Marriott International Reports Outstanding Second Quarter 2005 Results
WASHINGTON, July 14, 2005 /PRNewswire-FirstCall via COMTEX/ -- Marriott International, Inc. (NYSE: MAR) today reported diluted earnings per share (EPS) of $0.59 in the second quarter of 2005 and net income of $138 million. Results included $94 million of pre-tax charges ($0.26 per share after-tax) primarily due to the non-cash write-off of management agreements in connection with the CTF transaction, $29 million of pre-tax costs ($0.08 per share after-tax) related to the company's new bedding incentive program, and $44 million of net income ($0.19 per share) from the synthetic fuel operations. EPS excluding the synthetic fuel operations, CTF transaction and bedding incentive program was $0.75 in the 2005 second quarter, up 39 percent from comparable EPS in the 2004 second quarter.
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J.W. Marriott, Jr., chairman and chief executive officer of Marriott International, said, "The economy continues to be strong and so does our business. In the second quarter, surging U.S. travel demand drove occupancy and room rates higher in most markets, from New York and Seattle to New Orleans and San Francisco. Marriott's occupancy and room rates improved due to accelerating corporate demand, growing group meeting attendance and increasing global travel.
"Outside the U.S., international tourist and business travel demand also increased, driving Marriott's international managed REVPAR to historic highs. We continue to expand to meet that international demand with nearly 60 hotels in over 30 countries outside North America in our development pipeline. Globally, our pipeline of properties under construction, awaiting conversion or approved for development increased during the quarter to approximately 370 hotels and 60,000 rooms.
"While we are generating strong results today, we are setting the stage for an even better Marriott experience tomorrow. We and our owners and franchisees continue to invest in product - our new bedding package, our internet and technology offerings, and new room and public space designs. In 2005, we are rolling out new luxurious bedding for 628,000 beds at approximately 2,400 hotels, and renovating 331 company-operated hotels worldwide.
"With robust industry demand, our increasing share of expected low industry supply growth and the strength of our brand preference, we expect continued pricing power and strong financial results for the remainder of 2005 and beyond," said Mr. Marriott.
In the second fiscal quarter (12 week period from March 26, 2005 to June 17, 2005), REVPAR for the company's 2,250 comparable worldwide systemwide properties increased by 11.1 percent (10.4 percent using constant dollars). Company-operated comparable North American REVPAR increased by 10 percent in the second quarter of 2005; occupancy was up 1 percentage point to 76.2 percent. Robust demand for the company's brands in North America resulted in an 8.5 percent increase in average daily rate. When calculated for the calendar quarter (April 1 - June 30), North American company-operated REVPAR increased 11.5 percent. REVPAR at the comparable company-operated North American full-service hotels (including Marriott Hotels & Resorts, JW Marriott Hotels & Resorts, The Ritz-Carlton, and Renaissance Hotels & Resorts) increased by 10.3 percent during the quarter (12 percent for the calendar quarter), driven by an 8.2 percent increase in average daily rate and a 1.4 percentage point occupancy gain to 75.9 percent. North American company- operated REVPAR for comparable select-service and extended-stay brands (including Courtyard, Fairfield Inn, Residence Inn, TownePlace Suites, and SpringHill Suites) increased 9.2 percent (10.2 percent for the calendar quarter), driven by an 8.8 percent increase in average daily rate and a slight increase in occupancy to 76.6 percent.
International systemwide REVPAR increased 17.3 percent (13.4 percent using constant dollars), including a 13.6 percent increase in rate and a 2.4 percentage point increase in occupancy. The company experienced continued strength in Asia and the Middle East in the second quarter, with REVPAR in China up 23 percent and REVPAR in Egypt up 17 percent. Demand for the company's resorts in Mexico drove REVPAR up 14 percent in that market while REVPAR at the company's Caribbean hotels increased 16 percent.
The company added 34 hotels (5,932 rooms) to the worldwide lodging portfolio during the second quarter, including Marriott hotels in Okinawa and Beijing, the Renaissance Paris Vendome hotel and the Ritz-Carlton hotel in Jakarta. Five properties (670 rooms), all first generation Fairfield Inns, exited the system and one hotel (276 rooms) was closed for renovation. At quarter end, the company's lodging group encompassed 2,676 hotels and timeshare resorts (489,430 rooms).
MARRIOTT REVENUES totaled $2.7 billion in the second quarter of 2005, an 11 percent increase from 2004. Base management and franchise fees increased 13 percent to $201 million reflecting growth in units and REVPAR. Franchise fee growth was negatively impacted by the sale of the Ramada International franchise business in 2004, and the conversion of 46 hotels in the United Kingdom in the second quarter of 2005 from franchise to management agreements, which resulted in a shift from franchise to base management fees. With a nearly 10 percent increase in room rates at company-operated properties worldwide (using actual exchange rates), company-operated hotels generated house profit margins of 37.9 percent, a 170 basis point improvement over the prior year quarter. House profit margins for North American company-operated properties increased 120 basis points to 37.7 percent and house profit per available room increased nearly 12 percent. Property level EBITDA margins for North American company-operated properties, which include deductions for insurance and property taxes, but excludes management fees, increased 150 basis points.
Driven by the strong property level profits, incentive management fees rose 44 percent to $52 million. In the 2005 second quarter, including the 120 hotels in the Courtyard joint venture, 42 percent of the company's managed properties paid incentive fees, compared to 28 percent in the year ago quarter.
Property level room revenue booked through Marriott.com totaled $613 million during the second quarter, an increase of 43 percent over the prior year. Marriott.com represented 12 percent of total property level room reservations during the quarter.
Revenue from timeshare interval sales and services increased 19 percent during the second quarter of 2005, largely due to higher financially reportable development revenue. Timeshare contract sales, including sales made by joint venture projects declined 1 percent, primarily due to limited available inventory at the Ritz-Carlton fractional resorts in St. Thomas and Bachelor Gulch, Colorado. Those resorts experienced exceptional demand in 2004. Contract sales for the Marriott Vacation Club resorts rose 11 percent.
LODGING OPERATING INCOME benefited from higher fees and strong timeshare profits but showed a decline of 48 percent in the second quarter to $77 million, largely as a result of a $94 million charge associated with the CTF transaction, primarily related to the non-cash write-off of management agreements, which were replaced by new long-term management agreements, $29 million of incentives paid to owners and franchisees to accelerate the roll- out of the new bedding program, $6 million in expense related to guarantees at two hotels, and a $12 million payment made to retain a management agreement, offset in part by the receipt of a $10 million fee for the termination of a hotel management agreement.
