Marriott International Reports Record 2005 Fourth Quarter Earnings Per Share From Continuing Operations of $1.07; Up 35 Percent From the 2004 Fourth Quarter
Feb 09, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Marriott International, Inc. (NYSE: MAR) today reported record diluted earnings per share from continuing operations (EPS) of $1.07 in the fourth quarter of 2005, up 35 percent from the fourth quarter of 2004. Income from continuing operations, net of taxes, for the quarter was $237 million, a 26 percent increase over the prior year. Excluding the impact of our synthetic fuel business, income from continuing operations increased 32 percent to $204 million and diluted earnings per share increased 42 percent to $0.92 during the quarter.
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J.W. Marriott, Jr., Marriott International chairman and chief executive officer, said, "Strong worldwide economic expansion and impressive lodging industry strength continued in the fourth quarter, and Marriott International capitalized on those trends through increasingly favorable financial performance.
"Across all travel segments, group, business transient and leisure, revenues remained strong in the quarter. Meeting attendance was solid and group spending was robust. Catering revenues rose 13 percent during the quarter with particularly impressive demand from financial services and pharmaceutical businesses. Business guests continued to fill hotels. Manhattan REVPAR rose 16 percent largely due to a greater mix of corporate rated business and higher room rates. Technology rebounded, driving demand higher in San Francisco and the suburbs of Boston. Business travel to and especially within Asia continues to thrive. In China alone, Marriott currently operates 32 hotels, with 14 properties under construction, and additional projects in the development pipeline.
"The resort business in the Caribbean exceeded expectations, as leisure travel continues to boom. Our Ritz-Carlton brand just opened a spectacular resort on Grand Cayman Island, and we anticipate significant additional expansion opportunities in the region. In total, 16 Ritz-Carlton hotels, many in resort destinations, are currently in the development pipeline, including 11 which are under construction.
"Marriott and its owners invested record amounts in product improvements and renovations throughout our system in 2005, including new bedding for over 600,000 beds. Guest satisfaction scores and REVPAR improved dramatically in 2005, reflecting renovations over the past three years, including 129 Courtyard hotels and 95 Residence Inns. An additional 43 Courtyards and 24 Residence Inns are scheduled for renovation in 2006.
"We expect to deliver another year of outstanding results in 2006. U.S. industry supply growth is expected to remain modest while lodging demand continues to strengthen. Given the strength of the industry and the outstanding quality of our products, we believe our North American company- operated REVPAR should increase 8 to 10 percent in 2006."
In the 2005 fourth quarter (16 week period from September 10, 2005 to December 30, 2005), REVPAR for the company's comparable worldwide systemwide properties increased 11.2 percent (11.0 percent using constant dollars). Systemwide North American REVPAR increased by 11.0 percent in the fourth quarter of 2005, driven by a 7.8 percent increase in average daily rate and a 2 percentage point increase in occupancy to 70.7 percent. REVPAR at the company's comparable systemwide North American full-service hotels (including Marriott Hotels & Resorts, The Ritz-Carlton, and Renaissance Hotels & Resorts) increased by 11.3 percent during the quarter. North American systemwide REVPAR for the company's comparable select-service and extended-stay brands (including Courtyard, Fairfield Inn, Residence Inn, TownePlace Suites, and SpringHill Suites) increased 10.6 percent.
In the fourth quarter, international systemwide comparable REVPAR increased 11.9 percent (11.0 percent using constant dollars) including a 9.9 percent increase in average daily rates and a 1.3 percentage point improvement in occupancy to nearly 75 percent. REVPAR showed dramatic improvements in Hong Kong, China and Dubai.
The company added 38 hotels and timeshare resorts (5,980 rooms) to our worldwide lodging portfolio during the fourth quarter of 2005, while four properties (679 rooms) exited the system. At year-end, the company's lodging group encompassed 2,741 hotels and timeshare resorts (499,165 rooms).
MARRIOTT REVENUES totaled $3.6 billion in the 2005 fourth quarter, a 16 percent increase from the same period in 2004. Base and franchise fees also rose 16 percent. Incentive management fees soared 33 percent as a result of robust growth in REVPAR and higher property level house profit margins. In the prior year's quarter, Marriott recognized $7 million in incentive fees that were calculated based on prior period results, but not earned and due until the fourth quarter of 2004. Comparable company-operated house profit margins increased 210 basis points during the quarter, both worldwide and in North America, despite dramatically higher energy costs. Property level EBITDA margins for comparable North American company-operated properties, calculated as if wholly owned, increased 250 basis points.
Timeshare interval sales and services revenue increased 18 percent in the fourth quarter of 2005. Timeshare contract sales, including sales made by joint venture projects, increased 6 percent, reflecting strong sales at our timeshare resorts in St. Thomas, Las Vegas and Paris, as well as strong whole- ownership sales at our Grand Residences by Marriott in Panama City, Florida. Contract sales were lower at Ritz-Carlton Club resorts in St. Thomas and Bachelor Gulch, Colorado. These resorts continue to experience strong demand but offer limited inventory as they near sell-out. Seven new resorts offering timeshare, fractional or whole ownership products are expected to begin sales in 2006 including the Ritz-Carlton projects in San Francisco, Miami Beach, Kapalua and Kauai.
LODGING OPERATING INCOME for the fourth quarter of 2005 was $250 million, up from $146 million a year ago. Marriott's 2005 fourth quarter lodging operating income benefited from strong fee growth as well as increased profits from owned and leased properties the company acquired in 2005. The company's results included a $7 million charge in connection with the write-off of previously capitalized costs for one timeshare project. General and administrative expenses were also lower. The 2004 quarter included a $13 million charge associated with the Courtyard joint venture transaction.
SYNTHETIC FUEL operations contributed approximately $0.15 per share of after-tax earnings during the 2005 fourth quarter compared to $0.14 in the year ago quarter. Excluding the impact of our synthetic fuel operations, our tax rate for continuing operations was approximately 35 percent in the fourth quarter of 2005.
GAINS AND OTHER INCOME (excluding $12 million from synthetic fuel) totaled $72 million and included a $40 million gain from a fourth quarter timeshare mortgage note sale, a $17 million gain on the Courtyard land sale, $5 million of gains from the sale of other real estate, $6 million of preferred returns from joint venture investments and a $4 million gain on the sale of an equity interest in an international joint venture. Prior year gains of $69 million included a $36 million gain from a timeshare mortgage note sale, a $5 million gain associated with the repayment of a note, and $28 million of gains primarily related to the sale of real estate, our interest in an international joint venture and the disposition of the Ramada International business.
INTEREST EXPENSE increased $7 million primarily due to higher commercial paper balances, partially offset by changes in the company's senior debt in 2005.
INTEREST INCOME totaled $14 million during the quarter, down from $48 million in the year ago quarter, primarily driven by loan repayments in 2005 and in the fourth quarter of 2004.
EQUITY IN (LOSSES)/EARNINGS - OTHER reflects Marriott's share of income or losses from joint venture investments. During the fourth quarter 2005, the company earned a $15 million profit associated with the disposition of a hotel by a joint venture in which Marriott had an equity interest. Results also reflected improved profitability of joint venture hotels benefiting from higher property REVPAR. The company also benefited from the recapitalization of the Courtyard joint venture.
