EXHIBIT 99.1

 

Wyndham Worldwide Reports Third Quarter 2012 Earnings

Third Quarter Adjusted EPS Up 20% Year-Over-Year

Provides Preliminary 2013 Outlook

PARSIPPANY, N.J. (October 24, 2012) – Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended September 30, 2012.

Highlights:

 

•

Third quarter adjusted diluted earnings per share (EPS) was $1.13, compared with $0.94 in the third quarter of 2011, an increase of 20%. Third quarter 2012 reported diluted EPS was $1.11, compared with $1.08 from the same period in 2011, which included a $22 million benefit from adjustments.

 

•

Third quarter adjusted net income increased 6% compared with the third quarter of 2011. A stronger US dollar had an adverse effect on net income and EPS. In constant currency, third quarter adjusted net income increased 9% and adjusted EPS increased 24% compared with the third quarter of 2011.

 

•

During the quarter, the Company repurchased 2.6 million shares of its common stock for $133 million.

“The third quarter was highlighted by exceptional performance from our Hotel Group,” said Stephen P. Holmes, chairman and CEO. “Our timeshare business delivered another quarter of solid performance and I’m pleased with the ability of our exchange and rentals group to mitigate the impact of economic headwinds in Europe. Our share repurchase program continues to reduce our share count and contribute to strong adjusted EPS growth.”

THIRD QUARTER 2012 OPERATING RESULTS

Third quarter revenues were $1.3 billion, an increase of 4% from the prior year period. The increase reflected growth in the Lodging and Vacation Ownership businesses, partially offset by unfavorable currency effects in the Vacation Exchange and Rentals business.

For the third quarter of 2012, adjusted net income was $162 million, or $1.13 per diluted share, compared with $153 million, or $0.94 per diluted share for the same period in 2011. The increase in adjusted net income primarily reflected stronger operating results in the Lodging and Vacation Ownership businesses. EPS also benefited from the Company’s share repurchase program, which decreased weighted average share count by 11%.

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Reported net income for the third quarter of 2012 was $159 million, or $1.11 per diluted share, compared with net income of $175 million, or $1.08 per diluted share, for the third quarter of 2011. Reported net income included several items not included in adjusted net income. The third quarter of 2012 included $3 million of acquisition costs, legacy adjustments and debt transaction fees. The third quarter of 2011 included a $22 million benefit from adjustments. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

Free cash flow was $682 million for the nine months ended September 30, 2012, compared to $703 million for the same period in 2011. Excluding a $67 million benefit from a refund of value added taxes and related interest income received in 2011, free cash flow increased by 7%. The Company defines free cash flow as net cash provided by operating activities less capital expenditures and development advances. For the nine months ended September 30, 2012, net cash provided by operating activities was $808 million, compared with $860 million in the prior year period, which included the benefit from the refund of value added taxes and related interest income.

BUSINESS UNIT RESULTS

Lodging (Wyndham Hotel Group)

Revenues were $249 million in the third quarter of 2012, an increase of 12% compared with the third quarter of 2011. The increase primarily reflected RevPAR gains, 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.

EBITDA was $86 million, an increase of 28% compared with the third quarter of 2011, reflecting the revenue increases.

Domestic RevPAR increased 5% compared with the third quarter of 2011. Total system-wide RevPAR increased 2%, or 3% in constant currency.

As of September 30, 2012, the Company’s hotel system consisted of nearly 7,260 properties and approximately 618,100 rooms. The development pipeline included approximately 950 hotels and 108,300 rooms, of which 55% were new construction and 47% were international.

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)

Revenues were $420 million in the third quarter of 2012, compared to $436 million in the third quarter of 2011. In constant currency and excluding the impact of acquisitions, revenues were flat.

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Exchange revenues were $157 million, a decrease of 2% compared with the third quarter of 2011. In constant currency, exchange revenues were flat, as a 2% decline in the average number of members was offset by a 1% increase in exchange revenue per member. The decline in the average number of members was due to the non-renewal of an affiliation agreement at the beginning of 2012.

Vacation rental revenues were $248 million, a 5% decrease compared with the third quarter of 2011. In constant currency and excluding acquisitions, vacation rental revenues were flat, reflecting a 3% increase in transaction volume offset by a 2% decrease in the average net price per vacation rental.

Adjusted EBITDA for the third quarter of 2012 was $123 million, down 9% compared with the prior-year period. Adjusted EBITDA was flat excluding the impact of acquisitions and the net effect of foreign currency.

Vacation Ownership (Wyndham Vacation Ownership)

Revenues were $608 million in the third quarter of 2012, a 9% increase over the third quarter of 2011, primarily reflecting increased vacation ownership interest (VOI) sales.

Gross VOI sales were $502 million in the third quarter of 2012, up 10% from the third quarter of 2011, primarily reflecting a 5% increase in both volume per guest and tour flow.

Adjusted EBITDA for the third quarter of 2012 was $155 million, a 4% increase compared with the third quarter of 2011. The increase primarily reflects the revenue increases, partially offset by higher sales and marketing expenses related to the increase in VOI sales and higher intersegment licensing fees for use of the Wyndham brand trade name.

Other Items

 

•

The Company repurchased 2.6 million shares of common stock for $133 million during the third quarter of 2012. From October 1 through October 23, 2012, the Company repurchased an additional 915,000 shares for $49 million. The Company has $608 million remaining on its current share repurchase authorization.

 

•

Net interest expense in the third quarter of 2012 was $30 million, compared to $15 million in the third quarter of 2011, which included $16 million of interest income associated with a refund of value added taxes.

