Wyndham Worldwide Reports Solid First Quarter 2008 Results
Announces reported EPS of $0.24, or adjusted EPS of $0.35 excluding legacy and rebranding charges
Announces a $200 Million Vacation Ownership Receivables Securitization Affirms 2008 Guidance
PARSIPPANY, N.J., May 1 // PRNewswire-FirstCall // -- Wyndham Worldwide Corporation (NYSE: WYN) today announced results for the three months ended March 31, 2008.
FIRST QUARTER 2008 HIGHLIGHTS:
- First quarter 2008 revenues were $1.0 billion, with solid performance across the Company's three businesses. Revenue growth was reduced, as expected, by the impact of $82 million in deferred vacation ownership revenue.
- Gross Vacation Ownership Interest sales increased 7% compared to the first quarter of 2007.
- System-wide revenue per available room (RevPAR) increased 2.7% in the first quarter of 2008 compared to the first quarter of 2007, while comparable RevPAR rose 2.2% compared to the first quarter of 2007.
- Lodging opened over 10,000 rooms in the first quarter of 2008, ending the quarter with a hotel pipeline of almost 107,000 rooms.
- Average number of vacation exchange members increased 5%, or 158,000 members, compared to the first quarter of 2007, reaching 3.6 million members.
- Average net price per vacation rental increased 18% for first quarter 2008 compared to the first quarter of 2007, or 9% excluding the effect of currency translations.
- First quarter 2008 net income was $42 million or $0.24 diluted earnings per share. Adjusted net income excluding legacy and rebranding charges was $62 million or $0.35 adjusted diluted earnings per share. The Company had provided first quarter EPS guidance of $0.30-0.35.
- During the first quarter of 2008, Wyndham Worldwide repurchased approximately 520,000 shares. At March 31, 2008, approximately $155 million remained under the Company's previously announced share repurchase program.
- On April 25, 2008, the Company priced a term securitization transaction involving the issuance of $200 million of investment grade asset-backed notes by Sierra Timeshare 2008-1 Receivables Funding, LLC, an indirect subsidiary of Wyndham Vacation Ownership. The transaction is expected to close on May 1, 2008.
"Wyndham Worldwide's portfolio of resilient businesses and brands produced strong first-quarter results despite the challenging economic environment," said Stephen P. Holmes, Wyndham Worldwide chairman and chief executive officer. "We are focused on our growth strategy while prudently managing costs, and we remain confident that our business model offers balance, strength and stability across economic cycles."
FIRST QUARTER 2008 OPERATING RESULTS
Revenues for the first quarter of 2008 were $1.0 billion, flat compared to the first quarter of 2007, reflecting the expected impact of $82 million in deferred vacation ownership revenue recorded under the percentage-of- completion method of accounting. Excluding the net effect of deferred revenues in both periods, adjusted revenues would have grown 9%.
Net income for the first quarter of 2008 was $42 million or $0.24 diluted earnings per share, compared to $86 million or $0.45 diluted earnings per share for the first quarter of 2007.
Excluding $3 million in after-tax net expense from the resolution of, and adjustment to, certain legacy items and a $17 million after-tax, non-cash charge due to the Company's initiative to rebrand its vacation ownership trademarks to the Wyndham brand, adjusted net income for the first quarter of 2008 would have been $62 million, or $0.35 adjusted diluted earnings per share (such amounts are not adjusted for the impact of the increase in deferred revenues).
Excluding $4 million after-tax of separation and related costs and excluding $9 million in after-tax net benefit from the resolution of, and adjustment to, certain legacy items, adjusted net income for the first quarter of 2007 would have been $81 million, or $0.43 adjusted diluted earnings per share.
BUSINESS UNIT RESULTS
Lodging (Wyndham Hotel Group)
Revenues increased 12% to $170 million in the first quarter of 2008 compared with the first quarter of 2007, reflecting increased property management reimbursable revenues and RevPAR gains. System-wide RevPAR increased 2.7% in the first quarter of 2008, while comparable RevPAR increased 2.2% over the prior year period, led by RevPAR gains in the international portfolio.
For the quarter, Ramada, Super 8 and Days Inn, which collectively represent over 70% of the Company's U.S. lodging portfolio, achieved domestic RevPAR growth above their competitive sets.
Property management reimbursable revenues were $27 million and marketing/reservation revenues, including TripRewards revenues, were $62 million in the first quarter of 2008, compared to $16 million and $61 million, respectively, in the first quarter of 2007; these items contribute little, if any, EBITDA.
