Wyndham Worldwide Reports Second Quarter 2012 Earnings

Second Quarter Adjusted EPS Up 36% Year-Over-Year

Increases 2012 EPS Guidance

Jul 25, 2012, 06:30 ET from Wyndham Worldwide Corporation

PARSIPPANY, N.J., July 25, 2012 /PRNewswire/ -- Wyndham Worldwide Corporation (NYSE: WYN) today announced results for the three months ended June 30, 2012. 

Highlights:

  • Second quarter adjusted diluted earnings per share (EPS) was $0.87, compared with $0.64 in the second quarter of 2011, an increase of 36%.  Second quarter 2012 reported diluted EPS was $0.88, an increase of 31% from the same period in 2011.
  • Second quarter Adjusted EBITDA increased 10% to $281 million.
  • During the quarter, the Company repurchased 3.8 million shares of its common stock for $190 million at an average price of $49.35.
  • The Company announced on July 19, 2012 that it completed a term securitization transaction involving the issuance of $300 million of investment-grade asset-backed notes at an advance rate of 90% and an overall weighted average coupon of 2.66%.
  • Raises full year Adjusted EPS Guidance to $3.10 - $3.20 from $3.00 - $3.15

"In the first half of 2012 we achieved back-to-back 36% increases in quarterly adjusted EPS growth in an economic environment that remains uncertain," said Stephen P. Holmes, chairman and CEO, Wyndham Worldwide.  "Underlying this growth is strong execution from each of our businesses and diversified product offerings well positioned to capitalize on consumers' desire to travel.  In addition, we benefited from capital allocation that included the return of capital to shareholders."

SECOND QUARTER 2012 OPERATING RESULTS Second quarter revenues were $1.1 billion, an increase of 4% from the prior year period.  The increase reflected growth in our Lodging and Vacation Ownership businesses partially offset by unfavorable currency movements in our Vacation Exchange and Rentals business.

For the second quarter of 2012, adjusted net income was $128 million, or $0.87 per diluted share, compared with $108 million, or $0.64 per diluted share for the same period in 2011.  The increase in adjusted net income primarily reflected stronger operating results in our Lodging and Vacation Ownership businesses.  The increase in EPS also benefited from our share repurchase program, which decreased our weighted average share count by 14%.

Reported net income for the second quarter of 2012 was $128 million, or $0.88 per diluted share, compared with net income of $114 million, or $0.67 per diluted share, for the second quarter of 2011. The second quarter of 2011 included a refund of value added taxes, restructuring costs and legacy adjustments costs.

Free cash flow was $567 million for the six months ended June 30, 2012, compared to $595 million for the same period in 2011.  Excluding a $51 million refund of value added taxes received in the first half of 2011, free cash flow increased by 4%.  The Company defines free cash flow as net cash provided by operating activities less capital expenditures, equity investments and development advances.  For the six months ended June 30, 2012, cash provided by operating activities was $647 million, compared with $696 million in the prior year period, which included the refund of value added taxes.

BUSINESS UNIT RESULTS

Lodging (Wyndham Hotel Group) Revenues were $233 million in the second quarter of 2012, an increase of 23%, compared with the second quarter of 2011.  The increase reflected domestic RevPAR gains of 8%, as part of a total system RevPAR increase of 5%, revenues associated with the Wyndham Grand hotel in Orlando, which opened at the beginning of the fourth quarter of 2011, and higher intersegment licensing fees for use of the Wyndham brand trade name.  The revenue increase also included a combined $21 million of reclassifications and incremental global conference fees, both of which were fully offset in expenses.

Adjusted EBITDA was $74 million, an increase of 12% compared with the second quarter of 2011, largely a result of the revenue increases, partially offset by the operating costs associated with the Wyndham Grand hotel in Orlando and higher marketing costs. 

As of June 30, 2012, the Company's hotel system consisted of over 7,170 properties and approximately 608,300 rooms. The development pipeline included approximately 900 hotels and 113,900 rooms, of which 53% were new construction and 53% were international.

Vacation Exchange and Rentals (Wyndham Exchange & Rentals) Revenues were $348 million in the second quarter of 2012, compared to $361 million in the second quarter of 2011.  In constant currency and excluding the impact of acquisitions, revenues were flat.

Exchange revenues were $162 million, a decrease of 4% compared with the second quarter of 2011.  In constant currency, exchange revenues were flat, as a 2% increase in exchange revenue per member was offset by a 2% decline in the average number of members due to the non-renewal of an affiliation agreement in the beginning of 2012.   

