Marriott International Reports Second Quarter 2010 Results
BETHESDA, Md., July 14, 2010 /PRNewswire via COMTEX News Network/ -- Marriott International, Inc. (NYSE: MAR) today reported second quarter 2010 results, exceeding the company's diluted EPS expectations and prior year results.
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SECOND QUARTER HIGHLIGHTS
- Second quarter diluted earnings per share (EPS) totaled $0.31, ahead of expectations and prior year results;
- Total fee revenue increased 13 percent to $287 million as a result of strong revenue per available room (REVPAR) and unit growth. Incentive fees climbed 31 percent;
- Worldwide company-operated comparable REVPAR rose 9.9 percent (an 8.2 percent increase using constant dollars). Average daily rate rose 1.6 percent (a 0.1 percent increase using constant dollars);
- North American company-operated comparable REVPAR increased 7.9 percent (a 7.5 percent increase using constant dollars) with a 1.2 increase in average daily rate (a 0.8 percent increase using constant dollars);
- The company's worldwide pipeline of hotels under construction, awaiting conversion or approved for development totaled nearly 95,000 rooms, including over 36,000 rooms outside North America;
- Over 6,500 rooms opened during the second quarter, including over 1,800 rooms in international markets and nearly 1,300 rooms converting from competitor brands. At the end of the second quarter, Marriott's newest brand, The Autograph Collection, included 10 hotels with over 1,500 rooms.
SECOND QUARTER 2010 RESULTS
Second quarter 2010 net income totaled $119 million, a 42 percent increase compared to second quarter 2009 adjusted net income. Diluted EPS totaled $0.31, a 35 percent increase from adjusted diluted EPS in the year-ago quarter. On April 22, 2010, the company forecasted second quarter diluted EPS of $0.25 to $0.29.
Adjusted results for the 2009 second quarter excluded $57 million pretax ($30 million after-tax and $0.08 per diluted share) of restructuring costs and other charges and $17 million of non-cash charges ($0.05 per diluted share) in the provision for income taxes.
Reported net income totaled $119 million in the second quarter of 2010 compared to reported net income of $37 million in the year-ago quarter. Reported diluted EPS was $0.31 in the second quarter of 2010 compared to reported EPS of $0.10 in the second quarter of 2009.
J.W. Marriott, Jr., chairman and chief executive officer of Marriott International, said, "This is an exciting time for Marriott. Business and leisure stays at our hotels are trending up. Revenue per available room increased more than expected in the second quarter and room rates at company-operated hotels in North America rose for the first time in nearly two years.
"Totaling approximately 95,000 rooms, our development pipeline reflects expanding global opportunities. We opened over 6,500 rooms during the quarter. With strong interest by owners and franchisees in our brands, we expect to open over 30,000 rooms in 2010, including conversions to our new brand, the Autograph Collection.
"We are seeing major international growth. At the end of the quarter, a record 39 percent of our development pipeline was outside North America as were two-thirds of our worldwide rooms under construction. During the quarter, we opened superb new international hotels in Phuket, Shanghai, St. Petersburg and Budapest.
"We anticipate even more favorable pricing in the second half of 2010 and into 2011. Combined with productivity improvements achieved over the last year, strong unit growth and increasing demand, we look forward to growing cash flow and strong earnings in 2010 and beyond."
For the 2010 second quarter, REVPAR for worldwide comparable company-operated properties increased 9.9 percent (an 8.2 percent increase using constant dollars) and REVPAR for worldwide comparable systemwide properties increased 8.5 percent (a 7.0 percent increase using constant dollars).
International comparable company-operated REVPAR rose 14.1 percent (a 9.8 percent increase using constant dollars), including a 2.0 percent increase in average daily rate (a 1.8 percent decline using constant dollars) in the second quarter of 2010.
In North America, comparable company-operated REVPAR increased 7.9 percent (a 7.5 percent increase using constant dollars) in the second quarter of 2010. On a constant dollar basis, REVPAR for comparable company-operated North American full-service and luxury hotels (including Marriott Hotels & Resorts, The Ritz-Carlton and Renaissance Hotels) increased 9.0 percent with a 1.7 percent increase in average daily rate.
Marriott added 46 new properties (6,568 rooms) to its worldwide lodging portfolio in the 2010 second quarter and 14 properties (2,311 rooms) exited the system during the quarter. At quarter-end, the company's lodging group encompassed 3,489 properties and timeshare resorts for a total of over 607,000 rooms.
The company's worldwide pipeline of hotels under construction, awaiting conversion or approved for development totaled nearly 600 properties with approximately 95,000 rooms at quarter-end.
Early in the 2010 third quarter, the company launched Marriott Vacation Club Destinations (MVCD), a points-based program that offers increased usage and purchase flexibility to its owners. While Marriott Vacation Clubs in North America will offer this improved product to new customers going forward, existing owners will retain full rights and privileges of interval ownership as well as the opportunity to participate in MVCD.
MARRIOTT REVENUES totaled nearly $2.8 billion in the 2010 second quarter compared to approximately $2.6 billion for the second quarter of 2009. Base management and franchise fees rose 10 percent to $241 million reflecting higher REVPAR and fees from new hotels. Second quarter incentive management fees increased 31 percent to $46 million. In the second quarter, 25 percent of company-managed hotels earned incentive management fees compared to 23 percent in the year-ago quarter. Approximately 62 percent of incentive management fees came from hotels outside North America in the 2010 quarter compared to 61 percent in the 2009 quarter.
Worldwide comparable company-operated house profit margins increased 90 basis points in the second quarter reflecting higher occupancy, slight rate increases and strong productivity.
Owned, leased, corporate housing and other revenue, net of direct expenses, increased $10 million in the 2010 second quarter, to $31 million, including a $6 million favorable impact of hotel termination fees net of property closing costs. Operating results at owned and leased hotels improved year-over-year with stronger occupancy and margins.
Second quarter adjusted Timeshare segment contract sales decreased 21 percent to $167 million (excluding a $6 million allowance for fractional and residential contract cancellations recorded in the quarter) largely due to tough comparisons as a result of the 25th anniversary promotion in the year-ago quarter. In the prior year's quarter, adjusted Timeshare segment contract sales totaled $212 million (excluding a $3 million allowance for fractional and residential contract cancellations).
In the second quarter, timeshare sales and services revenue totaled $289 million and, net of expenses, totaled $50 million for the quarter. Adjusting for restructuring and other charges, as well as the impact of consolidating securitized loans had that occurred at the beginning of 2009 rather than 2010, second quarter 2009 timeshare sales and services revenue would have totaled $331 million and, net of direct expenses, would have totaled $48 million. These adjustments for the 2009 quarter are shown on page A-11.
Despite lower contract sales, development revenue, net of expense, benefited from lower marketing and sales costs, as well as price increases year-over-year. Timeshare segment results include Timeshare sales and services revenue, net of direct expenses, as well as base management fees, equity earnings (losses), noncontrolling interest, interest expense and general, administrative and other expenses associated with the timeshare business. Timeshare segment results for the 2010 second quarter, shown on page A-9, totaled $30 million, including $14 million of interest expense related to the consolidation of securitized Timeshare notes. Adjusting for restructuring and other charges, as well as the impact of consolidating securitized loans had that occurred at the beginning of 2009 rather than 2010, second quarter 2009 timeshare segment results would have totaled $29 million, including $18 million of interest expense related to the consolidation of securitized Timeshare notes. These adjustments for the 2009 quarter are shown on page A-11.
GENERAL, ADMINISTRATIVE and OTHER expenses for the 2010 second quarter increased 4 percent to $142 million, compared to adjusted expenses of $136 million in the year-ago quarter, and included higher incentive compensation costs partially offset by lower legal and deferred compensation expenses.
GAINS AND OTHER INCOME totaled $3 million primarily reflecting $2 million of gains on the sale of real estate and $1 million of returns from joint venture investments. The prior year's second quarter gains and other income totaled $3 million largely related to gains on the sale of real estate.
INTEREST EXPENSE increased $16 million to $44 million in the second quarter primarily due to $14 million of interest expense related to the consolidation of debt associated with securitized Timeshare notes, lower capitalized interest and interest expense associated with the company's deferred compensation plan partially offset by the impact of lower debt balances and interest rates. Adjusting for the impact of consolidating securitized loans had that occurred at the beginning of 2009 rather than 2010, second quarter 2009 interest expense would have been $18 million higher.
Earnings before Interest Expense, Taxes, Depreciation and Amortization (EBITDA)
EBITDA totaled $278 million in the 2010 second quarter. In the 2009 second quarter, adjusted EBITDA totaled $220 million. If the consolidation of securitized timeshare notes had occurred at the beginning of 2009, adjusted EBITDA in the 2009 second quarter would have totaled $252 million.
BALANCE SHEET
At the end of the second quarter 2010, total debt was $2,911 million and cash balances totaled $100 million, compared to $2,298 million in debt and $115 million of cash at year-end 2009. Adjusting for the debt associated with securitized Timeshare mortgage notes now required to be consolidated under new accounting rules, adjusted total debt, net of cash, has declined by over $350 million since year-end 2009.
At the end of the 2010 second quarter, Marriott had borrowings of approximately $100 million outstanding under its $2.4 billion bank revolver, about $900 million lower than the end of the 2009 first quarter.
COMMON STOCK
Weighted average fully diluted shares outstanding used to calculate diluted EPS totaled 377.4 million in the 2010 second quarter compared to weighted average fully diluted shares outstanding of 366.0 million used to calculate adjusted diluted EPS in the year-ago quarter.
