EXHIBIT 99.1

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Wyndham Worldwide Reports Fourth Quarter and Full Year 2014 Earnings

Fourth Quarter Adjusted Diluted EPS Growth of 23%

Annual Free Cash Flow Target Increased to $800 Million

Increases Dividend 20%

  

PARSIPPANY, N.J. (February 10, 2015) – Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months and year ended December 31, 2014.

 

Highlights:

 

·Fourth quarter adjusted diluted earnings per share (EPS) was $0.90, an increase of 23% from adjusted diluted EPS of $0.73 in the fourth quarter of 2013. Reported diluted EPS was $0.65 in the fourth quarter of 2014, unchanged from the same period in 2013.

 

·Full year adjusted diluted EPS was $4.53, an increase of 18% from adjusted diluted EPS of $3.83 for the prior year period. Reported diluted EPS was $4.18 compared with $3.21 for the prior year period.

 

·During the quarter, the Company repurchased 2.1 million shares of its common stock for $171 million. For the full year, the Company spent $652 million to repurchase 8.6 million shares of its common stock.

 

·The Company’s Board of Directors authorized an increase in the quarterly cash dividend to $0.42 from $0.35 per share, beginning with the dividend that is expected to be declared in the first quarter of 2015.

 

·The Company increased its annual free cash flow target to $800 million from $750 million beginning in 2015.

 

“A strong fourth quarter led to 18% growth in full-year adjusted EPS, capping another year of double-digit earnings growth,” said Stephen P. Holmes, chairman and CEO. “All three of our businesses performed well and we’re enthusiastic about the opportunities and initiatives that will drive growth going forward. As an indication of confidence in our prospects, the Board of Directors approved a 20% increase in our quarterly dividend.”

 

 
 

 

FOURTH QUARTER 2014 OPERATING RESULTS

Fourth quarter revenues were $1.2 billion, an increase of 3% from the prior year period, or 4% in constant currency. The increase reflects growth in all of the Company’s business segments.

 

Adjusted net income was $112 million, or $0.90 per diluted share, compared with $96 million, or $0.73 per diluted share for the same period in 2013. The increases reflect stronger operating results in the Company’s lodging and vacation exchange and rentals businesses and lower net interest expense. EPS also benefited from the Company’s share repurchase program, which decreased weighted average diluted share count by 5% year-over-year.

 

Reported net income for the fourth quarter of 2014 was $81 million, or $0.65 per diluted share, compared with $86 million, or $0.65 per diluted share, for the fourth quarter of 2013. Reported net income in both periods reflects several items excluded from adjusted net income. The net result of these items unfavorably impacted fourth quarter 2014 net income by $31 million and unfavorably impacted fourth quarter 2013 net income by $10 million. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

 

FULL YEAR 2014 OPERATING RESULTS

Revenues for full year 2014 were $5.3 billion, an increase of 5% over the prior year period. Adjusted net income for the full year 2014 was $573 million, or $4.53 per diluted share, compared with $515 million, or $3.83 per diluted share, for the prior year. The increases reflect stronger operating results across all of the Company’s businesses. EPS also benefited from the Company’s share repurchase program, which decreased weighted average diluted share count by 6% compared with 2013.

 

Reported net income for full year 2014 was $529 million, or $4.18 per diluted share, compared with reported net income of $432 million, or $3.21 per diluted share, for the prior year period. Reported net income reflects several items excluded from adjusted net income. The net result of these items unfavorably impacted full year 2014 net income by $44 million and unfavorably impacted full year 2013 net income by $83 million. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

 

FULL YEAR 2014 CASH FLOW

Free cash flow was $749 million for the year ended December 31, 2014, compared with $770 million for the same period in 2013. The Company defines free cash flow as net cash provided by operating activities less capital expenditures. For the year ended December 31, 2014, net cash provided by operating activities was $984 million, compared with $1,008 million in the prior year period.

 

 
 

 

BUSINESS UNIT RESULTS

 

Lodging (Wyndham Hotel Group)

Revenues were $267 million in the fourth quarter of 2014, a 9% increase over the fourth quarter of 2013.

 

Domestic RevPAR increased 8.6%, partially offset by a 7.8% decline in international RevPAR, resulting in a 3.0% increase in total system-wide RevPAR compared with the fourth quarter of 2013. In constant currency, total system-wide RevPAR increased 5.0%.

 

Adjusted EBITDA for the fourth quarter of 2014 was $79 million, a 23% increase compared with the fourth quarter of 2013. The increase primarily reflects higher RevPAR and the favorable timing of loyalty and marketing expenses compared with the same period last year.

 

As of December 31, 2014, the Company’s hotel system consisted of approximately 7,650 properties and approximately 661,000 rooms, a 2.4% room increase compared with the fourth quarter of 2013. The development pipeline included approximately 960 hotels and 117,000 rooms, of which 57% were international and 64% were new construction.

 

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)

Revenues were $311 million in the fourth quarter of 2014, a 2% increase over the fourth quarter of 2013. In constant currency, revenues were up 6%.

 

Exchange revenues were $150 million, flat compared with the fourth quarter of 2013. In constant currency, exchange revenues increased 2%, as the average number of members increased 2.2% and exchange revenue per member was flat.

 

Vacation rental revenues were $144 million, a 4% increase over the fourth quarter of 2013. In constant currency, vacation rental revenues were up 11%, reflecting a 7.3% increase in transaction volume and a 3.3% increase in the average net price per vacation rental.

 

Adjusted EBITDA for the fourth quarter of 2014 was $39 million, an 8% increase compared with the fourth quarter of 2013. On a currency-neutral basis, adjusted EBITDA increased 14% compared with the prior year period due to the revenue increases and cost controls.

 

 
 

 

Vacation Ownership (Wyndham Vacation Ownership)

Revenues were $668 million in the fourth quarter of 2014, a 2% increase over the fourth quarter of 2013, primarily reflecting higher resort management fees.

 

Gross VOI sales were $470 million in the fourth quarter of 2014, a decrease of 4% compared with the fourth quarter of 2013, reflecting a 1.4% decline in volume per guest and a 2.1% decline in tour flow.

 

Net VOI sales were flat compared with the fourth quarter of 2013, reflecting a lower provision for loan loss resulting from improved portfolio performance.

 

EBITDA for the fourth quarter of 2014 was $172 million, flat compared with the fourth quarter of 2013.

