Worldwide System-wide REVPAR for Same-Store Hotels increased 11.6%
Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) reported third quarter 2011 financial results.
Third Quarter 2011 Highlights
Third Quarter 2011 Earnings Summary
Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported EPS from continuing operations for the third quarter of 2011 of $0.85 compared to a loss of $0.03 per share in the third quarter of 2010. Excluding special items, EPS from continuing operations was $0.60 for the third quarter of 2011 compared to $0.25 in the third quarter of 2010. These results for the third quarter of 2011 benefitted from an overall tax benefit primarily as a result of the favorable settlement of an IRS audit. This favorable IRS settlement reduced income tax expense by approximately $35 million in the quarter and contributed approximately $0.18 to EPS. As a result of the favorable IRS settlement, the effective income tax rate in the third quarter of 2011, excluding special items, was a benefit of 4.8%, compared to an expense of 23.0% in the third quarter of 2010. Special items in the third quarter of 2011 totaled approximately $47 million (after-tax) primarily related to a gain on an asset exchange transaction. Special items in the third quarter of 2010, which totaled a $52 million charge (after-tax), primarily related to a loss on the sale of one hotel.
Income from continuing operations was $165 million in the third quarter of 2011 compared to a loss of $5 million in the third quarter of 2010. Excluding special items, income from continuing operations was $118 million in the third quarter of 2011 compared to $47 million in the third quarter of 2010.
Net income was $163 million and $0.84 per share in the third quarter of 2011 compared to a loss of $6 million and $0.03 per share in the third quarter of 2010.
Frits van Paasschen, CEO said, “Our brands showed strong top-line results around the world, driving managed and franchised fees up 17% in the 3rd quarter. Our Company-operated hotels translated higher REVPAR into margin increases of 140 basis points. We are also pleased with our continued footprint growth. Over the past four years, we have opened almost 320 new hotels, bringing our total to 1,071. We expect to continue growing faster than the market, both in terms of REVPAR and footprint, thanks to our brand momentum and exposure to rapidly growing markets."
“It is still too early to have a clear view into 2012. There are, to be sure, many clouds over the global economy. But three facts give us cautious confidence. First, in developed markets, occupancies are now at 2007 levels and at a point where rates historically have always risen. And yet, few new hotels are being built. Second, many emerging markets are continuing to see strong growth. Even if economic activity were to cool down, we see unmet demand for hotels. Third, our efforts to gain share have enabled our brands to outgrow the marketplace for more than eight quarters in a row.”
“In an uncertain world, investors should also note that our balance sheet is in great shape, with net debt below $1.7 billion. In the coming weeks, our St. Regis Bal Harbour project will start generating cash as we begin closing on previously sold residential units. We expect more cash in 2012 as we complete this project."
Nine Months Ended September 30, 2011 Earnings Summary
Income from continuing operations was $344 million in the nine months ended September 30, 2011 compared to $104 million in the same period in 2010. Excluding special items, income from continuing operations was $273 million in the nine months ended September 30, 2011 compared to $138 million in the same period in 2010. These results for the nine months ended September 30, 2011 benefitted by approximately $35 million from a significantly lower effective income tax rate as a result of the favorable settlement of an IRS audit.
Net income was $322 million and $1.66 per share in the nine months ended September 30, 2011 compared to $138 million and $0.73 per share in the same period in 2010.
Adjusted EBITDA was $711 million in the nine months ended September 30, 2011 compared to $610 million in the same period in 2010, an increase of approximately 17%.
Third Quarter 2011 Operating Results
Management and Franchise Revenues
Worldwide System-wide REVPAR for Same-Store Hotels increased 11.6% (7.4% in constant dollars) compared to the third quarter of 2010. International System-wide REVPAR for Same-Store Hotels increased 15.2% (6.8% in constant dollars).
