Marriott Corp.

: Restructuring
Harvard Business School Case 294090
Case Software # XLS-744

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Exhibit 3 Marriott Corporation Historical Financial Data

($ in millions) 1991 1990(a) 1989(b) 1988 1987 1986 1985 1984 1983 1982 1981 1980

SUMMARY OF OPERATIONS
Sales $8,331 $7,646 $7,536 $6,624 $5,846 $4,654 $3,611 $2,875 $2,378 $1,992 $1,448 $1,210
EBIT 410 263 483 448 425 357 304 236 196 163 134 121
Interest expense 265 183 185 136 90 60 76 62 63 72 52 47
Net Income 82 47 177 232 223 192 167 140 115 94 86 72

CASH FLOW INFORMATION

Cash from continuing operations (c) $549 $385 $423 $411 $326 $287 $257 $217 $198 $158 $105 $97
Capital expenditures 427 1,094 1,368 1,359 1,053 821 911 627 462 433 317 220
Proceeds from asset sales 84 975 139 1,016 675 365 302 204 0 184 110 71

CAPITALIZATION AND RETURNS

Total assets 6,509 7,034 6,600 6,079 5,371 4,579 3,664 2,905 2,501 2,063 1,455 1,214
Long-term debt (d) 3,189 3,598 3,050 2,857 2,499 1,663 1,192 1,115 1,072 889 608 537
Shareholders' equity 679 407 628 710 811 991 849 676 628 516 422 312
Return on avg. shareholders' equity 18.3% 9.7% 23.8% 30.4% 22.2% 20.6% 22.1% 22.1% 20.0% 20.0% 23.4% 23.8%

PER COMMON SHARE AND OTHER DATA

Earnings per common share (e) $0.80 $0.46 $1.62 $1.59 $1.40 $1.16 $0.96 $0.74 $0.56 $0.41 $0.38 $0.32
Common shares outstanding (millions) 95.5 93.6 102.8 108.7 118.8 130.6 131.0 128.8 134.4 132.8 130.8 125
Total hotel rooms 161,379 150,416 134,349 117,789 102,893 7,773 67,034 60,873 54,986 49,432 40,419 30,169
Employees 202,000 209,000 229,900 229,600 210,900 194,600 154,600 120,100 109,400 109,200 81,800 67,300

(a) Operating results in 1990 included pretax restructuring charges and writeoffs, net of certain nonrecurring gains, of $153 million related to continuing operations.
(b) Operating results in 1989 included pretax restructuring charges and writeoffs of $256 million related to continuing operations, a $231 million pretax gain on the sale of the airline catering division, and a $398 million
after-tax charge recorded in conjunction with the planned disposal of restaurant operations.

(c) Net income from continuing operations adjusted for non-cash items and changes in working capital.
(d) Includes convertible subordinated debt of $210 million at January 1,1992.
(e) Rpnrpspnts parnincrs from rontinnincr nnpratinns only
Exhibit 4A Marriott stock price history

Year Hiqh Low

1980 $7.28 -- $5.05
1981 9.08 -- 5.97
1982 12.38 -- 6.38
1983 16.25 -- 10.00
1984 16.00 -- 11.75
1985 23.38 -- 14.75
1986 39.00 -- 20.63
1987 43.75 -- 24.00
1988 33.38 -- 26.25
1989 41.25 -- 29.75
1990 33.63 -- 8.38
1991 22.63 -- 9.50
1992 (a) 19.38 -- 13.75

(a) 1992 Data is through October 4, 1992.

Exhibit 4B Marriott Corporation Senior Debt Rating History

Year S&P Moody's

1985 A- Baal
1986 A- A3
1987 A- A3
1988 A- A3
1989 A- A3
1990 BBB Baa2
1991 BBB Baa3
1992 (a) BBB Baa3

(a)1992 Data is through October 4, 1992.

