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Wyndham Worldwide Reports Fourth Quarter and Full Year 2013 Earnings

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SOURCE Wyndham Worldwide Corporation

Full Year Adjusted Diluted EPS Growth of 19%

Increases Dividend 21%

PARSIPPANY, N.J., Feb. 7, 2014 /PRNewswire/ -- Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months and year ended December 31, 2013. 

Highlights:

  • Fourth quarter adjusted diluted earnings per share (EPS) was $0.73, an increase of 16% from adjusted diluted EPS of $0.63 in the fourth quarter of 2012.  Reported diluted EPS was $0.65 in the fourth quarter of 2013, compared with $0.57 during the same period in 2012.
  • Fourth quarter adjusted EBITDA increased 10% from the prior-year period.
  • The Company's Board of Directors authorized an increase in the quarterly cash dividend to $0.35 from $0.29 per share, beginning with the dividend that is expected to be declared in the first quarter of 2014.
  • During the quarter, the Company repurchased 1.8 million shares of its common stock for $115 million.   For the full year, the Company spent $590 million to repurchase 9.7 million shares of its common stock.

"We finished the year with another strong quarter, marking our fourth consecutive year of double-digit growth in adjusted EPS," said Stephen P. Holmes, chairman and CEO.  "We are excited about our prospects for 2014 as we continue to execute and innovate across our businesses and maintain our capital allocation discipline to enhance value for shareholders."    

FOURTH QUARTER 2013 OPERATING RESULTS
Fourth quarter revenues were $1.2 billion, an increase of 9% from the prior year period.  The increase reflects growth in all of the Company's business segments.

Adjusted net income was $96 million, or $0.73 per diluted share, compared with $89 million, or $0.63 per diluted share for the same period in 2012.  The increases reflect stronger operating results in the Company's lodging and vacation ownership businesses.  EPS growth also benefited from the Company's share repurchase program, which decreased weighted average diluted share count by 7% year-over-year.

Reported net income for the fourth quarter of 2013 was $86 million, or $0.65 per diluted share, compared with $81 million, or $0.57 per diluted share, for the fourth quarter of 2012.  Reported net income included several items not included in adjusted net income.  The net result of these items unfavorably impacted fourth quarter 2013 net income by $10 million and unfavorably impacted fourth quarter 2012 net income by $8 million.  Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

FULL YEAR 2013 OPERATING RESULTS
Revenues for full year 2013 were $5.0 billion, an increase of 10% over the prior-year period.  Adjusted net income for the full year 2013 was $515 million, or $3.83 per diluted share, compared with $469 million, or $3.23 per diluted share, for the prior year.  The increases reflect stronger operating results across all of the Company's businesses.  EPS growth also benefited from the Company's share repurchase program, which decreased weighted average diluted share count by 7% compared with 2012.

Reported net income for full year 2013 was $432 million, or $3.21 per diluted share, compared with reported net income of $400 million, or $2.75 per diluted share, for the prior-year period.  Reported net income included several items not included in adjusted net income.  The net result of these items unfavorably impacted full year 2013 net income by $83 million and unfavorably impacted full year 2012 net income by $69 million.  Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

Free cash flow was $770 million for the year ended December 31, 2013, compared with $796 million for the same period in 2012, reflecting higher capital expenditures.  The Company defines free cash flow as net cash provided by operating activities less capital expenditures.  For the year ended December 31, 2013, net cash provided by operating activities was $1,008 million, compared with $1,004 million in the prior year period. 

BUSINESS UNIT RESULTS

Lodging (Wyndham Hotel Group)
Revenues were $245 million in the fourth quarter of 2013, a 10% increase over the fourth quarter of 2012.  The increase reflects higher RevPAR, a larger system size and increased hotel management reimbursable fees. 

Domestic RevPAR increased 4.7% compared with the fourth quarter of 2012.  Total system-wide RevPAR increased 3.8%, reflecting proportionally higher growth of lower RevPAR hotels in China. 

Adjusted EBITDA for the fourth quarter of 2013 was $64 million, a 3% increase compared with the fourth quarter of 2012.  The increase was primarily due to higher RevPAR and a larger system size, partially offset by the unfavorable timing of marketing expenditures.  Adjusted EBITDA excludes a $9 million restructuring charge and $8 million of non-cash asset impairment charges.

As of December 31, 2013, the Company's hotel system consisted of approximately 7,490 properties and over 645,400 rooms, a 2.9% room increase compared with the fourth quarter of 2012.  The development pipeline included over 970 hotels and approximately 114,000 rooms, of which 58% were international and 68% were new construction.

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)
Revenues were $305 million in the fourth quarter of 2013, a 4% increase over the fourth quarter of 2012.  In constant currency and excluding the impact of acquisitions, revenues increased 1%.

Exchange revenues were $150 million, a decline of 2% from the fourth quarter of 2012.  In constant currency, exchange revenues were flat, as a 1.6% increase in average number of members was offset by a 1.8% decline in exchange revenue per member.

Vacation rental revenues were $138 million, a 10% increase over the fourth quarter of 2012.  In constant currency and excluding acquisitions, vacation rental revenues were up 4%, reflecting a 4.4% increase in the average net price per vacation rental and flat transaction volume.  

Adjusted EBITDA for the fourth quarter of 2013 was $36 million, compared with $42 million for the fourth quarter of 2012, primarily reflecting the impact of seasonality from acquisitions and foreign currency movements.

Vacation Ownership (Wyndham Vacation Ownership)
Revenues were $658 million in the fourth quarter of 2013, a 12% increase over the fourth quarter of 2012, primarily reflecting higher gross VOI sales. 

Gross VOI sales were $488 million in the fourth quarter of 2013, an increase of 12% over the fourth quarter of 2012, primarily reflecting a 6.6% increase in tour flow and a 6.5% increase in volume per guest. 

Adjusted EBITDA for the fourth quarter of 2013 was $172 million, a 19% increase compared with the fourth quarter of 2012, primarily due to higher gross VOI sales and a lower loan loss provision. 

Other Items

  • The Company repurchased 1.8 million shares of common stock for $115 million during the fourth quarter of 2013.  For the full year, the Company repurchased 9.7 million shares of common stock for $590 million.  From January 1 through February 6, 2014, the Company repurchased an additional 0.3 million shares for $24 million.  The Company's remaining share repurchase authorization totals $643 million as of February 6, 2014.
  • Net interest expense in the fourth quarter of 2013 was $32 million, compared with $33 million in the fourth quarter of 2012, as lower rates associated with recent financings offset higher debt levels.

