Wyndham Worldwide Reports Third Quarter 2016 Results

PARSIPPANY, N.J., Oct. 26, 2016 /PRNewswire/ -- Wyndham Worldwide Corporation (NYSE: WYN) today announced results for the three months ended September 30, 2016.

Third quarter revenues were $1.6 billion, up 1% compared with the prior year period. In constant currency and excluding acquisitions, revenues also increased 1%.  Full reconciliations of GAAP results to non-GAAP measures appear in the tables to this press release.

Net income for the third quarter of 2016 was $196 million, or $1.78 per diluted share, compared with $190 million, or $1.61 per diluted share, for the third quarter of 2015. Adjusted net income for the third quarter of 2016 was $207 million, or $1.89 per diluted share, compared with $210 million, or $1.78 per diluted share, for the third quarter of 2015. EPS benefited from the Company's share repurchase program. 

Third quarter EBITDA was $402 million, compared with $382 million in the prior year period, an increase of 5%. Adjusted EBITDA, which excludes charges in both 2016 and 2015 as detailed in Table 8 of this press release, was $423 million, compared with $412 million in the prior year period, an increase of 3%. On a currency-neutral basis and excluding acquisitions, adjusted EBITDA increased 5%.

"Wyndham continues to deliver solid earnings and strong cash flow," said Stephen P. Holmes, chairman and CEO.  "These results reflect successful execution of our strategy, a resilient portfolio of complementary, fee-based businesses, and disciplined capital allocation."

For the nine months ended September 30, 2016, net cash provided by operating activities was $786 million, compared with $817 million in the prior year period. The decrease reflects unfavorable currency movements of $34 million, including a $24 million devaluation of the Venezuelan bolivar in the first quarter of 2016.

Free cash flow was $650 million for the nine months ended September 30, 2016, compared with $660 million for the same period in 2015, reflecting the currency movements referenced above partially offset by lower capital expenditures. The Company defines free cash flow as net cash provided by operating activities less capital expenditures. 

THIRD QUARTER 2016 BUSINESS UNIT RESULTS

Hotel Group
Revenues were $364 million in the third quarter of 2016, compared with $357 million in the third quarter of 2015. Revenues reflected higher royalties, growth in the Company's Wyndham Rewards credit card program and fees associated with the Company's global franchise conference, partially offset by lower reimbursable property management revenues.

EBITDA was $107 million in the third quarter compared with $83 million in the prior year quarter. Adjusted EBITDA, which excludes charges and benefits during both 2016 and 2015 as detailed in Table 8 of this press release, grew 8% to $117 million. This reflects higher royalties, growth in the Company's Wyndham Rewards credit card program and expense management.

Third quarter domestic RevPAR increased 1.9%. In constant currency, total system-wide same store RevPAR increased 1.4% compared with the third quarter of 2015, which reflects ongoing pressure in domestic and Canadian oil markets and decelerating industry RevPAR trends. 

As of September 30, 2016, the Company's hotel system consisted of approximately 7,930 properties and approximately 689,800 rooms, a 2.7% net room increase compared with the third quarter of 2015. The development pipeline included nearly 1,100 hotels and approximately 133,800 rooms, of which 60% were international and 66% were new construction.

Destination Network
Revenues were $486 million in the third quarter of 2016, compared with $476 million in the third quarter of 2015, an increase of 2%. In constant currency and excluding acquisitions, revenues increased 5%.

Exchange revenues were $159 million compared with $157 million in the prior year quarter. In constant currency, exchange revenues grew 2% as exchange revenue per member increased 1.4% and the average number of members increased 0.9%.

Vacation rental revenues were $304 million compared with $296 million in the prior year quarter. In constant currency and excluding the impact of acquisitions, vacation rental revenues were up 6%, reflecting an 8.0% increase in transaction volume, partially offset by a 1.7% decrease in average net price per vacation rental. Transaction growth benefited from our dynamic pricing initiative as well as capacity increases. Faster growth in our more moderately priced products decreased the average net price per rental.

EBITDA was $138 million during the third quarter compared with $134 million in the prior year quarter. Adjusted EBITDA, which excludes restructuring costs, was $142 million for the third quarter of 2016, a 4% increase compared with the prior year quarter. On a currency-neutral basis and excluding the impact of acquisitions, adjusted EBITDA increased 8% compared with the prior year period.

Vacation Ownership
Revenues were $744 million in the third quarter of 2016, compared with $750 million in the third quarter of 2015. 

Net VOI sales in the third quarter of 2016 declined 2% due to a higher provision for loan losses and flat Gross VOI sales. Results reflect tour flow growth of 1.3%, offset by a volume per guest (VPG) decline of 1.4%, reflecting proportionally higher sales to new owners. The number of new owners added increased 10% from the third quarter of 2015.

EBITDA was $189 million during the third quarter compared with $200 million in the prior year quarter. Adjusted EBITDA, which excludes restructuring costs, was $195 million for the third quarter of 2016, a decline of 3% compared with the prior year quarter. This reflects a higher loan loss provision and higher marketing costs, partially offset by higher property management fees, increased consumer financing income and expense management.

OTHER ITEMS

  • The Company repurchased 2.1 million shares of common stock for $150 million during the third quarter of 2016. From October 1 through October 25, 2016, the Company repurchased an additional 0.7 million shares for $50 million. 
  • Net interest expense in the third quarter of 2016 was $32 million, compared with $31 million in the third quarter of 2015.
  • Depreciation and amortization in the third quarter of 2016 was $63 million, compared with $59 million in the third quarter of 2015, reflecting new projects that were placed into service. 

Balance Sheet Information as of September 30, 2016:

  • Cash and cash equivalents of $332 million, compared with $171 million at December 31, 2015
  • Vacation ownership contract receivables, net, of $2.8 billion, compared with $2.7 billion at December 31, 2015
  • Vacation ownership and other inventory of $1.3 billion, unchanged from December 31, 2015
  • Securitized vacation ownership debt of $2.1 billion, unchanged from December 31, 2015
  • Long-term debt of $3.4 billion, compared with $3.1 billion at December 31, 2015. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.1 billion as of September 30, 2016, compared with $1.4 billion at December 31, 2015.

A schedule of debt is included in Table 12 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.

Full reconciliations of the outlook for adjusted net income, adjusted EBITDA and adjusted EPS to GAAP results appear in Table 10 of this press release.

