Full Year Diluted EPS Rises 27% to $1.96
WHITE PLAINS, N.Y., Feb. 8 /PRNewswire/ -- Starwood Hotels & Resorts
Worldwide, Inc. (NYSE: HOT) ("Starwood" or the "Company") today reported
record results for the fourth quarter and full year 2000.
Fourth Quarter and Full Year Financial Highlights
* Fourth quarter diluted EPS from continuing operations increased 25%
to $0.64 when compared to pro forma comparable diluted EPS of $0.51
for the same period of 1999. Full year diluted EPS from continuing
operations increased 27% to $1.96 when compared to pro forma
comparable diluted EPS of $1.54 for the same period of 1999.
* Total EBITDA for the fourth quarter increased 10% to $432 million
and operating income increased 11% to $290 million. For the full
year, total EBITDA increased 16% to $1.573 billion from
$1.359 billion in 1999.
* Fourth quarter REVPAR for Same-Store Owned Hotels in North America
increased 8.6%. Full year REVPAR for Same-Store Owned Hotels in
North America increased 11.0%. Fourth quarter REVPAR for Same-Store
Owned Hotels in Europe increased 13.2% excluding the unfavorable
effect of foreign currency translation.
* Fourth quarter EBITDA at Comparable Owned Hotels in North America
increased 16.8% and EBITDA margins increased 320 basis points to
34.6%. Full year EBITDA at Comparable Owned Hotels in North America
increased 16.5% and EBITDA margins increased 170 basis points to
33.1%.
Comments from the CEO
"2000 was a wonderful year for our company, in large measure the result of
numerous initiatives we began several years ago," said Barry Sternlicht,
Chairman and CEO. "Earnings growth accelerated from a healthy 23% in 1999 to
27% this year, leading the sector, and significantly exceeding beginning of
the year Street estimates. Equally impressive is the industry leading 11.0%
increase in same store REVPAR achieved in 2000 in North America."
"Moving forward, our core strategy remains quite simple; increase
shareholder value by growing EPS at least 15% and EBITDA by 8-10% per year.
In 2001, we will focus on increasing our revenues by harvesting our growth
investment spending of 2000, continued implementation of our new yield
management system, building upon the success of our innovations like W Hotels
and Westin's Heavenly Bed, increasing the effectiveness of the #1 rated
loyalty program, Starwood Preferred Guest, as well as the ongoing
renovations/repositionings of our major brands and the conversions of
independent properties to the W brand. The conversion of one well-located but
under-performing asset to a W hotel generates far more bottom line growth for
our shareholders than 50 new franchise agreements. At the same time, we will
continue to improve customer service while reducing costs through the launch
of Six Sigma and such initiatives as our energy management venture with Enron.
We will also deploy our substantial free cash flow to high yielding growth
investments in the hotel and vacation ownership areas, new
management/franchise agreements, strategic acquisitions, innovative
technologies that enhance productivity and we will recycle existing invested
capital by continuing to sell non-strategic assets, redeploying proceeds into
higher yielding ventures, stock repurchase, or debt reduction."
Concluding, Mr. Sternlicht said, "This year, we met our objective of
achieving investment grade and were delighted to learn of our inclusion in the
S&P 500 during the fourth quarter. We are encouraged by the extreme tightness
of the lending environment, declining industry supply trends, the recent
strength in the Euro and by our financing strategy that will allow us to take
advantage of the current lower interest rate environment. We are encouraged
by January's results and remain cautiously optimistic for the year, as we've
long recognized the economy could ultimately slow demand. Given the strength
of our balance sheet, with careful expense management in our owned hotels,
modulating capital expenditures as necessary, and harvesting the growth
investments of the year 2000, we remain confident that we can grow at a faster
rate than our competitive set for years to come, even in a softening economic
environment."
Fourth Quarter Ended December 31, 2000
For the fourth quarter of 2000, total revenues increased to $1.105 billion
when compared to $1.079 billion in the same period in 1999. Excluding the
impact of foreign exchange fluctuations and sold hotels, revenues increased 6%
in the fourth quarter of 2000 when compared to the same period in 1999.
Earnings per diluted share from continuing operations were $0.64 compared to
pro forma comparable earnings per diluted share from continuing operations of
$0.51 in the corresponding period in 1999. Income from continuing operations
increased 26% to $131 million in the fourth quarter of 2000 compared to pro
forma comparable income from continuing operations of $104 million in the same
period of 1999. (See the attached unaudited consolidated statements of
operations for the three months ended December 31, 2000 and 1999, and the
notes thereto, for the basis of the 1999 pro forma comparable results.)
