Wyndham Worldwide (WYN)

 

The largest portion of the Company’s restricted cash relates to securitizations. The remaining portion is comprised of cash held in escrow related to the Company’s vacation ownership business and cash held in all other escrow accounts.

 

Securitizations: In accordance with the contractual requirements of the Company’s various vacation ownership contract receivable securitizations, a dedicated lockbox account, subject to a blocked control agreement, is established for each securitization. At each month end, the total cash in the collection account from the previous month is analyzed and a monthly servicer report is prepared by the Company, which details how much cash should be remitted to the noteholders for principal and interest payments, and any cash remaining is transferred by the trustee back to the Company. Additionally, as required by various securitizations, the Company holds an agreed-upon percentage of the aggregate outstanding principal balances of the VOI contract receivables collateralizing the asset-backed notes in a segregated trust (or reserve) account as credit enhancement. Each time a securitization closes and the Company receives cash from the noteholders, a portion of the cash is deposited in the reserve account. Such amounts were $155 million and $125 million as of December 31, 2008 and 2007, respectively, of which $80 million is recorded within other current assets as of December 31, 2008 and $75 million and $125 million are recorded within other non-current assets as of December 31, 2008 and 2007, respectively, on the Consolidated Balance Sheets.

 

Escrow Deposits: Laws in most U.S. states require the escrow of down payments on VOI sales, with the typical requirement mandating that the funds be held in escrow until the rescission period expires. As sales transactions are consummated, down payments are collected and are subsequently placed in escrow until the rescission period has expired. Depending on the state, the rescission period can be as short as three calendar days or as long as 15 calendar days. In certain states, the escrow laws require that 100% of VOI purchaser funds (excluding interest payments, if any), be held in escrow until the deeding process is complete. Where possible, the Company utilizes surety bonds in lieu of escrow deposits. Escrow deposit amounts were $30 million and $66 million as of December 31, 2008 and 2007, respectively, of which $28 million and $66 million are recorded within other current assets as of December 31, 2008 and 2007, respectively, and $2 million is recorded within other non-current assets as of December 31, 2008 on the Consolidated Balance Sheets.

 

 

Restricted cash primarily consists of deposits received on sales of VOIs that are held in escrow until a certificate of occupancy is obtained, the legal rescission period has expired and the deed of trust has been recorded in governmental property ownership records, as well as separately held amounts based upon the terms of the securitizations. Such amounts were $191 million and $147 million as of December 31, 2007 and 2006, respectively, of which $66 million and $57 million, respectively, are recorded within other current assets and $125 million and $90 million, respectively, are recorded within other non-current assets on the Consolidated Balance Sheets.

 

 

Restricted cash consists of deposits received on sales of VOIs that are held in escrow until a certificate of occupancy is obtained, the legal rescission period has expired and the deed of trust has been recorded in governmental property ownership records, as well as separately held amounts based upon the terms of the securitizations. Such amounts were $147 million and $143 million as of December 31, 2006 and 2005, respectively, of which $57 million and $42 million, respectively, are recorded within other current assets and $90 million and $101 million, respectively, are recorded within other non-current assets on the Consolidated and Combined Balance Sheets.