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FORM 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 14, 2008

 

 

MARRIOTT INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   1-13881   52-2055918
(State of Incorporation)  

(Commission File No.)

  

(IRS Employer Identification No.)

10400 Fernwood Road, Bethesda, Maryland 20817

(Address of principal executive offices, including Zip Code)

Registrant’s telephone number, including area code: (301) 380-3000

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

ITEM 2.02.    Results of Operations and Financial Condition.

Financial Results for the Quarter and Fiscal Year Ended December 28, 2007

Marriott International, Inc. (“Marriott”) today issued a press release reporting financial results for the quarter and fiscal year ended December 28, 2007.

A copy of Marriott’s press release is attached as Exhibit 99 and is incorporated by reference.

ITEM 9.01.    Financial Statements and Exhibits.

 

(d) Exhibits. The following exhibit is furnished with this report:

 

Exhibit 99   –   Press release issued on February 14, 2008, reporting financial results for the quarter and fiscal year ended December 28, 2007.

 

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    MARRIOTT INTERNATIONAL, INC.
Date:  February 14, 2008     By:   /s/ Carl T. Berquist
       

Carl T. Berquist

Executive Vice President, Financial

Information and Risk Management

 

3

EXHIBIT INDEX

 

Exhibit No.

   

Description

99    Press release dated February 14, 2008, reporting financial results for the quarter and fiscal year ended
    December 28, 2007.

 

4

EXHIBIT 99

LOGO

 

CONTACT:    Tom Marder

(301) 380-2553

thomas.marder@marriott.com

   NEWS

MARRIOTT INTERNATIONAL REPORTS SOLID FOURTH QUARTER RESULTS

Full Year Highlights:

 

  •  

Full year management and franchise fee revenue totaled a record breaking $1.4 billion in 2007, up 17 percent over the prior year;

 

  •  

Incentive management fees reached an all-time record $369 million during the year, 31 percent higher than 2006 levels. Over 67 percent of company-operated hotels earned incentive management fees in 2007 compared to 62 percent in 2006. Hotels outside the United States contributed 36 percent of incentive management fees in 2007;

 

  •  

Adjusted diluted earnings per share from continuing operations, which excludes the impact of the 2007 second quarter ESOP settlement, totaled $1.89 for 2007, an increase of 15 percent over last year. Diluted earnings per share as reported was $1.75 for the full year;

 

  •  

Worldwide systemwide comparable revenue per available room (REVPAR) rose 7.6 percent (6.5 percent using constant dollars). Average Daily Rates increased 7.5 percent (6.4 percent using constant dollars). Occupancy remained strong at 73 percent;

 

  •  

In North America, company-operated comparable REVPAR rose 6.2 percent during 2007 and house profit margins increased 160 basis points to near record levels;

 

  •  

Over 31,000 rooms opened in 2007, including nearly 7,800 rooms outside the United States. Eighteen percent of total room openings were conversions from competitor brands;

 

  •  

The company’s worldwide pipeline of hotels under construction, awaiting conversion or approved for development increased to a record 125,000 rooms compared to 100,000 rooms a year ago and 115,000 rooms in the third quarter of 2007;

 

  •  

Marriott repurchased 41 million shares of the company’s common stock in 2007 for nearly $1.8 billion. The company repurchased over $5 billion of the company’s common stock over the past three years.

 

Exhibit 99

Page 1

Fourth Quarter Highlights:

 

  •  

Fourth quarter 2007 earnings per share from continuing operations totaled $0.62, up 19 percent from the fourth quarter of 2006;

 

  •  

Fourth quarter management and franchise fee revenue rose 19 percent over the prior year. Incentive management fees increased 31 percent;

 

  •  

Worldwide company-operated comparable REVPAR rose 9.2 percent (7.0 percent using constant dollars) and worldwide company-operated house profit margins increased 130 basis points during the quarter;

 

  •  

In North America, company-operated comparable REVPAR increased 6.2 percent and house profit margins rose 140 basis points;

 

  •  

Outside North America, company-operated comparable REVPAR increased 15.5 percent (8.5 percent using constant dollars) with double-digit growth in Southeast Asia, Latin America, Europe and the Middle East;

 

  •  

Approximately 10,800 rooms opened during the fourth quarter, including over 2,500 rooms converted from competitor brands. Twenty-five percent of rooms opened in the quarter are outside the United States;

 

  •  

Marriott repurchased 12 million shares of the company’s common stock for $462 million during the fourth quarter.

BETHESDA, MD – February 14, 2008 – Marriott International, Inc. (NYSE:MAR) today reported diluted earnings per share (EPS) from continuing operations of $0.62 in the fourth quarter of 2007, up 19 percent from the fourth quarter of 2006. Income from continuing operations was $236 million for the quarter, an 8 percent increase over the prior year. The company’s EPS guidance for the 2007 fourth quarter, disclosed on October 4, 2007, totaled $0.61 to $0.63.

Pre-tax charges during the quarter included an approximately $12 million non-cash loan loss reserve related to one property and a $5 million reserve for a leveraged aircraft lease. The fourth quarter results also reflected $13 million in higher legal costs.

J.W. Marriott, Jr., Marriott International’s chairman and chief executive officer, said, “2007 was another terrific year. Significant unit growth, REVPAR gains, and property-level margin improvement combined to deliver record management and franchise fee earnings. We recently

 

Exhibit 99

Page 2

celebrated our 3,000th hotel in November, the JW Marriott Beijing, and we introduced two new brands, Edition and Nickelodeon, which position us well for the travelers of the future. With our owners and franchisees, we opened 31,000 rooms during the year and, despite a tight credit market, drove our pipeline of hotels under construction, awaiting conversion or approved for development to a record 125,000 rooms.

“Around the world, customer satisfaction levels rose as our guests enjoyed a record number of newly renovated hotels. We introduced either new lobby or guest room enhancements – and sometimes both – in six of our brands. Our Marriott and Renaissance hotels are rolling out next-generation lobbies throughout our system. Our limited-service brands are also changing, with guest room and lobby enhancements designed to drive guest satisfaction and owner profitability.

“Looking ahead, we’ve never been better positioned to tackle short-term economic challenges nor more optimistic about our long-term prospects. While we’re carefully watching economic trends, our expected unit growth for 2008 is strong, customers love our brands, and owners and franchisees prefer our portfolio more than ever. Almost 40 percent of our full-service hotels, including Ritz-Carlton, are located outside the U.S. and 60 percent of the full-service hotels in our pipeline are outside the U.S.

“Our strategy of managing and franchising hotels under solid, long-term agreements is proven. Over the years, we’ve shown that this business model results in profits that are less volatile than owning properties. And our brands’ strength continues to accelerate unit growth without significant capital investment by us. Marriott’s pre-tax return on invested capital rose to a record 25 percent in 2007.”

In the 2007 fourth quarter (16-week period from September 8, 2007 to December 28, 2007), REVPAR for the company’s comparable worldwide systemwide properties increased 8.1 percent (6.6 percent using constant dollars). Comparable worldwide company-operated properties experienced 9.2 percent (7.0 percent using constant dollars) REVPAR growth over the year ago quarter.

North American REVPAR for the company’s comparable company-operated properties rose 6.2 percent in the fourth quarter of 2007, largely driven by a 5.6 percent increase in rate and a slight

 

Exhibit 99

Page 3

increase in occupancy to 70 percent. For the calendar quarter ended December 31, 2007, REVPAR at North American company-operated properties increased 7.0 percent.

Fourth quarter international company-operated comparable REVPAR increased 15.5 percent (8.5 percent using constant dollars), including a 13.9 percent increase in average daily rate (7.0 percent using constant dollars) and a 1.0 percentage point improvement in occupancy to 76.0 percent. Strong international economic growth continues to drive global travel.

