UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

 

 

Form 11-K

 

þ  ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

 

For the five months ended December 31, 2006

 

OR

 

o  TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______ to ______

 

Commission File No. 1-32876

 

 

 

 

A.  Full title of the plan and address of the plan, if different from that of the issuer named below:

 

Wyndham Worldwide Corporation

Employee Savings Plan

 

 

B.  Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 

 

Wyndham Worldwide Corporation
Seven Sylvan Way
Parsippany, New Jersey 07054

 

 

WYNDHAM WORLDWIDE CORPORATION EMPLOYEE SAVINGS PLAN

TABLE OF CONTENTS

 

 

All other schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.

 

To the Trustees and Participants of the Wyndham Worldwide Corporation Employee Savings Plan:

 

We have audited the accompanying statement of assets available for benefits of the Wyndham Worldwide Corporation Employee Savings Plan (the “Plan”) as of December 31, 2006, and the related statement of changes in assets available for benefits for the period beginning August 1, 2006 (inception) to December 31, 2006. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, such financial statements present fairly, in all material respects, the assets available for benefits of the Plan as of December 31, 2006, and the changes in assets available for benefits for the period beginning August 1, 2006 (inception) to December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.

 

Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at year end) as of December 31, 2006, is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This schedule is the responsibility of the Plan’s management. Such schedule has been subjected to the auditing procedures applied in our audit of the basic 2006 financial statements and, in our opinion, is fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole.

 

 

/s/ Deloitte & Touche LLP

Parsippany, New Jersey

June 29, 2007

WYNDHAM WORLDWIDE CORPORATION EMPLOYEE SAVINGS PLAN

STATEMENT OF ASSETS AVAILABLE FOR BENEFITS

 

 

 

The accompanying notes are an integral part of these financial statements.

WYNDHAM WORLDWIDE CORPORATION EMPLOYEE SAVINGS PLAN

STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS FOR THE

 

 

 

The accompanying notes are an integral part of these financial statements.

WYNDHAM WORLDWIDE CORPORATION EMPLOYEE SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

_ _

 

 

The following description of the Wyndham Worldwide Corporation Employee Savings Plan (the “Plan”) is provided for general information purposes only. Participants should refer to the Plan document for more complete information.

 

General — The Plan is a defined contribution plan subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). The Plan was formed on August 1, 2006 in connection with Wyndham Worldwide Corporation’s (the “Company”) separation from Cendant Corporation (“Cendant”).

 

Merrill Lynch Trust Company, FSB (the “Trustee” or “Merrill Lynch”) is the Plan’s trustee. Wyndham Worldwide Corporation Employee Benefits Committee (the “Plan Administrator”) controls and manages the operation and administration of the Plan. Under the terms of a trust agreement between the Trustee and the Company, contributions to the Plan are deposited with the Trustee and maintained in a trust on behalf of the Plan. The Plan Administrator has granted discretionary authority to one or more investment managers appointed by the Plan Administrator.

 

On July 31, 2006, Cendant completed the spin-off of the Company and distributed one share of the Company’s common stock for every five shares of outstanding Cendant Corporation common stock held on July 21, 2006. Upon the separation and distribution of the Company to Cendant’s stockholders, employees of the Company commenced participation in the Plan. Accordingly, net assets associated with the account balances of employees of the Company totaling approximately $222.5 million were transferred from the Cendant Corporation Employee Savings Plan to the Plan.

 

The following is a summary of certain Plan provisions:

 

Eligibility — Excluding employees of Wyndham Hotel Management, Inc., each regular employee (as defined in the Plan document) of the Company is eligible to participate in the Plan following the later of commencement of employment or the attainment of age eighteen. Excluding employees of Wyndham Hotel Management, Inc., each part-time employee (as defined in the Plan document) of the Company is eligible to participate in the Plan following the later of one year of eligible service (as defined in the Plan document) or the attainment of age eighteen.

