EXHIBIT 99.1

 

Wyndham Worldwide Reports Second Quarter 2013 Earnings

Second Quarter Adjusted EPS Up 13% Year-Over-Year

Share Repurchase Authorization Increased

Raised Full Year EPS Guidance

PARSIPPANY, N.J. (July 24, 2013) – Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended June 30, 2013.

Highlights:

 

•

Second quarter diluted earnings per share (EPS) was $0.98 on both a reported and adjusted basis, an increase of 13% from adjusted diluted EPS of $0.87 in the second quarter of 2012. Reported diluted EPS was $0.88 in the second quarter of 2012.

 

•

Revenues increased 10% from the prior-year period.

 

•

Free cash flow increased 15% for the six months ended June 30, 2013, compared with the same period in 2012. Net cash provided by operating activities increased 17% over the same period.

 

•

During the quarter, the Company repurchased 2.9 million shares of its common stock for $175 million.

 

•

The Company announced today that its Board of Directors approved a $750 million increase in the share repurchase authorization, bringing the remaining available authorization to $874 million.

 

•

On July 23, 2013, the Company completed a term securitization transaction involving the issuance of $325 million of asset-backed notes with a 2.68% weighted average coupon and a 98% advance rate.

“We once again delivered strong results this quarter, reflecting great operating momentum and disciplined capital allocation,” said Stephen P. Holmes, chairman and CEO. “This winning combination, along with continued innovation and a commitment to customer service, has enabled us to achieve outstanding results for our shareholders during our seven years as a public company, which is an anniversary we mark next week. The decision by our Board of Directors to increase our share repurchase authorization is evidence of our confidence that this powerful formula will continue to deliver and create value.”

SECOND QUARTER 2013 OPERATING RESULTS

Second quarter revenues were $1.3 billion, an increase of 10% from the prior year period. The increase reflects strong growth across all of the Company’s business segments.

Second quarter net income was $133 million, or $0.98 per diluted share, compared with $128 million, or $0.87 per adjusted diluted share for the same period in 2012. Reported diluted EPS was $0.88 in the second quarter of 2012. The increase in net income reflects stronger operating results in all of the Company’s segments. EPS also benefited from the Company’s share repurchase program.

Free cash flow was $654 million for the six months ended June 30, 2013, compared with $569 million for the same period in 2012, a 15% increase. The growth of free cash flow largely reflects favorable working capital timing. The Company defines free cash flow as net cash provided by operating activities less capital expenditures. For the six months ended June 30, 2013, net cash provided by operating activities was $758 million, compared with $647 million in the prior year period.

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BUSINESS UNIT RESULTS

Lodging (Wyndham Hotel Group)

Revenues were $262 million in the second quarter of 2013, a 12% increase over the second quarter of 2012. The increase reflects higher hotel management reimbursable fees and revenues associated with the Company’s owned hotels.

Domestic RevPAR increased 5.3% compared with the second quarter of 2012. Total system-wide RevPAR increased 2.1%, reflecting proportionally higher growth of lower RevPAR hotels in China.

Adjusted EBITDA for the second quarter of 2013 was $78 million, a 5% increase compared with the second quarter of 2012. The increase was primarily due to higher royalties and ancillary fees.

As of June 30, 2013, the Company’s hotel system consisted of approximately 7,410 properties and over 635,000 rooms, a 4.4% room increase compared with the second quarter of 2012. The development pipeline included over 940 hotels and approximately 112,000 rooms, of which 57% were international and 62% were new construction.

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)

Revenues were $376 million in the second quarter of 2013, an 8% increase over the second quarter of 2012. In constant currency and excluding the impact of acquisitions, revenues increased 4%.

Exchange revenues were $168 million, an increase of 4% compared with the second quarter of 2012. Exchange revenue per member increased 3.0%, while the average number of members remained flat.

Vacation rental revenues were $192 million, a 13% increase compared with the second quarter of 2012. Excluding acquisitions, vacation rental revenues were up 5%, reflecting a 4.0% increase in the average net price per vacation rental and a 1.2% increase in transaction volume.

EBITDA for the second quarter of 2013 was $85 million, a 4% increase over the second quarter of 2012.

Vacation Ownership (Wyndham Vacation Ownership)

Revenues were $630 million in the second quarter of 2013, an 11% increase over the second quarter of 2012, primarily reflecting higher gross VOI sales and the acquisition of Shell Vacations Club.