In the fourth quarter, Marriott added 70 new properties (10,787 rooms) to its worldwide lodging portfolio, including 12 new hotels (2,697 rooms) outside the United States. Worldwide, 13 properties (2,832 rooms) exited the system during the quarter. At quarter-end, the company’s lodging group encompassed about 3,000 properties and timeshare resorts for a total of over 535,000 rooms.

MARRIOTT REVENUES totaled $4.1 billion in the fourth quarter, an 8 percent increase from the same period in 2006. Base management and franchise fees rose 15 percent to $339 million as a result of REVPAR improvement and unit expansion. In addition, base management fees reflected $4 million in proceeds from business interruption insurance. Incentive management fees rose 31 percent to $126 million, driven by strong REVPAR, higher property-level house profit margins and $9 million of business interruption insurance proceeds. A record 600 company-operated hotels earned incentive management fees in the 2007 fourth quarter, including 165 properties outside the United States. Incentive management fees from North American Full-Service hotels rose 35 percent in the quarter while incentive management fees from North American Limited-Service properties rose 59 percent over the prior year.

Strong room rates, moderating utility costs, and improved productivity drove margins during the quarter. Worldwide company-operated comparable house profit margins increased 130 basis points. House profit margins for comparable North American company-operated properties grew 140 basis points and house profit per available room increased nearly 10 percent.

Owned, leased, corporate housing and other revenue, net of direct expenses, increased 25 percent in the fourth quarter, to $65 million, primarily driven by higher profits at owned and leased

 

Exhibit 99

Page 4

properties including strong results at the Ritz-Carlton hotels in St. Thomas and Tokyo and the Renaissance Jaragua Hotel in the Dominican Republic.

Timeshare sales and services revenue increased 2 percent in the 2007 fourth quarter on strong services and financing revenue offset by lower development revenue. Strong revenue in the 2006 quarter reflected several projects reaching reportability thresholds. In the 2007 quarter, timeshare sales and services revenue, net of direct expenses, declined 5 percent. Gain on the sale of timeshare notes totaled $36 million in the fourth quarter of 2007 and $37 million in the year ago quarter. In the guidance provided in October 2007, the company stated that it expected fourth quarter timeshare sales and services revenue, net of direct expenses, to decline 14 to 17 percent. Stronger than expected results reflected favorable marketing and selling costs and higher financing profits.

Timeshare segment results reflect timeshare sales and services revenue, net of direct expenses, as well as base fees, equity earnings, minority interest and general and administrative expenses associated with the timeshare business. Timeshare segment results increased 16 percent reflecting strong equity earnings from the Kapalua joint venture in Hawaii and lower timeshare general and administrative spending.

Although fourth quarter timeshare and fractional prices rose nearly 6 percent, timeshare contract sales declined 26 percent to $366 million. The 2006 quarter benefited from a $150 million surge in residential and fractional contract sales in Hawaii when a new project received final government approval. Compared to prior guidance, fourth quarter 2007 contract sales reflected lower than expected volume at projects in the Western United States and Florida, somewhat offset by stronger sales in Asia.

GENERAL, ADMINISTRATIVE and OTHER expenses for the fourth quarter totaled $250 million, a 5 percent increase compared to the prior year, reflecting $13 million in higher legal costs.

GAINS AND OTHER INCOME totaled $20 million and included $10 million of gains on the sale of real estate, an $8 million gain from the sale of a stock investment and $2 million of preferred returns from joint venture investments and other income. The prior year’s fourth

 

Exhibit 99

Page 5

quarter gains totaled $21 million and included $12 million from the sale of an interest in a joint venture, $5 million of gains from the sale of real estate, and $4 million of preferred returns from joint venture investments and other income.

INTEREST EXPENSE, net of INTEREST INCOME, increased $21 million to $45 million, primarily due to higher interest rates and higher average borrowings, including $400 million of senior debt issued during the 2007 fourth quarter.

The provision for loan losses totaled $17 million in the fourth quarter reflecting a $12 million reserve for a loan at one property and a $5 million reserve for an aircraft leveraged lease.

EQUITY IN EARNINGS (LOSSES) reflects Marriott’s share of income or losses in equity joint venture investments. The $5 million increase in equity in earnings was primarily driven by improved results at a timeshare joint venture project in Kapalua, Hawaii.

DISCONTINUED OPERATIONS

Production of synthetic fuel ceased in the fourth quarter. Therefore, financial results for that business are shown as discontinued operations for 2006 and 2007. The estimated phase-out for 2007 tax credits was 71 percent due to higher average oil prices for the year. This increase in estimated phase-out for the full year offset income from synthetic fuel operations recorded in the first three quarters of 2007.

FULL YEAR 2007 RESULTS

For the full year 2007, adjusted income from continuing operations totaled $751 million, an increase of 5 percent, and adjusted diluted earnings per share from continuing operations was $1.89, an increase of 15 percent. Adjusted income from continuing operations and adjusted diluted earnings per share exclude the impact of the 2007 second quarter settlement agreement with the Internal Revenue Service and the Department of Labor relating to the company’s leveraged Employee Stock Ownership Plan. As reported, diluted earnings per share was $1.75.

MARRIOTT REVENUES totaled $13 billion in 2007, an 8 percent increase from 2006. Total fees in 2007 were $1,428 million, an increase of 17 percent over the prior year, reflecting unit,

 

Exhibit 99

Page 6

REVPAR and incentive management fee growth. Worldwide company-operated comparable property-level margins rose 150 basis points during 2007, approaching record levels and driving incentive management fees higher. In 2006, the company recognized base management fees of $5 million and incentive management fees of $10 million that were based on prior period results but not earned and due until 2006. In 2007, incentive management fees included $17 million that were based on prior period results but not earned and due until 2007. In addition, in 2007 Marriott recognized incentive management fees of $13 million and base management fees of $6 million related to business interruption insurance proceeds.

Owned, leased, corporate housing and other revenue, net of direct expenses, totaled $178 million in 2007 compared to $183 million in 2006. Results were impacted by fewer owned hotels and lower termination fees during 2007, partially offset by higher affinity card revenue and branding fees. Termination fees totaled $19 million in 2007 compared to $26 million in 2006.

Timeshare sales and services revenue increased 11 percent to $1,747 million in 2007 on strong development, services and financing revenue. Timeshare sales and services revenue, net of direct expenses, totaled $350 million in 2007 and exceeded February 2007 guidance of $320 million to $330 million. Stronger than expected performance reflected strong demand at resorts in Maui, Las Vegas and Frenchmen’s Cove, which achieved reportability thresholds during the year, as well as higher than expected financing income. Timeshare segment revenue and segment results increased 12 percent and 9 percent, respectively, during 2007.

Timeshare contract sales in 2007 declined 14 percent to $1,401 million. Results in 2006 benefited from $287 million of residential contract sales, largely at project launches in Hawaii and San Francisco. In contrast, 2007 residential contract sales totaled $49 million.

GENERAL, ADMINISTRATIVE and OTHER expenses in 2007 included $35 million of expenses associated with the ESOP tax settlement.

GAINS AND OTHER INCOME totaled $97 million in 2007 and included gains of $39 million from the sale of real estate, $12 million of gains associated with the forgiveness of debt, an $18 million gain from the sale of a stock investment, $13 million of gains on the sale of the

 

Exhibit 99

Page 7

company’s interests in five joint ventures and $15 million of preferred returns from several joint venture investments and other income. Prior year gains of $74 million in 2006 included gains of $26 million from the sale of real estate, $2 million of gains from the sale or refinancing of real estate loans, $15 million of preferred returns from several joint venture investments, $25 million from the redemption of preferred stock in a joint venture and $43 million of gains on the sale of the company’s interests in six joint ventures. These 2006 gains were partially offset by a $37 million non-cash charge to adjust the carrying amount of a straight-line rent receivable associated with a land lease that has been sold.

