Comfort Inn 2011 Annual Report Download - page 83

Table of Contents
Choice Hotels Australasia
Choice Hotels Australasia Pty. Ltd. (“CHA”), a wholly-owned subsidiary, conducts direct franchising operations in Australia, New Zealand, Singapore
and Papua New Guinea. During 2011, 2010 and 2009, the Company recognized in the accompanying consolidated statements of income, revenues of $13.9
million, $11.3 million and $8.7 million respectively, including royalty, marketing and reservation system fees and other revenues from CHA.
Choice Hotels Canada, Inc. & Choice Hotels International Licensing ULC
The Company conducts operations in Canada for all brands except Cambria Suites, Mainstay Suites and Suburban Extended Stay Hotel through
Choice Hotels Canada, Inc. ("CHC") and through Choice Hotels International Licensing ULC ("CHIL"), a wholly-owned subsidiary for its extended stay
brands and Cambria Suites. The Company has a 50% interest in Choice Hotels Canada, Inc. (“CHC”), a joint venture with a third party. During 2011, 2010
and 2009, the Company recorded $1.5 million, $1.3 million, and $1.1 million respectively, based on CHC’s results for the twelve months ended
November 30, 2011, 2010 and 2009 of equity method income related to this investment in the accompanying consolidated statements of income. The
Company received dividends from CHC of $1.1 million, $1.2 million and $1.2 million for the years ended December 31, 2011, 2010 and 2009, respectively.
During 2011, 2010 and 2009, the Company recognized in the accompanying consolidated statements of income, revenues of $14.0 million, $12.3 million and
$10.6 million, respectively, including royalty, marketing and reservation system fees and other revenues from CHC and CHIL.
 
The Company sponsors an unfunded non-qualified defined benefit plan (“SERP”) for certain senior executives. The Company accounts for the SERP in
accordance with applicable guidance which requires the Company to (a) recognize in its statement of financial position an asset for a plan’s over funded status
or a liability for a plan’s underfunded status; (b) measure a plan’s assets and its obligations that determine its funded status as of the end of the employer’s
fiscal year; and (c) recognize changes in the funded status of a defined benefit post-retirement plan in the year in which the changes occur. The plan assets and
benefit obligations are measured as of the Company’s fiscal year end. No assets are held with respect to the SERP, therefore benefits are funded as paid to
participants.
For the years ended December 31, 2011, 2010 and 2009, the Company recorded $0.5 million, $0.5 million and $2.4 million, respectively for the
expenses related to the SERP which are included in SG&A expense in the accompanying consolidated statements of income.
The following table presents the components of net periodic benefit costs for the three years ended December 31, 2011:





Components of net periodic pension cost:
Service cost  
$ —
$404
Interest cost 
538
591
Amortization
Prior service cost 
—
230
Loss 
—
—

538
1,225
Curtailment 
—
1,209
Net periodic pension cost 
$ 538
$2,434
Weighted average assumptions:
Discount rate 
5.50%
6.00%
Curtailment
During the fourth quarter of 2009, the Company amended the terms of the SERP to freeze participant benefits effective December 31, 2009. The
amendment of the plan terms constituted a significant event and required the Company to recognize a curtailment loss as part of its 2009 net periodic pension
cost. The curtailment loss was equal to unrecognized prior service costs for all employees which totaled approximately $2.3 million The curtailment loss was
partially offset by a $1.1 million gain
81