##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-K


| |   |                                                                                               
| | - | ----------------------------------------------------------------------------------------------
| | þ | Joint Annual Report Pursuant to Section 13 or 15(d) of
    the Securities Exchange Act of 1934

| |                                            
| | -------------------------------------------
| | For the Fiscal Year Ended December 31, 2005
|
| | OR                                         



| |   |                                                                                             
| | - | --------------------------------------------------------------------------------------------
| | o | Transition Report Pursuant to Section 13 or 15(d) of the
    Securities Exchange Act of 1934

| |                                           
| | ------------------------------------------
| | For the Transition Period from
    
    to

|                                                                                                                                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Commission File Number: 1-7959
    STARWOOD HOTELS &
    RESORTS WORLDWIDE, INC.(Exact name of Registrant as specified in its charter)                                                                                                                                                                           |  | Commission File Number: 1-6828
    STARWOOD HOTELS & RESORTS(Exact name of Registrant as specified in its charter)                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                
|Maryland(State or other jurisdiction
    of incorporation or organization)52-1193298(I.R.S. employer identification no.)1111 Westchester Avenue
    White Plains, NY 10604(Address of principal executive
    offices, including zip code)(914) 640-8100(Registrants telephone number,
    including area code) |  | Maryland(State or other jurisdiction
    of incorporation or organization)52-0901263(I.R.S. employer identification no.)1111 Westchester Avenue
    White Plains, NY 10604(Address of principal executive
    offices, including zip code)(914) 640-8100(Registrants telephone number,
    including area code)

Securities Registered Pursuant to Section 12(b) of the
Act:


|                                                                                                                                                                                                                                                                                                                                                                                                              |  |                                          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------
|Title of Each Class                                                                                                                                                                                                                                                                                                                                                                                           |  | Name of Each Exchange on Which Registered
|                                                                                                                                                                                                                                                                                                                                                                                                              |  |                                          
|Common Stock, par value $0.01 per share
    (Corporation Share), of Starwood Hotels &
    Resorts Worldwide, Inc. (the Corporation),
    Class B shares of beneficial interest, par value $0.01 per
    share (Class B Shares), of Starwood
    Hotels & Resorts (the Trust), and Preferred
    Stock Purchase Rights of the Corporation, all of which are
    attached and trade together as a Share |  | New York Stock Exchange                  

Securities Registered Pursuant to Section 12(g) of the
Act:




þ o


o þ


Note:


þ o


S-K 10-K 10-K. þ


12b-2


|                                                                               | 
|------------------------------------------------------------------------------ | 
|Large accelerated filer  þ    Accelerated filer  o    Non-accelerated filer  o | 

12b-2 o þ








Document Incorporated by Reference:


|                |  |                           
|--------------- |  | --------------------------
|Document        |  | Where Incorporated        
|                |  |                           
|Proxy Statement |  | Part III (Items 11 and 12)









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##### 










TABLE OF CONTENTS


|         |  |                                                                                                                      |  |      |    | 
|-------- |  | -------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                                                      |  | Page |   
|         |  |                                                                                                                      |  |      |   
|PART I  
|         |  | Forward-Looking Statements                                                                                           |  |      | 1  | 
|Item 1.  |  | Business                                                                                                             |  |      | 1  | 
|Item 1A. |  | Risk Factors                                                                                                         |  |      | 10 | 
|Item 2.  |  | Properties                                                                                                           |  |      | 18 | 
|Item 3.  |  | Legal Proceedings                                                                                                    |  |      | 21 | 
|Item 4.  |  | Submission of Matters to a Vote of Security
    Holders                                                              |  |      | 21 | 
|         |  | Executive Officers of the Registrants                                                                                |  |      | 21 | 
|        
|PART II 
|Item 5.  |  | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities |  |      | 21 | 
|Item 6.  |  | Selected Financial Data                                                                                              |  |      | 24 | 
|Item 7.  |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                            |  |      | 24 | 
|Item 7A. |  | Quantitative and Qualitative Disclosures
    about Market Risk                                                       |  |      | 39 | 
|Item 8.  |  | Financial Statements and Supplementary
    Data                                                                      |  |      | 40 | 
|Item 9.  |  | Changes In and Disagreements with
    Accountants on Accounting and Financial Disclosure                             |  |      | 40 | 
|Item 9A. |  | Controls and Procedures                                                                                              |  |      | 40 | 
|        
|PART III
|Item 10. |  | Directors, Trustees and Executive Officers
    of the Registrants                                                    |  |      | 43 | 
|Item 11. |  | Executive Compensation                                                                                               |  |      | 46 | 
|Item 12. |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                   |  |      | 47 | 
|Item 13. |  | Certain Relationships and Related
    Transactions                                                                   |  |      | 47 | 
|Item 14. |  | Principal Accountant Fees and Services                                                                               |  |      | 48 | 
|        
|PART IV 
|Item 15. |  | Exhibits, Financial Statements, Financial
    Statement Schedules and Reports on Form 8-K                            |  |      | 48 | 
|EX-10.72
|EX-12.1 
|EX-21.1 
|EX-23.1 
|EX-31.1 
|EX-31.2 
|EX-31.3 
|EX-31.4 
|EX-32.1 
|EX-32.2 
|EX-32.3 
|EX-32.4 





---



##### Table of Contents








PART I





Forward-Looking Statements









|        |          
|------- | ---------
|Item 1. | Business.

General




St. Regis Hotels & Resorts


The Luxury Collection


W Hotels


Westin Hotels & Resorts


1



---



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Le Méridien


Sheraton Hotels & Resorts


Four Points by Sheraton


aloft on-the












2



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Competitive Strengths




Brand Strength.


Frequent Guest Program. ®


Significant Presence in Top Markets.


Premier and Distinctive Properties.


Scale.


Diversification of Cash Flow and Assets.


3



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|                                                      |  |            |     |  |       |  |         | 
|----------------------------------------------------- |  | ---------- | --- |  | ----- |  | ------- | 
|                                                      |  | Number of  |     |  |      
|                                                      |  | Properties |     |  | Rooms | 
|                                                      |  |            |     |  |       | 
|Owned
    hotels(a)                                   |  |            | 130 |  |       |  | 47,000  | 
|Managed and unconsolidated joint venture hotels       |  |            | 378 |  |       |  | 121,000 | 
|Franchised hotels                                     |  |            | 337 |  |       |  | 90,000  | 
|Vacation ownership resorts and residential properties |  |            | 19  |  |       |  | 6,000   | 
|                                                      |  |            |     |  |       | 
|Total properties                                      |  |            | 864 |  |       |  | 264,000 | 
|                                                      |  |            |     |  |       | 






|                                   |  |            |     |  |       |  |         | 
|---------------------------------- |  | ---------- | --- |  | ----- |  | ------- | 
|                                   |  | Number of  |     |  |      
|                                   |  | Properties |     |  | Rooms | 
|                                   |  |            |     |  |       | 
|North America                      |  |            | 431 |  |       |  | 149,000 | 
|Europe, Africa and the Middle East |  |            | 259 |  |       |  | 64,000  | 
|Latin America                      |  |            | 55  |  |       |  | 12,000  | 
|Asia Pacific                       |  |            | 119 |  |       |  | 39,000  | 
|                                   |  |            |     |  |       | 
|Total                              |  |            | 864 |  |       |  | 264,000 | 
|                                   |  |            |     |  |       | 

Business Segment and Geographical Information




Business Strategy




4



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##### Table of Contents



Growth Opportunities.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Continuing to build our brands to appeal to upscale business
    travelers and other customers seeking full-service hotels in
    major markets by establishing emotional connections to our
    brands by offering signature experiences at our properties such
    as by placing
    Bliss®
    Spas,
    Remedesm
    Spas and their branded amenities and upscale restaurants in
    certain of our branded hotels and by continuing our tradition of
    innovation started with the Heavenly
    Bed®
    and Heavenly
    Bath®,
    the Sheraton Sweet
    Sleepersm
    Bed, the Sheraton Service
    Promisesm
    and the Four Points by Sheraton Four Comfort
    Bedsm
    and with such ideas as Westin being the first major brand to go
    smoke-free in North America;
|
| |  | Renovating, upgrading and expanding our branded hotels to
    further our strategy of strengthening brand identity;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Continuing to expand our role as a third-party manager of hotels
    and resorts. This allows us to expand the presence of our
    lodging brands and gain additional cash flow generally with
    modest capital commitment;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | Franchising the Sheraton, Westin, Four Points by Sheraton,
    Luxury Collection, Le Méridien and aloft brands to selected
    third-party operators and licensing the Sheraton, Westin, W and
    St. Regis brand names to selected third parties in connection
    with luxury residential condominiums, thereby expanding our
    market presence, enhancing the exposure of our hotel brands and
    providing additional income through franchise and license fees;                                                                                                                                                                                                                                                                                                                  
|
| |  | Expanding our internet presence and sales capabilities to
    increase revenue and improve customer service;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Continuing to grow our frequent guest program, thereby
    increasing occupancy rates while providing our customers with
    benefits based upon loyalty to our hotels and vacation ownership
    resorts;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Enhancing our marketing efforts by integrating our proprietary
    customer databases, so as to sell additional products and
    services to existing customers, improve occupancy rates and
    create additional marketing opportunities;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Optimizing use of our real estate assets to improve ancillary
    revenue, such as residential sales and restaurant, beverage and
    parking revenue from our hotels and resorts;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Establishing relationships with third parties to enable us to
    provide attractive restaurants and other amenities at our
    branded properties;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Developing additional vacation ownership resorts and leveraging
    our hotel real estate assets where possible through VOI
    construction and residential sales;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Leveraging the Bliss and Remede product lines and distribution
    channels; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Increasing operating efficiencies through increased use of
    technology.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                





| |   |                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Luxury and upscale hotels and resorts in major metropolitan
    areas and business centers;                                                                                                                                                                                                                 
|
| |  | Development of an extended stay product by Westin;                                                                                                                                                                                                                                                        
|
| |  | Hotels or brands which would enable us to provide a wider range
    of amenities and services to customers or provide attractive
    geographic distribution;                                                                                                                                               
|
| |  | Major tourist hotels, destination resorts or conference centers
    that have favorable demographic trends and are located in
    markets with significant barriers to entry or with major room
    demand generators such as office or retail complexes, airports,
    tourist attractions or universities;

5



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| |   |                                                                                                                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Undervalued hotels whose performance can be increased by
    re-branding to one of our hotel brands, the introduction of
    better and more efficient management techniques and practices
    and/or the injection of capital for renovating, expanding or
    repositioning the property; and                                                                                       
|
| |  | Portfolios of hotels or hotel companies that exhibit some or all
    of the criteria listed above, where the purchase of several
    hotels in one transaction enables us to obtain favorable pricing
    or obtain attractive assets that would otherwise not be
    available or realize cost reductions on operating the hotels by
    incorporating them into the Starwood system.





Competition






Environmental Matters




6



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Seasonality and Diversification




Comparability of Owned Hotel Results




Regulation and Licensing of Gaming Facilities








7



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8



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Employees


U.S.-based


Where you can find more information


http://www.sec.gov. http://www.starwoodhotels.com/corporate/investorrelations.html


9



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Item 1A.     Risk
Factors.


Risks Relating to Hotel, Resort, Vacation Ownership and
Residential Operations


We Are Subject to All the Operating Risks Common to the
Hotel and Vacation Ownership and Residential Industries.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | changes in general economic conditions, including the prospects
    for improved performance in other parts of the world;                                                                                                                                                                                                                                                                                
|
| |  | impact of war and terrorist activity (including threatened
    terrorist activity) and heightened travel security measures
    instituted in response thereto;                                                                                                                                                                                                                                           
|
| |  | domestic and international political and geopolitical conditions;                                                                                                                                                                                                                                                                                                                                        
|
| |  | travelers fears of exposures to contagious diseases;                                                                                                                                                                                                                                                                                                                                                    
|
| |  | decreases in the demand for transient rooms and related lodging
    services, including a reduction in business travel as a result
    of general economic conditions;                                                                                                                                                                                                                                   
|
| |  | the impact of internet intermediaries on pricing and our
    increasing reliance on technology;                                                                                                                                                                                                                                                                                                          
|
| |  | cyclical over-building in the hotel and vacation ownership
    industries;                                                                                                                                                                                                                                                                                                                               
|
| |  | restrictive changes in zoning and similar land use laws and
    regulations or in health, safety and environmental laws, rules
    and regulations and other governmental and regulatory action;                                                                                                                                                                                                         
|
| |  | changes in travel patterns;                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | changes in operating costs including, but not limited to,
    energy, labor costs (including the impact of unionization), food
    costs, workers compensation and health-care related costs,
    insurance and unanticipated costs such as acts of nature and
    their consequences;                                                                                                                  
|
| |  | disputes with owners of properties, franchisees and homeowner
    associations which may result in litigation;                                                                                                                                                                                                                                                                                           
|
| |  | the availability of capital to allow us and potential hotel
    owners and franchisees to fund construction, renovations and
    investments;                                                                                                                                                                                                                                                            
|
| |  | foreign exchange fluctuations;                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | the financial condition of third-party property owners, project
    developers and franchisees, which may impact our ability to
    recover indemnity payments that may be owed to us and their
    ability to fund amounts required under development, management
    and franchise agreements and in most cases our recourse is
    limited to the equity value said party has in the
    property; and
|
| |  | the financial condition of the airline industry and the impact
    on air travel.                                                                                                                                                                                                                                                                                                                        



General Economic Conditions May Negatively Impact Our
Results.


10



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We Must Compete for Customers.


We Must Compete for Management and Franchise
Agreements.


Any Failure to Protect our Trademarks Could Have a
Negative Impact on the Value of our Brand Names and Adversely
Affect our Business.


Significant Owners of Our Properties May Concentrate
Risks.


The Hotel Industry Is Seasonal in Nature.


Third Party Internet Reservation Channels May Negatively
Impact our Bookings. ® ® ®


We Place Significant Reliance on Technology.


11



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Our Businesses Are Capital Intensive.


Real Estate Investments Are Subject to Numerous
Risks.


Hotel and Resort Development Is Subject to Timing,
Budgeting and Other Risks.




| |   |                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | construction delays or cost overruns that may increase project
    costs;                                                                                                                          
|
| |  | receipt of zoning, occupancy and other required governmental
    permits and authorizations;                                                                                                       
|
| |  | development costs incurred for projects that are not pursued to
    completion;                                                                                                                    
|
| |  | so-called acts of God such as earthquakes, hurricanes, floods or
    fires that could adversely impact a project;                                                                                  
|
| |  | defects in design or construction that may result in additional
    costs to remedy or require all or a portion of a property to be
    closed during the period required to rectify the situation;
|
| |  | ability to raise capital; and                                                                                                                                                                      
|
| |  | governmental restrictions on the nature or size of a project or
    timing of completion.                                                                                                          



Environmental Regulations.


12



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International Operations Are Subject to Special Political
and Monetary Risks. non-U.S. non-U.S.


Risks Relating to Operations in Syria


U.S.-origin


Debt Financing




13



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Risks Relating to So-Called Acts of God, Terrorist Activity
and War




Some Potential Losses are Not Covered by Insurance


Sub-limits






Acquisitions/Dispositions




14



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Investing Through Partnerships or Joint Ventures Decreases
Our Ability to Manage Risk




Our Vacation Ownership Business is Subject to Extensive
Regulation and Risk of Default






Recent Privacy Initiatives




15



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Ability to Manage Growth




Tax Risks


Failure of the Trust to Qualify as a REIT Would Increase
Our Tax Liability.


Additional Legislation Could Eliminate or Reduce Certain
Benefits of Our Structure.




16



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Evolving government regulation could impose taxes or other
burdens on our business.




Risks Relating to Ownership of Our Shares


No Person or Group May Own More Than 8% of Our
Shares.


Our Board of Directors May Issue Preferred Stock and
Establish the Preferences and Rights of Such Preferred
Stock.


17



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Our Board of Directors May Implement Anti-Takeover Devices
and our Charter and By-Laws Contain Provisions which May Prevent
Takeovers.


Our Shareholder Rights Plan Would Cause Substantial
Dilution to Any Shareholder That Attempts to Acquire Us on Terms
Not Approved by Our Board of Directors.


Changes in Stock Option Accounting Rules May Adversely
Impact Our Reported Operating Results Prepared in Accordance
with Generally Accepted Accounting Principles, Our Stock Price
and Our Competitiveness in the Employee Marketplace.









|        |            
|------- | -----------
|Item 2. | Properties.



18



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|                                |  |            |     |  |                     |  |         |            |  |  |       |  |  |  |       | 
|------------------------------- |  | ---------- | --- |  | ------------------- |  | ------- | ---------- |  |  | ----- |  |  |  | ----- | 
|                                |  | Hotels     |     |  | VOI and Residential | 
|                                |  |            |     |  |                     | 
|                                |  | Properties |     |  | Rooms               |  |         | Properties |  |  | Rooms | 
|                                |  |            |     |  |                     |  |         |            |  |  |       | 
|St. Regis and Luxury Collection |  |            | 53  |  |                     |  | 8,000   |            |  |  | 2     |  |  |  |      | 
|Sheraton                        |  |            | 389 |  |                     |  | 134,000 |            |  |  | 6     |  |  |  | 4,000 | 
|Westin                          |  |            | 121 |  |                     |  | 51,000  |            |  |  | 7     |  |  |  | 2,000 | 
|W                               |  |            | 20  |  |                     |  | 6,000   |            |  |  |      |  |  |  |      | 
|Four Points                     |  |            | 127 |  |                     |  | 22,000  |            |  |  |      |  |  |  |      | 
|Le Méridien                     |  |            | 122 |  |                     |  | 32,000  |            |  |  |      |  |  |  |      | 
|Independent/Other               |  |            | 13  |  |                     |  | 5,000   |            |  |  | 4     |  |  |  |      | 
|                                |  |            |     |  |                     |  |         |            |  |  |       | 
|Total                           |  |            | 845 |  |                     |  | 258,000 |            |  |  | 19    |  |  |  | 6,000 | 
|                                |  |            |     |  |                     |  |         |            |  |  |       | 

Hotel Business


Owned, Leased and Consolidated Joint Venture
Hotels. (1) year-to


|                                                         |  |              |        |   |      |   |        |          |  |  |      |  
|-------------------------------------------------------- |  | ------------ | ------ | - | ---- | - | ------ | -------- |  |  | ---- | -
|                                                         |  | Year Ended   |        |   |     
|                                                         |  | December 31, |        |   |     
|                                                         |  |              |        |   |     
|                                                         |  | 2005         |        |   | 2004 |   |        | Variance | 
|                                                         |  |              |        |   |      |   |        |          | 
|Worldwide(119 hotels with approximately 44,000 rooms)    |  |              |        |   |      |   |        |          |  |  |      |  
|REVPAR                                                   |  | $            | 123.14 |   |      | $ | 111.01 |          |  |  | 10.9 | %
|ADR                                                      |  | $            | 174.70 |   |      | $ | 162.50 |          |  |  | 7.5  | %
|Occupancy                                                |  |              | 70.5   | % |      |   | 68.3   | %        |  |  | 2.2  |  
|North America(78 hotels with approximately 32,000 rooms) |  |              |        |   |      |   |        |          |  |  |      |  
|REVPAR                                                   |  | $            | 123.02 |   |      | $ | 110.13 |          |  |  | 11.7 | %
|ADR                                                      |  | $            | 170.93 |   |      | $ | 156.62 |          |  |  | 9.1  | %
|Occupancy                                                |  |              | 72.0   | % |      |   | 70.3   | %        |  |  | 1.7  |  
|International(41 hotels with approximately 12,000 rooms) |  |              |        |   |      |   |        |          |  |  |      |  
|REVPAR                                                   |  | $            | 123.48 |   |      | $ | 113.48 |          |  |  | 8.8  | %
|ADR                                                      |  | $            | 186.30 |   |      | $ | 181.21 |          |  |  | 2.8  | %
|Occupancy                                                |  |              | 66.3   | % |      |   | 62.6   | %        |  |  | 3.7  |  






|    |                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | REVPAR is calculated by dividing room revenue, which is derived
    from rooms and suites rented or leased, by total room nights
    available for a given period. REVPAR may not be comparable to
    similarly titled measures such as revenues.

19



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Managed and Franchised Hotels.


Managed Hotels.




Brand Franchising and Licensing.


20



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Vacation Ownership and Residential Business















|        |                   
|------- | ------------------
|Item 3. | Legal Proceedings.






Item 4.     Submission of
Matters to a Vote of Security Holders.







Executive Officers of the Registrants







PART II







|        |                                                                                                                      
|------- | ---------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities.

Market Information




21



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|               |  |      |       |  |     |   |       | 
|-------------- |  | ---- | ----- |  | --- | - | ----- | 
|               |  | High |       |  | Low |  
|               |  |      |       |  |     |  
|2005           |  |      |       |  |     |   |       | 
|Fourth quarter |  | $    | 65.22 |  |     | $ | 54.93 | 
|Third quarter  |  | $    | 64.36 |  |     | $ | 54.23 | 
|Second quarter |  | $    | 61.04 |  |     | $ | 51.50 | 
|First quarter  |  | $    | 61.45 |  |     | $ | 55.00 | 
|2004           |  |      |       |  |     |   |       | 
|Fourth quarter |  | $    | 59.50 |  |     | $ | 46.20 | 
|Third quarter  |  | $    | 46.65 |  |     | $ | 40.06 | 
|Second quarter |  | $    | 45.04 |  |     | $ | 38.15 | 
|First quarter  |  | $    | 40.93 |  |     | $ | 34.81 | 

Holders




Distributions Made/ Declared




|                    |  |               |      |    
|------------------- |  | ------------- | ---- | ---
|                    |  | Distributions |     
|                    |  | Made          |     
|                    |  |               |     
|2005                |  |               |      |    
|Annual distribution |  | $             | 0.84 | (a)
|2004                |  |               |      |    
|Annual distribution |  | $             | 0.84 | (a)






|    |                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The Trust declared distributions in the fourth quarter of 2005
    and 2004 to shareholders of record on December 31, 2005 and
    2004, respectively. The distributions were paid in January 2006
    and 2005, respectively.



Conversion of Securities; Sale of Unregistered Securities




22



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Issuer Purchases of Equity Securities




|         |  |           |           |  |          |   |       |                        |  |  |                        |  |  |   |       | 
|-------- |  | --------- | --------- |  | -------- | - | ----- | ---------------------- |  |  | ---------------------- |  |  | - | ----- | 
|         |  |           |           |  |          |   |       | Maximum Number (or     | 
|         |  |           |           |  |          |   |       | Approximate Dollar     | 
|         |  | Total     |           |  | Average  |   |       | Total Number of Shares |  |  | Value) of Shares that  | 
|         |  | Number of |           |  | Price    |   |       | Purchased as Part      |  |  | May Yet Be Purchased   | 
|         |  | Shares    |           |  | Paid for |   |       | of Publicly Announced  |  |  | Under the Plans or     | 
|Period   |  | Purchased |           |  | Share    |   |       | Plans or Programs      |  |  | Programs (in millions) | 
|         |  |           |           |  |          |   |       |                        |  |  |                        | 
|October  |  |           |          |  |          | $ |      |                        |  |  |                       |  |  | $ | 1,296 | 
|November |  |           | 1,100,000 |  |          | $ | 59.33 |                        |  |  | 1,100,000              |  |  | $ | 1,231 | 
|December |  |           | 2,938,100 |  |          | $ | 63.80 |                        |  |  | 2,938,100              |  |  | $ | 1,043 | 
|         |  |           |           |  |          |   |       |                        |  |  |                        | 
|Total    |  |           | 4,038,100 |  |          |   |       |                        |  |  | 4,038,100              |  |  |   |       | 
|         |  |           |           |  |          |   |       |                        |  |  |                        | 



23



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Item 6.     Selected
Financial Data.




|                                                      |  |                                      |       |   |      |   |       |      |  |   |       |   |  |      |       |     |  |   |       |  
|----------------------------------------------------- |  | ------------------------------------ | ----- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ----- | --- |  | - | ----- | -
|                                                      |  | Year Ended December 31,              |      
|                                                      |  |                                      |      
|                                                      |  | 2005                                 |       |   | 2004 |   |       | 2003 |  |   | 2002  |   |  | 2001 |      
|                                                      |  |                                      |       |   |      |   |       |      |  |   |       |   |  |      |      
|                                                      |  | (In millions, except per Share data) |      
|Income Statement Data                                 |  |                                      |       |   |      |   |       |      |  |   |       |   |  |      |       |     |  |   |       |  
|Revenues                                              |  | $                                    | 5,977 |   |      | $ | 5,368 |      |  | $ | 4,630 |   |  | $    | 4,588 |     |  | $ | 4,633 |  
|Operating income                                      |  | $                                    | 822   |   |      | $ | 653   |      |  | $ | 427   |   |  | $    | 551   |     |  | $ | 576   |  
|Income from continuing operations                     |  | $                                    | 423   |   |      | $ | 369   |      |  | $ | 105   |   |  | $    | 251   |     |  | $ | 147   |  
|Diluted earnings per Share from continuing operations |  | $                                    | 1.88  |   |      | $ | 1.72  |      |  | $ | 0.51  |   |  | $    | 1.22  |     |  | $ | 0.71  |  
|Operating Data                                        |  |                                      |       |   |      |   |       |      |  |   |       |   |  |      |       |     |  |   |       |  
|Cash from operating activities                        |  | $                                    | 764   |   |      | $ | 578   |      |  | $ | 766   |   |  | $    | 759   |     |  | $ | 751   |  
|Cash from (used for) investing activities             |  | $                                    | 85    |   |      | $ | (415  | )    |  | $ | 515   |   |  | $    | (282  | )   |  | $ | (617  | )
|Cash used for financing activities                    |  | $                                    | (253  | ) |      | $ | (273  | )    |  | $ | (979  | ) |  | $    | (487  | )   |  | $ | (162  | )
|Aggregate cash distributions paid                     |  | $                                    | 176   |   |      | $ | 172   |      |  | $ | 170   |   |  | $    | 40    | (a) |  | $ | 156   |  
|Cash distributions declared per Share                 |  | $                                    | 0.84  |   |      | $ | 0.84  |      |  | $ | 0.84  |   |  | $    | 0.84  |     |  | $ | 0.80  |  






|    |                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | This balance reflects the payment made in January 2002 for the
    dividends declared for the fourth quarter of 2001. The Trust
    declared an annual dividend in 2002, which was paid in January
    2003 and reflected in the 2003 column.

|                                                                                                            |  |                 |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |        | 
|----------------------------------------------------------------------------------------------------------- |  | --------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ |  |  | ---- | ------ |  |  | - | ------ | 
|                                                                                                            |  | At December 31, |       
|                                                                                                            |  |                 |       
|                                                                                                            |  | 2005            |        |  | 2004 |   |        | 2003 |  |   | 2002   |  |  | 2001 |       
|                                                                                                            |  |                 |        |  |      |   |        |      |  |   |        |  |  |      |       
|                                                                                                            |  | (In millions)   |       
|Balance Sheet Data                                                                                          |  |                 |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |        | 
|Total assets                                                                                                |  | $               | 12,454 |  |      | $ | 12,298 |      |  | $ | 11,857 |  |  | $    | 12,190 |  |  | $ | 12,416 | 
|Long-term debt, net of current maturities and including
    exchangeable units and Class B preferred shares |  | $               | 2,926  |  |      | $ | 3,823  |      |  | $ | 4,424  |  |  | $    | 4,500  |  |  | $ | 5,301  | 




Item 7.     Managements
Discussion and Analysis of Financial Condition and Results of
Operations.






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CRITICAL ACCOUNTING POLICIES




Revenue Recognition.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Owned, Leased and Consolidated Joint Ventures 
    Represents revenue primarily derived from hotel operations,
    including the rental of rooms and food and beverage sales from
    owned, leased or consolidated joint venture hotels and resorts.
    Revenue is recognized when rooms are occupied and services have
    been rendered. These revenues are impacted by global economic
    conditions affecting the travel and hospitality industry as well
    as relative market share of the local competitive set of hotels.
    REVPAR is a leading indicator of revenue trends at owned, leased
    and consolidated joint venture hotels as it measures the
    period-over-period growth in rooms revenue for comparable
    properties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Management and Franchise Fees  Represents fees earned
    on hotels managed worldwide, usually under long-term contracts,
    franchise fees received in connection with the franchise of the
    our Sheraton, Westin, Four Points by Sheraton, Le Méridien,
    St. Regis, W and Luxury Collection brand names and termination
    fees, offset by payments by us under performance and other
    guarantees. Management fees are comprised of a base fee, which
    is generally based on a percentage of gross revenues, and an
    incentive fee, which is generally based on the propertys
    profitability. For any time during the year, when the provisions
    of our management contracts allow receipt of incentive fees upon
    termination, incentive fees are recognized for the fees due and
    earned as if the contract was terminated at that date, exclusive
    of any termination fees due or payable. Therefore, during
    periods prior to year-end, the incentive fees recorded may not
    be indicative of the eventual incentive fees that will be
    recognized at year-end as conditions and incentive hurdle
    calculations may not be final. Franchise fees are generally
    based on a percentage of hotel room revenues. As with hotel
    revenues discussed above, these revenue sources are affected by
    conditions impacting the travel and hospitality industry as well
    as competition from other hotel management and franchise
    companies.
|
| |  | Vacation Ownership and Residential  We recognize
    revenue from VOI sales and financings and the sales of
    residential units which are typically a component of mixed use
    projects that include a hotel. Such revenues are impacted by the
    state of the global economies and, in particular, the
    U.S. economy, as well as interest rate and other economic
    conditions affecting the lending market. We determine the
    portion of revenues to recognize for sales accounted for under
    the percentage of completion method based on judgments and
    estimates including total project costs to complete.
    Additionally, we record reserves against these revenues based on
    expected default levels. Changes in costs could lead to
    adjustments to the percentage of completion status of a project,
    which may result in differences in the timing and amount of
    revenues recognized from the projects. We anticipate developing
    future high end VOI projects adjacent to or as part of our
    luxury resorts, resulting in cross-selling opportunities and an
    audience of higher-end purchasers, yielding both higher revenues
    and reduced risks associated with financing these VOI sales. We
    have also entered into licensing agreements with third-party
    developers to offer consumers branded condominiums or
    residences. Our fees from these agreements are generally based
    on the gross sales revenue of units sold.
|
| |  | Revenues from Managed and Franchised Properties 
    These revenues represent reimbursements of costs incurred on
    behalf of managed hotel properties and franchisees. These costs
    relate primarily to payroll costs at managed properties where we
    are the employer. Since the reimbursements are made based upon
    the costs incurred with no added margin, these revenues and
    corresponding expenses have no effect on our operating income
    and our net income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Frequent Guest Program.


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Long-Lived Assets.


Assets Held for Sale. break-up


Legal Contingencies.


Income Taxes.


26



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RESULTS OF OPERATIONS








|                                                                      |  |          |      |   |          |  |      |  
|--------------------------------------------------------------------- |  | -------- | ---- | - | -------- |  | ---- | -
|Top Ten Metropolitan Areas as a % of Owned North America Revenues for | 
|the Year Ended December 31, 2005 with Comparable Data for 2004        | 
|                                                                      | 
|                                                                      |  | 2005     |      |   | 2004     | 
|Metropolitan Area                                                     |  | Revenues |      |   | Revenues | 
|                                                                      |  |          |      |   |          | 
|New York, NY                                                          |  |          | 20.0 | % |          |  | 19.2 | %
|Boston, MA                                                            |  |          | 9.1  | % |          |  | 9.4  | %
|San Diego, CA                                                         |  |          | 5.3  | % |          |  | 5.2  | %
|Los Angeles-Long Beach, CA                                            |  |          | 5.1  | % |          |  | 4.8  | %
|Phoenix, AZ                                                           |  |          | 4.8  | % |          |  | 5.0  | %
|Atlanta, GA                                                           |  |          | 4.6  | % |          |  | 4.4  | %
|Seattle, WA                                                           |  |          | 3.9  | % |          |  | 3.8  | %
|Toronto, Canada                                                       |  |          | 3.9  | % |          |  | 3.9  | %
|Maui, HI                                                              |  |          | 3.7  | % |          |  | 3.5  | %
|Houston, TX                                                           |  |          | 3.0  | % |          |  | 2.8  | %
|All Other                                                             |  |          | 36.6 | % |          |  | 38.0 | %
|                                                                      |  |          |      |   |          | 
|Total                                                                 |  |          | 100  | % |          |  | 100  | %
|                                                                      |  |          |      |   |          | 



Year Ended December 31, 2005 Compared with Year Ended
December 31, 2004




| |                      
| | ---------------------
| | Continuing Operations

Revenues.


27



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Operating Income.






Restructuring and Other Special Charges (Credits),
Net.


Depreciation and Amortization.


Gain on Sale of VOI Notes Receivable.


Net Interest Expense.


Gain (Loss) on Asset Dispositions and Impairments,
Net.




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Discontinued Operations.




Income Tax Expense. split-up


Year Ended December 31, 2004 Compared with Year Ended
December 31, 2003


Continuing Operations


Revenues.




30



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Operating Income.


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Restructuring and Other Special Credits, Net.


Depreciation and Amortization.


Gain on Sale of VOI Notes Receivable.


Net Interest Expense.


Loss On Asset Dispositions and Impairments, Net.




Discontinued Operations.




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Income Tax Expense.


LIQUIDITY AND CAPITAL RESOURCES


Cash From Operating Activities








Cash From (Used for) Investing Activities






33



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|                                          |  |       |       |             |             |   |        |           |  |        |           |  |           |         |     |  |  |   |       | 
|----------------------------------------- |  | ----- | ----- | ----------- | ----------- | - | ------ | --------- |  | ------ | --------- |  | --------- | ------- | --- |  |  | - | ----- | 
|                                          |  |       |       | Due in Less |             |   | Due in |           |  | Due in |           |  | Due After |        
|                                          |  | Total |       |             | Than 1 Year |   |        | 1-3 Years |  |        | 3-5 Years |  |           | 5 Years |    
|                                          |  |       |       |             |             |   |        |           |  |        |           |  |           |         |    
|Long-term debt                            |  | $     | 4,143 |             |             | $ | 1,219  |           |  | $      | 851       |  |           | $       | 481 |  |  | $ | 1,592 | 
|Capital lease
    obligations(1)          |  |       | 2     |             |             |   |       |           |  |        |          |  |           |         |    |  |  |   | 2     | 
|Operating lease obligations               |  |       | 1,142 |             |             |   | 78     |           |  |        | 140       |  |           |         | 125 |  |  |   | 799   | 
|Unconditional purchase
    obligations(2) |  |       | 135   |             |             |   | 45     |           |  |        | 57        |  |           |         | 25  |  |  |   | 8     | 
|Other long-term obligations               |  |       |      |             |             |   |       |           |  |        |          |  |           |         |    |  |  |   |      | 
|                                          |  |       |       |             |             |   |        |           |  |        |           |  |           |         |    
|Total contractual obligations             |  | $     | 5,422 |             |             | $ | 1,342  |           |  | $      | 1,048     |  |           | $       | 631 |  |  | $ | 2,401 | 
|                                          |  |       |       |             |             |   |        |           |  |        |           |  |           |         |    






|    |                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------
|(1) | Excludes sublease income of $2 million.                                                                       
|   
|(2) | Included in these balances are commitments that may be satisfied
    by our managed and franchised properties.



|                             |  |       |     |                                            |        |   |     |           |       |   |           |  |         |   |   |  |  |   |   | 
|---------------------------- |  | ----- | --- | ------------------------------------------ | ------ | - | --- | --------- | ----- | - | --------- |  | ------- | - | - |  |  | - | - | 
|                             |  |       |     | Amount of Commitment Expiration Per Period
|                             |  |       |     |                                           
|                             |  |       |     | Less Than                                  |        |   |     |           | After
|                             |  | Total |     |                                            | 1 Year |   |     | 1-3 Years |       |   | 3-5 Years |  | 5 Years
|                             |  |       |     |                                            |        |   |     |           |       |   |           |  |        
|Standby letters of credit    |  | $     | 129 |                                            |        | $ | 129 |           |       | $ |          |  |         | $ |  |  |  | $ |  | 
|Hotel loan
    guarantees(1) |  |       | 47  |                                            |        |   | 4   |           |       |   | 43        |  |         |   |  |  |  |   |  | 
|Other commercial commitments |  |       |    |                                            |        |   |    |           |       |   |          |  |         |   |  |  |  |   |  | 
|                             |  |       |     |                                            |        |   |     |           |       |   |           |  |         |   |  
|Total commercial commitments |  | $     | 176 |                                            |        | $ | 133 |           |       | $ | 43        |  |         | $ |  |  |  | $ |  | 
|                             |  |       |     |                                            |        |   |     |           |       |   |           |  |         |   |  






|    |                                                                                             
|--- | --------------------------------------------------------------------------------------------
|(1) | Excludes fair value of guarantees which are reflected in our
    consolidated balance sheet.







