Wyndham Worldwide Reports Fourth Quarter and Full Year 2015 Results

Full Year Adjusted Diluted EPS increased 13% over 2014

Increases Dividend 19%

One Billion Dollar Increase in Share Repurchase Authorization

Feb 09, 2016, 06:30 ET from Wyndham Worldwide Corporation

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

HIGHLIGHTS:

  • Fourth quarter adjusted diluted earnings per share (EPS) was $0.98, an increase of 9% from adjusted diluted EPS of $0.90 in the fourth quarter of 2014. Reported diluted EPS was $1.21, compared with $0.65 in the fourth quarter of 2014.
  • Full year adjusted diluted earnings per share (EPS) was $5.11, an increase of 13% from adjusted diluted EPS of $4.53 in 2014. Reported diluted EPS was $5.14, compared with $4.18 in 2014.
  • Fourth quarter 2015 revenues increased 6% and adjusted EBITDA increased 8% compared with the fourth quarter of 2014.
  • The Company's Board of Directors authorized an increase in the quarterly cash dividend to $0.50 from $0.42 per share, beginning with the dividend that is expected to be declared in the first quarter of 2016.
  • The Company repurchased 2.2 million shares of its common stock for $165 million during the quarter.
  • The Company's Board of Directors approved a $1 billion increase in the share repurchase authorization.

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

FOURTH QUARTER 2015 OPERATING RESULTS Fourth quarter revenues were $1.3 billion, an increase of 6% from the prior year period. 

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

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

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

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

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

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

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

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

FOURTH QUARTER 2015 BUSINESS UNIT RESULTS

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

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

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

Destination Network (formerly Vacation Exchange and Rentals) Revenues were $310 million in the fourth quarter of 2015, flat compared with the fourth quarter of 2014. In constant currency, and excluding acquisitions and a divestiture in 2014, revenues increased 5%.

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

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

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

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

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

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

OTHER ITEMS

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

Balance Sheet Information as of December, 2015:

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

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

OUTLOOK

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

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

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

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

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

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

About Wyndham Worldwide Corporation One of the world's largest hospitality companies, Wyndham Worldwide (NYSE: WYN) provides a wide range of hospitality services and products through its global portfolio of world-renowned brands.  The world's largest hotel company based on the number of properties, Wyndham Hotel Group is home to many of the world's best-known hotel brands, with over 7,800 franchised hotels and 678,000 hotel rooms worldwide. Wyndham Destination Network is the world's largest provider of professionally managed, unique vacation accommodations with more than 112,000 vacation properties in over 100 countries, sending more than 13 million people annually to their desired destinations through its trusted, diverse network of brands. The industry and timeshare ownership market leader, Wyndham Vacation Ownership develops, markets, and sells vacation ownership interests and provides consumer financing to owners through its network of over 210 vacation ownership resorts serving approximately 897,000 owners throughout the United States, Canada, Mexico, the Caribbean, and the South Pacific. Based in Parsippany, NJ, Wyndham Worldwide employs approximately 38,000 associates globally. For more information, please visit www.wyndhamworldwide.com.

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

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.  Factors that could cause actual results to differ materially from those in the forward-looking statements include general economic conditions, the performance of the financial and credit markets, the economic environment for the hospitality industry, the impact of war, terrorist activity or political strife, operating risks associated with the hotel, vacation exchange and rentals and vacation ownership businesses, as well as those described in the Company's Annual Report on Form 10-K, filed with the SEC on February 13, 2015.  Except for the Company's ongoing obligations to disclose material information under the federal securities laws, it undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

 

Table 1

(1 of 2)

Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)

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

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

Three Months Ended December 31, 

2015

2014

 Net Revenues 

 EBITDA 

 Net Revenues 

 EBITDA 

Hotel Group

$

314

$

94

$

267

$

77

Destination Network

310

44

311

2

Vacation Ownership

706

174

668

172

     Total Reportable Segments

1,330

312

1,246

251

Corporate and Other (a)

(19)

(37)

(15)

(36)

     Total Company

$

1,311

$

275

$

1,231

$

215

Reconciliation of EBITDA to Net income

Three Months Ended December 31, 

2015

2014

EBITDA

$

275

$

215

Depreciation and amortization

61

58

Interest expense

37

29

Interest income

(2)

(4)

Income before income taxes

179

132

Provision for income taxes

39

51

Net income

$

140

$

81

(a) Includes the elimination of transactions between segments.  

The following tables summarize net revenues and adjusted EBITDA for the Company's reportable segments for the three months ended December 31, 2015 and 2014 (for a description of adjustments by segment, see Table 7):

Three Months Ended December 31, 

2015

2014

Adjusted 

Adjusted 

 Net Revenues 

 EBITDA 

 Net Revenues 

 EBITDA 

Hotel Group

$

314

$

93

$

267

$

79

Destination Network

310

43

311

39

Vacation Ownership

706

174

668

172

     Total Reportable Segments

1,330

310

1,246

290

Corporate and Other

(19)

(37)

(15)

(38)

     Total Company

$

1,311

$

273

$

1,231

$

252

 

 

Table 1

(2 of 2)

Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)

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

Twelve Months Ended December 31, 

2015

2014

 Net Revenues 

 EBITDA 

 Net Revenues 

 EBITDA 

Hotel Group

$

1,297

$

349

$

1,101

$

327

Destination Network

1,538

367

1,604

335

Vacation Ownership

2,772

687

2,638

660

     Total Reportable Segments

5,607

1,403

5,343

1,322

Corporate and Other (a)

(71)

(137)

(62)

(141)

     Total Company

$

5,536

$

1,266

$

5,281

$

1,181

Reconciliation of EBITDA to Net income

Twelve Months Ended December 31, 

2015

2014

EBITDA

$

1,266

$

1,181

Depreciation and amortization

234

233

Interest expense

125

113

Interest income

(9)

(10)

Income before income taxes

916

845

Provision for income taxes

304

316

Net income

$

612

$

529

(a) Includes the elimination of transactions between segments.  

