EXHIBIT 99.1

 

Wyndham Worldwide Reports Second Quarter 2012 Earnings

Second Quarter Adjusted EPS Up 36% Year-Over-Year

Increases 2012 EPS Guidance

PARSIPPANY, N.J. (July 25, 2012) – Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended June 30, 2012.

Highlights:

 

•

Second quarter adjusted diluted earnings per share (EPS) was $0.87, compared with $0.64 in the second quarter of 2011, an increase of 36%. Second quarter 2012 reported diluted EPS was $0.88, an increase of 31% from the same period in 2011.

 

•

Second quarter Adjusted EBITDA increased 10% to $281 million.

 

•

During the quarter, the Company repurchased 3.8 million shares of its common stock for $190 million at an average price of $49.35.

 

•

The Company announced on July 19, 2012 that it completed a term securitization transaction involving the issuance of $300 million of investment-grade asset-backed notes at an advance rate of 90% and an overall weighted average coupon of 2.66%.

 

•

Raises full year Adjusted EPS Guidance to $3.10 - $3.20 from $3.00 - $3.15

“In the first half of 2012 we achieved back-to-back 36% increases in quarterly adjusted EPS growth in an economic environment that remains uncertain,” said Stephen P. Holmes, chairman and CEO, Wyndham Worldwide. “Underlying this growth is strong execution from each of our businesses and diversified product offerings well positioned to capitalize on consumers’ desire to travel. In addition, we benefited from capital allocation that included the return of capital to shareholders.”

SECOND QUARTER 2012 OPERATING RESULTS

Second quarter revenues were $1.1 billion, an increase of 4% from the prior year period. The increase reflected growth in our Lodging and Vacation Ownership businesses partially offset by unfavorable currency movements in our Vacation Exchange and Rentals business.

For the second quarter of 2012, adjusted net income was $128 million, or $0.87 per diluted share, compared with $108 million, or $0.64 per diluted share for the same period in 2011. The increase in adjusted net income primarily reflected stronger operating results in our Lodging and Vacation Ownership businesses. The increase in EPS also benefited from our share repurchase program, which decreased our weighted average share count by 14%.

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Reported net income for the second quarter of 2012 was $128 million, or $0.88 per diluted share, compared with net income of $114 million, or $0.67 per diluted share, for the second quarter of 2011. The second quarter of 2011 included a refund of value added taxes, restructuring costs and legacy adjustments costs.

Free cash flow was $567 million for the six months ended June 30, 2012, compared to $595 million for the same period in 2011. Excluding a $51 million refund of value added taxes received in the first half of 2011, free cash flow increased by 4%. The Company defines free cash flow as net cash provided by operating activities less capital expenditures, equity investments and development advances. For the six months ended June 30, 2012, cash provided by operating activities was $647 million, compared with $696 million in the prior year period, which included the refund of value added taxes.

BUSINESS UNIT RESULTS

Lodging (Wyndham Hotel Group)

Revenues were $233 million in the second quarter of 2012, an increase of 23%, compared with the second quarter of 2011. The increase reflected domestic RevPAR gains of 8%, as part of a total system RevPAR increase of 5%, revenues associated with the Wyndham Grand hotel in Orlando, which opened at the beginning of the fourth quarter of 2011, and higher intersegment licensing fees for use of the Wyndham brand trade name. The revenue increase also included a combined $21 million of reclassifications and incremental global conference fees, both of which were fully offset in expenses.

Adjusted EBITDA was $74 million, an increase of 12% compared with the second quarter of 2011, largely a result of the revenue increases, partially offset by the operating costs associated with the Wyndham Grand hotel in Orlando and higher marketing costs.

As of June 30, 2012, the Company’s hotel system consisted of over 7,170 properties and approximately 608,300 rooms. The development pipeline included approximately 900 hotels and 113,900 rooms, of which 53% were new construction and 53% were international.

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)

Revenues were $348 million in the second quarter of 2012, compared to $361 million in the second quarter of 2011. In constant currency and excluding the impact of acquisitions, revenues were flat.

Exchange revenues were $162 million, a decrease of 4% compared with the second quarter of 2011. In constant currency, exchange revenues were flat, as a 2% increase in exchange revenue per member was offset by a 2% decline in the average number of members due to the non-renewal of an affiliation agreement in the beginning of 2012.

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Vacation rental revenues were $170 million, a 6% decrease compared with the second quarter of 2011. Excluding the impact of foreign currency and acquisitions, vacation rental revenues were flat, reflecting a 4% increase in the average net price per vacation rental offset by a 3% decrease in transaction volume.

Adjusted EBITDA for the second quarter of 2012 was $82 million, flat compared with the prior-year period.

Vacation Ownership (Wyndham Vacation Ownership)

Revenues were $570 million in the second quarter of 2012, a 5% increase over the second quarter of 2011, primarily reflecting increased vacation ownership interest (VOI) sales.

Gross VOI sales were $460 million in the second quarter of 2012, up 12% from the second quarter of 2011, primarily reflecting a 6% increase in volume per guest and a 5% increase in tour flow.

Adjusted EBITDA for the second quarter of 2012 was $150 million, a 15% increase compared with the second quarter of 2011, primarily reflecting contributions from increased VOI sales.

Other Items

 

•

The Company repurchased 3.8 million shares of common stock for $190 million during the second quarter of 2012 at an average price of $49.35. From July 1 through July 24, 2012, the Company repurchased an additional 1.1 million shares for $58 million at an average price of $50.77. The Company has $733 million remaining on its current share repurchase authorization.

