Condensed Consolidating Financial Statements (Tables)

9 Months Ended

Sep. 30, 2013

Condensed Consolidating Financial Statements [Abstract]

Schedule of Error Corrections and Prior Period Adjustments Condensed Consolidating Statements of Income [Table Text Block]

The following tables present the effect of the correction of these immaterial errors on selected line items in the Company's Guarantor Condensed Consolidating Statements of Income for the three and nine months ended September 30, 2012.

	For the Three Months Ended September 30, 2012									For the Nine Months Ended September 30, 2012
	(in thousands)
	As Previously Reported			Adjustment			As Revised			As Previously Reported			Adjustment			As Revised
Marketing and reservation expense	$	89,498		$	(843	)	$	88,655		$	244,861		$	(2,954	)	$	241,907
Total operating expenses	111,041			(843		)	110,198			314,261			(2,954		)	311,307
Operating income (loss)	(2,470		)	843			(1,627		)	5,812			2,954			8,766
Interest expense	(839		)	843			4			(2,914		)	2,954			40
Total other income and expenses, net	(1,350		)	843			(507		)	(5,051		)	2,954			(2,097		)

Schedule of Error Corrections and Prior Period Adjustments [Table Text Block]

The following tables present the effect of the correction of the classification of the cash flows related to forgivable notes receivable on selected line items included in the Company's Consolidated Statements of Cash Flows for all periods affected:

	Year Ended December 31, 2012									Year Ended December 31, 2011									Year Ended December 31, 2010
	(In thousands)
	As Previously Reported			Adjustment			As Revised			As Previously Reported			Adjustment			As Revised			As Previously Reported			Adjustment			As Revised
Forgivable notes receivable, net	$	—		$	(10,898	)	$	(10,898	)	$	—		$	(3,475	)	$	(3,475	)	$	—		$	(1,120	)	$	(1,120	)
Net cash provided by operating activities	161,020			(10,898		)	150,122			134,844			(3,475		)	131,369			144,935			(1,120		)	143,815
Issuance of mezzanine and other notes receivable	(34,925		)	11,189			(23,736		)	(12,766		)	3,539			(9,227		)	(11,786		)	1,203			(10,583		)
Collections of mezzanine and other notes receivable	3,561			(291		)	3,270			4,754			(64		)	4,690			5,083			(83		)	5,000
Net cash used in investing activities	(57,999		)	10,898			(47,101		)	(23,804		)	3,475			(20,329		)	(32,155		)	1,120			(31,035		)

	Three Months Ended March 31, 2013									Three Months Ended March 31, 2012
	(In thousands)
	As Previously Reported			Adjustment			As Revised			As Previously Reported			Adjustment			As Revised
Forgivable notes receivable, net	$	—		$	(1,729	)	$	(1,729	)	$	—		$	(475	)	$	(475	)
Net cash provided by operating activities	1,874			(1,729		)	145			4,412			(475		)	3,937
Issuance of mezzanine and other notes receivable	(1,729		)	1,729			—			(3,719		)	583			(3,136		)
Collections of mezzanine and other notes receivable	19			—			19			151			(108		)	43
Net cash used in investing activities	(13,816		)	1,729			(12,087		)	(1,496		)	475			(1,021		)

	Six Months Ended June 30, 2012									Nine Months Ended September 30, 2012
	(In thousands)
	As Previously Reported			Adjustment			As Revised			As Previously Reported			Adjustment			As Revised
Forgivable notes receivable, net	$	—		$	(1,537	)	$	(1,537	)	$	—		$	(2,853	)	$	(2,853	)
Net cash provided by operating activities	37,802			(1,537		)	36,265			121,276			(2,853		)	118,423
Issuance of mezzanine and other notes receivable	(5,820		)	1,684			(4,136		)	(7,305		)	3,069			(4,236		)
Collections of mezzanine and other notes receivable	210			(147		)	63			326			(216		)	110
Net cash used in investing activities	(10,387		)	1,537			(8,850		)	(19,562		)	2,853			(16,709		)

The following tables present the effect of the correction for the aforementioned items on selected line items included in the Company's Condensed Consolidating Statement of Cash Flows for the nine months ended September 30, 2012:

	For the Nine Months Ended September 30, 2012
	Guarantor									Non-Guarantor
	(in thousands)
	As Previously Reported			Adjustment			As Revised			As Previously Reported			Adjustment			As Revised
Net cash provided (used) by operating activities	$	(1,928	)	$	6,869		$	4,941		$	36,131		$	(9,721	)	$	26,410
Investing Activities:
Issuance of mezzanine and other notes receivable	(3,068		)	3,068			—			—			—			—
Collection of mezzanine and other notes receivable	216			(216		)	—			—			—			—
Advances to and investments in affiliates	—			(9,721		)	(9,721		)	—			—			—
Net cash provided (used) in investing activities	1,649			(6,869		)	(5,220		)	(9,636		)	—			(9,636		)
Financing Activities:
Proceeds from contributions from affiliates	—			—			—			—			9,721			9,721
Net cash provided (used) by financing activities	122			—			122			(14		)	9,721			9,707

Condensed Consolidating Statement Of Income

Choice Hotels International, Inc.

