Exhibit 99.1

 

 

STARWOOD REPORTS FOURTH QUARTER

2015 RESULTS

STAMFORD, Conn. (February 18, 2016) – Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today reported fourth quarter 2015 financial results.

Fourth Quarter 2015 Highlights

 

 

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Full Year 2015 Highlights

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Fourth Quarter 2015 Earnings Summary

Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported EPS from continuing operations for the fourth quarter of 2015 of $0.98 compared to $1.40 in the fourth quarter of 2014.  Excluding special items, EPS from continuing operations was $0.89 for the year ended quarter of 2015 compared to $0.97 in the fourth quarter of 2014.

Special items in the fourth quarter of 2015 consisted primarily of restructuring and other special charges of $37 million ($22 million after-tax) partially offset by a gain on a property insurance settlement of $36 million (before and after-tax).  Special items in the fourth quarter of 2014 totaled a benefit of $74 million (after-tax).  Excluding special items, the effective income tax rate in the fourth quarter of 2015 was 29.3% compared to 24.5% in the fourth quarter of 2014.

Income from continuing operations was $166 million in the fourth quarter of 2015, compared to $245 million in the fourth quarter of 2014.  Excluding special items, income from continuing operations was $151 million in the fourth quarter of 2015 compared to $171 million in the fourth quarter of 2014. The decline in income from continuing operations primarily reflects the impact of hotel sales in 2014 and 2015.

Net income was $166 million and $0.98 per share in the fourth quarter of 2015, compared to $234 million and $1.33 per share in the fourth quarter of 2014.

Thomas Mangas, Chief Executive Officer of the Company, said, “We had good momentum in our business through the year, with REVPAR index gains in each of our six global regions and a record-breaking year of growth where we signed more new deals and opened more hotels than in any single year in Starwood’s entire history, increasing our net rooms growth to 4.4%. As we prepare for the merger with Marriott, our priorities in 2016 will build on this success – accelerating our growth, developing our talent, innovating across our brands, and delighting our guests to grow our REVPAR faster than the competition and deliver superior returns to our owners. While 2015 was clearly a year of change for Starwood given our announced merger with Marriott, our strategy remains very much intact and on track.”

Year Ended December 31, 2015 Earnings Summary

Income from continuing operations was $489 million for the year ended December 31, 2015 compared to $643 million in 2014.  Excluding special items, income from continuing operations was $529 million for the year ended December 31, 2015 compared to $561 million in 2014.  The decline in income from continuing operations primarily reflects the impact of hotel sales in 2014 and 2015.

Net income was $489 million and $2.88 per share for the year ended December 31, 2015 compared to $633 million and $3.40 per share in 2014.

Adjusted EBITDA was $1.197 billion for the year ended December 31, 2015 compared to $1.238 billion in 2014.

 

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Fourth Quarter 2015 Operating Results

Management and Franchise Revenues

Worldwide Systemwide REVPAR for Same-Store Hotels increased 2.8% in constant dollars (decreased 1.1% in actual dollars) compared to the fourth quarter of 2014.  International Systemwide REVPAR for Same-Store Hotels increased 0.6% in constant dollars (decreased 6.1% in actual dollars).

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

 

 

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

 

 

Worldwide Same-Store Company-Operated gross operating profit margins decreased approximately 15 basis points compared to 2014.  International gross operating profit margins for Same-Store Company-Operated properties decreased approximately 60 basis points.  North American Same-Store Company-Operated gross operating profit margins increased approximately 50 basis points.

 

Management fees, franchise fees and other income were $288 million, down $6 million, or 2.0% compared to the fourth quarter of 2014.  Core fees remained flat at $225 million.  Other management and franchise revenues decreased 12.7% or $8 million, primarily due to fees associated with the termination of certain management and franchise contracts in 2014.

Development

During the fourth quarter of 2015, the Company signed 79 hotel management and franchise contracts, representing approximately 16,800 rooms, of which 59 are new builds and 20 are conversions from other brands.  At December 31, 2015, the Company had approximately 530 hotels in the active pipeline representing approximately 116,000 rooms.