 

Other Items

·The Company repurchased 2.1 million shares of common stock for $171 million during the fourth quarter of 2014. For the full-year 2014, the Company purchased 8.6 million shares of common stock for $652 million. From January 1 through February 9, 2015, the Company repurchased an additional 0.8 million shares for $68 million. The Company’s remaining share repurchase authorization totals $948 million as of February 9, 2015.
·Reported net interest expense in the fourth quarter of 2014 was $25 million, compared with $32 million in the fourth quarter of 2013, primarily reflecting the benefit of lower interest rates associated with fixed-for-floating interest rate swaps.

 

Balance Sheet Information as of December 31, 2014:

·Cash and cash equivalents of $183 million, compared with $194 million at December 31, 2013
·Vacation ownership contract receivables, net, of $2.7 billion, compared with $2.8 billion at December 31, 2013
·Vacation ownership and other inventory of $1.2 billion, compared with $1.0 billion at December 31, 2013
·Securitized vacation ownership debt of $2.2 billion, compared with $1.9 billion at December 31, 2013
·Long-term debt of $2.9 billion, unchanged from December 31, 2013. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.3 billion as of December 31, 2014, unchanged from December 31, 2013

 

A schedule of debt is included in Table 5 of this press release.

 

 
 

 

Outlook

 

Note to Editors: The guidance excludes possible future share repurchases, while analysts’ estimates often include share repurchases. This results in discrepancies between Company guidance and database consensus forecasts.

 

For the full year 2015, the Company provides the following guidance:

·Revenues of approximately $5.450 - $5.550 billion from $5.400 - $5.500 billion.
·Adjusted EBITDA of approximately $1.285 - $1.315 billion from $1.300 - $1.330 billion, reflecting the adverse impact of foreign exchange partially offset by stronger underlying performance. Based on January 31, 2015 rates, foreign exchange movements have had a $25 million adverse effect on 2015 EBITDA guidance since the Company’s initial 2015 guidance, which was issued on October 24, 2014. The Company’s 2015 guidance reflects a $34 million adverse impact from foreign exchange compared with 2014 full year results.
·Adjusted EPS of approximately $4.75 - $4.90 based on a diluted share count of 123 million from $4.70 - $4.85 based on a diluted share count of 125 million.

 

Conference Call Information

Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company’s results, outlook and guidance on Tuesday, February 10, 2015 at 8:30 a.m. EST. Listeners may access the webcast live through the Company’s website at www.wyndhamworldwide.com/investors. An archive of this webcast will be available on the website for approximately 90 days beginning at noon EST on February 10, 2015. The conference call may also be accessed by dialing 800-369-2125 and providing the passcode "WYNDHAM." Listeners are urged to call at least 10 minutes prior to the scheduled start time. A telephone replay will be available for approximately 90 days beginning at noon EST on February 10, 2015, at 888-484-4840.

 

The Company will post guidance information on its website following the conference call.

 

 
 

 

Presentation of Financial Information

Financial information discussed in this press release includes non-GAAP measures, which include or exclude certain items.  These non-GAAP measures differ from reported GAAP results and are intended to illustrate what management believes are relevant period-over-period comparisons and are helpful to investors as an additional tool for further understanding and assessing the Company’s ongoing core operating performance. Exclusion of items in our non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring. A complete reconciliation of reported GAAP results to the comparable non-GAAP information appears in the financial tables section of the press release. It is not practicable to provide a reconciliation of forecasted adjusted EBITDA and adjusted EPS to the most directly comparable GAAP measures because certain items cannot be reasonably estimated or predicted at this time. Any such items could be significant to the Company’s reported results.

 

About Wyndham Worldwide Corporation

One of the world’s largest hospitality companies, Wyndham Worldwide (NYSE: WYN) provides a wide range of hospitality services and products through its global portfolio of world-renowned brands.  The world’s largest hotel company based on the number of properties, Wyndham Hotel Group is home to many of the world’s best-known hotel brands, with over 7,600 franchised hotels and approximately 661,000 hotel rooms worldwide. Wyndham Exchange & Rentals is the worldwide leader in vacation exchange and the world’s largest professionally managed vacation rentals business, providing more than 5 million leisure-bound families annually with access to over 107,000 vacation properties in over 100 countries through its prominent exchange and vacation rental brands. The industry and timeshare ownership market leader, Wyndham Vacation Ownership develops, markets, and sells vacation ownership interests and provides consumer financing to owners through its network of over 200 vacation ownership resorts serving approximately 904,000 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. For more information, please visit www.wyndhamworldwide.com.

 

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, conveying management’s expectations as to the future based on plans, estimates and projections at the time the Company makes the statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements contained in this press release include statements related to the Company’s revenues, earnings, dividends and related financial and operating measures.

 

 
 

 

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Factors that could cause actual results to differ materially from those in the forward-looking statements include general economic conditions, the performance of the financial and credit markets, the economic environment for the hospitality industry, the impact of war, terrorist activity or political strife, operating risks associated with the hotel, vacation exchange and rentals and vacation ownership businesses, as well as those described in the Company’s Annual Report on Form 10-K, filed with the SEC on February 14, 2014. Except for the Company’s ongoing obligations to disclose material information under the federal securities laws, it undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

 

# # #

 

Investor and Media contact:

Margo C. Happer

Senior Vice President, Investor Relations

Wyndham Worldwide Corporation

(973) 753-6472

margo.happer@wyn.com

 

Barry Goldschmidt

Vice President, Investor Relations

Wyndham Worldwide Corporation

(973) 753-7703

barry.goldschmidt@wyn.com

 

 
 

 

Table 1

(1 of 2)

Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)

 

In addition to other measures, management evaluates the operating results of each of its reportable segments based upon net revenues and “EBITDA”, which is defined as net income before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing interest) and income taxes, each of which is presented on the Company’s Consolidated Statements of Income. The Company believes that EBITDA is a useful measure of performance for the Company's 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 attributable to Wyndham shareholders for the three months ended December 31, 2014 and 2013:

 

   Three Months Ended December 31, 
   2014   2013 
   Net Revenues   EBITDA   Net Revenues   EBITDA 
Lodging  $267   $77   $245   $47 
Vacation Exchange and Rentals   311    2    305    36 
Vacation Ownership   668    172    658    172 
Total Reportable Segments   1,246    251    1,208    255 
Corporate and Other (a)   (15)   (36)   (13)   (33)
Total Company  $1,231   $215   $1,195   $222 

 

Reconciliation of EBITDA to Net income attributable to Wyndham shareholders

 

   Three Months Ended December 31, 
   2014   2013 
EBITDA  $215   $222 
Depreciation and amortization   58    56 
Interest expense   29    34 
Interest income   (4)   (2)
Income before income taxes   132    134 
Provision for income taxes   51    48 
Net income attributable to Wyndham shareholders  $81   $86 

