Marriott International Reports Second Quarter Results
BETHESDA, Md., July 16, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Marriott International, Inc. ("Marriott") (NYSE: MAR) today reported second quarter 2009 adjusted income from continuing operations attributable to Marriott of $84 million, a 56 percent decline over the year-ago quarter, and adjusted diluted earnings per share ("EPS") from continuing operations attributable to Marriott shareholders of $0.23, down 55 percent. The company's EPS guidance for the 2009 second quarter, disclosed on April 23, 2009, totaled $0.20 to $0.23.
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The reported income from continuing operations attributable to Marriott was $37 million in the second quarter of 2009 compared to reported income from continuing operations attributable to Marriott of $153 million in the year-ago quarter. Reported diluted EPS from continuing operations attributable to Marriott shareholders was $0.10 in the second quarter of 2009 compared to diluted EPS from continuing operations attributable to Marriott shareholders of $0.41 in the second quarter of 2008.
Adjusted results for the 2009 second quarter exclude $57 million pretax ($30 million after-tax and $0.08 per diluted share) of restructuring costs and other charges resulting from the continued soft lodging and timeshare demand environment. Restructuring costs totaled $33 million pretax and primarily included severance costs and timeshare facilities exit costs. Other charges totaled $24 million pretax primarily reflecting revaluation of residual interests from prior timeshare note sales, reserves for loan losses and guarantees and other charges. Of the total restructuring costs and other charges, cash payments are expected to be $31 million. See the table on page A-13 of the accompanying schedules for the detail of these restructuring costs and other charges and their placement on the Consolidated Statements of Income.
Adjusted results for the 2009 second quarter also exclude $17 million of non-cash charges ($0.05 per diluted share) in the provision for income taxes primarily related to the treatment of funds received from certain foreign subsidiaries that is in ongoing discussions with the Internal Revenue Service ("IRS").
Adjusted results for the 2008 second quarter exclude the $36 million ($0.10 per diluted share) impact of non-cash items included in the tax provision. These prior year items included a $24 million tax reserve related to the treatment of funds received from certain foreign subsidiaries with the remaining $12 million expense due primarily to prior years' tax adjustments, including a settlement with the IRS associated with a 1995 leasing transaction.
J.W. Marriott, Jr., chairman and chief executive officer of Marriott International, said, "In the midst of a continued difficult environment for the travel and tourism industry, our company retains its focus on driving revenue, reducing costs and strengthening the balance sheet.
"In the second quarter, we delivered impressive house profit margins as a result of ongoing cost controls and operational improvements, despite a significant decline in revenue per available room. Our efficient delivery of high quality products and services continues to get solid reviews from owners and franchisees as we manage through the difficult economy. Our 110,000-room global hotel development pipeline demonstrates owners' and franchisees' ongoing confidence in our brands and management expertise.
"Across the enterprise our lodging brands continue to show significant REVPAR premiums as our teams launch quick-to-market and focused revenue generation initiatives. Our timeshare business rolled out a successful 25(th) Anniversary stimulus promotion in the second quarter, which significantly improved timeshare contract sales compared to first quarter levels, while significant cost reductions helped the bottom line. We expect timeshare to deliver positive cash flow in 2009.
"Most importantly, both customer and associate satisfaction levels remain high in both our lodging and timeshare businesses. As a result, we remain confident in the long term prospects for our company."
In the 2009 second quarter (12-week period from March 28, 2009 to June 19, 2009), REVPAR for the company's worldwide comparable company-operated properties declined 26.1 percent (23.0 percent using constant dollars) and REVPAR for the company's worldwide comparable systemwide properties declined 23.6 percent (21.4 percent using constant dollars).
Markets outside North America were impacted by the difficult economic climate as well as concerns about the H1N1 flu. International comparable company-operated REVPAR declined 31.5 percent (22.1 percent using constant dollars), including a 22.3 percent decline in average daily rate (11.6 percent using constant dollars) in the second quarter of 2009.
In North America comparable company-operated REVPAR declined 23.4 percent and comparable systemwide REVPAR declined 21.2 percent. REVPAR at the company's comparable company-operated North American full-service and luxury hotels (including Marriott Hotels & Resorts, The Ritz-Carlton and Renaissance Hotels & Resorts) was down 23.5 percent driven by a 14.7 percent decline in average daily rate.
Marriott added 62 new properties (8,462 rooms) to its worldwide lodging portfolio in the 2009 second quarter, including the 118-room Renaissance Paris Arc de Triomphe. Three properties (861 rooms) exited the system during the quarter. At quarter-end, the company's lodging group encompassed 3,286 properties and timeshare resorts for a total of nearly 577,000 rooms. As of the end of the second quarter, the company's worldwide pipeline of hotels under construction, awaiting conversion or approved for development totaled over 110,000 rooms.
Reported results for the 2009 second quarter, the adjusted results and the associated reconciliations are shown on pages A-1 and A-13 of the accompanying schedules. The following paragraphs reflect adjusted results where indicated.
MARRIOTT REVENUES totaled approximately $2.6 billion in the 2009 second quarter compared to $3.2 billion for the second quarter of 2008. Base management and franchise fees declined 19 percent to $219 million reflecting worldwide declines in REVPAR in all brands offset in part by fees from new hotels. With continued soft lodging demand trends worldwide, second quarter incentive management fees declined 66 percent. The percentage of company-operated hotels earning incentive management fees declined to 23 percent in the 2009 second quarter compared to 58 percent in the year-ago quarter. Sixty-one percent of incentive management fees came from hotels outside of North America in the 2009 quarter compared to 37 percent in the 2008 quarter.
Worldwide comparable company-operated house profit margins declined 450 basis points in the second quarter reflecting weak REVPAR offset by continued efficiency improvements at the property level. House profit margins for comparable company-operated properties outside North America declined 310 basis points. North American comparable company-operated house profit margins declined 530 basis points from the year-ago quarter.
Owned, leased, corporate housing and other revenue, net of direct expenses, declined 54 percent in the 2009 second quarter, to $21 million, primarily reflecting weaker operating results at owned and leased properties, lower termination fees, and the impact of four hotels converting to management agreements during the second quarter of 2008, partially offset by higher branding fees.
Second quarter adjusted Timeshare segment contract sales declined 37 percent to $212 million excluding the $3 million allowance for fractional and residential contract cancellations recorded in the quarter. While demand remains soft, particularly in fractional and residential products, Marriott Vacation Club's 25(th) Anniversary marketing program was successful. Second quarter 2009 adjusted contract sales were $55 million higher than adjusted first quarter 2009 levels.
In the second quarter of 2009, adjusted Timeshare sales and services revenue declined 24 percent to $295 million and, net of expenses, declined to $16 million from $77 million in the 2008 second quarter. Adjusted results reflected lower development profit due to continued soft demand for timeshare, fractional, and residential products and an $8 million charge related to an issue with a state tax authority. Financing profit declined largely as a result of the absence of a note sale in the second quarter of 2009, compared to a $29 million note sale gain recognized in the second quarter of 2008.
Adjusted Timeshare segment results, which includes Timeshare sales and services revenue, net of direct expenses, as well as base management fees, equity earnings, noncontrolling interest and general, administrative and other expenses associated with the timeshare business, totaled $15 million in the 2009 second quarter compared to $70 million in the prior year quarter.
ADJUSTED GENERAL, ADMINISTRATIVE AND OTHER expenses for the 2009 second quarter totaled $136 million, a 26 percent decline from the year-ago quarter reflecting cost reductions throughout the organization as well as an $8 million reversal of incentive compensation accruals.
GAINS AND OTHER INCOME totaled $3 million largely related to gains on the sale of real estate. The prior year's second quarter gains totaled $9 million and included $5 million of gains on the sale of real estate, a $1 million gain from the sale of the company's interest in a joint venture and $3 million of returns from joint venture investments.
INTEREST EXPENSE decreased $10 million in the second quarter primarily due to lower interest rates on short-term borrowings and lower debt balances.
BALANCE SHEET
At the end of second quarter 2009, total debt was $2,849 million and cash balances totaled $125 million, compared to $3,095 million in debt and $134 million of cash at year-end 2008. As of the end of the second quarter 2009, Marriott had unused capacity of approximately $1.4 billion under its $2.4 billion bank revolver.
COMMON STOCK
Weighted average fully diluted shares outstanding totaled 363.5 million in the 2009 second quarter compared to 371.3 million in the year-ago quarter. The remaining share repurchase authorization, as of June 19, 2009, totaled 21.3 million shares. No share repurchases are planned in 2009.
On May 1, 2009, the Board of Directors declared the issuance of a stock dividend payable on July 30, 2009, to shareholders of record on June 25, 2009. For periods prior to the stock dividend, all share and per share data in our condensed consolidated financial statements and related notes have been retroactively adjusted to reflect the stock dividend.
