EXHIBIT 99.1
(LOGO)
Wyndham Worldwide Reports Strong First Quarter 2011 Earnings
Results Exceed Expectations
Announces $500 Million Increase in Share Repurchase Program
Increases EPS Guidance
PARSIPPANY, N.J. (April 27, 2011) — Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended March 31, 2011.
Highlights:
  First quarter 2011 adjusted diluted earnings per share (EPS) was $0.44, compared with $0.34 in the first quarter of 2010, an increase of 29%. First quarter 2011 reported diluted EPS was $0.41, an increase of 52%, compared with the same period in 2010.
 
  Free cash flow increased 11% to $185 million for the quarter ended March 31, 2011, compared with $166 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.
 
  Year-to-date, the Company repurchased approximately 8.2 million shares of its common stock at an average price of $31.01 for approximately $255 million.
 
  The Company announced today that its Board of Directors approved a $500 million increase to the share repurchase authorization.
 
  The Company is increasing its full-year adjusted EPS guidance from a range of $2.05 — $2.15 to a range of $2.15 — $2.25 based on a diluted share count of 173 million.
     “We are pleased to report that 2011 started as 2010 ended, with strong operating performance and accelerating earnings per share growth,” said Stephen P. Holmes, chairman and CEO, Wyndham Worldwide. “We delivered strong operating performance across all our businesses and are confident in the sustainability of our growth and cash flow. Our confidence in growth and cash flow generation is reflected in our substantial share repurchase activity so far this year, the significant increase in our share repurchase program as well as the previously announced 25% increase in our dividend for 2011.”

 


 

FIRST QUARTER 2011 OPERATING RESULTS
First quarter revenues increased 7.4% from the prior year period to $952 million. The revenue growth reflects continued sales momentum across the Company’s three business units and incremental contributions from acquisitions.
For the first quarter of 2011, adjusted net income increased by 23% to $79 million, or $0.44 per diluted share compared with $64 million, or $0.34 per diluted share for the same period in 2010. The increase reflects strong operational performance by the Company’s three business units. Adjusted net income for the first quarter of 2011 excludes a $7 million after-tax charge related to the repurchase of a portion of the Company’s convertible notes and an $8 million after-tax non-cash impairment charge related to a write-down of an international joint venture in the Company’s hotel business. These were partially offset by an $8 million after-tax benefit related to the resolution of certain contingent liabilities and assets.
First quarter 2011 reported net income grew 44% to $72 million, or $0.41 per diluted share, compared with net income of $50 million, or $0.27 per diluted share, for the first quarter of 2010.
Free cash flow increased 11% to $185 million for the quarter ended March 31, 2011, compared with $166 million during the same period in 2010. The growth in free cash flow reflects higher cash earnings and more efficient working capital utilization. For the quarter ended March 31, 2011, cash provided by operating activities was $229 million, compared with $205 million in the prior year period.
BUSINESS UNIT RESULTS
Lodging (Wyndham Hotel Group)
Revenues were $149 million in the first quarter of 2011, an increase of 3%, compared with the first quarter of 2010, reflecting a RevPAR increase of 7.4%, or 6.4% in constant currency, and incremental revenues related to the TRYP hotel brand.
First quarter 2011 adjusted EBITDA was $40 million, an increase of 21%, compared with the first quarter of 2010, primarily as a result of the RevPAR improvement and lower costs. Adjusted EBITDA excludes a $13 million impairment charge related to the write-down of an investment in an international joint venture in the Company’s hotel business.
As of March 31, 2011, the Company’s hotel system consisted of approximately 7,190 properties and 609,600 rooms. The development pipeline included approximately 830 hotels and over 102,000 rooms, of which 57% were new construction and 57% were international.

