Starwood Third Quarter 2012 Worldwide Systemwide REVPAR for Same-Store Hotels Increased 4.7%

Starwood Hotels & Resorts Worldwide, Inc. (HOT) today reported third quarter 2012 financial results.

Third Quarter 2012 Highlights

• Excluding special items, EPS from continuing operations was $0.58. Including special items, EPS from continuing operations was $0.75.
• Adjusted EBITDA was $275 million, which included $12 million of EBITDA from the St. Regis Bal Harbour residential project.
• Excluding special items, income from continuing operations was $114 million. Including special items, income from continuing operations was $147 million.
• Worldwide Systemwide REVPAR for Same-Store Hotels increased 4.7% in constant dollars (1.3% in actual dollars) compared to 2011. Systemwide REVPAR for Same-Store Hotels in North America increased 5.3% in constant dollars (4.8% in actual dollars).
• Management fees, franchise fees and other income increased 8.4% compared to 2011.
• Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 100 basis points compared to 2011.
• Worldwide REVPAR for Starwood branded Same-Store Owned Hotels increased 2.3% in constant dollars (decreased 2.2% in actual dollars) compared to 2011.
• Margins at Starwood branded Same-Store Owned Hotels Worldwide increased approximately 10 basis points compared to 2011.
• Earnings from Starwood’s vacation ownership and residential business increased approximately $19 million compared to 2011, including $12 million of earnings from the St. Regis Bal Harbour residential project.
• During the quarter, the Company signed 25 hotel management and franchise contracts, representing approximately 4,800 rooms, and opened 20 hotels and resorts with approximately 6,500 rooms.
• Starwood’s Board of Directors has declared the Company’s annual cash dividend of $1.25 per share, an increase of 150% from the prior year.
• On October 24, 2012, the Company completed a securitization involving the issuance of $165.7 million of fixed rate notes. Starwood is contributing approximately $174.4 million in timeshare mortgages resulting in an advance rate of 95% with an effective note yield of 2.02%.

Third Quarter 2012 Earnings Summary

Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported EPS from continuing operations for the third quarter of 2012 of $0.75 compared to $0.85 in the third quarter of 2011. Excluding special items, EPS from continuing operations was $0.58 for the third quarter of 2012 compared to $0.60 in the third quarter of 2011. Special items in the third quarter of 2012, which totaled a benefit of $33 million (after-tax), primarily related to an income tax benefit on the sale of two wholly-owned hotels. Special items in the third quarter of 2011, which totaled a benefit of $47 million (after-tax), primarily related to a gain on an asset exchange transaction. Excluding special items, the effective income tax rate in the third quarter of 2012 was 30.8% compared to a benefit of 4.8% in the third quarter of 2011. The effective income tax rate in the third quarter of 2011 included a favorable settlement of an IRS audit.

Income from continuing operations was $147 million in the third quarter of 2012, compared to $165 million in the third quarter of 2011. Excluding special items, income from continuing operations was $114 million in the third quarter of 2012. Excluding special items, income from continuing operations was $118 million in the third quarter of 2011 and included a $35 million benefit associated with the favorable settlement of an IRS audit.

Net income was $170 million and $0.87 per share in the third quarter of 2012, compared to $163 million and $0.84 per share in the third quarter of 2011. Net income in the third quarter of 2012 benefited from a $23 million (net of tax) reversal of reserves, following the favorable settlement, in the quarter, of certain liabilities associated with a former ITT subsidiary.

Frits van Paasschen, CEO, said, “We delivered another solid quarter of EBITDA and EPS growth led by continued gains in both room rates and occupancy. Global RevPAR grew nearly 5% in constant currency, despite a deceleration in the global economy. In fact, occupancy rose in all regions and is now reaching or exceeding peak levels in many markets around the world.”

“Looking ahead, our results will be driven by two things: first, the trajectory of the global recovery and whether it regains its momentum in 2013; and second, our ability to use our high-end, global brands, to get more than our fair share of the long-term growth in global travel.”

