Price Graph
Price
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|
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
|
|
For the quarterly period ended June 30, 2010 |
||
|
OR
|
||
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
|
|
For the transition period from to |
||
|
Delaware
|
20-0052541 | |
|
(State or other jurisdiction
of incorporation or organization) |
(I.R.S. Employer
Identification No.) |
|
|
22 Sylvan Way
Parsippany, New Jersey (Address of principal executive offices) |
07054
(Zip Code) |
|
| Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
1
2
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Net revenues
|
||||||||||||||||
|
Service fees and membership
|
$ | 409 | $ | 397 | $ | 833 | $ | 797 | ||||||||
|
Vacation ownership interest sales
|
271 | 242 | 488 | 482 | ||||||||||||
|
Franchise fees
|
120 | 117 | 211 | 216 | ||||||||||||
|
Consumer financing
|
106 | 109 | 211 | 217 | ||||||||||||
|
Other
|
57 | 55 | 106 | 109 | ||||||||||||
|
Net revenues
|
963 | 920 | 1,849 | 1,821 | ||||||||||||
|
Expenses
|
||||||||||||||||
|
Operating
|
387 | 391 | 769 | 759 | ||||||||||||
|
Cost of vacation ownership interests
|
49 | 33 | 86 | 82 | ||||||||||||
|
Consumer financing interest
|
29 | 35 | 53 | 67 | ||||||||||||
|
Marketing and reservation
|
138 | 137 | 261 | 275 | ||||||||||||
|
General and administrative
|
146 | 122 | 293 | 258 | ||||||||||||
|
Asset impairments
|
— | 3 | — | 8 | ||||||||||||
|
Restructuring costs
|
— | 3 | — | 46 | ||||||||||||
|
Depreciation and amortization
|
42 | 45 | 85 | 88 | ||||||||||||
|
Total expenses
|
791 | 769 | 1,547 | 1,583 | ||||||||||||
|
Operating income
|
172 | 151 | 302 | 238 | ||||||||||||
|
Other income, net
|
(3 | ) | — | (5 | ) | (3 | ) | |||||||||
|
Interest expense
|
36 | 26 | 86 | 45 | ||||||||||||
|
Interest income
|
(2 | ) | (2 | ) | (2 | ) | (4 | ) | ||||||||
|
Income before income taxes
|
141 | 127 | 223 | 200 | ||||||||||||
|
Provision for income taxes
|
46 | 56 | 78 | 84 | ||||||||||||
|
Net income
|
$ | 95 | $ | 71 | $ | 145 | $ | 116 | ||||||||
|
Earnings per share
|
||||||||||||||||
|
Basic
|
$ | 0.53 | $ | 0.40 | $ | 0.81 | $ | 0.65 | ||||||||
|
Diluted
|
0.51 | 0.39 | 0.78 | 0.64 | ||||||||||||
3
|
June 30,
|
December 31,
|
|||||||
| 2010 | 2009 | |||||||
|
Assets
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 239 | $ | 155 | ||||
|
Trade receivables, net
|
353 | 404 | ||||||
|
Vacation ownership contract receivables, net
|
287 | 289 | ||||||
|
Inventory
|
343 | 354 | ||||||
|
Prepaid expenses
|
117 | 116 | ||||||
|
Deferred income taxes
|
156 | 189 | ||||||
|
Other current assets
|
233 | 233 | ||||||
|
Total current assets
|
1,728 | 1,740 | ||||||
|
Long-term vacation ownership contract receivables, net
|
2,698 | 2,792 | ||||||
|
Non-current inventory
|
926 | 953 | ||||||
|
Property and equipment, net
|
887 | 953 | ||||||
|
Goodwill
|
1,392 | 1,386 | ||||||
|
Trademarks, net
|
699 | 660 | ||||||
|
Franchise agreements and other intangibles, net
|
410 | 391 | ||||||
|
Other non-current assets
|
479 | 477 | ||||||
|
Total assets
|
$ | 9,219 | $ | 9,352 | ||||
|
Liabilities and Stockholders’ Equity
|
||||||||
|
Current liabilities:
|
||||||||
|
Securitized vacation ownership debt
|
$ | 248 | $ | 209 | ||||
|
Current portion of long-term debt
|
29 | 175 | ||||||
|
Accounts payable
|
332 | 260 | ||||||
|
Deferred income
|
422 | 417 | ||||||
|
Due to former Parent and subsidiaries
|
246 | 245 | ||||||
|
Accrued expenses and other current liabilities
|
575 | 579 | ||||||
|
Total current liabilities
|
1,852 | 1,885 | ||||||
|
Long-term securitized vacation ownership debt
|
1,298 | 1,298 | ||||||
|
Long-term debt
|
1,763 | 1,840 | ||||||
|
Deferred income taxes
|
1,127 | 1,137 | ||||||
|
Deferred income
|
241 | 267 | ||||||
|
Due to former Parent and subsidiaries
|
62 | 63 | ||||||
|
Other non-current liabilities
|
166 | 174 | ||||||
|
Total liabilities
|
6,509 | 6,664 | ||||||
|
Commitments and contingencies (Note 11)
|
||||||||
|
Stockholders’ equity:
|
||||||||
|
Preferred stock, $.01 par value, authorized
6,000,000 shares, none issued and outstanding
|
— | — | ||||||
|
Common stock, $.01 par value, authorized
600,000,000 shares, issued 208,592,327 in 2010 and
205,891,254 shares in 2009
|
2 | 2 | ||||||
|
Treasury stock, at cost—30,196,916 shares in 2010 and
27,284,823 in 2009
|
(941 | ) | (870 | ) | ||||
|
Additional paid-in capital
|
3,759 | 3,733 | ||||||
|
Accumulated deficit
|
(215 | ) | (315 | ) | ||||
|
Accumulated other comprehensive income
|
105 | 138 | ||||||
|
Total stockholders’ equity
|
2,710 | 2,688 | ||||||
|
Total liabilities and stockholders’ equity
|
$ | 9,219 | $ | 9,352 | ||||
4
|
Six Months Ended
|
||||||||
| June 30, | ||||||||
| 2010 | 2009 | |||||||
|
Operating Activities
|
||||||||
|
Net income
|
$ | 145 | $ | 116 | ||||
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
||||||||
|
Depreciation and amortization
|
85 | 88 | ||||||
|
Provision for loan losses
|
174 | 229 | ||||||
|
Deferred income taxes
|
41 | 51 | ||||||
|
Stock-based compensation
|
20 | 18 | ||||||
|
Excess tax benefits from stock-based compensation
|
(13 | ) | — | |||||
|
Asset impairments
|
— | 8 | ||||||
|
Non-cash interest
|
39 | 18 | ||||||
|
Non-cash restructuring
|
— | 15 | ||||||
|
Net change in assets and liabilities, excluding the impact of
acquisitions and dispositions:
|
||||||||
|
Trade receivables
|
63 | 91 | ||||||
|
Vacation ownership contract receivables
|
(86 | ) | (51 | ) | ||||
|
Inventory
|
23 | (25 | ) | |||||
|
Prepaid expenses
|
(13 | ) | — | |||||
|
Other current assets
|
17 | 21 | ||||||
|
Accounts payable, accrued expenses and other current liabilities
|
78 | (4 | ) | |||||
|
Due to former Parent and subsidiaries, net
|
(2 | ) | (5 | ) | ||||
|
Deferred income
|
(5 | ) | (126 | ) | ||||
|
Other, net
|
(9 | ) | 15 | |||||
|
Net cash provided by operating activities
|
557 | 459 | ||||||
|
Investing Activities
|
||||||||
|
Property and equipment additions
|
(63 | ) | (87 | ) | ||||
|
Net assets acquired, net of cash acquired
|
(105 | ) | — | |||||
|
Equity investments and development advances
|
(8 | ) | (4 | ) | ||||
|
Proceeds from asset sales
|
16 | 3 | ||||||
|
(Increase)/decrease in securitization restricted cash
|
(20 | ) | 7 | |||||
|
(Increase)/decrease in escrow deposit restricted cash
|
(5 | ) | 4 | |||||
|
Other, net
|
2 | 1 | ||||||
|
Net cash used in investing activities
|
(183 | ) | (76 | ) | ||||
|
Financing Activities
|
||||||||
|
Proceeds from securitized borrowings
|
749 | 628 | ||||||
|
Principal payments on securitized borrowings
|
(710 | ) | (809 | ) | ||||
|
Proceeds from non-securitized borrowings
|
621 | 668 | ||||||
|
Principal payments on non-securitized borrowings
|
(1,059 | ) | (1,248 | ) | ||||
|
Proceeds from note issuance
|
247 | 460 | ||||||
|
Purchase of call options
|
— | (42 | ) | |||||
|
Proceeds from issuance of warrants
|
— | 11 | ||||||
|
Dividends to shareholders
|
(44 | ) | (15 | ) | ||||
|
Repurchase of common stock
|
(69 | ) | — | |||||
|
Proceeds from stock option exercises
|
16 | — | ||||||
|
Excess tax benefits from stock-based compensation
|
13 | — | ||||||
|
Debt issuance costs
|
(24 | ) | (11 | ) | ||||
|
Other, net
|
(23 | ) | 2 | |||||
|
Net cash used in financing activities
|
(283 | ) | (356 | ) | ||||
|
Effect of changes in exchange rates on cash and cash equivalents
|
(7 | ) | 11 | |||||
|
Net increase in cash and cash equivalents
|
84 | 38 | ||||||
|
Cash and cash equivalents, beginning of period
|
155 | 136 | ||||||
|
Cash and cash equivalents, end of period
|
$ | 239 | $ | 174 | ||||
5
|
Accumulated
|
||||||||||||||||||||||||||||||||
|
Treasury
|
Additional
|
Other
|
Total
|
|||||||||||||||||||||||||||||
| Common Stock | Stock |
Paid-in
|
Accumulated
|
Comprehensive
|
Stockholders’
|
|||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Income | Equity | |||||||||||||||||||||||||
|
Balance as of January 1, 2010
|
206 | $ | 2 | (27 | ) | $ | (870 | ) | $ | 3,733 | $ | (315 | ) | $ | 138 | $ | 2,688 | |||||||||||||||
|
Comprehensive income
|
||||||||||||||||||||||||||||||||
|
Net income
|
— | — | — | — | — | 145 | — | |||||||||||||||||||||||||
|
Currency translation adjustment, net of tax benefit of $32
|
— | — | — | — | — | — | (42 | ) | ||||||||||||||||||||||||
|
Reclassification of unrealized loss on cash flow hedge, net of
tax benefit of $6
|
— | — | — | — | — | — | 8 | |||||||||||||||||||||||||
|
Unrealized gains on cash flow hedges, net of tax of $0
|
— | — | — | — | — | — | 1 | |||||||||||||||||||||||||
|
Total comprehensive income
|
112 | |||||||||||||||||||||||||||||||
|
Exercise of stock options
|
1 | — | — | — | 16 | — | — | 16 | ||||||||||||||||||||||||
|
Issuance of shares for RSU vesting
|
2 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Repurchase of common stock
|
— | — | (3 | ) | (71 | ) | — | — | — | (71 | ) | |||||||||||||||||||||
|
Change in excess tax benefit on equity awards
|
— | — | — | — | 10 | — | — | 10 | ||||||||||||||||||||||||
|
Dividends
|
— | — | — | — | — | (45 | ) | — | (45 | ) | ||||||||||||||||||||||
|
Balance as of June 30, 2010
|
209 | $ | 2 | (30 | ) | $ | (941 | ) | $ | 3,759 | $ | (215 | ) | $ | 105 | $ | 2,710 | |||||||||||||||
|
Accumulated
|
||||||||||||||||||||||||||||||||
|
Treasury
|
Additional
|
Other
|
Total
|
|||||||||||||||||||||||||||||
| Common Stock | Stock |
Paid-in
|
Accumulated
|
Comprehensive
|
Stockholders’
|
|||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Income | Equity | |||||||||||||||||||||||||
|
Balance as of January 1, 2009
|
205 | $ | 2 | (27 | ) | $ | (870 | ) | $ | 3,690 | $ | (578 | ) | $ | 98 | $ | 2,342 | |||||||||||||||
|
Comprehensive income
|
||||||||||||||||||||||||||||||||
|
Net income
|
— | — | — | — | — | 116 | — | |||||||||||||||||||||||||
|
Currency translation adjustment, net of tax of $32
|
— | — | — | — | — | — | 29 | |||||||||||||||||||||||||
|
Unrealized gains on cash flow hedges, net of tax of $8
|
— | — | — | — | — | — | 13 | |||||||||||||||||||||||||
|
Total comprehensive income
|
158 | |||||||||||||||||||||||||||||||
|
Issuance of warrants
|
— | — | — | — | 11 | — | — | 11 | ||||||||||||||||||||||||
|
Issuance of shares for RSU vesting
|
1 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
Change in deferred compensation
|
— | — | — | — | 18 | — | — | 18 | ||||||||||||||||||||||||
|
Change in excess tax benefit on equity awards
|
— | — | — | — | (4 | ) | — | — | (4 | ) | ||||||||||||||||||||||
|
Dividends
|
— | — | — | — | — | (15 | ) | — | (15 | ) | ||||||||||||||||||||||
|
Balance as of June 30, 2009
|
206 | $ | 2 | (27 | ) | $ | (870 | ) | $ | 3,715 | $ | (477 | ) | $ | 140 | $ | 2,510 | |||||||||||||||
6
| 1. | Basis of Presentation |
| · | Lodging —franchises hotels in the upscale, midscale, economy and extended stay segments of the lodging industry and provides hotel management services for full-service hotels globally. | |
| · | Vacation Exchange and Rentals —provides vacation exchange products and services to owners of intervals of vacation ownership interests (“VOIs”) and markets vacation rental properties primarily on behalf of independent owners. | |
| · | Vacation Ownership —develops, markets and sells VOIs to individual consumers, provides consumer financing in connection with the sale of VOIs and provides property management services at resorts. |
7
| 2. | Earnings Per Share |
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Net income
|
$ | 95 | $ | 71 | $ | 145 | $ | 116 | ||||||||
|
Basic weighted average shares outstanding
|
180 | 179 | 180 | 178 | ||||||||||||
|
Stock options and restricted stock units (“RSU”)
|
4 | 3 | 3 | 2 | ||||||||||||
|
Warrants
(*)
|
3 | — | 3 | — | ||||||||||||
|
Diluted weighted average shares outstanding
|
187 | 182 | 186 | 180 | ||||||||||||
|
Earnings per share:
|
||||||||||||||||
|
Basic
|
$ | 0.53 | $ | 0.40 | $ | 0.81 | $ | 0.65 | ||||||||
|
Diluted
|
0.51 | 0.39 | 0.78 | 0.64 | ||||||||||||
| (*) | Represents the dilutive effect of warrants to purchase shares of the Company’s common stock related to the May 2009 issuance of the Company’s convertible notes (see Note 7—Long-Term Debt and Borrowing Arrangements). |
8
| 3. | Acquisitions |
| 4. | Intangible Assets |