Condensed Consolidating Statement of Income

For the Three Months Ended September 30, 2013

(Unaudited, in Thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES:
Royalty fees	$	76,645		$	25,161		$	11,279		$	(29,978	)	$	83,107
Initial franchise and relicensing fees	4,419			—			231			—			4,650
Procurement services	4,375			—			333			—			4,708
Marketing and reservation	114,117			96,626			5,577			(90,024		)	126,296
Other items, net	2,778			1,310			313			—			4,401
Total revenues	202,334			123,097			17,733			(120,002		)	223,162
OPERATING EXPENSES:
Selling, general and administrative	30,619			22,867			3,474			(29,978		)	26,982
Marketing and reservation	119,002			92,747			4,571			(90,024		)	126,296
Other items, net	828			2,285			222			—			3,335
Total operating expenses	150,449			117,899			8,267			(120,002		)	156,613
Operating income	51,885			5,198			9,466			—			66,549
OTHER INCOME AND EXPENSES, NET:
Interest expense	10,691			61			5			—			10,757
Equity in earnings of consolidated subsidiaries	(13,329		)	—			—			13,329			—
Other items, net	(577		)	(697		)	(526		)	—			(1,800		)
Total other income and expenses, net	(3,215		)	(636		)	(521		)	13,329			8,957
Income before income taxes	55,100			5,834			9,987			(13,329		)	57,592
Income taxes	13,588			2,052			440			—			16,080
Net income	$	41,512		$	3,782		$	9,547		$	(13,329	)	$	41,512

Choice Hotels International, Inc.

Condensed Consolidating Statement of Income

For the Three Months EndedSeptember 30, 2012

(Unaudited, in Thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES:
Royalty fees	$	74,186		$	16,347		$	22,925		$	(32,613	)	$	80,845
Initial franchise and relicensing fees	2,996			—			251			—			3,247
Procurement services	3,489			—			350			—			3,839
Marketing and reservation	109,793			90,986			4,783			(86,500		)	119,062
Other items, net	1,991			1,238			191			—			3,420
Total revenues	192,455			108,571			28,500			(119,113		)	210,413
OPERATING EXPENSES:
Selling, general and administrative	39,781			19,525			(3,523		)	(32,613		)	23,170
Marketing and reservation	111,831			88,655			4,233			(85,657		)	119,062
Other items, net	706			2,018			204			—			2,928
Total operating expenses	152,318			110,198			914			(118,270		)	145,160
Operating income	40,137			(1,627		)	27,586			(843		)	65,253
OTHER INCOME AND EXPENSES, NET:
Interest expense	11,005			4			—			(843		)	10,166
Equity in earnings of consolidated subsidiaries	(27,029		)	—			—			27,029			—
Other items, net	215			(511		)	(285		)	—			(581		)
Total other income and expenses, net	(15,809		)	(507		)	(285		)	26,186			9,585
Income before income taxes	55,946			(1,120		)	27,871			(27,029		)	55,668
Income taxes	11,569			(647		)	369			—			11,291
Net income	$	44,377		$	(473	)	$	27,502		$	(27,029	)	$	44,377

Choice Hotels International, Inc.

Condensed Consolidating Statement of Income

For the Nine Months Ended September 30, 2013

(Unaudited, in Thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES:
Royalty fees	$	183,063		$	84,477		$	31,452		$	(97,770	)	$	201,222
Initial franchise and relicensing fees	12,074			—			769			—			12,843
Procurement services	15,559			—			645			—			16,204
Marketing and reservation	267,491			267,308			14,953			(247,371		)	302,381
Other items, net	6,581			3,600			781			—			10,962
Total revenues	484,768			355,385			48,600			(345,141		)	543,612
OPERATING EXPENSES:
Selling, general and administrative	94,693			77,279			9,876			(97,770		)	84,078
Marketing and reservation	278,703			257,107			13,942			(247,371		)	302,381
Other items, net	2,301			6,890			625			—			9,816
Total operating expenses	375,697			341,276			24,443			(345,141		)	396,275
Operating income	109,071			14,109			24,157			—			147,337
OTHER INCOME AND EXPENSES, NET:
Interest expense	32,210			111			13			—			32,334
Equity in earnings of consolidated subsidiaries	(33,215		)	—			—			33,215			—
Other items, net	(1,689		)	(1,261		)	(635		)	—			(3,585		)
Total other income and expenses, net	(2,694		)	(1,150		)	(622		)	33,215			28,749
Income before income taxes	111,765			15,259			24,779			(33,215		)	118,588
Income taxes	26,496			6,058			765			—			33,319
Net income	$	85,269		$	9,201		$	24,014		$	(33,215	)	$	85,269

