EXHIBIT 99.1

 

 

Wyndham Worldwide Reports Second Quarter 2014 Earnings

Adjusted Diluted EPS Growth of 19%

Raises Full Year EBITDA and EPS Guidance

 

 

PARSIPPANY, N.J. (July 24, 2014) – Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended June 30, 2014.

 

SECOND QUARTER HIGHLIGHTS:

 

·

Adjusted diluted earnings per share (EPS) was $1.17, an increase of 19% from adjusted diluted EPS of $0.98 in the second quarter of 2013. Reported diluted EPS was $1.20, compared with $0.98 in the second quarter of 2013.

 

·

Revenues increased 7% compared with the second quarter of 2013.

 

·

Adjusted EBITDA increased 9% compared with the second quarter of 2013.

 

·

The Company repurchased 2.3 million shares of its common stock for $170 million.

  

“We delivered strong results in the second quarter, improving upon the positive trends from the first quarter,” said Stephen P. Holmes, chairman and CEO. “Domestic RevPAR growth continued to accelerate, net Vacation Ownership Interest sales increased ten percent and we are seeing continued strong growth in rental transaction volume.”

 

SECOND QUARTER 2014 OPERATING RESULTS

Second quarter revenues were $1.3 billion, an increase of 7% from the prior year period. The increase reflects growth in all of the Company’s business segments.

 

Adjusted net income was $150 million, or $1.17 per diluted share, compared with $133 million, or $0.98 per diluted share for the same period in 2013. The performance reflects solid operating results across all of the Company’s businesses and lower interest expense. EPS growth also benefited from the Company’s share repurchase program.

Reported net income for the second quarter of 2014 was $153 million, or $1.20 per diluted share, compared with $133 million, or $0.98 per diluted share, for the second quarter of 2013. Reported net income included items excluded from adjusted net income. The net result of these items favorably impacted second quarter 2014 net income by $3 million. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

 

Free cash flow was $695 million for the six months ended June 30, 2014, compared with $654 million for the same period in 2013. The growth of free cash flow largely reflects favorable timing of working capital. The Company defines free cash flow as net cash provided by operating activities less capital expenditures. For the six months ended June 30, 2014, net cash provided by operating activities was $793 million, compared with $758 million in the prior year period.

 

BUSINESS UNIT RESULTS

 

Lodging (Wyndham Hotel Group)

Revenues were $283 million in the second quarter of 2014, an 8% increase over the second quarter of 2013. The increase predominantly reflects higher RevPAR.

 

Domestic RevPAR increased 8.8%, partially offset by a 1.8% decline in international RevPAR, resulting in a 5.6% increase in total system-wide RevPAR compared with the second quarter of 2013. International RevPAR declined due to unfavorable currency movements and growth in lower-RevPAR countries such as China.

 

Adjusted EBITDA for the second quarter of 2014 was $87 million, a 12% increase compared with the second quarter of 2013. The increase was primarily due to higher RevPAR.

 

As of June 30, 2014, the Company’s hotel system consisted of approximately 7,540 properties and 650,200 rooms, a 2.4% room increase compared with the second quarter of 2013. The development pipeline included over 970 hotels and approximately 117,000 rooms, of which 57% were international and 67% were new construction.

 

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)

Revenues were $402 million in the second quarter of 2014, a 7% increase over the second quarter of 2013. In constant currency and excluding the impact of acquisitions, revenues were up 3%.

 

Exchange revenues were $168 million, flat compared with the second quarter of 2013, as a 1.7% increase in average number of members was offset by a 1.8% decline in exchange revenue per member.

 

Vacation rental revenues were $217 million, a 13% increase over the second quarter of 2013. Excluding the impact of foreign currency and acquisitions, vacation rental revenues were up 6%, reflecting a 4.9% increase in transaction volume and a 1.2% increase in the average net price per vacation rental.

 

Adjusted EBITDA for the second quarter of 2014 was $87 million, a 2% increase compared with the second quarter of 2013.

 

Vacation Ownership (Wyndham Vacation Ownership)

Revenues were $673 million in the second quarter of 2014, a 7% increase over the second quarter of 2013, primarily reflecting higher gross VOI sales and a lower loan loss provision.

 

Gross VOI sales were $496 million in the second quarter of 2014, an increase of 3% over the second quarter of 2013, reflecting a 1.1% increase in volume per guest, a 1.0% increase in tour flow and increased tele-sales upgrades.

