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iso4217:USD
xbrli:shares
xbrli:pure
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xbrli:shares
false
--12-31
2009-06-30
10-Q
0000316206
186832341000000
Yes
Large Accelerated Filer
7447000000
Starwood Hotels & Resorts Worldwide, Inc.
No
Yes
27000000
-28000000
-42000000
-40000000
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0
39000000
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1000000
-39000000
-34000000
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-1000000
2235000000
2237000000
254000000
150000000
22000000
16000000
102000000
55000000
96000000
53000000
424000000
218000000
352000000
187000000
137000000
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134000000
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2000000
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-121000000
-132000000
1048000000
541000000
944000000
512000000
1048000000
541000000
944000000
512000000
1180000000
620000000
780000000
394000000
892000000
454000000
663000000
329000000
-6000000
-6000000
13000000
13000000
143000000
149000000
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4000000
16000000
20000000
-49000000
-2000000
2000000
3000000
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0
1000000
1000000
317000000
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204000000
98000000
387000000
194000000
261000000
126000000
-74000000
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171000000
142000000
552000000
476000000
391000000
394000000
1274000000
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-391000000
-357000000
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9304000000
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151000000
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-36000000
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<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 20. Commitments and Contingencies</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     <b><i>Variable Interest Entities</i></b><b>.</b> The
Company has evaluated the 20 hotels in which it has a
variable interest, generally in the form of investments,
loans, guarantees, or equity. The Company determines if it
is the primary beneficiary of the hotel by considering
qualitative and quantitative factors. Qualitative factors
include evaluating distribution terms, proportional voting
rights, decision making ability, and the capital structure.
Quantitatively, the Company evaluates financial forecasts
under various scenarios to determine which variable
interest holders would absorb over 50% of the expected
losses of the hotel. The Company has determined it is not
the primary beneficiary of any of the variable interest
entities (“VIEs”) and therefore these entities are not
consolidated in the Company’s financial statements.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In all cases, the VIEs associated with the Company’s
variable interests are hotels for which the Company has
entered into management or franchise agreements with the
hotel owners. The Company is paid a fee primarily based on
financial metrics of the hotel. The hotels are financed by
the owners, generally in the form of working capital,
equity, and debt.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     At June 30, 2009, the Company has approximately
$68 million of investments associated with 18 VIEs, equity
investments of $10 million associated with one VIE, and a
loan balance of $5 million associated with one VIE. As the
Company is not obligated to fund future cash contributions
under these agreements, the maximum loss equals the
carrying value. In addition, the Company has not
contributed amounts to the VIEs in excess of their
contractual obligations.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     At December 31, 2008, the Company had approximately
$66 million of investments associated with 19 VIEs, equity
investments of $10 million associated with one VIE, and a
loan balance of $5 million associated with one VIE.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     <b><i>Guaranteed Loans and Commitments.</i></b> In
limited cases, the Company has made loans to owners of or
partners in hotel or resort ventures for which the Company
has a management or franchise agreement. Loans outstanding
under this program totaled $28 million at June 30, 2009.
The Company evaluates these loans for impairment, and at
June 30, 2009, believes the net carrying value of these
loans are collectible. Unfunded loan commitments
aggregating $55 million were outstanding at June 30, 2009,
none of which is expected to be funded in the next twelve
months or in total. These loans typically are secured by
pledges of project ownership interests and/or mortgages on
the projects. The Company also has $87 million of equity
and other potential contributions associated with managed
or joint venture properties, $49 million of which is
expected to be funded in the next twelve months.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     Surety bonds issued on behalf of the Company as of
June 30, 2009 totaled $63 million, the majority of which
were required by state or local governments relating to our
vacation ownership operations and by our insurers to secure
large deductible insurance programs.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     To secure management contracts, the Company may
provide performance guarantees to third-party owners. Most
of these performance guarantees allow the Company to
terminate the contract rather than fund shortfalls if
certain performance levels are not met. In limited cases,
the Company is obliged to fund shortfalls in performance
levels through the issuance of loans. As of June 30, 2009,
excluding the Le Méridien management agreement mentioned
below, the Company had three management contracts with
performance guarantees with possible cash outlays of up to
$70 million, $53 million of which, if required, would be
funded over several years and would be largely offset by
management fees received under these contracts. Many of the
performance tests are multi-year tests, are tied to the
results of a competitive set of hotels, and have exclusions
for force majeure and acts of war and terrorism. The
Company does not anticipate any significant funding under
these performance guarantees in 2009. In connection with
the acquisition of the Le Méridien brand in November 2005,
the Company assumed the obligation to guarantee certain
performance levels at one Le Méridien managed hotel for the
periods 2007 through 2013. This guarantee is uncapped;
however, the Company has estimated its exposure under this
guarantee and does not anticipate that payments made under
the guarantee will be significant in any single year. The
Company has recorded a loss contingency for this guarantee
of $8 million and $7 million, reflected in other
liabilities in the accompanying consolidated balance sheets
at June 30, 2009 and December 31, 2008, respectively. The
Company does not anticipate losing a significant number of
management or franchise contracts in 2009.
</div>
</div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In connection with the purchase of the Le Méridien
brand in November 2005, the Company was indemnified for
certain of Le Méridien’s historical liabilities by the
entity that bought Le Méridien’s owned and leased hotel
portfolio. The indemnity is limited to the financial
resources of that entity. However, at this time, the
Company believes that it is unlikely that it will have to
fund any of these liabilities.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In connection with the sale of 33 hotels to a third
party in 2006, the Company agreed to indemnify the third
party for certain pre-disposition liabilities, including
operations and tax liabilities. At this time, the Company
believes that it will not have to make any significant
payments under such indemnities.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     <b><i>Litigation.</i></b> The Company is involved in
various legal matters that have arisen in the normal course
of business, some of which include claims for substantial
sums. Accruals have been recorded when the outcome is
probable and can be reasonably estimated. While the
ultimate results of claims and litigation cannot be
determined, the Company does not expect that the resolution
of all legal matters will have a material adverse effect on
its consolidated results of operations, financial position
or cash flow. However, depending on the amount and the
timing, an unfavorable resolution of some or all of these
matters could materially affect the Company’s future
results of operations or cash flows in a particular period.
</div>
</div>
</div>
0.01
0.01
1000000000
1000000000
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186898723
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126000000
174000000
226000000
0
-1000000
2000000
0
182000000
127000000
172000000
226000000
2694000000
1374000000
2178000000
1119000000
68000000
42000000
-114000000
-115000000
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 9. Debt</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     Long-term debt and short-term borrowings consisted of
the following (in millions):
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="76%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>June 30,</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>December 31,</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Senior Credit Facilities:
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Revolving Credit Facility, interest rate of
3.125% at June 30, 2009, maturing 2011
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
157
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
213
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Term loans, interest rate of 3.125% at June 30,
2009, maturing 2010 and 2011
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
700
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
1,375
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Senior Notes, interest at 7.875%, maturing 2012
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
801
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
799
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Senior Notes, interest at 6.25%, maturing 2013
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
601
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
601
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Senior Notes, interest at 7.875%, maturing 2014
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
482
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Senior Notes, interest at 7.375%, maturing 2015
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
449
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
449
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Senior Notes, interest at 6.75%, maturing 2018
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
400
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
400
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Mortgages and other, interest rates ranging from
5.80% to 8.56%, various maturities
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
162
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
171
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
3,752
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
4,008
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Less current maturities
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(330
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(506
</td>
<td nowrap="nowrap">
)
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Long-term debt
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
3,422
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
3,502
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     On April 27, 2009, the Company amended its revolving
credit and term loan facilities (collectively with prior
amendments the “Amended Credit Facilities”) with the
consent of the lenders thereunder. The Amended Credit
Facilities enhance the Company’s financial flexibility by
increasing the Company’s maximum Consolidated Leverage
Ratio (as defined in the Amended Credit Facilities) from
4.50x to 5.50x. Additionally, the definition of
Consolidated EBITDA used in the Amended Credit Facilities
has been modified to exclude certain cash severance
expenses from Consolidated EBITDA. In connection with the
amendment, the Company repaid $500 million of its term loan
that was due June 2009 by drawing down on its revolver.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In connection with the amendment, the Company agreed
to increase the pricing on the outstanding Amended Credit
Facilities based upon the Company’s Consolidated Leverage
Ratio, the Company’s unsecured debt rating and the type of
loan borrowed. The margin increases range from 2.00% to
3.50% for term loans maintained as Eurodollar Loans, 1.75%
to 3.00% for revolving loans maintained as Euro Rate Loans,
and 0.00% to 1.50% for Base Rate and Canadian Prime Rate
Loans. The applicable margin for the Facility Fee ranges
from 0.25% to 0.50%. The amendment further modifies the
Amended Credit Facilities by (i.) restricting the Company’s
ability to pay dividends and repurchase stock depending on
the Company’s free cash flow and Consolidated Leverage
Ratio and (ii.) decreasing the Company’s permitted lien
basket from 10% of Net Tangible Assets (as defined in the
Amended Credit Facilities) to 5% of Net Tangible Assets. An
amendment fee of 50 basis points was also paid to all
consenting lenders who approved the Amended Credit
Facilities, with no amendment fee being paid on the repaid
portion of the term loan.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     On April 30, 2009, the Company launched and priced a
public offering of $500 million of senior notes with a
coupon rate of 7.875% (the “Notes”) due October 15, 2014,
issued at a discount price of 96.285%. The Company received
net proceeds of approximately $475 million on the
settlement date of May 7, 2009. The proceeds were used to
reduce the outstanding borrowings under its Amended Credit
Facilities and for general purposes. Interest on the Notes
is payable semi-annually on April 15 and October 15. The
Company may redeem all or a portion of the Notes at any
time at the Company’s option at a discount rate of Treasury
plus 50 basis points. The Notes will rank <i>pari passu</i>
with all other unsecured and unsubordinated obligations.
</div>
</div>
</div>
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 10. Deferred Gains</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The Company defers gains realized in connection with
the sale of a property that the Company continues to manage
through a long-term management agreement and recognizes the
gains over the initial term of the related agreement. As of
June 30, 2009 and December 31, 2008, the Company had total
deferred gains of $1.118 billion and $1.151 billion,
respectively, included in accrued expenses and other
liabilities in the Company’s consolidated balance sheets.
Amortization of deferred gains is included in management
fees, franchise fees and other income in the Company’s
consolidated statements of income and totaled approximately
$20 million and $40 million and $21 million and $42 million
in the three and six months ended June 30, 2009, and
June 30, 2008, respectively.
</div>
</div>
</div>
639000000
734000000
26000000
27000000
159000000
156000000
143000000
72000000
142000000
72000000
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 12. Derivative Financial Instruments</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The Company, based on market conditions, enters into
forward contracts to manage foreign exchange risk.
Beginning in January 2008, the Company entered into forward
contracts to hedge forecasted transactions based in certain
foreign currencies, including the Euro and Canadian Dollar.
These forward contracts have been designated and qualify as
cash flow hedges under the provisions of SFAS No. 133, and
their change in fair value is recorded as a component of
other comprehensive income and reclassified into earnings
in the same period or periods in which the forecasted
transaction occurs. The notional dollar amount of the
outstanding Euro forward contracts at June 30, 2009 is
$50 million, with average exchange rates of 1.5 and terms
of primarily less than one year. The Canadian forward
contracts expired during the second quarter of 2009. The
Company reviews the effectiveness of its hedging
instruments on a quarterly basis and records any
ineffectiveness into earnings. The Company discontinues
hedge accounting for any hedge that is no longer evaluated
to be highly effective. From time to time, the Company may
choose to de-designate portions of hedges when changes in
estimates of forecasted transactions occur. In the second
quarter of 2009, the Company de-designated notional amounts
of $4 million related to three hedges. Other than the
de-designated portions, each of these hedges was highly
effective in offsetting fluctuations in foreign currencies.
An insignificant amount of gain due to ineffectiveness was
recorded in the consolidated statements of income during
2009. Additionally, during the second quarter of 2009,
eight forward contracts matured.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The Company also enters into forward contracts to
manage foreign exchange risk on intercompany loans that are
not deemed permanently invested. These forward contracts
are not designated as hedges under the provisions of SFAS
No. 133, and their change in fair value is recorded in the
Company’s consolidated statements of income at each
reporting period.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The Company enters into interest rate swap agreements
to manage interest expense. The Company’s objective is to
manage the impact of interest rates on the results of
operations, cash flows and the market value of the
Company’s debt. At June 30, 2009, the Company has three
interest rate swap agreements with an aggregate notional
amount of $300 million under which the Company pays
floating rates and receives fixed rates of interest (“Fair
Value Swaps”). The Fair Value Swaps hedge the change in
fair value of certain fixed rate debt related to
fluctuations in interest rates and mature in 2012 and 2013.
The Fair Value Swaps modify the Company’s interest rate
exposure by effectively converting debt with a fixed rate
to a floating rate. These interest rate swaps have been
designated and qualify as fair value hedges under the
provisions of SFAS No. 133 and have met the requirements to
assume zero ineffectiveness.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In the Company’s most recent securitization
transaction, the unconsolidated QSPE entered into a balance
guaranteed interest rate swap to fix the interest rate on
its debt in order to mitigate interest rate risk for the
investors. In connection with the QSPE swap, the Company
also entered into two swaps. The first swap provides a
counterparty to the investors of the QSPE swap and is a
balance guaranteed interest rate swap, with the Company
paying a floating rate and receiving a fixed rate. To
mitigate the potential impact of the floating to fixed
swap, the Company also entered into a second swap, whereby
the Company pays a fixed rate and receives a floating rate,
with interest paid based on an expected amortization
schedule rather than a balance guaranteed notional. The
Company did not apply hedge accounting under SFAS No. 133
and the change in fair values will be marked to market at
each reporting period with the change in fair value
recorded in the consolidated statements of income. As of
June 30, 2009, the fair value of the Company’s two interest
rate swaps was insignificant.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The counterparties to the Company’s derivative
financial instruments are major financial institutions. The
Company evaluates the bond ratings of the financial
institutions and believes that credit risk is at an
acceptable level.
</div>
</div>
<p></p>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The following tables summarize the fair value of our
derivative instruments, the effect of derivative
instruments on our Consolidated Statements of Comprehensive
Income, the amounts reclassified from “Other comprehensive
income” and the effect on the Consolidated Statements of
Income during the quarter.
</div>
<div style="MARGIN-TOP: 18pt; FONT-SIZE: 10pt" align=
"center">
<b>Fair Value of Derivative Instruments</b>
<br />
(in millions)
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="52%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="6">
<b>June 30,</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="6">
<b>December 31,</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="6">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="6">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Balance Sheet</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Fair</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Balance Sheet</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Fair</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Location</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Value</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Location</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Value</b>
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td align="left" colspan="5">
<b>Derivatives designated as hedging instruments
under
<br />
SFAS No. 133</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
<i>Asset Derivatives</i>
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Forward contracts
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" colspan="3">
Prepaid and other current assets
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
3
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" colspan="3">
Prepaid and other current assets
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
6
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Interest rate swaps
</div>
</td>
<td>
 