The following tables summarize net revenues and adjusted EBITDA for the Company's reportable segments for the twelve months ended December 31, 2015 and 2014 (for a description of adjustments by segment, see Table 7):

Twelve Months Ended December 31, 

2015

2014

Adjusted 

Adjusted 

 Net Revenues 

 EBITDA 

 Net Revenues 

 EBITDA 

Hotel Group

$

1,297

$

376

$

1,101

$

340

Destination Network

1,538

370

1,604

380

Vacation Ownership

2,772

688

2,638

660

     Total Reportable Segments

5,607

1,434

5,343

1,380

Corporate and Other

(71)

(137)

(62)

(142)

     Total Company

$

5,536

$

1,297

$

5,281

$

1,238

 

 

Table 2

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

 Three Months Ended 

 Twelve Months Ended 

 December 31, 

 December 31, 

2015

2014

2015

2014

Net revenues

Service and membership fees

$

562

$

508

$

2,519

$

2,431

Vacation ownership interest sales

403

385

1,604

1,485

Franchise fees

157

151

674

632

Consumer financing

109

108

427

427

Other

80

79

312

306

Net revenues

1,311

1,231

5,536

5,281

Expenses

Operating

594

542

2,461

2,262

Cost of vacation ownership interests 

43

42

165

171

Consumer financing interest

19

18

74

71

Marketing and reservation

189

188

813

802

General and administrative

199

189

761

755

Loss on sale and asset impairments

-

27

7

35

Restructuring

(2)

12

6

11

Depreciation and amortization

61

58

234

233

Total expenses

1,103

1,076

4,521

4,340

Operating income

208

155

1,015

941

Other (income)/expense, net

(6)

(2)

(17)

(7)

Interest expense

37

29

125

113

Interest income

(2)

(4)

(9)

(10)

Income before income taxes

179

132

916

845

Provision for income taxes

39

51

304

316

Net income

$

140

$

81

$

612

$

529

Earnings per share

Basic

$

1.22

$

0.66

$

5.18

$

4.22

Diluted

1.21

0.65

5.14

4.18

Weighted average shares outstanding

Basic

115

122

118

125

Diluted

116

124

119

127

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

 

 

Table 3

(1 of 2)

Wyndham Worldwide Corporation

OPERATING STATISTICS

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

Year

Q1

Q2

Q3

Q4

Full Year

Hotel Group (a)

Number of Rooms 

2015

667,400

668,500

671,900

678,000

 N/A 

2014

646,900

650,200

655,300

660,800

 N/A 

2013

631,800

635,100

638,300

645,400

 N/A 

2012

609,300

608,300

618,100

627,400

 N/A 

RevPAR

2015

$

32.84

$

39.82

$

43.34

$

32.98

$

37.26

2014

$

32.30

$

40.11

$

43.71

$

34.06

$

37.57

2013

$

31.05

$

38.00

$

41.78

$

33.07

$

36.00

2012

$

29.73

$

37.23

$

40.39

$

31.86

$

34.80

Destination Network

Average Number of Members (in 000s)

2015

3,822

3,831

3,835

3,836

3,831

2014

3,727

3,748

3,777

3,808

3,765

2013

3,668

3,686

3,711

3,728

3,698

2012

3,684

3,670

3,672

3,670

3,674

Exchange Revenue Per Member

2015

$

194.06

$

167.81

$

163.38

$

152.00

$

169.29

2014

$

200.78

$

179.17

$

171.77

$

157.24

$

177.12

2013

$

210.96

$

182.42

$

169.95

$

161.21

$

181.02

2012

$

204.56

$

177.07

$

171.14

$

165.86

$

179.68

Vacation Rental Transactions (in 000s) (a) (b)

2015

459

390

462

319

1,630

2014

429

376

455

293

1,552

2013

423

355

433

273

1,483

2012

418

325

390

259

1,392

Average Net Price Per Vacation Rental(a) (b)

2015

$

361.20

$

513.14

$

642.00

$

452.19

$

494.92

2014

$

410.04

$

577.13

$

727.40

$

492.25

$

558.95

2013

$

392.64

$

540.38

$

677.81

$

506.62

$

532.11

2012

$

379.40

$

524.40

$

635.44

$

484.69

$

504.55

Vacation Ownership (a)

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

2015

$

390,000

$

502,000

$

565,000

$

507,000

$

1,965,000

2014

$

410,000

$

496,000

$

513,000

$

470,000

$

1,889,000

2013

$

384,000

$

481,000

$

536,000

$

488,000

$

1,889,000

2012

$

384,000

$

460,000

$

502,000

$

435,000

$

1,781,000

Tours (in 000s) (d)

2015

168

206

227

200

801

2014

170

208

225

191

794

2013

163

206

225

195

789

2012

148

186

207

183

724

Volume Per Guest (VPG) (d)

2015

$

2,177

$

2,353

$

2,354

$

2,390

$

2,326

2014

$

2,272

$

2,280

$

2,158

$

2,336

$

2,257

2013

$

2,211

$

2,256

$

2,278

$

2,370

$

2,281

2012

$

2,414

$

2,361

$

2,315

$

2,225

$

2,324

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

(a)

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

(b)

The destination network operating statistics excluding our U.K.-based camping business sold in Q4 2014 are as follows:

Year

Q1

Q2

Q3

Q4

Full Year

Vacation Rental Transactions (in 000s)

2014

429

367

431

292

1,518

Average Net Price Per Vacation Rental

2014

$

410.02

$

578.02

$

700.56

$

492.64

$

548.93

(c)

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

(d)

Includes the impact of WAAM Just-in-Time related tours beginning in the second quarter of 2012.

