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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
OR 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 001-13957 
 
RED LION HOTELS CORPORATION
(Exact name of registrant as specified in its charter)
Washington
91-1032187
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1550 Market St. #425
Denver
Colorado
80202
(Address of Principal Executive Offices)
(Zip Code)

(509) 459-6100
Registrant's telephone number, including area code
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockRLHNew York Stock Exchange
__________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer," "accelerated filer,” and "smaller reporting company" in Rule 12b-2 of the Exchange Act. 
Large accelerated filer  Accelerated filer
Non-accelerated filer  Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes      No  
As of May 4, 2020, there were 25,341,649 shares of the registrant’s common stock outstanding.



TABLE OF CONTENTS
 
Item No.DescriptionPage No.
PART I – FINANCIAL INFORMATION
Item 1
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Comprehensive Income (Loss)
Condensed Consolidated Statements of Stockholders' Equity
Condensed Consolidated Statements of Cash Flows
Notes to Condensed Consolidated Financial Statements
Item 2
Item 3
Item 4
PART II – OTHER INFORMATION
Item 1
Item 1A
Item 2
Item 3
Item 4
Item 5
Item 6


2


PART I – FINANCIAL INFORMATION
Item 1.Financial Statements

RED LION HOTELS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

March 31,
2020
December 31,
2019
 (In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents ($1,914 and $1,819 attributable to VIEs)
$37,775  $29,497  
Restricted cash ($100 and $2,311 attributable to VIEs)
100  2,311  
Accounts receivable ($718 and $1,033 attributable to VIEs), net of an allowance for doubtful accounts of $8,125 and $4,589, respectively
10,701  15,143  
Notes receivable, net286  5,709  
Other current assets ($144 and $311 attributable to VIEs)
5,156  5,849  
Total current assets54,018  58,509  
Property and equipment, net ($11,520 and $29,848 attributable to VIEs)
36,071  68,668  
Operating lease right-of-use assets ($ and $10,810 attributable to VIEs)
5,552  48,283  
Goodwill18,595  18,595  
Intangible assets, net47,845  48,612  
Other assets, net ($ and $703 attributable to VIEs)
2,427  3,851  
Total assets$164,508  $246,518  
LIABILITIES
Current liabilities:
Accounts payable ($543 and $589 attributable to VIEs)
$6,251  $5,510  
Accrued payroll and related benefits ($68 and $349 attributable to VIEs)
1,184  2,709  
Other accrued liabilities ($176 and $455 attributable to VIEs)
4,915  5,469  
Long-term debt, due within one year ($5,576 and $16,984 attributable to VIEs)
5,576  16,984  
Operating lease liabilities, due within one year ($ and $966 attributable to VIEs)
1,519  4,809  
Total current liabilities19,445  35,481  
Long-term debt, due after one year, net of debt issuance costs ($ and $5,576 attributable to VIEs)
  5,576  
Line of credit, due after one year  10,000  
Operating lease liabilities, due after one year ($ and $11,938 attributable to VIEs)
5,339  46,592  
Deferred income and other long-term liabilities ($3 and $28 attributable to VIEs)
941  1,105  
Deferred income taxes678  743  
Total liabilities26,403  99,497  
Commitments and contingencies (Note 10)
STOCKHOLDERS’ EQUITY
RLH Corporation stockholders' equity:
Preferred stock - 5,000,000 shares authorized; $0.01 par value; no shares issued or outstanding
    
Common stock - 50,000,000 shares authorized; $0.01 par value; 25,208,983 and 25,148,005 shares issued and outstanding
253  251  
Additional paid-in capital, common stock179,568  181,608  
Accumulated deficit(44,974) (36,875) 
Total RLH Corporation stockholders' equity134,847  144,984  
Noncontrolling interest3,258  2,037  
Total stockholders' equity138,105  147,021  
Total liabilities and stockholders’ equity$164,508  $246,518  
The accompanying notes are an integral part of these condensed consolidated financial statements.
3


