WASHINGTON, April 21, 2005 - Marriott International, Inc. (NYSE: MAR)
today reported diluted earnings per share (EPS) of $0.61 in the first quarter
of 2005, up 30 percent from the 2004 first quarter. Net income for the
quarter was $145 million, a 27 percent increase over the year ago quarter.
Synthetic fuel operations contributed approximately $18 million ($0.08
per share) in the first quarter versus $11 million ($0.04 per share) in
the year ago quarter.
-
Incentive management fees increased 52 percent, driven by 9.2 percent (9.9
percent using actual exchange rates) growth in worldwide company - operated
revenue per available room (REVPAR) and a 130 basis point improvement in
worldwide company-operated property level house profit margins;
-
The company continued its aggressive share repurchase program with the
repurchase of 5.1 million shares of stock for $328 million. Since 2000,
Marriott has repurchased over 54 million shares for $2.2 billion;
-
Over 4,500 hotel rooms and timeshare units were added during the first
quarter, bringing the global system to 2,648 hotels and timeshare resorts
(484,904 rooms). Over 35 percent of room additions were conversions from
competitor brands. At quarter-end, over 55,000 rooms worldwide were under
construction, awaiting conversion, or approved for development;
-
The company expects 2005 North American systemwide REVPAR to increase 8
to 10 percent and property level house profit margins to increase 1.5 to
2.0 percentage points.
|
J.W. Marriott, Jr., chairman and chief executive officer of Marriott
International, said, "The favorable demand momentum that we saw building
in 2004 has continued into 2005. Demand for our hotels is strong in most
markets around the world. Comparable REVPAR for our worldwide company-operated
properties increased 9.2 percent during the quarter, driven primarily by
rate increases. Comparable REVPAR for systemwide hotels in North America
grew 8.4 percent and reflected strength across our portfolio of brands.
Our Florida resorts continued to draw leisure and group meeting travelers;
our hotels in New Orleans made strong comebacks as they benefited from
group conventions; and New York, Miami and Orlando attracted international
visitors as the combination of low airfares and the weak dollar contributed
to strong international travel to the U.S. Outside the U.S., resorts in
the Caribbean, Mexico and the Middle East were popular with vacationers
from around the world.
"Demand for luxury lodging surged during the quarter. Worldwide, Ritz-
Carlton's comparable hotel REVPAR increased 16.7 percent over the prior
year on a constant dollar basis, while comparable company-operated REVPAR
for the JW Marriott brand increased 15.6 percent. Marriott's newest luxury
product, Bulgari Hotels & Resorts has been very popular with leisure
travelers. We currently have one property open in Milan and a second Bulgari
Hotels & Resorts is scheduled to open in Bali later this year.
"Owners and franchisees continue to add hotels to our system around
the world. With strengthening fundamentals and strong brands, satisfaction
scores for owners and franchisees have never been better. Over 35 percent
of the rooms added during the first quarter were conversions from other
brands. Our pipeline of hotels under development or awaiting conversion
remains strong with 350 hotels and more than 55,000 rooms. Over 40 percent
of our pipeline is comprised of valuable full-service hotels and, for the
first time, the majority of the rooms in our full-service development pipeline
are located outside the U.S.
"At Marriott, we recognize "success is never final" and we continue
to look for ways to improve our products. In 2005, Marriott will roll out
the highest quality bedding at every price point across 2,400 hotels worldwide.
We have also introduced new guest rooms at Marriott Hotels & Resorts,
Renaissance Hotels & Resorts and Residence Inn reflecting progressive
designs and style.
"With the strong results we have seen to date, we are well on our way
to another record earnings year for 2005," said Mr. Marriott.