ADDITIONAL DATA

Year

Q1

Q2

Q3

Q4

Full Year

Hotel Group

Number of Properties

2015

7,670

7,700

7,760

7,810

 N/A 

2014

7,500

7,540

7,590

7,650

 N/A 

2013

7,380

7,410

7,440

7,490

 N/A 

2012

7,150

7,170

7,260

7,340

 N/A 

Vacation Ownership

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

2015

$

46,000

$

60,000

$

78,000

$

64,000

$

248,000

2014

$

60,000

$

70,000

$

70,000

$

60,000

$

260,000

2013

$

84,000

$

90,000

$

102,000

$

73,000

$

349,000

2012

$

96,000

$

100,000

$

124,000

$

89,000

$

409,000

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

(*)

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

 

Table 3 (2 of 2)

Wyndham Worldwide Corporation OPERATING STATISTICS

GLOSSARY OF TERMS

Hotel Group

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

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

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

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

Destination Network

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

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

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

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

Vacation Ownership

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

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

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

General

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

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

 

Table 4

Wyndham Worldwide Corporation

REVENUE DETAIL BY REPORTABLE SEGMENT

(In millions)

2015

2014

 Q1 

 Q2 

 Q3 

 Q4 

 Year 

 Q1 

 Q2 

 Q3 

 Q4 

 Year 

Hotel Group

Royalties and Franchise Fees

$

74

$

96

$

103

$

87

$

361

$

68

$

88

$

100

$

83

$

339

Marketing, Reservation and Wyndham Rewards Revenues (a)

96

108

112

92

407

76

101

117

91

385

Hotel Management Reimbursable Revenues (b)

61

71

73

68

273

37

39

39

39

154

Intersegment Trademark Fees

12

15

16

15

57

9

11

11

10

41

Owned Hotel Revenues

25

20

16

19

79

24

20

18

20

81

Ancillary Revenues (c)

24

24

37

33

120

23

24

30

24

101

Total Hotel Group

292

334

357

314

1,297

237

283

315

267

1,101

Destination Network

Exchange Revenues

185

161

157

146

649

187

168

162

150

667

Rental Revenues

166

200

296

144

807

176

217

331

144

868

Ancillary Revenues (d)

18

22

23

20

82

16

17

19

17

69

Total Destination Network

369

383

476

310

1,538

379

402

512

311

1,604

Vacation Ownership

Vacation Ownership Interest Sales

336

417

448

403

1,604

303

382

415

385

1,485

Consumer Financing

104

105

108

109

427

105

106

108

108

427

Property Management Fees and Reimbursable Revenues

153

149

159

155

615

143

145

150

142

581

WAAM Fee-for-Service Commissions

12

19

23

28

83

33

30

18

16

98

Ancillary Revenues (e)

12

9

12

11

43

9

10

13

17

47

Total Vacation Ownership

617

699

750

706

2,772

593

673

704

668

2,638

Total Reportable Segments

$

1,278

$

1,416

$

1,583

$

1,330

$

5,607

$

1,209

$

1,358

$

1,531

$

1,246

$

5,343

2013

2012

 Q1 

 Q2 

 Q3 

 Q4 

 Year 

 Q1 

 Q2 

 Q3 

 Q4 

 Year 

Hotel Group

Royalties and Franchise Fees

$

64

$

79

$

91

$

75

$

309

$

62

$

80

$

88

$

71

$

301

Marketing, Reservation and Wyndham Rewards Revenues (a)

73

92

118

83

365

68

99

98

80

345

Hotel Management Reimbursable Revenues (b)

25

38

37

35

135

21

22

25

23

91

Intersegment Trademark Fees

8

10

11

10

39

8

9

9

8

34

Owned Hotel Revenues

26

20

18

19

84

8

8

7

18

41

Ancillary Revenues (c)

26

23

22

23

95

18

15

22

23

78

Total Hotel Group

222

262

297

245

1,027

185

233

249

223

890

Destination Network

Exchange Revenues

193

168

158

150

669

188

162

157

153

660

Rental Revenues

166

192

293

138

789

159

170

248

125

702

Ancillary Revenues (d)

15

16

19

17

68

14

16

15

15

60

Total Destination Network

374

376

470

305

1,526

361

348

420

293

1,422

Vacation Ownership

Vacation Ownership Interest Sales

263

347

384

384

1,379

271

342

373

337

1,323

Consumer Financing

105

106

107

108

426

103

102

106

110

421

Property Management Fees

146

141

143

137

567

110

108

117

125

460

WAAM Fee-for-Service Commissions

24

30

33

20

107

12

11

4

6

33

Ancillary Revenues (e)

11

6

10

9

36

5

7

8

12

32

Total Vacation Ownership

549

630

677

658

2,515

501

570

608

590

2,269

Total Reportable Segments

$

1,145

$

1,268

$

1,444

$

1,208

$

5,068

$

1,047

$

1,151

$

1,277

$

1,106

$

4,581

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

(a)

Marketing and reservation revenues represent fees the Company receives from franchised and managed hotels that are to be expended for marketing purposes or the operation of a centralized, brand-specific reservation system.  These fees are typically based on a percentage of the gross room revenues of each hotel.  Wyndham Rewards revenues represent fees the Company receives relating to its loyalty program.

(b)

Primarily represents payroll costs in the hotel management business that the Company pays on behalf of property owners and for which it is reimbursed by the property owners. During 2014, reimbursable revenues of $2 million in each of Q1, Q2 and Q3 and $1 million in Q4 which were charged to the Company's vacation ownership business and were eliminated in consolidation. During 2013, such amounts include reimbursable revenues of $1 million, $3 million and $2 million, in Q2, Q3 and Q4 respectively, which were charged to the Company's vacation ownership business and were eliminated in consolidation.

