Wyndham Results

Wyndham Worldwide Reports Q3 2015 Revenue Increase

Adjusted diluted earnings per share (EPS) was $1.78, an increase of 7% from adjusted diluted EPS of $1.67 in the third quarter of 2014. Reported diluted EPS was $1.61, compared with $1.64 in the third quarter of 2014.

Wyndham

Wyndham Worldwide Corporation (NYSE: WYN) yesterday announced results for the three months ended September 30, 2015.

THIRD QUARTER HIGHLIGHTS:

  • Adjusted diluted earnings per share (EPS) was $1.78, an increase of 7% from adjusted diluted EPS of $1.67 in the third quarter of 2014. Reported diluted EPS was $1.61, compared with $1.64 in the third quarter of 2014. 
  • Revenues for the third quarter of 2015 increased 3% compared with the third quarter of 2014. On a currency neutral basis and excluding the impact of acquisitions and a divestiture, revenues increased 6% and adjusted EBITDA increased 7%. 
  • Gross vacation ownership sales increased 12% on a constant currency basis. 
  • Vacation rental transactions increased 6% excluding the impact of acquisitions and a divestiture. 
  • The Company repurchased 2.1 million shares of its common stock for $170 million during the quarter. 

"We delivered great results in the third quarter across all our businesses, with more guests, staying more often, and more engaged than ever," said Stephen P. Holmes, chairman and CEO. "This quarter was highlighted by a double digit increase in gross vacation ownership interest sales, strong growth in vacation rental transaction volume, and increased activity through our re-invigorated loyalty program. We are connecting the widest range of guests around the globe with the accommodation options they desire."

THIRD QUARTER 2015 OPERATING RESULTS

Third quarter revenues were $1.6 billion, an increase of 3% from the prior year period.  Excluding acquisitions and a divestiture, constant currency revenues increased 6% reflecting growth in each of the Company's business segments.

Third quarter adjusted EBITDA was $412 million, compared with $418 million in the prior year period.  Year-over-year adjusted EBITDA comparisons were adversely affected by foreign currency effects of $17 million in 2015, and the absence of results in 2015 from Canvas Holiday, a U.K.-based camping business, which contributed $18 million of EBITDA in the third quarter 2014 and was divested in the fourth quarter of 2014.  Excluding these items and acquisitions, adjusted EBITDA increased 7%.

Adjusted net income was $210 million, or $1.78 per diluted share, compared with $210 million, or $1.67 per diluted share for the same period in 2014.  Net income and earnings per share benefited from strong operations, but were negatively affected by the same factors that influenced adjusted EBITDA comparisons, noted above.  EPS also benefited from the Company's share repurchase program, which decreased the weighted average diluted share count 6% year-over-year.  

Reported net income for the third quarter of 2015 was $190 million, or $1.61 per diluted share, compared with $206 million, or $1.64per diluted share, for the third quarter of 2014.  Reported net income in both periods reflects several items excluded from adjusted net income.  The net result of these items unfavorably impacted third quarter 2015 net income by $20 million and unfavorably impacted third quarter 2014 net income by $4 million.  Full reconciliations of adjusted net income to GAAP results appear in Table 8 of this press release.  Year-over-year reported net income third quarter comparisons were negatively impacted by the same factors that influenced adjusted EBITDA comparisons, noted above.

Free cash flow was $660 million for the nine months ended September 30, 2015, compared with $750 million for the same period in 2014.  The decline in free cash flow reflects the timing of capital expenditures and working capital, including inventory spending.  The Company expects inventory spending in the fourth quarter of 2015 to be significantly lower than in the fourth quarter of 2014.  The Company defines free cash flow as net cash provided by operating activities less capital expenditures.  For the nine months ended September 30, 2015, net cash provided by operating activities was $817 million, compared with $899 million in the prior year period. 

BUSINESS UNIT RESULTS

Lodging (Wyndham Hotel Group)

Revenues were $357 million in the third quarter of 2015, a 13% increase compared with the third quarter 2014.  Adjusted EBITDA was $108 million, flat compared with the same period in 2014.  

In constant currency and excluding acquisitions, revenues increased 4% and adjusted EBITDA increased 3%, reflecting domestic RevPAR growth, which was partially offset by increased marketing expenditures and higher costs related to the implementation of new property management and central reservation systems.

Domestic RevPAR increased 5.2%.  In constant currency, total system-wide RevPAR increased 3.3%.  

As of September 30, 2015, the Company's hotel system consisted of approximately 7,760 properties and 672,000 rooms, a 2.5% room increase compared with the third quarter of 2014.  The development pipeline included 910 hotels and over 122,800 rooms, of which 61% were international and 68% were new construction.

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)

Revenues were $476 million in the third quarter of 2015, a 7% decline compared with the third quarter of 2014. In constant currency, and excluding acquisitions and the impact of the divestiture of Canvas Holidays in 2014, revenues increased 6%.

Exchange revenues were $157 million, down 3% compared with the third quarter of 2014. In constant currency, exchange revenues were up 1% compared with the prior year, as the average number of members increased 1.5% while exchange revenue per member was flat.

