Starwood Fourth Quarter Profit Down

Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today reported fourth quarter 2011 financial results.

“We grew worldwide systemwide REVPAR by 5.8%, delivering strong fourth quarter EBITDA and EPS. Each of our nine brands performed well, driving REVPAR index gains for the tenth quarter in a row.”

Fourth Quarter 2011 Highlights

• Excluding special items, EPS from continuing operations was $0.71, including income from the St. Regis Bal Harbour residential project. Including special items, EPS from continuing operations was $0.80, including an income tax benefit of $0.40 primarily related to the use of tax capital losses, offset by charges totaling $0.31 primarily related to an unfavorable legal decision, the early extinguishment of debt and hotel impairments.
• Adjusted EBITDA was $321 million, which included $33 million of EBITDA from the St. Regis Bal Harbour residential project, up 19.3% compared to 2010.
• Excluding special items, income from continuing operations was $140 million, including income from the St. Regis Bal Harbour residential project. Including special items, income from continuing operations was $158 million.
• Worldwide System-wide REVPAR for Same-Store Hotels increased 5.9% (5.8% in constant dollars) compared to 2010. System-wide REVPAR for Same-Store Hotels in North America increased 7.7% (7.6% in constant dollars).
• Management fees, franchise fees and other income increased 12.0% compared to 2010.
• Worldwide Same-Store company-operated gross operating profit margins increased approximately 110 basis points compared to 2010.
• Worldwide REVPAR for Starwood branded Same-Store Owned Hotels increased 5.7% (5.0% in constant dollars) compared to 2010.
• Margins at Starwood branded Same-Store Owned Hotels Worldwide increased approximately 230 basis points compared to 2010.
• Earnings from our vacation ownership and residential business increased approximately $40 million compared to 2010, including $33 million of earnings from the St. Regis Bal Harbour residential project.
• During the quarter, the Company signed 36 hotel management and franchise contracts representing approximately 7,600 rooms and opened 28 hotels and resorts with approximately 7,900 rooms.

Fourth Quarter 2011 Earnings Summary

Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported EPS from continuing operations for the fourth quarter of 2011 of $0.80 compared to $1.08 in the fourth quarter of 2010. Excluding special items, EPS from continuing operations was $0.71 for the fourth quarter of 2011, including income from the St. Regis Bal Harbour residential project (“Bal Harbour”), compared to $0.52 in the fourth quarter of 2010. Special items in the fourth quarter of 2011 included a pre-tax charge of $98 million, representing a charge of approximately $70 million related to an unfavorable legal decision, a charge of $14 million related to certain hotel impairments and a charge of $16 million related to costs associated with the early extinguishment of debt. Special items in the fourth quarter of 2011 also included an income tax benefit of $116 million, primarily associated with the utilization of capital losses which had previously been fully reserved and the tax effects of the special items discussed above. Special items in the fourth quarter of 2010 included a pre-tax benefit of $69 million, primarily related to the favorable settlement of a lawsuit. Special items in the fourth quarter of 2010 also included a $38 million income tax benefit primarily related to the favorable settlement with the IRS regarding the 1998 disposition of World Directories, Inc. Excluding special items, the effective income tax rate in the fourth quarter of 2011 was 28.3%, including income from Bal Harbour, compared to 24.9% in the fourth quarter of 2010.

Income from continuing operations was $158 million in the fourth quarter of 2011 compared to $206 million in the fourth quarter of 2010. Excluding special items, income from continuing operations was $140 million in the fourth quarter of 2011, including income from Bal Harbour, compared to $99 million in the fourth quarter of 2010.

Net income was $167 million and $0.85 per share in the fourth quarter of 2011 compared to $339 million and $1.78 per share in the fourth quarter of 2010. In addition to the special items discussed above, 2010 results benefited from a gain of $132 million reflected in discontinued operations related to the final settlement with the IRS regarding the 1998 disposition of World Directories, Inc.

Frits van Paasschen, CEO said, “We grew worldwide systemwide REVPAR by 5.8%, delivering strong fourth quarter EBITDA and EPS. Each of our nine brands performed well, driving REVPAR index gains for the tenth quarter in a row."

“Our strong and growing presence in the emerging markets fueled almost 21,000 room openings in 2011, the most in our Company’s history. These openings bring our five year total to 389 new hotels. In other words, over one-third of our 1,090 hotels are newly opened. When combined with a full year REVPAR increase of 7.4%, our fees jumped 14.3%, a strong acceleration from 2010’s growth rate. As we look to 2012, it is shaping up to be another record year of room additions and strong REVPAR growth.”

