Starwood 2010 Annual Report Download - page 98

Year Ended
December 31,
2010
Year Ended
December 31,
2009
Increase/
(Decrease)
from Prior
Year
Percentage
Change
from Prior
Year
Loss on Asset Dispositions and Impairments,
Net .............................. $(39) $(91) $52 n/m
During the year ended December 31, 2010, we recorded a net loss on dispositions of approximately
$39 million, primarily related to a $53 million loss on the sale of one wholly-owned hotel (see Note 5) as well
as a $4 million impairment of fixed assets that are being retired in connection with a significant renovation of a
wholly-owned hotel, and a $2 million impairment on one hotel whose carrying value exceeded its fair value. These
charges were partially offset by a gain of $14 million from insurance proceeds received for a claim at a wholly-
owned hotel that suffered damage from a storm in 2008, a $5 million gain as a result of an acquisition of a
controlling interest in a joint venture in which we previously held a non-controlling interest (see Note 4) and a
$4 million gain from the sale of non-hotel assets.
During the year ended December 31, 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.
Year Ended
December 31,
2010
Year Ended
December 31,
2009
Increase/
(Decrease)
from Prior
Year
Percentage
Change
from Prior
Year
Income Tax (Benefit) Expense ........... $27 $(293) $320 n/m
The $320 million increase in income tax expense primarily relates to 2009 items that did not recur in 2010,
including a $120 million deferred tax benefit for an Italian tax incentive program in which the tax basis of land and
building for the hotels we own in Italy was stepped up to fair value in exchange for paying a current tax of
$9 million, a $51 million tax benefit related to previously unrecognized foreign tax credits for prior tax years and a
$10 million benefit to reverse the deferred interest accrual associated with the deferral of taxable income. The
remaining increase is primarily due to higher pretax income in 2010, partially offset by a benefit of $42 million
related to an IRS audit.
Discontinued Operations, Net of Tax
During the year ended December 31, 2010, we recorded a gain of $134 million related to the final settlement
with the IRS regarding the World Directories disposition and a gain of approximately $36 million related to the sale
of one wholly-owned hotel. The tax benefit was related to the realization of a high tax basis in this hotel that was
generated through a previous transaction.
During the year ended December 31, 2009, we sold our Bliss spa business and other non-core assets for cash
proceeds of $227 million. Revenues and expenses from the Bliss spa business, together with revenues and expenses
from one hotel that was sold in 2010, were reported in discontinued operations resulting in a loss of $2 million, net
of tax. In addition, the net gain on the assets sold in 2009 and the one hotel held for sale at December 31, 2009 has
been recorded in discontinued operations resulting in income of $76 million, net of tax.
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