Statement Of Income Alternative
Statement Of Income Alternative (USD $) | |||||||||||||||||||
In Millions, except Per Share data | 12 Months Ended
Jan. 01, 2010 | 12 Months Ended
Jan. 02, 2009 | 12 Months Ended
Dec. 28, 2007 | ||||||||||||||||
REVENUES | |||||||||||||||||||
Base management fees | $530 | [1] | $635 | [1] | $620 | [1] | |||||||||||||
Franchise fees | 400 | [1] | 451 | [1] | 439 | [1] | |||||||||||||
Incentive management fees | 154 | [1] | 311 | [1] | 369 | [1] | |||||||||||||
Owned, leased, corporate housing, and other revenue | 1,019 | 1,225 | 1,240 | ||||||||||||||||
Timeshare sales and services (including net note sale gains of $37 in 2009, $16 for 2008, and $81 for 2007) | 1,123 | 1,423 | 1,747 | ||||||||||||||||
Cost reimbursements | 7,682 | [1] | 8,834 | [1] | 8,575 | [1] | |||||||||||||
Revenues, Total | 10,908 | 12,879 | 12,990 | ||||||||||||||||
OPERATING COSTS AND EXPENSES | |||||||||||||||||||
Owned, leased, and corporate housing-direct | 951 | 1,088 | 1,062 | ||||||||||||||||
Timeshare-direct | 1,040 | 1,334 | 1,397 | ||||||||||||||||
Timeshare strategy-impairment charges | 614 | 0 | 0 | ||||||||||||||||
Reimbursed costs | 7,682 | [1] | 8,834 | [1] | 8,575 | [1] | |||||||||||||
Restructuring costs | 51 | 55 | 0 | ||||||||||||||||
General, administrative, and other | 722 | [1] | 803 | [1] | 773 | [1] | |||||||||||||
Costs and Expenses, Total | 11,060 | 12,114 | 11,807 | ||||||||||||||||
OPERATING (LOSS) INCOME | (152) | 765 | 1,183 | ||||||||||||||||
Gains and other income (including gain on debt extinguishment of $21 in 2009 and $28 in 2008) | 31 | [1] | 38 | [1] | 97 | [1] | |||||||||||||
Interest expense | (118) | [1] | (163) | [1] | (184) | [1] | |||||||||||||
Interest income | 25 | [1] | 39 | [1] | 38 | [1] | |||||||||||||
Equity in (losses) earnings | (66) | [1] | 15 | [1] | 3 | [1] | |||||||||||||
Timeshare strategy-impairment charges (non-operating) | (138) | [1] | 0 | [1] | 0 | [1] | |||||||||||||
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | (418) | 694 | 1,137 | ||||||||||||||||
Benefit (provision) for income taxes | 65 | [1] | (350) | [1] | (441) | [1] | |||||||||||||
(LOSS) INCOME FROM CONTINUING OPERATIONS | (353) | 344 | 696 | ||||||||||||||||
Discontinued operations, net of tax | 0 | 3 | (1) | ||||||||||||||||
NET (LOSS) INCOME | (353) | 347 | 695 | ||||||||||||||||
Add: Net losses attributable to noncontrolling interests, net of tax | 7 | 15 | 1 | ||||||||||||||||
NET (LOSS) INCOME ATTRIBUTABLE TO MARRIOTT | ($346) | $362 | $696 | ||||||||||||||||
EARNINGS PER SHARE-Basic | |||||||||||||||||||
(Losses) earnings from continuing operations attributable to Marriott shareholders | -0.97 | [2] | 1.01 | [2] | 1.83 | [2] | |||||||||||||
Earnings from discontinued operations attributable to Marriott shareholders | $0 | 0.01 | $0 | ||||||||||||||||
(Losses) earnings per share attributable to Marriott shareholders | -0.97 | 1.02 | 1.83 | ||||||||||||||||
EARNINGS PER SHARE-Diluted | |||||||||||||||||||
(Losses) earnings from continuing operations attributable to Marriott shareholders | -0.97 | [2] | 0.97 | [2] | 1.73 | [2] | |||||||||||||
Earnings from discontinued operations attributable to Marriott shareholders | $0 | 0.01 | $0 | ||||||||||||||||
(Losses) earnings per share attributable to Marriott shareholders | -0.97 | 0.98 | 1.73 | ||||||||||||||||
CASH DIVIDENDS DECLARED PER SHARE | 0.0866 | 0.3339 | 0.2844 | ||||||||||||||||
[1]See Footnote No. 24, "Related Party Transactions," of the Notes to Consolidated Financial Statements for disclosure of related party amounts. | |||||||||||||||||||
[2]See Footnote No. 7, "Earnings Per Share," of the Notes to Consolidated Financial Statements for income from continuing operations attributable to Marriott used to calculate earnings from continuing operations per share attributable to Marriott shareholders. |
1_Statement Of Income Alternati
Statement Of Income Alternative (Parenthetical) (USD $) | |||
In Millions | 12 Months Ended
Jan. 01, 2010 | 12 Months Ended
Jan. 02, 2009 | 12 Months Ended
Dec. 28, 2007 |
Timeshare sales and services, note sale gains | $37 | $16 | $81 |
Gains and other income, gain on debt extinguishment | $21 | $28 | $0 |
Statement Of Financial Position
Statement Of Financial Position Classified (USD $) | |||||||||||||||||||
In Millions | Jan. 01, 2010
| Jan. 02, 2009
| |||||||||||||||||
Current assets | |||||||||||||||||||
Cash and equivalents | $115 | $134 | |||||||||||||||||
Accounts and notes receivable | 838 | [1] | 898 | [1] | |||||||||||||||
Inventory | 1,444 | 1,981 | |||||||||||||||||
Current deferred taxes, net | 255 | 186 | |||||||||||||||||
Other | 199 | 207 | |||||||||||||||||
Assets, Current, Total | 2,851 | 3,406 | |||||||||||||||||
Property and equipment | 1,362 | 1,443 | |||||||||||||||||
Intangible assets | |||||||||||||||||||
Goodwill | 875 | 875 | |||||||||||||||||
Contract acquisition costs | 731 | [1] | 710 | [1] | |||||||||||||||
Goodwill And Intangible Assets, Net, Total | 1,606 | 1,585 | |||||||||||||||||
Equity and cost method investments | 249 | [1] | 346 | [1] | |||||||||||||||
Notes receivable | 452 | [1] | 830 | [1] | |||||||||||||||
Deferred taxes, net | 1,020 | [1] | 727 | [1] | |||||||||||||||
Other | 393 | 566 | |||||||||||||||||
Assets, Total | 7,933 | 8,903 | |||||||||||||||||
Current liabilities | |||||||||||||||||||
Current portion of long-term debt | 64 | 120 | |||||||||||||||||
Accounts payable | 562 | [1] | 704 | [1] | |||||||||||||||
Accrued payroll and benefits | 519 | 633 | |||||||||||||||||
Liability for guest loyalty program | 454 | 446 | |||||||||||||||||
Other | 688 | [1] | 630 | [1] | |||||||||||||||
Liabilities, Current, Total | 2,287 | 2,533 | |||||||||||||||||
Long-term debt | 2,234 | 2,975 | |||||||||||||||||
Liability for guest loyalty program | 1,193 | 1,090 | |||||||||||||||||
Other long-term liabilities | 1,077 | [1] | 914 | [1] | |||||||||||||||
Marriott shareholders' equity | |||||||||||||||||||
Class A Common Stock | 5 | 5 | |||||||||||||||||
Additional paid-in-capital | 3,585 | 3,590 | |||||||||||||||||
Retained earnings | 3,103 | 3,565 | |||||||||||||||||
Treasury stock, at cost | (5,564) | (5,765) | |||||||||||||||||
Accumulated other comprehensive (loss) income | 13 | (15) | |||||||||||||||||
Stockholders' Equity Attributable to Parent, Total | 1,142 | 1,380 | |||||||||||||||||
Noncontrolling interests | 0 | 11 | |||||||||||||||||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Total | 1,142 | 1,391 | |||||||||||||||||
Liabilities and Stockholders' Equity, Total | $7,933 | $8,903 | |||||||||||||||||
[1]See Footnote No. 24, "Related Party Transactions," of the Notes to Consolidated Financial Statements for disclosure of related party amounts. |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect (USD $) | |||
In Millions | 12 Months Ended
Jan. 01, 2010 | 12 Months Ended
Jan. 02, 2009 | 12 Months Ended
Dec. 28, 2007 |
OPERATING ACTIVITIES | |||
Net (loss) income | ($353) | $347 | $695 |
Adjustments to reconcile to cash provided by operating activities: | |||
Depreciation and amortization | 185 | 190 | 197 |
Income taxes | (167) | 101 | (152) |
Timeshare activity, net | 146 | (398) | (155) |
Timeshare strategy-impairment charge | 752 | 0 | 0 |
Liability for guest loyalty program | 103 | 116 | 122 |
Restructuring costs, net | 16 | 51 | 0 |
Asset impairments and write-offs | 80 | 62 | 13 |
Working capital changes and other | 106 | 172 | 58 |
Net cash provided by operating activities | 868 | 641 | 778 |
INVESTING ACTIVITIES | |||
Capital expenditures | (147) | (357) | (671) |
Dispositions | 2 | 38 | 745 |
Loan advances | (65) | (53) | (31) |
Loan collections and sales | 20 | 36 | 106 |
Equity and cost method investments | (28) | (25) | (40) |
Contract acquisition costs | (39) | (133) | (59) |
Sale of available-for-sale securities | 16 | 22 | 43 |
Partial surrender of life insurance policy cash value | 97 | 0 | 0 |
Other | 75 | (11) | 32 |
Net cash (used in) provided by investing activities | (69) | (483) | 125 |
FINANCING ACTIVITIES | |||
Commercial paper/credit facility, net | (544) | 384 | 258 |
Issuance of long-term debt | 0 | 17 | 820 |
Repayment of long-term debt | (238) | (275) | (153) |
Issuance of Class A Common Stock | 27 | 51 | 203 |
Dividends paid | (63) | (115) | (105) |
Purchase of treasury stock | 0 | (434) | (1,757) |
Other | 0 | 16 | (28) |
Net cash used in financing activities | (818) | (356) | (762) |
(DECREASE) INCREASE IN CASH AND EQUIVALENTS | (19) | (198) | 141 |
CASH AND EQUIVALENTS, beginning of year | 134 | 332 | 191 |
CASH AND EQUIVALENTS, end of year | $115 | $134 | $332 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | |||
In Millions | 12 Months Ended
Jan. 01, 2010 | 12 Months Ended
Jan. 02, 2009 | 12 Months Ended
Dec. 28, 2007 |
Net (loss) income | ($353) | $347 | $695 |
Other comprehensive income (loss), net of tax: | |||
Foreign currency translation adjustments | 24 | (59) | 35 |
Other derivative instrument adjustments | (6) | 12 | (2) |
Unrealized gains (losses) on available-for-sale securities | 6 | (21) | (8) |
Reclassification of losses (gains) on available-for-sale securities | 4 | 2 | (18) |
Total other comprehensive (loss) income, net of tax | 28 | (66) | 7 |
Comprehensive (loss) income | (325) | 281 | 702 |
Parent | |||
Net (loss) income | (346) | 362 | 696 |
Other comprehensive income (loss), net of tax: | |||
Foreign currency translation adjustments | 24 | (59) | 35 |
Other derivative instrument adjustments | (6) | 12 | (2) |
Unrealized gains (losses) on available-for-sale securities | 6 | (21) | (8) |
Reclassification of losses (gains) on available-for-sale securities | 4 | 2 | (18) |
Total other comprehensive (loss) income, net of tax | 28 | (66) | 7 |