INTEREST EXPENSE, net of INTEREST INCOME, increased $71 million primarily due to higher average borrowings in 2007 compared to 2006, including the issuance of $750 million of senior debt, and higher interest rates.

EQUITY IN EARNINGS increased $12 million, to $15 million, largely due to improved results at the timeshare joint venture project in Kapalua and the reopening of a hotel in Mexico following Hurricane Wilma in 2005.

BALANCE SHEET

At year-end 2007, total debt was $2,965 million and cash balances totaled $332 million, compared to $1,833 million in total debt and $191 million of cash at year-end 2006.

The company repurchased 41 million shares of common stock in 2007 at a cost of nearly $1.8 billion. The remaining share repurchase authorization as of year-end 2007 totaled 33 million shares.

OUTLOOK

The company expects worldwide systemwide comparable REVPAR and North American company-operated comparable REVPAR to increase 3 to 5 percent in 2008. Assuming only modest increases in North American house profit margins and roughly 30,000 new room openings, the company expects total fee revenue for the full year of approximately $1,490 million to $1,520 million, an increase of 4 to 6 percent. Adjusting 2007 fees for receipt of business interruption proceeds of $19 million, $17 million of incentive fees based on prior

 

Exhibit 99

Page 8

periods’ results and relicensing fees about $10 million higher than those anticipated in 2008 due to fewer expected transactions, total fee growth is expected to be 8 to 10 percent over 2007.

The company expects timeshare sales and services revenue, net of expenses, to decline 6 to 10 percent in 2008 reflecting projects near sellout and startup costs associated with new projects beginning sales. Timeshare contract sales are expected to increase 15 to 20 percent as four new projects begin sales in 2008. Timeshare segment results are expected to total $300 million to $315 million in 2008, roughly flat with 2007.

Based upon the above assumptions, the company expects 2008 EPS to total $2.00 to $2.10.

For the first quarter of 2008, the company expects worldwide systemwide comparable REVPAR to increase 3 to 5 percent and North American company-operated comparable REVPAR to increase 2 to 4 percent. Comparable worldwide house profit margins are expected to be flat. Expected first quarter results reflect the impact of the timing of the Easter holiday and the December 29, 2007 start of Marriott’s 2008 fiscal first quarter.

In the first quarter, the company expects timeshare sales and services revenue, net of direct expenses, to total $7 million to $12 million reflecting start up costs at new projects and tough comparisons to the 2007 quarter. In the year ago quarter, a significant amount of contract sales associated with a Hawaiian project became financially reportable. First quarter contract sales are expected to be flat to up 5 percent.

Based upon the above assumptions, the company expects EPS for the 2008 first quarter to total $0.32 to $0.36.

 

Exhibit 99

Page 9

    

First Quarter 2008

   

Full Year 2008

Total fee revenue

    $310 million to $315 million    $1,490 million to $1,520 million

Owned, leased, corporate housing and other revenue, net of direct expenses

    $35 million to $40 million    $170 million to $180 million

Timeshare sales and services revenue, net of direct expenses1

    $7 million to $12 million    $315 million to $330 million

General, administrative and other expenses

    $160 million to $170 million    $775 million to $785 million

Operating income

    $182 million to $207 million    $1,190 million to $1,255 million

Gains and other income

    Approx $5 million    Approx $30 million

Net interest expense2

    Approx $30 million    Approx $155 million

Equity in earnings (losses)

    Approx $20 million    Approx $55 million

After-tax minority interest

    Approx $3 million    Approx $6 million

Earnings per share

    $0.32 to $0.36    $2.00 to $2.10

Tax rate

    35.5 percent    35.5 percent

 

1

Includes an estimated $90 million of timeshare note sale gains for full year 2008

2

Net of interest income

The company expects investment spending in 2008 to total approximately $1.1 billion to $1.2 billion, including $60 million for maintenance capital spending, $525 million to $575 million for capital expenditures and acquisitions, $175 million to $200 million for timeshare development, $15 million to $25 million in new mezzanine financing and mortgage loans for hotels developed by owners and franchisees, and $275 million to $290 million in equity and other investments (including timeshare equity investments).

Marriott International, Inc. (NYSE:MAR) will conduct its quarterly earnings review for the investment community and news media on Thursday, February 14, 2008 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 at that same website until February 14, 2009. The webcast will also be available as a podcast from the same site.

The telephone dial-in number for the conference call is 719-325-4770. A telephone replay of the conference call will be available from 1 p.m. ET, Thursday, February 14, 2008 until 8 p.m. ET, Thursday, February 21, 2008. To access the replay, call 719-457-0820. The reservation number for the recording is 7280416.

 

Exhibit 99

Page 10

Note: This press release contains “forward-looking statements” within the meaning of federal securities laws, including REVPAR, profit margin and earnings trends; statements concerning the number of lodging properties we expect to add in the future; our expected share repurchases and 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 extent of growth in the economy and the lodging industry; supply and demand changes for hotel rooms, vacation ownership, condominiums, and corporate housing; competitive conditions in the lodging industry; relationships with clients and property owners; the availability of capital to finance hotel growth and refurbishment; and other risk factors identified in our most recent annual or quarterly report on Form 10-K or 10-Q; any of which could cause actual results to differ materially from those expressed in or implied by the statements herein. These statements are made as of the date of this press release, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

MARRIOTT INTERNATIONAL, INC. (NYSE:MAR) is a leading lodging company with about 3,000 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, 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. The company is headquartered in Washington, D.C., and had approximately 151,000 employees at 2007 year-end. It is ranked as the lodging industry’s most admired company and one of the best places to work by FORTUNE®. The company is also a 2006 U.S. Environmental Protection Agency (EPA) ENERGY STAR® Partner. In fiscal year 2007, Marriott International, Inc. reported sales from continuing operations of $13 billion. For more information or reservations, please visit our Web site at www.marriott.com.

IRPR#1

Tables follow

 

Exhibit 99

Page 11

MARRIOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENT OF INCOME

(in millions, except per share amounts)

 

     Sixteen Weeks Ended     Percent
Better/
(Worse)		  
     December 28, 2007     December 29, 2006    

REVENUES

       

Base management fees

    $ 203     $ 173     17  

Franchise fees

      136       121     12  

Incentive management fees

      126       96     31  

Owned, leased, corporate housing and other revenue 1

      416       354     18  

Timeshare sales and services 2

      536       526     2  

Cost reimbursements 3

      2,672       2,528     6  
                  

Total Revenues

      4,089       3,798     8  

OPERATING COSTS AND EXPENSES

       

Owned, leased and corporate housing - direct 4

      351       302     (16 )

Timeshare - direct

      410       393     (4 )

Reimbursed costs

      2,672       2,528     (6 )

General, administrative and other 5

     250       237     (5 )
                  

Total Expenses

      3,683       3,460     (6 )
                  

OPERATING INCOME

      406       338     20  

Gains and other income 6

      20       21     (5 )

Interest expense

      (57 )     (38 )   (50 )

Interest income

      12       14     (14 )

(Provision for) reversal of loan losses

      (17 )     —     *  

Equity in earnings (losses) 7

      6       1     500  
                  

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST

      370       336     10  

Provision for income taxes

      (134 )     (116 )   (16 )

Minority interest

      —       (1 )   100  
                  

INCOME FROM CONTINUING OPERATIONS

      236       219     8  

Discontinued operations - Synthetic Fuel, net of tax 8

      (60 )     1     (6,100 )
                  

NET INCOME

    $ 176     $ 220     (20 )
                  

EARNINGS PER SHARE - Basic

       

Earnings from continuing operations

    $ 0.65     $ 0.56     16  

Losses from discontinued operations

      (0.17 )     —     *  
                  

Earnings per share

    $ 0.48     $ 0.56     (14 )
                  

EARNINGS PER SHARE - Diluted

       

Earnings from continuing operations

    $ 0.62     $ 0.52     19  

Losses from discontinued operations

      (0.16 )     —     *  
                  

Earnings per share

    $ 0.46     $ 0.52     (12 )
                  

Basic Shares

      363.6       394.8    

Diluted Shares

      383.1       419.9    

 

* 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 corporate housing business, termination fees 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. Timeshare sales and services includes gains on the sale of timeshare note receivable securitizations.

