Starwood 2003 Annual Report Download - page 84

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
AND STARWOOD HOTELS & RESORTS
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
for available-for-sale securities. The Company had BeneÑcial and Retained Interests of $50 million and
$47 million at December 31, 2003 and 2002, respectively.
Use of Estimates. The preparation of Ñnancial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates and assumptions that aÅect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the Ñnancial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could diÅer from those estimates.
ReclassiÑcations. Certain reclassiÑcations have been made to the prior years' Ñnancial statements to
conform to the current year presentation.
Impact of Recently Issued Accounting Standards. In December 2003, FASB issued SFAS No. 132
(revised 2003), ""Employers' Disclosures about Pensions and Other Postretirement BeneÑts'' (SFAS
No. 132-(R)). SFAS No. 132-(R) retains the disclosure requirements in the original SFAS No. 132, but
requires additional disclosures related to plan assets, plan obligations, cash Öows and net periodic beneÑt cost
of deÑned beneÑt pension and other postretirement plans. In addition, this statement requires interim period
disclosure of the components of net periodic beneÑt costs and contributions if signiÑcantly diÅerent from
previously reported amounts. The Company adopted SFAS No. 132-(R) eÅective December 31, 2003 for its
domestic pension and postretirement plans, and incorporated the new disclosure requirements into Note 15.
Employee BeneÑt Plans. SFAS No. 132-(R) is eÅective December 31, 2004 for the Company's foreign
pension plans.
In May 2003, FASB issued SFAS No. 150 ""Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity.'' This statement establishes standards for how an issuer
classiÑes and measures certain Ñnancial instruments with characteristics of both liabilities and equity, and is
eÅective for Ñnancial instruments entered into or modiÑed after May 31, 2003, and otherwise is eÅective at the
beginning of the Ñrst interim period beginning after June 15, 2003. As a result of further discussion by the
FASB on October 8, 2003, the FASB announced that minority interests in consolidated partnerships with
speciÑed Ñnite lives should be reclassiÑed as liabilities and presented at fair market value unless the interests
are convertible into the equity of the parent. Fair market value adjustments occurring subsequent to July 1,
2003 should be recorded as a component of interest expense. At their October 29, 2003 meeting, the FASB
agreed to indeÑnitely defer the implementation of their announcement at the October 8, 2003 meeting
regarding the accounting treatment for minority interests in Ñnite life partnerships. Therefore, until a Ñnal
resolution is reached, the Company will not implement this aspect of the standard. If the Company were to
adopt this aspect of the standard under its current provisions, it is not expected to have a material impact on
the Company's Ñnancial statements.
In April 2003, the FASB issued SFAS No. 149, ""Amendment of Statement 133 on Derivative
Instruments and Hedging Activities'' which amends and clariÑes Ñnancial accounting and reporting for
derivative instruments and hedging activities, including the qualiÑcations for the normal purchases and normal
sales exception, under SFAS No. 133, ""Accounting for Derivative Instruments and Hedging Activities.'' The
amendment reÖects decisions made by the FASB in connection with issues raised about the application of
SFAS No. 133. Generally, the provisions of SFAS No. 149 will be applied prospectively for contracts entered
into or modiÑed after June 30, 2003, and for hedging relationships designated after June 30, 2003. Adoption of
SFAS No. 149 did not have a material eÅect on the Company's Ñnancial statements.
In January 2003, the FASB issued FIN 46 which requires a variable interest entity (""VIE'') to be
consolidated by its primary beneÑciary (""PB''). The PB is the party that absorbs a majority of the VIE's
expected losses and/or receives a majority of the expected residual returns.
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