The remaining share repurchase authorization, as of June 18, 2010, totaled 21.3 million shares. No share repurchases are planned for 2010.
THIRD QUARTER 2010 OUTLOOK
For the third quarter, the company assumes comparable systemwide REVPAR on a constant dollar basis will increase 5 to 7 percent in North America, 7 to 9 percent outside North America and 6 to 8 percent worldwide.
The company assumes third quarter 2010 Timeshare contract sales will total $165 million to $175 million and Timeshare sales and services revenue, net of direct expenses, will total approximately $50 million to $55 million. With these assumptions, Timeshare segment results for the third quarter, including interest expense associated with securitized notes, are expected to total $30 million to $35 million.
FULL YEAR 2010 OUTLOOK
For the full year 2010, the company assumes comparable systemwide REVPAR on a constant dollar basis will increase 4 to 6 percent in North America, 6 to 8 percent outside North America and 4 to 6 percent worldwide.
The company expects to open over 30,000 rooms in 2010 as most hotels expected to open are already under construction or undergoing conversion from other brands.
The company continues to estimate that, on a full-year basis, one point of worldwide systemwide REVPAR impacts total fees by approximately $10 million to $15 million pretax and impacts owned, leased, corporate housing and other revenue, net of direct expense, by approximately $3 million to $5 million pretax.
For its timeshare business, the company assumes 2010 timeshare contract sales will be in line with 2009 levels. For 2010, Timeshare sales and services revenue, net of direct expenses, is expected to total $205 million to $215 million. Timeshare segment results for 2010, including interest expense associated with previously securitized notes, is expected to total $115 million to $125 million.
The company expects that its 2010 general, administrative and other expenses will total $650 million to $660 million reflecting higher incentive compensation.
Third Quarter 2010 Full Year 2010
------------------ --------------
Total fee revenue $245 million to $1,160 million to
$255 million $1,180 million
Owned, leased,
corporate housing and
other revenue, net of
direct expenses Approx $10 million Approx $95 million
Timeshare sales and
services revenue, net
of direct expenses $50 million to $205 million to
$55 million $215 million
General, administrative
and other expenses Approx $155 million $650 million to
$660 million
Operating income $150 million to $800 million to
$165 million $840 million
Gains and other income Approx $5 million Approx $20 million
Net interest expense(1) Approx $40 million $165 million to
$170 million
Equity in earnings
(losses) ($5) million to $0 Approx ($30) million
Earnings per share $0.18 to $0.22 $1.05 to $1.13
Tax rate 36 percent
(1) Net of interest income
The company expects investment spending in 2010 will total approximately $500 million, including $50 million for maintenance capital spending and $200 million of other capital expenditures (including property acquisitions). Investment spending will also include new mezzanine financing and mortgage loans, contract acquisition costs, and equity and other investments. The investment in net timeshare development is not included above as the company expects cost of goods sold in the timeshare business will exceed timeshare inventory spending in 2010.
Based upon the assumptions above, full year 2010 EBITDA is expected to total $1,045 million to $1,085 million, a 7 to 11 percent increase over the prior year's adjusted EBITDA including the impact of consolidating securitized loans had that occurred at the beginning of 2009 rather than 2010. Adjusted EBITDA for full year 2009 is shown on page A-15.
Marriott International, Inc. (NYSE: MAR) will conduct its quarterly earnings review for the investment community and news media on Thursday, July 15, 2010 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 and Upcoming Events" tab and click on the quarterly conference call link. A replay will be available at that same website until July 15, 2011.
The telephone dial-in number for the conference call is 706-679-3455 and the pass code is 75250137. A telephone replay of the conference call will be available from 1 p.m. ET, Thursday, July 15, 2010 until 8 p.m. ET, Thursday, July 22, 2010. To access the replay, call 706-645-9291. The reservation number for the recording is 75250137.
Definitions
All references to net income or net loss reflect net income or net loss attributable to Marriott. All references to EPS or diluted losses per share, unless otherwise noted, reflect EPS or diluted losses per share attributable to Marriott shareholders.
Note: This press release and accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including REVPAR, profit margin and earnings trends, estimates and assumptions; statements concerning the number of lodging properties we expect to add in the future; our expectations about investment spending and share repurchases; 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 continuation and pace of the economic recovery; supply and demand changes for hotel rooms, corporate housing and our Timeshare segment products; competitive conditions in the lodging industry; relationships with clients and property owners; the availability of capital to finance hotel growth and refurbishment; and other risk factors that we identify in our most recent quarterly report on Form 10-Q; any of which could cause actual results to differ materially from the expectations we express or imply here. These statements are made as of July 14, 2010, 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 more than 3,400 lodging properties in 70 countries and territories. Marriott International operates and franchises hotels under the Marriott, JW Marriott, The Ritz-Carlton, The Autograph Collection, 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, The Ritz-Carlton Destination Club, and Grand Residences by Marriott brands; licenses and manages whole-ownership residential brands, including The Ritz-Carlton Residences, JW Marriott Residences and Marriott Residences; operates Marriott Executive Apartments; provides furnished corporate housing through its Marriott ExecuStay division; and operates conference centers. The company is headquartered in Bethesda, Maryland, USA, and had approximately 137,000 employees at 2009 year-end. It is recognized by FORTUNE(R) as one of the best companies to work for, and by Newsweek as one of the greenest big companies in America. In fiscal year 2009, Marriott International reported sales from continuing operations of nearly $11 billion. For more information or reservations, please visit our web site at www.marriott.com, and for the latest company news, visit www.marriottnewscenter.com.
IRPR#1
Tables follow
MARRIOTT INTERNATIONAL, INC.
PRESS RELEASE SCHEDULES
QUARTER 2, 2010
TABLE OF CONTENTS
Consolidated Statements of Income A-1
Total Lodging Products A-4
Key Lodging Statistics A-5
Timeshare Segment A-9
Second Quarter 2009 Timeshare Segment As Adjusted Had
ASU Nos. 2009-16 and 2009-17 Been Adopted on January 3, 2009 A-11
Timeshare Inventory As Adjusted Had ASU Nos. 2009-16 and
2009-17 Been Adopted on January 3, 2009 A-12
EBITDA and Adjusted EBITDA A-13
Second Quarter 2009 EBITDA As Adjusted Had ASU Nos. 2009-16
and 2009-17 Been Adopted on January 3, 2009 A-14
2009 EBITDA As Adjusted Had ASU Nos. 2009-16 and 2009-17
Been Adopted on January 3, 2009 and Forecasted 2010 A-15
Adjusted Total Debt Net of Cash A-16
Non-GAAP Financial Measures A-17
MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
Adjustments
-----------
Restructuring
As Reported As Reported Costs Certain
& Other
12 Weeks 12 Weeks Charges Tax Items
Ended Ended -------- ---------
June 18, June 19,
2010 2009
--------- --------
REVENUES
Base management
fees $136 $126 $- $-
Franchise fees 105 93 - -
Incentive
management
fees 46 35 - -
Owned, leased,
corporate
housing and
other revenue
1 255 238 - -
Timeshare sales
and services 2 289 283 12 -
Cost
reimbursements
3 1,940 1,787 - -
--- ---
Total Revenues 2,771 2,562 12 -
OPERATING COSTS
AND EXPENSES
Owned, leased
and corporate
housing -
direct 4 224 217 - -
Timeshare -
direct 239 279 - -
Reimbursed
costs 1,940 1,787 - -
Restructuring
costs - 33 (33) -
General,
administrative
and other 5 142 147 (11) -
--- ---
Total Expenses 2,545 2,463 (44) -
----- --- ---
OPERATING
INCOME 226 99 56 -
Gains and other
income 6 3 3 - -
Interest
expense (44) (28) - -
Interest income 3 9 - -
Equity in
(losses)
earnings 7 (4) (4) 1 -
--- --- --- ---
INCOME BEFORE
INCOME TAXES 184 79 57 -
Provision for
income taxes (65) (44) (27) 17
--- --- --- ---
NET INCOME 119 35 30 17
Add: Net losses
attributable
to
noncontrolling
interests, net
of tax - 2 - -
--- --- --- ---
NET INCOME
ATTRIBUTABLE
TO MARRIOTT $119 $37 $30 $17
==== === === ===
EARNINGS PER
SHARE -Basic
8
Earnings per
share
attributable
to Marriott
shareholders 9 $0.33 $0.10 $0.08 $0.05
===== ===== ===== =====
EARNINGS PER
SHARE -
Diluted 8
Earnings per
share
attributable
to Marriott
shareholders 9 $0.31 $0.10 $0.08 $0.05
===== ===== ===== =====
Basic Shares 8 362.1 356.2 356.2 356.2
Diluted Shares
8 377.4 366.0 366.0 366.0
As Adjusted Percent
Better/
(Worse)
12 Weeks 2010 vs.
Adjusted
Ended 2009
June 19,
2009** ---------
---------
REVENUES
Base management fees $126 8
Franchise fees 93 13
Incentive management fees 35 31
Owned, leased, corporate housing and
other revenue 1 238 7
Timeshare sales and services 2 295 (2)
Cost reimbursements 3 1,787 9
Total Revenues 2,574 8
OPERATING COSTS AND EXPENSES
Owned, leased and corporate housing -
direct 4 217 (3)
Timeshare - direct 279 14
Reimbursed costs 1,787 (9)
Restructuring costs - *
General, administrative and other 5 136 (4)
Total Expenses 2,419 (5)
-----
OPERATING INCOME 155 46
Gains and other income 6 3 -
Interest expense (28) (57)
Interest income 9 (67)
Equity in (losses) earnings 7 (3) (33)
---
INCOME BEFORE INCOME TAXES 136 35
Provision for income taxes (54) (20)
---
NET INCOME 82 45
Add: Net losses attributable to
noncontrolling interests, net of tax 2 (100)
---
NET INCOME ATTRIBUTABLE TO MARRIOTT $84 42
===
EARNINGS PER SHARE - Basic 8
Earnings per share attributable to
Marriott shareholders 9 $0.24 38
=====
EARNINGS PER SHARE - Diluted 8
Earnings per share attributable to
Marriott shareholders 9 $0.23 35
=====
Basic Shares 8 356.2
Diluted Shares 8 366.0
* Percent cannot be calculated.
