Summary
Marriott International, Inc. reported its financial results for the quarter ended June 14, 2002, reflecting a challenging economic environment that impacted its core lodging business. Net income for the quarter was $129 million, a slight decrease from $130 million in the prior year, with diluted earnings per share remaining flat at $0.50. Sales saw a modest increase to $2.586 billion from $2.450 billion year-over-year, driven by 'Other' revenue categories and managed/franchised property revenues, while management and franchise fees and distribution services revenue saw declines. The company's lodging segment experienced a decline in operating profit despite increased sales, with comparable U.S. managed properties showing an 8.0% decrease in Revenue Per Available Room (RevPAR). This was attributed to weaker hotel demand and a weaker economy. However, the company is taking strategic steps, including the decision to exit its distribution services business by the end of 2002 and initiating a strategic review of its Senior Living Services segment, which may include a spin-off. The company's balance sheet shows a decrease in cash and equivalents to $200 million from $817 million at year-end 2001, primarily due to debt repayment.
Key Highlights
- 1Net income for the quarter was $129 million, down slightly from $130 million in the prior year, with diluted EPS remaining flat at $0.50.
- 2Total sales increased by 6% to $2.586 billion, but the core lodging segment saw a 17% decrease in operating profit.
- 3Comparable U.S. managed lodging properties experienced an 8.0% decline in RevPAR due to weaker economic conditions and reduced hotel demand.
- 4The company announced its decision to exit the Distribution Services business by the end of 2002, expecting to incur material exit costs.
- 5Marriott is conducting a strategic review of its Senior Living Services segment, considering options including a potential spin-off.
- 6Cash and equivalents decreased significantly to $200 million from $817 million at year-end 2001, mainly due to debt repayment.
- 7The company is in negotiations to modify its management agreements with Host Marriott, aiming to enhance long-term strength and growth, with anticipated completion in the third quarter.