Vacation rental revenues were $170 million, a 6% decrease compared with the second quarter of 2011. Excluding the impact of foreign currency and acquisitions, vacation rental revenues were flat, reflecting a 4% increase in the average net price per vacation rental offset by a 3% decrease in transaction volume.

Adjusted EBITDA for the second quarter of 2012 was $82 million, flat compared with the prior-year period.  

Vacation Ownership (Wyndham Vacation Ownership) Revenues were $570 million in the second quarter of 2012, a 5% increase over the second quarter of 2011, primarily reflecting increased vacation ownership interest (VOI) sales. 

Gross VOI sales were $460 million in the second quarter of 2012, up 12% from the second quarter of 2011, primarily reflecting a 6% increase in volume per guest and a 5% increase in tour flow.

Adjusted EBITDA for the second quarter of 2012 was $150 million, a 15% increase compared with the second quarter of 2011, primarily reflecting contributions from increased VOI sales.

Other Items

  • The Company repurchased 3.8 million shares of common stock for $190 million during the second quarter of 2012 at an average price of $49.35.  From July 1 through July 24, 2012, the Company repurchased an additional 1.1 million shares for $58 million at an average price of $50.77.  The Company has $733 million remaining on its current share repurchase authorization.
  • Net interest expense in the second quarter of 2012 was $30 million, compared to $34 million in the second quarter of 2011.  The decline was primarily due to the absence of an accrual for interest on value added taxes in the second quarter of 2011 and a lower average cost of funds resulting from our debt tender and issuance activity during the first quarter of 2012.

Balance Sheet Information as of June 30, 2012:

  • Cash and cash equivalents of approximately $285 million, compared with $142 million at December 31, 2011
  • Vacation ownership contract receivables, net, of $2.8 billion, unchanged from December 31, 2011
  • Vacation ownership and other inventory of approximately $1.1 billion, unchanged from December 31, 2011
  • Securitized vacation ownership debt of $1.9 billion, unchanged from December 31, 2011
  • Long-term debt of $2.3 billion, compared with $2.2 billion at December 31, 2011. The remaining borrowing capacity on the revolving credit facility was $908 million, compared with $771 million as of December 31, 2011

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

Outlook

For the full year 2012, the Company:

  • Reiterates Revenues of approximately $4.425$4.6 billion
  • Updates Adjusted EBITDA guidance to $1.040$1.055 billion from $1.030 - $1.055 billion
  • Raises Adjusted EPS Guidance to $3.10 - $3.20 from $3.00 - $3.15
  • Reduces diluted shares to 147 million from 149 million

The guidance reflects assumptions used for internal planning purposes. Guidance may exclude non-recurring or special items, which may have a positive or negative impact on reported results. If economic conditions change materially from current levels, these assumptions and our guidance may change materially.

Conference Call Information Wyndham Worldwide Corporation will hold a conference call with investors to discuss this news on Wednesday, July 25, 2012 at 8:30 a.m. EDT. Listeners may access the webcast live through the Company's website at www.wyndhamworldwide.com/investors/. An archive of this webcast will be available at the website for approximately 90 days beginning at noon EDT on July 25, 2012. The conference call may also be accessed by dialing (800) 369-2052 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 EDT on July 25, 2012, at (800) 551-8154.

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. 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 EPS to the most directly comparable GAAP measure because certain items cannot be reasonably estimated or predicted at this time.  Any such items could be significant to our reported results.

About Wyndham Worldwide Corporation As one of the world's largest hospitality companies, Wyndham Worldwide offers individual consumers and business-to-business customers a broad suite of hospitality products and services across various accommodation alternatives and price ranges through its premier portfolio of world-renowned brands. Wyndham Hotel Group encompasses over 7,170 hotels with approximately 608,300 rooms worldwide. Wyndham Exchange & Rentals offers leisure travelers, including its 3.7 million members, access to approximately 100,000 vacation properties located in approximately 100 countries. Wyndham Vacation Ownership develops, markets and sells vacation ownership interests and provides consumer financing to owners through its network of over 160 vacation ownership resorts serving over 813,000 owners throughout North America, the Caribbean and the South Pacific. Wyndham Worldwide, headquartered in Parsippany, N.J., employs approximately 27,800 employees globally.

