Marriott International Reports Record Earnings Per
Share From Continuing Operations of $2.47 for 2004, up 27 Percent From
2003
-
2004 incentive management fees increased 30 percent,
driven by 10.5 percent (11.5 percent using actual exchange rates) worldwide
company-operated revenue per available room (REVPAR) growth and a 130 basis
point improvement in worldwide property house profit margins;
-
A record $650 million was returned to shareholders through
the repurchase of 14 million shares of stock;
-
Debt, net of cash, declined 55 percent ending the year
at $555 million, the lowest level since the company was spun-off in 1998;
-
Over 27,000 hotel rooms and timeshare units were opened
in 2004, including 2,700 Ramada International rooms added during the year.
Approximately 40 percent of room additions were conversions from competitor
brands. At year-end, over 55,000 rooms worldwide were under construction,
awaiting conversion, or approved for development;
-
Adjusted Earnings Before Interest Expense, Taxes, Depreciation
and Amortization (Adjusted EBITDA) exceeded $1.1 billion in 2004, a 21
percent increase over 2003;
-
North American systemwide REVPAR gained 10.7 percent
in the fourth quarter, which drove strong fee growth and resulted in fourth
quarter diluted earnings per share from continuing operations of $0.79,
an increase of 14 percent over 2003 (an increase of 32 percent excluding
one-time insurance proceeds received in the 2003 fourth quarter);
-
We believe our market share will continue to increase
in 2005, as we add 25,000 to 30,000 new rooms to our worldwide system.
Further, we estimate North American REVPAR growth for 2005 of 7 to 9 percent
and 1.5 to 2 percentage points improvement in house profit margins.
WASHINGTON, Feb. 8, 2005 - Marriott International, Inc.
(NYSE: MAR) today reported record diluted earnings per share from continuing
operations (EPS) of $2.47 in 2004, up 27 percent from 2003. Income
from continuing operations, net of taxes, for the year was $594 million,
a 25 percent increase over 2003 levels.
In 2003 the company recorded the receipt of a $36
million insurance
payment for lost revenue related to the loss of
the World Trade Center hotel on September 11, 2001. Adjusting for
this one-time payment the company's 2004 EPS increased 34 percent.
J.W. Marriott, Jr., chairman and chief executive
officer of Marriott International, said, "We are delighted to report all-time
record earnings for 2004. After three years of unprecedented challenges,
the travel industry is booming, especially in the United States and Asia,
as people travel again for business and pleasure. Demand was solid
in all customer segments during 2004. Strong corporate demand increased
midweek transient REVPAR in most markets and brands. For our full-service
hotels, group business strengthened substantially. Compared to 2003,
meeting planners booked more meetings and booked them at higher rates.
Further, attendance for meetings that took place in 2004 was better than
expected. Across the board, average daily rates strengthened significantly,
especially late in 2004. Strong rate increases were reported in New
York, Washington D.C. and Florida in the fourth quarter.
"Just as our industry is enjoying a new revitalization,
so is our company. We opened 166 new hotels (27,000 rooms) during
2004 in exciting locations like China, Belgium and Italy. Marriott
brands are still the best and most preferred in the industry. As
we continue to reinvent and refresh our designs and services, and offer
exciting new hotels and experiences, our brands just get better and better.
Our brands are more attuned than ever to our guests' needs, from Fairfield
Inn to The Ritz-Carlton and Bulgari, our newest brand, and are getting
rave reviews.
"Marriott's business model continues to leverage
our strong brands, which attracts owners and franchisees and allows us
to grow and improve our products while minimizing our capital investments.
As a result, even during the recent economic decline we were able to add
new units and improve our brands, as well as return cash to shareholders
through an aggressive share repurchase program.
"Although 2004 was a spectacular year for the company,
we are even more optimistic and enthusiastic about the future. We
currently have more than 55,000 rooms in our development pipeline and expect
to add 25,000 to 30,000 hotel rooms and timeshare units to our system in
2005. With increasing room rate momentum, outstanding service quality,
continuing product enhancements, global expansion and strong interest in
our timeshare business, 2005 should be another record earnings year," continued
Mr. Marriott.
In fiscal 2004 (52 week period from January 3, 2004
to December 31, 2004), REVPAR for the company's 2,116 comparable worldwide
systemwide properties increased by 9.6 percent (10.7 percent using actual
exchange rates). During 2004, hotel occupancy rates recovered and
room rates improved in many markets. Hotels in the Middle East, Asia
and the Mid-Atlantic and Northeast regions of the U.S. reported substantially
improved room rates and occupancies during the year.
Systemwide North American REVPAR increased by 8.5
percent in 2004, driven by a 3.8 percent increase in average daily rate
and a 3.1 percentage point increase in occupancy to over 71 percent.
REVPAR at the company's comparable systemwide North American full-service
hotels (including Marriott Hotels & Resorts, The Ritz-Carlton, and
Renaissance Hotels & Resorts) increased by 8.4 percent during the year.
North American systemwide REVPAR for the company's comparable select-service
and extended-stay brands (including Courtyard, Fairfield Inn, Residence
Inn, TownePlace Suites, and SpringHill Suites) posted a REVPAR increase
of 8.5 percent. North American systemwide Courtyard REVPAR increased
10 percent during 2004. The ongoing Courtyard reinvention effort, a program
to renovate and upgrade older Courtyard hotels, contributed to the brand's
higher REVPAR. In addition, strengthening midweek corporate demand
and cross-sells from the company's full-service hotels also improved occupancy
and room rates.
Including 22 Ramada properties (2,658 rooms), we
added 166 hotels and timeshare resorts (27,038 rooms) to our worldwide
lodging portfolio during 2004, while 42 properties (7,335 rooms), primarily
first generation Fairfield Inns, exited the system. Excluding the Ramada
properties, hotels converted from competitor or unbranded hotels accounted
for approximately 34 percent of gross hotel room additions. In addition,
excluding Ramada, over 40 percent of the rooms added during the year were
valuable full service hotels. In the fourth quarter we sold
our Ramada International business, which was comprised of 210 franchised
Ramada hotels (28,081 rooms). At year-end, the company's lodging
group encompassed 2,632 hotels and timeshare resorts (482,186 rooms).
MARRIOTT REVENUES totaled $10 billion in 2004,
a 12 percent increase from 2003. Base management and franchise fees
increased 15 percent to $731 million reflecting growth in units and REVPAR.
Largely due to the strength in room rates, North American company-operated
hotel house profit margins increased 80 basis points. With strong
property level profits, incentive management fee revenue increased 30 percent
to $142 million. In 2004, 31 percent of our worldwide managed hotels
paid incentive fees.
In 2004, property revenue booked through all internet
sources increased 37 percent over the prior year to $2.1 billion, with
most of this revenue booked on Marriott.com, the company's proprietary
web site, which increased 41 percent to $1.8 billion. Cross sell
revenue, reflecting business referred from our fully occupied properties
to our other hotels, rose 27 percent in 2004.
Timeshare interval sales and services revenues increased
9 percent in 2004. Contract sales for Marriott's timeshare business,
including results at the company's three timeshare joint ventures, increased
31 percent, reflecting strong demand at resorts in Newport Beach, Lake
Tahoe, Aruba and Maui as well as the new resorts in Hilton Head and Las
Vegas. Reported revenue growth trailed contract sales growth because
of new projects that have not yet reached financial reportability thresholds
and a higher proportion of sales in joint venture projects, which are reported
only as part of equity income. Across the Marriott Vacation Club
International timeshare brand, the average price per interval sold increased
6 percent to over $24,000.