3

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

4

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

5

General, administrative and other expenses include the overhead costs allocated to our segments, and our corporate overhead costs and general expenses.

6

Gains and other income includes net gains on the sale of real estate, gains on note sales or repayments (except timeshare note securitizations gains), gains on the sale of joint ventures, and income from cost method joint ventures.

7

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

8

Discontinued operations relates to our Synthetic Fuel business which was shut down and substantially all the assets liquidated at December 28, 2007.

 

Exhibit 99

Page 12

MARRIOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENT OF INCOME

(in millions, except per share amounts)

 

     Fifty-Two Weeks Ended     Percent
Better/
(Worse)		  
     December 28, 2007     December 29, 2006    

REVENUES

       

Base management fees

    $ 620     $ 553     12  

Franchise fees

      439       390     13  

Incentive management fees

      369       281     31  

Owned, leased, corporate housing and other revenue 1

      1,240       1,119     11  

Timeshare sales and services 2

      1,747       1,577     11  

Cost reimbursements 3

      8,575       8,075     6  
                  

Total Revenues

      12,990       11,995     8  

OPERATING COSTS AND EXPENSES

       

Owned, leased and corporate housing - direct 4

      1,062       936     (13 )

Timeshare - direct

      1,397       1,220     (15 )

Reimbursed costs

      8,575       8,075     (6 )

General, administrative and other 5

     768       677     (13 )
                  

Total Expenses

      11,802       10,908     (8 )
                  

OPERATING INCOME

      1,188       1,087     9  

Gains and other income 6

      97       74     31  

Interest expense

      (184 )     (124 )   (48 )

Interest income

      38       49     (22 )

(Provision for) reversal of loan losses

      (17 )     3     (667 )

Equity in earnings (losses) 7

      15       3     400  
                  

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST

      1,137       1,092     4  

Provision for income taxes

      (441 )     (380 )   (16 )

Minority interest

      1       —     *  
                  

INCOME FROM CONTINUING OPERATIONS

      697       712     (2 )

Discontinued operations - Synthetic Fuel, net of tax 8

      (1 )     5     (120 )
                  

INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

      696       717     (3 )

Cumulative effect of change in accounting principle, net of tax 9

      —       (109 )   100  
                  

NET INCOME

    $ 696     $ 608     14  
                  

EARNINGS PER SHARE - Basic

       

Earnings from continuing operations

    $ 1.85     $ 1.76     5  

Earnings from discontinued operations

      —       0.01     (100 )

Losses from cumulative effect of change in accounting principle

      —       (0.27 )   100  
                  

Earnings per share

    $ 1.85     $ 1.50     23  
                  

EARNINGS PER SHARE - Diluted

       

Earnings from continuing operations

    $ 1.75     $ 1.65     6  

Earnings from discontinued operations

      —       0.01     (100 )

Losses from cumulative effect of change in accounting principle

      —       (0.25 )   100  
                  

Earnings per share

    $ 1.75     $ 1.41     24  
                  

Basic Shares

      376.1       404.1    

Diluted Shares

      397.3       430.2    

 

* 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 corporate housing business, termination fees 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. Timeshare sales and services includes gains on the sale of timeshare note receivable securitizations.

3

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

4

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

5

General, administrative and other expenses include the overhead costs allocated to our segments and our corporate overhead costs and general expenses.

6

Gains and other income includes gains and losses on the sale of real estate, gains on note sales or repayments (except timeshare note securitizations gains), gains and losses on the sale of joint ventures, and income from cost method joint ventures.

7

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

8

Discontinued operations relates to our Synthetic Fuel business which was shut down and substantially all the assets liquidated at December 28, 2007.

9

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.

 

Exhibit 99

Page 13

Marriott International, Inc.

Business Segments

($ in millions)

 

     Sixteen Weeks Ended     Percent
Better/
(Worse)		  
     December 28, 2007     December 29, 2006    

REVENUES

       

North American Full - Service

    $ 1,709     $ 1,586     8  

North American Limited - Service

      657       618     6  

International

      538       478     13  

Luxury

      528       450     17  

Timeshare

      627       644     (3 )
                  

Total segment revenues 1

      4,059       3,776     7  

Other unallocated corporate

      30       22     36  
                  

Total

    $ 4,089     $ 3,798     8  
                  

INCOME FROM CONTINUING OPERATIONS

       

North American Full - Service

    $ 154     $ 141     9  

North American Limited - Service

      124       109     14  

International

      105       77     36  

Luxury

      28       19     47  

Timeshare

      116       100     16  
                  

Total segment financial results 1

     527       446     18  

Other unallocated corporate

      (95 )     (87 )   (9 )

Interest income, provision for loan losses and interest expense

      (62 )     (24 )   (158 )

Income taxes

      (134 )     (116 )   (16 )
                  

Total

    $ 236     $ 219     8  
                  

 

1

We consider segment revenues and segment 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 revenues and results of our lodging operations to those of other lodging companies.

 

Exhibit 99

Page 14

Marriott International, Inc.

Business Segments

($ in millions)

 

     Fifty-Two Weeks Ended     Percent
Better/
(Worse)		  
     December 28, 2007     December 29, 2006    

REVENUES

       

North American Full-Service

    $ 5,476     $ 5,196     5  

North American Limited-Service

      2,198       2,060     7  

International

      1,594       1,411     13  

Luxury

      1,576       1,423     11  

Timeshare

      2,065       1,840     12  
                  

Total segment revenues 1

      12,909       11,930     8  

Other unallocated corporate

      81       65     25  
                  

Total

    $ 12,990     $ 11,995     8  
                  

INCOME FROM CONTINUING OPERATIONS

       

North American Full-Service

    $ 478     $ 455     5  

North American Limited-Service

      461       380     21  

International

      271       237     14  

Luxury

      72       63     14  

Timeshare

      306       280     9  
                  

Total segment financial results 1

      1,588       1,415     12  

Other unallocated corporate

      (287 )     (251 )   (14 )

Interest income, provision for loan losses and interest expense

      (163 )     (72 )   (126 )

Income taxes

      (441 )     (380 )   (16 )
                  

Total

    $ 697     $ 712     (2 )
                  

 

1

We consider segment revenues and segment 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 revenues and results of our lodging operations to those of other lodging companies.

 

Exhibit 99

Page 15

MARRIOTT INTERNATIONAL, INC.

 

Total Lodging Products 1

  
     Number of Properties     Number of Rooms/Suites  

Brand

    December 28,
2007		    December 29,
2006		    vs. December 29,
2006		     December 28,
2007		    December 29,
2006		    vs. December 29,
2006		  

Domestic Full-Service

                 

Marriott Hotels & Resorts

    342    340    2     136,348    136,097    251  

Renaissance Hotels & Resorts

    71    65    6     26,117    25,106    1,011  

Domestic Limited-Service

                 

Courtyard

    693    650    43     96,759    91,226    5,533  

Fairfield Inn

    529    513    16     46,930    46,030    900  

SpringHill Suites

    176    152    24     20,445    17,684    2,761  

Residence Inn

    528    494    34     62,805    58,973    3,832  

TownePlace Suites

    141    123    18     14,122    12,368    1,754  

International

                 

Marriott Hotels & Resorts

    178    179    (1 )   52,196    51,307    889  

Renaissance Hotels & Resorts

    70    71    (1 )   22,817    23,120    (303 )

Courtyard

    74    83    (9 )   14,021    14,300    (279 )

