Marriott International Reports Earnings Per Share from Continuing Operations of $0.67 for the 2004 Second Quarter, Up 29 Percent From 2003
WASHINGTON, Jul 15, 2004 /PRNewswire-FirstCall via COMTEX/ -- Marriott International, Inc. (NYSE: MAR) today reported income from continuing operations of $160 million, up 27 percent, and diluted earnings per share from continuing operations of $0.67, up 29 percent for the quarter ended June 18, 2004. Highlights for the quarter were as follows:
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* Worldwide, systemwide comparable REVPAR for the second quarter ended
June 18, 2004, increased 13 percent (14 percent using actual exchange
rates). Room rates increased 3.7 percent during the quarter while
occupancy increased nearly 6 percentage points to 74 percent;
* Incentive management fees rose 29 percent, reflecting an approximately
200 basis point improvement in the company's worldwide house profit
margins;
* 186 managed and franchised hotels (31,000 rooms) were added to our
system since the 2003 second quarter, reaching over 500,000 rooms;
* Over one-third of the new hotel rooms added to Marriott's system in the
second quarter were conversions from other brands;
* Timeshare segment results increased 16 percent during the quarter
reflecting strong leisure demand;
* Marriott estimates 2004 full year diluted EPS from continuing
operations, including the impact of synthetic fuel, to total $2.32 to
$2.40 per share, which reflects growth of approximately 20 to 24 percent
over 2003.
J.W. Marriott, Jr., chairman and chief executive officer of Marriott International, said, "After three difficult years, strong demand returned to the markets most impacted by the downturn.
"We were particularly pleased to welcome back international visitors to the U.S. The number of international guests visiting our U.S. hotels increased 34 percent during the quarter, benefiting from favorable exchange rates, and was particularly evident in New York and San Francisco.
"Properties in Asia and the Middle East generated significantly higher sales and profits due to higher traveler demand from around the world. A year ago, in the 2003 second quarter, these regions were hurt by the war in Iraq and Severe Acute Respiratory Syndrome (SARS).
"Owner and franchisee interest in our brands remains robust and we converted over 3,000 rooms to our brands during the quarter. Since 2000, we have grown our room base by over one-third and we are well positioned to benefit from worldwide demand growth. Marriott's incentive fees during the quarter surged 29 percent reflecting an approximately 200 basis point improvement in the company's worldwide house profit margins. Our incentive fee performance reflects the considerable upside our hotels enjoy in this improving demand environment. Clearly, our prospects remain extremely bright," said Mr. Marriott.
In the second fiscal quarter (12 week period from March 27, 2004 to June 18, 2004), REVPAR for our 1,888 comparable systemwide North American properties rose 9.3 percent, driven by a 3.5 percent increase in average daily rate and a 3.9 percentage point increase in occupancy to nearly 74 percent. REVPAR at our 344 comparable systemwide North American full-service hotels (including Marriott Hotels & Resorts, The Ritz-Carlton, and Renaissance Hotels & Resorts) increased 9.9 percent, including 4.7 percentage points of improved occupancy to 73 percent. Demand for luxury lodging increased dramatically. Comparable systemwide North American Ritz-Carlton REVPAR increased 16.4 percent with strength in both resort and downtown locations. REVPAR at comparable systemwide North American select-service and extended-stay brands (including Courtyard, Fairfield Inn, Residence Inn, TownePlace Suites, and SpringHill Suites) increased 8.5 percent, with 3.3 percentage points improvement in occupancy to 75 percent. The Courtyard brand, benefiting from an increase in business traveler demand as well as continued property reinventions and renovations, posted an 11.2 percent REVPAR increase for systemwide comparable North American properties during the quarter. Sixteen percent of the Courtyard system in North America is non-comparable as a result of new hotels coming into the system in 2003 or 2004 and existing properties that were under renovation during those years.
International REVPAR at comparable systemwide properties increased 24.6 percent (33.1 percent using actual exchange rates) benefiting from strong demand in the 2004 quarter compared to the impact of SARS and the war in Iraq on the 2003 quarter. Constant dollar systemwide REVPAR increased nearly 55 percent in Asia and more than 15 percent in the Caribbean and Mexico.
The West India Quay Marriott in London's Canary Wharf opened during the quarter and included our 500,000th room. Overall during the quarter, we added 53 properties (7,745 rooms), including new timeshare resorts in Las Vegas and Hilton Head (both of which will be ready for occupancy in 2005) bringing the total number of hotels in the system to 2,791 (502,575 rooms). Fifteen properties (2,090 rooms) exited the system during the quarter. Owners continue to be attracted to the strength of our brands, converting 17 hotels (2,665 rooms) to Marriott's brands in the second quarter (excluding five hotels converted to the Ramada International brand).
Bulgari Hotels & Resorts, a joint venture company formed by Bulgari, the contemporary Italian Jeweler, and Marriott's Luxury Group, opened its first hotel, the 58-room Bulgari Hotel in Milan during the second quarter. The Bulgari Hotel in Milan is characterized by luxury, contemporary Italian design and impeccable service. The second Bulgari hotel has begun development in Bali and is expected to open mid-2005. The Marriott Luxury Group includes The Ritz-Carlton and Bulgari Hotels & Resorts.
Nearly 2,200 hotels in the Marriott system offered high-speed internet access as of the end of the second quarter, more than any other hotel system in the world, a significant competitive advantage for all of the company's brands. We also have wireless internet access in lobbies, meeting rooms, and public spaces in over 1,700 hotels throughout the U.S. We expect the roll out of high-speed internet access to our U.S. properties will be complete by the end of the year and that 2,000 hotels will have wireless internet access.
