| WASHINGTON, April 24, 2003 - Marriott International,
Inc. (NYSE: MAR) today reported diluted earnings per share from continuing
operations of $0.36 in the first quarter of 2003, up 13 percent from the
2002 first quarter. Income from continuing operations, net of taxes,
for the quarter was $87 million, up from $82 million a year ago.
Synthetic fuel operations contributed approximately $19 million after-tax
($0.08 per share) during the first quarter of 2003 compared to $2 million
after-tax ($0.01 per share) in the prior year quarter.
J.W. Marriott, Jr., chairman and chief executive officer of Marriott
International, said, "Although the lodging industry felt the negative effects
of the soft global economy compounded by the war in Iraq in the first quarter,
Marriott continued to benefit from its business model and strong balance
sheet. In the first quarter of 2003, our base management and franchise
fees were up $8 million, or 6 percent, from a year-ago. Given the
strength of our balance sheet, we have repurchased 5.5 million shares of
Marriott International stock since year-end 2002 for a total cost of $174
million.
"In difficult times like these, owners and franchisees continue to select
the strongest brands. With our partners, we added 8,028 rooms to
our system in the first quarter. Roughly 35 percent (2,844 rooms)
of these rooms were conversions of existing hotels to one of our brands.
We remain confident that our management and franchise strategy, combined
with our strong brands, will provide sustainable growth in market share
and profits over the long term."
MARRIOTT LODGING profits decreased $6 million, or 4 percent,
to $147 million during the first quarter of 2003, primarily reflecting
the absence of a timeshare note sale transaction in the quarter.
Timeshare note sale gains were $14 million in the first quarter of 2002.
Incentive management fees declined $3 million during the quarter to $29
million as lower house profit margins reduced profitability at the unit
level.
For the 2003 first quarter (January 4 - March 28), revenue per available
room (REVPAR) for comparable company-operated North American properties
decreased by 1.5 percent, driven entirely by lower average room rates.
Company-operated full-service hotels (including Marriott Hotels &
Resorts, The Ritz-Carlton, and Renaissance Hotels & Resorts) experienced
a REVPAR decrease of 1.7 percent in the 2003 first quarter, while Marriott's
company-operated select-service and extended-stay brands (including Courtyard,
Fairfield Inn, Residence Inn, TownePlace Suites, and SpringHill Suites)
posted a REVPAR decrease of 1.0 percent. Marriott's 2003 fiscal first
quarter began on January 4, 2003, while the prior year's first quarter
included the New Year's holiday. If calculated on the calendar quarter
of January 1 to March 31 for both the 2003 and 2002 first quarters, REVPAR
declined by an average of 4.1 percent across Marriott's domestic company-operated
hotels during the 2003 first quarter.
Our first quarter profits for international lodging reflected greater
strength than in the U.S., with REVPAR up 6.8 percent on a constant dollar
basis and improved house profit margins. Lodging demand was particularly
strong in the Asia/Pacific, Middle East/Africa and the Caribbean/Latin
American regions during the first quarter. Beginning in late March
and continuing into April, demand has declined significantly in many Asian
markets as a result of Severe Acute Respiratory Syndrome (SARS).
Marriott's timeshare business reported over 15 percent growth in contract
sales in the first quarter of 2003. Contract sales were particularly
strong at timeshare resorts in Aruba, Hawaii, Arizona, and Jupiter, FL,
while the Orlando market continued to be soft. Profits in the timeshare
business declined to $18 million in the first quarter of 2003, primarily
due to the deferral of a timeshare mortgage note sale to the second quarter.
We previously announced our plan to complete two note sales (in the second
and fourth quarters) during 2003 versus the smaller transactions in each
of the four quarters of 2002.
We added 35 hotels and timeshare resorts (8,028 rooms) to our worldwide
lodging portfolio during the first quarter, while one hotel (104 rooms)
and two timeshare resorts (78 rooms) exited the system. Seven Marriott
Hotels & Resorts (2,357 rooms) opened during the quarter, including
the properties in Waikoloa and Wailea, Hawaii that joined us from Outrigger
Resorts. Four Renaissance Hotels & Resorts (1,658 rooms), six
Courtyards (996 rooms), four Residence Inns (684 rooms), and five Fairfield
Inns (536 rooms) also opened during the quarter. At the end of the
first quarter, the company's lodging group encompassed 2,589 hotels and
timeshare resorts (471,275 rooms).
