Three Months
Ended
March 31,
2004 2003
------ -------
Income (loss) from continuing operations
before special items
$33 $(17)
------ -------
EPS before special items
$0.16 $(0.08)
------ -------
Special Items:
Adjustment to costs associated with construction
remediation (a)
1 -
Loss on asset dispositions and impairments, net(b)
(1) (170)
------ -------
Total special items - pre-tax
- (170)
Income tax benefit for special items(c)
- 66
Favorable settlement of tax matters(d)
- 4
------ -------
Total special items - after-tax
- (100)
------ -------
Income (loss) from continuing operations
$33 $(117)
------ -------
EPS including special items
$0.16 $(0.58)
------ -------
(a) Represents an adjustment to the Company's previously
recorded share of costs for construction remediation efforts at a property
owned by a vacation ownership unconsolidated joint venture.
(b) Loss of $1 million for the three months ended March
31, 2004 reflects the aggregate of various insignificant charges. Loss
for the three months ended March 31, 2003 primarily represents the impairment
charge recorded due to the classification of a portfolio of 18 domestic
non-core hotels as held for sale, 16 of which were subsequently sold in
2003.
(c) Represents taxes on special items at the Company's
incremental tax rate.
(d) Reversal relates to various tax matters that existed
prior to the ITT merger and were successfully settled during 2003.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per Share data)
Three Months Ended
March 31,
%
2004 2003 Variance
------ ------- ---------
Revenues
Owned, leased and consolidated joint venture
hotels
$769 $732 5.1%
Vacation ownership sales and services
128 92 39.1%
Management fees, franchise fees and other
income
90 52 73.1%
Other revenues from managed and franchised
properties(a)
240 210 14.3%
------ ------- ---------
1,227 1,086 13.0%
Costs and Expenses
Owned, leased and consolidated joint venture
hotels
607 586 (3.6%)
Vacation ownership
97 71 (36.6%)
Selling, general, administrative and other
82 50 (64.0%)
Depreciation
102 111 8.1%
Amortization
4 4
-
Other expenses from managed and franchised
properties(a)
240 210 (14.3%)
------ ------- ---------
1,132 1,032 (9.7%)
Operating income
95 54 75.9%
Gain on sale of VOI notes receivable
- 1
n/m
Equity earnings from unconsolidated ventures
4 4
-
Interest expense, net of interest income of
$0 and $0(b)
(64) (77) 16.9%
Loss on asset dispositions and impairments,
net
(1) (170) n/m
------ ------- ---------
Income (loss) from continuing operations
before taxes and minority equity
34 (188) n/m
Income tax benefit (expense)
(2) 70 n/m
Minority equity in net loss
1 1
-
------ ------- ---------
Income (loss) from continuing operations
33 (117) n/m
Discontinued operations:
Loss from operations, net of
taxes of $0
and $0(c)
- (1) n/m
Gain on disposition, net of
taxes of $0
and $1(d)
1 2 (50.0%)
------ ------- ---------
Net income (loss)
$34 $(116) n/m
====== ======= =========
Earnings (Loss) Per Share -- Basic
Continuing operations
$0.16 $(0.58) n/m
Discontinued operations
- -
-
------ ------- ---------
Net income (loss)
$0.16 $(0.58) n/m
====== ======= =========
Earnings (Loss) Per Share -- Diluted
Continuing operations
$0.16 $(0.58) n/m
Discontinued operations
- -
-
------ ------- ---------
Net income (loss)
$0.16 $(0.58) n/m
====== ======= =========
Weighted average number of Shares
205 200
====== =======
Weighted average number of Shares assuming
dilution
211 200
====== =======
(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) Interest expense is net of $0 and $4 million of discontinued
operations allocations for the three
months ended March 31, 2004
and 2003, respectively.
(c) For 2003, the Hotel Principe di Savoia in Milan,
Italy
("Principe") is reported as a discontinued
operation as a result
of the sale of this hotel in June
2003 with no continuing
involvement.