Gross VOI sales were $481 million in the second quarter of 2013, an increase of 5% over the second quarter of 2012, primarily reflecting an 10.8% increase in tour flow offset by a 4.4% decrease in volume per guest. Excluding Shell Vacations Club, volume per guest decreased 2.7%.

EBITDA for the second quarter of 2013 was $161 million, a 7% increase compared with the second quarter of 2012. The increase was primarily due to higher gross VOI sales, a lower loan loss provision and lower operating costs.

Other Items

 

•

The Company repurchased 2.9 million shares of common stock for $175 million during the second quarter of 2013. From July 1 through July 23, 2013, the Company repurchased an additional 1.2 million shares for $68 million. The Company’s new share repurchase authorization totals $874 million.

 

•

Net interest expense in the second quarter of 2013 was $32 million, compared with $30 million in the second quarter of 2012, due to higher debt levels.

 

•

On July 23, 2013, the Company completed a term securitization transaction involving the issuance of $325 million of asset-backed notes. Sierra Timeshare 2013-2 Receivables Funding LLC issued $226 million of A rated notes, $62 million of BBB rated notes and $37 million of BB rated notes. The notes had a 2.68% weighted average coupon and a 98% advance rate.

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Balance Sheet Information as of June 30, 2013:

 

•

Cash and cash equivalents of $342 million, compared with $195 million at December 31, 2012

 

•

Vacation ownership contract receivables, net, of $2.8 billion, compared with $2.9 billion at December 31, 2012

 

•

Vacation ownership and other inventory of $1.0 billion, compared with $1.1 billion at December 31, 2012

 

•

Securitized vacation ownership debt of $1.9 billion, compared with $2.0 billion at December 31, 2012

 

•

Long-term debt of $2.9 billion, compared with $2.6 billion at December 31, 2012. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.3 billion as of June 30, 2013, compared with $0.6 billion as of December 31, 2012

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

Outlook

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

For the full year 2013, the Company expects:

 

•

Revenues of approximately $4.925 - $5.100 billion

 

•

Adjusted EBITDA of approximately $1.140 - $1.165 billion

 

•

Adjusted EPS of approximately $3.66 - $3.76 based on a diluted share count of 136 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, the Company’s 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, July 24, 2013 at 8:30 a.m. EDT. Listeners may access the webcast live through the Company’s website at www.wyndhamworldwide.com/investors/. An archive of this webcast will be available at the website for approximately 90 days beginning at noon EDT on July 24, 2013. 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, 2013, at 866-430-8799.

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 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.

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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 over 7,410 franchised hotels and over 635,100 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 over 106,000 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 190 vacation ownership resorts serving approximately 915,000 owners throughout the United States, Canada, Mexico, the Caribbean, and the South Pacific. Based in Parsippany, NJ, Wyndham Worldwide employs approximately 32,500 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 15, 2013. Except for the Company’s ongoing obligations to disclose material information under the federal securities laws, it undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

# # #

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 June 30, 2013 and 2012:

 

		Three Months Ended June 30,
		2013								2012
		Net Revenues				EBITDA				Net Revenues				EBITDA
Lodging			$       262				$      78				$         233				$       75 (b)
Vacation Exchange and Rentals			376				85				348				82
Vacation Ownership			630				161				570				150
Total Reportable Segments			1,268				324				1,151				307
Corporate and Other (a)			(15)				(27)				(12)				(25)
Total Company			$    1,253				$    297				$      1,139				$    282
Reconciliation of EBITDA to Net Income Attributable to Wyndham shareholders
EBITDA							$    297								$    282
Depreciation and amortization							54								46
Interest expense							34								32
Interest income							(2)								(2)
Income before income taxes							211								206
Provision for income taxes							78								78
Net income attributable to Wyndham shareholders							$    133								$    128

 

(a)	Includes the elimination of transactions between segments.

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

The following tables summarize net revenues and Adjusted EBITDA for reportable segments for the three months ended June 30, 2013 and 2012 (for a description of adjustments by segment, see Table 7):

 

		Three Months Ended June 30,
		2013								2012
						Adjusted								Adjusted
		Net Revenues				EBITDA				Net Revenues				EBITDA
Lodging			$         262				$      78				$       233				$      74
Vacation Exchange and Rentals			376				85				348				82
Vacation Ownership			630				161				570				150
Total Reportable Segments			1,268				324				1,151				306
Corporate and Other			(15)				(27)				(12)				(25)
Total Company			$      1,253				$    297				$    1,139				$    281

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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 six months ended June 30, 2013 and 2012:

 

		Six Months Ended June 30,
		2013								2012
		Net Revenues				EBITDA				Net Revenues				EBITDA
Lodging		$	485				$137				$418				$123	(d)
Vacation Exchange and Rentals			750				179				709				177	(e)
Vacation Ownership			1,179				272	(b)			1,071				253
Total Reportable Segments			2,414				588				2,198				553
Corporate and Other (a)			(27	)			(57)				(23)				(46	) (f)
Total Company		$	2,387				$531				$2,175				$507
Reconciliation of EBITDA to Net Income Attributable to Wyndham shareholders
EBITDA						$	531							$	507
Depreciation and amortization							106								91
Interest expense							66								65
Early extinguishment of debt							111	(c)							106	(g)
Interest income							(4)								(5)
Income before income taxes							252								250
Provision for income taxes							92								91
Net income							160								159
Net loss attributable to noncontrolling interest							—								1
Net income attributable to Wyndham shareholders						$	160							$	160

 

(a)	Includes the elimination of transactions between segments.

(b)	Includes $2 million of costs incurred in connection with the acquisition of a WAAM 2.0 property (January 2013).

(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 its 9.875% senior unsecured notes.

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

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

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

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

The following tables summarize net revenues and Adjusted EBITDA for reportable segments for the six months ended June 30, 2013 and 2012 (for a description of adjustments by segment, see Table 7):

 

		Six Months Ended June 30,
		2013								2012
						Adjusted								Adjusted
		Net Revenues				EBITDA				Net Revenues				EBITDA
Lodging		$	485			$	137			$	418			$	122
Vacation Exchange and Rentals			750				179				709				175
Vacation Ownership			1,179				274				1,071				253
Total Reportable Segments			2,414				590				2,198				550
Corporate and Other			(27	)			(57	)			(23	)			(50	)
Total Company		$	2,387			$	533			$	2,175			$	500

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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,
		2013				2012				2013				2012
Net revenues
Service and membership fees		$	583			$	489			$	1,152			$	993
Vacation ownership interest sales			347				342				611				613
Franchise fees			152				163				274				281
Consumer financing			106				102				211				205
Other			65				43				139				83
Net revenues			1,253				1,139				2,387				2,175
Expenses
Operating			548				451				1,056	(a)			895
Cost of vacation ownership interests			32				42				64				70
Consumer financing interest			20				23				40				46
Marketing and reservation			181				190				357				356
General and administrative			177				156				342				310	(d)
Depreciation and amortization			54				46				106				91
Total expenses			1,012				908				1,965				1,768
Operating income			241				231				422				407
Other income, net			(2)				(5)	(c)			(3)				(9)	(c) (e)
Interest expense			34				32				66				65
Early extinguishment of debt			—				—				111	(b)			106	(f)
Interest income			(2)				(2)				(4)				(5)
Income before income taxes			211				206				252				250
Provision for income taxes			78				78				92				91
Net income			133				128				160				159
Net loss attributable to noncontrolling interest			—				—				—				1
Net income attributable to Wyndham shareholders		$	133			$	128			$	160			$	160
Earnings per share
Basic		$	0.99			$	0.89			$	1.18			$	1.10
Diluted			0.98				0.88				1.17				1.08
Weighted average shares outstanding
Basic			135				144				136				145
Diluted			136				147				137				148

 

(a)	Includes $2 million of costs incurred in connection with the acquisition of a WAAM 2.0 property (January 2013).

(b)	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 its 9.875% senior unsecured notes.

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

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

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

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

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Table 3

(1 of 3)

Wyndham Worldwide Corporation

OPERATING STATISTICS

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

 