Choice Hotels International, Inc.

Condensed Consolidating Statement of Income

For the Nine Months Ended September 30, 2012

(Unaudited, in Thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES:
Royalty fees	$	175,862		$	68,622		$	39,781		$	(89,503	)	$	194,762
Initial franchise and relicensing fees	8,459			—			494			—			8,953
Procurement services	13,349			—			641			—			13,990
Marketing and reservation	252,951			248,011			13,892			(230,230		)	284,624
Other items, net	6,958			3,440			476			—			10,874
Total revenues	457,579			320,073			55,284			(319,733		)	513,203
OPERATING EXPENSES:
Selling, general and administrative	92,804			63,544			5,228			(89,503		)	72,073
Marketing and reservation	256,936			241,907			13,057			(227,276		)	284,624
Other items, net	2,117			5,856			625			—			8,598
Total operating expenses	351,857			311,307			18,910			(316,779		)	365,295
Operating income	105,722			8,766			36,374			(2,954		)	147,908
OTHER INCOME AND EXPENSES, NET:
Interest expense	19,731			40			6			(2,954		)	16,823
Equity in earnings of consolidated subsidiaries	(42,075		)	—			—			42,075			—
Other items, net	(274		)	(2,137		)	(344		)	—			(2,755		)
Total other income and expenses, net	(22,618		)	(2,097		)	(338		)	39,121			14,068
Income before income taxes	128,340			10,863			36,712			(42,075		)	133,840
Income taxes	32,104			4,663			837			—			37,604
Net income	$	96,236		$	6,200		$	35,875		$	(42,075	)	$	96,236

Schedule of Condensed Consolidating Statement of Comprehensive Income

Choice Hotels International, Inc.

Condensed Consolidating Statement of Comprehensive Income

For the Three Months Ended September 30, 2013

(Unaudited, in Thousands)

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Net income	$	41,512	$	3,782	$	9,547	$	(13,329	)	$	41,512
Other comprehensive income (loss), net of tax:
Amortization of loss on cash flow hedge	215		—		—		—			215
Foreign currency translation adjustment	512		—		512		(512		)	512
Other comprehensive income (loss), net of tax	727		—		512		(512		)	727
Comprehensive income	$	42,239	$	3,782	$	10,059	$	(13,841	)	$	42,239

Choice Hotels International, Inc.

Condensed Consolidating Statement of Comprehensive Income

For the Three Months Ended September 30, 2012

(Unaudited, in Thousands)

	Parent		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Net income (loss)	$	44,377	$	(473	)	$	27,502	$	(27,029	)	$	44,377
Other comprehensive income (loss), net of tax:
Amortization of loss on cash flow hedge	215		—			—		—			215
Foreign currency translation adjustment	211		1			209		(210		)	211
Amortization of pension related costs, net of tax:
Actuarial loss	20		20			—		(20		)	20
Other comprehensive income (loss), net of tax	446		21			209		(230		)	446
Comprehensive income	$	44,823	$	(452	)	$	27,711	$	(27,259	)	$	44,823

Choice Hotels International, Inc.

Condensed Consolidating Statement of Comprehensive Income

For the Nine Months Ended September 30, 2013

(Unaudited, in Thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net income	$	85,269		$	9,201	$	24,014		$	(33,215	)	$	85,269
Other comprehensive income (loss), net of tax:
Amortization of loss on cash flow hedge	646			—		—			—			646
Foreign currency translation adjustment	(1,800		)	—		(1,800		)	1,800			(1,800		)
Other comprehensive income (loss), net of tax	(1,154		)	—		(1,800		)	1,800			(1,154		)
Comprehensive income	$	84,115		$	9,201	$	22,214		$	(31,415	)	$	84,115

Choice Hotels International, Inc.