For more information about Wyndham Worldwide, 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 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 Quarterly Report on Form 10-Q, filed with the SEC on April 25, 2012. 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 for the Three Months Ended June 30, 2012 and 2011:

Three Months Ended June 30, 

2012

2011

 Net Revenues 

 EBITDA 

 Net Revenues 

 EBITDA 

Lodging

$                     233

$                       75

 (b) 

$                     190

$                       66

Vacation Exchange and Rentals

348

82

361

106

 (c) 

Vacation Ownership

570

150

541

130

     Total Reportable Segments

1,151

307

1,092

302

Corporate and Other (a)

(12)

(25)

(2)

(26)

 (d) 

     Total Company

$                  1,139

$                     282

$                  1,090

$                     276

Reconciliation of EBITDA to Net Income Attributable to Wyndham

EBITDA

$                     282

$                     276

Depreciation and amortization

46

45

Interest expense

32

36

 (e) 

Early extinguishment of debt

-

1

 (f) 

Interest income

(2)

(2)

Income before income taxes

206

196

Provision for income taxes

78

82

Net income

128

114

Net loss attributable to noncontrolling interest

-

-

Net income attributable to Wyndham

$                     128

$                     114

__________

(a)

Includes the elimination of transactions between segments.  

(b)

Includes a $1 million benefit from the recovery of a previously recorded impairment charge.

(c)

Includes (i) a $31 million net benefit resulting from a refund of value added taxes and (ii) $7 million of restructuring costs incurred in connection with a strategic initiative commenced by the Company during 2010.

(d)

Includes $3 million of a net expense during the three months ended June 30, 2011 related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.

(e)

Includes $3 million of interest related to value added tax accruals.

(f)

Represents costs incurred for the early repurchase of a portion of the Company's convertible notes. 

The following tables summarize net revenues and Adjusted EBITDA for reportable segments for the three months ended June 30, 2012 and 2011 (for a description of adjustments by segment, see Table 7):

Three Months Ended June 30, 

2012

2011

Adjusted

Adjusted

 Net Revenues 

EBITDA

 Net Revenues 

 EBITDA 

Lodging

$                     233

$                       74

$                     190

$                       66

Vacation Exchange and Rentals

348

82

361

82

Vacation Ownership

570

150

541

130

     Total Reportable Segments

1,151

306

1,092

278

Corporate and Other

(12)

(25)

(2)

(23)

     Total Company

$                  1,139

$                     281

$                  1,090

$                     255

 

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 for the Six Months Ended June 30, 2012 and 2011:

Six Months Ended June 30, 

2012

2011

 Net Revenues 

 EBITDA 

 Net Revenues 

 EBITDA 

Lodging

$                     418

$                     123

 (b) 

$                     339

$                       92

 (f) 

Vacation Exchange and Rentals

709

177

 (c) 

716

199

 (g) 

Vacation Ownership

1,071

253

992

227

 (h) 

     Total Reportable Segments

2,198

553

2,047

518

Corporate and Other (a)

(23)

(46)

 (d) 

(6)

(38)

 (d) 

     Total Company

$                  2,175

$                     507

$                  2,041

$                     480

Reconciliation of EBITDA to Net Income Attributable to Wyndham

EBITDA

$                     507

$                     480

Depreciation and amortization

91

90

Interest expense

65

69

 (i) 

Early extinguishment of debt

106

 (e) 

12

 (j) 

Interest income

(5)

(3)

Income before income taxes

250

312

Provision for income taxes

91

126

Net income

159

186

Net loss attributable to noncontrolling interest

1

-

Net income attributable to Wyndham

$                     160

$                     186

__________

(a)

Includes the elimination of transactions between segments.  

(b)

Includes a $1 million benefit from the recovery of a previously recorded impairment charge.

(c)

Includes a $2 million benefit related to the reversal of an allowance associated with a previously divested asset.

(d)

Includes $4 million and $8 million of a net benefit during the six months ended June 30, 2012 and 2011, respectively, related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.

(e)

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

(f)

Includes a non-cash impairment charge of $13 million to reduce the value of an international joint venture.

(g)

Includes (i) a $31 million net benefit resulting from a refund of value added taxes and (ii) $7 million of restructuring costs incurred in connection with a strategic initiative commenced by the Company during 2010.

(h)

Includes a $1 million benefit for the reversal of costs incurred as a result of various strategic initiatives commenced by the Company during 2008.

