Exhibit 99.1

 

 

Wyndham Worldwide Reports Fourth Quarter and Full Year 2015 Results

Full Year Adjusted Diluted EPS increased 13% over 2014

Increases Dividend 19%

One Billion Dollar Increase in Share Repurchase Authorization

 

PARSIPPANY, N.J. (February 9, 2016) – Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months and year ended December 31, 2015.

 

HIGHLIGHTS:

 

·Fourth quarter adjusted diluted earnings per share (EPS) was $0.98, an increase of 9% from adjusted diluted EPS of $0.90 in the fourth quarter of 2014. Reported diluted EPS was $1.21, compared with $0.65 in the fourth quarter of 2014.

 

·Full year adjusted diluted earnings per share (EPS) was $5.11, an increase of 13% from adjusted diluted EPS of $4.53 in 2014. Reported diluted EPS was $5.14, compared with $4.18 in 2014.

 

·Fourth quarter 2015 revenues increased 6% and adjusted EBITDA increased 8% compared with the fourth quarter of 2014.

 

·The Company's Board of Directors authorized an increase in the quarterly cash dividend to $0.50 from $0.42 per share, beginning with the dividend that is expected to be declared in the first quarter of 2016.

 

·The Company repurchased 2.2 million shares of its common stock for $165 million during the quarter.

 

·The Company’s Board of Directors approved a $1 billion increase in the share repurchase authorization.

 

"With our strong fourth quarter financial results and sharp operational execution across our global portfolio of hospitality brands, we have delivered our sixth consecutive year of double-digit growth in full year adjusted diluted EPS," said Stephen P. Holmes, chairman and CEO. "As we enter 2016, we are confident in the strength and resilience of our business and remain focused on innovating and executing every day to deliver superior value for our shareholders and all our stakeholders. Reflecting our strong performance in 2015 and as an indication of our confidence in our prospects, the Board of Directors approved a 19% increase in our quarterly dividend and $1 billion increase in our share repurchase authorization.”

 

 
 

 

FOURTH QUARTER 2015 OPERATING RESULTS

Fourth quarter revenues were $1.3 billion, an increase of 6% from the prior year period.

 

Fourth quarter adjusted EBITDA was $273 million, compared with $252 million in the prior year period, an increase of 8%. Year-over-year adjusted EBITDA comparisons were adversely affected by foreign currency effects of $8 million in 2015. On a currency-neutral basis and excluding acquisitions and a divestiture, adjusted EBITDA also increased 8%.

 

Adjusted net income was $113 million, or $0.98 per diluted share, compared with $112 million, or $0.90 per diluted share for the same period in 2014. Net income and earnings per share benefited from strong operating results, but were reduced by foreign currency effects and higher interest expense. EPS also benefited from the Company’s share repurchase program.

 

Reported net income for the fourth quarter of 2015 was $140 million, or $1.21 per diluted share, compared with $81 million, or $0.65 per diluted share, for the fourth quarter of 2014. Reported net income in both periods reflects several items excluded from adjusted net income. The net result of these items favorably impacted fourth quarter 2015 net income by $27 million and unfavorably impacted fourth quarter 2014 net income by $31 million. Full reconciliations of adjusted net income to GAAP results appear in Table 8 of this press release. Year-over-year fourth quarter reported net income comparisons also were negatively impacted by foreign currency effects.

 

FULL YEAR 2015 OPERATING RESULTS

Revenues for full year 2015 were $5.5 billion, an increase of 5% over the prior year period.

 

Adjusted EBITDA for full year 2015 was $1,297 million, compared with $1,238 million in the prior year period. Year-over-year adjusted EBITDA comparisons were adversely affected by foreign currency effects of $46 million in 2015. On a currency-neutral basis and excluding acquisitions and a divestiture, adjusted EBITDA increased 8%.

 

Adjusted net income for the full year 2015 was $608 million, or $5.11 per diluted share, compared with $573 million, or $4.53 per diluted share, for the prior year. The increases reflect stronger operating results across all of the Company’s businesses, partially offset by foreign currency effects. EPS also benefited from the Company’s share repurchase program.

 

Reported net income for full year 2015 was $612 million, or $5.14 per diluted share, compared with reported net income of $529 million, or $4.18 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 favorably impacted full year 2015 net income by $4 million and unfavorably impacted full year 2014 net income by $44 million. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

 

 
 

 

FULL YEAR 2015 CASH FLOW

Free cash flow was $769 million for the year ended December 31, 2015, compared with $749 million for the same period in 2014. The increase reflects strong operating results and lower capital expenditures. In addition, 2015 free cash flow was unfavorably impacted by changes in foreign currency exchange rates. For the year ended December 31, 2015, net cash provided by operating activities was $991 million, compared with $984 million in the prior year period. The Company defines free cash flow as net cash provided by operating activities less capital expenditures.

 

FOURTH QUARTER 2015 BUSINESS UNIT RESULTS

 

Hotel Group

Revenues were $314 million in the fourth quarter of 2015, an 18% increase compared with the fourth quarter 2014. Adjusted EBITDA was $93 million, an 18% increase compared with the same period in 2014. In constant currency, excluding acquisitions and the impact of the increase in the inter-segment licensing fee rate charged for use of the Wyndham brand trade name, revenues increased 6% and adjusted EBITDA increased 10%. Results reflect higher royalty and management fees and growth in our Wyndham Rewards credit card program.

 

Fourth quarter domestic RevPAR increased 2.9%. In constant currency, total system-wide RevPAR was flat compared with the fourth quarter of 2014, which reflects higher unit growth in lower RevPAR countries such as China.

 

As of December 31, 2015, the Company’s hotel system consisted of over 7,800 properties and 678,000 rooms, a 2.6% net room increase compared with the fourth quarter of 2014. The development pipeline included 890 hotels and over 119,000 rooms, of which 60% were international and 70% were new construction.

