Marriott International, Inc. (MAR / NYSE) today reported net income of $335 million for its 1997 fiscal year ended Jan. 2, 1998, compared to $306 million in 1996. Diluted earnings per share rose to $2.46 from $2.25 in the preceding year, and sales totaled $12.0 billion, up 18 percent from $10.2 billion a year ago.
The company said that its 1997 net income was reduced by approximately $19 million (13 cents per diluted share) as a result of the March 1997 acquisition of Renaissance Hotel Group N.V. (RHG), and by an after-tax loss of $14 million (10 cents per diluted share) on the October 1997 sale to Sodexho Alliance of its management services business in the United Kingdom. Before the impact of these two items, net income and diluted earnings per share both were up 20 percent in 1997, on 12 percent sales growth.
J.W. Marriott, Jr., chairman and chief executive officer of Marriott International, said the company`s strong performance in 1997 was paced by its lodging group.
“This was an outstanding year for Marriott Lodging,” Mr. Marriott explained. “We achieved substantial growth in sales and profits for established hotels, developed a record number of new properties, and successfully integrated the biggest acquisition in Marriott history. We introduced several exciting new lodging products to meet the needs of today`s travelers, and launched Marriott Rewards, the largest and most popular frequent guest program in the industry.”
“Our senior living and management services operations also posted solid gains in 1997,” Mr. Marriott continued. “Looking ahead to 1998, the growth prospects for our businesses are excellent. In addition, we expect our planned spin-off and merger transactions to create significant value, and we are working hard to ensure both new organizations get off to strong starts.”
As previously reported, Marriott International has entered into a definitive agreement to merge its food service and facilities management business (Marriott Management Services) with the North American operations of Sodexho Alliance. Prior to the merger, Marriott International plans to spin off to its shareholders, on a tax-free basis, a new company comprised of its lodging, senior living and distribution services businesses. This new company will adopt the Marriott International name, and the present Marriott International will change its name to Sodexho Marriott Services, Inc. The spin-off and merger transactions, which are subject to shareholder and regulatory approvals, are expected to be completed in March 1998.
For the 1997 fourth quarter, Marriott International reported net income of $108 million and diluted earnings per share of 79 cents. Before the impact of the RHG acquisition, which reduced 1997 fourth quarter net income by $7 million (five cents per diluted share), and the loss on the sale of the company`s U.K. management services business, net income and diluted earnings per share were up 17 percent and 18 percent, respectively, over 1996 fourth quarter results. Sales totaled $3.9 billion, a gain of 12 percent compared to the 1996 quarter.