</td>
<td align="left" colspan="3">
Other assets
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
2
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left" colspan="3">
Other assets
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
Total assets under SFAS No. 133
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
5
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
6
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="52%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="6">
<b>June 30,</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="6">
<b>December 31,</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="6">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="6">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Balance Sheet</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Fair</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Balance Sheet</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Fair</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Location</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Value</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Location</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Value</b>
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td align="left" colspan="5">
<b>Derivatives not designated as hedging
instruments under
<br />
SFAS No. 133</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
<i>Asset Derivatives</i>
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Forward contracts
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" colspan="3">
Prepaid and other current assets
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
1
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" colspan="3">
Prepaid and other current assets
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
Total assets outside SFAS No. 133
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
1
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
<i>Liability Derivatives</i>
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Forward contracts
</div>
</td>
<td>
 
</td>
<td align="left" colspan="3">
Accrued expenses
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
4
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left" colspan="3">
Accrued expenses
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
3
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
Total liabilities outside SFAS No. 133
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
4
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
3
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
<p style="FONT-SIZE: 10pt" align="center">
  
</p>
</div>
<p></p>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 18pt; FONT-SIZE: 10pt" align=
"center">
<b>Consolidated Statements of Income and Comprehensive
Income
<br />
for the Three and Six Months Ended June 30, 2009 and
2008</b>
<br />
(in millions)
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="88%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Balance at March 31, 2009
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
$
</td>
<td align="right">
(7
</td>
<td nowrap="nowrap">
)
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Mark-to-market loss on forward exchange contracts
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
1
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Reclassification of gain from OCI to management
fees, franchise fees, and other income
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
2
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Balance at June 30, 2009
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
$
</td>
<td align="right">
(4
</td>
<td nowrap="nowrap">
)
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Balance at December 31, 2008
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
$
</td>
<td align="right">
(6
</td>
<td nowrap="nowrap">
)
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Mark-to-market gain on forward exchange contracts
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(1
</td>
<td nowrap="nowrap">
)
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Reclassification of gain from OCI to management
fees, franchise fees, and other income
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
3
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Balance at June 30, 2009
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
$
</td>
<td align="right">
(4
</td>
<td nowrap="nowrap">
)
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Balance at March 31, 2008
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
4
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Reclassification of gain from OCI to management
fees, franchise fees, and other income
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(1
</td>
<td nowrap="nowrap">
)
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Balance at June 30, 2008
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
3
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Balance at December 31, 2007
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Mark-to-market loss on forward exchange contracts
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
4
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Reclassification of gain from OCI to management
fees, franchise fees, and other income
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(1
</td>
<td nowrap="nowrap">
)
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Balance at June 30, 2008
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
3
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="64%">
 
