59305945.

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Exhibit 1 Financial History of Marriott Corporation

(dollars in millions, except per share amounts)
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1978 1979 1980 1981 1982 1983 1984 1985 1986 1987
Summary of Operations

Sales 1,174.1 1,426.0 1,633.9 1,905.7 2,458.9 2,950.5 3,524.9 4,241.7 5,266.5 6,522.2
Earnings before interest
expense and income taxes 107.1 133.5 150.3 173.3 205.5 247.9 297.7 371.3 420.5 489.4
Interest Expense 23.7 27.8 46.8 52.0 71.8 62.8 61.6 75.6 60.3 90.5
Income before income taxes 83.5 105.6 103.5 121.3 133.7 185.1 236.1 295.7 360.2 398.9 คำนวนหาอั ตราภาษี
Income taxes 35.4 43.8 40.6 45.2 50.2 76.7 100.8 128.3 168.5 175.9 0.44
Income from continuing operations 48.1 61.8 92.9 76.1 83.5 108.4 135.3 167.4 191.7 223.0
Net Income 54.3 71.0 72.0 86.1 94.3 115.2 139.8 167.4 191.7 223.0
Funds provided from cont. operatio 101.2 117.5 125.8 160.8 203.6 272.7 322.5 372.3 430.3 472.8

Capitalization and Returns

Total Assets 1,000.3 1,080.4 1,214.3 1,454.9 2,062.6 2,501.4 2,904.7 3,663.8 4,579.3 5,370.5
Total capital(c) 826.9 891.9 977.7 1,167.5 1,634.5 2,007.5 2,330.7 2,861.4 3,561.8 4,247.8
Long-term debt 309.9 365.3 536.6 607.7 889.3 1,071.6 1,115.3 1,192.3 1,662.8 2,498.8
Percent to total capital 37.5% 41.0% 54.9% 52.1% 54.4% 53.4% 47.9% 41.7% 46.7% 58.8%
Sharholders' equity 418.7 413.5 311.5 421.7 516.0 628.2 675.6 848.5 991.0 810.8

Per Share and Other Data

Earnings per share:

Continuing operations (a) 0.25 0.34 0.45 0.57 0.61 0.78 1.00 1.24 1.40 1.67
Net income 0.29 0.39 0.52 0.64 0.69 0.83 1.04 1.24 1.40 1.67
Cash Dividends 0.026 0.034 0.042 0.051 0.063 0.076 0.093 0.113 0.136 0.170
Shareholders' equity 2.28 2.58 2.49 3.22 3.89 4.67 5.25 6.48 7.59 6.82
Market price at year end 2.43 3.48 6.35 7.18 11.70 14.25 14.70 21.58 29.75 30.00
Shares outstanding (in millions) 183.6 160.5 125.3 130.8 132.8 134.4 128.8 131.0 130.6 118.8
Return on avg. shareholders' equity 13.9% 17.0% 23.8% 23.4% 20.0% 20.0% 22.1% 22.1% 20.6% 22.2%

(a) The Company's theme park operations were discontinued in 1984

(b) Funds provided from continuing operations consist of income from continuing operations plus depreciation,
deferred income taxes, and other items not currently affecting workign capital.
(c) Total capital represents total assets less current liabilities

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Exhibit 2 Financial Summary of Marriott by Business Segment, 1982-1987

(dollars in millions)

1982 1983 1984 1985 1986 1987 % SALES % OP.PROFIT

Lodging:
Sales $1,091.7 $1,320.5 $1,640.8 $1,898.4 $2,233.1 $2,673.3 TOTAL SALES $6,522.2 41.00%
Operating profit 132.6 139.7 161.2 185.8 215.7 263.9 51.10%
Identifiable assets 909.7 1,264.6 1,786.3 2,108.9 2,236.7 2,777.4
Depreciation 22.7 27.4 31.3 32.4 37.1 43.9 TOTAL OPERATING $516.9
Capital expenditures 371.5 377.2 366.4 808.3 966.6 1,241.9

Contract Services:
Sales 819.8 950.6 1,111.3 1,586.3 2,236.1 2,969.0 45.50%
Operating profit 51.0 71.7 86.8 118.6 154.9 170.6 33.00%
Identifiable assets 373.3 391.6 403.9 624.4 1,070.2 1,237.7
Depreciation 22.9 26.1 28.9 40.2 61.1 75.3
Capital expenditures 127.7 43.8 55.6 125.9 448.7 112.7

Retaurants:
Sales 547.4 679.4 707.0 757.0 797.3 879.9 13.50%
Operating profit 48.5 63.8 79.7 78.2 79.1 82.4 15.90%
Identifiable assets 452.2 483.0 496.7 582.6 562.3 467.6
Depreciation 25.1 31.8 35.5 34.8 38.1 42.1
Capital expenditures 199.6 65.0 72.3 128.4 64.0 79.6

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 59305945.xls

Exhibit 3 Information on Comparable Hotel and Restaurant Companies

Aritmetic (a) 1987

Average Equity (b) Market (c) Revenues
Return Beta Leverage ($ billions)

MARRIOTT CORPORATION 22.40% 1.11 41% 6.52

(owns, operates, and manages hotels, restaurants,

and airline and institutional food services.)

