Starwood Reports Record First Quarter 2005 Results
PLAINS, NY | Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT - News):
First Quarter 2005 Highlights:
- EPS from continuing operations for the first quarter of 2005 was $0.36 compared to $0.16 in the first quarter of 2004. Excluding special items, EPS from continuing operations was $0.35 for the first quarter of 2005 compared to $0.16 for the first quarter of 2004.
- Despite significant renovations at large owned hotels in North America, REVPAR at Same-Store Owned Hotels worldwide and in North America increased 9.7% and 8.0%, respectively, when compared to the first quarter of 2004. ADR increased 6.5% and 7.2% worldwide and in North America, respectively. The first quarter has historically been the seasonally weakest quarter for the Company's portfolio of owned hotels.
- Margins at Starwood branded Same-Store Owned Hotels in North America improved approximately 40 basis points when compared to first quarter of 2004.
- North America Same-Store Owned Hotel results were negatively impacted by the ongoing major renovations at three hotels - the Sheraton New York, the Sheraton Toronto and the Westin Seattle. Excluding these hotels, North America Same-Store Owned Hotels REVPAR increased 9.2% and margins improvement would have been significantly greater.
- Globally, for Same-Store Owned Hotels, W Hotels REVPAR grew (+13.9%), followed by St. Regis/Luxury Collection (+11.6%), Westin (+11.0%), and Sheraton (+7.7%), with each of these brands experiencing both ADR and occupancy gains.
- Third-party management and franchise fees in the quarter increased 15% when compared to 2004.
- Vacation ownership and residential revenues, which exclude gains on sales of notes receivable, increased 80%. Excluding the fractional sales at the St. Regis Aspen and residential sales at the St. Regis in San Francisco, contract sales at vacation ownership properties were up 11.7% when compared to 2004.
- Net income for the first quarter of 2005 was $79 million compared to $34 million in the first quarter of 2004. Total Company Adjusted EBITDA increased 30% to $288 million when compared to $222 million in 2004.
- According to Smith Travel Research system-wide market share in North America increased 160 basis points when compared to 2004.
Starwood Hotels & Resorts Worldwide, Inc. ("Starwood" or the "Company") today reported EPS from continuing operations for the first quarter of 2005 of $0.36 compared to $0.16 in the first quarter of 2004. Excluding special items, primarily related to a $2 million state tax refund, EPS from continuing operations was $0.35 for the first quarter of 2005 compared to $0.16 in the first quarter of 2004. Income from continuing operations was $79 million in the first quarter of 2005 compared to $33 million in 2004. Excluding special items, income from continuing operations was $77 million for the first quarter of 2005 compared to $33 million in 2004. Net income (after discontinued operations) was $79 million and EPS was $0.36 in the first quarter of 2005 compared to $34 million and EPS of $0.16 in the first quarter of 2004. The effective tax rate for the first quarter of 2005 was 21.3%. The tax rate and thereby income from continuing operations benefited from a state tax refund of $2 million during the quarter related to tax years prior to the 1995 split-up of ITT Corporation.
Steven J. Heyer, CEO, said: "For ten quarters in a row our market share has been improving, even as we took the opportunity to renovate key hotels this quarter, including another 500 rooms and all of the ballroom and group meeting spaces at the Sheraton New York. We are moving full speed ahead with our brand-building efforts and service innovation, which I believe will lead to further share gains in coming years. I'm excited about the progress we're making, the opportunity to take our expertise to other price points and brands and the additional talent we've brought in to lead these initiatives."
"Our global development pipeline continues to grow and I'm particularly pleased about our industry leading growth in China, where we currently have 19 hotels open and 13 more under development. In addition, we're pleased with our announcement of our non-binding agreement to acquire the Le Meridien brand and related management and franchise business.
"At the same time, we continue to evaluate our current portfolio of owned assets with a focus on the highest potential use of the real estate, as our announcement of the redevelopment of the Sheraton Bal Harbour into a St. Regis Residence & Hotel illustrates. We're also focused on assets sales where that makes sense and we expect to be able to announce some developments on that front in the second or third quarter."
"Demand for our brands is strong and supply remains constrained, which means that we continue to have above average pricing power. We clearly expect this to continue for the balance of 2005 and into 2006."
Operating Results:
First Quarter Ended March 31, 2005
Cash flow from operations was $59 million compared to $63 million in 2004. Total Company Adjusted EBITDA was $288 million compared to $222 million in 2004.
Owned, Leased and Consolidated Joint Venture Hotels
REVPAR for Same-Store Owned Hotels worldwide and in North America increased 9.7% and 8.0%, respectively, when compared to 2004. REVPAR at Same-Store Owned Hotels in North America increased 14.1% at St. Regis/Luxury Collection, 13.9% at W, 7.7% at Westin, and 5.1% at Sheraton. REVPAR growth was particularly strong at the Company's owned hotels in New York, Boston, Ft. Lauderdale, Denver, Los Angeles, Maui, New Orleans, San Diego and Washington D.C. Revenue from transient travel was up 12.0% in North America when compared to 2004. Results in North America were negatively impacted by significant renovations at the Sheraton Hotel and Towers in New York where the ballrooms and 500 guest rooms were closed, the Westin in Seattle, and the Sheraton Centre Toronto Hotel in Toronto. Excluding these three owned hotels, REVPAR at Same-Store Owned Hotels in North America increased 9.2% when compared to 2004. Internationally, Same-Store Owned Hotel REVPAR increased 14.5%, with Latin America up 19.5% (REVPAR in owned hotels in Argentina and resort areas in Mexico was particularly strong), Asia Pacific up 15.4%, and Europe up 12.3%. Excluding the favorable effects of foreign exchange, REVPAR increased 9.8% internationally.
