EXHIBIT 99.1

WW_Logo_1clr_Spot

 

Wyndham Worldwide Reports Fourth Quarter and Full Year 2016 Results

Increases Dividend 16%

 

 

PARSIPPANY, N.J. (February 15, 2017) – Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months and year ended December 31, 2016.

 

 

FOURTH QUARTER 2016 OPERATING RESULTS

Fourth quarter revenues were $1.3 billion, up 1% compared with the prior year period. Full reconciliations of GAAP results to non-GAAP measures for all reported periods appear in the tables to this press release.

 

Net income for the fourth quarter of 2016 was $164 million compared with $140 million for the fourth quarter of 2015. Diluted earnings per share (EPS) increased 26% to $1.53 per diluted share compared with $1.21 for the prior year period. Adjusted net income for the fourth quarter of 2016, which excludes charges and gains in both 2016 and 2015 as detailed in Table 7 of this press release, was $146 million compared with $113 million for the fourth quarter of 2015. Adjusted diluted EPS increased 38% to $1.35 from $0.98 per diluted share in the prior year period. Adjusted net income and EPS benefited from earnings growth across all of our businesses. EPS also benefited from the Company’s share repurchase program.

 

Fourth quarter EBITDA was $322 million, compared with $275 million in the prior year period, an increase of 17%. Adjusted EBITDA, which excludes charges and gains in 2016 and charges in 2015 as detailed in Table 8 of this press release, was $318 million, compared with $273 million in the prior year period, an increase of 16%.

 

“In 2016, we delivered earnings growth and free cash flow that were both in line with our targets despite headwinds from a higher provision for loan losses and foreign exchange rates,” said Stephen P. Holmes, chairman and CEO. “We achieved these results through consistent execution, careful expense management, and continued disciplined capital allocation.”

 

 

FULL YEAR 2016 OPERATING RESULTS

Revenues for full year 2016 were $5.6 billion, an increase of 1% over the prior year.

 

 

 

 

Net income for full year 2016 was $611 million compared with $612 million for full year 2015. Diluted EPS increased 8% to $5.53 from $5.14 per diluted share in the prior year. Adjusted net income for full year 2016, which excludes charges and gains in both 2016 and 2015 as detailed in Table 7 of this press release, was $636 million compared with $608 million for full year 2015. Adjusted diluted EPS increased 13% to $5.75 from $5.11 in the prior year period. Adjusted net income and EPS benefited from earnings growth across all of our businesses. EPS also benefited from the Company’s share repurchase program.

 

Full year 2016 EBITDA was $1,331 million, compared with $1,266 million in the prior year, an increase of 5%. Adjusted EBITDA, which excludes charges and gains in 2016 and charges in 2015 as detailed in Table 8 of this press release, was $1,373 million. This compares with $1,297 million in the prior year, an increase of 6%. On a currency-neutral basis and excluding acquisitions, adjusted EBITDA increased 7%.

 

For the twelve months ended December 31, 2016, net cash provided by operating activities was $973 million, compared with $991 million in the prior year period. The decrease reflects unfavorable currency movements of $48 million, including a $24 million devaluation of the Venezuelan bolivar in the first quarter of 2016.

 

Free cash flow was $782 million for the twelve months ended December 31, 2016, compared with $769 million for the same period in 2015, reflecting lower capital expenditures that were partially offset by the unfavorable currency movements referenced above. The Company defines free cash flow as net cash provided by operating activities less capital expenditures.

 

 

FOURTH QUARTER 2016 BUSINESS UNIT RESULTS

 

Hotel Group

Revenues were $316 million in the fourth quarter of 2016, compared with $314 million in the fourth quarter of 2015. Revenues reflected higher franchise fees and growth in the Company’s Wyndham Rewards credit card program, partially offset by lower reimbursable property management revenues.

 

EBITDA was $99 million in the fourth quarter compared with $94 million in the prior year quarter. Adjusted EBITDA grew 6% to $99 million. In constant currency and excluding acquisitions, adjusted EBITDA increased 8%. This reflects the higher franchise fees and growth in the Company’s Wyndham Rewards credit card program.

 

Fourth quarter domestic same store RevPAR increased 2.9%. Excluding oil markets, domestic same store RevPAR increased 3.7%. In constant currency, total systemwide same store RevPAR increased 2.7% compared with the fourth quarter of 2015, which reflects softness in domestic and Canadian oil markets.

 

 

 

 

As of December 31, 2016, the Company’s hotel system consisted of over 8,000 properties and over 697,600 rooms, a 2.9% net room increase compared with year-end 2015. The development pipeline increased to more than 1,110 hotels and approximately 138,300 rooms, of which 60% were international and 67% were new construction.

 

Destination Network

Revenues were $317 million in the fourth quarter of 2016, compared with $310 million in the fourth quarter of 2015, an increase of 2%. In constant currency and excluding acquisitions, revenues increased 3%.

 

Vacation rental revenues were $151 million compared with $144 million in the prior year quarter. In constant currency and excluding the impact of acquisitions, vacation rental revenues were up 5%, reflecting a 5.3% increase in transaction volume, which benefited from enhanced yield management as well as capacity increases across our Denmark-based Novasol brand and our U.K. cottage and parks brands. Average net price per rental was flat.

 

Exchange revenues were $145 million compared with $146 million in the prior year quarter. In constant currency, exchange revenues grew 1% as exchange revenue per member increased 0.4% and the average number of members increased 0.2%.

 

EBITDA was $53 million in the fourth quarter, compared with $44 million in the prior year quarter. Adjusted EBITDA increased $9 million to $52 million for the fourth quarter of 2016, which reflects the revenue gains from continued strong vacation rental performance and lower costs.

 

Vacation Ownership

Revenues were $705 million in the fourth quarter of 2016, compared with $706 million in the fourth quarter of 2015.

 

Gross VOI sales in the fourth quarter of 2016 were flat, impacted by sales office closures from a restructuring and Hurricane Matthew. The number of new owners added during the quarter was up 8% from the prior year quarter. Volume per guest was up 0.4% and tour flow declined 1.5%, reflecting the closure of sales sites as noted above.

