Attached files
WYNDHAM DESTINATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Overview
On May 31, 2018, Wyndham Worldwide Corporation (“Wyndham Worldwide” or “our”) completed the previously announced separation of its hotel group into a separate publicly-traded company (the “Separation”). Wyndham Worldwide completed the Separation by distributing 100% of the common stock of its wholly-owned subsidiary, Wyndham Hotels & Resorts, Inc. (“Wyndham Hotels”), to the shareholders of Wyndham Worldwide. For each share of Wyndham Worldwide common stock owned as of May 18, 2018, the record date, shareholders received one share of Wyndham Hotels common stock. The common stock of Wyndham Hotels, now a separate public company, trades on the New York Stock Exchange (“NYSE”) under the ticker symbol “WH.” In conjunction with the Separation, Wyndham Worldwide changed its name to Wyndham Destinations, Inc. (“Wyndham Destinations” or the “Company”). The common stock of Wyndham Destinations now trades on the NYSE under the ticker symbol “WYND.” Following the Separation, the Company does not beneficially own any shares of Wyndham Hotels.
In connection with the Separation, a series of internal reorganization transactions were undertaken to transfer certain assets and liabilities of the Company to Wyndham Hotels.
Basis of Pro Forma Presentation
The following unaudited pro forma condensed consolidated financial information is presented to illustrate the estimated effects of the Separation of Wyndham Hotels from the pre-separation combined company. The unaudited pro forma condensed consolidated financial information is based on information currently available, including certain assumptions and estimates. The information is intended for informational purposes only, and does not purport to represent the Company’s financial position and results of operations had the Separation occurred on the dates indicated, or to project the Company’s financial position or results of operations for any future date or period. Each of the following unaudited pro forma consolidated statement of income is presented as if the Separation occurred at the beginning of each respective reporting period. The following unaudited pro forma consolidated balance sheet as of March 31, 2018 is presented as if the Separation occurred on March 31, 2018. The unaudited pro forma condensed consolidated financial information should be read in conjunction with our historical audited consolidated financial statements and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our most recent annual report on Form 10-K for the year ended December 31, 2017, and our unaudited condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, and accompanying notes, in each case, which are available on the United States Securities and Exchange Commission’s website at www.sec.gov and the Company’s website (http://investor.wyndhamworldwide.com).
The information in the “Wyndham Worldwide Corporation- Historical” columns in the Unaudited Pro Forma Condensed Consolidated Statements of Income for the years ended December 31, 2017, 2016, and 2015 was derived from our Audited Consolidated Statement of Income for each of those same three years contained in our most recent Annual Report on Form 10-K for the year ended December 31, 2017, prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”) and unadjusted for the retrospective adoption of Accounting Standards Codification No. 606, Revenue from Contracts with Customers (“ASC 606”), on January 1, 2018. The information in the “Wyndham Worldwide Corporation-Historical” column in the Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2018 and the Unaudited Pro Forma Condensed Consolidated Statement of Income for the three-month period ended March 31, 2018 was derived from our unaudited condensed consolidated financial statements contained in our most recent Quarterly Report on Form 10-Q as of and for the three-month period ended March 31, 2018, prepared in accordance with GAAP and reflective of the retrospective adoption of ASC 606. Other pro forma adjustments are described in the accompanying notes to unaudited pro forma condensed consolidated financial statements.
