Wyndham Worldwide Reports Third Quarter 2014 Earnings

Adjusted Diluted EPS Growth of 18%
Additional One Billion Dollar Share Repurchase Authorization

PARSIPPANY, N.J. - Oct. 24, 2014 // PRNewswire // - Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended September 30, 2014.

Third Quarter Highlights

  • Adjusted diluted earnings per share (EPS) was $1.67, an increase of 18% from adjusted diluted EPS of $1.41 in the third quarter of 2013.  Reported diluted EPS was $1.64, compared with $1.40 in the third quarter of 2013.
  • Revenues increased 6% compared with the third quarter of 2013.
  • Adjusted EBITDA increased 11% compared with the third quarter of 2013.
  • The Company repurchased 2.0 million shares of its common stock for $161 million during the quarter.
  • The Company announced today that its Board of Directors approved a $1 billion increase in the share repurchase authorization.

"We delivered strong results in the third quarter, with 11% growth in adjusted EBITDA and 18% growth in adjusted EPS," said Stephen P. Holmes, chairman and chief executive officer. "Domestic RevPAR growth once again exceeded 8%, our vacation rentals business had a robust summer and our vacation ownership business significantly increased sales to new owners while continuing to benefit from improved lending practices. Based on our confidence in the prospects of our business, the Board of Directors approved a one billion dollar increase in our share repurchase authorization."

Third Quarter 2014 Operating Results

Third quarter revenues were $1.5 billion, an increase of 6% from the prior year period. The increase reflects growth in all of the Company's business segments.

Adjusted net income was $210 million, or $1.67 per diluted share, compared with $187 million, or $1.41 per diluted share for the same period in 2013. The performance reflects solid operating results across all of the Company's businesses. EPS growth also benefited from the Company's share repurchase activity.

Reported net income for the third quarter of 2014 was $206 million, or $1.64 per diluted share, compared with $187 million, or $1.40 per diluted share, for the third quarter of 2013. Reported net income included items excluded from adjusted net income. The net result of these items unfavorably impacted third quarter 2014 net income by $4 million. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

Free cash flow was $750 million for the nine months ended September 30, 2014, compared with $705 million for the same period in 2013. The growth of free cash flow largely reflects the favorable timing of working capital. The Company defines free cash flow as net cash provided by operating activities less capital expenditures. For the nine months ended September 30, 2014, net cash provided by operating activities was $899 million, compared with $858 million in the prior year period.

Business Unit Results

Lodging (Wyndham Hotel Group)

Revenues were $315 million in the third quarter of 2014, a 6% increase over the third quarter of 2013. The increase predominantly reflects higher RevPAR and increased ancillary fees related to our co-branded credit card program. The increase was partially offset by the absence of $11 million of fees from a global franchisee conference held in the third quarter of 2013, which were fully offset in expenses.

Domestic RevPAR increased 8.4%, partially offset by a 3.5% decline in international RevPAR, resulting in a 4.6% increase in total system-wide RevPAR compared with the third quarter of 2013. International RevPAR declined due to growth in lower RevPAR countries and unfavorable currency effects.

Adjusted EBITDA for the third quarter of 2014 was $107 million, a 13% increase compared with the third quarter of 2013, primarily reflecting the revenue increases.

As of September 30, 2014, the Company's hotel system consisted of approximately 7,590 properties and 655,300 rooms, a 2.7% room increase compared with the third quarter of 2013. The development pipeline included over 960 hotels and over 116,000 rooms, of which 57% were international and 66% were new construction.

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)

Revenues were $512 million in the third quarter of 2014, a 9% increase over the third quarter of 2013. In constant currency and excluding the impact of acquisitions, revenues were up 6%.

Exchange revenues were $162 million, up 3% compared with the third quarter of 2013, as the average number of members increased 1.8% and exchange revenue per member increased 1.1%.

Vacation rental revenues were $331 million, a 13% increase over the third quarter of 2013. Excluding the impact of foreign currency and acquisitions, vacation rental revenues were up 8%, reflecting a 3.8% increase in the average net price per vacation rental and a 3.6% increase in transaction volume.

EBITDA for the third quarter of 2014 was $159 million, a 13% increase compared with the third quarter of 2013. Excluding the impact of acquisitions and the net effect of foreign currency, EBITDA increased 6% compared with the prior year period.

Vacation Ownership (Wyndham Vacation Ownership)

Revenues were $704 million in the third quarter of 2014, a 4% increase over the third quarter of 2013, primarily reflecting 8% higher net VOI revenues, which benefited from a lower loan loss provision. Revenues also increased due to higher resort management fees.

