Condensed Consolidating Financial Statements (Tables)

3 Months Ended

Mar. 31, 2015

Condensed Consolidating Financial Statements [Abstract]

Condensed Consolidating Statement Of Income

Choice Hotels International, Inc.

Condensed Consolidating Statement of Income

For the Three Months Ended March 31, 2015

(Unaudited, in thousands)



	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES:
Royalty fees	$	57,587		$	31,240	$	11,155		$	(37,551	)	$	62,431
Initial franchise and relicensing fees	5,496			—		221			—			5,717
Procurement services	4,666			—		141			—			4,807
Marketing and reservation	88,236			90,385		3,621			(83,529		)	98,713
Other	3,102			—		475			—			3,577
Total revenues	159,087			121,625		15,613			(121,080		)	175,245

OPERATING EXPENSES:
Selling, general and administrative	38,699			28,052		3,238			(37,551		)	32,438
Marketing and reservation	92,024			86,811		3,407			(83,529		)	98,713
Depreciation and amortization	774			1,705		211			—			2,690
Total operating expenses	131,497			116,568		6,856			(121,080		)	133,841

Operating income	27,590			5,057		8,757			—			41,404

OTHER INCOME AND EXPENSES, NET:
Interest expense	10,032			—		147			—			10,179
Equity in earnings of consolidated subsidiaries	(11,332		)	138		—			11,194			—
Other items, net	(292		)	297		186			—			191
Total other income and expenses, net	(1,592		)	435		333			11,194			10,370

Income from continuing operations before income taxes	29,182			4,622		8,424			(11,194		)	31,034
Income taxes	7,588			2,284		(432		)	—			9,440
Income from continuing operations, net of income taxes	21,594			2,338		8,856			(11,194		)	21,594
Net income from discontinued operations, net of income taxes	—			—		—			—			—
Net income	$	21,594		$	2,338	$	8,856		$	(11,194	)	$	21,594

Choice Hotels International, Inc.

Condensed Consolidating Statement of Income

For the Three Months Ended March 31, 2014

(Unaudited, in thousands)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES:
Royalty fees	$	52,995		$	24,215		$	10,522		$	(29,192	)	$	58,540
Initial franchise and relicensing fees	3,584			—			156			—			3,740
Procurement services	4,631			—			147			—			4,778
Marketing and reservation	78,821			73,899			4,135			(67,249		)	89,606
Other	2,956			—			116			—			3,072
Total revenues	142,987			98,114			15,076			(96,441		)	159,736
OPERATING EXPENSES:
Selling, general and administrative	30,574			22,091			3,207			(29,192		)	26,680
Marketing and reservation	81,585			70,944			4,326			(67,249		)	89,606
Depreciation and amortization	751			1,318			209			—			2,278
Total operating expenses	112,910			94,353			7,742			(96,441		)	118,564
Operating income	30,077			3,761			7,334			—			41,172
OTHER INCOME AND EXPENSES, NET:
Interest expense	10,168			1			2			—			10,171
Equity in earnings of consolidated subsidiaries	(10,926		)	61			—			10,865			—
Other items, net	(428		)	(67		)	(32		)	—			(527		)
Total other income and expenses, net	(1,186		)	(5		)	(30		)	10,865			9,644
Income from continuing operations before income taxes	31,263			3,766			7,364			(10,865		)	31,528
Income taxes	8,153			1,804			102			—			10,059
Income from continuing operations, net of income taxes	23,110			1,962			7,262			(10,865		)	21,469
Income from discontinued operations, net of income taxes	—			1,641			—			—			1,641
Net income	$	23,110		$	3,603		$	7,262		$	(10,865	)	$	23,110

Condensed Consolidating Statement of Comprehensive Income

Choice Hotels International, Inc.

Condensed Consolidating Statement of Comprehensive Income

For the Three Months Ended March 31, 2015

(Unaudited, in thousands)



	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated

Net income	$	21,594		$	2,338	$	8,856		$	(11,194	)	$	21,594
Other comprehensive income (loss), net of tax:
Amortization of loss on cash flow hedge	215			—		—			—			215
Foreign currency translation adjustment	(1,447		)	—		(1,447		)	1,447			(1,447		)
Other comprehensive income (loss), net of tax	(1,232		)	—		(1,447		)	1,447			(1,232		)
Comprehensive income	$	20,362		$	2,338	$	7,409		$	(9,747	)	$	20,362

Choice Hotels International, Inc.