Vacation rental revenues were $296 million, an 11% decrease compared with the third quarter of 2014.  In constant currency and excluding the impact of acquisitions and the divestiture, vacation rental revenues were up 8%, reflecting a 5.8% increase in transaction volume and a 1.7% increase in average net price per vacation rental.  

Adjusted EBITDA for the third quarter of 2015 was $137 million, a 14% decrease compared with the third quarter of 2014.  On a currency neutral basis and excluding the impact of acquisitions and the divestiture, adjusted EBITDA increased 5% compared with the prior year period. 

Vacation Ownership (Wyndham Vacation Ownership) 

Revenues were $750 million in the third quarter of 2015, a 7% increase over the third quarter of 2014.  In constant currency, revenues increased 8%.

Gross VOI sales were $565 million in the third quarter of 2015, an increase of 10% compared with the third quarter of 2014.  In constant currency, Gross VOI sales increased 12%.  Volume per guest (VPG) for the quarter increased 10.6% in constant currency while tour flow increased 0.9%. VPG increases were driven primarily by a higher average transaction size. 

Adjusted EBITDA for the third quarter of 2015 was $201 million, an increase of 7% compared with the third quarter of 2014.  Results primarily reflect higher VPG.  On a currency neutral basis adjusted EBITDA increased 9%.  

OTHER ITEMS 

  • The Company repurchased 2.1 million shares of common stock for $170 million during the third quarter of 2015.  From October 1 through October 26, 2015, the Company repurchased an additional 0.9 million shares for $70 million. The  Company's remaining share repurchase authorization totals $461 million as of October 26, 2015
  • Reported net interest expense in the third quarter of 2015 was $31 million, compared with $26 million in the third quarter of 2014  

Balance Sheet Information as of September 30, 2015: 

  • Cash and cash equivalents of $259 million, compared with $183 million at December 31, 2014
  • Vacation ownership contract receivables, net, of $2.7 billion, unchanged from December 31, 2014
  • Vacation ownership and other inventory of $1.3 billion, compared with $1.2 billion at December 31, 2014
  • Securitized vacation ownership debt of $2.1 billion, compared with $2.2 billion at December 31, 2014
  • Long-term debt of $3.1 billion, compared with $2.9 billion at December 31, 2014. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.4 billion as of September 30, 2015, compared with $1.3 billionat December 31, 2014

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 2015, the Company provides the following guidance:

  • Revenues of approximately $5.450 - $5.550 billion
  • Adjusted EBITDA of approximately $1.285 - $1.315 billion. Guidance reflects a $46 million adverse earnings impact from foreign exchange compared with 2014 full year results 
  • Adjusted EPS of approximately $5.06 to $5.09 based on a diluted share count of 119.4 million up from $4.88 to $5.03 based on a diluted share count of 120.2 million 

"We were pleased with our performance across the Company in the third quarter, but we're even more excited by what lies ahead.  We have the broadest range of lodging accommodations in the world – including hotels, timeshare and rentals – spanning luxury to budget.  We are uniquely positioned to satisfy the burgeoning travel demand around the globe.  In 2016, we expect organic adjusted EBITDA growth consistent with our long-term target range of 6 – 8%," said Mr. Holmes.

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 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 7,760 franchised hotels and approximately 672,000 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 110,000 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 210 vacation ownership resorts serving approximately 900,000 owners throughout the United States, Canada, Mexico, the Caribbean, and the South Pacific. Based in Parsippany, NJ, Wyndham Worldwide employs over 34,000 associates globally. 

 

 

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 revenues) 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 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 the Company's reportable segments, as well as reconcile EBITDA to Net income for the three months ended September 30, 2015 and 2014:

Three Months Ended September 30, 

2015

2014

 Net Revenues 

 EBITDA 

 Net Revenues 

 EBITDA 

Lodging

$

357

$

83

$

315

$

100

Vacation Exchange and Rentals

476

134

512

159

Vacation Ownership

750

200

704

188

     Total Reportable Segments

1,583

417

1,531

447

Corporate and Other (a)

(19)

(35)

(17)

(36)

     Total Company

$

1,564

$

382

$

1,514

$

411

Reconciliation of EBITDA to Net income

Three Months Ended September 30, 

2015

2014

EBITDA

$

382

$

411

Depreciation and amortization

59

60

Interest expense

33

28

Interest income

(2)

(2)

Income before income taxes

292

325

Provision for income taxes

102

119

Net income

$

190

$

206

__________

(a) Includes the elimination of transactions between segments.  

