SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter Ended March 22, 2002 Commission File No. 1-13881
MARRIOTT INTERNATIONAL, INC.
Delaware 52-2055918
(State of Incorporation) (I.R.S. Employer Identification Number)
10400 Fernwood Road
Bethesda, Maryland 20817
(301) 380-3000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes |X| No |_|
Shares outstanding
Class at April 12, 2002
- ------------------------------------ ----------------------------
Class A Common Stock, 242,851,180
$0.01 par value
MARRIOTT INTERNATIONAL, INC.
INDEX
Page No.
-----------
Forward-Looking Statements ...................................... 3
Part I. Financial Information (Unaudited):
Condensed Consolidated Statement of Income -
Twelve Weeks Ended March 22, 2002 and March 23, 2001 .... 4
Condensed Consolidated Balance Sheet -
as of March 22, 2002 and December 28, 2001 .............. 5
Condensed Consolidated Statement of Cash Flows -
Twelve Weeks Ended March 22, 2002 and March 23, 2001 .... 6
Notes to Condensed Consolidated Financial Statements ........ 7
Management's Discussion and Analysis of Financial Condition
and Results of Operations ............................... 18
Quantitative and Qualitative Disclosures About Market Risk .. 24
Part II. Other Information and Signatures:
Legal Proceedings ........................................... 25
Changes in Securities ....................................... 25
Defaults Upon Senior Securities ............................. 25
Submission of Matters to a Vote of Security Holders ......... 25
Other Information ........................................... 25
Exhibits and Reports on Form 8-K ............................ 26
Signatures .................................................. 27
2
Forward-Looking Statements
We have made forward-looking statements in this document that are based on the
beliefs and assumptions of our management, and on information currently
available to our management. Forward-looking statements include the information
concerning our possible or assumed future results of operations and statements
preceded by, followed by or that include the words "believes," "expects,"
"anticipates," "intends," "plans," "estimates," or similar expressions.
Forward-looking statements involve risks, uncertainties and assumptions.
Actual results may differ materially from those expressed in these
forward-looking statements. We caution you not to put undue reliance on any
forward-looking statements.
You should understand that the following important factors, in addition to
those discussed in Exhibit 99 and elsewhere in this quarterly report, could
cause results to differ materially from those expressed in such forward-looking
statements.
o competition for each of our business segments;
o business strategies and their intended results;
o the balance between supply of and demand for hotel rooms, timeshare
units, senior living accommodations and corporate apartments;
o our continued ability to obtain new operating contracts and
franchise agreements;
o our ability to develop and maintain positive relations with current
and potential hotel and senior living community owners;
o our ability to obtain adequate property and liability insurance to
protect against losses or to obtain such insurance at reasonable
rates;
o the effect of international, national and regional economic
conditions including the duration and severity of the current
economic downturn in the United States and the pace of the lodging
industry's recovery in the aftermath of the terrorist attacks on
New York and Washington;
o our ability to recover our loan and guaranty fundings from hotel
operations or from owners through the proceeds of hotel sales,
refinancing of debt or otherwise;
o the availability of capital to allow us and potential hotel owners
to fund investments;
o the effect that internet reservation channels may have on the rates
that we are able to charge for hotel rooms and timeshare intervals;
and
o other risks described from time to time in our filings with the
Securities and Exchange Commission (the SEC).
3
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
- -------------------------------
MARRIOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
($ in millions, except per share amounts)
(Unaudited)
Twelve weeks ended
---------------------------------------
March 22, 2002 March 23, 2001
----------------- -----------------
SALES
Management and franchise fees .................................... $ 176 $ 204
Distribution services ............................................ 376 361
Other ............................................................ 460 481
------- -------
1,012 1,046
Other revenues from managed and franchised properties ............ 1,352 1,415
------- -------
2,364 2,461
------- -------
OPERATING COSTS AND EXPENSES
Distribution services ............................................ 382 359
Other ............................................................ 483 461
------- -------
865 820
Other costs from managed and franchised properties ............... 1,352 1,415
------- -------
2,217 2,235
------- -------
OPERATING PROFIT BEFORE CORPORATE EXPENSES
AND INTEREST........................................................ 147 226
Corporate expenses .................................................... (29) (30)
Interest expense ...................................................... (19) (22)
Interest income........................................................ 19 16
------- -------
INCOME BEFORE INCOME TAXES ............................................ 118 190
Provision for income taxes............................................. (36) (69)
------- -------
NET INCOME............................................................. $ 82 $ 121
======= =======
DIVIDENDS DECLARED PER SHARE........................................... $ .065 $ .060
======= =======
EARNINGS PER SHARE.....................................................
Basic Earnings Per Share ......................................... $ .34 $ .50
======= =======
Diluted Earnings Per Share ....................................... $ .32 $ .47
======= =======
See notes to condensed consolidated financial statements.
4
MARRIOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
($ in millions)
(Unaudited)
March 22, December 28,
2002 2001
------------- ----------------
ASSETS
Current assets
Cash and equivalents ........................................ $ 190 $ 817
Accounts and notes receivable ............................... 645 611
Inventory ................................................... 99 96
Other........................................................ 576 606
------- -------
1,510 2,130
------- -------
Property and equipment ......................................... 2,962 2,930
Goodwill ....................................................... 1,092 1,092
Other intangibles .............................................. 477 672
Investments in affiliates ...................................... 1,062 823
Notes and other receivables .................................... 1,030 1,038
Other .......................................................... 420 422
------- -------
$ 8,553 $ 9,107
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable ............................................ $ 658 $ 697
Other ....................................................... 1,029 1,105
------- -------
1,687 1,802
------- -------
Long-term debt ................................................. 1,775 2,408
Other long-term liabilities .................................... 1,036 1,012
Convertible debt ............................................... 407 407
Shareholders' equity
ESOP preferred stock ........................................ - -
Class A Common Stock, 255.6 million shares issued ........... 3 3
Additional paid-in capital .................................. 3,213 3,378
Retained earnings ........................................... 993 941
Unearned ESOP shares ........................................ (66) (291)
Treasury stock, at cost ..................................... (443) (503)
Accumulated other comprehensive income ...................... (52) (50)
------- -------
3,648 3,478
------- -------
$ 8,553 $ 9,107
======= =======
See notes to condensed consolidated financial statements.