 


 

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)
Revenues were $356 million in the first quarter of 2011, an increase of 19% compared with the first quarter of 2010, reflecting overall strength in vacation rentals and incremental revenues from acquisitions.
Exchange revenues were $194 million, an increase of 3%, compared with the first quarter of 2010. In constant currency, exchange revenues increased 2%, reflecting a modest increase in both exchange revenue per member and the average number of members.
Vacation rental revenues were $150 million, which included $25 million of incremental revenues related to acquisitions, compared with $105 million in the first quarter of 2010. Excluding the impact of the incremental revenues from acquisitions, net revenues generated from rental transactions and related services increased 19%, reflecting strong performance in the German rental market.
Excluding $4 million of acquisition costs in the first quarter of 2010, first quarter of 2011 EBITDA increased 11% compared with adjusted EBITDA of $84 million in the prior-year period, reflecting increases in vacation rental volume and average net price per rental.
Vacation Ownership (Wyndham Vacation Ownership)
Gross Vacation Ownership Interest (VOI) sales were $319 million in the first quarter of 2011, up 4% from the first quarter of 2010, reflecting an 11% increase in tour flow, partially offset by a 6% decrease in volume per guest. The changes in tour flow and volume per guest reflect the Company’s focus on increasing sales to new owners.
Total segment revenues were $450 million in the first quarter of 2011, compared with $444 million in the first quarter of 2010, reflecting incremental commission revenues under the Wyndham Asset Affiliation Model (WAAM) and a lower provision for loan losses.
Adjusted EBITDA for the first quarter of 2011 increased 17% to $96 million, compared with EBITDA of $82 million in the first quarter of 2010. This EBITDA increase reflected growth in the property management business and the lower provision for loan losses. Results were also impacted by lower sales commission expenses and the absence of a litigation charge in the first quarter 2011 that was incurred in the first quarter 2010.
Other Items
    The Company repurchased approximately 5.7 million shares of its common stock during the first quarter of 2011 at an average price of $30.62 and an additional 2.5 million shares at an average price of $31.84 through April 26, 2011.
 
    During the first quarter of 2011, the Company repurchased approximately 85% of its outstanding convertible notes, principally resulting from the completion of a cash tender offer.

 


 

    Net interest expense in the first quarter of 2011 was $42 million. Net interest includes $12 million of costs associated with the repurchase of a portion of the Company’s convertible notes, which is excluded from adjusted net income.
Balance Sheet Information as of March 31, 2011:
    Cash and cash equivalents of approximately $175 million, compared with approximately $155 million from 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 approximately $1.2 billion, unchanged from December 31, 2010.
 
    Securitized vacation ownership debt of $1.8 billion, compared with $1.7 billion at December 31, 2010.
 
    Other debt of $2.0 billion, compared with $2.1 billion at December 31, 2010. The remaining borrowing capacity on the revolving credit facility was $962 million, compared with $788 million as of December 31, 2010.
A schedule of debt is included in the financial tables section of this press release.
Outlook
The Company is increasing full-year 2011 adjusted EPS guidance from $2.05 — $2.15 to $2.15 — $2.25, based on a diluted share count of 173 million.
The Company reiterates full-year 2011 guidance:
    Revenues of approximately $4.0 — $4.2 billion
 
    Adjusted EBITDA of approximately $925 — $955 million
The guidance reflects assumptions used for internal planning purposes. All guidance excludes legacy items, restructuring costs, debt extinguishment, asset impairments, and acquisition costs, if any, 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. It is not practicable to provide a reconciliation of forecasted adjusted EBITDA to the most directly comparable GAAP measure because certain items cannot be reasonably estimated or predicted at this time. Any such items could be significant to our financial results.
Conference Call Information
Wyndham Worldwide Corporation will hold a conference call with investors to discuss this news on Wednesday, April 27, 2011 at 8:30 a.m. EDT. Listeners may access the webcast live through the Company’s website at www.wyndhamworldwide.com/investors/. An archive of this webcast will be available at the website for approximately 90 days beginning at noon EDT on April 27, 2011. The conference call may also be accessed by dialing (800) 369-2052 and providing the passcode “WYNDHAM.” Listeners are urged to call at least 10 minutes prior to the scheduled start time. A telephone replay will be available for approximately 90 days beginning at noon EDT on April 27, 2011, at (866) 509-3896.

