ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows.
MD&A is organized as follows: ?
Overview.
Discussion of our business and overall analysis of financial and other highlights affecting the company in order to provide context for the remainder of MD&A.  ?
Critical Accounting Estimates.
Accounting estimates that we believe are most important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.  ?
Results of Operations.
An analysis of our financial results comparing 2013 to 2012 and comparing 2012 to 2011.  ?
Liquidity and Capital Resources.
An analysis of changes in our balance sheets and cash flows, and discussion of our financial condition and potential sources of liquidity.  ?
Fair Value of Financial Instruments.
Discussion of the methodologies used in the valuation of our financial instruments.  ?
Contractual Obligations and Off-Balance-Sheet Arrangements.
Overview of contractual obligations, contingent liabilities, commitments, and off-balance-sheet arrangements outstanding as of December 28, 2013, including expected payment schedule.
The various sections of this MD&A contain a number of forward-looking statements that involve a number of risks and uncertainties.
Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” “will,” “should,” and variations of such words and similar expressions are intended to identify such forward-looking statements.
In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, uncertain events or assumptions, and other characterizations of future events or circumstances are forward-looking statements.
Such statements are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this filing and particularly in “Risk Factors” in Part I, Item 1A of this Form 10-K.  Our actual results may differ materially, and these forward-looking statements do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that had not been completed as of February 14, 2014.
Overview Our results of operations for each period were as follows:
## Table 0 ##
Revenue for 2013 was down 1% from 2012.
PCCG experienced lower platform unit sales in the first half of the year, but saw offsetting growth in the back half as the PC market began to show signs of stabilization.
DCG continued to benefit from the build out of Internet cloud computing and the strength of our product portfolio resulting in increased platform volumes for DCG for the year.
Higher factory start-up costs for our next-generation 14nm process technology led to a decrease in gross margin compared to 2012.
In response to the current business environment and to better align resources, management approved several restructuring actions including targeted workforce reductions as well as the exit of certain businesses and facilities.
These actions resulted in restructuring and asset impairment charges of $240 million for 2013.
new long-term management agreements; however, due to certain provisions in the management agreements, we account for these contracts as operating leases.
CTF placed approximately $89 million in trust accounts to cover possible shortfalls in cash flow necessary to meet rent payments under these leases.
In turn, we released CTF from its guarantees in connection with these leases.
In 2007, the lease agreement associated with one of these properties was terminated.
In 2007, we also entered into a transaction whereby the landlord allowed us to assume the lease agreement for another of the properties for which we then became the primary obligor.
In conjunction with becoming the primary obligor, we received a $16 million distribution from the trust, and the balance of the funds was distributed to the landlord.
We accounted for our receipt of trust funds as a lease incentive, the reduction of which will be recorded on a straight-line basis as an adjustment to lease expense over the term expiring in 2033.
At year-end 2007, approximately $38 million remained in these trust accounts for the 14 properties we still manage and account for as leases.
Minimum lease payments relating to these leases are as follows: $30 million in each of 2008, 2009, and 2010; $26 million in 2011; $17 million in 2012; and $33 million thereafter, for a total of $166 million.
For 13 European leased hotels, of the 29 properties mentioned in the preceding paragraph, CTF may terminate management agreements with us if and when CTF obtains releases from landlords of our back-up guarantees.
Pending completion of the CTF-landlord agreements, we continue to manage these hotels under modified management agreements and remain secondarily liable under certain of these leases.
We are also secondarily obligated for real estate taxes and other charges associated with the leases.
Third parties have severally indemnified us for all payments we may be required to make in connection with these obligations.
Since we assumed these guarantees, we have not funded any amounts and we do not expect to fund any amounts under these guarantees in the future.
CTF had new long-term management agreements; however, due to certain provisions in the management agreements, we account for these contracts as operating leases.
CTF placed approximately $89 million in trust accounts to cover possible shortfalls in cash flow necessary to meet rent payments under these leases.