 

Adjusted EBITDA for the second quarter of 2014 was $185 million, a 15% increase compared with the second quarter of 2013, primarily reflecting the revenue increases.

 

OTHER ITEMS

·

The Company repurchased 2.3 million shares of common stock for $170 million during the second quarter of 2014. From July 1 through July 23, 2014, the Company repurchased an additional 0.5 million shares for $37 million. The Company’s remaining share repurchase authorization totals $311 million as of July 23, 2014.

·

Reported net interest expense in the second quarter of 2014 was $26 million, compared with $32 million in the second quarter of 2013, reflecting lower rates associated with a fixed-for-floating rate swap and a $2 million benefit from a value added tax adjustment.

 

BALANCE SHEET INFORMATION AS OF JUNE 30, 2014:

·

Cash and cash equivalents of $247 million, compared with $194 million at December 31, 2013

·

Vacation ownership contract receivables, net, of $2.7 billion, compared with $2.8 billion at December 31, 2013

·

Vacation ownership and other inventory of $1.0 billion, unchanged from December 31, 2013

·

Securitized vacation ownership debt of $1.9 billion, unchanged from December 31, 2013

·

Long-term debt of $2.8 billion, compared with $2.9 billion at December 31, 2013. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.4 billion as of June 30, 2014, compared with $1.3 billion as of December 31, 2013

 

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 (unchanged)

·

Adjusted EBITDA of approximately $1.230 - $1.245 billion up from $1.215 - $1.240 billion

·

Adjusted EPS of approximately $4.34 - $4.44 based on a diluted share count of 128 million up from $4.23 - $4.33 based on a diluted share count of 130 million

 

CONFERENCE CALL INFORMATION

Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company’s results, outlook and guidance on Thursday, July 24, 2014 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 on the website for approximately 90 days beginning at noon EDT on July 24, 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 EDT on July 24, 2014, at 888-296-6944.

 

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 services and products 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 7,500 franchised hotels and 650,200 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 200 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 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 14, 2014. 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, gives a more complete understanding of its operating performance. The Company’s presentation of EBITDA may not be comparable to similarly-titled measures used by other companies.

 

The following tables summarize net revenues and EBITDA for reportable segments, as well as reconcile EBITDA to Net income attributable to Wyndham shareholders for the three months ended June 30, 2014 and 2013:

 

		Three Months Ended June 30,
		2014								2013
		Net Revenues				EBITDA				Net Revenues				EBITDA
Lodging		$	283			$	87			$	262			$	78
Vacation Exchange and Rentals			402				89				376				85
Vacation Ownership			673				185				630				161
Total Reportable Segments			1,358				361				1,268				324
Corporate and Other (a)			(15	)			(35	)			(15	)			(27	)
Total Company		$	1,343			$	326			$	1,253			$	297

 

Reconciliation of EBITDA to Net income attributable to Wyndham shareholders

 

		Three Months Ended June 30,
		2014				2013
EBITDA		$	326			$	297
Depreciation and amortization			59				54
Interest expense			29				34
Interest income			(3	)			(2	)
Income before income taxes			241				211
Provision for income taxes			88				78
Net income attributable to Wyndham shareholders		$	153			$	133

 

^(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 June 30, 2014 and 2013 (for a description of adjustments by segment, see Table 7):

 

		Three Months Ended June 30,
		2014								2013
		Net Revenues				Adjusted EBITDA				Net Revenues				Adjusted EBITDA
Lodging		$	283			$	87			$	262			$	78
Vacation Exchange and Rentals			402				87				376				85
Vacation Ownership			673				185				630				161
Total Reportable Segments			1,358				359				1,268				324
Corporate and Other			(15	)			(35	)			(15	)			(27	)
Total Company		$	1,343			$	324			$	1,253			$	297

 

 

Table 1

(2 of 2)

Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)

 

The following tables summarize net revenues and EBITDA for reportable segments, as well as reconcile EBITDA to Net income attributable to Wyndham shareholders for the six months ended June 30, 2014 and 2013:

 

		Six Months Ended June 30,
		2014								2013
		Net Revenues				EBITDA				Net Revenues				EBITDA
Lodging		$	520			$	151			$	485			$	137
Vacation Exchange and Rentals			781				174				750				179
Vacation Ownership			1,266				300				1,179				272
Total Reportable Segments			2,567				625				2,414				588
Corporate and Other (a)			(31	)			(69	)			(27	)			(57	)
Total Company		$	2,536			$	556			$	2,387			$	531

 

Reconciliation of EBITDA to Net income attributable to Wyndham shareholders

 

		Six Months Ended June 30,
		2014				2013
EBITDA		$	556			$	531
Depreciation and amortization			115				106
Interest expense			56				66
Early extinguishment of debt			-				111
Interest income			(5	)			(4	)
Income before income taxes			390				252
Provision for income taxes			146				92
Net income			244				160
Net income attributable to noncontrolling interest			(1	)			-
Net income attributable to Wyndham shareholders		$	243			$	160

 

^(a) Includes the elimination of transactions between segments.