5
MARRIOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
($ in millions)
(Unaudited)
Twelve weeks ended
----------------------------------
March 22, March 23,
2002 2001
------------- --------------
OPERATING ACTIVITIES
Net income ................................................ $ 82 $ 121
Adjustments to reconcile to cash provided by operations:
Depreciation and amortization ......................... 39 46
Income taxes and other ................................ 50 60
Timeshare activity, net ............................... (29) (107)
Working capital changes ............................... (87) (94)
----- ------
Cash provided by operations ........................... 55 26
----- ------
INVESTING ACTIVITIES
Dispositions .............................................. 99 241
Capital expenditures ...................................... (87) (125)
Note advances ............................................. (33) (35)
Note collections and sales ................................ 7 7
Other ..................................................... (36) (52)
----- ------
Cash (used in) provided by investing activities............ (50) 36
----- ------
FINANCING ACTIVITIES
Commercial paper activity, net ............................ 277 (298)
Issuance of other long-term debt .......................... 8 299
Repayment of other long-term debt ......................... (918) (4)
Issuance of Class A common stock .......................... 17 31
Dividends paid ............................................ (16) (15)
Purchase of treasury stock ................................ - (39)
----- ------
Cash used in financing activities ......................... (632) (26)
----- ------
(DECREASE) INCREASE IN CASH AND EQUIVALENTS .................... (627) 36
CASH AND EQUIVALENTS, beginning of period ...................... 817 334
----- ------
CASH AND EQUIVALENTS, end of period ............................ $ 190 $ 370
===== ======
See notes to condensed consolidated financial statements.
6
MARRIOTT INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
---------------------
The accompanying condensed consolidated financial statements present the
results of operations, financial position and cash flows of Marriott
International, Inc. (together with its subsidiaries, we, us or the
Company).
The accompanying condensed consolidated financial statements have not been
audited. We have condensed or omitted certain information and footnote
disclosures normally included in financial statements presented in
accordance with accounting principles generally accepted in the United
States. We believe the disclosures made are adequate to make the
information presented not misleading. However, you should read the
condensed consolidated financial statements in conjunction with the
consolidated financial statements and notes to those financial statements
included in our Annual Report on Form 10-K for the fiscal year ended
December 28, 2001. Capitalized terms not otherwise defined in this
quarterly report have the meanings specified in our Annual Report.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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 sales and expenses during the reporting period and the
disclosures of contingent liabilities. Accordingly, ultimate results could
differ from those estimates.
In our opinion, the accompanying condensed consolidated financial
statements reflect all normal and recurring adjustments necessary to
present fairly our financial position as of March 22, 2002 and December 28,
2001 and the results of operations and cash flows for the twelve weeks
ended March 22, 2002 and March 23, 2001. Interim results may not be
indicative of fiscal year performance because of seasonal and short-term
variations. We have eliminated all material intercompany transactions and
balances between entities included in these financial statements.
Revenue Recognition
Our sales include (1) management and franchise fees, (2) sales from our
distribution services business, (3) sales from lodging properties and
senior living communities owned or leased by us, and sales made by our
other businesses; and (4) certain other revenues from properties franchised
or managed by us. Management fees comprise a base fee, which is a
percentage of the revenues of hotels or senior living communities, and an
incentive fee, which is generally based on unit profitability. Franchise
fees comprise initial application fees and continuing royalties generated
from our franchise programs, which permit the hotel owners and operators to
use certain of our brand names. Other revenues from managed and franchised
properties include direct and indirect costs that are reimbursed to us by
lodging and senior living community owners for properties that we manage or
franchise. Other revenues include revenues from hotel properties and senior
living communities that we own or lease, along with sales from our
timeshare and ExecuStay businesses.
7
Management Fees: We recognize base fees as revenue when earned in
accordance with the contract. In interim periods and at year end we
recognize incentive fees that would be due as if the contract were to
terminate at that date, exclusive of any termination fees payable or
receivable by us. As of March 22, 2002 we have recognized $32 million of
incentive management fees, retention of which is dependent on achievement
of hotel profitability for the balance of the year at levels specified in a
number of our management contracts.
Distribution Services: We recognize revenue from our distribution services
business when goods have been shipped and title passes to the customer in
accordance with the terms of the applicable distribution contract.
Timeshare: We recognize revenue from timeshare interest sales in accordance
with Financial Accounting Standards (FAS) No. 66, "Accounting for Sales of
Real Estate." We recognize sales when a minimum of 10 percent of the
purchase price for the timeshare interval has been received, the period of
cancellation with refund has expired, receivables are deemed collectible
and certain minimum sales and construction levels have been attained. For
sales that do not meet these criteria, we defer all revenue using the
percentage of completion or the deposit method as applicable.
Owned and Leased Units: We recognize room sales and revenues from guest
services for our owned and leased units, including ExecuStay, when rooms
are occupied and services have been rendered.
Franchise Revenue: We recognize franchise fee revenues in accordance with
FAS No. 45, "Accounting for Franchise Fee Revenue." Franchise fees are
recognized as revenue in each accounting period as fees are earned and
become receivable from the franchisee.
Other Revenues from Managed and Franchised Properties: We recognize other
revenues from managed and franchised properties when we incur the related
reimbursable costs.
Synthetic Fuel: We recognize revenue from the Synthetic Fuel business when
the synthetic fuel is produced and sold.
8
We recognized sales and operating profit in the twelve weeks ended March
22, 2002 and March 23, 2001 as shown in the following table. Lodging
includes our Full-Service, Select-Service, Extended-Stay and Timeshare
business segments.