In turn, we released CTF from its guarantees in connection with these leases.
In 2007, the lease agreement associated with one of these properties was terminated.
In 2007, we also entered into a transaction whereby the landlord allowed us to assume the lease agreement for another of the properties for which we then became the primary obligor.
In conjunction with becoming the primary obligor, we received a $16 million distribution from the trust, and the balance of the funds was distributed to the landlord.
We accounted for our receipt of trust funds as a lease incentive, the reduction of which will be recorded on a straight-line basis as an adjustment to lease expense over the term expiring in 2033.
At year-end 2007, approximately $38 million remained in these trust accounts for the 14 properties we still manage and account for as leases.
Minimum lease payments relating to these leases are as follows: $30 million in each of 2008, 2009, and 2010; $26 million in 2011; $17 million in 2012; and $33 million thereafter, for a total of $166 million.
For 13 European leased hotels, of the 29 properties mentioned in the preceding paragraph, CTF may terminate management agreements with us if and when CTF obtains releases from landlords of our back-up guarantees.
Pending completion of the CTF-landlord agreements, we continue to manage these hotels under modified management agreements and remain secondarily liable under certain of these leases.
We are also secondarily obligated for real estate taxes and other charges associated with the leases.
Third parties have severally indemnified us for all payments we may be required to make in connection with these obligations.
Since we assumed these guarantees, we have not funded any amounts and we do not expect to fund any amounts under these guarantees in the future.
CTF had originally made available €35 million in cash collateral in the event that we were required to fund under such guarantees.
At year-end 2007, we still managed five of the original 13 properties.
Approximately €7 million ($11 million) of cash collateral remained available at year-end 2007.
Our contingent liability exposure at yearend 2007 associated with the five remaining properties totaled $77 million as also noted in Footnote No.17, ¡°Contingencies.
¡± As CTF obtains releases from the landlords and these remaining hotels exit the system, our contingent liability exposure will decline.
At the closing date, we continued to manage three other hotels in the United Kingdom under amended management agreements with CTF and continued to manage 14 other properties in Asia on behalf of New World Development Company Limited and its affiliates.
CTF¡¯s principals are officers, directors, and stockholders of New World Development Company Limited.
At the closing date, the owners of the United Kingdom and Asian hotels agreed to invest $17 million to renovate those properties.
We and CTF also exchanged legal releases effective as of the closing date and litigation and arbitration that was outstanding between the two companies and their affiliates was dismissed.
Simultaneously with the closing on the foregoing transactions, CTF also sold five properties and one minority joint venture interest to Sunstone Hotel Investors, Inc.  (¡°Sunstone¡±) for $419 million, eight properties to Walton Street Capital, L. L. C.  (¡°Walton Street¡±) for $578 million, and two properties to Tarsadia Hotels (¡°Tarsadia¡±) for $29 million, in each case as substitute purchasers under our purchase and sale agreement with CTF.
Prior to consummation of the sales, we also operated all of these properties.
At closing, Walton Street and Sunstone entered into new long-term management agreements with us and agreed to invest a combined $68 million to further upgrade the 13 properties they acquired.
At the closing date, the two properties purchased by Tarsadia were operated under shortterm management and franchise agreements.
When we signed the purchase and sale agreement for the foregoing transactions in the 2005 second quarter, we recorded a $94 million pretax charge primarily due to the non-cash write-off of deferred contract acquisition costs associated with the termination of the existing management agreements for properties involved in these transactions.
As described above, we entered into new longterm management agreements with CTF, Walton Street, and Sunstone at the closing of the transactions.
In 2005 we also purchased two full-service properties, one in Paris, France and the other in Munich, Germany, for aggregate cash consideration of $146 million.
We planned to sell these two fullservice properties to third-party owners and the balances related to these properties were classified within the ¡°Assets held for sale¡± and ¡°Liabilities of assets held for sale¡± line items on our Consolidated Balance Sheets at year-end 2005.
