Starwood 2006 Annual Report Download - page 93

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Defined Benefit and Postretirement Benefit Plans. The Company and its subsidiaries sponsor or previously
sponsored numerous funded and unfunded domestic and international pension plans. All defined benefit plans
covering U.S. employees are frozen. Certain plans covering non-U.S. employees remain active.
As a result of annuity purchases and lump sum distributions from our domestic pension plans, the Company
recorded net settlement gains (losses) of approximately $(0.1) million, $(0.3) million and $2 million during the
years ended December 31, 2006, 2005 and 2004, respectively.
The Company also sponsors the Starwood Hotels & Resorts Worldwide, Inc. Retiree Welfare Program. This
plan provides health care and life insurance benefits for certain eligible retired employees. The Company has
prefunded a portion of the health care and life insurance obligations through trust funds where such prefunding can
be accomplished on a tax effective basis. The Company also funds this program on a pay-as-you-go basis.
The following table sets forth the projected benefit obligation, fair value of plan assets, the funded status and
the accumulated benefit obligation of the Company’s defined benefit pension and postretirement benefit plans at
December 31, 2006 and 2005 (in millions):
2006 2005 2006 2005 2006 2005
Pension
Benefits
Foreign Pension
Benefits
Postretirement
Benefits
Change in Projected Benefit Obligation
Benefit obligation at beginning of year................. $16 $16 $187 $156 $ 23 $ 27
Service cost................................... — — 4 4 — —
Interest cost................................... 1 1 10 8 1 1
Actuarial loss (gain) ............................ 1 — (3) 13 (3) (3)
Acquisitions .................................. — — — 26 — —
Settlements and curtailments ...................... — — (2) (7) — —
Effect of foreign exchange rates .................... — — 11 (8) — —
Benefits paid .................................. (1) (1) (8) (5) (2) (2)
Adjustment to pension plans acquired................ — — (3) — — —
Benefit obligation at end of year ..................... $17 $16 $196 $187 $ 19 $ 23
Change in Plan Assets
Fair value of plan assets at beginning of year ............ $— $— $129 $110 $ 9 $ 11
Actual return on plan assets, net of expenses .......... — — 16 12 — —
Reimbursement of benefit payments ................. — — — — — (2)
Employer contribution ........................... 1 1 16 6 2 3
Acquisitions .................................. — — — 19 — —
Settlements and curtailments ...................... — — — (7) — —
Effect of foreign exchange rates .................... — — 8 (6) — —
Asset transfer . ................................ — — — — (2) —
Benefits paid .................................. (1) (1) (8) (5) (2) (3)
Fair value of plan assets at end of year ................ $— $— $161 $129 $ 7 $ 9
Funded status ................................... $(17) $(16) $ (35) $ (58) $ (12) $ (14)
Accumulated benefit obligation ...................... $17 $16 $181 $166 $N/A $N/A
The underfunded status of the plans of $1 million and $64 million at December 31, 2006 is recognized in the
accompanying consolidated balance sheet in accrued expenses and other liabilities, respectively. The overfunded
F-32
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)