Worldwide System-wide REVPAR for Same-Store changes by region:
| REVPAR | ||
| Region | Reported | Constant dollars |
| North America | 8.8% | 7.8% |
| Europe | 20.0% | 7.1% |
| Asia Pacific | 15.5% | 7.3% |
| Africa and the Middle East | (1.9)% | (2.4)% |
| Latin America | 19.3% | 19.3% |
Increases in REVPAR for Worldwide System-wide Same-Store hotels by brand:
| REVPAR | ||
| Brand | Reported | Constant dollars |
| St. Regis/Luxury Collection | 13.9% | 6.9% |
| W Hotels | 12.1% | 10.6% |
| Westin | 11.4% | 7.5% |
| Sheraton | 10.6% | 7.3% |
| Le Méridien | 13.1% | 5.2% |
| Four Points by Sheraton | 11.3% | 6.8% |
| Aloft | 14.4% | 14.1% |
Excluding North Africa and Japan, REVPAR increases in constant dollars were 8.4% for Sheraton and 6.4% for Le Méridien.
Worldwide Same-Store company-operated gross operating profit margins increased approximately 140 basis points compared to 2010. International gross operating profit margins for Same-Store company-operated properties increased 60 basis points, negatively impacted by political unrest in the Middle East and North Africa. North American Same-Store company-operated gross operating profit margins increased approximately 200 basis points, driven by REVPAR increases and cost controls.
Management fees, franchise fees and other income were $202 million, up $29 million, or 16.8% from the third quarter of 2010. Management fees increased 21.3% to $114 million and franchise fees increased 11.6% to $48 million. Management fees benefited by approximately 300 basis points due to the conversion of 19 European hotels from franchise contracts to management contracts during the quarter. Excluding North Africa and Japan, management fees increased 25.8%.
During the third quarter of 2011, the Company signed 24 hotel management and franchise contracts, representing approximately 6,300 rooms, of which 15 are new builds and 9 are conversions from other brands. At September 30, 2011, the Company had over 350 hotels in the active pipeline representing almost 90,000 rooms.
During the third quarter of 2011, 19 new hotels and resorts (representing approximately 4,900 rooms) entered the system, including the Sheraton Chongqing (China, 401 rooms), Aloft Coimbatore (India, 170 rooms), Westin Guadalajara (Mexico, 221 rooms), Sheraton Baku (Azerbaijan, 207 rooms) and Sheraton Stamford (Connecticut, 379 rooms). Six properties (representing approximately 1,800 rooms) were removed from the system during the quarter.
Owned, Leased and Consolidated Joint Venture Hotels
Worldwide REVPAR for Starwood branded Same-Store Owned Hotels increased 16.2% (9.2% in constant dollars) in the third quarter of 2011 when compared to 2010. REVPAR at Starwood branded Same-Store Owned Hotels in North America increased 8.1%. Internationally, Starwood branded Same-Store Owned Hotel REVPAR increased 25.4% (13.3% in constant dollars).
Revenues at Starwood branded Same-Store Owned Hotels in North America increased 7.1% while costs and expenses increased 5.1% when compared to 2010. Margins at these hotels increased approximately 160 basis points.
Revenues at Starwood branded Same-Store Owned Hotels Worldwide increased 14.6% (7.6% in constant dollars) while costs and expenses increased 10.7% (4.5% in constant dollars) when compared to 2010. Margins at these hotels increased approximately 265 basis points.
Revenues at owned, leased and consolidated joint venture hotels were $441 million, compared to $427 million in 2010. Expenses at owned, leased and consolidated joint venture hotels were $361 million compared to $352 million in 2010. Third quarter results were impacted by six renovations and four asset sales.
Vacation Ownership
Total vacation ownership revenues increased 7.0% to $138 million compared to 2010. Originated contract sales of vacation ownership intervals increased 3.8% primarily due to increased tour flow from new buyers and improved sales performance from existing owner channels. The number of contracts signed increased 8.2% when compared to 2010 and the average price per vacation ownership unit sold decreased 2.7% to approximately $14,000, driven by inventory mix.