LODGING OPERATING INCOME increased 20 percent
from 2003 levels to $575 million, largely as a result of robust leisure
and business demand, strong REVPAR, unit expansion, favorable property
level house profit margins and strong timeshare operating profits, partially
offset by higher general and administrative expenses. Marriott's
general and administrative expenses increased 16 percent to $607 million,
driven by increased overhead costs associated with the company's development
effort including charges related to timeshare joint ventures, a $13 million
write-off of an investment in a management contract as a result of the
impending Courtyard joint venture transaction, increased costs for compliance
with the Sarbanes-Oxley Act and lower foreign exchange gains. Marriott's
2003 operating income included the receipt of a $36 million insurance payment
for lost revenue related to the loss of the Marriott World Trade Center
Hotel on September 11, 2001.
SYNTHETIC FUEL. Net income generated
from the synthetic fuel joint ventures increased $11 million to $107 million
and earnings per share increased 13 percent to $0.44. Excluding the
impact of our synthetic fuel operations, our tax rate for continuing operations
was 35.2 percent in 2004.
In mid 2004, Marriott was informed that IRS field
auditors had issued a notice of proposed adjustment challenging the placed-in-service
date of three of the four synthetic fuel facilities owned by the company's
joint ventures. The matter has not yet been resolved. However,
Marriott strongly believes that all the facilities meet the placed-in-service
requirements.
GAINS AND OTHER INCOME (excluding $28 million
for synthetic fuel) in 2004 totaled $136 million. The company's ongoing
timeshare mortgage note sale program generated gains totaling $64 million,
flat with 2003 levels. Gains also included $50 million related to
the sale of real estate and our interest in an international joint venture,
a $17 million gain on the disposition of Marriott's interest in the Two
Flags joint venture and the Ramada International business, and a $5 million
gain associated with the repayment of principal and interest of a mezzanine
loan to a joint venture. Prior year gains included a $21 million gain associated
with the sale of three international joint ventures and $21 million of
gains on the sale of property.
INTEREST INCOME increased $17 million in 2004
primarily driven by $9 million of interest earned on the note receivable
in connection with the disposition of Marriott's interest in the Two Flags
joint venture and $7 million of interest income recognized as a result
of a loan repayment. The net provision for loan losses was a positive
$8 million as a result of the reversal of reserves no longer deemed necessary.
With record earnings, loan repayments and asset sales,
Marriott generated significant cash flow in 2004. Debt, net of cash,
totaled $555 million at year end, the lowest level since the company was
spun off in 1998. At the end of 2004, total debt was $1,325 million
and cash balances totaled $770 million compared to $1,455 million in debt
and $229 million of cash at the end of 2003. The company also repurchased
14 million shares of common stock in 2004 at a cost of $650 million.
The remaining share repurchase authorization, as of year-end, totaled approximately
18.6 million shares.
FOURTH QUARTER RESULTS
Fourth quarter diluted earnings per share from continuing
operations totaled $0.79 in 2004, a 14 percent increase from the 2003 quarter.
Income from continuing operations, net of taxes, for the quarter was $188
million compared to $170 million a year ago. Adjusting for the $36
million insurance payment received in the 2003 fourth quarter, income from
continuing operations was up 28 percent from $147 million to $188 million
and diluted EPS was up 32 percent.
Our fourth quarter EPS of $0.79 was $0.05 to $0.07
per share better than our prior guidance. As a result of stronger
than anticipated REVPAR, the upside was driven by $0.02 better owned and
leased results (including $5 million of pretax profit which was reported
in earlier quarters as management fees), and $0.01 better in joint venture
earnings. In addition, higher gains, interest income and timeshare
results, offset in part by increases in general and administrative expenses,
produced another $0.02 per share in earnings upside.
We added 39 hotels and timeshare resorts (5,868 rooms),
including 3 Ramada International properties (319 rooms) to our worldwide
lodging portfolio during the fourth quarter of 2004, while 11 properties
(1,990 rooms) exited the system. We also sold our Ramada International
business during the quarter.
Outside North America, comparable systemwide REVPAR
for the last four months of 2004 increased 8.7 percent in constant dollars
(13.9 percent using actual exchange rates) as a result of stronger occupancies
and rates in most regions and particularly strong demand in China, the
Caribbean and Mexico.
MARRIOTT REVENUES totaled $3.1 billion in
the 2004 fourth quarter, a 10 percent increase from 2003. Base and
franchise fees rose 12 percent. Incentive management fees increased
53 percent as REVPAR and property level house profit margins surged.
Fourth quarter incentive management fees included $7 million of fees paid
in the quarter but attributed to performance in earlier periods.
Comparable company-operated house profit margins during the fourth quarter
increased 180 basis points in North America and 120 basis points in international
markets.
Marriott's timeshare business reported 16 percent
higher contract sales in the 2004 fourth quarter. Contract sales
were particularly strong at timeshare resorts in Aruba and Lake Tahoe and
at our new resorts in Hilton Head and Las Vegas.
LODGING OPERATING INCOME for the fourth quarter
of 2004 was $146 million, down from $161 million a year ago. Marriott's
2003 fourth quarter lodging operating income benefited from a $36 million
insurance payment for lost revenue related to the loss of the Marriott
World Trade Center Hotel on September 11, 2001. Adjusting for this
item, lodging operating income increased 17 percent in the 2004 fourth
quarter. In addition, Marriott's 2004 fourth quarter lodging operating
income reflected a $13 million charge associated with the Courtyard joint
venture transaction.
SYNTHETIC FUEL operations contributed approximately
$0.14 per share of after-tax earnings during the 2004 fourth quarter and
$0.12 in the year ago quarter. Excluding the impact of our synthetic
fuel operations, our tax rate for continuing operations was 34.3 percent
in the fourth quarter of 2004.
GAINS AND OTHER INCOME totaled $69 million
and included a $36 million gain from the fourth quarter timeshare mortgage
note sale, a $5 million gain associated with the repayment of a note, and
$28 million of gains primarily related to the sale of real estate, our
interest in an international joint venture and the disposition of the Ramada
International business. Prior year gains included a $32 million gain from
the timeshare mortgage note sale, a $12 million gain associated with the
sale of two international joint ventures and an $8 million gain on the
sale of real estate.
INTEREST INCOME totaled $48 million during
the quarter and included $7 million of interest income recognized as part
of a loan repayment.
EQUITY IN (LOSSES)/EARNINGS - OTHER reflects
Marriott's share of income or losses from joint venture investments (excluding
our synthetic fuel business). The improved REVPAR and profitability
of our joint ventures and the reduction of our allocated losses associated
with the Courtyard joint ventures generated strong results during the quarter.
Partially offsetting these improvements was the disposition of the Two
Flags joint venture which reduced Marriott's equity income in the 2004
fourth quarter from year ago levels.
OUTLOOK
2004 was a major turning point for our lodging business.
The strengthening economy has increased demand for hotels, driving room
rates and property profitability higher. Lodging Econometrics expects
U.S. lodging supply to grow only 1.5 percent in 2005. We believe
our market share will continue to increase as we open 25,000 to 30,000
new rooms in 2005. Based on these dynamics, we estimate North American
REVPAR growth for 2005 of 7 to 9 percent and 1.5 to 2 percentage points
improvement in house profit margins. Under these assumptions, base
management, franchise, and incentive management fees should total $990
million to $1,010 million, an increase of 13 to 16 percent.
