Marriott International Reports Fourth Quarter Results
BETHESDA, Md., Feb. 11 /PRNewswire-FirstCall/ -- Marriott International, Inc. (NYSE: MAR) today reported fourth quarter and full year 2009 results.
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FOURTH QUARTER 2009 RESULTS
Fourth quarter 2009 adjusted income from continuing operations attributable to Marriott totaled $118 million, a 2 percent decline over the year-ago quarter, and adjusted diluted earnings per share (“EPS”) from continuing operations attributable to Marriott shareholders totaled $0.32, down 3 percent. On October 8, 2009, the company forecasted fourth quarter adjusted diluted EPS of $0.20 to $0.23.
Reported income from continuing operations attributable to Marriott was $106 million in the fourth quarter of 2009 compared to a reported loss from continuing operations attributable to Marriott of $10 million in the year-ago quarter. Reported diluted EPS from continuing operations attributable to Marriott shareholders was $0.28 in the fourth quarter of 2009 compared to reported diluted losses per share from continuing operations attributable to Marriott shareholders of $0.03 in the fourth quarter of 2008.
Adjusted results for the 2009 fourth quarter exclude $19 million pretax ($12 million after-tax and $0.03 per diluted share) of restructuring costs and other charges. Restructuring charges totaled $7 million pretax and included severance and facilities exit costs. Other charges totaled $12 million pretax and primarily included $11 million of charges against lodging assets and $3 million of reserves for Timeshare contract cancellations, offset by the $2 million favorable impact of the revaluation of Timeshare note residuals. Of the total restructuring costs and other charges in the fourth quarter, cash payments are expected to be $6 million. See the table on page A-15 of the accompanying schedules for the detail of these charges and their placement on the Consolidated Statements of Income.
Adjusted results for the 2008 fourth quarter exclude $192 million pretax ($124 million after-tax and $0.35 per diluted share) of restructuring costs and other charges, $152 million of which were non-cash, as well as $7 million of charges ($0.02 per diluted share) in the provision for income taxes.
J.W. Marriott, Jr., chairman and chief executive officer of Marriott International, said, “While the global business climate remained difficult, fourth quarter results exceeded our expectations. We grew our system, reduced total debt, and continued to improve efficiencies worldwide.
“In the fourth quarter, leisure travelers responded to aggressive marketing campaigns and special offers and, even adjusting for easier year-over-year comparisons, business travel showed signs of improvement, particularly in international markets. With solid cost controls, we translated the stronger-than-expected occupancy to better-than-expected incentive fee revenue. Demand for timeshare intervals improved modestly from third quarter levels which, combined with a successful note sale and reductions in investment spending, allowed the timeshare business to generate over $150 million of cash flow after investing activities for full year 2009.
“We are pleased that we remain an investment grade company. For the full year, we reduced investment spending by two-thirds and we were able to lower total debt by nearly $800 million.
“We opened over 38,000 rooms during 2009 and we’re thrilled to have two new exciting brands, EDITION and the Autograph Collection, opening their first hotels in 2010 with more expected to come. Our global development pipeline totals nearly 100,000 rooms. Our efforts have positioned us quite well for future earnings growth.”
Revenue per available room (REVPAR) for the company’s worldwide comparable company-operated properties declined 12.2 percent (12.4 percent using constant dollars) in the 2009 fourth quarter and REVPAR for the company’s worldwide comparable systemwide properties declined 12.3 percent (12.5 percent using constant dollars).
Outside North America, the fourth quarter included the months from September to December in both years. International comparable company-operated REVPAR declined 11.1 percent (11.7 percent using constant dollars), including an 11.6 percent decline in average daily rate (12.2 percent using constant dollars) in the fourth quarter of 2009.
In North America, comparable company-operated REVPAR declined 13.1 percent in the fourth quarter of 2009. REVPAR at the company’s comparable company-operated North American full-service and luxury hotels (including Marriott Hotels & Resorts, The Ritz-Carlton and Renaissance Hotels & Resorts) was down 11.8 percent with an 11.0 percent decline in average daily rate.
Marriott’s 2009 fiscal year ended on January 1, 2010 and included 52 weeks compared to 53 weeks in fiscal 2008. Similarly, the fourth quarter ended on January 1, 2010 and included 16 weeks compared to 17 weeks in the 2008 fiscal quarter. Key lodging statistics are included in the schedules accompanying the press release beginning on page A-7. While fiscal fourth quarter REVPAR statistics for North America are included, they are not comparable due to differences in the length and seasonality of the reporting periods. As a result, the company has also provided North American and worldwide REVPAR statistics adjusted for the shift in the fiscal calendar.
On a calendar quarter basis, which includes the months of October, November and December, North American comparable company-operated REVPAR declined 10.7 percent while worldwide comparable company-operated REVPAR declined 10.1 percent (10.8 percent using constant dollars).
Marriott added 65 new properties (10,626 rooms) to its worldwide lodging portfolio in the 2009 fourth quarter, including 45 limited-service hotels in North America. Seven properties (1,635 rooms) exited the system during the quarter. Rooms converted from competitor hotels accounted for nearly 18 percent of gross room additions during the quarter. At year-end, the company’s lodging group encompassed 3,420 properties and timeshare resorts for a total of over 595,000 rooms.
The company’s worldwide pipeline of hotels under construction, awaiting conversion or approved for development totaled nearly 100,000 rooms at year-end. Nearly 35 percent of these development pipeline rooms are Marriott, Ritz-Carlton, Renaissance, EDITION or Autograph rooms, of which nearly 75 percent are located outside North America.
Reported results for the 2009 fourth quarter, the adjusted results and the associated reconciliations are shown on pages A-1, A-13, A-15, and A-19 of the accompanying schedules. The following paragraphs reflect adjusted results where indicated.
MARRIOTT REVENUES totaled approximately $3.4 billion in the 2009 fourth quarter compared to $3.8 billion for the fourth quarter of 2008. Base management and franchise fees declined 12 percent to $282 million reflecting lower REVPAR, offset in part by fees from new hotels. Fourth quarter incentive management fees declined 28 percent to $59 million. The percentage of company-managed hotels earning incentive management fees decreased to 22 percent in the 2009 fourth quarter compared to 39 percent in the year-ago quarter. Approximately 70 percent of incentive management fees came from hotels outside North America in the 2009 quarter compared to 55 percent in the 2008 quarter.
Worldwide comparable company-operated house profit margins declined 260 basis points in the fourth quarter reflecting the weak REVPAR environment, offset in part by significant cost reductions from productivity improvements, lower management wages and procurement savings through volume discounts and compliance. House profit margins for comparable company-operated properties outside North America declined 100 basis points and North American comparable company-operated house profit margins declined 360 basis points from the year-ago quarter.
Owned, leased, corporate housing and other revenue, net of direct expenses, declined $23 million in the 2009 fourth quarter, to $22 million, primarily reflecting the impact of lower operating results in owned and leased hotels and lower termination fees and other income, partially offset by an increase in branding fee revenue.
Fourth quarter adjusted Timeshare segment contract sales declined 7 percent to $203 million excluding a $28 million allowance for fractional and residential contract cancellations recorded in the quarter. In the prior year’s quarter, adjusted Timeshare segment contract sales totaled $218 million excluding a $115 million allowance for contract cancellations.
In the fourth quarter, adjusted timeshare sales and services revenue declined 3 percent to $375 million and, net of expenses, totaled $72 million for the quarter, a $62 million increase from the 2008 adjusted fourth quarter. Development revenue, net of expense, benefited from higher closing efficiency and cost savings. Financing revenue, net of expense, increased largely as a result of a $38 million note sale gain recorded in the fourth quarter of 2009, compared to the absence of a note sale in the fourth quarter of 2008, and cost savings, partially offset by lower interest income.
Adjusted Timeshare segment results, which includes Timeshare sales and services revenue, net of direct expenses, as well as base management fees, equity earnings, gains and other income, noncontrolling interest and general, administrative and other expenses associated with the timeshare business, totaled $62 million in the 2009 fourth quarter compared to a loss of $2 million in the prior year quarter.
ADJUSTED GENERAL, ADMINISTRATIVE and OTHER expenses for the 2009 fourth quarter declined 13 percent to $207 million, compared to $238 million in the year-ago quarter. The 2009 fourth quarter benefited from cost savings throughout the organization, as well as $3 million in foreign exchange gains and the $3 million reversal of a loan loss reserve partially offset by $12 million of accruals and reserves related to the performance of 12 hotels and $8 million of lower capitalized development costs. The 2009 quarter also included a $21 million unfavorable impact associated with deferred compensation compared to the 2008 quarter (offset by a similar decrease in the provision for taxes). Excluding the impact of deferred compensation, adjusted general administrative and other expenses declined 20 percent in the fourth quarter, as shown on page A-19 of the accompanying schedules.
GAINS AND OTHER INCOME totaled $4 million and included a $3 million gain on the sale of investments and $1 million of net gains on the sale of real estate. The prior year’s fourth quarter adjusted gains and other income totaled $28 million and included a $28 million gain on the extinguishment of debt and $7 million of gains on the sale of real estate offset by a $4 million loss on the sale of an investment and $3 million unfavorable impact of preferred returns from joint venture investments and other income.
INTEREST EXPENSE decreased $16 million in the fourth quarter primarily due to lower interest rates and lower debt balances.
ADJUSTED EQUITY IN (LOSSES) EARNINGS totaled a $10 million loss in the quarter compared to $5 million in earnings in the year-ago quarter. The $15 million decline reflected lower operating results in two joint ventures.
ADJUSTED INCOME TAXES
The adjusted provision for taxes in the fourth quarter of 2009 reflected a $21 million favorable impact associated with deferred compensation (offset by a similar unfavorable impact in general, administrative and other expenses) compared with the 2008 fourth quarter.
FULL YEAR 2009 RESULTS
For the full year 2009, adjusted income from continuing operations attributable to Marriott totaled $342 million, a decline of 38 percent, and adjusted diluted EPS from continuing operations attributable to Marriott shareholders was $0.93, a decline of 38 percent.
The reported loss from continuing operations attributable to Marriott was $346 million for full year 2009 compared to reported income from continuing operations attributable to Marriott of $359 million a year ago. Reported diluted losses per share from continuing operations attributable to Marriott was $0.97 for 2009 compared to reported diluted EPS from continuing operations attributable to Marriott of $0.97 for 2008.
Adjusted income from continuing operations attributable to Marriott and adjusted diluted EPS from continuing operations attributable to Marriott shareholders for 2009 exclude the $213 million pretax ($130 million after-tax and $0.37 per diluted share) restructuring costs and other charges, $182 million of which were non-cash, as well as $752 million pretax ($502 million after-tax and $1.41 per diluted share) of primarily non-cash Timeshare impairment charges. See the table on pages A-15 and A-16 of the accompanying schedules for the detail of these charges and their placement on the Consolidated Statements of Income. Adjusted results for full year 2009 also exclude the $56 million ($0.16 per diluted share) impact of non-cash charges in the provision for income taxes.
Adjusted income from continuing operations attributable to Marriott and adjusted diluted EPS from continuing operations attributable to Marriott shareholders for 2008 exclude the $192 million pretax ($124 million after-tax and $0.33 per diluted share) restructuring costs and other charges. Adjusted results for full year 2008 also exclude the $72 million ($0.19 per diluted share) impact of charges, $67 million of which were non-cash, included in the tax provision.
REVPAR for the company’s worldwide comparable company-operated properties declined 20.0 percent (18.3 percent using constant dollars) in 2009. REVPAR for the company’s worldwide comparable systemwide properties declined 18.4 percent (17.3 percent using constant dollars) in 2009.
International comparable company-operated REVPAR for 2009 declined 23.5 percent (18.0 percent using constant dollars), including a 17.8 percent decline in average daily rate (11.9 percent using constant dollars).
In North America, comparable company-operated REVPAR declined 18.5 percent in 2009. REVPAR at the company’s comparable company-operated North American full-service and luxury hotels (including Marriott Hotels & Resorts, The Ritz-Carlton and Renaissance Hotels & Resorts) was down 17.8 percent with an average daily rate decline of 12.2 percent.
Reported results for full year 2009, the adjusted results and the associated reconciliations are shown on pages A-2, A-14, A-15, A-16, and A-19 of the accompanying schedules. The following paragraphs reflect adjusted results where indicated.
MARRIOTT REVENUES totaled $10.9 billion in 2009 compared to $12.9 billion in 2008. Total fees in 2009 were $1,084 million, a decrease of 22 percent from the prior year. Base management and franchise fees declined $156 million in 2009, reflecting the decline in worldwide REVPAR offset in part by unit growth across the system. Incentive management fees declined 50 percent reflecting lower property-level margins due to worldwide REVPAR declines, partially offset by strong cost controls. For full year 2009, 25 percent of company-operated hotels earned incentive management fees compared to 56 percent in the prior year. Approximately two-thirds of incentive management fees came from hotels outside North America in 2009 compared to 49 percent in 2008.
Owned, leased, corporate housing and other revenue, net of direct expenses, totaled $68 million in 2009 compared to $137 million in 2008. Results were primarily impacted by lower operating results at owned and leased properties, the conversion of some owned properties to management agreements, and lower termination fees, partially offset by higher branding fees and a transaction cancellation fee.
Reflecting weak demand, adjusted Timeshare segment contract sales in 2009 declined 37 percent to $748 million, excluding allowances for anticipated contract cancellations of $83 million in 2009 and $115 million in 2008.
Adjusted Timeshare sales and services revenue declined 23 percent to $1,147 million in 2009 and adjusted Timeshare sales and services revenue, net of direct expenses, totaled $106 million in 2009, a decrease of 28 percent. Development revenue, net of expense, declined in 2009 reflecting soft demand, partially offset by favorable reportability and reduced marketing and sales costs. Services revenue, net of expense, also declined largely reflecting lower rental revenues and higher carry costs on unsold units. Financing revenue, net of expense, increased in 2009 reflecting a $9 million increase in note sale gains and cost savings, partially offset by lower interest income. Timeshare direct expenses in 2008 included a $22 million impairment charge at a fractional and residential joint venture project referred to below.
Adjusted Timeshare segment results, which includes timeshare sales and services revenue, net of direct expenses, as well as base management fees, equity earnings, gains and other income, noncontrolling interest and general, administrative and other expenses associated with the timeshare business, totaled $87 million in 2009 compared to $121 million in the prior year. The segment results for 2008 reflected a net $10 million pretax impairment charge for a fractional and residential consolidated joint venture project, adjusting the carrying value of the real estate to its estimated fair market value. The $10 million charge in 2008 included a $22 million negative adjustment in timeshare direct expenses partially offset by a $12 million pretax ($8 million after-tax) benefit associated with the joint venture partner’s share, which is reflected in net losses attributable to noncontrolling interest, net of tax.