Wyndham Destinations, Inc. (formerly Wyndham Worldwide Corporation)
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Three Months Ended March 31, 2018
(In millions, except per share amounts)
|
|
|
Wyndham |
|
Wyndham Hotels |
|
Wyndham Hotels |
|
Pro Forma |
|
Pro Forma |
| |||||
|
Net revenues |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Service and membership fees |
|
$ |
487 |
|
$ |
(69 |
) |
$ |
2 |
|
$ |
— |
|
$ |
420 |
|
|
Vacation ownership interest sales |
|
358 |
|
— |
|
— |
|
— |
|
358 |
| |||||
|
Franchise fees |
|
151 |
|
(168 |
) |
17 |
|
— |
|
— |
| |||||
|
Consumer financing |
|
118 |
|
— |
|
— |
|
— |
|
118 |
| |||||
|
Other |
|
76 |
|
(65 |
) |
— |
|
2 |
|
13 |
| |||||
|
Net revenues |
|
1,190 |
|
(302 |
) |
19 |
|
2 |
|
909 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Operating |
|
513 |
|
(107 |
) |
(1 |
) |
— |
|
405 |
| |||||
|
Cost of vacation ownership interests |
|
31 |
|
— |
|
— |
|
— |
|
31 |
| |||||
|
Consumer financing interest |
|
19 |
|
— |
|
— |
|
— |
|
19 |
| |||||
|
Marketing and reservation |
|
188 |
|
(84 |
) |
26 |
|
8 |
|
138 |
| |||||
|
General and administrative |
|
173 |
|
(22 |
) |
3 |
|
— |
|
154 |
| |||||
|
Separation-related |
|
51 |
|
(12 |
) |
— |
|
(39 |
) |
— |
| |||||
|
Transaction-related |
|
— |
|
(2 |
) |
— |
|
— |
|
(2 |
) | |||||
|
Depreciation and amortization |
|
56 |
|
(19 |
) |
— |
|
(1 |
) |
36 |
| |||||
|
Total expenses |
|
1,031 |
|
(246 |
) |
28 |
|
(32 |
) |
781 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Operating income |
|
159 |
|
(56 |
) |
(9 |
) |
34 |
|
128 |
| |||||
|
Other income, net |
|
(6 |
) |
— |
|
— |
|
— |
|
(6 |
) | |||||
|
Interest expense |
|
45 |
|
(2 |
) |
— |
|
2 |
|
45 |
(d) | |||||
|
Interest income |
|
(1 |
) |
1 |
|
— |
|
— |
|
— |
| |||||
|
Income before income taxes |
|
121 |
|
(55 |
) |
(9 |
) |
32 |
|
89 |
| |||||
|
Provision/(benefit) for income taxes |
|
40 |
|
(16 |
) |
(1 |
) |
8 |
|
31 |
| |||||
|
Income from continuing operations |
|
81 |
|
(39 |
) |
(8 |
) |
24 |
|
58 |
| |||||
|
Loss from discontinued operations, net of income taxes |
|
(47 |
) |
— |
|
— |
|
— |
|
(47 |
) | |||||
|
Net income |
|
$ |
34 |
|
$ |
(39 |
) |
$ |
(8 |
) |
$ |
24 |
|
$ |
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Basic earnings per share |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Continuing operations |
|
$ |
0.81 |
|
|
|
|
|
|
|
$ |
0.58 |
| |||
|
Discontinued operations |
|
(0.47 |
) |
|
|
|
|
|
|
(0.47 |
) | |||||
|
|
|
$ |
0.34 |
|
|
|
|
|
|
|
$ |
0.11 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Continuing operations |
|
$ |
0.80 |
|
|
|
|
|
|
|
$ |
0.57 |
| |||
|
Discontinued operations |
|
(0.46 |
) |
|
|
|
|
|
|
(0.46 |
) | |||||
|
|
|
$ |
0.34 |
|
|
|
|
|
|
|
$ |
0.11 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Weighted-average shares |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Basic |
|
100.1 |
|
|
|
|
|
|
|
100.1 |
| |||||
|
Diluted |
|
100.8 |
|
|
|
|
|
|
|
100.8 |
| |||||
Wyndham Destinations, Inc. (formerly Wyndham Worldwide Corporation)
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Year Ended December 31, 2017
(In millions, except per share amounts)
|
|
|
Wyndham |
|
Wyndham Hotels |
|
Wyndham Hotels & |
|
Pro Forma adjustments |
|
Pro Forma |
| |||||
|
Net revenues |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Service and membership fees |
