EX-99.1 2 v384424_ex99-1.htm EARNINGS RELEASE

 

EXHIBIT 99.1

 

 

Wyndham Worldwide Reports Second Quarter 2014 Earnings

Adjusted Diluted EPS Growth of 19%

Raises Full Year EBITDA and EPS Guidance

 

 

PARSIPPANY, N.J. (July 24, 2014) – Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended June 30, 2014.

 

SECOND QUARTER HIGHLIGHTS:

 

·Adjusted diluted earnings per share (EPS) was $1.17, an increase of 19% from adjusted diluted EPS of $0.98 in the second quarter of 2013. Reported diluted EPS was $1.20, compared with $0.98 in the second quarter of 2013.

 

·Revenues increased 7% compared with the second quarter of 2013.

 

·Adjusted EBITDA increased 9% compared with the second quarter of 2013.

 

·The Company repurchased 2.3 million shares of its common stock for $170 million.

  

“We delivered strong results in the second quarter, improving upon the positive trends from the first quarter,” said Stephen P. Holmes, chairman and CEO. “Domestic RevPAR growth continued to accelerate, net Vacation Ownership Interest sales increased ten percent and we are seeing continued strong growth in rental transaction volume.”

 

SECOND QUARTER 2014 OPERATING RESULTS

Second quarter revenues were $1.3 billion, an increase of 7% from the prior year period. The increase reflects growth in all of the Company’s business segments.

 

Adjusted net income was $150 million, or $1.17 per diluted share, compared with $133 million, or $0.98 per diluted share for the same period in 2013. The performance reflects solid operating results across all of the Company’s businesses and lower interest expense. EPS growth also benefited from the Company’s share repurchase program.

 
 

Reported net income for the second quarter of 2014 was $153 million, or $1.20 per diluted share, compared with $133 million, or $0.98 per diluted share, for the second quarter of 2013. Reported net income included items excluded from adjusted net income. The net result of these items favorably impacted second quarter 2014 net income by $3 million. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

 

Free cash flow was $695 million for the six months ended June 30, 2014, compared with $654 million for the same period in 2013. The growth of free cash flow largely reflects favorable timing of working capital. The Company defines free cash flow as net cash provided by operating activities less capital expenditures. For the six months ended June 30, 2014, net cash provided by operating activities was $793 million, compared with $758 million in the prior year period.

 

BUSINESS UNIT RESULTS

 

Lodging (Wyndham Hotel Group)

Revenues were $283 million in the second quarter of 2014, an 8% increase over the second quarter of 2013. The increase predominantly reflects higher RevPAR.

 

Domestic RevPAR increased 8.8%, partially offset by a 1.8% decline in international RevPAR, resulting in a 5.6% increase in total system-wide RevPAR compared with the second quarter of 2013. International RevPAR declined due to unfavorable currency movements and growth in lower-RevPAR countries such as China.

 

Adjusted EBITDA for the second quarter of 2014 was $87 million, a 12% increase compared with the second quarter of 2013. The increase was primarily due to higher RevPAR.

 

As of June 30, 2014, the Company’s hotel system consisted of approximately 7,540 properties and 650,200 rooms, a 2.4% room increase compared with the second quarter of 2013. The development pipeline included over 970 hotels and approximately 117,000 rooms, of which 57% were international and 67% were new construction.

 

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)

Revenues were $402 million in the second quarter of 2014, a 7% increase over the second quarter of 2013. In constant currency and excluding the impact of acquisitions, revenues were up 3%.

 

Exchange revenues were $168 million, flat compared with the second quarter of 2013, as a 1.7% increase in average number of members was offset by a 1.8% decline in exchange revenue per member.

 

 
 

Vacation rental revenues were $217 million, a 13% increase over the second quarter of 2013. Excluding the impact of foreign currency and acquisitions, vacation rental revenues were up 6%, reflecting a 4.9% increase in transaction volume and a 1.2% increase in the average net price per vacation rental.

 

Adjusted EBITDA for the second quarter of 2014 was $87 million, a 2% increase compared with the second quarter of 2013.

 

Vacation Ownership (Wyndham Vacation Ownership)

Revenues were $673 million in the second quarter of 2014, a 7% increase over the second quarter of 2013, primarily reflecting higher gross VOI sales and a lower loan loss provision.

 

Gross VOI sales were $496 million in the second quarter of 2014, an increase of 3% over the second quarter of 2013, reflecting a 1.1% increase in volume per guest, a 1.0% increase in tour flow and increased tele-sales upgrades.

 

Adjusted EBITDA for the second quarter of 2014 was $185 million, a 15% increase compared with the second quarter of 2013, primarily reflecting the revenue increases.

 

OTHER ITEMS

·The Company repurchased 2.3 million shares of common stock for $170 million during the second quarter of 2014. From July 1 through July 23, 2014, the Company repurchased an additional 0.5 million shares for $37 million. The Company’s remaining share repurchase authorization totals $311 million as of July 23, 2014.
·Reported net interest expense in the second quarter of 2014 was $26 million, compared with $32 million in the second quarter of 2013, reflecting lower rates associated with a fixed-for-floating rate swap and a $2 million benefit from a value added tax adjustment.

 

 
 

BALANCE SHEET INFORMATION AS OF JUNE 30, 2014:

·Cash and cash equivalents of $247 million, compared with $194 million at December 31, 2013
·Vacation ownership contract receivables, net, of $2.7 billion, compared with $2.8 billion at December 31, 2013
·Vacation ownership and other inventory of $1.0 billion, unchanged from December 31, 2013
·Securitized vacation ownership debt of $1.9 billion, unchanged from December 31, 2013
·Long-term debt of $2.8 billion, compared with $2.9 billion at December 31, 2013. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.4 billion as of June 30, 2014, compared with $1.3 billion as of December 31, 2013

 

A schedule of debt is included in Table 5 of this press release.

 

OUTLOOK

 

Note to Editors: The guidance excludes possible future share repurchases, while analysts’ estimates often include share repurchases. This results in discrepancies between Company guidance and database consensus forecasts.

 

For the full year 2014, the Company provides the following guidance:

·Revenues of approximately $5.250 - $5.350 billion (unchanged)
·Adjusted EBITDA of approximately $1.230 - $1.245 billion up from $1.215 - $1.240 billion
·Adjusted EPS of approximately $4.34 - $4.44 based on a diluted share count of 128 million up from $4.23 - $4.33 based on a diluted share count of 130 million

 

CONFERENCE CALL INFORMATION

Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company’s results, outlook and guidance on Thursday, July 24, 2014 at 8:30 a.m. EDT. Listeners may access the webcast live through the Company’s website at www.wyndhamworldwide.com/investors. An archive of this webcast will be available on the website for approximately 90 days beginning at noon EDT on July 24, 2014. The conference call may also be accessed by dialing 800-369-2125 and providing the passcode "WYNDHAM." Listeners are urged to call at least 10 minutes prior to the scheduled start time. A telephone replay will be available for approximately 90 days beginning at noon EDT on July 24, 2014, at 888-296-6944.