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Cash Used for Financing Activities




|                                               |                           |                       |       |     |                |         |                  |  |            |          |   |  |      |     | 
|---------------------------------------------- | ------------------------- | --------------------- | ----- | --- | -------------- | ------- | ---------------- |  | ---------- | -------- | - |  | ---- | --- | 
|                                               |                           | Amount                |       |     |                |         | Interest Rate at |  |            |         
|                                               |                           | Outstanding at        |       |     |                |         | December 31,     |  |            | Average  |  
|                                               |                           | December 31, 2005(a)  |       |     | Interest Terms |         | 2005             |  |            | Maturity |  
|                                               |                           |                       |       |     |                |         |                  |  |            |          |  
|                                               |                           | (Dollars in millions) |       |     |                |         |                  |  | (In years) |         
|Floating Rate Debt                             |                           |                       |       |     |                |         |                  |  |            |          |   |  |      |    
|Senior Credit Facility:                        |                           |                       |       |     |                |         |                  |  |            |          |   |  |      |    
|                                               | Term Loan                 |                       | $     | 450 |                |         | LIBOR(b)+1.25%   |  |            | 5.64     | % |  |      | 0.7 | 
|                                               | Revolving Credit Facility |                       |       | 11  |                |         | CBA + 1.25%      |  |            | 4.57     | % |  |      | 0.8 | 
|Mortgages and Other                            |                           |                       | 481   |     |                | Various |                  |  | 4.05       | %        |   |  | 1.4  |    
|Interest Rate Swaps                            |                           |                       | 300   |     |                |         |                  |  | 8.77       | %        |   |  |     |    
|                                               |                           |                       |       |     |                |         |                  |  |            |          |  
|Total/ Average                                 |                           | $                     | 1,242 |     |                |         |                  |  | 5.77       | %        |   |  | 1.0  |    
|                                               |                           |                       |       |     |                |         |                  |  |            |          |  
|Fixed Rate Debt                                |                           |                       |       |     |                |         |                  |  |            |          |   |  |      |    
|Sheraton Holding Public Debt                   |                           | $                     | 148   |     |                |         |                  |  | 7.75       | %        |   |  | 19.9 |    
|Senior Notes                                   |                           |                       | 1,494 | (c) |                |         |                  |  | 6.70       | %        |   |  | 3.9  |    
|Convertible Debt                               |                           |                       | 360   |     |                |         |                  |  | 3.50       | %        |   |  | 0.4  |    
|Mortgages and Other                            |                           |                       | 649   |     |                |         |                  |  | 7.07       | %        |   |  | 4.6  |    
|Interest Rate Swaps                            |                           |                       | (300  | )   |                |         |                  |  | 7.88       | %        |   |  |     |    
|                                               |                           |                       |       |     |                |         |                  |  |            |          |  
|Total/ Average                                 |                           | $                     | 2,351 |     |                |         |                  |  | 6.23       | %        |   |  | 4.5  |    
|                                               |                           |                       |       |     |                |         |                  |  |            |          |  
|Floating Rate Debt Classified as Held for Sale |                           | $                     | 25    |     |                |         |                  |  | 4.30       | %        |   |  | 4.0  |    
|Fixed Rate Debt Classified as Held for Sale    |                           | $                     | 527   |     |                |         |                  |  | 7.59       | %        |   |  | 10.1 |    
|Total Debt                                     |                           |                       |       |     |                |         |                  |  |            |          |   |  |      |    
|                                               |                           |                       |       |     |                |         |                  |  |            |          |  
|Total Debt and Average Terms                   |                           | $                     | 4,145 |     |                |         |                  |  | 6.27       | %        |   |  | 4.4  |    
|                                               |                           |                       |       |     |                |         |                  |  |            |          |  






|    |  |                                                                                                                                                                             
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Excludes approximately $469 million of our share of
    unconsolidated joint venture debt, all of which was non-recourse.                                                   
|   
|(b) |  | At December 31, 2005, one-month LIBOR was 4.39%                                                                                                                             
|   
|(c) |  | Includes approximately $(3) million at December 31,
    2005 of fair value adjustments related to existing and
    terminated
    fixed-to-floating
    interest rate swaps.

Recent Events.






36



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Fiscal 2005 Developments.








Fiscal 2004 Developments




37



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Other


non-U.S.








| |   |                                                                                                                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | S & P affirmed our BB+ rating and revised their
    outlook to positive from stable. At the same time, S &
    P placed the BB+ ratings of Sheraton Holding Corporation on
    CreditWatch with negative implications, reflecting the
    possibility that these obligations will be assumed by Host
    Marriott, a lower rated entity.

38



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| |   |                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Moodys affirmed our Ba1 rating and placed it on review for
    a potential upgrade, and simultaneously placed the Ba1 ratings
    of Sheraton Holding Corporation on review for possible downgrade
    for the same reasons cited above.



Stock Sales and Repurchases






Off-Balance Sheet Arrangements









|         |                                                                
|-------- | ---------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures about Market
    Risk.



39



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|                                |                      |                      |     |  |      |   |              |      |            |              |      |  |  |      |     |  |            |   |   |      |  |   |       |  |  |   |       |      |   |   |       |  | 
|------------------------------- | -------------------- | -------------------- | --- |  | ---- | - | ------------ | ---- | ---------- | ------------ | ---- |  |  | ---- | --- |  | ---------- | - | - | ---- |  | - | ----- |  |  | - | ----- | ---- | - | - | ----- |  | 
|                                |                      | Expected Maturity or |     |  |      |   |              |      |           
|                                |                      | Transaction Date     |     |  |      |   |              |      | Total Fair |             
|                                |                      | At December 31,      |     |  |      |   | Total at     |      |            | Value at     |     
|                                |                      |                      |     |  |      |   | December 31, |      |            | December 31, |     
|                                |                      | 2006                 |     |  | 2007 |   |              | 2008 |            |              | 2009 |  |  | 2010 |     |  | Thereafter |   |   | 2005 |  |   | 2005  | 
|                                |                      |                      |     |  |      |   |              |      |            |              |      |  |  |      |     |  |            |   |   |      |  |   |       | 
|Liabilities                     |                      |                      |     |  |      |   |              |      |            |              |      |  |  |      |     |  |            |   |   |      |  |   |       |  |  |   |       |      |   |   |       | 
|Fixed rate (in millions)        |                      | $                    | 380 |  |      | $ | 740          |      |            | $            | 22   |  |  | $    | 435 |  |            | $ | 7 |      |  | $ | 1,594 |  |  | $ | 3,178 |      |   | $ | 3,466 | 
|Average interest rate           |                      |                      |     |  |      |   |              |      |            |              |      |  |  |      |     |  |            |   |   |      |  |   |       |  |  |   | 6.61  | %    |   |   |       | 
|Floating rate (in millions)     |                      | $                    | 839 |  |      | $ | 85           |      |            | $            | 4    |  |  | $    | 36  |  |            | $ | 3 |      |  | $ |      |  |  | $ | 967   |      |   | $ | 967   | 
|Average interest rate           |                      |                      |     |  |      |   |              |      |            |              |      |  |  |      |     |  |            |   |   |      |  |   |       |  |  |   | 4.81  | %    |   |   |       | 
|Interest Rate Swaps             |                      |                      |     |  |      |   |              |      |            |              |      |  |  |      |     |  |            |   |   |      |  |   |       |  |  |   |       |      |   |   |       | 
|Fixed to variable (in millions) |                      | $                    |    |  |      | $ |             |      |            | $            |     |  |  | $    |    |  |            | $ |  |      |  | $ | 300   |  |  | $ | 300   |      |   |   |       | 
|                                | Average pay rate     |                      |     |  |      |   |              |      |            |              |      |  |  |      |     |  |            |   |   |      |  |   |       |  |  |   |       | 8.77 | % |   |       |  | 
|                                | Average receive rate |                      |     |  |      |   |              |      |            |              |      |  |  |      |     |  |            |   |   |      |  |   |       |  |  |   |       | 7.88 | % |   |       |  | 












|        |                                             
|------- | --------------------------------------------
|Item 8. | Financial Statements and Supplementary Data.








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 9. | Changes In and Disagreements with Accountants on
    Accounting and Financial Disclosure.








|         |                         
|-------- | ------------------------
|Item 9A. | Controls and Procedures.

Evaluation of Disclosure Controls and Procedures




40



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##### Table of Contents







| |                                                                     
| | --------------------------------------------------------------------
| | Managements Report on Internal Control over Financial
    Reporting

13a-15(f)




| |   |                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of the assets of the Company;                                                                                                                                                             
|
| |  | Provide reasonable assurance that the transactions are recorded
    as necessary to permit the preparation of financial statements
    in accordance with GAAP, and the receipts and expenditures of
    the Company are being made only in accordance with
    authorizations of management and directors of the
    Company; and
|
| |  | Provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    Companys assets that could have a material effect on the
    financial statements.                                                                                                          





10-K,


41



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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
INTERNAL CONTROL OVER FINANCIAL REPORTING




















| |                  
| | -----------------
| | ERNST & YOUNG LLP





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##### Table of Contents





| |                             
| | ----------------------------
| | Changes in Internal Controls






PART III







|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 10. | Directors, Trustees and Executive Officers of the
    Registrants.



|                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                         |  | 
|------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------- |  | 
|Name (Age)               |  | Principal Occupation and Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Service Period                                                                          | 
|                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                         | 
|Steven J. Heyer (53)     |  | Chief Executive Officer of the Company since October 2004.
    Served as President and Chief Operating Officer of The Coca-Cola
    Company from December 2002 to September 2004, President and
    Chief Operating Officer, Coca-Cola Ventures from April 2001 to
    December 2002. Mr. Heyer was President and Chief Operating
    Officer of Turner Broadcasting System, Inc. from 1996 until
    April 2001.                                                                                                                                                                     |  | CEO, Director and Trustee since October 2004                                           
|Charlene Barshefsky (55) |  | Senior International Partner at the law firm of Wilmer Cutler
    Pickering LLP, Washington, D.C. From March 1997 to January
    2001, Ambassador Barshefsky was the United States Trade
    Representative, the chief trade negotiator and principal trade
    policy maker for the United States and a member of the
    Presidents Cabinet. Ambassador Barshefsky is a director of
    The Estee Lauder Companies, Inc., American Express Company and
    Intel Corporation. Ambassador Barshefsky also serves on the
    Board of Directors of the Council on Foreign Relations. |  | Director and Trustee since October 2001                                                
|Jean-Marc Chapus (46)    |  | Group Managing Director and Portfolio Manager of Trust Company
    of the West, an investment management firm, and President of
    TCW/Crescent Mezzanine L.L.C., a private investment fund, since
    March 1995. Mr. Chapus is a director of MEMC Electronic
    Materials, Inc.                                                                                                                                                                                                                                                                                                   |  | Director from August 1995 to November 1997; since April 1999Trustee since November 1997

43



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##### Table of Contents



|                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                         |  | 
|---------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------- |  | 
|Name (Age)             |  | Principal Occupation and Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | Service Period                                                                          | 
|                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                                                                                         | 
|Bruce W. Duncan (54)   |  | Private investor. From May 2005 to December 2005 Mr. Duncan
    was Chief Executive Officer and Trustee of Equity Residential
    (EQR) the largest publicly traded apartment company
    in the United States. From January 2003 to May 2005, he was
    President, Chief Executive Officer and Trustee, and from April
    2002 to December 2002, President and Trustee of EQR. From April
    2000 until March 2002, he was a private investor. From December
    1995 until March 2000, Mr. Duncan served as Chairman,
    President and Chief Executive Officer of The Cadillac Fairview
    Corporation Limited, a real estate operating company. |  | Chairman of the Boards since May 2005Director since April 1999Trustee since August 1995
|Lizanne Galbreath (48) |  | Managing Partner of Galbreath & Company, a real estate
    investment firm, since 1999. From April 1997 to 1999,
    Ms. Galbreath was Managing Director of LaSalle
    Partners/Jones Lang LaSalle where she also served as a Director.
    From 1984 to 1997, Ms. Galbreath served as a Managing
    Director then Chairman and CEO of The Galbreath Company, the
    predecessor entity of Galbreath & Company.                                                                                                                                                                                                                                        |  | Director and Trustee since May 2005                                                    
|Eric Hippeau (54)      |  | Managing Partner of Softbank Capital Partners, a technology
    venture capital firm, since March 2000. Mr. Hippeau served
    as Chairman and Chief Executive Officer of Ziff-Davis Inc., an
    integrated media and marketing company, from 1993 to March 2000
    and held various other positions with Ziff-Davis from 1989 to
    1993. Mr. Hippeau is a director of Yahoo! Inc.                                                                                                                                                                                                                                                                    |  | Director and Trustee since April 1999                                                  
|Stephen R. Quazzo (46) |  | Managing Director, Chief Executive Officer and co- founder of
    Transwestern Investment Company, L.L.C., a real estate principal
    investment firm, since March 1996. From April 1991 to March
    1996, Mr. Quazzo was President of Equity Institutional
    Investors, Inc., a subsidiary of Equity Group Investments, Inc.,
    a Chicago-based holding company controlled by Samuel Zell.                                                                                                                                                                                                                                                         |  | Director since April 1999Trustee since August 1995                                     
|Thomas O. Ryder (61)   |  | Chairman of the Board of The Readers Digest Association,
    Inc. since January 1, 2006. Chairman of the Board and Chief
    Executive Officer of The Readers Digest Association, Inc.
    from April 1998 through December 31, 2005. Mr. Ryder
    was President, American Express Travel Related Services
    International, a division of American Express Company, which
    provides travel, financial and network services, from October
    1995 to April 1998. He is a director of Amazon.com, Inc.                                                                                                                                             |  | Director and Trustee since April 2001                                                  
|Daniel W. Yih (47)     |  | Principal and Chief Operating Officer of GTCR Golder Rauner,
    LLC, a private equity firm, since September 2000. From June 1995
    until March 2000, Mr. Yih was a general partner of Chilmark
    Partners, L.P., a private equity firm.                                                                                                                                                                                                                                                                                                                                                                                                              |  | Director since August 1995Trustee since April 1999                                     

44



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##### Table of Contents



|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                                       |  | 
|--------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------- |  | 
|Name (Age)                  |  | Principal Occupation and Business Experience                                                                                                                                                                                                                                                                                                                                                                                              |  | Service Period                        | 
|                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                                       | 
|Kneeland C. Youngblood (50) |  | Managing partner of Pharos Capital Group, L.L.C., a private
    equity fund focused on technology companies, business service
    companies and health care companies, since January 1998. From
    July 1985 to December 1997, he was in private medical practice.
    He is Chairman of the Board of the American Beacon Funds, a
    mutual fund company managed by AMR Investments, an investment
    affiliate of American Airlines. |  | Director and Trustee since April 2001

Executive Officers of the Registrants




|                       |  |     |    |  |          |                                                                                                                                                  
|---------------------- |  | --- | -- |  | -------- | -------------------------------------------------------------------------------------------------------------------------------------------------
|Name                   |  | Age |    |  | Position
|                       |  |     |    |  |         
|Steven J. Heyer        |  |     | 53 |  |          | Chief Executive Officer and a Director of the Corporation and
    Chief Executive Officer and a Trustee of the Trust                             
|Vasant M. Prabhu       |  |     | 46 |  |          | Executive Vice President and Chief Financial Officer of the
    Corporation and Vice President and Chief Financial Officer of
    the Trust      
|Kenneth S. Siegel      |  |     | 50 |  |          | Executive Vice President, General Counsel and Secretary of the
    Corporation and Vice President, General Counsel and Secretary of
    the Trust
|Theodore W. Darnall    |  |     | 48 |  |          | President, Real Estate Group of the Corporation and the Trust                                                                                    
|Javier Benito          |  |     | 42 |  |          | Executive Vice President and Chief Marketing Officer of the
    Corporation and the Trust                                                        
|Raymond L. Gellein Jr. |  |     | 58 |  |          | Chairman of the Board and Chief Executive Officer of Starwood
    Vacation Ownership                                                             

Steven J. Heyer.


Vasant M. Prabhu.


Kenneth S. Siegel.


Theodore W. Darnall.


45



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##### Table of Contents



Javier Benito.


Raymond L. Gellein Jr.


Corporate Governance




http://starwoodhotels.com/corporate/investor  relations.html.


http://starwoodhotels.com/corporate/investor  relations.html.


http://starwoodhotels.com/corporate/investor  relations.html. 10-K.




Section 16(a) Beneficial Ownership Reporting
Compliance











|         |                        
|-------- | -----------------------
|Item 11. | Executive Compensation.



46



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##### Table of Contents










|         |                                                                                                    
|-------- | ---------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters.

Equity Compensation Plan Information-December 31,
2005


|                                                           |  |                      |            |     |                      |   |                         |                           |  |  |            |    
|---------------------------------------------------------- |  | -------------------- | ---------- | --- | -------------------- | - | ----------------------- | ------------------------- |  |  | ---------- | ---
|                                                           |  |                      |            | (b) |                      |   | (c)                     |                          
|                                                           |  | (a)                  |            |     |                      |   | Number of securities    |                          
|                                                           |  | Number of securities |            |     |                      |   | remaining available for |                          
|                                                           |  | to be issued upon    |            |     | Weighted-average     |   |                         | future issuance under     | 
|                                                           |  | exercise of          |            |     | exercise price of    |   |                         | equity compensation plans | 
|                                                           |  | outstanding options, |            |     | outstanding options, |   |                         | (excluding securities     | 
|                                                           |  | warrants and rights  |            |     | warrants and rights  |   |                         | reflected in Column (a))  | 
|                                                           |  |                      |            |     |                      |   |                         |                           | 
|Equity compensation plans approved by security holders     |  |                      | 26,768,910 |     |                      | $ | 35.45                   |                           |  |  | 53,812,523 | (1)
|Equity compensation plans not approved by security holders |  |                      |           |     |                      |   |                        |                           |  |  |           |    
|                                                           |  |                      |            |     |                      |   |                         |                           | 
|Total                                                      |  |                      | 26,768,910 |     |                      | $ | 35.45                   |                           |  |  | 53,812,523 |    






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Does not include deferred share units (that vest over three
    years and may be settled in Shares) that have been issued
    pursuant to the Executive Annual Incentive Plan (Executive
    AIP). The Executive AIP does not limit the number of
    deferred share units that may be issued. This plan has been
    amended to provide for a termination date of May 26, 2009
    to comply with new NYSE requirements. In addition,
    8,985,511 Shares remain available for issuance under our
    Employee Stock Purchase Plan, a stock purchase plan meeting the
    requirements of Section 423 of the Internal Revenue Code.








|         |                                                
|-------- | -----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions.

Policies of the Board of Directors of the Corporation and the
Board of Trustees of the Trust




Employee Loans




47



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##### Table of Contents





Other









|         |                                        
|-------- | ---------------------------------------
|Item 14. | Principal Accountant Fees and Services.








PART IV







|         |                                                                                               
|-------- | ----------------------------------------------------------------------------------------------
|Item 15. | Exhibits, Financial Statements, Financial Statement
    Schedules and Reports on
    Form 8-K.





| |    |                                                                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | The financial statements and financial statement schedules
    listed in the Index to Financial Statements and Schedules
    following the signature pages hereof.
|
| | 2. | Exhibits:                                                                                                                                                         

|        |   |    |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------- | - | -- | ---------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |   |    |                       
|Number  |   |    | Description of Exhibit
|        |   |    |                       
|        | 2 | .1 |                        | Formation Agreement, dated as of November 11, 1994, among
    the Trust, the Corporation, Starwood Capital and the Starwood
    Partners (incorporated by reference to Exhibit 2 to the
    Trusts and the Corporations Joint Current Report on
    Form 8-K dated November 16, 1994). (The SEC file
    numbers of all filings made by the Corporation and the Trust
    pursuant to the Securities Exchange Act of 1934, as amended, and
    referenced herein are: 1-7959 (the Corporation) and 1-6828 (the
    Trust)).                                                                                                                                                                                   
|        | 2 | .2 |                        | Form of Amendment No. 1 to Formation Agreement, dated as of
    July 1995, among the Trust, the Corporation and the Starwood
    Partners (incorporated by reference to Exhibit 10.23 to the
    Trusts and the Corporations Joint Registration
    Statement on Form S-2 filed with the SEC on June 29,
    1995 (Registration Nos. 33-59155 and 33-59155-01)).                                                                                                                                                                                                                                                                                                                                              
|        | 2 | .3 |                        | Transaction Agreement, dated as of September 8, 1997, by
    and among the Trust, the Corporation, Realty Partnership,
    Operating Partnership, WHWE L.L.C., Woodstar Investor
    Partnership (Woodstar), Nomura Asset Capital
    Corporation, Juergen Bartels, Westin Hotels & Resorts
    Worldwide, Inc., W&S Lauderdale Corp., W&S Seattle
    Corp., Westin St. John Hotel Company, Inc., W&S Denver
    Corp., W&S Atlanta Corp. and W&S Hotel L.L.C.
    (incorporated by reference to Exhibit 2 to the Trusts
    and the Corporations Joint Current Report on Form 8-K
    filed with the SEC on September 25, 1997, as amended by the
    Form 8-K/A filed with the SEC on December 18, 1997).

48



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##### Table of Contents



|        |   |    |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------- | - | -- | ---------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |   |    |                       
|Number  |   |    | Description of Exhibit
|        |   |    |                       
|        | 2 | .4 |                        | Master Agreement and Plan of Merger, dated as of
    November 14, 2005, among Host Marriott Corporation, Host
    Marriott, L.P., Horizon Supernova Merger Sub, L.L.C., Horizon
    SLT Merger Sub, L.P., Starwood Hotels & Resorts
    Worldwide, Inc., Starwood Hotels & Resorts, Sheraton
    Holding Corporation and SLT Realty Limited Partnership
    (incorporated by reference to Exhibit 10.1 to the
    Corporations and the Trusts Joint Current Report on
    From 8-K filed November 14, 2005).
|        | 3 | .1 |                        | Amended and Restated Declaration of Trust of the Trust, amended
    and restated through April 16, 1999 (incorporated by
    reference to Exhibit 3.1 of the Trusts and the
    Corporations Joint Quarterly Report on Form 10-Q for
    the quarterly period ended March 31, 1999 (the 1999
    Form 10-Q1).                                                                                                                                                                                             
|        | 3 | .2 |                        | Articles of Amendment to the Amended and Restated Declaration of
    Trust of the Trust, dated as of November 15, 2004
    (incorporated by reference to Exhibit 3.2 of the
    Trusts and the Corporations Joint Annual Report on
    Form 10-K for the fiscal year ended December 31, 2004
    (the 2004 Form 10-K)).                                                                                                                                                                                   
|        | 3 | .3 |                        | Articles of Restatement of the Corporation, as of May 7,
    2004 (incorporated by reference to Exhibit 10.1 to the
    Trusts and the Corporations Joint Quarterly Report
    on Form 10-Q for the quarterly period ended June 30,
    2004 (the 2004 Form 10-Q2)).                                                                                                                                                                                                                                      
|        | 3 | .4 |                        | Bylaws of the Trust, as amended and restated through
    November 8, 2004 (incorporated by reference to
    Exhibit 3.4 of the 2004 Form 10-K).                                                                                                                                                                                                                                                                                                                                                               
|        | 3 | .5 |                        | Amended and Restated Bylaws of the Corporation, as amended and
    restated through May 7, 2004 (incorporated by reference to
    Exhibit 10.2 to the 2004 Form 10-Q2).                                                                                                                                                                                                                                                                                                                                       
|        | 4 | .1 |                        | Amended and Restated Intercompany Agreement, dated as of
    January 6, 1999, between the Corporation and the Trust
    (incorporated by reference to Exhibit 3 to the Trust
    Form 8-A, except that on January 6, 1999, the
    Intercompany Agreement was executed and dated as of
    January 6, 1999).                                                                                                                                                                                                  
|        | 4 | .2 |                        | Rights Agreement, dated as of March 15, 1999, between the
    Corporation and Chase Mellon Shareholder Services, L.L.C., as
    Rights Agent (incorporated by reference to Exhibit 4 to the
    Trusts and the Corporations Joint Current Report on
    Form 8-K filed with the SEC on March 15, 1999).                                                                                                                                                                                                     
|        | 4 | .3 |                        | First Amendment to Rights Agreement, dated as of October 2,
    2003 (incorporated by reference to Exhibit 4 of
    Form 8-A/A filed on October 7, 2003).                                                                                                                                                                                                                                                                                                                                                     
|        | 4 | .4 |                        | Second Amendment to Rights Agreement, dated as of
    October 24, 2003 (incorporated by reference to
    Exhibit 4 of Form 8-A/A filed on October 30,
    2003).                                                                                                                                                                                                                                                                                                                                              
|        | 4 | .5 |                        | Amended and Restated Indenture, dated as of November 15,
    1995, as Amended and Restated as of December 15, 1995
    between ITT Corporation (formerly known as ITT Destinations,
    Inc.) and the First National Bank of Chicago, as trustee
    (incorporated by reference to Exhibit 4.A.IV to the First
    Amendment to ITT Corporations Registration Statement on
    Form S-3 filed November 13, 1996).                                                                                            
|        | 4 | .6 |                        | First Indenture Supplement, dated as of December 31, 1998,
    among ITT Corporation, the Corporation and The Bank of New York
    (incorporated by reference to Exhibit 4.1 to the
    Trusts and the Corporations Joint Current Report on
    Form 8-K filed January 8, 1999).                                                                                                                                                                                                                            
|        | 4 | .7 |                        | Indenture, dated as of May 25, 2001, by and among the
    Corporation, as Issuer, the guarantors named therein and Firstar
    Bank, N.A., as Trustee (incorporated by reference to
    Exhibit 10.2 to the Corporations and the Trusts
    Joint Quarterly Report on Form 10-Q for the quarterly
    period ended June 30, 2001 (the 2001
    Form 10-Q2)).                                                                                                                                              
|        | 4 | .8 |                        | Indenture, dated as of April 19, 2002, among the
    Corporation, the guarantor parties named therein and
    U.S. Bank National Association, as trustee (incorporated by
    reference to Exhibit 4.1 to the Corporations and
    Sheraton Holding Corporations Joint Registration Statement
    on Form S-4 filed on November 19, 2002 (the 2002
    Forms S-4)).                                                                                                                                       

49



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|        |    |     |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- | -- | --- | ---------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |                       
|Number  |    |     | Description of Exhibit
|        |    |     |                       
|        | 4  | .9  |                        | Indenture dated May 16, 2003 between the Corporation, the
    Trust, the Guarantor and U.S. Bank National Association as
    trustee (incorporated by reference to Exhibit 4.9 to the
    July 8, 2003 Form S-3) (Registration Nos. 333-106888,
    333-106888-01, 333-106888-02) (the Form S-3).                                                                                                                                                                                                                                                                                                    
|        | 4  | .10 |                        | First Indenture Supplement, dated as of January 11, 2006,
    between the Corporation, the Trust, the Guarantor and
    U.S. Bank National Association as trustee (incorporated by
    reference to Exhibit 10.1 to the Trusts and the
    Corporations Joint Current Report on Form 8-K filed
    January 17, 2006).                                                                                                                                                                                                                                                                                
|        |    |     |                        | The Registrants hereby agree to file with the Commission a copy
    of any instrument, including indentures, defining the rights of
    long-term debt holders of the Registrants and their consolidated
    subsidiaries upon the request of the Commission.                                                                                                                                                                                                                                                                                                                                          
|        | 10 | .1  |                        | Third Amended and Restated Limited Partnership Agreement for
    Realty Partnership, dated January 6, 1999, among the Trust
    and the limited partners of Realty Partnership (incorporated by
    reference to Exhibit 10.1 to the Corporations and the
    Trusts Joint Annual Report on Form 10-K for the
    fiscal year ended December 31, 1998 (the 1998
    Form 10-K)).                                                                                                                                                                                                                   
|        | 10 | .2  |                        | Third Amended and Restated Limited Partnership Agreement for
    Operating Partnership, dated January 6, 1999, among the
    Corporation and the limited partners of Operating Partnership
    (incorporated by reference to Exhibit 10.2 to the 1998
    Form 10-K).                                                                                                                                                                                                                                                                                                                                  
|        | 10 | .3  |                        | Form of Lease Agreement, entered into as of February 14,
    1997, between the Trust (or a subsidiary) as Lessor and the
    Corporation (or a subsidiary) as Lessee (incorporated by
    reference to Exhibit 10.3 to the 2004 Form 10-K).                                                                                                                                                                                                                                                                                                                                                            
|        | 10 | .4  |                        | Form of Amendment of Lease, dated as of June 1, 2002,
    between the Trust (or a subsidiary) as Lessor and the
    Corporation (or a subsidiary) as Lessee (incorporated by
    reference to Exhibit 10.4 to the 2004 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                     
|        | 10 | .5  |                        | Form of Trademark License Agreement, dated as of
    December 10, 1997, between Starwood Capital and the Trust
    (incorporated by reference to Exhibit 10.22 to the
    Trusts and the Corporations Joint Annual Report on
    Form 10-K for the fiscal year ended December 31, 1997
    (the 1997 Form 10-K)).                                                                                                                                                                                                                                                                                  
|        | 10 | .6  |                        | Credit Agreement, dated October 9, 2002, among the
    Corporation, certain additional alternative currency revolving
    loan borrowers and various lenders, Deutsche Bank, AG, New York
    Branch, as Administrative Agent, JP Morgan Chase Bank, as
    Syndication Agent, Bank of America, N.A., Fleet National Bank
    and Societe Generale, as Co-Documentation Agents, and Deutsche
    Bank Securities Inc. and JP Morgan Securities Inc. as Co-Lead
    Arrangers and joint Book Running Managers (incorporated by
    reference to Exhibit 10.1 of Form 8-K filed on
    October 11, 2002).
|        | 10 | .7  |                        | First Amendment to Credit Agreement (incorporated by reference
    to Exhibit 10.5 to the to the Corporations and the
    Trusts Joint Quarterly Report on Form 10-Q for the
    quarterly period ended March 31, 2003 (the
    2003 10-Q1)).                                                                                                                                                                                                                                                                                                                                                      
|        | 10 | .8  |                        | Second Amendment to Credit Agreement (incorporated by reference
    to Exhibit 10.1 to Form 10-Q for the quarter ended
    June 30, 2003 (the 2003 10-Q2)).                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 10 | .9  |                        | Third Amendment to Credit Agreement (incorporated by reference
    to Exhibit 10.1 to Form 10-Q for the quarter ended
    September 30, 2004 (the 2004 10-Q3)).                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 10 | .10 |                        | Form of Fourth Amendment to the Credit Agreement (incorporated
    by reference to Exhibit 10.1 to the Trusts and the
    Corporations Joint Current Report on Form 8-K filed
    November 9, 2005).                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 10 | .11 |                        | Incremental Term Loan Commitment to Credit Agreement
    (incorporated by reference to Exhibit 10.2 to the
    2004 10-Q3).                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 10 | .12 |                        | Pledge and Security Agreement, dated as of February 23,
    1998, executed and delivered by the Trust, the Corporation and
    the other Pledgors party thereto, in favor of Bankers Trust
    Company as Collateral Agent (incorporated by reference to
    Exhibit 10.63 to the 1997 Form 10-K).                                                                                                                                                                                                                                                                                                     

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##### Table of Contents



|        |    |     |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- | -- | --- | ---------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |                       
|Number  |    |     | Description of Exhibit
|        |    |     |                       
|        | 10 | .13 |                        | Credit Agreement, dated as of February 10, 2006, among
    Starwood Hotels & Resorts Worldwide, Inc., Starwood
    Hotels & Resorts, certain additional Dollar Revolving
    Loan Borrowers, certain additional Alternate Currency
    Revolving Loan Borrowers, various Lenders, Deutsche Bank AG
    New York Branch, as Administrative Agent, JPMorgan Chase Bank,
    N.A. and Societe Generale, as Syndication Agents, Bank of
    America, N.A. and Calyon New York Branch, as Co-Documentation
    Agents, Deutsche Bank Securities Inc., J.P. Morgan
    Securities Inc. and Banc of America Securities LLC, as Lead
    Arrangers and Book Running Managers, The Bank of Nova Scotia,
    Citicorp North America, Inc., and the Royal Bank of Scotland
    PLC, as Senior Managing Agents and Nizvho Corporate Bank, Ltd.
    as Managing Agent (incorporated by reference to
    Exhibit 10.1 to the Corporations and the Trusts
    Joint Current Report on Form 8-K filed February 15,
    2006).
|        | 10 | .14 |                        | Loan Agreement, dated as of February 23, 1998, between the
    Trust and the Corporation, together with Promissory Note
    executed in connection therewith, by the Corporation to the
    order of the Trust, in the principal amount of $3,282,000,000
    (incorporated by reference to Exhibit 10.65 to the 1997
    Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 10 | .15 |                        | First Modification, dated as of January 27, 1999, to Loan
    Agreement, dated as of February 23, 1998, among ITT
    Corporation, Realty Partnership, Sheraton Phoenician
    Corporation, and Starwood Phoenician CMBS I LLC (incorporated by
    reference to Exhibit 10.13 to the 2004 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 10 | .16 |                        | Second Modification, dated as of December 30, 1999, to Loan
    Agreement, dated as of February 23, 1998, among ITT
    Corporation, Realty Partnership, the Trust and Starwood Hotels
    and Resorts Holdings, Inc (incorporated by reference to
    Exhibit 10.14 to the 2004 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 10 | .17 |                        | Third Modification, dated as of June 30, 2000, to Loan
    Agreement, dated as of February 23, 1998, among ITT
    Corporation, the Corporation, Realty Partnership, the Trust and
    Starwood Hotels and Resorts Holdings, Inc. (incorporated by
    reference to Exhibit 10.15 to the 2004 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 10 | .18 |                        | Loan Agreement, dated as of February 23, 1998, between the
    Trust and the Corporation, together with Promissory Note
    executed in connection therewith, by the Corporation to the
    order of the Trust, in the principal amount of $100,000,000
    (incorporated by reference to Exhibit 10.66 to the 1997
    Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 10 | .19 |                        | First Modification, dated as of January 27, 1999, to Loan
    Agreement, dated as of February 23, 1998, among the
    Corporation, Harbor-Cal S.D., Starwood Sheraton San Diego
    CMBS I LLC and Realty Partnership (incorporated by reference to
    Exhibit 10.17 to the 2004 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10 | .20 |                        | Loan Agreement, dated as of February 23, 1998, between the
    Trust and the Corporation, together with Promissory Note
    executed in connection therewith, by the Corporation to the
    order of the Trust, in the principal amount of $50,000,000
    (incorporated by reference to Exhibit 10.67 to the 1997
    Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10 | .21 |                        | First Modification, dated as of January 27, 1999, to Loan
    Agreement, dated as of February 23, 1998, among the
    Corporation, Harbor-Cal S.D., Starwood Sheraton San Diego
    CMBS I LLC and Realty Partnership (incorporated by reference to
    Exhibit 10.19 to the 2004 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10 | .22 |                        | Loan Agreement, dated as of January 27, 1999, among the
    Borrowers named therein, as Borrowers, Starwood Operator I LLC,
    as Operator, and Lehman Brothers Holding Inc., d/b/a Lehman
    Capital, a division of Lehman Brothers Holdings Inc.
    (incorporated by reference to Exhibit 10.58 to the 1998
    Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        | 10 | .23 |                        | Starwood Hotels & Resorts 1995 Long-Term Incentive Plan
    (the Trust 1995 LTIP) (Amended and Restated as of
    December 3, 1998) (incorporated by reference to
    Annex D to the Trusts and the Corporations
    Joint Proxy Statement dated December 3, 1998 (the
    1998 Proxy
    Statement))(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 10 | .24 |                        | Second Amendment to the Trust 1995 LTIP (incorporated by
    reference to Exhibit 10.4 to the
    2003 10-Q1).(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 10 | .25 |                        | Form of Non-Qualified Stock Option Agreement pursuant to the
    Trust 1995 LTIP ((incorporated by reference to
    Exhibit 10.23 to the 2004
    Form 10-K).(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

