Starwood 2010 Annual Report Download - page 161

Environmental Matters. The Company is subject to certain requirements and potential liabilities under
various federal, state and local environmental laws, ordinances and regulations. Such laws often impose liability
without regard to whether the current or previous owner or operator knew of, or was responsible for, the presence of
such hazardous or toxic substances. Although the Company has incurred and expects to incur remediation and other
environmental costs during the ordinary course of operations, management anticipates that such costs will not have
a material adverse effect on the operations or financial condition of the Company.
Captive Insurance Company. Estimated insurance claims payable at December 31, 2010 and 2009 were
$72 million and $74 million, respectively. At December 31, 2010 and 2009, standby letters of credit amounting to
$64 million and $83 million, respectively, had been issued to provide collateral for the estimated claims. The letters
of credit are guaranteed by the Company.
ITT Industries. In 1995, the former ITT Corporation, renamed ITT Industries, Inc. (“ITT Industries”),
distributed to its stockholders all of the outstanding shares of common stock of ITT Corporation, then a wholly
owned subsidiary of ITT Industries (the “Distribution”). In connection with this Distribution, ITT Corporation,
which was then named ITT Destinations, Inc., changed its name to ITT Corporation. Subsequent to the acquisition
of ITT Corporation in 1998, the Company changed the name of ITT Corporation to Sheraton Holding Corporation.
For purposes of governing certain of the ongoing relationships between the Company and ITT Industries after
the Distribution and spin-off of ITT Corporation and to provide for an orderly transition, the Company and ITT
Industries have entered into various agreements including a spin-off agreement, Employee Benefits Services and
Liability Agreement, Tax Allocation Agreement and Intellectual Property Transfer and License Agreements. The
Company may be liable to or due reimbursement from ITT Industries relating to the resolution of certain pre-spin-
off matters under these agreements. Based on available information, management does not believe that these
matters would have a material impact on the Company’s consolidated results of operations, financial position or
cash flows. During the year ended December 31, 2010, the Company reversed a liability related to the 1998
acquisition (see Note 14).
Note 27. Business Segment and Geographical Information
The Company has two operating segments: hotels and vacation ownership and residential. The hotel segment
generally represents a worldwide network of owned, leased and consolidated joint venture hotels and resorts
operated primarily under the Company’s proprietary brand names including St. Regis», The Luxury Collection»,
Sheraton», Westin»,W», Le Méridien», Four Points»by Sheraton, Aloft»and Element»as well as hotels and
resorts which are managed or franchised under these brand names in exchange for fees. The vacation ownership and
residential segment includes the development, ownership and operation of vacation ownership resorts, marketing
and selling VOIs, providing financing to customers who purchase such interests, licensing fees from branded
condominiums and residences and the sale of residential units.
The performance of the hotels and vacation ownership and residential segments is evaluated primarily on
operating profit before corporate selling, general and administrative expense, interest expense, net of interest
income, losses on asset dispositions and impairments, restructuring and other special charges (credits) and income
tax benefit (expense). The Company does not allocate these items to its segments.
F-45
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS — (Continued)