-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NPGr7K+ooP7M1oUDMB7yDNApLNayjQm243X4rbcb8itCKJJN/kTRsbvCLZCAW9/s yoxPnS8CUMmxmRRg4d1MQA== 0000928385-97-001632.txt : 19971009 0000928385-97-001632.hdr.sgml : 19971009 ACCESSION NUMBER: 0000928385-97-001632 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971001 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971008 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARRIOTT INTERNATIONAL INC CENTRAL INDEX KEY: 0000905036 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 520936594 STATE OF INCORPORATION: DE FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-12188 FILM NUMBER: 97692421 BUSINESS ADDRESS: STREET 1: 10400 FERNWOOD RD CITY: BETHESDA STATE: MD ZIP: 20817 BUSINESS PHONE: 3013803000 MAIL ADDRESS: STREET 1: 10400 FERNWOOD RD CITY: BETHESDA STATE: MD ZIP: 20817 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Under Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 1, 1997 MARRIOTT INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware (State of incorporation) 1-12188 52-0936594 (Commission File No.) (IRS Employer Identification No.) 10400 Fernwood Road, Bethesda, Maryland 20817 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (301) 380-3000 (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS On October 1, 1997, the Registrant announced that it had entered into a definitive agreement with Sodexho Alliance, S.A. ("Sodexho Alliance"), a worldwide food and management services organization headquartered in France (listed on Paris Bourse), to combine the Registrant's food service and facilities management business (Marriott Management Services) with Sodexho Alliance's North American operations. The combined company, Sodexho Marriott Services, Inc. ("Sodexho Marriott Services"), is expected to be listed on the New York Stock Exchange. Prior to the merger, a new company comprised of the Registrant's lodging, senior living and distribution services businesses will be spun off, on a tax- free basis, to the Registrant's shareholders. This new company ("new Marriott International"), which will adopt the Marriott International, Inc. name, will apply for listing on the New York Stock Exchange. Immediately following the spin-off, Sodexho Alliance will make a cash contribution of approximately $305 million to its North American operations (International Catering Corporation), which will then be merged with a subsidiary of the Registrant. As consideration for the merger, Sodexho Alliance will receive approximately 124 million common shares of the Registrant, which will be renamed Sodexho Marriott Services, Inc. The Registrant's shareholders and Sodexho Alliance will own 51 percent and 49 percent, respectively, of Sodexho Marriott Services. Consummation of these transactions is subject to customary conditions, including approval by the Registrant's shareholders, receipt of a favorable ruling from the Internal Revenue Service, and other regulatory approvals. Additional information regarding these transactions is contained in the attached news release, and in the attached prepared remarks of Michael A. Stein, chief financial officer and executive vice president of the Registrant, delivered to a security analyst/investor meeting and conference call, each of which is incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (c) Exhibits Exhibit 99(1) News Release dated October 1, 1997. Exhibit 99(2) Prepared remarks of Michael A. Stein, chief financial officer and executive vice president of the Registrant, delivered to an analyst/investor meeting and conference call held on October 1, 1997 in New York City. SIGNATURES Under the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MARRIOTT INTERNATIONAL, INC. By: /s/ JOSEPH RYAN --------------------------- Joseph Ryan Executive Vice President and General Counsel Date: October 8, 1997 EX-99.1 2 EXHIBIT 99.1 Exhibit 99(1) MARRIOTT INTERNATIONAL TO MERGE ITS FOOD SERVICE AND FACILITIES MANAGEMENT BUSINESS WITH SODEXHO ALLIANCE'S NORTH AMERICAN OPERATIONS, AND SPIN OFF TO SHAREHOLDERS A NEW COMPANY COMPRISED OF ITS LODGING AND OTHER BUSINESSES . MARRIOTT SHAREHOLDERS TO OWN 51% STAKE IN SODEXHO MARRIOTT SERVICES, INC., WHICH WILL BE THE LARGEST CONTRACT SERVICES COMPANY IN NORTH AMERICA. . NEW COMPANY MADE UP OF MARRIOTT'S LODGING, SENIOR LIVING AND DISTRIBUTION SERVICES BUSINESSES TO BE SPUN OFF TO MARRIOTT INTERNATIONAL SHAREHOLDERS. . MARRIOTT'S FOOD SERVICE AND FACILITIES MANAGEMENT BUSINESS VALUED IN PACT AT APPROXIMATELY $2 BILLION. . MARRIOTT INTERNATIONAL SENIOR DEBT AND COMMERCIAL PAPER TO BE REFINANCED. WASHINGTON, D.C., Oct. 1, 1997 -- Marriott International, Inc. (MAR / NYSE) and Sodexho Alliance, a worldwide