Marriott International Reports Strong Third Quarter Results;

<< Back
Oct 5, 2006

Marriott International Reports Strong Third Quarter Results;

WASHINGTON, Oct 05, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Marriott International, Inc. (NYSE: MAR) today reported net income of $141 million and diluted earnings per share of $0.33 during the third quarter.

(Photo: http://www.newscom.com/cgi-bin/prnh/20061005/DCTH005 )

Adjusted income from continuing operations for the quarter rose 12 percent to $144 million, and adjusted diluted earnings from continuing operations per share jumped 21 percent to $0.34. Adjusted results for both years exclude the impact of the company's synthetic fuel business. The 2005 adjusted results also exclude the impact of a $17 million pre-tax impairment charge ($0.02 per share after-tax) related to an investment in a leveraged lease aircraft.

J.W. Marriott, Jr., Marriott International's chairman and chief executive officer, said, "We are pleased with the continued strong growth in the third quarter. Across our system, the vibrancy of many important markets and sustained demand of key customers delivered great revenue growth. And with strong meeting and business travel coupled with healthy holiday travel bookings to the Caribbean and other resort destinations, we are optimistic about our fourth quarter performance."

"We are not resting on our success, but are building greater strength as we grow the distribution of our brands and aggressively reinvent and renovate our hotels. We continue to deploy exciting, innovative tools to strengthen our relationships with customers and to drive bottom-line growth. As new lodging industry supply growth remains limited, our future looks brighter than ever."

In the 2006 third quarter (12 week period from June 17, 2006 to September 8, 2006), REVPAR for the company's comparable worldwide systemwide properties increased 9.4 percent (9.0 percent using constant dollars). Systemwide comparable North American REVPAR increased 8.6 percent in the quarter, largely driven by room rate improvement. Particularly strong results came from markets along the East and West Coasts, as well as Chicago.

REVPAR at the company's comparable systemwide North American full-service hotels (including Marriott Hotels & Resorts, The Ritz-Carlton, and Renaissance Hotels & Resorts) increased 8.6 percent during the quarter. North American systemwide REVPAR for the company's comparable select-service and extended- stay brands (including Courtyard, Fairfield Inn, Residence Inn, TownePlace Suites, and SpringHill Suites) rose 8.7 percent.

In the 2006 third quarter, international company-operated comparable REVPAR jumped 14.0 percent (11.3 percent using constant dollars) driven by higher room rates. Continental Europe showed strong REVPAR gains with company-operated hotels in Germany posting 22.4 percent REVPAR increases over the year ago quarter due to the World Cup and a strengthening economic climate.

House profit margins for both North American and worldwide comparable company-operated properties increased 210 basis points during the quarter. Higher room rates and continued cost efficiency improvements drove margins. Property-level EBITDA margins for comparable North American company-operated properties, calculated as if wholly owned, rose 200 basis points.

In the third quarter, Marriott added 38 new properties (6,281 rooms) to its worldwide lodging portfolio, including the 150-room Paris Courtyard Colombes, a new Courtyard prototype for Europe, and the 500-room Renaissance Schaumburg Hotel & Convention Center, a signature property featuring the latest technological, architectural and savvy service innovations which will soon be rolled out to other properties. Twelve properties (2,792 rooms) exited the system, including six Fairfield Inn properties (735 rooms). At quarter-end, the company's lodging group encompassed 2,815 hotels and timeshare resorts for a total of 510,506 rooms.

Marriott's worldwide pipeline of hotels under construction, awaiting conversion or approved for development rose to over 85,000 rooms, up from 60,000 rooms in the year ago quarter and 80,000 rooms at the end of the 2006 second quarter, representing the largest pipeline in the company's history. Full service hotels (Marriott, Renaissance and Ritz-Carlton) represent 35 percent of the pipeline and over 60 percent of those hotels will be located outside North America.

MARRIOTT REVENUES totaled $2.7 billion and were flat versus the year-ago quarter as lodging revenue growth offset a $92 million decline in synthetic fuel revenues. Base management and franchise fees rose 15 percent to $213 million as a result of REVPAR improvement and unit growth. Incentive fees increased 63 percent to $49 million, reflecting both REVPAR improvement and strong food and beverage and spa profits. Incentive fees include $10 million and $6 million for the third quarters of 2006 and 2005, respectively, that were calculated based on prior period earnings but not earned and due until the periods in which they were recognized. In the 2006 third quarter, 50 percent of the company's managed properties paid incentive fees, compared to 44 percent in the year ago quarter.

Owned, leased, corporate housing and other revenue was up slightly versus the year ago quarter primarily reflecting termination fees totaling $13 million and higher revenues associated with the stronger demand environment. Offsetting those increases were lower rent associated with land sold in late 2005 and lower revenue resulting from the sale of 10 properties since the end of the 2005 third quarter.

Revenue from timeshare sales and services declined 5 percent in the third quarter, largely due to projects in the early stages of development that did not reach revenue reporting thresholds. Timeshare sales and services, net of direct expenses, increased by $13 million. Third quarter timeshare results include the reversal of a contingency reserve established several years ago related to marketing incentives totaling $15 million.

Overall timeshare contract sales increased 3 percent during the quarter reflecting the delay of sales starts at one of its joint venture projects. However, a large Hawaiian project has seen significant increases in reservations, which will become contract sales as local jurisdictional requirements are met. Demand for other resorts continues to be strong, particularly in St. Kitts and Maui.

General and administrative expenses for the third quarter were flat at $149 million and included $10 million associated with the new accounting rules requiring the expensing of all share-based compensation. In the third quarter 2005, the company recorded a $6 million charge associated with the settlement of litigation.

SYNTHETIC FUEL operations had a $0.01 loss per share during the 2006 third quarter, compared to earnings per share of $0.07 in the year ago quarter. Lower synthetic fuel earnings reflected the suspension of production in April 2006 and the impact of revising the estimated phase out of the 2006 tax credits from 38 percent to 51 percent due to higher oil prices. Excluding the impact of synthetic fuel operations, the effective tax rate was approximately 34.8 percent in the third quarter of 2006. The company expects the tax rate for 2006, excluding synthetic fuel operations, to approximate 35 percent.

GAINS AND OTHER INCOME totaled $13 million (or $10 million excluding synthetic fuel) and included $4 million of net gains on the sale of real estate, a gain of $3 million from the sale of an interest in one joint venture and $3 million of preferred returns from joint venture investments.

INTEREST EXPENSE increased $5 million to $29 million, primarily due to higher interest rates.

INTEREST INCOME totaled $11 million during the quarter, down from $13 million in the year ago quarter, primarily driven by loan repayments in the last year. Interest income in 2006 reflected $3 million of income associated with a previously impaired loan. The $17 million provision for loan losses in the year ago quarter related to a non-cash pre-tax charge associated with the impairment of an aircraft leveraged lease receivable.

EQUITY IN EARNINGS/(LOSSES) reflect Marriott's share of income or losses in equity joint venture investments. In the third quarter of 2005, several hotels in which the company had an equity investment were sold and $15 million of equity earnings were recognized.

At the end of the 2006 third quarter, total debt was $1,636 million and cash balances totaled $136 million, compared to $1,737 million in total debt and $203 million of cash at the end of 2005.

The company repurchased 12.4 million shares of common stock in the third quarter of 2006 at a cost of $451 million. Year-to-date, through October 4, 2006, the company repurchased 31.6 million shares of common stock at a cost of $1.1 billion and the remaining share repurchase authorization as of that date totaled 44.2 million shares.

FOURTH QUARTER 2006 OUTLOOK

The company expects REVPAR to increase 7.5 to 8.5 percent in the fourth quarter, with 225 to 250 basis points of margin improvement. Under these assumptions, the company expects total fee revenue for the fourth quarter to total approximately $370 million to $380 million, an increase of 13 to 16 percent.