(c)

Primarily includes additional services provided to franchisees and managed properties and fees related to our co-branded credit card program.

(d)

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

(e)

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

 

Table 5

Wyndham Worldwide Corporation

SCHEDULE OF DEBT

(In millions)

December 31,

September 30,

June 30,

March 31,

December 31,

2015

2015

2015

2015

2014

Securitized vacation ownership debt (a)

Term notes

$

1,891

$

1,843

$

1,841

$

2,090

$

1,962

Bank conduit facility (b)

239

267

253

98

203

Total securitized vacation ownership debt (c)

2,130

2,110

2,094

2,188

2,165

Less: Current portion of securitized vacation ownership debt

209

210

211

217

214

Long-term securitized vacation ownership debt

$

1,921

$

1,900

$

1,883

$

1,971

$

1,951

Debt:

   Revolving credit facility (due July 2020) (d)

$

7

$

20

$

23

$

14

$

25

   Commercial paper (e)

109

87

476

346

189

   $315 million 6.00% senior unsecured notes (due December 2016)

316

316

317

317

317

   $300 million 2.95% senior unsecured notes (due March 2017)

299

299

299

299

299

   $14 million 5.75% senior unsecured notes (due February 2018)

14

14

14

14

14

   $450 million 2.50% senior unsecured notes (due March 2018)

449

448

448

448

448

   $40 million 7.375% senior unsecured notes (due March 2020)

40

40

40

40

40

   $250 million 5.625% senior unsecured notes (due March 2021)

247

247

247

247

247

   $650 million 4.25% senior unsecured notes (due March 2022)

648

648

648

650

648

   $400 million 3.90% senior unsecured notes (due March 2023)

408

409

409

418

410

   $350 million 5.10% senior unsecured notes (due October 2025)

338

338

-

-

-

   Capital leases

153

158

161

161

170

   Other

50

49

70

70

81

Total long-term debt

3,078

3,073

3,152

3,024

2,888

Less: Current portion of long-term debt

44

44

52

53

47

Long-term debt

$

3,034

$

3,029

$

3,100

$

2,971

$

2,841

(a)

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

(b)

Represents a non-recourse vacation ownership bank conduit facility with a term through August 2017 and borrowing capacity of $650 million. As of December 31, 2015, this facility had a remaining borrowing capacity of $411 million.

(c)

This debt is collateralized by $2,576 million, $2,582 million, $2,558 million, $2,609 million, and $2,629 million of underlying vacation ownership contract receivables and related assets as of December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015, and December 31, 2014.

(d)

Represents a $1.5 billion revolving credit facility that expires in July 2020. As of December 31, 2015, the Company had $1 million of outstanding letters of credit. After considering outstanding commercial paper borrowings of $109 million, the remaining borrowing capacity was $1.4 billion as of December 31, 2015.

(e)

Represents commercial paper programs of $1.25 billion with a remaining borrowing capacity of $1.1 billion as of December 31, 2015.

 

Table 6

(1 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

As of and For the Three Months Ended December 31, 2015

Average Revenue 

Number of 

Average 

Average Daily 

Per Available

Brand

Properties

Number of Rooms

Occupancy Rate

Rate (ADR)

Room (RevPAR)

Hotel Group

Super 8 

2,631

168,438

50.9%

$48.82

$24.86

Days Inn 

1,788

142,870

46.0%

$64.04

$29.43

Ramada 

839

118,132

50.2%

$72.84

$36.54

Wyndham Hotels and Resorts

225

48,753

56.6%

$108.79

$61.57

Howard Johnson 

393

42,888

46.7%

$60.92

$28.44

Baymont

410

32,667

46.8%

$66.11

$30.92

Travelodge 

411

30,188

44.6%

$62.65

$27.93

Microtel Inns & Suites by Wyndham

332

23,941

52.5%

$67.29

$35.30

Knights Inn 

386

23,560

41.7%

$47.21

$19.71

TRYP by Wyndham

121

17,355

61.0%

$78.94

$48.12

Wingate by Wyndham

151

13,780

57.0%

$87.38

$49.77

Hawthorn Suites by Wyndham

102

10,174

60.8%

$80.45

$48.89

Dolce

23

5,296

49.5%

$150.61

$74.59

Total Hotel Group

7,812

678,042

49.6%

$66.46

$32.98

Vacation Ownership

Wyndham Vacation Ownership resorts

213

24,329

N/A

N/A

N/A

Total Wyndham Worldwide

8,025

702,371

As of and For the Three Months Ended December 31, 2014

Average Revenue

Number of 

Average 

Average Daily 

Per Available 

Brand

Properties

Number of Rooms

Occupancy Rate

Rate (ADR)

Room (RevPAR)

Hotel Group

Super 8 

2,510

160,847

53.8%

$48.07

$25.85

Days Inn 

1,794

145,078

45.7%

$63.86

$29.18

Ramada 

837

115,923

51.1%

$78.04

$39.86

Howard Johnson 

429

45,919

46.7%

$62.82

$29.34

Wyndham Hotels and Resorts

195

43,865

58.0%

$116.50

$67.53

Travelodge 

421

30,989

45.0%

$63.71

$28.68

Baymont

369

29,727

47.1%

$64.64

$30.42

Knights Inn 

398

24,832

42.1%

$45.61

$19.19

Microtel Inns & Suites by Wyndham

323

23,138

56.1%

$67.28

$37.74

TRYP by Wyndham

119

16,965

59.5%

$84.73

$50.44

Wingate by Wyndham

153

13,923

58.2%

$84.83

$49.35

Hawthorn Suites by Wyndham

97

9,620

63.1%

$75.65

$47.72

Total Hotel Group

7,645

660,826

50.6%

$67.27

$34.06

Vacation Ownership

Wyndham Vacation Ownership resorts

203

23,644

N/A

N/A

N/A

Total Wyndham Worldwide

7,848

684,470

Note: A glossary of terms is included in Table 3 (2 of 2); RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding.