“Our efforts to Own the Global Guest are helping us grow faster than the market and driving returns for owners and shareholders. The changes we have made to reinvent the SPG program should allow us to deepen the relationships with our loyal guests as well as attract the next generation of global travel elites."

Year Ended December 31, 2011 Earnings Summary

Income from continuing operations was $502 million for the year ended December 31, 2011 compared to $310 million in the same period in 2010. Excluding special items, income from continuing operations was $378 million for the year ended December 31, 2011, including income from Bal Harbour, compared to $237 million in the same period in 2010. In addition to the fourth quarter special items discussed above, the results for the year ended December 31, 2011 included an income tax benefit of approximately $92 million, primarily as a result of the favorable settlement of an IRS audit and tax benefits associated with asset sales. Excluding special items, the effective income tax rate for the year ended December 31, 2011 was 26.1%, including income from Bal Harbour, when compared to 21.3% in the same period in 2010.

Net income was $489 million and $2.51 per share for the year ended December 31, 2011 compared to $477 million and $2.51 per share in the same period in 2010. In addition to the special items discussed above, 2010 benefited from a gain of $168 million reflected in discontinued operations related to the final settlement with the IRS regarding the 1998 disposition of World Directories, Inc. and a tax benefit in connection with the sale of one wholly-owned hotel.

Adjusted EBITDA was $1.032 billion for the year ended December 31, 2011, including $27 million of EBITDA from Bal Harbour, an increase of approximately 17.4% compared to $879 million in the same period in 2010.

Fourth Quarter 2011 Operating Results

Management and Franchise Revenues

Worldwide System-wide REVPAR for Same-Store Hotels increased 5.9% (5.8% in constant dollars) compared to the fourth quarter of 2010. International System-wide REVPAR for Same-Store Hotels increased 3.7% (3.5% in constant dollars).

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

				REVPAR
Region				Reported				Constant dollars
North America				7.7%				7.6%
Europe				0.2%				0.8%
Asia Pacific				6.6%				5.2%
Africa and the Middle East				(1.0)%				0.2%
Latin America				9.6%				9.6%

Increases in REVPAR for Worldwide System-wide Same-Store Hotels by brand:

				REVPAR
Brand				Reported				Constant dollars
St. Regis/Luxury Collection				6.2%				6.7%
W Hotels				7.8%				8.2%
Westin				8.2%				7.9%
Sheraton				4.3%				4.0%
Le Méridien				1.2%				1.6%
Four Points by Sheraton				8.1%				7.0%
Aloft				12.5%				12.8%

Worldwide Same-Store company-operated gross operating profit margins increased approximately 110 basis points compared to 2010. International gross operating profit margins for Same-Store company-operated properties increased 10 basis points, negatively impacted by political unrest in the Middle East and North Africa. North American Same-Store company-operated gross operating profit margins increased approximately 230 basis points, driven by REVPAR increases and cost controls.

Management fees, franchise fees and other income were $234 million, up $25 million, or 12.0% from the fourth quarter of 2010. Management fees increased 3.9% to $133 million and franchise fees increased 11.9% to $47 million.

For the full year 2011, Worldwide System-wide REVPAR for Same-Store Hotels increased 9.7% (7.4% in constant dollars) compared to the full year 2010. Worldwide Same-Store company-operated gross operating profit margins increased 90 basis points. Management fees, franchise fees and other income were $814 million, up $102 million, or 14.3% compared to the full year 2010. Management fees increased 11.2% to $455 million and franchise fees increased 16.1% to $187 million.

Development

During the fourth quarter of 2011, the Company signed 36 hotel management and franchise contracts, representing approximately 7,600 rooms, of which 25 are new builds and 11 are conversions from other brands. At December 31, 2011, the Company had over 350 hotels in the active pipeline representing almost 90,000 rooms.

During the fourth quarter of 2011, 28 new hotels and resorts (representing approximately 7,900 rooms) entered the system, including the St. Regis Sanya Resort (China, 401 rooms), Le Méridien Coimbatore (India, 254 rooms), St. Regis Saadiyat Island (United Arab Emirates, 377 rooms), The Westin Playa Bonita (Panama, 611 rooms) and Sheraton Kansas City at Crown Center (Missouri, 730 rooms). Ten properties (representing approximately 1,600 rooms) were removed from the system during the quarter.

