Marriott Reports 57 Percent Decline in Quarterly Income

Marriott International, Inc. reported third-quarter 2009 adjusted income from continuing operations attributable to Marriott of $53 million, a 57 percent decline over the year-ago quarter, and adjusted diluted earnings per share from continuing operations attributable to Marriott shareholders of $0.15, down 55 percent.

The company’s EPS guidance for the 2009 third quarter, disclosed on July 16, 2009, totaled $0.09 to $0.14. The reported loss from continuing operations attributable to Marriott was $466 million in the third quarter of 2009 compared to reported income from continuing operations attributable to Marriott of $94 million in the year-ago quarter.

Reported diluted losses per share from continuing operations attributable to Marriott shareholders was $1.31 in the third quarter of 2009 compared to diluted EPS from continuing operations attributable to Marriott shareholders of $0.25 in the third quarter of 2008.

Adjusted results for the 2009 third quarter exclude $752 million pretax ($502 million after-tax and $1.41 per diluted share) of impairment charges, which Marriott previously disclosed, related to the timeshare segment. Adjusted results for the 2009 third quarter also exclude $8 million pretax ($4 million after-tax and $0.01 per diluted share) of restructuring costs and other charges.

Restructuring costs totaled $9 million pretax and primarily included severance costs and timeshare facilities exit costs. Other charges totaled $1 million of pretax earnings and primarily reflect the $3 million favorable impact of the revaluation of residual interests from prior timeshare note sales due to three default triggers curing in the quarter, partially offset by $2 million of reserves for guarantees and contract cancellations. Of the total restructuring costs and other charges in the third quarter, cash payments are expected to be $5 million.

Adjusted results for the 2009 third quarter also exclude a $13 million after-tax non-cash charge ($0.03 per diluted share) in the provision for income taxes primarily related to the treatment of funds received from certain foreign subsidiaries that is in ongoing discussions with the Internal Revenue Service.

Marriott added 79 new properties (10,380 rooms) to its worldwide lodging portfolio in the 2009 third quarter, including over 8,600 North American limited-service rooms. Three properties (503 rooms) exited the system during the quarter.

At quarter-end, the company’s lodging group encompassed 3,362 properties and timeshare resorts for a total of over 586,000 rooms. As of the end of the third quarter, the company’s worldwide pipeline of hotels under construction, awaiting conversion or approved for development totaled approximately 105,000 rooms. The company expects to open over 33,000 rooms in 2009.

Marriott revenues totaled approximately $2.5 billion in the 2009 third quarter, compared to $3 billion for the third quarter of 2008. Base management and franchise fees declined 14 percent to $216 million reflecting worldwide declines in REVPAR in all brands offset in part by fees from new hotels.