EXHIBIT 99.1

 

Wyndham Worldwide Reports Fourth Quarter and Full Year 2013 Earnings

Full Year Adjusted Diluted EPS Growth of 19%

Increases Dividend 21%

PARSIPPANY, N.J. (February 7, 2014) – Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months and year ended December 31, 2013.

Highlights:

 

•

Fourth quarter adjusted diluted earnings per share (EPS) was $0.73, an increase of 16% from adjusted diluted EPS of $0.63 in the fourth quarter of 2012. Reported diluted EPS was $0.65 in the fourth quarter of 2013, compared with $0.57 during the same period in 2012.

 

•

Fourth quarter adjusted EBITDA increased 10% from the prior-year period.

 

•

The Company’s Board of Directors authorized an increase in the quarterly cash dividend to $0.35 from $0.29 per share, beginning with the dividend that is expected to be declared in the first quarter of 2014.

 

•

During the quarter, the Company repurchased 1.8 million shares of its common stock for $115 million. For the full year, the Company spent $590 million to repurchase 9.7 million shares of its common stock.

“We finished the year with another strong quarter, marking our fourth consecutive year of double-digit growth in adjusted EPS,” said Stephen P. Holmes, chairman and CEO. “We are excited about our prospects for 2014 as we continue to execute and innovate across our businesses and maintain our capital allocation discipline to enhance value for shareholders.”

FOURTH QUARTER 2013 OPERATING RESULTS

Fourth quarter revenues were $1.2 billion, an increase of 9% from the prior year period. The increase reflects growth in all of the Company’s business segments.

Adjusted net income was $96 million, or $0.73 per diluted share, compared with $89 million, or $0.63 per diluted share for the same period in 2012. The increases reflect stronger operating results in the Company’s lodging and vacation ownership businesses. EPS growth 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 fourth quarter of 2013 was $86 million, or $0.65 per diluted share, compared with $81 million, or $0.57 per diluted share, for the fourth quarter of 2012. Reported net income included several items not included in adjusted net income. The net result of these items unfavorably impacted fourth quarter 2013 net income by $10 million and unfavorably impacted fourth quarter 2012 net income by $8 million. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

FULL YEAR 2013 OPERATING RESULTS

Revenues for full year 2013 were $5.0 billion, an increase of 10% over the prior-year period. Adjusted net income for the full year 2013 was $515 million, or $3.83 per diluted share, compared with $469 million, or $3.23 per diluted share, for the prior year. The increases reflect stronger operating results across all of the Company’s businesses. EPS growth also benefited from the Company’s share repurchase program, which decreased weighted average diluted share count by 7% compared with 2012.

Reported net income for full year 2013 was $432 million, or $3.21 per diluted share, compared with reported net income of $400 million, or $2.75 per diluted share, for the prior-year period. Reported net income included several items not included in adjusted net income. The net result of these items unfavorably impacted full year 2013 net income by $83 million and unfavorably impacted full year 2012 net income by $69 million. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

Free cash flow was $770 million for the year ended December 31, 2013, compared with $796 million for the same period in 2012, reflecting higher capital expenditures. The Company defines free cash flow as net cash provided by operating activities less capital expenditures. For the year ended December 31, 2013, net cash provided by operating activities was $1,008 million, compared with $1,004 million in the prior year period.

BUSINESS UNIT RESULTS

Lodging (Wyndham Hotel Group)

Revenues were $245 million in the fourth quarter of 2013, a 10% increase over the fourth quarter of 2012. The increase reflects higher RevPAR, a larger system size and increased hotel management reimbursable fees.

Domestic RevPAR increased 4.7% compared with the fourth quarter of 2012. Total system-wide RevPAR increased 3.8%, reflecting proportionally higher growth of lower RevPAR hotels in China.

Adjusted EBITDA for the fourth quarter of 2013 was $64 million, a 3% increase compared with the fourth quarter of 2012. The increase was primarily due to higher RevPAR and a larger system size, partially offset by the unfavorable timing of marketing expenditures. Adjusted EBITDA excludes a $9 million restructuring charge and $8 million of non-cash asset impairment charges.

---

As of December 31, 2013, the Company’s hotel system consisted of approximately 7,490 properties and over 645,400 rooms, a 2.9% room increase compared with the fourth quarter of 2012. The development pipeline included over 970 hotels and approximately 114,000 rooms, of which 58% were international and 68% were new construction.

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)

Revenues were $305 million in the fourth quarter of 2013, a 4% increase over the fourth quarter of 2012. In constant currency and excluding the impact of acquisitions, revenues increased 1%.

Exchange revenues were $150 million, a decline of 2% from the fourth quarter of 2012. In constant currency, exchange revenues were flat, as a 1.6% increase in average number of members was offset by a 1.8% decline in exchange revenue per member.

Vacation rental revenues were $138 million, a 10% increase over the fourth quarter of 2012. In constant currency and excluding acquisitions, vacation rental revenues were up 4%, reflecting a 4.4% increase in the average net price per vacation rental and flat transaction volume.

Adjusted EBITDA for the fourth quarter of 2013 was $36 million, compared with $42 million for the fourth quarter of 2012, primarily reflecting the impact of seasonality from acquisitions and foreign currency movements.