Exhibit 5A Marriott Corporation Capitalization Table (as of 12/31/92)

(in millions)
Long-term debt
Secured debt $485
Senior unsecured debt 1,618
Bank revolver 250
Subordinated notes 175
Capital leases 225
2,753
Less: current portion (21)
Total long-term debt 2,732

Convertible subordinated debt (LYONs) 228

Convertible preferred stock 200
Shareholders' equity 585

Total capitalization $3,745

Total long-term debt/total capitalization 73%

(Total long-term debt + LYONs + preferred)/total
capitalization 84%
Exhibit 5 BHost Marriott Pro Forma Capitalization Table (as of 12/31/92)

(in millions)
Long-term debt
Secured debt $480
Senior unsecured debt 1,353
Bank revolver 250
Subordinated notes 96
Capital leases 191
2,370
Less: current portion (8)
Total long-term debt 2,362

Convertible subordinated debt (LYONs) 228

Convertible preferred stock 200
Shareholders' equity 61

Total capitalization $2,851

Total long-term debt/total capitalization 83%

(Total long-term debt + LYONs + preferred)/ total
capitalization 98%
Exhibit 5C Marriott International, Inc. Pro Forma Capitalization Table
(as of 12/31/92)

(in millions)
Long-term debt
Secured debt $5
Senior unsecured debt 265
Bank revolver (a) 7
Subordinated notes 79
Capital leases 34
390
Less: current portion (12)
Total long-term debt 378

Convertible subordinated debt (LYONs) (b) 205

Shareholders' equity 524

Total capitalization $1,107

Total long-term debt/total capitalization 34%

(Total long-term debt + LYONs)/ total capitalization
53%

(a) As part of the Distribution, $7 million in additional working capital funds would be drawn
from HM's bank revolver and transferred to MI, in connection to lodging properties owned
by HM and to be operated by MI.

(b) Reflects Mi's assumption of 90% of HM's LYONs pursuant to the LYONs Allocation
Agreement.
Exhibit 6A-1 Host Marriott Corporation Pro Forma and Projected Income Statements ($ millions)

Distribution (b)
Pro Forma
Historical (a) Adjust. Pro Forma (c) Projected (d)
1992 1992 1993 1994 1995 1996 1997
SALES
Lodging
Rooms $528 ($528) $0 $0 $0 $0 $0 $0
Food and beverage 167 (167) 0 0 0 0 0 0
Other (e) 39 194 233 245 219 225 205 185
734 (501) 233 245 219 225 205 185

Contract Services 1,017 (41) 976 1,005 1,040 1,082 1,131 1,182
1,751 (542) 1,209 1,250 1,260 1,307 1,336 1,367
OPERATING COSTS AND EXPENSES
Lodging
Departmental direct costs
Rooms 130 (130) 0 0 0 0 0 0
Food and beverage 135 (135) 0 0 0 0 0 0
Other operating expenses 372 (220) 152 159 141 144 130 117
637 (485) 152 159 141 144 130 117

Contract Services 957 (53) 904 930 960 996 1,037 1,081
1,594 (538) 1,056 1,089 1,101 1,139 1,168 1,198

OPERATING PROFIT
Lodging 97 (16) 81 86 78 81 75 68
Contract Services 60 12 72 75 81 87 93 100
157 (4) 153 161 158 168 168 169

Corporate expenses (f) (62) 16 (46) (48) (50) (52) (54) (56)
Interest expense (g) (210) 10 (200) (201) (184) (168) (142) (115)
Interest income (h) 28 0 28 26 21 20 20 20
INCOME BEFORE TAXES (87) 22 (65) (61) (54) (32) (7) 18
Provision for Income taxes (38) 16 (22) (12) (11) (6) (1) 4
Income before equity in subs. (49) 6 (43) (49) (43) (25) (6) 14
Equity in earnings of subsidiary, net 134 (134) 0 0 0 0 0 0
NET INCOME 85 (128) (43) (49) (43) (25) (6) 14
Preferred dividends 17 0 17 0 0 0 0 0
Net Income Available to common $68 ($128) ($60) ($49) ($43) ($25) ($6) $14

Earnings per share (i) ($0.57) ($0.42) ($0.37) ($0.22) ($0.05) $0.12

(a) Reflects the results of operations of Marriott Corporation after the adjustments required to separate the results of Marriott International according to the equity method.
(b) Reflects the pro forma adjustments to reflect the spin-off of Marriott International and the corresponding asset transfers.
(c) Reflects Host Marriott's pro forma results of operations after effecting the spin-off and the corresponding asset transfers.
(d) Projections based on the assumptions listed on page 20.
(e) Following the spin-off. Host would only record as revenues its share of hotel profits. Actual hotel revenues and costs of operations woul not be reflected.
(f) Includes non-cash losses from affiliated partnerships.
(g) Includes Interest expense on negative cash balances.
(h) Includes Interest income from partnership notes receivable.
(i) Assumes all preferred stock Is converted as part of the transaction, resulting In 116 million shares outstanding from 1993 onward.
Exhibit 6A-2 Host Marriott Corporation Pro Forma and Projected Balance Sheets ($ millions)

