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 10, 2004
MARRIOTT INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
| Delaware (State of incorporation) |
1-13881 (Commission File No.) |
52-2055918 (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
| ITEM 12. | DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION |
Financial Results for the Quarter and Fiscal Year Ended January 2, 2004
Marriott International, Inc. today issued a press release reporting financial results for the quarter and fiscal year ended January 2, 2004. The press release is attached as Exhibit 99.
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 10, 2004 |
By: |
/s/ Carl T. Berquist | ||||
| Carl T. Berquist Executive Vice President, Financial Information and Risk Management | ||||||
EXHIBIT INDEX
| Exhibit No. |
Description | |
| Exhibit 99 | Press release dated February 10, 2004 reporting financial results for the quarter and fiscal year ended January 2, 2004. | |
Exhibit 99
|
|
Marriott International, Inc. Corporate Headquarters |
Marriott Drive Washington, D.C. 20058 (301) 380-7770 |
NEWS
| CONTACT: Tom Marder |
(301) 380-2553
thomas.marder@marriott.com
MARRIOTT INTERNATIONAL REPORTS RECORD EPS FROM CONTINUING OPERATIONS OF $1.94 FOR 2003, UP 11% FROM 2002
Highlights from the year:
| • | Marriott added more than 31,000 hotel rooms and timeshare units in 2003, bringing the global system to 2,718 hotels and timeshare units (490,564 rooms). |
| • | Conversion pace of non-Marriott hotels to Marriott brands continued to be strong in 2003 and into 2004, accounting for approximately one-third of total new hotel rooms added in 2003. |
| • | Marriott used cash generated by its business and asset sales to reduce total debt by $319 million and to repurchase 10.5 million shares of common stock in 2003. |
| • | Marriott led the industry in Internet enabled hotels with approximately 1,400 at year end 2003 and expects well over 2,000 hotels to be Internet enabled by year end 2004. |
WASHINGTON, D.C.—February 10, 2004—Marriott International, Inc. (NYSE:MAR) today reported record diluted earnings per share from continuing operations of $1.94 in 2003, up 11 percent from 2002. Income from continuing operations, net of taxes, for the year was $476 million, an eight percent increase over 2002 levels. Synthetic fuel operations contributed approximately $96 million ($0.39 per share) in 2003 versus $74 million ($0.29 per share) a year ago.
J.W. Marriott, Jr., chairman and chief executive officer of Marriott International, said, “We are pleased with our solid performance in 2003, especially in light of the challenges of a war in Iraq and Severe Acute Respiratory Syndrome (SARS). Our leading brands have proven themselves in the challenging operating environment over the past three years. Owners have converted more than 115 hotels with over 20,000 rooms, excluding Ramada International, to our brands since the beginning of 2001 and the trend continues into 2004.
“We expect 2004 to be an even better year at Marriott, in part due to an improved demand outlook and in part due to Marriott’s recent product initiatives. We rolled out Marriott’s industry leading Look No Further sm Best Rate Guarantee, which ensures that customers receive the best available room rate at nearly 2,500 hotels when booking through any Marriott reservation channel. We also recently signed distribution agreements with major third party internet hotel distributors as well as with major travel management companies. These agreements are designed to make Marriott products available to a growing number of travelers with reliable pricing across all distribution channels.
“We are encouraged by the signs of improving trends and look forward to business travel demand building throughout 2004. We expect our 2004 REVPAR (revenue per available room) to increase three to four percent in North America. We also expect to continue our growth in distribution, adding approximately 25,000 to 30,000 hotel rooms and timeshare units to our system in 2004, even as growth in industry supply in the U.S. is expected to continue to decline. As we began 2004, our pipeline of hotel rooms under development increased to more than 50,000 rooms and included a growing proportion of international full service projects. With improved lodging demand, continued strong unit growth and strength in our timeshare business, we continue to expect EPS from continuing operations to be in the range of $2.06 to $2.16 in 2004.
“We have a long term vision for the lodging business to be where our guests are traveling. High-quality, worldwide distribution is important to drive brand value. During the year, we announced a number of exceptional hotels with tremendous market presence, both newly constructed and converted. Properties such as a new Ritz-Carlton in Tokyo and the Grosvenor House in Mayfair, London will extend the excellent distribution our brands enjoy today.”
In fiscal 2003 (52 week period from January 4, 2003 to January 2, 2004), REVPAR for comparable systemwide North American properties declined by 1.3 percent, driven largely by lower average room rates. REVPAR at comparable systemwide North American full-service hotels (including Marriott Hotels & Resorts, The Ritz-Carlton, and Renaissance Hotels & Resorts) decreased by 1.6 percent during the year, while North American systemwide REVPAR for select-service and extended-stay brands (including Courtyard, Fairfield Inn, Residence Inn, TownePlace Suites, and SpringHill Suites) posted a REVPAR decline of 0.8 percent. The Ritz-Carlton brand in North America experienced stronger demand, particularly at its resort properties, with comparable REVPAR up 1.0 percent for the year. International REVPAR at comparable systemwide properties increased 3.7 percent (or declined 1.5 percent in constant dollars). International lodging demand was impacted in 2003 by SARS, the Iraqi war and weak economies in Continental Europe.
We added 185 hotels and timeshare resorts (31,261 rooms) to our worldwide lodging portfolio during 2003, while 24 properties (4,126 rooms) exited the system. For the full year 2003, hotels converted from competitor or unbranded hotels accounted for approximately one-third of gross hotel room additions. At year-end, the company’s lodging group encompassed 2,718 hotels and timeshare resorts (490,564 rooms).
MARRIOTT REVENUES totaled $9.0 billion in 2003, a 7 percent increase from 2002. Base fees from managed hotels increased 2 percent to $388 million, reflecting 3 percent net growth in managed rooms, somewhat offset by lower REVPAR. Franchise fees increased 6 percent in
2003 to $245 million, reflecting 9 percent net growth in franchised rooms, somewhat offset by lower REVPAR. Incentive management fees declined 33 percent to $109 million, reflecting the REVPAR decline at managed hotels as well as lower property level house profit margins. North American company-operated hotel house profit margins in 2003 declined 2.7 percentage points largely due to lower average room rates, higher wages and insurance costs, lower telephone profits, and higher utility costs, offset somewhat by continued productivity improvements. International house profit margins were down only 1.0 percentage point. In 2003, 29 percent of managed rooms earned incentive management fees.
Marriott’s timeshare business reported 16 percent higher contract sales for the full year 2003. Contract sales were particularly strong at timeshare resorts in Aruba and Hawaii.
MARRIOTT OPERATING INCOME increased 17 percent from 2002 levels to $377 million, largely as a result of lower operating losses from the company’s synthetic fuel business in 2003 and the $50 million writedown of goodwill associated with ExecuStay that was included in operating income in 2002. Marriott’s 2003 operating income included the receipt of a $36 million insurance payment for lost revenue related to the loss of the Marriott World Trade Center Hotel on September 11, 2001. Operating income in 2003 also reflected a $53 million reduction in incentive fees, due to the continued weak operating environment in the lodging industry.