|
$ |
1,895 |
|
$ |
(277 |
) |
$ |
11 |
|
$ |
— |
|
$ |
1,629 |
|
|
Vacation ownership interest sales |
|
1,689 |
|
— |
|
— |
|
— |
|
1,689 |
| |||||
|
Franchise fees |
|
695 |
|
(798 |
) |
103 |
|
— |
|
— |
| |||||
|
Consumer financing |
|
463 |
|
— |
|
— |
|
— |
|
463 |
| |||||
|
Other |
|
334 |
|
(272 |
) |
(28 |
) |
9 |
|
43 |
| |||||
|
Net revenues |
|
5,076 |
|
(1,347 |
) |
86 |
|
9 |
|
3,824 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Operating |
|
2,194 |
|
(472 |
) |
(51 |
) |
— |
|
1,671 |
| |||||
|
Cost of vacation ownership interests |
|
150 |
|
— |
|
— |
|
— |
|
150 |
| |||||
|
Consumer financing interest |
|
74 |
|
— |
|
— |
|
— |
|
74 |
| |||||
|
Marketing and reservation |
|
773 |
|
(406 |
) |
159 |
|
32 |
|
558 |
| |||||
|
General and administrative |
|
648 |
|
(88 |
) |
7 |
|
— |
|
567 |
| |||||
|
Separation-related |
|
51 |
|
(3 |
) |
— |
|
(48 |
) |
— |
| |||||
|
Impairment |
|
246 |
|
(41 |
) |
— |
|
— |
|
205 |
| |||||
|
Restructuring |
|
15 |
|
(1 |
) |
— |
|
— |
|
14 |
| |||||
|
Depreciation and amortization |
|
213 |
|
(75 |
) |
(1 |
) |
(6 |
) |
131 |
| |||||
|
Total expenses |
|
4,364 |
|
(1,086 |
) |
114 |
|
(22 |
) |
3,370 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Operating income |
|
712 |
|
(261 |
) |
(28 |
) |
31 |
|
454 |
| |||||
|
Other income, net |
|
(27 |
) |
— |
|
— |
|
— |
|
(27 |
) | |||||
|
Interest expense |
|
156 |
|
(6 |
) |
— |
|
8 |
|
158 |
(d) | |||||
|
Interest income |
|
(7 |
) |
— |
|
— |
|
— |
|
(7 |
) | |||||
|
Income before income taxes |
|
590 |
|
(255 |
) |
(28 |
) |
23 |
|
330 |
| |||||
|
(Benefit)/provision for income taxes |
|
(229 |
) |
(12 |
) |
(11 |
) |
5 |
|
(247 |
) | |||||
|
Income from continuing operations |
|
819 |
|
(243 |
) |
(17 |
) |
18 |
|
577 |
| |||||
|
Income from discontinued operations, net of income taxes |
|
53 |
|
— |
|
— |
|
— |
|
53 |
| |||||
|
Net income |
|
872 |
|
(243 |
) |
(17 |
) |
18 |
|
630 |
| |||||
|
Net income attributable to non-controlling interest |
|
(1 |
) |
— |
|
— |
|
— |
|
(1 |
) | |||||
|
Net income attributable to Wyndham shareholders |
|
$ |
871 |
|
$ |
(243 |
) |
$ |
(17 |
) |
$ |
18 |
|
$ |
629 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Basic earnings per share |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Continuing operations |
|
$ |
7.94 |
|
|
|
|
|
|
|
$ |
5.59 |
| |||
|
Discontinued operations |
|
0.52 |
|
|
|
|
|
|
|
0.52 |
| |||||
|
|
|
$ |
8.46 |
|
|
|
|
|
|
|
$ |
6.11 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Continuing operations |
|
$ |
7.89 |
|
|
|
|
|
|
|
$ |
5.56 |
| |||
|
Discontinued operations |
|
0.51 |
|
|
|
|
|
|
|
0.51 |
| |||||
|
|
|
$ |
8.40 |
|
|
|
|
|
|
|
$ |
6.07 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Weighted-average shares |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Basic |
|
103.0 |
|
|
|
|
|
|
|
103.0 |
| |||||
|
Diluted |
|
103.7 |
|
|
|
|
|
|
|
103.7 |
| |||||
Wyndham Destinations, Inc. (formerly Wyndham Worldwide Corporation)
Unaudited Pro Forma Condensed Combined Statement of Income
For the Year Ended December 31, 2016
(In millions, except per share amounts)
|
|
|
Wyndham |
|
Wyndham |
|
Wyndham |
|
Pro Forma |
|
Pro Forma |
| |||||
|
Net revenues |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Service and membership fees |
|
$ |
1,879 |
|
$ |
(283 |
) |
$ |
8 |
|
$ |
— |
|
$ |
1,604 |
|
|
