Starwood 2012 Annual Report Download - page 148
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Off-Balance Sheet Arrangements
Our off-balance sheet arrangements include letters of credit of $117 million, unconditional purchase
obligations of $143 million and surety bonds of $80 million. These items are discussed in greater detail in Item 8,
Financial Statements and Supplementary Data, and in Note 25.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
In limited instances, we seek to reduce earnings and cash flow volatility associated with changes in interest
rates and foreign currency exchange rates by entering into financial arrangements intended to provide a hedge
against a portion of the risks associated with such volatility. We continue to have exposure to such risks to the
extent they are not hedged.
We enter into a derivative financial arrangement to the extent it meets the objectives described above, and
we do not engage in such transactions for trading or speculative purposes.
At December 31, 2012, we were party to the following derivative instruments:
• Forward contracts to hedge forecasted transactions for management and franchise fee revenues earned in
foreign currencies. The aggregate dollar equivalent of the notional amounts was approximately
$40 million. These contracts expire in 2013.
• Forward foreign exchange contracts to manage the foreign currency exposure related to certain
intercompany loans not deemed to be permanently invested. The aggregate dollar equivalent of the
notional amounts of the forward contracts was approximately $645 million. These contracts expire in
2013.
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