 


 

Presentation of Financial Information
Financial information discussed in this press release includes both GAAP and non-GAAP measures, which include or exclude certain items. These non-GAAP measures differ from reported results and are intended to illustrate what management believes are relevant period-over-period comparisons. A complete reconciliation of reported GAAP results to the comparable non-GAAP information appears in the financial tables section of the press release.
About Wyndham Worldwide Corporation
As one of the world’s largest hospitality companies, Wyndham Worldwide offers individual consumers and business-to-business customers a broad suite of hospitality services and products across various accommodation alternatives and price ranges through its premier portfolio of world-renowned brands. Wyndham Worldwide encompasses approximately 7,360 franchised hotels and vacation ownership resorts with approximately 630,300 rooms worldwide. Wyndham Exchange & Rentals offers leisure travelers, including its 3.8 million members, access to approximately 97,000 vacation properties located in approximately 100 countries. Wyndham Vacation Ownership develops, markets and sells vacation ownership interests and provides consumer financing to owners through its network of vacation ownership resorts serving nearly 815,000 owners throughout North America, the Caribbean and the South Pacific. Wyndham Worldwide, headquartered in Parsippany, N.J., employs approximately 26,000 employees globally.
For more information about Wyndham Worldwide, please visit the Company’s website at www.wyndhamworldwide.com.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, conveying management’s expectations as to the future based on plans, estimates and projections at the time the Company makes the statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements contained in this press release include statements related to the Company’s revenues, earnings and related financial and operating measures.
You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Factors that could cause actual results to differ materially from those in the forward-looking statements include general economic conditions, the performance of the financial and credit markets, the economic environment for the hospitality industry, the impact of war, terrorist activity or political strife, operating risks associated with the hotel, vacation exchange and rentals and

 


 

vacation ownership businesses, as well as those described in the Company’s Annual Report on Form 10-K, filed with the SEC on February 22, 2011. Except for the Company’s ongoing obligations to disclose material information under the federal securities laws, it undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.
# # #
Investor and Media contact:
Margo C. Happer
Senior Vice President, Investor Relations
Wyndham Worldwide Corporation
(973) 753-6472
margo.happer@wyn.com

 


 

Table 1
Wyndham Worldwide Corporation
OPERATING RESULTS OF REPORTABLE SEGMENTS
(In millions)
In addition to other measures, management evaluates the operating results of each of its reportable segments based upon net revenues and “EBITDA,” which is defined as net income before depreciation and amortization, interest expense (excluding consumer financing interest), interest income (excluding consumer financing interest) and income taxes, each of which is presented on the Company’s Consolidated Statements of Income. The Company believes that EBITDA is a useful measure of performance for the Company’s industry segments which, when considered with GAAP measures, the Company believes gives a more complete understanding of its operating performance. The Company’s presentation of EBITDA may not be comparable to similarly-titled measures used by other companies.
The following tables summarize net revenues and EBITDA for reportable segments, as well as reconcile EBITDA to net income for the three months ended March 31, 2011 and 2010:
                                 
    Three Months Ended March 31,  
    2011     2010  
    Net Revenues     EBITDA     Net Revenues     EBITDA  
Lodging
  $ 149     $ 27   (c)   $ 144     $ 33  
Vacation Exchange and Rentals
    356       93       300       80   (f)
Vacation Ownership
    450       97   (d)     444       82  
 
                       
Total Reportable Segments
    955       217       888       195  
Corporate and Other (a) (b)
    (3 )     (14 )     (2 )     (20 )
 
                       
Total Company
  $ 952     $ 203     $ 886     $ 175  
 
                       
 
                               
Reconciliation of EBITDA to Net Income
                               
 
                               
EBITDA
          $ 203             $ 175  
Depreciation and amortization
            45               44  
Interest expense
            44   (e)             50   (g)
Interest income
            (2 )             (1 )
 
                           
Income before income taxes
            116               82  
Provision for income taxes
            44               32  
 
                           
Net income
          $ 72             $ 50  
 
                           
 
(a)   Includes the elimination of transactions between segments.
 
(b)   Includes $11 million of a net benefit and $2 million of a net expense during the three months ended March 31, 2011 and 2010, respectively, related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation.
 
(c)   Includes a non-cash impairment charge of $13 million to reduce the value of an international joint venture in the Company’s hotel business.
 
(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 $12 million of costs incurred for the early repurchase of a portion of the Company’s 3.50% convertible notes during the first quarter of 2011.
 
(f)   Includes $4 million related to costs incurred in connection with the Company’s acquisition of Hoseasons during March 2010.
 