For the full year 2011, the Company signed 112 hotel management and franchise contracts (representing approximately 28,800 rooms). For the full year 2011, 81 new hotels and resorts (representing approximately 20,900 rooms) entered the system and 32 properties (representing approximately 8,200 rooms) left the system.

Owned, Leased and Consolidated Joint Venture Hotels

Worldwide REVPAR at Starwood branded Same-Store Owned Hotels increased 5.7% (5.0% in constant dollars) in the fourth quarter of 2011 when compared to 2010. REVPAR at Starwood branded Same-Store Owned Hotels in North America increased 5.5% (5.3% in constant dollars). Internationally, Starwood branded Same-Store Owned Hotel REVPAR increased 6.0% (4.7% in constant dollars).

Revenues at Starwood branded Same-Store Owned Hotels in North America increased 4.4% while costs and expenses increased 0.8% when compared to 2010. Margins at these hotels increased approximately 270 basis points.

Revenues at Starwood branded Same-Store Owned Hotels Worldwide increased 4.5% (3.8% in constant dollars) while costs and expenses increased 1.5% (0.7% in constant dollars) when compared to 2010. Margins at these hotels increased approximately 230 basis points.

Revenues at owned, leased and consolidated joint venture hotels were $439 million, compared to $459 million in 2010. Expenses at owned, leased and consolidated joint venture hotels were $346 million compared to $367 million in 2010. Fourth quarter results were impacted by six renovations and four asset sales.

For the full year 2011, Worldwide REVPAR at Starwood branded Same-Store Owned Hotels increased 12.4% (8.7% in constant dollars) when compared to the full year 2010. Margins at these hotels increased approximately 190 basis points.

Vacation Ownership

Total vacation ownership revenues increased 1.5% to $137 million in the fourth quarter of 2011 when compared to 2010. Originated contract sales of vacation ownership intervals increased 6.2% primarily due to increased tour flow from new buyers and improved sales and marketing performance. The number of contracts signed increased 4.3% when compared to 2010 and the average price per vacation ownership unit sold increased 1.4% to approximately $14,500, driven by inventory mix.

For the full year 2011, total vacation ownership revenues increased 7.6% to $566 million when compared to the full year 2010. The number of contracts signed increased 6.4% and the average price per vacation ownership unit sold was flat at approximately $14,900.

Residential

During the fourth quarter of 2011, the Company’s residential revenues were $127 million compared to $1 million in 2010. Residential revenues in the fourth quarter of 2011 included $121 million of revenues from the sale of residential units at Bal Harbour which received certificate of occupancy during the quarter. During the fourth quarter of 2011, upon receiving the certificate of occupancy, the sales of 36 units were closed and the Company realized incremental cash proceeds of $74 million associated with these units.

Selling, General, Administrative and Other

Selling, general, administrative and other expenses increased 11.6% to $96 million compared to $86 million in 2010. The increase was primarily due to a reimbursement of legal costs in 2010 as a result of a favorable legal settlement.

For the full year 2011, selling, general, administrative and other expenses increased 2.3% to $352 million compared to $344 million in the full year 2010.

Legal Decision

In November 2011, a subsidiary of the Company received an unfavorable legal decision. As a result, the Company recognized a $70 million pre-tax charge. The legal decision is not final and the Company intends to appeal.

Capital

Gross capital spending during the quarter included approximately $83 million of maintenance capital and $67 million of development capital. The Company realized net cash flow of $62 million from vacation ownership interest (“VOI”) and residential inventory, primarily related to Bal Harbour.

For the full year 2011, capital spending included $253 million of maintenance capital and $209 million of development capital. Net investment spending on VOI and residential inventory was $15 million.

Dividends

In November 2011, the Company’s Board of Directors increased its annual dividend by 67% to $0.50 per share. The dividend was paid by the Company on December 30, 2011 to holders of record on December 15, 2011.

Balance Sheet

At December 31, 2011, the Company had gross debt of $2.197 billion, excluding $532 million of debt associated with securitized vacation ownership notes receivable. Additionally, the Company had cash and cash equivalents of $666 million (including $212 million of restricted cash), and net debt of $1.531 billion, compared to net debt of $1.675 billion as of September 30, 2011. Net debt at December 31, 2011, including debt and restricted cash ($22 million) associated with securitized vacation ownership notes receivables, was $2.041 billion.