 

The following tables summarize net revenues and Adjusted EBITDA for reportable segments for the six months ended June 30, 2014 and 2013 (for a description of adjustments by segment, see Table 7):

 

		Six Months Ended June 30,
		2014								2013
		Net Revenues				Adjusted EBITDA				Net Revenues				Adjusted EBITDA
Lodging		$	520			$	155			$	485			$	137
Vacation Exchange and Rentals			781				182				750				179
Vacation Ownership			1,266				300				1,179				274
Total Reportable Segments			2,567				637				2,414				590
Corporate and Other			(31	)			(69	)			(27	)			(57	)
Total Company		$	2,536			$	568			$	2,387			$	533

 

 

Table 2

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2014				2013				2014				2013
Net revenues
Service and membership fees		$	616			$	583			$	1,205			$	1,152
Vacation ownership interest sales			382				347				685				611
Franchise fees			166				152				293				274
Consumer financing			106				106				211				211
Other			73				65				142				139
Net revenues			1,343				1,253				2,536				2,387
Expenses
Operating			572				548				1,106				1,056
Cost of vacation ownership interests			42				32				81				64
Consumer financing interest			17				20				35				40
Marketing and reservation			206				181				387				357
General and administrative			181				177				376				342
Depreciation and amortization			59				54				115				106
Total expenses			1,077				1,012				2,100				1,965
Operating income			266				241				436				422
Other income, net			(1	)			(2	)			(5	)			(3	)
Interest expense			29				34				56				66
Early extinguishment of debt			-				-				-				111
Interest income			(3	)			(2	)			(5	)			(4	)
Income before income taxes			241				211				390				252
Provision for income taxes			88				78				146				92
Net income			153				133				244				160
Net income attributable to noncontrolling interest			-				-				(1	)			-
Net income attributable to Wyndham shareholders		$	153			$	133			$	243			$	160
Earnings per share
Basic		$	1.21			$	0.99			$	1.91			$	1.18
Diluted			1.20				0.98				1.89				1.17
Weighted average shares outstanding
Basic			127				135				127				136
Diluted			128				136				129				137

 

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

 

 

Table 3

(1 of 2)

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
Number of Rooms			2014				646,900				650,200				N/A				N/A				N/A
			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
RevPAR			2014			$	32.30			$	40.11				N/A				N/A				N/A
			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
Vacation Exchange and Rentals
Average Number of Members (in 000s)			2014				3,727				3,748				N/A				N/A				N/A
			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
Exchange Revenue Per Member			2014			$	200.78			$	179.17				N/A				N/A				N/A
			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
Vacation Rental Transactions (in 000s) (a)			2014				429				376				N/A				N/A				N/A
			2013				423				355				433				273				1,483
			2012				418				325				390				259				1,392
			2011				398				328				370				250				1,347
Average Net Price Per Vacation Rental (a)			2014			$	410.04			$	577.13				N/A				N/A				N/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
Vacation Ownership (a)
Gross Vacation Ownership Interest (VOI) Sales (in 000s) (b)			2014			$	410,000			$	496,000				N/A				N/A				N/A
			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
Tours (in 000s) (c)			2014				170				208				N/A				N/A				N/A
			2013				163				206				225				195				789
			2012				148				186				207				183				724
			2011				137				177				197				173				685
Volume Per Guest (VPG) (c)			2014			$	2,272			$	2,280				N/A				N/A				N/A
			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

 

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) Just-in-Time 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 Just-in-Time related tours beginning in the second quarter of 2012.

 

ADDITIONAL DATA

 

		Year				Q1				Q2				Q3				Q4				Full Year
Lodging
Number of Properties			2014				7,500				7,540				N/A				N/A				N/A
			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
Vacation Ownership
Provision for Loan Losses (in 000s) (*)			2014			$	60,000			$	70,000				N/A				N/A				N/A
			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

 

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

(*)

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.

 

 

Table 3

(2 of 2)

 

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 who are 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 WAAM 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 2011-2014.