The Timeshare segment also generated over $150 million of pretax cash flow in 2009.
ADJUSTED GENERAL, ADMINISTRATIVE and OTHER expenses decreased $127 million to $622 million in 2009 reflecting cost savings and lower incentive compensation, partially offset by the $43 million unfavorable impact associated with deferred compensation compared to 2008 (offset by a similar decrease in the provision for taxes) and $12 million of accruals and reserves related to the performance of 12 hotels. Excluding the impact of deferred compensation, adjusted general, administrative and other expenses declined 22 percent in 2009, as shown on page A-19 of the accompanying schedules.
GAINS AND OTHER INCOME totaled $31 million in 2009 and included a $21 million gain on the extinguishment of debt, net gains of $10 million from the sale of real estate, a $3 million gain on the sale of investments and $2 million of preferred returns from joint venture investments, partially offset by a $5 million impairment charge on an investment. Adjusted gains and other income of $47 million in 2008 included gains of $14 million from the sale of real estate, a $28 million gain on the extinguishment of debt, $6 million of preferred returns from several joint venture investments and other income and $3 million of gains on the sale of the company’s interests in two joint ventures, partially offset by a $4 million loss on the sale of an investment.
INTEREST EXPENSE declined 28 percent in 2009 partially due to lower interest rates, repayment of debt and the repurchase of Senior Notes.
ADJUSTED EQUITY IN (LOSSES) EARNINGS totaled a $27 million loss in 2009 compared to $31 million of earnings in 2008. Losses in 2009 primarily reflected losses in five joint ventures and the impairment of one investment. Earnings in 2008 primarily reflected a $15 million gain on the sale of a joint venture’s assets, insurance proceeds of $5 million received through a joint venture and $11 million of earnings from joint ventures.
ADJUSTED INCOME TAXES
The adjusted provision for taxes reflected a $43 million favorable impact associated with deferred compensation (offset by a similar unfavorable impact in general, administrative and other expenses) compared to 2008.
NET LOSSES ATTRIBUTABLE TO NONCONTROLLING INTERESTS, NET OF TAX decreased $8 million in 2009 to $7 million. The decrease largely reflected the adjustment of the carrying value of a fractional and residential project in 2008. Since the project is a consolidated joint venture, the partner’s share of the adjustment was an $8 million after-tax benefit to noncontrolling interests in 2008.
ADJUSTED EBITDA
Adjusted EBITDA totaled $898 million in 2009, a 31 percent decline from 2008 adjusted EBITDA of $1,298 million.
BALANCE SHEET
At year-end 2009, total debt was $2,298 million and cash balances totaled $115 million, compared to $3,095 million in debt and $134 million of cash at year-end 2008. The company repurchased $119 million of its Senior Notes in 2009. At year-end 2009, Marriott had borrowings of $425 million under its $2.4 billion bank revolver.
COMMON STOCK
Weighted average fully diluted shares outstanding used to calculate adjusted diluted earnings per share amounts totaled 372.2 million in the 2009 fourth quarter compared to 363.1 million in the year-ago quarter.
On November 5, 2009, the Board of Directors declared a stock dividend payable on December 3, 2009, to shareholders of record on November 19, 2009. For periods prior to the stock dividend, all share and per share data in our financial statements have been retroactively adjusted to reflect the stock dividend.
On February 4, 2010, the Board of Directors declared the issuance of a $0.04 per share cash dividend payable on April 9, 2010 to shareholders of record on February 19, 2010.
The remaining share repurchase authorization, as of January 1, 2010, totaled 21.3 million shares. No share repurchases are planned for 2010.
IMPACT OF ACCOUNTING CHANGES
The company adopted ASU Nos. 2009-16 and 2009-17 (formerly referred to as FAS 166 and 167) at the beginning of 2010, which requires consolidating previously sold Timeshare notes and will impact the ongoing accounting for those notes. With the consolidation of the existing portfolio of sold loans on the first day of 2010, the company expects assets to increase by approximately $1,010 million, liabilities to increase by approximately $1,115 million, and shareholders’ equity to decline by approximately $105 million. No change in cash flow from the business is anticipated as a result of the accounting changes. Adjusted pretax earnings for fiscal 2009 would have been $1 million lower had the accounting change occurred at the beginning of 2009. See the tables on page A-22, A-23, A-24, A-25 and A-26 of the accompanying schedules for 2009 quarterly and full year Timeshare segment results adjusted as if the accounting changes had been made on the first day of fiscal 2009.
OUTLOOK
While Marriott typically provides a range of guidance for future performance, the current global economic and financial climate continues to make predictions very difficult. Therefore, the company is unable to give guidance. Instead, the company is providing the following assumptions for the 2010 first quarter and full year which it is using for internal planning purposes.
FIRST QUARTER 2010
For the first quarter, the company assumes worldwide comparable systemwide hotel REVPAR declines 5 to 7 percent on a constant dollar basis. For North American comparable systemwide hotels, the company assumes REVPAR declines of 7 to 8 percent and for comparable systemwide hotels outside North America, REVPAR could decline 2 to 3 percent on a constant dollar basis.
Given these REVPAR assumptions, total fee revenue could be $235 million to $245 million. Owned, leased, corporate housing and other revenue, net of direct expenses, could total approximately $5 million.
In the 2010 first quarter, the company assumes Timeshare contract sales total $165 million to $175 million and Timeshare sales and services revenue, net of direct expenses, total approximately $35 million to $45 million including the impact of ASU Nos. 2009-16 and 2009-17. With these assumptions, Timeshare segment results for the first quarter could total $30 million to $40 million.
The company anticipates that general, administrative and other expenses could total about $130 million to $140 million in the first quarter 2010, roughly flat from the adjusted 2009 first quarter amount. The company also assumes net interest expense of approximately $40 million in the quarter, reflecting the impact of ASU Nos. 2009-16 and 2009-17, as well as continued debt reduction.
Based upon the above assumptions and a 36.5 percent tax rate, diluted EPS from continuing operations attributable to Marriott shareholders for the 2010 first quarter could total $0.15 to $0.21.
FULL YEAR 2010
For full year 2010, the company expects hotel occupancies to improve, although the pace of such improvement is difficult to predict. The company continues to expect that both domestic and international comparable systemwide REVPAR comparisons to the prior year will turn positive sometime in 2010. For worldwide comparable systemwide hotels, the company assumes full year 2010 REVPAR will be down 2 percent to up 2 percent on a constant dollar basis with performance strengthening over the year. North American comparable systemwide REVPAR could be flat to down 3 percent in 2010, while REVPAR at comparable systemwide hotels outside North America could be flat to up 5 percent.
The company expects to open 25,000 to 30,000 rooms in 2010 as most hotels expected to open are already under construction or undergoing conversion from other brands. Given these assumptions, full year 2010 fee revenue could total $1,080 million to $1,120 million. The company expects that incentive management fees in 2010 would largely derive from international markets. Owned, leased, corporate housing and other, net of direct expense, could total $65 million to $70 million. The company continues to estimate that, on a full-year basis, one point of worldwide systemwide REVPAR impacts total fees by approximately $10 million to $15 million pretax and owned, leased, corporate housing and other revenue, net of direct expense, by roughly $4 million pretax.
For its timeshare business, the company assumes 2010 timeshare contract sales could be slightly higher than 2009 levels. Including the impact of the accounting changes under this scenario Timeshare sales and services revenue, net of direct expenses, could total $170 million to $180 million. Timeshare segment results for 2010 could total $145 million to $155 million and the segment’s net cash flow could total $175 million to $200 million.
The company expects its 2010 general, administrative and other expenses to total $635 million to $645 million reflecting modest salary increases and assumes interest expense to total $165 million to $170 million for the full year.
While the company cannot forecast results with any certainty, based upon the above assumptions, EBITDA could total $910 million to $970 million and diluted EPS from continuing operations for 2010 could total $0.82 to $0.94. Assuming the investment spending levels below, adjusted total debt, net of cash, could decline $400 million to $500 million by year end 2010.
The company expects investment spending in 2010 will total approximately $500 million, including capital expenditures totaling $150 million to $200 million, of which maintenance capital spending could total $50 million. Investment spending will also include new mezzanine financing and mortgage loans, contract acquisition costs, and equity and other investments. The investment in net timeshare development is not included above as the company expects cost of goods sold in the timeshare business will exceed timeshare inventory spending in 2010.
Marriott International, Inc. (NYSE: MAR) will conduct its quarterly earnings review for the investment community and news media on Thursday, February 11, 2010 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 and Upcoming Events” tab and click on the quarterly conference call link. A replay will be available at that same website until February 11, 2011.
The telephone dial-in number for the conference call is 719-325-2253. A telephone replay of the conference call will be available from 1 p.m. ET, Thursday, February 11, 2010 until 8 p.m. ET, Thursday, February 18, 2010. To access the replay, call 719-457-0820. The reservation number for the recording is 5171492.
Note: This press release and accompanying schedules contain “forward-looking statements” within the meaning of federal securities laws, including REVPAR, profit margin and earnings trends, estimates and assumptions; statements concerning the number of lodging properties we expect to add in the future; our expected cost savings, investment spending and share repurchases; 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 continuation and pace of the economic recovery; 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 Form 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 more than 3,400 lodging properties in 68 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, The Ritz-Carlton Destination Club, The Ritz-Carlton Residences 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 Bethesda, Maryland, USA and had approximately 137,000 employees at 2009 year-end. It is recognized by FORTUNE® as one of the best companies to work for, and by the U.S. Environmental Protection Agency (EPA) as Partner of the Year since 2004. In fiscal year 2009, Marriott International reported sales from continuing operations of nearly $11 billion. For more information or reservations, please visit our web site at www.marriott.com. For an interactive online version of Marriott's 2008 Annual Report, which includes a short video message from Chairman and CEO J.W. Marriott, Jr., visit www.marriott.com/investor.
IRPR#1
Tables follow
MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
Adjustments
-----------
As As
Reported Adjusted
16 Weeks Restructuring 16 Weeks
Ended Costs Ended
January 1, & Other January 1,
2010 Charges(6) 2010**
--------- -------------- -----------
REVENUES
Base management fees $163 $- $163
Franchise fees 119 - 119
Incentive management fees 59 - 59
Owned, leased, corporate
housing and other revenue(1) 335 - 335
Timeshare sales and services(2) 377 (2) 375
Cost reimbursements(3) 2,327 - 2,327
----- - -----
Total Revenues 3,380 (2) 3,378
OPERATING COSTS AND EXPENSES
Owned, leased and corporate
housing - direct(4) 313 - 313
Timeshare - direct 303 - 303
Timeshare strategy - impairment
charges(5) - - -
Reimbursed costs 2,327 - 2,327
Restructuring costs 7 (7) -
General, administrative and
other(7) 215 (8) 207
--- -- ---
Total Expenses 3,165 (15) 3,150
----- --- -----
OPERATING INCOME 215 13 228
Gains and other income(8) 4 - 4
Interest expense (34) - (34)
Interest income 5 - 5
Equity in (losses) earnings(9) (16) 6 (10)
Timeshare strategy - impairment
charges (non-operating)(10) - - -
--- --- ---
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 174 19 193
Provision for income taxes (68) (7) (75)
--- -- ---
INCOME / (LOSS) FROM CONTINUING
OPERATIONS 106 12 118
Discontinued operations -
Synthetic Fuel, net of tax(11) - - -
--- --- ---
NET INCOME / (LOSS) 106 12 118
Add: Net losses attributable to
noncontrolling interests, net
of tax - - -
--- --- ---
NET INCOME / (LOSS)
ATTRIBUTABLE TO MARRIOTT $106 $12 $118
==== === ====
EARNINGS / (LOSSES) PER SHARE -
Basic (13)
Earnings / (losses) from
continuing operations
attributable to Marriott
shareholders(12) $0.30 $0.03 $0.33
Earnings from discontinued
operations(11) - - -
--- --- ---
Earnings / (losses) per share
attributable to Marriott
shareholders(12) $0.30 $0.03 $0.33
===== ===== =====
EARNINGS / (LOSSES) PER SHARE -
Diluted(13)
Earnings / (losses) from
continuing operations
attributable to Marriott
shareholders(12) $0.28 $0.03 $0.32
Earnings from discontinued
operations(11) - - -
--- --- ---
Earnings / (losses) per share
attributable to Marriott
shareholders(12) $0.28 $0.03 $0.32
===== ===== =====
Basic Shares(13) 357.6 357.6 357.6
Diluted Shares(13),(14) 372.2 372.2 372.2
Adjustments
-----------
As
Reported
17 Weeks Restructuring
Ended Costs Certain
January 2, & Other Tax
2009 Charges(6) Items
-------- -------------- -------
REVENUES
Base management fees $183 $- $-
Franchise fees 137 - -
Incentive management fees 82 - -
Owned, leased, corporate
housing and other revenue(1) 376 - -
Timeshare sales and services(2) 325 61 -
Cost reimbursements(3) 2,681 - -
----- --- ---
Total Revenues 3,784 61 -
OPERATING COSTS AND EXPENSES
Owned, leased and corporate
housing - direct(4) 331 - -
Timeshare - direct 373 3 -
Timeshare strategy - impairment
charges(5) - - -
Reimbursed costs 2,681 - -
Restructuring costs 55 (55) -
General, administrative and
other(7) 292 (54) -
--- --- ---
Total Expenses 3,732 (106) -
----- ---- ---
OPERATING INCOME 52 167 -
Gains and other income(8) 19 9 -
Interest expense (50) - -
Interest income 11 - -
Equity in (losses) earnings(9) (11) 16 -
Timeshare strategy - impairment
charges (non-operating)(10) - - -
--- --- ---
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 21 192 -
Provision for income taxes (33) (68) 7
--- --- -
INCOME / (LOSS) FROM CONTINUING
OPERATIONS (12) 124 7
Discontinued operations -
Synthetic Fuel, net of tax(11) - - -
--- --- ---
NET INCOME / (LOSS) (12) 124 7
Add: Net losses attributable to
noncontrolling interests, net
of tax 2 - -
--- --- ---
NET INCOME / (LOSS)
ATTRIBUTABLE TO MARRIOTT $(10) $124 $7
==== ==== ==
EARNINGS / (LOSSES) PER SHARE -
Basic(13)
Earnings / (losses) from
continuing operations
attributable to Marriott
shareholders(12) $(0.03) $0.35 $0.02
Earnings from discontinued
operations(11) - - -
--- --- ---
Earnings / (losses) per share
attributable to Marriott
shareholders(12) $(0.03) $0.35 $0.02
====== ===== =====
EARNINGS / (LOSSES) PER SHARE -
Diluted(13)
Earnings / (losses) from
continuing operations
attributable to Marriott
shareholders(12) $(0.03) $0.35 $0.02
Earnings from discontinued
operations(11) - - -
--- --- ---
Earnings / (losses) per share
attributable to Marriott
shareholders(12) $(0.03) $0.35 $0.02
====== ===== =====
Basic Shares(13) 353.0 353.0 353.0
Diluted Shares (13),(14) 353.0 353.0 353.0
Percent
Better/
As (Worse)
Adjusted Adjusted
17 Weeks 2009
Ended vs.
