Second Quarter Financial Highlights
* Second quarter diluted EPS from continuing operations increased 30% to
$0.56 when compared to pro forma comparable diluted EPS for the same
period of 1999.
* Total revenues increased 19% to $1.15 billion. Operating income
increased 24% to $289 million.
* REVPAR for Same-Store Owned Hotels in North America increased 12.8%.
* Occupancy rates at Same-Store Owned Hotels in North America increased
370 basis points including a 550 basis point improvement at Sheraton
Same-Store Owned Hotels.
* Total Company EBITDA increased 18%. EBITDA margins at Comparable Owned
Hotels worldwide increased 170 basis points to 35.5%.
WHITE PLAINS, N.Y., July 27 /PRNewswire/ --
Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) is one of the leading
hotel and leisure companies in the world with more than 725 upscale and luxury
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. Additional
information is available at the Company's website at http://www.starwoodhotels.com .
Second Quarter Ended June 30, 2000
For the second quarter of 2000, total revenues increased 19% to
$1.15 billion when compared to the same period in 1999. Earnings per diluted
share from continuing operations were $0.56 compared to pro forma comparable
earnings per diluted share from continuing operations of $0.43 in the
corresponding period in 1999. Income from continuing operations increased 34%
to $114 million in the second quarter of 2000 compared to pro forma comparable
income from continuing operations of $85 million in the same period of 1999.
(See the attached unaudited consolidated statements of operations for the
three months ended June 30, 2000 and 1999, and the notes thereto, for the
basis of the 1999 pro forma comparable results.)
Six Months Ended June 30, 2000
For the six months ended June 30, 2000, total revenues increased 18% to
$2.16 billion when compared to the same period in 1999. Income from
continuing operations increased 28% to $0.82 per diluted share for the
six months ended June 30, 2000 compared to pro forma comparable income from
continuing operations of $0.64 per diluted share for the corresponding period
in 1999. Income from continuing operations was approximately $167 million for
the six months ended June 30, 2000 compared to pro forma comparable income
from continuing operations of $125 million for the same period of 1999. (See
the attached unaudited consolidated statements of operations for the
six months ended June 30, 2000 and 1999, and the notes thereto, for the basis
of the 1999 pro forma comparable results.)
Operating Results
Revenues for the second quarter of 2000 at the Company's owned, leased and
consolidated joint venture hotels, excluding six hotels sold since June 30,
1999 and four hotels without comparable prior year results ("Comparable Owned
Hotels"), increased 9% to $941 million from $861 million in 1999 and EBITDA
increased 15% to $334 million from $291 million in 1999. EBITDA at the
Company's Comparable Owned Hotels in North America increased 21% to
$243 million in the second quarter of 2000 when compared to the same period in
1999. International results were unfavorably impacted by continued weakness
in the Euro, economic conditions in Latin America and the political unrest in
Fiji.
For the second quarter of 2000, revenue per available room ("REVPAR") at
owned hotels worldwide, excluding hotels under significant renovation or for
which comparable results are not available ("Same-Store Owned Hotels"),
increased 8.6% when compared to the same period in 1999 as a result of
increases in both average daily rate ("ADR") and occupancy rate. ADR and
occupancy rate increases in the second quarter of 2000 were strongest at the
Same-Store Owned Hotels in North America where ADR increased 7.3% to $154.08
and occupancy increased 370 basis points to 76.8%, resulting in a 12.8%
increase in REVPAR when compared to the same period in 1999.
The Sheraton Same-Store Owned Hotels in North America experienced
particularly strong occupancy gains, up 550 basis points, resulting in a 13.5%
REVPAR increase. These results exclude the recently renovated Sheraton Boston
hotel which had a REVPAR increase of approximately 180%. REVPAR at the Westin
Same-Store Owned Hotels in North America increased 8.3%; REVPAR at the St.
Regis/Luxury Collection Same-Store Owned Hotels in North America increased
15.2%; REVPAR at W Same-Store Owned Hotels in North America increased 43.4%,
while the Same-Store owned portfolio in North America, operating under
independent and other brands, increased 6.6%. The increase in North America
for the Company's proprietary brands was 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 Boston, New York and San
Francisco. In Europe, Same-Store Owned Hotel REVPAR increased more than 12%
excluding the unfavorable effect of foreign currency translation. In Latin
America, REVPAR increased 1.3% excluding the unfavorable foreign currency
translation despite difficult economic conditions. The Company's
three Same-Store Owned Hotels in Asia, two of which are in Fiji where recent
political unrest has forced the closing of one of the hotels, had a decrease
in REVPAR of 18.5%.