SYNTHETIC FUEL. Net income generated from the synthetic fuel joint ventures totaled $44 million in the second quarter. The ventures contributed earnings per share of $0.19 compared to $0.13 in the prior year quarter. Following initiation of an IRS challenge to the placed-in-service date of three of the four synthetic fuel plants, the company amended the agreement with the joint venture partner, and Marriott received a larger allocation of the tax credits generated by the joint venture in the second quarter of 2005 compared to the 2004 second quarter. After the close of the second quarter the IRS ruled that the synthetic fuel plants met the placed-in-service requirement under Section 29 of the Internal Revenue Code. Subsequently, the company entered into an amended agreement with the joint venture partner and the allocation of tax credits returned to approximately 50 percent effective June 1, 2005. The company's tax benefit for the quarter was $20 million, including the $68 million tax benefit from the synthetic fuel operations.
GAINS AND OTHER INCOME (excluding synthetic fuel) in the second quarter included the $29 million gain on the sale of timeshare mortgage notes, $22 million of gains resulting from the sale or refinancing of real estate loans and $4 million of other gains. In the second quarter of 2004, gains from the timeshare note sale totaled $27 million and other gains totaled $12 million.
INTEREST EXPENSE declined $3 million to $21 million. The company retired its $275 million Series D senior notes in April 2005 and issued $350 million in new Series F senior notes in June 2005.
INTEREST INCOME was down $14 million to $25 million in the second quarter of 2005 due to lower notes receivable balances. Since the 2004 second quarter, the company's loan associated with the Ramada Two Flags joint venture was repaid, the company sold two real estate notes and as a result of refinancing, several notes were paid off, including the notes receivable associated with the Courtyard joint venture.
In the second quarter, the company received nearly $700 million in proceeds from notes receivable repayments and asset sales, including timeshare notes.
Adjusted earnings before interest expense, taxes, depreciation and amortization (Adjusted EBITDA) rose 20 percent to $334 million in the second quarter. Total debt at the end of the second quarter of 2005 was $1,432 million and the cash balance totaled $471 million, compared to $1,325 million of debt and $770 million of cash at the end of 2004. As a result of cash flows generated from strong operations and capital recycling, the company was able to repurchase $785 million of stock in the first half of 2005 and make substantial investments in its lodging business, while increasing debt, net of cash, only $400 million.
The company repurchased 7.2 million shares of common stock in the second quarter of 2005 at a cost of $457 million and has repurchased a total of 13.6 million shares year-to-date through July 13, 2005, at a cost of $872 million. The current remaining share repurchase authorization totals approximately 5 million shares.
OUTLOOK
Given the strong results year to date, the company continues to estimate 2005 systemwide North American REVPAR growth of 8 percent to 10 percent, primarily driven by rate. The company plans to open 25,000 to 30,000 new rooms. Under these assumptions, fees should grow to $1,020 million to $1,030 million in 2005, an increase of 17 to 18 percent over 2004.
Timeshare interval sales and services revenues, net of direct expenses, should increase approximately 25 to 28 percent for the year, to $261 million to $267 million. The company plans to complete another timeshare mortgage note sale transaction in the fourth quarter.
As part of the new bedding program that will add new luxurious bedding to 628,000 beds at approximately 2,400 hotels across eight brands worldwide, Marriott offered owners and franchisees an incentive to ensure that guests can enjoy the comfort and luxury of the new bedding by year-end 2005. In the second quarter, Marriott incurred a $29 million charge for bedding incentives and expects to incur additional costs of approximately $5 million in the third quarter.
The company expects general, administrative and other expenses to decrease from $607 million in 2004 to a range of $593 million to $599 million in 2005, excluding roughly $35 million for the bedding incentive program and the $94 million charge associated with the CTF transaction.
Given the above items, the company estimates that lodging operating income will total $710 million to $720 million in 2005 (including roughly $35 million of costs for the bedding incentives and the $94 million charge associated with the CTF transaction), an increase of 23 to 25 percent, or 46 to 48 percent without the impact of the bedding incentives and CTF charges.
The company's EPS guidance for 2005 includes roughly $0.49 to $0.51 of after tax earnings per share from the synthetic fuel business.
The company expects the notes receivable balance to continue to decline and anticipates reinvesting the cash in attractive investment opportunities, including share repurchases. With the reduction in the notes receivable balance, the company anticipates net interest (interest expense, interest income and provision for loan losses) will decline to an expense of roughly $45 million to $50 million in 2005 from income of $55 million in 2004.
In total, the company estimates full year 2005 EPS to range from $2.68 to $2.78 (including $0.10 of after-tax earnings per share impact for costs associated with the company's new bedding incentives, $0.49 to $0.51 of after- tax earnings per share benefit from the synthetic fuel business, and $0.26 of after-tax earnings per share impact from the charge associated with the CTF transaction).
In the third quarter 2005, the company anticipates North American systemwide REVPAR growth of 7 percent to 9 percent, with an approximately 1.5 to 2.0 percentage point improvement in house profit margins.
Under the above assumptions, the company currently estimates the following results for the third quarter and full year 2005:
Third Quarter Fiscal Year 2005
Total fee revenue $215 million to $1,020 million to
$220 million $1,030 million
Timeshare interval
sales and services,
net of direct
expenses $62 million to $261 million to
$66 million $267 million
General, administrative
& other expense $137 million to $720 million to
$141 million $730 million
Lodging operating
income $170 million to $710 million to
$175 million $720 million
Gains (excluding
synthetic fuel) $15 million to $106 million to
$20 million $113 million
Net interest expense $15 million to $45 million to
$20 million $50 million
Earnings per share
from synthetic fuel Approximately $0.12 $0.49 to $0.51
Earnings per share $0.61 to $0.65 $2.68 to $2.78
The company expects investment spending in 2005 to total approximately $1.4 billion including $50 million for maintenance capital spending, $800 million for capital expenditures, property acquisitions and timeshare inventory (including $426 million for the acquisition of 17 CTF Holding hotels), $150 million in new mezzanine financing and mortgage loans for hotels developed by owners and franchisees and approximately $350 million to $400 million in equity and other investments (including $170 million investment in the joint venture with Whitbread).
Marriott International, Inc. (NYSE: MAR) will conduct its quarterly earnings review for the investment community and news media on Thursday, July 14, 2005 at 10 a.m. Eastern Time (ET). The conference call will be webcast simultaneously via Marriott's investor relations website at http://www.marriott.com/investor, click the "Recent Investor News" tab and click on the quarterly conference call link. A replay will be available on the Internet until August 14, 2005.
