12  NOTES RECEIVABLE

The following table details the composition of our notes receivable balances at year-end 2009 and year-end 2008.

We classify notes receivable due within one year as current assets in the caption "Accounts and notes receivable" in the accompanying Consolidated Balance Sheets, including $73 million and $81 million, as of year-end 2009 and year-end 2008, respectively, related to loans to timeshare owners. Total long-term notes receivable as of year-end 2009 and year-end 2008 of $452 million and $830 million, respectively, consist of loans to timeshare owners of $352 million and $607 million, respectively, loans to equity method investees of $10 million and $50 million, respectively, and other notes receivable of $90 million and $173 million, respectively.

Notes receivable at year-end 2009 were due to us as follows: $168 million in 2010; $58 million in 2011; $64 million in 2012; $43 million in 2013; $39 million in 2014; and $248 million thereafter. The 2009 notes receivable balance is net of reserves of $210 million and unamortized discounts totaling $16 million. The 2008 notes receivable balance is net of reserves of $148 million and unamortized discounts totaling $21 million. Gains from the sale of notes receivable totaled approximately $37 million, $16 million, and $82 million during 2009, 2008, and 2007, respectively.

Senior, Mezzanine, and Other Loans
We reflect interest income associated with "Senior, mezzanine, and other loans" in the "Interest income" caption in the accompanying Consolidated Statements of Income. For financial statement purposes we do not accrue interest on "Senior, mezzanine, and other loans" that are impaired. At year-end 2009, our recorded investment in impaired "Senior, mezzanine, and other loans" was $191 million. We had a $183 million notes receivable reserve representing an allowance for credit losses, leaving $8 million of our investment in impaired loans for which there was no related allowance for credit losses. At year-end 2008, our recorded investment in impaired "Senior, mezzanine, and other loans" was $157 million. We had a $113 million notes receivable reserve representing an allowance for credit losses, leaving $44 million of our investment in impaired loans for which there was no related allowance for credit losses. During 2009 and 2008, our average investment in impaired loans totaled $174 million and $135 million, respectively.

In 2009, we fully reserved two notes receivable balances that we deemed uncollectible, one of which relates to a project that is in development, and partially reserved one notes receivable balance. We recorded a total charge of $43 million in 2009 in the "General, administrative, and other" expense caption in our Consolidated Statements of Income related to these notes receivable balances. See Footnote No. 21, "Restructuring Costs and Other Charges" for additional information.

In 2009, we also fully reserved certain notes receivable balances that we deemed uncollectible, which relate to a Timeshare segment joint venture project that is in development. Accordingly, we recorded a loan impairment charge of $40 million in 2009 in the "Timeshare strategy – impairment charges (non-operating)" caption of our Consolidated Statements of Income. See Footnote No. 20, "Timeshare Strategy – Impairment Charges," for additional information.

The following table summarizes the activity related to our "Senior, mezzanine, and other loans" notes receivable reserve for 2007, 2008, and 2009:

Loans to Timeshare Owners
At year-end 2009, the weighted average interest rate for our "Loans to timeshare owners" was 12.2 percent and the stated interest rates associated with these loans ranged from zero to 19.50 percent. We reflect interest income associated with "Loans to timeshare owners" of $46 million, $68 million, and $50 million for 2009, 2008, and 2007, respectively, in the accompanying Consolidated Statements of Income in the "Timeshare sales and services" revenue caption. Our recorded investment in "Loans to timeshare owners" on nonaccrual status at year-end 2009 and year-end 2008 totaled $113 million and $74 million, respectively.

The following table summarizes the activity related to our "Loans to timeshare owners" notes receivable reserve for 2007, 2008, and 2009:

> Back to top of page

> Go to next page