(i)

Includes $3 million of interest related to value added tax accruals.

(j)

Represents costs incurred for the early repurchase of a portion of the Company's convertible notes. 

The following tables summarize net revenues and Adjusted EBITDA for reportable segments for the six months ended June 30, 2012 and 2011 (for a description of adjustments by segment, see Table 7):

Six Months Ended June 30, 

2012

2011

Adjusted

Adjusted

 Net Revenues 

 EBITDA 

 Net Revenues 

 EBITDA 

Lodging

$                     418

$                     122

$                     339

$                     105

Vacation Exchange and Rentals

709

175

716

175

Vacation Ownership

1,071

253

992

226

     Total Reportable Segments

2,198

550

2,047

506

Corporate and Other

(23)

(50)

(6)

(46)

     Total Company

$                  2,175

$                     500

$                  2,041

$                     460

Table 2

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

 Three Months Ended 

 Six Months Ended 

 June 30, 

 June 30, 

2012

2011

2012

2011

Net revenues

Service and membership fees

$          489

$          499

$          993

$          995

Vacation ownership interest sales

342

313

613

535

Franchise fees

163

134

281

235

Consumer financing

102

103

205

206

Other

43

41

83

70

Net revenues

1,139

1,090

2,175

2,041

Expenses

Operating

451

458

895

868

Cost of vacation ownership interests 

42

48

70

79

Consumer financing interest

23

23

46

46

Marketing and reservation

190

153

356

290

General and administrative(a)

156

126

(c)

310

266

(c)

Asset impairments

-

-

-

13

(e)

Restructuring

-

7

(d)

-

6

(d)

Depreciation and amortization

46

45

91

90

Total expenses

908

860

1,768

1,658

Operating income

231

230

407

383

Other income, net

(5)

(b)

(1)

(9)

(b) (f)

(7)

(g)

Interest expense

32

36

(h)

65

69

Early extinguishment of debt

-

1

(i)

106

(j)

12

(i)

Interest income

(2)

(2)

(5)

(3)

Income before income taxes

206

196

250

312

Provision for income taxes

78

82

91

126

Net income

128

114

159

186

Net loss attributable to noncontrolling interest

-

-

1

-

Net income attributable to Wyndham

$          128

$          114

$          160

$          186

Earnings per share

Basic

$         0.89

$         0.68

$         1.10

$         1.10

Diluted

0.88

0.67

1.08

1.07

Weighted average shares outstanding

Basic

144

167

145

170

Diluted

147

170

148

174

__________

(a)

 

 

Includes $3 million of a net expense during the three months ended June 30, 2011 and $4 million and $4 million of a net benefit during the six months ended June 30, 2012 and 2011, respectively, related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.

(b)

 

Includes a $1 million benefit from the recovery of a previously recorded impairment charge at the Company's lodging business.

(c)

 

Includes a $31 million net benefit resulting from a refund of value added taxes at the Company's vacation exchange and rentals business.

(d)

 

The three and six months ended June 30, 2011 include $7 million of costs incurred as a result of a strategic initiative commenced by the Company during 2010.  The six months ended June 30, 2011 also includes a $1 million benefit  for the reversal of costs incurred as a result of various strategic initiatives commenced by the Company during 2008.

(e)

 

Represents a non-cash impairment charge related to a write-down of an international joint venture at the Company's lodging business.

(f)

 

Includes a $2 million benefit related to the reversal of an allowance associated with a previously divested asset at the Company's vacation exchange and rentals business.

(g)

 

Includes $4 million of a gain related to the redemption of a preferred stock investment allocated to the Company in connection with our separation from Cendant.

(h)

Includes $3 million of interest related to value added tax accruals.

(i)

Represents costs incurred for the early repurchase of a portion of the Company's convertible notes. 