The telephone dial-in number for the conference call is 719-457-2727. A telephone replay of the conference call will also be available by telephone from 1 p.m. ET, Thursday, June 14, 2005 until Thursday, July 21, 2005 at 8 p.m. ET. To access the recording, call 719-457-0820. The reservation number for the recording is 1682462.
Note: This press release contains "forward-looking statements" within the meaning of federal securities laws, including REVPAR, profit margin and earning trends; statements concerning the number of lodging properties we expect to add in future years; our expected investment spending; our anticipated results from synthetic fuel operations; and similar statements concerning anticipated future events and expectations that are not historical facts. We caution you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including the pace and extent of the current recovery in both the economy and the lodging industry; supply and demand changes for hotel rooms, vacation ownership intervals, and corporate housing; competitive conditions in the lodging industry; relationships with clients and property owners; the availability of capital to finance hotel growth and refurbishment; and the uncertain effect on our production plans of the potential reduction or elimination of projected future tax credits for synthetic fuel if average crude oil prices in 2005 and beyond exceed certain statutory thresholds; 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 2,600 lodging properties in the United States and 65 other countries and territories. Marriott International operates and franchises hotels under the Marriott, JW Marriott, Renaissance, Bulgari, The Ritz-Carlton, Courtyard, Residence Inn, SpringHill Suites, TownePlace Suites, and Fairfield Inn brand names; develops and operates vacation ownership resorts under the Marriott Vacation Club International, Horizons, The Ritz-Carlton Club and Marriott Grand Residence Club brands; operates Marriott Executive Apartments; provides furnished corporate housing through its Marriott ExecuStay division; and operates conference centers. Marriott is also in the synthetic fuel business. The company is headquartered in Washington, D.C. It is ranked as the lodging industry's most admired company and one of the best places to work for by Fortune(R) magazine. In fiscal year 2004, Marriott International reported sales from continuing operations of $10 billion, and the company had approximately 133,000 employees at year-end 2004. For more information or reservations, please visit our web site at http://www.marriott.com.
MARRIOTT INTERNATIONAL, INC.
Financial Highlights
(in millions, except per share amounts)
12 Weeks Ended 12 Weeks Ended
June 17, 2005 June 18, 2004
-------------------- ------------------
Synth- Synth- Percent
etic etic Better/
Lodging Fuel Total Lodging Fuel Total (Worse)
-------------------- ------------------ -------
REVENUES
Base management fees $123 $- $123 $106 $- $106 16
Franchise fees 78 - 78 72 - 72 8
Incentive management fees 52 - 52 36 - 36 44
Owned, leased, corporate
housing and other (1) 180 - 180 182 - 182 (1)
Timeshare interval sales
and services (2) 335 - 335 281 - 281 19
Cost reimbursements (3) 1,795 - 1,795 1,614 - 1,614 11
Synthetic fuel - 98 98 - 111 111 (12)
------ ----- ------ ----- ----- -----
Total Revenues 2,563 98 2,661 2,291 111 2,402 11
OPERATING COSTS AND EXPENSES
Owned, leased and corporate
housing - direct (4) 138 - 138 157 - 157 12
Timeshare - direct 269 - 269 245 - 245 (10)
Reimbursed costs 1,795 - 1,795 1,614 - 1,614 (11)
General, administrative and
other (5) 284 - 284 127 - 127 (124)
Synthetic fuel - 134 134 - 141 141 5
------ ----- ------ ----- ----- -----
Total Expenses 2,486 134 2,620 2,143 141 2,284 (15)
------ ----- ------ ----- ----- -----
OPERATING INCOME (LOSS) $77 $(36) 41 $148 $(30) 118 (65)
====== ===== ===== =====
Gains and other income (6) 63 48 31
Interest expense (21) (24) 13
Interest income 25 39 (36)
Provision for loan losses - (3) 100
Equity in earnings -
Other (7) 6 1 500
------ -----
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 114 179 (36)
Benefit/(Provision) for
income taxes 20 (33) 161
------ -----
INCOME BEFORE MINORITY
INTEREST 134 146 (8)
Minority interest -
Synthetic fuel 4 14 (71)
------ -----
NET INCOME $138 $160 (14)
====== =====
EARNINGS PER SHARE - Basic $0.63 $0.71 (11)
====== =====
EARNINGS PER SHARE - Diluted $0.59 $0.67 (12)
====== =====
Basic Shares 220.5 226.9
Diluted Shares 234.5 240.3
1 - Owned, leased, corporate housing and other revenue includes revenue
from the properties we own or lease, revenue from our ExecuStay
business, land rent income and other revenue.
2 - Timeshare interval sales and services includes total timeshare revenue
except for base fees, cost reimbursements, note sale gains, and joint
venture earnings (losses).
3 - Cost reimbursements include reimbursements from lodging properties for
Marriott funded operating expenses.
4 - Owned, leased and corporate housing -- direct expenses include
operating expenses related to our owned or leased hotels, including
lease payments, pre-opening expenses and depreciation, plus expenses
related to our ExecuStay business.
5 - General, administrative and other expenses include the overhead costs
allocated to our lodging business segments (including ExecuStay and
timeshare) and our unallocated corporate overhead costs and general
expenses.
6 - Gains and other income includes gains on the sale of real estate. In
addition, gains and other income also include the earn-out payments we
made to the previous owner of the synthetic fuel operations and earn-
out payments we received from our synthetic fuel joint venture
partner.
7 - Equity in earnings -- Other includes our equity in earnings of
unconsolidated joint ventures.
MARRIOTT INTERNATIONAL, INC.