Nine Months Ended September 30, 2012 Earnings Summary

Income from continuing operations was $405 million in the nine months ended September 30, 2012 compared to $344 million in the same period in 2011. Excluding special items, income from continuing operations was $376 million in the nine months ended September 30, 2012, compared to $273 million in the same period in 2011.

Net income was $420 million and $2.14 per share in the nine months ended September 30, 2012 compared to $322 million and $1.66 per share in the same period in 2011.

Adjusted EBITDA was $895 million in the nine months ended September 30, 2012, which includes $125 million of EBITDA from the St. Regis Bal Harbour Resort residential project (“Bal Harbour”), compared to $711 million in the same period in 2011.

Third Quarter 2012 Operating Results

Management and Franchise Revenues

Worldwide Systemwide REVPAR for Same-Store Hotels increased 4.7% in constant dollars (1.3% in actual dollars) compared to the third quarter of 2011. International Systemwide REVPAR for Same-Store Hotels increased 3.9% in constant dollars (decreased 3.0% in actual dollars).

Changes in REVPAR for Worldwide Systemwide Same-Store Hotels by region:

							REVPAR
Region							Constant     Dollars					Actual     Dollars
North America							5.3	%				4.8	%
Europe							3.1	%				(9.1	)%
Asia Pacific							4.3	%				0.7	%
Africa and the Middle East							7.0	%				3.2	%
Latin America							3.0	%				3.0	%

Changes in REVPAR for Worldwide Systemwide Same-Store Hotels by brand:

							REVPAR
Brand							Constant     Dollars					Actual     Dollars
St. Regis/Luxury Collection							5.7	%				(1.9	)%
W Hotels							6.7	%				4.6	%
Westin							6.2	%				3.4	%
Sheraton							2.8	%				0.6	%
Le Méridien							3.8	%				(4.0	)%
Four Points by Sheraton							5.4	%				3.3	%
Aloft							8.7	%				7.8	%

Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 100 basis points compared to 2011. International gross operating profit margins for Same-Store Company-Operated properties increased 80 basis points. North American Same-Store Company-Operated gross operating profit margins increased approximately 140 basis points, driven by REVPAR increases and cost controls.

Management fees, franchise fees and other income were $219 million, up $17 million, or 8.4% (10.1% in constant dollars) compared to the third quarter of 2011. Management fees increased 7.0% to $122 million and franchise fees increased 10.4% to $53 million.

Development

During the third quarter of 2012, the Company signed 25 hotel management and franchise contracts, representing approximately 4,800 rooms, of which 18 are new builds and seven are conversions from other brands. At September 30, 2012, the Company had approximately 370 hotels in the active pipeline representing approximately 95,000 rooms.

During the third quarter of 2012, 20 new hotels and resorts (representing approximately 6,500 rooms) entered the system, including Sheraton Macao Hotel (China, 1,796 rooms), ITC Grand Chola – a Luxury Collection Hotel (India, 600 rooms), W Singapore – Sentosa Cove (Singapore, 240 rooms), Sheraton Vitoria Hotel (Brazil, 234 rooms), and Sheraton Tampa East Hotel (Florida, 265 rooms). Additionally, during the quarter, the Company reopened its owned Aloft San Francisco Airport which was converted from an unbranded hotel. Four properties (representing approximately 800 rooms) were removed from the system during the quarter.

Owned, Leased and Consolidated Joint Venture Hotels

Worldwide REVPAR at Starwood branded Same-Store Owned Hotels increased 2.3% in constant dollars (decreased 2.2% in actual dollars) when compared to 2011. REVPAR at Starwood branded Same-Store Owned Hotels in North America increased 0.6% in constant dollars (decreased 0.5% actual dollars). Internationally, Starwood branded Same-Store Owned Hotel REVPAR increased 3.8% in constant dollars (decreased 3.7% in actual dollars).

Revenues at Starwood branded Same-Store Owned Hotels Worldwide increased 1.5% in constant dollars (decreased 2.9% in actual dollars) while costs and expenses increased 1.0% in constant dollars (decreased 3.1% in actual dollars) when compared to 2011. Margins at these hotels increased approximately 10 basis points.