Year Ended December 31, 2000
For the year ended December 31, 2000, total revenues increased 13% to
$4.345 billion when compared to $3.829 billion in the same period in 1999.
Excluding the impact of foreign exchange fluctuations and sold hotels,
revenues increased 17% in the year ended December 31, 2000 when compared to
1999. Earnings per diluted share from continuing operations were
$1.96 compared to pro forma comparable earnings per diluted share from
continuing operations of $1.54 in the corresponding period in 1999. Income
from continuing operations was $401 million for the year ended
December 31, 2000 compared to pro forma comparable income from continuing
operations of $303 million for the same period of 1999. (See the attached
unaudited consolidated statements of operations for the year ended December
31, 2000 and 1999, and the notes thereto, for the basis of the 1999 pro forma
comparable results.)
On a cash EPS basis, 2000 earnings per diluted share were $4.46.
Operating Results
At the Company's owned, leased and consolidated joint venture hotels,
excluding eight hotels sold since September 30, 1999 and two hotels without
comparable prior year results ("Comparable Owned Hotels"), revenues for the
fourth quarter of 2000 increased to $910 million from $884 million in 1999 and
EBITDA increased 10.6% to $320 million from $289 million in 1999. EBITDA at
the Company's Comparable Owned Hotels in North America increased 16.8% to
$242 million in the fourth quarter of 2000 when compared to the same period in
1999. International results were unfavorably impacted by continued weakness
in the Euro through most of the fourth quarter of 2000, economic conditions in
Latin America and the closure and partial closure of the Company's two owned
hotels in Fiji.
For the fourth quarter of 2000, revenue per available room ("REVPAR") at
owned hotels in North America, excluding hotels under significant renovation
or for which comparable results are not available ("Same-Store Owned Hotels"),
increased 8.6% to $111.51 when compared to the same period in 1999 as a result
of an increase in average daily rate ("ADR") of 7.5% to $164.08 and an
increase in occupancy rate of 80 basis points to 68.0%. The Sheraton
Same-Store Owned Hotels in North America continued to experience strong
occupancy gains, up 110 basis points, resulting in a 7.4% REVPAR increase.
Occupancy rates at the Westin Same-Store Owned Hotels in North America
increased 90 basis points, resulting in a 6.1% increase in REVPAR. REVPAR at
the St. Regis/Luxury Collection Same-Store Owned Hotels in North America
increased 4.2%; REVPAR at W Same-Store Owned Hotels in North America increased
30.2%, while the Same-Store owned portfolio in North America, operating under
independent and other brands, increased 4.4%. The increase in North America
for the Company's proprietary brands was primarily a result of previous and
current investment spending for asset renovations and repositionings, the
Starwood Preferred Guest Program and sales force realignment, as well as the
bi-coastal concentration of the owned portfolio, particularly in Boston, New
York, San Francisco and Los Angeles. For the fourth quarter of 2000, REVPAR
at Same-Store Owned Hotels worldwide increased 5.5% when compared to the same
period in 1999 as a result of an increase in ADR of 4.2% and an increase in
occupancy rate of 80 basis points. In Europe, Same-Store Owned Hotel REVPAR
increased 13.2% excluding the unfavorable effect of foreign currency
translation.
EBITDA margins at Comparable Owned Hotels worldwide increased 250 basis
points to 35.2%. In North America, EBITDA margins at Comparable Owned Hotels
increased 320 basis points to 34.6%. Internationally, despite weak economic,
political and/or currency conditions, EBITDA margins increased 40 basis points
to 37.0%.
Starwood Vacation Ownership, Inc. is currently selling vacation ownership
interest ("VOI") inventory at 12 resorts. Six new build projects are currently
underway at the Harborside Resort at Atlantis on Paradise Island in The
Bahamas; Sheraton's Mountain Vista in Avon, Colorado; Sheraton's Vistana
Villages in Orlando, Florida; Westin Mission Hills Resort Villas in Rancho
Mirage, California; Westin Kierland Resort in Scottsdale, Arizona; and Westin
Ka'anapali Ocean Resort Villas in Maui, Hawaii. Additional VOI projects
capitalizing on current Starwood owned locations are targeted in markets such
as Phoenix, Cancun and Southern Europe.