 

•

Net interest expense in the second quarter of 2012 was $30 million, compared to $34 million in the second quarter of 2011. The decline was primarily due to the absence of an accrual for interest on value added taxes in the second quarter of 2011 and a lower average cost of funds resulting from our debt tender and issuance activity during the first quarter of 2012.

Balance Sheet Information as of June 30, 2012:

 

•

Cash and cash equivalents of approximately $285 million, compared with $142 million at December 31, 2011

 

•

Vacation ownership contract receivables, net, of $2.8 billion, unchanged from December 31, 2011

 

•

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

 

•

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

 

•

Long-term debt of $2.3 billion, compared with $2.2 billion at December 31, 2011. The remaining borrowing capacity on the revolving credit facility was $908 million, compared with $771 million as of December 31, 2011

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

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Outlook

For the full year 2012, the Company:

 

•

Reiterates Revenues of approximately $4.425 – $4.6 billion

 

•

Updates Adjusted EBITDA guidance to $1.040 – $1.055 billion from $1.030 – $1.055 billion

 

•

Raises Adjusted EPS Guidance to $3.10 – $3.20 from $3.00 – $3.15

 

•

Reduces diluted shares to 147 million from 149 million

The guidance reflects assumptions used for internal planning purposes. Guidance may exclude non-recurring or special items, which may have a positive or negative impact on reported results. If economic conditions change materially from current levels, these assumptions and our guidance may change materially.

Conference Call Information

Wyndham Worldwide Corporation will hold a conference call with investors to discuss this news on Wednesday, July 25, 2012 at 8:30 a.m. EDT. Listeners may access the webcast live through the Company’s website at www.wyndhamworldwide.com/investors/. An archive of this webcast will be available at the website for approximately 90 days beginning at noon EDT on July 25, 2012. The conference call may also be accessed by dialing (800) 369-2052 and providing the passcode “WYNDHAM.” Listeners are urged to call at least 10 minutes prior to the scheduled start time. A telephone replay will be available for approximately 90 days beginning at noon EDT on July 25, 2012, at (800) 551-8154.

Presentation of Financial Information

Financial information discussed in this press release includes non-GAAP measures, which include or exclude certain items. These non-GAAP measures differ from reported GAAP results and are intended to illustrate what management believes are relevant period-over-period comparisons. A complete reconciliation of reported GAAP results to the comparable non-GAAP information appears in the financial tables section of the press release. It is not practicable to provide a reconciliation of forecasted adjusted EBITDA and EPS to the most directly comparable GAAP measure because certain items cannot be reasonably estimated or predicted at this time. Any such items could be significant to our reported results.

About Wyndham Worldwide Corporation

As one of the world’s largest hospitality companies, Wyndham Worldwide offers individual consumers and business-to-business customers a broad suite of hospitality products and services across various accommodation alternatives and price ranges through its premier portfolio of world-renowned brands. Wyndham Hotel Group encompasses over 7,170 hotels with approximately 608,300 rooms worldwide. Wyndham Exchange & Rentals offers leisure travelers, including its 3.7 million members, access to approximately 100,000 vacation properties located in approximately 100 countries. Wyndham Vacation Ownership develops, markets and sells vacation ownership interests and provides consumer financing to owners through its network of over 160 vacation ownership resorts serving over 813,000 owners

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throughout North America, the Caribbean and the South Pacific. Wyndham Worldwide, headquartered in Parsippany, N.J., employs approximately 27,800 employees globally.

For more information about Wyndham Worldwide, please visit www.wyndhamworldwide.com.

Forward-Looking Statements

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

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Factors that could cause actual results to differ materially from those in the forward-looking statements include general economic conditions, the performance of the financial and credit markets, the economic environment for the hospitality industry, the impact of war, terrorist activity or political strife, operating risks associated with the hotel, vacation exchange and rentals and vacation ownership businesses, as well as those described in the Company’s Quarterly Report on Form 10-Q, filed with the SEC on April 25, 2012. Except for the Company’s ongoing obligations to disclose material information under the federal securities laws, it undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

# # #

Investor and Media contact:

Margo C. Happer

Senior Vice President, Investor Relations

Wyndham Worldwide Corporation

(973) 753-6472

margo.happer@wyn.com

Barry Goldschmidt

Vice President, Investor Relations

Wyndham Worldwide Corporation

(973) 753-7703

barry.goldschmidt@wyn.com

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Table 1

(1 of 2)

Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)

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

The following tables summarize net revenues and EBITDA for reportable segments, as well as reconcile EBITDA to net income attributable to Wyndham for the Three Months Ended June 30, 2012 and 2011:

 

		Three Months Ended June 30,
		2012								2011
		Net Revenues				EBITDA				Net Revenues				EBITDA
Lodging		$	233			$	75	(b)		$	190			$	66
Vacation Exchange and Rentals			348				82				361				106	(c)
Vacation Ownership			570				150				541				130
Total Reportable Segments			1,151				307				1,092				302
Corporate and Other (a)			(12	)			(25	)			(2	)			(26	)(d)
Total Company		$	1,139			$	282			$	1,090			$	276
Reconciliation of EBITDA to Net Income Attributable to Wyndham
EBITDA						$	282							$	276
Depreciation and amortization							46								45
Interest expense							32								36	(e)
Early extinguishment of debt							—								1	(f)
Interest income							(2	)							(2	)
Income before income taxes							206								196
Provision for income taxes							78								82
Net income							128								114
Net loss attributable to noncontrolling interest							—								—
Net income attributable to Wyndham						$	128							$	114

 

(a)	Includes the elimination of transactions between segments.