Total revenues at Same-Store Owned Hotels worldwide increased 6.0%, to $793 million when compared to $748 million in 2004 while costs and expenses at the hotels increased 5.6% to $623 million in 2005 compared to $590 million in 2004. Total revenues at Same-Store Owned Hotels in North America increased 3.8% to $574 million in 2005 when compared to $552 million in 2004 while costs and expenses at these hotels increased 3.5% to $451 million when compared to $435 million in 2004. As discussed earlier, results in North America were negatively impacted by renovations at key hotels during the quarter.
System-wide REVPAR; Management/Franchise Fees
System-wide (owned, managed and franchised) branded REVPAR for Same-Store Hotels in North America increased 8.5%; W Hotels 14.0%, Westin 9.6%, Sheraton 7.8%, Four Points by Sheraton 7.5%, and St. Regis/Luxury Collection 6.3%. For the tenth quarter in a row, total Company market share in North America increased for the Company's owned and managed hotels as well as for system-wide hotels. Total third-party management and franchise fees were $77 million, up $10 million, or 15%, from last year.
Distribution
Starwood's central distribution systems gross bookings increased approximately 10% for the first quarter 2005 when compared to the same period in 2004. Gross online bookings through proprietary branded websites increased 33% for the first quarter of 2005 as compared to the same period in 2004, with gross dollar bookings from the proprietary branded sites increasing 46%. Gross online dollar bookings represented approximately 12% of the overall gross dollar bookings in the first quarter of 2005, with 75% of that coming from our proprietary branded websites, as compared to 9% of overall gross dollar bookings, with 71% of that from proprietary branded websites in the first quarter of 2004.
Vacation Ownership and Residential
Vacation ownership and residential revenue, which excludes gains on sales of notes receivable (there were no sales of notes receivable in the first quarter of 2005 or 2004), was up $103 million, or 80% to $231 million in the first quarter of 2005 when compared to 2004 primarily due to residential sales at the St. Regis Museum Tower in San Francisco and vacation ownership sales at our resorts in Aspen, Maui, Orlando and Scottsdale. Contract sales, excluding fractional sales at the St. Regis Aspen and residential sales at the St. Regis in San Francisco, were up 11.7%. The average price per timeshare unit sold increased approximately 4.4% to $23,753, and the number of contracts signed increased approximately 7.0% in the first quarter of 2005 when compared to 2004.
In December 2004, the Company completed the conversion of 98 guest rooms at the St. Regis in Aspen, Colorado into 25 fractional units, which are being sold in four week intervals, and 20 new hotel rooms. In the first quarter of 2005, the Company recognized revenues of $17 million related to this project. Also, in the first quarter of 2005, the Company continued selling condominiums at the St. Regis Museum Tower which is under construction in San Francisco, and recognized revenues of approximately $44 million.
In addition to its robust pipeline of existing vacation ownership inventory, the Company continues to evaluate its existing owned real estate for potential conversion to vacation ownership, fractional, or residential projects. The Company is also working with its business partners to develop similar conversion opportunities at managed hotels.
Earlier this month, the Company announced its expansion plans related to its vacation ownership business, including new phases at the Westin Ka'anapali Ocean Resort Villas in Maui, Hawaii, the Westin Mission Hills Resort & Villas in Rancho Mirage, California, the Westin Kierland Villas in Scottsdale, Arizona, the Sheraton Broadway Plantation in Myrtle Beach, South Carolina, the Harborside Resort at Atlantis, Nassau, Bahamas, and the Sheraton Vistana Villages in Orlando, Florida.
In addition to the expansion at the existing properties above, Starwood Vacation Ownership is in the predevelopment phase of several new vacation ownership resorts including one in Princeville on the island of Kauai, Hawaii and another in Cancun, Mexico. The Company is also working on its second St. Regis-branded fractional resort in Punta Mita, Mexico.
Brand Development/Unit Growth
During the first quarter, the Company signed 14 full service hotel management and franchise contracts (representing approximately 4,000 rooms) including the Sheraton Shanghai Hotel and Residences, Pudong (Shanghai, China, 509 rooms), Westin Nanjing (Nanjing, China, 300 rooms), Sheraton Poznan (Poznan, Poland, 183 rooms) and The St. Regis Resort & Residences, Deer Crest (Deer Valley, Utah, 183 rooms) and opened 5 new hotels and resorts, including Sheraton West Des Moines (West Des Moines, Iowa, 285 rooms) and Sheraton San Diego Hotel, Mission Valley (San Diego, California, 260 rooms). Ten properties (representing approximately 2,800 rooms) were removed from the system during the quarter (4 Four Points, 4 Sheratons, 1 St. Regis, and 1 other). Including openings during the first quarter, the Company expects to open approximately 40 new full-service hotels and resorts (approximately 8,700 rooms) around the world in 2005. The Company had approximately 190 full service hotels and approximately 47,000 rooms in its active global development pipeline at March 31, 2005, with roughly half of that number in international locations. In 2005, the Company plans to open 3 new Bliss spas in W hotels in San Francisco, Los Angeles and Chicago and 2 new Remede Spas in St. Regis hotels in San Francisco and New York with several others in various planning stages.
Capital:
Gross capital spending during the quarter included approximately $58 million in renovations of hotel assets including construction capital at the St. Regis in Aspen, Colorado, the Boston Park Plaza, the Seattle Westin, the Sheraton Centre Toronto Hotel, and the Sheraton Hotel and Towers in New York. Investment spending on gross VOI inventory was $33 million, which was more than offset by cost of sales of $47 million during the quarter. The inventory spend included VOI construction at the Westin Ka'anapali Ocean Resort Villas in Maui, Hawaii, the Sheraton Vistana Villages in Orlando, Florida, the Westin Kierland Villas in Scottsdale, Arizona, and the Westin Mission Hills Resort in Rancho Mirage, California and construction of fractional units at the St. Regis in Aspen, Colorado. Additionally during the quarter, further investment spending of $71 million included the ongoing development of the St. Regis Museum Tower in San Francisco (260 hotel rooms and 102 condominium units). To date, the Company has invested $251 million in the St. Regis Museum Tower project, which is expected to open in the summer of 2005. The Company expects to realize gross proceeds of approximately $200 million from the sale of the project's condominiums and has recognized approximately $59 million in revenues to date.