Condensed Consolidating Statement of Comprehensive Income

For the Nine Months Ended September 30, 2012

(Unaudited, in Thousands)

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Net income	$	96,236	$	6,200	$	35,875	$	(42,075	)	$	96,236
Other comprehensive income (loss), net of tax:
Amortization of loss on cash flow hedge	646		—		—		—			646
Foreign currency translation adjustment	191		5		171		(176		)	191
Amortization of pension related costs, net of tax:
Actuarial loss	60		60		—		(60		)	60
Other comprehensive income (loss), net of tax	897		65		171		(236		)	897
Comprehensive income	$	97,133	$	6,265	$	36,046	$	(42,311	)	$	97,133

Condensed Consolidating Balance Sheet

Choice Hotels International, Inc.

Condensed Consolidating Balance Sheet

As of September 30, 2013

(Unaudited, in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	10,921		$	437	$	149,780	$	—		$	161,138
Receivables, net	54,842			1,963		5,800		—			62,605
Other current assets	36,200			13,271		728		(15,675		)	34,524
Total current assets	101,963			15,671		156,308		(15,675		)	258,267
Property and equipment, at cost, net	11,351			53,331		858		—			65,540
Goodwill	60,620			5,193		—		—			65,813
Franchise rights and other identifiable intangibles, net	7,113			2,251		1,511		—			10,875
Advances, marketing and reservation activities	32,564			—		—		—			32,564
Investments, employee benefit plans, at fair value	—			14,950		—		—			14,950
Investment in affiliates	362,158			27,307		—		(389,465		)	—
Advances to affiliates	13,985			203,917		10,613		(228,515		)	—
Deferred income taxes	—			29,184		1,058		(10,746		)	19,496
Other assets	30,113			27,839		30,252		—			88,204
Total assets	$	619,867		$	379,643	$	200,600	$	(644,401	)	$	555,709
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Accounts payable	$	9,098		$	27,757	$	3,903	$	—		$	40,758
Accrued expenses	19,397			22,098		1,980		—			43,475
Deferred revenue	5,995			54,666		740		—			61,401
Current portion of long-term debt	8,437			684		11		—			9,132
Deferred compensation & retirement plan obligations	—			2,439		—		—			2,439
Other current liabilities	13,503			23,616		462		(15,675		)	21,906
Total current liabilities	56,430			131,260		7,096		(15,675		)	179,111
Long-term debt	811,243			4,694		20		—			815,957
Deferred compensation & retirement plan obligations	—			21,212		7		—			21,219
Advances from affiliates	220,721			403		7,390		(228,514		)	—
Other liabilities	16,197			18,211		484		(10,746		)	24,146
Total liabilities	1,104,591			175,780		14,997		(254,935		)	1,040,433
Total shareholders’ (deficit) equity	(484,724		)	203,863		185,603		(389,466		)	(484,724		)
Total liabilities and shareholders’ deficit	$	619,867		$	379,643	$	200,600	$	(644,401	)	$	555,709

Choice Hotels International, Inc.

Condensed Consolidating Balance Sheet

As of December 31, 2012

(In Thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	8,420		$	407	$	125,350	$	—		$	134,177
Receivables, net	44,344			1,797		6,129		—			52,270
Other current assets	41,897			20,110		3,528		(18,512		)	47,023
Total current assets	94,661			22,314		135,007		(18,512		)	233,470
Property and equipment, at cost, net	11,307			39,298		1,046		—			51,651
Goodwill	60,620			5,193		—		—			65,813
Franchise rights and other identifiable intangibles, net	8,669			2,715		2,089		—			13,473
Advances, marketing and reservation activities	42,179			—		—		—			42,179
Investments, employee benefit plans, at fair value	—			12,755		—		—			12,755
Investment in affiliates	329,038			26,194		—		(355,232		)	—
Advances to affiliates	14,252			206,770		13,479		(234,501		)	—
Deferred income taxes	—			28,539		640		(13,761		)	15,418
Other assets	32,085			18,925		25,003		—			76,013
Total assets	$	592,811		$	362,703	$	177,264	$	(622,006	)	$	510,772
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Accounts payable	$	5,930		$	28,525	$	4,259	$	—		$	38,714
Accrued expenses	18,582			34,576		2,394		—			55,552
Deferred revenue	17,239			53,081		834		—			71,154
Current portion of long-term debt	7,500			675		20		—			8,195
Deferred compensation and retirement plan obligations	—			2,522		—		—			2,522
Other current liabilities	—			17,722		790		(18,512		)	—
Total current liabilities	49,251			137,101		8,297		(18,512		)	176,137
Long-term debt	845,257			1,845		48		—			847,150
Deferred compensation & retirement plan obligations	—			20,390		9		—			20,399
Advances from affiliates	226,917			189		7,395		(234,501		)	—
Other liabilities	20,290			9,216		245		(13,761		)	15,990
Total liabilities	1,141,715			168,741		15,994		(266,774		)	1,059,676
Total shareholders’ (deficit) equity	(548,904		)	193,962		161,270		(355,232		)	(548,904		)
Total liabilities and shareholders' deficit	$	592,811		$	362,703	$	177,264	$	(622,006	)	$	510,772

Condensed Consolidating Statement Of Cash Flows

Choice Hotels International, Inc.

