Starwood 2005 Annual Report Download - page 85

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
AND STARWOOD HOTELS & RESORTS
NOTES TO FINANCIAL STATEMENTS Ì (Continued)
Note 5. Asset Dispositions and Impairments
In December 2005, the Company sold the Hotel Danieli in Venice, Italy for approximately 177 million
euros (approximately $213 million based on the exchange rate at the time the sale closed) in cash. The
Company continues to manage the hotel subject to a long-term management contract. Accordingly, the gain
on the sale of approximately $128 million was deferred and is being recognized in earnings over the 10-year
life of the management contract.
The Company sold four additional hotels for approximately $53 million in cash during 2005 and recorded
losses totaling approximately $13 million associated with these sales. The Company had recorded impairment
charges of $17 million in 2004 related to one of these properties.
Also during 2005, the Company sold three hotels unencumbered by long-term management contracts for
approximately $171 million in cash and recorded gains totaling approximately $38 million associated with
these sales.
In August 2005 the Company completed the sale of the St. Regis hotel in Washington D.C. for
approximately $47 million in cash. The Company continues to manage the hotel subject to a long-term
management contract. Accordingly, the gain on the sale of approximately $32 million was deferred and is
being recognized in earnings over the 15-year life of the management contract.
In April 2005, the Company completed the sale of the Sheraton Lisboa Hotel and Towers in Lisbon,
Portugal for approximately $31 million in cash. The Company continues to manage the hotel subject to a long-
term management contract. Accordingly, the gain on the sale of approximately $6 million was deferred and is
being recognized in earnings over the 20-year life of the management contract.
The hotels sold in 2005 were generally encumbered by long-term management or franchise contracts so
their operations prior to the sale date are not classiÑed as discontinued operations.
The Company recorded an impairment charge of approximately $17 million in 2005 associated with the
owned Sheraton hotel in Cancun, Mexico that is being partially demolished to build vacation ownership units.
The Company also recorded an impairment charge of approximately $32 million in accordance with
SFAS No. 144 in order to write down one hotel to its fair market value.
Subsequent to December 31, 2005, Starwood entered into deÑnitive agreements and later sold two hotels
with a carrying value of approximately $74 million for approximately $123 million in cash. These hotels were
sold subject to franchise agreements. The resulting gain net of allocated goodwill and other liabilities of
approximately $31 million will be recognized in the Ñrst quarter of 2006.
During 2004, the Company sold two hotels for approximately $56 million in cash. The Company recorded
a net loss of $33 million primarily related to the sale of these hotels, the impairment of one hotel sold in
January 2005, and three investments deemed impaired in 2004.
During 2003 the Company recorded a $183 million charge primarily related to the impairment of 18 non-
core domestic hotels that were held for sale. The Company sold 16 of these hotels for approximately
$404 million in cash, the majority of which were sold subject to franchise agreements.
In June 2003, the Company also sold a portfolio of assets including four hotels, a marina and shipyard, a
golf club and a 51% interest in its undeveloped land in Costa Smeralda in Sardinia, Italy (""Sardinia Assets'')
for 290 million euros (approximately $340 million based on exchange rates at the time the sale closed) in
cash. The Company continues to manage the four hotels subject to long-term management contracts.
Accordingly, the results related to the Sardinia Assets prior to the sale date are not classiÑed as discontinued
operations and the gain on sale of approximately $77 million was deferred and is being recognized in earnings
over the 10.5 year life of the management contracts. The Company recorded a $9 million gain on the sale of
F-22