RED LION HOTELS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
 Three Months Ended
March 31,
 20202019
(In thousands, except per share data)
Revenue:
Royalty$4,357  $5,740  
Marketing, reservations and reimbursables5,805  6,729  
Other franchise774  542  
Company operated hotels6,329  12,970  
Other  3  
Total revenues17,265  25,984  
Operating expenses:
Selling, general, administrative and other expenses16,265  7,391  
Company operated hotels6,678  11,545  
Marketing, reservations and reimbursables5,758  7,161  
Depreciation and amortization2,537  3,447  
Asset impairment1,760    
Loss (gain) on asset dispositions, net(7,892) 6  
Transaction and integration costs398  62  
Total operating expenses25,504  29,612  
Operating income (loss)(8,239) (3,628) 
Other income (expense):
Interest expense(506) (882) 
Loss on early retirement of debt(1,309)   
Other income (loss), net48  33  
Total other income (expense)(1,767) (849) 
Income (loss) before taxes(10,006) (4,477) 
Income tax expense (benefit)(752) 82  
Net income (loss)(9,254) (4,559) 
Net (income) loss attributable to noncontrolling interest1,155  286  
Net income (loss) and comprehensive income (loss) attributable to RLH Corporation$(8,099) $(4,273) 
Earnings (loss) per share - basic$(0.32) $(0.17) 
Earnings (loss) per share - diluted$(0.32) $(0.17) 
Weighted average shares - basic25,199  24,603  
Weighted average shares - diluted25,199  24,603  

The accompanying notes are an integral part of these condensed consolidated financial statements.
4


RED LION HOTELS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)

Red Lion Hotels Corporation Stockholders' Equity
Common StockRetained
Earnings (Accumulated Deficit)
RLH Corporation Total EquityEquity Attributable to Noncontrolling Interest
SharesAmountAdditional
Paid-In Capital
Total
Equity
(In thousands, except share data)
Balances, December 31, 201824,570,158  $246  $182,018  $(17,846) $164,418  $21,164  $185,582  
Net income (loss)—  —  —  (4,273) (4,273) (286) (4,559) 
Shared based payment activity56,301  1  685  —  686  —  686  
Distributions to noncontrolling interests—  —  —  —  —  (7,431) (7,431) 
Balances, March 31, 201924,626,459  247  182,703  (22,119) 160,831  13,447  174,278  
Net income (loss)—  —  —  (2,997) (2,997) (774) (3,771) 
Shared based payment activity449,453  4  (1,034) —  (1,030) —  (1,030) 
Balances, June 30, 201925,075,912  251  181,669  (25,116) 156,804  12,673  169,477  
Net income (loss)—  —  —  (3,672) (3,672) (2,980) (6,652) 
Shared based payment activity42,600  1  1,054  —  1,055  —  1,055  
Balances, September 30, 201925,118,512  252  182,723  (28,788) 154,187  9,693  163,880  
Net income (loss)—  —  —  (8,087) (8,087) 2,096  (5,991) 
Shared based payment activity29,493  (1) (739) —  (740) —  (740) 
Reclassification of noncontrolling interest—  —  (376) —  (376) 376    
Distributions to noncontrolling interests—  —  —  —  —  (10,128) (10,128) 
Balances, December 31, 201925,148,005  251  181,608  (36,875) 144,984  2,037  147,021  
Net income (loss)—  —  —  (8,099) (8,099) (1,155) (9,254) 
Shared based payment activity60,978  2  336  —  338  —  338  
Reclassification of noncontrolling interest—  —  (2,376) —  (2,376) 2,376    
Balances, March 31, 202025,208,983  $253  $179,568  $(44,974) $134,847  $3,258  $138,105  

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


RED LION HOTELS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three Months Ended
March 31,
 20202019
 (In thousands)
Operating activities:
Net income (loss)$(9,254) $(4,559) 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization2,537  3,447  
Noncash PIK interest and amortization of debt issuance costs182  47  
Amortization of key money and contract costs264  206  
Amortization of contract liabilities(165) (197) 
Loss (gain) on asset dispositions, net(7,892) 6  
Noncash loss on early retirement of debt750    
Asset impairment1,760    
Deferred income taxes(65) 52  
Stock-based compensation expense373  916  
Provision for doubtful accounts9,739  245  
Change in operating assets and liabilities:
Accounts receivable501  (1,009) 
Key money disbursements(129) (236) 
Other current assets504  (616) 
Accounts payable459  1,383  
Other accrued liabilities(1,858) (1,717) 
Net cash provided by (used in) operating activities(2,294) (2,032) 
Investing activities:
Capital expenditures(782) (1,500) 
Net proceeds from disposition of property and equipment36,896    
Collection of notes receivable  21  
Advances on notes receivable  (90) 
Net cash provided by (used in) investing activities36,114  (1,569) 
Financing activities:
Borrowings on long-term debt, net of discounts  16,513  
Repayment of long-term debt and finance leases(17,717) (170) 
Repayment of line of credit borrowing(10,000)   
Distributions to noncontrolling interest  (7,431) 
Stock-based compensation awards canceled to settle employee tax withholding(81) (342) 
Stock option and stock purchase plan issuances, net and other45  112  
Net cash provided by (used in) financing activities(27,753) 8,682  
Change in cash, cash equivalents and restricted cash:
Net increase (decrease) in cash, cash equivalents and restricted cash6,067  5,081  
Cash, cash equivalents and restricted cash at beginning of period31,808  19,789  
Cash, cash equivalents and restricted cash at end of period$37,875  $24,870  

The accompanying notes are an integral part of these condensed consolidated financial statements.