We expect timeshare interval sales and services revenues
will increase approximately 12 to 14 percent in 2005. Timeshare direct
expenses are expected to increase at a slower pace, approximately 10 to
12 percent.
General, administrative and other expenses are expected
to decline approximately seven percent to $560 million to $565 million
from $607 million representing an increase of roughly $0.11 to $0.13 of
earnings per share. The comparison reflects the impact of the write-off
of the investment in management contract for the Courtyard joint venture
in 2004, lower litigation expenses and improved administrative efficiencies
(excluding the impact of first time option expensing and costs associated
with the company's new bedding incentive program).
Given these above items, we estimate that lodging
operating income will total $795 million to $815 million in 2005, an increase
of 38 to 42 percent.
Lodging gains and other income are expected to total
$75 million to $85 million in 2005 (including approximately $60 million
in timeshare mortgage note sale gains), compared to $136 million in 2004,
a decline of roughly $0.14 to $0.17 of earnings per share. Our guidance
for 2005 includes roughly $0.42 to $0.46 of after-tax earnings per share
from our synthetic fuel business and assumes the placed-in-service issue
is resolved favorably by March 31, 2005, although there can be no assurance
of resolution by that date.
Finally, we have been successful in reducing our
outstanding real estate loan portfolio in 2004 and expect additional reductions
in 2005. As a result of this reduction, we anticipate net interest
will decline to an expense of $10 million to $20 million in 2005 from a
benefit of $55 million in 2004, a decline of roughly $0.18 to $0.20 of
earnings per share. We anticipate reinvesting the cash in attractive
investment opportunities, including share repurchases.
Based on these assumptions, we estimate that earnings
per share in 2005 will total $2.73 to $2.83 (excluding the impact of first
time option expensing and costs associated with the company's new bedding
incentive program).
Over the past two years, Marriott significantly revised
its executive compensation plans to reduce grants of new stock options
in favor of restricted stock. As a result, only 1.8 million options
were granted in 2004 and the costs of the restricted stock grants are expensed
as they vest. While not included in the estimates above, with the
implementation of the Financial Accounting Standard Board's (FASB) Statement
No. 123R requiring the expensing of options, we estimate that our third
and fourth quarter 2005 pre-tax earnings will be reduced by a total of
$20 million and fully diluted earnings per share will be reduced by $0.05.
In 2006, options are expected to reduce pre-tax earnings by $25 million
to $30 million or $0.06 to $0.07 per share for the full year.
Early in 2005, Marriott announced the roll out of
a new bedding program that will add new luxurious bedding to 628,000 beds
at approximately 2,400 hotels worldwide, across eight brands. The
bedding will include plusher mattresses, softer sheets, more pillows and
a new, fresh, white look. The company conducted extensive consumer
research on the new bedding for all its brands. More than four out
of five of the 1,000 guests surveyed preferred the new bedding and said
they liked the stylish design and appearance, calling it fresh, inviting
and comfortable. They also said the new bedding would increase their
preference for a Marriott brand. To accelerate the rollout of the new bedding,
Marriott is offering owners and franchisees a one-time incentive to ensure
that guests can enjoy the comfort and luxury of the new bedding by year-end
2005. While not included in the earnings estimates above, Marriott
estimates the one-time cost of owner incentives to be $40 million to $45
million pre-tax, impacting our results primarily in the second quarter
of 2005.
Assuming North American REVPAR growth of 6 to 8 percent
in the first quarter of 2005, we currently estimate first quarter earnings
per share of $0.52 to $0.54, including roughly $0.06 of earnings from synthetic
fuel.
We expect investment spending in 2005 to include
approximately $50 million for maintenance capital spending, $200 million
for capital expenditures or property acquisitions, $80 million to $90 million
for timeshare inventory, $250 million in new mezzanine financing and mortgage
loans for hotels developed by our owners and franchisees and approximately
$175 million in equity investments, including investments in timeshare
joint ventures.
In late 2004, the FASB issued new accounting rules
for the timeshare industry to take effect in our 2006 fiscal year.
The new rules will change the timing of our recognition of revenues and
selling and product costs, reacquired inventory and maintenance fees for
unsold inventory. This is an accounting change and will not impact
the attractive cash flow characteristics of the business. We have
reviewed the new guidelines and estimate that the one-time impact to 2006
first quarter pretax earnings will be a charge of approximately $150 million,
with no material impact to earnings thereafter.
MARRIOTT INTERNATIONAL, INC.
Financial Highlights
(in millions, except per share amounts)
16 Weeks Ended 16 Weeks Ended
December 31, 2004 January 2, 2004
Percent
Synthetic
Synthetic Inc/
Lodging Fuel Total Lodging Fuel Total
(Dec)
------- ------ ----- ------- ------ ----- -----
REVENUES
Base management
fees $133 $-
$133 $122 $- $122
9
Franchise fees
89 - 89
76 - 76
17
Incentive management
fees 52 -
52 34 -
34 53
Owned, leased,
corporate
housing and
other(1) 239
- 239 219
- 219 9
Timeshare interval
sales
and services(2)
349 - 349
378 - 378 (8)
Cost reimbursements(3)
2,156 - 2,156 1,959
- 1,959 10
Synthetic fuel
- 123 123
- 78 78 58
------- ----- ----- ------ ----- -----
Total Revenues 3,018
123 3,141 2,788 78 2,866
10
OPERATING COSTS
AND
EXPENSES
Owned, leased and
corporate
housing -
direct(4)
201 - 201
158 - 158 27
Timeshare - direct
293 - 293
323 - 323 (9)
Reimbursed costs
2,156 - 2,156 1,959
- 1,959 10
General, administrative
and other(5)
222 - 222
187 - 187 19
Synthetic fuel
- 160 160
- 78 78 *
------- ----- ----- ------ ----- -----
Total Expenses 2,872
160 3,032 2,627 78 2,705
12
------- ----- ----- ------ ----- -----
OPERATING INCOME
(LOSS) $146 $(37) 109
$161 $- 161 (32)
======= ==== ======
====
Gains and other
income(6)
69
52 33
Interest expense
(30)
(33) (9)
Interest income
48
51 (6)
Provision for loan
losses
8
- *
Equity in
earnings/(losses)
- Synthetic fuel(7) -
10 *
- Other (8)
(5)
(16) 69
-----
-----
INCOME FROM CONTINUING
OPERATIONS
BEFORE INCOME TAXES AND
MINORITY INTEREST
199
225 (12)
Provision for income
taxes
(21)
(29) 28
-----
-----
INCOME FROM CONTINUING
OPERATIONS
BEFORE
MINORITY INTEREST
178
196 (9)
Minority interest
10
(26) *
-----
-----
INCOME FROM CONTINUING
OPERATIONS
188
170 11
DISCONTINUED OPERATIONS
Loss from Senior
Living
Services,
net of tax
-
(3) *
Income from Distribution
Services,
net of tax
1
2 (50)
-----
-----
NET INCOME
$189
$169 12
=====
=====
EARNINGS PER SHARE
- Basic
Earnings from
continuing operations
$0.84
$0.74 14
Loss from discontinued
operations
-
(0.01) *
-----
-----
Earnings per share
$0.84
$0.73 15
=====
=====
EARNINGS PER SHARE
-
Diluted
Earnings from
continuing operations
$0.79
$0.69 14
Income from
discontinued
operations
-
- -
-----
-----
Earnings per share
$0.79
$0.69 14
=====
=====
Basic Shares
224.5
231.4
Diluted Shares
239.1
245.8
* Calculated
percentage is not meaningful.