Balance Sheet Information as of December 31, 2013:

  • Cash and cash equivalents of $194 million, compared with $195 million at December 31, 2012
  • Vacation ownership contract receivables, net, of $2.8 billion, compared with $2.9 billion at December 31, 2012
  • Vacation ownership and other inventory of $1.0 billion, compared with $1.1 billion at December 31, 2012
  • Securitized vacation ownership debt of $1.9 billion, compared with $2.0 billion at December 31, 2012
  • Long-term debt of $2.9 billion, compared with $2.6 billion at December 31, 2012. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.3 billion as of December 31, 2013, compared with $0.6 billion as of December 31, 2012

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 2014, the Company provides the following guidance:

  • Revenues of approximately $5.250 - $5.350 billion
  • Adjusted EBITDA of approximately $1.215 - $1.240 billion
  • Adjusted EPS of approximately $4.18 - $4.28 based on a diluted share count of 131 million

Conference Call Information
Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company's results, outlook and guidance on Friday, February 7, 2014 at 8:30 a.m. EST. Listeners may access the webcast live through the Company's website at www.wyndhamworldwide.com/investors.  An archive of this webcast will be available on the website for approximately 90 days beginning at noon EST on February 7, 2014. The conference call may also be accessed by dialing 800-369-2125 and providing the passcode "WYNDHAM." Listeners are urged to call at least 10 minutes prior to the scheduled start time. A telephone replay will be available for approximately 90 days beginning at noon EST on February 7, 2014, at 866-415-2340.

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

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

About Wyndham Worldwide Corporation
One of the world's largest hospitality companies, Wyndham Worldwide (NYSE: WYN) provides a wide range of hospitality products and services 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 approximately 7,490 franchised hotels and over 645,400 hotel rooms worldwide. Wyndham Exchange & Rentals is the worldwide leader in vacation exchange and the world's largest professionally managed vacation rentals business, providing more than 5 million leisure-bound families annually with access to over 107,000 vacation properties in over 100 countries through its prominent exchange and vacation rental brands. The industry and timeshare ownership market leader, Wyndham Vacation Ownership develops, markets, and sells vacation ownership interests and provides consumer financing to owners through its network of over 190 vacation ownership resorts serving approximately 907,000 owners throughout the United States, Canada, Mexico, the Caribbean, and the South Pacific. Based in Parsippany, NJ, Wyndham Worldwide employs approximately 32,800 associates globally. For more information, please visit www.wyndhamworldwide.com.

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

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.  Factors that could cause actual results to differ materially from those in the forward-looking statements include general economic conditions, the performance of the financial and credit markets, the economic environment for the hospitality industry, the impact of war, terrorist activity or political strife, operating risks associated with the hotel, vacation exchange and rentals and vacation ownership businesses, as well as those described in the Company's Annual Report on Form 10-K, filed with the SEC on February 15, 2013.  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.

 









Table 1









(1 of 2)

Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)





















In addition to other measures, management evaluates the operating results of each of its reportable segments based upon net revenues and "EBITDA", which is defined as net income before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing interest) and income taxes, each of which is presented on the Company's Consolidated Statements of Income. The Company believes that EBITDA is a useful measure of performance for the Company's industry segments which, when considered with GAAP measures, the Company believes gives a more complete understanding of its operating performance. The Company's presentation of EBITDA may not be comparable to similarly-titled measures used by other companies.


The following tables summarize net revenues and EBITDA for reportable segments, as well as reconcile EBITDA to Net Income Attributable to Wyndham shareholders for the three months ended December 31, 2013 and 2012:




Three Months Ended December 31,




2013


2012




Net Revenues


EBITDA


Net Revenues


EBITDA


Lodging

$         245


$         47


$          223


$        62


Vacation Exchange and Rentals

305


36


293


28


Vacation Ownership

658


172


590


142


Total Reportable Segments

1,208


255


1,106


232


Corporate and Other (a)

(13)


(33)


(12)


(28)


Total Company

$       1,195


$       222


$       1,094


$       204












Reconciliation of EBITDA to Net Income Attributable to Wyndham shareholders















Three Months Ended December 31,






2013




2012


EBITDA



$      222




$      204


Depreciation and amortization


56




49


Interest expense



34




35


Interest income



(2)




(2)


Income before income taxes


134




122


Provision for income taxes


48




41


Net income attributable to Wyndham shareholders

$       86




$       81












__________









(a) Includes the elimination of transactions between segments.











The following tables summarize net revenues and Adjusted EBITDA for reportable segments for the three months ended December 31, 2013 and 2012 (for a description of adjustments by segment, see Table 7):




Three Months Ended December 31,




2013


2012






Adjusted




Adjusted




Net Revenues


EBITDA


Net Revenues


EBITDA


Lodging

$         245


$         64


$         223


$      62


Vacation Exchange and Rentals

305


36


293


42


Vacation Ownership

658


172


590


144


Total Reportable Segments

1,208


272


1,106


248


Corporate and Other

(13)


(33)


(12)


(30)


Total Company

$       1,195


$       239


$      1,094


$    218


 

 









Table 1









(2 of 2)

Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)





















The following tables summarize net revenues and EBITDA for reportable segments, as well as reconcile EBITDA to Net Income Attributable to Wyndham shareholders for the twelve months ended December 31, 2013 and 2012:













Twelve Months Ended December 31,




2013


2012




Net Revenues


EBITDA


Net Revenues


EBITDA


Lodging

$        1,027


$          279


$           890


$          272


Vacation Exchange and Rentals

1,526


356


1,422


328


Vacation Ownership

2,515


619


2,269


549


Total Reportable Segments

5,068


1,254


4,581


1,149


Corporate and Other (a)

(59)


(122)


(47)


(104)


Total Company

$        5,009


$        1,132


$        4,534


$        1,045












Reconciliation of EBITDA to Net Income Attributable to Wyndham shareholders
















Twelve Months Ended December 31,






2013




2012


EBITDA



$        1,132




$        1,045


Depreciation and amortization


216




185


Interest expense


131




132


Early extinguishment of debt

111




108


Interest income



(9)




(8)


Income before income taxes


683




628


Provision for income taxes


250




229


Net income



433




399


Net (income)/loss attributable to noncontrolling interest

(1)




1


Net income attributable to Wyndham shareholders

$          432




$          400












__________









(a) Includes the elimination of transactions between segments.