Distribution (b)
Pro Forma Distribution
Historical (a) Adjust. Pro Forma (c) Projected (d) (b) Pro Forma
1992 1992 1993 1994 1995 1996 1997
ASSETS
Current Assets
Cash and equiv. (financing requirement) (e) $180 ($3) $177 $45 $36 ($26) ($136) ($122)
Accounts receivable 86 0 86 89 90 93 95 97
Inventories 92 0 92 95 96 99 102 104
Other current assets 74 (7) 67 69 70 72 74 76
432 422 298 291 239 134 155
Property and equipment 2,731 0 2,731 2,556 2,413 2,193 1,931 1,675
Investment in affiliates 341 0 341 341 343 346 350 355
Notes receivable and others 1,115 (558) 557 557 557 557 557 557
4.187 3,629 3,454 3,313 3,096 2,838 2,587
Total Assets $4,619 $4,051 $3,752 $3,605 $3,336 $2,972 $2,742
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $215 ($3) $212 $219 $221 $229 $234 $240
Other current liabilities 213 (31) 182 188 190 196 201 206
428 394 406 411 425 436 447

Long-term debt 2,369 (7) 2,362 2,100 1,991 1,733 1,365 1,110
Other long-term liabilities 809 (3) 806 806 806 806 806 806
Convertible subordinated debt 228 0 228 228 228 228 228 228

Shareholders' Equity
Convertible preferred stock (f) 200 0 200 0 0 0 0 0
Common stock 105 0 105 305 305 305 305 305
Additional paid-in capital 34 0 34 34 34 34 34 34
Retained earnings 555 (524) 31 (18) (61) (87) (93) (78)
Treasury stock (109) 0 (109) (109) Í109) (109) (109) (109)
 785 261 212 169 143 137 152

Total Liabilities and Equity $4,619 $4,051 $3,752 $3,605 $3,336 $2,972 $2,742

(a) Reflects the financial position of Marriott Corporation after the adjustments required to separate the results of Marriott International according to the equity method.
(b) Reflects the pro forma adjustments to reflect the spin-off and the corresponding asset transfers.
(c) Reflects Host Marriott's pro forma financial position after effecting the spin-off and the corresponding asset transfers.
(d) Projections based on the assumptions listed on page 20.
(e) Negative amounts reflect cash shortages representing financing needs that would be drawn from the Ml credit line. Interest expense on these drawn amounts is reflected in the Income
statement. However, amounts do not reflect additional working capital funds required for normal business operation. It is estimated that HM would need $25-30 million in cash for normal operation.

(f) Preferred stock Is assumed to be converted into common as part of the transaction.
Exhibit 6A-3 Host Marriott Corporation Pro Forma and Projected Cash Flow Statements ($ millions)

Distribution (b)
Pro Forma
Historical (a) Adjust. Pro Forma (c) Projected (d)
1992 1992 1993 1994 1995 1996 1997
Cash flows from operating activities
Net Income (loss) $68 ($128) ($60) ($49) ($43) ($25) ($6) $14
Adj. to reconcile net Income to net cash from operations
Depreciation & Amortization 175 0 175 175 168 170 163 155
Other Non-Cash Items (e) 0 0 0 25 23 22 21 20
Changes In working capital
Accounts receivable -- -- -- (3) (1) (3) (2) (2)
Inventories -- -- -- (3) (1) (3) (2) (3)
Other current assets -- -- -- (2) (1) (3) (2) (2)
Accounts payable -- -- -- 7 2 8 6 6
Other current liabilities -- -- -- 6 2 I 5 5
Net cash provided by operating activities 243 115 155 150 172 182 194

Cash flows from investing activities

Capital Expenditures (155) 0 (155) (200) (225) (150) (100) (100)
Asset Sales 387 0 387 200 200 200 200 200
Other (f) 0 0 0 (25) (25) (25) (25) (25)
Net cash provided (used in) investing act. 232 232 (25) (50) 25 75 75