51



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##### Table of Contents



|        |    |     |                        |                                                                                                                                                                                                                                                                                                                             
|------- | -- | --- | ---------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |                       
|Number  |    |     | Description of Exhibit
|        |    |     |                       
|        | 10 | .26 |                        | Starwood Hotels & Resorts Worldwide, Inc. 1995
    Long-Term Incentive Plan (the Corporation 1995 LTIP)
    (Amended and Restated as of December 3, 1998) (incorporated
    by reference to Annex E to the 1998 Proxy
    Statement).(1)                                                                                  
|        | 10 | .27 |                        | Second Amendment to the Corporation 1995 LTIP (incorporated by
    reference to Exhibit 10.3 to the
    2003 10-Q1).(1)                                                                                                                                                                                                     
|        | 10 | .28 |                        | Form of Non-Qualified Stock Option Agreement pursuant to the
    Corporation 1995 LTIP (incorporated by reference to
    Exhibit 10.26 to the 2004
    Form 10-K).(1)                                                                                                                                                       
|        | 10 | .29 |                        | Starwood Hotels & Resorts Worldwide, Inc. 1999
    Long-Term Incentive Compensation Plan (the 1999
    LTIP) (incorporated by reference to Exhibit 10.4 to
    the Corporations and the Trusts Joint Quarterly
    Report on Form 10-Q for the quarterly period ended
    June 30, 1999 (the 1999
    Form 10-Q2)).(1)
|        | 10 | .30 |                        | First Amendment to the 1999 LTIP, dated as of August 1,
    2001 (incorporated by reference to Exhibit 10.1 to the
    Corporations and the Trusts Joint Quarterly Report
    on Form 10-Q for the quarterly period ended
    September 30,
    2001).(1)                                                                 
|        | 10 | .31 |                        | Second Amendment to the 1999 LTIP (incorporated by reference to
    Exhibit 10.2 to the
    2003 10-Q1).(1)                                                                                                                                                                                                                 
|        | 10 | .32 |                        | Form of Non-Qualified Stock Option Agreement pursuant to the
    1999 LTIP (incorporated by reference to Exhibit 10.30 to
    the 2004
    Form 10-K).(1)                                                                                                                                                                   
|        | 10 | .33 |                        | Form of Restricted Stock Agreement pursuant to the 1999 LTIP
    (incorporated by reference to Exhibit 10.31 to the 2004
    Form 10-K).(1)                                                                                                                                                                                 
|        | 10 | .34 |                        | Starwood Hotels & Resorts Worldwide, Inc. 2002
    Long-Term Incentive Compensation Plan (the 2002
    LTIP) (incorporated by reference to Annex B of the
    Corporations 2002 Proxy
    Statement).(1)                                                                                                                 
|        | 10 | .35 |                        | First Amendment to the 2002 LTIP (incorporated by reference to
    Exhibit 10.1 to the
    2003 10-Q1).(1)                                                                                                                                                                                                                  
|        | 10 | .36 |                        | Form of Non-Qualified Stock Option Agreement pursuant to the
    2002 LTIP (incorporated by reference to Exhibit 10.49 to
    the 2002 Form 10-K filed on February 28, 2003 (the
    2002 10-K)).(1)                                                                                                                      
|        | 10 | .37 |                        | Form of Restricted Stock Agreement pursuant to the 2002 LTIP
    (incorporated by reference to Exhibit 10.35 to the 2004
    Form 10-K).(1)                                                                                                                                                                                 
|        | 10 | .38 |                        | 2004 Long-Term Incentive Compensation Plan (2004
    LTIP) (incorporated by reference to the Corporations
    2004 Notice of Annual Meeting of Stockholders and Proxy
    Statement, pages A-1 through
    A-20).(1)                                                                                                     
|        | 10 | .39 |                        | Form of Non-Qualified Stock Option Agreement pursuant to the
    2004 LTIP (incorporated by reference to Exhibit 10.4 to the
    2004 10-Q2).(1)                                                                                                                                                                            
|        | 10 | .40 |                        | Form of Restricted Stock Agreement pursuant to the 2004 LTIP
    (incorporated by reference to Exhibit 10.38 to the 2004
    Form 10-K).(1)                                                                                                                                                                                 
|        | 10 | .41 |                        | Form of Non-Qualified Stock Option Agreement pursuant to the
    2004 LTIP (incorporated by reference to Exhibit 10.2 to the
    Corporations and the Trusts Joint Current Report on
    Form 8-K filed February 13, 2006 (the February
    2006
    Form 8-K)).(1)                                                     
|        | 10 | .42 |                        | Form of Restricted Stock Agreement pursuant to the 2004 LTIP
    (incorporated by reference to Exhibit 10.1 to the February
    2006
    Form 8-K).(1)                                                                                                                                                                      
|        | 10 | .43 |                        | Starwood Hotels & Resorts Worldwide, Inc. 2005 Annual
    Incentive Plan for Certain Executives (incorporated by reference
    to Appendix A to the Corporations 2005 Proxy
    Statement).(1)                                                                                                                             

52



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##### Table of Contents



|        |    |     |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------- | -- | --- | ---------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |                       
|Number  |    |     | Description of Exhibit
|        |    |     |                       
|        | 10 | .44 |                        | Starwood Hotels & Resorts Worldwide, Inc. Annual
    Incentive Plan, dated as of November 3, 2005 (incorporated
    by reference to Exhibit 10.1 to the Corporations and
    the Trusts Joint Quarterly Report on Form 10-Q for
    the quarterly period ended September 30, 2005 (the
    2005
    Form 10-Q3)).(1)                                                                                                              
|        | 10 | .45 |                        | Starwood Hotels & Resorts Worldwide, Inc. Deferred
    Compensation Plan, effective as of January 1, 2001
    (incorporated by reference to Exhibit 10.1 to the 2001
    Form 10-Q2).(1)                                                                                                                                                                                                                                              
|        | 10 | .46 |                        | Amendment, dated as of November 3, 2005, to the Deferred
    Compensation Plan (incorporated by reference to
    Exhibit 10.2 to the 2005
    Form 10-Q3).(1)                                                                                                                                                                                                                                                                         
|        | 10 | .47 |                        | Form of Indemnification Agreement between the Corporation, the
    Trust and each of its Directors/Trustees and executive officers
    (incorporated by reference to Exhibit 10.10 to the 2003
    Form 10-K).(1)                                                                                                                                                                                                                     
|        | 10 | .48 |                        | Registration Rights Agreement, dated May 16, 2003, among
    the Corporation, the Guarantor and the Initial Purchasers
    (incorporated by reference to Exhibit 4.10 to the
    Form S-3).                                                                                                                                                                                                                                           
|        | 10 | .49 |                        | Exchange Rights Agreement, dated as of January 1, 1995,
    among the Trust, the Corporation, Realty Partnership, Operating
    Partnership and the Starwood Partners (incorporated by reference
    to Exhibit 2B to the Trusts and the
    Corporations Joint Current Report on Form 8-K dated
    January 31, 1995 (the Formation Form 8-K)).                                                                                  
|        | 10 | .50 |                        | Registration Rights Agreement, dated as of January 1, 1995,
    among the Trust, the Corporation and Starwood Capital
    (incorporated by reference to Exhibit 2C to the Formation
    Form 8-K).                                                                                                                                                                                                                                    
|        | 10 | .51 |                        | Exchange Rights Agreement, dated as of June 3, 1996, among
    the Trust, the Corporation, Realty Partnership, Operating
    Partnership, Philadelphia HIR Limited Partnership and
    Philadelphia HSR Limited Partnership (incorporated by reference
    to Exhibit 10.1 to the Trusts and the
    Corporations Joint Quarterly Report on Form 10-Q for
    the quarterly period ended June 30, 1996 (the 1996
    Form 10-Q2)).
|        | 10 | .52 |                        | Registration Rights Agreement, dated as of June 3, 1996,
    among the Trust, the Corporation and Philadelphia HSR Limited
    Partnership (incorporated by reference to Exhibit 10.2 to
    the 1996 Form 10-Q2).                                                                                                                                                                                                                    
|        | 10 | .53 |                        | Units Exchange Rights Agreement, dated as of February 14,
    1997, by and among, inter alia, the Trust, the
    Corporation, Realty Partnership, Operating Partnership and the
    Starwood Partners (incorporated by reference to
    Exhibit 10.34 to the 1997 Form 10-K).                                                                                                                                                         
|        | 10 | .54 |                        | Class A Exchange Rights Agreement, dated as of
    February 14, 1997, by and among, inter alia, the
    Trust, the Corporation, Operating Partnership and the Starwood
    Partners (incorporated by reference to Exhibit 10.35 to the
    1997 Form 10-K).                                                                                                                                                                           
|        | 10 | .55 |                        | Exchange Rights Agreement, dated as of January 2, 1998,
    among, inter alia, the Trust, Realty Partnership and
    Woodstar (incorporated by reference to Exhibit 10.50 to the
    1997 Form 10-K).                                                                                                                                                                                                                                 
|        | 10 | .56 |                        | Amendment to Exchange Rights Agreement (Class A Realty
    Partnership Units), dated as of October 10, 2002, among the
    Trust, Realty Partnership and certain limited partners of the
    Realty Partnership (incorporated by reference to
    Exhibit 10.53 to the 2002 Form 10-K).                                                                                                                                               
|        | 10 | .57 |                        | Amendment to Exchange Rights Agreement, dated as of
    December 17, 2003 for the Class A Realty Partnership
    Units (incorporated by reference to Exhibit 10.67 to the
    2003 Form 10-K).                                                                                                                                                                                                                                        
|        | 10 | .58 |                        | Exchange Rights Agreement, dated as of January 2, 1998,
    among, inter alia, the Corporation, Operating Partnership
    and Woodstar (incorporated by reference to Exhibit 10.51 to
    the 1997 Form 10-K).                                                                                                                                                                                                                        
|        | 10 | .59 |                        | Amendment to Exchange Rights Agreement (Class B Operating
    Partnership Units), dated as of October 10, 2002, among the
    Corporation, Operating Partnership and certain limited partners
    of the Operating Partnership (incorporated by reference to
    Exhibit 10.54 to the 2002 form 10-K).                                                                                                                                

53



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|        |    |     |                        |                                                                                                                                                                                                                                                                                                           
|------- | -- | --- | ---------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |                       
|Number  |    |     | Description of Exhibit
|        |    |     |                       
|        | 10 | .60 |                        | Employment Agreement, dated March 25, 1998, between
    Theodore Darnall and the Corporation (incorporated by reference
    to Exhibit 10.61 to the 2002
    Form 10-K).(1)                                                                                                                               
|        | 10 | .61 |                        | Severance Agreement, dated December 1999, between the
    Corporation and Theodore Darnall (incorporated by reference to
    Exhibit 10.55 to the 2002
    Form 10-K).(1)                                                                                                                                 
|        | 10 | .62 |                        | Employment Agreement, dated as of November 13, 2003,
    between the Corporation and Vasant Prabhu (incorporated by
    reference to Exhibit 10.68 to the
    2003 10-K).(1)                                                                                                                              
|        | 10 | .63 |                        | Employment Agreement, dated as of September 20, 2004,
    between the Corporation and Steven J. Heyer (incorporated by
    reference to Exhibit 10.1 to the Trusts and the
    Corporations Joint Current Report on Form 8-K filed
    with the SEC on September 24,
    2004).(1)                      
|        | 10 | .64 |                        | Amendment, dated as of May 4, 2005, to Employment Agreement
    between the Corporation and Steve J. Heyer (incorporated by
    reference to Exhibit 10.1 to the Corporations and
    Trusts Joint Quarterly Report on Form 10-Q for the
    quarterly period ended March 31,
    2005).(1)             
|        | 10 | .65 |                        | Form of Non-Qualified Stock Option Agreement between the
    Corporation and Steven J. Heyer pursuant to the 2004 LTIP
    (incorporated by reference to Exhibit 10.70 to the 2004
    Form 10-K).(1)                                                                                                     
|        | 10 | .66 |                        | Form of Restricted Stock Unit Agreement between the Corporation
    and Steven J. Heyer pursuant to the 2004 LTIP (incorporated by
    reference to Exhibit 10.71 to the 2004
    Form 10-K).(1)                                                                                                          
|        | 10 | .67 |                        | Employment Agreement, dated as of November 13, 2003,
    between the Corporation and Kenneth Siegel (incorporated by
    reference to Exhibit 10.57 to the Corporations and
    Trusts Joint Annual Report on Form 10-K for the fiscal
    year ended December 31, 2000 (the 2000 Form
    10-K)).(1) 
|        | 10 | .68 |                        | Form of Severance Agreement, dated as of September 26,
    2000, between the Corporation and Kenneth S. Siegel
    (incorporated by reference to Exhibit 10.58 to the 2000 Form
    10-K).(1)                                                                                                             
|        | 10 | .69 |                        | Letter Agreement, dated July 22, 2004 between the
    Corporation and Kenneth Siegel (incorporated by reference to
    Exhibit 10.73 to the 2004
    Form 10-K).(1)                                                                                                                                       
|        | 10 | .70 |                        | Employment Agreement, dated December 27, 1996, between
    Starwood Vacation Ownership and Raymond Gellein (incorporated by
    reference to Exhibit 10.1 to Vistana Inc.s
    Registration Statement on Form S-1 filed with the SEC on
    February 27,
    1997).(1)                                   
|        | 10 | .71 |                        | Amendment Number 1 and Amendment Number 2 to the Employment
    Agreement between Starwood Vacation Ownership and Raymond
    Gellein (incorporated by reference to Exhibits 10.1(a) and
    10.1(b) to Vistana Inc.s Annual Report on Form 10-K
    for the fiscal year ended December 31,
    1998).(1)
|        | 10 | .72 |                        | Severance Agreement, dated October 1, 2003, between the
    Corporation and Raymond
    Gellein.(1)(2)                                                                                                                                                                                                    
|        | 12 | .1  |                        | Calculation of Ratio of Earnings to Total Fixed Charges.
    (2)                                                                                                                                                                                                                                          
|        | 21 | .1  |                        | Subsidiaries of the
    Registrants.(2)                                                                                                                                                                                                                                                                   
|        | 23 | .1  |                        | Consent of Ernst & Young
    LLP.(2)                                                                                                                                                                                                                                                                      
|        | 31 | .1  |                        | Certification Pursuant to Rule 13a-14 under the Securities
    Exchange Act of 1934  Chief Executive
    Officer 
    Corporation.(2)                                                                                                                                                                   
|        | 31 | .2  |                        | Certification Pursuant to Rule 13a-14 under the Securities
    Exchange Act of 1934  Chief Financial
    Officer 
    Corporation.(2)                                                                                                                                                                   
|        | 31 | .3  |                        | Certification Pursuant to Rule 13a-14 under the Securities
    Exchange Act of 1934  Chief Executive
    Officer  Trust.
    (2)                                                                                                                                                                        
|        | 31 | .4  |                        | Certification Pursuant to Rule 13a-14 under the Securities
    Exchange Act of 1934  Chief Financial and Accounting
    Officer 
    Trust.(2)                                                                                                                                                          
|        | 32 | .1  |                        | Certification Pursuant to Section 1350 of Chapter 63
    of Title 18 of the United States Code  Chief
    Executive Officer 
    Corporation.(2)                                                                                                                                                        

54



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##### Table of Contents



|        |    |    |                        |                                                                                                                                                            
|------- | -- | -- | ---------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |    |                       
|Number  |    |    | Description of Exhibit
|        |    |    |                       
|        | 32 | .2 |                        | Certification Pursuant to Section 1350 of Chapter 63
    of Title 18 of the United States Code  Chief
    Financial Officer 
    Corporation.(2)         
|        | 32 | .3 |                        | Certification Pursuant to Section 1350 of Chapter 63
    of Title 18 of the United States Code  Chief
    Executive Officer 
    Trust.(2)               
|        | 32 | .4 |                        | Certification Pursuant to Section 1350 of Chapter 63
    of Title 18 of the United States Code  Chief
    Financial and Accounting Officer 
    Trust.(2)






|    |                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------
|(1) | Management contract or compensatory plan or arrangement required
    to be filed as an exhibit pursuant to Item 14(c) of
    Form 10-K.
|   
|(2) | Filed herewith.                                                                                                                        

55



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##### Table of Contents



SIGNATURES






| |                                                
| | -----------------------------------------------
| | STARWOOD HOTELS & RESORTS 
     WORLDWIDE, INC.



| |     |                    
| | --- | -------------------
| | By: | /s/ STEVEN J. HEYER

| |                            
| | ---------------------------
| |                            
| | Steven J. Heyer            
| | Chief Executive Officer and
| | Director                   



| |     |                    
| | --- | -------------------
| | By: | /s/ ALAN M. SCHNAID

| |                             
| | ----------------------------
| |                             
| | Alan M. Schnaid             
| | Senior Vice President,      
| | Corporate Controller and    
| | Principal Accounting Officer





|                                           |  |                                                                                        |  |               |  | 
|------------------------------------------ |  | -------------------------------------------------------------------------------------- |  | ------------- |  | 
|Signature                                  |  | Title                                                                                  |  | Date         
|                                           |  |                                                                                        |  |              
|                                          
|/s/ Steven J. HeyerSteven J. Heyer         |  | Chief Executive Officer and Director                                                   |  | March 2, 2006
|                                          
|/s/ Bruce W. DuncanBruce W. Duncan         |  | Chairman and Director                                                                  |  | March 3, 2006
|                                          
|/s/ Vasant M. PrabhuVasant M. Prabhu       |  | Executive Vice President and Chief Financial Officer (Principal
    Financial Officer) |  | March 3, 2006
|                                          
|/s/ Charlene BarshefskyCharlene Barshefsky |  | Director                                                                               |  | March 3, 2006
|                                          
|/s/ Jean-Marc ChapusJean-Marc Chapus       |  | Director                                                                               |  | March 3, 2006
|                                          
|/s/ Lizanne GalbreathLizanne Galbreath     |  | Director                                                                               |  | March 3, 2006
|                                          
|/s/ Eric HippeauEric Hippeau               |  | Director                                                                               |  | March 3, 2006

56



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##### Table of Contents



|                                                     |  |          |  |               |  | 
|---------------------------------------------------- |  | -------- |  | ------------- |  | 
|Signature                                            |  | Title    |  | Date         
|                                                     |  |          |  |              
|                                                    
|/s/ Stephen R. QuazzoStephen R. Quazzo               |  | Director |  | March 3, 2006
|                                                    
|/s/ Thomas O. RyderThomas O. Ryder                   |  | Director |  | March 3, 2006
|                                                    
|/s/ Daniel W. YihDaniel W. Yih                       |  | Director |  | March 3, 2006
|                                                    
|/s/ Kneeland C.
    YoungbloodKneeland C. Youngblood |  | Director |  | March 3, 2006

57



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##### Table of Contents



SIGNATURES






| |                          
| | -------------------------
| | STARWOOD HOTELS & RESORTS



| |     |                    
| | --- | -------------------
| | By: | /s/ Steven J. Heyer

| |                            
| | ---------------------------
| |                            
| | Steven J. Heyer            
| | Chief Executive Officer and
| | Trustee                    



| |     |                    
| | --- | -------------------
| | By: | /s/ Alan M. Schnaid

| |                             
| | ----------------------------
| |                             
| | Alan M. Schnaid             
| | Senior Vice President,      
| | Corporate Controller and    
| | Principal Accounting Officer





|                                           |  |                                                                           |  |               |  | 
|------------------------------------------ |  | ------------------------------------------------------------------------- |  | ------------- |  | 
|Signature                                  |  | Title                                                                     |  | Date         
|                                           |  |                                                                           |  |              
|                                          
|/s/ Steven J. HeyerSteven J. Heyer         |  | Chief Executive Officer and Trustee
    (Principal Executive Officer)     |  | March 2, 2006
|                                          
|/s/ Bruce W. DuncanBruce W. Duncan         |  | Chairman and Trustee                                                      |  | March 3, 2006
|                                          
|/s/ Vasant M. PrabhuVasant M. Prabhu       |  | Vice President, Chief Financial Officer
    (Principal Financial Officer) |  | March 3, 2006
|                                          
|/s/ Charlene BarshefskyCharlene Barshefsky |  | Trustee                                                                   |  | March 3, 2006
|                                          
|/s/ Jean-Marc ChapusJean-Marc Chapus       |  | Trustee                                                                   |  | March 3, 2006
|                                          
|/s/ Lizanne GalbreathLizanne Galbreath     |  | Trustee                                                                   |  | March 3, 2006
|                                          
|/s/ Eric HippeauEric Hippeau               |  | Trustee                                                                   |  | March 3, 2006

58



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##### Table of Contents



|                                                     |  |         |  |               |  | 
|---------------------------------------------------- |  | ------- |  | ------------- |  | 
|Signature                                            |  | Title   |  | Date         
|                                                     |  |         |  |              
|                                                    
|/s/ Stephen R. QuazzoStephen R. Quazzo               |  | Trustee |  | March 3, 2006
|                                                    
|/s/ Thomas O. RyderThomas O. Ryder                   |  | Trustee |  | March 3, 2006
|                                                    
|/s/ Daniel W. YihDaniel W. Yih                       |  | Trustee |  | March 3, 2006
|                                                    
|/s/ Kneeland C.
    YoungbloodKneeland C. Youngblood |  | Trustee |  | March 3, 2006

59



---



##### 










STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


INDEX TO FINANCIAL STATEMENTS AND SCHEDULES


|                                                            |                                                                                                              |      |      |      | 
|----------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | ---- | ---- | ---- | 
|                                                            |                                                                                                              | Page |     
|                                                            |                                                                                                              |      |     
|Report of Independent Registered Public
    Accounting Firm |                                                                                                              |      | F-2  |     
|Starwood Hotels & Resorts Worldwide, Inc.:                  |                                                                                                              |      |      |     
|                                                            | Consolidated Balance Sheets as of
    December 31, 2005 and 2004                                             |      |      | F-3  | 
|                                                            | Consolidated Statements of Income for the
    Years Ended December 31, 2005, 2004 and 2003                   |      |      | F-4  | 
|                                                            | Consolidated Statements of Comprehensive
    Income for the Years Ended December 31, 2005, 2004 and
    2003 |      |      | F-5  | 
|                                                            | Consolidated Statements of Equity for the
    Years Ended December 31, 2005, 2004 and 2003                   |      |      | F-6  | 
|                                                            | Consolidated Statements of Cash Flows for
    the Years Ended December 31, 2005, 2004 and 2003               |      |      | F-7  | 
|Starwood Hotels & Resorts:                                  |                                                                                                              |      |      |     
|                                                            | Consolidated Balance Sheets as of
    December 31, 2005 and 2004                                             |      |      | F-8  | 
|                                                            | Consolidated Statements of Income for the
    Years Ended December 31, 2005, 2004 and 2003                   |      |      | F-9  | 
|                                                            | Consolidated Statements of Cash Flows for
    the Years Ended December 31, 2005, 2004 and 2003               |      |      | F-10 | 
|Notes to Financial Statements                               |                                                                                                              |      | F-11 |     
|Schedules:                                                  |                                                                                                              |      |      |     
|                                                            | Schedule II  Valuation and
    Qualifying Accounts                                                          |      |      | S-1  | 
|                                                            | Schedule III  Real Estate
    and Accumulated Depreciation                                                  |      |      | S-2  | 
|                                                            | Schedule IV  Mortgage Loans on
    Real Estate                                                              |      |      | S-4  | 



F-1



---



##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM















| |                  
| | -----------------
| | ERNST & YOUNG LLP





F-2



---



##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.





CONSOLIDATED BALANCE SHEETS


(In millions, except share data)


|                                     |                                                                                                                                                                                                       |                            |        |       |       |   |        |       |       | 
|------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------ | ----- | ----- | - | ------ | ----- | ----- | 
|                                     |                                                                                                                                                                                                       | December 31,               |       
|                                     |                                                                                                                                                                                                       |                            |       
|                                     |                                                                                                                                                                                                       | 2005                       |        |       | 2004  |  
|                                     |                                                                                                                                                                                                       |                            |        |       |       |  
|ASSETS                              
|Current assets:                      |                                                                                                                                                                                                       |                            |        |       |       |   |        |      
|                                     | Cash and cash equivalents                                                                                                                                                                             |                            | $      | 897   |       |   | $      | 326   |      
|                                     | Restricted cash                                                                                                                                                                                       |                            |        | 295   |       |   |        | 347   |      
|                                     | Accounts receivable, net of allowance for doubtful accounts of
    $50 and $58                                                                                                                        |                            |        | 642   |       |   |        | 482   |      
|                                     | Inventories                                                                                                                                                                                           |                            |        | 280   |       |   |        | 371   |      
|                                     | Prepaid expenses and other                                                                                                                                                                            |                            |        | 169   |       |   |        | 157   |      
|                                     |                                                                                                                                                                                                       |                            |        |       |       |  
|                                     |                                                                                                                                                                                                       | Total current assets       |        |       | 2,283 |   |        |       | 1,683 | 
|Investments                          |                                                                                                                                                                                                       |                            | 403    |       |       |   | 453    |      
|Plant, property and equipment, net   |                                                                                                                                                                                                       |                            | 3,956  |       |       |   | 4,341  |      
|Assets held for sale                 |                                                                                                                                                                                                       |                            | 3,147  |       |       |   | 3,189  |      
|Goodwill and intangible assets, net  |                                                                                                                                                                                                       |                            | 2,263  |       |       |   | 2,011  |      
|Other assets                         |                                                                                                                                                                                                       |                            | 402    |       |       |   | 621    |      
|                                     |                                                                                                                                                                                                       |                            |        |       |       |  
|                                     |                                                                                                                                                                                                       | $                          | 12,454 |       |       | $ | 12,298 |      
|                                     |                                                                                                                                                                                                       |                            |        |       |       |  
|LIABILITIES AND STOCKHOLDERS EQUITY
|Current liabilities:                 |                                                                                                                                                                                                       |                            |        |       |       |   |        |      
|                                     | Short-term borrowings and current maturities of long-term debt                                                                                                                                        |                            | $      | 1,219 |       |   | $      | 590   |      
|                                     | Short-term borrowings held for sale                                                                                                                                                                   |                            |        |      |       |   |        | 29    |      
|                                     | Accounts payable                                                                                                                                                                                      |                            |        | 156   |       |   |        | 200   |      
|                                     | Accrued expenses                                                                                                                                                                                      |                            |        | 1,049 |       |   |        | 867   |      
|                                     | Accrued salaries, wages and benefits                                                                                                                                                                  |                            |        | 297   |       |   |        | 299   |      
|                                     | Accrued taxes and other                                                                                                                                                                               |                            |        | 158   |       |   |        | 143   |      
|                                     |                                                                                                                                                                                                       |                            |        |       |       |  
|                                     |                                                                                                                                                                                                       | Total current liabilities  |        |       | 2,879 |   |        |       | 2,128 | 
|Long-term debt                       |                                                                                                                                                                                                       |                            | 2,374  |       |       |   | 3,297  |      
|Long-term debt held for sale         |                                                                                                                                                                                                       |                            | 552    |       |       |   | 526    |      
|Deferred income taxes                |                                                                                                                                                                                                       |                            | 562    |       |       |   | 880    |      
|Other liabilities                    |                                                                                                                                                                                                       |                            | 851    |       |       |   | 652    |      
|                                     |                                                                                                                                                                                                       |                            |        |       |       |  
|                                     |                                                                                                                                                                                                       |                            | 7,218  |       |       |   | 7,483  |      
|                                     |                                                                                                                                                                                                       |                            |        |       |       |  
|Minority interest                    |                                                                                                                                                                                                       |                            | 25     |       |       |   | 27     |      
|                                     |                                                                                                                                                                                                       |                            |        |       |       |  
|Commitments and contingencies        |                                                                                                                                                                                                       |                            |        |       |       |   |        |      
|Stockholders equity:                |                                                                                                                                                                                                       |                            |        |       |       |   |        |      
|                                     | Class A exchangeable preferred shares of the Trust;
    $0.01 par value; authorized 30,000,000 shares;
    outstanding 562,222 and 597,825 shares at December 31,
    2005 and 2004, respectively     |                            |        |      |       |   |        |      |      
|                                     | Class B exchangeable preferred shares of the Trust;
    $0.01 par value; authorized 15,000,000 shares;
    outstanding 24,627 and 52,785 shares at December 31,
    2005 and 2004, respectively       |                            |        |      |       |   |        |      |      
|                                     | Corporation common stock; $0.01 par value; authorized
    1,050,000,000 shares; outstanding 217,218,781 and
    208,730,800 shares at December 31, 2005 and 2004,
    respectively                    |                            |        | 2     |       |   |        | 2     |      
|                                     | Trust Class B shares of beneficial interest;
    $0.01 par value; authorized 1,000,000,000 shares;
    outstanding 217,218,781 and 208,730,800 shares at
    December 31, 2005 and 2004, respectively |                            |        | 2     |       |   |        | 2     |      
|                                     | Additional paid-in capital                                                                                                                                                                            |                            |        | 5,412 |       |   |        | 5,121 |      
|                                     | Deferred compensation                                                                                                                                                                                 |                            |        | (53   | )     |   |        | (14   | )    
|                                     | Accumulated other comprehensive loss                                                                                                                                                                  |                            |        | (322  | )     |   |        | (255  | )    
|                                     | Retained earnings (accumulated deficit)                                                                                                                                                               |                            |        | 170   |       |   |        | (68   | )    
|                                     |                                                                                                                                                                                                       |                            |        |       |       |  
|                                     |                                                                                                                                                                                                       | Total stockholders equity |        |       | 5,211 |   |        |       | 4,788 | 
|                                     |                                                                                                                                                                                                       |                            |        |       |       |  
|                                     |                                                                                                                                                                                                       | $                          | 12,454 |       |       | $ | 12,298 |      
|                                     |                                                                                                                                                                                                       |                            |        |       |       |  



F-3



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.





CONSOLIDATED STATEMENTS OF INCOME


(In millions, except per Share data)


|                                                                                                 |                                                                             |                         |       |    |      |   |       |      |  |   |       |     |  
|------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------- | ----------------------- | ----- | -- | ---- | - | ----- | ---- |  | - | ----- | --- | -
|                                                                                                 |                                                                             | Year Ended December 31, |      
|                                                                                                 |                                                                             |                         |      
|                                                                                                 |                                                                             | 2005                    |       |    | 2004 |   |       | 2003 | 
|                                                                                                 |                                                                             |                         |       |    |      |   |       |      | 
|Revenues                                                                                         |                                                                             |                         |       |    |      |   |       |      |  |   |       |    
|Owned, leased and consolidated joint venture hotels                                              |                                                                             | $                       | 3,517 |    |      | $ | 3,326 |      |  | $ | 3,085 |    
|Vacation ownership and residential sales and services                                            |                                                                             |                         | 889   |    |      |   | 640   |      |  |   | 439   |    
|Management fees, franchise fees and other income                                                 |                                                                             |                         | 501   |    |      |   | 419   |      |  |   | 255   |    
|Other revenues from managed and franchised properties                                            |                                                                             |                         | 1,070 |    |      |   | 983   |      |  |   | 851   |    
|                                                                                                 |                                                                             |                         |       |    |      |   |       |      | 
|                                                                                                 |                                                                             |                         | 5,977 |    |      |   | 5,368 |      |  |   | 4,630 |    
|Costs and Expenses                                                                               |                                                                             |                         |       |    |      |   |       |      |  |   |       |    
|Owned, leased and consolidated joint venture hotels                                              |                                                                             |                         | 2,634 |    |      |   | 2,519 |      |  |   | 2,392 |    
|Vacation ownership and residential                                                               |                                                                             |                         | 661   |    |      |   | 488   |      |  |   | 340   |    
|Selling, general, administrative and other                                                       |                                                                             |                         | 370   |    |      |   | 331   |      |  |   | 200   |    
|Restructuring and other special charges (credits), net                                           |                                                                             |                         | 13    |    |      |   | (37   | )    |  |   | (9    | )  
|Depreciation                                                                                     |                                                                             |                         | 387   |    |      |   | 413   |      |  |   | 410   |    
|Amortization                                                                                     |                                                                             |                         | 20    |    |      |   | 18    |      |  |   | 19    |    
|Other expenses from managed and franchised properties                                            |                                                                             |                         | 1,070 |    |      |   | 983   |      |  |   | 851   |    
|                                                                                                 |                                                                             |                         |       |    |      |   |       |      | 
|                                                                                                 |                                                                             |                         | 5,155 |    |      |   | 4,715 |      |  |   | 4,203 |    
|Operating income                                                                                 |                                                                             |                         | 822   |    |      |   | 653   |      |  |   | 427   |    
|Gain on sale of VOI notes receivable                                                             |                                                                             |                         | 25    |    |      |   | 14    |      |  |   | 15    |    
|Equity earnings from unconsolidated ventures, net                                                |                                                                             |                         | 64    |    |      |   | 32    |      |  |   | 12    |    
|Interest expense, net of interest income of $19, $3 and $5                                       |                                                                             |                         | (239  | )  |      |   | (254  | )    |  |   | (282  | )  
|Loss on asset dispositions and impairments, net                                                  |                                                                             |                         | (30   | )  |      |   | (33   | )    |  |   | (183  | )  
|                                                                                                 |                                                                             |                         |       |    |      |   |       |      | 
|Income (loss) from continuing operations before taxes and
    minority equity                    |                                                                             |                         | 642   |    |      |   | 412   |      |  |   | (11   | )  
|Income tax benefit (expense)                                                                     |                                                                             |                         | (172  | )  |      |   | (43   | )    |  |   | 113   |    
|Tax expense on repatriation of foreign earnings under the
    American Jobs Creation Act of 2004 |                                                                             |                         | (47   | )  |      |   |      |      |  |   |      |    
|Minority equity in net loss                                                                      |                                                                             |                         |      |    |      |   |      |      |  |   | 3     |    
|                                                                                                 |                                                                             |                         |       |    |      |   |       |      | 
|Income from continuing operations                                                                |                                                                             |                         | 423   |    |      |   | 369   |      |  |   | 105   |    
|Discontinued operations:                                                                         |                                                                             |                         |       |    |      |   |       |      |  |   |       |    
|                                                                                                 | Loss from operations, net of tax benefit of $(1), $0 and $0                 |                         |       | (1 | )    |   |       |     |  |   |       | (2  | )
|                                                                                                 | Gain on dispositions, net of tax expense (benefit) of $0, $(10)
    and $40 |                         |       |   |      |   |       | 26   |  |   |       | 206 |  
|                                                                                                 |                                                                             |                         |       |    |      |   |       |      | 
|Net income                                                                                       |                                                                             | $                       | 422   |    |      | $ | 395   |      |  | $ | 309   |    
|                                                                                                 |                                                                             |                         |       |    |      |   |       |      | 
|Earnings Per Share  Basic                                                                       |                                                                             |                         |       |    |      |   |       |      |  |   |       |    
|Continuing operations                                                                            |                                                                             | $                       | 1.95  |    |      | $ | 1.78  |      |  | $ | 0.52  |    
|Discontinued operations                                                                          |                                                                             |                         |      |    |      |   | 0.13  |      |  |   | 1.01  |    
|                                                                                                 |                                                                             |                         |       |    |      |   |       |      | 
|Net income                                                                                       |                                                                             | $                       | 1.95  |    |      | $ | 1.91  |      |  | $ | 1.53  |    
|                                                                                                 |                                                                             |                         |       |    |      |   |       |      | 
|Earnings Per Share  Diluted                                                                     |                                                                             |                         |       |    |      |   |       |      |  |   |       |    
|Continuing operations                                                                            |                                                                             | $                       | 1.88  |    |      | $ | 1.72  |      |  | $ | 0.51  |    
|Discontinued operations                                                                          |                                                                             |                         |      |    |      |   | 0.12  |      |  |   | 0.99  |    
|                                                                                                 |                                                                             |                         |       |    |      |   |       |      | 
|Net income                                                                                       |                                                                             | $                       | 1.88  |    |      | $ | 1.84  |      |  | $ | 1.50  |    
|                                                                                                 |                                                                             |                         |       |    |      |   |       |      | 
|Weighted average number of Shares                                                                |                                                                             |                         | 217   |    |      |   | 207   |      |  |   | 203   |    
|                                                                                                 |                                                                             |                         |       |    |      |   |       |      | 
|Weighted average number of Shares assuming dilution                                              |                                                                             |                         | 225   |    |      |   | 215   |      |  |   | 207   |    
|                                                                                                 |                                                                             |                         |       |    |      |   |       |      | 



F-4



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.





CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


(In millions)


|                                                 |  |                         |     |   |      |   |     |      |  |   |     |  
|------------------------------------------------ |  | ----------------------- | --- | - | ---- | - | --- | ---- |  | - | --- | -
|                                                 |  | Year Ended December 31, |    
|                                                 |  |                         |    
|                                                 |  | 2005                    |     |   | 2004 |   |     | 2003 | 
|                                                 |  |                         |     |   |      |   |     |      | 
|Net income                                       |  | $                       | 422 |   |      | $ | 395 |      |  | $ | 309 |  
|                                                 |  |                         |     |   |      |   |     |      | 
|Other comprehensive income (loss), net of taxes: |  |                         |     |   |      |   |     |      |  |   |     |  
|Foreign currency translation adjustments         |  |                         | (60 | ) |      |   | 79  |      |  |   | 139 |  
|Minimum pension liability adjustments            |  |                         | (6  | ) |      |   | (4  | )    |  |   | (1  | )
|Unrealized holding gains (losses)                |  |                         | (1  | ) |      |   | 4   |      |  |   | 3   |  
|Change in fair value of derivative instruments   |  |                         |    |   |      |   |    |      |  |   | (1  | )
|                                                 |  |                         |     |   |      |   |     |      | 
|                                                 |  |                         | (67 | ) |      |   | 79  |      |  |   | 140 |  
|                                                 |  |                         |     |   |      |   |     |      | 
|Comprehensive income                             |  | $                       | 355 |   |      | $ | 474 |      |  | $ | 449 |  
|                                                 |  |                         |     |   |      |   |     |      | 



F-5



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##### Table of Contents





STARWOOD HOTELS & RESORTS WORLDWIDE, INC.