The following tables summarize net revenues and Adjusted EBITDA for reportable segments for the twelve months ended December 31, 2013 and 2012 (for a description of adjustments by segment, see Table 7):




Twelve Months Ended December 31,




2013


2012






Adjusted




Adjusted




Net Revenues


EBITDA


Net Revenues


EBITDA


Lodging

$        1,027


$          296


$          890


$          271


Vacation Exchange and Rentals

1,526


356


1,422


340


Vacation Ownership

2,515


621


2,269


552


Total Reportable Segments

5,068


1,273


4,581


1,163


Corporate and Other

(59)


(121)


(47)


(109)


Total Company

$        5,009


$        1,152


$        4,534


$        1,054


 

 









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,



2013


2012


2013


2012

Net revenues









Service and membership fees

$         496


$         446


$    2,329


$    2,005


Vacation ownership interest sales

384


337


1,379


1,323


Franchise fees

139


134


599


583


Consumer financing

108


110


426


421


Other

68


67


276


202

Net revenues

1,195


1,094


5,009


4,534










Expenses









Operating

517


454


2,161


1,842


Cost of vacation ownership interests

48


46


155


161


Consumer financing interest

18


21


78


90


Marketing and reservation

180


169


751


723


General and administrative

193


185


720


666


Asset impairments

8


8


8


8


Restructuring

9


7


10


7


Depreciation and amortization

56


49


216


185

Total expenses

1,029


939


4,099


3,682










Operating income

166


155


910


852

Other income, net

-


-


(6)


(8)

Interest expense

34


35


131


132

Early extinguishment of debt

-


-


111


108

Interest income

(2)


(2)


(9)


(8)










Income before income taxes

134


122


683


628

Provision for income taxes

48


41


250


229










Net income

86


81


433


399

Net (income)/loss attributable to noncontrolling interest

-


-


(1)


1










Net income attributable to Wyndham shareholders

$           86


$          81


$      432


$       400










Earnings per share









Basic

$        0.66


$        0.58


$     3.25


$      2.80


Diluted

0.65


0.57


3.21


2.75










Weighted average shares outstanding









Basic

129


139


133


143


Diluted

131


141


135


145

__________








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

 

 







Table 3







(1 of 3)

Wyndham Worldwide Corporation

OPERATING STATISTICS









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











Year

Q1

Q2

Q3

Q4

Full Year

Lodging (a)








Number of Rooms

2013

631,800

635,100

638,300

645,400

N/A



2012

609,300

608,300

618,100

627,400

N/A



2011

609,600

612,900

611,200

613,100

N/A



2010

593,300

606,800

605,700

612,700

N/A










RevPAR

2013

$     31.05

$    38.00

$    41.78

$    33.07

$       36.00



2012

$     29.73

$    37.23

$    40.39

$    31.86

$       34.80



2011

$     27.71

$    35.38

$    39.49

$    30.65

$       33.34



2010

$     25.81

$    32.25

$    37.14

$    29.18

$       31.14









Vacation Exchange and Rentals








Average Number of Members (in 000s)

2013

3,668

3,686

3,711

3,728

3,698



2012

3,684

3,670

3,672

3,670

3,674



2011

3,766

3,755

3,744

3,734

3,750



2010

3,746

3,741

3,766

3,759

3,753










Exchange Revenue Per Member

2013

$   210.96

$  182.42

$  169.95

$  161.21

$      181.02



2012

$   204.56

$  177.07

$  171.14

$  165.86

$      179.68



2011

$   205.64

$  178.46

$  172.38

$  161.68

$      179.59



2010

$   201.93

$  172.20

$  173.44

$  162.59

$      177.53










Vacation Rental Transactions (in 000s) (a)

2013

423

355

433

273

1,483



2012

418

325

390

259

1,392



2011

398

328

370

250

1,347



2010

291

297

322

253

1,163










Average Net Price Per Vacation Rental (a)

2013

$   392.64

$   540.38

$   677.81

$   506.62

$      532.11



2012

$   379.40

$   524.40

$   635.44

$   484.69

$      504.55



2011

$   377.71

$   549.09

$   701.81

$   497.04

$      530.78



2010

$   361.17

$   387.01

$   500.31

$   449.12

$      425.38









Vacation Ownership (a)








Gross Vacation Ownership Interest (VOI) Sales (in 000s) (b)

2013

$ 384,000

$ 481,000

$ 536,000

$ 488,000

$ 1,889,000



2012

$ 384,000

$ 460,000

$ 502,000

$ 435,000

$ 1,781,000



2011

$ 319,000

$ 412,000

$ 455,000

$ 409,000

$ 1,595,000



2010

$ 308,000

$ 371,000

$ 412,000

$ 373,000

$ 1,464,000










Tours (c)

2013

163,000

206,000

225,000

195,000

789,000



2012

148,000

186,000

207,000

183,000

724,000



2011

137,000

177,000

197,000

173,000

685,000



2010

123,000

163,000

187,000

160,000

634,000










Volume Per Guest (VPG) (c)

2013

$    2,211

$ 2,256

$     2,278

$     2,370

$        2,281



2012

$    2,414

$ 2,361

$     2,315

$     2,225

$        2,324



2011

$    2,192

$ 2,227

$     2,197

$     2,296

$        2,229



2010

$    2,334

$ 2,156

$     2,081

$     2,214

$        2,183









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







(a)

Includes the impact of acquisitions from the acquisition dates forward. Therefore, the operating statistics are not presented on a comparable basis.

(b)

Includes gross VOI sales under the Company's Wyndham Asset Affiliate Model (WAAM) 2.0 beginning in the second quarter of 2012 (see Table 9 for a reconciliation of gross VOI sales to vacation ownership interest sales).

(c)

Includes the impact of WAAM 2.0 related tours beginning in the second quarter of 2012.















Table 3







(2 of 3)









Wyndham Worldwide Corporation

ADDITIONAL DATA



















Year

Q1

Q2

Q3

Q4

Full Year

Lodging (a)








Number of Properties

2013

7,380

7,410

7,440

7,490

N/A



2012

7,150

7,170

7,260

7,340

N/A



2011

7,190

7,220

7,190

7,210

N/A



2010

7,090

7,160

7,150

7,210

N/A









Vacation Ownership








Provision for Loan Losses (in 000s) (b)

2013

$ 84,000

$  90,000

$ 102,000

$ 73,000

$ 349,000



2012

$ 96,000

$100,000

$ 124,000

$ 89,000

$ 409,000



2011

$ 79,000

$  80,000

$   96,000

$ 83,000

$ 339,000



2010

$ 86,000

$  87,000

$   85,000

$ 82,000

$ 340,000










Sales under WAAM 1.0 (in 000s) (c)

2013

$ 36,000

$  44,000

$  51,000

$ 29,000

$ 160,000



2012

$ 17,000

$  18,000

$    5,000

$ 10,000

$   49,000



2011

$ 18,000

$  19,000

$  38,000

$ 31,000

$ 106,000



2010

$   5,000

$  13,000

$  20,000

$ 14,000

$   51,000










WAAM 1.0 Commission Revenues (in 000s)

2013

$ 24,000

$  30,000

$ 33,000

$ 20,000

$ 107,000



2012

$ 12,000

$  11,000

$   4,000

$   6,000

$   33,000



2011

$ 10,000

$  11,000

$ 23,000

$ 21,000

$   65,000



2010

$   3,000

$    8,000

$ 12,000

$   9,000

$   31,000










Sales under WAAM 2.0 (in 000s) (d)

2013

$ 13,000

$    1,000

$           -

$           -

$  14,000



2012

$           -

$  12,000

$ 57,000

$ 30,000

$  99,000









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







(a)

Includes the impact of an acquisition from the acquisition date forward. Therefore, the operating statistics are not presented on a comparable basis.