MARRIOTT REVENUES for the second quarter totaled $2.4 billion, up 19 percent over the prior year. Base management fees increased 20 percent over the year ago quarter as a result of growth in managed units and a 16 percent increase in managed hotel REVPAR worldwide (using actual exchange rates). Franchise fees increased 29 percent over the year ago quarter reflecting unit expansion, a nearly 11 percent increase in worldwide franchised comparable REVPAR (using actual exchange rates), as well as the impact of units added last year that continue to ramp up. Incentive fees also increased 29 percent. Roughly one-third of the improvement in our incentive fees was attributable to properties in North America. The remainder of the improvement came from properties outside the U.S., particularly in Asia and the Middle East.
Owned, leased, corporate housing and other revenues increased 26 percent, primarily driven by higher REVPAR and the addition of four new leased full- service properties in Berlin, London and Dublin.
Revenues from timeshare interval sales and services increased 20 percent. Similar to the first quarter, leisure demand was very strong. Including results at our three joint ventures, contract sales increased 39 percent.
MARRIOTT'S OPERATING INCOME increased 74 percent in the 2004 second quarter from $68 million to $118 million, as a result of the 24 percent increase in combined base, franchise and incentive fees, robust timeshare interval sales, and lower operating losses from our synthetic fuel joint venture, slightly offset by higher general and administrative expenses. Marriott's general and administrative expenses increased 19 percent, to $127 million, driven primarily by higher litigation expenses, lower foreign exchange gains and increased overhead costs related to the company's unit growth.
LODGING SEGMENT RESULTS. Full-service lodging results were $113 million, up $26 million over prior year, as a result of higher fees, slightly offset by higher administrative expenses. Select-service and extended-stay lodging results were $57 million, up $13 million over prior year, driven by higher fees. Timeshare results rose 16 percent, to $51 million, including a $27 million note sale gain. Results also included a $7 million charge to reflect an increase in the discount rate used to value our timeshare interest-only strips, in light of the increasing interest rate environment. The note sale gain was $5 million lower than in the 2003 second quarter, primarily due to higher interest rates, partially offset by higher volume. Profits were also helped by improving margins, especially due to lower marketing and selling costs as a percentage of sales and a greater proportion of higher priced intervals sold.
INTEREST INCOME increased $12 million as a result of slightly higher average interest rates and interest earned on the note receivable in connection with the sale of our interest in the Two Flags joint venture, which took place early in the quarter. We expect to receive the proceeds from that approximately $200 million note in September of this year.
SYNTHETIC FUEL. During the quarter our synthetic fuel joint ventures generated net income of $31 million, including $38 million of tax benefits and credits, compared to $26 million of net income, including $68 million of tax benefits and credits in the year ago quarter. The increase in the net income from the synthetic fuel operations reflected higher production volume, partially offset by the impact of the change in ownership. In the second quarter of 2003, we were the sole owner of the synthetic fuel business. In the 2003 third quarter, we sold an approximately 50 percent interest and we currently consolidate the joint ventures.
Recently, we were informed by the previous owners of the synthetic fuel facilities that the Internal Revenue Service (IRS) field auditors issued a notice of proposed adjustment challenging the placed-in-service dates of three of the four synthetic fuel facilities now owned by our synthetic fuel joint ventures. One of the conditions to qualify for tax credits under Section 29 of the Internal Revenue Code is that the facility must have been placed-in- service before July 1, 1998. We strongly believe that all the facilities meet the placed-in-service requirement and we are confident this issue will be resolved in our favor. We are examining various procedural alternatives for pursuing this issue to resolution.
At the end of the second quarter, total debt was $1.4 billion and cash balances totaled $164 million compared to $1.7 billion in debt and $203 million of cash at March 26, 2004. Ninety-three percent of our total debt carries fixed rates. Depreciation and amortization totaled $37 million during the quarter compared to $34 million in the 2003 second quarter.
In the second quarter we sold 10 land parcels for $18 million and we recognized a gain of $3 million on the sales.
We repurchased 1.2 million shares of our stock in the second quarter and 7.8 million year-to-date through June 18, 2004. Our remaining share authorization totals 24.7 million shares.
OUTLOOK
We expect continued strong group and transient demand for the remainder of 2004. Based on the strong results to date, we now estimate 2004 systemwide comparable North American REVPAR growth of 7 to 9 percent.
We expect house profit margins to improve modestly in 2004, particularly as room rates have begun to improve. We also expect to complete a timeshare mortgage note sale transaction in the fourth quarter, open approximately 25,000 to 30,000 new rooms during 2004, and earn roughly $0.40 to $0.42 of after-tax earnings per share this year from our synthetic fuel business. Under these assumptions, our lodging operating income is expected to increase to a range of $600 million to $615 million for full year 2004. We expect full year timeshare segment results to total $190 million to $200 million, including a timeshare mortgage note gain of roughly $25 million in the fourth quarter. Overall, we estimate our 2004 diluted earnings per share from continuing operations to total $2.32 to $2.40.
For the third quarter, assuming North American systemwide comparable REVPAR growth of between 7 to 9 percent, we currently estimate lodging operating income of $115 million to $125 million, compared to $93 million in the 2003 third quarter. We expect that timeshare segment results will total roughly $30 million. No timeshare note sale is planned for the third quarter. We estimate third quarter EPS from continuing operations to range from $0.52 to $0.56, including $0.11 to $0.13 of earnings from synthetic fuel.
In 2004, we continue to estimate total investment spending levels to be roughly $500 million.