FULL YEAR 2005 RESULTS
For the full year 2005 EPS totaled $2.89, up 17 percent from 2004. Income from continuing operations, net of taxes, for the year was $668 million, a 12 percent increase over 2004 levels. Synthetic fuel operations contributed approximately $125 million ($0.54 per share) in 2005 versus $107 million ($0.44 per share) in the prior year. The guidance provided by the company on October 6, 2005, for fiscal year 2005 excluded the $94 million pre-tax ($0.27 per share) one-time charge associated with the CTF transaction, recorded in the 2005 second quarter, and the $17 million ($0.05 per share) pre-tax charge related to an impairment in a Delta Airlines leveraged aircraft lease, recorded in the 2005 third quarter. Excluding these items, 2005 EPS was $3.21, up 30 percent, and income from continuing operations, net of taxes, was $741 million, up 25 percent over 2004 levels.
LODGING OPERATING INCOME increased 22 percent from 2004 levels to $699 million, largely as a result of higher base and franchise fees, growth in incentive fees, favorable timeshare profits and strong results from our owned and leased properties, partially offset by higher general and administrative expenses. Marriott's general and administrative expenses increased 24 percent to $753 million, driven by $94 million of pre-tax charges associated with the CTF transaction, primarily due to the non-cash write-off of management agreements, $30 million for bedding incentives, a $12 million payment made in the second quarter to retain a management agreement and a $6 million charge recorded in the third quarter associated with the settlement of a litigation matter from 1998, partially offset by an overall decline in litigation costs.
GAINS AND OTHER INCOME of $149 million in 2005 (excluding $32 million for synthetic fuel) included $69 million from timeshare mortgage note sales, $34 million from the sale of real estate, $25 million of gains from the sale or refinancing of real estate loans, $14 million of preferred returns from several joint venture investments and $7 million of gains on the sale of the company's interests in two joint ventures. Prior year gains of $136 million (excluding $28 million for synthetic fuel) included $64 million from the sale of timeshare mortgage notes, $50 million related to the sale of real estate and our interest in an international joint venture, a $17 million gain on the disposition of Marriott's interest in the Two Flags joint venture and the Ramada International business, and a $5 million gain associated with the repayment of principal and interest of a mezzanine loan to a joint venture.
INTEREST INCOME declined $67 million in 2005 to $79 million as the company reduced its notes receivable balance in 2005, excluding timeshare notes, by $609 million. The provision for loan losses reflected a $17 million non-cash pre-tax charge associated with the impairment of a Delta Airline leveraged lease receivable and an $11 million reserve for a loan at one property.
BALANCE SHEET
With record earnings, loan repayments and asset sales, Marriott generated significant cash flow in 2005. At the end of 2005, total debt was $1,737 million and cash balances totaled $203 million compared to $1,325 million in debt and $770 million of cash at the end of 2004. The company also repurchased a record 26 million shares of common stock in 2005 at a cost of $1.65 billion. The remaining share repurchase authorization, as of year-end 2005, totaled approximately 17.9 million shares.
OUTLOOK
The company expects North American company-operated REVPAR to increase 8 to 10 percent in 2006, roughly 80 percent of which should be rate driven. Assuming a 150 to 200 percentage point improvement in house profit margins, and approximately 25,000 new room openings (gross), the company expects total fee revenue of $1,165 million to $1,185 million, an increase of 13 to 15 percent.
Given the recent rise in oil prices and the uncertainty surrounding the availability of 2006 tax credits, the company suspended production at its four synthetic fuel facilities in mid-January 2006. The company has not yet determined the duration of the temporary shut down and as such is unable to provide guidance for 2006 earnings from the synthetic fuel business. The current net book value of the four facilities is $19 million.
New accounting rules for the timeshare industry take effect in 2006. The new rules change the timing of the recognition of timeshare revenues, selling and product costs, reacquired timeshare inventory and maintenance fees for unsold timeshare inventory. At the same time, the attractive cash flow characteristics of the timeshare business will remain unchanged. The company's estimate of the one-time non-cash impact to 2006 first quarter earnings will be an after-tax charge of approximately $110 million to $115 million ($0.50 to $0.53 per share). Since this charge is a one-time item, and will be presented in the financial statements below income from continuing operations, it is not included in the 2006 earnings guidance.
Timeshare interval sales and services revenues, net of expenses are expected to decline approximately 2 percent in 2006, reflecting soft contract sales in 2005 resulting from limited inventory. Contract sales (including joint venture sales) are expected to increase over 40 percent in 2006, as the company continues to experience strong sales from highly successful projects in Aruba, Newport Coast, Las Vegas and Hawaii and begins sales in 2006 at seven new resorts offering timeshare, fractional or whole ownership products.
General, administrative and other expenses are expected to decline approximately 12 to 14 percent in 2006 to $650 million to $660 million from $753 million in 2005. The comparison reflects the impact of the $94 million charge associated with the CTF transaction in the second quarter of 2005 and $30 million in bedding incentives also recorded in 2005. This 2006 guidance includes the $44 million pre-tax impact of the Financial Accounting Standards Board's Statement (FAS) No. 123(R), requiring the expensing of all share-based compensation (including stock options).
Given these above items, the company estimates that lodging operating income will total $910 million to $940 million in 2006, an increase of 30 to 34 percent over 2005 (20 to 24 percent excluding the $94 million charge associated with the CTF transaction in 2005 and the expected $44 million impact of FAS No. 123(R) in 2006).
The company expects lodging gains and other income to total approximately $130 million in 2006 (including approximately $70 million in timeshare mortgage note sale gains), compared to $149 million in 2005.
Net interest expense is expected to total $75 million, an increase of $20 million, primarily driven by loan repayments in 2005 resulting in reduced interest income.
The company estimates North American company-operated REVPAR growth of 8 to 10 percent in the first quarter of 2006, with house profit margin growth of 150 to 200 basis points.
Under the above assumptions, the company currently estimates the following results for the first quarter and full year 2006:
First Quarter 2006 Full Year 2006
Total fee revenue $250 million to $1,165 million to
$260 million $1,185 million
Owned, leased, Approx. $45 million Approx. $150 million
corporate housing
and other, net of
direct expenses
Timeshare interval
sales and services,
net of direct expenses $65 million to Approx. $255 million
$70 million
General, administrative
& other expense(1) $140 million to $650 million to
$145 million $660 million
Lodging operating $215 million to $910 million to
income(1) $235 million $940 million
Gains (excluding
synthetic fuel) Approx. $30 million Approx. $130 million(2)
Net interest expense(3) Approx. $20 million Approx $75 million
Equity in earnings/ Approx. $0 Approx. $15 million
(losses)
Earnings per share No guidance No guidance
from synthetic fuel
Earnings per share
excluding synfuel(1,4) $0.67 to $0.73 $2.95 to $3.05
Earnings per share $0.70 to $0.76 $3.08 to $3.18
excluding synfuel and
impact of FAS123(R)
adoption(4,5)
(1) Full Year 2006 includes pre-tax charge of $44 million ($0.13 per
share) associated with the adoption of FAS No. 123(R) ($9 million
($0.03 per share) for the 2006 first quarter).
