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Marriott Corporation, 1970 Annual Report
Image 26
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Marriott International, Inc.. Marriott Corporation, 1970 Annual Report - Image 26. 1970. Hospitality Industry Archives, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston. University of Houston Digital Library. Web. November 19, 2019. https://digital.lib.uh.edu/collection/hiltonar/item/1630/show/1623.

Disclaimer: This is a general citation for reference purposes. Please consult the most recent edition of your style manual for the proper formatting of the type of source you are citing. If the date given in the citation does not match the date on the digital item, use the more accurate date below the digital item.

Marriott International, Inc.. (1970). Marriott Corporation, 1970 Annual Report - Image 26. Annual Reports from the Hospitality Industry Archives. Hospitality Industry Archives, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston. Retrieved from https://digital.lib.uh.edu/collection/hiltonar/item/1630/show/1623

Disclaimer: This is a general citation for reference purposes. Please consult the most recent edition of your style manual for the proper formatting of the type of source you are citing. If the date given in the citation does not match the date on the digital item, use the more accurate date below the digital item.

Marriott International, Inc., Marriott Corporation, 1970 Annual Report - Image 26, 1970, Annual Reports from the Hospitality Industry Archives, Hospitality Industry Archives, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston, accessed November 19, 2019, https://digital.lib.uh.edu/collection/hiltonar/item/1630/show/1623.

Disclaimer: This is a general citation for reference purposes. Please consult the most recent edition of your style manual for the proper formatting of the type of source you are citing. If the date given in the citation does not match the date on the digital item, use the more accurate date below the digital item.

