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/
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