Exhibit 99
MARRIOTT INTERNATIONAL, INC.
Segment Information and Non-GAAP Financial Measures and Reconciliations
Segment Information
Segment Results.Management evaluates the performance of our segments, including our Timeshare segment, based primarily on the results of the segment without allocating corporate expenses, interest expense, or indirect general, administrative, and other expenses. We do, however, allocate interest income associated with Timeshare segment notes receivable to our Timeshare segment results because financing sales is an integral part of that segment’s business. Because note sales are an integral part of the Timeshare segment, we also include note sale gains in our Timeshare segment results. We also allocate other gains or losses as well as equity in earnings or losses from our joint ventures and divisional general, administrative, and other expenses to each of our segments.
Non-GAAP Financial Measures
We report certain financial measures that are not prescribed or authorized by U. S. generally accepted accounting principles (“GAAP”). We discuss management’s reasons for reporting these non-GAAP measures below, and the tables on the following pages reconcile the most directly comparable GAAP measures to the non-GAAP measures (identified by a double asterisk on the following pages). Although management evaluates and presents these non-GAAP measures for the reasons described below, please be aware that these non-GAAP measures are not alternatives to revenue, operating income, income from continuing operations, net income, or any other comparable operating measure prescribed by GAAP. In addition, these non-GAAP financial measures may be calculated and/or presented differently than measures with the same or similar names that are reported by other companies, and as a result, the non-GAAP measures we report may not be comparable to those reported by others.
1
Timeshare Segment Revenue Excluding Cost Reimbursements.Timeshare segment cost reimbursements revenue represents reimbursements from owner associations or joint venture partners for Marriott-funded operating expenses. As we record cost reimbursements based upon the costs incurred with no added markup, this revenue and the related reimbursed costs expense have no impact on segment results because cost reimbursements revenue net of reimbursed costs expense is zero. We consider Timeshare segment revenue excluding cost reimbursements to be a meaningful metric as it represents that portion of our revenue that impacts segment results.
Timeshare Segment Cash Provided By Operating Activities.Timeshare segment cash provided by operating activities is evaluated by management because it represents the cash we have available from Timeshare segment operations which could be utilized in our Timeshare segment business or for other company-wide purposes such as for debt service requirements, opportunistic investments, share repurchases and other purposes.
2
MARRIOTT INTERNATIONAL, INC.
TIMESHARE SEGMENT
Composition of Fiscal Year 2007 Timeshare Segment Revenue Excluding Reimbursed Costs and Composition of Fiscal Year 2007 Timeshare Segment Results
($ in millions)
| | | | |
| | | Fiscal Year 2007
Timeshare Segment | |
| | | Revenue | |
Timeshare segment revenue, as reported | | $ | 2,065 | |
Less: reimbursed costs | | | (275 | ) |
| | | | |
Timeshare segment revenue excluding reimbursed costs** | | $ | 1,790 | |
| | | | |
| | | | | | |
| | | Fiscal Year 2007
Timeshare Segment
Revenue | |
| | | Revenue | | Percent | |
Development | | $ | 1,237 | | 69 | % |
Services | | | 358 | | 20 | % |
Financing | | | 195 | | 11 | % |
| | | | | | |
Timeshare segment revenue excluding reimbursed costs** | | $ | 1,790 | | 100 | % |
| | | | | | |
| |
| | | Fiscal Year 2007
Timeshare Segment Results | |
| | | Results | | Percent | |
Development | | $ | 176 | | 57 | % |
Financing | | | 106 | | 35 | % |
Services | | | 24 | | 8 | % |
| | | | | | |
Timeshare segment results | | $ | 306 | | 100 | % |
| | | | | | |
| ** | Denotes non-GAAP financial measures. |
Timeshare Segment Results assume an allocation of General, Administrative, and Other expenses. Development revenue includes financially reported sales, resales, sales of reacquired inventory, and other revenue. Development results also include equity and minority interest.
3
MARRIOTT INTERNATIONAL, INC.
Balance Sheet and Timeshare Segment Portion
Fiscal Year-End 2007
($ in millions)
| | | | | | |
| | | Year-End 2007 |
| | | Marriott International, Inc. | | Timeshare Segment Portion |
Assets | | | | | | |
Current assets | | | | | | |
Inventory | | $ | 1,557 | | $ | 1,544 |
Other | | | 2,015 | | | 500 |
Property and equipment | | | 1,329 | | | 331 |
Equity and cost method investments | | | 343 | | | 99 |
Notes receivable | | | 600 | | | 416 |
Other | | | 3,098 | | | 252 |
| | | | | | |
Total Assets | | $ | 8,942 | | $ | 3,142 |
| | | | | | |
| | |
Liabilities and shareholders’ equity | | | | | | |
Current liabilities | | $ | 2,876 | | $ | 599 |
Long-term debt | | | 2,790 | | | 63 |
Other long-term liabilities | | | 1,847 | | | 180 |
Intercompany | | | - | | | 606 |
Shareholders’ equity | | | 1,429 | | | 1,694 |
| | | | | | |
Total liabilities and shareholders’ equity | | $ | 8,942 | | $ | 3,142 |
| | | | | | |
4
MARRIOTT INTERNATIONAL, INC.
TIMESHARE SEGMENT NET CASH FLOW FROM OPERATIONS
FISCAL YEAR 2007
($ in millions)
| | | | | | | | |
Timeshare segment results | | | | | | $ | 306 | |
Add back depreciation and amortization | | | | | | | 39 | |
Timeshare activity, net | | | | | | | | |
Timeshare segment development in excess of cost of sales | | $ | (55 | ) | | | | |
Note activity | | | (49 | ) | | | | |
Financially reportable sales in excess of closed sales | | | (16 | ) | | | | |
Other cash outflows | | | (35 | ) | | | | |
| | | | | | | (155 | ) |
Net working capital changes, minority interest and other | | | | | | | (52 | ) |
| | | | | | | | |
Cash provided by operating activities attributable to the Timeshare segment ** | | | | | | $ | 138 | |
| | | | | | | | |
| ** | Denotes non-GAAP financial measures. |
5