Gains and other income include the gains on the sale of timeshare mortgage notes, hotel assets and other investments, including $64 million from the company’s ongoing timeshare mortgage note sale program in 2003 and $21 million in gains on the sale of three international joint venture interests. Prior year gains included $60 million from timeshare mortgage note sales and $44 million from the sale of our equity stake in Interval International.
INTEREST EXPENSE increased to $110 million in 2003 compared to $86 million in 2002 reflecting lower levels of capitalized interest. The net provision for loan losses was $7 million, down from the 2002 level of $12 million.
We sold a 50 percent ownership interest in our synthetic fuel operation to a major U.S. financial institution in mid-2003. We expect to receive substantial additional payments over time, the size of which depends on the amount of synthetic fuel produced. Because the buyer retained a put option, we continued to report synthetic fuel results on a consolidated basis until November 6, 2003, when the put option was terminated. At that point, we began to account for the synthetic fuel business under the equity method. Our income derived from our equity in the synthetic fuel joint venture totaled $10 million during the year. Excluding the impact of our synthetic fuel operations, our tax rate for continuing operations was 34.6 percent in 2003.
Other equity losses increased to $17 million in 2003, primarily as a result of continued weakness in the Courtyard joint venture.
During 2003, we sold three hotels, 23 senior living communities and several land parcels totaling $611 million. We owned only six hotels at year-end 2003. Also, during 2003, we received $280 million in cash from the sale and collection of notes receivable (excluding timeshare mortgage notes). Total debt at year end 2003 was $1.5 billion, down from $1.8 billion at the end of 2002. In addition to
reducing our debt by more than $300 million, we repurchased 10.5 million shares of common stock during 2003 at a total cost of $380 million. To date in 2004, we have repurchased an additional 2.3 million shares of common stock for a total cost of $104 million. Ten million shares remain authorized for repurchase.
During 2002, we closed the distribution services business and during 2003 we sold our senior living business. Therefore, we show the financial results for those businesses in discontinued operations for 2003 and 2002. Fully diluted earnings per share from discontinued operations were $0.11 in 2003 compared to losses of $0.64 a year ago. In light of our transition to a pure lodging company, we have modified our financial statements to include the consolidation of all of our general and administrative expenses and to provide more detail about our lodging business.
FOURTH QUARTER RESULTS
Fourth quarter highlights include:
| • | EPS from continuing operations totaled $0.69 in the fourth quarter 2003, a 47 percent increase over a year ago. |
| • | North American comparable systemwide REVPAR for the fourth quarter (Sept. 13, 2003 – Jan 2, 2004), increased 0.4 percent from the prior year. |
| • | On a fourth quarter 2003 calendar basis, Marriott’s full service brands reported 1.1 percent comparable company-operated REVPAR growth in North America and Hawaii combined. |
Fourth quarter diluted earnings per share from continuing operations totaled $0.69 in 2003, a 47 percent increase from the 2002 quarter. Income from continuing operations, net of taxes, for the quarter was $170 million compared to $116 million a year ago. Synthetic fuel operations contributed approximately $30 million ($0.12 per share) in the fourth quarter of 2003 versus $36 million ($0.14 per share) a year ago.
We added 50 hotels and timeshare resorts (7,206 rooms) to our worldwide lodging portfolio during the fourth quarter of 2003, while nine properties (1,599 rooms) exited the system.
Outside North America, comparable systemwide REVPAR for the last four months of 2003 increased 3.4 percent in constant dollars as a result of stronger occupancies in almost all regions and particularly strong demand in Middle Eastern, the United Kingdom and Caribbean destinations. Taking into account the decline in the value of the U.S. dollar, comparable systemwide REVPAR outside North America increased 8.7 percent during the quarter.
MARRIOTT REVENUES totaled $2.9 billion in the 2003 fourth quarter, a six percent increase from 2002. Base fees from managed hotels increased one percent, while franchise fees increased six percent as a result of strong unit growth. Incentive management fees declined 36 percent, reflecting REVPAR declines and lower property level house profit margins. North American comparable company-operated house profit margins during the fourth quarter declined 2.7 percentage points.
Marriott’s timeshare business reported 11 percent higher contract sales in the 2003 fourth quarter. Contract sales were particularly strong at timeshare resorts in Hawaii and California.
MARRIOTT’S OPERATING INCOME for the fourth quarter of 2003 was $161 million, up from $37 million a year ago primarily as a result of lower synthetic fuel operating losses in 2003 and the inclusion of a $50 million writedown of goodwill related to our ExecuStay corporate living business in the year ago quarter. Marriott’s fourth quarter lodging operating income benefited from a $36 million insurance payment for lost revenue related to the loss of the Marriott World Trade Center Hotel on September 11, 2001, largely offset by $19 million in lower incentive fees, charges totaling $15 million related to three hotels.
INTEREST EXPENSE totaled $33 million during the 2003 fourth quarter compared to $27 million in the fourth quarter of 2002. The increase was largely due to $5 million of lower capitalized interest.
Synthetic fuel operations contributed approximately $0.12 cents per share of after-tax earnings during the quarter. After the sale of a 50 percent interest, we continued to report synthetic fuel results on a consolidated basis because the buyer retained a put option. Effective November 6, 2003, that put option was terminated and we began to account for the synthetic fuel business under the equity method. Our income derived from our equity in the synthetic fuel joint venture totaled $10 million during the quarter. Excluding the impact of our synthetic fuel operations, our tax rate for continuing operations was 34.5 percent in the fourth quarter of 2003.
OUTLOOK
We are pleased with our current booking patterns in 2004 and believe the strengthening economy is beginning to impact favorably individual business travel. Combined with already strong leisure business, we are optimistic about 2004 demand growth. In addition, Lodging Econometrics expects U.S. lodging supply to grow only 1.2% in 2004. Based on these dynamics, we continue to estimate North American REVPAR growth for 2004 of 3 to 4 percent.
Assuming nearly flat house profit margins, completion of timeshare mortgage note sale transactions in the second and fourth quarters, approximately 25,000 to 30,000 new room openings, and roughly $0.40 of after-tax earnings per share from our synthetic fuel business, we continue to estimate that 2004 diluted earnings per share from continuing operations will range from $2.06 to $2.16. Under these assumptions, lodging operating income (excluding synthetic fuel’s operating loss in 2003) should increase roughly 15 percent for full year 2004.
Assuming North American REVPAR growth of 2 to 4 percent in the first quarter of 2004, we currently estimate first quarter earnings per share from continuing operations of $0.38 to $0.42, including $0.06 of earnings from synthetic fuel.