CONSOLIDATED STATEMENTS OF EQUITY


(In millions)


|                             |                                                                                                 |              |   |    |             |   |        |        |   |                    |        |   |             |       |   |               |                   |  |              |    |   |              |   |   |         |   |       |          |   |   |     |     |   |   |      |     |   |   |      |      |  
|---------------------------- | ----------------------------------------------------------------------------------------------- | ------------ | - | -- | ----------- | - | ------ | ------ | - | ------------------ | ------ | - | ----------- | ----- | - | ------------- | ----------------- |  | ------------ | -- | - | ------------ | - | - | ------- | - | ----- | -------- | - | - | --- | --- | - | - | ---- | --- | - | - | ---- | ---- | -
|                             |                                                                                                 | Exchangeable |   |    |             |   |        |        |   |                    |        |   |             |       |   |               |                   |  |             
|                             |                                                                                                 | units and    |   |    |             |   |        |        |   |                    |        |   | Accumulated |       |   |              
|                             |                                                                                                 | Class B EPS  |   |    | Class A EPS |   | Shares |        |   |                    |        |   |             | Other |   |               | Retained Earnings | 
|                             |                                                                                                 |              |   |    |             |   |        |        |   | Additional Paid-in |        |   | Deferred    |       |   | Comprehensive |                   |  | (Accumulated |   
|                             |                                                                                                 | Shares       |   |    | Amount      |   |        | Shares |   |                    | Amount |   | Shares      |       |   | Amount        |                   |  | Capital(b)   |    |   | Compensation |   |   | Loss(a) |   |       | Deficit) |  
|                             |                                                                                                 |              |   |    |             |   |        |        |   |                    |        |   |             |       |   |               |                   |  |              |    |   |              |   |   |         |   |       |          |  
|Balance at December 31, 2002 |                                                                                                 |              | 1 |    |             | $ | 51     |        |   |                    |       |   |             | $     |  |               |                   |  | 200          |    |   | $            | 4 |   |         | $ | 4,905 |          |   | $ | (14 | )   |   | $ | (474 | )   |   | $ | (424 | )   
|                             | Net income                                                                                      |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       |         |   |   |     |    |   |   |      |    |   |   |      | 309  |  
|                             | Stock option and restricted stock award transactions, net                                       |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              | 2  |   |              |   |  |         |   |       | 67       |   |   |     | 5   |   |   |      |    |   |   |      |     |  
|                             | ESPP stock issuances                                                                            |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       | 8        |   |   |     |    |   |   |      |    |   |   |      |     |  
|                             | Share repurchases                                                                               |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       | (28      | ) |   |     |    |   |   |      |    |   |   |      |     |  
|                             | Conversion or redemption and cancellation of Class A EPS,
    Class B EPS and Partnership Units |              |   |   |             |   |        | (20    | ) |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       |         |   |   |     |    |   |   |      |    |   |   |      |     |  
|                             | Foreign currency translation                                                                    |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       |         |   |   |     |    |   |   |      | 139 |   |   |      |     |  
|                             | Minimum pension liability adjustment                                                            |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       |         |   |   |     |    |   |   |      | (1  | ) |   |      |     |  
|                             | Unrealized gain on securities, net                                                              |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       |         |   |   |     |    |   |   |      | 3   |   |   |      |     |  
|                             | Unrealized loss on derivative instruments                                                       |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       |         |   |   |     |    |   |   |      | (1  | ) |   |      |     |  
|                             | Distributions declared                                                                          |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       |         |   |   |     |    |   |   |      |    |   |   |      | (172 | )
|                             |                                                                                                 |              |   |    |             |   |        |        |   |                    |        |   |             |       |   |               |                   |  |              |    |   |              |   |   |         |   |       |          |   |  
|Balance at December 31, 2003 |                                                                                                 |              | 1 |    |             |   | 31     |        |   |                    |       |   |             |       |  |               |                   |  | 202          |    |   |              | 4 |   |         |   | 4,952 |          |   |   | (9  | )   |   |   | (334 | )   |   |   | (287 | )   
|                             | Net income                                                                                      |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       |         |   |   |     |    |   |   |      |    |   |   |      | 395  |  
|                             | Stock option and restricted stock award transactions, net                                       |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              | 14 |   |              |   |  |         |   |       | 456      |   |   |     | (5  | ) |   |      |    |   |   |      |     |  
|                             | ESPP stock issuances                                                                            |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       | 12       |   |   |     |    |   |   |      |    |   |   |      |     |  
|                             | Share repurchases                                                                               |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              | (7 | ) |              |   |  |         |   |       | (310     | ) |   |     |    |   |   |      |    |   |   |      |     |  
|                             | Conversion or redemption and cancellation of Class A EPS,
    Class B EPS and Partnership Units |              |   | (1 | )           |   |        | (31    | ) |                    |        | 1 |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       | 11       |   |   |     |    |   |   |      |    |   |   |      |     |  
|                             | Foreign currency translation                                                                    |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       |         |   |   |     |    |   |   |      | 79  |   |   |      |     |  
|                             | Minimum pension liability adjustment                                                            |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       |         |   |   |     |    |   |   |      | (4  | ) |   |      |     |  
|                             | Unrealized gain on securities, net                                                              |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       |         |   |   |     |    |   |   |      | 4   |   |   |      |     |  
|                             | Distributions declared                                                                          |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       |         |   |   |     |    |   |   |      |    |   |   |      | (176 | )
|                             |                                                                                                 |              |   |    |             |   |        |        |   |                    |        |   |             |       |   |               |                   |  |              |    |   |              |   |   |         |   |       |          |   |  
|Balance at December 31, 2004 |                                                                                                 |              |  |    |             |   |       |        |   |                    | 1      |   |             |       |  |               |                   |  | 209          |    |   |              | 4 |   |         |   | 5,121 |          |   |   | (14 | )   |   |   | (255 | )   |   |   | (68  | )   
|                             | Net income                                                                                      |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       |         |   |   |     |    |   |   |      |    |   |   |      | 422  |  
|                             | Stock option and restricted stock award transactions, net                                       |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              | 12 |   |              |   |  |         |   |       | 542      |   |   |     | (39 | ) |   |      |    |   |   |      |     |  
|                             | ESPP stock issuances                                                                            |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       | 12       |   |   |     |    |   |   |      |    |   |   |      |     |  
|                             | Share repurchases                                                                               |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              | (4 | ) |              |   |  |         |   |       | (253     | ) |   |     |    |   |   |      |    |   |   |      |     |  
|                             | Conversion or redemption and cancellation of Class A EPS,
    Class B EPS and Partnership Units |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       | (10      | ) |   |     |    |   |   |      |    |   |   |      |     |  
|                             | Foreign currency translation                                                                    |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       |         |   |   |     |    |   |   |      | (60 | ) |   |      |     |  
|                             | Minimum pension liability adjustment                                                            |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       |         |   |   |     |    |   |   |      | (6  | ) |   |      |     |  
|                             | Unrealized loss on securities, net                                                              |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       |         |   |   |     |    |   |   |      | (1  | ) |   |      |     |  
|                             | Distributions declared                                                                          |              |   |   |             |   |        |       |   |                    |        |  |             |       |   |              |                   |  |              |   |   |              |   |  |         |   |       |         |   |   |     |    |   |   |      |    |   |   |      | (184 | )
|                             |                                                                                                 |              |   |    |             |   |        |        |   |                    |        |   |             |       |   |               |                   |  |              |    |   |              |   |   |         |   |       |          |   |  
|Balance at December 31, 2005 |                                                                                                 |              |  |    |             | $ |       |        |   |                    | 1      |   |             | $     |  |               |                   |  | 217          |    |   | $            | 4 |   |         | $ | 5,412 |          |   | $ | (53 | )   |   | $ | (322 | )   |   | $ | 170  |     
|                             |                                                                                                 |              |   |    |             |   |        |        |   |                    |        |   |             |       |   |               |                   |  |              |    |   |              |   |   |         |   |       |          |   |  






|    |  |                                                                                                                                                                                                                                                                                          
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | As of December 31, 2005, this balance is comprised of
    $299 million of cumulative translation adjustments,
    $7 million of cumulative unrealized gains on securities,
    including derivative instruments, and $30 million of
    cumulative minimum pension liability adjustments.
|   
|(b) |  | Stock option exercises are net of a tax benefit of
    $66 million, $70 million and $5 million in 2005,
    2004 and 2003, respectively.                                                                                                                                                 



F-6



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.





CONSOLIDATED STATEMENTS OF CASH FLOWS


(In millions)


|                                                                          |                                                                                |                                                       |      |      |      |   |      |      |     |   |       |      |      |  
|------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | ----------------------------------------------------- | ---- | ---- | ---- | - | ---- | ---- | --- | - | ----- | ---- | ---- | -
|                                                                          |                                                                                | Year Ended December 31,                               |     
|                                                                          |                                                                                |                                                       |     
|                                                                          |                                                                                | 2005                                                  |      |      | 2004 |   |      | 2003 |    
|                                                                          |                                                                                |                                                       |      |      |      |   |      |      |    
|Operating Activities                                                      |                                                                                |                                                       |      |      |      |   |      |      |     |   |       |     
|Net income                                                                |                                                                                | $                                                     | 422  |      |      | $ | 395  |      |     | $ | 309   |     
|Adjustments to net income:                                                |                                                                                |                                                       |      |      |      |   |      |      |     |   |       |     
|                                                                          | Discontinued operations:                                                       |                                                       |      |      |      |   |      |      |     |   |       |      |     
|                                                                          |                                                                                | Gain on dispositions, net                             |      |      |     |   |      |      | (26 | ) |       |      | (206 | )
|                                                                          |                                                                                | Other adjustments relating to discontinued operations |      |      | 11   |   |      |      | 1   |   |       |      | 13   |  
|                                                                          | Depreciation and amortization                                                  |                                                       |      | 407  |      |   |      | 431  |     |   |       | 429  |     
|                                                                          | Amortization of deferred loan costs                                            |                                                       |      | 12   |      |   |      | 12   |     |   |       | 14   |     
|                                                                          | Non-cash portion of restructuring and other special charges
    (credits), net |                                                       |      | (3   | )    |   |      | (37  | )   |   |       | (9   | )   
|                                                                          | Non-cash foreign currency losses (gains), net                                  |                                                       |      | 2    |      |   |      | (9   | )   |   |       | (4   | )   
|                                                                          | Provision for doubtful accounts                                                |                                                       |      | 6    |      |   |      | 25   |     |   |       | 34   |     
|                                                                          | Minority equity in net loss                                                    |                                                       |      |     |      |   |      |     |     |   |       | (3   | )   
|                                                                          | Distributions in excess of equity earnings                                     |                                                       |      | (7   | )    |   |      | 31   |     |   |       | 71   |     
|                                                                          | Gain on sale of VOI notes receivable                                           |                                                       |      | (25  | )    |   |      | (14  | )   |   |       | (15  | )   
|                                                                          | Loss on asset dispositions and impairments, net                                |                                                       |      | 30   |      |   |      | 33   |     |   |       | 183  |     
|Changes in working capital:                                               |                                                                                |                                                       |      |      |      |   |      |      |     |   |       |     
|                                                                          | Restricted cash                                                                |                                                       |      | 50   |      |   |      | (257 | )   |   |       | 17   |     
|                                                                          | Accounts receivable                                                            |                                                       |      | (152 | )    |   |      | (67  | )   |   |       | 6    |     
|                                                                          | Inventories                                                                    |                                                       |      | 105  |      |   |      | (22  | )   |   |       | 6    |     
|                                                                          | Prepaid expenses and other                                                     |                                                       |      | (8   | )    |   |      | (52  | )   |   |       | 8    |     
|                                                                          | Accounts payable and accrued expenses                                          |                                                       |      | 157  |      |   |      | 118  |     |   |       | 55   |     
|Accrued and deferred income taxes                                         |                                                                                |                                                       | (245 | )    |      |   | 7    |      |     |   | (138  | )   
|Other, net                                                                |                                                                                |                                                       | 2    |      |      |   | 9    |      |     |   | (4    | )   
|                                                                          |                                                                                |                                                       |      |      |      |   |      |      |    
|                                                                          | Cash from operating activities                                                 |                                                       |      | 764  |      |   |      | 578  |     |   |       | 766  |     
|                                                                          |                                                                                |                                                       |      |      |      |   |      |      |    
|Investing Activities                                                      |                                                                                |                                                       |      |      |      |   |      |      |     |   |       |     
|Purchases of plant, property and equipment                                |                                                                                |                                                       | (464 | )    |      |   | (333 | )    |     |   | (302  | )   
|Proceeds from asset sales, net                                            |                                                                                |                                                       | 510  |      |      |   | 74   |      |     |   | 1,042 |     
|Collection (issuance) of notes receivable, net                            |                                                                                |                                                       | 11   |      |      |   | (2   | )    |     |   | (2    | )   
|Acquisitions, net of acquired cash                                        |                                                                                |                                                       | (242 | )    |      |   | (65  | )    |     |   |      |     
|Investments                                                               |                                                                                |                                                       | 47   |      |      |   | (73  | )    |     |   | (11   | )   
|Proceeds from (acquisition of) senior debt                                |                                                                                |                                                       | 221  |      |      |   | (4   | )    |     |   | (203  | )   
|Other, net                                                                |                                                                                |                                                       | 2    |      |      |   | (12  | )    |     |   | (9    | )   
|                                                                          |                                                                                |                                                       |      |      |      |   |      |      |    
|                                                                          | Cash from (used for) investing activities                                      |                                                       |      | 85   |      |   |      | (415 | )   |   |       | 515  |     
|                                                                          |                                                                                |                                                       |      |      |      |   |      |      |    
|Financing Activities                                                      |                                                                                |                                                       |      |      |      |   |      |      |     |   |       |     
|Revolving credit facility and short-term borrowings
    (repayments), net |                                                                                |                                                       | 333  |      |      |   | (20  | )    |     |   | (344  | )   
|Long-term debt issued                                                     |                                                                                |                                                       | 9    |      |      |   | 300  |      |     |   | 446   |     
|Long-term debt repaid                                                     |                                                                                |                                                       | (583 | )    |      |   | (451 | )    |     |   | (911  | )   
|Distributions paid                                                        |                                                                                |                                                       | (176 | )    |      |   | (172 | )    |     |   | (170  | )   
|Proceeds from employee stock option exercises                             |                                                                                |                                                       | 405  |      |      |   | 379  |      |     |   | 54    |     
|Share repurchases                                                         |                                                                                |                                                       | (228 | )    |      |   | (310 | )    |     |   | (28   | )   
|Other, net                                                                |                                                                                |                                                       | (13  | )    |      |   | 1    |      |     |   | (26   | )   
|                                                                          |                                                                                |                                                       |      |      |      |   |      |      |    
|                                                                          | Cash used for financing activities                                             |                                                       |      | (253 | )    |   |      | (273 | )   |   |       | (979 | )   
|                                                                          |                                                                                |                                                       |      |      |      |   |      |      |    
|Exchange rate effect on cash and cash equivalents                         |                                                                                |                                                       | (25  | )    |      |   | 9    |      |     |   | 17    |     
|                                                                          |                                                                                |                                                       |      |      |      |   |      |      |    
|Increase (decrease) in cash and cash equivalents                          |                                                                                |                                                       | 571  |      |      |   | (101 | )    |     |   | 319   |     
|Cash and cash equivalents  beginning of period                           |                                                                                |                                                       | 326  |      |      |   | 427  |      |     |   | 108   |     
|                                                                          |                                                                                |                                                       |      |      |      |   |      |      |    
|Cash and cash equivalents  end of period                                 |                                                                                | $                                                     | 897  |      |      | $ | 326  |      |     | $ | 427   |     
|                                                                          |                                                                                |                                                       |      |      |      |   |      |      |    
|Supplemental Disclosures of Cash Flow Information                         |                                                                                |                                                       |      |      |      |   |      |      |     |   |       |     
|Cash paid during the period for:                                          |                                                                                |                                                       |      |      |      |   |      |      |     |   |       |     
|                                                                          | Interest                                                                       |                                                       | $    | 274  |      |   | $    | 293  |     |   | $     | 287  |     
|                                                                          |                                                                                |                                                       |      |      |      |   |      |      |    
|                                                                          | Income taxes, net of refunds                                                   |                                                       | $    | 447  |      |   | $    | 21   |     |   | $     | 17   |     
|                                                                          |                                                                                |                                                       |      |      |      |   |      |      |    



F-7



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##### Table of Contents



STARWOOD HOTELS & RESORTS





CONSOLIDATED BALANCE SHEETS


(In millions, except share data)


|                                        |                                                                                                                                                                                                       |                            |       |        |       |   |       |        |       | 
|--------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ----- | ------ | ----- | - | ----- | ------ | ----- | 
|                                        |                                                                                                                                                                                                       | December 31,               |      
|                                        |                                                                                                                                                                                                       |                            |      
|                                        |                                                                                                                                                                                                       | 2005                       |       |        | 2004  |  
|                                        |                                                                                                                                                                                                       |                            |       |        |       |  
|ASSETS                                 
|Current assets:                         |                                                                                                                                                                                                       |                            |       |        |       |   |       |       
|                                        | Cash and cash equivalents                                                                                                                                                                             |                            | $     | 1      |       |   | $     | 1      |      
|                                        | Restricted cash                                                                                                                                                                                       |                            |       | 5      |       |   |       |       |      
|                                        | Receivable, Corporation                                                                                                                                                                               |                            |       | 568    |       |   |       | 535    |      
|                                        | Accounts receivable, net                                                                                                                                                                              |                            |       | 11     |       |   |       |       |      
|                                        |                                                                                                                                                                                                       |                            |       |        |       |  
|                                        |                                                                                                                                                                                                       | Total current assets       |       |        | 585   |   |       |        | 536   | 
|Investments, Corporation                |                                                                                                                                                                                                       |                            | 848   |        |       |   | 848   |       
|Investments                             |                                                                                                                                                                                                       |                            | 28    |        |       |   | 28    |       
|Plant, property and equipment, net      |                                                                                                                                                                                                       |                            | 2,959 |        |       |   | 3,254 |       
|Long-term receivables, Corporation, net |                                                                                                                                                                                                       |                            | 2,298 |        |       |   | 2,043 |       
|Goodwill and intangible assets, net     |                                                                                                                                                                                                       |                            | 207   |        |       |   | 207   |       
|Other assets                            |                                                                                                                                                                                                       |                            | 8     |        |       |   | 9     |       
|                                        |                                                                                                                                                                                                       |                            |       |        |       |  
|                                        |                                                                                                                                                                                                       | $                          | 6,933 |        |       | $ | 6,925 |       
|                                        |                                                                                                                                                                                                       |                            |       |        |       |  
|LIABILITIES AND STOCKHOLDERS EQUITY   
|Current liabilities:                    |                                                                                                                                                                                                       |                            |       |        |       |   |       |       
|                                        | Short-term borrowings and current maturities of long-term debt                                                                                                                                        |                            | $     | 11     |       |   | $     | 10     |      
|                                        | Accounts payable                                                                                                                                                                                      |                            |       | 3      |       |   |       | 3      |      
|                                        | Accrued expenses                                                                                                                                                                                      |                            |       | 18     |       |   |       | 24     |      
|                                        | Distributions payable, Corporation                                                                                                                                                                    |                            |       | 328    |       |   |       | 225    |      
|                                        | Distributions payable                                                                                                                                                                                 |                            |       | 184    |       |   |       | 176    |      
|                                        |                                                                                                                                                                                                       |                            |       |        |       |  
|                                        |                                                                                                                                                                                                       | Total current liabilities  |       |        | 544   |   |       |        | 438   | 
|Long-term debt                          |                                                                                                                                                                                                       |                            | 428   |        |       |   | 435   |       
|                                        |                                                                                                                                                                                                       |                            |       |        |       |  
|                                        |                                                                                                                                                                                                       |                            | 972   |        |       |   | 873   |       
|                                        |                                                                                                                                                                                                       |                            |       |        |       |  
|Minority interest                       |                                                                                                                                                                                                       |                            | 31    |        |       |   | 29    |       
|                                        |                                                                                                                                                                                                       |                            |       |        |       |  
|Commitments and contingencies           |                                                                                                                                                                                                       |                            |       |        |       |   |       |       
|Stockholders equity:                   |                                                                                                                                                                                                       |                            |       |        |       |   |       |       
|                                        | Class A exchangeable preferred shares; $0.01 par
    value; authorized 30,000,000 shares;
    outstanding 562,222 and 597,825 shares at December 31,
    2005 and 2004, respectively                  |                            |       |       |       |   |       |       |      
|                                        | Class B exchangeable preferred shares of the Trust;
    $0.01 par value; authorized 15,000,000 shares;
    outstanding 24,627 and 52,785 shares at December 31,
    2005 and 2004, respectively       |                            |       |       |       |   |       |       |      
|                                        | Class A shares of beneficial interest; $0.01 par
    value; authorized 5,000 shares; outstanding 100 shares
    at December 31, 2005 and 2004                                                         |                            |       |       |       |   |       |       |      
|                                        | Trust Class B shares of beneficial interest;
    $0.01 par value; authorized 1,000,000,000 shares;
    outstanding 217,218,781 and 208,730,800 shares at
    December 31, 2005 and 2004, respectively |                            |       | 2      |       |   |       | 2      |      
|                                        | Additional paid-in capital                                                                                                                                                                            |                            |       | 7,787  |       |   |       | 7,761  |      
|                                        | Distributions in excess of net income                                                                                                                                                                 |                            |       | (1,859 | )     |   |       | (1,740 | )    
|                                        |                                                                                                                                                                                                       |                            |       |        |       |  
|                                        |                                                                                                                                                                                                       | Total stockholders equity |       |        | 5,930 |   |       |        | 6,023 | 
|                                        |                                                                                                                                                                                                       |                            |       |        |       |  
|                                        |                                                                                                                                                                                                       | $                          | 6,933 |        |       | $ | 6,925 |       
|                                        |                                                                                                                                                                                                       |                            |       |        |       |  



F-8



---



##### Table of Contents



STARWOOD HOTELS & RESORTS





CONSOLIDATED STATEMENTS OF INCOME


(In millions)


|                                                       |  |                         |     |   |      |   |     |      |  |   |      |  
|------------------------------------------------------ |  | ----------------------- | --- | - | ---- | - | --- | ---- |  | - | ---- | -
|                                                       |  | Year Ended December 31, |    
|                                                       |  |                         |    
|                                                       |  | 2005                    |     |   | 2004 |   |     | 2003 | 
|                                                       |  |                         |     |   |      |   |     |      | 
|Revenues                                               |  |                         |     |   |      |   |     |      |  |   |      |  
|Rent and interest, Corporation                         |  | $                       | 565 |   |      | $ | 536 |      |  | $ | 526  |  
|                                                       |  |                         |     |   |      |   |     |      | 
|                                                       |  |                         | 565 |   |      |   | 536 |      |  |   | 526  |  
|                                                       |  |                         |     |   |      |   |     |      | 
|Costs and Expenses                                     |  |                         |     |   |      |   |     |      |  |   |      |  
|Selling, general and administrative                    |  |                         | 3   |   |      |   | 3   |      |  |   | 3    |  
|Depreciation                                           |  |                         | 148 |   |      |   | 156 |      |  |   | 165  |  
|                                                       |  |                         |     |   |      |   |     |      | 
|                                                       |  |                         | 151 |   |      |   | 159 |      |  |   | 168  |  
|                                                       |  |                         |     |   |      |   |     |      | 
|Operating income                                       |  |                         | 414 |   |      |   | 377 |      |  |   | 358  |  
|Equity losses from unconsolidated joint venture        |  |                         |    |   |      |   | (1  | )    |  |   | (2   | )
|Interest expense, net                                  |  |                         | (34 | ) |      |   | (36 | )    |  |   | (35  | )
|Gain (loss) on asset dispositions and impairments, net |  |                         | 18  |   |      |   | (23 | )    |  |   | (186 | )
|Income tax benefit (expense)                           |  |                         | (2  | ) |      |   | 7   |      |  |   | (3   | )
|Minority equity in net loss (income)                   |  |                         | (3  | ) |      |   | (2  | )    |  |   | 1    |  
|                                                       |  |                         |     |   |      |   |     |      | 
|Net income                                             |  | $                       | 393 |   |      | $ | 322 |      |  | $ | 133  |  
|                                                       |  |                         |     |   |      |   |     |      | 



F-9



---



##### Table of Contents



STARWOOD HOTELS & RESORTS





CONSOLIDATED STATEMENTS OF CASH FLOWS


(In millions)


|                                                  |                                                        |                         |      |      |      |   |      |      |   |   |      |      |  
|------------------------------------------------- | ------------------------------------------------------ | ----------------------- | ---- | ---- | ---- | - | ---- | ---- | - | - | ---- | ---- | -
|                                                  |                                                        | Year Ended December 31, |     
|                                                  |                                                        |                         |     
|                                                  |                                                        | 2005                    |      |      | 2004 |   |      | 2003 |  
|                                                  |                                                        |                         |      |      |      |   |      |      |  
|Operating Activities                              |                                                        |                         |      |      |      |   |      |      |   |   |      |     
|Net income                                        |                                                        | $                       | 393  |      |      | $ | 322  |      |   | $ | 133  |     
|Adjustments to net income:                        |                                                        |                         |      |      |      |   |      |      |   |   |      |     
|                                                  | Depreciation and amortization                          |                         |      | 148  |      |   |      | 156  |   |   |      | 165  |  
|                                                  | Amortization of deferred loan costs                    |                         |      |     |      |   |      | 1    |   |   |      |     |  
|                                                  | Minority equity in net income (loss)                   |                         |      | 3    |      |   |      | 2    |   |   |      | (1   | )
|                                                  | Distributions in excess of equity earnings             |                         |      |     |      |   |      |     |   |   |      | 2    |  
|                                                  | (Gain) loss on asset dispositions and impairments, net |                         |      | (18  | )    |   |      | 23   |   |   |      | 186  |  
|Receivable, Corporation                           |                                                        |                         | (287 | )    |      |   | (52  | )    |   |   | (441 | )   
|Other, net                                        |                                                        |                         | (11  | )    |      |   | 3    |      |   |   | (1   | )   
|                                                  |                                                        |                         |      |      |      |   |      |      |  
|                                                  | Cash from operating activities                         |                         |      | 228  |      |   |      | 455  |   |   |      | 43   |  
|                                                  |                                                        |                         |      |      |      |   |      |      |  
|Investing Activities                              |                                                        |                         |      |      |      |   |      |      |   |   |      |     
|Purchases of plant, property and equipment        |                                                        |                         | (75  | )    |      |   | (100 | )    |   |   | (66  | )   
|Proceeds from asset sales, net                    |                                                        |                         | 223  |      |      |   | 43   |      |   |   | 402  |     
|Other, net                                        |                                                        |                         | 11   |      |      |   | (4   | )    |   |   |     |     
|                                                  |                                                        |                         |      |      |      |   |      |      |  
|                                                  | Cash from (used for) investing activities              |                         |      | 159  |      |   |      | (61  | ) |   |      | 336  |  
|                                                  |                                                        |                         |      |      |      |   |      |      |  
|Financing Activities                              |                                                        |                         |      |      |      |   |      |      |   |   |      |     
|Long-term debt issued                             |                                                        |                         | 4    |      |      |   |     |      |   |   | 70   |     
|Long-term debt repaid                             |                                                        |                         | (10  | )    |      |   | (9   | )    |   |   | (63  | )   
|Distributions paid                                |                                                        |                         | (176 | )    |      |   | (172 | )    |   |   | (170 | )   
|Distributions paid to Corporation                 |                                                        |                         | (225 | )    |      |   | (213 | )    |   |   | (206 | )   
|Share repurchases                                 |                                                        |                         | (17  | )    |      |   | (30  | )    |   |   | (3   | )   
|Proceeds from employee stock option exercises     |                                                        |                         | 47   |      |      |   | 56   |      |   |   | 10   |     
|Other, net                                        |                                                        |                         | (10  | )    |      |   | (27  | )    |   |   | (17  | )   
|                                                  |                                                        |                         |      |      |      |   |      |      |  
|                                                  | Cash used for financing activities                     |                         |      | (387 | )    |   |      | (395 | ) |   |      | (379 | )
|                                                  |                                                        |                         |      |      |      |   |      |      |  
|Decrease in cash and cash equivalents             |                                                        |                         |     |      |      |   | (1   | )    |   |   |     |     
|Cash and cash equivalents  beginning of period   |                                                        |                         | 1    |      |      |   | 2    |      |   |   | 2    |     
|                                                  |                                                        |                         |      |      |      |   |      |      |  
|Cash and cash equivalents  end of period         |                                                        | $                       | 1    |      |      | $ | 1    |      |   | $ | 2    |     
|                                                  |                                                        |                         |      |      |      |   |      |      |  
|Supplemental Disclosures of Cash Flow Information |                                                        |                         |      |      |      |   |      |      |   |   |      |     
|Cash paid (received) during the period for:       |                                                        |                         |      |      |      |   |      |      |   |   |      |     
|                                                  | Interest                                               |                         | $    | 33   |      |   | $    | 33   |   |   | $    | 33   |  
|                                                  |                                                        |                         |      |      |      |   |      |      |  
|                                                  | Income taxes, net of refunds                           |                         | $    | 2    |      |   | $    | (21  | ) |   | $    | 3    |  
|                                                  |                                                        |                         |      |      |      |   |      |      |  



F-10



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##### Table of Contents






STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS




|        |                      
|------- | ---------------------
|Note 1. | Basis of Presentation













|        |                                
|------- | -------------------------------
|Note 2. | Significant Accounting Policies

Principles of Consolidation.


Cash and Cash Equivalents.


Restricted Cash.


F-11



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


Inventories. (first-in, (first-in,


Loan Loss Reserves.




Assets Held for Sale. break-up


Investments.




F-12



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




Plant, Property and Equipment.




Goodwill and Intangible Assets.


Frequent Guest Program. ®




F-13



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




Legal Contingencies.


Derivative Financial Instruments.






Foreign Currency Translation.


Income Taxes.






F-14



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


Earnings Per Share.


|                                             |  |                         |     |     |        |  |     |       |     |   |          |  |  |        |     |  |       |  |     |          |  |   |        |  |  |       |     |  |  |  |     |  |  |   |      | 
|-------------------------------------------- |  | ----------------------- | --- | --- | ------ |  | --- | ----- | --- | - | -------- |  |  | ------ | --- |  | ----- |  | --- | -------- |  | - | ------ |  |  | ----- | --- |  |  |  | --- |  |  | - | ---- | 
|                                             |  | Year Ended December 31, |    
|                                             |  |                         |    
|                                             |  | 2005                    |     |     | 2004   |  |     | 2003  |    
|                                             |  |                         |     |     |        |  |     |       |    
|                                             |  |                         |     | Per |        |  |     |       | Per |   |          |  |  | Per    |    
|                                             |  | Earnings                |     |     | Shares |  |     | Share |     |   | Earnings |  |  | Shares |     |  | Share |  |     | Earnings |  |   | Shares |  |  | Share |    
|                                             |  |                         |     |     |        |  |     |       |     |   |          |  |  |        |     |  |       |  |     |          |  |   |        |  |  |       |    
|Basic earnings from continuing operations    |  | $                       | 423 |     |        |  | 217 |       |     | $ | 1.95     |  |  | $      | 369 |  |       |  | 207 |          |  | $ | 1.78   |  |  | $     | 105 |  |  |  | 203 |  |  | $ | 0.52 | 
|Effect of dilutive securities:               |  |                         |     |     |        |  |     |       |     |   |          |  |  |        |     |  |       |  |     |          |  |   |        |  |  |       |     |  |  |  |     |  |  |   |      | 
|Employee options and restricted stock awards |  |                         |    |     |        |  | 8   |       |     |   |          |  |  |        |    |  |       |  | 8   |          |  |   |        |  |  |       |    |  |  |  | 4   |  |  |   |      | 
|                                             |  |                         |     |     |        |  |     |       |     |   |          |  |  |        |     |  |       |  |     |          |  |   |        |  |  |       |    
|Diluted earnings from continuing operations  |  | $                       | 423 |     |        |  | 225 |       |     | $ | 1.88     |  |  | $      | 369 |  |       |  | 215 |          |  | $ | 1.72   |  |  | $     | 105 |  |  |  | 207 |  |  | $ | 0.51 | 
|                                             |  |                         |     |     |        |  |     |       |     |   |          |  |  |        |     |  |       |  |     |          |  |   |        |  |  |       |    







Stock-Based Compensation.


F-15



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                                       |            |                          |      |    |      |   |      |      |  |   |      |    | 
|-------------------------------------- | ---------- | ------------------------ | ---- | -- | ---- | - | ---- | ---- |  | - | ---- | -- | 
|                                       |            | Year Ended December 31,  |     
|                                       |            |                          |     
|                                       |            | 2005                     |      |    | 2004 |   |      | 2003 | 
|                                       |            |                          |      |    |      |   |      |      | 
|                                       |            | (In millions, except per |     
|                                       |            | Share data)              |     
|Net income, as reported                |            | $                        | 422  |    |      | $ | 395  |      |  | $ | 309  |   
|Deduct: SFAS No. 123 compensation cost |            |                          | (75  | )  |      |   | (83  | )    |  |   | (75  | ) 
|                                       | Tax effect |                          |      | 25 |      |   |      | 28   |  |   |      | 26 | 
|                                       |            |                          |      |    |      |   |      |      | 
|Proforma net income                    |            | $                        | 372  |    |      | $ | 340  |      |  | $ | 260  |   
|                                       |            |                          |      |    |      |   |      |      | 
|Earnings per Share:                    |            |                          |      |    |      |   |      |      |  |   |      |   
|Basic, as reported                     |            | $                        | 1.95 |    |      | $ | 1.91 |      |  | $ | 1.53 |   
|                                       |            |                          |      |    |      |   |      |      | 
|Basic, proforma                        |            | $                        | 1.72 |    |      | $ | 1.64 |      |  | $ | 1.28 |   
|                                       |            |                          |      |    |      |   |      |      | 
|Diluted, as reported                   |            | $                        | 1.88 |    |      | $ | 1.84 |      |  | $ | 1.50 |   
|                                       |            |                          |      |    |      |   |      |      | 
|Diluted, proforma                      |            | $                        | 1.65 |    |      | $ | 1.59 |      |  | $ | 1.26 |   
|                                       |            |                          |      |    |      |   |      |      | 





|               |           |                   |      |      |  
|-------------- | --------- | ----------------- | ---- | ---- | -
|               |           | Year Ended        |     
|               |           | December 31, 2005 |     
|               |           |                   |     
|Dividend yield |           |                   | 1.80 | %   
|Volatility:    |           |                   |      |     
|               | Near term |                   |      | 25   | %
|               | Long term |                   |      | 40   | %
|Expected life  |           |                   | 6 y  | rs  
|Yield curve:   |           |                   |      |     
|               | 6 month   |                   |      | 2.80 | %
|               | 1 year    |                   |      | 2.98 | %
|               | 3 year    |                   |      | 3.45 | %
|               | 5 year    |                   |      | 3.66 | %
|               | 10 year   |                   |      | 4.08 | %

F-16



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|               |  |              |     |    |      |  |     |   
|-------------- |  | ------------ | --- | -- | ---- |  | --- | --
|               |  | Year Ended   |    
|               |  | December 31, |    
|               |  |              |    
|               |  | 2004         |     |    | 2003 | 
|               |  |              |     |    |      | 
|Dividend Yield |  |              | 2.5 | %  |      |  | 3.1 | % 
|Volatility     |  |              | 42  | %  |      |  | 42  | % 
|Risk-free rate |  |              | 3.2 | %  |      |  | 3.2 | % 
|Expected life  |  |              | 6 y | rs |      |  | 6 y | rs



Revenue Recognition.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Owned, Leased and Consolidated Joint Ventures 
    Represents revenue primarily derived from hotel operations,
    including the rental of rooms and food and beverage sales, from
    owned, leased or consolidated joint venture hotels and resorts.
    Revenue is recognized when rooms are occupied and services have
    been rendered.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Management and Franchise Fees  Represents fees earned
    on hotels managed worldwide, usually under long-term contracts,
    franchise fees received in connection with the franchise of the
    Companys Sheraton, Westin, Four Points by Sheraton, Le
    Méridien, St. Regis, W and Luxury Collection brand names
    and termination fees, offset by payments by the Company under
    performance and other guarantees. Management fees are comprised
    of a base fee, which is generally based on a percentage of gross
    revenues, and an incentive fee, which is generally based on the
    propertys profitability. Base fee revenues are recognized
    when earned in accordance with the terms of the contract. For
    any time during the year, when the provisions of the management
    contracts allow receipt of incentive fees upon termination,
    incentive fees are recognized for the fees due and earned as if
    the contract was terminated at that date, exclusive of any
    termination fees due or payable. Franchise fees are generally
    based on a percentage of hotel room revenues and are recognized
    in accordance with SFAS No. 45, Accounting for
    Franchise Fee Revenue, as the fees are earned and become
    due from the franchisee.
|
| |  | Vacation Ownership and Residential  The Company
    recognizes revenue from VOI and residential sales in accordance
    with SFAS No. 66, Accounting for Sales of Real
    Estate. The Company recognizes sales when a minimum of 10%
    of the purchase price for the VOI or residential deposit has
    been received in cash, the period of cancellation with refund
    has expired and receivables are deemed collectible. For sales
    that do not qualify for full revenue recognition as the project
    has progressed beyond the preliminary stages but has not yet
    reached completion, all revenue and profit are initially
    deferred and recognized in earnings through the
    percentage-of-completion
    method. The Company has also entered into licensing agreements
    with third-party developers to offer consumers branded
    condominiums or residences. The fees from these arrangements are
    generally based on the gross sales revenue of the units sold.                                                                                                                                                                                                                                                                                              
|
| |  | Revenues from Managed and Franchised Properties 
    These revenues represent reimbursements of costs incurred on
    behalf of managed hotel properties and franchisees. These costs
    relate primarily to                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

F-17



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




| |  |                                                                                                                                                                                                                                                                                        
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | payroll costs at managed properties where the Company is the
    employer. Since the reimbursements are made based upon the costs
    incurred with no added margin, these revenues and corresponding
    expenses have no effect on the Companys operating income
    and net income.