(d) For 2003 and 2004, the gain on disposition relates
to the reversal
of a reserve relating to the 1999
divestiture of the Company's
gaming business that 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 December
31, 31,
2004 2003
---------- --------
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$237 $427
Restricted cash
165 81
Accounts receivable, net of allowance
for
doubtful accounts of $54 and
$53
443 418
Inventories
297 232
Prepaid expenses and other
142 104
----------- --------
Total current assets
1,284 1,262
Investments
432 415
Plant, property and equipment, net
7,025 7,106
Goodwill and intangible assets, net
2,515 2,488
Other assets
669 623
----------- --------
$11,925 $11,894
=========== ========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings and current maturities of
long-term debt (a)
$240 $233
Accounts payable
163 171
Accrued expenses
739 836
Accrued salaries, wages and benefits
220 228
Accrued taxes and other
187 176
----------- --------
Total current liabilities
1,549 1,644
Long-term debt (a)
4,362 4,393
Deferred income taxes
880 898
Other liabilities
616 574
----------- --------
7,407 7,509
----------- --------
Minority interest
28 28
----------- --------
Exchangeable units and Class B preferred shares,
at redemption value of $38.50
- 31
----------- --------
Commitments and contingencies
Stockholders' equity:
Class A exchangeable preferred
shares of the
Trust; $0.01 par value;
authorized
30,000,000 shares; outstanding
600,027 and
480,880 shares at March
31, 2004 and
December 31, 2003, respectively
- -
Corporation common stock; $0.01
par value;
authorized 1,050,000,000
shares; outstanding
206,820,250 and 201,812,126
shares at March
31, 2004 and December
31, 2003, respectively
2 2
Trust Class B shares of beneficial
interest;
$0.01 par value; authorized
1,000,000,000
shares; outstanding 206,820,250
and
201,812,126 shares at
March 31, 2004 and
December 31, 2003, respectively
2 2
Additional paid-in capital
5,102 4,952
Deferred compensation
(23) (9)
Accumulated other comprehensive income
(340) (334)
Accumulated deficit
(253) (287)
----------- --------
Total stockholders' equity
4,490 4,326
----------- --------
$11,925 $11,894
=========== ========
(a) Excludes Starwood's share of unconsolidated joint
venture debt aggregating approximately $416 million and $410 million at
March 31, 2004 and December 31, 2003, respectively.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations - Historical Data
(In millions)
Three Months Ended
March 31,
%
2004 2003 Variance
------ ------ ---------
Reconciliation of Net Income (loss) to EBITDA
and Adjusted EBITDA
Net income (loss)
$34 $(116) n/m
Interest expense(a)
71 85 (16.5%)
Income tax benefit (expense)(b)
2 (69) n/m
Depreciation(c)
110 118 (6.8%)
Amortization (d)
6 6
-
------ ------ ---------
EBITDA
223 24 n/m
Adjustment to costs associated with
construction remediation
(1) - n/m
Loss on asset dispositions and impairments,
net
1 170 n/m
Discontinued operations(e)
(1) (7) 85.7%
------ ------ ---------
Adjusted EBITDA
$222 $187 18.7%
====== ====== =========
(a) Includes $7 million and $4 million of interest expense,
respectively, related to unconsolidated
joint ventures for the
three months ended March 31, 2004
and 2003. Also includes $0 and
$4 million of interest expense allocated
to discontinued
operations for the three months ended
March 31, 2004 and 2003,
respectively.
(b) Includes $0 million and $1 million of tax expense
recorded,
respectively, in discontinued operations
for the three months
ended March 31, 2004 and 2003, respectively.
(c) Includes $8 million and $6 million of Starwood's share
of
depreciation expense of unconsolidated
joint ventures for the
three months ended March 31, 2004
and 2003. Also includes $0 and
$1 million of depreciation expense
included in discontinued
operations for the three months ended
March 31, 2004 and 2003.
(d) Includes $2 million of Starwood's share of amortization
expense of unconsolidated joint ventures for both of the three month periods
ended March 31, 2004 and 2003.
(e) Excludes the interest expense, taxes, and depreciation
balances already added back as noted in (a), (b) and (c) above.
