Wyndham third quarter EPS up 38%
Submitted by HBN on Wed, 10/26/2011 - 8:21am
PARSIPPANY, N.J., Oct. 26, 2011 (www.hospitalitybusinessnews.com) -- Wyndham Worldwide Corporation (NYSE: WYN) today announced results for the three months ended September 30, 2011.
Highlights:
- Third quarter 2011 adjusted diluted earnings per share (EPS) was $0.94, compared with $0.68 in the third quarter of 2010, an increase of 38%. Third quarter 2011 reported diluted EPS was $1.08, an increase of 29%, compared with the same period in 2010.
- Free cash flow increased 24% to $699 million for the first three quarters of 2011, compared with $564 million during the same period in 2010. The Company defines free cash flow as net cash provided by operating activities less capital expenditures, equity investments and development advances and excludes a 2010 cash payment related to contingent IRS tax liabilities.
- During the quarter, the Company repurchased approximately 10.2 million shares of its common stock at an average price of $29.75 for $304 million.
"I am pleased once again with our strong results, which reflect outstanding operating performance and the resiliency of our businesses," said Stephen P. Holmes, chairman and CEO, Wyndham Worldwide. "In addition, we continued to thoughtfully deploy our free cash flow to repurchase our common shares and invest in our company."
THIRD QUARTER 2011 OPERATING RESULTS
Third quarter revenues increased 14% from the prior year period to $1.2 billion. The revenue growth reflects strong RevPAR growth of 6.3% in our hotel business, increased rental revenues including contributions from acquisitions of vacation rentals businesses and higher sales in the vacation ownership business
For the third quarter of 2011, adjusted net income increased 22% to $153 million, compared with $125 million in the third quarter of 2010. On a per share basis, adjusted net income grew 38% to $0.94 per diluted share, compared with $0.68 per diluted share in the same period in 2010. The increase reflects strong operational performance and the benefit from the Company's share repurchase program, partially offset by a higher tax rate compared with the third quarter of 2010. Adjusted net income for the third quarter of 2011 excludes a tax benefit of $13 million related to the reversal of a tax valuation allowance, $7 million, after tax, of interest income related to a refund of value added taxes and a $6 million after-tax net benefit related to the adjustment and resolution of certain contingent liabilities and assets. These adjustments were partially offset by a $4 million after-tax loss related to the write-off of foreign exchange translation adjustments resulting from the liquidation of a foreign entity.
Including the above adjustments, third quarter 2011 net income grew 12% to $175 million, or $1.08 per diluted share, compared with net income of $156 million or $0.84 per diluted share, a 29% increase per share from the third quarter of 2010.
Free cash flow increased 24% to $699 million for the first nine months of 2011, compared with $564 million during the same period in 2010. The growth in free cash flow reflects higher cash earnings, more efficient working capital utilization and a refund of value added taxes and related interest income. For the first nine months, cash provided by operating activities was $860 million, compared with $528 million in the prior year period, which included a $145 million cash payment related to contingent IRS tax liabilities.
BUSINESS UNIT RESULTS
Lodging (Wyndham Hotel Group)
Revenues were $222 million in the third quarter of 2011, an increase of 9%, compared with the third quarter of 2010, primarily reflecting improved RevPAR performance, an increase in system size and a $12 million reclassification of certain reservation fees, which had no impact on EBITDA. In the third quarter of 2011, system-wide RevPAR increased 6.3%, or 4.8% in constant currency.
Third quarter 2011 EBITDA of $67 million, was flat, compared with the same period in 2010, primarily reflecting the timing of $3 million in marketing and reservation expenses as well as $3 million of pre-opening costs for the Wyndham Grand Orlando Resort Bonnet Creek.
As of September 30, 2011, the Company's hotel system consisted of approximately 7,190 properties and 611,200 rooms. The development pipeline included approximately 870 hotels and 115,000 rooms, of which 58% were new construction. International rooms accounted for 62% of the development pipeline.
Vacation Exchange and Rentals (Wyndham Exchange & Rentals)
Revenues were $436 million in the third quarter of 2011, an increase of 32% compared with the third quarter of 2010, reflecting incremental revenues from acquisitions and the favorable impact from foreign currency.
Exchange revenues were $161 million, flat compared with the third quarter of 2010. In constant currency, exchange revenues decreased 3%, reflecting a 2.2% decrease in exchange revenue per member. The average number of members was flat.
Vacation rental revenues were $260 million, which included $83 million of incremental revenues related to acquisitions, compared with $161 million in the third quarter of 2010. In constant currency, excluding the impact of the incremental revenues from acquisitions, net revenues generated from rental transactions and related services increased 2%, reflecting a 1.4% increase in the average net price per vacation rental, while rental transaction volume was flat.
Adjusted EBITDA for the third quarter of 2011 was $135 million, a 30% increase compared with $104 million in the prior year period. The increase reflects incremental contributions from acquisitions and the favorable impact from foreign currency. Third quarter 2011 adjusted EBITDA excludes a $4 million loss related to the write-off of foreign exchange translation adjustments resulting from the liquidation of a foreign entity.
Vacation Ownership (Wyndham Vacation Ownership)
Revenues for the third quarter of 2011 were $559 million, a 5% increase compared with $533 million in the third quarter of 2010, reflecting an increase in Vacation Ownership Interest (VOI) sales and commissions under the Wyndham Asset Affiliation Model (WAAM).
Gross VOI sales were $455 million in the third quarter of 2011, up 10% from the third quarter of 2010, reflecting a 5.6% increase in volume per guest and a 5.3% increase in tour flow.
EBITDA for the third quarter of 2011 increased 21% to $149 million, compared with EBITDA of $123 million in the third quarter of 2010, reflecting the increase in VOI sales and a decrease in cost of sales.
Other Items
- The Company repurchased approximately 10.2 million shares of its common stock during the third quarter of 2011 at an average price of $29.75 for $304 million and an additional 1.4 million shares at an average price of $29.19 for $40 million through October 25, 2011.
- Net interest expense in the third quarter of 2011 was $15 million, compared with $45 million in the same period in 2010. Third quarter 2011 net interest expense included $16 million of interest income related to a refund of value added taxes and third quarter 2010 net interest expense included $11 million of costs incurred for the early extinguishment of debt.
Balance Sheet Information as of September 30, 2011:
- Cash and cash equivalents of $175 million, compared with approximately $155 million at December 31, 2010.
- Vacation ownership contract receivables, net, of $2.9 billion, compared with $3.0 billion at December 31, 2010.
- Vacation ownership and other inventory of $1.1 billion, compared with $1.2 billion at December 31, 2010.
- Securitized vacation ownership debt of $1.7 billion, unchanged from December 31, 2010.
- Other debt of $2.1 billion, unchanged from December 31, 2010. The remaining borrowing capacity on the revolving credit facility was $820 million, compared with $788 million as of December 31, 2010.
Outlook
The Company is increasing full-year 2011 adjusted EPS guidance from $2.32 - $2.40 to $2.41 - $2.45, based on a diluted share count of 167 million.
For the fourth quarter of 2011, the Company expects adjusted EPS of $0.40 - $0.44 based on a diluted share count of 158 million.
The Company's preliminary guidance for the full-year 2012 is as follows:
- Revenues of approximately $4.425 - $4.600 billion
- Adjusted EBITDA of approximately $1.030 - $1.055 billion
- Adjusted EPS of approximately $2.72 - $2.82 based on a diluted share count of 160 million.