Selling, General, Administrative and Other
Selling, general, administrative and other expenses decreased 2.2% to $88 million compared to $90 million in 2010. Selling, general, administrative and other expenses declined relative to 2010 due to lower accruals for incentive compensation and lower legal expenses.
Capital
Gross capital spending during the quarter included approximately $79 million of maintenance capital and $77 million of development capital. Net investment spending on vacation ownership interest (“VOI”) and residential inventory was $30 million, primarily related to the St. Regis Bal Harbour project.
Asset Exchange Transaction
On September 30, 2011, the Company executed a transaction with its former partner in a joint venture that owned three luxury hotels in Austria. In connection with the transaction, the Company acquired two of the hotels, Hotel Imperial (Vienna) and Hotel Goldener Hirsch (Salzburg), in exchange for its interest in the third hotel, Hotel Bristol (Vienna), and a cash payment, by the Company, of approximately $27 million. The Company entered into a long-term management contract for the Hotel Bristol. The Company recorded a pretax gain of approximately $48 million and a deferred gain of approximately $30 million in connection with this transaction.
Balance Sheet
At September 30, 2011, the Company had gross debt of $2.797 billion, excluding $388 million of debt associated with securitized vacation ownership notes receivable. Additionally, the Company had cash and cash equivalents of $1.122 billion (including $135 million of restricted cash), and net debt of $1.675 billion, compared to net debt of $1.740 billion as of June 30, 2011. Net debt at September 30, 2011 including debt and restricted cash ($17 million) associated with securitized vacation ownership notes receivables was $2.046 billion.
At September 30, 2011, debt was approximately 77% fixed rate and 23% floating rate and its weighted average maturity was 3.5 years with a weighted average interest rate of 6.79% excluding the securitized debt. The Company had cash (including current restricted cash) and availability under the domestic and international revolving credit facility of approximately $2.625 billion.
During the quarter, the Company received an IRS refund of approximately $40 million.
Outlook
For the Full Year 2011:
For the three months ended December 31, 2011:
For the Full Year 2012:
In Developed markets, the macroeconomic environment remains uncertain with high unemployment and high public/private debt. While there are increasing concerns about slower, “new” normal demand growth, the lodging supply situation is very favorable. In Emerging markets, macroeconomic growth has been strong, driving high secular growth in both lodging demand and supply. We remain of the view that several scenarios could play out.
Special Items
The Company’s special items netted to a benefit of $45 million ($47 million after-tax) in the third quarter of 2011 compared to a charge of $55 million ($52 million after-tax) in the same period of 2010.
The following represents a reconciliation of income from continuing operations before special items to income from continuing operations including special items (in millions, except per share data):
| Three Months Ended | Nine Months Ended | |||||||||||||
| September 30, | September 30, | |||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||
| $ | 118 | $ | 47 | Income from continuing operations before special items | $ | 273 | $ | 138 | ||||||
| $ | 0.60 | $ | 0.25 | EPS before special items (a) | $ | 1.40 | $ | 0.73 | ||||||
| Special Items | ||||||||||||||
| ? | 1 | Restructuring, goodwill impairment, and other special (charges) credits, net (b) | ? | 2 | ||||||||||
| 45 | (56 | ) | Gain (loss) on asset dispositions and impairments, net (c) | 14 | (35 | ) | ||||||||
| 45 | (55 | ) | Total special items – pre-tax | 14 | (33 | ) | ||||||||
| 2 | 3 | Income tax benefit (expense) for special items (d) | 57 | (1 | ) | |||||||||
| 47 | (52 | ) | Total special items – after-tax | 71 | (34 | ) | ||||||||
| $ | 165 | $ | (5 | ) | Income (loss) from continuing operations | $ | 344 | $ | 104 | |||||
| $ | 0.85 | $ | (0.03 | ) | EPS including special items | $ | 1.77 | $ | 0.55 | |||||
(a) Diluted shares for the three months ended September 30, 2010 were 190 million.