(1) -- Owned, leased,
corporate housing and other revenue includes revenue
from the properties we own or lease, revenue from our ExecuStay business,
land rent income and other revenue.
(2) -- Timeshare
interval sales and services includes total timeshare
revenue except for base fees, cost reimbursements, note sale gains, and
joint venture earnings (losses).
(3) -- Cost reimbursements
include reimbursements from lodging properties
for Marriott funded operating expenses.
(4) -- Owned, leased
and corporate housing -- direct expenses include
operating expenses related to our owned or leased hotels, including lease
payments, pre-opening expenses and depreciation, plus expenses related
to our ExecuStay business.
(5) -- General,
administrative and other expenses include the overhead
costs allocated to our lodging business segments (including ExecuStay and
timeshare), our unallocated corporate overhead costs and general expenses.
(6) -- Gains and
other income includes gains on the sale of real estate,
note sales, and our interests in joint ventures, income related to our
cost method joint ventures, and beginning March 27, 2004, includes the
earn-out payments we made to the previous owner of the synthetic fuel operations
and earn-out payments we received from our synthetic fuel joint venture
partner.
(7) -- Equity in
earnings (losses) -- Synthetic fuel includes our share of
the equity in earnings of the synthetic fuel joint ventures and the earn-out
we received from our synthetic fuel joint venture partner from November
7, 2003 through March 25, 2004. Beginning March 26, 2004, the synthetic
fuel operations were consolidated as a result of adopting FIN 46(R), "Consolidation
of Variable Interest Entities."
(8) -- Equity in
(losses) earnings -- Other includes our equity in
(losses) earnings of unconsolidated joint ventures.
MARRIOTT INTERNATIONAL, INC.
Financial Highlights
(in millions, except per share amounts)
52 Weeks Ended 52 Weeks Ended
December 31, 2004 January 2, 2004
Percent
Synthetic
Synthetic Inc/
Lodging Fuel Total Lodging Fuel Total
(Dec)
------- ------ ----- ------- ------ ----- -----
REVENUES
Base management
fees $435 $-
$435 $388 $- $388
12
Franchise fees
296 - 296
245 - 245 21
Incentive management
fees 142 -
142 109 -
109 30
Owned, leased,
corporate
housing and
other(1) 730
- 730 633
- 633 15
Timeshare interval
sales
and services(2)
1,247 - 1,247 1,145
- 1,145 9
Cost reimbursements(3)
6,928 - 6,928 6,192
- 6,192 12
Synthetic fuel
- 321 321
- 302 302 6
------- ----- ----- ------ ----- -----
Total Revenues 9,778
321 10,099 8,712 302 9,014 12
OPERATING COSTS
AND
EXPENSES
Owned, leased and
corporate
housing -
direct(4)
629 - 629
505 - 505 25
Timeshare - direct
1,039 - 1,039 1,011
- 1,011 3
Reimbursed costs
6,928 - 6,928 6,192
- 6,192 12
General, administrative
and other(5)
607 - 607
523 - 523 16
Synthetic fuel
- 419 419
- 406 406 3
------- ----- ----- ------ ----- -----
Total Expenses 9,203
419 9,622 8,231 406 8,637
11
------- ----- ----- ------ ----- -----
OPERATING INCOME
(LOSS) $575 $(98) 477
$481 $(104) 377 27
======= ==== ======
====
Gains and other
income(6)
164
106 55
Interest expense
(99)
(110)(10)
Interest income
146
129 13
Provision for loan
losses
8
(7) *
Equity in (losses)
earnings
- Synthetic fuel(7)
(28)
10 *
- Other(8)
(14)
(17) 18
-----
-----
INCOME FROM CONTINUING
OPERATIONS
BEFORE INCOME TAXES AND
MINORITY INTEREST
654
488 34
(Provision) benefit
for
income taxes
(100)
43 *
-----
-----
INCOME FROM CONTINUING
OPERATIONS
BEFORE
MINORITY INTEREST
554
531 4
Minority interest
40
(55) *
-----
-----
INCOME FROM CONTINUING
OPERATIONS
594
476 25
DISCONTINUED OPERATIONS
Income from Senior
Living
Services,
net of tax
-
26 *
Income from Distribution
Services,
net of tax
2
- *
-----
-----
NET INCOME
$596
$502 19
=====
=====
EARNINGS PER SHARE
- Basic
Earnings from
continuing operations
$2.62
$2.05 28
Earnings from
discontinued
operations
0.01
0.11 (91)
-----
-----
Earnings per share
$2.63
$2.16 22
=====
=====
EARNINGS PER SHARE
-
Diluted
Earnings from
continuing operations
$2.47
$1.94 27
Earnings from
discontinued
operations
0.01
0.11 (91)
-----
-----
Earnings per share
$2.48
$2.05 21
=====
=====
Basic Shares
226.6
232.5
Diluted Shares
240.5
245.4
* Calculated
percentage is not meaningful.
(1) -- Owned, leased,
corporate housing and other revenue includes revenue
from the properties we own or lease, revenue from our ExecuStay business,
land rent income and other revenue.
(2) -- Timeshare
interval sales and services includes total timeshare
revenue except for base fees, cost reimbursements, note sale gains, and
joint venture earnings (losses).
(3) -- Cost reimbursements
include reimbursements from lodging properties
for Marriott funded operating expenses.
(4) -- Owned, leased
and corporate housing -- direct expenses include
operating expenses related to our owned or leased hotels, including lease
payments, pre-opening expenses and depreciation, plus expenses related
to our ExecuStay business.
(5) -- General,
administrative and other expenses include the overhead
costs allocated to our lodging business segments (including ExecuStay and
timeshare), our unallocated corporate overhead costs and general expenses.
(6) -- Gains and
other income includes gains on the sale of real estate,
note sales, and our interests in joint ventures, income related to our
cost method joint ventures, and beginning March 27, 2004, includes the
earn-out payments we made to the previous owner of the synthetic fuel operations
and earn-out payments we received from our synthetic fuel joint venture
partner.
(7) -- Equity in
earnings (losses) -- Synthetic fuel includes our share of
the equity in earnings of the synthetic fuel joint ventures and the earn-out
we received from our synthetic fuel joint venture partner from November
7, 2003 through March 25, 2004. Beginning March 26, 2004, the synthetic
fuel operations were consolidated as a result of adopting FIN 46(R), "Consolidation
of Variable Interest Entities."
(8) -- Equity in
(losses) earnings -- Other includes our equity in
(losses) earnings of unconsolidated joint ventures.
Marriott International, Inc.