In the first fiscal quarter (12 week period from January 1, 2005 to
March 25, 2005), REVPAR for the company's 2,314 comparable worldwide systemwide
properties increased by 8.8 percent (9.3 percent using actual exchange
rates). Systemwide North American REVPAR increased by 8.4 percent in the
first quarter of 2005, driven by a 6.7 percent increase in average daily
rate and a 1.1 percentage point increase in occupancy to 69 percent. REVPAR
at the company's comparable systemwide North American full-service hotels
(including Marriott Hotels & Resorts, JW Marriott Hotels & Resorts,
The Ritz-Carlton, and Renaissance Hotels & Resorts) increased by 7.5
percent during the quarter, primarily from higher rates, which were up
6.3 percent. 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 9.5 percent, driven by a 7.3 percent increase in average
daily rate and a 1.4 percentage point increase in occupancy to nearly 70
percent.
Strong demand from corporate and leisure travelers as well as a 13 percent
increase in cross-sells from the company's full-service hotels improved
REVPAR across our limited service brands. The Courtyard and Residence Inn
brands also benefited from the ongoing reinvention efforts to renovate
and upgrade older Courtyard and Residence Inn hotels. Comparable Courtyard
hotels that have completed renovation and stabilized reported first quarter
REVPAR 31 percent higher than similar unrenovated properties. Renovated
Courtyard and Residence Inn properties also experience higher customer
satisfaction and guest intent to return.
We added 27 hotels and timeshare units (4,525 rooms) to our worldwide
lodging portfolio during the first quarter, while 11 properties (1,466
rooms), primarily first generation Fairfield Inns, exited the system. At
quarter end, the Company's lodging group encompassed 2,648 hotels and timeshare
resorts (484,904 rooms). In the fourth quarter of 2004, we sold our Ramada
International business, which was comprised of 210 franchised Ramada hotels
(28,081 rooms) in international markets.
MARRIOTT REVENUES totaled $2.5 billion in the first quarter of 2005,
a 13 percent increase from 2004. Base management and franchise fees increased
13 percent to $181 million reflecting growth in units and REVPAR. With
most of the REVPAR improvement coming from higher room rates, North American
company- operated hotel house profit margins improved 100 basis points
and international company-operated hotel house profit margins increased
230 basis points. Strong property level profits drove incentive management
fee revenue up 52 percent to $50 million, including $8 million for incentive
fees related to prior periods, but received and recognized in the first
quarter. Direct costs associated with our owned and leased properties included
nearly $6 million of severance payments and other costs associated with
the temporary closing for renovation of the Shelbourne Hotel in Dublin,
Ireland, which will reopen as the Shelbourne Renaissance in 2006. The severance
costs will be recouped in future periods.
Property level revenue booked through Marriott.com totaled $596 million
during the first quarter, an increase of more than 40 percent over the
prior year. An additional $43 million of revenues was generated by Marriott.com
visitors who made reservations on a dedicated customer care toll-free number.
Now in its ninth year, Marriott.com continues to attract customers worldwide
with hotel-specific online photo tours, easy access to Marriott Rewards
exclusive offers and account balances, 24-hour customer support, and our
newly launched At Your Service program featuring personalized pre-arrival
emails with destination-specific maps, weather, and restaurant information.
Revenue from timeshare interval sales and services increased 9 percent
during the first quarter of 2005, largely due to higher financially reportable
development revenue. Timeshare contract sales, including sales made by
our timeshare joint venture projects, declined 5 percent. Lower contract
sales during the quarter reflected limited available inventory at Ritz-Carlton
destinations as well as very strong Ritz-Carlton contract sales in the
prior year. A new Ritz-Carlton fractional and whole ownership property
in San Francisco is expected to begin sales later in 2005.
LODGING OPERATING INCOME surged 34 percent in the first quarter to $203
million, largely due to higher base management and franchise fees, much
higher incentive management fees, as well as higher operating income from
our timeshare business. Marriott's general and administrative expenses
decreased 6 percent to $124 million, primarily as a result of lower litigation
expenses.
SYNTHETIC FUEL. Net income generated from our synthetic fuel joint ventures
increased $7 million to $18 million and earnings per share rose to $0.08
from $0.04 in the prior year. The favorable results compared to the prior
year were due to an increase in the proportion of the tax credits generated
by the joint ventures that were allocated to us, as well as higher production
levels. Excluding the impact of our synthetic fuel operations, our tax
rate was 34.5 percent in the first quarter of 2005.