(b) During the three and nine months ended September 30, 2010, the Company recorded restructuring credits associated with the reversal of previous restructuring reserves no longer deemed necessary.
(c) During the three months ended September 30, 2011, the net gain primarily relates to the asset exchange transaction described in this press release. During the nine months ended September 30, 2011, the gain from the asset exchange transaction was partially offset by the impairment of a minority investment in a joint venture hotel located in Japan.
During the three months ended September 30, 2010, the net loss primarily reflects a loss on the sale of one hotel. During the nine months ended September 30, 2010, the charges above were partially offset by $14 million from property insurance proceeds related to an owned hotel damaged by a tornado and a $5 million gain that resulted from the step acquisition of a controlling interest in a previously unconsolidated joint venture.
(d) During the three months ended September 30, 2011, the benefit relates primarily to a tax benefit on the asset exchange transaction described above, and the utilization of capital loss carry forwards, partially offset by tax expense as the result of a settlement of an IRS audit. During the nine months ended September 30, 2011, in addition to the activity in the third quarter, the tax benefit primarily relates to the sale of two wholly-owned hotels with high tax bases as a result of a previous transaction.
During the three months ended September 30, 2010, the benefit primarily relates to a tax benefit on the sale of one hotel. During the nine months ended September 30, 2010, the net expense primarily relates to tax expenses at the statutory rate for restructuring credits and losses partially offset by the adjustment of deferred taxes associated with prior year impairment charges due to the change in a foreign tax rate.
| STARWOOD HOTELS & RESORTS WORLDWIDE, INC. | ||||||||||||||||||||||
| UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||||
| (In millions, except per share data) | ||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||
| 2011 | 2010 | %
Variance |
2011 | 2010 | %
Variance |
|||||||||||||||||
| Revenues | ||||||||||||||||||||||
| $ | 441 | $ | 427 | 3.3 | Owned, leased and consolidated joint venture hotels | $ | 1,329 | $ | 1,245 | 6.7 | ||||||||||||
| 140 | 132 | 6.1 | Vacation ownership and residential sales and services | 439 | 402 | 9.2 | ||||||||||||||||
| 202 | 173 | 16.8 | Management fees, franchise fees and other income | 580 | 503 | 15.3 | ||||||||||||||||
| 589 | 523 | 12.6 | Other revenues from managed and franchised properties (a) | 1,745 | 1,581 | 10.4 | ||||||||||||||||
| 1,372 | 1,255 | 9.3 | 4,093 | 3,731 | 9.7 | |||||||||||||||||
| Costs and Expenses | ||||||||||||||||||||||
| 361 | 352 | (2.6 | ) | Owned, leased and consolidated joint venture hotels | 1,103 | 1,028 | (7.3 | ) | ||||||||||||||
| 107 | 98 | (9.2 | ) | Vacation ownership and residential | 330 | 302 | (9.3 | ) | ||||||||||||||
| 88 | 90 | 2.2 | Selling, general, administrative and other | 256 | 258 | 0.8 | ||||||||||||||||