Timeshare sales and services revenues, net of expenses, should total $115 million to $120 million in the fourth quarter. Included in that estimate is roughly $35 million of gains related to a timeshare mortgage note sale transaction the company expects to complete in the fourth quarter. Beginning in 2006, those gains are included in timeshare sales and services revenue. Even excluding those gains, the company expects timeshare sales and services revenue, net of expenses, to increase substantially over the year ago quarter as several projects achieve higher reportability thresholds. With strong customer interest in the company's new projects, Marriott expects contract sales (including joint venture sales) to increase roughly 20 percent in 2006 fourth quarter.

General, administrative and other expenses are expected to increase approximately 10 to 12 percent in the fourth quarter to $215 million to $220 million from $196 million. This guidance includes an estimated $12 million pre-tax impact of FAS No. 123(R), which requires the expensing of all share- based compensation (including stock options), for the quarter.

Given the items above, the company estimates that lodging operating income will total $310 million to $335 million in the fourth quarter.

The company expects lodging gains and other income to total approximately $10 million in the fourth quarter, excluding mortgage note sale gains which will be included in timeshare sales and services revenue.

Net interest expense is expected to total $25 million to $30 million, an increase of $2 million to $7 million, primarily driven by higher interest rates.

The company expects investment spending in 2006 to total approximately $900 million, including $50 million for maintenance capital spending, $375 million for capital expenditures and acquisitions, $100 million for timeshare development, $100 million in new mezzanine financing and mortgage loans for hotels developed by owners and franchisees, and approximately $275 million in equity and other investments (including timeshare equity investments).

2007 OUTLOOK

The company expects REVPAR to increase 7 to 8 percent with 150 to 200 basis points in margin improvement. Total fee revenue is estimated to range from $1,360 million to $1,380 million with diluted earnings per share from continuing operations of $1.78 to $1.88 excluding Synfuel.

Under the above assumptions, the company currently estimates the following results for the fourth quarter, full year 2006 and full year 2007. The table below reflects timeshare note sale gains included in timeshare sales and services, net of direct expenses.


                        Fourth Quarter   Full Year 2006     Full Year 2007
                             2006
                        ---------------  -----------------  -----------------
    Total fee revenue   $370 million to  $1,204 million to  $1,360 million to
                        $380 million     $1,214 million     $1,380 million

    Owned, leased,      $45 million to   $176 million to    $155 million to
     corporate housing  $50 million      $181 million       $160 million
     and other, net of
     direct expenses

    Timeshare sales and $115 million to  $339 million to    $305 million to
     services, net of   $120 million     $344 million       $320 million
     direct expenses(1)

    General,            $220 million to  $660 million to    $675 million to
     administrative &   $215 million     $655 million       $665 million
     other expenses(2)

    Lodging operating   $310 million to  $1,059 million to  $1,145 million to
     income(1,2)        $335 million     $1,084 million     $1,195 million

    Gains (excluding    Approx $10       Approx $63         Approx $20 million
    synthetic fuel)(3)  million          million

    Net interest        $30 million to   $78 million to     Approx $125
    expense(4)          $25 million      $73 million        million

    Equity in           Approx $5        Approx $7 million  $45 million to $55
     earnings/(losses)  million                             million


    Earnings per share  No guidance      No guidance        No guidance
     from synthetic
     fuel

    Earnings per share  $0.46 to $0.51   $1.59 to $1.64     $1.78 to $1.88
     excluding synthetic
     fuel(2,5)

    Core tax rate       35.2 percent     35.2 percent       35.0 percent
    excluding synthetic
    fuel

    (1) Includes timeshare mortgage note sale gains.
    (2) Full year 2006 includes pre-tax expense of $39 million ($0.06 per
        share) associated with the adoption of FAS No. 123(R) ($12 million
        ($0.02 per share) for the 2006 fourth quarter).
    (3) Excludes timeshare mortgage note sale gains and a $2 million gain
        reported year-to-date from the synthetic fuel business.
    (4) Includes interest expense, provision for loan losses and interest
        income.
    (5) Full year estimate is before the cumulative effect of a change in
        accounting principle associated with the new timeshare accounting
        rules.  The company recorded an after-tax charge of $105 million
        ($0.24 per share) in the 2006 first quarter.


Marriott International, Inc. (NYSE: MAR) will conduct its quarterly earnings review for the investment community and news media on Thursday, October 5, 2006 at 10 a.m. Eastern Time (ET). The conference call will be webcast simultaneously via Marriott's investor relations website at http://www.marriott.com/investor. To listen, click the "Recent Investor News" tab and then click on the quarterly conference call link. A replay will be available on the Internet until November 5, 2006.

The telephone dial-in number for the conference call is 719-457-2604. A telephone replay of the conference call will also be available by telephone from 1 p.m. ET, Thursday, October 5, 2006 until Thursday, October 12, 2006 at 8 p.m. ET. To access the recording, call 719-457-0820. The reservation number for the recording is 5347658.

Note: This press release contains "forward-looking statements" within the meaning of federal securities laws, including REVPAR, profit margin and earning trends; statements concerning the number of lodging properties we expect to add in future years; our expected investment spending; and similar statements concerning anticipated future events and expectations that are not historical facts. We caution you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including the duration and full extent of the current growth environment in both the economy and the lodging industry; supply and demand changes for hotel rooms, timeshare interval, fractional and whole ownership products, 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 matters referred to in our most recent quarterly report on Form 10-Q under the heading "Risks Factors," 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 2,800 lodging properties in the United States and 67 other countries and territories. Marriott International operates and franchises hotels under the Marriott, JW Marriott, The Ritz-Carlton, Renaissance, Residence Inn, Courtyard, TownePlace Suites, Fairfield Inn, SpringHill Suites and Bulgari brand names; develops and operates vacation ownership resorts under the Marriott Vacation Club International, Horizons, The Ritz-Carlton Club and Grand Residences by Marriott brands; operates Marriott Executive Apartments; provides furnished corporate housing through its Marriott ExecuStay division; and operates conference centers. Marriott is also in the synthetic fuel business. The company is headquartered in Washington, D.C., and had approximately 143,000 employees at 2005 year-end. In fiscal year 2005, Marriott International reported sales from continuing operations of $11.6 billion. For more information or reservations, please visit our web site at http://www.marriott.com.

                                    IRPR#1

                                Tables follow



                         MARRIOTT INTERNATIONAL, INC.
                             Financial Highlights
                   (in millions, except per share amounts)

                                12 Weeks Ended       12 Weeks Ended
                               September 8, 2006    September 9, 2005
                              -------------------- ------------------- Percent
                                     Synthetic           Synthetic     Better/
                              Lodging  Fuel  Total Lodging Fuel  Total (Worse)
                              ------- ------ ----- ------- ----- ----- -------
    REVENUES
    Base management fees       $  119 $  -  $  119 $  108  $  - $  108    10
    Franchise fees                 94    -      94     78     -     78    21
    Incentive management fees      49    -      49     30     -     30    63
    Owned, leased, corporate
     housing and other
     revenue(1)                   239    -     239    236     -    236     1
    Timeshare sales and
     services(2)                  374    -     374    393     -    393    (5)
    Cost reimbursements(3)      1,822    -   1,822  1,771     -  1,771     3
    Synthetic fuel                  -    6       6      -    98     98   (94)
                              ------- ------ ----- ------- ----- -----
       Total Revenues           2,697    6   2,703  2,616    98  2,714     -

    OPERATING COSTS AND EXPENSES
    Owned, leased and corporate
     housing - direct(4)          201    -     201    197     -    197    (2)
    Timeshare - direct            298    -     298    330     -    330    10
    Reimbursed costs            1,822    -   1,822  1,771     -  1,771    (3)
    General, administrative
     and other(5)                 149    -     149    149     -    149     -
    Synthetic fuel                  -    4       4      -   132    132    97
                              ------- ------ ----- ------- ----- -----
       Total Expenses           2,470    4   2,474  2,447   132  2,579     4
                              ------- ------ ----- ------- ----- -----

