Comfort Inn 2007 Annual Report Download - page 48

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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. The Company accounts for these
plans in accordance with Emerging Issues Task Force (“EITF”) No. 97-14, “Accounting for Deferred Compensation
Arrangements Where Amounts Earned Are Held in a Rabbi Trust and Invested.” Pursuant to EITF 97-14, as of
December 31, 2007 and December 31, 2006, the Company had recorded a deferred compensation liability of $36.5
million and $32.9 million, respectively. The change in the deferred compensation obligation related to changes in the fair
value of the diversified investments held in trust and to earnings credited to participants is recorded in compensation
expense. The diversified investments held in the trusts were $34.5 million and $31.5 million as of December 31, 2007 and
December 31, 2006, respectively, and are recorded at their fair value, based on quoted market prices. The change in the
fair value of the diversified assets held in trust is recorded in accordance with SFAS 115 as trading security income (loss)
and is included in other income and expenses, net in the accompanying statements of income.
Effective December 31, 2006, the Company adopted SFAS No. 158, “Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R),” (“SFAS
No. 158”) which requires employers 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 under funded 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 postretirement plan in the year in which the changes occur. Those changes were reported in comprehensive
income of the Company. As a result of this adoption, the Company increased its pension benefit obligations at
December 31, 2006 by approximately $2.6 million with a corresponding change, net of tax, reported in comprehensive
income. See Notes 1 and 16 to our consolidated financial statements.
Recently Issued Accounting Standards
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”) which defines
fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands
disclosures about fair value measurements. This Statement is effective for financial statements issued for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal years. In November 2007, the FASB agreed to
partially defer the effective date, for one year, of SFAS No. 157 for non-financial assets and liabilities, except those that
are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company is currently
evaluating the impact that SFAS No. 157 will have on our consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value for Financial Assets and Financial Liabilities”
(“SFAS No. 159”) which provides reporting entities an option to report certain financial instruments and other items at
fair value that are not currently required to be measured at fair value. SFAS No. 159 is effective as of the beginning of a
reporting entity’ s first fiscal year beginning after November 15, 2007. The Company does not expect to elect the fair value
measurement option of any financial assets or liabilities at the present time.
In December 2007, the FASB issued SFAS No. 160 (“SFAS 160”), “Noncontrolling Interests in Consolidated
Financial Statements—An Amendment of ARB No. 51”. SFAS 160 establishes new accounting and reporting standards
for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective for fiscal
years beginning on or after December 15, 2008. The Company is currently evaluating the impact, if any, the adoption of
this statement will have on our consolidated financial statements.
In December 2007, the FASB issued SFAS Standards No. 141 (Revised 2007) (“SFAS 141R”), “Business
Combinations”. SFAS 141R will change the accounting for business combinations by requiring an acquiring entity to
recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited
exceptions. SFAS 141R will also change the accounting treatment and disclosure for certain specific items in a business
combination. SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December 15, 2008.
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