Starwood 2012 Annual Report Download - page 138

net addition of 49 managed and franchised hotels to our system since the beginning of 2011. Additionally,
residential sales at the St. Regis Bal Harbour favorably impacted 2011 operating income by $27 million.
Operating income for the year ended December 31, 2011, as compared to 2010, was negatively impacted by a
$70 million charge associated with an unfavorable legal decision in 2011, while 2010 benefited from a favorable
settlement of a lawsuit of $75 million. Results were also negatively impacted by political unrest in the Middle
East and North Africa, as well as the earthquake and tsunami in Japan.
Year Ended
December 31,
2011
Year Ended
December 31,
2010
Increase /
(decrease)
from prior
year
Percentage
change
from prior
year
(in millions)
Equity Earnings (Losses) and Gains and
Losses from Unconsolidated Ventures,
Net ................................ $11 $10 $1 10.0%
The increase in equity earnings and gains and losses from unconsolidated joint ventures for the year ended
December 31, 2011, when compared to the corresponding period of 2010, was primarily due to improved
operating results at several properties owned by joint ventures in which we hold non-controlling interests,
partially offset by unfavorable mark-to-market adjustments on US dollar denominated loans at several properties
in Latin America.
Year Ended
December 31,
2011
Year Ended
December 31,
2010
Increase /
(decrease)
from prior
year
Percentage
change
from prior
year
(in millions)
Net Interest Expense .................... $200 $235 $(35) (14.9)%
The decrease in net interest expense for the year ended December 31, 2011, when compared to the
corresponding period of 2010, was primarily due to a lower average debt balance and an increase in capitalized
interest related to construction projects, primarily relating to the St. Regis Bal Harbour. Our weighted average
interest rate was 6.66% at December 31, 2011 as compared to 6.86% at December 31, 2010.
Year Ended
December 31,
2011
Year Ended
December 31,
2010
Increase /
(decrease)
from prior
year
Percentage
change
from prior
year
(in millions)
Loss on Early Extinguishment of Debt,
net ................................. $16 $1 $15 n/m
The increase in loss on early extinguishment of debt, net is from the $16 million charge for redemption
premiums and other costs associated with the December 2011 redemption of all $605 million of our 7.875%
Senior Notes due 2012.
Year Ended
December 31,
2011
Year Ended
December 31,
2010
Increase /
(decrease)
from prior
year
Percentage
change
from prior
year
(in millions)
Loss on Asset Dispositions and Impairments,
Net ................................ $— $(39) $(39) 100.0%
During the year ended December 31, 2011, we recorded an impairment charge of $31 million to write-off
our noncontrolling interest in a joint venture that owns a hotel in Tokyo, Japan, a $9 million loss due to
significant renovations and related asset retirements at two properties, $7 million in losses relating to the
impairment of six hotels whose carrying value exceeded their book value and a $2 million loss on an investment
in a management contract that was terminated during the period. These amounts were offset by a $50 million
gain as a result of the write-up to fair value of our previously held noncontrolling interest in two hotels in which
we obtained a controlling interest (see Note 4).
39