10-QPeriod: Q2 FY2011

MARRIOTT INTERNATIONAL INC /MD/ Quarterly Report for Q2 Ended Jun 17, 2011

Filed July 15, 2011For Securities:MAR

Summary

Marriott International, Inc. reported solid financial results for the second quarter and first half of 2011, demonstrating a recovery from the economic downturn. Revenues increased driven by higher management and franchise fees, reflecting improved RevPAR (Revenue Per Available Room) and system-wide unit growth. The company saw a notable increase in operating income and net income year-over-year, with diluted EPS showing similar positive trends. The company also announced a planned spin-off of its timeshare operations into a separate publicly traded company, Marriott Vacations Worldwide Corporation (MVW), expected in late 2011, which is anticipated to unlock further value and tax benefits. Liquidity remains strong, supported by an amended and restated credit facility providing ample borrowing capacity. The company resumed issuing commercial paper, indicating confidence in market conditions. Investment spending is projected for the full year, focusing on growth and maintenance. Despite positive performance, risks related to economic conditions, competition, and international operations persist. The company continues to implement cost controls across its operations.

Financial Highlights

51 data points
Beta

Revenue

$2.97B

Net Income

$135.00M

4.5% Net Margin

EPS (Diluted)

$0.37

Total Assets

$8.79B

Cash & Equivalents

$220.00M

Free Cash Flow

$313.00M

Financial Statements
Beta
Revenue$2.97B
Operating Expenses$2.74B
Operating Income$232.00M
Interest Expense$37.00M
Net Income$135.00M
EPS (Basic)$0.38
EPS (Diluted)$0.37
Shares Outstanding (Basic)356.90M
Shares Outstanding (Diluted)369.40M

Key Highlights

  • 1Revenues increased by 7% to $2.97 billion for the twelve weeks ended June 17, 2011, compared to the prior year, driven by higher cost reimbursements and management/franchise fees.
  • 2Net income rose 13% to $135 million for the twelve weeks ended June 17, 2011, with diluted EPS increasing to $0.37 from $0.31 in the prior year period.
  • 3Operating income for the twelve weeks ended June 17, 2011, increased slightly to $232 million from $226 million in the prior year, despite higher general, administrative, and other expenses.
  • 4Marriott announced plans to spin off its timeshare operations into a new publicly traded company, Marriott Vacations Worldwide Corporation (MVW), expected in late 2011.
  • 5Worldwide RevPAR (Revenue Per Available Room) for comparable systemwide properties increased by 6.8% on a constant dollar basis for the twelve weeks ended June 17, 2011.
  • 6The company's credit facility was amended and restated to extend its expiration to June 23, 2016, and reduce its size to $1.75 billion, maintaining strong liquidity and supporting general corporate needs.
  • 7Share-based compensation expense was $22 million for the twelve weeks ended June 17, 2011.

Frequently Asked Questions

The primary driver for the revenue increase in the second quarter of 2011 was higher cost reimbursements ($176 million) and increased base management and franchise fees ($28 million), reflecting stronger RevPAR and unit growth across the system.

Marriott announced a plan to spin off its timeshare operations and development business into a new independent company, Marriott Vacations Worldwide Corporation (MVW), through a special tax-free dividend, expected in late 2011. The new company filed an initial Form 10 registration statement with the SEC.

Long-term debt decreased to $2.44 billion at June 17, 2011, from $2.69 billion at December 31, 2010. This decrease was primarily due to a reduction in non-recourse debt associated with securitized notes, partially offset by an increase in commercial paper and other debt.

For the full fiscal year 2011, Marriott expects to add approximately 35,000 rooms (gross) to its system, excluding residential, timeshare, or ExecuStay units. During the first half of 2011, 18,332 rooms were added.