    OPERATING INCOME (LOSS)    $  227 $  2     229 $  169  $(34)   135    70
                              ======= ======       ======= =====


    Gains and other income(6)                   13                  39   (67)
    Interest expense                           (29)                (24)  (21)
    Interest income                             11                  13   (15)
    Provision for loan losses                    -                 (17)  100
    Equity in (losses)
     earnings(7)                                (1)                 17  (106)
                                             -----               -----

    INCOME FROM CONTINUING
     OPERATIONS BEFORE INCOME
     TAXES AND MINORITY
     INTEREST                                  223                 163    37
    Provision for income taxes                 (82)                (33) (148)
    Minority interest                            -                  18  (100)
                                             -----               -----

    INCOME FROM CONTINUING
     OPERATIONS                                141                 148    (5)
    Discontinued operations,
     net of tax                                  -                   1  (100)
                                             -----               -----
    NET INCOME                              $  141              $  149    (5)
                                             =====               =====

    EARNINGS PER SHARE -
     Basic(8)
       Earnings from
        continuing operations               $ 0.35              $ 0.34     3
       Earnings from
        discontinued
        operations                               -                   -       -
                                             -----               -----
       Earnings per share                   $ 0.35              $ 0.34     3
                                             =====               =====

    EARNINGS PER SHARE -
     Diluted(8)
       Earnings from
        continuing operations               $ 0.33              $ 0.32     3
       Earnings from
        discontinued
        operations                             -                   -       -
                                             -----               -----
       Earnings per share                   $ 0.33              $ 0.32     3
                                             =====               =====


    Basic Shares(8)                          400.7               430.5
    Diluted Shares(8)                        424.7               458.7


    (1) Owned, leased, corporate housing and other revenue includes revenue
        from the properties we own or lease, revenue from our ExecuStay
        business, land rent income and other revenue.

    (2) Timeshare sales and services includes total timeshare revenue except
        for base fees, cost reimbursements, real estate gains and joint
        venture earnings (losses). We understand that the Staff of the
        Securities and Exchange Commission will be evaluating the presentation
        of interest income associated with timeshare notes receivable. We
        recorded $9 million for each of the twelve weeks ended September 8,
        2006, and September 9, 2005, of such interest income as "Timeshare
        sales and services" revenue.

    (3) Cost reimbursements include reimbursements from lodging properties for
        Marriott funded operating expenses.

    (4) Owned, leased and corporate housing - direct expenses include
        operating expenses related to our owned or leased hotels, including
        lease payments, pre-opening expenses and depreciation, plus expenses
        related to our ExecuStay business.

    (5) General, administrative and other expenses include the overhead costs
        allocated to our lodging business segments (including ExecuStay and
        timeshare) and our unallocated corporate overhead costs and general
        expenses.

    (6) Gains and other income includes net gains on the sale of real estate,
        gains on note sales or repayments, gains on the sale of joint
        ventures, income from cost method joint ventures and net earn-out
        payments associated with our synthetic fuel operations.

    (7) Equity in (losses) earnings includes our equity in (losses) earnings
        of unconsolidated joint ventures.

    (8) All share and per share amounts reflect the June 9, 2006, two-for-one
        stock split effected in the form of a stock dividend.



                         MARRIOTT INTERNATIONAL, INC.
                             Financial Highlights
                   (in millions, except per share amounts)

                                36 Weeks Ended      36 Weeks Ended
                              September 8, 2006    September 9, 2005
                            -------------------- --------------------- Percent
                                  Synthetic            Synthetic       Better/
                            Lodging  Fuel  Total Lodging  Fuel   Total (Worse)
                            ------- ------ ----- ------- ------ ------ -------
    REVENUES
    Base management fees     $  380  $  - $  380 $  342  $   - $  342      11
    Franchise fees              269     -    269    226      -    226      19
    Incentive management fees   185     -    185    132      -    132      40
    Owned, leased, corporate
     housing and other
     revenue(1)                 765     -    765    583      -    583      31
    Timeshare sales and
     services(2)              1,051     -  1,051  1,074      -  1,074      (2)
    Cost reimbursements(3)    5,547     -  5,547  5,248      -  5,248       6
    Synthetic fuel                -   102    102      -    304    304     (66)
                            ------- ------ ----- ------- ------ ------
       Total Revenues         8,197   102  8,299  7,605    304  7,909       5

    OPERATING COSTS AND
     EXPENSES
    Owned, leased and
     corporate housing -
     direct(4)                  634     -    634    480      -    480     (32)
    Timeshare - direct          827     -    827    871      -    871       5
    Reimbursed costs          5,547     -  5,547  5,248      -  5,248      (6)
    General, administrative
     and other(5)               440     -    440    557      -    557      21
    Synthetic fuel                -   145    145      -    419    419      65
                            ------- ------ ----- ------- ------ ------
       Total Expenses         7,448   145  7,593  7,156    419  7,575       -
                            ------- ------ ----- ------- ------ ------

    OPERATING INCOME (LOSS)  $  749 $ (43)   706 $  449  $(115)   334     111
                            ======= ======       ======= ======


    Gains and other income(6)                 55                   97     (43)
    Interest expense                         (86)                 (69)    (25)
    Interest income                           34                   65     (48)
    Reversal of (provision
     for) loan losses                          3                  (28)    111
    Equity in earnings(7)                      2                   18     (89)
                                           -----                ------

    INCOME FROM CONTINUING
     OPERATIONS BEFORE
     INCOME TAXES AND
     MINORITY INTEREST                       714                  417      71
    Provision for income
     taxes                                  (223)                 (18) (1,139)
    Minority interest                          6                   32     (81)
                                           -----                ------

    INCOME FROM CONTINUING
     OPERATIONS                              497                  431      15
    Discontinued operations,
     net of tax                                -                    1    (100)
    Cumulative effect of
     change in accounting
     principle, net of tax(8)               (105)                   -       *
                                           -----                ------
    NET INCOME                            $  392               $  432      (9)
                                           =====                ======

    EARNINGS PER SHARE -
     Basic(9)
       Earnings from
        continuing operations             $ 1.22               $ 0.98      24
       Earnings from
        discontinued
        operations                           -                    -         -
       Losses from cumulative
        effect of change in
        accounting principle               (0.26)                 -         *
                                           -----                ------
       Earnings per share                 $ 0.96               $ 0.98      (2)
                                           =====                ======

    EARNINGS PER SHARE -
     Diluted(9)
       Earnings from
        continuing operations             $ 1.14               $ 0.92      24
       Earnings from
        discontinued
        operations                           -                    -         -
       Losses from cumulative
        effect of change in
        accounting principle               (0.24)                 -         *
                                           -----                ------
       Earnings per share                 $ 0.90               $ 0.92      (2)
                                           =====                ======


    Basic Shares(9)                        408.3                440.8
    Diluted Shares(9)                      434.4                470.6

    *  Percent cannot be calculated.

    (1) Owned, leased, corporate housing and other revenue includes revenue
        from the properties we own or lease, revenue from our ExecuStay
        business, land rent income and other revenue.

    (2) Timeshare sales and services includes total timeshare revenue except
        for base fees, cost reimbursements, real estate gains and joint
        venture earnings (losses). For 2006 only, timeshare sales and services
        includes gains on the sale of timeshare note receivable
        securitizations. In accordance with recent discussions between the
        American Resort Development Association and the Securities and
        Exchange Commission regarding the income statement presentation of
        Timeshare segment note securitization gains, we reclassified, in our
        income statement for the thirty-six weeks ended September 8, 2006,
        timeshare securitization gains of $40 million recognized in the 2006
        second quarter from the "Gains and other income" caption to the
        "Timeshare sales and services" revenue caption. Additionally, we
        understand that the Staff of the Securities and Exchange Commission
        will be evaluating the presentation of interest income associated with
        timeshare notes receivable. We recorded $29 million and $27 million
        for the thirty-six weeks ended September 8, 2006, and September 9,
        2005, respectively, of such interest income as "Timeshare sales and
        services" revenue.