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

(c)	Includes (i) a $31 million net benefit resulting from a refund of value added taxes and (ii) $7 million of restructuring costs incurred in connection with a strategic initiative commenced by the Company during 2010.

(d)	Includes $3 million of a net expense during the three months ended June 30, 2011 related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.

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

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

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

 

		Three Months Ended June 30,
		2012								2011
		Net Revenues				Adjusted EBITDA				Net Revenues				Adjusted EBITDA
Lodging		$	233			$	74			$	190			$	66
Vacation Exchange and Rentals			348				82				361				82
Vacation Ownership			570				150				541				130
Total Reportable Segments			1,151				306				1,092				278
Corporate and Other			(12	)			(25	)			(2	)			(23	)
Total Company		$	1,139			$	281			$	1,090			$	255

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Table 1

(2 of 2)

Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)

The following tables summarize net revenues and EBITDA for reportable segments, as well as reconcile EBITDA to net income attributable to Wyndham for the Six Months Ended June 30, 2012 and 2011:

 

		Six Months Ended June 30,
		2012								2011
		Net Revenues				EBITDA				Net Revenues				EBITDA
Lodging		$	418			$	123	(b)		$	339			$	92	(f)
Vacation Exchange and Rentals			709				177	(c)			716				199	(g)
Vacation Ownership			1,071				253				992				227	(h)
Total Reportable Segments			2,198				553				2,047				518
Corporate and Other (a)			(23	)			(46	)(d)			(6	)			(38	)(d)
Total Company		$	2,175			$	507			$	2,041			$	480
Reconciliation of EBITDA to Net Income Attributable to Wyndham
EBITDA						$	507							$	480
Depreciation and amortization							91								90
Interest expense							65								69	(i)
Early extinguishment of debt							106	(e)							12	(j)
Interest income							(5	)							(3	)
Income before income taxes							250								312
Provision for income taxes							91								126
Net income							159								186
Net loss attributable to noncontrolling interest							1								—
Net income attributable to Wyndham						$	160							$	186

 

(a)	Includes the elimination of transactions between segments.

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

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

(d)	Includes $4 million and $8 million of a net benefit during the six months ended June 30, 2012 and 2011, respectively, related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.

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

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

(g)	Includes (i) a $31 million net benefit resulting from a refund of value added taxes and (ii) $7 million of restructuring costs incurred in connection with a strategic initiative commenced by the Company during 2010.

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

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

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

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

 

		Six Months Ended June 30,
		2012								2011
		Net Revenues				Adjusted EBITDA				Net Revenues				Adjusted EBITDA
Lodging		$	418			$	122			$	339			$	105
Vacation Exchange and Rentals			709				175				716				175
Vacation Ownership			1,071				253				992				226
Total Reportable Segments			2,198				550				2,047				506
Corporate and Other			(23	)			(50	)			(6	)			(46	)
Total Company		$	2,175			$	500			$	2,041			$	460

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Table 2

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2012				2011				2012				2011
Net revenues
Service and membership fees		$	489			$	499			$	993			$	995
Vacation ownership interest sales			342				313				613				535
Franchise fees			163				134				281				235
Consumer financing			102				103				205				206
Other			43				41				83				70
Net revenues			1,139				1,090				2,175				2,041
Expenses
Operating			451				458				895				868
Cost of vacation ownership interests			42				48				70				79
Consumer financing interest			23				23				46				46
Marketing and reservation			190				153				356				290
General and administrative (a)			156				126	(c)			310				266	(c)
Asset impairments			—				—				—				13	(e)
Restructuring			—				7	(d)			—				6	(d)
Depreciation and amortization			46				45				91				90
Total expenses			908				860				1,768				1,658
Operating income			231				230				407				383
Other income, net			(5	)(b)			(1	)			(9	)(b) (f)			(7	)(g)
Interest expense			32				36	(h)			65				69
Early extinguishment of debt			—				1	(i)			106	(j)			12	(i)
Interest income			(2	)			(2	)			(5	)			(3	)
Income before income taxes			206				196				250				312
Provision for income taxes			78				82				91				126
Net income			128				114				159				186
Net loss attributable to noncontrolling interest			—				—				1				—
Net income attributable to Wyndham		$	128			$	114			$	160			$	186
Earnings per share
Basic		$	0.89			$	0.68			$	1.10			$	1.10
Diluted			0.88				0.67				1.08				1.07
Weighted average shares outstanding
Basic			144				167				145				170
Diluted			147				170				148				174

 

(a)

Includes $3 million of a net expense during the three months ended June 30, 2011 and $4 million and $4 million of a net benefit during the six months ended June 30, 2012 and 2011, respectively, related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.

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

(c)	Includes a $31 million net benefit resulting from a refund of value added taxes at the Company’s vacation exchange and rentals business.

(d)

The three and six months ended June 30, 2011 include $7 million of costs incurred as a result of a strategic initiative commenced by the Company during 2010. The six months ended June 30, 2011 also includes a $1 million benefit for the reversal of costs incurred as a result of various strategic initiatives commenced by the Company during 2008.

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

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

(g)	Includes $4 million of a gain related to the redemption of a preferred stock investment allocated to the Company in connection with our separation from Cendant.

