In Best Western's financial statements, where are the investments in certificates of deposits, mutual funds, common shares, U.S. treasury and government agency bonds, corporate bonds, mortgage and asset-backed securities, and municipal and provincial notes and bonds included?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
| income tax provision: | ||||
|---|---|---|---|---|
| 2024 | 2023 | |||
| (in thousands) | $ % | $ | % | |
| Income taxes computed at statutory rates | $ 17,974 21.0% | $ 24,478 | 21.0% | |
| State taxes, net of federal benefit | 3,350 3.9% | 4,445 | 3.8% | |
| Valuation allowance | 1,167 1.4% | 150 | 0.1% | |
| Non-deductible meals and entertainment | 730 0.8% | 775 | 0.7% | |
| Other non-deductible items | 166 0.2% | 272 | 0.2% | |
| Research and development and foreign tax credits | (1,287) (1.5%) | (1,041) | (0.9%) | |
| Other | (871) (1.0%) | (367) | (0.3%) | |
| Foreign-derived intangible income | (749) (0.9%) | (1,214) | (1.0%) | |
| Income tax provision | $ 20,480 23.9% | $ 27,498 | 23.6% |
(g) Investments
Investments consist of certificates of deposits, mutual funds, common shares, U.S. treasury and government agency bonds, corporate bonds, mortgage and asset-backed securities, and municipal and provincial notes and bonds, and are classified as short-term or long-term investments based on maturity dates for debt securities, and equity securities are classified as long-term based on the Company's liquidity position. The Company has not recognized any investment impairments during the years ended November 30, 2024 and 2023 (see note 3).
(h) Restricted Rabbi Trust Investments
The Company has a Nonqualified Deferred Compensation Plan ("NQP") in which key management employees of the Company, as determined by the Board of Directors, are selected to participate. The NQP was restated effective December 1, 2020, to provide for the use of a Rabbi Trust and to amend the design of the Company's contributions. Effective December 1, 2020, the Company established a NQP Rabbi Trust ("Trust"), whereby the Company makes contributions to this Trust to provide the Company a source of funds to assist in satisfying the NQP liability. The investments included in this Trust are carried at fair value and recorded in Restricted Rabbi Trust investments in the Consolidated Statements of Financial Position (see note 13).
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to Best Western's 2025 Franchise Disclosure Document, the investments in certificates of deposits, mutual funds, common shares, U.S. treasury and government agency bonds, corporate bonds, mortgage and asset-backed securities, and municipal and provincial notes and bonds are detailed in Item 23, specifically within the discussion of 'Investments'. These investments are classified as either short-term or long-term based on the maturity dates for debt securities. Equity securities are classified as long-term based on Best Western's liquidity position. The investments included in the Rabbi Trust are carried at fair value and recorded in Restricted Rabbi Trust investments in the Consolidated Statements of Financial Position.
For example, the FDD provides a breakdown of these investments in thousands of dollars. As of 2023, Best Western held $2,253 in investments in certificates of deposits, $2,043 in corporate bonds, and no holdings in U.S. treasury and government agency bonds. In 2022, the company held $5,250 in investments in certificates of deposits, $10,074 in corporate bonds, and $2,020 in U.S. treasury and government agency bonds. The total held-to-maturity debt securities amounted to $4,296 in 2023 and $17,344 in 2022.
Additionally, the FDD provides a breakdown of the fair value of these investments. Mutual funds are valued at $75,070, mortgage and asset-backed securities at $74,452, corporate bonds at $64,357, common shares at $44,630, U.S. treasury and government agency bonds at $32,649, municipal and provincial notes and bonds at $3,622, investments in certificates of deposits at $2,253, and Restricted Rabbi Trust investments at $17,037. The total value of these investments is $314,070. These figures are crucial for prospective franchisees to understand the financial stability and investment strategies of Best Western.