Financial Highlights
(in millions, except per share amounts)
24 Weeks Ended 24 Weeks Ended
June 17, 2005 June 18, 2004
-------------------- ------------------
Synth- Synth- Percent
etic etic Better/
Lodging Fuel Total Lodging Fuel Total (Worse)
------- ---- ----- ------- ---- ----- -------
REVENUES
Base management fees $234 $- $234 $205 $- $205 14
Franchise fees 148 - 148 133 - 133 11
Incentive management fees 102 - 102 69 - 69 48
Owned, leased, corporate
housing and other (1) 347 - 347 338 - 338 3
Timeshare interval sales
and services (2) 681 - 681 599 - 599 14
Cost reimbursements (3) 3,477 - 3,477 3,199 - 3,199 9
Synthetic fuel - 206 206 - 111 111 86
------- ---- ----- ------- ---- -----
Total Revenues 4,989 206 5,195 4,543 111 4,654 12
OPERATING COSTS AND EXPENSES
Owned, leased and corporate
housing - direct (4) 283 - 283 289 - 289 2
Timeshare - direct 541 - 541 497 - 497 (9)
Reimbursed costs 3,477 - 3,477 3,199 - 3,199 (9)
General, administrative
and other (5) 408 - 408 259 - 259 (58)
Synthetic fuel - 287 287 - 141 141 (104)
------- ---- ----- ------- ---- -----
Total Expenses 4,709 287 4,996 4,244 141 4,385 (14)
------- ---- ----- ------- ---- -----
OPERATING INCOME (LOSS) $280 $(81) 199 $299 $(30) 269 (26)
======= ==== ======= ====
Gains and other income (6) 58 52 12
Interest expense (45) (46) 2
Interest income 52 65 (20)
Provision for loan losses (11) - *
Equity in earnings/(losses)
- Synthetic fuel (7) - (28) 100
- Other (8) 1 (1) 200
----- -----
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 254 311 (18)
Benefit/(Provision) for
income taxes 15 (51) 129
----- -----
INCOME BEFORE MINORITY
INTEREST 269 260 3
Minority interest -
Synthetic fuel 14 14 -
----- -----
NET INCOME $283 $274 3
===== =====
EARNINGS PER SHARE - Basic $1.27 $1.20 6
===== =====
EARNINGS PER SHARE - Diluted $1.19 $1.14 4
===== =====
Basic Shares 223.0 228.2
Diluted Shares 237.8 241.5
* Percent can not be calculated.
1 - Owned, leased, corporate housing and other revenue includes revenue
from the properties we own or lease, revenue from our ExecuStay
business, land rent income and other revenue.
2 - Timeshare interval sales and services includes total timeshare revenue
except for base fees, cost reimbursements, note sale gains, and joint
venture earnings (losses).
3 - Cost reimbursements include reimbursements from lodging properties for
Marriott funded operating expenses.
4 - Owned, leased and corporate housing - direct expenses include
operating expenses related to our owned or leased hotels, including
lease payments, pre-opening expenses and depreciation, plus expenses
related to our ExecuStay business.
5 - General, administrative and other expenses include the overhead costs
allocated to our lodging business segments (including ExecuStay and
timeshare) and our unallocated corporate overhead costs and general
expenses.
6 - Gains and other income includes gains on the sale of real estate. In
addition, gains and other income for the first half of 2005 also
include the earn-out payments we made to the previous owner of the
synthetic fuel operations and earn-out payments we received from our
synthetic fuel joint venture partner.
7 - Equity in earnings/(losses) - Synthetic fuel includes our share of the
equity in earnings of the synthetic fuel joint ventures and the net
earn-out payments made to our synthetic fuel joint venture partner
from January 3, 2004 through March 25, 2004. Beginning March 26, 2004,
the synthetic fuel operations were consolidated as a result of
adopting FIN 46(R), "Consolidation of Variable Interest Entities."
8 - Equity in earnings/(losses) - Other includes our equity in earnings
(losses) of unconsolidated joint ventures.
MARRIOTT INTERNATIONAL, INC.
Business Segments
($ in millions)
Twelve Weeks Ended Percent
---------------------------- Better/
June 17, 2005 June 18, 2004 (Worse)
------------- ------------- -------
REVENUES
Full-Service $1,751 $1,548 13%
Select-Service 293 264 11%
Extended-Stay 136 129 5%
Timeshare 383 350 9%
------------- -------------
Total Lodging (1) 2,563 2,291 12%
Synthetic Fuel 98 111 -12%
------------- -------------
Total $2,661 $2,402 11%
============= =============
NET INCOME
Full-Service $30 $113 -73%
Select-Service 48 39 23%
Extended-Stay 13 18 -28%
Timeshare 80 51 57%
------------- -------------
Total Lodging financial
results (1) 171 221 -23%
Synthetic Fuel (after-tax) 44 31 42%
Unallocated corporate expenses (33) (33) -
Interest income, provision for
loan losses and interest expense 4 12 -67%
Income taxes (excluding Synthetic
Fuel) (48) (71) 32%
------------- -------------
Total $138 $160 -14%
============= =============
1 We consider lodging revenues and lodging financial results to be
meaningful indicators of our performance because they measure our growth
in profitability as a lodging company and enable investors to compare
the sales and results of our lodging operations to those of other
lodging companies.
MARRIOTT INTERNATIONAL, INC.
Business Segments
($ in millions)
Twenty-Four Weeks Ended Percent
---------------------------- Better/
June 17, 2005 June 18, 2004 (Worse)
------------- ------------- -------
REVENUES
Full-Service $3,380 $3,053 11%
Select-Service 565 511 11%
Extended-Stay 262 244 7%
Timeshare 782 735 6%
------------- -------------
Total Lodging (1) 4,989 4,543 10%
Synthetic Fuel 206 111 86%
------------- -------------
Total $5,195 $4,654 12%
============= =============
NET INCOME
Full-Service $146 $213 -31%
Select-Service 81 62 31%
Extended-Stay 29 28 4%
Timeshare 143 101 42%
------------- -------------
Total Lodging financial
results (1) 399 404 -1%
Synthetic Fuel (after-tax) 62 42 48%
Unallocated corporate expenses (59) (63) 6%
Interest income, provision for
loan losses and interest expense (4) 19 -121%
Income taxes (excluding Synthetic
Fuel) (115) (128) 10%
------------- -------------
Total $283 $274 3%
============= =============
1 We consider lodging revenues and lodging financial results to be
meaningful indicators of our performance because they measure our growth
in profitability as a lodging company and enable investors to compare
the sales and results of our lodging operations to those of other
lodging companies.
MARRIOTT INTERNATIONAL, INC.
Total Lodging Products(1)
--------------------------------------------------------------------------
Number of Number of
Properties Rooms/Suites
Change Change
vs. vs.
June 17, June 18, June 17, June 18,
Brand 2005 2004 2005 2004
--------------------------------- -------- -------- -------- ---------
Full-Service Lodging
Marriott Hotels & Resorts 499 17 181,184 4,203
The Ritz-Carlton 58 1 18,931 287
Renaissance Hotels & Resorts 136 6 48,129 1,302
Bulgari Hotel & Resort 1 - 58 -
Ramada International 4 (202) 724 (27,139)
Select-Service Lodging
Courtyard 668 30 96,239 4,795
Fairfield Inn 515 (15) 47,397 (2,794)
SpringHill Suites 134 18 15,557 2,072
Extended-Stay Lodging
Residence Inn 475 21 56,458 2,439
TownePlace Suites 118 6 11,935 473
Marriott Executive Apartments 16 2 2,809 338
Timeshare(2)
Marriott Vacation Club
International 44 1 9,160 786
Horizons by Marriott Vacation
Club International 2 - 328 72
The Ritz-Carlton Club 4 - 273 21
Marriott Grand Residence Club 2 - 248 -
------------------ -------------------
Total 2,676 (115) 489,430 (13,145)
================== ===================
1 Total Lodging Products excludes the 1,817 corporate housing rental
units.