We expect investment spending in 2004 to include approximately $50 million for maintenance capital spending and approximately $50 million for systems initiatives. We also expect to invest approximately $25 million in new company-developed hotels and $75 million in the timeshare business. We expect to invest approximately $150 million in mezzanine financing and mortgage loans for hotels developed by our owners and franchisees and approximately $150 million in equity investments, including investments in timeshare joint ventures. In 2004, we estimate total investment spending levels to be roughly $500 million, moderately lower than in 2003.
Individual investors and the news media are invited to listen to the review on the Internet at http://www.marriott.com/investor. A replay will be available on the Internet until March 10, 2004 at http://www.marriott.com/investor (click on “recent investor news”). A recording of the call will also be available by telephone from 1 p.m. ET, Tuesday, February 10, 2004 until Tuesday, February 17, 2004 at 8 p.m. ET. To access the recording, call 719-457-0820. The reservation number for the recording is 277182.
Note: This press release contains “forward-looking statements” within the meaning of federal securities laws, including REVPAR, profit margin and earning trends; statements concerning the number of lodging properties we expect to add in future years; our expected investment spending; our anticipated results from synthetic fuel operations; and similar statements concerning anticipated future events and expectations that are not historical facts. We caution you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including the pace and extent of the current recovery in both the economy and the lodging industry; supply and demand changes for hotel rooms, vacation ownership intervals, and corporate housing; competitive conditions in the lodging industry; relationships with clients and property owners; and the availability of capital to finance hotel growth and refurbishment; 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 worldwide hospitality company with over 2,700 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 Ramada International brand names; develops and operates vacation ownership resorts under the Marriott Vacation Club International, Horizons, The Ritz-Carlton Club and Marriott Grand Residence Club brands; operates Marriott Executive Apartments; provides furnished corporate housing through its Marriott ExecuStay division; and operates conference centers. Marriott is also in the synthetic fuel business. The company is headquartered in Washington, D.C., and has approximately 128,000 employees. In fiscal year 2003, Marriott International reported sales from continuing operations of $9 billion. For more information or reservations, please visit our web site at www.marriott.com.
IRPR#1
Tables follow
MARRIOTT INTERNATIONAL, INC.
Financial Highlights
(in millions, except per share amounts)
| 16 Weeks Ended January 2, 2004 |
17 Weeks Ended January 3, 2003 |
||||||||||||||||||||||
| Lodging |
Synthetic Fuel |
Total |
Lodging |
Synthetic Fuel |
Total |
Percent Better/ (Worse) | |||||||||||||||||
| REVENUES |
|||||||||||||||||||||||
| Base management fees |
$ | 122 | $ | — | $ | 122 | $ | 121 | $ | — | $ | 121 | |||||||||||
| Franchise fees |
76 | — | 76 | 72 | — | 72 | |||||||||||||||||
| Incentive management fees |
34 | — | 34 | 53 | — | 53 | |||||||||||||||||
| Owned, leased, corporate housing and other 1 |
219 | — | 219 | 197 | — | 197 | |||||||||||||||||
| Timeshare interval sales and services 2 |
378 | — | 378 | 318 | — | 318 | |||||||||||||||||
| Cost reimbursements 3 |
1,959 | — | 1,959 | 1,852 | — | 1,852 | |||||||||||||||||
| Synthetic fuel |
— | 78 | 78 | — | 80 | 80 | |||||||||||||||||
| Total Revenues |
2,788 | 78 | 2,866 | 2,613 | 80 | 2,693 | |||||||||||||||||
| OPERATING COSTS AND EXPENSES |
|||||||||||||||||||||||
| Owned, leased and corporate housing—direct 4 |
158 | — | 158 | 214 | — | 214 | |||||||||||||||||
| Timeshare—direct |
323 | — | 323 | 283 | — | 283 | |||||||||||||||||
| Reimbursed costs |
1,959 | — | 1,959 | 1,852 | — | 1,852 | |||||||||||||||||
| General, administrative and other 5 |
187 | — | 187 | 174 | — | 174 | |||||||||||||||||
| Synthetic fuel |
— | 78 | 78 | — | 133 | 133 | |||||||||||||||||
| Total Expenses |
2,627 | 78 | 2,705 | 2,523 | 133 | 2,656 | |||||||||||||||||
| OPERATING INCOME |
$ | 161 | $ | — | 161 | $ | 90 | $ | (53 | ) | 37 | * | |||||||||||
| Gains and other income 6 |
52 | 69 | |||||||||||||||||||||
| Interest expense |
(33 | ) | (27 | ) | |||||||||||||||||||
| Interest income |
51 | 47 | |||||||||||||||||||||
| Provision for loan losses |
— | (12 | ) | ||||||||||||||||||||
| Equity in earnings (losses)—Synthetic fuel 7 |
10 | — | |||||||||||||||||||||
| —Other 8 |
(16 | ) | (6 | ) | |||||||||||||||||||
| INCOME FROM CONTINUING OPERATIONS |
225 | 108 | |||||||||||||||||||||
| (Provision)/Benefit for income taxes |
(29 | ) | 8 | ||||||||||||||||||||
| INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST |
196 | 116 | |||||||||||||||||||||
| Minority Interest |
(26 | ) | — | ||||||||||||||||||||
| INCOME FROM CONTINUING OPERATIONS |
170 | 116 | 47 | ||||||||||||||||||||
| Discontinued operations |
|||||||||||||||||||||||
| Loss from Senior Living Services, net of tax |
(3 | ) | (125 | ) | |||||||||||||||||||
| Income/(loss) from Distribution Services, net of tax |
2 | (28 | ) | ||||||||||||||||||||
| NET INCOME/(LOSS) |
$ | 169 | $ | (37 | ) | * | |||||||||||||||||
| EARNINGS PER SHARE—Basic |
|||||||||||||||||||||||
| Earnings from continuing operations |
$ | 0.74 | $ | 0.49 | 51 | ||||||||||||||||||
| Loss from discontinued operations |
(0.01 | ) | (0.65 | ) | 98 | ||||||||||||||||||
| Earnings/(loss) per share |
$ | 0.73 | $ | (0.16 | ) | * | |||||||||||||||||
| EARNINGS PER SHARE—Diluted |
|||||||||||||||||||||||
| Earnings from continuing operations |
$ | 0.69 | $ | 0.47 | 47 | ||||||||||||||||||
| Loss from discontinued operations |
— | (0.62 | ) | * | |||||||||||||||||||
| Earnings/(loss) per share |
$ | 0.69 | $ | (0.15 | ) | * | |||||||||||||||||
| Basic Shares |
231.4 | 237.0 | |||||||||||||||||||||
| Diluted Shares |
245.8 | 247.3 | |||||||||||||||||||||
| * | Calculated percentage is not meaningful. |
| 1 – | Owned, leased, corporate housing and other revenue includes revenue from the properties we own or lease, our ExecuStay business, land rent income and other revenue. |
| 2 – | Timeshare interval sales and services includes total timeshare revenue except for base fees, reimbursed costs and note sale gains. |
| 3 – | Cost reimbursements include reimbursements from lodging properties for Marriott funded operating expenses. Marriott earns no markup on these expenses. |
| 4 – | Owned, leased and corporate housing—direct expenses include operating expenses of our ExecuStay business unit, and owned or leased hotels including lease payments, pre-opening expenses and depreciation. |
| 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. |
| 6 – | Gains and other income includes gains on the sale of real estate, timeshare note sale gains, and gains on the sale of our interests in joint ventures. |
| 7 – | Equity in earnings/(losses)—Synthetic fuel includes our share of the equity in earnings of the Synthetic fuel joint venture and the earnout we received from the Synthetic fuel joint venture partner beginning November 6, 2003. The earnout we received prior to November 6, 2003, along with the revenue generated from the previously consolidated Synthetic fuel joint venture, are included in Synthetic fuel revenue. |
| 8 – | Equity in earnings/(losses)—Other includes our equity in earnings/(losses) of unconsolidated joint ventures. |
MARRIOTT INTERNATIONAL, INC.
