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First quarter 2004 Highlights:
Press Release: Starwood Hotels & Resorts Worldwide, Inc.
April 23, 2004
WHITE PLAINS, NY -- Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) ("Starwood" or the "Company")
yesterday reported EPS from continuing operations for the first quarter of 2004 of $0.16 compared to a loss of
$0.58 in the first quarter of 2003. Excluding special items, EPS from continuing operations was $0.16 for the first
quarter of 2004 compared to a loss of $0.08 in the first quarter of 2003. Income from continuing operations was
$33 million in the first quarter of 2004 compared to a loss of $117 million in 2003. Excluding special items, income
from continuing operations was $33 million for the first quarter of 2004 compared to a loss of $17 million in 2003.
Net income (including discontinued operations) was $34 million and EPS was $0.16 in the first quarter of 2004 compared
to net loss of $116 million and loss per share of $0.58 in the first quarter of 2003. Selling, general, administrative
and other in the first quarter of 2004 as reflected in our new income statement format includes cost of sales from
our new Bliss spa and beauty products business (the revenue from this business is included in management fees,
franchise fees and other income), legal settlements, costs associated with our World Conference in January 2004
(the Company did not have a conference in 2003) and an accrual, not payment, for Mr. Sternlicht's contractual separation
payment. First quarter results reflect a 6.3% tax rate. The tax rate for the first quarter of 2004 includes a $3
million net benefit primarily related to the favorable settlement of certain international tax matters.
Barry S. Sternlicht, Chairman and CEO said, "This quarter continues the momentum we saw building in our company
the past six months especially now as the world returns to an accelerated travel pattern."
"It is gratifying to see the strategies and investments we have made in the recession drive our performance
now. Powered by our unique global urban and resort footprint, our RevPar rebound exceeded our own "top-of-the-industry"
estimates. Our results were further driven by strong growth in our franchise and management fees, by outstanding
results at Starwood Vacation Ownership, and by our brands' market share gains. Our major brands, led by W, Westin
and Sheraton, are gaining material market share driven by product and technology innovations, careful property
renovations, and by the passion of our associates."
"I am pleased to once again be able to raise our EBITDA targets for 2004. Reflecting this expectation of a
sustained recovery, 81% of our debt is now fixed rate. Our balance sheet is a major corporate asset."
"Looking forward, we have a robust pipeline of new products to further bolster our brand strength. Sheraton
begins a new ad campaign on May 1st. Six Sigma will drive productivity and e-purchasing will continue to drive
down our cost of goods sold. I am very pleased with our expanding and global development pipeline. Sheraton is
expanding rapidly in Asia, Westin in the domestic and suburban markets, W internationally and into the resort markets,
and St. Regis into the residential and resort arena. W will soon announce its first resorts in Maui, Hawaii and
the Indian Ocean and its expansion into Europe and Asia. W has more than a dozen significant projects in various
stages of development."
"With the economy stabilizing and our balance sheet strength, we have refocused our efforts on mining the
extraordinary value of our asset base. We intend to take advantage of the property sales markets and sell additional
noncore assets as the year progresses. In addition, we will embark on a series of important real estate value enhancing
projects. These include the conversion of a portion of our flagship St. Regis New York into residential condominiums
and the demolition of the low rise south building at the Sheraton Bal Harbour in Miami, Florida for the construction
and sale (in joint venture) of a St. Regis Condo/Hotel and Residences on the four acre site. We are also planning
a joint venture to build a W Hotel & Residences on our nine owned acres in the Buckhead area of Atlanta. Other
major projects may include the demolition of a low rise building at the Sheraton Toronto to construct a W Condo/Hotel,
a similar project in Portland, Oregon on owned land, maximization of our interest in land at the Sheraton Steamboat
Springs and the aggressive repositioning of the Sheraton Hyannis and Sheraton Key West. We anticipate these projects
being done through joint ventures with our partners providing the majority of the capital. We will also reinvest
capital for additional interval ownership projects on our oceanfront 20 acres on Princeville, Kauai, Hawaii and
in our recently acquired Sheraton in Poipu, Kauai, as well as the expected conversion of a tower at the Sheraton
Cancun, a fractional product on our substantial excess land at the Phoenician as well as the anticipated expansion
of timeshare operations into Europe."
Concluding, Mr. Sternlicht said, "With internal growth intact and our diverse external engines, this is an
exciting time for Starwood and our shareholders."
First Quarter 2004 Operating Results:
Cash flow from operations was $63 million compared to $141 million in 2003. Total Company Adjusted EBITDA was $222
million compared to $187 million in 2003. Total management and franchise fees were $66 million, up $16 million,
or 32.0%, from last year and vacation ownership revenue, which exclude gains on sales of notes receivable, was
up $36 million when compared to 2003.
REVPAR for Same-Store Owned Hotels worldwide and in North America increased 11.6% and 9.4%, respectively, when
compared to 2003. Revenue from transient travel was up 14.9% in North America when compared to 2003. For the sixth
quarter in a row, total Company market share in North America increased for the Company's owned and managed hotels
as well as system-wide (owned, managed and franchised) hotels. REVPAR at Same-Store Owned Hotels in North America
increased 12.2% at St. Regis/Luxury Collection, 11.8% at W, 10.3% at Sheraton, and 5.8% at Westin. REVPAR growth
was particularly strong at the Company's owned hotels in New York, San Francisco, Houston, Washington D.C., Maui
and Philadelphia. REVPAR was weaker at owned hotels in San Diego, Chicago and New Orleans. Internationally, Same-Store
Owned Hotel REVPAR increased 18.8%, with Europe up 13.7%, Asia Pacific up 50.9%, and Latin America up 17.6%. Excluding
the favorable effects of foreign exchange, REVPAR increased 3.9% internationally.