(2) Includes timeshare mortgage note sale gains.
(3) Net of interest income
(4) From continuing operations before cumulative effect of a change in
accounting principle associated with the new timeshare accounting
rules. The company expects to record an after-tax charge of $110
million to $115 million ($0.50 to $0.53 per share) in the 2006 first
quarter.
(5) Full Year 2006 excludes pre-tax charge of $44 million ($0.13 per
share) associated with the adoption of FAS No. 123(R) ($9 million
($0.03 per share) for the 2006 first quarter).
The company expects investment spending in 2006 to total approximately $900 million, including $50 million for maintenance capital spending, $500 million for capital expenditures, acquisitions and timeshare development, $30 million in new mezzanine financing and mortgage loans for hotels developed by owners and franchisees, and approximately $320 million in equity and other investments (including timeshare equity investments).
Marriott International, Inc. (NYSE: MAR) will conduct its quarterly earnings review for the investment community and news media on Thursday, February 9, 2006 at 10 a.m. Eastern Time (ET). The conference call will be webcast simultaneously via Marriott's investor relations website at http://www.marriott.com/investor, click the "Recent Investor News" tab and click on the quarterly conference call link. A replay will be available on the Internet until March 9, 2006.
The telephone dial-in number for the conference call is 913-981-4910. A telephone replay of the conference call will also be available by telephone from 1 p.m. ET, Thursday, February 9, 2006 until Thursday, February 16, 2006 at 8 p.m. ET. To access the recording, call 719-457-0820. The reservation number for the recording is 8301413.
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; 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 duration and full extent of the current growth environment 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; 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 over 2,700 lodging properties in the United States and 66 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 and Bulgari brand names; develops and operates vacation ownership resorts under the Marriott Vacation Club International, Horizons, The Ritz-Carlton Club and Grand Residences by Marriott 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 143,000 employees. In fiscal year 2005, Marriott International reported sales from continuing operations of $11.6 billion. For more information or reservations, please visit our web site at http://www.marriott.com.
IRPR#1
ADD: /FIRST AND FINAL ADD -- NYTH069 -- Marriott International Earnings/
MARRIOTT INTERNATIONAL, INC.
Financial Highlights
(in millions, except per share amounts)
16 Weeks Ended 16 Weeks Ended
December 30, 2005 December 31, 2004
-------------------- -------------------- Percent
Synthetic Synthetic Better/
Lodging Fuel Total Lodging Fuel Total (Worse)
------- ------ ----- ------- ------ ----- -------
REVENUES
Base management fees $155 $- $155 $133 $- $133 17
Franchise fees 103 - 103 89 - 89 16
Incentive management fees 69 - 69 52 - 52 33
Owned, leased, corporate
housing and other(1) 361 - 361 239 - 239 51
Timeshare interval sales
and services(2) 413 - 413 349 - 349 18
Cost reimbursements(3) 2,423 - 2,423 2,156 - 2,156 12
Synthetic fuel - 117 117 - 123 123 (5)
------- ------ ----- ------- ------ -----
Total Revenues 3,524 117 3,641 3,018 123 3,141 16
OPERATING COSTS AND EXPENSES
Owned, leased and corporate
housing - direct(4) 298 - 298 201 - 201 (48)
Timeshare - direct 357 - 357 293 - 293 (22)
Reimbursed costs 2,423 - 2,423 2,156 - 2,156 (12)
General, administrative
and other(5) 196 - 196 222 - 222 12
Synthetic fuel - 146 146 - 160 160 9
------- ------ ----- ------- ------ -----
Total Expenses 3,274 146 3,420 2,872 160 3,032 (13)
------- ------ ----- ------- ------ -----
OPERATING INCOME (LOSS) $250 $(29) 221 $146 $(37) 109 103
======= ====== ======= ======
Gains and other income(6) 84 69 22
Interest expense (37) (30) (23)
Interest income 14 48 (71)
Reversal of provision for
loan losses - 8 (100)
Equity in earnings/
(losses) - Other(7) 18 (5) 460
---- ----
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 300 199 51
Provision for income taxes (76) (21) (262)
---- ----
INCOME BEFORE MINORITY
INTEREST 224 178 26
Minority interest 13 10 30
---- ----
INCOME FROM CONTINUING
OPERATIONS 237 188 26
DISCONTINUED OPERATIONS - 1 (100)
---- ----
NET INCOME $237 $189 25
==== ====
EARNINGS PER SHARE - Basic
Earnings from continuing
operations $1.14 $0.84 36
Earnings from discontinued
operations - - *
---- ----
EARNINGS PER SHARE - Basic $1.14 $0.84 36
==== ====
EARNINGS PER SHARE - Diluted
Earnings from continuing
operations $1.07 $0.79 35
Earnings from discontinued
operations - - *
---- ----
EARNINGS PER SHARE - Diluted $1.07 $0.79 35
==== ====
Basic Shares 207.3 224.5
Diluted Shares 220.8 239.1
* Percent cannot be calculated.
(1) Owned, leased, corporate housing and other revenue includes revenue
from the properties we own or lease, revenue from 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, 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 and
general expenses.
(6) Gains and other income includes gains on the sale of real estate,
gains from the sale of joint ventures, income related to our cost
method joint ventures and the earn-out payments we made to the
previous owner of the synthetic fuel operations and earn-out payments
we received from our synthetic fuel joint venture partner.
(7) 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)
52 Weeks Ended 52 Weeks Ended
December 30, 2005 December 31, 2004
-------------------- -------------------- Percent
Synthetic Synthetic Better/
Lodging Fuel Total Lodging Fuel Total (Worse)
------- ------ ----- ------- ------ ----- -------
REVENUES
Base management fees $497 $- $497 $435 $- $435 14
Franchise fees 329 - 329 296 - 296 11
Incentive management
fees 201 - 201 142 - 142 42
Owned, leased, corporate
housing and other(1) 944 - 944 730 - 730 29
Timeshare interval sales
and services(2) 1,487 - 1,487 1,247 - 1,247 19
Cost reimbursements(3) 7,671 - 7,671 6,928 - 6,928 11
Synthetic fuel - 421 421 - 321 321 31
------- ------ ------ ------ ------ ------
Total Revenues 11,129 421 11,550 9,778 321 10,099 14
OPERATING COSTS AND
EXPENSES
Owned, leased and
corporate housing -
direct(4) 778 - 778 629 - 629 (24)
Timeshare - direct 1,228 - 1,228 1,039 - 1,039 (18)
Reimbursed costs 7,671 - 7,671 6,928 - 6,928 (11)
General, administrative
and other(5) 753 - 753 607 - 607 (24)
Synthetic fuel - 565 565 - 419 419 (35)
------- ------ ------ ------ ------ ------
Total Expenses 10,430 565 10,995 9,203 419 9,622 (14)
------- ------ ------ ------ ------ ------
OPERATING INCOME (LOSS) $699 $(144) 555 $575 $(98) 477 16
======= ====== ====== ======
Gains and other income(6) 181 164 10
Interest expense (106) (99) (7)
Interest income 79 146 (46)
(Provision for)/reversal
of provision for loan
losses (28) 8 (450)
Equity in losses -
Synthetic Fuel(7) - (28) 100
Equity in earnings/
(losses) - Other(8) 36 (14) 357
----- -----
INCOME BEFORE INCOME
TAXES AND MINORITY
INTEREST 717 654 10
Provision for income
taxes (94) (100) 6
----- -----
INCOME BEFORE MINORITY
INTEREST 623 554 12
Minority interest 45 40 13
----- -----
INCOME FROM CONTINUING
OPERATIONS 668 594 12
DISCONTINUED OPERATIONS 1 2 (50)
----- -----
NET INCOME $669 $596 12
===== =====
EARNINGS PER SHARE -
Basic
Earnings from
continuing
operations $3.09 $2.62 18
Earnings from
discontinued
operations - 0.01 (100)
----- -----
EARNINGS PER SHARE -
Basic $3.09 $2.63 17
===== =====
EARNINGS PER SHARE -
Diluted
Earnings from
continuing
operations $2.89 $2.47 17
Earnings from
discontinued
operations - 0.01 (100)
----- -----
EARNINGS PER SHARE -
Diluted $2.89 $2.48 17
===== =====
Basic Shares 216.4 226.6
Diluted Shares 231.2 240.5
(1) Owned, leased, corporate housing and other revenue includes revenue
from the properties we own or lease, revenue from our ExecuStay
business, land rent income and other revenue.