Financial Highlights
(in millions, except per share amounts)
| 52 Weeks Ended January 2, 2004 |
53 Weeks Ended January 3, 2003 |
|||||||||||||||||||||||
| Lodging |
Synthetic Fuel |
Total |
Lodging |
Synthetic Fuel |
Total |
Percent Better/ | ||||||||||||||||||
| REVENUES |
||||||||||||||||||||||||
| Base management fees |
$ | 388 | $ | — | $ | 388 | $ | 379 | $ | — | $ | 379 | ||||||||||||
| Franchise fees |
245 | — | 245 | 232 | — | 232 | ||||||||||||||||||
| Incentive management fees |
109 | — | 109 | 162 | — | 162 | ||||||||||||||||||
| Owned, leased, corporate housing and other 1 |
633 | — | 633 | 651 | — | 651 | ||||||||||||||||||
| Timeshare interval sales and services 2 |
1,145 | — | 1,145 | 1,059 | — | 1,059 | ||||||||||||||||||
| Cost reimbursements 3 |
6,192 | — | 6,192 | 5,739 | — | 5,739 | ||||||||||||||||||
| Synthetic fuel |
— | 302 | 302 | — | 193 | 193 | ||||||||||||||||||
| Total Revenues |
8,712 | 302 | 9,014 | 8,222 | 193 | 8,415 | ||||||||||||||||||
| OPERATING COSTS AND EXPENSES |
||||||||||||||||||||||||
| Owned, leased and corporate housing—direct 4 |
505 | — | 505 | 580 | — | 580 | ||||||||||||||||||
| Timeshare—direct |
1,011 | — | 1,011 | 938 | — | 938 | ||||||||||||||||||
| Reimbursed costs |
6,192 | — | 6,192 | 5,739 | — | 5,739 | ||||||||||||||||||
| General, administrative and other 5 |
523 | — | 523 | 510 | — | 510 | ||||||||||||||||||
| Synthetic fuel |
— | 406 | 406 | — | 327 | 327 | ||||||||||||||||||
| Total Expenses |
8,231 | 406 | 8,637 | 7,767 | 327 | 8,094 | ||||||||||||||||||
| OPERATING INCOME |
$ | 481 | $ | (104 | ) | 377 | $ | 455 | $ | (134 | ) | 321 | 17 | |||||||||||
| Gains and other income 6 |
106 | 132 | ||||||||||||||||||||||
| Interest expense |
(110 | ) | (86 | ) | ||||||||||||||||||||
| Interest income |
129 | 122 | ||||||||||||||||||||||
| Provision for loan losses |
(7 | ) | (12 | ) | ||||||||||||||||||||
| Equity in earnings (losses)—Synthetic fuel 7 |
10 | — | ||||||||||||||||||||||
| —Other 8 |
(17 | ) | (6 | ) | ||||||||||||||||||||
| INCOME FROM CONTINUING OPERATIONS |
488 | 471 | ||||||||||||||||||||||
| Benefit (Provision) for income taxes |
43 | (32 | ) | |||||||||||||||||||||
| INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST |
531 | 439 | ||||||||||||||||||||||
| Minority Interest |
(55 | ) | — | |||||||||||||||||||||
| INCOME FROM CONTINUING OPERATIONS |
476 | 439 | 8 | |||||||||||||||||||||
| Discontinued operations |
||||||||||||||||||||||||
| Income (Loss) from Senior Living Services, net of tax |
26 | (108 | ) | |||||||||||||||||||||
| Loss from Distribution Services, net of tax |
— | (54 | ) | |||||||||||||||||||||
| NET INCOME |
$ | 502 | $ | 277 | 81 | |||||||||||||||||||
| EARNINGS PER SHARE—Basic |
||||||||||||||||||||||||
| Earnings from continuing operations |
$ | 2.05 | $ | 1.83 | 12 | |||||||||||||||||||
| Earnings (loss) from discontinued operations |
0.11 | (0.68 | ) | * | ||||||||||||||||||||
| Earnings per share |
$ | 2.16 | $ | 1.15 | 88 | |||||||||||||||||||
| EARNINGS PER SHARE—Diluted |
||||||||||||||||||||||||
| Earnings from continuing operations |
$ | 1.94 | $ | 1.74 | 11 | |||||||||||||||||||
| Earnings (loss) from discontinued operations |
0.11 | (0.64 | ) | * | ||||||||||||||||||||
| Earnings per share |
$ | 2.05 | $ | 1.10 | 86 | |||||||||||||||||||
| Basic Shares |
232.5 | 240.3 | ||||||||||||||||||||||
| Diluted Shares |
245.4 | 254.6 | ||||||||||||||||||||||
* Calculated percentage is not meaningful.
1 – Owned, leased, corporate housing and other revenue includes revenue from the properties we own or lease, our ExecuStay business, land rent income and other revenue.
2 – Timeshare interval sales and services includes total timeshare revenue except for base fees, reimbursed costs and note sale gains.
3 – Cost reimbursements include reimbursements from lodging properties for Marriott funded operating expenses. Marriott earns no markup on these expenses.
4 – Owned, leased and corporate housing—direct expenses include operating expenses of our ExecuStay business unit, and owned or leased hotels including lease payments, pre-opening expenses and depreciation.
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.
6 – Gains and other income includes gains on the sale of real estate, timeshare note sale gains, and gains on the sale of our interests in joint ventures.
7 – Equity in earnings/(losses)—Synthetic fuel includes our share of the equity in earnings of the Synthetic fuel joint venture and the earnout we received from the Synthetic fuel joint venture partner beginning November 6, 2003. The earnout we received prior to November 6, 2003, along with the revenue generated from the previously consolidated Synthetic fuel joint venture, are included in Synthetic fuel revenue.
