10-QPeriod: Q3 FY2010

MARRIOTT INTERNATIONAL INC /MD/ Quarterly Report for Q3 Ended Sep 10, 2010

Filed October 8, 2010For Securities:MAR

Summary

Marriott International, Inc. reported a significant turnaround in its financial performance for the first three quarters of 2010 compared to the same period in 2009. The company posted a net income of $285 million, a substantial improvement from a net loss of $459 million in the prior year. This recovery was driven by increased revenues across its segments, particularly in lodging operations which saw RevPAR (Revenue Per Available Room) increase by 8.4% in the third quarter for company-operated properties. The company also benefited from reduced expenses, including the absence of significant impairment charges that impacted the prior year's results. The adoption of new accounting standards (ASU Nos. 2009-16 and 2009-17) led to the consolidation of previously off-balance sheet entities, increasing both assets and liabilities, but also impacting the presentation of financial results and debt. The company's liquidity remains strong, supported by its credit facilities and operating cash flow, positioning it to navigate future growth and capital needs.

Financial Highlights

51 data points
Beta

Revenue

$2.65B

Net Income

$83.00M

3.1% Net Margin

EPS (Diluted)

$0.22

Total Assets

$8.79B

Cash & Equivalents

$223.00M

Free Cash Flow

$308.00M

Financial Statements
Beta
Revenue$2.65B
Operating Expenses$2.48B
Operating Income$167.00M
Interest Expense$41.00M
Net Income$83.00M
EPS (Basic)$0.23
EPS (Diluted)$0.22
Shares Outstanding (Basic)363.10M
Shares Outstanding (Diluted)378.10M

Key Highlights

  • 1Marriott International reported a net income of $285 million for the first three quarters of 2010, a significant improvement from a net loss of $459 million in the same period of 2009.
  • 2Total revenues increased by 7% to $8.05 billion for the first nine months of 2010 compared to $7.53 billion in 2009.
  • 3Worldwide RevPAR for company-operated properties increased by 8.4% in Q3 2010, indicating a recovery in lodging demand and pricing.
  • 4The adoption of new accounting standards (ASU Nos. 2009-16 and 2009-17) resulted in the consolidation of 13 special purpose entities, increasing assets by $970 million and liabilities by $1.116 billion.
  • 5The company's liquidity position remained strong, with $223 million in cash and equivalents and $2.534 billion in available borrowing capacity at the end of Q3 2010.
  • 6Dividend payment of $0.04 per share declared in Q3 2010, indicating confidence in financial stability and return of capital to shareholders.

Frequently Asked Questions

The primary driver was the recovery in the lodging industry, indicated by an 8.4% increase in RevPAR for company-operated properties in the third quarter of 2010, coupled with improved revenue across most business segments and reduced operating costs. The absence of significant impairment charges that affected the prior year also contributed to the positive net income.

The adoption of ASU Nos. 2009-16 and 2009-17 led to the consolidation of 13 previously off-balance sheet entities, primarily related to timeshare notes receivable securitization. This resulted in a significant increase in consolidated assets and liabilities, and a one-time after-tax reduction to shareholders' equity of $146 million. It also changed how securitizations are accounted for, moving from sales to secured borrowings.

The report indicates a strengthening demand for lodging, with improved occupancies and stabilizing room rates. The company expects this positive trend to continue, with projected higher special corporate rates for 2011. Investments in new development pipelines remain robust, suggesting confidence in future growth.

The Timeshare segment showed mixed results. While contract sales were flat year-over-year for the first nine months, financing revenue increased significantly due to higher interest income from consolidated securitized notes. The segment also benefited from the launch of the new points-based Marriott Vacation Club Destinations program. However, development revenue was impacted by lower sales volumes and increased reserves.