Three Months
Ended
March 31,
2004 2003
------ ------
Cash Flow Data
Net income (loss)
$34 $(116)
Exclude:
Discontinued operations, net
(1) (1)
------ ------
Income (loss) from continuing operations
33 (117)
Increase in restricted cash
(84) (38)
Adjustment to income (loss) from continuing operations
and changes in working capital
113 289
------ ------
Cash from continuing operations
62 134
Cash from discontinued operations
1 7
------ ------
Cash from operating activities
$63 $141
====== ======
Cash used for investing activities
$(180) $(66)
====== ======
Cash used for financing activities
$(73) $(28)
====== ======
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP
to GAAP Reconciliations - Future Performance
(In millions)
Three Months Twelve Months
Ended Ended
June December
30, 31,
2004 2004
----------- -------------
Net income
$76 $265
Interest expense
72 285
Income tax expense
15 46
Depreciation and amortization
117 470
----------- -----------
EBITDA
280 1,066
Loss on asset dispositions, net
-
1
Discontinued operations
- (1)
Costs associated with construction
remediation
- (1)
----------- -----------
Adjusted EBITDA
$280 $1,065
=========== ===========
Twelve Months
Ended
December 31, 2003
Net income
$309
Interest expense
312
Income tax benefit
(73)
Depreciation
438
Amortization
26
EBITDA
1,012
Loss on asset dispositions and impairments, net
183
Discontinued operations
(252)
Restructuring and other special credits, net
(9)
Costs associated with construction remediation
4
Adjusted EBITDA
938
Hotels sold in 2003
(21)
Adjusted EBITDA excluding hotels sold in 2003
$917
STARWOOD HOTELS & RESORTS WORLDWIDE,
INC.
Hotel Results - Same Store (1)
For the Three Months Ended March 31, 2004
UNAUDITED
WORLDWIDE
NORTH AMERICA
---------------- ----------------
2004 2003 Var. 2004
2003 Var.
-------- ------- ----- -------- ------- -----
138 Hotels
95 Hotels
---------------------- ----------------------
OWNED HOTELS
REVPAR ($)
102.73 92.07 11.6% 103.50 94.63
9.4%
ADR ($)
159.06 152.08 4.6% 156.41 152.78
2.4%
OCCUPANCY
(%) 64.6% 60.5% 4.1
66.2% 61.9% 4.3
60
37
---------------------- ----------------------
SHERATON
REVPAR ($)
83.88 73.82 13.6% 85.88 77.83
10.3%
ADR ($)
132.95 127.19 4.5% 132.80 130.66
1.6%
OCCUPANCY
(%) 63.1% 58.0% 5.1
64.7% 59.6% 5.1
35
22
---------------------- ----------------------
WESTIN
REVPAR ($)
114.66 107.52 6.6% 108.85 102.90
5.8%
ADR ($)
164.73 158.77 3.8% 149.53 146.31
2.2%
OCCUPANCY
(%) 69.6% 67.7% 1.9
72.8% 70.3% 2.5
11
5
---------------------- ----------------------
ST. REGIS / LUXURY
COLLECTION
REVPAR ($)
232.91 202.85 14.8% 260.44 232.06 12.2%
ADR ($)
387.76 367.06 5.6% 380.58 372.03
2.3%
OCCUPANCY
(%) 60.1% 55.3% 4.8
68.4% 62.4% 6.0
12
12
---------------------- ----------------------
W
REVPAR ($)
137.01 122.51 11.8% 137.01 122.51 11.8%
ADR ($)
205.52 199.74 2.9% 205.52 199.74
2.9%
OCCUPANCY
(%) 66.7% 61.3% 5.4
66.7% 61.3% 5.4
20
19
---------------------- ----------------------
OTHER
REVPAR ($)
68.16 59.27 15.0% 62.39 57.98
7.6%
ADR ($)
116.35 106.89 8.9% 114.93 112.85
1.8%
OCCUPANCY
(%) 58.6% 55.5% 3.1
54.3% 51.4% 2.9
INTERNATIONAL(2)
----------------
2004 2003 Var.