Cash flows from financing activities

Issuance of long-term debt 0 0 0 0 0 0 0 0
Principal payments
Senior notes 0 0 0 (250) (100) (200) (300) (250)
Other (12) (9) (58) (68) (5)
Preferred dividends 0 0 0 0 0 0 0 0
Net cash provided (used in) investing act. 0 0 (262) (109) (258) (368) (255)

Increase (decrease) in cash 475 347 (132) (9) (61) (111) 14

Cash at beginning of year -- -- -- 177 45 36 (26) (136)
Cash at end of year/(financing req.) -- -- $177 $45 $36 ($26) ($136) ($122)

(a) Reflects the cash flows of Marriott Corporation after the adjustments required to separate the results of Marriott International according to the equity method.
(b) Reflects, In summary form, the pro forma adjustments to reflect the spin-off of Marriott International and the corresponding asset transfers.
(c) Reflects Host Marriott's pro forma cash flows after effecting the spin-off and the corresponding asset transfers.
(d) Projections based on the assumptions listed on page 20.
(e) Represents non-cash losses from affilitated partneshlps.
(f) Represents funding for contingent liabilities in affiliated partnerships.
Exhibit 6B-1 Marriott International, Inc. Pro Forma and Projected Income Statements ($ millions)

Distribution (b)
Pro Forma
Historical (a) Adjust. Pro Forma (c) Projected (d)
1990 1991 1992 1992 1993 1994 1995 1996 1997
SALES
Lodging
Rooms $2,101 $2,208 $2,315 $528 $2,843 $2,957 $3,134 $3,385 $3,673 $4,003
Food and beverage 1,012 1,017 1,023 167 1,190 1,190 1,214 1,262 1,325 1,392
Other 399 449 479 39 518 539 568 608 654 703
3.512 3.674 3.817 734 4.551 4.685 4.916 5.255 5.652 6.098

Contract Services 2,813 3,033 3,154 82 3,236 3,430 3,653 3,909 4,202 4,517
6,325 6,707 6,971 816 7,787 8,116 8,569 9,164 9,854 10,615
OPERATING COSTS AND EXPENSES
Lodging
Departmental direct costs
Rooms 484 509 546 147 693 664 695 741 795 855
Food and beverage 762 772 782 152 934 886 927 988 1,060 1,140
Other operating expenses (ε 2,064 216 2,253 419 2,672 2,878 3,012 3,211 3,444 3,706
3,310 3,441 3,581 718 4,299 4,428 4,634 4,940 5,299 5,701

Contract Services 2,743 2,944 3,064 94 3,158 3,344 3,553 3,792 4,065 4,359
6,053 6,385 6,645 812 7,457 7,772 8,186 8,732 9,364 10,060
OPERATING PROFIT
Lodging 202 233 236 16 252 258 283 315 353 396
Contract Services 70 89 90 (12) 78 86 100 117 137 158
272 322 326 4 330 343 383 433 490 554

Corporate expenses (63) (72) (62) 5 (57) (59) (62) (64) (67) (69)
Restructuring charges (8) 0 (5) 0 (5) 0 0 0 0 0
Interest expense (32) (24) (25) (16) (41) (39) (39) (39) (39) (39)
Interest Income 5 4 3 6 9 5 6 6 7 8
INCOME BEFORE TAXES 174 230 237 (1) 236 250 288 335 391 453
Provision for Income taxes 69 97 103 (4) 99 105 121 141 164 190
NET INCOME $105 $133 $134 $3 $137 $145 $167 $195 $227 $263

Earnings per share (f) $1.30 $1.25 $1.44 $1.68 $1.95 $2.27

(a) Historical figures represent the results of operations of Marriott International as if It had been a separate entity for the periods presented (source: Marriott Proxy Statement)
(b) Represents the adjustments required to reflect the spin-off of International and the corresponding asset transfers (source: Marriott Proxy Statement).
(c) Represents the results of operations of Marriott International as If the spin-off of International and corresponding asset transfers had been completed at the beginning of the period (source: Marriott Proxy
Statement).

(d) Projections based on the assumptions described on page 24.

