Starwood 2005 Annual Report Download - page 100

Download and view the complete annual report

Please find page 100 of the 2005 Starwood annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 133

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
AND STARWOOD HOTELS & RESORTS
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
All domestic pension plans are frozen plans, where employees do not accrue additional beneÑts.
Therefore, at December 31, 2005 and 2004, the projected beneÑt obligation is equal to the accumulated
beneÑt obligation. At December 31, 2005 and 2004, the accumulated beneÑt obligation for the foreign pension
plans was $166 million and $129 million, respectively. At December 31, 2005 and 2004, 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, 2005, 2004 and 2003 (in millions):
Postretirement
Pension BeneÑts Foreign Pension BeneÑts BeneÑts
2005 2004 2003 2005 2004 2003 2005 2004 2003
Service costÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $Ì $Ì $Ì $ 4 $ 4 $ 4 $Ì $Ì $Ì
Interest cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1 1 2 8 8 7122
Expected return on plan assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì (1) (8) (8) (7) (1) (1) (1)
Amortization of actuarial loss (gain) ÏÏÏÏÏÏÏÏ Ì Ì Ì 3 3 2ÌÌÌ
SFAS No. 87 cost/SFAS No. 106 cost ÏÏÏÏÏÏ 1 1 1776Ì11
SFAS No. 88 settlement gain ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì (2) (5) Ì Ì ÌÌÌÌ
Net periodic beneÑt cost (income) ÏÏÏÏÏÏÏÏÏÏ $ 1 $(1) $(4) $ 7 $ 7 $ 6 $Ì $ 1 $ 1
For measurement purposes, an 8% annual rate of increase in the per capita cost of covered health care
beneÑts was assumed for 2006. The rate was assumed to decrease gradually to 5% for 2009 and remain at that
level thereafter. A one-percentage-point change in assumed health care cost trend rates would have
approximately a $0.4 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 Pension Postretirement
BeneÑts BeneÑts BeneÑts
2005 2004 2005 2004 2005 2004
Discount rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5.50% 5.51% 5.09% 5.49% 5.49% 5.50%
Rate of compensation increase ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ N/A N/A 3.60% 3.63% N/A N/A
The weighted average assumptions used to determine net periodic beneÑt cost for the years ended
December 31 were as follows:
Foreign Pension
Pension BeneÑts BeneÑts Postretirement BeneÑts
2005 2004 2003 2005 2004 2003 2005 2004 2003
Discount rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5.51% 5.99% 5.86% 5.49% 5.87% 6.09% 5.50% 6.25% 6.75%
Rate of compensation increase ÏÏÏÏÏÏ N/A N/A N/A 3.62% 3.74% 3.96% N/A N/A N/A
Expected return on plan assets ÏÏÏÏÏÏ N/A 6.00% 6.00% 7.10% 7.02% 7.37% 8.00% 8.00% 8.75%
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, historical rates of
return and Company and investment expert expectations for investment performance over approximately a ten
year period.
F-37