January 2, Adjusted
2009** 2008
----------- ---------
REVENUES
Base management fees $183 (11)
Franchise fees 137 (13)
Incentive management fees 82 (28)
Owned, leased, corporate
housing and other revenue(1) 376 (11)
Timeshare sales and services(2) 386 (3)
Cost reimbursements(3) 2,681 (13)
-----
Total Revenues 3,845 (12)
OPERATING COSTS AND EXPENSES
Owned, leased and corporate
housing - direct(4) 331 5
Timeshare - direct 376 19
Timeshare strategy - impairment
charges(5) - -
Reimbursed costs 2,681 13
Restructuring costs - -
General, administrative and
other(7) 238 13
---
Total Expenses 3,626 13
-----
OPERATING INCOME 219 4
Gains and other income(8) 28 (86)
Interest expense (50) 32
Interest income 11 (55)
Equity in (losses) earnings(9) 5 (300)
Timeshare strategy - impairment
charges (non-operating)(10) - -
---
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 213 (9)
Provision for income taxes (94) 20
---
INCOME / (LOSS) FROM CONTINUING
OPERATIONS 119 (1)
Discontinued operations -
Synthetic Fuel, net of tax(11) - -
---
NET INCOME / (LOSS) 119 (1)
Add: Net losses attributable to
noncontrolling interests, net
of tax 2 (100)
---
NET INCOME / (LOSS)
ATTRIBUTABLE TO MARRIOTT $121 (2)
====
EARNINGS / (LOSSES) PER SHARE -
Basic(13)
Earnings / (losses) from
continuing operations
attributable to Marriott
shareholders(12) $0.34 (3)
Earnings from discontinued
operations(11) - -
---
Earnings / (losses) per share
attributable to Marriott
shareholders(12) $0.34 (3)
=====
EARNINGS / (LOSSES) PER SHARE -
Diluted(13)
Earnings / (losses) from
continuing operations
attributable to Marriott
shareholders(12) $0.33 (3)
Earnings from discontinued
operations(11) - -
---
Earnings / (losses) per share
attributable to Marriott
shareholders(12) $0.33 (3)
=====
Basic Shares(13) 353.0
Diluted Shares(13),(14) 363.1
** Denotes non-GAAP financial measures. Please see pages A-27 and
A-28 for additional information about our reasons for providing
these alternative financial measures and the limitations on their
use.
See page A-3 for footnote references.
A-1
MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
Adjustments
----------------------------------
As As
Reported Adjusted
52 Restruc- Timeshare 52
Weeks turing Strategy - Weeks
Ended Costs Impairment Certain Ended
January 1, & Other Charges Tax January 1,
2010 Charges(6) (5),(10) Items 2010**
----------- ---------- ----------- ------- --------
REVENUES
Base management
fees $530 $- $- $- $530
Franchise fees 400 - - - 400
Incentive
management fees 154 - - - 154
Owned, leased,
corporate
housing and
other revenue(1) 1,019 - - - 1,019
Timeshare sales
and services(2) 1,123 24 - - 1,147
Cost
reimbursements(3) 7,682 - - - 7,682
----- --- --- --- -----
Total
Revenues 10,908 24 - - 10,932
OPERATING COSTS
AND EXPENSES
Owned, leased
and corporate
housing -
direct(4) 951 - - - 951
Timeshare -
direct 1,040 1 - - 1,041
Timeshare
strategy -
impairment
charges(5) 614 - (614) - -
Reimbursed costs 7,682 - - - 7,682
Restructuring
costs 51 (51) - - -
General,
administrative
and other(7) 722 (100) - - 622
--- ---- --- --- ---
Total
Expenses 11,060 (150) (614) - 10,296
------ ---- ---- --- ------
OPERATING
(LOSS) /
INCOME (152) 174 614 - 636
Gains and other
income(8) 31 - - - 31
Interest expense (118) - - - (118)
Interest income 25 - - - 25
Equity in
(losses)
earnings(9) (66) 39 - - (27)
Timeshare
strategy -
impairment
charges (non-
operating)(10) (138) - 138 - -
---- --- --- --- ---
(LOSS) / INCOME
FROM CONTINUING
OPERATIONS
BEFORE INCOME
TAXES (418) 213 752 - 547
Benefit /
(Provision) for
income taxes 65 (83) (250) 56 (212)
-- --- ---- -- ----
(LOSS) / INCOME
FROM CONTINUING
OPERATIONS (353) 130 502 56 335
Discontinued
operations -
Synthetic Fuel,
net of tax(11) - - - - -
--- --- --- --- ---
NET (LOSS) /
INCOME (353) 130 502 56 335
Add: Net losses
attributable to
noncontrolling
interests, net
of tax 7 - - - 7
--- --- --- --- ---
NET (LOSS) /
INCOME
ATTRIBUTABLE TO
MARRIOTT $(346) $130 $502 $56 $342
===== ==== ==== === ====
(LOSSES) / EARNINGS
PER SHARE -
Basic(13)
(Losses) /
earnings from
continuing
operations
attributable
to Marriott
shareholders
(12) $(0.97) $0.37 $1.41 $0.16 $0.96
Earnings from
discontinued
operations(11) - - - - -
--- --- --- --- ---
(Losses) /
earnings per
share
attributable
to Marriott
shareholders
(12) $(0.97) $0.37 $1.41 $0.16 $0.96
====== ===== ===== ===== =====
(LOSSES) / EARNINGS
PER SHARE -
Diluted(13)
(Losses) /
earnings from
continuing
operations
attributable to
Marriott
shareholders
(12) $(0.97) $0.37 $1.41 $0.16 $0.93
Earnings from
discontinued
operations(11) - - - - -
--- --- --- --- ---
(Losses) /
earnings per
share
attributable to
Marriott
shareholders
(12) $(0.97) $0.37 $1.41 $0.16 $0.93
====== ===== ===== ===== =====
Basic Shares(13) 356.4 356.4 356.4 356.4 356.4
Diluted Shares
(13),(14) 356.4 356.4 356.4 356.4 367.4
Adjustments
--------------------
As Percent
As Adjusted Better/
Reported 53 (Worse)
53 Restruc- Weeks Adjusted
Weeks turing Ended 2009
Ended Costs Certain January vs.
January 2, & Other Tax 2, Adjusted
2009 Charges(6) Items 2009** 2008
----------- ---------- ------- -------- ---------
REVENUES
Base management
fees $635 $- $- $635 (17)
Franchise fees 451 - - 451 (11)
Incentive
management fees 311 - - 311 (50)
Owned, leased,
corporate
housing and
other revenue(1) 1,225 - - 1,225 (17)
Timeshare sales
and services(2) 1,423 61 - 1,484 (23)
Cost
reimbursements(3) 8,834 - - 8,834 (13)
----- --- --- -----
Total
Revenues 12,879 61 - 12,940 (16)
OPERATING COSTS
AND EXPENSES
Owned, leased
and corporate
housing -
direct(4) 1,088 - - 1,088 13
Timeshare -
direct 1,334 3 - 1,337 22
Timeshare
strategy -
impairment
charges(5) - - - - -
Reimbursed costs 8,834 - - 8,834 13
Restructuring
costs 55 (55) - - -
General,
administrative
and other(7) 803 (54) - 749 17
--- --- - ---
Total
Expenses 12,114 (106) - 12,008 14
------ ---- --- ------
OPERATING
(LOSS) /
INCOME 765 167 - 932 (32)
Gains and other
income(8) 38 9 - 47 (34)
Interest expense (163) - - (163) 28
Interest income 39 - - 39 (36)
Equity in
(losses)
earnings(9) 15 16 - 31 (187)
Timeshare
strategy -
impairment
charges (non-
operating)(10) - - - - -
--- --- --- ---
(LOSS) / INCOME
FROM CONTINUING
OPERATIONS
BEFORE INCOME
TAXES 694 192 - 886 (38)
Benefit /
(Provision) for
income taxes (350) (68) 72 (346) 39
---- --- -- ----
(LOSS) / INCOME
FROM CONTINUING
OPERATIONS 344 124 72 540 (38)
Discontinued
operations -
Synthetic Fuel,
net of tax(11) 3 - - 3 (100)
--- --- --- ---
NET (LOSS) /
INCOME 347 124 72 543 (38)
Add: Net losses
attributable to
noncontrolling
interests, net
of tax 15 - - 15 (53)
--- --- --- ---
NET (LOSS) /
INCOME
ATTRIBUTABLE TO
MARRIOTT $362 $124 $72 $558 (39)
==== ==== === ====
(LOSSES) / EARNINGS
PER SHARE -
Basic (13)
(Losses) /
earnings from
continuing
operations
attributable to
Marriott
shareholders
(12) $1.01 $0.35 $0.20 $1.56 (38)
Earnings from
discontinued
operations
(11) 0.01 - - 0.01 (100)
---- --- --- ----
(Losses) /
earnings per
share
attributable to
Marriott
shareholders
(12) $1.02 $0.35 $0.20 $1.57 (39)
===== ===== ===== =====
(LOSSES) / EARNINGS
PER SHARE -
Diluted(13)
(Losses) /
earnings from
continuing
operations
attributable to
Marriott
shareholders
(12) $0.97 $0.33 $0.19 $1.49 (38)
Earnings from
discontinued
operations
(11) 0.01 - - 0.01 (100)
---- --- --- ----
(Losses) /
earnings per
share
attributable to
Marriott
shareholders
(12) $0.98 $0.33 $0.19 $1.50 (38)
===== ===== ===== =====
Basic Shares(13) 355.6 355.6 355.6 355.6
Diluted Shares
(13),(14) 370.7 370.7 370.7 370.7
** Denotes non-GAAP financial measures. Please see pages A-27 and A-28
for additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
See page A-3 for footnote references.
A-2
MARRIOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
Reconciliations of Consolidated Income / (Loss) from Continuing
Operations to Income / (Loss) from Continuing Operations Attributable to
Marriott
Adjustments
-----------
As As
Reported Adjusted
16 Restruc- 16
Weeks turing Weeks
Ended Costs Ended
January 1, & Other January 1,
2010 Charges(6) 2010**
----------- ---------- -----------
CONSOLIDATED
INCOME / (LOSS)
FROM CONTINUING
OPERATIONS $106 $12 $118
Add: Losses
attributable to
noncontrolling
interests, net
of tax - - -
--- --- ---
INCOME / (LOSS)
FROM CONTINUING
OPERATIONS
ATTRIBUTABLE TO
MARRIOTT $106 $12 $118
==== === ====
Adjustments
-------------------
As Percent
As Adjusted Better/
Reported 17 (Worse)
17 Restruc- Weeks Adjusted
Weeks turing Ended 2009
Ended Costs Certain January vs.
January 2, & Other Tax 2, Adjusted
2009 Charges(6) Items 2009** 2008
----------- ---------- ------- -------- ---------
CONSOLIDATED
INCOME / (LOSS)
FROM CONTINUING
OPERATIONS $(12) $124 $7 $119 (1)
Add: Losses
attributable to
noncontrolling
interests, net
of tax 2 - - 2 (100)
--- --- --- ---
INCOME / (LOSS)
FROM CONTINUING
OPERATIONS
ATTRIBUTABLE TO
MARRIOTT $(10) $124 $7 $121 (2)
==== ==== == ====
Adjustments
------------------------------
As As
Reported Adjusted
52 Restruc- Timeshare 52
Weeks turing Strategy - Weeks
Ended Costs Impairment Certain Ended
January 1, & Other Charges Tax January 1,
2010 Charges(6) (5),(10) Items 2010**
----------- ---------- ----------- ------- -----------
CONSOLIDATED
(LOSS) /
INCOME FROM
CONTINUING
OPERATIONS $(353) $130 $502 $56 $335
Add: Losses
attributable
to
noncontrolling
interests, net
of tax 7 - - - 7
--- --- --- --- ---
(LOSS) /
INCOME FROM
CONTINUING
OPERATIONS
ATTRIBUTABLE
TO MARRIOTT $(346) $130 $502 $56 $342
===== ==== ==== === ====
Adjustments
--------------------
As Percent
As Adjusted Better/
Reported 53 (Worse)
53 Restruc- Weeks Adjusted
Weeks turing Ended 2009
Ended Costs January vs.
January 2, & Other Certain 2, Adjusted
2009 Charges(6) Tax Items 2009** 2008
----------- ---------- --------- -------- ---------
CONSOLIDATED
(LOSS) /
INCOME FROM
CONTINUING
OPERATIONS $344 $124 $72 $540 (38)
Add: Losses
attributable
to
noncontrolling
interests, net
of tax 15 - - 15 (53)
--- --- --- ---
(LOSS) /
INCOME FROM
CONTINUING
OPERATIONS
ATTRIBUTABLE
TO MARRIOTT $359 $124 $72 $555 (38)
==== ==== === ====
** Denotes non-GAAP financial measures. Please see pages A-27 and A-28
for additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
(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 management fees, incentive management fees, cost
reimbursements, real estate gains and joint venture earnings.
Timeshare sales and services also includes gains / (losses) 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) – Reflects the following 2009 third quarter impairments: inventory
$529 million, property and equipment $64 million; and other
impairments $21 million, all of which are allocated to the
Timeshare segment. See page A-16 for information regarding
Timeshare Strategy - Impairment Charges.
(6) – Refer to page A-15 for information regarding Restructuring and
Other Charges.
(7) – General, administrative and other expenses include the overhead
costs allocated to our segments, and our corporate overhead costs
and general expenses.
(8) – Gains and other income includes gains and losses on: the sale of
real estate, note sales or repayments (except timeshare note
securitizations), the sale of joint ventures and investments; and
debt extinguishments, as well as income from cost method joint
ventures.