(g)   Includes $16 million of costs incurred for the early extinguishment of the Company’s revolving foreign credit facility and term loan facility during March 2010.
The following tables summarize net revenues and Adjusted EBITDA for reportable segments for the three months ended March 31, 2011 and 2010 (for a description of adjustments by segment, see Table 7):
                                 
    Three Months Ended March 31,  
    2011     2010  
            Adjusted             Adjusted  
    Net Revenues     EBITDA     Net Revenues     EBITDA  
Lodging
  $ 149     $ 40       $ 144     $ 33    
Vacation Exchange and Rentals
    356       93       300       84  
Vacation Ownership
    450       96       444       82  
 
                       
Total Reportable Segments
    955       229       888       199  
Corporate and Other
    (3 )     (25 )          (2 )     (18 )     
 
                       
Total Company
  $ 952     $ 204     $ 886     $ 181  
 
                       


 

Table 2
Wyndham Worldwide Corporation
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
                 
    Three Months Ended  
    March 31,  
    2011     2010  
Net revenues
               
Service and membership fees
  $ 495     $ 424  
Vacation ownership interest sales
    222       217  
Franchise fees
    101       92  
Consumer financing
    102       105  
Other
    32       48  
 
           
Net revenues
    952       886  
 
           
 
               
Expenses
               
Operating
    411       381   (a)
Cost of vacation ownership interests
    32       36  
Consumer financing interest
    23       24  
Marketing and reservation
    137       123  
General and administrative (b)
    140       148  
Asset impairment
    13   (c)      
Restructuring
    (1 ) (d)      
Depreciation and amortization
    45       44  
 
           
Total expenses
    800       756  
 
           
 
               
Operating income
    152       130  
Other income, net
    (6 ) (e)     (1 )
Interest expense
    44   (f)     50   (g)
Interest income
    (2 )     (1 )
 
           
 
               
Income before income taxes
    116       82  
Provision for income taxes
    44       32  
 
           
 
               
Net income
  $ 72     $ 50  
 
           
 
               
Earnings per share
               
Basic
  $ 0.42     $ 0.28  
Diluted
    0.41       0.27  
 
               
Weighted average shares outstanding
               
Basic
    173       179  
Diluted
    179       186  
 
(a)   Includes $4 million relating to costs incurred in connection with the Company’s acquisition of Hoseasons during March 2010.
 
(b)   Includes $7 million of a net benefit and $2 million of a net expense during the three months ended March 31, 2011 and 2010, respectively, related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation.
 
(c)   Represents a non-cash impairment charge to reduce the value of an international joint venture in the Company’s hotel business.
 
(d)   Reflects the reversal of costs incurred as a result of various strategic initiatives commenced by the Company during 2008.
 
(e)   Includes $4 million of a gain related to the redemption of a preferred stock investment allocated to the Company in connection with our separation.
 
(f)   Includes $12 million of costs incurred for the early repurchase of a portion of the Company’s 3.50% convertible notes during the first quarter of 2011.
 
(g)   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.


 

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       N/A       N/A       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       N/A       N/A       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       N/A       N/A       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       N/A       N/A       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       N/A       N/A       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       N/A       N/A       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       N/A       N/A       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       N/A       N/A       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       N/A       N/A       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 foot 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) and James Villa Holidays (November 2010) 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       N/A       N/A       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       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       N/A       N/A       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       N/A       N/A       N/A       N/A  
 
    2010     $ 5,000     $ 13,000     $ 20,000     $ 14,000     $ 51,000  
 
                                               
WAAM Commission Revenues (in 000s)
    2011     $ 10,000       N/A       N/A       N/A       N/A  
 
    2010     $ 3,000     $ 8,000     $ 12,000     $ 9,000     $ 31,000  
 
Note:   Full year amounts may not foot 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. Under the percentage of completion method of accounting, a portion of the total revenue from a vacation ownership contract sale is not recognized if the construction of the vacation resort has not yet been fully completed. This revenue will be recognized in future periods in proportion to the costs incurred as compared to the total expected costs for completion of construction of the vacation resort. Positive amounts represent the recognition of previously deferred revenues.
 
