Starwood 2006 Annual Report Download - page 47

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against a portion of the risks associated with such volatility. We continue to have exposure to such risks to the extent
they are not hedged.
Interest rate swap agreements are the primary instruments used to manage interest rate risk. At December 31,
2006, we had two outstanding long-term interest rate swap agreements under which we pay variable interest rates
and receive fixed interest rates. At December 31, 2006, we had no interest rate swap agreements under which we pay
a fixed rate and receive a variable rate.
We enter into a derivative financial arrangement to the extent it meets the objectives described above, and we
do not engage in such transactions for trading or speculative purposes.
See Note 21. Derivative Financial Instruments in the notes to financial statements filed as part of this Annual
Report and incorporated herein by reference for further description of derivative financial instruments.
The following table sets forth the scheduled maturities and the total fair value of our debt portfolio:
2007 2008 2009 2010 2011 Thereafter
Total at
December 31,
2006
Total Fair
Value at
December 31,
2006
Expected Maturity or
Transaction Date
At December 31,
Liabilities
Fixed rate (in millions) ..... $709 $ 5 $ 5 $ 5 $ 6 $1,335 $2,065 $2,151
Average interest rate ....... 6.97%
Floating rate (in millions) . . . $ 96 $— $35 $ 1 $435 $ — $ 567 $ 567
Average interest rate ....... 6.08%
Interest Rate Swaps
Fixed to variable
(in millions) ........... $ — $— $— $— $ — $ 300 $ 300
Average pay rate ........ 9.59%
Average receive rate ..... 7.88%
Item 8. Financial Statements and Supplementary Data.
The financial statements and supplementary data required by this Item are included in Item 15 of this Annual
Report and are incorporated herein by reference.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
The Company’s management conducted an evaluation, under the supervision and with the participation of the
Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of
the Company’s disclosure controls and procedures as of December 31, 2006. Based on this evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are
effective in alerting them in a timely manner to material information required to be included in the Company’s SEC
reports.
Management’s Report on Internal Control over Financial Reporting
Management of Starwood Hotels & Resorts Worldwide Inc. and its subsidiaries is responsible for establishing
and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act
Rule 13a-15(f) or 15(d)-15(f). Those rules define internal control over financial reporting as a process designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
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