 

The Company will post guidance information on its website following the conference call.

 
 

PRESENTATION OF FINANCIAL INFORMATION

Financial information discussed in this press release includes non-GAAP measures, which include or exclude certain items.  These non-GAAP measures differ from reported GAAP results and are intended to illustrate what management believes are relevant period-over-period comparisons and are helpful to investors as an additional tool for further understanding and assessing the Company’s ongoing core operating performance. Exclusion of items in our non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring. A complete reconciliation of reported GAAP results to the comparable non-GAAP information appears in the financial tables section of the press release. It is not practicable to provide a reconciliation of forecasted adjusted EBITDA and adjusted EPS to the most directly comparable GAAP measures because certain items cannot be reasonably estimated or predicted at this time. Any such items could be significant to the Company’s reported results.

 

ABOUT WYNDHAM WORLDWIDE CORPORATION

One of the world’s largest hospitality companies, Wyndham Worldwide (NYSE: WYN) provides a wide range of hospitality services and products through its global portfolio of world-renowned brands.  The world’s largest hotel company based on the number of properties, Wyndham Hotel Group is home to many of the world’s best-known hotel brands, with approximately 7,500 franchised hotels and 650,200 hotel rooms worldwide. Wyndham Exchange & Rentals is the worldwide leader in vacation exchange and the world’s largest professionally managed vacation rentals business, providing more than 5 million leisure-bound families annually with access to over 107,000 vacation properties in over 100 countries through its prominent exchange and vacation rental brands. The industry and timeshare ownership market leader, Wyndham Vacation Ownership develops, markets, and sells vacation ownership interests and provides consumer financing to owners through its network of over 200 vacation ownership resorts serving approximately 907,000 owners throughout the United States, Canada, Mexico, the Caribbean, and the South Pacific. Based in Parsippany, NJ, Wyndham Worldwide employs approximately 32,800 associates globally. For more information, please visit www.wyndhamworldwide.com.

 

FORWARD-LOOKING STATEMENTS

This press release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, conveying management’s expectations as to the future based on plans, estimates and projections at the time the Company makes the statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements contained in this press release include statements related to the Company’s revenues, earnings and related financial and operating measures.

 

 
 

 

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Factors that could cause actual results to differ materially from those in the forward-looking statements include general economic conditions, the performance of the financial and credit markets, the economic environment for the hospitality industry, the impact of war, terrorist activity or political strife, operating risks associated with the hotel, vacation exchange and rentals and vacation ownership businesses, as well as those described in the Company’s Annual Report on Form 10-K, filed with the SEC on February 14, 2014. Except for the Company’s ongoing obligations to disclose material information under the federal securities laws, it undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

 

# # #

 

Investor and Media contact:

Margo C. Happer

Senior Vice President, Investor Relations

Wyndham Worldwide Corporation

(973) 753-6472

margo.happer@wyn.com

 

Barry Goldschmidt

Vice President, Investor Relations

Wyndham Worldwide Corporation

(973) 753-7703

barry.goldschmidt@wyn.com

 

 
 

 

Table 1

(1 of 2)

Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)

 

In addition to other measures, management evaluates the operating results of each of its reportable segments based upon net revenues and “EBITDA”, which is defined as net income before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing interest) and income taxes, each of which is presented on the Company’s Consolidated Statements of Income. The Company believes that EBITDA is a useful measure of performance for the Company's industry segments which when considered with GAAP measures, gives a more complete understanding of its operating performance. The Company’s presentation of EBITDA may not be comparable to similarly-titled measures used by other companies.

 

The following tables summarize net revenues and EBITDA for reportable segments, as well as reconcile EBITDA to Net income attributable to Wyndham shareholders for the three months ended June 30, 2014 and 2013:

 

   Three Months Ended June 30, 
   2014   2013 
   Net Revenues   EBITDA   Net Revenues   EBITDA 
Lodging  $283   $87   $262   $78 
Vacation Exchange and Rentals   402    89    376    85 
Vacation Ownership   673    185    630    161 
Total Reportable Segments   1,358    361    1,268    324 
Corporate and Other (a)   (15)   (35)   (15)   (27)
Total Company  $1,343   $326   $1,253   $297 

 

Reconciliation of EBITDA to Net income attributable to Wyndham shareholders

 

   Three Months Ended June 30, 
   2014   2013 
EBITDA  $326   $297 
Depreciation and amortization   59    54 
Interest expense   29    34 
Interest income   (3)   (2)
Income before income taxes   241    211 
Provision for income taxes   88    78 
Net income attributable to Wyndham shareholders  $153   $133 

 

 

(a) Includes the elimination of transactions between segments.

 

The following tables summarize net revenues and Adjusted EBITDA for reportable segments for the three months ended June 30, 2014 and 2013 (for a description of adjustments by segment, see Table 7):

 

   Three Months Ended June 30, 
   2014   2013 
   Net Revenues   Adjusted
EBITDA		   Net Revenues   Adjusted
EBITDA		 
Lodging  $283   $87   $262   $78 
Vacation Exchange and Rentals   402    87    376    85 
Vacation Ownership   673    185    630    161 
Total Reportable Segments   1,358    359    1,268    324 
Corporate and Other   (15)   (35)   (15)   (27)
Total Company  $1,343   $324   $1,253   $297 

 

 
 

 

Table 1

(2 of 2)

Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)

 

The following tables summarize net revenues and EBITDA for reportable segments, as well as reconcile EBITDA to Net income attributable to Wyndham shareholders for the six months ended June 30, 2014 and 2013:

 

   Six Months Ended June 30, 
   2014   2013 
   Net Revenues   EBITDA   Net Revenues   EBITDA 
Lodging  $520   $151   $485   $137 
Vacation Exchange and Rentals   781    174    750    179 
Vacation Ownership   1,266    300    1,179    272 
Total Reportable Segments   2,567    625    2,414    588 
Corporate and Other (a)   (31)   (69)   (27)   (57)
Total Company  $2,536   $556   $2,387   $531 

 

Reconciliation of EBITDA to Net income attributable to Wyndham shareholders

 

   Six Months Ended June 30, 
   2014   2013 
EBITDA  $556   $531 
Depreciation and amortization   115    106 
Interest expense   56    66 
Early extinguishment of debt   -    111 
Interest income   (5)   (4)
Income before income taxes   390    252 
Provision for income taxes   146    92 
Net income   244    160 
Net income attributable to noncontrolling interest   (1)   - 
Net income attributable to Wyndham shareholders  $243   $160 

 

 

(a) Includes the elimination of transactions between segments.