 

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)

 

		2014																				2013
		Q1				Q2				Q3				Q4				Year				Q1				Q2				Q3				Q4				Year
Lodging
Royalties and Franchise Fees		$	68			$	88				N/A				N/A				N/A			$	64			$	79			$	91			$	75			$	309
Marketing, Reservation and Wyndham Rewards Revenues (a)			76				101				N/A				N/A				N/A				73				92				118				83				365
Hotel Management Reimbursable Revenues (b)			37				39				N/A				N/A				N/A				25				38				37				35				135
Intersegment Trademark Fees			9				11				N/A				N/A				N/A				8				10				11				10				39
Owned Hotel Revenues			24				20				N/A				N/A				N/A				26				20				18				19				84
Ancillary Revenues (c)			23				24				N/A				N/A				N/A				26				23				22				23				95
Total Lodging			237				283				N/A				N/A				N/A				222				262				297				245				1,027
Vacation Exchange and Rentals
Exchange Revenues			187				168				N/A				N/A				N/A				193				168				158				150				669
Rental Revenues			176				217				N/A				N/A				N/A				166				192				293				138				789
Ancillary Revenues (d)			16				17				N/A				N/A				N/A				15				16				19				17				68
Total Vacation Exchange and Rentals			379				402				N/A				N/A				N/A				374				376				470				305				1,526
Vacation Ownership
Vacation Ownership Interest Sales			303				382				N/A				N/A				N/A				263				347				384				384				1,379
Consumer Financing			105				106				N/A				N/A				N/A				105				106				107				108				426
Property Management Fees			143				145				N/A				N/A				N/A				146				141				143				137				567
WAAM Fee-for-Service Commissions			33				30				N/A				N/A				N/A				24				30				33				20				107
Ancillary Revenues (e)			9				10				N/A				N/A				N/A				11				6				10				9				36
Total Vacation Ownership			593				673				N/A				N/A				N/A				549				630				677				658				2,515
Total Reportable Segments		$	1,209			$	1,358				N/A				N/A				N/A			$	1,145			$	1,268			$	1,444			$	1,208			$	5,068

 

		2012																				2011
		Q1				Q2				Q3				Q4				Year				Q1				Q2				Q3				Q4				Year
Lodging
Royalties and Franchise Fees		$	62			$	80			$	88			$	71			$	301			$	58			$	75			$	85			$	66			$	284
Marketing, Reservation and Wyndham Rewards Revenues (a)			68				99				98				80				345				54				75				94				76				299
Hotel Management Reimbursable Revenues (b)			21				22				25				23				91				19				19				21				20				79
Intersegment Trademark Fees (f)			8				9				9				8				34				1				2				3				4				10
Owned Hotel Revenues			8				8				7				18				41				-				-				-				5				5
Ancillary Revenues (c)			18				15				22				23				78				17				19				19				17				72
Total Lodging			185				233				249				223				890				149				190				222				188				749
Vacation Exchange and Rentals
Exchange Revenues			188				162				157				153				660				194				168				161				150				673
Rental Revenues			159				170				248				125				702				150				180				260				125				715
Ancillary Revenues (d)			14				16				15				15				60				12				13				15				16				56
Total Vacation Exchange and Rentals			361				348				420				293				1,422				356				361				436				291				1,444
Vacation Ownership
Vacation Ownership Interest Sales			271				342				373				337				1,323				222				313				320				295				1,150
Consumer Financing			103				102				106				110				421				102				103				105				105				415
Property Management Fees			110				108				117				125				460				110				108				105				101				424
WAAM Fee-for-Service Commissions			12				11				4				6				33				10				11				23				21				65
Ancillary Revenues (e)			5				7				8				12				32				6				6				6				5				23
Total Vacation Ownership			501				570				608				590				2,269				450				541				559				527				2,077
Total Reportable Segments		$	1,047			$	1,151			$	1,277			$	1,106			$	4,581			$	955			$	1,092			$	1,217			$	1,006			$	4,270

 

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 both Q1 and Q2 2014, reimbursable revenues of $2 million, which eliminate in consolidation, were charged to the Company's vacation ownership business. During Q2, Q3 and Q4 2013, such amounts were $1 million, $3 million and $2 million, respectively.