CORPORATE EXPENSES were $30 million in the first quarter of 2003
compared to $29 million a year ago. Interest expense in the 2003
first quarter was $26 million, up $7 million from a year ago, largely as
a result of lower capitalized interest. Provisions for loan losses
in the first quarter of 2003 were $5 million, related to reserves on two
hotels. At the end of the first quarter 2003, total debt (including
debt associated with discontinued operations) was $2.2 billion and cash
balances totaled $525 million. We owned nine hotels at the end of
the 2003 first quarter.
We repurchased 4.9 million shares of common stock during the 2003 first
quarter at a total cost of $155 million and have repurchased approximately
600,000 shares to date in the second quarter. Currently, our remaining
share repurchase authorization totals approximately 18 million shares.
We closed our distribution services business in 2002 and completed the
sale of our senior living business in the 2003 first quarter. Therefore,
we show the financial results for those businesses in discontinued operations
for 2002 and 2003. Earnings per share from discontinued operations
were $0.12 in the first quarter of 2003. Proceeds from the sale of
our senior living business and certain related real estate assets were
$266 million during the first quarter of 2003 and we recorded a $23 million
after-tax gain on disposal in discontinued operations ($0.09 per share).
OUTLOOK
Based on the extraordinarily high level of uncertainty surrounding the
global economy, the effect of the war in Iraq and the evolving impact of
SARS, it is very difficult to forecast future operating performance.
Our assumptions for the second quarter are for REVPAR trends and unit level
profitability to continue at roughly the same levels as the first quarter.
We currently estimate that domestic comparable managed REVPAR will decline
by approximately four percent in the second quarter compared to 2002 levels
and, with continued upward pressure on casualty insurance and medical benefits
costs, we expect hotel house profit margins to decline.
We expect timeshare profits in the second quarter of 2003 to be between
$42 million and $45 million, as a result of a higher gain on the sale of
timeshare mortgage notes, offset somewhat by amortization of technology
investments and lower interest income from timeshare notes.
Given the above assumptions and weaker international lodging profits,
we estimate total lodging profits (including timeshare profits) will be
$180 million to $190 million in the 2003 second quarter, down slightly
from the 2002 second quarter. Including approximately $0.09 in earnings
per share from our synthetic fuel operations, we anticipate that earnings
per share from continuing operations will total $0.46 to $0.49 per share
in the second quarter 2003.
For the second half of the year, we believe a fairly wide range of possible
lodging demand estimates is appropriate, given the level of economic uncertainty.
However, if one assumes that in the third quarter of 2003, the change in
domestic comparable managed REVPAR ranges from down two percent to up two
percent, no gain on timeshare mortgage note sales and $0.04 to $0.06 of
after-tax earnings from synthetic fuel, we estimate EPS from continuing
operations will range from $0.30 to $0.34. For the 2003 fourth quarter,
assuming REVPAR ranges from flat to up four percent, completion of a timeshare
mortgage note sale transaction, and $0.11 to $0.13 of after-tax earnings
from our synthetic fuel operation, we estimate EPS will range from $0.64
to $0.68.
Under these assumptions, we estimate 2003 EPS from continuing operations,
including synthetic fuel, would be $1.76 to $1.87.
We continue to expect to add between 25,000 and 30,000 hotel rooms annually
in 2003 and 2004 to our worldwide lodging portfolio. At the end of
the first quarter, the company's pipeline of properties under construction,
awaiting conversion, or approved for development was over 50,000 rooms,
even after opening more than 8,000 rooms in the first quarter.
We expect investment spending in 2003 to include approximately $40 million
for maintenance spending and approximately $100 million for new company-developed
hotels. We anticipate timeshare investment spending to total approximately
$150 - $200 million. We also expect to invest $200 million in equity
slivers, mezzanine financing and mortgage loans for hotels developed by
our partners. We expect that total investment spending in 2003 will
be roughly $500 - $550 million.
MARRIOTT INTERNATIONAL, INC.
