Comfort Inn 2011 Annual Report Download - page 79
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Table of Contents
services, the Company has the right to expend funds in an amount reasonably necessary to ensure the provision of such services, whether or not such amount
is currently available to the Company for reimbursement. The franchise agreements provide the Company the right to advance monies to the franchise system
when the needs of the system surpass the balances currently available. As a result, expenditures by the Company in support of marketing and reservation
services in excess of available revenues are recorded as a receivable in the Company’s financial statements. Conversely, cumulative marketing and reservation
system revenues not expended are recorded as a payable in the financial statements and are carried over to the next fiscal year and expended in accordance with
the franchise agreements.
Under the terms of these agreements, the Company has the legally enforceable right to assess and collect from its current franchisees fees sufficient to
pay for the marketing and reservation services the Company has procured for the benefit of the franchise system, including fees to reimburse the Company for
past services rendered. The Company has the contractual authority to require that the franchisees in the system at any given point repay any deficits related to
marketing and reservation activities. The Company’s current franchisees are legally obligated to pay any assessment the Company imposes on its franchisees
to obtain reimbursement of such deficit regardless of whether those constituents continue to generate gross room revenue and whether or not they joined the
system following the deficit's occurrence.
The marketing fees receivable at December 31, 2011 and 2010 was $18.5 million and $17.0 million, respectively from cumulative marketing expenses
incurred in excess of cumulative marketing revenues. As of December 31, 2011 and 2010, the reservation fees receivable related to cumulative reservation
expenses incurred in excess of cumulative reservation revenues was $35.5 million and $25.5 million, respectively. Depreciation and amortization expense
attributable to marketing and reservation activities for the years ended December 31, 2011, 2010 and 2009 was $13.3 million, $12.4 million and $10.3
million, respectively. Interest expense attributable to reservation activities was $4.1 million, $1.1 million and $0.3 million for the years ended December 31,
2011, 2010 and 2009, respectively.
Other assets consist of the following at:
Notes receivable (See Note 3)
$ 12,101
Equity method investments
251
Deferred financing fees
2,102
Other assets
851
Total
$15,305
Accrued expenses consist of the following:
Accrued compensation and benefits
$25,934
Dividends payable
10,960
Termination benefits (see note 26)
3,269
Accrued interest
5,280
Other liabilities and contingencies
2,375
Total
$ 47,818
77