(e) Includes $290 million In restructuring expenses In 1990.
(f) Assumes all preferred stock is converted as part of the transaction, resulting In a total of 116 million shares outstanding starting In 1993.
Exhibit 6B-2 Marriott International, Inc. Pro Forma and Projected Balance Sheets ($ millions)

Distribution (b)
Pro Forma
Historical (a) Adjust. Pro Forma (c) Projected (d)
1991 1992 1992 1993 1994 1995 1996 1997
ASSETS
Current Assets
Cash and equivalents $95 $145 $24 $172 $190 $202 $217 $239 $272
Accounts receivable 447 520 47 567 591 624 667 717 773
Inventories 176 224 49 273 285 300 320 343 368
Other current assets 137 175 66 241 251 265 284 305 329
855 1,064 1,253 1,317 1,391 1,487 1,604 1,742
Property and equipment 741 730 0 730 765 800 835 870 905
Intangibles 467 437 0 437 402 367 332 297 262
Other investments 0 0 0 0 100 225 375 550 750
Notes Receivable and others 365 370 0 370 370 370 370 370 370
1,573 1,537 1,537 1,637 1,762 1,912 2,087 2,287
Total Assets $2,428 $2,601 $2,790 $2,954 $3,153 $3,399 $3,691 $4,029

LIABILITIES AND EQUITY

Current Liabilities
Accounts payable $490 $495 $84 $579 $596 $617 $646 $680 $717
Other current liabilities 473 575 126 701 731 770 821 880 946
963 1,070 1,280 1,327 1,386 1,467 1,560 1,662

Long-term debt(e) 377 371 212 583 583 583 583 583 583
Other long-term liabilities 242 305 3 308 308 308 308 308 308
Deferred income 101 92 0 92 92 92 92 92 92

Equity
Investment and adv. from Marriott Corp. 745 763 (239) 524 527 644 783 950 1.148
Retained earnings 0 0 3 3 117 139 167 199 235
745 763 527 644 783 950 1,148 1,383
Total Liabilities and Equity $2,428 $2,601 $2,790 $2,954 $3,153 $3,399 $3,691 $4,029

(a) Historical figures represent the financial position of Marriott International as if it had been a separate entity for the periods presented (source: Marriott Proxy Statement)
(b) Represents the adjustments required to reflect the spin-off and the corresponding asset transfers (source: Marriott Proxy Statement).
(c) Represents the financial position of Marriott International as if the spin-off and corresponding asset transfers had been completed at the beginning of the period (source: Marriott Proxy Statement)

(d) Projections based on the assumptions described on page 24.

(e) Includes $205 million of HM LYONs assumed by Ml pursuant to the LYONs Allocation Agreement.
Exhibit 6B-3 Marriott International, Inc. Pro Forma and Projected Cash Flow Statements ($ millions)

Distribution (b)
Pro Forma
Historical (a) Adjust. Pro Forma (c) Projected (d)
1990 1991 1992 1992 1993 1994 1995 1996 1997
Cash flows from operating activities
Net Income $105 $133 $134 $3 $137 $145 $167 $195 $227 $263
Adj. to reconcile net Income to net cash from operations
Depreciation & Amortization 104 110 109 0 109 109 109 109 109 109
Other Non-Cash Items 2 0 (21) 0 (21) 0 0 0 0 0
Changes In working capital
Accounts receivable (47) 28 (31) 0 (31) (24) (33) (43) (50) (55)
Inventories (51) 18 (25) 0 (25) (12) (15) (20) (23) (25)
Other current assets (1) 10 (14) 0 (14) (10) (14) (18) (21) (24)
Accounts payable 127 (13) 109 0 109 17 21 29 34 37
Other current liabilities -- -- -- 0 -- 30 39 51 59 65
Cash flow from operations 239 286 261 264 255 273 302 334 370

Cash flows from investing activities

Capital expenditures (187) (50) (55) 0 (55) (109) (109) (109) (109) (109)
Asset sales 0 0 0 0 0 0 0 0 0 0
Other investments (32) (43) (28) 0 (28) (100) (125) (150) 015) Í200)
Cash from investing act. (219) (93) (83) (83) (209) (234) (259) (284) (309)

Cash flows from financing activities

Issuance of long-term debt 29 16 22 0 22 0 0 0 0 0
Principal payments (63) (39) (31) 0 (31) 0 0 0 0 0
Cash dividends 0 0 0 0 0 (28) (28) (28) (28) (28)
Advances to Marriott Corp. (78) (161) (119) 0 (119) 0 0 0 0 0
Cash flows from financing act. (112) (184) (128) (128) (28) (28) (28) (28) (28)

