What were the main drivers of Marriott's revenue growth in the second quarter of 2007?

Marriott's revenue growth was primarily driven by strong demand in the lodging industry, which allowed the company to increase room rates and improve RevPAR (Revenue per Available Room). This was complemented by unit growth across its various brands and strong performance in the Timeshare segment.

How is the Synthetic Fuel segment performing and what is its impact on the company's overall financial results?

The Synthetic Fuel segment generated revenue of $88 million in the second quarter of 2007, but it incurred operating losses. However, the segment's financial results were significantly boosted by tax credits available under the Internal Revenue Code. While these credits offset the operating losses and contributed positively to the company's net income, the program is scheduled to expire at the end of 2007, which is expected to lead to a higher effective tax rate for Marriott in the future.

What significant changes occurred in Marriott's debt and liquidity position during the quarter?

Marriott amended and restated its multicurrency revolving credit agreement to increase the aggregate borrowing capacity from $2 billion to $2.5 billion and extended the facility's expiration to 2012, enhancing its liquidity. The company also issued $350 million in new Notes due 2017, using the proceeds for general corporate purposes, including the repayment of commercial paper borrowings. Despite increased commercial paper borrowings used for share repurchases and capital expenditures, the company's liquidity was considered adequate.

Are there any significant one-time charges or gains impacting the reported net income?

Yes, the second quarter of 2007 included a $35 million charge for excise taxes related to the settlement of issues from an IRS and Department of Labor examination concerning an employee stock ownership plan (ESOP). This settlement also resulted in additional interest expense and a reduction in shareholders' equity. Separately, the Timeshare segment reported a $45 million gain from the sale of notes receivable.

MAR 10-Q Quarterly Report Q2 FY2007 — Revenue, Net Income, EPS

Summary

Marriott International, Inc. (MAR) reported strong financial results for the fiscal second quarter ended June 15, 2007. Total revenues increased by 11% year-over-year to $3.21 billion, driven by robust demand in the lodging industry, leading to increased room rates and improved RevPAR (Revenue per Available Room) across its segments. Net income for the quarter grew to $207 million, or $0.51 per diluted share, compared to $186 million, or $0.43 per diluted share, in the prior year's second quarter. The company's lodging business, which includes its North American Full-Service, North American Limited-Service, International, Luxury, and Timeshare segments, showed significant growth. This was fueled by strong RevPAR increases globally, particularly in key international markets and major North American cities. The Timeshare segment also experienced substantial revenue growth. While the company's Synthetic Fuel segment continues to operate at a loss, its impact on overall net income was mitigated by significant tax credits, though this program is set to expire at the end of 2007, which is expected to increase the company's effective tax rate in the future. Marriott also continued its share repurchase program and strengthened its financial position through credit facility amendments.

Key Highlights

1Total revenues for the second quarter of 2007 increased 11% to $3.21 billion compared to $2.89 billion in the prior year's quarter.
2Net income for the quarter rose to $207 million ($0.51 diluted EPS) from $186 million ($0.43 diluted EPS) in the second quarter of 2006.
3The company's lodging business, comprising several segments, saw strong performance driven by increased RevPAR (Revenue per Available Room) globally.
4Timeshare segment revenues increased by 22% to $532 million, reflecting strong development revenue.
5The Synthetic Fuel segment generated revenue of $88 million but incurred an operating loss; however, significant tax credits offset this and contributed positively to net income, though these credits are temporary.
6Marriott International amended and restated its revolving credit agreement, increasing the available borrowing capacity from $2 billion to $2.5 billion and extending the expiration date to 2012.
7The company repurchased approximately 18.2 million shares of Class A Common Stock during the first half of 2007.

MARRIOTT INTERNATIONAL INC /MD/ Quarterly Report for Q2 Ended Jun 15, 2007

Summary

Key Highlights

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