Gross VOI sales were $513 million in the third quarter of 2014, a decrease of 4% compared with the third quarter of 2013, reflecting a 5.3% decrease in volume per guest. VPG declined primarily due to an increase in the percentage of new owner tours, which generally have a lower VPG than tours to existing owners. Total tour flow was flat compared with the third quarter of 2013.

EBITDA for the third quarter of 2014 was $188 million, a 7% increase compared with the third quarter of 2013, primarily reflecting the net revenue increases.

OTHER ITEMS

  • The Company repurchased 2.0 million shares of common stock for $161 million during the third quarter of 2014.  From October 1 through October 23, 2014, the Company repurchased an additional 0.6 million shares for $50 million.  The Company's remaining share repurchase authorization, including the $1 billion authorization increase, totals $1.1 billion as of October 23, 2014.
  • Reported net interest expense in the third quarter of 2014 was $26 million, compared with $29 million in the third quarter of 2013, reflecting lower rates associated with fixed-for-floating interest rate swaps and an increase in capitalized interest. 

BALANCE SHEET INFORMATION AS OF SEPTEMBER 30, 2014:

  • Cash and cash equivalents of $252 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 $2.9 billion, unchanged from December 31, 2013. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.2 billion as of September 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 (unchanged)
  • Adjusted EPS of approximately $4.45 - $4.48 based on a diluted share count of 127 million up from $4.34 - $4.44 based on a diluted share count of 128 million

The Company's preliminary guidance for the full-year 2015 is as follows:

  • Revenues of approximately $5.400 - $5.500 billion
  • EBITDA of approximately $1.300 - $1.330 billion
  • EPS of approximately $4.70 - $4.85 based on a diluted share count of 125 million.  EPS guidance assumes a higher year-over-year tax rate and higher depreciation and amortization.

Conference Call Information

Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company's results, outlook and guidance on Friday, October 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 October 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 October 24, 2014, at 800-841-4360.

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 7,600 franchised hotels and over 655,000 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.

 

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 September 30, 2014 and 2013:

 
                           
   

Three Months Ended September 30, 

 
   

2014

 

2013

 
   

 Net Revenues 

 

 EBITDA 

 

 Net Revenues 

 

 EBITDA 

 

Lodging

$

315

 

$

100

 

$

297

 

$

95

 

Vacation Exchange and Rentals

 

512

   

159

   

470

   

141

 

Vacation Ownership

 

704

   

188

   

677

   

176

 

     Total Reportable Segments

 

1,531

   

447

   

1,444

   

412

 

Corporate and Other (a)

 

(17)

   

(36)

   

(17)

   

(33)

 

     Total Company

$

1,514

 

$

411

 

$

1,427

 

$

379

 
                           

Reconciliation of EBITDA to Net income attributable to Wyndham shareholders

             
                           
         

Three Months Ended September 30, 

 
         

2014

       

2013

 

EBITDA

     

$

411

       

$

379

 

Depreciation and amortization

       

60

         

54

 

Interest expense

       

28

         

31

 

Interest income

       

(2)

         

(2)

 

Income before income taxes

       

325

         

296

 

Provision for income taxes

       

119

         

109

 

Net income attributable to Wyndham shareholders

     

$

206

       

$

187

 
                           

__________

                       

(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 September 30, 2014 and 2013 (for a description of adjustments by segment, see Table 7):

 
   

Three Months Ended September 30, 

 
   

2014

 

2013

 
   

 Net Revenues 

 

 Adjusted

EBITDA 

 

 Net Revenues 

 

 Adjusted

EBITDA 

 

Lodging

$

315

 

$

107

 

$

297

 

$

95

 

Vacation Exchange and Rentals

 

512

   

159

   

470

   

141

 

Vacation Ownership

 

704

   

188

   

677

   

176

 

     Total Reportable Segments

 

1,531

   

454

   

1,444

   

412

 

Corporate and Other

 

(17)

   

(36)

   

(17)

   

(34)

 

     Total Company

$

1,514

 

$

418

 

$

1,427

 

$

378

 
                           

 

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 nine months ended September 30, 2014 and 2013:

 
   

Nine Months Ended September 30, 

 
   

2014

 

2013

 
   

 Net Revenues 

 

 EBITDA 

 

 Net Revenues 

 

 EBITDA 

 

Lodging

$

835

 

$

250

 

$

782

 

$

232

 

Vacation Exchange and Rentals

 

1,293

   

333

   

1,220

   

320

 

Vacation Ownership

 

1,970

   

488

   

1,856

   

447

 

     Total Reportable Segments

 

4,098

   

1,071

   

3,858

   

999

 

Corporate and Other (a)

 

(48)

   

(104)

   

(44)

   

(89)

 

     Total Company

$

4,050

 

$

967

 

$

3,814

 

$

910

 
                           

Reconciliation of EBITDA to Net income attributable to Wyndham shareholders

             
                           
         

Nine Months Ended September 30, 

 
         

2014

       

2013

 

EBITDA

     

$

967

       

$

910

 

Depreciation and amortization

       

175

         

160

 

Interest expense

       

84

         

97

 

Early extinguishment of debt

       

-

         

111

 

Interest income

       

(6)

         

(6)

 

Income before income taxes

       

714

         

548

 

Provision for income taxes

       

265

         

201

 

Net income

       

449

         

347

 

Net income attributable to noncontrolling interest

       

(1)

         

(1)

 

Net income attributable to Wyndham shareholders

     

$

448

       

$

346

 
                           

__________

                       

(a)     Includes the elimination of transactions between segments.  