The following tables summarize net revenues and adjusted EBITDA for the Company's reportable segments for the three months ended September 30, 2015 and 2014 (for a description of adjustments by segment, see Table 7):

Three Months Ended September 30, 

2015

2014

 Net Revenues 

 Adjusted 

EBITDA 

 Net Revenues 

 Adjusted 

EBITDA 

Lodging

$

357

$

108

$

315

$

107

Vacation Exchange and Rentals

476

137

512

159

Vacation Ownership

750

201

704

188

     Total Reportable Segments

1,583

446

1,531

454

Corporate and Other

(19)

(34)

(17)

(36)

     Total Company

$

1,564

$

412

$

1,514

$

418

 

 

Table 1

(2 of 2)

Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)

The following tables summarize net revenues and EBITDA for the Company's reportable segments, as well as reconcile EBITDA to Net income attributable to Wyndham shareholders for the nine months ended September 30, 2015 and 2014:

Nine Months Ended September 30, 

2015

2014

 Net Revenues 

 EBITDA 

 Net Revenues 

 EBITDA 

Lodging

$

983

$

255

$

835

$

250

Vacation Exchange and Rentals

1,228

323

1,293

333

Vacation Ownership

2,067

513

1,970

488

     Total Reportable Segments

4,278

1,091

4,098

1,071

Corporate and Other (a)

(54)

(100)

(48)

(104)

     Total Company

$

4,224

$

991

$

4,050

$

967

Reconciliation of EBITDA to Net income attributable to Wyndham shareholders

Nine Months Ended September 30, 

2015

2014

EBITDA

$

991

$

967

Depreciation and amortization

173

175

Interest expense

89

84

Interest income

(7)

(6)

Income before income taxes

736

714

Provision for income taxes

265

265

Net income

471

449

Net income attributable to noncontrolling interest

-

(1)

Net income attributable to Wyndham shareholders

$

471

$

448

__________

(a) Includes the elimination of transactions between segments.  

The following tables summarize net revenues and adjusted EBITDA for the Company's reportable segments for the nine months ended September 30, 2015 and 2014 (for a description of adjustments by segment, see Table 7):

Nine Months Ended September 30, 

2015

2014

 Net Revenues 

 Adjusted 

EBITDA 

 Net Revenues 

 Adjusted 

EBITDA 

Lodging

$

983

$

284

$

835

$

261

Vacation Exchange and Rentals

1,228

326

1,293

341

Vacation Ownership

2,067

514

1,970

488

     Total Reportable Segments

4,278

1,124

4,098

1,090

Corporate and Other

(54)

(101)

(48)

(103)

     Total Company

$

4,224

$

1,023

$

4,050

$

987

 

 

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, 

2015

2014

2015

2014

Net revenues

Service and membership fees

$

734

$

717

$

1,957

$

1,922

Vacation ownership interest sales

448

415

1,201

1,101

Franchise fees

192

189

517

482

Consumer financing

108

108

318

319

Other

82

85

231

226

Net revenues

1,564

1,514

4,224

4,050

Expenses

Operating

691

613

1,865

1,721

Cost of vacation ownership interests 

43

49

123

129

Consumer financing interest

18

18

55

52

Marketing and reservation

218

227

624

614

General and administrative

200

188

562

564

Asset impairment

7

8

7

8

Restructuring

8

-

8

-

Depreciation and amortization

59

60

173

175

Total expenses

1,244

1,163

3,417

3,263

Operating income

320

351

807

787

Other income, net

(3)

-

(11)

(5)

Interest expense

33

28

89

84

Interest income

(2)

(2)

(7)

(6)

Income before income taxes

292

325

736

714

Provision for income taxes

102

119

265

265

Net income

190

206

471

449

Net income attributable to noncontrolling interest

-

-

-

(1)

Net income attributable to Wyndham shareholders

$

190

$

206

$

471

$

448

Earnings per share

Basic

$

1.62

$

1.65

$

3.96

$

3.55

Diluted

1.61

1.64

3.93

3.51

Weighted average shares outstanding

Basic

117

124

119

126

Diluted

118

126

120

128

__________

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 (a)

Number of Rooms 

2015

667,400

668,500

671,900

 N/A 

 N/A 

2014

646,900

650,200

655,300

660,800

 N/A 

2013

631,800

635,100

638,300

645,400

 N/A 

2012

609,300

608,300

618,100

627,400

 N/A 

RevPAR

2015

$

32.84

$

39.82

$

43.34

 N/A 

 N/A 

2014

$

32.30

$

40.11

$

43.71

$

34.06

$

37.57

2013

$

31.05

$

38.00

$

41.78

$

33.07

$

36.00

2012

$

29.73

$

37.23

$

40.39

$

31.86

$

34.80

Vacation Exchange and Rentals

Average Number of Members (in 000s)

2015

3,822

3,831

3,835

 N/A 

 N/A 

2014

3,727

3,748

3,777

3,808

3,765

2013

3,668

3,686

3,711

3,728

3,698

2012

3,684

3,670

3,672

3,670

3,674

Exchange Revenue Per Member

2015

$

194.06

$

167.81

$

163.38

 N/A 

 N/A 

2014

$

200.78

$

179.17

$

171.77

$

157.24

$

177.12

2013

$

210.96

$

182.42

$

169.95

$

161.21

$

181.02

2012

$

204.56

$

177.07

$

171.14

$

165.86

$

179.68

Vacation Rental Transactions (in 000s) (a) (b)