|
? |
(1 |
) |
(100.0 |
) |
Restructuring, goodwill impairment and other special charges (credits), net | ? | (2 | ) | (100.0 | ) | ||||||||||||
| 57 | 64 | 10.9 | Depreciation | 177 | 196 | 9.7 | ||||||||||||||||
| 8 | 7 | (14.3 | ) | Amortization | 23 | 24 | 4.2 | |||||||||||||||
| 589 | 523 | (12.6 | ) | Other expenses from managed and franchised properties (a) | 1,745 | 1,581 | (10.4 | ) | ||||||||||||||
| 1,210 | 1,133 | (6.8 | ) | 3,634 | 3,387 | (7.3 | ) | |||||||||||||||
| 162 | 122 | 32.8 | Operating income | 459 | 344 | 33.4 | ||||||||||||||||
| (5 | ) | (1 | ) | n/m | Equity (losses) earnings and gains and (losses) from unconsolidated ventures, net | 6 | 5 | 20.0 | ||||||||||||||
| (45 | ) | (59 | ) | 23.7 | Interest expense, net of interest income of $1, $0, $2 and $1 | (151 | ) | (180 | ) | 16.1 | ||||||||||||
| 45 | (56 | ) | n/m | Gain (loss) on asset dispositions and impairments, net | 14 | (35 | ) | n/m | ||||||||||||||
| 157 | 6 | n/m | Income from continuing operations before taxes and noncontrolling interests | 328 | 134 | n/m | ||||||||||||||||
| 8 | (11 | ) | n/m | Income tax benefit (expense) | 14 | (32 | ) | n/m | ||||||||||||||
| 165 | (5 | ) | n/m | Income (loss) from continuing operations | 342 | 102 | n/m | |||||||||||||||
| Discontinued Operations: | ( | |||||||||||||||||||||
| ? | (1 | ) | 100.0 | Income (loss) from operations, net of tax | ? | (2 | ) | 100.0 | ||||||||||||||
| (2 | ) | ? | n/m | Gain (loss) on dispositions, net of tax | ( (22 | ) | 36 | n/m | ||||||||||||||
| 163 | (6 | ) | n/m | Net income (loss) | 320 | 136 | n/m | |||||||||||||||
| ? | ? | ? | Net loss (income) attributable to noncontrolling interests | 2 | 2 | ? | ||||||||||||||||
| $ | 163 | $ | (6 | ) | n/m | Net income (loss) attributable to Starwood | $ | 322 | $ | 138 | n/m | |||||||||||
| Earnings (Losses) Per Share – Basic | ||||||||||||||||||||||
| $ | 0.88 | $ | (0.03 | ) | n/m | Continuing operations | $ | 1.83 | $ | 0.57 | n/m | |||||||||||
| (0.01 | ) | ? | n/m | Discontinued operations | (0.12 | ) | 0.19 | n/m | ||||||||||||||
| $ | 0.87 | $ | (0.03 | ) | n/m | Net income (loss) | $ | 1.71 | $ | 0.76 | n/m | |||||||||||
| Earnings (Losses) Per Share – Diluted | ||||||||||||||||||||||
| $ | 0.85 | $ | (0.03 | ) | n/m | Continuing operations | $ | 1.77 | $ | 0.55 | n/m | |||||||||||
| (0.01 | ) | ? | n/m | Discontinued operations | (0.11 | ) | 0.18 | n/m | ||||||||||||||
| $ | 0.84 | $ | (0.03 | ) | n/m | Net income (loss) | $ | 1.66 | $ | 0.73 | n/m | |||||||||||
| Amounts attributable to Starwood’s Common Shareholders | ||||||||||||||||||||||
| $ | 165 | $ | (5 | ) | n/m | Continuing operations | $ | 344 | $ | 104 | n/m | |||||||||||
| (2 | ) | (1 | ) | (100.0 | ) | Discontinued operations | (22 | ) | 34 | n/m | ||||||||||||
| $ | 163 | $ | (6 | ) | n/m | Net income (loss) | $ | 322 | $ | 138 | n/m | |||||||||||
| 190 | 183 | Weighted average number of shares | 189 | 182 | ||||||||||||||||||
| 195 | 183 | Weighted average number of shares assuming dilution | 195 | 189 | ||||||||||||||||||
(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.