Business Segments
($ in millions)
Sixteen Weeks Ended
Fifty-Two Weeks Ended
-------------------
---------------------
December January
December January
31, 2004 2, 2004
31, 2004 2, 2004
--------- --------
--------- --------
REVENUES
REVENUES
Full-Service
$2,099 $1,899 Full-Service
$6,611 $5,876
Select-Service
330 301 Select-Service
1,118 1,000
Extended-Stay
170 165 Extended-Stay
547 557
Timeshare
419 423 Timeshare
1,502 1,279
------ ------
------ ------
Total
lodging(1) 3,018 2,788
Total lodging(1) 9,778 8,712
Synthetic fuel
123 78 Synthetic fuel
321 302
------ ------
------ ------
Total
$3,141 $2,866 Total
$10,099 $9,014
====== ======
====== ======
INCOME FROM CONTINUING
OPERATIONS INCOME FROM CONTINUING OPERATIONS
Full-Service
$134 $148 Full-Service
$426 $407
Select-Service
36 18 Select-Service
140 99
Extended-Stay
18 10 Extended-Stay
66 47
Timeshare
68 64 Timeshare
203 149
------ ------
------ ------
Total
lodging
Total lodging
financial
financial
results(1)
256 240 results(1)
835 702
Synthetic fuel
Synthetic fuel
(after-tax)
34 30 (after-tax)
107 96
Unallocated
Unallocated
corporate
expenses (47) (43)
corporate expenses (138) (132)
Interest income,
Interest income,
provision
for loan
provision for loan
losses and
interest
losses and interest
expense
26 18 expense
55 12
Income taxes
Income taxes
(excluding
(excluding
Synthetic
fuel) (81)
(75) Synthetic fuel) (265)
(202)
------ ------
------ ------
Total
$188 $170 Total
$594 $476
====== ======
====== ======
(1) We consider
lodging revenues and lodging financial results to be
meaningful indicators of our performance because they measure our growth
in profitability as a lodging company and enable investors to compare the
sales and results of our lodging operations to those of other lodging companies.
MARRIOTT
INTERNATIONAL, INC.
Total Lodging Products(1)
Number of Properties Number of Rooms/Suites
Dec. 31, vs. Jan. 2, Dec. 31, vs. Jan. 2,
Brand
2004 2004
2004 2004
----------------------------
--------------------------------------------
Full-Service Lodging
Marriott Hotels & Resorts
490 +18 179,159
+5,185
The Ritz-Carlton
57 +1 18,611
+264
Renaissance Hotels & Resorts 133
+7 47,459 +1,845
Bulgari Hotel & Resort
1 +1
58 +58
Ramada International
4 (188) 727
(25,423)
Select-Service
Lodging
Courtyard
656 +40 94,003
+5,789
Fairfield Inn
523 (1) 48,710
(1,496)
SpringHill Suites
125 +15 14,550
+1,868
Extended-Stay Lodging
Residence Inn
463 +14 55,059
+1,745
TownePlace Suites
115 +4 11,710
+329
Marriott Executive Apartments 14
+1 2,471
+149
Timeshare(2)
Marriott Vacation Club
International
43 +2 8,832
+1,210
Horizons by Marriott Vacation
Club International
2 -
328 +72
The Ritz-Carlton Club
4 -
261 +27
Marriott Grand Residence Club 2
- 248
-
--------------- ------------------
Total
2,632 (86) 482,186
(8,378)
=============== ==================
(1) Total Lodging
Products excludes the 2,504 corporate housing rental
units.
(2) Includes products
in active sales which are not ready for occupancy.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
North American Comparable Company-Operated Properties(1)
Sixteen Weeks Ended December 31, 2004 and January 2, 2004
REVPAR Occupancy Average Daily
Rate
------ --------- ------------------
vs. vs.
vs.
Brand
2004 2003 2004 2003
2004 2003
Marriott
Hotels & Resorts $102.76 9.2% 68.8% 2.1%
pts. $149.46 5.9%
The Ritz-Carlton(2)
$172.85 10.1% 65.6% 1.8% pts. $263.64 7.1%
Renaissance
Hotels &
Resorts
$93.76 13.2% 67.2% 4.7% pts. $139.60 5.2%
Composite
- Full-Service $109.04 9.9% 68.2% 2.5%
pts. $159.97 5.9%
Residence
Inn
$77.48 12.3% 77.2% 4.7% pts. $100.31 5.4%
Courtyard
$65.84 11.8% 66.9% 2.4% pts. $98.36 7.8%
TownePlace
Suites $47.23
11.0% 70.9% 2.4% pts. $66.64 7.2%
Composite
- Select-Service
&
Extended-Stay
$67.05 12.0% 69.8% 3.1% pts. $96.08 7.0%
Composite
- All
$94.17 10.4% 68.7% 2.7% pts. $137.01 6.1%
North American Comparable Systemwide Properties(1)
Sixteen Weeks Ended December 31, 2004 and January 2, 2004
REVPAR Occupancy Average Daily
Rate
------ --------- ------------------
vs. vs.
vs.
Brand
2004 2003 2004 2003
2004 2003
Marriott
Hotels & Resorts $93.50 9.4% 67.2%
2.6% pts. $139.08 5.2%
The Ritz-Carlton(2)
$172.85 10.1% 65.6% 1.8% pts. $263.64 7.1%
Renaissance
Hotels &
Resorts
$88.82 12.5% 67.4% 4.5% pts. $131.83 5.0%
Composite
- Full-Service $98.89 9.9% 67.1%
2.8% pts. $147.33 5.3%
Residence
Inn
$74.30 10.6% 76.2% 4.1% pts. $97.52 4.7%
Courtyard
$67.20 12.1% 68.4% 3.2% pts. $98.26 6.8%
Fairfield
Inn
$43.40 11.2% 63.7% 2.9% pts. $68.16 6.0%
TownePlace
Suites $47.85
12.5% 72.1% 4.0% pts. $66.33 6.3%
SpringHill
Suites $58.28
14.0% 69.7% 5.0% pts. $83.62 5.8%
Composite
- Select-Service
&
Extended-Stay
$61.42 11.6% 69.4% 3.5% pts. $88.49 6.0%
Composite
- All
$77.87 10.7% 68.4% 3.2% pts. $113.84 5.5%
(1) Composite -
All statistics include properties for the Marriott Hotels
& Resorts, Renaissance Hotels & Resorts, The Ritz-Carlton, Courtyard,
Residence Inn, TownePlace Suites, Fairfield Inn, and SpringHill Suites
brands. Full-Service composite statistics include properties for
Marriott Hotels & Resorts, Renaissance Hotels & Resorts and The
Ritz-Carlton brands. Select-Service and Extended-Stay composite statistics
include properties for the Courtyard, Residence Inn, TownePlace Suites,
Fairfield Inn and SpringHill Suites brands.
(2) Statistics
for The Ritz-Carlton are for September through December.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
North American Comparable Company-Operated Properties(1)
Fifty-Two Weeks Ended December 31, 2004 and January 2, 2004
REVPAR Occupancy Average Daily
Rate
------ --------- ------------------
vs. vs.
vs.
Brand
2004 2003 2004 2003
2004 2003
Marriott
Hotels & Resorts $103.46 7.4% 72.0% 2.8%
pts. $143.70 3.3%
The Ritz-Carlton(2)
$177.96 12.9% 69.2% 4.3% pts. $257.16 5.9%
Renaissance
Hotels &
Resorts
$94.30 8.4% 69.6% 4.3% pts. $135.54 1.7%
Composite
- Full-Service $109.62 8.4% 71.3% 3.2%
pts. $153.66 3.6%
Residence
Inn
$78.59 7.4% 79.0% 2.7% pts. $99.49
3.8%
Courtyard
$67.66 9.6% 70.3% 3.2% pts. $96.30
4.6%
TownePlace
Suites $48.71
9.5% 74.1% 3.7% pts. $65.77 4.0%
Composite
- Select-Service
&
Extended-Stay
$68.66 9.1% 72.6% 3.1% pts. $94.52
4.4%
Total North
America $95.04
8.6% 71.8% 3.2% pts. $132.36 3.8%
North American Comparable Systemwide Properties(1)
Fifty-Two Weeks Ended December 31, 2004 and January 2, 2004
REVPAR Occupancy Average Daily
Rate
------ --------- ------------------
Brand
vs. vs.
vs.
