Comfort Inn 2003 Annual Report Download - page 29

Download and view the complete annual report

Please find page 29 of the 2003 Comfort Inn annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 49

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49

CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Income Taxes.
Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that
have been included in the financial statements or income tax returns. Deferred tax assets and liabilities are
determined based on the difference between the financial statement and tax basis of assets and liabilities using
enacted rates expected to apply to taxable income in the years in which those differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. We also estimate and accrue for certain tax assessments
and the expected resolution of tax contingencies which arise in the course of our business.
Earnings per Share.
Basic earnings per share excludes dilution and is computed by dividing net income by the weighted-average
number of common shares outstanding. Diluted earnings per share, assumes dilution and is computed based on
the weighted-average number of common shares outstanding after consideration of the dilutive effect of stock
options and unvested restricted stock.
Use of Estimates.
The consolidated financial statements are prepared in conformity with accounting principles generally
accepted in the United States and require management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
2. Property and Equipment
The components of property and equipment in the consolidated balance sheets are:
December 31,
2003 2002
(In thousands)
Land and land improvements ................................ $ 4,173 $ 4,117
Facilities in progress ....................................... 2,313 1,631
Computer equipment and software ............................ 88,051 83,790
Buildings and improvements ................................. 38,089 36,283
Furniture, fixtures and equipment ............................. 10,503 10,479
143,129 136,300
Less: Accumulated depreciation and amortization ................ (88,876) (71,650)
$ 54,253 $ 64,650
As facilities in progress are completed and placed in service, they are transferred to appropriate property and
equipment categories and depreciation begins. Depreciation expense, excluding amounts attributable to
marketing and reservation activities, for the years ended December 31, 2003, 2002 and 2001 was $6.5 million,
$5.6 million and $4.6 million, respectively. Depreciation has been computed for financial reporting purposes
F-22