Comfort Inn 2013 Annual Report Download - page 94

Table of Contents
The following table presents the components of net periodic benefit costs for the years ended December 31, 2012 and 2011. No periodic benefit costs
were incurred during the year ended December 31, 2013 due to the 2012 settlement of the SERP:




Components of net periodic benefit cost:
Interest cost $526
$ 541
Amortization of actuarial loss 128
—
654
541
Settlement loss, net 2,162
—
Net periodic benefit cost $2,816
$ 541
Weighted average assumption:
Discount rate 4.50%
5.50%
As a result of the settlement of the SERP, the Company recognized a net settlement loss totaling $2.2 million during the year ended December 31, 2012.
The net settlement loss consisted of an actuarial gain of $0.1 million representing the difference between actuarial calculation of the lump sum distribution to
participants and the projected benefit obligation and the reclassification of the unamortized accumulated loss from other comprehensive loss to the net periodic
benefit cost totaling $2.3 million. Following the settlement of the SERP, there were no amounts in accumulated other comprehensive income (loss) that have not
yet been recognized as a component of net periodic benefit costs.
 
The Company sponsors two non-qualified retirement savings and investment plans for certain employees and senior executives. Employee and
Company contributions are maintained in separate irrevocable trusts. Legally, the assets of the trusts remain those of the Company; however, access to the
trusts’ assets is severely restricted. The trusts cannot be revoked by the Company or an acquirer, but the assets are subject to the claims of the Company’s
general creditors. The participants do not have the right to assign or transfer contractual rights in the trusts.
In 2002, the Company adopted the Choice Hotels International, Inc. Executive Deferred Compensation Plan ("EDCP") which became effective
January 1, 2003. Under the EDCP, certain executive officers may defer a portion of their salary into an irrevocable trust. Prior to January 1, 2010, participants
could elect an investment return of either the annual yield of the Moody’s Average Corporate Bond Rate Yield Index plus 300 basis points, or a return based on
a selection of available diversified investment options. Effective January 1, 2010, the Moody’s Average Corporate Bond Rate Yield Index plus 300 basis points
is no longer an investment option for salary deferrals made on compensation earned after December 31, 2009. The Company recorded current and long-term
deferred compensation liabilities of $11.3 million and $11.7 million at December 31, 2013 and 2012, respectively, related to these deferrals and credited
investment returns. Compensation expense is recorded in SG&A expense on the Company’s consolidated statements of income based on the change in the
deferred compensation obligation related to earnings credited to participants as well as changes in the fair value of diversified investments. Compensation
expense recorded in SG&A for the years ended December 31, 2013, 2012 and 2011 were $0.9 million, $0.8 million and $0.8 million, respectively.
The Company has invested the employee salary deferrals in diversified long-term investments which are intended to provide investment returns that
partially offset the earnings credited to the participants. The diversified investments held in the trusts totaled $4.1 million and $6.0 million as of December 31,
2013 and 2012, respectively, and are recorded at their fair value, based on quoted market prices. At December 31, 2013, the Company expects $0.4 million of
the assets held in the trust to be distributed during the year ended December 31, 2014 to participants. These investments are considered trading securities and
therefore the changes in the fair value of the diversified assets is included in other gains and losses in the accompanying consolidated statements of income.
The Company recorded investment gains (losses) during the years ended December 31, 2013, 2012 and 2011 of $0.3 million, $1.2 million, and $(0.1)
million, respectively. In addition, the EDCP Plan held shares of the Company's common stock with a market value of $0.2 million and $0.1 million at
December 31, 2013 and 2012 , respectively which were recorded as a component of shareholders' deficit.
In 1997, the Company adopted the Choice Hotels International, Inc. Non-Qualified Retirement Savings and Investment Plan ("Non-Qualified Plan").
The Non-Qualified Plan allows certain employees who do not participate in the EDCP to defer a
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