 

The following tables summarize net revenues and Adjusted EBITDA for reportable segments for the six months ended June 30, 2014 and 2013 (for a description of adjustments by segment, see Table 7):

 

   Six Months Ended June 30, 
   2014   2013 
   Net Revenues   Adjusted
EBITDA		   Net Revenues   Adjusted
EBITDA		 
Lodging  $520   $155   $485   $137 
Vacation Exchange and Rentals   781    182    750    179 
Vacation Ownership   1,266    300    1,179    274 
Total Reportable Segments   2,567    637    2,414    590 
Corporate and Other   (31)   (69)   (27)   (57)
Total Company  $2,536   $568   $2,387   $533 

 

 
 

 

Table 2

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2014   2013   2014   2013 
Net revenues                    
Service and membership fees  $616   $583   $1,205   $1,152 
Vacation ownership interest sales   382    347    685    611 
Franchise fees   166    152    293    274 
Consumer financing   106    106    211    211 
Other   73    65    142    139 
Net revenues   1,343    1,253    2,536    2,387 
                     
Expenses                    
Operating   572    548    1,106    1,056 
Cost of vacation ownership interests   42    32    81    64 
Consumer financing interest   17    20    35    40 
Marketing and reservation   206    181    387    357 
General and administrative   181    177    376    342 
Depreciation and amortization   59    54    115    106 
Total expenses   1,077    1,012    2,100    1,965 
                     
Operating income   266    241    436    422 
Other income, net   (1)   (2)   (5)   (3)
Interest expense   29    34    56    66 
Early extinguishment of debt   -    -    -    111 
Interest income   (3)   (2)   (5)   (4)
                     
Income before income taxes   241    211    390    252 
Provision for income taxes   88    78    146    92 
Net income   153    133    244    160 
Net income attributable to noncontrolling interest   -    -    (1)   - 
Net income attributable to Wyndham shareholders  $153   $133   $243   $160 
                     
Earnings per share                    
Basic  $1.21   $0.99   $1.91   $1.18 
Diluted   1.20    0.98    1.89    1.17 
                     
Weighted average shares outstanding                    
Basic   127    135    127    136 
Diluted   128    136    129    137 

 

 

Note: For a description of adjustments to Net Income, see Table 8.

 

 
 

 

Table 3

(1 of 2)

Wyndham Worldwide Corporation

OPERATING STATISTICS

 

The following operating statistics are the drivers of our revenues and therefore provide an enhanced understanding of our businesses:

 

    Year     Q1     Q2     Q3     Q4     Full Year  
Lodging                                                
Number of Rooms     2014       646,900       650,200        N/A        N/A        N/A  
      2013       631,800       635,100       638,300       645,400        N/A  
      2012       609,300       608,300       618,100       627,400        N/A  
      2011       609,600       612,900       611,200       613,100        N/A  
                                                 
RevPAR     2014     $ 32.30     $ 40.11        N/A        N/A        N/A  
      2013     $ 31.05     $ 38.00     $ 41.78     $ 33.07     $ 36.00  
      2012     $ 29.73     $ 37.23     $ 40.39     $ 31.86     $ 34.80  
      2011     $ 27.71     $ 35.38     $ 39.49     $ 30.65     $ 33.34  
                                                 
Vacation Exchange and Rentals                                                
Average Number of Members (in 000s)     2014       3,727       3,748        N/A        N/A        N/A  
      2013       3,668       3,686       3,711       3,728       3,698  
      2012       3,684       3,670       3,672       3,670       3,674  
      2011       3,766       3,755       3,744       3,734       3,750  
                                                 
Exchange Revenue Per Member     2014     $ 200.78     $ 179.17        N/A        N/A        N/A  
      2013     $ 210.96     $ 182.42     $ 169.95     $ 161.21     $ 181.02  
      2012     $ 204.56     $ 177.07     $ 171.14     $ 165.86     $ 179.68  
      2011     $ 205.64     $ 178.46     $ 172.38     $ 161.68     $ 179.59  
                                                 
Vacation Rental Transactions (in 000s) (a)     2014       429       376        N/A        N/A        N/A  
      2013       423       355       433       273       1,483  
      2012       418       325       390       259       1,392  
      2011       398       328       370       250       1,347  
                                                 
Average Net Price Per Vacation Rental (a)     2014     $ 410.04     $ 577.13        N/A        N/A        N/A  
      2013     $ 392.64     $ 540.38     $ 677.81     $ 506.62     $ 532.11  
      2012     $ 379.40     $ 524.40     $ 635.44     $ 484.69     $ 504.55  
      2011     $ 377.71     $ 549.09     $ 701.81     $ 497.04     $ 530.78  
                                                 
Vacation Ownership (a)                                                
Gross Vacation Ownership Interest (VOI) Sales (in 000s) (b)     2014     $ 410,000     $ 496,000        N/A        N/A        N/A  
      2013     $ 384,000     $ 481,000     $ 536,000     $ 488,000     $ 1,889,000  
      2012     $ 384,000     $ 460,000     $ 502,000     $ 435,000     $ 1,781,000  
      2011     $ 319,000     $ 412,000     $ 455,000     $ 409,000     $ 1,595,000  
                                                 
Tours (in 000s) (c)     2014       170       208        N/A        N/A        N/A  
      2013       163       206       225       195       789  
      2012       148       186       207       183       724  
      2011       137       177       197       173       685  
                                                 
Volume Per Guest (VPG) (c)     2014     $ 2,272     $ 2,280        N/A        N/A        N/A  
      2013     $ 2,211     $ 2,256     $ 2,278     $ 2,370     $ 2,281  
      2012     $ 2,414     $ 2,361     $ 2,315     $ 2,225     $ 2,324  
      2011     $ 2,192     $ 2,227     $ 2,197     $ 2,296     $ 2,229  

 

 

Note: Full year amounts may not add across due to rounding.

(a)Includes the impact of acquisitions from the acquisition dates forward. Therefore, the operating statistics are not presented on a comparable basis.
(b)Includes Gross VOI sales under the Company's Wyndham Asset Affiliate Model (WAAM) Just-in-Time beginning in the second quarter of 2012 (see Table 9 for a reconciliation of Gross VOI sales to vacation ownership interest sales).
(c)Includes the impact of WAAM Just-in-Time related tours beginning in the second quarter of 2012.

 

ADDITIONAL DATA

 

   Year   Q1   Q2   Q3   Q4   Full Year 
Lodging                              
Number of Properties   2014    7,500    7,540     N/A      N/A      N/A  
    2013    7,380    7,410    7,440    7,490     N/A  
    2012    7,150    7,170    7,260    7,340     N/A  
    2011    7,190    7,220    7,190    7,210     N/A  
                               
Vacation Ownership                              
Provision for Loan Losses (in 000s) (*)   2014   $60,000   $70,000     N/A      N/A      N/A  
    2013   $84,000   $90,000   $102,000   $73,000   $349,000 
    2012   $96,000   $100,000   $124,000   $89,000   $409,000 
    2011   $79,000   $80,000   $96,000   $83,000   $339,000 

 

 

Note: Full year amounts may not add across due to rounding.