Comprehensive (loss) income | (318) | 296 | 703 |
Equity Attributable to Noncontrolling Interests | |||
Net (loss) income | (7) | (15) | (1) |
Other comprehensive income (loss), net of tax: | |||
Foreign currency translation adjustments | 0 | 0 | 0 |
Other derivative instrument adjustments | 0 | 0 | 0 |
Unrealized gains (losses) on available-for-sale securities | 0 | 0 | 0 |
Reclassification of losses (gains) on available-for-sale securities | 0 | 0 | 0 |
Total other comprehensive (loss) income, net of tax | 0 | 0 | 0 |
Comprehensive (loss) income | (7) | (15) | (1) |
Retained Earnings | |||
Net (loss) income | (346) | 362 | 696 |
Accumulated Other Comprehensive Income (Loss) | |||
Other comprehensive income (loss), net of tax: | |||
Total other comprehensive (loss) income, net of tax | $28 | ($66) | $7 |
Statement Of Shareholders' Equi
Statement Of Shareholders' Equity (USD $) | |||||||||||||||||||
In Millions | Class A Common Stock
| Additional Paid-in-Capital
| Equity Attributable to Noncontrolling Interests
| Retained Earnings
| Treasury Stock, at Cost
| Accumulated Other Comprehensive Income (Loss)
| Total
| ||||||||||||
Beginning Balance at Dec. 29, 2006 | $5 | $3,617 | $33 | $2,860 | ($3,908) | $44 | $2,651 | ||||||||||||
Beginning Balance at Dec. 29, 2006 | 393.3 | ||||||||||||||||||
Balance, as adjusted for accounting changes | 393.3 | ||||||||||||||||||
Employee stock plan issuance | 8.6 | ||||||||||||||||||
Purchase of treasury stock | (41) | ||||||||||||||||||
Impact of adoption of ASC 860-50-35 | 1 | [2] | 1 | [2] | |||||||||||||||
Impact of adoption of ASC 740-10 | (121) | [3] | (34) | [3] | (155) | [3] | |||||||||||||
Balance, as adjusted for accounting changes | 5 | 3,496 | 33 | 2,827 | (3,908) | 44 | 2,497 | ||||||||||||
Net income (loss) | (1) | 696 | 695 | ||||||||||||||||
Other comprehensive income (loss) | 0 | 7 | 7 | ||||||||||||||||
Dividends | (107) | (107) | |||||||||||||||||
Employee stock plan issuance | 35 | (84) | 195 | 146 | |||||||||||||||
Other | 1 | 1 | |||||||||||||||||
Purchase of treasury stock | (1,777) | (1,777) | |||||||||||||||||
Ending Balance at Dec. 28, 2007 | 360.9 | ||||||||||||||||||
Ending Balance at Dec. 28, 2007 | 5 | 3,531 | 33 | 3,332 | (5,490) | 51 | 1,462 | ||||||||||||
Balance, as adjusted for accounting changes | 360.9 | ||||||||||||||||||
Employee stock plan issuance | 4.4 | ||||||||||||||||||
Purchase of treasury stock | -11.9 | ||||||||||||||||||
Impact of adoption of ASC 360-20-40 | (3) | [1] | (3) | [1] | |||||||||||||||
Balance, as adjusted for accounting changes | 5 | 3,531 | 33 | 3,329 | (5,490) | 51 | 1,459 | ||||||||||||
Net income (loss) | (15) | 362 | 347 | ||||||||||||||||
Other comprehensive income (loss) | 0 | (66) | (66) | ||||||||||||||||
Dividends | (118) | (118) | |||||||||||||||||
Employee stock plan issuance | 59 | (8) | 96 | 147 | |||||||||||||||
Other | (7) | (7) | |||||||||||||||||
Purchase of treasury stock | (371) | (371) | |||||||||||||||||
Ending Balance at Jan. 02, 2009 | 353.4 | ||||||||||||||||||
Ending Balance at Jan. 02, 2009 | 5 | 3,590 | 11 | 3,565 | (5,765) | (15) | 1,391 | ||||||||||||
Employee stock plan issuance | 4.8 | ||||||||||||||||||
Purchase of treasury stock | 0 | ||||||||||||||||||
Net income (loss) | (7) | (346) | (353) | ||||||||||||||||
Other comprehensive income (loss) | 0 | 28 | 28 | ||||||||||||||||
Dividends | (125) | 92 | (33) | ||||||||||||||||
Employee stock plan issuance | (5) | 9 | 109 | 113 | |||||||||||||||
Other | (4) | (4) | |||||||||||||||||
Purchase of treasury stock | 0 | 0 | |||||||||||||||||
Ending Balance at Jan. 01, 2010 | 358.2 | ||||||||||||||||||
Ending Balance at Jan. 01, 2010 | $5 | $3,585 | $0 | $3,103 | ($5,564) | $13 | $1,142 | ||||||||||||
[1]This was previously Emerging Issues Task Force Issue No. ("EITF") 06-8 and was updated with referencing to the ASC. | |||||||||||||||||||
[2]This was previously FAS No. 156 and was updated with referencing to the Accounting Standards Codification ("ASC"). | |||||||||||||||||||
[3]This was previously FASB Interpretation No. ("FIN") 48 and was updated with referencing to the ASC. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements present the results of operations, financial position, and cash flows of Marriott International, Inc. (Marriott, and together with its subsidiaries we, us, or the Company). In accordance with the guidance for noncontrolling interests in consolidated financial statements, references in this report to our earnings per share, net income and shareholders equity attributable to Marriott do not include noncontrolling interests (previously known as minority interests), which we report separately. Please see New Accounting Standards, later in this Footnote No.1 for additional information on this accounting standard, which was adopted in 2009. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods, and the disclosures of contingent liabilities. Accordingly, ultimate results could differ from those estimates. As a result of the discontinuation of our synthetic fuel business on November3, 2007, the balances and activities of the synthetic fuel reportable segment have been segregated and reported as discontinued operations for all periods presented. We have reclassified certain prior year amounts to conform to our 2009 presentation. These reclassifications resulted from communications with the Staff of the Securities and Exchange Commission (SEC) on the income statement presentation of the provision for loan losses associated with our lodging operations in the normal course of business, which we now classify as a component of General, administrative, and other within Operating (loss) income in our Consolidated Statements of Income, and which we previously classified as Provision for loan losses below Operating (loss) income. We made the following reclassifications in our Consolidated Statements of Income of provisions for loan losses that we recognized in 2009, 2008, and 2007 and originally reported in Provision for loan losses: 1. The $42 million provision for loan losses in the 2009 first quarter is now reported in General, administrative, and other expenses, with the result that Operating (loss) income of $82 million as originally reported in the 2009 first quarter, now totals $40 million; 2. The $1 million provision for loan losses that we recognized in the 2009 second quarter is now reported in General, administrative, and other expenses, with the result that Operating (loss) income of $100 million as originally reported in the 2009 second quarter, now totals $99 million; 3. As a result of these two reclassifications, and our 2009 fourth quarter classification of a $3 million reversal of provision for loan losses in General, administrative, and other expenses, we now report our 2009 full year provision for loan losses totaling $40 million in General, administrative, and other expenses; and 4. The provisions for loa |
INCOME TAXES
INCOME TAXES | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
INCOME TAXES | 2. INCOME TAXES We adopted the provisions for accounting for uncertainty in income taxes, on December30, 2006, the first day of fiscal year 2007. As a result of the implementation, we recorded a $155 million increase in the net liability for unrecognized tax positions, which was recorded as an adjustment to the opening balance of retained earnings and additional paid-in-capital on December30, 2006. The total amount of unrecognized tax benefits as of year-end 2009 and year-end 2008 was $249 million and $141 million, respectively. Included in the balances at year-end 2009 and year-end 2008 were $136 million and $87 million, respectively, of tax positions that, if recognized, would impact the effective tax rate. The unrecognized tax benefit reconciliation from the beginning balance to the ending balance is as follows: ($ in millions) Amount Unrecognized tax benefit at beginning of year (December 29, 2007) $ 132 Change attributable to tax positions taken during a prior period 92 Change attributable to tax positions taken during the current period 5 Decrease attributable to settlements with taxing authorities (86 ) Decrease attributable to lapse of statute of limitations (2 ) Unrecognized tax benefit at end of year (January 2, 2009) 141 Change attributable to tax positions taken during a prior period 99 Change attributable to tax positions taken during the current period 22 Decrease attributable to settlements with taxing authorities (10 ) Decrease attributable to lapse of statute of limitations (3 ) Unrecognized tax benefit at end of year (January 1, 2010) $ 249 In accordance with our accounting policy, we recognize accrued interest and penalties related to unrecognized tax benefits as a component of tax expense. Our Consolidated Statement of Income for the year ended January1, 2010, and our Consolidated Balance Sheet as of that date included interest of $2 million and $28 million, respectively. Our Consolidated Statement of Income for the year ended January2, 2009, and our Consolidated Balance Sheet as of that date included interest of $42 million and $29 million, respectively. We file income tax returns, including returns for our subsidiaries, with federal, state, local, and foreign jurisdictions. We are participating in the Internal Revenue Service (IRS) Compliance Assurance Program (CAP) for the 2009 and 2008 tax years and we will participate for 2010. This program accelerates the examination of key transactions with the goal of resolving any issues before the tax return is filed. Our federal income tax returns have been examined and we have settled all issues for tax years through 2004. We filed a refund claim relating to 2000 and 2001. The IRS disallowed the claims, and in July 2009, we protested the disallowance. This issue is pending in the IRS Appeals Division. The 2005, 2006, and 2007 field examinations have been completed, and the unresolved issues from those years are now with the IRS Appeals Division. The 2008 and 2009 IRS examinations are ongoing as part of the IRSs Compli |