 

 

(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 December 31, 2014 and 2013 (for a description of adjustments by segment, see Table 7):

 

   Three Months Ended December 31, 
   2014   2013 
   Net Revenues   Adjusted
EBITDA
   Net Revenues   Adjusted
EBITDA
 
Lodging  $267   $79   $245   $64 
Vacation Exchange and Rentals   311    39    305    36 
Vacation Ownership   668    172    658    172 
Total Reportable Segments   1,246    290    1,208    272 
Corporate and Other   (15)   (38)   (13)   (33)
Total Company  $1,231   $252   $1,195   $239 

 

 
 

 

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 twelve months ended December 31, 2014 and 2013:

 

   Twelve Months Ended December 31, 
   2014   2013 
   Net Revenues   EBITDA   Net Revenues   EBITDA 
Lodging  $1,101   $327   $1,027   $279 
Vacation Exchange and Rentals   1,604    335    1,526    356 
Vacation Ownership   2,638    660    2,515    619 
Total Reportable Segments   5,343    1,322    5,068    1,254 
Corporate and Other (a)   (62)   (141)   (59)   (122)
Total Company  $5,281   $1,181   $5,009   $1,132 

 

Reconciliation of EBITDA to Net income attributable to Wyndham shareholders

 

   Twelve Months Ended December 31, 
   2014   2013 
EBITDA  $1,181   $1,132 
Depreciation and amortization   233    216 
Interest expense   113    131 
Early extinguishment of debt   -    111 
Interest income   (10)   (9)
Income before income taxes   845    683 
Provision for income taxes   316    250 
Net income   529    433 
Net income attributable to noncontrolling interest   -    (1)
Net income attributable to Wyndham shareholders  $529   $432 

 

 

(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 twelve months ended December 31, 2014 and 2013 (for a description of adjustments by segment, see Table 7):

 

   Twelve Months Ended December 31, 
   2014   2013 
   Net Revenues   Adjusted
EBITDA
   Net Revenues   Adjusted
EBITDA
 
Lodging  $1,101   $340   $1,027   $296 
Vacation Exchange and Rentals   1,604    380    1,526    356 
Vacation Ownership   2,638    660    2,515    621 
Total Reportable Segments   5,343    1,380    5,068    1,273 
Corporate and Other   (62)   (142)   (59)   (121)
Total Company  $5,281   $1,238   $5,009   $1,152 

 

 
 

 

Table 2

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

 

   Three Months Ended   Twelve Months Ended 
   December 31,   December 31, 
   2014   2013   2014   2013 
Net revenues                    
Service and membership fees  $508   $496   $2,431   $2,329 
Vacation ownership interest sales   385    384    1,485    1,379 
Franchise fees   151    139    632    599 
Consumer financing   108    108    427    426 
Other   79    68    306    276 
Net revenues   1,231    1,195    5,281    5,009 
                     
Expenses                    
Operating   542    517    2,262    2,161 
Cost of vacation ownership interests   42    48    171    155 
Consumer financing interest   18    18    71    78 
Marketing and reservation   188    180    802    751 
General and administrative   189    193    755    720 
Loss on sale and asset impairments   27    8    35    8 
Restructuring   12    9    11    10 
Depreciation and amortization   58    56    233    216 
Total expenses   1,076    1,029    4,340    4,099 
                     
Operating income   155    166    941    910 
Other income, net   (2)   -    (7)   (6)
Interest expense   29    34    113    131 
Early extinguishment of debt   -    -    -    111 
Interest income   (4)   (2)   (10)   (9)
                     
Income before income taxes   132    134    845    683 
Provision for income taxes   51    48    316    250 
Net income   81    86    529    433 
Net income attributable to noncontrolling interest   -    -    -    (1)
Net income attributable to Wyndham shareholders  $81   $86   $529   $432 
                     
Earnings per share                    
Basic  $0.66   $0.66   $4.22   $3.25 
Diluted   0.65    0.65    4.18    3.21 
                     
Weighted average shares outstanding                    
Basic   122    129    125    133 
Diluted   124    131    127    135 

 

 

 

Note: For a description of adjustments to Net Income, see Table 8.

 

 
 

 

Table 3

(1 of 2)

Wyndham Worldwide Corporation

OPERATING STATISTICS

 

The following operating statistics are the drivers of our revenues and therefore provide an enhanced understanding of our businesses:

 

   Year   Q1   Q2   Q3   Q4   Full Year 
Lodging                              
Number of Rooms   2014    646,900    650,200    655,300    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 
    2011    609,600    612,900    611,200    613,100    N/A 
                               
RevPAR   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 
    2011   $27.71   $35.38   $39.49   $30.65   $33.34 
                               
Vacation Exchange and Rentals                              
Average Number of Members (in 000s)   2014    3,727    3,748    3,777    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 
    2011    3,766    3,755    3,744    3,734    3,750 
                               
Exchange Revenue Per Member   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 
    2011   $205.64   $178.46   $172.38   $161.68   $179.59 
                               
Vacation Rental Transactions (in 000s) (a)   2014    429    376    455    293    1,552 
    2013    423    355    433    273    1,483 
    2012    418    325    390    259    1,392 
    2011    398    328    370    250    1,347 
                               
Average Net Price Per Vacation Rental (a)   2014   $410.04   $577.13   $727.40   $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 
    2011   $377.71   $549.09   $701.81   $497.04   $530.78 
                               
Vacation Ownership (a)                              
Gross Vacation Ownership Interest (VOI) Sales (in 000s) (b)   2014   $410,000   $496,000   $513,000   $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 
    2011   $319,000   $412,000   $455,000   $409,000   $1,595,000 
                               
Tours (in 000s) (c)   2014    170    208    225    191    794 
    2013    163    206    225    195    789 
    2012    148    186    207    183    724 
    2011    137    177    197    173    685 
                               
Volume Per Guest (VPG) (c)   2014   $2,272   $2,280   $2,158   $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 
    2011   $2,192   $2,227   $2,197   $2,296   $2,229 

 

 

Note: Full year amounts may not add across due to rounding.

(a)Includes the impact of acquisitions from the acquisition dates forward. Therefore, the operating statistics are not presented on a comparable basis.
(b)Includes Gross VOI sales under the Company's Wyndham Asset Affiliate Model (WAAM) Just-in-Time beginning in the second quarter of 2012 (see Table 9 for a reconciliation of Gross VOI sales to vacation ownership interest sales).
(c)Includes the impact of WAAM Just-in-Time related tours beginning in the second quarter of 2012.