 

EBITDA was $182 million in the fourth quarter compared with $174 million in the prior year quarter. Adjusted EBITDA was $191 million for the fourth quarter of 2016, an increase of 10% compared with the prior year quarter, due to lower costs.

 

 

 

 

OTHER ITEMS

·The Company’s Board of Directors authorized an increase in the quarterly cash dividend to $0.58 from $0.50 per share, beginning with the dividend that is expected to be declared in the first quarter of 2017.
·The Company repurchased 2.1 million shares of common stock for $150 million during the fourth quarter of 2016 at an average price of $70.34. From January 1 through February 14, 2017, the Company repurchased an additional 1.0 million shares for $75 million.
·Net interest expense in the fourth quarter of 2016 was $32 million, compared with $35 million in the fourth quarter of 2015. This reflects a larger proportion of lower cost variable debt partially offset by higher debt levels.
·Depreciation and amortization in the fourth quarter of 2016 was $65 million, compared with $61 million in the fourth quarter of 2015, reflecting new projects that were placed into service.

 

Balance Sheet Information as of December 31, 2016:

·Cash and cash equivalents of $185 million, compared with $171 million at December 31, 2015
·Vacation ownership contract receivables, net, of $2.8 billion, compared with $2.7 billion at December 31, 2015
·Vacation ownership and other inventory of $1.4 billion, compared with $1.3 billion at December 31, 2015
·Securitized vacation ownership debt of $2.1 billion, unchanged from December 31, 2015
·Long-term debt of $3.4 billion, compared with $3.1 billion at December 31, 2015. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.1 billion as of December 31, 2016, compared with $1.4 billion at December 31, 2015.

 

A schedule of debt is included in Table 12 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.

 

The Company provides the following guidance for the full year 2017:

·Revenues of approximately $5.80 billion to $5.95 billion
·Adjusted net income of approximately $637 million to $658 million
·Adjusted EBITDA of approximately $1.41 billion to $1.44 billion
·Adjusted diluted EPS of approximately $5.90 to $6.10 based on a diluted share count of 108 million

 

In determining adjusted EBITDA, adjusted net income and adjusted EPS, the Company excludes certain items which are otherwise included in determining the comparable GAAP financial measures. A description of the adjustments that have been applicable for the reported periods in determining adjusted net income, adjusted EBITDA and adjusted EPS are reflected in Tables 7 and 8 of this press release. The Company is providing an outlook for net income, EPS and EBITDA only on a non-GAAP basis because the Company is unable to predict with reasonable certainty the totality or ultimate outcome or occurrence of these adjustments for the outlook period, which can be dependent on future events that may not be reliably predicted. See Table 10 for certain non-GAAP information concerning the outlook period.

 

The Company will post full 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 Wednesday, February 15, 2017 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 888-632-3384 and providing the pass code "WYNDHAM." 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 12:00 p.m. ET on February 15, 2017. A telephone replay will be available for approximately 10 days beginning at 12:00 p.m. ET on February 15, 2017 at 800-839-0866.

 

 

 

 

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 operating performance. Exclusion of items in the Company’s non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring. Full reconciliations of GAAP results to the comparable non-GAAP measures for the reported periods appear in the financial tables section of the press release.

 

ABOUT WYNDHAM WORLDWIDE

Wyndham Worldwide (NYSE: WYN) is one of the largest global hospitality companies, providing travelers with access to a collection of trusted hospitality brands in hotels, vacation ownership, and unique accommodations including vacation exchange, holiday parks, and managed home rentals. With a collective inventory of nearly 130,000 places to stay across more than 110 countries on six continents, Wyndham Worldwide and its 38,000 associates welcomes people to experience travel the way they want. This is enhanced by Wyndham Rewards®, the Company’s re-imagined guest loyalty program across its businesses, which is making it simpler for members to earn more rewards and redeem their points faster. 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, 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 12, 2016. 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 Contacts:

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

 

 

 

 

Wyndham Worldwide Corporation

Earnings Release Schedules

Quarter Four - December 31, 2016

Table of Contents

 

  Table No.
   
Consolidated Statements of Income (Unaudited) 1
   
Operating Results of Reportable Segments 2
   
Operating Statistics 3
   
Condensed Consolidated Statements of Cash Flows and Reconciliation of Free Cash Flows (Unaudited) 4
   
Revenue Detail by Reportable Segment 5
   
Brand System Details 6
   
Non-GAAP Reconciliation of Adjusted Net Income and EPS 7
   
Non-GAAP Reconciliation of Adjusted EBITDA by Reportable Segment 8
   
Non-GAAP Reconciliation of Gross VOI Sales 9
   
Non-GAAP Reconciliation of 2017 Outlook 10
   
Non-GAAP Reconciliation - Constant Currency and Currency Neutral 11
   
Schedule of Debt 12

 

 

 

 

Table 1

 

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

(Unaudited)

 

   Three Months Ended   Twelve Months Ended 
   December 31,   December 31, 
   2016   2015   2016   2015 
Net revenues                    
Service and membership fees  $550   $562   $2,552   $2,519 
Vacation ownership interest sales   415    403    1,606    1,604 
Franchise fees   164    157    677    674 
Consumer financing   113    109    440    427 
Other   78    80    324    312 
Net revenues   1,320    1,311    5,599    5,536 
                     
Expenses                    
Operating   597    594    2,511    2,461 
Cost of vacation ownership interests   31    43    146    165 
Consumer financing interest   19    19    75    74 
Marketing and reservation   184    189    829    813 
General and administrative   169    199    714    761 
Loss on sale and asset impairment   -    -    -    7 
Restructuring   1    (2)   15    6 
Depreciation and amortization   65    61    252    234 
Total expenses   1,066    1,103    4,542    4,521 
                     
Operating income   254    208    1,057    1,015 
Other (income)/expense, net   (3)   (6)   (22)   (17)
Interest expense   34    37    136    125 
Early extinguishment of debt   -    -    11    - 
Interest income   (2)   (2)   (8)   (9)
                     