EBITDA margins at Comparable Owned Hotels worldwide increased 170 basis
points (bps) to 35.5% (Sheraton +250 bps to 36.6%, Westin +40 bps to 34.9%,
St. Regis/ Luxury Collection +270 bps to 34.9% and W Hotels +370 bps to
32.1%). In North America, EBITDA margins at Comparable Owned Hotels increased
230 basis points to 35.0%. Internationally, despite negative REVPAR due to
the unfavorable impact of foreign currency translation, EBITDA margins
increased 30 bps to 37.0%.
Development highlights included the addition of 14 managed Barcelo hotels
in North America which were all converted to Four Points and Sheraton brands
on April 27, 2000. Additionally, 30 management and franchise contracts with
approximately 7,100 rooms were signed during the second quarter of 2000.
The Company is currently selling vacation ownership interest ("VOI")
inventory in ten locations including Orlando, Florida; Myrtle Beach, South
Carolina; Scottsdale, Arizona; Avon, Colorado; St. John, U.S. Virgin Islands;
Paradise Island, The Bahamas; St. Augustine, Florida; and Port St. Lucie,
Florida. 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; and Sheraton's Vistana Villages in Orlando, Florida.
Additional VOI projects capitalizing on current Starwood locations are
targeted in markets such as Palm Springs and Phoenix and are expected to begin
construction by the end of 2000. In July 2000, the Company's vacation
ownership subsidiary was renamed Starwood Vacation Ownership, Inc.
Dispositions
On June 23, 2000, the Company completed the sale of the Desert Inn Resort
& Casino (the "Desert Inn") for approximately $270 million. This transaction
completes the Company's exit from the gaming business and brings total asset
sales in the two years since the acquisition of ITT to more than $7.0 billion.
In addition, the Company continues its efforts to sell non-strategic hotel
assets around the world, closing approximately $34 million of such sales so
far in 2000.
Renovations
During the second quarter of 2000, the Company invested approximately
$160 million in capital improvements on owned hotel assets and new
construction of timeshare inventory. Approximately 7,000 or 13% of the
Company's owned hotel rooms, were either under renovation or completed during
the quarter, including the completion of the almost year-long renovation at
the 1,068 room Westin Peachtree Plaza in Atlanta, Georgia.
Additionally, during the quarter, the Company continued its aggressive
renovation program on its largest brand, Sheraton, completing the renovation
of six owned Sheratons during this period. During 1999 and through the end of
the second quarter of 2000, the Company has renovated more than 55% of its
owned Sheraton rooms and is on target to reach its goal of having more than
60% of its owned Sheraton rooms renovated by the end of 2000. Approximately
4,500 managed and franchised rooms have also been renovated.
"I'm pleased that for the second quarter in a row, we were able to exceed
expectations and achieve industry leading results in REVPAR, total revenue,
operating income and EPS growth. I am particularly encouraged by the rapid
improvements in our largest and most significant global brand, Sheraton," said
Barry S. Sternlicht, Chairman and CEO of Starwood. "After the completion of
our exit from gaming our balance sheet restructuring is substantially
complete, providing significant financial flexibility, positioning the Company
for growth. This quarter highlights the progress we've made in strengthening
our management team, driving process improvements, building stronger
relationships with our customers, driving margin improvements, implementing
innovative marketing programs and executing our e-commerce strategies (such as
our e-purchasing partnership with Zoho) while also fulfilling our corporate
commitment to community service."
Completion of Tender Offer to Purchase Minority Shares of CIGA, S.p.A.
In June 2000, the Company completed the acquisition of the minority-owned
shares of CIGA, S.p.A. ("CIGA"). The aggregate purchase price of the
incremental shares was approximately $312 million. The Company is currently
evaluating alternatives for maximizing the value of this unique portfolio of
assets.
Financing
On June 30, 2000, the Company had total debt of approximately $5.6 billion
and cash of approximately $283 million. During the quarter ended June 30,
2000, the Company paid down $484 million of its revolving credit facility with
proceeds from the sale of the Desert Inn and using cash balances repatriated
from overseas operations. As of June 30, 2000, the Company had availability
under its revolving credit facility of $700 million. Due to the Company's
continuous improvement of its credit profile, the interest rate on the
Company's Senior Credit Facility decreased 25 basis points in the second
quarter. Other than $700 million of outstanding ITT Bonds maturing in
November 2000, Starwood has no significant debt maturing until 2003, and the
weighted average maturity of the Company's debt portfolio exceeds five years.