DISCONTINUED OPERATIONS-SYNTHET
DISCONTINUED OPERATIONS-SYNTHETIC FUEL | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
DISCONTINUED OPERATIONS-SYNTHETIC FUEL | 3. DISCONTINUED OPERATIONS-SYNTHETIC FUEL Our synthetic fuel operations consisted of four coal-based synthetic fuel production facilities (the Facilities). Because tax credits under Section45K of the IRC are not available for the production and sale of synthetic fuel produced from coal after calendar year-end 2007, and because we estimated that high oil prices during 2007 would result in the phaseout of a significant portion of the tax credits available for synthetic fuel produced and sold in 2007, on November3, 2007, we shut down the Facilities and permanently ceased production of synthetic fuel. Accordingly, we now report this business as a discontinued operation. The following tables provide additional income statement and balance sheet information relating to our discontinued synthetic fuel operations. The discontinued synthetic fuel operations reflected in the income statements for 2008 and 2007 only represent activity related to Marriott and there were no noncontrolling interests. Income Statement Summary ($ in millions) 2009 2008 2007 Revenue $ $ 1 $ 352 Operating loss $ $ (4 ) $ (113 ) Gains and other expense (6 ) Interest expense (8 ) Loss from discontinued operations before income taxes (4 ) (127 ) Tax (provision) benefit (3 ) 46 Tax credits 10 80 Total tax benefit 7 126 Income (loss) from discontinued operations, net of tax $ $ 3 $ (1 ) Balance Sheet Summary ($ in millions) AtYear-End 2009 AtYear-End 2008 Current liabilities-other payables and accruals $ $ (3 ) |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
SHARE-BASED COMPENSATION | 4. SHARE-BASED COMPENSATION Under our 2002 Comprehensive Stock and Cash Incentive Plan, we award: (1)stock options to purchase our ClassA Common Stock (Stock Option Program); (2)share appreciation rights (SARs) for our ClassA Common Stock (Stock Appreciation Right Program); (3)restricted stock units of our ClassA Common Stock; and (4)deferred stock units. We grant awards at exercise prices or strike prices that are equal to the market price of our ClassA Common Stock on the date of grant. For all share-based awards, the guidance requires that we measure compensation costs related to our share-based payment transactions at fair value on the grant date and that we recognize those costs in the financial statements over the vesting period during which the employee provides service in exchange for the award. During 2009, we granted 0.8million restricted stock units, 0.5million Employee SARs, 5,600 Non-employee SARs, and 39,000 deferred stock units. See Footnote No.4, Share-Based Compensation in our 2008 Annual Report on Form 10-K for information regarding grants made in August 2008 that would ordinarily have been made in February 2009, but were accelerated to encourage associate retention in a difficult economic climate. Awards for the most senior executives were not accelerated. We recorded share-based compensation expense related to award grants of $85 million in 2009, $112 million in 2008, and $104 million in 2007. Deferred compensation costs related to unvested awards totaled $122 million at year-end 2009 and $215 million at year-end 2008, and the weighted average period over which we expect the deferred compensation costs at year-end 2009 to be recognized is two years. For awards granted after 2005, we recognize share-based compensation expense over the period from the grant date to the date on which the award is no longer contingent on the employee providing additional service (the substantive vesting period). We continue to follow the stated vesting period for the unvested portion of awards granted prior to fiscal year 2006 and the adoption of the current guidance for share-based compensation and follow the substantive vesting period for awards granted after fiscal year 2005. In accordance with the guidance for share-based compensation, we present the tax benefits and costs resulting from the exercise or vesting of share-based awards as financing cash flows. An $8 million tax cost resulted from the exercise of share-based awards in 2009. Tax benefits resulted from the exercise of share-based awards totaling $21 million in 2008, and $114 million in 2007. The aggregate amount of cash we received from the exercise of stock options granted under share-based payment arrangements was $35 million, $30 million, and $89 million, for 2009, 2008, and 2007, respectively. Restricted Stock Units We issue restricted stock units under the Comprehensive Plan to certain officers and key employees and those units vest generally over four years in annual installments commencing one year after the date of grant. We recognize compensation expense for the restricted stock units over the service period equal to the fair market va |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
FAIR VALUE MEASUREMENTS | 5. FAIR VALUE MEASUREMENTS The guidance for fair value measurement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. The guidance for fair value measurement details the disclosures that are required for items measured at fair value. We have various financial instruments we must measure at fair value on a recurring basis, including certain marketable securities, derivatives, and residual interests related to our asset securitizations. We also apply the provisions of fair value measurement to various non-recurring measurements for our financial and non-financial assets and liabilities, which included the impairment of a joint venture investment, and two security deposits in the first quarter of 2009, the impairment of Timeshare segment inventory, property and equipment, anticipated fundings in conjunction with certain purchase commitments, and a joint venture investment in the third quarter of 2009, and the impairment of a joint venture investment and an intangible asset in the fourth quarter of 2009. See Footnote No.21, Restructuring Costs and Other Charges, and Footnote No.20, Timeshare Strategy-Impairment Charges, for further information. We measure our assets and liabilities using inputs from the following three levels of the fair value hierarchy: Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3 includes unobservable inputs that reflect our assumptions about what factors market participants would use in pricing the asset or liability. We develop these inputs based on the best information available, including our own data. In accordance with the fair value hierarchy, the following table shows the fair value as of year-end 2009, of those assets and liabilities that we must measure at fair value on a recurring basis and that we classify as Other current assets, Other assets, Other current liabilities, and Other long-term liabilities: ($ in millions) Fair Value Measurements as of Year-End 2009 Description Balanceat Year-End 2009 Level1 Level2 Level3 Assets: Servicing assets and other residual interests $ 214 $ $ $ 214 Marketable securities 18 18 Derivative instruments 2 2 Li |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 6. FAIR VALUE OF FINANCIAL INSTRUMENTS We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts. The following table shows the carrying values and the fair values of non-current financial assets and liabilities that qualify as financial instruments, determined in accordance with the guidance for disclosures about fair value of financial instruments. At Year-End 2009 At Year-End 2008 ($ in millions) Carrying Amount Fair Value Carrying Amount Fair Value Cost method investments $ 41 $ 43 $ 37 $ 36 Long-term notes receivable 452 445 830 817 Residual interests and effectively owned notes 197 197 135 135 Restricted cash 22 22 51 51 Marketable securities 18 18 24 24 Other long-term receivables 6 6 24 24 Total long-term financial assets $ 736 $ 731 $ 1,101 $ 1,087 Long-term debt $ (2,206 ) $ (2,286 ) $ (2,941 ) $ (2,720 ) Other long-term liabilities (86 ) (75 ) (92 ) (92 ) Long-term derivative liabilities (1 ) (1 ) (20 ) (20 ) Total long-term financial liabilities $ (2,293 ) $ (2,362 ) $ (3,053 ) $ (2,832 ) We estimate the fair value of our cost method investments by applying a cap rate to stabilized earnings (a market approach). We estimate the fair value of our long-term notes receivables using various methods, which include discounting cash flows using risk-adjusted rates and applying historical results from our most recent securitization transaction to our unsold notes receivables. The carrying value of our restricted cash approximates its fair value, and we estimate the fair value of our other long-term receivables by discounting future cash flows at risk-adjusted rates. The carrying value of our marketable securities at year-end 2009, of $18 million includes debt securities of the U.S. Government, its sponsored agencies and other U.S. corporations invested for our self-insurance programs. Our residual interests, marketable securities, and restricted cash are included within the Other long-term assets caption on our Consolidated Balance Sheets. We estimate the fair value of our long-term debt, excluding leases, using a combination of quoted market prices and expected future payments discounted at risk-adjusted rates. Other long-term liabilities represent guarantee costs and reserves and deposit liabilities. The carrying values of our guarantee costs and reserves approximate their fair values. We estimate the fair value of our deposit liabilities primarily by discounting future payments at a risk adjusted rate. Our residual interests related to our timeshare securitizations, marketable securities, and derivative liabilities are carried at fair value. Please see Footnote No.5, Fair Value Measurements, for additional information on the metho |
