Table A

Debt Fraction of Debt premium

percentage in debt at Fraction debt above
capital floating fixed government
Marriot 60% 40% 60% 1.30%
Lodging 74% 50% 50% 1.10%
Contract services 40% 40% 60% 1.40%
Restaurants 42% 25% 75% 1.80%

Table B
Maturity Rate
30-year 8.95%
10-year 8.72%
1-year 6.90%
Summary of operations
1978 1979 1980 1981 1982
Sales 1174.1 1426 1633.9 1905.7 2458.9
PBIT 107.1 133.5 150.3 173.3 205.5
Interest 23.7 27.8 46.8 52 71.8
PBT 83.5 105.6 103.5 121.3 133.7
Taxes 35.4 43.8 40.6 45.2 50.2
Income from continuing operations 48.1 61.8 62.9 76.1 83.5
PAT 54.3 71 72 86.1 94.3
Funds from cont. operations 101.2 117.5 125.8 160.8 203.6

Capitalization and returns

Total assets 1000.3 1080.4 1214.3 1454.9 2062.6
Total capital (TA - CL) 826.9 891.9 977.7 1167.5 1634.5
Long-term debt 309.9 365.3 536.6 607.7 889.3
Shareholder's equity 418.7 413.5 311.5 421.7 516

Per Share and Other Data

Shares outstanding 183.6 160.5 125.3 130.8 132.8
EPS - Net income 0.29 0.39 0.52 0.64 0.69
EPS - continuing operations 0.25 0.34 0.45 0.57 0.61

Market price 2.43 3.48 6.35 7.18 11.7

Shares outstanding 183.6 160.5 125.3 130.8 132.8
 1983 1984 1985 1986 1987
2950.5 3524.9 4241.7 5266.5 6522.2
247.9 297.7 371.3 420.5 489.4
62.8 61.6 75.6 60.3 90.5
185.1 236.1 295.7 360.2 398.9
76.7 100.8 128.3 168.5 175.9
108.4 135.3 167.4 191.7 223
115.2 139.8 167.4 191.7 223
272.7 322.5 372.3 430.3 472.8

2501.4 2904.7 3663.8 4579.3 5370.5

2007.5 2330.7 2861.4 3561.8 4247.8
1071.6 1115.3 1192.3 1662.8 2498.8
628.2 675.6 848.5 991 810.8

134.4 128.8 131 130.6 118.8

0.83 1.04 1.24 1.40 1.67
0.78 1.00 1.24 1.4 1.67

14.25 14.7 21.58 29.75 30

134.4 128.8 131 130.6 118.8
Divisional Details
1982 1983 1984 1985 1986 1987
Sales
Contract services 819.8 950.6 1111.3 1586.3 2236.1 2969
Lodging 1091.7 1320.5 1640.8 1898.4 2233.1 2673.3
Restaurants 547.4 679.4 707 757 797.3 879.9

Operating profits
Contract services 51 71.1 86.8 118.6 154.9 170.6
Lodging 132.6 139.7 161.2 185.8 215.7 263.9
Restaurants 48.5 63.8 79.7 78.2 79.1 82.4

Identifiable assets
Contract services 373.3 391.6 403.9 624.4 1070.2 1237.7
Lodging 909.7 1264.6 1786.3 2108.9 2236.7 2777.4
Restaurants 452.2 483 496.7 582.6 562.3 467.6

Depreciation
Contract services 22.9 26.1 28.9 40.2 61.1 75.3
Lodging 22.7 27.4 31.3 32.4 37.1 43.9
Restaurants 25.1 31.8 35.5 34.8 38.1 42.1

Capital expenditure
Contract services 127.7 43.8 55.6 125.9 448.7 112.7
Lodging 371.5 377.2 366.4 808.3 966.6 1241.9
Restaurants 199.6 65 72.3 128.4 64 79.6
Information on comaprable Hotel and Restaurant Chains