</td>
<td width="5%">
 
</td>
<td width="7%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td nowrap="nowrap" align="middle">
<b>Derivatives Not</b>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="6">
 
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td nowrap="nowrap" align="middle">
<b>Designated as Hedging</b>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle">
<b>Location of Gain</b>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="6">
<b>Amount of Gain</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td nowrap="nowrap" align="middle">
<b>Instruments under</b>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle">
<b>or (Loss) Recognized</b>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="6">
<b>or (Loss) Recognized</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle">
<b>SFAS No. 133</b>
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle">
<b>in Income on Derivative</b>
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="6">
<b>in Income on Derivative</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="6">
<b>Three Months Ended</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="6">
<b>June 30,</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Foreign forward exchange contracts
</div>
</td>
<td>
 
</td>
<td valign="top" align="left">
Interest expense, net
</td>
<td>
 
</td>
<td valign="top" align="left">
$
</td>
<td valign="top" align="right">
3
</td>
<td valign="top">
 
</td>
<td>
 
</td>
<td valign="top" nowrap="nowrap" align="left">
$
</td>
<td valign="top" align="right">
(6
</td>
<td valign="top" nowrap="nowrap">
)
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td valign="top" align="left">
 
</td>
<td>
 
</td>
<td valign="top" align="left">
 
</td>
<td valign="top" align="right">
 
</td>
<td valign="top">
 
</td>
<td>
 
</td>
<td valign="top" align="left">
 
</td>
<td valign="top" align="right">
 
</td>
<td valign="top">
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td valign="top" align="left">
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" valign=
"top" nowrap="nowrap" align="right" colspan="2">
 
</td>
<td valign="top">
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" valign=
"top" nowrap="nowrap" align="right" colspan="2">
 
</td>
<td valign="top">
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Total gain (loss) included in income
</div>
</td>
<td>
 
</td>
<td valign="top" align="left">
 
</td>
<td>
 
</td>
<td valign="top" align="left">
$
</td>
<td valign="top" align="right">
3
</td>
<td valign="top">
 
</td>
<td>
 
</td>
<td valign="top" nowrap="nowrap" align="left">
$
</td>
<td valign="top" align="right">
(6
</td>
<td valign="top" nowrap="nowrap">
)
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td valign="top" align="left">
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" valign=
"top" nowrap="nowrap" align="right" colspan="2">
 
</td>
<td valign="top">
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" valign=
"top" nowrap="nowrap" align="right" colspan="2">
 
</td>
<td valign="top">
 
</td>
</tr>
</tbody>
</table>
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="64%">
 
</td>
<td width="5%">
 
</td>
<td width="7%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="6">
<b>Six Months Ended</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="6">
<b>June 30,</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Foreign forward exchange contracts
</div>
</td>
<td>
 
</td>
<td valign="top" align="left">
<font style="WHITE-SPACE: nowrap">Interest expense,
net</font>
</td>
<td>
 
</td>
<td valign="top" nowrap="nowrap" align="left">
$
</td>
<td valign="top" align="right">
(7
</td>
<td valign="top" nowrap="nowrap">
)
</td>
<td>
 
</td>
<td valign="top" nowrap="nowrap" align="left">
$
</td>
<td valign="top" align="right">
(5
</td>
<td valign="top" nowrap="nowrap">
)
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td valign="top" align="left">
 
</td>
<td>
 
</td>
<td valign="top" align="left">
 
</td>
<td valign="top" align="right">
 
</td>
<td valign="top">
 
</td>
<td>
 
</td>
<td valign="top" align="left">
 
</td>
<td valign="top" align="right">
 
</td>
<td valign="top">
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td valign="top" align="left">
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" valign=
"top" nowrap="nowrap" align="right" colspan="2">
 
</td>
<td valign="top">
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" valign=
"top" nowrap="nowrap" align="right" colspan="2">
 
</td>
<td valign="top">
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Total loss included in income
</div>
</td>
<td>
 
</td>
<td valign="top" align="left">
 
</td>
<td>
 
</td>
<td valign="top" nowrap="nowrap" align="left">
$
</td>
<td valign="top" align="right">
(7
</td>
<td valign="top" nowrap="nowrap">
)
</td>
<td>
 
</td>
<td valign="top" nowrap="nowrap" align="left">
$
</td>
<td valign="top" align="right">
(5
</td>
<td valign="top" nowrap="nowrap">
)
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td valign="top" align="left">
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" valign=
"top" nowrap="nowrap" align="right" colspan="2">
 
</td>
<td valign="top">
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" valign=
"top" nowrap="nowrap" align="right" colspan="2">
 
