EXHIBIT 99.1

 

Wyndham Worldwide Reports Third Quarter 2013 Earnings

Third Quarter Adjusted EPS Up 25% Year-Over-Year

Raises Full Year EPS Guidance

Provides Preliminary 2014 Outlook

PARSIPPANY, N.J. (October 23, 2013) – Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended September 30, 2013.

Highlights:

 

•

Third quarter adjusted diluted earnings per share (EPS) was $1.41, an increase of 25% from adjusted diluted EPS of $1.13 in the third quarter of 2012. Reported diluted EPS was $1.40 in the third quarter of 2013, compared with $1.11 during the same period in 2012.

 

•

Adjusted net income increased 15% from the prior-year period.

 

•

During the quarter, the Company repurchased 2.7 million shares of its common stock for $160 million.

“Results for the quarter were excellent, with adjusted EPS growth of 25% and strong performance in each of our business units,” said Stephen P. Holmes, chairman and CEO. “Wyndham Hotel Group continues to expand its international footprint, Wyndham Exchange & Rentals is benefiting from recent innovations, and Wyndham Vacation Ownership continues to transform the business to an asset-light model. Overall, we have great momentum across the company, which when combined with our disciplined capital allocation strategy, will continue to create value for shareholders.”

THIRD QUARTER 2013 OPERATING RESULTS

Third quarter revenues were $1.4 billion, an increase of 13% from the prior year period.

Adjusted net income was $187 million, or $1.41 per diluted share, compared with $162 million, or $1.13 per diluted share for the same period in 2012. The increases in revenues and adjusted net income reflect stronger operating results across all of the Company’s businesses. EPS also benefited from the Company’s share repurchase program, which decreased weighted average diluted share count by 7% year-over-year.

Reported net income for the third quarter of 2013 was $187 million, or $1.40 per diluted share, compared with $159 million, or $1.11 per diluted share, for the third quarter of 2012. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

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Free cash flow was $705 million for the nine months ended September 30, 2013, compared with $685 million for the same period in 2012, a 3% increase. The growth of free cash flow largely reflects stronger operating performance partially offset by higher capital expenditures. The Company defines free cash flow as net cash provided by operating activities less capital expenditures. For the nine months ended September 30, 2013, net cash provided by operating activities was $858 million, compared with $808 million in the prior year period.

BUSINESS UNIT RESULTS

Lodging (Wyndham Hotel Group)

Revenues were $297 million in the third quarter of 2013, a 19% increase over the third quarter of 2012. The increase reflects higher revenues from owned hotels, hotel franchise fees and management reimbursable fees as well as incremental global conference fees.

Domestic RevPAR increased 5.2% compared with the third quarter of 2012. Total system-wide RevPAR increased 3.4%, reflecting proportionally higher growth of lower RevPAR hotels in China.

EBITDA for the third quarter of 2013 was $95 million, a 10% increase compared with the third quarter of 2012. The increase was primarily due to higher RevPAR and the favorable timing of marketing expenditures.

As of September 30, 2013, the Company’s hotel system consisted of approximately 7,440 properties and over 638,300 rooms, a 3.3% room increase compared with the third quarter of 2012. The development pipeline included over 900 hotels and approximately 114,000 rooms, of which 60% were international and 66% were new construction.

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)

Revenues were $470 million in the third quarter of 2013, a 12% increase over the third quarter of 2012. In constant currency and excluding the impact of acquisitions, revenues increased 7%.

Exchange revenues were $158 million, flat compared with the third quarter of 2012. In constant currency, exchange revenues were up 1%, as the average number of members increased 1.0% and exchange revenue per member increased 0.4%.

Vacation rental revenues were $293 million, an 18% increase compared with the third quarter of 2012. In constant currency and excluding acquisitions, vacation rental revenues were up 10%, reflecting a 6.7% increase in the average net price per vacation rental and a 3.1% increase in transaction volume. Results benefited from an improved pricing strategy and increased rental unit supply in Europe.

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EBITDA for the third quarter of 2013 was $141 million, a 15% increase over the third quarter of 2012. Excluding the impact of acquisitions and foreign currency, EBITDA increased 6%.

Vacation Ownership (Wyndham Vacation Ownership)

Revenues were $677 million in the third quarter of 2013, an 11% increase over the third quarter of 2012. Excluding the impact of the Shell Vacations Club acquisition, revenues increased 6%, primarily reflecting higher gross VOI sales.