Marriott International, Inc. (NYSE: MAR) will conduct its quarterly earnings review for the investment community and news media on Thursday, July 15, 2004 at 10 a.m. Eastern Time (ET). Individual investors and the news media are invited to listen to the review on the Internet at http://www.marriott.com/investor. A replay will be available on the Internet until August 15, 2004 at http://www.marriott.com/investor (click on "recent investor news"). A recording of the call will also be available by telephone from 1 p.m. ET, Thursday, July 15, 2004 until Thursday, July 22, 2004 at 8 p.m. ET. To access the recording, call 719-457-0820. The reservation number for the recording is 333460.
Note: This press release contains "forward-looking statements" within the meaning of federal securities laws, including REVPAR, profit margin and earning trends; statements concerning the number of lodging properties we expect to add in future years; our expected investment spending; our anticipated results from synthetic fuel operations and the anticipated favorable resolution of the IRS's placed-in-service challenge; and similar statements concerning anticipated future events and expectations that are not historical facts. We caution you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including the pace and extent of the current recovery in both the economy and the lodging industry; supply and demand changes for hotel rooms, vacation ownership intervals, and corporate housing; competitive conditions in the lodging industry; relationships with clients and property owners; the availability of capital to finance hotel growth and refurbishment; and the uncertainties inherent in the IRS audit and appeals process; any of which could cause actual results to differ materially from those expressed in or implied by the statements herein. These statements are made as of the date of this press release, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
MARRIOTT INTERNATIONAL, INC. (NYSE: MAR) is a leading lodging company with nearly 2,800 lodging properties in the United States and 69 other countries and territories. Marriott International operates and franchises hotels under the Marriott, JW Marriott, The Ritz-Carlton, Renaissance, Residence Inn, Courtyard, TownePlace Suites, Fairfield Inn, SpringHill Suites, Ramada International and Bulgari brand names; develops and operates vacation ownership resorts under the Marriott Vacation Club International, Horizons, The Ritz-Carlton Club and Marriott Grand Residence Club brands; operates Marriott Executive Apartments; provides furnished corporate housing through its Marriott ExecuStay division; and operates conference centers. Marriott is also in the synthetic fuel business. The company is headquartered in Washington, D.C., and has approximately 128,000 employees. In fiscal year 2003, Marriott International reported sales from continuing operations of $9 billion. For more information or reservations, please visit our web site at http://www.marriott.com.
IRPR#1
Tables follow
MARRIOTT INTERNATIONAL, INC.
Financial Highlights
(in millions, except per share amounts)
12 Weeks Ended 12 Weeks Ended
June 18, 2004 June 20, 2003
------------------------------------------------
Syn- Syn- Percent
thetic thetic Better/
Lodging Fuel Total Lodging Fuel Total(Worse)
-------- ------ ----- ------- ---- ----- ------
REVENUES
Base management fees $106 $- $106 $88 $- $88 20
Franchise fees 72 - 72 56 - 56 29
Incentive management fees 36 - 36 28 - 28 29
Owned, leased, corporate
housing and other(1) 182 - 182 145 - 145 26
Timeshare interval sales and
services(2) 281 - 281 234 - 234 20
Cost reimbursements(3) 1,614 - 1,614 1,402 - 1,402 15
Synthetic fuel - 111 111 - 63 63 76
-------- ----- ----- ------ ---- -----
Total Revenues 2,291 111 2,402 1,953 63 2,016 19
OPERATING COSTS AND EXPENSES
Owned, leased and corporate
housing -- direct(4) 157 - 157 119 - 119 32
Timeshare -- direct 245 - 245 215 - 215 14
Reimbursed costs 1,614 - 1,614 1,402 - 1,402 15
General, administrative and
other(5) 127 - 127 107 - 107 19
Synthetic fuel - 141 141 - 105 105 34
-------- ----- ----- ----- ---- -----
Total Expenses 2,143 141 2,284 1,843 105 1,948 17
-------- ----- ----- ----- ---- -----
OPERATING INCOME (LOSS) $148 $(30) 118 $110 $(42) 68 74
======== ===== ===== =====
Gains and other income(6) 48 38 26
Interest expense (24) (25) 4
Interest income 39 27 44
Provision for loan losses (3) (1) *
Equity in earnings (losses)
-- Synthetic fuel(7) - - -
-- Other(8) 1 3 (67)
----- -----
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES AND MINORITY INTEREST 179 110 63
(Provision) benefit for
income taxes (33) 16 *
----- -----
INCOME FROM CONTINUING
OPERATIONS BEFORE
MINORITY INTEREST 146 126 16
Minority Interest 14 - *
----- -----
INCOME FROM CONTINUING
OPERATIONS 160 126 27
DISCONTINUED OPERATIONS
Loss from Senior Living
Services, net of tax - (1) *
Income from Distribution
Services, net of tax - - -
----- -----
NET INCOME $160 $125 28
===== =====
EARNINGS PER SHARE -- Basic
Earnings from continuing
operations $0.71 $0.54 31
Earnings from
discontinued operations - - -
----- -----
Earnings per share $0.71 $0.54 31
===== =====
EARNINGS PER SHARE -- Diluted
Earnings from continuing
operations $0.67 $0.52 29
Loss from discontinued
operations - (0.01) *
----- -----
Earnings per share $0.67 $0.51 31
===== =====
Basic Shares 226.9 232.3
Diluted Shares 240.3 244.3
* Calculated percentage is not meaningful.
1 - Owned, leased, corporate housing and other revenue includes revenue
from the properties we own or lease, our ExecuStay business, land
rent income and other revenue.
2 - Timeshare interval sales and services includes total timeshare
revenue except for base fees, cost reimbursements, note sale gains,
and joint venture earnings (losses).
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 ExecuStay business.