(b)

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.


(c)

Represents gross VOI sales under the Company's WAAM 1.0 for which the Company earns commission revenue (WAAM 1.0 Commission Revenues). The commission revenue earned on these sales is included in service fees and membership revenues on the Consolidated Statements of Income.


(d)

Represents gross VOI sales under the Company's WAAM 2.0 which enables the Company to acquire and own completed timeshare units close to the timing of the sales of such units. This significantly reduces the period between the deployment of capital to acquire inventory and the subsequent return on investment which occurs at the time of its sale to a timeshare purchaser. The Company implemented this sales model during the second quarter of 2012 and as such, there is no historical data prior to 2012.


























Table 3








(3 of 3)









Wyndham Worldwide Corporation

OPERATING STATISTICS


GLOSSARY OF TERMS









Lodging















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









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









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









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









Vacation Exchange and Rentals















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









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









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









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









Vacation Ownership















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









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 2010-2013.









General















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
















 

 












Table 4














Wyndham Worldwide Corporation

REVENUE DETAIL BY REPORTABLE SEGMENT

(In millions)





























2013


2012



Q1

Q2

Q3

Q4

Year


Q1

Q2

Q3

Q4

Year

Lodging













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


Inter-segment 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 Lodging

222

262

297

245

1,027


185

233

249

223

890














Vacation Exchange and Rentals













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 Vacation Exchange and Rentals

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 1.0 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





























2011


2010



Q1

Q2

Q3

Q4

Year


Q1

Q2

Q3

Q4

Year

Lodging













Royalties and Franchise Fees

$     58

$     75

$     85

$     66

$    284


$     52

$     69

$     82

$     62

$    265


Marketing, Reservation and Wyndham Rewards Revenues (a)

54

75

94

76

299


50

65

76

60

251


Hotel Management Reimbursable Revenues (b)

19

19

21

20

79


21

20

18

18

77


Inter-segment Trademark Fees (f)

1

2

3

4

10


-

-

-

-

-


Owned Hotel Revenues

-

-

-

5

5


-

-

-

-

-


Ancillary Revenues (c)

17

19

19

17

72


21

24

27

23

95


Total Lodging

149

190

222

188

749


144

178

203

163

688














Vacation Exchange and Rentals













Exchange Revenues

194

168

161

150

673


189

161

163

153

666


Rental Revenues

150

180

260

125

715


105

115

161

114

495


Ancillary Revenues (d)

12

13

15

16

56


6

5

6

15

32


Total Vacation Exchange and Rentals

356

361

436

291

1,444


300

281

330

282

1,193














Vacation Ownership













Vacation Ownership Interest Sales

222

313

320

295

1,150


217

271

308

276

1,072


Consumer Financing

102

103

105

105

415


105

106

107

107

425


Property Management Fees

110

108

105

101

424


100

100

104

101

405


WAAM 1.0 Commissions

10

11

23

21

65


3

8

12

8

31


Ancillary Revenues (e)

6

6

6

5

23


19

20

2

5

46


Total Vacation Ownership

450

541

559

527

2,077


444

505

533

497

1,979

Total Reportable Segments

$ 955

$ 1,092

$ 1,217

$ 1,006

$ 4,270


$ 888

$ 964

$ 1,066

$ 942

$ 3,860



























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 Q2, Q3 and Q4 2013, $1 million, $3 million and $2 million, respectively, of reimbursable revenues, which eliminate in consolidation, were charged to the Company's vacation ownership business.

(c)

Primarily includes additional services provided to franchisees.

(d)

Primarily includes fees generated from programs with affiliated resorts and homeowners.

(e)

Primarily includes revenues associated with bonus points/credits that are provided as purchase incentives on VOI sales and fees generated from other non-core operations.

(f)

During 2011, $3 million, $1 million and $2 million of inter-segment trademark fees were recorded as a reduction of expenses in Q1, Q2 and Q3, respectively. As such, total inter-segment trademark fees for 2011 were $16 million.

 

 











Table 5

Wyndham Worldwide Corporation

SCHEDULE OF DEBT

(In millions)

























December 31,
2013


September 30,
2013


June 30,
2013


March 31,
2013


December 31,
2012












Securitized vacation ownership debt (a)










Term notes

$         1,648


$         1,615


$     1,569


$     1,869


$         1,770

Bank conduit facility (b)

262


273


289


125


190

Total securitized vacation ownership debt (c)

1,910


1,888


1,858


1,994


1,960

Less: Current portion of securitized vacation ownership debt

184


186


217


228


218

Long-term securitized vacation ownership debt

$         1,726


$         1,702


$     1,641


$     1,766


$         1,742























Debt:










Revolving credit facility (due July 2018) (d)

$              23


$             74


$         41


$         34


$             85

Commercial paper (e)

210


164


168


202


273

9.875% senior unsecured notes (f)

-


-


-


-


42

6.00% senior unsecured notes (due December 2016)

318


318


319


319


361

2.95% senior unsecured notes (due March 2017)

298


298


298


298


298

5.75% senior unsecured notes (due February 2018)

14


14


14


14


248

2.50% senior unsecured notes (due March 2018)

447


447


447


447


-

7.375% senior unsecured notes (due March 2020)

40


40


40


40


248

5.625% senior unsecured notes (due March 2021)

246


246


246


246


246

4.25% senior unsecured notes (due March 2022)(g)

643


644


644


644


644

3.90% senior unsecured notes (due March 2023)(h)

387


396


397


397


-

Capital leases

191


185


184


187


105

Other

114


117


133


133


52

Total long-term debt

2,931


2,943


2,931


2,961


2,602

Less: Current portion of long-term debt

49


55


52


254


326

Long-term debt

$         2,882


$         2,888


$     2,879


$     2,707


$         2,276

__________





(a)

The Company's vacation ownership contract receivables are securitized through bankruptcy-remote special purpose entities ("SPEs") that are consolidated within our financial statements. These bankruptcy-remote SPEs are legally separate from the Company. The receivables held by the bankruptcy-remote SPEs are not available to the Company's creditors and legally are not the Company's assets. Additionally, the creditors of these SPEs have no recourse to the Company for principal and interest.

(b)

Represents a non-recourse vacation ownership bank conduit facility with a term through August 2015 and borrowing capacity of $650 million. As of December 31, 2013, this facility had a remaining borrowing capacity of $388 million.