At December 31, 2011, debt was approximately 80% fixed rate and 20% floating rate and its weighted average maturity was 4.1 years with a weighted average interest rate of 6.66% excluding the securitized debt. The Company had cash (including current restricted cash) and availability under the domestic and international revolving credit facility of approximately $2.177 billion.

During the fourth quarter of 2011, the Company sold approximately $210 million of vacation ownership notes receivable realizing cash proceeds of $200 million.

During the fourth quarter of 2011, the Company redeemed all $605 million of its 7.875% Senior Notes outstanding which were originally issued in April 2002 and due May 2012. Redemption premiums and other costs associated with the prepayment were approximately $16 million.

Outlook

In Developed markets, the macroeconomic environment remains uncertain with high unemployment and high public/private debt. While there are increasing concerns about slower, “new” normal demand growth, the lodging supply situation is very favorable. In Emerging markets, macroeconomic growth has been strong, driving high secular growth in both lodging demand and supply. We remain of the view that several scenarios could play out. Our outlook below reflects our Baseline Scenario for the full year 2012:

• Excluding Bal Harbour, adjusted EBITDA is expected to be approximately $1.060 billion to $1.090 billion, assuming:

• REVPAR increases at Same-Store Company Operated Hotels Worldwide of 5% to 7% in constant dollars (approximately 200 basis points lower in dollars at current exchange rates).
• REVPAR increases at Branded Same-Store Owned Hotels Worldwide of 4% to 6% in constant dollars (approximately 200 basis points lower in dollars at current exchange rates).
• Margins at Branded Same-Store Owned Hotels Worldwide increase 100 to 150 basis points.
• Management fees, franchise fees and other income increase approximately 8% to 10%.
• Earnings from our vacation ownership and residential business of approximately $150 million to $155 million.
• Selling, general and administrative expenses increase 3% to 5%.

• Including Bal Harbour, which is expected to contribute at least $80 million of EBITDA, adjusted EBITDA is expected to be approximately $1.140 billion to $1.170 billion.
• Depreciation and amortization is expected to be approximately $300 million.
• Interest expense is expected to be approximately $212 million.
• Inclusive of Bal Harbour, full year effective tax rate is expected to be approximately 30%, and cash taxes are expected to be approximately $100 million.
• Inclusive of Bal Harbour, EPS is expected to be approximately $2.22 to $2.33.
• Full year capital expenditure (excluding vacation ownership and residential inventory) is expected to be approximately $200 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 $375 million.
• Vacation ownership (excluding Bal Harbour) is expected to generate approximately $125 million in positive cash flow. Bal Harbour is expected to generate at least $250 million in net cash flow.

For the three months ended March 31, 2012:

• Excluding Bal Harbour, adjusted EBITDA is expected to be approximately $205 million to $215 million, assuming:

• REVPAR increases at Same-Store Company Operated Hotels Worldwide of 5% to 7% in constant dollars (approximately 100 basis points lower in dollars at current exchange rates).
• REVPAR increases at Branded Same-Store Company Owned Hotels Worldwide of 4% to 6% in constant dollars (approximately 150 basis points lower in dollars at current exchange rates).
• Management fees, franchise fees and other income increase approximately 8% to 10%.
• Earnings from our vacation ownership and residential business are flat year over year.

• Including Bal Harbour, which is expected to contribute at least $60 million of EBITDA, adjusted EBITDA is expected to be approximately $265 million to $275 million.
• Depreciation and amortization is expected to be approximately $73 million.
• Interest expense is expected to be approximately $54 million.
• Including Bal Harbour, income from continuing operations is expected to be approximately $97 million to $104 million, reflecting an effective tax rate of approximately 30%.
• Including Bal Harbour, EPS is expected to be approximately $0.49 to $0.53.

Special Items

The Company’s special items netted to a charge of $98 million ($18 million after-tax benefit) in the fourth quarter of 2011 compared to a benefit of $69 million ($107 million after-tax) in the same period of 2010.