Income before income taxes   225    179    940    916 
Provision for income taxes   61    39    328    304 
Net income   164    140    612    612 
Net income attributable to noncontrolling interest   -    -    (1)   - 
Net income attributable to Wyndham shareholders  $164   $140   $611   $612 
                     
Earnings per share                    
Basic  $1.54   $1.22   $5.56   $5.18 
Diluted   1.53    1.21    5.53    5.14 
                     
Weighted average shares outstanding                    
Basic   107    115    110    118 
Diluted   108    116    111    119 

 

 

 

 

Table 2

(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 also uses adjusted EBITDA as a financial measure of its operating performance.  The Company believes that EBITDA and Adjusted EBITDA are useful measures of assessing performance of the Company and for the Company's segments which, when considered with GAAP measures, give a more complete understanding of its operating performance and assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods, by adjusting for certain items which may be recurring or nonrecurring and which in our view do not necessarily reflect ongoing operating performance. We also internally use these measures to assess our operating performance, both in absolute terms and in comparison to other companies, and in evaluating or making selected compensation decisions.  These supplemental disclosures are in addition to GAAP reported measures.  The Company’s presentation of EBITDA and adjusted 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, 2016 and 2015:  

 

   Three Months Ended December 31, 
   2016   2015 
   Net Revenues   EBITDA   Net Revenues   EBITDA 
Hotel Group  $316   $99   $314   $94 
Destination Network   317    53    310    44 
Vacation Ownership   705    182    706    174 
Total Reportable Segments   1,338    334    1,330    312 
Corporate and Other (a)   (18)   (12)   (19)   (37)
Total Company  $1,320   $322   $1,311   $275 
                     
Reconciliation of EBITDA to net income                    
                     
         Three Months Ended December 31,   
         2016         2015 
EBITDA       $322        $275 
Depreciation and amortization        65         61 
Interest expense        34         37 
Interest income        (2)        (2)
Income before income taxes        225         179 
Provision for income taxes        61         39 
Net income       $164        $140 

 

 

(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, 2016 and 2015 (for a description of adjustments and reconciliation by segment, see Table 8):  

 

   Three Months Ended December 31, 
   2016   2015 
       Adjusted       Adjusted 
   Net Revenues   EBITDA   Net Revenues   EBITDA 
Hotel Group  $316   $99   $314   $93 
Destination Network   317    52    310    43 
Vacation Ownership   705    191    706    174 
Total Reportable Segments   1,338    342    1,330    310 
Corporate and Other (a)   (18)   (24)   (19)   (37)
Total Company  $1,320   $318   $1,311   $273 

 

 

 

 

                          Table 2

                          (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, 2016 and 2015:

 

   Twelve Months Ended December 31, 
   2016   2015 
   Net Revenues   EBITDA   Net Revenues   EBITDA 
Hotel Group  $1,309   $391   $1,297   $349 
Destination Network   1,571    356    1,538    367 
Vacation Ownership   2,794    694    2,772    687 
Total Reportable Segments   5,674    1,441    5,607    1,403 
Corporate and Other (a)   (75)   (110)   (71)   (137)
Total Company  $5,599   $1,331   $5,536   $1,266 

 

Reconciliation of EBITDA to net income attributable to Wyndham shareholders

 

   Twelve Months Ended December 31, 
   2016   2015 
EBITDA  $1,331   $1,266 
Depreciation and amortization   252    234 
Interest expense   136    125 
Early extinguishment of debt   11    - 
Interest income   (8)   (9)
Income before income taxes   940    916 
Provision for income taxes   328    304 
Net income   612    612 
Net income attributable to noncontrolling interest   (1)   - 
Net income attributable to Wyndham shareholders  $611   $612 

 

 

(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, 2016 and 2015 (for a description of adjustments and reconciliation by segment, see Table 8):

 

   Twelve Months Ended December 31, 
   2016   2015 
       Adjusted       Adjusted 
   Net Revenues   EBITDA   Net Revenues   EBITDA 
Hotel Group  $1,309   $401   $1,297   $376 
Destination Network   1,571    385    1,538    370 
Vacation Ownership   2,794    708    2,772    688 
Total Reportable Segments   5,674    1,494    5,607    1,434 
Corporate and Other (a)   (75)   (121)   (71)   (137)
Total Company  $5,599   $1,373   $5,536   $1,297 

 

 

 

                                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   2016   679,100    683,300    689,800    697,600     N/A  
   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  
                             
RevPAR  2016  $31.59   $39.10   $43.04   $32.92   $36.67 
   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 
                             
Destination Network                            
Average Number of Members (in 000s)  2016   3,841    3,857    3,868    3,843    3,852 
   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 
                             
Exchange Revenue Per Member  2016  $189.78   $164.61   $164.39   $151.19   $167.48 
   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 
                             
Vacation Rental Transactions (in 000s) (a) (b)  2016   500    409    508    350    1,767 
   2015   459    390    462    319    1,630 
   2014   429    376    455    293    1,552 
   2013   423    355    433    273    1,483 
                             
Average Net Price Per Vacation Rental (a) (b)  2016  $366.08   $492.83   $599.59   $430.14   $475.24 
   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 
                             
Vacation Ownership (a)                            
Gross Vacation Ownership Interest (VOI) Sales (in 000s) (c)  2016  $428,000   $518,000   $564,000   $502,000   $2,012,000 
   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 
                             
Tours (in 000s)  2016   179    213    230    197    819 
   2015   168    206    227    200    801 
   2014   170    208    225    191    794 
   2013   163    206    225    195    789 
                             
Volume Per Guest (VPG)  2016  $2,244   $2,328   $2,320   $2,399   $2,324 
   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 

 

 

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. (See Table 9 for a reconciliation of Gross VOI sales to vacation ownership interest sales).

 

ADDITIONAL DATA

 

   Year  Q1   Q2   Q3   Q4   Full Year 
Hotel Group                            
Number of Properties  2016   7,830    7,880    7,930    8,040     N/A 
   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 
                             
Vacation Ownership                            
Provision for Loan Losses (in 000s) (*)  2016  $63,000   $90,000   $104,000   $86,000   $342,000 
   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 

 

 

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. We believe gross VOI sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period. 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 2013-2016.  