(c)

This debt is collateralized by $2,314 million, $2,306 million, $2,414 million, $2,512 million and $2,543 million of underlying vacation ownership contract receivables and related assets as of December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013 and December 31, 2012, respectively.

(d)

Represents a $1.5 billion revolving credit facility that expires on July 15, 2018. As of December 31, 2013, the Company had $9 million of outstanding letters of credit. After considering outstanding commercial paper borrowings of $210 million, the remaining borrowing capacity was $1.3 billion as of December 31, 2013.

(e)

Represents a $750 million commercial paper program which the Company commenced in October 2012 and a $500 million European commercial paper program which the Company commenced in December 2013. As of December 31, 2013, the programs had a remaining borrowing capacity of $1.0 billion.

(f)

Represents senior unsecured notes issued by the Company during May 2009 and repaid by the Company during March 2013.

(g)

The balance as of December 31, 2013 includes a $2 million adjustment to the carrying value resulting from the fair value hedge derivative.

(h)

The balance as of December 31, 2013 includes a $10 million adjustment to the carrying value resulting from the fair value hedge derivative.




















 

 







Table 6







(1 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

















As of and For the Three Months Ended December 31, 2013




Brand

Number of Properties

Number of Rooms

Average Occupancy Rate

Average Daily Rate (ADR)

Average Revenue

Per Available

Room (RevPAR)








Lodging






Wyndham Hotels and Resorts

170

37,569

54.5%

$120.69

$65.76








TRYP by Wyndham

113

16,216

57.4%

$97.16

$55.74








Wingate by Wyndham

159

14,559

56.0%

$83.38

$46.66








Hawthorn Suites by Wyndham

91

8,933

59.2%

$69.39

$41.10








Ramada

834

115,394

50.9%

$80.82

$41.13








Baymont

329

27,108

46.0%

$62.11

$28.60








Days Inn

1,817

146,959

44.3%

$62.20

$27.54








Super 8

2,391

152,648

52.2%

$49.36

$25.77








Howard Johnson

449

46,777

45.8%

$59.86

$27.39








Travelodge

432

32,012

44.2%

$63.13

$27.91








Microtel Inns & Suites by Wyndham

312

22,304

53.7%

$63.53

$34.11








Knights Inn

380

23,325

40.0%

$43.43

$17.37








Dream

5

989

74.6%

$249.45

$186.05








Night

3

630

63.3%

$172.81

$109.40









Total Lodging

7,485

645,423

49.1%

$67.36

$33.07








Vacation Ownership






Wyndham Vacation Ownership resorts

191

23,506

N/A

N/A

N/A









Total Wyndham Worldwide

7,676

668,929




















As of and For the Three Months Ended December 31, 2012




Brand

Number of Properties

Number of Rooms

Average
Occupancy Rate

Average Daily
Rate (ADR)

Average Revenue
Per Available
Room (RevPAR)








Lodging






Wyndham Hotels and Resorts

112

27,651

55.2%

$110.77

$61.16








TRYP by Wyndham

91

13,112

56.8%

$96.64

$54.85








Wingate by Wyndham

160

14,681

55.2%

$82.73

$45.65








Hawthorn Suites by Wyndham

94

9,317

57.7%

$68.86

$39.75








Ramada

850

115,811

50.3%

$79.76

$40.13








Baymont

317

26,109

45.5%

$61.27

$27.87








Days Inn

1,826

147,808

43.4%

$61.29

$26.59








Super 8

2,314

147,512

51.5%

$50.72

$26.14








Howard Johnson

455

46,203

44.6%

$62.03

$27.65








Travelodge

445

33,213

43.2%

$63.06

$27.26








Microtel Inns & Suites by Wyndham

308

21,938

51.3%

$61.73

$31.68








Knights Inn

363

22,670

40.3%

$41.72

$16.80








Dream

5

990

69.2%

$242.53

$167.79








Night

2

422

45.9%

$119.65

$54.93









Total Lodging

7,342

627,437

48.2%

$66.05

$31.86








Vacation Ownership






Wyndham Vacation Ownership resorts

190

23,441

N/A

N/A

N/A









Total Wyndham Worldwide

7,532

650,878




_______________






NOTE:  A glossary of terms is included in Table 3 (3 of 3); RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding.




























Table 6







(2 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

















As of and For the Year Ended December 31, 2013

Brand

Number of Properties

Number of Rooms

Average
Occupancy Rate

Average Daily
Rate (ADR)

Average Revenue
Per Available
Room (RevPAR)








Lodging






Wyndham Hotels and Resorts

170

37,569

58.6%

$117.27

$68.74








TRYP by Wyndham

113

16,216

60.5%

$96.09

$58.16








Wingate by Wyndham

159

14,559

60.9%

$85.11

$51.82








Hawthorn Suites by Wyndham

91

8,933

62.6%

$71.46

$44.71








Ramada

834

115,394

53.0%

$80.19

$42.50








Baymont

329

27,108

51.3%

$63.14

$32.40








Days Inn

1,817

146,959

48.8%

$64.34

$31.42








Super 8

2,391

152,648

56.3%

$52.33

$29.45








Howard Johnson

449

46,777

47.7%

$62.06

$29.58








Travelodge

432

32,012

49.5%

$67.10

$33.23








Microtel Inns & Suites by Wyndham

312

22,304

57.6%

$64.42

$37.10








Knights Inn

380

23,325

42.0%

$45.04

$18.92








Dream

5

989

71.8%

$229.77

$164.88








Night

3

630

62.4%

$152.65

$95.18









Total Lodging

7,485

645,423

52.7%

$68.27

$36.00








Vacation Ownership






Wyndham Vacation Ownership resorts

191

23,506

N/A

N/A

N/A









Total Wyndham Worldwide

7,676

668,929




















As of and For the Year Ended December 31, 2012

Brand

Number of Properties

Number of Rooms

Average
Occupancy Rate

Average Daily
Rate (ADR)

Average Revenue
Per Available
Room (RevPAR)








Lodging






Wyndham Hotels and Resorts

112

27,651

58.9%

$110.28

$64.97








TRYP by Wyndham

91

13,112

60.7%

$97.49

$59.17








Wingate by Wyndham

160

14,681

61.0%

$83.43

$50.88








Hawthorn Suites by Wyndham

94

9,317

61.9%

$72.89

$45.13








Ramada

850

115,811

52.6%

$78.86

$41.50








Baymont

317

26,109

50.5%

$63.25

$31.96








Days Inn

1,826

147,808

48.1%

$63.05

$30.34








Super 8

2,314

147,512

54.8%

$53.00

$29.06








Howard Johnson

455

46,203

47.6%

$62.47

$29.76








Travelodge

445

33,213

48.2%

$66.40

$32.02








Microtel Inns & Suites by Wyndham

308

21,938

54.9%

$62.20

$34.14








Knights Inn

363

22,670

41.3%

$43.08

$17.78








Dream

5

990

72.1%

$216.87

$156.44








Night

2

422

57.8%

$159.04

$91.90









Total Lodging

7,342

627,437

51.8%

$67.13

$34.80








Vacation Ownership






Wyndham Vacation Ownership resorts

190

23,441

N/A

N/A

N/A









Total Wyndham Worldwide

7,532

650,878




_______________






NOTE: A glossary of terms is included in Table 3 (3 of 3); RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding.

