
17.	Planned Spin-off

On February 14, 2011, we announced a plan to separate the company’s businesses into two separate, publicly traded companies. Under the plan, we expect to spin-off our timeshare operations and timeshare development business as a new independent company through a special tax-free dividend to our shareholders in late 2011. The new company will focus on the timeshare business as the exclusive developer and operator of timeshare, fractional, and related products under the Marriott brand and the exclusive developer of fractional and related products under The Ritz-Carlton brand. In the separation, we will retain the lodging management and franchise businesses. We expect to receive franchise fees totaling approximately two percent of developer contract sales plus $50 million annually for the new timeshare company’s use of the Marriott timeshare and Ritz-Carlton fractional brands. The franchise fee is also expected to include a periodic inflation adjustment. We also expect that the anticipated spin-off will result in the realization through 2015 of approximately $325 million to $350 million of cash tax benefits to Marriott, including approximately $70 million to $80 million for the 2011 full fiscal year and approximately $120 million to $130 million for the 2012 fiscal year, relating to the value of the timeshare business. For the thirty-six weeks ended September 9, 2011, we have already realized approximately $55 million of these cash tax benefits.

For the twelve and thirty-six weeks ended September 9, 2011, we recognized $8 million and $13 million, respectively, of transaction-related expenses associated with the planned spin-off. We anticipate spending $40 million to $50 million in cash for the 2011 full fiscal year for transaction-related costs, some of which we expect will be capitalized. While we are not completing our typical notes securitization this year, subsequent to the end of the 2011 third quarter we have already received most of the approximately $110 million we expect to receive under the MVW warehouse facility. Combined with approximately $40 million in expected proceeds from the sale of the preferred stock of MVW's U.S. holding company, Marriott expects to receive approximately $150 million in a cash distribution prior to the completion of the spin-off. This will have no impact to Marriott's earnings.

The new timeshare company, MVW, filed an initial Form 10 registration statement with the SEC on June 28, 2011, and filed amendments to that Form 10 registration statement on September 9, and September 30, 2011. We expect that the common stock of MVW will be listed on the New York Stock Exchange. We do not expect that MVW will pay a quarterly cash dividend or be investment grade in the near term. The transaction is subject to final approval by our board of directors, the receipt of normal and customary regulatory approvals and third-party consents, the execution of inter-company agreements, receipt of a favorable ruling from the Internal Revenue Service, arrangement of adequate financing facilities, and other related matters. We anticipate the receipt of the IRS private-letter tax ruling in early October, confirming that the distribution of shares of MVW common stock will not result in the recognition, for U.S. federal income tax purposes, of income, gain or loss by us or our shareholders, except, in the case of our shareholders, for cash received in lieu of fractional shares. The transaction will not require shareholder approval and will have no impact on Marriott’s contractual obligations to the existing securitizations. While we expect that the planned spin-off will be completed before year-end 2011, we cannot assure you that it will be completed on the anticipated schedule or that its terms will not change. See “Part II, Item 1A – Risk Factors” for certain risk factors relating to the Planned Spin-off Risks.

Because of the anticipated continuing involvement between the companies, we do not expect the planned spin-off of the timeshare operations and timeshare development business to qualify under GAAP for discontinued operations presentation in our financial statements.