Twelve weeks ended
March 22, 2002
---------------------------------------------------------------------
Senior
Living Distribution Synthetic
Lodging Services Services Fuel Total
------------- ------------- ------------- ----------- ----------
Sales
($ in millions)
Management and franchise
fees....................... $ 168 $ 8 $ - $ - $ 176
Other.......................... 373 82 376 5 836
------------- ------------ ---------- ----------- ----------
541 90 376 5 1,012
Other revenues from managed
and franchised
properties................. 1,262 90 - - 1,352
------------- ------------ ---------- ----------- ----------
1,803 180 376 5 2,364
------------- ------------ ---------- ----------- ----------
Operating costs and expenses
Operating costs................ 388 84 382 11 865
Other costs from managed and
franchised properties...... 1,262 90 - - 1,352
------------- ------------ ---------- ----------- ----------
1,650 174 382 11 2,217
------------- ------------ ---------- ----------- ----------
Operating profit (loss)
before corporate expenses
and interest............... $ 153 $ 6 $ (6) $ (6) $ 147
============= ============ ========== =========== ==========
Twelve weeks ended
March 23, 2001
---------------------------------------------------------------------
Senior
Living Distribution Synthetic
Lodging Services Services Fuel Total
------------- ------------- ------------- ----------- ----------
Sales
($ in millions)
Management and franchise
fees....................... $ 196 $ 8 $ - $ - $ 204
Other.......................... 405 76 361 - 842
------------- ------------- ------------- ----------- ----------
601 84 361 - 1,046
Other revenues from managed
and franchised
properties................. 1,334 81 - - 1,415
------------- ------------- ------------- ----------- ----------
1,935 165 361 - 2,461
------------- ------------- ------------- ----------- ----------
Operating costs and expenses
Operating costs................ 378 83 359 - 820
Other costs from managed and
franchised properties...... 1,334 81 - - 1,415
------------- ------------- ------------- ----------- ---------
1,712 164 359 - 2,235
------------- ------------- ------------- ----------- ---------
Operating profit before
corporate expenses and
interest................... $ 223 $ 1 $ 2 $ - $ 226
============= ============= ============ =========== ==========
9
2. Earnings Per Share
------------------
The following table reconciles the earnings and number of shares used in
the basic and diluted earnings per share calculations (in millions, except
per share amounts).
Twelve weeks ended
----------------------------------------------
March 22, 2002 March 23, 2001
--------------------- --------------------
Computation of Basic Earnings Per Share
Net income...................................... $ 82 $ 121
Weighted average shares outstanding............. 241.9 243.7
-------------------- --------------------
Basic Earnings Per Share........................ $ .34 $ .50
==================== ====================
Computation of Diluted Earnings Per Share
Net income...................................... $ 82 $ 121
==================== ====================
Weighted average shares outstanding............. 241.9 243.7
Effect of Dilutive Securities
Employee stock option plan................... 7.5 8.7
Deferred stock incentive plan................ 4.9 5.2
-------------------- --------------------
Shares for diluted earnings per share........... 254.3 257.6
==================== ====================
Diluted Earnings Per Share...................... $ .32 $ .47
==================== ====================
We compute the effect of dilutive securities using the treasury stock
method and average market prices during the period. The calculation of
diluted earnings per share for 2002 excludes 5.9 million options, most of
which were granted in 2001, $2 million of after-tax interest expense on
convertible debt and 6.4 million shares issuable upon conversion of
convertible debt, the inclusion of which would have an antidilutive impact
for the period. The calculation of diluted earnings per share for 2001
excludes 5.7 million options granted in 2001, the inclusion of which would
have had an antidilutive impact for the period. No convertible debt was
outstanding in the twelve weeks ended March 23, 2001.
3. Marriott Rewards
----------------
We defer revenue received from managed, franchised, and Marriott-owned/
leased hotels and program partners equal to the fair value of our future
redemption obligation. We recognize the component of revenue from program
partners that corresponds to program maintenance services over the expected
life of the points awarded. Upon the redemption of points, we recognize as
revenue the amounts previously deferred, and recognize the corresponding
expense relating to the cost of the awards redeemed. The liability for the
Marriott Rewards program was $652 million at March 22, 2002 and $631
million at December 28, 2001, of which $399 million and $380 million,
respectively, are included in other long-term liabilities in the
accompanying condensed consolidated balance sheet.
10
4. Dispositions
------------
In the first quarter of 2002, we closed on sales of four hotels for cash
proceeds of $97 million, resulting in gains of $13 million. The gains have
been deferred and will be recognized as certain contingencies in the sales
contract expire. We will continue to operate the hotels under long-term
management agreements.
5. Comprehensive Income
--------------------
Total comprehensive income was $80 million and $115 million, for the twelve
weeks ended March 22, 2002 and March 23, 2001, respectively. In 2002 and
2001 the difference between net income and total comprehensive income
includes changes in the market value of investments available
for sale. The difference in 2002 also includes foreign currency
translation adjustments.
6. New Accounting Standards
------------------------
In the first quarter of 2002, we adopted Financial Accounting Standard
(FAS) No. 144, "Financial Statement Treatment Issues Relating to Assets
Held for Sale." The adoption of FAS No. 144 did not have a financial
statement impact. The assets held for sale as of December 28, 2001 continue
to be accounted for in accordance with FAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of."
We adopted FAS No. 142, "Goodwill and other Intangible Assets," in the
first quarter of 2002. The new rules require that goodwill is not
amortized, but is reviewed annually for impairment. The adoption of FAS No.
142 resulted in an increase in net income of approximately $7 million in
the first quarter of 2002. We are in the process of testing goodwill for
impairment in connection with the adoption of FAS No. 142.
11
The impact of the adoption of FAS No. 142 on our net income, basic earnings
per share, and diluted earnings per share for the twelve weeks ended March
22, 2002 and March 23, 2001, as if the adoption took place in the first
quarter of 2001, is presented in the following tables (in millions except
per share amounts):
Twelve weeks ended
------------------------------------
March 22, March 23,
2002 2001
-------------- ----------------
Reported net income............................... $ 82 $ 121
Add back: Goodwill amortization.................. - 7
-------------- ----------------
Adjusted net income............................... 82 128
============== ================
Reported basic earnings per share................. $ .34 $ .50
Goodwill amortization............................. - .03
-------------- ----------------
Adjusted basic earnings per share................. .34 .53
============== ================
Reported diluted earnings per share............... $ .32 $ .47
Goodwill amortization............................. - .03
-------------- ----------------
Adjusted diluted earnings per share............... $ .32 $ .50
============== ================
7. Business Segments
-----------------
We are a diversified hospitality company with operations in seven business
segments:
o Full-Service Lodging, which includes Marriott Hotels, Resorts and Suites;
The Ritz-Carlton Hotels; Renaissance Hotels, Resorts and Suites; and Ramada
International;
o Select-Service Lodging, which includes Courtyard, Fairfield Inn and
SpringHill Suites;
o Extended-Stay Lodging, which includes Residence Inn, TownePlace Suites,
Marriott ExecuStay and Marriott Executive Apartments;
o Timeshare, which includes the operation, ownership, development and
marketing of Marriott's timeshare properties under the Marriott Vacation
Club International, The Ritz-Carlton Club, Horizons and Marriott Grand
Residence Club brands;
o Senior Living Services, which includes our operation, ownership and
development of senior living communities;
o Distribution Services, which includes our wholesale food distribution
business; and
o Synthetic Fuel, which includes the operation of our new coal-based
synthetic fuel production facilities.