 

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

 
   

Nine Months Ended September 30, 

 
   

2014

 

2013

 
   

 Net Revenues 

 

 Adjusted

EBITDA 

 

 Net Revenues 

 

 Adjusted

EBITDA 

 

Lodging

$

835

 

$

261

 

$

782

 

$

232

 

Vacation Exchange and Rentals

 

1,293

   

341

   

1,220

   

320

 

Vacation Ownership

 

1,970

   

488

   

1,856

   

449

 

     Total Reportable Segments

 

4,098

   

1,090

   

3,858

   

1,001

 

Corporate and Other

 

(48)

   

(103)

   

(44)

   

(88)

 

     Total Company

$

4,050

 

$

987

 

$

3,814

 

$

913

 
                           

 

                         
                       

 

Table 2

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

                           
                           
     

 Three Months Ended 

 

 Nine Months Ended 

     

 September 30, 

 

 September 30, 

     

2014

 

2013

 

2014

 

2013

Net revenues

                       
 

Service and membership fees

 

$

717

 

$

680

 

$

1,922

 

$

1,833

 

Vacation ownership interest sales

   

415

   

384

   

1,101

   

995

 

Franchise fees

   

189

   

186

   

482

   

460

 

Consumer financing

   

108

   

107

   

319

   

318

 

Other

   

85

   

70

   

226

   

208

Net revenues

   

1,514

   

1,427

   

4,050

   

3,814

                           

Expenses

                       
 

Operating

   

613

   

589

   

1,721

   

1,645

 

Cost of vacation ownership interests 

   

49

   

43

   

129

   

107

 

Consumer financing interest

   

18

   

19

   

52

   

60

 

Marketing and reservation

   

227

   

213

   

614

   

570

 

General and administrative

   

188

   

186

   

564

   

528

 

Asset impairment

   

8

   

-

   

8

   

-

 

Depreciation and amortization

   

60

   

54

   

175

   

160

Total expenses

   

1,163

   

1,104

   

3,263

   

3,070

                           

Operating income

   

351

   

323

   

787

   

744

Other income, net

   

-

   

(2)

   

(5)

   

(6)

Interest expense

   

28

   

31

   

84

   

97

Early extinguishment of debt

   

-

   

-

   

-

   

111

Interest income

   

(2)

   

(2)

   

(6)

   

(6)

                           

Income before income taxes

   

325

   

296

   

714

   

548

Provision for income taxes

   

119

   

109

   

265

   

201

Net income

   

206

   

187

   

449

   

347

Net income attributable to noncontrolling interest

 

-

   

-

   

(1)

   

(1)

Net income attributable to Wyndham shareholders

$

206

 

$

187

 

$

448

 

$

346

                           

Earnings per share

                       
 

Basic

 

$

1.65

 

$

1.42

 

$

3.55

 

$

2.58

 

Diluted

   

1.64

   

1.40

   

3.51

   

2.55

                           

Weighted average shares outstanding

                       
 

Basic

   

124

   

131

   

126

   

134

 

Diluted

   

126

   

133

   

128

   

136

__________

                       
                           

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

 

655,300

 

 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

$

43.71

 

 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

 

3,777

 

 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

$

171.77

 

 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

 

455

 

 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

$

727.40

 

 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

$

513,000

 

 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

 

225

 

 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

$

2,158

 

 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

 

7,590

 

 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

$

70,000

 

 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

$

100

 

 N/A 

 

 N/A 

 

$

64

$

79

$

91

$

75

$

309

 

Marketing, Reservation and Wyndham Rewards Revenues (a)

 

76

 

101

 

117

 

 N/A 

 

 N/A 

   

73

 

92

 

118

 

83

 

365

 

Hotel Management Reimbursable Revenues (b)

 

37

 

39

 

39

 

 N/A 

 

 N/A 

   

25

 

38

 

37

 

35

 

135

 

Intersegment Trademark Fees

   

9

 

11

 

11

 

 N/A 

 

 N/A 

   

8

 

10

 

11

 

10

 

39

 