		Year				Q1				Q2				Q3				Q4				Full Year
Lodging (a)
Number of Rooms			2013				631,800				635,100				N/A				N/A				N/A
			2012				609,300				608,300				618,100				627,400				N/A
			2011				609,600				612,900				611,200				613,100				N/A
			2010				593,300				606,800				605,700				612,700				N/A
RevPAR			2013			$	31.05			$	38.00				N/A				N/A				N/A
			2012			$	29.73			$	37.23			$	40.39			$	31.86			$	34.80
			2011			$	27.71			$	35.38			$	39.49			$	30.65			$	33.34
			2010			$	25.81			$	32.25			$	37.14			$	29.18			$	31.14
Vacation Exchange and Rentals
Average Number of Members (in 000s)			2013				3,668				3,686				N/A				N/A				N/A
			2012				3,684				3,670				3,672				3,670				3,674
			2011				3,766				3,755				3,744				3,734				3,750
			2010				3,746				3,741				3,766				3,759				3,753
Exchange Revenue Per Member			2013			$	210.96			$	182.42				N/A				N/A				N/A
			2012			$	204.56			$	177.07			$	171.14			$	165.86			$	179.68
			2011			$	205.64			$	178.46			$	172.38			$	161.68			$	179.59
			2010			$	201.93			$	172.20			$	173.44			$	162.59			$	177.53
Vacation Rental Transactions (in 000s) (b)			2013				423				355				N/A				N/A				N/A
			2012				418				325				390				259				1,392
			2011				398				328				370				250				1,347
			2010				291				297				322				253				1,163
Average Net Price Per Vacation Rental (b)			2013			$	392.64			$	540.38				N/A				N/A				N/A
			2012			$	379.40			$	524.40			$	635.44			$	484.69			$	504.55
			2011			$	377.71			$	549.09			$	701.81			$	497.04			$	530.78
			2010			$	361.17			$	387.01			$	500.31			$	449.12			$	425.38
Vacation Ownership (c)
Gross Vacation Ownership Interest (VOI) Sales (in 000s) (d)			2013			$	384,000			$	481,000				N/A				N/A				N/A
			2012			$	384,000			$	460,000			$	502,000			$	435,000			$	1,781,000
			2011			$	319,000			$	412,000			$	455,000			$	409,000			$	1,595,000
			2010			$	308,000			$	371,000			$	412,000			$	373,000			$	1,464,000
Tours (e)			2013				163,000				206,000				N/A				N/A				N/A
			2012				148,000				186,000				207,000				183,000				724,000
			2011				137,000				177,000				197,000				173,000				685,000
			2010				0				163,000				187,000				160,000				634,000
Volume Per Guest (VPG) (e)			2013			$	2,211			$	2,256				N/A				N/A				N/A
			2012			$	2,414			$	2,361			$	2,315			$	2,225			$	2,324
			2011			$	2,192			$	2,227			$	2,197			$	2,296			$	2,229
			2010			$	2,334			$	2,156			$	2,081			$	2,214			$	2,183

 

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

 

(a)	Includes the impact of 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), Smoky Mountain Property Management Group (August 2012), Oceana Resorts (December 2012) and four tuck-in acquisitions (Q3 2011, Q4 2012 and Q1 2013) from their acquisition dates forward. Therefore, the operating statistics are not presented on a comparable basis.

(c)	Includes the impact of the acquisition of Shell Vacations Club (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) 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 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			2013				7,380				7,410				N/A				N/A				N/A
			2012				7,150				7,170				7,260				7,340				N/A
			2011				7,190				7,220				7,190				7,210				N/A
			2010				7,090				7,160				7,150				7,210				N/A
Vacation Ownership
Provision for Loan Losses (in 000s) (b)			2013			$	84,000			$	90,000				N/A				N/A				N/A
			2012			$	96,000			$	100,000			$	124,000			$	89,000			$	409,000
			2011			$	79,000			$	80,000			$	96,000			$	83,000			$	339,000
			2010			$	86,000			$	87,000			$	85,000			$	82,000			$	340,000
Sales under WAAM 1.0 (in 000s) (c)			2013			$	36,000			$	44,000				N/A				N/A				N/A
			2012			$	17,000			$	18,000			$	5,000			$	10,000			$	49,000
			2011			$	18,000			$	19,000			$	38,000			$	31,000			$	106,000
			2010			$	5,000			$	13,000			$	20,000			$	14,000			$	51,000
WAAM 1.0 Commission Revenues (in 000s)			2013			$	24,000			$	30,000				N/A				N/A				N/A
			2012			$	12,000			$	11,000			$	4,000			$	6,000			$	33,000
			2011			$	10,000			$	11,000			$	23,000			$	21,000			$	65,000
			2010			$	3,000			$	8,000			$	12,000			$	9,000			$	31,000
Sales under WAAM 2.0 (in 000s) (d)			2013			$	13,000			$	1,000				N/A				N/A				N/A
			2012			$	—			$	12,000			$	57,000			$	30,000			$	99,000

 

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

 

(a)	Includes the impact of 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.

(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 during the period 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 during the period divided by the number of vacation rental transactions during the period.

Vacation Ownership

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

Tours: Represents the number of tours taken by guests in our efforts to sell 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 2010-2013.

