WYNDHAM WORLDWIDE CORPORATION

Consolidated Statement of Operations during the year ended December 31, 2010. The amount of losses that the Company
expects to reclassify from other comprehensive income to earnings during the next 12 months is not material. The impact
of the freestanding derivatives was a gain of $14 million, $7 million and a loss of $5 million (of which $6 million,
$7 million and $5 million was included in consumer financing interest expense and $8 million, $0 and $0 was included
in interest expense), during the years ended December 31, 2010, 2009 and 2008, respectively on the Company’s
Consolidated Statements of Operations. The freestanding derivatives had an immaterial impact on the Company’s
financial position and cash flows during the years ended December 31, 2010, 2009 and 2008.
The following table summarizes information regarding the Company’s derivative instruments as of
December 31, 2010:
Assets Liabilities
Balance Sheet Location Fair Value Balance Sheet Location Fair Value
Derivatives designated as hedging
instruments
Interest rate contracts
Derivatives not designated as hedging
instruments
Other non-current liabilities $ 18
Interest rate contracts Other non-current assets $ 7 Other non-current liabilities $ 9
Foreign exchange contracts
Convertible Notes related
Other current assets 4 Accrued exp. & other current liabs. 12
Call Options (*)
Other non-current assets 162 —
Bifurcated Conversion Feature (*)
Total derivatives not designated as
— Long-term debt 162
hedging instruments $ 173 $ 183
(*)
See Note 13 — Long-Term Debt and Borrowing Arrangements for further detail.
The following table summarizes information regarding the Company’s derivative instruments as of
December 31, 2009:
Assets Liabilities
Balance Sheet Location Fair Value Balance Sheet Location Fair Value
Derivatives designated as hedging
instruments
Interest rate contracts
Derivatives not designated as hedging
instruments
Other non-current liabilities $ 39
Interest rate contracts Other non-current assets $ 5 Other non-current liabilities $ 6
Foreign exchange contracts
Convertible Notes related
Other current assets 3 Accrued exp. & other current liabs. 2
Call Options (*)
Other non-current assets 176 —
Bifurcated Conversion Feature (*)
Total derivatives not designated as
— Long-term debt 176
hedging instruments $ 184 $ 184
(*)
See Note 13 — Long-Term Debt and Borrowing Arrangements for further detail.
Credit Risk and Exposure
The Company is exposed to counterparty credit risk in the event of nonperformance by counterparties to
various agreements and sales transactions. The Company manages such risk by evaluating the financial position and
creditworthiness of such counterparties and by requiring collateral in instances in which financing is provided. The
Company mitigates counterparty credit risk associated with its derivative contracts by monitoring the amounts at risk
with each counterparty to such contracts, periodically evaluating counterparty creditworthiness and financial
position, and where possible, dispersing its risk among multiple counterparties.
As of December 31, 2010, there were no significant concentrations of credit risk with any individual
counterparty or groups of counterparties. However, approximately 19% of the Company’s outstanding vacation
ownership contract receivables portfolio relates to customers who reside in California. With the exception of the
financing provided to customers of its vacation ownership businesses, the Company does not normally require
collateral or other security to support credit sales.
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