Condensed Consolidating Financial Statements (Tables)

6 Months Ended

Jun. 30, 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 June 30, 2015

(Unaudited, in thousands)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES:
Royalty fees	$	75,564		$	39,280		$	10,549		$	(44,210	)	$	81,183
Initial franchise and relicensing fees	5,624			—			192			—			5,816
Procurement services	8,440			—			149			—			8,589
Marketing and reservation	122,627			124,342			3,951			(117,798		)	133,122
Other	2,973			—			473			—			3,446
Total revenues	215,228			163,622			15,314			(162,008		)	232,156

OPERATING EXPENSES:
Selling, general and administrative	36,705			35,307			5,320			(44,210		)	33,122
Marketing and reservation	127,748			119,617			3,555			(117,798		)	133,122
Depreciation and amortization	794			1,952			249			—			2,995
Total operating expenses	165,247			156,876			9,124			(162,008		)	169,239

Operating income	49,981			6,746			6,190			—			62,917

OTHER INCOME AND EXPENSES, NET:
Interest expense	10,947			1			109			—			11,057
Equity in earnings of consolidated subsidiaries	(10,533		)	240			—			10,293			—
Other items, net	(254		)	(825		)	60			—			(1,019		)
Total other income and expenses, net	160			(584		)	169			10,293			10,038

Income from continuing operations before income taxes	49,821			7,330			6,021			(10,293		)	52,879
Income taxes	14,008			3,206			(148		)	—			17,066
Income from continuing operations, net of income taxes	35,813			4,124			6,169			(10,293		)	35,813
Net income from discontinued operations, net of income taxes	—			—			—			—			—
Net income	$	35,813		$	4,124		$	6,169		$	(10,293	)	$	35,813

Choice Hotels International, Inc.

Condensed Consolidating Statement of Income

For the Three Months Ended June 30, 2014

(Unaudited, in thousands)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES:
Royalty fees	$	71,090		$	36,759		$	12,360		$	(42,539	)	$	77,670
Initial franchise and relicensing fees	4,435			—			287			—			4,722
Procurement services	7,842			—			178			—			8,020
Marketing and reservation	92,289			94,301			5,034			(87,858		)	103,766
Other	3,342			1			143			—			3,486
Total revenues	178,998			131,061			18,002			(130,397		)	197,664
OPERATING EXPENSES:
Selling, general and administrative	37,137			33,503			3,312			(42,539		)	31,413
Marketing and reservation	96,232			90,658			4,734			(87,858		)	103,766
Depreciation and amortization	756			1,416			160			—			2,332
Total operating expenses	134,125			125,577			8,206			(130,397		)	137,511
Operating income	44,873			5,484			9,796			—			60,153
OTHER INCOME AND EXPENSES, NET:
Interest expense	10,703			1			6			—			10,710
Equity in earnings of consolidated subsidiaries	(13,188		)	(11		)	—			13,199			—
Other items, net	(297		)	(450		)	(44		)	—			(791		)
Total other income and expenses, net	(2,782		)	(460		)	(38		)	13,199			9,919
Income from continuing operations before income taxes	47,655			5,944			9,834			(13,199		)	50,234
Income taxes	12,255			2,380			320			—			14,955
Income from continuing operations, net of income taxes	35,400			3,564			9,514			(13,199		)	35,279
Income from discontinued operations, net of income taxes	—			121			—			—			121
Net income	$	35,400		$	3,685		$	9,514		$	(13,199	)	$	35,400

Condensed Consolidating Statement of Comprehensive Income

Choice Hotels International, Inc.

Condensed Consolidating Statement of Comprehensive Income

For the Three Months Ended June 30, 2015

(Unaudited, in thousands)



	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated

Net income	$	35,813	$	4,124	$	6,169	$	(10,293	)	$	35,813
Other comprehensive income (loss), net of tax:
Amortization of loss on cash flow hedge	216		—		—		—			216
Foreign currency translation adjustment	175		—		175		(175		)	175
Other comprehensive income (loss), net of tax	391		—		175		(175		)	391
Comprehensive income	$	36,204	$	4,124	$	6,344	$	(10,468	)	$	36,204

Choice Hotels International, Inc.

Condensed Consolidating Statement of Comprehensive Income

For the Three Months Ended June 30, 2014

(Unaudited, in thousands)



	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated

Net income	$	35,400	$	3,685	$	9,514	$	(13,199	)	$	35,400
Other comprehensive income (loss), net of tax:
Amortization of loss on cash flow hedge	216		—		—		—			216
Foreign currency translation adjustment	509		—		509		(509		)	509
Other comprehensive income (loss), net of tax	725		—		509		(509		)	725
Comprehensive income	$	36,125	$	3,685	$	10,023	$	(13,708	)	$	36,125

Condensed Consolidating Balance Sheet

Choice Hotels International, Inc.