Balance Sheet Information as of September 30, 2012:

 

•

Cash and cash equivalents of approximately $230 million, compared with $142 million at December 31, 2011

 

•

Vacation ownership contract receivables, net, of $2.9 billion, compared with $2.8 billion at December 31, 2011

 

•

Vacation ownership and other inventory of approximately $1.1 billion, unchanged from December 31, 2011

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•

Securitized vacation ownership debt of $1.9 billion, unchanged from December 31, 2011

 

•

Long-term debt of $2.5 billion, compared with $2.2 billion at December 31, 2011. The remaining borrowing capacity on the revolving credit facility was $720 million as of September 30, 2012, 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:

 

•

Revises Revenues to $4.5 – $4.6 billion from $4.425 - $4.6 billion

 

•

Revises Adjusted EBITDA guidance to $1.045 - $1.055 billion from $1.040 – $1.055 billion

 

•

Revises Adjusted EPS Guidance to $3.15 - $3.20 from $3.10 - $3.20

 

•

Reduces diluted shares to 146 million from 147 million

The Company’s preliminary guidance for the full-year 2013 is as follows:

 

•

Revenues of approximately $4.9 - $5.05 billion

 

•

Adjusted EBITDA of approximately $1.125 - $1.150 billion

 

•

Adjusted EPS of approximately $3.50 - $3.60 based on a diluted share count of 143 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 guidance may change materially.

Conference Call Information

Wyndham Worldwide Corporation will hold a conference call with investors to discuss this news on Wednesday, October 24, 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 October 24, 2012. The conference call may also be accessed by dialing (888) 942-9868 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 October 24, 2012, at (866) 395-9153.

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

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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 the Company’s reported results.

About Wyndham Worldwide Corporation

One of the world’s largest hospitality companies, Wyndham Worldwide (NYSE: WYN) provides a wide range of hospitality products and services through its global portfolio of world-renowned brands. The world’s largest hotel company based on the number of properties, Wyndham Hotel Group is home to many of the world’s best-known hotel brands, with approximately 7,260 franchised hotels and 618,100 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 approximately 100,000 vacation properties in 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 180 vacation ownership resorts serving more than 915,000 owners throughout the United States, Canada, Mexico, the Caribbean, and the South Pacific. Based in Parsippany, NJ, Wyndham Worldwide employs approximately 27,800 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 Quarterly Report on Form 10-Q, filed with the SEC on July 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.

# # #

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Investor and Media contact:

Margo C. Happer

Senior Vice President, Investor Relations

Wyndham Worldwide Corporation

(973) 753-6472

margo.happer@wyn.com

Barry Goldschmidt

Vice President, Investor Relations

Wyndham Worldwide Corporation

(973) 753-7703

barry.goldschmidt@wyn.com

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Table 1

(1 of 2)

Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)

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

The following tables summarize net revenues and EBITDA for reportable segments, as well as reconcile EBITDA to net income attributable to Wyndham shareholders for the three months ended September 30, 2012 and 2011:

 

		Three Months Ended September 30,
		2012								2011
		Net Revenues				EBITDA				Net Revenues				EBITDA
Lodging		$	249			$	86			$	222			$	67
Vacation Exchange and Rentals			420				123				436				131	(e)
Vacation Ownership			608				154	(b)			559				149
Total Reportable Segments			1,277				363				1,217				347
Corporate and Other (a)			(12	)			(30	)(c)			(5	)			(18	)(c)
Total Company		$	1,265			$	333			$	1,212			$	329
Reconciliation of EBITDA to Net Income Attributable to Wyndham shareholders
EBITDA						$	333							$	329
Depreciation and amortization							45								43
Interest expense							32								34
Early extinguishment of debt							2	(d)							—
Interest income							(2	)							(19	)(f)
Income before income taxes							256								271
Provision for income taxes							97								96
Net income							159								175
Net loss attributable to noncontrolling interest							—								—
Net income attributable to Wyndham shareholders						$	159							$	175

 

(a)	Includes the elimination of transactions between segments.

(b)	Includes $1 million of costs incurred in connection with the Company’s acquisition of Shell Vacations during September 2012.

(c)	Includes $1 million of a net expense and $8 million of a net benefit during the three months ended September 30, 2012 and 2011, respectively, related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.

(d)	Represents costs incurred in connection with the early repurchase of a portion of the Company’s 9.875% senior unsecured notes and 6.00% senior unsecured notes.

(e)	Includes a $4 million charge related to the write-off of foreign exchange translation adjustment associated with liquidation of a foreign entity.

(f)	Includes $16 million of interest income related to a refund of value added taxes.

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

 

		Three Months Ended September 30,
		2012								2011
						Adjusted								Adjusted
		Net Revenues				EBITDA				Net Revenues				EBITDA
Lodging		$	249			$	86			$	222			$	67
Vacation Exchange and Rentals			420				123				436				135
Vacation Ownership			608				155				559				149
Total Reportable Segments			1,277				364				1,217				351
Corporate and Other			(12	)			(29	)			(5	)			(26	)
Total Company		$	1,265			$	335			$	1,212			$	325

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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 nine months ended September 30, 2012 and 2011:

 

		Nine Months Ended September 30,
		2012								2011
		Net Revenues				EBITDA				Net Revenues				EBITDA
Lodging		$	667			$	210	(b)		$	561			$	160	(g)
Vacation Exchange and Rentals			1,129				300	(c)			1,152				330	(h)
Vacation Ownership			1,679				407	(d)			1,550				376	(i)
Total Reportable Segments			3,475				917				3,263				866
Corporate and Other (a)			(35	)			(76	)(e)			(10	)			(57	)(e)
Total Company		$	3,440			$	841			$	3,253			$	809
Reconciliation of EBITDA to Net Income Attributable to Wyndham shareholders
EBITDA						$	841							$	809
Depreciation and amortization							136								133
Interest expense							98								103	(j)
Early extinguishment of debt							108	(f)							12	(k)
Interest income							(7	)							(22	)(l)
Income before income taxes							506								583
Provision for income taxes							187								222
Net income							319								361
Net loss attributable to noncontrolling interest							1								—
Net income attributable to Wyndham shareholders						$	320							$	361

 

(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 $1 million of costs incurred in connection with the Company’s acquisition of Shell Vacations during September 2012.