Fairfield Inn

    8    5    3     947    559    388  

SpringHill Suites

    1    1    —       124    124    —    

Residence Inn

    18    17    1     2,611    2,313    298  

Marriott Executive Apartments

    18    18    —       2,905    3,027    (122 )

Ramada

    2    2    —       332    332    —    

Luxury

                 

The Ritz-Carlton—Domestic

    36    35    1     11,627    11,616    11  

The Ritz-Carlton—International

    32    25    7     9,591    7,790    1,801  

Bulgari Hotels & Resorts

    2    2    —       117    117    —    

The Ritz-Carlton Residential

    17    —      17     1,707    —      1,707  

The Ritz-Carlton Services Apartments

    2    —      2     387    —      387  

Timeshare 2

                 

Marriott Vacation Club

    46    45    1     10,896    10,512    384  

The Ritz-Carlton Club—Fractional

    7    5    2     388    398    (10 )

The Ritz-Carlton Club—Residential

    3    2    1     144    148    (4 )

Grand Residences by Marriott—Fractional

    2    2    —       248    248    —    

Grand Residences by Marriott—Residential

    1    1    —       65    65    —    

Horizons by Marriott Vacation Club

    2    2    —       444    372    72  
                                

Sub Total Timeshare

    61    57    4     12,185    11,743    442  
                                

Total

    2,999    2,832    167     535,093    513,832    21,261  
                                

Number of Timeshare Interval, Fractional and Residential Resorts 2

                       
     Total 3    In Active
Sales		                       

100% Company-Developed

                 

Marriott Vacation Club

    45    24           

The Ritz-Carlton Club and Residences

    6    4           

Grand Residences by Marriott and Residences

    3    3           

Horizons by Marriott Vacation Club

    2    2           

Joint Ventures

                 

Marriott Vacation Club

    1    1           

The Ritz-Carlton Club and Residences

    4    4           
                    

Total

    61    38           
                    

 

1

Total Lodging Products excludes the 2,156 and 2,046 corporate housing rental units as of December 28, 2007 and December 29, 2006, respectively.

2

Includes products in active sales which may not be ready for occupancy.

3

Includes resorts that are in active sales and those that are sold out. Residential properties are captured once they possess a certificate of occupancy.

 

Exhibit 99

Page 16

Marriott International, Inc.

Key Lodging Statistics

 

Comparable Company-Operated International Properties 1

  
     Four Months Ended December 31, 2007 and December 31, 2006  
     REVPAR     Occupancy     Average Daily Rate  

Region

    2007    vs. 2006     2007     vs. 2006     2007    vs. 2006  

Caribbean & Latin America

    $ 124.79    14.2 %   74.8 %   3.7 % pts.   $ 166.81    8.6 %

Continental Europe

    $ 145.74    10.1 %   76.9 %   1.0 % pts.   $ 189.57    8.7 %

United Kingdom

    $ 167.23    5.2 %   78.1 %   -1.4 % pts.   $ 214.00    7.1 %

Middle East & Africa

    $ 104.19    15.1 %   72.2 %   5.7 % pts.   $ 144.39    6.0 %

Asia Pacific 2

    $ 121.60    6.1 %   76.2 %   -0.2 % pts.   $ 159.51    6.5 %

Regional Composite 3

    $ 136.77    8.4 %   76.5 %   0.9 % pts.   $ 178.87    7.1 %

International Luxury 4

    $ 211.48    9.3 %   72.0 %   2.5 % pts.   $ 293.69    5.5 %

Total International 5

    $ 144.54    8.5 %   76.0 %   1.0 % pts.   $ 190.18    7.0 %

Worldwide 6

    $ 123.72    7.0 %   71.7 %   0.6 % pts.   $ 172.43    6.1 %

Comparable Systemwide International Properties 1

  
     Four Months Ended December 31, 2007 and December 31, 2006  
     REVPAR     Occupancy     Average Daily Rate  

Region

    2007    vs. 2006     2007     vs. 2006     2007    vs. 2006  

Caribbean & Latin America

    $ 112.41    12.4 %   73.5 %   3.4 % pts.   $ 152.88    7.2 %

Continental Europe

    $ 141.52    9.3 %   75.4 %   2.2 % pts.   $ 187.76    6.1 %

United Kingdom

    $ 164.37    4.9 %   77.9 %   -1.2 % pts.   $ 210.97    6.5 %

Middle East & Africa

    $ 102.10    15.5 %   71.6 %   5.7 % pts.   $ 142.63    6.3 %

Asia Pacific 2

    $ 122.65    5.2 %   76.4 %   -0.5 % pts.   $ 160.54    5.9 %

Regional Composite 3

    $ 132.92    7.7 %   75.8 %   1.2 % pts.   $ 175.47    6.0 %

International Luxury 4

    $ 211.48    9.3 %   72.0 %   2.5 % pts.   $ 293.69    5.5 %

Total International 5

    $ 139.63    7.9 %   75.4 %   1.3 % pts.   $ 185.11    6.0 %

Worldwide 6

    $ 103.51    6.6 %   70.8 %   0.2 % pts.   $ 146.29    6.3 %

 

1

International financial results are reported on a period basis, while International statistics are reported on a monthly basis. Statistics are in constant dollars for September through December. Excludes North America (except for Worldwide).

2

Does not include Hawaii.

3

Regional information includes Marriott Hotels & Resorts, Renaissance Hotels & Resorts and Courtyard properties. Includes Hawaii.

4

International Luxury includes The Ritz-Carlton properties outside of North America and Bulgari Hotels & Resorts.

5

Includes Regional Composite and International Luxury.

6

Includes international statistics for the four calendar months ended December 31, 2007 and December 31, 2006, and North American statistics for the sixteen weeks ended December 28, 2007 and December 29, 2006. Includes Marriott Hotels & Resorts, The Ritz-Carlton, Bulgari Hotels & Resorts, Renaissance Hotels & Resorts, Residence Inn, Courtyard, TownePlace Suites, Fairfield Inn and SpringHill Suites properties.

 

Exhibit 99

Page 17

Marriott International, Inc.

Key Lodging Statistics

 

Comparable Company-Operated International Properties 1

  
     Twelve Months Ended December 31, 2007 and December 31, 2006  
      REVPAR     Occupancy     Average Daily Rate  

Region

    2007    vs. 2006     2007     vs. 2006     2007    vs. 2006  

Caribbean & Latin America

    $ 128.25    12.7 %   76.5 %   2.4 % pts.   $ 167.56    9.2 %

Continental Europe

    $ 129.34    7.7 %   74.4 %   1.3 % pts.   $ 173.92    5.8 %

United Kingdom

    $ 158.08    5.2 %   77.8 %   0.1 % pts.   $ 203.27    5.2 %

Middle East & Africa

    $ 99.57    16.8 %   73.3 %   4.8 % pts.   $ 135.74    9.1 %

Asia Pacific 2

    $ 111.15    7.8 %   75.2 %   -0.8 % pts.   $ 147.79    8.9 %

Regional Composite 3

    $ 127.44    8.2 %   75.7 %   0.8 % pts.   $ 168.30    7.0 %

International Luxury 4

    $ 212.54    12.2 %   72.7 %   4.0 % pts.   $ 292.24    6.1 %

Total International 5

    $ 136.29    8.9 %   75.4 %   1.2 % pts.   $ 180.73    7.2 %

Worldwide 6

    $ 121.34    7.0 %   73.5 %   0.5 % pts.   $ 165.19    6.2 %

Comparable Systemwide International Properties 1

  
     Twelve Months Ended December 31, 2007 and December 31, 2006  
     REVPAR     Occupancy     Average Daily Rate  

Region

    2007    vs. 2006     2007     vs. 2006     2007    vs. 2006  

Caribbean & Latin America

    $ 117.20    11.7 %   74.8 %   2.8 % pts.   $ 156.76    7.5 %

Continental Europe

    $ 126.01    7.3 %   72.0 %   1.2 % pts.   $ 174.93    5.4 %

United Kingdom

    $ 155.27    5.1 %   77.4 %   0.3 % pts.   $ 200.65    4.7 %

Middle East & Africa

    $ 96.95    17.0 %   72.4 %   4.9 % pts.   $ 133.98    9.0 %

Asia Pacific 2

    $ 111.92    7.0 %   75.3 %   -0.5 % pts.   $ 148.67    7.7 %

Regional Composite 3

    $ 123.78    7.8 %   74.6 %   1.0 % pts.   $ 166.03    6.3 %

International Luxury 4

    $ 212.54    12.2 %   72.7 %   4.0 % pts.   $ 292.24    6.1 %

Total International 5

    $ 131.36    8.4 %   74.4 %   1.3 % pts.   $ 176.57    6.6 %

Worldwide 6

    $ 103.19    6.5 %   72.9 %   0.1 % pts.   $ 141.60    6.4 %

 

1

International financial results are reported on a period basis, while International statistics are reported on a monthly basis. Statistics are in constant dollars for January through December. Excludes North America (except for Worldwide).