Equity
beta Leverage
Marriott 0.97 41%
Hilton 0.88 14%
Holiday 1.46 79%
La-quinta 0.38 69%
Ramada Inn 0.95 65%
Chrich's FC 0.75 4%
Collins 0.6 10%
Frisch 0.13 6%
Luby's 0.64 1%
McDonalds 1.00 23%
Wendy's 1.08 21%
Exhibit 4 Annual Holding-Period Returns for Selected Securities Exhibit 5 Spreads be
and market Indexes, 1926-1987

ArimethiGeometriStandard Years
Years Average Average Deviation
Spread between S&P 500 Co
Short-term Treasury bills: and short-term U.S. Treasury

1926-87 3.54% 3.48% 0.94% 3.54% 1926-87

1926-50 1.01% 1.00% 0.40% 1.01% 1926-50
1951-75 3.67% 3.66% 0.56% 3.67% 1951-75
1976-80 7.80% 7.77% 0.83% 7.80% 1976-80
1981-85 10.32% 10.30% 0.75% 10.32% 1981-85
1986 6.16% 6.16% 0.19% 6.16% 1986
1987 5.46% 5.46% 0.22% 5.46% 1987

Long-term U.S. Government bonds returns: Spread between S&P 500 Co

and long-term U.S. Governm
1926-87 4.58% 4.27% 7.58%
1926-50 4.14% 4.04% 4.17% 1926-87
1951-75 2.39% 2.22% 6.45% 1926-50
1976-80 1.95% 1.69% 11.15% 1951-75
1981-85 17.85% 16.82% 14.26% 1976-80
1986 24.44% 24.44% 17.30% 1981-85
1987 -2.69% -2.69% 10.28% 1986
1987
Long-term, high-grade corporate bond returns:
Spread between S&P 500 Co
1926-87 5.24% 4.93% 6.97% and long-term high-grade co
1926-50 4.82% 4.76% 3.45%
1951-75 3.05% 2.86% 6.04% 1926-87
1976-80 2.70% 2.39% 10.87% 1926-50
1981-85 18.96% 17.83% 14.17% 1951-75
1986 19.85% 19.85% 8.19% 1976-80
1987 -0.27% -0.27% 9.64% 1981-85
1986
Standard and Poor's 500 Composit Stock Index returns: 1987

1926-87 12.01% 9.90% 20.55%

1926-50 10.90% 7.68% 27.18%
1951-75 11.87% 10.26% 13.57%
1976-80 14.81% 13.95% 14.60%
1981-85 15.49% 14.71% 13.92%
 1986 18.47% 18.47% 17.94%
1987 5.23% 5.23% 30.50%

Source: Casewriter estimates based on data from the University of

Chicago's Center for Research in Security Prices.
Exhibit 5 Spreads between S&P 500 Composite Returns and Bond Rates

ArimethiGeometriStandard
Average Average Deviation

Spread between S&P 500 Compsoite returns

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

8.47% 6.42% 20.60% 3.65%

9.89% 6.68% 27.18%
8.20% 6.60% 13.71%
7.01% 6.18% 14.60%
5.17% 4.41% 14.15%
12.31% 12.31% 17.92%
-0.23% -0.23% 30.61%

Spread between S&P 500 Compsoite returns

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

7.43% 5.63% 20.78%

6.76% 3.64% 26.94%
9.48% 8.04% 14.35%
12.86% 12.26% 15.58%
-2.36% -2.11% 13.70%
-5.97% -5.97% 14.76%
7.92% 7.92% 35.35%

Spread between S&P 500 Compsoite returns

and long-term high-grade corporate bond returns:

6.77% 4.97% 20.31%

6.06% 2.92% 26.70%
8.82% 7.40% 13.15%
12.11% 11.56% 15.84%
-3.47% -3.12% 13.59%
-1.38% -1.38% 14.72%
5.50% 5.50% 34.06%