EARNINGS PER SHARE
EARNINGS PER SHARE | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
EARNINGS PER SHARE | 7. EARNINGS PER SHARE The table below illustrates the reconciliation of the (losses) earnings and number of shares used in our calculations of basic and diluted (losses) earnings per share attributable to Marriott shareholders. (in millions, except per share amounts) 2009 2008 2007 Computation of Basic Earnings Per Share Attributable to Marriott Shareholders (Loss) income from continuing operations $ (353 ) $ 344 $ 696 Net losses attributable to noncontrolling interests 7 15 1 (Loss) income from continuing operations attributable to Marriott shareholders (346 ) $ 359 $ 697 Weighted average shares outstanding 356.4 355.6 380.2 Basic (losses) earnings per share from continuing operations attributable to Marriott shareholders $ (0.97 ) $ 1.01 $ 1.83 Computation of Diluted Earnings Per Share Attributable to Marriott Shareholders (Loss) income from continuing operations attributable to Marriott shareholders $ (346 ) $ 359 $ 697 Weighted average shares outstanding 356.4 355.6 380.2 Effect of dilutive securities Employee stock option and SARs plan 11.7 16.8 Deferred stock incentive plan 1.6 1.9 Restricted stock units 1.8 2.5 Shares for diluted earnings per share 356.4 370.7 401.4 Diluted (losses) earnings per share from continuing operations attributable to Marriott shareholders $ (0.97 ) $ 0.97 $ 1.73 We compute the effect of dilutive securities using the treasury stock method and average market prices during the period. We determine dilution based on earnings from continuing operations attributable to Marriott shareholders. As we recorded a loss from continuing operations in 2009, we did not include the following shares in the Effect of dilutive securities caption in the preceding table, because it would have been antidilutive to do so: 7.5million employee stock option and SARs plan shares, 1.4million deferred stock incentive plans shares, or 2.1million restricted stock unit shares. In accordance with the guidance for earnings per share, we have not included the following stock options and SARs in our calculation of diluted earnings per share attributable to Marriott shareholders because the exercise prices were greater than the average market prices for the applicable periods: (a) for 2009, 12.3million options and SARs, with exercise prices ranging from $22.30 to $49.03; (b) for 2008, 3.9million options and SARs, with exercise prices ranging from $31.05 to $49.03; and (c) for 2007, 0.4million options and SARs, with exercise prices ranging from $45.91 to $49.03. We have restated weighted average common and diluted shares to reflect the 2009 second through fourth quarter stock dividends of 0.00360, 0.00370, and 0.00341 shares of common stock, respectively, and adjusted d |
INVENTORY
INVENTORY | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
INVENTORY | 8. INVENTORY Inventory, totaling $1,444 million and $1,981 million as of fiscal year-end 2009 and fiscal year-end 2008, respectively, consists primarily of Timeshare segment interval, fractional ownership, and residential products totaling $1,426 million and $1,959 million as of fiscal year-end 2009, and fiscal year-end 2008, respectively. Inventory totaling $18 million and $22 million as of fiscal year-end 2009, and fiscal year-end 2008, respectively, primarily relates to hotel operating supplies for the limited number of properties we own or lease. We value Timeshare segment interval, fractional ownership, and residential products at the lower of cost or net realizable value and generally value operating supplies at the lower of cost (using the first-in, first-out method) or market. Consistent with recognized industry practice, we classify Timeshare segment interval, fractional ownership, and residential products inventory, which has an operating cycle that exceeds 12 months, as a current asset. Weak economic conditions in the United States, Europe and much of the rest of the world, instability in the financial markets following the 2008 worldwide financial crisis, and weak consumer confidence all contributed to a difficult business environment and resulted in weaker demand for our Timeshare segment products, in particular our luxury residential (or whole ownership) products, but also to a lesser extent our luxury fractional ownership and timeshare products. In 2009, we recorded an inventory impairment charge of $529 million in conjunction with our evaluation of the entire Timeshare portfolio. See Footnote No.20, Timeshare Strategy-Impairment Charges, for additional information. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
PROPERTY AND EQUIPMENT | 9. PROPERTY AND EQUIPMENT The following table details the composition of our property and equipment balances at year-end 2009 and year-end 2008. ($ in millions) 2009 2008 Land $ 454 $ 469 Buildings and leasehold improvements 935 852 Furniture and equipment 996 954 Construction in progress 163 244 2,548 2,519 Accumulated depreciation (1,186 ) (1,076 ) $ 1,362 $ 1,443 We record property and equipment at cost, including interest and real estate taxes incurred during development and construction. Interest capitalized as a cost of property and equipment totaled $32 million in 2009, $55 million in 2008, and $49 million in 2007. We capitalize the cost of improvements that extend the useful life of property and equipment when incurred. These capitalized costs may include structural costs, equipment, fixtures, floor, and wall coverings. We expense all repair and maintenance costs as incurred. We compute depreciation using the straight-line method over the estimated useful lives of the assets (three to 40 years), and we amortize leasehold improvements over the shorter of the asset life or lease term. Depreciation expense totaled $151 million in 2009, $155 million in 2008, and $162 million in 2007. |
ACQUISITIONS AND DISPOSITIONS
ACQUISITIONS AND DISPOSITIONS | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
ACQUISITIONS AND DISPOSITIONS | 10. ACQUISITIONS AND DISPOSITIONS We made no significant acquisitions or dispositions in 2009. 2008 Acquisitions At year-end 2007, we were party to a venture that developed and marketed fractional ownership and residential products. In 2008, we purchased our partners interest in that joint venture together with additional land. Cash consideration for this transaction totaled $42 million and we acquired assets and liabilities totaling $80 million and $38 million, respectively, on the date of purchase. In 2008, we also purchased real estate for a timeshare project for a total purchase price of approximately $63 million. Cash consideration totaled approximately $39 million, and non-current liabilities recorded as a result of this transaction were $24 million. In addition, in 2008, we purchased real estate for another timeshare project for cash consideration of $47 million. Also in 2008, we purchased units in an existing building for our timeshare operations for cash consideration of approximately $14 million. We also purchased real estate for another timeshare project for $28 million. Cash consideration totaled approximately $27 million, and we acquired assets and liabilities totaling $28 million and $1 million, respectively, on the date of purchase. 2008 Dispositions In 2008, we sold, at book value, two limited-service properties and two land parcels for cash proceeds of $33 million, and we received a $22 million equity interest in the entity that purchased one of the land parcels. We accounted for each of the sales under the full accrual method in accordance with accounting for sales of real estate and each property will continue to operate under our brands pursuant to management or franchise agreements. Also, in 2008, we sold our interest in an entity that leases four hotels. In conjunction with that transaction, we received cash proceeds totaling $5 million, and the sales price of the investment approximated its book value. 2007 Acquisitions During 2007, we acquired one full-service property, one limited-service property, and one extended-stay property for cash consideration of $199 million. These three properties were acquired in conjunction with a land assemblage for a large hotel complex that is still in the formative development stage. In addition, we acquired certain land parcels in 2007 for cash consideration of $52 million. Also during 2007, we acquired the fee simple interest in the improvements of three properties and the leasehold interest in the ground underlying the three properties for cash consideration of $58 million. The purchase included one full-service property and two limited-service properties, which were each sold later in the same year. During the first half of 2007, we were party to a venture that developed and marketed fractional ownership and residential interests. In the second half of 2007, we purchased our partners interest in the joint venture for $6 million. In conjunction with that transaction, we acquired assets and liabilities totaling $90 million and $84 million, respectively, on the date of the purchase. During the first half of 2007, we were party to another venture that was |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