food and management services organization headquartered in France (listed on Paris Bourse), today announced they have entered into a definitive agreement to combine Marriott's food service and facilities management business (Marriott Management Services) with Sodexho Alliance's North American operations. The combined company, Sodexho Marriott Services, Inc., will be the largest provider of food and facilities management services in North America, with over 4,800 accounts and annual sales in excess of $4 billion. It is expected to be listed on the New York Stock Exchange. Prior to the merger, a new company comprised of Marriott's lodging, senior living and distribution services businesses will be spun off, on a tax-free basis, to Marriott International shareholders. This new company, which will adopt the Marriott International, Inc. name, will apply for listing on the New York Stock Exchange. Immediately following the spin-off, Sodexho Alliance will make a cash contribution of approximately $305 million to its North American operations (International Catering Corporation), which will then be merged with Marriott's food service and facilities management business, to form Sodexho Marriott Services, Inc. As consideration for the merger, Sodexho Alliance will receive approximately 124 million common shares of Sodexho Marriott Services. Marriott International shareholders and Sodexho will own 51 percent and 49 percent, respectively, of Sodexho Marriott Services. The spin-off and merger transactions are expected to be completed in early 1998. Based on an estimate of the initial market value of Sodexho Marriott Services common stock, the merger indicates a total value for Marriott's food service and facilities management business in excess of $2 billion, including debt to be retained by Sodexho Marriott Services. In connection with the allocation of debt between the new Marriott International and Sodexho Marriott Services, it is Marriott International's intention to preserve bondholder value. Prior to the spin-off, Marriott International intends to offer to repurchase the outstanding public senior debt of the company and its subsidiaries, currently totaling $720 million, through a tender offer. In addition, Marriott International intends to repay all outstanding commercial paper prior to the spin-off and merger transactions. The company's commercial paper($683 million outstanding as of Sept. 26, 1997) is supported by a committed bank revolving credit facility of $1.5 billion. J.W. Marriott, Jr., chairman and chief executive officer of Marriott International, Inc., and William J. Shaw, president and chief operating officer of Marriott International, Inc., will assume the same positions with the new Marriott International. Charles D. O'Dell, currently president of Marriott Management Services, will become president and chief executive officer of Sodexho Marriott Services, and Mr. Shaw will serve as chairman of the board. Michel Landel, president and chief executive officer of Sodexho North America, will become executive vice president of Sodexho Marriott Services. Both Mr. Marriott and Pierre Bellon, chairman and chief executive officer of Sodexho Alliance S.A., said they expect the planned transactions to create significant value for their respective stakeholders. "The merger provides Marriott shareholders with an immediate premium for our food service and facilities management business," Mr. Marriott explained, "as well as an ongoing stake in a strong and well-focused contract services company with excellent growth prospects. With the industry consolidating and becoming increasingly global, we are extremely pleased that Marriott Management Services will be aligned with Sodexho Alliance, one of the largest and most successful contract services organizations in the world." "The transaction also provides the new Marriott International with substantial investment capacity," Mr. Marriott continued. "This will enable us to pursue additional growth opportunities in our businesses, extending Marriott's global leadership in the hospitality industry." Mr. Bellon said the merger would make Sodexho Alliance the world leader in food and contract services. "Sodexho Alliance is number one in Europe, and we have been considering various alternatives for expanding our presence in the attractive North American market," noted Mr. Bellon. "We have been successful in developing alliances with organizations throughout the world which share our values and are committed to providing the highest quality service to clients and customers. Marriott Management Services is the ideal partner to have in North America. We are extremely pleased with the opportunities which will result