The guidance reflects assumptions used for internal planning purposes. Guidance may exclude non-recurring or special items, which may have a positive or negative impact on reported results. If economic conditions change materially from current levels, these assumptions and our guidance may change materially.
Three Months Ended September 30,
--------------------------------
2011 2010
---- ----
Net Net
Revenues EBITDA Revenues EBITDA
--------- ------ --------- ------
Lodging $222 $67 $203 $67
Vacation
Exchange
and
Rentals 436 131 (b) 330 103 (e)
Vacation
Ownership 559 149 533 123
--- --- --- ---
Total
Reportable
Segments 1,217 347 1,066 293
Corporate
and
Other
(a) (5) (18) (c) (1) 30 (c)
Total
Company $1,212 $329 $1,065 $323
====== ==== ====== ====
Reconciliation
of EBITDA to
Net Income
--------------
EBITDA $329 $323
Depreciation
and
amortization 43 43
Interest
expense 34 47 (f)
Interest income (19) (d) (2)
--- ---
Income before
income taxes 271 235
Provision for
income taxes 96 79
--- ---
Net income $175 $156
==== ====
__________
(a) Includes the elimination of transactions between
segments.
(b) Includes a $4 million charge related to the
write-off of foreign exchange translation
adjustments associated with the liquidation of a
foreign entity.
(c) Includes $8 million and $52 million of a net
benefit during the three months ended September 30,
2011 and 2010, respectively, related to the
resolution of and adjustment to certain contingent
liabilities and assets resulting from our separation
from Cendant.
(d) Includes $16 million of interest income related
to a refund of value added taxes.
(e) Includes $1 million related to costs incurred in
connection with the Company's acquisition of
ResortQuest during September 2010.
(f) Includes $11 million of costs incurred for the
early repurchase of a portion of the Company's 3.50%
convertible notes during the third quarter of 2010.
The following tables summarize net revenues and
Adjusted EBITDA for reportable segments for the
three months ended September 30, 2011 and 2010 (for
a description of adjustments by segment, see Table
7):
Three Months Ended September 30,
--------------------------------
2011 2010
---- ----
Adjusted Adjusted
Net Net
Revenues EBITDA Revenues EBITDA
--------- ------ --------- ------
Lodging $222 $67 $203 $67
Vacation
Exchange
and
Rentals 436 135 330 104
Vacation
Ownership 559 149 533 123
--- --- --- ---
Total
Reportable
Segments 1,217 351 1,066 294
Corporate
and
Other (5) (26) (1) (22)
Total
Company $1,212 $325 $1,065 $272
====== ==== ====== ====
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 for the nine months ended September 30,
2011 and 2010:
Nine Months Ended September 30,
-------------------------------
2011 2010
---- ----
Net Net
Revenues EBITDA Revenues EBITDA
--------- ------ --------- ------
Lodging $561 $160 (b) $525 $148 (h)
Vacation
Exchange
and
Rentals 1,152 330 (c) 912 261 (i)
Vacation
Ownership 1,550 376 (d) 1,483 310
----- --- ----- ---
Total
Reportable
Segments 3,263 866 2,920 719
Corporate
and
Other
(a) (10) (57) (e) (6) (4) (e)
Total
Company $3,253 $809 $2,914 $715
====== ==== ====== ====
Reconciliation
of EBITDA to
Net Income
--------------
EBITDA $809 $715
Depreciation and
amortization 133 128
Interest expense 115 (f) 133 (j)
Interest income (22) (g) (3)
--- ---
Income before
income taxes 583 457
Provision for
income taxes 222 157
--- ---
Net income $361 $300
==== ====
__________
(a) Includes the elimination of transactions between
segments.
(b) Includes a non-cash impairment charge of $13
million related to a write-down of an international
joint venture in the Company's lodging business.
(c) Includes (i) a $31 million net benefit resulting
from a refund of value added taxes, (ii) $7 million
of restructuring costs incurred in connection with a
strategic initiative commenced by the Company during
2010 and (iii) a $4 million charge related to the
write-off of foreign exchange translation
adjustments associated with the liquidation of a
foreign entity.
(d) Includes a $1 million benefit for the reversal of
costs incurred as a result of various strategic
initiatives commenced by the Company during 2008.
(e) Includes $16 million and $51 million of a net
benefit during the nine months ended September 30,
2011 and 2010, respectively, related to the
resolution of and adjustment to certain contingent
liabilities and assets resulting from our separation
from Cendant.
(f) Includes (i) $12 million of costs incurred for
the early repurchase of a portion of the Company's
convertible notes during the first nine months of
2011 and (ii) $3 million of interest related to value
added tax accruals.
(g) Includes $16 million of interest income related
to a refund of value added taxes.
(h) Includes $1 million related to costs incurred in
connection with the Company's acquisition of the TRYP
hotel brand during June 2010.
(i) Includes (i) $4 million related to costs incurred
in connection with the Company's acquisition of
Hoseasons Holdings Ltd. during March 2010 and (ii) $1
million related to costs incurred in connection with
the Company's acquisition of ResortQuest during
September 2010.
(j) Includes (i) $16 million of costs incurred for
the early extinguishment of the Company's term loan
facility and revolving foreign credit facility during
March 2010 and (ii) $11 million of costs incurred for
the repurchase of a portion of the Company's 3.50%
convertible notes during the third quarter of 2010.
The following tables summarize net revenues and
Adjusted EBITDA for reportable segments for the nine
months ended September 30, 2011 and 2010 (for a
description of adjustments by segment, see Table 7):
Nine Months Ended September 30,
-------------------------------
2011 2010
---- ----
Adjusted Adjusted
Net Net
Revenues EBITDA Revenues EBITDA
--------- ------ --------- ------
Lodging $561 $173 $525 $149
Vacation
Exchange
and
Rentals 1,152 310 912 266
Vacation
Ownership 1,550 375 1,483 310
----- --- ----- ---
Total
Reportable
Segments 3,263 858 2,920 725
Corporate
and
Other (10) (73) (6) (55)
Total
Company $3,253 $785 $2,914 $670
====== ==== ====== ====
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,
------------- -------------
2011 2010 2011 2010
---- ---- ---- ----
Net revenues
Service and membership fees $584 $464 $1,579 $1,298
Vacation ownership interest sales 320 308 855 796
Franchise fees 160 142 395 353
Consumer financing 105 107 310 318
Other 43 44 114 149
--- --- --- ---
Net revenues 1,212 1,065 3,253 2,914
----- ----- ----- -----
Expenses
Operating 490 (a) 410 (b) 1,358 (a) 1,179 (b)
Cost of vacation ownership interests 35 52 115 138
Consumer financing interest 21 27 67 80
Marketing and reservation 182 149 472 410
General and administrative (c) 157 101 422 (d) 394
Asset impairment - 4 (e) 13 (f) 4 (e)
Restructuring - - 6 (g) -
Depreciation and amortization 43 43 133 128
Total expenses 928 786 2,586 2,333
--- --- ----- -----
Operating income 284 279 667 581
Other income, net (2) (1) (9) (h) (6)
Interest expense 34 47 (i) 115 (j) 133 (i)
Interest income (19) (k) (2) (22) (k) (3)
--- --- --- ---
Income before income taxes 271 235 583 457
Provision for income taxes 96 (l) 79 222 (l) 157
--- --- --- ---
Net income $175 $156 $361 $300
==== ==== ==== ====
Earnings per share
Basic $1.10 $0.88 $2.17 $1.68
Diluted 1.08 0.84 2.12 1.62
Weighted average shares outstanding
Basic 159 177 166 179
Diluted 162 184 170 186
__________
(a) Includes a $4 million charge related to the
write-off of foreign exchange translation
adjustments associated with the liquidation of a
foreign entity.