Owned Hotel Revenues

   

24

 

20

 

18

 

 N/A 

 

 N/A 

   

26

 

20

 

18

 

19

 

84

 

Ancillary Revenues (c)

   

23

 

24

 

30

 

 N/A 

 

 N/A 

   

26

 

23

 

22

 

23

 

95

 

Total Lodging

   

237

 

283

 

315

 

 N/A 

 

 N/A 

   

222

 

262

 

297

 

245

 

1,027

                                               

Vacation Exchange and Rentals

                                           
 

Exchange Revenues

   

187

 

168

 

162

 

 N/A 

 

 N/A 

   

193

 

168

 

158

 

150

 

669

 

Rental Revenues

   

176

 

217

 

331

 

 N/A 

 

 N/A 

   

166

 

192

 

293

 

138

 

789

 

Ancillary Revenues (d)

   

16

 

17

 

19

 

 N/A 

 

 N/A 

   

15

 

16

 

19

 

17

 

68

 

Total Vacation Exchange and Rentals

 

379

 

402

 

512

 

 N/A 

 

 N/A 

   

374

 

376

 

470

 

305

 

1,526

                                               

Vacation Ownership

                                           
 

Vacation Ownership Interest Sales

 

303

 

382

 

415

 

 N/A 

 

 N/A 

   

263

 

347

 

384

 

384

 

1,379

 

Consumer Financing

   

105

 

106

 

108

 

 N/A 

 

 N/A 

   

105

 

106

 

107

 

108

 

426

 

Property Management Fees

   

143

 

145

 

150

 

 N/A 

 

 N/A 

   

146

 

141

 

143

 

137

 

567

 

WAAM Fee-for-Service Commissions

 

33

 

30

 

18

 

 N/A 

 

 N/A 

   

24

 

30

 

33

 

20

 

107

 

Ancillary Revenues (e)

   

9

 

10

 

13

 

 N/A 

 

 N/A 

   

11

 

6

 

10

 

9

 

36

 

Total Vacation Ownership

   

593

 

673

 

704

 

 N/A 

 

 N/A 

   

549

 

630

 

677

 

658

 

2,515

Total Reportable Segments

 

$

1,209

$

1,358

$

1,531

 

 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 each of Q1, Q2 and Q3 2014, reimbursable revenues of $2 million, respectively, 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)

                                       
                                       
           

September 30,
2014

 

June 30,
2014

 

March 31,
2014

 

December 31, 
2013

 

September 30, 
2013

                                       

Securitized vacation ownership debt (a)

                           

Term notes

$

1,670

 

$

1,600

 

$

1,823

 

$

1,648

 

$

1,615

Bank conduit facility (b)

 

271

   

291

   

156

   

262

   

273

Total securitized vacation ownership debt (c)

 

1,941

   

1,891

   

1,979

   

1,910

   

1,888

Less: Current portion of securitized vacation ownership debt

 

192

   

187

   

192

   

184

   

186

Long-term securitized vacation ownership debt

$

1,749

 

$

1,704

 

$

1,787

 

$

1,726

 

$

1,702

                                       
                                       

Debt:

                           

Revolving credit facility (due July 2018) (d)

$

18

 

$

16

 

$

10

 

$

23

 

$

74

Commercial paper (e)

       

237

   

107

   

184

   

210

   

164

$315 million 6.00% senior unsecured notes (due December 2016)(f)

 

317

   

318

   

318

   

318

   

318

$300 million 2.95% senior unsecured notes (due March 2017)

 

299

   

299

   

299

   

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

   

448

   

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)

 

247

   

246

   

246

   

246

   

246

$650 million 4.25% senior unsecured notes (due March 2022)(g)

 

646

   

646

   

645

   

643

   

644

$400 million 3.90% senior unsecured notes (due March 2023)(h)

 

401

   

403

   

395

   

387

   

396

Capital leases

 

175

   

186

   

188

   

191

   

185

Other

 

80

   

99

   

100

   

114

   

117

Total long-term debt

 

2,922

   

2,822

   

2,886

   

2,931

   

2,943

Less: Current portion of long-term debt

 

49

   

50

   

52

   

49

   

55

Long-term debt

$

2,873

 

$

2,772

 

$

2,834

 

$

2,882

 

$

2,888

 

__________

(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 2016 and borrowing capacity of $650 million. As of September 30, 2014, this facility had a remaining borrowing capacity of $379 million.                  

(c) 

This debt is collateralized by $2,326 million, $2,287 million, $2,328 million, $2,314 million and $2,306 million of underlying vacation ownership contract receivables and related assets as of September 30, 2014, June 30, 2014, March 31, 2014, December 31, 2013 and September 30, 2013, respectively.                  

