WYNDHAM WORLDWIDE CORPORATION

average exchange rates during the periods presented. The gains or losses resulting from translating foreign currency
financial statements into U.S. dollars, net of hedging gains or losses and taxes, are included in accumulated other
comprehensive income on the Consolidated Balance Sheets. Gains or losses resulting from foreign currency
transactions are included in the Consolidated Statements of Operations.
STOCK-BASED COMPENSATION
In accordance with the guidance for stock-based compensation, the Company measures all employee stockbased
compensation awards using a fair value method and records the related expense in its Consolidated Statements
of Operations. The Company uses the modified prospective transition method, which requires that compensation cost
be recognized in the financial statements for all awards granted after the date of adoption as well as for existing
awards for which the requisite service has not been rendered as of the date of adoption and requires that prior
periods not be restated.
As of December 31, 2008, the Company had an APIC Pool balance of $4 million on its Consolidated Balance
Sheet. During March 2009, the Company utilized its APIC Pool related to the vesting of restricted stock units
(“RSUs”), which reduced the balance to $0 on its Consolidated Balance Sheet. During May 2009, the Company
recorded a $4 million charge to its provision for income taxes on its Consolidated Statement of Operations related to
additional vesting of RSUs. During 2010, the Company increased its APIC Pool by $12 million due to the vesting of
equity awards. As of December 31, 2010, the Company’s APIC Pool balance was $12 million.
EQUITY EARNINGS AND OTHER INCOME
The Company applies the equity method of accounting when it has the ability to exercise significant influence
over operating and financial policies of an investee. The Company recorded $1 million, $1 million and $4 million of
net earnings from such investments during 2010, 2009 and 2008, respectively, in other income, net on the
Consolidated Statements of Operations. In addition, during 2010, the Company recorded $6 million of income
primarily related to gains associated with the sale of non-strategic assets at its vacation ownership business. During
2009, the Company recorded $5 million of income primarily related to gains associated with the sale of nonstrategic
assets at its vacation ownership and vacation exchange and rentals businesses. During 2008, the Company
recorded $7 million of income primarily associated with the assumption of a lodging-related credit card marketing
program obligation by a third-party and the sale of a non-strategic asset by the Company’s lodging business. Such
amounts were recorded within other income, net on the Consolidated Statements of Operations.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Transfers and Servicing. In June 2009, the Financial Accounting Standards Board (“FASB”) issued guidance on
transfers and servicing of financial assets. The guidance eliminates the concept of a Qualifying Special — Purpose
Entity, changes the requirements for derecognizing financial assets, and requires additional disclosures in order to
enhance information reported to users of financial statements by providing greater transparency about transfers of
financial assets, including securitization transactions, and an entity’s continuing involvement in and exposure to the
risks related to transferred financial assets. The guidance is effective for interim or annual reporting periods
beginning after November 15, 2009. The Company adopted the guidance on January 1, 2010, as required. See
Note 8 — Vacation Ownership Contract Receivables for additional disclosure required by such guidance.
Consolidation. In June 2009, the FASB issued guidance that modifies how a company determines when an
entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated.
The guidance clarifies that the determination of whether a company is required to consolidate an entity is based on,
among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that
most significantly impact the entity’s economic performance. The guidance requires an ongoing reassessment of
whether a company is the primary beneficiary of a variable interest entity, additional disclosures about a company’s
involvement in VIEs and any significant changes in risk exposure due to that involvement. The guidance is effective
for interim or annual reporting periods beginning after November 15, 2009. The Company adopted the guidance on
January 1, 2010, as required. See Note 8 — Vacation Ownership Contract Receivables for additional disclosure
required by such guidance regarding the consolidation of the Company’s bankruptcy remote special purpose entities
(“SPEs”) associated with its vacation ownership contract receivables securitizations.
Multiple-Deliverable Revenue Arrangements. In October 2009, the FASB issued guidance on multiple-deliverable
revenue arrangements, which requires an entity to apply the relative selling price allocation method in order to
estimate selling prices for all units of accounting, including delivered items, when vendor-specific objective evidence
or acceptable third-party evidence does not exist. The guidance is effective for revenue arrangements entered into or
materially modified in fiscal years beginning on or after June 15, 2010 and shall be applied on a prospective basis.
Earlier application is permitted as of the beginning of an entity’s fiscal year. The Company will adopt the guidance
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