(b) Includes $1 million during both the three and
nine months ended September 30, 2010 related to
costs incurred in connection with the Company's
September 2010 acquisition of ResortQuest. The
nine months ended September 30, 2010 also
includes (i) $4 million of costs incurred in
connection with the Company's March 2010
acquisition of Hoseasons Holdings Ltd. and (ii)
$1 million related to costs incurred in
connection with the Company's June 2010
acquisition of the TRYP hotel brand.
(c) Includes $8 million and $52 million of a net
benefit during the three months ended September
30, 2011 and 2010, respectively, and $12 million
and $51 million of a net benefit during the nine
months ended September 30, 2011 and 2010,
respectively, related to the resolution of and
adjustment to certain contingent liabilities and
assets resulting from our separation.
(d) Includes a $31 million net benefit resulting
from a refund of value added taxes.
(e) Represents a non-cash impairment charge to
reduce the value of certain vacation ownership
properties and related assets held for sale that
are no longer consistent with the Company's
development plans.
(f) Represents a non-cash impairment charge
related to a write-down of an international
joint venture in the Company's lodging business.
(g) Includes (i) $7 million of costs incurred as
a result of a strategic initiative commenced by
the Company during 2010 and (ii) a $1 million
benefit for the reversal of costs incurred as a
result of various strategic initiatives commenced
by the Company during 2008.
(h) Includes $4 million of a gain related to the
redemption of a preferred stock investment
allocated to the Company in connection with our
separation from Cendant.
(i) Includes $11 million during both the three
and nine months ended September 30, 2010 related
to costs incurred for the early repurchase of a
portion of the Company's 3.50% convertible notes
during the third quarter of 2010. The nine
months ended September 30, 2010 also includes $16
million of costs incurred for the early
extinguishment of the Company's term loan
facility and revolving foreign credit facility
during March 2010.
(j) Includes (i) $12 million of costs incurred
for the early repurchase of a portion of the
Company's 3.50% convertible notes and (ii) $3
million of interest related to non-U.S. value
added tax accruals.
(k) Includes $16 million of interest income
related to the refund of value added taxes.
(l) Includes a benefit of $13 million related to
the reversal of a tax valuation allowance.
Table 3
(1 of 3)
Wyndham Worldwide Corporation
OPERATING STATISTICS
Year Q1 Q2 Q3 Q4 Full Year
---- --- --- --- --- ---------
Lodging (a)
Number of Rooms 2011 609,600 612,900 611,200 N/A N/A
2010 593,300 606,800 605,700 612,700 N/A
2009 588,500 590,200 590,900 597,700 N/A
2008 551,100 551,500 583,400 592,900 N/A
RevPAR 2011 $27.71 $35.38 $39.49 N/A N/A
2010 $25.81 $32.25 $37.14 $29.18 $31.14
2009 $27.69 $32.38 $34.81 $26.47 $30.34
2008 $32.21 $38.87 $41.93 $30.03 $35.74
Vacation Exchange and Rentals
Average Number of Members (in 000s) 2011 3,766 3,755 3,744 N/A N/A
2010 3,746 3,741 3,766 3,759 3,753
2009 3,789 3,795 3,781 3,765 3,782
2008 3,632 3,682 3,673 3,693 3,670
Exchange Revenue Per Member 2011 $205.64 $178.46 $172.38 N/A N/A
2010 $201.93 $172.20 $173.44 $162.59 $177.53
2009 $194.83 $174.22 $173.90 $163.89 $176.73
2008 $234.05 $201.04 $193.39 $165.99 $198.48
Vacation Rental Transactions (in
000s) (b) 2011 398 328 370 N/A N/A
2010 291 297 322 253 1,163
2009 273 231 264 196 964
2008 269 220 255 191 936
Average Net Price Per Vacation Rental
(b) 2011 $377.71 $549.09 $701.81 N/A N/A
2010 $361.17 $387.01 $500.31 $449.12 $425.38
2009 $353.15 $471.74 $594.34 $499.66 $477.38
2008 $442.50 $541.69 $659.93 $460.86 $528.95
Vacation Ownership
Gross Vacation Ownership Interest
(VOI) Sales (in 000s) (c) 2011 $319,000 $412,000 $455,000 N/A N/A
2010 $308,000 $371,000 $412,000 $373,000 $1,464,000
2009 $280,000 $327,000 $366,000 $343,000 $1,315,000
2008 $458,000 $532,000 $566,000 $432,000 $1,987,000
Tours (d) 2011 137,000 177,000 197,000 N/A N/A
2010 123,000 163,000 187,000 160,000 634,000
2009 137,000 164,000 173,000 142,000 617,000
2008 255,000 314,000 334,000 240,000 1,143,000
Volume Per Guest (VPG) (d) 2011 $2,192 $2,227 $2,197 N/A N/A
2010 $2,334 $2,156 $2,081 $2,214 $2,183
2009 $1,866 $1,854 $1,944 $2,210 $1,964
2008 $1,668 $1,583 $1,550 $1,630 $1,602
__________
Note: Full year amounts may not add across due to rounding.
(a) Includes the impact of the acquisitions of Microtel Inns & Suites and Hawthorn Suites (July
2008) and the TRYP hotel brand (June 2010) from the acquisition dates forward. Therefore, the
operating statistics are not presented on a comparable basis.
(b) Includes the impact of the acquisitions of Hoseasons (March 2010), ResortQuest (September
2010), James Villa Holidays (November 2010) and a tuck-in acquisition (August 2011) from the
acquisition dates forward. Therefore, the operating statistics are not presented on a comparable
basis.
(c) Includes gross VOI sales under the Company's Wyndham Asset Affiliate Model (WAAM) beginning in
the first quarter of 2010 (see Table 9 for a reconciliation of gross VOI sales to vacation
ownership interest sales).
(d) Includes the impact of WAAM related tours beginning in the first quarter of 2010.
Table 3
(2 of 3)
Wyndham Worldwide Corporation
ADDITIONAL DATA
Year Q1 Q2 Q3 Q4 Full Year
---- --- --- --- --- ---------
Lodging (a)
Number of Properties 2011 7,190 7,220 7,190 N/A N/A
2010 7,090 7,160 7,150 7,210 N/A
2009 6,990 7,020 7,040 7,110 N/A
2008 6,550 6,560 6,970 7,040 N/A
Vacation Ownership
Deferred Revenues (in 000s) (b) 2011 $- $- $- N/A N/A
2010 $- $- $- $- $-
2009 $67,000 $37,000 $36,000 $47,000 $187,000
2008 $(82,000) $(5,000) $(2,000) $14,000 $(75,000)
Provision for Loan Losses (in 000s)
(c) 2011 $79,000 $80,000 $96,000 N/A N/A
2010 $86,000 $87,000 $85,000 $82,000 $340,000
2009 $107,000 $122,000 $117,000 $103,000 $449,000
2008 $82,000 $113,000 $119,000 $136,000 $450,000
Sales under WAAM (in 000s) (d) 2011 $18,000 $19,000 $38,000 N/A N/A
2010 $5,000 $13,000 $20,000 $14,000 $51,000
WAAM Commission Revenues (in 000s) 2011 $10,000 $11,000 $23,000 N/A N/A
2010 $3,000 $8,000 $12,000 $9,000 $31,000
__________
Note: Full year amounts may not add across due to rounding.