Dispositions
The Company continues its efforts to sell non-strategic assets around the
world. Total proceeds from such sales in 2000 were approximately $350 million.
The Company will continue to review its portfolio for disposition candidates.
Since the acquisition of ITT Corporation, the Company has completed non-core
asset dispositions with aggregate proceeds exceeding $7.1 billion.
The Company is in the final stage of selecting a banker for the proposed
sale of its CIGA portfolio which includes such world renowned assets as the
Gritti Palace and Danieli in Venice, the St. Regis Grand and Westin Excelsior
in Rome, the Grand and Excelsior in Florence, the Principe di Savoia in Milan,
the Westin Palace in Madrid, and four hotels in Sardinia's Costa Smeralda (and
almost 6,000 acres of surrounding land) including the world famous Cala di
Volpe and Pitrizza resorts.
Capital
During the fourth quarter of 2000, the Company invested approximately
$236 million for capital improvements primarily at owned hotel assets,
continuing the renovation program on its largest brand, Sheraton and vacation
ownership construction. In addition, these capital expenditures included
significant new growth investment for the acquisition of land for vacation
ownership project construction adjacent to the Westin Kierland Resort in
Scottsdale, Arizona and 14 acres on the island of Maui as well as the
acquisition of a second fully-entitled site adjacent to the San Francisco
Museum of Modern Art. Other major expenditures in the quarter included
ongoing development of the W Times Square, repositioning of the W Midland and
conversion to the W Lakeshore of the Days Inn Chicago. The Company also
expanded the Westin Mission Hills Resort and completed significant renovation
work at the Sheraton Bal Harbour and Westin Maui. Internationally, the
100 room expansion of the Westin Turnberry Resort in Scotland, including the
addition of a second golf course and the Colin Montgomerie links golf academy
was completed.
During the fourth quarter, the Company purchased 1,056,600 shares
at a total cost of approximately $30 million. The Company repurchased
2,525,600 shares at a total cost of approximately $70 million during the year
ended December 31, 2000. At December 31, 2000, Starwood had approximately
202 million shares outstanding (including partnership units and exchangeable
preferred shares).
Financing
On December 31, 2000, the Company had total debt of $5.542 billion and
cash of $189 million. In the fourth quarter of 2000, the Company was upgraded
by Fitch to investment grade, consistent with Standard & Poors' upgrade in the
third quarter of 2000. During the fourth quarter of 2000, the Company paid
off $700 million of maturing bonds. On December 15, 2000, the Company
completed a $172.5 million add-on financing to its credit facility and, in
January 2001, an additional $150 million was added to the credit facility. At
the end of the fourth quarter of 2000, the Company's debt was approximately
59% fixed and 41% floating and its weighted average maturity exceeded five
years. As of January 31, 2001, the Company had availability under its
revolving credit facility in excess of $550 million and total Company debt had
an average interest rate of 7.1%.
During the fourth quarter of 2000, the Company declared a quarterly
dividend of $0.1725 per share, representing a 15.0% increase over the prior
year. Consistent with the Company's earlier announcements relating to its
dividend policy, the Company expects to increase its annual dividend by
15.9% for 2001 to $0.80 per share.
Future Performance
All comments in the following paragraphs and the comments from Mr.
Sternlicht 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
political environments. Actual results may differ materially.
* Full year 2001 North American Same-Store REVPAR growth is expected
to be in excess of 6%. Worldwide Same-Store REVPAR growth is
expected to be in excess of 5%.
* January 2001 REVPAR growth for Same-Store North American Owned
Hotels was approximately 10%.
* Should the FASB's proposed change in accounting for the amortization
of goodwill be implemented, the Company estimates that diluted EPS
could increase at least $0.24 on an annual basis.
* Full year 2001 EBITDA is expected to be approximately $1.7 billion.
* Owned hotel EBITDA margins are expected to improve at or above the
Company's 100 basis point annual target.
* The Company is currently comfortable with the total year 2001
diluted EPS estimate increasing to $2.26 which represents a 15%
growth in diluted EPS over the Company's 2000 diluted EPS. The
increase in the 2001 diluted EPS estimate from the prior estimate of
$2.22 is due primarily to the reduction in the estimated effective
tax rate to approximately 33% for 2001, consistent with the actual
effective tax rate in 2000. Given the timing of the rollout of Six
Sigma, which was announced February 5, and the intensive renovation
cycle and ongoing changes in the portfolio, the Company currently
expects first quarter 2001 diluted EPS of $0.30, representing an
increase of 15% over the same period in 2000. Further, the Company
expects quarterly diluted EPS for all subsequent quarters in 2001 to
also achieve approximately 15% growth.
