Starwood 2005 Annual Report Download - page 106

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
AND STARWOOD HOTELS & RESORTS
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
designated as Net Investment Hedges by using the changes in forward exchange rates because this method
best reÖects the Company's risk management strategies and the economics of those strategies in the Ñnancial
statements. Under this method, the change in fair value of the hedging instrument attributable to the changes
in forward exchange rates is reported in stockholders' equity to oÅset the translation results on the hedged net
investment. The remaining change in fair value of the hedging instrument, if any, is recognized through
income. As of December 31, 2005, the Company had no Net Investment Hedges outstanding.
The counterparties to the Company's derivative Ñnancial instruments are major Ñnancial institutions. The
Company does not expect its derivative Ñnancial instruments to signiÑcantly impact earnings in the next
twelve months.
Note 21. Related Party Transactions
The Company on occasion made loans to employees, including executive oÇcers, prior to August 23,
2002, principally in connection with home purchases upon relocation. As of December 31, 2005, approxi-
mately $4.1 million in loans to 11 employees was outstanding of which approximately $2.9 million were non-
interest bearing home loans. Home loans are generally due Ñve years from the date of issuance or upon
termination of employment and are secured by a second mortgage on the employee's home. Theodore W.
Darnall, President, Real Estate Group, an executive oÇcer, received a home loan in connection with
relocation in 1996 and 1998 (original balance of $750,000 ($150,000 bridge loan in 1996 and $600,000 home
loan in 1998)). Mr. Darnall repaid $600,000 in 2003. As a result of the acquisition of ITT Corporation in
1998, restricted stock awarded to Mr. Darnall in 1996 vested at a price for tax purposes of $53 per Share. This
amount was taxable at ordinary income rates. By late 1998, the value of the stock had fallen below the amount
of income tax owed. In order to avoid a situation in which the executive could be required to sell all of the
Shares acquired by him to cover income taxes, in April 1999 the Company made an interest-bearing loan at
5.67% to Mr. Darnall of approximately $416,000 to cover the taxes payable. Mr. Darnall's loan was repaid in
2004.
Brett Gellein is Manager, Acquisitions and Purchases for Starwood Vacation Ownership. Mr. Gellein's
salary and bonus were $42,182 for 2004 and $86,769 for 2005. Brett Gellein is the son of Raymond Gellein,
who is Chairman of the Board and Chief Executive OÇcer of Starwood Vacation Ownership.
Note 22. Commitments and Contingencies
The Company had the following contractual obligations outstanding as of December 31, 2005 (in
millions):
Due in Less Due in Due in Due After
Total Than 1 Year 1-3 Years 3-5 Years 5 Years
Unconditional purchase obligations(a) ÏÏÏÏ $135 $45 $57 $25 $8
Other long-term obligations ÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì Ì Ì
Total contractual obligations ÏÏÏÏÏÏÏÏÏÏÏÏ $135 $45 $57 $25 $8
(a) Included in these balances are commitments that may be satisÑed by the Company's managed and franchised properties.
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