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RED LION HOTELS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.Organization

Red Lion Hotels Corporation ("RLH Corporation," "RLHC," "we," "our," "us," or "our company") is a NYSE-listed hospitality and leisure company (ticker symbol: RLH) doing business as RLH Corporation and primarily engaged in the franchising and ownership of hotels under the following proprietary brands: Hotel RL, Red Lion Hotels, Red Lion Inn & Suites, GuestHouse, Settle Inn, Americas Best Value Inn, Canadas Best Value Inn, Signature and Signature Inn, Knights Inn, and Country Hearth Inns & Suites.

2.Summary of Significant Accounting Policies

The unaudited condensed consolidated financial statements included herein were prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations.

The Consolidated Balance Sheet as of December 31, 2019 was derived from the audited balance sheet as of such date. We believe the disclosures included herein are adequate; however, they should be read in conjunction with the consolidated financial statements and the notes thereto for the year ended December 31, 2019, filed with the SEC in our annual report on Form 10-K on February 27, 2020.

In the opinion of management, these unaudited condensed consolidated financial statements contain all of the adjustments of a normal and recurring nature necessary to present fairly our Condensed Consolidated Balance Sheets, the Condensed Consolidated Statements of Comprehensive Income (Loss), the Condensed Consolidated Statements of Stockholders' Equity, and the Condensed Consolidated Statements of Cash Flows. The results of operations for the periods presented may not be indicative of that which may be expected for a full year or for any other fiscal period.

New Accounting Pronouncements Not Yet Adopted

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments, as amended by multiple subsequent ASUs, which will change how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The ASU will replace the current "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost. For trade and other receivables, held to maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. In October 2019, an update was issued to the standard that deferred the effective date of the guidance to the first quarter of 2023 for smaller reporting companies such as us. We are currently evaluating the effects of this ASU on our financial statements, and such effects have not yet been determined.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which amends the existing guidance related to the accounting for income taxes. The ASU eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The ASU is effective the first quarter of 2021, with early adoption permitted. We are currently evaluating the effects of this ASU on our financial statements, and such effects have not yet been determined.

We have assessed the potential impact of other recently issued, but not yet effective, accounting standards and determined that the provisions are either not applicable to us or are not anticipated to have a material impact on our consolidated financial statements.

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3. Business Segments

We have two operating segments: franchised hotels and company operated hotels. The "other" segment consists of miscellaneous revenues and expenses, cash and cash equivalents, certain receivables, certain property and equipment and general and administrative expenses, which are not specifically associated with an operating segment. Management reviews and evaluates the operating segments exclusive of interest expense, income taxes and certain corporate expenses; therefore, they have not been allocated to the operating segments. We allocate selling, general, administrative and other expenses to our operating segments. All balances have been presented after the elimination of inter-segment and intra-segment revenues and expenses.

Selected financial information is provided below (in thousands):
Three Months Ended March 31, 2020Franchised HotelsCompany Operated HotelsOtherTotal
Revenue$10,936  $6,329  $  $17,265  
Operating expenses:
Segment and other operating expenses17,540  7,030  4,131  28,701  
Depreciation and amortization882  866  789  2,537  
Asset impairment  1,760    1,760  
Transaction and integration costs  32  366  398  
Loss (gain) on asset dispositions, net  (7,892)   (7,892) 
Operating income (loss)$(7,486) $4,533  $(5,286) $(8,239) 
Identifiable assets as of March 31, 2020$82,199  $65,523  $16,786  $164,508  

Three Months Ended March 31, 2019Franchised HotelsCompany Operated HotelsOtherTotal
Revenue$13,011  $12,970  $3  $25,984  
Operating expenses:
Segment and other operating expenses9,622  12,461  4,014  26,097  
Depreciation and amortization914  1,956  577  3,447  
Transaction and integration costs62      62  
Loss (gain) on asset dispositions, net  6    6  
Operating income (loss)$2,413  $(1,453) $(4,588) $(3,628) 
Identifiable assets as of December 31, 2019$91,832  $138,477  $16,209  $246,518  

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4.  Variable Interest Entities

Our joint venture entities have been determined to be variable interest entities ("VIEs") because our voting rights are not proportional to our financial interest and substantially all of each joint venture's activities involve and are conducted on our behalf. We have determined that we are the primary beneficiary as (a) we exert power over two of the entity's key activities (hotel operations and property renovations) and share power over the remaining key activities with our joint venture partners, which do not have the unilateral ability to exercise kick-out rights, and (b) we have the obligation to absorb losses and right to receive benefits that could be significant to the entity through our equity interest and management fees. As a result, we consolidate the assets, liabilities, and results of operations of (1) RL Venture LLC ("RL Venture"), (2) RLS Atla Venture LLC ("RLS Atla Venture"), and (3) RLS DC Venture LLC ("RLS DC Venture"). The equity interests owned by our joint venture partners are reflected as a noncontrolling interest in the condensed consolidated financial statements.