(e)	Includes $3 million and $16 million of a net benefit during the nine months ended September 30, 2012 and 2011, respectively, related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.

(f)	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.

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

(h)

Includes (i) a $31 million net benefit resulting from a refund of value added taxes, (ii) $7 million of restructuring costs incurred in connection with a strategic initiative commenced by the Company during 2010 and (iii) a $4 million charge related to the write-off of foreign exchange translation adjustments associated with the liquidation of a foreign entity.

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

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

(k)	Represents costs incurred for the early repurchase of a portion of the Company’s convertible notes.

(l)	Includes $16 million of interest income related to a refund value added taxes.

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

 

		Nine Months Ended September 30,
		2012								2011
						Adjusted								Adjusted
		Net Revenues				EBITDA				Net Revenues				EBITDA
Lodging		$	667			$	209			$	561			$	173
Vacation Exchange and Rentals			1,129				298				1,152				310
Vacation Ownership			1,679				408				1,550				375
Total Reportable Segments			3,475				915				3,263				858
Corporate and Other			(35	)			(79	)			(10	)			(73	)
Total Company		$	3,440			$	836			$	3,253			$	785

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Table 2

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2012				2011				2012				2011
Net revenues
Service and membership fees		$	566			$	584			$	1,558			$	1,579
Vacation ownership interest sales			373				320				987				855
Franchise fees			168				160				449				395
Consumer financing			106				105				311				310
Other			52				43				135				114
Net revenues			1,265				1,212				3,440				3,253
Expenses
Operating			495	(b)			490	(d)			1,389	(b)			1,358	(d)
Cost of vacation ownership interests			45				35				115				115
Consumer financing interest			23				21				69				67
Marketing and reservation			197				182				554				472
General and administrative (a)			172				157				481				422	(i)
Asset impairments			—				—				—				13	(j)
Restructuring			—				—				—				6	(k)
Depreciation and amortization			45				43				136				133
Total expenses			977				928				2,744				2,586
Operating income			288				284				696				667
Other income, net			—				(2	)			(9	)(g)(h)			(9	)(l)
Interest expense			32				34				98				103	(m)
Early extinguishment of debt			2	(c)			—				108	(c)			12	(n)
Interest income			(2	)			(19	)(e)			(7	)			(22	)(e)
Income before income taxes			256				271				506				583
Provision for income taxes			97				96	(f)			187				222	(f)
Net income			159				175				319				361
Net loss attributable to noncontrolling interest			—				—				1				—
Net income attributable to Wyndham shareholders		$	159			$	175			$	320			$	361
Earnings per share
Basic		$	1.13			$	1.10			$	2.20			$	2.17
Diluted			1.11				1.08				2.16				2.12
Weighted average shares outstanding
Basic			141				159				145				166
Diluted			144				162				148				170

 

(a)

Includes $1 million of a net expense and $8 million of a net benefit during the three months ended September 30, 2012 and 2011, respectively, and $3 million and $12 million of a net benefit during the nine months ended September 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 $1 million of costs incurred in connection with the Company’s acquisition of Shell Vacations (September 2012).

(c)	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.

(d)	Includes a $4 million charge related to the write-off of foreign exchange translation adjustments associated with the liquidation of a foreign entity.

(e)	Includes $16 million of interest income related to the refund of value added taxes.

(f)	Includes a benefit of $13 million related to the reversal of a tax valuation allowance.

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

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

(i)	Includes a $31 million net benefit resulting from a refund of value added taxes.

 

(j)	Represents a non-cash impairment charge related to a write-down of an international joint venture.

(k)	Includes $7 million of costs incurred as a result of a strategic initiative commenced by the Company during 2010 and a $1 million benefit for the reversal of costs incurred as a result of various strategic initiatives commenced by the Company during 2008.

(l)	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.

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

(n)	Represents costs incurred for the early repurchase of a portion of the Company’s convertible notes.

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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				618,100				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			$	40.39				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				3,672				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			$	171.14				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				390				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			$	635.44				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 (c)
Gross Vacation Ownership Interest (VOI) Sales (in 000s) (d)			2012			$	384,000			$	460,000			$	502,000				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 (e)			2012				148,000				186,000				207,000				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) (e)			2012			$	2,414			$	2,361			$	2,315				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), two tuck-in acquisitions (third quarter 2011) and Smoky Mountain Property Management Group (August 2012) from the acquisition dates forward. Therefore, the operating statistics are not presented on a comparable basis.

(c)	Includes the impact of the acquisition of Shell Vacations (September 2012) from the acquisition date forward. Therefore, the operating statistics are not presented on a comparable basis.

(d)	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).

(e)	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.

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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				7,260				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			$	124,000				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			$	5,000				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			$	4,000				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			$	57,000				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.

