Feb 8, 2007
/FIRST ADD -- DCTH004D -- Marriott International Earnings/
/FIRST ADD -- DCTH004D -- Marriott International Earnings/
Feb 08, 2007 /PRNewswire via COMTEX News Network/ --
MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share amounts)
Sixteen Weeks Ended
-------------------------- Percent
December 29, December 30, Better/
2006 2005 (Worse)
------------ ------------ --------
REVENUES
Base management fees $173 $155 12
Franchise fees 121 103 17
Incentive management fees 96 69 39
Owned, leased, corporate housing and
other revenue(1) 354 361 (2)
Timeshare sales and services(2) 526 413 27
Cost reimbursements(3) 2,528 2,423 4
Synthetic fuel 63 117 (46)
------------ ------------
Total Revenues 3,861 3,641 6
OPERATING COSTS AND EXPENSES
Owned, leased and corporate housing -
direct(4) 302 298 (1)
Timeshare - direct 393 357 (10)
Reimbursed costs 2,528 2,423 (4)
General, administrative and other(5) 237 196 (21)
Synthetic fuel 96 146 34
------------ ------------
Total Expenses 3,556 3,420 (4)
------------ ------------
OPERATING INCOME 305 221 38
Gains and other income(6) 4 84 (95)
Interest expense (38) (37) (3)
Interest income 11 14 (21)
Equity in earnings(7) 1 18 (94)
------------ ------------
INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST 283 300 (6)
Provision for income taxes (63) (76) 17
Minority interest - 13 (100)
------------ ------------
NET INCOME $220 $237 (7)
============ ============
EARNINGS PER SHARE - Basic(8) $0.56 $0.57 (2)
============ ============
EARNINGS PER SHARE - Diluted(8) $0.52 $0.54 (4)
============ ============
Basic Shares(8) 394.8 414.6
Diluted Shares(8) 419.9 441.5
(1) Owned, leased, corporate housing and other revenue includes revenue
from the properties we own or lease, revenue from our corporate
housing business, land rent income and other revenue.
(2) Timeshare sales and services includes total timeshare revenue except
for base fees, cost reimbursements, real estate gains and joint
venture earnings. For 2006 only, timeshare sales and services includes
gains on the sale of timeshare note receivable securitizations of $37
million.
(3) Cost reimbursements include reimbursements from lodging properties for
Marriott funded operating expenses.
(4) Owned, leased and corporate housing - direct expenses include
operating expenses related to our owned or leased hotels, including
lease payments, pre-opening expenses and depreciation, plus expenses
related to our corporate housing business.
(5) General, administrative and other expenses include the overhead costs
allocated to our lodging business segments, and our corporate overhead
costs and general expenses.
(6) Gains and other income includes net gains on the sale of real estate,
gains on note sales or repayments (except as noted below), gains on
the sale of joint ventures, income from cost method joint ventures and
net earn-out payments associated with our synthetic fuel operations,
and for 2005 only, timeshare note securitization gains. Timeshare
note securitization gains for 2005 totaled $40 million. See footnote
2 for information regarding timeshare note securitization gains for
2006.
(7) Equity in earnings includes our equity in earnings of unconsolidated
joint ventures.
(8) All share and per share amounts reflect the June 9, 2006, two-for-one
stock split effected in the form of a stock dividend.
Fifty-Two Weeks Ended
-------------------------- Percent
December 29, December 30, Better/
2006 2005 (Worse)
------------ ------------ --------
REVENUES
Base management fees $553 $497 11
Franchise fees 390 329 19
Incentive management fees 281 201 40
Owned, leased, corporate housing and
other revenue(1) 1,119 944 19
Timeshare sales and services(2) 1,577 1,487 6
Cost reimbursements(3) 8,075 7,671 5
Synthetic fuel 165 421 (61)
------------ ------------
Total Revenues 12,160 11,550 5
OPERATING COSTS AND EXPENSES
Owned, leased and corporate housing -
direct(4) 936 778 (20)
Timeshare - direct 1,220 1,228 1
Reimbursed costs 8,075 7,671 (5)
General, administrative and other(5) 677 753 10
Synthetic fuel 241 565 57
------------ ------------
Total Expenses 11,149 10,995 (1)
------------ ------------
OPERATING INCOME 1,011 555 82
Gains and other income(6) 59 181 (67)
Interest expense (124) (106) (17)
Interest income 45 79 (43)
Reversal of (provision for) loan losses 3 (28) 111
Equity in earnings(7) 3 36 (92)
------------ ------------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND MINORITY INTEREST 997 717 39
Provision for income taxes (286) (94) (204)
Minority interest 6 45 (87)
------------ ------------
INCOME FROM CONTINUING OPERATIONS 717 668 7
Discontinued operations, net of tax - 1 (100)
Cumulative effect of change in
accounting principle, net of tax(8) (109) - *
------------ ------------
NET INCOME $608 $669 (9)
============ ============
EARNINGS PER SHARE - Basic(9)
Earnings from continuing
operations $1.77 $1.55 14
Earnings from discontinued
operations - - *
Losses from cumulative effect of
change in accounting principle (0.27) - *
------------ ------------
Earnings per share $1.50 $1.55 (3)
============ ============
EARNINGS PER SHARE - Diluted(9)
Earnings from continuing
operations $1.66 $1.45 14
Earnings from discontinued
operations - - *
Losses from cumulative effect of
change in accounting principle (0.25) - *
------------ ------------
Earnings per share $1.41 $1.45 (3)
============ ============
Basic Shares(9) 404.1 432.7
Diluted Shares(9) 430.2 462.3
* Percent cannot be calculated.
(1) Owned, leased, corporate housing and other revenue includes revenue
from the properties we own or lease, revenue from our corporate
housing business, land rent income and other revenue.
(2) Timeshare sales and services includes total timeshare revenue except
for base fees, cost reimbursements, real estate gains and joint
venture earnings. For 2006 only, timeshare sales and services includes
gains on the sale of timeshare note receivable securitizations of $77
million.
(3) Cost reimbursements include reimbursements from lodging properties for
Marriott funded operating expenses.