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/(EXPENSE) (excluding synthetic fuel) included
gains on the sale of real estate which totaled $4 million in each of the
2005 and 2004 first quarters.
EQUITY IN EARNINGS/(LOSSES) declined $3 million largely due to the sale
of our interest in the Two Flags joint venture in 2004, partially offset
by improved results from our Courtyard joint venture.
INTEREST EXPENSE was up $2 million in the first quarter of 2005 due
to higher interest associated with the Marriott Rewards program. Interest
income increased $1 million primarily due to an increase in our cash balance,
partially offset by the impact of loans repaid to us in 2004. The provision
for loan losses in the quarter totaled $11 million for one property.
During the 2005 first quarter, cash proceeds from the sale of land totaled
$15 million. We owned only six hotels at the end of the first quarter.
We continue to generate significant cash flow from our operations. Adjusted
earnings before interest expense, taxes, depreciation and amortization
(Adjusted EBITDA) rose 14 percent to $276 million. Total debt at the end
of the first quarter of 2005 was $1,324 million and our cash balance totaled
$377 million, compared to $1,325 million in debt and $770 million of cash
at the end of 2004. The company repurchased 5.1 million shares of common
stock in the first quarter of 2005 at a cost of $328 million and has repurchased
another 1.5 million shares to date in the second quarter at a cost of $96
million. The current remaining share repurchase authorization totals approximately
12.2 million shares.
OUTLOOK
Based on continued strong lodging demand, we have adjusted our estimate
of 2005 systemwide North American REVPAR growth to 8 to 10 percent, primarily
driven by rate. We continue to expect house profit margins to improve 150
to 200 basis points in 2005. In addition, given our pipeline of over 55,000
rooms, we plan to open 25,000 to 30,000 new rooms in 2005. Under these
assumptions, base management, franchise, and incentive management fees
should total $1,015 million to $1,035 million in 2005, an increase of 16
to 19 percent.
We expect timeshare contract sales to grow 5 to 7 percent during 2005
and timeshare interval sales and services revenues, net of direct expenses,
to increase approximately 23 to 27 percent for the year. We also plan to
complete timeshare mortgage note sale transactions in the second and fourth
quarters.
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. 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. Marriott estimates
the one- time cost of the bedding incentive to be roughly $40 million pre-tax,
impacting our results primarily in the second quarter of 2005 by roughly
$0.11 of earnings per share. In total, we believe that general, administrative
and other expenses, including the bedding incentive program, will total
$600 million to $610 million for the full year 2005 compared to $607 million
in 2004. General, administrative and other expenses in 2004 reflected the
impact of the write-off of the investment in the management contract for
the Courtyard joint venture. Our 2005 estimate reflects lower litigation
expenses and improved administrative efficiencies, offset substantially
by the costs of the company's bedding incentive program.
Given these above items, we estimate that lodging operating income will
total $790 million to $820 million in 2005 (including roughly $40 million
of pre-tax cost of the bedding incentives), an increase of 37 to 43 percent.
Our guidance for 2005 includes roughly $0.42 to $0.46 of after tax earnings
per share from our synthetic fuel business. Our partner in our synthetic
fuel joint venture has the right, until April 30, 2005, to return its ownership
interest in the three facilities that are subject to the IRS's placed-in-service
challenge to us, effective as of April 1, 2005. Our partner has not yet
exercised that right. In the event our partner exercises this right, we
will have the flexibility to reduce production and/or sell an interest
to another party, which could have a modest impact on our synthetic fuel
EPS forecast.
As a result of the improved economy and hotel profitability, we expect
to see a continued reduction in our real estate loan portfolio. We anticipate
reinvesting the cash in attractive investment opportunities, including
share repurchases. With the reduction in our loan balance, we anticipate
net interest (interest expense, interest income and provision for loan
losses) will decline to an expense of roughly $20 million to $30 million
in 2005 from income of $55 million in 2004, a decline of $0.21 to $0.23
of earnings per share.