(a) Includes the impact of the acquisitions of Microtel Inns & Suites and Hawthorn Suites (July
2008) and the Tryp hotel brand (June 2010) from the acquisition dates forward. Therefore, the
operating statistics are not presented on a comparable basis.
(b) Represents the revenue that is deferred under the percentage of completion method of
accounting.
(c) 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.
(d) Represents gross VOI sales under the Company's WAAM for which the Company earns commission
revenue (WAAM Commission Revenues). The commission revenue earned on these sales is included in
service fees and membership revenues on the Consolidated Statements of Income. The Company
implemented this sales model during the first quarter of 2010 and, as such, there is no historical
data prior to 2010.
Table 3
(3 of 3)
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 under
affiliation agreements for which we receive a fee for reservation and/or other services provided
or (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 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 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 in
connection with customers booking their vacation rental stays through us. 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 divided by the number of
vacation rental transactions.
--------------------------------------------------------------------------------------------------
Vacation Ownership
Gross Vacation Ownership Interest Sales: Represents sales of vacation ownership interest (VOIs),
including Wyndham Asset Affiliation Model 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. We believe that Gross VOI sales provides an enhanced
understanding of the performance of our vacation ownership business because it directly measures
the sales volume of this business during a given reporting period.
--------------------------------------------------------------------------------------------------
Tours: Represents the number of tours taken by guests in our efforts to sell vacation ownership
interests.
-----------------------------------------------------------------------------------------------
Volume per Guest (VPG): Represents gross VOI sales (excluding tele-sales upgrades, which are non-
tour upgrade sales) divided by the number of tours. We have 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 2007-2010. We believe that VPG
provides an enhanced understanding of the performance of our vacation ownership business because
it directly measures the efficiency of this business' tour selling efforts during a given
reporting period.
-------------------------------------------------------------------------------------------------
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)
2011 2010
---- ----
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
-- -- -- -- ---- -- -- -- -- ----
Lodging
Royalties and Franchise
Fees $58 $75 $85 N/A N/A $52 $69 $82 $62 $265
Marketing, Reservation and
Wyndham Rewards Revenues
(a) 54 75 94 N/A N/A 50 65 76 60 251
Hotel Management
Reimbursable Revenues (b) 19 19 21 N/A N/A 21 20 18 18 77
Ancillary Revenues (c) 18 21 22 N/A N/A 21 24 27 23 95
--- --- --- -- -- --- --- --- --- ---
Total Lodging 149 190 222 N/A N/A 144 178 203 163 688
--- --- --- -- -- --- --- --- --- ---
Vacation Exchange and Rentals
Exchange Revenues 194 168 161 N/A N/A 189 161 163 153 666
Rental Revenues 150 180 260 N/A N/A 105 115 161 114 495
Ancillary Revenues (d) 12 13 15 N/A N/A 6 5 6 15 32
--- --- --- -- -- --- --- --- --- ---
Total Vacation Exchange
and Rentals 356 361 436 N/A N/A 300 281 330 282 1,193
--- --- --- --- --- --- --- --- --- -----
Vacation Ownership
Vacation Ownership
Interest Sales 222 313 320 N/A N/A 217 271 308 276 1,072
Consumer Financing 102 103 105 N/A N/A 105 106 107 107 425
Property Management Fees 110 108 105 N/A N/A 100 100 104 101 405
WAAM Commissions 10 11 23 N/A N/A 3 8 12 8 31
Ancillary Revenues (e) 6 6 6 N/A N/A 19 20 2 5 46
Total Vacation Ownership 450 541 559 N/A N/A 444 505 533 497 1,979
--- --- --- -- -- --- --- --- --- -----
Total Reportable Segments $955 $1,092 $1,217 N/A N/A $888 $964 $1,066 $942 $3,860
==== ====== ====== == == ==== ==== ====== ==== ======
2009 2008
---- ----
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
-- -- -- -- ---- -- -- -- -- ----
Lodging
Royalties and Franchise
Fees $57 $68 $72 $57 $254 $64 $78 $88 $66 $297
Marketing, Reservation and
Wyndham Rewards Revenues
(a) 54 66 73 53 246 60 75 84 61 280
Hotel Management
Reimbursable Revenues (b) 22 23 21 19 85 27 26 25 21 100
Ancillary Revenues (c) 21 17 17 20 75 19 21 16 22 76
Total Lodging 154 174 183 149 660 170 200 213 170 753
--- --- --- --- --- --- --- --- --- ---
Vacation Exchange and Rentals
Exchange Revenues 185 165 164 154 668 213 185 178 152 728
Rental Revenues 96 109 157 98 460 119 119 169 88 495
Ancillary Revenues (d) 6 6 6 6 24 9 10 7 10 36
Total Vacation Exchange
and Rentals 287 280 327 258 1,152 341 314 354 250 1,259
--- --- --- --- ----- --- --- --- --- -----
Vacation Ownership
Vacation Ownership
Interest Sales 239 242 285 287 1,053 294 414 446 309 1,463
Consumer Financing 109 109 108 109 435 99 104 111 112 426
Property Management Fees 91 94 96 95 376 85 84 89 89 346
Ancillary Revenues (e) 23 22 19 17 81 26 19 15 (18) 43
Total Vacation Ownership 462 467 508 508 1,945 504 621 661 492 2,278
--- --- --- --- ----- --- --- --- --- -----
Total Reportable Segments $903 $921 $1,018 $915 $3,757 $1,015 $1,135 $1,228 $912 $4,290
==== ==== ====== ==== ====== ====== ====== ====== ==== ======
__________
Note: Full year amounts may not add across due to rounding.
(a) 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. Wyndham Rewards revenues
represent fees we receive relating to our loyalty program.
(b) Primarily represents payroll costs in our hotel management business that we pay
on behalf of property owners and for which we are reimbursed by the property owners.
(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.