Vacation ownership interest sales |
|
1,606 |
|
— |
|
— |
|
— |
|
1,606 |
| |||||
|
Franchise fees |
|
677 |
|
(772 |
) |
95 |
|
— |
|
— |
| |||||
|
Consumer financing |
|
440 |
|
— |
|
— |
|
— |
|
440 |
| |||||
|
Other |
|
324 |
|
(257 |
) |
(23 |
) |
9 |
|
53 |
| |||||
|
Net revenues |
|
4,926 |
|
(1,312 |
) |
80 |
|
9 |
|
3,703 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Operating |
|
2,144 |
|
(459 |
) |
(48 |
) |
— |
|
1,637 |
| |||||
|
Cost of vacation ownership interests |
|
146 |
|
— |
|
— |
|
— |
|
146 |
| |||||
|
Consumer financing interest |
|
75 |
|
— |
|
— |
|
— |
|
75 |
| |||||
|
Marketing and reservation |
|
740 |
|
(407 |
) |
147 |
|
30 |
|
510 |
| |||||
|
General and administrative |
|
631 |
|
(83 |
) |
10 |
|
— |
|
558 |
| |||||
|
Restructuring |
|
14 |
|
(2 |
) |
— |
|
— |
|
12 |
| |||||
|
Depreciation and amortization |
|
202 |
|
(73 |
) |
(1 |
) |
(6 |
) |
122 |
| |||||
|
Total expenses |
|
3,952 |
|
(1,024 |
) |
108 |
|
24 |
|
3,060 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Operating income |
|
974 |
|
(288 |
) |
(28 |
) |
(15 |
) |
643 |
| |||||
|
Other income, net |
|
(21 |
) |
— |
|
— |
|
— |
|
(21 |
) | |||||
|
Interest expense |
|
133 |
|
(1 |
) |
— |
|
1 |
|
133 |
(d) | |||||
|
Early extinguishment of debt expense |
|
11 |
|
— |
|
— |
|
— |
|
11 |
| |||||
|
Interest income |
|
(7 |
) |
— |
|
— |
|
— |
|
(7 |
) | |||||
|
Income before income taxes |
|
858 |
|
(287 |
) |
(28 |
) |
(16 |
) |
527 |
| |||||
|
Provision/(benefit) for income taxes |
|
313 |
|
(115 |
) |
(7 |
) |
(6 |
) |
185 |
| |||||
|
Income from continuing operations |
|
545 |
|
(172 |
) |
(21 |
) |
(10 |
) |
342 |
| |||||
|
Income from discontinued operations, net of income taxes |
|
67 |
|
— |
|
— |
|
— |
|
67 |
| |||||
|
Net income |
|
612 |
|
(172 |
) |
(21 |
) |
(10 |
) |
409 |
| |||||
|
Net income attributable to non-controlling interest |
|
(1 |
) |
— |
|
— |
|
— |
|
(1 |
) | |||||
|
Net income attributable to Wyndham shareholders |
|
$ |
611 |
|
$ |
(172 |
) |
$ |
(21 |
) |
$ |
(10 |
) |
$ |
408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Basic earnings per share |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Continuing operations |
|
$ |
4.96 |
|
|
|
|
|
|
|
$ |
3.11 |
| |||
|
Discontinued operations |
|
0.60 |
|
|
|
|
|
|
|
0.60 |
| |||||
|
|
|
$ |
5.56 |
|
|
|
|
|
|
|
$ |
3.71 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Continuing operations |
|
$ |
4.93 |
|
|
|
|
|
|
|
$ |
3.09 |
| |||
|
Discontinued operations |
|
0.60 |
|
|
|
|
|
|
|
0.60 |
| |||||
|
|
|
$ |
5.53 |
|
|
|
|
|
|
|
$ |
3.69 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Weighted-average shares |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Basic |
|
109.9 |
|
|
|
|
|
|
|
109.9 |
| |||||
|
Diluted |
|
110.6 |
|
|
|
|
|
|
|
110.6 |
| |||||
Wyndham Destinations, Inc. (formerly Wyndham Worldwide Corporation)
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Year Ended December 31, 2015
(In millions, except per share amounts)
|
|
|
Wyndham |
|
Wyndham |
|
Wyndham |
|
Pro Forma |
|
Pro Forma |
| |||||
|
Net revenues |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Service and membership fees |
|
$ |
1,861 |
|
$ |
(284 |
) |
$ |
1 |
|
$ |
— |
|
$ |
1,578 |
|
|
Vacation ownership interest sales |
|
1,604 |
|
— |
|
— |
|
— |
|
1,604 |
| |||||
|
Franchise fees |
|
674 |
|
(770 |
) |
96 |
|
— |
|
— |
| |||||