from this combination, particularly for our clients, our employees and our shareholders." Sodexho Marriott Services, Inc. - ------------------------------- Mr. O'Dell said, "Sodexho Marriott Services will be the top provider of contract services to the corporate, health care and education markets in North America. Our clients will benefit from the combination of the best food and facility programs and operating systems of the two separate entities, as well as the broader range of value-added services we will be able to provide." Mr. Landel said he is confident that employees of both Marriott Management Services and Sodexho's North American operations will have enhanced career development opportunities as a result of the merger. "Sodexho Marriott Services will be well positioned to grow at above-average rates," Mr. Landel explained. "We expect to capture a major share of new business as more organizations recognize the cost savings and performance gains we can help them achieve through outsourcing." Mr. O'Dell also said he anticipates that Sodexho Marriott Services will have considerable appeal to investors. "This will be a highly focused company with a leadership position in a growing industry," Mr. O'Dell said. "Our affiliation with worldwide leader Sodexho Alliance is expected to create tremendous synergies that will enhance our competitiveness and accelerate our growth. We expect to realize annual pretax cost savings in excess of $60 million within a three-year period, largely through greater purchasing economies, and elimination of duplicate functions and facilities." On a pro forma basis for fiscal year 1996 (ended Jan. 3, 1997), Sodexho Marriott Services would have had sales of $4.0 billion. Total debt of the company immediately following the spin-off is expected to be approximately $1.25 billion. Sodexho Marriott Services will have approximately 100,000 employees, as well as 60,000 client employees managed by the company. The New Marriott International - ------------------------------ "I am enthusiastic about the future growth prospects for the new Marriott International," said William J. Shaw, president and chief operating officer. "Marriott Lodging will continue to execute its global growth strategy by adding properties across our 10 hotel brands, and developing new vacation club resorts," Mr. Shaw elaborated. "We expect to add more than 140,000 rooms to the Marriott lodging system over the next five years (1998-2002) through management contracts, franchise agreements, selective company development and acquisitions. We also will take advantage of opportunities in the rapidly growing market for senior living services, by nearly tripling the number of assisted living and full-service communities operated by Marriott over the next five years. Finally, Marriott Distribution Services plans to open additional facilities, and expects to gain market share in the limited line food service distribution business." On a pro forma basis for fiscal year 1996 (ended Jan. 3, 1997), assuming the spin-off had occurred at the beginning of the year, the new Marriott International would have had sales of $7.3 billion, operating profit of $508 million, net income of $297 million, and earnings per share of $2.16. Total debt immediately after the spin-off is expected to be approximately $450 million. On a pro forma basis, as of September 12, 1997, the company's operations would include more than 1,450 lodging properties in the United States and 51 other countries and territories, as well as 82 senior living communities and 15 distribution centers located throughout the United States, with a total of 140,000 employees. Other Highlights of the Transactions - ------------------------------------ The definitive agreement is subject to customary conditions, including approval by Marriott International shareholders, receipt of a favorable ruling from the Internal Revenue Service, and other regulatory approvals. Sodexho Marriott Services and the new Marriott International will have separate boards of directors. The Board of Directors of the new Marriott International will consist of the 10 current Marriott International directors. The two new companies will enter into agreements under which the new Marriott International will distribute food and supplies to Sodexho Marriott Services, and will provide various administrative and data processing services. The rights to all Marriott trademarks and tradenames will be conveyed to the new Marriott International, which will license certain Marriott tradenames used in the management services business to Sodexho Marriott Services. In a separate transaction, Sodexho Alliance will acquire Marriott's food service and facilities