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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.

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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			$	88				N/A				N/A					$	58			$	75			$	85			$	66			$	284
Marketing, Reservation and Wyndham Rewards Revenues (a)			68				99				98				N/A				N/A						54				75				94				76				299
Hotel Management Reimbursable Revenues (b)			21				22				25				N/A				N/A						19				19				21				20				79
Inter-segment Trademark Fees (c)			8				9				9				N/A				N/A						1				2				3				4				10
Owned Hotel Revenues			8				8				7				N/A				N/A						—				—				—				5				5
Ancillary Revenues (d)			18				15				22				N/A				N/A						17				19				19				17				72
Total Lodging			185				233				249				N/A				N/A						149				190				222				188				749
Vacation Exchange and Rentals
Exchange Revenues			188				162				157				N/A				N/A						194				168				161				150				673
Rental Revenues			159				170				248				N/A				N/A						150				180				260				125				715
Ancillary Revenues (e)			14				16				15				N/A				N/A						12				13				15				16				56
Total Vacation Exchange and Rentals			361				348				420				N/A				N/A						356				361				436				291				1,444
Vacation Ownership
Vacation Ownership Interest Sales			271				342				373				N/A				N/A						222				313				320				295				1,150
Consumer Financing			103				102				106				N/A				N/A						102				103				105				105				415
Property Management Fees			110				108				117				N/A				N/A						110				108				105				101				424
WAAM 1.0 Commissions			12				11				4				N/A				N/A						10				11				23				21				65
Ancillary Revenues (f)			5				7				8				N/A				N/A						6				6				6				5				23
Total Vacation Ownership			501				570				608				N/A				N/A						450				541				559				527				2,077
Total Reportable Segments		$	1,047			$	1,151			$	1,277				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.

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Table 5

Wyndham Worldwide Corporation

SCHEDULE OF DEBT

(In millions)

 

		September 30, 2012				June 30, 2012				March 31, 2012				December 31, 2011				September 30, 2011
Securitized vacation ownership debt (a)
Term notes		$	1,702			$	1,634			$	1,896			$	1,625			$	1,512
Bank conduit facility (b)			220				220				104				237				218
Securitized vacation ownership debt (c)			1,922				1,854				2,000				1,862				1,730
Less: Current portion of securitized vacation ownership debt			206				191				206				196				179
Long-term securitized vacation ownership debt		$	1,716			$	1,663			$	1,794			$	1,666			$	1,551
Debt:
Revolving credit facility (due July 2016) (d)		$	270			$	81			$	47			$	218			$	169
3.50% convertible notes (due May 2012) (e)			—				—				44				36				27
9.875% senior unsecured notes (due May 2014)			42				42				42				243				243
6.00% senior unsecured notes (due December 2016)			361				362				362				811				812
2.95% senior unsecured notes (due March 2017)			298				298				298				—				—
5.75% senior unsecured notes (due February 2018)			248				248				247				247				247
7.375% senior unsecured notes (due March 2020)			248				248				248				247				247
5.625% senior unsecured notes (due March 2021)			246				245				245				245				245
4.25% senior unsecured notes (due March 2022)			644				644				643				—				—
Vacation rentals capital leases			104				95				103				102				108
Other			68				3				1				4				1
Total debt			2,529				2,266				2,280				2,153				2,099
Less: Current portion of debt			64				11				54				46				37
Long-term debt		$	2,465			$	2,255			$	2,226			$	2,107			$	2,062

 

(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 August 2014 and borrowing capacity of $650 million. As of September 30, 2012, this facility had remaining borrowing capacity of $430 million.

(c)	This debt is collateralized by $2,517 million, $2,490 million, $2,622 million, $2,638 million and $2,502 million of underlying vacation ownership contract receivables and related assets as of September 30, 2012, June 30, 2012, March 31, 2012, December 31, 2011 and September 30, 2011, respectively.

(d)	Represents a $1.0 billion revolving credit facility that expires on July 15, 2016. As of September 30, 2012, the Company had $10 million of outstanding letters of credit and a remaining borrowing capacity of $720 million.

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

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Table 6

(1 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

 