In total, we are raising our full year 2005 estimate of EPS to a range
of $2.80 to $2.90 (including the estimated $0.11 of earnings per share
impact of costs associated with the company's new bedding incentives and
$0.42 to $0.46 of earnings per share benefit from our synthetic fuel business).
In the second quarter 2005, the company anticipates North American systemwide
REVPAR growth of 9 to 11 percent with a 1.5 to 2.0 percentage point improvement
in house profit margins. The company also plans to complete a timeshare
mortgage note sale transaction in the second quarter. Under these assumptions,
we currently estimate the following for the second quarter 2005:
-
Second quarter total fee revenue: $245 million to $255 million
-
Timeshare interval sales and services, net of direct expenses: $60
million to $65 million
-
General, administrative & other expense (including roughly $40 million
of costs associated with the company's new bedding incentives): $177 million
to $182 million
-
Lodging operating income: $165 million to $175 million
-
Gains (including gains on sale of the timeshare mortgage notes but excluding
synthetic fuel): Approximately $50 million
-
Net interest: Approximately $0
-
Earnings per share from synthetic fuel: Approximately $0.13
-
Second quarter earnings per share: $0.74 to $0.76
Our investment spending in 2005 is expected to total approximately $1 billion
including $50 million for maintenance capital spending, $300 million for
capital expenditures or property acquisitions, $100 million for timeshare
inventory, $200 million to $250 million in new mezzanine financing and
mortgage loans for hotels developed by our owners and franchisees and approximately
$350 million in equity and other investments (including our roughly $200
million investment in our joint venture with Whitbread).
As recently announced by the Securities and Exchange Commission, the
implementation of the Financial Accounting Standard Board's (FASB) Statement
No. 123R requiring the expensing of options, has been deferred and will
be effective for us beginning in fiscal 2006. We expect the expensing of
options will reduce pre-tax earnings by roughly $25 million and our earnings
per share by $0.07 for the full year 2006.
MARRIOTT INTERNATIONAL, INC.
Financial Highlights
(in millions, except per share amounts)
12 Weeks Ended 12
Weeks Ended
March 25,
March 26,
2005
2004
Percent
Synthetic Synthetic
Better/
Lodging Fuel Total Lodging Fuel Total (Worse)
REVENUES
Base management fees
$111 $- $111 $99
$- $99 12
Franchise fees
70 - 70
61 - 61 15
Incentive management fees
50 - 50
33 - 33 52
Owned, leased, corporate
housing and other(1)
167 - 167 156
- 156 7
Timeshare interval sales
and services(2)
346 - 346 318
- 318 9
Cost reimbursements(3)
1,682 - 1,682 1,585
- 1,585 6
Synthetic fuel
- 108 108 -
- - *
Total Revenues
2,426 108 2,534 2,252 -
2,252 13
OPERATING COSTS AND EXPENSES
Owned, leased and corporate
housing - direct(4)
145 - 145 132
- 132 (10)
Timeshare - direct
272 - 272 252
- 252 (8)
Reimbursed costs
1,682 - 1,682 1,585
- 1,585 (6)
General, administrative
and other(5)
124 - 124 132
- 132 6
Synthetic fuel
- 153 153 -
- - *
Total Expenses
2,223 153 2,376 2,101 -
2,101 (13)
OPERATING INCOME (LOSS)
$203 $(45) 158 $151 $-
151 5
Gains and other income
(expense)(6)
(5)
4 (225)
Interest expense
(24)
(22) (9)
Interest income
27
26 4
Provision for loan losses
(11)
3 (467)
Equity in losses
- Synthetic fuel(7)
-
(28) 100
- Other(8)
(5)
(2) (150)
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST
140
132 6
Provision for income taxes
(5)
(18) 72
INCOME BEFORE MINORITY
INTEREST
135
114 18
Minority interest
10
- *
NET INCOME
$145
$114 27
EARNINGS PER SHARE - Basic
$0.64
$0.50 28
EARNINGS PER SHARE - Diluted
$0.61
$0.47 30
Basic Shares
225.5
229.6
Diluted Shares
239.6
242.9
* Percent can not be calculated.
