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This excerpt taken from the WYN 10-K filed Feb 27, 2009. Other
Commercial Commitments and Off-Balance Sheet
Arrangements
Purchase Commitments. In the normal course of business,
we make various commitments to purchase goods or services from
specific suppliers, including those related to vacation
ownership resort development and other capital expenditures.
Purchase commitments made by us as of December 31, 2008
aggregated $778 million. Individually, such commitments
range as high as $100 million related to the development of
a vacation ownership resort. The majority of the commitments
relate to the development of vacation ownership properties
(aggregating $512 million; $236 million of which
relates to 2009).
Standard Guarantees/Indemnifications. In the ordinary
course of business, we enter into agreements that contain
standard guarantees and indemnities whereby we indemnify another
party for specified breaches of or third-party claims relating
to an underlying agreement. Such underlying agreements are
typically entered into by one of our subsidiaries. The various
underlying agreements generally govern purchases, sales or
outsourcing of assets or businesses, leases of real estate,
licensing of trademarks, development of vacation ownership
properties, access to credit facilities, derivatives and
issuances of debt securities. While a majority of these
guarantees and indemnifications extend only for the duration of
the underlying agreement, some survive the expiration of the
agreement. We are not able to estimate the maximum potential
amount of future payments to be made under these guarantees and
indemnifications as the triggering events are not predictable.
In certain cases we maintain insurance coverage that may
mitigate any potential payments.
Other Guarantees/Indemnifications. In the ordinary course
of business, our vacation ownership business provides guarantees
to certain owners’ associations for funds required to
operate and maintain vacation ownership properties in excess of
assessments collected from owners of the VOIs. We may be
required to fund such excess as a result of unsold Company-owned
VOIs or failure by owners to pay such assessments. These
guarantees extend for the duration of the underlying subsidy
agreements (which generally approximate one year and are
renewable on an annual basis) or until a stipulated percentage
(typically 80% or higher) of related VOIs are sold. The maximum
potential future payments that we could be required to make
under these guarantees was approximately $350 million as of
December 31, 2008. We would only be required to pay this
maximum amount if none of the owners assessed paid their
assessments. Any assessments collected from the owners of the
VOIs would reduce the maximum potential amount of future
payments to be made by us. Additionally, should we be required
to fund the deficit through the payment of any owners’
assessments under these guarantees, we would be permitted access
to the property for its own use and may use that property to
engage in revenue-producing activities, such as rentals. During
2008, 2007 and 2006, we made payments related to these
guarantees of $7 million, $5 million and
$6 million, respectively. As of December 31, 2008 and
2007, we maintained a liability in connection with these
guarantees of $37 million and $30 million,
respectively, on our Consolidated Balance Sheets.
In the ordinary course of business, we enter into hotel
management agreements which may provide a guarantee by us of
minimum returns to the hotel owner. Under such guarantees, we
are required to compensate for any shortfall over the life of
the management agreement up to a specified aggregate amount. Our
exposure under these guarantees is partially mitigated by our
ability to terminate any such management agreement if certain
targeted operating results are not met. Additionally, we are
able to recapture a portion or all of the shortfall payments and
any waived fees in the event that future operating results
exceed targets. The maximum potential amount of future payments
to be made under these guarantees is $15 million. The
underlying agreements would not require payment until 2010 or
thereafter. As of both December 31, 2008 and 2007, we
maintained a liability in connection with these guarantees of
less than $1 million on our Consolidated Balance Sheets.
Securitizations. We pool qualifying vacation ownership
contract receivables and sell them to bankruptcy-remote entities
all of which are consolidated into the accompanying Consolidated
Balance Sheet at December 31, 2008.
Letters of Credit. As of December 31, 2008 and 2007,
we had $33 million and $53 million, respectively, of
irrevocable standby letters of credit outstanding, which mainly
relate to support for development activity at our vacation
ownership business.
This excerpt taken from the WYN 10-K filed Feb 29, 2008. Other
Commercial Commitments and Off-Balance Sheet
Arrangements
Purchase Commitments. In the normal course of business,
we make various commitments to purchase goods or services from
specific suppliers, including those related to vacation
ownership resort development and other capital expenditures.
Purchase commitments made by us as of December 31, 2007
aggregated $570 million. Individually, such commitments
range as high as $73 million related to the development of
a vacation ownership resort. The majority of the commitments
relate to the development of vacation ownership properties
(aggregating $331 million; $218 million of which
relates to 2008 and $113 million of which relates to 2009).
