Financial Information
RETURN ON INVESTED CAPITAL** — UNAUDITED
The following table reconciles income (loss) from continuing operations attributable to Marriott to earnings (losses) before interest expense and income taxes:
The following table reconciles assets to invested capital:
** Denotes a non-GAAP financial measure.
1. Timeshare interest represents (for periods before the November 21, 2011 spin-off of our timeshare operations and timeshare development business) previously capitalized interest that was a component of product cost.
2. “Deferred tax assets, net” was also net of “current deferred income tax liabilities” of $13 million, $12 million, $19 million, and $19 million for year-ends 2012, 2011, 2010, and 2009, respectively, and zero for each prior year-end presented.
3. Calculated as “Invested capital” for the current year and prior year, divided by two, with the exception of 2010. To reflect our adoption of ASU No. 2009-16 and ASU No. 2009-17 on the first day of fiscal year 2010, we calculate “Average invested capital” for 2010 as the average of (1) the 2010 beginning balance (reflecting the impact of adopting those standards); and (2) the Year-End 2010 balance.
4. As discussed in more detail in Footnote No. 16, “Spin-off” of the Notes to our Financial Statements in this report, on November 21, 2011 we completed a spin-off of our timeshare operations and timeshare development business through a special tax-free dividend to our shareholders of all of the issued and outstanding common stock of our then wholly owned subsidiary Marriott Vacations Worldwide Corporation (“MVW”). From the spin-off date, Marriott no longer beneficially owned any shares of MVW common stock and for periods after the spin-off date does not consolidate MVW’s financial results as part of Marriott’s financial reporting. However, because of Marriott’s significant continuing involvement in MVW future operations (by virtue of the license and other agreements between Marriott and MVW), we continue to include our former Timeshare segment’s historical financial results for periods before the spin-off date in our historical financial results as a component of continuing operations. The results for 2011 include the results of the former Timeshare segment before the spin-off date while results for all earlier fiscal years include the results of the former Timeshare segment for those entire fiscal years.
Adjusted Measures That Reflect the Timeshare Spin-off As If It Had Occurred On the First Day of 2011 (“Timeshare Spin-off Adjustments”)
See Footnote No. 16, “Spin-off” of the Notes to our Financial Statements in this report for additional information on the spin-off of our timeshare operations and timeshare development business. In order to perform year-over-year comparisons on a comparable basis, management evaluates non-GAAP measures that, for certain periods before the spin-off, assume the spin-off had occurred on the first day of 2011. Please see the “Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA” caption within the Management’s Discussion and Analysis section of this report for additional information on the Timeshare Spin-off Adjustments.
We provide the following adjusted measures that reflect Timeshare Spin-off Adjustments for illustrative and informational purposes only. These adjusted measures are not necessarily indicative of, and we do not purport that they represent, what our operating results would have been had the spin-off actually occurred on the first day of 2011. This information also does not reflect certain financial and operating benefits we expect to realize as a result of the 2011 Timeshare spin-off.
Adjusted Measures That Exclude 2011 Other Charges
Management evaluates non-GAAP measures that exclude 2011 other charges of $28 million pre-tax ($17 million after-tax) because those non-GAAP measures allow for period-over-period comparisons of our on-going core operations before the impact of material charges. These non-GAAP measures also facilitate management’s comparison of results from our on-going operations before material charges with results from other lodging companies. Please see the “Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA” caption within the Management’s Discussion and Analysis section of this report for additional information on these 2011 other charges.