(4) Owned, leased and corporate housing - direct expenses include
operating expenses related to our owned or leased hotels, including
lease payments, pre-opening expenses and depreciation, plus expenses
related to our corporate housing business.
(5) General, administrative and other expenses include the overhead costs
allocated to our lodging business segments, and our corporate overhead
costs and general expenses. Expenses in 2005 included a $94 million
charge associated with the CTF transaction as well as charges totaling
$30 million associated with our bedding incentive program.
(6) Gains and other income includes net gains on the sale of real estate,
gains on note sales or repayments (except as noted below), gains on
the sale of joint ventures, income from cost method joint ventures,
net earn-out payments associated with our synthetic fuel operations
and for 2005 only, timeshare note securitizations gains. Timeshare
note securitizations gains for 2005 totaled $69 million. See footnote
2 for information regarding timeshare note securitization gains for
2006.
(7) Equity in earnings includes our equity in earnings of unconsolidated
joint ventures.
(8) Cumulative effect of change in accounting principle, net of tax is
associated with the adoption, in the 2006 first quarter, of Statement
of Position 04-2, "Accounting for Real Estate Time-sharing
Transactions" which was issued by the American Institute of Certified
Public Accountants. The initial adoption of SOP 04-2 in our 2006
first quarter, which we reported as a cumulative effect of change in
accounting principle in our Consolidated Statement of Income, resulted
in a non-cash after-tax charge of $105 million. As a result of tax
rate adjustments in the 2006 fourth quarter, we reduced the tax
benefit associated with the initial adoption from $68 million to $64
million. Accordingly, the after-tax impact of the adoption is $109
million.
(9) All share and per share amounts reflect the June 9, 2006, two-for-one
stock split effected in the form of a stock dividend.
MARRIOTT INTERNATIONAL, INC.
Business Segments
In 2006, the company analyzed its internal reporting process and implemented changes in the fourth quarter that were designed to improve efficiency. As part of this process, we evaluated the impact on segment reporting and made certain changes that were in accordance with U.S. generally accepted accounting principles. Accordingly, we now report six operating segments as compared to five before the change and no longer allocate indirect administrative expenses to our segments.
The company is a diversified hospitality company with operations in six business segments:
-- North American Full-Service Lodging, which includes the Marriott Hotels & Resorts, Marriott Conference Centers, JW Marriott Hotels & Resorts, Renaissance Hotels & Resorts, and Renaissance ClubSport brands located in the continental United States and Canada;
-- North American Limited-Service Lodging, which includes the Courtyard, Fairfield Inn, SpringHill Suites, Residence Inn, TownePlace Suites and Marriott ExecuStay brands located in the continental United States and Canada;
-- International Lodging, which includes the Marriott Hotels & Resorts, JW Marriott Hotels & Resorts, Renaissance Hotels & Resorts, Courtyard and Marriott Executive Apartments brands located outside the continental United States and Canada;
-- Luxury Lodging, which includes The Ritz-Carlton and Bulgari Hotels & Resorts brands worldwide;
-- Timeshare, which includes the development, marketing, operation and sale of timeshare, fractional and whole ownership properties under the Marriott Vacation Club, The Ritz-Carlton Club, Grand Residences by Marriott and Horizons by Marriott Vacation Club brands worldwide; and
-- Synthetic Fuel, which includes our interest in the operation of coal- based synthetic fuel production facilities.
MARRIOTT INTERNATIONAL, INC.
Business Segments
($ in millions)
Sixteen Weeks Ended
-------------------------- Percent
December 29, December 30, Better/
2006 2005 (Worse)
------------ ------------ --------
REVENUES
North American Full-Service $1,586 $1,596 (1)
North American Limited-Service 618 599 3
International 478 410 17
Luxury 450 412 9
Timeshare 644 488 32
------------ ------------
Total lodging(1) 3,776 3,505 8
Synthetic Fuel 63 117 (46)
Other unallocated corporate 22 19 16
------------ ------------
Total $3,861 $3,641 6
============ ============
NET INCOME
North American Full-Service $141 $126 12
North American Limited-Service 109 111 (2)
International 77 79 (3)
Luxury 19 13 46
Timeshare 100 78 28
------------ ------------
Total lodging financial results(1) 446 407 10
Synthetic Fuel (after-tax) 1 33 (97)
Other unallocated corporate (87) (69) (26)
Interest income and interest expense
(excluding Synthetic Fuel) (24) (23) (4)
Income taxes (excluding Synthetic Fuel) (116) (111) (5)
------------ ------------
Total $220 $237 (7)
============ ============
(1) We consider lodging revenues and lodging financial results to be
meaningful indicators of our performance because they measure our
growth in profitability as a lodging company and enable investors to
compare the sales results of our lodging operations to those of other
lodging companies.
MARRIOTT INTERNATIONAL, INC.
Business Segments
($ in millions)
Fifty-Two Weeks Ended
-------------------------- Percent
December 29, December 30, Better/
2006 2005 (Worse)
------------ ------------ --------
REVENUES
North American Full-Service $5,196 $5,116 2
North American Limited-Service 2,060 1,886 9
International 1,411 1,017 39
Luxury 1,423 1,333 7
Timeshare 1,840 1,721 7
------------ ------------
Total lodging(1) 11,930 11,073 8
Synthetic Fuel 165 421 (61)
Other unallocated corporate 65 56 16
------------ ------------
Total $12,160 $11,550 5
============ ============
NET INCOME
North American Full-Service $455 $349 30
North American Limited-Service 380 303 25
International 237 133 78
Luxury 63 45 40
Timeshare 280 271 3
------------ ------------
Total lodging financial results(1) 1,415 1,101 29
Synthetic Fuel (after-tax) 5 125 (96)
Other unallocated corporate (251) (219) (15)
Interest income and interest expense
(excluding Synthetic Fuel) (72) (55) (31)
Income taxes (excluding Synthetic Fuel) (380) (284) (34)
------------ ------------
Total $717 $668 7
============ ============
(1) We consider lodging revenues and lodging financial results to be
meaningful indicators of our performance because they measure our
growth in profitability as a lodging company and enable investors to
compare the sales results of our lodging operations to those of other
lodging companies.