(9) – Equity in (losses) earnings includes our equity in (losses) /
earnings of unconsolidated equity method joint ventures.
(10) – Reflects the 2009 third quarter $71 million joint venture
impairment charge which is allocated to the Timeshare segment and
$67 million loan impairment and funding liability charge which is
unallocated. See page A-16 for information regarding Timeshare
Strategy - Impairment Charges.
(11) – Discontinued operations relates to our Synthetic Fuel business
which was shut down and substantially all the assets liquidated
at December 28, 2007.
(12) – Earnings / (Losses) per share attributable to Marriott
shareholders plus adjustment items may not equal earnings per
share attributable to Marriott shareholders as adjusted due to
rounding.
(13) – All share numbers and per share amounts have been retroactively
adjusted to reflect the stock dividends with distribution dates
of July 30, 2009, September 3, 2009 and December 3, 2009.
(14) – Basic and fully diluted weighted average common shares outstanding
used to calculate earnings per share from continuing operations for
the periods in which we had a loss are the same because inclusion
of additional equivalents would be anti-dilutive.
A-3
MARRIOTT INTERNATIONAL, INC.
BUSINESS SEGMENTS
($ in millions)
Quarter Ended(3)
-------------------- Percent
January 1, January 2, Better/
2010 2009 (Worse)
-------- -------- -------
REVENUES
North American Full-Service $1,466 $1,714 (14)
North American Limited-Service 585 663 (12)
International 389 451 (14)
Luxury 442 512 (14)
Timeshare 477 424 13
--- ---
Total segment revenues(1) 3,359 3,764 (11)
Other unallocated corporate 21 20 5
-- --
Total $3,380 $3,784 (11)
====== ======
INCOME / (LOSS) FROM CONTINUING
OPERATIONS ATTRIBUTABLE TO MARRIOTT
North American Full-Service $81 $129 (37)
North American Limited-Service 83 94 (12)
International 40 67 (40)
Luxury 17 12 42
Timeshare(2) 54 (95) 157
-- ---
Total segment financial results(1) 275 207 33
Other unallocated corporate (72) (143) 50
Interest income and interest expense (29) (39) 26
Income taxes(2) (68) (35) (94)
--- ---
Total $106 $(10) 1,160
==== ====
(1) We consider segment revenues and segment financial results to be
meaningful indicators of our performance because they measure changes
in our profitability as a lodging company and enable investors to
compare the revenues and results of our lodging operations to those
of other lodging companies.
(2) We allocate noncontrolling interests of our consolidated subsidiaries
to our segments. For the 2008 fourth quarter, we allocated $2
million of noncontrolling interests as follows: $4 million to our
Timeshare segment and $(2) million to provision for income taxes.
(3) There were 16 weeks in the quarter ended January 1, 2010 and 17 weeks
in the quarter ended January 2, 2009.
A-4
MARRIOTT INTERNATIONAL, INC.
BUSINESS SEGMENTS
($ in millions)
Year Ended(5)
-------------------- Percent
January 1, January 2, Better/
2010 2009 (Worse)
-------- -------- -------
REVENUES
North American Full-Service $4,848 $5,631 (14)
North American Limited-Service 1,986 2,233 (11)
International 1,145 1,544 (26)
Luxury 1,413 1,659 (15)
Timeshare 1,439 1,750 (18)
----- -----
Total segment revenues 1 10,831 12,817 (15)
Other unallocated corporate 77 62 24
-- --
Total $10,908 $12,879 (15)
======= =======
INCOME / (LOSS) FROM CONTINUING
OPERATIONS ATTRIBUTABLE TO MARRIOTT
North American Full-Service $272 $419 (35)
North American Limited-Service 265 395 (33)
International 3 129 246 (48)
Luxury 17 78 (78)
Timeshare 2,3 (679) 28 (2525)
---- --
Total segment financial results 1 4 1,166 (100)
Other unallocated corporate 4 (318) (324) 2
Interest income and interest expense (93) (124) 25
Income taxes 3 61 (359) 117
-- ----
Total $(346) $359 (196)
===== ====
(1) We consider segment revenues and segment financial results to be
meaningful indicators of our performance because they measure
changes in our profitability as a lodging company and enable
investors to compare the revenues and results of our lodging
operations to those of other lodging companies.
(2) Reflects $685 million of impairment charges recorded in the 2009
third quarter.
(3) We allocate noncontrolling interests of our consolidated
subsidiaries to our segments. Accordingly, we allocated $7 million
of noncontrolling interests of our consolidated subsidiaries in
2009 as reflected in our income statement as follows: $11 million
to our Timeshare segment and $(4) million to provision for income
taxes. In 2008, we allocated $15 million of noncontrolling
interests as follows: $25 million to our Timeshare segment, $(1)
million to our International segment, and $(9) million to
provision for income taxes.
(4) Reflects a $67 million loan impairment and funding liability charge
in the 2009 third quarter which is unallocated. See page A-16 for
additional information.
(5) There were 52 weeks in the year ended January 1, 2010 and 53 weeks
in the year ended January 2, 2009.
A-5
MARRIOTT INTERNATIONAL, INC.
TOTAL LODGING PRODUCTS(1)
Number of Properties Number of Rooms/Suites
-------------------- ----------------------
vs. vs.
January January January January January January
Brand 1, 2010 2, 2009 2, 2009 1, 2010 2, 2009 2, 2009
----- -------- -------- -------- -------- -------- --------
Domestic Full-Service
---------------------
Marriott Hotels &
Resorts 353 348 5 140,160 138,613 1,547
Renaissance
Hotels &
Resorts 79 76 3 28,918 27,774 1,144
Domestic Limited-Service
------------------------
Courtyard 768 728 40 107,640 101,743 5,897
Fairfield Inn 620 560 60 55,622 49,678 5,944
SpringHill
Suites 255 207 48 29,846 24,027 5,819
Residence Inn 591 555 36 70,995 66,252 4,743
TownePlace
Suites 184 163 21 18,451 16,328 2,123
International
-------------
Marriott Hotels &
Resorts 192 183 9 58,595 54,617 3,978
Renaissance
Hotels &
Resorts 64 65 (1) 21,664 21,615 49
Courtyard 90 80 10 17,566 15,515 2,051
Fairfield Inn 9 9 - 1,109 1,109 -
SpringHill
Suites 1 1 - 124 124 -
Residence Inn 17 18 (1) 2,417 2,665 (248)
Marriott
Executive
Apartments 23 20 3 3,880 3,217 663
Luxury
------
The Ritz-Carlton -
Domestic 40 37 3 12,115 11,629 486
The Ritz-Carlton -
International 34 33 1 10,171 10,204 (33)
Bulgari Hotels &
Resorts 2 2 - 117 117 -
The Ritz-Carlton
Residential 26 23 3 2,706 2,269 437
The Ritz-Carlton
Serviced
Apartments 3 3 - 474 478 (4)
Timeshare 2
-----------
Marriott Vacation
Club 3 52 51 1 11,854 11,797 57
The Ritz-Carlton
Destination
Club 9 10 (1) 461 456 5
The Ritz-Carlton
Residences 4 3 1 237 148 89
Grand Residences
by Marriott -
Fractional 2 2 - 248 241 7
Grand Residences
by Marriott -
Residential 2 1 1 91 65 26
-- -- -- -- -- --
Sub Total
Timeshare 69 67 2 12,891 12,707 184
-- -- -- ------ ------ ---
Total 3,420 3,178 242 595,461 560,681 34,780
===== ===== === ======= ======= ======
Number of Timeshare Interval, Fractional
and Residential Resorts
----------------------------------------
Properties
Total in
Properties Active
(2) Sales(4)
---------- --------
100% Company-Developed
----------------------
Marriott
Vacation Club
3 52 29
The Ritz-
Carlton
Destination
Club and
Residences 9 8
Grand
Residences by
Marriott and
Residences 4 4
Joint Ventures
--------------
The Ritz-
Carlton
Destination
Club and
Residences 4 4
-- --
Total 69 45
== ==
(1) Total Lodging Products excludes the 2,072 and 2,332 corporate housing
rental units as of January 1, 2010 and January 2, 2009,
respectively.
(2) Includes products that are in active sales as well as those that
are sold out. Residential products are included once they
possess a certificate of occupancy.
(3) Marriott Vacation Club includes Horizons by Marriott Vacation Club
products that were previously reported separately.
(4) Products in active sales may not be ready for occupancy.
A-6
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
Constant $
Comparable Company-Operated International Properties(1)
-------------------------------------------------------
Four Months Ended December 31, 2009 and
December 31, 2008
---------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Region 2009 2008 2009 2008 2009 2008
------ ---- ---- ---- ---- ---- ----
Caribbean & Latin America $109.05 -16.4% 65.9% -3.1% pts. $165.45 -12.4%
Continental Europe $121.11 -11.1% 70.6% 0.6% pts. $171.44 -11.9%
United Kingdom $110.38 -5.7% 74.5% 0.0% pts. $148.16 -5.7%
Middle East & Africa $98.17 -13.9% 71.9% -2.4% pts. $136.59 -11.0%
Asia Pacific(2) $91.49 -8.1% 69.4% 4.4% pts. $131.86 -13.9%
Regional Composite(3) $107.59 -10.6% 70.4% 0.6% pts. $152.88 -11.4%
International Luxury(4) $173.30 -17.1% 57.2% -1.5% pts. $303.07 -14.9%
Total International(5) $114.21 -11.7% 69.0% 0.4% pts. $165.41 -12.2%
Worldwide(6) $97.26 -12.4% 64.8% -0.9% pts. $150.05 -11.2%
Comparable Systemwide International Properties(1)
-------------------------------------------------
Four Months Ended December 31, 2009 and
December 31, 2008
---------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Region 2009 2008 2009 2008 2009 2008
------ ---- ---- ---- ---- ---- ----
Caribbean & Latin America $94.13 -15.2% 63.9% -2.5% pts. $147.24 -11.9%
Continental Europe $119.20 -11.8% 69.5% 0.2% pts. $171.56 -12.1%
United Kingdom $108.89 -6.0% 74.1% -0.1% pts. $147.03 -5.9%
Middle East & Africa $98.17 -13.9% 71.9% -2.4% pts. $136.59 -11.0%
Asia Pacific(2) $98.49 -9.9% 69.1% 2.3% pts. $142.57 -13.0%
Regional Composite(3) $106.59 -11.2% 69.3% 0.1% pts. $153.77 -11.3%
International Luxury(4) $173.30 -17.1% 57.2% -1.5% pts. $303.07 -14.9%
Total International(5) $112.08 -12.0% 68.3% 0.0% pts. $164.06 -12.0%
Worldwide(6) $81.10 -12.5% 62.8% -1.7% pts. $129.11 -10.1%
(1) We report international results on a period basis, and international
statistics on a monthly basis. Statistics are in constant dollars
for September through December. International includes properties
located outside the Continental United States and Canada, except for
Worldwide which also includes North America.
(2) Does not include Hawaii.
(3) Regional information includes the Marriott Hotels & Resorts,
Renaissance Hotels & Resorts and Courtyard brands. 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, 2009 and December 31, 2008, and North American
statistics for the sixteen weeks ended January 1, 2010 and the
seventeen weeks ended January 2, 2009. Includes the Marriott Hotels
& Resorts, Renaissance Hotels & Resorts, The Ritz-Carlton, Bulgari
Hotels & Resorts, Residence Inn, Courtyard, Fairfield Inn, TownePlace
Suites and SpringHill Suites brands.
A-7
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
Constant $
Comparable Company-Operated International Properties(1)
-------------------------------------------------------
Twelve Months Ended December 31, 2009 and
December 31, 2008
-----------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Region 2009 2008 2009 2008 2009 2008
------ ---- ---- ---- ---- ---- ----
Caribbean & Latin America $117.59 -19.8% 67.0% -7.6% pts. $175.43 -10.8%
Continental Europe $107.83 -16.0% 66.9% -3.3% pts. $161.17 -11.9%
United Kingdom $101.41 -11.1% 72.5% -3.0% pts. $139.81 -7.5%
Middle East & Africa $94.21 -18.9% 68.6% -9.1% pts. $137.31 -8.1%
Asia Pacific(2) $80.80 -21.1% 63.6% -4.5% pts. $127.12 -15.5%
Regional Composite(3) $100.44 -17.1% 67.3% -4.6% pts. $149.15 -11.4%
International Luxury(4) $179.99 -22.1% 56.8% -7.2% pts. $317.16 -12.2%
Total International(5) $108.45 -18.0% 66.3% -4.9% pts. $163.64 -11.9%
Worldwide(6) $96.86 -18.3% 65.2% -5.0% pts. $148.61 -12.1%
Comparable Systemwide International Properties(1)
-------------------------------------------------
Twelve Months Ended December 31, 2009 and
December 31, 2008
-----------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Region 2009 2008 2009 2008 2009 2008
------ ---- ---- ---- ---- ---- ----
Caribbean & Latin America $101.02 -19.6% 63.6% -6.9% pts. $158.85 -10.8%
Continental Europe $106.00 -16.9% 65.3% -4.0% pts. $162.33 -11.8%
United Kingdom $100.03 -11.3% 72.0% -3.0% pts. $139.01 -7.6%
Middle East & Africa $94.21 -18.9% 68.6% -9.1% pts. $137.31 -8.1%
Asia Pacific(2) $87.33 -19.3% 64.1% -5.1% pts. $136.15 -12.9%
Regional Composite(3) $99.11 -17.2% 66.1% -4.9% pts. $149.93 -11.0%
International Luxury(4) $179.99 -22.1% 56.8% -7.2% pts. $317.16 -12.2%
Total International(5) $105.78 -17.9% 65.3% -5.1% pts. $161.89 -11.5%
Worldwide(6) $82.83 -17.3% 64.2% -4.9% pts. $128.92 -10.9%
(1) We report international results on a period basis, and international
statistics on a monthly basis. Statistics are in constant dollars
for January through December. International includes properties
located outside the Continental United States and Canada, except for
Worldwide which also includes North America.
(2) Does not include Hawaii.
(3) Regional information includes the Marriott Hotels & Resorts,
Renaissance Hotels & Resorts and Courtyard brands. 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, 2009 and December 31, 2008, and North American
statistics for the fifty-two weeks ended January 1, 2010 and the
fifty-three weeks ended January 2, 2009. Includes the Marriott Hotels
& Resorts, Renaissance Hotels & Resorts, The Ritz-Carlton, Bulgari
Hotels & Resorts, Residence Inn, Courtyard, Fairfield Inn, TownePlace
Suites and SpringHill Suites brands.
