Starwood 2009 Annual Report Download - page 140

Note 4. Significant Acquisitions
Acquisition of the Sheraton Full Moon Maldives Resort and Spa
During the fourth quarter of 2008, the Company entered into a joint venture that acquired the Sheraton Full
Moon Maldives Resort and Spa. The Company invested approximately $28 million in this venture in exchange for a
45% ownership interest.
Note 5. Asset Dispositions and Impairments
As a result of the current economic climate, during 2009 and 2008, the Company reviewed the recoverability of
its carrying values of its owned hotels and determined that certain hotels were impaired. The fair values of the hotels
were estimated by using discounted cash flows, comparative sales for similar assets and recent letters of intent to
sell certain assets. Impairment charges of $41 million and $64 million, relating to 11 hotels, were recorded in the
years ended December 31, 2009 and 2008, respectively. These assets are reported in the Hotels operating segment. It
is reasonably possible that there will be additional impairments on owned hotels in 2010 if economic conditions
worsen.
Additionally, during 2009, the Company recorded a $13 million impairment of an investment in a hotel
management contract that has been cancelled, a $5 million impairment of certain technology-related fixed assets
and a $4 million loss on the sale of a wholly-owned hotel.
During 2009 and 2008, as a result of market conditions and its impact on the timeshare industry, the Company
reviewed the fair value of its economic interests in securitized VOI notes receivable and concluded these interests
were impaired. The fair value of the Company’s investment in these retained interests was determined by estimating
the net present value of the expected future cash flows, based on expected default and prepayment rates (See
Note 10.) The Company recorded impairment charges of $22 million and $23 million in the years ended
December 31, 2009 and 2008, respectively, related to these retained interests. These assets are reported in the
Vacation Ownership and Residential operating segment.
During the third quarter of 2009, the Company sold a wholly-owned hotel for cash proceeds of approximately
$90 million. This sale was subject to a long-term management contract, and the Company recorded a deferred gain
of $8 million in connection with the sale.
During the fourth quarter of 2008, the Company sold a wholly-owned hotel for net cash proceeds of
$99 million. This sale was subject to a long term management contract and the Company recorded a deferred
gain of $27 million in connection with the sale.
During the third quarter of 2008, the Company recorded a loss of $11 million primarily related to an investment
in which the Company holds a minority interest. This investment was fully written off as the joint venture’s lenders
began foreclosure proceedings on the underlying assets of the venture.
Note 6. Assets Held for Sale
During the fourth quarter of 2009, the Company entered into purchase and sale agreements for the sale of two
wholly owned hotels for total expected cash consideration of approximately $78 million. The Company received an
$8 million non-refundable deposit from the prospective buyer during the quarter. The Company classified these
assets and the estimated goodwill to be allocated as assets held for sale, ceased depreciating them and reclassified
the operating results to discontinued operations. Reclassifications have been made to the 2008 balance in order to be
comparable to the 2009 presentation (see Note 17).
F-17
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)