Gross VOI sales were $536 million in the third quarter of 2013, an increase of 7% over the third quarter of 2012, primarily reflecting an 8.7% increase in tour flow offset by a 1.6% decrease in volume per guest. Excluding Shell Vacations Club, volume per guest was flat.

Adjusted EBITDA for the third quarter of 2013 was $176 million, a 14% increase compared with the third quarter of 2012. Excluding the impact of the Shell Vacations Club acquisition, adjusted EBITDA increased 8%, primarily due to the revenue increases and a lower loan loss provision.

Other Items

 

•

The Company repurchased 2.7 million shares of common stock for $160 million during the third quarter of 2013. From October 1 through October 22, 2013, the Company repurchased an additional 0.8 million shares for $50 million. The Company’s remaining share repurchase authorization totals $732 million as of October 22, 2013.

 

•

Net interest expense in the third quarter of 2013 was $29 million, compared with $30 million in the third quarter of 2012, as lower rates associated with recent financings offset higher debt levels.

Balance Sheet Information as of September 30, 2013:

 

•

Cash and cash equivalents of $269 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 September 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.

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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 $3.78 — $3.80 based on a diluted share count of 135 million, from $3.66 — $3.76 based on a diluted share count of 136 million

The Company’s preliminary guidance for the full-year 2014 is as follows:

 

•

Revenues of approximately $5.250 — $5.350 billion

 

•

Adjusted EBITDA of approximately $1.215 — $1.240 billion

 

•

Adjusted EPS of approximately $4.12 — $4.22 based on a diluted share count of 133 million.

Conference Call Information

Wyndham Worldwide Corporation will hold a conference call with investors to discuss this news on Wednesday, October 23, 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 October 23, 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 October 23, 2013, at 866-454-2130.

Presentation of Financial Information

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

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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 7,440 franchised hotels and over 638,300 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 September 30, 2013 and 2012:

 

		Three Months Ended September 30,
		2013								2012
		Net Revenues				EBITDA				Net Revenues				EBITDA
Lodging		$	297			$	95			$	249			$	86
Vacation Exchange and Rentals			470				141				420				123
Vacation Ownership			677				176				608				154	(c)
Total Reportable Segments			1,444				412				1,277				363
Corporate and Other (a)			(17	)			(33	) (b)			(12	)			(30	) (b)
Total Company		$	1,427			$	379			$	1,265			$	333
Reconciliation of EBITDA to Net Income Attributable to Wyndham shareholders
						Three Months Ended September 30,
						2013								2012
EBITDA						$	379							$	333
Depreciation and amortization							54								45
Interest expense							31								32
Early extinguishment of debt							—								2	(d)
Interest income							(2	)							(2	)
Income before income taxes							296								256
Provision for income taxes							109								97
Net income attributable to Wyndham shareholders						$	187							$	159

 

(a)	Includes the elimination of transactions between segments.

(b)	Includes $1 million of a net benefit and $1 million of a net expense during the three months ended September 30, 2013 and 2012, respectively, related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.

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

(d)	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 three months ended September 30, 2013 and 2012 (for a description of adjustments by segment, see Table 7):

 

		Three Months Ended September 30,
		2013								2012
		Net Revenues				Adjusted EBITDA				Net Revenues				Adjusted EBITDA
Lodging		$	297			$	95			$	249			$	86
Vacation Exchange and Rentals			470				141				420				123
Vacation Ownership			677				176				608				155
Total Reportable Segments			1,444				412				1,277				364
Corporate and Other			(17	)			(34	)			(12	)			(29	)
Total Company		$	1,427			$	378			$	1,265			$	335

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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, 2013 and 2012:

 

		Nine Months Ended September 30,
		2013								2012
		Net Revenues				EBITDA				Net Revenues				EBITDA
Lodging		$	782			$	232			$	667			$	210	(e)
Vacation Exchange and Rentals			1,220				320				1,129				300	(f)
Vacation Ownership			1,856				447	(b)			1,679				407	(g)
Total Reportable Segments			3,858				999				3,475				917
Corporate and Other (a)			(44	)			(89	) (c)			(35	)			(76	) (c)
Total Company		$	3,814			$	910			$	3,440			$	841
Reconciliation of EBITDA to Net Income Attributable to Wyndham shareholders
						Nine Months Ended September 30,
						2013								2012
EBITDA						$	910							$	841
Depreciation and amortization							160								136
Interest expense							97								98
Early extinguishment of debt							111	(d)							108	(h)
Interest income							(6	)							(7	)
Income before income taxes							548								506
Provision for income taxes							201								187
Net income							347								319
Net (income)/loss attributable to noncontrolling interest							(1	)							1
Net income attributable to Wyndham shareholders						$	346							$	320

 

(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)	Includes $1 million of a net expense and $3 million of a net benefit during the nine months ended September 30, 2013 and 2012, respectively, related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.