Vacation Ownership (Wyndham Vacation Ownership)

Revenues were $658 million in the fourth quarter of 2013, a 12% increase over the fourth quarter of 2012, primarily reflecting higher gross VOI sales.

Gross VOI sales were $488 million in the fourth quarter of 2013, an increase of 12% over the fourth quarter of 2012, primarily reflecting a 6.6% increase in tour flow and a 6.5% increase in volume per guest.

Adjusted EBITDA for the fourth quarter of 2013 was $172 million, a 19% increase compared with the fourth quarter of 2012, primarily due to higher gross VOI sales and a lower loan loss provision.

---

Other Items

 

•

The Company repurchased 1.8 million shares of common stock for $115 million during the fourth quarter of 2013. For the full year, the Company repurchased 9.7 million shares of common stock for $590 million. From January 1 through February 6, 2014, the Company repurchased an additional 0.3 million shares for $24 million. The Company’s remaining share repurchase authorization totals $643 million as of February 6, 2014.

 

•

Net interest expense in the fourth quarter of 2013 was $32 million, compared with $33 million in the fourth quarter of 2012, as lower rates associated with recent financings offset higher debt levels.

Balance Sheet Information as of December 31, 2013:

 

•

Cash and cash equivalents of $194 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 December 31, 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 2014, the Company provides the following guidance:

 

•

Revenues of approximately $5.250 - $5.350 billion

 

•

Adjusted EBITDA of approximately $1.215 - $1.240 billion

 

•

Adjusted EPS of approximately $4.18 - $4.28 based on a diluted share count of 131 million

Conference Call Information

Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company’s results, outlook and guidance on Friday, February 7, 2014 at 8:30 a.m. EST. Listeners may access the webcast live through the Company’s website at www.wyndhamworldwide.com/investors. An archive of this webcast will be available on the website for approximately 90 days beginning at noon EST on February 7, 2014. The conference call may also be accessed by dialing 800-369-2125 and providing the passcode “WYNDHAM.” Listeners are urged to call at least 10 minutes prior to the scheduled start time. A telephone replay will be available for approximately 90 days beginning at noon EST on February 7, 2014, at 866-415-2340.

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

Presentation of Financial Information

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

---

About Wyndham Worldwide Corporation

One of the world’s largest hospitality companies, Wyndham Worldwide (NYSE: WYN) provides a wide range of hospitality products and services through its global portfolio of world-renowned brands. The world’s largest hotel company based on the number of properties, Wyndham Hotel Group is home to many of the world’s best-known hotel brands, with approximately 7,490 franchised hotels and over 645,400 hotel rooms worldwide. Wyndham Exchange & Rentals is the worldwide leader in vacation exchange and the world’s largest professionally managed vacation rentals business, providing more than 5 million leisure-bound families annually with access to over 107,000 vacation properties in over 100 countries through its prominent exchange and vacation rental brands. The industry and timeshare ownership market leader, Wyndham Vacation Ownership develops, markets, and sells vacation ownership interests and provides consumer financing to owners through its network of over 190 vacation ownership resorts serving approximately 907,000 owners throughout the United States, Canada, Mexico, the Caribbean, and the South Pacific. Based in Parsippany, NJ, Wyndham Worldwide employs approximately 32,800 associates globally. For more information, please visit www.wyndhamworldwide.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, conveying management’s expectations as to the future based on plans, estimates and projections at the time the Company makes the statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements contained in this press release include statements related to the Company’s revenues, earnings, dividends 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

---

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 December 31, 2013 and 2012:

 

		Three Months Ended December 31,
		2013								2012
		Net Revenues				EBITDA				Net Revenues				EBITDA
Lodging		$	245			$	47			$	223			$	62
Vacation Exchange and Rentals			305				36				293				28
Vacation Ownership			658				172				590				142
Total Reportable Segments			1,208				255				1,106				232
Corporate and Other (a)			(13	)			(33	)			(12	)			(28	)
Total Company		$	1,195			$	222			$	1,094			$	204
Reconciliation of EBITDA to Net Income Attributable to Wyndham shareholders
						Three Months Ended December 31,
						2013								2012
EBITDA						$	222							$	204
Depreciation and amortization							56								49
Interest expense							34								35
Interest income							(2	)							(2	)
Income before income taxes							134								122
Provision for income taxes							48								41
Net income attributable to Wyndham shareholders						$	86							$	81

 

(a)	Includes the elimination of transactions between segments.

The following tables summarize net revenues and Adjusted EBITDA for reportable segments for the three months ended December 31, 2013 and 2012 (for a description of adjustments by segment, see Table 7):

 

		Three Months Ended December 31,
		2013								2012
		Net Revenues				Adjusted EBITDA				Net Revenues				Adjusted EBITDA
Lodging		$	245			$	64			$	223			$	62
Vacation Exchange and Rentals			305				36				293				42
Vacation Ownership			658				172				590				144
Total Reportable Segments			1,208				272				1,106				248
Corporate and Other			(13	)			(33	)			(12	)			(30	)
Total Company		$	1,195			$	239			$	1,094			$	218

---

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 twelve months ended December 31, 2013 and 2012:

 

