wh-20200930

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-38432

Wyndham Hotels & Resorts, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		82-3356232
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

22 Sylvan Way		07054
Parsippany,	New Jersey	(Zip Code)
(Address of Principal Executive Offices)

(973) 753-6000

(Registrant’s Telephone Number, Including Area Code)

None

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock	WH	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date:

93,167,022 shares of common stock outstanding as of September 30, 2020.

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TABLE OF CONTENTS


		Page
PART I	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Report of Independent Registered Public Accounting Firm	1
	Condensed Consolidated Statements of Income (Loss)	2
	Condensed Consolidated Statements of Comprehensive Income (Loss)	3
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Cash Flows	5
	Condensed Consolidated Statements of Equity	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
	Forward-Looking Statements	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	39
	Signatures	40

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Wyndham Hotels & Resorts, Inc.

Results of Review of Interim Financial Statements

We have reviewed the accompanying condensed consolidated balance sheet of Wyndham Hotels & Resorts, Inc. and subsidiaries (the “Company”) as of September 30, 2020, the related condensed consolidated statements of income (loss), comprehensive income (loss), cash flows, and equity for the three-month and nine-month periods ended September 30, 2020 and 2019, and the related notes (collectively referred to as the “interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2019, and the related consolidated and combined statements of income, comprehensive income, cash flows, and equity for the year then ended (not presented herein); and in our report dated February 13, 2020, we expressed an unqualified opinion (which included an emphasis of a matter paragraph relating to expense allocations for certain corporate functions and services historically provided by Wyndham Worldwide Corporation) on those consolidated and combined financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2019, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

The interim financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ Deloitte & Touche LLP

New York, New York

October 29, 2020

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WYNDHAM HOTELS & RESORTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In millions, except per share amounts)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net revenues
Royalties and franchise fees	$	96	$	140	$	250	$	368
Marketing, reservation and loyalty	99		167		288		421
Management and other fees	12		12		50		88
License and other fees	21		35		63		97
Cost reimbursements	82		161		274		476
Other	27		45		79		111
Net revenues	337		560		1,004		1,561
Expenses
Marketing, reservation and loyalty	107		160		311		437
Operating	25		43		82		124
General and administrative	28		33		82		98
Cost reimbursements	82		161		274		476
Depreciation and amortization	24		26		73		81
Impairments, net	—		—		206		45
Restructuring	—		—		29		—
Transaction-related, net	—		12		13		30
Separation-related	—		—		1		22
Contract termination	—		34		—		43
Total expenses	266		469		1,071		1,356
Operating income/(loss)	71		91		(67)		205
Interest expense, net	29		25		83		76
Income/(loss) before income taxes	42		66		(150)		129
Provision/(benefit) for income taxes	15		21		(25)		36
Net income/(loss)	$	27	$	45	$	(125)	$	93

Earnings/(loss) per share
Basic	$	0.29	$	0.47	$	(1.34)	$	0.95
Diluted	0.29		0.47		(1.34)		0.95

See Notes to Condensed Consolidated Financial Statements.

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WYNDHAM HOTELS & RESORTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net income/(loss)	$	27	$	45	$	(125)	$	93
Other comprehensive income/(loss), net of tax
Foreign currency translation adjustments	1		(1)		—		1
Unrealized gains/(losses) on cash flow hedges	4		(3)		(35)		(27)
Other comprehensive income/(loss), net of tax	5		(4)		(35)		(26)
Comprehensive income/(loss)	$	32	$	41	$	(160)	$	67

See Notes to Condensed Consolidated Financial Statements.

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WYNDHAM HOTELS & RESORTS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per share amounts)

(Unaudited)


	September 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	735	$	94
Trade receivables, net	324		304
Prepaid expenses	42		48
Other current assets	39		53
Total current assets	1,140		499
Property and equipment, net	284		307
Goodwill	1,525		1,539
Trademarks, net	1,203		1,395
Franchise agreements and other intangibles, net	522		551
Other non-current assets	220		242
Total assets	$	4,894	$	4,533
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt	$	21	$	21
Accounts payable	41		30
Deferred revenues	78		132
Accrued expenses and other current liabilities	241		279
Total current liabilities	381		462
Long-term debt	2,814		2,101
Deferred income taxes	323		387
Deferred revenues	161		151
Other non-current liabilities	252		220
Total liabilities	3,931		3,321
Commitments and contingencies (Note 11)
Stockholders’ equity:
Preferred stock, $0.01 par value, authorized 6.0 shares, none issued and outstanding	—		—
Common stock, $0.01 par value, authorized 600.0 shares, 100.8 and 100.6 issued and outstanding at September 30, 2020 and December 31, 2019	1		1
Treasury stock, at cost – 7.7 and 6.8 shares at September 30, 2020 and December 31, 2019	(408)		(363)
Additional paid-in capital	1,498		1,488
Retained earnings/(accumulated deficit)	(66)		113
Accumulated other comprehensive loss	(62)		(27)
Total stockholders’ equity	963		1,212
Total liabilities and stockholders' equity	$	4,894	$	4,533

See Notes to Condensed Consolidated Financial Statements.