5 - General, administrative and other expenses include the overhead costs
allocated to our lodging business segments (including ExecuStay and
timeshare) and our unallocated corporate overhead costs.
6 - Gains and other income includes gains on the sale of real estate and
timeshare notes, income related to our cost method joint ventures and
beginning March 27, 2004 includes the earnout payments we made to the
previous owner of the Synthetic fuel operation and earnout payments we
received from our Synthetic fuel joint venture partner.
7 - Equity in earnings (losses) -- Synthetic fuel includes our share of
the equity in earnings of the Synthetic fuel joint venture and the
earnout we received from our Synthetic fuel joint venture partner from
November 7, 2003 through March 25, 2004. Beginning March 26, 2004,
the Synthetic fuel operation was consolidated as a result of
adopting FIN 46(R), "Consolidation of Variable Interest Entities."
8 - Equity in earnings (losses) -- Other includes our equity in earnings
(losses) of unconsolidated joint ventures.
MARRIOTT INTERNATIONAL, INC.
Financial Highlights
(in millions, except per share amounts)
24 Weeks Ended June 18, 2004
----------------------------------
Synthetic
Lodging Fuel Total
REVENUES -------- --------- -------
Base management fees $ 205 $ - $ 205
Franchise fees 133 - 133
Incentive management fees 69 - 69
Owned, leased, corporate
housing and other(1) 338 - 338
Timeshare interval sales
and services(2) 599 - 599
Cost reimbursements(3) 3,199 - 3,199
Synthetic fuel - 111 111
-------- --------- -------
Total Revenues 4,543 111 4,654
OPERATING COSTS AND EXPENSES
Owned, leased and
corporate housing - direct(4) 289 - 289
Timeshare - direct 497 - 497
Reimbursed costs 3,199 - 3,199
General, administrative
and other(5) 259 - 259
Synthetic fuel - 141 141
-------- --------- -------
Total Expenses 4,244 141 4,385
-------- --------- -------
OPERATING INCOME (LOSS) $ 299 $ (30) 269
======== ========= =======
Gains and other income(6) 52
Interest expense (46)
Interest income 65
Provision for loan losses -
Equity in earnings (losses)
- Synthetic fuel(7) (28)
- Other(8) (1)
-------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
AND MINORITY INTEREST 311
(Provision) benefit for income taxes (51)
INCOME FROM CONTINUING OPERATIONS -------
BEFORE MINORITY INTEREST 260
Minority Interest 14
-------
INCOME FROM CONTINUING OPERATIONS 274
DISCONTINUED OPERATIONS
Income from Senior Living Services,
net of tax -
Loss from Distribution Services,
net of tax -
-------
NET INCOME $274
=======
EARNINGS PER SHARE - Basic
Earnings from
continuing operations $ 1.20
Earnings from
discontinued operations -
-------
Earnings per share $ 1.20
=======
EARNINGS PER SHARE - Diluted
Earnings from
continuing operations $ 1.14
Earnings from
discontinued
operations -
-------
Earnings per share $ 1.14
=======
Basic Shares 228.2
Diluted Shares 241.5
24 Weeks Ended June 20, 2003
---------------------------------
Percent
Synthetic Better/
Lodging Fuel Total (Worse)
------- --------- ------- -------
REVENUES
Base management fees $ 180 $ - $ 180 14
Franchise fees 108 - 108 23
Incentive management
fees 57 - 57 21
Owned, leased, corporate
housing and other(1) 282 - 282 20
Timeshare interval
sales and services(2) 471 - 471 27
Cost reimbursements(3) 2,810 - 2,810 14
Synthetic fuel - 131 131 (15)
------- --------- -------
Total Revenues 3,908 131 4,039 15
OPERATING COSTS
AND EXPENSES
Owned, leased and
corporate housing
- direct(4) 229 - 229 26
Timeshare - direct 423 - 423 17
Reimbursed costs 2,810 - 2,810 14
General,
administrative
and other(5) 219 - 219 18
Synthetic fuel - 232 232 (39)
------- -------- -------
Total Expenses 3,681 232 3,913 12
------- -------- -------
OPERATING INCOME
(LOSS) $ 227 $ (101) 126 *
======= ========
Gains and
other income(6) 39 33
Interest expense (51) 10
Interest income 47 38
Provision for
loan losses (6) *
Equity in
earnings (losses)
- Synthetic fuel(7) - *
- Other(8) 2 *
-------
INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES
AND MINORITY INTEREST 157 98
(Provision) benefit
for income taxes 56 *
-------
INCOME FROM CONTINUING
OPERATIONS BEFORE
MINORITY INTEREST 213 22
Minority Interest - *
-------
INCOME FROM CONTINUING
OPERATIONS 213 29
DISCONTINUED OPERATIONS
Income from Senior
Living Services,
net of tax 29 *
Loss from
Distribution Services,
net of tax (1) *
-------
NET INCOME $ 241 14
=======
EARNINGS PER SHARE
- Basic
Earnings from
continuing
operations $ 0.91 32
Earnings from
discontinued
operations 0.12 *
-------
Earnings per share $ 1.03 17
=======
EARNINGS PER SHARE
- Diluted
Earnings from
continuing
operations $ 0.87 31
Earnings from
discontinued
operations 0.12 *
-------
Earnings per share $ 0.99 15
=======
Basic Shares 233.1
Diluted Shares 243.9
* Calculated percentage is not meaningful.
(1) - Owned, leased, corporate housing and other revenue includes revenue
from the properties we own or lease, our ExecuStay business, land
rent income and other revenue.
(2) - Timeshare interval sales and services includes total timeshare
revenue except for base fees, cost reimbursements, note sale gains,
and joint venture earnings (losses).
