Starwood 2006 Annual Report Download - page 69

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The accompanying consolidated financial statements represent the consolidated financial position and
consolidated results of operations of Starwood Hotels & Resorts Worldwide, Inc. and its subsidiaries (the
“Corporation”). Unless the context otherwise requires, all references to the Corporation include those entities
owned or controlled by the Corporation, which prior to April 10, 2006 included Starwood Hotels & Resorts (the
“Trust”). All references to “Starwood” or the “Company” refer to the Corporation, the Trust and its respective
subsidiaries, collectively through April 7, 2006. As a result of the Host Transaction (as defined below) in April
2006, the financial statements for the Trust are no longer required to be consolidated or presented separately, nor are
we required to include a guarantor footnote containing certain financial information for Sheraton Holding
Corporation (“Sheraton Holding”), a former subsidiary of the Corporation.
Starwood is one of the world’s largest hotel and leisure companies. The Company’s principal business is hotels
and leisure, which is comprised of a worldwide hospitality network of more than 850 full-service hotels, vacation
ownership resorts and residential developments primarily serving two markets: luxury and upscale. The principal
operations of Starwood Vacation Ownership, Inc. (“SVO”) include the acquisition, development and operation of
vacation ownership resorts; marketing and selling vacation ownership interests (“VOIs”) in the resorts; and
providing financing to customers who purchase such interests.
The Trust was formed in 1969 and elected to be taxed as a real estate investment trust under the Internal
Revenue Code. In 1980, the Trust formed the Corporation and made a distribution to the Trust’s shareholders of one
share of common stock, par value $0.01 per share, of the Corporation (a “Corporation Share”) for each common
share of beneficial interest, par value $0.01 per share, of the Trust (a “Trust Share”).
Pursuant to a reorganization in 1999, the Trust became a subsidiary of the Corporation, which indirectly held
all outstanding shares of the new Class A shares of beneficial interest of the Trust (“Class A Shares”). In the 1999
reorganization, each Trust Share was converted into one share of the new non-voting Class B Shares of beneficial
interest in the Trust (a “Class B Share”). Prior to the Host Transaction discussed below and in detail in Note 5, the
Corporation Shares and the Class B Shares traded together on a one-for-one basis, consisting of one Corporation
Share and one Class B Share (the “Shares”).
On April 7, 2006, in connection with the transaction (the “Host Transaction”) with Host Hotels & Resorts, Inc.
(“Host”) described below, the Shares were depaired and the Corporation Shares became transferable separately
from the Class B Shares. As a result of the depairing, the Corporation Shares trade alone under the symbol “HOT”
on the New York Stock Exchange (“NYSE”). As of April 10, 2006, neither Shares nor Class B Shares are listed or
traded on the NYSE.
On April 10, 2006, in connection with the Host Transaction, certain subsidiaries of Host acquired the Trust and
Sheraton Holding from the Corporation. As part of the Host Transaction, among other things, (i) a subsidiary of
Host was merged with and into the Trust, with the Trust surviving as a subsidiary of Host, (ii) all the capital stock of
Sheraton Holding was sold to Host and (iii) a subsidiary of Host was merged with and into SLT Realty Limited
Partnership (the “Realty Partnership”) with the Realty Partnership surviving as a subsidiary of Host.
Note 2. Significant Accounting Policies
Principles of Consolidation. The accompanying consolidated financial statements of the Company and its
subsidiaries include the assets, liabilities, revenues and expenses of majority-owned subsidiaries over which the
Company exercises control. Intercompany transactions and balances have been eliminated in consolidation.
Cash and Cash Equivalents. The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
F-8