Insurance Retention.


Costs Incurred to Sell VOIs.


VOI and Residential Inventory Costs.


Advertising Costs.


Retained Interests.


Use of Estimates.


F-18



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




Reclassifications.


Impact of Recently Issued Accounting Standards.


04-2,




04-8, 04-8




F-19



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)








|        |                
|------- | ---------------
|Note 3. | Restricted Cash





F-20



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|        |                         
|------- | ------------------------
|Note 4. | Significant Acquisitions

Acquisition of Le Méridien.


Recapitalization of the Joint Venture that Owns the
Sheraton Imperial Hotel.


Acquisition of the Remaining Interest in PT Indo-Pacific
Sheraton.


Acquisition of Sheraton Kauai Resort.


Tender Offer to Acquire Partnership Units of Westin Hotels
Limited Partnership.


Acquisition of Bliss World LLC.


F-21



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|        |                                   
|------- | ----------------------------------
|Note 5. | Asset Dispositions and Impairments

10-year






15-year


20-year














F-22



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)






|        |                                           
|------- | ------------------------------------------
|Note 6. | Notes Receivable Securitizations and Sales













F-23



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)
























F-24



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                                    |                             |  |   |      |  
|----------------------------------- | --------------------------- |  | - | ---- | -
|Annual prepayment rate:             |                             |  |   |     
|                                    | 100 basis points-dollars    |  | $ | 0.7  |  
|                                    | 100 basis points-percentage |  |   | 1.1  | %
|                                    | 200 basis points-dollars    |  | $ | 1.4  |  
|                                    | 200 basis points-percentage |  |   | 2.1  | %
|Discount rate:                      |                             |  |   |     
|                                    | 100 basis points-dollars    |  | $ | 1.4  |  
|                                    | 100 basis points-percentage |  |   | 2.2  | %
|                                    | 200 basis points-dollars    |  | $ | 2.8  |  
|                                    | 200 basis points-percentage |  |   | 4.3  | %
|Gross annual rate of credit losses: |                             |  |   |     
|                                    | 100 basis points-dollars    |  | $ | 4.6  |  
|                                    | 100 basis points-percentage |  |   | 7.1  | %
|                                    | 200 basis points-dollars    |  | $ | 9.1  |  
|                                    | 200 basis points-percentage |  |   | 14.0 | %



|        |                              
|------- | -----------------------------
|Note 7. | Assets and Debt Held for Sale

break-up






F-25



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)










|        |                        
|------- | -----------------------
|Note 8. | Discontinued Operations



|                                                    |  |              |    |   |      |   |    |      |  |   |     |  
|--------------------------------------------------- |  | ------------ | -- | - | ---- | - | -- | ---- |  | - | --- | -
|                                                    |  | Year Ended   |   
|                                                    |  | December 31, |   
|                                                    |  |              |   
|                                                    |  | 2005         |    |   | 2004 |   |    | 2003 | 
|                                                    |  |              |    |   |      |   |    |      | 
|Income Statement Data                               |  |              |    |   |      |   |    |      |  |   |     |  
|Revenues                                            |  | $            |   |   |      | $ |   |      |  | $ | 22  |  
|Operating income (loss)                             |  | $            | (2 | ) |      | $ |   |      |  | $ | 5   |  
|Interest expense on debt repaid with sales proceeds |  | $            |   |   |      | $ |   |      |  | $ | 7   |  
|Income tax benefit                                  |  | $            | 1  |   |      | $ |   |      |  | $ |    |  
|Loss from operations, net of tax                    |  | $            | (1 | ) |      | $ |   |      |  | $ | (2  | )
|Gain on disposition, net of tax                     |  | $            |   |   |      | $ | 26 |      |  | $ | 206 |  



F-26



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)








|        |                               
|------- | ------------------------------
|Note 9. | Goodwill and Intangible Assets



|                                  |  |         |       |          |           |   |     |       |  |   |       |  
|--------------------------------- |  | ------- | ----- | -------- | --------- | - | --- | ----- |  | - | ----- | -
|                                  |  |         |       | Vacation |           |   |    
|                                  |  | Hotel   |       |          | Ownership |   |     |      
|                                  |  | Segment |       |          | Segment   |   |     | Total | 
|                                  |  |         |       |          |           |   |     |       | 
|Balance at January 1, 2005        |  | $       | 1,383 |          |           | $ | 241 |       |  | $ | 1,624 |  
|Acquisitions                      |  |         | 193   |          |           |   |    |       |  |   | 193   |  
|Settlement of tax contingency     |  |         | (2    | )        |           |   |    |       |  |   | (2    | )
|Cumulative translation adjustment |  |         | (18   | )        |           |   |    |       |  |   | (18   | )
|Asset dispositions                |  |         | (60   | )        |           |   |    |       |  |   | (60   | )
|                                  |  |         |       |          |           |   |     |       | 
|Balance at December 31, 2005      |  | $       | 1,496 |          |           | $ | 241 |       |  | $ | 1,737 |  
|                                  |  |         |       |          |           |   |     |       | 



|                                    |  |              |     |   |      |   |     |  
|----------------------------------- |  | ------------ | --- | - | ---- | - | --- | -
|                                    |  | December 31, |    
|                                    |  |              |    
|                                    |  | 2005         |     |   | 2004 |  
|                                    |  |              |     |   |      |  
|Trademarks and trade names          |  | $            | 339 |   |      | $ | 232 |  
|Management and franchise agreements |  |              | 220 |   |      |   | 177 |  
|Other                               |  |              | 61  |   |      |   | 64  |  
|                                    |  |              |     |   |      |  
|                                    |  |              | 620 |   |      |   | 473 |  
|Accumulated amortization            |  |              | (94 | ) |      |   | (86 | )
|                                    |  |              |     |   |      |  
|                                    |  | $            | 526 |   |      | $ | 387 |  
|                                    |  |              |     |   |      |  





F-27



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)






|         |             
|-------- | ------------
|Note 10. | Other Assets



Contractual Obligations.




|         |                                                  
|-------- | -------------------------------------------------
|Note 11. | Restructuring and Other Special Charges (Credits)



|                             |                                                           |         |    |    |          |   |              |   |  |              |    |    |  |   |    |    |  
|---------------------------- | --------------------------------------------------------- | ------- | -- | -- | -------- | - | ------------ | - |  | ------------ | -- | -- |  | - | -- | -- | -
|                             |                                                           | Noncash |    |    | Cash     |   | Expenditures |   |  | Total Charge |   
|                             |                                                           | Credits |    |    | Receipts |   | Accrued      |   |  | (Credit)     |   
|                             |                                                           |         |    |    |          |   |              |   |  |              |   
|Year Ended December 31, 2005 |                                                           |         |    |    |          |   |              |   |  |              |    |    |  |   |    |   
|Restructuring charges:       |                                                           |         |    |    |          |   |              |   |  |              |    |    |  |   |    |   
|                             | Severance costs associated with a corporate restructuring |         | $  |   |          |   | $            |  |  |              | $  | 13 |  |   | $  | 13 |  
|                             | Le Méridien transition costs                              |         |    |   |          |   |              |  |  |              |    | 3  |  |   |    | 3  |  
|                             |                                                           |         |    |    |          |   |              |   |  |              |    |   
|Total restructuring charges  |                                                           | $       |   |    |          | $ |             |   |  | $            | 16 |    |  | $ | 16 |   
|                             |                                                           |         |    |    |          |   |              |   |  |              |    |   
|Other special credits:       |                                                           |         |    |    |          |   |              |   |  |              |    |    |  |   |    |   
|                             | Adjustments to ITT merger related reserves                |         | $  | (3 | )        |   | $            |  |  |              | $  |   |  |   | $  | (3 | )
|                             |                                                           |         |    |    |          |   |              |   |  |              |    |   
|Total other special credits  |                                                           | $       | (3 | )  |          | $ |             |   |  | $            |   |    |  | $ | (3 | ) 
|                             |                                                           |         |    |    |          |   |              |   |  |              |    |   

F-28



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


|                                      |                                                                  |         |     |     |          |   |     |              |   |   |              |    |   |   |     |     |  
|------------------------------------- | ---------------------------------------------------------------- | ------- | --- | --- | -------- | - | --- | ------------ | - | - | ------------ | -- | - | - | --- | --- | -
|                                      |                                                                  | Noncash |     |     | Cash     |   |     | Expenditures |   |   | Total Charge |   
|                                      |                                                                  | Credits |     |     | Receipts |   |     | Accrued      |   |   | (Credit)     |   
|                                      |                                                                  |         |     |     |          |   |     |              |   |   |              |   
|Year Ended December 31, 2004          |                                                                  |         |     |     |          |   |     |              |   |   |              |    |   |   |     |    
|Restructuring charges (credits):      |                                                                  |         |     |     |          |   |     |              |   |   |              |    |   |   |     |    
|                                      | Adjustments to liability as a result of benefit plan termination |         | $   |    |          |   | $   |             |   |   | $            |   |   |   | $   |    |  
|                                      |                                                                  |         |     |     |          |   |     |              |   |   |              |   
|Other special credits:                |                                                                  |         |     |     |          |   |     |              |   |   |              |    |   |   |     |    
|                                      | Adjustments from favorable settlement of litigation              |         | $   | (37 | )        |   | $   |             |   |   | $            |   |   |   | $   | (37 | )
|                                      |                                                                  |         |     |     |          |   |     |              |   |   |              |   
|Total other special credits           |                                                                  | $       | (37 | )   |          | $ |    |              |   | $ |             |    |   | $ | (37 | )  
|                                      |                                                                  |         |     |     |          |   |     |              |   |   |              |   
|Year Ended December 31, 2003          |                                                                  |         |     |     |          |   |     |              |   |   |              |    |   |   |     |    
|Restructuring credits:                |                                                                  |         |     |     |          |   |     |              |   |   |              |    |   |   |     |    
|                                      | Adjustments to liability as a result of benefit plan termination |         | $   | (9  | )        |   | $   |             |   |   | $            |   |   |   | $   | (9  | )
|                                      |                                                                  |         |     |     |          |   |     |              |   |   |              |   
|Other special charges (credits):      |                                                                  |         |     |     |          |   |     |              |   |   |              |    |   |   |     |    
|                                      | Proceeds from favorable settlement of litigation                 |         | $   |    |          |   | $   | (12          | ) |   | $            |   |   |   | $   | (12 | )
|                                      | Legal defense costs                                              |         |     |    |          |   |     |             |   |   |              | 13 |   |   |     | 13  |  
|                                      | Adjustments to receivables previously written down               |         |     |    |          |   |     |             |   |   |              | (1 | ) |   |     | (1  | )
|                                      |                                                                  |         |     |     |          |   |     |              |   |   |              |   
|Total other special charges (credits) |                                                                  | $       |    |     |          | $ | (12 | )            |   | $ | 12           |    |   | $ |    |    
|                                      |                                                                  |         |     |     |          |   |     |              |   |   |              |   

2005 Restructuring and Other Special Charges
(Credits).


2004 Other Special Credits.


2003 Restructuring and Other Special Charges
(Credits).


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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|         |                              
|-------- | -----------------------------
|Note 12. | Plant, Property and Equipment



|                                               |  |              |        |   |      |   |        |  
|---------------------------------------------- |  | ------------ | ------ | - | ---- | - | ------ | -
|                                               |  | December 31, |       
|                                               |  |              |       
|                                               |  | 2005         |        |   | 2004 |  
|                                               |  |              |        |   |      |  
|Land and improvements                          |  | $            | 924    |   |      | $ | 921    |  
|Buildings and improvements                     |  |              | 3,479  |   |      |   | 3,757  |  
|Furniture, fixtures and equipment              |  |              | 1,361  |   |      |   | 1,384  |  
|Construction work in process                   |  |              | 116    |   |      |   | 166    |  
|                                               |  |              |        |   |      |  
|                                               |  |              | 5,880  |   |      |   | 6,228  |  
|Less accumulated depreciation and amortization |  |              | (1,924 | ) |      |   | (1,887 | )
|                                               |  |              |        |   |      |  
|                                               |  | $            | 3,956  |   |      | $ | 4,341  |  
|                                               |  |              |        |   |      |  



|         |                 
|-------- | ----------------
|Note 13. | Accrued Expenses





|         |             
|-------- | ------------
|Note 14. | Income Taxes



|                                   |                 |                         |      |     |      |   |     |      |   |   |      |      |  
|---------------------------------- | --------------- | ----------------------- | ---- | --- | ---- | - | --- | ---- | - | - | ---- | ---- | -
|                                   |                 | Year Ended December 31, |     
|                                   |                 |                         |     
|                                   |                 | 2005                    |      |     | 2004 |   |     | 2003 |  
|                                   |                 |                         |      |     |      |   |     |      |  
|Pretax income (loss)               |                 |                         |      |     |      |   |     |      |   |   |      |     
|U.S.                               |                 | $                       | 535  |     |      | $ | 307 |      |   | $ | (64  | )   
|Foreign                            |                 |                         | 107  |     |      |   | 105 |      |   |   | 53   |     
|                                   |                 |                         |      |     |      |   |     |      |  
|                                   |                 | $                       | 642  |     |      | $ | 412 |      |   | $ | (11  | )   
|                                   |                 |                         |      |     |      |   |     |      |  
|Provision (benefit) for income tax |                 |                         |      |     |      |   |     |      |   |   |      |     
|Current:                           |                 |                         |      |     |      |   |     |      |   |   |      |     
|                                   | U.S. federal    |                         | $    | 258 |      |   | $   | (33  | ) |   | $    | 1    |  
|                                   | State and local |                         |      | 14  |      |   |     | 6    |   |   |      | 4    |  
|                                   | Foreign         |                         |      | 57  |      |   |     | 39   |   |   |      | 48   |  
|                                   |                 |                         |      |     |      |   |     |      |  
|                                   |                 |                         | 329  |     |      |   | 12  |      |   |   | 53   |     
|                                   |                 |                         |      |     |      |   |     |      |  
|Deferred:                          |                 |                         |      |     |      |   |     |      |   |   |      |     
|                                   | U.S. federal    |                         |      | (19 | )    |   |     | 32   |   |   |      | (108 | )
|                                   | State and local |                         |      | (60 | )    |   |     | (7   | ) |   |      | (14  | )
|                                   | Foreign         |                         |      | (31 | )    |   |     | 6    |   |   |      | (44  | )
|                                   |                 |                         |      |     |      |   |     |      |  
|                                   |                 |                         | (110 | )   |      |   | 31  |      |   |   | (166 | )   
|                                   |                 |                         |      |     |      |   |     |      |  
|                                   |                 | $                       | 219  |     |      | $ | 43  |      |   | $ | (113 | )   
|                                   |                 |                         |      |     |      |   |     |      |  

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)








|                                                    |  |              |      |   |      |   |      |  
|--------------------------------------------------- |  | ------------ | ---- | - | ---- | - | ---- | -
|                                                    |  | December 31, |     
|                                                    |  |              |     
|                                                    |  | 2005         |      |   | 2004 |  
|                                                    |  |              |      |   |      |  
|Plant, property and equipment                       |  | $            | (448 | ) |      | $ | (546 | )
|Intangibles                                         |  |              | (158 | ) |      |   | (157 | )
|Allowances for doubtful accounts and other reserves |  |              | 139  |   |      |   | 125  |  
|Employee benefits                                   |  |              | 51   |   |      |   | 53   |  
|Deferred gain on ITT World Directories disposition  |  |              |     |   |      |   | (551 | )
|Net operating loss and tax credit carryforwards     |  |              | 173  |   |      |   | 510  |  
|Deferred income                                     |  |              | (154 | ) |      |   | (134 | )
|Other                                               |  |              | (40  | ) |      |   | (62  | )
|                                                    |  |              |      |   |      |  
|                                                    |  |              | (437 | ) |      |   | (762 | )
|Less valuation allowance                            |  |              | (125 | ) |      |   | (118 | )
|                                                    |  |              |      |   |      |  
|Deferred income taxes                               |  | $            | (562 | ) |      | $ | (880 | )
|                                                    |  |              |      |   |      |  





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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)






|                                                                                         |  |                         |     |   |      |   |     |      |  |   |      |  
|---------------------------------------------------------------------------------------- |  | ----------------------- | --- | - | ---- | - | --- | ---- |  | - | ---- | -
|                                                                                         |  | Year Ended December 31, |    
|                                                                                         |  |                         |    
|                                                                                         |  | 2005                    |     |   | 2004 |   |     | 2003 | 
|                                                                                         |  |                         |     |   |      |   |     |      | 
|Tax provision (benefit) at U.S. statutory rate                                           |  | $                       | 225 |   |      | $ | 144 |      |  | $ | (4   | )
|U.S. state and local income taxes                                                        |  |                         | (14 | ) |      |   | (37 | )    |  |   | (6   | )
|Exempt Trust income                                                                      |  |                         | (64 | ) |      |   | (62 | )    |  |   | (60  | )
|Tax on repatriation of foreign earnings                                                  |  |                         | 11  |   |      |   | 13  |      |  |   | 12   |  
|Tax on repatriation of foreign earnings under the American Jobs
    Creation Act of 2004 |  |                         | 47  |   |      |   |    |      |  |   |     |  
|Foreign tax rate differential                                                            |  |                         | (28 | ) |      |   | (6  | )    |  |   | (1   | )
|Change in tax law and regulations                                                        |  |                         |    |   |      |   | (15 | )    |  |   |     |  
|Deferred gain on ITT World Directories disposition                                       |  |                         | 52  |   |      |   |    |      |  |   |     |  
|Tax settlements                                                                          |  |                         | (8  | ) |      |   | (15 | )    |  |   | (36  | )
|Basis difference on asset sales                                                          |  |                         |    |   |      |   |    |      |  |   | (5   | )
|Change in valuation allowance                                                            |  |                         | 7   |   |      |   | 24  |      |  |   | (13  | )
|Other                                                                                    |  |                         | (9  | ) |      |   | (3  | )    |  |   |     |  
|                                                                                         |  |                         |     |   |      |   |     |      | 
|Provision for income tax (benefit)                                                       |  | $                       | 219 |   |      | $ | 43  |      |  | $ | (113 | )
|                                                                                         |  |                         |     |   |      |   |     |      | 

1993-1995






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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)






|         |     
|-------- | ----
|Note 15. | Debt



|                                                                                                    |                                                                                                                                      |              |        |     |      |   |       |     | 
|--------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------ | ------------ | ------ | --- | ---- | - | ----- | --- | 
|                                                                                                    |                                                                                                                                      | December 31, |       
|                                                                                                    |                                                                                                                                      |              |       
|                                                                                                    |                                                                                                                                      | 2005         |        |     | 2004 |  
|                                                                                                    |                                                                                                                                      |              |        |     |      |  
|Senior Credit Facility:                                                                             |                                                                                                                                      |              |        |     |      |   |       |    
|                                                                                                    | Term loan, interest at LIBOR + 1.25% (5.64% at December 31,
    2005) maturing through 2006                                          |              | $      | 450 |      |   | $     | 550 | 
|                                                                                                    | Revolving Credit Facility, interest at Canadian Bankers
    Acceptance rate + 1.25% (4.57% at December 31,
    2005), maturing 2006 |              |        | 11  |      |   |       | 11  | 
|Senior Notes interest rates of 7.375% and 7.875%, maturing 2007
    and 2012                        |                                                                                                                                      |              | 1,494  |     |      |   | 1,514 |    
|Sheraton Holding public debt, interest rates ranging from 6.75%
    to 7.75%, maturing through 2025 |                                                                                                                                      |              | 597    |     |      |   | 1,058 |    
|Convertible Debt                                                                                    |                                                                                                                                      |              | 360    |     |      |   | 360   |    
|Mortgages and other, interest rates ranging from 1.95% to 9.21%,
    various maturities             |                                                                                                                                      |              | 1,233  |     |      |   | 949   |    
|                                                                                                    |                                                                                                                                      |              |        |     |      |  
|                                                                                                    |                                                                                                                                      |              | 4,145  |     |      |   | 4,442 |    
|Less current maturities                                                                             |                                                                                                                                      |              | (1,219 | )   |      |   | (590  | )  
|Less current maturities of long-term debt held for sale                                             |                                                                                                                                      |              |       |     |      |   | (29   | )  
|Less long-term debt held for sale                                                                   |                                                                                                                                      |              | (552   | )   |      |   | (526  | )  
|                                                                                                    |                                                                                                                                      |              |        |     |      |  
|Long-term debt                                                                                      |                                                                                                                                      | $            | 2,374  |     |      | $ | 3,297 |    
|                                                                                                    |                                                                                                                                      |              |        |     |      |  



|           |  |   |       | 
|---------- |  | - | ----- | 
|2006       |  | $ | 1,219 | 
|2007       |  |   | 825   | 
|2008       |  |   | 26    | 
|2009       |  |   | 471   | 
|2010       |  |   | 10    | 
|Thereafter |  |   | 1,594 | 
|           |  |   |      
|           |  | $ | 4,145 | 
|           |  |   |      



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AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)














F-34



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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)






non-U.S.






|         |                       
|-------- | ----------------------
|Note 16. | Employee Benefit Plans

Defined Benefit and Postretirement Benefit Plans. non-U.S.








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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                                                                                                           |                                               |          |     |     |                 |   |     |                |   |   |      |     |   |      |     |     |      |   |     |     |   |   |     |     |  
|---------------------------------------------------------------------------------------------------------- | --------------------------------------------- | -------- | --- | --- | --------------- | - | --- | -------------- | - | - | ---- | --- | - | ---- | --- | --- | ---- | - | --- | --- | - | - | --- | --- | -
|                                                                                                           |                                               | Pension  |     |     | Foreign Pension |   |     | Postretirement |  
|                                                                                                           |                                               | Benefits |     |     | Benefits        |   |     | Benefits       |  
|                                                                                                           |                                               |          |     |     |                 |   |     |                |  
|                                                                                                           |                                               | 2005     |     |     | 2004            |   |     | 2005           |   |   | 2004 |     |   | 2005 |     |     | 2004 |  
|                                                                                                           |                                               |          |     |     |                 |   |     |                |   |   |      |     |   |      |     |     |      |  
|Change in Benefit Obligation                                                                               |                                               |          |     |     |                 |   |     |                |   |   |      |     |   |      |     |     |      |   |     |     |   |   |     |    
|Benefit obligation at beginning of year                                                                    |                                               | $        | 16  |     |                 | $ | 20  |                |   | $ | 156  |     |   | $    | 134 |     |      | $ | 27  |     |   | $ | 31  |    
|                                                                                                           | Service cost                                  |          |     |    |                 |   |     |               |   |   |      | 4   |   |      |     | 4   |      |   |     |    |   |   |     |    |  
|                                                                                                           | Interest cost                                 |          |     | 1   |                 |   |     | 1              |   |   |      | 8   |   |      |     | 8   |      |   |     | 1   |   |   |     | 2   |  
|                                                                                                           | Actuarial loss (gain)                         |          |     |    |                 |   |     | 1              |   |   |      | 13  |   |      |     | 9   |      |   |     | (3  | ) |   |     | (3  | )
|                                                                                                           | Acquisitions                                  |          |     |    |                 |   |     |               |   |   |      | 26  |   |      |     |    |      |   |     |    |   |   |     |    |  
|                                                                                                           | Settlements                                   |          |     |    |                 |   |     | (1             | ) |   |      | (7  | ) |      |     |    |      |   |     |    |   |   |     |    |  
|                                                                                                           | Annuity purchase                              |          |     |    |                 |   |     | (4             | ) |   |      |    |   |      |     |    |      |   |     |    |   |   |     |    |  
|                                                                                                           | Effect of foreign exchange rates              |          |     |    |                 |   |     |               |   |   |      | (8  | ) |      |     | 6   |      |   |     |    |   |   |     |    |  
|                                                                                                           | Benefits paid                                 |          |     | (1  | )               |   |     | (1             | ) |   |      | (5  | ) |      |     | (5  | )    |   |     | (2  | ) |   |     | (3  | )
|                                                                                                           |                                               |          |     |     |                 |   |     |                |   |   |      |     |   |      |     |     |      |  
|Benefit obligation at end of year                                                                          |                                               | $        | 16  |     |                 | $ | 16  |                |   | $ | 187  |     |   | $    | 156 |     |      | $ | 23  |     |   | $ | 27  |    
|                                                                                                           |                                               |          |     |     |                 |   |     |                |   |   |      |     |   |      |     |     |      |  
|Change in Plan Assets                                                                                      |                                               |          |     |     |                 |   |     |                |   |   |      |     |   |      |     |     |      |   |     |     |   |   |     |    
|Fair value of plan assets at beginning of year                                                             |                                               | $        |    |     |                 | $ | 5   |                |   | $ | 110  |     |   | $    | 97  |     |      | $ | 11  |     |   | $ | 13  |    
|                                                                                                           | Actual return on plan assets, net of expenses |          |     |    |                 |   |     |               |   |   |      | 12  |   |      |     | 9   |      |   |     |    |   |   |     | 1   |  
|                                                                                                           | Reimbursement of benefit payments             |          |     |    |                 |   |     |               |   |   |      |    |   |      |     |    |      |   |     | (2  | ) |   |     | (3  | )
|                                                                                                           | Employer contribution                         |          |     | 1   |                 |   |     | 1              |   |   |      | 6   |   |      |     | 5   |      |   |     | 3   |   |   |     | 3   |  
|                                                                                                           | Acquisitions                                  |          |     |    |                 |   |     |               |   |   |      | 19  |   |      |     |    |      |   |     |    |   |   |     |    |  
|                                                                                                           | Settlements                                   |          |     |    |                 |   |     | (1             | ) |   |      | (7  | ) |      |     |    |      |   |     |    |   |   |     |    |  
|                                                                                                           | Annuity purchase                              |          |     |    |                 |   |     | (4             | ) |   |      |    |   |      |     |    |      |   |     |    |   |   |     |    |  
|                                                                                                           | Effect of foreign exchange rates              |          |     |    |                 |   |     |               |   |   |      | (6  | ) |      |     | 4   |      |   |     |    |   |   |     |    |  
|                                                                                                           | Benefits paid                                 |          |     | (1  | )               |   |     | (1             | ) |   |      | (5  | ) |      |     | (5  | )    |   |     | (3  | ) |   |     | (3  | )
|                                                                                                           |                                               |          |     |     |                 |   |     |                |   |   |      |     |   |      |     |     |      |  
|Fair value of plan assets at end of year                                                                   |                                               | $        |    |     |                 | $ |    |                |   | $ | 129  |     |   | $    | 110 |     |      | $ | 9   |     |   | $ | 11  |    
|                                                                                                           |                                               |          |     |     |                 |   |     |                |   |   |      |     |   |      |     |     |      |  
|Funded status                                                                                              |                                               | $        | (16 | )   |                 | $ | (16 | )              |   | $ | (58  | )   |   | $    | (46 | )   |      | $ | (14 | )   |   | $ | (16 | )  
|                                                                                                           | Unrecognized net actuarial loss (gain)        |          |     | 2   |                 |   |     | 2              |   |   |      | 60  |   |      |     | 58  |      |   |     | (3  | ) |   |     | (1  | )
|                                                                                                           | Unrecognized prior service cost               |          |     |    |                 |   |     |               |   |   |      | (2  | ) |      |     | (3  | )    |   |     |    |   |   |     |    |  
|                                                                                                           |                                               |          |     |     |                 |   |     |                |   |   |      |     |   |      |     |     |      |  
|Net amount recognized at end of year                                                                       |                                               | $        | (14 | )   |                 | $ | (14 | )              |   | $ |     |     |   | $    | 9   |     |      | $ | (17 | )   |   | $ | (17 | )  
|                                                                                                           |                                               |          |     |     |                 |   |     |                |   |   |      |     |   |      |     |     |      |  
|Amounts recognized in the consolidated balance sheets consist of:                                          |                                               |          |     |     |                 |   |     |                |   |   |      |     |   |      |     |     |      |   |     |     |   |   |     |    
|                                                                                                           | Accrued benefit cost                          |          | $   | (18 | )               |   | $   | (18            | ) |   | $    | (39 | ) |      | $   | (19 | )    |   | $   | (17 | ) |   | $   | (17 | )
|                                                                                                           | Accumulated other comprehensive income        |          |     | 4   |                 |   |     | 4              |   |   |      | 39  |   |      |     | 28  |      |   |     | N/A |   |   |     | N/A |  
|                                                                                                           |                                               |          |     |     |                 |   |     |                |   |   |      |     |   |      |     |     |      |  
|Net amount recognized at end of year                                                                       |                                               | $        | (14 | )   |                 | $ | (14 | )              |   | $ |     |     |   | $    | 9   |     |      | $ | (17 | )   |   | $ | (17 | )  
|                                                                                                           |                                               |          |     |     |                 |   |     |                |   |   |      |     |   |      |     |     |      |  
|Increase (decrease) in additional minimum liability included in
    accumulated other comprehensive income |                                               | $        |    |     |                 | $ | 2   |                |   | $ | 11   |     |   | $    | 2   |     |      |   | N/A |     |   |   | N/A |    
|                                                                                                           |                                               |          |     |     |                 |   |     |                |   |   |      |     |   |      |     |     |      |  

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)






|                                      |  |                  |   |  |                          |                |    |          |  |   |      |   |  |      |    |   |      |   |    |      |  |   |      |   |  |      |    |   |  |   |    |   |  |   |    |  
|------------------------------------- |  | ---------------- | - |  | ------------------------ | -------------- | -- | -------- |  | - | ---- | - |  | ---- | -- | - | ---- | - | -- | ---- |  | - | ---- | - |  | ---- | -- | - |  | - | -- | - |  | - | -- | -
|                                      |  |                  |   |  |                          | Postretirement |   
|                                      |  | Pension Benefits |   |  | Foreign Pension Benefits |                |    | Benefits | 
|                                      |  |                  |   |  |                          |                |    |          | 
|                                      |  | 2005             |   |  | 2004                     |                |    | 2003     |  |   | 2005 |   |  | 2004 |    |   | 2003 |   |    | 2005 |  |   | 2004 |   |  | 2003 |   
|                                      |  |                  |   |  |                          |                |    |          |  |   |      |   |  |      |    |   |      |   |    |      |  |   |      |   |  |      |   
|Service cost                          |  | $                |  |  |                          | $              |   |          |  | $ |     |   |  | $    | 4  |   |      | $ | 4  |      |  | $ | 4    |   |  | $    |   |   |  | $ |   |   |  | $ |   |  
|Interest cost                         |  |                  | 1 |  |                          |                | 1  |          |  |   | 2    |   |  |      | 8  |   |      |   | 8  |      |  |   | 7    |   |  |      | 1  |   |  |   | 2  |   |  |   | 2  |  
|Expected return on plan assets        |  |                  |  |  |                          |                |   |          |  |   | (1   | ) |  |      | (8 | ) |      |   | (8 | )    |  |   | (7   | ) |  |      | (1 | ) |  |   | (1 | ) |  |   | (1 | )
|Amortization of actuarial loss (gain) |  |                  |  |  |                          |                |   |          |  |   |     |   |  |      | 3  |   |      |   | 3  |      |  |   | 2    |   |  |      |   |   |  |   |   |   |  |   |   |  
|                                      |  |                  |   |  |                          |                |    |          |  |   |      |   |  |      |    |   |      |   |    |      |  |   |      |   |  |      |   
|SFAS No. 87 cost/ SFAS No. 106 cost   |  |                  | 1 |  |                          |                | 1  |          |  |   | 1    |   |  |      | 7  |   |      |   | 7  |      |  |   | 6    |   |  |      |   |   |  |   | 1  |   |  |   | 1  |  
|                                      |  |                  |   |  |                          |                |    |          |  |   |      |   |  |      |    |   |      |   |    |      |  |   |      |   |  |      |   
|SFAS No. 88 settlement gain           |  |                  |  |  |                          |                | (2 | )        |  |   | (5   | ) |  |      |   |   |      |   |   |      |  |   |     |   |  |      |   |   |  |   |   |   |  |   |   |  
|                                      |  |                  |   |  |                          |                |    |          |  |   |      |   |  |      |    |   |      |   |    |      |  |   |      |   |  |      |   
|Net periodic benefit cost (income)    |  | $                | 1 |  |                          | $              | (1 | )        |  | $ | (4   | ) |  | $    | 7  |   |      | $ | 7  |      |  | $ | 6    |   |  | $    |   |   |  | $ | 1  |   |  | $ | 1  |  
|                                      |  |                  |   |  |                          |                |    |          |  |   |      |   |  |      |    |   |      |   |    |      |  |   |      |   |  |      |   





|                              |  |          |      |   |                 |  |      |                |  |  |      |   |  |      |      |   |      |  |      |   |  |  |      |  
|----------------------------- |  | -------- | ---- | - | --------------- |  | ---- | -------------- |  |  | ---- | - |  | ---- | ---- | - | ---- |  | ---- | - |  |  | ---- | -
|                              |  | Pension  |      |   | Foreign Pension |  |      | Postretirement | 
|                              |  | Benefits |      |   | Benefits        |  |      | Benefits       | 
|                              |  |          |      |   |                 |  |      |                | 
|                              |  | 2005     |      |   | 2004            |  |      | 2005           |  |  | 2004 |   |  | 2005 |      |   | 2004 | 
|                              |  |          |      |   |                 |  |      |                |  |  |      |   |  |      |      |   |      | 
|Discount rate                 |  |          | 5.50 | % |                 |  | 5.51 | %              |  |  | 5.09 | % |  |      | 5.49 | % |      |  | 5.49 | % |  |  | 5.50 | %
|Rate of compensation increase |  |          | N/A  |   |                 |  | N/A  |                |  |  | 3.60 | % |  |      | 3.63 | % |      |  | N/A  |   |  |  | N/A  |  



|                               |  |                  |      |                 |          |  |      |                         |  |  |      |   |  |      |      |   |      |  |      |      |  |  |      |   |  |      |      |   |  |  |      |   |  |  |      |  
|------------------------------ |  | ---------------- | ---- | --------------- | -------- |  | ---- | ----------------------- |  |  | ---- | - |  | ---- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | - |  | ---- | ---- | - |  |  | ---- | - |  |  | ---- | -
|                               |  |                  |      | Foreign Pension |          |  |     
|                               |  | Pension Benefits |      |                 | Benefits |  |      | Postretirement Benefits | 
|                               |  |                  |      |                 |          |  |      |                         | 
|                               |  | 2005             |      |                 | 2004     |  |      | 2003                    |  |  | 2005 |   |  | 2004 |      |   | 2003 |  |      | 2005 |  |  | 2004 |   |  | 2003 |     
|                               |  |                  |      |                 |          |  |      |                         |  |  |      |   |  |      |      |   |      |  |      |      |  |  |      |   |  |      |     
|Discount rate                  |  |                  | 5.51 | %               |          |  | 5.99 | %                       |  |  | 5.86 | % |  |      | 5.49 | % |      |  | 5.87 | %    |  |  | 6.09 | % |  |      | 5.50 | % |  |  | 6.25 | % |  |  | 6.75 | %
|Rate of compensation increase  |  |                  | N/A  |                 |          |  | N/A  |                         |  |  | N/A  |   |  |      | 3.62 | % |      |  | 3.74 | %    |  |  | 3.96 | % |  |      | N/A  |   |  |  | N/A  |   |  |  | N/A  |  
|Expected return on plan assets |  |                  | N/A  |                 |          |  | 6.00 | %                       |  |  | 6.00 | % |  |      | 7.10 | % |      |  | 7.02 | %    |  |  | 7.37 | % |  |      | 8.00 | % |  |  | 8.00 | % |  |  | 8.75 | %



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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                  |  |                  |     |      |                          |  |      |                         |  |  |               |      |  |            |      |   |               |  |     |      |  |  |      |   |  |  |     |   |  |  |     |   |  |  |     |  
|----------------- |  | ---------------- | --- | ---- | ------------------------ |  | ---- | ----------------------- |  |  | ------------- | ---- |  | ---------- | ---- | - | ------------- |  | --- | ---- |  |  | ---- | - |  |  | --- | - |  |  | --- | - |  |  | --- | -
|                  |  | Pension Benefits |     |      | Foreign Pension Benefits |  |      | Postretirement Benefits | 
|                  |  |                  |     |      |                          |  |      |                         | 
|                  |  | Target           |     |      | Percentage of            |  |      | Target                  |  |  | Percentage of |      |  | Target     |      |   | Percentage of | 
|                  |  | Allocation       |     |      | Plan Assets              |  |      | Allocation              |  |  | Plan Assets   |      |  | Allocation |      |   | Plan Assets   | 
|                  |  |                  |     |      |                          |  |      |                         |  |  |               |      |  |            |      |   |               | 
|                  |  |                  |     | 2005 |                          |  | 2004 |                         |  |  |               | 2005 |  |            | 2004 |   |               |  |     | 2005 |  |  | 2004 |  
|                  |  |                  |     |      |                          |  |      |                         |  |  |               |      |  |            |      |   |               |  |     |      |  |  |      |  
|Equity securities |  |                  | N/A |      |                          |  | N/A  |                         |  |  | N/A           |      |  |            | 59   | % |               |  | 64  | %    |  |  | 66   | % |  |  | 60  | % |  |  | 67  | % |  |  | 63  | %
|Debt securities   |  |                  | N/A |      |                          |  | N/A  |                         |  |  | N/A           |      |  |            | 40   | % |               |  | 32  | %    |  |  | 29   | % |  |  | 40  | % |  |  | 33  | % |  |  | 35  | %
|Cash and other    |  |                  | N/A |      |                          |  | N/A  |                         |  |  | N/A           |      |  |            | 1    | % |               |  | 4   | %    |  |  | 5    | % |  |  | 0   | % |  |  | 0   | % |  |  | 2   | %
|                  |  |                  |     |      |                          |  |      |                         |  |  |               |      |  |            |      |   |               |  |     |      |  |  |      |   |  |  |    
|                  |  |                  |     |      |                          |  |      |                         |  |  |               |      |  |            | 100  | % |               |  | 100 | %    |  |  | 100  | % |  |  | 100 | % |  |  | 100 | % |  |  | 100 | %
|                  |  |                  |     |      |                          |  |      |                         |  |  |               |      |  |            |      |   |               |  |     |      |  |  |      |   |  |  |    





|            |  |          |   |  |                 |   |    |                |  |   |   | 
|----------- |  | -------- | - |  | --------------- | - | -- | -------------- |  | - | - | 
|            |  | Pension  |   |  | Foreign Pension |   |    | Postretirement | 
|            |  | Benefits |   |  | Benefits        |   |    | Benefits       | 
|            |  |          |   |  |                 |   |    |                | 
|2006        |  | $        | 1 |  |                 | $ | 7  |                |  | $ | 2 | 
|2007        |  | $        | 1 |  |                 | $ | 7  |                |  | $ | 2 | 
|2008        |  | $        | 1 |  |                 | $ | 7  |                |  | $ | 2 | 
|2009        |  | $        | 1 |  |                 | $ | 8  |                |  | $ | 2 | 
|2010        |  | $        | 1 |  |                 | $ | 8  |                |  | $ | 1 | 
|2011 - 2015 |  | $        | 6 |  |                 | $ | 52 |                |  | $ | 5 | 

Defined Contribution Plans.