(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 ExecuStay business.
(5) - General, administrative and other expenses include the overhead
costs allocated to our lodging business segments (including
ExecuStay and timeshare) and our unallocated corporate overhead
costs.
(6) - Gains and other income includes gains on the sale of real estate and
timeshare notes, income related to our cost method joint ventures
and beginning March 27, 2004 includes the earnout payments we made
to the previous owner of the Synthetic fuel operation and earnout
payments we received from our Synthetic fuel joint venture partner.
(7) - Equity in earnings (losses) -- Synthetic fuel includes our share of
the equity in earnings of the Synthetic fuel joint venture and the
earnout we received from our Synthetic fuel joint venture partner
from November 7, 2003 through March 25, 2004. Beginning March 26,
2004, the Synthetic fuel operation was consolidated as a result of
adopting FIN 46(R), "Consolidation of Variable Interest Entities."
(8) - Equity in earnings (losses) - Other includes our equity in earnings
(losses) of unconsolidated joint ventures.
Marriott International, Inc.
Business Segments
($ in millions)
Twelve Weeks Ended
----------------------------
June 18, 2004 June 20, 2003
------------- -------------
REVENUES
Full-Service $ 1,548 $ 1,333
Select-Service 264 229
Extended-Stay 129 130
Timeshare 350 261
------------- -------------
Total lodging(1) 2,291 1,953
Synthetic fuel 111 63
------------- -------------
Total $ 2,402 $ 2,016
============= =============
INCOME FROM CONTINUING OPERATIONS
Full-Service $ 113 $ 87
Select-Service 39 29
Extended-Stay 18 15
Timeshare 51 44
------------- -------------
Total lodging financial results(1) 221 175
Synthetic fuel (after tax) 31 26
Unallocated corporate expenses (33) (24)
Interest income, provision for loan losses
and interest expense 12 1
Income taxes (excluding Synthetic fuel) (71) (52)
------------- -------------
Total $ 160 $ 126
============= =============
(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 and results of our lodging operations to those of
other lodging companies.
Marriott International, Inc.
Business Segments
($ in millions)
Twenty-Four Weeks Ended
----------------------------
June 18, 2004 June 20, 2003
------------- -------------
REVENUES
Full-Service $3,053 $2,663
Select-Service 511 463
Extended-Stay 244 254
Timeshare 735 528
------------- -------------
Total lodging(1) 4,543 3,908
Synthetic fuel 111 131
------------- -------------
Total $4,654 $4,039
============= =============
INCOME FROM CONTINUING OPERATIONS
Full-Service $213 $182
Select-Service 62 53
Extended-Stay 28 25
Timeshare 101 62
------------- -------------
Total lodging financial results(1) 404 322
Synthetic fuel (after tax) 42 45
Unallocated corporate expenses (63) (54)
Interest income, provision for loan losses
and interest expense 19 (10)
Income taxes (excluding Synthetic fuel) (128) (90)
------------- -------------
Total $274 $213
============= =============
(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 and results of our lodging operations to those of
other lodging companies.
MARRIOTT INTERNATIONAL, INC.
Total Lodging Products(1)
-------------------------------------------------------------------------
Number of Number of
Properties Rooms/Suites
June 18, vs. June June 18, vs. June
Brand 2004 20, 2003 2004 20, 2003
------------------------------ -----------------------------------------
Full-Service Lodging
Marriott Hotels & Resorts 482 +17 176,981 +6,444
The Ritz-Carlton 57 +3 18,644 +1,434
Bulgari Hotels & Resorts 1 +1 58 +58
Renaissance Hotels & Resorts 130 +4 46,827 +1,243
Ramada International 206 +35 27,863 +4,094
Select-Service Lodging
Courtyard 638 +39 91,444 +5,480
Fairfield Inn 530 +14 50,191 +825
SpringHill Suites 116 +13 13,485 +1,483
Extended-Stay Lodging
Residence Inn 454 +18 54,019 +2,140
TownePlace Suites 112 +6 11,462 +563
Marriott Executive Apartments 14 +2 2,471 +304
Timeshare(2)
Marriott Vacation Club
International 43 -1 8,374 +1,038
Horizons by Marriott Vacation
Club International 2 - 256 +44
The Ritz-Carlton Club 4 - 252 +28
Marriott Grand Residence Club 2 - 248 -
------------------ -------------------
Total 2,791 +151 502,575 +25,178
================== ===================
(1) Total Lodging Products excludes the 2,591 corporate housing rental
units.
(2) Includes products under construction and in active sales which are
not ready for occupancy.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
North American Comparable Company-Operated Properties(1)
-------------------------------------------------------------------------
Twelve Weeks Ended June 18, 2004 and June 20, 2003
-----------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- --------------
Brand vs. vs. vs.
2004 2003 2004 2003 2004 2003
-------------------------------------------------------------------------
Marriott Hotels & Resorts $109.27 8.7% 75.5% 4.8% pts. $144.77 1.8%
The Ritz-Carlton(2) $200.34 16.4% 73.8% 7.9% pts. $271.44 3.9%
Renaissance Hotels &
Resorts $100.60 8.5% 72.6% 5.4% pts. $138.67 0.4%
Composite - Full-Service $118.43 10.1% 74.8% 5.3% pts. $158.24 2.3%
Residence Inn $81.22 6.5% 81.0% 1.6% pts. $100.25 4.3%
Courtyard $71.16 10.7% 73.8% 4.4% pts. $96.48 4.1%
TownePlace Suites $50.42 12.0% 77.7% 6.8% pts. $64.91 2.2%
Composite - Select-Service
& Extended-Stay $71.87 9.8% 75.8% 4.0% pts. $94.76 4.1%
Composite - All $102.07 10.0% 75.2% 4.8% pts. $135.74 3.0%
North American Comparable Systemwide Properties(1)
-------------------------------------------------------------------------
Twelve Weeks Ended June 18, 2004 and June 20, 2003
-----------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
Brand vs. vs. vs.