A-8
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
(Excludes 53rd Week of 2008 for North America)
Comparable Company-Operated North American Properties(1)
--------------------------------------------------------
Sixteen Weeks Ended January 1, 2010 and
January 2, 2009
---------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Brand 2009 2008 2009 2008 2009 2008
----- ---- ---- ---- ---- ---- ----
Marriott Hotels &
Resorts $104.04 -11.1% 65.0% -0.2% pts. $160.11 -10.9%
Renaissance Hotels &
Resorts $96.24 -12.5% 63.4% -0.4% pts. $151.82 -11.9%
Composite North
American Full-
Service(2) $102.69 -11.3% 64.7% -0.2% pts. $158.70 -11.1%
The Ritz-Carlton(3) $169.42 -11.6% 60.8% 1.0% pts. $278.52 -13.0%
Composite North
American Full-Service
& Luxury(4) $109.42 -11.4% 64.3% -0.1% pts. $170.12 -11.3%
Residence Inn $74.33 -12.9% 67.2% -1.7% pts. $110.55 -10.6%
Courtyard $63.88 -15.9% 59.4% -1.9% pts. $107.57 -13.2%
TownePlace Suites $41.61 -26.5% 57.1% -8.6% pts. $72.83 -15.4%
SpringHill Suites $55.25 -14.7% 59.3% -2.0% pts. $93.22 -11.8%
Composite North
American Limited-
Service(5) $64.87 -15.3% 61.5% -2.2% pts. $105.51 -12.2%
Composite - All(6) $90.40 -12.6% 63.1% -1.0% pts. $143.25 -11.2%
Comparable Systemwide North American Properties(1)
--------------------------------------------------
Sixteen Weeks Ended January 1, 2010 and
January 2, 2009
---------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Brand 2009 2008 2009 2008 2009 2008
----- ---- ---- ---- ---- ---- ----
Marriott Hotels &
Resorts $89.76 -11.8% 61.9% -0.9% pts. $145.12 -10.6%
Renaissance Hotels &
Resorts $86.11 -12.1% 62.4% -0.3% pts. $137.91 -11.8%
Composite North
American Full-
Service(2) $89.15 -11.9% 62.0% -0.8% pts. $143.90 -10.8%
The Ritz-Carlton(3) $169.42 -11.6% 60.8% 1.0% pts. $278.52 -13.0%
Composite North
American Full-Service
& Luxury(4) $93.95 -11.9% 61.9% -0.7% pts. $151.82 -10.9%
Residence Inn $75.57 -11.3% 68.2% -1.6% pts. $110.81 -9.2%
Courtyard $65.60 -13.9% 60.1% -2.3% pts. $109.09 -10.6%
Fairfield Inn $46.62 -12.7% 57.2% -3.0% pts. $81.56 -8.1%
TownePlace Suites $46.21 -17.0% 59.3% -4.0% pts. $77.98 -11.3%
SpringHill Suites $56.37 -13.4% 59.9% -2.1% pts. $94.09 -10.4%
Composite North
American Limited-
Service5 $62.70 -13.0% 61.6% -2.3% pts. $101.79 -9.7%
Composite - All(6) $74.90 -12.5% 61.7% -1.7% pts. $121.37 -10.1%
(1) North America includes properties located in the Continental United
States and Canada.
(2) Includes the Marriott Hotels & Resorts and Renaissance Hotels &
Resorts brands.
(3) Statistics for The Ritz-Carlton are for September through December.
(4) Includes the Marriott Hotels & Resorts Renaissance Hotels & Resorts
and The Ritz-Carlton brands.
(5) Includes the Residence Inn, Courtyard, Fairfield Inn, TownePlace
Suites and SpringHill Suites brands.
(6) Includes the Marriott Hotels & Resorts, Renaissance Hotels &
Resorts, The Ritz-Carlton, Residence Inn, Courtyard, Fairfield Inn,
TownePlace Suites, and SpringHill Suites brands.
A-9
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
(Excludes 53rd Week of 2008 for North America)
Comparable Company-Operated North American Properties(1)
--------------------------------------------------------
Fifty-two Weeks Ended January 1, 2010 and
January 2, 2009
------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Brand 2009 2008 2009 2008 2009 2008
----- ---- ---- ---- ---- ---- ----
Marriott Hotels &
Resorts $104.60 -17.9% 66.3% -4.8% pts. $157.81 -11.9%
Renaissance Hotels &
Resorts $100.42 -16.7% 65.3% -4.6% pts. $153.71 -10.8%
Composite North American
Full-Service(2) $103.87 -17.7% 66.1% -4.8% pts. $157.10 -11.7%
The Ritz-Carlton(3) $172.61 -23.1% 61.5% -6.5% pts. $280.76 -14.9%
Composite North American
Full-Service & Luxury(4) $110.30 -18.5% 65.7% -4.9% pts. $167.93 -12.4%
Residence Inn $79.38 -17.1% 69.5% -5.8% pts. $114.27 -10.1%
Courtyard $67.15 -22.5% 61.2% -6.4% pts. $109.78 -14.4%
TownePlace Suites $47.45 -21.8% 61.3% -8.0% pts. $77.40 -11.6%
SpringHill Suites $59.63 -20.7% 61.3% -7.4% pts. $97.32 -11.2%
Composite North American
Limited-Service(5) $68.83 -20.8% 63.5% -6.4% pts. $108.33 -12.8%
Composite - All(6) $92.52 -19.3% 64.8% -5.6% pts. $142.86 -12.3%
Comparable Systemwide North American Properties(1)
--------------------------------------------------
Fifty-two Weeks Ended January 1, 2010 and
January 2, 2009
------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Brand 2009 2008 2009 2008 2009 2008
----- ---- ---- ---- ---- ---- ----
Marriott Hotels & Resorts $92.09 -18.2% 63.4% -5.1% pts. $145.16 -11.7%
Renaissance Hotels &
Resorts $89.75 -17.1% 63.8% -4.7% pts. $140.75 -11.0%
Composite North American
Full-Service(2) $91.70 -18.0% 63.5% -5.0% pts. $144.42 -11.6%
The Ritz-Carlton(3) $172.61 -23.1% 61.5% -6.5% pts. $280.76 -14.9%
Composite North American
Full-Service & Luxury(4) $96.18 -18.6% 63.4% -5.1% pts. $151.75 -12.0%
Residence Inn $80.48 -15.3% 70.7% -5.0% pts. $113.86 -9.2%
Courtyard $69.87 -19.2% 62.8% -5.7% pts. $111.20 -11.8%
Fairfield Inn $51.41 -16.3% 60.8% -5.8% pts. $84.62 -8.3%
TownePlace Suites $51.24 -17.7% 62.8% -6.5% pts. $81.60 -9.3%
SpringHill Suites $62.01 -16.9% 62.7% -5.7% pts. $98.97 -9.4%
Composite North American
Limited-Service(5) $67.40 -17.3% 64.5% -5.6% pts. $104.55 -10.2%
Composite - All(6) $78.59 -17.9% 64.0% -5.4% pts. $122.71 -11.0%
(1) North America includes properties located in the Continental United
States and Canada.
(2) Includes the Marriott Hotels & Resorts and Renaissance Hotels &
Resorts brands.
(3) Statistics for The Ritz-Carlton are for January through December.
(4) Includes the Marriott Hotels & Resorts, Renaissance Hotels & Resorts
and The Ritz-Carlton brands.
(5) Includes the Residence Inn, Courtyard, Fairfield Inn, TownePlace
Suites and SpringHill Suites brands.
(6) Includes the Marriott Hotels & Resorts, Renaissance Hotels & Resorts,
The Ritz-Carlton, Residence Inn, Courtyard, Fairfield Inn, TownePlace
Suites, and SpringHill Suites brands.
A-10
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
Comparable Company-Operated North American Properties(1)
-------------------------------------------------------
Sixteen Weeks Ended January 1, 2010 and Seventeen Weeks
Ended January 2, 2009
----------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
Brand 2009 vs. 2008 2009 vs. 2008 2009 vs. 2008
----- ---- -------- ---- -------- ---- --------
Marriott Hotels &
Resorts $104.04 -11.9% 65.0% -0.6% pts. $160.11 -11.1%
Renaissance Hotels
& Resorts $96.24 -13.4% 63.4% -0.9% pts. $151.82 -12.1%
Composite North
American Full-
Service(2) $102.69 -12.2% 64.7% -0.7% pts. $158.70 -11.2%
The Ritz-
Carlton(3) $169.42 -11.6% 60.8% 1.0% pts. $278.52 -13.0%
Composite North
American Full-
Service &
Luxury(4) $109.42 -11.8% 64.3% -0.6% pts. $170.12 -11.0%
Residence Inn $74.33 -13.6% 67.2% -2.2% pts. $110.55 -10.8%
Courtyard $63.88 -17.0% 59.4% -2.4% pts. $107.57 -13.6%
TownePlace Suites $41.61 -26.7% 57.1% -8.8% pts. $72.83 -15.3%
SpringHill Suites $55.25 -15.5% 59.3% -2.3% pts. $93.22 -12.1%
Composite North
American Limited-
Service5 $64.87 -16.2% 61.5% -2.6% pts. $105.51 -12.6%
Composite - All(6) $90.40 -13.1% 63.1% -1.4% pts. $143.25 -11.1%
Comparable Systemwide North American Properties(1)
------------------------------------------------
Sixteen Weeks Ended January 1, 2010 and Seventeen Weeks
Ended January 2, 2009
----------------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
Brand 2009 vs. 2008 2009 vs. 2008 2009 vs. 2008
----- ---- -------- ---- -------- ---- ----------
Marriott Hotels &
& Resorts $89.76 -12.6% 61.9% -1.3% pts. $145.12 -10.8%
Renaissance Hotels
Resorts $86.11 -13.1% 62.4% -0.7% pts. $137.91 -12.1%
Composite North
American Full-
Service(2) $89.15 -12.7% 62.0% -1.2% pts. $143.90 -11.0%
The Ritz-
Carlton(3) $169.42 -11.6% 60.8% 1.0% pts. $278.52 -13.0%
Composite North
American Full-
Service &
Luxury(4) $93.95 -12.3% 61.9% -1.1% pts. $151.82 -10.8%
Residence Inn $75.57 -12.0% 68.2% -2.0% pts. $110.81 -9.4%
Courtyard $65.60 -14.9% 60.1% -2.8% pts. $109.09 -11.0%
Fairfield Inn $46.62 -13.6% 57.2% -3.3% pts. $81.56 -8.5%
TownePlace Suites $46.21 -17.7% 59.3% -4.4% pts. $77.98 -11.5%
SpringHill Suites $56.37 -14.3% 59.9% -2.5% pts. $94.09 -10.8%
Composite North
American Limited-
Service(5) $62.70 -13.9% 61.6% -2.8% pts. $101.79 -10.0%
Composite - All(6) $74.90 -13.1% 61.7% -2.1% pts. $121.37 -10.1%
1 North America includes properties located in the Continental United
States and Canada.
2 Includes the Marriott Hotels & Resorts and Renaissance Hotels & Resorts
brands.
3 Statistics for The Ritz-Carlton are for September through December.
4 Includes the Marriott Hotels & Resorts Renaissance Hotels & Resorts and
The Ritz-Carlton brands.
5 Includes the Residence Inn, Courtyard, Fairfield Inn, TownePlace Suites
and SpringHill Suites brands.
6 Includes the Marriott Hotels & Resorts, Renaissance Hotels & Resorts,
The Ritz-Carlton, Residence Inn, Courtyard, Fairfield Inn, TownePlace
Suites, and SpringHill Suites brands.
A-11
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
Comparable Company-Operated North American Properties(1)
--------------------------------------------------------
Fifty-two Weeks Ended January 1, 2010 and
Fifty-three Weeks Ended January 2, 2009
------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Brand 2009 2008 2009 2008 2009 2008
----- ---- ---- ---- ---- ---- ----
Marriott Hotels & Resorts $104.60 -17.2% 66.3% -4.3% pts. $157.81 -11.8%
Renaissance Hotels &
Resorts $100.42 -16.1% 65.3% -4.2% pts. $153.71 -10.7%
Composite North American
Full-Service(2) $103.87 -17.0% 66.1% -4.3% pts. $157.10 -11.6%
The Ritz-Carlton(3) $172.61 -23.1% 61.5% -6.5% pts. $280.76 -14.9%
Composite North American
Full-Service &
Luxury(4) $110.30 -17.8% 65.7% -4.5% pts. $167.93 -12.2%
Residence Inn $79.38 -16.4% 69.5% -5.3% pts. $114.27 -10.0%
Courtyard $67.15 -21.7% 61.2% -5.8% pts. $109.78 -14.2%
TownePlace Suites $47.45 -21.1% 61.3% -7.4% pts. $77.40 -11.5%
SpringHill Suites $59.63 -20.0% 61.3% -6.9% pts. $97.32 -11.0%
Composite North American
Limited-Service(5) $68.83 -20.0% 63.5% -5.8% pts. $108.33 -12.7%
Composite - All(6) $92.52 -18.5% 64.8% -5.1% pts. $142.86 -12.2%
Comparable Systemwide North American Properties(1)
--------------------------------------------------
Fifty-two Weeks Ended January 1, 2010 and
Fifty-three Weeks Ended January 2, 2009
------------------------------------------
Average Daily
REVPAR Occupancy Rate
------ --------- -------------
vs. vs. vs.
Brand 2009 2008 2009 2008 2009 2008
----- ---- ---- ---- ---- ---- ----
Marriott Hotels & Resorts $92.09 -17.5% 63.4% -4.6% pts. $145.16 -11.6%
Renaissance Hotels &
Resorts $89.75 -16.5% 63.8% -4.3% pts. $140.75 -10.9%
Composite North American
Full-Service(2) $91.70 -17.3% 63.5% -4.5% pts. $144.42 -11.5%
The Ritz-Carlton(3) $172.61 -23.1% 61.5% -6.5% pts. $280.76 -14.9%
Composite North American
Full-Service &
Luxury(4) $96.18 -17.9% 63.4% -4.6% pts. $151.75 -11.9%
Residence Inn $80.48 -14.6% 70.7% -4.5% pts. $113.86 -9.2%
Courtyard $69.87 -18.3% 62.8% -5.1% pts. $111.20 -11.7%
Fairfield Inn $51.41 -15.6% 60.8% -5.4% pts. $84.62 -8.1%
TownePlace Suites $51.24 -16.9% 62.8% -5.9% pts. $81.60 -9.2%
SpringHill Suites $62.01 -16.1% 62.7% -5.2% pts. $98.97 -9.2%
Composite North American
Limited-Service(5) $67.40 -16.6% 64.5% -5.1% pts. $104.55 -10.0%
Composite - All(6) $78.59 -17.2% 64.0% -4.9% pts. $122.71 -10.9%
(1) North America includes properties located in the Continental United
States and Canada.
