HYATT HOTELS CORP, 10-K filed on 2/18/2014
Annual Report
Document and Entity Information Document (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Jun. 30, 2013
Jan. 31, 2014
Common Class B
Jan. 31, 2014
Common Class A
Document Information [Line Items]
 
 
 
 
Entity Registrant Name
Hyatt Hotels Corp 
 
 
 
Entity Central Index Key
0001468174 
 
 
 
Current Fiscal Year End Date
--12-31 
 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
 
Document Type
10-K 
 
 
 
Document Period End Date
Dec. 31, 2013 
 
 
 
Document Fiscal Year Focus
2013 
 
 
 
Document Fiscal Period Focus
FY 
 
 
 
Amendment Flag
false 
 
 
 
Trading Symbol
 
 
 
Entity Common Stock, Shares Outstanding
 
 
112,527,463 
43,387,819 
Entity Well-known Seasoned Issuer
Yes 
 
 
 
Entity Voluntary Filers
No 
 
 
 
Entity Current Reporting Status
Yes 
 
 
 
Entity Public Float
 
$ 1,761.0 
 
 
Consolidated Statements Of Income (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
REVENUES:
 
 
 
Owned and leased hotels
$ 2,142 
$ 2,021 
$ 1,879 
Management and franchise fees
342 
307 
288 
Other revenues
78 
78 
66 
Other revenues from managed properties
1,622 
1,543 
1,465 
Total revenues
4,184 
3,949 
3,698 
DIRECT AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES:
 
 
 
Owned and leased hotels
1,629 
1,549 
1,468 
Depreciation and amortization
345 
353 
305 
Other direct costs
32 
29 
24 
Selling, general, and administrative
323 
316 
283 
Other costs from managed properties
1,622 
1,543 
1,465 
Direct and selling, general, and administrative expenses
3,951 
3,790 
3,545 
Net gains and interest income from marketable securities held to fund operating programs
34 
21 
Equity earnings (losses) from unconsolidated hospitality ventures
(1)
(22)
Interest expense
(65)
(70)
(57)
Gains (losses) on sales of real estate
125 
(2)
Asset impairments
(22)
(6)
Other income (loss), net
17 
(11)
INCOME BEFORE INCOME TAXES
321 
95 
83 
(PROVISION) BENEFIT FOR INCOME TAXES
(116)
(8)
28 
NET INCOME
205 
87 
111 
Net loss attributable to noncontrolling interests
NET INCOME ATTRIBUTABLE TO HYATT HOTELS CORPORATION
$ 207 
$ 88 
$ 113 
EARNINGS PER SHARE - Basic
 
 
 
Net Income -Basic (in dollars per share)
$ 1.29 
$ 0.53 
$ 0.66 
Net income attributable to Hyatt Hotels Corporation (in dollars per share)
$ 1.30 
$ 0.53 
$ 0.67 
EARNINGS PER SHARE - Diluted
 
 
 
Net Income- Diluted (in dollars per share)
$ 1.29 
$ 0.53 
$ 0.66 
Net income attributable to Hyatt Hotels Corporation (in dollars per share)
$ 1.30 
$ 0.53 
$ 0.67 
Consolidated Statements of Comprehensive Income (Loss) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Net income
$ 205 
$ 87 
$ 111 
Foreign Currency Translation Adjustments, Net of Tax (benefit) expense of $1, $(3), and $(1) for the years ended December 31, 2013, 2012, and 2011, respectively.
(8)
29 
(31)
Unrealized gains (losses) on available-for-sale securities, net of tax (benefit) expense of $1, $1, and $(1) for the years ended December 31, 2013, 2012, and 2011, respectively
(2)
Unrecognized pension cost, net of tax (benefit) expense of $1, $-, and $(1) for the years ended December 31, 2013, 2012, and 2011, respectively
(1)
Unrealized gains (losses) on derivative activity, net of tax (benefit) expense of $-, $-, and $(5) for the years ended December 31, 2013, 2012, and 2011, respectively
(8)
Other Comprehensive Income (Loss)
(1)
32 
(42)
Comprehensive Income
204 
119 
69 
Comprehensive loss attributable to noncontrolling interests
Comprehensive Income Attributable to Hyatt Hotels Corporation
$ 206 
$ 120 
$ 71 
Consolidated Statements of Comprehensive Income (Loss) Parentheticals (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Foreign Currency Translation Adjustments, Tax
$ 1 
$ (3)
$ (1)
Unrealized Gains (Losses) on Available-for-sale Securities, Tax
(1)
Unrecognized Pension Cost, Tax
(1)
Unrealized Gains (Losses) on Derivatives Activity, Tax
$ 0 
$ 0 
$ (5)
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
ASSETS
 
 
Cash and cash equivalents
$ 454 
$ 413 
Restricted cash
184 
72 
Short-term investments
30 
514 
Receivables, net of allowances of $11 and $11 at December 31, 2013 and December 31, 2012, respectively
273 
531 
Inventories
77 
80 
Prepaids and other assets
122 
83 
Prepaid income taxes
12 
12 
Deferred tax assets
11 
19 
Assets held for sale
34 
Total current assets
1,163 
1,758 
Investments
329 
283 
Property and equipment, net
4,671 
4,139 
Financing receivables, net of allowances
119 
126 
Goodwill
147 1
133 1
Intangibles, net
591 
388 
Deferred tax assets
198 
183 
Other assets
959 
620 
TOTAL ASSETS
8,177 
7,630 
LIABILITIES AND EQUITY
 
 
Current maturities of long-term debt
194 
Accounts payable
133 
138 
Accrued expenses and other current liabilities
411 
338 
Accrued compensation and benefits
133 
137 
Liabilities held for sale
Total current liabilities
871 
618 
Long-term Debt, Excluding Current Maturities
1,289 
1,229 
Other long-term liabilities
1,240 
962 
Total liabilities
3,400 
2,809 
Commitments and Contingencies (see Note 16)
   
   
EQUITY:
 
 
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized and none outstanding as of December 31, 2013 and 2012
Common stock
Additional paid-in capital
3,015 
3,263 
Retained earnings
1,821 
1,614 
Treasury stock at cost, 36,273 shares at December 31, 2013 and 2012
(1)
(1)
Accumulated other comprehensive loss
(68)
(67)
Total stockholders' equity
4,769 
4,811 
Noncontrolling interests in consolidated subsidiaries
10 
Total equity
4,777 
4,821 
TOTAL LIABILITIES AND EQUITY
$ 8,177 
$ 7,630 
Consolidated Balance Sheets Parentheticals (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Allowance for Doubtful Accounts Receivable, Current
$ 11 
$ 11 
Preferred Stock, Par or Stated Value Per Share
$ 0.01 
$ 0.01 
Preferred Stock, Shares Authorized
10,000,000 
10,000,000 
Preferred Stock, Shares Outstanding
Treasury Stock, Shares
36,273 
36,273 
Common Class A
 
 
Common Stock, Par or Stated Value Per Share
$ 0.01 
$ 0.01 
Common Stock, Shares Authorized
1,000,000,000 
1,000,000,000 
Common Stock, Shares, Outstanding
43,584,144 
46,631,778 
Common Stock, Shares, Issued
43,620,417 
46,668,051 
Common Class B
 
 
Common Stock, Par or Stated Value Per Share
$ 0.01 
$ 0.01 
Common Stock, Shares Authorized
444,521,875 
448,985,467 
Common Stock, Shares, Outstanding
112,527,463 
115,434,342 
Common Stock, Shares, Issued
112,527,463 
115,434,342 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$ 205 
$ 87 
$ 111 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
345 
353 
305 
Deferred income taxes
(7)
65 
(137)
Asset impairments
22 
Provision on hotel loans
Equity losses from unconsolidated hospitality ventures, net of distributions received
50 
44 
17 
(Gain) loss on sales of real estate
(125)
Foreign currency losses
Net realized gains from other marketable securities
(2)
(17)
Net unrealized losses from other marketable securities
13 
Other
(12)
27 
32 
Increase (Decrease) in cash attributable to changes in assets and liabilities
 
 
 
Restricted Cash
(73)
(1)
(2)
Receivables, net
(9)
(33)
(17)
Inventories
Prepaid Income Taxes
16 
(6)
Accounts Payable, Accrued Expenses, and Other Current Liabilities
71 
81 
10 
Accrued Compensation and Benefits
(5)
22 
Other long-term liabilities
(6)
(118)
62 
Other, Net
(28)
(34)
(24)
Net cash provided by operating activities
456 
499 
393 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Purchases of marketable securities and short-term investments
(301)
(370)
(503)
Proceeds from marketable securities and short-term investments
741 
467 
417 
Contributions to investments
(428)
(90)
(44)
Proceeds from Sale of Investments
52 
Return of investment
86 
39 
Acquisitions, net of cash acquired
(814)
(233)
(716)
Capital expenditures
(232)
(301)
(331)
Issuance of financing receivable
67 
Proceeds from Financing Receivables
279 
18 
11 
Proceeds from sales of real estate and assets held for sale
601 
87 
108 
Sales proceeds transferred to escrow as restricted cash
(498)
(44)
(35)
Sales proceeds transferred from escrow to cash and cash equivalents
466 
132 
(Increase) decrease in restricted cash - investing
(9)
(25)
Other investing activities
(38)
(48)
(29)
Net cash used in investing activities
(147)
(489)
(1,015)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from issuance of long-term debt, net of issuance costs of $3, $0, and $4, respectively
385 
10 
519 
Repayments of long-term debt
(368)
(54)
Repurchase of common stock
(275)
(136)
(396)
Other financing activities
(6)
(13)
Net cash provided by (used in) financing activities
(264)
(124)
56 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(4)
(7)
(10)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
41 
(121)
(576)
Cash and cash equivalents, beginning of year
413 
534 
1,110 
Cash and Cash Equivalents, end of period
454 
413 
534 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
 
 
Cash paid during the period for interest
66 
68 
49 
Cash paid during the period for income taxes
119 
50 
60 
Non-cash operating activities are as follows:
 
 
 
Non-cash performance guarantee (see Note 16)
128 
Non-cash investing activities are as follows:
 
 
 