</td>
<td valign="top">
 
</td>
</tr>
</tbody>
</table>
</div>
</div>
</div>
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 17. Stock-Based Compensation</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In accordance with the Company’s 2004 Long-Term
Incentive Compensation Plan, during the six month period
ended June 30, 2009, the Company granted approximately
5.3 million stock options that had a weighted average grant
date fair value of $4.69 per option. The weighted average
exercise price of these options was $11.39. In addition,
the Company granted approximately 5.3 million restricted
shares and restricted stock units that had a weighted
average grant date fair value of $11.66 per share or unit.
</div>
</div>
<p></p>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The Company recorded stock-based employee compensation
expense, including the estimated impact of 2009
reimbursements from third parties, of $15 million and
$26 million in the three and six months ended June 30, 2009
respectively, and $22 million and $40 million in the three
and six months ended June 30, 2008, respectively.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     As of June 30, 2009, there was approximately
$31 million of unrecognized compensation cost, net of
estimated forfeitures, related to non-vested options, which
is expected to be recognized, on a straight-line basis,
over a weighted-average period of 3.42 years.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     As of June 30, 2009, there was approximately
$167 million of unrecognized compensation cost, net of
estimated forfeitures, related to restricted stock and
restricted stock units, which is expected to be recognized,
on a straight-line basis, over a weighted-average period of
2.42 years.
</div>
</div>
</div>
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 5. Assets Held for Sale</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     During the first quarter of 2008, the Company entered
into a purchase and sale agreement for the sale of a hotel
for total consideration of $10 million. The Company
received a non-refundable deposit from the prospective
buyer during the first quarter of 2008. The Company
recorded an impairment charge of approximately $1 million
in the first quarter of 2008 related to this hotel. In
December 2008, the Company and prospective buyer agreed to
extend the closing period for up to 12 months and the
prospective buyer paid the Company an incremental
non-refundable deposit of approximately $2 million. During
the second quarter of 2009, the agreement was terminated,
and as a result, this hotel was reclassified as held for
use during the second quarter of 2009.
</div>
</div>
</div>
-49000000
-2000000
2000000
3000000
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 13. Discontinued Operations</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     For the three months ended June 30, 2009 and 2008, the
Company recorded tax benefits of $3 million and tax charges
of $2 million, respectively. The Company recorded
$1 million and $2 million of tax charges for the three
months ending June 30, 2009 and 2008, respectively, as a
result of a 2008 administrative tax ruling for an unrelated
taxpayer that impacts the tax liability associated with the
disposition of one of its businesses several years ago. The
charge for the three months ended June 30, 2009 is offset
by a benefit of approximately $4 million related to the
final settlement of an uncertain tax position related to an
entity the Company sold several years ago.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     For the six months ended June 30, 2009 and 2008, the
Company recorded tax benefits of $2 million and tax charges
of $49 million, respectively. The Company recorded
$2 million and $49 million of tax charges for the six
months ended June 30, 2009 and 2008, respectively, as a
result of a 2008 administrative tax ruling discussed above.
The charge for the six months ended June 30, 2009 is offset
by a benefit of approximately $4 million related to the
settlement discussed above.
</div>
</div>
</div>
0.75
0.57
0.78
0.75
0.73
0.56
0.77
0.74
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 3. Earnings Per Share</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     Basic and diluted earnings per share are calculated
using income from continuing operations attributable to
Starwood’s common shareholders (i.e. excluding amounts
attributable to non-controlling interests).
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The following is a reconciliation of basic earnings
per share to diluted earnings per share for income from
continuing operations (in millions, except per Share data):
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="28%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="22">
<b>Three Months Ended June 30,</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="10">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="10">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Earnings</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Shares</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Per Share</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Earnings</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Shares</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Per Share</b>
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Basic earnings from continuing operations
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
131
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
179
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
0.73
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
107
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
184
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
0.58
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Effect of dilutive securities:
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Employee stock options and restricted stock
awards
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
4
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(0.01
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
4
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(0.02
</td>
<td nowrap="nowrap">
)
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Diluted earnings from continuing operations
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
131
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
183
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
0.72
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
107
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
188
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
0.56
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="28%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="22">
<b>Six Months Ended June 30,</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="10">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="10">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Earnings</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Shares</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Per Share</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Earnings</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Shares</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Per Share</b>
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Basic earnings from continuing operations
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
138
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
179
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
0.77
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
186
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
184
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
1.01
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Effect of dilutive securities:
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Employee stock options and restricted stock
awards
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
3
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(0.01
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
4
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(0.02
</td>
<td nowrap="nowrap">
)
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Diluted earnings from continuing operations
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
138
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
182
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
0.76
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
186
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
188
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
0.99
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     Approximately 9,694,000 and 2,640,000 shares for the
three months ended June 30, 2009 and 2008 and 10,782,000
and 5,183,000 shares for the six months ended June 30, 2009
and 2008, respectively, were excluded from the computation
of diluted shares, respectively, as their impact would have
been anti-dilutive.
</div>
</div>
</div>
9000000
3000000
346000000
286000000
-12000000
-18000000
18000000
0
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 8. Fair Value</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In accordance with SFAS No. 157, the following table
represents the Company’s fair value hierarchy for its
financial assets and liabilities measured at fair value on
a recurring basis as of June 30, 2009 (in millions):
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="52%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="3">
Level 1
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="3">
Level 2
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="3">
Level 3
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="3">
Total
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Assets:
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Forward contracts
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
4
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
4
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Interest rate swaps
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
2
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
2
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Retained Interests
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
10
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
10
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
6
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
10
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
16
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Liabilities:
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Forward contracts
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
4
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
4
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The forward contracts are over the counter contracts
that do not trade on a public exchange. The fair values of
the contracts are based on inputs such as foreign currency
spot rates and forward points that are readily available on
public markets, and as such, are classified as Level 2. The
Company considered both its credit risk, as well as its
counterparties’ credit risk in determining fair value and
no adjustment was made as it was deemed insignificant based
on the short duration of the contracts and the Company’s
rate of short-term debt. 
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The interest rate swaps are valued using an income
approach.  Expected future cash flows are converted to a
present value amount based on market expectations of the
yield curve on floating interest rates.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The Company estimates the fair value of its Retained
Interests using a discounted cash flow model with
unobservable inputs, which is considered Level 3. See Note
7 for the assumptions used to calculate the estimated fair
value and sensitivity analysis based on changes in
assumptions.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The following table presents a reconciliation of the
Company’s Retained Interests measured at fair value on a
recurring basis using significant unobservable inputs
(Level 3) for the three and six months ended June 30, 2009
(in millions):
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="88%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Balance at March 31, 2009
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
20
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Total losses (realized/unrealized)
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
Included in earnings
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(13
</td>
<td nowrap="nowrap">
)
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
Included in other comprehensive income
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Purchases, issuances, and settlements
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
3
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Transfers in and/or out of Level 3
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Balance at June 30, 2009
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
10
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="88%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Balance at December 31, 2008
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
19
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Total losses (realized/unrealized)
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
Included in earnings
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(13
</td>
<td nowrap="nowrap">
)
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
Included in other comprehensive income
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Purchases, issuances, and settlements
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
4
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Transfers in and/or out of Level 3
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Balance at June 30, 2009
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
10
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
</div>
</div>
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 18. Fair Value of Financial Instruments</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The following table presents the carrying amounts and
estimated fair values of the Company’s financial
instruments (in millions):
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="52%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="6">
June 30, 2009
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="6">
December 31, 2008
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
Carrying
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
Fair
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
Carrying
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
Fair
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
Amount
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
Value
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
Amount
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
Value
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Assets :
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Restricted cash
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
6
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
6
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
6
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
6
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
VOI notes receivable
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
335
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
349
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
444
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
419
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Other notes receivable
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
34
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
34
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
32
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
32
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
Total financial assets
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
375
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
389
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
482
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
457
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Liabilities:
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Long-term debt
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
3,422
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
3,231
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
3,502
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
2,725
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Other long-term liabilities
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
8
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
8
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
7
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
7
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
Total financial liabilities
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
3,430
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
3,239
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
3,509
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
2,732
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Off-Balance sheet:
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Letters of credit
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
172
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
115
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Surety bonds
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
63
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
91
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
Total Off-Balance sheet
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
235
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
206
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The Company believes the carrying values of its
financial instruments related to current assets and
liabilities approximate fair value. The Company records its
retained interests and derivative assets and liabilities at
fair value. See Note 8 for recorded amounts and the methods
and assumptions used to estimate fair value.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The carrying value of the Company’s restricted cash
approximates its fair value. The Company estimates the fair
value of its VOI notes receivable by discounting the
expected future cash flows with discount rates commensurate
with the risk of the underlying notes, primarily determined
by the credit worthiness of the borrowers based on their
Fair Isaac Corporation (“FICO”) scores. The fair value of
other notes receivable is estimated based on terms of the
instrument and current market conditions . These financial
instrument assets are recorded in the other assets line
item in the Company’s consolidated balance sheet.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The Company estimates the fair value of its publicly
traded debt based on the bid prices in the public debt
markets. The carrying amount of its floating rate debt is a
reasonable basis of fair value due to the variable nature
of the interest rates. The Company’s non-public fixed rate
debt fair value is determined based upon discounted cash
flows for the debt rates deemed reasonable for the type of
debt, prevailing market conditions and the length to
maturity for the debt. Other long-term liabilities
represent a financial guarantee. The carrying value of this
liability approximates its fair value.
</div>
</div>
<p></p>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The fair values of the Company’s letters of credit and
surety bonds are estimated to be the same as the contract
values based on the nature of the fee arrangements with the
issuing financial institutions.
</div>
</div>
</div>
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 4. Dispositions</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     During the second quarter of 2009, the Company sold a
hotel in Minneapolis for cash proceeds of approximately
$4 million. The Company recorded a loss of approximately
$3 million on the sale. Also during the second quarter of
2009, the Company terminated the lease of the Sheraton
Newton prior to its original term. As a result, the Company
wrote down its leasehold improvements to fair value,
resulting in an impairment charge of $10 million.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     During the first quarter of 2009, the Company sold the
Sheraton hotel in Brussels, Belgium in exchange for a
long-term agreement to manage the hotel. The Company
recorded a loss of approximately $5 million on the sale.
</div>
</div>
</div>
186000000
107000000
138000000
131000000
186000000
108000000
136000000
131000000
1.01
0.58
0.77
0.73
0.99
0.56
0.76
0.72
-49000000
2000000
-49000000
-2000000
2000000
3000000
-0.26
-0.01
0.01
0.02
-0.26
0
0.01
0.02
11000000
5000000
-2000000
3000000
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 15. Income Taxes</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The total amount of unrecognized tax benefits as of
June 30, 2009, was $998 million, of which $149 million
would affect the Company’s effective tax rate if
recognized. The amount of unrecognized tax benefits
includes approximately $499 million related to the
February 1998 disposition of ITT World Directories which
the Company strongly believes was completed on a tax
deferred basis. In 2002, the IRS proposed an adjustment to
tax the gain on disposition in 1998, and the issue has
progressed to litigation in United States Tax Court. In
January 2009, the Company and the IRS reached an agreement
in principle to settle the litigation pertaining to the tax
treatment of this transaction. The Company expects to
finalize the details of the agreement by the end of 2009
and obtain a refund of over $200 million for previously
paid tax. As a result, the Company expects to decrease its
unrecognized tax benefits by approximately $499 million
within the next 12 months. An estimate of the range of
other possible changes cannot be made unless or until tax
positions are further developed or examinations close.
</div>
</div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The Company recognizes interest and penalties related
to unrecognized tax benefits through income tax expense. As
of June 30, 2009, the Company had $223 million accrued for
the payment of interest and no accrued penalties.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The Company is subject to taxation in the U.S. federal
jurisdiction, as well as various state and foreign
jurisdictions. As of June 30, 2009, the Company is no
longer subject to examination by U.S. federal taxing
authorities for years prior to 2004 and to examination by
any U.S. state taxing authority prior to 1998. All
subsequent periods remain eligible for examination. In the
significant foreign jurisdictions in which the Company
operates, the Company is no longer subject to examination
by the relevant taxing authorities for any years prior to
2001.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     During the three months ended June 30, 2009, the
Company entered into an Italian tax incentive program
through which the tax basis of its Italian owned hotels
were stepped up in exchange for paying $9 million of
current tax over a three year period. As a result, the
Company was able to recognize a tax benefit of $129 million
to establish the deferred tax asset related to the basis
step up. This benefit was offset by a $9 million tax charge
to accrue the current tax payable under the program,
resulting in a net benefit of $120 million.
</div>
</div>
</div>
65000000
-15000000
24000000
53000000
3000000
1000000
2000000
2000000
95000000
88000000
986000000
1035000000
8059000000
7472000000
9703000000
9304000000
2688000000
2244000000
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 7. Notes Receivable Securitizations and Sales</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     From time to time, the Company securitizes, without
recourse, its fixed rate VOI notes receivable. To
accomplish these securitizations, the Company transfers a
pool of VOI notes receivable to third-party special purpose
entities (together with the special purpose entities in the
next sentence, the “SPEs”) and the SPEs transfer the VOI
notes receivable to qualifying special purpose entities
(“QSPEs”), as defined in SFAS No. 140, “Accounting for
Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities — a Replacement of FASB
Statement No. 125” (“SFAS No. 140”). The Company continues
to service the securitized VOI notes receivable pursuant to
servicing agreements negotiated at arms-length based on
market conditions; accordingly, the Company has not
recognized any servicing assets or liabilities. All of the
Company’s VOI notes receivable securitizations to date have
qualified to be, and have been, accounted for as sales in
accordance with SFAS No. 140.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     With respect to those transactions still outstanding
at June 30, 2009, the Company retains economic interests
(the “Retained Interests”) in securitized VOI notes
receivables through SPE ownership of QSPE beneficial
interests. The Retained Interests, which are comprised of
subordinated interests and interest only strips in the
related VOI notes receivable, provide credit enhancement to
the third-party purchasers of the related QSPE beneficial
interests. Retained Interests cash flows are limited to the
cash available from the related VOI notes receivable, after
servicing and other related fees, absorbing 100% of any
credit losses on the related VOI notes receivable and QSPE
fixed rate interest expense. With respect to those
transactions still outstanding at June 30, 2009, the
Retained Interests are classified and accounted for as
“available-for-sale” securities in accordance with SFAS
No. 115, “Accounting for Certain Investments in Debt and
Equity Securities,” and SFAS No. 140.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The Company’s securitization agreements prior to 2009
provide the Company with the option, subject to certain
limitations, to repurchase or replace defaulted VOI notes
receivable at their outstanding principal amounts. Such
activity totaled $6 million and $13 million during the
three and six months ended June 30, 2009, respectively, and
$5 million and $11 million during the three and six months
ended June 30, 2008, respectively. The Company has been
able to resell the VOIs underlying the VOI notes
repurchased or replaced under these provisions without
incurring significant losses. The Company’s replacement of
the defaulted VOI notes receivable under the securitization
agreements with new VOI notes receivable resulted in net
gains of approximately $1 million and $2 million during the
three and six months ended June 30, 2009 and 2008,
respectively, which are included in vacation ownership and
residential sales and services in the Company’s
consolidated statements of income.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In June 2009, the Company securitized approximately
$181 million of VOI notes receivable (the “2009
Securitization”) resulting in cash proceeds of
approximately $125 million. The Company retained
$44 million of interests in the QSPE, which included
$43 million of notes the Company effectively owned after
the transfer and $1 million related to the interest only
strip. Although the notes effectively owned after the
transfer were measured at fair value on the transfer date,
they require prospective accounting treatment as notes
receivable and will be carried at the basis established at
the date of transfer and accrete interest over time to
return to the historical cost basis. If the Company deems
such amount to be non-recoverable in the future, it will
record a valuation allowance. In accordance with SFAS
No. 152, the related loss on the 2009 Securitization of
$2 million is included in vacation ownership and
residential sales and services in the Company’s
consolidated statements of income.
</div>
</div>
<p></p>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     Key assumptions used in measuring the fair value of
the Retained Interests at the time of the 2009
Securitization and at June 30, 2009, relating to the 2009
Securitization, were as follows: an average discount rate
of 12.8%, an average expected annual prepayment rate
including defaults of 17.9%, and an expected weighted
average remaining life of prepayable notes receivable of
52 months. These key assumptions are based on the Company’s
historical experience.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     At June 30, 2009, the aggregate outstanding principal
balance of VOI notes receivable that has been securitized
was $383 million. The aggregate principal amount of those
VOI notes receivables that were more than 90 days
delinquent at June 30, 2009 was approximately $5 million.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     Gross credit losses for all VOI notes receivable that
have been securitized totaled $9 million and $18 million
during the three and six months ended June 30, 2009,
respectively, and $7 million and $14 million during the
three and six months ended June 30, 2008, respectively.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The Company received aggregate cash proceeds of
$5 million and $11 million from the Retained Interests
during the three and six months ended June 30, 2009,
respectively, and $7 million and $14 million during the
three and six months ended June 30, 2008, respectively. The
Company received aggregate servicing fees of $1 million and
$2 million related to these VOI notes receivable in the
three and six months ended June 30, 2009 and 2008,
respectively.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     At the time of each VOI notes receivable
securitization and at the end of each financial reporting
period, the Company estimates the fair value of its
Retained Interests using a discounted cash flow model. All
assumptions used in the models are reviewed and updated, if
necessary, based on current trends and historical
experience. The key assumption used in measuring the fair
value associated with its outstanding note securitizations
(excluding the 2009 Securitization, which is previously
disclosed) was as follows: an average discount rate of
16.0%, an average expected annual prepayment rate including
defaults of 22.7% and an expected weighted average
remaining life of prepayable notes receivable of 70 months.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In accordance with FSP FAS 115-2, the fair value of
the Company’s retained interest as of June 30, 2009 and
December 31, 2008 was $10 million and $19 million with
amortized cost basis of $11 million and $21 million,
respectively. Other-than-temporary impairments related to
other factors and recognized in accumulated other
comprehensive income as of June 30, 2009 and December 31,
2008 totaled $1 million and $2 million, respectively. Total
other-than-temporary impairments related to credit losses
recorded in gain (loss) on impairments totaled $14 million
and $16 million for the three and six months ended June 30,
2009. There was no credit losses recorded in the 2008
period.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The Company completed a sensitivity analysis on the
net present value of the Retained Interests to measure the
change in value associated with independent changes in
individual key variables. The methodology applied
unfavorable changes for the key variables of expected
prepayment rates, discount rates and expected gross credit
losses as of June 30, 2009. The decreases in value of the
Retained Interests that would result from various
independent changes in key variables are shown in the chart
that follows (in millions). The factors may not move
independently of each other.
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="88%">
 