We evaluate the performance of our segments based primarily on operating
profit before corporate expenses and interest. We do not allocate income
taxes at the segment level.
12
We have aggregated the brands and businesses presented within each of our
segments considering their similar economic characteristics, types of
customers, distribution channels, and the regulatory business environment
of the brands and operations within each segment.
Twelve weeks ended
-------------------------------------------
March 22, 2002 March 23, 2001
-------------------- -------------------
($ in millions)
Sales
Full-Service.......................... $ 1,221 $ 1,349
Select-Service........................ 207 213
Extended-Stay......................... 121 139
Timeshare............................. 254 234
-------------------- -------------------
Total Lodging..................... 1,803 1,935
Senior Living Services................ 180 165
Distribution Services................. 376 361
Synthetic Fuel........................ 5 -
-------------------- -------------------
$ 2,364 $ 2,461
==================== ===================
Operating profit (loss) before corporate
expenses and interest
Full-Service.......................... $ 86 $ 117
Select-Service........................ 28 44
Extended-Stay......................... 8 19
Timeshare............................. 31 43
-------------------- -------------------
Total Lodging.................... 153 223
Senior Living Services................ 6 1
Distribution Services................. (6) 2
Synthetic Fuel........................ (6) -
-------------------- -------------------
$ 147 $ 226
==================== ===================
Sales from Distribution Services exclude sales (made at market terms and
conditions) to our other business segments of $26 million and $39 million
for the twelve weeks ended March 22, 2002 and March 23, 2001, respectively.
8. Contingencies
-------------
We issue guarantees to lenders and other third parties in connection with
financing transactions and other obligations. These guarantees were
limited, in the aggregate, to $571 million at March 22, 2002, including
guarantees involving major customers. In addition, we have made a physical
completion guarantee relating to one hotel property with minimal expected
funding. As of March 22, 2002, we had extended
13
approximately $619 million of loan commitments to owners of lodging
properties and senior living communities under which we expect to fund
approximately $171 million by January 3, 2003, and $318 million in total.
Letters of credit outstanding on our behalf at March 22, 2002, totaled $97
million, the majority of which related to our self-insurance programs. At
March 22, 2002, we had repurchase obligations of $55 million related to
notes receivable from timeshare interval purchasers, which have been sold
with limited recourse.
Third-parties have severally indemnified us for guarantees by us of leases
with minimum annual payments of approximately $57 million.
On March 30, 2001, Green Isle Partners, Ltd., S.E. (Green Isle) filed a
63-page complaint in Federal district court in Delaware against The
Ritz-Carlton Hotel Company, L.L.C., The Ritz-Carlton Hotel Company of
Puerto Rico, Inc. (Ritz-Carlton Puerto Rico), Marriott International, Inc.,
Marriott Distribution Services, Inc., Marriott International Capital Corp.
and Avendra L.L.C. (Green Isle Partners, Ltd. S.E., v. The Ritz-Carlton
Hotel Company, L.L.C., et al, civil action no. 01-202). Ritz-Carlton Puerto
Rico manages The Ritz-Carlton San Juan Hotel, Spa and Casino located in San
Juan, Puerto Rico under an operating agreement with Green Isle dated
December 15, 1995 (the Operating Agreement).
The claim asserts 11 causes of action: three Racketeer Influenced and
Corrupt Organizations Act (RICO) claims, together with claims based on the
Robinson-Patman Act, breach of contract, breach of fiduciary duty, aiding
and abetting a breach of fiduciary duty, breach of implied duties of good
faith and fair dealing, common law fraud and intentional misrepresentation,
negligent misrepresentation, and fiduciary accounting. The complaint does
not request termination of the Operating Agreement.
The claim includes allegations of: (i) national, non-competitive contracts
and attendant kick-back schemes; (ii) concealing transactions with
affiliates; (iii) false entries in the books and manipulation of accounts
payable and receivable; (iv) excessive compensation schemes and fraudulent
expense accounts; (v) charges of prohibited overhead costs to the project;
(vi) charges of prohibited procurement costs; (vii) inflation of Group
Service Expense; (viii) the use of prohibited or falsified revenues; (ix)
attempts to oust Green Isle from ownership; (x) creating a financial crisis
and then attempting to exploit it by seeking an economically oppressive
contract in connection with a loan; and (xi) providing incorrect cash flow
figures and failing appropriately to reveal and explain revised cash flow
figures.
The complaint seeks as damages the $140 million, which Green Isle claims to
have invested in the hotel (which includes $85 million in third party
debt), which the plaintiffs seek to treble to $420 million under RICO and
the Robinson-Patman Act.
On May 25, 2001, defendants moved to dismiss the complaint or,
alternatively, to stay or transfer. Briefing of the motion is complete but
oral argument has not yet been scheduled. On June 25, 2001, Green Isle
filed its Chapter 11 Bankruptcy Petition in the Southern District of
Florida. On November 11, 2001, the court granted defendants' motion to
transfer and subsequently did transfer the matter to the United States
District Court for the District of Puerto Rico. In that proceeding, Green
Isle's motion to reject the Ritz-Carlton operating agreement was dismissed
without prejudice.
14
On April 8, 2002, The Company and its subsidiary, Renaissance Hotel
Operating Company (RHOC), initiated an arbitration proceeding against CTF
Hotel Holdings, Inc. (CTF) and CTF's affiliate, Hotel Property Investments
(B.V.I.) Ltd. (HPI), in connection with a dispute over procurement issues
for certain Renaissance hotels and resorts that RHOC manages for CTF and
HPI. On April 12, 2002, CTF filed a lawsuit under seal in U.S. District
Court in Delaware against The Company, RHOC and Avendra LLC, alleging that,
in connection with procurement at 20 of those hotels, The Company and RHOC
engaged in improper acts of self-dealing, and claiming breach of fiduciary,
contractual and other duties; fraud; misrepresentation; and violations of
the RICO and Robinson-Patman acts. CTF seeks various remedies, including a
stay of the arbitration proceedings against CTF and unspecified actual,
treble and punitive damages.