OUTLOOK
While Marriott typically provides a range of guidance for future performance, the current global economic and financial climate continues to make predictions very difficult. Therefore, the company is unable to give its typical guidance. Instead, the company is providing the following assumptions which it is using for internal planning purposes. For the third quarter, the company assumes North American comparable systemwide hotel REVPAR declines of 20 to 23 percent. For comparable systemwide hotels outside North America, the company assumes REVPAR declines of 22 to 24 percent on a constant dollar basis. Total fee revenue could total $210 million to $220 million, including incentive fees of only $0 to $10 million. Owned, leased, corporate housing and other revenue, net of direct expenses, could total $0 to $5 million.
In the third quarter, the company assumes Timeshare sales and services revenue, net of direct expenses, totals about $15 million. Third quarter Timeshare contract sales could total $165 million to $175 million.
The company anticipates that general, administrative and other expenses will total about $135 million to $145 million in the third quarter of 2009, a roughly 15 percent decline from the 2008 third quarter.
Based upon the above assumptions and a 39 percent tax rate, adjusted diluted EPS from continuing operations attributable to Marriott shareholders for the 2009 third quarter could total $0.09 to $0.14.
For the full year 2009, the company expects the business climate, particularly the pricing environment, to remain very unpredictable. In addition, booking windows remain very short. For comparable systemwide hotels in North America, the company continues to assume a 17 to 20 percent decline in REVPAR for full year 2009. With continued concerns regarding the H1N1 virus and weakening economies in most international markets, the company assumes full year 2009 REVPAR declines of 17 to 20 percent for comparable systemwide hotels outside North America on a constant dollar basis.
The company expects to open over 30,000 rooms in 2009 as most hotels expected to open are already under construction or undergoing conversion from other brands. All in all, fee revenue under these assumptions could total roughly $1,030 million to $1,060 million in 2009. The company estimates that incentive management fees in 2009 would derive largely from international markets. Owned, leased, corporate housing and other revenue, net of direct expenses, could total $55 million to $60 million in 2009. The company estimates that, on a full-year basis, one point of worldwide systemwide REVPAR impacts total fees by approximately $15 million to $20 million and one point of REVPAR impacts owned, leased, corporate housing and other revenue, net of direct expenses, by roughly $4 million.
Similar to lodging, timeshare demand is difficult to predict and the business is more complex to forecast and model, particularly in this weak economic environment. In 2009, if adjusted Timeshare segment contract sales total roughly $800 million, then adjusted Timeshare sales and services revenue, net of direct expenses, could total approximately $45 million. Base management fees associated with the timeshare business are likely to increase and timeshare site, regional and corporate overhead is likely to decline in 2009. In contrast, rental rates remain weak and maintenance fees on unsold units are likely to increase. While the company expects to complete an additional timeshare note sale in 2009, pricing is likely to remain unfavorable, so no note sale gain is assumed. Under this scenario, adjusted Timeshare segment results for 2009 could total approximately $25 million. The company estimates that a $50 million change in Timeshare segment contract sales could impact Timeshare segment pretax earnings by $5 million to $10 million.
The company anticipates that adjusted general, administrative and other expenses will decline from $751 million in 2008 to about $585 million to $605 million in 2009. Further, the company anticipates a 39 percent tax rate for the second half of the year.
While the company cannot forecast results with any certainty, based upon the above assumptions, adjusted diluted EPS from continuing operations attributable to Marriott shareholders for 2009 could total $0.76 to $0.86. Assuming the investment spending levels shown below, debt levels, net of cash, are expected to decline $600 million to $650 million during 2009.
The company expects investment spending in 2009 will decline by more than 50 percent from 2008 levels to approximately $325 million to $375 million. This investment spending estimate includes $145 million to $155 million for capital expenditures and maintenance capital spending, $25 million to $35 million for net timeshare development, $80 million to $90 million in new mezzanine financing and mortgage loans, $35 million to $45 million for contract acquisition costs and $40 million to $50 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, July 16, 2009 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 16, 2010. The webcast will also be available as a podcast from the same site.
The telephone dial-in number for the conference call is 719-325-4805. A telephone replay of the conference call will be available from 1 p.m. ET, Thursday, July 16, 2009 until 8 p.m. ET, Thursday, July 23, 2009. To access the replay, call 719-457-0820. The reservation number for the recording is 8493117.
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 expected cost savings, 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 depth and duration of the current recession; supply and demand changes for hotel rooms, vacation ownership, condominiums, and corporate housing; competitive conditions in the lodging industry; relationships with clients and property owners; the availability of capital to finance hotel growth and refurbishment; and other risk factors identified in our most recent quarterly report on Form 10-Q; 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 more than 3,200 lodging properties in 66 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, The Ritz-Carlton Destination Club and Grand Residences by Marriott brands; 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 146,000 employees at 2008 year-end. It is recognized by BusinessWeek as one of the 100 best global brands, by FORTUNE(R) as one of the best companies to work for, and by the U.S. Environmental Protection Agency (EPA) as Partner of the Year since 2004. In fiscal year 2008, Marriott International reported sales from continuing operations of nearly $13 billion. For more information or reservations, please visit our web site at www.marriott.com. For an interactive online version of Marriott's 2008 Annual Report, which includes a short video message from Chairman and CEO J.W. Marriott, Jr., visit www.marriott.com/investor.
IRPR#1
Tables follow
MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
Adjustments
------------------------------------------------
As
Adjusted
As Reported Restructuring 12 Weeks
12 Weeks Costs Certain Ended
Ended & Other Tax June 19,
June 19, 2009 Charges(5) Items 2009**
------------- -------------- ------- ---------
REVENUES
Base management
fees $126 $- $- $126
Franchise fees 93 - - 93
Incentive
management fees 35 - - 35
Owned, leased,
corporate
housing and
other revenue (1) 238 - - 238
Timeshare sales
and services (2) 283 12 - 295
Cost
reimbursements (3) 1,787 - - 1,787
----- --- --- -----
Total Revenues 2,562 12 - 2,574
OPERATING COSTS
AND EXPENSES
Owned, leased
and corporate
housing - direct (4) 217 - - 217
Timeshare - direct 279 - - 279
Reimbursed costs 1,787 - - 1,787
Restructuring costs 33 (33) - -
General,
administrative and
other (6) 146 (10) - 136
--- --- --- ---
Total Expenses 2,462 (43) - 2,419
----- --- --- -----
OPERATING INCOME 100 55 - 155
Gains and
other income (7) 3 - - 3
Interest expense (28) - - (28)
Interest income 9 - - 9
(Provision for)
reversal of loan
losses (1) 1 - -
Equity in (losses)
earnings (8) (4) 1 - (3)
-- --- --- --
INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES 79 57 - 136
Provision for
income taxes (44) (27) 17 (54)
--- --- -- ---
INCOME FROM
CONTINUING OPERATIONS 35 30 17 82
Discontinued operations -
Synthetic Fuel, net of
tax (9) - - - -
--- --- --- ---
NET INCOME 35 30 17 82
Add: Net losses
attributable to
noncontrolling
interests, net of tax 2 - - 2
--- --- --- ---
NET INCOME
ATTRIBUTABLE TO
MARRIOTT $37 $30 $17 $84
=== === === ===
EARNINGS PER
SHARE - Basic
Earnings from
continuing
operations
attributable to
Marriott
shareholders (10) $0.10 $0.08 $0.05 $0.24
Earnings from
discontinued
operations (9) - - - -
--- --- --- ---
Earnings per
share
attributable to
Marriott
shareholders (10) $0.10 $0.08 $0.05 $0.24
===== ===== ===== =====
EARNINGS PER
SHARE - Diluted
Earnings from
continuing
operations
attributable to
Marriott
shareholders (10) $0.10 $0.08 $0.05 $0.23
Earnings from
discontinued
operations (9) - - - -
--- --- --- ---
Earnings per
share
attributable to
Marriott
shareholders (10) $0.10 $0.08 $0.05 $0.23
===== ===== ===== =====
Basic Shares (11) 353.7 353.7 353.7 353.7
Diluted Shares (11) 363.5 363.5 363.5 363.5
Reconciliation of
Income from
Continuing
Operations
Attributable to
Marriott:
-----------------
CONSOLIDATED
INCOME FROM
CONTINUING
OPERATIONS $35 $30 $17 $82
Add: Losses
attributable to
noncontrolling
interests, net of tax 2 - - 2
--- --- --- ---
INCOME FROM
CONTINUING
OPERATIONS
ATTRIBUTABLE
TO MARRIOTT $37 $30 $17 $84
=== === === ===
Adjustments
------------------------------------------
Percent
As Better/
Reported As (Worse)
12 Adjusted Adjusted
Weeks 12 Weeks 2009
Ended Certain Ended vs.