2015

459

390

462

 N/A 

 N/A 

2014

429

376

455

293

1,552

2013

423

355

433

273

1,483

2012

418

325

390

259

1,392

Average Net Price Per Vacation Rental(a) (b)

2015

$

361.20

$

513.14

$

642.00

 N/A 

 N/A 

2014

$

410.04

$

577.13

$

727.40

$

492.25

$

558.95

2013

$

392.64

$

540.38

$

677.81

$

506.62

$

532.11

2012

$

379.40

$

524.40

$

635.44

$

484.69

$

504.55

Vacation Ownership (a)

Gross Vacation Ownership Interest (VOI) Sales (in 000s) (c)

2015

$

390,000

$

502,000

$

565,000

 N/A 

 N/A 

2014

$

410,000

$

496,000

$

513,000

$

470,000

$

1,889,000

2013

$

384,000

$

481,000

$

536,000

$

488,000

$

1,889,000

2012

$

384,000

$

460,000

$

502,000

$

435,000

$

1,781,000

Tours (in 000s) (d)

2015

168

206

227

 N/A 

 N/A 

2014

170

208

225

191

794

2013

163

206

225

195

789

2012

148

186

207

183

724

Volume Per Guest (VPG) (d)

2015

$

2,177

$

2,353

$

2,354

 N/A 

 N/A 

2014

$

2,272

$

2,280

$

2,158

$

2,336

$

2,257

2013

$

2,211

$

2,256

$

2,278

$

2,370

$

2,281

2012

$

2,414

$

2,361

$

2,315

$

2,225

$

2,324

Note:

Full year amounts may not add across due to rounding.

(a)

Includes the impact of acquisitions/dispositions from the acquisition/disposition dates forward. Therefore, the operating statistics are not presented on a comparable basis.

(b)

The vacation exchange and rentals operating statistics excluding our U.K.-based camping business sold in Q4 2014 are as follows:

Year

Q1

Q2

Q3

Q4

Full Year

Vacation Rental Transactions (in 000s)

2014

429

367

431

292

1,518

Average Net Price Per Vacation Rental

2014

$

410.02

$

578.02

$

700.56

$

492.64

$

548.93

(c)

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).

(d)

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

2015

7,670

7,700

7,760

 N/A 

 N/A 

2014

7,500

7,540

7,590

7,650

 N/A 

2013

7,380

7,410

7,440

7,490

 N/A 

2012

7,150

7,170

7,260

7,340

 N/A 

Vacation Ownership

Provision for Loan Losses (in 000s) (*) 

2015

$

46,000

$

60,000

$

78,000

 N/A 

 N/A 

2014

$

60,000

$

70,000

$

70,000

$

60,000

$

260,000

2013

$

84,000

$

90,000

$

102,000

$

73,000

$

349,000

2012

$

96,000

$

100,000

$

124,000

$

89,000

$

409,000

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 and (ii) properties under affiliation agreements for which the Company receives a fee for reservation and/or other services provided. 

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 2012-2015.  

General

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

Currency-Neutral: Represents a comparison eliminating the effects of foreign exchange rate fluctuations between periods (foreign currency translation) and the impact caused by any foreign exchange related activities (i.e., hedges, balance sheet remeasurements and/or adjustments).

 

 

Table 4

Wyndham Worldwide Corporation

REVENUE DETAIL BY REPORTABLE SEGMENT

(In millions)

2015

2014

 Q1 

 Q2 

 Q3 

 Q4 

 Year 

 Q1 

 Q2 

 Q3 

 Q4 

 Year 

Lodging

Royalties and Franchise Fees

$

74

$

96

$

103

 N/A 

 N/A 

$

68

$

88

$

100

$

83

$

339

Marketing, Reservation and Wyndham Rewards Revenues (a)

96

108

112

 N/A 

 N/A 

76

101

117

91

385

Hotel Management Reimbursable Revenues (b)

61

71

73

 N/A 

 N/A 

37

39

39

39

154

Intersegment Trademark Fees

12

15

16

 N/A 

 N/A 

9

11

11

10

41

Owned Hotel Revenues

25

20

16

 N/A 

 N/A 

24

20

18

20

81

Ancillary Revenues (c)

24

24

37

 N/A 

 N/A 

23

24

30

24

101

Total Lodging

292

334

357

 N/A 

 N/A 

237

283

315

267

1,101

Vacation Exchange and Rentals

Exchange Revenues

185

161

157

 N/A 

 N/A 

187

168

162

150

667

Rental Revenues

166

200

296

 N/A 

 N/A 

176

217

331

144

868

Ancillary Revenues (d)

18

22

23

 N/A 

 N/A 

16

17

19

17

69

Total Vacation Exchange and Rentals

369

383

476

 N/A 

 N/A 

379

402

512

311

1,604

Vacation Ownership

Vacation Ownership Interest Sales

336

417

448

 N/A 

 N/A 

303

382

415

385

1,485

Consumer Financing

104

105

108

 N/A 

 N/A 

105

106

108

108

427

Property Management Fees and Reimbursable Revenues

153

149

159

 N/A 

 N/A 

143

145

150

142

581

WAAM Fee-for-Service Commissions

12

19

23

 N/A 

 N/A 

33

30

18

16

98

Ancillary Revenues (e)

