Wyndham Worldwide Reports Second Quarter 2014 Earnings

Adjusted Diluted EPS Growth of 19%

Raises Full Year EBITDA and EPS Guidance

Jul 24, 2014, 06:30 ET from Wyndham Worldwide Corporation

PARSIPPANY, N.J., July 24, 2014 /PRNewswire/ -- Wyndham Worldwide Corporation (NYSE: WYN) today announced results for the three months ended June 30, 2014.

SECOND QUARTER HIGHLIGHTS:

  • Adjusted diluted earnings per share (EPS) was $1.17, an increase of 19% from adjusted diluted EPS of $0.98 in the second quarter of 2013. Reported diluted EPS was $1.20, compared with $0.98 in the second quarter of 2013.
  • Revenues increased 7% compared with the second quarter of 2013.
  • Adjusted EBITDA increased 9% compared with the second quarter of 2013.
  • The Company repurchased 2.3 million shares of its common stock for $170 million.

"We delivered strong results in the second quarter, improving upon the positive trends from the first quarter," said Stephen P. Holmes, chairman and CEO.  "Domestic RevPAR growth continued to accelerate, net Vacation Ownership Interest sales increased ten percent and we are seeing continued strong growth in rental transaction volume." 

SECOND QUARTER 2014 OPERATING RESULTS

Second quarter revenues were $1.3 billion, an increase of 7% from the prior year period.  The increase reflects growth in all of the Company's business segments.

Adjusted net income was $150 million, or $1.17 per diluted share, compared with $133 million, or $0.98 per diluted share for the same period in 2013.  The performance reflects solid operating results across all of the Company's businesses and lower interest expense.  EPS growth also benefited from the Company's share repurchase program.

Reported net income for the second quarter of 2014 was $153 million, or $1.20 per diluted share, compared with $133 million, or $0.98 per diluted share, for the second quarter of 2013.  Reported net income included items excluded from adjusted net income.  The net result of these items favorably impacted second quarter 2014 net income by $3 million.  Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

Free cash flow was $695 million for the six months ended June 30, 2014, compared with $654 million for the same period in 2013.  The growth of free cash flow largely reflects favorable timing of working capital.  The Company defines free cash flow as net cash provided by operating activities less capital expenditures.  For the six months ended June 30, 2014, net cash provided by operating activities was $793 million, compared with $758 million in the prior year period.

BUSINESS UNIT RESULTS

Lodging (Wyndham Hotel Group)

Revenues were $283 million in the second quarter of 2014, an 8% increase over the second quarter of 2013.  The increase predominantly reflects higher RevPAR. 

Domestic RevPAR increased 8.8%, partially offset by a 1.8% decline in international RevPAR, resulting in a 5.6% increase in total system-wide RevPAR compared with the second quarter of 2013.  International RevPAR declined due to unfavorable currency movements and growth in lower-RevPAR countries such as China. 

Adjusted EBITDA for the second quarter of 2014 was $87 million, a 12% increase compared with the second quarter of 2013.  The increase was primarily due to higher RevPAR.  

As of June 30, 2014, the Company's hotel system consisted of approximately 7,540 properties and 650,200 rooms, a 2.4% room increase compared with the second quarter of 2013.  The development pipeline included over 970 hotels and approximately 117,000 rooms, of which 57% were international and 67% were new construction.

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)

Revenues were $402 million in the second quarter of 2014, a 7% increase over the second quarter of 2013.  In constant currency and excluding the impact of acquisitions, revenues were up 3%.

Exchange revenues were $168 million, flat compared with the second quarter of 2013, as a 1.7% increase in average number of members was offset by a 1.8% decline in exchange revenue per member.

Vacation rental revenues were $217 million, a 13% increase over the second quarter of 2013.  Excluding the impact of foreign currency and acquisitions, vacation rental revenues were up 6%, reflecting a 4.9% increase in transaction volume and a 1.2% increase in the average net price per vacation rental.  

Adjusted EBITDA for the second quarter of 2014 was $87 million, a 2% increase compared with the second quarter of 2013.

Vacation Ownership (Wyndham Vacation Ownership)

Revenues were $673 million in the second quarter of 2014, a 7% increase over the second quarter of 2013, primarily reflecting higher gross VOI sales and a lower loan loss provision. 

Gross VOI sales were $496 million in the second quarter of 2014, an increase of 3% over the second quarter of 2013, reflecting a 1.1% increase in volume per guest, a 1.0% increase in tour flow and increased tele-sales upgrades. 

Adjusted EBITDA for the second quarter of 2014 was $185 million, a 15% increase compared with the second quarter of 2013, primarily reflecting the revenue increases.

OTHER ITEMS

  • The Company repurchased 2.3 million shares of common stock for $170 million during the second quarter of 2014.  From July 1 through July 23, 2014, the Company repurchased an additional 0.5 million shares for $37 million.  The Company's remaining share repurchase authorization totals $311 million as of July 23, 2014.
  • Reported net interest expense in the second quarter of 2014 was $26 million, compared with $32 million in the second quarter of 2013, reflecting lower rates associated with a fixed-for-floating rate swap and a $2 million benefit from a value added tax adjustment. 