| As of June 30, 2010 | As of December 31, 2009 | |||||||||||||||||||||||
|
Gross
|
Net
|
Gross
|
Net
|
|||||||||||||||||||||
|
Carrying
|
Accumulated
|
Carrying
|
Carrying
|
Accumulated
|
Carrying
|
|||||||||||||||||||
| Amount | Amortization | Amount | Amount | Amortization | Amount | |||||||||||||||||||
|
Unamortized Intangible Assets:
|
||||||||||||||||||||||||
|
Goodwill
|
$ | 1,392 | $ | 1,386 | ||||||||||||||||||||
|
Trademarks
|
$ | 699 | $ | 660 | ||||||||||||||||||||
|
Amortized Intangible Assets:
|
||||||||||||||||||||||||
|
Franchise agreements
|
$ | 637 | $ | 308 | $ | 329 | $ | 630 | $ | 298 | $ | 332 | ||||||||||||
|
Other
|
115 | 34 | 81 | 94 | 35 | 59 | ||||||||||||||||||
| $ | 752 | $ | 342 | $ | 410 | $ | 724 | $ | 333 | $ | 391 | |||||||||||||
9
|
Balance at
|
Goodwill
|
Balance at
|
||||||||||||||
|
January 1,
|
Acquired
|
Foreign
|
June 30,
|
|||||||||||||
| 2010 | During 2010 | Exchange | 2010 | |||||||||||||
|
Lodging
|
$ | 297 | $ | 9 | (a) | $ | — | $ | 306 | |||||||
|
Vacation Exchange and Rentals
|
1,089 | 38 | (b) | (41 | ) | 1,086 | ||||||||||
|
Total Company
|
$ | 1,386 | $ | 47 | $ | (41 | ) | $ | 1,392 | |||||||
| (a) | Relates to the acquisition of Tryp (see Note 3—Acquisitions). | |
| (b) | Relates to the acquisition of Hoseasons (see Note 3—Acquisitions). |
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Franchise agreements
|
$ | 5 | $ | 5 | $ | 10 | $ | 10 | ||||||||
|
Other
|
2 | 2 | 4 | 4 | ||||||||||||
|
Total
(*)
|
$ | 7 | $ | 7 | $ | 14 | $ | 14 | ||||||||
| (*) | Included as a component of depreciation and amortization on the Company’s Consolidated Statements of Income. |
| Amount | ||||
|
Remainder of 2010
|
$ | 13 | ||
|
2011
|
27 | |||
|
2012
|
26 | |||
|
2013
|
25 | |||
|
2014
|
24 | |||
|
2015
|
24 | |||
|
June 30,
|
December 31,
|
|||||||
| 2010 | 2009 | |||||||
|
Current vacation ownership contract receivables:
|
||||||||
|
Securitized
|
$ | 259 | $ | 244 | ||||
|
Non-securitized
|
63 | 52 | ||||||
|
Secured
(*)
|
— | 28 | ||||||
| 322 | 324 | |||||||
|
Less: Allowance for loan losses
|
(35 | ) | (35 | ) | ||||
|
Current vacation ownership contract receivables, net
|
$ | 287 | $ | 289 | ||||
|
Long-term vacation ownership contract receivables:
|
||||||||
|
Securitized
|
$ | 2,425 | $ | 2,347 | ||||
|
Non-securitized
|
596 | 546 | ||||||
|
Secured
(*)
|
— | 234 | ||||||
| 3,021 | 3,127 | |||||||
|
Less: Allowance for loan losses
|
(323 | ) | (335 | ) | ||||
|
Long-term vacation ownership contract receivables, net
|
$ | 2,698 | $ | 2,792 | ||||
| (*) | As of December 31, 2009, such receivables collateralized the Company’s 364-day, AUD 213 million, secured, revolving foreign credit facility, which was paid down and terminated during March 2010 (See Note 7—Long-Term Debt and Borrowing Arrangements). |
10
| Amount | ||||
|
Allowance for loan losses as of January 1, 2010
|
$ | (370 | ) | |
|
Provision for loan losses
|
(174 | ) | ||
|
Contract receivables written-off
|
186 | |||
|
Allowance for loan losses as of June 30, 2010
|
$ | (358 | ) | |
| 6. | Inventory |
|
June 30,
|
December 31,
|
|||||||
| 2010 | 2009 | |||||||
|
Land held for VOI development
|
$ | 119 | $ | 119 | ||||
|
VOI construction in process
|
330 | 352 | ||||||
|
Completed inventory and vacation credits
|
820 | 836 | ||||||
|
Total inventory
|
1,269 | 1,307 | ||||||
|
Less: Current portion
|
343 | 354 | ||||||
|
Non-current inventory
|
$ | 926 | $ | 953 | ||||
11
| 7. | Long-Term Debt and Borrowing Arrangements |
|
June 30,
|
December 31,
|
|||||||
| 2010 | 2009 | |||||||
|
Securitized vacation ownership debt:
(a)
|
||||||||
|
Term notes
|
$ | 1,255 | $ | 1,112 | ||||
|
Bank conduit facility
(b)
|
291 | 395 | ||||||
|
Total securitized vacation ownership debt
|
1,546 | 1,507 | ||||||
|
Less: Current portion of securitized vacation ownership debt
|
248 | 209 | ||||||
|
Long-term securitized vacation ownership debt
|
$ | 1,298 | $ | 1,298 | ||||
|
Long-term debt:
|
||||||||
|
6.00% senior unsecured notes (due December 2016)
(c)
|
$ | 798 | $ | 797 | ||||
|
Term loan
(d)
|
— | 300 | ||||||
|
Revolving credit facility (due October 2013)
(e)
|
— | — | ||||||
|
9.875% senior unsecured notes (due May 2014)
(f)
|
239 | 238 | ||||||
|
3.50% convertible notes (due May 2012)
(g)
|
362 | 367 | ||||||
|
7.375% senior unsecured notes (due March 2020)
(h)
|
247 | — | ||||||
|
Vacation ownership bank borrowings
(i)
|
— | 153 | ||||||
|
Vacation rentals capital
leases
(j)
|
110 | 133 | ||||||
|
Other
|
36 | 27 | ||||||
|
Total long-term debt
|
1,792 | 2,015 | ||||||
|
Less: Current portion of long-term debt
|
29 | 175 | ||||||
|
Long-term debt
|
$ | 1,763 | $ | 1,840 | ||||
| (a) | Represents debt that is securitized through bankruptcy remote special purpose entities (“SPEs”), the creditors of which have no recourse to the Company for principal and interest. | |
| (b) | Represents a 364-day, $600 million, non-recourse vacation ownership bank conduit facility, with a term through October 2010 whose capacity is subject to the Company’s ability to provide additional assets to collateralize the facility. As of June 30, 2010, the total available capacity of the facility was $309 million. | |
| (c) | The balance as of June 30, 2010 represents $800 million aggregate principal less $2 million of unamortized discount. | |
| (d) | The term loan facility was fully repaid during March 2010. | |
| (e) | The revolving credit facility has a total capacity of $950 million, which includes availability for letters of credit. As of June 30, 2010, the Company had $31 million of letters of credit outstanding and, as such, the total available capacity of the revolving credit facility was $919 million. |
| (f) | Represents senior unsecured notes issued by the Company during May 2009. The balance as of June 30, 2010 represents $250 million aggregate principal less $11 million of unamortized discount. |
| (g) | Represents convertible notes issued by the Company during May 2009, which includes debt principal, less unamortized discount, and a liability related to a bifurcated conversion feature. The following table details the components of the convertible notes: |
|
June 30,
|
||||||||
| 2010 | December 31, 2009 | |||||||
|
Debt principal
|
$ | 230 | $ | 230 | ||||
|
Unamortized discount
|
(31 | ) | (39 | ) | ||||
|
Debt less discount
|
199 | 191 | ||||||
|
Fair value of bifurcated conversion feature
(*)
|
163 | 176 | ||||||
|
Convertible notes
|
$ | 362 | $ | 367 | ||||
| (*) | The Company also has an asset with a fair value equal to the bifurcated conversion feature, which represents cash-settled call options that the Company purchased concurrent with the issuance of the convertible notes (“Bifurcated Conversion Feature”). |
| (h) | Represents senior unsecured notes issued by the Company during February 2010. The balance at June 30, 2010 represents $250 million aggregate principal less $3 million of unamortized discount. |
| (i) | Represents a 364-day, AUD 213 million, secured, revolving foreign credit facility, which was paid down and terminated during March 2010. | |
| (j) | Represents capital lease obligations with corresponding assets classified within property and equipment on the Company’s Consolidated Balance Sheets. |
12
13
|
Securitized
|
||||||||||||
|
Vacation
|
||||||||||||
|
Ownership
|
||||||||||||
| Debt | Other | Total | ||||||||||
|
Within 1 year
|
$ | 248 | $ | 29 | $ | 277 | ||||||
|
Between 1 and 2 years
|
385 | 372 | (*) | 757 | ||||||||
|
Between 2 and 3 years
|
192 | 25 | 217 | |||||||||
|
Between 3 and 4 years
|
188 | 249 | 437 | |||||||||
|
Between 4 and 5 years
|
164 | 10 | 174 | |||||||||
|
Thereafter
|
369 | 1,107 | 1,476 | |||||||||
| $ | 1,546 | $ | 1,792 | $ | 3,338 | |||||||
| (*) | Includes a liability of $163 million related to the Bifurcated Conversion Feature associated with the Company’s Convertible Notes. |
14
|
Total
|
Outstanding
|
Available
|
||||||||||
| Capacity | Borrowings | Capacity | ||||||||||
|
Securitized vacation ownership debt:
|
||||||||||||
|
Term notes
|
$ | 1,255 | $ | 1,255 | $ | — | ||||||
|
Bank conduit facility
(a)
|
600 | 291 | 309 | |||||||||
|
Total securitized vacation ownership debt
(b)
|
$ | 1,855 | $ | 1,546 | $ | 309 | ||||||
|
Long-term debt:
|
||||||||||||
|
6.00% senior unsecured notes (due December 2016)
|
$ | 798 | $ | 798 | $ | — | ||||||
|
Revolving credit facility (due October 2013)
(c)
|
950 | — | 950 | |||||||||
|
9.875% senior unsecured notes (due May 2014)
|
239 | 239 | — | |||||||||
|
3.50% convertible notes (due May 2012)
|
362 | 362 | — | |||||||||
|
7.375% senior unsecured notes (due March 2020)
|
247 | 247 | — | |||||||||
|
Vacation rentals capital leases
|
110 | 110 | — | |||||||||
|
Other
|
51 | 36 | 15 | |||||||||
|
Total long-term debt
|
$ | 2,757 | $ | 1,792 | 965 | |||||||
|
Less: Issuance of letters of credit
(c)
|
31 | |||||||||||
| $ | 934 | |||||||||||
| (a) | The capacity of this facility is subject to the Company’s ability to provide additional assets to collateralize additional securitized borrowings. | |
| (b) | These outstanding borrowings are collateralized by $2,862 million of underlying gross vacation ownership contract receivables and related assets. | |
| (c) | The capacity under the Company’s revolving credit facility includes availability for letters of credit. As of June 30, 2010, the available capacity of $950 million was reduced by $31 million for the issuance of letters of credit. |
15
|
June 30,
|
December 31,
|
|||||||
| 2010 | 2009 | |||||||
|
Securitized contract receivables, gross
(a)
|
$ | 2,684 | $ | 2,591 | ||||
|
Securitized restricted cash
(b)
|
153 | 133 | ||||||
|
Interest receivables on securitized contract receivables
(c)
|
21 | 20 | ||||||
|
Other assets
(d)
|
4 | 11 | ||||||
|
Total SPE assets
(e)
|
2,862 | 2,755 | ||||||
|
Securitized term notes
(f)
|
1,255 | 1,112 | ||||||
|
Securitized conduit facilities
(f)
|
291 | 395 | ||||||
|
Other liabilities
(g)
|
26 | 26 | ||||||
|
Total SPE liabilities
|
1,572 | 1,533 | ||||||
|
SPE assets in excess of SPE liabilities
|
$ | 1,290 | $ | 1,222 | ||||
|
|
||||||||
| (a) | Included in current ($259 million and $244 million as of June 30, 2010 and December 31, 2009, respectively) and non-current ($2,425 million and $2,347 million as of June 30, 2010 and December 31, 2009, respectively) vacation ownership contract receivables on the Company’s Consolidated Balance Sheets. | |
| (b) | Included in other current assets ($91 million and $69 million as of June 30, 2010 and December 31, 2009, respectively) and other non-current assets ($62 million and $64 million as of June 30, 2010 and December 31, 2009, respectively) on the Company’s Consolidated Balance Sheets. | |
| (c) | Included in trade receivables, net on the Company’s Consolidated Balance Sheets. | |
| (d) | Primarily includes interest rate derivative contracts and related assets; included in other non-current assets on the Company’s Consolidated Balance Sheets. | |
| (e) | Excludes deferred financing costs of $18 million and $20 million as of June 30, 2010 and December 31, 2009, respectively, related to securitized debt. |
| (f) | Included in current ($248 million and $209 million as of June 30, 2010 and December 31, 2009, respectively) and long-term ($1,298 million as of both June 30, 2010 and December 31, 2009) securitized vacation ownership debt on the Company’s Consolidated Balance Sheets. |
| (g) | Primarily includes interest rate derivative contracts and accrued interest on securitized debt; included in accrued expenses and other current liabilities ($4 million as of both June 30, 2010 and December 31, 2009) and other non-current liabilities ($22 million and $23 million as of June 30, 2010 and December 31, 2009, respectively) on the Company’s Consolidated Balance Sheets. |
|
June 30,
|
December 31,
|
|||||||
| 2010 | 2009 | |||||||
|
SPE assets in excess of SPE liabilities
|
$ | 1,290 | $ | 1,222 | ||||
|
Non-securitized contract receivables
|
659 | 598 | ||||||
|
Secured contract receivables
(*)
|
— | 262 | ||||||
|
Allowance for loan losses
|
(358 | ) | (370 | ) | ||||
|
Total, net
|
$ | 1,591 | $ | 1,712 | ||||