 

ADDITIONAL DATA

 

   Year   Q1   Q2   Q3   Q4   Full Year 
Lodging                              
Number of Properties   2014    7,500    7,540    7,590    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 
    2011    7,190    7,220    7,190    7,210    N/A 
                               
Vacation Ownership                              
Provision for Loan Losses (in 000s) (*)   2014   $60,000   $70,000   $70,000   $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 
    2011   $79,000   $80,000   $96,000   $83,000   $339,000 

 

 

Note: Full year amounts may not add across due to rounding.

(*)Represents provision for estimated losses on vacation ownership contract receivables originated during the period, which is recorded as a contra revenue to vacation ownership interest sales on the Consolidated Statements of Income.

 

 
 

 

Table 3

(2 of 2)

 

Wyndham Worldwide Corporation

OPERATING STATISTICS

 

GLOSSARY OF TERMS

 

Lodging

 

Number of Rooms: Represents the number of rooms at lodging properties at the end of the period which are either (i) under franchise and/or management agreements, or company owned, (ii) properties under affiliation agreements for which the Company receives a fee for reservation and/or other services provided and (iii) properties managed under a joint venture.

 

Average Occupancy Rate: Represents the percentage of available rooms occupied during the period.

 

Average Daily Rate (ADR): Represents the average rate charged for renting a lodging room for one day.

 

RevPAR: Represents revenue per available room and is calculated by multiplying average occupancy rate by ADR. Comparable RevPAR represents RevPAR of hotels which are included in both periods.

 

Vacation Exchange and Rentals

 

Average Number of Members: Represents members in our vacation exchange programs who paid annual membership dues as of the end of the period or who are within the allowed grace period. For additional fees, such participants are entitled to exchange intervals for intervals at other properties affiliated with the Company's vacation exchange business. In addition, certain participants may exchange intervals for other leisure-related services and products.

 

Exchange Revenue Per Member: Represents total annualized revenues generated from fees associated with memberships, exchange transactions, member-related rentals and other servicing for the period divided by the average number of vacation exchange members during the period.

 

Vacation Rental Transactions: Represents the number of transactions that are generated during the period in connection with customers booking their vacation rental stays through the Company. One rental transaction is recorded for each standard one-week rental.

 

Average Net Price Per Vacation Rental: Represents the net rental price generated from renting vacation properties to customers and other related rental servicing fees during the period divided by the number of vacation rental transactions during the period.

 

Vacation Ownership

 

Gross Vacation Ownership Interest Sales: Represents sales of vacation ownership interest (VOIs), including WAAM sales, before the net effect of percentage-of-completion accounting and loan loss provisions. See Table 9 for a reconciliation of Gross VOI sales to vacation ownership interest sales.

 

Tours: Represents the number of tours taken by guests in our efforts to sell VOIs.

 

Volume per Guest (VPG): Represents Gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) divided by the number of tours. The Company has excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel. See Table 9 for a detail of tele-sales upgrades for 2011-2014.

 

General

 

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

 

   2014   2013 
   Q1   Q2   Q3   Q4   Year   Q1   Q2   Q3   Q4   Year 
Lodging                                                  
Royalties and Franchise Fees  $68   $88   $100   $83   $339   $64   $79   $91   $75   $309 
Marketing, Reservation and Wyndham Rewards Revenues (a)   76    101    117    91    385    73    92    118    83    365 
Hotel Management Reimbursable Revenues (b)   37    39    39    39    154    25    38    37    35    135 
Intersegment Trademark Fees   9    11    11    10    41    8    10    11    10    39 
Owned Hotel Revenues   24    20    18    20    81    26    20    18    19    84 
Ancillary Revenues (c)   23    24    30    24    101    26    23    22    23    95 
Total Lodging   237    283    315    267    1,101    222    262    297    245    1,027 
                                                   
Vacation Exchange and Rentals                                                  
Exchange Revenues   187    168    162    150    667    193    168    158    150    669 
Rental Revenues   176    217    331    144    868    166    192    293    138    789 
Ancillary Revenues (d)   16    17    19    17    69    15    16    19    17    68 
Total Vacation Exchange and Rentals   379    402    512    311    1,604    374    376    470    305    1,526 
                                                   
Vacation Ownership                                                  
Vacation Ownership Interest Sales   303    382    415    385    1,485    263    347    384    384    1,379 
Consumer Financing   105    106    108    108    427    105    106    107    108    426 
Property Management Fees   143    145    150    142    581    146    141    143    137    567 
WAAM Fee-for-Service Commissions   33    30    18    16    98    24    30    33    20    107 
Ancillary Revenues (e)   9    10    13    17    47    11    6    10    9    36 
Total Vacation Ownership   593    673    704    668    2,638    549    630    677    658    2,515 
Total Reportable Segments  $1,209   $1,358   $1,531   $1,246   $5,343   $1,145   $1,268   $1,444   $1,208   $5,068 

 

   2012   2011 
   Q1   Q2   Q3   Q4   Year   Q1   Q2   Q3   Q4   Year 
Lodging                                                  
Royalties and Franchise Fees  $62   $80   $88   $71   $301   $58   $75   $85   $66   $284 
Marketing, Reservation and Wyndham Rewards Revenues (a)   68    99    98    80    345    54    75    94    76    299 
Hotel Management Reimbursable Revenues (b)   21    22    25    23    91    19    19    21    20    79 
Intersegment Trademark Fees (f)   8    9    9    8    34    1    2    3    4    10 
Owned Hotel Revenues   8    8    7    18    41    -    -    -    5    5 
Ancillary Revenues (c)   18    15    22    23    78    17    19    19    17    72 
Total Lodging   185    233    249    223    890    149    190    222    188    749 
                                                   
Vacation Exchange and Rentals                                                  
Exchange Revenues   188    162    157    153    660    194    168    161    150    673 
Rental Revenues   159    170    248    125    702    150    180    260    125    715 
Ancillary Revenues (d)   14    16    15    15    60    12    13    15    16    56 
Total Vacation Exchange and Rentals   361    348    420    293    1,422    356    361    436    291    1,444 
                                                   
Vacation Ownership                                                  
Vacation Ownership Interest Sales   271    342    373    337    1,323    222    313    320    295    1,150 
Consumer Financing   103    102    106    110    421    102    103    105    105    415 
Property Management Fees   110    108    117    125    460    110    108    105    101    424 
WAAM Fee-for-Service Commissions   12    11    4    6    33    10    11    23    21    65 
Ancillary Revenues (e)   5    7    8    12    32    6    6    6    5    23 
Total Vacation Ownership   501    570    608    590    2,269    450    541    559    527    2,077 
Total Reportable Segments  $1,047   $1,151   $1,277   $1,106   $4,581   $955   $1,092   $1,217   $1,006   $4,270 

 

 

Note: Full year amounts may not add across due to rounding.