 

 










Table 7









(1 of 2)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION

(In millions)

























Reported

Legacy

Acquisition 

Restructuring

Asset

Adjusted

Three months ended March 31, 2013

Net Revenues


EBITDA

Adjustments (b)

Costs (c)

Costs (d)

Impairment (e)

EBITDA

Lodging

$               222


$         58

$                       -

$                 -

$                     -

$                    -

$        58

Vacation Exchange and Rentals

374


94

-

-

-

-

94

Vacation Ownership

549


111

-

2

-

-

113

Total Reportable Segments

1,145


263

-

2

-

-

265

Corporate and Other (a)

(12)


(29)

-

-

-

-

(29)

Total Company

$            1,133


$       234

$                       -

$                2

$                     -

$                    -

$      236











Three months ended June 30, 2013









Lodging

$               262


$         78

$                       -

$                 -

$                     -

$                    -

$        78

Vacation Exchange and Rentals

376


85

-

-

-

-

85

Vacation Ownership

630


161

-

-

-

-

161

Total Reportable Segments

1,268


324

-

-

-

-

324

Corporate and Other (a)

(15)


(27)

-

-

-

-

(27)

Total Company

$            1,253


$       297

$                       -

$                 -

$                     -

$                    -

$      297











Three months ended September 30, 2013









Lodging

$               297


$         95

$                       -

$                 -

$                     -

$                    -

$        95

Vacation Exchange and Rentals

470


141

-

-

-

-

141

Vacation Ownership

677


176

-

-

-

-

176

Total Reportable Segments

1,444


412

-

-

-

-

412

Corporate and Other (a)

(17)


(33)

(1)

-

-

-

(34)

Total Company

$            1,427


$       379

$                    (1)

$                 -

$                     -

$                    -

$      378











Three months ended December 31, 2013









Lodging

$               245


$         47

$                       -

$                 -

$                     9

$                    8

$        64

Vacation Exchange and Rentals

305


36

-

-

-

-

36

Vacation Ownership

658


172

-

-

-

-

172

Total Reportable Segments

1,208


255

-

-

9

8

272

Corporate and Other (a)

(13)


(33)

-

-

-

-

(33)

Total Company

$            1,195


$       222

$                       -

$                 -

$                     9

$                    8

$      239











Twelve months ended December 31, 2013









Lodging

$            1,027


$       279

$                       -

$                 -

$                     9

$                    8

$      296

Vacation Exchange and Rentals

1,526


356

-

-

-

-

356

Vacation Ownership

2,515


619

-

2

-

-

621

Total Reportable Segments

5,068


1,254

-

2

9

8

1,273

Corporate and Other (a)

(59)


(122)

1

-

-

-

(121)

Total Company

$            5,009


$    1,132

$                      1

$                2

$                     9

$                    8

$   1,152

________________

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

(a)

Includes the elimination of transactions between segments.

(b)

Relates to a net (benefit)/expense from the resolution of and adjustment to certain contingent liabilities and assets resulting from the Company's separation from Cendant.

(c)

Relates to costs incurred in connection with the acquisition of Midtown 45, a NYC property (January 2013).

(d)

Relates to costs incurred as a result of an organizational realignment initiative.

(e)

Relates primarily to a non-cash impairment charge from a partial write-down of the Hawthorn trademark.

 

 














Table 7












(2 of 2)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION

(In millions)





























Reported

Legacy

Impairment

Allowance

Acquisition 

Asset

Restructuring 

Adjusted

Three months ended March 31, 2012

Net Revenues


EBITDA

Adjustments (b)

Recovery (c)

Reversal (d)

Costs (e)

Impairment (f)

Costs (g)

EBITDA

Lodging

$               185


$         49

$                       -

$                -

$                -

$                 -

$                    -

$                      -

$        49

Vacation Exchange and Rentals

361


95

-

-

(2)

-

-

-

93

Vacation Ownership

501


103

-

-

-

-

-

-

103

Total Reportable Segments

1,047


247

-

-

(2)

-

-

-

245

Corporate and Other (a)

(11)


(21)

(4)

-

-

-

-

-

(25)

Total Company

$            1,036


$       226

$                    (4)

$                -

$             (2)

$                 -

$                    -

$                      -

$      220

























Three months ended June 30, 2012











Lodging

$               233


$         75

$                       -

$              (1)

$                -

$                 -

$                    -

$                      -

$        74

Vacation Exchange and Rentals

348


82

-

-

-

-

-

-

82

Vacation Ownership

570


150

-

-

-

-

-

-

150

Total Reportable Segments

1,151


307

-

(1)

-

-

-

-

306

Corporate and Other (a)

(12)


(25)

-

-

-

-

-

-

(25)

Total Company

$            1,139


$       282

$                       -

$              (1)

$                -

$                 -

$                    -

$                      -

$      281













Three months ended September 30, 2012










Lodging

$               249


$         86

$                       -

$                -

$                -

$                 -

$                    -

$                      -

$        86

Vacation Exchange and Rentals

420


123

-

-

-

-

-

-

123

Vacation Ownership

608


154

-

-

-

1

-

-

155

Total Reportable Segments

1,277


363

-

-

-

1

-

-

364

Corporate and Other (a)

(12)


(30)

1

-

-

-

-

-

(29)

Total Company

$            1,265


$       333

$                      1

$                -

$                -

$                1

$                    -

$                      -

$      335













Three months ended December 31, 2012










Lodging

$               223


$         62

$                       -

$                -

$                -

$                 -

$                    -

$                      -

$        62

Vacation Exchange and Rentals

293


28

-

-

-

1

8

5

42

Vacation Ownership

590


142

-

-

-

-

-

2

144

Total Reportable Segments

1,106


232

-

-

-

1

8

7

248

Corporate and Other (a)

(12)


(28)

(2)

-

-

-

-

-

(30)

Total Company

$            1,094


$       204

$                    (2)

$                -

$                -

$                1

$                    8

$                      7

$      218













Twelve months ended December 31, 2012










Lodging

$               890


$       272

$                       -

$              (1)

$                -

$                 -

$                    -

$                      -

$      271

Vacation Exchange and Rentals

1,422


328

-

-

(2)

1

8

5

340

Vacation Ownership

2,269


549

-

-

-

1

-

2

552

Total Reportable Segments

4,581


1,149

-

(1)

(2)

2

8

7

1,163

Corporate and Other (a)

(47)


(104)

(5)

-

-

-

-

-

(109)

Total Company

$            4,534


$    1,045

$                    (5)

$              (1)

$             (2)

$                2

$                    8

$                      7

$   1,054

 _______________

(a)

Includes the elimination of transactions between segments.