(*)Represents provision for estimated losses on vacation ownership contract receivables originated during the period, which is recorded as a contra revenue to vacation ownership interest sales on the Consolidated Statements of Income.

 

 
 

 

Table 3

(2 of 2)

 

Wyndham Worldwide Corporation

OPERATING STATISTICS

 

GLOSSARY OF TERMS

 

Lodging

 

Number of Rooms: Represents the number of rooms at lodging properties at the end of the period which are either (i) under franchise and/or management agreements, or company owned, (ii) properties under affiliation agreements for which the Company receives a fee for reservation and/or other services provided and (iii) properties managed under a joint venture.

 

Average Occupancy Rate: Represents the percentage of available rooms occupied during the period.

 

Average Daily Rate (ADR): Represents the average rate charged for renting a lodging room for one day.

 

RevPAR: Represents revenue per available room and is calculated by multiplying average occupancy rate by ADR. Comparable RevPAR represents RevPAR of hotels which are included in both periods.

 

Vacation Exchange and Rentals

 

Average Number of Members: Represents members in our vacation exchange programs who paid annual membership dues as of the end of the period or who are within the allowed grace period. For additional fees, such participants are entitled to exchange intervals for intervals at other properties affiliated with the Company's vacation exchange business. In addition, certain participants may exchange intervals for other leisure-related services and products.

 

Exchange Revenue Per Member: Represents total annualized revenues generated from fees associated with memberships, exchange transactions, member-related rentals and other servicing for the period divided by the average number of vacation exchange members during the period.

 

Vacation Rental Transactions: Represents the number of transactions that are generated during the period in connection with customers booking their vacation rental stays through the Company. One rental transaction is recorded for each standard one-week rental.

 

Average Net Price Per Vacation Rental: Represents the net rental price generated from renting vacation properties to customers and other related rental servicing fees during the period divided by the number of vacation rental transactions during the period.

 

Vacation Ownership

 

Gross Vacation Ownership Interest Sales: Represents sales of vacation ownership interest (VOIs), including WAAM sales, before the net effect of percentage-of-completion accounting and loan loss provisions. See Table 9 for a reconciliation of Gross VOI sales to vacation ownership interest sales.

 

Tours: Represents the number of tours taken by guests in our efforts to sell VOIs.

 

Volume per Guest (VPG): Represents Gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) divided by the number of tours. The Company has excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel. See Table 9 for a detail of tele-sales upgrades for 2011-2014.

 

General

 

Constant Currency: Represents a comparison eliminating the effects of foreign exchange rate fluctuations between periods.

 

 
 

 

Table 4

 

Wyndham Worldwide Corporation

REVENUE DETAIL BY REPORTABLE SEGMENT

(In millions)

 

   2014   2013 
   Q1   Q2   Q3   Q4   Year   Q1   Q2   Q3   Q4   Year 
Lodging                                                  
Royalties and Franchise Fees  $68   $88     N/A      N/A      N/A    $64   $79   $91   $75   $309 
Marketing, Reservation and Wyndham Rewards Revenues (a)   76    101     N/A      N/A      N/A     73    92    118    83    365 
Hotel Management Reimbursable Revenues (b)   37    39     N/A      N/A      N/A     25    38    37    35    135 
Intersegment Trademark Fees   9    11     N/A      N/A      N/A     8    10    11    10    39 
Owned Hotel Revenues   24    20     N/A      N/A      N/A     26    20    18    19    84 
Ancillary Revenues (c)   23    24     N/A      N/A      N/A     26    23    22    23    95 
Total Lodging   237    283     N/A      N/A      N/A     222    262    297    245    1,027 
                                                   
Vacation Exchange and Rentals                                                  
Exchange Revenues   187    168     N/A      N/A      N/A     193    168    158    150    669 
Rental Revenues   176    217     N/A      N/A      N/A     166    192    293    138    789 
Ancillary Revenues (d)   16    17     N/A      N/A      N/A     15    16    19    17    68 
Total Vacation Exchange and Rentals   379    402     N/A      N/A      N/A     374    376    470    305    1,526 
                                                   
Vacation Ownership                                                  
Vacation Ownership Interest Sales   303    382     N/A      N/A      N/A     263    347    384    384    1,379 
Consumer Financing   105    106     N/A      N/A      N/A     105    106    107    108    426 
Property Management Fees   143    145     N/A      N/A      N/A     146    141    143    137    567 
WAAM Fee-for-Service Commissions   33    30     N/A      N/A      N/A     24    30    33    20    107 
Ancillary Revenues (e)   9    10     N/A      N/A      N/A     11    6    10    9    36 
Total Vacation Ownership   593    673     N/A      N/A      N/A     549    630    677    658    2,515 
Total Reportable Segments  $1,209   $1,358     N/A      N/A      N/A    $1,145   $1,268   $1,444   $1,208   $5,068 

 

   2012   2011 
   Q1   Q2   Q3   Q4   Year   Q1   Q2   Q3   Q4   Year 
Lodging                                                  
Royalties and Franchise Fees  $62   $80   $88   $71   $301   $58   $75   $85   $66   $284 
Marketing, Reservation and Wyndham Rewards Revenues (a)   68    99    98    80    345    54    75    94    76    299 
Hotel Management Reimbursable Revenues (b)   21    22    25    23    91    19    19    21    20    79 
Intersegment Trademark Fees (f)   8    9    9    8    34    1    2    3    4    10 
Owned Hotel Revenues   8    8    7    18    41    -    -    -    5    5 
Ancillary Revenues (c)   18    15    22    23    78    17    19    19    17    72 
Total Lodging   185    233    249    223    890    149    190    222    188    749 
                                                   
Vacation Exchange and Rentals                                                  
Exchange Revenues   188    162    157    153    660    194    168    161    150    673 
Rental Revenues   159    170    248    125    702    150    180    260    125    715 
Ancillary Revenues (d)   14    16    15    15    60    12    13    15    16    56 
Total Vacation Exchange and Rentals   361    348    420    293    1,422    356    361    436    291    1,444 
                                                   
Vacation Ownership                                                  
Vacation Ownership Interest Sales   271    342    373    337    1,323    222    313    320    295    1,150 
Consumer Financing   103    102    106    110    421    102    103    105    105    415 
Property Management Fees   110    108    117    125    460    110    108    105    101    424 
WAAM Fee-for-Service Commissions   12    11    4    6    33    10    11    23    21    65 
Ancillary Revenues (e)   5    7    8    12    32    6    6    6    5    23 
Total Vacation Ownership   501    570    608    590    2,269    450    541    559    527    2,077 
Total Reportable Segments  $1,047   $1,151   $1,277   $1,106   $4,581   $955   $1,092   $1,217   $1,006   $4,270 

 

 

Note: Full year amounts may not add across due to rounding.

