University of Houston, 4333 University Drive, Houston TX 77204-2000, (713) 743-1050.
© 2013 University of Houston. All rights reserved.
| Title | Marriott Corporation, 1984 Annual Report |
| Creator (LCNAF) |
|
| Publisher | Marriott International, Inc. |
| Date | 1984 |
| Description | Marriott Corporation Annual Report for calendar year 1984. |
| Subject.Topical (LCSH) |
|
| Subject.Name (LCNAF) |
|
| Genre (AAT) |
|
| Language | English |
| Type (DCMI) |
|
| 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 |
| Title | Image 25 |
| Format (IMT) |
|
| File Name | hiltonar_201609_056_025.jpg |
| Transcript | Debt maturity will remain well within Marriott's conservative policy limits, which require that total debt amortizing in the subsequent five-year period not exceed Funds Provided from Operations of the prior year. The company has met this policy constraint by wide margins since 1980, as shown below. Debt Maturity Schedule ($ in millions) Year 1984 1983 1982 1981 1980 1 $ 26 $ 25 $ 23 $ 16 $ 9 2 36 36 28 17 18 3 50 43 36 22 18 4 58 50 42 40 34 5 72 62 48 43 38 Total $242 $216 $177 $138 $117 Funds Provided from Operations $330 $294 $231 $187 $150 Marriott has no requirement for positive working capital, since it principally sells services (rather than goods) for cash. Therefore, the company maintains relatively low receivable and cash balances. Negative working capital is a source of interest-free financing. As a result of a company-instituted program to aggressively reduce current asset investment, Marriott increased its negative working capital to $144 million during 1984. Dividends and Stock Price Increase In December 1984, the Board of Directors increased the cash dividend 23% to 54 cents annually. This is consistent with Marriott's goal to increase dividends with planned long-term earnings growth. The company has an excellent record of reinvesting cash flow in growth businesses at high returns. Marriott will continue this investment strategy to finance expected profit growth through the 1980s. If management is successful, shareholders should continue to profit through share appreciation taxed at advantageous capital gain rates, rather than through higher dividends taxed at ordinary rates. The range of Marriott stock prices by quarter was: Quarter IV 84 19 83 Ended in High Low High Low March 76 61M> 63% 50V4 June 66% 58% 78% 58% September 76V4 64% 81 72% December 80y4 70 77V4 68% Marriott's stock price has grown at a compound rate of 35% annually over the past five years, to a total market value of over $2 billion. We believe this has occurred because: □ The company has consistendy maintained high real earnings growth and high capital productivity through varying and difficult economic environments. The investment community has confidence that Marriott's experienced, entrepreneurial management team will continue to achieve its earnings growth and return objectives, thereby maximizing shareholder wealth. □ Marriott's aggressive unit expansion program is a major contributor to earnings growth. This program has a high probability of continued success because of the company's demonstrated long-term ability to expand its businesses. Moreover, the unit growth required to maintain Marriott's 20% annual earnings increase into the 1990s is already under construction or development □ Marriott owns valuable real estate assets that appreciate with inflation as shown in the Current Value statement on page 24. Thus Marriott shareholders own solid tangible assets that are appreciating in value. In addition, they share in the stock market's capitalized value of Marriott's future growth, which is not reflected in the company's Current Value of $82.03 per share. Current Value Increases Shareholders' equity per share, expressed on a Current Value basis, increased to $82.03 in 1984 from $70.66 in 1983. This compares favorably with the historical cost book value of $26.22 per share. Historical cost accounting understates both the value of Marriott's real estate-based assets and its investment capacity. The company's Current Value balance sheet restates historical cost assets and liabilities and values management agreements to reflect 1984 year-end valuations. Current Value is based on the company's productive capacity and does not include anticipated growth. Therefore, it does not reflect the full intrinsic value of Marriott As shown, Current Value shareholders' equity per share increased 16% during 1984, primarily from strong discretionary cash flow and new hotel management agreements. 23 |