(2) Timeshare interval sales and services includes total timeshare revenue
except for base fees, cost reimbursements, gains, and joint venture
earnings (losses).
(3) Cost reimbursements include reimbursements from lodging properties for
Marriott funded operating expenses.
(4) Owned, leased and corporate housing -- direct expenses include
operating expenses related to our owned or leased hotels, including
lease payments, pre-opening expenses and depreciation, plus expenses
related to our ExecuStay business.
(5) General, administrative and other expenses include the overhead costs
allocated to our lodging business segments (including ExecuStay and
Timeshare) and our unallocated corporate overhead costs and general
expenses.
(6) Gains and other income includes gains on the sale of real estate,
gains from the sale of joint ventures, income related to our cost
method joint ventures and the earn-out payments we made to the
previous owner of the synthetic fuel operations and earn-out payments
we received from our synthetic fuel joint venture partner.
(7) Equity in losses -- Synthetic fuel includes our share of the equity in
earnings of the synthetic fuel joint ventures and the net earn-out
payments made to our synthetic fuel joint venture partner from January
3, 2004 through March 25, 2004. Beginning March 26, 2004, the
synthetic fuel operations were consolidated as a result of adopting
FIN 46(R), "Consolidation of Variable Interest Entities."
(8) Equity in earnings/(losses) -- Other includes our equity in earnings/
(losses) of unconsolidated joint ventures.
Marriott International, Inc.
Business Segments
($ in millions)
Sixteen Weeks Ended Percent
--------------------------------------- Better/
December 30, 2005 December 31, 2004 (Worse)
------------------- ------------------- ---------
REVENUES
Full-Service $2,442 $2,099 16%
Select-Service 397 330 20%
Extended-Stay 197 170 16%
Timeshare 488 419 16%
------------------- -------------------
Total lodging(1) 3,524 3,018 17%
Synthetic fuel 117 123 -5%
------------------- -------------------
Total $3,641 $3,141 16%
=================== ===================
INCOME FROM CONTINUING
OPERATIONS
Full-Service $199 $134 49%
Select-Service 79 36 119%
Extended-Stay 22 18 22%
Timeshare 78 68 15%
------------------- -------------------
Total lodging
financial results(1) 378 256 48%
Synthetic fuel (after-tax) 33 34 -3%
Unallocated corporate
expenses (40) (47) 15%
Interest income, provision
for loan losses and
interest expense (23) 26 -188%
Income taxes (excluding
Synthetic fuel) (111) (81) -37%
------------------- -------------------
Total $237 $188 26%
=================== ===================
(1) We consider lodging revenues and lodging financial results to be
meaningful indicators of our performance because they measure our
growth in profitability as a lodging company and enable investors to
compare the sales and results of our lodging operations to those of
other lodging companies.
Marriott International, Inc.
Business Segments
($ in millions)
Fifty-Two Weeks Ended Percent
--------------------------------------- Better/
December 30, 2005 December 31, 2004 (Worse)
------------------- ------------------- ---------
REVENUES
Full-Service $7,535 $6,611 14%
Select-Service 1,265 1,118 13%
Extended-Stay 608 547 11%
Timeshare 1,721 1,502 15%
------------------- -------------------
Total lodging(1) 11,129 9,778 14%
Synthetic fuel 421 321 31%
------------------- -------------------
Total $11,550 $10,099 14%
=================== ===================
INCOME FROM CONTINUING
OPERATIONS
Full-Service $474 $426 11%
Select-Service 209 140 49%
Extended-Stay 65 66 -2%
Timeshare 271 203 33%
------------------- -------------------
Total lodging
financial results(1) 1,019 835 22%
Synthetic fuel (after-tax) 125 107 17%
Unallocated corporate
expenses (137) (138) 1%
Interest income, provision
for loan losses and
interest expense (55) 55 -200%
Income taxes (excluding
Synthetic fuel) (284) (265) -7%
------------------- -------------------
Total $668 $594 12%
=================== ===================
(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
---------- ------------
Change vs. Change vs.
Dec. 30, Dec. 31, Dec. 30, Dec. 31,
Brand 2005 2004 2005 2004
--------------------------------- ---------------------------------------
Full-Service Lodging
--------------------
Marriott Hotels & Resorts 507 17 183,455 4,296
The Ritz-Carlton 59 2 19,285 674
Renaissance Hotels & Resorts 137 4 48,232 773
Bulgari Hotel & Resort 1 - 58 -
Ramada International 3 (1) 532 (195)
Select-Service Lodging
----------------------
Courtyard 692 36 99,669 5,666
Fairfield Inn 524 1 47,999 (711)
SpringHill Suites 137 12 16,002 1,452
Extended-Stay Lodging
---------------------
Residence Inn 490 27 58,444 3,385
TownePlace Suites 122 7 12,303 593
Marriott Executive Apartments 17 3 2,852 381
Timeshare(2)
-----------
Marriott Vacation Club
International 44 1 9,401 569
The Ritz-Carlton Club 4 - 292 31
Grand Residences by Marriott 2 - 313 65
Horizons by Marriott Vacation
Club 2 - 328 -
------------------ -------------------
Total 2,741 109 499,165 16,979
================== ===================
(1) Total Lodging Products excludes the 1,850 corporate housing rental
units.