Equity contribution of property and equipment, net
10 
Equity contribution of long-term debt (see Note 8)
25 
Contribution to investment (see Note 3)
20 
Non-cash Contract Acquisition Costs (see Note 9)
128 
Change in Accrued Capital Expenditures
(7)
(40)
19 
Acquired capital leases
$ 0 
$ 0 
$ 7 
Consolidated Statements Of Cash Flows Statement of Cash Flow Parenthetical (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2009
Debt Issuance Cost
$ 3 
$ 0 
$ 4 
$ 3 
Consolidated Statements of Changes in Stockholders' Equity (USD $)
In Millions, unless otherwise specified
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Treasury Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Noncontrolling Interest [Member]
Balance - at Dec. 31, 2010
$ 5,121 
$ 2 
$ 3,751 
$ 1,413 
$ (1)
$ (57)
$ 13 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
Total comprehensive income
69 
113 
(42)
(2)
Distributions to noncontrolling interests
(1)
(1)
Repurchase of common stock
(396)
(396)
Directors compensation
Employee Stock Plan Issuance
Share based payment activity
21 
21 
Balance - at Dec. 31, 2011
4,818 
3,380 
1,526 
(1)
(99)
10 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
Total comprehensive income
119 
88 
32 
(1)
Purchase of shares in noncontrolling interests
(2)
(3)
Repurchase of common stock
(136)
(136)
Directors compensation
Employee Stock Plan Issuance
Share based payment activity
18 
18 
Balance - at Dec. 31, 2012
4,821 
3,263 
1,614 
(1)
(67)
10 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
Total comprehensive income
204 
207 
(1)
(2)
Repurchase of common stock
(275)
(275)
Directors compensation
Employee Stock Plan Issuance
Share based payment activity
22 
22 
Balance - at Dec. 31, 2013
$ 4,777 
$ 2 
$ 3,015 
$ 1,821 
$ (1)
$ (68)
$ 8 
Organization
Organization
ORGANIZATION
Hyatt Hotels Corporation, a Delaware corporation, and its consolidated subsidiaries (“Hyatt Hotels Corporation”), provide hospitality services on a worldwide basis through the management, franchising and ownership of hospitality related businesses. As of December 31, 2013, we operated or franchised 271 full service hotels under the Hyatt portfolio of brands, consisting of 110,670 rooms throughout the world. As of December 31, 2013, we operated or franchised 250 select service hotels under the Hyatt portfolio of brands with 33,729 rooms, of which 246 hotels are located in the United States. As of December 31, 2013, our Hyatt portfolio of brands included 2 franchised all inclusive Hyatt-branded resorts, consisting of 925 rooms. We operated these hotels in 48 countries around the world. We hold ownership interests in certain of these hotels. We develop, operate, manage, license or provide services to the Hyatt portfolio of brands including timeshare, fractional and other forms of residential or vacation properties.
As used in these Notes, the terms “Company,” “HHC,” “we,” “us,” or “our” mean Hyatt Hotels Corporation and its consolidated subsidiaries.
As used in these Notes, the term “Pritzker family business interests” means (1) various lineal descendants of Nicholas J. Pritzker (deceased) and spouses and adopted children of such descendants; (2) various trusts for the benefit of the individuals described in clause (1) and trustees thereof; and (3) various entities owned and/or controlled, directly and/or indirectly, by the individuals and trusts described in (1) and (2).
Summary of Significant Accounting Policies (Notes)
Significant Accounting Policies [Text Block]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation—The consolidated financial statements present the results of operations, financial position, and cash flows of Hyatt Hotels Corporation and its majority owned and controlled subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates—We are required to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from such estimated amounts.
Revenue Recognition—Our revenues are primarily derived from the following sources and are generally recognized when services have been rendered:
Owned and leased hotel revenues are derived from room rentals and services provided at our owned, leased, and consolidated hospitality venture properties and are recorded when rooms are occupied and services have been rendered. Sales and occupancy taxes are recorded on a net basis in the consolidated statements of income.
Management and franchise fees earned from hotels managed and franchised worldwide:
Management fees primarily consist of a base fee, which is generally computed as a percentage of gross revenues, and an incentive fee, which is generally computed based on a hotel profitability measure. Base fee revenues are recognized when earned in accordance with the terms of the contract. We recognize incentive fees that would be due as if the contract were to terminate at that date, exclusive of any termination fees payable or receivable by us.
Realized gains from the sale of hotel real estate assets where we maintain substantial continuing involvement in the form of a long-term management contract are deferred and recognized as management fee revenue over the term of the underlying management contract.
Franchise fees are generally based on a percentage of hotel rooms’ revenues and in certain circumstances, food and beverage revenues and are recognized as the fees are earned and become due from the franchisee and when all material services or conditions relating to the sale have been substantially performed or satisfied by the franchisor.
Other revenues
Other revenues primarily include revenues from our vacation ownership business. We recognize vacation ownership revenue when a minimum of 10% of the purchase price for the interval has been received, the period of cancellation with refund has expired, and receivables are deemed collectible. For sales that do not qualify for full revenue recognition, as the project has progressed beyond the preliminary stages, but has not yet reached completion, all revenue and associated direct expenses are initially deferred and recognized in earnings through the percentage-of-completion method.
Other revenues also include revenues from our co-branded credit card launched in 2010. We recognize revenue from our co-branded credit card upon: (1) the sale of points to our third-party partner; and (2) the fulfillment or expiration of a card member's activation offer. We receive incentive fees from our third-party partner upon activation of each credit card, which we defer until the associated compensated nights awarded on member activation are redeemed or expired.
Other revenues from managed properties represent the reimbursement of costs incurred on behalf of the owners of hotel properties we manage. These costs relate primarily to payroll costs at managed properties where we are the employer. Since the reimbursements are made based upon the costs incurred with no added margin, these revenues and corresponding expenses have no effect on our net income.
Cash Equivalents—We consider all highly liquid investments purchased with an original maturity of three months or less at the date of purchase to be cash equivalents.
Restricted Cash—We had restricted cash of $184 million and $72 million at December 31, 2013 and 2012, respectively. The 2013 balance relates primarily to a like-kind exchange agreement under which $74 million in proceeds from sales were placed into an escrow account administered by an intermediary (see Note 8), reserves statutorily required to be held by our captive insurance subsidiary of $74 million (see Note 16), proceeds from $16 million drawn on a loan which will be used for the development of a hotel in Brazil (see Note 10), and $21 million of debt service related to the bonds acquired in connection with the acquisition of the entity that owns the Grand Hyatt San Antonio hotel (see Note 10), of which $10 million is recorded to restricted cash and $11 million is recorded in other assets. The 2012 balance relates primarily to a like-kind exchange agreement under which $44 million in proceeds from sales were placed into an escrow account administered by an intermediary (see Note 8), a holdback escrow agreement of $10 million entered into in conjunction with the acquisition of a full service hotel in Mexico City, Mexico (see Note 8), and proceeds from $10 million drawn on a loan which was used for completion of a property improvement plan and conversion of a non-Hyatt branded property to a Hyatt Place (see Note 10). The remaining $10 million and $8 million at December 31, 2013 and 2012, respectively, relates to secured real estate taxes, property insurance, escrow deposits on purchases of our vacation ownership intervals, escrow deposits on construction projects, security deposits, property and equipment reserves, and long-term loans. These amounts are invested in interest-bearing accounts.
Investments—We consolidate entities under our control, including entities where we are deemed to be the primary beneficiary as a result of qualitative and/or quantitative characteristics. The primary beneficiary is the party who has the power to direct the activities of a variable interest entity ("VIE") that most significantly impact the entity’s economic performance and who has an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity. Investments in unconsolidated affiliates over which we exercise significant influence, but do not control, including joint ventures, are accounted for by the equity method. In addition, our limited partnership investments in which we hold more than a minimal investment are accounted for under the equity method of accounting. Investments in unconsolidated affiliates over which we are not able to exercise significant influence are accounted for under the cost method.
We assess investments in unconsolidated affiliates for impairment quarterly. When there is indication that a loss in value has occurred, we evaluate the carrying value compared to the estimated fair value of the investment. Fair value is based upon internally developed discounted cash flow models, third-party appraisals, and if appropriate, current estimated net sales proceeds from pending offers. If the estimated fair value is less than carrying value, we use our judgment to determine if the decline in value is other-than-temporary. In determining this, we consider factors including, but not limited to, the length of time and extent of the decline, loss of values as a percentage of the cost, financial condition and near-term financial projections, our intent and ability to recover the lost value and current economic conditions. Impairments that are deemed other-than-temporary are charged to equity earnings (losses) from unconsolidated hospitality ventures on our consolidated statements of income.
Marketable Securities—Our investments in marketable securities are principally included within short-term investments and other assets in the consolidated balance sheets and are classified as either trading or available-for-sale (see Note 4). Marketable securities are recorded at fair value based on listed market prices or dealer price quotations where available. Listed market prices and dealer price quotations are not available to value our preferred investment, therefore, we utilize an option pricing model, which requires that we make certain assumptions regarding the expected volatility, term, risk free interest rate over the expected term, dividend yield and enterprise value (see Note 5).
Our marketable securities consist of various types of mutual funds, preferred shares, common stock and fixed income securities, including U.S. government obligations, obligations of other government agencies, corporate debt, mortgage-backed and asset-backed securities and municipal and provincial bonds. Realized and unrealized gains and losses on trading securities are reflected in the consolidated statements of income in other income (loss), net. Available-for-sale securities with unrealized gains and losses are reported as part of accumulated other comprehensive loss on the consolidated balance sheets. Realized gains and losses on available-for-sale securities are recognized in other income (loss), net based on the cost of the securities using specific identification. Available-for-sale securities are assessed for impairment quarterly. To determine if an impairment is other-than-temporary, we consider the duration and severity of the loss position, the strength of the underlying collateral, the term to maturity, credit rating and our intent to sell. For debt securities that are deemed other-than-temporarily impaired and there is no intent to sell, impairments are separated into the amount related to the credit loss, which is recorded in our consolidated statements of income and the amount related to all other factors, which is recorded in accumulated other comprehensive loss. For debt securities that are deemed other-than-temporarily impaired and there is intent to sell, impairments in their entirety are recorded in our consolidated statements of income.
Derivative Instruments—Derivative transactions are executed only to manage exposures arising in the normal course of business and not for the purpose of creating speculative positions or trading. As a result of the use of derivative instruments, we are exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, we only enter into contracts with carefully selected major financial institutions based upon their credit rating and other factors. Our derivative instruments do not contain credit-risk related contingent features.
All derivatives are recognized on the balance sheet at fair value. On the date the derivative contract is entered, we designate the derivative as one of the following: a hedge of a forecasted transaction or the variability of cash flows to be paid (cash flow hedge), a hedge of the fair value of a recognized asset or liability (fair value hedge), or an undesignated hedge instrument. Changes in the fair value of a derivative that is qualified, designated and highly effective as a cash flow hedge are recorded in accumulated other comprehensive loss on the consolidated balance sheets until they are reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Changes in the fair value of a derivative that is qualified, designated and highly effective as a fair value hedge, along with the gain or loss on the hedged asset or liability that is attributable to the hedged risk are recorded in current earnings. Changes in the fair value of undesignated derivative instruments and the ineffective portion of designated derivative instruments are reported in current period earnings. Cash flows from designated derivative financial instruments are classified within the same category as the item being hedged on the consolidated statements of cash flows. Cash flows from undesignated derivative financial instruments are included in the investing category on the consolidated statements of cash flows. We do not offset any derivative assets or liabilities in the balance sheet and none of our derivatives are subject to master netting arrangements.
At the designation date, we formally document all relationships between hedging activities, including the risk management objective and strategy for undertaking various hedge transactions. This process includes matching all derivatives that are designated as cash flow hedges to specific forecasted transactions and linking all derivatives designated as fair value hedges to specific assets and liabilities on the consolidated balance sheets.
We also formally assess both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair value or cash flow of hedged items. We discontinue hedge accounting prospectively, when the derivative is not highly effective as a hedge, the underlying hedged transaction is no longer probable, or the hedging instrument expires, is sold, terminated, or exercised.
Foreign Currency—The functional currency of our consolidated and nonconsolidated entities located outside the United States of America is generally the local currency. The assets and liabilities of these entities are translated into U.S. dollars at year-end exchange rates, and the related gains and losses, net of applicable deferred income taxes, are reflected in stockholders’ equity. Gains and losses from foreign currency transactions are included in earnings. Income and expense accounts are translated at the average exchange rate for the period. Gains and losses from foreign exchange rate changes related to intercompany receivables and payables of a long-term nature are generally included in other comprehensive income (loss). Gains and losses from foreign exchange rate movement related to intercompany receivables and payables that are not of a long-term nature are reported currently in income.
Financing Receivables—We define financing receivables as financing arrangements that represent a contractual right to receive money either on demand or on fixed or determinable dates and that are recognized as an asset on our consolidated balance sheets. We record all financing receivables at amortized cost in current and long-term receivables. We recognize interest income as earned and provide an allowance for cancellations and defaults. We have divided our financing receivables into three portfolio segments based on the level at which we develop and document a systematic methodology to determine the allowance for credit losses. Based on their initial measurement, risk characteristics and our method for monitoring and assessing credit risk, we have determined the class of financing receivables to correspond to our identified portfolio segments, which are as follows:
Secured Financing to Hotel Owners
These financing receivables are senior, secured mortgage loans and are collateralized by underlying hotel properties currently in operation. We determine our secured financing to hotel owners to be non-performing if either interest or principal is greater than 90 days past due based on the contractual terms of the individual mortgage loans.
– We individually assess all loans in this portfolio for impairment. We determine a loan to be impaired if it is probable that we will be unable to collect all amounts due in accordance with the contractual terms of the individual loan agreement. This assessment is based on an analysis of several factors including current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including loan performance, individual market factors, hotel performance, and the collateral of the underlying hotel. We measure loan impairment based on either the present value of expected future cash flows discounted at the loan’s effective interest rate or the estimated fair value of the collateral. The measurement method used is based on which would be most appropriate given the nature of the loan, the underlying collateral, and the facts and circumstances of the individual loan. For impaired loans, we establish a specific loan loss reserve for the difference between the recorded investment in the loan and the present value of the expected future cash flows or the estimated fair value of the collateral. The loan loss reserve is maintained at a level deemed adequate by management based on a periodic analysis of the individual loans.
– If we consider secured financing to hotel owners to be non-performing or impaired, we place the financing receivable on non-accrual status. We will recognize interest income when received for non-accruing finance receivables. Accrual of interest income is resumed when the receivable becomes contractually current and collection doubts are removed. We write off secured financing to hotel owners when we determine that the loans are uncollectible and when all commercially reasonable means of recovering the loan balances have been exhausted.