| (*) | As of December 31, 2009, such receivables collateralized the Company’s secured, revolving foreign credit facility, which was paid down and terminated during March 2010. |
16
| 8. | Fair Value |
|
Fair Value Measure on a
|
||||||||||||
| Recurring Basis | ||||||||||||
|
Significant
|
Significant
|
|||||||||||
|
As of
|
Other
|
Unobservable
|
||||||||||
|
June 30,
|
Observable
|
Inputs
|
||||||||||
| 2010 | Inputs (Level 2) | (Level 3) | ||||||||||
|
Assets:
|
||||||||||||
|
Derivatives
(a)
|
||||||||||||
|
Convertible Notes related Call Options
|
$ | 163 | $ | — | $ | 163 | ||||||
|
Interest rate contracts
|
6 | 6 | — | |||||||||
|
Foreign exchange contracts
|
14 | 14 | — | |||||||||
|
Securities
available-for-sale
(b)
|
5 | — | 5 | |||||||||
|
Total assets
|
$ | 188 | $ | 20 | $ | 168 | ||||||
|
Liabilities:
|
||||||||||||
|
Derivatives
(c)
|
||||||||||||
|
Bifurcated Conversion Feature
|
$ | 163 | $ | — | $ | 163 | ||||||
|
Interest rate contracts
|
37 | 37 | — | |||||||||
|
Foreign exchange contracts
|
10 | 10 | — | |||||||||
|
Total liabilities
|
$ | 210 | $ | 47 | $ | 163 | ||||||
| (a) | Included in other current assets and other non-current assets on the Company’s Consolidated Balance Sheet. | |
| (b) | Included in other non-current assets on the Company’s Consolidated Balance Sheet. | |
| (c) | Included in long-term debt, accrued expenses and other current liabilities and other non-current liabilities on the Company’s Consolidated Balance Sheet. |
17
|
Fair Value Measurements Using
|
||||||||||||
| Significant Unobservable Inputs (Level 3) | ||||||||||||
|
Derivative
|
||||||||||||
|
Liability-
|
||||||||||||
|
Derivative
|
Bifurcated
|
Securities
|
||||||||||
|
Asset-Call
|
Conversion
|
Available-For-
|
||||||||||
| Options | Feature | Sale | ||||||||||
|
Balance as of January 1, 2010
|
$ | 176 | $ | (176 | ) | $ | 5 | |||||
|
Change in fair value
|
(13 | ) | 13 | — | ||||||||
|
Balance as of June 30, 2010
|
$ | 163 | $ | (163 | ) | $ | 5 | |||||
| June 30, 2010 | December 31, 2009 | |||||||||||||||
|
Estimated
|
Estimated
|
|||||||||||||||
|
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||||||
| Amount | Value | Amount | Value | |||||||||||||
|
Assets
|
||||||||||||||||
|
Vacation ownership contract receivables, net
|
$ | 2,985 | $ | 2,794 | $ | 3,081 | $ | 2,809 | ||||||||
|
Debt
|
||||||||||||||||
|
Total debt
(a)
|
3,338 | 3,340 | 3,522 | 3,405 | ||||||||||||
|
Derivatives
|
||||||||||||||||
|
Foreign exchange contracts
(b)
|
||||||||||||||||
|
Assets
|
14 | 14 | 3 | 3 | ||||||||||||
|
Liabilities
|
(10 | ) | (10 | ) | (2 | ) | (2 | ) | ||||||||
|
Interest rate contracts
(c)
|
||||||||||||||||
|
Assets
|
6 | 6 | 5 | 5 | ||||||||||||
|
Liabilities
|
(37 | ) | (37 | ) | (45 | ) | (45 | ) | ||||||||
|
Convertible Notes related Call Options
|
||||||||||||||||
|
Assets
|
163 | 163 | 176 | 176 | ||||||||||||
| (a) | As of June 30, 2010 and December 31, 2009, includes $163 million and $176 million, respectively, related to the Bifurcated Conversion Feature liability. | |
| (b) | Instruments are in net gain positions as of June 30, 2010 and December 31, 2009. | |
| (c) | Instruments are in net loss positions as of June 30, 2010 and December 31, 2009. |
| 9. | Derivative Instruments and Hedging Activities |
18
| Assets | Liabilities | |||||||||||
| Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||||
|
Derivatives designated as hedging instruments
|
||||||||||||
|
Interest rate contracts
|
Other non-current liabilities | $ | 22 | |||||||||
|
Derivatives not designated as hedging instruments
|
||||||||||||
|
Interest rate contracts
|
Other non-current assets | $ | 6 | Other non-current liabilities | $ | 15 | ||||||
|
Foreign exchange contracts
|
Other current assets | 14 | Accrued exp. & other current liabs. | 10 | ||||||||
|
Convertible Notes related
Call Options (*) |
Other non-current assets | 163 | — | |||||||||
|
Bifurcated Conversion Feature
(*)
|
— | Long-term debt | 163 | |||||||||
|
Total derivatives not designated as hedging instruments
|
$ | 183 | $ | 188 | ||||||||
| (*) | See Note 7—Long-Term Debt and Borrowing Arrangements for further detail. |
19
| Assets | Liabilities | |||||||||||
| Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||||
|
Derivatives designated as hedging instruments
|
||||||||||||
|
Interest rate contracts
|
Other non-current liabilities | $ | 39 | |||||||||
|
Derivatives not designated as hedging instruments
|
||||||||||||
|
Interest rate contracts
|
Other non-current assets | $ | 5 | Other non-current liabilities | $ | 6 | ||||||
|
Foreign exchange contracts
|
Other current assets | 3 | Accrued exp. & other current liabs. | 2 | ||||||||
|
Convertible Notes related
Call Options (*) |
Other non-current assets | 176 | — | |||||||||
|
Bifurcated Conversion Feature
(*)
|
— | Long-term debt | 176 | |||||||||
|
Total derivatives not designated as hedging instruments
|
$ | 184 | $ | 184 | ||||||||
| (*) | See Note 7—Long-Term Debt and Borrowing Arrangements for further detail. |
| 10. | Income Taxes |
| 11. | Commitments and Contingencies |
20
| 12. | Accumulated Other Comprehensive Income |
|
Unrealized
|
Minimum
|
Accumulated
|
||||||||||||||
|
Currency
|
Gains/(Losses)
|
Pension
|
Other
|
|||||||||||||
|
Translation
|
on Cash Flow
|
Liability
|
Comprehensive
|
|||||||||||||
| Adjustments | Hedges, Net | Adjustment | Income | |||||||||||||
|
Balance, January 1, 2010, net of tax benefit of $32
|
$ | 166 | $ | (27 | ) | $ | (1 | ) | $ | 138 | ||||||
|
Current period change
|
(42 | ) | 9 | (*) | — | (33 | ) | |||||||||
|
Balance, June 30, 2010, net of tax benefit of $58
|
$ | 124 | $ | (18 | ) | $ | (1 | ) | $ | 105 | ||||||
| (*) | Primarily represents the reclassification of an after-tax unrealized loss associated with the termination of an interest rate swap agreement in connection with the early extinguishment of the term loan facility (See Note 7—Long-Term Debt and Borrowing Arrangements). |
|
Unrealized
|
Minimum
|
Accumulated
|
||||||||||||||
|
Currency
|
Gains/(Losses)
|
Pension
|
Other
|
|||||||||||||
|
Translation
|
on Cash Flow
|
Liability
|
Comprehensive
|
|||||||||||||
| Adjustments | Hedges, Net | Adjustment | Income | |||||||||||||
|
Balance, January 1, 2009, net of tax benefit of $72
|
$ | 141 | $ | (45 | ) | $ | 2 | $ | 98 | |||||||
|
Current period change
|
29 | 13 | — | 42 | ||||||||||||
|
Balance, June 30, 2009, net of tax benefit of $32
|
$ | 170 | $ | (32 | ) | $ | 2 | $ | 140 | |||||||
| 13. | Stock-Based Compensation |
21
| RSUs | SSARs | |||||||||||||||
|
Weighted
|
Weighted
|
|||||||||||||||
|
Number
|
Average
|
Number
|
Average
|
|||||||||||||
| of RSUs | Grant Price | of SSARs | Exercise Price | |||||||||||||
|
Balance as of January 1, 2010
|
8.3 | $ | 9.60 | 2.1 | $ | 21.70 | ||||||||||
|
Granted
|
1.9 | (b) | 22.85 | 0.2 | (b) | 22.84 | ||||||||||
|
Vested/exercised
|
(2.8 | ) | 11.63 | — | — | |||||||||||
|
Canceled
|
(0.3 | ) | 11.04 | — | — | |||||||||||
|
Balance as of June 30,
2010
(a)
|
7.1 | (c) | 12.21 | 2.3 | (d) | 21.77 | ||||||||||
| (a) | Aggregate unrecognized compensation expense related to SSARs and RSUs was $81 million as of June 30, 2010 which is expected to be recognized over a weighted average period of 2.7 years. | |
| (b) | Primarily represents awards granted by the Company on February 24, 2010. | |
| (c) | Approximately 6.7 million RSUs outstanding as of June 30, 2010 are expected to vest over time. | |
| (d) | Approximately 1.3 million of the 2.3 million SSARs are exercisable as of June 30, 2010. The Company assumes that all unvested SSARs are expected to vest over time. SSARs outstanding as of June 30, 2010 had an intrinsic value of $10 million and have a weighted average remaining contractual life of 3.9 years. |
|
SSARs Issued on
|
||||
| February 24, 2010 | ||||
|
Grant date fair value
|
$ | 8.66 | ||
|
Grant date strike price
|
$ | 22.84 | ||
|
Expected volatility
|
53.0% | |||
|
Expected life
|
4.25 yrs. | |||
|
Risk free interest rate
|
2.07% | |||
|
Projected dividend yield
|
2.10% | |||
22
| 14. | Segment Information |
| Three Months Ended June 30, | ||||||||||||||||
| 2010 | 2009 | |||||||||||||||
|
Net
|
Net
|
|||||||||||||||
| Revenues | EBITDA | Revenues | EBITDA (d) | |||||||||||||
|
Lodging
|
$ | 178 | $ | 49 | (c) | $ | 174 | $ | 50 | |||||||
|
Vacation Exchange and Rentals
|
281 | 78 | 280 | 56 | ||||||||||||
|
Vacation Ownership
|
505 | 104 | 467 | 107 | (e) | |||||||||||
|
Total Reportable Segments
|
964 | 231 | 921 | 213 | ||||||||||||
|
Corporate and Other
(a)(b)
|
(1 | ) | (14 | ) | (1 | ) | (17 | ) | ||||||||
|
Total Company
|
$ | 963 | 217 | $ | 920 | 196 | ||||||||||
|
Depreciation and amortization
|
42 | 45 | ||||||||||||||
|
Interest expense
|
36 | 26 | ||||||||||||||
|
Interest income
|
(2 | ) | (2 | ) | ||||||||||||
|
Income before income taxes
|
$ | 141 | $ | 127 | ||||||||||||
| (a) | Includes the elimination of transactions between segments. | |
| (b) | Includes $14 million and $19 million of corporate costs during the three months ended June 30, 2010 and 2009, respectively. | |
| (c) | Includes $1 million related to costs incurred in connection with the Company’s acquisition of Tryp during June 2010. | |
| (d) | Includes restructuring costs of $2 million and $1 million for Vacation Exchange and Rentals and Vacation Ownership, respectively, during the three months ended June 30, 2009. | |
| (e) | Includes a non-cash impairment charge of $3 million to reduce the value of certain vacation ownership properties and related assets held for sale that are no longer consistent with the Company’s development plans. |
23
| Six Months Ended June 30, | ||||||||||||||||
| 2010 | 2009 | |||||||||||||||
|
Net
|
Net
|
|||||||||||||||
|
Revenues
|
EBITDA | Revenues | EBITDA (f) | |||||||||||||
|
Lodging
|
$ | 322 | $ | 82 | (c) | $ | 328 | $ | 85 | |||||||
|
Vacation Exchange and Rentals
|
582 | 158 | (d) | 566 | 132 | |||||||||||
|
Vacation Ownership
|
950 | 186 | 929 | 151 | (g) | |||||||||||
|
Total Reportable Segments
|
1,854 | 426 | 1,823 | 368 | ||||||||||||
|
Corporate and Other
(a)(b)
|
(5 | ) | (34 | ) | (2 | ) | (39 | ) | ||||||||
|
Total Company
|
$ | 1,849 | 392 | $ | 1,821 | 329 | ||||||||||
|
Depreciation and amortization
|
85 | 88 | ||||||||||||||
|
Interest expense
|
86 | (e) | 45 | |||||||||||||
|
Interest income
|
(2 | ) | (4 | ) | ||||||||||||
|
Income before income taxes
|
$ | 223 | $ | 200 | ||||||||||||
| (a) | Includes the elimination of transactions between segments. | |
| (b) | Includes $1 million and $3 million of a net expense related to the resolution of and adjustment to certain contingent liabilities and assets during the six months ended June 30, 2010 and 2009, respectively, and $32 million and $36 million of corporate costs during the six months ended June 30, 2010 and 2009, respectively. | |
| (c) | Includes $1 million related to costs incurred in connection with the Company’s acquisition of Tryp during June 2010. | |
| (d) | Includes $4 million related to costs incurred in connection with the Company’s acquisition of Hoseasons during March 2010. | |
| (e) | Includes $1 million and $15 million for Vacation Ownership and Corporate and Other, respectively, of costs incurred for the early extinguishment of the Company’s revolving foreign credit facility and term loan facility during March 2010. |
| (f) | Includes restructuring costs of $3 million, $6 million, $36 million and $1 million for Lodging, Vacation Exchange and Rentals, Vacation Ownership and Corporate and Other, respectively, during the six months ended June 30, 2009. |
| (g) | Includes a non-cash impairment charge of $8 million to reduce the value of certain vacation ownership properties and related assets held for sale that are no longer consistent with the Company’s development plans. |
| 15. | Restructuring |
|
Personnel
|
Facility
|
Asset Write-off’s/
|
Contract
|
|||||||||||||||||
| Related (a) | Related (b) | Impairments (c) | Termination (d) | Total | ||||||||||||||||
|
Lodging
|
$ | 3 | $ | — | $ | — | $ | — | $ | 3 | ||||||||||
|
Vacation Exchange and Rentals
|
5 | 1 | — | — | 6 | |||||||||||||||
|
Vacation Ownership
|
1 | 20 | 14 | 1 | 36 | |||||||||||||||
|
Corporate
|
1 | — | — | — | 1 | |||||||||||||||
|
Total
|
$ | 10 | $ | 21 | $ | 14 | $ | 1 | $ | 46 | ||||||||||