    (3) Cost reimbursements include reimbursements from lodging properties
        for Marriott funded operating expenses.

    (4) Owned, leased and corporate housing -- direct expenses include
        operating expenses related to our owned or leased hotels, including
        lease payments, pre-opening expenses and depreciation, plus expenses
        related to our ExecuStay business.

    (5) General, administrative and other expenses include the overhead costs
        allocated to our lodging business segments (including ExecuStay and
        timeshare) and our unallocated corporate overhead costs and general
        expenses. Expenses in 2005 included a $94 million charge associated
        with the CTF transaction as well as charges totaling $30 million
        associated with our bedding incentive program.

    (6) Gains and other income includes net gains on the sale of real estate,
        gains on note sales or repayments, gains on the sale of joint
        ventures, income from cost method joint ventures, net earn-out
        payments associated with our synthetic fuel operations and for 2005
        only, timeshare note securitization gains. Timeshare note
        securitization gains for 2005 totaled $29 million. See footnote 2 for
        information regarding timeshare note securitization gains for 2006.

    (7) Equity in earnings includes our equity in earnings of unconsolidated
        joint ventures.

    (8) Cumulative effect of change in accounting principle, net of tax is
        associated with the adoption, in the 2006 first quarter, of Statement
        of Position 04-2, "Accounting for Real Estate Time-sharing
        Transactions" which was issued by the American Institute of Certified
        Public Accountants.

    (9) All share and per share amounts reflect the June 9, 2006, two-for-
        one stock split effected in the form of a stock dividend.



                         Marriott International, Inc.
                              Business Segments
                                 ($ millions)

                                        Twelve Weeks Ended             Percent
                              -----------------   -----------------    Better/
                              September 8, 2006   September 9, 2005    (Worse)
                              -----------------   -----------------    -------
    REVENUES

    Full-Service                     $    1,787          $    1,713        4
    Select-Service                          331                 303        9
    Extended-Stay                           166                 149       11
    Timeshare                               413                 451       (8)
                              -----------------   -----------------
      Total lodging(1)                    2,697               2,616        3
    Synthetic Fuel                            6                  98      (94)
                              -----------------   -----------------
      Total                          $    2,703          $    2,714        -
                              =================   =================


    INCOME FROM CONTINUING OPERATIONS

    Full-Service                     $      131          $      129        2
    Select-Service                           57                  49       16
    Extended-Stay                            29                  14      107
    Timeshare                                61                  50       22
                              -----------------   -----------------
      Total lodging financial
       results(1)                           278                 242       15
    Synthetic Fuel (after-tax)               (3)                 30     (110)
    Unallocated corporate
     expenses                               (42)                (38)     (11)
    Interest income, provision
     for loan losses and
     interest expense
     (excluding Synthetic Fuel)             (15)                (28)      46
    Income taxes (excluding
     Synthetic Fuel)                        (77)                (58)     (33)
                              -----------------   -----------------
      Total                          $      141          $      148       (5)
                              =================   =================

    (1) We consider lodging revenues and lodging financial results to be
        meaningful indicators of our performance because they measure our
        growth in profitability as a lodging company and enable investors to
        compare the sales and results of our lodging operations to those of
        other lodging companies.



                         Marriott International, Inc.
                              Business Segments
                                 ($ millions)

                                     Thirty-six Weeks Ended            Percent
                              -----------------   -----------------    Better/
                              September 8, 2006   September 9, 2005    (Worse)
                              -----------------   -----------------    -------
    REVENUES

    Full-Service                     $    5,566          $    5,093        9
    Select-Service                          969                 868       12
    Extended-Stay                           466                 411       13
    Timeshare                             1,196               1,233       (3)
                              -----------------   -----------------
      Total lodging(1)                    8,197               7,605        8
    Synthetic Fuel                          102                 304      (66)
                              -----------------   -----------------
      Total                          $    8,299          $    7,909        5
                              =================   =================


    INCOME FROM CONTINUING OPERATIONS

    Full-Service                     $      489          $      275       78
    Select-Service                          174                 130       34
    Extended-Stay                            75                  43       74
    Timeshare                               180                 193       (7)
                              -----------------   -----------------
      Total lodging financial
       results(1)                           918                 641       43
    Synthetic Fuel (after-tax)                4                  92      (96)
    Unallocated corporate
     expenses                              (113)                (97)     (16)
    Interest income, reversal
     of or provision for loan
     losses and interest
     expense (excluding
     Synthetic Fuel)                        (48)                (32)     (50)
    Income taxes (excluding
     Synthetic Fuel)                       (264)               (173)     (53)
                              -----------------   -----------------
      Total                          $      497          $      431       15
                              =================   =================

    (1) We consider lodging revenues and lodging financial results to be
        meaningful indicators of our performance because they measure our
        growth in profitability as a lodging company and enable investors to
        compare the sales and results of our lodging operations to those of
        other lodging companies.



                         MARRIOTT INTERNATIONAL, INC.

                          Total Lodging Products(1)
    --------------------------------------------------------------------------
                           Number of Properties      Number of Rooms/Suites
                           --------------------      ----------------------
                                             vs.                         vs.
                       Sept. 8, Sept. 9,  Sept. 9,  Sept. 8, Sept. 9, Sept. 9,
    Brand                2006     2005      2005      2006     2005     2005
    --------------------------------------------------------------------------

    Full-Service Lodging
    --------------------
      Marriott Hotels &
       Resorts             516     502        14   186,154  181,599    4,555
      The Ritz-Carlton      60      58         2    19,382   18,907      475
      Renaissance Hotels &
       Resorts             137     137       -      48,228   48,137       91
      Bulgari Hotel & Resort 1       1       -          58       58      -
      Ramada International   2       4        (2)      332      724     (392)
    Select-Service Lodging
    ----------------------
      Courtyard            722     680        42   104,082   98,043    6,039
      Fairfield Inn        520     521        (1)   47,019   47,826     (807)
      SpringHill Suites    149     135        14    17,370   15,767    1,603
    Extended-Stay Lodging
    ---------------------
      Residence Inn        511     482        29    61,329   57,296    4,033
      TownePlace Suites    122     119         3    12,295   12,021      274
      Marriott Executive
       Apartments           18      16         2     3,027    2,809      218
    Timeshare(2)
    ------------
      Marriott Vacation
       Club International   45      44         1    10,189    9,231      958
      The Ritz-Carlton Club  7       4         3       400      280      120
      Grand Residences by
       Marriott              3       2         1       313      248       65
      Horizons by Marriott
       Vacation Club         2       2       -         328      328      -
                        ------------------------- ---------------------------
    Total                2,815   2,707       108   510,506  493,274   17,232
                        ========================= ===========================


   Number of Timeshare Interval, Fractional and Whole Ownership Resorts(2)
    ----------------------------------------------------------------------
                                                                    In Active
                                                   Total(3)           Sales
                                                   --------         ---------
    100% Company-Developed
    ----------------------
      Marriott Vacation Club International            44                24
      The Ritz-Carlton Club                            3                 2
      Grand Residences by Marriott                     3                 3
      Horizons by Marriott Vacation Club               2                 2

    Joint Ventures
    --------------
      Marriott Vacation Club International             1                 1
      The Ritz-Carlton Club                            4                 4
                                                   --------------------------
    Total                                             57                36
                                                   ==========================

    (1) Total Lodging Products excludes the 2,045 corporate housing rental
        units.
    (2) Includes products in active sales which may not be ready for
        occupancy.
    (3) Includes resorts that are in active sales as well as those that are
        sold out.