System-wide branded REVPAR for Same-Store Hotels in North America increased 8.7%: W Hotels +11.9%, Westin +10.8%,
St. Regis/Luxury Collection +10.3%, Sheraton +7.5%, and Four Points by Sheraton +3.7%.
Starwood Vacation Ownership:
Revenues from the vacation ownership business increased 39.1% to $128 million in the first quarter of 2004 when
compared to 2003 as contract sales were up 64.3% reflecting strong demand at our resorts in Maui, Scottsdale, Mission
Hills and Orlando. The average price per timeshare unit sold increased approximately 14.8% to $22,756, and the
number of contracts sold increased approximately 43.1% in the first quarter of 2004 when compared to 2003. During
the first quarters of 2004 and 2003, the Company did not have any sales of vacation ownership receivables.
Development:
During the first quarter, the Company signed 10 hotel management and franchise contracts (representing approximately
2,000 rooms), including the Sheraton Shenzhen in Shenzhen, China (320 rooms), and the Westin Camporeal Golf &
Spa Resort in Turcifal, Portugal (150 rooms), and opened eight new hotels and resorts including: the Sheraton Tunis
Hotel (Tunis, Tunisia, 271 rooms), and the Sheraton Hanoi (Hanoi, Vietnam, 156 rooms). The Company expects to open
18 new full service hotels and resorts (approximately 6,000 rooms) around the world in 2004. The Company had approximately
56 hotels and approximately 15,000 rooms in its active global development pipeline at March 31, 2004 with roughly
one half of that number in international locations.
Capital:
Gross capital spending during the quarter included approximately $50 million in hotel assets including $7 million
for the renovation of the Company's flagship Sheraton Hotel and Towers in New York and $5 million for the continued
renovation of the Phoenician in Phoenix, Arizona; $19 million in VOI capital assets (primarily inventory build),
including VOI construction at Westin Ka'anapali Ocean Resort Villas in Maui, Hawaii. Additionally during the quarter,
development capital of $132 million included the acquisition of the 413-room Sheraton Kauai Resort for approximately
$40 million, the acquisition of Bliss World, LLC for approximately $25 million, a $20 million investment in the
St. Regis Anguilla, an approximate $24 million investment for approximately 25% of the limited partnership interests
in the Westin Hotels Limited Partnership (which owns the Westin Michigan Avenue in Chicago, IL) and the ongoing
development of the St. Regis Museum Tower in San Francisco (269 rooms and 102 condominium units). To date, the
Company has invested $155 million in the St. Regis Museum Tower Project, a mixed-use project, which is expected
to open in mid-2005. The Company expects to realize gross proceeds of approximately $200 million from the sale
of the project's condominiums. The Company expects to begin taking reservations for these condominiums this quarter.
Dividend:
On January 21, 2004 the Company paid its annual dividend of $0.84 per share to shareholders of record on December
31, 2003.
Balance Sheet:
At March 31, 2004, the Company had total debt of $4.602 billion and cash and cash equivalents (including restricted
cash) of $402 million, or net debt of $4.200 billion, compared to net debt of $4.118 billion at the end of the
fourth quarter of 2003. In addition, the Company has an approximate $200 million debt investment in Le Meridien
hotels.
In order to increase the Company's fixed to floating debt ratio, during the quarter, the Company terminated approximately
$1 billion of fixed to floating interest rate swaps and entered into $300 million of new fixed to floating interest
rate swaps. The Company received $33 million from the termination of the $1 billion of interest rate swaps. After
giving effect to these new swaps, at March 31, 2004, debt was approximately 81% fixed rate and 19% floating rate
and its weighted average maturity was 5.8 years with a weighted average interest rate of 5.55%. The Company had
cash (including restricted cash) and availability under domestic and international revolving credit facilities
of approximately $1.3 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 second quarter of 2004, if REVPAR at Same-Store Owned Hotels in North America is up 11% - 12% versus the
same period a year ago:
For the full year 2004, if REVPAR at Same-Store Owned Hotels in North America increases approximately 8% - 9% versus the full year 2003:
Special Items:
The Company had two special items in the first quarter of 2004 which, when considered together, had no impact on
the Company's results. In the first quarter of 2003, the Company recorded $100 million of net charges (after-tax)
for special items.
The following represents a reconciliation of income (loss) from continuing operations before special items to income
(loss) from continuing operations after special items (in millions, except per share data):
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.
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.
Starwood will be conducting a conference call to discuss the first quarter financial results at 12:00 noon (EDT)
today. The conference call will be available through simultaneous webcast in the Investor Relations/Press Releases
section of the Company's website at www.starwood.com. A replay of the conference call will also be available from
3:00 p.m. (EDT) today through 12:00 midnight (EDT) Thursday, April 29, on both the Company's website and via telephone
replay at (719) 457-0820 (access code 685746).
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.
Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with
more than 740 properties in more than 80 countries and 110,000 employees at its owned and managed properties. With
internationally renowned brands, Starwood is a fully integrated owner, operator and franchisor of hotels and resorts
including: St. Regis®, The Luxury Collection®, Sheraton®, Westin®, Four Points® by Sheraton,
W® brands, 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 www.starwood.com.
(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 a recovery from the current global economic downturn, 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 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 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.
-------------------------------------------------------------
Contact:
Starwood Hotels & Resorts Worldwide, Inc.
Allison Reid, 914-640-8514
Source: Starwood Hotels & Resorts Worldwide, Inc.