GOODWILL AND INTANGIBLE ASSETS | 11. GOODWILL AND INTANGIBLE ASSETS The following table details the composition of our other intangible assets at year-end 2009 and year-end 2008. ($ in millions) 2009 2008 Contract acquisition costs and other $ 1,073 $ 1,004 Accumulated amortization (342 ) (294 ) $ 731 $ 710 We capitalize costs incurred to acquire management, franchise, and license agreements that are both direct and incremental. We amortize these costs on a straight-line basis over the initial term of the agreements, ranging from 15 to 30 years. Amortization expense totaled $31 million in 2009 and $35 million for each of 2008 and 2007. Our estimated aggregate amortization expense for each of the next five fiscal years is as follows: $30 million for 2010; $29 million for 2011; $28 million for 2012; $28 million for 2013; and $28 million for 2014. In 2008, following the guidance for uncertainties related to income taxes in a purchase business combination, we recorded a net $46 million reduction of goodwill and a corresponding change to the related net deferred tax liability due to the resolution of tax-related matters and a change in managements estimate of tax basis related to the purchase method of accounting for the Renaissance brand acquisition in 1997. The following table details the changes in the carrying amount of goodwill for year-end 2008. There were no changes in the carrying amount of goodwill for year-end 2009. ($ in millions) Balanceat Year-End 2007 2008 NetDeferred Tax Liability Adjustment Balanceat Year-End 2008 Balanceat Year-End 2009 Goodwill $ 1,049 $ (46 ) $ 1,003 $ 1,003 Accumulated amortization (128 ) (128 ) (128 ) $ 921 $ (46 ) $ 875 $ 875 |
NOTES RECEIVABLE
NOTES RECEIVABLE | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
NOTES RECEIVABLE | 12. NOTES RECEIVABLE The following table details the composition of our notes receivable balances at year-end 2009 and year-end 2008. ($ in millions) 2009 2008 Loans to timeshare owners $ 424 $ 688 Senior loans 1 2 Mezzanine and other loans 195 236 620 926 Less current portion (168 ) (96 ) $ 452 $ 830 We classify notes receivable due within one year as current assets in the caption Accounts and notes receivable in the accompanying Consolidated Balance Sheets, including $73 million and $81 million, as of year-end 2009 and year-end 2008, respectively, related to loans to timeshare owners. Total long-term notes receivable as of year-end 2009 and year-end 2008 of $452 million and $830 million, respectively, consist of loans to timeshare owners of $352 million and $607 million, respectively, loans to equity method investees of $10 million and $50 million, respectively, and other notes receivable of $90 million and $173 million, respectively. Notes receivable at year-end 2009 were due to us as follows: $168 million in 2010; $58 million in 2011; $64 million in 2012; $43 million in 2013; $39 million in 2014; and $248 million thereafter. The 2009 notes receivable balance is net of reserves of $210 million and unamortized discounts totaling $16 million. The 2008 notes receivable balance is net of reserves of $148 million and unamortized discounts totaling $21 million. Gains from the sale of notes receivable totaled approximately $37 million, $16 million, and $82 million during 2009, 2008, and 2007, respectively. Senior, Mezzanine, and Other Loans We reflect interest income associated with Senior, mezzanine, and other loans in the Interest income caption in the accompanying Consolidated Statements of Income. For financial statement purposes we do not accrue interest on Senior, mezzanine, and other loans that are impaired. At year-end 2009, our recorded investment in impaired Senior, mezzanine, and other loans was $191 million. We had a $183 million notes receivable reserve representing an allowance for credit losses, leaving $8 million of our investment in impaired loans for which there was no related allowance for credit losses. At year-end 2008, our recorded investment in impaired Senior, mezzanine, and other loans was $157 million. We had a $113 million notes receivable reserve representing an allowance for credit losses, leaving $44 million of our investment in impaired loans for which there was no related allowance for credit losses. During 2009 and 2008, our average investment in impaired loans totaled $174 million and $135 million, respectively. In 2009, we fully reserved two notes receivable balances that we deemed uncollectible, one of which relates to a project that is in development, and partially reserved one notes receivable balance. We recorded a total charge of $43 million in 2009 in the General, administrative, and other expense caption in our Consolidated Statements of Income related to these notes receivable balances. See Footnote No.21, Restructuring Costs and |
ASSET SECURITIZATIONS
ASSET SECURITIZATIONS | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
ASSET SECURITIZATIONS | 13. ASSET SECURITIZATIONS We periodically sell, without recourse, through special purpose entities, notes receivable originated by our Timeshare segment in connection with the sale of timeshare interval and fractional products. We continue to service the notes and transfer all proceeds collected to special purpose entities. We retain servicing assets and other interests in the notes and account for these assets and interests as residual interests. The interests are limited to the present value of cash available after paying financing expenses and program fees and absorbing credit losses. The executed transactions typically include minimal cash reserves established at time of sale as well as default and delinquency triggers, which are monitored on a monthly basis. We measure our servicing assets using the fair value method. Under the fair value method, we carry servicing assets on the balance sheet at fair value, and report the changes in fair value, primarily due to changes in valuation inputs and assumptions and to the collection or realization of expected cash flows, in earnings in the period in which the change occurs. To determine the fair value of servicing assets, we use a valuation model that calculates the present value of estimated future net servicing income, which is based on the monthly fee we receive for servicing the securitized notes. We use market assumptions in the valuation model, including estimates of prepayment speeds, default rates, and discount rates. We have inherent risk for changes in the fair value of the servicing asset but do not deem the risk significant and therefore, do not use other financial instruments to mitigate this risk. The changes in servicing assets for year-end 2008 and year-end 2009, measured using the fair value method were: ($ in millions) Servicing Assets Fair value, beginning of fiscal year 2008 $ 15 Servicing from securitizations 3 Changes in fair value (1) (6 ) Fair value, fiscal year-end 2008 12 Servicing from securitizations 8 Disposals (2) (3 ) Changes in fair value (1) (3 ) Fair value, fiscal year-end 2009 $ 14 (1) Principally represents changes due to collection/realization of expected cash flows over time and changes in fair value due to changes in key variables listed below. (2) Represents release of servicing assets related to the repurchase of outstanding note sale pools. At year-end 2009, $1,235 million of principal due from timeshare interval and fractional owners remained outstanding in 13 special purpose entities formed in connection with our timeshare note sales. Delinquencies of more than 90 days amounted to $16 million. The impact to us from delinquencies, and our maximum exposure to loss as a result of our involvement with these special purpose entities, is limited to our residual interests and servicing assets, as discussed in Footnote No.5, Fair Value Measurements. Please see the Timeshare Residual Interests Valuation caption in Footnote No.21, Restructuring Costs and Other Charges for additional information on the risks |
LONG-TERM DEBT
LONG-TERM DEBT | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
LONG-TERM DEBT | 14. LONG-TERM DEBT Our long-term debt at year-end 2009 and year-end 2008, net of unamortized debt discounts of $20 million and $27 million, respectively, consisted of the following: ($ in millions) 2009 2008 Senior Notes: Series C, matured September15, 2009 $ $ 76 Series F, interest rate of 4.625%, face amount of $348, maturing June15, 2012 (effective interest rate of 5.020%) 347 347 Series G, interest rate of 5.810%, face amount of $316, maturing November10, 2015 (effective interest rate of 6.550%) 302 349 Series H, interest rate of 6.200%, face amount of $289, maturing June15, 2016 (effective interest rate of 6.300%) 289 314 Series I, interest rate of 6.375%, face amount of $293, maturing June15, 2017 (effective interest rate of 6.450%) 291 335 Series J, interest rate of 5.625%, face amount of $400, maturing February15, 2013 (effective interest rate of 5.710%) 398 397 $2.4B Effective Credit Facility, average interest rate of 0.872% at January1, 2010 425 969 Other 246 308 2,298 3,095 Less current portion (64 ) (120 ) $ 2,234 $ 2,975 As of year-end 2009, all debt was unsecured, and we had long-term public debt ratings of BBB- from Standard and Poors and Baa3 from Moodys. We are party to a multicurrency revolving credit agreement (the Credit Facility) that provides for $2.4 billion of aggregate effective borrowings to support general corporate needs, including working capital and capital expenditures, and letters of credit supported our commercial paper program. The Credit Facility expires on May14, 2012. Borrowings under the Credit Facility bear interest at the London Interbank Offered Rate (LIBOR) plus a fixed spread. We also pay quarterly fees on the Credit Facility at a rate based on our public debt rating. Until the 2008 fourth quarter, when disruptions in the financial markets significantly reduced liquidity in the commercial paper market, we regularly issued short-term commercial paper primarily in the United States and, to a much lesser extent, in Europe. At that time, we suspended issuing commercial paper and used funds borrowed under the Credit Facility to repay all of our previously issued commercial paper as it matured. Our Standard and Poors commercial paper rating at the end of 2009 was A3. Because the current market for A3 commercial paper is very limited, it would be very difficult to rely on the use of this market as a meaningful source of liquidity, and we do not anticipate issuing commercial paper under these circumstances. We classified outstanding commercial paper as long-term debt based on our ability and intent to refinance it on a long-term basis. We reserved unused capacity under our Credit Facility to repay outstanding commercial paper borrowings in the event that the commercial paper market was not available to us for any reason when outstanding borrowings matured. Given our borrowing capacity under the Credit Facility, fluctuations in the co |