First quarter 2008 EBITDA grew to $46 million compared to $45 million in the first quarter of 2007. The EBITDA growth was tempered by the timing of approximately $5 million of incremental marketing expenses.
As of March 31, 2008, the Company's hotel system consisted of approximately 551,100 rooms and 6,550 properties, with a development pipeline of approximately 930 hotels and approximately 107,000 rooms, of which 45% were new construction and 35% were international.
Vacation Exchange and Rentals (Group RCI)
Revenues increased to $341 million in the first quarter of 2008, a 9% increase compared with the first quarter of 2007, reflecting growth in vacation exchange and vacation rentals, including favorable currency translations. Excluding the favorable effect of currency translations of $16 million, revenues increased 4% compared to the first quarter of 2007.
Vacation exchange revenues were $137 million, up 1% compared to the first quarter of 2007, primarily driven by a 5% increase in the average number of members, partially offset by a 3% decrease in annual dues and exchange revenue per member, primarily related to the earlier Easter holiday, which shortened the prime booking season.
Vacation rentals revenues were $160 million, a 15% increase compared to the first quarter of 2007, or a 6% increase excluding the favorable effect of currency translations. These results reflect an 18% increase in the average net price per vacation rental, or 9% excluding favorable currency translations, primarily due to improved pricing and favorable mix in the Novasol and Landal brands, and the conversion of two existing Landal parks from franchised to managed properties.
Other ancillary revenues generated primarily from additional products and services provided to affiliates and members were $44 million in the first quarter of 2008, compared with $40 million in the first quarter of 2007.
First quarter 2008 EBITDA was $93 million, compared to first quarter 2007 EBITDA of $85 million. Excluding the favorable net effect of currency translations of $4 million, EBITDA increased $4 million compared to the first quarter of 2007.
Vacation Ownership (Wyndham Vacation Ownership)
Gross Vacation Ownership Interest sales (which are not affected by deferred revenues) were $458 million for the first quarter of 2008, up 7% compared to the first quarter of 2007. This increase was driven by marketing efforts resulting in increases in tour flow and volume per guest based on strong performance by our sales force, the opening of new sales locations and continued strength in transaction pricing.
Reported revenues were $504 million in the first quarter of 2008, an 8% decrease from the first quarter of 2007, resulting from higher levels of deferred revenue which more than offset continued success in marketing and sales, growing consumer finance revenues and incremental property management revenues.
First quarter 2008 revenues were reduced by $82 million as a result of deferred vacation ownership revenue recorded under the percentage-of- completion method of accounting. Including this deferred revenue and the recognition of $4 million of previously deferred revenue in the first quarter of 2007, first quarter 2008 adjusted vacation ownership revenues would have grown 8% over the prior year period.
For comparison purposes, the impact of deferred revenues in both periods
is summarized as follows:
($ in millions)
2008 2007 % Change
---------- --------- ----------
Reported Revenue $504 $549 (8)%
Net Change in Deferred
Revenue(1) 82 $(4) N/M
---------- --------- ----------
Total Adjusted Revenue $586 545 8 %
========== ========= ==========
(1) Represents the revenue that is deferred under the percentage-of-
completion method of accounting.
Consumer finance revenues increased $18 million to $99 million in the first quarter of 2008, up 22% compared to the first quarter of 2007, reflecting continued Vacation Ownership sales growth.
EBITDA for the first quarter of 2008 was $7 million, including a $28 million pre-tax ($17 million after-tax), non-cash charge due to the Wyndham rebranding initiative mentioned above, compared to $63 million in the first quarter of 2007, which included $3 million of separation and related costs. The decrease in EBITDA reflects a net reduction of approximately $40 million ($38 million reduction for 2008 and a $2 million increase from 2007) due to the increase in deferred vacation ownership revenue.
On April 25, 2008, the Company priced a term securitization transaction involving the issuance of $200 million of investment grade asset-backed notes by Sierra Timeshare 2008-1 Receivables Funding, LLC, an indirect subsidiary of Wyndham Vacation Ownership. The notes are backed by vacation ownership receivables originated by subsidiaries of Wyndham Vacation Ownership. The transaction is expected to close on May 1, 2008.
Other Items
Interest expense for the first quarter of 2008 was $19 million, a $1 million increase from the first quarter of 2007. Interest income for the quarter was $3 million, unchanged from the comparable prior year period. Depreciation and amortization rose $6 million to $44 million reflecting increased capital investments over the past twelve months.
