In sales transactions where we retain a management con- tract, the terms and conditions of the management contract are comparable to the terms and conditions of the management agreements obtained directly with third-party owners in com- petitive bid processes. We periodically sell, with limited recourse, through special purpose entities, notes receivable originated by our timeshare business in connection with the sale of timeshare intervals. We continue to service the notes and transfer all proceeds collected to the special purpose entities. We retain servicing assets and interests in the securitizations which are accounted for as inter- est only strips. The interests are limited to the present value of cash available after paying financing expenses, program fees, and absorbing credit losses. Gains from the sales of timeshare notes receivable totaled $40 million in 2001, $22 million in 2000 and $29 million in 1999 and are included in other sales in the consolidated statement of income. At the date of securitization and at the end of each report- ing period, we estimate the fair value of the interest only strips and servicing assets using a discounted cash flow model. These transactions utilize interest rate swaps to protect the net inter- est margin associated with the beneficial interest. We report changes in the fair value of the interest only strips that are treated as available-for-sale securities under the provisions of FAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” through other comprehensive income in the accompanying consolidated balance sheet. We report in income changes in the fair value of interest only strips treated as trad- ing securities under the provisions of FAS No. 115. The key assumptions used in measuring the fair value of the interest only strips at the time of securitization and at the end of the two years ended December 28, 2001 and December 29, 2000, were as follows: average discount rate of 6.89 percent and 7.82 percent, respectively; average expected annual prepayments, including defaults, of 15.43 percent and 12.72 percent, respec- tively; and expected weighted average life of prepayable notes receivable of 118 months and 86 months, respectively. Our key assumptions are based on experience. To date, actual results have not materially affected the carrying value of the interests. Cash flows between us and third-party purchasers during the years ended December 28, 2001 and December 29, 2000, were as follows: net proceeds to us from new securitizations of $199 million and $144 million, respectively, repurchases by us of delinquent loans (over 150 days overdue) of $11 million and $12 million, respectively, servicing fees received by us of $2 mil- lion in each year, and cash flows received on retained interests of $30 million and $18 million, respectively. On December 12, 2000, we repurchased notes receivable with  a principal balance of $359 million and immediately sold those notes, along with $19 million of additional notes, in a $378 million securitization to an investor group. We have included net proceeds from these transactions of $16 million in the net proceeds from securitizations of $144 million disclosed above. We realized a gain of $3 million, primarily associated with the $19 million of addi- tional notes sold, which is included in the $22 million gain on the sales of notes receivable for fiscal year 2000 disclosed above. In December 2001, management approved and committed to a plan to exit the companion living concept of senior living ser- vices and sell the related properties within the next 12 months. We recorded a $60 million impairment charge to adjust the During the fourth quarter of 2001, management approved and committed to a plan to sell two lodging properties and undeveloped land for an estimated sales price of $119 million. Seven additional lodging properties ($156 million) were subject to signed sales contracts at December 28, 2001. We recorded an impairment charge to adjust the carrying value of three proper- ties and the undeveloped land to their estimated fair value less cost to sell. See the Restructuring Costs and Other Charges foot- note. All properties held for sale at December 29, 2000, were under signed sales contracts and were sold in 2001. At December 28, 2001, assets held for sale included $76 million of full-service lodging properties, $158 million of select-service properties, $27 million of extended-stay properties, $14 million of undeveloped land and $49 million of senior living services proper- ties. At December 29, 2000, assets held for sale included $143 mil- lion of full-service lodging properties, $66 million of select-service properties and $21 million of extended-stay properties. Included in other current assets at December 28, 2001 and December 29, 2000, are $324 million and $230 million, respec- tively, of assets held for sale. At December 28, 2001, assets held for sale consisted of $316 million of property, plant and equip- ment and $8 million of other related assets. Included in other current liabilities at December 28, 2001, are $8 million of liabili- ties related to the assets held for sale. At December 28, 2001, $499 million of principal remains outstanding in all securitizations in which we have a retained interest only strip. Delinquencies of more than 90 days at December 28, 2001, amounted to $5 million. Loans repurchased by the Company, net of obligors subsequently curing delinquen- cies, during the year ended December 28, 2001, amounted to  $4 million. We have been able to resell timeshare units underlying repurchased loans without incurring material losses. We have completed a stress test on the net present value of the interest only strips and the servicing assets with the objective of measuring the change in value associated with independent changes in individual key variables. The methodology used applied unfavor- able changes that would be considered statistically significant for the key variables of prepayment rate, discount rate, and weighted average remaining term. The net present value of the interest only strips and servicing assets was $90 million at December 28, 2001, before any stress test changes were applied. An increase of 100 basis points in the prepayment rate would decrease the year-end valuation by  $2 million, or 2 percent, and an increase of 200 basis points in the prepayment rate would decrease the year-end valuation by $4 mil- lion, or 4 percent. An increase of 100 basis points in the discount rate would decrease the year-end valuation by $2 million, or 2 per- cent, and an increase of 200 basis points in the discount rate would decrease the year-end valuation by $3 million, or 4 percent. A decline of two months in the weighted average remaining term would decrease the year-end valuation by $1 million, or 2 percent, and a decline of four months in the weighted average remaining term would decrease the year-end valuation by $3 million, or 3 percent. ASSETS HELD FOR SALE ASSET SECURITIZATIONS 31 Marriott International, Inc. 2001 Annual Report