The Company provides the following guidance for the full year 2016:

  • Revenues of approximately $5.650 billion.
  • Adjusted net income of approximately $630 million.
  • Adjusted EBITDA of approximately $1.375 billion.
  • Adjusted diluted EPS of approximately $5.68 - $5.71 based on a diluted share count of 111 million.

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

CONFERENCE CALL INFORMATION
Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company's results, outlook and guidance on Wednesday, October 26, 2016 at 8:30 a.m. ET. Listeners can access the webcast live through the Company's website at http://www.wyndhamworldwide.com/investors/.  The conference call may also be accessed by dialing 888-632-3384 and providing the pass code "WYNDHAM."  Listeners are urged to call at least 10 minutes prior to the scheduled start time.  An archive of this webcast will be available on the website for approximately 90 days beginning at 12:00pm ET on October 26, 2016.  A telephone replay will be available for approximately 10 days beginning at 12:00pm ET on October 26, 2016 at 800-388-6197.

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 the Company's non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring.  A reconciliation of reported GAAP results to the comparable non-GAAP information appears in the financial tables section of the press release.  A reconciliation of forecasted adjusted net income, adjusted EBITDA and adjusted EPS to the most directly comparable GAAP measures is provided in Table 10 of this press release.

ABOUT WYNDHAM WORLDWIDE
Wyndham Worldwide (NYSE: WYN) is one of the largest global hospitality companies, providing travelers with access to a collection of trusted hospitality brands in hotels, vacation ownership, and unique accommodations including vacation exchange, holiday parks, and managed home rentals. With a collective inventory of more than 120,000 places to stay across 100 countries on six continents, Wyndham Worldwide and its 38,000 associates welcomes people to experience travel the way they want. This is enhanced by Wyndham Rewards®, the Company's re-imagined guest loyalty program across its businesses, which is making it simpler for members to earn more rewards and redeem their points faster. 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, cash flow 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 12, 2016.  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.

 

Wyndham Worldwide Corporation

Earnings Release Schedules

Quarter Three - September 30, 2016

Table of Contents




Table No.



Consolidated Statements of Income (Unaudited)

1



Operating Results of Reportable Segments

2



Operating Statistics

3



Condensed Consolidated Statements of Cash Flows and Reconciliation of Free Cash Flows (Unaudited)

4



Revenue Detail by Reportable Segment

5



Brand System Details

6



Non-GAAP Reconciliation of Adjusted Net Income and EPS

7



Non-GAAP Reconciliation of Adjusted EBITDA by Reportable Segment

8



Non-GAAP Reconciliation of Gross VOI Sales

9



Non-GAAP Reconciliation of 2016 Outlook

10



Non-GAAP Reconciliation - Constant Currency and Currency Neutral

11



Schedule of Debt

12

 

 















Table 1

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

(Unaudited)



































 Three Months Ended 


 Nine Months Ended 





 September 30, 


 September 30, 





2016


2015


2016


2015

Net revenues














Service and membership fees


$

735


$

734


$

2,001


$

1,957


Vacation ownership interest sales



441



448



1,191



1,201


Franchise fees



203



192



513



517


Consumer financing



112



108



327



318


Other




82



82



247



231

Net revenues



1,573



1,564



4,279



4,224
















Expenses















Operating



679



691



1,915



1,865


Cost of vacation ownership interests 



47



43



115



123


Consumer financing interest



19



18



55



55


Marketing and reservation



242



218



645



624


General and administrative



173



200



545



562


Asset impairments



-



7



-



7


Restructuring



14



8



14



8


Depreciation and amortization



63



59



187



173

Total expenses



1,237



1,244



3,476



3,417
















Operating income



336



320



803



807

Other (income)/expense, net



(3)



(3)



(19)



(11)

Interest expense



34



33



102



89

Early extinguishment of debt



-



-



11



-

Interest income



(2)



(2)



(6)



(7)
















Income before income taxes



307



292



715



736

Provision for income taxes



110



102



267



265

Net income




197



190



448



471

Net income attributable to noncontrolling interest


(1)



-



(1)



-

Net income attributable to Wyndham shareholders

$

196


$

190


$

447


$

471
















Earnings per share














Basic



$

1.79


$

1.62


$

4.03


$

3.96


Diluted



1.78



1.61



4.01



3.93
















Weighted average shares outstanding














Basic




109



117



111



119


Diluted



110



118



112



120































Note: For a description of adjustments to Net Income, see Table 7.

 














Table 2















(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 revenues) and income taxes, each of which is presented on the Company's Consolidated Statements of Income.  The Company also uses adjusted EBITDA as a financial measure of its operating performance.  The Company believes that EBITDA and Adjusted EBITDA are useful measures of assessing performance of the Company and for the Company's segments which, when considered with GAAP measures, give a more complete understanding of its operating performance and assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods, by adjusting for certain items which may be recurring or nonrecurring and which in our view do not necessarily reflect ongoing operating performance. We also internally use these measures to assess our operating performance, both in absolute terms and in comparison to other companies, and in evaluating or making selected compensation decisions.  These supplemental disclosures are in addition to GAAP reported measures.  The Company's presentation of EBITDA and Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.






















The following tables summarize net revenues and EBITDA for the Company's reportable segments, as well as reconcile EBITDA to Net income attributable to Wyndham shareholders for the three months ended September 30, 2016 and 2015:




















Three Months Ended September 30, 





2016


2015





 Net Revenues 


 EBITDA 


 Net Revenues 


 EBITDA 


Hotel Group

$

364


$

107


$

357


$

83


Destination Network


486



138



476



134


Vacation Ownership


744



189



750



200


     Total Reportable Segments


1,594



434



1,583



417


Corporate and Other (a)


(21)



(32)



(19)



(35)


     Total Company

$

1,573


$

402


$

1,564


$

382

















Reconciliation of EBITDA to Net income attributable to Wyndham shareholders
































 Three Months Ended September 30,  








2016





2015


EBITDA





$

402





$

382


Depreciation and amortization





63






59


Interest expense





34






33


Interest income





(2)






(2)


Income before income taxes





307






292


Provision for income taxes





110






102


Net income






197






190


Net income attributable to noncontrolling interest





(1)






-


Net income attributable to Wyndham shareholders




$

196





$

190
































(a) Includes the elimination of transactions between segments.  
















