Marriott Corporation (A)

Harvard Business School Case 9-394-085

Courseware 9-307-703

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 Marriott Corporation
Based on No Spin-out of Marriott International
Financial Projections

Change the highlighted numbers only

Annual growth of $ sales through existing units 6.0%
(assuming general inflation of 3% per year)
Forecast
1982-1989
Average 1992 1993 1994 1995
EBIT % Sales 7.6% 5.0% 5.5% 6.0% 6.0%

Available for sale

at Dec. 1991 1992 1993 1994 1995
Assets Sales ($ millions) $ 1,524 $ 100 $ 150 $ 200 $ 300
Common Dividend Per Share $ 0.28 $ 0.28 $ 0.28 $ 0.28

1991 1992 1993 1994 1995

Sales $ 8,331 $ 8,831 $ 9,361 $ 9,922 $ 10,518
EBIT 367 442 515 595 631
Interest (net) 222 206 197 180 154
Pre-tax profits 145 235 318 415 477
Tax @ 41% 63 96 130 170 195
Net income 82 139 187 245 281
Preferred dividend 6 17 17 17 17
Net income, common 76 122 170 228 264
Shares outstanding (millions) 94.5 93.6 93.6 93.6 93.6
Earnings per share $ 0.80 $ 1.30 $ 1.82 $ 2.44 $ 2.82
Times Interest earned 1.7 2.1 2.6 3.3 4.1

Statement of Cash Flows: 1992 1993 1994 1995

Cash Flow from Operating Activities
Net income $ 139 $ 187 $ 245 $ 281
Depreciation 270 270 270 270
Change in net working capital 0 0 0 0
Total from Operating Activities 409 457 515 551
Cash Flow from Investing Activities
Capital expenditures (350) (350) (350) (350)
Sale of assets 100 150 200 300
Total from Investing Activities (250) (200) (150) (50)
Cash Flow from Financing Activities
Preferred dividend (17) (17) (17) (17)
Common dividend (26) (26) (26) (26)
Total (43) (43) (43) (43)
Cash Available for Debt Repayment 115 214 322 458
Cumulative Debt Repayment 115 330 651 1,109

Partial Balance Sheet 12/31/1991 1992 1993 1994 1995

Interest bearing debt $ 3,031 $ 2,916 $ 2,701 $ 2,380 $ 1,922
Owner's equity 679 774 919 1,120 1,358
Total Capital $ 3,710 $ 3,690 $ 3,620 $ 3,500 $ 3,280

Debt as % capital 82% 79% 75% 68% 59%

 MII HMC MC
EBIT 259 123 382
Int 25 210 235
Net Income (tax -45%) 128.7 -47.85 80.85
EPS (105 m shares exh 1.225714 -0.455714 0.77
Debt 400 4600 5000
Equity 800 600 1400
int coverage 10.36 0.585714 1.625532
D/E 0.5 7.666667 3.571429
Business risk (HML)
Financial Risk (HML)
Total Risk (HML)
1.134257 1.1369