 

Destination Network (formerly Vacation Exchange and Rentals)

Revenues were $310 million in the fourth quarter of 2015, flat compared with the fourth quarter of 2014. In constant currency, and excluding acquisitions and a divestiture in 2014, revenues increased 5%.

 

Exchange revenues were $146 million, down 3% compared with the fourth quarter of 2014. In constant currency, exchange revenues were up 1% compared with the prior year, as the average number of members increased 0.7% while exchange revenue per member was flat.

 

Vacation rental revenues were $144 million, flat compared with the fourth quarter of 2014. In constant currency and excluding the impact of acquisitions and the divestiture, vacation rental revenues were up 8%, reflecting an 8.1% increase in transaction volume and flat average net price per vacation rental.

 

 
 

 

Adjusted EBITDA for the fourth quarter of 2015 was $43 million, a 10% increase compared with the fourth quarter of 2014. On a currency-neutral basis and excluding the impact of acquisitions and the divestiture, adjusted EBITDA increased 9% compared with the prior year period.

 

Vacation Ownership

Revenues were $706 million in the fourth quarter of 2015, a 6% increase over the fourth quarter of 2014. In constant currency, revenues increased 7%.

 

Gross VOI sales were $507 million in the fourth quarter of 2015, an increase of 8% compared with the fourth quarter of 2014. In constant currency, Gross VOI sales increased 9%. Volume per guest (VPG) for the quarter increased 3.4% in constant currency and tour flow increased 4.7%.

 

Adjusted EBITDA for the fourth quarter of 2015 was $174 million, an increase of 1% compared with the fourth quarter of 2014. On a currency-neutral basis and excluding the impact of the increase in the inter-segment licensing fee rate, adjusted EBITDA increased 5%, reflecting higher sales volume.

 

OTHER ITEMS

·The Company repurchased 2.2 million shares of common stock for $165 million during the fourth quarter of 2015. For the full-year 2015, the Company repurchased 7.9 million shares of common stock for $650 million. From January 1 through February 8, 2016, the Company repurchased an additional 1.6 million shares for $107 million.
·The Company’s Board of Directors approved a $1 billion increase in the share repurchase authorization. Including the increase, the Company’s remaining share repurchase authorization totals $1.3 billion as of February 8, 2016.
·Reported net interest expense in the fourth quarter of 2015 was $35 million, compared with $25 million in the fourth quarter of 2014, reflecting the $350 million 5.10% bond issued in September and the absence of a fixed-to-floating interest rate swap.

 

Balance Sheet Information as of December, 2015:

·Cash and cash equivalents of $171 million, compared with $183 million at December 31, 2014
·Vacation ownership contract receivables, net, of $2.7 billion, unchanged from December 31, 2014
·Vacation ownership and other inventory of $1.3 billion, compared with $1.2 billion at December 31, 2014
·Securitized vacation ownership debt of $2.1 billion, compared with $2.2 billion at December 31, 2014
·Long-term debt of $3.1 billion, compared with $2.9 billion at December 31, 2014. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.4 billion as of December 31, 2015, compared with $1.3 billion at December 31, 2014.

 

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

 

 
 

 

OUTLOOK

 

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

 

For the full year 2016, the Company provides the following guidance:

·Revenues of approximately $5.800 - $5.950 billion.
·Adjusted EBITDA of approximately $1.375 - $1.400 billion.
·Adjusted EPS of approximately $5.46 - $5.60 based on a diluted share count of 116 million.

 

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

 

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 9, 2016 at 8:30 a.m. ET. Listeners can access the webcast live through the company’s website at http://www.wyndhamworldwide.com/investors/. The conference call may also be accessed by dialing 877-876-9177 and providing the pass code "WYNQ415." Listeners are urged to call at least 10 minutes prior to the scheduled start time. An archive of this webcast will be available on the website for approximately 90 days beginning at 12:00pm ET on February 9, 2016. A telephone replay will be available for approximately 10 days beginning at 12:00pm ET on February 9, 2016 at 800-723-0607.

 

Presentation of Financial Information

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

 

 
 

 

About Wyndham Worldwide Corporation

One of the world’s largest hospitality companies, Wyndham Worldwide (NYSE: WYN) provides a wide range of hospitality services and products through its global portfolio of world-renowned brands.  The world’s largest hotel company based on the number of properties, Wyndham Hotel Group is home to many of the world’s best-known hotel brands, with over 7,800 franchised hotels and 678,000 hotel rooms worldwide. Wyndham Destination Network is the world’s largest provider of professionally managed, unique vacation accommodations with more than 112,000 vacation properties in over 100 countries, sending more than 13 million people annually to their desired destinations through its trusted, diverse network of brands. The industry and timeshare ownership market leader, Wyndham Vacation Ownership develops, markets, and sells vacation ownership interests and provides consumer financing to owners through its network of over 210 vacation ownership resorts serving approximately 897,000 owners throughout the United States, Canada, Mexico, the Caribbean, and the South Pacific. Based in Parsippany, NJ, Wyndham Worldwide employs approximately 38,000 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, cash flow, dividends, share repurchases 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 13, 2015. 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 revenues) and income taxes, each of which is presented on the Company’s Consolidated Statements of Income. The Company believes that EBITDA is a useful measure of performance for the Company's segments which when considered with GAAP measures, gives a more complete understanding of its operating performance. The Company’s presentation of EBITDA may not be comparable to similarly-titled measures used by other companies.