Table 5
Wyndham Worldwide Corporation
SCHEDULE OF DEBT
(In millions)
September
30, June 30, March 31, December 31, September 30,
2011 2011 2011 2010 2010
---- ---- ---- ---- ----
Securitized vacation ownership debt (a)
Term notes $1,512 $1,446 $1,666 $1,498 $1,400
Bank conduit facility (b) 218 242 148 152 215
--- --- --- --- ---
Securitized vacation
ownership debt (c) 1,730 1,688 1,814 1,650 1,615
Less: Current portion of
securitized vacation
ownership debt 179 190 216 223 187
Long-term securitized
vacation ownership debt $1,551 $1,498 $1,598 $1,427 $1,428
====== ====== ====== ====== ======
Debt:
Revolving credit facility
(due July 2016) (d) $169 $107 $5 $154 $26
6.00% senior unsecured
notes (due December 2016)
(e) 812 803 797 798 798
9.875% senior unsecured
notes (due May 2014) (f) 243 242 241 241 240
3.50% convertible notes
(due May 2012) (g) 27 32 41 266 289
7.375% senior unsecured
notes (due March 2020) (h) 247 247 247 247 247
5.75% senior unsecured
notes (due February 2018)
(i) 247 247 247 247 247
5.625% senior unsecured
notes (due March 2021) (j) 245 245 245 - -
Vacation rentals capital
leases 108 120 120 115 120
Other 1 1 28 26 34
--- --- --- --- ---
Total debt 2,099 2,044 1,971 2,094 2,001
Less: Current portion of
debt 37 43 12 11 32
--- --- --- --- ---
Long-term debt $2,062 $2,001 $1,959 $2,083 $1,969
====== ====== ====== ====== ======
__________
(a) The Company's vacation ownership contract receivables are securitized through bankruptcy-
remote special purpose entities ("SPE") 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 June
2013 and borrowing capacity of $600 million. As of September 30, 2011, this facility had
remaining borrowing capacity of $382 million.
(c) This debt is collateralized by $2,502 million, $2,672 million, $2,778 million, $2,865
million and $2,874 million of underlying vacation ownership contract receivables and related
assets as of September 30, 2011, June 30, 2011, March 31, 2011, December 31, 2010 and September
30, 2010, respectively.
(d) Represents a $1.0 billion revolving credit facility that expires on July 15, 2016. As of
September 30, 2011, the Company had $11 million of outstanding letters of credit and a remaining
borrowing capacity of $820 million.
(e) Represents senior unsecured notes issued by the Company during December 2006. The balance
as of September 30, 2011 represents $800 million aggregate principal less $2 million of
unamortized discount, plus $14 million of unamortized gains from the settlement of a derivative.
(f) Represents senior unsecured notes issued by the Company during May 2009. The balance as of
September 30, 2011 represents $250 million aggregate principal less $7 million of unamortized
discount.
(g) Represents convertible notes issued by the Company during May 2009, which includes debt
principal, less unamortized discount, and a liability related to a bifurcated conversion
feature. During the third and fourth quarters of 2010, the Company repurchased a portion of
these notes. During the nine months ended September 30, 2011, the Company repurchased a portion
of these notes, primarily through the completion of a cash tender offer. The following table
details the components of the convertible notes:
September
30, June 30, March 31, December 31, September 30,
2011 2011 2011 2010 2010
---- ---- ---- ---- ----
Debt principal $12 $12 $17 $116 $138
Unamortized discount (1) (1) (1) (12) (17)
--- --- --- --- ---
Debt less discount 11 11 16 104 121
Fair value of conversion
feature (*) 16 21 25 162 168
Convertible notes $27 $32 $41 $266 $289
=== === === ==== ====
__________
(*) The Company also has an asset with a fair value equal to the conversion feature, which
represents cash-settled call options that the Company purchased concurrent with the issuance of
the convertible notes.
(h) Represents senior unsecured notes issued by the Company during February 2010. The balance
as of September 30, 2011 represents $250 million aggregate principal less $3 million of
unamortized discount.
(i) Represents senior unsecured notes issued by the Company during September 2010. The balance
as of September 30, 2011 represents $250 million aggregate principal less $3 million of
unamortized discount.
(j) Represents senior unsecured notes issued by the Company during March 2011. The balance as
of September 30, 2011 represents $250 million aggregate principal less $5 million of unamortized
discount.
Table 6
(1 of 2)
Wyndham Worldwide Corporation
BRAND SYSTEM DETAILS
As of and For the Three Months Ended September 30, 2011
-------------------------------------------------------
Brand Number of Number of Rooms Average Average Daily Average Revenue
----- Properties --------------- Occupancy Rate Rate (ADR) Per Available
---------- -------------- ---------- Room (RevPAR)
-------------
Lodging
Wyndham
Hotels and
Resorts 98 26,548 62.3% $106.49 $66.34
TRYP by
Wyndham 93 13,456 67.0% $102.53 $68.73
Wingate by
Wyndham 166 15,234 64.7% $83.02 $53.68
Hawthorn
Suites by
Wyndham 74 7,047 66.7% $75.65 $50.48
Ramada 848 114,377 56.9% $78.49 $44.64
Baymont 257 21,464 54.6% $64.72 $35.33
Days Inn 1,857 149,165 54.5% $65.47 $35.68
Super 8 2,241 141,272 60.4% $58.35 $35.24
Howard
Johnson 453 45,016 52.4% $64.10 $33.57
Travelodge 436 32,563 54.7% $71.30 $39.00
Microtel
Inns &
Suites 317 22,601 59.4% $62.74 $37.23
Knights Inn 348 21,362 43.0% $44.84 $19.29
Dream 5 990 78.7% $175.65 $138.32
Night 1 72 94.8% $214.38 $203.31
Total
Lodging 7,194 611,167 57.0% $69.34 $39.49
Vacation
Ownership
Wyndham
Vacation
Ownership
resorts 162 20,803 N/A N/A N/A
--- ------
Total
Wyndham
Worldwide 7,356 631,970
===== =======
As of and For the Three Months Ended September 30, 2010
-------------------------------------------------------
Brand Number of Number of Rooms Average Average Daily Average Revenue
----- Properties --------------- Occupancy Rate Rate (ADR) Per Available
---------- -------------- ---------- Room (RevPAR)
-------------
Lodging
Wyndham
Hotels and
Resorts 99 27,753 57.4% $107.11 $61.46
TRYP by
Wyndham 92 13,236 63.2% $83.93 $53.03
Wingate by
Wyndham 165 15,097 63.1% $81.19 $51.22
Hawthorn
Suites by
Wyndham 78 7,451 61.7% $75.83 $46.77
Ramada 894 117,842 55.0% $73.43 $40.38
Baymont 245 20,479 53.3% $63.36 $33.78
Days Inn 1,859 148,155 53.4% $64.03 $34.19
Super 8 2,156 134,827 58.3% $59.40 $34.61
Howard
Johnson 474 45,735 52.6% $63.19 $33.26
Travelodge 438 32,377 54.1% $68.24 $36.89
Microtel
Inns &
Suites 319 22,760 57.1% $60.12 $34.34
Knights Inn 331 19,597 43.2% $46.42 $20.06
Other 2 404 N/A N/A N/A
Total
Lodging 7,152 605,713 55.3% $67.16 $37.14
Vacation
Ownership
Wyndham
Vacation
Ownership
resorts 160 20,569 N/A N/A N/A
--- ------
Total
Wyndham
Worldwide 7,312 626,282
===== =======
_______________
NOTE: A glossary of terms is included in Table 3 (3 of 3); 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, 2011