SELF-INSURANCE RESERVE FOR LOSS
SELF-INSURANCE RESERVE FOR LOSSES AND LOSS ADJUSTMENT EXPENSES | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
SELF-INSURANCE RESERVE FOR LOSSES AND LOSS ADJUSTMENT EXPENSES | 15. SELF-INSURANCE RESERVE FOR LOSSES AND LOSS ADJUSTMENT EXPENSES The activity in the reserve for losses and loss adjustment expenses is summarized as follows: ($ in millions) 2009 2008 Balance at beginning of year $ 296 $ 274 Less: reinsurance recoverable (12 ) (14 ) Net balance at beginning of year 284 260 Incurred related to: Current year 109 117 Prior year (6 ) (4 ) Total incurred 103 113 Paid related to: Current year (36 ) (36 ) Prior year (56 ) (53 ) Total paid (92 ) (89 ) Net balance at end of year 295 284 Add: reinsurance recoverable 9 12 Balance at end of year $ 304 $ 296 The provision for unpaid loss and loss adjustment expenses decreased by $6 million and $4 million in 2009 and 2008, respectively, as a result of changes in estimates from insured events of the prior years due to changes in underwriting experience and frequency and severity trends. The year-end 2009 self-insurance reserve of $304 million is comprised of a current portion of $96 million and long-term portion of $208 million. The year-end 2008 self-insurance reserve of $296 million is comprised of a current portion of $92 million and long-term portion of $204 million. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
SHAREHOLDERS' EQUITY | 16. SHAREHOLDERS EQUITY Eight hundred million shares of our ClassA Common Stock, with a par value of $.01 per share, and 10million shares of preferred stock, without par value, are authorized under our restated certificate of incorporation. As of year-end 2009, of those authorized shares 358.2million shares of our ClassA Common Stock and no shares of our preferred stock were outstanding. Accumulated other comprehensive income of $13 million at year-end 2009 consisted of gains totaling $11 million associated with foreign currency translation adjustments, and gains of $2 million associated with interest rate swap agreement cash flow hedges. Accumulated other comprehensive loss of $15 million at year-end 2008 primarily consisted of losses totaling $10 million associated with available-for-sale securities and losses totaling $13 million associated with foreign currency translation adjustments, partially offset by gains of $8 million associated with interest rate swap agreement cash flow hedges. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
DERIVATIVE INSTRUMENTS | 17. DERIVATIVE INSTRUMENTS We adopted the current guidance for disclosures about derivative instruments and hedging activities on January3, 2009, the first day of our 2009 fiscal year. This guidance enhances the current disclosure framework for derivative instruments and hedging activities. The designation of a derivative instrument as a hedge and its ability to meet the hedge accounting criteria determine how the change in fair value of the derivative instrument will be reflected in the Consolidated Financial Statements. A derivative qualifies for hedge accounting if, at inception, the derivative is expected to be highly effective in offsetting the underlying hedged cash flows or fair value and the hedge documentation standards are fulfilled at the time we enter into the derivative contract. A hedge is designated as a cash flow hedge, fair value hedge, or a net investment in foreign operations hedge based on the exposure being hedged. The asset or liability value of the derivative will change in tandem with its fair value. Changes in fair value, for the effective portion of qualifying hedges, are recorded in other comprehensive income (OCI). The derivatives gain or loss is released from OCI to match the timing of the underlying hedged cash flows effect on earnings. We review the effectiveness of our hedging instruments on a quarterly basis, recognize current period hedge ineffectiveness immediately in earnings, and discontinue hedge accounting for any hedge that we no longer consider to be highly effective. We recognize changes in fair value for derivatives not designated as hedges or those not qualifying for hedge accounting in current period earnings. Upon termination of cash flow hedges, we release gains and losses from OCI based on the timing of the underlying cash flows, unless the termination results from the failure of the intended transaction to occur in the expected timeframe. Such untimely transactions require us to immediately recognize in earnings gains and losses previously recorded in OCI. Changes in interest rates, foreign exchange rates, and equity securities expose us to market risk. We manage our exposure to these risks by monitoring available financing alternatives, as well as through development and application of credit granting policies. We also use derivative instruments, including cash flow hedges, net investment in foreign operations hedges, fair value hedges, and other derivative instruments, as part of our overall strategy to manage our exposure to market risks associated with fluctuations in interest rates and foreign currency exchange rates. As a matter of policy, we only enter into transactions that we believe will be highly effective at offsetting the underlying risk, and we do not use derivatives for trading or speculative purposes. Our use of derivative instruments to manage market risks exposes us to the risk that a counterparty could default on a derivative contract. Our financial instrument counterparties are high-quality investment or commercial banks with significant experience with such instruments. We manage our exposure to counterparty risk by requiring specific minimum credit s |
CONTINGENCIES
CONTINGENCIES | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
CONTINGENCIES | 18. CONTINGENCIES Guarantees We issue guarantees to certain lenders and hotel owners primarily to obtain long-term management contracts. The guarantees generally have a stated maximum amount of funding and a term of three to 10 years. The terms of guarantees to lenders generally require us to fund if cash flows from hotel operations are inadequate to cover annual debt service or to repay the loan at the end of the term. The terms of the guarantees to hotel owners generally require us to fund if the hotels do not attain specified levels of operating profit. Guarantee fundings to lenders and hotel owners are generally recoverable as loans repayable to us out of future hotel cash flows and/or proceeds from the sale of hotels. We also enter into project completion guarantees with certain lenders in conjunction with hotels and Timeshare segment properties that we or our joint venture partners are building. The maximum potential amount of future fundings for guarantees where we are the primary obligor and the carrying amount of the liability for expected future fundings at year-end 2009 are as follows: ($ in millions) Guarantee Type MaximumPotential Amount of Future Fundings LiabilityforExpected Future Fundings at Year-End 2009 Debt service $ 37 $ 3 Operating profit 139 28 Other 103 7 Total guarantees where we are the primary obligor $ 279 $ 38 The liability for expected future fundings at year-end 2009 in our Consolidated Balance Sheet is as follows: $8 million in the Other current liabilities line item and $30 million in the Other long-term liabilities line item. Our guarantees of $279 million listed in the preceding table include $33 million of operating profit guarantees that will not be in effect until the underlying properties open and we begin to operate the properties, $3 million of debt service guarantees that will not be in effect until the underlying debt has been funded, and $8 million of other guarantees. The guarantees of $279 million in the preceding table do not include $171 million of guarantees that we anticipate will expire in the years 2013 and 2014, related to Senior Living Services lease obligations totaling $116 million and lifecare bonds of $55 million for which we are secondarily liable. Sunrise Senior Living, Inc. (Sunrise) is the primary obligor of the leases and $8 million of the lifecare bonds, and CNL Retirement Properties, Inc. (CNL), which subsequently merged with Health Care Property Investors, Inc., is the primary obligor of $45 million of the lifecare bonds. Five Star is the primary obligor of the remainder of the lifecare bonds. Prior to our sale of the Senior Living Services business in 2003, these preexisting guarantees were guarantees by us of obligations of consolidated Senior Living Services subsidiaries. Sunrise and CNL have indemnified us for any guarantee fundings we may be called upon to make in connection with these lease obligations and lifecare bonds. While we currently do not expect to fund under the guarantees, according to recent SEC filings made by Sunrise there has been a si |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