June 13, Tax June 13, Adjusted
2008 Items 2008** 2008
--------- ------- --------- ---------
REVENUES
Base management fees $161 $- $161 (22)
Franchise fees 110 - 110 (15)
Incentive management
fees 103 - 103 (66)
Owned, leased,
corporate
housing and
other revenue (1) 319 - 319 (25)
Timeshare
sales and
services (2) 388 - 388 (24)
Cost
reimbursements (3) 2,104 - 2,104 (15)
----- --- -----
Total
Revenues 3,185 - 3,185 (19)
OPERATING COSTS AND
EXPENSES
Owned, leased
and corporate
housing - direct (4) 273 - 273 21
Timeshare - direct 311 - 311 10
Reimbursed costs 2,104 - 2,104 15
Restructuring costs - - - *
General, administrative
and other (6) 184 - 184 26
--- --- ---
Total Expenses 2,872 - 2,872 16
----- --- -----
OPERATING INCOME 313 - 313 (50)
Gains and
other income (7) 9 - 9 (67)
Interest expense (38) - (38) 26
Interest income 9 - 9 -
(Provision
for) reversal
of loan losses - - - *
Equity in
(losses)
earnings (8) (3) - (3) -
--- --- ---
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 290 - 290 (53)
Provision for income taxes (139) 36 (103) 48
---- --- ----
INCOME FROM
CONTINUING OPERATIONS 151 36 187 (56)
Discontinued
operations -
Synthetic
Fuel, net of
tax (9) 4 - 4 (100)
--- --- ---
NET INCOME 155 36 191 (57)
Add: Net losses
attributable to
noncontrolling
interests, net
of tax 2 - 2 -
--- --- ---
NET INCOME
ATTRIBUTABLE
TO MARRIOTT $157 $36 $193 (56)
==== === ====
EARNINGS PER
SHARE -
Basic
Earnings from
continuing
operations
attributable
to Marriott
shareholders
(10) $0.43 $0.10 $0.53 (55)
Earnings from
discontinued
operations (9) 0.01 - 0.01 (100)
---- --- ----
Earnings per
share
attributable
to Marriott
shareholders
(10) $0.44 $0.10 $0.54 (56)
===== ===== =====
EARNINGS PER
SHARE - Diluted
Earnings from
continuing
operations
attributable
to Marriott
shareholders
(10) $0.41 $0.10 $0.51 (55)
Earnings from
discontinued
operations (9) 0.01 - 0.01 (100)
---- --- ----
Earnings per
share
attributable
to Marriott
shareholders
(10) $0.42 $0.10 $0.52 (56)
===== ===== =====
Basic Shares (11) 354.8 354.8 354.8
Diluted Shares (11) 371.3 371.3 371.3
Reconciliation of
Income from
Continuing
Operations
Attributable to
Marriott:
-----------------
CONSOLIDATED
INCOME FROM
CONTINUING
OPERATIONS $151 $36 $187 (56)
Add: Losses
attributable to
noncontrolling
interests, net of
tax 2 - 2 -
--- --- ---
INCOME FROM
CONTINUING
OPERATIONS
ATTRIBUTABLE
TO MARRIOTT $153 $36 $189 (56)
==== === ====
* Percent can not be calculated.
** Denotes non-GAAP financial measures. Please see page A-17 for
additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
(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 and other revenue.
(2) - Timeshare sales and services includes total timeshare revenue
except for base management fees, cost reimbursements, real estate
gains and joint venture earnings. Timeshare sales and services
also includes gains / (losses) on the sale of timeshare note
receivable securitizations.
(3) - Cost reimbursements include reimbursements from lodging
properties for Marriott-funded operating expenses.
(4) - Owned, leased and corporate housing - direct expenses include
operating expenses related to our owned or leased hotels,
including lease payments, pre-opening expenses and depreciation,
plus expenses related to our corporate housing business.
(5) - See page A-13 for information regarding Restructuring Costs
and Other Charges.
(6) - General, administrative and other expenses include the
overhead costs allocated to our segments, and our corporate
overhead costs and general expenses.
(7) - Gains and other income includes gains and losses on the sale
of real estate, gains on note sales or repayments (except
timeshare note securitizations gains), sale of joint ventures,
gains on debt extinguishment and income from cost method joint
ventures.
(8) - Equity in (losses) earnings includes our equity in (losses) /
earnings of unconsolidated equity method joint ventures.
(9) - Discontinued operations relates to our Synthetic Fuel business
which was shut down and substantially all the assets liquidated at
December 28, 2007.
(10) - 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.
(11) - All share numbers and per share amounts have been
retroactively adjusted to reflect the stock dividend that will be
distributed on July 30, 2009.
MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
Adjustments
---------------------------------------------
As As
Reported Adjusted
24 Weeks Restructuring 24 Weeks
Ended Costs Certain Ended
June 19, & Other Tax June 19,
2009 Charges (5) Items 2009**
--------- -------------- ------- ---------
REVENUES
Base management fees $251 $- $- $251
Franchise fees 181 - - 181
Incentive management fees 78 - - 78
Owned, leased, corporate
housing and other revenue (1) 458 - - 458
Timeshare sales and
services (2) 492 29 - 521
Cost reimbursements (3) 3,597 - - 3,597
----- --- --- -----
Total Revenues 5,057 29 - 5,086
OPERATING COSTS AND
EXPENSES
Owned, leased and
corporate housing -
direct (4) 424 - - 424
Timeshare - direct 499 1 - 500
Reimbursed costs 3,597 - - 3,597
Restructuring costs 35 (35) - -
General, administrative and
other (6) 320 (48) - 272
--- --- --- ---
Total Expenses 4,875 (82) - 4,793
----- --- --- -----
OPERATING INCOME 182 111 - 293
Gains and other income (7) 28 - - 28
Interest expense (57) - - (57)
Interest income 15 - - 15
(Provision for) reversal of
loan losses (43) 43 - -
Equity in (losses)
earnings (8) (38) 32 - (6)
--- --- --- ---
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 87 186 - 273
Provision for income taxes (77) (72) 43 (106)
--- --- -- ----
INCOME FROM CONTINUING
OPERATIONS 10 114 43 167
Discontinued operations -
Synthetic Fuel, net of tax
(9) - - - -
--- --- --- ---
NET INCOME 10 114 43 167
Add: Net losses
attributable to
noncontrolling interests,
net of tax 4 - - 4
--- --- --- ---
NET INCOME ATTRIBUTABLE TO
MARRIOTT $14 $114 $43 $171
=== ==== === ====
EARNINGS PER SHARE - Basic
Earnings from
continuing operations
attributable to
Marriott shareholders
(10) $0.04 $0.32 $0.12 $0.48
Earnings from
discontinued
operations (9) - - - -
--- --- --- ---
Earnings per share
attributable to
Marriott
shareholders (10) $0.04 $0.32 $0.12 $0.48
===== ===== ===== =====
EARNINGS PER SHARE -
Diluted
Earnings from
continuing operations
attributable to
Marriott shareholders (10) $0.04 $0.31 $0.12 $0.47
Earnings from
discontinued
operations (9) - - - -
--- --- --- ---
Earnings per share
attributable to
Marriott
shareholders (10) $0.04 $0.31 $0.12 $0.47
===== ===== ===== =====
Basic Shares (11) 352.7 352.7 352.7 352.7
Diluted Shares (11) 361.6 361.6 361.6 361.6
Reconciliation of Income
from Continuing
Operations Attributable
to Marriott:
------------------------
CONSOLIDATED INCOME
FROM CONTINUING
OPERATIONS $10 $114 $43 $167
Add: Losses attributable
to noncontrolling
interests, net of tax 4 - - 4
--- --- --- ---
INCOME FROM CONTINUING
OPERATIONS ATTRIBUTABLE TO
MARRIOTT $14 $114 $43 $171
=== ==== === ====
Adjustments
-----------------------------------------
Percent
As As Better/
Reported Adjusted (Worse)
24 Weeks 24 Weeks Adjusted
Ended Certain Ended 2009 vs.
June 13, Tax June 13, Adjusted
2008 Items 2008** 2008
--------- ------- --------- ---------
REVENUES
Base management fees $309 $- $309 (19)
Franchise fees 206 - 206 (12)
Incentive management fees 177 - 177 (56)
Owned, leased,
corporate housing and
other revenue (1) 589 - 589 (22)
Timeshare sales and
services (2) 714 - 714 (27)
Cost reimbursements (3) 4,137 - 4,137 (13)
----- --- -----
Total Revenues 6,132 - 6,132 (17)
OPERATING COSTS AND EXPENSES
Owned, leased and
corporate housing -
direct (4) 517 - 517 18
Timeshare - direct 624 - 624 20
Reimbursed costs 4,137 - 4,137 13
Restructuring costs - - - *
General, administrative and
other (6) 346 - 346 21
--- --- ---
Total Expenses 5,624 - 5,624 15
----- --- -----
OPERATING INCOME 508 - 508 (42)
Gains and other income (7) 12 - 12 133
Interest expense (80) - (80) 29
Interest income 20 - 20 (25)
(Provision for)
reversal of loan
losses 2 - 2 (100)
Equity in (losses)
earnings (8) 24 - 24 (125)
--- --- ---
INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES 486 - 486 (44)
Provision for income taxes (214) 36 (178) 40
---- -- ----
INCOME FROM CONTINUING
OPERATIONS 272 36 308 (46)
Discontinued operations -
Synthetic Fuel, net of
tax (9) 3 - 3 (100)
--- --- ---
NET INCOME 275 36 311 (46)
Add: Net losses
attributable to
noncontrolling interests,
net of tax 3 - 3 33
--- --- ---
NET INCOME ATTRIBUTABLE TO
MARRIOTT $278 $36 $314 (46)
==== === ====
EARNINGS PER SHARE - Basic
Earnings from
continuing operations
attributable to
Marriott shareholders
(10) $0.77 $0.10 $0.87 (45)
Earnings from
discontinued
operations (9) 0.01 - 0.01 (100)
---- --- ----
Earnings per share
attributable to Marriott
shareholders (10) $0.78 $0.10 $0.88 (45)
===== ===== =====
EARNINGS PER SHARE - Diluted
Earnings from
continuing operations
attributable to
Marriott shareholders (10) $0.74 $0.10 $0.83 (43)
Earnings from
discontinued
operations (9) 0.01 - 0.01 (100)
---- --- ----
Earnings per share
attributable to Marriott
shareholders (10) $0.75 $0.10 $0.84 (44)
===== ===== =====
Basic Shares (11) 355.2 355.2 355.2
Diluted Shares (11) 372.5 372.5 372.5
Reconciliation of Income from
Continuing Operations
Attributable to Marriott:
-----------------------------
CONSOLIDATED INCOME
FROM CONTINUING
OPERATIONS $272 $36 $308 (46)
Add: Losses attributable to
noncontrolling interests,
net of tax 3 - 3 33
--- --- ---
INCOME FROM CONTINUING
OPERATIONS ATTRIBUTABLE
TO MARRIOTT $275 $36 $311 (45)
==== === ====
* Percent can not be calculated.