(2) Includes the Marriott Hotels & Resorts and Renaissance Hotels &
Resorts brands.
(3) Statistics for The Ritz-Carlton are for January through December.
(4) Includes the Marriott Hotels & Resorts, Renaissance Hotels & Resorts
and The Ritz-Carlton brands.
(5) Includes the Residence Inn, Courtyard, Fairfield Inn, TownePlace
Suites and SpringHill Suites brands.
(6) Includes the Marriott Hotels & Resorts, Renaissance Hotels & Resorts,
The Ritz-Carlton, Residence Inn, Courtyard, Fairfield Inn, TownePlace
Suites, and SpringHill Suites brands.
A-12
MARRIOTT INTERNATIONAL, INC.
TIMESHARE SEGMENT
($ in millions)
Adjustments
---------------------
As As
Reported Restruc- Adjusted
16 Weeks turing Timeshare 16 Weeks
Ended Costs & Strategy - Ended
January 1, Other Impairment January 1,
2010 Charges Charges 2010**
---------------- ----------- -------- ----------- -----------
Segment Revenues
----------------
Segment revenues $477 $(2) $- $475
==== === == ====
---------------
Segment Results
---------------
Base fees revenue $15 $- $- $15
Timeshare sales and
services, net 74 (2) - 72
Timeshare strategy -
impairment
charges - - - -
Restructuring costs (7) 7 - -
General, administrative
and other expense (23) - - (23)
Gains and other
income 1 - - 1
Joint venture equity
earnings (6) 3 - (3)
Timeshare strategy -
impairment charges
(non-operating) - - - -
Noncontrolling
interest - - - -
--- --- --- ---
Segment results $54 $8 $- $62
=== == == ===
--------------------------
Sales and Services Revenue
--------------------------
Development $185 $- $- $185
Services 98 - - 98
Financing 76 (2) - 74
Other revenue 18 - - 18
-- -- -- --
Sales and
services revenue
$377 $(2) $- $375
==== === == ====
--------------
Contract Sales
--------------
Company:
Timeshare $183 $- $- $183
Fractional 3 3 - 6
Residential 9 - - 9
- - - -
Total company 195 3 - 198
Joint ventures:
Timeshare - - - -
Fractional (12) 17 - 5
Residential (8) 8 - -
-- - - -
Total joint
ventures (20) 25 - 5
--- -- --- ---
Total
contract
sales,
including
joint
ventures $175 $28 $- $203
==== === == ====
---------------------------
Gain / (Loss) on Notes Sold
---------------------------
Gain / (loss) on
notes sold $38 $- $- $38
=== == == ===
Adjustments
-----------
Percent
Better /
(Worse)
As As As
Reported Restruc- Adjusted Adjusted
17 Weeks turing 17 Weeks 2009 vs.
Ended Costs & Ended As
January 2, Other January 2, Adjusted
2009 Charges 2009** 2008
---------------- ----------- -------- ----------- ---------
Segment Revenues
----------------
Segment revenues $424 $61 $485 (2)
==== === ====
---------------
Segment Results
---------------
Base fees revenue $7 $- $7 114
Timeshare sales and
services, net (48) 58 10 620
Timeshare strategy -
impairment charges - - - -
Restructuring costs (28) 28 - -
General, administrative
and other expense (32) - (32) 28
Gains and other
income - - - *
Joint venture equity
earnings 2 7 9 (133)
Timeshare strategy -
impairment charges
(non-operating) - - - -
Noncontrolling
interest 4 - 4 (100)
--- --- ---
Segment results $(95) $93 $(2) 3,200
==== === ===
--------------------------
Sales and Services Revenue
--------------------------
Development $231 $17 $248 (25)
Services 92 - 92 7
Financing (1) 44 43 72
Other revenue 3 - 3 500
--- --- ---
Sales and
services revenue
$325 $61 $386 (3)
==== === ====
--------------
Contract Sales
--------------
Company:
Timeshare $222 $- $222 (18)
Fractional 1 2 3 100
Residential (23) 16 (7) 229
--- -- --
Total company 200 18 218 (9)
Joint ventures:
Timeshare - - - -
Fractional (23) 21 (2) 350
Residential (74) 76 2 (100)
--- -- -
Total joint
ventures (97) 97 - *
--- -- ---
Total
contract
sales,
including
joint
ventures $103 $115 $218 (7)
==== ==== ====
---------------------------
Gain / (Loss) on Notes Sold
---------------------------
Gain / (loss) on
notes sold $(12) $12 $- *
==== === ==
* Percent cannot be calculated.
** Denotes non-GAAP financial measures. Please see pages A-27 and A-28
for additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
A-13
MARRIOTT INTERNATIONAL, INC.
TIMESHARE SEGMENT
($ in millions)
Adjustments
--------------------
As As
Reported Restruc- Adjusted
52 Weeks turing Timeshare 52 Weeks
Ended Costs & Strategy - Ended
January 1, Other Impairment January 1,
2010 Charges Charges 2010**
---------------- ---------- -------- ---------- ----------
Segment Revenues
----------------
Segment revenues $1,439 $24 $- $1,463
====== === == ======
---------------
Segment Results
---------------
Base fees revenue $47 $- $- $47
Timeshare sales and
services, net 83 23 - 106
Timeshare strategy -
impairment charges (614) - 614 -
Restructuring costs (45) 45 - -
General, administrative
and other expense (80) 7 - (73)
Gains and other income 2 - - 2
Joint venture equity
earnings (12) 6 - (6)
Timeshare strategy -
impairment charges
(non-operating) (71) - 71 -
Noncontrolling interest 11 - - 11
-- --- --- --
Segment results $(679) $81 $685 $87
===== === ==== ===
--------------------------
Sales and Services Revenue
--------------------------
Development $626 $4 $- $630
Services 330 - - 330
Financing 130 20 - 150
Other revenue 37 - - 37
-- --- --- --
Sales and services
revenue $1,123 $24 $- $1,147
====== === == ======
--------------
Contract Sales
--------------
Company:
Timeshare $685 $- $- $685
Fractional 28 4 - 32
Residential 8 4 - 12
--- --- --- --
Total company 721 8 - 729
Joint ventures:
Timeshare - - - -
Fractional (21) 40 - 19
Residential (35) 35 - -
--- -- --- ---
Total joint
ventures (56) 75 - 19
--- -- --- --
Total contract
sales, including
joint ventures $665 $83 $- $748
==== === == ====
---------------------------
Gain / (Loss) on Notes Sold
---------------------------
Gain / (loss) on notes sold $37 $- $- $37
=== == == ===
Adjustments
-----------
Percent
Better /
(Worse)
As As As
Reported Restruc- Adjusted Adjusted
53 Weeks turing 53 Weeks 2009 vs.
Ended Costs & Ended As
January 2, Other January 2, Adjusted
2009 Charges 2009** 2008
---------------- ---------- -------- ---------- ---------
Segment Revenues
----------------
Segment revenues $1,750 $61 $1,811 (19)
====== === ======
---------------
Segment Results
---------------
Base fees revenue $42 $- $42 12
Timeshare sales and
services, net 89 58 147 (28)
Timeshare strategy -
impairment charges - - - -
Restructuring costs (28) 28 - -
General, administrative
and other expense (111) - (111) 34
Gains and other income - - - *
Joint venture equity
earnings 11 7 18 (133)
Timeshare strategy -
impairment charges
(non-operating) - - - -
Noncontrolling interest 25 - 25 (56)
-- --- --
Segment results $28 $93 $121 (28)
=== === ====
--------------------------
Sales and Services Revenue
--------------------------
Development $953 $17 $970 (35)
Services 336 - 336 (2)
Financing 106 44 150 -
Other revenue 28 - 28 32
-- --- --
Sales and services
revenue $1,423 $61 $1,484 (23)
====== === ======
--------------
Contract Sales
--------------
Company:
Timeshare $1,081 $- $1,081 (37)
Fractional 35 2 37 (14)
Residential 10 16 26 (54)
-- -- --
Total company 1,126 18 1,144 (36)
Joint ventures:
Timeshare - - - -
Fractional (6) 21 15 27
Residential (44) 76 32 (100)
--- -- --
Total joint
ventures (50) 97 47 (60)
--- -- --
Total contract
sales, including
joint ventures $1,076 $115 $1,191 (37)
====== ==== ======
---------------------------
Gain / (Loss) on Notes Sold
---------------------------
Gain / (loss) on notes sold $16 $12 $28 32
=== === ===
* Percent cannot be calculated.
** Denotes non-GAAP financial measures. Please see pages A-27 and A-28
for additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
A-14
MARRIOTT INTERNATIONAL, INC.
Summary of Restructuring Costs and Other Charges
($ in millions)
2009
--------------
Fourth
Quarter
Fourth Year to
External Line Description Quarter Date
------------- ----------- ------- -----
Timeshare sales
and services
revenue Mark-to-market of residual interests $(2) $20
Contract sale cancellation allowances - 4
-- --
Timeshare sales and services
revenue (2) 24
Timeshare -
direct
expenses Contract sale cancellation allowances - (1)
--- ---
Timeshare - direct expenses - (1)
Restructuring
costs Severance 5 21
Facilities exit costs 2 29
Development cancellations - 1
--- ---
Restructuring costs 7 51
General,
administrative
and other System development write-down - 7
Accounts receivable and guarantee charges - 4
Loan impairments - 43
Reserves for security deposits & other
asset impairments, net of prior
year reserves 8 46
--- ---
General, administrative
and other 8 100
Equity in
(earnings)
losses Contract sale cancellation allowances 3 6
Investment impairment 3 33
--- ---
Equity in (earnings) losses 6 39
--- ---
Restructuring Costs & Other
Charges Total 19 213
Tax Impact (7) (83)
-- ---
Restructuring Costs & Other
Charges Net of Tax $12 $130
=== ====
A-15
MARRIOTT INTERNATIONAL, INC.
Timeshare Strategy - Impairment Charges Summary
Full Year 2009
($ in millions)
Impairment
Charge
------
Operating Income Impact
Inventory impairment $529
Property and equipment impairment 64
Other impairments 21
--
Total operating income impact 614
---
Non-Operating Income Impact
Joint venture impairment 71
Loan impairment 40
Funding liability 27
--
Total non-operating income impact 138
---
Total impact 752
---
Tax Impact (250)
----
Timeshare Strategy - Impairment Charges Net of Tax $502
====
A-16
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure
EBITDA and Adjusted EBITDA
($ in millions)
Fiscal Year 2009
----------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
Net (Loss) / Income
attributable to Marriott $(23) $37 $(466) $106 $(346)
Interest expense 29 28 27 34 118
Tax provision, continuing
operations 33 44 (210) 68 (65)
Tax provision,
noncontrolling interest 1 2 1 - 4
Depreciation and amortization 39 42 43 61 185
Less: Depreciation
reimbursed by third-party
owners (2) (2) (2) (3) (9)
Interest expense from
unconsolidated joint
ventures 3 6 4 6 19
Depreciation and
amortization from
unconsolidated joint
ventures 6 6 6 9 27
-- -- -- -- --
EBITDA ** 86 163 (597) 281 (67)
Restructuring costs and other
charges
Severance 2 10 4 5 21
Facilities exit costs - 22 5 2 29
Development
cancellations - 1 - - 1
--- --- --- --- ---
Total restructuring
costs 2 33 9 7 51
--- --- --- --- ---
Impairment of investments
and other, net of prior
year reserves 68 3 1 11 83
Reserves for loan
losses 42 1 - - 43
Contract cancellation
allowances 4 1 1 3 9
Residual interests
valuation 13 12 (3) (2) 20
System development write-
off - 7 - - 7
--- -- --- --- ---
Total other charges 127 24 (1) 12 162
--- -- -- -- ---
Total restructuring costs
and other charges 129 57 8 19 213
--- -- - -- ---
Timeshare strategy - impairment
charges
Operating impairments - - 614 - 614
Non-operating
impairments - - 138 - 138
--- --- --- --- ---
Total timeshare strategy -
impairment charges - - 752 - 752
--- --- --- --- ---
Adjusted EBITDA ** $215 $220 $163 $300 $898
==== ==== ==== ==== ====
Decrease over 2008 Adjusted
EBITDA -25% -43% -43% -12% -31%
Fiscal Year 2008
----------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
Net Income / (Loss)
attributable to Marriott $121 $157 $94 $(10) $362
Interest expense 42 38 33 50 163
Tax provision, continuing
operations 75 139 103 33 350
Tax provision, minority
interest 1 1 5 2 9
Tax benefit, synthetic fuel - (6) (1) - (7)
Depreciation and amortization 41 47 42 60 190
Less: Depreciation
reimbursed by third-party
owners (3) (3) (2) (2) (10)
Interest expense from
unconsolidated joint
ventures 4 4 5 5 18
Depreciation and
amortization from
unconsolidated joint
ventures 5 6 6 10 27
- - - -- --
EBITDA ** 286 383 285 148 1,102
Discontinued operations
adjustment (synthetic fuel) 1 2 1 - 4
Restructuring costs and other
charges
Severance - - - 19 19
Facilities exit costs - - - 5 5
Development
cancellations - - - 31 31
--- --- --- -- --
Total restructuring
costs - - - 55 55
--- --- --- -- --
Reserves for expected
fundings - - - 16 16
Inventory write-downs - - - 9 9
Contract cancellation
allowances - - - 12 12
Accounts receivable-bad
debts - - - 4 4
Residual interests
valuation - - - 32 32
Hedge ineffectiveness - - - 12 12
Impairment of investments
and other - - - 30 30
Reserves for loan
losses - - - 22 22
--- --- --- -- --
Total other charges - - - 137 137
--- --- --- --- ---
Total restructuring costs
and other charges - - - 192 192
--- --- --- --- ---
Adjusted EBITDA ** $287 $385 $286 $340 $1,298
==== ==== ==== ==== ======
The following items make up
the discontinued operations
adjustment (synthetic fuel)
Pre-tax Synthetic Fuel
losses $1 $2 $1 $- $4
-- -- -- -- --
EBITDA adjustment for
discontinued operations
(synthetic fuel) $1 $2 $1 $- $4
== == == == ==
** Denotes non-GAAP financial measures. Please see pages A-27 and A-28
for additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
A-17
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure
Total Debt Net of Cash
($ in millions)
Balance at Balance at Better/
Year-End Year-End (Worse)
2009 2008 Change
---------- ----------- -------
Total debt $2,298 $3,095 $797
Cash and cash
equivalents (115) (134) (19)
---- ---- ---
Total debt net of
cash** $2,183 $2,961 $778
====== ====== ====
Range Range
----- -----
As Compared to Balance
at Year-End 2009
Estimated Estimated ----------------------
Balance Balance Better/ Better/
Year-End Year-End (Worse) (Worse)
2010 (a) 2010 (b) Change (a) Change (b)
--------- --------- ---------- ----------
Total debt $2,851 $2,751 $(553) $(453)
Cash and cash
equivalents (115) (115) - -
---- ---- --- ---
Total debt net of
cash** 2,736 2,636 (553) (453)
Less the impact of
ASU Nos. 2009-16 and
2009-17 (953) (953) 953 953
---- ---- --- ---
Adjusted total debt
net of cash** (c) $1,783 $1,683 $400 $500
====== ====== ==== ====
(a) Assumes $400 debt repayment in 2010.