MARRIOTT INTERNATIONAL, INC.
Total Lodging Products(1)
-------------------------------------------------------------------------
Number of Properties Number of Rooms/Suites
vs. vs.
Dec. Dec. Dec. Dec. Dec. Dec.
29, 30, 30, 29, 30, 30,
Brand 2006 2005 2005 2006 2005 2005
----------------------------- -------------------------------------------
Domestic Full-Service
---------------------------
Marriott Hotels & Resorts 340 332 8 136,097 133,534 2,563
Renaissance Hotels &
Resorts 65 67 (2) 25,106 25,431 (325)
Domestic Limited-Service
------------------------------
Courtyard 650 623 27 91,226 87,539 3,687
Fairfield Inn 513 519 (6) 46,030 47,440 (1,410)
SpringHill Suites 152 136 16 17,684 15,878 1,806
Residence Inn 494 473 21 58,973 56,204 2,769
TownePlace Suites 123 122 1 12,368 12,303 65
International
-------------
Marriott Hotels & Resorts 179 175 4 51,307 49,921 1,386
Renaissance Hotels &
Resorts 71 70 1 23,120 22,801 319
Courtyard 83 69 14 14,300 12,130 2,170
Fairfield Inn 5 5 - 559 559 -
SpringHill Suites 1 1 - 124 124 -
Residence Inn 17 17 - 2,313 2,240 73
Marriott Executive
Apartments 18 17 1 3,027 2,852 175
Ramada 2 3 (1) 332 532 (200)
Luxury
------
Ritz-Carlton - North
America 35 35 - 11,616 11,616 -
Ritz-Carlton -
International 25 24 1 7,790 7,669 121
Bulgari Hotels & Resorts 2 1 1 117 58 59
Timeshare(2)
------------
Marriott Vacation Club 45 44 1 10,512 9,401 1,111
The Ritz-Carlton Club 7 4 3 546 292 254
Grand Residences by
Marriott 3 2 1 313 313 -
Horizons by Marriott
Vacation Club 2 2 - 372 328 44
----------------- ------------------------
Total 2,832 2,741 91 513,832 499,165 14,667
================= ========================
Number of Timeshare Interval, Fractional and Whole
Ownership Resorts(2)
In Active
Total(3) Sales
-------- ---------
100% Company-Developed
----------------------
Marriott Vacation Club 44 23
The Ritz-Carlton Club 3 2
Grand Residences by Marriott 3 3
Horizons by Marriott Vacation Club 2 2
Joint Ventures
--------------
Marriott Vacation Club 1 1
The Ritz-Carlton Club 4 4
-----------------------------
Total 57 35
=============================
(1) Total Lodging Products excludes the 2,046 corporate housing rental
units.
(2) Includes products in active sales which may not be ready for
occupancy.
(3) Includes resorts that are in active sales as well as those that are
sold out.
Marriott International, Inc.
Key Lodging Statistics
Comparable Company-Operated North American Properties
--------------------------------------------------------------------------
Sixteen Weeks Ended December 29, 2006 and December 30, 2005
-----------------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Brand 2006 2005 2006 2005 2006 2005
--------------------------------------------------------------------------
Marriott Hotels
& Resorts $123.11 7.9% 70.1% -0.9% pts. $175.71 9.3%
Renaissance Hotels &
Resorts $117.14 4.3% 69.2% -1.7% pts. $169.29 6.8%
Composite North American
Full-Service(1) $122.15 7.3% 69.9% -1.1% pts. $174.69 8.9%
The Ritz-Carlton(2) $219.04 9.5% 69.4% 0.4% pts. $315.47 8.9%
Composite North American
Full-Service & Luxury(3) $131.71 7.6% 69.9% -0.9% pts. $188.50 9.1%
Residence Inn $88.36 2.9% 74.0% -4.8% pts. $119.33 9.7%
Courtyard $82.23 8.4% 67.9% -1.1% pts. $121.15 10.3%
TownePlace Suites $56.19 5.6% 70.2% -3.5% pts. $80.08 10.8%
SpringHill Suites $70.49 3.5% 68.2% -4.0% pts. $103.39 9.6%
Composite North American
Limited-Service(4) $81.40 6.4% 69.7% -2.4% pts. $116.86 10.1%
Composite - All(5) $110.23 7.2% 69.8% -1.6% pts. $157.97 9.7%
Comparable Systemwide North American Properties
--------------------------------------------------------------------------
Sixteen Weeks Ended December 29, 2006 and December 30, 2005
-----------------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Brand 2006 2005 2006 2005 2006 2005
--------------------------------------------------------------------------
Marriott Hotels
& Resorts $108.59 7.0% 68.5% -0.6% pts. $158.60 7.9%
Renaissance Hotels &
Resorts $108.80 5.8% 69.7% -0.4% pts. $156.13 6.5%
Composite North American
Full-Service(1) $108.62 6.9% 68.7% -0.5% pts. $158.22 7.7%
The Ritz-Carlton(2) $219.04 9.5% 69.4% 0.4% pts. $315.47 8.9%
Composite North American
Full-Service & Luxury(3) $115.49 7.2% 68.7% -0.5% pts. $168.10 7.9%
Residence Inn $86.47 5.2% 75.6% -2.5% pts. $114.42 8.7%
Courtyard $81.88 7.7% 69.3% -1.0% pts. $118.20 9.3%
Fairfield Inn $55.23 8.1% 67.0% -0.5% pts. $82.46 8.9%
TownePlace Suites $57.67 6.4% 71.5% -2.6% pts. $80.69 10.3%
SpringHill Suites $70.01 6.0% 71.0% -2.2% pts. $98.65 9.2%
Composite North American
Limited-Service(4) $75.35 6.8% 70.7% -1.5% pts. $106.61 9.1%
Composite - All(5) $91.49 7.0% 69.9% -1.1% pts. $130.92 8.6%
(1) Includes the Marriott Hotels & Resorts and Renaissance Hotels &
Resorts brands.