We believe that the Green Isle and CTF lawsuits are without merit and we
intend to vigorously defend against the claims being made against us.
However, we cannot assure you as to the outcome of either lawsuit nor can
we currently estimate the range of any potential loss to the Company.
In addition to the foregoing, we are from time to time involved in legal
proceedings which could, if adversely decided, result in losses to the
Company.
9. Convertible Debt
----------------
On May 8, 2001 we received cash proceeds of $405 million from the sale of
zero-coupon convertible senior notes due 2021, known as LYONs.
The LYONs have a face value of $470 million, are convertible into
approximately 6.4 million shares of our Class A Common Stock and carry a
yield to maturity of 0.75 percent. We may not redeem the LYONs prior to May
8, 2004, but may at the option of the holders be required to purchase the
LYONs at their accreted value on May 8 of each of 2002, 2004, 2011 and
2016. We may choose to pay the purchase price for redemptions or
repurchases in cash and/or shares of our Class A Common Stock. If we are
required to repurchase any of the LYONS in May 2002, we will pay the
purchase price in cash. The accreted value of the LYONs and the redemption
price on the May 8, 2002 redemption date will be approximately $408
million.
We are amortizing the issuance costs of the LYONs into interest expense
over the one-year period ending May 8, 2002. The LYONs are classified as
long-term based on our ability and intent to refinance the obligation with
long-term debt if we are required to repurchase the LYONs.
10. Marriott and Cendant Corporation Joint Venture
----------------------------------------------
In the first quarter of 2002, Marriott and Cendant Corporation (Cendant)
completed the formation of a joint venture to further develop and expand
the Ramada and Days Inn brands in the United States. We contributed the
domestic Ramada license agreements and related intellectual property to the
joint venture at their carrying value of approximately $200 million. We
also contributed a $205 million note receivable from us and the joint
venture assumed a $205 million note payable to us, which eliminate upon
consolidation. Cendant
15
contributed the Days Inn license agreement and related intellectual
property with a carrying value of approximately $205 million. We each own
approximately 50 percent of the joint venture, with Cendant having the
slightly larger interest. We will account for our interest in the joint
venture using the equity method. The joint venture can be dissolved at any
time with the consent of both members and is scheduled to terminate in
March 2012. In the event of dissolution, the joint venture's assets will
generally be distributed in accordance with each member's capital account.
In addition, during certain periods of time commencing in March 2004, first
the joint venture and later Marriott will have a brief opportunity to cause
a mandatory redemption of Marriott's joint venture equity.
11. Restructuring Costs and Other Charges
-------------------------------------
In 2001 the Company experienced a significant decline in demand for hotel
rooms in the aftermath of the September 11, 2001 attacks on New York and
Washington and the subsequent dramatic downturn in the economy. This
decline resulted in reduced management and franchise fees, cancellation of
development projects, and anticipated losses under guarantees and loans.
The Company responded by implementing certain companywide cost-saving
measures. As a result of our restructuring plan, in the fourth quarter of
2001 we recorded pretax restructuring costs of $124 million, including (1)
$16 million in severance costs; (2) $20 million, primarily associated with
a loss on a sublease of excess space arising from the reduction in
personnel; (3) $28 million related to the write-off of capitalized costs
relating to development projects no longer deemed viable; and (4) $60
million related to the write-down of the Village Oaks brand of
companion-style senior living communities, which are now classified as held
for sale, to their estimated fair value. We also incurred $147 million of
other charges including (1) $85 million related to reserves for guarantees
and loan losses; (2) $17 million related to accounts receivable reserves;
(3) $13 million related to the write-down of properties held for sale; and
(4) $32 million related to the impairment of technology related investments
and other write-offs.
A summary of the remaining restructuring liability is as follows:
Restructuring costs Restructuring costs
and other charges and other charges
liability at liability at
March 22, 2002 December 28, 2001
--------------------- ---------------------
Severance.......................... $ 6 $ 8
Facilities exit costs.............. 16 18
--------------------- ---------------------
Total restructuring costs.......... 22 26
Reserves for guarantees............ 32 33
Other.............................. 1 1
--------------------- ---------------------
Total.............................. $ 55 $ 60
===================== =====================
16
12. Assets Held for Sale
--------------------
Included in other current assets at March 22, 2002 and December 28, 2001,
are $290 million and $324 million, respectively, of assets held for sale.
At March 22, 2002, assets held for sale consisted of $285 million of
property, plant and equipment and $5 million of other related assets.
Included in other liabilities at March 22, 2002, are $9 million related to
the assets held for sale.
17
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
- -------------
RESULTS OF OPERATIONS
The following discussion presents an analysis of results of our operations for
the twelve weeks ended March 22, 2002 and March 23, 2001. Revenue per available
room (REVPAR) is calculated by dividing room sales for comparable properties by
room nights available to guests for the period. We consider REVPAR to be a
meaningful indicator of our performance because it measures the period over
period change in room revenues for comparable properties. REVPAR may not be
comparable to similarly titled measures such as revenues. Comparable REVPAR,
room rate and occupancy statistics used throughout this report are based upon
U.S. properties operated by us, except that data for Fairfield Inn, TownePlace
Suites and SpringHill Suites also include comparable franchised units.
Twelve Weeks Ended March 22, 2002 Compared to Twelve Weeks Ended
----------------------------------------------------------------
March 23, 2001
--------------
We reported net income of $82 million for the 2002 first quarter on sales
of $2,364 million. This represents a 32 percent decrease in net income and
a 4 percent decrease in sales compared to the first quarter of 2001.
Diluted earnings per share of $.32 for the quarter decreased 32 percent
compared to the 2001 amount. The overall earnings decline in 2002 is
primarily due to weaker hotel results and losses in our distribution
services business, partially offset by the lower tax rate associated with
our Synthetic Fuel business.