(b)

Relates to the net expense/(benefit) from the resolution of and adjustment to certain contingent liabilities and assets resulting from the Company's separation from Cendant.

(c)

Relates to the recovery of a previously recorded impairment charge.

(d)

Relates to a benefit from the reversal of an allowance associated with a previously divested asset.

(e)

Relates to costs incurred in connection with the acquisition of Shell Vacations Club at the Company's vacation ownership business (September 2012) and several other acquisitions at the Company's vacation rental businesses (December 2012).

(f)

Relates to a non-cash impairment charge for the write-down of the ResortQuest and Steamboat Resorts tradenames at the Company's vacation exchange and rentals business.

(g)

Relates to costs incurred as a result of organizational realignment initiatives commenced during 2012 at the Company's vacation exchange and rentals business and restructuring associated with the Shell acquisition.

 

 









Table 8









(1 of 4)










Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)












Three Months Ended December 31, 2013












 As Reported 


Restructuring
Costs (a)


Asset
Impairment (b)


As Adjusted
non-GAAP

Net revenues









Service and membership fees

$               496






$            496


Vacation ownership interest sales

384






384


Franchise fees

139






139


Consumer financing

108






108


Other

68






68

Net revenues

1,195


-


-


1,195










Expenses









Operating

517






517


Cost of vacation ownership interests 

48






48


Consumer financing interest

18






18


Marketing and reservation

180






180


General and administrative

193






193


Asset impairments

8




(8)


-


Restructuring

9


(9)




0


Depreciation and amortization

56






56

Total expenses

1,029


(9)


(8)


1,012










Operating income

166


9


8


183

Interest expense

34






34

Interest income

(2)






(2)










Income before income taxes

134


9


8


151

Provision for income taxes

48


4

(c)

3

(c)

55



















Net income attributable to Wyndham shareholders

$                 86


$                          5


$                       5


$              96










Earnings per share









Basic

$              0.66


$                     0.04


$                  0.04


$           0.74


Diluted

0.65


0.04


0.04


0.73










Weighted average shares outstanding









Basic

129


129


129


129


Diluted

131


131


131


131

__________








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










(a)

Relates to costs incurred as a result of an organizational realignment initiative at the Company's lodging business.

(b)

Relates primarily to a non-cash impairment charge from a partial write-down of the Hawthorn trademark at the Company's lodging business.

(c)

Relates to the tax effect of the adjustment.

 

 















Table 8















(2 of 4)
















Wyndham Worldwide Corporation


NON-GAAP FINANCIAL INFORMATION


(In millions, except per share data)




















Twelve Months Ended December 31, 2013




















Legacy
Adjustments


Acquisition
Costs (c)


Early
Extinguishment of
Debt (d)


Restructuring
Costs (e)


Asset
Impairment (f)


As Adjusted
non-GAAP



 As Reported 







Net revenues















Service and membership fees

$              2,329












$                       2,329


Vacation ownership interest sales

1,379












1,379


Franchise fees

599












599


Consumer financing

426












426


Other

276












276

Net revenues

5,009


-


-


-


-


-


5,009
















Expenses















Operating

2,161




(2)








2,159


Cost of vacation ownership interests 

155












155


Consumer financing interest

78












78


Marketing and reservation

751












751


General and administrative

720


(1)

(a)









719


Asset impairments

8










(8)


-


Restructuring

10








(9)




1


Depreciation and amortization

216












216

Total expenses

4,099


(1)


(2)


-


(9)


(8)


4,079
















Operating income

910


1


2


-


9


8


930

Other income, net

(6)












(6)

Interest expense

131












131

Early extinguishment of debt

111






(111)






-

Interest income

(9)












(9)
















Income before income taxes

683


1


2


111


9


8


814

Provision for income taxes

250


(2)

(b)

1

(g)

42

(g)

4

(g)

3

(g)

298
















Net income

433


3


1


69


5


5


516

Net income attributable to noncontrolling interest

(1)


-


-


-


-


-


(1)
















Net income attributable to Wyndham shareholders

$                 432


$                           3


$                 1


$                      69


$                      5


$                          5


$                          515
















Earnings per share















Basic

$                3.25


$                      0.02


$            0.01


$                   0.51


$                 0.04


$                     0.04


$                         3.87


Diluted

3.21


0.02


0.01


0.51


0.04


0.04


3.83
















Weighted average shares outstanding















Basic

133


133


133


133


133


133


133


Diluted

135


135


135


135


135


135


135

__________














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

















(a)

Relates to the net expense from the resolution of and adjustment to certain contingent liabilities and assets resulting from the Company's separation from Cendant.

(b)

Relates to a state tax accrual for legacy tax matters.

(c)

Relates to costs incurred in connection with the acquisition of Midtown 45, a NYC property (January 2013) at the Company's vacation ownership business.

(d)

Represents costs incurred for the early repurchase of a portion of the Company's 7.375%, 5.75% and 6.00% senior unsecured notes and the remaining portion of the 9.875% senior unsecured notes. 

(e)

Relates to costs incurred as a result of an organizational realignment initiative at Company's lodging business.








(f)

Relates primarily to a non-cash impairment charge from a partial write-down of the Hawthorn trademark at Company's lodging business.





(g)

Relates to the tax effect of the adjustment.

 

 













Table 8













(3 of 4)














Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)
















Three Months Ended December 31, 2012


















Legacy
Adjustments (a)


Acquisition
Costs(b)


Asset
Impairment (c)


Restructuring
Costs (d)


As Adjusted
non-GAAP



 As Reported 






Net revenues













Service fees and membership

$         446










$                     446


Vacation ownership interest sales

337










337


Franchise fees

134










134


Consumer financing

110










110


Other

67










67

Net revenues

1,094


-


-


-


-


1,094














Expenses













Operating

454




(1)






453


Cost of vacation ownership interests 

46










46


Consumer financing interest

21










21


Marketing and reservation

169










169


General and administrative

185


2








187


Asset impairments

8






(8)




-


Restructuring

7








(7)


-


Depreciation and amortization

49










49

Total expenses

939


2


(1)


(8)


(7)


925














Operating income

155


(2)


1


8


7


169

Interest expense

35










35

Interest income

(2)










(2)














Income before income taxes

122


(2)


1


8


7


136

Provision for income taxes

41


-


-


3

 (e) 

3

 (e) 

47














Net income attributable to Wyndham shareholders

$            81


$                      (2)


$          1


$              5


$                4


$                         89














Earnings per share













Basic

$         0.58


$                 (0.01)


$     0.01


$          0.04


$           0.03


$                      0.64


Diluted

0.57


(0.01)


0.01


0.04


0.03


0.63














Weighted average shares outstanding













Basic

139


139


139


139


139


139


Diluted

141


141


141


141


141


141

__________












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 Company's separation from Cendant.