(2) Statistics for The Ritz-Carlton are for September through December.
(3) Includes the Marriott Hotels & Resorts, Renaissance Hotels & Resorts
and The Ritz-Carlton brands.
(4) Includes the Courtyard, Residence Inn, TownePlace Suites, Fairfield
Inn and SpringHill Suites brands.
(5) Includes the Marriott Hotels & Resorts, Renaissance Hotels & Resorts,
The Ritz-Carlton, Residence Inn, Courtyard, Fairfield Inn, TownePlace
Suites, and SpringHill Suites brands.
Marriott International, Inc.
Key Lodging Statistics
Comparable Company-Operated North American Properties
---------------------------------------------------------------------------
Fifty-Two Weeks Ended December 29, 2006 and December 30, 2005
-------------------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Brand 2006 2005 2006 2005 2006 2005
--------------------------------------------------------------------------
Marriott Hotels
& Resorts $121.58 8.3% 72.3% -0.6% pts. $168.11 9.1%
Renaissance Hotels &
Resorts $118.57 9.6% 72.8% 0.6% pts. $162.96 8.7%
Composite North American
Full-Service(1) $121.10 8.5% 72.4% -0.4% pts. $167.27 9.0%
The Ritz-Carlton(2) $223.88 10.3% 72.9% 2.1% pts. $307.20 7.1%
Composite North American
Full-Service & Luxury(3) $130.52 8.7% 72.4% -0.1% pts. $180.17 8.9%
Residence Inn $92.35 6.8% 78.3% -1.8% pts. $117.99 9.2%
Courtyard $84.62 10.3% 70.9% -0.4% pts. $119.30 10.9%
TownePlace Suites $59.28 10.4% 75.3% -0.3% pts. $78.68 10.9%
SpringHill Suites $74.42 7.8% 72.3% -2.0% pts. $102.86 10.7%
Composite North American
Limited-Service(4) $84.41 9.1% 73.3% -0.8% pts. $115.24 10.4%
Composite - All(5) $110.74 8.9% 72.8% -0.4% pts. $152.14 9.5%
Comparable Systemwide North American Properties
---------------------------------------------------------------------------
Fifty-Two Weeks Ended December 29, 2006 and December 30, 2005
-------------------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Brand 2006 2005 2006 2005 2006 2005
--------------------------------------------------------------------------
Marriott Hotels & Resorts $109.48 8.6% 70.9% 0.2% pts. $154.37 8.3%
Renaissance Hotels &
Resorts $109.75 10.0% 72.2% 1.1% pts. $151.91 8.4%
Composite North American
Full-Service(1) $109.52 8.9% 71.1% 0.3% pts. $153.99 8.3%
The Ritz-Carlton(2) $223.88 10.3% 72.9% 2.1% pts. $307.20 7.1%
Composite North American
Full-Service & Luxury(3) $116.11 9.0% 71.2% 0.5% pts. $163.03 8.3%
Residence Inn $90.15 7.6% 79.2% -0.5% pts. $113.85 8.2%
Courtyard $84.57 9.7% 72.5% 0.1% pts. $116.67 9.5%
Fairfield Inn $58.01 10.6% 70.7% 1.0% pts. $82.05 9.1%
TownePlace Suites $60.35 9.9% 75.7% -0.2% pts. $79.69 10.2%
SpringHill Suites $73.16 10.0% 74.1% 0.2% pts. $98.76 9.8%
Composite North American
Limited-Service(4) $78.34 9.2% 74.2% 0.1% pts. $105.65 9.0%
Composite - All(5) $93.47 9.1% 73.0% 0.3% pts. $128.07 8.7%
(1) Includes the Marriott Hotels & Resorts and Renaissance Hotels &
Resorts brands.
(2) Statistics for The Ritz-Carlton are for January through December.
(3) Includes the Marriott Hotels & Resorts, Renaissance Hotels & Resorts
and The Ritz-Carlton brands.
(4) Includes the Courtyard, Residence Inn, TownePlace Suites, Fairfield
Inn and SpringHill Suites brands.
(5) Includes the Marriott Hotels & Resorts, Renaissance Hotels & Resorts,
The Ritz-Carlton, Residence Inn, Courtyard, Fairfield Inn, TownePlace
Suites, and SpringHill Suites brands.
Marriott International, Inc.
Key Lodging Statistics
Comparable Company-Operated International Properties(1)
---------------------------------------------------------------------------
Four Months Ended December 31, 2006 and December 31, 2005
-------------------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Region 2006 2005 2006 2005 2006 2005
--------------------------------------------------------------------------
Caribbean & Latin
America $112.38 11.2% 71.4% -0.6% pts. $157.41 12.1%
Continental Europe $115.86 8.4% 75.3% 2.1% pts. $153.93 5.4%
United Kingdom $194.78 13.1% 80.9% 3.7% pts. $240.89 8.0%
Middle East & Africa $103.95 10.6% 66.8% 0.5% pts. $155.71 9.8%
Asia Pacific(2) $106.40 13.0% 76.1% 0.2% pts. $139.90 12.7%
Regional Composite(3) $117.34 10.9% 74.9% 0.9% pts. $156.59 9.6%
International Luxury(4) $191.52 16.8% 74.8% 3.9% pts. $256.05 10.7%
Total International(5) $122.16 11.4% 74.9% 1.1% pts. $163.04 9.9%
Worldwide(6) $113.52 8.5% 71.2% -0.8% pts. $159.44 9.7%
Comparable Systemwide International Properties(1)
---------------------------------------------------------------------------
Four Months Ended December 31, 2006 and December 31, 2005
-------------------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Region 2006 2005 2006 2005 2006 2005
--------------------------------------------------------------------------
Caribbean & Latin
America $102.83 12.2% 70.6% -1.0% pts. $145.68 13.8%
Continental Europe $115.24 8.8% 73.0% 0.6% pts. $157.95 7.8%
United Kingdom $168.15 11.8% 77.8% 2.6% pts. $216.14 8.0%
Middle East & Africa $97.92 8.4% 67.0% -0.7% pts. $146.24 9.6%
Asia Pacific(2) $108.32 11.2% 76.8% 0.2% pts. $141.13 10.9%
Regional Composite(3) $114.88 10.3% 74.2% 0.2% pts. $154.78 10.0%
International Luxury(4) $191.52 16.8% 74.8% 3.9% pts. $256.05 10.7%
Total International(5) $118.95 10.8% 74.2% 0.4% pts. $160.20 10.2%
Worldwide(6) $96.17 7.8% 70.6% -0.8% pts. $136.17 9.0%
(1) International financial results are reported on a period basis, while
International statistics are reported on a monthly basis.