-------- ------- -----
43 Hotels
OWNED HOTELS
REVPAR ($)
100.51 84.57 18.8%
ADR ($)
167.50 149.84 11.8%
OCCUPANCY
(%)
60.0% 56.4% 3.6
23
SHERATON
REVPAR ($)
79.89 65.83 21.4%
ADR ($)
133.28 119.71 11.3%
OCCUPANCY
(%)
59.9% 55.0% 4.9
13
WESTIN
REVPAR ($)
133.84 123.20 8.6%
ADR ($)
226.59 209.40 8.2%
OCCUPANCY
(%)
59.1% 58.8% 0.3
6
ST. REGIS / LUXURY COLLECTION
REVPAR ($)
176.28 142.48 23.7%
ADR ($)
411.33 351.27 17.1%
OCCUPANCY
(%)
42.9% 40.6% 2.3
0
W
REVPAR ($)
0.00 0.00 0.0%
ADR ($)
0.00 0.00 0.0%
OCCUPANCY
(%)
0.0% 0.0% n/a
1
OTHER
REVPAR ($)
106.54 68.11 56.4%
ADR ($)
122.20 81.79 49.4%
OCCUPANCY
(%)
87.2% 83.3% 3.9
(1) Hotel Results exclude 23 hotels sold or closed in
2003 and 3
hotels without comparable results
(2) See next page for breakdown by division
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotel Results - Same Store (1)
For the Three Months Ended March 31, 2004
UNAUDITED
EUROPE
LATIN AMERICA
-------- ----------------
2004 2003 Var. 2004
2003 Var.
-------- ------- ----- -------- ------- -----
27 Hotels
12 Hotels
---------------------- ----------------------
OWNED HOTELS
REVPAR ($)
121.04 106.45 13.7% 71.11 60.46
17.6%
ADR ($)
223.92 199.05 12.5% 113.79 109.04 4.4%
OCCUPANCY
(%) 54.1% 53.5% 0.6
62.5% 55.4% 7.1
11
9
---------------------- ----------------------
SHERATON
REVPAR ($)
94.42 82.60 14.3% 60.23 49.80
20.9%
ADR ($)
163.64 146.93 11.4% 100.97 95.68
5.5%
OCCUPANCY
(%) 57.7% 56.2% 1.5
59.6% 52.0% 7.6
10
3
---------------------- ----------------------
WESTIN
REVPAR ($)
140.19 128.87 8.8% 118.10 108.75
8.6%
ADR ($)
265.87 238.18 11.6% 157.95 153.48 2.9%
OCCUPANCY
(%) 52.7% 54.1% (1.4)
74.8% 70.9% 3.9
6
0
ST. REGIS / LUXURY
COLLECTION
REVPAR ($)
176.28 142.48 23.7% 0.00
0.00 0.0%
ADR ($)
411.33 351.27 17.1% 0.00
0.00 0.0%
OCCUPANCY
(%) 42.9% 40.6% 2.3
0.0% 0.0% n/a
0
0
OTHER
REVPAR ($)
0.00 0.00 0.0% 0.00
0.00 0.0%
ADR ($)
0.00 0.00 0.0% 0.00
0.00 0.0%
OCCUPANCY
(%) 0.0% 0.0%
n/a 0.0% 0.0% n/a
ASIA PACIFIC
----------------
2004 2003 Var.
-------- ------- -----
4 Hotels
OWNED HOTELS
REVPAR ($)
107.56 71.29 50.9%
ADR ($)
142.64 101.33 40.8%
OCCUPANCY
(%)
75.4% 70.4% 5.0
3
SHERATON
REVPAR ($)
108.19 73.28 47.6%
ADR ($)
158.67 117.69 34.8%
OCCUPANCY
(%)
68.2% 62.3% 5.9
0
WESTIN
REVPAR ($)
0.00 0.00 0.0%
ADR ($)
0.00 0.00 0.0%
OCCUPANCY
(%)
0.0% 0.0% n/a
0
ST. REGIS / LUXURY COLLECTION
REVPAR ($)
0.00 0.00 0.0%
ADR ($)
0.00 0.00 0.0%
OCCUPANCY
(%)
0.0% 0.0% n/a
1
OTHER
REVPAR ($)
106.54 68.11 56.4%
ADR ($)
122.20 81.79 49.4%
OCCUPANCY
(%)
87.2% 83.3% 3.9
(1) Hotel Results exclude 23 hotels sold or closed in
2003 and 3
hotels without comparable results
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Debt Portfolio Summary
As of March 31, 2004
UNAUDITED
Avg
Interest Balance % of
Interest Maturity
Debt
Terms (in millions) Portfolio Rate
(in years)
------------- -------- ---------- ----------
---------- ---------
Floating Rate
Debt:
Senior credit
facility
Revolving
credit
facility CBA + 162.5
$14 -
3.82% 2.5
Term loan LIBOR + 162.5
300 7%
2.72% 1.8
---------- ---------- ---------- ---------
314 7%
2.76% 1.8
Mortgages and
other
Various 244
5% 5.22% 1.5
Interest rate
swaps
Various 300
7% 5.34%
---------- ---------- ----------
Total
Floating
858 19%
4.36% 1.6
Fixed Rate
Debt:
Sheraton
Holding
public debt
(1)
1,068 23%
6.00% 8.8
Senior notes
(2)
1,532 33%
6.70% 5.8
Convertible
debt -
Series B
329 7%
3.25% 2.5 (3)
Convertible
debt - 2003
360 8%
3.50% 2.1
Mortgages and
other
755 17%
7.24% 8.1
Interest rate
swaps
(300) -7%
7.88%
---------- ---------- ----------
Total Fixed
3,744 81%
5.82% 6.4
---------- ---------- ----------
Total Debt
$4,602 100%
5.55% 5.8
========== ========== ==========
Maturities
(less than)1 year $240
2-3 years 1,510
4-5 years 1,223
(greater than)5 years 1,629
$4,602
(1) Balance consists of outstanding public debt of $1.047
billion and a $21 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 $1.495
billion and
a $45 million fair value adjustment
related to the unamortized
gain on fixed to floating interest
rate swaps terminated in
September 2002 and March 2004 and
an ($8) million fair value
adjustment related to current fixed
to floating interest rate
swaps.