8 – Equity in earnings/(losses)—Other includes our equity in earnings/(losses) of unconsolidated joint ventures.
MARRIOTT INTERNATIONAL, INC.
Business Segments
($ in millions)
| Quarter Ended1 |
||||||||
| January 2, 2004 |
January 3, 2003 |
|||||||
| REVENUES |
||||||||
| Full-Service |
$ | 1,899 | $ | 1,791 | ||||
| Select-Service |
301 | 291 | ||||||
| Extended-Stay |
165 | 184 | ||||||
| Timeshare |
423 | 347 | ||||||
| Total Lodging |
2,788 | 2,613 | ||||||
| Synthetic Fuel |
78 | 80 | ||||||
| Total |
$ | 2,866 | $ | 2,693 | ||||
| INCOME FROM CONTINUING OPERATIONS |
|
|||||||
| Full-Service |
$ | 148 | $ | 132 | ||||
| Select-Service |
18 | 35 | ||||||
| Extended-Stay |
10 | (38 | ) | |||||
| Timeshare |
64 | 73 | ||||||
| Total Lodging Financial Results (pretax) |
240 | 202 | ||||||
| Synthetic Fuel (after tax) |
30 | 36 | ||||||
| Unallocated corporate expense |
(43 | ) | (49 | ) | ||||
| Interest income, provision for loan losses and interest expense |
18 | 8 | ||||||
| Income taxes (excluding Synthetic Fuel) |
(75 | ) | (81 | ) | ||||
| Total |
$ | 170 | $ | 116 | ||||
| 1 | There were 16 weeks in the fourth quarter ended January 2, 2004 and 17 weeks in the fourth quarter ended January 3, 2003. |
MARRIOTT INTERNATIONAL, INC.
Business Segments
($ in millions)
| Year Ended1 |
||||||||
| January 2, 2004 |
January 3, 2003 |
|||||||
| REVENUES |
||||||||
| Full-Service |
$ | 5,876 | $ | 5,508 | ||||
| Select-Service |
1,000 | 967 | ||||||
| Extended-Stay |
557 | 600 | ||||||
| Timeshare |
1,279 | 1,147 | ||||||
| Total Lodging |
8,712 | 8,222 | ||||||
| Synthetic Fuel |
302 | 193 | ||||||
| Total |
$ | 9,014 | $ | 8,415 | ||||
| INCOME FROM CONTINUING OPERATIONS |
||||||||
| Full-Service |
$ | 407 | $ | 397 | ||||
| Select-Service |
99 | 130 | ||||||
| Extended-Stay |
47 | (3 | ) | |||||
| Timeshare |
149 | 183 | ||||||
| Total Lodging Financial Results (pretax) |
702 | 707 | ||||||
| Synthetic Fuel (after tax) |
96 | 74 | ||||||
| Unallocated corporate expense |
(132 | ) | (126 | ) | ||||
| Interest income, provision for loan losses and interest expense |
12 | 24 | ||||||
| Income taxes (excluding Synthetic Fuel) |
(202 | ) | (240 | ) | ||||
| Total |
$ | 476 | $ | 439 | ||||
| 1 | There were 52 weeks in the year ended January 2, 2004 and 53 weeks in the year ended January 3, 2003. |
MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
January 2, 2004 and January 3, 2003
($ in millions)
| January 2, 2004 |
January 3, 2003 |
|||||||
| ASSETS |
||||||||
| Current assets |
||||||||
| Cash and equivalents |
$ | 229 | $ | 198 | ||||
| Accounts and notes receivable |
699 | 522 | ||||||
| Prepaid taxes |
223 | 300 | ||||||
| Other |
84 | 89 | ||||||
| Assets held for sale |
— | 664 | ||||||
| 1,235 | 1,773 | |||||||
| Property and equipment |
2,513 | 2,560 | ||||||
| Goodwill |
923 | 923 | ||||||
| Other intangible assets |
526 | 495 | ||||||
| Investments in affiliates—equity |
468 | 475 | ||||||
| Investments in affiliates—notes receivable |
558 | 522 | ||||||
| Notes and other receivables, net |
||||||||
| Loans to timeshare owners |
167 | 153 | ||||||
| Other notes receivable |
389 | 366 | ||||||
| Other long-term receivables |
548 | 473 | ||||||
| 1,104 | 992 | |||||||
| Other |
850 | 556 | ||||||
| $ | 8,177 | $ | 8,296 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities |
||||||||
| Accounts payable |
$ | 584 | $ | 505 | ||||
| Accrued payroll and benefits |
412 | 373 | ||||||
| Casualty self insurance |
43 | 32 | ||||||
| Other payables and accruals |
667 | 662 | ||||||
| Current portion of long-term debt |
64 | 221 | ||||||
| Liabilities of businesses held for sale |
— | 390 | ||||||
| 1,770 | 2,183 | |||||||
| Long-term debt |
1,391 | 1,553 | ||||||
| Casualty self insurance reserves |
169 | 106 | ||||||
| Other long-term liabilities |
1,009 | 881 | ||||||
| Shareholders’ equity |
||||||||
| Class A common stock |
3 | 3 | ||||||
| Additional paid-in capital |
3,317 | 3,224 | ||||||
| Retained earnings |
1,505 | 1,126 | ||||||
| Deferred compensation |
(81 | ) | (43 | ) | ||||
| Treasury stock, at cost |
(865 | ) | (667 | ) | ||||
| Accumulated other comprehensive loss |
(41 | ) | (70 | ) | ||||
| 3,838 | 3,573 | |||||||
| $ | 8,177 | $ | 8,296 | |||||
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
| North American Comparable Company-Operated Properties 1 | ||||||||||||||
| 16 Weeks Ended Jan. 2, 2004 vs. 17 Weeks Ended Jan. 3, 2003 | ||||||||||||||
| REVPAR |
Occupancy |
Average Daily Rate | ||||||||||||