The following tables summarize net revenues and Adjusted EBITDA for the Company's reportable segments for the three months ended September 30, 2016 and 2015 (for a description of adjustments and reconciliation by segment, see Table 8):





















Three Months Ended September 30, 





2016


2015







Adjusted 




Adjusted 





 Net Revenues 


 EBITDA 


 Net Revenues 


 EBITDA 


Hotel Group

$

364


$

117


$

357


$

108


Destination Network


486



142



476



137


Vacation Ownership


744



195



750



201


     Total Reportable Segments


1,594



454



1,583



446


Corporate and Other


(21)



(31)



(19)



(34)


     Total Company

$

1,573


$

423


$

1,564


$

412

















 














Table 2















(2 of 2)


Wyndham Worldwide Corporation


OPERATING RESULTS OF REPORTABLE SEGMENTS


(In millions)
































The following tables summarize net revenues and EBITDA for the Company's reportable segments, as well as reconcile EBITDA to Net income
attributable to Wyndham shareholders for the nine months ended September 30, 2016 and 2015:




















Nine Months Ended September 30, 





2016


2015





 Net Revenues 


 EBITDA 


 Net Revenues 


 EBITDA 


Hotel Group

$

993


$

291


$

983


$

255


Destination Network


1,255



303



1,228



323


Vacation Ownership


2,089



512



2,067



513


     Total Reportable Segments


4,337



1,106



4,278



1,091


Corporate and Other (a)


(58)



(97)



(54)



(100)


     Total Company

$

4,279


$

1,009


$

4,224


$

991

















Reconciliation of EBITDA to Net income attributable to Wyndham shareholders
































Nine Months Ended September 30, 








2016





2015


EBITDA





$

1,009





$

991


Depreciation and amortization





187






173


Interest expense





102






89


Early extinguishment of debt





11






-


Interest income





(6)






(7)


Income before income taxes





715






736


Provision for income taxes





267






265


Net income






448






471


Net income attributable to noncontrolling interest





(1)






-


Net income attributable to Wyndham shareholders




$

447





$

471
































(a) Includes the elimination of transactions between segments.  





The following tables summarize net revenues and Adjusted EBITDA for the Company's reportable segments for the nine months ended September 30,
2016 and 2015 (for a description of adjustments and reconciliation by segment, see Table 8):





















Nine Months Ended September 30, 





2016


2015







Adjusted 




Adjusted 





 Net Revenues 


 EBITDA 


 Net Revenues 


 EBITDA 


Hotel Group

$

993


$

301


$

983


$

284


Destination Network


1,255



333



1,228



326


Vacation Ownership


2,089



518



2,067



514


     Total Reportable Segments


4,337



1,152



4,278



1,124


Corporate and Other


(58)



(97)



(54)



(101)


     Total Company

$

4,279


$

1,055


$

4,224


$

1,023


 

















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

Hotel Group (a)













Number of Rooms 

2016


679,100


683,300


689,800


 N/A 


 N/A 



2015


667,400


668,500


671,900


678,000


 N/A 



2014


646,900


650,200


655,300


660,800


 N/A 



2013


631,800


635,100


638,300


645,400


 N/A 















RevPAR

2016

$

31.59

$

39.10

$

43.04


 N/A 


 N/A 



2015

$

32.84

$

39.82

$

43.34

$

32.98

$

37.26



2014

$

32.30

$

40.11

$

43.71

$

34.06

$

37.57



2013

$

31.05

$

38.00

$

41.78

$

33.07

$

36.00














Destination Network













Average Number of Members (in 000s)

2016


3,841


3,857


3,868


 N/A 


 N/A 



2015


3,822


3,831


3,835


3,836


3,831



2014


3,727


3,748


3,777


3,808


3,765



2013


3,668


3,686


3,711


3,728


3,698















Exchange Revenue Per Member

2016

$

189.78

$

164.61

$

164.39


 N/A 


 N/A 



2015

$

194.06

$

167.81

$

163.38

$

152.00

$

169.29



2014

$

200.78

$

179.17

$

171.77

$

157.24

$

177.12



2013

$

210.96

$

182.42

$

169.95

$

161.21

$

181.02















Vacation Rental Transactions (in 000s) (a) (b)

2016


500


409


508


 N/A 


 N/A 



2015


459


390


462


319


1,630



2014


429


376


455


293


1,552



2013


423


355


433


273


1,483















Average Net Price Per Vacation Rental (a) (b)

2016

$

366.08

$

492.83

$

599.59


 N/A 


 N/A 



2015

$

361.20

$

513.14

$

642.00

$

452.19

$

494.92



2014

$

410.04

$

577.13

$

727.40

$

492.25

$

558.95



2013

$

392.64

$

540.38

$

677.81

$

506.62

$

532.11














Vacation Ownership (a)













Gross Vacation Ownership Interest (VOI) Sales (in 000s) (c)

2016

$

428,000

$

518,000

$

564,000


 N/A 


 N/A 



2015

$

390,000

$

502,000

$

565,000

$

507,000

$

1,965,000



2014

$

410,000

$

496,000

$

513,000

$

470,000

$

1,889,000



2013

$

384,000

$

481,000

$

536,000

$

488,000

$

1,889,000















Tours (in 000s)

2016


179


213


230


 N/A 


 N/A 



2015


168


206


227


200


801



2014


170


208


225


191


794



2013


163


206


225


195


789















Volume Per Guest (VPG)

2016

$

2,244

$

2,328

$

2,320


 N/A 


 N/A 



2015

$

2,177

$

2,353

$

2,354

$

2,390

$

2,326



2014

$

2,272

$

2,280

$

2,158

$

2,336

$

2,257



2013

$

2,211

$

2,256

$

2,278

$

2,370

$

2,281


















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

(a) Includes the impact of acquisitions/dispositions from the acquisition/disposition dates forward. Therefore, the operating statistics are not presented on a comparable basis.

(b) The destination network operating statistics excluding our U.K.-based camping business sold in Q4 2014 are as follows:
























Year


Q1


Q2


Q3


Q4


Full Year


Vacation Rental Transactions (in 000s)

2014


429


367


431


292


1,518


Average Net Price Per Vacation Rental

2014

$

410.02

$

578.02

$

700.56

$

492.64

$

548.93



































(c) Includes Gross VOI sales under the Company's Wyndham Asset Affiliate Model (WAAM) Just-in-Time. (See Table 9 for a reconciliation of Gross VOI
sales to vacation ownership interest sales).








































ADDITIONAL DATA
































Year


Q1


Q2


Q3


Q4


Full Year

Hotel Group













Number of Properties

2016


7,830


7,880


7,930


 N/A 


 N/A 



2015


7,670


7,700


7,760


7,810


 N/A 



2014


7,500


7,540


7,590


7,650


 N/A 



2013


7,380


7,410


7,440


7,490


 N/A 














Vacation Ownership













Provision for Loan Losses (in 000s) (*) 

2016

$

63,000

$

90,000

$

104,000


 N/A 


 N/A 



2015

$

46,000

$

60,000

$

78,000

$

64,000

$

248,000



2014

$

60,000

$

70,000

$

70,000

$

60,000

$

260,000



2013

$

84,000

$

90,000

$

102,000

$

73,000

$

349,000


















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

Hotel Group

Number of Rooms: Represents the number of rooms at hotel group properties at the end of the period which are either (i) under franchise and/or management agreements, or company owned and (ii) properties under affiliation agreements for which the Company receives a fee for reservation and/or other services provided.  