                         Marriott International, Inc.
                            Key Lodging Statistics

           Comparable Company-Operated North American Properties(1)
    --------------------------------------------------------------------------
                    Twelve Weeks Ended September 8, 2006 and September 9, 2005
                    ----------------------------------------------------------
                                                                 Average Daily
                                  REVPAR        Occupancy             Rate
                                  ------        ---------        -------------
                                        vs.                                vs.
    Brand                     2006     2005  2006    vs. 2005    2006     2005
    --------------------------------------------------------------------------
    Marriott Hotels &
     Resorts                 $116.08   7.9%  74.0%  -1.1% pts.  $156.77   9.6%
    The Ritz-Carlton(2)      $193.59   9.2%  73.4%   1.5% pts.  $263.58   7.0%
    Renaissance Hotels &
     Resorts                 $112.28   6.8%  73.3%  -1.4% pts.  $153.22   8.8%
    Composite - Full-Service $123.48   8.0%  73.9%  -0.9% pts.  $167.16   9.3%
    Residence Inn             $95.75   5.9%  81.7%  -1.6% pts.  $117.21   8.0%
    Courtyard                 $84.60   9.4%  73.0%  -0.8% pts.  $115.87  10.7%
    TownePlace Suites         $64.21  11.1%  81.3%   0.4% pts.   $78.99  10.5%
    SpringHill Suites         $78.27   8.7%  76.1%  -1.8% pts.  $102.83  11.3%
    Composite - Select-
     Service & Extended-Stay  $85.77   8.3%  76.0%  -1.1% pts.  $112.93   9.9%
    Composite - All          $107.42   8.1%  74.8%  -1.0% pts.  $143.69   9.5%


              Comparable Systemwide North American Properties(1)
    --------------------------------------------------------------------------
                    Twelve Weeks Ended September 8, 2006 and September 9, 2005
                    ----------------------------------------------------------
                                                                 Average Daily
                                  REVPAR        Occupancy             Rate
                                  ------        ---------        -------------
                                        vs.                                vs.
    Brand                     2006     2005  2006    vs. 2005    2006     2005
    --------------------------------------------------------------------------
    Marriott Hotels &
     Resorts                 $107.12   8.5%  73.1%  -0.1% pts.  $146.63   8.6%
    The Ritz-Carlton(2)      $193.59   9.2%  73.4%   1.5% pts.  $263.58   7.0%
    Renaissance Hotels &
     Resorts                 $106.03   8.4%  73.6%  -0.1% pts.  $144.10   8.5%
    Composite - Full-Service $112.57   8.6%  73.2%   0.0% pts.  $153.88   8.5%
    Residence Inn             $95.40   6.8%  83.0%  -0.7% pts.  $114.90   7.7%
    Courtyard                 $87.29   9.3%  75.6%  -0.2% pts.  $115.54   9.6%
    Fairfield Inn             $64.28   9.5%  76.4%   0.5% pts.   $84.14   8.8%
    TownePlace Suites         $64.37   9.9%  80.8%   0.2% pts.   $79.67   9.7%
    SpringHill Suites         $76.99  10.1%  77.3%   0.1% pts.   $99.64  10.0%
    Composite - Select-
     Service & Extended-Stay  $82.61   8.7%  78.1%  -0.2% pts.  $105.79   8.9%
    Composite - All           $94.65   8.6%  76.1%  -0.1% pts.  $124.37   8.7%


    (1) Composite -- All statistics include properties for the Marriott Hotels
        & Resorts, The Ritz-Carlton, Renaissance Hotels & Resorts, Residence
        Inn, Courtyard, Fairfield Inn, TownePlace Suites, and SpringHill
        Suites brands. Full-Service composite statistics include properties
        for Marriott Hotels & Resorts, The Ritz-Carlton and Renaissance Hotels
        & Resorts. Select-Service and Extended-Stay composite statistics
        include properties for the Residence Inn, Courtyard, Fairfield Inn,
        TownePlace Suites and SpringHill Suites brands.

    (2) Statistics for The Ritz-Carlton are for June through August.



                         Marriott International, Inc.
                            Key Lodging Statistics

           Comparable Company-Operated North American Properties(1)
    --------------------------------------------------------------------------
                Thirty-Six Weeks Ended September 8, 2006 and September 9, 2005
                --------------------------------------------------------------
                                                                 Average Daily
                                  REVPAR        Occupancy             Rate
                                  ------        ---------        -------------
                                        vs.                                vs.
    Brand                     2006     2005  2006    vs. 2005    2006     2005
    --------------------------------------------------------------------------
    Marriott Hotels &
     Resorts                 $120.86   8.5%  73.3%  -0.4% pts.  $164.99   9.0%
    The Ritz-Carlton(2)      $223.76  10.2%  74.6%   2.7% pts.  $299.92   6.2%
    Renaissance Hotels &
     Resorts                 $119.20  12.0%  74.3%   1.6% pts.  $160.34   9.6%
    Composite - Full-Service $130.03   9.2%  73.5%   0.2% pts.  $176.83   8.9%
    Residence Inn             $94.13   8.4%  80.1%  -0.4% pts.  $117.45   9.0%
    Courtyard                 $85.30  11.0%  72.2%   0.0% pts.  $118.12  11.1%
    TownePlace Suites         $60.66  12.5%  77.6%   1.1% pts.   $78.12  10.9%
    SpringHill Suites         $76.16   9.6%  74.2%  -1.1% pts.  $102.65  11.2%
    Composite - Select-
     Service & Extended-Stay  $85.52  10.3%  74.8%  -0.1% pts.  $114.35  10.5%
    Composite - All          $110.93   9.5%  74.1%   0.1% pts.  $149.76   9.4%


              Comparable Systemwide North American Properties(1)
    --------------------------------------------------------------------------
                Thirty-Six Weeks Ended September 8, 2006 and September 9, 2005
                --------------------------------------------------------------
                                                                 Average Daily
                                  REVPAR        Occupancy             Rate
                                  ------        ---------        -------------
                                        vs.                                vs.
    Brand                     2006     2005  2006    vs. 2005    2006     2005
    --------------------------------------------------------------------------
    Marriott Hotels &
     Resorts                 $109.83   9.4%  72.0%   0.6% pts.  $152.64   8.5%
    The Ritz-Carlton(2)      $223.76  10.2%  74.6%   2.7% pts.  $299.92   6.2%
    Renaissance Hotels &
     Resorts                 $110.17  12.0%  73.4%   1.7% pts.  $150.12   9.4%
    Composite - Full-Service $116.45   9.8%  72.3%   0.9% pts.  $161.04   8.5%
    Residence Inn             $91.66   8.6%  80.7%   0.5% pts.  $113.57   8.0%
    Courtyard                 $85.58  10.6%  73.9%   0.7% pts.  $115.85   9.6%
    Fairfield Inn             $59.36  11.8%  72.4%   1.7% pts.   $82.00   9.1%
    TownePlace Suites         $61.54  11.4%  77.6%   0.9% pts.   $79.28  10.1%
    SpringHill Suites         $74.55  11.8%  75.5%   1.2% pts.   $98.81  10.0%
    Composite - Select-
     Service & Extended-Stay  $79.58  10.3%  75.7%   0.9% pts.  $105.18   9.0%
    Composite - All           $94.30  10.1%  74.3%   0.9% pts.  $126.89   8.8%


    (1) Composite -- All statistics include properties for the Marriott Hotels
        & Resorts, The Ritz-Carlton, Renaissance Hotels & Resorts, Residence
        Inn, Courtyard, Fairfield Inn, TownePlace Suites, and SpringHill
        Suites brands. Full-Service composite statistics include properties
        for Marriott Hotels & Resorts, The Ritz-Carlton and Renaissance Hotels
        & Resorts. Select-Service and Extended-Stay composite statistics
        include properties for the Residence Inn, Courtyard, Fairfield Inn,
        TownePlace Suites and SpringHill Suites brands.

    (2) Statistics for The Ritz-Carlton are for January through August.