During the fourth quarter of 2015, 37 new hotels and resorts (representing approximately 9,600 rooms) entered the system, including the SLS Las Vegas, a Tribute Portfolio Resort (Nevada, 1,623 rooms), The St. Regis Macao, Cotai Central (Macau, 400 rooms), The Westin Denver International Airport (Colorado, 519 rooms), Sheraton Zhuhai Hotel (China, 544 rooms), and Aloft Louisville Downtown (Kentucky, 175 rooms). During the quarter, 11 properties (representing approximately 2,300 rooms) were removed from the system.

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Owned Hotels

Worldwide REVPAR at Starwood Same-Store Owned Hotels increased 6.3% in constant dollars (increased 0.8% in actual dollars) when compared to 2014.  REVPAR at Starwood Same-Store Owned Hotels in North America increased 6.7% in constant dollars (increased 2.7% in actual dollars).  Internationally, Starwood Same-Store Owned Hotel REVPAR increased 5.8% in constant dollars (decreased 1.8% in actual dollars).

Revenues at Starwood Same-Store Owned Hotels Worldwide increased 6.7% in constant dollars (increased 1.0% in actual dollars) while costs and expenses increased 4.6% in constant dollars (decreased 1.2% in actual dollars) when compared to 2014.  Margins at these hotels increased approximately 170 basis points compared to 2014.

Revenues at Starwood Same-Store Owned Hotels in North America increased 7.2% in constant dollars (increased 3.0% in actual dollars) while costs and expenses increased 5.6% in constant dollars (increased 1.6% in actual dollars) when compared to 2014.  Margins at these hotels increased approximately 110 basis points compared to 2014.

Internationally, revenues at Starwood Same-Store Owned Hotels increased 6.1% in constant dollars (decreased 1.8% in actual dollars) while costs and expenses increased 3.2% in constant dollars (decreased 5.0% in actual dollars) when compared to 2014.  Margins at these hotels increased approximately 250 basis points compared to 2014.

Revenues at Owned Hotels, which were negatively impacted by asset sales in 2015, were $309 million, compared to $370 million in 2014.  Expenses at Owned Hotels were $237 million compared to $288 million in 2014.

Vacation Ownership and Residential

Vacation ownership and residential revenues for the three months ended December 31, 2015 decreased 7.6%, to $157 million, compared to the corresponding period in 2014 primarily due to the timing of deferred revenues.  Originated contract sales of vacation ownership intervals increased 26.3% for the three months ended December 31, 2015, compared to the corresponding period in 2014, primarily driven by the launch of the new Sheraton Flex product as well as sales at the Westin Nanea Ocean Villas. The number of contracts signed increased 10.1%, and the average price per vacation ownership unit sold increased 13.0% to approximately $15,800.

Selling, General, Administrative and Other

During the fourth quarter of 2015, selling, general, administrative and other expenses (“SG&A”) decreased 11.9% to $96 million compared to $109 million in 2014, primarily due to various cost savings initiatives.  For the full year 2015, SG&A decreased 3.5% to $388 million compared to $402 million in 2014.

Capital

Gross capital spending during the quarter included approximately $56 million of maintenance capital and $60 million of development capital.

Asset Sales

In 2015, the Company received gross cash proceeds from asset sales of approximately $822 million. On February 15, 2016, the Company completed the sale of the Hotel Imperial, A Luxury Collection Hotel, Vienna, for gross cash proceeds of approximately $79 million, subject to a long-term management agreement.  

Restructuring and Other Special Charges

During the fourth quarter of 2015, the Company recorded a $3 million restructuring charge primarily related to the Company’s previously announced cost savings initiatives. The Company also recorded $34 million of other special charges primarily consisting of $10 million in costs associated with the planned ILG transaction as well as $17 million in costs associated with the Company’s review of strategic alternatives, which culminated in Marriott’s proposed acquisition of the Company.

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Dividend

On November 5, 2015, the Company declared a regular quarterly dividend of $0.375 per share, which was paid on December 23, 2015 to stockholders of record as of December 9, 2015.  The total dividends paid in the fourth quarter of 2015 were approximately $63 million. For the full year 2015, the Company has paid approximately $255 million in total dividends.