2

Does not include Hawaii.

3

Regional information includes Marriott Hotels & Resorts, Renaissance Hotels & Resorts and Courtyard properties. Includes Hawaii.

4

International Luxury includes The Ritz-Carlton properties outside of North America and Bulgari Hotels & Resorts.

5

Includes Regional Composite and International Luxury.

6

Includes international statistics for the twelve calendar months ended December 31, 2007 and December 31, 2006, and North American statistics for the fifty-two weeks ended December 28, 2007 and December 29, 2006. Includes Marriott Hotels & Resorts, The Ritz-Carlton, Bulgari Hotels & Resorts, Renaissance Hotels & Resorts, Residence Inn, Courtyard, TownePlace Suites, Fairfield Inn and SpringHill Suites properties.

 

Exhibit 99

Page 18

Marriott International, Inc.

Key Lodging Statistics

 

 

Comparable Company-Operated North American Properties

 

     Sixteen Weeks Ended December 28, 2007 and December 29, 2006  
     REVPAR     Occupancy     Average Daily Rate  

Brand

    2007    vs. 2006     2007     vs. 2006     2007    vs. 2006  

Marriott Hotels & Resorts

    $ 128.23    6.1 %   70.0 %   0.1 % pts.   $ 183.31    5.9 %

Renaissance Hotels & Resorts

    $ 123.40    7.9 %   70.0 %   1.2 % pts.   $ 176.29    6.1 %

Composite North American Full-Service 1

    $ 127.47    6.4 %   70.0 %   0.3 % pts.   $ 182.20    5.9 %

The Ritz-Carlton 2

    $ 232.62    7.0 %   68.7 %   -0.1 % pts.   $ 338.59    7.1 %

Composite North American Full-Service & Luxury 3

    $ 138.26    6.5 %   69.8 %   0.3 % pts.   $ 197.99    6.1 %

Residence Inn

    $ 93.60    5.1 %   75.0 %   0.8 % pts.   $ 124.83    4.0 %

Courtyard

    $ 88.19    5.4 %   68.0 %   0.1 % pts.   $ 129.65    5.3 %

TownePlace Suites

    $ 60.95    8.5 %   71.5 %   1.3 % pts.   $ 85.30    6.5 %

SpringHill Suites

    $ 75.40    6.8 %   70.0 %   2.2 % pts.   $ 107.65    3.5 %

Composite North American Limited-Service 4

    $ 87.08    5.6 %   70.2 %   0.5 % pts.   $ 124.11    4.9 %

Composite—All 5

    $ 115.07    6.2 %   70.0 %   0.4 % pts.   $ 164.43    5.6 %

Comparable Systemwide North American Properties

 

     Sixteen Weeks Ended December 28, 2007 and December 29, 2006  
     REVPAR     Occupancy     Average Daily Rate  

Brand

    2007    vs. 2006     2007     vs. 2006     2007    vs. 2006  

Marriott Hotels & Resorts

    $ 112.62    6.3 %   68.0 %   0.0 % pts.   $ 165.66    6.3 %

Renaissance Hotels & Resorts

    $ 112.37    6.2 %   69.3 %   0.0 % pts.   $ 162.07    6.3 %

Composite North American Full-Service 1

    $ 112.58    6.3 %   68.2 %   0.0 % pts.   $ 165.11    6.3 %

The Ritz-Carlton 2

    $ 232.62    7.0 %   68.7 %   -0.1 % pts.   $ 338.59    7.1 %

Composite North American Full-Service & Luxury 3

    $ 119.87    6.4 %   68.2 %   0.0 % pts.   $ 175.72    6.4 %

Residence Inn

    $ 92.85    5.6 %   75.6 %   0.0 % pts.   $ 122.88    5.6 %

Courtyard

    $ 87.62    6.3 %   69.7 %   0.4 % pts.   $ 125.71    5.7 %

Fairfield Inn

    $ 59.30    6.8 %   67.0 %   -0.1 % pts.   $ 88.50    6.9 %

TownePlace Suites

    $ 61.13    4.9 %   70.5 %   -1.3 % pts.   $ 86.76    6.8 %

SpringHill Suites

    $ 74.22    5.3 %   69.9 %   -0.9 % pts.   $ 106.22    6.7 %

Composite North American Limited-Service 4

    $ 80.81    6.0 %   70.7 %   0.0 % pts.   $ 114.22    6.0 %

Composite—All 5

    $ 95.89    6.2 %   69.8 %   0.0 % pts.   $ 137.43    6.2 %

 

1

Includes Marriott Hotels & Resorts and Renaissance Hotels & Resorts properties.

2

Statistics for Ritz-Carlton properties are for September through December.

3

Includes Marriott Hotels & Resorts, Renaissance Hotels & Resorts and Ritz-Carlton properties.

4

Includes Residence Inn, Courtyard, Fairfield Inn, TownePlace Suites and SpringHill Suites properties.

5

Includes Marriott Hotels & Resorts, Renaissance Hotels & Resorts, The Ritz-Carlton, Residence Inn, Courtyard, Fairfield Inn, TownePlace Suites, and SpringHill Suites properties.

 

Exhibit 99

Page 19

Marriott International, Inc.

Key Lodging Statistics

 

Comparable Company-Operated North American Properties

 
     Fifty-two Weeks Ended December 28, 2007 and December 29, 2006  
     REVPAR     Occupancy     Average Daily Rate  

Brand

    2007    vs. 2006     2007     vs. 2006     2007    vs. 2006  

Marriott Hotels & Resorts

    $ 127.43    6.9 %   72.6 %   1.0 % pts.   $ 175.41    5.4 %

Renaissance Hotels & Resorts

    $ 124.17    5.9 %   73.1 %   0.4 % pts.   $ 169.93    5.4 %

Composite North American Full-Service 1

    $ 126.92    6.8 %   72.7 %   0.9 % pts.   $ 174.54    5.4 %

The Ritz-Carlton 2

    $ 239.67    7.5 %   72.3 %   0.1 % pts.   $ 331.48    7.3 %

Composite North American Full-Service & Luxury 3

    $ 137.66    6.9 %   72.7 %   0.8 % pts.   $ 189.41    5.7 %

Residence Inn

    $ 96.53    3.9 %   77.7 %   -0.5 % pts.   $ 124.24    4.6 %

Courtyard

    $ 89.69    4.9 %   70.4 %   -0.4 % pts.   $ 127.34    5.6 %

TownePlace Suites

    $ 63.56    7.2 %   74.2 %   -1.1 % pts.   $ 85.65    8.9 %

SpringHill Suites

    $ 78.27    5.0 %   72.6 %   0.6 % pts.   $ 107.86    4.2 %

Composite North American Limited-Service 4

   $ 89.18    4.8 %   72.7 %   -0.4 % pts.   $ 122.63    5.4 %

Composite—All 5

    $ 115.60    6.2 %   72.7 %   0.3 % pts.   $ 159.01    5.8 %

Comparable Systemwide North American Properties

  
     Fifty-two Weeks Ended December 28, 2007 and December 29, 2006  
     REVPAR     Occupancy     Average Daily Rate  