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

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

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

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Table 3

(1 of 3)

Wyndham Worldwide Corporation

OPERATING STATISTICS

 

		Year				Q1				Q2				Q3				Q4				Full Year
Lodging (a)
Number of Rooms			2012				609,300				608,300				N/A				N/A				N/A
			2011				609,600				612,900				611,200				613,100				N/A
			2010				593,300				606,800				605,700				612,700				N/A
			2009				588,500				590,200				590,900				597,700				N/A
RevPAR			2012			$	29.73			$	37.23				N/A				N/A				N/A
			2011			$	27.71			$	35.38			$	39.49			$	30.65			$	33.34
			2010			$	25.81			$	32.25			$	37.14			$	29.18			$	31.14
			2009			$	27.69			$	32.38			$	34.81			$	26.47			$	30.34
Vacation Exchange and Rentals
Average Number of Members (in 000s)			2012				3,684				3,670				N/A				N/A				N/A
			2011				3,766				3,755				3,744				3,734				3,750
			2010				3,746				3,741				3,766				3,759				3,753
			2009				3,789				3,795				3,781				3,765				3,782
Exchange Revenue Per Member			2012			$	204.56			$	177.07				N/A				N/A				N/A
			2011			$	205.64			$	178.46			$	172.38			$	161.68			$	179.59
			2010			$	201.93			$	172.20			$	173.44			$	162.59			$	177.53
			2009			$	194.83			$	174.22			$	173.90			$	163.89			$	176.73
Vacation Rental Transactions (in 000s) (b)			2012				418				325				N/A				N/A				N/A
			2011				398				328				370				250				1,347
			2010				291				297				322				253				1,163
			2009				273				231				264				196				964
Average Net Price Per Vacation Rental (b)			2012			$	379.40			$	524.40				N/A				N/A				N/A
			2011			$	377.71			$	549.09			$	701.81			$	497.04			$	530.78
			2010			$	361.17			$	387.01			$	500.31			$	449.12			$	425.38
			2009			$	353.15			$	471.74			$	594.34			$	499.66			$	477.38
Vacation Ownership
Gross Vacation Ownership Interest (VOI) Sales (in 000s) (c)			2012			$	384,000			$	460,000				N/A				N/A				N/A
			2011			$	319,000			$	412,000			$	455,000			$	409,000			$	1,595,000
			2010			$	308,000			$	371,000			$	412,000			$	373,000			$	1,464,000
			2009			$	280,000			$	327,000			$	366,000			$	343,000			$	1,315,000
Tours (d)			2012				148,000				186,000				N/A				N/A				N/A
			2011				137,000				177,000				197,000				173,000				685,000
			2010				123,000				163,000				187,000				160,000				634,000
			2009				137,000				164,000				173,000				142,000				617,000
Volume Per Guest (VPG) (d)			2012			$	2,414			$	2,361				N/A				N/A				N/A
			2011			$	2,192			$	2,227			$	2,197			$	2,296			$	2,229
			2010			$	2,334			$	2,156			$	2,081			$	2,214			$	2,183
			2009			$	1,866			$	1,854			$	1,944			$	2,210			$	1,964

 

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

(a)	Includes the impact of the acquisition of the Tryp hotel brand (June 2010) from the acquisition date forward. Therefore, the operating statistics are not presented on a comparable basis.

(b)	Includes the impact of the acquisitions of Hoseasons (March 2010), ResortQuest (September 2010), James Villa Holidays (November 2010) and two tuck-in acquisitions (third quarter 2011) from the acquisition dates forward. Therefore, the operating statistics are not presented on a comparable basis.

(c)	Includes gross VOI sales under the Company’s Wyndham Asset Affiliate Model (WAAM) 1.0 beginning in the first quarter of 2010 and WAAM 2.0 beginning in the second quarter of 2012 (see Table 9 for a reconciliation of gross VOI sales to vacation ownership interest sales).

(d)	Includes the impact of WAAM 1.0 related tours beginning in the first quarter of 2010 and WAAM 2.0 related tours beginning in the second quarter of 2012.

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Table 3

(2 of 3)

Wyndham Worldwide Corporation

ADDITIONAL DATA

 

		Year				Q1				Q2				Q3				Q4				Full Year
Lodging (a)
Number of Properties			2012				7,150				7,170				N/A				N/A				N/A
			2011				7,190				7,220				7,190				7,210				N/A
			2010				7,090				7,160				7,150				7,210				N/A
			2009				6,990				7,020				7,040				7,110				N/A
Vacation Ownership
Provision for Loan Losses (in 000s) (b)			2012			$	96,000			$	100,000				N/A				N/A				N/A
			2011			$	79,000			$	80,000			$	96,000			$	83,000			$	339,000
			2010			$	86,000			$	87,000			$	85,000			$	82,000			$	340,000
			2009			$	107,000			$	122,000			$	117,000			$	103,000			$	449,000
Sales under WAAM 1.0 (in 000s) (c)			2012			$	17,000			$	18,000				N/A				N/A				N/A
			2011			$	18,000			$	19,000			$	38,000			$	31,000			$	106,000
			2010			$	5,000			$	13,000			$	20,000			$	14,000			$	51,000
WAAM 1.0 Commission Revenues (in 000s)			2012			$	12,000			$	11,000				N/A				N/A				N/A
			2011			$	10,000			$	11,000			$	23,000			$	21,000			$	65,000
			2010			$	3,000			$	8,000			$	12,000			$	9,000			$	31,000
Sales under WAAM 2.0 (in 000s) (d)			2012			$	—			$	12,000				N/A				N/A				N/A

 

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

(a)	Includes the impact of the acquisition of Tryp hotel brand (June 2010) from the acquisition date forward. Therefore, the operating statistics are not presented on a comparable basis.