The property in Paris, France, was sold in 2006 and the property located in Munich, Germany, was sold in 2007.
The balances associated with the Munich, Germany, property were reclassified, in conformity with other ¡°held and used¡± properties in the 2006 fourth quarter as the property was not sold at that time, as expected, within one year of its classification as ¡°held for sale.
¡± In conjunction with the 2006 reclassification, we recorded depreciation expense of $5 million in the 2006 fourth quarter that would have been recognized had the asset been continuously classified as ¡°held and used.
¡± 2005 Dispositions Late in 2005, we contributed land underlying an additional nine Courtyard hotels, worth approximately $40 million, to CBM Land Joint Venture limited partnership (¡°CBM Land JV¡±), a joint venture the majority of which was owned, at the time of the transaction, by a third party on behalf of an institutional investor, thereby obtaining a 23 percent equity stake in CBM Land JV.
At the same time we completed the sale of a portfolio of land underlying 75 Courtyard by Marriott hotels for approximately $246 million in cash to CBM Land JV.
In conjunction with this transaction, we recognized a gain of $17 million in 2005, we deferred recognition of a $5 million gain due to our minority interest in the joint venture, and we also deferred recognition of a $40 million gain due to contingencies in the transaction documents.
As those contingencies expire in subsequent years, we will recognize additional gains.
In each of 2007 and 2006, we recognized gains of $4 million, and at year-end 2007, the aggregate remaining deferred gains totaled $37 million.
We also sold a number of other land parcels in 2005 for $38 million in cash, net of transaction costs and recognized gains totaling $6 million, and we sold two minority interests in joint ventures for $14 million in cash and recognized gains totaling $7 million.9 GOODWILL AND INTANGIBLE ASSETS The following table details the composition of our goodwill and other intangible assets at year-end 2007 and year-end 2006.
## Table 1 ##
Brand Statistics The following brand statistics for 2016, and for 2016 compared to 2015, include Legacy-Starwood comparable properties for both full years even though Marriott did not own the Legacy-Starwood brands before the Starwood Combination.
The statistics for 2015, and for 2015 compared to 2014, are for Legacy-Marriott comparable properties only, as Marriott did not own the Legacy-Starwood brands at any time during that two-year period.2016 Compared to 2015.
The following tables present RevPAR, occupancy, and ADR for comparable properties under our Legacy-Marriott and Legacy-Starwood brands in North America and in our International regions.
Systemwide statistics include data from our franchised properties, in addition to our company-operated properties.
## Table 2 ##
Comparable Systemwide North American Properties
## Table 3 ##
(1) Includes JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St.  Regis, and EDITION.
(2) Includes Marriott Hotels, Sheraton, Westin, Renaissance Hotels, Autograph Collection Hotels, Gaylord Hotels, Le Méridien, and Tribute Portfolio.
(3) Includes Composite North American Luxury and Composite North American Upper Upscale.
(4) Includes Courtyard, Residence Inn, Fairfield Inn & Suites, SpringHill Suites, and TownePlace Suites.
Systemwide also includes Four Points, Aloft Hotels, and Element Hotels.

