Wyndham Reports Higher First Quarter Net Income of $50 Million

Wyndham Worldwide Corporation reported first quarter revenues of $886 million, a 2 percent decline from the prior-year period due to the fact that first quarter 2009 revenues included a $67 million benefit from the recognition of revenues previously deferred under the percentage-of-completion (POC) accounting method associated with the company’s Vacation Ownership business.

Excluding the effects of the POC method of accounting and favorable foreign currency of $12 million, adjusted revenue grew by 5 percent. The company said has decided to alter its business approach so that POC deferred revenue is eliminated going forward.

Reported net income for the first quarter of 2010 grew 11 percent to $50 million, or $0.27 per diluted share, compared with net income of $45 million, or $0.25 per diluted share, for the first quarter of 2009.

Adjusted net income for the first quarter of 2010 was $64 million, or $0.34 per diluted share, compared with $74 million, or $0.41 per diluted share, in the first quarter of 2009. The 2010 results reflect the absence of deferred revenues from the POC method of accounting included in 2009 and higher interest expense.

Excluded from the first quarter of 2010 adjusted net income are after-tax costs of $10 million associated with the early extinguishment of debt, $3 million of expenses related to the acquisition of Hoseasons Holdings Ltd. and $1 million of legacy expenses. Excluded from the first quarter of 2009 adjusted net income are after-tax costs of $27 million related to restructuring and $2 million of legacy expenses.

For the Wyndham Hotel Group, revenues were $144 million in the first quarter of 2010, a decline of 6 percent compared with the first quarter of 2009, primarily reflecting a decline in RevPAR of 6.8 percent or 8.7 percent in constant currency. First quarter 2010 EBITDA was $33 million compared with $38 million of adjusted EBITDA in the first quarter of 2009, which excluded $3 million of restructuring costs. The decrease reflects the decline in RevPAR, which was partially offset by expense reductions.

EBITDA for the first quarter of 2010 was $82 million, compared with adjusted EBITDA of $79 million in the first quarter of 2009, which excluded $35 million of restructuring costs. Excluding an estimated $31 million impact from the POC method of accounting in the first quarter of 2009, first quarter 2010 adjusted EBITDA increased 71 percent, reflecting the increase in gross VOI sales and the lower provision for loan losses.