** Denotes non-GAAP financial measures. Please see page A-17 for
additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
(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 and other revenue.
(2) - Timeshare sales and services includes total timeshare revenue
except for base management fees, cost reimbursements, real estate
gains and joint venture earnings. Timeshare sales and services
also includes gains / (losses) on the sale of timeshare note
receivable securitizations.
(3) - Cost reimbursements include reimbursements from lodging properties
for Marriott-funded operating expenses.
(4) - Owned, leased and corporate housing - direct expenses include
operating expenses related to our owned or leased hotels,
including lease payments, pre-opening expenses and depreciation,
plus expenses related to our corporate housing business.
(5) - See page A-13 for information regarding Restructuring Costs and
Other Charges.
(6) - General, administrative and other expenses include the overhead
costs allocated to our segments, and our corporate overhead costs
and general expenses.
(7) - Gains and other income includes gains and losses on the sale of
real estate, gains on note sales or repayments (except timeshare
note securitizations gains), sale of joint ventures, gains on debt
extinguishment and income from cost method joint ventures.
(8) - Equity in (losses) earnings includes our equity in (losses) /
earnings of unconsolidated equity method joint ventures.
(9) - Discontinued operations relates to our Synthetic Fuel business
which was shut down and substantially all the assets liquidated at
December 28, 2007.
(10) - 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.
(11) - All share numbers and per share amounts have been retroactively
adjusted to reflect the stock dividend that will be distributed on
July 30, 2009.
MARRIOTT INTERNATIONAL, INC.
BUSINESS SEGMENTS
($ IN MILLIONS)
Twelve Weeks
Ended
----------------- Percent
June 19, June 13, Better/
2009 2008 (Worse)
-------- -------- -------
REVENUES
North American Full-Service $1,142 $1,371 (17)
North American Limited-Service 471 538 (12)
International 250 399 (37)
Luxury 324 403 (20)
Timeshare 355 461 (23)
--- ---
Total segment revenues (1) 2,542 3,172 (20)
Other unallocated corporate 20 13 54
--- ---
Total $2,562 $3,185 (20)
====== ======
INCOME / (LOSS) FROM CONTINUING OPERATIONS
North American Full-Service $71 $129 (45)
North American Limited-Service 72 112 (36)
International (2) 27 65 (58)
Luxury 15 23 (35)
Timeshare (2) (35) 70 (150)
--- ---
Total segment financial results 1 150 399 (62)
Other unallocated corporate (47) (77) 39
Interest income, provision for loan losses
and interest expense (20) (29) 31
Income taxes (2) (46) (140) 67
--- ----
Total $37 $153 (76)
=== ====
(1) We consider segment revenues and segment financial results to be
meaningful indicators of our performance because they
measure changes in our profitability as a lodging company and enable
investors to compare the revenues and results of our
lodging operations to those of other lodging companies.
(2) We allocate noncontrolling interests of our consolidated
subsidiaries to our segments. Accordingly, we allocated $2 million
of noncontrolling interests of our consolidated subsidiaries for the
2009 second quarter as reflected in our income statement
as follows: $4 million to our Timeshare segment and $(2) million to
provision for income taxes. For the 2008 second quarter,
we allocated $2 million of noncontrolling interests as follows: $4
million to our Timeshare segment, $(1) million to our International
segment, and $(1) million to provision for income taxes.
MARRIOTT INTERNATIONAL, INC.
BUSINESS SEGMENTS
($ IN MILLIONS)
Twenty-Four
Weeks Ended
----------------- Percent
June 19, June 13, Better/
2009 2008 (Worse)
-------- -------- -------
REVENUES
North American Full-Service $2,308 $2,678 (14)
North American Limited-Service 912 1,026 (11)
International 497 751 (34)
Luxury 675 790 (15)
Timeshare 632 863 (27)
--- ---
Total segment revenues (1) 5,024 6,108 (18)
Other unallocated corporate 33 24 38
--- ---
Total $5,057 $6,132 (18)
====== ======
INCOME / (LOSS) FROM CONTINUING OPERATIONS
North American Full-Service $140 $224 (38)
North American Limited-Service 105 198 (47)
International (2) 64 129 (50)
Luxury (7) 49 (114)
Timeshare (2) (52) 74 (170)
--- ---
Total segment financial results (1) 250 674 (63)
Other unallocated corporate (71) (125) 43
Interest income, provision for loan losses
and interest expense (85) (58) (47)
Income taxes (2) (80) (216) 63
--- ----
Total $14 $275 (95)
=== ====
(1) We consider segment revenues and segment financial results to be
meaningful indicators of our performance because they measure
changes in our profitability as a lodging company and enable
investors to compare the revenues and results of our lodging
operations to those of other lodging companies.
(2) We allocate noncontrolling interests of our consolidated
subsidiaries to our segments. Accordingly, we allocated $4 million
of noncontrolling interests of our consolidated subsidiaries for the
2009 second quarter year-to-date as reflected in our income
statement as follows: $7 million to our Timeshare segment and $(3)
million to provision for income taxes. For the 2008 second quarter
year-to-date, we allocated noncontrolling interests of $3 million as
follows: $6 million to our Timeshare segment, $(1) million to our
International segment, and $(2) million to provision for income
taxes.
MARRIOTT INTERNATIONAL, INC.
TOTAL LODGING PRODUCTS (1)
Number of Properties
------------------------------------
June 19, June 13, vs. June 13,
Brand 2009 2008 2008
----- --------- --------- -------------
Domestic Full-Service
---------------------
Marriott Hotels & Resorts 349 344 5
Renaissance Hotels & Resorts 77 76 1
Domestic Limited-Service
------------------------
Courtyard 747 708 39
Fairfield Inn 589 536 53
SpringHill Suites 226 195 31
Residence Inn 567 534 33
TownePlace Suites 173 152 21
International
-------------
Marriott Hotels & Resorts 187 179 8
Renaissance Hotels & Resorts 67 64 3
Courtyard 87 77 10
Fairfield Inn 9 9 -
SpringHill Suites 1 1 -
Residence Inn 18 18 -
Marriott Executive Apartments 21 19 2
Luxury
------
The Ritz-Carlton - Domestic 37 36 1
The Ritz-Carlton - International 33 33 -
Bulgari Hotels & Resorts 2 2 -
The Ritz-Carlton Residential 24 21 3
The Ritz-Carlton
Serviced Apartments 3 2 1
Timeshare (2)
-------------
Marriott Vacation Club (3) 52 50 2
The Ritz-Carlton
Club -Fractional 10 7 3
The Ritz-Carlton
Club -Residential 3 3 -
Grand Residences
by Marriott -
Fractional 2 2 -
Grand Residences
by Marriott - Residential 2 1 1
--- --- ---
Sub Total Timeshare 69 63 6
--- --- ---
Total 3,286 3,069 217
===== ===== ===
Number of Rooms/Suites
----------------------
June 19, June 13, vs. June 13
Brand 2009 2008 2008
----- ---------- ---------- ---------
Domestic Full-Service
---------------------
Marriott Hotels & Resorts 138,945 137,130 1,815
Renaissance Hotels & Resorts 28,197 27,721 476
Domestic Limited-Service
------------------------
Courtyard 104,657 98,901 5,756
Fairfield Inn 52,450 47,572 4,878
SpringHill Suites 26,044 22,718 3,326
Residence Inn 67,814 63,843 3,971
TownePlace Suites 17,359 15,195 2,164
International
-------------
Marriott Hotels & Resorts 56,514 52,457 4,057
Renaissance Hotels & Resorts 22,698 21,118 1,580
Courtyard 17,110 14,576 2,534
Fairfield Inn 1,109 1,111 (2)
SpringHill Suites 124 124 -
Residence Inn 2,604 2,611 (7)
Marriott Executive Apartments 3,412 3,029 383
Luxury
------
The Ritz-Carlton - Domestic 11,549 11,437 112
The Ritz-Carlton - International 10,117 10,171 (54)
Bulgari Hotels & Resorts 117 117 -
The Ritz-Carlton
Residential 2,539 2,122 417
The Ritz-Carlton
Serviced Apartments 474 387 87
Timeshare (2)
-------------
Marriott Vacation Club (3) 11,858 11,625 233
The Ritz-Carlton
Club -Fractional 461 388 73
The Ritz-Carlton
Club -Residential 150 145 5
Grand Residences by
Marriott -Fractional 241 248 (7)
Grand Residences
by Marriott - Residential 91 65 26
--- --- ---
Sub Total Timeshare 12,801 12,471 330
------ ------ ---
Total 576,634 544,811 31,823
======= ======= ======
Number of Timeshare Interval, Fractional and Residential
Resorts
--------------------------------------------------------
Total Properties in
Properties (2) Active Sales (4)
------------- ---------------
100% Company-Developed
----------------------
Marriott Vacation Club (3) 52 29
The Ritz-Carlton Club and
Residences 10 8
Grand Residences by Marriott and
Residences 4 4
Joint Ventures
--------------
The Ritz-Carlton Club and Residences 3 3
--- ---
Total 69 44
=== ===
(1) Total Lodging Products excludes the 2,142 and 2,225 corporate
housing rental units as of June 19, 2009 and June 13, 2008,
respectively.