(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 Statement 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 products and services.
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 each time a standard one-week rental is booked.
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       N/A       N/A       N/A       N/A     $ 52     $ 69     $ 82     $ 62     $ 265  
Marketing, Reservation and Wyndham Rewards Revenues (a)
    54       N/A       N/A       N/A       N/A       50       65       76       60       251  
Hotel Management Reimbursable Revenues (b)
    19       N/A       N/A       N/A       N/A       21       20       18       18       77  
Ancillary Revenues (c)
    18       N/A       N/A       N/A       N/A       21       24       27       23       95  
             
Total Lodging
    149       N/A       N/A       N/A       N/A       144       178       203       163       688  
             
 
                                                                               
Vacation Exchange and Rentals
                                                                               
Exchange Revenues
    194       N/A       N/A       N/A       N/A       189       161       163       153       666  
Rental Revenues
    150       N/A       N/A       N/A       N/A       105       115       161       114       495  
Ancillary Revenues (d)
    12       N/A       N/A       N/A       N/A       6       5       6       15       32  
             
Total Vacation Exchange and Rentals
    356       N/A       N/A       N/A       N/A       300       281       330       282       1,193  
             
 
                                                                               
Vacation Ownership
                                                                               
Vacation Ownership Interest Sales
    222       N/A       N/A       N/A       N/A       217       271       308       276       1,072  
Consumer Financing
    102       N/A       N/A       N/A       N/A       105       106       107       107       425  
Property Management Fees
    110       N/A       N/A       N/A       N/A       100       100       104       101       405  
WAAM Commissions
    10       N/A       N/A       N/A       N/A       3       8       12       8       31  
Ancillary Revenues (e)
    6       N/A       N/A       N/A       N/A       19       20       2       5       46  
             
Total Vacation Ownership
    450       N/A       N/A       N/A       N/A       444       505       533       497       1,979  
             
Total Reportable Segments
  $ 955       N/A       N/A       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 foot 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.
 
(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 businesses.


 

Table 5
Wyndham Worldwide Corporation
SCHEDULE OF DEBT
(In millions)
                                         
    March 31,     December 31,     September 30,     June 30,     March 31,  
    2011     2010     2010     2010     2010  
Securitized vacation ownership debt (a)
                                       
Term notes
  $ 1,666     $ 1,498     $ 1,400     $ 1,255     $ 1,258  
Bank conduit facility (b)
    148       152       215       291       240  
 
                             
Securitized vacation ownership debt (c)
    1,814       1,650       1,615       1,546       1,498  
Less: Current portion of securitized vacation ownership debt
    216       223       187       248       220  
 
                             
Long-term securitized vacation ownership debt
  $ 1,598     $ 1,427     $ 1,428     $ 1,298     $ 1,278  
 
                             
 
                                       
Debt:
                                       
Revolving credit facility (due October 2013) (d)
  $ 5     $ 154     $ 26     $     $ 199  
6.00% senior unsecured notes (due December 2016) (e)
    797       798       798       798       798  
9.875% senior unsecured notes (due May 2014) (f)
    241       241       240       239       239  
3.50% convertible notes (due May 2012) (g)
    41       266       289       362       448  
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              
5.625% senior unsecured notes (due March 2021) (j)
    245                          
Vacation rentals capital leases
    120       115       120       110       123  
Other
    28       26       34       36       28  
 
                             
Total debt
    1,971       2,094       2,001       1,792       2,082  
Less: Current portion of debt
    12       11       32       29       23  
 
                             
Long-term debt
  $ 1,959     $ 2,083     $ 1,969     $ 1,763     $ 2,059  
 
                             
 
(a)   The Company’s vacation ownership contract receivables are securitized through bankruptcy-remote special purpose entities (“SPE”) that are consolidated with 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 364-day, non-recourse vacation ownership bank conduit facility with a term through September 2011 and borrowing capacity of $600 million. As of March 31, 2011, our 364-day facility has remaining borrowing capacity of $452 million.
 
(c)   This debt is collateralized by $2,778 million, $2,865 million, $2,874 million, $2,862 million and $2,712 million of underlying vacation ownership contract receivables and related assets as of March 31, 2011, December 31, 2010, September 30, 2010, June 30, 2010 and March 31, 2010, respectively.
 