 

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND RECONCILIATION OF FREE CASH FLOWS

(In millions)

(Unaudited)

 

Condensed Consolidated Statements of Cash Flows:            

 

   Twelve Months Ended December 31, 
   2016   2015 
Net cash provided by operating activities  $973   $991 
           
Net cash used in investing activities   (353)   (302)
           
Net cash used in financing activities   (586)   (675)
           
Effect of changes in exchange rates on cash and cash equivalents   (20)   (26)
           
Net increase / (decrease) in cash and cash equivalents  $14   $(12)

 

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 measures 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, 
   2016   2015 
Net cash provided by operating activities  $973   $991 
Less: Property and equipment additions   (191)   (222)
Free cash flow  $782   $769 

 

 

 

 

Table 5

 

Wyndham Worldwide Corporation

REVENUE DETAIL BY REPORTABLE SEGMENT

(In millions)

 

   2016   2015 
   Q1   Q2   Q3   Q4   Year   Q1   Q2   Q3   Q4   Year 
Hotel Group                                                  
Royalties and Franchise Fees  $74   $94   $105   $94   $367   $74   $96   $103   $87   $361 
Marketing, Reservation and Wyndham Rewards Revenues (a)   83    103    125    92    405    96    108    112    92    407 
Hotel Management Reimbursable Revenues (b)   67    71    67    65    271    61    71    73    68    273 
Intersegment Trademark Fees   13    15    16    14    56    12    15    16    15    57 
Owned Hotel Revenues   27    19    17    17    81    25    20    16    19    79 
Ancillary Revenues (c)   31    32    34    34    129    24    24    37    33    120 
Total Hotel Group   295    334    364    316    1,309    292    334    357    314    1,297 
                                                   
Destination Network                                                  
Exchange Revenues   182    159    159    145    645    185    161    157    146    649 
Rental Revenues   183    202    304    151    840    166    200    296    144    807 
Ancillary Revenues (d)   20    23    23    21    86    18    22    23    20    82 
Total Destination Network   385    384    486    317    1,571    369    383    476    310    1,538 
                                                   
Vacation Ownership                                                  
Vacation Ownership Interest Sales   342    409    441    415    1,606    336    417    448    403    1,604 
Consumer Financing   107    108    112    113    440    104    105    108    109    427 
Property Management Fees and Reimbursable Revenues   164    161    168    168    660    153    149    159    155    615 
WAAM Fee-for-Service Commissions   17    16    13    -    46    12    19    23    28    83 
Ancillary Revenues (e)   11    11    10    9    42    12    9    12    11    43 
Total Vacation Ownership   641    705    744    705    2,794    617    699    750    706    2,772 
Total Reportable Segments  $1,321   $1,423   $1,594   $1,338   $5,674   $1,278   $1,416   $1,583   $1,330   $5,607 

 

   2014  2013 
   Q1   Q2   Q3   Q4   Year   Q1   Q2   Q3   Q4   Year 
Hotel Group                                                  
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 Hotel Group   237    283    315    267    1,101    222    262    297    245    1,027 
                                                   
Destination Network                                                  
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 Destination Network   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 and Reimbursable Revenues   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 

 

 

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 6

              (1 of 2)

 

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

 

   As of and For the Three Months Ended December 31, 2016 
                   Average Revenue 
   Number of   Number of   Average   Average Daily   Per Available 
Brand  Properties   Rooms   Occupancy Rate   Rate (ADR)   Room (RevPAR) 
                     
Hotel Group                         
Super 8   2,793    177,191    55.4%  $44.53   $24.69 
                          
Days Inn   1,792    143,610    47.0%  $64.63   $30.36 
                          
Ramada   866    120,809    50.8%  $69.42   $35.29 
                          
Wyndham Hotels and Resorts   247    54,143    54.7%  $102.54   $56.08 
                          
Howard Johnson   369    42,346    49.5%  $56.39   $27.90 
                          
Baymont   436    34,614    48.1%  $67.28   $32.39 
                          
Travelodge   402    29,604    44.6%  $65.75   $29.34 
                          
Microtel Inns & Suites by Wyndham   336    24,224    54.8%  $67.74   $37.13 
                          
Knights Inn   377    22,912    44.9%  $44.79   $20.11 
                          
TRYP by Wyndham   115    16,370    64.6%  $77.53   $50.05 
                          
Wingate by Wyndham   149    13,703    58.0%  $87.16   $50.57 
                          
Hawthorn Suites by Wyndham   111    10,959    61.7%  $81.48   $50.29 
                          
Dolce   21    4,951    49.4%  $152.61   $75.37 
                          
Dazzler   11    1,464    87.2%  $61.21   $53.39 
                          
Esplendor   10    707    66.6%  $77.05   $51.29 
                          
Total Hotel Group   8,035    697,607    51.6%  $63.78   $32.92 
                          
Vacation Ownership                         
Wyndham Vacation Ownership resorts   219    24,665    N/A    N/A    N/A 
                          
Total Wyndham Worldwide   8,254    722,272                

 

   As of and For the Three Months Ended December 31, 2015 
                   Average Revenue 
   Number of   Number of    Average   Average Daily   Per Available 
Brand  Properties   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                

 

 

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, 2016 
                   Average Revenue 
   Number of   Number of   Average   Average Daily   Per Available 
Brand  Properties   Rooms   Occupancy Rate   Rate (ADR)   Room (RevPAR) 
                     
Hotel Group                         
Super 8   2,793    177,191    57.8%  $48.18   $27.84 
                          
