WYNDHAM WORLDWIDE CORPORATION

cash flow model in determining the fair values of vacation ownership contract receivables. The primary assumptions
used in determining fair value are prepayment speeds, estimated loss rates and discount rates. We use a durationbased
model in determining the impact of interest rate shifts on our debt and interest rate derivatives. The primary
assumption used in these models is that a 10% increase or decrease in the benchmark interest rate produces a
parallel shift in the yield curve across all maturities.
We use a current market pricing model to assess the changes in the value of our foreign currency derivatives
used by us to hedge underlying exposure that primarily consist of the non-functional current assets and liabilities of
us and our subsidiaries. The primary assumption used in these models is a hypothetical 10% weakening or
strengthening of the U.S. dollar against all our currency exposures as of December 31, 2010. The gains and losses
on the hedging instruments are largely offset by the gains and losses on the underlying assets, liabilities or expected
cash flows. As of December 31, 2010, the absolute notional amount of our outstanding foreign exchange hedging
instruments was $480 million. A hypothetical 10% change in the foreign currency exchange rates would result in an
immaterial change in the fair value of the hedging instrument as of December 31, 2010. Such a change would be
largely offset by an opposite effect on the underlying assets, liabilities and expected cash flows.
Our total market risk is influenced by a wide variety of factors including the volatility present within the
markets and the liquidity of the markets. There are certain limitations inherent in the sensitivity analyses presented.
While probably the most meaningful analysis, these “shock tests” are constrained by several factors, including the
necessity to conduct the analysis based on a single point in time and the inability to include the complex market
reactions that normally would arise from the market shifts modeled.
We used December 31, 2010 market rates on outstanding financial instruments to perform the sensitivity
analysis separately for each of our market risk exposures — interest and foreign currency rate instruments. The
estimates are based on the market risk sensitive portfolios described in the preceding paragraphs and assume
instantaneous, parallel shifts in interest rate yield curves and exchange rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Financial Statements and Financial Statement Index commencing on page F-1 hereof.
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures. Our management, with the participation of our Chairman and Chief
Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such
evaluation, our Chairman and Chief Executive Officer and Chief Financial Officer have concluded that,
as of the end of such period, our disclosure controls and procedures are effective.
(b) Management’s Report on Internal Control over Financial Reporting. Our management is responsible for
establishing and maintaining adequate internal control over financial reporting, as defined in
Rule 13a-15(f) under the Exchange Act. Our management assessed the effectiveness of our internal
control over financial reporting as of December 31, 2010. In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control — Integrated Framework. Based on this assessment, our management
believes that, as of December 31, 2010, our internal control over financial reporting is effective. Our
independent registered public accounting firm has issued an attestation report on the effectiveness of our
internal control over financial reporting, which is included within their audit opinion on page F-2.
ITEM 9B. OTHER INFORMATION
None.
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