Standard Guarantees/Indemnifications. In the ordinary
course of business, we enter into numerous agreements that
contain standard guarantees and indemnities whereby we indemnify
another party for breaches of representations and warranties. In
addition, many of these parties are also indemnified against any
third-party claim resulting from the transaction that is
contemplated in the underlying agreement. Such guarantees and
indemnifications are granted under various agreements, including
those governing (i) purchases, sales or outsourcing of
assets or businesses, (ii) leases of real estate,
(iii) licensing of trademarks, (iv) development of
vacation ownership properties, (v) access to credit
facilities and use of derivatives and (vi) issuances of
debt securities. The guarantees and indemnifications issued are
for the benefit of the (i) buyers in sale agreements and
sellers in purchase agreements, (ii) landlords in lease
contracts, (iii) franchisees in licensing agreements,
(iv) developers in vacation ownership development
agreements, (v) financial institutions in credit facility
arrangements and derivative contracts and (vi) underwriters
in debt security issuances. While some of these guarantees and
indemnifications extend only for the duration of the underlying
agreement, many survive the expiration of the term of the
agreement or extend into perpetuity (unless subject to a legal
statute of limitations). There are no specific limitations on
the maximum potential amount of future payments that we could be
required to make under these guarantees and indemnifications,
nor are we able to develop an estimate of the maximum potential
amount of future payments to be made under these guarantees and
indemnifications as the triggering events are not subject to
predictability. With respect to certain of the aforementioned
guarantees and indemnifications, such as indemnifications of
landlords against third-party claims for the use of real estate
property leased by us, we maintain insurance coverage that
mitigates any potential payments to be made.
Other Guarantees/Indemnifications. In the normal course
of business, our vacation ownership business provides guarantees
to certain property owners’ associations for funds required
to operate and maintain vacation ownership properties in excess
of assessments collected from owners of the vacation ownership
interests. We may be required to fund such excess as a result of
our unsold owned vacation ownership interests or failure by
owners to pay such assessments. These guarantees extend for the
duration of the underlying subsidy agreements (which generally
approximate one year and are renewable on an annual basis) or
until a stipulated percentage (typically 80% or higher) of
related vacation ownership interests are sold. The maximum
potential future payments that we could be required to make
under these guarantees was $257 million as of
December 31, 2007. We would only be required to pay this
maximum amount if none of the owners assessed paid their
assessments. Any assessments collected from the owners of the
vacation ownership interests would reduce the maximum potential
amount of future payments to be made by us. Additionally, should
we be required to fund the deficit through the payment of any
owners’ assessments under these guarantees, we would be
permitted access to the property for our own use and may use
that property to engage in revenue-producing activities, such as
marketing or rental. During 2007, 2006 and 2005, we made
payments related to these guarantees of $5 million,
$6 million and $4 million, respectively. As of
December 31, 2007, we recorded a liability in connection
with these guarantees of $30 million.
Table of Contents
In the ordinary course of business, we enter into hotel
management agreements which may provide a guarantee by us of
minimum returns to the hotel owner. Under such guarantees, we
are required to compensate for any shortfall over the life of
the management agreement up to a specified aggregate amount. Our
exposure under these guarantees is partially mitigated by our
ability to terminate any such management agreement if certain
targeted operating results are not met. Additionally, we are
able to recapture a portion or all of the shortfall payments and
any waived fees in the event that future operating results
exceed targets. The maximum potential amount of future payments
to be made under these guarantees is $20 million. The
underlying agreement would not require payment until 2010 or
thereafter. As of December 31, 2007, we recorded a
liability in connection with these guarantees of less than
$1 million on our Consolidated Balance Sheet.
Securitizations. We pool qualifying vacation ownership
contract receivables and sell them to bankruptcy-remote entities
all of which are consolidated into the accompanying Consolidated
Balance Sheet at December 31, 2007.
Letters of Credit. As of December 31, 2007, we had
$53 million of irrevocable standby letters of credit
outstanding, which mainly relate to support for development
activity at our vacation ownership business.
This excerpt taken from the WYN 10-K filed Mar 7, 2007. Other
Commercial Commitments And Off-balance Sheet
Arrangements
Purchase Commitments. In the normal course of business,
we make various commitments to purchase goods or services from
specific suppliers, including those related to vacation
ownership resort development and other capital expenditures.
None of the purchase commitments made by us as of
December 31, 2006 (aggregating approximately
$531 million) were individually significant; the majority
relate to commitments for the development of vacation ownership
properties (aggregating $323 million, all of which relates
to 2007).
