Starwood 2003 Annual Report Download - page 91

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
AND STARWOOD HOTELS & RESORTS
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
recorded a $25 million gain resulting from an adjustment to the Company's tax basis in ITT World
Directories, a subsidiary which was disposed of in early 1998 through a tax deferred reorganization. The
increase in the tax basis has the eÅect of reducing the deferred tax charge recorded on the disposition in 1998.
This gain also included the reversal of $5 million (after tax) of liabilities set up in conjunction with the sale of
the former gaming business that are no longer required as the related contingencies have been resolved.
Note 8. Goodwill and Intangible Assets
Prior to the adoption of SFAS No. 142, goodwill and trademarks and trade names were amortized on a
straight-line basis over a 40-year period. EÅective January 1, 2002, goodwill and trademarks and trade names,
which are deemed intangible assets with an indeÑnite life, were no longer amortized. Intangible assets
associated with management and franchise contracts are amortized on a straight-line basis over the initial life
of the respective contract.
The changes in the carrying amount of goodwill for the year ended December 31, 2003 are as follows (in
millions):
Vacation
Hotel Ownership
Segment Segment Total
Balance at January 1, 2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,959 $241 $2,200
Settlement of tax contingency ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1) Ì (1)
Cumulative translation adjustment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 24 Ì 24
Asset dispositions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (113) Ì (113)
Balance at December 31, 2003.ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,869 $241 $2,110
Intangible assets consisted of the following (in millions):
December 31,
2003 2002
Trademarks and trade names ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $226 $226
Management and franchise agreementsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 168 147
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 59 64
453 437
Accumulated amortization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (75) (67)
$378 $370
Amortization expense of $13 million, $13 million and $12 million, respectively, related to intangible
assets with Ñnite lives was recorded during the years ended December 31, 2003, 2002 and 2001. Amortization
expense relating to these assets is expected to be at least $13 million in each of the Ñscal years 2004 through
2009.
Note 9. Other Assets
Contractual Obligations. On December 30, 2003, the Company together with Lehman Brothers
Holdings Inc. (""Lehman Brothers''), announced the acquisition of all of the outstanding senior debt
(approximately $1.3 billion), at a discount, of Le Meridien Hotels and Resorts Ltd. (""Le Meridien''). The
Company funded its $200 million share of this acquisition through a high yield junior participation in the debt.
As part of this funding, Lehman Brothers and the Company have entered into an exclusive agreement through
F-25