Marriott Lodging, which includes our Full-Service, Select-Service,
Extended-Stay, and Timeshare segments, reported a 31 percent decrease in
operating profit on 7 percent lower sales. Systemwide lodging sales
decreased to $4.6 billion.
We added a total of 34 lodging properties (7,000 units) during the first
quarter of 2002, and deflagged 4 properties (216 rooms), increasing our
total properties to 2,428 (442,767 rooms). Properties by brand as of March
22, 2002 (excluding 5,363 rental units relating to Marriott ExecuStay) are
as indicated in the following table.
Company-operated Franchised
------------------------------- ----------------------------------
Brand Properties Rooms Properties Rooms
- --------------------------------------------------------- --------------- ------------ ----------------- -------------
Full-Service Lodging
- --------------------
Marriott Hotels, Resorts and Suites................ 247 108,783 181 50,537
The Ritz-Carlton Hotels............................ 46 15,365 - -
Renaissance Hotels, Resorts and Suites............. 86 33,081 38 12,049
Ramada International............................... 5 1,068 132 18,822
Select-Service Lodging
- ----------------------
Courtyard.......................................... 287 45,432 275 35,105
Fairfield Inn...................................... 2 890 485 45,858
SpringHill Suites.................................. 19 3,023 68 6,952
Extended-Stay Lodging
- ---------------------
Residence Inn...................................... 133 17,874 262 28,824
TownePlace Suites.................................. 34 3,667 65 6,593
Marriott Executive Apartments...................... 11 1,969 1 99
Timeshare
- ---------
Marriott Vacation Club International............... 44 6,287 - -
Horizons........................................... 2 146 - -
The Ritz-Carlton Club.............................. 4 144 - -
Marriott Grand Residence Club...................... 1 199 - -
--------------- ------------ ----------------- -------------
Total................................................... 921 237,928 1,507 204,839
=============== ============ ================= =============
18
Across our Lodging brands, REVPAR for comparable U.S. properties declined
by an average of 12.7 percent in the first quarter of 2002. Average room
rates for these hotels declined 7.7 percent and occupancy declined 3.8
percentage points. Management and franchise fees decreased 14 percent
compared to the first quarter 2001. The operating results reflect the
impact of a weaker economy, offset by the $6 million reduction in
amortization expense resulting from the adoption of Financial Accounting
Standard (FAS) No. 142, "Goodwill and Other Intangible Assets," in the
first quarter of 2002. Occupancy, average daily rate and REVPAR for each of
our principal established brands are shown in the following table.
Twelve weeks ended Change vs.
March 22, 2002 2001
----------------------- ------------------
Marriott Hotels, Resorts and Suites
Occupancy .............................. 69.4% -3.5% pts.
Average daily rate...................... $ 142.25 -8.2%
REVPAR.................................. $ 98.70 -12.7%
The Ritz-Carlton Hotels
Occupancy............................... 67.1% -1.9% pts.
Average daily rate...................... $ 248.86 -11.6%
REVPAR.................................. $ 166.91 -14.0%
Renaissance Hotels, Resorts and Suites
Occupancy............................... 64.5% -5.7% pts.
Average daily rate...................... $ 134.70 -7.8%
REVPAR.................................. $ 86.83 -15.3%
Courtyard
Occupancy............................... 65.8% -7.2% pts.
Average daily rate...................... $ 97.01 -5.8%
REVPAR.................................. $ 63.85 -15.1%
Fairfield Inn
Occupancy............................... 60.9% -2.4% pts.
Average daily rate...................... $ 63.76 -1.4%
REVPAR.................................. $ 38.82 -5.2%
SpringHill Suites
Occupancy............................... 67.7% +1.6% pts.
Average daily rate...................... $ 79.92 -5.7%
REVPAR.................................. $ 54.10 -3.4%
Residence Inn
Occupancy............................... 74.2% -5.0% pts.
Average daily rate...................... $ 99.38 -10.0%
REVPAR.................................. $ 73.76 -15.6%
TownePlace Suites
Occupancy............................... 69.9% +3.3% pts.
Average daily rate...................... $ 62.67 -10.2%
REVPAR.................................. $ 43.78 -5.8%
19
Across Marriott's domestic full-service lodging brands (Marriott Hotels, Resorts
and Suites; Renaissance Hotels, Resorts and Suites; and The Ritz-Carlton
Hotels), REVPAR for comparable company-operated U.S. properties declined 13.2
percent. Average room rates for these hotels declined 8.4 percent and occupancy
decreased 3.8 percentage points to 68.5 percent.
Our domestic select-service and extended-stay brands (Fairfield Inn, Courtyard,
Residence Inn, SpringHill Suites and TownePlace Suites) had average REVPAR
declines of 12 percent, occupancy declines of 3.9 percentage points and average
room rate declines of 6.7 percent.
Results for international lodging operations declined, reflecting the impact of
the decrease in international travel, the unfavorable impact of foreign currency
rates principally in Egypt and Australia, partially offset by higher margins.
Our Timeshare business achieved an 11 percent increase in contract sales in the
quarter. Sales growth was strong at timeshare resorts in Colorado, Hawaii, and
California, but remained soft in Orlando. Profits for the quarter in the
timeshare business declined 28 percent largely as a result of higher sales and
marketing expenses. Note sale gains of approximately $13.5 million were flat
compared to 2001. At March 22, 2002, 28 resorts were in active sales, 21 resorts
were sold out and an additional two resorts were under development.
Senior Living Services posted a 9 percent increase in sales and a $5 million
increase in operating profit in the first quarter of 2002. Operating profit was
impacted by the recognition of a $2 million one-time payment associated with the
sale of the Crestline Senior Living Communities to an unaffiliated third-party,
the result of the implementation of cost containment initiatives, $1 million of
lower depreciation expense due to the classification of the Village Oaks
Communities as assets held for sale and $1 million of lower amortization expense
associated with the adoption of FAS No. 142, slightly offset by higher casualty
insurance cost. Occupancy for comparable communities was 83 percent in the
quarter, stable with a year ago. As of March 22, 2002, we operated 156
facilities (26,218 units).
