WYNDHAM WORLDWIDE CORPORATION

2010 2009
Non-current deferred income tax assets:
Net operating loss carryforwards $ 52 $ 53
Foreign tax credit carryforward 41 67
Alternative minimum tax credit carryforward 71 44
Tax basis differences in assets of foreign subsidiaries 71 79
Accrued liabilities and deferred income 27 18
Other comprehensive income 40 32
Other 3 19
Depreciation and amortization 4 17
Valuation allowance (*)
(34) (50)
Non-current deferred income tax assets
Non-current deferred income tax liabilities:
275 279
Depreciation and amortization 585 547
Installment sales of vacation ownership interests 703 869
Other 8 —
Non-current deferred income tax liabilities 1,296 1,416
Non-current net deferred income tax liabilities $ 1,021 $ 1,137
(*)
During 2010, the Company’s valuation allowance was reduced by $32 million, primarily due to the current utilization of certain cumulative foreign
tax credits, which the Company was able to realize based on certain changes in its tax profile.
As of December 31, 2010, the Company’s net operating loss carryforwards primarily relate to state net
operating losses which are due to expire at various dates, but no later than 2030. No provision has been made for
U.S. federal deferred income taxes on $323 million of accumulated and undistributed earnings of certain foreign
subsidiaries as of December 31, 2010 since it is the present intention of management to reinvest the undistributed
earnings indefinitely in those foreign operations. The determination of the amount of unrecognized U.S. federal
deferred income tax liability for unremitted earnings is not practicable.
The Company’s effective income tax rate differs from the U.S. federal statutory rate as follows for the year
ended December 31:
2010 2009 2008
Federal statutory rate 35.0% 35.0% 35.0%
State and local income taxes, net of federal tax benefits 1.3 1.7 (1.9)
Taxes on foreign operations at rates different than U.S. federal statutory rates (1.0) (0.9) 1.6
Taxes on foreign income, net of tax credits 1.0 1.9 (1.2)
Foreign tax credits (3.6) — —
IRS examination settlement (1.8) — —
Other 1.8 2.9 (2.2)
Goodwill impairment — — (52.4)
32.7% 40.6% (21.1)%
The Company’s effective tax rate declined from 40.6% in 2009 to 32.7% in 2010 primarily due to the benefit
derived from the current utilization of certain cumulative foreign tax credits, which the Company was able to realize
based on certain changes in its tax profile, as well as the settlement of the IRS examination. The difference between
the Company’s 2009 effective tax rate of 40.6% and 2008 effective tax rate of (21.1%) is primarily due to the
absence of impairment charges recorded during 2008, a charge recorded during 2009 for the reduction of deferred
tax assets and the origination of deferred tax liabilities in a foreign tax jurisdiction and the write-off of deferred tax
assets that were associated with stock-based compensation, which were in excess of the Company’s pool of excess
tax benefits available to absorb tax deficiencies.
F-21