Standard Guarantees/Indemnifications. In the ordinary
course of business, we enter into numerous agreements that
contain standard guarantees and indemnities whereby we indemnify
another party for breaches of representations and warranties. In
addition, many of these parties are also indemnified against any
third-party claim resulting from the transaction that is
contemplated in the underlying agreement. Such guarantees and
indemnifications are granted under various agreements, including
those governing (i) purchases, sales or outsourcing of
assets or businesses, (ii) leases of real estate,
(iii) licensing of trademarks, (iv) development of
vacation ownership properties, (v) access to credit
facilities and use of derivatives and (vi) issuances of
debt securities. The guarantees and indemnifications issued are
for the benefit of the (i) buyers in sale agreements and
sellers in purchase agreements, (ii) landlords in lease
contracts, (iii) franchisees in licensing agreements,
(iv) developers in vacation ownership development
agreements, (v) financial institutions in credit facility
arrangements and derivative contracts and (vi) underwriters
in debt security issuances. While some of these guarantees and
indemnifications extend only for the duration of the underlying
agreement, many survive the expiration of the term of the
agreement or extend into perpetuity (unless subject to a legal
statute of limitations). There are no specific limitations on
the maximum potential amount of future payments that we could be
required to make under these guarantees and indemnifications,
nor are we able to develop an estimate of the maximum potential
amount of future payments to be made under these guarantees and
indemnifications as the triggering events are not subject to
predictability. With respect to certain of the aforementioned
guarantees and indemnifications, such as indemnifications of
landlords against third-party claims for the use of real estate
property leased by us, we maintain insurance coverage that
mitigates any potential payments to be made.
Other Guarantees/Indemnifications. In the normal course
of business, our vacation ownership business provides guarantees
to certain property owners’ associations for funds required
to operate and maintain vacation ownership properties in excess
of assessments collected from owners of the vacation ownership
interests. We may be required to fund such excess as a result of
our unsold owned vacation ownership interests or failure by
owners to pay such assessments. These guarantees extend for the
duration of the underlying subsidy agreements (which generally
approximate one year and are renewable on an annual basis) or
until a stipulated percentage (typically 80% or higher) of
related vacation ownership interests are sold. The maximum
potential future payments that we could be required to make
under these guarantees was approximately $230 million as of
December 31, 2006. We would only be required to pay this
maximum amount if none of the owners assessed paid their
assessments. Any assessments collected from the owners of the
vacation ownership interests would reduce the maximum potential
amount of future payments to be made by us. Additionally, should
we be required to fund the deficit through the payment of any
owners’ assessments under these guarantees, we would be
permitted access to the property for our own use and may use
that property to engage in revenue-producing activities, such as
marketing or rental. Historically, we have not been required to
make material payments under these guarantees, as the fees
collected from owners of vacation ownership interests have been
sufficient to support the operation and maintenance of the
vacation ownership properties. As of December 31, 2006, we
recorded a liability in connection with these guarantees of
$14 million.
Securitizations. We pool qualifying vacation ownership
contract receivables and sell them to bankruptcy-remote
entities. Prior to September 1, 2003, sales of vacation
ownership contract receivables were treated as off-balance sheet
sales as the entities utilized were structured as
bankruptcy-remote QSPEs pursuant to SFAS No. 140
“Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities.” Subsequent to
September 1, 2003, newly originated as well as certain
legacy vacation ownership contract receivables are securitized
through bankruptcy-remote SPEs that are consolidated within our
financial statements.
Letters of Credit. As of December 31, 2006, we had
$30 million of irrevocable standby letters of credit
outstanding, which mainly relate to support for development
activity at our vacation ownership business.
