UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported)
July 21, 2010 (July 15, 2010)
Wyndham Worldwide Corporation
(Exact Name of Registrant as Specified in Its Charter)
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Delaware
(State or Other Jurisdiction
of Incorporation)
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1-32876
(Commission File No.)
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20-0052541
(I.R.S. Employer
Identification No.)
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22 Sylvan Way
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Parsippany, NJ
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07054
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(Address of Principal
Executive Office)
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(Zip Code)
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Registrant’s Telephone Number, Including Area Code:
(973) 753-6000
(Former Name or Former Address if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01
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Entry into a Material Definitive Agreement.
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The information set forth in the second paragraph of Item 8.01 below is incorporated herein by
reference.
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Item 7.01.
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Regulation FD Disclosure.
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Wyndham Worldwide Corporation (“Wyndham” or the “Company”) today issued a press release reporting
that it reached an agreement with the IRS to settle its federal contingent tax liability. A copy
of the Company’s press release is furnished as Exhibit 99.1 and is incorporated by reference.
On July 15, 2010, Cendant Corporation (now known as Avis Budget Group, Inc.) (“Cendant”), and the
Internal Revenue Service (“IRS”) agreed to settle the IRS examination of Cendant’s taxable years
2003 through 2006. During such period the Company and Cendant’s former real estate services unit
Realogy Corporation (“Realogy”) were included in Cendant’s tax returns. As previously disclosed in
the Company’s periodic reports, in connection with the Company’s separation from Cendant effective
July 31, 2006 (“Separation Date”), the Company entered into a tax sharing agreement with Cendant
and Realogy.
The agreements with the IRS close the IRS examination for tax periods prior to the Separation Date.
The agreements with the IRS also include a resolution with respect to the tax treatment of Wyndham
timeshare receivables, which resulted in the acceleration of unrecognized Wyndham deferred tax
liabilities as of the Separation Date. In connection with reaching agreement with the IRS to
resolve the contingent federal tax liabilities at issue, the Company entered into an agreement with
Realogy to clarify each party’s obligations under the tax sharing agreement. Under the agreement
with Realogy, among other things, the parties specified that the Company has sole responsibility
for taxes and interest associated with the acceleration of timeshare receivables income previously
deferred for tax purposes, while Realogy will not seek any reimbursement for the loss of a step up
in basis of certain assets. Such agreement is attached as Exhibit 10.1 to this Current
Report on Form 8-K and is incorporated herein by reference.
During the third quarter 2010, the Company expects to make payment for all such tax liabilities,
including the final interest payable, to Cendant who is the taxpayer and receive payments from
Realogy. The Company expects its aggregate net payments to approximate $145 million. As of June
30, 2010, the Company’s accrual for outstanding Cendant contingent tax liabilities was $274
million, of which $185 million was in respect of items resolved in the agreement with the IRS and
the remaining $89 million relates to state and foreign tax legacy issues, which are expected to be
resolved in the next few years. The Company thus expects to recognize income of
approximately $40 million for the residual accrual that will no longer be required for such items
in its third quarter 2010 Consolidated Statement of Income.
The
agreement with the IRS and the net payment of $145 million
referenced above, will also result in the reversal of approximately $190 million in net deferred tax liabilities
allocated from Cendant on the Separation Date with a corresponding
increase to stockholders’ equity during the third quarter 2010.
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Item 9.01.
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Financial Statements and Exhibits.
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(d) Exhibits.
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The following Exhibit 10.1 is filed, and the following Exhibit 99.1 is furnished with
this report:
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Exhibit No.
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Description
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Exhibit 10.1
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Agreement, dated as of July 15, 2010, between Wyndham Worldwide
Corporation and Realogy Corporation clarifying Tax Sharing
Agreement, dated as of July 28, 2006, among Realogy Corporation,
Cendant Corporation, Wyndham Worldwide Corporation and Travelport,
Inc.