** Denotes non-GAAP financial measures. Please see pages A-17 and
A-18 for additional information about our reasons for providing
these alternative financial measures and limitations on their use.
See page A-3 for footnote references.
A-1
MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
Adjustments
-----------
As As Restructuring
Reported Reported Costs Certain
& Other Tax
24 Weeks 24 Weeks Charges Items
Ended Ended -------- ------
June 18, June 19,
2010 2009
--------- ---------
REVENUES
Base management fees $261 $251 $- $-
Franchise fees 196 181 - -
Incentive management
fees 86 78 - -
Owned, leased, corporate
housing and other
revenue 1 484 458 - -
Timeshare sales and
services (including net
note sale losses of $1
for 574 492 29 -
twenty-four weeks ended
June 19, 2009) 2
Cost reimbursements 3 3,800 3,597 - -
Total Revenues 5,401 5,057 29 -
OPERATING COSTS AND
EXPENSES
Owned, leased and
corporate housing -
direct 4 441 424 - -
Timeshare - direct 474 499 1 -
Reimbursed costs 3,800 3,597 - -
Restructuring costs - 35 (35) -
General, administrative
and other 5 280 363 (91) -
Total Expenses 4,995 4,918 (125) -
----- ---
OPERATING INCOME 406 139 154 -
Gains and other income
(including gain on debt
extinguishment of $21 4 28 - -
for the twenty-four
weeks ended June 19,
2009) 6
Interest expense (89) (57) - -
Interest income 7 15 - -
Equity in (losses)
earnings 7 (15) (38) 32 -
--- --- --- ---
INCOME BEFORE INCOME
TAXES 313 87 186 -
Provision for income
taxes (111) (77) (72) 43
---- --- --- ---
NET INCOME 202 10 114 43
Add: Net losses
attributable to
noncontrolling
interests, net of tax - 4 - -
--- --- --- ---
NET INCOME ATTRIBUTABLE
TO MARRIOTT $202 $14 $114 $43
==== === ==== ===
EARNINGS PER SHARE -
Basic 8
Earnings per share
attributable to
Marriott shareholders 9 $0.56 $0.04 $0.32 $0.12
===== ===== ===== =====
EARNINGS PER SHARE -
Diluted 8
Earnings per share
attributable to
Marriott shareholders 9 $0.54 $0.04 $0.31 $0.12
===== ===== ===== =====
Basic Shares 8 360.7 355.3 355.3 355.3
Diluted Shares 8 375.5 364.2 364.2 364.2
As
Adjusted Percent
Better/
(Worse)
24 Weeks 2010 vs.
Adjusted
Ended 2009
June 19,
2009** ---------
---------
REVENUES
Base management fees $251 4
Franchise fees 181 8
Incentive management fees 78 10
Owned, leased, corporate housing and other
revenue 1 458 6
Timeshare sales and services (including
net note sale losses of $1 for 521 10
twenty-four weeks ended June 19, 2009) 2
Cost reimbursements 3 3,597 6
Total Revenues 5,086 6
OPERATING COSTS AND EXPENSES
Owned, leased and corporate housing -
direct 4 424 (4)
Timeshare - direct 500 5
Reimbursed costs 3,597 (6)
Restructuring costs - *
General, administrative and other 5 272 (3)
Total Expenses 4,793 (4)
OPERATING INCOME 293 39
Gains and other income (including gain on
debt extinguishment of $21 28 (86)
for the twenty-four weeks ended June 19,
2009) 6
Interest expense (57) (56)
Interest income 15 (53)
Equity in (losses) earnings 7 (6) (150)
---
INCOME BEFORE INCOME TAXES 273 15
Provision for income taxes (106) (5)
----
NET INCOME 167 21
Add: Net losses attributable to
noncontrolling interests, net of tax 4 (100)
---
NET INCOME ATTRIBUTABLE TO MARRIOTT $171 18
====
EARNINGS PER SHARE - Basic 8
Earnings per share attributable to
Marriott shareholders 9 $0.48 17
=====
EARNINGS PER SHARE - Diluted 8
Earnings per share attributable to
Marriott shareholders 9 $0.47 15
=====
Basic Shares 8 355.3
Diluted Shares 8 364.2
* Percent cannot be calculated.
** Denotes non-GAAP financial measures. Please see pages A-17 and
A-18 for additional information about our reasons for providing
these alternative financial measures and limitations on their use.
See page A-3 for footnote references.
A-2
MARRIOTT INTERNATIONAL, INC.
FOOTNOTES TO CONSOLIDATED STATEMENTS OF INCOME
1 - Owned, leased, corporate housing and other revenue includes
revenue from the properties we own or lease, revenue from our
corporate housing business, termination fees, branding fees and
other revenue.
2 - Timeshare sales and services includes total timeshare revenue
except for base management fees and cost reimbursements.
3 - Cost reimbursements include reimbursements from properties for
Marriott-funded operating expenses.
4 - Owned, leased and corporate housing - direct expenses include
operating expenses related to our owned or leased hotels, including
lease payments, pre-opening expenses and depreciation, plus
expenses related to our corporate housing business.
5 - General, administrative and other expenses include the overhead
costs allocated to our segments and our corporate overhead costs and
general expenses.
6 - Gains and other income includes gains and losses on: the sale of
real estate, note sales or repayments (except timeshare note
securitizations), the sale of joint ventures and investments; and
debt extinguishments, as well as income from cost method joint
ventures.
7 - Equity in (losses) earnings includes our equity in (losses) /
earnings of unconsolidated equity method joint ventures.
8 - 2009 share numbers and per share amounts have been retroactively
adjusted to reflect the stock dividends with distribution dates of
July 30, 2009, September 3, 2009 and December 3, 2009.
9 - Earnings per share attributable to Marriott shareholders plus
adjustment items may not equal earnings per share attributable to
Marriott shareholders as adjusted due to rounding.
A-3
MARRIOTT INTERNATIONAL, INC.
TOTAL LODGING PRODUCTS 1
Number of Properties
--------------------
June 18, June 19, vs. June 19,
Brand 2010 2009 2009
----- --------- --------- -------------
Domestic Full-Service
---------------------
Marriott Hotels & Resorts 354 349 5
Renaissance Hotels 80 77 3
Autograph Collection 10 - 10
Domestic Limited-Service
------------------------
Courtyard 780 747 33
Fairfield Inn & Suites 641 589 52
SpringHill Suites 267 226 41
Residence Inn 589 567 22
TownePlace Suites 190 173 17
International
-------------
Marriott Hotels & Resorts 194 187 7
Renaissance Hotels 66 67 (1)
Courtyard 96 87 9
Fairfield Inn & Suites 9 9 -
SpringHill Suites 1 1 -
Residence Inn 17 18 (1)
Marriott Executive
Apartments 22 21 1
Luxury
------
The Ritz-Carlton -
Domestic 39 37 2
The Ritz-Carlton -
International 34 33 1
Bulgari Hotels & Resorts 2 2 -
The Ritz-Carlton
Residential 25 24 1
The Ritz-Carlton Serviced
Apartments 3 3 -
Timeshare 2
-----------
Marriott Vacation Club 3 53 52 1
The Ritz-Carlton
Destination Club 9 10 (1)
The Ritz-Carlton
Residences 4 3 1
Grand Residences by
Marriott -Fractional 2 2 -
Grand Residences by
Marriott -Residential 2 2 -
Sub Total Timeshare 70 69 1
--- --- ---
Total 3,489 3,286 203
===== ===== ===
Number of Rooms/Suites
----------------------
June 18, June 19, vs. June 19,
Brand 2010 2009 2009
----- --------- --------- -------------
Domestic Full-Service
---------------------
Marriott Hotels & Resorts 141,819 138,945 2,874
Renaissance Hotels 29,069 28,197 872
Autograph Collection 1,529 - 1,529
Domestic Limited-Service
------------------------
Courtyard 109,649 104,657 4,992
Fairfield Inn & Suites 57,780 52,450 5,330
SpringHill Suites 31,295 26,044 5,251
Residence Inn 70,998 67,814 3,184
TownePlace Suites 19,063 17,359 1,704
International
-------------
Marriott Hotels & Resorts 59,616 56,514 3,102
Renaissance Hotels 22,255 22,698 (443)
Courtyard 18,931 17,110 1,821
Fairfield Inn & Suites 1,153 1,109 44
SpringHill Suites 124 124 -
Residence Inn 2,418 2,604 (186)
Marriott Executive
Apartments 3,679 3,412 267
Luxury
------
The Ritz-Carlton -
Domestic 11,587 11,549 38
The Ritz-Carlton -
International 10,171 10,117 54
Bulgari Hotels & Resorts 117 117 -
The Ritz-Carlton
Residential 2,644 2,539 105
The Ritz-Carlton Serviced
Apartments 458 474 (16)
Timeshare 2
-----------
Marriott Vacation Club 3 11,874 11,858 16
The Ritz-Carlton
Destination Club 469 461 8
The Ritz-Carlton Residences 238 150 88
Grand Residences by Marriott
-Fractional 248 241 7
Grand Residences by Marriott
-Residential 68 91 (23)
Sub Total Timeshare 12,897 12,801 96
------ ------ ---
Total 607,252 576,634 30,618
======= ======= ======
Number of Timeshare Interval, Fractional and Residential Resorts
----------------------------------------------------------------
Properties
Total in
Active
Properties 2 Sales 4
------------ -------
100% Company-Developed
----------------------
Marriott Vacation Club 3 53 27
The Ritz-Carlton Destination Club
and Residences 9 7
Grand Residences by Marriott and
Residences 4 3
Joint Ventures
--------------
The Ritz-Carlton Destination Club
and Residences 4 4
Total 70 41
=== ===
1 Total Lodging Products excludes the 1,869 and 2,142 corporate
housing rental units as of June 18, 2010 and June 19, 2009,
respectively.