At the end of the second quarter of 2000, the Company's debt was approximately
70% fixed and 30% floating. On July 25, 2000, the Company entered into a
one-year, Euro 270 million loan (approximately $252 million) at an initial
average interest rate of Euribor + 112.5 basis points. The proceeds from this
loan were used to further pay down the Company's revolving credit facility,
bringing current availability to more than $1.0 billion.
During the second quarter of 2000, the Company declared a dividend of
$0.1725 per share ($0.69 per share on an annual basis for 2000), representing
a 15% increase over the prior year, consistent with the Company's January 6,
1999 reorganization. At June 30, 2000, Starwood had approximately 203 million
shares outstanding (including partnership units and exchangeable preferred
shares).
(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; completion, terms and timing of
future acquisitions and dispositions; the availability 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 industry and from emerging technologies, the
cyclicality of the real estate business; and the hotel business; foreign
exchange fluctuations and exchange control restrictions; general real estate
and national and international economic conditions; political, financial and
economic conditions and uncertainties in countries in which Starwood owns
property or operates; and the other risks and uncertainties set forth in the
annual, quarterly and current reports and proxy statements of the Trust and
Starwood. 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 Six Months Ended
June 30, June 30,
2000(a) 1999(b) 2000(a) 1999(b)
Revenues
$ 971 $ 871 Owned, leased and consolidated $1,814 $1,641
joint venture hotels
180 99 Other hotel and leisure(c) 345 182
1,151 970 2,159 1,823
Costs and Expenses
628 581 Owned, leased and consolidated 1,218 1,122
joint venture hotels
111 38 Selling, general, administrative 215 79
and other(d)
123 117 Depreciation and amortization 246 236
862 736 1,679 1,437
289 234 480 386
(112) (93) Interest expense, net of interest (223) (180)
income of $6 and $3 for the three
months ended June 30 and $9 and $6
for the six months ended June 30
1 -- Gains on sales of real estate and 2 --
investments, net
178 141 259 206
(62) (51) Income tax expense (91) (77)
(2) (5) Minority equity in net income (1) (4)
114 $ 85 Income from continuing operations 167 $ 125
Discontinued operations:
-- Net loss from operations, --
net of tax benefit of $0
5 Net gain on dispositions, 5
net of tax of $2 and $0
-- Extraordinary item, (3)
net of tax benefit of $0
$ 119 Net income $ 169
Earnings Per Share - Basic
$ 0.58 $ 0.45 Continuing operations $ 0.85 $ 0.66
0.02 Discontinued operations 0.02
-- Extraordinary item (0.01)
$ 0.60 Net income $ 0.86
Earnings Per Share - Diluted
$ 0.56 $ 0.43 Continuing operations $ 0.82 $ 0.64
0.02 Discontinued operations 0.02
-- Extraordinary item (0.01)
$ 0.58 Net income $ 0.83
195 187 Weighted average number of Shares 195 186
205 196 Weighted average number of Shares 204 196
assuming dilution
(a) Represents historical results of Starwood for the three and
six months ended June 30, 2000. The Desert Inn was presented as a
discontinued operation as a result of the Company's previously
announced plan to dispose of the gaming segment and was sold on
June 23, 2000. In accordance with generally accepted accounting
principles, for the three and six months ended June 30, 2000,
$3 million and $6 million, respectively, of interest expense was
allocated to discontinued operations on $165 million of allocated
debt during the respective time periods.
(b) 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 and six months ended June 30, 1999, respectively, and the
exclusion of the following unusual items during the three and
six months ended June 30, 1999, respectively: (i) a $0 and
$15 million pretax charge to miscellaneous expense (ii) restructuring
and other special credits of $50 million (pretax) in both periods
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 of $9 million (pretax)
in both periods primarily related to the rationalization of one of
the Company's technical centers (iii) a $936 million deferred tax
charge related to the Reorganization for the six months ended
June 30, 1999, and (iv) pretax gains on sales of real estate and
investments totaling $22 million and $30 million. Including the
effects of these unusual items, income (loss) from continuing
operations and diluted earnings (loss) per Share from continuing
operations for the three and six months ended June 30, 1999 would
have been $142 million and $(783) million and $0.73 and $(4.21) per
diluted Share, respectively.
(c) 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.
(d) Selling, general, administrative and other expenses includes the cost
of sales of VOIs and other costs of timeshare operations.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
UNAUDITED BALANCE SHEET INFORMATION
(In millions)
June 30, 2000
Total assets $ 12,700
Cash and cash equivalents $ 283
Total debt $ 5,644
Shares outstanding(a) 203
(a) Shares outstanding include partnership units and exchangeable
preferred shares.
SOURCE Starwood Hotels & Resorts Worldwide, Inc.
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Related links:
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, 914-640-8175
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