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.

Destination Network

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 in connection with customers booking their vacation rental stays through one of our vacation brands. 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 WAAM sales, before the net effect of percentage-of-completion accounting and loan loss provisions. We believe gross VOI sales provide 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. 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 2013-2016.  

General

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

Currency-Neutral: Represents a comparison eliminating the effects of foreign exchange rate fluctuations between periods (foreign currency translation) and the impact caused by any foreign exchange related activities (i.e., hedges, balance sheet remeasurements and/or adjustments).

 

 








Table 4

Wyndham Worldwide Corporation

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND RECONCILIATION OF FREE CASH FLOWS

(In millions)

(Unaudited)

















Condensed Consolidated Statements of Cash Flows:










Nine Months Ended September 30, 




2016


2015

Net cash provided by operating activities


$

786


$

817









Net cash used in investing activities



(172)



(244)









Net cash used in financing activities



(442)



(477)









Effect of changes in exchange rates on cash and cash equivalents



(11)



(20)









Net increase in cash and cash equivalents


$

161


$

76

















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 measures of net cash provided by operating activities, net cash used in investing activities and net cash used in financing activities as a means for evaluating Wyndham Worldwide is that free cash flow does not represent the total cash movement for the period as detailed in the consolidated statement of cash flows.


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




Nine Months Ended September 30, 




2016


2015

Net cash provided by operating activities


$

786


$

817

Less: Property and equipment additions



(136)



(157)

Free cash flow



$

650


$

660

 

























Table 5


























Wyndham Worldwide Corporation

REVENUE DETAIL BY REPORTABLE SEGMENT

(In millions)























































2016


2015






 Q1 


 Q2 


 Q3 


 Q4 


 Year 



 Q1 


 Q2 


 Q3 


 Q4 


 Year 

Hotel Group
























Royalties and Franchise Fees


$

74

$

94

$

105


 N/A 


 N/A 


$

74

$

96

$

103

$

87

$

361


Marketing, Reservation and Wyndham Rewards Revenues (a)


83


103


125


 N/A 


 N/A 



96


108


112


92


407


Hotel Management Reimbursable Revenues (b)


67


71


67


 N/A 


 N/A 



61


71


73


68


273


Intersegment Trademark Fees



13


15


16


 N/A 


 N/A 



12


15


16


15


57


Owned Hotel Revenues



27


19


17


 N/A 


 N/A 



25


20


16


19


79


Ancillary Revenues (c)



31


32


34


 N/A 


 N/A 



24


24


37


33


120


Total Hotel Group



295


334


364


 N/A 


 N/A 



292


334


357


314


1,297


























Destination Network
























Exchange Revenues



182


159


159


 N/A 


 N/A 



185


161


157


146


649


Rental Revenues



183


202


304


 N/A 


 N/A 



166


200


296


144


807


Ancillary Revenues (d)



20


23


23


 N/A 


 N/A 



18


22


23


20


82


Total Destination Network



385


384


486


 N/A 


 N/A 



369


383


476


310


1,538


























Vacation Ownership
























Vacation Ownership Interest Sales



342


409


441


 N/A 


 N/A 



336


417


448


403


1,604


Consumer Financing



107


108


112


 N/A 


 N/A 



104


105


108


109


427


Property Management Fees and Reimbursable Revenues


164


161


168


 N/A 


 N/A 



153


149


159


155


615


WAAM Fee-for-Service Commissions


17


16


13


 N/A 


 N/A 



12


19


23


28


83


Ancillary Revenues (e)



11


11


10


 N/A 


 N/A 



12


9


12


11


43


Total Vacation Ownership



641


705


744


 N/A 


 N/A 



617


699


750


706


2,772

Total Reportable Segments


$

1,321

$

1,423

$

1,594


 N/A 


 N/A 


$

1,278

$

1,416

$

1,583

$

1,330

$

5,607























































2014


2013






 Q1 


 Q2 


 Q3 


 Q4 


 Year 



 Q1 


 Q2 


 Q3 


 Q4 


 Year 

Hotel Group
























Royalties and Franchise Fees


$

68

$

88

$

100

$

83

$

339


$

64

$

79

$

91

$

75

$

309


Marketing, Reservation and Wyndham Rewards Revenues (a)


76


101


117


91


385



73


92


118


83


365


Hotel Management Reimbursable Revenues (b)


37


39


39


39


154



25


38


37


35


135


Intersegment Trademark Fees



9


11


11


10


41



8


10


11


10


39


Owned Hotel Revenues



24


20


18


20


81



26


20


18


19


84


Ancillary Revenues (c)



23


24


30


24


101



26


23


22


23


95


Total Hotel Group



237


283


315


267


1,101



222


262


297


245


1,027


























Destination Network
























Exchange Revenues



187


168


162


150


667



193


168


158


150


669


Rental Revenues



176


217


331


144


868



166


192


293


138


789


Ancillary Revenues (d)



16


17


19


17


69



15


16


19


17


68


Total Destination Network



379


402


512


311


1,604



374


376


470


305


1,526


























Vacation Ownership
























Vacation Ownership Interest Sales



303


382


415


385


1,485



263


347


384


384


1,379


Consumer Financing



105


106


108


108


427



105


106


107


108


426


Property Management Fees



143


145


150


142


581



146


141


143


137


567


WAAM Fee-for-Service Commissions


33


30


18


16


98



24


30


33


20


107


Ancillary Revenues (e)



9


10


13


17


47



11


6


10


9


36


Total Vacation Ownership



593


673


704


668


2,638



549


630


677


658


2,515

Total Reportable Segments


$

1,209

$

1,358

$

1,531

$

1,246

$

5,343


$

1,145

$

1,268

$

1,444

$

1,208

$

5,068



















































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

(c)

Primarily includes additional services provided to franchisees and managed properties and fees related to our co-branded credit card program.