------------------------------------------------------
Average
Brand Number of Number of Rooms Average Average Daily Revenue
Occupancy
----- Properties --------------- Rate Rate (ADR) Per Available
---------- ---------- ---------- Room (RevPAR)
-------------
Lodging
Wyndham
Hotels and
Resorts 98 26,548 59.5% $107.74 $64.14
TRYP by
Wyndham 93 13,456 60.7% $105.13 $63.85
Wingate by
Wyndham 166 15,234 61.1% $81.27 $49.68
Hawthorn
Suites by
Wyndham 74 7,047 62.7% $75.32 $47.26
Ramada 848 114,377 52.1% $75.97 $39.58
Baymont 257 21,464 49.0% $62.41 $30.59
Days Inn 1,857 149,165 48.4% $62.12 $30.09
Super 8 2,241 141,272 53.1% $55.31 $29.36
Howard
Johnson 453 45,016 47.6% $61.12 $29.07
Travelodge 436 32,563 48.2% $66.22 $31.94
Microtel
Inns &
Suites 317 22,601 53.9% $59.21 $31.90
Knights Inn 348 21,362 39.1% $42.98 $16.79
Dream 5 990 75.5% $174.99 $132.10
Night 1 72 93.8% $232.89 $218.53
Total
Lodging 7,194 611,167 51.2% $66.85 $34.25
Vacation
Ownership
Wyndham
Vacation
Ownership
resorts 162 20,803 N/A N/A N/A
--- ------
Total
Wyndham
Worldwide 7,356 631,970
===== =======
As of and For the Nine Months Ended September 30, 2010
------------------------------------------------------
Average
Brand Number of Number of Rooms Average Average Daily Revenue
Occupancy
----- Properties --------------- Rate Rate (ADR) Per Available
---------- ---------- ---------- Room (RevPAR)
-------------
Lodging
Wyndham
Hotels and
Resorts 99 27,753 56.1% $109.35 $61.32
TRYP by
Wyndham 92 13,236 63.2% $83.93 $53.03
Wingate by
Wyndham 165 15,097 58.8% $79.67 $46.85
Hawthorn
Suites by
Wyndham 78 7,451 56.1% $76.95 $43.14
Ramada 894 117,842 49.9% $72.73 $36.26
Baymont 245 20,479 48.1% $61.03 $29.37
Days Inn 1,859 148,155 46.9% $61.16 $28.69
Super 8 2,156 134,827 50.4% $56.48 $28.50
Howard
Johnson 474 45,735 46.1% $60.85 $28.04
Travelodge 438 32,377 45.9% $64.36 $29.57
Microtel
Inns &
Suites 319 22,760 51.1% $57.59 $29.41
Knights Inn 331 19,597 38.0% $42.67 $16.22
Other 2 404 N/A N/A N/A
Total
Lodging 7,152 605,713 49.0% $64.98 $31.81
Vacation
Ownership
Wyndham
Vacation
Ownership
resorts 160 20,569 N/A N/A N/A
--- ------
Total
Wyndham
Worldwide 7,312 626,282
===== =======
_______________
NOTE: A glossary of terms is included in Table 3 (3 of 3); RevPAR may not
recalculate by multiplying average occupancy rate by ADR due to rounding.
Table 7
(1 of 2)
Wyndham Worldwide
NON-GAAP RECONCILIATION
(In millions)
Net
Revenues Reported Legacy Asset Restructuring VAT CTA Adjusted
Three months
ended March 31, Adjustments Impairment Adjustments Writeoff
2011 --------- EBITDA (b) (c) Costs (e) (f) EBITDA
------ ------------ ----------- ----- ------------ --------- ------
Lodging $149 $27 $- $13 $- $- $- $40
Vacation
Exchange and
Rentals 356 93 - - - - - 93
Vacation
Ownership 450 97 - - (1) (d) - - 96
--- --- --- --- --- --- --- --- ---
Total Reportable
Segments 955 217 - 13 (1) - - 229
Corporate and
Other (a) (3) (14) (11) - - - - (25)
--- --- ---
Total Company $952 $203 $(11) $13 $(1) $- $- $204
==== ==== ==== === === === === ====
Three months
ended June 30,
2011
Lodging $190 $66 $- $- $- $- $- $66
Vacation
Exchange and
Rentals 361 106 - - 7 (g) (31) - 82
Vacation
Ownership 541 130 - - - - - 130
--- --- --- --- --- --- ---
Total Reportable
Segments 1,092 302 - - 7 (31) - 278
Corporate and
Other (a) (2) (26) 3 - - - - (23)
--- --- ---
Total Company $1,090 $276 $3 $- $7 $(31) $- $255
====== ==== === === === ==== === ====
Three months
ended September
30, 2011
Lodging $222 $67 $- $- $- $- $- $67
Vacation
Exchange and
Rentals 436 131 - - - - 4 135
Vacation
Ownership 559 149 - - - - - 149
--- --- --- --- --- --- ---
Total Reportable
Segments 1,217 347 - - - - 4 351
Corporate and
Other (a) (5) (18) (8) - - - - (26)
--- --- ---
Total Company $1,212 $329 $(8) $- $- $- $4 $325
====== ==== === === === === === ====
________________
(a) Includes the elimination of transactions between segments.
(b) Relates to the net expense/(benefit) from the resolution of and adjustment to certain contingent liabilities and
assets resulting from our separation from Cendant.
(c) Relates to a non-cash impairment charge related to a write-down of an international joint venture in the Company's
lodging business.
(d) Relates to the reversal of costs incurred as a result of various strategic initiatives commenced by the Company during
2008.
(e) Relates to a net benefit resulting from a refund of value added taxes.
(f) Relates to the write-off of foreign exchange translation adjustments associated with the liquidation of a foreign
entity.
(g) Relates to costs incurred as a result of a strategic initiative commenced by the Company during 2010.
Table 7
(2 of 2)
Wyndham Worldwide
NON-GAAP RECONCILIATIONS
(In millions)
Net Revenues Reported Acquisition Legacy Restructuring Adjusted
Three months
ended March
31, 2010 ------------ EBITDA Costs (b) Adjustments (c) Costs (d) EBITDA
------ --------- --------------- --------- ------
Lodging $144 $33 $- $- $- $33
Vacation
Exchange and
Rentals 300 80 4 - - 84
Vacation
Ownership 444 82 - - - 82
--- --- --- --- --- ---
Total
Reportable
Segments 888 195 4 - - 199
Corporate and
Other (a) (2) (20) - 2 - (18)
--- --- --- --- ---
Total Company $886 $175 $4 $2 $- $181
==== ==== === === === ====
Three months
ended June
30, 2010
Lodging $178 $49 $1 $- $- $50
Vacation
Exchange and
Rentals 281 78 - - - 78
Vacation
Ownership 505 104 - - - 104
--- --- --- --- --- ---
Total
Reportable
Segments 964 231 1 - - 232
Corporate and
Other (a) (1) (14) - - - (14)
--- --- --- --- ---
Total Company $963 $217 $1 $- $- $218
==== ==== === === === ====
Three months
ended
September
30, 2010
Lodging $203 $67 $- $- $- $67
Vacation
Exchange and
Rentals 330 103 1 - - 104
Vacation
Ownership 533 123 - - - 123
--- --- --- --- --- ---
Total
Reportable
Segments 1,066 293 1 - - 294
Corporate and
Other (a) (1) 30 - (52) - (22)
--- --- --- --- ---
Total Company $1,065 $323 $1 $(52) $- $272
====== ==== === ==== === ====
Three months
ended
December 31,
2010
Lodging $163 $40 $- $- $- $40
Vacation
Exchange and
Rentals 282 32 1 - 9 42
Vacation
Ownership 497 131 - - - 131
--- --- --- --- --- ---
Total
Reportable
Segments 942 203 1 - 9 213
Corporate and
Other (a) (5) (20) - (3) - (23)
--- --- --- --- ---
Total Company $937 $183 $1 $(3) $9 $190
==== ==== === === === ====
Twelve months
ended
December 31,
2010
Lodging $688 $189 $1 $- $- $190
Vacation
Exchange and
Rentals 1,193 293 6 - 9 308
Vacation
Ownership 1,979 440 - - - 440
----- --- --- --- --- ---
Total
Reportable
Segments 3,860 922 7 - 9 938
Corporate and
Other (a) (9) (24) - (54) - (78)
--- --- --- --- ---
Total Company $3,851 $898 $7 $(54) $9 $860
====== ==== === ==== === ====
________________
Note: Amounts may not add across due to rounding.