(b)

Relates to the costs incurred in connection with the acquisitions of several vacation rental businesses (December 2012).

(c)

Relates to the non-cash impairment charge for the write-down of the ResortQuest and Steamboat Resorts tradenames at Company's vacation exchange and rental business.

(d)

Relates to costs incurred as a result of organizational realignment initiatives commenced during 2012 at the Company's vacation exchange and rentals business and restructuring associated with the Shell acquisition.

(e)

Relates to the tax effect of the adjustment.

 

 

















Table 8

















(4 of 4)


















Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)




















Twelve Months Ended December 31, 2012






















Legacy
Adjustments (a)


Reversal /
Recovery(b)


Acquisition
Costs(c)


Early
Extinguishment
of Debt(d)


Asset
Impairment (e)


Restructuring
Costs(f)


As Adjusted
non-GAAP



 As Reported 







Net revenues

















Service fees and membership

$            2,005














$                 2,005


Vacation ownership interest sales

1,323














1,323


Franchise fees

583














583


Consumer financing

421














421


Other

202














202

Net revenues

4,534


-


-


-


-


-


-


4,534


















Expenses

















Operating

1,842






(2)








1,840


Cost of vacation ownership interests 

161














161


Consumer financing interest

90














90


Marketing and reservation

723














723


General and administrative

666


5












671


Asset impairments

8










(8)




-


Restructuring

7












(7)


-


Depreciation and amortization

185














185

Total expenses

3,682


5


-


(2)


-


(8)


(7)


3,670


















Operating income

852


(5)


-


2


-


8


7


864

Other income, net

(8)




3










(5)

Interest expense

132














132

Early extinguishment of debt

108








(108)






-

Interest income

(8)














(8)


















Income before income taxes

628


(5)


(3)


2


108


8


7


745

Provision for income taxes

229


(2)

 (g) 

(1)

 (g) 

1

 (g) 

44

 (g) 

3

 (g) 

3

 (g) 

277


















Net income

399


(3)


(2)


1


64


5


4


468

Net loss attributable to noncontrolling interest

1


-


-


-


-


-


-


1


















Net income attributable to Wyndham shareholders

$               400


$                    (3)


$              (2)


$               1


$                     64


$                    5


$             4


$                     469


















Earnings per share

















Basic

$              2.80


$               (0.02)


$         (0.02)


$          0.01


$                  0.45


$               0.03


$        0.03


$                   3.29


Diluted

2.75


(0.02)


(0.02)


0.01


0.44


0.03


0.03


3.23


















Weighted average shares outstanding

















Basic

143


143


143


143


143


143


143


143


Diluted

145


145


145


145


145


145


145


145

__________
















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 the Company's separation from Cendant.

(b)

Includes $2 million related to the benefit from the reversal of an allowance associated with a previously divested asset and $1 million related to the recovery of a previously recorded impairment charge.

(c)

Relates to costs incurred in connection with the acquisition of Shell Vacations Club at the Company's vacation ownership business (September 2012) and several other acquisitions at the Company's vacation rental businesses (December 2012).

(d)

Represents costs incurred for the early repurchase of a portion of the Company's 9.875% and 6.00% senior unsecured notes.

(e)

Relates to the non-cash impairment charge for the write-down of the ResortQuest and Steamboat Resorts tradenames at the Company's vacation exchange and rentals business.



(f)

Relates to costs incurred as a result of organizational realignment initiatives commenced during 2012 at the Company's vacation exchange and rentals business and restructuring associated with the Shell acquisition.

(g)

Relates to the tax effect of the adjustment.












 

 






Table 9

Wyndham Worldwide Corporation


NON-GAAP RECONCILIATIONS AND FINANCIAL INFORMATION


(In millions)









FREE CASH FLOW







The Company defines free cash flow to be net cash provided by operating activities less property and equipment additions which it also refers to as capital expenditures. Prior to the fourth quarter 2012,  the Company had previously included development advances within its calculation of free cash flow.  




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, 





2013


2012










Net cash provided by operating activities


$ 1,008


$ 1,004



Less: Property and equipment additions


(238)


(208)



Free cash flow


$    770


$    796

















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







2013


Q1

Q2

Q3

Q4

Full Year








Gross VOI sales (a)


$    384

$ 481

$    536

$ 488

$    1,889

Less: Sales under WAAM 1.0


(36)

(44)

(51)

(29)

(160)

Gross VOI sales, net of WAAM 1.0 sales


347

437

486

459

1,729

Less: Loan loss provision


(84)

(90)

(102)

(73)

(349)

Less: Impact of percentage-of-completion accounting


-

-

-

(1)

(1)

Vacation ownership interest sales (a)


$    263

$ 347

$    384

$ 384

$    1,379








2012














Gross VOI sales (a)


$    384

$ 460

$    502

$ 435

$    1,781

Less: Sales under WAAM 1.0


(17)

(18)

(5)

(10)

(49)

Gross VOI sales, net of WAAM 1.0 sales


367

442

497

426

1,732

Less: Loan loss provision


(96)

(100)

(124)

(89)

(409)

Vacation ownership interest sales (a)


$    271

$ 342

$    373

$ 337

$    1,323








2011














Gross VOI sales


$    319

$ 412

$    455

$ 409

$    1,595

Less: Sales under WAAM 1.0


(18)

(19)

(38)

(31)

(106)

Gross VOI sales, net of WAAM 1.0 sales


302

393

417

378

1,489

Less: Loan loss provision


(79)

(80)

(96)

(83)

(339)

Vacation ownership interest sales


$    222

$ 313

$    320

$ 295

$    1,150








2010














Gross VOI sales


$    308

$ 371

$    412

$ 373

$    1,464

Less: Sales under WAAM 1.0


(5)

(13)

(20)

(14)

(51)

Gross VOI sales, net of WAAM 1.0 sales


303

358

392

359

1,413

Less: Loan loss provision


(86)

(87)

(85)

(82)

(340)

Vacation ownership interest sales


$    217

$ 271

$    308

$ 276

$    1,072

_____________







Note:  Amounts may not add due to rounding.


(a) Includes VOI sales under WAAM 2.0 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








2013


$      24

$   18

$      22

$   25

$         89

2012


$      27

$   20

$      22

$   28

$         97

2011


$      18

$   18

$      21

$   11

$         68

2010


$      20

$   20

$      23

$   17

$         80



 

 

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