(b) Assumes $500 debt repayment in 2010.
(c) Excludes the impact of the update to ASU Nos. 2009-16 and 2009-17.
** Denotes non-GAAP financial measures. Please see pages A-27 and
A-28 for additional information about our reasons for providing
these alternative financial measures and the limitations on their
use.
A-18
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
Adjusted Fourth Quarter and Full Year 2008 and 2009
General, Administrative, and Other Expenses Excluding Restructuring
Costs, Other Charges and Deferred Compensation Credits (Charges)
($ in millions)
Percent
Better/
(Worse)
Adjusted
2009
Fourth Fourth vs.
Quarter Quarter Adjusted
2008 2009 2008
-------- -------- ---------
General, administrative and other expenses $292 $215
Less: Restructuring costs and other charges (54) (8)
Deferred Compensation credits (charges) 16 (5)
-- --
Adjusted General, administrative and other
expenses** $254 $202 20
==== ====
Percent
Better/
(Worse)
Adjusted
2009
Full Full vs.
Year Year Adjusted
2008 2009 2008
----- ----- ---------
General, administrative and other expenses $803 $722
Less: Restructuring costs and other charges (54) (100)
Deferred Compensation credits (charges) 28 (15)
-- ---
Adjusted General, administrative and other
expenses** $777 $607 22
==== ====
** Denotes non-GAAP financial measures. Please see pages A-27 and A-28
for additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
A-19
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure
2009 Adjusted for ASU Nos. 2009-16 and 2009-17 and Forecasted 2010
EBITDA and Adjusted EBITDA
($ in millions)
Range
-----
As
Adjusted
For
ASU ASU Nos.
Nos. 2009-16
2009-16 and Estimated
and 2009-17 EBITDA
2009 2009-17 Fiscal Full
Fiscal Adjust- Year Year
Year ments 2009** 2010
------- -------- --------- ----------
Net (Loss) / Income
attributable to Marriott $(346) $(1) $(347) $311 $356
Interest expense 118 77 195 195 190
Tax provision, continuing
operations (65) (65) 179 204
Tax provision,
noncontrolling interest 4 - 4 - -
Depreciation and
amortization 185 - 185 187 187
Less: Depreciation
reimbursed by third-party
owners (9) - (9) (21) (21)
Interest expense from
unconsolidated joint
ventures 19 - 19 27 27
Depreciation and
amortization from
unconsolidated joint
ventures 27 - 27 30 30
-- -- -- -- --
EBITDA ** (67) 76 9 908 973
Restructuring costs and
other charges
Severance 21 - 21 - -
Facilities exit
costs 29 - 29 - -
Development
cancellations 1 - 1 - -
--- --- --- --- ---
Total restructuring
costs 51 - 51 - -
-- --- -- --- ---
Impairment of investments
and other, net of prior
year reserves 83 - 83 - -
Reserves for loan
losses 43 - 43 - -
Contract cancellation
allowances 9 - 9 - -
Residual interests
valuation 20 - 20 - -
System development write-
off 7 - 7 - -
--- --- --- --- ---
Total other
charges 162 - 162 - -
--- --- --- --- ---
Total restructuring costs
and other charges 213 - 213 - -
--- --- --- --- ---
Timeshare strategy -
impairment charges
Operating
impairments 614 - 614 - -
Non-operating
impairments 138 - 138 - -
--- --- --- --- ---
Total timeshare strategy -
impairment charges 752 - 752 - -
--- --- --- --- ---
Adjusted EBITDA ** $898 $76 $974 $908 $973
==== === ==== ==== ====
** Denotes non-GAAP financial measures. Please see pages A-27 and A-28
for additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
A-20
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
First Quarter 2009 General, Administrative, and Other Expenses
Excluding Restructuring Costs and Other Charges
($ in millions)
Range Range
----- -----
Percent Percent
Better/ Better/
(Worse) (Worse)
Estimated Estimated
First First
Quarter Quarter
Estimated Estimated 2010 vs. 2010 vs.
First First First First First
Quarter Quarter Quarter Quarter Quarter
2010 2010 2009 2009 2009
--------- --------- -------- --------- ---------
General,
administrative
and other
expenses $130 $140 $174
Less:
Restructuring
costs and other
charges - - (38)
--- --- ---
General,
administrative
and other
expenses
excluding
restructuring
costs and other
charges** $130 $140 $136 4 (3)
==== ==== ====
** Denotes non-GAAP financial measures. Please see pages A-27 and
A-28 for additional information about our reasons for providing
these alternative financial measures and the limitations on their
use.
A-21
MARRIOTT INTERNATIONAL, INC.
TIMESHARE SEGMENT
AS ADJUSTED HAD ASU NOS. 2009-16 AND 2009-17 (FORMERLY REFERRED
TO AS FAS 166 & 167) BEEN ADOPTED ON JANUARY 2, 2009
FIRST QUARTER 2009
($ in millions)
Adjustments
-----------------
As
Adjusted
For
ASU
Nos.
As ASU 2009-16
As Adjusted Nos. And
Reported Time- 12 2009-16 2009-17
12 Restruc- share Weeks And 12 Weeks
Weeks turing Strategy - Ended 2009- Ended
Ended Costs & Impair- March 17 March
March 27, Other ment 27, Adjust- 27,
2009 Charges Charges 2009** ments*** 2009**
--------- ---------- -------- --------- ------- -------- --------
Segment
Revenues
---------
Segment
revenues $277 $17 $- $294 $28 $322
==== === == ==== === ====
--------
Segment
Results
--------
Base fees
revenue $10 $- $- $10 $- $10
Timeshare
sales and
services, net (11) 16 - 5 20 25
Timeshare
strategy -
impairment
charges - - - - - -
Restructuring
costs (1) 1 - - - - -
General,
administrative
and other
expense (17) - - (17) - (17)
Gains and
other
income - - - - - -
Joint
venture
equity
earnings (1) 1 - - - -
Timeshare
strategy -
impairment
charges (non-
operating) - - - - - -
Noncontrolling
interest 3 - - 3 - 3
-- -- -- -- -- --
Segment
results $(17) $18 $- $1 $20 $21
==== === == == === ===
---------
Sales and
Services
Revenue
---------
Development $121 $4 $- $125 $2 $127
Services 70 - - 70 - 70
Financing 13 13 - 26 27 53
Other
revenue 5 - - 5 (1) 4
-- -- -- -- -- --
Sales and
services
revenue $209 $17 $- $226 $28 $254
==== === == ==== === ====
--------
Contract
Sales
--------
Company:
Timeshare $138 $- $- $138 $- $138
Fractional 10 - - 10 - 10
Residential (5) 4 - (1) - (1)
-- -- -- -- -- --
Total
company 143 4 - 147 - 147
Joint
ventures:
Timeshare - - - - - -
Fractional 13 (3) - 10 - 10
Residential (27) 27 - - - -
-- -- -- -- -- --
Total
joint
ventures (14) 24 - 10 - 10
-- -- -- -- -- --
Total
contract
sales,
including
joint
ventures $129 $28 $- $157 $- $157
==== === == ==== == ====
-----------
(Loss) /
Gain on
Notes Sold
-----------
(Loss) /
gain on
notes sold $(1) $- $- $(1) $1 $-
=== == == === == ==
**Denotes non-GAAP financial measures. Please see pages A-27 and A-28
for additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
***In addition to the segment impacts shown, ASU Nos. 2009-16 and 2009-
17 would have increased consolidated interest expense by $16 million
from $29 million as reported to $45 million.
A-22
MARRIOTT INTERNATIONAL, INC.
TIMESHARE SEGMENT
AS ADJUSTED HAD ASU NOS. 2009-16 AND 2009-17 (FORMERLY REFERRED
TO AS FAS 166 & 167) BEEN ADOPTED ON JANUARY 2, 2009
SECOND QUARTER 2009
($ in millions)
Adjustments
-----------------
As
Adjusted
For
ASU
Nos.
As ASU 2009-16
As Adjusted Nos. And
Reported Time- 12 2009-16 2009-17
12 Restruc- share Weeks And 12 Weeks
Weeks turing Strategy - Ended 2009- Ended
Ended Costs & Impair- June 17 June
June 19, Other ment 19, Adjust- 19,
2009 Charges Charges 2009** ments*** 2009**
--------- ---------- -------- --------- ------- -------- --------
Segment
Revenues
---------
Segment
revenues $355 $12 $- $367 $36 $403
==== === == ==== === ====
--------
Segment
Results
--------
Base fees
revenue $11 $- $- $11 $- $11
Timeshare sales
and services,
net 4 12 - 16 32 48
Timeshare
strategy -
impairment
charges - - - - - -
Restructuring
costs (30) 30 - - - -
General,
administrative
and other
expense (23) 7 - (16) - (16)
Gains and
other
income - - - - - -
Joint
venture
equity
earnings (1) 1 - - - -
Timeshare
strategy -
impairment
charges (non-
operating) - - - - - -
Noncontrolling
interest 4 - - 4 - 4
-- -- -- -- -- --
Segment
results $(35) $50 $- $15 $32 $47
==== === == === === ===
---------
Sales and
Services
Revenue
---------
Development $182 $- $- $182 $6 $188
Services 80 - - 80 - 80
Financing 14 12 - 26 30 56
Other
revenue 7 - - 7 - 7
-- -- -- -- -- --
Sales and
services
revenue $283 $12 $- $295 $36 $331
==== === == ==== === ====
--------
Contract
Sales
--------
Company:
Timeshare $200 $- $- $200 $- $200
Fractional 8 1 - 9 - 9
Residential 2 - - 2 - 2
-- -- -- -- -- --
Total
company 210 1 - 211 - 211
Joint
ventures:
Timeshare - - - - - -
Fractional (18) 19 - 1 - 1
Residential 17 (17) - - - -
-- -- -- -- -- --
Total
joint
ventures (1) 2 - 1 - 1
-- -- -- -- -- --
Total
contract
sales,
including
joint
ventures $209 $3 $- $212 $- $212
==== == == ==== == ====
---------
Gain /
(Loss)
on Notes
Sold
---------
Gain / loss
on notes
sold $- $- $- $- $- $-
== == == == == ==
**Denotes non-GAAP financial measures. Please see pages A-27 and A-28 for
additional information about our reasons for providing these alternative
financial measures and the limitations on their use.
***In addition to the segment impacts shown, ASU Nos. 2009-16 and 2009-17
would have increased consolidated interest expense by $18 million from
$28 million as reported to $46 million.
A-23
MARRIOTT INTERNATIONAL, INC.
TIMESHARE SEGMENT
AS ADJUSTED HAD ASU NOS. 2009-16 AND 2009-17 (FORMERLY REFERRED TO
AS FAS 166 & 167) BEEN ADOPTED ON JANUARY 2, 2009
THIRD QUARTER 2009
($ in millions)
Adjustments
------------------
As
Adjusted
For
ASU Nos.
As As 2009-16
Reported Adjusted ASU And
12 Time- 12 Nos. 2009-17
Weeks Restruc- share Weeks 2009-16 12
Ended turing Strategy - Ended And Weeks
Sept. Costs Impair- Sept. 2009-17 Ended
11, & Other ment 11, Adjust- Sept. 11,
2009 Charges Charges 2009** ments*** 2009**
--------- --------- -------- --------- ------- -------- ---------
Segment
Revenues
---------
Segment
revenues $330 $(3) $- $327 $39 $366
==== === == ==== === ====
--------
Segment
Results
--------
Base fees
revenue $11 $- $- $11 $- $11
Timeshare
sales and
services,
net 16 (3) - 13 32 45
Timeshare
strategy -
impairment
charges (614) - 614 - - -
Restructuring
costs (7) 7 - - - -
General,
administrative
and other
expense (17) - - (17) - (17)
Gains and
other income 1 - - 1 - 1
Joint
venture
equity
earnings (4) 1 - (3) - (3)
Timeshare
strategy -
impairment
charges (non-
operating) (71) - 71 - - -
Noncontrolling
interest 4 - - 4 - 4
-- -- -- -- -- --
Segment
results $(681) $5 $685 $9 $32 $41
===== == ==== == === ===
---------
Sales and
Services
Revenue
---------
Development $138 $- $- $138 $11 $149
Services 82 - - 82 - 82
Financing 27 (3) - 24 28 52
Other
revenue 7 - - 7 - 7
-- -- -- -- -- --
Sales and
services
revenue $254 $(3) $- $251 $39 $290
==== === == ==== === ====
--------------
Contract Sales
--------------
Company:
Timeshare $164 $- $- $164 $- $164
Fractional 7 - - 7 - 7
Residential 2 - - 2 - 2
-- -- -- -- -- --
Total
company 173 - - 173 - 173
Joint ventures:
Timeshare - - - - - -
Fractional (4) 7 - 3 - 3
Residential (17) 17 - - - -
-- -- -- -- -- --
Total joint
ventures (21) 24 - 3 - 3
-- -- -- -- -- --
Total
contract
sales,
including
joint
ventures $152 $24 $- $176 $- $176
==== === == ==== == ====
-----------
Gain /
(Loss) on
Notes Sold
-----------
Gain /
loss on
notes
sold $- $- $- $- $- $-
== == == == == ==
**Denotes non-GAAP financial measures. Please see pages A-27 and A-28
for additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
***In addition to the segment impacts shown, ASU Nos. 2009-16 and 2009-
17 would have increased consolidated interest expense by $17 million
from $27 million as reported to $44 million.