2 Includes products in active sales which are not ready for occupancy.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
North American Comparable Company-Operated Properties(1)
--------------------------------------------------------------------------
Twelve Weeks Ended June 17, 2005 and June 18, 2004
--------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
Brand 2005 vs. 2004 2005 vs. 2004 2005 vs. 2004
--------------------------------------------------------------------------
Marriott Hotels and
Resorts $119.90 9.8% 76.5% 1.3% pts. $156.77 7.9%
The Ritz-Carlton (2) $229.89 11.3% 74.5% 0.4% pts. $308.59 10.7%
Renaissance Hotels and
Resorts $110.14 11.7% 74.2% 2.7% pts. $148.38 7.6%
Composite - Full-
Service $129.06 10.3% 75.9% 1.4% pts. $169.98 8.2%
Residence Inn $88.56 7.6% 81.7% 0.4% pts. $108.45 7.1%
Courtyard $79.14 9.4% 74.1% -0.1% pts. $106.85 9.5%
TownePlace Suites $54.41 7.6% 77.8% -0.3% pts. $69.93 8.1%
SpringHill Suites $74.38 17.3% 77.9% 4.8% pts. $95.54 10.1%
Composite - Select-
Service & Extended-
Stay $79.76 9.2% 76.6% 0.3% pts. $104.09 8.8%
Composite - All $109.88 10.0% 76.2% 1.0% pts. $144.20 8.5%
North American Comparable Systemwide Properties(1)
--------------------------------------------------------------------------
Twelve Weeks Ended June 17, 2005 and June 18, 2004
--------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
Brand 2005 vs. 2004 2005 vs. 2004 2005 vs. 2004
-------------------------------------------------------------------------
Marriott Hotels and
Resorts $107.36 9.4% 73.9% 1.4% pts. $145.34 7.3%
The Ritz-Carlton(2) $229.89 11.3% 74.5% 0.4% pts. $308.59 10.7%
Renaissance Hotels and
Resorts $102.42 12.0% 73.4% 2.9% pts. $139.54 7.6%
Composite - Full-
Service $114.68 10.0% 73.8% 1.6% pts. $155.31 7.7%
Residence Inn $85.05 7.6% 81.1% 0.5% pts. $104.89 7.0%
Courtyard $79.97 9.2% 75.4% 0.7% pts. $106.09 8.1%
Fairfield Inn $53.72 11.8% 72.3% 2.1% pts. $74.26 8.6%
TownePlace Suites $56.08 10.4% 78.0% -0.1% pts. $71.89 10.5%
SpringHill Suites $70.00 14.6% 76.7% 3.6% pts. $91.31 9.2%
Composite - Select-
Service & Extended-
Stay $73.54 9.5% 76.4% 1.1% pts. $96.19 7.9%
Composite - All $91.12 9.8% 75.3% 1.3% pts. $120.96 7.9%
1 Composite -- All statistics include properties for the Marriott Hotels &
Resorts, Renaissance Hotels & Resorts, The Ritz-Carlton, Courtyard,
Residence Inn, TownePlace Suites, Fairfield Inn, and SpringHill Suites
brands. Full-Service composite statistics include properties for
Marriott Hotels & Resorts, Renaissance Hotels & Resorts and The Ritz
Carlton brands. Select-Service and Extended-Stay composite statistics
include properties for the Courtyard, Residence Inn, TownePlace Suites,
Fairfield Inn and SpringHill Suites brands.
2 Statistics for The Ritz-Carlton are for March through May.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
North American Comparable Company-Operated Properties(1)
--------------------------------------------------------------------------
Twenty Four Weeks Ended June 17, 2005 and
June 18, 2004
--------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
Brand 2005 vs. 2004 2005 vs. 2004 2005 vs. 2004
-----------------------------------------------------------------------
Marriott Hotels and
Resorts $114.22 8.0% 73.1% 0.7% pts. $156.20 7.0%
The Ritz-Carlton(2) $221.86 12.4% 71.7% 0.4% pts. $309.36 11.8%
Renaissance Hotels and
Resorts $105.80 11.1% 71.8% 2.9% pts. $147.37 6.6%
Composite - Full-
Service $121.62 9.0% 72.8% 1.0% pts. $167.07 7.5%
Residence Inn $84.76 8.7% 79.2% 1.5% pts. $107.08 6.6%
Courtyard $75.82 9.1% 71.1% -0.5% pts. $106.70 9.8%
TownePlace Suites $51.31 7.1% 74.1% -0.3% pts. $69.24 7.6%
SpringHill Suites $70.43 19.8% 74.3% 5.9% pts. $94.81 10.3%
Composite - Select-
Service &
Extended-Stay $76.32 9.5% 73.7% 0.5% pts. $103.57 8.7%
Composite - All $103.80 9.1% 73.1% 0.8% pts. $141.91 7.9%
North American Comparable Systemwide Properties(1)
--------------------------------------------------------------------------
Twenty Four Weeks Ended June 17, 2005 and
June 18, 2004
--------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
Brand 2005 vs. 2004 2005 vs. 2004 2005 vs. 2004
--------------------------------------------------------------------------
Marriott Hotels and
Resorts $103.15 7.9% 71.0% 0.9% pts. $145.19 6.5%
The Ritz-Carlton(2) $221.86 12.4% 71.7% 0.4% pts. $309.36 11.8%
Renaissance Hotels and
Resorts $98.38 11.3% 70.6% 2.7% pts. $139.29 7.0%
Composite - Full-
Service $108.93 8.8% 71.0% 1.2% pts. $153.39 7.0%
Residence Inn $81.75 8.3% 78.5% 1.2% pts. $104.11 6.6%
Courtyard $75.78 8.9% 72.0% 0.5% pts. $105.27 8.1%
Fairfield Inn $49.93 11.4% 68.1% 1.9% pts. $73.36 8.3%
TownePlace Suites $53.27 11.0% 74.5% 0.7% pts. $71.48 10.0%
SpringHill Suites $66.77 14.9% 73.4% 3.7% pts. $90.99 9.1%
Composite - Select-
Service &
Extended-Stay $69.81 9.5% 73.1% 1.2% pts. $95.52 7.7%
Composite - All $86.39 9.2% 72.2% 1.2% pts. $119.63 7.3%
(1) Composite - All statistics include properties for the Marriott Hotels
& Resorts, Renaissance Hotels & Resorts, The Ritz-Carlton,
Courtyard, Residence Inn, TownePlace Suites, Fairfield Inn, and
SpringHill Suites brands. Full-Service composite statistics include
properties for Marriott Hotels & Resorts, Renaissance Hotels &
Resorts and The Ritz Carlton. Select-Service and Extended-Stay
composite statistics include properties for the Courtyard, Residence
Inn, TownePlace Suites, Fairfield Inn and SpringHill Suites brands.