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Exhibit 99.1
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Press Release of Wyndham Worldwide Corporation, dated July 21, 2010.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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WYNDHAM WORLDWIDE CORPORATION
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Date: July 21, 2010
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By:
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/s/ Thomas G. Conforti
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Thomas G. Conforti
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Chief Financial Officer
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WYNDHAM WORLDWIDE CORPORATION
CURRENT REPORT ON FORM 8-K
Report dated July 21, 2010
EXHIBIT INDEX
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Exhibit No.
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Description
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Exhibit 10.1
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Agreement, dated as of July 15, 2010, between Wyndham Worldwide
Corporation and Realogy Corporation clarifying Tax Sharing
Agreement, dated as of July 28, 2006, among Realogy Corporation,
Cendant Corporation, Wyndham Worldwide Corporation and Travelport,
Inc.
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Exhibit 99.1
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Press Release of Wyndham Worldwide Corporation, dated July 21, 2010.
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Exhibit 10.1
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Wyndham Worldwide Corporation
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Thomas G. Conforti
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22 Sylvan Way
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EVP & Chief Financial Officer
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Parsippany, NJ 07054
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(973) 753-7106 telephone
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(973) 753-8873 facsimile
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thomas.conforti@wyndhamworldwide.com
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July 15, 2010
Anthony E. Hull
Executive Vice President, Chief Financial Officer & Treasurer
Realogy Corporation
1 Campus Drive
Parsippany, NJ 07054
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Re:
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Resolution of Certain Tax Sharing Agreement Issues in Connection with the IRS
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2003-2006 Audit (“Audit”) of the Cendant Consolidated Group (“Cendant”)
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Dear Tony:
This letter supplements the Tax Sharing Agreement (“TSA”) dated as of July 28, 2006, as amended on
July 8, 2008, by and among Cendant Corporation (currently Avis Budget Group, Inc. (“ABG”)), Realogy
Corporation (“Realogy”), Wyndham Worldwide Corporation (“Wyndham”) and Travelport, Inc. in
connection with the settlement of the Audit with the Internal Revenue Service (“IRS”) pursuant to
(1) the Form 870 executed by ABG and the IRS (the “Form 870”) and (2) the Closing Agreement on
Final Determination Covering Specific Matters among the IRS, ABG and Wyndham (the “Closing
Agreement” and together with the Form 870, the “IRS Settlement”), which are being executed
simultaneously with the execution and delivery of this letter. Capitalized terms used but not
defined herein shall have the meanings ascribed to them in the TSA.
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1.
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Realogy and Wyndham shall meet their respective obligations for amounts due for federal,
state and local taxes, interest and penalties (if any) and amounts owing ABG under the TSA,
at the sharing percentages of 62.5 percent for Realogy and 37.5 percent for Wyndham, on the
aggregate amount that reflects an adjustment for all Audit issues under the Form 870,
excluding adjustments relating to the additional recognition of gain on the sale of
timeshare receivables (the “Timeshare Matter”).
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2.
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Each of Realogy and Wyndham waive and release any and all claims against the other party
for amounts due under Section 8.12 of the TSA.
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3.
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Anything in the TSA to the contrary notwithstanding, Wyndham accepts, and shall pay when
due, any and all tax liability associated with the settlement of the Timeshare Matter
including (a) any federal income taxes and any interest and penalties thereon payable to the
IRS, (b) any reimbursement due to ABG pursuant to Section 8.9 of the TSA for the use of net
operating loss or Credit Carryovers of ABG associated with the settlement of the Timeshare
Matter and (c) any and all state taxes and any interest and penalties thereon arising from
the settlement of the Timeshare Matter (by consistent amendment of state tax
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July 15, 2010
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returns), in the case of each of clauses (a), (b) and (c), calculated on a “with and without”
basis after all other items from the Audit pursuant to the Form 870 are taken into account.
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4.
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Wyndham releases Realogy of any and all obligations to Wyndham under Section 8.9 of the
TSA for any Wyndham credits used in connection with the IRS Settlement, except as set forth
in the next sentence. Realogy will reimburse Wyndham (through a cash payment to Wyndham
made concurrently with the payment made by ABG to the IRS under the Form 870) for $10
million. Realogy releases Wyndham of any and all obligations to Realogy under Section 8.9
of the TSA for any Realogy credits used in connection with the IRS Settlement.