 

The following tables summarize net revenues and EBITDA for the Company's reportable segments, as well as reconcile EBITDA to Net income for the three months ended December 31, 2015 and 2014:

 

   Three Months Ended December 31, 
   2015   2014 
   Net Revenues   EBITDA   Net Revenues   EBITDA 
Hotel Group  $314   $94   $267   $77 
Destination Network   310    44    311    2 
Vacation Ownership   706    174    668    172 
Total Reportable Segments   1,330    312    1,246    251 
Corporate and Other (a)   (19)   (37)   (15)   (36)
Total Company  $1,311   $275   $1,231   $215 

 

Reconciliation of EBITDA to Net income

 

   Three Months Ended December 31, 
   2015       2014 
EBITDA  $275        $215 
Depreciation and amortization   61         58 
Interest expense   37         29 
Interest income   (2)        (4)
Income before income taxes   179         132 
Provision for income taxes   39         51 
Net income  $140        $81 

 

 

(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, 2015 and 2014 (for a description of adjustments by segment, see Table 7):

 

   Three Months Ended December 31, 
   2015   2014 
       Adjusted       Adjusted 
   Net Revenues   EBITDA   Net Revenues   EBITDA 
Hotel Group  $314   $93   $267   $79 
Destination Network   310    43    311    39 
Vacation Ownership   706    174    668    172 
Total Reportable Segments   1,330    310    1,246    290 
Corporate and Other   (19)   (37)   (15)   (38)
Total Company  $1,311   $273   $1,231   $252 

 

 

 

 

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 for the twelve months ended December 31, 2015 and 2014:

 

   Twelve Months Ended December 31, 
   2015   2014 
   Net Revenues   EBITDA   Net Revenues   EBITDA 
Hotel Group  $1,297   $349   $1,101   $327 
Destination Network   1,538    367    1,604    335 
Vacation Ownership   2,772    687    2,638    660 
Total Reportable Segments   5,607    1,403    5,343    1,322 
Corporate and Other (a)   (71)   (137)   (62)   (141)
Total Company  $5,536   $1,266   $5,281   $1,181 

 

Reconciliation of EBITDA to Net income

 

   Twelve Months Ended December 31, 
   2015       2014 
EBITDA  $1,266        $1,181 
Depreciation and amortization   234         233 
Interest expense   125         113 
Interest income   (9)        (10)
Income before income taxes   916         845 
Provision for income taxes   304         316 
Net income  $612        $529 

 

 

(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, 2015 and 2014 (for a description of adjustments by segment, see Table 7):

 

   Twelve Months Ended December 31, 
   2015   2014 
       Adjusted       Adjusted 
   Net Revenues   EBITDA   Net Revenues   EBITDA 
Hotel Group  $1,297   $376   $1,101   $340 
Destination Network   1,538    370    1,604    380 
Vacation Ownership   2,772    688    2,638    660 
Total Reportable Segments   5,607    1,434    5,343    1,380 
Corporate and Other   (71)   (137)   (62)   (142)
Total Company  $5,536   $1,297   $5,281   $1,238 

 

 

 

 

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, 
   2015   2014   2015   2014 
Net revenues                    
Service and membership fees  $562   $508   $2,519   $2,431 
Vacation ownership interest sales   403    385    1,604    1,485 
Franchise fees   157    151    674    632 
Consumer financing   109    108    427    427 
Other   80    79    312    306 
Net revenues   1,311    1,231    5,536    5,281 
                     
Expenses                    
Operating   594    542    2,461    2,262 
Cost of vacation ownership interests   43    42    165    171 
Consumer financing interest   19    18    74    71 
Marketing and reservation   189    188    813    802 
General and administrative   199    189    761    755 
Loss on sale and asset impairments   -    27    7    35 
Restructuring   (2)   12    6    11 
Depreciation and amortization   61    58    234    233 
Total expenses   1,103    1,076    4,521    4,340 
                     
Operating income   208    155    1,015    941 
Other (income)/expense, net   (6)   (2)   (17)   (7)
Interest expense   37    29    125    113 
Interest income   (2)   (4)   (9)   (10)
                     
Income before income taxes   179    132    916    845 
Provision for income taxes   39    51    304    316 
Net income  $140   $81   $612   $529 
                     
Earnings per share                    
Basic  $1.22   $0.66   $5.18   $4.22 
Diluted   1.21    0.65    5.14    4.18 
                     
Weighted average shares outstanding                    
Basic   115    122    118    125 
Diluted   116    124    119    127 

 

 

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 
Hotel Group (a)                            
Number of Rooms  2015   667,400    668,500    671,900    678,000     N/A  
   2014   646,900    650,200    655,300    660,800     N/A  
   2013   631,800    635,100    638,300    645,400     N/A  
   2012   609,300    608,300    618,100    627,400     N/A  
                             
RevPAR  2015  $32.84   $39.82   $43.34   $32.98   $37.26 
   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 
                             
Destination Network                            
Average Number of Members (in 000s)  2015   3,822    3,831    3,835    3,836    3,831 
   2014   3,727    3,748    3,777    3,808    3,765 
   2013   3,668    3,686    3,711    3,728    3,698 
   2012   3,684    3,670    3,672    3,670    3,674 
                             
Exchange Revenue Per Member  2015  $194.06   $167.81   $163.38   $152.00   $169.29 
   2014  $200.78   $179.17   $171.77   $157.24   $177.12 
   2013  $210.96   $182.42   $169.95   $161.21   $181.02 
   2012  $204.56   $177.07   $171.14   $165.86   $179.68 
                             
Vacation Rental Transactions (in 000s) (a) (b)  2015   459    390    462    319    1,630 
   2014   429    376    455    293    1,552 
   2013   423    355    433    273    1,483 
   2012   418    325    390    259    1,392 
                             
Average Net Price Per Vacation Rental (a) (b)  2015  $361.20   $513.14   $642.00   $452.19   $494.92 
   2014  $410.04   $577.13   $727.40   $492.25   $558.95 
   2013  $392.64   $540.38   $677.81   $506.62   $532.11 
   2012  $379.40   $524.40   $635.44   $484.69   $504.55 
                             
Vacation Ownership (a)                            
Gross Vacation Ownership Interest (VOI) Sales (in 000s) (c)  2015  $390,000   $502,000   $565,000   $507,000   $1,965,000 
   2014  $410,000   $496,000   $513,000   $470,000   $1,889,000 
   2013  $384,000   $481,000   $536,000   $488,000   $1,889,000 
   2012  $384,000   $460,000   $502,000   $435,000   $1,781,000 
                             