| (a) | Represents severance benefits resulting from reductions of approximately 390 in staff. The Company formally communicated the termination of employment to substantially all 390 employees, representing a wide range of employee groups. As of June 30, 2009, the Company had terminated approximately 250 of these employees. | |
| (b) | Primarily related to the termination of leases of certain sales offices. | |
| (c) | Primarily related to the write-off of assets from sales office closures and cancelled development projects. | |
| (d) | Primarily represents costs incurred in connection with the termination of a property development contract. |
24
|
Liability as of
|
Liability as of
|
|||||||||||
|
January 1,
|
Cash
|
June 30,
|
||||||||||
| 2010 | Payments | 2010 | ||||||||||
|
Personnel-Related
(*)
|
$ | 3 | $ | 2 | $ | 1 | ||||||
|
Facility-Related
|
18 | 4 | 14 | |||||||||
|
Contract Terminations
|
1 | 1 | — | |||||||||
| $ | 22 | $ | 7 | $ | 15 | |||||||
| (*) | As of June 30, 2010, the Company had terminated all of the employees related to such costs. |
| 16. | Separation Adjustments and Transactions with Former Parent and Subsidiaries |
25
| · | Contingent litigation liabilities The Company assumed 37.5% of liabilities for certain litigation relating to, arising out of or resulting from certain lawsuits in which Cendant is named as the defendant. The indemnification obligation will continue until the underlying lawsuits are resolved. The Company will indemnify Cendant to the extent that Cendant is required to make payments related to any of the underlying lawsuits. As the indemnification obligation relates to matters in various stages of litigation, the maximum exposure cannot be quantified. Due to the inherently uncertain nature of the litigation process, the timing of payments related to these liabilities cannot reasonably be predicted, but is expected to occur over several years. Since the Separation, Cendant settled a majority of these lawsuits and the Company assumed a portion of the related indemnification obligations. For each settlement, the Company paid 37.5% of the aggregate settlement amount to Cendant. The Company’s payment obligations under the settlements were greater or less than the Company’s accruals, depending on the matter. On September 7, 2007, Cendant received an adverse ruling in a litigation matter for which the Company retained a 37.5% indemnification obligation. The judgment on the adverse ruling was entered on May 16, 2008. On May 23, 2008, Cendant filed an appeal of the judgment and, on July 1, 2009, an order was entered denying the appeal. As a result of the denial of the appeal, Realogy and the Company determined to pay the judgment. On July 23, 2009, the Company paid its portion of the aforementioned judgment ($37 million). Although the judgment for the underlying liability for this matter has been paid, the phase of the litigation involving the determination of fees owed the plaintiffs’ attorneys remains pending. Similar to the contingent liability, the Company is responsible for 37.5% of any attorneys’ fees payable. As a result of settlements and payments to Cendant, as well as other reductions and accruals for developments in active litigation matters, the Company’s aggregate accrual for outstanding Cendant contingent litigation liabilities was $5 million as of June 30, 2010. | |
| · | Contingent tax liabilities Prior to the Separation, the Company was included in the consolidated federal and state income tax returns of Cendant through the Separation date for the 2006 period then ended. The Company is generally liable for 37.5% of certain contingent tax liabilities. In addition, each of the Company, Cendant and Realogy may be responsible for 100% of certain of Cendant’s tax liabilities that will provide the responsible party with a future, offsetting tax benefit. |
| · | Cendant contingent and other corporate liabilities The Company has assumed 37.5% of corporate liabilities of Cendant including liabilities relating to (i) Cendant’s terminated or divested businesses; (ii) liabilities relating to the Travelport sale, if any; and (iii) generally any actions with respect to the Separation plan or the distributions brought by any third party. The Company’s maximum exposure to loss cannot be quantified as this guarantee relates primarily to future claims that may be made against Cendant. The Company assessed the probability and amount of potential liability related to this guarantee based on the extent and nature of historical experience. | |
| · | Guarantee related to deferred compensation arrangements In the event that Cendant, Realogy and/or Travelport are not able to meet certain deferred compensation obligations under specified plans for certain current and former officers and directors because of bankruptcy or insolvency, the Company has guaranteed such obligations (to the extent relating to amounts deferred in respect of 2005 and earlier). This guarantee will remain outstanding until such deferred compensation balances are distributed to the respective officers and directors. The maximum exposure cannot be quantified as the guarantee, in part, is related to the value of deferred investments as of the date of the requested distribution. |
26
| 17. | Subsequent Events |
27
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
| · | Lodging —franchises hotels in the upscale, midscale, economy and extended stay segments of the lodging industry and provides hotel management services for full-service hotels globally. | |
| · | Vacation Exchange and Rentals —provides vacation exchange products and services to owners of intervals of vacation ownership interests (“VOIs”) and markets vacation rental properties primarily on behalf of independent owners. | |
| · | Vacation Ownership —develops, markets and sells VOIs to individual consumers, provides consumer financing in connection with the sale of VOIs and provides property management services at resorts. |
28
| Three Months Ended June 30, | ||||||||||||
| 2010 | 2009 | % Change | ||||||||||
|
Lodging
|
||||||||||||
|
Number of rooms
(a)
|
606,800 | 590,200 | 3 | |||||||||
|
RevPAR
(b)
|
$ | 32.25 | $ | 32.38 | — | |||||||
|
Vacation Exchange and Rentals
|
||||||||||||
|
Average number of members (000s)
(c)
|
3,741 | 3,795 | (1 | ) | ||||||||
|
Exchange revenue per
member
(d)
|
$ | 172.20 | $ | 174.22 | (1 | ) | ||||||
|
Vacation rental transactions (in 000s)
(e)(f)
|
297 | 231 | 29 | |||||||||
|
Average net price per vacation rental
(f)(g)
|
$ | 387.01 | $ | 471.74 | (18 | ) | ||||||
|
Vacation Ownership
|
||||||||||||
|
Gross VOI sales (in 000s)
(h)(i)
|
$ | 371,000 | $ | 327,000 | 13 | |||||||
|
Tours
(j)
|
163,000 | 164,000 | (1 | ) | ||||||||
|
Volume Per Guest (“VPG”)
(k)
|
$ | 2,156 | $ | 1,854 | 16 | |||||||
| (a) | Represents the number of rooms at lodging properties at the end of the period which are either (i) under franchise and/or management agreements, (ii) properties affiliated with the Wyndham Hotels and Resorts brand for which we receive a fee for reservation and/or other services provided and (iii) properties managed under a joint venture. The amounts in 2010 and 2009 include 404 and 3,549 affiliated rooms, respectively. The Tryp hotel brand was acquired on June 30, 2010 and is, therefore, included in the number of rooms as of such date. | |
| (b) | Represents revenue per available room and is calculated by multiplying the percentage of available rooms occupied during the period by the average rate charged for renting a lodging room for one day. RevPAR does not reflect the results of the Tryp hotel brand since it was not owned until June 30, 2010. | |
| (c) | Represents members in our vacation exchange programs who pay annual membership dues. For additional fees, such participants are entitled to exchange intervals for intervals at other properties affiliated with our vacation exchange business. In addition, certain participants may exchange intervals for other leisure-related products and services. | |
| (d) | Represents total revenue 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. Excluding the impact of foreign exchange movements, exchange revenue per member decreased 2%. | |
| (e) | Represents the number of transactions that are generated in connection with customers booking their vacation rental stays through us. One rental transaction is recorded each time a standard one-week rental is booked. | |
| (f) | Includes the impact from the acquisition of Hoseasons Holdings Ltd. (“Hoseasons”), which was acquired on March 1, 2010; therefore, such operating statistics for 2010 are not presented on a comparable basis to the 2009 operating statistics. | |
| (g) | Represents the net rental price generated from renting vacation properties to customers divided by the number of vacation rental transactions. Excluding the impact of foreign exchange movements, the average net price per vacation rental decreased 13%. | |
| (h) | Represents total sales of VOIs, including sales under the Wyndham Asset Affiliation Model (“WAAM”), before the net effect of percentage-of-completion accounting and loan loss provisions. We believe that Gross VOI sales provides an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period. | |
| (i) | The following table provides a reconciliation of Gross VOI sales to Vacation ownership interest sales for the three months ended June 30 (in millions): |
| 2010 | 2009 | |||||||
|
Gross VOI sales
|
$ | 371 | $ | 327 | ||||
|
Less: WAAM sales
(*)
|
(13 | ) | — | |||||
|
Gross VOI sales, net of WAAM sales
|
358 | 327 | ||||||
|
Plus: Net effect of
percentage-of-completion
accounting
|
— | 37 | ||||||
|
Less: Loan loss provision
|
(87 | ) | (122 | ) | ||||
|
Vacation ownership interest sales
|
$ | 271 | $ | 242 | ||||
| (*) | Represents total sales of VOIs through our fee-for-service vacation ownership sales model designed to offer turn-key solutions for developers or banks in possession of newly developed inventory, which we will sell for a commission fee through our extensive sales and marketing channels. |
| (j) | Represents the number of tours taken by guests in our efforts to sell VOIs. | |
| (k) | VPG is calculated by dividing Gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) by the number of tours. Tele-sales upgrades were $7 million and $23 million during the three months ended June 30, 2010 and 2009, respectively. We have excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel. We believe that VPG provides an enhanced understanding of the performance of our vacation ownership business because it directly measures the efficiency of this business’ tour selling efforts during a given reporting period. |
29
| Three Months Ended June 30, | ||||||||||||
| 2010 | 2009 | Change | ||||||||||
|
Net revenues
|
$ | 963 | $ | 920 | $ | 43 | ||||||
|
Expenses
|
791 | 769 | 22 | |||||||||
|
Operating income
|
172 | 151 | 21 | |||||||||
|
Other income, net
|
(3 | ) | — | (3 | ) | |||||||
|
Interest expense
|
36 | 26 | 10 | |||||||||
|
Interest income
|
(2 | ) | (2 | ) | — | |||||||
|
Income before income taxes
|
141 | 127 | 14 | |||||||||
|
Provision for income taxes
|
46 | 56 | (10 | ) | ||||||||
|
Net income
|
$ | 95 | $ | 71 | $ | 24 | ||||||
| · | a $35 million decrease in our provision for loan losses primarily due to improved portfolio performance and mix, partially offset by the impact to the provision from higher gross VOI sales; | |
| · | a $31 million increase in gross sales of VOIs, net of WAAM sales, primarily reflecting an increase in VPG; | |
| · | a favorable impact of $8 million due to commissions earned on VOI sales under our WAAM; | |
| · | a $6 million increase in net revenues from rental transactions and related services at our vacation exchange and rentals business primarily due to incremental revenues contributed from the March 2010 acquisition of Hoseasons and higher average net price per vacation rental, partially offset by an unfavorable impact of foreign exchange movements of $7 million; | |
| · | $6 million of incremental property management fees within our vacation ownership business primarily as a result of growth in the number of units under management; and | |