 

Contributions — Each year, participants may contribute up to 20% of their pretax annual compensation, as defined in the Plan, subject to certain Internal Revenue Code (“IRC”) limitations. The Company contributes 100% of the first 6% of base compensation that a participant contributes to the Plan. Participants may also contribute amounts representing distributions from other qualified defined contribution plans.

 

Participant Accounts — Individual accounts are maintained for each Plan participant. Each participant’s account is credited with the participant’s contribution, the Company’s matching contribution, and Plan earnings, and charged with withdrawals and an allocation of Plan losses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

 

Investments — Participants direct the investment of their contributions into various investment options offered by the Plan. The Plan currently offers 15 mutual funds, four common collective trusts and Wyndham Worldwide stock as investment options for participants.

Vesting — Participants are vested immediately in their contributions plus actual earnings thereon. All employer contributions are 100% vested.

 

Participant Loans — Participants may borrow from their fund accounts up to a maximum of $50,000 or 50% of their account balance, whichever is less (provided the vested balance is at least $1,000). The initial principal amount of the loan may not be less than $500. The loans are secured by the balance in the participant’s account and bear interest at rates commensurate with local prevailing rates at the time funds are borrowed as determined quarterly by the Plan administrator. Principal and interest is paid ratably through payroll deductions.

 

Payment of Benefits — On termination of service, a participant will receive a lump-sum amount equal to the value of the participant’s vested interest in his or her account.

 

Forfeited Accounts — As all employer matched amounts are 100% vested, the Plan does not have any forfeitures.

 

 

Basis of Accounting — The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America.

 

Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and changes therein and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

 

Risks and Uncertainties — The Plan contains investments in mutual funds, common/collective trusts and common stock. Investment securities, in general, are exposed to various risks, such as interest rate and credit risk and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of the Plan’s investment securities will occur in the near term and that such changes would materially affect the amounts reported in the Plan’s financial statements.

 

Cash and Cash Equivalents — The Plan considers highly-liquid investments purchased with an original maturity of three months or less to be cash equivalents.

 

Administrative Expenses — Administrative expenses are paid by the Company, pursuant to the Plan document.

 

Payment of Benefits — Benefit payments to participants are recorded when paid. Amounts allocated to accounts of participants who have elected to withdraw from the Plan but have not yet been paid were approximately $112,000 at December 31, 2006.

 

Valuation of Investments and Income Recognition — The Plan’s investments are stated at fair value. Securities traded on a national securities exchange are valued at the last reported sales price on the last business day of the Plan year. Mutual funds are valued at the quoted market price, which represents the net asset value of shares held by the Plan at year-end. Common/collective trusts are valued at the net asset value of the shares held by the Plan at year-end, which is based on the fair value of the underlying assets. A portion of the Plan’s investments in common/collective trusts consists of a fund that invests primarily in guaranteed investment contracts with high quality insurance companies. The Plan’s investment in this common/collective trust fund is valued at fair market value of the underlying investments and then adjusted to contract value. The fair value recorded in the Plan’s financial statements for such fund was approximately $31.3 million at December 31, 2006. Contract value represents contributions made to the fund, plus earnings, less participant withdrawals. Participants may ordinarily direct the withdrawals or transfers of all or a portion of their investment at contract value. Loans to participants are valued at outstanding loan balances, which approximate fair value.

 

Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date and interest is recorded when earned. The accompanying Statement of Changes in Assets Available for

Benefits presents net appreciation in fair value of investments, which includes unrealized gains and losses on investments held at December 31, 2006, realized gains and losses on investments sold during the period beginning August 1, 2006 (inception) to December 31, 2006 and management and operating expenses associated with the Plan’s investments in mutual funds and common/collective trusts.

 

Management fees and operating expenses charged to the Plan for investments in the mutual funds are deducted from income earned on a daily basis and are not separately reflected. Consequently, management fees and operating expenses are reflected as a reduction of investment return for such investments.

