Cost of preparing for division cuts Marriott profits

February 05, 1993|By Kim Clark | Kim Clark,Staff Writer

Marriott Corp. said yesterday that the costs of preparing for its controversial division into two companies sapped ' fourth-quarter earnings.

The Bethesda-based hospitality company said its profits were down significantly from last year's final quarter because of special charges, in particular a $21 million expense for the services of lawyers and accountants to prepare for the %o company's proposed June 4 split.

In October, the company announced it wanted to separate into two companies: Marriott International Inc., which would operate hotels and other businesses, and have little debt; and Host Marriott Corp, which would inherit the parent's $2.9 billion in debt and would own hotels and some concessions.

The plan has sparked a lawsuit by bondholders who claim it would saddle them with problematic real estate investments.

Company spokesman Robert T. Souers said that because negotiations with bondholders broke down this week, the company expects to face them in Baltimore's U.S. District Court on Feb. 11.

The company said that for the year, sales and operating profit in its lodging operations increased 4 percent in 1992, though revenue at Marriott's full-service hotels was flat.

Contract services saw a 6 percent increase in sales and 3 percent rise in operating profits, as improvements in sales to health care and educational institutions were offset by losses at a laundry facility and problems in the company's Canadian operations.

Marriott Corp.

Ticker Symbol: MHS

Yesterday's Cls.: 24 1/2

Yesterday's Chg.: + 1/4

Period ended *

Jan. 3... .. 4th qtr.... ... Year ago... ... Chg.

Revenue.. ..$2,785,000 .... $2,729,000... +2.0%

Net Income ....$19,000... .... $27,000... 29.6%

Primary EPS.... $0.14.... .... $0.26.... 46.1%

... ... .... Year... ... ... Year ago... ... Chg.

Revenue ...$8,722,000 ... ..$8,331,000... .. +4.7%

Net Income $85,000... ... ..$82,000... ... . +3.7%

Primary EPS $0.68... ... ... $0.81... ... ...16.0%

Figures in thousands (except per share data.)

* Fiscal year 1992 contained 53 weeks, with an extra week in the fourth quarter. The fourth quarter of 1991 ended Jan. 1, 1992.

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