(a)Marketing and reservation revenues represent fees the Company receives from franchised and managed hotels that are to be expended for marketing purposes or the operation of a centralized, brand-specific reservation system. These fees are typically based on a percentage of the gross room revenues of each hotel. Wyndham Rewards revenues represent fees the Company receives relating to its loyalty program.
(b)Primarily represents payroll costs in the hotel management business that the Company pays on behalf of property owners and for which it is reimbursed by the property owners. During 2014, such amounts include 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.
(d)Primarily includes fees generated from programs with affiliated resorts and homeowners.
(e)Primarily includes revenues associated with bonus points/credits that are provided as purchase incentives on VOI sales and fees generated from other non-core operations.
(f)During 2011, $3 million, $1 million and $2 million of intersegment trademark fees were recorded as a reduction of expenses in Q1, Q2 and Q3, respectively. As such, total intersegment trademark fees for 2011 were $16 million.

 

 
 

 

Table 5

Wyndham Worldwide Corporation

SCHEDULE OF DEBT

(In millions)

 

   December 31,
2014
   September 30,
2014
   June 30,
2014
   March 31,
2014
   December 31,
2013
 
                     
Securitized vacation ownership debt (a)                         
Term notes  $1,962   $1,670   $1,600   $1,823   $1,648 
Bank conduit facility (b)   203    271    291    156    262 
Total securitized vacation ownership debt (c)   2,165    1,941    1,891    1,979    1,910 
Less: Current portion of securitized vacation ownership debt   214    192    187    192    184 
Long-term securitized vacation ownership debt  $1,951   $1,749   $1,704   $1,787   $1,726 
                          
Debt:                         
Revolving credit facility (due July 2018) (d)  $25   $18   $16   $10   $23 
Commercial paper (e)   189    237    107    184    210 
$315 million 6.00% senior unsecured notes (due December 2016)(f)   317    317    318    318    318 
$300 million 2.95% senior unsecured notes (due March 2017)   299    299    299    299    298 
$14 million 5.75% senior unsecured notes (due February 2018)   14    14    14    14    14 
$450 million 2.50% senior unsecured notes (due March 2018)   448    448    448    447    447 
$40 million 7.375% senior unsecured notes (due March 2020)   40    40    40    40    40 
$250 million 5.625% senior unsecured notes (due March 2021)   247    247    246    246    246 
$650 million 4.25% senior unsecured notes (due March 2022) (g)   648    646    646    645    643 
$400 million 3.90% senior unsecured notes (due March 2023) (h)   410    401    403    395    387 
Capital leases   170    175    186    188    191 
Other   81    80    99    100    114 
Total long-term debt   2,888    2,922    2,822    2,886    2,931 
Less: Current portion of long-term debt   47    49    50    52    49 
Long-term debt  $2,841   $2,873   $2,772   $2,834   $2,882 

 

 

(a)The Company's vacation ownership contract receivables are securitized through bankruptcy-remote special purpose entities ("SPEs") that are consolidated within our financial statements. These bankruptcy-remote SPEs are legally separate from the Company. The receivables held by the bankruptcy-remote SPEs are not available to the Company's creditors and legally are not the Company's assets. Additionally, the creditors of these SPEs have no recourse to the Company for principal and interest.
(b)Represents a non-recourse vacation ownership bank conduit facility with a term through August 2016 and borrowing capacity of $650 million. As of December 31, 2014, this facility had a remaining borrowing capacity of $447 million.
(c)This debt is collateralized by $2,629 million, $2,326 million, $2,287 million, $2,328 million and $2,314 million of underlying vacation ownership contract receivables and related assets as of December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014 and December 31, 2013, respectively.
(d)Represents a $1.5 billion revolving credit facility that expires in July 2018. As of December 31, 2014, the Company had $2 million of outstanding letters of credit. After considering outstanding commercial paper borrowings of $189 million, the remaining borrowing capacity was $1.3 billion as of December 31, 2014.
(e)Represents commercial paper programs of $1.25 billion with a remaining borrowing capacity of $1.1 billion, as of December 31, 2014.
(f)Includes unamortized gains from the settlement of a derivative in the amount of $2 million as of December 31, 2014 and September 30, 2014, respectively, and $3 million as of June 30, 2014, March 31, 2014 and December 31, 2013, respectively.
(g)Includes a $3 million increase and $2 million decrease in the carrying value resulting from a fair value hedge derivative as of December 31, 2014 and December 31, 2013, respectively.
(h)Includes a $13 million increase and $10 million decrease in the carrying value resulting from a fair value hedge derivative as of December 31, 2014 and December 31, 2013, respectively.

 

 
 

 

Table 6

(1 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

 

   As of and For the Three Months Ended December 31, 2014 
Brand  Number of
Properties
   Number of Rooms   Average
Occupancy Rate
   Average Daily
Rate (ADR)
   Average Revenue
Per Available
Room (RevPAR)
 
                     
Lodging                         
Wyndham Hotels and Resorts   195    43,865    58.0%  $116.50   $67.53 
                          
TRYP by Wyndham   119    16,965    59.5%  $84.73   $50.44 
                          
Wingate by Wyndham   153    13,923    58.2%  $84.83   $49.35 
                          
Hawthorn Suites by Wyndham   97    9,620    63.1%  $75.65   $47.72 
                          
Ramada   837    115,923    51.1%  $78.04   $39.86 
                          
Baymont   369    29,727    47.1%  $64.64   $30.42 
                          
Days Inn   1,794    145,078    45.7%  $63.86   $29.18 
                          
Super 8   2,510    160,847    53.8%  $48.07   $25.85 
                          
Howard Johnson   429    45,919    46.7%  $62.82   $29.34 
                          
Travelodge   421    30,989    45.0%  $63.71   $28.68 
                          
Microtel Inns & Suites by Wyndham   323    23,138    56.1%  $67.28   $37.74 
                          
Knights Inn   398    24,832    42.1%  $45.61   $19.19 
                          
Total Lodging   7,645    660,826    50.6%  $67.27   $34.06 
                          
Vacation Ownership                         
Wyndham Vacation Ownership resorts   203    23,644    N/A    N/A    N/A 
                          
Total Wyndham Worldwide   7,848    684,470                

 