(b)	Represents provision for estimated losses on vacation ownership contract receivables originated during the period, which is recorded as a contra revenue to vacation ownership interest sales on the Consolidated Statements of Income.

(c)

Represents gross VOI sales under the Company’s WAAM 1.0 for which the Company earns commission revenue (WAAM 1.0 Commission Revenues). The commission revenue earned on these sales is included in service fees and membership revenues on the Consolidated Statements of Income. The Company implemented this sales model during the first quarter of 2010 and, as such, there is no historical data prior to 2010.

(d)

Represents gross VOI sales under the Company’s WAAM 2.0 which enables the Company to acquire and own completed timeshare units close to the timing of the sales of such units. This significantly reduces the period between the deployment of capital to acquire inventory and the subsequent return on investment which occurs at the time of its sale to a timeshare purchaser. The Company implemented this sales model during the second quarter of 2012 and as such, there is no historical data prior to 2012.

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Table 3

(3 of 3)

Wyndham Worldwide Corporation

OPERATING STATISTICS

GLOSSARY OF TERMS

Lodging

Number of Rooms: Represents the number of rooms at lodging properties at the end of the period which are either (i) under franchise and/or management agreements, or company owned, (ii) properties under affiliation agreements for which we receive a fee for reservation and/or other services provided and (iii) properties managed under a joint venture.

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

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

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

Vacation Exchange and Rentals

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

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

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

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

Vacation Ownership

Gross Vacation Ownership Interest Sales: Represents sales of vacation ownership interest (VOIs), including Wyndham Asset Affiliation Model sales, before the net effect of percentage-of-completion accounting and loan loss provisions. See Table 9 for a reconciliation of Gross VOI sales to Vacation Ownership Interest Sales. We believe that Gross VOI sales provides an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period.

Tours: Represents the number of tours taken by guests in our efforts to sell vacation ownership interests.

Volume per Guest (VPG): Represents gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) divided by the number of tours. We have excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel. See Table 9 for a detail of tele-sales upgrades for 2009-2012. We believe that VPG provides an enhanced understanding of the performance of our vacation ownership business because it directly measures the efficiency of this business’ tour selling efforts during a given reporting period.

General

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

---

Table 4

Wyndham Worldwide Corporation

REVENUE DETAIL BY REPORTABLE SEGMENT

(In millions)

 

		2012																						2011
		Q1				Q2				Q3				Q4				Year						Q1				Q2				Q3				Q4				Year
Lodging
Royalties and Franchise Fees		$	62			$	80				N/A				N/A				N/A					$	58			$	75			$	85			$	66			$	284
Marketing, Reservation and Wyndham Rewards Revenues (a)			68				99				N/A				N/A				N/A						54				75				94				76				299
Hotel Management Reimbursable Revenues (b)			21				22				N/A				N/A				N/A						19				19				21				20				79
Inter-segment Trademark Fees (c)			8				9				N/A				N/A				N/A						1				2				3				4				10
Owned Hotel Revenues			8				8				N/A				N/A				N/A						—				—				—				5				5
Ancillary Revenues (d)			18				15				N/A				N/A				N/A						17				19				19				17				72
Total Lodging			185				233				N/A				N/A				N/A						149				190				222				188				749
Vacation Exchange and Rentals
Exchange Revenues			188				162				N/A				N/A				N/A						194				168				161				150				673
Rental Revenues			159				170				N/A				N/A				N/A						150				180				260				125				715
Ancillary Revenues (e)			14				16				N/A				N/A				N/A						12				13				15				16				56
Total Vacation Exchange and Rentals			361				348				N/A				N/A				N/A						356				361				436				291				1,444
Vacation Ownership
Vacation Ownership Interest Sales			271				342				N/A				N/A				N/A						222				313				320				295				1,150
Consumer Financing			103				102				N/A				N/A				N/A						102				103				105				105				415
Property Management Fees			110				108				N/A				N/A				N/A						110				108				105				101				424
WAAM 1.0 Commissions			12				11				N/A				N/A				N/A						10				11				23				21				65
Ancillary Revenues (f)			5				7				N/A				N/A				N/A						6				6				6				5				23
Total Vacation Ownership			501				570				N/A				N/A				N/A						450				541				559				527				2,077
Total Reportable Segments		$	1,047			$	1,151				N/A				N/A				N/A					$	955			$	1,092			$	1,217			$	1,006			$	4,270
		2010																						2009
		Q1				Q2				Q3				Q4				Year						Q1				Q2				Q3				Q4				Year
Lodging
Royalties and Franchise Fees		$	52			$	69			$	82			$	62			$	265					$	57			$	68			$	72			$	57			$	254
Marketing, Reservation and Wyndham Rewards Revenues (a)			50				65				76				60				251						54				66				73				53				246
Hotel Management Reimbursable Revenues (b)			21				20				18				18				77						22				23				21				19				85
Ancillary Revenues (d)			21				24				27				23				95						21				17				17				20				75
Total Lodging			144				178				203				163				688						154				174				183				149				660
Vacation Exchange and Rentals
Exchange Revenues			189				161				163				153				666						185				165				164				154				668
Rental Revenues			105				115				161				114				495						96				109				157				98				460
Ancillary Revenues (e)			6				5				6				15				32						6				6				6				6				24
Total Vacation Exchange and Rentals			300				281				330				282				1,193						287				280				327				258				1,152
Vacation Ownership
Vacation Ownership Interest Sales			217				271				308				276				1,072						239				242				285				287				1,053
Consumer Financing			105				106				107				107				425						109				109				108				109				435
Property Management Fees			100				100				104				101				405						91				94				96				95				376
WAAM 1.0 Commissions (g)			3				8				12				8				31						—				—				—				—				—
Ancillary Revenues (f)			19				20				2				5				46						23				22				19				17				81
Total Vacation Ownership			444				505				533				497				1,979						462				467				508				508				1,945
Total Reportable Segments		$	888			$	964			$	1,066			$	942			$	3,860					$	903			$	921			$	1,018			$	915			$	3,757

 

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

(a)

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

(b)	Primarily represents payroll costs in our hotel management business that we pay on behalf of property owners and for which we are reimbursed by the property owners.