2004 2003 2004 2003
2004 2003
Marriott
Hotels & Resorts $94.77 7.6% 70.1%
2.8% pts. $135.15 3.3%
The Ritz-Carlton(2)
$177.96 12.9% 69.2% 4.3% pts. $257.16 5.9%
Renaissance
Hotels &
Resorts
$88.92 8.9% 69.1% 4.2% pts. $128.67 2.3%
Composite
- Full-Service $99.82 8.4% 69.9%
3.1% pts. $142.80 3.6%
Residence
Inn
$76.52 7.1% 78.6% 2.9% pts. $97.33
3.2%
Courtyard
$69.35 10.0% 71.4% 3.3% pts. $97.18 4.9%
Fairfield
Inn
$45.29 6.2% 66.6% 1.9% pts. $67.97
3.1%
TownePlace
Suites $48.81
9.0% 74.9% 4.3% pts. $65.18 2.7%
SpringHill
Suites $60.04
10.6% 71.5% 4.2% pts. $83.97 4.2%
Composite
- Select-Service
&
Extended-Stay
$63.42 8.5% 72.2% 3.0% pts. $87.89
4.0%
Composite
- All
$79.35 8.5% 71.2% 3.1% pts. $111.49 3.8%
(1) Composite -
All statistics include properties for the Marriott Hotels
& Resorts, Renaissance Hotels & Resorts, The Ritz-Carlton, Courtyard,
Residence Inn, TownePlace Suites, Fairfield Inn, and SpringHill Suites
brands. Full-Service composite statistics include properties for
Marriott Hotels & Resorts, Renaissance Hotels & Resorts and The
Ritz-Carlton brands. Select-Service and Extended-Stay composite statistics
include properties for the Courtyard, Residence Inn, TownePlace Suites,
Fairfield Inn and SpringHill Suites brands.
(2) Statistics
for The Ritz-Carlton are for January through December.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
(Constant $)
International Comparable Company-Operated Properties (1),(2)
Four Months Ended December 31, 2004 and December 31, 2003
REVPAR Occupancy Average Daily
Rate
------ --------- ------------------
vs. vs.
vs.
Region/Brand
2004 2003 2004 2003
2004 2003
Caribbean &
Latin
America
$92.54 13.5% 67.7% 3.7% pts. $136.59
7.3%
Continental Europe
$100.22 5.5% 73.2% 1.4% pts. $136.83
3.4%
United Kingdom
$140.77 4.8% 78.2% -2.5% pts. $179.90
8.2%
Middle East &
Africa $64.10 19.8% 71.1%
2.1% pts. $90.12 16.2%
Asia Pacific(3)
$80.87 12.6% 76.7% 0.2% pts. $105.47 12.4%
The Ritz-Carlton
International
$151.01 13.3% 70.9% 2.8% pts. $213.11
8.8%
Total International(4)
$99.46 10.3% 73.7% 1.6% pts. $134.92
7.9%
Worldwide(5)
$95.59 10.4% 70.1% 2.4% pts. $136.42
6.6%
International Comparable Systemwide Properties (1),(2)
Four Months Ended December 31, 2004 and December 31, 2003
REVPAR Occupancy Average Daily
Rate
------ --------- ------------------
vs. vs.
vs.
Region/Brand
2004 2003 2004 2003
2004 2003
Caribbean &
Latin
America
$86.22 13.1% 66.9% 3.5% pts. $128.91
7.1%
Continental Europe
$97.57 5.8% 71.7% 1.6% pts. $136.08
3.4%
United Kingdom
$112.50 2.9% 77.3% -0.5% pts. $145.48
3.5%
Middle East &
Africa $64.10 19.8% 71.1%
2.1% pts. $90.12 16.2%
Asia Pacific(3)
$83.39 11.2% 77.9% 0.7% pts. $107.09 10.2%
The Ritz-Carlton
International
$151.01 13.3% 70.9% 2.8% pts. $213.11
8.8%
Total International(4)
$98.48 8.7% 74.1% 1.6% pts. $132.99
6.4%
Worldwide(5)
$81.85 10.2% 69.5% 2.9% pts. $117.76
5.6%
(1) International
financial results are reported on a period basis, while
international statistics are reported on a monthly basis.
(2) Statistics
are in constant dollars and include results for September
through December.
(3) Excludes Hawaii.
(4) Includes Hawaii.
(5) Worldwide includes
international statistics for September through
December and North American statistics for the sixteen weeks ending December
31, 2004 and January 2, 2004.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
(Constant $)
International Comparable Company-Operated Properties (1),(2)
Twelve Months Ended December 31, 2004 and December 31, 2003
REVPAR Occupancy Average Daily
Rate
------ --------- ------------------
vs. vs.
vs.
Region/Brand
2004 2003 2004 2003
2004 2003
Caribbean &
Latin
America
$98.91 14.9% 71.2% 4.3% pts. $138.98
8.0%
Continental Europe
$92.38 6.8% 70.8% 2.8% pts. $130.49
2.6%
United Kingdom
$133.37 10.7% 76.9% 2.0% pts. $173.48
7.8%
Middle East &
Africa $61.10 28.1% 73.2%
8.1% pts. $83.44 13.8%
Asia Pacific(3)
$72.98 27.0% 75.5% 9.8% pts. $96.67
10.5%
The Ritz-Carlton
International
$145.68 21.3% 71.0% 10.3% pts. $205.06 3.8%
Total International(4)
$94.75 16.6% 73.3% 6.6% pts. $129.35
6.0%
Worldwide(5)
$94.97 10.5% 72.2% 4.0% pts. $131.58
4.3%
International Comparable Systemwide Properties (1),(2)
Twelve Months Ended December 31, 2004 and December 31, 2003
REVPAR Occupancy Average Daily
Rate
------ --------- ------------------
vs. vs.
vs.
Region/Brand
2004 2003 2004 2003
2004 2003
Caribbean &
Latin
America
$91.76 14.7% 69.7% 4.3% pts. $131.61
7.7%
Continental Europe
$89.91 8.0% 68.8% 3.7% pts. $130.74
2.2%
United Kingdom
$106.01 6.4% 74.4% 2.3% pts. $142.47
3.1%
Middle East &
Africa $61.10 28.1% 73.2%
8.1% pts. $83.44 13.8%
Asia Pacific(3)
$76.11 22.6% 76.4% 9.0% pts. $99.61
8.2%
The Ritz-Carlton
International
$145.68 21.3% 71.0% 10.3% pts. $205.06 3.8%
Total International(4)
$93.61 14.2% 72.9% 6.0% pts. $128.44
4.8%
Worldwide(5)
$81.93 9.6% 71.5% 3.6% pts. $114.61
4.1%
(1) International
financial results are reported on a period basis, while
international statistics are reported on a monthly basis.
(2) Statistics
are in constant dollars and include results for January
through December.
(3) Excludes Hawaii.
(4) Includes Hawaii.
(5) Worldwide includes
international statistics for the twelve months
ending December 31, 2004 and December 31, 2003 and North American statistics
for the fifty-two weeks ending December 31, 2004 and January 2, 2004.