<table><tr><td></td><td>Three Months Ended</td><td>Twelve Months Ended</td></tr><tr><td>(Dollars in Millions, Except Per Share Amounts)</td><td>Dec. 28,2013</td><td>Sept. 28,2013</td><td>Change</td><td>Dec. 28,2013</td><td>Dec. 29,2012</td><td>Change</td></tr><tr><td>Net revenue</td><td>$13,834</td><td>$13,483</td><td>$351</td><td>$52,708</td><td>$53,341</td><td>$-633</td></tr><tr><td>Gross margin</td><td>$8,571</td><td>$8,414</td><td>$157</td><td>$31,521</td><td>$33,151</td><td>$-1,630</td></tr><tr><td>Gross margin percentage</td><td>62.0%</td><td>62.4%</td><td>-0.4%</td><td>59.8%</td><td>62.1%</td><td>-2.3%</td></tr><tr><td>Operating income</td><td>$3,549</td><td>$3,504</td><td>$45</td><td>$12,291</td><td>$14,638</td><td>$-2,347</td></tr><tr><td>Net income</td><td>$2,625</td><td>$2,950</td><td>$-325</td><td>$9,620</td><td>$11,005</td><td>$-1,385</td></tr><tr><td>Diluted earnings per common share</td><td>$0.51</td><td>$0.58</td><td>$-0.07</td><td>$1.89</td><td>$2.13</td><td>$-0.24</td></tr></table>
<table><tr><td>  <i>($ in millions)</i> </td><td>2007</td><td>2006</td></tr><tr><td>Contract acquisition costs and other</td><td>$899</td><td>$809</td></tr><tr><td>Accumulated amortization</td><td>-264</td><td>-234</td></tr><tr><td></td><td>$635</td><td>$575</td></tr><tr><td>Goodwill</td><td>$1,049</td><td>$1,049</td></tr><tr><td>Accumulated amortization</td><td>-128</td><td>-128</td></tr><tr><td></td><td>$921</td><td>$921</td></tr></table>
<table><tr><td></td><td colspan="2">RevPAR</td><td colspan="3">Occupancy</td><td colspan="2">Average Daily Rate</td></tr><tr><td></td><td>2016</td><td>Change vs. 2015</td><td>2016</td><td colspan="2">Change vs. 2015</td><td>2016</td><td>Change vs. 2015</td></tr><tr><td>JW Marriott</td><td>$187.02</td><td>4.0%</td><td>76.8%</td><td>2.2%</td><td>pts.</td><td>$243.57</td><td>1.1%</td></tr><tr><td>The Ritz-Carlton</td><td>$252.40</td><td>3.6%</td><td>71.9%</td><td>1.0%</td><td>pts.</td><td>$350.99</td><td>2.2%</td></tr><tr><td>W Hotels</td><td>$239.94</td><td>-2.2%</td><td>81.7%</td><td>0.2%</td><td>pts.</td><td>$293.82</td><td>-2.5%</td></tr><tr><td>Composite North American Luxury<sup>-1</sup></td><td>$242.10</td><td>2.8%</td><td>76.3%</td><td>1.4%</td><td>pts.</td><td>$317.13</td><td>0.9%</td></tr><tr><td>Marriott Hotels</td><td>$144.94</td><td>2.4%</td><td>75.4%</td><td>0.7%</td><td>pts.</td><td>$192.23</td><td>1.4%</td></tr><tr><td>Sheraton</td><td>$149.49</td><td>2.1%</td><td>76.5%</td><td>-0.5%</td><td>pts.</td><td>$195.40</td><td>2.7%</td></tr><tr><td>Westin</td><td>$167.21</td><td>0.9%</td><td>77.4%</td><td>-0.6%</td><td>pts.</td><td>$216.07</td><td>1.7%</td></tr><tr><td>Composite North American Upper Upscale<sup>-2</sup></td><td>$149.92</td><td>2.3%</td><td>76.1%</td><td>0.3%</td><td>pts.</td><td>$196.98</td><td>1.8%</td></tr><tr><td>Composite North American Full-Service<sup>-3</sup></td><td>$166.97</td><td>2.4%</td><td>76.2%</td><td>0.5%</td><td>pts.