Starwood 2006 Annual Report Download - page 85

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Annual prepayment rate:
100 basis points-dollars .................................................. $ 0.4
100 basis points-percentage ............................................... 0.9%
200 basis points-dollars .................................................. $ 0.8
200 basis points-percentage ............................................... 1.7%
Discount rate:
100 basis points-dollars .................................................. $ 1.1
100 basis points-percentage ............................................... 2.2%
200 basis points-dollars .................................................. $ 2.1
200 basis points-percentage ............................................... 4.3%
Gross annual rate of credit losses:
100 basis points-dollars .................................................. $ 8.0
100 basis points-percentage ............................................... 16.2%
200 basis points-dollars .................................................. $15.7
200 basis points-percentage ............................................... 31.9%
Note 11. Deferred Gains
The Company defers gains realized in connection with the sale of a property for which the Company continues
to manage the property through a long-term management agreement and recognizes the gains over the initial term of
the related agreement. As of December 31, 2006 and 2005, the Company had total deferred gains of $1.258 billion
and $267 million, respectively, included in accrued expenses and other liabilities in the Company’s consolidated
balance sheets. Amortization of deferred gains is included in management fees, franchise fees and other income in
the Company’s consolidated statements of income and totaled approximately $62 million, $12 million and
$11 million in 2006, 2005 and 2004, respectively. The increase in deferred gains and their amortization in
2006 is primarily due to the Host Transaction discussed in Note 5.
Note 12. Restructuring and Other Special Charges (Credits)
The Company had remaining accruals related to restructuring charges of $11 million and $28 million,
respectively, at December 31, 2006 and 2005, of which $6 million is included in other liabilities in the accom-
panying consolidated balance sheets for both periods. The following table summarizes the activity in the
restructuring accruals in 2006 (in millions):
December 31,
2005
Expenses
Accrued
Cash
Payments
Reversal of
Accruals
December 31,
2006
Retained reserves established by Sheraton
Holding prior to its merger with the
Company in 1998 ................... $17 $— $ (1) $(8) $ 8
Severance costs related to a corporate
restructuring which began in 2005 ....... 11 3 (11) — 3
Total .............................. $28 $ 3 $(12) $ (8) $11
2006 Restructuring and Other Special Charges (Credits). During the year ended December 31, 2006, the
Company incurred and paid approximately $21 million of transition costs associated with the Le Meridien
Acquisition. Also during 2006, the Company recorded a charge of approximately $7 million related to severance
costs primarily related to certain executives in connection with the continued corporate restructuring that began at
the end of 2005, of which approximately $4 million related to compensation expense due to the accelerated vesting
of previously granted stock-based awards. These charges were offset by the reversal of $8 million of accruals for a
lease the Company assumed as part of the merger with Sheraton Holding in 1998 as the lease matured at the end of
2006 and the accruals exceeded the Company’s maximum obligation under the lease.
F-24
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)