Hotels:

HILTON HOTELS CORPORATION 13.30% 0.76 14% 0.77

(owns, manages, and licenses hotels.
Operates casinos.)

HOLIDAY CORPORATION 28.80% 1.35 79% 1.66

(Owns, operates, and licenses hotels and restaurants.

Operates casinos.)

LA QUINTA MOTOR INNS -6.40% 0.89 69% 0.17

(Owns, operates, and licenses motor inns.)

RAMADA INNS, INC. 11.70% 1.36 65% 0.75

(Owns and operates hotels and restaurants.)

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Restaurants:

CHURCH'S FRIED CHICKEN -3.20% 1.45 4% 0.39

(owns and franchises restaurants and gaming businesses.)

COLLINS FOODS INTERNATIONAL 20.30% 1.45 10% 0.57

(Operates Kentucky Fried Chicken franchise

and moderately prices restaurants.)

FRISCH'S RESTAURANTS 56.90% 0.57 6% 0.14

(Operates and franchises restaurants.)

LUBY'S CAFETERIAS 15.10% 0.76 1% 0.23

(Operates Cafeterias.)

MCDONALD'S 22.50% 0.94 23% 4.89

(Operates, franchises, and services restaurants.)

WENDY'S INTERNATIONAL 4.60% 1.32 21% 1.05

(Operates, franchises, and services restaurants.)

(a) Calculated over the five-year priod of 1983-1987

(b) Estimated using five years of monthly data over the 1983-1987 period by ordinary least squares
(c) Book value of debt divided by the sum of the book value of debt plus the market value of equity.

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Exhibit 4 Annual Holding-Period Returns for Selected Securities

and market Indexes, 1926-1987

Arimethic Standard
Years Average Deviation

Short-term Treasury bills:

1926-87 3.54% 0.94%

1926-50 1.01% 0.40%
1951-75 3.67% 0.56%
1976-80 7.80% 0.83%
1981-85 10.32% 0.75%
1986 6.16% 0.19%
1987 5.46% 0.22%

Long-term U.S. Government bonds returns:

1926-87 4.58% 7.58%

1926-50 4.14% 4.17%
1951-75 2.39% 6.45%
1976-80 1.95% 11.15%
1981-85 17.85% 14.26%
1986 24.44% 17.30%

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1987 (2.69%) 10.28%

Long-term, high-grade corporate bond returns:

1926-87 5.24% 6.97%

1926-50 4.82% 3.45%
1951-75 3.05% 6.04%
1976-80 2.70% 10.87%
1981-85 18.96% 14.17%
1986 19.85% 8.19%
1987 (0.27%) 9.64%

Standard and Poor's 500 Composit Stock Index returns:

1926-87 12.01% 20.55%

1926-50 10.90% 27.18%
1951-75 11.87% 13.57%
1976-80 14.81% 14.60%
1981-85 15.49% 13.92%
1986 18.47% 17.94%
1987 5.23% 30.50%

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Exhibit 5 Spreads between S&P 500 Composite Returns and Bond Rates

Arimethic Standard
Years Average Deviation

Spread between S&P 500 Compsoite returns

and short-term U.S. Treasury bill returns:

1926-87 8.47% 20.60%

1926-50 9.89% 27.18%
1951-75 8.20% 13.71%
1976-80 7.01% 14.60%
1981-85 5.17% 14.15%
1986 12.31% 17.92%
1987 (0.23%) 30.61%

Spread between S&P 500 Compsoite returns

and long-term U.S. Government bond returns:

1926-87 7.43% 20.78%

1926-50 6.76% 26.94%
1951-75 9.48% 14.35%
1976-80 12.86% 15.58%
1981-85 (2.36%) 13.70%
1986 (5.97%) 14.76%
1987 7.92% 35.35%

Spread between S&P 500 Compsoite returns

and long-term high-grade corporate bond returns:

1926-87 6.77% 20.31%

1926-50 6.06% 26.70%
1951-75 8.82% 13.15%
1976-80 12.11% 15.84%
1981-85 (3.47%) 13.59%

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1986 (1.38%) 14.72%

1987 5.50% 34.06%

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 Mariott

MARIOTT

Mariott's Asset Beta Calculation

Equity Beta Income Market Equity Asset Beta
Tax Leverage
(D)
Mariott 1.11 44% 0.41 0.59 0.80

Releveled Beta Calculation

Tax Rate 44% βLeveraged = βU[1 + (1 − T)D/E]
Target %D 60% βLeveraged = 1.4702
Target %E 40%