Statistics are in constant dollars for September through December.
Excludes North America (except for Worldwide).
(2) Does not include Hawaii.
(3) Regional information includes the Marriott Hotels & Resorts,
Renaissance Hotels & Resorts and Courtyard brands. Includes Hawaii.
(4) International Luxury includes The Ritz-Carlton properties outside of
North America and Bulgari Hotels & Resorts.
(5) Includes Regional Composite, The Ritz-Carlton International and
Bulgari Hotels & Resorts brands.
(6) Includes international statistics for the four calendar months ended
December 31, 2006 and December 31, 2005, and North American
statistics for the sixteen weeks ended December 29, 2006 and
December 30, 2005. Includes the Marriott Hotels & Resorts, The Ritz-
Carlton, Bulgari Hotels & Resorts, Renaissance Hotels & Resorts,
Residence Inn, Courtyard, TownePlace Suites, Fairfield Inn and
SpringHill Suites brands.
Marriott International, Inc.
Key Lodging Statistics
Comparable Company-Operated International Properties(1)
---------------------------------------------------------------------------
Twelve Months Ended December 31, 2006 and December 31, 2005
-------------------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Region 2006 2005 2006 2005 2006 2005
--------------------------------------------------------------------------
Caribbean & Latin
America $119.81 12.0% 74.9% 1.5% pts. $159.93 9.7%
Continental Europe $106.95 9.6% 72.6% 2.0% pts. $147.28 6.6%
United Kingdom $179.44 14.6% 79.6% 3.5% pts. $225.38 9.5%
Middle East & Africa $98.58 10.5% 68.9% -0.3% pts. $143.12 11.0%
Asia Pacific(2) $96.28 12.7% 75.8% 1.0% pts. $127.09 11.3%
Regional Composite(3) $110.53 11.4% 74.6% 1.3% pts. $148.13 9.5%
International Luxury(4) $173.35 9.1% 71.7% -0.1% pts. $241.90 9.2%
Total International(5) $114.61 11.1% 74.4% 1.2% pts. $153.99 9.4%
Worldwide(6) $111.75 9.5% 73.2% 0.0% pts. $152.63 9.5%
Comparable Systemwide International Properties(1)
--------------------------------------------------------------------------
Twelve Months Ended December 31, 2006 and December 31, 2005
-------------------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Region 2006 2005 2006 2005 2006 2005
--------------------------------------------------------------------------
Caribbean & Latin
America $110.11 9.9% 73.0% 0.5% pts. $150.93 9.2%
Continental Europe $106.53 10.2% 70.7% 1.9% pts. $150.58 7.2%
United Kingdom $153.94 13.3% 75.1% 3.1% pts. $204.99 8.6%
Middle East & Africa $93.05 10.3% 69.0% -0.7% pts. $134.95 11.5%
Asia Pacific(2) $98.46 11.2% 76.2% 0.9% pts. $129.26 9.8%
Regional Composite(3) $108.32 10.7% 73.6% 1.1% pts. $147.12 9.0%
International Luxury(4) $173.35 9.1% 71.7% -0.1% pts. $241.90 9.2%
Total International(5) $111.78 10.5% 73.5% 1.0% pts. $152.02 9.0%
Worldwide(6) $96.39 9.4% 73.1% 0.4% pts. $131.92 8.8%
(1) International financial results are reported on a period basis, while
International statistics are reported on a monthly basis. Statistics
are in constant dollars for January through December. Excludes North
America (except for Worldwide).
(2) Does not include Hawaii.
(3) Regional information includes the Marriott Hotels & Resorts,
Renaissance Hotels & Resorts and Courtyard brands. Includes Hawaii.
(4) International Luxury includes The Ritz-Carlton properties outside of
North America and Bulgari Hotels & Resorts.
(5) Includes Regional Composite, The Ritz-Carlton International and
Bulgari Hotels & Resorts brands.
(6) Includes international statistics for the twelve calendar months
ended December 31, 2006 and December 31, 2005, and North American
statistics for the fifty-two weeks ended December 29, 2006 and
December 30, 2005. Includes the Marriott Hotels & Resorts, The Ritz-
Carlton, Bulgari Hotels & Resorts, Renaissance Hotels & Resorts,
Residence Inn, Courtyard, TownePlace Suites, Fairfield Inn and
SpringHill Suites brands.
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measures
In our press release and schedules, and related conference call, we report certain financial measures that are not prescribed or authorized by United States generally accepted accounting principles ("GAAP"). We discuss management's reasons for reporting these non-GAAP measures below, and the tables on the following pages reconcile the most directly comparable generally accepted accounting principle measures to the non-GAAP measures (identified by a double asterisk on the following pages) that we refer to in our press release. Although management evaluates and presents these non-GAAP measures for the reasons described below, please be aware that these non-GAAP measures are not alternatives to revenue, operating income, income from continuing operations, net income, earnings per share or any other comparable operating measure prescribed by GAAP. In addition, these non-GAAP financial measures may be calculated and/or presented differently than measures with the same or similar names that are reported by other companies, and as a result, the non- GAAP measures we report may not be comparable to those reported by others.
Synthetic Fuel. We do not consider the Synthetic Fuel segment to be related to our core business, which is lodging. In addition, management expects the Synthetic Fuel segment will no longer have a material impact on our business after the end of 2007, when the Internal Revenue Code provision which provides for synthetic fuel tax credits expires. Accordingly, our management evaluates non-GAAP measures which exclude the impact of our Synthetic Fuel segment because those measures allow for period-over-period comparisons of our on-going core lodging operations. In addition, these non- GAAP measures facilitate management's comparison of our results with the results of other lodging companies.