n/m = not meaningful
| STARWOOD HOTELS & RESORTS WORLDWIDE, INC. | |||||||
| CONSOLIDATED BALANCE SHEETS | |||||||
| (In millions, except share data) | |||||||
| September 30, | December 31, | ||||||
| 2011 | 2010 | ||||||
| (unaudited) | |||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 987 | $ | 753 | |||
| Restricted cash | 150 | 53 | |||||
| Accounts receivable, net of allowance for doubtful accounts of $40 and $45 | 561 | 513 | |||||
| Inventories | 857 | 802 | |||||
| Securitized vacation ownership notes receivable, net of allowance for doubtful accounts of $9 and $10 |
54 |
59 |
|||||
| Prepaid expenses and other | 179 | 126 | |||||
| Total current assets | 2,788 | 2,306 | |||||
| Investments | 256 | 312 | |||||
| Plant, property and equipment, net | 3,234 | 3,323 | |||||
| Assets held for sale | ? | — | |||||
| Goodwill and intangible assets, net | 2,055 | 2,067 | |||||
| Deferred tax assets | 801 | 979 | |||||
| Other assets (a) | 478 | 381 | |||||
| Securitized vacation ownership notes receivable | 325 | 408 | |||||
| $ | 9,937 | $ | 9,776 | ||||
| Liabilities and Stockholders’ Equity | |||||||
| Current liabilities: | |||||||
| Short-term borrowings and current maturities of long-term debt (b) | $ | 610 | $ | 9 | |||
| Accounts payable | 125 | 138 | |||||
| Current maturities of long-term securitized vacation ownership debt | 105 | 127 | |||||
| Accrued expenses | 1,251 | 1,104 | |||||
| Accrued salaries, wages and benefits | 345 | 410 | |||||
| Accrued taxes and other | 151 | 373 | |||||
| Total current liabilities | 2,587 | 2,161 | |||||
| Long-term debt (b) | 2,187 | 2,848 | |||||
| Long-term securitized vacation ownership debt | 283 | 367 | |||||
| Deferred income taxes | 52 | 28 | |||||
| Other liabilities | 1,950 | 1,886 | |||||
| 7,059 | 7,290 | ||||||
| Commitments and contingencies | |||||||
| Stockholders’ equity: | |||||||
| Common stock; $0.01 par value; authorized 1,000,000,000 shares; outstanding 195,342,872 and 192,970,437 shares at September 30, 2011 and December 31, 2010, respectively | 2 | 2 | |||||
| Additional paid-in capital | 925 | 805 | |||||
| Accumulated other comprehensive loss | (319 | ) | (283 | ) | |||
| Retained earnings | 2,269 | 1,947 | |||||
| Total Starwood stockholders’ equity | 2,877 | 2,471 | |||||
| Noncontrolling interest | 1 | 15 | |||||
| Total equity | 2,878 | 2,486 | |||||
| $ | 9,937 | $ | 9,776 | ||||
(a) Includes restricted cash of $2 million and $10 million at September 30, 2011 and December 31, 2010, respectively.
(b) Excludes Starwood’s share of unconsolidated joint venture debt aggregating approximately $434 million at September 30, 2011 and December 31, 2010.
| STARWOOD HOTELS & RESORTS WORLDWIDE, INC. | ||||||||||||||||||||||
| Non-GAAP to GAAP Reconciliations – Historical Data | ||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||
| % | % | |||||||||||||||||||||
| 2011 | 2010 | Variance | 2011 | 2010 | Variance | |||||||||||||||||
|
|
|
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA | ||||||||||||||||||||
| $ | 163 | $ | (6 | ) | n/m | Net income (loss) | $ | 322 | $ | 138 | n/m | |||||||||||
| 57 | 64 | (10.9 | ) | Interest expense (a) | 170 | 194 | (12.4 | ) | ||||||||||||||
| (7 | ) | 12 | n/m | Income tax (benefit) expense (b) | (11 | ) | (1 | ) | n/m | |||||||||||||
| 65 | 73 | (11.0 | ) | Depreciation (c) | 200 | 222 | (9.9 | ) | ||||||||||||||
| 8 | 7 | 14.3 | Amortization (d) | 26 | 26 | ? | ||||||||||||||||
| 286 | 150 | 90.7 | EBITDA | 707 | 579 | 22.1 | ||||||||||||||||
| (45 | ) | 56 | n/m | (Gain) loss on asset dispositions and impairments, net | (14 | ) | 35 | n/m | ||||||||||||||
| ? | ? | ? | Discontinued operations (gain) loss on dispositions | 18 | (2 | ) | n/m | |||||||||||||||
|
? |
(1 |
) |
100.0 |
Restructuring, goodwill impairment and other special charges (credits), net | ? | (2 | ) | 100.0 | ||||||||||||||
| $ | 241 | $ | 205 | 17.6 | Adjusted EBITDA | $ | 711 | $ | 610 | 16.6 | ||||||||||||
(a) Includes $11 million and $5 million of Starwood’s share of interest expense of unconsolidated joint ventures for the three months ended September 30, 2011 and 2010, respectively, and $17 million and $13 million for the nine months ended September 30, 2011 and 2010, respectively.