(d)	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.

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

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

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

(h)	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 nine months ended September 30, 2013 and 2012 (for a description of adjustments by segment, see Table 7):

 

		Nine Months Ended September 30,
		2013								2012
		Net Revenues				Adjusted EBITDA				Net Revenues				Adjusted EBITDA
Lodging		$	782			$	232			$	667			$	209
Vacation Exchange and Rentals			1,220				320				1,129				298
Vacation Ownership			1,856				449				1,679				408
Total Reportable Segments			3,858				1,001				3,475				915
Corporate and Other			(44	)			(88	)			(35	)			(79	)
Total Company		$	3,814			$	913			$	3,440			$	836

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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,
		2013				2012				2013				2012
Net revenues
Service and membership fees		$	680			$	566			$	1,833			$	1,558
Vacation ownership interest sales			384				373				995				987
Franchise fees			186				168				460				449
Consumer financing			107				106				318				311
Other			70				52				208				135
Net revenues			1,427				1,265				3,814				3,440
Expenses
Operating			589				495	(b)			1,645	(d)			1,389	(b)
Cost of vacation ownership interests			43				45				107				115
Consumer financing interest			19				23				60				69
Marketing and reservation			213				197				570				554
General and administrative (a)			186				172				528				481
Depreciation and amortization			54				45				160				136
Total expenses			1,104				977				3,070				2,744
Operating income			323				288				744				696
Other income, net			(2	)			—				(6	)			(9	) (f)
Interest expense			31				32				97				98
Early extinguishment of debt			—				2	(c)			111	(e)			108	(c)
Interest income			(2	)			(2	)			(6	)			(7	)
Income before income taxes			296				256				548				506
Provision for income taxes			109				97				201				187
Net income			187				159				347				319
Net (income)/loss attributable to noncontrolling interest			—				—				(1	)			1
Net income attributable to Wyndham shareholders		$	187			$	159			$	346			$	320
Earnings per share
Basic		$	1.42			$	1.13			$	2.58			$	2.20
Diluted			1.40				1.11				2.55				2.16
Weighted average shares outstanding
Basic			131				141				134				145
Diluted			133				144				136				148

 

(a)

Includes $1 million of a net benefit and $1 million of a net expense during the three months ended September 30, 2013 and 2012, respectively, and $1 million of a net expense and $3 million of a net benefit during the nine months ended September 30, 2013 and 2012, 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 during September 2012.

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

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

(e)	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.

(f)	Includes a $2 million benefit related to the reversal of an allowance associated with a previously divested asset at the Company’s vacation exchange and rentals business and a $1 million benefit from the recovery of a previously recorded impairment charge at the Company’s lodging business.

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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				638,300				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			$	41.78				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				3,711				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			$	169.95				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				433				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			$	677.81				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			$	536,000				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				225,000				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				123,000				163,000				187,000				160,000				634,000
Volume Per Guest (VPG) (e)			2013			$	2,211			$	2,256			$	2,278				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 other 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 (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				7,440				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			$	102,000				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			$	51,000				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			$	33,000				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
			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			$	91				N/A				N/A			$	62			$	80			$	88			$	71			$	301
Marketing, Reservation and Wyndham Rewards Revenues (a)			73				92				118				N/A				N/A				68				99				98				80				345
Hotel Management Reimbursable Revenues (b)			25				38				37				N/A				N/A				21				22				25				23				91
Inter-segment Trademark Fees			8				10				11				N/A				N/A				8				9				9				8				34
Owned Hotel Revenues			26				20				18				N/A				N/A				8				8				7				18				41
Ancillary Revenues (c)			26				23				22				N/A				N/A				18				15				22				23				78
Total Lodging			222				262				297				N/A				N/A				185				233				249				223				890
Vacation Exchange and Rentals
Exchange Revenues			193				168				158				N/A				N/A				188				162				157				153				660
Rental Revenues			166				192				293				N/A				N/A				159				170				248				125				702
Ancillary Revenues (d)			15				16				19				N/A				N/A				14				16				15				15				60
Total Vacation Exchange and Rentals			374				376				470				N/A				N/A				361				348				420				293				1,422
Vacation Ownership
Vacation Ownership Interest Sales			263				347				384				N/A				N/A				271				342				373				337				1,323
Consumer Financing			105				106				107				N/A				N/A				103				102				106				110				421
Property Management Fees			146				141				143				N/A				N/A				110				108				117				125				460
WAAM 1.0 Commissions			24				30				33				N/A				N/A				12				11				4				6				33
Ancillary Revenues (e)			11				6				10				N/A				N/A				5				7				8				12				32
Total Vacation Ownership			549				630				677				N/A				N/A				501				570				608				590				2,269
Total Reportable Segments		$	1,145			$	1,268			$	1,444				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 (f)			1				2				3				4				10				—				—				—				—				—
Owned Hotel Revenues			—				—				—				5				5				—				—				—				—				—
Ancillary Revenues (c)			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 (d)			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 (e)			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. During Q2 and Q3 2013, $1 million and $3 million, respectively, of reimbursable revenues, which eliminate in consolidation, were charged to our vacation ownership business.