(1) Owned, leased, corporate
housing and other revenue includes revenue
from
the properties we own or lease, revenue from our ExecuStay
business,
land rent income and other revenue.
(2) Timeshare interval sales
and services includes total timeshare
revenue
except for base fees, cost reimbursements, note sale gains,
and
joint venture earnings (losses).
(3) Cost reimbursements include
reimbursements from lodging properties
for
Marriott funded operating expenses.
(4) Owned, leased and corporate
housing -- direct expenses include
operating
expenses related to our owned or leased hotels, including
lease
payments, pre-opening expenses and depreciation, plus expenses
related
to our ExecuStay business.
(5) General, administrative
and other expenses include the overhead costs
allocated
to our lodging business segments (including ExecuStay and
timeshare)
and our unallocated corporate overhead costs and general
expenses.
(6) Gains and other income (expense)
includes gains on the sale of real
estate.
In addition, gains and other income (expense) for the 2005
first
quarter also include the earn-out payments we made to the
previous
owner of the synthetic fuel operations and earn-out payments
we received
from our synthetic fuel joint venture partner.
(7) Equity in losses -- Synthetic
fuel includes our share of the equity
in earnings
of the synthetic fuel joint ventures and the net earn-out
payments
made to our synthetic fuel joint venture partner from
January
3, 2004 through March 25, 2004. Beginning March 26, 2004, the
synthetic
fuel operations were consolidated as a result of adopting
FIN
46®, "Consolidation of Variable Interest Entities."
(8) Equity in losses -- Other
includes our equity in (losses) earnings of
unconsolidated
joint ventures.
Marriott International, Inc.
Business Segments
($ in millions)
Twelve Weeks Ended
March 25, 2005 March 26, 2004
REVENUES
Full-Service
$1,629
$1,505
Select-Service
272
247
Extended-Stay
126
115
Timeshare
399
385
Total lodging(1)
2,426
2,252
Synthetic fuel
108
-
Total
$2,534
$2,252
NET INCOME
Full-Service
$116
$100
Select-Service
33
23
Extended-Stay
16
10
Timeshare
63
50
Total lodging financial
results(1)
228
183
Synthetic fuel (after-tax)
18
11
Unallocated corporate expenses
(26)
(30)
Interest income, provision for loan
losses and interest expense
(8)
7
Income taxes (excluding Synthetic
fuel)
(67)
(57)
Total
$145
$114
(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 Rooms/
Number of Properties Suites
Mar. 25, vs. Mar. 26, Mar. 25, vs. Mar. 26,
Brand
2005 2004
2005 2004
Full-Service Lodging
Marriott Hotels
& Resorts 492
16 179,485
4,354
The Ritz-Carlton
57 -
18,598 (46)
Renaissance
Hotels & Resorts 135
9 48,221
2,624
Bulgari Hotel
& Resort
1 1
58 58
Ramada International
4 (198)
726 (26,796)
Select-Service Lodging
Courtyard
663 33
95,429 4,902
Fairfield
Inn
517 (10) 47,840
(2,634)
SpringHill
Suites
126 14
14,644 1,741
Extended-Stay Lodging
Residence
Inn
469 20
55,770 2,348
TownePlace
Suites
117 5
11,816 354