(d) 

Represents a $1.5 billion revolving credit facility that expires in July 2018. As of September 30, 2014, the Company had $2 million of outstanding letters of credit. After considering outstanding commercial paper borrowings of $237 million, the remaining borrowing capacity was $1.2 billion as of September 30, 2014.                  

(e) 

Represents commercial paper programs of $1.25 billion with a remaining borrowing capacity of $1.0 billion, as of September 30, 2014.                  

(f) 

Includes unamortized gains from the settlement of a derivative in the amount of $2 million as of September 30, 2014 and $3 million as of June 30, 2014, March 31, 2014, December 31, 2013 and September 30, 2013.                  

(g) 

Includes a $1 million increase and $2 million decrease in the carrying value resulting from a fair value hedge derivative as of September 30, 2014 and December 31, 2013, respectively.                   

(h) 

Includes a $4 million increase and $10 million decrease in the carrying value resulting from a fair value hedge derivative as of September 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 September 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

182

41,510

67.0%

$113.52

$76.06

             

TRYP by Wyndham

119

16,910

69.4%

$93.45

$64.85

             

Wingate by Wyndham

157

14,377

68.2%

$89.34

$60.89

             

Hawthorn Suites by Wyndham

97

9,685

69.5%

$77.13

$53.62

             

Ramada 

829

114,918

58.5%

$82.00

$47.95

             

Baymont

359

29,293

59.0%

$69.16

$40.78

             

Days Inn 

1,791

144,405

57.7%

$70.77

$40.83

             

Super 8 

2,476

158,347

63.3%

$55.36

$35.05

             

Howard Johnson 

432

46,303

54.4%

$65.79

$35.77

             

Travelodge 

424

31,117

60.5%

$75.65

$45.74

             

Microtel Inns & Suites by Wyndham

320

22,862

65.6%

$71.02

$46.59

             

Knights Inn 

394

24,326

50.2%

$49.53

$24.84

             

Dream

5

989

63.9%

$221.73

$141.74

             

Night

2

280

76.6%

$164.40

$125.90

             
 

Total Lodging

7,587

655,322

60.4%

$72.34

$43.71

             

Vacation Ownership

         

Wyndham Vacation Ownership resorts

202

23,498

N/A  

N/A     

N/A     

             
 

Total Wyndham Worldwide

7,789

678,820

     
             
             
   

As of and For the Three Months Ended September 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

144

33,748

60.3%

$116.22

$70.08

             

TRYP by Wyndham

108

15,218

66.2%

$94.58

$62.61

             

Wingate by Wyndham

158

14,491

65.6%

$86.69

$56.88

             

Hawthorn Suites by Wyndham

91

9,126

64.7%

$73.12

$47.31

             

Ramada 

829

113,815

58.0%

$80.70

$46.81

             

Baymont

323

26,636

57.9%

$65.65

$38.00

             

Days Inn 

1,828

147,891

56.4%

$67.76

$38.25

             

Super 8 

2,382

152,534

64.0%

$56.34

$36.06

             

Howard Johnson 

445

45,199

53.7%

$64.43

$34.57

             

Travelodge 

439

32,773

58.2%

$73.66

$42.87

             

Microtel Inns & Suites by Wyndham

309

22,085

63.7%

$67.61

$43.08

             

Knights Inn 

377

23,174

47.1%

$49.32

$23.21

             

Dream

5

990

75.3%

$226.39

$170.40

             

Night

3

630

69.8%

$143.58

$100.16

             
 

Total Lodging

7,441

638,310

59.2%

$70.59

$41.78

             

Vacation Ownership

         

Wyndham Vacation Ownership resorts

191

23,440

N/A   

N/A     

N/A     

             
 

Total Wyndham Worldwide

7,632

661,750

     

_______________

         

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 Nine Months Ended September 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

182

41,510

63.2%

$114.72

$72.47

             

TRYP by Wyndham

119

16,910

62.7%

$92.33

$57.89

             

Wingate by Wyndham

157

14,377

65.3%

$87.14

$56.93

             

Hawthorn Suites by Wyndham

97

9,685

66.4%

$76.90

$51.03

             

Ramada 

829

114,918

55.3%

$80.22

$44.36

             

Baymont

359

29,293

54.4%

$66.09

$35.95

             

Days Inn 

1,791

144,405

52.7%

$66.20

$34.91

             

Super 8 

2,476

158,347

58.4%

$51.75

$30.21

             

Howard Johnson 

432

46,303

49.5%

$63.66

$31.49

             

Travelodge 

424

31,117

53.1%

$68.87

$36.56

             

Microtel Inns & Suites by Wyndham

320

22,862

61.1%

$67.25

$41.08

             

Knights Inn 

394

24,326

45.9%

$47.01

$21.56

             