Balance Sheet Information as of March 31, 2008:
- Cash and cash equivalents of approximately $230 million compared to approximately $210 million at December 31, 2007
- Vacation ownership contract receivables, net, of $3.0 billion compared to $2.9 billion at December 31, 2007
- Vacation ownership and other inventory of approximately $1.2 billion, unchanged since December 31, 2007
- Securitized vacation ownership debt of $2.1 billion, unchanged since December 31, 2007
- Other debt of $1.6 billion, compared to $1.5 billion at December 31, 2007
A schedule of debt is included in the financial tables section of this press release.
Share Repurchase
The Company repurchased approximately 520,000 shares of stock during the first quarter of 2008 at an average price of $21.96. At March 31, 2008, approximately $155 million remained under the Company's previously announced share repurchase program.
Outlook and Guidance
Wyndham Worldwide affirms full-year 2008 guidance as follows:
- Revenues of $4,800 - $4,900 million
- EBITDA of $920 - $945 million
- Depreciation and amortization expense of $175 - $185 million
- Interest expense, net of $75 - $85 million
- Effective tax rate of 38.25%
- Adjusted* net income of $401 - $429 million
- Adjusted* EPS of $2.23 - $2.38 based on weighted average shares of approximately 180 million
The Company also issues second quarter 2008 guidance as follows:
- EPS of $0.46 - $0.48 based on weighted average shares of approximately 180 million
- EPS guidance is reduced by the estimated impact of deferred vacation ownership revenue of approximately $0.04 - $0.06 per share that will be recognized in future quarters
*All guidance excludes the first quarter rebranding charge as well as legacy items, which may have a positive or negative impact on reported results. Presentation of Financial Information
Financial information discussed in this press release includes both GAAP and non-GAAP measures, which include or exclude certain items. These non-GAAP measures differ from reported results and are intended to illustrate what management believes are relevant period-over-period comparisons. A complete reconciliation of reported GAAP results to the comparable non-GAAP information appears in the financial tables section of this press release.
Conference Call Information
Wyndham Worldwide Corporation will provide a webcast of its conference call to discuss the Company's first quarter 2008 financial results on Thursday, May 1, 2008 at 8:30 a.m. EDT. Listeners may access the webcast live through the Company's Web site at http://www.wyndhamworldwide.com/investors/. An archive of this webcast will be available at the Web site for approximately 90 days beginning at noon EDT on May 1. The conference call also may be accessed by dialing (888) 790-3442 and providing the pass code "Wyndham." Listeners are urged to call at least 10 minutes prior to the scheduled start time. A telephone replay will be available at (888) 566-0674 beginning at noon EDT on May 1 until 5 p.m. EDT on May 4.
About Wyndham Worldwide
As one of the world's largest hospitality companies, Wyndham Worldwide offers individual consumers and business-to-business customers a broad suite of hospitality products and services across various accommodation alternatives and price ranges through its premier portfolio of world-renowned brands. Wyndham Hotel Group encompasses more than 6,500 franchised hotels and approximately 551,000 hotel rooms worldwide. Group RCI offers its more than 3.6 million members access to more than 67,000 vacation properties located in approximately 100 countries. Wyndham Vacation Ownership develops, markets and sells vacation ownership interests and provides consumer financing to owners through its network of approximately 145 vacation ownership resorts serving over 800,000 owners throughout North America, the Caribbean and the South Pacific. Wyndham Worldwide, headquartered in Parsippany, N.J., employs more than 33,000 employees globally.
For more information about Wyndham Worldwide, please visit the Company's web site at http://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, financing transactions and the number of hotel rooms the Company intends to add in future periods.
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 markets, the economic environment for the hospitality industry, the impact of war and terrorist activity, operating risks associated with the hotel, vacation exchange and rentals and vacation ownership businesses, as well as those described in the Company's 2007 Annual Report on Form 10-K, filed with the SEC on February 29, 2008. 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.
Table 1
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 interest on securitized
vacation ownership debt), interest income and income taxes, each of
which is presented on the Company's Consolidated Statements of Income.
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 for the three months
ended March 31, 2008 and 2007:
Three Months Ended March 31,
----------------------------------------
2008 2007
------------------- -------------------
Net Revenues EBITDA Net Revenues EBITDA(d)
------------ ------ ------------ ------
Lodging $170 $46 $152 $45
Vacation Exchange and Rentals 341 93 314 85
Vacation Ownership 504 7 (c) 549 63
------------ ------ ------------ ------
Total Reportable Segments 1,015 146 1,015 193
Corporate and Other (a) (b) (3) (16) (3) (1)
------------ ------ ------------ ------
Total Company $1,012 $130 $1,012 $192
============ ====== ============ ======
Reconciliation of EBITDA to
Net Income
---------------------------
EBITDA $130 $192
Depreciation and amortization 44 38
Interest expense 19 18
Interest income (3) (3)
------ ------
Income before income taxes 70 139
Provision for income taxes 28 53
------ ------
Net income $42 $86
====== ======
----------
(a) Includes the elimination of transactions between segments.