|
Consumer financing |
|
427 |
|
— |
|
— |
|
— |
|
427 |
| |||||
|
Other |
|
312 |
|
(247 |
) |
(20 |
) |
9 |
|
54 |
| |||||
|
Net revenues |
|
4,878 |
|
(1,301 |
) |
77 |
|
9 |
|
3,663 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Operating |
|
2,096 |
|
(466 |
) |
(46 |
) |
— |
|
1,584 |
| |||||
|
Cost of vacation ownership interests |
|
165 |
|
— |
|
— |
|
— |
|
165 |
| |||||
|
Consumer financing interest |
|
74 |
|
— |
|
— |
|
— |
|
74 |
| |||||
|
Marketing and reservation |
|
723 |
|
(418 |
) |
147 |
|
30 |
|
482 |
| |||||
|
General and administrative |
|
685 |
|
(89 |
) |
8 |
|
— |
|
604 |
| |||||
|
Impairment |
|
7 |
|
(7 |
) |
— |
|
— |
|
— |
| |||||
|
Restructuring |
|
6 |
|
(4 |
) |
— |
|
— |
|
2 |
| |||||
|
Depreciation and amortization |
|
187 |
|
(67 |
) |
(1 |
) |
(6 |
) |
113 |
| |||||
|
Total expenses |
|
3,943 |
|
(1,051 |
) |
108 |
|
24 |
|
3,024 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Operating income |
|
935 |
|
(250 |
) |
(31 |
) |
(15 |
) |
639 |
| |||||
|
Other income, net |
|
(16 |
) |
— |
|
— |
|
— |
|
(16 |
) | |||||
|
Interest expense |
|
122 |
|
(1 |
) |
— |
|
(2 |
) |
119 |
(d) | |||||
|
Interest income |
|
(8 |
) |
— |
|
— |
|
— |
|
(8 |
) | |||||
|
Income before income taxes |
|
837 |
|
(249 |
) |
(31 |
) |
(13 |
) |
544 |
| |||||
|
Provision/(benefit) for income taxes |
|
285 |
|
(100 |
) |
(11 |
) |
(5 |
) |
169 |
| |||||
|
Income from continuing operations |
|
552 |
|
(149 |
) |
(20 |
) |
(8 |
) |
375 |
| |||||
|
Income from discontinued operations, net of income taxes |
|
60 |
|
— |
|
— |
|
— |
|
60 |
| |||||
|
Net income |
|
$ |
612 |
|
$ |
(149 |
) |
$ |
(20 |
) |
$ |
(8 |
) |
$ |
435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Basic earnings per share |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Continuing operations |
|
$ |
4.67 |
|
|
|
|
|
|
|
$ |
3.18 |
| |||
|
Discontinued operatins |
|
0.51 |
|
|
|
|
|
|
|
0.51 |
| |||||
|
|
|
$ |
5.18 |
|
|
|
|
|
|
|
$ |
3.69 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Continuing operations |
|
$ |
4.63 |
|
|
|
|
|
|
|
$ |
3.15 |
| |||
|
Discontinued operatins |
|
0.51 |
|
|
|
|
|
|
|
0.51 |
| |||||
|
|
|
$ |
5.14 |
|
|
|
|
|
|
|
$ |
3.66 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Weighted-average shares |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Basic |
|
118.0 |
|
|
|
|
|
|
|
118.0 |
| |||||
|
Diluted |
|
119.0 |
|
|
|
|
|
|
|
119.0 |
| |||||
Wyndham Destinations, Inc. (formerly Wyndham Worldwide Corporation)
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of March 31, 2018
(In millions, except per share amounts)
|
|
|
Wyndham |
|
Wyndham |
|
Wyndham Hotels |
|
Pro Forma |
|
Pro Forma |
| |||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Cash and cash equivalents |
|
$ |
291 |
|
$ |
(71 |
) |
$ |
6 |
|
$ |
— |
|
$ |
226 |
|
|
Trade receivables, net |
|
450 |
|
(205 |
) |
5 |
|
— |
|
250 |
| |||||
|
Vacation ownership contract receivables, net |
|
268 |
|
— |
|
— |
|
— |
|
268 |
| |||||
|
Inventory |
|
337 |
|
— |
|
— |
|
— |
|
337 |
| |||||
|
Prepaid expenses |
|
186 |
|
(40 |
) |
— |
|
— |
|
146 |
| |||||
|
Other current assets |
|
424 |
|
(63 |
) |
(8 |
) |
— |
|
353 |
| |||||
|
Assets held for sale |
|
1,726 |
|
— |
|
— |
|
— |
|
1,726 |
(d) | |||||
|
Total current assets |
|
3,682 |
|
(379 |
) |
3 |
|
— |
|
3,306 |
| |||||
|
Long-term vacation ownership contract receivables, net |