| Brand |
2003 |
vs. 2002 |
2003 |
vs. 2002 |
2003 |
vs. 2002 | ||||||||
| Marriott Hotels & Resorts |
$ | 91.21 | -1.2% | 66.6% | 0.1% pts. | $ | 136.93 | -1.4% | ||||||
| The Ritz-Carlton 2 |
$ | 144.34 | 4.8% | 63.5% | 3.2% pts. | $ | 227.17 | -0.5% | ||||||
| Renaissance Hotels & Resorts |
$ | 83.38 | 0.1% | 63.0% | 1.5% pts. | $ | 132.35 | -2.3% | ||||||
| Composite—Full-Service |
$ | 95.84 | 0.1% | 65.8% | 0.6% pts. | $ | 145.72 | -0.8% | ||||||
| Residence Inn |
$ | 68.63 | -1.7% | 72.9% | -0.6% pts. | $ | 94.15 | -0.8% | ||||||
| Courtyard |
$ | 59.92 | -0.7% | 64.9% | -0.3% pts. | $ | 92.38 | -0.3% | ||||||
| TownePlace Suites |
$ | 42.56 | 2.1% | 68.4% | 2.0% pts. | $ | 62.19 | -0.9% | ||||||
| Composite—Select-Service & Extended-Stay |
$ | 60.38 | -0.4% | 67.0% | 0.0% pts. | $ | 90.18 | -0.4% | ||||||
| Composite—All |
$ | 82.94 | 0.0% | 66.2% | 0.4% pts. | $ | 125.29 | -0.5% | ||||||
| North American Comparable Systemwide Properties 1 | ||||||||||||||
| 16 Weeks Ended Jan. 2, 2004 vs. 17 Weeks Ended Jan. 3, 2003 | ||||||||||||||
| REVPAR |
Occupancy |
Average Daily Rate | ||||||||||||
| Brand |
2003 |
vs. 2002 |
2003 |
vs. 2002 |
2003 |
vs. 2002 | ||||||||
| Marriott Hotels & Resorts |
$ | 84.02 | -0.9% | 64.9% | -0.1% pts. | $ | 129.42 | -0.8% | ||||||
| The Ritz-Carlton 2 |
$ | 144.34 | 4.8% | 63.5% | 3.2% pts. | $ | 227.17 | -0.5% | ||||||
| Renaissance Hotels & Resorts |
$ | 78.51 | 1.5% | 63.5% | 2.3% pts. | $ | 123.73 | -2.1% | ||||||
| Composite—Full-Service |
$ | 87.80 | 0.4% | 64.6% | 0.5% pts. | $ | 135.89 | -0.4% | ||||||
| Residence Inn |
$ | 66.68 | -0.7% | 72.0% | -0.1% pts. | $ | 92.55 | -0.6% | ||||||
| Courtyard |
$ | 60.23 | 0.3% | 65.2% | -0.2% pts. | $ | 92.34 | 0.6% | ||||||
| Fairfield Inn |
$ | 37.56 | 0.3% | 60.0% | 0.0% pts. | $ | 62.61 | 0.2% | ||||||
| TownePlace Suites |
$ | 42.64 | 2.3% | 68.5% | 2.4% pts. | $ | 62.22 | -1.3% | ||||||
| SpringHill Suites |
$ | 51.41 | 4.1% | 65.5% | 2.2% pts. | $ | 78.44 | 0.6% | ||||||
| Composite—Select-Service & Extended-Stay |
$ | 54.22 | 0.3% | 65.6% | 0.2% pts. | $ | 82.63 | 0.0% | ||||||
| Composite—All |
$ | 69.05 | 0.4% | 65.2% | 0.3% pts. | $ | 105.95 | -0.1% | ||||||
| North American Comparable Company-Operated Properties 1 | ||||||||||||||
| 52 Weeks Ended Jan. 2, 2004 vs. 53 Weeks Ended Jan. 3, 2003 | ||||||||||||||
| REVPAR |
Occupancy |
Average Daily Rate | ||||||||||||
| Brand |
2003 |
vs. 2002 |
2003 |
vs. 2002 |
2003 |
vs. 2002 | ||||||||
| Marriott Hotels & Resorts |
$ | 93.81 | -2.8% | 69.3% | -0.5% pts. | $ | 135.42 | -2.1% | ||||||
| The Ritz-Carlton 3 |
$ | 151.85 | 1.0% | 65.7% | 1.1% pts. | $ | 231.12 | -0.8% | ||||||
| Renaissance Hotels & Resorts |
$ | 86.99 | -0.4% | 65.8% | 0.9% pts. | $ | 132.12 | -1.8% | ||||||
| Composite—Full-Service |
$ | 98.65 | -1.8% | 68.4% | -0.1% pts. | $ | 144.17 | -1.6% | ||||||
| Residence Inn |
$ | 73.09 | -2.3% | 77.0% | -0.3% pts. | $ | 94.94 | -1.9% | ||||||
| Courtyard |
$ | 63.01 | -2.7% | 67.6% | -1.0% pts. | $ | 93.16 | -1.2% | ||||||
| TownePlace Suites |
$ | 44.48 | -1.0% | 70.3% | -2.0% pts. | $ | 63.24 | 1.8% | ||||||
| Composite—Select-Service & Extended-Stay |
$ | 63.64 | -2.2% | 70.0% | -0.8% pts. | $ | 90.98 | -1.1% | ||||||
| Composite—All |
$ | 85.85 | -1.9% | 69.0% | -0.4% pts. | $ | 124.45 | -1.4% | ||||||
| North American Comparable Systemwide Properties
| ||||||||||||||
| 52 Weeks Ended Jan. 2, 2004 vs. 53 Weeks Ended Jan. 3, 2003 | ||||||||||||||
| REVPAR |
Occupancy |
Average Daily Rate | ||||||||||||
| Brand |
2003 |
vs. 2002 |
2003 |
vs. 2002 |
2003 |
vs. 2002 | ||||||||
| Marriott Hotels & Resorts |
$ | 86.87 | -2.4% | 67.6% | -0.4% pts. | $ | 128.53 | -1.8% | ||||||
| The Ritz-Carlton 3 |
$ | 151.85 | 1.0% | 65.7% | 1.1% pts. | $ | 231.12 | -0.8% | ||||||
| Renaissance Hotels & Resorts |
$ | 80.92 | 0.1% | 65.3% | 1.5% pts. | $ | 123.97 | -2.2% | ||||||
| Composite—Full-Service |
$ | 90.57 | -1.6% | 67.1% | 0.0% pts. | $ | 134.92 | -1.6% | ||||||
| Residence Inn |
$ | 71.47 | -1.1% | 76.2% | 0.2% pts. | $ | 93.85 | -1.4% | ||||||
| Courtyard |
$ | 63.65 | -1.4% | 68.5% | -0.6% pts. | $ | 92.90 | -0.6% | ||||||
| Fairfield Inn |
$ | 41.22 | -0.4% | 64.1% | -0.3% pts. | $ | 64.28 | 0.2% | ||||||
| TownePlace Suites |
$ | 44.89 | -0.1% | 70.9% | 0.0% pts. | $ | 63.34 | -0.2% | ||||||
| SpringHill Suites |
$ | 54.94 | 3.2% | 68.4% | 1.3% pts. | $ | 80.38 | 1.3% | ||||||
| Composite—Select-Service & Extended-Stay |
$ | 57.95 | -0.8% | 69.2% | -0.2% pts. | $ | 83.70 | -0.6% | ||||||