(j)

 

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

 

Table 3

(1 of 3)

Wyndham Worldwide Corporation

OPERATING STATISTICS

Year

Q1

Q2

Q3

Q4

Full Year

Lodging (a)

Number of Rooms 

2012

609,300

608,300

 N/A 

 N/A 

 N/A 

2011

609,600

612,900

611,200

613,100

 N/A 

2010

593,300

606,800

605,700

612,700

 N/A 

2009

588,500

590,200

590,900

597,700

 N/A 

RevPAR

2012

$               29.73

$               37.23

 N/A 

 N/A 

 N/A 

2011

$               27.71

$               35.38

$               39.49

$               30.65

$               33.34

2010

$               25.81

$               32.25

$               37.14

$               29.18

$               31.14

2009

$               27.69

$               32.38

$               34.81

$               26.47

$               30.34

Vacation Exchange and Rentals

Average Number of Members (in 000s)

2012

3,684

3,670

 N/A 

 N/A 

 N/A 

2011

3,766

3,755

3,744

3,734

3,750

2010

3,746

3,741

3,766

3,759

3,753

2009

3,789

3,795

3,781

3,765

3,782

Exchange Revenue Per Member

2012

$             204.56

$             177.07

 N/A 

 N/A 

 N/A 

2011

$             205.64

$             178.46

$             172.38

$             161.68

$             179.59

2010

$             201.93

$             172.20

$             173.44

$             162.59

$             177.53

2009

$             194.83

$             174.22

$             173.90

$             163.89

$             176.73

Vacation Rental Transactions (in 000s) (b)

2012

418

325

 N/A 

 N/A 

 N/A 

2011

398

328

370

250

1,347

2010

291

297

322

253

1,163

2009

273

231

264

196

964

Average Net Price Per Vacation Rental(b)

2012

$             379.40

$             524.40

 N/A 

 N/A 

 N/A 

2011

$             377.71

$             549.09

$             701.81

$             497.04

$             530.78

2010

$             361.17

$             387.01

$             500.31

$             449.12

$             425.38

2009

$             353.15

$             471.74

$             594.34

$             499.66

$             477.38

Vacation Ownership

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

2012

$           384,000

$           460,000

 N/A 

 N/A 

 N/A 

2011

$           319,000

$           412,000

$           455,000

$           409,000

$        1,595,000

2010

$           308,000

$           371,000

$           412,000

$           373,000

$        1,464,000

2009

$           280,000

$           327,000

$           366,000

$           343,000

$        1,315,000

Tours (d)

2012

148,000

186,000

 N/A 

 N/A 

 N/A 

2011

137,000

177,000

197,000

173,000

685,000

2010

123,000

163,000

187,000

160,000

634,000

2009

137,000

164,000

173,000

142,000

617,000

Volume Per Guest (VPG) (d)

2012

$               2,414

$               2,361

 N/A 

 N/A 

 N/A 

2011

$               2,192

$               2,227

$               2,197

$               2,296

$               2,229

2010

$               2,334

$               2,156

$               2,081

$               2,214

$               2,183

2009

$               1,866

$               1,854

$               1,944

$               2,210

$               1,964

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

(a)

Includes the impact of the acquisition of the Tryp hotel brand (June 2010) from the acquisition date forward. Therefore, the operating statistics are not presented on a comparable basis.

(b)

Includes the impact of the acquisitions of Hoseasons (March 2010), ResortQuest (September 2010), James Villa Holidays (November 2010) and two tuck-in acquisitions (third quarter 2011) from the acquisition dates forward. Therefore, the operating statistics are not presented on a comparable basis.

(c)

Includes gross VOI sales under the Company's Wyndham Asset Affiliate Model (WAAM) 1.0 beginning in the first quarter of 2010 and 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).

(d)

Includes the impact of WAAM 1.0 related tours beginning in the first quarter of 2010 and 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

2012

7,150

7,170

 N/A 

 N/A 

 N/A 

2011

7,190

7,220

7,190

7,210

 N/A 

2010

7,090

7,160

7,150

7,210

 N/A 

2009

6,990

7,020

7,040

7,110

 N/A 

Vacation Ownership

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

2012

$             96,000

$           100,000

 N/A 

 N/A 

 N/A 

2011

$             79,000

$             80,000

$             96,000

$             83,000

$           339,000

2010

$             86,000

$             87,000

$             85,000

$             82,000

$           340,000

2009

$           107,000

$           122,000

$           117,000

$           103,000

$           449,000

Sales under WAAM 1.0 (in 000s) (c) 

2012

$             17,000

$             18,000

 N/A 

 N/A 

 N/A 

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)

2012

$             12,000

$             11,000

 N/A 

 N/A 

 N/A 

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) 

2012

$                    -

$             12,000

 N/A 

 N/A 

 N/A 

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

(a)

 

Includes the impact of the acquisition of Tryp hotel brand (June 2010) 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.  The Company implemented this sales model during the first quarter of 2010 and, as such, there is no historical data prior to 2010.