12

9

12

 N/A 

 N/A 

9

10

13

17

47

Total Vacation Ownership

617

699

750

 N/A 

 N/A 

593

673

704

668

2,638

Total Reportable Segments

$

1,278

$

1,416

$

1,583

 N/A 

 N/A 

$

1,209

$

1,358

$

1,531

$

1,246

$

5,343

2013

2012

 Q1 

 Q2 

 Q3 

 Q4 

 Year 

 Q1 

 Q2 

 Q3 

 Q4 

 Year 

Lodging

Royalties and Franchise Fees

$

64

$

79

$

91

$

75

$

309

$

62

$

80

$

88

$

71

$

301

Marketing, Reservation and Wyndham Rewards Revenues (a)

73

92

118

83

365

68

99

98

80

345

Hotel Management Reimbursable Revenues (b)

25

38

37

35

135

21

22

25

23

91

Intersegment Trademark Fees

8

10

11

10

39

8

9

9

8

34

Owned Hotel Revenues

26

20

18

19

84

8

8

7

18

41

Ancillary Revenues (c)

26

23

22

23

95

18

15

22

23

78

Total Lodging

222

262

297

245

1,027

185

233

249

223

890

Vacation Exchange and Rentals

Exchange Revenues

193

168

158

150

669

188

162

157

153

660

Rental Revenues

166

192

293

138

789

159

170

248

125

702

Ancillary Revenues (d)

15

16

19

17

68

14

16

15

15

60

Total Vacation Exchange and Rentals

374

376

470

305

1,526

361

348

420

293

1,422

Vacation Ownership

Vacation Ownership Interest Sales

263

347

384

384

1,379

271

342

373

337

1,323

Consumer Financing

105

106

107

108

426

103

102

106

110

421

Property Management Fees

146

141

143

137

567

110

108

117

125

460

WAAM Fee-for-Service Commissions

24

30

33

20

107

12

11

4

6

33

Ancillary Revenues (e)

11

6

10

9

36

5

7

8

12

32

Total Vacation Ownership

549

630

677

658

2,515

501

570

608

590

2,269

Total Reportable Segments

$

1,145

$

1,268

$

1,444

$

1,208

$

5,068

$

1,047

$

1,151

$

1,277

$

1,106

$

4,581

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 2014, reimbursable revenues of $2 million in each of Q1, Q2 and Q3 and $1 million in Q4 which were charged to the Company's vacation ownership business and were eliminated in consolidation. During 2013, such amounts include reimbursable revenues of $1 million, $3 million and $2 million, in Q2, Q3 and Q4 respectively, which were charged to the Company's vacation ownership business and were eliminated in consolidation.

(c)

Primarily includes additional services provided to franchisees and managed properties and fees related to our co-branded credit card program.

(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,

2015

June 30,

2015

March 31,

2015

December 31,

2014

September 30,

2014

Securitized vacation ownership debt (a)

Term notes

$

1,843

$

1,841

$

2,090

$

1,962

$

1,670

Bank conduit facility (b)

267

253

98

203

271

Total securitized vacation ownership debt (c)

2,110

2,094

2,188

2,165

1,941

Less: Current portion of securitized vacation ownership debt

210

211

217

214

192

Long-term securitized vacation ownership debt

$

1,900

$

1,883

$

1,971

$

1,951

$

1,749

Debt:

Revolving credit facility (due July 2020) (d)

$

20

$

23

$

14

$

25

$

18

Commercial paper (e)

87

476

346

189

237

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

316

317

317

317

317

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

299

299

299

299

299

$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

448

448

448

$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

247

247

247

247

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

648

648

650

648

646

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

409

409

418

410

401

$350 million 5.10% senior unsecured notes (due October 2025)

338

-

-

-

-

Capital leases

158

161

161

170

175

Other

49

70

70

81

80

Total long-term debt

3,073

3,152

3,024

2,888

2,922

Less: Current portion of long-term debt

44

52

53

47

49

Long-term debt

$

3,029

$

3,100

$

2,971

$

2,841

$

2,873

__________

(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 non-recourse debt that is securitized through the SPEs is legally not a liability of the Company and thus, 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 2017 and borrowing capacity of $650 million. As of September 30, 2015, this facility had a remaining borrowing capacity of $383 million.

(c)

This debt is collateralized by $2,582 million, $2,558 million, $2,609 million, $2,629 million, and $2,326 million of underlying vacation ownership contract receivables and related assets as of September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014 and September 30, 2014.

(d)

Represents a $1.5 billion revolving credit facility that expires in July 2020. As of September 30, 2015, the Company had $1 million of outstanding letters of credit. After considering outstanding commercial paper borrowings of $87 million, the remaining borrowing capacity was $1.4 billion as of September 30, 2015.