Balance Sheet:
At March 31, 2005, the Company had total debt of $4.397 billion and cash and cash equivalents (including $415 million of restricted cash) of $728 million, or net debt of $3.669 billion, compared to net debt of $3.759 billion at the end of the fourth quarter of 2004. In addition, the Company continues to have an approximate $200 million investment in the senior debt of Le Meridien hotels.
At March 31, 2005, debt was approximately 76% fixed rate and 24% floating rate and its weighted average maturity was 4.8 years with a weighted average interest rate of 5.95%. The Company had cash (including total restricted cash) and availability under domestic and international revolving credit facilities of approximately $1.7 billion.
Outlook:
All comments in the following paragraphs and certain comments in this release above are deemed to be forward-looking statements. These statements reflect expectations of the Company's performance given its current base of assets and its current understanding of external economic and geo-political environments. Actual results may differ materially.
For the three months ended June 30, 2005, if REVPAR at Same-Store Owned Hotels in North America increases approximately 10% -12% versus the same period in 2004:
- Adjusted EBITDA would be expected to be approximately $380 million, an increase of 22.6% when compared to $310 million in the same period of 2004.
- Net income would be expected to be approximately $144 million, an increase of 34.6% when compared to income from continuing operations before special items in the second quarter of 2004.
- EPS would be expected to be $0.64, an increase of 28.0% when compared to EPS from continuing operations before special items in the second quarter of 2004.
For the full year 2005, if REVPAR at Same-Store Owned Hotels in North America increases approximately 9% - 11% versus the full year 2004:
- Full year revenues, including other revenues from managed and franchised properties, would be expected to be approximately $5.950 billion.
- Full year Adjusted EBITDA would be expected to increase approximately 20.0% to approximately $1.380 billion, when compared to 2004 Adjusted EBITDA of $1.150 billion.
- Full year net income before special items would be expected to be approximately $466 million at a 24% effective tax rate, which assumes an annual dividend of $0.84 per Share (payable in January 2006), when compared to 2004 income from continuing operations before special items of approximately $348 million at a 13.9% effective tax rate.
- Full year EPS before special items would be expected to increase approximately 29.0% to $2.09 when compared to 2004 EPS from continuing operations before special items of $1.62.
- Full year capital expenditures (excluding timeshare inventory) would be approximately $600 million, including $300 million for maintenance, renovation and technology, approximately $100 million for the completion of the St. Regis San Francisco multi-use project under construction, and $200 million for other growth initiatives. Additionally, net capital expenditures for timeshare inventory would be approximately $100 million.
- For the full year the Company expects cash interest expense of approximately $280 million and cash taxes of approximately $50 million.
Special Items:
The Company recorded net credits of $2 million (after-tax) for special items in the first quarter of 2005. In the first quarter of 2004, the Company recorded two special items which, when considered together, had no impact on the Company's results.
Special items in the first quarter of 2005 primarily relate to a state tax refund related to tax years prior to the 1995 split-up of ITT Corporation and the reversal of a reserve related to the financing of a hotel previously sold, which is no longer required as the loan has been repaid, offset in part by the net loss from the sale of two hotels.
The following represents a reconciliation of income from continuing operations before special items to income from continuing operations after special items (in millions, except per share data):
Three Months Ended
March 31,
2005 2004
-------- --------
Income from continuing operations before special
items $77 $33
-------- --------
EPS before special items $0.35 $0.16
-------- --------
Special Items
Adjustment to costs associated with construction
remediation (a) – 1
Gain (loss) on asset dispositions and
impairments, net (b) 1 (1)
-------- --------
Total special items - pre-tax 1 –
Income tax expense for special items (c) (1) –
Favorable settlement of tax matters (d) 2 –
-------- --------
Total special items - after-tax 2 –
Income from continuing operations $79 $33
-------- --------
EPS including special items $0.36 $0.16
======== ========
(a) Represents adjustments to the Company's share of costs for
construction remediation efforts at a property owned by a vacation
ownership unconsolidated joint venture that were previously
recorded in 2002.
(b) For the three months ended March 31, 2005, reflects the reversal
of a reserve related to the financing of a hotel previously sold,
which is no longer required as the loan has been repaid, offset in
part by the net loss from the sale of two hotels. For the three
months ended March 31, 2004 the loss of $1 million reflects the
aggregate of various insignificant charges.
(c) Represents taxes on special items at the Company's incremental tax
rate.
(d) Tax benefit in the three months ended March 31, 2005 reflects a
state tax refund related to tax years prior to the 1995 split-up
of ITT Corporation.
Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with approximately 750 properties in more than 80 countries and 120,000 employees at its owned and managed properties. With internationally renowned brands, Starwood® corporation is a fully integrated owner, operator and franchisor of hotels and resorts including: St. Regis®, The Luxury Collection®, Sheraton®, Westin®, Four Points® by Sheraton, and W®, Hotels and Resorts as well as Starwood Vacation Ownership, Inc., one of the premier developers and operators of high quality vacation interval ownership resorts. For more information, please visit . (Note: This press release contains forward-looking statements within the meaning of federal securities regulations. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties and other factors that may cause actual results to differ materially from those anticipated at the time the forward-looking statements are made. Further results, performance and achievements may be affected by general economic conditions including the timing and robustness of the apparent recovery in the United States from the recent economic downturn and the prospects for improved performance in other parts of the world, the impact of war and terrorist activity, business and financing conditions, foreign exchange fluctuations, cyclicality of the real estate and the hotel and vacation ownership businesses, operating risks associated with the hotel and vacation ownership businesses, relationships with associates, customers and property owners, the impact of the internet reservation channels, our reliance on technology, domestic and international political and geopolitical conditions, competition, governmental and regulatory actions (including the impact of changes in U.S. and foreign tax laws and their interpretation), travelers' fears of exposure to contagious diseases, risk associated with the level of our indebtedness, risk associated with potential acquisitions and dispositions, and other circumstances and uncertainties. These risks and uncertainties are presented in detail in our filings with the Securities and Exchange Commission. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that results will not materially differ. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.)