</td>
<td width="5%">
 
</td>
<td width="3%">
 
</td>
<td width="1%">
 
</td>
<td width="3%">
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Annual prepayment rate:
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
100 basis points-dollars
</div>
</td>
<td>
 
</td>
<td align="right">
$
</td>
<td align="right">
0.5
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
100 basis points-percentage
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right">
 
</td>
<td align="right">
4.7
</td>
<td nowrap="nowrap">
%
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
200 basis points-dollars
</div>
</td>
<td>
 
</td>
<td align="right">
$
</td>
<td align="right">
0.8
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
200 basis points-percentage
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right">
 
</td>
<td align="right">
8.3
</td>
<td nowrap="nowrap">
%
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Discount rate:
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
100 basis points-dollars
</div>
</td>
<td>
 
</td>
<td align="right">
$
</td>
<td align="right">
0.2
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
100 basis points-percentage
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right">
 
</td>
<td align="right">
1.9
</td>
<td nowrap="nowrap">
%
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
200 basis points-dollars
</div>
</td>
<td>
 
</td>
<td align="right">
$
</td>
<td align="right">
0.4
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
200 basis points-percentage
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right">
 
</td>
<td align="right">
3.7
</td>
<td nowrap="nowrap">
%
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Gross annual rate of credit losses:
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
100 basis points-dollars
</div>
</td>
<td>
 
</td>
<td align="right">
$
</td>
<td align="right">
3.4
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
100 basis points-percentage
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right">
 
</td>
<td align="right">
35.4
</td>
<td nowrap="nowrap">
%
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
200 basis points-dollars
</div>
</td>
<td>
 
</td>
<td align="right">
$
</td>
<td align="right">
6.1
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
200 basis points-percentage
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right">
 
