Starwood 2007 Annual Report Download - page 145

of employees were terminated. The Company has recorded the following expenses in 2007 related to Bal Harbour in
restructuring and other special charges (in millions):
Accelerated depreciation of the hotel’s property, plant & equipment and charges related to
inventory that was not salvageable ............................................ $48
Demolition costs........................................................... 4
Severance costs ........................................................... 2
Accrual for asbestos abatement ................................................ 1
Total ................................................................. $55
In the first quarter of 2007, the Company recorded net restructuring and other special credits of $2 million
primarily related to the refund of premium payments related to the termination of a retired executive officer’s life
insurance policy that were previously recorded as a restructuring charge in conjunction with the acquisition of
Sheraton Holding in 1998.
The Company had remaining accruals related to restructuring charges of $9 million and $11 million at
December 31, 2007 and December 31, 2006, respectively, of which $6 million is included in other liabilities in the
accompanying consolidated balance sheets for both periods. The following table summarizes the activity in the
restructuring accruals in 2007 (in millions):
December 31,
2006
Expenses
Accrued
Cash
Payments
Reversal of
Accruals
December 31,
2007
Retained reserves established by Sheraton
Holding prior to its merger with the
Company in 1998 ................. $ 8 $— $— $— $ 8
Severance costs related to a corporate
restructuring which began in 2005 ..... 3 — (3) — —
Costs related to the Bal Harbour
demolition . . .................... — 4 (4) — —
Severance costs related to the Bal Harbour
redevelopment .................... — 2 (2) — —
Bal Harbour asbestos abatement ........ — 1 — — 1
Total............................. $11 $ 7 $(9) $— $ 9
2006 Restructuring and Other Special Charges, Net. During the year ended December 31, 2006, the
Company incurred and paid approximately $21 million of transition costs associated with the Le Méridien
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 reserve exceeded the
Company’s maximum obligation.
2005 Restructuring and Other Special Charges, Net. 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 in 1998 as the related obligations no longer exist.
F-25
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)