BALANCE SHEET INFORMATION AS OF JUNE 30, 2014:

  • Cash and cash equivalents of $247 million, compared with $194 million at December 31, 2013
  • Vacation ownership contract receivables, net, of $2.7 billion, compared with $2.8 billion at December 31, 2013
  • Vacation ownership and other inventory of $1.0 billion, unchanged from December 31, 2013
  • Securitized vacation ownership debt of $1.9 billion, unchanged from December 31, 2013
  • Long-term debt of $2.8 billion, compared with $2.9 billion at December 31, 2013. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.4 billion as of June 30, 2014, compared with $1.3 billion as of December 31, 2013

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

OUTLOOK

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

For the full year 2014, the Company provides the following guidance:

  • Revenues of approximately $5.250 - $5.350 billion (unchanged)
  • Adjusted EBITDA of approximately $1.230 - $1.245 billion up from $1.215 - $1.240 billion
  • Adjusted EPS of approximately $4.34 - $4.44 based on a diluted share count of 128 million up from $4.23 - $4.33 based on a diluted share count of 130 million

CONFERENCE CALL INFORMATION

Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company's results, outlook and guidance on Thursday, July 24, 2014 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 on the website for approximately 90 days beginning at noon EDT on July 24, 2014. The conference call may also be accessed by dialing 800-369-2125 and providing the passcode "WYNDHAM." Listeners are urged to call at least 10 minutes prior to the scheduled start time. A telephone replay will be available for approximately 90 days beginning at noon EDT on July 24, 2014, at 888-296-6944.

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

PRESENTATION OF FINANCIAL INFORMATION

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

ABOUT WYNDHAM WORLDWIDE CORPORATION

One of the world's largest hospitality companies, Wyndham Worldwide (NYSE: WYN) provides a wide range of hospitality 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 approximately 7,500 franchised hotels and 650,200 hotel rooms worldwide. Wyndham Exchange & Rentals is the worldwide leader in vacation exchange and the world's largest professionally managed vacation rentals business, providing more than 5 million leisure-bound families annually with access to over 107,000 vacation properties in over 100 countries through its prominent exchange and vacation rental brands. The industry and timeshare ownership market leader, Wyndham Vacation Ownership develops, markets, and sells vacation ownership interests and provides consumer financing to owners through its network of over 200 vacation ownership resorts serving approximately 907,000 owners throughout the United States, Canada, Mexico, the Caribbean, and the South Pacific. Based in Parsippany, NJ, Wyndham Worldwide employs approximately 32,800 associates globally. For more information, please visit www.wyndhamworldwide.com.

FORWARD-LOOKING STATEMENTS

This press release contains "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, conveying management's expectations as to the future based on plans, estimates and projections at the time the Company makes the statements.  Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  The forward-looking statements contained in this press release include statements related to the Company's revenues, earnings 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 14, 2014.  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, gives a more complete understanding of its operating performance.  The Company's presentation of EBITDA may not be comparable to similarly-titled measures used by other companies.

The following tables summarize net revenues and EBITDA for reportable segments, as well as reconcile EBITDA to Net income attributable to Wyndham shareholders for the three months ended June 30, 2014 and 2013:

Three Months Ended June 30,

2014

2013

 Net Revenues

 EBITDA

 Net Revenues

 EBITDA

Lodging

$

283

$

87

$

262

$

78

Vacation Exchange and Rentals

402

89

376

85

Vacation Ownership

673

185

630

161

     Total Reportable Segments

1,358

361

1,268

324

Corporate and Other (a)

(15)

(35)

(15)

(27)

     Total Company

$

1,343

$

326

$

1,253

$

297

Reconciliation of EBITDA to Net income attributable to Wyndham shareholders

Three Months Ended June 30,

2014

2013

EBITDA

$

326

$

297

Depreciation and amortization

59

54

Interest expense

29

34

Interest income

(3)

(2)

Income before income taxes

241

211

Provision for income taxes

88

78

Net income attributable to Wyndham shareholders

$

153

$

133

__________

(a)     Includes the elimination of transactions between segments. 

The following tables summarize net revenues and Adjusted EBITDA for reportable segments for the three months ended June 30, 2014 and 2013 (for a description of adjustments by segment, see Table 7):

Three Months Ended June 30,

2014

2013

 Net Revenues

 Adjusted EBITDA

 Net Revenues

 Adjusted EBITDA

Lodging

$

283

$

87

$

262

$

78

Vacation Exchange and Rentals

402

87

376

85

Vacation Ownership

673

185

630

161

     Total Reportable Segments

1,358

359

1,268

324

Corporate and Other

(15)

(35)

(15)

(27)

     Total Company

$

1,343

$

324

$

1,253

$

297

 

 

Table 1

(2 of 2)

Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)

The following tables summarize net revenues and EBITDA for reportable segments, as well as reconcile EBITDA to Net income attributable to Wyndham shareholders for the six months ended June 30, 2014 and 2013:

Six Months Ended June 30,

2014

2013

 Net Revenues

 EBITDA

 Net Revenues

 EBITDA

Lodging

$

520

$

151

$

485

$

137

Vacation Exchange and Rentals

781

174

750

179

Vacation Ownership

1,266

300

1,179

272

     Total Reportable Segments

2,567

625

2,414

588

Corporate and Other (a)

(31)

(69)

(27)

(57)

     Total Company

$

2,536

$

556

$

2,387

$

531

Reconciliation of EBITDA to Net income attributable to Wyndham shareholders

Six Months Ended June 30,

2014

2013

EBITDA

$

556

$

531

Depreciation and amortization

115

106

Interest expense

56

66

Early extinguishment of debt

-

111

Interest income

(5)

(4)

Income before income taxes

390

252

Provision for income taxes

146

92

Net income

244

160

Net income attributable to noncontrolling interest

(1)

-

Net income attributable to Wyndham shareholders

$

243

$

160

__________

(a)    Includes the elimination of transactions between segments. 

The following tables summarize net revenues and Adjusted EBITDA for reportable segments for the six months ended June 30, 2014 and 2013 (for a description of adjustments by segment, see Table 7):

Six Months Ended June 30,

2014

2013

 Net Revenues

 Adjusted EBITDA

 Net Revenues

 Adjusted EBITDA

Lodging

$

520

$

155

$

485

$

137

Vacation Exchange and Rentals

781

182

750

179

Vacation Ownership

1,266

300

1,179

274

     Total Reportable Segments

2,567

637

2,414

590

Corporate and Other

(31)

(69)

(27)

(57)

     Total Company

$

2,536

$

568

$

2,387

$

533

 

 

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,

2014

2013

2014

2013

Net revenues

Service and membership fees

$

616

$

583

$

1,205

$

1,152

Vacation ownership interest sales

382

347

685

611

Franchise fees

166

152

293

274

Consumer financing

106

106

211

211

Other

73

65

142

139

Net revenues

1,343

1,253

2,536

2,387

Expenses

Operating

572

548

1,106

1,056

Cost of vacation ownership interests

42

32

81

64

Consumer financing interest

17

20

35

40

Marketing and reservation

206

181

387

357

General and administrative

181

177

376

342

Depreciation and amortization

59

54

115

106

Total expenses

1,077

1,012

2,100

1,965

Operating income

266

241

436

422

Other income, net

(1)

(2)

(5)

(3)

Interest expense

29

34

56

66

Early extinguishment of debt

-

-

-

111

Interest income

(3)

(2)

(5)

(4)

Income before income taxes

241

211

390

252

Provision for income taxes

88

78

146

92

Net income

153

133

244

160

Net income attributable to noncontrolling interest

-

-

(1)

-

Net income attributable to Wyndham shareholders

$

153

$

133

$

243

$

160

Earnings per share

Basic

$

1.21

$

0.99

$

1.91

$

1.18

Diluted

1.20

0.98

1.89

1.17

Weighted average shares outstanding

Basic

127

135

127

136

Diluted

128

136

129

137

__________

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

Lodging

Number of Rooms 

2014

646,900

650,200

 N/A

 N/A

 N/A

2013

631,800

635,100

638,300

645,400

 N/A

2012

609,300

608,300

618,100

627,400

 N/A

2011

609,600

612,900

611,200

613,100

 N/A

RevPAR

2014

$

32.30

$

40.11

 N/A

 N/A

 N/A

2013

$

31.05

$

38.00

$

41.78

$

33.07

$

36.00

2012

$

29.73

$

37.23

$

40.39

$

31.86

$

34.80

2011

$

27.71

$

35.38

$

39.49

$

30.65

$

33.34

Vacation Exchange and Rentals

Average Number of Members (in 000s)

2014

3,727

3,748

 N/A

 N/A

 N/A

2013

3,668

3,686

3,711

3,728

3,698

2012

3,684

3,670

3,672

3,670

3,674

2011

3,766

3,755

3,744

3,734

3,750

Exchange Revenue Per Member

2014

$

200.78

$

179.17

 N/A

 N/A

 N/A

2013

$

210.96

$

182.42

$

169.95

$

161.21

$

181.02

2012

$

204.56

$

177.07

$

171.14

$

165.86

$

179.68

2011

$

205.64

$

178.46

$

172.38

$

161.68

$

179.59

Vacation Rental Transactions (in 000s) (a)

2014

429

376

 N/A

 N/A

 N/A

2013

423

355

433

273

1,483

2012

418

325

390

259

1,392

2011

398

328

370

250

1,347

Average Net Price Per Vacation Rental (a)

2014

$

410.04

$

577.13

 N/A

 N/A

 N/A

2013

$

392.64

$

540.38

$

677.81

$

506.62

$

532.11

2012

$

379.40

$

524.40

$

635.44

$

484.69

$

504.55

2011

$

377.71

$

549.09

$

701.81

$

497.04

$

530.78

Vacation Ownership (a)