(e)

Represents commercial paper programs of $1.25 billion with a remaining borrowing capacity of $1.2 billion as of September 30, 2015.

 

 

Table 6

(1 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

As of and For the Three Months Ended September 30, 2015

Brand

Number of 

Properties

Number of Rooms

Average 

Occupancy Rate

Average Daily

Rate (ADR)

Average Revenue 

Per Available

Room (RevPAR)

Lodging

Super 8 

2,600

166,656

65.1%

$52.68

$34.29

Days Inn 

1,785

142,613

58.1%

$71.39

$41.48

Ramada 

838

117,044

59.0%

$76.94

$45.42

Wyndham Hotels and Resorts

210

45,537

65.5%

$108.30

$70.92

Howard Johnson 

403

43,803

59.0%

$62.54

$36.88

Baymont

396

31,480

60.0%

$72.04

$43.20

Travelodge 

414

30,692

59.8%

$74.56

$44.56

Microtel Inns & Suites by Wyndham

333

23,960

64.2%

$72.00

$46.20

Knights Inn 

383

23,464

49.2%

$52.00

$25.58

TRYP by Wyndham

122

17,641

70.3%

$84.05

$59.05

Wingate by Wyndham

148

13,450

70.4%

$91.42

$64.39

Hawthorn Suites by Wyndham

101

10,053

70.1%

$81.67

$57.28

Dolce

24

5,530

58.8%

$160.45

$94.40

Total Lodging

7,757

671,923

61.4%

$70.63

$43.34

Vacation Ownership

Wyndham Vacation Ownership resorts

211

24,095

N/A

N/A

N/A

Total Wyndham Worldwide

7,968

696,018

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

Super 8 

2,476

158,347

63.3%

$55.36

$35.05

Days Inn 

1,791

144,405

57.7%

$70.77

$40.83

Ramada 

829

114,918

58.5%

$82.00

$47.95

Howard Johnson 

432

46,303

54.4%

$65.79

$35.77

Wyndham Hotels and Resorts

182

41,510

67.0%

$113.52

$76.06

Travelodge 

424

31,117

60.5%

$75.65

$45.74

Baymont

359

29,293

59.0%

$69.16

$40.78

Knights Inn 

394

24,326

50.2%

$49.53

$24.84

Microtel Inns & Suites by Wyndham

320

22,862

65.6%

$71.02

$46.59

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

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

_______________

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, 2015

Brand

Number of 

Properties

Number of Rooms

Average

 Occupancy Rate

Average Daily 

Rate (ADR)

Average Revenue

 Per Available

 Room (RevPAR)

Lodging

Super 8 

2,600

166,656

59.2%

$51.01

$30.17

Days Inn 

1,785

142,613

52.5%

$68.20

$35.83

Ramada 

838

117,044

55.5%

$75.78

$42.08

Wyndham Hotels and Resorts

210

45,537

61.8%

$111.39

$68.87

Howard Johnson 

403

43,803

51.1%

$62.91

$32.15

Baymont

396

31,480

54.5%

$69.23

$37.72

Travelodge 

414

30,692

52.9%

$69.14

$36.55

Microtel Inns & Suites by Wyndham

333

23,960

59.8%

$69.81

$41.73

Knights Inn 

383

23,464

46.9%

$48.56

$22.79

TRYP by Wyndham

122

17,641

62.4%

$80.87

$50.42

Wingate by Wyndham

148

13,450

65.4%

$89.70

$58.66

Hawthorn Suites by Wyndham

101

10,053

68.5%

$81.16

$55.62

Dolce

24

5,530

57.5%

$149.84

$86.20

Total Lodging

7,757

671,923

56.1%

$68.97

$38.72

Vacation Ownership

Wyndham Vacation Ownership resorts

211

24,095

N/A

N/A

N/A

Total Wyndham Worldwide

7,968

696,018

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

Super 8 

2,476

158,347

58.4%

$51.75

$30.21

Days Inn 

1,791

144,405

52.7%

$66.20

$34.91

Ramada 

829

114,918

55.3%

$80.22

$44.36

Howard Johnson 

432

46,303

49.5%

$63.66

$31.49

Wyndham Hotels and Resorts

182

41,510

63.2%

$114.72

$72.47

Travelodge 

424

31,117

53.1%

$68.87

$36.56

Baymont

359

29,293

54.4%

$66.09

$35.95

Knights Inn 

394

24,326

45.9%

$47.01

$21.56

Microtel Inns & Suites by Wyndham

320

22,862

61.1%

$67.25

$41.08

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

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

_______________

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, 2015

Net Revenues

Reported 

EBITDA

Legacy

    Adjustments (b)

Acquisition

   Costs (c)

Restructuring

Costs (d)

Asset

   Impairment (e)

Contract

 Termination (f)

Adjusted 

EBITDA

Lodging

$

292

$

76

$

-

$

3

$

-

$

-

$

-

$

79

Vacation Exchange and Rentals

369

105

-

-

(1)

-

-

104

Vacation Ownership

617

130

-

-

-

-

-

130

Total Reportable Segments

1,278

311

-

3

(1)