Tours (in 000s) (d)  2015   168    206    227    200    801 
   2014   170    208    225    191    794 
   2013   163    206    225    195    789 
   2012   148    186    207    183    724 
                             
Volume Per Guest (VPG) (d)  2015  $2,177   $2,353   $2,354   $2,390   $2,326 
   2014  $2,272   $2,280   $2,158   $2,336   $2,257 
   2013  $2,211   $2,256   $2,278   $2,370   $2,281 
   2012  $2,414   $2,361   $2,315   $2,225   $2,324 

 

 

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

(a)Includes the impact of acquisitions/dispositions from the acquisition/disposition dates forward. Therefore, the operating statistics are not presented on a comparable basis.
(b)The destination network operating statistics excluding our U.K.-based camping business sold in Q4 2014 are as follows:

 

   Year  Q1   Q2   Q3   Q4   Full Year 
Vacation Rental Transactions (in 000s)  2014   429    367    431    292    1,518 
Average Net Price Per Vacation Rental  2014  $410.02   $578.02   $700.56   $492.64   $548.93 

 

(c)Includes Gross VOI sales under the Company's Wyndham Asset Affiliate Model (WAAM) Just-in-Time beginning in the second quarter of 2012 (see Table 9 for a reconciliation of Gross VOI sales to vacation ownership interest sales).
(d)Includes the impact of WAAM Just-in-Time related tours beginning in the second quarter of 2012.

 

ADDITIONAL DATA

 

   Year  Q1   Q2   Q3   Q4   Full Year 
Hotel Group                            
Number of Properties  2015   7,670    7,700    7,760    7,810     N/A  
   2014   7,500    7,540    7,590    7,650     N/A  
   2013   7,380    7,410    7,440    7,490     N/A  
   2012   7,150    7,170    7,260    7,340     N/A  
                             
Vacation Ownership                            
Provision for Loan Losses (in 000s) (*)  2015  $46,000   $60,000   $78,000   $64,000   $248,000 
   2014  $60,000   $70,000   $70,000   $60,000   $260,000 
   2013  $84,000   $90,000   $102,000   $73,000   $349,000 
   2012  $96,000   $100,000   $124,000   $89,000   $409,000 

 

 

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

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

 

 

 

 

Table 3

(2 of 2)

 

Wyndham Worldwide Corporation

OPERATING STATISTICS

 

GLOSSARY OF TERMS

 

Hotel Group

 

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

 

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

 

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

 

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

 

Destination Network

 

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 in connection with customers booking their vacation rental stays through one of our vacation brands. One rental transaction is recorded for each standard one-week rental.

 

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

 

Vacation Ownership

 

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

 

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

 

Volume per Guest (VPG): Represents Gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) divided by the number of tours. The Company has excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel. See Table 9 for a detail of tele-sales upgrades for 2012-2015.

 

General

 

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

 

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

 

 

 

 

Table 4

 

Wyndham Worldwide Corporation

REVENUE DETAIL BY REPORTABLE SEGMENT

(In millions)

 

   2015   2014 
   Q1   Q2   Q3   Q4   Year   Q1   Q2   Q3   Q4   Year 
Hotel Group                                                  
Royalties and Franchise Fees  $74   $96   $103   $87   $361   $68   $88   $100   $83   $339 
Marketing, Reservation and Wyndham Rewards Revenues (a)   96    108    112    92    407    76    101    117    91    385 
Hotel Management Reimbursable Revenues (b)   61    71    73    68    273    37    39    39    39    154 
Intersegment Trademark Fees   12    15    16    15    57    9    11    11    10    41 
Owned Hotel Revenues   25    20    16    19    79    24    20    18    20    81 
Ancillary Revenues (c)   24    24    37    33    120    23    24    30    24    101 
Total Hotel Group   292    334    357    314    1,297    237    283    315    267    1,101 
                                                   
Destination Network                                                  
Exchange Revenues   185    161    157    146    649    187    168    162    150    667 
Rental Revenues   166    200    296    144    807    176    217    331    144    868 
Ancillary Revenues (d)   18    22    23    20    82    16    17    19    17    69 
Total Destination Network   369    383    476    310    1,538    379    402    512    311    1,604 
                                                   
Vacation Ownership                                                  
Vacation Ownership Interest Sales   336    417    448    403    1,604    303    382    415    385    1,485 
Consumer Financing   104    105    108    109    427    105    106    108    108    427 
Property Management Fees and Reimbursable Revenues   153    149    159    155    615    143    145    150    142    581 
WAAM Fee-for-Service Commissions   12    19    23    28    83    33    30    18    16    98 
Ancillary Revenues (e)   12    9    12    11    43    9    10    13    17    47 
Total Vacation Ownership   617    699    750    706    2,772    593    673    704    668    2,638 
Total Reportable Segments  $1,278   $1,416   $1,583   $1,330   $5,607   $1,209   $1,358   $1,531   $1,246   $5,343 

 

   2013   2012 
   Q1   Q2   Q3   Q4   Year   Q1   Q2   Q3   Q4   Year 
Hotel Group                                                  
Royalties and Franchise Fees  $64   $79   $91   $75   $309   $62   $80   $88   $71   $301 
Marketing, Reservation and Wyndham Rewards Revenues (a)   73    92    118    83    365    68    99    98    80    345 
Hotel Management Reimbursable Revenues (b)   25    38    37    35    135    21    22    25    23    91 
Intersegment Trademark Fees   8    10    11    10    39    8    9    9    8    34 
Owned Hotel Revenues   26    20    18    19    84    8    8    7    18    41 
Ancillary Revenues (c)   26    23    22    23    95    18    15    22    23    78 
Total Hotel Group   222    262    297    245    1,027    185    233    249    223    890 
                                                   
Destination Network                                                  
Exchange Revenues   193    168    158    150    669    188    162    157    153    660 
Rental Revenues   166    192    293    138    789    159    170    248    125    702 
Ancillary Revenues (d)   15    16    19    17    68    14    16    15    15    60 
Total Destination Network   374    376    470    305    1,526    361    348    420    293    1,422 
                                                   
