We determine our debt capacity based on the amount and variability of our cash flows. EBITDA coverage of gross interest cost was 4.1 times in 2001, and we met the cash flow require- ments under our loan agreements. At December 28, 2001, we had long-term public debt ratings of BBB+ and Baa2 from Standard and Poor’s and Moody’s, respectively. Our contractual obligations and commitments are as sum- marized in the following tables: Total unfunded loan commitments amounted to $669 million at December 28, 2001. We expect to fund $187 million within one year, $124 million in one to three years, and $23 million  in four to five years. We do not expect to fund the remaining  $335 million commitments, which expire as follows: $15 million within one year; $16 million in one to three years; $4 million in four to five years; and $300 million after five years. Share Repurchases. We periodically repurchase our com- mon stock to replace shares needed for employee stock plans  and for other corporate purposes. We purchased 6.1 million of our shares in 2001 at an average price of $38.20 per share and 10.8 million of our shares in 2000 at an average price of $31 per share. As of December 28, 2001, we had been authorized by our Board of Directors to repurchase an additional 13.5 million shares. Inflation has been moderate in recent years, and has not had a significant impact on our businesses. Certain of our critical accounting policies require the use of judgment in their application or require estimates of inherently O THER MATTERS Inflation Critical Accounting Policies Dividends. In May 2001, our Board of Directors increased the quarterly cash dividend by 8 percent to $.065 per share. uncertain matters. Our accounting policies are in compliance with principles generally accepted in the United States, although a change in the facts and circumstances of the underlying trans- actions could significantly change the application of the accounting policy and the resulting financial statement impact. We have listed below those policies which we believe are critical and require the use of complex judgment in their application. We recognize base fees as revenue when earned in accordance with the terms of the management contract. In interim periods, we recognize as income the incentive fees that would be due to us as if the contract were to terminate at that date, exclusive of any termination fees payable or receivable by us. If we recognized incentive fees only after the underlying full-year performance thresholds were certain, the revenue recognized for each year would be unchanged, but no incentive fees for any year would be recognized until the fourth quarter. We recognized incentive fees revenue of $202 million, $316 million and $268 million in 2001, 2000 and 1999, respectively. For properties that we manage, we are responsible to employees for salaries and wages and to subcontractors and other credi- tors for materials and services. We also have the discretionary responsibility to procure and manage the resources in perform- ing our services under these contracts. We, therefore, include these costs and the reimbursement of the costs as part of our expenses and revenues. We recorded other revenues from prop- erties managed by us of $5.6 billion in both 2001 and 2000 and $5.2 billion in 1999. We account for the sales of real estate in accordance with Statement of Financial Accounting Standards (FAS) No. 66, “Accounting for Sales of Real Estate.” Gains on sales of real estate are reduced by the maximum exposure to loss if we have continuing involvement with the property and do not transfer substantially all of the risks and rewards of ownership. We reduced gains on sales of real estate due to maximum exposure to loss by $16 million in 2001, $18 million in 2000 and $8 mil- lion in 1999. Our ongoing ability to achieve sale accounting under FAS No. 66 depends on our ability to negotiate the struc- ture of the sales transactions to comply with these rules. We also recognize revenue from the sale of timeshare interests in accordance with FAS No. 66. We recognize sales when a mini- mum of 10 percent of the purchase price for the timeshare inter- val has been received, the period of cancellation with refund has expired, receivables are deemed collectible and certain minimum sales and construction levels have been attained. For sales that do not meet these criteria, we defer all revenue using the percentage of completion or the deposit method as applicable. We capitalize direct costs incurred to sell real estate projects attributable to and recoverable from the sales of timeshare inter- ests until the sales are recognized. Costs eligible for capitalization Costs Incurred to Sell Real Estate Projects Timeshare Sales Real Estate Sales Other Revenues from Managed Properties Incentive Fees Marriott International, Inc. 2001 Annual Report 19 Payments Due by Period Less  than 1 – 3 4 – 5 After Contractual Obligations Total 1 year years years 5 years ($ in millions) Long-Term Debt $2,451 $ 43 $255 $1,433 $ 720 Operating Leases Recourse 1,473 173 262 198 840 Non-recourse 717 10 82 119 506 Total Contractual Cash Obligations $4,641 $226 $599 $1,750 $2,066 Amount of Commitment  Expiration Per Period Total Less Other Commercial Amounts than 1 – 3 4 – 5 After Commitments Committed 1 year years years 5 years ($ in millions) Guarantees $574 $93 $139 $327 $15 Timeshare note repurchase obligations 46 — 1 — 45 Total $620 $93 $140 $327 $60