 

Table 6

(2 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

As of and For the Year Ended December 31, 2015

Average Revenue

Number of 

Average 

Average Daily 

 Per Available 

Brand

Properties

Number of Rooms

Occupancy Rate

Rate (ADR)

Room (RevPAR)

Hotel Group

Super 8 

2,631

168,438

57.0%

$50.51

$28.81

Days Inn 

1,788

142,870

50.9%

$67.26

$34.22

Ramada 

839

118,132

54.2%

$75.08

$40.67

Wyndham Hotels and Resorts

225

48,753

60.5%

$110.76

$66.96

Howard Johnson 

393

42,888

50.0%

$62.45

$31.24

Baymont

410

32,667

52.5%

$68.50

$35.95

Travelodge 

411

30,188

50.8%

$67.71

$34.39

Microtel Inns & Suites by Wyndham

332

23,941

57.9%

$69.23

$40.08

Knights Inn 

386

23,560

45.7%

$48.26

$22.03

TRYP by Wyndham

121

17,355

62.0%

$80.39

$49.84

Wingate by Wyndham

151

13,780

63.3%

$89.17

$56.43

Hawthorn Suites by Wyndham

102

10,174

66.5%

$81.00

$53.89

Dolce

23

5,296

55.4%

$150.03

$83.08

Total Hotel Group

7,812

678,042

54.5%

$68.39

$37.26

Vacation Ownership

Wyndham Vacation Ownership resorts

213

24,329

N/A

N/A

N/A

Total Wyndham Worldwide

8,025

702,371

As of and For the Year Ended December 31, 2014

Average Revenue

Number of 

Average 

Average Daily 

 Per Available

Brand

Properties

Number of Rooms

Occupancy Rate

Rate (ADR)

 Room (RevPAR)

Hotel Group

Super 8 

2,510

160,847

57.2%

$50.86

$29.09

Days Inn 

1,794

145,078

51.0%

$65.68

$33.48

Ramada 

837

115,923

54.2%

$79.70

$43.22

Howard Johnson 

429

45,919

48.8%

$63.46

$30.96

Wyndham Hotels and Resorts

195

43,865

61.8%

$115.17

$71.14

Travelodge 

421

30,989

51.1%

$67.75

$34.62

Baymont

369

29,727

52.5%

$65.75

$34.51

Knights Inn 

398

24,832

44.9%

$46.67

$20.94

Microtel Inns & Suites by Wyndham

323

23,138

59.8%

$67.26

$40.23

TRYP by Wyndham

119

16,965

61.9%

$90.45

$55.97

Wingate by Wyndham

153

13,923

63.6%

$86.61

$55.05

Hawthorn Suites by Wyndham

97

9,620

65.5%

$76.59

$50.19

Total Hotel Group

7,645

660,826

54.5%

$68.94

$37.57

Vacation Ownership

Wyndham Vacation Ownership resorts

203

23,644

N/A

N/A

N/A

Total Wyndham Worldwide

7,848

684,470

Note: A glossary of terms is included in Table 3 (2 of 2); RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding.

 

 

Table 7

(1 of 2)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION

(In millions)

Reported 

Legacy

Acquisition

Restructuring

Asset

Contract 

Adjusted

Three months ended March 31, 2015

Net Revenues

EBITDA

Adjustments(b)

Costs (c)

Costs (d)

Impairment (e)

Termination (f)

EBITDA

Hotel Group

$

292

$

76

$

-

$

3

$

-

$

-

$

-

$

79

Destination Network

369

105

-

-

(1)

-

-

104

Vacation Ownership

617

130

-

-

-

-

-

130

Total Reportable Segments

1,278

311

-

3

(1)

-

-

313

Corporate and Other (a)

(16)

(34)

-

-

-

-

-

(34)

Total Company

$

1,262

$

277

$

-

$

3

$

(1)

$

-

$

-

$

279

Three months ended June 30, 2015

Hotel Group

$

334

$

96

$

-

$

1

$

-

$

-

$

-

$

97

Destination Network

383

84

-

-

-

-

-

84

Vacation Ownership

699

182

-

-

-

-

-

182

Total Reportable Segments

1,416

362

-

1

-

-

-

363

Corporate and Other (a)

(18)

(30)

(1)

-

-

-

-

(31)

Total Company

$

1,398

$

332

$

(1)

$

1

$

-

$

-

$

-

$

332

Three months ended September 30, 2015

Hotel Group

$

357

$

83

$

-

$

-

$

4

$

7

$

14

$

108

Destination Network

476

134

-

-

3

-

-

137

Vacation Ownership

750

200

-

-

1

-

-

201

Total Reportable Segments

1,583

417

-

-

8

7

14

446

Corporate and Other (a)

(19)

(35)

1

-

-

-

-

(34)

Total Company

$

1,564

$

382

$

1

$

-

$

8

$

7

$

14

$

412

Three months ended December 31, 2015

Hotel Group

$

314

$

94

$

-

$

-

$

(1)

$

-

$

-

$

93

Destination Network

310

44

-

-

(1)

-

-

43

Vacation Ownership

706

174

-

-

-

-

-

174

Total Reportable Segments

1,330

312

-

-

(2)

-

-

310

Corporate and Other (a)

(19)

(37)

-

-

-

-

-

(37)

Total Company

$

1,311

$

275

$

-

$

-

$

(2)

$

-

$

-

$

273

Twelve months ended December 31, 2015

Hotel Group

$

1,297

$

349

$

-

$

3

$

3

$

7

$

14

$

376

Destination Network

1,538

367

-

1

2

-

-

370

Vacation Ownership

2,772

687

-

-

1

-

-

688

Total Reportable Segments

5,607

1,403

-

4

6

7

14

1,434

Corporate and Other (a)

(71)

(137)

-

-

-

-

-

(137)

Total Company

$

5,536

$

1,266

$

-

$

4

$

6

$

7

$

14

$

1,297

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

(a)

Includes the elimination of transactions between segments.