(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 intersegment 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)

 

		June 30, 2014				March 31, 2014				December 31,  2013				September 30,  2013				June 30,  2013
Securitized vacation ownership debt (a)
Term notes		$	1,600			$	1,823			$	1,648			$	1,615			$	1,569
Bank conduit facility (b)			291				156				262				273				289
Total securitized vacation ownership debt (c)			1,891				1,979				1,910				1,888				1,858
Less: Current portion of securitized vacation ownership debt			187				192				184				186				217
Long-term securitized vacation ownership debt		$	1,704			$	1,787			$	1,726			$	1,702			$	1,641
Debt:
Revolving credit facility (due July 2018) (d)		$	16			$	10			$	23			$	74			$	41
Commercial paper (e)			107				184				210				164				168
$315 million 6.00% senior unsecured notes (due December 2016) (f)			318				318				318				318				319
$300 million 2.95% senior unsecured notes (due March 2017)			299				299				298				298				298
$14 million 5.75% senior unsecured notes (due February 2018)			14				14				14				14				14
$450 million 2.50% senior unsecured notes (due March 2018)			448				447				447				447				447
$40 million 7.375% senior unsecured notes (due March 2020)			40				40				40				40				40
$250 million 5.625% senior unsecured notes (due March 2021)			246				246				246				246				246
$650 million 4.25% senior unsecured notes (due March 2022) (g)			646				645				643				644				644
$400 million 3.90% senior unsecured notes (due March 2023) (h)			403				395				387				396				397
Capital leases			186				188				191				185				184
Other			99				100				114				117				133
Total long-term debt			2,822				2,886				2,931				2,943				2,931
Less: Current portion of long-term debt			50				52				49				55				52
Long-term debt		$	2,772			$	2,834			$	2,882			$	2,888			$	2,879

 

(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 June 30, 2014, this facility had a remaining borrowing capacity of $359 million.

(c)

This debt is collateralized by $2,287 million, $2,328 million, $2,314 million, $2,306 million and $2,414 million of underlying vacation ownership contract receivables and related assets as of June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013 and June 30, 2013, respectively.

(d)

Represents a $1.5 billion revolving credit facility that expires in July 2018. As of June 30, 2014, the Company had $9 million of outstanding letters of credit. After considering outstanding commercial paper borrowings of $107 million, the remaining borrowing capacity was $1.4 billion as of June 30, 2014.

(e)

Represents commercial paper programs of $1.25 billion with a remaining borrowing capacity of $1.1 billion, as of June 30, 2014.

(f)

Includes unamortized gains from the settlement of a derivative in the amount of $3 million as of June 30, 2014, March 31, 2014, December 31, 2013 and September 30, 2013 and $4 million as of June 30, 2013.

(g)

Includes a $2 million increase and $2 million decrease in the carrying value resulting from a fair value hedge derivative as of June 30, 2014 and December 31, 2013, respectively.

(h)

Includes a $5 million increase and $10 million decrease in the carrying value resulting from a fair value hedge derivative as of June 30, 2014 and December 31, 2013, respectively.

 

 

Table 6

(1 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

 

		As of and For the Three Months Ended June 30, 2014
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			178				39,816				66.7	%		$	117.57			$	78.43
TRYP by Wyndham			117				16,740				66.9	%		$	96.01			$	64.19
Wingate by Wyndham			158				14,436				68.7	%		$	88.24			$	60.65
Hawthorn Suites by Wyndham			98				9,737				68.1	%		$	77.37			$	52.72
Ramada			829				114,195				57.2	%		$	79.00			$	45.15
Baymont			346				28,325				56.9	%		$	66.36			$	37.78
Days Inn			1,807				146,139				55.8	%		$	64.86			$	36.20
Super 8			2,436				155,711				60.0	%		$	50.77			$	30.46
Howard Johnson			439				46,214				50.4	%		$	62.88			$	31.68
Travelodge			425				31,075				54.3	%		$	67.35			$	36.60
Microtel Inns & Suites by Wyndham			318				22,744				63.8	%		$	67.26			$	42.88
Knights Inn			383				23,472				46.4	%		$	46.78			$	21.70
Dream			5				989				72.9	%		$	246.03			$	179.38
Night			3				630				72.8	%		$	158.86			$	115.62
Total Lodging			7,542				650,223				58.0	%		$	69.13			$	40.11
Vacation Ownership
Wyndham Vacation Ownership resorts			201				23,450				N/A				N/A				N/A
Total Wyndham Worldwide			7,743				673,673

 