Vacation Ownership Mortgage Receivables
These financing receivables are comprised of various mortgage loans related to our financing of vacation ownership interval sales. We record an estimate of uncollectibility as a reduction of sales revenue at the time revenue is recognized on a vacation ownership interval sale. We evaluate this portfolio collectively as we hold a large group of homogeneous, smaller-balance, vacation ownership mortgage receivables and use a technique referred to as static pool analysis, which tracks uncollectibles over the entire life of those mortgage receivables. We use static pool analysis as the basis for determining our general reserve requirements on our vacation ownership mortgage receivables. The adequacy of the related allowance is determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including defaults, aging and historical write-offs of these receivables. The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio.
We determine our vacation ownership mortgage receivables to be non-performing if either interest or principal is greater than 120 days past due based on the contractual terms of the individual mortgage loans. We do not recognize interest income and write-off vacation ownership mortgage receivables that are over 120 days past due, the date on which we determine the mortgage receivables to be uncollectible.

Unsecured Financing to Hotel Owners
These financing receivables are primarily made up of individual loans and other types of unsecured financing arrangements provided to hotel owners. These financing receivables have stated maturities and interest rates, however, the repayment terms vary and may be dependent upon future cash flows of the hotel. We determine our unsecured financing to hotel owners to be non-performing if interest or principal is greater than 90 days past due or if estimates of future cash flows available for repayment of these receivables indicate that there is a collectibility risk. We do not recognize interest income on non-performing financing arrangements and only resume interest recognition if the financing receivable becomes current.
– We individually assess all financing receivables in this portfolio for collectability and impairment. We determine a loan to be impaired if it is probable that we will be unable to collect all amounts due according to the contractual terms of the individual loan agreement based on an analysis of several factors including current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including capital structure, individual hotel performance, and individual financing arrangement. We measure loan impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate. For impaired loans, we establish a specific impairment reserve for the difference between the recorded investment in the loan and the present value of the expected future cash flows. The impairment reserve is maintained at a level deemed adequate by management based on a periodic analysis of the individual loans.
We write off unsecured financing to hotel owners when we determine that the receivables are uncollectible and when all commercially reasonable means of recovering the receivable balances have been exhausted.
Inventories—Inventories are comprised principally of unsold vacation ownership intervals of $64 million and $66 million at December 31, 2013 and 2012, respectively, and food and beverage inventories at our owned and leased hotels. Vacation ownership inventory is carried at the lower of cost or market, based on relative sales value or net realizable value. Food and beverage inventories are generally valued at the lower of cost (first-in, first-out) or market. Vacation ownership interval inventory, which has an operating cycle that exceeds 12 months, is classified as a current asset consistent with recognized industry practice. Based on management's assessment, no impairment charges were recorded in 2013 or 2012 related to vacation ownership inventory. During 2011, management changed its plans for future development of multi-phase vacation ownership properties. These changes resulted in an impairment charge of $5 million during 2011, recorded to asset impairments. In certain of these vacation ownership properties, our ownership interest is less than 100%. As a result, $1 million of this impairment charge during 2011 is attributable to our partners and is reflected in net loss attributable to noncontrolling interests. As a result, the net impairment charge attributable to Hyatt Hotels Corporation is $4 million during 2011.
Property and Equipment—Property and equipment are stated at cost, including interest incurred during development and construction periods. Depreciation and amortization are recognized over the estimated useful lives of the assets, primarily on the straight-line method. All repair and maintenance costs are expensed as incurred.
Useful lives assigned to property and equipment are as follows:
Buildings and improvements
15-50 years
Leasehold improvements
The shorter of the lease term or useful life of asset
Furniture and equipment
2-21 years
Computers
3-6 years

Long-Lived Assets and Definite-Lived Intangibles—We evaluate the carrying value of our long-lived assets and definite-lived intangibles for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value of the assets when events or circumstances indicate that the carrying amount of a long-lived asset or definite-lived intangible may not be recoverable. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value is charged to earnings. Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals, and, if appropriate, current estimated net sales proceeds from pending offers. We evaluate the carrying value of our long-lived assets and definite-lived intangibles based on our plans, at the time, for such assets and such qualitative factors as future development in the surrounding area and status of expected local competition. Changes to our plans, including a decision to dispose of or change the intended use of an asset, can have a material impact on the carrying value of the asset.
Acquisitions—Assets acquired and liabilities assumed in business combinations are recorded on our consolidated balance sheets as of the respective acquisition dates based upon their estimated fair values at such dates. The results of operations of businesses acquired by us have been included in the consolidated statements of income since their respective dates of acquisition. In certain circumstances, the purchase price allocations are based upon preliminary estimates and assumptions. Accordingly, the allocations are subject to revision when we receive final information, including appraisals and other analyses. There were no contingent payments, preliminary estimates, options, or commitments specified except as otherwise disclosed in Note 8.
Guarantees—We enter into performance guarantees related to certain hotels that we manage or debt repayment guarantees with respect to certain hotels in which we hold an equity investment.  We record a liability for the fair value of these performance and debt repayment guarantees at their inception date. The offset depends on the circumstances in which the guarantee was issued.  We amortize the liability for the fair value of a guarantee into income over the term of the guarantee using a systematic and rational, risk-based approach. Performance guarantees are amortized into income in other income (loss), net in the consolidated income statements and debt guarantees that relate to our equity method investments are amortized into income in equity earnings (losses) from unconsolidated hospitality ventures in the consolidated income statements. On a quarterly basis, we evaluate the likelihood of funding a guarantee. To the extent we determine an obligation to fund under a guarantee is both probable and estimable, we will record a separate contingent liability. The expense related to the separate contingent liability is recognized in other income (loss), net in the period that we determine funding is probable. For additional information about guarantees, see Note 16.
Goodwill—As required, we evaluate goodwill for impairment on an annual basis, and do so during the fourth quarter of each year using balances as of October 1 and at an interim date if indications of impairment exist. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount. This is done either by performing a qualitative assessment or proceeding to the two-step process, with an impairment being recognized only where the fair value is less than carrying value. We define a reporting unit at the individual property or business level. In any given year we can elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is in excess of its carrying value. If it is not more likely than not that the fair value is in excess of the carrying value, or we elect to bypass the qualitative assessment, we proceed to the two-step process. When determining fair value, we utilize internally developed discounted future cash flow models, third party appraisals and, if appropriate, current estimated net sales proceeds from pending offers. Under the discounted cash flow approach we utilize various assumptions, including projections of revenues based on assumed long-term growth rates, estimated costs and appropriate discount rates. The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flow, discount rates and the terminal value growth rate assumptions. Our estimates of long-term growth and costs are based on historical data, various internal estimates and a variety of external sources, and are developed as part of our routine, long-term planning process. We then compare the estimated fair value to our carrying value. If the carrying value is in excess of the fair value, we must determine our implied fair value of goodwill to measure if any impairment charge is necessary. The determination of our implied fair value of goodwill requires the allocation of the reporting unit’s estimated fair value to the individual assets and liabilities of the reporting unit as if we had completed a business combination. We perform the allocation based on our knowledge of the reporting unit, the market in which they operate, and our overall knowledge of the hospitality industry. See Note 9 for additional information about goodwill.
Indefinite Lived Intangibles—As required, we evaluate indefinite lived intangibles for impairment on an annual basis, and do so during the fourth quarter of each year using balances as of October 1 and at an interim date if indications of impairment exist. Indefinite lived intangibles impairment is determined by comparing the fair value of the asset to its carrying amount. This is done either by performing a qualitative or quantitative assessment, with an impairment being recognized only where the fair value is less than carrying value. In any given year we can elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value is in excess of its carrying value. If it is not more likely than not that the fair value is in excess of the carrying value, or we elect to bypass the qualitative assessment, we proceed to the quantitative analysis. When determining fair value, we primarily utilize the income approach. Under the income approach we utilize various assumptions, including projections of revenues based on assumed long-term growth rates and appropriate discount rates based on the weighted average cost of capital. Our estimates of long-term growth are based on historical data, various internal estimates and a variety of external sources, and are developed as part of our routine, long-term planning process. See Note 9 for additional information about indefinite lived intangibles.
Income Taxes—We account for income taxes to recognize the amount of taxes payable or refundable for the current year and the amount of deferred tax assets and liabilities resulting from the future tax consequences of differences between the financial statements and tax basis of the respective assets and liabilities. We recognize the financial statement effect of a tax position when, based on the technical merits of the uncertain tax position, it is more likely than not to be sustained on a review by taxing authorities. These estimates are based on judgments made with currently available information. We review these estimates and make changes to recorded amounts of uncertain tax positions as facts and circumstances warrant. For additional information about income taxes, see Note 15.
Fair Value—We disclose the fair value of our financial assets and liabilities based on observable market information where available, or on market participant assumptions. These assumptions are subjective in nature, involve matters of judgment, and, therefore, fair values cannot always be determined with precision. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Accounting Principles Generally Accepted in the United States of America (“GAAP”) establishes a valuation hierarchy for prioritizing the inputs and the hierarchy places greater emphasis on the use of observable market inputs and less emphasis on unobservable inputs. When determining fair value, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of the hierarchy are as follows:
Level One—Fair values based on unadjusted quoted prices in active markets for identical assets and liabilities;
Level Two—Fair values based on quoted market prices for similar assets and liabilities in active markets, quoted prices in inactive markets for identical assets and liabilities, and inputs other than quoted market prices that are observable for the asset or liability;
Level Three— Fair values based on inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. Valuation techniques could include the use of discounted cash flow models and similar techniques.
We utilize the market approach and income approach for valuing our financial instruments. The market approach utilizes prices and information generated by market transactions involving identical or similar assets and liabilities and the income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). For instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the classification of fair value assets and liabilities within the fair value hierarchy.
The carrying values of cash equivalents, accounts receivable, financing receivable – current, accounts payable and current maturities of long-term debt approximate fair value due to the short-term nature of these items and their close proximity to maturity. For additional information about fair value, see Note 5. The fair value of marketable securities is discussed in Note 4; the fair value of financing receivable is discussed in Note 7; and the fair value of long-term debt is discussed in Note 10.
Hyatt Gold Passport Fund—The Hyatt Gold Passport Program (the “Program”) is our loyalty program. We operate the Program for the benefit of the Hyatt portfolio of properties, whether owned, operated, managed, or franchised by us. The Program is operated through the Hyatt Gold Passport Fund, which is an entity that is owned collectively by the owners of the Hyatt portfolio of hotels, whether owned, operated, managed or franchised by us. The Hyatt Gold Passport Fund (the “Fund”) has been established to provide for the payment of operating expenses and redemptions of member awards associated with the Program. The Fund is maintained and managed by us on behalf of and for the benefit of the Hyatt portfolio of hotels. We have evaluated our investment in the Fund and have determined that the Fund qualifies as a VIE and, as a result of the Company being the primary beneficiary, we have consolidated the Fund.
The Program allows members to earn points based on their spending at the Hyatt portfolio of properties. Points earned by members can be redeemed for goods and services at the Hyatt portfolio of properties, and to a lesser degree, through other redemption opportunities with third parties, such as the conversion to airline miles. Points cannot be redeemed for cash. We charge the cost of operating the Program, including the estimated cost of award redemption, to the hotel properties based on members’ qualified expenditures. Due to the requirements under the Program that the hotel properties reimburse us for the Program’s operating costs as incurred, we recognize this revenue from properties at the time such costs are incurred and expensed. We defer revenue received from the hotel properties equal to the fair value of our future redemption obligation. Upon the redemption of points, we recognize as revenue the amounts previously deferred and recognize the corresponding expense relating to the costs of the awards redeemed. Revenue is recognized by the hotel properties when the points are redeemed, and expenses are recognized when the points are earned by the members.
We actuarially determine the expected fair value of the future redemption obligation based on statistical formulas that project the timing of future point redemption based on historical experience, including an estimate of the “breakage” for points that will never be redeemed, and an estimate of the points that will eventually be redeemed. Actual expenditures for the Program may differ from the actuarially determined liability.
The Fund is financed by payments from the properties and returns on marketable securities. The Fund invests amounts received from the properties in marketable securities (see Note 4). As of December 31, 2013 and 2012, total assets of the Fund were $368 million and $345 million, respectively, including $106 million and $78 million of current assets, respectively. Marketable securities held by the Fund and included in other noncurrent assets were $262 million and $267 million as of December 31, 2013 and 2012, respectively (see Note 4). As of December 31, 2013 and 2012, total liabilities of the Fund were $368 million and $345 million, respectively, including $106 million and $78 million of current liabilities, respectively. The current liabilities include $94 million and $68 million of accrued expenses and other current liabilities as of December 31, 2013 and 2012, respectively. The non-current liabilities of the Fund are included in other long-term liabilities (see Note 14).
Recently Issued Accounting Pronouncements

