Starwood 2007 Annual Report Download - page 156

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The investment objective of the foreign pension plans and postretirement benefit plan is to seek long-term
capital appreciation and current income by investing in a diversified portfolio of equity and fixed income securities
with a moderate level of risk. At December 31, 2007, all remaining domestic pension plans are unfunded plans.
The Company expects to contribute approximately $1 million to its domestic pension plans, approximately
$14 million to its foreign pension plans, and approximately $2 million to the postretirement benefit plan in 2007.
The following table represents the Company’s expected pension and postretirement benefit plan payments for the
next five years and the five years thereafter (in millions):
Pension
Benefits
Foreign Pension
Benefits
Postretirement
Benefits
2008 ........................................ $1 $ 8 $2
2009 ........................................ $1 $ 8 $2
2010 ........................................ $1 $ 8 $2
2011 ........................................ $1 $ 9 $2
2012 ........................................ $1 $10 $2
2013 — 2017 .................................. $7 $63 $7
Defined Contribution Plans. The Company and its subsidiaries sponsor various defined contribution plans,
including the Starwood Hotels & Resorts Worldwide, Inc. Savings and Retirement Plan, which is a voluntary
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 $28 million in 2007, $25 million in 2006 and $22 million in 2005. Included as an
investment choice is the Company’s publicly traded common stock, which had a balance of $62 million and
$88 million at December 31, 2007 and 2006, respectively.
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 $9 million in 2007,
$8 million in 2006 and $11 million in 2005 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 (19 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 (19 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 or revenues 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.
F-36
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)