| Composite—All |
$ | 72.31 | -1.3% | 68.3% | -0.1% pts. | $ | 105.86 | -1.1% | ||||||
| 1 | Composite—All statistics include properties for the Marriott Hotels & Resorts, Renaissance Hotels & Resorts, The Ritz-Carlton, Courtyard, Residence Inn, TownePlace Suites, Fairfield Inn, and SpringHill Suites brands. Select-Service and Extended-Stay composite statistics include properties for the Courtyard, Residence Inn, TownePlace Suites, Fairfield Inn and SpringHill Suites brands. |
| 2 | Statistics for The Ritz-Carlton are for the four months ended December 31, 2003. |
| 3 | Statistics for The Ritz-Carlton are for the twelve months ended December 31, 2003. |
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
| International Comparable Company-Operated Properties 1,2 | ||||||||||||||
| Four Months Ended December 31, 2003 and December 31, 2002 | ||||||||||||||
| REVPAR |
Occupancy |
Average Daily Rate | ||||||||||||
| Brand |
2003 |
vs. 2002 |
2003 |
vs. 2002 |
2003 |
vs. 2002 | ||||||||
| Caribbean & Latin America |
$ | 78.06 | 8.2% | 63.8% | 4.0% pts. | $ | 122.41 | 1.5% | ||||||
| Continental Europe |
$ | 87.09 | -0.6% | 71.5% | 3.0% pts. | $ | 121.77 | -4.7% | ||||||
| United Kingdom |
$ | 128.11 | 5.1% | 82.9% | 4.5% pts. | $ | 154.46 | -0.6% | ||||||
| Middle East & Africa |
$ | 53.82 | 34.5% | 72.5% | 5.8% pts. | $ | 74.25 | 23.8% | ||||||
| Asia Pacific4 |
$ | 69.92 | 1.2% | 75.5% | -0.4% pts. | $ | 92.59 | 1.7% | ||||||
| Total International5 |
$ | 80.81 | 4.0% | 72.1% | 2.3% pts. | $ | 112.09 | 0.7% | ||||||
| International Comparable Systemwide Properties 1,2 | ||||||||||||||
| Four Months Ended December 31, 2003 and December 31, 2002 | ||||||||||||||
| REVPAR |
Occupancy |
Average Daily Rate | ||||||||||||
| Brand |
2003 |
vs. 2002 |
2003 |
vs. 2002 |
2003 |
vs. 2002 | ||||||||
| Caribbean & Latin America |
$ | 73.04 | 8.2% | 62.8% | 4.4% pts. | $ | 116.29 | 0.6% | ||||||
| Continental Europe |
$ | 85.56 | 1.3% | 69.8% | 3.6% pts. | $ | 122.60 | -3.8% | ||||||
| United Kingdom |
$ | 101.01 | -1.6% | 78.1% | 1.1% pts. | $ | 129.28 | -2.9% | ||||||
| Middle East & Africa |
$ | 50.38 | 26.5% | 67.6% | 2.3% pts. | $ | 74.56 | 22.2% | ||||||
| Asia Pacific4 |
$ | 77.66 | 3.8% | 76.8% | 0.6% pts. | $ | 101.16 | 3.0% | ||||||
| Total International5 |
$ | 83.15 | 3.4% | 72.2% | 2.2% pts. | $ | 115.09 | 0.3% | ||||||
| International Comparable Company-Operated Properties 1,3 | ||||||||||||||
| Twelve Months Ended December 31, 2003 and December 31, 2002 | ||||||||||||||
| REVPAR |
Occupancy |
Average Daily Rate | ||||||||||||
| Brand |
2003 |
vs. 2002 |
2003 |
vs. 2002 |
2003 |
vs. 2002 | ||||||||
| Caribbean & Latin America |
$ | 85.32 | 9.5% | 67.5% | 4.2% pts. | $ | 126.45 | 2.7% | ||||||
| Continental Europe |
$ | 79.92 | -4.9% | 67.9% | 0.3% pts. | $ | 117.79 | -5.4% | ||||||
| United Kingdom |
$ | 113.48 | -2.4% | 76.6% | -0.7% pts. | $ | 148.14 | -1.5% | ||||||
| Middle East & Africa |
$ | 47.49 | 15.7% | 66.5% | 0.4% pts. | $ | 71.39 | 14.9% | ||||||
| Asia Pacific4 |
$ | 55.86 | -10.5% | 65.5% | -6.7% pts. | $ | 85.25 | -1.4% | ||||||
| Total International5 |
$ | 74.14 | -1.8% | 67.6% | -1.3% pts. | $ | 109.62 | 0.1% | ||||||
| International Comparable Systemwide Properties 1,3 | ||||||||||||||
| Twelve Months Ended December 31, 2003 and December 31, 2002 | ||||||||||||||
| REVPAR |
Occupancy |
Average Daily Rate | ||||||||||||
| Brand |
2003 |
vs. 2002 |
2003 |
vs. 2002 |
2003 |
vs. 2002 | ||||||||
| Caribbean & Latin America |
$ | 79.49 | 8.5% | 65.3% | 3.8% pts. | $ | 121.64 | 2.2% | ||||||
| Continental Europe |
$ | 77.50 | -3.5% | 64.9% | 0.3% pts. | $ | 119.40 | -4.0% | ||||||
| United Kingdom |
$ | 90.71 | -4.2% | 72.3% | -0.8% pts. | $ | 125.44 | -3.2% | ||||||
| Middle East & Africa |
$ | 46.00 | 15.8% | 64.3% | 0.6% pts. | $ | 71.58 | 14.6% | ||||||
| Asia Pacific4 |
$ | 63.10 | -6.8% | 67.8% | -5.3% pts. | $ | 93.13 | 0.5% | ||||||
| Total International5 |
$ | 75.69 | -1.5% | 67.5% | -1.0% pts. | $ | 112.14 | 0.0% | ||||||
| 1 | International financial results are reported on a period end basis, while International statistics are reported on a month end basis. |
| 2 | Statistics are in constant dollars and include results for September through December. Excludes North America. |
| 3 | Statistics are in constant dollars and include results for January through December. Excludes North America. |
| 4 | Excludes Hawaii. |
| 5 | Includes Hawaii. |
MARRIOTT INTERNATIONAL, INC.
