Starwood 2010 Annual Report Download - page 140
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Past due balances of VOI notes receivable by credit quality indicators are as follows (in millions):
30-59 Days
Past Due
60-89 Days
Past Due
H90 Days
Past Due
Total Past
Due Current
Total
Receivables
As of December 31, 2010:
Sheraton .................... $ 6 $4 $30 $40 $314 $354
Westin...................... 5 3 33 41 342 383
Other ...................... 1 1 4 6 37 43
$12 $8 $67 $87 $693 $780
As of December 31, 2009:
Sheraton .................... $ 3 $2 $25 $30 $ 97 $127
Westin...................... 3 3 27 33 128 161
Other ...................... 2 2 2 6 42 48
$ 8 $7 $54 $69 $267 $336
Note 12. Fair Value
The following table presents the Company’s fair value hierarchy for its financial assets and liabilities measured
at fair value on a recurring basis as of December 31, 2010 (in millions):
Level 1 Level 2 Level 3 Total
Assets:
Interest Rate Swaps ................................ $— $16 $— $16
$— $16 $— $16
Liabilities:
Forward contracts.................................. $— $ 9 $— $ 9
The forward contracts are over the counter contracts that do not trade on a public exchange. The fair values of
the contracts are based on inputs such as foreign currency spot rates and forward points that are readily available on
public markets, and as such, are classified as Level 2. The Company considered both its credit risk, as well as its
counterparties’ credit risk in determining fair value and no adjustment was made as it was deemed insignificant
based on the short duration of the contracts and the Company’s rate of short-term debt.
The interest rate swaps are valued using an income approach. Expected future cash flows are converted to a
present value amount based on market expectations of the yield curve on floating interest rates, which is readily
available on public markets.
Prior to ASU No. 2009-17, the Company estimated the fair value of its Retained Interests using a discounted
cash flow model with unobservable inputs, which is considered Level 3. See Note 10 for the assumptions used to
calculate the estimated fair value and sensitivity analysis based on changes in assumptions.
The following table presents a reconciliation of the Company’s Retained Interests measured at fair value on a
recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2010 (in millions):
Balance at January 1, 2010 .................................................. $25
Adoption of ASU No. 2009-17.............................................. (25)
Balance at December 31, 2010 ............................................... $—
F-24
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)