Financial Highlights
(in millions, except per share amounts)
12 Weeks Ended
12 Weeks Ended
March 28, 2003
March 22, 2002
------------------------- --------------------------------
Percent
Synthetic
Synthetic better/
Lodging Fuel Total Lodging
Fuel Total (worse)
--------- --------- ----- ------- -------- ----- -------
SALES
Base
management
fees
$92 $-
$92 $85 $-
$85
Franchise fees
52 -
52 51
- 51
Incentive
management
fees
29 -
29 32
- 32
Owned and
leased
properties
89 -
89 93
- 93
Other lodging
revenue(1)
276 -
276 280
- 280
Cost
reimbursements
(2)
1,408 - 1,408
1,262 - 1,262
Synthetic Fuel
- 68
68 -
5 5
-------- ------- ----- ------- --------
-------
Total
Revenues
1,946 68 2,014
1,803 5 1,808
-------- ------- ----- ------- --------
-------
OPERATING
COSTS AND
EXPENSES
Owned and
leased-
direct(3)
89 -
89 91
- 91
Other
lodging-
direct(4)
250 -
250 240
- 240
Reimbursed
costs
1,408 - 1,408
1,262 - 1,262
Administrative
and other(5)
52 -
52 57
- 57
Synthetic Fuel
- 127 127
- 11
11
-------- ------- ------ ------- -------
-------
Total
Expenses
1,799 127 1,926
1,650 11 1,661
-------- ------- ------ ------- -------
-------
Segment
Results
$147 $(59) 88
$153 $(6) 147
(40)
======== =======
======= =======
Corporate
expenses
(30)
(29)
Interest
expense
(26)
(19)
Interest
income
20
19
Provision for
loan losses
(5)
-
------
-------
INCOME FROM
CONTINUING
OPERATIONS
BEFORE
INCOME
TAXES
47
118
Benefit
(Provision)
for
income taxes
40
(36)
------
-------
INCOME FROM
CONTINUING
OPERATIONS
87
82 6
Discontinued
operations
Senior Living
Services
Income from
discontinued
operations,
net of tax
7
4
Gain on
disposal,
net of tax
23
-
Marriott
Distribution
Services
Loss from
discontinued
operations,
net of tax
-
(4)
Exit costs,
net of tax
(1)
-
------
-------
NET INCOME
$116
$82 41
======
=======
EARNINGS
PER SHARE-Basic
Earnings
from
continuing
operations
$0.37
$0.34 9
Earnings
from
discontinued
operations
0.13
- *
-------
-------
Earnings
per share
$0.50
$0.34 47
=======
=======
EARNINGS
PER SHARE-Diluted
Earnings
from
continuing
operations
$0.36
$0.32 13
Earnings
from
discontinued
operations
0.12
- *
------
-------
Earnings
per share
$0.48
$0.32 50
======
=======
Diluted Shares
243.6
254.3
Basic Shares
233.9
241.9
* Calculated percentage
is not meaningful.
(1) Other lodging revenue includes
timeshare revenue (including note sale gains and excluding base management
fees and reimbursed costs), ExecuStay revenue, land rent income, and other
revenue.
(2) Cost reimbursements include
reimbursements from hotel owners for Marriott funded operating expenses.
Marriott earns no markup on these expenses.
(3) Owned and leased - direct
includes operating expenses of owned or leased hotels including lease payments,
pre-opening expenses and depreciation.
(4) Other lodging - direct includes
administrative and related expenses of the timeshare (including timeshare
development, financing, gains and joint venture results, but excluding
reimbursed costs) and ExecuStay business units.
(5) Administrative and other
expenses include lodging segment overhead, joint venture results, amortization,
and gains and losses. Does not include any administrative and other
expenses related to either the timeshare or ExecuStay business units.
MARRIOTT INTERNATIONAL, INC.
Business Segment Financial Results
(in millions)
Twelve weeks ended
March 28, March 22,
2003
2002
----------- ----------
SALES
Full-Service
$1,321
$1,221
Select-Service
234
207
Timeshare
267
254
Extended-Stay
124
121
---------- ----------
Total Lodging
1,946
1,803
Synthetic Fuel
68
5
---------- ----------
Total
$2,014
$1,808
========== ==========
SEGMENT FINANCIAL RESULTS
Full-Service
$95
$86
Select-Service
24
28
Timeshare
18
31
Extended-Stay
10
8
---------- ----------
Total Lodging
147
153
Synthetic Fuel
(59)
(6)
---------- ----------
Total
$88
$147
========== ==========
MARRIOTT INTERNATIONAL, INC.
Key Lodging Statistics
North American Comparable Company-Operated Properties(1)
First Quarter
REVPAR(2) Occupancy Average Daily
Rate
---------- ----------- -------------------
vs. vs.
vs.