(d)   During March 2010, the Company replaced its five-year $900 million revolving credit facility with a $950 million revolving credit facility that expires on October 1, 2013. During the fourth quarter of 2010, the total capacity of this facility was increased to $970 million. During the first quarter of 2011, the total capacity was further increased to $980 million. As of March 31, 2011, the Company has $13 million of outstanding letters of credit and a remaining borrowing capacity of $962 million.
 
(e)   Represents senior unsecured notes issued by the Company during December 2006. The balance as of March 31, 2011 represents $800 million aggregate principal less $2 million of unamortized discount and a $1 million fair value hedge derivative.
 
(f)   Represents senior unsecured notes issued by the Company during May 2009. The balance as of March 31, 2011 represents $250 million aggregate principal less $9 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 its 3.50% convertible notes. During the first quarter of 2011, the Company repurchased a portion of its outstanding 3.50% convertible notes, primarily through the completion of a cash tender offer. The following table details the components of the convertible notes:
                                         
    March 31,
2011
    December 31,
2010
    September 30,
2010
    June 30,
2010
      March 31,   
2010
 
Debt principal
  $ 17     $ 116     $ 138     $ 230     $ 230  
Unamortized discount
    (1 )     (12 )     (17 )     (31 )     (35 )
 
                             
Debt less discount
    16       104       121       199       195  
Fair value of conversion feature (*)
    25       162       168       163       253  
 
                             
Convertible notes
  $ 41     $ 266     $ 289     $ 362     $ 448  
 
                             
 
  (*)   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 March 31, 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 March 31, 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 March 31, 2011 represents $250 million aggregate principal less $5 million of unamortized discount.


 

Table 6
Wyndham Worldwide Corporation
BRAND SYSTEM DETAILS
                                         
   
As of and For the Three Months Ended March 31, 2011
 
                                    Average Revenue
 
Brand   Number of Properties     Number of Rooms     Average
Occupancy Rate
    Average Daily
Rate (ADR)
    Per Available
Room (RevPAR)
 
   
Lodging
                                       
Wyndham Hotels and Resorts
    94       25,521       53.3 %   $ 106.57     $ 56.84  
 
Tryp by Wyndham
    92       13,420       48.3 %   $ 111.27     $ 53.75  
 
Wingate by Wyndham
    165       15,134       55.8 %   $ 78.31     $ 43.68  
 
Hawthorn Suites by Wyndham
    75       7,028       57.6 %   $ 74.22     $ 42.73  
 
Ramada
    888       117,278       45.4 %   $ 73.37     $ 33.30  
 
Baymont
    261       21,886       41.2 %   $ 59.02     $ 24.33  
 
Days Inn
    1,877       150,214       40.5 %   $ 58.19     $ 23.58  
 
Super 8
    2,185       137,260       43.9 %   $ 51.41     $ 22.56  
 
Howard Johnson
    464       46,080       41.1 %   $ 57.28     $ 23.56  
 
Travelodge
    434       31,920       40.8 %   $ 59.70     $ 24.34  
 
Microtel Inns & Suites
    316       22,528       46.3 %   $ 55.03     $ 25.46  
 
Knights Inn
    339       20,679       33.7 %   $ 40.75     $ 13.74  
 
Dream
    3       566       73.1 %   $ 177.95     $ 130.02  
 
Night
    1       72       93.8 %   $ 298.78     $ 280.20  
                               
Total Lodging
    7,194       609,586       43.5 %   $ 63.66     $ 27.71  
 
Vacation Ownership
                                       
Wyndham Vacation Ownership resorts
    162       20,736       N/A       N/A       N/A  
                               
 
Total Wyndham Worldwide
    7,356       630,322                          
                               
 
   
As of and For the Three Months Ended March 31, 2010
 
                                    Average Revenue  
Brand   Number of Properties     Number of Rooms     Average
Occupancy Rate
    Average Daily
Rate (ADR)
    Per Available
Room
(RevPAR)
 
   
Lodging
                                       
Wyndham Hotels and Resorts
    94       25,140       51.2 %   $ 112.88     $ 57.74  
 
