Summary
Marriott International, Inc. (MAR) has filed an 8-K report on September 9, 2011, disclosing significant non-cash impairment charges related to its Timeshare segment in anticipation of its spin-off into Marriott Vacations Worldwide Corporation. The company plans to monetize excess undeveloped land and built inventory within the Timeshare segment, leading to a write-down of these assets due to current market conditions and a strategy to accelerate cash flow. In addition to the asset write-downs, Marriott International also identified impairments in certain international deferred tax assets that will be transferred to Marriott Vacations Worldwide. These impairments are due to the unlikelihood of Marriott Vacations Worldwide being able to realize their value. The total estimated impact of these combined charges is a pre-tax non-cash impairment charge between $275 million and $325 million, resulting in after-tax non-tax impairment charges ranging from $215 million to $260 million for the third quarter of 2011. Investors should monitor the upcoming 10-Q filing for further details.
Key Highlights
- 1Marriott International is incurring significant non-cash impairment charges impacting its Timeshare segment.
- 2The charges are primarily related to a plan to monetize excess undeveloped land and built inventory within the Timeshare segment.
- 3These actions are designed to accelerate cash flow in preparation for the spin-off of the Timeshare business into Marriott Vacations Worldwide Corporation.
- 4Impairment of certain international deferred tax assets is also contributing to the charges.
- 5Total after-tax non-cash impairment charges are estimated to be between $215 million and $260 million for the third quarter of 2011.
- 6The company expects to provide more detailed information in its third-quarter 10-Q filing.