Starwood 2003 Annual Report Download - page 101

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
AND STARWOOD HOTELS & RESORTS
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
At December 31, 2003 and 2002, the accumulated beneÑt obligation for the Company's domestic pension
plans was $20 million and $34 million, respectively, and the accumulated beneÑt obligation for the foreign
pension plans was $112 million and $95 million, respectively. At December 31, 2003 and 2002, the projected
beneÑt obligation and accumulated beneÑt obligation exceeded the fair value of plan assets for all of the
Company's domestic and foreign pension plans, and the accumulated postretirement beneÑt obligation
exceeded plan assets of the postretirement beneÑt plan.
The following table presents the components of net periodic beneÑt cost for the years ended Decem-
ber 31, 2003, 2002 and 2001 (amounts are in millions):
Pension Foreign Postretirement
BeneÑts Pension BeneÑts BeneÑts
2003 2002 2001 2003 2002 2001 2003 2002 2001
Service cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $Ì $ Ì $ Ì $ 4 $ 3 $ 2 $Ì $Ì $Ì
Interest cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2 3 3 766222
Expected return on plan assets ÏÏÏÏÏÏÏÏ (1) (2) (3) (7) (8) (8) (1) (1) (2)
Amortization of:
Prior service cost (income) ÏÏÏÏÏÏÏÏÏ Ì Ì Ì ÌÌÌÌÌ(1)
Actuarial (gain) lossÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì (1) 2ÌÌÌ(1)Ì
SFAS 87 cost/SFAS 106 costÏÏÏÏÏÏÏÏÏ 1 1 (1) 6 1 Ì 1 Ì (1)
SFAS 88 settlement gain ÏÏÏÏÏÏÏÏÏÏÏÏÏ (5) (3) (14) ÌÌÌÌÌÌ
Net periodic beneÑt cost (income)ÏÏÏÏÏ $(4) $ (2) $(15) $ 6 $ 1 $Ì $ 1 $Ì $(1)
For measurement purposes, a 10% annual rate of increase in the per capita cost of covered health care
beneÑts was assumed for 2003 and 2004. The rate was assumed to decrease gradually to 5.00% for 2009 and
remain at that level thereafter. Assumed health care cost trend rates can have a signiÑcant eÅect on the
amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend
rates would have a $1 million eÅect on the postretirement obligation and a nominal impact on the total of
service and interest cost components of net periodic beneÑt cost.
The weighted average assumptions used to determine beneÑt obligations at December 31, were as follows:
Pension Foreign Postretirement
BeneÑts Pension BeneÑts BeneÑts
2003 2002 2003 2002 2003 2002
Discount rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5.99% 5.86% 5.87% 6.09% 6.25% 6.75%
Rate of compensation increaseÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ N/A N/A 3.74% 3.96% N/A N/A
The weighted average assumptions used to determine net periodic beneÑt cost for the years ended
December 31, were as follows:
Pension Foreign Postretirement
BeneÑts Pension BeneÑts BeneÑts
2003 2002 2001 2003 2002 2001 2003 2002 2001
Discount rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5.86% 6.37% 6.81% 6.09% 6.44% 6.63% 6.75% 7.25% 7.25%
Rate of compensation increase N/A N/A N/A 3.96% 4.29% 4.59% N/A N/A N/A
Expected return on plan assets 6.00% 6.00% 7.00% 7.37% 7.94% 8.11% 8.75% 8.00% 9.75%
A number of factors were considered in the determination of the expected return on plan assets. These
factors included current and expected allocation of plan assets, the investment strategy of cash planning,
F-35