Adopted Accounting Standards

In December 2011, the Financial Accounting Standards Board ("FASB") released Accounting Standards Update No. 2011-10 (“ASU 2011-10”), Property, Plant and Equipment (Topic 360): Derecognition of in Substance Real Estate-a Scope Clarification (a consensus of the FASB Emerging Issues Task Force). ASU 2011-10 clarifies when a parent (reporting entity) ceases to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary's nonrecourse debt, the reporting entity should apply the guidance for Real Estate Sales (Subtopic 360-20). The provisions of ASU 2011-10 are effective for public companies for fiscal years and interim periods within those years, beginning on or after June 15, 2012. The adoption of ASU 2011-10 did not materially impact our consolidated financial statements.

In December 2011, the FASB released Accounting Standards Update No. 2011-11 (“ASU 2011-11”), Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities and in January 2013 the FASB released Accounting Standards Update No. 2013-01 (“ASU 2013-01”), Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 requires companies to provide new disclosures about offsetting and related arrangements for financial instruments and derivatives. ASU 2013-01 clarified the scope of ASU 2011-11. The provisions of ASU 2011-11 and ASU-2013-01 are effective for annual reporting periods beginning on or after January 1, 2013, and are required to be applied retrospectively. The adoption of ASU 2011-11 and ASU 2013-01 did not materially impact our consolidated financial statements.

In July 2012, the FASB released Accounting Standards Update No. 2012-02 ("ASU 2012-02"), Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. ASU 2012-02 gives companies the option to perform a qualitative assessment before calculating the fair value of the indefinite-lived intangible asset. Under the guidance in ASU 2012-02, if this option is selected, a company is not required to calculate the fair value of the indefinite-lived intangible unless the entity determines it is more likely than not that its fair value is less than its carrying amount. The provisions of ASU 2012-02 are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, but early adoption was permitted. The adoption of ASU 2012-02 did not materially impact our consolidated financial statements.

In February 2013, the FASB released Accounting Standards Update No. 2013-02 ("ASU 2013-02"), Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income (loss) by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income (loss) by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. The provisions of ASU 2013-02 are effective for reporting periods beginning after December 15, 2012. The adoption of ASU 2013-02 resulted in additional disclosure within our equity footnote.

Future Adoption of Accounting Standards

In February 2013, the FASB released Accounting Standards Update No. 2013-04 ("ASU 2013-04"), Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force). ASU 2013-04 requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The provisions of ASU 2013-04 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. When adopted, ASU 2013-04 is not expected to materially impact our consolidated financial statements.

In March 2013, the FASB released Accounting Standards Update No. 2013-05 ("ASU 2013-05"), Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (a consensus of the FASB Emerging Issues Task Force). ASU 2013-05 requires that when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity, the parent is required to release any related cumulative translation adjustment into net income. The provisions of ASU 2013-05 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. When adopted, ASU 2013-05 is not expected to materially impact our consolidated financial statements.

In July 2013, the FASB released Accounting Standards Update No. 2013-11 ("ASU 2013-11"), Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). ASU 2013-11 requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The provisions of ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. When adopted, ASU 2013-11 is not expected to materially impact our consolidated financial statements.
Equity And Cost Method Investments
Equity And Cost Method Investments
EQUITY AND COST METHOD INVESTMENTS
We have investments that are recorded under both the equity and cost methods. These investments are considered to be an integral part of our business and are strategically and operationally important to our overall results. Our equity and cost method investment balances recorded at December 31, 2013 and 2012 are as follows:
 
December 31, 2013
 
December 31, 2012
Equity method investments
$
320

 
$
212

Cost method investments
9

 
71

Total investments
$
329

 
$
283


Of our $329 million total investment balance as of December 31, 2013, $310 million was recorded in our owned and leased hotels segment. Of our $283 million total investment balance as of December 31, 2012, $262 million was recorded in our owned and leased hotels segment.
We recorded $50 million, $1 million, and insignificant income (loss) from our cost method investments for the years ended December 31, 2013, December 31, 2012 and December 31, 2011, respectively. Gains or losses from cost method investments are recorded within other income (loss), net in our consolidated statements of income, see Note 22.
The carrying values and ownership percentages of our unconsolidated investments in hotel, vacation and all inclusive properties accounted for under the equity method as of December 31, 2013 and 2012 are as follows:
 
Ownership Interests
 
Our Investment
December 31, 2013
 
December 31, 2012
Wailea Hotel and Beach Resort, LLC
64.1%
 
$
132

 
$
83

Playa Hotels & Resorts B.V.
21.8%
 
50

 

Juniper Hotels Private Limited
50.0%
 
33

 
40

Maui Timeshare Ventures, LLC
33.0%
 
17

 
16

Noble Select JV
40.0%
 
14

 
17

Andaz Mayakoba BV
40.0%
 
12

 

ADHP LLC
50.0%
 
7

 
6

Hi Holdings HP Cabo B.V.
50.0%
 
5

 

Hi Holdings La Paz B.V.
50.0%
 
5

 

Coast Beach, LLC
40.0%
 
4

 
5

Other
 
 
41

 
45

Total
 
 
$
320

 
$
212


The following tables present summarized financial information for all unconsolidated ventures in which we hold an investment that is accounted for under the equity method.
 
Years Ended December 31,
2013
 
2012
 
2011
Total revenues
$
978

 
$
979

 
$
986

Gross operating profit
315

 
313

 
317

Income from continuing operations
17

 
12

 
22

Net income
$
17

 
$
12

 
$
22

 
 
December 31,
2013
 
2012
Current Assets
$
556

 
$
419

Noncurrent Assets
2,877

 
2,151

Total Assets
$
3,433

 
$
2,570

Current Liabilities
$
519

 
$
700

Noncurrent Liabilities
1,962

 
1,434

Total Liabilities
$
2,481

 
$
2,134


During 2013, a wholly owned Hyatt subsidiary invested $325 million in Playa Hotels & Resorts B.V. ("Playa"), a company that was formed to own, operate and develop all inclusive resorts. Playa's current portfolio consists of 13 all inclusive resorts totaling approximately 5,800 rooms across the Dominican Republic, Mexico and Jamaica. In connection with our investment, Hyatt has entered into franchise agreements for six of the 13 all inclusive resorts, or approximately 2,800 rooms, which will operate as Hyatt-branded resorts. Under an agreement with Hyatt, Playa will have certain exclusive rights to operate Hyatt-branded all inclusive resorts in five Latin American and Caribbean countries through 2018. Playa issued Hyatt common shares and preferred shares in return for our investment. Our investment in common shares gives us a common ownership interest of 21.8%, which has been classified as an equity method investment. The investment in preferred shares has been classified as an available for sale debt security and recorded in other assets on the consolidated balance sheets. Subsequent to our initial valuation, we revised the allocation of our total investment to reflect fair value of $271 million and $54 million for the preferred and common shares, respectively, as of the closing date of the transaction. See Note 4 for further discussion of our preferred investment.
During 2013 and 2012, we invested $68 million and $63 million, respectively, in Wailea Hotel and Beach Resort, LLC, an equity method hospitality venture that was established to develop, own and operate a hotel property in the State of Hawaii. The hotel opened during the third quarter of 2013.
During 2013, we purchased the remaining 70% interest of the entity that owns the Grand Hyatt San Antonio hotel. As a result of this transaction, we ceased to report our interest as an equity method investment and now we consolidate the investment into the consolidated statements of income and the consolidated balance sheets. See Note 8 for further discussion of our acquisition.
During 2013, we recorded income from cost method investments of $50 million in other income (loss), net. We received a complete pay off of our $63 million investment and a $30 million return on our preferred equity interest in a joint venture that owns the Hyatt Regency New Orleans. Additionally, our partner in the joint venture executed its option to purchase our residual common investment interest in the venture resulting in a $20 million distribution, (see Note 22). The investment was included in our owned and leased hotels segment. We will continue to manage the property under the existing management agreement.
During 2013, a joint venture in which we held an interest and which we classified as an equity method investment, sold the hotel it owned and dissolved the venture. The venture was included in our owned and leased hotels segment. As a result of this transaction, we received a $5 million distribution, which was recorded as a deferred gain and will be amortized over the remaining life of our management agreement for the hotel.
During 2012, we sold our interest in two joint ventures classified as equity method investments, which were included in our owned and leased segment, to a third party for $52 million. Each venture owns a hotel that we currently manage. At the time of the sale we signed agreements with the third party purchaser to extend our existing management agreements for the hotels owned by the ventures by ten years. A $28 million pre-tax gain on the sale was deferred and is being amortized over the life of the extended management agreements into management and franchise fees within the Americas management and franchise segment. The operations of the hotel prior to the sale are included in Adjusted EBITDA within our owned and leased segment.
During 2011, we contributed $20 million to a newly formed joint venture with Noble Investment Group (“Noble”) in return for a 40% ownership interest in the venture (see Note 8). In addition, the Company and Noble agreed to invest in the strategic new development of select service hotels in the United States. Under that agreement, we are required to contribute up to a maximum of 40% of the equity necessary to fund up to $80 million (i.e. $32 million) of such new development.
During 2013, 2012 and 2011 we recorded $3 million, $19 million and $1 million in total impairment charges in equity earnings (losses) from unconsolidated hospitality ventures, respectively. The impairment charges in 2013 relate to three properties, two hospitality ventures for which we recorded total impairment charges of $2 million and one that relates to a vacation ownership business for which we recorded an impairment charge of $1 million. The three investments impaired in 2013 are accounted for as equity method investments. The impairment charges in 2012 relate to three properties, two of which are hospitality ventures, for which we recorded total impairment charges of $18 million and the third relates to a vacation ownership business for which we recorded an impairment charge of $1 million. The three investments impaired in 2012 are accounted for as equity method investments. The impairment charge in 2011 relates to one property in our vacation ownership business that is accounted for as an equity method investment. Impairment charges recognized were the result of our impairment review process, and impairments were recognized when the carrying amount of our assets was determined to exceed the fair value as calculated using discounted operating cash flows and a determination was made that the decline was other than temporary.
During 2013, the Company identified and corrected an error in the underlying accounting for foreign currency translation for a joint venture in which the Company has an ownership interest. The error impacts the Company's share of equity in earnings of this equity method investment. As of December 31, 2012, the cumulative impact to equity and investments from this error was a decrease of $10 million, respectively.
Marketable Securities (Notes)
Marketable Securities [Text Block]
MARKETABLE SECURITIES
We hold marketable securities to fund certain operating programs and for investment purposes. Marketable securities held to fund operating programs are recorded in prepaids and other assets and other assets. We periodically transfer cash and cash equivalents to time deposits, highly liquid and transparent commercial paper, corporate notes and bonds, and U.S. government obligations and obligations of other government agencies for investment purposes, which are recorded in short-term investments. Additionally in 2013, we invested in preferred shares of Playa valued at $271 million as of the closing date of the transaction, which is included within other assets. See Note 3 for further detail regarding the Playa transaction.
Marketable Securities Held to Fund Operating Programs—At December 31, 2013 and 2012, total marketable securities held for the Hyatt Gold Passport Fund (see Note 2) and certain deferred compensation plans (see Note 13), carried at fair value and included in the consolidated balance sheets were as follows: 
 