-

-

313

Corporate and Other (a)

(16)

(34)

-

-

-

-

-

(34)

Total Company

$

1,262

$

277

$

-

$

3

$

(1)

$

-

$

-

$

279

Three months ended June 30, 2015

Lodging

$

334

$

96

$

-

$

1

$

-

$

-

$

-

$

97

Vacation Exchange and Rentals

383

84

-

-

-

-

-

84

Vacation Ownership

699

182

-

-

-

-

-

182

Total Reportable Segments

1,416

362

-

1

-

-

-

363

Corporate and Other (a)

(18)

(30)

(1)

-

-

-

-

(31)

Total Company

$

1,398

$

332

$

(1)

$

1

$

-

$

-

$

-

$

332

Three months ended September 30, 2015

Lodging

$

357

$

83

$

-

$

-

$

4

$

7

$

14

$

108

Vacation Exchange and Rentals

476

134

-

-

3

-

-

137

Vacation Ownership

750

200

-

-

1

-

-

201

Total Reportable Segments

1,583

417

-

-

8

7

14

446

Corporate and Other (a)

(19)

(35)

1

-

-

-

-

(34)

Total Company

$

1,564

$

382

$

1

$

-

$

8

$

7

$

14

$

412

________________

(a)

Includes the elimination of transactions between segments.

(b)

Relates to the net (benefit)/expense from the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.

(c)

Relates to costs incurred in connection with the acquisition of Dolce Hotels and Resorts (January 2015).

(d)

Relates to costs incurred as a result of various organizational realignment initiatives and the reversal of a portion of the restructuring reserve established during the fourth quarter of 2014. 

(e)

Relates to a non-cash impairment charge related to the write-down of terminated in-process technology projects resulting from the Company's decision to outsource its reservation system to a third-party provider.

(f)

Relates to the cost of the anticipated termination of a management contract.

 

 

 

Table 7

(2 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 

Costs (d)

Loss on Sale 

and Asset 

   Impairments (e)

Legacy 

   Adjustments (f)

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

Three months ended December 31, 2014

Lodging

$

267

$

77

$

-

$

-

$

-

$

2

$

-

$

-

$

79

Vacation Exchange and Rentals

311

2

-

-

-

10

27

-

39

Vacation Ownership

668

172

-

-

-

-

-

-

172

Total Reportable Segments

1,246

251

-

-

-

12

27

-

290

Corporate and Other (a)

(15)

(36)

-

-

-

-

-

(2)

(38)

Total Company

$

1,231

$

215

$

-

$

-

$

-

$

12

$

27

$

(2)

$

252

Twelve months ended December 31, 2014

Lodging

$

1,101

$

327

$

4

$

-

$

-

$

1

$

8

$

-

$

340

Vacation Exchange and Rentals

1,604

335

-

10

(2)

10

27

-

380

Vacation Ownership

2,638

660

-

-

-

-

-

-

660

Total Reportable Segments

5,343

1,322

4

10

(2)

11

35

-

1,380

Corporate and Other (a)

(62)

(141)

-

-

-

-

-

(1)

(142)

Total Company

$

5,281

$

1,181

$

4

$

10

$

(2)

$

11

$

35

$

(1)

$

1,238

________________

Note: 

The sum of the quarters may not agree to the twelve months ended December 31, 2014 due to rounding.

(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 (i) the reversal of a portion of a restructuring reserve established during the fourth quarter of 2013 and (ii) costs incurred as a result of various organizational realignment initiatives by the Company. 

(e)

Relates to (i) a loss on the sale of a business and a write-down of an equity investment at the Company's vacation exchange and rentals business and (ii) a write-down of an investment in a joint venture at the Company's lodging business. 

(f)

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

 

 

 

Table 8

(1 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

Three Months Ended September 30, 2015

 As Reported 

Legacy

    Adjustments (a)

Restructuring

    Costs (b)

Asset

    Impairment (d)

Contract

 Termination (e)

As Adjusted

non-GAAP

Net revenues

Service and membership fees

$

734

$

$

$

$

$

734

Vacation ownership interest sales

448

448

Franchise fees

192

192

Consumer financing

108

108

Other

82

82

Net revenues

1,564

-

-

-

-

1,564

Expenses

Operating

691

(14)

677

Cost of vacation ownership interests 

43

43

Consumer financing interest

18

18

Marketing and reservation

218

218

General and administrative

200

(1)

199

Asset impairment

7

(7)

-

Restructuring

8

(8)

-

Depreciation and amortization

59

59

Total expenses

1,244

(1)

(8)

(7)

(14)

1,214

Operating income

320

1

8

7

14

350

Other income, net

(3)

(3)

Interest expense

33

33

Interest income

(2)

(2)

Income before income taxes

292

1

8

7

14

322

Provision for income taxes

102

-

2

(c)

2

(c)

6

(c)

112

Net income

$

190

$

1

$

6

$

5

$

8

$

210

Earnings per share

Basic

$

1.62

$

0.01

$

0.05

$

0.04

$

0.07

$

1.79

Diluted

1.61

0.01

0.05

0.04

0.07

1.78

Weighted average shares outstanding

Basic

117

117

117

117

117

117

Diluted

118

118

118

118

118

118

__________

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

(b)

Relates to costs incurred as a result of various organizational realignment initiatives across the Company.