2 Includes products that are in active sales as well as those that
are sold out. Residential products are included once they possess a
certificate of occupancy.
3 Marriott Vacation Club includes Horizons by Marriott Vacation Club
products that were previously reported separately.
4 Products in active sales may not be ready for occupancy.
A-4
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
Constant $
Comparable Company-Operated International Properties 1
Three Months Ended May 31, 2010 and May 31, 2009
------------------------------------------------
REVPAR Occupancy
------ ---------
vs.
Region 2010 2009 2010 vs. 2009
------ ---- ---- ---- --------
Caribbean & Latin America $138.23 9.5% 72.7% 5.5% pts.
Continental Europe $115.68 5.6% 70.6% 3.8% pts.
United Kingdom $115.15 5.8% 76.3% 4.0% pts.
Middle East & Africa $104.18 -2.0% 76.7% 3.8% pts.
Asia Pacific 2 $83.87 27.7% 68.2% 16.2% pts.
Regional Composite 3 $108.81 8.8% 72.1% 7.3% pts.
International Luxury 4 $213.49 14.0% 67.3% 10.1% pts.
Total International 5 $120.13 9.8% 71.6% 7.6% pts.
Worldwide 6 $110.74 8.2% 71.7% 5.4% pts.
Three Months Ended May 31, 2010 and May 31, 2009
------------------------------------------------
Average Daily Rate
------------------
Region 2010 vs. 2009
------ ---- --------
Caribbean &
Latin
America $190.08 1.3%
Continental
Europe $163.77 0.0%
United
Kingdom $150.98 0.3%
Middle East &
Africa $135.92 -6.8%
Asia Pacific
2 $122.94 -2.5%
Regional
Composite 3 $150.82 -2.2%
International
Luxury 4 $317.09 -3.1%
Total
International
5 $167.72 -1.8%
Worldwide 6 $154.52 0.1%
Comparable Systemwide International Properties 1
Three Months Ended May 31, 2010 and May 31, 2009
------------------------------------------------
REVPAR Occupancy
------ ---------
vs. vs.
Region 2010 2009 2010 2009
------ ---- ---- ---- ----
Caribbean & Latin
America $122.40 15.5% 71.2% 8.8% pts.
Continental Europe $111.92 5.1% 68.9% 4.6% pts.
United Kingdom $113.43 5.8% 75.6% 3.9% pts.
Middle East & Africa $104.18 -2.0% 76.7% 3.8% pts.
Asia Pacific 2 $87.89 21.0% 69.0% 13.9% pts.
Regional Composite 3 $106.96 9.0% 71.2% 7.5% pts.
International Luxury 4 $213.49 14.0% 67.3% 10.1% pts.
Total International 5 $116.55 9.8% 70.9% 7.7% pts.
Worldwide 6 $92.96 7.0% 70.7% 5.0% pts.
Three Months Ended May 31, 2010 and May 31, 2009
------------------------------------------------
Average Daily
Rate
--------------
vs.
Region 2010 2009
------ ---- ----
Caribbean &
Latin America $171.83 1.3%
Continental
Europe $162.53 -1.9%
United Kingdom $150.08 0.3%
Middle East &
Africa $135.92 -6.8%
Asia Pacific 2 $127.43 -3.4%
Regional
Composite 3 $150.16 -2.4%
International
Luxury 4 $317.09 -3.1%
Total
International 5 $164.43 -2.1%
Worldwide 6 $131.39 -0.6%
1 We report International results on a period basis, and
international statistics on a monthly basis. Statistics are in
constant dollars for March through May. International includes
properties located outside the Continental United States and Canada,
except for Worldwide which also includes North America.
2 Does not include Hawaii.
3 Regional information includes the Marriott Hotels & Resorts,
Renaissance Hotels and Courtyard brands.
Includes Hawaii.
4 International Luxury includes The Ritz-Carlton properties outside
of North America and Bulgari Hotels & Resorts.
5 Includes Regional Composite and International Luxury.
6 Includes international statistics for the three calendar months
ended May 31, 2010 and May 31, 2009, and North American statistics
for the twelve weeks ended June 18, 2010 and June 19, 2009.
Includes the Marriott Hotels & Resorts, Renaissance Hotels, The
Ritz-Carlton, Bulgari Hotels & Resorts, Residence Inn, Courtyard,
Fairfield Inn & Suites, TownePlace Suites and SpringHill Suites
brands.
A-5
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
Constant $
Comparable Company-Operated International Properties 1
Five Months Ended May 31, 2010 and May 31, 2009
-----------------------------------------------
REVPAR Occupancy
------ ---------
vs.
Region 2010 2009 2010 vs. 2009
------ ---- ---- ---- --------
Caribbean & Latin America $140.94 4.1% 73.0% 4.9% pts.
Continental Europe $106.18 4.2% 65.6% 4.2% pts.
United Kingdom $110.77 5.9% 72.6% 4.2% pts.
Middle East & Africa $100.94 -5.3% 73.1% 2.8% pts.
Asia Pacific 2 $79.53 23.3% 64.9% 14.8% pts.
Regional Composite 3 $104.41 6.2% 68.9% 6.9% pts.
International Luxury 4 $204.73 8.4% 63.9% 7.7% pts.
Total International 5 $115.26 6.6% 68.3% 7.0% pts.
Worldwide 6 $103.13 4.0% 68.2% 5.0% pts.
Five Months Ended May 31, 2010 and May 31, 2009
-----------------------------------------------
Average Daily
Rate
--------------
vs.
Region 2010 2009
------ ---- ----
Caribbean &
Latin America $193.07 -2.9%
Continental
Europe $161.90 -2.5%
United Kingdom $152.56 -0.1%
Middle East &
Africa $138.08 -8.9%
Asia Pacific 2 $122.62 -4.8%
Regional
Composite 3 $151.59 -4.4%
International
Luxury 4 $320.28 -4.6%
Total
International 5 $168.66 -4.3%
Worldwide 6 $151.27 -3.7%
Comparable Systemwide International Properties 1
Five Months Ended May 31, 2010 and May 31, 2009
-----------------------------------------------
REVPAR Occupancy
------ ---------
vs.
Region 2010 2009 2010 vs. 2009
------ ---- ---- ---- --------
Caribbean & Latin
America $121.45 9.7% 69.7% 7.8% pts.
Continental Europe $102.50 3.4% 63.9% 4.7% pts.
United Kingdom $109.01 5.7% 71.9% 4.1% pts.
Middle East & Africa $100.94 -5.3% 73.1% 2.8% pts.
Asia Pacific 2 $83.65 16.0% 65.6% 12.6% pts.
Regional Composite 3 $102.06 6.1% 67.7% 7.0% pts.
International Luxury 4 $204.73 8.4% 63.9% 7.7% pts.
Total International 5 $111.24 6.5% 67.4% 7.0% pts.
Worldwide 6 $86.27 3.1% 67.0% 4.3% pts.
Five Months Ended May 31, 2010 and May 31, 2009
-----------------------------------------------
Average Daily
Rate
--------------
vs.
Region 2010 2009
------ ---- ----
Caribbean & Latin
America $174.24 -2.6%
Continental
Europe $160.29 -4.1%
United Kingdom $151.68 -0.2%
Middle East &
Africa $138.08 -8.9%
Asia Pacific 2 $127.61 -6.2%
Regional
Composite 3 $150.65 -4.7%
International
Luxury 4 $320.28 -4.6%
Total
International 5 $165.05 -4.6%
Worldwide 6 $128.77 -3.6%
1 We report International results on a period basis, and
international statistics on a monthly basis. Statistics are in
constant dollars for January through May. International includes
properties located outside the Continental United States and Canada,
except for Worldwide which also includes North America.
2 Does not include Hawaii.
3 Regional information includes the Marriott Hotels & Resorts,
Renaissance Hotels and Courtyard brands.
Includes Hawaii.
4 International Luxury includes The Ritz-Carlton properties outside
of North America and Bulgari Hotels & Resorts.
5 Includes Regional Composite and International Luxury.
6 Includes international statistics for the five calendar months
ended May 31, 2010 and May 31, 2009, and North American statistics
for the twenty-four weeks ended June 18, 2010 and June 19, 2009.
Includes the Marriott Hotels & Resorts, Renaissance Hotels, The
Ritz-Carlton, Bulgari Hotels & Resorts, Residence Inn, Courtyard,
Fairfield Inn & Suites, TownePlace Suites and SpringHill Suites
brands.
A-6
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
Constant $
Comparable Company-Operated North American Properties 1
Twelve Weeks Ended June 18, 2010 and June 19,
2009
----------------------------------------------
REVPAR Occupancy
------ ---------
vs. vs.