(c)	During 2011, $3 million, $1 million and $2 million of inter-segment trademark fees were recorded as a reduction of expenses in Q1, Q2 and Q3, respectively. As such, total inter-segment trademark fees for 2011 were $16 million.

(d)	Primarily includes additional services provided to franchisees.

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

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

(g)	The Company implemented the WAAM 1.0 sales model during the first quarter of 2010 and, as such, there is no historical data for 2009.

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Table 5

Wyndham Worldwide Corporation

SCHEDULE OF DEBT

(In millions)

 

		June 30, 2012				March 31, 2012				December 31, 2011				September 30, 2011				June 30, 2011
Securitized vacation ownership debt (a)
Term notes		$	1,634			$	1,896			$	1,625			$	1,512			$	1,446
Bank conduit facility (b)			220				104				237				218				242
Securitized vacation ownership debt (c)			1,854				2,000				1,862				1,730				1,688
Less: Current portion of securitized vacation ownership debt			191				206				196				179				190
Long-term securitized vacation ownership debt		$	1,663			$	1,794			$	1,666			$	1,551			$	1,498
Debt:
Revolving credit facility (due July 2016) (d)		$	81			$	47			$	218			$	169			$	107
3.50% convertible notes (due May 2012) (e)			—				44				36				27				32
9.875% senior unsecured notes (due May 2014) (f)			42				42				243				243				242
6.00% senior unsecured notes (due December 2016) (g)			362				362				811				812				803
2.95% senior unsecured notes (due March 2017) (h)			298				298				—				—				—
5.75% senior unsecured notes (due February 2018) (i)			248				247				247				247				247
7.375% senior unsecured notes (due March 2020) (j)			248				248				247				247				247
5.625% senior unsecured notes (due March 2021) (k)			245				245				245				245				245
4.25% senior unsecured notes (due March 2022) (l)			644				643				—				—				—
Vacation rentals capital leases			95				103				102				108				120
Other			3				1				4				1				1
Total debt			2,266				2,280				2,153				2,099				2,044
Less: Current portion of debt			11				54				46				37				43
Long-term debt		$	2,255			$	2,226			$	2,107			$	2,062			$	2,001

 

(a)

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

(b)	Represents a non-recourse vacation ownership bank conduit facility with a term through June 2013 and borrowing capacity of $600 million. As of June 30, 2012, this facility had remaining borrowing capacity of $380 million.

(c)	This debt is collateralized by $2,490 million, $2,622 million, $2,638 million, $2,502 million and $2,672 million of underlying vacation ownership contract receivables and related assets as of June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively.

(d)	Represents a $1.0 billion revolving credit facility that expires on July 15, 2016. As of June 30, 2012, the Company had $11 million of outstanding letters of credit and a remaining borrowing capacity of $908 million.

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

(f)	Represents senior unsecured notes issued by the Company during May 2009. The balance as of June 30, 2012 represents $43 million aggregate principal less $1 million of unamortized discount.

(g)	Represents senior unsecured notes issued by the Company during December 2006. The balance as of June 30, 2012 represents $357 million aggregate principal less $1 million of unamortized discount, plus $6 million of unamortized gains from the settlement of a derivative.

(h)	Represents senior unsecured notes issued by the Company during March 2012. The balance as of June 30, 2012 represents $300 million aggregate principal less $2 million of unamortized discount.

(i)	Represents senior unsecured notes issued by the Company during September 2010. The balance as of June 30, 2012 represents $250 million aggregate principal less $2 million of unamortized discount.

(j)	Represents senior unsecured notes issued by the Company during February 2010. The balance as of June 30, 2012 represents $250 million aggregate principal less $2 million of unamortized discount.

(k)	Represents senior unsecured notes issued by the Company during March 2011. The balance as of June 30, 2012 represents $250 million aggregate principal less $5 million of unamortized discount.

(l)	Represents senior unsecured notes issued by the Company during March 2012. The balance as of June 30, 2012 represents $650 million aggregate principal less $6 million of unamortized discount.