		Twelve Months Ended December 31,
		2013								2012
		Net Revenues				EBITDA				Net Revenues				EBITDA
Lodging		$	1,027			$	279			$	890			$	272
Vacation Exchange and Rentals			1,526				356				1,422				328
Vacation Ownership			2,515				619				2,269				549
Total Reportable Segments			5,068				1,254				4,581				1,149
Corporate and Other (a)			(59	)			(122	)			(47	)			(104	)
Total Company		$	5,009			$	1,132			$	4,534			$	1,045
Reconciliation of EBITDA to Net Income Attributable to Wyndham shareholders
						Twelve Months Ended December 31,
						2013								2012
EBITDA						$	1,132							$	1,045
Depreciation and amortization							216								185
Interest expense							131								132
Early extinguishment of debt							111								108
Interest income							(9	)							(8	)
Income before income taxes							683								628
Provision for income taxes							250								229
Net income							433								399
Net (income)/loss attributable to noncontrolling interest							(1	)							1
Net income attributable to Wyndham shareholders						$	432							$	400

 

(a)	Includes the elimination of transactions between segments.

The following tables summarize net revenues and Adjusted EBITDA for reportable segments for the twelve months ended December 31, 2013 and 2012 (for a description of adjustments by segment, see Table 7):

 

		Twelve Months Ended December 31,
		2013								2012
		Net Revenues				Adjusted EBITDA				Net Revenues				Adjusted EBITDA
Lodging		$	1,027			$	296			$	890			$	271
Vacation Exchange and Rentals			1,526				356				1,422				340
Vacation Ownership			2,515				621				2,269				552
Total Reportable Segments			5,068				1,273				4,581				1,163
Corporate and Other			(59	)			(121	)			(47	)			(109	)
Total Company		$	5,009			$	1,152			$	4,534			$	1,054

---

Table 2

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
		2013				2012				2013				2012
Net revenues
Service and membership fees		$	496			$	446			$	2,329			$	2,005
Vacation ownership interest sales			384				337				1,379				1,323
Franchise fees			139				134				599				583
Consumer financing			108				110				426				421
Other			68				67				276				202
Net revenues			1,195				1,094				5,009				4,534
Expenses
Operating			517				454				2,161				1,842
Cost of vacation ownership interests			48				46				155				161
Consumer financing interest			18				21				78				90
Marketing and reservation			180				169				751				723
General and administrative			193				185				720				666
Asset impairments			8				8				8				8
Restructuring			9				7				10				7
Depreciation and amortization			56				49				216				185
Total expenses			1,029				939				4,099				3,682
Operating income			166				155				910				852
Other income, net			—				—				(6	)			(8	)
Interest expense			34				35				131				132
Early extinguishment of debt			—				—				111				108
Interest income			(2	)			(2	)			(9	)			(8	)
Income before income taxes			134				122				683				628
Provision for income taxes			48				41				250				229
Net income			86				81				433				399
Net (income)/loss attributable to noncontrolling interest			—				—				(1	)			1
Net income attributable to Wyndham shareholders		$	86			$	81			$	432			$	400
Earnings per share
Basic		$	0.66			$	0.58			$	3.25			$	2.80
Diluted			0.65				0.57				3.21				2.75
Weighted average shares outstanding
Basic			129				139				133				143
Diluted			131				141				135				145

 

Note: For a description of adjustments to Net Income, see Table 8.

---

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				645,400				N/A
			2012				609,300				608,300				618,100				627,400				N/A
			2011				609,600				612,900				611,200				613,100				N/A
			2010				593,300				606,800				605,700				612,700				N/A
RevPAR			2013			$	31.05			$	38.00			$	41.78			$	33.07			$	36.00
			2012			$	29.73			$	37.23			$	40.39			$	31.86			$	34.80
			2011			$	27.71			$	35.38			$	39.49			$	30.65			$	33.34
			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				3,728				3,698
			2012				3,684				3,670				3,672				3,670				3,674
			2011				3,766				3,755				3,744				3,734				3,750
			2010				3,746				3,741				3,766				3,759				3,753
Exchange Revenue Per Member			2013			$	210.96			$	182.42			$	169.95			$	161.21			$	181.02
			2012			$	204.56			$	177.07			$	171.14			$	165.86			$	179.68
			2011			$	205.64			$	178.46			$	172.38			$	161.68			$	179.59
			2010			$	201.93			$	172.20			$	173.44			$	162.59			$	177.53
Vacation Rental Transactions (in 000s) (a)			2013				423				355				433				273				1,483
			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 (a)			2013			$	392.64			$	540.38			$	677.81			$	506.62			$	532.11
			2012			$	379.40			$	524.40			$	635.44			$	484.69			$	504.55
			2011			$	377.71			$	549.09			$	701.81			$	497.04			$	530.78
			2010			$	361.17			$	387.01			$	500.31			$	449.12			$	425.38
Vacation Ownership (a)
Gross Vacation Ownership Interest (VOI) Sales (in 000s) (b)			2013			$	384,000			$	481,000			$	536,000			$	488,000			$	1,889,000
			2012			$	384,000			$	460,000			$	502,000			$	435,000			$	1,781,000
			2011			$	319,000			$	412,000			$	455,000			$	409,000			$	1,595,000
			2010			$	308,000			$	371,000			$	412,000			$	373,000			$	1,464,000
Tours (c)			2013				163,000				206,000				225,000				195,000				789,000
			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) (c)			2013			$	2,211			$	2,256			$	2,278			$	2,370			$	2,281
			2012			$	2,414			$	2,361			$	2,315			$	2,225			$	2,324
			2011			$	2,192			$	2,227			$	2,197			$	2,296			$	2,229
			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 acquisitions from the acquisition dates forward. Therefore, the operating statistics are not presented on a comparable basis.