		As of and For the Three Months Ended September 30, 2012
Brand		Number of Properties				Number of Rooms				Average Occupancy Rate				Average Daily Rate (ADR)				Average Revenue Per Available Room (RevPAR)
Lodging
Wyndham Hotels and Resorts			109				27,473				61.8	%		$	107.95			$	66.69
TRYP by Wyndham			90				12,955				68.0	%		$	94.63			$	64.38
Wingate by Wyndham			163				14,981				65.5	%		$	85.56			$	56.00
Hawthorn Suites by Wyndham			94				9,272				65.6	%		$	73.49			$	48.24
Ramada			843				114,227				57.1	%		$	80.14			$	45.72
Baymont			257				21,642				57.2	%		$	66.12			$	37.79
Days Inn			1,832				147,224				55.3	%		$	66.81			$	36.91
Super 8			2,312				147,054				62.6	%		$	56.59			$	35.44
Howard Johnson			445				45,072				52.4	%		$	65.91			$	34.55
Travelodge			438				32,225				56.5	%		$	72.92			$	41.17
Microtel Inns & Suites by Wyndham			309				22,085				61.1	%		$	65.51			$	40.06
Knights Inn			358				22,468				45.7	%		$	46.47			$	21.22
Dream			5				990				71.1	%		$	210.71			$	149.86
Night			2				422				43.4	%		$	111.74			$	48.49
Total Lodging			7,257				618,090				58.1	%		$	69.53			$	40.39
Vacation Ownership
Wyndham Vacation Ownership resorts			184				23,152				N/A				N/A				N/A
Total Wyndham Worldwide			7,441				641,242
		As of and For the Three Months Ended September 30, 2011
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			98				26,548				62.3	%		$	106.49			$	66.34
TRYP by Wyndham			93				13,456				67.0	%		$	102.53			$	68.73
Wingate by Wyndham			166				15,234				64.7	%		$	83.02			$	53.68
Hawthorn Suites by Wyndham			74				7,047				66.7	%		$	75.65			$	50.48
Ramada			848				114,377				56.9	%		$	78.49			$	44.64
Baymont			257				21,464				54.6	%		$	64.72			$	35.33
Days Inn			1,857				149,165				54.5	%		$	65.47			$	35.68
Super 8			2,241				141,272				60.4	%		$	58.35			$	35.24
Howard Johnson			453				45,016				52.4	%		$	64.10			$	33.57
Travelodge			436				32,563				54.7	%		$	71.30			$	39.00
Microtel Inns & Suites by Wyndham			317				22,601				59.4	%		$	62.74			$	37.23
Knights Inn			348				21,362				43.0	%		$	44.84			$	19.29
Dream			5				990				78.7	%		$	175.65			$	138.32
Night			1				72				94.8	%		$	214.38			$	203.31
Total Lodging			7,194				611,167				57.0	%		$	69.34			$	39.49
Vacation Ownership
Wyndham Vacation Ownership resorts			162				20,803				N/A				N/A				N/A
Total Wyndham Worldwide			7,356				631,970

 

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

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Table 6

(2 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

 

		As of and For the Nine Months Ended September 30, 2012
Brand		Number of Properties				Number of Rooms				Average Occupancy Rate				Average Daily Rate (ADR)				Average Revenue Per Available Room (RevPAR)
Lodging
Wyndham Hotels and Resorts			109				27,473				60.2	%		$	110.12			$	66.34
TRYP by Wyndham			90				12,955				62.0	%		$	97.75			$	60.63
Wingate by Wyndham			163				14,981				62.9	%		$	83.64			$	52.64
Hawthorn Suites by Wyndham			94				9,272				63.6	%		$	74.38			$	47.30
Ramada			843				114,227				53.4	%		$	78.57			$	41.96
Baymont			257				21,642				52.3	%		$	63.86			$	33.42
Days Inn			1,832				147,224				49.7	%		$	63.57			$	31.60
Super 8			2,312				147,054				56.0	%		$	53.72			$	30.06
Howard Johnson			445				45,072				48.7	%		$	62.61			$	30.49
Travelodge			438				32,225				49.9	%		$	67.37			$	33.63
Microtel Inns & Suites by Wyndham			309				22,085				56.1	%		$	62.35			$	34.97
Knights Inn			358				22,468				41.6	%		$	43.54			$	18.11
Dream			5				990				73.1	%		$	208.71			$	152.63
Night			2				422				64.1	%		$	173.99			$	111.49
Total Lodging			7,257				618,090				53.1	%		$	67.46			$	35.80
Vacation Ownership
Wyndham Vacation Ownership resorts			184				23,152				N/A				N/A				N/A
Total Wyndham Worldwide			7,441				641,242
		As of and For the Nine Months Ended September 30, 2011
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			98				26,548				59.5	%		$	107.74			$	64.14
TRYP by Wyndham			93				13,456				60.7	%		$	105.13			$	63.85
Wingate by Wyndham			166				15,234				61.1	%		$	81.27			$	49.68
Hawthorn Suites by Wyndham			74				7,047				62.7	%		$	75.32			$	47.26
Ramada			848				114,377				52.1	%		$	75.97			$	39.58
Baymont			257				21,464				49.0	%		$	62.41			$	30.59
Days Inn			1,857				149,165				48.4	%		$	62.12			$	30.09
Super 8			2,241				141,272				53.1	%		$	55.31			$	29.36
Howard Johnson			453				45,016				47.6	%		$	61.12			$	29.07
Travelodge			436				32,563				48.2	%		$	66.22			$	31.94
Microtel Inns & Suites by Wyndham			317				22,601				53.9	%		$	59.21			$	31.90
Knights Inn			348				21,362				39.1	%		$	42.98			$	16.79
Dream			5				990				75.5	%		$	174.99			$	132.10
Night			1				72				93.8	%		$	232.89			$	218.53
Total Lodging			7,194				611,167				51.2	%		$	66.85			$	34.25
Vacation Ownership
Wyndham Vacation Ownership resorts			162				20,803				N/A				N/A				N/A
Total Wyndham Worldwide			7,356				631,970

 

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

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Table 7

(1 of 2)

Wyndham Worldwide

NON-GAAP RECONCILIATION

(In millions)

 