* The Company produces substantial free cash flow. The Company has
completed a multi-year capital plan and divided these expenditures
into growth and maintenance expenditures. The Company considers the
growth expenditures as discretionary. After interest expense,
maintenance capital expenditures, dividends and cash taxes,
discretionary cash flow is expected to be approximately $750 million
in 2001. The Company's 2001 earnings estimates assume EBITDA
generating investment spending for timeshare inventory
(approximately $200 million), the completion of the W Times Square
and the two W Hotels in Chicago (approximately $100 million) and
sliver equity investments (approximately $100 million). The balance
of expected discretionary cash flow is available for other EBITDA
generating projects, share repurchase or debt paydown. In general,
the Company targets 15% after-tax internal rate of return on
invested capital. Vacation ownership projects, on average, are
expected to achieve better than 20% after-tax internal rate of
return on invested capital.
Starwood Hotels & Resorts Worldwide, Inc. will be conducting a conference
call to discuss the fourth quarter financial results at 10:30 a.m. (EST)
today. The conference call will be available through simultaneous webcast in
the Investor Relations/Press Releases section of the Company's website at
http://www.starwoodhotels.com. A replay of the conference call will also be
available from 1:30 p.m. (EST) today through 8:00 p.m. (EST) February 15, 2001
on both the Company's website and via telephone replay at 719-457-0820 (access
code: 790268).
Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and
leisure companies in the world with more than 725 properties in 80 countries
and 120,000 employees at its owned and managed properties. With
internationally renowned brands, Starwood is a fully integrated owner,
operator and franchiser of hotels and resorts including: St. Regis, The
Luxury Collection, Sheraton, Westin, Four Points and W brands, as well as
Starwood Vacation Ownership, Inc., one of the premier developers and operators
of high quality vacation interval ownership.
(Note: This release contains certain statements that may be deemed
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements are not guarantees of future performance and
involve risks and uncertainties that could cause actual results to differ
materially from historical results or those anticipated at the time the
forward-looking statements are made, including, without limitation, risks and
uncertainties associated with the following: the continued ability of
Starwood Hotels & Resorts (the "Trust") to qualify for taxation as a REIT;
Starwood's ability to attract and retain personnel; identification,
completion, terms and timing of future acquisitions and dispositions; the
availability and terms of capital for acquisitions and for renovations;
execution of hotel renovation and expansion programs; the ability to maintain
existing management, franchise or representation agreements and to obtain new
agreements on favorable terms; competition within the lodging and leisure
industry; the cyclicality of the real estate business and the hotel and
leisure business; foreign exchange fluctuations and exchange control
restrictions; general real estate and national and international economic
conditions; political and financial conditions and uncertainties in countries
in which Starwood owns or operates properties; changes in current laws, rules
or regulations of governmental or other regulatory bodies; and the other risks
and uncertainties set forth in the annual, quarterly and current reports and
proxy statements of the Trust and Starwood filed with the SEC. Starwood
undertakes 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 Year Ended
December 31,(a) December 31,(a)
2000(b) 1999(c) 2000(b) 1999(c)
Revenues
$919 $895 Owned, leased and consolidated
joint venture hotels $3,659 $3,391
186 184 Other hotel and leisure(d) 686 438
1,105 1,079 4,345 3,829
Costs and Expenses
599 604 Owned, leased and consolidated
joint venture hotels 2,433 2,313
91 97 Selling, general, administrative
and other(e) 403 213
104 99 Depreciation 391 370
21 18 Amortization 90 82
815 818 3,317 2,978
290 261 Operating income 1,028 851
(103) (94) Interest expense, net of (420) (353)
interest income of $5 and $7
for the three months ended
December 31 and $19 and $16
for the year ended December 31
1 -- Gains on sales of real estate and 2 --
investments, net
188 167 610 498
(56) (61) Income tax expense (201) (182)
(1) (2) Minority equity in net income (8) (13)
131 104 Income from continuing operations 401 303
Discontinued operations:
-- -- Net loss from operations, -- --
net of tax benefit of $0 -- --
-- -- Net gain on dispositions,
net of tax of $0 and $2 5 --
-- -- Extraordinary item, net of tax (3) --
$131 $104 Net income $403 $303
Earnings Per Share - Basic
$0.66 $0.53 Continuing operations $2.03 $1.59
-- Discontinued operations 0.02
-- Extraordinary item (0.01)
$0.66 Net income $2.04
Earnings Per Share - Diluted
$0.64 $0.51 Continuing operations $1.96 $1.54
-- Discontinued operations 0.02
-- Extraordinary item (0.01)
$0.64 Net income $1.97
197 195 Weighted average number of Shares 196 189
205 203 Weighted average number of Shares
assuming dilution 205 197
Reconciliation of Operating Income to EBITDA(f)
$290 $261 Operating income $1,028 $851
113 105 Depreciation(g) 418 394
21 18 Amortization 90 82
3 3 Interest expense of unconsolidated
joint ventures 18 16
5 7 Interest income 19 16
$432 $394 EBITDA $1,573 $1,359
(a) Includes reclassification in accordance with Emerging Issues Task
Force ("EITF") Issue No. 00-1, "Investor Balance Sheet and Income
Statement Display under the Equity Method for Investments in Certain
Partnerships and Other Ventures."