</td>
<td align="right">
62.4
</td>
<td nowrap="nowrap">
%
</td>
</tr>
</tbody>
</table>
</div>
</div>
</div>
3502000000
3422000000
372000000
345000000
23000000
22000000
-78000000
-442000000
-211000000
-95000000
244000000
224000000
137000000
105000000
140000000
134000000
0
1000000
-2000000
0
345000000
199000000
159000000
100000000
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 1. Basis of Presentation</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The accompanying consolidated financial statements
represent the consolidated financial position and
consolidated results of operations of Starwood Hotels &
Resorts Worldwide, Inc. and its subsidiaries (the
“Company”).
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The consolidated financial statements include the
accounts of the Company and all of its controlled
subsidiaries and partnerships. In consolidating, all
material intercompany transactions are eliminated. We have
evaluated all subsequent events through August 6, 2009, the
date the consolidated financial statements were filed.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     Starwood is one of the world’s largest hotel and
leisure companies. The Company’s principal business is
hotels and leisure, which is comprised of a worldwide
hospitality network of approximately 970 full-service
hotels, vacation ownership resorts and residential
developments primarily serving two markets: luxury and
upscale. The principal operations of Starwood Vacation
Ownership, Inc. (“SVO”) include the acquisition,
development and operation of vacation ownership resorts;
marketing and selling vacation ownership interests (“VOIs”)
in the resorts; and providing financing to customers who
purchase such interests.
</div>
</div>
</div>
682000000
615000000
-3000000
1000000
-2000000
-3000000
54000000
26000000
22000000
81000000
45000000
21000000
34000000
92000000
1843000000
1779000000
30000000
-118000000
13000000
7000000
459000000
0
172000000
164000000
216000000
112000000
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 14. Pension and Postretirement Benefit Plans</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The following table presents the components of net
periodic benefit cost for the three and six months ended
June 30, 2009 and 2008 (in millions):
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="28%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="22">
<b>Three Months Ended June 30,</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="10">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="10">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Foreign</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Foreign</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Pension</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Pension</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Postretirement</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Pension</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Pension</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Postretirement</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Benefits</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Benefits</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Benefits</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Benefits</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Benefits</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Benefits</b>
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Service cost
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
1.2
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
2.2
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Interest cost
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
0.2
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
3.2
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
0.3
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
0.2
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
3.0
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
0.3
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Expected return on plan assets
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(2.7
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(3.0
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(0.1
</td>
<td nowrap="nowrap">
)
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Amortization of:
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Actuarial loss
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
1.0
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
0.4
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Prior service income
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(0.1
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(0.1
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Net period benefit cost
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
0.2
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
2.6
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
0.3
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
0.2
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
2.5
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
0.2
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="28%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="22">
<b>Six Months Ended June 30,</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="10">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="10">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Foreign</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Foreign</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Pension</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Pension</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Postretirement</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Pension</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Pension</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Postretirement</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Benefits</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Benefits</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Benefits</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Benefits</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Benefits</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Benefits</b>
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Service cost
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
2.4
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
3.3
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Interest cost
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
0.5
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
6.3
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
0.5
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
0.4
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
6.0
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
0.6
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Expected return on plan assets
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(5.0
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(0.1
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(5.9
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(0.2
</td>
<td nowrap="nowrap">
)
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Amortization of:
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Actuarial loss
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
2.4
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
0.8
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Prior service income
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(0.1
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(0.2
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Net periodic benefit cost
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
0.5
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
6.0
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
0.4
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
0.4
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
4.0
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
0.4
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     During the three and six months ended June 30, 2009,
the Company contributed approximately $5 million and
$13 million, respectively, to its pension and post
retirement benefit plans. For the remainder of 2009, the
Company expects to contribute approximately $8 million to
its pension and post-retirement benefit plans. A portion of
these fundings will be reimbursed for costs related to
employees of managed hotels.
</div>
</div>
</div>
2000000
0
977000000
482000000
-23000000
-25000000
-534000000
-58000000
117000000
0
137000000
106000000
138000000
134000000
3599000000
3593000000
2000000
677000000
96000000
41000000
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 11. Restructuring and Other Special Charges</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     During the three and six months ended June 30, 2009,
the Company recorded restructuring charges of $5 million
and $22 million, respectively, in connection with its
ongoing initiative of rationalizing its cost structure in
light of the decline in growth in its business units.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     During the three months ended June 30, 2008, the
Company recorded a $1 million restructuring charge
primarily related to further demolition costs at the
Sheraton Bal Harbour Beach Resort (“Bal Harbour”), which is
being redeveloped as a St. Regis hotel along with branded
residences and fractional units.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     During the six months ended June 30, 2008, the Company
recorded an $8 million restructuring charge in connection
with the Company’s ongoing initiative of rationalizing its
cost structure and an additional $2 million charge for
further demolition costs related to Bal Harbour.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     Restructuring costs and other special charges, net, by
segment are as follows (in millions):
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="52%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="6">
<b>Three Months Ended</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="6">
<b>Six Months Ended</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="6">
<b>June 30,</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="6">
<b>June 30,</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2008</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Hotel
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
4
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
1
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
13
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
5
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Vacation Ownership & Residential
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
1
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
9
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
5
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Total
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
5
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
1
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
22
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
10
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     The Company had remaining accruals of $23 million and
$41 million at June 30, 2009 and December 31, 2008,
respectively, which are primarily recorded in accrued
expenses and other liabilities. The following table
summarizes activity in the restructuring and other special
charges related accruals:
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="40%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>December 31,</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Expenses</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Non-cash</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>June 30,</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2008</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>(Reversals)</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Payments</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Other</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2009</b>
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Retained reserves established by Sheraton Holding
prior to its merger with the Company in 1998
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
8
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
8
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Le Méridien acquisition reserves
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(2
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
2
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Consulting fees associated with cost reduction
initiatives
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
3
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
1
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(4
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Severance
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
23
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
18
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(33
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
8
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Closure of vacation ownership facilities
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
7
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
5
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(3
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(2
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
7
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Total
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
41
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
22
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
$
</td>
<td align="right">
(40
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
23
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
</div>
</div>
10000000
1000000
22000000
5000000
1517000000
1657000000
3039000000
1573000000
2337000000
1219000000
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 2. Recently Issued Accounting Standards</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     <b><i>Adopted Accounting Standards</i></b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In April 2009, the Financial Accounting Standards
Board (“FASB”) issued FASB Staff Position (“FSP”) Issue
No. FAS No. 157-4 “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions that
are not Orderly” (“FSP FAS No. 157-4”). FSP FAS No. 157-4
provides additional guidance for estimating fair value in
accordance with SFAS No. 157. This FSP No. 157-4 is
effective in reporting periods ending after June 15, 2009.
On June 30, 2009, the Company adopted FSP FAS No. 157-4,
which did not have a material impact on its consolidated
financial statements.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In April 2009, the FASB issued FSP No. FAS No. 107-1
and Accounting Principles Board (“APB”) No. 28-1 “Interim
Disclosures about Fair Value of Financial Instruments”
(“FSP FAS No. 107-1 and APB No 28-1”). FSP FAS No. 107-1
and APB No. 28-1 require disclosures about the fair value
of financial instruments for annual and interim reporting
periods of publicly traded companies. FSP No. 107-1 and APB
No. 28-1 are effective in reporting periods ending after
June 15, 2009. On June 30, 2009, the Company adopted FSP
FAS No. 107-1 and APB No. 28-1, which did not have a
material impact on its consolidated financial statements.
See Note 18 for disclosure.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In April 2009, the FASB issued FSP Issue No. FAS
No. 115-2 and FAS No. 124-2 “Recognition and Presentation
of Other-Than-Temporary Impairments” (“FSP FAS No. 115-2
and 124-2”). FSP FAS No. 115-2 and 124-2 amend the
other-than-temporary impairment guidance for debt
securities to make the guidance more operational and to
improve the disclosure of other-than-temporary impairments
on debt and equity securities in the financial statements.
FSP No. 115-2 and 124-2 are effective in reporting periods
ending after June 15, 2009. On June 30, 2009, the Company
adopted FSP FAS No. 115-2 and 124-2, which did not have a
material impact on its consolidated financial statements.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In May 2009, the FASB issued Statement of Financial
Accounting Standards (“SFAS”) No. 165, “Subsequent Events”
(“SFAS No. 165”). SFAS No. 165 establishes the period in
which management of a reporting entity should evaluate
events and transactions for recognition or disclosure in
the financial statements. It also describes the
circumstances under which an entity should recognize events
or transactions that occur after the balance sheet date.
SFAS No. 165 is effective for interim and annual reporting
periods ending after June 15, 2009. On June 30, 2009, the
Company adopted SFAS No. 165, which did not have a material
effect on its consolidated financial statements.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In June 2008, the FASB ratified FSP Issue No. Emerging
Issues Task Force (“EITF”) 03-6-1, “Determining Whether
Instruments Granted in Share-Based Payment Transactions are
Participating Securities” (FSP No. EITF 03-6-1), which
addresses whether instruments granted in share-based
payment awards are participating securities prior to
vesting and, therefore, must be included in the earnings
allocation in calculating earnings per share under the
two-class method described in SFAS No. 128, “Earnings per
Share” (SFAS No. 128). FSP No. EITF 03-6-1 requires that
unvested share-based payment awards that contain
non-forfeitable rights to dividends or dividend-equivalents
be treated as participating securities in calculating
earnings per share. FSP No. EITF 03-6-1 is effective for
the Company beginning with the first interim period ending
after December 15, 2008, and will be applied
retrospectively to all prior periods. On January 1, 2009
the Company adopted FSP No. EITF 03-6-1, which did not have
a material impact on the Company.
</div>
</div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In April 2008, the FASB issued FSP No. 142-3,
“Determination of the Useful Life of Intangible Assets”
(“FSP No. 142-3”). FSP No. 142-3 amends the factors that
should be considered in developing renewal or extension
assumptions used to determine the useful life of a
recognized intangible asset under SFAS No. 142, “Goodwill
and Other Intangible Assets.” FSP No. 142-3 is effective
for financial statements issued for fiscal years beginning
after December 15, 2008 and interim periods within those
fiscal years. On January 1, 2009, the Company adopted FSP
No. 142-3, which did not have any impact on its
consolidated financial statements.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In March 2008, the FASB issued SFAS No. 161,
“Disclosures about Derivative Instruments and Hedging
Activities-an amendment of FASB Statement No. 133” (“SFAS
No. 161”). SFAS No. 161 requires enhanced disclosure
related to derivatives and hedging activities. SFAS No. 161
must be applied prospectively to all derivative instruments
and non-derivative instruments that are designated and
qualify as hedging instruments and related hedged items
accounted for under SFAS No. 133 for all financial
statements issued for fiscal years and interim periods
beginning after November 15, 2008. The Company adopted SFAS
No. 161 on January 1, 2009. See Note 12 for enhanced
disclosures associated with the adoption of SFAS No. 161.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     Effective January 1, 2008, the Company adopted SFAS
No. 157 related to its financial assets and liabilities and
elected to defer the option of SFAS No. 157 for
non-financial assets and non-financial liabilities as
allowed by FSP No. SFAS 157-2 “Effective Date of FASB
Statement No. 157,” which was issued in February 2008. SFAS
No. 157 defines fair value, establishes a framework for
measuring fair value under generally accepted accounting
principles and enhances disclosures about fair value
measurements. Fair value is defined under SFAS No. 157 as
the exchange price that would be received for an asset or
paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or
liability in an orderly transaction between market
participants on the measurement date. Valuation techniques
used to measure fair value under SFAS No. 157 must maximize
the use of observable inputs and minimize the use of
unobservable inputs. The standard describes a fair value
hierarchy based on three levels of inputs, of which the
first two are considered observable and the last
unobservable, that may be used to measure fair value as
follows:
</div>
<div style="MARGIN-TOP: 6pt">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr style=
"FONT-SIZE: 10pt; BACKGROUND: none transparent scroll repeat 0% 0%; COLOR: #000000"
valign="top">
<td style=
"BACKGROUND: none transparent scroll repeat 0% 0%"
width="2%">
 