Dream

5

989

70.2%

$219.10

$153.79

             

Night

2

280

69.4%

$147.35

$102.20

             
 

Total Lodging

7,587

655,322

55.8%

$69.45

$38.77

             

Vacation Ownership

         

Wyndham Vacation Ownership resorts

202

23,498

N/A  

N/A     

N/A     

             
 

Total Wyndham Worldwide

7,789

678,820

     
             
             
   

As of and For the Nine Months Ended September 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

144

33,748

60.2%

$116.07

$69.90

             

TRYP by Wyndham

108

15,218

61.7%

$95.72

$59.05

             

Wingate by Wyndham

158

14,491

62.6%

$85.63

$53.56

             

Hawthorn Suites by Wyndham

91

9,126

63.7%

$72.10

$45.90

             

Ramada 

829

113,815

53.7%

$79.99

$42.96

             

Baymont

323

26,636

53.1%

$63.44

$33.70

             

Days Inn 

1,828

147,891

50.4%

$64.97

$32.73

             

Super 8 

2,382

152,534

57.7%

$53.25

$30.71

             

Howard Johnson 

445

45,199

48.3%

$62.76

$30.32

             

Travelodge 

439

32,773

51.3%

$68.24

$35.01

             

Microtel Inns & Suites by Wyndham

309

22,085

58.9%

$64.70

$38.12

             

Knights Inn 

377

23,174

42.7%

$45.56

$19.44

             

Dream

5

990

70.8%

$222.79

$157.74

             

Night

3

630

62.0%

$145.14

$89.99

             
 

Total Lodging

7,441

638,310

54.0%

$68.56

$37.00

             

Vacation Ownership

         

Wyndham Vacation Ownership resorts

191

23,440

N/A   

N/A     

N/A     

             
 

Total Wyndham Worldwide

7,632

661,750

     

_______________

         

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)

 

Restructuring
   Reversal(d)

 

Asset
  Impairment(e)

 

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

                                                   

Three months ended September 30, 2014

                                               

Lodging

 

$

315

 

$

100

 

$

-

 

$

-

 

$

-

 

$

(1)

 

$

8

 

$

107

Vacation Exchange and Rentals

   

512

   

159

   

-

   

-

   

-

   

-

   

-

   

159

Vacation Ownership

   

704

   

188

   

-

   

-

   

-

   

-

   

-

   

188

Total Reportable Segments

   

1,531

   

447

   

-

   

-

   

-

   

(1)

   

8

   

454

Corporate and Other (a)

   

(17)

   

(36)

   

-

   

-

   

-

   

-

   

-

   

(36)

Total Company

 

$

1,514

 

$

411

 

$

-

 

$

-

 

$

-

 

$

(1)

 

$

8

 

$

418

 

________________

(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.      

(d) 

Relates to the reversal of a portion of a restructuring reserve established during the fourth quarter of 2013.      

(e) 

Relates to a write-down of an investment in a joint venture.    

 

                               

 

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 4)

                           

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

                           
     

Three Months Ended September 30, 2014

                           
     

 As Reported 

 

Restructuring
  Reversal(a)

 

Asset
  Impairment(b)

 

As Adjusted
non-GAAP

Net revenues

                       
 

Service and membership fees

 

$

717

 

$

   

$

   

$

717

 

Vacation ownership interest sales

   

415

               

415

 

Franchise fees

   

189

               

189

 

Consumer financing

   

108

               

108

 

Other

   

85

               

85

Net revenues

   

1,514

   

-

   

-

   

1,514

                           

Expenses

                       
 

Operating

   

613

               

613

 

Cost of vacation ownership interests 

   

49

               

49

 

Consumer financing interest

   

18

               

18

 

Marketing and reservation

   

227

               

227

 

General and administrative

   

188

   

1

         

189

 

Asset impairment

   

8

         

(8)

   

-

 

Depreciation and amortization

   

60

               

60

Total expenses

   

1,163

   

1

   

(8)

   

1,156

                           

Operating income

   

351

   

(1)

   

8

   

358

Interest expense

   

28

               

28

Interest income

   

(2)

               

(2)

                           

Income before income taxes

   

325

   

(1)

   

8

   

332

Provision for income taxes

   

119

   

-

   

3

(c)

 

122

                           

Net income attributable to Wyndham shareholders

 

$

206

 

$

(1)

 

$

5

 

$

210

                           

Earnings per share

                       
 

Basic

 

$

1.65

 

$

(0.01)

 

$

0.04

 

$

1.69

 

Diluted

   

1.64

   

(0.01)

   

0.04

   

1.67

                           

Weighted average shares outstanding

                       
 

Basic

   

124

   

124

   

124

   

124

 

Diluted

   

126

   

126

   

126

   

126

 

__________

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 portion of a restructuring reserve established during the fourth quarter of 2013 at the Company's lodging business.