                         Marriott International, Inc.
                            Key Lodging Statistics

             Comparable Company-Operated International Properties(1,2)
    --------------------------------------------------------------------------
                        Three Months Ended August 31, 2006 and August 31, 2005
                        ------------------------------------------------------
                                                                 Average Daily
                                  REVPAR        Occupancy             Rate
                                  ------        ---------        -------------
                                        vs.                                vs.
    Region/Brand(3)           2006     2005  2006    vs. 2005   2006      2005
    --------------------------------------------------------------------------
    Caribbean & Latin
     America                 $105.48   9.5%  74.2%   1.2% pts. $142.25   7.7%
    Continental Europe       $113.77  13.2%  75.3%   0.4% pts. $151.02  12.5%
    United Kingdom           $192.62  17.6%  84.4%   3.9% pts. $228.26  12.2%
    Middle East & Africa      $82.80   9.0%  69.1%   2.4% pts. $119.90   5.3%
    Asia Pacific(4)           $88.08  12.7%  76.0%   1.3% pts. $115.90  10.8%

    The Ritz-Carlton
     International           $142.50   2.2%  68.3%  -1.1% pts. $208.74   3.9%

    Total International(5)   $110.22  11.3%  75.5%   0.9% pts. $146.06  10.0%

    Worldwide(6)             $108.19   9.0%  75.0%  -0.5% pts. $144.35   9.6%


             Comparable Systemwide International Properties(1,2)
    --------------------------------------------------------------------------
                        Three Months Ended August 31, 2006 and August 31, 2005
                        ------------------------------------------------------
                                                                 Average Daily
                                  REVPAR        Occupancy             Rate
                                  ------        ---------        -------------
                                        vs.                                vs.
    Region/Brand(3)           2006     2005  2006    vs. 2005   2006      2005
    --------------------------------------------------------------------------
    Caribbean & Latin
     America                  $98.45   8.3%  72.7%   1.1% pts. $135.33   6.7%
    Continental Europe       $113.21  13.0%  73.6%   1.5% pts. $153.87  10.6%
    United Kingdom           $161.82  15.8%  78.8%   3.7% pts. $205.33  10.4%
    Middle East & Africa      $79.57   9.4%  70.0%   2.4% pts. $113.61   5.7%
    Asia Pacific(4)           $92.36  10.4%  76.6%   1.4% pts. $120.59   8.3%

    The Ritz-Carlton
     International           $142.50   2.2%  68.3%  -1.1% pts. $208.74   3.9%

    Total International(5)   $108.86  10.6%  74.8%   1.3% pts. $145.54   8.6%

    Worldwide(6)              $97.10   9.0%  75.9%   0.2% pts. $127.96   8.8%


    (1) International financial results are reported on a period basis, while
        International statistics are reported on a monthly basis.

    (2) Statistics are in constant dollars for June through August.  Excludes
        North America (except for Worldwide).

    (3) Region information includes the Marriott Hotels & Resorts, Renaissance
        Hotels & Resorts and Courtyard brands. Does not include The Ritz-
        Carlton brand.

    (4) Does not include Hawaii.

    (5) Includes Hawaii.

    (6) Includes international statistics for the three calendar months ended
        August 31, 2006 and August 31, 2005, and North American statistics for
        the twelve weeks ended September 8, 2006 and September 9, 2005.
        Includes the Marriott Hotels & Resorts, The Ritz-Carlton, Renaissance
        Hotels & Resorts, Residence Inn, Courtyard, TownePlace Suites,
        Fairfield Inn and SpringHill Suites brands.



                         Marriott International, Inc.
                            Key Lodging Statistics

          Comparable Company-Operated International Properties(1,2)
    --------------------------------------------------------------------------
                        Eight Months Ended August 31, 2006 and August 31, 2005
                        ------------------------------------------------------
                                                                 Average Daily
                                  REVPAR        Occupancy             Rate
                                  ------        ---------        -------------
                                        vs.                                vs.
    Region/Brand(3)           2006     2005  2006    vs. 2005   2006      2005
    --------------------------------------------------------------------------
    Caribbean & Latin
     America                 $123.52  12.4%  76.7%   2.6% pts. $161.10   8.6%
    Continental Europe       $102.49  10.3%  71.3%   2.0% pts. $143.75   7.2%
    United Kingdom           $171.74  15.5%  79.0%   3.5% pts. $217.42  10.4%
    Middle East & Africa      $95.88  10.5%  69.9%  -0.7% pts. $137.08  11.6%
    Asia Pacific(4)           $91.22  12.6%  75.4%   1.4% pts. $120.97  10.5%

    The Ritz-Carlton
     International           $154.35   4.2%  69.4%  -2.4% pts. $222.36   7.8%

    Total International(5)   $110.20  10.9%  74.1%   1.2% pts. $148.81   9.1%

    Worldwide(6)             $110.75   9.9%  74.1%   0.4% pts. $149.52   9.4%


             Comparable Systemwide International Properties(1,2)
    --------------------------------------------------------------------------
                        Eight Months Ended August 31, 2006 and August 31, 2005
                        ------------------------------------------------------
                                                                 Average Daily
                                  REVPAR        Occupancy             Rate
                                  ------        ---------        -------------
                                        vs.                                vs.
    Region/Brand(3)           2006     2005  2006    vs. 2005   2006      2005
    --------------------------------------------------------------------------
    Caribbean & Latin
     America                 $113.75   8.9%  74.1%   1.3% pts. $153.43   7.1%
    Continental Europe       $100.85  10.9%  69.1%   2.3% pts. $146.04   7.3%
    United Kingdom           $146.81  13.7%  73.7%   3.1% pts. $199.08   9.0%
    Middle East & Africa      $90.61  11.4%  70.0%  -0.7% pts. $129.52  12.5%
    Asia Pacific(4)           $93.49  11.3%  75.7%   1.3% pts. $123.48   9.3%

    The Ritz-Carlton
     International           $154.35   4.2%  69.4%  -2.4% pts. $222.36   7.8%

    Total International(5)   $107.24  10.3%  72.9%   1.2% pts. $147.17   8.4%

    Worldwide(6)              $96.31  10.1%  74.1%   0.9% pts. $129.99   8.7%


    (1) International financial results are reported on a period basis, while
        International statistics are reported on a monthly basis.

    (2) Statistics are in constant dollars for January through August.
        Excludes North America (except for Worldwide).

    (3) Region information includes the Marriott Hotels & Resorts, Renaissance
        Hotels & Resorts and Courtyard brands. Does not include The Ritz-
        Carlton brand.

    (4) Does not include Hawaii.

    (5) Includes Hawaii.

    (6) Includes international statistics for the eight calendar months ended
        August 31, 2006 and August 31, 2005, and North American statistics for
        the thirty-six weeks ended September 8, 2006 and September 9, 2005.
        Includes the Marriott Hotels & Resorts, The Ritz-Carlton, Renaissance
        Hotels & Resorts, Residence Inn, Courtyard, TownePlace Suites,
        Fairfield Inn and SpringHill Suites brands.



                         MARRIOTT INTERNATIONAL, INC.
                         Non-GAAP Financial Measures

In our press release and schedules we report certain financial measures that are not prescribed or authorized by United States generally accepted accounting principles ("GAAP"). We discuss management's reasons for reporting these non-GAAP measures below, and the tables on the following pages reconcile the most directly comparable generally accepted accounting principle measures to the non-GAAP measures (identified by a double asterisk on the following pages) that we refer to in our press release. Although our 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 operating income, income from continuing operations, net income, earnings per share or any other comparable operating measure prescribed by GAAP. In addition, these non-GAAP financial measures may be calculated and/or presented differently than measures with the same or similar names that are reported by other companies, and as a result, the non-GAAP measures we report may not be comparable to those reported by others.