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

2014

$

410,000

$

496,000

 N/A

 N/A

 N/A

2013

$

384,000

$

481,000

$

536,000

$

488,000

$

1,889,000

2012

$

384,000

$

460,000

$

502,000

$

435,000

$

1,781,000

2011

$

319,000

$

412,000

$

455,000

$

409,000

$

1,595,000

Tours (in 000s) (c)

2014

170

208

 N/A

 N/A

 N/A

2013

163

206

225

195

789

2012

148

186

207

183

724

2011

137

177

197

173

685

Volume Per Guest (VPG) (c)

2014

$

2,272

$

2,280

 N/A

 N/A

 N/A

2013

$

2,211

$

2,256

$

2,278

$

2,370

$

2,281

2012

$

2,414

$

2,361

$

2,315

$

2,225

$

2,324

2011

$

2,192

$

2,227

$

2,197

$

2,296

$

2,229

Note:

Full year amounts may not add across due to rounding.

(a)

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

(b)

Includes Gross VOI sales under the Company's Wyndham Asset Affiliate Model (WAAM) 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).

(c)

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

Lodging

Number of Properties

2014

7,500

7,540

 N/A

 N/A

 N/A

2013

7,380

7,410

7,440

7,490

 N/A

2012

7,150

7,170

7,260

7,340

 N/A

2011

7,190

7,220

7,190

7,210

 N/A

Vacation Ownership

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

2014

$

60,000

$

70,000

 N/A

 N/A

 N/A

2013

$

84,000

$

90,000

$

102,000

$

73,000

$

349,000

2012

$

96,000

$

100,000

$

124,000

$

89,000

$

409,000

2011

$

79,000

$

80,000

$

96,000

$

83,000

$

339,000

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

Lodging

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

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

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

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

Vacation Exchange and Rentals

Average Number of Members:  Represents members in our vacation exchange programs who paid annual membership dues as of the end of the period or 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 during the period in connection with customers booking their vacation rental stays through the Company. One rental transaction is recorded for each standard one-week rental.

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

Vacation Ownership

Gross Vacation Ownership Interest Sales: Represents sales of vacation ownership interest (VOIs), including 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 2011-2014. 

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)

2014

2013

 Q1

 Q2

 Q3

 Q4

 Year

 Q1

 Q2

 Q3

 Q4

 Year

Lodging

Royalties and Franchise Fees

$

68

$         88

 N/A

 N/A

 N/A

$

64

$

79

$

91

$

75

$

309

Marketing, Reservation and Wyndham Rewards Revenues (a)

76

101

 N/A

 N/A

 N/A

73

92

118

83

365

Hotel Management Reimbursable Revenues (b)

37

39

 N/A

 N/A

 N/A

25

38

37

35

135

Intersegment Trademark Fees

9

11

 N/A

 N/A

 N/A

8

10

11

10

39

Owned Hotel Revenues

24

20

 N/A

 N/A

 N/A

26

20

18

19

84

Ancillary Revenues (c)

23

24

 N/A

 N/A

 N/A

26

23

22

23

95

Total Lodging

237

283

 N/A

 N/A

 N/A

222

262

297

245

1,027

Vacation Exchange and Rentals

Exchange Revenues

187

168

 N/A

 N/A

 N/A

193

168

158

150

669

Rental Revenues

176

217

 N/A

 N/A

 N/A

166

192

293

138

789

Ancillary Revenues (d)

16

17

 N/A

 N/A

 N/A

15

16

19

17

68

Total Vacation Exchange and Rentals

379

402

 N/A

 N/A

 N/A

374

376

470

305

1,526

Vacation Ownership

Vacation Ownership Interest Sales

303

382

 N/A

 N/A

 N/A

263

347

384

384

1,379

Consumer Financing

105

106

 N/A

 N/A

 N/A

105

106

107

108

426

Property Management Fees

143

145

 N/A

 N/A

 N/A

146

141

143

137

567

WAAM Fee-for-Service Commissions

33

30

 N/A

 N/A

 N/A

24

30

33

20

107

Ancillary Revenues (e)

9

10

 N/A

 N/A

 N/A

11

6

10

9

36

Total Vacation Ownership

593

673

 N/A

 N/A

 N/A

549

630

677

658

2,515

Total Reportable Segments

$

1,209

$   1,358

 N/A

 N/A

 N/A

$

1,145

$

1,268

$

1,444

$

1,208

$

5,068

2012

2011

 Q1

 Q2

 Q3

 Q4

 Year

 Q1

 Q2

 Q3

 Q4

 Year

Lodging

Royalties and Franchise Fees

$

62

$

80

$

88

$

71

$

301

$

58

$

75

$

85

$

66

$

284

Marketing, Reservation and Wyndham Rewards Revenues (a)

68

99

98

80

345

54

75

94

76

299

Hotel Management Reimbursable Revenues (b)

21

22

25

23

91

19

19

21

20

79

Intersegment Trademark Fees (f)

8

9

9

8

34

1

2

3

4

10

Owned Hotel Revenues

8

8

7

18

41

-

-

-

5

5

Ancillary Revenues (c)

