Starwood 2006 Annual Report Download - page 86

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2005 Restructuring and Other Special Charges (Credits). During the year ended December 31, 2005, the
Company recorded a $13 million charge primarily related to severance costs in connection with the Company’s
restructuring as a result of its planned disposition of significant real estate assets. The Company also recorded
$3 million of transition costs associated with the acquisition of the Le Méridien brand and management business in
November 2005. These charges were offset by the reversal of $3 million of reserves related to the Company’s
acquisition of Sheraton Holding Corporation and its subsidiaries (formerly ITT Corporation) in 1998 as the related
obligations no longer exist.
2004 Other Special Credits. During the year ended December 31, 2004, the Company reversed a $37 million
special charge previously recorded in 1999 due to the favorable resolution of a litigation matter.
Note 13. Income Taxes
Income tax data from continuing operations of the Company is as follows (in millions):
2006 2005 2004
Year Ended December 31,
Pretax income
U.S. ..................................................... $556 $535 $307
Foreign................................................... 126 107 105
$ 682 $ 642 $412
Provision (benefit) for income tax
Current:
U.S. federal ............................................. $104 $258 $(33)
State and local ........................................... 31 14 6
Foreign ................................................. 51 57 39
186 329 12
Deferred:
U.S. federal ............................................. (517) (19) 32
State and local ........................................... (84) (60) (7)
Foreign ................................................. (19) (31) 6
(620) (110) 31
$(434) $ 219 $ 43
No provision has been made for U.S. taxes payable on undistributed foreign earnings amounting to approx-
imately $344 million as of December 31, 2006, since these amounts are permanently reinvested.
n December 2004, the FASB issued FASB Staff Position No. 109-2, “Accounting and Disclosure Guidance for
the Foreign Repatriation Provision within the American Jobs Creation Act of 2004,” in response to the American Jobs
Creation Act of 2004 (the “Act”) which provided for a special one-time dividends received deduction of 85 percent for
certain foreign earnings that were repatriated (as defined in the Act) in either an enterprise’s last tax year that began
before the December 2004 enactment date, or the first tax year that began during the one-year period beginning on the
date of the enactment. In 2005, Starwood’s Board of Directors adopted a plan to repatriate approximately $550 million
and, accordingly, the Company recorded a tax liability of approximately $47 million. The Company borrowed these
funds in Italy, repatriated them to the United States and reinvested them pursuant to the terms of a domestic
reinvestment plan which has been approved by the Company’s Board of Directors in accordance with the Act.
F-25
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)