CTF transaction. Some of the non-GAAP measures are further adjusted to exclude the impact of the $94 million pre-tax charge (2005 second quarter) associated with the agreements we entered into with CTF Holdings Ltd. and its affiliates ("the CTF transaction"). That charge was primarily non-cash and primarily due to the write-off of deferred contract acquisition costs associated with the termination of management agreements. GAAP reporting for the CTF transaction charge does not reflect the fact that the company entered into new management agreements as part of the CTF transaction, which substantially replaced the terminated management agreements. Accordingly, our management evaluates the non-GAAP measures which exclude the CTF transaction charge because those measures allow for period-over-period comparisons relative to our on-going core lodging operations before material charges, and in particular because those non-GAAP measures recognize the new management agreements that were entered into as part of the CTF transaction and the resulting continuity of management for the hotels in question. In addition, these non-GAAP measures facilitate management's comparison of our results with the results of other lodging companies.
Leveraged lease impairment charge. Management evaluates non-GAAP measures that exclude the $17 million leveraged lease impairment charge recorded in the 2005 third quarter in order to better assess the period-over-period performance of our on-going core operating business. Management does not consider the leveraged lease investment to be related to our core lodging business. In addition, non-GAAP measures which exclude these non-lodging items facilitate management's comparison of our results with the results of other lodging companies.
Return on Invested Capital. We calculate return on invested capital ("ROIC") excluding our synthetic fuel operation as earnings before income taxes and interest expense (EBIT), excluding our synthetic fuel operation, divided by average capital investment, excluding our Synthetic Fuel segment. We exclude our synthetic fuel operations for the reasons noted above in the "Synthetic Fuel" caption. We consider ROIC excluding our synthetic fuel operation to be a meaningful indicator of our operating performance, and we evaluate this financial measure because it measures how effectively we use the money invested in our lodging operations.
Timeshare Sales and Services Revenue excluding Note Sale Gains. At the beginning of our 2006 fiscal year, we adopted Statement of Position 04-2, "Accounting for Real Estate Time-Sharing Transactions," ("SOP 04-2") as issued by the American Institute of Certified Public Accountants. During 2006, the American Resort Development Association, a timeshare trade association of which we are a member, and the Staff of the Securities and Exchange Commission had communications regarding SOP 04-2 and the income statement presentation of timeshare note securitizations gains. As a result of those communications, for 2006 we reflect Timeshare segment note securitization gains totaling $77 million for 2006 in our "Timeshare sales and services" revenue caption in our Consolidated Statement of Income, while for 2005 we reflect Timeshare segment note securitization gains totaling $69 million for 2005 in our "Gains and other income" caption. Management considers Timeshare Sales and Services Revenue Excluding Note Sale Gains to be a meaningful indicator of the performance of our Timeshare segment, as it allows for the period-over-period analysis of the revenues from our Timeshare business on a comparable basis.
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA. Our management considers earnings before interest, taxes, depreciation and amortization to be an indicator of operating performance because it can be used to measure our ability to service debt, fund capital expenditures, and expand our business. For the reasons noted above in the "Synthetic Fuel," "CTF Transaction" and "Leveraged Lease Impairment Charge," captions, our management also evaluates Adjusted EBITDA.
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
Operating Income Excluding Synthetic Fuel
($ in millions)
Fiscal Year 2006
-----------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- ------
Operating income as reported $203 $274 $229 $305 $1,011
Add back: Synthetic Fuel
operating loss (income) 27 18 (2) 33 76
------- ------- ------- ------- ------
Operating income excluding
Synthetic Fuel** $230 $292 $227 $338 $1,087
======= ======= ======= ======= ======
Fiscal Year 2005
-----------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- ------
Operating income as reported $158 $41 $135 $221 $555
Add back: Synthetic Fuel
operating loss 45 36 34 29 144
------- ------- ------- ------- ------
Operating income excluding
Synthetic Fuel** $203 $77 $169 $250 $699
======= ======= ======= ======= ======
** Denotes non-GAAP financial measures.
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
Measures that Exclude Synthetic Fuel
(in millions, except per share amounts)
Fourth Quarter 2006 Fourth Quarter 2005
----------------------------------------------------------------
Percent
Better/
(Worse)
Synthetic Excluding Synthetic Excluding Excluding
As Fuel Synthetic As Fuel Synthetic Synthetic
Reported Impact Fuel** Reported Impact Fuel** Fuel
-----------------------------------------------------------------
Operating
income
(loss) $305 $(33) $338 $221 $(29) $250 35
Gains and
other
income
(expense) 4 (17) 21 84 12 72 (71)
Interest
income and
interest
expense (27) (3) (24) (23) - (23) (4)
Equity in
earnings 1 - 1 18 - 18 (94)
------ ------ ------ ------ ------ ------
Income
(losses)
before
income
taxes and
minority
interest 283 (53) 336 300 (17) 317 6
------ ------ ------ ------ ------ ------
Tax
(provision)/
benefit (97) 19 (116) (109) 2 (111) (5)
Tax credits 34 34 - 33 33 - -
------ ------ ------ ------ ------ ------
Total tax
(provision)/
benefit (63) 53 (116) (76) 35 (111) (5)
------ ------ ------ ------ ------ ------
Minority
interest - 1 (1) 13 15 (2) 50
------ ------ ------ ------ ------ ------
Net Income $220 $1 $219 $237 $33 $204 7
====== ====== ====== ====== ====== ======
Diluted
shares 419.9 419.9 419.9 441.5 441.5 441.5
Earnings
per
share -
dilu-
ted(1) $0.52 $- $0.52 $0.54 $0.07 $0.46 13
Tax rate 22.3% 34.5% 25.3% 35.0%
** Denotes non-GAAP financial measures.
(1) For 2005, earnings per share as reported less earnings per share from
Synthetic Fuel do not sum to earnings per share excluding Synthetic
Fuel due to rounders.