(2) Statistics for The Ritz-Carlton are for January through May.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
(Constant $)
International Comparable Company-Operated Properties (1)(2)
--------------------------------------------------------------------------
Three Months Ended May 31, 2005 and May 31, 2004
-------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
Region/Brand 2005 vs. 2004 2005 vs. 2004 2005 vs. 2004
--------------------------------------------------------------------------
Caribbean & Latin
America $115.98 14.9% 74.5% 2.6% pts. $155.67 10.9%
Continental Europe $101.18 0.2% 70.2% -1.1% pts. $144.10 1.7%
United Kingdom $145.21 5.6% 76.6% -0.5% pts. $189.64 6.4%
Middle East & Africa $84.37 32.3% 80.2% 7.5% pts. $105.17 19.9%
Asia Pacific(3) $90.14 17.7% 76.7% 1.9% pts. $117.59 14.8%
The Ritz-Carlton
International $164.08 22.6% 75.6% 6.1% pts. $217.09 12.8%
Total International(4) $106.78 12.2% 74.9% 1.8% pts. $142.50 9.5%
Worldwide(5) $109.07 10.5% 75.9% 1.2% pts. $143.76 8.8%
International Comparable Systemwide Properties (1)(2)
--------------------------------------------------------------------------
Three Months Ended May 31, 2005 and May 31, 2004
-------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
Region/Brand 2005 vs. 2004 2005 vs. 2004 2005 vs. 2004
--------------------------------------------------------------------------
Caribbean & Latin
America $112.67 17.4% 74.0% 3.0% pts. $152.18 12.6%
Continental Europe $97.99 3.4% 68.1% 0.6% pts. $143.96 2.6%
United Kingdom $126.11 3.8% 73.6% -2.0% pts. $171.43 6.6%
Middle East & Africa $81.06 31.3% 77.8% 7.5% pts. $104.25 18.6%
Asia Pacific(3) $92.52 18.1% 77.5% 2.5% pts. $119.35 14.3%
The Ritz-Carlton
International $164.08 22.6% 75.6% 6.1% pts. $217.09 12.8%
Total International(4) $104.53 13.4% 74.2% 2.4% pts. $140.95 9.8%
Worldwide(5) $93.41 10.4% 75.1% 1.5% pts. $124.33 8.3%
(1) International financial results are reported on a period basis,
while International statistics are reported on a monthly basis.
(2) Statistics are in constant dollars and include results for March
through May. Excludes North America (except for Worldwide).
(3) Excludes Hawaii.
(4) Includes Hawaii.
(5) Worldwide includes international statistics for March through May
and North American statistics for the twelve weeks ending June 17,
2005 and June 18, 2004.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
(Constant $)
International Comparable Company-Operated Properties (1)(2)
--------------------------------------------------------------------------
Five Months Ended May 31, 2005 and May 31, 2004
-------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
Region/Brand 2005 vs. 2004 2005 vs. 2004 2005 vs. 2004
--------------------------------------------------------------------------
Caribbean & Latin
America $122.04 16.2% 75.7% 4.2% pts. $161.19 9.7%
Continental Europe $93.80 2.5% 65.8% 0.2% pts. $142.55 2.2%
United Kingdom $138.77 4.8% 74.0% -0.9% pts. $187.49 6.2%
Middle East & Africa $84.03 30.9% 78.4% 7.8% pts. $107.24 17.9%
Asia Pacific(3) $84.51 17.3% 74.7% 2.1% pts. $113.12 14.0%
The Ritz-Carlton
International $160.26 25.8% 74.0% 7.6% pts. $216.42 12.9%
Total International(4) $103.13 13.2% 72.9% 2.5% pts. $141.50 9.3%
Worldwide(5) $103.65 10.0% 73.1% 1.2% pts. $141.82 8.2%
International Comparable Systemwide Properties 1,2
--------------------------------------------------------------------------
Five Months Ended May 31, 2005 and May 31, 2004
-------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
Region/Brand 2005 vs. 2004 2005 vs. 2004 2005 vs. 2004
--------------------------------------------------------------------------
Caribbean & Latin
America $113.74 15.1% 73.2% 3.0% pts. $155.45 10.4%
Continental Europe $90.26 4.8% 63.7% 1.0% pts. $141.70 3.2%
United Kingdom $117.04 1.8% 68.9% -3.0% pts. $169.81 6.3%
Middle East & Africa $80.69 30.0% 76.0% 7.6% pts. $106.15 16.9%
Asia Pacific(3) $87.05 16.7% 75.4% 2.6% pts. $115.47 12.8%
The Ritz-Carlton
International $160.26 25.8% 74.0% 7.6% pts. $216.42 12.9%
Total International(4) $99.83 13.1% 71.6% 2.5% pts. $139.45 9.2%
Worldwide(5) $88.35 9.8% 72.1% 1.4% pts. $122.51 7.7%
(1) International financial results are reported on a period basis, while
International statistics are reported on a monthly basis.
(2) Statistics are in constant dollars and include results for January
through May. Excludes North America (except for Worldwide).
(3) Excludes Hawaii.
(4) Includes Hawaii.
(5) Worldwide includes international statistics for January through May
and North American statistics for the twenty-four weeks ending June
17, 2005 and June 18, 2004.
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
($ in millions)
We consider lodging operating income to be a meaningful indicator of
our performance because it measures our growth in profitability as a
lodging company and enables investors to compare the operating income
related to our lodging segments to the operating income of other lodging
companies. However, lodging operating income is a non-GAAP financial
measure and is not an alternative to operating income or any other
operating measure prescribes by Unites States generally accepted
accounting principles.