2004 2003 2004 2003 2004 2003
-------------------------------------------------------------------------
Marriott Hotels & Resorts $99.31 8.9% 73.0% 4.4% pts. $135.96 2.3%
The Ritz-Carlton(2) $200.34 16.4% 73.8% 7.9% pts. $271.44 3.9%
Renaissance Hotels &
Resorts $93.79 8.5% 71.5% 4.6% pts. $131.17 1.5%
Composite - Full-Service $106.69 9.9% 72.9% 4.7% pts. $146.39 2.8%
Residence Inn $78.05 6.3% 80.4% 2.2% pts. $97.06 3.3%
Courtyard $72.58 11.2% 74.6% 4.3% pts. $97.32 4.8%
Fairfield Inn $46.02 4.9% 69.1% 2.0% pts. $66.64 1.8%
TownePlace Suites $50.05 10.0% 78.0% 6.4% pts. $64.20 1.0%
SpringHill Suites $62.71 10.3% 74.1% 4.0% pts. $84.66 4.3%
Composite - Select-Service
& Extended-Stay $65.19 8.5% 74.7% 3.3% pts. $87.27 3.7%
Composite - All $83.32 9.3% 73.9% 3.9% pts. $112.73 3.5%
(1) Composite -- All statistics include properties for the Marriott
Hotels & Resorts, Renaissance Hotels & Resorts, The Ritz-Carlton,
Courtyard, Residence Inn, TownePlace Suites, Fairfield Inn, and
SpringHill Suites brands. Full-Service composite statistics include
properties for Marriott Hotels & Resorts, Renaissance Hotels &
Resorts and The Ritz-Carlton. Select-Service and Extended-Stay
composite statistics include properties for the Courtyard, Residence
Inn, TownePlace Suites, Fairfield Inn and SpringHill Suites brands.
(2) Statistics for The Ritz-Carlton are for March through May.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
North American Comparable Company-Operated Properties(1)
--------------------------------------------------------------------------
Twenty-Four Weeks Ended June 18, 2004 and June 20, 2003
-------------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
Brand 2004 vs. 2003 2004 vs. 2003 2004 vs. 2003
--------------------------------------------------------------------------
Marriott Hotels
& Resorts $105.72 6.2% 72.8% 3.3% pts. $145.27 1.4%
The Ritz-Carlton(2) $192.67 14.0% 71.2% 7.0% pts. $270.71 2.8%
Renaissance Hotels
& Resorts $97.90 7.0% 70.3% 4.4% pts. $139.25 0.4%
Composite -
Full-Service $112.95 7.6% 72.2% 3.8% pts. $156.34 1.9%
Residence Inn $77.31 4.2% 77.6% 0.8% pts. $99.63 3.2%
Courtyard $68.02 8.4% 71.0% 3.9% pts. $95.79 2.5%
TownePlace Suites $47.72 11.5% 73.8% 6.1% pts. $64.63 2.3%
Composite -
Select-Service
& Extended-Stay $68.42 7.7% 72.7% 3.3% pts. $94.15 2.7%
Composite - All $97.09 7.6% 72.4% 3.7% pts. $134.12 2.2%
North American Comparable Systemwide Properties(1)
--------------------------------------------------------------------------
Twenty-Four Weeks Ended June 18, 2004 and June 20, 2003
-------------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
Brand 2004 vs. 2003 2004 vs. 2003 2004 vs. 2003
--------------------------------------------------------------------------
Marriott Hotels &
Resorts $96.78 6.6% 70.8% 3.2% pts. $136.68 1.8%
The Ritz-Carlton(2) $192.67 14.0% 71.2% 7.0% pts. $270.71 2.8%
Renaissance Hotels
& Resorts $91.18 7.9% 69.2% 4.4% pts. $131.68 1.1%
Composite -
Full-Service $102.46 7.7% 70.6% 3.6% pts. $145.13 2.2%
Residence Inn $75.10 5.3% 77.5% 2.0% pts. $96.85 2.6%
Courtyard $69.14 9.3% 71.6% 3.7% pts. $96.62 3.7%
Fairfield Inn $42.63 3.7% 64.7% 1.3% pts. $65.90 1.6%
TownePlace Suites $47.46 8.5% 73.9% 5.2% pts. $64.24 0.9%
SpringHill Suites $59.79 9.3% 71.0% 3.8% pts. $84.24 3.5%
Composite -
Select-Service
& Extended-Stay $61.96 7.1% 71.3% 2.8% pts. $86.89 2.9%
Composite - All $79.51 7.4% 71.0% 3.1% pts. $111.98 2.7%
(1) Composite - All statistics include properties for the Marriott Hotels
& Resorts, Renaissance Hotels & Resorts, The Ritz-Carlton, Courtyard,
Residence Inn, TownePlace Suites, Fairfield Inn, and SpringHill Suites
brands. Full-Service composite statistics include properties for
Marriott Hotels & Resorts, Renaissance Hotels & Resorts and The Ritz-
Carlton. Select-Service and Extended-Stay composite statistics
include properties for the Courtyard, Residence Inn, TownePlace
Suites, Fairfield Inn and SpringHill Suites brands.