Brand 2010 2009 2010 2009
----- ---- ---- ---- ----
Marriott Hotels &
Resorts $117.21 7.6% 73.1% 4.4% pts.
Renaissance Hotels $113.08 6.1% 71.0% 3.0% pts.
Composite North
American Full-Service
2 $116.44 7.4% 72.7% 4.1% pts.
The Ritz-Carlton 3 $212.67 15.9% 71.6% 9.9% pts.
Composite North
American Full-Service
& Luxury 4 $127.98 9.0% 72.6% 4.8% pts.
Residence Inn $88.88 4.9% 76.7% 4.8% pts.
Courtyard $73.82 4.0% 67.7% 3.6% pts.
TownePlace Suites $50.47 2.1% 68.8% 5.2% pts.
SpringHill Suites $67.26 3.2% 69.5% 3.5% pts.
Composite North
American Limited-
Service 5 $76.03 4.0% 70.4% 3.9% pts.
Composite - All 6 $106.47 7.5% 71.7% 4.4% pts.
Twelve Weeks Ended June 18, 2010 and June 19,
2009
----------------------------------------------
Average Daily
Rate
--------------
Brand 2010 vs. 2009
----- ---- --------
Marriott
Hotels &
Resorts $160.30 1.2%
Renaissance
Hotels $159.16 1.6%
Composite
North
American
Full-
Service 2 $160.09 1.3%
The Ritz-
Carlton 3 $297.03 0.0%
Composite
North
American
Full-
Service &
Luxury 4 $176.29 1.7%
Residence Inn $115.87 -1.6%
Courtyard $108.98 -1.4%
TownePlace
Suites $73.30 -5.6%
SpringHill
Suites $96.85 -2.1%
Composite
North
American
Limited-
Service 5 $108.00 -1.7%
Composite -
All 6 $148.53 0.8%
Comparable Systemwide North American Properties 1
Twelve Weeks Ended June 18, 2010 and June 19,
2009
----------------------------------------------
REVPAR Occupancy
------ ---------
vs. vs.
Brand 2010 2009 2010 2009
----- ---- ---- ---- ----
Marriott Hotels &
Resorts $102.17 7.1% 70.0% 4.6% pts.
Renaissance Hotels $101.97 7.1% 70.7% 4.6% pts.
Composite North American
Full-Service 2 $102.14 7.1% 70.1% 4.6% pts.
The Ritz-Carlton 3 $212.67 15.9% 71.6% 9.9% pts.
Composite North American
Full-Service & Luxury
4 $110.01 8.2% 70.2% 5.0% pts.
Residence Inn $88.49 5.8% 77.9% 5.5% pts.
Courtyard $77.06 4.2% 69.2% 3.4% pts.
Fairfield Inn & Suites $56.25 3.1% 66.4% 3.1% pts.
TownePlace Suites $56.84 4.5% 71.2% 6.2% pts.
SpringHill Suites $67.98 3.6% 69.1% 4.3% pts.
Composite North American
Limited-Service 5 $73.94 4.5% 71.0% 4.1% pts.
Composite - All 6 $87.90 6.3% 70.7% 4.5% pts.
Twelve Weeks Ended June 18, 2010 and June 19,
2009
----------------------------------------------
Average Daily
Rate
--------------
Brand 2010 vs. 2009
----- ---- --------
Marriott
Hotels &
Resorts $146.03 0.0%
Renaissance
Hotels $144.32 0.2%
Composite
North
American
Full-Service
2 $145.72 0.1%
The Ritz-
Carlton 3 $297.03 0.0%
Composite
North
American
Full-Service
& Luxury 4 $156.72 0.6%
Residence Inn $113.56 -1.6%
Courtyard $111.33 -0.9%
Fairfield Inn
& Suites $84.67 -1.7%
TownePlace
Suites $79.84 -4.5%
SpringHill
Suites $98.37 -2.8%
Composite
North
American
Limited-
Service 5 $104.08 -1.6%
Composite -
All 6 $124.31 -0.4%
1 North America includes properties located in the Continental United
States and Canada.
2 Includes the Marriott Hotels & Resorts and Renaissance Hotels brands.
3 Statistics for The Ritz-Carlton are for March through May.
4 Includes the Marriott Hotels & Resorts, Renaissance Hotels and The
Ritz-Carlton brands.
5 Includes the Residence Inn, Courtyard, Fairfield Inn & Suites,
TownePlace Suites and SpringHill Suites brands.
6 Includes the Marriott Hotels & Resorts, Renaissance Hotels, The
Ritz-Carlton, Residence Inn, Courtyard, Fairfield Inn & Suites,
TownePlace Suites, and SpringHill Suites brands.
A-7
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
Constant $
Comparable Company-Operated North American Properties 1
Twenty-four Weeks Ended June 18, 2010 and June 19,
2009
---------------------------------------------------
REVPAR Occupancy
------ ---------
vs. vs.
Brand 2010 2009 2010 2009
----- ---- ---- ---- ----
Marriott Hotels &
Resorts $109.28 3.2% 69.7% 4.4% pts.
Renaissance Hotels $104.56 0.8% 67.5% 3.2% pts.
Composite North
American Full-
Service 2 $108.40 2.7% 69.3% 4.2% pts.
The Ritz-Carlton 3 $205.25 10.6% 68.7% 8.7% pts.
Composite North
American Full-
Service & Luxury 4 $118.14 4.0% 69.3% 4.6% pts.
Residence Inn $83.89 2.0% 73.1% 5.0% pts.
Courtyard $69.28 0.0% 64.0% 3.6% pts.
TownePlace Suites $46.89 -4.5% 63.4% 3.1% pts.
SpringHill Suites $62.71 0.6% 64.6% 3.8% pts.
Composite North
American Limited-
Service 5 $71.43 0.4% 66.5% 3.9% pts.
Composite - All 6 $98.55 2.9% 68.1% 4.3% pts.
Twenty-four Weeks Ended June 18, 2010 and June 19,
2009
---------------------------------------------------
Average Daily
Rate
vs.
Brand 2010 2009
----- ---- ----
Marriott Hotels &
Resorts $156.68 -3.3%
Renaissance Hotels $154.92 -4.0%
Composite North
American Full-
Service 2 $156.36 -3.4%
The Ritz-Carlton 3 $298.75 -3.3%
Composite North
American Full-
Service & Luxury 4 $170.57 -2.9%
Residence Inn $114.83 -5.0%
Courtyard $108.18 -5.6%
TownePlace Suites $73.92 -9.2%
SpringHill Suites $97.02 -5.3%
Composite North
American Limited-
Service 5 $107.36 -5.4%
Composite - All 6 $144.68 -3.6%
Comparable Systemwide North American Properties 1
Twenty-four Weeks Ended June 18, 2010 and June 19,
2009
---------------------------------------------------
REVPAR Occupancy
------ ---------
vs. vs.
Brand 2010 2009 2010 2009
----- ---- ---- ---- ----
Marriott Hotels &
Resorts $96.06 3.0% 66.7% 4.3% pts.
Renaissance Hotels $94.89 2.5% 67.1% 4.6% pts.
Composite North
American Full-
Service 2 $95.85 2.9% 66.8% 4.4% pts.
The Ritz-Carlton 3 $205.25 10.6% 68.7% 8.7% pts.
Composite North
American Full-
Service & Luxury 4 $102.35 3.8% 66.9% 4.6% pts.
Residence Inn $83.39 2.4% 74.3% 4.9% pts.
Courtyard $72.06 0.6% 65.3% 2.9% pts.
Fairfield Inn &
Suites $51.43 -0.3% 61.4% 2.0% pts.
TownePlace Suites $53.05 0.1% 66.3% 4.8% pts.
SpringHill Suites $63.46 -0.3% 65.1% 3.4% pts.
Composite North
American Limited-
Service 5 $69.07 0.9% 66.9% 3.4% pts.
Composite - All 6 $81.83 2.3% 66.9% 3.9% pts.
Twenty-four Weeks Ended June 18, 2010 and June 19,
2009
---------------------------------------------------
Average Daily
Rate
--------------
Brand 2010 vs. 2009
----- ---- --------
Marriott
Hotels &
Resorts $143.93 -3.6%
Renaissance
Hotels $141.39 -4.6%
Composite
North
American
Full-
Service 2 $143.47 -3.8%
The Ritz-
Carlton 3 $298.75 -3.3%
Composite
North
American
Full-
Service &
Luxury 4 $152.94 -3.4%
Residence
Inn $112.29 -4.3%
Courtyard $110.30 -3.9%
Fairfield
Inn &
Suites $83.73 -3.6%
TownePlace
Suites $80.07 -7.1%
SpringHill
Suites $97.52 -5.6%
Composite
North
American
Limited-
Service 5 $103.21 -4.2%
Composite
-All 6 $122.27 -3.7%
1 North America includes properties located in the Continental United
States and Canada.
2 Includes the Marriott Hotels & Resorts and Renaissance Hotels brands.
3 Statistics for The Ritz-Carlton are for January through May.
4 Includes the Marriott Hotels & Resorts, Renaissance Hotels and The
Ritz-Carlton brands.
5 Includes the Residence Inn, Courtyard, Fairfield Inn & Suites,
TownePlace Suites and SpringHill Suites brands.
6 Includes the Marriott Hotels & Resorts, Renaissance Hotels, The
Ritz-Carlton, Residence Inn, Courtyard, Fairfield Inn & Suites,
TownePlace Suites, and SpringHill Suites brands.
A-8
MARRIOTT INTERNATIONAL, INC.