		Net Revenues				Reported EBITDA				Legacy Adjustments  (b)				Impairment Recovery (c)				Allowance Reversal  (d)				Acquisition Costs (e)				Adjusted EBITDA
Three months ended March 31, 2012
Lodging		$	185			$	49			$	—			$	—			$	—			$	—			$	49
Vacation Exchange and Rentals			361				95				—				—				(2	)			—				93
Vacation Ownership			501				103				—				—				—				—				103
Total Reportable Segments			1,047				247				—				—				(2	)			—				245
Corporate and Other (a)			(11	)			(21	)			(4	)			—				—				—				(25	)
Total Company		$	1,036			$	226			$	(4	)		$	—			$	(2	)		$	—			$	220
Three months ended June 30, 2012
Lodging		$	233			$	75			$	—			$	(1	)		$	—			$	—			$	74
Vacation Exchange and Rentals			348				82				—				—				—				—				82
Vacation Ownership			570				150				—				—				—				—				150
Total Reportable Segments			1,151				307				—				(1	)			—				—				306
Corporate and Other (a)			(12	)			(25	)			—				—				—				—				(25	)
Total Company		$	1,139			$	282			$	—			$	(1	)		$	—			$	—			$	281
Three months ended September 30, 2012
Lodging		$	249			$	86			$	—			$	—			$	—			$	—			$	86
Vacation Exchange and Rentals			420				123				—				—				—				—				123
Vacation Ownership			608				154				—				—				—				1				155
Total Reportable Segments			1,277				363				—				—				—				1				364
Corporate and Other (a)			(12	)			(30	)			1				—				—				—				(29	)
Total Company		$	1,265			$	333			$	1			$	—			$	—			$	1			$	335

 

(a)	Includes the elimination of transactions between segments.

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

(c)	Relates to the recovery of a previously recorded impairment charge.

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

(e)	Relates to costs incurred in connection with the Company’s acquisition of Shell Vacations (September 2012).

---

Table 7

(2 of 2)

Wyndham Worldwide

NON-GAAP RECONCILIATION

(In millions)

 

		Net Revenues				Reported EBITDA				Legacy Adjustments  (b)				Asset Impairments				Restructuring Costs				VAT Adjustments  (e)				CTA Writeoff  (f)				Adjusted EBITDA
Three months ended March 31, 2011
Lodging		$	149			$	27			$	—			$	13	(c)		$	—			$	—			$	—			$	40
Vacation Exchange and Rentals			356				93				—				—				—				—				—				93
Vacation Ownership			450				97				—				—				(1	)(d)			—				—				96
Total Reportable Segments			955				217				—				13				(1	)			—				—				229
Corporate and Other (a)			(3	)			(14	)			(11	)			—				—				—				—				(25	)
Total Company		$	952			$	203			$	(11	)		$	13			$	(1	)		$	—			$	—			$	204
Three months ended June 30, 2011
Lodging		$	190			$	66			$	—			$	—			$	—			$	—			$	—			$	66
Vacation Exchange and Rentals			361				106				—				—				7	(g)			(31	)			—				82
Vacation Ownership			541				130				—				—				—				—				—				130
Total Reportable Segments			1,092				302				—				—				7				(31	)			—				278
Corporate and Other (a)			(2	)			(26	)			3				—				—				—				—				(23	)
Total Company		$	1,090			$	276			$	3			$	—			$	7			$	(31	)		$	—			$	255
Three months ended September 30, 2011
Lodging		$	222			$	67			$	—			$	—			$	—			$	—			$	—			$	67
Vacation Exchange and Rentals			436				131				—				—				—				—				4				135
Vacation Ownership			559				149				—				—				—				—				—				149
Total Reportable Segments			1,217				347				—				—				—				—				4				351
Corporate and Other (a)			(5	)			(18	)			(8	)			—				—				—				—				(26	)
Total Company		$	1,212			$	329			$	(8	)		$	—			$	—			$	—			$	4			$	325
Three months ended December 31, 2011
Lodging		$	188			$	(3	)		$	—			$	44	(h)		$	—			$	—			$	—			$	41
Vacation Exchange and Rentals			291				38				—				—				—				—				—				38
Vacation Ownership			527				139				—				—				—				—				—				139
Total Reportable Segments			1,006				174				—				44				—				—				—				218
Corporate and Other (a)			(6	)			(26	)			—				—				—				—				—				(26	)
Total Company		$	1,000			$	148			$	—			$	44			$	—			$	—			$	—			$	192
Twelve months ended December 31, 2011
Lodging		$	749			$	157			$	—			$	57	(c) (h)		$	—			$	—			$	—			$	214
Vacation Exchange and Rentals			1,444				368				—				—				7	(g)			(31	)			4				348
Vacation Ownership			2,077				515				—				—				(1	)(d)			—				—				514
Total Reportable Segments			4,270				1,040				—				57				6				(31	)			4				1,076
Corporate and Other (a)			(16	)			(84	)			(16	)			—				—				—				—				(100	)
Total Company		$	4,254			$	956			$	(16	)		$	57			$	6			$	(31	)		$	4			$	976

 

(a)	Includes the elimination of transactions between segments.

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

(c)	Relates to a non-cash impairment charge related to a write-down of an international joint venture.

(d)	Relates to the reversal of costs incurred as a result of various strategic initiatives commenced by the Company during 2008.

(e)	Relates to a net benefit resulting from a refund of value added taxes.

(f)	Relates to the write-off of foreign exchange translation adjustments associated with the liquidation of a foreign entity.

(g)	Relates to costs incurred as a result of a strategic initiative commenced by the Company during 2010.

(h)	Relates to non-cash impairment charges primarily related to the write-down of certain franchise and management agreements and development advance notes.