Vacation Ownership                                                  
Vacation Ownership Interest Sales   263    347    384    384    1,379    271    342    373    337    1,323 
Consumer Financing   105    106    107    108    426    103    102    106    110    421 
Property Management Fees   146    141    143    137    567    110    108    117    125    460 
WAAM Fee-for-Service Commissions   24    30    33    20    107    12    11    4    6    33 
Ancillary Revenues (e)   11    6    10    9    36    5    7    8    12    32 
Total Vacation Ownership   549    630    677    658    2,515    501    570    608    590    2,269 
Total Reportable Segments  $1,145   $1,268   $1,444   $1,208   $5,068   $1,047   $1,151   $1,277   $1,106   $4,581 

 

 

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

(a)Marketing and reservation revenues represent fees the Company receives from franchised and managed hotels that are to be expended for marketing purposes or the operation of a centralized, brand-specific reservation system. These fees are typically based on a percentage of the gross room revenues of each hotel. Wyndham Rewards revenues represent fees the Company receives relating to its loyalty program.
(b)Primarily represents payroll costs in the hotel management business that the Company pays on behalf of property owners and for which it is reimbursed by the property owners. During 2014, reimbursable revenues of $2 million in each of Q1, Q2 and Q3 and $1 million in Q4 which were charged to the Company's vacation ownership business and were eliminated in consolidation. During 2013, such amounts include reimbursable revenues of $1 million, $3 million and $2 million, in Q2, Q3 and Q4 respectively, which were charged to the Company's vacation ownership business and were eliminated in consolidation.
(c)Primarily includes additional services provided to franchisees and managed properties and fees related to our co-branded credit card program.
(d)Primarily includes fees generated from programs with affiliated resorts and homeowners.
(e)Primarily includes revenues associated with bonus points/credits that are provided as purchase incentives on VOI sales and fees generated from other non-core operations.

 

 

 

 

Table 5

Wyndham Worldwide Corporation

SCHEDULE OF DEBT

(In millions)

 

   December 31,   September 30,   June 30,   March 31,   December 31, 
   2015   2015   2015   2015   2014 
                     
Securitized vacation ownership debt (a)                         
Term notes  $1,891   $1,843   $1,841   $2,090   $1,962 
Bank conduit facility (b)   239    267    253    98    203 
Total securitized vacation ownership debt (c)   2,130    2,110    2,094    2,188    2,165 
Less: Current portion of securitized vacation ownership debt   209    210    211    217    214 
Long-term securitized vacation ownership debt  $1,921   $1,900   $1,883   $1,971   $1,951 
                          
                          
Debt:                         
Revolving credit facility (due July 2020) (d)  $7   $20   $23   $14   $25 
Commercial paper (e)   109    87    476    346    189 
$315 million 6.00% senior unsecured notes (due December 2016)   316    316    317    317    317 
$300 million 2.95% senior unsecured notes (due March 2017)   299    299    299    299    299 
$14 million 5.75% senior unsecured notes (due February 2018)   14    14    14    14    14 
$450 million 2.50% senior unsecured notes (due March 2018)   449    448    448    448    448 
$40 million 7.375% senior unsecured notes (due March 2020)   40    40    40    40    40 
$250 million 5.625% senior unsecured notes (due March 2021)   247    247    247    247    247 
$650 million 4.25% senior unsecured notes (due March 2022)   648    648    648    650    648 
$400 million 3.90% senior unsecured notes (due March 2023)   408    409    409    418    410 
$350 million 5.10% senior unsecured notes (due October 2025)   338    338    -    -    - 
Capital leases   153    158    161    161    170 
Other   50    49    70    70    81 
Total long-term debt   3,078    3,073    3,152    3,024    2,888 
Less: Current portion of long-term debt   44    44    52    53    47 
Long-term debt  $3,034   $3,029   $3,100   $2,971   $2,841 

 

 

(a)The Company's vacation ownership contract receivables are securitized through bankruptcy-remote special purpose entities ("SPEs") that are consolidated within our financial statements. These bankruptcy-remote SPEs are legally separate from the Company. The receivables held by the bankruptcy-remote SPEs are not available to the Company's creditors and legally are not the Company's assets. Additionally, the non-recourse debt that is securitized through the SPEs is legally not a liability of the Company and thus, the creditors of these SPEs have no recourse to the Company for principal and interest.
(b)Represents a non-recourse vacation ownership bank conduit facility with a term through August 2017 and borrowing capacity of $650 million. As of December 31, 2015, this facility had a remaining borrowing capacity of $411 million.
(c)This debt is collateralized by $2,576 million, $2,582 million, $2,558 million, $2,609 million, and $2,629 million of underlying vacation ownership contract receivables and related assets as of December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015, and December 31, 2014.
(d)Represents a $1.5 billion revolving credit facility that expires in July 2020. As of December 31, 2015, the Company had $1 million of outstanding letters of credit. After considering outstanding commercial paper borrowings of $109 million, the remaining borrowing capacity was $1.4 billion as of December 31, 2015.
(e)Represents commercial paper programs of $1.25 billion with a remaining borrowing capacity of $1.1 billion as of December 31, 2015.