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per Share data)
Three Months Ended
March 31,
-------------------------
%
2005 2004 Variance
------- ------- ---------
Revenues
Owned, leased and consolidated joint venture
hotels $813 $769 5.7
Vacation ownership and residential sales and
services 231 128 80.5
Management fees, franchise fees and other
income 104 90 15.6
Other revenues from managed and franchised
properties (a) 258 240 7.5
------- ------- ---------
1,406 1,227 14.6
Costs and Expenses
Owned, leased and consolidated joint venture
hotels 641 607 (5.6)
Vacation ownership and residential 167 97 (72.2)
Selling, general, administrative and other 82 82 –
Depreciation 105 102 (2.9)
Amortization 5 4 (25.0)
Other expenses from managed and franchised
properties (a) 258 240 (7.5)
------- ------- ---------
1,258 1,132 (11.1)
Operating income 148 95 55.8
Equity earnings from unconsolidated ventures 13 4 n/m
Interest expense, net of interest income of
$2 and $0 (62) (64) 3.1
Gain (loss) on asset dispositions and
impairments, net 1 (1) n/m
------- ------- ---------
Income from continuing operations before
taxes and minority equity 100 34 n/m
Income tax expense (21) (2) n/m
Minority equity in net loss – 1 (100.0)
------- ------- ---------
Income from continuing operations 79 33 n/m
Discontinued operations:
Gain on disposition (b) – 1 (100.0)
------- ------- ---------
Net income $79 $34 132.4
======= ======= =========
Earnings Per Share - Basic
Continuing operations $0.37 $0.16 131.3
Discontinued operations – -- –
------- ------- ---------
Net income $0.37 $0.16 131.3
======= ======= =========
Earnings Per Share - Diluted
Continuing operations $0.36 $0.16 125.0
Discontinued operations – -- –
------- ------- ---------
Net income $0.36 $0.16 125.0
======= ======= =========
Weighted average number of Shares 212 205
======= =======
Weighted average number of Shares assuming
dilution 221 211
======= =======
(a) The Company includes in revenues the reimbursement of costs
incurred on behalf of managed hotel property owners and
franchisees with no added margin and includes in costs and
expenses these reimbursed costs. These costs relate primarily to
payroll costs at managed properties where the Company is the
employer.
(b) Activity in the three months ended March 31, 2004 primarily
relates to the reversal of a reserve relating to the 1999
divestiture of the Company's gaming business. The reserve is no
longer required as the related contingencies have been resolved.
n/m = not meaningful
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
March 31, December 31,
2005 2004
------------- -------------
Assets
Current assets:
Cash and cash equivalents $313 $326
Restricted cash 406 347
Accounts receivable, net of allowance for
doubtful accounts of $63 and $58 544 482
Inventories 341 371
Prepaid expenses and other 169 157
------------- -------------
Total current assets 1,773 1,683
Investments 440 453
Plant, property and equipment, net 6,888 6,997
Goodwill and intangible assets, net 2,547 2,544
Other assets (a) 642 621
------------- -------------
$12,290 $12,298
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings and current
maturities of long-term debt (b) $642 $619
Accounts payable 156 200
Accrued expenses 741 872
Accrued salaries, wages and benefits 227 299
Accrued taxes and other 156 138
------------- -------------
Total current liabilities 1,922 2,128
Long-term debt (b) 3,755 3,823
Deferred income taxes 839 880
Other liabilities 648 652
------------- -------------
7,164 7,483
Minority interest 27 27
Exchangeable units and Class B preferred
shares, at redemption value of $38.50 – --
Commitments and contingencies
Stockholders' equity:
Class A exchangeable preferred shares
of the Trust; $0.01 par value;
authorized 30,000,000 shares;
outstanding 564,397 and 597,825 shares
at March 31, 2005 and December 31,
2004, respectively – --
Corporation common stock; $0.01 par
value; authorized 1,050,000,000
shares; outstanding 216,049,634 and
208,730,800 shares at March 31, 2005
and December 31, 2004, respectively 2 2
Trust Class B shares of beneficial
interest; $0.01 par value; authorized
1,000,000,000 shares; outstanding
216,049,634 and 208,730,800 shares at
March 31, 2005 and December 31, 2004,
respectively 2 2
Additional paid-in capital 5,456 5,121
Deferred compensation (81) (14)
Accumulated other comprehensive loss (291) (255)
Retained earnings (accumulated deficit) 11 (68)
------------- -------------
Total stockholders' equity 5,099 4,788
------------- -------------
$12,290 $12,298
============= =============
(a) Includes restricted cash of $9 million and $10 million at March
31, 2005 and December 31, 2004, respectively.
(b) Excludes Starwood's share of unconsolidated joint venture debt
aggregating approximately $432 million and $438 million at March
31, 2005 and December 31, 2004, respectively.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations - Historical Data
(in millions)
Three Months Ended
March 31,
-----------------------
%
2005 2004 Variance
------ ------ ---------
Reconciliations of Net Income to EBITDA and
Adjusted EBITDA
Net income $79 $34 132.4%
Interest expense (a) 69 71 2.8
Income tax expense 21 2 n/m
Depreciation (b) 114 110 (3.6)
Amortization (c) 6 6 –
------ ------ ---------
EBITDA 289 223 29.6
Adjustment to costs associated with
construction remediation – (1) (100.0)
(Gain) loss on asset dispositions and
impairments, net (1) 1 n/m
Discontinued operations – (1) (100.0)
------ ------ ---------
Adjusted EBITDA $288 $222 29.7%
====== ====== =========
(a) Includes $5 and $7 million of interest expense related to
unconsolidated joint ventures for the three months ended March 31,
2005 and 2004, respectively.
