Comfort Inn 2014 Annual Report Download - page 63

Table of Contents
See Note 3 Notes Receivable for additional information.
Stock Compensation.
The Company’s policy is to recognize compensation cost related to share-based payment transactions in the financial statements based on the fair value
of the equity or liability instruments issued. Compensation expense related to the fair value of share-based awards is recognized over the requisite service
period based on an estimate of those awards that will ultimately vest. The Company estimates the share-based compensation expense for awards that will
ultimately vest upon inception of the grant and adjusts the estimate of share-based compensation for those awards with performance and/or service
requirements that will not be satisfied so that compensation cost is recognized only for awards that ultimately vest.
Income Taxes.
Income taxes are recorded using the asset and liability method of accounting for income taxes. Deferred income taxes reflect the net tax effect of temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation
allowance is provided for deferred tax assets if it is more likely than not such assets will be unrealized. Deferred United States income taxes have not been
recorded for temporary differences related to investments in certain foreign subsidiaries and corporate affiliates. The temporary differences consist primarily
of undistributed earnings that are considered permanently reinvested in operations outside the United States. If management’s intentions change in the future,
deferred taxes may need to be provided.
With respect to uncertain income tax positions, a tax liability is recorded in full when management determines that the position does not meet the more
likely than not threshold of being sustained on examination. A tax liability may also be recognized for a position that meets the more likely than not
threshold, based upon management’s assessment of the position’s probable settlement value. The Company records interest and penalties on unrecognized
tax benefits in the provision for income taxes. Additional information regarding the Company’s unrecognized tax benefits is provided in Note 17 to
Consolidated Financial Statements.
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See Footnotes No. 1 “Recently Adopted Accounting Guidance” and Note 29 "Future Adoption of Accounting Standards" of the Notes to our Financial
Statements for information related to our adoption of new accounting standards in 2014 and for information on our anticipated adoption of recently issued
accounting standards.
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Certain matters discussed in this report constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995. Generally, our use of words such as "expect," "estimate," "believe," "anticipate," "should," "will," "forecast," "plan," "project," "assume" or similar words
of futurity identify such forward-looking statements. These forward-looking statements are based on management's current beliefs, assumption and
expectations regarding future events, which in turn are based on information currently available to management. Such statements may relate to projections of
the Company’s revenue, earnings and other financial and operational measures, Company debt levels, ability to repay outstanding indebtedness, payment of
dividends, and future operations, among other matters. We caution you not to place undue reliance on any such forward-looking statements. Forward-looking
statements do not guarantee future performance and involve known and unknown risks, uncertainties and other factors.
Several factors could cause actual results, performance or achievements of the Company to differ materially from those expressed in or contemplated by
the forward-looking statements. Such risks include, but are not limited to, changes to general, domestic and foreign economic conditions; foreign currency
fluctuations; operating risks common in the lodging and franchising industries; changes to the desirability of our brands as viewed by hotel operators and
customers; changes to the terms or termination of our contracts with franchisees and our relationships with our franchisees; our ability to keep pace with
improvements in technology utilized for marketing and reservations systems and other operating systems; our ability to grow our franchise system; exposure
to risks relating to development activities; fluctuations in the supply and demand for hotels rooms; the level of acceptance of alternative growth strategies we
may implement; operating risks associated with our international operations; the outcome of litigation; and our ability to effectively manage our
indebtedness. These and other risk factors are discussed in detail in Item 1A. “Risk Factors” of this report. We undertake no obligation to publicly update or
revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
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The Company is exposed to market risk from changes in interest rates and the impact of fluctuations in foreign currencies on the Company’s foreign
investments and operations. The Company manages its exposure to these market risks through the
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