(3) Average maturity reflects the maturity date of the
revolving
credit facility which would be used
to refinance the amount put to
the Company.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotels Without
Comparable Results Other Selected Items
As of March 31, 2004
UNAUDITED ($ millions)
Properties without comparable results in 2004:
Property
Location
---------------------------------- ---------------------------------
Sheraton Kauai Resort (acquired in Koloa, HI
2004)
Hotel Des Bains (seasonal)
Venice, Italy
Westin Excelsior (seasonal)
Venice, Italy
Properties sold or closed in 2003:
Property
Location
---------------------------------- ---------------------------------
Arlington Marriott
Arlington, VA
Baltimore Marriott
Baltimore, MD
Cervo Hotel & Conference Center
Costa Smeralda, Italy
Hilton Novi
Novi, MI
Hilton Sonoma County
Santa Rosa, CA
Hotel Cala di Volpe
Costa Smeralda, Italy
Hotel Pitrizza
Costa Smeralda, Italy
Hotel Principe di Savoia
Milan, Italy
Hotel Romazzino
Costa Smeralda, Italy
Lenox Inn
Atlanta, GA
North Charleston Sheraton
Charleston, SC
Residence Inn Tyson's Corner
Vienna, VA
Sheraton Buckhead
Atlanta, GA
Sheraton Chicago Northwest
Arlington Heights, IL
Sheraton College Park
Beltsville, MD
Sheraton Danbury
Danbury, CT
Sheraton Ferncroft
Danvers, MA
Sheraton Gainesville
Gainesville, FL
Sheraton Mofarrej
Sao Paulo, Brazil
Sheraton Norfolk
Norfolk, VA
Wayfarer Inn
Bedford, NH
Westin Southfield
Southfield, MI
Westin Stamford
Stamford, CT
Selected Balance Sheet and Cash Flow Items:
Cash and cash equivalents (including restricted cash
of $165 million)
$402
Debt level
$4,602
Revenues and Expenses Associated with Assets
Sold in 2003 (1):
Q1 Q2 Q3
Q4 Full Year
2003
Revenues
$42 $61 $7
$ - $110
Expenses
$38 $45 $6
$ - $89
(1) Results consist of 20 hotels (excludes the Hotel Principe
di
Savoia reported in discontinued operations)
that were sold in
2003. These amounts are included in
the revenues and expenses from
owned, leased and consolidated joint
venture hotels in 2003.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Capital Expenditures
For the Three Months Ended March 31, 2004
UNAUDITED ($ millions)
Capital Expenditures:
Owned, Leased and Consolidated Joint Venture Hotels
$50
Corporate/IT
4
Subtotal
54
Vacation Ownership Capital Expenditures:
Capital expenditures (includes land acquisition)
4
Inventory
15
-----
Subtotal
19
Development Capital (1)
132
Total Capital Expenditures
$205
(1) Includes Sheraton Kauai Resort acquisition of $40
million, Bliss
World LLC acquisition of approximately
$25 million, WHLP
investment of $24 million, St. Regis
Anguilla investment of $20
million, and St. Regis San Francisco
additions of $10 million.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Summary of Portfolio by Ownership Brand
As of March 31, 2004
UNAUDITED
North America Europe,
Africa &
Middle East
Owned
Hotels Rooms Hotels Rooms
-----------------------------
Sheraton
38 16,706 12 3,471
Westin
22 10,352 11 2,385
Four Points
6 1,138 -
-
W
12 4,369 -
-
Luxury Collection
1 654 5
638
St. Regis
4 997 1
161
Other
13 3,061 -
-
Total Owned
96 37,277 29 6,655
Managed & UJV
Sheraton
43 20,411 77 22,321
Westin
38 21,416 6 1,464
Four Points
14 2,853 6
903
W
4 750 -
-
Luxury Collection
6 1,508 5 621
St. Regis
2 697 1
95
Other
1 132 1
405
Total Managed & UJV
108 47,767 96 25,809
Franchised
Sheraton
114 36,419 30 7,278
Westin
19 7,502 3 1,127
Four Points
88 15,912 10 1,376
Luxury Collection
2 351 10 1,084
Total Franchised
223 60,184 53 10,865
Systemwide
Sheraton
195 73,536 119 33,070
Westin
79 39,270 20 4,976
Four Points
108 19,903 16 2,279
W
16 5,119 -
-
Luxury Collection
9 2,513 20 2,343