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Compound Item Description
Title Marriott Corporation, 1970 Annual Report
Creator (LCNAF)
  • Marriott International, Inc.
Publisher Marriott International, Inc.
Date 1970
Description Marriott Corporation Annual Report for the 53 weeks ending on July 31, 1970.
Subject.Topical (LCSH)
  • Hospitality industry
  • Hotel management
  • Corporation reports
Subject.Name (LCNAF)
  • Marriott International, Inc.
Genre (AAT)
  • annual reports
  • business records
Language English
Type (DCMI)
  • Text
  • Image
Original Item Location Marriott Hotels Collection
Digital Collection Annual Reports from the Hospitality Industry Archives
Digital Collection URL http://digital.lib.uh.edu/collection/hiltonar
Repository Hospitality Industry Archives, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston
Repository URL http://www.uh.edu/hilton-college/About/hospitality-industry-archives
Use and Reproduction No Copyright - United States
File Name index.cpd
Item Description
Title Image 26
Format (IMT)
  • image/jpeg
File Name hiltonar_201609_041_026.jpg
Transcript Notes to Consolidated Financial Statements 1. Principles of Consolidation and Acquisitions: The accompanying consolidated financial statements include accounts of the Company and all majority-owned domestic and foreign subsidiaries except Marriott Financial Services, Inc., the condensed balance sheet of which is set forth in Note 2 and its net income of $210,000 for 1970 and $98,000 for 1969 has been included in the accompanying consolidated income statement. The accounts of foreign subsidiaries are included in the consolidated financial statements after translation into U.S. dollars. All material intercompany transactions have been eliminated. During 1970, the Company acquired several small foreign and domestic businesses for cash. All of these acquisitions were accounted for as purchases. The cost of businesses acquired in excess of the net assets at the dates of acquisition has, in the opinion of management, a continuing value and is not being amortized. 2. Unconsolidated Finance Subsidiary: Marriott Financial Services, Inc. (MFS) was formed in 1969 to provide leasing and financing for the Company's franchisees. In addition, MFS is committed to provide construction financing of $20,000,000, of which $6,000,000 has been advanced, to the landlord of the New Orleans Marriott Hotel, against a loan commitment from a major insurance company conditioned on completion of the hotel by May 1972. The commitment by MFS has been guaranteed by the Company. Also, MFS has loaned $22,000,000 until April, 1972 and $3,000,000 until 1989. secured by first and second mortgages respectively, to the landlord of the Essex House in New York City. Assuming the Company exercises all of its options, it will continue to lease the Essex House until April 15, 2012, and will lease the New Orleans Marriott Hotel for a 55 year term. The Company acquired a 25% non-voting equity interest (with 50% voting rights) in the landlord of the New Orleans Marriott Hotel in 1969, and has a right to acquire an additional 24% non-voting equity interest during the three years following the hotel opening by converting $1,000,000 principal amount of debentures it now owns. The Company has the option until May, 1972 to purchase a 50% interest in the Essex House at the landlord's cost of approximately $13,500,000 and a second option running three years later to purchase the remainder at the then appraised value of such remainder but not less than $16,500,000. The Company has guaranteed M FS borrowings of $29,920,000 and $27,000,000 as of July 31. 1970 and July 27, 1969, substantially all of which are short-term. MFS's condensed balance sheet is as follows: 7/31170 7/27/69 (In thousands) ASSETS Mortgage Notes Receiv able^—Landlord of Essex House $25,000 525,000 Construction Advances: Landlord of the New Orleans Marriott Hotel ^■'•Sv'^ # ii'^lt Marriott Inn Franchisee, duepriortoDec.31,1970 ^jfli&i _ Land, Buildings and Equip ment Under Lease to Franchisees (Note) *"#" -^ nJwjte Other Assets '2,591 300 Total Assets $40,517 $29,000 24 LIABILITIES AND NET WORTH Commercial Paper Guaranteed by Marriott Short-term Loans Guaranteed by Marriott Subordinated Note Payable Guaranteed by Marriott due 1974 Other Liabilities Long-term advances from Marriott Net Worth Total Liabilities and Net Worth 1,000 497 8.792 1.308 Note: Aggregate rentals from building and equipment leases in excess of the cost of such property are recognized as revenue at a level rate of return on the unpaid rentals (financing method). Aggregate rentals from land leases are recognized as revenue on a straight-line basis over the life of the lease (operating method). M FS has aggregate bank lines of credit (as a standby for commercial paper) of $25,000,000. which expire May 31, 1971 subject to the expressed intention of the banks to renew for an additional year provided'there is no material adverse change in the financial condition of MFS or Marriott Corporation. Marriott has guaranteed MFS borrowings under these lines of credit. MFS had borrowed $5,200,000 under these lines as of July 31, 1970 and $20,200,000 as of October 2, 1970, all of which was used to retire it's commercial paper. Since July 31, 1970 Marriott Corporation has advanced an additional $1,500,000, bringing the Company's total advances to and investment in MFS to $11,600,000 as of October 2, 1970. 3. Federal Income Taxes: The Company and its subsidiaries file separate income tax returns. Federal income tax returns for fiscal years prior to 1964 have been examined and settled. The Federal income tax returns for fiscal years 1964 through 1967 are currently being reviewed by the Internal Revenue Service. In the opinion of management, any adjustment for such years will not have a material adverse effect on the Company's consolidated financial statements. See Note 8 for tax accounting policies. 4. Long-term Obligations (Excluding Convertible Subordinated Debt): Maturities of mortgages, notes and lease-purchase obligations are as follows: Fiscal Year Interest rates.. IS72 1973 1974 1975 101995 Total long-term obi „"i!& . '- Summary of Pledging of Assets: Cost of investment in real estateand equipment, excluding construction in progress: Pledged ■ •.'wBEiWli^*§88&l Not Pledged S^Sst? ™~~~ ' . * Total.., » ,"T*,...„ * "*". °, % Secured Mortgage Loans Unsecured Notes Lease- Purchase Obligations % 2,246,210 8,320,779 1,491,385 1,571,534 14,181,388 6-9'/<% $ 7,507,663 1,177,891 75,042 12,553,042 997,825 VA-1%% $ 2,908,752 2,617,238 2,639,801 2,722,971 42,461,895 $27,811,296 $22,321,463 $53,350,657 $43,224,612 $ — 1|e:-$82,750,3[i8 115,952,198 Tilll 543,224,612 $115,952,198 $82,750,308 Lease-purchase obligations are in substance installment purchases and are recorded as leasehold interest at the discounted amount of future rentals. These leases are made with corporations owned by the Marriott Foundation and provide for the recovery of principal and interest and a nominal profit. In addition to the foregoing leases, the Company has other leases which are not installment purchases and which have an average remaining term of 19 years as of July 31. 1970. Minimum annual rentals, amount to approximately $7,500,000 as of July 31, 1970 of which $2,500,000 is for the Essex House. Most of these leases have renewal privileges and require additional rentals under percentage clauses relating to sales. The Company is presently financing construction of certain projects with short-term financing consisting of $14,850,000 of commercial paper (maturing in not more than 270 days) and $5,000,000 of bank loans, as of July 31, 1970. Such financing is reflected in the accompanying balance sheet as non- current liabilities. The Company has long-term mortgage commitments covering $7,070,000 of this financing, of which $6,484,275 was converted to a permanent mortgage subsequent to July 31, 1970. In addition, the Company obtained after July 31, 1 970 a bank loan commitment which is available to pay off $12,780,000 of the Company's commercial paper and bank loans as they become due. This bank loan commitment expires on December 31, 1971, requires a monthly standby fee, provides for interest at the rate of one percent per annum in excess of the bank's prime rate or its marginal cost of money, whichever is higher, and requires the