		As of and For the Three Months Ended June 30, 2013
Brand		Number of Properties				Number of Rooms				Average Occupancy Rate				Average Daily Rate (ADR)				Average Revenue Per Available Room (RevPAR)
Lodging
Wyndham Hotels and Resorts			136				32,400				63.5	%		$	118.31			$	75.10
TRYP by Wyndham			103				14,344				64.6	%		$	95.59			$	61.75
Wingate by Wyndham			158				14,493				65.0	%		$	86.67			$	56.34
Hawthorn Suites by Wyndham			91				9,118				67.6	%		$	72.51			$	49.02
Ramada			837				114,691				54.4	%		$	80.42			$	43.78
Baymont			325				26,860				55.6	%		$	63.70			$	35.42
Days Inn			1,833				148,411				51.7	%		$	64.78			$	33.46
Super 8			2,356				150,467				59.0	%		$	52.70			$	31.08
Howard Johnson			446				45,089				48.2	%		$	62.57			$	30.18
Travelodge			437				32,607				51.9	%		$	66.48			$	34.50
Microtel Inns & Suites by Wyndham			310				22,080				60.7	%		$	64.85			$	39.34
Knights Inn			374				22,963				42.5	%		$	45.08			$	19.17
Dream			5				990				75.5	%		$	262.46			$	198.18
Night			3				630				61.5	%		$	169.06			$	103.91
Total Lodging			7,414				635,143				55.2	%		$	68.78			$	38.00
Vacation Ownership
Wyndham Vacation Ownership resorts			190				23,410				N/A				N/A				N/A
Total Wyndham Worldwide			7,604				658,553

 

NOTE: A glossary of terms is included in Table 3 (2 of 2); 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 Six Months Ended June 30, 2014
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			178				39,816				61.1	%		$	115.42			$	70.55
TRYP by Wyndham			117				16,740				59.2	%		$	91.64			$	54.22
Wingate by Wyndham			158				14,436				63.9	%		$	85.95			$	54.93
Hawthorn Suites by Wyndham			98				9,737				64.7	%		$	76.76			$	49.66
Ramada			829				114,195				53.7	%		$	79.22			$	42.52
Baymont			346				28,325				52.0	%		$	64.25			$	33.40
Days Inn			1,807				146,139				50.2	%		$	63.56			$	31.92
Super 8			2,436				155,711				55.8	%		$	49.63			$	27.69
Howard Johnson			439				46,214				47.0	%		$	62.41			$	29.32
Travelodge			425				31,075				49.5	%		$	64.82			$	32.08
Microtel Inns & Suites by Wyndham			318				22,744				58.8	%		$	65.08			$	38.24
Knights Inn			383				23,472				43.6	%		$	45.50			$	19.84
Dream			5				989				73.4	%		$	217.94			$	159.91
Night			3				630				66.3	%		$	139.04			$	92.20
Total Lodging			7,542				650,223				53.5	%		$	67.78			$	36.23
Vacation Ownership
Wyndham Vacation Ownership resorts			201				23,450				N/A				N/A				N/A
Total Wyndham Worldwide			7,743				673,673

 

		As of and For the Six Months Ended June 30, 2013
Brand		Number of Properties				Number of Rooms				Average Occupancy Rate				Average Daily Rate (ADR)				Average Revenue Per Available Room (RevPAR)
Lodging
Wyndham Hotels and Resorts			136				32,400				60.2	%		$	115.98			$	69.80
TRYP by Wyndham			103				14,344				59.3	%		$	96.39			$	57.15
Wingate by Wyndham			158				14,493				61.0	%		$	85.05			$	51.88
Hawthorn Suites by Wyndham			91				9,118				63.1	%		$	71.57			$	45.19
Ramada			837				114,691				51.5	%		$	79.58			$	41.01
Baymont			325				26,860				50.7	%		$	62.15			$	31.50
Days Inn			1,833				148,411				47.3	%		$	63.27			$	29.91
Super 8			2,356				150,467				54.4	%		$	51.38			$	27.96
Howard Johnson			446				45,089				45.6	%		$	61.78			$	28.17
Travelodge			437				32,607				47.8	%		$	64.89			$	31.02
Microtel Inns & Suites by Wyndham			310				22,080				56.4	%		$	63.01			$	35.56
Knights Inn			374				22,963				40.4	%		$	43.34			$	17.53
Dream			5				990				68.5	%		$	220.79			$	151.31
Night			3				630				57.5	%		$	146.22			$	84.14
Total Lodging			7,414				635,143				51.3	%		$	67.35			$	34.55
Vacation Ownership
Wyndham Vacation Ownership resorts			190				23,410				N/A				N/A				N/A
Total Wyndham Worldwide			7,604				658,553

