Comfort Inn 2013 Annual Report Download - page 93

Table of Contents
Economic Development Loans
The Company entered into economic development agreements with various governmental entities in conjunction with the relocation of its corporate
headquarters in April 2013. In accordance with these agreements, the governmental entities agreed to advance approximately $4.4 million to the Company to
offset a portion of the corporate headquarter relocation and tenant improvement costs in consideration of the employment of permanent, full-time employees
within the jurisdictions. At December 31, 2013, the Company had been advanced approximately $3.4 million pursuant to these agreements and expects to
receive the remaining $1.1 million over the next several years, subject to annual appropriations by the governmental entities. These advances bear interest at a
rate of 3% per annum.
Repayment of the advances is contingent upon the Company achieving certain performance conditions. Performance conditions are measured annually
on December 31st and primarily relate to maintaining certain levels of employment within the various jurisdictions. If the Company fails to meet an annual
performance condition, the Company may be required to repay a portion or all of the advances including accrued interest by April 30 th following the
measurement date. Any outstanding advances at the expiration of the Company's ten year corporate headquarter lease in 2023 will be forgiven in full. The
advances will be included in long-term debt in Company's consolidated balance sheets until the Company determines that the future performance conditions
will be met over the entire term of the agreement and the Company will not be required to repay the advances. The Company accrues interest on the portion of
the advances that it expects to repay. The Company was in compliance with all current performance conditions as of December 31, 2013.
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The Company sponsored an unfunded non-qualified defined benefit plan (“SERP”) for certain senior executives. The Company accounted for the SERP
in accordance with applicable guidance which required 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 were measured as of the Company’s fiscal year end.
On December 26, 2011, the Company's board of directors approved the termination of the SERP effective immediately. Pursuant to this termination, the
Company effectuated the termination of the SERP through the payment of lump sum distributions to all SERP participants based upon the actuarial equivalent
commuted lump sum value of the full accrued benefit earned by each such participant, using actuarial and other assumptions on December 27, 2012. No
assets were held with respect to the SERP, therefore benefits were funded when paid to participants.
The following is a reconciliation of the changes in the projected benefit obligation for the year ended December 31, 2012:


Projected benefit obligation, beginning of year 
Interest cost 
Actuarial loss (gain) 
Benefit payments 
Settlement payments 
Projected benefit obligation, end of year  
For the years ended December 31, 2012 and 2011, the Company recorded $2.8 million and $0.5 million, respectively for the expenses related to the
SERP which are included in SG&A and marketing and reservation expense in the accompanying consolidated statements of income.
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