(b) Includes a net expense of $3 million and a net benefit of $13 million
during the three months ended March 31, 2008 and 2007, respectively,
related to the resolution of and adjustment to certain contingent
liabilities and assets.
(c) Includes an impairment charge of $28 million due to the Company's
initiative to rebrand its vacation ownership trademarks to the
Wyndham brand.
(d) Includes separation and related costs of $3 million and $3 million
for Vacation Ownership and Corporate and Other, respectively, during
the three months ended March 31, 2007.
Table 2
Wyndham Worldwide Corporation
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
Three Months Ended
March 31,
-------------------------
2008 2007
------- -------
Net revenues
Vacation ownership interest sales $294 $373
Service fees and membership 453 403
Franchise fees 112 113
Consumer financing 99 81
Other 54 42
------- -------
Net revenues 1,012 1,012
------- -------
Expenses
Operating 441 406
Cost of vacation ownership interests 60 91
Marketing and reservation 209 196
General and administrative (a) 145 121
Separation and related costs (b) - 6
Trademark impairment (c) 28 -
Depreciation and amortization 44 38
------- -------
Total expenses 927 858
------- -------
Operating income 85 154
Other income, net (1) -
Interest expense 19 18
Interest income (3) (3)
------- -------
Income before income taxes 70 139
Provision for income taxes 28 53
------- -------
Net income $42 $86
======= =======
Earnings per share
Basic $0.24 $0.46
Diluted 0.24 0.45
Weighted average shares outstanding
Basic 177 188
Diluted 178 190
-----------
(a) Includes a net expense of $3 million and a net benefit of $13 million
during the three months ended March 31, 2008 and 2007, respectively,
related to the resolution of and adjustment to certain contingent
liabilities and assets.
(b) Represents costs that the Company incurred in connection with the
execution of its separation from its former parent, Cendant (now Avis
Budget Group, Inc.). Such amounts, net of tax, were $4 million during
the three months ended March 31, 2007.
(c) Represents an impairment charge due to the Company's initiative to
rebrand its vacation ownership trademarks to the Wyndham brand. Such
amount, net of tax, was $17 million during the three months ended
March 31, 2008.
Table 3
(1 of 2)
Wyndham Worldwide Corporation
OPERATING STATISTICS
Year Q1 Q2 Q3 Q4 Full Year
---- -- -- -- -- ---------
Lodging (a)
Number of
Rooms (b) 2008 551,100 N/A N/A N/A N/A
2007 539,300 541,700 540,900 550,600 N/A
2006 525,500 535,900 533,700 543,200 N/A
2005 519,300 516,000 512,000 532,700 N/A
RevPAR 2008 $32.21 N/A N/A N/A N/A
2007 $31.35 $38.35 $43.10 $33.09 $36.48
2006 $30.45 $36.97 $40.82 $31.41 $34.95
2005 $25.53 $31.91 $36.86 $29.72 $31.00
Royalty,
Marketing and
Reservation
Revenue
(in 000s) 2008 $104,162 N/A N/A N/A N/A
2007 $105,426 $129,453 $146,290 $107,870 $489,041
2006 $102,741 $125,409 $138,383 $104,505 $471,039
2005 $84,704 $104,281 $119,829 $99,804 $408,620
Vacation Exchange
and Rentals
Average Number
of Members
(in 000s) 2008 3,632 N/A N/A N/A N/A
2007 3,474 3,506 3,538 3,588 3,526
2006 3,292 3,327 3,374 3,429 3,356
2005 3,148 3,185 3,233 3,271 3,209
Annual Dues
and Exchange
Revenue Per
Member 2008 $150.84 N/A N/A N/A N/A
2007 $155.60 $132.33 $131.38 $124.59 $135.85
2006 $152.10 $130.37 $132.31 $128.13 $135.62
2005 $159.12 $134.98 $125.64 $124.05 $135.76
Vacation Rental
Transactions
(in 000s) 2008 387 N/A N/A N/A N/A
2007 398 326 360 293 1,376
2006 385 310 356 293 1,344
2005 367 311 344 278 1,300
Average Net
Price Per
Vacation
Rental 2008 $412.74 N/A N/A N/A N/A
2007 $349.73 $415.71 $506.78 $426.93 $422.83
2006 $312.51 $374.91 $442.75 $356.16 $370.93
2005 $331.37 $363.14 $412.66 $325.62 $359.27
Vacation Ownership
Gross Vacation
Ownership
Interest
Sales
(in 000s) 2008 $458,000 N/A N/A N/A N/A
2007 $430,000 $523,000 $552,000 $488,000 $1,993,000
2006 $357,000 $434,000 $482,000 $469,000 $1,743,000
2005 $281,000 $354,000 $401,000 $360,000 $1,396,000
Tours 2008 255,000 N/A N/A N/A N/A
2007 240,000 304,000 332,000 268,000 1,144,000
2006 208,000 273,000 312,000 254,000 1,046,000
2005 195,000 250,000 272,000 217,000 934,000
Volume Per
Guest (VPG) 2008 $1,668 N/A N/A N/A N/A
2007 $1,607 $1,596 $1,545 $1,690 $1,606
2006 $1,475 $1,426 $1,434 $1,623 $1,486
2005 $1,349 $1,284 $1,349 $1,507 $1,368
------------
Note: Full year amounts may not foot across due to rounding.