TIMESHARE SEGMENT
($ in millions)
Adjustments
-----------
As Reported As Reported Restructuring
12 Weeks 12 Weeks Costs &
Ended Ended Other
June 18, June 19,
2010 2009 Charges
--------- --------- -------
Segment Revenues
----------------
Base fees revenue $12 $11 $-
Sales and services revenue
Development 148 182 -
Services 84 80 -
Financing revenue
Interest income - non-
securitized notes 10 10 -
Interest income -securitized
notes 33 - -
Other financing revenue 1 (1) 12
--- --- ---
Total financing revenue 44 9 12
Other revenue 13 12 -
--- --- ---
Total sales and services revenue 289 283 12
Cost reimbursements 62 61 -
Segment revenues $363 $355 $12
==== ==== ===
Segment Results
---------------
Base fees revenue $12 $11 $-
Timeshare sales and services, net 50 4 12
Restructuring costs - (30) 30
General, administrative and other
expense (15) (23) 7
Gains and other income - - -
Joint venture equity earnings (3) (1) 1
Interest expense (14) - -
Noncontrolling interest - 4 -
Segment results $30 $(35) $50
=== ==== ===
Contract Sales
--------------
Company:
Timeshare $155 $200 $-
Fractional 8 8 1
Residential 2 2 -
--- --- ---
Total company 165 210 1
Joint ventures:
Timeshare - - -
Fractional (1) (18) 19
Residential (3) 17 (17)
--- --- ---
Total joint ventures (4) (1) 2
--- --- ---
Total contract sales 1 $161 $209 $3
==== ==== ===
As Adjusted Percent
12 Weeks Better/
Ended (Worse)
June 19,
2009** 2010 vs.
Adjusted
-------- 2009
---------
Segment Revenues
----------------
Base fees revenue $11 9
Sales and services revenue
Development 182 (19)
Services 80 5
Financing revenue
Interest income - non-
securitized notes 10 0
Interest income -securitized
notes - *
Other financing revenue 11 (91)
---
Total financing revenue 21 110
Other revenue 12 8
---
Total sales and services revenue 295 (2)
Cost reimbursements 61 2
Segment revenues $367 (1)
====
Segment Results
---------------
Base fees revenue $11 9
Timeshare sales and services, net 16 213
Restructuring costs - -
General, administrative and other
expense (16) 6
Gains and other income - -
Joint venture equity earnings - *
Interest expense - *
Noncontrolling interest 4 (100)
Segment results $15 100
===
Contract Sales
--------------
Company:
Timeshare $200 (23)
Fractional 9 (11)
Residential 2 0
---
Total company 211 (22)
Joint ventures:
Timeshare - -
Fractional 1 (200)
Residential - *
---
Total joint ventures 1 (500)
---
Total contract sales 1 $212 (24)
====
* Percent cannot be calculated.
**Denotes non-GAAP financial measures. Please see pages A-17 and
A-18 for additional information about our reasons for providing
these alternative financial measures and the
limitations on their use.
1 As Reported 12 Weeks Ended June 18, 2010 includes fractional and
residential contract cancellation allowances of ($3) million and
($3) million, respectively. Gross contract sales for the 2010
second quarter were $167 million before the contract cancellation
reserves of $6 million.
A-9
MARRIOTT INTERNATIONAL, INC.
TIMESHARE SEGMENT
($ in millions)
Adjustments
-----------
As Reported As Reported Restructuring
24 Weeks 24 Weeks Costs &
Ended Ended Other
June 18, June 19,
2010 2009 Charges
--------- --------- -------
Segment Revenues
----------------
Base fees revenue $23 $21 $-
Sales and services
revenue
Development 295 303 4
Services 167 150 -
Financing revenue
Interest income - non-
securitized notes 19 23 -
Interest income -
securitized notes 69 - -
Other financing revenue 1 3 (4) 25
--- --- ---
Total financing revenue 91 19 25
Other revenue 21 20 -
--- --- ---
Total sales and services
revenue 574 492 29
Cost reimbursements 124 119 -
Segment revenues $721 $632 $29
==== ==== ===
Segment Results
---------------
Base fees revenue $23 $21 $-
Timeshare sales and
services, net 100 (7) 28
Restructuring costs - (31) 31
General, administrative
and other
expense (32) (40) 7
Gains and other income - - -
Joint venture equity
earnings (8) (2) 2
Interest expense (28) - -
Noncontrolling interest - 7 -
Segment results $55 $(52) $68
=== ==== ===
Contract Sales
--------------
Company:
Timeshare $306 $338 $-
Fractional 16 18 1
Residential 6 (3) 4
--- --- ---
Total company 328 353 5
Joint ventures:
Timeshare - - -
Fractional - (5) 16
Residential (3) (10) 10
--- --- ---
Total joint ventures (3) (15) 26
--- --- ---
Total contract sales 2 $325 $338 $31
==== ==== ===
As Adjusted Percent
24 Weeks Better/
Ended (Worse)
June 19,
2009** 2010 vs.
Adjusted
-------- 2009
---------
Segment Revenues
----------------
Base fees revenue $21 10
Sales and services revenue
Development 307 (4)
Services 150 11
Financing revenue
Interest income - non-
securitized notes 23 (17)
Interest income -securitized
notes - *
Other financing revenue 1 21 (86)
---
Total financing revenue 44 107
Other revenue 20 5
---
Total sales and services
revenue 521 10
Cost reimbursements 119 4
Segment revenues $661 9
====
Segment Results
---------------
Base fees revenue $21 10
Timeshare sales and services,
net 21 376
Restructuring costs - -
General, administrative and
other
expense (33) 3
Gains and other income - -
Joint venture equity earnings - *
Interest expense - *
Noncontrolling interest 7 (100)
Segment results $16 244
===
Contract Sales
--------------
Company:
Timeshare $338 (9)
Fractional 19 (16)
Residential 1 500
---
Total company 358 (8)
Joint ventures:
Timeshare - -
Fractional 11 (100)
Residential - *
---
Total joint ventures 11 (127)
---
Total contract sales 2 $369 (12)
====
* Percent cannot be calculated.
**Denotes non-GAAP financial measures. Please see pages A-17 and
A-18 for additional information about our reasons for providing
these alternative financial measures and the limitations on their
use.
1) As Reported 24 Weeks Ended June 19, 2009 and As Adjusted 24 Weeks
Ended June 19, 2009 include gain/(loss) on notes sold of ($1)
million and ($1) million, respectively.
2) As Reported 24 Weeks Ended June 18, 2010 includes fractional and
residential contract cancellation allowances of ($7) million and
($7) million, respectively. Gross contract sales for 2010 year-to-
date were $339 million before the contract cancellation reserves of
$14 million.
A-10
MARRIOTT INTERNATIONAL, INC.
TIMESHARE SEGMENT
AS ADJUSTED HAD ASU NOS. 2009-16 AND 2009-17 BEEN ADOPTED ON JANUARY
3, 2009
SECOND QUARTER 2009
($ in millions)
Adjustments
As Reported Restructuring As Adjusted
12 Weeks Costs & 12 Weeks
Ended Other Ended
June 19, June 19,
2009 Charges 2009**
--------- ------- ---------
Segment Revenues
----------------
Base fees revenue $11 $- $11
Sales and services
revenue
Development 182 - 182
Services 80 - 80
Financing revenue
Interest income -
non-securitized
notes 10 - 10
Interest income -
securitized notes - - -
Other financing
revenue (1) 12 11
--- --- ---
Total financing
revenue 9 12 21
Other revenue 12 - 12
--- --- ---
Total sales and
services revenue 283 12 295
Cost
reimbursements 61 - 61
Segment revenues $355 $12 $367
==== === ====
Segment Results
---------------
Base fees revenue $11 $- $11
Timeshare sales
and services, net 4 12 16
Restructuring
costs (30) 30 -
General,
administrative
and other
expense (23) 7 (16)
Gains and other
income - - -
Joint venture
equity earnings (1) 1 -
Interest expense - - -
Noncontrolling
interest 4 - 4
Segment results $(35) $50 $15
==== === ===
Contract Sales
--------------
Company:
Timeshare $200 $- $200
Fractional 8 1 9
Residential 2 - 2
--- --- ---
Total company 210 1 211
Joint ventures:
Timeshare - - -
Fractional (18) 19 1
Residential 17 (17) -
--- --- ---
Total joint
ventures (1) 2 1
--- --- ---
Total contract
sales, including
joint ventures $209 $3 $212
==== === ====
ASU Nos. As Adjusted
2009-16 For
ASU Nos.
And 2009-17 2009-16
Adjustments And 2009-17
12 Weeks
----------- Ended
June 19,
2009**
---------
Segment Revenues
----------------
Base fees revenue $- $11
Sales and services revenue
Development 6 188
Services - 80
Financing revenue
Interest income - non-securitized
notes - 10
Interest income -securitized notes 38 38
Other financing revenue (8) 3
--- ---
Total financing revenue 30 51
Other revenue - 12
--- ---
Total sales and services revenue 36 331
Cost reimbursements - 61
Segment revenues $36 $403
=== ====
Segment Results
---------------
Base fees revenue $- $11
Timeshare sales and services, net 32 48
Restructuring costs - -
General, administrative and other
expense - (16)
Gains and other income - -
Joint venture equity earnings - -
Interest expense (18) (18)
Noncontrolling interest - 4
Segment results $14 $29
=== ===
Contract Sales
--------------
Company:
Timeshare $- $200
Fractional - 9
Residential - 2
--- ---
Total company - 211
Joint ventures:
Timeshare - -
Fractional - 1
Residential - -
--- ---
Total joint ventures - 1
--- ---
Total contract sales, including joint
ventures $- $212
=== ====
**Denotes non-GAAP financial measures. Please see pages A-17 and
A-18 for additional information about our reasons for providing
these alternative financial measures and the limitations on their
use.