 

 

 

 

Table 6

(1 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

 

   As of and For the Three Months Ended December 31, 2015 
                   Average Revenue 
   Number of       Average   Average Daily   Per Available 
Brand  Properties   Number of Rooms   Occupancy Rate   Rate (ADR)   Room (RevPAR) 
                     
Hotel Group                         
Super 8   2,631    168,438    50.9%  $48.82   $24.86 
                          
Days Inn   1,788    142,870    46.0%  $64.04   $29.43 
                          
Ramada   839    118,132    50.2%  $72.84   $36.54 
                          
Wyndham Hotels and Resorts   225    48,753    56.6%  $108.79   $61.57 
                          
Howard Johnson   393    42,888    46.7%  $60.92   $28.44 
                          
Baymont   410    32,667    46.8%  $66.11   $30.92 
                          
Travelodge   411    30,188    44.6%  $62.65   $27.93 
                          
Microtel Inns & Suites by Wyndham   332    23,941    52.5%  $67.29   $35.30 
                          
Knights Inn   386    23,560    41.7%  $47.21   $19.71 
                          
TRYP by Wyndham   121    17,355    61.0%  $78.94   $48.12 
                          
Wingate by Wyndham   151    13,780    57.0%  $87.38   $49.77 
                          
Hawthorn Suites by Wyndham   102    10,174    60.8%  $80.45   $48.89 
                          
Dolce   23    5,296    49.5%  $150.61   $74.59 
                          
Total Hotel Group   7,812    678,042    49.6%  $66.46   $32.98 
                          
Vacation Ownership                         
Wyndham Vacation Ownership resorts   213    24,329    N/A    N/A    N/A 
                          
Total Wyndham Worldwide   8,025    702,371                

 

   As of and For the Three Months Ended December 31, 2014 
                   Average Revenue 
   Number of       Average   Average Daily   Per Available 
Brand  Properties   Number of Rooms   Occupancy Rate   Rate (ADR)   Room (RevPAR) 
                     
Hotel Group                         
Super 8   2,510    160,847    53.8%  $48.07   $25.85 
                          
Days Inn   1,794    145,078    45.7%  $63.86   $29.18 
                          
Ramada   837    115,923    51.1%  $78.04   $39.86 
                          
Howard Johnson   429    45,919    46.7%  $62.82   $29.34 
                          
Wyndham Hotels and Resorts   195    43,865    58.0%  $116.50   $67.53 
                          
Travelodge   421    30,989    45.0%  $63.71   $28.68 
                          
Baymont   369    29,727    47.1%  $64.64   $30.42 
                          
Knights Inn   398    24,832    42.1%  $45.61   $19.19 
                          
Microtel Inns & Suites by Wyndham   323    23,138    56.1%  $67.28   $37.74 
                          
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 
                          
Total Hotel Group   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                

 

 

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, 2015 
                   Average Revenue 
   Number of       Average   Average Daily   Per Available 
Brand  Properties   Number of Rooms   Occupancy Rate   Rate (ADR)   Room (RevPAR) 
                     
Hotel Group                         
Super 8   2,631    168,438    57.0%  $50.51   $28.81 
                          
Days Inn   1,788    142,870    50.9%  $67.26   $34.22 
                          
Ramada   839    118,132    54.2%  $75.08   $40.67 
                          
Wyndham Hotels and Resorts   225    48,753    60.5%  $110.76   $66.96 
                          
Howard Johnson   393    42,888    50.0%  $62.45   $31.24 
                          
Baymont   410    32,667    52.5%  $68.50   $35.95 
                          
Travelodge   411    30,188    50.8%  $67.71   $34.39 
                          
Microtel Inns & Suites by Wyndham   332    23,941    57.9%  $69.23   $40.08 
                          
Knights Inn   386    23,560    45.7%  $48.26   $22.03 
                          
TRYP by Wyndham   121    17,355    62.0%  $80.39   $49.84 
                          
Wingate by Wyndham   151    13,780    63.3%  $89.17   $56.43 
                          
Hawthorn Suites by Wyndham   102    10,174    66.5%  $81.00   $53.89 
                          
Dolce   23    5,296    55.4%  $150.03   $83.08 
                          
Total Hotel Group   7,812    678,042    54.5%  $68.39   $37.26 
                          
Vacation Ownership                         
Wyndham Vacation Ownership resorts   213    24,329    N/A    N/A    N/A 
                          
Total Wyndham Worldwide   8,025    702,371                

 

   As of and For the Year Ended December 31, 2014 
                   Average Revenue 
   Number of       Average   Average Daily   Per Available 
Brand  Properties   Number of Rooms   Occupancy Rate   Rate (ADR)   Room (RevPAR) 
                     
Hotel Group                         
Super 8   2,510    160,847    57.2%  $50.86   $29.09 
                          
Days Inn   1,794    145,078    51.0%  $65.68   $33.48 
                          
Ramada   837    115,923    54.2%  $79.70   $43.22 
                          
Howard Johnson   429    45,919    48.8%  $63.46   $30.96 
                          
Wyndham Hotels and Resorts   195    43,865    61.8%  $115.17   $71.14 
                          
Travelodge   421    30,989    51.1%  $67.75   $34.62 
                          
Baymont   369    29,727    52.5%  $65.75   $34.51 
                          
Knights Inn   398    24,832    44.9%  $46.67   $20.94 
                          
Microtel Inns & Suites by Wyndham   323    23,138    59.8%  $67.26   $40.23 
                          
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 
                          
Total Hotel Group   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                

 

 

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)

 

       Reported   Legacy   Acquisition   Restructuring   Asset   Contract   Adjusted 
  Net Revenues   EBITDA   Adjustments (b)   Costs (c)   Costs (d)   Impairment (e)   Termination (f)   EBITDA 
Three months ended March 31, 2015                                
Hotel Group  $292   $76   $-   $3   $-   $-   $-   $79 
Destination Network   369    105    -    -    (1)   -    -    104 
Vacation Ownership   617    130    -    -    -    -    -    130 
Total Reportable Segments   1,278    311    -    3    (1)   -    -    313 
Corporate and Other (a)   (16)   (34)   -    -    -    -    -    (34)
Total Company  $1,262   $277   $-   $3   $(1)  $-   $-   $279 
                                         
Three months ended June 30, 2015                                        
Hotel Group  $334   $96   $-   $1   $-   $-   $-   $97 
Destination Network   383    84    -    -    -    -    -    84 
Vacation Ownership   699    182    -    -    -    -    -    182 
Total Reportable Segments   1,416    362    -    1    -    -    -    363 
Corporate and Other (a)   (18)   (30)   (1)   -    -    -    -    (31)
Total Company  $1,398   $332   $(1)  $1   $-   $-   $-   $332 
                                         