Revenues at Starwood branded Same-Store Owned Hotels in North America decreased 1.5% in constant dollars (2.5% in actual dollars) while costs and expenses decreased 0.2% in constant dollars (1.1% in actual dollars) when compared to 2011. Margins at these hotels decreased approximately 130 basis points.

Internationally, revenues at Starwood branded Same-Store Owned Hotels increased 4.1% in constant dollars (decreased 3.1% in actual dollars) while costs and expenses increased 2.3% in constant dollars (decreased 5.0% in actual dollars) when compared to 2011. Margins at these hotels increased approximately 140 basis points.

Revenues at owned, leased and consolidated joint venture hotels were $425 million, compared to $441 million in 2011. Expenses at owned, leased and consolidated joint venture hotels were $348 million compared to $361 million in 2011. Third quarter results were negatively impacted by four asset sales that took place since the third quarter of 2011.

Vacation Ownership

Total vacation ownership revenues increased 2.2% to $141 million in the third quarter of 2012 when compared to 2011, primarily due to the increased revenues from resort operations. Originated contract sales of vacation ownership intervals and numbers of contracts signed decreased 1.2% and 3.8%, respectively, primarily due to lower tour flow partially offset by a slight increase in the average price of vacation ownership units sold. The average price per vacation ownership unit sold increased 1.8% to approximately $14,300, driven by inventory mix.

Residential

The Company’s residential revenues were $67 million compared to $2 million in 2011. The Company realized residential revenues from Bal Harbour during the third quarter of 2012 of $62 million and generated EBITDA of $12 million. During the third quarter of 2012, the Company closed sales of 14 units at Bal Harbour and realized incremental cash proceeds of $59 million associated with these units. From project inception through September 30, 2012, the Company has closed contracts on approximately 64% of the total residential units available at Bal Harbour.

Selling, General, Administrative and Other

Selling, general, administrative and other expenses decreased 1.1% to $87 million compared to $88 million in 2011. The Company is now targeting a 3% to 4% increase for the full year.

Capital

Gross capital spending during the quarter included approximately $37 million of maintenance capital and $78 million of development capital.

Asset Sales

During the quarter, the Company completed the sales of two wholly-owned hotels, the W Chicago - Lakeshore and W Los Angeles - Westwood, for cash proceeds of approximately $244 million. These hotels were sold subject to long-term management contracts.

Timeshare Securitization

On October 24, 2012, the Company completed a securitization involving the issuance of $165.7 million of fixed rate notes. Starwood is contributing approximately $174.4 million in timeshare mortgages resulting in an advance rate of 95% with an effective note yield of 2.02%. The proceeds from the transaction will be used for general corporate purposes and the pay down of the securitized vacation ownership debt related to its 2005 securitization.

Dividend

The Board of Directors has declared the Company’s annual cash dividend of $1.25 per share, an increase of 150% from the prior year. The dividend will be paid on December 28, 2012 to shareholders of record on December 14, 2012.

Share Repurchase

In the third quarter of 2012, the Company repurchased 1.6 million shares at a total cost of approximately $78.7 million. Year to date, the Company has repurchased 2.8 million shares at a total cost of approximately $140 million. As of September 30, 2012, approximately $360 million remained available under the Company’s share repurchase authorization.

Balance Sheet

At September 30, 2012, the Company had gross debt of $1.654 billion, cash and cash equivalents of $795 million (including $144 million of restricted cash) and net debt of $859 million, compared to net debt of $1.242 billion as of June 30, 2012, in each case, excluding debt and restricted cash associated with securitized vacation ownership notes receivable. Net debt at September 30, 2012, including $410 million of debt and $17 million of restricted cash associated with securitized vacation ownership notes receivables, was $1.252 billion.