(b) Includes $9 and $8 million of Starwood's share of depreciation
expense of unconsolidated joint ventures for the three months
ended March 31, 2005 and 2004, respectively.
(c) Includes $1 and $2 million of Starwood's share of amortization
expense of unconsolidated joint ventures for the three months
ended March 31, 2005 and 2004, respectively.
Three Months
Ended March 31,
---------------
2005 2004
------ ------
Cash Flow Data
Net income $79 $34
Exclude:
Discontinued operations, net – (1)
------ ------
Income from continuing operations 79 33
Increase in restricted cash (58) (84)
Adjustments to income from continuing operations,
changes in working capital, and other 38 113
------ ------
Cash from continuing operations 59 62
Cash from discontinued operations – 1
------ ------
Cash from operating activities $59 $63
====== ======
Cash used for investing activities $(69) $(180)
====== ======
Cash from (used for) financing activities $2 $(73)
====== ======
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations - Future Performance
(In millions)
Year Ended
December 31, 2005
------------------
Net income before special items $466
Special items (see page 7) 2
------------------
Net income $468
==================
EPS before special items $2.09
Special items (see page7) 0.01
------------------
EPS $2.10
==================
Three Months
Ended Year Ended
June 30, 2005 December 31, 2005
-------------- -----------------
$144 Net Income $468
70 Interest expense 280
45 Income tax expense 144
121 Depreciation and amortization 489
------------- -----------------
380 EBITDA 1,381
Gain on asset dispositions and
– impairments, net (1)
------------- -----------------
$380 Adjusted EBITDA $1,380
============= =================
Three Months
Ended Year Ended
June 30, 2004 December 31, 2004
------------- ------------------
$154 Net income $395
70 Interest expense 275
(29) Income tax (benefit) expense 34
109 Depreciation 445
6 Amortization 26
------------ -----------------
310 EBITDA 1,175
Loss on asset dispositions and
3 impairments, net 33
– Discontinued operations (17)
Restructuring and other special
– credits, net (37)
Adjustment to costs associated with
(3) construction remediation (4)
------------ -----------------
$310 Adjusted EBITDA $1,150
============ =================
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations -
Same-Store Owned Hotel Revenue and Expenses
(In millions)
Three Months Ended
March 31,
-----------------------
Same-Store Owned Hotels (1) %
Worldwide 2005 2004 Variance
------ ------ ---------
Revenue
Same-Store Owned Hotels $793 $748 6.0
Hotels Sold or Closed in 2005 and 2004
(3 hotels) 2 6 (66.7)
Hotels without Comparable Results
(4 hotels) 18 15 20.0
------ ------ ---------
Total Owned, Leased and Consolidated Joint
Venture Hotels Revenue $813 $769 5.7
====== ====== =========
Costs and Expenses
Same-Store Owned Hotels $623 $590 (5.6)
Hotels Sold or Closed in 2005 and 2004
(3 hotels) 2 4 50.0
Hotels without Comparable Results
(4 hotels) 15 12 (25.0)
Other ancillary hotel operations 1 1 –
------ ------ ---------
Total Owned, Leased and Consolidated Joint
Venture Hotel Costs and Expenses $641 $607 (5.6)
====== ====== =========
Three Months Ended
March 31,
-----------------------
Same-Store Owned Hotels %
North America 2005 2004 Variance
------ ------ ---------
Revenue
Same-Store Owned Hotels $574 $552 4.0
Hotels Sold or Closed in 2005 and 2004
(3 hotels) 2 6 (66.7)
Hotels without Comparable Results
(2 hotels) 18 15 20.0
------ ------ ---------
Total Owned, Leased and Consolidated Joint
Venture Hotels Revenue $594 $573 3.7
====== ====== =========
Costs and Expenses
Same-Store Owned Hotels $451 $435 (3.7)
Hotels Sold or Closed in 2005 and 2004
(3 hotels) 2 4 50.0
Hotels without Comparable Results
(2 hotels) 12 10 (20.0)
------ ------ ---------
Total Owned, Leased and Consolidated Joint
Venture Hotel Costs and Expenses $465 $449 (3.6)
====== ====== =========
Three Months Ended
March 31,
-----------------------
Same-Store Owned Hotels %
International 2005 2004 Variance
------ ------ ---------
Revenue
Same-Store Owned Hotels $219 $196 11.7
Hotels without Comparable Results
(2 hotels) – -- –
------ ------ ---------
Total Owned, Leased and Consolidated Joint
Venture Hotels Revenue $219 $196 11.7
====== ====== =========
Costs and Expenses
Same-Store Owned Hotels $172 $155 (11.0)
Hotels without Comparable Results
(2 hotels) 3 2 (50.0)
Other ancillary hotel operations 1 1 –
------ ------ ---------
Total Owned, Leased and Consolidated Joint
Venture Hotel Costs and Expenses $176 $158 (11.4)
====== ====== =========
(1) Same-Store Owned Hotel Results exclude 3 hotels sold or closed in
2005 and 2004 and 4 hotels without comparable results.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotel Results - Same-Store Owned Hotels (1)
For the Three Months Ended March 31, 2005
UNAUDITED
WORLDWIDE NORTH AMERICA
--------------------- ---------------------
2005 2004 Var. 2005 2004 Var.
