Starwood 2012 Annual Report Download - page 191

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS
Domestic
Pension Benefits
Foreign
Pension Benefits
Postretirement
Benefits
2012 2011 2012 2011 2012 2011
Plans with Accumulated Benefit Obligations in excess of Plan
Assets
Projected benefit obligation ................................ $23 $20 $158 $140 n/a n/a
Accumulated benefit obligation ............................. $23 $20 $157 $140 n/a n/a
Fair value of plan assets ................................... $— $— $121 $105 n/a n/a
The net underfunded status of the plans at December 31, 2012 was $57 million, of which $76 million is
recorded in other liabilities, $3 million is recorded in accrued expenses and $22 million is recorded in other
assets in the accompanying balance sheet.
All domestic pension plans are frozen plans, whereby employees do not accrue additional benefits.
Therefore, at December 31, 2012 and 2011, the projected benefit obligation is equal to the accumulated benefit
obligation.
The following table presents the components of net periodic benefit cost for the years ended December 31
(in millions):
Domestic
Pension Benefits
Foreign
Pension Benefits
Postretirement
Benefits
2012 2011 2010 2012 2011 2010 2012 2011 2010
Service cost ......................... $— $— $— $— $— $— $— $— $—
Interest cost ......................... 1 1 1 10 10 10111
Expected return on plan assets .......... — — — (12) (12) (10) — — —
Amortization of net actuarial loss ........ — — — 2 1 1———
Other .............................. — — — — 1 ————
Settlement and curtailment (gain) loss .... — — — — — ————
Net periodic benefit cost ............... $ 1 $ 1 $ 1 $— $— $ 1 $ 1 $ 1 $ 1
For measurement purposes, a 9% annual rate of increase in the per capita cost of covered health care
benefits was assumed for 2013, gradually decreasing to 5% in 2020. A one-percentage point change in assumed
health care cost trend rates would have approximately a $1 million effect on the postretirement obligation and a
nominal impact on the total of service and interest cost components of net periodic benefit cost. The majority of
participants in the Foreign Pension Plans are employees of managed hotels, for which we are reimbursed for
costs related to their benefits. The impact of these reimbursements is not reflected above.
The weighted average assumptions used to determine benefit obligations at December 31 were as follows:
Domestic
Pension Benefits
Foreign Pension
Benefits
Postretirement
Benefits
2012 2011 2012 2011 2012 2011
Discount rate ......................................... 3.50% 4.25% 4.01% 4.68% 3.50% 4.00%
Rate of compensation increase ........................... n/a n/a 3.03% 3.26% n/a n/a
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