The reconciliation of operating income to lodging operating income is
as follows:
Fiscal Year 2005
------------------------------
First Second
Quarter Quarter Total
------- ------- -----
Operating income as reported $158 $41 $199
Add back: Synthetic fuel
operating loss 45 36 81
------- ------- -----
Lodging operating income $203 $77 $280
======= ======= =====
Fiscal Year 2004
-------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
Operating income as reported $151 $118 $99 $109 $477
Add back: Synthetic fuel
operating loss - 30 31 37 98
------- ------- ------- ------- -----
Lodging operating income $151 $148 $130 $146 $575
======= ======= ======= ======= =====
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
(in millions, except per share amounts)
We consider net income and earnings per share, both excluding the impact
of the synthetic fuel operations, the charge associated with the
agreements we entered into with CTF Holdings Ltd ("the CTF transaction")
and the bedding incentive program costs, to be meaningful performance
indicators because they allow for additional comparisons relative to our
on-going lodging operations before material charges. The $94 million
charge recorded in connection with the CTF transaction is primarily non
cash and due to the write-off of deferred contract acquisition costs
associated with the termination of management agreements. In addition, we
incurred a material charge of $29 million associated with our new bedding
incentive program. Management believes the above items should be excluded
from net income and earnings per share in order to be able to compare the
past and current results. The exclusion of the synthetic fuel operations
allows investors to compare the results of our operations to that of other
lodging companies.
However, net income and earnings per share, both excluding our synthetic
fuel operations, the charge associated with the CTF transaction and the
material bedding charge are non-GAAP financial measures, and are not
alternatives to net income, earnings per share or any other operating
measure prescribed by United States generally accepted accounting
principles.
The reconciliation of net income and earnings per share, both excluding
the impact of the synthetic fuel operations, the charge associated with
the CTF transaction and the bedding program incentive costs is as follows:
Twelve Weeks ending June 17, 2005
-------------------------------------------------
Exclu-
ding
Synth-
etic
Fuel,
CTF
Bedd- Acqui-
Exclu- ing sition
Synth- ding CTF Incen- and
etic Synth- Acqui- tive Bedd-
Net Fuel etic sition Program ing
Income Impact Fuel Charge Charge Charges
------ ------ ---- ------ ------ -------
Operating income (loss) $ 41 $ (36) $ 77 $ (94) $ (29) $ 200
Gains and other income 63 8 55 - - 55
Interest income,
(provision for loan
losses) and (interest
expense) 4 - 4 - - 4
Equity in earnings 6 - 6 - - 6
------ ------ ---- ------ ------ -------
Pre-tax income (loss) 114 (28) 142 (94) (29) 265
------ ------ ---- ------ ------ -------
Tax (Provision)/Benefit (39) 9 (48) 32 10 (90)
Tax Credits 59 59 - - - -
------ ------ ---- ------ ------ -------
Total Tax
Benefit/(Provision) 20 68 (48) 32 10 (90)
------ ------ ---- ------ ------ -------
Income before Minority
Interest 134 40 94 (62) (19) 175
Minority Interest -
Synthetic fuel 4 4 - - - -
------ ------ ---- ------ ------ -------
Net Income $138 $ 44 $ 94 $ (62) $ (19) $ 175
====== ====== ==== ====== ====== =======
Diluted Shares 234.5 234.5 234.5 234.5 234.5 234.5
Earnings per Share -
Diluted(1) $0.59 $0.19 $0.40 ($0.26) ($0.08) $0.75
Tax Rate -17.5% 33.8% 34.0%
1 The sum of earnings per share as reported plus the individual earnings
per share impacts associated with Synthetic Fuel, CTF, and Bedding
differs from earnings per share excluding Synthetic Fuel, CTF and
Bedding by $.01 due to rounding.
Twelve Weeks ending June 18, 2004
-------------------------------------------------
Exclu-
ding
Synth-
etic
Fuel,
CTF
Bedd- Acqui-
Exclu- ing sition
Synth- ding CTF Incen- and
etic Synth- Acqui- tive Bedd-
Net Fuel etic sition Program ing
Income Impact Fuel Charge Charge Charges
------ ------ ---- ------ ------ -------
Operating income (loss) $ 118 $ (30) $148 $ - $ - $ 148
Gains and other income 48 9 39 - - 39
Interest income,
(provision for loan
losses) and (interest
expense) 12 - 12 - - 12
Equity in earnings 1 - 1 - - 1
------ ------ ---- ------ ------ -------
Pre-tax income (loss) 179 (21) 200 - - 200
------ ------ ---- ------ ------ -------
Tax (Provision)/Benefit (68) 3 (71) - - (71)
Tax Credits 35 35 - - - -
------ ------ ---- ------ ------ -------
Total Tax
Benefit/(Provision) (33) 38 (71) - - (71)
------ ------ ---- ------ ------ -------
Income before Minority
Interest 146 17 129 - - 129
Minority Interest -
Synthetic fuel 14 14 - - - -
------ ------ ---- ------ ------ -------
Net Income $ 160 $ 31 $ 129 $ - $ - $ 129
====== ====== ==== ====== ====== =======
Diluted Shares 240.3 240.3 240.3 240.3 240.3 240.3
Earnings per Share
- Diluted $0.67 $0.13 $0.54 $0.00 $0.00 $0.54
Tax Rate 18.4% 35.4% 35.4%
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
(in millions, except per share amounts)
We consider net income and earnings per share, both excluding the impact
of the synthetic fuel operations, the charge associated with the
agreements we entered into with CTF Holdings Ltd ("the CTF transaction")
and the bedding incentive program costs, to be meaningful performance
indicators because they allow for additional comparisons relative to our
on-going lodging operations before material charges. The $94 million
charge recorded in connection with the CTF transaction is primarily non
cash and due to the write-off of deferred contract acquisition costs
associated with the termination of management agreements. In addition, we
incurred a material charge of $29 million associated with our new bedding
incentive program. Management believes the above items should be excluded
from net income and earnings per share in order to be able to compare the
past and current results. The exclusion of the synthetic fuel operations
allows investors to compare the results of our operations to that of other
lodging companies.
However, net income and earnings per share, both excluding our synthetic
fuel operations, the charge associated with the CTF transaction and the
material bedding charge are non-GAAP financial measures, and are not
alternatives to net income, earnings per share or any other operating
measure prescribed by United States generally accepted accounting
principles.