Share Repurchase

In the fourth quarter of 2015, the Company repurchased 0.6 million shares at a total cost of approximately $43 million and a weighted average price of $70.44 per share.  As of December 31, 2015, approximately $458 million remained available under the Company’s share repurchase authorization.  For the full year 2015, the Company has repurchased 4.7 million shares at a total cost of $371 million and an average price of $78.39.

Balance Sheet

At December 31, 2015, the Company had gross debt of $2.2 billion, cash and cash equivalents of $1.1 billion (including $50 million of restricted cash) and net debt of $1.1 billion, compared to net debt of $1.7 billion as of December 31, 2014, in each case excluding debt and restricted cash associated with securitized vacation ownership notes receivable.  Net debt at December 31, 2015, including $172 million of debt and $8 million of restricted cash associated with securitized vacation ownership notes receivable, was $1.3 billion.

ILG Transaction

On October 27, 2015, the Company entered into definitive agreements with ILG, pursuant to which the Company’s vacation ownership business will be distributed on a pro rata basis to its stockholders and immediately after will merge with a wholly-owned subsidiary of ILG. In addition, the Company will transfer five hotels to ILG. When the merger is completed, the Company’s stockholders will own approximately 55% of the outstanding shares of ILG on a fully-diluted basis and the existing stockholders of ILG will own approximately 45% of ILG on a fully-diluted basis. The transactions are expected to qualify as tax-free transactions to the Company’s stockholders and are subject to customary closing conditions, including regulatory and ILG stockholder approvals. The transactions will not require a vote of the Company’s stockholders and, assuming satisfaction of all required conditions, the parties expect the transactions to close in the second quarter of 2016.

Marriott Transaction

On November 15, 2015, the Company entered into a definitive merger agreement with Marriott, pursuant to which the Company agreed to be acquired by Marriott. At closing, the Company’s stockholders will receive 0.92 shares of Marriott common stock and $2.00 in cash for each share of the Company’s common stock. On a pro forma basis, the Company’s stockholders will own approximately 39% of the combined company’s common stock after the completion of the merger. The Company’s stockholders will separately receive consideration from the spin-off of the Company’s vacation ownership business and subsequent merger with ILG. Following the closing, Marriott’s Board of Directors will increase from 11 to 14 members with the expected addition of three members of the Company’s Board of Directors.

The transaction is subject to Marriott and the Company’s stockholder approvals, completion of the Company’s planned disposition of its vacation ownership business, regulatory approvals and the satisfaction of other customary closing conditions.  Assuming satisfaction of all required conditions, the parties expect the transaction to close in mid-2016.

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Outlook

For the full year 2016:

 

 

 

 

 

 

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For the three months ended March 31, 2016:

 

 

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Special Items

The Company’s special items included a pre-tax charge of $6 million ($15 million benefit after-tax) in the fourth quarter of 2015 compared to a pre-tax benefit of $23 million ($74 million after-tax) in the same period of 2014.

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):

 

During the three months ended December 31, 2014, the net gain relates to the acceleration of $31 million of deferred gains primarily related to hotels that were converted from management to franchise contracts, a $10 million gain on the sale of our interest in an unconsolidated joint venture hotel, partially offset by a loss of $17 million from the sale of four wholly-owned hotels. The year ended December 31, 2014 also includes a net loss of $39 million from the impairment of three hotels, an impairment charge of $7 million associated with a foreign unconsolidated joint venture, and a $9 million charge related to the termination of a leasehold interest in a hotel which is now franchised.

 

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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 ongoing operations.

Starwood will be conducting a conference call to discuss the fourth quarter financial results at 1:00 p.m. Eastern Standard Time today, available via webcast on the Company’s website at http://www.starwoodhotels.com/corporate/about/investor/earnings.html. A webcast replay will be available on the corporate website a few hours after the live event on Thursday, February 18 and will run for one year. Alternatively, participants may dial into the live call at (866) 921-0636 with conference ID 6065537. Outside the U.S., participants may dial into the live call at (706) 758-8764. Please dial in fifteen minutes early to ensure a timely start. A call replay will be available a few hours after the live event on Thursday, February 18 and will run for one week; the call replay can be accessed by dialing (855) 859-2056 with conference ID 6065537. Outside the U.S., the call replay can be accessed at (404) 537-3406.

