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Starwood Reports Third Quarter 2012 Results And Declares Annual Dividend Of $1.25 Per Share

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 alitigation 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 monthsended September 30, 2011, the gain from the asset exchange transaction was partially offset by the impairment of a minority investment in a jointventure 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 seniornotes.

 

(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 describedabove and the utilization of capital loss carry forwards, partially offset by tax expense as the result of a settlement of an IRS audit. During thenine 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.

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