Multi-Employer Pension Plans.




|         |                   
|-------- | ------------------
|Note 17. | Leases and Rentals



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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


25-year






|           |  |   |     | 
|---------- |  | - | --- | 
|2006       |  | $ | 78  | 
|2007       |  | $ | 71  | 
|2008       |  | $ | 69  | 
|2009       |  | $ | 65  | 
|2010       |  | $ | 60  | 
|Thereafter |  | $ | 799 | 







|     |  |   |     | 
|---- |  | - | --- | 
|2006 |  | $ | 224 | 
|2007 |  | $ | 93  | 



|         |                     
|-------- | --------------------
|Note 18. | Stockholders Equity

Share Repurchases.


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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




Exchangeable Preferred Shares.






|         |                      
|-------- | ---------------------
|Note 19. | Stock Incentive Plans



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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                                 |           |         |            |                           |                 |   |       |       | 
|-------------------------------- | --------- | ------- | ---------- | ------------------------- | --------------- | - | ----- | ----- | 
|                                 |           |         |            | Weighted Average Exercise |                
|                                 |           | Options |            |                           | Price Per Share |  
|                                 |           |         |            |                           |                 |  
|Outstanding at December 31, 2002 |           |         | 44,807,314 |                           |                 | $ | 32.22 |      
|                                 | Granted   |         |            | 682,596                   |                 |   |       | 26.01 | 
|                                 | Exercised |         |            | (2,336,980                | )               |   |       | 23.59 | 
|                                 | Forfeited |         |            | (3,851,559                | )               |   |       | 38.97 | 
|                                 |           |         |            |                           |                 |  
|Outstanding at December 31, 2003 |           |         | 39,301,371 |                           |                 |   | 32.01 |      
|                                 | Granted   |         |            | 8,724,616                 |                 |   |       | 39.18 | 
|                                 | Exercised |         |            | (13,209,744               | )               |   |       | 28.73 | 
|                                 | Forfeited |         |            | (1,428,237                | )               |   |       | 36.90 | 
|                                 |           |         |            |                           |                 |  
|Outstanding at December 31, 2004 |           |         | 33,388,006 |                           |                 |   | 34.98 |      
|                                 | Granted   |         |            | 4,486,017                 |                 |   |       | 59.14 | 
|                                 | Exercised |         |            | (11,070,392               | )               |   |       | 36.63 | 
|                                 | Forfeited |         |            | (1,890,028                | )               |   |       | 41.57 | 
|                                 |           |         |            |                           |                 |  
|Outstanding at December 31, 2005 |           |         | 24,913,603 |                           |                 | $ | 38.09 |      
|                                 |           |         |            |                           |                 |  
|Exercisable at December 31, 2005 |           |         | 13,690,925 |                           |                 | $ | 33.42 |      
|                                 |           |         |            |                           |                 |  



|                         |  |                     |            |                  |                     |  |                  |             |  |   |             |                  |  |             |            |  |  |   |       | 
|------------------------ |  | ------------------- | ---------- | ---------------- | ------------------- |  | ---------------- | ----------- |  | - | ----------- | ---------------- |  | ----------- | ---------- |  |  | - | ----- | 
|                         |  | Options Outstanding |            |                  | Options Exercisable | 
|                         |  |                     |            |                  |                     | 
|                         |  |                     |            | Weighted Average |                     |  |                  |             | 
|                         |  |                     |            | Remaining        |                     |  | Weighted Average |             |  |   |             | Weighted Average | 
|                         |  | Number              |            |                  | Contractual Life    |  |                  | Exercise    |  |   | Number      |                  |  | Exercise    |           
|Range of Exercise Prices |  | Outstanding         |            |                  | in Years            |  |                  | Price/Share |  |   | Exercisable |                  |  | Price/Share |           
|                         |  |                     |            |                  |                     |  |                  |             |  |   |             |                  |  |             |           
|$15.00  $23.92          |  |                     | 2,403,716  |                  |                     |  | 3.43             |             |  | $ | 22.27       |                  |  |             | 2,293,760  |  |  | $ | 22.24 | 
|$24.00  $24.25          |  |                     | 1,884,564  |                  |                     |  | 3.24             |             |  | $ | 24.00       |                  |  |             | 1,882,495  |  |  | $ | 24.00 | 
|$24.88  $24.88          |  |                     | 3,688,001  |                  |                     |  | 4.98             |             |  | $ | 24.88       |                  |  |             | 2,388,479  |  |  | $ | 24.88 | 
|$25.16  $36.54          |  |                     | 3,530,428  |                  |                     |  | 5.65             |             |  | $ | 34.45       |                  |  |             | 2,209,014  |  |  | $ | 34.45 | 
|$37.25  $38.50          |  |                     | 1,589,644  |                  |                     |  | 5.13             |             |  | $ | 37.81       |                  |  |             | 1,528,616  |  |  | $ | 37.83 | 
|$38.75  $38.75          |  |                     | 4,637,633  |                  |                     |  | 6.13             |             |  | $ | 38.75       |                  |  |             | 612,001    |  |  | $ | 38.75 | 
|$38.76  $54.85          |  |                     | 3,244,588  |                  |                     |  | 3.55             |             |  | $ | 50.65       |                  |  |             | 2,705,302  |  |  | $ | 51.76 | 
|$56.53  $63.31          |  |                     | 3,935,029  |                  |                     |  | 7.95             |             |  | $ | 59.15       |                  |  |             | 71,258     |  |  | $ | 59.03 | 
|                         |  |                     |            |                  |                     |  |                  |             |  |   |             |                  |  |             |           
|Total/ Average           |  |                     | 24,913,603 |                  |                     |  | 5.30             |             |  | $ | 38.09       |                  |  |             | 13,690,925 |  |  | $ | 33.42 | 
|                         |  |                     |            |                  |                     |  |                  |             |  |   |             |                  |  |             |           





| |                                  
| | ---------------------------------
| | 2002 Employee Stock Purchase Plan



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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)










|         |                                 
|-------- | --------------------------------
|Note 20. | Derivative Financial Instruments











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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)








|         |                           
|-------- | --------------------------
|Note 21. | Related Party Transactions







|         |                              
|-------- | -----------------------------
|Note 22. | Commitments and Contingencies



|                                          |  |       |     |             |             |   |        |           |  |        |           |  |           |         |    |  |  |   |   | 
|----------------------------------------- |  | ----- | --- | ----------- | ----------- | - | ------ | --------- |  | ------ | --------- |  | --------- | ------- | -- |  |  | - | - | 
|                                          |  |       |     | Due in Less |             |   | Due in |           |  | Due in |           |  | Due After |        
|                                          |  | Total |     |             | Than 1 Year |   |        | 1-3 Years |  |        | 3-5 Years |  |           | 5 Years |   
|                                          |  |       |     |             |             |   |        |           |  |        |           |  |           |         |   
|Unconditional purchase
    obligations(a) |  | $     | 135 |             |             | $ | 45     |           |  | $      | 57        |  |           | $       | 25 |  |  | $ | 8 | 
|Other long-term obligations               |  |       |    |             |             |   |       |           |  |        |          |  |           |         |   |  |  |   |  | 
|                                          |  |       |     |             |             |   |        |           |  |        |           |  |           |         |   
|Total contractual obligations             |  | $     | 135 |             |             | $ | 45     |           |  | $      | 57        |  |           | $       | 25 |  |  | $ | 8 | 
|                                          |  |       |     |             |             |   |        |           |  |        |           |  |           |         |   






|    |                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------
|(a) | Included in these balances are commitments that may be satisfied
    by the Companys managed and franchised properties.

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                             |  |       |     |                                            |        |   |     |           |       |   |           |  |         |   |   |  |  |   |   | 
|---------------------------- |  | ----- | --- | ------------------------------------------ | ------ | - | --- | --------- | ----- | - | --------- |  | ------- | - | - |  |  | - | - | 
|                             |  |       |     | Amount of Commitment Expiration Per Period
|                             |  |       |     |                                           
|                             |  |       |     | Less Than                                  |        |   |     |           | After
|                             |  | Total |     |                                            | 1 Year |   |     | 1-3 Years |       |   | 3-5 Years |  | 5 Years
|                             |  |       |     |                                            |        |   |     |           |       |   |           |  |        
|Standby letters of credit    |  | $     | 129 |                                            |        | $ | 129 |           |       | $ |          |  |         | $ |  |  |  | $ |  | 
|Hotel loan
    guarantees(1) |  |       | 47  |                                            |        |   | 4   |           |       |   | 43        |  |         |   |  |  |  |   |  | 
|Other commercial commitments |  |       |    |                                            |        |   |    |           |       |   |          |  |         |   |  |  |  |   |  | 
|                             |  |       |     |                                            |        |   |     |           |       |   |           |  |         |   |  
|Total commercial commitments |  | $     | 176 |                                            |        | $ | 133 |           |       | $ | 43        |  |         | $ |  |  |  | $ |  | 
|                             |  |       |     |                                            |        |   |     |           |       |   |           |  |         |   |  






|    |                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------
|(1) | Excludes fair value of guarantees which are reflected in the
    Companys consolidated balance sheet.

Guaranteed Loans and Commitments.








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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)






Litigation.




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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)








| |                                           
| | ------------------------------------------
| | (a) that no breach had been committed; and



| |     |                                                                                                                                                                                                                                                                           
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | that even if a breach had been committed, it was merely
    technical, that is as AHIL was unsuccessful in acquiring the
    majority stake in the hotel, AHILs loss, if any, was not
    caused by Starwood, but by its own inability to consummate the
    acquisition.









Environmental Matters.


Captive Insurance Company.


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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


ITT Industries.






|         |                                              
|-------- | ---------------------------------------------
|Note 23. | Business Segment and Geographical Information

® ® ® ® ® ® ®




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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                                                                                |                                    |      |      |        |      |   |      |        |  |   |      |        | 
|------------------------------------------------------------------------------- | ---------------------------------- | ---- | ---- | ------ | ---- | - | ---- | ------ |  | - | ---- | ------ | 
|                                                                                |                                    | 2005 |      |        | 2004 |   |      | 2003   | 
|                                                                                |                                    |      |      |        |      |   |      |        | 
|Revenues:                                                                       |                                    |      |      |        |      |   |      |        |  |   |      |       
|                                                                                | Hotel                              |      | $    | 4,995  |      |   | $    | 4,656  |  |   | $    | 4,130  | 
|                                                                                | Vacation ownership and residential |      |      | 982    |      |   |      | 712    |  |   |      | 500    | 
|                                                                                |                                    |      |      |        |      |   |      |        | 
|                                                                                | Total                              |      | $    | 5,977  |      |   | $    | 5,368  |  |   | $    | 4,630  | 
|                                                                                |                                    |      |      |        |      |   |      |        | 
|Operating income:                                                               |                                    |      |      |        |      |   |      |        |  |   |      |       
|                                                                                | Hotel                              |      | $    | 792    |      |   | $    | 664    |  |   | $    | 445    | 
|                                                                                | Vacation ownership and residential |      |      | 215    |      |   |      | 142    |  |   |      | 89     | 
|                                                                                |                                    |      |      |        |      |   |      |        | 
|                                                                                | Total segment operating income     |      |      | 1,007  |      |   |      | 806    |  |   |      | 534    | 
|Selling, general, administrative and other                                      |                                    |      | 172  |        |      |   | 190  |        |  |   | 116  |       
|Restructuring and other special credits, net                                    |                                    |      | 13   |        |      |   | (37  | )      |  |   | (9   | )     
|                                                                                |                                    |      |      |        |      |   |      |        | 
|Operating income                                                                |                                    |      | 822  |        |      |   | 653  |        |  |   | 427  |       
|Gain on sale of VOI notes receivable                                            |                                    |      | 25   |        |      |   | 14   |        |  |   | 15   |       
|Equity earnings (loss) from unconsolidated ventures, net:                       |                                    |      |      |        |      |   |      |        |  |   |      |       
|                                                                                | Hotel                              |      |      | 51     |      |   |      | 24     |  |   |      | 7      | 
|                                                                                | Vacation ownership and residential |      |      | 13     |      |   |      | 8      |  |   |      | 5      | 
|Interest expense, net                                                           |                                    |      | (239 | )      |      |   | (254 | )      |  |   | (282 | )     
|Gain (loss) on asset dispositions and impairments, net                          |                                    |      | (30  | )      |      |   | (33  | )      |  |   | (183 | )     
|                                                                                |                                    |      |      |        |      |   |      |        | 
|Income (loss) from continuing operations before taxes and
    minority interest |                                    | $    | 642  |        |      | $ | 412  |        |  | $ | (11  | )     
|                                                                                |                                    |      |      |        |      |   |      |        | 
|Depreciation and amortization:                                                  |                                    |      |      |        |      |   |      |        |  |   |      |       
|                                                                                | Hotel                              |      | $    | 352    |      |   | $    | 372    |  |   | $    | 372    | 
|                                                                                | Vacation ownership and residential |      |      | 13     |      |   |      | 11     |  |   |      | 10     | 
|                                                                                | Corporate                          |      |      | 42     |      |   |      | 48     |  |   |      | 47     | 
|                                                                                |                                    |      |      |        |      |   |      |        | 
|                                                                                | Total                              |      | $    | 407    |      |   | $    | 431    |  |   | $    | 429    | 
|                                                                                |                                    |      |      |        |      |   |      |        | 
|Assets:                                                                         |                                    |      |      |        |      |   |      |        |  |   |      |       
|                                                                                | Hotel                              |      | $    | 11,126 |      |   | $    | 11,019 |  |   | $    | 10,885 | 
|                                                                                | Vacation ownership and residential |      |      | 1,279  |      |   |      | 1,220  |  |   |      | 879    | 
|                                                                                | Corporate                          |      |      | 49     |      |   |      | 59     |  |   |      | 93     | 
|                                                                                |                                    |      |      |        |      |   |      |        | 
|                                                                                | Total                              |      | $    | 12,454 |      |   | $    | 12,298 |  |   | $    | 11,857 | 
|                                                                                |                                    |      |      |        |      |   |      |        | 
|Capital expenditures:                                                           |                                    |      |      |        |      |   |      |        |  |   |      |       
|                                                                                | Hotel                              |      | $    | 318    |      |   | $    | 245    |  |   | $    | 233    | 
|                                                                                | Vacation ownership and residential |      |      | 95     |      |   |      | 34     |  |   |      | 43     | 
|                                                                                | Corporate                          |      |      | 51     |      |   |      | 54     |  |   |      | 26     | 
|                                                                                |                                    |      |      |        |      |   |      |        | 
|                                                                                | Total                              |      | $    | 464    |      |   | $    | 333    |  |   | $    | 302    | 
|                                                                                |                                    |      |      |        |      |   |      |        | 

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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                        |  |          |       |  |                   |               |       |      |  |   |       |  |  |      |       |  |  |   |       | 
|----------------------- |  | -------- | ----- |  | ----------------- | ------------- | ----- | ---- |  | - | ----- |  |  | ---- | ----- |  |  | - | ----- | 
|                        |  | Revenues |       |  | Long-Lived Assets |              
|                        |  |          |       |  |                   |              
|                        |  | 2005     |       |  | 2004              |               |       | 2003 |  |   | 2005  |  |  | 2004 |      
|                        |  |          |       |  |                   |               |       |      |  |   |       |  |  |      |      
|                        |  |          |       |  |                   | (In millions) |       |      | 
|United States           |  | $        | 4,656 |  |                   | $             | 4,157 |      |  | $ | 3,600 |  |  | $    | 4,490 |  |  | $ | 5,304 | 
|Italy                   |  |          | 450   |  |                   |               | 434   |      |  |   | 404   |  |  |      | 826   |  |  |   | 889   | 
|All other international |  |          | 871   |  |                   |               | 777   |      |  |   | 626   |  |  |      | 1,657 |  |  |   | 1,257 | 
|                        |  |          |       |  |                   |               |       |      |  |   |       |  |  |      |      
|Total                   |  | $        | 5,977 |  |                   | $             | 5,368 |      |  | $ | 4,630 |  |  | $    | 6,973 |  |  | $ | 7,450 | 
|                        |  |          |       |  |                   |               |       |      |  |   |       |  |  |      |      





|         |                     
|-------- | --------------------
|Note 24. | Guarantor Subsidiary









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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


|                                         |                                                                |                                 |        |           |            |   |           |              |    |   |              |       |       |              |         |   |   |   |        |       |       | 
|---------------------------------------- | -------------------------------------------------------------- | ------------------------------- | ------ | --------- | ---------- | - | --------- | ------------ | -- | - | ------------ | ----- | ----- | ------------ | ------- | - | - | - | ------ | ----- | ----- | 
|                                         |                                                                | Balance Sheet December 31, 2005 |       
|                                         |                                                                | (In millions)                   |       
|                                         |                                                                |                                 |       
|                                         |                                                                |                                 |        | Non-      |            |   |          
|                                         |                                                                |                                 |        | Guarantor |            |   | Guarantor |              |    |  
|                                         |                                                                | Parent                          |        |           | Subsidiary |   |           | Subsidiaries |    |   | Eliminations |       |       | Consolidated |        
|                                         |                                                                |                                 |        |           |            |   |           |              |    |   |              |       |       |              |        
|Assets                                   |                                                                |                                 |        |           |            |   |           |              |    |   |              |       |       |              |         |   |   |   |        |      
|Current assets:                          |                                                                |                                 |        |           |            |   |           |              |    |   |              |       |       |              |         |   |   |   |        |      
|                                         | Cash and cash equivalents                                      |                                 | $      | 618       |            |   | $         |             |    |   | $            | 279   |       |              | $       |  |   |   | $      | 897   |      
|                                         | Restricted cash                                                |                                 |        | 8         |            |   |           |             |    |   |              | 287   |       |              |         |  |   |   |        | 295   |      
|                                         | Inventories                                                    |                                 |        | 20        |            |   |           |             |    |   |              | 260   |       |              |         |  |   |   |        | 280   |      
|                                         | Other current assets                                           |                                 |        | 178       |            |   |           |             |    |   |              | 633   |       |              |         |  |   |   |        | 811   |      
|                                         |                                                                |                                 |        |           |            |   |           |              |    |   |              |       |       |              |        
|                                         |                                                                | Total current assets            |        |           | 824        |   |           |              |   |   |              |       | 1,459 |              |         |   |  |   |        |       | 2,283 | 
|Intercompany                             |                                                                |                                 | (6,360 | )         |            |   | (7,919    | )            |    |   | 14,279       |       |       |              |        |   |   |   |       |      
|Investments in consolidated subsidiaries |                                                                |                                 | 11,768 |           |            |   | 10,754    |              |    |   |             |       |       |              | (22,522 | ) |   |   |       |      
|Plant, property and equipment, net       |                                                                |                                 | 192    |           |            |   |          |              |    |   | 3,764        |       |       |              |        |   |   |   | 3,956  |      
|Assets held for sale                     |                                                                |                                 | 636    |           |            |   |          |              |    |   | 2,511        |       |       |              |        |   |   |   | 3,147  |      
|Goodwill and intangible assets, net      |                                                                |                                 | 1,127  |           |            |   | 2         |              |    |   | 1,134        |       |       |              |        |   |   |   | 2,263  |      
|Other assets                             |                                                                |                                 | 141    |           |            |   | 17        |              |    |   | 647          |       |       |              |        |   |   |   | 805    |      
|                                         |                                                                |                                 |        |           |            |   |           |              |    |   |              |       |       |              |        
|                                         |                                                                |                                 | 8,328  |           |            |   | 2,854     |              |    |   | 23,794       |       |       |              | (22,522 | ) |   |   | 12,454 |      
|                                         |                                                                |                                 |        |           |            |   |           |              |    |   |              |       |       |              |        
|                                        
|Liabilities and stockholders equity     |                                                                |                                 |        |           |            |   |           |              |    |   |              |       |       |              |         |   |   |   |        |      
|Current liabilities:                     |                                                                |                                 |        |           |            |   |           |              |    |   |              |       |       |              |         |   |   |   |        |      
|                                         | Short-term borrowings and current maturities of long-term debt |                                 | $      | 810       |            |   | $         |             |    |   | $            | 409   |       |              | $       |  |   |   | $      | 1,219 |      
|                                         | Other current liabilities                                      |                                 |        | 468       |            |   |           | 38           |    |   |              | 1,154 |       |              |         |  |   |   |        | 1,660 |      
|                                         |                                                                |                                 |        |           |            |   |           |              |    |   |              |       |       |              |        
|                                         |                                                                | Total current liabilities       |        |           | 1,278      |   |           |              | 38 |   |              |       | 1,563 |              |         |   |  |   |        |       | 2,879 | 
|Long-term debt                           |                                                                |                                 | 1,494  |           |            |   | 148       |              |    |   | 732          |       |       |              |        |   |   |   | 2,374  |      
|Long-term debt held for sale             |                                                                |                                 |       |           |            |   | 449       |              |    |   | 103          |       |       |              |        |   |   |   | 552    |      
|Deferred income taxes                    |                                                                |                                 | 293    |           |            |   |          |              |    |   | 269          |       |       |              |        |   |   |   | 562    |      
|Other liabilities                        |                                                                |                                 | 60     |           |            |   | 64        |              |    |   | 727          |       |       |              |        |   |   |   | 851    |      
|                                         |                                                                |                                 |        |           |            |   |           |              |    |   |              |       |       |              |        
|                                         |                                                                |                                 | 3,125  |           |            |   | 699       |              |    |   | 3,394        |       |       |              |        |   |   |   | 7,218  |      
|Minority interest                        |                                                                |                                 | (8     | )         |            |   |          |              |    |   | 33           |       |       |              |        |   |   |   | 25     |      
|Commitments and contingencies            |                                                                |                                 |        |           |            |   |           |              |    |   |              |       |       |              |         |   |   |   |        |      
|Total stockholders equity               |                                                                |                                 | 5,211  |           |            |   | 2,155     |              |    |   | 20,367       |       |       |              | (22,522 | ) |   |   | 5,211  |      
|                                         |                                                                |                                 |        |           |            |   |           |              |    |   |              |       |       |              |        
|                                         |                                                                | $                               | 8,328  |           |            | $ | 2,854     |              |    | $ | 23,794       |       |       | $            | (22,522 | ) |   | $ | 12,454 |      
|                                         |                                                                |                                 |        |           |            |   |           |              |    |   |              |       |       |              |        

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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


|                                         |                                                                |                                 |        |           |            |   |           |              |     |   |              |       |       |              |         |   |   |   |        |       |       | 
|---------------------------------------- | -------------------------------------------------------------- | ------------------------------- | ------ | --------- | ---------- | - | --------- | ------------ | --- | - | ------------ | ----- | ----- | ------------ | ------- | - | - | - | ------ | ----- | ----- | 
|                                         |                                                                | Balance Sheet December 31, 2004 |       
|                                         |                                                                | (In millions)                   |       
|                                         |                                                                |                                 |       
|                                         |                                                                |                                 |        | Non-      |            |   |          
|                                         |                                                                |                                 |        | Guarantor |            |   | Guarantor |              |     |  
|                                         |                                                                | Parent                          |        |           | Subsidiary |   |           | Subsidiaries |     |   | Eliminations |       |       | Consolidated |        
|                                         |                                                                |                                 |        |           |            |   |           |              |     |   |              |       |       |              |        
|Assets                                   |                                                                |                                 |        |           |            |   |           |              |     |   |              |       |       |              |         |   |   |   |        |      
|Current assets:                          |                                                                |                                 |        |           |            |   |           |              |     |   |              |       |       |              |         |   |   |   |        |      
|                                         | Cash and cash equivalents                                      |                                 | $      | 160       |            |   | $         |             |     |   | $            | 166   |       |              | $       |  |   |   | $      | 326   |      
|                                         | Restricted cash                                                |                                 |        | 5         |            |   |           |             |     |   |              | 342   |       |              |         |  |   |   |        | 347   |      
|                                         | Inventories                                                    |                                 |        | 21        |            |   |           |             |     |   |              | 350   |       |              |         |  |   |   |        | 371   |      
|                                         | Other current assets                                           |                                 |        | 142       |            |   |           | 2            |     |   |              | 495   |       |              |         |  |   |   |        | 639   |      
|                                         |                                                                |                                 |        |           |            |   |           |              |     |   |              |       |       |              |        
|                                         |                                                                | Total current assets            |        |           | 328        |   |           |              | 2   |   |              |       | 1,353 |              |         |   |  |   |        |       | 1,683 | 
|Intercompany                             |                                                                |                                 | (5,526 | )         |            |   | (7,541    | )            |     |   | 13,067       |       |       |              |        |   |   |   |       |      
|Investments in consolidated subsidiaries |                                                                |                                 | 11,214 |           |            |   | 10,754    |              |     |   |             |       |       |              | (21,968 | ) |   |   |       |      
|Plant, property and equipment, net       |                                                                |                                 | 170    |           |            |   |          |              |     |   | 4,171        |       |       |              |        |   |   |   | 4,341  |      
|Assets held for sale                     |                                                                |                                 | 632    |           |            |   |          |              |     |   | 2,557        |       |       |              |        |   |   |   | 3,189  |      
|Goodwill and intangible assets, net      |                                                                |                                 | 1,148  |           |            |   | 1         |              |     |   | 862          |       |       |              |        |   |   |   | 2,011  |      
|Other assets                             |                                                                |                                 | 394    |           |            |   | 17        |              |     |   | 663          |       |       |              |        |   |   |   | 1,074  |      
|                                         |                                                                |                                 |        |           |            |   |           |              |     |   |              |       |       |              |        
|                                         |                                                                |                                 | 8,360  |           |            |   | 3,233     |              |     |   | 22,673       |       |       |              | (21,968 | ) |   |   | 12,298 |      
|                                         |                                                                |                                 |        |           |            |   |           |              |     |   |              |       |       |              |        
|                                        
|Liabilities and stockholders equity     |                                                                |                                 |        |           |            |   |           |              |     |   |              |       |       |              |         |   |   |   |        |      
|Current liabilities:                     |                                                                |                                 |        |           |            |   |           |              |     |   |              |       |       |              |         |   |   |   |        |      
|                                         | Short-term borrowings and current maturities of long-term debt |                                 | $      | 101       |            |   | $         | 461          |     |   | $            | 28    |       |              | $       |  |   |   | $      | 590   |      
|                                         | Current maturities of long-term debt held for sale             |                                 |        |          |            |   |           |             |     |   |              | 29    |       |              |         |  |   |   |        | 29    |      
|                                         | Other current liabilities                                      |                                 |        | 466       |            |   |           | 30           |     |   |              | 1,013 |       |              |         |  |   |   |        | 1,509 |      
|                                         |                                                                |                                 |        |           |            |   |           |              |     |   |              |       |       |              |        
|                                         |                                                                | Total current liabilities       |        |           | 567        |   |           |              | 491 |   |              |       | 1,070 |              |         |   |  |   |        |       | 2,128 | 
|Long-term debt                           |                                                                |                                 | 2,326  |           |            |   | 148       |              |     |   | 823          |       |       |              |        |   |   |   | 3,297  |      
|Long-term debt held for sale             |                                                                |                                 |       |           |            |   | 449       |              |     |   | 77           |       |       |              |        |   |   |   | 526    |      
|Deferred income taxes                    |                                                                |                                 | 630    |           |            |   |          |              |     |   | 250          |       |       |              |        |   |   |   | 880    |      
|Other liabilities                        |                                                                |                                 | 53     |           |            |   | 80        |              |     |   | 519          |       |       |              |        |   |   |   | 652    |      
|                                         |                                                                |                                 |        |           |            |   |           |              |     |   |              |       |       |              |        
|                                         |                                                                |                                 | 3,576  |           |            |   | 1,168     |              |     |   | 2,739        |       |       |              |        |   |   |   | 7,483  |      
|Minority interest                        |                                                                |                                 | (4     | )         |            |   |          |              |     |   | 31           |       |       |              |        |   |   |   | 27     |      
|Commitments and contingencies            |                                                                |                                 |        |           |            |   |           |              |     |   |              |       |       |              |         |   |   |   |        |      
|Total stockholders equity               |                                                                |                                 | 4,788  |           |            |   | 2,065     |              |     |   | 19,903       |       |       |              | (21,968 | ) |   |   | 4,788  |      
|                                         |                                                                |                                 |        |           |            |   |           |              |     |   |              |       |       |              |        
|                                         |                                                                | $                               | 8,360  |           |            | $ | 3,233     |              |     | $ | 22,673       |       |       | $            | (21,968 | ) |   | $ | 12,298 |      
|                                         |                                                                |                                 |        |           |            |   |           |              |     |   |              |       |       |              |        

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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


|                                                                              |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |      |   |  |   |       |    |  
|----------------------------------------------------------------------------- | ---------------------------------- | ---------------------------- | ----- | --------- | ---------- | - | --------- | ------------ | - | - | ------------ | -- | - | ------------ | ---- | - |  | - | ----- | -- | -
|                                                                              |                                    | Statement of Income          |      
|                                                                              |                                    | Year Ended December 31, 2005 |      
|                                                                              |                                    | (In millions)                |      
|                                                                              |                                    |                              |      
|                                                                              |                                    |                              |       | Non-      |            |   |          
|                                                                              |                                    |                              |       | Guarantor |            |   | Guarantor |              |   |  
|                                                                              |                                    | Parent                       |       |           | Subsidiary |   |           | Subsidiaries |   |   | Eliminations |    |   | Consolidated |     
|                                                                              |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |     
|Revenues                                                                      |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |      |   |  |   |       |   
|Owned, leased and consolidated joint venture hotels                           |                                    | $                            | 1,125 |           |            | $ |          |              |   | $ | 2,392        |    |   | $            |     |   |  | $ | 3,517 |   
|Vacation ownership and residential sales and services                         |                                    |                              | 1     |           |            |   |          |              |   |   | 888          |    |   |              |     |   |  |   | 889   |   
|Management fees, franchise fees and other income                              |                                    |                              | 167   |           |            |   |          |              |   |   | 722          |    |   |              | (388 | ) |  |   | 501   |   
|Other revenues from managed and franchised properties                         |                                    |                              | 951   |           |            |   |          |              |   |   | 119          |    |   |              |     |   |  |   | 1,070 |   
|                                                                              |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |     
|                                                                              |                                    |                              | 2,244 |           |            |   |          |              |   |   | 4,121        |    |   |              | (388 | ) |  |   | 5,977 |   
|Costs and Expenses                                                            |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |      |   |  |   |       |   
|Owned, leased and consolidated joint venture hotels                           |                                    |                              | 1,124 |           |            |   |          |              |   |   | 1,898        |    |   |              | (388 | ) |  |   | 2,634 |   
|Vacation ownership and residential                                            |                                    |                              | 2     |           |            |   |          |              |   |   | 659          |    |   |              |     |   |  |   | 661   |   
|Selling, general and administrative and other                                 |                                    |                              | 224   |           |            |   | (1        | )            |   |   | 147          |    |   |              |     |   |  |   | 370   |   
|Restructuring and other special charges (credits), net                        |                                    |                              | 13    |           |            |   | (3        | )            |   |   | 3            |    |   |              |     |   |  |   | 13    |   
|Depreciation and amortization                                                 |                                    |                              | 35    |           |            |   |          |              |   |   | 372          |    |   |              |     |   |  |   | 407   |   
|Other expenses from managed and franchised properties                         |                                    |                              | 951   |           |            |   |          |              |   |   | 119          |    |   |              |     |   |  |   | 1,070 |   
|                                                                              |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |     
|                                                                              |                                    |                              | 2,349 |           |            |   | (4        | )            |   |   | 3,198        |    |   |              | (388 | ) |  |   | 5,155 |   
|Operating income (loss)                                                       |                                    |                              | (105  | )         |            |   | 4         |              |   |   | 923          |    |   |              |     |   |  |   | 822   |   
|Gain on sale of VOI notes receivable                                          |                                    |                              |      |           |            |   |          |              |   |   | 25           |    |   |              |     |   |  |   | 25    |   
|Equity earnings in consolidated subsidiaries                                  |                                    |                              | 649   |           |            |   | 315       |              |   |   |             |    |   |              | (964 | ) |  |   |      |   
|Equity earnings from unconsolidated ventures, net                             |                                    |                              | (3    | )         |            |   |          |              |   |   | 67           |    |   |              |     |   |  |   | 64    |   
|Interest expense, net of interest income                                      |                                    |                              | (238  | )         |            |   | (345      | )            |   |   | 344          |    |   |              |     |   |  |   | (239  | ) 
|Loss on asset dispositions and impairments, net                               |                                    |                              | (25   | )         |            |   |          |              |   |   | (5           | )  |   |              |     |   |  |   | (30   | ) 
|                                                                              |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |     
|Income (loss) from continuing operations before taxes and
    minority equity |                                    |                              | 278   |           |            |   | (26       | )            |   |   | 1,354        |    |   |              | (964 | ) |  |   | 642   |   
|Income tax benefit (expense)                                                  |                                    |                              | 141   |           |            |   | 78        |              |   |   | (438         | )  |   |              |     |   |  |   | (219  | ) 
|Minority equity in net loss (income)                                          |                                    |                              | 4     |           |            |   |          |              |   |   | (4           | )  |   |              |     |   |  |   |      |   
|                                                                              |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |     
|Income from continuing operations                                             |                                    |                              | 423   |           |            |   | 52        |              |   |   | 912          |    |   |              | (964 | ) |  |   | 423   |   
|Discontinued operations:                                                      |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |      |   |  |   |       |   
|                                                                              | Loss from operations, net of taxes |                              |       | (1        | )          |   |           | (1           | ) |   |              | (1 | ) |              |      | 2 |  |   |       | (1 | )
|                                                                              |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |     
|Net income                                                                    |                                    | $                            | 422   |           |            | $ | 51        |              |   | $ | 911          |    |   | $            | (962 | ) |  | $ | 422   |   
|                                                                              |                                    |                              |       |           |            |   |           |              |   |   |              |    |   |              |     

