Marriott International : Q2 2019 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________

FORM 10-Q

_______________________________________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 1-13881

_________________________________________________

MARRIOTT INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

_______________________________________

Delaware	52-2055918
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)
10400 Fernwood Road Bethesda Maryland	20817
(Address of principal executive offices)	(Zip Code)

[phone]

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Class A Common Stock, $0.01 par value	MAR	Nasdaq Global Select Market
Class A Common Stock, $0.01 par value	MAR	Chicago Stock Exchange

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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant

was required to submit such files). Yes

No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	Accelerated filer
Non-accelerated filer	Smaller Reporting Company
	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 329,358,821 shares of Class A Common Stock, par value $0.01 per share, outstanding at July 26, 2019.

MARRIOTT INTERNATIONAL, INC.

FORM 10-Q TABLE OF CONTENTS

		Page No.
Part I.	Financial Information (Unaudited):
Item 1.	Financial Statements
	Condensed Consolidated Statements of Income -	3
	Three and Six Months Ended June 30, 2019 and June 30, 2018
	Condensed Consolidated Statements of Comprehensive Income -	4
	Three and Six Months Ended June 30, 2019 and June 30, 2018
	Condensed Consolidated Balance Sheets -	5
	as of June 30, 2019 and December 31, 2018
	Condensed Consolidated Statements of Cash Flows -	6
	Six Months Ended June 30, 2019 and June 30, 2018
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
	Forward-Looking Statements	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
Part II.	Other Information:
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 6.	Exhibits	47
	Signature	48

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

MARRIOTT INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

($ in millions, except per share amounts)

(Unaudited)

Three Months Ended		Six Months Ended
June 30, 2019	June 30, 2018		June 30, 2019	June 30, 2018

REVENUES

Base management fees Franchise fees Incentive management fees Gross fee revenues Contract investment amortization Net fee revenues

Owned, leased, and other revenue Cost reimbursement revenue

OPERATING COSTS AND EXPENSES

Owned, leased, and other-direct Depreciation, amortization, and other General, administrative, and other Merger-related costs and charges Reimbursed expenses

OPERATING INCOME

Gains and other income, net

Interest expense

Interest income

Equity in earnings

INCOME BEFORE INCOME TAXES

Provision for income taxes

NET INCOME

EARNINGS PER SHARE

Earnings per share - basic

Earnings per share - diluted

$

$

$

$

309	$	300	$	591	$	573
525		475			975			892
165		176			328			331
999		951			1,894			1,796
(15)		(13)			(29)			(31)
984		938			1,865			1,765
418		423			793			829
3,903		4,048			7,659			7,824
5,305		5,409			10,317			10,418
331		334			656			670
56		58			110			112
229		217			451			464
173		18			182			52
4,107		3,964			7,999			7,772
4,896		4,591			9,398			9,070
409		818			919			1,348
1		114			6			173
(102)		(85)			(199)			(160)
6		6			12			11
-		21			8			34
314		874			746			1,406
(82)		(207)			(139)			(319)
232	$	667		$	607		$	1,087
0.70	$	1.89	$	1.80	$	3.06
0.69	$	1.87	$	1.79	$	3.02

See Notes to Condensed Consolidated Financial Statements.

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MARRIOTT INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

($ in millions)

(Unaudited)

		Three Months Ended				Six Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019	June 30, 2018
Net income	$	232		$	667		$	607		$	1,087
Other comprehensive income (loss):
Foreign currency translation adjustments		38			(399)			71			(247)
Derivative instrument adjustments and other, net of tax		(1)			11			(2)			8
Reclassification of (income) loss, net of tax		(3)			3			(4)			16
Total other comprehensive income (loss), net of tax		34			(385)			65			(223)
Comprehensive income	$	266		$	282		$	672		$	864

See Notes to Condensed Consolidated Financial Statements.

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MARRIOTT INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

($ in millions)

		(Unaudited)
		June 30,			December 31,
		2019			2018
ASSETS
Current assets
Cash and equivalents	$	284	$	316
Accounts and notes receivable, net		2,328			2,133
Prepaid expenses and other		257			257
		2,869			2,706
Property and equipment, net		1,945			1,956
Intangible assets
Brands		5,968			5,790
Contract acquisition costs and other		2,646			2,590
Goodwill		9,067			9,039
		17,681			17,419
Equity method investments		580			732
Notes receivable, net		97			125
Deferred tax assets		171			171
Operating lease assets		977			-
Other noncurrent assets		573			587
	$	24,893		$	23,696
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt	$	229	$	833
Accounts payable		927			767
Accrued payroll and benefits		1,067			1,345
Liability for guest loyalty program		2,157			2,529
Accrued expenses and other		1,244			963
		5,624			6,437
Long-term debt		10,185			8,514
Liability for guest loyalty program		3,530			2,932
Deferred tax liabilities		359			485
Deferred revenue		768			731
Operating lease liabilities		893			-
Other noncurrent liabilities		2,294			2,372
Shareholders' equity
Class A Common Stock		5			5
Additional paid-in-capital		5,729			5,814
Retained earnings		9,292			8,982
Treasury stock, at cost		(13,460)			(12,185)
Accumulated other comprehensive loss		(326)			(391)
		1,240			2,225
	$	24,893		$	23,696

See Notes to Condensed Consolidated Financial Statements.

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