Summary
Marriott International Inc. reported net income of $103 million for the third quarter of 2002, a slight increase from the prior year's $101 million, on sales of $2,454 million, up 3%. Diluted EPS stood at $0.41, a 5% increase. While the core lodging business experienced a decline in RevPAR across most brands due to weaker hotel demand, this was offset by positive contributions from the sale of Village Oaks senior living communities and tax benefits from the Synthetic Fuel business. However, the company is actively exiting its Distribution Services business, which incurred significant charges and operating losses during the quarter. Looking at the year-to-date performance (first three quarters of 2002), net income decreased by 11% to $314 million on sales of $7,404 million, with diluted EPS at $1.23. This decline was primarily attributed to weaker hotel results and the costs associated with exiting the distribution services business. Despite these challenges, Marriott is managing its liquidity effectively, with significant cash balances and available borrowing capacity, and is navigating ongoing legal proceedings with a generally confident outlook.
Key Highlights
- 1Net income for the third quarter of 2002 was $103 million, a slight increase from $101 million in the prior year, on sales of $2,454 million, up 3%.
- 2Diluted Earnings Per Share (EPS) for the quarter was $0.41, an increase of 5% compared to the prior year.
- 3The company is in the process of exiting its Distribution Services business, which resulted in a $30 million charge and an operating loss of $34 million for the quarter.
- 4Revenue per Available Room (RevPAR) for comparable managed U.S. properties declined by an average of 6.8% in the third quarter, reflecting weaker hotel demand.
- 5The Senior Living Services segment saw a favorable result due to an $11 million pre-tax gain from the sale of Village Oaks senior living communities.
- 6Marriott is actively managing its liquidity, with cash and equivalents and available borrowing capacity totaling nearly $2 billion at September 6, 2002.
- 7The company is currently involved in several legal proceedings, though it believes they are without merit and intends to defend itself vigorously.