| · | a $4 million increase in net revenues in our lodging business primarily due to an increase in rooms. |
| · | $24 million of increased cost of VOI sales related to the increase in gross VOI sales, net of WAAM sales; | |
| · | $20 million of increased employee and other related expenses at our vacation ownership business primarily related to higher sales commission costs resulting from increased gross VOI sales and rates; | |
| · | $9 million of increased costs at our lodging business primarily associated with additional services provided to franchisees; | |
| · | $7 million of increased litigation related expenses at our vacation ownership business; | |
| · | $7 million of higher bad debt expenses at our lodging business primarily attributable to receivables relating to terminated franchisees that are no longer operating a hotel under one of our 12 brands; | |
| · | $6 million of incremental costs at our vacation exchange and rentals business contributed from our acquisition of Hoseasons; | |
| · | $6 million of higher costs at our vacation ownership business related to our WAAM; and | |
| · | $5 million of incremental property management expenses at our vacation ownership business primarily associated with the growth in the number of units under management. |
30
| · | a decrease of $15 million of expenses related to the absence of the recognition of revenues previously deferred at our vacation ownership business, as discussed above; | |
| · | the favorable impact of $12 million at our vacation exchange and rentals business from foreign exchange transactions, foreign exchange hedging contracts and currency conversion gains; | |
| · | $9 million of lower volume-related, marketing and bad debt expenses at our vacation exchange and rentals business; | |
| · | a $6 million decrease in consumer financing interest expenses primarily related to lower average borrowings on our securitized debt facilities and a decrease in interest rates; | |
| · | the favorable impact of $4 million from foreign currency translation on expenses at our vacation exchange and rentals business; | |
| · | $4 million of decreased costs at our vacation ownership business related to our trial membership marketing program; | |
| · | a net decrease in marketing-related expenses of $4 million due to an $8 million decrease at our lodging business primarily due to lower marketing overhead costs as well as the timing of certain spend, partially offset by a $4 million increase at our vacation ownership business primarily related to a change in tour mix; | |
| · | the absence of $3 million of costs due to organizational realignment initiatives across our vacation exchange and rentals and vacation ownership businesses (see Restructuring Plan for more details); and | |
| · | the absence of a non-cash charge of $3 million recorded during the second quarter of 2009 to impair the value of certain vacation ownership properties and related assets held for sale that were no longer consistent with our development plans. |
| · | net revenues of approximately $3.7 billion to $4.0 billion; | |
| · | depreciation and amortization of approximately $180 million to $185 million; and | |
| · | interest expense, net (excluding early extinguishment of debt costs) of approximately $135 million to $145 million. |
| Net Revenues | EBITDA | |||||||||||||||||||
| 2010 | 2009 | % Change | 2010 | 2009 | % Change | |||||||||||||||
|
Lodging
|
$ | 178 | $ | 174 | 2 | $ | 49 | $ | 50 | (2) | ||||||||||
|
Vacation Exchange and Rentals
|
281 | 280 | — | 78 | 56 | 39 | ||||||||||||||
|
Vacation Ownership
|
505 | 467 | 8 | 104 | 107 | (3) | ||||||||||||||
|
Total Reportable Segments
|
964 | 921 | 5 | 231 | 213 | 8 | ||||||||||||||
|
Corporate and Other
(a)
|
(1 | ) | (1 | ) | * | (14 | ) | (17 | ) | * | ||||||||||
|
Total Company
|
$ | 963 | $ | 920 | 5 | 217 | 196 | 11 | ||||||||||||
|
Less: Depreciation and amortization
|
42 | 45 | ||||||||||||||||||
|
Interest expense
|
36 | 26 | ||||||||||||||||||
|
Interest income
|
(2 | ) | (2 | ) | ||||||||||||||||
|
Income before income taxes
|
$ | 141 | $ | 127 | ||||||||||||||||
| (*) | Not meaningful. | |
| (a) | Includes the elimination of transactions between segments. |
31
| · | $9 million of increased costs primarily associated with additional services provided to franchisees; | |
| · | $7 million of higher bad debt expense which is primarily attributable to receivables relating to terminated franchisees that are no longer operating a hotel under one of our 12 brands; and | |
| · | $1 million of costs incurred in connection with our acquisition of the Tryp hotel brand. |
| · | RevPAR to be flat to up 3%; and | |
| · | number of rooms (including Tryp) to increase 3-5%. |
32
| · | the favorable impact of $10 million from foreign exchange transactions and foreign exchange hedging contracts; | |
| · | the favorable impact of foreign currency translation on expenses of $4 million; | |
| · | $5 million of lower volume-related and marketing costs; | |
| · | $4 million of lower bad debt expense; | |
| · | $2 million of currency conversion gains related to our Venezuela operations; and | |
| · | the absence of $2 million of costs recorded during the second quarter of 2009 relating to organizational realignment initiatives (see Restructuring Plan for more details). |
| · | vacation rental transactions to increase 20—23% and average net price per vacation rental to decrease 12—15% primarily reflecting increased volumes at lower rental yields from our Hoseasons acquisition; and | |
| · | average number of members as well as exchange revenue per member to be flat. |
33
| · | $175 million of decreased average borrowings on our securitized debt facilities; | |
| · | a 61 basis point decrease in our weighted average interest rate; and | |
| · | higher weighted average interest rates earned on our contract receivable portfolio. |
| · | $24 million of increased cost of VOI sales related to the increase in gross VOI sales, net of WAAM sales; | |
| · | $20 million of increased employee and other related expenses primarily due to higher sales commission costs resulting from increased gross VOI sales and rates; | |
| · | $7 million of increased litigation related expenses; and | |
| · | $4 million of increased marketing expenses due to the change in tour mix. |
| · | $4 million of decreased costs related to our trial membership marketing program; | |
| · | the absence of a non-cash charge of $3 million recorded during the second quarter of 2009 to impair the value of certain vacation ownership properties and related assets held for sale that were no longer consistent with our development plans; and | |
| · | the absence of $1 million of costs recorded during the second quarter of 2009 relating to organizational realignment initiatives (see Restructuring Plan for more details). |
| · | gross VOI sales to be up 2-4%; | |
| · | tours to decline 1-3%; and |
34
| · | VPG to increase 10-14%. |
| · | $2 million of funding of the Wyndham charitable foundation; | |
| · | $2 million of employee related expenses; | |
| · | $2 million of higher legal fees; and | |
| · | $1 million of increased IT costs. |
| Six Months Ended June 30, | ||||||||||||
| 2010 | 2009 | Change | ||||||||||
|
Net revenues
|
$ | 1,849 | $ | 1,821 | $ | 28 | ||||||
|
Expenses
|
1,547 | 1,583 | (36 | ) | ||||||||
|
Operating income
|
302 | 238 | 64 | |||||||||
|
Other income, net
|
(5 | ) | (3 | ) | (2 | ) | ||||||
|
Interest expense
|
86 | 45 | 41 | |||||||||
|
Interest income
|
(2 | ) | (4 | ) | 2 | |||||||
|
Income before income taxes
|
223 | 200 | 23 | |||||||||
|
Provision for income taxes
|
78 | 84 | (6 | ) | ||||||||
|
Net income
|
$ | 145 | $ | 116 | $ | 29 | ||||||
| · | a $55 million increase in gross sales of VOIs, net of WAAM sales, reflecting an increase in VPG, partially offset by the planned reduction in tour flow; | |
| · | a $55 million decrease in our provision for loan losses primarily due to improved portfolio performance and mix, partially offset by the impact to the provision from higher gross VOI sales; |
35
| · | a $15 million increase in net revenues from rental transactions and related services at our vacation exchange and rentals business due to incremental revenues contributed from the March 2010 acquisition of Hoseasons; | |
| · | $15 million of incremental property management fees within our vacation ownership business primarily as a result of growth in the number of units under management; and | |
| · | a favorable impact of $11 million due to commissions earned on VOI sales under our WAAM. |
| · | a decrease of $104 million as a result of the absence of the recognition of revenues previously deferred under the POC method of accounting due to operational changes that we made at our vacation ownership business to eliminate the impact of deferred revenues; | |
| · | a $6 million decrease in net revenues in our lodging business primarily due to RevPAR weakness; | |
| · | a $6 million decline in consumer financing revenues due to a decline in our contract receivable portfolio; and | |
| · | a $5 million decrease in ancillary revenues at our vacation ownership business primarily associated with a decline in fees generated from other non-core businesses, partially offset by the usage of bonus points/credits, which are provided as purchase incentives on VOI sales. |
| · | the absence of $46 million of costs due to organizational realignment initiatives across our businesses (see Restructuring Plan for more details); | |
| · | a decrease of $41 million of expenses related to the absence of the recognition of revenues previously deferred at our vacation ownership business, as discussed above; | |
| · | $19 million of lower marketing-related expenses primarily at our lodging business resulting from lower marketing overhead as well as the timing of certain spend; | |
| · | a $14 million decrease in consumer financing interest expenses primarily related to lower average borrowings on our securitized debt facilities and a decrease in interest rates; | |
| · | the favorable impact of $12 million at our vacation exchange and rentals business from foreign exchange transactions and foreign exchange hedging contracts; | |
| · | $10 million of lower volume-related, marketing and bad debt expenses at our vacation exchange and rentals business; | |
| · | the absence of non-cash charges of $8 million recorded during the six months ended June 30, 2009 to impair the value of certain vacation ownership properties and related assets held for sale that were no longer consistent with our development plans; | |
| · | $8 million of lower corporate expenses primarily related to hedging activity; and | |
| · | $6 million of decreased costs at our vacation ownership business related to our trial membership marketing program. |
| · | $27 million of increased cost of VOI sales related to the increase in gross VOI sales, net of WAAM sales; | |
| · | $25 million of increased employee and other related expenses at our vacation ownership business primarily related to higher sales commission costs resulting from increased gross VOI sales and rates; | |
| · | $19 million of increased litigation related expenses primarily at our vacation ownership business; | |
| · | $13 million of incremental property management expenses at our vacation ownership business primarily associated with the growth in the number of units under management; | |
| · | $10 million of costs incurred at our vacation exchange and rentals business in connection with our acquisition of Hoseasons; | |
| · | $9 million of increased costs at our lodging business primarily associated with additional services provided to franchisees; | |
| · | $8 million of higher bad debt expenses at our lodging business primarily attributable to receivables relating to terminated franchisees that are no longer operating a hotel under one of our 12 brands; |
36
| · | $7 million of higher costs at our vacation ownership business related to our WAAM; and | |
| · | the unfavorable impact of foreign currency translation on expenses of $7 million at our vacation exchange and rentals business. |