Brand
2003 2002 2003 2002
2003 2002
Marriott Hotels &
Resorts
$95.11 -2.1% 68.3% -0.3% pts. $139.32 -1.7%
The Ritz-Carlton
$161.97 -0.8% 63.5% -2.0% pts. $255.21
2.4%
Renaissance Hotels &
Resorts
$86.81 0.1% 65.1% 1.4% pts. $133.34
-2.0%
Composite -
Full-Service
$98.57 -1.7% 67.5% -0.2% pts. $146.14 -1.4%
Residence Inn
$72.10 -2.8% 74.2% 0.1% pts. $97.13
-2.9%
Courtyard
$62.08 -0.3% 65.9% 0.7% pts. $94.23
-1.4%
TownePlace Suites
$40.59 -3.6% 64.7% -6.2% pts. $62.75
5.6%
Composite -
Select-Service &
Extended-Stay
$62.68 -1.0% 67.8% 0.2% pts. $92.39
-1.3%
Total North America
$85.19 -1.5% 67.6% 0.0% pts. $126.03
-1.5%
North American Comparable Systemwide Properties(1)
First Quarter
REVPAR Occupancy Average Daily
Rate
-------- ----------- -------------------
vs. vs.
vs.
Brand
2003 2002 2003 2002
2003 2002
Marriott Hotels &
Resorts
$87.90 -1.9% 66.7% 0.3% pts. $131.70
-2.4%
The Ritz-Carlton
$161.97 -0.8% 63.5% -2.0% pts. $255.21
2.4%
Renaissance Hotels &
Resorts
$77.84 1.0% 62.4% 2.0% pts. $124.67
-2.2%
Composite -
Full-Service
$90.00 -1.5% 65.9% 0.4% pts. $136.50
-2.1%
Residence Inn
$70.04 -1.2% 73.7% 0.7% pts. $94.99
-2.2%
Courtyard
$62.27 0.6% 66.7% 1.1% pts. $93.42
-1.0%
Fairfield Inn
$38.03 2.0% 59.9% 0.7% pts. $63.54
0.8%
TownePlace Suites
$42.30 -1.2% 66.5% -1.6% pts. $63.60
1.2%
SpringHill Suites
$54.22 6.1% 66.3% 2.6% pts. $81.72
1.8%
Composite -
Select-Service &
Extended-Stay
$56.30 0.5% 66.6% 0.8% pts. $84.50
-0.8%
Total North America
$70.95 -0.6% 66.3% 0.7% pts. $106.97
-1.6%
(1) Total North America statistics
include properties for the Marriott Hotels & Resorts, Renaissance Hotels
& Resorts, The Ritz-Carlton, Courtyard, Residence Inn, TownePlace Suites,
Fairfield Inn, and SpringHill Suites brands. Select-Service and Extended-Stay
composite statistics include properties for the Courtyard, Residence Inn,
TownePlace Suites, Fairfield Inn and SpringHill Suites brands.
(2) Percentage change in statistics
for the North American comparable company-operated properties for the calendar
quarter January 1 - March 31, 2003 versus the same period in 2002:
REVPAR Occupancy
Average Daily Rate
-------- ----------- -------------------
vs. vs.
vs.
Brand
2003 2002 2003 2002
2003 2002
------
-------------------------------------------------
Marriott Hotels &
Resorts
$93.60 -4.8% 67.5% -1.7% pts. $138.76 -2.4%
The Ritz-Carlton
$161.97 -0.8% 63.5% -2.0% pts. $255.08
2.3%
Renaissance Hotels &
Resorts
$85.54 -1.9% 64.3% 0.2% pts. $133.11
-2.2%
Composite -
Full-Service
$96.90 -4.0% 66.7% -1.4% pts. $145.26 -1.9%
Residence Inn
$71.27 -5.5% 73.5% -1.8% pts. $96.94
-3.2%
Courtyard
$60.89 -4.0% 64.9% -1.3% pts. $93.80
-2.1%
TownePlace Suites
$39.96 -6.5% 63.9% -7.9% pts. $62.53
5.0%
SpringHill Suites
$49.53 5.7% 59.9% 2.3% pts. $82.68
1.6%
Composite -
Select-Service &
Extended-Stay
$61.87 -4.2% 67.0% -1.7% pts. $92.29
-1.8%
Total North America
$83.88 -4.1% 66.8% -1.5% pts. $125.52 -1.9%
MARRIOTT INTERNATIONAL, INC.