Wingate by Wyndham
    164       15,020       51.8 %   $ 77.42     $ 40.09  
 
Hawthorn Suites by Wyndham
    87       8,106       49.2 %   $ 76.99     $ 37.89  
 
Ramada
    899       117,555       43.2 %   $ 72.76     $ 31.42  
 
Baymont
    242       20,529       41.3 %   $ 57.68     $ 23.83  
 
Days Inn
    1,860       149,770       38.7 %   $ 57.80     $ 22.36  
 
Super 8
    2,134       132,910       41.1 %   $ 52.93     $ 21.76  
 
Howard Johnson
    489       46,588       38.8 %   $ 57.69     $ 22.37  
 
Travelodge
    452       33,604       38.1 %   $ 61.40     $ 23.39  
 
Microtel Inns & Suites
    317       22,550       43.5 %   $ 54.99     $ 23.94  
 
Knights Inn
    347       21,155       33.1 %   $ 38.94     $ 12.89  
 
Other
    2       404       N/A       N/A       N/A  
                               
Total Lodging
    7,087       593,331       41.1 %   $ 62.78     $ 25.81  
 
Vacation Ownership
                                       
Wyndham Vacation Ownership resorts
    159       20,559       N/A       N/A       N/A  
                               
 
Total Wyndham Worldwide
    7,246       613,890                          
                               
 
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)
                                                 
            Reported     Legacy     Asset     Restructuring     Adjusted  
    Net Revenues     EBITDA     Adjustments(b)     Impairment(c)     Costs(d)     EBITDA  
             
Three months ended March 31, 2011            
Lodging
  $ 149     $ 27     $     $ 13     $     $ 40  
Vacation Exchange and Rentals
    356       93                         93  
Vacation Ownership
    450       97                   (1 )     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  
           
 
(a)   Includes the elimination of transactions between segments.
 
(b)   Relates to the net benefit from the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation.
 
(c)   Relates to a non-cash impairment charge to reduce the value of an international joint venture in the Company’s hotel business.
 
(d)   Relates to the reversal of costs incurred as a result of various strategic initiatives commenced by the Company during 2008.


 

Table 7
(2 of 2)
Wyndham Worldwide
NON-GAAP RECONCILIATIONS
(In millions)
                                                 
            Reported     Acquisition     Legacy     Restructuring     Adjusted  
    Net Revenues     EBITDA     Costs(b)     Adjustments(c)     Costs(d)     EBITDA  
             
Three months ended March 31, 2010            
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 foot 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.
 
(d)   Relates to costs incurred as a result of a strategic initiative commenced by the Company during 2010.


 

Table 8
(1 of 2)
Wyndham Worldwide Corporation
NON-GAAP FINANCIAL INFORMATION
(In millions, except per share data)
                                                 
    Three Months Ended March 31, 2011  
            Early                          
    As Reported     Extinguishment
of Debt
    Legacy
Adjustments
    Asset Impairment     Restructuring
Costs
    As Adjusted  
Net revenues
                                               
Service fees and membership
  $ 495                                     $ 495  
Vacation ownership interest sales
    222                                       222  
Franchise fees
    101                                       101  
Consumer financing
    102                                       102  
Other
    32                                       32  
 
                                   
Net revenues
    952                               952  
 
                                   
 
                                               
Expenses
                                               
Operating
    411                                       411  
Cost of vacation ownership interests
    32                                       32  
Consumer financing interest
    23                                       23  
Marketing and reservation
    137                                       137  
General and administrative
    140               7   (b)                     147  
Asset impairment
    13                       (13)   (d)              
Restructuring
    (1 )                             1   (e)      
Depreciation and amortization
    45                                       45  
 
                                   
Total expenses
    800             7       (13 )     1       795  
 
                                   
 
                                               
Operating income
    152             (7 )     13       (1 )     157  
Other income, net
    (6 )             4   (c)                     (2 )
Interest expense
    44       (12)   (a)                             32  
Interest income
    (2 )                                     (2 )
 
                                   
 
                                               
Income before income taxes
    116       12       (11 )     13       (1 )     129  
Provision for income taxes
    44       5   (f)     (3)   (f)     5   (f)     (1 )  (f)     50  
 
                                   
 
                                               
Net income
  $ 72     $ 7     $ (8 )   $ 8     $     $ 79  
 
                                   
 
                                               
Earnings per share
                                               
Basic
  $ 0.42     $ 0.04     $ (0.04 )   $ 0.04     $     $ 0.46  
Diluted
    0.41       0.04       (0.04 )     0.04             0.44  
 
                                               
Weighted average shares outstanding
                                               
Basic
    173       173       173       173       173       173  
Diluted
    179       179       179       179       179       179  
 
Note:   EPS amounts may not foot due to rounding.
 