| Net Revenues | EBITDA | |||||||||||||||||||
| 2010 | 2009 | % Change | 2010 | 2009 | % Change | |||||||||||||||
|
Lodging
|
$ | 322 | $ | 328 | (2) | $ | 82 | $ | 85 | (4) | ||||||||||
|
Vacation Exchange and Rentals
|
582 | 566 | 3 | 158 | 132 | 20 | ||||||||||||||
|
Vacation Ownership
|
950 | 929 | 2 | 186 | 151 | 23 | ||||||||||||||
|
Total Reportable Segments
|
1,854 | 1,823 | 2 | 426 | 368 | 16 | ||||||||||||||
|
Corporate and
Other
(a)
|
(5 | ) | (2 | ) | * | (34 | ) | (39 | ) | * | ||||||||||
|
Total Company
|
$ | 1,849 | $ | 1,821 | 2 | 392 | 329 | 19 | ||||||||||||
|
Less: Depreciation and amortization
|
85 | 88 | ||||||||||||||||||
|
Interest expense
|
86 | 45 | ||||||||||||||||||
|
Interest income
|
(2 | ) | (4 | ) | ||||||||||||||||
|
Income before income taxes
|
$ | 223 | $ | 200 | ||||||||||||||||
| (*) | Not meaningful. | |
| (a) | Includes the elimination of transactions between segments. |
| · | a $9 million decrease in domestic royalty, marketing and reservation revenues primarily due to a domestic RevPAR decline of 5% principally driven by occupancy and rate declines; | |
| · | $4 million of lower reimbursable revenues recorded by our hotel management business; and | |
| · | a $4 million decrease in other franchise fees principally related to lower termination settlements. |
37
| · | $9 million of increased costs primarily associated with additional services provided to franchisees; | |
| · | $8 million of higher bad debt expense which is primarily attributable to receivables relating to terminated franchisees that are no longer operating a hotel under one of our 12 brands; | |
| · | $2 million of consulting costs incurred during 2010 relating to our strategic initiative to grow reservation contribution; and | |
| · | $1 million of costs incurred in connection with our acquisition of the Tryp hotel brand. |
| · | the favorable impact of $12 million from foreign exchange transactions and foreign exchange hedging contracts; |
38
| · | the absence of $6 million of costs recorded during the six months ended June 30, 2009 relating to organizational realignment initiatives (see Restructuring Plan for more details); | |
| · | $6 million of lower volume-related and marketing costs; and | |
| · | $4 million of lower bad debt expense. |
39
| · | $231 million of decreased average borrowings on our securitized debt facilities; | |
| · | a 72 basis point decrease in our weighted average interest rate; and | |
| · | higher weighted average interest rates earned on our contract receivable portfolio. |
| · | $27 million of increased cost of VOI sales related to the increase in gross VOI sales, net of WAAM sales; | |
| · | $25 million of increased employee and other related expenses primarily due to higher sales commission costs resulting from increased gross VOI sales and rates; | |
| · | $19 million of increased litigation related expenses; and | |
| · | $4 million of increased costs related to sales incentives awarded to owners. |
| · | the absence of $36 million of costs recorded during the six months ended June 30, 2009 relating to organizational realignment initiatives (see Restructuring Plan for more details); | |
| · | the absence of a non-cash charge of $8 million recorded during the six months ended June 30, 2009 to impair the value of certain vacation ownership properties and related assets held for sale that were no longer consistent with our development plans; | |
| · | $6 million of decreased costs related to our trial membership marketing program; and | |
| · | $3 million of decreased marketing expenses due to the change in tour mix. |
| · | $8 million of favorable impact from foreign exchange hedging contracts; | |
| · | $2 million resulting from the absence of severance recorded during the second quarter of 2009; | |
| · | $2 million of decreased expenses related to the resolution of and adjustment to certain contingent liabilities and assets recorded during the six months ended June 30, 2010 compared to the same period during 2009; and | |
| · | the absence of $1 million of costs relating to organizational realignment initiatives (see Restructuring Plan for more details). |
| · | $3 million of increased IT costs; | |
| · | $2 million of funding of the Wyndham charitable foundation; | |
| · | $2 million of employee related expenses; and | |
| · | $2 million of higher legal fees. |
40
| · | a $22 million increase in interest incurred on our long-term debt facilities, primarily related to our May 2009 and February 2010 debt issuances; | |
| · | our termination of an interest rate swap agreement related to the early extinguishment of our term loan facility during the first quarter of 2010, which resulted in the reclassification of a $14 million unrealized loss from accumulated other comprehensive income to interest expense on our Consolidated Statement of Income; | |
| · | a $3 million decrease in capitalized interest at our vacation ownership business due to lower development of vacation ownership inventory; and | |
| · | an additional $2 million of costs, which are included within interest expense on our Consolidated Statement of Income, recorded during the first quarter of 2010 in connection with the early extinguishment of our term loan and revolving foreign credit facilities. |
41
|
June 30,
|
December 31,
|
|||||||||||
| 2010 | 2009 | Change | ||||||||||
|
Total assets
|
$ | 9,219 | $ | 9,352 | $ | (133 | ) | |||||
|
Total liabilities
|
6,509 | 6,664 | (155 | ) | ||||||||
|
Total stockholders’ equity
|
2,710 | 2,688 | 22 | |||||||||
| · | a $96 million decrease in vacation ownership contract receivables, net as a result of a decline in VOI sales financed; | |
| · | a $66 million decrease in property and equipment primarily related to the depreciation of property and equipment and the impact of foreign currency translation at our vacation exchange and rentals business, partially offset by capital expenditures for the improvement of technology and maintenance of technological advantages; | |
| · | a $51 million decrease in trade receivables, net, primarily due to seasonality at our European vacation rental businesses and a decline in ancillary revenues at our vacation ownership business, partially offset by the acquisition of Hoseasons and the impact of foreign currency translation at our vacation exchange and rentals business; | |
| · | a $38 million decrease in inventory primarily due to increased VOI sales and a reduction in the development of vacation ownership resorts; and | |
| · | a $33 million decrease in deferred income taxes primarily attributable to a change in the expected timing of the utilization of alternative minimum tax credits. |
| · | an increase of $84 million in cash and cash equivalents, which is discussed in further detail in “Liquidity and Capital Resources—Cash Flows”; | |
| · | a $39 million increase in trademarks, net primarily as a result of the acquisitions of Hoseasons and the Tryp hotel brand; | |
| · | a $19 million increase in franchise agreements and other intangibles, net, primarily related to the acquisitions of Hoseasons and the Tryp hotel brand, partially offset by the amortization of franchise agreements at our lodging business; | |
| · | a $6 million net increase in goodwill related to the acquisitions of Hoseasons and the Tryp hotel brand, partially offset by the impact of foreign currency translation at our vacation exchange and rentals business; and |
42
| · | a $2 million increase in other non-current assets primarily due to increased deferred financing costs as a result of the debt issuances during the first half of 2010, partially offset by a $13 million decrease in our call option transaction entered into concurrent with the sale of the convertible notes, which is discussed in greater detail in Note 7—Long-Term Debt and Borrowing Arrangements. |
| · | a net decrease of $223 million in our other long-term debt primarily reflecting net principal payments on our other long-term debt with operating cash of $194 million, a $16 million impact due to foreign currency translation and a $13 million decrease in our derivative liability related to the bifurcated conversion feature entered into concurrent with the sale of our convertible notes, which is discussed in greater detail in Note 7—Long-Term Debt and Borrowing Arrangements; | |
| · | a $21 million decrease in deferred income primarily resulting from the impact of the recognition of revenues related to our vacation ownership trial membership marketing program, partially offset by increased deferred revenue at our lodging and vacation exchange and rentals businesses; | |
| · | a $10 million decrease in deferred income taxes primarily attributable to movement in other comprehensive income, partially offset by utilization of alternative minimum credits; and | |
| · | a $4 million decrease in accrued expenses and other current liabilities primarily due to lower accrued employee costs related to the payment of our annual incentive compensation during the first half of 2010, partially offset by increased litigation related expenses at our vacation ownership business and higher accrued interest on our non-securitized long-term debt. |
| · | $145 million of net income generated during the first half of 2010; | |
| · | a $16 million impact resulting from the exercise of stock options during the first half of 2010; | |
| · | a $10 million increase to our pool of excess tax benefits available to absorb tax deficiencies due to the vesting of equity awards; and | |
| · | a $9 million impact resulting from (i) the reclassification of an $8 million after-tax unrealized loss associated with the termination of an interest rate swap agreement in connection with the early extinguishment of our term loan facility (see Note 7—Long-Term Debt and Borrowing Arrangements) and (ii) $1 million of unrealized gains on cash flow hedges. |
| · | $71 million of treasury stock purchased through our stock repurchase program; | |
| · | $45 million related to dividends; and | |
| · | $42 million of currency translation adjustments, net of a tax benefit. |
43
| Six Months Ended June 30, | ||||||||||||
| 2010 | 2009 | Change | ||||||||||
|
Cash provided by/(used in):
|
||||||||||||
|
Operating activities
|
$ | 557 | $ | 459 | $ | 98 | ||||||
|
Investing activities
|
(183 | ) | (76 | ) | (107 | ) | ||||||
|
Financing activities
|
(283 | ) | (356 | ) | 73 | |||||||
|
Effects of changes in exchange rate on cash and cash equivalents
|
(7 | ) | 11 | (18 | ) | |||||||
|
Net change in cash and cash equivalents
|
$ | 84 | $ | 38 | $ | 46 | ||||||
| · | a $121 million increase in deferred income related to the absence of the recognition of revenue previously deferred under the POC method of accounting during the first half of 2009; | |
| · | an $82 million increase related to accounts payable primarily due to increased accruals for marketing, litigation and incentive programs along with timing differences in accounts payable at our vacation ownership business; and | |
| · | $48 million of lower investments in inventory primarily related to the planned reduction in development of resorts for VOI sales and a reduction in projected inventory recovery due to improved portfolio performance. |
| · | a $55 million decline in our provision for loan losses primarily related to improved portfolio performance and mix and the absence of the recognition of revenue previously deferred under the POC method of accounting; | |
| · | $35 million related to higher originations of vacation ownership contract receivables primarily related to an increase in VOI sales; and | |
| · | $28 million of lower cash inflows from trade receivables primarily due to lower collections associated with the 2009 planned reduction of ancillary revenues at our vacation ownership business. |
| · | higher acquisition-related payments of $105 million primarily related to the March 2010 acquisition of Hoseasons and the June 2010 acquisition of the Tryp hotel brand; | |
| · | an increase of $27 million in cash outflows from securitized restricted cash primarily due to the timing of cash that we are required to set aside in connection with additional vacation ownership contract receivable securitizations; and | |