management operations in the United Kingdom for approximately $50 million in cash. Each outstanding zero-coupon convertible subordinated note (LYONs) of Marriott International, Inc. would be convertible into 8.76 common shares of both the new Marriott International and Sodexho Marriott Services. The LYONs debt will be assigned to the new Marriott International and, through an intercompany agreement, Sodexho Marriott Services will assume a pro rata share of the debt obligation based on the respective equity values of the two companies. Merrill Lynch & Co. is acting as advisor to Marriott International, and Societe Generale Securities Corporation is serving as advisor to Sodexho Alliance. Company Profiles - ---------------- MARRIOTT INTERNATIONAL, INC. is the world's leading hospitality company with over 4,900 operating units in the United States and 51 other countries and territories. Major businesses include hotels operated and franchised under the Marriott, Ritz-Carlton, Courtyard, Residence Inn, Fairfield, TownePlace Suites, Renaissance, New World and Ramada International brands; vacation club (timeshare) resorts; food service and facilities management for clients in business, education and health care; senior living communities and services; and, food service distribution. Total sales for fiscal year 1996 were $10.2 billion. The company is headquartered in Washington, D.C. and has approximately 230,000 employees. SODEXHO ALLIANCE and its affiliates provide food and other contract services in more than 60 countries around the world. The Group provides catering for over 13,500 businesses, hospitals, schools and prisons, as well as facilities design and construction, building and grounds maintenance, housekeeping and other services. Its businesses also provide food service, child care, housekeeping and maintenance services in remote corporate living areas throughout the world, and operate river cruises, sports clubs and theme restaurant chains. Sales for the Group in fiscal year 1995/96 totaled Fr. francs 26.7 billion (U.S. $5.3 billion). - - - - - - - - - - - - - - - - Note: This press release contains "forward-looking statements" within the meaning of federal securities law, including statements concerning synergies and cost savings anticipated from the transaction, the number of lodging properties and senior living communities expected to be added in future years, business strategies and their intended results, and similar statements concerning anticipated future events and expectations that are not historical facts. The forward-looking statements in this press release are subject to numerous risks and uncertainties, including the effects of economic conditions; changes in supply and demand for hotel rooms, vacation club resorts and senior living accommodations; competitive conditions in the lodging, management services and other contract services industries; relationships with clients and property owners; the impact of government regulations; and, the availability of capital to finance growth, which could cause actual results to differ materially from those expressed in or implied by the statements herein. # # # Marriott International contacts: Nick Hill 301-380-7484 Tom Marder (Pager) 800-408-9143 EX-99.2 3 EXHIBIT 99.2 Exhibit 99(2) MARRIOTT INTERNATIONAL SECURITY ANALYST PRESENTATION MICHAEL A. STEIN OCTOBER 1, 1997 . Before I get started, I should point out that many of my comments, as well as those of the other speakers, are considered to be forward-looking statements under federal securities law. As such, you are reminded that these forward- looking statements are subject to numerous risks and uncertainties, as described in our S.E.C. filings, which could cause future results to differ materially from those stated or implied by our comments. As Bill Shaw mentioned, we expect to complete the transactions before the end of our 1998 first quarter. Within a few days, we will be filing our request for a ruling from the Internal Revenue Service that the spin-off will be tax-free to Marriott International and its shareholders. We are confident that the transaction has been structured to meet the requirements of the Internal Revenue Code, but the ruling process typically takes about four months, which puts us at the end of January. The spin-off transaction also requires the approval of Marriott International shareholders. Later this month, we plan to file the preliminary proxy materials with the S.E.C. After getting clearance from the Commission, we hope to be able to mail the proxy statement to Marriott shareholders around year-end. That would enable us to schedule the special shareholders' meeting in mid-February. The bond tender