Distribution Services (MDS) posted a 4 percent increase in sales in the first
quarter of 2002, reflecting the commencement of new contracts since the first
quarter of 2001, which include the distribution of higher value, lower margin
items. The $6 million operating loss resulted from an overall decline in the
number of cases shipped and a $2 million write-off of an investment in a
customer contract, due to a change in an agreement with one of our customers.
We continue to strategically review the MDS business segment, and we expect to
complete that review in 2002.
Corporate Expenses, Interest and Taxes. Interest expense decreased $3 million
reflecting lower borrowings and lower interest rates. Interest income increased
$3 million as a result of higher average loan balances compared to the first
quarter 2001 and interest earned on excess cash reserves. Corporate expenses
decreased 3 percent, reflecting the first quarter 2001 reversal of a $10 million
insurance reserve related to a lawsuit at one of our hotels, the $5 million
accrual in 2002 of a payment expected to be made in connection with the sale of
a land parcel, offset by the $6 million 2001 write-off of an investment in a
technology partner, $3 million recorded in 2001 associated with the start-up of
Avendra LLC and the continued favorable impact of our cost containment
initiatives. The effective income tax rate decreased from 36.5 percent to 30.5
percent primarily
20
due to the impact of the tax credits arising from our Synthetic Fuel business,
the elimination of nondeductible goodwill amortization, partially offset by the
2001 sale of the affordable housing tax credits.
Synthetic Fuel. In October 2001, we acquired four coal-based synthetic fuel
production facilities (the Facilities) for $46 million in cash. The synthetic
fuel produced at the Facilities qualifies for tax credits based on Section 29 of
the Internal Revenue Code. Under Section 29, tax credits are not available for
synthetic fuel produced after 2007. We began operating these Facilities in the
first quarter of 2002. We anticipate that the operation of the Facilities,
together with the benefit arising from the tax credits, will be significantly
accretive to our net income. Although we expect that the Facilities will produce
significant operating losses, we anticipate that these will be offset by the tax
credits generated under Section 29, which we expect to reduce our income tax
expense. In the first quarter of 2002 our Synthetic Fuel business reflected
sales of $5 million and an operating loss of $6 million, resulting in tax
credits of nearly $6 million.
21
LIQUIDITY AND CAPITAL RESOURCES
We have credit facilities, which support our commercial paper program and
letters of credit. At March 22, 2002, our cash balances combined with our
available borrowing capacity under the credit facilities was over $2 billion.
We consider these resources, together with cash expected to be generated by
operations, adequate to meet our short-term and long-term liquidity
requirements, to finance our long-term growth plans, and to meet debt service
and other cash requirements. We monitor the status of the capital markets, and
regularly evaluate the effect that changes in capital market conditions may have
on our ability to execute our announced growth plans. We expect that part of our
financing and liquidity needs will continue to be met through commercial paper
borrowings and access to long-term committed credit facilities. If the lodging
industry recovers more slowly than we anticipate, our ability to obtain
commercial paper borrowings at competitive rates may be impaired.
Cash and equivalents totaled $190 million at March 22, 2002, a decrease of $627
million from year end 2001. Net income is stated after recording depreciation
expense of $28 million and $29 million for the twelve weeks ended March 22, 2002
and March 23, 2001, respectively, and after amortization expense of $11 million
and $17 million, respectively, for the same time periods. Earnings before
interest expense, income taxes, depreciation and amortization (EBITDA) for the
twelve weeks ended March 22, 2002 decreased by $82 million, or 32 percent, to
$176 million. EBITDA is an indicator of operating performance, which can be used
to measure our ability to service debt, fund capital expenditures and expand our
business. However, EBITDA is not an alternative to net income, operating profit,
cash from operations, or any other operating or liquidity measure prescribed by
accounting principles generally accepted in the United States.
Net cash used in investing activities totaled $50 million for the twelve weeks
ended March 22, 2002, and consisted primarily of capital expenditures, notes
receivable advances and equity investments, partially offset by the disposition
of four lodging properties.
In April 1999, January 2000, and January 2001, we filed "universal shelf"
registration statements with the Securities and Exchange Commission in the
amounts of $500 million, $300 million and $300 million, respectively. As of
March 22, 2002, we had offered and sold to the public under these registration
statements, $300 million of debt securities at 7 7/8%, due 2009 and $300 million
at 8 1/8%, due 2005, leaving a balance of $500 million available for future
offerings.
In January 2001, we issued, through a private placement, $300 million of 7
percent senior unsecured notes, due 2008, and received net proceeds of $297
million. We agreed to make and complete a registered exchange offer for these
notes and completed that exchange offer on January 15, 2002.
On May 8, 2001, we issued zero-coupon convertible senior notes due 2021, known
as LYONs, and received cash proceeds of $405 million. The LYONs have a face
value of $470 million, are convertible into approximately 6.4 million shares of
our Class A common stock and carry a yield to maturity of 0.75 percent. We may
not redeem the LYONs prior to May 8, 2004, but may at the option of the holders
be required to purchase the LYONs at their accreted value on May 8 of each of
2002, 2004, 2011 and 2016. We may choose to pay the purchase price for
redemptions or
22
repurchases in cash and/or shares of our Class A Common Stock. If we are
required to repurchase any of the LYONS in May 2002, we will pay the purchase
price in cash. The accreted value of the LYONs and the redemption price on the
May 8, 2002 redemption date will be approximately $408 million.
Our contractual obligations and commitments are as summarized in the following
tables:
Payments Due by Period
--------------------------------------------------------------------
Before
January 3, After 5
Contractual Obligations Total 2003 1 - 3 years 4 - 5 years years
- ------------------------------------------------------------------------------------------------------------------------------
($ in millions)
Debt.............................. $ 1,819 $ 37 $ 260 $ 809 $ 713
Operating Leases
Recourse....................... 1,433 133 262 198 840
Non-recourse................... 715 8 82 119 506
------------- ------------------ ---------------- ---------------- ----------------
Total Contractual Cash
Obligations.................... $ 3,967 $ 178 $ 604 $ 1,126 $ 2,059
============= ================== ================ ================ ================
The $1,819 million of debt is recorded in the condensed consolidated balance
sheet as long-term debt of $1,775 million and current liabilities of $44
million, which reflects the portion of debt becoming due by March 28, 2003. The
$1,819 million of debt excludes the $407 million obligation associated with the
LYONs.