December 31, 2013
 
December 31, 2012
Marketable securities held by the Hyatt Gold Passport Fund
$
321

 
$
292

Marketable securities held to fund deferred compensation plans
334

 
275

Total marketable securities
$
655

 
$
567

Less current portion of marketable securities held for operating programs included in prepaids and other assets
(59
)
 
(25
)
Marketable securities included in other assets
$
596

 
$
542


Included in net gains and interest income from marketable securities held to fund operating programs in the consolidated statements of income are $(1) million, $3 million and $4 million of realized and unrealized gains (losses) and interest income, net related to marketable securities held by the Hyatt Gold Passport Fund for the years ended December 31, 2013, 2012 and 2011, respectively. Also included are $35 million, $18 million, and $(2) million of net realized and unrealized gains (losses) related to marketable securities held to fund deferred compensation plans for the years ended December 31, 2013, 2012 and 2011, respectively.
Marketable Securities Held for Investment Purposes—At December 31, 2013 and 2012, our total marketable securities held for investment purposes, carried at fair value and included in the consolidated balance sheets were as follows: 
 
December 31, 2013
 
December 31, 2012
Available-for-sale investments
$

 
$
484

Time deposits
30

 
30

Total short-term investments
$
30

 
$
514

 
 
 
 
 
December 31, 2013

 
December 31, 2012

Available-for-sale investments included in other assets
$
278

 
$


Gains (losses) on marketable securities held for investment purposes of $2 million, $17 million and $(13) million for the years ended December 31, 2013, 2012 and 2011, respectively are included in other income (loss), net (see Note 2). Included in gains (losses) on marketable securities held for investment purposes were gross realized gains and losses on available-for-sale securities of $2 million for the year ended December 31, 2013, and insignificant amounts for the years ended December 31, 2012 and 2011.
During the year ended December 31, 2013, we invested $271 million in Playa as of the closing date of the transaction for redeemable, convertible preferred shares. Hyatt has the option to convert its preferred shares into shares of common stock at any time through the later of the second anniversary of the closing of our investment or an initial public offering by Playa. The preferred investment is redeemable at Hyatt's option in August 2021. In the event of an initial public offering or other equity issuance, Hyatt has the option to request that Playa redeem up to $125 million of preferred shares. As a result, we have classified the preferred investment as an available for sale debt security, which is remeasured quarterly at fair value in the consolidated balance sheets through other comprehensive income. See Note 5 for further detail on the fair value of this preferred investment.

Included in our portfolio of marketable securities held for investment purposes are investments in debt and equity securities classified as available for sale. At December 31, 2013 and 2012, these were as follows: 
 
December 31, 2013
 
Cost or Amortized
Cost
 
Gross Unrealized
Gain
 
Gross Unrealized
Loss
 
Fair Value
Total preferred shares
$
271

 
$
7

 
$

 
$
278



 
December 31, 2012
 
Cost or Amortized
Cost
 
Gross Unrealized
Gain
 
Gross Unrealized
Loss
 
Fair Value
Corporate debt securities
$
443

 
$
8

 
$
(8
)
 
$
443

U.S. government agencies and municipalities
31

 

 

 
31

Equity securities
9

 
1

 

 
10

Total
$
483

 
$
9

 
$
(8
)
 
$
484

Fair Value Measurement
Fair Value Disclosures [Text Block]
FAIR VALUE MEASUREMENT
We have various financial instruments that are measured at fair value including certain marketable securities and derivative instruments. We currently do not have non-financial assets or non-financial liabilities that are required to be measured at fair value on a recurring basis.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of December 31, 2013 and 2012, we had the following financial assets and liabilities measured at fair value on a recurring basis (refer to Note 2 for definitions of fair value and the three levels of the fair value hierarchy):
 
December 31, 2013
 
Quoted Prices in Active Markets for Identical Assets (Level One)
 
Significant Other Observable Inputs (Level Two)
 
Significant Unobservable Inputs (Level Three)
Marketable securities recorded in cash and cash equivalents
 
 
 
 
 
 
 
Interest bearing money market funds
$
71

 
$
71

 
$

 
$

Marketable securities included in short-term investments, prepaids and other assets and other assets
 
 
 
 
 
 
 
Mutual funds
334

 
334

 

 

Preferred shares
278

 

 

 
278

U.S. government obligations
121

 

 
121

 

U.S. government agencies
46

 

 
46

 

Corporate debt securities
112

 

 
112

 

Mortgage-backed securities
20

 

 
20

 

Asset-backed securities
18

 

 
18

 

Municipal and provincial notes and bonds
4

 

 
4

 

Derivative instruments
 
 
 
 
 
 
 
Foreign currency forward contracts
(3
)
 

 
(3
)
 

 
December 31, 2012
 
Quoted Prices in Active Markets for Identical Assets (Level One)
 
Significant Other Observable Inputs (Level Two)
 
Significant Unobservable Inputs (Level Three)
Marketable securities recorded in cash and cash equivalents
 
 
 
 
 
 
 
Interest bearing money market funds
$
117

 
$
117

 
$

 
$

Marketable securities included in short-term investments, prepaids and other assets and other assets
 
 
 
 
 
 
 
Mutual funds
275

 
275

 

 

Common stock
10

 
10

 

 

U.S. government obligations
111

 

 
111

 

U.S. government agencies
68

 

 
68

 

Corporate debt securities
540

 

 
540

 

Mortgage-backed securities
22

 

 
22

 

Asset-backed securities
10

 

 
10

 

Municipal and provincial notes and bonds
15

 

 
15

 

Derivative instruments
 
 
 
 
 
 
 
Interest rate swaps
1

 

 
1

 

Foreign currency forward contracts
(1
)
 

 
(1
)
 


During the years ended December 31, 2013 and 2012, there were no transfers between levels of the fair value hierarchy. Our policy is to recognize transfers in and transfers out as of the end of each quarterly reporting period.
Marketable Securities
Our portfolio of marketable securities consists of various types of mutual funds, preferred shares, common stock and fixed income securities, including U.S. government obligations, obligations of other government agencies, corporate debt, mortgage-backed and asset-backed securities and municipal and provincial bonds. The fair value of our mutual funds and common stock were classified as Level One as they trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis. The remaining securities, other than our investment in preferred shares, were classified as Level Two due to the use and weighting of multiple market inputs being considered in the final price of the security. Market inputs include quoted market prices from active markets for identical securities, quoted market prices for identical securities in inactive markets, and quoted market prices in active and inactive markets for similar securities. See Note 4 for further details on our marketable securities.
We invest a portion of our cash balance into short-term interest bearing money market funds that have a maturity of less than ninety days. Consequently, the balances are recorded in cash and cash equivalents. The funds are held with open-ended registered investment companies and the fair value of the funds are classified as Level One as we are able to obtain market available pricing information on an ongoing basis.

We estimated the fair value of the Playa preferred shares using an option pricing model. This model requires that we make certain assumptions regarding the expected volatility, term, risk free interest rate over the expected term, dividend yield and enterprise value. As Playa is not publicly traded, there is no market value for its stock. Therefore, we utilized observable data for a group of comparable peer companies to assist in developing our volatility assumptions. The expected volatility of Playa’s stock price was developed using weighted average measures of implied volatility and historic volatility for their peer group for a period equal to our expected term of the option. The weighted-average risk-free interest rate was based on a zero coupon U.S. Treasury instrument whose term was consistent with the expected term. We anticipate receiving cumulative preferred dividends on our preferred shares; therefore, the expected dividend yield was assumed to be 10% per annum compounding quarterly for two years and increasing to 12% after the second year, with such dividends to be paid-in-kind.
A summary of the significant assumptions used to estimate the fair value of our preferred investment during the year ended December 31, 2013 is as follows:
 
Year Ended December 31, 2013
Expected term
2 years

Risk-free Interest Rate
0.38
%
Volatility
47.7
%
Dividend Yield
10
%


Our valuation considers a number of objective and subjective factors that we believe market participants would consider, including: Playa's business and results of operations, including related industry trends affecting Playa's operations; Playa's forecasted operating performance and projected future cash flows; liquidation preferences, redemption rights, and other rights and privileges of Playa's preferred stock; and market multiples of comparable peer companies.

As of December 31, 2013, financial forecasts were used in the computation of the enterprise value using the income approach. The financial forecasts were based on assumed revenue growth rates and operating margin levels. The risks associated with achieving these forecasts were assessed in selecting the appropriate cost of capital. There is inherent uncertainty in our assumptions, and fluctuations in these assumptions will result in different estimates of fair value. Due to the lack of availability in market data, the preferred shares are classified as Level Three. Based on the assumptions used for the year ended December 31, 2013, the fair value of our preferred shares was $278 million and is recorded in other assets on the consolidated balance sheets, resulting in a $7 million increase in other comprehensive income as of December 31, 2013. See Note 4 for further details on our marketable securities.
The impact to net income from total gains or losses included in net gains and interest income from marketable securities held to fund operating programs due to the change in unrealized gains or losses relating to assets still held at the reporting date for the years ended December 31, 2013, 2012 and 2011 was insignificant.
Derivative Instruments
Our derivative instruments are foreign currency exchange rate instruments and interest rate swaps. The instruments are valued using an income approach with factors such as interest rates and yield curves, which represent market observable inputs and are generally classified as Level Two. Credit valuation adjustments may be made to ensure that derivatives are recorded at fair value. These adjustments include amounts to reflect counterparty credit quality and our nonperformance risk. During the year ended December 31, 2013, we redeemed all of our 2015 Notes and settled the related outstanding interest rate swaps. See Note 10 for further details on our debt settlement. As of December 31, 2012, the credit valuation adjustments were insignificant. See Note 12 for further details on our derivative instruments.