   As of and For the Three Months Ended December 31, 2013 
Brand  Number of
Properties
   Number of Rooms   Average
Occupancy Rate
   Average Daily
Rate (ADR)
   Average Revenue
Per Available
Room (RevPAR)
 
                     
Lodging                         
Wyndham Hotels and Resorts   170    37,569    54.5%  $120.69   $65.76 
                          
TRYP by Wyndham   113    16,216    57.4%  $97.16   $55.74 
                          
Wingate by Wyndham   159    14,559    56.0%  $83.38   $46.66 
                          
Hawthorn Suites by Wyndham   91    8,933    59.2%  $69.39   $41.10 
                          
Ramada   834    115,394    50.9%  $80.82   $41.13 
                          
Baymont   329    27,108    46.0%  $62.11   $28.60 
                          
Days Inn   1,817    146,959    44.3%  $62.20   $27.54 
                          
Super 8   2,391    152,648    52.2%  $49.36   $25.77 
                          
Howard Johnson   449    46,777    45.8%  $59.86   $27.39 
                          
Travelodge   432    32,012    44.2%  $63.13   $27.91 
                          
Microtel Inns & Suites by Wyndham   312    22,304    53.7%  $63.53   $34.11 
                          
Knights Inn   380    23,325    40.0%  $43.43   $17.37 
                          
Dream   5    989    74.6%  $249.45   $186.05 
                          
Night   3    630    63.3%  $172.81   $109.40 
                          
Total Lodging   7,485    645,423    49.1%  $67.36   $33.07 
                          
Vacation Ownership                         
Wyndham Vacation Ownership resorts   191    23,506    N/A    N/A    N/A 
                          
Total Wyndham Worldwide   7,676    668,929                

 

 

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 Year Ended December 31, 2014 
Brand  Number of
Properties
   Number of Rooms   Average
Occupancy Rate
   Average Daily
Rate (ADR)
   Average Revenue
Per Available
Room (RevPAR)
 
                     
Lodging                         
Wyndham Hotels and Resorts   195    43,865    61.8%  $115.17   $71.14 
                          
TRYP by Wyndham   119    16,965    61.9%  $90.45   $55.97 
                          
Wingate by Wyndham   153    13,923    63.6%  $86.61   $55.05 
                          
Hawthorn Suites by Wyndham   97    9,620    65.5%  $76.59   $50.19 
                          
Ramada   837    115,923    54.2%  $79.70   $43.22 
                          
Baymont   369    29,727    52.5%  $65.75   $34.51 
                          
Days Inn   1,794    145,078    51.0%  $65.68   $33.48 
                          
Super 8   2,510    160,847    57.2%  $50.86   $29.09 
                          
Howard Johnson   429    45,919    48.8%  $63.46   $30.96 
                          
Travelodge   421    30,989    51.1%  $67.75   $34.62 
                          
Microtel Inns & Suites by Wyndham   323    23,138    59.8%  $67.26   $40.23 
                          
Knights Inn   398    24,832    44.9%  $46.67   $20.94 
                          
Total Lodging   7,645    660,826    54.5%  $68.94   $37.57 
                          
Vacation Ownership                         
Wyndham Vacation Ownership resorts   203    23,644    N/A    N/A    N/A 
                          
Total Wyndham Worldwide   7,848    684,470                

 

   As of and For the Year Ended December 31, 2013 
Brand  Number of
Properties
   Number of Rooms   Average
Occupancy Rate
   Average Daily
Rate (ADR)
   Average Revenue
Per Available
Room (RevPAR)
 
                     
Lodging                         
Wyndham Hotels and Resorts   170    37,569    58.6%  $117.27   $68.74 
                          
TRYP by Wyndham   113    16,216    60.5%  $96.09   $58.16 
                          
Wingate by Wyndham   159    14,559    60.9%  $85.11   $51.82 
                          
Hawthorn Suites by Wyndham   91    8,933    62.6%  $71.46   $44.71 
                          
Ramada   834    115,394    53.0%  $80.19   $42.50 
                          
Baymont   329    27,108    51.3%  $63.14   $32.40 
                          
Days Inn   1,817    146,959    48.8%  $64.34   $31.42 
                          
Super 8   2,391    152,648    56.3%  $52.33   $29.45 
                          
Howard Johnson   449    46,777    47.7%  $62.06   $29.58 
                          
Travelodge   432    32,012    49.5%  $67.10   $33.23 
                          
Microtel Inns & Suites by Wyndham   312    22,304    57.6%  $64.42   $37.10 
                          
Knights Inn   380    23,325    42.0%  $45.04   $18.92 
                          
Dream   5    989    71.8%  $229.77   $164.88 
                          
Night   3    630    62.4%  $152.65   $95.18 
                          
Total Lodging   7,485    645,423    52.7%  $68.27   $36.00 
                          
Vacation Ownership                         
Wyndham Vacation Ownership resorts   191    23,506    N/A    N/A    N/A 
                          
Total Wyndham Worldwide   7,676    668,929                

 

 

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)

 

   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
 
Three months ended March 31, 2014                                             
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 7

(2 of 2)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION

(In millions)

 

   Net Revenues   Reported
EBITDA
   Legacy
Adjustments (b)
   Acquisition
Costs (c)
   Restructuring
Costs (d)
   Asset
Impairment (e)
   Adjusted
EBITDA
 
Three months ended March 31, 2013                                   
Lodging  $222   $58   $-   $-   $-   $-   $58 
Vacation Exchange and Rentals   374    94    -    -    -    -    94 
Vacation Ownership   549    111    -    2    -    -    113 
Total Reportable Segments   1,145    263    -    2    -    -    265 
Corporate and Other (a)   (12)   (29)   -    -    -    -    (29)
Total Company  $1,133   $234   $-   $2   $-   $-   $236 
                                    
Three months ended June 30, 2013                                   
Lodging  $262   $78   $-   $-   $-   $-   $78 
Vacation Exchange and Rentals   376    85    -    -    -    -    85 
Vacation Ownership   630    161    -    -    -    -    161 
Total Reportable Segments   1,268    324    -    -    -    -    324 
Corporate and Other (a)   (15)   (27)   -    -    -    -    (27)
Total Company  $1,253   $297   $-   $-   $-   $-   $297 
                                    
Three months ended September 30, 2013                                   
Lodging  $297   $95   $-   $-   $-   $-   $95 
Vacation Exchange and Rentals   470    141    -    -    -    -    141 
Vacation Ownership   677    176    -    -    -    -    176 
Total Reportable Segments   1,444    412    -    -    -    -    412 
Corporate and Other (a)   (17)   (33)   (1)   -    -    -    (34)
Total Company  $1,427   $379   $(1)  $-   $-   $-   $378 
                                    