(2) Includes products that are in active sales as well as those that are
sold out. We include residential products 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.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
Constant $
Comparable Company-Operated International Properties (1)
-------------------------------------------------------
Three Months Ended May 31, 2009 and May 31, 2008
--------------------------------------------
REVPAR Occupancy
------------------ ----------------------
Region 2009 vs. 2008 2009 vs. 2008
------ ------------------ ----------------------
Caribbean & Latin America $124.51 -23.5% 67.9% -11.2% pts.
Continental Europe $102.98 -18.6% 66.6% -5.9% pts.
United Kingdom $92.61 -15.2% 72.1% -5.3% pts.
Middle East & Africa $100.59 -22.2% 72.8% -12.7% pts.
Asia Pacific (2) $73.57 -28.9% 59.6% -12.0% pts.
Regional Composite (3) $97.23 -21.2% 66.8% -8.5% pts.
International Luxury (4) $188.29 -26.1% 57.5% -11.8% pts.
Total International (5) $106.80 -22.1% 65.8% -8.9% pts.
Worldwide (6) $100.67 -23.0% 66.9% -8.2% pts.
Three Months
Ended May 31, 2009 and May 31, 2008
-----------------
Average Daily Rate
-----------------
Region 2009 vs. 2008
------ -----------------
Caribbean & Latin America $183.40 -10.8%
Continental Europe $154.59 -11.4%
United Kingdom $128.51 -9.0%
Middle East & Africa $138.09 -8.7%
Asia Pacific (2) $123.43 -14.5%
Regional Composite (3) $145.61 -11.1%
International Luxury (4) $327.22 -10.9%
Total International (5) $162.31 -11.6%
Worldwide (6) $150.59 -13.6%
Comparable Systemwide International Properties (1)
-------------------------------------------------
Three Months Ended May 31, 2009 and May 31, 2008
------------------------------------------
REVPAR Occupancy
---------------- --------------------
Region 2009 vs. 2008 2009 vs. 2008
------ ---------------- --------------------
Caribbean & Latin America $108.33 -23.4% 64.3% -10.2% pts.
Continental Europe $100.57 -19.6% 64.3% -7.0% pts.
United Kingdom $90.20 -15.6% 70.7% -5.6% pts.
Middle East & Africa $100.59 -22.2% 72.8% -12.7% pts.
Asia Pacific (2) $78.31 -26.7% 61.5% -11.0% pts.
Regional Composite (3) $95.22 -21.4% 65.4% -8.6% pts.
International Luxury (4) $188.29 -26.1% 57.5% -11.8% pts.
Total International (5) $103.26 -22.2% 64.7% -8.9% pts.
Worldwide (6) $86.09 -21.4% 66.1% -7.5% pts.
Three Months
Ended May 31,
2009 and May 31,
2008
------------------
Average Daily
Rate
------------------
Region 2009 vs. 2008
------ ------------------
Caribbean & Latin America $168.35 -11.3%
Continental Europe $156.52 -10.9%
United Kingdom $127.66 -9.0%
Middle East & Africa $138.09 -8.7%
Asia Pacific (2) $127.39 -13.6%
Regional Composite(3) $145.56 -11.1%
International Luxury (4) $327.22 -10.9%
Total International (5) $159.51 -11.5%
Worldwide (6) $130.17 -12.4%
(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 & Resorts and Courtyard brands. Includes Hawaii.
(4) International Luxury includes The Ritz-Carlton properties outside of
North America and Bulgari Hotels & Resorts.
(5) Includes Regional Composite and International Luxury.
(6) Includes international statistics for the three calendar months ended
May 31, 2009 and May 31, 2008, and North American statistics for the
twelve weeks ended June 19, 2009 and June 13, 2008. Includes the
Marriott Hotels & Resorts, Renaissance Hotels & Resorts, The Ritz-
Carlton, Bulgari Hotels & Resorts, Residence Inn, Courtyard,
Fairfield Inn, TownePlace Suites and SpringHill Suites brands.
Comparable Company-Operated International Properties (1)
-------------------------------------------------------
Five Months Ended May 31, 2009 and May 31, 2008
-------------------------------------------
REVPAR Occupancy
----------------- ---------------------
Region 2009 vs. 2008 2009 vs. 2008
------ ----------------- ---------------------
Caribbean & Latin America $131.99 -19.9% 68.4% -10.2% pts.
Continental Europe $96.30 -18.9% 61.4% -7.1% pts.
United Kingdom $88.25 -15.0% 68.5% -5.4% pts.
Middle East & Africa $101.69 -17.9% 70.4% -11.5% pts.
Asia Pacific (2) $75.17 -26.2% 59.2% -11.1% pts.
Regional Composite (3) $96.22 -19.7% 64.3% -8.4% pts.
International Luxury (4) $189.56 -22.8% 57.0% -10.7% pts.
Total International (5) $106.04 -20.2% 63.5% -8.7% pts.
Worldwide (6) $97.82 -20.7% 63.8% -7.9% pts.
Five Months
Ended May 31,
2009 and May 31,
2008
-----------------
Average Daily
Rate
-----------------
Region 2009 vs. 2008
------ -----------------
Caribbean & Latin America $192.99 -7.9%
Continental Europe $156.88 -9.6%
United Kingdom $128.88 -8.3%
Middle East & Africa $144.49 -4.5%
Asia Pacific (2) $127.02 -12.4%
Regional Composite (3) $149.68 -9.1%
International Luxury (4) $332.67 -8.2%
Total International (5) $166.94 -9.3%
Worldwide (6) $153.32 -11.0%
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
Constant $
Comparable Systemwide International Properties (1)
-------------------------------------------------
Five Months Ended May 31, 2009 and May 31, 2008
-------------------------------------------
REVPAR Occupancy
----------------- ---------------------
Region 2009 vs. 2008 2009 vs. 2008
------ ----------------- ---------------------
Caribbean & Latin America $112.86 -19.8% 64.0% -8.9% pts.
Continental Europe $94.11 -19.2% 59.4% -7.7% pts.
United Kingdom $86.00 -15.4% 67.1% -5.7% pts.
Middle East & Africa $101.69 -17.9% 70.4% -11.5% pts.
Asia Pacific (2) $80.52 -23.8% 60.5% -10.3% pts.
Regional Composite (3) $94.13 -19.6% 62.8% -8.4% pts.
International Luxury (4) $189.56 -22.8% 57.0% -10.7% pts.
Total International (5) $102.33 -20.1% 62.3% -8.6% pts.
Worldwide (6) $83.43 -19.1% 63.2% -6.9% pts.
Five Months
Ended May 31,
2009 and May 31,
2008
-----------------
Average Daily
Rate
-----------------
Region 2009 vs. 2008
------ -----------------
Caribbean & Latin America $176.23 -8.6%
Continental Europe $158.38 -8.8%
United Kingdom $128.19 -8.2%
Middle East & Africa $144.49 -4.5%
Asia Pacific (2) $133.06 -10.8%
Regional Composite (3) $149.82 -8.8%
International Luxury (4) $332.67 -8.2%
Total International (5) $164.19 -9.0%
Worldwide (6) $132.00 -10.2%
(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 & Resorts and Courtyard brands. Includes Hawaii.
(4) International Luxury includes The Ritz-Carlton properties outside of
North America and Bulgari Hotels & Resorts.
(5) Includes Regional Composite and International Luxury.
