Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the
accounts of Marriott Corporation and all subsidiaries.
Investments in companies representing 20% to 50%
interests are accounted for under the equity method.
All material intercompany transactions and balances
have been eliminated.
The company's fiscal year ends on the Friday closest
to December 31 for domestic operations and November
30 for foreign operations. Fiscal 1980 (ended January 2,
1981) includes 53 weeks. All other years presented
contain 52 weeks.
In 1980, the company began allocating the operating
profits of its corporate food production and distribution
operations (previously included in Cruise Ships and
Other) to its operating businesses based on relative
sales to each segment Prior year segment information
has been reclassified to reflect this change and other
minor changes in organizational responsibility adopted
The consolidated financial statements include
net assets of foreign subsidiaries and affiliates of
$72,729,000 at January 2,1981 and $60,755,000 at
December 28,1979. Foreign netincomewas$ll,389,000
in 1980, $12,994,000 in 1979 and $9,264,000 in 1978.
Foreign exchange and translation gains or losses are
Theme park costs incurred during the off-season are
deferred (included in prepaid expenses) and charged to
expense during the operating season based on
Property and Equipment
The cost of new units includes interest rent charges
and real estate taxes incurred during construction.
Capitalized interest totaled $12,546,000 in 1980
$4,705,000 in 1979 and $4,766,000 in 1978. Replacements and improvements, including most costs of
converting units, are capitalized.
Depreciation and amortization are calculated using
the straight-line method over the estimated useful lives
of the assets. Leasehold improvements are amortized
over the shorter of asset or lease life.
Upon sale or retirement of property and equipment
(excluding normal sales or retirements of theme park
rides and equipment), the costs less accumulated depreciation and salvage are charged or credited to
income. Theme park rides and equipment are depreciated under the composite method and no gain or loss
is recognized on normal sales or retirements.
Cost in Excess of Net Assets of Businesses Acquired
Of the cost in excess of net assets of businesses
acquired, $ 12,936,000 relates to acquisitions prior to
October31, 1970 (at which time amortization became
mandatory) and is not being amortized because in the
opinion of management it has continuing value. The remaining $5,939,000 at January 2,1981 is being amortized over periods of up to 40 years.
Operating costs incurred prior to opening are deferred and amortized over three years for hotels, five
years for theme parks and one year for other major
operations. Similar costs for all other operations are
expensed as incurred.
Profit Sharing Plan
The company contributes to a profit sharing plan for
the benefit of employees meeting certain eligibility requirements and electing participation in the plan. Company contributions are a specified percentage of the
company's pre-tax income. Company contributions to
the plan were $10,621,000 in 1980, $10.337000 in 1979
and $7792,000 in 1978.
Income taxes are based on reported income. Deferred income taxes are provided fortiming differences
between the recognition of certain income and expenses for book and tax purposes, principally depreciation and interest Investment tax credits are accounted
for using the "flow-through" method.
Provision for income taxes has not been made on
unremitted earnings of foreign subsidiaries ($34,047,000
as of January 2,1981) because management considers
these earnings to be permanently invested.
Earnings Per Share
Primary earnings pershare are based on the weighted
average number of shares outstanding during each year,
adjusted for the dilutive effect of employee stock option
and purchase plans, deferred stock compensation, a
stock warrant and the conversion of certain convertible
Fully diluted earnings pershare further assumes the
conversion of all convertible debt Primary and fully
diluted shares averaged 27777081 and 27.973,784, respectively, in 1980.