(a) Quarterly drivers in the Lodging segment include the acquisitions of
Wyndham Hotels and Resorts (October 2005) and Baymont Inn & Suites
(April 2006) from their acquisition dates forward. Therefore, the
operating statistics are not presented on a comparable basis.
(b) Numbers include affiliated rooms from the fourth quarter of 2006
forward.
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, (ii) properties affiliated with Wyndham Hotels
and Resorts brand for which we receive a fee for reservation and/or
other services provided or (iii) properties managed under the CHI
Limited 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.
Royalty, Marketing and Reservation Revenues: Royalty, marketing and
reservation revenues are typically based on a percentage of the gross
room revenues of each hotel. Royalty revenue is generally a fee charged
to each franchised or managed hotel for the use of one of our trade
names, while marketing and reservation revenues are fees that we collect
and are contractually obligated to spend to support marketing and
reservation activities. Marketing and reservation fees are also included
in Table 4 within Marketing, Reservation and TripRewards Revenues.
Vacation Exchange and Rentals
Average Number of Members: Represents members in our vacation exchange
programs who pay annual membership dues. For additional fees, such
participants are entitled to exchange intervals for intervals at other
properties affiliated with our vacation exchange business. In addition,
certain participants may exchange intervals for other leisure-related
products and services.
Annual Dues and Exchange Revenue Per Member: Represents total revenues
from annual membership dues and exchange fees generated for the period
divided by the average number of vacation exchange members during the
year.
Vacation Rental Transactions: Represents the gross number of
transactions that are generated in connection with customers booking
their vacation rental stays through us. In our European vacation rentals
businesses, one rental transaction is recorded each time a standard one-
week rental is booked; however, in the United States, one rental
transaction is recorded each time a vacation rental stay is booked,
regardless of whether it is less than or more than one week.
Average Net Price Per Vacation Rental: Represents the net rental price
generated from renting vacation properties to customers divided by the
number of rental transactions.
Vacation Ownership
Gross Vacation Ownership Interest Sales: Represents gross sales of
vacation ownership interests (including tele-sales upgrades, which are a
component of upgrade sales) before deferred sales and loan loss
provisions.
Tours: Represents the number of tours taken by guests in our efforts to
sell vacation ownership interests.
Volume per Guest (VPG): Represents revenue per guest and is calculated
by dividing the gross vacation ownership interest sales, excluding
tele-sales upgrades, which are a component of upgrade sales, by the
number of tours.