(a) Includes the elimination of transactions between segments.
(b) Relates to costs incurred in connection with the Company's acquisitions of Hoseasons during March
2010, the TRYP hotel brand during June 2010, ResortQuest during September 2010 and James Villa
Holidays during November 2010.
(c) Relates to the net expense/(benefit) from the resolution of and adjustment to certain contingent
liabilities and assets resulting from our separation from Cendant.
(d) Relates to costs incurred as a result of a strategic initiative commenced by the Company during
2010.
Table 8
(1 of 4)
Wyndham Worldwide Corporation
NON-GAAP FINANCIAL INFORMATION
(In millions, except per share data)
Three Months Ended September 30, 2011
-------------------------------------
Tax Valuation Legacy VAT
As Reported Allowance Adjustments Adjustments CTA Writeoff As Adjusted
----------- --------- ----------- ----------- ------------ -----------
Net revenues
Service fees
and
membership $584 $584
Vacation
ownership
interest
sales 320 320
Franchise fees 160 160
Consumer
financing 105 105
Other 43 43
Net revenues 1,212 - - - - 1,212
----- --- --- --- --- -----
Expenses
Operating 490 (4) (d) 486
Cost of
vacation
ownership
interests 35 35
Consumer
financing
interest 21 21
Marketing and
reservation 182 182
General and
administrative 157 8 (b) 165
Restructuring - -
Depreciation
and
amortization 43 43
Total expenses 928 - 8 - (4) 932
--- --- --- --- --- ---
Operating
income 284 - (8) - 4 280
Other income,
net (2) (2)
Interest
expense 34 34
Interest
income (19) 16 (c) (3)
Income before
income taxes 271 - (8) (16) 4 251
Provision for
income taxes 96 13 (a) (2) (e) (9) (e) - (e) 98
--- --- --- --- --- ---
Net income $175 $(13) $(6) $(7) $4 $153
==== ==== === === === ====
Earnings per
share
Basic $1.10 $(0.08) $(0.03) $(0.05) $0.02 $0.96
Diluted 1.08 (0.08) (0.03) (0.04) 0.02 0.94
Weighted
average
shares
outstanding
Basic 159 159 159 159 159 159
Diluted 162 162 162 162 162 162
__________
Note: EPS amounts may not add across due to rounding.
(a) Relates to the reversal of a tax valuation allowance.
(b) Relates to the net benefit from the resolution of and adjustment to certain contingent liabilities and
assets resulting from our separation from Cendant.
(c) Relates to interest income associated with a refund of value added taxes.
(d) Relates to the write-off of foreign exchange translation adjustments associated with the liquidation of a
foreign entity.
(e) Relates to the tax effect of the adjustments.
Table 8
(2 of 4)
Wyndham Worldwide Corporation
NON-GAAP FINANCIAL INFORMATION
(In millions, except per share data)
Nine Months Ended September 30, 2011
------------------------------------
Tax
Early Valuation Legacy Asset Restructuring VAT
Extinguishment
of
CTA
As Reported Debt Allowance Adjustments Impairment Costs Adjustments Writeoff As Adjusted
----------- ---- --------- ----------- ---------- ----- ----------- --------- -----------
Net revenues
Service fees
and
membership $1,579 $1,579
Vacation
ownership
interest
sales 855 855
Franchise fees 395 395
Consumer
financing 310 310
Other 114 114
Net revenues 3,253 - - - - - - - 3,253
----- --- --- --- --- --- --- --- -----
Expenses
Operating 1,358 (4) (j) 1,354
Cost of
vacation
ownership
interests 115 115
Consumer
financing
interest 67 67
Marketing and
reservation 472 472
General and
administrative 422 12 (c) 31 (g) 465
Asset
impairment 13 (13) (e) -
Restructuring 6 (6) (f) -
Depreciation
and
amortization 133 133
Total expenses 2,586 - - 12 (13) (6) 31 (4) 2,606
----- --- --- --- --- --- --- --- -----
Operating
income 667 - - (12) 13 6 (31) 4 647
Other income,
net (9) 4 (d) (5)
Interest
expense 115 (12) (a) (3) (h) 100
Interest
income (22) 16 (i) (6)
Income before
income taxes 583 12 - (16) 13 6 (44) 4 558
Provision for
income taxes 222 5 (k) 13 (b) (5) (k) 5 (k) 2 (k) (24) (k) - (k) 218
--- --- --- --- --- --- --- --- ---
Net income $361 $7 $(13) $(11) $8 $4 $(20) $4 $340
==== === ==== ==== === === ==== === ====
Earnings per
share
Basic $2.17 $0.04 $(0.08) $(0.06) $0.05 $0.03 $(0.12) $0.02 $2.05
Diluted 2.12 0.04 (0.08) (0.06) 0.05 0.03 (0.12) 0.02 2.00
Weighted
average
shares
outstanding
Basic 166 166 166 166 166 166 166 166 166
Diluted 170 170 170 170 170 170 170 170 170
__________
(a) Relates to costs incurred for the early repurchase of a portion of the Company's 3.50% convertible notes during the first half of 2011.
(b) Relates to the reversal of a tax valuation allowance.
(c) Relates to the net benefit from the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from
Cendant.
(d) Relates to a gain on the redemption of a preferred stock investment allocated to the Company in connection with our separation.
(e) Relates to a non-cash impairment charge related to a write-down of an international joint venture in the Company's lodging business.
(f) Primarily relates to costs incurred as a result of a strategic initiative commenced by the Company during 2010.
(g) Relates to a net benefit resulting from a refund of value added taxes.
(h) Relates to interest on value added tax accruals.
(i) Relates to interest income associated with a refund of value added taxes.
(j) Relates to the write-off of foreign exchange translation adjustments associated with the liquidation of a foreign entity.
(k) Relates to the tax effect of the adjustments.
Table 8
(3 of 4)
Wyndham Worldwide Corporation
NON-GAAP FINANCIAL INFORMATION
(In millions, except per share data)
Three Months Ended September 30, 2010
-------------------------------------
Early Legacy
Extinguishment of
As Reported Debt Acquisition Costs Adjustments As Adjusted
----------- ---- ----------------- ----------- -----------
Net revenues
Service fees
and
membership $464 $464
Vacation
ownership
interest
sales 308 308
Franchise fees 142 142
Consumer
financing 107 107
Other 44 44
Net revenues 1,065 - - - 1,065
----- --- --- --- -----
Expenses
Operating 410 (1) (b) 409
Cost of
vacation
ownership
interests 52 52
Consumer
financing
interest 27 27
Marketing and
reservation 149 149
General and
administrative 101 52 (c) 153
Asset
impairment 4 4
Depreciation
and
amortization 43 43
Total expenses 786 - (1) 52 837
--- --- --- --- ---
Operating
income 279 1 (52) 228
Other income,
net (1) (1)
Interest
expense 47 (11) (a) 36
Interest
income (2) (2)
--- ---
Income before
income taxes 235 11 1 (52) 195
Provision for
income taxes 79 5 (d) - (d) (14) (d) 70
--- --- --- --- ---
Net income $156 $6 $1 $(38) $125
==== === === ==== ====
Earnings per
share
Basic $0.88 $0.04 $0.01 $(0.22) $0.71
Diluted 0.84 0.04 0.01 (0.21) 0.68
Weighted
average
shares
outstanding
Basic 177 177 177 177 177
Diluted 184 184 184 184 184
__________
Note: EPS amounts may not add across due to rounding.