Brand

    2007    vs. 2006     2007     vs. 2006     2007    vs. 2006  

Marriott Hotels & Resorts

    $ 113.66    6.4 %   70.8 %   0.6 % pts.   $ 160.61    5.5 %

Renaissance Hotels & Resorts

    $ 112.96    5.1 %   71.8 %   -0.4 % pts.   $ 157.29    5.8 %

Composite North American Full-Service 1

    $ 113.56    6.2 %   70.9 %   0.5 % pts.   $ 160.10    5.5 %

The Ritz-Carlton 2

    $ 239.67    7.5 %   72.3 %   0.1 % pts.   $ 331.48    7.3 %

Composite North American Full-Service & Luxury 3

    $ 120.65    6.4 %   71.0 %   0.4 % pts.   $ 169.92    5.7 %

Residence Inn

    $ 95.80    5.1 %   78.2 %   -0.8 % pts.   $ 122.44    6.1 %

Courtyard

    $ 89.53    5.6 %   72.1 %   -0.2 % pts.   $ 124.12    5.9 %

Fairfield Inn

    $ 62.17    6.7 %   70.5 %   -0.3 % pts.   $ 88.19    7.2 %

TownePlace Suites

    $ 63.89    5.0 %   73.5 %   -2.4 % pts.   $ 86.93    8.4 %

SpringHill Suites

    $ 77.97    5.7 %   73.2 %   -0.6 % pts.   $ 106.49    6.5 %

Composite North American Limited-Service 4

   $ 83.37    5.6 %   73.6 %   -0.5 % pts.   $ 113.34    6.3 %

Composite—All 5

    $ 97.70    6.0 %   72.6 %   -0.2 % pts.   $ 134.62    6.2 %

 

1

Includes Marriott Hotels & Resorts and Renaissance Hotels & Resorts properties.

2

Statistics for Ritz-Carlton properties are for January through December.

3

Includes Marriott Hotels & Resorts, Renaissance Hotels & Resorts and Ritz-Carlton properties.

4

Includes Residence Inn, Courtyard, Fairfield Inn, TownePlace Suites and SpringHill Suites properties.

5

Includes Marriott Hotels & Resorts, Renaissance Hotels & Resorts, The Ritz-Carlton, Residence Inn, Courtyard, Fairfield Inn, TownePlace Suites, and SpringHill Suites properties.

 

Exhibit 99

Page 20

MARRIOTT INTERNATIONAL, INC.

TIMESHARE SEGMENT

($ in millions)

 

Segment Results

       
     Sixteen Weeks Ended     Percent
Better / (Worse)		  
     December 28, 2007     December 29, 2006    

Base fees revenue

    $ 13     $ 10     30  

Timeshare sales and services revenue, net of direct expense

      126       133     (5 )

Joint venture equity income (loss)

      6       (3 )   300  

General, administrative and other expense

      (29 )     (40 )   28  
                  

Segment results

    $ 116     $ 100     16  
                  
      

Sales and Services Revenue

       
     Sixteen Weeks Ended     Percent
Better / (Worse)		  
     December 28, 2007     December 29, 2006    

Development

    $ 362     $ 378     (4 )

Services

      90       79     14  

Financing

      75       67     12  

Other revenue

      9       2     350  
                  

Sales and services revenue

    $ 536     $ 526     2  
                  
      

Contract Sales1

       
     Sixteen Weeks Ended     Percent
Better / (Worse)		  
     December 28, 2007     December 29, 2006    

Company:

       

Timeshare

    $ 344     $ 314     10  

Fractional

      17       10     70  

Residential

      (15 )     —     *  
                  

Total company

      346       324     7  

Joint ventures:

       

Timeshare

      10       10     —  

Fractional

      8       46     (83 )

Residential

      2       116     (98 )
                  

Total joint ventures

      20       172     (88 )
                  

Total contract sales, including joint ventures

    $ 366     $ 496     (26 )
                  

 

* Percent can not be calculated.

 

1  -

Timeshare contract sales represent gross sales of timeshare, fractional, and residential products from both our wholly-owned and joint venture projects, before the adjustment for percentage-of-completion accounting.

 

Exhibit 99

Page 21

MARRIOTT INTERNATIONAL, INC.

TIMESHARE SEGMENT

($ in millions)

 

Segment Results

       
     Fifty-Two Weeks Ended     Percent
Better / (Worse)		  
     December 28, 2007     December 29, 2006    

Base fees revenue

    $ 43     $ 34     26  

Timeshare sales and services revenue, net of direct expense

      350       357     (2 )

Joint venture equity income (loss)

      10       (2 )   600  

Minority interest

      1       —     *  

General, administrative and other expense

      (98 )     (109 )   10  
                  

Segment results

    $ 306     $ 280     9  
                  
      

Sales and Services Revenue

       
     Fifty-Two Weeks Ended     Percent
Better / (Worse)		  
     December 28, 2007     December 29, 2006    

Development

    $ 1,208     $ 1,112     9  

Services

      315       286     10  

Financing

      195       171     14  

Other revenue

      29       8     263  
                  

Sales and services revenue

    $ 1,747     $ 1,577     11  
                  
      

Contract Sales1

       
     Fifty-Two Weeks Ended     Percent
Better / (Worse)		  
     December 28, 2007     December 29, 2006    

Company:

       

Timeshare

    $ 1,221     $ 1,207     1  

Fractional

      44       42     5  

Residential

      (9 )     5     (280 )
                  

Total company

      1,256       1,254     —  

Joint ventures:

       

Timeshare

      33       28     18  

Fractional

      54       68     (21 )

Residential

      58       282     (79 )
                  

Total joint ventures

      145       378     (62 )
                  

Total contract sales, including joint ventures

    $ 1,401     $ 1,632     (14 )
                  

 

* Percent can not be calculated.

 

1  -

Timeshare contract sales represent gross sales of timeshare, fractional, and residential products from both our wholly-owned and joint venture projects, before the adjustment for percentage-of-completion accounting.

 

Exhibit 99

Page 22

MARRIOTT INTERNATIONAL, INC.

Non-GAAP Financial Measures

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

ESOP Settlement Charge. Management evaluates non-GAAP measures that exclude the charge associated with the 2007 settlement of issues raised during the IRS’ and Department of Labor’s examination of the employee stock ownership plan (“ESOP”) feature of our Employees’ Profit Sharing, Retirement and Savings Plan and Trust, including adjusted earnings per share and adjusted earnings before interest, taxes, depreciation and amortization, because these measures allow for period-over-period comparisons relative to our on-going operations before material charges. Additionally, these non-GAAP measures facilitate management’s comparison of our results relative to on-going operations before material charges with that of other lodging companies. The settlement resulted in an after-tax charge of $54 million in the second quarter 2007 reflecting $35 million of excise taxes (impacting General, Administrative, and Other Expenses), $13 million of interest expense on those excise taxes and $6 million of income tax expense primarily reflecting additional interest.

Earnings Before Interest and Taxes. Earnings before interest and taxes (EBIT) reflects earnings excluding the impact of interest expense and tax expense. EBIT is used by analysts, lenders, investors and others, as well as by us, to evaluate companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company’s capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. Additionally, the tax positions of companies can vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and tax expense can vary considerably among companies.

Earnings Before Interest, Taxes, Depreciation and Amortization. Earnings before interest, taxes, depreciation and amortization (EBITDA) reflects EBIT excluding the impact of depreciation and amortization. Our management considers EBITDA to be an indicator of operating performance because it can be used to measure our ability to service debt, fund capital expenditures, and expand our business. EBITDA is used by analysts, lenders, investors and others, as well as by us, to evaluate companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. In addition to the items previously noted that are excluded in calculating EBIT, EBITDA further excludes depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.