(2) Includes products in active sales which are not ready for occupancy.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
Comparable Company-Operated North American Properties
--------------------------------------------------------------------------
Sixteen Weeks Ended December 30, 2005
and December 31, 2004
------------------------------------------------
Average
REVPAR Occupancy Daily Rate
------ --------- ----------
Brand 2005 vs. 2004 2005 vs. 2004 2005 vs. 2004
--------------------------------------------------------------------------
Marriott Hotels &
Resorts $114.74 10.9% 71.1% 1.8% pts. $161.39 8.2%
The Ritz-Carlton(2) $199.80 12.9% 68.9% 3.8% pts. $290.17 6.7%
Renaissance Hotels &
Resorts $109.95 15.1% 70.1% 3.9% pts. $156.77 8.8%
Composite - Full-Service $122.82 11.8% 70.7% 2.3% pts. $173.68 8.2%
Residence Inn $85.47 9.7% 78.5% 1.7% pts. $108.87 7.2%
Courtyard $74.16 10.2% 68.2% 0.5% pts. $108.67 9.4%
TownePlace Suites $52.54 11.6% 73.3% 2.6% pts. $71.70 7.5%
SpringHill Suites $68.79 14.0% 72.3% 1.7% pts. $95.13 11.3%
Composite - Select-
Service & Extended-Stay $75.34 10.4% 71.5% 1.1% pts. $105.33 8.7%
Composite - All(1) $103.86 11.4% 71.0% 1.8% pts. $146.19 8.5%
Comparable Systemwide North American Properties
--------------------------------------------------------------------------
Sixteen Weeks Ended December 30, 2005
and December 31, 2004
------------------------------------------------
Average
REVPAR Occupancy Daily Rate
------ --------- ----------
Brand 2005 vs. 2004 2005 vs. 2004 2005 vs. 2004
--------------------------------------------------------------------------
Marriott Hotels &
Resorts $102.57 10.5% 69.0% 1.8% pts. $148.64 7.6%
The Ritz-Carlton(2) $199.80 12.9% 68.9% 3.8% pts. $290.17 6.7%
Renaissance Hotels &
Resorts $102.29 14.5% 69.7% 3.0% pts. $146.67 9.6%
Composite - Full-Service $109.26 11.3% 69.1% 2.1% pts. $158.11 7.9%
Residence Inn $81.62 9.1% 77.7% 1.9% pts. $105.00 6.4%
Courtyard $75.08 10.2% 69.9% 1.2% pts. $107.36 8.3%
Fairfield Inn $50.48 13.5% 67.4% 3.2% pts. $74.94 8.1%
TownePlace Suites $54.09 11.8% 74.1% 2.2% pts. $72.99 8.6%
SpringHill Suites $65.66 13.4% 72.5% 2.7% pts. $90.54 9.2%
Composite - Select-
Service & Extended-Stay $69.61 10.6% 71.8% 2.0% pts. $96.91 7.6%
Composite - All(1) $86.14 11.0% 70.7% 2.0% pts. $121.85 7.8%
(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 brands. 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 September through December.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
Comparable Company-Operated North American Properties
--------------------------------------------------------------------------
Fifty-Two Weeks Ended December 30, 2005
and December 31, 2004
------------------------------------------------
Average
REVPAR Occupancy Daily Rate
------ --------- ----------
Brand 2005 vs. 2004 2005 vs. 2004 2005 vs. 2004
--------------------------------------------------------------------------
Marriott Hotels &
Resorts $113.31 9.0% 73.2% 1.0% pts. $154.84 7.5%
The Ritz-Carlton(2) $204.45 12.2% 71.0% 1.9% pts. $287.99 9.2%
Renaissance Hotels &
Resorts $108.01 12.5% 72.1% 3.0% pts. $149.90 7.8%
Composite - Full-Service $121.27 10.0% 72.8% 1.4% pts. $166.58 7.8%
Residence Inn $86.46 8.6% 80.0% 1.0% pts. $108.09 7.3%
Courtyard $75.32 9.1% 70.7% -0.2% pts. $106.50 9.4%
TownePlace Suites $53.18 9.1% 75.4% 1.1% pts. $70.52 7.4%
SpringHill Suites $70.36 16.3% 74.9% 3.4% pts. $93.89 11.0%
Composite - Select-
Service & Extended-Stay $76.49 9.4% 73.8% 0.5% pts. $103.70 8.7%
Composite - All(1) $103.29 9.8% 73.2% 1.0% pts. $141.14 8.2%
Comparable Systemwide North American Properties
--------------------------------------------------------------------------
Fifty-Two Weeks Ended December 30, 2005
and December 31, 2004
------------------------------------------------
Average
REVPAR Occupancy Daily Rate
------ --------- ----------
Brand 2005 vs. 2004 2005 vs. 2004 2005 vs. 2004
--------------------------------------------------------------------------
Marriott Hotels &
Resorts $102.21 8.7% 71.0% 1.2% pts. $144.03 6.9%
The Ritz-Carlton(2) $204.45 12.2% 71.0% 1.9% pts. $287.99 9.2%
Renaissance Hotels &
Resorts $100.45 12.4% 71.3% 2.6% pts. $140.89 8.3%
Composite - Full-Service $108.51 9.6% 71.0% 1.4% pts. $152.81 7.3%
Residence Inn $83.47 8.1% 79.5% 1.1% pts. $104.99 6.7%
Courtyard $76.31 8.9% 72.2% 0.6% pts. $105.72 7.9%
Fairfield Inn $51.76 11.7% 69.5% 2.3% pts. $74.47 8.1%
TownePlace Suites $54.62 10.8% 75.8% 1.1% pts. $72.11 9.3%
SpringHill Suites $66.88 13.5% 74.0% 2.9% pts. $90.43 9.1%
Composite - Select-
Service &
Extended-Stay $70.97 9.5% 73.8% 1.3% pts. $96.11 7.6%
Composite - All(1) $86.56 9.5% 72.7% 1.3% pts. $119.12 7.5%
(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 brands. 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 December.
Comparable Company-Operated International Properties (1, 2)
--------------------------------------------------------------------------
Four Months Ended December 31, 2005 and December 31, 2004
---------------------------------------------------------
Average
REVPAR Occupancy Daily Rate
------ --------- ----------
Region/Brand(3) 2005 vs. 2004 2005 vs. 2004 2005 vs. 2004
--------------------------------------------------------------------------
Caribbean & Latin
America $102.05 10.2% 72.1% 3.9% pts. $141.62 4.3%
Continental Europe $99.87 3.2% 72.9% 0.4% pts. $137.07 2.7%
United Kingdom $141.92 4.5% 77.8% -0.5% pts. $182.44 5.2%
Middle East & Africa $88.93 28.6% 69.6% 0.8% pts. $127.84 27.2%
Asia Pacific(4) $94.14 10.8% 76.7% 0.1% pts. $122.79 10.7%
The Ritz-Carlton
International $150.08 12.0% 72.3% 1.1% pts. $207.67 10.2%
Total International(5) $105.37 9.7% 74.5% 0.9% pts. $141.39 8.5%
Worldwide(6) $104.25 10.9% 72.0% 1.6% pts. $144.89 8.5%
Comparable Systemwide International Properties (1, 2)
--------------------------------------------------------------------------
Four Months Ended December 31, 2005 and December 31, 2004
----------------------------------------------------------
Average
REVPAR Occupancy Daily Rate
------ --------- ----------
Region/Brand(3) 2005 vs. 2004 2005 vs. 2004 2005 vs. 2004
--------------------------------------------------------------------------
Caribbean & Latin America $95.64 10.7% 73.7% 5.8% pts. $129.84 1.9%
Continental Europe $99.99 7.0% 72.6% 1.7% pts. $137.70 4.4%
United Kingdom $124.31 4.5% 77.8% 0.1% pts. $159.74 4.4%
Middle East & Africa $87.53 31.3% 69.8% 3.0% pts. $125.42 25.7%
Asia Pacific(4) $98.04 14.4% 77.7% 0.9% pts. $126.18 13.1%
The Ritz-Carlton
International $150.08 12.0% 72.3% 1.1% pts. $207.67 10.2%
Total International(5) $103.88 11.0% 74.8% 1.3% pts. $138.87 9.1%
Worldwide(6) $89.18 11.0% 71.4% 1.9% pts. $124.91 8.0%
(1) International financial results are reported on a period-end basis,
while International statistics are reported on a month-end basis.