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											Year Ended
December 31,											December 31,
2011				2010							2011							2010
$	140			$	99			Income from continuing operations before special items		$		378					$		237
$	0.71			$	0.52			EPS before special items		$		1.93					$		1.25
								Special Items
	(68	)			73			Restructuring, goodwill impairment, and other special (charges) credits, net (a)				(68	)						75
	(14	)			(4	)		Gain (loss) on asset dispositions and impairments, net (b)			―								(39	)
	(16	)		―				Debt extinguishment (c)				(16	)					―
	(98	)			69			Total special items – pre-tax				(84	)						36
	38				(4	)		Income tax benefit (expense) for special items (d)				108							(5	)
	78				42			Income tax benefit – capital loss utilization and other non-recurring items (e)				100							42
	18				107			Total special items – after-tax				124							73
$	158			$	206			Income (loss) from continuing operations		$		502					$		310
$	0.80			$	1.08			EPS including special items		$		2.57					$		1.63

(a) During the three months and year ended December 31, 2011, the Company recorded restructuring and other special charges of $68 million primarily related to an unfavorable legal decision.

During the three months ended December 31, 2010, the Company recorded restructuring and other special credits of $73 million primarily related to the favorable settlement of a lawsuit and the reversal of a reserve from a previous acquisition no longer deemed necessary. Additionally, the year ended December 31, 2010 includes $2 million of restructuring credits associated with the reversal of previous restructuring reserves no longer deemed necessary.

(b) During the three months ended December 31, 2011, the net loss primarily relates to impairment charges of $7 million related to six hotels where their carrying value exceeded their estimated fair values and impairment charges of $9 million associated with fixed assets at two owned hotels undergoing a significant renovation, partially offset by insurance proceeds as a result of storm damage at another owned hotel. Additionally, the year ended December 31, 2011 includes the gain from an asset exchange transaction that was partially offset by the impairment of a minority investment in a joint venture hotel located in Japan.

During the three months ended December 31, 2010, the net loss primarily relates to the impairment of fixed assets at an owned hotel that is undergoing a significant renovation, offset by a gain on the sale of non-core assets. The year ended December 31, 2010 also includes a loss of $53 million from the sale of one owned hotel partially offset by a gain of $14 million from property insurance proceeds related to an owned hotel damaged by a tornado and a $5 million gain that resulted from the step acquisition of a controlling interest in a previously unconsolidated joint venture.

(c) The three months and year ended December 31, 2011, include $16 million of charges associated with tender premiums and other costs related to the early extinguishment of approximately $605 million of the Company’s long-term debt. These charges were recorded in the interest expense line item.

(d) During the three months and year ended December 31, 2011, the benefit relates primarily to a tax benefit on the special items at the statutory tax rate. The year ended December 31, 2011 also includes a tax benefit on the sale of two wholly-owned hotels with high tax bases as a result of a previous transaction.

During the three months and year ended December 31, 2010, the net expense primarily relates to a tax expense at the statutory rate for restructuring credits partially offset by a benefit related to a gain on the sale of a joint venture investment.

(e) During the three months and year ended December 31, 2011, the benefit primarily relates to the use of capital losses which had previously been reserved and certain changes in valuation allowances associated with deferred tax assets. The year ended December 31, 2011 also includes a tax benefit of $35 million related to the IRS settlement in the third quarter of 2011.

During the three months and year ended December 31, 2010, a $42 million benefit primarily relates to a refund from the IRS of approximately $245 million primarily for previously paid taxes and related interest associated with the settlement of a dispute regarding the 1998 disposition of World Directories, Inc. An additional benefit of $134 million, associated with this settlement, was recorded in discontinued operations.