A-24
MARRIOTT INTERNATIONAL, INC.
TIMESHARE SEGMENT
AS ADJUSTED HAD ASU NOS. 2009-16 AND 2009-17 (FORMERLY REFERRED
TO AS FAS 166 & 167) BEEN ADOPTED ON JANUARY 2, 2009
FOURTH QUARTER 2009
($ in millions)
Adjustments
------------------
As
Adjusted
For
ASU
Nos.
2009-16
As As ASU And
Reported Time- Adjusted Nos. 2009-17
16 Restruc- share 16 2009-16 16
Weeks turing Strategy - Weeks And Weeks
Ended Costs & Impair- Ended 2009-17 Ended
Jan. 1, Other ment Jan. 1, Adjust- Jan. 1,
2010 Charges Charges 2010** ments*** 2010**
--------- --------- -------- --------- -------- -------- ---------
Segment
Revenues
---------
Segment
revenues $477 $(2) $- $475 $(2) $473
==== === == ==== === ====
---------------
Segment Results
---------------
Base fees
revenue $15 $- $- $15 $- $15
Timeshare
sales and
services,
net 74 (2) - 72 (8) 64
Timeshare
strategy -
impairment
charges - - - - - -
Restructuring
costs (7) 7 - - - -
General,
administrative
and other
expense (23) - - (23) - (23)
Gains and
other income 1 - - 1 - 1
Joint
venture
equity
earnings (6) 3 - (3) - (3)
Timeshare
strategy -
impairment -
charges (non-
operating) - - - - - -
Noncontrolling
interest - - - - - -
-- -- -- -- -- --
Segment
results $54 $8 $- $62 $(8) $54
=== == == === === ===
---------
Sales and
Services
Revenue
---------
Development $185 $- $- $185 $4 $189
Services 98 - - 98 - 98
Financing 76 (2) - 74 (6) 68
Other revenue 18 - - 18 - 18
-- -- -- -- -- --
Sales and
services
revenue $377 $(2) $- $375 $(2) $373
==== === == ==== === ====
--------------
Contract Sales
--------------
Company:
Timeshare $183 $- $- $183 $- $183
Fractional 3 3 - 6 - 6
Residential 9 - - 9 - 9
-- -- -- -- -- --
Total
company 195 3 - 198 - 198
Joint ventures:
Timeshare - - - - - -
Fractional (12) 17 - 5 - 5
Residential (8) 8 - - - -
-- - - - - -
Total joint
ventures (20) 25 - 5 - 5
--- -- - - - -
Total contract
sales,
including
joint
ventures $175 $28 $- $203 $- $203
==== === == ==== == ====
-----------
Gain /
(Loss) on
Notes Sold
-----------
Gain / loss on
notes sold $38 $- $- $38 $(38) $-
=== == == === ==== ==
**Denotes non-GAAP financial measures. Please see pages A-27 and A-28
for additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
***In addition to the segment impacts shown, ASU Nos. 2009-16 and 2009-
17 would have increased consolidated interest expense by $26 million
from $34 million as reported to $60 million.
A-25
MARRIOTT INTERNATIONAL, INC.
TIMESHARE SEGMENT
AS ADJUSTED HAD ASU NOS. 2009-16 AND 2009-17 (FORMERLY REFERRED
TO AS FAS 166 & 167) BEEN ADOPTED ON JANUARY 2, 2009
FULL YEAR 2009
($ in millions)
Adjustments
-----------
As
Adjusted
For
ASU
Nos.
As As ASU 2009-16
Reported Time- Adjusted Nos. And
52 Restruc- share 52 2009-16 2009-17
Weeks turing Strategy - Weeks And 52 Weeks
Ended Costs & Impair- Ended 2009-17 Ended
Jan. 1, Other ment Jan. 1, Adjust- Jan. 1,
2010 Charges Charges 2010** ments*** 2010**
--------- -------- -------- ----------- -------- -------- --------
Segment
Revenues
---------
Segment
revenues $1,439 $24 $- $1,463 $101 $1,564
====== === == ====== ==== ======
---------------
Segment Results
---------------
Base fees
revenue $47 $- $- $47 $- $47
Timeshare
sales and
services,
net 83 23 - 106 76 182
Timeshare
strategy -
impairment
charges (614) - 614 - - -
Restructuring
costs (45) 45 - - - -
General,
administrative
and other
expense (80) 7 - (73) - (73)
Gains and
other income 2 - - 2 - 2
Joint
venture
equity
earnings (12) 6 - (6) - (6)
Timeshare
strategy -
impairment
charges (non-
operating) (71) - 71 - - -
Noncontrolling
interest 11 - - 11 - 11
-- -- -- -- -- --
Segment
results $(679) $81 $685 $87 $76 $163
===== === ==== === === ====
---------
Sales and
Services
Revenue
---------
Development $626 $4 $- $630 $23 $653
Services 330 - - 330 - 330
Financing 130 20 - 150 79 229
Other revenue 37 - - 37 (1) 36
-- -- -- -- -- --
Sales and
services
revenue $1,123 $24 $- $1,147 $101 $1,248
====== === == ====== ==== ======
--------------
Contract Sales
--------------
Company:
Timeshare $685 $- $- $685 $- $685
Fractional 28 4 - 32 - 32
Residential 8 4 - 12 - 12
-- -- -- -- -- --
Total
company 721 8 - 729 - 729
Joint ventures:
Timeshare - - - - - -
Fractional (21) 40 - 19 - 19
Residential (35) 35 - - - -
--- -- -- -- -- --
Total joint
ventures (56) 75 - 19 - 19
--- -- -- -- -- --
Total
contract
sales,
including
joint
ventures $665 $83 $- $748 $- $748
==== === == ==== == ====
-----------
Gain /
(Loss) on
Notes Sold
-----------
Gain / loss on
notes sold $37 $- $- $37 $(37) $-
=== == == === ==== ==
**Denotes non-GAAP financial measures. Please see pages A-27 and A-28
for additional information about our reasons for providing these
alternative financial measures and the limitations on their use.
***If we had adopted ASU Nos. 2009-16 and 2009-17 on the first day of
fiscal year 2009, the full year 2009 impact to the company would have
been a $1 million decline in adjusted pretax income, which includes
the $76 million increase to Timeshare segment results shown in the
table above more than offset by the $77 million increase in interest
expense.
A-26
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measures
In our press release and schedules, and on the 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 press release schedules reconcile the most directly comparable GAAP measure to each non-GAAP measure that we refer to (identified by a double asterisk on the preceding pages). 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.
Adjusted Measures That Exclude Certain Charges, Costs, and Other Expenses. Management evaluates non-GAAP measures that exclude the impact of Timeshare strategy - impairment charges incurred in the 2009 third quarter, restructuring costs and other charges incurred in the 2008 fourth quarter through the 2009 fourth quarter, deferred compensation charges and credits incurred in the 2008 first quarter through the 2009 fourth quarter, and certain tax expenses incurred in the 2008 second quarter through the 2009 third quarter, because those non-GAAP measures allow for period-over-period comparisons of our on-going core operations before material charges. These non-GAAP measures also facilitate management’s comparison of results from our on-going operations before material charges with results from other lodging companies.
Timeshare Strategy - Impairment Charges. In response to the difficult business conditions that the Timeshare segment’s timeshare, luxury residential, and luxury fractional real estate development businesses continued to experience, we evaluated our entire Timeshare portfolio in the 2009 third quarter. In order to adjust the business strategy to reflect current market conditions at that time, on September 22, 2009, we approved plans for our Timeshare segment to take the following actions: (1) for our luxury residential projects, reduce prices, convert certain proposed projects to other uses, sell some undeveloped land, and not pursue further Marriott-funded residential development projects; (2) reduce prices for existing luxury fractional units; (3) continue short-term promotions for our U.S. timeshare business and defer the introduction of new projects and development phases; and (4) for our European timeshare and fractional resorts, continue promotional pricing and marketing incentives and not pursue further development. As a result of these decisions, we recorded third quarter 2009 pretax charges totaling $752 million in our Consolidated Statements of Income ($502 million after-tax), including $614 million of pretax charges impacting operating income under the “Timeshare strategy-impairment charges” caption, and $138 million of pretax charges impacting non-operating income under the “Timeshare strategy-impairment charges (non-operating)” caption.
Restructuring Costs and Other Charges. During the latter part of 2008 and particularly the fourth quarter, we experienced a significant decline in demand for hotel rooms both domestically and internationally due, in part, to the failures and near failures of several large financial service companies and the dramatic downturn in the economy. Our capital intensive Timeshare business was also hurt by the downturn in market conditions and particularly, the significant deterioration in the credit markets, which resulted in our decision not to complete a note sale in the fourth quarter of 2008 (although we did complete a note sale in the first quarter of 2009). These declines resulted in reduced management and franchise fees, cancellation of development projects, reduced timeshare contract sales, contract cancellation allowances, and charges and reserves associated with expected fundings, loans, Timeshare inventory, accounts receivable, contract cancellation allowances, valuation of Timeshare residual interests, hedge ineffectiveness, and asset impairments. We responded by implementing various cost saving measures, beginning in the fourth quarter of 2008 and which continued in 2009, and resulted in first quarter 2009 restructuring costs of $2 million, second quarter 2009 restructuring costs of $33 million, and third quarter 2009 restructuring costs of $9 million, and 2009 fourth quarter restructuring costs of $7 million that were directly related to the downturn. We also incurred other first quarter 2009, second quarter 2009 and fourth quarter 2009 charges totaling $127 million, $24 million, and $12 million respectively, as well as $1 million in net other credits in the 2009 third quarter, that were directly related to the downturn, including asset impairment charges, accounts receivable and guarantee charges, reserves associated with loans, reversal of the liability related to expected fundings, Timeshare contract cancellation allowances, and charges related to the valuation of Timeshare residual interests.
Deferred Compensation Expenses. We evaluate adjusted general, administrative, and other expenses excluding the impact of deferred compensation expenses because this non-GAAP measure allows for period-over-period comparisons of our on-going core general, administrative, other expenses before material charges or credits associated with a program that we have modified. As we implemented changes to our deferred compensation plan in 2009, we expect to have significantly reduced expense impact and volatility in 2010 and beyond. We also utilize this metric for forecasting and modeling purposes.
Certain Tax Expenses. Certain tax expenses included $26 million in the 2009 first quarter, $17 million in the 2009 second quarter, $13 million in the 2009 third quarter and $24 million in the 2008 second quarter of non-cash charges primarily related to the treatment of funds received from certain foreign subsidiaries, an issue we are contesting with the Internal Revenue Service ("IRS"). Additionally, certain tax expenses in the 2008 second quarter also reflected $12 million of tax expense due primarily to prior years' tax adjustments, including a settlement with the IRS that resulted in a lower than expected refund of taxes associated with a 1995 leasing transaction. Certain tax expenses in the 2008 third quarter reflected $29 million of tax expense primarily related to an unfavorable court decision involving a tax planning transaction associated with a 1994 sale transaction. Certain tax expenses in the 2008 fourth quarter include income tax expense totaling $7 million primarily due to prior years’ tax adjustments.
A-27
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measures
(cont.)
Earnings Before Interest, Taxes, Depreciation and Amortization. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) reflects earnings excluding the impact of interest expense, tax expense, depreciation and amortization. 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. 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. The tax positions of companies can also 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. EBITDA also 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. Management also evaluates adjusted EBITDA which excludes: (1) Timeshare strategy - impairment charges of $752 million incurred in the 2009 third quarter; (2) the 2009 fourth quarter restructuring costs and other charges totaling $19 million; (3) the 2009 third quarter restructuring costs and other charges totaling $8 million; (4) the 2009 second quarter restructuring costs and other charges totaling $57 million; (5) the 2009 first quarter restructuring costs and other charges totaling $129 million; (6) the 2008 fourth quarter restructuring costs and other charges totaling $192 million; and (7) the first through third quarters of 2008 impact of the synthetic fuel business. Management excludes the restructuring costs and other charges incurred in the 2009 first through fourth quarters and in the 2008 fourth quarter and the timeshare strategy-impairment charges recorded in the 2009 third quarter for the reasons noted above under “Measures That Exclude Certain Charges, Costs, and Other Expenses.” Fourth quarter 2008 restructuring costs and other charges included $55 million of restructuring costs and $137 million of other charges, including charges and reserves associated with expected fundings, loans, Timeshare inventory, accounts receivable, contract cancellation allowances, valuation of Timeshare residual interests, hedge ineffectiveness, and asset impairments. Management also excludes the first through third quarters of 2008 impact of the synthetic fuel business, which was discontinued in 2007 and which did not relate to our core lodging business, to allow for period-over-period comparisons of our on-going core lodging operations and facilitate management’s comparison of our results with those of other lodging companies.
Adjusted Measures that Exclude the Impact of New Accounting Standards or Reflect Their Early Adoption. As of the first day of fiscal year 2010, we adopted Accounting Standards Update ("ASU") No. 2009-16 "Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets" (formerly known as FAS No. 166, "Accounting for Transfers of Financial Assets-an amendment of FASB Statement No. 140") and ASU No. 2009-17 "Consolidations (Topic 810); Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities" (formerly known as FAS No. 167, “Amendments to FASB Interpretation No. 46(R),” which requires consolidating previously securitized pools of Timeshare notes and will impact the ongoing accounting for those notes. Management evaluates non-GAAP measures that exclude the impact of these standards in future years or include the impact of these standards as if we had adopted them early in order to better perform year-over-year comparisons on a comparable basis.
Total Debt Net of Cash (or "Net Debt") and Adjusted Total Debt Net of Cash. Total debt net of cash reflects total debt less cash and cash equivalents. Management considers total debt net of cash to be a more accurate indicator of the net debt that must be repaid or refinanced at maturity (as it gives consideration to cash resources available to retire a portion of the debt when due). In addition, Management considers adjusted total debt net of cash, which excludes the debt that will be consolidated as a result of adopting ASU Nos. 2009-16 and 2009-17, because that debt is non-recourse to the Company and is not supported by the Company's cash flows. Management believes that these financial measures provide a clearer picture of the future demands on cash to repay debt and uses these measures in making decisions regarding its borrowing capacity and future refinancing needs. Management also evaluates adjusted total debt net of cash for the reason stated in the previous paragraph.
A-28
SOURCE Marriott International, Inc.
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