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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


|                                                                       |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |        |     |   |   |       |    | 
|---------------------------------------------------------------------- | ---------------------------------- | ---------------------------- | ----- | --------- | ---------- | - | --------- | ------------ |  | - | ------------ | -- |  | ------------ | ------ | --- | - | - | ----- | -- | 
|                                                                       |                                    | Statement of Income          |      
|                                                                       |                                    | Year Ended December 31, 2004 |      
|                                                                       |                                    | (In millions)                |      
|                                                                       |                                    |                              |      
|                                                                       |                                    |                              |       | Non-      |            |   |          
|                                                                       |                                    |                              |       | Guarantor |            |   | Guarantor |              |  |  
|                                                                       |                                    | Parent                       |       |           | Subsidiary |   |           | Subsidiaries |  |   | Eliminations |    |  | Consolidated |       
|                                                                       |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |       
|Revenues                                                               |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |        |     |   |   |       |   
|Owned, leased and consolidated joint venture hotels                    |                                    | $                            | 1,062 |           |            | $ |          |              |  | $ | 2,264        |    |  | $            |       |     |   | $ | 3,326 |   
|Vacation ownership and residential sales and services                  |                                    |                              |      |           |            |   |          |              |  |   | 640          |    |  |              |       |     |   |   | 640   |   
|Management fees, franchise fees and other income                       |                                    |                              | 112   |           |            |   |          |              |  |   | 600          |    |  |              | (293   | )   |   |   | 419   |   
|Other revenues from managed and franchised properties                  |                                    |                              | 888   |           |            |   |          |              |  |   | 95           |    |  |              |       |     |   |   | 983   |   
|                                                                       |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |       
|                                                                       |                                    |                              | 2,062 |           |            |   |          |              |  |   | 3,599        |    |  |              | (293   | )   |   |   | 5,368 |   
|Costs and Expenses                                                     |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |        |     |   |   |       |   
|Owned, leased and consolidated joint venture hotels                    |                                    |                              | 1,078 |           |            |   |          |              |  |   | 1,734        |    |  |              | (293   | )   |   |   | 2,519 |   
|Vacation ownership and residential                                     |                                    |                              |      |           |            |   |          |              |  |   | 488          |    |  |              |       |     |   |   | 488   |   
|Selling, general and administrative and other                          |                                    |                              | 263   |           |            |   | (2        | )            |  |   | 70           |    |  |              |       |     |   |   | 331   |   
|Restructuring and other special credits, net                           |                                    |                              |      |           |            |   |          |              |  |   | (37          | )  |  |              |       |     |   |   | (37   | ) 
|Depreciation and amortization                                          |                                    |                              | 42    |           |            |   |          |              |  |   | 389          |    |  |              |       |     |   |   | 431   |   
|Other expenses from managed and franchised properties                  |                                    |                              | 888   |           |            |   |          |              |  |   | 95           |    |  |              |       |     |   |   | 983   |   
|                                                                       |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |       
|                                                                       |                                    |                              | 2,271 |           |            |   | (2        | )            |  |   | 2,739        |    |  |              | (293   | )   |   |   | 4,715 |   
|Operating income (loss)                                                |                                    |                              | (209  | )         |            |   | 2         |              |  |   | 860          |    |  |              |       |     |   |   | 653   |   
|Gain on sale of VOI notes receivable                                   |                                    |                              |      |           |            |   |          |              |  |   | 14           |    |  |              |       |     |   |   | 14    |   
|Equity earnings in consolidated subsidiaries                           |                                    |                              | 604   |           |            |   | 410       |              |  |   |             |    |  |              | (1,014 | )   |   |   |      |   
|Equity earnings from unconsolidated ventures, net                      |                                    |                              | 1     |           |            |   |          |              |  |   | 31           |    |  |              |       |     |   |   | 32    |   
|Interest expense, net of interest income                               |                                    |                              | (197  | )         |            |   | (346      | )            |  |   | 289          |    |  |              |       |     |   |   | (254  | ) 
|Loss on asset dispositions and impairments, net                        |                                    |                              | (6    | )         |            |   |          |              |  |   | (27          | )  |  |              |       |     |   |   | (33   | ) 
|                                                                       |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |       
|Income from continuing operations before taxes and minority
    equity |                                    |                              | 193   |           |            |   | 66        |              |  |   | 1,167        |    |  |              | (1,014 | )   |   |   | 412   |   
|Income tax benefit (expense)                                           |                                    |                              | 174   |           |            |   | 120       |              |  |   | (337         | )  |  |              |       |     |   |   | (43   | ) 
|Minority equity in net loss (income)                                   |                                    |                              | 2     |           |            |   |          |              |  |   | (2           | )  |  |              |       |     |   |   |      |   
|                                                                       |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |       
|Income from continuing operations                                      |                                    |                              | 369   |           |            |   | 186       |              |  |   | 828          |    |  |              | (1,014 | )   |   |   | 369   |   
|Discontinued operations:                                               |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |        |     |   |   |       |   
|                                                                       | Gain on dispositions, net of taxes |                              |       | 26        |            |   |           | 17           |  |   |              | 18 |  |              |        | (35 | ) |   |       | 26 | 
|                                                                       |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |       
|Net income                                                             |                                    | $                            | 395   |           |            | $ | 203       |              |  | $ | 846          |    |  | $            | (1,049 | )   |   | $ | 395   |   
|                                                                       |                                    |                              |       |           |            |   |           |              |  |   |              |    |  |              |       

F-53



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


|                                                                              |                                    |                              |       |           |            |   |               |              |   |   |              |     |   |              |        |      |   |   |       |     |  
|----------------------------------------------------------------------------- | ---------------------------------- | ---------------------------- | ----- | --------- | ---------- | - | ------------- | ------------ | - | - | ------------ | --- | - | ------------ | ------ | ---- | - | - | ----- | --- | -
|                                                                              |                                    | Statement of Income          |      
|                                                                              |                                    | Year Ended December 31, 2003 |      
|                                                                              |                                    | (In millions)                |      
|                                                                              |                                    |                              |      
|                                                                              |                                    |                              |       | Guarantor |            |   | Non-Guarantor |              |   |  
|                                                                              |                                    | Parent                       |       |           | Subsidiary |   |               | Subsidiaries |   |   | Eliminations |     |   | Consolidated |       
|                                                                              |                                    |                              |       |           |            |   |               |              |   |   |              |     |   |              |       
|Revenues                                                                      |                                    |                              |       |           |            |   |               |              |   |   |              |     |   |              |        |      |   |   |       |    
|Owned, leased and consolidated joint venture hotels                           |                                    | $                            | 1,092 |           |            | $ |              |              |   | $ | 1,993        |     |   | $            |       |      |   | $ | 3,085 |    
|Vacation ownership and residential sales and services                         |                                    |                              |      |           |            |   |              |              |   |   | 439          |     |   |              |       |      |   |   | 439   |    
|Management fees, franchise fees and other income                              |                                    |                              | 51    |           |            |   |              |              |   |   | 501          |     |   |              | (297   | )    |   |   | 255   |    
|Other revenues from managed and franchised properties                         |                                    |                              | 774   |           |            |   |              |              |   |   | 77           |     |   |              |       |      |   |   | 851   |    
|                                                                              |                                    |                              |       |           |            |   |               |              |   |   |              |     |   |              |       
|                                                                              |                                    |                              | 1,917 |           |            |   |              |              |   |   | 3,010        |     |   |              | (297   | )    |   |   | 4,630 |    
|Costs and Expenses                                                            |                                    |                              |       |           |            |   |               |              |   |   |              |     |   |              |        |      |   |   |       |    
|Owned, leased and consolidated joint venture hotels                           |                                    |                              | 1,128 |           |            |   |              |              |   |   | 1,561        |     |   |              | (297   | )    |   |   | 2,392 |    
|Vacation ownership and residential                                            |                                    |                              |      |           |            |   |              |              |   |   | 340          |     |   |              |       |      |   |   | 340   |    
|Selling, general and administrative and other                                 |                                    |                              | 209   |           |            |   | (2            | )            |   |   | (7           | )   |   |              |       |      |   |   | 200   |    
|Restructuring and other special credits, net                                  |                                    |                              |      |           |            |   | (9            | )            |   |   |             |     |   |              |       |      |   |   | (9    | )  
|Depreciation and amortization                                                 |                                    |                              | 49    |           |            |   |              |              |   |   | 380          |     |   |              |       |      |   |   | 429   |    
|Other expenses from managed and franchised properties                         |                                    |                              | 774   |           |            |   |              |              |   |   | 77           |     |   |              |       |      |   |   | 851   |    
|                                                                              |                                    |                              |       |           |            |   |               |              |   |   |              |     |   |              |       
|                                                                              |                                    |                              | 2,160 |           |            |   | (11           | )            |   |   | 2,351        |     |   |              | (297   | )    |   |   | 4,203 |    
|Operating income (loss)                                                       |                                    |                              | (243  | )         |            |   | 11            |              |   |   | 659          |     |   |              |       |      |   |   | 427   |    
|Gain on sale of VOI notes receivable                                          |                                    |                              |      |           |            |   |              |              |   |   | 15           |     |   |              |       |      |   |   | 15    |    
|Equity earnings in consolidated subsidiaries                                  |                                    |                              | 371   |           |            |   | 320           |              |   |   |             |     |   |              | (691   | )    |   |   |      |    
|Equity earnings from unconsolidated ventures, net                             |                                    |                              |      |           |            |   | 1             |              |   |   | 11           |     |   |              |       |      |   |   | 12    |    
|Interest expense, net of interest income                                      |                                    |                              | (180  | )         |            |   | (360          | )            |   |   | 258          |     |   |              |       |      |   |   | (282  | )  
|Loss on asset dispositions and impairments, net                               |                                    |                              | (3    | )         |            |   |              |              |   |   | (180         | )   |   |              |       |      |   |   | (183  | )  
|                                                                              |                                    |                              |       |           |            |   |               |              |   |   |              |     |   |              |       
|Income (loss) from continuing operations before taxes and
    minority equity |                                    |                              | (55   | )         |            |   | (28           | )            |   |   | 763          |     |   |              | (691   | )    |   |   | (11   | )  
|Income tax benefit (expense)                                                  |                                    |                              | 158   |           |            |   | 122           |              |   |   | (167         | )   |   |              |       |      |   |   | 113   |    
|Minority equity in net loss                                                   |                                    |                              | 2     |           |            |   |              |              |   |   | 1            |     |   |              |       |      |   |   | 3     |    
|                                                                              |                                    |                              |       |           |            |   |               |              |   |   |              |     |   |              |       
|Income from continuing operations                                             |                                    |                              | 105   |           |            |   | 94            |              |   |   | 597          |     |   |              | (691   | )    |   |   | 105   |    
|Discontinued operations:                                                      |                                    |                              |       |           |            |   |               |              |   |   |              |     |   |              |        |      |   |   |       |    
|                                                                              | Loss from operations, net of taxes |                              |       | (2        | )          |   |               | (2           | ) |   |              | (2  | ) |              |        | 4    |   |   |       | (2  | )
|                                                                              | Gain on dispositions, net of taxes |                              |       | 206       |            |   |               | 203          |   |   |              | 174 |   |              |        | (377 | ) |   |       | 206 |  
|                                                                              |                                    |                              |       |           |            |   |               |              |   |   |              |     |   |              |       
|Net income                                                                    |                                    | $                            | 309   |           |            | $ | 295           |              |   | $ | 769          |     |   | $            | (1,064 | )    |   | $ | 309   |    
|                                                                              |                                    |                              |       |           |            |   |               |              |   |   |              |     |   |              |       

F-54



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


|                                                                |                                           |                                                       |      |           |            |   |               |              |   |   |              |     |   |              |      |   |   |   |      |      |    | 
|--------------------------------------------------------------- | ----------------------------------------- | ----------------------------------------------------- | ---- | --------- | ---------- | - | ------------- | ------------ | - | - | ------------ | --- | - | ------------ | ---- | - | - | - | ---- | ---- | -- | 
|                                                                |                                           | Statement of Cash Flows                               |     
|                                                                |                                           | Year Ended December 31, 2005                          |     
|                                                                |                                           | (In millions)                                         |     
|                                                                |                                           |                                                       |     
|                                                                |                                           |                                                       |      | Guarantor |            |   | Non-Guarantor |              |   |  
|                                                                |                                           | Parent                                                |      |           | Subsidiary |   |               | Subsidiaries |   |   | Eliminations |     |   | Consolidated |     
|                                                                |                                           |                                                       |      |           |            |   |               |              |   |   |              |     |   |              |     
|Operating Activities                                            |                                           |                                                       |      |           |            |   |               |              |   |   |              |     |   |              |      |   |   |   |      |     
|Net income                                                      |                                           | $                                                     | 422  |           |            | $ | 51            |              |   | $ | 911          |     |   | $            | (962 | ) |   | $ | 422  |     
|Discontinued operations:                                        |                                           |                                                       |      |           |            |   |               |              |   |   |              |     |   |              |      |   |   |   |      |     
|                                                                |                                           | Gain on dispositions                                  |      |           |           |   |               |              |  |   |              |     |  |              |      |   |  |   |      |      |   | 
|                                                                |                                           | Other adjustments relating to discontinued operations |      |           | 10         |   |               |              |  |   |              |     | 1 |              |      |   |  |   |      |      | 11 | 
|Adjustments to net income, changes in working capital and other |                                           |                                                       | (143 | )         |            |   | 399           |              |   |   | (887         | )   |   |              | 962  |   |   |   | 331  |     
|                                                                |                                           |                                                       |      |           |            |   |               |              |   |   |              |     |   |              |     
|                                                                | Cash from (used for) operating activities |                                                       |      | 289       |            |   |               | 450          |   |   |              | 25  |   |              |      |  |   |   |      | 764  |   
|Investing Activities                                            |                                           |                                                       |      |           |            |   |               |              |   |   |              |     |   |              |      |   |   |   |      |     
|Purchases of plant, property and equipment                      |                                           |                                                       | (90  | )         |            |   |              |              |   |   | (374         | )   |   |              |     |   |   |   | (464 | )   
|Proceeds from asset sales                                       |                                           |                                                       |     |           |            |   |              |              |   |   | 510          |     |   |              |     |   |   |   | 510  |     
|Acquisitions and investments                                    |                                           |                                                       | (10  | )         |            |   |              |              |   |   | (185         | )   |   |              |     |   |   |   | (195 | )   
|Proceeds from senior debt                                       |                                           |                                                       | 221  |           |            |   |              |              |   |   |             |     |   |              |     |   |   |   | 221  |     
|Other, net                                                      |                                           |                                                       | 4    |           |            |   |              |              |   |   | 9            |     |   |              |     |   |   |   | 13   |     
|                                                                |                                           |                                                       |      |           |            |   |               |              |   |   |              |     |   |              |     
|                                                                | Cash from (used for) investing activities |                                                       |      | 125       |            |   |               |             |   |   |              | (40 | ) |              |      |  |   |   |      | 85   |   
|Financing Activities                                            |                                           |                                                       |      |           |            |   |               |              |   |   |              |     |   |              |      |   |   |   |      |     
|Revolving credit facility and short-term borrowings, net        |                                           |                                                       |     |           |            |   |              |              |   |   | 333          |     |   |              |     |   |   |   | 333  |     
|Long-term debt issued                                           |                                           |                                                       |     |           |            |   |              |              |   |   | 9            |     |   |              |     |   |   |   | 9    |     
|Long-term debt repaid                                           |                                           |                                                       | (101 | )         |            |   | (450          | )            |   |   | (32          | )   |   |              |     |   |   |   | (583 | )   
|Distributions paid                                              |                                           |                                                       |     |           |            |   |              |              |   |   | (176         | )   |   |              |     |   |   |   | (176 | )   
|Proceeds from employee stock option exercises                   |                                           |                                                       | 358  |           |            |   |              |              |   |   | 47           |     |   |              |     |   |   |   | 405  |     
|Share repurchases                                               |                                           |                                                       | (211 | )         |            |   |              |              |   |   | (17          | )   |   |              |     |   |   |   | (228 | )   
|Other, net                                                      |                                           |                                                       | (2   | )         |            |   |              |              |   |   | (11          | )   |   |              |     |   |   |   | (13  | )   
|                                                                |                                           |                                                       |      |           |            |   |               |              |   |   |              |     |   |              |     
|                                                                | Cash from (used for) financing activities |                                                       |      | 44        |            |   |               | (450         | ) |   |              | 153 |   |              |      |  |   |   |      | (253 | ) 
|Exchange rate effect on cash and cash equivalents               |                                           |                                                       |     |           |            |   |              |              |   |   | (25          | )   |   |              |     |   |   |   | (25  | )   
|                                                                |                                           |                                                       |      |           |            |   |               |              |   |   |              |     |   |              |     
|Increase (decrease) in cash and cash equivalents                |                                           |                                                       | 458  |           |            |   |              |              |   |   | 113          |     |   |              |     |   |   |   | 571  |     
|Cash and cash equivalents-beginning of period                   |                                           |                                                       | 160  |           |            |   |              |              |   |   | 166          |     |   |              |     |   |   |   | 326  |     
|                                                                |                                           |                                                       |      |           |            |   |               |              |   |   |              |     |   |              |     
|Cash and cash equivalents-end of period                         |                                           | $                                                     | 618  |           |            | $ |              |              |   | $ | 279          |     |   | $            |     |   |   | $ | 897  |     
|                                                                |                                           |                                                       |      |           |            |   |               |              |   |   |              |     |   |              |     

F-55



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


|                                                                |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |        |    |  |   |      |      |  
|--------------------------------------------------------------- | ----------------------------------------------------- | ---------------------------- | ---- | --------- | ---------- | - | --------- | ------------ | - | - | ------------ | ---- | - | ------------ | ------ | -- |  | - | ---- | ---- | -
|                                                                |                                                       | Statement of Cash Flows      |     
|                                                                |                                                       | Year Ended December 31, 2004 |     
|                                                                |                                                       | (In millions)                |     
|                                                                |                                                       |                              |     
|                                                                |                                                       |                              |      | Non-      |            |   |          
|                                                                |                                                       |                              |      | Guarantor |            |   | Guarantor |              |   |  
|                                                                |                                                       | Parent                       |      |           | Subsidiary |   |           | Subsidiaries |   |   | Eliminations |      |   | Consolidated |       
|                                                                |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |       
|Operating Activities                                            |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |        |    |  |   |      |     
|Net income                                                      |                                                       | $                            | 395  |           |            | $ | 203       |              |   | $ | 846          |      |   | $            | (1,049 | )  |  | $ | 395  |     
|Discontinued operations:                                        |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |        |    |  |   |      |     
|                                                                | Gain on dispositions                                  |                              |      | (26       | )          |   |           | (17          | ) |   |              | (18  | ) |              |        | 35 |  |   |      | (26  | )
|                                                                | Other adjustments relating to discontinued operations |                              |      | 1         |            |   |           |             |   |   |              |     |   |              |        |   |  |   |      | 1    |  
|Adjustments to net income, changes in working capital and other |                                                       |                              | (391 | )         |            |   | (195      | )            |   |   | (220         | )    |   |              | 1,014  |    |  |   | 208  |     
|                                                                |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |       
|                                                                | Cash from (used for) operating activities             |                              |      | (21       | )          |   |           | (9           | ) |   |              | 608  |   |              |        |   |  |   |      | 578  |  
|Investing Activities                                            |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |        |    |  |   |      |     
|Purchases of plant, property and equipment                      |                                                       |                              | (63  | )         |            |   |          |              |   |   | (270         | )    |   |              |       |    |  |   | (333 | )   
|Proceeds from asset sales                                       |                                                       |                              |     |           |            |   |          |              |   |   | 74           |      |   |              |       |    |  |   | 74   |     
|Acquisitions and investments                                    |                                                       |                              | (28  | )         |            |   |          |              |   |   | (110         | )    |   |              |       |    |  |   | (138 | )   
|Other, net                                                      |                                                       |                              | (2   | )         |            |   |          |              |   |   | (16          | )    |   |              |       |    |  |   | (18  | )   
|                                                                |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |       
|                                                                | Cash used for investing activities                    |                              |      | (93       | )          |   |           |             |   |   |              | (322 | ) |              |        |   |  |   |      | (415 | )
|Financing Activities                                            |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |        |    |  |   |      |     
|Revolving credit facility and short-term borrowings, net        |                                                       |                              | 1    |           |            |   |          |              |   |   | (21          | )    |   |              |       |    |  |   | (20  | )   
|Long-term debt issued                                           |                                                       |                              | 300  |           |            |   |          |              |   |   |             |      |   |              |       |    |  |   | 300  |     
|Long-term debt repaid                                           |                                                       |                              | (381 | )         |            |   |          |              |   |   | (70          | )    |   |              |       |    |  |   | (451 | )   
|Distributions paid                                              |                                                       |                              |     |           |            |   |          |              |   |   | (172         | )    |   |              |       |    |  |   | (172 | )   
|Proceeds from employee stock option exercises                   |                                                       |                              | 323  |           |            |   |          |              |   |   | 56           |      |   |              |       |    |  |   | 379  |     
|Share repurchases                                               |                                                       |                              | (280 | )         |            |   |          |              |   |   | (30          | )    |   |              |       |    |  |   | (310 | )   
|Other, net                                                      |                                                       |                              | 49   |           |            |   | 9         |              |   |   | (57          | )    |   |              |       |    |  |   | 1    |     
|                                                                |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |       
|                                                                | Cash from (used for) financing activities             |                              |      | 12        |            |   |           | 9            |   |   |              | (294 | ) |              |        |   |  |   |      | (273 | )
|Exchange rate effect on cash and cash equivalents               |                                                       |                              |     |           |            |   |          |              |   |   | 9            |      |   |              |       |    |  |   | 9    |     
|                                                                |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |       
|Increase (decrease) in cash and cash equivalents                |                                                       |                              | (102 | )         |            |   |          |              |   |   | 1            |      |   |              |       |    |  |   | (101 | )   
|Cash and cash equivalents-beginning of period                   |                                                       |                              | 262  |           |            |   |          |              |   |   | 165          |      |   |              |       |    |  |   | 427  |     
|                                                                |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |       
|Cash and cash equivalents-end of period                         |                                                       | $                            | 160  |           |            | $ |          |              |   | $ | 166          |      |   | $            |       |    |  | $ | 326  |     
|                                                                |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |       

F-56



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)


|                                                                |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |        |     |   |   |       |      |  
|--------------------------------------------------------------- | ----------------------------------------------------- | ---------------------------- | ---- | --------- | ---------- | - | --------- | ------------ | - | - | ------------ | ---- | - | ------------ | ------ | --- | - | - | ----- | ---- | -
|                                                                |                                                       | Statement of Cash Flows      |     
|                                                                |                                                       | Year Ended December 31, 2003 |     
|                                                                |                                                       | (In millions)                |     
|                                                                |                                                       |                              |     
|                                                                |                                                       |                              |      | Non-      |            |   |          
|                                                                |                                                       |                              |      | Guarantor |            |   | Guarantor |              |   |  
|                                                                |                                                       | Parent                       |      |           | Subsidiary |   |           | Subsidiaries |   |   | Eliminations |      |   | Consolidated |       
|                                                                |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |       
|Operating Activities                                            |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |        |     |   |   |       |     
|Net income                                                      |                                                       | $                            | 309  |           |            | $ | 295       |              |   | $ | 769          |      |   | $            | (1,064 | )   |   | $ | 309   |     
|Discontinued operations:                                        |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |        |     |   |   |       |     
|                                                                | Gain on dispositions                                  |                              |      | (206      | )          |   |           | (201         | ) |   |              | (174 | ) |              |        | 375 |   |   |       | (206 | )
|                                                                | Other adjustments relating to discontinued operations |                              |      | 2         |            |   |           |             |   |   |              | 13   |   |              |        | (2  | ) |   |       | 13   |  
|Adjustments to net income, changes in working capital and other |                                                       |                              | 341  |           |            |   | 155       |              |   |   | (537         | )    |   |              | 691    |     |   |   | 650   |     
|                                                                |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |       
|                                                                | Cash from operating activities                        |                              |      | 446       |            |   |           | 249          |   |   |              | 71   |   |              |        |    |   |   |       | 766  |  
|Investing Activities                                            |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |        |     |   |   |       |     
|Purchases of plant, property and equipment                      |                                                       |                              | (30  | )         |            |   |          |              |   |   | (272         | )    |   |              |       |     |   |   | (302  | )   
|Proceeds from asset sales                                       |                                                       |                              |     |           |            |   |          |              |   |   | 1,042        |      |   |              |       |     |   |   | 1,042 |     
|Acquisitions and investments                                    |                                                       |                              |     |           |            |   |          |              |   |   | (11          | )    |   |              |       |     |   |   | (11   | )   
|Acquisition of senior debt                                      |                                                       |                              | (203 | )         |            |   |          |              |   |   |             |      |   |              |       |     |   |   | (203  | )   
|Other, net                                                      |                                                       |                              | (10  | )         |            |   |          |              |   |   | (1           | )    |   |              |       |     |   |   | (11   | )   
|                                                                |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |       
|                                                                | Cash from (used for) investing activities             |                              |      | (243      | )          |   |           |             |   |   |              | 758  |   |              |        |    |   |   |       | 515  |  
|Financing Activities                                            |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |        |     |   |   |       |     
|Revolving credit facility and short-term borrowings, net        |                                                       |                              | (319 | )         |            |   |          |              |   |   | (25          | )    |   |              |       |     |   |   | (344  | )   
|Long-term debt issued                                           |                                                       |                              | 360  |           |            |   |          |              |   |   | 86           |      |   |              |       |     |   |   | 446   |     
|Long-term debt repaid                                           |                                                       |                              |     |           |            |   | (250      | )            |   |   | (661         | )    |   |              |       |     |   |   | (911  | )   
|Distributions paid                                              |                                                       |                              |     |           |            |   |          |              |   |   | (170         | )    |   |              |       |     |   |   | (170  | )   
|Other, net                                                      |                                                       |                              | 15   |           |            |   |          |              |   |   | (15          | )    |   |              |       |     |   |   |      |     
|                                                                |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |       
|                                                                | Cash from (used for) financing activities             |                              |      | 56        |            |   |           | (250         | ) |   |              | (785 | ) |              |        |    |   |   |       | (979 | )
|Exchange rate effect on cash and cash equivalents               |                                                       |                              |     |           |            |   |          |              |   |   | 17           |      |   |              |       |     |   |   | 17    |     
|                                                                |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |       
|Increase (decrease) in cash and cash equivalents                |                                                       |                              | 259  |           |            |   | (1        | )            |   |   | 61           |      |   |              |       |     |   |   | 319   |     
|Cash and cash equivalents-beginning of period                   |                                                       |                              | 3    |           |            |   | 1         |              |   |   | 104          |      |   |              |       |     |   |   | 108   |     
|                                                                |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |       
|Cash and cash equivalents-end of period                         |                                                       | $                            | 262  |           |            | $ |          |              |   | $ | 165          |      |   | $            |       |     |   | $ | 427   |     
|                                                                |                                                       |                              |      |           |            |   |           |              |   |   |              |      |   |              |       

F-57



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##### Table of Contents



STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


NOTES TO FINANCIAL STATEMENTS  (Continued)




|         |                              
|-------- | -----------------------------
|Note 25. | Quarterly Results (Unaudited)

|                                  |                                   |                    |       |                                      |         |   |       |              |  |   |             |       |   |      |       |       |   |   |       |      | 
|--------------------------------- | --------------------------------- | ------------------ | ----- | ------------------------------------ | ------- | - | ----- | ------------ |  | - | ----------- | ----- | - | ---- | ----- | ----- | - | - | ----- | ---- | 
|                                  |                                   | Three Months Ended |       |                                      |        
|                                  |                                   |                    |       |                                      |        
|                                  |                                   | March 31           |       |                                      | June 30 |   |       | September 30 |  |   | December 31 |       |   | Year |      
|                                  |                                   |                    |       |                                      |         |   |       |              |  |   |             |       |   |      |      
|                                  |                                   |                    |       | (In millions, except per Share data) |         |   |      
|2005                              |                                   |                    |       |                                      |         |   |       |              |  |   |             |       |   |      |       |       |   |   |       |     
|Revenues                          |                                   | $                  | 1,406 |                                      |         | $ | 1,559 |              |  | $ | 1,496       |       |   | $    | 1,516 |       |   | $ | 5,977 |     
|Costs and expenses                |                                   | $                  | 1,258 |                                      |         | $ | 1,309 |              |  | $ | 1,282       |       |   | $    | 1,306 |       |   | $ | 5,155 |     
|Income from continuing operations |                                   | $                  | 79    |                                      |         | $ | 145   |              |  | $ | 40          |       |   | $    | 159   |       |   | $ | 423   |     
|Discontinued operations           |                                   | $                  |      |                                      |         | $ |      |              |  | $ | (1          | )     |   | $    |      |       |   | $ | (1    | )   
|Net income                        |                                   | $                  | 79    |                                      |         | $ | 145   |              |  | $ | 39          |       |   | $    | 159   |       |   | $ | 422   |     
|Earnings per Share:               |                                   |                    |       |                                      |         |   |       |              |  |   |             |       |   |      |       |       |   |   |       |     
|Basic                            |                                   |                    |       |                                      |         |   |       |              |  |   |             |       |   |      |       |       |   |   |       |     
|                                  | Income from continuing operations |                    | $     | 0.37                                 |         |   | $     | 0.67         |  |   | $           | 0.19  |   |      | $     | 0.72  |   |   | $     | 1.95 | 
|                                  | Discontinued operations           |                    | $     |                                     |         |   | $     |             |  |   | $           | (0.01 | ) |      | $     |      |   |   | $     |     | 
|                                  | Net income                        |                    | $     | 0.37                                 |         |   | $     | 0.67         |  |   | $           | 0.18  |   |      | $     | 0.72  |   |   | $     | 1.95 | 
|Diluted                          |                                   |                    |       |                                      |         |   |       |              |  |   |             |       |   |      |       |       |   |   |       |     
|                                  | Income from continuing operations |                    | $     | 0.36                                 |         |   | $     | 0.65         |  |   | $           | 0.18  |   |      | $     | 0.70  |   |   | $     | 1.88 | 
|                                  | Discontinued operations           |                    | $     |                                     |         |   | $     |             |  |   | $           | (0.01 | ) |      | $     |      |   |   | $     |     | 
|                                  | Net income                        |                    | $     | 0.36                                 |         |   | $     | 0.65         |  |   | $           | 0.17  |   |      | $     | 0.70  |   |   | $     | 1.88 | 
|2004                              |                                   |                    |       |                                      |         |   |       |              |  |   |             |       |   |      |       |       |   |   |       |     
|Revenues                          |                                   | $                  | 1,227 |                                      |         | $ | 1,363 |              |  | $ | 1,336       |       |   | $    | 1,442 |       |   | $ | 5,368 |     
|Costs and expenses                |                                   | $                  | 1,132 |                                      |         | $ | 1,190 |              |  | $ | 1,138       |       |   | $    | 1,255 |       |   | $ | 4,715 |     
|Income from continuing operations |                                   | $                  | 33    |                                      |         | $ | 120   |              |  | $ | 105         |       |   | $    | 111   |       |   | $ | 369   |     
|Discontinued operations           |                                   | $                  | 1     |                                      |         | $ | 34    |              |  | $ | 2           |       |   | $    | (11   | )     |   | $ | 26    |     
|Net income                        |                                   | $                  | 34    |                                      |         | $ | 154   |              |  | $ | 107         |       |   | $    | 100   |       |   | $ | 395   |     
|Earnings per Share:               |                                   |                    |       |                                      |         |   |       |              |  |   |             |       |   |      |       |       |   |   |       |     
|Basic                            |                                   |                    |       |                                      |         |   |       |              |  |   |             |       |   |      |       |       |   |   |       |     
|                                  | Income from continuing operations |                    | $     | 0.16                                 |         |   | $     | 0.57         |  |   | $           | 0.51  |   |      | $     | 0.53  |   |   | $     | 1.78 | 
|                                  | Discontinued operations           |                    | $     |                                     |         |   | $     | 0.17         |  |   | $           | 0.01  |   |      | $     | (0.05 | ) |   | $     | 0.13 | 
|                                  | Net income                        |                    | $     | 0.16                                 |         |   | $     | 0.74         |  |   | $           | 0.52  |   |      | $     | 0.48  |   |   | $     | 1.91 | 
|Diluted                          |                                   |                    |       |                                      |         |   |       |              |  |   |             |       |   |      |       |       |   |   |       |     
|                                  | Income from continuing operations |                    | $     | 0.16                                 |         |   | $     | 0.56         |  |   | $           | 0.49  |   |      | $     | 0.51  |   |   | $     | 1.72 | 
|                                  | Discontinued operations           |                    | $     |                                     |         |   | $     | 0.16         |  |   | $           | 0.01  |   |      | $     | (0.05 | ) |   | $     | 0.12 | 
|                                  | Net income                        |                    | $     | 0.16                                 |         |   | $     | 0.72         |  |   | $           | 0.50  |   |      | $     | 0.46  |   |   | $     | 1.84 | 

F-58



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##### Table of Contents






SCHEDULE II


STARWOOD HOTELS & RESORTS WORLDWIDE, INC.