At September 30, 2012, debt was approximately 88% fixed rate and 12% floating rate and its weighted average maturity was 4.1 years with a weighted average interest rate of 7.03%, excluding the securitized debt. The Company had cash (including current restricted cash) and availability under the domestic and international revolving credit facility of approximately $2.297 billion.

Outlook

For the Full Year 2012:

• Including Bal Harbour, which is expected to contribute approximately $135 million of EBITDA, adjusted EBITDA is expected to be approximately $1.190 billion to $1.195 billion.
• Excluding Bal Harbour, adjusted EBITDA is expected to be approximately $1.055 billion to $1.060 billion, assuming:
  • REVPAR increases at Same-Store Company-Operated Hotels Worldwide of 5% to 6% in constant dollars (approximately 200 basis points lower in dollars at current exchange rates).
  • REVPAR increases at Same-Store Owned Hotels Worldwide of 3% to 4% in constant dollars (approximately 250 basis points lower in dollars at current exchange rates).
  • Margins at Same-Store Owned Hotels Worldwide increase 50 to 100 basis points.
  • Management fees, franchise fees and other income increase approximately 9% to 10%.
  • Earnings from the Company’s vacation ownership and residential business of approximately $158 million.
  • Selling, general and administrative expenses increase approximately 3% to 4%.
• Full year earnings are negatively impacted by approximately $10 million due to recent asset sales.
• Depreciation and amortization is expected to be approximately $280 million.
• Interest expense is expected to be approximately $185 million, excluding the $15 million of redemption premiums and other costs associated with the Senior Notes redemption in the second quarter of 2012.
• Including Bal Harbour, full year effective tax rate is expected to be approximately 31%, and cash taxes are expected to be approximately $100 million.
• Including Bal Harbour, EPS before special items is expected to be approximately $2.55 to $2.57.
• Full year capital expenditures (excluding vacation ownership and residential inventory) is expected to be approximately $150 million for maintenance, renovation and technology. In addition, in-flight investment projects and prior commitments for joint ventures and other investments are expected to total approximately $325 million.
• Vacation ownership (excluding Bal Harbour) is expected to generate approximately $200 million in positive cash flow. Bal Harbour is expected to generate at least $400 million in net cash flow.

For the three months ended December 31, 2012:

• Including Bal Harbour, which is expected to contribute approximately $10 million of EBITDA, adjusted EBITDA is expected to be approximately $295 million to $300 million.
• Excluding Bal Harbour, adjusted EBITDA is expected to be approximately $285 million to $290 million, assuming:
  • REVPAR increases at Same-Store Company-Operated Hotels Worldwide of 4% to 6% in constant dollars (approximately 50 basis points lower in dollars at current exchange rates).
  • REVPAR increases at Same-Store Company Owned Hotels Worldwide of 3% to 4% in constant dollars (approximately 50 basis points lower in dollars at current exchange rates).
  • Management fees, franchise fees and other income increase approximately 4% to 5%.
  • Earnings from the Company’s vacation ownership and residential business are down approximately $5 million year over year.
• Fourth quarter earnings are negatively impacted by approximately $8 million due to recent asset sales.
• Depreciation and amortization is expected to be approximately $70 million.
• Interest expense is expected to be approximately $43 million.
• Including Bal Harbour, income from continuing operations is expected to be approximately $126 million to $129 million, reflecting an effective tax rate of approximately 31%.
• Including Bal Harbour, EPS is expected to be approximately $0.64 to $0.66.

For the Full Year 2013:

At this point, the Company expects REVPAR at Same-Store Company-Operated Hotels Worldwide to increase 4% to 7% in constant dollars. The Company also expects Bal Harbour to contribute approximately $30 million to $40 million in EBITDA, which is approximately $100 million lower than 2012. Asset sales completed to date will reduce 2013 EBITDA by approximately $20 million year over year and approximately $30 million on an annualized basis. The Company will provide more details on its 2013 expectations in February.

Special Items

The Company’s special items netted to a benefit of $1 million ($33 million after-tax) in the third quarter of 2012 compared to a benefit of $45 million ($47 million after-tax) in the same period of 2011.