Marriott Executive
Apartments 15 2
2,585 163
Timeshare(2)
Marriott Vacation
Club
International
44 3
8,895 827
Horizons by
Marriott Vacation
Club
International
2 -
328 72
The Ritz-Carlton
Club
4 -
261 17
Marriott Grand
Residence Club 2
- 248
-
Total
2,648 (105) 484,904
(12,016)
(1) Total Lodging Products excludes
the 1,978 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)
Twelve Weeks Ended March 25, 2005 and March 26, 2004
Average Daily
REVPAR Occupancy
Rate
Brand
2005 vs. 2004 2005 vs. 2004 2005
vs. 2004
Marriott Hotels &
Resorts
$109.44 6.1% 69.9% 0.1% pts. $156.66
6.0%
The Ritz-Carlton(2)
$204.87 13.5% 67.1% 0.3% pts. $305.53
13.1%
Renaissance Hotels &
Resorts
$101.47 10.4% 69.4% 3.1% pts. $146.29
5.5%
Composite -
Full-Service
$114.56 7.4% 69.6% 0.6% pts. $164.62
6.6%
Residence Inn
$80.96 10.0% 76.7% 2.7% pts. $105.63
6.1%
Courtyard
$72.37 8.7% 67.9% -0.7% pts. $106.57
9.7%
TownePlace Suites
$48.21 6.6% 70.4% -0.3% pts. $68.48
7.0%
Composite - Select-
Service &
Extended-Stay
$72.79 9.5% 70.5% 0.7% pts. $103.28
8.4%
Composite - All
$98.35 8.0% 69.9% 0.6% pts. $140.64
7.1%
North American Comparable Systemwide Properties(1)
Twelve Weeks Ended March 25, 2005 and March 26, 2004
Average Daily
REVPAR Occupancy
Rate
Brand
2005 vs. 2004 2005 vs. 2004 2005
vs. 2004
Marriott Hotels &
Resorts
$99.66 6.4% 68.3% 0.4% pts. $145.96
5.8%
The Ritz-Carlton(2)
$204.87 13.5% 67.1% 0.3% pts. $305.53
13.1%
Renaissance Hotels &
Resorts
$94.30 10.6% 67.8% 2.6% pts. $139.02
6.3%
Composite -
Full-Service
$103.63 7.5% 68.2% 0.7% pts. $152.05
6.3%
Residence Inn
$78.45 9.0% 76.0% 1.9% pts. $103.26
6.2%
Courtyard
$71.51 8.4% 68.5% 0.3% pts. $104.36
7.9%
Fairfield Inn
$45.53 10.9% 63.4% 1.8% pts. $71.87
7.7%
TownePlace Suites
$50.46 11.7% 71.0% 1.5% pts. $71.03
9.3%
SpringHill Suites
$62.94 14.4% 69.7% 3.5% pts. $90.36
8.6%
Composite - Select-
Service &
Extended-Stay
$65.79 9.5% 69.5% 1.4% pts. $94.61
7.3%
Composite - All
$81.81 8.4% 69.0% 1.1% pts. $118.65
6.7%
(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 February.
MARRIOTT INTERNATIONAL, INC.
KEY LODGING STATISTICS
(Constant $)
International Comparable Company-Operated Properties (1,2)
Two Months Ended February 28, 2005
and February 29, 2004
REVPAR Occupancy
Average Daily Rate
Region/Brand
vs. vs.
vs.
2005 2004 2005 2004
2005 2004
Caribbean & Latin
America
$125.16 20.1% 76.7% 7.5% pts. $163.09
8.3%
Continental Europe
$82.30 7.0% 58.9% 2.0% pts. $139.67
3.3%
United Kingdom
$128.72 3.3% 70.0% -1.6% pts. $183.83
5.8%
Middle East & Africa
$83.50 28.8% 75.4% 8.1% pts. $110.70 15.0%
Asia Pacific(3)
$75.73 16.2% 71.7% 2.3% pts. $105.67 12.6%
The Ritz-Carlton
International
$160.30 26.9% 71.2% 8.2% pts. $225.15 12.2%
Total International(4)
$97.21 14.9% 69.5% 3.6% pts. $139.96
8.9%
Worldwide(5)
$98.14 9.2% 69.8% 1.2% pts. $140.51
7.4%
International Comparable Systemwide Properties (1,2)
Two Months Ended February 28, 2005
and February 29, 2004
REVPAR Occupancy
Average Daily Rate
Region/Brand
vs. vs.
vs.