 

NOTE: A glossary of terms is included in Table 3 (2 of 2); 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, 2014		Net Revenues				Reported  EBITDA				Executive  Departure Costs				Venezuela Currency   Devaluation (b)				VAT  Adjustment (c)				Adjusted  EBITDA
Lodging		$	237			$	64			$	4			$	-			$	-			$	68
Vacation Exchange and Rentals			379				85				-				10				-				95
Vacation Ownership			593				115				-				-				-				115
Total Reportable Segments			1,209				264				4				10				-				278
Corporate and Other (a)			(16	)			(34	)			-				-				-				(34	)
Total Company		$	1,193			$	230			$	4			$	10			$	-			$	244
Three months ended June 30, 2014
Lodging		$	283			$	87			$	-			$	-			$	-			$	87
Vacation Exchange and Rentals			402				89				-				-				(2	)			87
Vacation Ownership			673				185				-				-				-				185
Total Reportable Segments			1,358				361				-				-				(2	)			359
Corporate and Other (a)			(15	)			(35	)			-				-				-				(35	)
Total Company		$	1,343			$	326			$	-			$	-			$	(2	)		$	324

 

(a)

Includes the elimination of transactions between segments.

(b)

Represents the devaluation of the official exchange rate of Venezuela.

(c)

Reversal of a reserve for value-added taxes.

 

 

 

Table 7

(2 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 8

(1 of 3)

 

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

		Three Months Ended June 30, 2014
		As Reported				Legacy     Adjustments				VAT     Adjustment (b)				As Adjusted non-GAAP
Net revenues
Service and membership fees		$	616			$				$				$	616
Vacation ownership interest sales			382												382
Franchise fees			166												166
Consumer financing			106												106
Other			73												73
Net revenues			1,343				-				-				1,343
Expenses
Operating			572												572
Cost of vacation ownership interests			42												42
Consumer financing interest			17												17
Marketing and reservation			206												206
General and administrative			181								2				183
Depreciation and amortization			59												59
Total expenses			1,077				-				2				1,079
Operating income			266				-				(2	)			264
Other income, net			(1	)											(1	)
Interest expense			29								2				31
Interest income			(3	)											(3	)
Income before income taxes			241				-				(4	)			237
Provision for income taxes			88				1	(a)			(2	) (c)			87
Net income attributable to Wyndham shareholders		$	153			$	(1	)		$	(2	)		$	150
Earnings per share
Basic		$	1.21			$	-			$	(0.02	)		$	1.18
Diluted			1.20				-				(0.02	)			1.17
Weighted average shares outstanding
Basic			127				127				127				127
Diluted			128				128				128				128

__________

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 reversal of a state tax accrual.

(b)

Relates to the reversal of a reserve for value-added taxes at the Company's vacation exchange and rentals business.

(c)

Relates to the tax effect of the adjustment.

 

 

Table 8

(2 of 3)

 

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

		Six Months Ended June 30, 2014
		As Reported				Executive Departure Costs (a)				Venezuela Currency     Devaluation (c)				Legacy     Adjustments				VAT     Adjustment (e)				As Adjusted non-GAAP
Net revenues
Service and membership fees		$	1,205			$				$				$				$				$	1,205
Vacation ownership interest sales			685																				685
Franchise fees			293																				293
Consumer financing			211																				211
Other			142																				142
Net revenues			2,536				-				-				-				-				2,536
Expenses
Operating			1,106								(10	)											1,096
Cost of vacation ownership interests			81																				81
Consumer financing interest			35																				35
Marketing and reservation			387																				387
General and administrative			376				(4	)											2				374
Depreciation and amortization			115																				115
Total expenses			2,100				(4	)			(10	)			-				2				2,088
Operating income			436				4				10				-				(2	)			448
Other income, net			(5	)																			(5	)
Interest expense			56																2				58
Interest income			(5	)																			(5	)
Income before income taxes			390				4				10				-				(4	)			400
Provision for income taxes			146				1	(b)			1	(b)			1	(d)			(2)	(b)			147
Net income			244				3				9				(1	)			(2	)			253
Net income attributable to noncontrolling interest			(1	)			-				-				-				-				(1	)
Net income attributable to Wyndham shareholders		$	243			$	3			$	9			$	(1	)		$	(2	)		$	252
Earnings per share
Basic		$	1.91			$	0.02			$	0.07			$	-			$	(0.02	)		$	1.98
Diluted			1.89				0.02				0.07				-				(0.02	)			1.96
Weighted average shares outstanding
Basic			127				127				127				127				127				127
Diluted			129				129				129				129				129				129

__________

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)

Related to costs associated with an executive's departure at the Company's lodging business.