(b)	Includes gross VOI sales under the Company's Wyndham Asset Affiliate Model (WAAM) 2.0 beginning in the second quarter of 2012 (see Table 9 for a reconciliation of gross VOI sales to vacation ownership interest sales).

(c)	Includes the impact of WAAM 2.0 related tours beginning in the second quarter of 2012.

---

Table 3

(2 of 3)

Wyndham Worldwide Corporation

ADDITIONAL DATA

 

		Year				Q1				Q2				Q3				Q4				Full Year
Lodging (a)
Number of Properties			2013				7,380				7,410				7,440				7,490				N/A
			2012				7,150				7,170				7,260				7,340				N/A
			2011				7,190				7,220				7,190				7,210				N/A
			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			$	73,000			$	349,000
			2012			$	96,000			$	100,000			$	124,000			$	89,000			$	409,000
			2011			$	79,000			$	80,000			$	96,000			$	83,000			$	339,000
			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			$	29,000			$	160,000
			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			$	20,000			$	107,000
			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			$	—			$	—			$	14,000
			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 an acquisition 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.

---

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 the Company receives a fee for reservation and/or other services provided and (iii) properties managed under a joint venture.

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

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

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

Vacation Exchange and Rentals

Average Number of Members: Represents members in our vacation exchange programs who paid annual membership dues as of the end of the period or within the allowed grace period. For additional fees, such participants are entitled to exchange intervals for intervals at other properties affiliated with the Company's vacation exchange business. In addition, certain participants may exchange intervals for other leisure-related services and products.

Exchange Revenue Per Member: Represents total annualized revenues generated from fees associated with memberships, exchange transactions, member-related rentals and other servicing for the period divided by the average number of vacation exchange members during the period.

Vacation Rental Transactions: Represents the number of transactions that are generated during the period in connection with customers booking their vacation rental stays through the Company. One rental transaction is recorded for each standard one-week rental.

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

Vacation Ownership

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

Volume per Guest (VPG): Represents gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) divided by the number of tours. The Company has excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel. See Table 9 for a detail of tele-sales upgrades for 2010-2013.

General

Constant Currency: Represents a comparison eliminating the effects of foreign exchange rate fluctuations between periods.

---

Table 4

Wyndham Worldwide Corporation

REVENUE DETAIL BY REPORTABLE SEGMENT

(In millions)

 

		2013																				2012
		Q1				Q2				Q3				Q4				Year				Q1				Q2				Q3				Q4				Year
Lodging
Royalties and Franchise Fees		$	64			$	79			$	91			$	75			$	309			$	62			$	80			$	88			$	71			$	301
Marketing, Reservation and Wyndham Rewards Revenues (a)			73				92				118				83				365				68				99				98				80				345
Hotel Management Reimbursable Revenues (b)			25				38				37				35				135				21				22				25				23				91
Inter-segment Trademark Fees			8				10				11				10				39				8				9				9				8				34
Owned Hotel Revenues			26				20				18				19				84				8				8				7				18				41
Ancillary Revenues (c)			26				23				22				23				95				18				15				22				23				78
Total Lodging			222				262				297				245				1,027				185				233				249				223				890
Vacation Exchange and Rentals
Exchange Revenues			193				168				158				150				669				188				162				157				153				660
Rental Revenues			166				192				293				138				789				159				170				248				125				702
Ancillary Revenues (d)			15				16				19				17				68				14				16				15				15				60
Total Vacation Exchange and Rentals			374				376				470				305				1,526				361				348				420				293				1,422
Vacation Ownership
Vacation Ownership Interest Sales			263				347				384				384				1,379				271				342				373				337				1,323
Consumer Financing			105				106				107				108				426				103				102				106				110				421
Property Management Fees			146				141				143				137				567				110				108				117				125				460
WAAM 1.0 Commissions			24				30				33				20				107				12				11				4				6				33
Ancillary Revenues (e)			11				6				10				9				36				5				7				8				12				32
Total Vacation Ownership			549				630				677				658				2,515				501				570				608				590				2,269
Total Reportable Segments		$	1,145			$	1,268			$	1,444			$	1,208			$	5,068			$	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

 

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

(a)

Marketing and reservation revenues represent fees the Company receives from franchised and managed hotels that are to be expended for marketing purposes or the operation of a centralized, brand-specific reservation system. These fees are typically based on a percentage of the gross room revenues of each hotel. Wyndham Rewards revenues represent fees the Company receives relating to its loyalty program.