(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 we receive 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 our 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 us. 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 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. We believe that Gross VOI sales provides an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period.

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

Volume per Guest (VPG): Represents gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) divided by the number of tours. We have 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 2009-2012. We believe that VPG provides an enhanced understanding of the performance of our vacation ownership business because it directly measures the efficiency of this business' tour selling efforts during a given reporting period.

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)

2012

2011

 Q1 

 Q2 

 Q3 

 Q4 

 Year 

 Q1 

 Q2 

 Q3 

 Q4 

 Year 

Lodging

Royalties and Franchise Fees

$             62

$             80

 N/A 

 N/A 

 N/A 

$             58

$             75

$             85

$             66

$           284

Marketing, Reservation and Wyndham Rewards Revenues (a)

68

99

 N/A 

 N/A 

 N/A 

54

75

94

76

299

Hotel Management Reimbursable Revenues (b)

21

22

 N/A 

 N/A 

 N/A 

19

19

21

20

79

Inter-segment Trademark Fees (c)

8

9

 N/A 

 N/A 

 N/A 

1

2

3

4

10

Owned Hotel Revenues

8

8

 N/A 

 N/A 

 N/A 

-

-

-

5

5

Ancillary Revenues (d)

18

15

 N/A 

 N/A 

 N/A 

17

19

19

17

72

Total Lodging

185

233

 N/A 

 N/A 

 N/A 

149

190

222

188

749

Vacation Exchange and Rentals

Exchange Revenues

188

162

 N/A 

 N/A 

 N/A 

194

168

161

150

673

Rental Revenues

159

170

 N/A 

 N/A 

 N/A 

150

180

260

125

715

Ancillary Revenues (e)

14

16

 N/A 

 N/A 

 N/A 

12

13

15

16

56

Total Vacation Exchange and Rentals

361

348

 N/A 

 N/A 

 N/A 

356

361

436

291

1,444

Vacation Ownership

Vacation Ownership Interest Sales

271

342

 N/A 

 N/A 

 N/A 

222

313

320

295

1,150

Consumer Financing

103

102

 N/A 

 N/A 

 N/A 

102

103

105

105

415

Property Management Fees

110

108

 N/A 

 N/A 

 N/A 

110

108

105

101

424

WAAM 1.0 Commissions

12

11

 N/A 

 N/A 

 N/A 

10

11

23

21

65

Ancillary Revenues (f)

5

7

 N/A 

 N/A 

 N/A 

6

6

6

5

23

Total Vacation Ownership

501

570

 N/A 

 N/A 

 N/A 

450

541

559

527

2,077

Total Reportable Segments

$      1,047

$      1,151

 N/A 

 N/A 

 N/A 

$          955

$      1,092

$      1,217

$      1,006

$      4,270

2010

2009

 Q1 

 Q2 

 Q3 

 Q4 

 Year 

 Q1 

 Q2 

 Q3 

 Q4 

 Year 

Lodging

Royalties and Franchise Fees

$             52

$             69

$             82

$             62

$           265

$             57

$             68

$             72

$             57

$           254

Marketing, Reservation and Wyndham Rewards Revenues (a)

50

65

76

60

251

54

66

73

53

246

Hotel Management Reimbursable Revenues (b)

21

20

18

18

77

22

23

21

19

85

Ancillary Revenues (d)

21

24

27

23

95

21

17

17

20

75

Total Lodging

144

178

203

163

688

154

174

183

149

660

Vacation Exchange and Rentals

Exchange Revenues

189

161

163

153

666

185

165

164

154

668

Rental Revenues

105

115

161

114

495

96

109

157

98

460

Ancillary Revenues (e)

6

5

6

15

32

6

6

6

6

24

Total Vacation Exchange and Rentals

300

281

330

282

1,193

287

280

327

258

1,152

Vacation Ownership

Vacation Ownership Interest Sales

217

271

308

276

1,072

239

242

285

287

1,053

Consumer Financing

105

106

107

107

425

109

109

108

109

435

Property Management Fees

100

100

104

101

405

91

94

96

95

376

WAAM 1.0 Commissions (g)

3

8

12

8

31

-

-

-

-

-

Ancillary Revenues (f)

19

20

2

5

46

23

22

19

17

81

Total Vacation Ownership

444

505

533

497

1,979

462

467

508

508

1,945

Total Reportable Segments

$          888

$          964

$      1,066

$          942

$      3,860

$          903

$          921

$      1,018

$          915

$      3,757

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

(a)

Marketing and reservation revenues represent fees we receive 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 we receive relating to our loyalty program.