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)

 

		2013																				2012
		Q1				Q2				Q3				Q4				Year				Q1				Q2				Q3				Q4				Year
Lodging
Royalties and Franchise Fees		$	64			$	79				N/A				N/A				N/A			$	62			$	80			$	88			$	71			$	301
Marketing, Reservation and Wyndham Rewards Revenues (a)			73				92				N/A				N/A				N/A				68				99				98				80				345
Hotel Management Reimbursable Revenues (b)			25				38				N/A				N/A				N/A				21				22				25				23				91
Inter-segment Trademark Fees			8				10				N/A				N/A				N/A				8				9				9				8				34
Owned Hotel Revenues			26				20				N/A				N/A				N/A				8				8				7				18				41
Ancillary Revenues (d)			26				23				N/A				N/A				N/A				18				15				22				23				78
Total Lodging			222				262				N/A				N/A				N/A				185				233				249				223				890
Vacation Exchange and Rentals
Exchange Revenues			193				168				N/A				N/A				N/A				188				162				157				153				660
Rental Revenues			166				192				N/A				N/A				N/A				159				170				248				125				702
Ancillary Revenues (e)			15				16				N/A				N/A				N/A				14				16				15				15				60
Total Vacation Exchange and Rentals			374				376				N/A				N/A				N/A				361				348				420				293				1,422
Vacation Ownership
Vacation Ownership Interest Sales			263				347				N/A				N/A				N/A				271				342				373				337				1,323
Consumer Financing			105				106				N/A				N/A				N/A				103				102				106				110				421
Property Management Fees			146				141				N/A				N/A				N/A				110				108				117				125				460
WAAM 1.0 Commissions			24				30				N/A				N/A				N/A				12				11				4				6				33
Ancillary Revenues (f)			11				6				N/A				N/A				N/A				5				7				8				12				32
Total Vacation Ownership			549				630				N/A				N/A				N/A				501				570				608				590				2,269
Total Reportable Segments		$	1,145			$	1,268				N/A				N/A				N/A			$	1,047			$	1,151			$	1,277			$	1,106			$	4,581
		2011																				2010
		Q1				Q2				Q3				Q4				Year				Q1				Q2				Q3				Q4				Year
Lodging
Royalties and Franchise Fees		$	58			$	75			$	85			$	66			$	284			$	52			$	69			$	82			$	62			$	265
Marketing, Reservation and Wyndham Rewards Revenues (a)			54				75				94				76				299				50				65				76				60				251
Hotel Management Reimbursable Revenues (b)			19				19				21				20				79				21				20				18				18				77
Inter-segment Trademark Fees (c)			1				2				3				4				10				—				—				—				—				—
Owned Hotel Revenues			—				—				—				5				5				—				—				—				—				—
Ancillary Revenues (d)			17				19				19				17				72				21				24				27				23				95
Total Lodging			149				190				222				188				749				144				178				203				163				688
Vacation Exchange and Rentals
Exchange Revenues			194				168				161				150				673				189				161				163				153				666
Rental Revenues			150				180				260				125				715				105				115				161				114				495
Ancillary Revenues (e)			12				13				15				16				56				6				5				6				15				32
Total Vacation Exchange and Rentals			356				361				436				291				1,444				300				281				330				282				1,193
Vacation Ownership
Vacation Ownership Interest Sales			222				313				320				295				1,150				217				271				308				276				1,072
Consumer Financing			102				103				105				105				415				105				106				107				107				425
Property Management Fees			110				108				105				101				424				100				100				104				101				405
WAAM 1.0 Commissions			10				11				23				21				65				3				8				12				8				31
Ancillary Revenues (f)			6				6				6				5				23				19				20				2				5				46
Total Vacation Ownership			450				541				559				527				2,077				444				505				533				497				1,979
Total Reportable Segments		$	955			$	1,092			$	1,217			$	1,006			$	4,270			$	888			$	964			$	1,066			$	942			$	3,860

 

(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.

