Wyndham Worldwide (WYN)

 

We issue debt through the securitization of vacation ownership contract receivables (see Note 8—Vacation Ownership Contract Receivables). On May 1, 2008, we closed a series of term notes payable, Sierra Timeshare 2008-1 Receivables Funding, LLC, in the initial principal amount of $200 million. These borrowings bear interest at a weighted average rate of 7.9% and are secured by vacation ownership contract receivables. As of December 31, 2008, we had $120 million of outstanding borrowings under these term notes. The proceeds from these notes were used to reduce the balance outstanding under our previous bank conduit facility referenced below and the remaining proceeds were used for general corporate purposes. On June 26, 2008, we closed an additional series of term notes payable, Sierra Timeshare 2008-2 Receivables Funding, LLC, in the initial principal amount of $450 million. These borrowings bear interest at a weighted average rate of 7.2% and are secured by vacation ownership contract receivables. As of December 31, 2008, we had $278 million of outstanding borrowings under these term notes. The proceeds from these notes were used to reduce the balance outstanding under our previous bank conduit facility referenced below and the remaining proceeds were used for general corporate purposes. As of December 31, 2008, we had $854 million of outstanding borrowings under term notes entered into prior to January 1, 2008. Such securitized debt includes fixed and floating rate term notes for which the weighted average interest rate was 5.8%, 5.2% and 4.7% during the years ended December 31, 2008, 2007 and 2006, respectively.

 

On November 10, 2008, we closed on a 364-day, $943 million, non-recourse, vacation ownership bank conduit facility with a term through November 2009. This facility bears interest at variable commercial paper rates plus a spread. The $943 million facility with an advance rate for new borrowings of approximately 50% represents a decrease from the $1.2 billion capacity of our previous bank conduit facility with an advance rate of approximately 80%. The previous bank conduit facility ceased operating as a revolving facility on October 29, 2008 and will amortize in accordance with its terms, which is expected to be approximately two years. The two bank conduit facilities, on a combined basis, had a weighted average interest rate of 4.1%, 5.9% and 5.7% during the years ended December 31, 2008, 2007 and 2006, respectively.

 

As of December 31, 2008, our securitized vacation ownership debt of $1,810 million is collateralized by $2,906 million of underlying gross vacation ownership contract receivables and securitization restricted cash. Additional usage of the capacity of our 2008 bank conduit facility is subject to our ability to provide additional assets to collateralize such facility. The combined weighted average interest rate on our total securitized vacation ownership debt was 5.2%, 5.4% and 5.1% during 2008, 2007 and 2006, respectively.

 

Cash paid related to consumer financing interest expense was $106 million, $95 million and $59 million during 2008, 2007 and 2006, respectively.

 

 

As previously discussed in Note 8—Vacation Ownership Contract Receivables, the Company issues debt through the securitization of vacation ownership contract receivables. On May 1, 2008, the Company closed a series of term notes payable, Sierra Timeshare 2008-1 Receivables Funding, LLC, in the initial principal amount of $200 million. These borrowings bear interest at a weighted average rate of 7.9% and are secured by vacation ownership contract receivables. As of December 31, 2008, the Company had $120 million of outstanding borrowings under these term notes. On June 26, 2008, the Company closed an additional series of term notes payable, Sierra Timeshare 2008-2 Receivables Funding, LLC, in the initial principal amount of $450 million. These borrowings bear interest at a weighted average rate of 7.2% and are secured by vacation ownership contract receivables. As of December 31, 2008, the Company had $278 million of outstanding borrowings under these term notes. As of December 31, 2008, the Company had $854 million of outstanding borrowings under term notes entered into prior

 

As previously discussed in Note 8—Vacation Ownership Contract Receivables, the Company issues debt through the securitization of vacation ownership contract receivables. On February 12, 2007, the Company closed a securitization facility, Premium Yield Facility 2007-A, in the amount of $155 million, which matures in February 2020. As of December 31, 2007, the Company had $155 million of outstanding borrowings under this facility. On May 23, 2007, the Company closed an additional series of term notes payable, Sierra Timeshare 2007-1 Receivables Funding, LLC, secured by vacation ownership contract receivables in the initial principal amount of $600 million. The payment of principal and interest on these notes is insured under the terms of a financial guaranty insurance policy. The proceeds from these notes were used to reduce the balance outstanding under the bank conduit facility referenced below and the remaining proceeds were used for general corporate purposes. As of December 31, 2007, the Company had $396 million of outstanding borrowings under these term notes. On November 1, 2007, the Company closed an additional series of term notes payable, Sierra Timeshare 2007-2 Receivables Funding, LLC, in the initial principal amount of $455 million, secured by vacation ownership contract receivables. The payment of principal and interest on these notes is insured under the terms of a financial guaranty insurance policy. The proceeds from these notes were also used primarily to reduce the balance outstanding under the bank conduit facility. As of December 31, 2007, the Company had $410 million of outstanding borrowings under these term notes. Such securitized debt includes fixed and floating rate term notes for which the weighted average interest rate was 5.2%, 4.7% and 4.0% during the years ended December 31, 2007, 2006 and 2005, respectively.

 

On October 30, 2007, the Company renewed its 364-day securitized vacation ownership bank conduit facility through October 2008. This facility bears interest at variable rates based on LIBOR and usage and its capacity was increased from $1.0 billion to $1.2 billion in connection with its renewal. Such facility had a weighted average interest rate of 5.9%, 5.7% and 4.3% during the years ended December 31, 2007, 2006 and 2005, respectively.

 

As of December 31, 2007, the Company’s securitized vacation ownership debt is collateralized by $2,596 million of underlying vacation ownership contract receivables and related assets. Additional usage of the capacity of the Company’s bank conduit facility is subject to the Company’s ability to provide additional assets to collateralize such facility. The combined weighted average interest rate on the Company’s total securitized vacation ownership debt was 5.4%, 5.1% and 4.1% during 2007, 2006 and 2005, respectively.

 

Interest expense incurred in connection with the Company’s securitized vacation ownership debt amounted to $110 million, $70 million and $46 million during 2007, 2006 and 2005, respectively, and is recorded within

 

As previously discussed in Note 8—Vacation Ownership Contract Receivables, the Company issues debt through the securitization of vacation ownership contract receivables. The debt issued through these securitizations includes fixed rate and floating rate term notes for which the weighted average interest rate was 4.7%, 4.0% and 3.3% for 2006, 2005 and 2004, respectively, and access to a $1,000 million bank conduit facility, which is also used to securitize vacation ownership contract receivables. This conduit facility bears interest at variable rates and had a weighted average interest rate of 5.7%, 4.3% and 1.4% during 2006, 2005 and 2004, respectively. As of December 31, 2006, the Company’s securitized vacation ownership debt is collateralized by $1,844 million of underlying vacation ownership contract receivables and related assets.

 

Interest expense incurred in connection with the Company’s securitized vacation ownership debt amounted to $70 million, $46 million and $36 million during 2006, 2005 and 2004, respectively, and is recorded within the operating expenses line item on the Consolidated and Combined Statements of Income as the Company earns consumer finance income on the related securitized vacation ownership contract receivables.