</td><td>$219.25</td><td>1.7%</td></tr><tr><td>Courtyard</td><td>$103.65</td><td>2.2%</td><td>73.1%</td><td>0.3%</td><td>pts.</td><td>$141.83</td><td>1.7%</td></tr><tr><td>Residence Inn</td><td>$118.14</td><td>3.8%</td><td>79.0%</td><td>0.6%</td><td>pts.</td><td>$149.56</td><td>3.0%</td></tr><tr><td>Composite North American Limited-Service<sup>-4</sup></td><td>$106.20</td><td>2.8%</td><td>75.0%</td><td>0.5%</td><td>pts.</td><td>$141.68</td><td>2.1%</td></tr><tr><td>Composite North American - All</td><td>$147.48</td><td>2.5%</td><td>75.8%</td><td>0.5%</td><td>pts.</td><td>$194.64</td><td>1.8%</td></tr></table>
<table><tr><td></td><td colspan="2">RevPAR</td><td colspan="3">Occupancy</td><td colspan="2">Average Daily Rate</td></tr><tr><td></td><td>2016</td><td>Change vs. 2015</td><td>2016</td><td colspan="2">Change vs. 2015</td><td>2016</td><td>Change vs. 2015</td></tr><tr><td>JW Marriott</td><td>$178.91</td><td>3.5%</td><td>76.0%</td><td>1.3%</td><td>pts.</td><td>$235.47</td><td>1.8%</td></tr><tr><td>The Ritz-Carlton</td><td>$252.40</td><td>3.6%</td><td>71.9%</td><td>1.0%</td><td>pts.</td><td>$350.99</td><td>2.2%</td></tr><tr><td>W Hotels</td><td>$239.94</td><td>-2.2%</td><td>81.7%</td><td>0.2%</td><td>pts.</td><td>$293.82</td><td>-2.5%</td></tr><tr><td>Composite North American Luxury<sup>-1</sup></td><td>$231.99</td><td>2.8%</td><td>76.0%</td><td>1.2%</td><td>pts.</td><td>$305.36</td><td>1.2%</td></tr><tr><td>Marriott Hotels</td><td>$124.39</td><td>2.0%</td><td>72.4%</td><td>0.3%</td><td>pts.</td><td>$171.92</td><td>1.5%</td></tr><tr><td>Sheraton</td><td>$115.58</td><td>2.4%</td><td>73.3%</td><td>0.3%</td><td>pts.</td><td>$157.73</td><td>2.0%</td></tr><tr><td>Westin</td><td>$152.94</td><td>2.4%</td><td>76.9%</td><td>0.1%</td><td>pts.</td><td>$198.98</td><td>2.3%</td></tr><tr><td>Composite North American Upper Upscale<sup>-2</sup></td><td>$130.44</td><td>2.5%</td><td>73.9%</td><td>0.4%</td><td>pts.</td><td>$176.52</td><td>1.9%</td></tr><tr><td>Composite North American Full-Service<sup>-3</sup></td><td>$141.11</td><td>2.6%</td><td>74.1%</td><td>0.5%</td><td>pts.</td><td>$190.41</td><td>1.9%</td></tr><tr><td>Courtyard</td><td>$101.49</td><td>1.9%</td><td>72.9%</td><td>—%</td><td>pts.</td><td>$139.24</td><td>1.9%</td></tr><tr><td>Residence Inn</td><td>$112.78</td><td>2.4%</td><td>79.0%</td><td>-0.1%</td><td>pts.</td><td>$142.78</td><td>2.6%</td></tr><tr><td>Fairfield Inn & Suites</td><td>$77.96</td><td>1.2%</td><td>70.1%</td><td>-0.5%</td><td>pts.</td><td>$111.20</td><td>1.9%</td></tr><tr><td>Composite North American Limited-Service<sup>-4</sup></td><td>$96.62</td><td>2.0%</td><td>74.2%</td><td>—%</td><td>pts.</td><td>$130.15</td><td>2.0%</td></tr><tr><td>Composite North American - All</td><td>$116.47</td><td>2.3%</td><td>74.2%</td><td>0.2%</td><td>pts.</td><td>$157.00</td><td>2.0%</td></tr></table>

Question: What is the row number of the section for which the RevPAR in 2016 is greater than 240?
Answer: 3