(a)Marketing and reservation revenues represent fees the Company receives from franchised and managed hotels that are to be expended for marketing purposes or the operation of a centralized, brand-specific reservation system. These fees are typically based on a percentage of the gross room revenues of each hotel. Wyndham Rewards revenues represent fees the Company receives relating to its loyalty program.
(b)Primarily represents payroll costs in the hotel management business that the Company pays on behalf of property owners and for which it is reimbursed by the property owners. During both Q1 and Q2 2014, reimbursable revenues of $2 million, which eliminate in consolidation, were charged to the Company's vacation ownership business. During Q2, Q3 and Q4 2013, such amounts were $1 million, $3 million and $2 million, respectively.
(c)Primarily includes additional services provided to franchisees.
(d)Primarily includes fees generated from programs with affiliated resorts and homeowners.
(e)Primarily includes revenues associated with bonus points/credits that are provided as purchase incentives on VOI sales and fees generated from other non-core operations.
(f)During 2011, $3 million, $1 million and $2 million of intersegment trademark fees were recorded as a reduction of expenses in Q1, Q2 and Q3, respectively. As such, total inter-segment trademark fees for 2011 were $16 million.

 

 
 

 

Table 5

 

Wyndham Worldwide Corporation

SCHEDULE OF DEBT

(In millions)

 

   June 30,
2014		   March 31,
2014		   December 31, 
2013		   September 30, 
2013		   June 30,
 2013		 
                     
Securitized vacation ownership debt (a)                         
Term notes  $1,600   $1,823   $1,648   $1,615   $1,569 
Bank conduit facility (b)   291    156    262    273    289 
Total securitized vacation ownership debt (c)   1,891    1,979    1,910    1,888    1,858 
Less: Current portion of securitized vacation ownership debt   187    192    184    186    217 
Long-term securitized vacation ownership debt  $1,704   $1,787   $1,726   $1,702   $1,641 
                          
Debt:                         
Revolving credit facility (due July 2018) (d)  $16   $10   $23   $74   $41 
Commercial paper (e)   107    184    210    164    168 
$315 million 6.00% senior unsecured notes (due December 2016) (f)   318    318    318    318    319 
$300 million 2.95% senior unsecured notes (due March 2017)   299    299    298    298    298 
$14 million 5.75% senior unsecured notes (due February 2018)   14    14    14    14    14 
$450 million 2.50% senior unsecured notes (due March 2018)   448    447    447    447    447 
$40 million 7.375% senior unsecured notes (due March 2020)   40    40    40    40    40 
$250 million 5.625% senior unsecured notes (due March 2021)   246    246    246    246    246 
$650 million 4.25% senior unsecured notes (due March 2022) (g)   646    645    643    644    644 
$400 million 3.90% senior unsecured notes (due March 2023) (h)   403    395    387    396    397 
Capital leases   186    188    191    185    184 
Other   99    100    114    117    133 
Total long-term debt   2,822    2,886    2,931    2,943    2,931 
Less: Current portion of long-term debt   50    52    49    55    52 
Long-term debt  $2,772   $2,834   $2,882   $2,888   $2,879 

 

 

(a)The Company's vacation ownership contract receivables are securitized through bankruptcy-remote special purpose entities ("SPEs") that are consolidated within our financial statements. These bankruptcy-remote SPEs are legally separate from the Company. The receivables held by the bankruptcy-remote SPEs are not available to the Company's creditors and legally are not the Company's assets. Additionally, the creditors of these SPEs have no recourse to the Company for principal and interest.
(b)Represents a non-recourse vacation ownership bank conduit facility with a term through August 2015 and borrowing capacity of $650 million. As of June 30, 2014, this facility had a remaining borrowing capacity of $359 million.
(c)This debt is collateralized by $2,287 million, $2,328 million, $2,314 million, $2,306 million and $2,414 million of underlying vacation ownership contract receivables and related assets as of June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013 and June 30, 2013, respectively.
(d)Represents a $1.5 billion revolving credit facility that expires in July 2018. As of June 30, 2014, the Company had $9 million of outstanding letters of credit. After considering outstanding commercial paper borrowings of $107 million, the remaining borrowing capacity was $1.4 billion as of June 30, 2014.
(e)Represents commercial paper programs of $1.25 billion with a remaining borrowing capacity of $1.1 billion, as of June 30, 2014.
(f)Includes unamortized gains from the settlement of a derivative in the amount of $3 million as of June 30, 2014, March 31, 2014, December 31, 2013 and September 30, 2013 and $4 million as of June 30, 2013.
(g)Includes a $2 million increase and $2 million decrease in the carrying value resulting from a fair value hedge derivative as of June 30, 2014 and December 31, 2013, respectively.
(h)Includes a $5 million increase and $10 million decrease in the carrying value resulting from a fair value hedge derivative as of June 30, 2014 and December 31, 2013, respectively.

 

 
 

 

Table 6

(1 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

 

   As of and For the Three Months Ended June 30, 2014 
Brand  Number of 
Properties		   Number of Rooms   Average 
Occupancy Rate		   Average Daily 
Rate (ADR)		   Average Revenue 
Per Available 
Room (RevPAR)		 
                     
Lodging                         
Wyndham Hotels and Resorts   178    39,816    66.7%  $117.57   $78.43 
                          
TRYP by Wyndham   117    16,740    66.9%  $96.01   $64.19 
                          
Wingate by Wyndham   158    14,436    68.7%  $88.24   $60.65 
                          
Hawthorn Suites by Wyndham   98    9,737    68.1%  $77.37   $52.72 
                          
Ramada   829    114,195    57.2%  $79.00   $45.15 
                          
Baymont   346    28,325    56.9%  $66.36   $37.78 
                          
Days Inn   1,807    146,139    55.8%  $64.86   $36.20 
                          
Super 8   2,436    155,711    60.0%  $50.77   $30.46 
                          
Howard Johnson   439    46,214    50.4%  $62.88   $31.68 
                          
Travelodge   425    31,075    54.3%  $67.35   $36.60 
                          
Microtel Inns & Suites by Wyndham   318    22,744    63.8%  $67.26   $42.88 
                          
Knights Inn   383    23,472    46.4%  $46.78   $21.70 
                          
Dream   5    989    72.9%  $246.03   $179.38 
                          
Night   3    630    72.8%  $158.86   $115.62 
                          
Total Lodging   7,542    650,223    58.0%  $69.13   $40.11 
                          
Vacation Ownership                         
Wyndham Vacation Ownership resorts   201    23,450    N/A    N/A    N/A 
                          
Total Wyndham Worldwide   7,743    673,673                

 