BUSINESS SEGMENTS | 19. BUSINESS SEGMENTS We are a diversified hospitality company with operations in five business segments: North American Full-Service Lodging, which includes the Marriott Hotels Resorts, Marriott Conference Centers, JW Marriott, Renaissance Hotels, and Renaissance ClubSport properties located in the continental United States and Canada; North American Limited-Service Lodging, which includes the Courtyard, Fairfield Inn Suites, SpringHill Suites, Residence Inn, TownePlace Suites, and Marriott ExecuStay properties located in the continental United States and Canada; International Lodging, which includes the Marriott Hotels Resorts, JW Marriott, Renaissance Hotels, Courtyard, Fairfield Inn Suites, Residence Inn, and Marriott Executive Apartments properties located outside the continental United States and Canada; Luxury Lodging, which includes The Ritz-Carlton and Bulgari Hotels Resorts properties worldwide (together with adjacent residential projects associated with some Ritz-Carlton hotels), as well as EDITION, for which no properties are yet open; and Timeshare, which includes the development, marketing, operation, and sale of Marriott Vacation Club, The Ritz-Carlton Destination Club, The Ritz-Carlton Residences, and Grand Residences by Marriott timeshare, fractional ownership, and residential properties worldwide. In addition to the segments above, we exited the synthetic fuel business in 2007, which we formerly reported as a separate segment but now report under discontinued operations. We evaluate the performance of our segments based primarily on the results of the segment without allocating corporate expenses, interest expense, income taxes, or indirect general, administrative, and other expenses. With the exception of the Timeshare segment, we do not allocate interest income to our segments. Because note sales are an integral part of the Timeshare segment, we include note sale gains or (losses) in our Timeshare segment results. We also include interest income associated with Timeshare segment notes in our Timeshare segment results because financing sales are an integral part of that segments business. Additionally, we allocate other gains or losses, equity in earnings or losses from our joint ventures, divisional general, administrative, and other expenses, and income or losses attributable to noncontrolling interests to each of our segments. Other unallocated corporate represents that portion of our revenues, general, administrative, and other expenses, (which now includes provision for loan losses, as indicated in Footnote No.1, Summary of Significant Accounting Policies,) equity in earnings or losses, and other gains or losses that are not allocable to our segments. We aggregate the brands presented within our North American Full-Service, North American Limited-Service, International, Luxury, and Timeshare segments considering their similar economic characteristics, types of customers, distribution channels, the regulatory business environment of the brands and operations within each segment and our organizational and management reporting structure. Reve |
TIMESHARE STRATEGY - IMPAIRMENT
TIMESHARE STRATEGY - IMPAIRMENT CHARGES | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
TIMESHARE STRATEGY - IMPAIRMENT CHARGES | 20. TIMESHARE STRATEGY IMPAIRMENT CHARGES In response to the difficult business conditions that the Timeshare segments timeshare, luxury residential, and luxury fractional real estate development businesses continued to experience, we evaluated our entire Timeshare portfolio in the 2009 third quarter. In order to adjust the business strategy to reflect current market conditions at that time, on September22, 2009, we approved plans for our Timeshare segment to take the following actions: (1)for our luxury residential projects, reduce prices, convert certain proposed projects to other uses, sell some undeveloped land, and not pursue further Marriott-funded residential development projects; (2)reduce prices for existing luxury fractional units; (3)continue short-term promotions for our U.S. timeshare business and defer the introduction of new projects and development phases; and (4)for our European timeshare and fractional resorts, continue promotional pricing and marketing incentives and not pursue further development. We designed these plans, which primarily relate to luxury residential and fractional resorts, to stimulate sales, accelerate cash flow, and reduce investment spending. As a result of these decisions, in 2009 we recorded pretax charges totaling $752 million in our Consolidated Statements of Income ($502 million after-tax), including $614 million of pretax charges impacting operating income under the Timeshare strategy-impairment charges caption, and $138 million of pretax charges impacting non-operating income under the Timeshare strategy-impairment charges (non-operating) caption. The $752 million of pretax impairment charges were non-cash, other than $27 million of charges associated with ongoing mezzanine loan fundings and $21 million of charges for purchase commitments that we expected to fund in 2010. Grouped by product type and/or geographic location, these impairment charges consist of $295 million associated with five luxury residential projects, $299 million associated with nine North American luxury fractional projects, $93 million related to one North American timeshare project, $51 million related to the four projects in our European timeshare and fractional business, and $14 million associated with two Asia Pacific timeshare resorts. The following table details the composition of these charges. ($ in millions) ImpairmentCharge 2009 Operating Income Charge Inventory impairment $ 529 Property and equipment impairment 64 Other impairments 21 Total operating income charge 614 2009 Non-Operating Income Charge Joint venture impairment 71 Loan impairment 40 Funding liability 27 Total non-operating income charge 138 Total $ 752 In accordance with the guidance for accounting for the impairment or disposal of long-lived assets, we made these impairment adjustments to inventory, property and equipment and joint venture investment to adjust the carrying value of each underlying asset to our estimate of its fair value as of the end of the 2009 third quarter, including fully i |
RESTRUCTURING COSTS AND OTHER C
RESTRUCTURING COSTS AND OTHER CHARGES | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
RESTRUCTURING COSTS AND OTHER CHARGES | 21. RESTRUCTURING COSTS AND OTHER CHARGES During the latter part of 2008, we experienced a significant decline in demand for hotel rooms both domestically and internationally as a result, in part, of the failures and near failures of a number of large financial service companies in the fourth quarter of 2008 and the dramatic downturn in the economy. Our capital intensive Timeshare business was also hurt both domestically and internationally by the downturn in market conditions and particularly the significant deterioration in the credit markets, which resulted in our decision not to complete a note sale in the fourth quarter of 2008 (although we did complete a note sale in the first quarter of 2009). These declines resulted in reduced management and franchise fees, cancellation of development projects, reduced timeshare contract sales, and anticipated losses under guarantees and loans. In the fourth quarter of 2008, we put certain company-wide cost-saving measures in place in response to these declines, with individual company segments and corporate departments implementing further cost saving measures. Upper-level management responsible for the Timeshare segment, lodging development, and above-property level management of the various corporate departments and brand teams individually led these decentralized management initiatives. The various initiatives resulted in aggregate restructuring costs of $55 million that we recorded in the fourth quarter of 2008. We also recorded $137 million of other charges in the 2008 fourth quarter. For information regarding the fourth quarter 2008 charges, see Footnote No.20, Restructuring Costs and Other Charges, in our Annual Report on Form 10-K for 2008 (2008 Form 10-K). Restructuring Costs As part of the restructuring actions we began in the fourth quarter of 2008, we initiated further cost savings measures in 2009 associated with our Timeshare segment, hotel development, above-property level management, and corporate overhead. These further measures resulted in additional 2009 restructuring costs of $51 million, which included: (1)$21 million in severance costs related to the reduction of 1,077 employees; (2)$29 million in facilities exit costs; and (3)$1 million related to the write-off of capitalized costs relating to development projects no longer deemed viable. The severance costs do not reflect amounts billed out separately to owners for property-level severance costs. The $21 million of 2009 severance costs consists of (1)$17 million of the expected $19 million in costs that, as disclosed in our Quarterly Report on Form 10-Q for the quarterly period ended September11, 2009 (the 2009 Third Quarter Form 10-Q), we incurred through the third quarter of 2009 and expected to incur in the fourth quarter of 2009, and (2)$4 million of incremental costs that we incurred as a result of further cost savings measures we implemented in the 2009 fourth quarter. All of the $29 million of 2009 facilities exit costs reflects the expected $29 million to $30 million in costs that, as disclosed in our 2009 Third Quarter Form 10-Q, we incurred through the third quarter of 2009 and expected to incur in th |
