MARRIOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME Fiscal Years 2019, 2018, and 2017 ($ in millions, except per share amounts) December 31, December 31, December 31, 2019 2018 2017 REVENUES Base management fees () $ 1,180 $ 1,140 $ 1,102 Franchise fees 2,006 1,849 1,586 Incentive management fees () 637 649 607 Gross fee revenues 3,823 3,638 3,295 Contract investment amortization (1) (62) (58 ) (50) Net fee revenues 3, 761 3,580 3,245 Owned, leased, and other revenue () 1,612 1,635 1,752 Cost reimbursement revenue (1) 15,599 15,543 15,455 TOTAL REVENUE 20,972 20,758 20,452 OPERATING COSTS AND EXPENSES Owned, leased, and other-direct 1,316 1,306 1,411 Depreciation, amortization, and other () 341 226 229 General, administrative, and other () 938 927 921 Merger-related costs and charges 138 155 159 Reimbursed expenses () 16,439 15,778 TOTAL OPERATING INCOME 5,228 19,172 18,392 17,948 OPERATING INCOME 1,800 2,366 2,504 Gains and other income, net () 154 194 688 Interest expense (D) (394) (340 (288) Interest income ) 26 22 38 Equity in earnings () 13 103 40 INCOME BEFORE INCOME TAXES 1,599 2,345 2,982 Provision for income taxes 326) 438 (1,523 NET INCOME $ 1,273 1,907 $ 1,459 EARNINGS PER SHARE Earnings per share - basic $ 3.83 $ 5.45 $ 3.89 Earnings per share - diluted EA 3.80 $ 5.38 $ 3.84 (1) See Note 16 for disclosure of related party amounts. See Notes to Consolidated Financial Statements. 50MARRIOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Fiscal Years 2019, 2018, and 2017 ($ in millions) December 31, December 31, December 31, 2019 2018 2017 OPERATING ACTIVITIES Net income $ 1,273 $ 1,907 $ 1,459 Adjustments to reconcile to cash provided by operating activities: Depreciation, amortization, and other 403 284 279 Share-based compensation 187 184 181 Income taxes (200) 239) 887 Liability for guest loyalty program 257 520 298 Contract acquisition costs (195) (152) (185) Merger-related charges 86 16 (124) Working capital changes (273) (76) (30) Gain on asset dispositions (147) (194) (687) Other 294 107 149 Net cash provided by operating activities 1,685 2,357 2,227 INVESTING ACTIVITIES Capital expenditures (653) (556) (240) Dispositions 395 479 1,418 Loan advances (30) (13) (93) Loan collections 51 48 187 Other (47) (10) 61) Net cash (used in) provided by investing activities '284) (52) 1,211 FINANCING ACTIVITIES Commercial paper/Credit Facility, net 951 (129) 60 Issuance of long-term debt 1,397 1,646 Repayment of long-term debt (835) (397) (310) Issuance of Class A Common Stock 6 Dividends paid (612) (543) 482 Purchase of treasury stock (2,260) (2,850) (3,013) Share-based compensation withholding taxes (148) 105) (157) Other (8) Net cash (used in) provided by financing activities (1,508) (2,374) 3,896) DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (107) 69) 458 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period) 360 429 887 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period ) $ 253 $ 360 $ 429 (1) The 2019 amounts include beginning restricted cash of $44 million at December 31, 2018, and ending restricted cash of $28 million at December 31, 2019, which we present in the "Prepaid expenses and other" and "Other noncurrent assets" captions of our Balance Sheets. See Notes to Consolidated Financial Statements. 53MARRIOTT INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS Fiscal Years-Ended 2019 and 2018 ($ in millions) December 31, December 31, 2019 2018 ASSETS Current assets Cash and equivalents $ 225 $ 316 Accounts and notes receivable, net (1) 2,395 2, 133 Prepaid expenses and other (1) 252 249 Assets held for sale 255 TOTAL CURRENT ASSETS 3,127 2,706 Property and equipment, net 1,904 1,956 Intangible assets Brands 5,954 5,790 Contract acquisition costs and other (1) 2,687 2,590 Goodwill 9 048 9,039 17,689 17,419 Equity method investments (1) 577 732 Notes receivable, net 117 125 Deferred tax assets 154 171 Operating lease assets 888 Other noncurrent assets (1) 595 587 TOTHE ASSETS $ 25,051 $ 23,696 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current portion of long-term debt $ 977 $ 833 Accounts payable() 720 767 Accrued payroll and benefits 1,339 1,345 Liability for guest loyalty program 2,258 2,529 Accrued expenses and other (1) 1,383 963 TOTAL CURRENT LIABILITIES 6,677 6,437 Long-term debt 9,963 8,514 Liability for guest loyalty program 3,460 2,932 Deferred tax liabilities (1) 290 485 Deferred revenue 840 731 Operating lease liabilities 882 Other noncurrent liabilities () 2,236 2,372 Shareholders' equity Class A Common Stock 5 Additional paid-in-capital 5,800 5,814 Retained earnings 9,644 8,982 Treasury stock, at cost (14,385) (12, 185) Accumulated other comprehensive loss (361) (391) TOTAL SHAREHOLDERS EQUITY, 703 2,225 TOTAL HABILITIES AND S/E $ 25,051 $ 23,696 (1) See Note 16 for disclosure of related party amounts. See Notes to Consolidated Financial Statements. 52