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 and other special charges (credits) 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 ongoing 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 Owned or Owned Hotels reflect the Company’s owned, leased, and consolidated joint venture hotels.  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 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.

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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.  All references to core fees represent total management and franchise fees.

 

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with nearly 1,300 properties in some 100 countries and approximately 188,000 employees at its owned and managed properties. Starwood is a fully integrated owner, operator and franchisor of hotels, resorts and residences under the renowned brands: St. Regis®, The Luxury Collection®, W®, Westin®, Le Méridien®, Sheraton®, Tribute Portfolio™, Four Points® by Sheraton, Aloft®, and Element®, along with an expanded partnership with Design Hotels™. The Company also boasts one of the industry’s leading loyalty programs, Starwood Preferred Guest (SPG^®). Visit www.starwoodhotels.com for more information and stay connected @starwoodbuzz on Twitter and Instagram and facebook.com/Starwood. For more information, including reconciliations of non-GAAP financial measures to GAAP financial measures, please visit www.starwoodhotels.com or contact Investor Relations at (203) 351-3500.

 

Cautionary Statement Regarding Forward Looking Statements

 

This communication includes “forward-looking” statements, as that term is defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission (“SEC”) in its rules, regulations and releases. Forward-looking statements are any statements other than statements of historical fact, including statements regarding Starwood’s and Marriot’s expectations, beliefs, hopes, intentions or strategies regarding the future. Among other things, these forward-looking statements may include statements regarding the proposed combination of Starwood and Marriott; our beliefs relating to value creation as a result of a potential combination with Marriott; the expected timetable for completing the transactions; benefits and synergies of the transactions; future opportunities for the combined company; and any other statements regarding Starwood’s and Marriott’s future beliefs, expectations, plans, intentions, financial condition or performance. In some cases, forward-looking statements can be identified by the use of words such as “may,” “will,” “expects,” “should,” “believes,” “plans,” “anticipates,” “estimates,” “predicts,” “potential,” “continue,” or other words of similar meaning. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in, or implied by, the forward-looking statements. Factors that might cause such a difference include, but are not limited to, general economic conditions, our financial and business prospects, our capital requirements, our financing prospects, our relationships with associates and labor unions, our ability to consummate potential acquisitions or dispositions or the spin-off of our vacation ownership business and its subsequent merger with a wholly-owned subsidiary of ILG or realize the anticipated benefits of such transactions, and those disclosed as risks in other reports filed by us with the SEC, including those described in Part I of our most recently filed Annual Report on Form 10-K and subsequent reports on Forms 10-Q and 8-K as well as on Marriott’s most recently filed Annual Report on Form 10-K and subsequent reports on Forms 10-Q and 8-K and those discussed in the joint proxy statement/prospectus included in the registration statement on Form S-4 (Reg. No. 333-208684) filed by Marriott with the SEC on December 22, 2015 and the amendments thereto. Other risks and uncertainties include the timing and likelihood of completion of the proposed transactions between Starwood and Marriott, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals for the proposed transactions that could reduce anticipated benefits or cause the parties to abandon the transactions; the possibility that Starwood’s stockholders may not approve the proposed transactions; the possibility that Marriott’s stockholders may not approve the proposed transactions; the possibility that the expected synergies and value creation from the proposed transactions will not be realized or will not be realized within the expected time period; the risk that the businesses of Starwood and Marriott will not be integrated successfully; disruption from the proposed transactions making it more difficult to maintain business and operational relationships; the risk that unexpected costs will be incurred; the possibility that the proposed transactions do not close, including due to the failure to satisfy the closing conditions; as well as more specific risks and uncertainties. We caution readers that any such statements are based on currently available operational, financial and competitive information, and they should not place undue reliance on these forward-looking statements, which reflect management's opinion only as of the date on which they were made. Except as required by law, we disclaim any obligation to review or update these forward-looking statements to reflect events or circumstances as they occur.