</td>
<td nowrap="nowrap" align="left" width="3%">
<b>•</b>
</td>
<td width="1%">
 
</td>
<td>
Level 1 — Quoted prices in active markets for
identical assets or liabilities.
</td>
</tr>
<tr>
<td style="FONT-SIZE: 6pt">
 
</td>
</tr>
<tr style=
"FONT-SIZE: 10pt; BACKGROUND: none transparent scroll repeat 0% 0%; COLOR: #000000"
valign="top">
<td style=
"BACKGROUND: none transparent scroll repeat 0% 0%"
width="2%">
 
</td>
<td nowrap="nowrap" align="left" width="3%">
<b>•</b>
</td>
<td width="1%">
 
</td>
<td>
Level 2 — Inputs other than Level 1 that are
observable, either directly or indirectly, such as
quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or
other inputs that are observable or can be
corroborated by observable market data for
substantially the full term of the assets or
liabilities.
</td>
</tr>
<tr>
<td style="FONT-SIZE: 6pt">
 
</td>
</tr>
<tr style=
"FONT-SIZE: 10pt; BACKGROUND: none transparent scroll repeat 0% 0%; COLOR: #000000"
valign="top">
<td style=
"BACKGROUND: none transparent scroll repeat 0% 0%"
width="2%">
 
</td>
<td nowrap="nowrap" align="left" width="3%">
<b>•</b>
</td>
<td width="1%">
 
</td>
<td>
Level 3 — Unobservable inputs that are supported by
little or no market activity and that are
significant to the fair value of the assets or
liabilities.
</td>
</tr>
</tbody>
</table>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     On January 1, 2009, the Company adopted the provisions
of SFAS No. 157 relating to non-financial assets and
non-financial liabilities. The adoption of this statement
did not have a material impact on the Company’s
consolidated financial statements. See Note 8 for
additional information.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In December 2007, the FASB issued SFAS No. 141
(revised 2007), “Business Combinations” (“SFAS 141(R)”),
which is a revision of SFAS 141, “Business Combinations.”
The primary requirements of SFAS 141(R) are as follows:
(i.) Upon initially obtaining control, the acquiring entity
in a business combination must recognize 100% of the fair
values of the acquired assets, including goodwill, and
assumed liabilities, with only limited exceptions even if
the acquirer has not acquired 100% of its target. As a
consequence, the current step acquisition model will be
eliminated. (ii.) Contingent consideration arrangements
will be fair valued at the acquisition date and included on
that basis in the purchase price consideration. The concept
of recognizing contingent consideration at a later date
when the amount of that consideration is determinable
beyond a reasonable doubt, will no longer be applicable.
(iii.) All transaction costs will be expensed as incurred.
SFAS 141 (R) is effective as of the beginning of an
entity’s first fiscal year beginning after December 15,
2008. The Company adopted SFAS 141(R) on January 1, 2009
and it did not have an impact on its consolidated financial
statements.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In December 2007, the FASB issued SFAS No. 160,
“Non-controlling Interests in Consolidated Financial
Statements — An Amendment of ARB No. 51, or SFAS No. 160”
(“SFAS No. 160”). SFAS No. 160 establishes new accounting
and reporting standards for the non-controlling interest in
a subsidiary and for the deconsolidation of a subsidiary.
Among other items, SFAS No. 160 requires that equity
attributable to non-controlling interests be recognized in
equity separate from that of the Company’s and that
consolidated net income now includes the results of
operations attributable to non-controlling interests. The
Company adopted SFAS No. 160 on January 1, 2009 and it did
not have a material impact on the Company’s consolidated
financial statements. See the financial statements and Note
16 for the presentation and disclosure provisions related
to SFAS No. 160.
</div>
</div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     <b><i>Future Adoption of Accounting Standards</i></b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In January 2009, the FASB issued FSP Issue No. FAS
No. 132(R)-1 “Employers Disclosures about Pensions and
Other Postretirement Benefit Plan Assets” (“FSP FAS
No. 132(R)-1”). FSP FAS No. 132(R)-1 amends FAS No. 132
“Employers’ Disclosures about Pensions and Other
Postretirement Benefits” to provide guidance on an
employer’s disclosures about plan assets of a defined
benefit pension or other postretirement plan. FSP FAS
No. 132(R)-1 is effective for fiscal years ending after
December 15, 2009. The Company is currently evaluating the
impact that FSP FAS No. 132(R)-1 will have on its
consolidated financial statements.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In June 2009, the FASB issued SFAS No. 166,
“Accounting for Transfers of Financial Assets, an Amendment
of FASB Statement No. 140” (“SFAS No. 166”). SFAS No. 166
amends SFAS No. 140 “Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities.”
SFAS No. 166 improves the comparability of information that
a reporting entity provides regarding transfers of
financial assets and the effects on its financial
statements. SFAS No. 166 is effective for interim and
annual reporting periods ending after November 15, 2009.
The Company is currently evaluating the effect that SFAS
No. 166 will have on its consolidated financial statements.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In June 2009, the FASB issued SFAS No. 167,
“Amendments to FASB Interpretation No. 46(R)” (“SFAS
No. 167”). SFAS No. 167 amends FIN No. 46(R),
“Consolidation of Variable Interest Entities” and changes
the consolidation guidance applicable to a variable
interest entity. Among other things, it requires a
qualitative analysis to be performed in determining whether
an enterprise is the primary beneficiary of a variable
interest entity. SFAS No. 167 is effective for interim and
annual reporting periods ending after November 15, 2009.
The Company is currently evaluating the effect that SFAS
No. 167 will have on its consolidated financial statements.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     In June 2009, the FASB issued SFAS No. 168, “The FASB
Accounting Standards Codification ™ and the Hierarchy of
Generally Accepted Accounting Principles a Replacement of
FASB Statement No. 162” (“SFAS No. 168”). SFAS No. 168
replaces SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” as the source of authoritative
accounting principles recognized by the FASB to be applied
by non-governmental entities in the preparation of
financial statements in accordance with generally accepted
accounting principles. SFAS No. 168 is effective for
interim and annual reporting periods ending after
September 15, 2009. SFAS No. 168 will have no effect on the
Company’s consolidated financial statements as it is for
disclosure purposes only.
</div>
</div>
</div>
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 6. Other Assets</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     Other assets include the following (in millions):
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="76%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>June 30,</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>December 31,</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
VOI notes receivable, net
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
335
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
444
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Other notes receivable, net
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
34
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
32
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Prepaid taxes
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
128
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
130
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Deposits and other
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
118
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
76
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
615
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
682
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
</div>
</div>
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 19. Business Segment Information</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     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<sup style=
"FONT-SIZE: 85%; VERTICAL-ALIGN: text-top">®</sup>, The
Luxury Collection<sup style=
"FONT-SIZE: 85%; VERTICAL-ALIGN: text-top">®</sup>,
Sheraton<sup style=
"FONT-SIZE: 85%; VERTICAL-ALIGN: text-top">®</sup>,
Westin<sup style=
"FONT-SIZE: 85%; VERTICAL-ALIGN: text-top">®</sup>,
W<sup style=
"FONT-SIZE: 85%; VERTICAL-ALIGN: text-top">®</sup>, Le
Méridien<sup style=
"FONT-SIZE: 85%; VERTICAL-ALIGN: text-top">®</sup>,
Aloft<sup style=
"FONT-SIZE: 85%; VERTICAL-ALIGN: text-top">®</sup>,
Element<sup style=
"FONT-SIZE: 85%; VERTICAL-ALIGN: text-top">®</sup>, and
Four Points<sup style=
"FONT-SIZE: 85%; VERTICAL-ALIGN: text-top">®</sup> by
Sheraton 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 and the sale of
residential units.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     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, gains and losses on the
sale of real estate, restructuring and other special
(charges) credits, and income taxes. The Company does not
allocate these items to its segments.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
      The following table presents revenues, operating
income, capital expenditures and assets for the Company’s
reportable segments (in millions):
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="52%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="6">
<b>Three Months Ended</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="6">
<b>Six Months Ended</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="6">
<b>June 30,</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="6">
<b>June 30,</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2008</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Revenues:
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Hotel
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
1,055
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
1,344
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
2,001
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
2,585
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Vacation ownership and residential
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
164
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
229
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
336
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
454
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 60px; TEXT-INDENT: -15px">
Total
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
1,219
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
1,573
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
2,337
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
3,039
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Operating income:
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Hotel
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
113
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
216
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
198
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
397
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Vacation ownership and residential
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
22
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
28
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
43
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
56
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 60px; TEXT-INDENT: -15px">
Total segment operating income
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
135
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
244
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
241
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
453
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
Selling, general, administrative and other
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(30
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(44
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(60
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(98
</td>
<td nowrap="nowrap">
)
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
Restructuring and other special charges, net
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(5
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(1
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(22
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(10
</td>
<td nowrap="nowrap">
)
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
Operating income
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
100
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
199
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
159
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
345
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
Equity earnings and gains and losses from
unconsolidated ventures, net:
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 90px; TEXT-INDENT: -15px">
Hotel
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
2
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
4
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(3
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
8
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 90px; TEXT-INDENT: -15px">
Vacation ownership and residential
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
1
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
1
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
1
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
3
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
Interest expense, net
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(53
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(55
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(96
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(102
</td>
<td nowrap="nowrap">
)
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
(Loss) gain on asset dispositions and
impairments, net
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(34
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
1
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(39
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
Income from continuing operations before taxes
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
16
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
150
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
22
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
254
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Capital expenditures:
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Hotel
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
35
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
62
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
72
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
118
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Vacation ownership and residential
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
9
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
26
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
27
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
54
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Corporate
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
6
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
19
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
13
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
44
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 60px; TEXT-INDENT: -15px">
Total
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
50
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
107
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
112
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
216
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="76%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>June 30,</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>December 31,</b>
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Assets:
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Hotel<sup style=
"FONT-SIZE: 85%; VERTICAL-ALIGN: text-top">(a)</sup>
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
6,251
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
6,728
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Vacation ownership and residential<sup style=
"FONT-SIZE: 85%; VERTICAL-ALIGN: text-top">(b)</sup>
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
2,083
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
2,183
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Corporate
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
970
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
792
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 45px; TEXT-INDENT: -15px">
Total
</div>
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
9,304
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
9,703
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
<div align="left">
<div style=
"BORDER-TOP: #000000 1px solid; MARGIN-TOP: 16pt; FONT-SIZE: 3pt; WIDTH: 18%">
</div>
</div>
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">
(a)
</td>
<td>
 