(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.

 








Table 6








(1 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS




















As of and For the Three Months Ended September 30, 2016








Average Revenue 




Number of 


Average 

Average Daily 

Per Available

Brand

Properties

Number of Rooms

Occupancy Rate

Rate (ADR)

Room (RevPAR)









Hotel Group







Super 8 

2,747

175,094

63.7%

$52.27

$33.28









Days Inn 

1,784

142,789

57.5%

$73.31

$42.15









Ramada 

850

120,092

58.0%

$78.30

$45.39









Wyndham Hotels and Resorts

235

51,898

57.4%

$109.11

$62.66









Howard Johnson 

376

43,226

55.5%

$67.43

$37.41









Baymont

425

33,732

58.9%

$75.52

$44.49









Travelodge 

406

30,012

59.0%

$79.62

$46.99









Microtel Inns & Suites by Wyndham

337

24,325

63.7%

$73.28

$46.70









Knights Inn 

375

22,841

49.3%

$54.80

$27.00









TRYP by Wyndham

114

16,322

73.7%

$79.77

$58.75









Wingate by Wyndham

149

13,568

68.4%

$94.68

$64.75









Hawthorn Suites by Wyndham

109

10,743

71.1%

$82.32

$58.49









Dolce

22

5,110

58.8%

$170.72

$100.43










Total Hotel Group

7,929

689,752

59.9%

$71.80

$43.04









Vacation Ownership






Wyndham Vacation Ownership resorts

218

24,582

N/A

N/A

N/A










Total Wyndham Worldwide

8,147

714,334























As of and For the Three Months Ended September 30, 2015








Average Revenue




Number of 


Average 

Average Daily 

Per Available 

Brand

Properties

Number of Rooms

Occupancy Rate

Rate (ADR)

Room (RevPAR)









Hotel Group







Super 8 

2,600

166,656

65.1%

$52.68

$34.29









Days Inn 

1,785

142,613

58.1%

$71.39

$41.48









Ramada 

838

117,044

59.0%

$76.94

$45.42









Wyndham Hotels and Resorts

210

45,537

65.5%

$108.30

$70.92









Howard Johnson 

403

43,803

59.0%

$62.54

$36.88









Baymont

396

31,480

60.0%

$72.04

$43.20









Travelodge 

414

30,692

59.8%

$74.56

$44.56









Microtel Inns & Suites by Wyndham

333

23,960

64.2%

$72.00

$46.20









Knights Inn 

383

23,464

49.2%

$52.00

$25.58









TRYP by Wyndham

122

17,641

70.3%

$84.05

$59.05









Wingate by Wyndham

148

13,450

70.4%

$91.42

$64.39









Hawthorn Suites by Wyndham

101

10,053

70.1%

$81.67

$57.28









Dolce

24

5,530

58.8%

$160.45

$94.40










Total Hotel Group

7,757

671,923

61.4%

$70.63

$43.34









Vacation Ownership






Wyndham Vacation Ownership resorts

211

24,095

N/A

N/A

N/A










Total Wyndham Worldwide

7,968

696,018












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 Nine Months Ended September 30, 2016








Average Revenue




Number of 


Average 

Average Daily 

 Per Available 

Brand

Properties

Number of Rooms

Occupancy Rate

Rate (ADR)

Room (RevPAR)









Hotel Group







Super 8 

2,747

175,094

58.6%

$49.38

$28.93









Days Inn 

1,784

142,789

51.8%

$69.10

$35.80









Ramada 

850

120,092

54.5%

$75.09

$40.94









Wyndham Hotels and Resorts

235

51,898

58.1%

$106.62

$61.99









Howard Johnson 

376

43,226

49.8%

$62.94

$31.32









Baymont

425

33,732

53.0%

$71.67

$38.01









Travelodge 

406

30,012

52.5%

$72.15

$37.88









Microtel Inns & Suites by Wyndham

337

24,325

58.3%

$69.26

$40.36









Knights Inn 

375

22,841

46.3%

$51.42

$23.83









TRYP by Wyndham

114

16,322

66.0%

$77.88

$51.40









Wingate by Wyndham

149

13,568

64.2%

$91.77

$58.96









Hawthorn Suites by Wyndham

109

10,743

67.8%

$82.68

$56.09









Dolce

22

5,110

53.4%

$165.67

$88.44










Total Hotel Group

7,929

689,752

55.3%

$68.60

$37.95









Vacation Ownership






Wyndham Vacation Ownership resorts

218

24,582

N/A

N/A

N/A










Total Wyndham Worldwide

8,147

714,334























As of and For the Nine Months Ended September 30, 2015








Average Revenue




Number of 


Average 

Average Daily 

 Per Available

Brand

Properties

Number of Rooms

Occupancy Rate

Rate (ADR)

 Room (RevPAR)









Hotel Group







Super 8 

2,600

166,656

59.2%

$51.01

$30.17









Days Inn 

1,785

142,613

52.5%

$68.20

$35.83









Ramada 

838

117,044

55.5%

$75.78

$42.08









Wyndham Hotels and Resorts

210

45,537

61.8%

$111.39

$68.87









Howard Johnson 

403

43,803

51.1%

$62.91

$32.15









Baymont

396

31,480

54.5%

$69.23

$37.72









Travelodge 

414

30,692

52.9%

$69.14

$36.55









Microtel Inns & Suites by Wyndham

333

23,960

59.8%

$69.81

$41.73









Knights Inn 

383

23,464

46.9%

$48.56

$22.79









TRYP by Wyndham

122

17,641

62.4%

$80.87

$50.42









Wingate by Wyndham

148

13,450

65.4%

$89.70

$58.66









Hawthorn Suites by Wyndham

101

10,053

68.5%

$81.16

$55.62









Dolce

24

5,530

57.5%

$149.84

$86.20










Total Hotel Group

7,757

671,923

56.1%

$68.97

$38.72









Vacation Ownership






Wyndham Vacation Ownership resorts

211

24,095

N/A

N/A

N/A










Total Wyndham Worldwide

7,968

696,018












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

























Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF ADJUSTED NET INCOME AND EPS

(In millions, except per share data)


















Location on Consolidated
Statements of Income


Three Months Ended September 30, 







2016


2015

Diluted weighted average shares outstanding





110



118













Diluted EPS





$

1.78


$

1.61













Net income attributable to Wyndham shareholders




$

196


$

190













Adjustments:











Legacy costs (b)