------- ------- ----- ------- ------- -----
134 Hotels 91 Hotels
--------------------- ---------------------
SAME-STORE OWNED HOTELS
REVPAR ($) 111.96 102.06 9.7% 110.85 102.61 8.0%
ADR ($) 168.32 158.00 6.5% 166.08 154.95 7.2%
OCCUPANCY (%) 66.5% 64.6% 1.9 66.7% 66.2% 0.5
58 35
--------------------- ---------------------
SHERATON
REVPAR ($) 91.44 84.90 7.7% 91.98 87.50 5.1%
ADR ($) 141.07 133.57 5.6% 143.61 133.72 7.4%
OCCUPANCY (%) 64.8% 63.6% 1.2 64.0% 65.4% (1.4)
35 22
--------------------- ---------------------
WESTIN
REVPAR ($) 127.29 114.66 11.0% 117.28 108.85 7.7%
ADR ($) 177.34 164.73 7.7% 159.48 149.53 6.7%
OCCUPANCY (%) 71.8% 69.6% 2.2 73.5% 72.8% 0.7
10 4
--------------------- ---------------------
ST. REGIS/LUXURY
COLLECTION
REVPAR ($) 243.96 218.70 11.6% 277.35 243.02 14.1%
ADR ($) 387.89 376.89 2.9% 380.64 364.21 4.5%
OCCUPANCY (%) 62.9% 58.0% 4.9 72.9% 66.7% 6.2
12 12
--------------------- ---------------------
W
REVPAR ($) 156.12 137.01 13.9% 156.12 137.01 13.9%
ADR ($) 221.86 205.52 8.0% 221.86 205.52 8.0%
OCCUPANCY (%) 70.4% 66.7% 3.7 70.4% 66.7% 3.7
19 18
--------------------- ---------------------
OTHER
REVPAR ($) 71.67 65.97 8.6% 64.13 59.57 7.7%
ADR ($) 123.41 116.81 5.7% 119.33 115.37 3.4%
OCCUPANCY (%) 58.1% 56.5% 1.6 53.7% 51.6% 2.1
INTERNATIONAL(2)
----------------------
2005 2004 Var.
------- ------- ------
43 Hotels
----------------------
SAME-STORE OWNED HOTELS
REVPAR ($) 115.10 100.51 14.5%
ADR ($) 174.71 167.50 4.3%
OCCUPANCY (%) 65.9% 60.0% 5.9
23
----------------------
SHERATON
REVPAR ($) 90.38 79.89 13.1%
ADR ($) 136.31 133.28 2.3%
OCCUPANCY (%) 66.3% 59.9% 6.4
13
----------------------
WESTIN
REVPAR ($) 160.97 133.84 20.3%
ADR ($) 244.39 226.59 7.9%
OCCUPANCY (%) 65.9% 59.1% 6.8
6
----------------------
ST. REGIS/LUXURY COLLECTION
REVPAR ($) 188.16 176.28 6.7%
ADR ($) 407.00 411.33 (1.1%)
OCCUPANCY (%) 46.2% 42.9% 3.3
W
REVPAR ($)
ADR ($)
OCCUPANCY (%)
1
----------------------
OTHER
REVPAR ($) 119.15 106.54 11.8%
ADR ($) 139.59 122.20 14.2%
OCCUPANCY (%) 85.4% 87.2% (1.8)
(1) Hotel Results exclude 3 hotels sold or closed in 2005 and 2004 and
4 hotels without comparable results
(2) See next page for breakdown by division
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotel Results - Same-Store Owned Hotels (1)
For the Three Months Ended March 31, 2005
UNAUDITED
EUROPE LATIN AMERICA
---------------------- ---------------------
2005 2004 Var. 2005 2004 Var.
------- ------- ------ ------- ------- -----
27 Hotels 12 Hotels
---------------------- ---------------------
SAME-STORE OWNED HOTELS
REVPAR ($) 135.87 121.04 12.3% 84.98 71.11 19.5%
ADR ($) 233.19 223.92 4.1% 118.68 113.79 4.3%
OCCUPANCY (%) 58.3% 54.1% 4.2 71.6% 62.5% 9.1
11 9
---------------------- ---------------------
SHERATON
REVPAR ($) 103.99 94.42 10.1% 69.29 60.23 15.0%
ADR ($) 167.94 163.64 2.6% 101.77 100.97 0.8%
OCCUPANCY (%) 61.9% 57.7% 4.2 68.1% 59.6% 8.5
10 3
---------------------- ---------------------
WESTIN
REVPAR ($) 164.37 140.19 17.2% 152.76 118.10 29.3%
ADR ($) 287.32 265.87 8.1% 176.01 157.95 11.4%
OCCUPANCY (%) 57.2% 52.7% 4.5 86.8% 74.8% 12.0
6
----------------------
ST. REGIS/LUXURY
COLLECTION
REVPAR ($) 188.16 176.28 6.7%
ADR ($) 407.00 411.33 (1.1%)
OCCUPANCY (%) 46.2% 42.9% 3.3
OTHER
REVPAR ($)
ADR ($)
OCCUPANCY (%)
ASIA PACIFIC
---------------------
2005 2004 Var.
------- ------- -----
4 Hotels
---------------------
SAME-STORE OWNED HOTELS
REVPAR ($) 124.09 107.56 15.4%
ADR ($) 159.15 142.64 11.6%
OCCUPANCY (%) 78.0% 75.4% 2.6
3
---------------------
SHERATON
REVPAR ($) 127.11 108.19 17.5%
ADR ($) 173.09 158.67 9.1%
OCCUPANCY (%) 73.4% 68.2% 5.2
WESTIN
REVPAR ($)
ADR ($)
OCCUPANCY (%)
ST. REGIS/LUXURY COLLECTION
REVPAR ($)
ADR ($)
OCCUPANCY (%)
1
---------------------
OTHER
REVPAR ($) 119.15 106.54 11.8%
ADR ($) 139.59 122.20 14.2%
OCCUPANCY (%) 85.4% 87.2% (1.8)
(1) Hotel Results exclude 3 hotels sold or closed in 2005 and 2004 and
4 hotels without comparable results
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotel Results - Same-Store Owned Hotels (1)
For the Three Months Ended March 31, 2005
UNAUDITED ($thousands)
WORLDWIDE NORTH AMERICA
------------------------ ------------------------
2005 2004 Var. 2005 2004 Var.
