Starwood 2011 Annual Report Download - page 109

The cost of borrowing of the Facilities is determined by a combination of our leverage ratios and credit
ratings. Changes in our credit ratings may result in changes in our borrowing costs. Downgrades in our credit
ratings would likely increase the relative costs of borrowing and reduce our ability to issue long-term debt,
whereas upgrades would likely reduce costs and increase our ability to issue long-term debt. A credit rating is not
a recommendation to buy, sell or hold securities, is subject to revision or withdrawal at any time by the assigning
rating organization and should be evaluated independently of any other rating. On February 1, 2012, our long-
term debt rating was upgraded to investment grade by one of the major credit rating agencies.
Our Facility is used to fund general corporate cash needs. As of December 31, 2011, we have availability of
over $1.5 billion under the Facility. The Facility allows for multi-currency borrowing and, if drawn upon, would
have an applicable margin, inclusive of the commitment fee, of 2.5% plus the applicable currency LIBOR rate.
Our ability to borrow under the Facility is subject to compliance with the terms and conditions under the Facility,
including certain leverage and coverage covenants.
Based upon the current level of operations, management believes that our cash flow from operations,
together with our significant cash balances, available borrowings under the Facility, and our capacity for
additional borrowings will be adequate to meet anticipated requirements for scheduled maturities (primarily our
$500 million of Senior Notes due in early 2013), dividends, working capital, capital expenditures, marketing and
advertising program expenditures, other discretionary investments, interest and scheduled principal payments and
share repurchases for the foreseeable future. However, there can be no assurance that we will be able to refinance
our indebtedness as it becomes due and, if refinanced, on favorable terms. Approximately $159 million, included
in our cash balance above, is deemed to be permanently invested in foreign countries and we would be subject to
income taxes if we repatriated these amounts. In addition, there can be no assurance that in our continuing
business we will generate cash flow at or above historical levels, that currently anticipated results will be
achieved or that we will be able to complete dispositions on commercially reasonable terms or at all.
If we are unable to generate sufficient cash flow from operations in the future to service our debt, we may be
required to sell additional assets at lower than preferred amounts, reduce capital expenditures, refinance all or a portion
of our existing debt or obtain additional financing at unfavorable rates. Our ability to make scheduled principal
payments, to pay interest on or to refinance our indebtedness depends on our future performance and financial results,
which, to a certain extent, are subject to general conditions in or affecting the hotel and vacation ownership industries
and to general economic, political, financial, competitive, legislative and regulatory factors beyond our control.
We had the following contractual obligations (1) outstanding as of December 31, 2011 (in millions):
Total
Due in Less
Than 1 Year
Due in
1-3 Years
Due in
3-5 Years
Due After
5 Years
Debt(2) ............................ $2,195 $ 3 $1,007 $494 $ 691
Interest payable ..................... 659 155 263 134 107
Capital lease obligations (3) ............ 2 — — — 2
Operating lease obligation ............. 1,455 84 177 170 1,024
Unconditional purchase obligations (4) . . . 174 66 93 15 —
Other long-term obligations ........... 1 1 — — —
Total contractual obligations ........... $4,486 $309 $1,540 $813 $1,824
(1) This table excludes unrecognized tax benefits that would require cash outlays for $172 million, the timing of
which is uncertain. Refer to Note 15 of the consolidated financial statements for additional discussion on this
matter. In addition, the table excludes amounts related to the construction of our St. Regis Bal Harbour project
that has a total project cost of $759 million, of which $714 million has been paid through December 31, 2011.
(2) Excludes securitized debt of $532 million, all of which is non-recourse.
(3) Excludes sublease income of $0 million.
(4) Included in these balances are commitments that may be reimbursed or satisfied by our managed and
franchised properties.
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