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 September 30,									Nine Months Ended September 30,
2012			2011						2012				2011
$	114		$	118			Income from continuing operations before special items		$	376			$	273
$	0.58		$	0.60			EPS before special items		$	1.91			$	1.40
							Special Items
	—			—			Restructuring, goodwill impairment, and other special (charges) credits, net(a)			11				—
	1			45			Gain (loss) on asset dispositions and impairments, net(b)			(7	)			14
	—			—			Debt extinguishment(c)			(15	)			—
	1			45			Total special items – pre-tax			(11	)			14
	32			2			Income tax benefit (expense) for special items(d)			40				57
	33			47			Total special items – after-tax			29				71
$	147		$	165			Income from continuing operations		$	405			$	344
$	0.75		$	0.85			EPS including special items		$	2.06			$	1.77

(a)		During the nine months ended September 30, 2012, the Company recorded a favorable adjustment of $11 million to reverse a portion of a litigation reserve.
(b)		During the nine months ended September 30, 2012, the net loss primarily relates to the sale of one wholly-owned hotel.
		During the three months ended September 30, 2011, the net gain primarily relates to an asset exchange transaction. 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.
(c)		During the nine months ended September 30, 2012, the net charges are associated with the redemption of approximately $495 million of senior notes.
(d)		During the three and nine months ended September 30, 2012, the tax benefit primarily relates to the sale of two hotels with high tax bases.
		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.

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 attributable to Starwood’s common stockholders. All references to continuing operations, discontinued operations and net income reflect amounts attributable to Starwood’s common stockholders (i.e. excluding amounts attributable to noncontrolling interests). All references to “net capital expenditures” mean gross capital expenditures for timeshare and fractional inventory net of cost of sales. 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 operating performance. It also facilitates comparisons between the Company and its competitors. The Company’s management has historically adjusted EBITDA (i.e., “Adjusted EBITDA”) when evaluating operating performance for the 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 restructuring, goodwill impairment and other special charges and gains and losses on asset dispositions and impairments, 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. 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 condo hotels, hotels sold to date and hotels undergoing significant repositionings or for which comparable results are not available (i.e., hotels not owned during the entire periods presented or closed due to seasonality or natural disasters). References to Company-Operated Hotel metrics (e.g. REVPAR) reflect metrics for the Company’s owned, leased and managed hotels. References to Systemwide metrics (e.g. REVPAR) reflect metrics for the Company’s owned, managed and franchised hotels. REVPAR is defined as revenue per available room. ADR is defined as average daily rate.

All references to revenues in constant dollars represent revenues, excluding the impact of the movement of foreign exchange rates. The Company calculates revenues in constant dollars by calculating revenues for the current year using the prior year’s exchange rates. The Company uses this revenue measure to better understand the underlying results and trends of the business, excluding the impact of movements in foreign exchange rates.