The reconciliation of net income and earnings per share, both excluding
the impact of the synthetic fuel operations, the charge associated with
the CTF transaction and the bedding program incentive costs is as follows:
Twenty four weeks ending June 17, 2005
-------------------------------------------------
Exclu-
ding
Synth-
etic
Fuel,
CTF
Bedd- Acqui-
Exclu- ing sition
Synth- ding CTF Incen- and
etic Synth- Acqui- tive Bedd-
Net Fuel etic sition Program ing
Income Impact Fuel Charge Charge Charges
------ ------ ---- ------ ------ -------
Operating income (loss) $ 199 $ (81) $280 $ (94) $ (29) $ 403
Gains and other income
(expense) 58 (1) 59 - - 59
Interest income,
(provision for loan
losses) and (interest
expense) (4) - (4) - - (4)
Equity in earnings/
(losses) 1 - 1 - - 1
------ ------ ---- ------ ------ ------
Pre-tax income (loss) 254 (82) 336 (94) (29) 459
------ ------ ---- ------ ------ ------
Tax (Provision)/Benefit (91) 24 (115) 32 10 (157)
Tax Credits 106 106 - - - -
------ ------ ---- ------ ------ ------
Total Tax
Benefit/(Provision) 15 130 (115) 32 10 (157)
------ ------ ---- ------ ------ ------
Income before Minority
Interest 269 48 221 (62) (19) 302
Minority Interest -
Synthetic Fuel 14 14 - - - -
------ ------ ---- ------ ------ ------
Net Income $283 $62 $221 $ (62) $ (19) $ 302
====== ====== ==== ====== ====== ======
Diluted Shares 237.8 237.8 237.8 237.8 237.8 237.8
Earnings per Share
- Diluted $1.19 $0.26 $0.93 ($0.26) ($0.08) $ 1.27
Tax Rate -5.9% 34.2% 34.2%
Twenty four weeks ending June 18, 2004
-------------------------------------------------------------------------
Exclu-
ding
Synth-
etic
Fuel,
CTF
Bedd- Acqui-
Exclu- ing sition
Synth- ding CTF Incen- and
etic Synth- Acqui- tive Bedd-
Net Fuel etic sition Program ing
Income Impact Fuel Charge Charge Charges
------ ------ ---- ------ ------ -------
Operating income (loss) $ 269 $ (30) $299 $ - $ - $ 299
Gains and other income
(expense) 52 9 43 - - 43
Interest income,
(provision for loan
losses) and (interest
expense) 19 - 19 - - 19
Equity in earnings/
(losses) (29) (28) (1) - - (1)
------ ------ ---- ------ ------ ------
Pre-tax income (loss) 311 (49) 360 - - 360
------ ------ ---- ------ ------ ------
Tax (Provision)/Benefit (115) 13 (128) - - (128)
Tax Credits 64 64 - - - -
------ ------ ---- ------ ------ ------
Total Tax Benefit/
(Provision) (51) 77 (128) - - (128)
Income before Minority
Interest 260 28 232 - - 232
Minority Interest -
Synthetic Fuel 14 14 - - - -
------ ------ ---- ------ ------ ------
Net Income $ 274 $42 $232 $ - $ - $ 232
====== ====== ==== ====== ====== ======
Diluted Shares 241.5 241.5 241.5 241.5 241.5 241.5
Earnings per Share -
Diluted $1.14 $0.17 $0.97 $0.00 $0.00 $ 0.97
Tax Rate 16.4% 35.5% 35.5%
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure
EBITDA
(in millions)
We consider earnings before interest, taxes, depreciation and
amortization, adjusted to eliminate the impact of our synthetic fuel
segment and other material items (Adjusted EBITDA), to be an indicator of
operating performance from on-going operations because it can be used to
measure our ability to service debt, fund capital expenditures, and expand
our business, and reflects our belief that the synthetic fuel segment will
no longer have a material impact on our business after the Section 29
synthetic fuel tax credits expire at the end of 2007. In addition, the
$94 million charge associated with the agreements we entered into with CTF
Holdings Ltd ("the CTF acquisition") and the bedding incentive charge of
$29
However, EBITDA and Adjusted EBITDA are non-GAAP financial measures, and
are not alternatives to net income, financial results, cash flow from
operations, or any other operating measure prescribed by United States
generally accepted accounting principles. Additionally, our calculation
of EBITDA and Adjusted EBITDA may be different from the calculations used
by other companies and as a result comparability may be limited.
Fiscal Year 2005
-----------------------
First Second
Quarter Quarter Total
------- ------- -----
Net income $ 145 $ 138 $ 283
Interest expense 24 21 45
Tax provision/ (benefit) 5 (20) (15)
Depreciation 30 29 59
Amortization 7 7 14
Interest expense from unconsolidated
joint ventures 11 6 17
Depreciation and amortization from
unconsolidated joint ventures 12 9 21
------- ------- -----
EBITDA $ 234 $ 190 $ 424
Synthetic fuel adjustment 42 21 63
CTF acquisition charge - 94 94
Bedding incentive program - 29 29
------- ------- -----
Adjusted EBITDA $ 276 $ 334 $ 610
======= ======= =====
Increase over 2004 Adjusted EBITDA 14% 20% 17%
The following items make up the
synthetic fuel adjustment:
Pre-tax synthetic fuel operating
losses $ 54 $ 28 $ 82
Pre-tax minority interest - synthetic
fuel (10) (5) (15)
Synthetic fuel depreciation (2) (2) (4)
------- ------- -----
EBITDA adjustment for synthetic fuel $42 $21 $63
======= ======= =====
Fiscal Year 2004
--------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
Net income $ 114 $ 160 $ 133 $ 189 $ 596
Interest expense 22 24 23 30 99
Tax provision continuing operations 18 33 28 21 100
Tax provision discontinued
operations - - 1 - 1
Depreciation 32 29 32 40 133
Amortization 7 8 7 11 33
Interest expense from
unconsolidated joint ventures 10 11 9 15 45
Depreciation and amortization from
unconsolidated joint ventures 13 9 13 17 52
------- ------- ------- ------- -----
EBITDA $ 216 $ 274 $ 246 $ 323 $1,059
Synthetic fuel adjustment 28 5 (6) 21 48
Pre-tax gain discontinued
operations (1) - (1) (1) (3)
------- ------- ------- ------- -----
Adjusted EBITDA $ 243 $ 279 $ 239 $ 343 $1,104
======= ======= ======= ======= =====
The following items make up the
synthetic fuel adjustment:
Pre-tax synthetic fuel operating
losses $ - $ 21 $ 12 $ 37 $ 70
Pre-tax synthetic fuel equity
losses 28 - - - 28
Pre-tax minority interest -
synthetic fuel - (14) (15) (11) (40)
Synthetic fuel depreciation - (2) (3) (5) (10)
------- ------- ------- ------- -----
EBITDA adjustment for synthetic
fuel $ 28 $ 5 $ (6) $ 21 $ 48
======= ======= ======= ======= =====
IRPR#1
SOURCE Marriott International
Tom Marder, 301-380-2553, or thomas.marder@marriott.com
http://www.prnewswire.com
Copyright (C) 2005 PR Newswire. All rights reserved.
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