Increase (deer.) in cash (92) 9 50 0 53 18 11 15 22 33

Cash at beginning of year 178 86 95 24 119 172 190 202 217 239
Cash at end of year $86 $95 $145 $172 $190 $202 $217 $239 $272

(a) Historical figures represent the cash flows of Marriott International as if It had been a separate entity for the periods presented (source: Marriott Proxy Statement)
(b) Represents, In summary, the adjustments required to reflect the spin-off and the corresponding asset transfers (source: Marriott Proxy Statement).
(c) Represents the cash flows of Marriott International as if the spin-off and corresponding asset transfers had been completed at the beginning of the period (source: Marriott Proxy Statement)
(d) Projections based on the assumptions described on page 24.
Exhibit 6C-1 Marriott Corporation Historical and Projected Income Statements ($ millions)

Historical Projected (a)

1990(d) 1991 1992(d) 1993 1994 1995 1996 1997
SALES
Lodging
Rooms $2,374 $2,699 $2,843 $2,957 $2,912 $3,027 $3,046 $3,080
Food and beverage 1,146 1,194 1,190 1,190 1,202 1,226 1,263 1,301
Other 422 486 518 539 563 591 624 661
3,942 4,379 4,551 4,685 4,677 4,844 4,932 5,042
Contract Services 3,704 3,952 4,171 4,400 4,653 4,933 5,241 5,582
7,646 8,331 8,722 9,086 9,331 9,777 10,173 10,623
OPERATING COSTS AND EXPENSES
Lodging
Departmental direct costs
Rooms 554 628 676 686 703 735 763 795
Food and beverage 870 915 917 1,030 1,055 1,103 1,145 1,193
Other 2,214 2,511 2,620 2,574 2,638 2,758 2,863 2,983
Contract services 3,533 3,799 4,013 4,290 4,397 4,596 4,772 4,972
7,171 7,853 8,226 8,580 8,794 9,192 9,543 9,944
OPERATING PROFIT
Lodging 304 325 338 351 362 388 407 429
Contract services 171 153 158 154 175 197 223 251
475 478 496 505 537 585 630 680

Corporate expenses (b) (106) (111) (108) (112) (117) (121) (126) (131)
Interest expense (183) (265) (248) (210) (193) (174) (150) (125)
Interest income (c) 47 43 31 33 31 33 34 35
INCOME BEFORE INCOME TAXES 233 145 171 216 259 322 387 459
Provision for income taxes 96 63 74 86 103 129 155 184
NET INCOME 137 82 97 130 155 193 232 276
Dividends on preferred stock 0 (1) (17) (17) (17) (17) (17) (17)
NET INCOME AVAILABLE FOR COMMON $137 $81 $80 $113 $138 $176 $215 $259
Earnings per share (assumes 105 mm shares outstanding) $0.76 $1.07 $1.32 $1.68 $2.05 $2.46

(a) The projections are based on the assumptions described on page 28.
(b) Includes non-cash losses from affiliated partnerships
(c) Includes income from notes receivable from affiliated partnerships.
(d) Results for 1990 are adjusted to exclude the effect of a net pre-tax restructuring charge of $153 million, related principally to management's decision to delay construction
activities and cancel certain planned development projects. The after-tax effect of this charge was to reduce net income by approximately $90 million.Results for 1992 are
similarly adjusted for a projected pre-tax $21 million charge related to Project Chariot. The after-tax effect of the charge was to reduce net income by approximately $12
million. Including the charge, Marriott EPS was $0.64.
Exhibit 6C-2 Marriott Corporation Historical and Projected Balance Sheets ($ millions)

Historical Projected (a)

ASSETS 1990 1991 1992 1993 1994 1995 1996 1997
Current assets
Cash and equivalents $283 $163 $325 $347 $400 $459 $443 $587
Accounts receivable 654 527 606 697 716 750 780 815
Inventories 261 244 316 329 337 353 366 381
Other 230 221 249 249 256 268 279 291
1,428 1,155 1,496 1,622 1,709 1,829 1,868 2,074