---

Table 5

Wyndham Worldwide Corporation

SCHEDULE OF DEBT

(In millions)

 

		June 30, 2013				March 31, 2013				December 31, 2012				September 30, 2012				June 30, 2012
Securitized vacation ownership debt (a)
Term notes		$	1,569			$	1,869			$	1,770			$	1,702			$	1,634
Bank conduit facility (b)			289				125				190				220				220
Securitized vacation ownership debt (c)			1,858				1,994				1,960				1,922				1,854
Less: Current portion of securitized vacation ownership debt			217				228				218				206				191
Long-term securitized vacation ownership debt		$	1,641			$	1,766			$	1,742			$	1,716			$	1,663
Debt:
Revolving credit facility (due July 2018) (d)		$	41			$	34			$	85			$	270			$	81
Commercial paper (e)			168				202				273				—				—
9.875% senior unsecured notes (due May 2014) (f)			—				—				42				42				42
6.00% senior unsecured notes (due December 2016)			319				319				361				361				362
2.95% senior unsecured notes (due March 2017)			298				298				298				298				298
5.75% senior unsecured notes (due February 2018)			14				14				248				248				248
2.50% senior unsecured notes (due March 2018)			447				447				—				—				—
7.375% senior unsecured notes (due March 2020)			40				40				248				248				248
5.625% senior unsecured notes (due March 2021)			246				246				246				246				245
4.25% senior unsecured notes (due March 2022)			644				644				644				644				644
3.90% senior unsecured notes (due March 2023)			397				397				—				—				—
Capital leases			184				187				105				104				95
Other			133				133				52				68				3
Total debt			2,931				2,961				2,602				2,529				2,266
Less: Current portion of debt			52				254				326				64				11
Long-term debt		$	2,879			$	2,707			$	2,276			$	2,465			$	2,255

 

(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 June 30, 2013, this facility had a remaining borrowing capacity of $361 million.

(c)	This debt is collateralized by $2,414 million, $2,512 million, $2,543 million, $2,517 million and $2,490 million of underlying vacation ownership contract receivables and related assets as of June 30, 2013, March 31, 2013, December 31, 2012, September 30, 2012 and June 30, 2012, respectively.

(d)

Represents a $1.5 billion revolving credit facility that expires on July 15, 2018. As of June 30, 2013, the Company had $11 million of outstanding letters of credit and a remaining borrowing capacity of $1.4 billion. After considering outstanding commercial paper borrowings of $168 million, the remaining borrowing capacity was $1.3 billion as of June 30, 2013.

(e)	Represents a $750 million commericial paper program which the Company commenced in October 2012. As of June 30, 2013, the program had a remaining borrowing capacity of $582 million.

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

---

Table 6

(1 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

 

		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
		As of and For the Three Months Ended June 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				101					25,360					63.2	%			$	111.54				$	70.48
TRYP by Wyndham				89					12,824					66.9	%			$	102.26				$	68.37
Wingate by Wyndham				161					14,796					65.6	%			$	84.70				$	55.60
Hawthorn Suites by Wyndham				77					7,355					65.3	%			$	75.89				$	49.56
Ramada				841					113,275					55.5	%			$	79.17				$	43.93
Baymont				257					21,655					55.0	%			$	64.24				$	35.36
Days Inn				1,825					146,261					51.4	%			$	63.92				$	32.86
Super 8				2,275					144,570					57.8	%			$	53.07				$	30.65
Howard Johnson				445					44,441					49.4	%			$	62.32				$	30.79
Travelodge				433					32,159					50.7	%			$	66.41				$	33.66
Microtel Inns & Suites by Wyndham				308					21,967					58.0	%			$	62.40				$	36.18
Knights Inn				353					22,255					42.5	%			$	43.11				$	18.30
Dream				5					990					73.1	%			$	221.34				$	161.88
Night				2					422					86.6	%			$	210.05				$	181.94
Total Lodging				7,172					608,330					54.9	%			$	67.81				$	37.23
Vacation Ownership
Wyndham Vacation Ownership resorts				165					20,938					N/A					N/A					N/A
Total Wyndham Worldwide				7,337					629,268

 

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 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
		As of and For the Six Months Ended June 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				101					25,360					59.4	%			$	111.30				$	66.15
TRYP by Wyndham				89					12,824					59.0	%			$	99.57				$	58.73
Wingate by Wyndham				161					14,796					61.6	%			$	82.60				$	50.91
Hawthorn Suites by Wyndham				77					7,355					62.4	%			$	74.93				$	46.74
Ramada				841					113,275					51.6	%			$	77.70				$	40.06
Baymont				257					21,655					49.9	%			$	62.54				$	31.18
Days Inn				1,825					146,261					46.9	%			$	61.67				$	28.95
Super 8				2,275					144,570					52.5	%			$	51.94				$	27.28
Howard Johnson				445					44,441					46.8	%			$	60.72				$	28.42
Travelodge				433					32,159					46.7	%			$	64.10				$	29.95
Microtel Inns & Suites by Wyndham				308					21,967					53.5	%			$	60.54				$	32.41
Knights Inn				353					22,255					39.5	%			$	41.79				$	16.51
Dream				5					990					74.1	%			$	207.74				$	154.04
Night				2					422					87.4	%			$	208.83				$	182.48
Total Lodging				7,172					608,330					50.5	%			$	66.25				$	33.47
Vacation Ownership
Wyndham Vacation Ownership resorts				165					20,938					N/A					N/A					N/A
Total Wyndham Worldwide				7,337					629,268