(b)

Primarily represents payroll costs in our hotel management business that we pay on behalf of property owners and for which we are reimbursed by the property owners.

(c)

 

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.

(d)

Primarily includes additional services provided to franchisees.

(e)

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

(f)

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.

(g)

The Company implemented the WAAM 1.0 sales model during the first quarter of 2010 and, as such, there is no historical data for 2009.

 

Table 5

Wyndham Worldwide Corporation

SCHEDULE OF DEBT

(In millions)

June 30, 2012

March 31, 2012

December 31, 2011

September 30, 2011

June 30, 2011

Securitized vacation ownership debt (a)

Term notes

$          1,634

$            1,896

$                 1,625

$           1,512

$         1,446

Bank conduit facility (b)

220

104

237

218

242

Securitized vacation ownership debt (c)

1,854

2,000

1,862

1,730

1,688

Less: Current portion of securitized vacation ownership debt

191

206

196

179

190

Long-term securitized vacation ownership debt

$          1,663

$            1,794

$                 1,666

$           1,551

$         1,498

Debt:

Revolving credit facility (due July 2016) (d)

$               81

$                 47

$                    218

$              169

$            107

3.50% convertible notes (due May 2012) (e)

-

44

36

27

32

9.875% senior unsecured notes (due May 2014) (f)

42

42

243

243

242

6.00% senior unsecured notes (due December 2016) (g)

362

362

811

812

803

2.95% senior unsecured notes (due March 2017) (h)

298

298

-

-

-

5.75% senior unsecured notes (due February 2018) (i)

248

247

247

247

247

7.375% senior unsecured notes (due March 2020) (j)

248

248

247

247

247

5.625% senior unsecured notes (due March 2021) (k)

245

245

245

245

245

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

644

643

-

-

-

Vacation rentals capital leases

95

103

102

108

120

Other

3

1

4

1

1

Total debt

2,266

2,280

2,153

2,099

2,044

Less: Current portion of debt

11

54

46

37

43

Long-term debt

$          2,255

$            2,226

$                 2,107

$           2,062

$         2,001

__________

(a)

 

 

 

The Company's vacation ownership contract receivables are securitized through bankruptcy-remote special purpose entities ("SPE") 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 June 2013 and borrowing capacity of $600 million.  As of June 30, 2012, this facility had remaining borrowing capacity of $380 million.

(c)

 

This debt is collateralized by $2,490 million, $2,622 million, $2,638 million, $2,502 million and $2,672 million of underlying vacation ownership contract receivables and related assets as of June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively.

(d)

 

Represents a $1.0 billion revolving credit facility that expires on July 15, 2016.  As of June 30, 2012, the Company had $11 million of outstanding letters of credit and a remaining borrowing capacity of $908 million.  

(e)

Represents convertible notes issued by the Company during May 2009 and repaid by the Company during May 2012.

(f)

 

Represents senior unsecured notes issued by the Company during May 2009.  The balance as of June 30, 2012 represents $43 million aggregate principal less $1 million of unamortized discount.

(g)

 

Represents senior unsecured notes issued by the Company during December 2006.  The balance as of June 30, 2012 represents $357 million aggregate principal less $1 million of unamortized discount, plus $6 million of unamortized gains from the settlement of a derivative.

(h)

 

Represents senior unsecured notes issued by the Company during March 2012.  The balance as of June 30, 2012 represents $300 million aggregate principal less $2 million of unamortized discount.

(i)

 

Represents senior unsecured notes issued by the Company during September 2010.  The balance as of  June 30, 2012 represents $250 million aggregate principal less $2 million of unamortized discount.

(j)

 

Represents senior unsecured notes issued by the Company during February 2010.  The balance as of June 30, 2012 represents $250 million aggregate principal less $2 million of unamortized discount.

(k)

 

Represents senior unsecured notes issued by the Company during March 2011.  The balance as of June 30, 2012 represents $250 million aggregate principal less $5 million of unamortized discount.

(l)

 

Represents senior unsecured notes issued by the Company during March 2012.  The balance as of June 30, 2012 represents $650 million aggregate principal less $6 million of unamortized discount.

 

Table 6

(1 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

As of and For the Three Months Ended June 30, 2012

Brand

Number of Properties

Number of Rooms