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended September 30, 2013

(Unaudited, in thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by operating activities	$	60,070		$	18,718		$	26,221		$	—		$	105,009
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(4,083		)	(22,182		)	(177		)	—			(26,442		)
Equity method investments	—			(1,481		)	(2,280		)	—			(3,761		)
Issuance of mezzanine and other notes receivable	—			—			—			—			—
Collections of mezzanine and other notes receivable	224			—			—			—			224
Purchases of investments, employee benefit plans	—			(1,845		)	—			—			(1,845		)
Proceeds from sales of investments, employee benefit plans	—			4,052			—			—			4,052
Advances to and investments in affiliates	(1,000		)	(1,280		)	—			2,280			—
Other items, net	(578		)	—			—			—			(578		)
Net cash provided (used) in investing activities	(5,437		)	(22,736		)	(2,457		)	2,280			(28,350		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments pursuant to revolving credit facilities	(27,500		)	—			—			—			(27,500		)
Proceeds from issuance of long-term debt	—			3,360			—			—			3,360
Principal payments on long-term debt	(5,625		)	(502		)	(31		)	—			(6,158		)
Purchase of treasury stock	(3,684		)	—			—			—			(3,684		)
Dividends paid	(22,026		)	—			—			—			(22,026		)
Excess tax benefits from stock-based compensation	26			1,190			—			—			1,216
Proceeds from contributions from affiliates	—			—			2,280			(2,280		)	—
Proceeds from exercise of stock options	6,677			—			—			—			6,677
Net cash provided (used) by financing activities	(52,132		)	4,048			2,249			(2,280		)	(48,115		)
Net change in cash and cash equivalents	2,501			30			26,013			—			28,544
Effect of foreign exchange rate changes on cash and cash equivalents	—			—			(1,583		)	—			(1,583		)
Cash and cash equivalents at beginning of period	8,420			407			125,350			—			134,177
Cash and cash equivalents at end of period	$	10,921		$	437		$	149,780		$	—		$	161,138

Choice Hotels International, Inc.

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended September 30, 2012

(Unaudited, in Thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by operating activities	$	87,072		$	4,941		$	26,410		$	—		$	118,423
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(7,126		)	(5,217		)	(182		)	—			(12,525		)
Equity method investments	—			—			(9,454		)	—			(9,454		)
Issuance of mezzanine and other notes receivable	(4,236		)	—			—			—			(4,236		)
Collections of mezzanine and other notes receivable	110			—			—			—			110
Purchases of investments, employee benefit plans	—			(1,191		)	—			—			(1,191		)
Proceeds from sales of investments, employee benefit plans	—			10,909			—			—			10,909
Advances to and investments in affiliates	—			(9,721		)	—			9,721			—
Other items, net	(322		)	—			—			—			(322		)
Net cash provided (used) in investing activities	(11,574		)	(5,220		)	(9,636		)	9,721			(16,709		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facilities	16,725			—			—			—			16,725
Proceeds from issuance of long-term debt	543,500			—			—			—			543,500
Principal payments on long-term debt	—			(488		)	(14		)	—			(502		)
Purchase of treasury stock	(22,227		)	—			—			—			(22,227		)
Dividends paid	(632,751		)	—			—			—			(632,751		)
Excess tax benefits from stock-based compensation	183			610			—			—			793
Debt issuance costs	(4,753		)	—			—			—			(4,753		)
Proceeds from contributions from affiliates	—			—			9,721			(9,721		)	—
Proceeds from exercise of stock options	4,695			—			—			—			4,695
Net cash provided (used) by financing activities	(94,628		)	122			9,707			(9,721		)	(94,520		)
Net change in cash and cash equivalents	(19,130		)	(157		)	26,481			—			7,194
Effect of foreign exchange rate changes on cash and cash equivalents	—			—			813			—			813
Cash and cash equivalents at beginning of period	23,370			432			83,255			—			107,057
Cash and cash equivalents at end of period	$	4,240		$	275		$	110,549		$	—		$	115,064