(2) Statistics for The Ritz-Carlton are for January through May.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
International Comparable Company-Operated Properties(1,2)
--------------------------------------------------------------------------
Three Months Ended May 31, 2004 and May 31, 2003
-------------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
Region/Brand 2004 vs. 2003 2004 vs. 2003 2004 vs. 2003
--------------------------------------------------------------------------
Caribbean & Latin
America $101.87 16.6% 74.5% 7.5% pts. $136.65 4.9%
Continental Europe $95.21 14.6% 72.5% 7.0% pts. $131.33 3.6%
United Kingdom $140.62 21.7% 77.2% 9.6% pts. $182.15 6.6%
Middle East & Africa $79.23 45.0% 75.6% 19.2% pts. $104.86 8.1%
Asia Pacific(3) $72.53 70.5% 75.2% 25.4% pts. $96.49 13.0%
Total International
(4,5) $90.64 29.7% 74.5% 14.8% pts. $121.64 4.0%
Ritz-Carlton
International $154.24 37.6% 72.6% 21.4% pts. $212.49 -3.0%
Total International
(4) $97.59 31.0% 74.3% 15.5% pts. $131.34 3.7%
International Comparable Systemwide Properties (1,2)
--------------------------------------------------------------------------
Three Months Ended May 31, 2004 and May 31, 2003
-------------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
Region/Brand 2004 vs. 2003 2004 vs. 2003 2004 vs. 2003
--------------------------------------------------------------------------
Caribbean & Latin
America $96.23 17.5% 73.6% 8.3% pts. $130.81 4.2%
Continental Europe $91.59 14.5% 69.4% 7.4% pts. $132.06 2.3%
United Kingdom $109.04 14.5% 75.9% 7.7% pts. $143.74 2.9%
Middle East & Africa $79.23 45.0% 75.6% 19.2% pts. $104.86 8.1%
Asia Pacific(3) $75.78 54.5% 76.3% 22.6% pts. $99.35 8.8%
Total International
(4,5) $90.79 24.6% 73.9% 12.9% pts. $122.78 2.8%
Ritz-Carlton
International $154.24 37.6% 72.6% 21.4% pts. $212.49 -3.0%
Total International
(4) $95.93 26.1% 73.8% 13.6% pts. $129.93 2.9%
(1) International financial results are reported on a period basis, while
International statistics are reported on a monthly basis.
(2) Statistics are in constant dollars and include results for March
through May. Excludes North America.
(3) Excludes Hawaii.
(4) Includes Hawaii.
(5) Excludes Ritz-Carlton.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
International Comparable Company-Operated Properties(1,2)
--------------------------------------------------------------------------
Five Months Ended May 31, 2004 and May 31, 2003
------------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
Region/Brand 2004 vs. 2003 2004 vs. 2003 2004 vs. 2003
--------------------------------------------------------------------------
Caribbean & Latin
America $105.92 14.1% 74.0% 6.4% pts. $143.19 4.2%
Continental Europe $86.48 8.8% 66.8% 4.5% pts. $129.39 1.4%
United Kingdom $134.20 19.1% 74.8% 8.4% pts. $179.34 5.6%
Middle East & Africa $81.26 38.8% 74.8% 13.7% pts. $108.62 13.3%
Asia Pacific(3) $68.83 39.0% 73.6% 16.0% pts. $93.57 8.7%
Total International(4,5) $87.43 20.6% 72.0% 10.0% pts. $121.40 3.8%
Ritz-Carlton
International $145.65 25.8% 69.4% 14.5% pts. $209.95 -0.5%
Total International(4) $93.79 21.5% 71.7% 10.5% pts. $130.76 3.6%
International Comparable Systemwide Properties(1,2)
--------------------------------------------------------------------------
Five Months Ended May 31, 2004 and May 31, 2003
---------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
Region/Brand 2004 vs. 2003 2004 vs. 2003 2004 vs. 2003
--------------------------------------------------------------------------
Caribbean & Latin
America $99.19 15.3% 72.6% 7.6% pts. $136.63 3.3%
Continental Europe $83.54 9.9% 64.6% 5.6% pts. $129.28 0.4%
United Kingdom $99.80 10.7% 70.5% 5.4% pts. $141.52 2.2%
Middle East & Africa $81.26 38.8% 74.8% 13.7% pts. $108.62 13.3%
Asia Pacific(3) $72.68 31.3% 74.7% 14.4% pts. $97.27 6.1%
Total International(4,5) $86.72 17.6% 71.1% 9.1% pts. $122.01 2.6%
Ritz-Carlton
International $145.65 25.8% 69.4% 14.5% pts. $209.95 -0.5%
Total International(4) $91.47 18.6% 70.9% 9.5% pts. $128.94 2.7%
(1) International financial results are reported on a period basis, while
International statistics are reported on a monthly basis.
(2) Statistics are in constant dollars and include results for January
through May. Excludes North America.
(3) Excludes Hawaii.
(4) Includes Hawaii.
(5) Excludes Ritz-Carlton.
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
(in millions, except per share amounts)
We consider income from continuing operations excluding the impact of the synthetic fuel operations, earnings per share excluding the impact of the synthetic fuel operations, and the effective tax rate excluding the impact of the synthetic fuel operations, to be meaningful performance indicators because they reflect that portion of our income from continuing operations, earnings per share, and the effective tax rate that relates to our lodging business and enables investors to compare the results of our operations and effective tax rate to that of other lodging companies. However, income from continuing operations excluding the impact of the synthetic fuel operations, earnings per share excluding the impact of the synthetic fuel operations, and the effective tax rate excluding the impact of the synthetic fuel operations are all non- GAAP financial measures, and are not alternatives to income from continuing operations, earnings per share, effective tax rate or any other operating measure prescribed by accounting principles generally accepted in the United States.