Table 4
Wyndham Worldwide Corporation
ADDITIONAL DATA
Year Q1 Q2 Q3 Q4 Full Year
---- -- -- -- -- ---------
Lodging (a)
Number of
Properties (b) 2008 6,550 N/A N/A N/A N/A
2007 6,450 6,460 6,460 6,540 N/A
2006 6,300 6,440 6,420 6,470 N/A
2005 6,400 6,380 6,350 6,350 N/A
Marketing,
Reservation and
TripRewards
Revenues
(in 000s) (c) 2008 $62,200 N/A N/A N/A N/A
2007 $61,369 $74,575 $84,820 $65,208 $285,973
2006 $58,572 $70,931 $78,856 $61,135 $269,495
2005 $45,066 $56,558 $65,812 $58,053 $225,491
Property
Management
Reimbursable
Revenue
(in 000s) (d) 2008 $27,128 N/A N/A N/A N/A
2007 $15,624 $22,338 $25,612 $28,414 $91,987
2006 $15,732 $19,935 $17,210 $16,263 $69,142
2005 $- $- $- $17,291 $17,291
Vacation Ownership
Deferred
Revenues
(in 000s) (e) 2008 $(81,716) N/A N/A N/A N/A
2007 $3,906 $(4,908) $506 $(21,092) $(21,588)
2006 $12,708 $(221) $(23,491) $(10,675) $(21,679)
2005 $492 $(9,150) $(5,856) $(2,022) $(16,536)
Provision for
Loan Losses
(in 000s) (f) 2008 $82,344 N/A N/A N/A N/A
2007 $60,869 $75,032 $85,762 $83,644 $305,307
2006 $61,242 $55,872 $63,213 $78,680 $259,007
2005 $24,652 $27,754 $44,050 $31,644 $128,101
---------
Note: Full year amounts may not foot across due to rounding.
(a) Information includes the acquisitions of Wyndham Hotels and Resorts
(October 2005) and Baymont Inn & Suites (April 2006) from their
acquisition dates forward. Therefore, the data is not presented on a
comparable basis.
(b) Numbers include affiliated hotels from the fourth quarter of 2006
forward.
(c) Marketing and reservation revenues represent fees we receive 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. Marketing and reservation
fees are also included in the above table within royalty, marketing
and reservation revenues. TripRewards revenues represent fees we
receive relating to our loyalty program.
(d) Primarily represents payroll costs in our hotel management business
that we incur and pay on behalf of property owners and for which we
are reimbursed by the property owners.
(e) Represents the revenue that is deferred under the percentage of
completion method of accounting. Under the percentage of completion
method of accounting, a portion of the total revenue from a vacation
ownership contract sale is not recognized if the construction of the
vacation resort has not yet been fully completed. This revenue will
be recognized in future periods in proportion to the costs incurred
as compared to the total expected costs for completion of
construction of the vacation resort. Positive amounts represent the
recognition of previously deferred revenues.
(f) Represents provision for estimated losses on vacation ownership
contract receivables originated during the period. Beginning January
1, 2006, the Company recorded such provision as a contra revenue to
vacation ownership interest sales on the Consolidated and Combined
Statements of Income, as required by Statement of Financial
Accounting Standards No. 152, "Accounting for Real Estate
Time-Sharing Transactions." Prior to January 1, 2006, the Company
recorded such provision, net of estimated inventory recoveries, as a
separate expense line item on the Combined Statements of Income and
thus 2005 amounts are not comparable to 2006, 2007 and 2008 amounts.
Table 5
Wyndham Worldwide Corporation
SCHEDULE OF DEBT
(In millions)
March 31, Dec. 31, Sept. 30, June 30, March 31,
2008 2007 2007 2007 2007
--------- -------- --------- -------- ---------
Securitized vacation
ownership debt
Term notes $1,278 $1,435 $1,148 $1,322 $887
Bank conduit facility (a) 841 646 777 491 826
--------- -------- --------- -------- ---------
Securitized vacation
ownership debt (b) 2,119 2,081 1,925 1,813 1,713
Less: Current portion
of securitized vacation
ownership debt 268 237 304 242 231
--------- -------- --------- -------- ---------
Long-term securitized
vacation ownership debt $1,851 $1,844 $1,621 $1,571 $1,482
========= ======== ========= ======== =========
Debt:
6.00% Senior unsecured
notes (due December
2016) (c) $797 $797 $797 $797 $796
Term loan (due July 2011) 300 300 300 300 300
Revolving credit facility
(due July 2011) (d) 95 97 133 215 48
Vacation ownership
bank borrowings 181 164 148 130 112
Vacation rentals
capital leases 165 154 153 147 147
Other 14 14 14 14 16
--------- -------- --------- -------- ---------
Total debt 1,552 1,526 1,545 1,603 1,419
Less: Current portion
of debt 193 175 159 140 123
--------- -------- --------- -------- ---------
Long-term debt $1,359 $1,351 $1,386 $1,463 $1,296
========= ======== ========= ======== =========
--------
(a) This 364-day vacation ownership bank conduit facility has
availability of $1,200 million and expires in October 2008.