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.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
Three Months Ended													Year Ended
December 31,													December 31,
								%															%
2011				2010				Variance					2011					2010					Variance
											Revenues
$	439			$	459			(4.4	)		Owned, leased and consolidated joint venture hotels		$	1,768				$	1,704				3.8
	264				136			94.1			Vacation ownership and residential sales and services			703					538				30.7
	234				209			12.0			Management fees, franchise fees and other income			814					712				14.3
	594				536			10.8			Other revenues from managed and franchised properties (a)			2,339					2,117				10.5
	1,531				1,340			14.3						5,624					5,071				10.9
											Costs and Expenses
	346				367			5.7			Owned, leased and consolidated joint venture hotels			1,449					1,395				(3.9	)
	191				103			(85.4	)		Vacation ownership and residential			521					405				(28.6	)
	96				86			(11.6	)		Selling, general, administrative and other			352					344				(2.3	)
	68				(73	)		n/m			Restructuring, goodwill impairment and other special charges (credits), net			68					(75	)			n/m
	58				56			(3.6	)		Depreciation			235					252				6.7
	7				9			22.2			Amortization			30					33				9.1
	594				536			(10.8	)		Other expenses from managed and franchised properties (a)			2,339					2,117				(10.5	)
	1,360				1,084			(25.5	)					4,994					4,471				(11.7	)
	171				256			(33.2	)		Operating income			630					600				5.0
	5				5			―			Equity (losses) earnings and gains and (losses) from unconsolidated ventures, net			11					10				10.0
	(65	)			(56	)		(16.1	)		Interest expense, net of interest income of $1, $1, $3 and $2			(216	)				(236	)			8.5
	(14	)			(4	)		n/m			Gain (loss) on asset dispositions and impairments, net		―						(39	)			100.0
	97				201			(51.7	)		Income from continuing operations before taxes and noncontrolling interests			425					335				26.9
	61				5			n/m			Income tax benefit (expense)			75					(27	)			n/m
	158				206			(23.3	)		Income (loss) from continuing operations			500					308				62.3
											Discontinued Operations:
―					1			(100.0	)		Income (loss) from operations, net of tax		―						(1	)			100.0
	9				132			(93.2	)		Gain (loss) on dispositions, net of tax			( (13	)				168				n/m
	167				339			(50.7	)		Net income (loss)			487					475				2.5
―				―				―			Net loss (income) attributable to noncontrolling interests			2					2				―
$	167			$	339			(50.7	)		Net income (loss) attributable to Starwood		$	489				$	477				2.5
											Earnings (Losses) Per Share – Basic
$	0.82			$	1.13			(27.4	)		Continuing operations		$	2.65				$	1.70				55.9
	0.05				0.72			(93.1	)		Discontinued operations			(0.07	)				0.91				n/m
$	0.87			$	1.85			(53.0	)		Net income (loss)		$	2.58				$	2.61				(1.1	)
											Earnings (Losses) Per Share – Diluted
$	0.80			$	1.08			(25.9	)		Continuing operations		$	2.57				$	1.63				57.7
	0.05				0.70			(92.9	)		Discontinued operations			(0.06	)				0.88				n/m
$	0.85			$	1.78			(52.2	)		Net income (loss)		$	2.51				$	2.51				―
											Amounts attributable to Starwood’s Common Shareholders
$	158			$	206			(23.3	)		Continuing operations		$	502				$	310				61.9
	9				133			(93.2	)		Discontinued operations			(13	)				167				n/m
$	167			$	339			(50.7	)		Net income (loss)		$	489				$	477				2.5
	190				185						Weighted average number of shares			189					183
	196				192						Weighted average number of shares assuming dilution			195					190

(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)
		December 31,				December 31,
		2011				2010
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	454			$	753
Restricted cash			232				53
Accounts receivable, net of allowance for doubtful accounts of $46 and $45			569				513
Inventories			812				802
Securitized vacation ownership notes receivable, net of allowance for doubtful accounts of $10 and $10			64				59
Prepaid expenses and other			125				126
Total current assets			2,256				2,306
Investments			259				312
Plant, property and equipment, net			3,270				3,323
Goodwill and intangible assets, net			2,057				2,067
Deferred tax assets			921				979
Other assets (a)			355				381
Securitized vacation ownership notes receivable			446				408
		$	9,564			$	9,776
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings and current maturities of long-term debt (b)		$	3			$	9
Accounts payable			144				138
Current maturities of long-term securitized vacation ownership debt			130				127
Accrued expenses			1,177				1,104
Accrued salaries, wages and benefits			375				410
Accrued taxes and other			166				373
Total current liabilities			1,995				2,161
Long-term debt (b)			2,194				2,848
Long-term securitized vacation ownership debt			402				367
Deferred income taxes			47				28
Other liabilities			1,971				1,886
			6,609				7,290
Commitments and contingencies
Stockholders’ equity:
Common stock; $0.01 par value; authorized 1,000,000,000 shares; outstanding 195,913,400 and 192,970,437 shares at December 31, 2011 and December 31, 2010, respectively			2				2
Additional paid-in capital			963				805
Accumulated other comprehensive loss			(348	)			(283	)
Retained earnings			2,337				1,947
Total Starwood stockholders’ equity			2,954				2,471
Noncontrolling interest			1				15
Total equity			2,955				2,486	<

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