(c)

Relates to the tax effect of the adjustment.

(d)

Relates to a non-cash impairment charge at the Company's lodging business related to the write-down of terminated in-process technology projects resulting from the decision to outsource the reservation system to a third-party provider. 

(e)

Relates to the cost of the anticipated termination of a management contract within the Company's lodging business.

 

 

Table 8

(2 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

Nine Months Ended September 30, 2015

 As Reported 

Acquisition

    Costs (a)

Restructuring

    Costs (c)

Asset

Impairment (e)

Contract 

Termination (f)

As Adjusted 

non-GAAP

Net revenues

Service and membership fees

$

1,957

$

$

$

$

$

1,957

Vacation ownership interest sales

1,201

1,201

Franchise fees

517

517

Consumer financing

318

318

Other

231

231

Net revenues

4,224

-

-

-

-

4,224

Expenses

Operating

1,865

(3)

(14)

1,848

Cost of vacation ownership interests 

123

123

Consumer financing interest

55

55

Marketing and reservation

624

624

General and administrative

562

562

Asset impairment

7

(7)

-

Restructuring

8

(8)

-

Depreciation and amortization

173

173

Total expenses

3,417

(3)

(8)

(7)

(14)

3,385

Operating income

807

3

8

7

14

839

Other income, net

(11)

(11)

Interest expense

89

89

Interest income

(7)

(7)

Income before income taxes

736

3

8

7

14

768

Provision for income taxes

265

(1)

(b)

2

(d)

2

(d)

6

(d)

274

Net income

$

471

$

4

$

6

$

5

$

8

$

494

Earnings per share

Basic

$

3.96

$

0.04

$

0.05

$

0.04

$

0.07

$

4.15

Diluted

3.93

0.04

0.05

0.04

0.07

4.12

Weighted average shares outstanding

Basic

119

119

119

119

119

119

Diluted

120

120

120

120

120

120

__________

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 primarily to costs incurred in connection with the acquisition of Dolce Hotels and Resorts (January 2015) at the Company's lodging business.

(b)

Relates to (i) the tax effect of the adjustment and (ii) a valuation allowance established in connection with the acquisition of Dolce Hotels and Resorts.

(c)

Relates to costs incurred as a result of various organizational realignment initiatives across the Company and the reversal of a portion of the restructuring reserve established during the fourth

quarter of 2014 at the Company's vacation exchange and rentals business. 

(d)

Relates to the tax effect of the adjustment.

(e)

Relates to a non-cash impairment charge at the Company's lodging business related to the write-down of terminated in-process technology projects resulting from the decision to outsource the reservation system to a third-party provider. 

(f)

Relates to the cost of the anticipated termination of a management contract within 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, 2014

 As Reported 

Restructuring

Reversal (a)

Asset

Impairment (b)

As Adjusted 

non-GAAP

Net revenues

Service fees and membership

$

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

$

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

(4 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 fees and membership

$

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 rentals 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 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, 

2015

2014

Net cash provided by operating activities

$

817

$

899

Less: Property and equipment additions

(157)

(149)

Free cash flow

$

660

$

750

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

2015

Q1

Q2

Q3

Q4

Full Year

Gross VOI sales (*)

$

390

$

502

$

565

 N/A 

 N/A 

Less: Sales under WAAM Fee-for-Service

(21)

(26)

(37)

 N/A 

 N/A 

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

369

477

528

 N/A 

 N/A 

Less: Loan loss provision

(46)

(60)

(78)

 N/A 

 N/A 

Plus: Impact of percentage-of-completion accounting

13

-

(2)

 N/A 

 N/A 

Vacation ownership interest sales (*)

$

336

$

417

$

448

 N/A 

 N/A 

2014

Gross VOI sales (*)

$

410

$

496

$

513

$

470

$

1,889

Less: Sales under WAAM Fee-for-Service

(44)

(40)

(27)

(21)

(132)

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

366

456

486

449

1,757

Less: Loan loss provision

(60)

(70)

(70)

(60)

(260)

Less: Impact of percentage-of-completion accounting

(3)

(4)

(1)

(4)

(12)

Vacation ownership interest sales (*)

$

303

$

382

$

415

$

385

$

1,485

2013

Gross VOI sales (*)

$

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 (*)

$

263

$

347

$

384

$

384

$

1,379

2012

Gross VOI sales (*)

$

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 (*)

$

271

$

342

$

373

$

337

$

1,323

_____________

Note: Amounts may not add due to rounding.

(*) 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

2015

$

24

$

17

$

32

 N/A 

 N/A 

2014

$

25

$

21

$

27

$

24

$

97

2013

$

24

$

18

$

22

$

25

$

89

2012

$

27

$

20

$

22

$

28

$

97

 

 



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