(c)	Primarily includes additional services provided to franchisees.

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

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

(f)	During 2011, $3 million, $1 million and $2 million of 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.

---

Table 5

Wyndham Worldwide Corporation

SCHEDULE OF DEBT

(In millions)

 

		September 30, 2013				June 30, 2013				March 31, 2013				December 31, 2012				September 30, 2012
Securitized vacation ownership debt (a)
Term notes		$	1,615			$	1,569			$	1,869			$	1,770			$	1,702
Bank conduit facility (b)			273				289				125				190				220
Securitized vacation ownership debt (c)			1,888				1,858				1,994				1,960				1,922
Less: Current portion of securitized vacation ownership debt			186				217				228				218				206
Long-term securitized vacation ownership debt		$	1,702			$	1,641			$	1,766			$	1,742			$	1,716
Debt:
Revolving credit facility (due July 2018) (d)		$	74			$	41			$	34			$	85			$	270
Commercial paper (e)			164				168				202				273				—
9.875% senior unsecured notes (due May 2014) (f)			—				—				—				42				42
6.00% senior unsecured notes (due December 2016)			318				319				319				361				361
2.95% senior unsecured notes (due March 2017)			298				298				298				298				298
5.75% senior unsecured notes (due February 2018)			14				14				14				248				248
2.50% senior unsecured notes (due March 2018)			447				447				447				—				—
7.375% senior unsecured notes (due March 2020)			40				40				40				248				248
5.625% senior unsecured notes (due March 2021)			246				246				246				246				246
4.25% senior unsecured notes (due March 2022)			644				644				644				644				644
3.90% senior unsecured notes (due March 2023)			396				397				397				—				—
Capital leases			185				184				187				105				104
Other			117				133				133				52				68
Total debt			2,943				2,931				2,961				2,602				2,529
Less: Current portion of debt			55				52				254				326				64
Long-term debt		$	2,888			$	2,879			$	2,707			$	2,276			$	2,465

 

(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 2015 and borrowing capacity of $650 million. As of September 30, 2013, this facility had a remaining borrowing capacity of $377 million.

(c)	This debt is collateralized by $2,306 million, $2,414 million, $2,512 million, $2,543 million and $2,517 million of underlying vacation ownership contract receivables and related assets as of September 30, 2013, June 30, 2013, March 31, 2013, December 31, 2012 and September 30, 2012, respectively.

(d)

Represents a $1.5 billion revolving credit facility that expires on July 15, 2018. As of September 30, 2013, the Company had $9 million of outstanding letters of credit and a remaining borrowing capacity of $1.4 billion. After considering outstanding commercial paper borrowings of $164 million, the remaining borrowing capacity was $1.3 billion as of September 30, 2013.

(e)	Represents a $750 million commercial paper program which the Company commenced in October 2012. As of September 30, 2013, the program had a remaining borrowing capacity of $586 million.