(2) Statistics are in constant dollars and include results for September
through December. Excludes North American (except for Worldwide).
(3) Regional information includes the Marriott Hotels & Resorts,
Renaissance Hotels & Resorts and Courtyard brands. Does not include
The Ritz-Carlton brand.
(4) Excludes Hawaii.
(5) Includes Hawaii.
(6) Includes international statistics for the four calendar months ended
December 31, 2005 and December 31, 2004, and North American statistics
for the sixteen weeks ended December 30, 2005 and December 31, 2004.
Includes the Marriott Hotels & Resorts, Renaissance Hotels & Resorts,
The Ritz-Carlton, Courtyard, Residence Inn, TownePlace Suites,
Fairfield Inn and SpringHill Suites brands.
Comparable Company-Operated International Properties (1, 2)
--------------------------------------------------------------------------
Twelve Months Ended December 31, 2005 and December 31, 2004
------------------------------------------------------------
Average
REVPAR Occupancy Daily Rate
------ --------- ----------
Region/Brand(3) 2005 vs. 2004 2005 vs. 2004 2005 vs. 2004
--------------------------------------------------------------------------
Caribbean & Latin America $107.24 12.1% 73.6% 3.9% pts. $145.78 6.3%
Continental Europe $96.69 3.1% 70.5% 0.5% pts. $137.09 2.4%
United Kingdom $140.49 4.8% 76.9% 0.1% pts. $182.61 4.8%
Middle East & Africa $84.96 29.5% 73.2% 4.0% pts. $116.07 22.5%
Asia Pacific(4) $86.63 13.1% 75.8% 0.8% pts. $114.34 12.0%
The Ritz-Carlton
International $143.30 18.3% 71.6% 3.4% pts. $200.08 12.7%
Total International(5) $101.84 11.0% 74.0% 1.5% pts. $137.62 8.7%
Worldwide(6) $102.94 10.1% 73.4% 1.2% pts. $140.26 8.3%
Comparable Systemwide International Properties (1, 2)
--------------------------------------------------------------------------
Twelve Months Ended December 31, 2005 and December 31, 2004
-------------------------------------------------------------
Average
REVPAR Occupancy Daily Rate
------ --------- ----------
Region/Brand(3) 2005 vs. 2004 2005 vs. 2004 2005 vs. 2004
--------------------------------------------------------------------------
Caribbean & Latin
America $101.02 13.1% 73.0% 4.6% pts. $138.31 5.9%
Continental Europe $95.10 5.9% 68.6% 1.0% pts. $138.63 4.3%
United Kingdom $120.53 3.1% 74.0% -1.1% pts. $162.96 4.6%
Middle East & Africa $82.10 29.3% 71.7% 4.5% pts. $114.45 21.2%
Asia Pacific(4) $90.79 14.7% 76.5% 1.5% pts. $118.63 12.5%
The Ritz-Carlton
International $143.30 18.3% 71.6% 3.4% pts. $200.08 12.7%
Total International(5) $100.02 11.9% 73.2% 1.8% pts. $136.57 9.1%
Worldwide(6) $88.72 9.9% 72.8% 1.4% pts. $121.94 7.8%
(1) International financial results are reported on a period-end basis,
while International statistics are reported on a month-end basis.
(2) Statistics are in constant dollars and include results for January
through December. Excludes North American (except for Worldwide).
(3) Regional information includes the Marriott Hotels & Resorts,
Renaissance Hotels & Resorts and Courtyard brands. Does not include
The Ritz-Carlton brand.
(4) Excludes Hawaii.
(5) Includes Hawaii.
(6) Includes international statistics for the twelve calendar months ended
December 31, 2005 and December 31, 2004, and North American statistics
for the fifty-two weeks ended December 30, 2005 and December 31, 2004.
Includes the Marriott Hotels & Resorts, Renaissance Hotels & Resorts,
The Ritz-Carlton, Courtyard, Residence Inn, TownePlace Suites,
Fairfield Inn and SpringHill Suites brands.
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
($ 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 United States generally accepted accounting principles.
The reconciliation of operating income to lodging operating income is as
follows:
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
------- ------- ------- ------- ------
Lodging operating income $ 203 $ 77 $ 169 $250 $699
======= ======= ======= ======= ======
Fiscal Year 2004
-------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
Operating income as reported $151 $118 $99 $109 $477
Add back: Synthetic fuel
operating loss - 30 31 37 98
------- ------- ------- ------- ------
Lodging operating income $151 $148 $130 $146 $575
======= ======= ======= ======= ======
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
(in millions, except per share amounts)
The table below details the impact on our continuing operations of our Synthetic Fuel segment for the 2005 and 2004 fourth quarters. Our management evaluates the figures presented in the "Excluding Synthetic Fuel" columns because management expects the Synthetic Fuel segment will no longer have a material impact on our business after the Internal Revenue Code Section 29 synthetic fuel tax credits expire at the end of 2007 or earlier if the company elects to make permanent its present synthetic fuel production shutdown and because the presentation reflects the results of our core lodging operations. Management also believes that these presentations facilitate the comparison of our results with the results of other lodging companies.
However, the figures presented in the "Excluding Synthetic Fuel" columns are all non-GAAP financial measures, may be calculated and/or presented differently than presentations of other companies and are not alternatives to operating income, income from continuing operations, net income, earnings per share or any other operating measure prescribed by United States generally accepted accounting principles.