|
2,608 |
|
— |
|
— |
|
— |
|
2,608 |
| |||||
|
Non-current inventory |
|
888 |
|
— |
|
— |
|
— |
|
888 |
| |||||
|
Property and equipment, net |
|
1,112 |
|
(251 |
) |
(8 |
) |
(56 |
) |
797 |
| |||||
|
Goodwill |
|
1,330 |
|
(421 |
) |
7 |
|
— |
|
916 |
| |||||
|
Trademarks, net |
|
741 |
|
(692 |
) |
— |
|
— |
|
49 |
| |||||
|
Franchise agreements and other intangibles, net |
|
344 |
|
(246 |
) |
— |
|
— |
|
98 |
| |||||
|
Other non-current assets |
|
394 |
|
(173 |
) |
11 |
|
— |
|
232 |
| |||||
|
Total assets |
|
$ |
11,099 |
|
$ |
(2,162 |
) |
$ |
13 |
|
$ |
(56 |
) |
$ |
8,894 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Securitized vacation ownership debt |
|
$ |
198 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
198 |
|
|
Current portion of long-term debt |
|
91 |
|
(116 |
) |
15 |
|
97 |
|
87 |
| |||||
|
Accounts payable |
|
245 |
|
(36 |
) |
12 |
|
— |
|
221 |
| |||||
|
Deferred income |
|
566 |
|
(83 |
) |
— |
|
— |
|
483 |
| |||||
|
Accrued expenses and other current liabilities |
|
753 |
|
(192 |
) |
(38 |
) |
— |
|
523 |
| |||||
|
Liabilities held for sale |
|
1,246 |
|
— |
|
— |
|
— |
|
1,246 |
(d) | |||||
|
Total current liabilities |
|
3,099 |
|
(427 |
) |
(11 |
) |
97 |
|
2,758 |
| |||||
|
Long-term securitized vacation ownership debt |
|
1,779 |
|
— |
|
— |
|
— |
|
1,779 |
| |||||
|
Long-term debt |
|
4,193 |
|
(81 |
) |
— |
|
17 |
|
4,129 |
(d) | |||||
|
Deferred income taxes |
|
802 |
|
(175 |
) |
10 |
|
(3 |
) |
634 |
| |||||
|
Deferred income |
|
283 |
|
(159 |
) |
— |
|
— |
|
124 |
| |||||
|
Other non-current liabilities |
|
293 |
|
(47 |
) |
10 |
|
— |
|
256 |
| |||||
|
Total liabilities |
|
10,449 |
|
(889 |
) |
9 |
|
111 |
|
9,680 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Preferred stock, $.01 par value, authorized 6,000,000 shares, none issued and outstanding |
|
— |
|
— |
|
— |
|
— |
|
— |
| |||||
|
Common stock, $.01 par value, authorized 600,000,000 shares, issued 219,249,183 shares in 2018 and 218,796,817 shares in 2017 |
|
2 |
|
— |
|
— |
|
— |
|
2 |
| |||||
|
Treasury stock, at cost — 119,536,306 shares in 2018 and 118,887,441 shares in 2017 |
|
(5,795 |
) |
— |
|
— |
|
— |
|
(5,795 |
) | |||||
|
Additional paid-in capital |
|
3,986 |
|
— |
|
— |
|
— |
|
3,986 |
| |||||
|
Retained earnings |
|
2,449 |
|
(1,267 |
) |
4 |
|
(167 |
) |
1,019 |
| |||||
|
Accumulated other comprehensive (loss)/income |
|
3 |
|
(6 |
) |
— |
|
— |
|
(3 |
) | |||||
|
Total stockholders’ equity |
|
645 |
|
(1,273 |
) |
4 |
|
(167 |
) |
(791 |
) | |||||
|
Noncontrolling interest |
|
5 |
|
— |
|
— |
|
— |
|
5 |
| |||||
|
Total equity |
|
650 |
|
(1,273 |
) |
4 |
|
(167 |
) |
(786 |
) | |||||
|
Total liabilities and equity |
|
$ |
11,099 |
|
$ |
(2,162 |
) |
$ |
13 |
|
$ |
(56 |
) |
$ |
8,894 |
|
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated financial statements include the following pro forma adjustments:
(a) The sum of the amounts in the columns “Wyndham Hotels & Resorts Historical” and “Wyndham Hotels & Resorts Adjustments” reflects the discontinued operations of the Hotel Group. These amounts were previously included in the Company’s historical consolidated financial statements. These adjustments include reclassifications; intercompany segment revenues and expenses that no longer eliminate in consolidation; and certain corporate allocations which do not meet the requirement to be reported as discontinued operations. The “Wyndham Hotels & Resorts” column is intended to correspond to current and future financial information that is expected to be provided by Wyndham Hotels & Resorts, lnc.