(b)

Primarily represents payroll costs in the hotel management business that the Company pays on behalf of property owners and for which it is reimbursed by the property owners. During Q2, Q3 and Q4 2013, $1 million, $3 million and $2 million, respectively, of reimbursable revenues, which eliminate in consolidation, were charged to the Company's 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)

 

		December 31, 2013				September 30, 2013				June 30, 2013				March 31, 2013				December 31, 2012
Securitized vacation ownership debt (a)
Term notes		$	1,648			$	1,615			$	1,569			$	1,869			$	1,770
Bank conduit facility (b)			262				273				289				125				190
Total securitized vacation ownership debt (c)			1,910				1,888				1,858				1,994				1,960
Less: Current portion of securitized vacation ownership debt			184				186				217				228				218
Long-term securitized vacation ownership debt		$	1,726			$	1,702			$	1,641			$	1,766			$	1,742
Debt:
Revolving credit facility (due July 2018) (d)		$	23			$	74			$	41			$	34			$	85
Commercial paper (e)			210				164				168				202				273
9.875% senior unsecured notes (f)			—				—				—				—				42
6.00% senior unsecured notes (due December 2016)			318				318				319				319				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				14				248
2.50% senior unsecured notes (due March 2018)			447				447				447				447				—
7.375% senior unsecured notes (due March 2020)			40				40				40				40				248
5.625% senior unsecured notes (due March 2021)			246				246				246				246				246
4.25% senior unsecured notes (due March 2022) (g)			643				644				644				644				644
3.90% senior unsecured notes (due March 2023) (h)			387				396				397				397				—
Capital leases			191				185				184				187				105
Other			114				117				133				133				52
Total long-term debt			2,931				2,943				2,931				2,961				2,602
Less: Current portion of long-term debt			49				55				52				254				326
Long-term debt		$	2,882			$	2,888			$	2,879			$	2,707			$	2,276

 

(a)

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

(b)	Represents a non-recourse vacation ownership bank conduit facility with a term through August 2015 and borrowing capacity of $650 million. As of December 31, 2013, this facility had a remaining borrowing capacity of $388 million.

(c)	This debt is collateralized by $2,314 million, $2,306 million, $2,414 million, $2,512 million and $2,543 million of underlying vacation ownership contract receivables and related assets as of December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013 and December 31, 2012, respectively.

(d)

Represents a $1.5 billion revolving credit facility that expires on July 15, 2018. As of December 31, 2013, the Company had $9 million of outstanding letters of credit. After considering outstanding commercial paper borrowings of $210 million, the remaining borrowing capacity was $1.3 billion as of December 31, 2013.

(e)	Represents a $750 million commercial paper program which the Company commenced in October 2012 and a $500 million European commercial paper program which the Company commenced in December 2013. As of December 31, 2013, the programs had a remaining borrowing capacity of $1.0 billion.

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

(g)	The balance as of December 31, 2013 includes a $2 million adjustment to the carrying value resulting from the fair value hedge derivative.

(h)	The balance as of December 31, 2013 includes a $10 million adjustment to the carrying value resulting from the fair value hedge derivative.

---

Table 6

(1 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

 

		As of and For the Three Months Ended December 31, 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				170					37,569					54.5	%			$	120.69				$	65.76
TRYP by Wyndham				113					16,216					57.4	%			$	97.16				$	55.74
Wingate by Wyndham				159					14,559					56.0	%			$	83.38				$	46.66
Hawthorn Suites by Wyndham				91					8,933					59.2	%			$	69.39				$	41.10
Ramada				834					115,394					50.9	%			$	80.82				$	41.13
Baymont				329					27,108					46.0	%			$	62.11				$	28.60
Days Inn				1,817					146,959					44.3	%			$	62.20				$	27.54
Super 8				2,391					152,648					52.2	%			$	49.36				$	25.77
Howard Johnson				449					46,777					45.8	%			$	59.86				$	27.39
Travelodge				432					32,012					44.2	%			$	63.13				$	27.91
Microtel Inns & Suites by Wyndham				312					22,304					53.7	%			$	63.53				$	34.11
Knights Inn				380					23,325					40.0	%			$	43.43				$	17.37
Dream				5					989					74.6	%			$	249.45				$	186.05
Night				3					630					63.3	%			$	172.81				$	109.40
Total Lodging				7,485					645,423					49.1	%			$	67.36				$	33.07
Vacation Ownership
Wyndham Vacation Ownership resorts				191					23,506					N/A					N/A					N/A
Total Wyndham Worldwide				7,676					668,929
		As of and For the Three Months Ended December 31, 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				112					27,651					55.2	%			$	110.77				$	61.16
TRYP by Wyndham				91					13,112					56.8	%			$	96.64				$	54.85
Wingate by Wyndham				160					14,681					55.2	%			$	82.73				$	45.65
Hawthorn Suites by Wyndham				94					9,317					57.7	%			$	68.86				$	39.75
Ramada				850					115,811					50.3	%			$	79.76				$	40.13
Baymont				317					26,109					45.5	%			$	61.27				$	27.87
Days Inn				1,826					147,808					43.4	%			$	61.29				$	26.59
Super 8				2,314					147,512					51.5	%			$	50.72				$	26.14
Howard Johnson				455					46,203					44.6	%			$	62.03				$	27.65
Travelodge				445					33,213					43.2	%			$	63.06				$	27.26
Microtel Inns & Suites by Wyndham				308					21,938					51.3	%			$	61.73				$	31.68
Knights Inn				363					22,670					40.3	%			$	41.72				$	16.80
Dream				5					990					69.2	%			$	242.53				$	167.79
Night				2					422					45.9	%			$	119.65				$	54.93
Total Lodging				7,342					627,437					48.2	%			$	66.05				$	31.86
Vacation Ownership
Wyndham Vacation Ownership resorts				190					23,441					N/A					N/A					N/A
Total Wyndham Worldwide				7,532					650,878