A-11
MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURE
TIMESHARE INVENTORY
AS ADJUSTED HAD ASU NOS. 2009-16 AND 2009-17 BEEN ADOPTED ON JANUARY
3, 2009
($ in millions)
Adjustments
-----------
ASU Nos. As Adjusted
Balance at As Reported 2009-16 For
ASU Nos.
End of 2010 Balance at And 2009-17 2009-16
Second Year-End
Quarter 2009 Adjustments And 2009-17
------- --------- ----------- Balance at
Year-End
2009** 1
---------
Finished goods 2 $757 $721 $100 $821
Work-in-process 148 198 - 198
Land and
infrastructure 545 507 - 507
Total inventory $1,450 $1,426 $100 $1,526
====== ====== ==== ======
** Denotes non-GAAP financial measures. Please see pages A-17 and
A-18 for additional information about our reasons for providing
these alternative financial measures and the limitations on their
use.
1) As Adjusted had ASU Nos. 2009-16 and 2009-17 (formerly referred to
as FAS 166 & 167) been adopted on January 3, 2009.
2) Includes completed inventory as well as an estimate of inventory
we expect to acquire when we foreclose on defaulted notes. The
estimate of inventory we expect to acquire when we foreclose on
defaulted notes for As Adjusted 2009 and As Reported 2010 include
securitized and non-securitized notes, and As Reported 2009
includes non-securitized notes.
A-12
MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURE
EBITDA AND ADJUSTED EBITDA
($ in millions)
Fiscal Year 2010
----------------
Second Total Year
First Quarter Quarter to Date
------------- ------- -----------
Net Income attributable
to Marriott $83 $119 $202
Interest expense 45 44 89
Tax provision 46 65 111
Depreciation and
amortization 39 42 81
Less: Depreciation
reimbursed by third-
party owners (3) (3) (6)
Interest expense from
unconsolidated joint
ventures 5 5 10
Depreciation and
amortization from
unconsolidated joint
ventures 6 6 12
--- --- ---
EBITDA ** $221 $278 $499
==== ==== ====
Increase over 2009
Adjusted EBITDA 3% 26% 15%
Fiscal Year 2009
----------------
First Second Third
Quarter Quarter Quarter
-------- ------- --------
Net Income /(Loss) attributable to
Marriott $(23) $37 $(466)
Interest expense 29 28 27
Tax provision 33 44 (210)
Tax provision, noncontrolling
interest 1 2 1
Depreciation and amortization 39 42 43
Less: Depreciation reimbursed by
third-party owners (2) (2) (2)
Interest expense from unconsolidated
joint ventures 3 6 4
Depreciation and amortization from
unconsolidated joint ventures 6 6 6
--- --- ---
EBITDA ** 86 163 (597)
Restructuring costs and other
charges
Severance 2 10 4
Facilities exit costs - 22 5
Development cancellations - 1 -
Total restructuring costs 2 33 9
--- --- ---
Impairment of investments and other,
net of prior year reserves 68 3 1
Reserves for loan losses 42 1 -
Contract cancellation allowances 4 1 1
Residual interests valuation 13 12 (3)
System development write-off - 7 -
Total other charges 127 24 (1)
--- --- ---
Total restructuring costs and other
charges 129 57 8
--- --- ---
Timeshare strategy -impairment
charges
Operating impairments - - 614
Non-operating impairments - - 138
--- --- ---
Total timeshare strategy -
impairment charges - - 752
--- --- ---
Adjusted EBITDA ** $215 $220 $163
==== ==== ====
Fiscal Year 2009
----------------
Fourth
Quarter Total
------- -----
Net Income /(Loss) attributable to
Marriott $106 $(346)
Interest expense 34 118
Tax provision 68 (65)
Tax provision, noncontrolling interest - 4
Depreciation and amortization 61 185
Less: Depreciation reimbursed by third-
party owners (3) (9)
Interest expense from unconsolidated
joint ventures 6 19
Depreciation and amortization from
unconsolidated joint ventures 9 27
--- ---
EBITDA ** 281 (67)
Restructuring costs and other charges
Severance 5 21
Facilities exit costs 2 29
Development cancellations - 1
Total restructuring costs 7 51
--- ---
Impairment of investments and other, net
of prior year reserves 11 83
Reserves for loan losses - 43
Contract cancellation allowances 3 9
Residual interests valuation (2) 20
System development write-off - 7
Total other charges 12 162
--- ---
Total restructuring costs and other
charges 19 213
--- ---
Timeshare strategy - impairment charges
Operating impairments - 614
Non-operating impairments - 138
--- ---
Total timeshare strategy -impairment
charges - 752
--- ---
Adjusted EBITDA ** $300 $898
==== ====
** Denotes non-GAAP financial measures. Please see pages A-17 and
A-18 for additional information about our reasons for providing
these alternative financial measures and the limitations on their
use.
A-13
MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURE
EBITDA AND ADJUSTED EBITDA
AS ADJUSTED HAD ASU NOS. 2009-16 AND 2009-17 BEEN ADOPTED ON JANUARY
3, 2009
SECOND QUARTER 2009
($ in millions)
Second
Quarter As Adjusted
2009 ASU Nos. For
2009-16
------- and ASU Nos.
2009-17 2009-16 and
Adjustments 2009-17
Second
----------- Quarter
2009**
------
Net Income /(Loss)
attributable to Marriott $37 $9 $46
Interest expense 28 18 46
Tax provision 44 5 49
Tax provision,
noncontrolling interest 2 - 2
Depreciation and
amortization 42 - 42
Less: Depreciation
reimbursed by third-party
owners (2) - (2)
Interest expense from
unconsolidated joint
ventures 6 - 6
Depreciation and
amortization from
unconsolidated joint
ventures 6 - 6
--- --- ---
EBITDA ** 163 32 195
Restructuring costs and
other charges
Severance 10 - 10
Facilities exit costs 22 - 22
Development cancellations 1 - 1
--- --- ---
Total restructuring costs 33 - 33
--- --- ---
Impairment of investments
and other, net of prior
year reserves 3 - 3
Reserves for loan losses 1 - 1
Contract cancellation
allowances 1 - 1
Residual interests
valuation 12 - 12
System development write-
off 7 - 7
--- ---
Total other charges 24 - 24
--- --- ---
Total restructuring costs
and other charges 57 - 57
--- --- ---
Adjusted EBITDA ** $220 $32 $252
==== === ====
** Denotes non-GAAP financial measures. Please see pages A-17 and
A-18 for additional information about our reasons for providing
these alternative financial measures and the limitations on their
use.
A-14
MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURE
EBITDA AND ADJUSTED EBITDA
2009 AS ADJUSTED HAD ASU NOS. 2009-16 AND 2009-17 BEEN ADOPTED ON
JANUARY 3, 2009 AND FORECASTED 2010
($ in millions)
2009
Fiscal As Adjusted
Year ASU Nos. For
2009-16
------ and ASU Nos.
2009-17 2009-16 and
Adjustments 2009-17
----------- Fiscal Year
2009**
------
Net (Loss) /Income
attributable to Marriott $(346) $(1) $(347)
Interest expense 118 77 195
Tax provision, continuing
operations (65) - (65)
Tax provision,
noncontrolling interest 4 - 4
Depreciation and
amortization 185 - 185
Less: Depreciation
reimbursed by third-party
owners (9) - (9)
Interest expense from
unconsolidated joint
ventures 19 - 19
Depreciation and
amortization from
unconsolidated joint
ventures 27 - 27
--- --- ---
EBITDA ** (67) 76 9
Restructuring costs and
other charges
Severance 21 - 21
Facilities exit costs 29 - 29
Development cancellations 1 - 1
--- --- ---
Total restructuring costs 51 - 51
--- --- ---
Impairment of investments
and other, net of prior
year reserves 83 - 83
Reserves for loan losses 43 - 43
Contract cancellation
allowances 9 - 9
Residual interests valuation 20 - 20
System development write-
off 7 - 7
--- --- ---
Total other charges 162 - 162
--- --- ---
Total restructuring costs
and other charges 213 - 213
--- --- ---
Timeshare strategy -
impairment charges
Operating impairments 614 - 614
Non-operating impairments 138 - 138
--- ---
Total timeshare strategy -
impairment charges 752 - 752
--- --- ---
Adjusted EBITDA ** $898 $76 $974
==== === ====
Increase over 2009 Adjusted
EBITDA as Adjusted for ASU
Nos. 2009-16 and 2009-17
Range
-----
Estimated
EBITDA
Full Year 2010
--------------
Net (Loss) / Income attributable to Marriott $398 $427
Interest expense 195 190
Tax provision, continuing operations 222 238
Tax provision, noncontrolling interest - -
Depreciation and amortization 185 185
Less: Depreciation reimbursed by third-
party owners (10) (10)
Interest expense from unconsolidated joint
ventures 25 25
Depreciation and amortization from
unconsolidated joint ventures 30 30
--- ---
EBITDA ** 1,045 1,085
Restructuring costs and other charges
Severance - -
Facilities exit costs - -
Development cancellations - -
--- ---
Total restructuring costs - -
--- ---
Impairment of investments and other, net of
prior year reserves - -
Reserves for loan losses - -
Contract cancellation allowances - -
Residual interests valuation - -
System development write-off - -
--- ---
Total other charges - -
--- ---
Total restructuring costs and other charges - -
--- ---
Timeshare strategy - impairment charges
Operating impairments - -
Non-operating impairments - -
--- ---
Total timeshare strategy -impairment
charges - -
--- ---
Adjusted EBITDA ** $1,045 $1,085
====== ======
Increase over 2009 Adjusted EBITDA as
Adjusted for ASU Nos. 2009-16 and 2009-17 7% 11%
** Denotes non-GAAP financial measures. Please see pages A-17 and
A-18 for additional information about our reasons for providing
these alternative financial measures and the limitations on their
use.