(b) 

Relates to a write-down of an investment in a joint venture at the Company's lodging business.            

(c) 

Relates to the tax effect of the adjustment.            

 

                                               

 

Table 8

                                               

 

(2 of 4)

                                                   

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

                                                   
     

Nine Months Ended September 30, 2014

                                                   
     

 As Reported 

 

Executive
Departure
Costs (a)

 

Venezuela
Currency 
    Devaluation(c)

 

Legacy
  Adjustments(d)

 

    VAT
    Adjustment(f)

 

Restructuring
  Reversal(g)

 

  Asset
  Impairment(h)

 

As Adjusted 
non-GAAP

Net revenues

                                               
 

Service and membership fees

 

$

1,922

 

$

   

$

   

$

   

$

   

$

   

$

   

$

1,922

 

Vacation ownership interest sales

   

1,101

                                       

1,101

 

Franchise fees

   

482

                                       

482

 

Consumer financing

   

319

                                       

319

 

Other

   

226

                                       

226

Net revenues

   

4,050

   

-

   

-

   

-

   

-

   

-

   

-

   

4,050

                                                   

Expenses

                                               
 

Operating

   

1,721

         

(10)

                           

1,711

 

Cost of vacation ownership interests 

   

129

                                       

129

 

Consumer financing interest

   

52

                                       

52

 

Marketing and reservation

   

614

                                       

614

 

General and administrative

   

564

   

(4)

         

(1)

   

2

   

1

         

562

 

Asset impairment

   

8

                                 

(8)

   

-

 

Depreciation and amortization

   

175

                                       

175

Total expenses

   

3,263

   

(4)

   

(10)

   

(1)

   

2

   

1

   

(8)

   

3,243

                                                   

Operating income

   

787

   

4

   

10

   

1

   

(2)

   

(1)

   

8

   

807

Other income, net

   

(5)

                                       

(5)

Interest expense

   

84

                     

2

               

86

Interest income

   

(6)

                                       

(6)

                                                   

Income before income taxes

   

714

   

4

   

10

   

1

   

(4)

   

(1)

   

8

   

732

Provision for income taxes

   

265

   

1

(b)

 

1

(b)

 

1

(e)

 

(2)

(b)

 

-

   

3

(b)

 

269

                                                   

Net income

   

449

   

3

   

9

   

-

   

(2)

   

(1)

   

5

   

463

Net income attributable to noncontrolling interest

   

(1)

   

-

   

-

   

-

   

-

   

-

   

-

   

(1)

                                                   

Net income attributable to Wyndham shareholders

 

$

448

 

$

3

 

$

9

 

$

-

 

$

(2)

 

$

(1)

 

$

5

 

$

462

                                                   

Earnings per share

                                               
 

Basic

 

$

3.55

 

$

0.02

 

$

0.07

 

$

-

 

$

(0.02)

 

$

(0.01)

 

$

0.04

 

$

3.65

 

Diluted

   

3.51

   

0.02

   

0.07

   

-

   

(0.02)

   

(0.01)

   

0.04

   

3.62

                                                   

Weighted average shares outstanding

                                               
 

Basic

   

126

   

126

   

126

   

126

   

126

   

126

   

126

   

126

 

Diluted

   

128

   

128

   

128

   

128

   

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) 

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 net expense from the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.                        

(e) 

Relates to the reversal of a state tax accrual.                        

(f) 

Relates to the reversal of a reserve for value-added taxes at the Company's vacation exchange and rentals business.                        

(g) 

Relates to the reversal of a portion of a restructuring reserve established during the fourth quarter of 2013 at the Company's lodging business.                        

(h) 

Relates to a write-down of an investment in a joint venture at the Company's lodging business.                        

 

                 

 

Table 8

                 

 

(3 of 4)

                     

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

                     
     

Three Months Ended September 30, 2013

                     
     

 As Reported 

 

Legacy
  Adjustments(a)

 

As Adjusted 
non-GAAP

Net revenues

                 
 

Service fees and membership

 

$

680

 

$

   

$

680

 

Vacation ownership interest sales

   

384

         

384

 

Franchise fees

   

186

         

186

 

Consumer financing

   

107

         

107

 

Other

   

70

         

70

Net revenues

   

1,427

   

-

   

1,427

                     

Expenses

                 
 

Operating

   

589

         

589

 

Cost of vacation ownership interests 

   

43

         

43

 

Consumer financing interest

   

19

         

19

 

Marketing and reservation

   

213

         

213

 

General and administrative

   

186

   

1

   

187

 

Depreciation and amortization

   

54

         

54

Total expenses

   

1,104

   

1

   

1,105

                     