 

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 6

(2 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

 

		As of and For the Year Ended December 31, 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				170					37,569					58.6	%			$	117.27				$	68.74
TRYP by Wyndham				113					16,216					60.5	%			$	96.09				$	58.16
Wingate by Wyndham				159					14,559					60.9	%			$	85.11				$	51.82
Hawthorn Suites by Wyndham				91					8,933					62.6	%			$	71.46				$	44.71
Ramada				834					115,394					53.0	%			$	80.19				$	42.50
Baymont				329					27,108					51.3	%			$	63.14				$	32.40
Days Inn				1,817					146,959					48.8	%			$	64.34				$	31.42
Super 8				2,391					152,648					56.3	%			$	52.33				$	29.45
Howard Johnson				449					46,777					47.7	%			$	62.06				$	29.58
Travelodge				432					32,012					49.5	%			$	67.10				$	33.23
Microtel Inns & Suites by Wyndham				312					22,304					57.6	%			$	64.42				$	37.10
Knights Inn				380					23,325					42.0	%			$	45.04				$	18.92
Dream				5					989					71.8	%			$	229.77				$	164.88
Night				3					630					62.4	%			$	152.65				$	95.18
Total Lodging				7,485					645,423					52.7	%			$	68.27				$	36.00
Vacation Ownership
Wyndham Vacation Ownership resorts				191					23,506					N/A					N/A					N/A
Total Wyndham Worldwide				7,676					668,929
		As of and For the Year Ended December 31, 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				112					27,651					58.9	%			$	110.28				$	64.97
TRYP by Wyndham				91					13,112					60.7	%			$	97.49				$	59.17
Wingate by Wyndham				160					14,681					61.0	%			$	83.43				$	50.88
Hawthorn Suites by Wyndham				94					9,317					61.9	%			$	72.89				$	45.13
Ramada				850					115,811					52.6	%			$	78.86				$	41.50
Baymont				317					26,109					50.5	%			$	63.25				$	31.96
Days Inn				1,826					147,808					48.1	%			$	63.05				$	30.34
Super 8				2,314					147,512					54.8	%			$	53.00				$	29.06
Howard Johnson				455					46,203					47.6	%			$	62.47				$	29.76
Travelodge				445					33,213					48.2	%			$	66.40				$	32.02
Microtel Inns & Suites by Wyndham				308					21,938					54.9	%			$	62.20				$	34.14
Knights Inn				363					22,670					41.3	%			$	43.08				$	17.78
Dream				5					990					72.1	%			$	216.87				$	156.44
Night				2					422					57.8	%			$	159.04				$	91.90
Total Lodging				7,342					627,437					51.8	%			$	67.13				$	34.80
Vacation Ownership
Wyndham Vacation Ownership resorts				190					23,441					N/A					N/A					N/A
Total Wyndham Worldwide				7,532					650,878

 

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				Legacy Adjustments (b)				Acquisition Costs (c)				Restructuring Costs (d)				Asset Impairment (e)				Adjusted EBITDA
Lodging		$	222			$	58			$	—			$	—			$	—			$	—			$	58
Vacation Exchange and Rentals			374				94				—				—				—				—				94
Vacation Ownership			549				111				—				2				—				—				113
Total Reportable Segments			1,145				263				—				2				—				—				265
Corporate and Other (a)			(12	)			(29	)			—				—				—				—				(29	)
Total Company		$	1,133			$	234			$	—			$	2			$	—			$	—			$	236
Three months ended June 30, 2013
Lodging		$	262			$	78			$	—			$	—			$	—			$	—			$	78
Vacation Exchange and Rentals			376				85				—				—				—				—				85
Vacation Ownership			630				161				—				—				—				—				161
Total Reportable Segments			1,268				324				—				—				—				—				324
Corporate and Other (a)			(15	)			(27	)			—				—				—				—				(27	)
Total Company		$	1,253			$	297			$	—			$	—			$	—			$	—			$	297
Three months ended September 30, 2013
Lodging		$	297			$	95			$	—			$	—			$	—			$	—			$	95
Vacation Exchange and Rentals			470				141				—				—				—				—				141
Vacation Ownership			677				176				—				—				—				—				176
Total Reportable Segments			1,444				412				—				—				—				—				412
Corporate and Other (a)			(17	)			(33	)			(1	)			—				—				—				(34	)
Total Company		$	1,427			$	379			$	(1	)		$	—			$	—			$	—			$	378
Three months ended December 31, 2013
Lodging		$	245			$	47			$	—			$	—			$	9			$	8			$	64
Vacation Exchange and Rentals			305				36				—				—				—				—				36
Vacation Ownership			658				172				—				—				—				—				172
Total Reportable Segments			1,208				255				—				—				9				8				272
Corporate and Other (a)			(13	)			(33	)			—				—				—				—				(33	)
Total Company		$	1,195			$	222			$	—			$	—			$	9			$	8			$	239
Twelve months ended December 31, 2013
Lodging		$	1,027			$	279			$	—			$	—			$	9			$	8			$	296
Vacation Exchange and Rentals			1,526				356				—				—				—				—				356
Vacation Ownership			2,515				619				—				2				—				—				621
Total Reportable Segments			5,068				1,254				—				2				9				8				1,273
Corporate and Other (a)			(59	)			(122	)			1				—				—				—				(121	)
Total Company		$	5,009			$	1,132			$	1			$	2			$	9			$	8			$	1,152

 

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

(a)	Includes the elimination of transactions between segments.