Property and equipment 4,048 3,847 3,461 3,296 3,131 2,966 2,801 2,636
Investment in affiliates 462 457 445 490 537 580 624 659
Intangibles 494 477 452 417 382 347 312 277
Notes receivable and others 494 573 556 556 556 556 556 556
5,498 5,354 4,914 4,759 4,606 4,449 4,293 4,128
Total Assets $6,926 $6,509 $6,410 $6,381 $6,315 $6,278 $6,161 $6,202

LIABILITIES AND EQUITY

Current liabilities
Accounts payable $675 $706 $710 $724 $735 $756 $779 $804
Accrued liabilities and other 962 739 786 870 891 932 967 1,008
1,637 1,445 1,496 1,594 1,626 1,687 1,747 1,812

Long-term debt 3,598 2,979 2,732 2,517 2,304 2,054 1,686 1,428
Other long-term liabilities 388 350 401 401 401 401 401 401
Deferred items 896 846 768 768 768 768 768 768
Convertible subordinated debt 0 210 228 228 228 228 228 228

Shareholders' equity
Convertible preferred stock 0 200 200 200 200 200 200 200
Common stock 105 105 105 105 105 105 105 105
Additional paid-in capital 69 35 34 34 34 34 34 34
Retained earnings 528 583 555 644 758 910 1,101 1,336
 Treasury stock (295) (244) (109) (109) (109) (109) (109) (109)
407 679 785 874 988 1,140 1,331 1,566

Total Liabilities and equity $6,926 $6,509 $6,410 $6,382 $6,315 $6,278 $6,161 $6,203

(a) The projections are based on the assumptions described on page 28.
Exhibit 6C-3 Marriott Corporation Historical and Projected Cash Flow Statements ($ millions)

Historical Projected (a)

1990 1991 1992 1993 1994 1995 1996 1997
Cash flows from operating activities
Net Income $137 $82 $97 $130 $155 $193 $232 $276
Adjustments (c) (20) 0 (12) 0 0 0 0 0
Adjusted net income 47 82 85 130 155 193 232 276
Adjustments to reconcile net income to net cash from operations
Depreciation and amortization 208 272 284 284 277 279 272 264
Proceeds from sales of timeshare rec. 0 83 41 0 0 0 0 0
Other non-cash items (b) 170 (5) (25) 25 23 22 21 20
Changes in working capital
Receivables (76) 88 (40) (91) (19) (34) (30) (35)
Inventories (22) 63 (16) (13) (8) (15) (13) (15)
Other current assets (5) 13 (14) 0 (7) (12) (11) (12)
Accounts payable 63 (47) 106 14 11 21 24 25
Accrued liabilities and other -- -- -- 84 22 40 36 41
Cash from continuing operations 385 549 421 433 454 493 529 563
Cash from discontinued operations (10) 3 (11) 0 0 0 0 0
Cash from operating activities 375 552 410 433 454 493 529 563

Cash flows from investing activities

Cash received from sale of assets 975 84 387 200 200 200 200 200
Capital expenditures (1,094) (427) (210) (284) (277) (279) (272) (264)
Acquisitions (118) 0 (47) 0 0 0 0 0
Other Investments (Host) (129) (126) (82) (70) (70) (65) (65) (55)
Cash from (used in) investing act. (366) (469) 48 (154) (147) (144) (137) (119)

Cash flows from investing activities

Issuance of long-term debt 1,317 815 917 0 0 0 0 0
Issuance of convertible preferred 0 195 0 0 0 0 0 0
Issuance of common stock 24 3 7 0 0 0 0 0
Repayment of long-term debt (846) (1,316) (1,179) (215) (213) (250) (368) (258)
 Dividends paid (27) (27) (41) (41) (41) (41) (41) (41)
Other (294) 0 0 0 0 0 0 0
Cash from (used in) financing act. 174 (330) (296) (256) (254) (291) (409) (299)

Increase (decrease in cash) 183 (247) 162 23 53 59 (16) 144

Cash at beginning of year 227 410 163 325 347 400 459 443
Cash at end of year $410 $163 $325 $347 $400 $459 $443 $587

(a) The projections are based on the assumptions described on page 28.
(b) Reflects non-cash losses from affiliated partnerships. For 1990 and 1992, figures also reflect the net effect of deferred taxes, amortization of deferred income, and net
restructuring charges.
(c) Adjustments represent the after-tax effect of restructuring charges taken in 1990 and 1992 which are not reflected in the income statement in Exhibit 6C-1 (see footnote (d) on
page 25).