18

15

22

23

78

17

19

19

17

72

Total Lodging

185

233

249

223

890

149

190

222

188

749

Vacation Exchange and Rentals

Exchange Revenues

188

162

157

153

660

194

168

161

150

673

Rental Revenues

159

170

248

125

702

150

180

260

125

715

Ancillary Revenues (d)

14

16

15

15

60

12

13

15

16

56

Total Vacation Exchange and Rentals

361

348

420

293

1,422

356

361

436

291

1,444

Vacation Ownership

Vacation Ownership Interest Sales

271

342

373

337

1,323

222

313

320

295

1,150

Consumer Financing

103

102

106

110

421

102

103

105

105

415

Property Management Fees

110

108

117

125

460

110

108

105

101

424

WAAM Fee-for-Service Commissions

12

11

4

6

33

10

11

23

21

65

Ancillary Revenues (e)

5

7

8

12

32

6

6

6

5

23

Total Vacation Ownership

501

570

608

590

2,269

450

541

559

527

2,077

Total Reportable Segments

$

1,047

$

1,151

$

1,277

$

1,106

$

4,581

$

955

$

1,092

$

1,217

$

1,006

$

4,270

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 both Q1 and Q2 2014, reimbursable revenues of $2 million, which eliminate in consolidation, were charged to the Company's vacation ownership business. During Q2, Q3 and Q4 2013, such amounts were $1 million, $3 million and $2 million, respectively.

(c)

Primarily includes additional services provided to franchisees.

(d)

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

(e)

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

(f)

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

 

 

Table 5

Wyndham Worldwide Corporation

SCHEDULE OF DEBT

(In millions)

June 30, 2014

March 31, 2014

December 31, 2013

September 30, 2013

June 30,  2013

Securitized vacation ownership debt (a)

Term notes

$

1,600

$

1,823

$

1,648

$

1,615

$

1,569

Bank conduit facility (b)

291

156

262

273

289

Total securitized vacation ownership debt (c)

1,891

1,979

1,910

1,888

1,858

Less: Current portion of securitized vacation ownership debt

187

192

184

186

217

Long-term securitized vacation ownership debt

$

1,704

$

1,787

$

1,726

$

1,702

$

1,641

Debt:

Revolving credit facility (due July 2018) (d)

$

16

$

10

$

23

$

74

$

41

Commercial paper (e)

107

184

210

164

168

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

318

318

318

318

319

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

299

299

298

298

298

$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)

448

447

447

447

447

$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)

246

246

246

246

246

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

646

645

643

644

644

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

403

395

387

396

397

Capital leases

186

188

191

185

184

Other

99

100

114

117

133

Total long-term debt

2,822

2,886

2,931

2,943

2,931

Less: Current portion of long-term debt

50

52

49

55

52

Long-term debt

$

2,772

$

2,834

$

2,882

$

2,888

$

2,879

__________

(a)

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

(b)

Represents a non-recourse vacation ownership bank conduit facility with a term through August 2015 and borrowing capacity of $650 million. As of June 30, 2014, this facility had a remaining borrowing capacity of $359 million.

(c)

This debt is collateralized by $2,287 million, $2,328 million, $2,314 million, $2,306 million and $2,414 million of underlying vacation ownership contract receivables and related assets as of June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013 and June 30, 2013, respectively.

(d)

Represents a $1.5 billion revolving credit facility that expires in July 2018. As of June 30, 2014, the Company had $9 million of outstanding letters of credit. After considering outstanding commercial paper borrowings of $107 million, the remaining borrowing capacity was $1.4 billion as of June 30, 2014.

(e)

Represents commercial paper programs of $1.25 billion with a remaining borrowing capacity of $1.1 billion, as of June 30, 2014.

(f)

Includes unamortized gains from the settlement of a derivative in the amount of $3 million as of June 30, 2014, March 31, 2014, December 31, 2013 and September 30, 2013 and $4 million as of June 30, 2013.

(g)

Includes a $2 million increase and $2 million decrease in the carrying value resulting from a fair value hedge derivative as of June 30, 2014 and December 31, 2013, respectively.

(h)

Includes a $5 million increase and $10 million decrease in the carrying value resulting from a fair value hedge derivative as of June 30, 2014 and December 31, 2013, respectively.

 

 

Table 6

(1 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

As of and For the Three Months Ended June 30, 2014

Brand

Number of Properties

Number of Rooms

Average Occupancy Rate

Average Daily Rate (ADR)

Average Revenue Per Available Room (RevPAR)