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
Measures that Exclude Synthetic Fuel
(in millions, except per share amounts)
Fiscal Year 2006 Fiscal Year 2005
----------------------------------------------------------------
Percent
Better/
(Worse)
Synthetic Excluding Synthetic Excluding Excluding
As Fuel Synthetic As Fuel Synthetic Synthetic
Reported Impact Fuel** Reported Impact Fuel** Fuel
-----------------------------------------------------------------
Operating
income
(loss) $1,011 $(76) $1,087 $555 $(144) $699 56
Gains and
other
income
(expense) 59 (15) 74 181 32 149 (50)
Interest
income,
provision
for loan
losses and
interest
expense (76) (4) (72) (55) - (55) (31)
Equity in
earnings 3 - 3 36 - 36 (92)
------ ------ ------ ------ ------ ------
Income
(loss)
from
continuing
operations
before
income
taxes and
minority
interest 997 (95) 1,092 717 (112) 829 32
------ ------ ------ ------ ------ ------
Tax
(provision)/
benefit (348) 32 (380) (261) 23 (284) (34)
Tax credits 62 62 - 167 167 - -
------ ------ ------ ------ ------ ------
Total tax
(provision)/
benefit (286) 94 (380) (94) 190 (284) (34)
------ ------ ------ ------ ------ ------
Minority
interest 6 6 - 45 47 (2) 100
------ ------ ------ ------ ------ ------
Income
from
continuing
operations $717 $5 $712 $668 $125 $543 31
====== ====== ====== ====== ====== ======
Diluted
shares 430.2 430.2 430.2 462.3 462.3 462.3
Earnings
per share
from
continuing
opera-
tions -
dilu-
ted(1) $1.66 $0.01 $1.65 $1.45 $0.27 $1.17 41
Tax rate 28.7% 34.8% 13.1% 34.3%
** Denotes non-GAAP financial measures.
(1) For 2005, earnings per share as reported less earnings per share from
Synthetic Fuel do not sum to earnings per share excluding Synthetic
Fuel due to rounders.
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
Measures that Exclude Synthetic Fuel, CTF Transaction, and Leveraged Lease
Charge
(in millions, except per share amounts)
Fiscal Year 2005
-----------------------------------------------
Excluding
Synthetic
Fuel, CTF
Transaction
and
Synthetic CTF Leveraged Leveraged
As Fuel Trans- Lease Lease
Reported Impact action Charge Charge**
-------- -------- -------- ------- ---------
Operating income (loss) $555 $(144) $(94) $- $793
Gains and other income 181 32 - - 149
Interest income, provision
for loan losses, and
interest expense (55) - - (17) (38)
Equity in earnings 36 - - - 36
-------- -------- -------- ------- ---------
Income (loss) from
continuing operations
before income taxes and
minority interest 717 (112) (94) (17) 940
-------- -------- -------- ------- ---------
Tax (provision)/benefit (261) 23 32 6 (322)
Tax credits 167 167 - - -
-------- -------- -------- ------- ---------
Total tax (provision)/
benefit (94) 190 32 6 (322)
-------- -------- -------- ------- ---------
Minority interest 45 47 - - (2)
-------- -------- -------- ------- ---------
Income (loss) from
continuing operations $668 $125 $(62) $(11) $616
======== ======== ======== ======= =========
Diluted shares 462.3 462.3 462.3 462.3 462.3
Earnings (losses) per
share from continuing
operations - diluted $1.45 $0.27 $(0.13) $(0.02) $1.33
Tax rate 13.1% 34.3%
** Denotes non-GAAP financial measures.
Marriott International, Inc.
Non-GAAP Financial Measure Reconciliation
Return on Invested Capital
($ in millions)
The reconciliation of income from continuing operations to earnings before income taxes and interest expense is as follows:
Fiscal Year 2006
--------------------------------
Synthetic Excluding
As Fuel Synthetic
Reported Impact(1) Fuel**
--------------------------------
Income from continuing operations $717 $5 $712
Add:
Provision (benefit) for income
taxes 286 (94) 380
Tax benefit included in
minority interest - - -
Interest expense 124 - 124
Timeshare interest(2) 21 - 21
-------- -------- --------
Earnings (losses) before income
taxes and interest expense ** $1,148 $(89) $1,237
======== ======== ========
The reconciliation of assets to invested capital is as follows:
Year End 2006 Year End 2005
----------------------------- ----------------------------
Synthetic Excluding Synthetic Excluding
As Fuel Synthetic As Fuel Synthetic
Reported Impact(1) Fuel ** Reported Impact(1) Fuel**
----------------------------- ----------------------------
Assets $8,588 $91 $8,497 $8,530 $103 $8,427
Add:
Cumulative
goodwill
amortization 128 - 128 128 - 128
Current
liabilities -
discontinued
operations - - - - - -
Less:
Current
liabilities,
net of current
portion of
long-term
debt (2,507) (55) (2,452) (2,077) (54) (2,023)
Assets -
discontinued
operations - - - - - -
Deferred tax
assets, net (865) - (865) (765) - (765)
Timeshare
capitalized
interest (19) - (19) (20) - (20)
------- ------- ------- ------- ------- -------
Invested
capital ** $5,325 $36 $5,289 $5,796 $49 $5,747
======= ======= ======= ======= ======= =======
Average
capital
invest-
ment **(3) $5,561 $43 $5,518
======= ======= =======
Return on
invested
capital ** 22%
** Denotes a non-GAAP financial measure.
1. We acquired the synthetic fuel operations in the 2001 fourth quarter
and began operating the facilities in the 2002 first quarter.
2. Timeshare interest represents previously capitalized interest that is
a component of product cost.
3. Calculated as "Invested capital" for the current year and prior year,
divided by two.
Marriott International, Inc.