General and administrative



(1)



1


Restructuring costs (c)


Operating



14



8


Asset impairments (d)


Operating



-



7


Contract termination (e)


Operating



7



14



Total adjustments before tax





20



30


Income tax benefit/(expense) on adjustments (f)


Provision for income taxes



(9)



(10)

Total adjustments after tax





11



20













Adjustments - EPS impact




$

0.11


$

0.17













Adjusted net income attributable to Wyndham shareholders




$

207


$

210













Adjusted diluted EPS




$

1.89


$

1.78












































Nine Months Ended September 30, 







2016


2015

Diluted weighted average shares outstanding





112



120













Diluted EPS





$

4.01


$

3.93













Net income attributable to Wyndham shareholders




$

447


$

471













Adjustments:











Venezuela currency devaluation (g)


Operating



24



-


Acquisition costs (a)


Operating



1



3


Restructuring costs (c)


Operating



14



8


Early extinguishment of debt (h)


Interest expense



11



-


Asset impairments (d)


Operating



-



7


Contract termination (e)


Operating



7



14



Total adjustments before tax





57



32


Income tax benefit/(expense) on adjustments (i)


Provision for income taxes



(14)



(9)

Total adjustments after tax





43



23













Total adjustments - EPS impact




$

0.39


$

0.19













Adjusted net income attributable to Wyndham shareholders




$

490


$

494













Adjusted diluted EPS




$

4.40


$

4.12













Note:Amounts may not add due to rounding.













(a)

The amount for 2016 represents costs related to an acquisition that closed on July 1, 2016 at the Company's destination network business. The amount for 2015 relates primarily to costs incurred in connection with the acquisition of Dolce Hotels and Resorts at the Company's hotel group business during 2015.

(b)

Relates to the 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 as a result of (i) enhancing organizational efficiency and rationalizing existing facilities during the three and nine months ended September 30, 2016 and (ii) various organization realignment initiatives across the Company during the three and nine months ended September 30, 2015.

(d)

Relates to a non-cash impairment charge related to the write-down of terminated in-process technology projects resulting from the decision to outsource its reservation system to a third-party provider at the Company's hotel group business.

(e)

Relates to costs associated with the anticipated termination of a management contract at the Company's hotel group business during both the three and nine months ended September 30, 2016 and 2015.

(f)

Relates to (i) the tax effect of the adjustments during both 2016 and 2015 and (ii) a $2 million state tax refund for legacy tax matters during 2016.

(g)

Represents the impact from the devaluation of the exchange rate of Venezuela at the Company's destination network business during 2016.

(h)

Represents costs incurred in connection with the Company's early repurchase of its 6.0% senior unsecured notes during 2016.

(i)

Relates to (i) the tax effect of the adjustments during both 2016 and 2015; (ii) a valuation allowance established in connection with the acquisition of Dolce Hotels and Resorts during 2015 and (iii) a $2 million state tax refund for legacy tax matters during 2016. There was no tax impact associated with the $24 million Venezuela currency devaluation adjustment.



The above tables reconcile certain non-GAAP financial measures.  The presentation of these adjustments is intended to permit the comparison of particular adjustments as they appear in the income statement in order to assist investors' understanding of the overall impact of such adjustments.  In addition to GAAP financial measures, the Company provides adjusted net income and adjusted EPS financial measures to assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods, by adjusting for certain items which may be recurring or non-recurring and which in our view do not necessarily reflect ongoing performance.  We also internally use these measures to assess our operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions.  These supplemental disclosures are in addition to GAAP reported measures.  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.

 

























Table 8





























(1 of 3)





Wyndham Worldwide Corporation





NON-GAAP RECONCILIATION OF ADJUSTED EBITDA BY REPORTABLE SEGMENT





(In millions)







































































Venezuela 



























Currency 


Acquisition


Legacy


Restructuring


Contract


Adjusted





Three months ended March 31, 2016


EBITDA


Devaluation (b)


Costs(c)


Costs(d)


Costs(e)


Termination(f)


EBITDA





Hotel Group



$

84


$

-


$

-


$

-


$

-


$

-


$

84





Destination Network




81



24



-



-



-



-



105





Vacation Ownership




136



-



-



-



-



-



136





Total Reportable Segments



301



24



-



-



-



-



325





Corporate and Other (a)




(34)



-



-



-



-



-



(34)





Total Company



$

267


$

24


$

-


$

-


$

-


$

-


$

291


































Three months ended June 30, 2016


























Hotel Group



$

101


$

-


$

-


$

-


$

-


$

-


$

101





Destination Network




85



-



1






-



-



85





Vacation Ownership




187



-



-



-



-



-



187





Total Reportable Segments



373



-



1



-



-



-



373





Corporate and Other (a)




(33)



-



-



-



-



-



(33)





Total Company



$

340


$

-


$

1


$

-


$

-


$

-


$

340


































Three months ended September 30, 2016


























Hotel Group



$

107


$

-


$

-


$

-


$

3


$

7


$

117





Destination Network




138



-



-



-



4



-



142





Vacation Ownership




189



-



-



-



6



-



195





Total Reportable Segments



434



-



-



-



13



7



454





Corporate and Other (a)




(32)



-






(1)



1



-



(31)





Total Company



$

402


$

-


$

-


$

(1)


$

14


$

7


$

423


































Note: Amounts may not add across due to rounding.


































(a) Includes the elimination of transactions between segments.





(b) Represents the impact from the devaluation of the exchange rate of Venezuela.





(c) Represents costs related to an acquisition that closed on July 1, 2016.

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





(e) Relates to costs incurred due to enhancing organizational efficiency and rationalizing existing facilities across the Company.





(f) Relates to additional costs associated with the anticipated termination of a management contract.