Lodging

Wyndham Hotels and Resorts

178

39,816

66.7%

$117.57

$78.43

TRYP by Wyndham

117

16,740

66.9%

$96.01

$64.19

Wingate by Wyndham

158

14,436

68.7%

$88.24

$60.65

Hawthorn Suites by Wyndham

98

9,737

68.1%

$77.37

$52.72

Ramada

829

114,195

57.2%

$79.00

$45.15

Baymont

346

28,325

56.9%

$66.36

$37.78

Days Inn

1,807

146,139

55.8%

$64.86

$36.20

Super 8

2,436

155,711

60.0%

$50.77

$30.46

Howard Johnson

439

46,214

50.4%

$62.88

$31.68

Travelodge

425

31,075

54.3%

$67.35

$36.60

Microtel Inns & Suites by Wyndham

318

22,744

63.8%

$67.26

$42.88

Knights Inn

383

23,472

46.4%

$46.78

$21.70

Dream

5

989

72.9%

$246.03

$179.38

Night

3

630

72.8%

$158.86

$115.62

Total Lodging

7,542

650,223

58.0%

$69.13

$40.11

Vacation Ownership

Wyndham Vacation Ownership resorts

201

23,450

N/A

N/A

N/A

Total Wyndham Worldwide

7,743

673,673

As of and For the Three Months Ended June 30, 2013

Brand

Number of Properties

Number of Rooms

Average Occupancy Rate

Average Daily Rate (ADR)

Average Revenue Per Available Room (RevPAR)

Lodging

Wyndham Hotels and Resorts

136

32,400

63.5%

$118.31

$75.10

TRYP by Wyndham

103

14,344

64.6%

$95.59

$61.75

Wingate by Wyndham

158

14,493

65.0%

$86.67

$56.34

Hawthorn Suites by Wyndham

91

9,118

67.6%

$72.51

$49.02

Ramada

837

114,691

54.4%

$80.42

$43.78

Baymont

325

26,860

55.6%

$63.70

$35.42

Days Inn

1,833

148,411

51.7%

$64.78

$33.46

Super 8

2,356

150,467

59.0%

$52.70

$31.08

Howard Johnson

446

45,089

48.2%

$62.57

$30.18

Travelodge

437

32,607

51.9%

$66.48

$34.50

Microtel Inns & Suites by Wyndham

310

22,080

60.7%

$64.85

$39.34

Knights Inn

374

22,963

42.5%

$45.08

$19.17

Dream

5

990

75.5%

$262.46

$198.18

Night

3

630

61.5%

$169.06

$103.91

Total Lodging

7,414

635,143

55.2%

$68.78

$38.00

Vacation Ownership

Wyndham Vacation Ownership resorts

190

23,410

N/A

N/A

N/A

Total Wyndham Worldwide

7,604

658,553

_______________

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 Six Months Ended June 30, 2014

Brand

Number of Properties

Number of Rooms

Average Occupancy Rate

Average Daily Rate (ADR)

Average Revenue Per Available Room (RevPAR)

Lodging

Wyndham Hotels and Resorts

178

39,816

61.1%

$115.42

$70.55

TRYP by Wyndham

117

16,740

59.2%

$91.64

$54.22

Wingate by Wyndham

158

14,436

63.9%

$85.95

$54.93

Hawthorn Suites by Wyndham

98

9,737

64.7%

$76.76

$49.66

Ramada

829

114,195

53.7%

$79.22

$42.52

Baymont

346

28,325

52.0%

$64.25

$33.40

Days Inn

1,807

146,139

50.2%

$63.56

$31.92

Super 8

2,436

155,711

55.8%

$49.63

$27.69

Howard Johnson

439

46,214

47.0%

$62.41

$29.32

Travelodge

425

31,075

49.5%

$64.82

$32.08

Microtel Inns & Suites by Wyndham

318

22,744

58.8%

$65.08

$38.24

Knights Inn

383

23,472

43.6%

$45.50

$19.84

Dream

5

989

73.4%

$217.94

$159.91

Night

3

630

66.3%

$139.04

$92.20

Total Lodging

7,542

650,223

53.5%

$67.78

$36.23

Vacation Ownership

Wyndham Vacation Ownership resorts

201

23,450

N/A

N/A

N/A

Total Wyndham Worldwide

7,743

673,673

As of and For the Six Months Ended June 30, 2013

Brand

Number of Properties

Number of Rooms

Average Occupancy Rate

Average Daily Rate (ADR)

Average Revenue Per Available Room (RevPAR)

Lodging

Wyndham Hotels and Resorts

136

32,400

60.2%

$115.98

$69.80

TRYP by Wyndham

103

14,344

59.3%

$96.39

$57.15

Wingate by Wyndham

158

14,493

61.0%

$85.05

$51.88

Hawthorn Suites by Wyndham

91

9,118

63.1%

$71.57

$45.19

Ramada

837

114,691

51.5%

$79.58

$41.01

Baymont

325

26,860

50.7%

$62.15

$31.50

Days Inn

1,833

148,411

47.3%

$63.27

$29.91

Super 8

2,356

150,467

54.4%

$51.38

$27.96

Howard Johnson

446

45,089

45.6%

$61.78

$28.17

Travelodge

437

32,607

47.8%

$64.89

$31.02

Microtel Inns & Suites by Wyndham

310

22,080

56.4%

$63.01

$35.56

Knights Inn

374

22,963

40.4%

$43.34

$17.53

Dream

5

990

68.5%

$220.79

$151.31

Night

3

630

57.5%

$146.22

$84.14

Total Lodging

7,414

635,143

51.3%

$67.35

$34.55

Vacation Ownership

Wyndham Vacation Ownership resorts

190

23,410

N/A

N/A

N/A

Total Wyndham Worldwide

7,604

658,553

_______________

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)

Three months ended March 31, 2014

Net Revenues

Reported EBITDA

Executive Departure Costs

Venezuela Currency Devaluation (b)

    VAT    Adjustment (c)

Adjusted EBITDA

Lodging

$

237

$

64

$

4

$

-

$

-

$

68

Vacation Exchange and Rentals

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

Lodging

$

283

$

87

$

-

$

-

$

-

$

87

Vacation Exchange and Rentals

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

________________

(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.