offer is expected to commence around the time of the shareholders' meeting, with closing to be concurrent with the spin-off and merger transactions. Let me briefly describe how the tender will work and how we anticipate Marriott's debt will be allocated between Sodexho Marriott Services and New Marriott International. Our debt balance at year-end 1997 is projected to be around $1.9 billion. The overall intent of the debt restructuring is that approximately $1.45 billion of this will stay with Sodexho Marriott Services. There are four major components to this debt. . We have five issues of public senior debt outstanding which total $720 million. The tender offer price for each series of debt will reflect a modest premium to market value to make tendering the bonds attractive. To be successful, 51% of each series of bonds must be tendered. Untendered bonds of any series for which we do not get 51% will be assumed by New Marriott International, and Sodexho Marriott Services will allocate an equivalent amount of cash to New Marriott International as an offset. . The outstanding zero-coupon convertible subordinated notes (LYONs) will have an accreted value of about $310 million at year-end 1997. LYONs will be convertible into 8.76 shares each of New Marriott International and Sodexho Marriott Services. The LYONs debt will become an obligation of New Marriott International and, through an intercompany agreement, Sodexho Marriott Services will assume a pro rata share of the debt obligation based on the respective equity values of the two companies. . Short-term debt is projected to be between $650 and $700 million at year-end 1997. This debt will be refinanced or replaced by Sodexho Marriott Services using funds from its new credit facilities. . The last major component of our debt is the endowment bonds associated with our senior living communities, currently about $105 million, which will be allocated to New Marriott International. To summarize, after the spin-off, but before the merger, Sodexho Marriott Services will have about $1.5 billion of debt, although the components could vary somewhat based on the outcome of the tender offers. Concurrent with the merger, Sodexho Marriott Services will use cash contributed by Sodexho Alliance to reduce proforma debt from $1.5 billion to approximately $1.25 billion. This $1.25 billion is expected to consist mostly of two facilities: (i) a senior bank facility, and (ii) a longer-term facility which will be guaranteed by Sodexho Alliance. By our estimates, the spin-off and related transactions indicate a value greater than $2 billion for our Marriott Management Services business. This was determined as follows: . First, debt retained by Sodexho Marriott Services and/or cash distributed to New Marriott International will be $1.45 billion. . Second, we have estimated the initial market equity value of Sodexho Marriott Services common stock to be at least in the $1.1 to $1.2 billion range, based on analysis by Merrill Lynch and ourselves of cash flow and earnings multiples of other companies believed to be comparable. Based on these analyses, we have estimated a value of over $550 million for the 51% ownership interest to be held by premerger Marriott International shareholders. . Third, we are separately selling our food services and facilities management business in the United Kingdom to Sodexho Alliance for $50 million in cash; $58 million after related income tax benefits. . From that, we deduct approximately $28 million in after-tax transaction costs to arrive at the $2+ billion of estimated value. Based on our internal analysis, this is considerably above the value calculated for our Management Services business as a continuing part of Marriott International. The largest portion of the value created comes from cost savings and other operational synergies which the combined entity is expected to achieve. I will discuss these briefly in a moment. Next, I'd like to walk you through some proforma numbers for Sodexho Marriott Services and New Marriott International. I should point out that these proformas were prepared for informational purposes only, are different from (because they reflect certain anticipated synergies) and do not meet all of the Securities and Exchange Commission's technical requirements for proforma financial statements. We are still in the process of preparing the proformas which will be included in the preliminary proxy materials to be filed with the S.E.C. We'll start with the proforma capitalization for Sodexho Marriott Services as of December 1996. The chart shows that the combined company would have had over $800 million in net assets [i.e., total assets minus current liabilities], and $1.2 to $1.3 billion in debt. The debt balance was calculated roughly as follows: one-billion, 450 million of refinanced Marriott debt, plus $80 million of existing Sodexho North America debt, less debt reductions of about $270 million using proceeds from Sodexho Alliance's premerger cash contribution of approximately $305 million to its North American subsidiary. Also it should be noted that Sodexho Alliance has agreed to guarantee over $600 million of the Sodexho Marriott Services' debt. Turning to the proforma operating data for 1996, which assumes that the merger and spin-off transactions occurred at the beginning of the year, the combined entity would have had proforma sales of over $4 billion, EBITDA of $235 million, depreciation and amortization of $92 million, interest expense of $93 million, pretax income of $50 million and net income of $25 million. With the projected issuance of approximately 124 million common shares to Sodexho Alliance, on a fully-diluted basis, Sodexho Marriott Services is expected to have about 261 million shares, yielding proforma EPS for 1996 of 10 cents. ---- We haven't presented year-to-date proformas for 1997, but I will point out that in the first half of this year Marriott Management Services profits were up in the 15% to 20% range, while Sodexho North America net income for its fiscal year ended August 31, 1997, grew more than 30%. The 1996 proforma numbers reflect anticipated first year cost savings from operating synergies of $21 million, and exclude $24 million of one-time pretax integration costs. As was noted in the press release, Sodexho Marriott Services expects to realize at least $60 million in annual savings by the third post- merger year. A substantial part of the savings will come from incremental leverage and economies in procurement, with the remainder coming from other operating efficiencies. We expect to achieve nearly one-third of the projected cost savings, or about $21 million, in the first year, and about two-thirds, $40 million, in the second year. The 1996 proformas show cash flow (or EBITDA) coverage of interest cost of 2.5 times, a ratio that should grow as the business grows, planned synergies are realized, and free cash flow is used to pay down debt. We believe that Sodexho Marriott Services has excellent prospects for growth. Both Marriott Management Services and Sodexho North America have demonstrated much improved results in 1997 to date, which will only be enhanced by a more focused, combined Sodexho Marriott Services. Growth in core operating measurements, combined with realizing synergies and repaying debt should result in annual Sodexho Marriott Services net income growth in excess of 25% over the next several years. Turning to Marriott International, this chart compares the actual balance sheet of the current company, as of June 20, 1997, to the proforma capitalization of New Marriott International. You can see the significant impact that the spin-off will have on the capital structure. I would also like to point out that the sale, to Host Marriott, of the 29 Forum retirement communities occurred just after the end of our 1997 second quarter. Taking that transaction into consideration, together with other cash flow activity in the second half of the year, we are projecting the debt balance at year end 1997 to be at least $300 million less than the proforma at mid-year. This means that the initial balance sheet of the New Marriott International, as of a hypothetical 1997 year-end spin-off date, would include debt estimated to be about $450 million. This slide shows the 1996 historical income statement of Marriott International compared to the proforma operating data of the new company. Proforma sales of $7.3 billion were calculated by subtracting $3.3 billion in sales for Marriott Management Services, including its U.K. operations, and then adding back roughly $400 million of intercompany sales, from Marriott Distribution Services to MMS, because those sales were eliminated in the preparation of the historical numbers. Marriott Management Services generated about $120 million in operating profit in 1996, and the proforma numbers also reflect the impact of eliminating $1.5 billion of debt (that's $1.45 billion of debt going to Sodexho Marriott Services plus $50 million cash from the sale of the U.K operations). The other proforma adjustments include a modest reduction in corporate expenses following the spin-off, and a small increase in fully-diluted shares as a result of redenominating shares awarded under various employee stock plans to preserve their pre-merger value. The net result is proforma earnings per share for New Marriott International of $2.16 for 1996 