St. Regis
6 1,694 2 256
Other
14 3,193 1
405
Total Systemwide
427 145,228 178 43,329
Latin America Asia Pacific Total
Owned
Hotels Rooms Hotels Rooms Hotels Rooms
---------------------------------------------
Sheraton
7 3,573 3 1,028
60 24,778
Westin
3 901 -
- 36 13,638
Four Points
- -
1 630 7 1,768
W
- -
- - 12
4,369
Luxury Collection
2 320 -
- 8 1,612
St. Regis
- -
- - 5
1,158
Other
- -
- - 13
3,061
Total Owned
12 4,794 4 1,658
141 50,384
Managed & UJV
Sheraton
9 1,811 48 17,338
177 61,881
Westin
- - 13
5,121 57 28,001
Four Points
1 128 2
207 23 4,091
W
1 237 1
100 6 1,087
Luxury Collection
6 143 -
- 17 2,272
St. Regis
- -
2 591 5 1,383
Other
- -
2 315 4
852
Total Managed & UJV
17 2,319 68 23,672
289 99,567
Franchised
Sheraton
3 1,087 16 5,453
163 50,237
Westin
3 598 4
1,018 29 10,245
Four Points
8 1,244 1
126 107 18,658
Luxury Collection
- -
- - 12
1,435
Total Franchised
14 2,929 21 6,597
311 80,575
Systemwide
Sheraton
19 6,471 67 23,819
400 136,896
Westin
6 1,499 17 6,139
122 51,884
Four Points
9 1,372 4
963 137 24,517
W
1 237 1
100 18 5,456
Luxury Collection
8 463 -
- 37 5,319
St. Regis
- -
2 591 10 2,541
Other
- -
2 315 17 3,913
Total Systemwide
43 10,042 93 31,927
741 230,526
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
2003 CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per Share data)
(Unaudited)
Three Months Ended
March June Sept. Dec. Year
31 30 30 31
Revenues
Owned, leased and consolidated
joint venture hotels
$732 $821 $735 $797 $3,085
Vacation ownership sales and
services (a)
92 106 129 112 439
Management fees, franchise fees
and other income
52 64 68 71
255
Other revenues from managed
and franchised properties
210 220 204 217 851
1,086 1,211 1,136 1,197 4,630
Costs and Expenses
Owned, leased and consolidated
joint venture hotels
586 618 577 611 2,392
Vacation ownership (a)
71 83 98 88
340
Selling, general, administrative
and other
50 64 45 41
200
Restructuring and other special
charges (credits), net
- - (1) (8)
(9)
Depreciation
111 98 100 101
410
Amortization
4 6 4
5 19
Other expenses from managed and
franchised properties
210 220 204 217 851
1,032 1,089 1,027 1,055 4,203
Operating income
54 122 109 142 427
Gain on sale of VOI notes
receivable (b)
1 4 1
9 15
Equity earnings from
unconsolidated ventures, net (c)
4 4 2
2 12
Interest expense, net of interest
income
(77) (73) (69) (63) (282)
Loss on asset dispositions and
impairments, net
(170) (6) (3) (4) (183)
Income (loss) from continuing
operations before taxes and
minority equity
(188) 51 40 86
(11)
Income tax benefit (expense)
70 36 7
- 113
Minority equity in net loss
(income)
1 - -
2 3
Income (loss) from continuing
operations
(117) 87 47 88
105
Discontinued operations:
Loss from operations, net of tax
(1) - - (1)
(2)
Gain on dispositions, net of tax
2 203 1 -
206
Net income
$(116) $290 $48 $87 $309
Earnings Per Share -- Basic
Continuing operations
$(0.58)$0.43 $0.23 $0.43 $0.52
Discontinued
operations
- 1.00 0.01 - 1.01
Net income
$(0.58)$1.43 $0.24 $0.43 $1.53
Earnings Per Share -- Diluted
Continuing operations
$(0.58)$0.42 $0.23 $0.42 $0.51
Discontinued operations
- 0.99 - -
0.99
Net income
$(0.58)$1.41 $0.23 $0.42 $1.50
Weighted average number of Shares
200 202 203 202 203
Weighted average number of Shares
assuming dilution
200 205 208 209 207
The following classifications have been made to the above
consolidated
statements of income to conform to the current year presentation:
(a) Vacation ownership revenues were previously a component
of other hotel and leisure. Vacation ownership expenses were previously
a component of selling, general, administrative and other expenses.
These revenues and expenses are now separately disclosed.