   As of and For the Three Months Ended June 30, 2013 
Brand  Number of
Properties		   Number of Rooms   Average
Occupancy Rate		   Average Daily
Rate (ADR)		   Average Revenue
Per Available
Room (RevPAR)		 
                     
Lodging                         
Wyndham Hotels and Resorts   136    32,400    63.5%  $118.31   $75.10 
                          
TRYP by Wyndham   103    14,344    64.6%  $95.59   $61.75 
                          
Wingate by Wyndham   158    14,493    65.0%  $86.67   $56.34 
                          
Hawthorn Suites by Wyndham   91    9,118    67.6%  $72.51   $49.02 
                          
Ramada   837    114,691    54.4%  $80.42   $43.78 
                          
Baymont   325    26,860    55.6%  $63.70   $35.42 
                          
Days Inn   1,833    148,411    51.7%  $64.78   $33.46 
                          
Super 8   2,356    150,467    59.0%  $52.70   $31.08 
                          
Howard Johnson   446    45,089    48.2%  $62.57   $30.18 
                          
Travelodge   437    32,607    51.9%  $66.48   $34.50 
                          
Microtel Inns & Suites by Wyndham   310    22,080    60.7%  $64.85   $39.34 
                          
Knights Inn   374    22,963    42.5%  $45.08   $19.17 
                          
Dream   5    990    75.5%  $262.46   $198.18 
                          
Night   3    630    61.5%  $169.06   $103.91 
                          
Total Lodging   7,414    635,143    55.2%  $68.78   $38.00 
                          
Vacation Ownership                         
Wyndham Vacation Ownership resorts   190    23,410    N/A    N/A    N/A 
                          
Total Wyndham Worldwide   7,604    658,553                

 

 

NOTE: A glossary of terms is included in Table 3 (2 of 2); RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding.

 

 
 

 

Table 6

(2 of 2)

 

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

 

   As of and For the Six Months Ended June 30, 2014 
Brand  Number of
Properties		   Number of Rooms   Average
Occupancy Rate		   Average Daily
Rate (ADR)		   Average Revenue
Per Available
Room (RevPAR)		 
                     
Lodging                         
Wyndham Hotels and Resorts   178    39,816    61.1%  $115.42   $70.55 
                          
TRYP by Wyndham   117    16,740    59.2%  $91.64   $54.22 
                          
Wingate by Wyndham   158    14,436    63.9%  $85.95   $54.93 
                          
Hawthorn Suites by Wyndham   98    9,737    64.7%  $76.76   $49.66 
                          
Ramada   829    114,195    53.7%  $79.22   $42.52 
                          
Baymont   346    28,325    52.0%  $64.25   $33.40 
                          
Days Inn   1,807    146,139    50.2%  $63.56   $31.92 
                          
Super 8   2,436    155,711    55.8%  $49.63   $27.69 
                          
Howard Johnson   439    46,214    47.0%  $62.41   $29.32 
                          
Travelodge   425    31,075    49.5%  $64.82   $32.08 
                          
Microtel Inns & Suites by Wyndham   318    22,744    58.8%  $65.08   $38.24 
                          
Knights Inn   383    23,472    43.6%  $45.50   $19.84 
                          
Dream   5    989    73.4%  $217.94   $159.91 
                          
Night   3    630    66.3%  $139.04   $92.20 
                          
Total Lodging   7,542    650,223    53.5%  $67.78   $36.23 
                          
Vacation Ownership                         
Wyndham Vacation Ownership resorts   201    23,450    N/A    N/A    N/A 
                          
Total Wyndham Worldwide   7,743    673,673                

 

   As of and For the Six Months Ended June 30, 2013 
Brand  Number of
Properties		   Number of Rooms   Average
Occupancy Rate		   Average Daily
Rate (ADR)		   Average Revenue
Per Available
Room (RevPAR)		 
                     
Lodging                         
Wyndham Hotels and Resorts   136    32,400    60.2%  $115.98   $69.80 
                          
TRYP by Wyndham   103    14,344    59.3%  $96.39   $57.15 
                          
Wingate by Wyndham   158    14,493    61.0%  $85.05   $51.88 
                          
Hawthorn Suites by Wyndham   91    9,118    63.1%  $71.57   $45.19 
                          
Ramada   837    114,691    51.5%  $79.58   $41.01 
                          
Baymont   325    26,860    50.7%  $62.15   $31.50 
                          
Days Inn   1,833    148,411    47.3%  $63.27   $29.91 
                          
Super 8   2,356    150,467    54.4%  $51.38   $27.96 
                          
Howard Johnson   446    45,089    45.6%  $61.78   $28.17 
                          
Travelodge   437    32,607    47.8%  $64.89   $31.02 
                          
Microtel Inns & Suites by Wyndham   310    22,080    56.4%  $63.01   $35.56 
                          
Knights Inn   374    22,963    40.4%  $43.34   $17.53 
                          
Dream   5    990    68.5%  $220.79   $151.31 
                          
Night   3    630    57.5%  $146.22   $84.14 
                          
Total Lodging   7,414    635,143    51.3%  $67.35   $34.55 
                          
Vacation Ownership                         
Wyndham Vacation Ownership resorts   190    23,410    N/A    N/A    N/A 
                          
Total Wyndham Worldwide   7,604    658,553                

 

 

NOTE: A glossary of terms is included in Table 3 (2 of 2); RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding.

 

 
 

 

Table 7

(1 of 2)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION

(In millions)

 

Three months ended March 31, 2014  Net Revenues   Reported 
EBITDA		   Executive 
Departure
Costs		   Venezuela
Currency 
 Devaluation (b)		    VAT
 Adjustment (c)		   Adjusted 
EBITDA		 
Lodging  $237   $64   $4   $-   $-   $68 
Vacation Exchange and Rentals   379    85    -    10    -    95 
Vacation Ownership   593    115    -    -    -    115 
Total Reportable Segments   1,209    264    4    10    -    278 
Corporate and Other (a)   (16)   (34)   -    -    -    (34)
Total Company  $1,193   $230   $4   $10   $-   $244 
                               
Three months ended June 30, 2014                              
Lodging  $283   $87   $-   $-   $-   $87 
Vacation Exchange and Rentals   402    89    -    -    (2)   87 
Vacation Ownership   673    185    -    -    -    185 
Total Reportable Segments   1,358    361    -    -    (2)   359 
Corporate and Other (a)   (15)   (35)   -    -    -    (35)
Total Company  $1,343   $326   $-   $-   $(2)  $324 

 

 

(a)Includes the elimination of transactions between segments.
(b)Represents the devaluation of the official exchange rate of Venezuela.
(c)Reversal of a reserve for value-added taxes.