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation (in millions, except per share
amounts)
We consider
income from continuing operations excluding the impact of the synthetic
fuel operations, earnings per share excluding the impact of the synthetic
fuel operations, and the effective tax rate excluding the impact of the
synthetic fuel operations, to be meaningful performance indicators because
they reflect that portion of our income from continuing operations, earnings
per share, and the effective tax rate that relates to our lodging business
and enables investors to compare the results of our operations and effective
tax rate to that of other lodging companies. However, income from continuing
operations excluding the impact of the synthetic fuel operations, earnings
per share excluding the impact of the synthetic fuel operations, and the
effective tax rate excluding the impact of the synthetic fuel operations
are all non-GAAP financial measures, and are not alternatives to income
from continuing operations, earnings per share, effective tax rate or any
other operating measure prescribed by United States generally accepted
accounting principles.
The reconciliation
of income from continuing operations, earnings per share, and the effective
income tax rate as reported to income from continuing operations excluding
the impact of the synthetic fuel operations, earnings per share excluding
the impact of the synthetic fuel operations, and the effective income tax
rate excluding the impact of the synthetic fuel operations is as follows:
Fourth Quarter 2004
Continuing Operations
Income from Synthetic Excluding
Continuing Fuel
Synthetic
Operations Impact
Fuel
----------- --------- ---------
Operating Income
(loss)
$109 $(37)
$146
Gains and
other income
69 -
69
Interest
income, provision for loan
losses
and interest expense
26 -
26
Equity in
(losses)
(5) -
(5)
----------- --------- ---------
Pre-tax income
(loss)
199 (37)
236
----------- --------- ---------
Tax (provision)/benefit
(72)
9 (81)
Tax credits
51 51
-
----------- --------- ---------
Total tax
(provision)/benefit
(21) 60
(81)
----------- --------- ---------
Income from
continuing operations
before
minority interest
178 23
155
Minority interest
10 11
(1)
----------- --------- ---------
Income from
continuing operations
$188 $34
$154
=========== ========= =========
Diluted shares
239.1 239.1
239.1
Earnings per
share - Diluted
$0.79 $0.14
$0.65
Tax rate
10.4%
34.3%
Fourth Quarter 2003
Continuing Operations
Income from Synthetic Excluding
Continuing Fuel
Synthetic
Operations Impact
Fuel
----------- --------- ---------
Operating Income
(loss)
$161 $-
$161
Gains and
other income
52 -
52
Interest
income, provision for loan
losses
and interest expense
18 -
18
Equity in
(losses)
(6) 10
(16)
----------- --------- ---------
Pre-tax income
(loss)
225 10
215
----------- --------- ---------
Tax (provision)/benefit
(78) (3)
(75)
Tax credits
49 49
-
----------- --------- ---------
Total tax
(provision)/benefit
(29) 46
(75)
----------- --------- ---------
Income from
continuing operations
before
minority interest
196 56
140
Minority interest
(26) (26)
-
----------- --------- ---------
Income from
continuing operations
$170 $30
$140
=========== ========= =========
Diluted shares
245.8 245.8
245.8
Earnings per
share - Diluted
$0.69 $0.12
$0.57
Tax rate
12.9%
34.5%
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
(in millions, except per share amounts)
We consider
income from continuing operations excluding the impact of the synthetic
fuel operations, earnings per share excluding the impact of the synthetic
fuel operations, and the effective tax rate excluding the impact of the
synthetic fuel operations, to be meaningful performance indicators because
they reflect that portion of our income from continuing operations, earnings
per share, and the effective tax rate that relates to our lodging business
and enables investors to compare the results of our operations and effective
tax rate to that of other lodging companies. However, income from continuing
operations excluding the impact of the synthetic fuel operations, earnings
per share excluding the impact of the synthetic fuel operations, and the
effective tax rate excluding the impact of the synthetic fuel operations
are all non-GAAP financial measures, and are not alternatives to income
from continuing operations, earnings per share, effective tax rate or any
other operating measure prescribed by United States generally accepted
accounting principles.
The reconciliation
of income from continuing operations, earnings per share, and the effective
income tax rate as reported to income from continuing operations excluding
the impact of the synthetic fuel operations, earnings per share excluding
the impact of the synthetic fuel operations, and the effective income tax
rate excluding the impact of the synthetic fuel operations is as follows:
Fiscal Year 2004
Continuing Operations
Income from Synthetic Excluding
Continuing Fuel
Synthetic
Operations Impact
Fuel
----------- --------- ---------
Operating Income
(loss)
$477 $(98)
$575
Gains and
other income
164 28
136
Interest
income, provision for loan
losses
and interest expense
55 -
55
Equity in
(losses)
(42) (28)
(14)
----------- --------- ---------
Pre-tax income
(loss)
654 (98)
752
----------- --------- ---------
Tax (provision)/benefit
(244) 21
(265)
Tax credits
144 144
-
----------- --------- ---------
Total tax
(provision)/benefit
(100) 165
(265)
----------- --------- ---------
Income from
continuing operations
before
minority interest
554 67
487
Minority interest
40 40
-
----------- --------- ---------
Income from
continuing operations
$594 $107
$487
=========== ========= =========
Diluted shares
240.5 240.5
240.5
Earnings per
share - Diluted
$2.47 $0.44
$2.03
Tax rate
15.3%
35.2%
Fiscal Year 2003
Continuing Operations
Income from Synthetic Excluding
Continuing Fuel
Synthetic
Operations Impact
Fuel
----------- --------- ---------
Operating Income
(loss)
$377 $(104)
$481
Gains and
other income
106
- 106
Interest
income, provision for loan
losses
and interest expense
12
- 12
Equity in
(losses)
(7) 10
(17)
----------- --------- ---------
Pre-tax income
(loss)
488 (94)
582
----------- --------- ---------
Tax (provision)/benefit
(168) 34
(202)
Tax credits
211 211
-
----------- --------- ---------
Total tax
(provision)/benefit
43 245
(202)
----------- --------- ---------
Income from
continuing operations
before
minority interest
531 151
380
Minority interest
(55) (55)
-
----------- --------- ---------
Income from
continuing operations
$476 $96
$380
=========== ========= =========
Diluted shares
245.4 245.4
245.4
Earnings per
share - Diluted
$1.94 $0.39
$1.55
Tax rate
-8.8%
34.6%
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
($ in millions)
We
consider lodging operating income to be a meaningful indicator of our performance
because it measures our growth in profitability as a lodging company and
enables investors to compare the operating income related to our lodging
segments to the operating income of other lodging companies. However,
lodging operating income is a non-GAAP financial measure and is not an
alternative to operating income or any other operating measure prescribed
by United States generally accepted accounting principles.
We
consider lodging operating income excluding insurance proceeds to be a
meaningful indicator of performance because it allows for additional comparisons
relative to ongoing operations. The receipt of a $36 million insurance
payment in 2003, for lost revenue related to the loss of the World Trade
Center hotel on September 11, 2001, represented a material and non-recurring
source of revenue. Accordingly, management believes such revenue
should be excluded in order to be able to compare the past and current
recurring results. However, lodging operating income, excluding insurance
proceeds is a non-GAAP financial measure and is not an alternative to operating
income or any other operating measure prescribed by United States generally
accepted accounting principles.
The
reconciliation of operating income to lodging operating income is as follows:
Fiscal Year 2003
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
Operating
income as reported
$58 $68 $90
$161 $377
Add back: Synthetic fuel
operating loss
59 42
3 - 104
------- ------- ------- ------- -----
Lodging operating income
$117 $110 $93
$161 $481
World Trade Center insurance proceeds
- - -
(36) (36)
------- ------- ------- ------- -----
Lodging operating income,
excluding World Trade Center
insurance proceeds
$117 $110 $93
$125 $445
======= ======= ======= ======= =====
Fiscal Year 2004
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
Operating
income as reported $151
$118 $99 $109 $477
Add back: Synthetic fuel
operating loss
- 30
31 37 98
------- ------- ------- ------- -----
Lodging operating income
$151 $148 $130 $146
$575
======= ======= ======= ======= =====
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
(in millions, except per share amounts)
We consider
income from continuing operations excluding insurance proceeds and earnings
per share excluding insurance proceeds to be meaningful performance indicators
because they allow for additional comparisons relative to our ongoing operations.