| · | an increase of $9 million in cash outflows from escrow deposits restricted cash primarily due to timing differences between our deeding and sales processes for certain VOI sales and the absence of the utilization of restricted cash during the first half of 2009 for renovations at one of our vacation exchange and rentals location. |
44
| · | $220 million of higher net proceeds related to securitized vacation ownership debt; | |
| · | lower cash outflows of $31 million relating to the absence of our 2009 convertible note hedge and warrant transactions; | |
| · | $16 million of higher proceeds received in connection with stock option exercises during the first half of 2010; and | |
| · | higher tax benefits of $13 million from the exercise and vesting of equity awards. |
| · | $71 million of lower net proceeds related to non-securitized borrowings; | |
| · | $69 million spent on our stock repurchase program; | |
| · | $29 million of additional dividends paid to shareholders; | |
| · | $22 million of higher withholding taxes related to restricted stock unit net share settlement; and | |
| · | $13 million of incremental debt issuance costs primarily related to our new $950 million revolving credit facility. |
45
46
|
June 30,
|
December 31,
|
|||||||
| 2010 | 2009 | |||||||
|
Securitized vacation ownership debt:
(a)
|
||||||||
|
Term notes
|
$ | 1,255 | $ | 1,112 | ||||
|
Bank conduit facility
(b)
|
291 | 395 | ||||||
|
Total securitized vacation ownership debt
|
$ | 1,546 | $ | 1,507 | ||||
|
Long-term debt:
|
||||||||
|
6.00% senior unsecured notes (due December 2016)
(c)
|
$ | 798 | $ | 797 | ||||
|
Term loan
(d)
|
— | 300 | ||||||
|
Revolving credit facility (due October 2013)
(e)
|
— | — | ||||||
|
9.875% senior unsecured notes (due May 2014)
(f)
|
239 | 238 | ||||||
|
3.50% convertible notes (due May 2012)
(g)
|
362 | 367 | ||||||
|
7.375% senior unsecured notes (due March 2020)
(h)
|
247 | — | ||||||
|
Vacation ownership bank borrowings
(i)
|
— | 153 | ||||||
|
Vacation rentals capital leases
(j)
|
110 | 133 | ||||||
|
Other
|
36 | 27 | ||||||
|
Total long-term debt
|
$ | 1,792 | $ | 2,015 | ||||
| (a) | Represents debt that is securitized through bankruptcy-remote special purpose entities (“SPEs”), the creditors of which have no recourse to us for principal and interest. | |
| (b) | Represents a 364-day, $600 million, non-recourse vacation ownership bank conduit facility, with a term through October 2010, whose capacity is subject to our ability to provide additional assets to collateralize the facility. As of June 30, 2010, the total available capacity of the facility was $309 million. | |
| (c) | The balance as of June 30, 2010 represents $800 million aggregate principal less $2 million of unamortized discount. | |
| (d) | The term loan facility was fully repaid during March 2010. | |
| (e) | The revolving credit facility has a total capacity of $950 million, which includes availability for letters of credit. As of June 30, 2010, we had $31 million of letters of credit outstanding and, as such, the total available capacity of the revolving credit facility was $919 million. | |
| (f) | Represents senior unsecured notes we issued during May 2009. The balance as of June 30, 2010 represents $250 million aggregate principal less $11 million of unamortized discount. | |
| (g) | Represents convertible notes issued by us during May 2009, which includes debt principal, less unamortized discount, and a liability related to a bifurcated conversion feature. The following table details the components of the convertible notes: |
|
June 30,
|
December 31,
|
|||||||
| 2010 | 2009 | |||||||
|
Debt principal
|
$ | 230 | $ | 230 | ||||
|
Unamortized discount
|
(31 | ) | (39 | ) | ||||
|
Debt less discount
|
199 | 191 | ||||||
|
Fair value of bifurcated conversion feature(*)
|
163 | 176 | ||||||
|
Convertible notes
|
$ | 362 | $ | 367 | ||||
| (*) | We also have an asset with a fair value equal to the bifurcated conversion feature, which represents cash-settled call options that we purchased concurrent with the issuance of the convertible notes. |
| (h) | Represents senior unsecured notes we issued during February 2010. The balance as of June 30, 2010 represents $250 million aggregate principal less $3 million of unamortized discount. | |
| (i) | Represents a 364-day, AUD 213 million, secured, revolving foreign credit facility, which was paid down and terminated during March 2010. | |
| (j) | Represents capital lease obligations with corresponding assets classified within property and equipment on our Consolidated Balance Sheets. |
47
|
Total
|
Outstanding
|
Available
|
||||||||||
| Capacity | Borrowings | Capacity | ||||||||||
|
Securitized vacation ownership debt:
|
||||||||||||
|
Term notes
|
$ | 1,255 | $ | 1,255 | $ | — | ||||||
|
Bank conduit facility
(a)
|
600 | 291 | 309 | |||||||||
|
Total securitized vacation ownership debt
(b)
|
$ | 1,855 | $ | 1,546 | $ | 309 | ||||||
|
Long-term debt:
|
||||||||||||
|
6.00% senior unsecured notes (due December 2016)
|
$ | 798 | $ | 798 | $ | — | ||||||
|
Revolving credit facility (due October 2013)
(c)
|
950 | — | 950 | |||||||||
|
9.875% senior unsecured notes (due May 2014)
|
239 | 239 | — | |||||||||
|
3.50% convertible notes (due May 2012)
|
362 | 362 | — | |||||||||
|
7.375% senior unsecured notes (due March 2020)
|
247 | 247 | — | |||||||||
|
Vacation rentals capital leases
|
110 | 110 | — | |||||||||
|
Other
|
51 | 36 | 15 | |||||||||
|
Total long-term debt
|
$ | 2,757 | $ | 1,792 | 965 | |||||||
|
Less: Issuance of letters of credit
(c)
|
31 | |||||||||||
| $ | 934 | |||||||||||
| (a) | The capacity of this facility is subject to our ability to provide additional assets to collateralize additional securitized borrowings. | |
| (b) | These outstanding borrowings are collateralized by $2,862 million of underlying gross vacation ownership contract receivables and related assets. | |
| (c) | The capacity under our revolving credit facility includes availability for letters of credit. As of June 30, 2010, the available capacity of $950 million was reduced by $31 million for the issuance of letters of credit. |
|
June 30,
|
December 31,
|
|||||||
| 2010 | 2009 | |||||||
|
Securitized contract receivables, gross
|
$ | 2,684 | $ | 2,591 | ||||
|
Securitized restricted cash
|
153 | 133 | ||||||
|
Interest receivables on securitized contract receivables
|
21 | 20 | ||||||
|
Other assets
(a)
|
4 | 11 | ||||||
|
Total SPE assets
(b)
|
2,862 | 2,755 | ||||||
|
Securitized term notes
|
1,255 | 1,112 | ||||||
|
Securitized conduit facilities
|
291 | 395 | ||||||
|
Other liabilities
(c)
|
26 | 26 | ||||||
|
Total SPE liabilities
|
1,572 | 1,533 | ||||||
|
SPE assets in excess of SPE liabilities
|
$ | 1,290 | $ | 1,222 | ||||
| (a) | Primarily includes interest rate derivative contracts and related assets. | |
| (b) | Excludes deferred financing costs of $18 million and $20 million as of June 30, 2010 and December 31, 2009, respectively, related to securitized debt. | |
| (c) | Primarily includes interest rate derivative contracts and accrued interest on securitized debt. |
48
|
June 30,
|
December 31,
|
|||||||
| 2010 | 2009 | |||||||
|
SPE assets in excess of SPE liabilities
|
$ | 1,290 | $ | 1,222 | ||||
|
Non-securitized contract receivables
|
659 | 598 | ||||||
|
Secured contract receivables
(*)
|
— | 262 | ||||||
|
Allowance for loan losses
|
(358 | ) | (370 | ) | ||||
|
Total, net
|
$ | 1,591 | $ | 1,712 | ||||
| (*) | As of December 31, 2009, such receivables collateralized our secured, revolving foreign credit facility, which was paid down and terminated during March 2010. |
49
50
| · | Contingent litigation liabilities We assumed 37.5% of liabilities for certain litigation relating to, arising out of or resulting from certain lawsuits in which Cendant is named as the defendant. The indemnification obligation will continue until the underlying lawsuits are resolved. We will indemnify Cendant to the extent that Cendant is required to make payments related to any of the underlying lawsuits. As the indemnification obligation relates to matters in various stages of litigation, the maximum exposure cannot be quantified. Due to the inherently uncertain nature of the litigation process, the timing of payments related to these liabilities cannot reasonably be predicted, but is expected to occur over several years. Since the Separation, Cendant settled a majority of these lawsuits and we assumed a portion of the related indemnification obligations. For each settlement, we paid 37.5% of the aggregate settlement amount to Cendant. Our payment obligations under the settlements were greater or less than our accruals, depending on the matter. On September 7, 2007, Cendant received an adverse ruling in a litigation matter for which we retained a 37.5% indemnification obligation. The judgment on the adverse ruling was entered on May 16, 2008. On May 23, 2008, Cendant filed an appeal of the judgment and, on July 1, 2009, an order was entered denying the appeal. As a result of |
51
| the denial of the appeal, Realogy and we determined to pay the judgment. On July 23, 2009, we paid our portion of the aforementioned judgment ($37 million). Although the judgment for the underlying liability for this matter has been paid, the phase of the litigation involving the determination of fees owed the plaintiffs’ attorneys remains pending. Similar to the contingent liability, we are responsible for 37.5% of any attorneys’ fees payable. As a result of settlements and payments to Cendant, as well as other reductions and accruals for developments in active litigation matters, our aggregate accrual for outstanding Cendant contingent litigation liabilities was $5 million as of June 30, 2010. |
| · | Contingent tax liabilities Prior to the Separation, we and Realogy were included in the consolidated federal and state income tax returns of Cendant through the Separation date for the 2006 period then ended. We are generally liable for 37.5% of certain contingent tax liabilities. In addition, each of us, Cendant and Realogy may be responsible for 100% of certain of Cendant’s tax liabilities that will provide the responsible party with a future, offsetting tax benefit. |
| · | Cendant contingent and other corporate liabilities We have assumed 37.5% of corporate liabilities of Cendant including liabilities relating to (i) Cendant’s terminated or divested businesses; (ii) liabilities relating to the Travelport sale, if any; and (iii) generally any actions with respect to the Separation plan or the distributions brought by any third party. Our maximum exposure to loss cannot be quantified as this guarantee relates primarily to future claims that may be made against Cendant. We assessed the probability and amount of potential liability related to this guarantee based on the extent and nature of historical experience. | |
| · | Guarantee related to deferred compensation arrangements In the event that Cendant, Realogy and/or Travelport are not able to meet certain deferred compensation obligations under specified plans for certain current and former officers and directors because of bankruptcy or insolvency, we have guaranteed such obligations (to the extent relating to amounts deferred in respect of 2005 and earlier). This guarantee will remain outstanding until such deferred compensation balances are distributed to the respective officers and directors. The maximum exposure cannot be quantified as the guarantee, in part, is related to the value of deferred investments as of the date of the requested distribution. |
52
|
7/1/10-
|
7/1/11-
|
7/1/12-
|
7/1/13-
|
7/1/14-
|
||||||||||||||||||||||||
| 6/30/11 | 6/30/12 | 6/30/13 | 6/30/14 | 6/30/15 | Thereafter | Total | ||||||||||||||||||||||
|
Securitized
debt
(a)
|
$ | 248 | $ | 385 | $ | 192 | $ | 188 | $ | 164 | $ | 369 | $ | 1,546 | ||||||||||||||
|
Long-term debt
|
29 | 372 | 25 | 249 | 10 | 1,107 | 1,792 | |||||||||||||||||||||
|
Interest on securitized and long-term debt
(b)
|
216 | 199 | 176 | 145 | 105 | 241 | 1,082 | |||||||||||||||||||||
|
Operating leases
|
62 | 55 | 41 | 30 | 25 | 119 | 332 | |||||||||||||||||||||
