WYNDHAM WORLDWIDE CORPORATION

k $29 million of losses from foreign exchange transactions and the unfavorable impact from foreign
exchange hedging contracts at our vacation exchange and rentals business;
k $26 million of incremental expenses at our lodging business related to bad debt expense, remediation
efforts on technology compliance initiatives and our acquisition of USFS;
k a $24 million unfavorable impact from the resolution of and adjustment to certain contingent liabilities and
assets recorded during 2009 as compared to 2008;
k $19 million of higher corporate costs primarily related to employee incentive programs, severance, hedging
activity and additional rent associated with the consolidation of two leased facilities into one, partially
offset by cost savings initiatives;
k non-cash charges of $15 million at our vacation ownership and lodging businesses to reduce the carrying
value of certain assets based on their revised estimated fair values;
k $8 million of incremental costs at our vacation exchange and rentals business related to marketing, IT and
facility operations;
k an $8 million increase in consumer financing interest expenses primarily related to an increase in interest
rates, partially offset by decreased average borrowings on our securitized debt facilities; and
k $6 million of incremental property management expenses at our vacation ownership business associated
with the growth in the number of units under management, partially offset by cost containment initiatives
implemented during 2009.
Other income, net decreased $5 million primarily as a result of a decline in net earnings from equity
investments, the absence of income associated with the assumption of a lodging-related credit card marketing
program obligation by a third party and the absence of income associated with the sale of a non-strategic asset at
our lodging business, partially offset by higher gains associated with the sale of non-strategic assets at our vacation
ownership business. Such amounts are included within our segment EBITDA results. Interest expense increased
$34 million during 2009 as compared to 2008 primarily due to an increase in interest incurred on our long-term
debt facilities resulting from our May 2009 debt issuances (see Note 13 — Long-Term Debt and Borrowing
Arrangements) and lower capitalized interest at our vacation ownership business due to lower development of
vacation ownership inventory. Interest income decreased $5 million during 2009 compared to 2008 due to decreased
interest earned on invested cash balances as a result of lower rates earned on investments. The difference between
our 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 our pool of excess tax benefits available to
absorb tax deficiencies.
As a result of these items, our net income increased $1,367 million as compared to 2008.
Following is a discussion of the results of each of our segments, other income net and interest expense/income:
Net Revenues EBITDA
2009 2008
%
Change 2009 2008
%
Change
Lodging $ 660 $ 753 (12) $ 175 $ 218 (20)
Vacation Exchange and Rentals 1,152 1,259 (8) 287 248 16
Vacation Ownership 1,945 2,278 (15) 387 (1,074) *
Total Reportable Segments 3,757 4,290 (12) 849 (608) *
Corporate and Other (a)
(7) (9) * (71) (27) *
Total Company $3,750 $4,281 (12) 778 (635) *
Less: Depreciation and amortization 178 184
Interest expense 114 80
Interest income (7) (12)
Income/(loss) before income taxes $ 493 $ (887)
* Not meaningful.
(a)
Includes the elimination of transactions between segments.
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