 

 
 

 

 

Table 7

(2 of 2)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION

(In millions)

 

Three months ended March 31, 2013  Net Revenues   Reported
EBITDA		   Legacy 
Adjustments (b)		   Acquisition 
Costs (c)		   Restructuring 
Costs (d)		   Asset 
Impairment (e)		   Adjusted 
EBITDA		 
Lodging  $222   $58   $-   $-   $-   $-   $58 
Vacation Exchange and Rentals   374    94    -    -    -    -    94 
Vacation Ownership   549    111    -    2    -    -    113 
Total Reportable Segments   1,145    263    -    2    -    -    265 
Corporate and Other (a)   (12)   (29)   -    -    -    -    (29)
Total Company  $1,133   $234   $-   $2   $-   $-   $236 
                                    
Three months ended June 30, 2013                                   
Lodging  $262   $78   $-   $-   $-   $-   $78 
Vacation Exchange and Rentals   376    85    -    -    -    -    85 
Vacation Ownership   630    161    -    -    -    -    161 
Total Reportable Segments   1,268    324    -    -    -    -    324 
Corporate and Other (a)   (15)   (27)   -    -    -    -    (27)
Total Company  $1,253   $297   $-   $-   $-   $-   $297 
                                    
Three months ended September 30, 2013                                   
Lodging  $297   $95   $-   $-   $-   $-   $95 
Vacation Exchange and Rentals   470    141    -    -    -    -    141 
Vacation Ownership   677    176    -    -    -    -    176 
Total Reportable Segments   1,444    412    -    -    -    -    412 
Corporate and Other (a)   (17)   (33)   (1)   -    -    -    (34)
Total Company  $1,427   $379   $(1)  $-   $-   $-   $378 
                                    
Three months ended December 31, 2013                                   
Lodging  $245   $47   $-   $-   $9   $8   $64 
Vacation Exchange and Rentals   305    36    -    -    -    -    36 
Vacation Ownership   658    172    -    -    -    -    172 
Total Reportable Segments   1,208    255    -    -    9    8    272 
Corporate and Other (a)   (13)   (33)   -    -    -    -    (33)
Total Company  $1,195   $222   $-   $-   $9   $8   $239 
                                    
Twelve months ended December 31, 2013                                   
Lodging  $1,027   $279   $-   $-   $9   $8   $296 
Vacation Exchange and Rentals   1,526    356    -    -    -    -    356 
Vacation Ownership   2,515    619    -    2    -    -    621 
Total Reportable Segments   5,068    1,254    -    2    9    8    1,273 
Corporate and Other (a)   (59)   (122)   1    -    -    -    (121)
Total Company  $5,009   $1,132   $1   $2   $9   $8   $1,152 

 __________

Note: The sum of the quarters may not agree to the twelve months ended December 31, 2013 due to rounding.

 

(a)Includes the elimination of transactions between segments.
(b)Relates to a net (benefit)/expense from the resolution of and adjustment to certain contingent liabilities and assets resulting from the Company's separation from Cendant.
(c)Relates to costs incurred in connection with the acquisition of Midtown 45, a NYC property (January 2013).
(d)Relates to costs incurred as a result of an organizational realignment initiative.
(e)Relates primarily to a non-cash impairment charge from a partial write-down of the Hawthorn trademark.

 

 
 

  

Table 8

(1 of 3)

 

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

   Three Months Ended June 30, 2014 
   As Reported   Legacy
    Adjustments		   VAT
    Adjustment (b)		   As Adjusted
non-GAAP		 
Net revenues                    
Service and membership fees  $616   $   $   $616 
Vacation ownership interest sales   382              382 
Franchise fees   166              166 
Consumer financing   106              106 
Other   73              73 
Net revenues   1,343    -    -    1,343 
                     
Expenses                    
Operating   572              572 
Cost of vacation ownership interests   42              42 
Consumer financing interest   17              17 
Marketing and reservation   206              206 
General and administrative   181         2    183 
Depreciation and amortization   59              59 
Total expenses   1,077    -    2    1,079 
                     
Operating income   266    -    (2)   264 
Other income, net   (1)             (1)
Interest expense   29         2    31 
Interest income   (3)             (3)
                     
Income before income taxes   241    -    (4)   237 
Provision for income taxes   88    1 (a)   (2) (c)   87 
Net income attributable to Wyndham shareholders  $153   $(1)  $(2)  $150 
                     
Earnings per share                    
Basic  $1.21   $-   $(0.02)  $1.18 
Diluted   1.20    -    (0.02)   1.17 
                     
Weighted average shares outstanding                    
Basic   127    127    127    127 
Diluted   128    128    128    128 

__________

The above table reconciles certain non-GAAP financial measures. The presentation of these adjustments is intended to permit the comparison of particular adjustments as they appear in the line items of the income statement in order to assist investors' understanding of the overall impact of such adjustments. This non-GAAP reconciliation table should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.

 

Note:EPS amounts may not add due to rounding.
(a)Relates to the reversal of a state tax accrual.
(b)Relates to the reversal of a reserve for value-added taxes at the Company's vacation exchange and rentals business.
(c)Relates to the tax effect of the adjustment.

 

 
 

 

Table 8

(2 of 3)

 

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

   Six Months Ended June 30, 2014 
   As Reported   Executive
Departure
Costs (a)		   Venezuela
Currency
    Devaluation (c)		   Legacy
    Adjustments		   VAT
    Adjustment (e)		   As Adjusted
non-GAAP		 
Net revenues                              
Service and membership fees  $1,205   $   $   $   $   $1,205 
Vacation ownership interest sales   685                        685 
Franchise fees   293                        293 
Consumer financing   211                        211 
Other   142                        142 
Net revenues   2,536    -    -    -    -    2,536 
                               
Expenses                              
Operating   1,106         (10)             1,096 
Cost of vacation ownership interests   81                        81 
Consumer financing interest   35                        35 
Marketing and reservation   387                        387 
General and administrative   376    (4)             2    374 
Depreciation and amortization   115                        115 
Total expenses   2,100    (4)   (10)   -    2    2,088 
                               
Operating income   436    4    10    -    (2)   448 
Other income, net   (5)                       (5)
Interest expense   56                   2    58 
Interest income   (5)                       (5)
                               
Income before income taxes   390    4    10    -    (4)   400 
Provision for income taxes   146    1 (b)   1 (b)   1 (d)   (2) (b)   147 
                               
Net income   244    3    9    (1)   (2)   253 
Net income attributable to noncontrolling interest   (1)   -    -    -    -    (1)
                               
Net income attributable to Wyndham shareholders  $243   $3   $9   $(1)  $(2)  $252 
                               
Earnings per share                              
Basic  $1.91   $0.02   $0.07   $-   $(0.02)  $1.98 
Diluted   1.89    0.02    0.07    -    (0.02)   1.96 
                               
Weighted average shares outstanding                              
Basic   127    127    127    127    127    127 
Diluted   129    129    129    129    129    129 

__________

The above table reconciles certain non-GAAP financial measures. The presentation of these adjustments is intended to permit the comparison of particular adjustments as they appear in the line items of the income statement in order to assist investors' understanding of the overall impact of such adjustments. This non-GAAP reconciliation table should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.