Days Inn   1,792    143,610    50.6%  $68.06   $34.44 
                          
Ramada   866    120,809    53.6%  $73.72   $39.50 
                          
Wyndham Hotels and Resorts   247    54,143    57.2%  $105.60   $60.44 
                          
Howard Johnson   369    42,346    49.7%  $61.32   $30.47 
                          
Baymont   436    34,614    51.8%  $70.63   $36.57 
                          
Travelodge   402    29,604    50.5%  $70.73   $35.74 
                          
Microtel Inns & Suites by Wyndham   336    24,224    57.4%  $68.89   $39.55 
                          
Knights Inn   377    22,912    46.0%  $49.80   $22.90 
                          
TRYP by Wyndham   115    16,370    65.6%  $77.79   $51.06 
                          
Wingate by Wyndham   149    13,703    62.7%  $90.70   $56.84 
                          
Hawthorn Suites by Wyndham   111    10,959    66.3%  $82.39   $54.60 
                          
Dolce   21    4,951    52.4%  $162.59   $85.17 
                          
Dazzler   11    1,464    87.2%  $61.21   $53.39 
                          
Esplendor   10    707    66.6%  $77.05   $51.29 
                          
Total Hotel Group   8,035    697,607    54.4%  $67.44   $36.67 
                          
Vacation Ownership                         
Wyndham Vacation Ownership resorts   219    24,665    N/A    N/A    N/A 
                          
Total Wyndham Worldwide   8,254    722,272                

 

   As of and For the Year Ended December 31, 2015 
                   Average Revenue 
   Number of   Number of   Average   Average Daily   Per Available 
Brand  Properties   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                

 

 

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 OF ADJUSTED NET INCOME AND EPS

(In millions, except per share data)

 

   Location on Consolidated Statements of Income  Three Months Ended December 31, 
      2016   2015 
Diluted weighted average shares outstanding      108    116 
              
Diluted EPS     $1.53   $1.21 
              
Net income attributable to Wyndham shareholders     $164   $140 
              
Adjustments:             
Acquisition costs (a)  Operating   2    - 
Restructuring costs (b)  Restructuring    1    (2)
Executive departure costs (c)  General and administrative    6    - 
Bargain purchase gain (d)  Operating   (2)   - 
Legacy costs (e)  General and administrative   (11)   - 
Total adjustments before tax      (4)   (2)
Income tax (benefit)/expense (f) (g)  Provision for income taxes   (14)   (25)
Total adjustments after tax      (18)   (27)
              
Adjustments - EPS impact     $(0.17)  $(0.23)
              
Adjusted net income attributable to Wyndham shareholders     $146   $113 
              
Adjusted diluted EPS     $1.35   $0.98 

 

 

Note: Amounts may not add due to rounding.

(a)The amount for 2016 represents costs related to (i) the Fen acquisition that closed in the fourth quarter at the Company's hotel group business and (ii) acquisitions that closed in the third and fourth quarters at the Company's destination network business.
(b)The amount for 2016 represents costs incurred as a result of enhancing organizational efficiency and rationalizing existing facilities. The amount for 2015 represents a reversal of a portion of restructuring reserves that were established in prior periods.
(c)Represents costs associated with the departure of the chief executive officer at the Company's vacation ownership business.
(d)Represents a gain from a bargain purchase on an acquisition at the Company's destination network business.
(e)Relates to a benefit from an adjustment to certain contingent liabilities from the Company's separation from Cendant.
(f)The amount for 2016 represents (i) the tax effect of the adjustments, (ii) an $8 million benefit primarily due to the release of a foreign tax credit valuation allowance, and (iii) a $7 million benefit from foreign tax credits.
(g)The amount for 2015 represents (i) the tax effect of the adjustments and (ii) a $26 million benefit primarily due to the release of a foreign tax credit valuation allowance.

 

The above tables reconcile certain non-GAAP financial measures.  The presentation of these adjustments is intended to permit the comparison of particular adjustments as they appear in the income statement in order to assist investors' understanding of the overall impact of such adjustments.  In addition to GAAP financial measures, the Company provides adjusted net income and adjusted EPS financial measures to assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods, by adjusting for certain items which may be recurring or non-recurring and which in our view do not necessarily reflect ongoing performance.  We also internally use these measures to assess our operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions.  These supplemental disclosures are in addition to GAAP reported measures.  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.

 

 

 

 

                      Table 7

                      (2 of 2)

 

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF ADJUSTED NET INCOME AND EPS

(In millions, except per share data)

 

    Location on Consolidated Statements of Income   Twelve Months Ended December 31,  
        2016     2015  
Diluted weighted average shares outstanding         111       119  
                     
Diluted EPS       $ 5.53     $ 5.14  
                     
Net income attributable to Wyndham shareholders       $ 611     $ 612  
                     
Adjustments:                    
Acquisition costs (a)   Operating     2       4  
Restructuring costs (b)   Restructuring     15       6  
Executive departure costs (c)   General and administrative     6       -  
Bargain purchase gain (d)   Operating     (2 )     -  
Legacy costs (e)   General and administrative     (11 )     -  
Venezuela currency devaluation (f)   Operating     24       -  
Asset impairments (g)   Loss on sale and asset impairments     -       7  
Contract termination (h)   Operating     7       14  
Early extinguishment of debt (i)   Interest expense     11       -  
Total adjustments before tax         53       31  
Income tax (benefit)/expense (j) (k)   Provision for income taxes     (28 )     (35 )
Total adjustments after tax         25       (4 )
                     
Total adjustments - EPS impact       $ 0.22     $ (0.03 )
                     
Adjusted net income attributable to Wyndham shareholders       $ 636     $ 608  
                     
Adjusted diluted EPS       $ 5.75     $ 5.11  

 

 

Note: Amounts may not add due to rounding.