AND STARWOOD HOTELS & RESORTS


VALUATION AND QUALIFYING ACCOUNTS


(In millions)


|                                                    |                                         |            |    |                        |               |   |         |               |   |   |           |    |   |              |     |     |   |   |    |    | 
|--------------------------------------------------- | --------------------------------------- | ---------- | -- | ---------------------- | ------------- | - | ------- | ------------- | - | - | --------- | -- | - | ------------ | --- | --- | - | - | -- | -- | 
|                                                    |                                         |            |    | Additions (Deductions) |               |   |        
|                                                    |                                         |            |    |                        |               |   |        
|                                                    |                                         |            |    | Charged to/            |               |   | Charged |               |   |   |           |   
|                                                    |                                         | Balance    |    |                        | Reversed from |   |         | to/from Other |   |   | Payments/ |    |   | Balance      |    
|                                                    |                                         | January 1, |    |                        | Expenses      |   |         | Accounts(a)   |   |   | Other     |    |   | December 31, |    
|                                                    |                                         |            |    |                        |               |   |         |               |   |   |           |    |   |              |    
|2005                                                |                                         |            |    |                        |               |   |         |               |   |   |           |    |   |              |     |     |   |   |    |   
|Trade receivables  allowance for doubtful accounts |                                         | $          | 58 |                        |               | $ | 9       |               |   | $ | 4         |    |   | $            | (21 | )   |   | $ | 50 |   
|Notes receivable  allowance for doubtful accounts  |                                         | $          | 81 |                        |               | $ | (3      | )             |   | $ | 10        |    |   | $            | (7  | )   |   | $ | 81 |   
|Reserves included in accrued and other liabilities: |                                         |            |    |                        |               |   |         |               |   |   |           |    |   |              |     |     |   |   |    |   
|                                                    | Restructuring and other special charges |            | $  | 29                     |               |   | $       | 13            |   |   | $         | (1 | ) |              | $   | (11 | ) |   | $  | 30 | 
|2004                                                |                                         |            |    |                        |               |   |         |               |   |   |           |    |   |              |     |     |   |   |    |   
|Trade receivables  allowance for doubtful accounts |                                         | $          | 53 |                        |               | $ | 8       |               |   | $ | 2         |    |   | $            | (5  | )   |   | $ | 58 |   
|Notes receivable  allowance for doubtful accounts  |                                         | $          | 85 |                        |               | $ | 17      |               |   | $ | (10       | )  |   | $            | (11 | )   |   | $ | 81 |   
|Reserves included in accrued and other liabilities: |                                         |            |    |                        |               |   |         |               |   |   |           |    |   |              |     |     |   |   |    |   
|                                                    | Restructuring and other special charges |            | $  | 77                     |               |   | $       | (37           | ) |   | $         |   |   |              | $   | (11 | ) |   | $  | 29 | 
|2003                                                |                                         |            |    |                        |               |   |         |               |   |   |           |    |   |              |     |     |   |   |    |   
|Trade receivables  allowance for doubtful accounts |                                         | $          | 45 |                        |               | $ | 17      |               |   | $ | 1         |    |   | $            | (10 | )   |   | $ | 53 |   
|Notes receivable  allowance for doubtful accounts  |                                         | $          | 67 |                        |               | $ | 17      |               |   | $ | 7         |    |   | $            | (6  | )   |   | $ | 85 |   
|Reserves included in accrued and other liabilities: |                                         |            |    |                        |               |   |         |               |   |   |           |    |   |              |     |     |   |   |    |   
|                                                    | Restructuring and other special charges |            | $  | 86                     |               |   | $       | (9            | ) |   | $         | 21 |   |              | $   | (21 | ) |   | $  | 77 | 






|    |                                
|--- | -------------------------------
|(a) | Charged to/from other accounts:

|                                     |  |                   |    |   |                 |   |    |  
|------------------------------------ |  | ----------------- | -- | - | --------------- | - | -- | -
|                                     |  | Trade and Notes   |    |   |                
|                                     |  | Receivable       |    |   | Restructuring   |  
|                                     |  | Allowance for     |    |   | and Other       |  
|                                     |  | Doubtful Accounts |    |   | Special Charges |  
|                                     |  |                   |    |   |                 |  
|2005                                 |  |                   |    |   |                 |   |    |  
|Accounts receivable                  |  | $                 |   |   |                 | $ | (1 | )
|Other assets                         |  |                   | 14 |   |                 |   |   |  
|                                     |  |                   |    |   |                 |  
|Total charged to/from other accounts |  | $                 | 14 |   |                 | $ | (1 | )
|                                     |  |                   |    |   |                 |  
|2004                                 |  |                   |    |   |                 |   |    |  
|Other assets                         |  | $                 | (5 | ) |                 | $ |   |  
|Other liabilities                    |  |                   | (3 | ) |                 |   |   |  
|                                     |  |                   |    |   |                 |  
|Total charged to/from other accounts |  | $                 | (8 | ) |                 | $ |   |  
|                                     |  |                   |    |   |                 |  
|2003                                 |  |                   |    |   |                 |   |    |  
|Other assets                         |  | $                 | 7  |   |                 | $ | 12 |  
|Other liabilities                    |  |                   | 1  |   |                 |   | 9  |  
|                                     |  |                   |    |   |                 |  
|Total charged to/from other accounts |  | $                 | 8  |   |                 | $ | 21 |  
|                                     |  |                   |    |   |                 |  

S-1



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##### Table of Contents



SCHEDULE III
 STARWOOD HOTELS & RESORTS
 REAL ESTATE AND ACCUMULATED DEPRECIATION
 December 31, 2005
 (In millions)
 Gross Amount Book ValueInitial Cost to
    
    Costs Subsequent to
    
    at December 31, 2005Company
    
    Acquisition(a)(b)
    
    AccumulatedBuilding and
    
    
    
    Building and
    
    (a)
    
    Building and
    
    Depreciation &
    
    Year of
    
    DateDescription
    
    City
    
    State
    
    Land
    
    Improvements
    
    Land
    
    Improvements
    
    Land
    
    Improvements
    
    Amortization
    
    Construction
    
    Acquired
    
    LifeThe St. Regis, New York
    
    New York
    
    NY
    
    $
    65
    
    
    $
    150
    
    
    $
    
    
    
    $
    17
    
    
    $
    65
    
    
    $
    167
    
    
    $
    30
    
    
    1904
    
    6/98
    
    40Hotel properties, each less than 5% of total
    
    Various
    
    Various
    
    
    330
    
    
    
    2,741
    
    
    
    (25
    )
    
    
    296
    
    
    
    305
    
    
    
    3,040
    
    
    
    710
    
    
    Various
    
    Various
    
    Various$
    395
    
    
    $
    2,891
    
    
    $
    (25
    )
    
    $
    313
    
    
    $
    370
    
    
    $
    3,207
    
    
    $
    740Land
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    370
    
    
    
    Furniture, fixtures and equipment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    490
    
    
    
    387Construction in progress
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    $
    4,086
    
    
    $
    1,127 
  (a)
    As of December 31, 2005, land, building and improvements,
    furniture, fixtures and equipment and construction in progress
    have a cost basis of $312 million, $1,754 million,
    $72 million and $20 million, respectively, for federal
    income tax purposes.(b)
    Building and improvements include amounts allocated for
    leasehold interest in land. S-2    Table of Contents  SCHEDULE III  (Continued)
 STARWOOD HOTELS & RESORTS
 REAL ESTATE AND ACCUMULATED DEPRECIATION
 (In millions)
  Year Ended December 31,2005
    
    2004
    
    2003Real Estate and Furniture and FixturesBalance at beginning of period
    
    $
    4,298
    
    
    $
    4,229
    
    
    $
    4,108Additions during period:Improvements
    
    
    76
    
    
    
    153
    
    
    
    62Transfer from assets held for sale
    
    
    
    
    
    
    
    
    
    
    80Deductions during period:Sale of properties
    
    
    (217
    )
    
    
    (84
    )
    
    
    (21
    )Write down of impaired assets
    
    
    (71
    )
    
    
    
    
    
    
    Balance at end of period
    
    $
    4,086
    
    
    $
    4,298
    
    
    $
    4,229Accumulated DepreciationBalance at beginning of period
    
    $
    (1,044
    )
    
    $
    (905
    )
    
    $
    (746
    )Additions during period:Depreciation expense
    
    
    (148
    )
    
    
    (156
    )
    
    
    (155
    )Transfer from assets held for sale
    
    
    
    
    
    
    
    
    
    
    (16
    )Deductions during period:Sale of properties
    
    
    45
    
    
    
    17
    
    
    
    12Write down of impaired assets
    
    
    20
    
    
    
    
    
    
    
    Balance at end of period
    
    $
    (1,127
    )
    
    $
    (1,044
    )
    
    $
    (905
    ) S-3    Table of Contents  
 SCHEDULE IV
 STARWOOD HOTELS & RESORTS
 MORTGAGE LOANS ON REAL ESTATE
 December 31, 2005
 (In millions)
 Interest EarnedAmount of
    
    
    
    
    
    During thePrincipal
    
    
    
    
    
    Twelve MonthsCarrying
    
    Unpaid at
    
    Amount
    
    Interest Due at
    
    EndedPrior
    
    Amount of
    
    December 31,
    
    Being
    
    December 31,
    
    December 31,Description
    
    Liens
    
    Mortgages(a)
    
    2005
    
    Foreclosed
    
    2005
    
    2005Intercompany Mortgage LoansFirst Mortgages:Westin Maui  Hawaii
    
    
    No
    
    
    $
    209
    
    
    $
    200
    
    
    $
    
    
    
    $
    9
    
    
    $
    12Other, all(5) less than 3% of total carrying value
    
    
    No
    
    
    
    131
    
    
    
    112
    
    
    
    
    
    
    
    19
    
    
    
    10Sheraton Holding Corporation Mortgage Note
    
    
    No
    
    
    
    344
    
    
    
    210
    
    
    
    
    
    
    
    134
    
    
    
    18Sheraton Holding Corporation Mortgage Note
    
    
    No
    
    
    
    2,256
    
    
    
    1,289
    
    
    
    
    
    
    
    967
    
    
    
    129Starwood Hotels & Resorts Worldwide, Inc.
    
    
    No
    
    
    
    239
    
    
    
    150
    
    
    
    
    
    
    
    89
    
    
    
    13$
    3,179
    
    
    $
    1,961
    
    
    $
    
    
    
    $
    1,218
    
    
    $
    182 
  (a)
    Per the mortgage loan agreements, several of the loans do not
    require monthly interest payments if cash flows are
    insufficient. Thus, the Trust has accrued interest on such loans. Year Ended December 31,2005
    
    2004
    
    2003Balance at beginning of period
    
    $
    2,974
    
    
    $
    2,836
    
    
    $
    2,661Additions:New mortgage loans
    
    
    200
    
    
    
    
    
    
    
    Accrued interest(a)
    
    
    114
    
    
    
    178
    
    
    
    175Deductions:Principal repayments
    
    
    (109
    )
    
    
    (40
    )
    
    
    Balance at end of period
    
    $
    3,179
    
    
    $
    2,974
    
    
    $
    2,836 
  (a)
    Per the mortgage loan agreements, several of the loans do not
    require monthly interest payments if cash flows are
    insufficient. Thus, the Trust has accrued interest on such loans. S-4    Table of Contents  EXHIBIT INDEX
 ExhibitNumber
    
    Description of Exhibit2
    .1
    
    Formation Agreement, dated as of November 11, 1994, among
    the Trust, the Corporation, Starwood Capital and the Starwood
    Partners (incorporated by reference to Exhibit 2 to the
    Trusts and the Corporations Joint Current Report on
    Form 8-K dated November 16, 1994). (The SEC file
    numbers of all filings made by the Corporation and the Trust
    pursuant to the Securities Exchange Act of 1934, as amended, and
    referenced herein are: 1-7959 (the Corporation) and 1-6828 (the
    Trust)).2
    .2
    
    Form of Amendment No. 1 to Formation Agreement, dated as of
    July 1995, among the Trust, the Corporation and the Starwood
    Partners (incorporated by reference to Exhibit 10.23 to the
    Trusts and the Corporations Joint Registration
    Statement on Form S-2 filed with the SEC on June 29,
    1995 (Registration Nos. 33-59155 and 33-59155-01)).2
    .3
    
    Transaction Agreement, dated as of September 8, 1997, by
    and among the Trust, the Corporation, Realty Partnership,
    Operating Partnership, WHWE L.L.C., Woodstar Investor
    Partnership (Woodstar), Nomura Asset Capital
    Corporation, Juergen Bartels, Westin Hotels & Resorts
    Worldwide, Inc., W&S Lauderdale Corp., W&S Seattle
    Corp., Westin St. John Hotel Company, Inc., W&S Denver
    Corp., W&S Atlanta Corp. and W&S Hotel L.L.C.
    (incorporated by reference to Exhibit 2 to the Trusts
    and the Corporations Joint Current Report on Form 8-K
    filed with the SEC on September 25, 1997, as amended by the
    Form 8-K/A filed with the SEC on December 18, 1997).2
    .4
    
    Master Agreement and Plan of Merger, dated as of
    November 14, 2005, among Host Marriott Corporation, Host
    Marriott, L.P., Horizon Supernova Merger Sub, L.L.C., Horizon
    SLT Merger Sub, L.P., Starwood Hotels & Resorts
    Worldwide, Inc., Starwood Hotels & Resorts, Sheraton
    Holding Corporation and SLT Realty Limited Partnership
    (incorporated by reference to Exhibit 10.1 to the
    Corporations and the Trusts Joint Current Report on
    From 8-K filed November 14, 2005).3
    .1
    
    Amended and Restated Declaration of Trust of the Trust, amended
    and restated through April 16, 1999 (incorporated by
    reference to Exhibit 3.1 of the Trusts and the
    Corporations Joint Quarterly Report on Form 10-Q for
    the quarterly period ended March 31, 1999 (the 1999
    Form 10-Q1).3
    .2
    
    Articles of Amendment to the Amended and Restated Declaration of
    Trust of the Trust, dated as of November 15, 2004
    (incorporated by reference to Exhibit 3.2 of the
    Trusts and the Corporations Joint Annual Report on
    Form 10-K for the fiscal year ended December 31, 2004
    (the 2004 Form 10-K)).3
    .3
    
    Articles of Restatement of the Corporation, as of May 7,
    2004 (incorporated by reference to Exhibit 10.1 to the
    Trusts and the Corporations Joint Quarterly Report
    on Form 10-Q for the quarterly period ended June 30,
    2004 (the 2004 Form 10-Q2)).3
    .4
    
    Bylaws of the Trust, as amended and restated through
    November 8, 2004 (incorporated by reference to
    Exhibit 3.4 of the 2004 Form 10-K).3
    .5
    
    Amended and Restated Bylaws of the Corporation, as amended and
    restated through May 7, 2004 (incorporated by reference to
    Exhibit 10.2 to the 2004 Form 10-Q2).4
    .1
    
    Amended and Restated Intercompany Agreement, dated as of
    January 6, 1999, between the Corporation and the Trust
    (incorporated by reference to Exhibit 3 to the Trust
    Form 8-A, except that on January 6, 1999, the
    Intercompany Agreement was executed and dated as of
    January 6, 1999).4
    .2
    
    Rights Agreement, dated as of March 15, 1999, between the
    Corporation and Chase Mellon Shareholder Services, L.L.C., as
    Rights Agent (incorporated by reference to Exhibit 4 to the
    Trusts and the Corporations Joint Current Report on
    Form 8-K filed with the SEC on March 15, 1999).4
    .3
    
    First Amendment to Rights Agreement, dated as of October 2,
    2003 (incorporated by reference to Exhibit 4 of
    Form 8-A/A filed on October 7, 2003).    Table of Contents  ExhibitNumber
    
    Description of Exhibit4
    .4
    
    Second Amendment to Rights Agreement, dated as of
    October 24, 2003 (incorporated by reference to
    Exhibit 4 of Form 8-A/A filed on October 30,
    2003).4
    .5
    
    Amended and Restated Indenture, dated as of November 15,
    1995, as Amended and Restated as of December 15, 1995
    between ITT Corporation (formerly known as ITT Destinations,
    Inc.) and the First National Bank of Chicago, as trustee
    (incorporated by reference to Exhibit 4.A.IV to the First
    Amendment to ITT Corporations Registration Statement on
    Form S-3 filed November 13, 1996).4
    .6
    
    First Indenture Supplement, dated as of December 31, 1998,
    among ITT Corporation, the Corporation and The Bank of New York
    (incorporated by reference to Exhibit 4.1 to the
    Trusts and the Corporations Joint Current Report on
    Form 8-K filed January 8, 1999).4
    .7
    
    Indenture, dated as of May 25, 2001, by and among the
    Corporation, as Issuer, the guarantors named therein and Firstar
    Bank, N.A., as Trustee (incorporated by reference to
    Exhibit 10.2 to the Corporations and the Trusts
    Joint Quarterly Report on Form 10-Q for the quarterly
    period ended June 30, 2001 (the 2001
    Form 10-Q2)).4
    .8
    
    Indenture, dated as of April 19, 2002, among the
    Corporation, the guarantor parties named therein and
    U.S. Bank National Association, as trustee (incorporated by
    reference to Exhibit 4.1 to the Corporations and
    Sheraton Holding Corporations Joint Registration Statement
    on Form S-4 filed on November 19, 2002 (the 2002
    Forms S-4)).4
    .9
    
    Indenture dated May 16, 2003 between the Corporation, the
    Trust, the Guarantor and U.S. Bank National Association as
    trustee (incorporated by reference to Exhibit 4.9 to the
    July 8, 2003 Form S-3) (Registration Nos. 333-106888,
    333-106888-01, 333-106888-02) (the Form S-3).4
    .10
    
    First Indenture Supplement, dated as of January 11, 2006,
    between the Corporation, the Trust, the Guarantor and
    U.S. Bank National Association as trustee (incorporated by
    reference to Exhibit 10.1 to the Trusts and the
    Corporations Joint Current Report on Form 8-K filed
    January 17, 2006).The Registrants hereby agree to file with the Commission a copy
    of any instrument, including indentures, defining the rights of
    long-term debt holders of the Registrants and their consolidated
    subsidiaries upon the request of the Commission.10
    .1
    
    Third Amended and Restated Limited Partnership Agreement for
    Realty Partnership, dated January 6, 1999, among the Trust
    and the limited partners of Realty Partnership (incorporated by
    reference to Exhibit 10.1 to the Corporations and the
    Trusts Joint Annual Report on Form 10-K for the
    fiscal year ended December 31, 1998 (the 1998
    Form 10-K)).10
    .2
    
    Third Amended and Restated Limited Partnership Agreement for
    Operating Partnership, dated January 6, 1999, among the
    Corporation and the limited partners of Operating Partnership
    (incorporated by reference to Exhibit 10.2 to the 1998
    Form 10-K).10
    .3
    
    Form of Lease Agreement, entered into as of February 14,
    1997, between the Trust (or a subsidiary) as Lessor and the
    Corporation (or a subsidiary) as Lessee (incorporated by
    reference to Exhibit 10.3 to the 2004 Form 10-K).10
    .4
    
    Form of Amendment of Lease, dated as of June 1, 2002,
    between the Trust (or a subsidiary) as Lessor and the
    Corporation (or a subsidiary) as Lessee (incorporated by
    reference to Exhibit 10.4 to the 2004 Form 10-K).10
    .5
    
    Form of Trademark License Agreement, dated as of
    December 10, 1997, between Starwood Capital and the Trust
    (incorporated by reference to Exhibit 10.22 to the
    Trusts and the Corporations Joint Annual Report on
    Form 10-K for the fiscal year ended December 31, 1997
    (the 1997 Form 10-K)).    Table of Contents  ExhibitNumber
    
    Description of Exhibit10
    .6
    
    Credit Agreement, dated October 9, 2002, among the
    Corporation, certain additional alternative currency revolving
    loan borrowers and various lenders, Deutsche Bank, AG, New York
    Branch, as Administrative Agent, JP Morgan Chase Bank, as
    Syndication Agent, Bank of America, N.A., Fleet National Bank
    and Societe Generale, as Co-Documentation Agents, and Deutsche
    Bank Securities Inc. and JP Morgan Securities Inc. as Co-Lead
    Arrangers and joint Book Running Managers (incorporated by
    reference to Exhibit 10.1 of Form 8-K filed on
    October 11, 2002).10
    .7
    
    First Amendment to Credit Agreement (incorporated by reference
    to Exhibit 10.5 to the to the Corporations and the
    Trusts Joint Quarterly Report on Form 10-Q for the
    quarterly period ended March 31, 2003 (the
    2003 10-Q1)).10
    .8
    
    Second Amendment to Credit Agreement (incorporated by reference
    to Exhibit 10.1 to Form 10-Q for the quarter ended
    June 30, 2003 (the 2003 10-Q2)).10
    .9
    
    Third Amendment to Credit Agreement (incorporated by reference
    to Exhibit 10.1 to Form 10-Q for the quarter ended
    September 30, 2004 (the 2004 10-Q3)).10
    .10
    
    Form of Fourth Amendment to the Credit Agreement (incorporated
    by reference to Exhibit 10.1 to the Trusts and the
    Corporations Joint Current Report on Form 8-K filed
    November 9, 2005).10
    .11
    
    Incremental Term Loan Commitment to Credit Agreement
    (incorporated by reference to Exhibit 10.2 to the
    2004 10-Q3).10
    .12
    
    Pledge and Security Agreement, dated as of February 23,
    1998, executed and delivered by the Trust, the Corporation and
    the other Pledgors party thereto, in favor of Bankers Trust
    Company as Collateral Agent (incorporated by reference to
    Exhibit 10.63 to the 1997 Form 10-K).10
    .13
    
    Credit Agreement, dated as of February 10, 2006, among
    Starwood Hotels & Resorts Worldwide, Inc., Starwood
    Hotels & Resorts, certain additional Dollar Revolving
    Loan Borrowers, certain additional Alternate Currency
    Revolving Loan Borrowers, various Lenders, Deutsche Bank AG
    New York Branch, as Administrative Agent, JPMorgan Chase Bank,
    N.A. and Societe Generale, as Syndication Agents, Bank of
    America, N.A. and Calyon New York Branch, as Co-Documentation
    Agents, Deutsche Bank Securities Inc., J.P. Morgan
    Securities Inc. and Banc of America Securities LLC, as Lead
    Arrangers and Book Running Managers, The Bank of Nova Scotia,
    Citicorp North America, Inc., and the Royal Bank of Scotland
    PLC, as Senior Managing Agents and Nizvho Corporate Bank, Ltd.
    as Managing Agent (incorporated by reference to
    Exhibit 10.1 to the Corporations and the Trusts
    Joint Current Report on Form 8-K filed February 15,
    2006).10
    .14
    
    Loan Agreement, dated as of February 23, 1998, between the
    Trust and the Corporation, together with Promissory Note
    executed in connection therewith, by the Corporation to the
    order of the Trust, in the principal amount of $3,282,000,000
    (incorporated by reference to Exhibit 10.65 to the 1997
    Form 10-K).10
    .15
    
    First Modification, dated as of January 27, 1999, to Loan
    Agreement, dated as of February 23, 1998, among ITT
    Corporation, Realty Partnership, Sheraton Phoenician
    Corporation, and Starwood Phoenician CMBS I LLC (incorporated by
    reference to Exhibit 10.13 to the 2004 Form 10-K).10
    .16
    
    Second Modification, dated as of December 30, 1999, to Loan
    Agreement, dated as of February 23, 1998, among ITT
    Corporation, Realty Partnership, the Trust and Starwood Hotels
    and Resorts Holdings, Inc (incorporated by reference to
    Exhibit 10.14 to the 2004 Form 10-K).10
    .17
    
    Third Modification, dated as of June 30, 2000, to Loan
    Agreement, dated as of February 23, 1998, among ITT
    Corporation, the Corporation, Realty Partnership, the Trust and
    Starwood Hotels and Resorts Holdings, Inc. (incorporated by
    reference to Exhibit 10.15 to the 2004 Form 10-K).10
    .18
    
    Loan Agreement, dated as of February 23, 1998, between the
    Trust and the Corporation, together with Promissory Note
    executed in connection therewith, by the Corporation to the
    order of the Trust, in the principal amount of $100,000,000
    (incorporated by reference to Exhibit 10.66 to the 1997
    Form 10-K).    Table of Contents  ExhibitNumber
    
    Description of Exhibit10
    .19
    
    First Modification, dated as of January 27, 1999, to Loan
    Agreement, dated as of February 23, 1998, among the
    Corporation, Harbor-Cal S.D., Starwood Sheraton San Diego
    CMBS I LLC and Realty Partnership (incorporated by reference to
    Exhibit 10.17 to the 2004 Form 10-K).10
    .20
    
    Loan Agreement, dated as of February 23, 1998, between the
    Trust and the Corporation, together with Promissory Note
    executed in connection therewith, by the Corporation to the
    order of the Trust, in the principal amount of $50,000,000
    (incorporated by reference to Exhibit 10.67 to the 1997
    Form 10-K).10
    .21
    
    First Modification, dated as of January 27, 1999, to Loan
    Agreement, dated as of February 23, 1998, among the
    Corporation, Harbor-Cal S.D., Starwood Sheraton San Diego
    CMBS I LLC and Realty Partnership (incorporated by reference to
    Exhibit 10.19 to the 2004 Form 10-K).10
    .22
    
    Loan Agreement, dated as of January 27, 1999, among the
    Borrowers named therein, as Borrowers, Starwood Operator I LLC,
    as Operator, and Lehman Brothers Holding Inc., d/b/a Lehman
    Capital, a division of Lehman Brothers Holdings Inc.
    (incorporated by reference to Exhibit 10.58 to the 1998
    Form 10-K).10
    .23
    
    Starwood Hotels & Resorts 1995 Long-Term Incentive Plan
    (the Trust 1995 LTIP) (Amended and Restated as of
    December 3, 1998) (incorporated by reference to
    Annex D to the Trusts and the Corporations
    Joint Proxy Statement dated December 3, 1998 (the
    1998 Proxy
    Statement))(1)10
    .24
    
    Second Amendment to the Trust 1995 LTIP (incorporated by
    reference to Exhibit 10.4 to the
    2003 10-Q1)(1)10
    .25
    
    Form of Non-Qualified Stock Option Agreement pursuant to the
    Trust 1995 LTIP ((incorporated by reference to
    Exhibit 10.23 to the 2004
    Form 10-K).(1)10
    .26
    
    Starwood Hotels & Resorts Worldwide, Inc. 1995
    Long-Term Incentive Plan (the Corporation 1995 LTIP)
    (Amended and Restated as of December 3, 1998) (incorporated
    by reference to Annex E to the 1998 Proxy
    Statement).(1)10
    .27
    
    Second Amendment to the Corporation 1995 LTIP (incorporated by
    reference to Exhibit 10.3 to the
    2003 10-Q1).(1)10
    .28
    
    Form of Non-Qualified Stock Option Agreement pursuant to the
    Corporation 1995 LTIP (incorporated by reference to
    Exhibit 10.26 to the 2004
    Form 10-K).(1)10
    .29
    
    Starwood Hotels & Resorts Worldwide, Inc. 1999
    Long-Term Incentive Compensation Plan (the 1999
    LTIP) (incorporated by reference to Exhibit 10.4 to
    the Corporations and the Trusts Joint Quarterly
    Report on Form 10-Q for the quarterly period ended
    June 30, 1999 (the 1999
    Form 10-Q2)).(1)10
    .30
    
    First Amendment to the 1999 LTIP, dated as of August 1,
    2001 (incorporated by reference to Exhibit 10.1 to the
    Corporations and the Trusts Joint Quarterly Report
    on Form 10-Q for the quarterly period ended
    September 30,
    2001).(1)10
    .31
    
    Second Amendment to the 1999 LTIP (incorporated by reference to
    Exhibit 10.2 to the
    2003 10-Q1).(1)10
    .32
    
    Form of Non-Qualified Stock Option Agreement pursuant to the
    1999 LTIP (incorporated by reference to Exhibit 10.30 to
    the 2004
    Form 10-K).(1)10
    .33
    
    Form of Restricted Stock Agreement pursuant to the 1999 LTIP
    (incorporated by reference to Exhibit 10.31 to the 2004
    Form 10-K).(1)10
    .34
    
    Starwood Hotels & Resorts Worldwide, Inc. 2002
    Long-Term Incentive Compensation Plan (the 2002
    LTIP) (incorporated by reference to Annex B of the
    Corporations 2002 Proxy
    Statement).(1)10
    .35
    
    First Amendment to the 2002 LTIP (incorporated by reference to
    Exhibit 10.1 to the
    2003 10-Q1).(1)    Table of Contents  ExhibitNumber
    
    Description of Exhibit10
    .36
    
    Form of Non-Qualified Stock Option Agreement pursuant to the
    2002 LTIP (incorporated by reference to Exhibit 10.49 to
    the 2002 Form 10-K filed on February 28, 2003 (the
    2002 10-K)).(1)10
    .37
    
    Form of Restricted Stock Agreement pursuant to the 2002 LTIP
    (incorporated by reference to Exhibit 10.35 to the 2004
    Form 10-K).(1)10
    .38
    
    2004 Long-Term Incentive Compensation Plan (2004
    LTIP) (incorporated by reference to the Corporations
    2004 Notice of Annual Meeting of Stockholders and Proxy
    Statement, pages A-1 through
    A-20).(1)10
    .39
    
    Form of Non-Qualified Stock Option Agreement pursuant to the
    2004 LTIP (incorporated by reference to Exhibit 10.4 to the
    2004 10-Q2).(1)10
    .40
    
    Form of Restricted Stock Agreement pursuant to the 2004 LTIP
    (incorporated by reference to Exhibit 10.38 to the 2004
    Form 10-K).(1)10
    .41
    
    Form of Non-Qualified Stock Option Agreement pursuant to the
    2004 LTIP (incorporated by reference to Exhibit 10.2 to the
    Corporations and the Trusts Joint Current Report on
    Form 8-K filed February 13, 2006 (the February
    2006
    Form 8-K)).(1)10
    .42
    
    Form of Restricted Stock Agreement pursuant to the 2004 LTIP
    (incorporated by reference to Exhibit 10.1 to the February
    2006
    Form 8-K).(1)10
    .43
    
    Starwood Hotels & Resorts Worldwide, Inc. 2005 Annual
    Incentive Plan for Certain Executives (incorporated by reference
    to Appendix A to the Corporations 2005 Proxy
    Statement).(1)10
    .44
    
    Starwood Hotels & Resorts Worldwide, Inc. Annual
    Incentive Plan, dated as of November 3, 2005 (incorporated
    by reference to Exhibit 10.1 to the Corporations and
    the Trusts Joint Quarterly Report on Form 10-Q for
    the quarterly period ended September 30, 2005 (the
    2005
    Form 10-Q3)).(1)10
    .45
    
    Starwood Hotels & Resorts Worldwide, Inc. Deferred
    Compensation Plan, effective as of January 1, 2001
    (incorporated by reference to Exhibit 10.1 to the 2001
    Form 10-Q2).(1)10
    .46
    
    Amendment, dated as of November 3, 2005, to the Deferred
    Compensation Plan (incorporated by reference to
    Exhibit 10.2 to the 2005
    Form 10-Q3).(1)10
    .47
    
    Form of Indemnification Agreement between the Corporation, the
    Trust and each of its Directors/Trustees and executive officers
    (incorporated by reference to Exhibit 10.10 to the 2003
    Form 10-K).(1)10
    .48
    
    Registration Rights Agreement, dated May 16, 2003, among
    the Corporation, the Guarantor and the Initial Purchasers
    (incorporated by reference to Exhibit 4.10 to the
    Form S-3).10
    .49
    
    Exchange Rights Agreement, dated as of January 1, 1995,
    among the Trust, the Corporation, Realty Partnership, Operating
    Partnership and the Starwood Partners (incorporated by reference
    to Exhibit 2B to the Trusts and the
    Corporations Joint Current Report on Form 8-K dated
    January 31, 1995 (the Formation Form 8-K)).10
    .50
    
    Registration Rights Agreement, dated as of January 1, 1995,
    among the Trust, the Corporation and Starwood Capital
    (incorporated by reference to Exhibit 2C to the Formation
    Form 8-K).10
    .51
    
    Exchange Rights Agreement, dated as of June 3, 1996, among
    the Trust, the Corporation, Realty Partnership, Operating
    Partnership, Philadelphia HIR Limited Partnership and
    Philadelphia HSR Limited Partnership (incorporated by reference
    to Exhibit 10.1 to the Trusts and the
    Corporations Joint Quarterly Report on Form 10-Q for
    the quarterly period ended June 30, 1996 (the 1996
    Form 10-Q2)).10
    .52
    
    Registration Rights Agreement, dated as of June 3, 1996,
    among the Trust, the Corporation and Philadelphia HSR Limited
    Partnership (incorporated by reference to Exhibit 10.2 to
    the 1996 Form 10-Q2).    Table of Contents  ExhibitNumber
    
    Description of Exhibit10
    .53
    
    Units Exchange Rights Agreement, dated as of February 14,
    1997, by and among, inter alia, the Trust, the
    Corporation, Realty Partnership, Operating Partnership and the
    Starwood Partners (incorporated by reference to
    Exhibit 10.34 to the 1997 Form 10-K).10
    .54
    
    Class A Exchange Rights Agreement, dated as of
    February 14, 1997, by and among, inter alia, the
    Trust, the Corporation, Operating Partnership and the Starwood
    Partners (incorporated by reference to Exhibit 10.35 to the
    1997 Form 10-K).10
    .55
    
    Exchange Rights Agreement, dated as of January 2, 1998,
    among, inter alia, the Trust, Realty Partnership and
    Woodstar (incorporated by reference to Exhibit 10.50 to the
    1997 Form 10-K).10
    .56
    
    Amendment to Exchange Rights Agreement (Class A Realty
    Partnership Units), dated as of October 10, 2002, among the
    Trust, Realty Partnership and certain limited partners of the
    Realty Partnership (incorporated by reference to
    Exhibit 10.53 to the 2002 Form 10-K).10
    .57
    
    Amendment to Exchange Rights Agreement, dated as of
    December 17, 2003 for the Class A Realty Partnership
    Units (incorporated by reference to Exhibit 10.67 to the
    2003 Form 10-K).10
    .58
    
    Exchange Rights Agreement, dated as of January 2, 1998,
    among, inter alia, the Corporation, Operating Partnership
    and Woodstar (incorporated by reference to Exhibit 10.51 to
    the 1997 Form 10-K).10
    .59
    
    Amendment to Exchange Rights Agreement (Class B Operating
    Partnership Units), dated as of October 10, 2002, among the
    Corporation, Operating Partnership and certain limited partners
    of the Operating Partnership (incorporated by reference to
    Exhibit 10.54 to the 2002 form 10-K).10
    .60
    
    Employment Agreement, dated March 25, 1998, between
    Theodore Darnall and the Corporation (incorporated by reference
    to Exhibit 10.61 to the 2002
    Form 10-K).(1)10
    .61
    
    Severance Agreement, dated December 1999, between the
    Corporation and Theodore Darnall (incorporated by reference to
    Exhibit 10.55 to the 2002
    Form 10-K).(1)10
    .62
    
    Employment Agreement, dated as of November 13, 2003,
    between the Corporation and Vasant Prabhu (incorporated by
    reference to Exhibit 10.68 to the
    2003 10-K).(1)10
    .63
    
    Employment Agreement, dated as of September 20, 2004,
    between the Corporation and Steven J. Heyer (incorporated by
    reference to Exhibit 10.1 to the Trusts and the
    Corporations Joint Current Report on Form 8-K filed
    with the SEC on September 24,
    2004).(1)10
    .64
    
    Amendment, dated as of May 4, 2005, to Employment Agreement
    between the Corporation and Steve J. Heyer (incorporated by
    reference to Exhibit 10.1 to the Corporations and
    Trusts Joint Quarterly Report on Form 10-Q for the
    quarterly period ended March 31,
    2005).(1)10
    .65
    
    Form of Non-Qualified Stock Option Agreement between the
    Corporation and Steven J. Heyer pursuant to the 2004 LTIP
    (incorporated by reference to Exhibit 10.70 to the 2004
    Form 10-K).(1)10
    .66
    
    Form of Restricted Stock Unit Agreement between the Corporation
    and Steven J. Heyer pursuant to the 2004 LTIP (incorporated by
    reference to Exhibit 10.71 to the 2004
    Form 10-K).(1)10
    .67
    
    Employment Agreement, dated as of November 13, 2003,
    between the Corporation and Kenneth Siegel (incorporated by
    reference to Exhibit 10.57 to the Corporations and
    Trusts Joint Annual Report on Form 10-K for the fiscal
    year ended December 31, 2000 (the 2000 Form
    10-K)).(1)10
    .68
    
    Form of Severance Agreement, dated as of September 26,
    2000, between the Corporation and Kenneth S. Siegel
    (incorporated by reference to Exhibit 10.58 to the 2000 Form
    10-K).(1)10
    .69
    
    Letter Agreement, dated July 22, 2004 between the
    Corporation and Kenneth Siegel (incorporated by reference to
    Exhibit 10.73 to the 2004
    Form 10-K).(1)10
    .70
    
    Employment Agreement, dated December 27, 1996, between
    Starwood Vacation Ownership and Raymond Gellein (incorporated by
    reference to Exhibit 10.1 to Vistana Inc.s
    Registration Statement on Form S-1 filed with the SEC on
    February 27,
    1997).(1)    Table of Contents  ExhibitNumber
    
    Description of Exhibit10
    .71
    
    Amendment Number 1 and Amendment Number 2 to the Employment
    Agreement between Starwood Vacation Ownership and Raymond
    Gellein (incorporated by reference to Exhibits 10.1(a) and
    10.1(b) to Vistana Inc.s Annual Report on Form 10-K
    for the fiscal year ended December 31,
    1998).(1)10
    .72
    
    Severance Agreement, dated October 1, 2003, between the
    Corporation and Raymond
    Gellein.(1)(2)12
    .1
    
    Calculation of Ratio of Earnings to Total Fixed Charges.
    (2)21
    .1
    
    Subsidiaries of the
    Registrants.(2)23
    .1
    
    Consent of Ernst & Young
    LLP.(2)31
    .1
    
    Certification Pursuant to Rule 13a-14 under the Securities
    Exchange Act of 1934  Chief Executive
    Officer 
    Corporation.(2)31
    .2
    
    Certification Pursuant to Rule 13a-14 under the Securities
    Exchange Act of 1934  Chief Financial
    Officer 
    Corporation.(2)31
    .3
    
    Certification Pursuant to Rule 13a-14 under the Securities
    Exchange Act of 1934  Chief Executive
    Officer  Trust.
    (2)31
    .4
    
    Certification Pursuant to Rule 13a-14 under the Securities
    Exchange Act of 1934  Chief Financial and Accounting
    Officer 
    Trust.(2)32
    .1
    
    Certification Pursuant to Section 1350 of Chapter 63
    of Title 18 of the United States Code  Chief
    Executive Officer 
    Corporation.(2)32
    .2
    
    Certification Pursuant to Section 1350 of Chapter 63
    of Title 18 of the United States Code  Chief
    Financial Officer 
    Corporation.(2)32
    .3
    
    Certification Pursuant to Section 1350 of Chapter 63
    of Title 18 of the United States Code  Chief
    Executive Officer 
    Trust.(2)32
    .4
    
    Certification Pursuant to Section 1350 of Chapter 63
    of Title 18 of the United States Code  Chief
    Financial and Accounting Officer 
    Trust.(2) 
  (1)
    Management contract or compensatory plan or arrangement required
    to be filed as an exhibit pursuant to Item 14(c) of
    Form 10-K.(2)
    Filed herewith.