 

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

---

Table 7

(1 of 2)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION

(In millions)

 

Three months ended March 31, 2013		Net Revenues				Reported EBITDA				Acquisition Costs (b)				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

 

(a)	Includes the elimination of transactions between segments.

(b)	Relates to costs incurred in connection with the acquisition of a WAAM 2.0 property (January 2013).

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Table 7

(2 of 2)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION

(In millions)

 

		Net Revenues				Reported EBITDA				Legacy Adjustments  (b)				Impairment Recovery  (c)				Allowance Reversal  (d)				Acquisition Costs (e)				Asset Impairment (f)				Restructuring Costs (g)				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
Three months ended December 31, 2012
Lodging		$	223			$	62			$	—			$	—			$	—			$	—			$	—			$	—			$	62
Vacation Exchange and Rentals			293				28				—				—				—				1				8				5				42
Vacation Ownership			590				142				—				—				—				—				—				2				144
Total Reportable Segments			1,106				232				—				—				—				1				8				7				248
Corporate and Other (a)			(12	)			(28	)			(2	)			—				—				—				—				—				(30	)
Total Company		$	1,094			$	204			$	(2	)		$	—			$	—			$	1			$	8			$	7			$	218
Twelve months ended December 31, 2012
Lodging		$	890			$	272			$	—			$	(1	)		$	—			$	—			$	—			$	—			$	271
Vacation Exchange and Rentals			1,422				328				—				—				(2	)			1				8				5				340
Vacation Ownership			2,269				549				—				—				—				1				—				2				552
Total Reportable Segments			4,581				1,149				—				(1	)			(2	)			2				8				7				1,163
Corporate and Other (a)			(47	)			(104	)			(5	)			—				—				—				—				—				(109	)
Total Company		$	4,534			$	1,045			$	(5	)		$	(1	)		$	(2	)		$	2			$	8			$	7			$	1,054

 

(a)	Includes the elimination of transactions between segments.

(b)	Relates to the net expense/(benefit) from the resolution of and adjustment to certain contingent liabilities and assets resulting from 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 Club (September 2012) and the acquisition of Oceana Resorts and a tuck-in acquisition (December 2012).

(f)	Relates to a non-cash impairment charge for the write-down of the ResortQuest and Steamboat Resorts tradenames.

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

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Table 8

(1 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 and membership fees		$	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 attributable to Wyndham shareholders		$	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 costs incurred in connection with the acquisition of a WAAM 2.0 property (January 2013).

(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.

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Table 8

(2 of 3)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

		Three Months Ended June 30, 2012
		As Reported				Impairment Recovery				As Adjusted non-GAAP
Net revenues
Service fees and membership		$	489							$	489
Vacation ownership interest sales			342								342
Franchise fees			163								163
Consumer financing			102								102
Other			43								43
Net revenues			1,139				—				1,139
Expenses
Operating			451								451
Cost of vacation ownership interests			42								42
Consumer financing interest			23								23
Marketing and reservation			190								190
General and administrative			156								156
Depreciation and amortization			46								46
Total expenses			908				—				908
Operating income			231				—				231
Other income, net			(5	)			1	(a)			(4	)
Interest expense			32								32
Interest income			(2	)							(2	)
Income before income taxes			206				(1	)			205
Provision for income taxes			78				(1	) (b)			77
Net income attributable to Wyndham shareholders		$	128			$	—			$	128
Earnings per share
Basic		$	0.89			$	—			$	0.89
Diluted			0.88				—				0.87
Weighted average shares outstanding
Basic			144				144				144
Diluted			147				147				147

 

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 recovery of a previously recorded impairment charge.