Fourth Quarter 2005
Continuing Operations
-----------------------------------------
Income from Synthetic
Continuing Fuel Excluding
Operations Impact Synthetic Fuel
------------- ----------- ---------------
Operating income (loss) $221 $(29) $250
Gains and other income 84 12 72
Interest income, provision
for loan losses and interest
expense (23) - (23)
Equity in earnings/(losses) 18 - 18
------------- ----------- ---------------
Pre-tax income (loss) 300 (17) 317
------------- ----------- ---------------
Tax (Provision)/Benefit (109) 2 (111)
Tax Credits 33 33 -
------------- ----------- ---------------
Total Tax (Provision)/Benefit (76) 35 (111)
------------- ----------- ---------------
Income from Continuing Operations
before Minority Interest 224 18 206
Minority Interest 13 15 (2)
------------- ----------- ---------------
Income from Continuing
Operations $237 $33 $204
============= =========== ===============
Diluted Shares 220.8 220.8 220.8
Earnings per Share from
Continuing Operations -
Diluted $1.07 $0.15 0.92
Tax Rate 25.3% 35.0%
Fourth Quarter 2004
Continuing Operations
-----------------------------------------
Income from Synthetic
Continuing Fuel Excluding
Operations Impact Synthetic Fuel
------------- ----------- ---------------
Operating income (loss) $109 $(37) $146
Gains and other income 69 - 69
Interest income, provision for
loan losses and interest expense 26 - 26
Equity in earnings/(losses) (5) - (5)
------------- ----------- ---------------
Pre-tax income (loss) 199 (37) 236
------------- ----------- ---------------
Tax (Provision)/Benefit (72) 9 (81)
Tax Credits 51 51 -
------------- ----------- ---------------
Total Tax (Provision)/Benefit (21) 60 (81)
------------- ----------- ---------------
Income from Continuing
Operations before Minority
Interest 178 23 155
Minority Interest 10 11 (1)
------------- ----------- ---------------
Income from Continuing
Operations $188 $34 $154
============= =========== ===============
Diluted Shares 239.1 239.1 239.1
Earnings per Share from
Continuing Operations - Diluted $0.79 $0.14 $0.65
Tax Rate 10.4% 34.3%
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
(in millions, except per share amounts)
The table below details the impact on our continuing operations of our Synthetic Fuel segment for the 52 weeks ended December 30, 2005 and December 31, 2004. Our management evaluates the figures presented in the "Excluding Synthetic Fuel" columns because management expects the Synthetic Fuel segment will no longer have a material impact on our business after the Internal Revenue Code Section 29 synthetic fuel tax credits expire at the end of 2007 or earlier if the company elects to make permanent its present synthetic fuel production shutdown and because the presentation reflects the results of our core lodging operations. Management also believes that these presentations facilitate the comparison of our results with the results of other lodging companies.
However, the figures presented in the "Excluding Synthetic Fuel" columns are all non-GAAP financial measures, may be calculated and/or presented differently than presentations of other companies and are not alternatives to operating income, income from continuing operations, net income, earnings per share or any other operating measure prescribed by United States generally accepted accounting principles.
Fiscal Year 2005
Continuing Operations
------------------------------------
Income from Synthetic Excluding
Continuing Fuel Synthetic
Operations Impact Fuel
----------- --------- ---------
Operating income (loss) $555 $(144) $699
Gains and other income 181 32 149
Interest income, provision for loan
losses and interest expense (55) - (55)
Equity in earnings/(losses) 36 - 36
--------- ------- ---------
Pre-tax income (loss) 717 (112) 829
--------- ------- ---------
Tax (Provision)/Benefit (261) 23 (284)
Tax Credits 167 167 -
--------- ------- ---------
Total Tax (Provision)/Benefit (94) 190 (284)
--------- ------- ---------
Income from Continuing Operations
before Minority Interest 623 78 545
Minority Interest 45 47 (2)
--------- ------- ---------
Income from Continuing Operations $668 $125 $543
========= ======= =========
Diluted Shares 231.2 231.2 231.2
Earnings per Share from Continuing
Operations - Diluted $2.89 $0.54 $2.35
Tax Rate 13.1% 34.3%
Fiscal Year 2004
Continuing Operations
------------------------------------
Income from Synthetic Excluding
Continuing Fuel Synthetic
Operations Impact Fuel
----------- --------- ---------
Operating income (loss) $477 $(98) $575
Gains and other income 164 28 136
Interest income, provision for loan
losses and interest expense 55 - 55
Equity in earnings/(losses) (42) (28) (14)
--------- ------- ---------
Pre-tax income (loss) 654 (98) 752
--------- ------- ---------
Tax (Provision)/Benefit (244) 21 (265)
Tax Credits 144 144 -
--------- ------- ---------
Total Tax (Provision)/Benefit (100) 165 (265)
--------- ------- ---------
Income from Continuing Operations
before Minority Interest 554 67 487
Minority Interest 40 40 -
--------- ------- ---------
Income from Continuing Operations $594 $107 $487
========= ======= =========
Diluted Shares 240.5 240.5 240.5
Earnings per Share from Continuing
Operations - Diluted $2.47 $0.44 $2.03
Tax Rate 15.3% 35.2%
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
(in millions, except per share amounts)
The table below details the impact on our continuing operations of the $94 million charge (2005 second quarter) associated with the agreements we entered into with CTF Holdings Ltd. (the "CTF transaction") and the $17 million leveraged lease impairment charge (2005 third quarter). The $94 million charge recorded in connection with the CTF transaction was primarily non-cash and primarily due to the write-off of deferred contract acquisition costs associated with the termination of management agreements. In addition, we incurred a material charge of $17 million associated with the impairment of our one investment in an aircraft leveraged lease. We do not consider the leveraged lease investment to be related to our core business.
Our management evaluates the figures in the "Excluding CTF and Leveraged Lease Charges" column because they allow for year-over-year comparisons relative to our on-going operations before material charges and believes that this presentation facilitates the comparison of our results with the results of other lodging companies. Management evaluates income-related financial measures that exclude the leveraged lease impairment charge in order to better assess the period-over-period performance of our core operating businesses. Management evaluates income-related financial measures that exclude the CTF transaction charge in order to better assess the Company's period-over-period performance of our lodging operations in light of the fact that the CTF transaction charge does not reflect the fact that new management agreements, entered into as part of the CTF transaction, substantially replaced the old management agreements the termination of which make up the bulk of the CTF transaction charge.
However, the figures presented in the "Excluding CTF and Leveraged Lease Charges" column are all non-GAAP financial measures, may be calculated and/or presented differently than presentations of other companies, and are not alternatives to operating income, income from continuing operations, net income, earnings per share or any other operating measure prescribed by United States generally accepted accounting principles.
Fiscal Year 2005
---------------------------------------------------
Excluding
Income CTF Leveraged CTF and
from Transaction Lease Leveraged
Continuing Charge Charge Lease
Operations Charges
---------- ----------- --------- ---------
Operating income
(loss) $ 555 $ (94) $ - $ 649
Gains and other
income 181 - - 181
Interest income,
provision for
loan losses and
interest expense (55) - (17) (38)
Equity in earnings 36 - - 36
---------- ----------- ---------- --------
Pre-tax income
(loss) 717 (94) (17) 828
---------- ----------- ---------- --------
Tax (Provision)/
Benefit (261) 32 6 (299)
Tax Credits 167 - - 167
---------- ----------- ---------- --------
Total Tax (Provision)/
Benefit (94) 32 6 (132)
---------- ----------- ---------- --------
Income (Loss)
from Continuing
Operations before
Minority Interest 623 (62) (11) 696
Minority Interest 45 - - 45
---------- ----------- ---------- --------
Income (Loss)
from Continuing
Operations $ 668 $ (62) $ (11) $ 741
========== =========== ========== ========
Diluted Shares 231.2 231.2 231.2 231.2
Earnings/(Loss) per
Share from
Continuing
Operations - Diluted $2.89 $(0.27) $(0.05) $3.21
Fiscal Year 2004
---------------------------------------------------
Excluding
Income CTF Leveraged CTF and
from Transaction Lease Leveraged
Continuing Charge Charge Lease
Operations Charges
---------- ----------- --------- ---------
Operating income $ 477 $ - $ - $ 477
Gains and other
income 164 - - 164
Interest income,
provision for loan
losses and
interest expense 55 - - 55
Equity in losses (42) - - (42)
---------- ----------- ---------- --------
Pre-tax income 654 - - 654
Tax Provision (244) - - (244)
Tax Credits 144 - - 144
---------- ----------- ---------- --------
Total Tax Provision (100) - - (100)
---------- ----------- ---------- --------
Income from Continuing
Operations before
Minority Interest 554 - - 554
Minority Interest 40 - - 40
---------- ----------- ---------- --------
Income from
Continuing
Operations $ $594 $ - $ - $ 594
========== =========== ========== ========
Diluted Shares 240.5 240.5 240.5 240.5
Earnings per Share
from Continuing
Operations -
Diluted $ $2.47 - $ - $ 2.47
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
We adopted Statement of Financial Accounting Standard No. 123 (revised 2004), "Share-Based Payment ("FAS No. 123R") at the beginning of our 2006 fiscal year. We estimate the adoption of FAS No. 123R, using the modified prospective method, will result in incremental pre-tax expense in the 2006 first quarter of $9 million and total incremental pre-tax expense for the entire 2006 fiscal year of $44 million.
