Starwood 2010 Annual Report Download - page 101

$17 million charge, recorded in the vacation ownership costs and expenses line, related to a price reduction in
vacation ownership intervals, following an in-depth review of the business. These decreases were partially offset by
the reduction in selling, general, administrative and other costs as a result of our activity value analysis costs savings
project and other cost savings initiatives and a favorable $14 million income item related to the expiration of the
statute of limitations on an indirect tax exposure and a Brazilian water claim.
Year Ended
December 31,
2009
Year Ended
December 31,
2008
Increase/
(Decrease)
from Prior
Year
Percentage
Change
from Prior
Year
Equity (Losses) Earnings and Gains and
Losses from Unconsolidated Ventures,
Net .............................. $(4) $16 $(20) n/m
The decrease in equity earnings and gains and losses from unconsolidated joint ventures was primarily due to
decreased operating results at several properties owned by joint ventures in which we hold non-controlling interests.
The decrease also relates to a charge of approximately $4 million, in 2009, related to an unfavorable mark-to-market
adjustment on a US dollar denominated loan in an unconsolidated venture in Mexico.
Year Ended
December 31,
2009
Year Ended
December 31,
2008
Increase/
(Decrease)
from Prior
Year
Percentage
Change
from Prior
Year
Net Interest Expense ................... $227 $207 $20 9.7%
The increase in net interest expense was primarily due to higher interest rates in the year ended December 31,
2009 when compared to the same period of 2008 and early debt extinguishment costs of $21 million that were
incurred in 2009. This was partially offset by a lower average debt balance in 2009 as compared to 2008. Our
weighted average interest rate was 6.73% at December 31, 2009 as compared to 5.24% at December 31, 2008.
Year Ended
December 31,
2009
Year Ended
December 31,
2008
Increase/
(Decrease)
from Prior
Year
Percentage
Change
from Prior
Year
Loss on Asset Dispositions and Impairments,
Net .............................. $(91) $(98) $(7) (7.1)%
During 2009, we recorded a net loss on dispositions of approximately $91 million, primarily related to
$41 million of impairment charges on six hotels whose carrying values exceeded their fair values, a $22 million
impairment of our retained interests in vacation ownership mortgage receivables, 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 2008, we recorded a net loss of $98 million primarily related to $64 million of impairment charges on
five hotels, a $22 million impairment of our investment in vacation ownership notes receivable that we have
previously securitized, and an $11 million write-off of our investment in a joint venture in which we hold minority
interest (see Note 5).
Year Ended
December 31,
2009
Year Ended
December 31,
2008
Increase/
(Decrease)
from Prior
Year
Percentage
Change
from Prior
Year
Income Tax (Benefit) Expense ........... $(293) $72 $(365) n/m
The $365 million decrease in income tax expense primarily relates to a deferred tax benefit of $120 million
(net) in 2009 for an Italian tax incentive program in which the tax basis of land and buildings for the hotels we own
in Italy was stepped-up to fair value in exchange for paying a current tax of $9 million. The remaining decrease
primarily relates to tax benefits of $67 million associated with impairments, restructuring and asset sales and
$37 million related to a foreign tax credit election change. Additionally, a benefit of $10 million was recognized to
reverse the deferred interest accrual associated with the deferral of taxable income. The remaining decrease is
primarily due to lower pretax income.
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