---

Table 8

(1 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

		Three Months Ended September 30, 2012
		As Reported				Legacy Adjustments				Acquisition Costs				Early Extinguishment of Debt				As Adjusted
Net revenues
Service fees and membership		$	566															$	566
Vacation ownership interest sales			373																373
Franchise fees			168																168
Consumer financing			106																106
Other			52																52
Net revenues			1,265				—				—				—				1,265
Expenses
Operating			495								(1	)(b)							494
Cost of vacation ownership interests			45																45
Consumer financing interest			23																23
Marketing and reservation			197																197
General and administrative			172				(1	)(a)											171
Depreciation and amortization			45																45
Total expenses			977				(1	)			(1	)			—				975
Operating income			288				1				1				—				290
Interest expense			32																32
Early extinguishment of debt			2												(2	)(c)			—
Interest income			(2	)															(2	)
Income before income taxes			256				1				1				2				260
Provision for income taxes			97				—	(d)			—	(d)			1	(d)			98
Net income attributable to Wyndham shareholders		$	159			$	1			$	1			$	1			$	162
Earnings per share
Basic		$	1.13			$	—			$	0.01			$	0.01			$	1.15
Diluted			1.11				—				0.01				0.01				1.13
Weighted average shares outstanding
Basic			141				141				141				141				141
Diluted			144				144				144				144				144

 

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

(b)	Relates to costs incurred in connection with the Company’s acquisition of Shell Vacations (September 2012).

(c)	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.

(d)	Relates to the tax effect of the adjustment.

---

Table 8

(2 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

		Nine Months Ended September 30, 2012
		As Reported				Impairment Recovery				Legacy Adjustments				Allowance Reversal				Acquisition Costs				Early Extinguishment of Debt				As Adjusted
Net revenues
Service fees and membership		$	1,558																							$	1,558
Vacation ownership interest sales			987																								987
Franchise fees			449																								449
Consumer financing			311																								311
Other			135																								135
Net revenues			3,440				—				—				—				—				—				3,440
Expenses
Operating			1,389																(1	)(d)							1,388
Cost of vacation ownership interests			115																								115
Consumer financing interest			69																								69
Marketing and reservation			554																								554
General and administrative			481								3	(b)															484
Depreciation and amortization			136																								136
Total expenses			2,744				—				3				—				(1	)			—				2,746
Operating income			696				—				(3	)			—				1				—				694
Other income, net			(9	)			1	(a)							2	(c)											(6	)
Interest expense			98																								98
Early extinguishment of debt			108																				(108	)(e)			—
Interest income			(7	)																							(7	)
Income before income taxes			506				(1	)			(3	)			(2	)			1				108				609
Provision for income taxes			187				(1	)(f)			—	(f)			—	(f)			—	(f)			44	(f)			230
Net income			319				—				(3	)			(2	)			1				64				379
Net loss attributable to noncontrolling interest			1				—				—				—				—				—				1
Net income attributable to Wyndham shareholders		$	320			$	—			$	(3	)		$	(2	)		$	1			$	64			$	380
Earnings per share
Basic		$	2.20			$	—			$	(0.01	)		$	(0.01	)		$	0.01			$	0.44			$	2.62
Diluted			2.16				—				(0.01	)			(0.01	)			0.01				0.43				2.57
Weighted average shares outstanding
Basic			145				145				145				145				145				145				145
Diluted			148				148				148				148				148				148				148

 

Note: EPS amounts may not add due to rounding.

(a)	Relates to the recovery of a previously recorded impairment charge.

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

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

(d)	Relates to costs incurred in connection with the Company’s acquisition of Shell Vacations (September 2012).

(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)	Relates to the tax effect of the adjustment.

---

Table 8

(3 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

		Three Months Ended September 30, 2011
		As Reported				Tax  Valuation Allowance				Legacy Adjustments				VAT Adjustments				CTA Writeoff				As Adjusted
Net revenues
Service fees and membership		$	584																			$	584
Vacation ownership interest sales			320																				320
Franchise fees			160																				160
Consumer financing			105																				105
Other			43																				43
Net revenues			1,212				—				—				—				—				1,212
Expenses
Operating			490																(4	)(d)			486
Cost of vacation ownership interests			35																				35
Consumer financing interest			21																				21
Marketing and reservation			182																				182
General and administrative			157								8	(b)											165
Restructuring			—																				—
Depreciation and amortization			43																				43
Total expenses			928				—				8				—				(4	)			932
Operating income			284				—				(8	)			—				4				280
Other income, net			(2	)																			(2	)
Interest expense			34																				34
Interest income			(19	)											16	(c)							(3	)
Income before income taxes			271				—				(8	)			(16	)			4				251
Provision for income taxes			96				13	(a)			(2	)(e)			(9	)(e)			—	(e)			98
Net income attributable to Wyndham shareholders		$	175			$	(13	)		$	(6	)		$	(7	)		$	4			$	153
Earnings per share
Basic		$	1.10			$	(0.08	)		$	(0.03	)		$	(0.05	)		$	0.02			$	0.96
Diluted			1.08				(0.08	)			(0.03	)			(0.04	)			0.02				0.94
Weighted average shares outstanding
Basic			159				159				159				159				159				159
Diluted			162				162				162				162				162				162

 

Note: EPS amounts may not add across due to rounding.

(a)	Relates to the reversal of a tax valuation allowance.

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

(c)	Relates to interest income associated with a refund of value added taxes.

(d)	Relates to the write-off of foreign exchange translation adjustments associated with the liquidation of a foreign entity.

(e)	Relates to the tax effect of the adjustments.