Property and Equipment
Property, Plant and Equipment Disclosure [Text Block]
PROPERTY AND EQUIPMENT
Property and equipment at cost as of December 31, 2013 and 2012, consists of the following:
 
December 31, 2013
 
December 31, 2012
Land
$
672

 
$
688

Buildings
4,628

 
4,062

Leasehold improvements
254

 
248

Furniture, equipment and computers
1,376

 
1,288

Construction in progress
86

 
65

 
7,016

 
6,351

Less accumulated depreciation
(2,345
)
 
(2,212
)
Total
$
4,671

 
$
4,139


Depreciation expense was $320 million, $327 million, and $288 million for the years ended December 31, 2013, 2012 and 2011, respectively. The net book value of capital leased assets at December 31, 2013 and 2012, is $223 million and $185 million, respectively, which is net of accumulated depreciation of $80 million and $46 million, respectively.
During 2013, we acquired property and equipment of $678 million in the acquisition of the hotel formerly known as The Peabody in Orlando, Florida, property and equipment of $210 million in the acquisition of Grand Hyatt San Antonio, and property and equipment of $72 million in the acquisition of The Driskill hotel in Austin, Texas. During 2013, we sold eleven properties which had property and equipment of $315 million. Refer to Note 8 for further details on the acquisitions and dispositions in 2013.
Interest capitalized as a cost of property and equipment totaled $8 million, $4 million and $4 million for the years ended December 31, 2013, 2012 and 2011, respectively, and is recorded net in interest expense. The year ended December 31, 2013 includes an $11 million charge to asset impairments in the consolidated statements of income, related to an impairment of property and equipment recorded in our owned and leased hotels segment.
Financing Receivables
Financing Receivables
FINANCING RECEIVABLES
We have divided our financing receivables, which include loans and other financing arrangements, into three portfolio segments based on their initial measurement, risk characteristics and our method for monitoring or assessing credit risk. These portfolio segments correspond directly with our assessed class of receivables and are as follows:
Secured Financing to Hotel OwnersThese financing receivables are senior, secured mortgage loans and are collateralized by underlying hotel properties currently in operation. These loans at December 31, 2013 and December 31, 2012 include financing provided to certain franchisees for the renovation and conversion of certain franchised hotels. These franchisee loans accrue interest at fixed rates ranging between 5.0% and 5.5%. Secured financing to hotel owners at December 31, 2012 consisted primarily of a $277 million mortgage loan receivable to an unconsolidated hospitality venture which was formed to acquire ownership of a hotel property in Waikiki, Hawaii. This mortgage receivable had interest set at 30-day LIBOR +3.75% due monthly. This receivable was repaid in full, including payment of all accrued, but unpaid interest in 2013.
Vacation Ownership Mortgages Receivables—These financing receivables are comprised of various mortgage loans related to our financing of vacation ownership interval sales. As of December 31, 2013, the weighted-average interest rate on vacation ownership mortgages receivable was 13.9%.
Unsecured Financing to Hotel Owners—These financing receivables are primarily made up of individual unsecured loans and other types of financing arrangements provided to hotel owners. During 2012, we entered into a loan agreement to provide a $50 million mezzanine loan for the construction of a hotel that we will manage. Under the loan agreement, interest accrues at the greater of one-month LIBOR plus 5.0%, or 6.5%. Our other financing receivables have stated maturities and interest rates. However, the expected repayment terms may be dependent on the future cash flows of the hotels and these instruments, therefore, are not considered loans as the repayment dates are not fixed or determinable. Because these arrangements are not considered loans, we do not include them in our impaired loans analysis. Since these receivables may come due earlier than the stated maturity date, the expected maturity dates have been excluded from the maturities table below.
The three portfolio segments of financing receivables and their balances at December 31, 2013 and 2012 are as follows:
 
December 31, 2013
 
December 31, 2012
Secured financing to hotel owners
$
39

 
$
317

Vacation ownership mortgage receivables at various interest rates with varying payments through 2031 (see below)
44

 
48

Unsecured financing to hotel owners
147

 
147

 
230

 
512

Less allowance for losses
(103
)
 
(99
)
Less current portion included in receivables, net
(8
)
 
(287
)
Total long-term financing receivables, net
$
119

 
$
126


Financing receivables held by us as of December 31, 2013 are scheduled to mature as follows:
Year Ending December 31,
Secured Financing to Hotel Owners
 
Vacation Ownership Mortgage Receivables
2014
$
1

 
$
7

2015
38

 
7

2016

 
7

2017

 
5

2018

 
4

Thereafter

 
14

Total
39

 
44

Less allowance
(13
)
 
(7
)
Net financing receivables
$
26

 
$
37



Allowance for Losses and Impairments
We individually assess all loans in the secured financing to hotel owners portfolio and the unsecured financing to hotel owners portfolio for impairment. We assess the vacation ownership mortgage receivables portfolio, which consists entirely of loans, for impairment on an aggregate basis. In addition to loans, we include other types of financing arrangements in unsecured financing to hotel owners which we do not assess individually for impairment. However, we do regularly evaluate our reserves for these other financing arrangements and record provisions in the financing receivables allowance as necessary. Impairment charges for loans within all three portfolios and reserves related to our other financing arrangements are recorded as provisions in the financing receivables allowance. We consider the provisions on all of our portfolio segments to be adequate based on the economic environment and our assessment of the future collectability of the outstanding loans.
The following tables summarize the activity in our financing receivables allowance for the years ended December 31, 2013 and 2012:
 
Secured Financing
 
Vacation Ownership
 
Unsecured Financing
 
Total
Allowance at January 1, 2013
$
7

 
$
9

 
$
83

 
$
99

   Provision
6

 

 
7

 
13

   Write-offs

 
(2
)
 
(4
)
 
(6
)
   Other Adjustments

 

 
(3
)
 
(3
)
Allowance December 31, 2013
$
13

 
$
7

 
$
83

 
$
103


 
Secured Financing
 
Vacation Ownership
 
Unsecured Financing
 
Total
Allowance at January 1, 2012
$
7

 
$
8

 
$
75

 
$
90

  Provisions

 
6

 
13

 
19

  Write-offs

 
(5
)
 
(3
)
 
(8
)
  Recoveries

 

 
(2
)
 
(2
)
Allowance at December 31, 2012
$
7

 
$
9

 
$
83

 
$
99

 
 
 
 
 
 
 
 

During the year ended December 31, 2011, we recorded provisions of $4 million, $4 million and $8 million for receivables within our secured financing to hotel owners, vacation ownership mortgage receivables and unsecured financing to hotel owners portfolio segments, respectively.
We routinely evaluate loans within financing receivables for impairment. To determine whether an impairment has occurred, we evaluate the collectability of both interest and principal. A loan is considered to be impaired when the Company determines that it is probable that we will not be able to collect all amounts due under the contractual terms. We do not record interest income for impaired loans unless cash is received, in which case the payment is recorded to other income (loss), net in the accompanying consolidated statements of income. During the year ended December 31, 2013, we recorded an allowance of $6 million for loans to hotel owners that we deemed to be impaired, which was recognized within other income (loss), net in the accompanying consolidated statements of income. During the year ended December 31, 2012, we recorded an allowance of $10 million for loans and wrote off a fully impaired loan of $3 million. During the year ended December 31, 2011, we established an allowance of $4 million for loans to hotel owners that we deemed to be impaired, which was recognized within other income (loss), net in the accompanying consolidated statements of income. The gross value of our impaired loans and related reserve does increase, outside of impairments recognized, due to the accrual and related reserve of interest income on these loans.
An analysis of our loans included in secured financing to hotel owners and unsecured financing to hotel owners had the following impaired amounts at December 31, 2013 and 2012, all of which had a related allowance recorded against them:
Impaired Loans
December 31, 2013
 
Gross Loan Balance (Principal and Interest)
 
Unpaid Principal Balance
 
Related Allowance
 
Average Recorded Loan Balance
Secured financing to hotel owners
$
39

 
$
39

 
$
(13
)
 
$
40

Unsecured financing to hotel owners
51

 
37

 
(51
)
 
52


Impaired Loans
December 31, 2012
 
Gross Loan Balance (Principal and Interest)
 
Unpaid Principal Balance
 
Related Allowance
 
Average Recorded Loan Balance
Secured financing to hotel owners
$
40

 
$
39

 
$
(7
)
 
$
40

Unsecured financing to hotel owners
53

 
40

 
(53
)
 
51


Interest income recognized on these impaired loans within other income (loss), net on our consolidated statements of income for the years ended December 31, 2013, 2012, and 2011 was as follows:
Interest Income
 
Years Ended December 31,
 
2013
 
2012
 
2011
Secured financing to hotel owners
$
2

 
$
2

 
$
2

Unsecured financing to hotel owners

 
2

 
1



Credit Monitoring
On an ongoing basis, we monitor the credit quality of our financing receivables based on payment activity.
Past-due Receivables—We determine financing receivables to be past-due based on the contractual terms of each individual financing receivable agreement.
Non-Performing Receivables—Receivables are determined to be non-performing based upon the following criteria: (1) if interest or principal is more than 90 days past due for secured financing to hotel owners and unsecured financing to hotel owners; (2) if interest or principal is more than 120 days past due for vacation ownership mortgage receivables; or (3) if an impairment charge has been recorded for a loan or a provision established for our other financing arrangements. For the years ended December 31, 2013 and 2012, no interest income was accrued for secured financing to hotel owners and unsecured financing to hotel owners more than 90 days past due or for vacation ownership receivables more than 120 days past due. For the years ended December 31, 2013 and 2012, insignificant interest income was accrued for vacation ownership receivables past due more than 90 days but less than 120 days.
If a financing receivable is non-performing, we place the financing receivable on non-accrual status. We only recognize interest income when received for financing receivables on non-accrual status. Accrual of interest income is resumed when the receivable becomes contractually current and collection doubts are removed.
The following tables summarize our aged analysis of past-due financing receivables by portfolio segment, the gross balance of financing receivables greater than 90 days past-due and the gross balance of financing receivables on non-accrual status as of December 31, 2013 and December 31, 2012:

Analysis of Financing Receivables
December 31, 2013
 
Receivables Past Due
 
Greater than 90 Days Past Due
 
Receivables on Non-Accrual Status
Secured financing to hotel owners
$

 
$

 
$
39

Vacation ownership mortgage receivables
2

 

 

Unsecured financing to hotel owners*
3

 
3

 
82

Total
$
5

 
$
3

 
$
121



Analysis of Financing Receivables
December 31, 2012
 
Receivables Past Due
 
Greater than 90 Days Past Due
 
Receivables on Non-Accrual Status
Secured financing to hotel owners
$

 
$

 
$
40

Vacation ownership mortgage receivables
2

 

 

Unsecured financing to hotel owners*
3

 
3

 
81

Total
$
5

 
$
3

 
$
121


* Certain of these receivables have been placed on non-accrual status and we have recorded allowances for these receivables based on estimates of future cash flows available for payment of these financing receivables. However, a majority of these payments are not past due.

Fair Value—We estimated the fair value of financing receivables to approximate $130 million and $417 million as of December 31, 2013 and December 31, 2012, respectively. We estimated the fair value of financing receivables using discounted cash flow analysis based on current market assumptions for similar types of arrangements. Based upon the availability of market data, we have classified our financing receivables as Level Three. The primary sensitivity in these calculations is based on the selection of appropriate interest and discount rates. Fluctuations in these assumptions will result in different estimates of fair value.