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Table 6

(1 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

 

		As of and For the Three Months Ended June 30, 2012
Brand		Number of Properties				Number of Rooms				Average Occupancy Rate				Average Daily Rate (ADR)				Average Revenue Per Available Room (RevPAR)
Lodging
Wyndham Hotels and Resorts			101				25,360				63.2	%		$	111.54			$	70.48
TRYP by Wyndham			89				12,824				66.9	%		$	102.26			$	68.37
Wingate by Wyndham			161				14,796				65.6	%		$	84.70			$	55.60
Hawthorn Suites by Wyndham			77				7,355				65.3	%		$	75.89			$	49.56
Ramada			841				113,275				55.5	%		$	79.17			$	43.93
Baymont			257				21,655				55.0	%		$	64.24			$	35.36
Days Inn			1,825				146,261				51.4	%		$	63.92			$	32.86
Super 8			2,275				144,570				57.8	%		$	53.07			$	30.65
Howard Johnson			445				44,441				49.4	%		$	62.32			$	30.79
Travelodge			433				32,159				50.7	%		$	66.41			$	33.66
Microtel Inns & Suites by Wyndham			308				21,967				58.0	%		$	62.40			$	36.18
Knights Inn			353				22,255				42.5	%		$	43.11			$	18.30
Dream			5				990				73.1	%		$	221.34			$	161.88
Night			2				422				86.6	%		$	210.05			$	181.94
Total Lodging			7,172				608,330				54.9	%		$	67.81			$	37.23
Vacation Ownership
Wyndham Vacation Ownership resorts			165				20,938				N/A				N/A				N/A
Total Wyndham Worldwide			7,337				629,268
		As of and For the Three Months Ended June 30, 2011
Brand		Number of Properties				Number of Rooms				Average Occupancy Rate				Average Daily Rate (ADR)				Average Revenue Per Available Room (RevPAR)
Lodging
Wyndham Hotels and Resorts			98				26,488				62.7	%		$	109.96			$	68.98
TRYP by Wyndham			94				13,659				66.6	%		$	103.39			$	68.88
Wingate by Wyndham			166				15,234				62.8	%		$	82.01			$	51.51
Hawthorn Suites by Wyndham			74				7,054				63.8	%		$	75.96			$	48.49
Ramada			884				117,365				53.9	%		$	75.47			$	40.70
Baymont			255				21,381				51.2	%		$	62.66			$	32.08
Days Inn			1,865				149,032				50.2	%		$	61.60			$	30.92
Super 8			2,214				139,196				54.6	%		$	54.95			$	30.01
Howard Johnson			462				46,291				49.1	%		$	61.11			$	30.00
Travelodge			434				32,364				49.0	%		$	65.77			$	32.23
Microtel Inns & Suites by Wyndham			317				22,579				55.9	%		$	58.85			$	32.88
Knights Inn			347				21,221				40.1	%		$	42.71			$	17.14
Dream			5				990				71.6	%		$	173.17			$	124.00
Night			1				72				92.8	%		$	228.31			$	211.96
Total Lodging			7,216				612,926				53.0	%		$	66.73			$	35.38
Vacation Ownership
Wyndham Vacation Ownership resorts			162				20,760				N/A				N/A				N/A
Total Wyndham Worldwide			7,378				633,686

 

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

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Table 6

(2 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

 

		As of and For the Six Months Ended June 30, 2012
Brand		Number of Properties				Number of Rooms				Average Occupancy Rate				Average Daily Rate (ADR)				Average Revenue Per Available Room (RevPAR)
Lodging
Wyndham Hotels and Resorts			101				25,360				59.4	%		$	111.30			$	66.15
TRYP by Wyndham			89				12,824				59.0	%		$	99.57			$	58.73
Wingate by Wyndham			161				14,796				61.6	%		$	82.60			$	50.91
Hawthorn Suites by Wyndham			77				7,355				62.4	%		$	74.93			$	46.74
Ramada			841				113,275				51.6	%		$	77.70			$	40.06
Baymont			257				21,655				49.9	%		$	62.54			$	31.18
Days Inn			1,825				146,261				46.9	%		$	61.67			$	28.95
Super 8			2,275				144,570				52.5	%		$	51.94			$	27.28
Howard Johnson			445				44,441				46.8	%		$	60.72			$	28.42
Travelodge			433				32,159				46.7	%		$	64.10			$	29.95
Microtel Inns & Suites by Wyndham			308				21,967				53.5	%		$	60.54			$	32.41
Knights Inn			353				22,255				39.5	%		$	41.79			$	16.51
Dream			5				990				74.1	%		$	207.74			$	154.04
Night			2				422				87.4	%		$	208.83			$	182.48
Total Lodging			7,172				608,330				50.5	%		$	66.25			$	33.47
Vacation Ownership
Wyndham Vacation Ownership resorts			165				20,938				N/A				N/A				N/A
Total Wyndham Worldwide			7,337				629,268
		As of and For the Six Months Ended June 30, 2011
Brand		Number of Properties				Number of Rooms				Average Occupancy Rate				Average Daily Rate (ADR)				Average Revenue Per Available Room (RevPAR)
Lodging
Wyndham Hotels and Resorts			98				26,488				58.1	%		$	108.43			$	63.01
TRYP by Wyndham			94				13,659				57.5	%		$	106.68			$	61.36
Wingate by Wyndham			166				15,234				59.3	%		$	80.29			$	47.63
Hawthorn Suites by Wyndham			74				7,054				60.7	%		$	75.14			$	45.63
Ramada			884				117,365				49.7	%		$	74.51			$	37.01
Baymont			255				21,381				46.2	%		$	61.04			$	28.20
Days Inn			1,865				149,032				45.4	%		$	60.08			$	27.27
Super 8			2,214				139,196				49.3	%		$	53.39			$	26.31
Howard Johnson			462				46,291				45.1	%		$	59.36			$	26.77
Travelodge			434				32,364				44.9	%		$	63.04			$	28.32
Microtel Inns & Suites by Wyndham			317				22,579				51.1	%		$	57.13			$	29.19
Knights Inn			347				21,221				37.0	%		$	41.84			$	15.47
Dream			5				990				71.9	%		$	174.20			$	125.27
Night			1				72				93.1	%		$	246.94			$	229.87
Total Lodging			7,216				612,926				48.3	%		$	65.35			$	31.57
Vacation Ownership
Wyndham Vacation Ownership resorts			162				20,760				N/A				N/A				N/A
Total Wyndham Worldwide			7,378				633,686

 

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

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Table 7

(1 of 2)

Wyndham Worldwide

NON-GAAP RECONCILIATION

(In millions)

 

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

 

(a)	Includes the elimination of transactions between segments.