Condensed Consolidating Statement of Comprehensive Income

For the Three Months Ended March 31, 2014

(Unaudited, in thousands)



	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated

Net income	$	23,110	$	3,603	$	7,262	$	(10,865	)	$	23,110
Other comprehensive income (loss), net of tax:
Amortization of loss on cash flow hedge	215		—		—		—			215
Foreign currency translation adjustment	521		—		521		(521		)	521
Other comprehensive income (loss), net of tax	736		—		521		(521		)	736
Comprehensive income	$	23,846	$	3,603	$	7,783	$	(11,386	)	$	23,846

Condensed Consolidating Balance Sheet

Choice Hotels International, Inc.

Condensed Consolidating Balance Sheet

As of March 31, 2015

(Unaudited, in thousands)



	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	5,460		$	20	$	195,064	$	—		$	200,544
Receivables, net	92,210			1,856		7,947		—			102,013
Other current assets	15,840			44,814		3,071		(9,010		)	54,715
Total current assets	113,510			46,690		206,082		(9,010		)	357,272
Property and equipment, at cost, net	28,756			37,171		14,130		—			80,057
Goodwill	60,620			5,193		—		—			65,813
Franchise rights and other identifiable intangibles, net	3,766			1,323		2,912		—			8,001
Notes receivable, net of allowances	11,783			36,319		679		—			48,781
Investments, employee benefit plans, at fair value	—			17,916		—		—			17,916
Investment in affiliates	438,965			29,443		—		(468,408		)	—
Advances to affiliates	16,594			201,673		8,706		(226,973		)	—
Deferred income taxes	11,706			7,132		83		—			18,921
Other assets	6,691			25,009		32,661		—			64,361
Total assets	$	692,391		$	407,869	$	265,253	$	(704,391	)	$	661,122
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Accounts payable	$	10,035		$	41,405	$	3,191	$	—		$	54,631
Accrued expenses	19,294			18,140		1,980		—			39,414
Deferred revenue	12,620			60,672		616		—			73,908
Current portion of long-term debt	11,250			725		387		—			12,362
Deferred compensation and retirement plan obligations	—			177		—		—			177
Other current liabilities	—			10,406		—		(9,010		)	1,396
Total current liabilities	53,199			131,525		6,174		(9,010		)	181,888
Long-term debt	785,665			3,783		10,180		—			799,628
Deferred compensation and retirement plan obligations	—			24,246		13		—			24,259
Advances from affiliates	219,024			414		7,535		(226,973		)	—
Other liabilities	47,996			18,044		2,800		—			68,840
Total liabilities	1,105,884			178,012		26,702		(235,983		)	1,074,615
Total shareholders’ (deficit) equity	(413,493		)	229,857		238,551		(468,408		)	(413,493		)
Total liabilities and shareholders’ deficit	$	692,391		$	407,869	$	265,253	$	(704,391	)	$	661,122

Choice Hotels International, Inc.

Condensed Consolidating Balance Sheet

As of December 31, 2014

(in thousands)



	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	25,290		$	25	$	189,564	$	—		$	214,879
Receivables, net	82,195			1,194		8,292		—			91,681
Other current assets	25,152			33,585		1,875		(15,758		)	44,854
Total current assets	132,637			34,804		199,731		(15,758		)	351,414
Property and equipment, at cost, net	25,300			37,675		14,334		—			77,309
Goodwill	60,620			5,193		—		—			65,813
Franchise rights and other identifiable intangibles, net	4,380			1,479		3,053		—			8,912
Notes receivable, net of allowances	11,847			27,895		699		—			40,441
Investments, employee benefit plans, at fair value	—			17,539		—		—			17,539
Investment in affiliates	424,600			31,139		—		(455,739		)	—
Advances to affiliates	15,670			222,500		7,793		(245,963		)	—
Deferred income taxes	9,418			10,429		699		—			20,546
Other assets	7,228			23,891		34,177		—			65,296
Total assets	$	691,700		$	412,544	$	260,486	$	(717,460	)	$	647,270
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Accounts payable	$	15,588		$	37,970	$	3,566	$	—		$	57,124
Accrued expenses	28,719			32,649		2,162		—			63,530
Deferred revenue	8,467			57,339		576		—			66,382
Current portion of long-term debt	11,250			718		381		—			12,349
Deferred compensation and retirement plan obligations	—			628		—		—			628
Other current liabilities	—			15,843		—		(15,758		)	85
Total current liabilities	64,024			145,147		6,685		(15,758		)	200,098
Long-term debt	767,760			3,966		10,356		—			782,082
Deferred compensation and retirement plan obligations	—			23,978		9		—			23,987
Advances from affiliates	237,973			341		7,649		(245,963		)	—
Other liabilities	50,744			16,116		3,044		—			69,904
Total liabilities	1,120,501			189,548		27,743		(261,721		)	1,076,071
Total shareholders’ (deficit) equity	(428,801		)	222,996		232,743		(455,739		)	(428,801		)
Total liabilities and shareholders' deficit	$	691,700		$	412,544	$	260,486	$	(717,460	)	$	647,270

Condensed Consolidating Statement Of Cash Flows

Choice Hotels International, Inc.