Our management evaluates diluted earnings per share from continuing operations excluding the impact of the Synthetic Fuel segment and the adoption of FAS 123R because it allows for year-over-year comparisons relative to our on-going lodging operations before material charges and because management expects the Synthetic Fuel segment will no longer have a material impact on our business after the Internal Revenue Code Section 29 synthetic fuel tax credits expire at the end of 2007 or earlier if the company elects to make permanent its present synthetic fuel production shutdown. Management believes that this presentation facilitates the comparison of our results with the results of other lodging companies.
However, diluted earnings per share from continuing operations excluding the impact of the Synthetic Fuel segment and the adoption of FAS 123R is a non-GAAP financial measure, may be calculated and/or presented differently than presentations of other companies and are not alternatives to operating income, income from continuing operations, net income, earnings per share or any other operating measure prescribed by United States generally accepted accounting principles.
Range
--------------------------------------
Estimated Estimated
First Quarter 2006 First Quarter 2006
------------------- ------------------
Diluted earnings per share from
continuing operations
excluding the impact of the
Synthetic Fuel segment $ 0.67 $ 0.73
Add back estimated eps impact
associated with the adoption
of FAS No. 123R 0.03 0.03
------------------- ------------------
Diluted earnings per share from
continuing operations excluding
the impact of the Synthetic
Fuel segment and the adoption
of FAS No. 123R $ 0.70 $ 0.76
=================== ==================
Range
------------------------------------
Estimated Estimated
Full Year 2006 Full Year 2006
------------------- ----------------
Diluted earnings per share from
continuing operations
excluding the impact of the
Synthetic Fuel segment $ 2.95 $ 3.05
Add back estimated eps impact
associated with the adoption
of FAS No. 123R 0.13 0.13
------------------- ----------------
Diluted earnings per share from
continuing operations excluding
the impact of the Synthetic
Fuel segment and the adoption
of FAS No. 123R $ $3.08 $ $3.18
=================== ================
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure
EBITDA
($ in millions)
Our management considers earnings before interest, taxes, depreciation and amortization (EBITDA) 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.
In the 2005 second quarter we recorded a $94 million charge associated with the agreements we entered into with CTF Holdings Ltd. (the "CTF transaction"). The $94 million charge was primarily non-cash and due to the write-off of deferred contract acquisition costs associated with the termination of management agreements. In addition, we incurred a material charge of $17 million in the 2005 third quarter associated with the impairment of our one investment in an aircraft leveraged lease. We do not consider the leveraged lease investment to be related to our core business. Management expects the Synthetic Fuel segment will no longer have a material impact on our business after the Internal Revenue Code Section 29 synthetic fuel tax credits expire at the end of 2007 or earlier if the company elects to make permanent its present synthetic fuel production shutdown.
Management evaluates Adjusted EBITDA which excludes the aircraft leveraged lease impairment charge, discontinued operations and the impact of our Synthetic Fuel segment in order to better assess the period-over-period performance of our on-going core operating businesses. Management evaluates Adjusted EBITDA which also excludes the CTF transaction charge in order to better assess the Company's period-over-period performance of our lodging operations in light of the fact that the CTF transaction charge does not reflect the fact that new management agreements, entered into as part of the CTF transaction, substantially replaced the old management agreements the termination of which makes up the bulk of the CTF transaction charge. Management also believes that these presentations facilitate the comparison of our results with the results of other lodging companies.
However, EBITDA and Adjusted EBITDA are non-GAAP financial measures, may
be calculated and/or presented differently than presentations of other
companies, and are not alternatives to operating income, income from
continuing operations, net income, cash flow from operations, or any other
operating measure prescribed by United States generally accepted accounting
principles.
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(1) 30 29 34 46 139
Amortization 7 7 7 7 28
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 discontinued
operations - - (2) - (2)
Non-recurring charges -
CTF acquisition charge - 94 - - 94
Leveraged lease charge - - 17 - 17
------- ------- ------- ------- ------
Adjusted EBITDA $ 276 $ 306 $ 267 $ 421 $1,270
======= ======= ======= ======= ======
Increase over 2004 Adjusted
EBITDA 14% 10% 12% 23% 15%
The following items make up the
synthetic fuel adjustment:
Pre-tax synthetic fuel 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
======= ======= ======= ======= ======
(1) Does not include depreciation reimbursed by third party owners.
Fiscal Year 2004
--------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- ------
Net income $ 114 $ 160 $ 133 $ 189 $ 596
Interest expense 22 24 23 30 99
Tax provision continuing
operations 18 33 28 21 100
Tax provision discontinued
operations - - 1 - 1
Depreciation 32 29 32 40 133
Amortization 7 8 7 11 33
Interest expense from unconsolidated
joint ventures 10 11 9 15 45
Depreciation and amortization from
unconsolidated joint ventures 13 9 13 17 52
------- ------- ------- ------- ------
EBITDA $ 216 $ 274 $ 246 $ 323 $1,059
Synthetic fuel adjustment 28 5 (6) 21 48
Pre-tax gain discontinued
operations (1) - (1) (1) (3)
------- ------- ------- ------- ------
Adjusted EBITDA $243 $279 $239 $343 $1,104
======= ======= ======= ======= ======
The following items make up the
synthetic fuel adjustment:
Pre-tax synthetic fuel losses $ - $ 21 $ 12 $ 37 $ 70
Pre-tax synthetic fuel equity
losses 28 - - - 28
Pre-tax minority interest -
synthetic fuel - (14) (15) (11) (40)
Synthetic fuel depreciation - (2) (3) (5) (10)
------- ------- ------- ------- ------
EBITDA adjustment for synthetic
fuel $ 28 $ 5 $ (6)$ 21 $ 48
======= ======= ======= ======= ======
IRPR#1
SOURCE Marriott International, Inc.
Tom Marder, +1-301-380-2553, thomas.marder@marriott.com
http://www.prnewswire.com
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