 

 

Table 7

(2 of 2)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION

(In millions)

Three months ended March 31, 2013

Net Revenues

Reported EBITDA

Legacy Adjustments (b)

Acquisition Costs (c)

Restructuring Costs (d)

Asset Impairment (e)

Adjusted EBITDA

Lodging

$

222

$

58

$

-

$

-

$

-

$

-

$

58

Vacation Exchange and Rentals

374

94

-

-

-

-

94

Vacation Ownership

549

111

-

2

-

-

113

Total Reportable Segments

1,145

263

-

2

-

-

265

Corporate and Other (a)

(12)

(29)

-

-

-

-

(29)

Total Company

$

1,133

$

234

$

-

$

2

$

-

$

-

$

236

Three months ended June 30, 2013

Lodging

$

262

$

78

$

-

$

-

$

-

$

-

$

78

Vacation Exchange and Rentals

376

85

-

-

-

-

85

Vacation Ownership

630

161

-

-

-

-

161

Total Reportable Segments

1,268

324

-

-

-

-

324

Corporate and Other (a)

(15)

(27)

-

-

-

-

(27)

Total Company

$

1,253

$

297

$

-

$

-

$

-

$

-

$

297

Three months ended September 30, 2013

Lodging

$

297

$

95

$

-

$

-

$

-

$

-

$

95

Vacation Exchange and Rentals

470

141

-

-

-

-

141

Vacation Ownership

677

176

-

-

-

-

176

Total Reportable Segments

1,444

412

-

-

-

-

412

Corporate and Other (a)

(17)

(33)

(1)

-

-

-

(34)

Total Company

$

1,427

$

379

$

(1)

$

-

$

-

$

-

$

378

Three months ended December 31, 2013

Lodging

$

245

$

47

$

-

$

-

$

9

$

8

$

64

Vacation Exchange and Rentals

305

36

-

-

-

-

36

Vacation Ownership

658

172

-

-

-

-

172

Total Reportable Segments

1,208

255

-

-

9

8

272

Corporate and Other (a)

(13)

(33)

-

-

-

-

(33)

Total Company

$

1,195

$

222

$

-

$

-

$

9

$

8

$

239

Twelve months ended December 31, 2013

Lodging

$

1,027

$

279

$

-

$

-

$

9

$

8

$

296

Vacation Exchange and Rentals

1,526

356

-

-

-

-

356

Vacation Ownership

2,515

619

-

2

-

-

621

Total Reportable Segments

5,068

1,254

-

2

9

8

1,273

Corporate and Other (a)

(59)

(122)

1

-

-

-

(121)

Total Company

$

5,009

$

1,132

$

1

$

2

$

9

$

8

$

1,152

________________

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

(a)

Includes the elimination of transactions between segments.

(b)

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

(c)

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

(d)

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

(e)

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

 

 

Table 8

(1 of 3)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

Three Months Ended June 30, 2014

 As Reported

    Legacy    Adjustments

    VAT Adjustment (b)

As Adjusted non-GAAP

Net revenues

Service and membership fees

$

616

$

$

$

616

Vacation ownership interest sales

382

382

Franchise fees

166

166

Consumer financing

106

106

Other

73

73

Net revenues

1,343

-

-

1,343

Expenses

Operating

572

572

Cost of vacation ownership interests

42

42

Consumer financing interest

17

17

Marketing and reservation

206

206

General and administrative

181

2

183

Depreciation and amortization

59

59

Total expenses

1,077

-

2

1,079

Operating income

266

-

(2)

264

Other income, net

(1)

(1)

Interest expense

29

2

31

Interest income

(3)

(3)

Income before income taxes

241

-

(4)

237

Provision for income taxes

88

1

(a)

(2)

(c)

87

Net income attributable to Wyndham shareholders

$

153

$

(1)

$

(2)

$

150

Earnings per share

Basic

$

1.21

$

-

$

(0.02)

$

1.18

Diluted

1.20

-

(0.02)

1.17

Weighted average shares outstanding

Basic

127

127

127

127

Diluted

128

128

128

128

__________

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 reversal of a state tax accrual.

(b)

Relates to the reversal of a reserve for value-added taxes at the Company's vacation exchange and rentals business.

(c)

Relates to the tax effect of the adjustment.