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

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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, 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				144					33,748					60.3	%			$	116.22				$	70.08
TRYP by Wyndham				108					15,218					66.2	%			$	94.58				$	62.61
Wingate by Wyndham				158					14,491					65.6	%			$	86.69				$	56.88
Hawthorn Suites by Wyndham				91					9,126					64.7	%			$	73.12				$	47.31
Ramada				829					113,815					58.0	%			$	80.70				$	46.81
Baymont				323					26,636					57.9	%			$	65.65				$	38.00
Days Inn				1,828					147,891					56.4	%			$	67.76				$	38.25
Super 8				2,382					152,534					64.0	%			$	56.34				$	36.06
Howard Johnson				445					45,199					53.7	%			$	64.43				$	34.57
Travelodge				439					32,773					58.2	%			$	73.66				$	42.87
Microtel Inns & Suites by Wyndham				309					22,085					63.7	%			$	67.61				$	43.08
Knights Inn				377					23,174					47.1	%			$	49.32				$	23.21
Dream				5					990					75.3	%			$	226.39				$	170.40
Night				3					630					69.8	%			$	143.58				$	100.16
Total Lodging				7,441					638,310					59.2	%			$	70.59				$	41.78
Vacation Ownership
Wyndham Vacation Ownership resorts				191					23,440					N/A					N/A					N/A
Total Wyndham Worldwide				7,632					661,750
		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

 

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, 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				144					33,748					60.2	%			$	116.07				$	69.90
TRYP by Wyndham				108					15,218					61.7	%			$	95.72				$	59.05
Wingate by Wyndham				158					14,491					62.6	%			$	85.63				$	53.56
Hawthorn Suites by Wyndham				91					9,126					63.7	%			$	72.10				$	45.90
Ramada				829					113,815					53.7	%			$	79.99				$	42.96
Baymont				323					26,636					53.1	%			$	63.44				$	33.70
Days Inn				1,828					147,891					50.4	%			$	64.97				$	32.73
Super 8				2,382					152,534					57.7	%			$	53.25				$	30.71
Howard Johnson				445					45,199					48.3	%			$	62.76				$	30.32
Travelodge				439					32,773					51.3	%			$	68.24				$	35.01
Microtel Inns & Suites by Wyndham				309					22,085					58.9	%			$	64.70				$	38.12
Knights Inn				377					23,174					42.7	%			$	45.56				$	19.44
Dream				5					990					70.8	%			$	222.79				$	157.74
Night				3					630					62.0	%			$	145.14				$	89.99
Total Lodging				7,441					638,310					54.0	%			$	68.56				$	37.00
Vacation Ownership
Wyndham Vacation Ownership resorts				191					23,440					N/A					N/A					N/A
Total Wyndham Worldwide				7,632					661,750
		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

 

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 Corporation

NON-GAAP RECONCILIATION

(In millions)

 

Three months ended March 31, 2013		Net Revenues				Reported EBITDA				Legacy Adjustments (b)				Acquisition Costs (c)				Adjusted EBITDA
Lodging		$	222			$	58			$	—			$	—			$	58
Vacation Exchange and Rentals			374				94				—				—				94
Vacation Ownership			549				111				—				2				113
Total Reportable Segments			1,145				263				—				2				265
Corporate and Other (a)			(12	)			(29	)			—				—				(29	)
Total Company		$	1,133			$	234			$	—			$	2			$	236
Three months ended June 30, 2013
Lodging		$	262			$	78			$	—			$	—			$	78
Vacation Exchange and Rentals			376				85				—				—				85
Vacation Ownership			630				161				—				—				161
Total Reportable Segments			1,268				324				—				—				324
Corporate and Other (a)			(15	)			(27	)			—				—				(27	)
Total Company		$	1,253			$	297			$	—			$	—			$	297
Three months ended September 30, 2013
Lodging		$	297			$	95			$	—			$	—			$	95
Vacation Exchange and Rentals			470				141				—				—				141
Vacation Ownership			677				176				—				—				176
Total Reportable Segments			1,444				412				—				—				412
Corporate and Other (a)			(17	)			(33	)			(1	)			—				(34	)
Total Company		$	1,427			$	379			$	(1	)		$	—			$	378

 

Note: Adjusted EBITDA for the quarters may not add to year-to-date Adjusted EBITDA due to rounding.

 

(a)	Includes the elimination of transactions between segments.