Condensed Consolidating Balance Sheet

As of June 30, 2015

(Unaudited, in thousands)



	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	25,613		$	29	$	205,008	$	—		$	230,650
Receivables, net	108,933			1,971		8,085		—			118,989
Other current assets	19,249			39,876		3,675		(14,862		)	47,938
Total current assets	153,795			41,876		216,768		(14,862		)	397,577
Property and equipment, at cost, net	32,691			35,698		13,986		—			82,375
Goodwill	60,620			5,193		—		—			65,813
Franchise rights and other identifiable intangibles, net	3,257			1,168		2,843		—			7,268
Notes receivable, net of allowances	11,720			38,849		659		—			51,228
Investments, employee benefit plans, at fair value	—			18,274		—		—			18,274
Investment in affiliates	449,034			28,675		—		(477,709		)	—
Advances to affiliates	16,581			242,822		7,059		(266,462		)	—
Deferred income taxes	10,635			9,011		83		—			19,729
Other assets	7,376			21,793		31,160		—			60,329
Total assets	$	745,709		$	443,359	$	272,558	$	(759,033	)	$	702,593
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Accounts payable	$	10,278		$	58,904	$	3,025	$	—		$	72,207
Accrued expenses	28,797			25,542		2,198		—			56,537
Deferred revenue	7,595			62,077		730		—			70,402
Current portion of long-term debt	—			730		394		—			1,124
Deferred compensation and retirement plan obligations	—			174		—		—			174
Other current liabilities	—			16,104		—		(14,862		)	1,242
Total current liabilities	46,670			163,531		6,347		(14,862		)	201,686
Long-term debt	786,417			3,598		10,020		—			800,035
Deferred compensation and retirement plan obligations	—			24,220		17		—			24,237
Advances from affiliates	256,527			286		9,649		(266,462		)	—
Other liabilities	41,562			17,765		2,775		—			62,102
Total liabilities	1,131,176			209,400		28,808		(281,324		)	1,088,060
Total shareholders’ (deficit) equity	(385,467		)	233,959		243,750		(477,709		)	(385,467		)
Total liabilities and shareholders’ deficit	$	745,709		$	443,359	$	272,558	$	(759,033	)	$	702,593

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 Six Months Ended June 30, 2015

(Unaudited, in thousands)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated

Net cash provided (used) by operating activities	$	25,842		$	(5,396	)	$	18,141		$	(657	)	$	37,930

CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(11,351		)	(3,187		)	(16		)	—			(14,554		)
Proceeds from sales of assets	29			4,661			1,593			—			6,283
Contributions to equity method investments	—			(1,659		)	(787		)	—			(2,446		)
Distributions from equity method investments	—			—			270			—			270
Purchases of investments, employee benefit plans	—			(1,736		)	—			—			(1,736		)
Proceeds from sales of investments, employee benefit plans	—			1,087			—			—			1,087
Issuance of mezzanine and other notes receivable	(1,500		)	—			—			—			(1,500		)
Collections of mezzanine and other notes receivable	3,567			—			—			—			3,567
Advances to and investment in affiliates	—			(35		)	—			35			—
Divestment in affiliates	—			2,122			—			(2,122		)	—
Other items, net	(261		)	—			—			—			(261		)
Net cash provided (used) by investing activities	(9,516		)	1,253			1,060			(2,087		)	(9,290		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facility	13,000			—			—			—			13,000
Principal payments on long-term debt	(5,625		)	(356		)	(188		)	—			(6,169		)
Purchases of treasury stock	(6,244		)	—			—			—			(6,244		)
Dividends paid	(22,940		)	—			(657		)	657			(22,940		)
Excess tax benefits from stock-based compensation	110			4,503			—			—			4,613
Proceeds from contributions from affiliates	—			—			35			(35		)	—
Distributions to affiliates	—			—			(2,122		)	2,122			—
Proceeds from exercise of stock options	5,696			—			—			—			5,696
Net cash provided (used) by financing activities	(16,003		)	4,147			(2,932		)	2,744			(12,044		)
Net change in cash and cash equivalents	323			4			16,269			—			16,596
Effect of foreign exchange rate changes on cash and cash equivalents	—			—			(825		)	—			(825		)
Cash and cash equivalents at beginning of period	25,290			25			189,564			—			214,879
Cash and cash equivalents at end of period	$	25,613		$	29		$	205,008		$	—		$	230,650

Choice Hotels International, Inc.

Condensed Consolidating Statement of Cash Flows

For the Six Months Ended June 30, 2014

(Unaudited, in thousands)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated

Net cash provided (used) by operating activities	$	53,132		$	(1,383	)	$	14,740		$	(657	)	$	65,832

CASH FLOWS FROM INVESTING ACTIVITIES
Investment in property and equipment	(1,797		)	(5,235		)	(282		)	—			(7,314		)
Proceeds from sales of assets	27			12,189			—			—			12,216
Equity method investments	—			(1,283		)	(5,663		)	—			(6,946		)
Purchases of investments, employee benefit plans	—			(1,220		)	—			—			(1,220		)
Proceeds from sales of investments, employee benefit plans	—			641			—			—			641
Issuance of mezzanine and other notes receivable	(2,223		)	—			—			—			(2,223		)
Collections of mezzanine and other notes receivable	9,743			—			—			—			9,743
Advances to and investments in affiliates	(1,000		)	(4,842		)	—			5,842			—
Other items, net	(296		)	—			—			—			(296		)
Net cash provided (used) in investing activities	4,454			250			(5,945		)	5,842			4,601

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt	(3,750		)	(349		)	(13		)	—			(4,112		)
Proceeds from the issuance of long-term debt	—			—			26			—			26
Proceeds from contributions from affiliates	—			—			5,842			(5,842		)	—
Purchases of treasury stock	(4,544		)	—			—			—			(4,544		)
Dividends paid	(21,957		)	—			(657		)	657			(21,957		)
Excess tax benefits from stock-based compensation	295			1,024			—			—			1,319
Proceeds from exercise of stock options	1,547			—			—			—			1,547
Net cash provided (used) by financing activities	(28,409		)	675			5,198			(5,185		)	(27,721		)

Net change in cash and cash equivalents	29,177			(458		)	13,993			—			42,712
Effect of foreign exchange rate changes on cash and cash equivalents	—			—			1,035			—			1,035
Cash and cash equivalents at beginning of period	9,785			569			157,441			—			167,795
Cash and cash equivalents at end of period	$	38,962		$	111		$	172,469		$	—		$	211,542