Operating income

   

323

   

(1)

   

322

Other income, net

   

(2)

         

(2)

Interest expense

   

31

         

31

Interest income

   

(2)

         

(2)

                     

Income before income taxes

   

296

   

(1)

   

295

Provision for income taxes

   

109

   

(1)

(b)

 

108

                     

Net income attributable to Wyndham shareholders

 

$

187

 

$

-

 

$

187

                     

Earnings per share

                 
 

Basic

 

$

1.42

 

$

-

 

$

1.42

 

Diluted

   

1.40

   

-

   

1.41

                     

Weighted average shares outstanding

                 
 

Basic

   

131

   

131

   

131

 

Diluted

   

133

   

133

   

133

 

__________

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 net benefit from the resolution of and adjustment to certain contingent liabilities and assets resulting from 
our separation from Cendant. 

(b) 

Relates to a state tax accrual for legacy tax matters.         

 

                             

 

Table 8

                             

 

(4 of 4)

                                 

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

                                 
     

Nine Months Ended September 30, 2013

                                 
     

 As Reported 

 

Legacy
  Adjustments(a)

 

Acquisition
   Costs(c)

 

Early 
Extinguishment 
    of Debt (e)

 

As Adjusted 
non-GAAP

Net revenues

                             
 

Service fees and membership

 

$

1,833

 

$

   

$

   

$

   

$

1,833

 

Vacation ownership interest sales

   

995

                     

995

 

Franchise fees

   

460

                     

460

 

Consumer financing

   

318

                     

318

 

Other

   

208

                     

208

Net revenues

   

3,814

   

-

   

-

   

-

   

3,814

                                 

Expenses

                             
 

Operating

   

1,645

         

(2)

         

1,643

 

Cost of vacation ownership interests 

   

107

                     

107

 

Consumer financing interest

   

60

                     

60

 

Marketing and reservation

   

570

                     

570

 

General and administrative

   

528

   

(1)

               

527

 

Depreciation and amortization

   

160

                     

160

Total expenses

   

3,070

   

(1)

   

(2)

   

-

   

3,067

                                 

Operating income

   

744

   

1

   

2

   

-

   

747

Other income, net

   

(6)

                     

(6)

Interest expense

   

97

                     

97

Early extinguishment of debt

   

111

               

(111)

   

-

Interest income

   

(6)

                     

(6)

                                 

Income before income taxes

   

548

   

1

   

2

   

111

   

662

Provision for income taxes

   

201

   

(2)

(b)

 

1

(d)

 

42

(d)

 

242

                                 

Net income

   

347

   

3

   

1

   

69

   

420

Net loss attributable to noncontrolling interest

   

(1)

   

-

   

-

   

-

   

(1)

                                 

Net income attributable to Wyndham shareholders

 

$

346

 

$

3

 

$

1

 

$

69

 

$

419

                                 

Earnings per share

                             
 

Basic

 

$

2.58

 

$

0.02

 

$

0.01

 

$

0.51

 

$

3.12

 

Diluted

   

2.55

   

0.02

   

0.01

   

0.50

   

3.09

                                 

Weighted average shares outstanding

                             
 

Basic

   

134

   

134

   

134

   

134

   

134

 

Diluted

   

136

   

136

   

136

   

136

   

136

 

__________

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 net expense from the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.               

(b) 

Relates to a state tax accrual for legacy tax matters.               

(c) 

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.               

(d) 

Relates to the tax effect of the adjustment.               

(e) 

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.               

 

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:

 
   

Nine Months Ended September 30, 

       
   

2014

   

2013

       
                       

Net cash provided by operating activities

 

$

899

   

$

858

       

Less: Property and equipment additions

   

(149)

     

(153)

       

Free cash flow

 

$

750

   

$

705

       
                       
                       

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

$

513

 

 N/A 

 

 N/A 

Less: Sales under WAAM Fee-for-Service

   

(44)

 

(40)

 

(27)

 

 N/A 

 

 N/A 

Gross VOI sales, net of WAAM Fee-for-Service sales

   

366

 

456

 

486

 

 N/A 

 

 N/A 

Less: Loan loss provision

   

(60)

 

(70)

 

(70)

 

 N/A 

 

 N/A 

Less: Impact of percentage-of-completion accounting

   

(3)

 

(4)

 

(1)

 

 N/A 

 

 N/A 

Vacation ownership interest sales (a)

 

$

303

$

382

$

415

 

 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

$

27

 

 N/A 

 

 N/A 

2013

 

$

24

$

18

$

22

$

25

$

89

2012

 

$

27

$

20

$

22

$

28

$

97

2011

 

$

18

$

18

$

21

$

11

$

68

SOURCE Wyndham Worldwide Corporation

Contacts:

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

###

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