(a)   Relates to costs incurred for the early repurchase of a portion of the Company’s 3.50% convertible notes during the first quarter of 2011.
 
(b)   Relates to the net benefit from the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation.
 
(c)   Relates to a gain on the redemption of a preferred stock investment allocated to the Company in connection with our separation.
 
(d)   Relates to a non-cash impairment charge to reduce the value of an international joint venture in the Company’s hotel business.
 
(e)   Relates to the reversal of costs incurred as a result of various strategic initiatives commenced by the Company during 2008.
 
(f)   Relates to the tax effect of the adjustments.


 

Table 8
(2 of 2)
Wyndham Worldwide Corporation
NON-GAAP FINANCIAL INFORMATION
(In millions, except per share data)
                                         
    Three Months Ended March 31, 2010  
            Early                    
    As Reported     Extinguishment of
Debt
    Acquisition Costs     Legacy
Adjustments
    As Adjusted  
Net revenues
                                       
Service fees and membership
  $ 424                             $ 424  
Vacation ownership interest sales
    217                               217  
Franchise fees
    92                               92  
Consumer financing
    105                               105  
Other
    48                               48  
 
                             
Net revenues
    886                         886  
 
                             
 
                                       
Expenses
                                       
Operating
    381               (4 )  (b)             377  
Cost of vacation ownership interests
    36                               36  
Consumer financing interest
    24                               24  
Marketing and reservation
    123                               123  
General and administrative
    148                       (2 )  (c)     146  
Depreciation and amortization
    44                               44  
 
                             
Total expenses
    756             (4 )     (2 )     750  
 
                             
 
                                       
Operating income
    130             4       2       136  
Other income, net
    (1 )                             (1 )
Interest expense
    50       (16 )  (a)                     34  
Interest income
    (1 )                             (1 )
 
                             
 
                                       
Income before income taxes
    82       16       4       2       104  
Provision for income taxes
    32       6   (d)     1   (d)     1   (d)     40  
 
                             
 
                                       
Net income
  $ 50     $ 10     $ 3     $ 1     $ 64  
 
                             
 
                                       
Earnings per share
                                       
Basic
  $ 0.28     $ 0.05     $ 0.02     $ 0.01     $ 0.36  
Diluted
    0.27       0.05       0.02       0.01       0.34  
 
                                       
Weighted average shares outstanding
                                       
Basic
    179       179       179       179       179  
Diluted
    186       186       186       186       186  
 
Note:   EPS amounts may not foot 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.
 
(b)   Relates to costs incurred in connection with the Company’s acquisition of Hoseasons during March 2010.
 
(c)   Relates to the net expense from the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation.
 
(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 minus capital expenditures, equity investments and development advances, 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 hotel 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:
                 
    Three Months Ended March 31,  
    2011     2010  
Net cash provided by operating activities
  $ 229     $ 205  
Less: Property and equipment additions
    (41 )     (36 )
Less: Equity investments and development advances
    (3 )     (3 )
 
           
Free cash flow
  $ 185     $ 166  
 
           
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                              
2011   Q1     Q2     Q3     Q4     Full Year  
     
Gross VOI sales
  $ 319       N/A       N/A       N/A       N/A  
Less: Sales under the WAAM
    (18 )     N/A       N/A       N/A       N/A  
     
Gross VOI sales, net of WAAM sales
    302       N/A       N/A       N/A       N/A  
Less: Loan loss provision
    (79 )     N/A       N/A       N/A       N/A  
     
Vacation ownership interest sales
  $ 222       N/A       N/A       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 foot 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):
                                         
      Q1   Q2     Q3     Q4     Full Year  
     
2011
  $ 18       N/A       N/A       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 foot across due to rounding.