Three months ended September 30, 2015                                        
Hotel Group  $357   $83   $-   $-   $4   $7   $14   $108 
Destination Network   476    134    -    -    3    -    -    137 
Vacation Ownership   750    200    -    -    1    -    -    201 
Total Reportable Segments   1,583    417    -    -    8    7    14    446 
Corporate and Other (a)   (19)   (35)   1    -    -    -    -    (34)
Total Company  $1,564   $382   $1   $-   $8   $7   $14   $412 
                                         
Three months ended December 31, 2015                                        
Hotel Group  $314   $94   $-   $-   $(1)  $-   $-   $93 
Destination Network   310    44    -    -    (1)   -    -    43 
Vacation Ownership   706    174    -    -    -    -    -    174 
Total Reportable Segments   1,330    312    -    -    (2)   -    -    310 
Corporate and Other (a)   (19)   (37)   -    -    -    -    -    (37)
Total Company  $1,311   $275   $-   $-   $(2)  $-   $-   $273 
                                         
Twelve months ended December 31, 2015                                        
Hotel Group  $1,297   $349   $-   $3   $3   $7   $14   $376 
Destination Network   1,538    367    -    1    2    -    -    370 
Vacation Ownership   2,772    687    -    -    1    -    -    688 
Total Reportable Segments   5,607    1,403    -    4    6    7    14    1,434 
Corporate and Other (a)   (71)   (137)   -    -    -    -    -    (137)
Total Company  $5,536   $1,266   $-   $4   $6   $7   $14   $1,297 

 

Note: The sum of the quarters may not agree to the twelve months ended December 31, 2015 due to rounding.

(a)Includes the elimination of transactions between segments.
(b)Relates to the net (benefit)/expense from the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.
(c)Relates primarily to costs incurred in connection with the acquisition of Dolce Hotels and Resorts (January 2015).
(d)Relates to costs incurred as a result of various organizational realignment initiatives and the reversal of a portion of restructuring reserves that were established in prior periods.
(e)Relates to a non-cash impairment charge related to the write-down of terminated in-process technology projects resulting from the Company's decision to outsource its reservation system to a third-party provider.
(f)Relates to costs associated with the anticipated termination of a management contract.

 

 

 

 

Table 7

(2 of 2)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION

(In millions)

 

           Executive   Venezuela           Loss on Sale         
       Reported   Departure   Currency   VAT   Restructuring   and Asset   Legacy   Adjusted 
  Net Revenues   EBITDA   Costs   Devaluation (b)   Adjustment (c)   Costs (d)   Impairments (e)   Adjustments (f)   EBITDA 
Three months ended March 31, 2014                                    
Hotel Group  $237   $64   $4   $-   $-   $-   $-   $-   $68 
Destination Network   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                                             
Hotel Group  $283   $87   $-   $-   $-   $-   $-   $-   $87 
Destination Network   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                                             
Hotel Group  $315   $100   $-   $-   $-   $(1)  $8   $-   $107 
Destination Network   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                                             
Hotel Group  $267   $77   $-   $-   $-   $2   $-   $-   $79 
Destination Network   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                                             
Hotel Group  $1,101   $327   $4   $-   $-   $1   $8   $-   $340 
Destination Network   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 destination network business and (ii) a write-down of an investment in a joint venture at the Company's hotel group business.
(f)Relates to the net benefit from the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.

 

 

 

 

Table 8

(1 of 4)

 

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

   Three Months Ended December 31, 2015 
                 
       Restructuring   Foreign Tax   As Adjusted 
   As Reported   Costs (a)   Credit (c)   non-GAAP 
Net revenues                    
Service and membership fees  $562   $    $    $562 
Vacation ownership interest sales   403              403 
Franchise fees   157              157 
Consumer financing   109              109 
Other   80              80 
Net revenues   1,311    -    -    1,311 
                     
Expenses                    
Operating   594              594 
Cost of vacation ownership interests   43              43 
Consumer financing interest   19              19 
Marketing and reservation   189              189 
General and administrative   199              199 
Restructuring   (2)   2         - 
Depreciation and amortization   61              61 
Total expenses   1,103    2    -    1,105 
                     
Operating income   208    (2)   -    206 
Other (income)/expense, net   (6)             (6)
Interest expense   37              37 
Interest income   (2)             (2)
                     
Income before income taxes   179    (2)   -    177 
Provision for income taxes   39    (1)(b)   26    64 
                     
Net income  $140   $(1)  $(26)  $113 
                     
Earnings per share                    
Basic  $1.22   $(0.01)  $(0.22)  $0.99 
Diluted   1.21    (0.01)   (0.22)   0.98 
                     
Weighted average shares outstanding                    
Basic   115    115    115    115 
Diluted   116    116    116    116 

 

 

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 a reversal of a portion of restructuring reserves that were established in prior periods.
(b)Relates to the tax effect of the adjustment.
(c)Relates to the release of a valuation allowance on foreign tax credits.

 

 

 

 

Table 8

(2 of 4)

 

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

   Twelve Months Ended December 31, 2015 
                             
       Acquisition   Restructuring   Asset   Contract   Foreign Tax   As Adjusted 
   As Reported   Costs (a)    Costs (c)   Impairment (e)   Termination (f)   Credit (g)   non-GAAP 
Net revenues                                   
Service and membership fees  $2,519   $    $    $    $    $    $2,519 
Vacation ownership interest sales   1,604                             1,604 
Franchise fees   674                             674 
Consumer financing   427                             427 
Other   312                             312 
Net revenues   5,536    -    -    -    -    -    5,536 
                                    
Expenses                                   
Operating   2,461    (4)             (14)        2,443 
Cost of vacation ownership interests   165                             165 
Consumer financing interest   74                             74 
Marketing and reservation   813                             813 
General and administrative   761                             761 
Asset impairment   7              (7)             - 
Restructuring   6         (6)                  - 
Depreciation and amortization   234                             234 
Total expenses   4,521    (4)   (6)   (7)   (14)   -    4,490 
                                    