(b) Reflects:
(i) additional revenue associated with a revenue share agreement from the Wyndham co-branded credit card, which the Company entered into with Wyndham Hotels upon completion of the spin-off, of approximately $2 million for the three-month period ended March 31, 2018 and approximately $9 million for each of the years 2017, 2016, and 2015;
(ii) an increase in fee expenses related to license, development, and noncompetition agreements, which the Company entered into with Wyndham Hotels upon completion of the spin-off, of approximately $8 million, $32 million, $32 million, and $30 million for the three-month period ended March 31, 2018 and the years 2017, 2016, and 2015, respectively;
(iii) the removal of separation costs related to the spin-off transaction of approximately $39 million and $48 million for the three-month period ended March 31, 2018 and the year 2017, respectively;
(iv) an adjustment to depreciation and amortization expense associated with the capital lease and leasehold assets described in Note (c) below of approximately $1 million for the three-month period ended March 31, 2018 and approximately $6 million for each of the years 2017, 2016, and 2015;
(v) the removal of interest expense associated with the capital lease described in Note (c) below of approximately $1 million for the three-month period ended March 31, 2018 and approximately $3 million for each of the years 2017, 2016, and 2015;
(vi) an increase in interest expense of approximately $3 million, $11 million, $4 million, and $1 million for the three-month period ended March 31, 2018, and the years 2017, 2016, and 2015, respectively, due to the downgrade of the Company’s debt to non-investment-grade for select tranches due to the spin-off transaction; and
(vii) the tax impact for the pro forma adjustments, using the Wyndham Worldwide effective income tax rate.
(c) Reflects (i) the $4 million current and $64 million non-current portions of a capital lease obligation associated with Wyndham Worldwide’s former headquarters office in Parsippany, New Jersey, which was assigned to Wyndham Hotels as the primary obligor; (ii) $56 million net of leasehold assets and $3 million of related deferred income taxes related to the former headquarters office, which was assigned to Wyndham Hotels; and (iii) the reclassification of $197 million of intercompany debt due to parent to additional paid-in capital.
(d) The pro forma statements do not reflect proceeds of approximately $1.3 billion received from the sale of the Company’s European vacation rentals business on May 9, 2018, which were used to pay down existing debt of $1.1 billion and pay approximately $200 million of transaction expenses and tax payments. Upon sale of the European vacation rentals business on May 9, 2018 and completion of the spin-off transaction, the Company has approximately $3 billion of total indebtedness, excluding securitized time-share debt. Interest expense related to the paid debt was approximately $8 million for the three-month period ended March 31, 2018 and approximately $33 million for each of the years 2017, 2016, and 2015.