Amount of Commitment Expiration Per Period
-----------------------------------------------------------------------
Before
Other Commercial Total Amounts January 3,
Commitments Committed 2003 1 - 3 years 4 - 5 years After 5 years
- ------------------------------------------------------------------------------------------------------------------------------
($ in millions)
Guarantees........................ $ 571 $ 84 $ 129 $ 261 $ 97
Timeshare note repurchase
obligations.................... 55 - 1 - 54
--------------- --------------------- ----------------- ----------------- -----------------
Total............................. $ 626 $ 84 $ 130 $ 261 $ 151
=============== ===================== ================= ================= =================
Total unfunded loan commitments amounted to $619 million at March 22, 2002. We
expect to fund $171 million by January 3, 2003, $137 million in one to three
years, and $10 million in four to five years. We do not expect to fund the
remaining $301 million of commitments, which expire as follows: $31 million by
January 3, 2003; $6 million in one to three years; $0 million in four to five
years; and $264 million after five years.
Share Repurchases
We did not purchase any shares of our Class A Common Stock during the twelve
weeks ended March 22, 2002. As of March 22, 2002, we were authorized by our
Board of Directors to repurchase 13.5 million shares.
Relationship with Host Marriott
In recognition of the significant changes in the lodging industry over the last
ten years and the age of our agreements with Host Marriott, many provisions of
which predate our 1993 Spinoff, we and Host Marriott concluded that we could
mutually enhance the long term strength and growth of both companies by updating
our existing relationship. Accordingly, we are currently negotiating certain
changes to our management agreements for Host Marriott-owned hotels. The
modifications under discussion would, if made, be effective as of the beginning
of our 2002 fiscal year and
23
would remain subject to the consent of various lenders to the properties and
other third parties. If made, these changes would, among other things,
o Provide Host Marriott with additional approval rights over budgets and
capital expenditures;
o Extend the effective management agreement termination dates for several
hotels;
o Expand the pool of hotels that Host Marriott could sell with franchise
agreements to one of our approved franchisees and revise the method of
determining the number of hotels that may be sold without a management
agreement or franchise agreement;
o Lower the incentive management fees payable to us by amounts dependent
in part on underlying hotel profitability at eight hotels;
o Reduce certain expenses to the properties and lower Host Marriott's
working capital requirements;
o Confirm that we and our affiliates may earn a profit (in addition to
what we earn through management fees) on certain transactions relating
to Host Marriott-owned properties, and establish the specific
conditions under which we may profit on future transactions; and
o Terminate our existing right to purchase up to 20 percent of Host
Marriott's outstanding common stock upon certain changes of control and
clarify our rights in each of our management agreements to prevent
either a sale of the hotel to our major competitors or specified
changes in control of Host Marriott involving our major competitors.
We cannot assure you that these negotiations will be successful, that the
changes will be substantially as we have described above, or that the consents
necessary to implement these changes will be obtained. The monetary effect of
the anticipated changes will depend on future events such as the operating
results of the hotels. We do not expect these modifications to have a material
financial impact on us.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
- ------------------------------------------------------------------
There have been no material changes to our exposures to market risk since
December 28, 2001.
24
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
Incorporated by reference to the description of legal proceedings in the
"Contingencies" footnote in the financial statements set forth in Part I,
"Financial Information."
Item 2. Changes in Securities
- ------------------------------
None.
Item 3. Defaults Upon Senior Securities
- ----------------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
None.
Item 5. Other Information
- --------------------------
The following holders of our Liquid Yield Option Notes (Zero Coupon--Senior) due
2021 ("LYONs") bearing CUSIP No. 571903AA1, and the shares of our Class A common
stock, par value $0.01 per share, issuable upon conversion or redemption of the
LYONs have notified us that they beneficially own the principal amount at
maturity of LYONs shown below, which they may from time to time offer and sell
pursuant to our Registration Statement under the Securities Act of 1933, as
amended, on Form S-3 (File No. 333-66406) relating to the LYONs and the
Prospectus dated December 12, 2001, as supplemented from time to time, included
therein (the "Prospectus"):
Aggregate Principal
Amount of LYONs at Percentage of Number of Shares of Percentage of
Maturity that LYONs Common Stock that Common Stock
Name May be Sold Outstanding May be Sold(1) Outstanding(2)
---- ----------- ----------- -------------- --------------
Dodeca Fund, L.P. $3,000,000 * 40,585 *
Quattro Fund Ltd. 1,250,000 * 16,211 *
S.A.C. Capital Associates, LLC 4,000,000 * 54,114 *
Zurich Institutional Benchmarks Management
c/o Quattro Fund 1,000,000 * 13,529 *
- ----------------
* Less than 1%.
1. Assumes conversion of all of the holder's LYONs at a conversion rate of
13.5285 shares of common stock per $1,000 principal amount at maturity of
the LYONs, rounded down to the nearest whole number of shares. However,
this conversion rate will be subject to adjustment as described in the
Prospectus under the caption "Description of LYONs--Conversion Rights." As
a result, the amount of common stock issuable upon conversion of the LYONs
may increase or decrease in the future.
2. Calculated based on Rule 13d-3(d)(i) of the Securities Exchange Act of 1934
using 242,851,180 shares of common stock outstanding as of April 12,
2002. In calculating this amount for each holder, we treated as outstanding
the number of shares of common stock issuable upon conversion of all of
that holder's LYONs but did not assume conversion of any other holder's
LYONs.
25
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
Exhibit No. Description
----------- -----------
12 Statement of Computation of Ratio of Earnings
to Fixed Charges.
99 Forward-Looking Statements.
(b) Reports on Form 8-K
On February 1, 2002, we filed a report on Form 8-K listing certain
holders of our Liquid Yield Option Notes (LYONs) and indicating that we
had been notified that the listed holders from time to time offer and
sell the LYONs pursuant to Marriott's Registration Statement under the
Securities Act of 1933, as amended, on Form S-3.
26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MARRIOTT INTERNATIONAL, INC.
24th day of April, 2002
/s/ Arne M. Sorenson
--------------------------------------
Arne M. Sorenson
Executive Vice President and
Chief Financial Officer
/s/ Linda A. Bartlett
--------------------------------------
Linda A. Bartlett
Vice President and Controller
(Principal Accounting Officer)
27