This excerpt taken from the WYN 8-K filed Jul 19, 2006. Other Commercial Commitments and Off-Balance Sheet Arrangements Purchase Commitments. In the normal course of business, we make various commitments to purchase goods or services from specific suppliers, including those related to vacation ownership resort development and other capital expenditures. None of the purchase commitments made by us as of December 31, 2005 (aggregating approximately $349 million) were individually significant; the majority relate to commitments for the development of vacation ownership properties (aggregating $233 million, of which $219 million relates to 2006). Standard Guarantees/Indemnifications. In the ordinary course of business, we enter into numerous agreements that contain standard guarantees and indemnities whereby we indemnify another party for breaches of representations and warranties. In addition, many of these parties are also indemnified against any third-party claim resulting from the transaction that is contemplated in the underlying agreement. Such guarantees and indemnifications are granted under various agreements, including those governing (i) purchases, sales or outsourcing of assets or businesses, (ii) leases of real estate, (iii) licensing of trademarks, (iv) development of vacation ownership properties, (v) access to credit facilities and use of derivatives and (vi) issuances of debt securities. The guarantees and indemnifications issued are for the benefit of the (i) buyers in sale agreements and sellers in purchase agreements, (ii) landlords in lease contracts, (iii) franchisees in licensing agreements, (iv) developers in vacation ownership development agreements, (v) financial institutions in credit facility arrangements and derivative contracts and (vi) underwriters in debt security issuances. While some of these guarantees and indemnifications extend only for the duration of the underlying agreement, many survive the
109
Table of Contentsexpiration of the term of the agreement or extend into perpetuity (unless subject to a legal statute of limitations). There are no specific limitations on the maximum potential amount of future payments that we could be required to make under these guarantees and indemnifications, nor are we able to develop an estimate of the maximum potential amount of future payments to be made under these guarantees and indemnifications as the triggering events are not subject to predictability. With respect to certain of the aforementioned guarantees and indemnifications, such as indemnifications of landlords against third-party claims for the use of real estate property leased by us, we maintain insurance coverage that mitigates any potential payments to be made. Other Guarantees/Indemnifications. In the normal course of business, our vacation ownership business provides guarantees to certain property owners’ associations for funds required to operate and maintain vacation ownership properties in excess of assessments collected from owners of the vacation ownership interests. We may be required to fund such excess as a result of our unsold owned vacation ownership interests or failure by owners to pay such assessments. These guarantees extend for the duration of the underlying subsidy agreements (which generally approximate one year and are renewable on an annual basis) or until a stipulated percentage (typically 80% or higher) of related vacation ownership interests are sold. The maximum potential future payments that we could be required to make under these guarantees was approximately $175 million as of December 31, 2005. We would only be required to pay this maximum amount if none of the owners assessed paid their assessments. Any assessments collected from the owners of the vacation ownership interests would reduce the maximum potential amount of future payments to be made by us. Additionally, should we be required to fund the deficit through the payment of any owners’ assessments under these guarantees, we would be permitted access to the property for our own use and may use that property to engage in revenue-producing activities, such as marketing or rental. Historically, we have not been required to make material payments under these guarantees, as the fees collected from owners of vacation ownership interests have been sufficient to support the operation and maintenance of the vacation ownership properties. As of December 31, 2005, we recorded a liability in connection with these guarantees of $11 million. Securitizations. We pool qualifying vacation ownership contract receivables and sell them to bankruptcy-remote entities. Prior to September 1, 2003, sales of vacation ownership contract receivables were treated as off-balance sheet sales as the entities utilized were structured as bankruptcy-remote QSPEs pursuant to SFAS No. 140 “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” Subsequent to September 1, 2003, newly originated as well as certain legacy vacation ownership contract receivables are securitized through bankruptcy-remote SPEs that are consolidated within our financial statements. Certain structures that we use to securitize vacation ownership contract receivables prior to September 1, 2003 did not qualify for inclusion in Combined Financial Statements and, therefore, securitizations through these structures were treated as off-balance sheet sales, with us retaining the servicing rights and a subordinated interest. As these securitization facilities are precluded from consolidation pursuant to generally accepted accounting principles, the debt issued by these entities and the collateralizing assets, which we service, are not reflected on the Combined Balance Sheets. The retained interest, however, is reported on the Combined Balance Sheets. Our retained interest of $13 million and $40 million as of December 31, 2005 and 2004, respectively, is recorded within other non-current assets on the Combined Balance Sheets. During 2003, we recognized pre-tax gains of $39 million on the securitization of vacation ownership contract receivables through the off-balance sheet, bankruptcy-remote QSPEs (prior to our consolidation thereof on September 1, 2003), which were calculated using the following key economic assumptions: 7-15% prepayment speed; 7.0-7.6 weighted average life (in years); 15% discount rate; and 9.5-13.7% anticipated credit losses. Such gains were recorded within consumer financing on the Combined Statement of Income. Letters of Credit. As of December 31, 2005, we had $44 million of irrevocable standby letters of credit outstanding, which mainly relate to support for development activity at our vacation ownership business.
110
Table of ContentsIn addition to the above and in connection with our separation from Cendant, we expect to enter into certain guarantee commitments with Cendant and cross-guarantee commitments with each of the separate stand-alone companies. These guarantee arrangements include certain Cendant contingent and other corporate liabilities including those relating to unresolved tax and legal matters. Such amounts will be valued utilizing third-party experts upon our separation from Cendant in accordance with Financial Interpretation No. 45 “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” and recorded as liabilities on our balance sheet. The timing of payment related to these liabilities cannot be reasonably predicted, but is expected to occur over several years. To the extent such recorded liabilities are not adequate to cover the ultimate payment amounts, such excess will be reflected as an expense to our results of operations in future periods. See Unaudited Pro Forma Combined Condensed Financial Statements for a further discussion and estimate of these amounts. | EXCERPTS ON THIS PAGE:
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