(b) Represents historical results of Starwood for the three months and
year ended December 31, 2000. The Desert Inn is presented as a
discontinued operation and was sold on June 23, 2000. In accordance
with accounting principles generally accepted in the United States,
for the year ended December 31, 2000, $6 million of interest expense
was allocated to discontinued operations through the date of the
sale on $165 million of allocated debt.
(c) Represents pro forma comparable results of Starwood assuming the
dispositions of the gaming segment and other non-core businesses had
occurred at the beginning of the period, certain benefit savings as
a result of the ITT Merger of $0 and $7 million (pretax) for the
three months and year ended December 31, 1999, respectively, and the
exclusion of the following unusual items: (i) a $0 and $15 million
pretax charge to miscellaneous expense in the three months and year
ended December 31, 1999, respectively; (ii) restructuring and other
special charges of $44 million (pretax) and $3 million (pretax) in
the three months and year ended December 31, 1999, respectively,
attributable to the reversal of certain restructuring charges as a
result of the resolution of certain employment related
contingencies, net of restructuring and other special charges
primarily related to the rationalization of one of the Company's
technical centers, a reserve for certain litigation costs and
certain executive severance costs; (iii) a $936 million deferred tax
charge related to the Reorganization for the year ended December 31,
1999; and (iv) pretax gains/(losses) on sales of real estate and
investments totaling $169 million and $191 million in the three
months and year ended December 31, 1999, respectively. Including
the effects of these unusual items, income (loss) from continuing
operations and diluted earnings (loss) per Share from continuing
operations for the three months and year ended December 31, 1999
was $101 million and $(638) million and $0.50 and $(3.41) per
diluted Share, respectively.
(d) Other hotel and leisure revenue includes management and franchise
fees earned from third party hotel owners, the Company's interest in
unconsolidated joint ventures and the sale and financing of VOIs.
(e) Selling, general, administrative and other expenses includes the
cost of sales of VOIs and other costs of timeshare operations.
(f) EBITDA is defined as income before interest expense, income tax
expense and depreciation and amortization. Non-recurring items and
gains and losses from sales of real estate and investments are also
excluded from EBITDA as these items do not impact operating results
on a recurring basis. Management considers EBITDA to be one measure
of the cash flows from operations of the Company before debt service
that provides a relevant basis for comparison, and EBITDA is
presented to assist investors in analyzing the performance of the
Company. This information should not be considered as an
alternative to any measure of performance as promulgated under
accounting principles generally accepted in the United States, nor
should it be considered as an indicator of the overall financial
performance of the Company. The Company's calculation of EBITDA may
be different from the calculation used by other companies and,
therefore, comparability may be limited.
(g) Includes depreciation expense of unconsolidated joint ventures.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
UNAUDITED BALANCE SHEET INFORMATION
(In millions)
December 31,
2000
Total assets $12,660
Cash and cash equivalents $189
Total debt $5,542
Shares outstanding(a) 202
(a) Shares outstanding include partnership units and exchangeable
preferred shares.
SOURCE Starwood Hotels & Resorts Worldwide, Inc.
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http://www.starwoodhotels.com
Company News On-Call:
http://www.prnewswire.com/comp/443150.html or fax,
800-758-5804, ext. 443150
CONTACT:
Dan Gibson of Starwood Hotels & Resorts
Worldwide, Inc., 914-640-8175
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