 
Asset (Liability)
 
December 31, 2013
 
Carrying Value
 
Fair Value
 
Quoted Prices in Active Markets for Identical Assets (Level One)
 
Significant Other Observable Inputs (Level Two)
 
Significant Unobservable Inputs (Level Three)
Financing receivables
 
 
 
 
 
 
 
 
 
Secured financing to hotel owners
$
26

 
$
28

 
$

 
$

 
$
28

Vacation ownership mortgage receivable
37

 
38

 

 

 
38

Unsecured financing to hotel owners
64

 
64

 

 

 
64


 
Asset (Liability)
 
December 31, 2012
 
Carrying Value
 
Fair Value
 
Quoted Prices in Active Markets for Identical Assets (Level One)
 
Significant Other
Observable Inputs
(Level Two)
 
Significant Unobservable Inputs (Level Three)
Financing receivables
 
 
 
 
 
 
 
 
 
Secured financing to hotel owners
$
310

 
$
314

 
$

 
$

 
$
314

Vacation ownership mortgage receivable
39

 
39

 

 

 
39

Unsecured financing to hotel owners
64

 
64

 

 

 
64

Acquisitions, Dispositions, And Discontinued Operations
Acquisitions, Dispositions, And Discontinued Operations
    ACQUISITIONS, DISPOSITIONS, AND DISCONTINUED OPERATIONS

We continually assess and execute strategic acquisitions and dispositions to complement our current business.
Acquisitions
Hyatt Regency Orlando —During the year ended December 31, 2013, we acquired The Peabody in Orlando, Florida for a total purchase price of approximately $716 million. As part of the purchase, we acquired cash and cash equivalents of $2 million, resulting in a net purchase price of $714 million.
The following table summarizes the preliminary estimated fair value of the identifiable assets acquired and liabilities assumed, which are primarily recorded in our owned and leased hotels segment at the date of acquisition (in millions):
Cash and cash equivalents
$
2

Prepaids and other current assets
3

Property and equipment
678

Intangibles
39

Total assets
722

Current liabilities
6

Total liabilities
6

     Total net assets acquired
$
716



The $716 million purchase price consists of $678 million of property and equipment, which have been included in our owned and leased hotels segment, $8 million of definite lived intangibles, which have been included in our owned and leased hotels segment, and $31 million of definite lived intangibles, which have been included in our Americas management and franchising segment. The definite lived intangibles are comprised of $31 million of management intangibles and $8 million of advanced bookings and will be amortized over a useful life of 20 years and 7 years, respectively. The preliminary estimated fair value asset allocation indicates that the purchase price approximates the fair value of the assets acquired and there will be no goodwill. We began managing this property in the year ended December, 31, 2013, as the Hyatt Regency Orlando.
The results of the Hyatt Regency Orlando since the acquisition date have been included in our consolidated financial statements.  The following table presents the results of this property since the acquisition date on a stand-alone basis (in millions):
Hyatt Regency Orlando operations included in 2013 results
 
Year Ended
 
December 31, 2013
Revenues
 
$
30

Income
 
(3
)


The following table presents our revenues and income on a pro forma basis as if we had completed the acquisition and rebranding of the Hyatt Regency Orlando as of January 1, 2012 (in millions):
 
 
 
Year Ended December 31,
 
 
2013
 
2012
Pro forma revenues
 
$
4,295

 
$
4,077

Pro forma income
 
218

 
78


The pro forma income for the year ended December 31, 2013 excludes $4 million of transaction costs that were recorded to other income (loss), net on our consolidated statements of income. The year ended December 31, 2012 pro forma income was adjusted to include these charges. See "Like-Kind Exchange Agreements" below, as the purchase of Hyatt Regency Orlando has been designated as a like-kind exchange.
Grand Hyatt San Antonio—We previously held a 30% interest in the entity which owns the Grand Hyatt San Antonio hotel. Accordingly, we accounted for the investment as an unconsolidated hospitality venture under the equity method. During the year ended December 31, 2013, we purchased the remaining 70% interest in this entity.
Total value of net assets acquired
$
67

Previous investment in Grand Hyatt San Antonio
(7
)
Purchase price to acquire our joint venture partner's interest
(16
)
 
$
44


As part of the acquisition of our partner's interest in the hospitality venture, we repaid $44 million of mezzanine debt that was held at the hospitality venture. This transaction has been accounted for as a step acquisition, which resulted in an insignificant gain on our previously held investment.
The following table summarizes the preliminary estimated fair value of the identifiable assets acquired and liabilities assumed, which are primarily recorded in our owned and leased hotels segment at the date of acquisition (in millions):
Cash and cash equivalents
$
1

Restricted cash
10

Deferred tax assets
5

Property and equipment
210

Intangibles
24

Goodwill
14

Other assets
11

Total assets
275

Current liabilities
11

Long-term debt
197

Total liabilities
208

     Total net assets acquired
$
67


The preliminary purchase price allocation for this acquisition created goodwill of $14 million at the date of acquisition, of which $3 million is deductible for tax purposes. The goodwill is recorded within our owned and leased hotels segment. The definite lived intangibles are comprised of $12 million of management intangibles and $12 million of lease related intangibles and will be amortized over a useful life of 15 years and 75 years, respectively. The deferred tax asset of $5 million relates primarily to property and equipment. As part of the acquisition, we acquired $200 million of outstanding Tax-Exempt Contract Revenue Empowerment Zone Bonds, Series 2005A and Contract Revenue Bonds, Senior Taxable Series 2005B. See Note 10 for details of these bonds. In connection with recording the acquisition, we wrote-off $11 million of contract acquisition costs, which has been recorded to asset impairments on our consolidated statements of income within our Americas management and franchising segment, see Note 9.
The Driskill—During the year ended December 31, 2013, we acquired The Driskill hotel in Austin, Texas ("The Driskill") for a purchase price of approximately $85 million. The Driskill has a long-standing presence in a market which we view as a key location for our guests. Due to the iconic nature of the hotel and its membership in the Historic Hotels of America and Associated Luxury Hotels International, we have chosen to retain The Driskill name. Of the total $85 million purchase price, significant assets acquired consist of $72 million of property and equipment, a $7 million indefinite-lived brand intangible, a $5 million management intangible and $1 million of other assets which have been included primarily in our owned and leased hotels segment.
Hyatt Regency Birmingham—During the year ended December 31, 2012, we acquired the Hyatt Regency Birmingham in the United Kingdom for a total purchase price of approximately $44 million. As part of the purchase, we acquired cash and cash equivalents of $1 million, resulting in a net purchase price of $43 million. Of the total purchase price of $44 million, $38 million was property and equipment and the remaining assets acquired relate to working capital. The fair value asset allocation determined that the purchase price approximated the fair value of the property and equipment acquired and there was no goodwill.
Hyatt Regency Mexico City—During the year ended December 31, 2012, we acquired all of the outstanding shares of capital stock of a company that owned a full service hotel in Mexico City, Mexico in order to expand our presence in the region. The total purchase price was approximately $202 million. As part of the purchase, we acquired cash and cash equivalents of $12 million, resulting in a net purchase price of $190 million. We began managing this property during the second quarter of 2012 as the Hyatt Regency Mexico City.
In conjunction with the acquisition, we entered into a holdback escrow agreement. Pursuant to the holdback escrow agreement, we withheld $11 million from the purchase price and placed it into an escrow account, which was classified as restricted cash on our consolidated balance sheet. During the year ended December 31, 2012, we released $1 million from escrow to the seller. As of December 31, 2013, the remaining funds in the escrow account had been released to the seller.
The following table summarizes the fair value of the identifiable assets acquired and liabilities assumed for Hyatt Regency Mexico City as of the acquisition date, primarily in our owned and leased hotels segment (in millions):
Cash and cash equivalents
$
12