Synthetic Fuel. We do not consider the Synthetic Fuel segment to be related to our core business, which is lodging. In addition, management expects the Synthetic Fuel segment will no longer have a material impact on our business after the end of 2007, when the Internal Revenue Code provision which provides for synthetic fuel tax credits expires. Accordingly, our management evaluates non-GAAP measures which exclude the impact of our Synthetic Fuel segment because those measures allow for period-over-period comparisons of our on-going core lodging operations. In addition, these non- GAAP measures facilitate management's comparison of our results with the results of other lodging companies.

CTF transaction. Some of the non-GAAP measures are further adjusted to exclude the impact of the $94 million pre-tax charge (2005 second quarter) associated with the agreements we entered into with CTF Holdings Ltd. and its affiliates ("the CTF transaction"). That charge was primarily non-cash and primarily due to the write-off of deferred contract acquisition costs associated with the termination of management agreements. GAAP reporting for the CTF transaction charge does not reflect the fact that the company entered into new management agreements as part of the CTF transaction, which substantially replaced the terminated management agreements. Accordingly, our management evaluates the non-GAAP measures which exclude the CTF transaction charge because those measures allow for period-over-period comparisons relative to our on-going core lodging operations before material charges, and in particular because those non-GAAP measures recognize the new management agreements that were entered into as part of the CTF transaction and the resulting continuity of management for the hotels in question. In addition, these non-GAAP measures facilitate management's comparison of our results with the results of other lodging companies.


    Leveraged lease impairment charge and discontinued operations.  Management
evaluates non-GAAP measures that exclude the $17 million leveraged lease
impairment charge recorded in the 2005 third quarter and discontinued
operations in order to better assess the period-over-period performance of our
on-going core operating business.  Management does not consider the leveraged
lease investment to be related to our core lodging business.  In addition,
non-GAAP measures which exclude these non-lodging items facilitate
management's comparison of our results with the results of other lodging
companies.



                         MARRIOTT INTERNATIONAL, INC.
                  Non-GAAP Financial Measure Reconciliation
                               ($ in millions)

                                    Fiscal Year 2006
               ---------------------------------------------------------------
                                              Range               Range
                                       ------------------- -------------------
                                       Estimated Estimated Estimated Estimated
               ------------------------------------------- -------------------
                First  Second   Third   Fourth    Fourth      Full      Full
               Quarter Quarter Quarter  Quarter   Quarter     Year      Year
               ------- ------- -------  -------   -------  --------- ---------

    Operating
     income      $ 203   $ 274   $ 229      ***       ***      ***       ***

    Add back:
     Synthetic
     Fuel
     operating
     loss
     (income)       27      18      (2)     ***       ***      ***       ***
               ------- ------- -------  -------   -------  --------- ---------

    Lodging
     operating
     income**    $ 230   $ 292   $ 227    $ 310     $ 335   $1,059    $1,084
               ======= ======= =======  =======   =======  ========= =========


                                                  Fiscal Year 2005
                                     -----------------------------------------
                                      First   Second    Third   Fourth
                                     Quarter  Quarter  Quarter  Quarter  Total
                                     -------  -------  -------  -------  -----

    Operating income as reported      $ 158    $  41    $ 135    $ 221   $ 555

    Add back: Synthetic Fuel
     operating loss                      45       36       34       29     144
                                     -------  -------  -------  -------  -----

    Lodging operating income**        $ 203    $  77    $ 169    $ 250   $ 699
                                    ========  =======  =======  =======  =====

    ** Denotes non-GAAP financial measures.
    *** Guidance not provided for the fourth quarter and full year of 2006.



                         MARRIOTT INTERNATIONAL, INC.
                  Non-GAAP Financial Measure Reconciliation
       Measures that Exclude Synthetic Fuel and Leveraged Lease Charge
                   (in millions, except per share amounts)

                                  Twelve Weeks ending September 8, 2006
                              ------------------------------------------------
                                                                     Excluding
                                                                     Synthetic
                                                                     Fuel and
                                      Synthetic  Excluding Leveraged Leveraged
                                 As      Fuel    Synthetic   Lease     Lease
                              Reported  Impact     Fuel**   Charge    Charge**
                              -------- --------  --------- --------- ---------

    Operating income           $  229   $    2     $  227   $    -    $  227
    Gains and other income         13        3         10        -        10
    Interest income and
     interest expense             (18)      (3)       (15)       -       (15)
    Equity in losses               (1)       -         (1)       -        (1)
                              -------- --------  --------- --------- ---------
    Income from continuing
     operations before income
     taxes and minority
     interest                     223        2        221        -       221
                              -------- --------  --------- --------- ---------

    Tax provision                 (78)      (1)       (77)       -       (77)
    Reversal of tax credits        (4)      (4)         -        -         -
                              -------- --------  --------- --------- ---------
    Total tax provision           (82)      (5)       (77)       -       (77)
                              -------- --------  --------- --------- ---------

    Minority interest               -        -          -        -       -
                              -------- --------  --------- --------- ---------

    Income (loss) from
     continuing operations      $  141  $   (3)    $  144   $    -    $  144
                              ======== ========  ========= ========= =========

    Diluted shares               424.7   424.7      424.7    424.7     424.7

    Earnings (losses) from
     continuing operations
     per share - diluted        $ 0.33  $(0.01)    $ 0.34   $   -      $0.34

    Tax rate                     36.8%              34.8%              34.8%


                                  Twelve Weeks ending September 9, 2005
                              ------------------------------------------------
                                                                     Excluding
                                                                     Synthetic
                                                                     Fuel and
                                      Synthetic  Excluding Leveraged Leveraged
                                 As      Fuel    Synthetic   Lease     Lease
                              Reported  Impact     Fuel**   Charge    Charge**
                              -------- --------  --------- --------- ---------

    Operating income (loss)     $  135  $  (34)    $  169   $    -    $  169
    Gains and other income          39      21         18        -        18
    Interest income, provision
     for loan losses and
     interest expense              (28)      -        (28)     (17)      (11)
    Equity in earnings              17       -         17        -        17
                              -------- --------  --------- --------- ---------
    Income (loss) from
     continuing operations
     before income taxes and
     minority interest             163     (13)       176      (17)      193
                              -------- --------  --------- --------- ---------

    Tax (provision)/benefit        (61)     (3)       (58)       6       (64)
    Tax credits                     28      28          -        -         -
                              -------- --------  --------- --------- ---------
    Total tax (provision)/
     benefit                       (33)     25        (58)       6       (64)
                              -------- --------  --------- --------- ---------

    Minority interest               18      18          -        -         -
                              -------- --------  --------- --------- ---------

    Income (loss) from
        continuing operations   $  148  $   30     $  118   $  (11)   $  129
                              ======== ========  ========= ========= =========

    Diluted shares               458.7   458.7      458.7    458.7     458.7

    Earnings (losses) from
     continuing operations per
     share - diluted(1)         $ 0.32  $ 0.07     $ 0.26   $(0.02)   $ 0.28

    Tax rate                     20.2%              33.0%              33.2%

    ** Denotes non-GAAP financial measures.


    (1) The sum of earnings per share as reported plus the individual earnings
        per share impact associated with Synthetic Fuel differs from earnings
        per share excluding Synthetic Fuel.