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
VARIABLE INTEREST ENTITIES | 22. VARIABLE INTEREST ENTITIES In accordance with the guidance for the consolidation of variable interest entities, we analyze our variable interests, including loans, guarantees, and equity investments, to determine if the entity in which we have a variable interest is a variable interest entity. Our analysis includes both quantitative and qualitative reviews. We base our quantitative analysis on the forecasted cash flows of the entity, and our qualitative analysis on our review of the design of the entity, its organizational structure including decision-making ability and financial agreements. We also use our quantitative and qualitative analyses to determine if we must consolidate a variable interest entity as the primary beneficiary. We have an equity investment in and a loan receivable due from a variable interest entity that develops and markets fractional ownership and residential interests, and we consolidate the entity because we are the primary beneficiary. We concluded that the entity is a variable interest entity because the voting rights are not proportionate to the economic interests. The loan we provided to the entity replaced the original senior loan, and at year-end 2009, had a principal balance of $88 million and an accrued interest balance of $3 million. The variable interest entity uses the loan facility to fund its net cash flow. The loans outstanding principal balance increased by $20 million compared to year-end 2008. At year-end 2009, the carrying amount of consolidated assets included within our Consolidated Balance Sheet that are collateral for the variable interest entitys obligations totaled $40 million and comprised $34 million of real estate held for development, property, equipment, and other assets and $6 million of cash. Further, at year-end 2009, the carrying amount of the consolidated liabilities and noncontrolling interests included within our Consolidated Balance Sheets for this variable interest entity totaled $13 million and the noncontrolling interest was reduced to zero. The creditors of this entity do not have general recourse to our credit. We have contracted to purchase the noncontrolling interest in the entity for less than $1 million. The acquisition will occur in stages, and commenced with our initial acquisition of 3 percent of the noncontrolling interest in the entity that occurred during the 2009 third quarter. The acquisition is expected to be completed in the 2010 third quarter. Our Timeshare segment uses several special purpose entities to maintain ownership of real estate in certain jurisdictions in order to facilitate sales within the Asia Pacific Points Club (the Asia Club). In 2009, we established a special purpose entity to maintain ownership of real estate for sale of a Portfolio membership in The Ritz-Carlton Destination Club (RCDC Club). Although we have no equity ownership in the Asia or RCDC Clubs themselves, we absorb the variability in the assets of the Asia or RCDC Clubs to the extent that inventory has not been sold to the ultimate Asia or RCDC Club member. The Asia and RCDC Clubs are variable interest entities because the equity investment at risk is not suf |
LEASES
LEASES | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
LEASES | 23. LEASES We have summarized our future obligations under operating leases at year-end 2009, below: ($ in millions) MinimumLease Payments Fiscal Year 2010 $ 160 2011 153 2012 138 2013 125 2014 117 Thereafter 994 Total minimum lease payments where we are the primary obligor $ 1,687 Most leases have initial terms of up to 20 years and contain one or more renewal options, generally for five- or 10-year periods. These leases provide for minimum rentals and additional rentals based on our operations of the leased property. The total minimum lease payments above include $382 million, representing obligations of consolidated subsidiaries that are non-recourse to us. Minimum lease payments aggregating $92 million relating to the CTF leases further discussed in Footnote No.22, Variable Interest Entities, which are not reflected in the $1,687 million in the preceding table are as follows: $27 million in 2010; $25 million in 2011; $16 million in 2012; $12 million in 2013; $8 million in 2014; and $4 million thereafter. The composition of rent expense for the last three fiscal years associated with operating leases is detailed in the following table: ($ in millions) 2009 2008 2007 Minimum rentals $ 262 $ 283 $ 272 Additional rentals 63 67 78 $ 325 $ 350 $ 350 We have summarized our future obligations under capital leases at year-end 2009, in the following table: ($ in millions) MinimumLease Payments Fiscal Year 2010 $ 1 2011 1 2012 1 2013 1 2014 1 Thereafter 5 Total minimum lease payments 10 Less: Amount representing interest (4 ) Present value of net minimum lease payments $ 6 The accompanying Consolidated Balance Sheets for year-end 2009 and year-end 2008 included $6 million and $6 million, respectively, in the Long-term debt caption that represented the present value of net minimum lease payments associated with capital leases. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
RELATED PARTY TRANSACTIONS | 24. RELATED PARTY TRANSACTIONS Equity Method Investments We have equity method investments in entities that own properties for which we provide management and/or franchise services and receive fees. In addition, in some cases we provide loans, preferred equity or guarantees to these entities. Our ownership interest in these equity method investments generally varies from 10 to 49 percent. The amount of our consolidated retained earnings that represents undistributed earnings attributable to our equity investments totaled $2 million at year-end 2009. The following tables present financial data resulting from transactions with these related parties: Income Statement Data ($ in millions) 2009 2008 2007 Base management fees $ 44 $ 49 $ 56 Franchise fees 1 Incentive management fees 2 11 26 Cost reimbursements 260 340 510 Total revenue $ 306 $ 400 $ 593 General, administrative, and other $ (1 ) $ (1 ) $ (4 ) Reimbursed costs (260 ) (340 ) (510 ) Gains and other income 6 12 25 Interest expense-capitalized 4 4 1 Interest income 8 3 4 Equity in (losses) earnings (66 ) 15 3 Timeshare strategy-impairment charges (non-operating) (138 ) Provision for income taxes 1 Balance Sheet Data ($ in millions) AtYear-End 2009 AtYear-End 2008 Current assets-accounts and notes receivable $ 10 $ 23 Deferred development 2 3 Contract acquisition costs 26 28 Equity and cost method investments 208 309 Notes receivable 10 50 Other 1 7 Current liabilities: Other (31 ) (9 ) Other long-term liabilities (13 ) (15 ) Summarized information for the entities in which we have equity method investments is as follows: Income Statement Data ($ in millions) 2009 2008 2007 Sales $ 850 $ 1,342 $ 1,622 Net (loss) income $ (241 ) $ 122 $ 134 Balance Sheet Summary ($ in millions) AtYear-End 2009 AtYear-End 2008 Assets (primarily comprised of hotel real estate managed by us) $ 3,228 $ 3,669 Liabilities $ 2,339 $ 2,532 |
RELATIONSHIP WITH MAJOR CUSTOME
RELATIONSHIP WITH MAJOR CUSTOMER | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
RELATIONSHIP WITH MAJOR CUSTOMER | 25. RELATIONSHIP WITH MAJOR CUSTOMER As of year-end 2009, Host Hotels Resorts, Inc. (Host), formerly known as Host Marriott Corporation, owned or leased 146 lodging properties operated by us under long-term agreements as compared to 149 properties as of year-end 2008. We recognized revenues from lodging properties owned or leased by Host (which are included in our North American Full-Service, North American Limited-Service, Luxury, and International segments) for the last three fiscal years as shown in the following table: ($ in millions) 2009 2008 2007 Revenues $ 2,096 $ 2,539 $ 2,580 Additionally, Host is a partner in certain unconsolidated partnerships that own lodging properties operated by us under long-term agreements. As of year-end 2009, Host was affiliated with five such properties operated by us as compared to 125 such properties operated by us as of year-end 2008. The revenues associated with those properties (which are included in our North American Full-Service, Luxury, and International segments for 2009, 2008 and 2007, as well as our North American Limited-Service segment for 2008 and 2007) that were recognized by the Company for the last three fiscal years are shown in the following table: ($ in millions) 2009 2008 2007 Revenues $ 104 $ 411 $ 350 |
Document Information
Document Information | |
12 Months Ended
Jan. 01, 2010 USD / shares | |
Document Type | 10-K |
Amendment Flag | false |
Document Period End Date | 2010-01-01 |
Entity Information
Entity Information (USD $) | |||
12 Months Ended
Jan. 01, 2010 | Jan. 29, 2010
| Jun. 19, 2009
| |
Trading Symbol | MAR | ||
Entity Registrant Name | MARRIOTT INTERNATIONAL INC /MD/ | ||
Entity Central Index Key | 0001048286 | ||
Current Fiscal Year End Date | --01-01 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 358,522,350 | ||
Entity Public Float | $5,960,238,420 |