Operating income   1,015    4    6    7    14    -    1,046 
Other (income)/expense, net   (17)                            (17)
Interest expense   125                             125 
Interest income   (9)                            (9)
                                    
Income before income taxes   916    4    6    7    14    -    947 
Provision for income taxes   304    (1)(b)   2(d)   2(d)   6(d)   26    339 
                                    
Net income  $612   $5   $4   $5   $8   $(26)  $608 
                                    
Earnings per share                                   
Basic  $5.18   $0.04   $0.04   $0.04   $0.07   $(0.22)  $5.15 
Diluted   5.14    0.04    0.04    0.04    0.07    (0.22)   5.11 
                                    
Weighted average shares outstanding                                   
Basic   118    118    118    118    118    118    118 
Diluted   119    119    119    119    119    119    119 

 

 

The above table reconciles certain non-GAAP financial measures. The presentation of these adjustments is intended to permit the comparison of particular adjustments as they appear in the line items of the income statement in order to assist investors' understanding of the overall impact of such adjustments. This non-GAAP reconciliation table should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.

 

Note: EPS amounts may not add due to rounding.

(a)Relates primarily to costs incurred in connection with the acquisition of Dolce Hotels and Resorts (January 2015) at the Company's hotel group business.
(b)Relates to (i) the tax effect of the adjustment and (ii) a valuation allowance established in connection with the acquisition of Dolce Hotels and Resorts.
(c)Relates to costs incurred as a result of various organizational realignment initiatives across the Company and the reversal of a portion of restructuring reserves that were established in prior periods.
(d)Relates to the tax effect of the adjustment.
(e)Relates to a non-cash impairment charge at the Company's hotel group business related to the write-down of terminated in-process technology projects resulting from the decision to outsource the reservation system to a third-party provider.
(f)Relates to costs associated with the anticipated termination of a management contract within the Company's hotel group business.
(g)Relates to the release of a valuation allowance on foreign tax credits.

 

 

 

 

Table 8

(3 of 4)

 

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

   Three Months Ended December 31, 2014 
                     
               Loss on Sale     
       Legacy   Restructuring   and Asset   As Adjusted 
   As Reported   Adjustments (a)   Costs (c)   Impairment (d)   non-GAAP 
Net revenues                         
Service fees and membership  $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)/expense, 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  $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 hotel group and destination network businesses.
(d)Relates to a loss on the sale of a business and a write-down of an equity investment at the Company’s destination network business.

 

 

 

 

Table 8

(4 of 4)

 

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

   Twelve Months Ended December 31, 2014 
                                 
       Executive   Venezuela               Loss on sale     
       Departure   Currency   Legacy   VAT   Restructuring   and Asset   As Adjusted 
   As Reported   Costs (a)   Devaluation (c)   Adjustments (d)   Adjustment (f)   Costs (g)   Impairments (h)   non-GAAP 
Net revenues                                        
Service fees and membership  $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)/expense, 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 
                                         
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 hotel group 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 destination network 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 destination network business.
(g)Relates to (i) costs incurred as a result of organizational realignment initiatives at the Company's hotel group and destination network 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 destination network business and (ii) a write-down of an investment in a joint venture at the Company's hotel group 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,         
   2015       2014         
                     
Net cash provided by operating activities  $991        $984           
Less: Property and equipment additions   (222)        (235)          
Free cash flow  $769        $749           

 

GROSS VOI SALES  

 

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

 

Year                    
2015  Q1   Q2   Q3   Q4   Full Year 
                     
Gross VOI sales (*)  $390   $502   $565   $507   $1,965 
Less: Sales under WAAM Fee-for-Service   (21)   (26)   (37)   (42)   (126)
Gross VOI sales, net of WAAM Fee-for-Service sales   369    477    528    464    1,838 
Less: Loan loss provision   (46)   (60)   (78)   (64)   (248)
Plus: Impact of percentage-of-completion accounting   13    -    (2)   2    13 
Vacation ownership interest sales (*)  $336   $417   $448   $403   $1,604 
                          
2014                         
                          
Gross VOI sales (*)  $410   $496   $513   $470   $1,889 
Less: Sales under WAAM Fee-for-Service   (44)   (40)   (27)   (21)   (132)
Gross VOI sales, net of WAAM Fee-for-Service sales   366    456    486    449    1,757 
Less: Loan loss provision   (60)   (70)   (70)   (60)   (260)
Less: Impact of percentage-of-completion accounting   (3)   (4)   (1)   (4)   (12)
Vacation ownership interest sales (*)  $303   $382   $415   $385   $1,485 
                          
2013                         
                          
Gross VOI sales (*)  $384   $481   $536   $488   $1,889 
Less: Sales under WAAM Fee-for-Service   (36)   (44)   (51)   (29)   (160)
Gross VOI sales, net of WAAM Fee-for-Service sales   347    437    486    459    1,729 
Less: Loan loss provision   (84)   (90)   (102)   (73)   (349)
Less: Impact of percentage-of-completion accounting   -    -    -    (1)   (1)
Vacation ownership interest sales (*)  $263   $347   $384   $384   $1,379 
                          
2012                         
                          
Gross VOI sales (*)  $384   $460   $502   $435   $1,781 
Less: Sales under WAAM Fee-for-Service   (17)   (18)   (5)   (10)   (49)
Gross VOI sales, net of WAAM Fee-for-Service sales   367    442    497    426    1,732 
Less: Loan loss provision   (96)   (100)   (124)   (89)   (409)
Vacation ownership interest sales (*)  $271   $342   $373   $337   $1,323 

 

 

Note: Amounts may not add due to rounding.

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

 

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

 

   Q1   Q2   Q3   Q4   Full Year 
                     
2015  $24   $17   $32   $27   $100 
2014  $25   $21   $27   $24   $97 
2013  $24   $18   $22   $25   $89 
2012  $27   $20   $22   $28   $97