|
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As of December 31, 2004 and 2003, a liability of $2.4 million and $1.7 million, respectively, related to the SERP was included in other non-current liabilities in the accompanying consolidated balance sheets. The components of the benefit obligation are as follows:
| |
December 31, |
 |
|
| |
2004 |
|
2003 |
|
|
|
| |
(In thousands) |
| Projected benefit obligation |
$ |
4,365 |
|
$ |
3,283 |
|
| Unrecognized prior service cost |
|
(1,000 |
) |
|
(931 |
) |
| Unrecognized net (gain)/loss |
|
(1,170 |
) |
|
(858 |
) |
|
|
|
| Net amount recognized |
|
2,195 |
|
|
1,494 |
|
| Intangible asset |
|
192 |
|
|
237 |
|
|
|
|
| Accumulated benefit obligation |
$ |
2,387 |
|
$ |
1,731 |
|
|
|
|
|
|
|
|
The following is a reconciliation of the changes in the projected benefit obligation for the years ended December 31, 2004 and 2003:
| |
December 31, |
|
|
| |
2004 |
|
2003 |
|
|
|
| |
(In thousands) |
| Projected benefit obligation, beginning |
$ |
3,283 |
|
$ |
1,980 |
|
| Service cost |
|
416 |
|
|
259 |
|
| Interest cost |
|
205 |
|
|
139 |
|
| Amendments |
|
121 |
|
|
— |
|
| Actuarial (gain)/loss |
|
340 |
|
|
905 |
|
|
|
|
| Projected benefit obligation, ending |
$ |
4,365 |
|
$ |
3,283 |
|
|
|
|
|
|
|
|
The Company sponsors two non-qualified retirement savings and investment plans for certain employees and senior executives whose pre-tax deferrals are limited under the Company’s 401(k) plan. Employee and Company contributions are maintained in separate irrevocable trusts. Legally, the assets of the 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, 2004 and 2003, the Company had recorded a deferred compensation liability of $19.0 million and $13.3 million, respectively, in other non-current liabilities in the accompanying consolidated balance sheets. 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 $17.2 million and $12.1 million as of December 31, 2004 and 2003, respectively, and are recorded at their fair value, based on quoted market prices, in other non-current assets on the accompanying consolidated balance sheets. 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).
|
