Starwood 2006 Annual Report Download - page 96

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defined contribution plan allowing participation by employees on U.S. payroll who meet certain age and service
requirements. Each participant may contribute on a pretax basis between 1% and 18% of his or her compensation to
the plan subject to certain maximum limits. The plan also contains provisions for matching contributions to be made
by the Company, which are based on a portion of a participant’s eligible compensation. The amount of expense for
matching contributions totaled $25 million in 2006, $22 million in 2005 and $20 million in 2004.
Multi-Employer Pension Plans. Certain employees are covered by union sponsored multi-employer pen-
sion plans. Pursuant to agreements between the Company and various unions, contributions of $8 million in 2006,
$11 million in 2005 and $10 million in 2004 were made by the Company and charged to expense.
Note 18. Leases and Rentals
The Company leases certain equipment for the hotels’ operations under various lease agreements. The leases
extend for varying periods through 2014 and generally are for a fixed amount each month. In addition, several of the
Company’s hotels are subject to leases of land or building facilities from third parties, which extend for varying
periods through 2089 and generally contain fixed and variable components, including a 25-year building lease of
the Westin Dublin hotel in Dublin, Ireland (20 years remaining under the lease) with fixed annual payments of
$3 million and a building lease of the W Times Square hotel in New York City which has a term of 25 years (20 years
remaining under the lease) with fixed annual lease payments of $16 million. The variable components of leases of
land or building facilities are based on the operating profit of the related hotels.
In June 2004, the Company entered into an agreement to lease the W Barcelona hotel in Spain, which is in the
process of being constructed with an anticipated opening date of December 2009. The term of this lease is 15 years
with annual fixed rent payments which range from approximately 7 million euros to 9 million euros. In conjunction
with entering into this lease, the Company made a 9 million euro guarantee to the lessor that it will not terminate the
lease prior to the lease commencement date. At the lease commencement date, the Company must provide a letter of
credit to the lessor for 9 million euros as security for the first three years of rent. This letter of credit would supersede
the Company’s guarantee once the hotel opens.
The Company’s minimum future rents at December 31, 2006 payable under non-cancelable operating leases
with third parties are as follows (in millions):
2007 .................................................................. $ 66
2008 .................................................................. $ 65
2009 .................................................................. $ 62
2010 .................................................................. $ 62
2011 .................................................................. $ 58
Thereafter ............................................................... $762
Rent expense under non-cancelable operating leases consisted of the following (in millions):
2006 2005 2004
Year Ended
December 31,
Minimum rent ................................................. $76 $80 $72
Contingent rent ................................................ 11 19 14
Sublease rent .................................................. (4) (7) (6)
$83 $92 $80
F-35
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)