WACC (Mariott) Calculation

Risk free rate 8.95% Target %D 60%
Market risk premium 7.43% Target %E 40%
Mariott's equity Beta 1.470 Tax Rate 44%
Ks = Krf+(Km-Krf)B Krf 8.95%
Ks = 19.87% Debt Rate 1.30% (Above U.S. Government interest rate)
Premium
Kd 10.25% (Risk Free + Above Government)

WACC (Mariott) = (%D)(1-Tax)(Kd)+(%E)(Ks)

11.39%

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 Lodging

LODGING

Lodging's Asset Beta Calculation

Equity Beta Income Market Equity Asset Beta Revenues Weighted Weighted
Tax Leverage Average Beta
(D)
Hilton 0.76 44% 0.14 0.86 0.697 0.77 0.23 0.160
Holiday 1.35 44% 0.79 0.21 0.435 1.66 0.50 0.216
La Quinta 0.89 44% 0.69 0.31 0.396 0.17 0.05 0.020
Ramada 1.36 44% 0.65 0.35 0.667 0.75 0.22 0.149
0.550 3.35 1.00 0.550

Releveled Beta Calculation

Tax Rate 44% βLeveraged = βU[1 + (1 − T)D/E]
Target %D 74% βLeveraged = 1.4266
Target %E 26%

WACC (Lodging) Calculation

Risk free rate 8.95% Target %D 74%
Market risk premium 7.43% Target %E 26%
Lodging's equity Bet 1.427 Tax Rate 44%
Ks = Krf+(Km-Krf)B Krf 8.95%
Ks = 19.55% Debt Rate 1.10% (Above U.S. Government interest rate)
Premium
Kd 10.05% (Risk Free + Above Government)

WACC (Lodging) = (%D)(1-Tax)(Kd)+(%E)(Ks)

9.25%

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 Resturants

RESTURANTS

Resturants's Asset Beta Calculation

Equity Beta Income Market Equity Asset Beta Revenues Weighted Weighted
Tax Leverage Average Beta
(D)
Church's 1.45 44% 0.04 0.96 1.417 0.39 0.05 0.076
Collins 1.45 44% 0.10 0.90 1.365 0.57 0.08 0.107
Frisch's 0.57 44% 0.06 0.94 0.550 0.14 0.02 0.011
Luby's 0.76 44% 0.01 0.99 0.756 0.23 0.03 0.024
McDonalds 0.94 44% 0.23 0.77 0.805 4.89 0.67 0.542
Wendys 1.32 44% 0.21 0.79 1.149 1.05 0.14 0.166
1.010 7.27 1.00 0.925

Releveled Beta Calculation

Tax Rate 44% βLeveraged = βU[1 + (1 − T)D/E]
Target %D 42% βLeveraged = 1.4196
Target %E 58%

WACC (Resturants) Calculation

Risk free rate 8.72% Target %D 42%
Market risk premium 7.43% Target %E 58%
Resturants's equity Beta 1.420 Tax Rate 44%
Ks = Krf+(Km-Krf)B Krf 8.72%
Ks = 19.27% Debt Rate 1.80% (Above U.S. Government interest rate)
Premium
Kd 10.52% (Risk Free + Above Government)

WACC (Resturants) = (%D)(1-Tax)(Kd)+(%E)(Ks)

13.65%

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 Contract Service

CONTRACT SERVICE

Contract Service's Asset Beta Calculation

Identifiable Percentage βUnleveraged

Assets (1) (2) (1)x(2)

Contract Services 1,237.70 27.61% 1.28 0.35
Lodging 2777.40 61.96% 0.55 0.34
Restaurants 467.60 10.43% 1.01 0.11
Mariott Corporation (Total 4,482.70 100.00% 0.80 0.80

Releveled Beta Calculation

Tax Rate 44% βLeveraged = βU[1 + (1 − T)D/E]
Target %D 40% βLeveraged = 1.7554
Target %E 60%

WACC (Contract Service) Calculation

Risk free rate 8.72% Target %D 40%
Market risk premium 7.43% Target %E 60%
Contract Service's equity Be 1.755 Tax Rate 44%
Ks = Krf+(Km-Krf)B Krf 8.72%
Ks = 21.76% Debt Rate 1.40% (Above U.S. Government interest rate)
Premium
Kd 10.12% (Risk Free + Above Government)

WACC (Contract Service) = (%D)(1-Tax)(Kd)+(%E)(Ks)

15.32%

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Cost of Capital Summary

Bu D/V BL Kd Ks WACC
Marriott Corporation 0.80 60% 1.47 10.25% 19.87% 11.39%
Lodging 0.55 74% 1.43 10.05% 19.55% 9.25%
Restaurants 1.01 42% 1.42 10.52% 19.27% 13.65%
Contract Services 1.28 40% 1.76 10.12% 21.76% 15.32%