| Total Lodging Products 1 | ||||||||
| Number of Properties | Number of Rooms/Suites | |||||||
| Brand |
Jan. 2, 2004 |
vs. Jan. 3, 2003 |
Jan. 2, 2004 |
vs. Jan. 3, 2003 | ||||
| Full-Service Lodging |
||||||||
| Marriott Hotels & Resorts |
472 | +22 | 173,974 | +8,774 | ||||
| The Ritz-Carlton |
56 | +5 | 18,347 | +1,781 | ||||
| Renaissance Hotels & Resorts |
126 | — | 45,614 | -185 | ||||
| Ramada International |
192 | +46 | 26,150 | +4,920 | ||||
| Select-Service Lodging |
||||||||
| Courtyard |
616 | +29 | 88,214 | +3,858 | ||||
| Fairfield Inn |
524 | +21 | 50,206 | +1,992 | ||||
| SpringHill Suites |
110 | +12 | 12,682 | +1,473 | ||||
| Extended-Stay Lodging |
||||||||
| Residence Inn |
449 | +21 | 53,314 | +2,741 | ||||
| TownePlace Suites |
111 | +7 | 11,381 | +677 | ||||
| Marriott Executive Apartments |
13 | +2 | 2,322 | +315 | ||||
| Timeshare |
||||||||
| Marriott Vacation Club International |
41 | -4 | 7,622 | +649 | ||||
| Horizons by Marriott Vacation Club International |
2 | — | 256 | +110 | ||||
| The Ritz-Carlton Club |
4 | — | 234 | +30 | ||||
| Marriott Grand Residence Club |
2 | — | 248 | — | ||||
| Total |
2,718 | +161 | 490,564 | +27,135 | ||||
| 1 | Total Lodging Products excludes the 2,978 corporate housing rental units. |
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
(in millions, except per share amounts)
We consider income from continuing operations and the effective tax rate excluding the impact of the Synthetic Fuel joint venture, to be meaningful performance indicators because they reflect that portion of our income from continuing operations and the effective tax rate that relates to our lodging business and enables investors to compare the results of our operations and effective tax rate to that of other lodging companies.
The reconciliation of the effective income tax rate from continuing operations to the effective income tax rate from continuing operations, excluding the impact of our Synthetic Fuel business is as follows:
Fourth Quarter 2003
| Continuing Operations |
||||||||||||
| Income from Continuing Operations |
Synthetic Fuel Impact |
Excluding Synthetic Fuel |
||||||||||
| Pre tax income (loss) |
$ | 225 | $ | 10 | $ | 215 | ||||||
| Tax Benefit/(Provision) |
(78 | ) | (3 | ) | (75 | ) | ||||||
| Tax Credits |
49 | 49 | — | |||||||||
| Total Tax Benefit/(Provision) |
(29 | ) | 46 | (75 | ) | |||||||
| Income from Continuing Operations before Minority Interest |
196 | 56 | 140 | |||||||||
| Minority Interest |
(26 | ) | (26 | ) | — | |||||||
| Income from Continuing Operations |
$ | 170 | $ | 30 | $ | 140 | ||||||
| Diluted Shares |
245.8 | 245.8 | 245.8 | |||||||||
| Earnings per Share—Diluted |
$ | 0.69 | $ | 0.12 | $ | 0.57 | ||||||
| Tax Rate |
12.9 | % | 34.5 | % | ||||||||
Fourth Quarter 2002
| Continuing Operations |
||||||||||||
| Income from Continuing Operations |
Synthetic Fuel Impact |
Excluding Synthetic Fuel |
||||||||||
| Pre tax income (loss) |
$ | 108 | $ | (53 | ) | $ | 161 | |||||
| Tax Benefit/(Provision) |
(60 | ) | 21 | (81 | ) | |||||||
| Tax Credits |
68 | 68 | — | |||||||||
| Total Tax Benefit/(Provision) |
8 | 89 | (81 | ) | ||||||||
| Income from Continuing Operations before Minority Interest |
116 | 36 | 80 | |||||||||
| Minority Interest |
— | — | — | |||||||||
| Income from Continuing Operations |
$ | 116 | $ | 36 | $ | 80 | ||||||
| Diluted Shares |
247.3 | 247.3 | 247.3 | |||||||||
| Earnings per Share—Diluted |
$ | 0.47 | $ | 0.14 | $ | 0.33 | ||||||
| Tax Rate |
-7.4 | % | 49.7 | % | ||||||||
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
(in millions, except per share amounts)
We consider income from continuing operations and the effective tax rate excluding the impact of the Synthetic Fuel joint venture, to be meaningful performance indicators because they reflect that portion of our income from continuing operations and the effective tax rate that relates to our lodging business and enables investors to compare the results of our operations and effective tax rate to that of other lodging companies.
The reconciliation of the effective income tax rate from continuing operations to the effective income tax rate from continuing operations, excluding the impact of our Synthetic Fuel business is as follows:
Fourth Quarter YTD 2003
| Continuing Operations |
||||||||||||
| Income from Continuing Operations |
Synthetic Fuel Impact |
Excluding Synthetic Fuel |
||||||||||
| Pre tax income (loss) |
$ | 488 | $ | (94 | ) | $ | 582 | |||||
| Tax Benefit/(Provision) |
(168 | ) | 34 | (202 | ) | |||||||
| Tax Credits |
211 | 211 | — | |||||||||
| Total Tax Benefit/(Provision) |
43 | 245 | (202 | ) | ||||||||
| Income from Continuing Operations before Minority Interest |
531 | 151 | 380 | |||||||||
| Minority Interest |
(55 | ) | (55 | ) | — | |||||||
| Income from Continuing Operations |
$ | 476 | $ | 96 | $ | 380 | ||||||
| Diluted Shares |
245.4 | 245.4 | 245.4 | |||||||||
| Earnings per Share—Diluted |
$ | 1.94 | $ | 0.39 | $ | 1.55 | ||||||
| Tax Rate |
-8.8 | % | 34.6 | % | ||||||||
Fourth Quarter YTD 2002
| Continuing Operations |
||||||||||||
| Income from Continuing Operations |
Synthetic Fuel Impact |
Excluding Synthetic Fuel |
||||||||||
| Pre tax income (loss) |
$ | 471 | $ | (134 | ) | $ | 605 | |||||
| Tax Benefit/(Provision) |
(191 | ) | 49 | (240 | ) | |||||||
| Tax Credits |
159 | 159 | — | |||||||||
| Total Tax Benefit/(Provision) |
(32 | ) | 208 | (240 | ) | |||||||
| Income from Continuing Operations before Minority Interest |
439 | 74 | 365 | |||||||||
| Minority Interest |
— | — | — | |||||||||
| Income from Continuing Operations |
$ | 439 | $ | 74 | $ | 365 | ||||||
| Diluted Shares |
254.6 | 254.6 | 254.6 | |||||||||
| Earnings per Share—Diluted |
$ | 1.74 | $ | 0.29 | $ | 1.45 | ||||||
| Tax Rate |
6.8 | % | 39.6 | % | ||||||||
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
(in millions)
We consider lodging operating income to be a meaningful indicator of our performance because it measures our growth in profitability as a lodging company and enables investors to compare the operating income related to our lodging segments to the operating income of other lodging companies.
The reconciliation of operating income to lodging operating income is as follows:
| Fiscal Year | ||||||
| 2003 |
2002 | |||||
| Operating Income |
$ | 377 | $ | 321 | ||
| Less: Synthetic Fuel Operating Loss |
104 | 134 | ||||
| Lodging Operating Income |
$ | 481 | $ | 455 | ||
| Fourth Quarter | ||||||
| 2003 |
2002 | |||||
| Operating Income |
$ | 161 | $ | 37 | ||
| Less: Synthetic Fuel Operating Loss |
— | 53 | ||||
| Lodging Operating Income |
$ | 161 | $ | 90 | ||