Starwood 2007 Annual Report Download - page 154
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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, 2007 and 2006 (in millions):
2007 2006 2007 2006 2007 2006
Pension Benefits Foreign Pension Benefits
Postretirement
Benefits
Change in Projected Benefit Obligation
Benefit obligation at beginning of year . . . . . $ 17 $ 16 $196 $187 $ 19 $ 23
Service cost ....................... — — 5 4 — —
Interest cost ....................... 1 1 12 10 1 1
Actuarial loss (gain) ................. — 1 (4) (3) 2 (3)
Settlements and curtailments .......... — — — (2) — —
Effect of foreign exchange rates ........ — — 5 11 — —
Benefits paid ...................... (1) (1) (8) (8) (2) (2)
Adjustment to pension plans acquired .... — — — (3) — —
Benefit obligation at end of year ......... $17 $17 $206 $196 $ 20 $ 19
Change in Plan Assets
Fair value of plan assets at beginning of
year ............................. $— $— $161 $129 $ 7 $ 9
Actual return on plan assets, net of
expenses ....................... — — 12 16 — —
Employer contribution ............... 1 1 16 16 2 2
Effect of foreign exchange rates ........ — — 4 8 — —
Asset transfer ...................... — — — — (2) (2)
Benefits paid ...................... (1) (1) (8) (8) (2) (2)
Fair value of plan assets at end of year . . . . . $ — $ — $185 $161 $ 5 $ 7
Funded status ....................... $(17) $(17) $ (21) $ (35) $ (15) $ (12)
Accumulated benefit obligation .......... $17 $17 $186 $181 $N/A $N/A
The underfunded status of the plans at December 31, 2007 was $2 million and $53 million, and is recognized in
the accompanying consolidated balance sheet in accrued expenses and other liabilities, respectively. The over-
funded status of the plan of $2 million at December 31, 2007 is recognized in other assets in the Company’s
consolidated balance sheet.
All domestic pension plans are frozen plans, where employees do not accrue additional benefits. Therefore, at
December 31, 2007 and 2006, the projected benefit obligation is equal to the accumulated benefit obligation. In
March 2006, the Company elected to freeze its pension plans in the United Kingdom. Its other foreign pension plans
are not frozen, and accordingly, at December 31, 2007 and 2006, the accumulated benefit obligation for the foreign
pension plans was $186 million and $181 million, respectively.
F-34
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)