Other current assets
4

Land, property, and equipment
190

Intangibles
12

Goodwill
29

Total assets
247

Current liabilities
4

Other long-term liabilities
41

Total liabilities
45

     Total net assets acquired
$
202

The acquisition created goodwill of $29 million at the date of acquisition, which is not deductible for tax purposes and is recorded within our owned and leased segment. The definite lived intangibles, which are substantially comprised of management intangibles, are being amortized over a weighted average useful life of 17 years. The other long-term liabilities consist of a $41 million deferred tax liability, the majority of which relates to property and equipment.
LodgeWorks—During 2011, we acquired 20 hotels from LodgeWorks, branding, management and franchising rights to an additional four hotels, and other assets for a purchase price of approximately $661 million. Of the four hotels for which we acquired management rights, three joined our portfolio in 2011 and one joined our portfolio in the first half of 2012. The number of assets within our owned and leased hotels segment increased as a result of this acquisition.
 In conjunction with the acquisition, we entered into a holdback escrow agreement with LodgeWorks. Pursuant to the holdback escrow agreement, we withheld approximately $20 million from the purchase price and placed it into an escrow account. During 2012, the funds in the escrow account were released to LodgeWorks.
Woodfin Suites—During 2011, we acquired three Woodfin Suites properties in California for a total purchase price of approximately $77 million and rebranded them as Hyatt Summerfield Suites and, subsequently, as Hyatt House hotels.
Dispositions
Hyatt Key West—During the year ended December 31, 2013, we sold Hyatt Key West for $74 million, net of closing costs, to an unrelated third party, resulting in a pre-tax gain of $61 million. The Company entered into a long-term management agreement with the purchaser of the hotel. The gain on sale has been deferred and is being recognized in management and franchise fees over the term of the management contract, within our Americas management and franchising segment. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below, as proceeds from the sale of Hyatt Key West are being held as restricted for use in a potential like-kind exchange.
Andaz Napa—During the year ended December 31, 2013, we sold Andaz Napa for $71 million, net of closing costs, to an unrelated third party, resulting in a pre-tax gain of $27 million. The Company entered into a long-term management agreement with the purchaser of the hotel. The gain on sale has been deferred and is being recognized in management and franchise fees over the term of the management contract, within our Americas management and franchising segment. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below, as proceeds from the sale of Andaz Napa had been held as restricted for use in a potential like-kind exchange. As a closing condition of the Andaz Napa transaction, an affiliate of the purchaser and Hyatt entered into a purchase and sale agreement for the Andaz Savannah.
Andaz Savannah—During the year ended December 31, 2013, we sold Andaz Savannah for $42 million, net of closing costs, to an unrelated third party, resulting in a pre-tax gain of $4 million. The Company entered into a long-term management agreement with the purchaser of the hotel. The gain on sale has been deferred and is being recognized in management and franchise fees over the term of the management contract, within our Americas management and franchising segment. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment.
Hyatt Regency Denver Tech—During the year ended December 31, 2013, we sold Hyatt Regency Denver Tech for $59 million, net of closing costs, to an unrelated third party, and entered into a long-term franchise agreement with the purchaser of the hotel. The sale resulted in a pre-tax gain of $26 million, which has been recognized in gains on sales of real estate on our consolidated statements of income for the year ended December 31, 2013. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below, as proceeds from the sale of Hyatt Regency Denver Tech had been held as restricted for use in a potential like-kind exchange.
Hyatt Regency Santa Clara—During the year ended December 31, 2013, we sold Hyatt Regency Santa Clara for $91 million, net of closing costs, to an unrelated third party, and entered into a long-term management agreement with the purchaser of the property. As part of the sale agreement, we have the potential for an additional earn-out of up to $7 million based on the hotel's performance in 2013. If achieved, this contingent payment will be received in 2014. At that time, the gain will be deferred and recognized in management and franchise fees over the term of the management contract. The sale resulted in an insignificant loss, which has been recognized in gains on sales of real estate on our consolidated statements of income during the year ended December 31, 2013. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below, as proceeds from the sale of Hyatt Regency Santa Clara had been held as restricted for use in a potential like-kind exchange.
Hyatt Fisherman's Wharf—During the year ended December 31, 2013, we sold Hyatt Fisherman's Wharf for $100 million, net of closing costs, to an unrelated third party, and entered into a long-term franchise agreement with the owner of the property. The sale resulted in a pre-tax gain of $55 million, which has been recognized in gains on sales of real estate on our consolidated statements of income for the year ended December 31, 2013. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below, as proceeds from the sale of Hyatt Fisherman's Wharf had been held as restricted for use in a potential like-kind exchange.
Hyatt Santa Barbara—During the year ended December 31, 2013, we sold Hyatt Santa Barbara for $60 million, net of closing costs, to an unrelated third party, and entered into a long-term franchise agreement with the owner of the property. The sale resulted in a pre-tax gain of $44 million, which has been recognized in gains on sales of real estate on our consolidated statements of income during the year ended December 31, 2013. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment.
Hyatt Place 2013—During the year ended December 31, 2013, we sold four Hyatt Place properties for a combined $68 million, net of closing costs, to an unrelated third party, resulting in a pre-tax gain of approximately $4 million. Three of these properties had been classified as assets and liabilities held for sale as of December 31, 2012. The Company retained long-term management agreements for each hotel with the purchaser of the hotels. The gain on sale has been deferred and is being recognized in management and franchise fees over the term of the management contracts, within our Americas management and franchising segment. The operations of the hotels prior to the sale remain within our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below, as proceeds from the sales of two of the hotels had been held as restricted for use in a potential like-kind exchange.
Artwork—During the year ended December 31, 2013, we sold artwork to an unrelated third party and recognized a pre-tax gain of $29 million which was recognized in other income (loss), net on our consolidated statements of income. See "Like-Kind Exchange Agreements" below, as proceeds from the sale of artwork had been held as restricted for use in a potential like-kind exchange.
Hyatt Place and Hyatt House 2012—During 2012, we sold seven Hyatt Place properties and one Hyatt House property for a combined $87 million, net of closing costs, to an unrelated third party, resulting in a pre-tax gain of $14 million. The Company entered into long-term management agreements for each hotel with the purchaser of the hotels. The gain on sale has been deferred and is being recognized in management and franchise fees over the term of the management contracts, within our Americas management and franchising segment. The operations of the hotels prior to the sale remain within our owned and leased hotels segment. The proceeds from the sales of four of these hotels were classified into cash and cash equivalents as we did not enter into a like-kind exchange agreement related to these four hotels. In conjunction with the sale of the other four properties we entered into a like-kind exchange agreement. See “Like-Kind Exchange Agreements,” below, for further detail.
Hyatt Place and Hyatt Summerfield Suites 2011—During 2011, we sold six Hyatt Place and two Hyatt Summerfield Suites properties to a newly formed joint venture with Noble, in which the Company holds a 40% ownership interest. The properties were sold for a combined sale price of $110 million or $90 million, net of our $20 million contribution to the new joint venture (see Note 3). The sale resulted in a pre-tax loss of $2 million, which has been recognized in gains (losses) on sales of real estate on our consolidated statements of income. In conjunction with the sale, we entered into a long-term franchise agreement with the joint venture for each property. The six Hyatt Place and two Hyatt Summerfield Suites hotels continue to be operated as Hyatt-branded hotels and the two Hyatt Summerfield Suites hotels were subsequently rebranded as Hyatt House properties. The operating results and financial positions of these hotels prior to the sale remain within our owned and leased hotels segment. In conjunction with the sale of four of the properties we entered into a like-kind exchange agreement. See “Like-Kind Exchange Agreements,” below, for further detail.
Hyatt Regency Minneapolis—During 2011, we entered into an agreement with third parties to form a new joint venture to own and operate the Hyatt Regency Minneapolis. We contributed a fee simple interest in the Hyatt Regency Minneapolis to the joint venture as part of our equity interest subject to a $25 million loan to the newly formed joint venture. HHC has guaranteed the repayment of the loan (see Note 16). In conjunction with our contribution, we entered into a long-term management contract with the joint venture. The terms of the joint venture provided for capital contributions by the non-HHC partners that were used to complete a full renovation of the Hyatt Regency Minneapolis.
Like-Kind Exchange Agreements
In conjunction with the fourth quarter 2013 sale of Hyatt Key West, we entered into a like-kind exchange agreement with an intermediary. Pursuant to the like-kind exchange agreement, the proceeds from the sale of this hotel were placed into an escrow account administered by an intermediary. Accordingly, we classified net proceeds of $74 million related to this property as restricted cash on our consolidated balance sheets as of December 31, 2013. Pursuant to the like-kind exchange agreement, the cash remains restricted for a maximum of 180 days from the date of execution pending consummation of the exchange transaction.
In conjunction with the 2013 sales of Andaz Napa, Hyatt Regency Denver Tech, Hyatt Regency Santa Clara and Hyatt Fisherman's Wharf we entered into like-kind exchange agreements with an intermediary. Pursuant to the like-kind exchange agreements, the combined net proceeds of $321 million from the sales of these hotels were placed into an escrow account administered by an intermediary. During the year ended December 31, 2013, these net proceeds were utilized in a like-kind exchange agreement to acquire The Peabody Orlando.
During the year ended December 31, 2013, we released the net proceeds from the first quarter 2013 sales of two of the four Hyatt Place properties discussed above of $23 million and the 2012 sales of four Hyatt Place properties of $44 million from restricted cash on our consolidated balance sheets, as like-kind exchange agreements were not consummated within allowable time periods.
In conjunction with the second quarter 2013 sale of artwork, we placed proceeds received into restricted cash pursuant to a like-kind exchange agreement administered by an intermediary. We used a portion of the proceeds to fund artwork purchases and released the remaining amount from restricted cash.
In conjunction with the sale of four of the Hyatt Place properties in 2011, we entered into a like-kind exchange agreement with an intermediary. Pursuant to the like-kind exchange agreement, the net proceeds of $35 million from the sales of these four hotels were placed into an escrow account administered by the intermediary. During the second half of 2011, these net proceeds were utilized in a like-kind exchange agreement to acquire one of the LodgeWorks properties.
In conjunction with the 2010 sales of the Hyatt Deerfield, Grand Hyatt Tampa Bay and Hyatt Regency Greenville, we entered into like-kind exchange agreements with an intermediary. Pursuant to the like-kind exchange agreements, the proceeds from the sale of each hotel were placed into an escrow account administered by the intermediary. During the year ended December 31, 2011, we released the net proceeds from the sales of Grand Hyatt Tampa Bay and Hyatt Regency Greenville of $56 million and $15 million, respectively, from restricted cash on our consolidated balance sheet, as a like-kind exchange agreement was not consummated within applicable time periods. The net proceeds of $26 million from the sale of Hyatt Deerfield were utilized in a like-kind exchange agreement to acquire one of the Woodfin Suites properties.
Assets Held For Sale
During 2012, we committed to a plan to sell three Hyatt Place properties to a third party and classified the value of this portfolio as assets held for sale in the amount of $34 million, of which $33 million related to property and equipment, net, and liabilities held for sale in the amount of $1 million at December 31, 2012, which is included in our owned and leased hotels segment. The sale transaction was completed in 2013.
During 2011, we closed on the sale of a Company owned airplane to a third party for net proceeds of $18 million. The transaction resulted in a small pre-tax gain upon sale.
As a result of certain of the above-mentioned dispositions, we have agreed to provide indemnifications to third-party purchasers for certain liabilities incurred prior to sale and for breach of certain representations and warranties made during the sales process, such as representations of valid title, authority, and environmental issues that may not be limited by a contractual monetary amount. These indemnification agreements survive until the applicable statutes of limitation expire, or until the agreed upon contract terms expire.
Goodwill And Intangible Assets
Goodwill And Intangible Assets
GOODWILL AND INTANGIBLE ASSETS
The following is a summary of changes in the carrying amount of goodwill for the years ended December 31, 2013 and 2012:
 
Owned and Leased Hotels
 
Americas Management and Franchising
 
Other
 
Total*
Balance as of January 1, 2012
 
 
 
 
 
 
 
Goodwill
$
158

 
$
33

 
$
4

 
$
195

Accumulated impairment losses
(93
)
 

 

 
(93
)
Goodwill, net
65

 
33

 
4

 
102

Activity during the year
 
 
 
 
 
 
 
Goodwill acquired
29

 

 

 
29

Foreign exchange**
2

 

 

 
2

Balance as of December 31, 2012
 
 
 
 
 
 
 
Goodwill
189

 
33

 
4

 
226

Accumulated impairment losses
(93
)
 

 

 
(93
)
Goodwill, net
$
96

 
$
33

 
$
4

 
$
133

Activity during the year
 
 
 
 
 
 
 
Goodwill acquired
14

 

 

 
14

Balance as of December 31, 2013
 
 
 
 
 
 
 
Goodwill
203

 
33

 
4

 
240

Accumulated impairment losses
(93
)
 

 

 
(93
)
Goodwill, net
$
110

 
$
33

 
$
4

 
$
147


 
*
The ASPAC management and franchising and EAME/SW Asia management segments contained no goodwill balances as of December 31, 2013 and 2012, respectively.

**
Foreign exchange translation adjustments related to the acquisition of Hyatt Regency Mexico City (see Note 8).
During the year ended December 31, 2013, we recognized $14 million of goodwill in conjunction with the acquisition of the interests in the entity that owns the Grand Hyatt San Antonio hotel (see Note 8). At December 31, 2013, our indefinite-lived brand intangible acquired as part of the 2013 acquisition of The Driskill was $7 million (see Note 8).
Definite lived intangible assets primarily include contract acquisition costs, acquired franchise and management intangibles, lease related intangibles, and advanced booking intangibles. Contract acquisition costs and franchise and management intangibles are generally amortized on a straight-line basis over their contract terms, which range from approximately 5 to 40 years and 15 to 30 years, respectively. Lease related intangibles are amortized on a straight-line basis over the lease term. Advanced bookings are generally amortized on a straight-line basis over the period of the advanced bookings.
During the year ended December 31, 2013, we entered into a master agreement with a hotel owner for 30 year management agreements for four hotels in France. Using exchange rates at December 31, 2013, the value of the contract acquisition cost at inception was $123 million. The intangible is being amortized into expense on a straight-line basis over the 30 year term of the management agreements, which began in the second quarter of 2013 in conjunction with the conversion of the hotels to Hyatt management.
The following is a summary of intangible assets at December 31, 2013 and 2012:
 
December 31, 2013
 
Weighted Average Useful Lives
 
December 31, 2012
Contract acquisition costs
$
348

 
26

 
$
203

Franchise and management intangibles
170

 
23

 
122

Lease related intangibles
155

 
109

 
139

Advanced booking intangibles
8

 
7

 
2

Brand intangible
7

 

 

Other
8

 
13

 
8

 
696

 
 
 
474

Accumulated amortization
(105
)
 
 
 
(86
)
Intangibles, net
$
591

 
 
 
$
388



Amortization expense relating to intangible assets for the years ended December 31, 2013, 2012, and 2011 was as follows:
 
Years Ended December 31,
 
2013
 
2012
 
2011
Amortization Expense
$
25

 
$
26

 
$
17



Amortization expense of $1 million and $7 million was recognized in 2013 and 2012, respectively, related to the accelerated amortization of an intangible asset.
We estimate amortization expense for definite lived intangibles for the years 2014 through 2018 to be:
Years Ending December 31,
 
2014
$
27

2015
25

2016
24

20