(b)

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

(c)

Relates primarily to costs incurred in connection with the acquisition of Dolce Hotels and Resorts (January 2015).

(d)

Relates to costs incurred as a result of various organizational realignment initiatives and the reversal of a portion of restructuring reserves that were established in prior periods.

(e)

Relates to a non-cash impairment charge related to the write-down of terminated in-process technology projects resulting from the Company's decision to outsource its reservation system to a third-party provider.

(f)

Relates to costs associated with the anticipated termination of a management contract.

 

 

Table 7

(2 of 2)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION

(In millions)

Executive

Venezuela 

Loss on Sale 

Reported

Departure

Currency 

VAT 

Restructuring 

and Asset 

Legacy 

Adjusted 

Three months ended March 31, 2014

Net Revenues

EBITDA

Costs

Devaluation (b)

Adjustment (c)

Costs (d)

Impairments (e)

Adjustments (f)

EBITDA

Hotel Group

$

237

$

64

$

4

$

-

$

-

$

-

$

-

$

-

$

68

Destination Network

379

85

-

10

-

-

-

-

95

Vacation Ownership

593

115

-

-

-

-

-

-

115

Total Reportable Segments

1,209

264

4

10

-

-

-

-

278

Corporate and Other (a)

(16)

(34)

-

-

-

-

-

-

(34)

Total Company

$

1,193

$

230

$

4

$

10

$

-

$

-

$

-

$

-

$

244

Three months ended June 30, 2014

Hotel Group

$

283

$

87

$

-

$

-

$

-

$

-

$

-

$

-

$

87

Destination Network

402

89

-

-

(2)

-

-

-

87

Vacation Ownership

673

185

-

-

-

-

-

-

185

Total Reportable Segments

1,358

361

-

-

(2)

-

-

-

359

Corporate and Other (a)

(15)

(35)

-

-

-

-

-

-

(35)

Total Company

$

1,343

$

326

$

-

$

-

$

(2)

$

-

$

-

$

-

$

324

Three months ended September 30, 2014

Hotel Group

$

315

$

100

$

-

$

-

$

-

$

(1)

$

8

$

-

$

107

Destination Network

512

159

-

-

-

-

-

-

159

Vacation Ownership

704

188

-

-

-

-

-

-

188

Total Reportable Segments

1,531

447

-

-

-

(1)

8

-

454

Corporate and Other (a)

(17)

(36)

-

-

-

-

-

-

(36)

Total Company

$

1,514

$

411

$

-

$

-

$

-

$

(1)

$

8

$

-

$

418

Three months ended December 31, 2014

Hotel Group

$

267

$

77

$

-

$

-

$

-

$

2

$

-

$

-

$

79

Destination Network

311

2

-

-

-

10

27

-

39

Vacation Ownership

668

172

-

-

-

-

-

-

172

Total Reportable Segments

1,246

251

-

-

-

12

27

-

290

Corporate and Other (a)

(15)

(36)

-

-

-

-

-

(2)

(38)

Total Company

$

1,231

$

215

$

-

$

-

$

-

$

12

$

27

$

(2)

$

252

Twelve months ended December 31, 2014

Hotel Group

$

1,101

$

327

$

4

$

-

$

-

$

1

$

8

$

-

$

340

Destination Network

1,604

335

-

10

(2)

10

27

-

380

Vacation Ownership

2,638

660

-

-

-

-

-

-

660

Total Reportable Segments

5,343

1,322

4

10

(2)

11

35

-

1,380

Corporate and Other (a)

(62)

(141)

-

-

-

-

-

(1)

(142)

Total Company

$

5,281

$

1,181

$

4

$

10

$

(2)

$

11

$

35

$

(1)

$

1,238

Note: The sum of the quarters may not agree to the twelve months ended December 31, 2014 due to rounding.

(a)

Includes the elimination of transactions between segments.

(b)

Represents the devaluation of the official exchange rate of Venezuela.

(c)

Reversal of a reserve for value-added taxes.

(d)

Relates to (i) the reversal of a portion of a restructuring reserve established during the fourth quarter of 2013 and (ii) costs incurred as a result of various organizational realignment initiatives by the Company. 

(e)

Relates to (i) a loss on the sale of a business and a write-down of an equity investment at the Company's destination network business and (ii) a write-down of an investment in a joint venture at the Company's hotel group business. 

(f)

Relates to the net benefit from the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.

 

 

Table 8

(1 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

Three Months Ended December 31, 2015

 Restructuring 

 Foreign Tax 

As Adjusted

 As Reported 

Costs(a)

Credit  (c)

non-GAAP

Net revenues

Service and membership fees

$

562

$

$

$

562

Vacation ownership interest sales

403

403

Franchise fees

157

157

Consumer financing

109

109

Other

80

80

Net revenues

1,311

-

-

1,311

Expenses

Operating

594

594

Cost of vacation ownership interests 

43

43

Consumer financing interest

19

19

Marketing and reservation

189

189

General and administrative

199

199

Restructuring

(2)

2

-

Depreciation and amortization

61

61

Total expenses

1,103

2

-

1,105

Operating income

208

(2)

-

206

Other (income)/expense, net

(6)

(6)

Interest expense

37

37

Interest income

(2)

(2)

Income before income taxes

179

(2)

-

177

Provision for income taxes

39

(1)

(b)

26

64

Net income

$

140

$

(1)

$

(26)

$

113

Earnings per share

Basic

$

1.22

$

(0.01)

$

(0.22)

$

0.99

Diluted

1.21

(0.01)

(0.22)

0.98

Weighted average shares outstanding

Basic

115

115

115

115

Diluted

116

116

116

116

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

Note: EPS amounts may not add due to rounding.

