Starwood 2008 Annual Report Download - page 143
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During the year ended December 31, 2007, the Company recorded net restructuring and other special charges
of approximately $53 million primarily related to the Company’s redevelopment of the Sheraton Bal Harbour Beach
Resort. The Company demolished the hotel in late 2007 and plans to rebuild a St. Regis hotel along with branded
residences and fractional units. Bal Harbour was closed for business on July 1, 2007, and the majority of employees
were terminated. The charge primarily related to accelerated depreciation, demolition, and severance costs. This
charge was partially offset by a $2 million refund related to a terminated life insurance policy.
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.
Restructuring and Other Special Charges by operating segment are as follows:
2008 2007 2006
Year Ended
December 31,
Segment
Hotel ....................................................... $ 41 $53 $20
Vacation Ownership & Residential ................................. 100 — —
Total ....................................................... $141 $53 $20
The Company had remaining accruals of $41 million as of December 31, 2008, which are primarily recorded in
accrued expenses and other liabilities. The following table summarizes activity in the restructuring and other special
charges related accounts during the year ended December 31, 2008 (in millions):
December 31,
2007 Expenses Payments
Non-Cash
Other
Reversal of
Accruals
December 31,
2008
Retained reserves established by
Sheraton Holding prior to its
merger with the Company in
1998 ................... $ 8 — — — — $ 8
Bal Harbour demolition costs . . . 1 $ 2 $ (3) — — —
Consulting fees associated with
cost reduction initiatives ..... — 5 (2) — — 3
Severance ................. — 39 (20) $ 4 23
Closure of vacation ownership
facilities................. — 16 (1) (8) — 7
Impairments ............... — 79 — (79) — —
Total ..................... $ 9 $141 $(26) $(83) — $41
F-27
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)