 

Note: EPS amounts may not add due to rounding.

(a)Related to costs associated with an executive's departure at the Company's lodging business.
(b)Relates to the tax effect of the adjustment.
(c)Represents the devaluation of the official exchange rate of Venezuela at the Company's vacation exchange and rental business.
(d)Relates to the reversal of a state tax accrual.
(e)Relates to the reversal of a reserve for value-added taxes at the Company's vacation exchange and rentals business.

 

 
 

  

Table 8

(3 of 3)

 

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

   Six Months Ended June 30, 2013 
   As Reported   Legacy 
Adjustments		   Acquisition 
Costs		   Early
Extinguishment 
of Debt		   As Adjusted 
non-GAAP		 
Net revenues                         
Service fees and membership  $1,152               $1,152 
Vacation ownership interest sales   611                   611 
Franchise fees   274                   274 
Consumer financing   211                   211 
Other   139                   139 
Net revenues   2,387    -    -    -    2,387 
                          
Expenses                         
Operating   1,056         (2) (b)        1,054 
Cost of vacation ownership interests   64                   64 
Consumer financing interest   40                   40 
Marketing and reservation   357                   357 
General and administrative   342                   342 
Depreciation and amortization   106                   106 
Total expenses   1,965    -    (2)   -    1,963 
                          
Operating income   422    -    2    -    424 
Other income, net   (3)                  (3)
Interest expense   66                   66 
Early extinguishment of debt   111              (111) (c)   - 
Interest income   (4)                  (4)
                          
Income before income taxes   252    -    2    111    365 
Provision for income taxes   92    (1) (a)   1 (d)   42 (d)   134 
                          
Net income  $160   $1   $1   $69   $231 
                          
Earnings per share                         
Basic  $1.18   $0.01   $0.01   $0.51   $1.71 
Diluted   1.17    0.01    0.01    0.50    1.69 
                          
Weighted average shares outstanding                         
Basic   136    136    136    136    136 
Diluted   137    137    137    137    137 

__________

The above table reconciles certain non-GAAP financial measures. The presentation of these adjustments is intended to permit the comparison of particular adjustments as they appear in the line items of the income statement in order to assist investors' understanding of the overall impact of such adjustments. This non-GAAP reconciliation table should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.

 

Note: EPS amounts may not add due to rounding.

(a)Relates to a state tax payment for legacy tax matters.
(b)Relates to the costs incurred in connection with the acquisition of Midtown 45, a NYC property (January 2013) at the Company's vacation ownership business.
(c)Represents costs incurred for the early repurchase of a portion of the Company's 7.375%, 5.75% and 6.00% senior unsecured notes and the remaining portion of the 9.875% senior unsecured notes.
(d)Relates to the tax effect of the adjustment.

 

 
 

 

Table 9

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATIONS AND FINANCIAL INFORMATION

(In millions)

 

FREE CASH FLOW

 

We define free cash flow to be net cash provided by operating activities less property and equipment additions which we also refer to as capital expenditures.

 

We believe free cash flow to be a useful operating performance measure to evaluate the ability of our operations to generate cash for uses other than capital expenditures and, after debt service and other obligations, our ability to grow our business through acquisitions, development advances and equity investments, as well as our ability to return cash to shareholders through dividends and share repurchases. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities, net cash used in investing activities and net cash used in financing activities as a means for evaluating Wyndham Worldwide is that free cash flow does not represent the total cash movement for the period as detailed in the consolidated statement of cash flows.

 

The following table provides more details on the GAAP financial measure that is most directly comparable to the non-GAAP financial measure and the related reconciliation between these financial measures:

 

   Six Months Ended June 30, 
   2014   2013 
         
Net cash provided by operating activities  $793   $758 
Less: Property and equipment additions   (98)   (104)
Free cash flow  $695   $654 

 

GROSS VOI SALES

 

 

The following table provides a reconciliation of Gross VOI sales (see Table 3) to vacation ownership interest sales (see Table 4):

 

Year                    
2014  Q1   Q2   Q3   Q4   Full Year 
                     
Gross VOI sales (a)  $410   $496    N/A    N/A    N/A 
Less: Sales under WAAM Fee-for-Service   (44)   (40)   N/A    N/A    N/A 
Gross VOI sales, net of WAAM Fee-for-Service sales   366    456    N/A    N/A    N/A 
Less: Loan loss provision   (60)   (70)   N/A    N/A    N/A 
Less: Impact of percentage-of-completion accounting   (3)   (4)   N/A    N/A    N/A 
Vacation ownership interest sales (a)  $303   $382    N/A    N/A    N/A 
                          
2013                         
                          
Gross VOI sales (a)  $384   $481   $536   $488   $1,889 
Less: Sales under WAAM Fee-for-Service   (36)   (44)   (51)   (29)   (160)
Gross VOI sales, net of WAAM Fee-for-Service sales   347    437    486    459    1,729 
Less: Loan loss provision   (84)   (90)   (102)   (73)   (349)
Less: Impact of percentage of completion accounting   -    -    -    (1)   (1)
Vacation ownership interest sales (a)  $263   $347   $384   $384   $1,379 
                          
2012                         
                          
Gross VOI sales (a)  $384   $460   $502   $435   $1,781 
Less: Sales under WAAM Fee-for-Service   (17)   (18)   (5)   (10)   (49)
Gross VOI sales, net of WAAM Fee-for-Service sales   367    442    497    426    1,732 
Less: Loan loss provision   (96)   (100)   (124)   (89)   (409)
Vacation ownership interest sales (a)  $271   $342   $373   $337   $1,323 
                          
2011                         
                          
Gross VOI sales  $319   $412   $455   $409   $1,595 
Less: Sales under WAAM Fee-for-Service   (18)   (19)   (38)   (31)   (106)
Gross VOI sales, net of WAAM Fee-for-Service sales   302    393    417    378    1,489 
Less: Loan loss provision   (79)   (80)   (96)   (83)   (339)
Vacation ownership interest sales  $222   $313   $320   $295   $1,150 

_____________

Note: Amounts may not add due to rounding.

(a) Includes VOI sales under WAAM Just-in-Time beginning in the second quarter of 2012.

 

The following includes primarily tele-sales upgrades and other non-tour revenues, which are excluded from Gross VOI sales in the Company's VPG calculation (see Table 3):

 

   Q1   Q2   Q3   Q4   Full Year 
                     
2014  $25   $21     N/A     N/A     N/A 
2013  $24   $18   $22   $25   $89 
2012  $27   $20   $22   $28   $97 
2011  $18   $18   $21   $11   $68