compared to historical earnings per share of $2.24. We also prepared proforma operating data for the first halves of 1997 and 1996 on the same basis as the full-year 1996 proformas. These proformas, I will remind you, may not be the exact same numbers that will later appear in our proxy statement, but they do provide, in our opinion, a reasonable indication not only of the growth rate but also the strong interest coverage and the financial flexibility that New Marriott International will have. I should add that the Renaissance acquisition resulted in earnings dilution of 4 cents per share in our 1997 second quarter, and similarly affects the earnings growth comparisons shown here. Provided forecasts for a continuing strong lodging market are accurate, our earnings growth could increase to the 20% range over the next couple of years. Thereafter, we would target our earnings growth rate in the high teens. In closing my remarks, I should also mention that we expect both Sodexho Marriott Services and New Marriott International to be listed on the New York Stock Exchange. Regarding dividend policy, the post-spinoff combined payout is expected to be at least equal to that received by a shareholder from the 36 cents per share in annual dividends currently paid by Marriott International. - -------------------------------------------------------------------------------- Sodexho Marriott Services ($ millions)
Pro Forma December 1996 ------------- Net assets* $ 813 ========= Debt (incl. LYONs) $ 1,260 Other long-term liabilities 93 Equity (deficit) (540) --------- Total Capitalization $ 813 =========
*Total assets less current liabilities - -------------------------------------------------------------------------------- Transaction Value of MMS Business ($ millions) Debt retained and/or cash distributed $1,450 51% of SMS common stock 550 Cash sale of U.K. business 58 Transaction costs and other (after tax) (28) -------- Approximate Value $2,030 ========
- -------------------------------------------------------------------------------- Refinancing Plan for Marriott International Debt ($ millions)
Projected Debt at Year-End 1997 --------------------------------- Sodexho New Marriott Marriott Total Service Int'l ------- ---------- --------- Senior notes/tender/refinancing $ 720 $ 720 $ -- LYONs 310 25 285 Revolving loans/commercial paper 680 680 -- Endowment deposits and other 190 25 165 -------- -------- ------ Total $1,900 $1,450 $450 ======== ======== ======
New Marriott International Pro Forma* ($ millions except EPS) Twenty-Four Weeks Ended ----------------------- June 1997 June 1996 --------- --------- Sales $ 4,104 $ 3,205 ======= ======= Operating profit $ 294 $ 230 Net interest income (expense) 3 27 Corporate and other (40) (30) ------- ------- Pretax income 257 227 Income taxes (98) (88) ------- ------- Net income $ 159 $ 139 ======= ======= Earnings per share $ 1.17 $ 1.02 ======= =======
* Based on historical data after certain adjustments, principally (a) the elimination of operating results for Marriott Management Services, and (b) the impact of a $1.5B reduction in debt.
Marriott International ($ millions except EPS) 1996 -------------------------- Pro Forma* Historical (New Company) ---------- ------------- Sales $ 10,172 $ 7,267 ======== ======= Operating profit $ 629 $ 508 Net interest income (expense) (48) 50 Corporate and other (79) (76) -------- ------- Pretax income 502 482 Income taxes (196) (185) -------- ------- Net income $ 306 $ 297 ======== ======= Earnings per share $ 2.24 $ 2.16 ======== =======
* Based on historical data after certain adjustments, principally (a) the elimination of operating results for Marriott Management Services, and (b) the impact of a $1.5B reduction in debt.
Marriott International ($ millions) June 1997 -------------------------- Pro Forma* Historical (New Company) ---------- ------------- Net assets* $ 4,665 $ 4,227 ======== ======= Debt (incl. LYONs) $ 2,235 $ 785 Other long-term liabilities 1,013 981 Equity 1,417 2,461 -------- ------- Total Capitalization $ 4,665 $ 4,227 ======== =======
* Total assets less current liabilities - -------------------------------------------------------------------------------- Sodexho Marriott Services ($ millions except EPS)
Pro Forma 1996 --------- Sales $ 4,020 ======== EBITDA $ 235 Depreciation and amortization (92) Interest expense (93) -------- Pretax income 50 Income taxes (25) -------- Net income $ 25 ======== Fully-diluted shares (millions) 261 ======== EPS $ .10 ========
NOTE: Includes estimated synergies/cost savings of $21M in first year subsequent to merger; excludes one-time transaction costs and integration expenses. -----END PRIVACY-ENHANCED MESSAGE-----