 

























Table 8

























(2 of 3)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF ADJUSTED EBITDA BY REPORTABLE SEGMENT

(In millions)
















































































Legacy


Acquisition


Restructuring


Asset


Contract 


Adjusted 

Three months ended March 31, 2015


EBITDA


Adjustments(b)


Costs (c)


Costs (d)


Impairment (e)


Termination (f)


EBITDA

Hotel Group



$

76


$

-


$

3


$

-


$

-


$

-


$

79

Destination Network




105



-



-



(1)



-



-



104

Vacation Ownership




130



-



-



-



-



-



130

Total Reportable Segments



311



-



3



(1)



-



-



313

Corporate and Other (a)




(34)



-



-



-



-



-



(34)

Total Company



$

277


$

-


$

3


$

(1)


$

-


$

-


$

279


























Three months ended June 30, 2015






















Hotel Group



$

96


$

-


$

1


$

-


$

-


$

-


$

97

Destination Network




84



-



-



-



-



-



84

Vacation Ownership




182



-



-



-



-



-



182

Total Reportable Segments



362



-



1



-



-



-



363

Corporate and Other (a)




(30)



(1)



-



-



-



-



(31)

Total Company



$

332


$

(1)


$

1


$

-


$

-


$

-


$

332


























Three months ended September 30, 2015





















Hotel Group



$

83


$

-


$

-


$

4


$

7


$

14


$

108

Destination Network




134



-



-



3



-



-



137

Vacation Ownership




200



-



-



1



-



-



201

Total Reportable Segments



417



-



-



8



7



14



446

Corporate and Other (a)




(35)



1



-



-



-



-



(34)

Total Company



$

382


$

1


$

-


$

8


$

7


$

14


$

412


























Three months ended December 31, 2015






















Hotel Group



$

94


$

-


$

-


$

(1)


$

-


$

-


$

93

Destination Network




44



-



-



(1)



-



-



43

Vacation Ownership




174



-



-



-



-



-



174

Total Reportable Segments



312



-



-



(2)



-



-



310

Corporate and Other (a)




(37)



-



-



-



-



-



(37)

Total Company



$

275


$

-


$

-


$

(2)


$

-


$

-


$

273


























Twelve months ended December 31, 2015





















Hotel Group



$

349


$

-


$

3


$

3


$

7


$

14


$

376

Destination Network




367



-



1



2



-



-



370

Vacation Ownership




687



-



-



1



-



-



688

Total Reportable Segments



1,403



-



4



6



7



14



1,434

Corporate and Other (a)




(137)



-



-



-



-



-



(137)

Total Company



$

1,266


$

-


$

4


$

6


$

7


$

14


$

1,297


























Note:  The sum of the quarters may not agree to the twelve months ended December 31, 2015 due to rounding.

(a) Includes the elimination of transactions between segments.

(b) Relates to the 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 primarily to costs incurred in connection with the acquisition of Dolce Hotels and Resorts (January 2015).

(d) Relates to costs incurred as a result of various organizational realignment initiatives and the reversal of a portion of restructuring reserves that were established in prior periods.

(e) Relates to a non-cash impairment charge related to the write-down of terminated in-process technology projects resulting from the Company's decision to outsource its reservation system to a third-party provider.

(f) Relates to costs associated with the anticipated termination of a management contract.

 


















Table 8


















(3 of 3)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF ADJUSTED EBITDA BY REPORTABLE SEGMENT

SHARED-BASED COMPENSATION EXPENSE

(In millions)





































The following tables provide detail regarding share-based compensation expense which is included within adjusted EBITDA:









































2016





Q1


Q2


Q3


Q4


Full Year

Adjusted EBITDA


$

291


$

340


$

423



 N/A 



 N/A 


Share-based compensation expense (*)



13



20



14



 N/A 



 N/A 

Adjusted EBITDA excluding share-based compensation expense


$

304


$

360


$

437



 N/A 



 N/A 



























































2015





Q1


Q2


Q3


Q4


Full Year

Adjusted EBITDA


$

279


$

332


$

412


$

273


$

1,297


Share-based compensation expense (*)



15



13



13



15



55

Adjusted EBITDA excluding share-based compensation expense


$

294


$

345


$

425


$

288


$

1,352





































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

(*) Excludes share-based compensation expenses for which there was no impact on EBITDA. Such costs amounted to $1 million during Q1, Q2 and Q3 2016
and $3 million for the full year 2015.  The Company believes providing Adjusted EBITDA with the additional exclusion of share-based compensation
expense assists our investors and management by providing an additional financial measure to evaluate ongoing operations by excluding the variations
among companies in timing, amount and reporting of share-based compensation expense, which may differ significantly among companies.

 













Table 9

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF GROSS VOI SALES

(In millions)



























GROSS VOI SALES












We believe gross vacation ownership sales provide 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.















The following table provides a reconciliation of Gross VOI sales (see Table 3) to vacation ownership interest sales (see Table 5):














Year












2016


Q1

Q2

Q3

Q4

Full Year














Gross VOI sales



$

428

$

518

$

564


 N/A 


 N/A 

Less: Sales under WAAM Fee-for-Service



(23)


(20)


(20)


 N/A 


 N/A 

Gross VOI sales, net of WAAM Fee-for-Service sales



405


498


544


 N/A 


 N/A 

Less: Loan loss provision



(63)


(90)


(104)


 N/A 


 N/A 

Vacation ownership interest sales


$

342

$

409

$

441


 N/A 


 N/A 














2015

























Gross VOI sales



$

390

$

502

$

565

$

507

$

1,965

Less: Sales under WAAM Fee-for-Service



(21)


(26)


(37)


(42)


(126)

Gross VOI sales, net of WAAM Fee-for-Service sales



369


477


528


464


1,838

Less: Loan loss provision



(46)


(60)


(78)


(64)


(248)

Plus: Impact of percentage-of-completion accounting



13


-


(2)


2


13

Vacation ownership interest sales


$

336

$

417

$

448

$

403

$

1,604














2014

























Gross VOI sales



$

410

$

496

$

513

$

470

$

1,889

Less: Sales under WAAM Fee-for-Service



(44)


(40)


(27)


(21)


(132)

Gross VOI sales, net of WAAM Fee-for-Service sales



366


456


486


449


1,757

Less: Loan loss provision



(60)


(70)


(70)


(60)


(260)

Less: Impact of percentage-of-completion accounting



(3)


(4)


(1)


(4)


(12)

Vacation ownership interest sales


$

303

$

382

$

415

$

385

$

1,485














2013

























Gross VOI sales



$

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


$

263

$

347

$

384

$

384

$

1,379

_____________












Note: Amounts may not add due to rounding.








































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

FullYear














2016


$

25

$

22

$

31


 N/A 


 N/A 

2015


$

24

$

17

$

32

$

27

$

100

2014


$

25

$

21

$

27

$

24

$

97

2013


$

24

$

18

$

22

$

25

$

89

 

Table 10

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF 2016 OUTLOOK

(In millions, except per share data)








































Outlook (a)




Outlook (a)






As Adjusted




(GAAP)


Adjustments


(Non-GAAP)















Net revenues

$

5,650



$

-



$

5,650






























EBITDA

$

1,329



$

46

(b) 


$

1,375


Depreciation and amortization


(252)




-




(252)


Interest expense, net


(139)




11

(c)  



(128)


Income before taxes


938




57




995


Income taxes


(348)




(14)

(d)  


(362)


Net income attributable to noncontrolling interest


(1)




-




(1)


Net income attributable to Wyndham shareholders

$

587



$

43



$

630
















Diluted earnings per share


$5.29 - $5.32








$5.68 - $5.71
















Diluted shares


111








111






























(a) Outlook represents Company's approximate projection of performance for the fourth quarter of 2016.  Projections may not total because the Company does not expect the actual results of all items to be at the precise amount simultaneously.