Condensed Consolidating Statement of Cash Flows

For the Three Months Ended March 31, 2015

(Unaudited, in thousands)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated

Net cash provided (used) by operating activities	$	(20,715	)	$	(2,457	)	$	7,337		$	—		$	(15,835	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(4,712		)	(2,060		)	(32		)	—			(6,804		)
Proceeds from sales of assets	—			—			1,592			—			1,592
Equity method investments	—			(1,177		)	(744		)	—			(1,921		)
Purchases of investments, employee benefit plans	—			(1,089		)	—			—			(1,089		)
Proceeds from sales of investments, employee benefit plans	—			925			—			—			925
Collections of mezzanine and other notes receivable	105			—			—			—			105
Advances to and investments in affiliates	—			(35		)	—			35			—
Divestment in affiliates	—			1,592			—			(1,592		)	—
Other items, net	(77		)	—			—			—			(77		)
Net cash provided (used) by investing activities	(4,684		)	(1,844		)	816			(1,557		)	(7,269		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facility	20,700			—			—			—			20,700
Principal payments on long-term debt	(2,813		)	(177		)	(92		)	—			(3,082		)
Proceeds from contributions from affiliates	—			—			35			(35		)	—
Distributions to affiliates	—			—			(1,592		)	1,592			—
Purchases of treasury stock	(6,227		)	—			—			—			(6,227		)
Dividends paid	(11,710		)	—			—			—			(11,710		)
Excess tax benefits from stock-based compensation	—			4,473			—			—			4,473
Proceeds from exercise of stock options	5,619			—			—			—			5,619
Net cash provided (used) by financing activities	5,569			4,296			(1,649		)	1,557			9,773
Net change in cash and cash equivalents	(19,830		)	(5		)	6,504			—			(13,331		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			—			(1,004		)	—			(1,004		)
Cash and cash equivalents at beginning of period	25,290			25			189,564			—			214,879
Cash and cash equivalents at end of period	$	5,460		$	20		$	195,064		$	—		$	200,544

Choice Hotels International, Inc.

Condensed Consolidating Statement of Cash Flows

For the Three Months Ended March 31, 2014

(Unaudited, in thousands)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated

Net cash provided (used) by operating activities	$	4,252		$	(5,359	)	$	6,371		$	—		$	5,264

CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(1,359		)	(1,444		)	(212		)	—			(3,015		)
Equity method investments	—			(98		)	(3,281		)	—			(3,379		)
Purchases of investments, employee benefit plans	—			(890		)	—			—			(890		)
Proceeds from sales of investments, employee benefit plans	—			281			—			—			281
Issuance of mezzanine and other notes receivable	(587		)	—			—			—			(587		)
Collections of mezzanine and other notes receivable	68			—			—			—			68
Proceeds from sale of assets	—			8,703			—			—			8,703
Advances to and investments in affiliates	(1,000		)	(2,314		)	—			3,314			—
Other items, net	(154		)	—			—			—			(154		)
Net cash provided (used) by investing activities	(3,032		)	4,238			(3,493		)	3,314			1,027

CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facility	15,000			—			—			—			15,000
Principal payments on long-term debt	(1,875		)	(174		)	(3		)	—			(2,052		)
Purchase of treasury stock	(4,530		)	—			—			—			(4,530		)
Dividends paid	(10,784		)	—			—			—			(10,784		)
Excess tax benefits from stock-based compensation	—			1,024			—			—			1,024
Proceeds from contributions from affiliates	—			—			3,314			(3,314		)	—
Proceeds from exercise of stock options	1,547			—			—			—			1,547
Net cash provided (used) by financing activities	(642		)	850			3,311			(3,314		)	205
Net change in cash and cash equivalents	578			(271		)	6,189			—			6,496
Effect of foreign exchange rate changes on cash and cash equivalents	—			—			587			—			587
Cash and cash equivalents at beginning of period	9,785			569			157,441			—			167,795
Cash and cash equivalents at end of period	$	10,363		$	298		$	164,217		$	—		$	174,878