Starwood 2010 Annual Report Download - page 100

Other revenues from managed and franchised properties decreased primarily due to a decrease in costs,
commensurate with the decline in revenues, at our managed and franchised hotels. These revenues represent
reimbursements of costs incurred on behalf of managed hotel and vacation ownership properties and franchisees
and relate primarily to payroll costs at managed properties where we are the employer. Since the reimbursements
are made based upon the costs incurred with no added margin, these revenues and corresponding expenses have no
effect on our operating income and our net income.
Year Ended
December 31,
2009
Year Ended
December 31,
2008
Increase/
(Decrease)
from Prior
Year
Percentage
Change
from Prior
Year
Selling, General, Administrative and Other . . $314 $377 $(63) (16.7)%
The decrease in selling, general, administrative and other expenses was primarily a result of our focus on
reducing our cost structure in the current economic climate. Beginning in the middle of 2008, we began an activity
value analysis project to review our cost structure across a majority of our corporate departments and divisional
headquarters. (See Note 14 for a summary of charges associated with this initiative.) A majority of the cost
containment initiatives were completed and implemented in late 2008 and early 2009 and are now being realized.
Costs and expenses related to our former Bliss spa business were reclassified to discontinued operations for both
periods presented as a result of its sale at the end of 2009.
Year Ended
December 31,
2009
Year Ended
December 31,
2008
Increase/
(Decrease)
from Prior
Year
Percentage
Change
from Prior
Year
Restructuring, Goodwill Impairment and
Other Special Charges, Net ......... $379 $141 $238 n/m
During the fourth quarter of 2009, we completed a comprehensive review of our vacation ownership business.
We decided not to develop certain vacation ownership sites and future phases of certain existing projects. As a result
of these decisions, we recorded a primarily non-cash impairment charge of $255 million in the restructuring,
goodwill impairment and other special charges line item. Additionally, we recorded a $90 million non-cash charge
for the impairment of goodwill in the vacation ownership reporting unit.
Additionally, throughout 2009, we recorded restructuring and other special charges of $34 million related to
our ongoing initiative of rationalizing our cost structure. These charges related to severance charges and costs to
close vacation ownership sales galleries.
During the year ended December 31, 2008, we recorded restructuring and other special charges of $141 mil-
lion, including $62 million of severance and related charges associated with our ongoing initiative of rationalizing
our cost structure in light of the current economic climate. We also recorded impairment charges of approximately
$79 million primarily related to the decision not to develop two vacation ownership projects as a result of the
economic climate and its impact on business conditions.
Year Ended
December 31,
2009
Year Ended
December 31,
2008
Increase/
(Decrease)
from Prior
Year
Percentage
Change
from Prior
Year
Depreciation and Amortization ........... $309 $313 $(4) (1.3)%
The decrease in depreciation expense was due to reduced depreciation expense from sold hotels offset by
additional capital expenditures made in the last twelve months.
Year Ended
December 31,
2009
Year Ended
December 31,
2008
Increase/
(Decrease)
from Prior
Year
Percentage
Change
from Prior
Year
Operating Income ..................... $26 $610 $(584) n/m
The decrease in operating income was primarily due to the decline in our core business units, hotels and
vacation ownership, due to the severe impact from the global economic crisis as discussed above and the related
impairments and restructuring charges previously discussed. Additionally, operating income was impacted by a
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