The receipt of a $36 million insurance payment in 2003, for lost revenue
related to the loss of the World Trade Center hotel (WTC) on September
11, 2001, represented a material and non-recurring source of revenue. Accordingly,
management believes such revenue should be excluded in order to be able
to compare the past and current recurring results. However, income from
continuing operations excluding insurance proceeds and earnings per share
excluding insurance proceeds are non-GAAP financial measures, and are not
alternatives to income from continuing operations and earnings per share
or any other operating measure prescribed by United States generally accepted
accounting principles.
The reconciliation
of income from continuing operations and earnings per share to income from
continuing operations excluding insurance proceeds and earnings per share
excluding insurance proceeds is as follows:
Fourth Quarter 2004
Fourth Quarter 2003
Continuing Operations Continuing
Operations
------------------------------- ------------------------------
Income from WTC Excluding Income from
WTC Excluding
Continuing Insurance Insurance Continuing Insurance Insurance
Operations Proceeds Proceeds Operations Proceeds
Proceeds
----------- --------- --------- ----------- -------- ---------
Pre-tax income
(loss)
$199 -
$199 $225
$36 $189
Tax (provision)/
benefit (21)
- (21)
(29) (13) (16)
Minority
interest 10
- 10
(26) -
(26)
----------- --------- --------- ----------- -------- ---------
Income from
continuing
operations
$188 $-
$188 $170
$23 $147
=========== ========= ========= =========== ======== =========
Diluted shares
239.1 239.1 239.1
245.8 245.8 245.8
Earnings
per
share
- Diluted
$0.79 -
$0.79 $0.69 $0.09
$0.60
Fiscal Year 2004
Fiscal Year 2003
Continuing Operations Continuing
Operations
------------------------------- ------------------------------
Income from WTC Excluding Income from
WTC Excluding
Continuing Insurance Insurance Continuing Insurance Insurance
Operations Proceeds Proceeds Operations Proceeds
Proceeds
----------- --------- --------- ----------- -------- ---------
Pre-tax income
(loss)
$654 -
$654 $488
$36 $452
Tax (provision)/
benefit
(100) -
(100) 43
(13) 56
Minority
interest 40
- 40
(55) -
(55)
----------- --------- --------- ----------- -------- ---------
Income from
continuing
operations
$594 $-
$594 $476
$23 $453
=========== ========= ========= =========== ======== =========
Diluted shares
240.5 240.5 240.5
245.4 245.4 245.4
Earnings
per
share
- Diluted
$2.47 -
$2.47 $1.94 $0.09
$1.85
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure
EBITDA
(in millions)
We consider
earnings before interest, taxes, depreciation and amortization, adjusted
to eliminate the impact of our synthetic fuel segment and non-recurring
items (Adjusted 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, and reflects our belief that the synthetic fuel
segment will no longer have a material impact on our business after the
Section 29 synthetic fuel tax credits expire at the end of 2007. In addition,
the receipt of a $36 million insurance payment in 2003 for lost revenue
related to the loss of the World Trade Center hotel on September 11, 2001,
represented a material and non-recurring source of revenue. Accordingly,
management believes such revenue should be excluded in order to be able
to compare the past and current recurring results. However, EBITDA and
Adjusted EBITDA are non-GAAP financial measures, and are not alternatives
to net income, financial results, cash flow from operations, or any other
operating measure prescribed by United States generally accepted accounting
principles. Additionally, our calculation of EBITDA and Adjusted EBITDA
may be different from the calculations used by other companies and as a
result comparability may be limited.
Fiscal Year 2004
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
Net income
$114 $160 $133 $189
$596
Interest expense
22 24 23
30 99
Tax provision continuing
operations 18 33
28 21 100
Tax provision discontinued
operations - -
1 - 1
Depreciation
32 29 32
40 133
Amortization
7 8
7 11 33
Interest expense
from unconsolidated
joint ventures
10 11
9 15 45
Depreciation and
amortization from
unconsolidated
joint ventures 13
9 13 17
52
------- ------- ------- ------- -----
EBITDA
$216 $274 $246 $323
$1,059
Synthetic fuel adjustment
28 5
(6) 21 48
Pre-tax loss (gain)
discontinued operations
(1) - (1)
(1) (3)
------- ------- ------- ------- -----
Adjusted EBITDA
$243 $279 $239 $343
$1,104
======= ======= ======= ======= =====
Increase over 2003
Adjusted EBITDA 31%
20% 22% 15%
21%
The following items
make up the
synfuel adjustment:
Pre-tax synthetic
fuel operating
losses
$- $21 $12
$37 $70
Pre-tax synthetic
fuel equity losses 28
- -
- 28
Pre-tax minority
interest - synthetic
fuel
- (14) (15)
(11) (40)
Synthetic fuel
depreciation
(2) (3) (5)
(10)
------- ------- ------- ------- -----
EBITDA adjustment
for
synthetic
fuel
$28 $5 $(6)
$21 $48
======= ======= ======= ======= =====
Fiscal Year 2003
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
Net income
$116 $125 $92
$169 $502
Interest expense
26 25 26
33 110
Tax provision (benefit)
-
- continuing
operations
(40) (16) (16)
29 (43)
Tax provision (benefit)
-
-
discontinued
operations
19 (1) -
(2) 16
Tax benefit included
in minority
interest
(1)
- - 49
45 94
Depreciation
29 27 30
46 132
Amortization
5 7
7 9 28
Interest expense
from unconsolidated
joint ventures
10 12 13
16 51
Depreciation and
amortization from
unconsolidated
joint ventures 11
12 13 17
53
------- ------- ------- ------- -----
EBITDA
$176 $191 $214 $362
$943
Non-recurring pre-tax
insurance
proceeds
- -
- (36) (36)
Synthetic fuel
adjustment
57 39 (19)
(30) 47
Pre-tax loss (gain)
discontinued operations
(48) 2
1 3 (42)
------- ------- ------- ------- -----
Adjusted EBITDA
$185 $232 $196 $299
$912
======= ======= ======= ======= =====
The following items
make up the
synfuel adjustment:
Pre-tax synthetic
fuel operating
losses
$59 $42 $3
$- $104 Pre-tax synthetic fuel equity (earnings)
- -
- (10) (10)
Pre-tax minority
interest - synthetic
fuel
- - (20)
(19) (39)
Synthetic fuel
depreciation
(2) (3) (2)
(1) (8)
------- ------- ------- ------- -----
EBITDA adjustment
for synthetic fuel $57 $39
$(19) $(30) $47
======= ======= ======= ======= =====
(1) 2003 minority
interest tax benefits have been reclassified in order to
make the presentation comparable. |
This press release contains "forward-looking statements"
within the meaning of federal securities laws, including REVPAR, profit
margin and earning trends; statements concerning the number of lodging
properties we expect to add in future years; our expected investment spending;
our anticipated results from synthetic fuel operations and the anticipated
favorable resolution of the IRS's placed-in-service challenge; and similar
statements concerning anticipated future events and expectations that are
not historical facts.
|