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

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

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

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

---

Table 7

(2 of 2)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION

(In millions)

 

Three months ended March 31, 2012		Net Revenues				Reported EBITDA				Legacy Adjustments (b)				Impairment Recovery (c)				Allowance Reversal (d)				Acquisition Costs (e)				Asset Impairment (f)				Restructuring Costs (g)				Adjusted EBITDA
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 the Company's 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 acquisition of Shell Vacations Club at the Company's vacation ownership business (September 2012) and several other acquisitions at the Company's vacation rental businesses (December 2012).

(f)	Relates to a non-cash impairment charge for the write-down of the ResortQuest and Steamboat Resorts tradenames at the Company's vacation exchange and rentals business.

(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.

---

Table 8

(1 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

		Three Months Ended December 31, 2013
		As Reported				Restructuring Costs (a)				Asset Impairment (b)				As Adjusted non-GAAP
Net revenues
Service and membership fees		$	496											$	496
Vacation ownership interest sales			384												384
Franchise fees			139												139
Consumer financing			108												108
Other			68												68
Net revenues			1,195				—				—				1,195
Expenses
Operating			517												517
Cost of vacation ownership interests			48												48
Consumer financing interest			18												18
Marketing and reservation			180												180
General and administrative			193												193
Asset impairments			8								(8	)			—
Restructuring			9				(9	)							—
Depreciation and amortization			56												56
Total expenses			1,029				(9	)			(8	)			1,012
Operating income			166				9				8				183
Interest expense			34												34
Interest income			(2	)											(2	)
Income before income taxes			134				9				8				151
Provision for income taxes			48				4	(c)			3	(c)			55
Net income attributable to Wyndham shareholders		$	86			$	5			$	5			$	96
Earnings per share
Basic		$	0.66			$	0.04			$	0.04			$	0.74
Diluted			0.65				0.04				0.04				0.73
Weighted average shares outstanding
Basic			129				129				129				129
Diluted			131				131				131				131

 

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 costs incurred as a result of an organizational realignment initiative at the Company's lodging business.

(b)	Relates primarily to a non-cash impairment charge from a partial write-down of the Hawthorn trademark at the Company's lodging business.

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

---

Table 8

(2 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

		Twelve Months Ended December 31, 2013
		As Reported				Legacy Adjustments				Acquisition Costs (c)				Early Extinguishment of Debt (d)				Restructuring Costs (e)				Asset Impairment (f)				As Adjusted non-GAAP
Net revenues
Service and membership fees		$	2,329																							$	2,329
Vacation ownership interest sales			1,379																								1,379
Franchise fees			599																								599
Consumer financing			426																								426
Other			276																								276
Net revenues			5,009				—				—				—				—				—				5,009
Expenses
Operating			2,161								(2	)															2,159
Cost of vacation ownership interests			155																								155
Consumer financing interest			78																								78
Marketing and reservation			751																								751
General and administrative			720				(1	)(a)																			719
Asset impairments			8																				(8	)			—
Restructuring			10																(9	)							1
Depreciation and amortization			216																								216
Total expenses			4,099				(1	)			(2	)			—				(9	)			(8	)			4,079
Operating income			910				1				2				—				9				8				930
Other income, net			(6	)																							(6	)
Interest expense			131																								131
Early extinguishment of debt			111												(111	)											—
Interest income			(9	)																							(9	)
Income before income taxes			683				1				2				111				9				8				814
Provision for income taxes			250				(2	)(b)			1	(g)			42	(g)			4	(g)			3	(g)			298
Net income			433				3				1				69				5				5				516
Net income attributable to noncontrolling interest			(1	)			—				—				—				—				—				(1	)
Net income attributable to Wyndham shareholders		$	432			$	3			$	1			$	69			$	5			$	5			$	515
Earnings per share
Basic		$	3.25			$	0.02			$	0.01			$	0.51			$	0.04			$	0.04			$	3.87
Diluted			3.21				0.02				0.01				0.51				0.04				0.04				3.83
Weighted average shares outstanding
Basic			133				133				133				133				133				133				133
Diluted			135				135				135				135				135				135				135

 

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 net expense from the resolution of and adjustment to certain contingent liabilities and assets resulting from the Company's 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 Midtown 45, a NYC property (January 2013) at the Company's vacation ownership business.

(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 the 9.875% senior unsecured notes.

(e)	Relates to costs incurred as a result of an organizational realignment initiative at the Company's lodging business.

(f)	Relates primarily to a non-cash impairment charge from a partial write-down of the Hawthorn trademark at the Company's lodging business.