(a)The amount for 2016 represents costs related to (i) the Fen acquisition that closed in the fourth quarter at the Company's hotel group business and (ii) acquisitions that closed in the third and fourth quarters at the Company's destination network business. The amount for 2015 relates primarily to costs incurred in connection with the acquisition of Dolce Hotels and Resorts at the Company's hotel group business.
(b)Relates to costs incurred as a result of (i) enhancing organizational efficiency and rationalizing existing facilities during the twelve months ended December 31, 2016 and (ii) various organization realignment initiatives across the Company during the twelve months ended December 31, 2015.
(c)Represents costs associated with the departure of the chief executive officer at the Company's vacation ownership business.
(d)Represents a gain from a bargain purchase on an acquisition at the Company's destination network business.
(e)Relates to a benefit from an adjustment to certain contingent liabilities from the Company's separation from Cendant.
(f)Represents the impact from the devaluation of the exchange rate of Venezuela at the Company's destination network business during 2016.
(g)Relates to a non-cash impairment charge related to the write-down of terminated in-process technology projects resulting from the decision to outsource its reservation system to a third-party provider at the Company's hotel group business.
(h)Relates to costs incurred during the third quarter of both 2016 and 2015 associated with the termination of a management contract at the Company's hotel group business.
(i)Represents costs incurred in connection with the Company's early repurchase of its 6.0% senior unsecured notes.
(j)The amount from 2016 represents (i) the tax effect of the adjustments, (ii) an $8 million benefit primarily due to the release of a foreign tax credit valuation allowance, (iii) a $7 million benefit from foreign tax credits, and (iv) a $2 million state tax refund for legacy tax matters. There was no tax benefit associated with the $24 million Venezuela currency devaluation adjustment.
(k)The amount from 2015 represents (i) the tax effect of the adjustments, (ii) a $2 million tax valuation allowance established in connection with the acquisition of Dolce Hotels and Resorts, and (iii) a $26 million benefit primarily due to the release of a foreign tax credit valuation allowance.

 

The above tables reconcile certain non-GAAP financial measures.  The presentation of these adjustments is intended to permit the comparison of particular adjustments as they appear in the income statement in order to assist investors' understanding of the overall impact of such adjustments.  In addition to GAAP financial measures, the Company provides adjusted net income and adjusted EPS financial measures to assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods, by adjusting for certain items which may be recurring or non-recurring and which in our view do not necessarily reflect ongoing performance.  We also internally use these measures to assess our operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions.  These supplemental disclosures are in addition to GAAP reported measures.  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.

 

 

 

 

                                                            Table 8

                                                            (1 of 3)

 

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF ADJUSTED EBITDA BY REPORTABLE SEGMENT

(In millions)

 

       Venezuela                   Executive   Bargain     
       Currency   Acquisition   Legacy   Restructuring   Contract   Departure   Purchase   Adjusted 
  EBITDA   Devaluation (b)   Costs (c)   Costs (d)   Costs (e)   Termination (f)   Costs (g)   Gain (h)   EBITDA 
Three months ended March 31, 2016                                    
Hotel Group  $84   $-   $-   $-   $-   $-   $-   $-   $84 
Destination Network   81    24    -    -    -    -    -    -    105 
Vacation Ownership   136    -    -    -    -    -    -    -    136 
Total Reportable Segments   301    24    -    -    -    -    -    -    325 
Corporate and Other (a)   (34)   -    -    -    -    -    -    -    (34)
Total Company  $267   $24   $-   $-   $-   $-   $-   $-   $291 
                                              
Three months ended June 30, 2016                                             
Hotel Group  $101   $-   $-   $-   $-   $-   $-   $-   $101 
Destination Network   85    -    1         -    -    -    -    85 
Vacation Ownership   187    -    -    -    -    -    -    -    187 
Total Reportable Segments   373    -    1    -    -    -    -    -    373 
Corporate and Other (a)   (33)   -    -    -    -    -    -    -    (33)
Total Company  $340   $-   $1   $-   $-   $-   $-   $-   $340 
                                              
Three months ended September 30, 2016                                             
Hotel Group  $107   $-   $-   $-   $3   $7   $-   $-   $117 
Destination Network   138    -    -    -    4    -    -    -    142 
Vacation Ownership   189    -    -    -    6    -    -    -    195 
Total Reportable Segments   434    -    -    -    13    7    -    -    454 
Corporate and Other (a)   (32)   -         (1)   1    -    -    -    (31)
Total Company  $402   $-   $-   $(1)  $14   $7   $-   $-   $423 
                                              
Three months ended December 31, 2016                                             
Hotel Group  $99   $-   $1   $-   $(1)  $-   $-   $-   $99 
Destination Network   53    -    1    -    -    -    -    (2)   52 
Vacation Ownership   182    -         -    2    -    6    -    191 
Total Reportable Segments   334    -    2    -    1    -    6    (2)   342 
Corporate and Other (a)   (12)   -    -    (11)   -    -    -    -    (24)
Total Company  $322   $-   $2   $(11)   1   $-   $6   $(2)  $318 
                                              
Twelve months ended December 31, 2016                                             
Hotel Group  $391   $-   $1   $-   $2   $7   $-   $-   $401 
Destination Network   356    24    1    -    5    -    -    (2)   385 
Vacation Ownership   694    -    -    -    8    -    6    -    708 
Total Reportable Segments   1,441    24    2    -    15    7    6    (2)   1,494 
Corporate and Other (a)   (110)   -    -    (11)   -    -    -    -    (121)
Total Company  $1,331   $24   $2   $(11)  $15   $7   $6   $(2)  $1,373 

 

 

Note: Amounts may not add across due to rounding. The sum of the quarters may not add down due to rounding.

(a)Includes the elimination of transactions between segments.
(b)Represents the impact from the devaluation of the exchange rate of Venezuela.
(c)Represents costs related to acquisitions.
(d)Relates to a benefit from an adjustments to certain contingent liabilities from the Company's separation from Cendant.
(e)Relates to costs incurred due to enhancing organizational efficiency and rationalizing existing facilities across the Company.
(f)Relates to additional costs associated with the termination of a management contract.
(g)Represents costs associated with the departure of the chief executive officer at the Company's vacation ownership business.
(h)Represents a gain from a bargain purchase on an acquisition of a vacation rentals business.