 

 

Table 8

(2 of 3)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

Six Months Ended June 30, 2014

 As Reported

Executive Departure Costs (a)

Venezuela Currency   Devaluation (c)

Legacy    Adjustments

    VAT     Adjustment  (e)

As Adjusted non-GAAP

Net revenues

Service and membership fees

$

1,205

$

$

$

$

$

1,205

Vacation ownership interest sales

685

685

Franchise fees

293

293

Consumer financing

211

211

Other

142

142

Net revenues

2,536

-

-

-

-

2,536

Expenses

Operating

1,106

(10)

1,096

Cost of vacation ownership interests

81

81

Consumer financing interest

35

35

Marketing and reservation

387

387

General and administrative

376

(4)

2

374

Depreciation and amortization

115

115

Total expenses

2,100

(4)

(10)

-

2

2,088

Operating income

436

4

10

-

(2)

448

Other income, net

(5)

(5)

Interest expense

56

2

58

Interest income

(5)

(5)

Income before income taxes

390

4

10

-

(4)

400

Provision for income taxes

146

1

(b)

1

(b)

1

(d)

(2)

(b)

147

Net income

244

3

9

(1)

(2)

253

Net income attributable to noncontrolling interest

(1)

-

-

-

-

(1)

Net income attributable to Wyndham shareholders

$

243

$

3

$

9

$

(1)

$

(2)

$

252

Earnings per share

Basic

$

1.91

$

0.02

$

0.07

$

-

$                   (0.02)

$

1.98

Diluted

1.89

0.02

0.07

-

(0.02)

1.96

Weighted average shares outstanding

Basic

127

127

127

127

127

127

Diluted

129

129

129

129

129

129

__________

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 lodging 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 vacation exchange and rental business.

(d)

Relates to the reversal of a state tax accrual.

(e)

Relates to the reversal of a reserve for value-added taxes at the Company's vacation exchange and rentals business.

 

Table 8

(3 of 3)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

Six Months Ended June 30, 2013

 As Reported

Legacy Adjustments

Acquisition Costs

Early Extinguishment of Debt

As Adjusted non-GAAP

Net revenues

Service fees and membership

$

1,152

$

1,152

Vacation ownership interest sales

611

611

Franchise fees

274

274

Consumer financing

211

211

Other

139

139

Net revenues

2,387

-

-

-

2,387

Expenses

Operating

1,056

(2)

 (b)

1,054

Cost of vacation ownership interests

64

64

Consumer financing interest

40

40

Marketing and reservation

357

357

General and administrative

342

342

Depreciation and amortization

106

106

Total expenses

1,965

-

(2)

-

1,963

Operating income

422

-

2

-

424

Other income, net

(3)

(3)

Interest expense

66

66

Early extinguishment of debt

111

(111)

(c)

-

Interest income

(4)

(4)

Income before income taxes

252

-

2

111

365

Provision for income taxes

92

(1)

(a)

1

(d)

42

(d)

134

Net income

$

160

$

1

$

1

$

69

$

231

Earnings per share

Basic

$

1.18

$

0.01

$

0.01

$

0.51

$

1.71

Diluted

1.17

0.01

0.01

0.50

1.69

Weighted average shares outstanding

Basic

136

136

136

136

136

Diluted

137

137

137

137

137

__________

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 state tax payment for legacy tax matters.

(b)

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

(c)

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

(d)

Relates to the tax effect of the adjustment.

 

 

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:

Six Months Ended June 30, 

2014

2013

Net cash provided by operating activities

$

793

$

758

Less: Property and equipment additions

(98)

(104)

Free cash flow

$

695

$

654

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

2014

Q1

Q2

Q3

Q4

Full Year

Gross VOI sales (a)

$

410

$

496

 N/A 

 N/A 

 N/A 

Less: Sales under WAAM Fee-for-Service

(44)

(40)

 N/A 

 N/A 

 N/A 

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

366

456

 N/A 

 N/A 

 N/A 

Less: Loan loss provision

(60)

(70)

 N/A 

 N/A 

 N/A 

Less: Impact of percentage-of-completion accounting

(3)

(4)

 N/A 

 N/A 

 N/A 

Vacation ownership interest sales (a)

$

303

$

382

 N/A 

 N/A 

 N/A 

2013

Gross VOI sales (a)

$

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 (a)

$

263

$

347

$

384

$

384

$

1,379

2012

Gross VOI sales (a)

$

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 (a)

$

271

$

342

$

373

$

337

$

1,323

2011

Gross VOI sales

$

319

$

412

$

455

$

409

$

1,595

Less: Sales under WAAM Fee-for-Service

(18)

(19)

(38)

(31)

(106)

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

302

393

417

378

1,489

Less: Loan loss provision

(79)

(80)

(96)

(83)

(339)

Vacation ownership interest sales

$

222

$

313

$

320

$

295

$

1,150

_____________

Note:  Amounts may not add due to rounding.

(a)  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

2014

$

25

$

21

 N/A 

 N/A 

 N/A 

2013

$

24

$

18

$

22

$

25

$

89

2012

$

27

$

20

$

22

$

28

$

97

2011

$

18

$

18

$

21

$

11

$

68

 

 

SOURCE Wyndham Worldwide Corporation



RELATED LINKS

http://www.wyndhamworldwide.com