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

---

Table 8

(3 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

		Three Months Ended December 31, 2012
		As Reported				Legacy Adjustments (a)				Acquisition Costs (b)				Asset Impairment (c)				Restructuring Costs (d)				As Adjusted non-GAAP
Net revenues
Service fees and membership		$	446																			$	446
Vacation ownership interest sales			337																				337
Franchise fees			134																				134
Consumer financing			110																				110
Other			67																				67
Net revenues			1,094				—				—				—				—				1,094
Expenses
Operating			454								(1	)											453
Cost of vacation ownership interests			46																				46
Consumer financing interest			21																				21
Marketing and reservation			169																				169
General and administrative			185				2																187
Asset impairments			8												(8	)							—
Restructuring			7																(7	)			—
Depreciation and amortization			49																				49
Total expenses			939				2				(1	)			(8	)			(7	)			925
Operating income			155				(2	)			1				8				7				169
Interest expense			35																				35
Interest income			(2	)																			(2	)
Income before income taxes			122				(2	)			1				8				7				136
Provision for income taxes			41				—				—				3	(e)			3	(e)			47
Net income attributable to Wyndham shareholders		$	81			$	(2	)		$	1			$	5			$	4			$	89
Earnings per share
Basic		$	0.58			$	(0.01	)		$	0.01			$	0.04			$	0.03			$	0.64
Diluted			0.57				(0.01	)			0.01				0.04				0.03				0.63
Weighted average shares outstanding
Basic			139				139				139				139				139				139
Diluted			141				141				141				141				141				141

 

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 benefit from the resolution of and adjustment to certain contingent liabilities and assets resulting from the Company's separation from Cendant.

(b)	Relates to the costs incurred in connection with the acquisitions of several vacation rental businesses (December 2012).

(c)	Relates to the non-cash impairment charge for the write-down of the ResortQuest and Steamboat Resorts tradenames at the Company's vacation exchange and rental business.

(d)	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.

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

---

Table 8

(4 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

		Twelve Months Ended December 31, 2012
		As Reported				Legacy Adjustments (a)				Reversal / Recovery (b)				Acquisition Costs (c)				Early Extinguishment of Debt (d)				Asset Impairment (e)				Restructuring Costs (f)				As Adjusted non-GAAP
Net revenues
Service fees and membership		$	2,005																											$	2,005
Vacation ownership interest sales			1,323																												1,323
Franchise fees			583																												583
Consumer financing			421																												421
Other			202																												202
Net revenues			4,534				—				—				—				—				—				—				4,534
Expenses
Operating			1,842												(2	)															1,840
Cost of vacation ownership interests			161																												161
Consumer financing interest			90																												90
Marketing and reservation			723																												723
General and administrative			666				5																								671
Asset impairments			8																				(8	)							—
Restructuring			7																								(7	)			—
Depreciation and amortization			185																												185
Total expenses			3,682				5				—				(2	)			—				(8	)			(7	)			3,670
Operating income			852				(5	)			—				2				—				8				7				864
Other income, net			(8	)							3																				(5	)
Interest expense			132																												132
Early extinguishment of debt			108																(108	)											—
Interest income			(8	)																											(8	)
Income before income taxes			628				(5	)			(3	)			2				108				8				7				745
Provision for income taxes			229				(2	)(g)			(1	)(g)			1	(g)			44	(g)			3	(g)			3	(g)			277
Net income			399				(3	)			(2	)			1				64				5				4				468
Net loss attributable to noncontrolling interest			1				—				—				—				—				—				—				1
Net income attributable to Wyndham shareholders		$	400			$	(3	)		$	(2	)		$	1			$	64			$	5			$	4			$	469
Earnings per share
Basic		$	2.80			$	(0.02	)		$	(0.02	)		$	0.01			$	0.45			$	0.03			$	0.03			$	3.29
Diluted			2.75				(0.02	)			(0.02	)			0.01				0.44				0.03				0.03				3.23
Weighted average shares outstanding
Basic			143				143				143				143				143				143				143				143
Diluted			145				145				145				145				145				145				145				145

 

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 benefit from the resolution of and adjustment to certain contingent liabilities and assets resulting from the Company's separation from Cendant.

(b)	Includes $2 million related to the benefit from the reversal of an allowance associated with a previously divested asset and $1 million related to the recovery of a previously recorded impairment charge.

(c)	Relates to costs incurred in connection with the acquisition of Shell Vacations Club at the Company's vacation ownership business (September 2012) and several other acquisitions at the Company's vacation rental businesses (December 2012).

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

(e)	Relates to the non-cash impairment charge for the write-down of the ResortQuest and Steamboat Resorts tradenames at the Company's vacation exchange and rentals business.

(f)	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.

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

---

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:

 

		Twelve Months Ended December 31,
		2013								2012
Net cash provided by operating activities		$	1,008							$	1,004
Less: Property and equipment additions			(238	)							(208	)
Free cash flow		$	770							$	796
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			$	488			$	1,889
Less: Sales under WAAM 1.0			(36	)			(44	)			(51	)			(29	)			(160	)
Gross VOI sales, net of WAAM 1.0 sales			347				437				486				459				1,729
Less: Loan loss provision			(84	)			(90	)			(102	)			(73	)			(349	)
Less: Impact of percentage-of-completion accounting			—				—				—				(1	)			(1	)
Vacation ownership interest sales (a)		$	263			$	347			$	384			$	384			$	1,379
2012
Gross VOI sales (a)		$	384			$	460			$	502			$	435			$	1,781
Less: Sales under WAAM 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			$	25			$	89
2012		$	27			$	20			$	22			$	28			$	97
2011		$	18			$	18			$	21			$	11			$	68
2010		$	20			$	20			$	23			$	17			$	80