A-15
MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURE
ADJUSTED TOTAL DEBT NET OF CASH
($ in millions)
Balance at Balance at Balance at
End of 2010 Year-End Year-End
Second Quarter 2009 2008
-------------- ---- ----
Total debt $2,911 $2,298 $3,095
Cash and cash equivalents (100) (115) (134)
Total debt net of cash** 2,811 2,183 2,961
Less the impact of ASU Nos.
2009-16 and 2009-17 (987) - -
Adjusted total debt net of
cash** (a) $1,824 $2,183 $2,961
====== ====== ======
Better / (Worse) Change
-----------------------
Balance at End of
2010 Second Quarter
as Compared to
--------------
Balance at Balance at
Year-End Year-End
2009 2008
----------- -----------
Total debt $(613) $184
Cash and cash equivalents (15) (34)
Total debt net of cash** (628) 150
Less the impact of ASU Nos.
2009-16 and 2009-17 987 987
Adjusted total debt net of
cash** (a) $359 $1,137
==== ======
(a) Excludes the impact of the update to ASU Nos. 2009-16 and 2009-17.
**Denotes non-GAAP financial measures. Please see pages A-17 and
A-18 for additional information about our reasons for providing
these alternative financial measures and the limitations on their
use.
A-16
MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURES
In our press release and schedules, and on the related conference
call, we report certain financial measures that are not prescribed
or authorized by United States generally accepted accounting
principles ("GAAP"). We discuss management's reasons for reporting
these non-GAAP measures below, and the press release schedules
reconcile the most directly comparable GAAP measure to each non-
GAAP measure that we refer to (identified by a double asterisk on
the preceding pages). Although management evaluates and presents
these non-GAAP measures for the reasons described below, please be
aware that these non-GAAP measures have limitations and should not
be considered in isolation or as a substitute for revenue, operating
income, income from continuing operations, net income, earnings per
share or any other comparable operating measure prescribed by GAAP.
In addition, these non-GAAP financial measures may be calculated
and/or presented differently than measures with the same or similar
names that are reported by other companies, and as a result, the
non-GAAP measures we report may not be comparable to those reported
by others.
Adjusted Measures That Exclude Certain Charges, Costs, and Other
Expenses. Management evaluates non-GAAP measures that exclude the
impact of Timeshare strategy - impairment charges incurred in the
2009 third quarter, restructuring costs and other charges incurred
in the 2009 first through fourth quarters, and certain tax expenses
incurred in the 2009 first and second quarters, because those non-
GAAP measures allow for period-over-period comparisons of our on-
going core operations before material charges. These non-GAAP
measures also facilitate management's comparison of results from our
on-going operations before material charges with results from other
lodging companies.
Timeshare Strategy - Impairment Charges. In response to the
difficult business conditions that the Timeshare segment's
timeshare, luxury residential, and luxury fractional real estate
development businesses experienced, we evaluated our entire
Timeshare portfolio in the 2009 third quarter. In order to adjust
the business strategy to reflect current market conditions at that
time, on September 22, 2009, we approved plans for our Timeshare
segment to take the following actions: (1) for our luxury
residential projects, reduce prices, convert certain proposed
projects to other uses, sell some undeveloped land, and not pursue
further Marriott-funded residential development projects; (2)
reduce prices for existing luxury fractional units; (3) continue
short-term promotions for our U.S. timeshare business and defer the
introduction of new projects and development phases; and (4) for our
European timeshare and fractional resorts, continue promotional
pricing and marketing incentives and not pursue further development.
As a result of these decisions, we recorded third quarter 2009
pretax charges totaling $752 million in our Consolidated Statements
of Income ($502 million after-tax), including $614 million of
pretax charges impacting operating income under the "Timeshare
strategy-impairment charges" caption, and $138 million of pretax
charges impacting non-operating income under the "Timeshare
strategy-impairment charges (non-operating)" caption.
Restructuring Costs and Other Charges. During the latter part of
2008 we experienced a significant decline in demand for hotel rooms
both domestically and internationally due, in part, to the financial
crisis and the dramatic downturn in the economy. Our capital
intensive Timeshare business was also hurt by the downturn in market
conditions and particularly, the significant deterioration in the
credit markets. These declines resulted in reduced management and
franchise fees, cancellation of development projects, reduced
timeshare contract sales, contract cancellation allowances, and
charges and reserves associated with expected fundings, loans,
Timeshare inventory, accounts receivable, contract cancellation
allowances, valuation of Timeshare residual interests, hedge
ineffectiveness, and asset impairments. We responded by
implementing various cost saving measures which resulted in first,
second, third and fourth quarter 2009 restructuring costs of $2
million, $33 million, $9 million, and $7 million, respectively, that
were directly related to the downturn. We also incurred other
charges in the 2009 first, second, and fourth quarters totaling $127
million, $24 million, and $12 million respectively, as well as $1
million in net other credits in the 2009 third quarter, that were
directly related to the downturn, including asset impairment
charges, accounts receivable and guarantee charges, reserves
associated with loans, reversal of the liability related to expected
fundings, Timeshare contract cancellation allowances, and charges
related to the valuation of Timeshare residual interests.
Certain Tax Expenses. Certain tax expenses included non-cash
charges of $26 million in the 2009 first quarter and $17 million in
the 2009 second quarter primarily related to the treatment of funds
received from certain foreign subsidiaries, an issue we are
contesting with the Internal Revenue Service ("IRS").
A-17
MARRIOTT INTERNATIONAL, INC.
NON-GAAP FINANCIAL MEASURES
Earnings Before Interest, Taxes, Depreciation and Amortization.
Earnings before interest, taxes, depreciation and amortization
("EBITDA") reflects earnings excluding the impact of interest
expense, provision for income taxes, depreciation and amortization.
Management considers EBITDA to be an indicator of operating
performance because we use it to measure our ability to service
debt, fund capital expenditures, and expand our business. We also
use EBITDA, as do analysts, lenders, investors and others, to
evaluate companies because it excludes certain items that can vary
widely across different industries or among companies within the
same industry. For example, interest expense can be dependent on a
company's capital structure, debt levels and credit ratings.
Accordingly, the impact of interest expense on earnings can vary
significantly among companies. The tax positions of companies can
also vary because of their differing abilities to take advantage of
tax benefits and because of the tax policies of the jurisdictions in
which they operate. As a result, effective tax rates and provision
for income taxes can vary considerably among companies. EBITDA also
excludes depreciation and amortization because companies utilize
productive assets of different ages and use different methods of
both acquiring and depreciating productive assets. These differences
can result in considerable variability in the relative costs of
productive assets and the depreciation and amortization expense
among companies.
Both EBITDA and Adjusted EBITDA (described below) exclude certain
cash expenses that we are obligated to make.
Adjusted EBITDA. Management also evaluates adjusted EBITDA as an
indicator of operating performance. Adjusted EBITDA excludes: (1)
Timeshare strategy - impairment charges of $752 million incurred in
the 2009 third quarter; and (2) the 2009 restructuring costs and
other charges of $19 million from the fourth quarter, $8 million
from the third quarter, $57 million from the second quarter and $129
million from the first quarter. Management excludes these Timeshare
strategy-impairment charges and restructuring costs and other
charges for the reasons noted above under "Adjusted Measures That
Exclude Certain Charges, Costs, and Other Expenses."
Adjusted Measures that Exclude the Impact of New Accounting Standards
or Reflect Their Early Adoption. As of the first day of fiscal year
2010, we adopted Accounting Standards Update ("ASU") No. 2009-16,
"Transfers and Servicing (Topic 860): Accounting for Transfers of
Financial Assets" (formerly known as FAS No. 166) and ASU No. 2009-
17, "Consolidations (Topic 810); Improvements to Financial Reporting
by Enterprises Involved with Variable Interest Entities" (formerly
known as FAS No. 167), which required consolidating previously
securitized pools of Timeshare notes and impacts the ongoing
accounting for those notes. Management evaluates non-GAAP measures
that exclude the impact of these standards in the current year or
include the impact of these standards as if we had adopted them
early in order to better perform year-over-year comparisons on a
comparable basis.
Total Debt Net of Cash (or "Net Debt") and Adjusted Total Debt Net of
Cash. Total debt net of cash reflects total debt less cash and cash
equivalents. Management considers total debt net of cash to be a
more accurate indicator of the net debt that must be repaid or
refinanced at maturity (as it gives consideration to cash resources
available to retire a portion of the debt when due). In addition,
Management evaluates adjusted total debt net of cash, which excludes
the debt that was consolidated as a result of adopting ASU Nos.
2009-16 and 2009-17, because that debt is non-recourse to the
Company and is not supported by the Company's cash flows.
Management believes that these financial measures provide a clearer
picture of the future demands on cash to repay debt and uses these
measures in making decisions regarding its borrowing capacity and
future refinancing needs. Management also evaluates adjusted total
debt net of cash for the reason stated in the previous paragraph.
A-18
SOURCE Marriott International
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