The reconciliation of income from continuing operations, earnings per share, and the effective income tax rate as reported to income from continuing operations excluding the impact of the synthetic fuel operations, earnings per share excluding the impact of the synthetic fuel operations, and the effective income tax rate excluding the impact of the synthetic fuel operations is as follows:
Second Quarter 2004
Continuing Operations
---------------------------------
Income from Synthetic Excluding
Continuing Fuel Synthetic
Operations Impact Fuel
----------- --------- ---------
Pre tax income (loss) $179 $(21) $200
Tax (Provision)/Benefit (68) 3 (71)
Tax Credits 35 35 -
----------- --------- ---------
Total Tax (Provision)/Benefit (33) 38 (71)
----------- --------- ---------
Income from Continuing Operations
before Minority Interest 146 17 129
Minority Interest 14 14 -
----------- --------- ---------
Income from Continuing Operations $160 $31 $129
=========== ========= =========
Diluted Shares 240.3 240.3 240.3
Earnings per Share - Diluted $0.67 $0.13 $0.54
Tax Rate 18.4% 35.4%
Second Quarter 2003
Continuing Operations
---------------------------------
Income from Synthetic Excluding
Continuing Fuel Synthetic
Operations Impact Fuel
----------- --------- ---------
Pre tax income (loss) $110 $(42) $152
Tax (Provision)/Benefit (37) 15 (52)
Tax Credits 53 53 -
----------- --------- ---------
Total Tax Benefit/(Provision) 16 68 (52)
----------- --------- ---------
Income from Continuing Operations $126 $26 $100
=========== ========= =========
Diluted Shares 244.3 244.3 244.3
Earnings per Share - Diluted $0.52 $0.11 $0.41
Tax Rate -14.7% 33.8%
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
(in millions, except per share amounts)
We consider income from continuing operations excluding the impact of the synthetic fuel operations, earnings per share excluding the impact of the synthetic fuel operations, and the effective tax rate excluding the impact of the synthetic fuel operations, to be meaningful performance indicators because they reflect that portion of our income from continuing operations, earnings per share, and the effective tax rate that relates to our lodging business and enables investors to compare the results of our operations and effective tax rate to that of other lodging companies. However, income from continuing operations excluding the impact of the synthetic fuel operations, earnings per share excluding the impact of the synthetic fuel operations, and the effective tax rate excluding the impact of the synthetic fuel operations are all non- GAAP financial measures, and are not alternatives to income from continuing operations, earnings per share, effective tax rate or any other operating measure prescribed by accounting principles generally accepted in the United States.
The reconciliation of income from continuing operations, earnings per share, and the effective income tax rate as reported to income from continuing operations excluding the impact of the synthetic fuel operations, earnings per share excluding the impact of the synthetic fuel operations, and the effective income tax rate excluding the impact of the synthetic fuel operations is as follows:
Second Quarter YTD 2004
Continuing Operations
-----------------------------------
Income from Synthetic Excluding
Continuing Fuel Synthetic
Operations Impact Fuel
----------- --------- ----------
Pre tax income (loss) $311 $(49) $360
Tax (Provision)/Benefit (115) 13 (128)
Tax Credits 64 64 -
----------- --------- ----------
Total Tax (Provision)/Benefit (51) 77 (128)
----------- --------- ----------
Income from Continuing Operations
before Minority Interest 260 28 232
Minority Interest 14 14 -
----------- --------- ----------
Income from Continuing Operations $274 $42 $232
=========== ========= ==========
Diluted Shares 241.5 241.5 241.5
Earnings per Share - Diluted $1.14 $0.17 $0.97
Tax Rate 16.4% 35.5%
Second Quarter YTD 2003
Continuing Operations
-----------------------------------
Income from Synthetic Excluding
Continuing Fuel Synthetic
Operations Impact Fuel
----------- --------- ----------
Pre tax income (loss) $157 $(101) $258
Tax (Provision)/Benefit (54) 36 (90)
Tax Credits 110 110 -
----------- --------- ----------
Total Tax Benefit/(Provision) 56 146 (90)
----------- --------- ----------
Income from Continuing Operations $213 $45 $168
=========== ========= ==========
Diluted Shares 243.9 243.9 243.9
Earnings per Share - Diluted $0.87 $0.18 $0.69
Tax Rate -35.4% 34.7%
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
($ in millions)
We consider lodging operating income to be a meaningful indicator of our performance because it measures our growth in profitability as a lodging company and enables investors to compare the operating income related to our lodging segments to the operating income of other lodging companies. However, lodging operating income is a non-GAAP financial measure and is not an alternative to operating income or any other operating measure prescribed by accounting principles generally accepted in the United States.
The reconciliation of operating income to lodging operating income is as follows:
Fiscal Year 2003
-----------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
Operating income as reported $58 $68 $90 $161 $377
Less: Synthetic fuel operating
loss 59 42 3 - 104
------- ------- ------- ------- -----
Lodging operating income $117 $110 $93 $161 $481
======= ======= ======= ======= =====
Fiscal Year 2004
---------------------------------
First Second Second
Quarter Quarter Quarter YTD
------- ------- -----------
Operating income as reported $151 $118 $269
Less: Synthetic fuel operating
loss - 30 30
------- ------- -----------
Lodging operating income $151 $148 $299
======= ======= ===========
SOURCE Marriott International, Inc.
Tom Marder of Marriott International, Inc., +1-301-380-2553, or thomas.marder@marriott.com /Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20030605/MARRIOTTLOGO AP Archive: http://photoarchive.ap.org PRN Photo Desk, +1-888-776-6555 or +1-212-782-2840 /Company News On-Call: http://www.prnewswire.com/comp/532963.html
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