In November 2019, RLH Atlanta LLC, which is wholly owned by RLS Atla Venture, sold the Red Lion Hotel Atlanta International Airport Hotel. Upon completion of the sale, no remaining distributions to our joint venture partner, Shelbourne Falcon Big Peach Investors, LLC, were required and the remaining noncontrolling interest for the entity was reclassified to Additional paid-in capital on the Condensed Consolidated Balance Sheets.

There were no cash contributions or distributions by partners to any of the joint venture entities during the three months ended March 31, 2020 or 2019 except as otherwise described below.

RL Venture

For all periods presented, RLH Corporation owns 55% of RL Venture and our JV Partner owns 45%. In March 2019, secured loans with an aggregate principal of $16.6 million were entered into for two RL Venture properties, Hotel RL Salt Lake City and Hotel RL Olympia. Shortly thereafter the net loan proceeds were distributed to us and our joint venture partner in accordance with our respective ownership percentages. In December 2019, the Hotel RL Salt Lake City sold for $33.0 million. Proceeds from the sale were used to repay in full the secured loan entered into in 2019 for the Hotel RL Salt Lake City property. As of March 31, 2020, RL Venture has one remaining property, the Hotel RL Olympia.

Cash distributions may also be made periodically based on calculated distributable income. There were no distributions made during the three months ended March 31, 2020. During the three months ended March 31, 2019, cash distributions totaled $16.5 million, of which RLH Corporation received $9.1 million.

RLS DC Venture

As of December 31, 2019, RLH Corporation owned 55% of RLS DC Venture and our Joint Venture Partner owned 45%. In May 2019, a secured loan with principal and accrued exit fee of $17.4 million was executed by RLS DC Venture. The net loan proceeds were used to pay off the previous debt with a principal balance of approximately $15.9 million. There were no cash distributions resulting from the refinancing. In February 2020, the Hotel RL in Washington DC, which was wholly-owned by RLS DC Venture, was sold for $16.4 million. Using proceeds from the sale, together with the release of $2.3 million in restricted cash held by CP Business Finance I, LP, RLS DC Venture repaid the remaining outstanding principal balance and accrued exit fee under the secured loan agreement. The $2.4 million balance remaining in non-controlling interest for the entity was reclassified to Additional paid-in capital on the Condensed Consolidated Balance Sheets as no remaining distributions to the joint venture partner are required.

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5. Property and Equipment

Property and equipment is summarized as follows (in thousands):
March 31,
2020
December 31,
2019
Buildings and equipment$47,186  $101,619  
Furniture and fixtures6,718  12,407  
Landscaping and land improvements493  2,038  
54,397  116,064  
Less accumulated depreciation(29,099) (57,491) 
25,298  58,573  
Land6,871  6,871  
Construction in progress3,902  3,224  
Property and equipment, net$36,071  $68,668  

A novel strain of coronavirus (COVID-19) was first identified in Wuhan, China in December 2019, and subsequently declared a pandemic by the World Health Organization on March 11, 2020. To date, COVID-19 has surfaced in nearly all regions around the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas. The economic impact of the pandemic thus far has been extremely punitive to travel related businesses across the nation, significantly affecting the operating results of companies within the hospitality industry. We considered the actual and anticipated economic impacts of the COVID-19 pandemic on our financial results to be an indicator that the carrying value of our long-lived assets might not be recoverable. Accordingly, we performed a test for recoverability using probability-weighted undiscounted cash flows on our long-lived assets as of March 31, 2020.

Only the Red Lion Hotel Seattle Airport, one of our company operated hotel properties under a lease through February 2024, did not recover the carrying value of the long-lived asset group in the test for recoverability, due to the short useful life and lack of terminal value. After calculating the fair value of the Red Lion Hotel Seattle Airport property long-lived asset group, we recognized an impairment loss of $1.8 million. The fair value was determined based on a discounted cash flow analysis, which is a Level 3 fair value measurement. The impairment loss was allocated to the assets within the long-lived asset group on a pro rata basis, with $1.5 million applied against the hotel building leasehold interest, included within Property and equipment, net and $0.3 million applied against the Operating lease right-of-use asset on the Condensed Consolidated Balance Sheets. There were no other impairments of our long-lived assets.