(b) Includes $2 million and $0 million of tax expense (benefit) recorded in discontinued operations net gain (loss) on dispositions for the three months ended September 30, 2011 and 2010, respectively, and $4 million and $(34) million for the nine months ended September 30, 2011 and 2010, respectively. Also includes $(1) million and $1 million of tax (benefit) expense recorded in discontinued operations for the three months ended September 30, 2011 and 2010, respectively, and $(1) million and $1 million for the nine months ended September 30, 2011 and 2010, respectively.
(c) Includes $8 million and $9 million of Starwood’s share of depreciation expense of unconsolidated joint ventures for the three months ended September 30, 2011 and 2010, respectively, and $23 million and $26 million for the nine months ended September 30, 2011 and 2010, respectively.
(d) Includes $0 million of Starwood’s share of amortization expense of unconsolidated joint ventures for the three months ended September 30, 2011 and 2010, and $3 million and $2 million for the nine months ended September 30, 2011 and 2010, respectively.
| Non-GAAP to GAAP Reconciliations – Branded Same-Store Owned Hotels Worldwide | ||||||
| (In millions) | ||||||
| Three Months Ended | ||||||
| September 30, 2011 | ||||||
|
$ |
Change |
% Variance |
||||
| Revenue | ||||||
| Revenue increase (GAAP) | $ | 46 | 14.6 | % | ||
| Impact of changes in foreign exchange rates | (22 | ) | (7.0 | )% | ||
| Revenue increase in constant dollars | $ | 24 | 7.6 | % | ||
| Expense | ||||||
| Expense increase (GAAP) | $ | 27 | 10.7 | % | ||
| Impact of changes in foreign exchange rates | (16 | ) | (6.2 | )% | ||
| Expense increase in constant dollars | $ | 11 | 4.5 | % | ||
| Non-GAAP to GAAP Reconciliation – Earnings from Vacation Ownership and Residential Business | |||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
| 2011 | 2010 | Variance | 2011 | 2010 | Variance | ||||||||||||||||||
| Earnings from vacation ownership and residential | $ | 33 | $ | 34 | $ | (1 | ) | $ | 109 | $ | 100 | $ | 9 | ||||||||||
| Depreciation expense | (5 | ) | (7 | ) | 2 | (17 | ) | (21 | ) | 4 | |||||||||||||
| Operating income from vacation ownership and residential | $ | 28 | $ | 27 | $ | 1 | $ | 92 | $ | 79 | $ | 13 | |||||||||||
| STARWOOD HOTELS & RESORTS WORLDWIDE, INC. | ||||||||
| Non-GAAP to GAAP Reconciliations – Future Performance | ||||||||
| (In millions, except per share data) | ||||||||
| Low Case | ||||||||
| Three Months Ended | Year Ended | |||||||
| December 31, 2011 | December 31, 2011 | |||||||
| $ | 103 | Net income | $ | 425 | ||||
| 56 |
Interest expense |
225 | ||||||
| 35 | Income tax expense (a) | 24 |
|
|||||
| 76 | Depreciation and amortization | 302 | ||||||
| < | ||||||||