(6) Includes international statistics for the five calendar months ended
May 31, 2009 and May 31, 2008, and North American statistics for the
twenty-four weeks ended June 19, 2009 and June 13, 2008. Includes
the Marriott Hotels & Resorts, Renaissance Hotels & Resorts, The
Ritz-Carlton, Bulgari Hotels & Resorts, Residence Inn, Courtyard,
Fairfield Inn, TownePlace Suites and SpringHill Suites brands.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
Comparable Company-Operated North American Properties (1)
--------------------------------------------------------
Twelve Weeks Ended June 19, 2009 and
June 13, 2008
--------------------------------------
REVPAR Occupancy
---------------- -------------------
Brand 2009 vs. 2008 2009 vs. 2008
----- ---------------- -------------------
Marriott Hotels & Resorts $109.81 -22.0% 68.6% -7.2% pts.
Renaissance Hotels &
Resorts $107.73 -20.8% 68.1% -7.1% pts.
Composite North American
Full-Service (2) $109.45 -21.8% 68.5% -7.1% pts.
The Ritz-Carlton (3) $185.34 -31.4% 61.9% -13.9% pts.
Composite North American
Full-Service &
Luxury (4) $117.05 -23.5% 67.9% -7.8% pts.
Residence Inn $82.78 -18.9% 71.8% -7.6% pts.
Courtyard $70.91 -25.8% 64.2% -8.5% pts.
TownePlace Suites $49.42 -20.8% 63.6% -8.0% pts.
SpringHill Suites $65.26 -21.9% 65.9% -9.3% pts.
Composite North American
Limited-Service (5) $72.58 -23.3% 66.5% -8.2% pts.
Composite - All (6) $98.17 -23.4% 67.3% -8.0% pts.
Twelve Weeks
Ended June 19,
2009 and June
13, 2008
-----------------
Average Daily
Rate
-----------------
Brand 2009 vs. 2008
----- -----------------
Marriott Hotels & Resorts $159.98 -13.8%
Renaissance Hotels & Resorts $158.24 -12.6%
Composite North American Full-Service (2) $159.69 -13.6%
The Ritz-Carlton (3) $299.28 -16.1%
Composite North American Full-Service &
Luxury (4) $172.45 -14.7%
Residence Inn $115.31 -10.4%
Courtyard $110.53 -16.0%
TownePlace Suites $77.69 -10.8%
SpringHill Suites $99.00 -10.9%
Composite North American Limited-Service (5) $109.19 -13.9%
Composite - All (6) $145.91 -14.4%
Comparable Systemwide North American Properties (1)
--------------------------------------------------
Twelve Weeks Ended June 19, 2009 and June
13, 2008
-------------------------------------------
REVPAR Occupancy
----------------- ---------------------
Brand 2009 vs. 2008 2009 vs. 2008
----- ----------------- ---------------------
Marriott Hotels & Resorts $96.16 -22.1% 65.5% -7.3% pts.
Renaissance Hotels & Resorts $95.05 -20.6% 66.0% -6.8% pts.
Composite North American
Full-Service (2) $95.97 -21.8% 65.6% -7.2% pts.
The Ritz-Carlton (3) $185.34 -31.4% 61.9% -13.9% pts.
Composite North American Full-
Service & Luxury (4) $101.30 -23.0% 65.4% -7.6% pts.
Residence Inn $82.71 -17.4% 72.3% -6.6% pts.
Courtyard $73.68 -22.0% 65.8% -7.3% pts.
Fairfield Inn $54.60 -17.1% 63.9% -6.8% pts.
TownePlace Suites $53.43 -18.0% 65.1% -7.5% pts.
SpringHill Suites $65.71 -18.2% 65.5% -7.2% pts.
Composite North American
Limited-Service (5) $70.60 -19.5% 67.1% -7.1% pts.
Composite - All (6) $82.63 -21.2% 66.4% -7.3% pts.
Twelve Weeks
Ended June 19,
2009 and June
13, 2008
---------------
Average Daily
Rate
-----------------
Brand 2009 vs. 2008
----- -----------------
Marriott Hotels & Resorts $146.79 -13.4%
Renaissance Hotels & Resorts $143.92 -12.3%
Composite North American Full-Service (2) $146.31 -13.3%
The Ritz-Carlton (3) $299.28 -16.1%
Composite North American Full-Service &
Luxury (4) $154.95 -14.1%
Residence Inn $114.39 -9.9%
Courtyard $111.93 -13.3%
Fairfield Inn $85.46 -8.2%
TownePlace Suites $82.05 -8.6%
SpringHill Suites $100.29 -9.2%
Composite North American Limited-Service (5) $105.23 -11.0%
Composite - All (6) $124.41 -12.6%
(1) North America includes properties located in the Continental
United States and Canada.
(2) Includes the Marriott Hotels & Resorts, and Renaissance Hotels
& Resorts brands.
(3) Statistics for The Ritz-Carlton are for March through May.
(4) Includes the Marriott Hotels & Resorts, Renaissance Hotels &
Resorts and The Ritz-Carlton brands.
(5) Includes the Residence Inn, Courtyard, Fairfield Inn,
TownePlace Suites and SpringHill Suites brands.
(6) Includes the Marriott Hotels & Resorts, Renaissance Hotels &
Resorts, The Ritz-Carlton, Residence Inn, Courtyard, Fairfield Inn,
TownePlace Suites, and SpringHill Suites brands.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
Comparable Company-Operated North American Properties (1)
--------------------------------------------------------
Twenty-four Weeks Ended June 19, 2009 and
June 13, 2008
-------------------------------------------
REVPAR Occupancy
----------------- ---------------------
Brand 2009 vs. 2008 2009 vs. 2008
----- ----------------- ---------------------
Marriott Hotels & Resorts $106.72 -19.2% 65.2% -6.6% pts.
Renaissance Hotels & Resorts $106.46 -16.9% 65.3% -6.6% pts.
Composite North American
Full-Service (2) $106.68 -18.8% 65.2% -6.6% pts.
The Ritz-Carlton (3) $185.85 -29.6% 59.9% -13.5% pts.
Composite North American Full-
Service & Luxury (4) $113.31 -20.5% 64.8% -7.2% pts.
Residence Inn $80.68 -17.8% 68.2% -7.6% pts.
Courtyard $69.19 -23.8% 60.4% -8.2% pts.
TownePlace Suites $49.09 -18.8% 60.3% -8.0% pts.
SpringHill Suites $62.61 -21.7% 60.9% -9.8% pts.
Composite North American
Limited-Service (5) $70.74 -21.7% 62.7% -8.1% pts.
Composite - All (6) $95.05 -20.9% 63.9% -7.6% pts.
Twenty-four
Weeks Ended June
19, 2009 and
June 13, 2008
-----------------
Average Daily
Rate
-----------------
Brand 2009 vs. 2008
----- -----------------
Marriott Hotels & Resorts $163.64 -11.0%
Renaissance Hotels & Resorts $163.04 -8.5%
Composite North American Full-Service (2) $163.53 -10.6%
The Ritz-Carlton (3) $310.14 -13.7%
Composite North American Full-Service &
Luxury (4) $174.89 -11.7%
Residence Inn $118.35 -8.6%
Courtyard $114.46 -13.4%
TownePlace Suites $81.38 -8.1%
SpringHill Suites $102.73 -9.1%
Composite North American Limited-Service (5) $112.80 -11.6%
Composite - All (6) $148.74 -11.5%
Comparable Systemwide North American Properties (1)
--------------------------------------------------
Twenty-four Weeks Ended June 19, 2009 and
June 13, 2008
-------------------------------------------
REVPAR Occupancy
----------------- ----------------------
Brand 2009 vs. 2008 2009 vs. 2008
----- ----------------- ----------------------
Marriott Hotels &
Resorts $94.22 -19.4% 62.6% -6.6% pts.
Renaissance Hotels &
Resorts $94.07 -17.3% 63.2% -6.5% pts.
Composite North
American Full-
Service (2) $94.19 -19.1% 62.7% -6.6% pts.
The Ritz-Carlton (3) $185.85 -29.6% 59.9% -13.5% pts.
Composite North
American Full-
Service & Luxury (4) $98.74 -20.2% 62.6% -6.9% pts.
Residence Inn $81.04 -15.5% 69.5% -6.0% pts.
Courtyard $71.43 -19.7% 62.4% -6.6% pts.
Fairfield Inn $51.97 -16.0% 60.3% -6.3% pts.
TownePlace Suites $52.38 -16.4% 61.9% -7.3% pts.
SpringHill Suites $64.02 -16.3% 62.4% -6.6% pts.
Composite North
American Limited-
Service (5) $68.54 -17.5% 63.8% -6.4% pts.
Composite - All (6) $80.28 -18.8% 63.4% -6.6% pts.
Twenty-four
Weeks Ended June
19, 2009 and
June 13, 2008
-----------------
Average Daily
Rate
-----------------
Brand 2009 vs. 2008
----- -----------------
Marriott Hotels & Resorts $150.39 -11.0%
Renaissance Hotels & Resorts $148.80 -8.8%
Composite North American Full-Service (2) $150.12 -10.6%
The Ritz-Carlton (3) $310.14 -13.7%
Composite North American Full-Service &
Luxury (4) $157.73 -11.4%
Residence Inn $116.61 -8.2%
Courtyard $114.40 -11.2%
Fairfield Inn $86.24 -7.2%
TownePlace Suites $84.68 -6.5%
SpringHill Suites $102.64 -7.5%
Composite North American Limited-Service (5) $107.38 -9.2%
Composite - All (6) $126.71 -10.3%
(1) North America includes properties located in the Continental United
States and Canada.