---

Table 8

(4 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

		Nine Months Ended September 30, 2011
		As Reported				Early Extinguishment of Debt				Tax Valuation Allowance				Legacy Adjustments				Asset Impairment				Restructuring Costs				VAT Adjustments				CTA Writeoff				As Adjusted
Net revenues
Service fees and membership		$	1,579																															$	1,579
Vacation ownership interest sales			855																																855
Franchise fees			395																																395
Consumer financing			310																																310
Other			114																																114
Net revenues			3,253				—				—				—				—				—				—				—				3,253
Expenses
Operating			1,358																												(4	)(j)			1,354
Cost of vacation ownership interests			115																																115
Consumer financing interest			67																																67
Marketing and reservation			472																																472
General and administrative			422												12	(c)											31	(g)							465
Asset impairment			13																(13	)(e)															—
Restructuring			6																				(6	)(f)											—
Depreciation and amortization			133																																133
Total expenses			2,586				—				—				12				(13	)			(6	)			31				(4	)			2,606
Operating income			667				—				—				(12	)			13				6				(31	)			4				647
Other income, net			(9	)											4	(d)																			(5	)
Interest expense			115				(12	)(a)																			(3	)(h)							100
Interest income			(22	)																							16	(i)							(6	)
Income before income taxes			583				12				—				(16	)			13				6				(44	)			4				558
Provision for income taxes			222				5	(k)			13	(b)			(5	)(k)			5	(k)			2	(k)			(24	)(k)			—	(k)			218
Net income attributable to Wyndham shareholders		$	361			$	7			$	(13	)		$	(11	)		$	8			$	4			$	(20	)		$	4			$	340
Earnings per share
Basic		$	2.17			$	0.04			$	(0.08	)		$	(0.06	)		$	0.05			$	0.03			$	(0.12	)		$	0.02			$	2.05
Diluted			2.12				0.04				(0.08	)			(0.06	)			0.05				0.03				(0.12	)			0.02				2.00
Weighted average shares outstanding
Basic			166				166				166				166				166				166				166				166				166
Diluted			170				170				170				170				170				170				170				170				170

 

(a)	Relates to costs incurred for the early repurchase of a portion of the Company’s 3.50% convertible notes during the first half of 2011.

(b)	Relates to the reversal of a tax valuation allowance.

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

(d)	Relates to a gain on the redemption of a preferred stock investment allocated to the Company in connection with our separation.

(e)	Relates to a non-cash impairment charge related to a write-down of an international joint venture in the Company’s lodging business.

(f)	Primarily relates to costs incurred as a result of a strategic initiative commenced by the Company during 2010.

(g)	Relates to a net benefit resulting from a refund of value added taxes.

(h)	Relates to interest on value added tax accruals.

(i)	Relates to interest income associated with a refund of value added taxes.

(j)	Relates to the write-off of foreign exchange translation adjustments associated with the liquidation of a foreign entity.

(k)	Relates to the tax effect of the adjustments.

---

Table 9

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATIONS AND FINANCIAL INFORMATION

(In millions)

FREE CASH FLOW

The Company defines free cash flow as net cash provided by operating activities less capital expenditures and development advances. The Company considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the acquisition of property and equipment and development advances, can be used for strategic opportunities, including making acquisitions, paying dividends, repurchasing the Company’s common stock and strengthening the balance sheet. Analysis of free cash flow also facilitates management’s comparisons of the Company’s operating results to its competitors’ operating results. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating Wyndham Worldwide is that free cash flow does not represent the total increase or decrease in the cash balance from operations for the period.

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:

 

		Nine Months Ended September 30,
		2012				2011
Net cash provided by operating activities		$	808			$	860
Less: Property and equipment additions			(123	)			(153	)
Less: Development advances			(3	)			(4	)
Free cash flow		$	682			$	703

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
2012		Q1				Q2				Q3				Q4				Full Year
Gross VOI sales (a)		$	384			$	460			$	502				N/A				N/A
Less: Sales under WAAM 1.0			(17	)			(18	)			(5	)			N/A				N/A
Gross VOI sales, net of WAAM 1.0 sales			367				442				497				N/A				N/A
Less: Loan loss provision			(96	)			(100	)			(124	)			N/A				N/A
Vacation ownership interest sales (a)		$	271			$	342			$	373				N/A				N/A
2011
Gross VOI sales		$	319			$	412			$	455			$	409			$	1,595
Less: Sales under WAAM 1.0			(18	)			(19	)			(38	)			(31	)			(106	)
Gross VOI sales, net of WAAM 1.0 sales			302				393				417				378				1,489
Less: Loan loss provision			(79	)			(80	)			(96	)			(83	)			(339	)
Vacation ownership interest sales		$	222			$	313			$	320			$	295			$	1,150
2010
Gross VOI sales		$	308			$	371			$	412			$	373			$	1,464
Less: Sales under WAAM 1.0			(5	)			(13	)			(20	)			(14	)			(51	)
Gross VOI sales, net of WAAM 1.0 sales			303				358				392				359				1,413
Less: Loan loss provision			(86	)			(87	)			(85	)			(82	)			(340	)
Vacation ownership interest sales		$	217			$	271			$	308			$	276			$	1,072
2009
Gross VOI sales		$	280			$	327			$	366			$	343			$	1,315
Plus: Net effect of percentage-of-completion accounting (b)			67				37				36				47				187
Less: Loan loss provision			(107	)			(122	)			(117	)			(103	)			(449	)
Vacation ownership interest sales		$	239			$	242			$	285			$	287			$	1,053

 

Note: Amounts may not add due to rounding.

(a)	Includes VOI sales under WAAM 2.0 beginning in the second quarter of 2012.

(b)	Represents the revenue that is deferred under the percentage of completion method of accounting.

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
2012		$	27			$	20			$	22				N/A				N/A
2011		$	18			$	18			$	21			$	11			$	68
2010		$	20			$	20			$	23			$	17			$	80
2009		$	24			$	23			$	29			$	28			$	104

 

Note: Amounts may not add across due to rounding.