(b) For a description of such adjustments, see Table 7.

(c) Adjustment represents early extinguishment of debt in the first quarter of 2016.

(d) Represents the tax effect of the adjustments and a $2 million state tax refund for legacy tax matters.

 

 













Table 11

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION - CONSTANT CURRENCY AND CURRENCY NEUTRAL

(In millions, except per share data)














The Company reports certain current year period financial measures on a constant currency and currency-neutral basis and excluding the impact of acquisitions.  The Company believes providing certain financial measures on a constant currency and currency-neutral basis as well as excluding the impact of acquisitions assists management and investors in better understanding underlying results and trends by excluding the impact of period over period changes in foreign exchange rates and changes resulting from acquisitions.














Constant currency results assume foreign results are translated from foreign currencies to the U.S. dollar at exchange rates consistent with those in the comparable period.














Currency Neutral results (i) assume foreign results are translated from foreign currencies to the U.S. dollar at exchange rates consistent with those in the comparable period and (ii) eliminating foreign exchange related activities such as foreign exchange hedges, balance sheet remeasurements, currency devaluations and/or other adjustments.  














Acquisition results are defined as the incremental period over period changes in the Company's results directly attributable to acquisitions.














Revenues in Constant Currency and Excluding Acquisitions:

Three months ended September 30,







2016


2015


% Change

Total revenues as reported

$

1,573


$

1,564


1%


Adjustments:










Foreign currency - constant currency


18



-


*



Incremental revenues from acquisitions


(7)



-


*


Total revenues in constant currency and excluding acquisitions

$

1,584


$

1,564


1%














Destination Network revenue as reported

$

486


$

476


2%


Adjustments:










Foreign currency - constant currency


19



-


*



Incremental revenues from acquisitions


(7)



-


*


Total Destination Network revenues in constant currency and excluding acquisitions

$

498


$

476


5%

















Exchange revenue as reported

$

159


$

157


1%





Adjustments:













Foreign currency - constant currency


1



-


*





Total Exchange revenues in constant currency and excluding acquisitions

$

160


$

157


2%

















Rental revenue as reported

$

304


$

296


3%





Adjustments:













Foreign currency - constant currency


18



-


*






Incremental revenues from acquisitions


(7)



-


*





Total Rental revenues in constant currency and excluding acquisitions

$

315


$

296


6%














Currency-neutral Adjusted EBITDA:

Three months ended September 30,







2016


2015


% Change

Adjusted EBITDA (a)

$

423


$

412


3%


Adjustments:










Foreign currency - currency-neutral


10



-


*



Incremental EBITDA from acquisitions


(2)



-


*


Currency-neutral Adjusted EBITDA excluding acquisitions

$

431


$

412


5%














Destination Network Adjusted EBITDA (a)

$

142


$

137


4%


Adjustments:










Foreign currency - currency-neutral


8



-


*



Incremental EBITDA from acquisitions


(2)



-


*


Destination Network Currency-neutral Adjusted EBITDA excluding acquisitions

$

148


$

137


8%



























* Not meaningful.

(a) See Table 8 for a reconciliation of EBITDA to Adjusted EBITDA and Table 2 for a reconciliation of EBITDA to Net Income

 























Table 12

Wyndham Worldwide Corporation

SCHEDULE OF DEBT

(In millions)







































September 30,


December 31,


September 30,
















2016


2015


2015
























Securitized vacation ownership debt (a)









Term notes

$

1,818


$

1,867


$

1,819

Bank conduit facility (b)


280



239



267

Total securitized vacation ownership debt (c)


2,098



2,106



2,086

Less: Current portion of securitized vacation ownership debt


200



209



210

Long-term securitized vacation ownership debt

$

1,898


$

1,897


$

1,876



















Debt:









   Revolving credit facility (due July 2020) (d)


$

12


$

7


$

20

   Commercial paper (e)



404



109



87

   Term loan (due March 2021)















323



-



-

   $315 million 6.00% senior unsecured notes (due December 2016)


-



316



316

   $300 million 2.95% senior unsecured notes (due March 2017) (f)


300



299



299

   $14 million 5.75% senior unsecured notes (due February 2018)


14



14



14

   $450 million 2.50% senior unsecured notes (due March 2018)


449



448



448

   $40 million 7.375% senior unsecured notes (due March 2020)


40



40



40

   $250 million 5.625% senior unsecured notes (due March 2021)


247



247



247

   $650 million 4.25% senior unsecured notes (due March 2022)


648



648



648

   $400 million 3.90% senior unsecured notes (due March 2023)


407



408



408

   $350 million 5.10% senior unsecured notes (due October 2025)


338



337



337

   Capital leases


151



153



158

   Other









18



49



48

Total long-term debt









3,351



3,075



3,070

Less: Current portion of long-term debt









33



44



44

Long-term debt








$

3,318


$

3,031


$

3,026
























(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 non-recourse
debt that is securitized through the SPEs is legally not a liability of the Company and thus, 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 2018 and borrowing capacity of $650 million. As of September 30, 2016, this facility had a remaining borrowing
capacity of $370 million.

(c) This debt is collateralized by $2,560 million, $2,576 million and $2,582 million, of underlying vacation ownership contract receivables and related assets as of September 30, 2016, December 31, 2015, and September
30, 2015, respectively.

(d) Represents a $1.5 billion revolving credit facility that expires in July 2020. As of September 30, 2016, the Company had $1 million of outstanding letters of credit. After considering outstanding commercial paper
borrowings of $404 million, the remaining borrowing capacity was $1.1 billion as of September 30, 2016.

(e) Represents commercial paper programs of $1.25 billion with a remaining borrowing capacity of $846 million as of September 30, 2016.

(f) Classified as long-term as the Company has the intent to refinance such debt on a long-term basis and the ability to do so with its revolving credit facility.

 

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SOURCE Wyndham Worldwide Corporation