Comfort Inn 2003 Annual Report Download - page 40

Download and view the complete annual report

Please find page 40 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)
Included in the accompanying consolidated balance sheet as follows:
December 31,
2003 2002
(In thousands)
Current net deferred tax assets ........................................ $ 1,957 $ 2,232
Non-current net deferred tax liabilities .................................. (21,562) (29,807)
Net deferred tax liability ............................................. (19,605) (27,575)
No provision has been made for U.S. federal income taxes on approximately $21 million of accumulated
and undistributed earnings of foreign subsidiaries at December 31, 2003 since these earnings are considered to be
permanently invested in foreign operations.
A reconciliation of income tax expense at the statutory rate to income tax expense included in the
accompanying consolidated statements of income follows:
Years ended December 31,
2003 2002 2001
(In thousands, except Federal
income tax rate)
Federal income tax rate ...................................... 35% 35% 35%
Federal taxes at statutory rate .................................. $39,342 $33,536 $15,896
State income taxes, net of federal tax benefit ..................... 1,974 1,068 1,120
Unrealized tax benefits ....................................... (617) — 12,737
Other ..................................................... (155) 370 1,337
Income tax expense ................................. $40,544 $34,974 $31,090
We have estimated and accrued for certain tax assessments and the expected resolution of tax contingencies
which arise in the course of our business. The ultimate outcome of these tax-related contingencies impact the
determination of income tax expense and may not be resolved until several years after the related tax returns have
been filed. Predicting the outcome of such tax assessments involves uncertainty; however, we believe that
recorded tax liabilities adequately account for our analysis of probable outcomes.
14. Other Non-Current Liabilities
Other non-current liabilities consist of the following at.
Year ended
December 31,
2003 2002
(in thousands)
Deferred revenue .................................................... 4,006 1,299
Other liabilities and contingencies ...................................... 21,160 21,513
Total ..................................................... $40,224 $32,462
Other liabilities and contingencies includes long-term deposits and accruals for tax contingencies. These
accruals have been recorded to address potential exposures involving tax positions that could be challenged by
taxing authorities.
F-33