|
Other purchase commitments
(c)
|
210 | 100 | 17 | 6 | 24 | 117 | 474 | |||||||||||||||||||||
|
Contingent liabilities
(d)
|
252 | 13 | 3 | — | — | — | 268 | |||||||||||||||||||||
|
Total
(e)
|
$ | 1,017 | $ | 1,124 | $ | 454 | $ | 618 | $ | 328 | $ | 1,953 | $ | 5,494 | ||||||||||||||
| (a) | Represents debt that is securitized through bankruptcy-remote SPEs, the creditors to which have no recourse to us for principal and interest. | |
| (b) | Estimated using the stated interest rates on our long-term debt and the swapped interest rates on our securitized debt. | |
| (c) | Primarily represents commitments for the development of vacation ownership properties. Total includes approximately $100 million of vacation ownership development commitments, which we may terminate at minimal to no cost. | |
| (d) | Primarily represents certain contingent litigation liabilities, contingent tax liabilities and 37.5% of Cendant contingent and other corporate liabilities, which we assumed and are responsible for pursuant to our separation from Cendant. | |
| (e) | Excludes $25 million of our liability for unrecognized tax benefits associated with the guidance for uncertainty in income taxes since it is not reasonably estimatable to determine the periods in which such liability would be settled with the respective tax authorities. |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risks. |
| Item 4. | Controls and Procedures. |
| (a) | Disclosure Controls and Procedures. Our management, with the participation of our Chairman and Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our Chairman and Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective. |
| (b) | Internal Control Over Financial Reporting. There have been no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the period to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. |
53
| Item 1. | Legal Proceedings. |
| ITEM 1A. | RISK FACTORS |
| · | changes in operating costs, including inflation, energy, labor costs (including minimum wage increases and unionization), workers’ compensation and health-care related costs and insurance; | |
| · | changes in desirability of geographic regions of the hotels or resorts in our business; | |
| · | changes in the supply and demand for hotel rooms, vacation exchange and rental services and vacation ownership products and services; | |
| · | seasonality in our businesses may cause fluctuations in our operating results; | |
| · | geographic concentrations of our operations and customers; | |
| · | increases in costs due to inflation that may not be fully offset by price and fee increases in our business; | |
| · | availability of acceptable financing and cost of capital as they apply to us, our customers, current and potential hotel franchisees and developers, owners of hotels with which we have hotel management contracts, our RCI affiliates and other developers of vacation ownership resorts; | |
| · | our ability to securitize the receivables that we originate in connection with sales of vacation ownership interests; |
54
| · | the risk that purchasers of vacation ownership interests who finance a portion of the purchase price default on their loans due to adverse macro or personal economic conditions or otherwise, which would increase loan loss reserves and adversely affect loan portfolio performance, each of which would negatively impact our results of operations; that if such defaults occur during the early part of the loan amortization period we will not have recovered the marketing, selling, administrative and other costs associated with such vacation ownership interest; such costs will be incurred again in connection with the resale of the repossessed vacation ownership interest; and the value we recover in a default is not, in all instances, sufficient to cover the outstanding debt; | |
| · | the quality of the services provided by franchisees, our vacation exchange and rentals business, resorts with units that are exchanged through our vacation exchange business and/or resorts in which we sell vacation ownership interests may adversely affect our image and reputation; | |
| · | our ability to generate sufficient cash to buy from third-party suppliers the products that we need to provide to the participants in our points programs who want to redeem points for such products; | |
| · | overbuilding in one or more segments of the hospitality industry and/or in one or more geographic regions; | |
| · | changes in the number and occupancy and room rates of hotels operating under franchise and management agreements; | |
| · | changes in the relative mix of franchised hotels in the various lodging industry price categories; | |
| · | our ability to develop and maintain positive relations and contractual arrangements with current and potential franchisees, hotel owners, vacation exchange members, vacation ownership interest owners, resorts with units that are exchanged through our vacation exchange business and/or owners of vacation properties that our vacation rentals business markets for rental; | |
| · | the availability of and competition for desirable sites for the development of vacation ownership properties; difficulties associated with obtaining entitlements to develop vacation ownership properties; liability under state and local laws with respect to any construction defects in the vacation ownership properties we develop; and our ability to adjust our pace of completion of resort development relative to the pace of our sales of the underlying vacation ownership interests; | |
| · | our ability to adjust our business model to generate greater cash flow and require less capital expenditures; | |
| · | private resale of vacation ownership interests could adversely affect our vacation ownership resorts and vacation exchange businesses; | |
| · | revenues from our lodging business are indirectly affected by our franchisees’ pricing decisions; | |
| · | organized labor activities and associated litigation; | |
| · | maintenance and infringement of our intellectual property; | |
| · | the bankruptcy or insolvency of any one of our customers could impair our ability to collect outstanding fees or other amounts due or otherwise exercise our contractual rights; | |
| · | increases in the use of third-party Internet services to book online hotel reservations; and | |
| · | disruptions in relationships with third parties, including marketing alliances and affiliations with e-commerce channels. |
55
| · | our cash flows from operations or available lines of credit may be insufficient to meet required payments of principal and interest, which could result in a default and acceleration of the underlying debt; | |
| · | if we are unable to comply with the terms of the financial covenants under our revolving credit facility, including a breach of the financial ratios or tests, such non-compliance could result in a default and acceleration of the underlying revolver debt and under other debt instruments that contain cross-default provisions; | |
| · | our leverage may adversely affect our ability to obtain additional financing; | |
| · | our leverage may require the dedication of a significant portion of our cash flows to the payment of principal and interest thus reducing the availability of cash flows to fund working capital, capital expenditures or other operating needs; | |
| · | increases in interest rates; | |
| · | rating agency downgrades for our debt that could increase our borrowing costs; | |
| · | failure or non-performance of counterparties for foreign exchange and interest rate hedging transactions; | |
| · | we may not be able to securitize our vacation ownership contract receivables on terms acceptable to us because of, among other factors, the performance of the vacation ownership contract receivables, adverse conditions in the market for vacation ownership loan-backed notes and asset-backed notes in general, the credit quality and financial stability of insurers of securitization transactions, and the risk that the actual amount of uncollectible accounts on our securitized vacation ownership contract receivables and other credit we extend is greater than expected; | |
| · | our securitizations contain portfolio performance triggers which, if violated, may result in a disruption or loss of cash flow from such transactions; | |
| · | a reduction in commitments from surety bond providers may impair our vacation ownership business by requiring us to escrow cash in order to meet regulatory requirements of certain states; | |
| · | prohibitive cost and inadequate availability of capital could restrict the development or acquisition of vacation ownership resorts by us and the financing of purchases of vacation ownership interests; and | |
| · | if interest rates increase significantly, we may not be able to increase the interest rate offered to finance purchases of vacation ownership interests by the same amount of the increase. |
56
57
58
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
|
Approximate Dollar
|
||||||||||||||||
|
Total Number of
|
Value of Shares
|
|||||||||||||||
|
Shares Purchased as
|
that May Yet Be
|
|||||||||||||||
|
Total Number of
|
Average Price Paid
|
Part of Publicly
|
Purchased Under
|
|||||||||||||
| Period | Shares Purchased | per Share | Announced Plan | Plan | ||||||||||||
|
April 1—30, 2010
|
604,594 | $ | 26.64 | 604,594 | $ | 132,312,936 | ||||||||||
|
May 1—31, 2010
|
851,400 | $ | 23.97 | 851,400 | $ | 114,073,414 | ||||||||||
|
June 1—30,
2010
(*)
|
699,400 | $ | 22.76 | 699,400 | $ | 99,844,011 | ||||||||||
|
Total
|
2,155,394 | $ | 24.33 | 2,155,394 | $ | 99,844,011 | ||||||||||
| (*) | Includes 88,700 shares purchased for which the trade date occurred during June 2010 while settlement occurred during July 2010. |
59
| Item 3. | Defaults Upon Senior Securities. |
| Item 5. | Other Information. |
| Item 6. | Exhibits. |
| · | were not intended to be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; | |
| · | may have been qualified in such agreement by disclosures that were made to the other party in connection with the negotiation of the applicable agreement; | |
| · | may apply contract standards of “materiality” that are different from “materiality” under the applicable securities laws; and | |
| · | were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement. |
60
|
Date: July 30, 2010
|
/s/ Thomas
G. Conforti
Chief Financial Officer |
|
|
Date: July 30, 2010
|
/s/ Nicola
Rossi
Chief Accounting Officer |
61
|
Exhibit No.
|
Description
|
|
|
2.1
|
Separation and Distribution Agreement by and among Cendant Corporation, Realogy Corporation, Wyndham Worldwide Corporation and Travelport Inc., dated as of July 27, 2006 (incorporated by reference to the Registrant’s Form 8-K filed July 31, 2006) | |
|
2.2
|
Amendment No. 1 to Separation and Distribution Agreement by and among Cendant Corporation, Realogy Corporation, Wyndham Worldwide Corporation and Travelport Inc., dated as of August 17, 2006 (incorporated by reference to the Registrant’s Form 10-Q filed November 14, 2006) | |
|
3.1
|
Amended and Restated Certificate of Incorporation (incorporated by reference to the Registrant’s Form 8-K filed July 19, 2006) | |
|
3.2
|
Amended and Restated By-Laws (incorporated by reference to the Registrant’s Form 8-K filed July 19, 2006) | |
|
12*
|
Computation of Ratio of Earnings to Fixed Charges | |
|
15*
|
Letter re: Unaudited Interim Financial Information | |
|
31.1*
|
Certification of Chairman and Chief Executive Officer Pursuant to Rules 13(a)-14(a) and 15(d)-14(a) Promulgated Under the Securities Exchange Act of 1934, as amended | |
|
31.2*
|
Certification of Chief Financial Officer Pursuant to Rules 13(a)-14(a) and 15(d)-14(a) Promulgated Under the Securities Exchange Act of 1934, as amended | |
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32*
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Certification of Chairman and Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| * | Filed with this report |
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
Suppliers
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|