All references to contract sales or originated sales reflect vacation ownership sales before revenue adjustments for percentage of completion accounting methodology. All references to earnings from vacation ownership and residential represents operating income before depreciation expense. All references to management and franchise revenues represent base and incentive fees, franchise fees, amortization of deferred gains resulting from the sales of hotels subject to long-term management contracts and termination fees.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with 1,128 properties in nearly 100 countries and 154,000 employees at its owned and managed properties. Starwood is a fully integrated owner, operator and franchisor of hotels, resorts and residences with the following internationally renowned brands: St. Regis^®, The Luxury Collection^®, W^®, Westin^®, Le Méridien^®, Sheraton^®, Four Points^® by Sheraton, Aloft^®, and Element^SM. The Company boasts one of the industry’s leading loyalty programs, Starwood Preferred Guest (SPG), allowing members to earn and redeem points for room stays, room upgrades and flights, with no blackout dates. Starwood also owns Starwood Vacation Ownership, Inc., a premier provider of world-class vacation experiences through villa-style resorts and privileged access to Starwood brands.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Unaudited Consolidated Statements of Income
(In millions, except per share data)
Three Months EndedSeptember 30,																		Nine Months EndedSeptember 30,
2012					2011					%    Variance								2012					2011					%    Variance
															Revenues
$	425				$	441				(3.6	)				Owned, leased and consolidated joint venture hotels			$	1,280				$	1,329				(3.7	)
	208					140				48.6					Vacation ownership and residential sales and services				1,038					439				n/m
	219					202				8.4					Management fees, franchise fees and other income				642					580				10.7
	603					589				2.4					Other revenues from managed and franchised     properties(a)				1,828					1,745				4.8
	1,455					1,372				6.0									4,788					4,093				17.0
															Costs and Expenses
	348					361				3.6					Owned, leased and consolidated joint venture hotels				1,057					1,103				4.2
	156					107				(45.8	)				Vacation ownership and residential				790					330				n/m
	87					88				1.1					Selling, general, administrative and other				269					256				(5.1	)
	—					—				—					Restructuring, goodwill impairment and other special    charges (credits), net				(11	)				—				n/m
	55					57				3.5					Depreciation				168					177				5.1
	6					8				25.0					Amortization				18					23				21.7
	603					589				(2.4	)				Other expenses from managed and franchised     properties(a)				1,828					1,745				(4.8	)
	1,255					1,210				(3.7	)								4,119					3,634				(13.3	)
	200					162				23.5					Operating income				669					459				45.8
	4					(5	)			n/m					Equity (losses) earnings and gains and (losses) from     unconsolidated ventures, net				19					6				n/m
	(39	)				(45	)			13.3					Interest expense, net of interest income of $0, $1, $1 and     $2				(149	)				(151	)			1.3
	1					45				(97.8	)				Gain (loss) on asset dispositions and impairments, net				(7	)				14				n/m
	166					157				5.7					Income from continuing operations before taxes and     noncontrolling interests				532					328				62.2
	(19	)				8				n/m					Income tax benefit (expense)				(127	)				14				n/m
	147					165				(10.9	)				Income (loss) from continuing operations				405					342				18.4
															Discontinued Operations:
	23					(2	)			n/m					Gain (loss) on dispositions, net of tax				15					(22	)			n/m
	170					163				4.3					Net income (loss)				420					320				31.3
	—					—				—					Net loss (income) attributable to noncontrolling interests				—					2				(100.0	)
$	170				$	163				4.3					Net income (loss) attributable to Starwood			$	420				$	322				30.4
															Earnings (Losses) Per Share – Basic
$	0.76				$	0.88				(13.6	)				Continuing operations			$	2.10				$	1.83				14.8
	0.12					(0.01	)			n/m					Discontinued operations				0.08					(0.12	)			n/m
$	0.88				$	0.87				1.1					Net income (loss)			$	2.18				$	1.71				27.5
															Earnings (Losses) Per Share – Diluted
$	0.75				$	0.85				(11.8	)				Continuing operations			$	2.06				$	1.77				16.4
	0.12					(0.01	)			n/m					Discontinued operations				0.08					(0.11	)			n/m
$	0.87				$	0.84				3.6					Net income (loss)			$	2.14				$	1.66				28.9
															Amounts attributable to Starwood’s Common     Stockholders
$	147				$	165				(10.9	)				Continuing operations			$	405				$	344				17.7
	23					(2	)			n/m					Discontinued operations				15					(22	)			n/m
$	170				$	163				4.3					Net income (loss)			$	420				$	322				30.4
	193					190									Weighted average number of shares				193					189
	196					195									Weighted average number of shares assuming dilution				197					195

(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,     2012						December 31,  2011
			(unaudited)
Assets
Current assets:
Cash and cash equivalents			$	651					$	454
Restricted cash				158						232
Accounts receivable, net of allowance for doubtful accounts of $50 and $46				575						569
Inventories				414						812
Securitized vacation ownership notes receivable, net of allowance for doubtful    accounts of $8 and $10				58						64
Current deferred tax asset				256						278
Prepaid expenses and other				138

Logos, product and company names mentioned are the property of their respective owners.

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