Starwood 2006 Annual Report Download - page 106

without regard to whether the current or previous owner or operator knew of, or was responsible for, the presence of
such hazardous or toxic substances. Although the Company has incurred and expects to incur remediation and other
environmental costs during the ordinary course of operations, management anticipates that such costs will not have
a material adverse effect on the operations or financial condition of the Company.
Captive Insurance Company. Estimated insurance claims payable at December 31, 2006 and 2005 were
$94 million and $95 million, respectively. At December 31, 2006 and 2005, standby letters of credit amounting to
$132 million and $103 million, respectively, had been issued to provide collateral for the estimated claims. The
letters of credit are guaranteed by the Company.
ITT Industries. In 1995, the former ITT Corporation, renamed ITT Industries, Inc. (“ITT Industries”),
distributed to its stockholders all of the outstanding shares of common stock of ITT Corporation, then a wholly
owned subsidiary of ITT Industries (the “Distribution”). In connection with this Distribution, ITT Corporation,
which was then named ITT Destinations, Inc., changed its name to ITT Corporation. Subsequent to the acquisition
of ITT Corporation in 1998, the Company changed the name of ITT Corporation to Sheraton Holding Corporation.
For purposes of governing certain of the ongoing relationships between the Company and ITT Industries after
the Distribution and spin-off of ITT Corporation and to provide for an orderly transition, the Company and ITT
Industries have entered into various agreements including a spin-off agreement, Employee Benefits Services and
Liability Agreement, Tax Allocation Agreement and Intellectual Property Transfer and License Agreements. The
Company may be liable to or due reimbursement from ITT Industries relating to the resolution of certain pre-spin-
off matters under these agreements. As discussed in Note 1, as part of the Host Transaction, the Company sold the
shares of Sheraton Holding to Host. In connection with this transaction, the Company entered into an indemni-
fication agreement with Host for certain obligations including those associated with the Distribution. Based on
available information, management does not believe that these matters would have a material impact on the
consolidated results of operations, financial position or cash flows.
Note 24. Business Segment and Geographical Information
The Company has two operating segments: hotels and vacation ownership and residential. The hotel segment
generally represents a worldwide network of owned, leased and consolidated joint venture hotels and resorts
operated primarily under the Company’s proprietary brand names including St. Regis», The Luxury Collection»,
Sheraton», Westin»,W», Le Méridien», and Four Points»by Sheraton as well as hotels and resorts which are
managed or franchised under these brand names in exchange for fees. The vacation ownership and residential
segment includes the development, ownership and operation of vacation ownership resorts, marketing and selling
VOIs, providing financing to customers who purchase such interests and the sale of residential units.
The performance of the hotels and vacation ownership and residential segments is evaluated primarily on
operating profit before corporate selling, general and administrative expense, interest, gains (losses) on the sale of
real estate, restructuring and other special (charges) credits, and income taxes. The Company does not allocate these
items to its segments.
F-45
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)