Key Lodging Statistics
International Comparable Company-Operated Properties(1)
First Quarter
REVPAR Occupancy
Average Daily Rate
-------- -----------
--------------------
vs.
vs.
vs.
Region
2003 2002 2003 2002
2003 2002
Caribbean & Latin
America
$111.03 14.5% 69.4% 6.6% pts. $160.05
3.6%
Continental Europe
$68.89 -3.7% 57.3% 0.2% pts. $120.27
-4.1%
United Kingdom
$98.49 -5.3% 67.7% -5.2% pts. $145.57
1.9%
Middle East & Africa $61.81
33.3% 67.2% 11.2% pts. $91.98 11.0%
Asia Pacific(2)
$64.87 8.7% 69.0% 4.7% pts. $94.00
1.3%
Total International $76.12
6.8% 65.3% 3.8% pts. $116.64 0.6%
International Comparable Systemwide Properties(1)
First Quarter
REVPAR Occupancy
Average Daily Rate
-------- -----------
-------------------
vs.
vs.
vs.
Region
2003 2002 2003 2002
2003 2002
Caribbean & Latin
America
$102.07 16.3% 66.1% 6.3% pts. $154.45
5.1%
Continental Europe
$65.04 -2.3% 54.6% -0.3% pts. $119.19 -1.8%
United Kingdom
$74.63 -9.2% 61.2% -2.8% pts. $122.01 -5.0%
Middle East & Africa $60.57
34.1% 66.5% 11.7% pts. $91.10 10.4%
Asia Pacific(2)
$68.12 7.2% 69.8% 3.9% pts. $97.55
1.3%
Total International $73.27
4.2% 63.3% 2.5% pts. $115.79 0.1%
(1) Statistics are in constant dollars
and include results for January and February. Excludes North America.
(2) Excludes Hawaii.
Total Lodging Products(3)
Number of Number
of
Properties Rooms/Suites
vs.
vs.
March March March
March
28, 22, 28,
22,
Brand
2003 2002 2003
2002
------------------------------------
----------------------------------
Full-Service Lodging
Marriott Hotels
& Resorts
458 +30 168,107
+8,787
The Ritz-Carlton
52 +6 16,916
+1,551
Renaissance
Hotels & Resorts 129
+5 46,907 +1,777
Ramada International
150 +13 21,874
+1,984
Select-Service Lodging
Courtyard
593 +31 85,352
+4,815
Fairfield
Inn
508 +21 48,750
+2,002
SpringHill
Suites
99 +12 11,368
+1,393
Extended-Stay Lodging
Residence
Inn
431 +36 51,153
+4,455
TownePlace
Suites
105 +6 10,806
+546
Marriott Executive
Apartments 12
- 2,167
+99
Timeshare
Marriott Vacation
Club
International
44 -
7,211 +924
Horizons by
Marriott Vacation
Club
International
2 -
212 +66
The Ritz-Carlton
Club
4 -
204 +60
Marriott Grand
Residence Club 2
+1 248
+49
------------- ------------------
Total
2,589 +161 471,275
+28,508
============= ==================
(3) Total Lodging Products excludes
the 3,920 corporate housing rental units.
MARRIOTT INTERNATIONAL, INC. Non-GAAP Financial Measure Reconciliation
(in millions, except per share amounts)
The reconciliation of the effective
income tax rate from continuing operations to the effective income tax
rate from continuing operations, excluding the impact of our Synthetic
Fuel business is as follows:
Continuing Operations
Income from Synthetic Excluding
Continuing Fuel Synthetic
Operations Impact Fuel
------------ -------- ---------
Pre tax income (loss)
$47 ($59)
$106
Tax (Provision)/Benefit
(17) 21
(38)
Tax Credits
57 57
-
---------- ---------- --------
Total Tax Benefit/(Provision)
40 78
(38)
---------- ---------- --------
Income from Continuing Operations $87
$19 $68
Diluted Shares
243.6 243.6
243.6
Earnings per Share - Diluted
$0.36 $0.08
$0.28
Tax Rate
-83.7%
36.0%
|
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
expected to be added in future years; expected investment spending; anticipated
results from synthetic fuel operations; the completion of the sale of an
interest in our synthetic fuel business; and similar statements concerning
anticipated future events and expectations that are not historical facts.
MARRIOTT INTERNATIONAL, INC. (NYSE: MAR) is a leading worldwide hospitality
company with nearly 2,600 lodging properties in the United States and 66
other countries and territories. |