(2) Includes the Marriott Hotels & Resorts, and Renaissance Hotels &
Resorts brands.
(3) Statistics for The Ritz-Carlton are for January through May.
(4) Includes the Marriott Hotels & Resorts, Renaissance Hotels & Resorts
and The Ritz-Carlton brands.
(5) Includes the Residence Inn, Courtyard, Fairfield Inn, TownePlace
Suites and SpringHill Suites brands.
(6) Includes the Marriott Hotels & Resorts, Renaissance Hotels & Resorts,
The Ritz-Carlton, Residence Inn, Courtyard, Fairfield Inn, TownePlace
Suites, and SpringHill Suites brands.
MARRIOTT INTERNATIONAL, INC.
TIMESHARE SEGMENT
($ in millions)
Adjustments
------------
As Reported Restructuring As Adjusted
12 Weeks Ended Costs & Other 12 Weeks Ended
June 19, 2009 Charges June 19, 2009**
---------------- ------------- ----------- --------------
Segment Revenues
----------------
Segment revenues $355 $12 $367
==== === ====
---------------
Segment Results
---------------
Base fees revenue $11 $- $11
Timeshare sales and
services, net 4 12 16
Restructuring costs (30) 30 -
Joint venture equity
earnings (1) 1 -
Noncontrolling interest 4 - 4
General, administrative
and other expense (23) 7 (16)
--- --- ---
Segment results $(35) $50 $15
==== === ===
--------------------------
Sales and Services Revenue
--------------------------
Development $182 $- $182
Services 80 - 80
Financing 14 12 26
Other revenue 7 - 7
--- --- ---
Sales and services
revenue $283 $12 $295
==== === ====
--------------
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
==== === ====
---------------------------
(Loss) / Gain on Notes Sold
---------------------------
(Loss) / gain on notes sold $- $- $-
== == ==
Percent Better /
As Reported (Worse) as Adjusted
12 Weeks Ended 2009 vs. 2008
June 13, 2008 As Reported
---------------- ------------- -----------
Segment Revenues
----------------
Segment revenues $461 (20)
====
---------------
Segment Results
---------------
Base fees revenue $12 (8)
Timeshare sales and
services, net 77 (79)
Restructuring costs - *
Joint venture equity earnings 2 (100)
Noncontrolling interest 4 -
General, administrative and
other expense (25) 36
---
Segment results $70 (79)
===
--------------------------
Sales and Services Revenue
--------------------------
Development $252 (28)
Services 79 1
Financing 49 (47)
Other revenue 8 (13)
-
Sales and services revenue $388 (24)
====
--------------
Contract Sales
--------------
Company:
Timeshare $291 (31)
Fractional 8 13
Residential 27 (93)
---
Total company 326 (35)
Joint ventures:
Timeshare - *
Fractional 6 (83)
Residential 2 (100)
---
Total joint ventures 8 (88)
---
Total contract sales, including
joint ventures $334 (37)
====
---------------------------
(Loss) / Gain on Notes Sold
---------------------------
(Loss) / gain on notes sold $29 (100)
===
* Percent can not be calculated.
** Denotes non-GAAP financial measures. Please see page A-17 for
additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
MARRIOTT INTERNATIONAL, INC.
TIMESHARE SEGMENT
($ in millions)
Adjustments
-------------
As Reported Restructuring As Adjusted
24 Weeks Ended Costs & Other 24 Weeks Ended
June 19, 2009 Charges June 19, 2009 **
---------------- -------------- ----------- ----------------
Segment Revenues
----------------
Segment revenues $632 $29 $661
==== === ====
---------------
Segment Results
---------------
Base fees revenue $21 $- $21
Timeshare sales and
services, net (7) 28 21
Restructuring costs (31) 31 -
Joint venture
equity earnings (2) 2 -
Noncontrolling
interest 7 - 7
General,
administrative and
other expense (40) 7 (33)
--- - ---
Segment results $(52) $68 $16
==== === ===
------------------
Sales and Services
Revenue
------------------
Development $303 $4 $307
Services 150 - 150
Financing 27 25 52
Other revenue 12 - 12
--- --- ---
Sales and services revenue $492 $29 $521
==== === ====
--------------
Contract Sales
--------------
Company:
Timeshare $338 $- $338
Fractional 18 1 19
Residential (3) 4 1
--- --- ---
Total company 353 5 358
Joint ventures:
Timeshare - - -
Fractional (5) 16 11
Residential (10) 10 -
--- -- --
Total joint
ventures (15) 26 11
--- -- --
Total contract
sales, including
joint ventures $338 $31 $369
==== === ====
---------------------------
(Loss) / Gain on Notes Sold
---------------------------
(Loss) / gain on notes sold $(1) $- $(1)
=== == ===
Percent Better /
As Reported (Worse) As Adjusted
24 Weeks Ended 2009 vs. 2008
June 13, 2008 As Reported
---------------- ------------- -----------
Segment Revenues
----------------
Segment revenues $863 (23)
====
---------------
Segment Results
---------------
Base fees revenue $23 (9)
Timeshare sales and
services, net 90 (77)
Restructuring costs - *
Joint venture equity earnings 7 (100)
Noncontrolling
interest 6 17
General, administrative
and other expense (52) 37
---
Segment results $74 (78)
===
--------------------------
Sales and Services Revenue
--------------------------
Development $457 (33)
Services 163 (8)
Financing 76 (32)
Other revenue 18 (33)
--
Sales and services revenue $714 (27)
====
--------------
Contract Sales
--------------
Company:
Timeshare $576 (41)
Fractional 16 19
Residential 39 (97)
--
Total company 631 (43)
Joint ventures:
Timeshare - *
Fractional 11 -
Residential 25 (100)
--
Total joint ventures 36 (69)
--
Total contract sales,
including joint ventures $667 (45)
====
---------------------------
(Loss) / Gain on Notes Sold
---------------------------
(Loss) / gain on notes sold $29 (103)
===
* Percent can not be calculated.
** Denotes non-GAAP financial measures. Please see page A-17 for
additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure
EBITDA and Adjusted EBITDA
($ in millions)
Fiscal Year 2009
----------------------------------
First Second Total Year
Quarter Quarter to Date
-------- -------- ---------
Net (Loss) / Income
attributable to Marriott $(23) $37 $14
Interest expense 29 28 57
Tax provision, continuing
operations 33 44 77
Tax provision, noncontrolling
interest 1 2 3
Depreciation and amortization 39 42 81
Less: Depreciation
reimbursed by third-party
owners (2) (2) (4)
Interest expense from
unconsolidated joint ventures 3 6 9
Depreciation and amortization
from unconsolidated joint
ventures 6 6 12
-- -- --
EBITDA ** $86 $163 $249
Restructuring costs and other
charges
Severance 2 10 12
Facilities exit costs - 22 22
Development
cancellations - 1 1
-- -- --
Total restructuring costs 2 33 35
-- -- --
Impairment of investments
and other, net of prior
year reserves 68 3 71
Reserves for loan
losses 42 1 43
Contract cancellation
allowances 4 1 5
Residual interests
valuation 13 12 25
System development write-off - 7 7
-- -- --
Total other charges 127 24 151
--- -- ---
Total restructuring costs and
other charges 129 57 186
--- -- ---
Adjusted EBITDA ** $215 $220 $435
==== ==== ====
Decrease over 2008 Adjusted EBITDA -25% -43% -35%
Fiscal Year 2008
------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- -------- -------- -------- -----
Net Income/
(Loss)
attributable to
Marriott $121 $157 $94 $(10) $362
Interest expense 42 38 33 50 163
Tax provision,
continuing
operations 75 139 103 33 350
Tax provision,
minority
interest 1 1 5 2 9
Tax benefit,
synthetic fuel - (6) (1) - (7)
Depreciation and
amortization 41 47 42 60 190
Less:
Depreciation
reimbursed by
third-party
owners (3) (3) (2) (2) (10)
Interest expense
from
unconsolidated
joint ventures 4 4 5 5 18
Depreciation and
amortization from
unconsolidated
joint ventures 5 6 6 10 27
--- --- --- -- --
EBITDA ** $286 $383 $285 $148 $1,102
Discontinued
operations
adjustment
(synthetic fuel) 1 2 1 - 4
Restructuring costs
and other charges
Severance - - - 19 19
Facilities
exit costs - - - 5 5
Development
cancellations - - - 31 31
--- --- --- -- --
Total
restructuring
costs - - - 55 55
--- --- --- -- --
Reserves for
expected
fundings - - - 16 16
Inventory
write-downs - - - 9 9
Contract
cancellation
allowances - - - 12 12
Accounts
receivable-
bad debts - - - 4 4
Residual
interests
valuation - - - 32 32
Hedge
ineffectiveness - - - 12 12
Impairment of
investments
and other - - - 30 30
Reserves
for loan
losses - - - 22 22
--- --- --- -- --
Total
other
charges - - - 137 137
--- --- --- --- ---
Total
restructuring
costs and
other charges - - - 192 192
--- --- --- --- ---
Adjusted EBITDA ** $287 $385 $286 $340 $1,298
==== ==== ==== ==== ======
The following
items make up the
discontinued
operationsadjustment
(synthetic fuel)
Pre-tax Synthetic
Fuel losses $1 $2 $1 $- $4
-- -- -- -- --
EBITDA adjustment for
discontinued
operations
(synthetic fuel) $1 $2 $1 $- $4
== == == == ==
** Denotes non-GAAP financial measures. Please see page A-17 for
additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
Marriott International, Inc.