(a) Relates to costs incurred for the early repurchase of a portion of the Company's 3.50% convertible notes
during third quarter of 2010.
(b) Relates to costs incurred in connection with the Company's acquisition of ResortQuest during September 2010.
(c) Relates to the net benefit from the resolution of and adjustment to certain contingent liabilities and
assets primarily related to the accrual that was no longer needed for outstanding Cendant contingent tax
liabilities since Cendant and the IRS agreed to settle the IRS examination of Cendant's taxable years 2003
through 2006 on July 15, 2010.
(d) Relates to the tax effect of the adjustments.
Table 8
(4 of 4)
Wyndham Worldwide Corporation
NON-GAAP FINANCIAL INFORMATION
(In millions, except per share data)
Nine Months Ended September 30, 2010
------------------------------------
Early Legacy
Extinguishment of
As Reported Debt Acquisition Costs Adjustments As Adjusted
----------- ---- ----------------- ----------- -----------
Net revenues
Service fees
and
membership $1,298 $1,298
Vacation
ownership
interest
sales 796 796
Franchise fees 353 353
Consumer
financing 318 318
Other 149 149
Net revenues 2,914 - - - 2,914
----- --- --- --- -----
Expenses
Operating 1,179 (6) (b) 1,173
Cost of
vacation
ownership
interests 138 138
Consumer
financing
interest 80 80
Marketing and
reservation 410 410
General and
administrative 394 51 (c) 445
Asset
impairment 4 4
Depreciation
and
amortization 128 128
Total expenses 2,333 - (6) 51 2,378
----- --- --- --- -----
Operating
income 581 - 6 (51) 536
Other income,
net (6) - (6)
Interest
expense 133 (27) (a) 106
Interest
income (3) (3)
Income before
income taxes 457 27 6 (51) 439
Provision for
income taxes 157 11 (d) 1 (d) (15) (d) 154
--- --- --- --- ---
Net income $300 $16 $5 $(36) $285
==== === === ==== ====
Earnings per
share
Basic $1.68 $0.09 $0.03 $(0.21) $1.59
Diluted 1.62 0.09 0.03 (0.20) 1.53
Weighted
average
shares
outstanding
Basic 179 179 179 179 179
Diluted 186 186 186 186 186
__________
Note: EPS amounts may not add across due to rounding.
(a) Relates to costs incurred for the early extinguishment of the Company's term loan facility and revolving
foreign credit facility during March 2010 and the early repurchase of a portion of the Company's 3.50%
convertible notes during the third quarter of 2010.
(b) Relates to costs incurred in connection with the Company's acquisitions of Hoseasons Holdings Ltd. during
March 2010, the Tryp hotel brand during June 2010 and ResortQuest during September 2010.
(c) Relates to the net benefit from the resolution of and adjustment to certain contingent liabilities and assets
primarily related to the accrual that was no longer needed for outstanding Cendant contingent tax liabilities
since Cendant and the IRS agreed to settle the IRS examination of Cendant's taxable years 2003 through 2006 on
July 15, 2010.
(d) Relates to the tax effect of the adjustments.
Table 9
Wyndham Worldwide Corporation
NON-GAAP RECONCILIATIONS AND FINANCIAL INFORMATION
(In millions)
FREE CASH FLOW
--------------
The Company defines free cash flow as net cash provided by
operating activities less capital expenditures, equity
investments and development advances and excluding cash
payments related to the Company's contingent tax liabilities
that it assumed and is responsible for pursuant to its
separation from Cendant. The Company considers free cash
flow to be a liquidity measure that provides useful
information to management and investors about the amount of
cash generated by the business that, after the acquisition
of property and equipment, equity investments and
development advances, can be used for strategic
opportunities, including making acquisitions, paying
dividends, repurchasing the Company's common stock and
strengthening the balance sheet. Analysis of free cash flow
also facilitates management's comparisons of the Company's
operating results to its competitors' operating results. A
limitation of using free cash flow versus the GAAP measure
of net cash provided by operating activities as a means for
evaluating Wyndham Worldwide is that free cash flow does not
represent the total increase or decrease in the cash balance
from operations for the period.
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,
------------------
2011 2010
---- ----
Net cash provided by
operating activities $860 $528
Less: Property and equipment
additions (153) (100)
Less: Equity investments and
development advances (8) (9)
Plus: Cash payments related
to contingent IRS tax
liabilities - 145
Free cash flow $699 $564
==== ====
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
----
Full
2011 Q1 Q2 Q3 Q4 Year
---- --- --- --- --- -----
Gross VOI sales $319 $412 $455 N/A N/A
Less: Sales under the WAAM (18) (19) (38) N/A N/A
--- --- --- -- --
Gross VOI sales, net of WAAM
sales 302 393 417 N/A N/A
Less: Loan loss provision (79) (80) (96) N/A N/A
-- --
Vacation ownership interest
sales $222 $313 $320 N/A N/A
==== ==== ==== === ===
2010
----
Gross VOI sales $308 $371 $412 $373 $1,464
Less: Sales under the WAAM (5) (13) (20) (14) (51)
--- --- --- --- ---
Gross VOI sales, net of WAAM
sales 303 358 392 359 1,413
Less: Loan loss provision (86) (87) (85) (82) (340)
Vacation ownership interest
sales $217 $271 $308 $276 $1,072
==== ==== ==== ==== ======
2009
----
Gross VOI sales $280 $327 $366 $343 $1,315
Plus: Net effect of
percentage-of-completion
accounting 67 37 36 47 187
Less: Loan loss provision (107) (122) (117) (103) (449)
Vacation ownership interest
sales $239 $242 $285 $287 $1,053
==== ==== ==== ==== ======
2008
----
Gross VOI sales $458 $532 $566 $432 $1,987
Plus/(less): Net effect of
percentage-of-completion
accounting (82) (5) (2) 14 (75)
Less: Loan loss provision (82) (113) (119) (136) (450)
--- ---- ---- ---- ----
Vacation ownership interest
sales $294 $414 $446 $309 $1,463
==== ==== ==== ==== ======
_____________
Note: Amounts may not add due to rounding.
The following represents tele-sales upgrades, which are
excluded from Gross VOI sales in the Company's VPG
calculation (see Table 3):
Full
Q1 Q2 Q3 Q4 Year
--- --- --- --- -----
2011 $18 $18 $21 N/A N/A
2010 $20 $20 $23 $17 $80
2009 $24 $23 $29 $28 $104
2008 $33 $35 $49 $40 $156
_____________
Note: Amounts may not add across due to rounding.
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