Starwood 2005 Annual Report Download - page 102

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
AND STARWOOD HOTELS & RESORTS
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
extend for varying periods through 2069 and generally contain Ñxed and variable components, including a
25-year building lease of the Westin Dublin hotel in Dublin, Ireland (21 years remaining under the lease) with
Ñxed annual payments of $3 million and a building lease of the W Times Square hotel in New York City
which has a term of 25 years (21 years remaining under the lease) with Ñxed annual lease payments of
$16 million.
In June 2004, the Company entered into an agreement to lease the W Barcelona hotel in Spain, which is
in the process of being constructed with an anticipated opening date of June 2008. The term of this lease is
15 years with annual Ñxed rent payments which range from approximately 7 million euros to 9 million euros.
In conjunction with entering into this lease, the Company made a 9 million euro guarantee to the lessor that it
will not terminate the lease prior to the lease commencement date. At the lease commencement date, the
Company must provide a letter of credit to the lessor for 9 million euros as security for the Ñrst three years of
rent. This letter of credit would supersede the Company's guarantee once the hotel opens.
The Company's minimum future rents at December 31, 2005 payable under non-cancelable operating
leases with third parties are as follows (in millions):
2006ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 78
2007ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 71
2008ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 69
2009ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 65
2010ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 60
Thereafter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $799
Rent expense under non-cancelable operating leases was $92 million, $85 million and $77 million in 2005,
2004 and 2003, respectively.
The Trust owned equity interests in 73 hotels, all of which were leased to the Corporation for some
portion of the year ended December 31, 2005 (eight of which were sold during 2005). The leases between the
Trust and the Corporation are generally for Ñve-year terms and provide for annual base, or minimum rents,
plus contingent, or percentage rents based on the gross revenues of the properties and are accounted for as
operating leases. The leases are ""triple-net'' in that the lessee is generally responsible for paying all operating
expenses of the properties, including maintenance, insurance and real property taxes. The lessee is also
generally responsible for any payments required pursuant to underlying ground leases. Total rental expense
incurred by the Corporation under such leases with the Trust was approximately $372 million for the year
ended December 31, 2005, of which approximately $141 million related to percentage rent. The Trust's rents
receivable from the Corporation relating to leased hotel properties at December 31, 2005 and 2004 were
$91 million and $70 million, respectively.
The Corporation's minimum future rents at December 31, 2005 payable under non-cancelable operating
leases with the Trust, are as follows (in millions):
2006ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $224
2007ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 93
Note 18. Stockholders' Equity
Share Repurchases. In October 2005, the Board of Directors of the Company authorized the repurchase
of up to an additional $1 billion of Shares under the Company's existing share repurchase program (the
""Share Repurchase Program''). During the year ended December 31, 2005, the Company repurchased
4.0 million shares at a total cost of $253 million. Pursuant to the Share Repurchase Program, through
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