</td>
<td>
Includes $300 million and $315 million of investments
in unconsolidated joint ventures at June 30, 2009 and
December 31, 2008, respectively.
</td>
</tr>
<tr style="FONT-SIZE: 3pt">
<td>
 
</td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">
(b)
</td>
<td>
 
</td>
<td>
Includes $34 million and $38 million of investments
in unconsolidated joint ventures at June 30, 2009 and
December 31, 2008, respectively.
</td>
</tr>
</tbody>
</table>
<p style="FONT-SIZE: 10pt" align="center">
  
</p>
</div>
<p></p>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     During the fourth quarter of 2008, the Company
performed its annual impairment test of goodwill for both
of its reporting segments and concluded that goodwill was
not impaired. If the current economic climate and the
deterioration of results in the timeshare industry do not
improve, it is reasonably possible that the carrying value
of goodwill related to the vacation ownership segment could
become impaired.
</div>
</div>
</div>
268000000
138000000
189000000
96000000
506000000
330000000
1621000000
1810000000
1644000000
1832000000
<div>
<div style="FONT-FAMILY: 'Times New Roman',Times,serif">
<div style="MARGIN-TOP: 12pt; FONT-SIZE: 10pt" align="left">
<b>Note 16. Stockholders’ Equity</b>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     <b><i>Effect of SFAS No. 160.</i></b> The following
table represents changes in stockholders equity that are
attributable to Starwood’s stockholders and non-controlling
interests (in millions).
</div>
<div align="center">
<table style="FONT-SIZE: 10pt" cellspacing="0" cellpadding=
"0" width="100%" border="0">
<tbody>
<tr valign="bottom">
<td width="23%">
 
</td>
<td width="4%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="4%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="4%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="4%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="4%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="4%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
<td width="4%">
 
</td>
<td width="1%">
 
</td>
<td width="5%">
 
</td>
<td width="1%">
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Accumulated</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Equity</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Additional</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Other</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
<b>Attributable to</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="6">
<b>Shares</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 0px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Paid-in</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 0px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Comprehensive</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 0px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Retained</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 0px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Noncontrolling</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="middle" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 8pt" valign="bottom">
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Shares</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Amount</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Capital</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Loss</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Earnings</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Interests</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-BOTTOM: #000000 1px solid" nowrap=
"nowrap" align="middle" colspan="2">
<b>Total</b>
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Balance at December 31, 2008
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
183
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
2
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
493
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
$
</td>
<td align="right">
(391
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
1,517
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
23
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
1,644
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Net income (loss)
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
140
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
 
</td>
<td align="right">
(2
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
138
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Stock option and restricted stock award
transactions, net
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
4
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
12
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
12
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Foreign currency translation
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
23
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
1
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
24
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
Change in fair value of derivatives and
investments
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
11
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
11
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td>
<div style="MARGIN-LEFT: 30px; TEXT-INDENT: -15px">
ESPP stock issuances
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
3
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
—
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
3
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 1px solid" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
<tr style="BACKGROUND: #cceeff" valign="bottom">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
Balance at June 30, 2009
</div>
</td>
<td>
 
</td>
<td>
 
</td>
<td align="right">
187
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
2
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
508
</td>
<td>
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left">
$
</td>
<td align="right">
(357
</td>
<td nowrap="nowrap">
)
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
1,657
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
22
</td>
<td>
 
</td>
<td>
 
</td>
<td align="left">
$
</td>
<td align="right">
1,832
</td>
<td>
 
</td>
</tr>
<tr style="FONT-SIZE: 1px">
<td>
<div style="MARGIN-LEFT: 15px; TEXT-INDENT: -15px">
</div>
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="BORDER-TOP: #000000 3px double" nowrap=
"nowrap" align="right" colspan="2">
 
</td>
<td>
 
</td>
</tr>
</tbody>
</table>
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     <b><i>Share Issuances and Repurchases.</i></b> During
the three and six months ended June 30, 2009, the Company
issued an insignificant amount of common shares as a result
of stock option exercises. The Company has not repurchased
any common stock during 2009. In November 2007, the Board
of Directors authorized the repurchase of up to $1 billion
of common stock under the Company’s existing repurchase
authorization (the “Share Repurchase Authorization”). As of
June 30, 2009, no repurchase capacity remained available
under the Share Repurchase Authorization.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     <b><i>Limited Partnership Units.</i></b> At June 30,
2009, there were approximately 178,000 Operating Limited
Partnership (the “Operating Partnership”) units
outstanding. The Operating Partnership units are
convertible into common shares at the unit holder’s option,
provided that the Company has the option to settle
conversion requests in cash or common shares.
</div>
<div style="MARGIN-TOP: 6pt; FONT-SIZE: 10pt" align="left">
     <b><i>Dividends.</i></b> On January 9, 2009, the
Company paid a dividend of $0.90 per share to shareholders
of record on December 31, 2008.
</div>
</div>
</div>
40000000
26000000
188000000
188000000
182000000
183000000
184000000
184000000
179000000
179000000