Special Items
The Company’s special items netted to a pre-tax charge of $431 million ($281 million aftertax)
in the fourth quarter of 2009 compared to $195 million ($133 million after-tax) in the
same period of 2008.
The following represents a reconciliation of income from continuing operations before
special items to income from continuing operations including special items (in millions,
except per share data):
Three Months Ended
December 31,
Year Ended
December 31,
2009 2008 2009 2008
$ 95 $ 88 Income from continuing operations before special items ............. $ 188 $ 400
$ 0.51 $ 0.49 EPS before special items (a) ......................................................... $ 1.02 $ 2.16
Special Items
(355) (109) Restructuring, goodwill impairment and other special charges, net (b) (379) (141)
(42) (86) Loss on asset dispositions and impairments, net (c)……………… (91) (98)
(17) ― Debt extinguishment (d) ................................................................ (17) ―
(17) ― Cost of sales adjustments (e) ...................................................... (17) ―
(431) (195) Total special items – pre-tax ........................................................ (504) (239)
113 62 Income tax benefit for special items (f) ......................................... 158 88
37 ― Foreign tax credits (g) .................................................................... 37 ―
― ― Italian income tax incentive (h) ...................................................... 120 ―
(281) (133) Total special items – after-tax....................................................... (189) (151)
$ (186) $ (45) Income (loss) from continuing operations .................................... $ (1) $ 249
$ (1.03) $ (0.25) EPS (loss per share) including special items ............................... $ 0.00 $ 1.34
(a) Fully diluted shares for the three months ended December 31, 2009 and 2008 are 187 million and 181 million,
respectively. Fully diluted shares for the twelve months ended December 31, 2009 are 184 million.
(b) During the three months ended December 31, 2009 and 2008, the Company recorded restructuring charges of $10
million and $30 million, respectively, consisting primarily of severance and consulting charges related to its ongoing
initiative to streamline operations and eliminate costs.
The three months ended December 31, 2009, also includes impairment charges of $255 million, following an in depth
review of the vacation ownership business which resulted in a decision not to develop certain vacation ownership sites
and future phases of certain existing projects. Additionally, the three months ended December 31, 2009 includes a
$90 million charge related to the impairment of goodwill associated with the vacation ownership business.
The three months ended December 31, 2008, also includes other special charges of $79 million primarily related to
impairment charges associated with two vacation ownership projects that the Company no longer plans to develop as
a result of the current economic crisis and its expected long-term impact on this business.
The years ended December 31, 2009 and 2008 include additional restructuring costs associated with its ongoing
initiative to streamline operations.
(c) During the three months ended December 31, 2009, the Company recorded impairment charges of $42 million
primarily related to five owned and leased hotels, where their carrying amounts exceeded their estimated fair values,
as a result of the significant decline in the business at those hotels.
The year ended December 31, 2009 also includes impairment charges of $49 million primarily related to the
Company’s retained interests in securitized vacation ownership notes receivable, certain fixed assets and an owned
hotel. The full year excludes approximately $16 million of losses recorded in the first three quarters of the year, which
were reclassified to discontinued operations to conform to the fourth quarter presentation.
During the three months ended December 31, 2008, the Company recorded impairment charges of $64 million on five
owned hotels where their carrying values exceeded their estimated fair values and a $22 million impairment charge to
write down its retained interests in securitized vacation ownership notes receivable.
The net loss for the year ended December 31, 2008, also includes an impairment charge of $11 million associated with
the Company’s equity interest in a joint venture that owns land that it no longer intends to develop.
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