 

 

 

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NO OFFER OR SOLICITATION

 

This communication is neither an offer to buy, nor a solicitation of an offer to sell, subscribe for or buy any securities or the solicitation of any vote or approval in any jurisdiction pursuant to or in connection with the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law.

 

ADDITIONAL INFORMATION ABOUT THE PROPOSED TRANSACTION WITH MARRIOTT AND WHERE TO FIND IT

 

The proposed transaction involving Marriott and Starwood will be submitted to Starwood’s stockholders and Marriott’s stockholders for their consideration. In connection with the proposed transaction, Marriott has filed with the SEC on December 22, 2015 a registration statement on Form S-4 (Reg. No. 333-208684) that includes a joint proxy statement/prospectus for Starwood’s stockholders and Marriott’s stockholders. The registration statement, which has been amended in recent filings by Marriott, was declared effective by the SEC on February 17, 2016. Each of Starwood and Marriott will commence mailing the definitive joint proxy statement/prospectus to their respective stockholders on or about February 19, 2016, and Marriott may file other documents regarding the proposed transaction with the SEC. This communication is not intended to be, and is not, a substitute for such filings or for any other document that Marriott or Starwood may file with the SEC in connection with the proposed transaction. SECURITY HOLDERS ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE REGISTRATION STATEMENT ON FORM S-4 AND THE JOINT PROXY STATEMENT/PROSPECTUS AND THE AMENDMENTS THERETO AND ANY OTHER RELEVANT DOCUMENTS, CAREFULLY WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The registration statement, the joint proxy statement/prospectus, the amendments thereto and other relevant materials and any other documents filed or furnished by Marriott or Starwood with the SEC may be obtained free of charge at the SEC’s web site at www.sec.gov. In addition, security holders will be able to obtain free copies of the registration statement, the joint proxy statement/prospectus and the amendments thereto from Marriott by going to its investor relations page on its corporate web site at www.marriott.com and from Starwood by going to its investor relations page on its corporate web site at www.starwoodhotels.com.

 

ADDITIONAL INFORMATION ABOUT THE PROPOSED TRANSACTION WITH ILG AND WHERE TO FIND IT

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This communication may be deemed to be solicitation material in respect of the proposed merger between a wholly-owned subsidiary of ILG and Vistana Signature Experiences, Inc. (“Vistana”). In connection with the proposed merger, ILG has filed a registration statement on Form S-4, containing a proxy statement/prospectus with the SEC. STOCKHOLDERS OF ILG AND STARWOOD ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT/PROSPECTUS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Investors and security holders will be able to obtain copies of the proxy statement/prospectus as well as other filings containing information about ILG, Starwood and Vistana, without charge, at the SEC’s website, http://www.sec.gov. Copies of documents filed with the SEC by ILG will be made available free of charge on ILG’s investor relations website. Copies of documents filed with the SEC by Starwood will be made available free of charge on Starwood’s investor relations website.

PARTICIPANTS IN THE SOLICITATIONS

Marriott, Starwood, their respective directors and certain of their respective executive officers and employees may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction with Marriott. Information about Marriott’s directors and executive officers is set forth in its definitive proxy statement filed with the SEC on April 7, 2015 and information about Starwood’s directors and executive officers is set forth in its definitive proxy statement filed with the SEC on April 17, 2015.  These documents are available free of charge from the sources indicated above, and from Marriott by going to its investor relations page on its corporate web site at www.marriott.com and from Starwood by going to its investor relations page on its corporate web site at www.starwoodhotels.com. Additional information regarding the interests of participants in the solicitation of proxies in connection with the proposed transaction is presented in the joint proxy statement/prospectus included in the registration statement on Form S-4 (Reg. No. 333-

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208684) as amended by Marriott in a filing with the SEC on February 16, 2016 and declared effective by the SEC on February 17, 2016, and may be included in other relevant materials that Marriott and Starwood file with the SEC.

 

ILG and its directors and executive officers, and Starwood and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the holders of ILG common stock in respect of ILG’s stock issuance in connection with the proposed merger of Vistana with a wholly owned subsidiary of ILG. Information about the directors and executive officers of ILG is set forth in the proxy statement for ILG’s 2015 Annual Meeting of Stockholders, which was filed with the SEC on April 6, 2015. Information about the directors and executive officers of Starwood is set forth in the proxy statement for Starwood’s 2015 Annual Meeting of Stockholders, which was filed with the SEC on April 17, 2015. Investors may obtain additional information regarding the interest of such participants by reading the proxy statement/prospectus regarding the proposed merger when it becomes available.