 

Adoption of New Accounting Guidance — The financial statements reflect the adoption of Financial Accounting Standards Board Staff Position, FSP AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans (the “FSP”). However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the plan. The contract value is the total cost of the investment (amount paid at the time of purchase plus or minus any additional deposits or withdrawals) plus accrued interest. This is also referred to as book value. As required by the FSP, the statements of assets available for benefits presents investment contracts at fair value as well as an additional line item showing an adjustment of fully benefit contracts from fair value to contract value. The statement of changes in assets available for benefit is presented on a contract value basis and was not affected by the adoption of the FSP.

 

 

The Plan and related trust are designed in accordance with applicable sections of the IRC. A determination letter request was sent in January 2007 and is pending with the Internal Revenue Service. However, the Plan Administrator and the Plan’s tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC and the related trust continues to be tax-exempt. Therefore, no provision for income taxes has been included in the Plan’s financial statements.

 

 

The following table presents investments at fair value that represent five percent or more of the Plan’s assets available for benefits at fair value as of December 31, 2006:

 

 

      _ _

 

*  The contract value was approximately $31.9 million at December 31, 2006.

During the period beginning August 1, 2006 (inception) to December 31, 2006, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the period) appreciated (depreciated) in value as follows:

 

 

 

A portion of the Plan’s investments includes shares of mutual funds that are managed by the Trustee. The Trustee is the custodian of these investments as defined by the Plan, and, therefore, these transactions qualify as exempt party-in-interest transactions.

 

Management fees and operating expenses charged to the Plan for investments in the mutual funds are deducted from income earned on a daily basis and are not separately reflected. Consequently, management fees and operating expenses are reflected as a reduction of investment return for such investments.

 

At December 31, 2006, the Plan held approximately 127,000, 40,000 and 91,000 shares of common stock of Wyndham Worldwide Corporation, Avis Budget Group, Inc. and Realogy Corporation, respectively, with a cost basis of approximately $3.2 million, $3.2 million and $1.5 million, respectively, and fair market value of approximately $4.1 million, $0.9 million and $2.8 million, respectively.

 

 

While it is the Company’s intention to continue the Plan in operation indefinitely, the right is, nevertheless, expressly reserved to terminate the Plan in whole or in part or discontinue contributions in the event of unforeseen conditions at any time and for any reason. Any such termination or discontinuance of contributions shall be effected only upon condition that such action is taken as shall render it impossible for any part of the corpus of the Fund or the income therefrom to be used for, or diverted to, purposes other than the exclusive benefit of the participants and their beneficiaries.

 

7.  RECONCILIATION TO FORM 5500

 

The following is a reconciliation of assets available for benefits per the financial statements to Form 5500 at December 31, 2006:

 

 

The following is a reconciliation of benefits paid to participants per the financial statements for the period beginning August 1, 2006 (inception) to December 31, 2006 to Form 5500:

 

 

Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, 2006, but not yet paid as of that date.

The following is a reconciliation of the increase in assets per the financial statements to Form 5500 for the period beginning August 1, 2006 (inception) to December 31, 2006:

 

Supplemental Schedule of Assets held at End of Year: Form 5500 instructions require reporting of Common/Collective Trusts at fair value on this schedule.

 

 

On June 19, 2007, the Company amended the plan document to require regular employees to complete one year of service to become eligible to participate in the Plan. This amendment is effective July 1, 2007.

 

*****

 

Wyndham Worldwide Employee Savings Plan

Form 5500, Schedule H, Part IV, Line 4i — Schedule of Assets (Held at Year End)

As of December 31, 2006

 

 

 

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Employee Benefits Committee of the Wyndham Worldwide Corporation Employee Savings Plan (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Wyndham Worldwide Corporation Employee Savings Plan

 

Mary Falvey
Executive Vice President,
Chief Human Resources Officer
Wyndham Worldwide Corporation

 

 

Date:  June 29, 2007