Three months ended December 31, 2013                                   
Lodging  $245   $47   $-   $-   $9   $8   $64 
Vacation Exchange and Rentals   305    36    -    -    -    -    36 
Vacation Ownership   658    172    -    -    -    -    172 
Total Reportable Segments   1,208    255    -    -    9    8    272 
Corporate and Other (a)   (13)   (33)   -    -    -    -    (33)
Total Company  $1,195   $222   $-   $-   $9   $8   $239 
                                    
Twelve months ended December 31, 2013                                   
Lodging  $1,027   $279   $-   $-   $9   $8   $296 
Vacation Exchange and Rentals   1,526    356    -    -    -    -    356 
Vacation Ownership   2,515    619    -    2    -    -    621 
Total Reportable Segments   5,068    1,254    -    2    9    8    1,273 
Corporate and Other (a)   (59)   (122)   1    -    -    -    (121)
Total Company  $5,009   $1,132   $1   $2   $9   $8   $1,152 

 

 

Note: The sum of the quarters may not agree to the twelve months ended December 31, 2013 due to rounding.

(a)Includes the elimination of transactions between segments.
(b)Relates to a net (benefit)/expense from the resolution of and adjustment to certain contingent liabilities and assets resulting from the Company's separation from Cendant.
(c)Relates to costs incurred in connection with the acquisition of Midtown 45, a NYC property (January 2013).
(d)Relates to costs incurred as a result of an organizational realignment initiative.
(e)Relates primarily to a non-cash impairment charge from a partial write-down of the Hawthorn trademark.

 

 
 

 

Table 8

(1 of 4)

 

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

   Three Months Ended December 31, 2014 
   As Reported  

Legacy

Adjustments (a)

  

Restructuring

Costs (c)

  

Loss on Sale

and Asset

Impairment (d)

   As Adjusted
non-GAAP
 
Net revenues                         
Service and membership fees  $508   $    $    $    $508 
Vacation ownership interest sales   385                   385 
Franchise fees   151                   151 
Consumer financing   108                   108 
Other   79                   79 
Net revenues   1,231    -    -    -    1,231 
                          
Expenses                         
Operating   542                   542 
Cost of vacation ownership interests   42                   42 
Consumer financing interest   18                   18 
Marketing and reservation   188                   188 
General and administrative   189    2              191 
Loss on sale and asset impairment   27              (27)   - 
Restructuring   12         (12)        - 
Depreciation and amortization   58                   58 
Total expenses   1,076    2    (12)   (27)   1,039 
                          
Operating income   155    (2)   12    27    192 
Other income, net   (2)                  (2)
Interest expense   29                   29 
Interest income   (4)                  (4)
                          
Income before income taxes   132    (2)   12    27    169 
Provision for income taxes   51    (1)(b)   4(b)   3(b)   57 
                          
Net income attributable to Wyndham shareholders  $81   $(1)  $8   $24   $112 
                          
Earnings per share                         
Basic  $0.66   $(0.01)  $0.07   $0.20   $0.91 
Diluted   0.65    (0.01)   0.06    0.20    0.90 
                          
Weighted average shares outstanding                         
Basic   122    122    122    122    122 
Diluted   124    124    124    124    124 

 

 

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 benefit from the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.
(b)Relates to the tax effect of the adjustment.
(c)Relates to costs incurred as a result of organizational realignment initiatives at the Company's lodging and vacation exchange and rentals businesses.
(d)Relates to 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.

 

 
 

 

Table 8

(2 of 4)

 

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

   Twelve Months Ended December 31, 2014 
   As Reported  

Executive

Departure

Costs (a)

  

Venezuela

Currency

Devaluation (c)

  

Legacy

Adjustments (d)

  

VAT

Adjustment (f)

  

Restructuring

Costs (g)

  

Loss on Sale

and Asset

Impairments (h)

   As Adjusted
non-GAAP
 
Net revenues                                        
Service and membership fees  $2,431   $    $    $    $    $    $    $2,431 
Vacation ownership interest sales   1,485                                  1,485 
Franchise fees   632                                  632 
Consumer financing   427                                  427 
Other   306                                  306 
Net revenues   5,281    -    -    -    -    -    -    5,281 
                                         
Expenses                                        
Operating   2,262         (10)                       2,252 
Cost of vacation ownership interests   171                                  171 
Consumer financing interest   71                                  71 
Marketing and reservation   802                                  802 
General and administrative   755    (4)        1    2              754 
Loss on sale and asset impairments   35                             (35)   - 
Restructuring   11                        (11)        - 
Depreciation and amortization   233                                  233 
Total expenses   4,340    (4)   (10)   1    2    (11)   (35)   4,283 
                                         
Operating income   941    4    10    (1)   (2)   11    35    998 
Other income, net   (7)                                 (7)
Interest expense   113                   2              115 
Interest income   (10)                                 (10)
                                         
Income before income taxes   845    4    10    (1)   (4)   11    35    900 
Provision for income taxes   316    1(b)   1(b)   1(e)   (2)(b)   4(b)   6(b)   327 
                                         
Net income   529    3    9    (2)   (2)   7    29    573 
Net income attributable to noncontrolling interest   -    -    -    -    -    -    -    - 
                                         
Net income attributable to Wyndham shareholders  $529   $3   $9   $(2)  $(2)  $7   $29   $573 
                                         
Earnings per share                                        
Basic  $4.22   $0.02   $0.07   $(0.01)  $(0.02)  $0.06   $0.23   $4.57 
Diluted   4.18    0.02    0.07    (0.01)   (0.02)   0.06    0.23    4.53 
                                         
Weighted average shares outstanding                                        
Basic   125    125    125    125    125    125    125    125 
Diluted   127    127    127    127    127    127    127    127 

 

 

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 benefit 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 (i) costs incurred as a result of organizational realignment initiatives at the Company's lodging and vacation exchange and rentals businesses, partially offset by (ii) the reversal of a portion of a restructuring reserve of $1 million established during the fourth quarter of 2013.
(h)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.