2005 2004 2005 2004
2005 2004
Caribbean & Latin America $109.64
12.6% 70.8% 3.4% pts. $154.81 7.2%
Continental Europe
$78.43 7.4% 57.0% 1.5% pts. $137.57
4.6%
United Kingdom
$92.09 1.8% 63.1% 0.4% pts. $145.90
1.1%
Middle East & Africa
$80.13 28.0% 73.3% 7.8% pts. $109.30 14.4%
Asia Pacific(3)
$78.66 14.2% 72.1% 2.6% pts. $109.07 10.1%
The Ritz-Carlton
International
$160.30 26.9% 71.2% 8.2% pts. $225.15 12.2%
Total International(4)
$91.92 11.4% 67.0% 2.6% pts. $137.24 7.1%
Worldwide(5)
$83.15 8.8% 68.7% 1.3% pts. $121.06
6.8%
(1) International financial results
are reported on a period basis, while
International
statistics are reported on a monthly basis.
(2) Statistics are in constant dollars
and include results for January and
February.
Excludes North America.
(3) Excludes Hawaii.
(4) Includes Hawaii.
(5) Worldwide includes international
statistics for January through
February and
North American statistics for the twelve weeks ending
March 25,
2005 and March 26, 2004.
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
(in millions, except per share amounts)
We consider net income
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 net income, 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, net income
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 net
income, earnings per share,
effective tax rate or any other operating
measure prescribed by
United States generally accepted accounting
principles.
The reconciliation of net
income, earnings per share, and the effective
income tax rate as reported
to net income 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:
First Quarter 2005 First Quarter
2004
Synthetic Excluding Synthetic Excluding
Net Fuel Synthetic Net
Fuel Synthetic
Income Impact Fuel Income
Impact Fuel
Operating income (loss) $158
$(45) $203 $151
$- $151
Gains and other
income (expense)
(5) (9) 4
4 -
4
Interest income,
provision for loan
losses and interest
expense
(8) -
(8) 7
- 7
Equity in losses
(5) -
(5) (30) (28)
(2)
Pre-tax income (loss)
$140 $(54) $194
$132 $(28) $160
Tax (Provision)/Benefit
(52) 15 (67)
(47) 10 (57)
Tax Credits
47 47
- 29 29
-
Total Tax (Provision)/
Benefit
(5) 62 (67)
(18) 39 (57)
Income before Minority
Interest
135 8
127 114 11
103
Minority Interest
10 10
- -
- -
Net Income
$145 $18 $127
$114 $11 $103
Diluted Shares
239.6 239.6 239.6 242.9
242.9 242.9
Earnings per Share
- Diluted
$0.61 $0.08 $0.53 $0.47
$0.04 $0.43
Tax Rate
3.6%
34.5% 13.7%
35.5%
MARRIOTT INTERNATIONAL, INC.
Non-GAAP Financial Measure Reconciliation
($ 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.
The reconciliation of operating
income to lodging operating income is as
follows:
Fiscal Year 2005
First
Quarter Total
Operating income as reported
$158 $158
Add back: Synthetic
fuel operating loss 45
45
Lodging operating income
$203 $203
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
EBITDA
(in millions)
We consider earnings before
interest, taxes, depreciation and
amortization, adjusted
to eliminate the impact of our synthetic fuel
segment and discontinued
operations (Adjusted EBITDA), to be an
indicator of operating
performance from on-going operations 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. 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 2005
First
Quarter Total
Net income
$145 $145
Interest expense
24 24
Tax provision
5 5
Depreciation
30 30
Amortization
7 7
Interest expense from unconsolidated
joint ventures
11 11
Depreciation and amortization from
unconsolidated joint ventures
12 12
EBITDA
$234 $234
Synthetic fuel adjustment
42 42
Adjusted EBITDA
$276 $276
The following items make up the
synthetic fuel adjustment:
Pre-tax synthetic fuel operating
losses
$54 $54
Pre-tax minority interest - synthetic
fuel
(10) (10)
Synthetic fuel depreciation
(2) (2)
EBITDA adjustment for synthetic fuel
$42 $42
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 gain discontinued operations
(1) - (1)
(1) (3)
Adjusted EBITDA
$243 $279 $239 $343 $1,104
The following items make up the
synthetic fuel 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
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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.
MARRIOTT INTERNATIONAL, INC. (NYSE: MAR) is a leading lodging company
with over 2,600 lodging properties in the United States and 65 other countries
and territories.
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