Non-GAAP Financial Measure Reconciliation
Return on Invested Capital
($ in millions)
The reconciliation of income from continuing operations to earnings before income taxes and interest expense is as follows:
Fiscal Year 2003
--------------------------------
Synthetic Excluding
As Fuel Synthetic
Reported Impact(1) Fuel**
--------------------------------
Income from continuing operations $476 $96 $380
Add:
Provision (benefit) for income
taxes (43) (245) 202
Tax benefit included in minority
interest 94 94 -
Interest expense 110 - 110
Timeshare interest(2) 21 - 21
-------- -------- --------
Earnings (losses) before income
taxes and interest expense ** $658 $(55) $713
======== ======== ========
The reconciliation of assets to invested capital is as follows:
Year End 2003 Year End 2002
----------------------------- ----------------------------
Synthetic Excluding Synthetic Excluding
As Fuel Synthetic As Fuel Synthetic
Reported Impact(1) Fuel ** Reported Impact(1) Fuel**
----------------------------- ----------------------------
Assets $8,177 $83 $8,094 $8,296 $59 $8,237
Add:
Cumulative
goodwill
amortization 128 - 128 128 - 128
Current
liabilities -
discontinued
operations - - - 119 - 119
Less:
Current
liabilities,
net of current
portion of
long-term
debt (1,779) (16) (1,763) (2,043) (14) (2,029)
Assets -
discontinued
operations - - - (633) - (633)
Deferred tax
assets, net (466) - (466) (369) - (369)
Timeshare
capitalized
interest (22) - (22) (26) - (26)
------- ------- ------- ------- ------- -------
Invested
capital ** $6,038 $67 $5,971 $5,472 $45 $5,427
======= ======= ======= ======= ======= =======
Average
capital
invest-
ment **(3) $5,755 $56 $5,699
======= ======= =======
Return on
invested
capital ** 13%
** Denotes a non-GAAP financial measure.
1. We acquired the synthetic fuel operations in the 2001 fourth quarter
and began operating the facilities in the 2002 first quarter.
2. Timeshare interest represents previously capitalized interest that is
a component of product cost.
3. Calculated as "Invested capital" for the current year and prior year,
divided by two.
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
Timeshare Sales and Services Revenue Excluding Note Sale Gains
($ in millions)
Fiscal Year 2006
----------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
--------- ------- ------- ------- -----
Timeshare sales and services
revenue as reported $306 $371 $374 $526 $1,577
Less: Timeshare note sale gains - 40 - 37 77
--------- ------- ------- ------ ------
Timeshare sales and services
revenue excluding note sale
gains** $306 $331 $374 $489 $1,500
========= ====== ======= ====== ======
Fiscal Year 2005
----------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
--------- ------- ------- ------- -----
Timeshare sales and services
revenue as reported(1) $346 $335 $393 $413 $1,487
========= ====== ======= ====== ======
** Denotes non-GAAP financial measures.
(1) Timeshare sales and services revenue as reported for 2005 does not
include gains from the sale of timeshare notes.
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure
EBITDA and Adjusted EBITDA
($ in millions)
Fiscal Year 2006
--------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
Net income(1) $61 $186 $141 $220 $608
Cumulative effect of change in
accounting principle 173 - - - 173
Interest expense 27 30 29 38 124
Tax provision 56 85 82 63 286
Tax benefit from cumulative effect of
change in accounting principle(1) (64) - - - (64)
Depreciation 34 34 36 51 155
Amortization 6 8 8 11 33
Less: Depreciation reimbursed by
third-party owners (4) (4) (4) (6) (18)
Interest expense from unconsolidated
joint ventures 5 6 5 7 23
Depreciation and amortization from
unconsolidated joint ventures 6 7 7 9 29
------- ------- ------- ------ ------
EBITDA** $300 $352 $304 $393 $1,349
Synthetic fuel adjustment 24 11 (4) 44 75
------- ------- ------- ------ ------
Adjusted EBITDA** $324 $363 $300 $437 $1,424
======= ======= ======= ====== ======
Increase over 2005 Adjusted EBITDA 17% 19% 12% 4% 12%
The following items make up the
Synthetic Fuel adjustment:
Pre-tax synthetic fuel operating
losses/(income) $31 $13 $(2) $53 $95
Pre-tax minority interest - synthetic
fuel (5) - - (1) (6)
Synthetic fuel depreciation (2) (2) (2) (8) (14)
------- ------- ------- ------ ------
EBITDA adjustment for Synthetic Fuel $24 $11 $(4) $44 $75
======= ======= ======= ====== ======
Fiscal Year 2005
--------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
Net income $145 $138 $149 $237 $669
Interest expense 24 21 24 37 106
Tax provision (benefit) from
continuing operations 5 (20) 33 76 94
Tax provision from discontinued
operations - - 1 - 1
Depreciation 30 29 46 51 156
Amortization 7 7 7 7 28
Less: Depreciation reimbursed by
third-party owners - - (12) (5) (17)
Interest expense from unconsolidated
joint ventures 11 6 4 8 29
Depreciation and amortization from
unconsolidated joint ventures 12 9 7 11 39
------- ------- ------- ------ ------
EBITDA** $234 $190 $259 $422 $1,105
Synthetic fuel adjustment 42 22 (7) (1) 56
Pre-tax gain from discontinued
operations - - (2) - (2)
Non-recurring charges -
CTF Acquisition one-time charge - 94 - - 94
Leveraged lease charge - - 17 - 17
------- ------- ------- ------ ------
Adjusted EBITDA** $276 $306 $267 $421 $1,270
======= ======= ======= ====== ======
The following items make up the
Synthetic Fuel adjustment:
Pre-tax synthetic fuel operating
losses $54 $28 $13 $17 $112
Pre-tax minority interest - synthetic
fuel (10) (4) (18) (15) (47)
Synthetic fuel depreciation (2) (2) (2) (3) (9)
------- ------- ------- ------ ------
EBITDA adjustment for Synthetic Fuel $42 $22 $(7) $(1) $56
======= ======= ======= ====== ======
** Denotes non-GAAP financial measures.
(1) First Quarter results were restated to reflect a change in the tax
rate associated with the cumulative effect of change in accounting
principle.
IRPR#1
SOURCE Marriott International, Inc.
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