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

(c)	Relates to 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.

---

Table 7

(2 of 2)

Wyndham Worldwide

NON-GAAP RECONCILIATION

(In millions)

 

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

 

(a)	Includes the elimination of transactions between segments.

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

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

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

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

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

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

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

---

Table 8

(1 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

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

 

Note: EPS amounts may not add due to rounding.

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

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

---

Table 8

(2 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

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

 

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

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

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

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

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

---

Table 8

(3 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

		Three Months Ended June 30, 2011
		As Reported				Early Extinguishment of Debt				Legacy Adjustments				Restructuring Costs				VAT Adjustments				As Adjusted
Net revenues
Service fees and membership		$	499																			$	499
Vacation ownership interest sales			313																				313
Franchise fees			134																				134
Consumer financing			103																				103
Other			41																				41
Net revenues			1,090				—				—				—				—				1,090
Expenses
Operating			458																				458
Cost of vacation ownership interests			48																				48
Consumer financing interest			23																				23
Marketing and reservation			153																				153
General and administrative			126								(3	)(b)							31	(d)			154
Restructuring			7												(7	)(c)							—
Depreciation and amortization			45																				45
Total expenses			860				—				(3	)			(7	)			31				881
Operating income			230				—				3				7				(31	)			209
Other income, net			(1	)																			(1	)
Interest expense			36																(3	)(e)			33
Early extinguishment of debt			1				(1	)(a)															—
Interest income			(2	)																			(2	)
Income before income taxes			196				1				3				7				(28	)			179
Provision for income taxes			82				1	(f)			1	(f)			2	(f)			(15	)(f)			71
Net income attributable to Wyndham		$	114			$	—			$	2			$	5			$	(13	)		$	108
Earnings per share
Basic		$	0.68			$	—			$	0.01			$	0.03			$	(0.08	)		$	0.65
Diluted			0.67				—				0.01				0.03				(0.08	)			0.64
Weighted average shares outstanding
Basic			167				167				167				167				167				167
Diluted			170				170				170				170				170				170

 

Note: EPS amounts may not add due to rounding.

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

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

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

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

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

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

---

Table 8

(4 of 4)

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

		Six Months Ended June 30, 2011
		As Reported				Early Extinguishment of Debt				Legacy Adjustments				Asset Impairment				Restructuring Costs				VAT Adjustments				As Adjusted
Net revenues
Service fees and membership		$	995																							$	995
Vacation ownership interest sales			535																								535
Franchise fees			235																								235
Consumer financing			206																								206
Other			70																								70
Net revenues			2,041				—				—				—				—				—				2,041
Expenses
Operating			868																								868
Cost of vacation ownership interests			79																								79
Consumer financing interest			46																								46
Marketing and reservation			290																								290
General and administrative			266								4	(b)											31	(f)			301
Asset impairment			13												(13	)(d)											—
Restructuring			6																(6	)(e)							—
Depreciation and amortization			90																								90
Total expenses			1,658				—				4				(13	)			(6	)			31				1,674
Operating income			383				—				(4	)			13				6				(31	)			367
Other income, net			(7	)							4	(c)															(3	)
Interest expense			69																				(3	)(g)			66
Early extinguishment of debt			12				(12	)(a)																			—
Interest income			(3	)																							(3	)
Income before income taxes			312				12				(8	)			13				6				(28	)			307
Provision for income taxes			126				5	(h)			(3	)(h)			5	(h)			2	(h)			(15	)(h)			120
Net income attributable to Wyndham		$	186			$	7			$	(5	)		$	8			$	4			$	(13	)		$	187
Earnings per share
Basic		$	1.10			$	0.04			$	(0.03	)		$	0.05			$	0.03			$	(0.08	)		$	1.10
Diluted			1.07				0.04				(0.03	)			0.04				0.02				(0.07	)			1.07
Weighted average shares outstanding
Basic			170				170				170				170				170				170				170
Diluted			174				174				174				174				174				174				174

 

Note: EPS amounts may not add due to rounding.

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

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

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

(d)	Relates to a non-cash impairment charge to reduce the value of an international joint venture in the Company’s lodging business.

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

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

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

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

---

Table 9

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATIONS AND FINANCIAL INFORMATION

(In millions)

FREE CASH FLOW

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

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

 

		Six Months Ended June 30,
		2012				2011
Net cash provided by operating activities		$	647			$	696
Less: Property and equipment additions			(78	)			(96	)
Less: Equity investments and development advances			(2	)			(5	)
Free cash flow		$	567			$	595

GROSS VOI SALES

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

 

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

 

Note: Amounts may not add due to rounding.

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

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

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

 

		Q1				Q2				Q3				Q4				Full Year
2012		$	27			$	20				N/A				N/A				N/A
2011		$	18			$	18			$	21			$	11			$	68
2010		$	20			$	20			$	23			$	17			$	80
2009		$	24			$	23			$	29			$	28			$	104

 

Note: Amounts may not add across due to rounding.