 

 
 

 

Table 8

(3 of 4)

 

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

   Three Months Ended December 31, 2013 
   As Reported  

Restructuring

Costs (a)

  

Asset

Impairment (b)

   As Adjusted
non-GAAP
 
Net revenues                    
Service fees and membership  $496   $   $   $496 
Vacation ownership interest sales   384              384 
Franchise fees   139              139 
Consumer financing   108              108 
Other   68              68 
Net revenues   1,195    -    -    1,195 
                     
Expenses                    
Operating   517              517 
Cost of vacation ownership interests   48              48 
Consumer financing interest   18              18 
Marketing and reservation   180              180 
General and administrative   193              193 
Loss on sale and asset impairments   8         (8)   - 
Restructuring   9    (9)        - 
Depreciation and amortization   56              56 
Total expenses   1,029    (9)   (8)   1,012 
                     
Operating income   166    9    8    183 
Interest expense   34              34 
Interest income   (2)             (2)
                     
Income before income taxes   134    9    8    151 
Provision for income taxes   48    4(c)   3(c)   55 
                     
Net income attributable to Wyndham shareholders  $86   $5   $5   $96 
                     
Earnings per share                    
Basic  $0.66   $0.04    0.04   $0.74 
Diluted   0.65    0.04    0.04    0.73 
                     
Weighted average shares outstanding                    
Basic   129    129    129    129 
Diluted   131    131    131    131 

 

 

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.

 

(a)Relates to costs incurred as a result of an organizational realignment initiative at the Company's lodging business.
(b)Relates primarly to a non-cash impairment charge from a partial write-down of the Hawthorn trademark 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)

 

   Twelve Months Ended December 31, 2013 
   As Reported  

Legacy

Adjustments (a)

  

Acquisition

Costs (c)

  

Early

Extinguishment

of Debt (e)

  

Restructuring

Costs (f)

  

Asset

Impairment (g)

   As Adjusted
non-GAAP
 
Net revenues                                   
Service fees and membership  $2,329   $   $   $   $   $   $2,329 
Vacation ownership interest sales   1,379                             1,379 
Franchise fees   599                             599 
Consumer financing   426                             426 
Other   276                             276 
Net revenues   5,009    -    -    -    -    -    5,009 
                                    
Expenses                                   
Operating   2,161         (2)                  2,159 
Cost of vacation ownership interests   155                             155 
Consumer financing interest   78                             78 
Marketing and reservation   751                             751 
General and administrative   720    (1)                       719 
Loss on sale and asset impairments   8                        (8)   - 
Restructuring   10                   (9)        1 
Depreciation and amortization   216                             216 
Total expenses   4,099    (1)   (2)   -    (9)   (8)   4,079 
                                    
Operating income   910    1    2    -    9    8    930 
Other income, net   (6)                            (6)
Interest expense   131                             131 
Early extinguishment of debt   111              (111)             - 
Interest income   (9)                            (9)
                                    
Income before income taxes   683    1    2    111    9    8    814 
Provision for income taxes   250    (2)(b)   1(d)   42(d)   4(d)   3(d)   298 
                                    
Net income   433    3    1    69    5    5    516 
Net loss attributable to noncontrolling interest   (1)   -    -    -    -    -    (1)
                                    
Net income attributable to Wyndham shareholders  $432   $3   $1   $69   $5   $5   $515 
                                    
Earnings per share                                   
Basic  $3.25   $0.02   $0.01   $0.51   $0.04   $0.04   $3.87 
Diluted   3.21    0.02    0.01    0.51    0.04    0.04    3.83 
                                    
Weighted average shares outstanding                                   
Basic   133    133    133    133    133    133    133 
Diluted   135    135    135    135    135    135    135 

 

 

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 liabilites and assets resulting from our separation from Cendant.
(b)Relates to a state tax accrual for legacy tax matters.
(c)Relates to the costs incurred in connection with the acquisition of Midtown 45, a NYC property (January 2013) at the Company's vacation ownership business.
(d)Relates to the tax effect of the adjustment.
(e)Represents costs incurred for the early repurchase of a portion of the Company's 7.375%, 5.75% and 6.00% senior unsecured notes and the remaining portion of the 9.875% senior unsecured notes.
(f)Relates to costs incurred as a result of an organizational realignment initiative at the Company's lodging business.
(g)Relates primarily to a non-cash impairment charge from a partial write-down of the Hawthorn trademark 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:

 

   Twelve Months Ended December 31, 
   2014   2013 
         
Net cash provided by operating activities  $984   $1,008 
Less: Property and equipment additions   (235)   (238)
Free cash flow  $749   $770 

 

GROSS VOI SALES  

 

The following table provides a reconciliation of Gross VOI sales (see Table 3) to vacation ownership interest sales (see Table 4):

 

Year                    
2014  Q1   Q2   Q3   Q4   Full Year 
                     
Gross VOI sales (a)  $410   $496   $513   $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 (a)  $303   $382   $415   $385   $1,485 
                          
2013                         
                          
Gross VOI sales (a)  $384   $481   $536   $488   $1,889 
Less: Sales under WAAM Fee-for-Service   (36)   (44)   (51)   (29)   (160)
Gross VOI sales, net of WAAM Fee-for-Service sales   347    437    486    459    1,729 
Less: Loan loss provision   (84)   (90)   (102)   (73)   (349)
Less: Impact of percentage of completion accounting   -    -    -    (1)   (1)
Vacation ownership interest sales (a)  $263   $347   $384   $384   $1,379 
                          
2012                         
                          
Gross VOI sales (a)  $384   $460   $502   $435   $1,781 
Less: Sales under WAAM Fee-for-Service   (17)   (18)   (5)   (10)   (49)
Gross VOI sales, net of WAAM Fee-for-Service sales   367    442    497    426    1,732 
Less: Loan loss provision   (96)   (100)   (124)   (89)   (409)
Vacation ownership interest sales (a)  $271   $342   $373   $337   $1,323 
                          
2011                         
                          
Gross VOI sales  $319   $412   $455   $409   $1,595 
Less: Sales under WAAM Fee-for-Service   (18)   (19)   (38)   (31)   (106)
Gross VOI sales, net of WAAM Fee-for-Service sales   302    393    417    378    1,489 
Less: Loan loss provision   (79)   (80)   (96)   (83)   (339)
Vacation ownership interest sales  $222   $313   $320   $295   $1,150 

 

 

Note: Amounts may not add due to rounding.

(a) Includes VOI sales under WAAM Just-in-Time beginning in the second quarter of 2012.

 

The following includes primarily tele-sales upgrades and other non-tour revenues, which are excluded from Gross VOI sales in the Company's VPG calculation (see Table 3):

 

   Q1   Q2   Q3   Q4   Full Year 
                     
2014  $25   $21   $27   $24   $97 
2013  $24   $18   $22   $25   $89 
2012  $27   $20   $22   $28   $97 
2011  $18   $18   $21   $11   $68