Adjusted EBITDA. Our management also evaluates adjusted EBITDA which excludes the synthetic fuel business for 2007 and 2006, as well as the $35 million charge in 2007 for excise taxes associated with the ESOP settlement. The synthetic fuel operations, discontinued in 2007, are not related to our core business, which is lodging. Accordingly, our management evaluates non-GAAP measures which exclude the impact of the synthetic fuel business 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. Our management excludes the excise taxes associated with the ESOP settlement for the reasons noted above in the “ESOP Settlement Charge” caption.

Return on Invested Capital. Return on Invested Capital (“ROIC”) is calculated as EBIT divided by average capital investment. We consider ROIC to be a meaningful indicator of our operating performance, and we evaluate this metric because it measures how effectively we use the money invested in our lodging operations. The calculation of EBIT adds back to income from continuing operations: 1) the provision for income taxes; 2) interest expense; and 3) timeshare interest representing previously capitalized interest that is a component of product cost. The calculation of invested capital adds back to total assets cumulative goodwill amortization to be consistent with the calculation for earlier years. Beginning with 2002, we stopped amortizing goodwill in conjunction with the adoption of FAS No. 142, “Goodwill and Other Intangible Assets.” The calculation of invested capital deducts from total assets: 1) current liabilities as they will be satisfied in the short term; 2) assets associated with discontinued operations net of liabilities because the ROIC metric we analyze is related to our core lodging business (continuing operations); 3) deferred tax assets net of liabilities because the numerator of the calculation is a pre-tax number; and 4) timeshare capitalized interest because the numerator of the calculation is a pre-interest expense number.

 

Exhibit 99

Page 23

MARRIOTT INTERNATIONAL, INC.

Non-GAAP Financial Measure Reconciliation

Measures that Exclude the Second Quarter 2007 ESOP Settlement

(in millions, except per share amounts)

 

     Fiscal Year 2007  
     As Reported      ESOP Impact      Excluding
ESOP**1 		 

Operating income (loss)

    $ 1,188      $ (35 )    $ 1,223  

Gains and other income (expense)

      97        —        97  

Interest income, provision for loan
losses and interest expense

      (163 )      (13 )      (150 )

Equity in earnings (losses)

      15        —        15  
                          

Income (losses) from continuing operations before
income taxes and minority interest

      1,137        (48 )      1,185  

Provision for income taxes

      (441 )      (6 )      (435 )

Minority interest

      1        —        1  
                          

Income (loss) from continuing operations

    $ 697      $ (54 )    $ 751  
                          

Diluted shares

      397.3        397.3        397.3  

Earnings per share—diluted

    $ 1.75      $ (0.14 )    $ 1.89  

 

** Denotes non-GAAP financial measures.

 

1

We refer to earnings per share excluding the ESOP impact as adjusted earnings per share, and we refer to income from continuing operations excluding the ESOP impact as adjusted income from continuing operations.

 

Exhibit 99

Page 24

Marriott International, Inc.

Non-GAAP Financial Measure Reconciliation

Return on Invested Capital

($ in millions)

The reconciliation of income from continuing operations to earnings before income taxes and interest expense is as follows:

 

     Fiscal Year 2007        

Income from continuing operations

    $ 697    

Add:

     

Provision for income taxes

      441    

Interest expense

      184    

Timeshare interest 1

      24    
          

Earnings before income taxes and interest expense **

    $ 1,346    
          

The reconciliation of assets to invested capital is as follows:

 

 

  
     Fiscal Year 2007     Fiscal Year 2006  

Assets

    $ 8,942     $ 8,588  

Add:

     

Cumulative goodwill amortization

      128       128  

Current liabilities—discontinued operations

      13       55  

Less:

     

Current liabilities, net of current portion of long-term debt

      (2,701 )     (2,507 )

Assets—discontinued operations

      (53 )     (91 )

Deferred tax assets, net

      (863 )     (865 )

Timeshare capitalized interest

      (19 )     (19 )
                

Invested capital **

    $ 5,447     $ 5,289  
                

Average capital investment ** 2

    $ 5,368    
          

Return on invested capital **

      25 %  

 

** Denotes a non-GAAP financial measure.

 

1

Timeshare interest represents previously capitalized interest that is a component of product cost.

2

Calculated as "Invested capital" for the current year and prior year, divided by two.

 

Exhibit 99

Page 25

MARRIOTT INTERNATIONAL, INC.

Non-GAAP Financial Measure

EBITDA and Adjusted EBITDA

($ in millions)

 

     Fiscal Year 2007  
     First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total  

Net income

    $ 182     $ 207     $ 131     $ 176     $ 696  

Interest expense

      33       52       42       57       184  

Tax provision

      14       42       52       207       315  

Depreciation and amortization

      46       45       43       63       197  

Less: Depreciation reimbursed by third-party owners

      (4 )     (4 )     (4 )     (6 )     (18 )

Interest expense from unconsolidated joint ventures

      5       5       8       6       24  

Depreciation and amortization from unconsolidated joint ventures

      6       7       6       9       28  
                                        

EBITDA**

    $ 282     $ 354     $ 278     $ 512     $ 1,426  

ESOP Settlement—Excise Tax

      —       35       —       —       35  

Discontinued operations adjustment (synthetic fuel)

      52       52       30       (15 )     119  
                                        

Adjusted EBITDA**

    $ 334     $ 441     $ 308     $ 497     $ 1,580  
                                        

Increase over 2006 Adjusted EBITDA

      3 %     21 %     3 %     14 %     11 %

The following items make up the discontinued operations (synthetic fuel)

           

Pre-tax Synthetic Fuel operating losses (income)

    $ 54     $ 54     $ 32     $ (13 )   $ 127  

Synthetic Fuel depreciation

      (2 )     (2 )     (2 )     (2 )     (8 )
                                        

EBITDA adjustment for discontinued operations (synthetic fuel)

    $ 52     $ 52     $ 30     $ (15 )   $ 119  
                                        
     Fiscal Year 2006  
     First
Quarter		     Second
Quarter		     Third
Quarter		     Fourth
Quarter		     Total  

Net income

    $ 61     $ 186     $ 141     $ 220     $ 608  

Cumulative effect of change in accounting principle

      173       —       —       —       173  

Interest expense

      27       30       29       38       124  

Tax provision

      56       85       82       63       286  

Tax benefit from cumulative effect of change in accounting principle

      (64 )     —       —       —       (64 )

Depreciation and amortization

      40       42       44       62       188  

Less: Depreciation reimbursed by third-party owners

      (4 )     (4 )     (4 )     (6 )     (18 )

Interest expense from unconsolidated joint ventures

      5       6       5       7       23  

Depreciation and amortization from unconsolidated joint ventures

      6       7       7       9       29  
                                        

EBITDA**

    $ 300     $ 352     $ 304     $ 393     $ 1,349  

Discontinued operations adjustment (synthetic fuel)

      24       11       (4 )     44       75  
                                        

Adjusted EBITDA**

    $ 324     $ 363     $ 300     $ 437     $ 1,424  
                                        

The following items make up the discontinued operations (synthetic fuel)

           

Pre-tax Synthetic Fuel operating losses (income)

    $ 31     $ 13     $ (2 )   $ 53     $ 95  

Pre-tax minority interest—Synthetic Fuel

      (5 )     —       —       (1 )     (6 )

Synthetic Fuel depreciation

      (2 )     (2 )     (2 )     (8 )     (14 )
                                        

EBITDA adjustment for discontinued operations (synthetic fuel)

    $ 24     $ 11     $ (4 )   $ 44     $ 75  
                                        

 

** Denotes non-GAAP financial measures.

 

Exhibit 99

Page 26