(a)

Relates to a reversal of a portion of restructuring reserves that were established in prior periods.

(b)

Relates to the tax effect of the adjustment.

(c)

Relates to the release of a valuation allowance on foreign tax credits.

 

Table 8

(2 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

Twelve Months Ended December 31, 2015

Acquisition

Restructuring

Asset

Contract 

Foreign Tax

 As Adjusted  

 As Reported 

Costs(a)

 Costs (c)

Impairment (e)

Termination (f)

Credit (g)

non-GAAP

Net revenues

Service and membership fees

$

2,519

$

$

$

$

$

$

2,519

Vacation ownership interest sales

1,604

1,604

Franchise fees

674

674

Consumer financing

427

427

Other

312

312

Net revenues

5,536

-

-

-

-

-

5,536

Expenses

Operating

2,461

(4)

(14)

2,443

Cost of vacation ownership interests 

165

165

Consumer financing interest

74

74

Marketing and reservation

813

813

General and administrative

761

761

Asset impairment

7

(7)

-

Restructuring

6

(6)

-

Depreciation and amortization

234

234

Total expenses

4,521

(4)

(6)

(7)

(14)

-

4,490

Operating income

1,015

4

6

7

14

-

1,046

Other (income)/expense, net

(17)

(17)

Interest expense

125

125

Interest income

(9)

(9)

Income before income taxes

916

4

6

7

14

-

947

Provision for income taxes

304

(1)

(b)

2

(d)

2

(d)

6

(d)

26

339

Net income

$

612

$

5

$

4

$

5

$

8

$

(26)

$

608

Earnings per share

Basic

$

5.18

$

0.04

$

0.04

$

0.04

$

0.07

$

(0.22)

$

5.15

Diluted

5.14

0.04

0.04

0.04

0.07

(0.22)

5.11

Weighted average shares outstanding

Basic

118

118

118

118

118

118

118

Diluted

119

119

119

119

119

119

119

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

Note: EPS amounts may not add due to rounding.

(a)

Relates primarily to costs incurred in connection with the acquisition of Dolce Hotels and Resorts (January 2015) at the Company's hotel group business.

(b)

Relates to (i) the tax effect of the adjustment and (ii) a valuation allowance established in connection with the acquisition of Dolce Hotels and Resorts.

(c)

Relates to costs incurred as a result of various organizational realignment initiatives across the Company and the reversal of a portion of restructuring reserves that were established in prior periods.

(d)

Relates to the tax effect of the adjustment.

(e)

Relates to a non-cash impairment charge at the Company's hotel group business related to the write-down of terminated in-process technology projects resulting from the decision to outsource the reservation system to a third-party provider. 

(f)

Relates to costs associated with the anticipated termination of a management contract within the Company's hotel group business.

(g)

Relates to the release of a valuation allowance on foreign tax credits.

 

Table 8

(3 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

Three Months Ended December 31, 2014

Loss on Sale 

Legacy

Restructuring

 and Asset 

As Adjusted 

 As Reported 

Adjustments(a)

Costs(c)

Impairment (d)

non-GAAP

Net revenues

Service fees and membership

$

508

$

$

$

$

508

Vacation ownership interest sales

385

385

Franchise fees

151

151

Consumer financing

108

108

Other

79

79

Net revenues

1,231

-

-

-

1,231

Expenses

Operating

542

542

Cost of vacation ownership interests 

42

42

Consumer financing interest

18

18

Marketing and reservation

188

188

General and administrative

189

2

191

Loss on sale and asset impairment

27

(27)

-

Restructuring

12

(12)

-

Depreciation and amortization

58

58

Total expenses

1,076

2

(12)

(27)

1,039

Operating income

155

(2)

12

27

192

Other (income)/expense, net

(2)

(2)

Interest expense

29

29

Interest income

(4)

(4)

Income before income taxes

132

(2)

12

27

169

Provision for income taxes

51

(1)

(b)

4

(b)

3

(b)

57

Net income

$

81

$

(1)

$

8

$

24

$

112

Earnings per share

Basic

$

0.66

$

(0.01)

$

0.07

$

0.20

$

0.91

Diluted

0.65

(0.01)

0.06

0.20

0.90

Weighted average shares outstanding

Basic

122

122

122

122

122

Diluted

124

124

124

124

124

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

Note: EPS amounts may not add due to rounding.

(a)

Relates to the net benefit from the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.

(b)

Relates to the tax effect of the adjustment.

(c)

Relates to costs incurred as a result of organizational realignment initiatives at the Company's hotel group and destination network businesses.

(d)

Relates to a loss on the sale of a business and a write-down of an equity investment at the Company's destination network business.