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

(c)	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 acquisitions of several vacation rental businesses (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 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

		Three Months Ended September 30, 2013
		As Reported				Legacy Adjustments				As Adjusted non-GAAP
Net revenues
Service and membership fees		$	680							$	680
Vacation ownership interest sales			384								384
Franchise fees			186								186
Consumer financing			107								107
Other			70								70
Net revenues			1,427				—				1,427
Expenses
Operating			589								589
Cost of vacation ownership interests			43								43
Consumer financing interest			19								19
Marketing and reservation			213								213
General and administrative			186				1	(a)			187
Depreciation and amortization			54								54
Total expenses			1,104				1				1,105
Operating income			323				(1	)			322
Other income, net			(2	)							(2	)
Interest expense			31								31
Interest income			(2	)							(2	)
Income before income taxes			296				(1	)			295
Provision for income taxes			109				(1	) (b)			108
Net income attributable to Wyndham shareholders		$	187			$	—			$	187
Earnings per share
Basic		$	1.42			$	—			$	1.42
Diluted			1.40				—				1.41
Weighted average shares outstanding
Basic			131				131				131
Diluted			133				133				133

 

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

(b)	Relates to a state tax accrual for legacy tax matters.

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Table 8

(2 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

		Nine Months Ended September 30, 2013
		As Reported				Legacy Adjustments				Acquisition Costs (c)				Early Extinguishment of Debt (e)				As Adjusted non-GAAP
Net revenues
Service and membership fees		$	1,833															$	1,833
Vacation ownership interest sales			995																995
Franchise fees			460																460
Consumer financing			318																318
Other			208																208
Net revenues			3,814				—				—				—				3,814
Expenses
Operating			1,645								(2	)							1,643
Cost of vacation ownership interests			107																107
Consumer financing interest			60																60
Marketing and reservation			570																570
General and administrative			528				(1	) (a)											527
Depreciation and amortization			160																160
Total expenses			3,070				(1	)			(2	)			—				3,067
Operating income			744				1				2				—				747
Other income, net			(6	)															(6	)
Interest expense			97																97
Early extinguishment of debt			111												(111	)			—
Interest income			(6	)															(6	)
Income before income taxes			548				1				2				111				662
Provision for income taxes			201				(2	) (b)			1	(d)			42	(d)			242
Net income			347				3				1				69				420
Net income attributable to noncontrolling interest			(1	)			—				—				—				(1	)
Net income attributable to Wyndham shareholders		$	346			$	3			$	1			$	69			$	419
Earnings per share
Basic		$	2.58			$	0.02			$	0.01			$	0.51			$	3.12
Diluted			2.55				0.02				0.01				0.50				3.09
Weighted average shares outstanding
Basic			134				134				134				134				134
Diluted			136				136				136				136				136

 

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

(b)	Relates to a state tax accrual for legacy tax matters.

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

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

(e)	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.

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Table 8

(3 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 (a)				Acquisition Costs (b)				Early Extinguishment of Debt (c)				As Adjusted non-GAAP
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	)							494
Cost of vacation ownership interests			45																45
Consumer financing interest			23																23
Marketing and reservation			197																197
General and administrative			172				(1	)											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	)			—
Interest income			(2	)															(2	)
Income before income taxes			256				1				1				2				260
Provision for income taxes			97				—				—				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

 

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

Note: EPS amounts may not add due to rounding.

 

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

(b)	Relates to the 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% and 6.00% senior unsecured notes.

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

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Table 8

(4 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 (a)				Legacy Adjustments (b)				Allowance Reversal (c)				Acquisition Costs (d)				Early Extinguishment of Debt (e)				As Adjusted non-GAAP
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	)							1,388
Cost of vacation ownership interests			115																								115
Consumer financing interest			69																								69
Marketing and reservation			554																								554
General and administrative			481								3																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								2												(6	)
Interest expense			98																								98
Early extinguishment of debt			108																				(108	)			—
Interest income			(7	)																							(7	)
Income before income taxes			506				(1	)			(3	)			(2	)			1				108				609
Provision for income taxes			187				(1	) (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

 

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 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 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% and 6.00% senior unsecured notes.

(f)	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 movement for the period as detailed in the consolidated statement of cash flows.

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

 

		Nine Months Ended September 30,
		2013				2012
Net cash provided by operating activities		$	858			$	808
Less: Property and equipment additions			(153	)			(123	)
Free cash flow		$	705			$	685

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			$	536				N/A				N/A
Less: Sales under WAAM 1.0							(36	)			(44	)			(51	)			N/A				N/A
Gross VOI sales, net of WAAM 1.0 sales							347				437				486				N/A				N/A
Less: Loan loss provision							(84	)			(90	)			(102	)			N/A				N/A
Vacation ownership interest sales (a)						$	263			$	347			$	384				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			$	22				N/A				N/A
2012						$	27			$	20			$	22			$	28			$	97
2011						$	18			$	18			$	21			$	11			$	68
2010						$	20			$	20			$	23			$	17			$	80