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5.
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All terms and conditions of the TSA remain otherwise undisturbed.
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Please sign and return the enclosed copy of this letter in order to accept and agree to the terms
described herein.
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Very Truly Yours,
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/s/ Thomas G. Conforti
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Thomas G. Conforti
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Executive Vice President &
Chief Financial Officer
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ACCEPTED AND AGREED TO:
REALOGY CORPORATION
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By: /s/ Anthony E. Hull
Anthony E. Hull, Executive Vice President,
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Chief Financial Officer & Treasurer
7/15/10
(Date)
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Exhibit 99.1
Wyndham Worldwide Reaches Agreement with IRS Settling Legacy Tax Issues
PARSIPPANY,
N.J. (July 21, 2010)
— Wyndham Worldwide Corporation (NYSE:WYN) today announced that
it has reached an agreement, along with its former parent, Cendant Corporation (“Cendant”), with
the Internal Revenue Service (“IRS”) that resolves and pays certain contingent and deferred tax
liabilities relating to the audit of the federal income tax returns for Cendant’s taxable years
2003 through 2006, during which time Wyndham Worldwide was included in Cendant’s tax returns.
As of June 30, 2010, the Company’s accrual for outstanding Cendant contingent tax liabilities was
$274 million, of which $185 million (net of state, foreign and other deferred tax adjustments) was
related to the IRS audit. The Company expects to pay approximately $145 million during the third
quarter 2010, including estimated interest on taxes due, in connection with the settlement. As a
result of this agreement, in the third quarter 2010, Wyndham Worldwide will realize an approximate
$40 million benefit to its net income, reflecting reversals of previously recorded legacy
contingent tax liability accruals.
“We are pleased to have resolved this matter, which successfully concludes the IRS audit issues we
inherited upon our spin-off from Cendant four years ago. With this investor uncertainty behind us,
we will continue our focus on growing free cash flow and earnings,” said Tom Conforti, executive
vice president and chief financial officer of Wyndham Worldwide.
Wyndham Worldwide will exclude the net income benefit from adjusted results, to which the Company
refers when providing guidance and outlook to investors.
About Wyndham Worldwide Corporation
As one of the world’s largest hospitality companies, Wyndham Worldwide offers individual consumers
and business-to-business customers a broad suite of hospitality products and services across
various accommodation alternatives and price ranges through its premier portfolio of world-renowned
brands. Wyndham Hotel Group encompasses approximately 7,090 franchised hotels and approximately
593,300 hotel rooms worldwide. Wyndham Exchange and Rentals offers leisure travelers, including its
3.8 million members, access to over 65,000 vacation properties located in
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approximately 100 countries. Wyndham Vacation Ownership develops, markets and sells vacation
ownership interests and provides consumer financing to owners through its network of over 155
vacation ownership resorts serving over 820,000 owners throughout North America, the Caribbean and
the South Pacific. Wyndham Worldwide, headquartered in Parsippany, N.J., employs approximately
25,000 employees globally.
For more information about Wyndham Worldwide, please visit the Company’s website at
www.wyndhamworldwide.com
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Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended, conveying management’s expectations as to the future
based on plans, estimates and projections at the time the Company makes the statements.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which
may cause the actual results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by such forward-looking
statements. The forward-looking statements contained in this press release include statements
related to payments, interest and the accounting impact of the agreements described in this press
release. You are cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. Except for the Company’s ongoing obligations to
disclose material information under the federal securities laws, it undertakes no obligation to
release publicly any revisions to any forward-looking statements, to report events or to report the
occurrence of unanticipated events.
# # #
Investor and Media contact:
Margo C. Happer
Senior Vice President, Investor Relations
Wyndham Worldwide Corporation
(973) 753-6472
margo.happer@wyndhamworldwide.com
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