-------- -------- ------ -------- -------- ------
134 Hotels 91 Hotels
------------------------ ------------------------
SAME-STORE OWNED
HOTELS
Total REVENUE 792,860 748,138 6.0% 573,788 552,618 3.8%
Total EXPENSE(3) 622,932 590,083 (5.6%) 450,650 435,471 (3.5%)
58 35
------------------------ ------------------------
SHERATON
REVENUE 304,771 295,756 3.0% 195,045 196,888 (0.9%)
EXPENSE 242,978 231,878 (4.8%) 161,038 158,378 (1.7%)
35 22
------------------------ ------------------------
WESTIN
REVENUE 261,206 239,181 9.2% 183,937 172,310 6.7%
EXPENSE 193,335 179,613 (7.6%) 132,261 125,523 (5.4%)
10 4
------------------------ ------------------------
ST. REGIS/LUXURY
COLLECTION
REVENUE 93,035 87,929 5.8% 70,125 66,646 5.2%
EXPENSE 71,583 69,044 (3.7%) 50,581 49,544 (2.1%)
12 12
------------------------ ------------------------
W(3)
REVENUE 87,391 80,020 9.2% 87,391 80,020 9.2%
EXPENSE 71,622 68,156 (5.1%) 71,622 68,156 (5.1%)
19 18
------------------------ ------------------------
OTHER
REVENUE 46,457 45,252 2.7% 37,290 36,754 1.5%
EXPENSE 43,414 41,392 (4.9%) 35,148 33,870 (3.8%)
INTERNATIONAL(2)
-------------------------
2005 2004 Var.
-------- -------- -------
43 Hotels
-------------------------
SAME-STORE OWNED HOTELS
Total REVENUE 219,072 195,520 12.0%
Total EXPENSE(3) 172,282 154,612 (11.4%)
23
-------------------------
SHERATON
REVENUE 109,726 98,868 11.0%
EXPENSE 81,940 73,500 (11.5%)
13
-------------------------
WESTIN
REVENUE 77,269 66,871 15.5%
EXPENSE 61,074 54,090 (12.9%)
6
-------------------------
ST. REGIS/LUXURY COLLECTION
REVENUE 22,910 21,283 7.6%
EXPENSE 21,002 19,500 (7.7%)
W(3)
REVENUE
EXPENSE
1
-------------------------
OTHER
REVENUE 9,167 8,498 7.9%
EXPENSE 8,266 7,522 (9.9%)
(1) Hotel Results exclude 3 hotels sold or closed in 2005 and 2004 and
4 hotels without comparable results
(2) See next page for breakdown by division
(3) Includes lease expense of $4,288 in 2005 and 2004 related to the
lease of the W Times Square in New York
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotel Results - Same-Store Owned Hotels (1)
For the Three Months Ended March 31, 2005
UNAUDITED ($thousands)
EUROPE LATIN AMERICA
------------------------- -----------------------
2005 2004 Var. 2005 2004 Var.
-------- -------- ------- ------- ------- -------
27 Hotels 12 Hotels
------------------------- -----------------------
SAME-STORE OWNED
HOTELS
Total REVENUE 131,824 119,173 10.6% 58,145 50,319 15.6%
Total EXPENSE 116,449 104,077 (11.9%) 34,086 30,853 (10.5%)
11 9
------------------------- -----------------------
SHERATON
REVENUE 52,595 48,009 9.6% 37,195 33,329 11.6%
EXPENSE 45,265 40,214 (12.6%) 23,194 21,126 (9.8%)
10 3
------------------------- -----------------------
WESTIN
REVENUE 56,319 49,881 12.9% 20,950 16,990 23.3%
EXPENSE 50,182 44,363 (13.1%) 10,892 9,727 (12.0%)
6
-------------------------
ST. REGIS/LUXURY
COLLECTION
REVENUE 22,910 21,283 7.6%
EXPENSE 21,002 19,500 (7.7%)
OTHER
REVENUE
EXPENSE
ASIA PACIFIC
-----------------------
2005 2004 Var.
------- ------- -------
4 Hotels
-----------------------
SAME-STORE OWNED HOTELS
Total REVENUE 29,103 26,028 11.8%
Total EXPENSE 21,747 19,682 (10.5%)
3
-----------------------
SHERATON
REVENUE 19,936 17,530 13.7%
EXPENSE 13,481 12,160 (10.9%)
WESTIN
REVENUE
EXPENSE
ST. REGIS/LUXURY COLLECTION
REVENUE
EXPENSE
1
-----------------------
OTHER
REVENUE 9,167 8,498 7.9%
EXPENSE 8,266 7,522 (9.9%)
(1) Hotel Results exclude 3 hotels sold or closed in 2005 and 2004 and
4 hotels without comparable results
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Debt Portfolio Summary
As of March 31, 2005
UNAUDITED
Balance Avg
Interest (in % of Interest Maturity
Debt Terms millions) Portfolio Rate (in years)
------------------- -------- --------- ---------- -------- ----------
Floating Rate Debt:
Senior credit
facility
Revolving credit
facility Various
+ 125 $12 0% 3.95% 1.5
Term loan LIBOR
+ 125 525 12% 4.12% 1.3
--------- ---------- -------- ----------
537 12% 4.12% 1.3
Mortgages and other Various 203 5% 5.57% 2.5
Interest rate swaps LIBOR
+ 423 300 7% 7.35%
--------- ---------- --------
Total Floating 1,040 24% 5.33% 1.7
Fixed Rate Debt:
Sheraton Holding
public debt (1) 1,055 24% 6.00% 7.7
Senior notes (2) 1,503 34% 6.70% 4.7
Convertible debt 360 8% 3.50% 1.1
Mortgages and other 739 17% 7.25% 6.0
Interest rate swaps (300) (7%) 7.88%
--------- ---------- --------
Total Fixed 3,357 76% 6.14% 5.5
--------- ---------- --------
Total Debt $4,397 100% 5.95% 4.8
========= ========== ========
(1) Balance consists of outstanding public debt of $1.047 billion and
an $8 million fair value adjustment related to the unamortized
gain on fixed to floating interest rate swaps terminated in
September 2002 and March 2004.