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

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Table 8

(3 of 3)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

		Six Months Ended June 30, 2012
		As Reported				Impairment Recovery				Legacy Adjustments				Allowance Reversal				Early Extinguishment of Debt				As Adjusted non-GAAP
Net revenues
Service fees and membership		$	993																			$	993
Vacation ownership interest sales			613																				613
Franchise fees			281																				281
Consumer financing			205																				205
Other			83																				83
Net revenues			2,175				—				—				—				—				2,175
Expenses
Operating			895																				895
Cost of vacation ownership interests			70																				70
Consumer financing interest			46																				46
Marketing and reservation			356																				356
General and administrative			310								4	(b)											314
Depreciation and amortization			91																				91
Total expenses			1,768				—				4				—				—				1,772
Operating income			407				—				(4	)			—				—				403
Other income, net			(9	)			1	(a)							2	(c)							(6	)
Interest expense			65																				65
Early extinguishment of debt			106																(106	) (d)			—
Interest income			(5	)																			(5	)
Income before income taxes			250				(1	)			(4	)			(2	)			106				349
Provision for income taxes			91				(1	) (e)			(2	) (e)			—	(e)			44	(e)			132
Net income			159				—				(2	)			(2	)			62				217
Net loss attributable to noncontrolling interest			1				—				—				—				—				1
Net income attributable to Wyndham shareholders		$	160			$	—			$	(2	)		$	(2	)		$	62			$	218
Earnings per share
Basic		$	1.10			$	—			$	(0.02	)		$	(0.01	)		$	0.43			$	1.50
Diluted			1.08				—				(0.02	)			(0.01	)			0.42				1.47
Weighted average shares outstanding
Basic			145				145				145				145				145				145
Diluted			148				148				148				148				148				148

 

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

 

(a)	Relates to the 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)	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.

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

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Table 9

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATIONS AND FINANCIAL INFORMATION

(In millions)

FREE CASH FLOW

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

We believe free cash flow to be a useful operating performance measure to evaluate the ability of our operations to generate cash for uses other than capital expenditures and, after debt service and other obligations, our ability to grow our business through acquisitions, development advances and equity investments, as well as our ability to return cash to shareholders through dividends and share repurchases. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities, net cash used in investing activities and net cash used in financing activities as a means for evaluating Wyndham Worldwide is that free cash flow does not represent the total cash movements 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,
		2013				2012
Net cash provided by operating activities		$	758			$	647
Less: Property and equipment additions			(104	)			(78	)
Free cash flow		$	654			$	569

GROSS VOI SALES

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

 

Year
2013				Q1				Q2				Q3				Q4				Full Year
Gross VOI sales (a)				$	384			$	481				N/A				N/A				N/A
Less: Sales under WAAM 1.0					(36	)			(44	)			N/A				N/A				N/A
Gross VOI sales, net of WAAM 1.0 sales					347				437				N/A				N/A				N/A
Less: Loan loss provision					(84	)			(90	)			N/A				N/A				N/A
Vacation ownership interest sales (a)				$	263			$	347				N/A				N/A				N/A
2012
Gross VOI sales (a)				$	384			$	460			$	502			$	435			$	1,781
Less: Sales under WAAM 1.0					(17	)			(18	)			(5	)			(10	)			(49	)
Gross VOI sales, net of WAAM 1.0 sales					367				442				497				426				1,732
Less: Loan loss provision					(96	)			(100	)			(124	)			(89	)			(409	)
Vacation ownership interest sales (a)				$	271			$	342			$	373			$	337			$	1,323
2011
Gross VOI sales				$	319			$	412			$	455			$	409			$	1,595
Less: Sales under WAAM 1.0					(18	)			(19	)			(38	)			(31	)			(106	)
Gross VOI sales, net of WAAM 1.0 sales					302				393				417				378				1,489
Less: Loan loss provision					(79	)			(80	)			(96	)			(83	)			(339	)
Vacation ownership interest sales				$	222			$	313			$	320			$	295			$	1,150
2010
Gross VOI sales				$	308			$	371			$	412			$	373			$	1,464
Less: Sales under WAAM 1.0					(5	)			(13	)			(20	)			(14	)			(51	)
Gross VOI sales, net of WAAM 1.0 sales					303				358				392				359				1,413
Less: Loan loss provision					(86	)			(87	)			(85	)			(82	)			(340	)
Vacation ownership interest sales				$	217			$	271			$	308			$	276			$	1,072

 

Note: Amounts may not add due to rounding.

 

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

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

 

		Q1				Q2				Q3				Q4				Full Year
2013		$	24			$	18				N/A				N/A				N/A
2012		$	27			$	20			$	22			$	28			$	97
2011		$	18			$	18			$	21			$	11			$	68
2010		$	20			$	20			$	23			$	17			$	80