(b) This debt is collateralized by $2,667 million, $2,596 million, $2,428
million, $2,288 million and $2,198 million of underlying vacation
ownership contract receivables and related assets at March 31, 2008,
December 31, 2007, September 30, 2007, June 30, 2007 and March 31,
2007, respectively.
(c) The balance at March 31, 2008 represents $800 million aggregate
principal less $3 million of unamortized discount.
(d) The Company's revolving credit facility has a borrowing capacity of
$900 million. At March 31, 2008, the Company has $68 million of
outstanding letters of credit and a remaining borrowing capacity of
$737 million.
Table 6
Wyndham Worldwide Corporation
HOTEL BRAND SYSTEMS DETAILS
As of and For the Three Months Ended March 31, 2008
--------------------------------------------------------------------------
Average
Revenue
Average Per
Number Number Average Daily Available
of of Occupancy Rate Room
Brand Properties Rooms Rate (ADR) (RevPAR)
--------------------------------------------------------------------------
Wyndham Hotels and Resorts 83 22,763 61.8% $116.61 $72.04
Wingate Inn 155 14,172 58.1% $91.84 $53.39
Ramada 867 106,142 50.1% $79.69 $39.91
Baymont 201 17,373 46.0% $65.66 $30.23
AmeriHost Inn 21 1,369 42.3% $63.38 $26.84
Days Inn 1,881 153,323 45.9% $61.99 $28.43
Super 8 2,091 129,793 48.5% $56.78 $27.53
Howard Johnson 477 46,300 43.8% $63.11 $27.63
Travelodge 490 36,798 45.2% $67.68 $30.58
Knights Inn 272 18,657 37.9% $40.88 $15.51
Unmanaged, Affiliated and
Managed, Non-Proprietary
Hotels (*) 14 4,367 N/A N/A N/A
---------------
Total 6,552 551,057 47.7% $67.60 $32.21
===============
As of and For the Three Months Ended March 31, 2007
--------------------------------------------------------------------------
Average
Revenue
Average Per
Number Number Average Daily Available
of of Occupancy Rate Room
Brand Properties Rooms Rate (ADR) (RevPAR)
--------------------------------------------------------------------------
Wyndham Hotels and Resorts 78 20,456 67.7% $109.42 $74.04
Wingate Inn 155 14,243 63.2% $87.74 $55.42
Ramada 859 104,762 50.2% $74.64 $37.46
Baymont 149 13,248 48.9% $61.86 $30.23
AmeriHost Inn 76 5,314 43.2% $63.08 $27.22
Days Inn 1,862 151,355 47.1% $59.65 $28.11
Super 8 2,047 126,113 49.2% $54.19 $26.64
Howard Johnson 471 44,703 43.3% $61.37 $26.60
Travelodge 500 37,289 46.1% $60.07 $27.69
Knights Inn 237 17,151 38.2% $39.73 $15.18
Unmanaged, Affiliated and
Managed, Non-Proprietary
Hotels (*) 16 4,677 N/A N/A N/A
---------------
Total 6,450 539,311 48.7% $64.43 $31.35
===============
-----------
NOTE: A glossary of terms is included in Table 3 (2 of 2).
(*) Represents 1) affiliated properties for which we receive a fee for
reservation services provided and 2) properties managed under the CHI
Limited joint venture. These properties are not branded; as such,
certain operating statistics (such as average occupancy rate, ADR and
RevPAR) are not relevant.
Table 7
Wyndham Worldwide Corporation
NON-GAAP RECONCILIATIONS
(In millions, except per share data)
Three Months Ended
--------------------------------
March 31, 2008 March 31, 2007
-------------- --------------
Reported EBITDA $130 $192
Separation and related costs (a) - 6
Resolution of and adjustment to
contingent liabilities and assets (b) 3 (13)
Trademark impairment (c) 28 -
-------------- --------------
Adjusted EBITDA $161 $185
==========================================================================
Reported PreTax Income $70 $139
Separation and related costs (a) - 6
Resolution of and adjustment to
contingent liabilities and assets (b) 3 (13)
Trademark impairment (c) 28 -
-------------- --------------
Adjusted PreTax Income $101 $132
==========================================================================
Reported Tax Provision $28 $(53)
Separation and related costs (d) - (2)
Resolution of and adjustment to
contingent liabilities and assets (d) - 4
Trademark impairment (d) 11 -
-------------- --------------
Adjusted Tax Provision $39 $(51)
==========================================================================
Reported Net Income $42 $86
Separation and related costs - 4
Resolution of and adjustment to
contingent liabilities and assets 3 (9)
Trademark impairment (c) 17 -
-------------- --------------
Adjusted Net Income $62 $81
==========================================================================
Reported Diluted EPS $0.24 $0.45
Separation and related costs - 0.02
Resolution of and adjustment to
contingent liabilities and assets 0.01 (0.05)
Trademark impairment (c) 0.10 -
-------------- --------------
Adjusted Diluted EPS $0.35 $0.43
==========================================================================
Diluted Shares 178 190
----------
Note: Amounts may not foot due to rounding.