(b)

Relates to the tax effect of the adjustment.

(c)

Represents the devaluation of the official exchange rate of Venezuela at the Company's vacation exchange and rental business.

(d)

Relates to the reversal of a state tax accrual.

(e)

Relates to the reversal of a reserve for value-added taxes at the Company's vacation exchange and rentals business.

 

  

Table 8

(3 of 3)

 

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

		Six Months Ended June 30, 2013
		As Reported				Legacy  Adjustments				Acquisition  Costs				Early Extinguishment  of Debt				As Adjusted  non-GAAP
Net revenues
Service fees and membership		$	1,152															$	1,152
Vacation ownership interest sales			611																611
Franchise fees			274																274
Consumer financing			211																211
Other			139																139
Net revenues			2,387				-				-				-				2,387
Expenses
Operating			1,056								(2	) (b)							1,054
Cost of vacation ownership interests			64																64
Consumer financing interest			40																40
Marketing and reservation			357																357
General and administrative			342																342
Depreciation and amortization			106																106
Total expenses			1,965				-				(2	)			-				1,963
Operating income			422				-				2				-				424
Other income, net			(3	)															(3	)
Interest expense			66																66
Early extinguishment of debt			111												(111	) (c)			-
Interest income			(4	)															(4	)
Income before income taxes			252				-				2				111				365
Provision for income taxes			92				(1)	(a)			1	(d)			42	(d)			134
Net income		$	160			$	1			$	1			$	69			$	231
Earnings per share
Basic		$	1.18			$	0.01			$	0.01			$	0.51			$	1.71
Diluted			1.17				0.01				0.01				0.50				1.69
Weighted average shares outstanding
Basic			136				136				136				136				136
Diluted			137				137				137				137				137

__________

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

 

Note: EPS amounts may not add due to rounding.

(a)

Relates to a state tax payment for legacy tax matters.

(b)

Relates to the costs incurred in connection with the acquisition of Midtown 45, a NYC property (January 2013) at the Company's vacation ownership business.

(c)

Represents costs incurred for the early repurchase of a portion of the Company's 7.375%, 5.75% and 6.00% senior unsecured notes and the remaining portion of the 9.875% senior unsecured notes.

(d)

Relates to the tax effect of the adjustment.

 

 

Table 9

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATIONS AND FINANCIAL INFORMATION

(In millions)

 

FREE CASH FLOW

We define free cash flow to be net cash provided by operating activities less property and equipment additions which we also refer to as capital expenditures.

 

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:

 

		Six Months Ended June 30,
		2014				2013
Net cash provided by operating activities		$	793			$	758
Less: Property and equipment additions			(98	)			(104	)
Free cash flow		$	695			$	654

 

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
2014		Q1				Q2				Q3				Q4				Full Year
Gross VOI sales (a)		$	410			$	496				N/A				N/A				N/A
Less: Sales under WAAM Fee-for-Service			(44	)			(40	)			N/A				N/A				N/A
Gross VOI sales, net of WAAM Fee-for-Service sales			366				456				N/A				N/A				N/A
Less: Loan loss provision			(60	)			(70	)			N/A				N/A				N/A
Less: Impact of percentage-of-completion accounting			(3	)			(4	)			N/A				N/A				N/A
Vacation ownership interest sales (a)		$	303			$	382				N/A				N/A				N/A
2013
Gross VOI sales (a)		$	384			$	481			$	536			$	488			$	1,889
Less: Sales under WAAM Fee-for-Service			(36	)			(44	)			(51	)			(29	)			(160	)
Gross VOI sales, net of WAAM Fee-for-Service 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 Fee-for-Service			(17	)			(18	)			(5	)			(10	)			(49	)
Gross VOI sales, net of WAAM Fee-for-Service 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 Fee-for-Service			(18	)			(19	)			(38	)			(31	)			(106	)
Gross VOI sales, net of WAAM Fee-for-Service 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

_____________

Note: Amounts may not add due to rounding.

^(a) Includes VOI sales under WAAM Just-in-Time 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
2014		$	25			$	21				N/A				N/A				N/A
2013		$	24			$	18			$	22			$	25			$	89
2012		$	27			$	20			$	22			$	28			$	97
2011		$	18			$	18			$	21			$	11			$	68