What was the primary driver of the significant increase in sales for the first quarter of 2003?

The primary driver of the 11% increase in sales to $2.01 billion was a combination of the Synthetic Fuel business, which saw its sales jump from $5 million to $68 million year-over-year, and an increase in cost reimbursements from managed and franchised properties.

How did the Synthetic Fuel business impact Marriott's profitability?

While the Synthetic Fuel business incurred operating losses of $59 million for the quarter, it generated substantial tax benefits and tax credits totaling $78 million. These tax advantages more than offset the operational losses, making the business accretive to net income.

What is the status of the Senior Living Services business and its financial impact?

Marriott completed the sale of its Senior Living Services business in March 2003, recognizing a net gain of $23 million. The operating results of this segment are now reported under discontinued operations, and the remaining assets are classified as held for sale.

What is the company's liquidity position and how is it managing cash?

Marriott's cash and equivalents increased significantly to $525 million from $198 million at the start of the year. The company also has access to substantial borrowing capacity, providing nearly $2 billion in combined cash and available credit facilities, which management considers adequate to meet liquidity needs and fund growth plans.

MAR 10-Q Quarterly Report Q1 FY2003 — Revenue, Net Income, EPS

Summary

Marriott International Inc. reported a solid first quarter for 2003, with income from continuing operations increasing by 6% to $87 million, translating to a 13% rise in diluted earnings per share to $0.36. This growth was driven by an 11% increase in sales, reaching $2 billion, despite a 4% decline in the core lodging business results. The company highlighted significant operational impacts from its Synthetic Fuel business, which generated substantial tax benefits offsetting operational losses. Discontinued operations, primarily the sale of Senior Living Services, contributed positively with a significant gain on disposal. Key financial movements include an increase in cash and equivalents to $525 million, bolstered by strategic decisions to manage liquidity amidst economic uncertainty. The company also actively engaged in share repurchases. While the lodging segment experienced a slight revenue dip, offset by new property additions, international lodging showed resilience. The company remains focused on its strategic growth plans and managing its liquidity, with ample resources to meet its obligations.

Key Highlights

1Income from continuing operations increased 6% to $87 million, and diluted EPS grew 13% to $0.36 for the twelve weeks ended March 28, 2003.
2Total sales increased 11% to $2.01 billion, driven by the Synthetic Fuel business and cost reimbursements.
3The Synthetic Fuel business, despite operational losses, generated significant tax benefits and credits ($78 million total in Q1 2003), substantially contributing to net income.
4Discontinued operations, particularly the sale of Senior Living Services, resulted in a $23 million net gain recognized in the first quarter.
5Cash and equivalents significantly increased to $525 million from $198 million at the start of the year, attributed partly to managing liquidity during uncertain times.
6Marriott added 35 new lodging properties (8,028 rooms) in the first quarter, expanding its global footprint.
7The company actively repurchased shares, acquiring 4.9 million shares of Class A Common Stock during the quarter.

MARRIOTT INTERNATIONAL INC /MD/ Quarterly Report for Q1 Ended Mar 28, 2003

Summary

Key Highlights

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