 

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Unaudited Consolidated Statements of Income

(In millions, except per share data)

 

 

n/m = not meaningful

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Consolidated Balance Sheets

(In millions, except share data)

 

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Historical Data

(In millions)

 

 

n/m = not meaningful

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Same-Store Owned Hotels Worldwide

(In millions)

 

 

Non-GAAP to GAAP Reconciliations – Same-Store Owned Hotels North America

(In millions)

 

 

Non-GAAP to GAAP Reconciliations – Same-Store Owned Hotels International

(In millions)

 

 

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Future Performance

(In millions, except per share data)

 

 

 

  

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Same Store Owned Hotel Revenue and Expenses

(In millions)

 

 

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Systemwide⁽¹⁾ Statistics - Same Store

For the Three Months Ended December 31,

UNAUDITED

 

 

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Worldwide Hotel Results - Same Store

For the Three Months Ended December 31,

UNAUDITED

 

 

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Owned Hotel Results - Same Store

For the Three Months Ended December 31,

UNAUDITED

 

 

*Revenues and Expenses above are represented in '000s

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Management Fees, Franchise Fees and Other Income

For the Three Months Ended December 31,

UNAUDITED ($ millions)

 

 

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Vacation Ownership and Residential Revenues and Expenses

For the Three Months Ended December 31,

UNAUDITED ($ millions)

 

 

Note: Deferred revenue is calculated based on the Percentage of Completion ("POC") of the project.  Deferred expenses, also based on POC, include product costs and direct sales and marketing costs only.  Indirect sales and marketing costs are not deferred per ASC 978-720-25 and ASC 978-340-25.

n/m = not meaningful

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Total Earnings by Geographic Area – Owned

For the Twelve Months Ended December 31, 2015

UNAUDITED

 

 

(1) Represents earnings for owned, leased, and consolidated joint venture hotels before depreciation expense.

(2) Includes U.S. territories.

 

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Total Core Fees by Geographic Area

For the Twelve Months Ended December 31, 2015

UNAUDITED

 

 

(1) Includes U.S. territories.

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Systemwide⁽¹⁾ Statistics - Same Store

For the Twelve Months Ended December 31,

UNAUDITED

 

 

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Worldwide Hotel Results - Same Store

For the Twelve Months Ended December 31,

UNAUDITED

 

 

 

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Owned Hotel Results - Same Store

For the Twelve Months Ended December 31,

UNAUDITED

 

 

*Revenues and Expenses above are represented in '000s

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Management Fees, Franchise Fees and Other Income

For the Twelve Months Ended December 31,

UNAUDITED ($ millions)

 

 

 

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Vacation Ownership and Residential Revenues and Expenses

For the Twelve Months Ended December 31,

UNAUDITED ($ millions)

 

 

Note: Deferred revenue is calculated based on the Percentage of Completion ("POC") of the project.  Deferred expenses, also based on POC, include product costs and direct sales and marketing costs only.  Indirect sales and marketing costs are not deferred per ASC 978-720-25 and ASC 978-340-25.

n/m = not meaningful

 

31

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Owned Hotels without Comparable Results and Other Selected Items

As of December 31, 2015

UNAUDITED ($ millions)

 

Owned Hotels without comparable results in 2015 and 2014:

 

 

Owned Hotels sold or closed in 2015 and 2014:

 

 

Revenues and expenses associated with hotels sold or closed in 2015 and 2014: ⁽¹⁾

 

 

 

32

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Capital Expenditures

For the Three and Twelve Months Ended December 31, 2015

UNAUDITED ($ millions)

 

 

 

 

 

33

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Divisional Hotel Inventory Summary by Ownership by Brand

As of December 31, 2015

 

 

 

 

34

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Vacation Ownership Inventory Pipeline

As of December 31, 2015

UNAUDITED

 

 

 

 

 

 

35