(2) Balance consists of outstanding public debt of $1.496 billion and
a $29 million fair value adjustment related to the unamortized
gain on fixed to floating interest rate swaps terminated in
September 2002 and March 2004 and a ($22) million fair value
adjustment related to current fixed to floating interest rate
swaps.
Maturities
--------------------------------------
less than 1 year $ 642
1-3 years 1,660
3-5 years 490
greater than 5 years 1,605
--------------
$ 4,397
==============
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotels without Comparable Results & Other Selected Items
As of March 31, 2005
UNAUDITED ($ millions)
Properties without comparable results in 2005:
Property Location
-------- --------
Sheraton Kauai Koloa, HI
St. Regis Aspen Aspen, CO
Hotel Des Bains Venice, Italy
Westin Hotel Excelsior Venice, Italy
Properties sold or closed in 2005 and 2004:
Property Location
-------- --------
Englewood - Sheraton Denver Tech Center Englewood, CO
Deerfield - Hilton Ft. Lauderdale, FL
Rancho Bernardo - Four Points Rancho Bernardo, CA
Selected Balance Sheet and Cash Flow Items:
Cash and cash equivalents
(including restricted cash of $415 million) $728
Debt level $4,397
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Capital Expenditures
For the Three Months Ended March 31, 2005
UNAUDITED ($ millions)
Capital Expenditures:
Owned, Leased and Consolidated Joint Venture Hotels $ 58
Corporate/IT 4
--------------
Subtotal 62
Vacation Ownership Capital Expenditures:
Capital expenditures (includes land acquisitions) 2
Inventory (1) (14)
--------------
Subtotal (12)
Development Capital 71
--------------
Total Capital Expenditures $ 121
==============
(1) Represents gross inventory capital expenditures of $33 million in
the three months ended March 31, 2005, less cost of sales of $47
million in the three months ended March 31, 2005.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Summary of Portfolio by Properties & Rooms
As of March 31, 2005
UNAUDITED
NAD EAME LAD
---------------- --------------- ---------------
Owned Hotels Rooms Hotels Rooms Hotels Rooms
------- -------- ------- ------- ------- -------
Sheraton 36 16,220 12 3,463 7 3,573
Westin 22 10,352 11 2,374 3 901
Four Points 6 1,153 - - - -
W 12 4,294 - - - -
Luxury Collection 1 654 5 638 2 320
St. Regis 4 840 1 161 - -
Other 12 2,815 - - - -
------- -------- ------- ------- ------- -------
Total Owned 93 36,328 29 6,636 12 4,794
Managed & UJV
Sheraton 41 20,071 70 20,511 10 1,995
Westin 38 21,206 7 1,841 - -
Four Points 2 639 7 1,035 1 128
W 5 902 - - 1 237
Luxury Collection 6 1,401 6 942 7 158
St. Regis 1 400 1 95 - -
Other 1 2,558 - - - -
------- -------- ------- ------- ------- -------
Total Managed & UJV 94 47,177 91 24,424 19 2,518
Franchised
Sheraton 117 37,400 29 7,041 3 1,074
Westin 17 6,924 3 1,141 3 598
Four Points 94 16,882 10 1,376 9 1,350
Luxury Collection 2 351 11 1,292 - -
------- -------- ------- ------- ------- -------
Total Franchised 230 61,557 53 10,850 15 3,022
--------------------------- -------- ------- ------- ------- -------
Systemwide
Sheraton 194 73,691 111 31,015 20 6,642
Westin 77 38,482 21 5,356 6 1,499
Four Points 102 18,674 17 2,411 10 1,478
W 17 5,196 - - 1 237
Luxury Collection 9 2,406 22 2,872 9 478
St. Regis 5 1,240 2 256 - -
Other 13 5,373 - - - -
------- -------- ------- ------- ------- -------
Total Systemwide 417 145,062 173 41,910 46 10,334
======= ======== ======= ======= ======= =======
ASIA Total
-------- ------------------
Owned Hotels Rooms Hotels Rooms
-------- ------- -------- ---------
Sheraton 3 1,028 58 24,284
Westin - - 36 13,627
Four Points 1 630 7 1,783
W - - 12 4,294
Luxury Collection - - 8 1,612
St. Regis - - 5 1,001
Other - - 12 2,815
-------- ------- -------- ---------
Total Owned 4 1,658 138 49,416
Managed & UJV
Sheraton 45 16,221 166 58,798
Westin 12 4,935 57 27,982
Four Points 2 269 12 2,071
W 2 353 8 1,492
Luxury Collection - - 19 2,501
St. Regis 2 591 4 1,086
Other 2 315 3 2,873
-------- ------- -------- ---------
Total Managed & UJV 65 22,684 269 96,803
Franchised
Sheraton 17 5,682 166 51,197
Westin 5 1,226 28 9,889
Four Points 1 126 114 19,734
Luxury Collection - - 13 1,643
-------- ------- -------- ---------
Total Franchised 23 7,034 321 82,463
--------------------------------- -------- ------- -------- ---------
Systemwide
Sheraton 65 22,931 390 134,279
Westin 17 6,161 121 51,498
Four Points 4 1,025 133 23,588
W 2 353 20 5,786
Luxury Collection - - 40 5,756
St. Regis 2 591 9 2,087
Other 2 315 15 5,688
-------- ------- -------- ---------
Total Systemwide 92 31,376 728 228,682
======== ======= ======== =========
Alisa Rosenberg
Starwood