(a) Represents the costs incurred in connection with the Company's
separation from Cendant (now Avis Budget Group).
(b) Relates to the net expense/(benefit) from the resolution of and
adjustment to certain contingent liabilities and assets.
(c) Represents an impairment charge due to the Company's initiative to
rebrand its vacation ownership trademarks to the Wyndham brand.
(d) Relates to the tax effect of the adjustments.
Table 8
(1 of 2)
Wyndham Worldwide Corporation
NON-GAAP FINANCIAL INFORMATION
(In millions, except per share data)
Three Months Ended March 31, 2008
--------------------------------------
Legacy Trademark
As Adjust- Impair- As
Reported ments ment Adjusted
-------- ------- --------- --------
Net revenues
Vacation ownership interest sales $294 $294
Service fees and membership 453 453
Franchise fees 112 112
Consumer financing 99 99
Other 54 54
-------- ------- --------- --------
Net revenues 1,012 - - 1,012
-------- ------- --------- --------
Expenses
Operating 441 441
Cost of vacation ownership
interests 60 60
Marketing and reservation 209 209
General and administrative 145 (3)(a) 142
Trademark impairment 28 (28)(b) -
Depreciation and amortization 44 44
-------- ------- --------- --------
Total expenses 927 (3) (28) 896
-------- ------- --------- --------
Operating income 85 3 28 116
Other loss, net (1) (1)
Interest expense 19 19
Interest income (3) (3)
-------- ------- --------- --------
Income before income taxes 70 3 28 101
Provision for income taxes 28 11 (c) 39
-------- ------- --------- --------
Net income $42 $3 $17 $62
======== ======= ========= ========
Earnings per share
Basic $0.24 $0.01 $0.10 $0.35
Diluted 0.24 0.01 0.10 0.35
Weighted average shares outstanding
Basic 177 177 177 177
Diluted 178 178 178 178
----------
Note: EPS amounts may not foot across due to rounding.
(a) Relates to the net expense from the resolution of and adjustment to
certain contingent liabilities and assets.
(b) Represents an impairment charge due to the Company's initiative to
rebrand its vacation ownership trademarks to the Wyndham brand.
(c) Relates to the tax effect of the adjustment.
Table 8
(2 of 2)
Wyndham Worldwide Corporation
NON-GAAP FINANCIAL INFORMATION
(In millions, except per share data)
Three Months Ended March 31, 2007
------------------------------------
Separation
and
Related Legacy
As Adjust- Adjust- As
Reported ments ments Adjusted
-------- ---------- ------- --------
Net revenues
Vacation ownership interest sales $373 $373
Service fees and membership 403 403
Franchise fees 113 113
Consumer financing 81 81
Other 42 42
-------- ---------- ------- --------
Net revenues 1,012 - - 1,012
-------- ---------- ------- --------
Expenses
Operating 406 406
Cost of vacation ownership interests 91 91
Marketing and reservation 196 196
General and administrative 121 13(b) 134
Separation and related costs 6 (6)(a) -
Depreciation and amortization 38 38
-------- ---------- ------- --------
Total expenses 858 (6) 13 865
-------- ---------- ------- --------
Operating income 154 6 (13) 147
Interest expense 18 18
Interest income (3) (3)
-------- ---------- ------- --------
Income before income taxes 139 6 (13) 132
Provision for income taxes 53 2(c) (4)(c) 51
-------- ---------- ------- --------
Net income $86 $4 $(9) $81
======== ========== ======= ========
Earnings per share
Basic $0.46 $0.02 $(0.05) $0.43
Diluted 0.45 0.02 (0.05) 0.43
Weighted average shares outstanding
Basic 188 188 188 188
Diluted 190 190 190 190
----------
Note: EPS amounts may not foot across due to rounding.
(a) Represents the costs incurred in connection with the Company's
separation from Cendant (now Avis Budget Group).
(b) Relates to the net benefit from the resolution of certain contingent
liabilities.
(c) Relates to the tax effect of the adjustments.
SOURCE Wyndham Worldwide Corporation
###
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