Summary of Restructuring Costs and Other Charges
Second Quarter and Second Quarter Year-to-Date 2009
($ in millions)
Q2 Q2 YTD
External Line Description Amount Amount
------------- ----------- ------ ------
Timeshare sales and Mark-to-market of residual
services revenue interests $12 $25
Contract sale cancellation
allowances - 4
--- --
Timeshare sales and
services revenue 12 29
Timeshare - direct Contract sale cancellation
expenses allowances - (1)
--- --
Timeshare - direct
expenses - (1)
Restructuring costs Severance 10 12
Facilities exit costs 22 22
Development cancellations 1 1
- -
Restructuring costs 33 35
General, administrative
and other System development write-down 7 7
Accounts receivable and
guarantee charges 3 3
Reserves for security
deposits, net of prior year
reserves - 38
-- --
General, administrative
and other 10 48
Provision for loan
losses Loan impairments 1 43
-- --
Provision for loan
losses 1 43
Equity in (earnings) Contract sale cancellation
losses allowances 1 2
Investment impairment - 30
-- --
Equity in (earnings) losses 1 32
-- --
Restructuring Costs &
Other Charges Total $57 $186
Tax Impact (27) (72)
--- ---
Restructuring Costs & Other
Charges Net of Tax $30 $114
=== ====
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure
Total Debt Net of Cash
($ in millions)
Balance at Balance at Better/
End of 2009 Year-End (Worse)
Second Quarter 2008 Change
-------------- ----------- -------
Total debt $2,849 $3,095 $246
Cash and cash
equivalents (125) (134) $(9)
---- ---- ---
Total debt net
of cash** $2,724 $2,961 $237
====== ====== ====
Range Range
----------------------- ----------------------
As Compared
to Balance at
Year-End 2008
Estimated Estimated ----------------------
Balance Balance Better/ Better/
Year-End Year-End (Worse) (Worse)
2009 (a) 2009 (b) Change (a) Change (b)
--------- --------- ---------- ----------
Total debt $2,476 $2,426 $619 $669
Cash and cash
equivalents (115) (115) (19) (19)
---- ---- --- ---
Total debt net
Of cash** $2,361 $2,311 $600 $650
====== ====== ==== ====
(a) Assumes $619M debt repayment in 2009 and $19M reduction in cash
(b) Assumes $669M debt repayment in 2009 and $19M reduction in cash
** Denotes non-GAAP financial measures. Please see page A-17 for
additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
Measures that Exclude Restructuring Costs and Other Charges in 2008
($ in millions)
Full Year 2008
--------------
General, administrative and other expenses $783
Less: Restructuring costs and other charges (32)
---
General, administrative and other expenses
excluding restructuring costs and other charges** $751
====
** Denotes non-GAAP financial measures. Please see page A-17 for
additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
Internal Planning Assumptions and Related Estimates that
Exclude Restructuring Costs and Other Charges and Certain Tax Items in
2009
($ in millions, except per share amounts)
Assumed/Estimated
Full Year 2009
-----------------
Timeshare sales and services revenue net
of Timeshare direct expenses $14
Add back: Restructuring costs and other charges 31
--
Timeshare sales and services (net)
excluding restructuring costs and other charges** $45
===
Range
-----------------------------
Assumed/ Assumed/
Estimated Estimated
Full Year 2009 Full Year 2009
-------------- --------------
General, administrative and other
expenses $633 $653
Less: Restructuring costs and other
charges (48) (48)
-- --
General, administrative and other
expenses excluding restructuring
costs and other charges** $585 $605
==== ====
Range Range
-----------------------------------------------------
Assumed/ Assumed/ Assumed/ Assumed/
Estimated Estimated Estimated Estimated
Third Quarter Third Quarter Full Year Full Year
2009 2009 2009 2009
--------------- --------------- ---------- ----------
Earnings per
share
attributable
to Marriott
shareholders $0.07 $0.12 $0.31 $0.41
Add back:
Restructuring
costs and other
charges and
certain tax
items 0.02 0.02 0.45 0.45
---- ---- ---- ----
Earnings per
share
attributable to
Marriott
shareholders
excluding
restructuring
costs and other
charges and
certain tax
items** $0.09 $0.14 $0.76 $0.86
===== ===== ===== =====
Assumed/Estimated
Full Year 2009
-----------------
Timeshare segment results $(53)
Add back: Restructuring costs and other charges 78
--
Timeshare segment results excluding
restructuring costs and other charges** $25
===
** Denotes non-GAAP financial measures. Please see page A-17 for
additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure
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 are not alternatives to
revenue, operating income, income from continuing operations, net income,
earnings per share or any other comparable operating measure prescribed by
GAAP. In addition, these non-GAAP financial measures may be calculated
and/or presented differently than measures with the same or similar names
that are reported by other companies, and as a result, the non-GAAP
measures we report may not be comparable to those reported by others.
Measures That Exclude Restructuring Costs and Other Charges and Certain
Tax Expenses. Management evaluates non-GAAP measures that exclude the
impact of restructuring costs and other charges and certain tax expenses
incurred in the 2009 first quarter and 2009 and 2008 second quarters as
well as estimated restructuring costs and other charges expected to be
incurred in the third quarter of 2009 and full year 2009 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.
During the latter part of 2008 and particularly the fourth quarter, we
experienced a significant decline in demand for hotel rooms both
domestically and internationally due, in part, to the failures and near
failures of several large financial service companies 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, which resulted in our
decision not to complete a note sale in the fourth quarter of 2008
(although we did complete a note sale in the first quarter of 2009).
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, beginning in the fourth quarter
of 2008 and which continued in the first quarter of 2009 and second
quarter of 2009, and resulted in first quarter 2009 restructuring costs of
$2 million and second quarter 2009 restructuring costs of $33 million that
were directly related to the downturn. We also incurred other first
quarter 2009 and second quarter 2009 charges totaling $127 million and $24
million, respectively, 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.
Currently, we expect to incur $9 to $11 million (our calculation assumes
$10 million) in restructuring costs and other charges in the 2009 third
quarter. For full year 2009, we expect restructuring costs and other
charges to total $197 million to $202 million (our calculation assumes
$201 million) as a result of our restructuring efforts and the economic
downturn, which includes $186 million of restructuring costs and other
charges already incurred in the first half of 2009. These estimates are
subject to change.
Certain tax expenses included $26 million in the 2009 first quarter, $17
million in the 2009 second quarter and $24 million in the 2008 second
quarter of non-cash charges primarily related to the treatment of funds
received from certain foreign subsidiaries that is in ongoing discussion
with the Internal Revenue Service ("IRS"). Additionally, certain tax
expenses in the 2008 second quarter also reflected $12 million of tax
expense due primarily to prior years' tax adjustments, including a
settlement with the IRS that resulted in a lower than expected refund of
taxes associated with a 1995 leasing transaction.
Earnings Before Interest, Taxes, Depreciation and Amortization. Earnings
before interest, taxes, depreciation and amortization ("EBITDA") reflects
earnings excluding the impact of interest expense, tax expense,
depreciation and amortization. Management considers 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. EBITDA is used by analysts, lenders, investors and others, as
well as by us, 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 tax expense 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.
Adjusted EBITDA. Management also evaluates adjusted EBITDA which
excludes: (1) the 2009 second quarter restructuring costs and other
charges totaling $57 million; (2) the 2009 first quarter restructuring
costs and other charges totaling $129 million; (3) the 2008 fourth quarter
restructuring costs and other charges totaling $192 million; and (4) the
first and second quarter 2008 impact of the synthetic fuel business.
Management excludes the restructuring costs and other charges incurred in
the 2009 first and second quarters and in the 2008 fourth quarter for the
reasons noted above under "Measures That Exclude Restructuring Costs and
Other Charges and Certain Tax Expenses." Fourth quarter 2008 restructuring
costs and other charges included $55 million of restructuring costs and
$137 million of other charges, including 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. Management also
excludes the first and second quarter 2008 impact of the synthetic fuel
business, which was discontinued in 2007 and which did not relate to our
core lodging business, to allow for period-over-period comparisons of our
on-going core lodging operations and facilitate management's comparison of
our results with those of other lodging companies.
Total Debt, Net of Cash (or, "Net Debt"). 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).
Additionally, management believes that this financial measure provides a
clearer picture of the future demands on cash to repay debt. Management
uses this financial measure in making decisions regarding its borrowing
capacity and future refinancing needs.
SOURCE Marriott International, Inc.
http://www.marriott.com
Copyright (C) 2009 PR Newswire. All rights reserved