 

 

 

 

                                                Table 8

                                                (2 of 3)

 

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF ADJUSTED EBITDA BY REPORTABLE SEGMENT

(In millions)

 

       Legacy   Acquisition   Restructuring   Asset   Contract   Adjusted 
  EBITDA   Adjustments (b)   Costs (c)   Costs (d)   Impairment (e)   Termination (f)   EBITDA 
Three months ended March 31, 2015                            
Hotel Group  $76   $-   $3   $-   $-   $-   $79 
Destination Network   105    -    -    (1)   -    -    104 
Vacation Ownership   130    -    -    -    -    -    130 
Total Reportable Segments   311    -    3    (1)   -    -    313 
Corporate and Other (a)   (34)   -    -    -    -    -    (34)
Total Company  $277   $-   $3   $(1)  $-   $-   $279 
                                    
Three months ended June 30, 2015                                   
Hotel Group  $96   $-   $1   $-   $-   $-   $97 
Destination Network   84    -    -    -    -    -    84 
Vacation Ownership   182    -    -    -    -    -    182 
Total Reportable Segments   362    -    1    -    -    -    363 
Corporate and Other (a)   (30)   (1)   -    -    -    -    (31)
Total Company  $332   $(1)  $1   $-   $-   $-   $332 
                                    
Three months ended September 30, 2015                                   
Hotel Group  $83   $-   $-   $4   $7   $14   $108 
Destination Network   134    -    -    3    -    -    137 
Vacation Ownership   200    -    -    1    -    -    201 
Total Reportable Segments   417    -    -    8    7    14    446 
Corporate and Other (a)   (35)   1    -    -    -    -    (34)
Total Company  $382   $1   $-   $8   $7   $14   $412 
                                    
Three months ended December 31, 2015                                   
Hotel Group  $94   $-   $-   $(1)  $-   $-   $93 
Destination Network   44    -    -    (1)   -    -    43 
Vacation Ownership   174    -    -    -    -    -    174 
Total Reportable Segments   312    -    -    (2)   -    -    310 
Corporate and Other (a)   (37)   -    -    -    -    -    (37)
Total Company  $275   $-   $-   $(2)  $-   $-   $273 
                                    
Twelve months ended December 31, 2015                                   
Hotel Group  $349   $-   $3   $3   $7   $14   $376 
Destination Network   367    -    1    2    -    -    370 
Vacation Ownership   687    -    -    1    -    -    688 
Total Reportable Segments   1,403    -    4    6    7    14    1,434 
Corporate and Other (a)   (137)   -    -    -    -    -    (137)
Total Company  $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 adjustments to certain contingent liabilities from the Company's 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 8

                                  (3 of 3)

 

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF ADJUSTED EBITDA BY REPORTABLE SEGMENT

SHARED-BASED COMPENSATION EXPENSE

(In millions)

 

The following tables provide detail regarding share-based compensation expense which is included within adjusted EBITDA:

  

   2016 
   Q1   Q2   Q3   Q4   Full Year 
Adjusted EBITDA  $291   $340   $423   $318   $1,373 
Share-based compensation expense (*)   13    20    14    13    61 
Adjusted EBITDA excluding share-based compensation expense  $304   $360   $437   $331   $1,434 

 

   2015 
   Q1   Q2   Q3   Q4   Full Year 
Adjusted EBITDA  $279   $332   $412   $273   $1,297 
Share-based compensation expense (*)   15    13    13    15    55 
Adjusted EBITDA excluding share-based compensation expense  $294   $345   $425   $288   $1,352 

 

 

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

(*)Excludes share-based compensation expenses for which there was no impact on adjusted EBITDA. Such costs amounted to $1 million during Q1, Q2, Q3 and $4 million for Q4 2016 and $7 million for the full year. During 2015, such costs amounted to $1 million during Q1, Q2 and Q3 and $3 million for the full year.  The Company believes providing adjusted EBITDA with the additional exclusion of share-based compensation expense assists our investors and management by providing an additional financial measure to evaluate ongoing operations by excluding the variations among companies in timing, amount and reporting of share-based compensation expense, which may differ significantly among companies.

 

 

 

 

                        Table 9

 

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF GROSS VOI SALES

(In millions)  

 

GROSS VOI SALES                                                                                         

We believe gross vacation ownership sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period.

 

The following table provides a reconciliation of Gross VOI sales (see Table 3) to vacation ownership interest sales (see Table 5):

                           

Year                    
2016  Q1   Q2   Q3   Q4   Full Year 
                     
Gross VOI sales  $428   $518   $564   $502   $2,012 
Less: Sales under WAAM Fee-for-Service   (23)   (20)   (20)   (1)   (64)
Gross VOI sales, net of WAAM Fee-for-Service sales   405    498    544    501    1,948 
Less: Loan loss provision   (63)   (90)   (104)   (86)   (342)
Vacation ownership interest sales  $342   $409   $441   $415   $1,606 
                          
2015                         
                          
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 

 

 

Note: Amounts may not add due to rounding.

 

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 
                     
2016  $25   $22   $31   $30   $108 
2015  $24   $17   $32   $27   $100 
2014  $25   $21   $27   $24   $97 
2013  $24   $18   $22   $25   $89 

 

 

 

 

Table 10

Wyndham Worldwide Corporation

2017 OUTLOOK -  NON-GAAP

(In millions, except per share data)

 

   Outlook (a) (b)   Outlook (a) (b) 
   As Adjusted   As Adjusted 
   (Non-GAAP)   (Non-GAAP) 
   Low   High 
         
Net revenues  $5,800   $5,950 
           
Adjusted EBITDA  $1,410   $1,440 
Depreciation and amortization   (268)   (263)
Interest expense, net   (138)   (134)
Adjusted income before taxes   1,005    1,038 
Income taxes   368    (380)
Adjusted net income  $637   $658 
           
Adjusted diluted earnings per share  $5.90   $6.10 
           
Diluted shares   107.9    107.9 

 

 

 

In determining adjusted EBIDTA, adjusted Net Income and adjusted EPS, the Company excludes certain items which are otherwise included in determining the comparable GAAP financial measures. A description of the adjustments which have been applicable in determining adjusted EBITDA, adjusted Net Income and adjusted EPS is included in Tables 7 and 8.  The Company is providing outlook for EBITDA, Net Income and EPS only on a non-GAAP basis because the Company is unable to predict with reasonable certainty the totality or ultimate outcome or occurrence of these adjustments for the forward-looking period, which can be dependent on future events that may not be reliably predicted, such as acquisition costs, legacy expenses, restructuring costs, asset impairments, contract termination costs, currency devaluations, and early extinguishment of debt costs. Based on past reported results, where one or more of these items have been applicable, such excluded special items could be material, individually or in the aggregate, to the reported results. See Tables 7 and 8 for historical adjustments.