                         MARRIOTT INTERNATIONAL, INC.
                  Non-GAAP Financial Measure Reconciliation
  Measures that Exclude Synthetic Fuel, CTF Transaction, and Leveraged Lease
                                    Charge
                   (in millions, except per share amounts)

                            Thirty-six Weeks ending September 8, 2006
                     ---------------------------------------------------------
                                                                    Excluding
                                                                    Synthetic
                                                                    Fuel, CTF
                                                                   Transaction
                                                                       and
                             Synthetic  Excluding   CTF   Leveraged  Leveraged
                        As      Fuel    Synthetic  Trans-   Lease     Lease
                     Reported  Impact     Fuel**   action   Charge    Charge**
                     -------- --------  --------  ------- --------- ----------

    Operating income
     (loss)           $  706  $  (43)    $  749    $   -    $   -     $  749
    Gains and other
     income               55       2         53        -        -         53
    Interest income,
     reversal of loan
     losses and
     interest expense    (49)     (1)       (48)       -        -        (48)
    Equity in earnings     2       -          2        -        -          2
                     -------- --------  --------  ------- --------- ----------
    Income (loss) from
     continuing
     operations before
     income taxes and
     minority interest   714     (42)       756        -        -        756
                     -------- --------  --------  ------- --------- ----------

    Tax (provision)/
     benefit            (251)     13       (264)       -        -       (264)
    Tax credits           28      28          -        -        -          -
                     -------- --------  --------  ------- --------- ----------
    Total tax
     (provision)/
     benefit            (223)     41       (264)       -        -       (264)
                     -------- --------  --------  ------- --------- ----------

    Minority interest      6       5          1        -        -          1
                     -------- --------  --------  ------- --------- ----------

    Income from
     continuing
     operations       $  497  $    4     $  493    $   -    $   -     $  493
                     ======== ========  ========  ======= ========= ==========
    Diluted shares     434.4   434.4      434.4    434.4    434.4      434.4

    Earnings from
     continuing
     operations per
     share - diluted  $ 1.14  $ 0.01     $ 1.13    $   -    $   -     $ 1.13

    Tax rate           31.2%              34.9%                        34.9%


                             Thirty-six Weeks ending September 9, 2005
                     ---------------------------------------------------------
                                                                    Excluding
                                                                    Synthetic
                                                                    Fuel, CTF
                                                                   Transaction
                                                                       and
                             Synthetic  Excluding   CTF   Leveraged  Leveraged
                        As      Fuel    Synthetic  Trans-   Lease     Lease
                     Reported  Impact     Fuel**   action   Charge    Charge**
                     -------- --------  --------  ------- --------- ----------

    Operating income
     (loss)           $  334  $ (115)    $  449   $  (94)   $   -     $  543
    Gains and other
     income               97      20         77        -        -         77
    Interest income,
     provision for
     loan losses, and
     interest
     expense             (32)      -        (32)       -      (17)       (15)
    Equity in earnings    18       -         18        -        -         18
                     -------- --------  --------  ------- --------- ----------
    Income (loss) from
     continuing
     operations before
     income taxes and
     minority interest   417     (95)       512      (94)     (17)       623
                     -------- --------  --------  ------- --------- ----------

    Tax (provision)/
     benefit            (152)     21       (173)      32        6       (211)
    Tax credits          134     134          -        -        -          -
                     -------- --------  --------  ------- --------- ----------
    Total tax
     (provision)/
     benefit             (18)    155       (173)      32        6       (211)
                     -------- --------  --------  ------- --------- ----------

    Minority interest     32      32          -        -        -          -
                     -------- --------  --------  ------- --------- ----------

    Income (loss)
     from continuing
     operations       $  431  $   92     $  339   $  (62)  $  (11)    $  412
                     ======== ========  ========  ======= ========= ==========

    Diluted shares     470.6   470.6      470.6    470.6    470.6      470.6

    Earnings (losses)
     from continuing
     operations per
     share -
     diluted(1)       $ 0.92  $ 0.20     $ 0.72   $(0.13)  $(0.02)    $ 0.88

    Tax rate            4.3%              33.8%                        33.9%

    ** Denotes non-GAAP financial measures.

    (1) The sum of earnings per share as reported plus the individual earnings
        per share impact associated with Synthetic Fuel, CTF Transaction and
        Leveraged Lease charge differs from earnings per share excluding
        Synthetic Fuel, CTF Transaction and Leveraged Lease charge.



                         MARRIOTT INTERNATIONAL, INC.
                          Non-GAAP Financial Measure
                                    EBITDA
                               ($ in millions)

                                                   Fiscal Year 2006
                                          ------------------------------------
                                           First   Second    Third
                                          Quarter  Quarter  Quarter  YTD Total
                                          -------  -------  -------  ---------
    Net income                              $  65    $ 186    $ 141    $ 392
    Cumulative effect of change in
     accounting principle before tax          173        -        -      173
    Interest expense                           27       30       29       86
    Tax provision from continuing operations   56       85       82      223
    Tax benefit from change in accounting
     principle                                (68)       -        -      (68)
    Depreciation                               34       34       36      104
    Amortization                                6        8        8       22
    Less: Depreciation reimbursed by
     third-party owners                        (4)      (4)      (4)     (12)
    Interest expense from unconsolidated
     joint ventures                             5        6        5       16
    Depreciation and amortization from
     unconsolidated joint ventures              6        7        7       20
                                          -------  -------  -------  ---------
    EBITDA**                                $ 300    $ 352    $ 304    $ 956

    Synthetic fuel adjustment                  24       11       (4)      31
                                          -------  -------  -------  ---------
    Adjusted EBITDA**                       $ 324    $ 363    $ 300    $ 987
                                          =======  =======  =======  =========

    Increase over 2005 Adjusted EBITDA        17%      19%      12%      16%

    The following items make up the
     Synthetic Fuel adjustment:
    Pre-tax synthetic fuel operating
     losses (income)                        $  31    $  13    $  (2)   $  42
    Pre-tax minority interest - synthetic
     fuel                                      (5)       -      -         (5)
    Synthetic fuel depreciation                (2)      (2)      (2)      (6)
                                          -------  -------  -------  ---------
    EBITDA adjustment for Synthetic Fuel    $  24    $  11    $  (4)   $  31
                                          =======  =======  =======  =========


                                               Fiscal Year 2005
                                   -------------------------------------------
                                    First   Second    Third   Fourth
                                   Quarter  Quarter  Quarter  Quarter   Total
                                   -------  -------  -------  -------  -------

    Net income                       $ 145    $ 138    $ 149    $ 237  $  669
    Interest expense                    24       21       24       37     106
    Tax provision/(benefit) from
     continuing operations               5      (20)      33       76      94
    Tax provision from discontinued
     operations                          -        -        1        -       1
    Depreciation                        30       29       46       51     156
    Amortization                         7        7        7        7      28
    Less: Depreciation reimbursed by
     third-party owners                  -        -      (12)      (5)    (17)
    Interest expense from
     unconsolidated joint ventures      11        6        4        8      29
    Depreciation and amortization
     from unconsolidated joint
     ventures                           12        9        7       11      39
                                   -------  -------  -------  -------  -------
    EBITDA**                         $ 234    $ 190    $ 259    $ 422  $1,105

    Synthetic fuel adjustment           42       22       (7)      (1)     56
    Pre-tax gain from discontinued
     operations                          -        -       (2)       -      (2)
    Non-recurring charges -
       CTF Transaction                   -       94        -        -      94
       Leveraged lease charge            -        -       17        -      17
                                   -------  -------  -------  -------  -------
    Adjusted EBITDA**                $ 276    $ 306    $ 267    $ 421  $1,270
                                   =======  =======  =======  =======  =======

    The following items make up the
     Synthetic Fuel adjustment:
    Pre-tax synthetic fuel operating
     losses                          $  54    $  28    $  13    $  17  $  112
    Pre-tax minority interest -
     synthetic fuel                    (10)      (4)     (18)     (15)    (47)
    Synthetic fuel depreciation         (2)      (2)      (2)      (3)     (9)
                                   -------  -------  -------  -------  -------
    EBITDA adjustment for synthetic
     fuel                            $  42    $  22    $  (7)   $  (1) $   56
                                   =======  =======  =======  =======  =======

    ** Denotes non-GAAP financial measures.


SOURCE Marriott International, Inc.

Tom Marder of Marriott International, Inc., +1-301-380-2553,
thomas.marder@marriott.com
http://www.marriott.com/

Copyright (C) 2006 PR Newswire. All rights reserved

News Provided by COMTEX

About Marriott