During the three months ended March 31, 2020, we sold the Hotel RL Washington DC joint venture hotel property, and our leasehold interest in the Red Lion Anaheim for a combined net gain of $7.9 million. There were no properties sold during the three months ended March 31, 2019.

6.  Goodwill and Intangible Assets

Interim Impairment Assessment

We considered the actual and anticipated economic impacts of the COVID-19 pandemic on our financial results to be an indicator that the fair value of our goodwill and indefinite-lived intangible assets might be less than their carrying amounts. Accordingly, we performed quantitative assessments to measure the fair values of these assets as of March 31, 2020. No impairments were identified based on the quantitative impairment calculations of our goodwill and other indefinite-lived intangible assets.

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The following table summarizes the balances of goodwill and other intangible assets (in thousands):
March 31,
2020
December 31,
2019
Goodwill$18,595  $18,595  
Intangible assets
Brand name - indefinite lived$32,532  $32,532  
Trademarks - indefinite lived128  128  
Brand name - finite lived, net3,376  3,554  
Customer contracts - finite lived, net11,809  12,398  
Total intangible assets, net$47,845  $48,612  

The following table summarizes the balances of amortized customer contracts and finite-lived brand names (in thousands):
March 31,
2020
December 31,
2019
Customer contracts$20,773  $20,773  
Brand name - finite lived5,395  5,395  
Accumulated amortization(10,983) (10,216) 
Net carrying amount$15,185  $15,952  

7.  Revenue from Contracts with Customers

Inner Circle
In July 2019, the parent entities for eight Inner Circle franchisees and the operating entities for two other Inner Circle franchisees all filed for voluntary bankruptcy protection under Chapter 11 of the United Stated Bankruptcy Code.
As of March 31, 2020 there was approximately $7.1 million in accounts receivable and notes receivable balances related to these franchisees, including unamortized key money converted to notes receivable upon termination of contracts, of which $0.8 million had been previously allowed for. The remaining balances were supported through a security interest in property improvements and an equity interest in one of the leaseholds, as well as a personal guarantee of the owner. However, during the first quarter of 2020, the first lienholder for the collateral property indicated its desire to exercise its right to foreclose on the leasehold interest and liquidate the property. Due to the timing of this action in conjunction with the decline in fair value of the collateral property due to the economic impacts of the COVID-19 pandemic, we have concluded the fair value of the collateral no longer supports any of the remaining balances and as such we have recognized bad debt expense of $6.3 million on the previously unreserved balances.
We recognized $0.1 million and $0.3 million of royalty income from these franchisees during the three months ended March 31, 2020 and 2019, respectively.

Other Allowances
As of March 31, 2020, we evaluated the economic impacts of the COVID-19 pandemic and historical collection information on the collectibility of our accounts receivable and notes receivable balances. We determined it was appropriate to recognize additional bad debt expense of $3.4 million, primarily related to large balances under legal dispute, aged balances from terminated agreements, or aged balances placed with third party collections.









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The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):
Financial Statement Line Item(s)March 31,
2020
December 31,
2019
Accounts receivableAccounts receivable, net$10,701  $15,143  
Key money disbursedOther current assets and Other assets, net1,875  2,228  
Capitalized contract costsOther current assets and Other assets, net833  941  
Contract liabilitiesOther accrued liabilities and Deferred income and other long-term liabilities1,397  1,448  

Significant changes in the key money disbursements, capitalized contract costs, and contract liabilities balances during the period are as follows (in thousands):
Key Money DisbursedCapitalized Contract CostsContract Liabilities
Balance as of January 1, 2020$2,228  $941  $1,448  
Key money disbursed129  —  —  
Key money converted from accounts receivable247  —  —  
Key money converted to notes receivable(639) —  —  
Costs incurred to acquire contracts—  66  —  
Cash received in advance—  —  114  
Revenue or expense recognized that was included in the January 1, 2020 balance(83) (172) (162) 
Revenue or expense recognized in the period for the period(7) (2) (3) 
Balance as of March 31, 2020$1,875  $833  $1,397  

Estimated revenues and expenses expected to be recognized related to performance obligations that were unsatisfied as of March 31, 2020, including revenues related to application, initiation and other fees were as follows (in thousands):
Year Ending December 31,Contra RevenueExpenseRevenue
2020 (remainder)$254  $263  $413  
2021267  183  361  
2022235