 

(a)Outlook represents Company's approximate projection of performance for the outlook period.  Projections may not total because the Company does not expect the actual results of all items to be at the precise amount simultaneously.

 

(b)We estimate for the 2017 full year outlook period pre-tax adjustments related to restructuring expenses totaling between $8 million and $12 million (after-tax between $5 million and $8 million). These estimates do not include special items for the outlook period that cannot be predicted with reasonable certainty.  We cannot assure that the foregoing estimates for the outlook period will be accurate or may not significantly change or that other special items may not occur in the outlook period.

 

 

 

 

                        Table 11

 

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION - CONSTANT CURRENCY AND CURRENCY NEUTRAL

(In millions, except per share data)

                         

The Company reports certain current year period financial measures on a constant currency and currency-neutral basis and excluding the impact of acquisitions.  The Company believes providing certain financial measures on a constant currency and currency-neutral basis as well as excluding the impact of acquisitions assists management and investors in better understanding underlying results and trends by excluding the impact of period over period changes in foreign exchange rates and changes resulting from acquisitions.

 

Constant currency results assume foreign results are translated from foreign currencies to the U.S. dollar at exchange rates consistent with those in the comparable period.

 

Currency Neutral results (i) assume foreign results are translated from foreign currencies to the U.S. dollar at exchange rates consistent with those in the comparable period and (ii) eliminating foreign exchange related activities such as foreign exchange hedges, balance sheet remeasurements, currency devaluations and/or other adjustments.

 

Acquisition results are defined as the incremental period over period changes in the Company's results directly attributable to acquisitions.

 

Revenues in Constant Currency and Excluding Acquisitions:  Three Months Ended December 31, 
   2016   2015   % Change 
Destination Network revenue as reported  $317   $310    2%
Adjustments:               
Foreign currency - constant currency   10    -    * 
Incremental revenues from acquisitions   (8)   -    * 
Total Destination Network revenues in constant currency and excluding acquisitions  $319   $310    3%
                
Exchange revenue as reported  $145   $146    -1%
Adjustments:               
Foreign currency - constant currency   2    -    * 
Total Exchange revenues in constant currency and excluding acquisitions  $147   $146    1%
                
Rental revenue as reported  $151   $144    5%
Adjustments:               
Foreign currency - constant currency   8    -    * 
Incremental revenues from acquisitions   (8)   -    * 
Total Rental revenues in constant currency and excluding acquisitions  $151   $144    5%

 

Currency-neutral Adjusted EBITDA:  Three Months Ended December 31, 
   2016   2015   % Change 
Hotel Group Adjusted EBITDA (a)  $99   $93    6%
Adjustments:               
Foreign currency - currency-neutral   1    -    * 
Hotel Group Currency-neutral Adjusted EBITDA excluding acquisitions  $100   $93    8%

 

Currency-neutral Adjusted EBITDA:  Twelve Months Ended December 31, 
   2016   2015   % Change 
Adjusted EBITDA (a)  $1,373   $1,297    6%
Adjustments:               
Foreign currency - currency-neutral   17    -    * 
Incremental EBITDA from acquisitions   (7)   -    * 
Currency-neutral Adjusted EBITDA excluding acquisitions  $1,383   $1,297    7%

 

 

*Not meaningful.
(a)See Table 8 for a reconciliation of EBITDA to adjusted EBITDA and Table 2 for a reconciliation of EBITDA to Net Income.

 

 

 

 

                                      Table 12

 

Wyndham Worldwide Corporation

SCHEDULE OF DEBT

(In millions)

                                             

   December 31,   December 31, 
   2016   2015 
         
Securitized vacation ownership debt (a)          
Term notes  $1,857   $1,867 
Bank conduit facility (b)   284    239 
Total securitized vacation ownership debt (c)   2,141    2,106 
Less: Current portion of securitized vacation ownership debt   195    209 
Long-term securitized vacation ownership debt  $1,946   $1,897 
           
Debt:          
Revolving credit facility (due July 2020) (d)  $14   $7 
Commercial paper (e)   427    109 
Term loan (due March 2021)   323    - 
$315 million 6.00% senior unsecured notes (due December 2016)   -    316 
$300 million 2.95% senior unsecured notes (due March 2017) (f)   300    299 
$14 million 5.75% senior unsecured notes (due February 2018)   14    14 
$450 million 2.50% senior unsecured notes (due March 2018)   449    448 
$40 million 7.375% senior unsecured notes (due March 2020)   40    40 
$250 million 5.625% senior unsecured notes (due March 2021)   248    247 
$650 million 4.25% senior unsecured notes (due March 2022)   648    648 
$400 million 3.90% senior unsecured notes (due March 2023)   407    408 
$350 million 5.10% senior unsecured notes (due October 2025)   338    337 
Capital leases   143    153 
Other   20    49 
Total long-term debt   3,371    3,075 
Less: Current portion of long-term debt   34    44 
Long-term debt  $3,337   $3,031 

 

 

(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 2018 and borrowing capacity of $650 million. As of December 31, 2016, this facility had a remaining borrowing capacity of $366 million.
(c)This debt is collateralized by $2,601 million and $2,576 million, of underlying vacation ownership contract receivables and related assets as of December 31, 2016, and December 31, 2015, respectively.
(d)Represents a $1.5 billion revolving credit facility that expires in July 2020. As of December 31, 2016, the Company had $1 million of outstanding letters of credit. After considering outstanding commercial paper borrowings of $427 million, the remaining borrowing capacity was $1.1 billion as of December 31, 2016.
(e)Represents commercial paper programs of $1.25 billion with a remaining borrowing capacity of $823 million as of December 31, 2016.
(f)Classified as long-term as the Company has the intent to refinance such debt on a long-term basis and the ability to do so with its revolving credit facility.