10-QPeriod: Q3 FY2011

MARRIOTT INTERNATIONAL INC /MD/ Quarterly Report for Q3 Ended Sep 9, 2011

Filed October 7, 2011For Securities:MAR

Summary

Marriott International, Inc. reported a net loss of $179 million ($0.52 per diluted share) for the twelve weeks ended September 9, 2011, a significant decline from a net income of $83 million ($0.22 per diluted share) in the same period last year. This loss was primarily driven by a substantial $324 million impairment charge related to the company's timeshare strategy, aimed at monetizing excess undeveloped land and inventory. Excluding this charge, the company's Adjusted EBITDA showed a slight increase, indicating underlying operational resilience. Revenues for the quarter grew by 9% year-over-year to $2.874 billion, driven by increases in cost reimbursements, owned/leased properties, and management/franchise fees. Despite the reported net loss, the company's lodging segments, particularly North American Full-Service and Limited-Service, demonstrated revenue and RevPAR growth, signaling a recovery in the core hospitality business. The company is also progressing with its plan to spin off its timeshare business, Marriott Vacations Worldwide Corporation (MVW), into a separate publicly traded entity.

Financial Highlights

50 data points
Beta

Revenue

$2.87B

Net Income

-$179.00M

-6.2% Net Margin

EPS (Diluted)

$-0.52

Total Assets

$8.46B

Cash & Equivalents

$220.00M

Free Cash Flow

$367.00M

Financial Statements
Beta
Revenue$2.87B
Operating Expenses$3.02B
Operating Income-$144.00M
Interest Expense$39.00M
Net Income-$179.00M
EPS (Basic)$-0.52
EPS (Diluted)$-0.52
Shares Outstanding (Basic)345.40M
Shares Outstanding (Diluted)345.40M

Key Highlights

  • 1Reported a net loss of $179 million for the twelve weeks ended September 9, 2011, compared to net income of $83 million in the prior year period, largely due to a $324 million timeshare strategy impairment charge.
  • 2Total revenues increased by 9% to $2.874 billion for the twelve weeks ended September 9, 2011.
  • 3Adjusted EBITDA increased to $240 million from $220 million in the prior year period, suggesting operational strength excluding impairment charges.
  • 4RevPAR (Revenue Per Available Room) for comparable systemwide properties increased by 6.9% to $96.15 for the first three quarters of 2011.
  • 5The company is actively pursuing the planned spin-off of its timeshare operations into a new entity, Marriott Vacations Worldwide Corporation (MVW).
  • 6Significant share repurchases totaling $1.225 billion were made during the first nine months of 2011.
  • 7North American Full-Service and Limited-Service lodging segments showed revenue growth and improved RevPAR, indicating a positive trend in core operations.

Frequently Asked Questions

The primary driver for the net loss of $179 million was a $324 million impairment charge recorded in the Timeshare segment. This charge was taken to write down the carrying value of excess undeveloped land and built inventory to their fair values as part of a strategy to monetize these assets in preparation for the planned spin-off of the timeshare business.

The core lodging business showed signs of recovery and growth. For the first three quarters of 2011, worldwide RevPAR increased by 6.7% compared to the prior year. Specifically, North American Full-Service and Limited-Service segments reported revenue increases and improved RevPAR, indicating stronger demand and operational performance in these segments.

Marriott International announced plans to spin off its timeshare operations and development business into a new, independent, publicly traded company called Marriott Vacations Worldwide Corporation (MVW). The filing indicates that the company was progressing with this plan, including filing registration statements with the SEC and expecting normal and customary regulatory approvals.

The company reported cash and cash equivalents of $220 million as of September 9, 2011, a decrease from the prior year-end. However, it maintained a strong liquidity position with $1.493 billion in available borrowing capacity, primarily from its amended and restated credit facility, which it believes is adequate to meet its short-term and long-term liquidity requirements.