(b) Gain on sale of VOI notes receivable was previously
a component of vacation ownership revenues recorded in other hotel and
leisure. These gains are now separately disclosed.
(c) Equity earnings from unconsolidated ventures, net
were previously a component of other hotel and leisure. These earnings
are now separately disclosed.
The Company has included the above supplemental information
concerning special items to assist investors in analyzing Starwood's financial
position and results of operations. The Company has chosen to provide this
information to investors to enable them to perform meaningful comparisons
of past, present and future operating results and as a means to emphasize
the results of core on-going operations.
Definitions:
All references to EPS, unless otherwise noted, reflect
earnings per diluted share from continuing operations. EBITDA represents
net income before interest expense, taxes, depreciation and amortization.
The Company believes that EBITDA is a useful measure of the Company's operating
performance due to the significance of the Company's long-lived assets
and level of indebtedness. EBITDA is a commonly used measure of performance
in its industry which, when considered with GAAP measures, the Company
believes gives a more complete understanding of the Company's ability to
service debt, fund capital expenditures, pay income taxes and pay cash
distributions. It also facilitates comparisons between the Company and
its competitors. The Company's management has historically adjusted EBITDA
("Adjusted EBITDA") when evaluating operating performance for the total
Company as well as for individual properties or groups of properties because
the Company believes that the inclusion or exclusion of certain recurring
and non-recurring items, such as the special items described on page 6
of this release, is necessary to provide the most accurate measure of core
operating results and as a means to evaluate comparative results. The Company's
management also uses Adjusted EBITDA as a measure in determining the value
of acquisitions and dispositions and it is used in the annual budget process.
Due to recent guidance from the Securities and Exchange Commission, the
Company now does not reflect such items when calculating EBITDA, however
the Company continues to adjust for these special items and refers to this
measure as Adjusted EBITDA. The Company has historically reported this
measure to its investors and believes that the continued inclusion of Adjusted
EBITDA provides consistency in its financial reporting and enables investors
to perform more meaningful comparisons of past, present and future operating
results and provides a means to evaluate the results of its core on-going
operations. EBITDA and Adjusted EBITDA are not intended to represent cash
flow from operations as defined by GAAP and such metrics should not be
considered as an alternative to net income, cash flow from operations or
any other performance measure prescribed by GAAP. The Company's calculation
of EBITDA and Adjusted EBITDA may be different from the calculations used
by other companies and, therefore, comparability may be limited.
All references to Same-Store Owned Hotels reflect the
Company's owned, leased and consolidated joint venture hotels, excluding
hotels sold to date and under significant renovation or for which comparable
results are not available. REVPAR is defined as revenue per available room.
ADR is defined as average daily rate.
All references to contract sales reflect vacation ownership
sales before revenue adjustments for percentage of completion accounting
methodology. |