 

Table 8

(4 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

Twelve Months Ended December 31, 2014

Executive 

Venezuela 

Loss on sale 

Departure 

Currency 

Legacy

VAT 

Restructuring

and Asset

As Adjusted 

 As Reported 

Costs(a)

Devaluation(c)

Adjustments (d)

Adjustment (f)

Costs (g)

Impairments (h)

non-GAAP

Net revenues

Service fees and membership

$

2,431

$

$

$

$

$

$

$

2,431

Vacation ownership interest sales

1,485

1,485

Franchise fees

632

632

Consumer financing

427

427

Other

306

306

Net revenues

5,281

-

-

-

-

-

-

5,281

Expenses

Operating

2,262

(10)

2,252

Cost of vacation ownership interests 

171

171

Consumer financing interest

71

71

Marketing and reservation

802

802

General and administrative

755

(4)

1

2

754

Loss on sale and asset impairments

35

(35)

-

Restructuring

11

(11)

-

Depreciation and amortization

233

233

Total expenses

4,340

(4)

(10)

1

2

(11)

(35)

4,283

Operating income

941

4

10

(1)

(2)

11

35

998

Other (income)/expense, net

(7)

(7)

Interest expense

113

2

115

Interest income

(10)

(10)

Income before income taxes

845

4

10

(1)

(4)

11

35

900

Provision for income taxes

316

1

(b)

1

(b)

1

(e)

(2)

(b)

4

(b)

6

(b)

327

Net income

$

529

$

3

$

9

$

(2)

$

(2)

$

7

$

29

$

573

Earnings per share

Basic

$

4.22

$

0.02

$

0.07

$

(0.01)

$

(0.02)

$

0.06

$

0.23

$

4.57

Diluted

4.18

0.02

0.07

(0.01)

(0.02)

0.06

0.23

4.53

Weighted average shares outstanding

Basic

125

125

125

125

125

125

125

125

Diluted

127

127

127

127

127

127

127

127

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

Note: EPS amounts may not add due to rounding.

(a)

Related to costs associated with an executive's departure at the Company's hotel group business.

(b)

Relates to the tax effect of the adjustment.

(c)

Represents the devaluation of the official exchange rate of Venezuela at the Company's destination network business.

(d)

Relates to the net benefit from the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.

(e)

Relates to the reversal of a state tax accrual.

(f)

Relates to the reversal of a reserve for value-added taxes at the Company's destination network business.

(g)

Relates to (i) costs incurred as a result of organizational realignment initiatives at the Company's hotel group and destination network businesses, partially offset by (ii) the reversal of a portion of a restructuring reserve of $1 million established during the fourth quarter of 2013.

(h)

Relates to (i) a loss on the sale of a business and a write-down of an equity investment at the Company's destination network business and (ii) a write-down of an investment in a joint venture at the Company's hotel group business.

 

Table 9

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATIONS AND FINANCIAL INFORMATION

(In millions)

FREE CASH FLOW

We define free cash flow to be net cash provided by operating activities less property and equipment additions which we also refer to as capital expenditures.

We believe free cash flow to be a useful operating performance measure to evaluate the ability of our operations to generate cash for uses other than capital expenditures and, after debt service and other obligations, our ability to grow our business through acquisitions, development advances and equity investments, as well as our ability to return cash to shareholders through dividends and share repurchases. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities, net cash used in investing activities and net cash used in financing activities as a means for evaluating Wyndham Worldwide is that free cash flow does not represent the total cash movement for the period as detailed in the consolidated statement of cash flows.

The following table provides more details on the GAAP financial measure that is most directly comparable to the non-GAAP financial measure and the related reconciliation between these financial measures:

Twelve Months Ended December 31, 

2015

2014

Net cash provided by operating activities

$

991

$

984

Less: Property and equipment additions

(222)

(235)

Free cash flow

$

769

$

749

GROSS VOI SALES

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

Year

2015

Q1

Q2

Q3

Q4

Full Year

Gross VOI sales (*)

$

390

$

502

$

565

$

507

$

1,965

Less: Sales under WAAM Fee-for-Service

(21)

(26)

(37)

(42)

(126)

Gross VOI sales, net of WAAM Fee-for-Service sales

369

477

528

464

1,838

Less: Loan loss provision

(46)

(60)

(78)

(64)

(248)

Plus: Impact of percentage-of-completion accounting

13

-

(2)

2

13

Vacation ownership interest sales (*)

$

336

$

417

$

448

$

403

$

1,604

2014

Gross VOI sales (*)

$

410

$

496

$

513

$

470

$

1,889

Less: Sales under WAAM Fee-for-Service

(44)

(40)

(27)

(21)

(132)

Gross VOI sales, net of WAAM Fee-for-Service sales

366

456

486

449

1,757

Less: Loan loss provision

(60)

(70)

(70)

(60)

(260)

Less: Impact of percentage-of-completion accounting

(3)

(4)

(1)

(4)

(12)

Vacation ownership interest sales (*)

$

303

$

382

$

415

$

385

$

1,485

2013

Gross VOI sales (*)

$

384

$

481

$

536

$

488

$

1,889

Less: Sales under WAAM Fee-for-Service

(36)

(44)

(51)

(29)

(160)

Gross VOI sales, net of WAAM Fee-for-Service sales

347

437

486

459

1,729

Less: Loan loss provision

(84)

(90)

(102)

(73)

(349)

Less: Impact of percentage-of-completion accounting

-

-

-

(1)

(1)

Vacation ownership interest sales (*)

$

263

$

347

$

384

$

384

$

1,379

2012

Gross VOI sales (*)

$

384

$

460

$

502

$

435

$

1,781

Less: Sales under WAAM Fee-for-Service

(17)

(18)

(5)

(10)

(49)

Gross VOI sales, net of WAAM Fee-for-Service sales

367

442

497

426

1,732

Less: Loan loss provision

(96)

(100)

(124)

(89)

(409)

Vacation ownership interest sales (*)

$

271

$

342

$

373

$

337

$

1,323

_____________

Note: Amounts may not add due to rounding.

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

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

Q1

Q2

Q3

Q4

Full Year

2015

$

24

$

17

$

32

$

27

$

100

2014

$

25

$

21

$

27

$

24

$

97

2013

$

24

$

18

$

22

$

25

$

89

2012

$

27

$

20

$

22

$

28

$

97

 

 

SOURCE Wyndham Worldwide Corporation



RELATED LINKS

http://www.wyndhamworldwide.com