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WYNDHAM HOTELS & RESORTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Nine Months Ended September 30,
	2020		2019
Operating activities
Net (loss)/income	$	(125)	$	93
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Depreciation and amortization	73		81
Impairments, net	209		45
Deferred income taxes	(52)		(12)
Stock-based compensation	15		15
Net change in assets and liabilities:
Trade receivables	(32)		(46)
Prepaid expenses	6		(6)
Other current assets	6		(16)
Accounts payable, accrued expenses and other current liabilities	5		57
Payment of tax liability assumed in La Quinta acquisition	—		(188)
Deferred income	(43)		1
Payments of development advance notes, net	(11)		(10)


Other, net	6		(5)
Net cash provided by operating activities	57		9
Investing activities
Property and equipment additions	(23)		(35)
Issuance of loans, net	(1)		(2)

Net cash used in investing activities	(24)		(37)
Financing activities
Proceeds from borrowings	1,244		—
Principal payments on long-term debt	(522)		(12)
Finance lease payments	(4)		(4)
Debt issuance costs	(10)		—
Capital contribution from former Parent	—		68
Dividends to shareholders	(45)		(84)
Repurchases of common stock	(50)		(168)
Net share settlement of incentive equity awards	(4)		(5)
Other, net	—		1
Net cash provided by/(used in) financing activities	609		(204)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash	(1)		—
Net increase/(decrease) in cash, cash equivalents and restricted cash	641		(232)
Cash, cash equivalents and restricted cash, beginning of period	94		366
Cash, cash equivalents and restricted cash, end of period	$	735	$	134

See Notes to Condensed Consolidated Financial Statements.

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WYNDHAM HOTELS & RESORTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In millions)

(Unaudited)


	Common Shares Outstanding	Common Stock		Treasury Stock		Additional Paid-in Capital		Retained Earnings/(Accumulated Deficit)		Accumulated Other Comprehensive Loss		Total Equity
Balance as of December 31, 2019	94	$	1	$	(363)	$	1,488	$	113	$	(27)	$	1,212
Net income	—	—		—		—		22		—		22
Other comprehensive loss	—	—		—		—		—		(39)		(39)
Dividends	—	—		—		—		(30)		—		(30)
Repurchase of common stock	(1)	—		(45)		—		—		—		(45)
Net share settlement of incentive equity awards	—	—		—		(2)		—		—		(2)
Change in deferred compensation	—	—		—		4		—		—		4
Cumulative effect of change in accounting standard	—	—				—		(10)		—		(10)
Balance as of March 31, 2020	93	1		(408)		1,490		95		(66)		1,112
Net loss	—	—		—		—		(174)		—		(174)
Other comprehensive loss	—	—		—		—		—		(1)		(1)
Dividends	—	—		—		—		(8)		—		(8)

Net share settlement of incentive equity awards	—	—		—		(2)		—		—		(2)
Change in deferred compensation	—	—		—		6		—		—		6
Other	—	—		—		(1)		1		—		—
Balance as of June 30, 2020	93	1		(408)		1,493		(86)		(67)		933
Net income	—	—		—		—		27		—		27
Other comprehensive income	—	—		—		—		—		5		5
Dividends	—	—		—		—		(7)		—		(7)


Change in deferred compensation	—	—		—		5		—		—		5

Balance as of September 30, 2020	93	$	1	$	(408)	$	1,498	$	(66)	$	(62)	$	963


	Common Shares Outstanding	Common Stock		Treasury Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Equity
Balance as of December 31, 2018	98	$	1	$	(119)	$	1,475	$	69	$	(8)	$	1,418
Net income	—	—		—		—		21		—		21
Other comprehensive loss	—	—		—		—		—		(7)		(7)
Dividends	—	—		—		—		(29)		—		(29)
Repurchase of common stock	(1)	—		(44)		—		—		—		(44)
Change in deferred compensation	—	—		—		5		—		—		5
Other	—	—		(1)		1		—		—		—
Balance as of March 31, 2019	97	1		(164)		1,481		61		(15)		1,364
Net income	—	—		—		—		26		—		26
Other comprehensive loss	—	—		—		—		—		(15)		(15)
Dividends	—	—		—		—		(28)		—		(28)
Repurchase of common stock	(1)	—		(50)		—		—		—		(50)
Net share settlement of incentive equity awards	—	—		—		(4)		—		—		(4)
Change in deferred compensation	—	—		—		6		—		—		6
Other	—	—		—		1		—		—		1
Balance as of June 30, 2019	96	1		(214)		1,484		59		(30)		1,300
Net income	—	—		—		—		45		—		45
Other comprehensive loss	—	—		—		—		—		(4)		(4)
Dividends	—	—		—		—		(28)		—		(28)
Repurchase of common stock	(1)	—		(75)		—		—		—		(75)
Net share settlement of incentive equity awards	—	—		—		(1)		—		—		(1)
Change in deferred compensation	—	—		—		4		—		—		4
Other	—	—		—		—		1		—		1
Balance as of September 30, 2019	95	$	1	$	(289)	$	1,487	$	77	$	(34)	$	1,242

See Notes to Condensed Consolidated Financial Statements.

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WYNDHAM HOTELS & RESORTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise noted, all amounts are in millions, except share and per share amounts)

(Unaudited)


1. BASIS OF PRESENTATION

Wyndham Hotels & Resorts, Inc. (collectively with its consolidated subsidiaries, “Wyndham Hotels” or the “Company”) is a leading global hotel franchisor, licensing its renowned hotel brands to hotel owners in approximately 90 countries around the world.

The Condensed Consolidated Financial Statements have been prepared on a stand-alone basis. The Condensed Consolidated Financial Statements include Wyndham Hotels’ assets, liabilities, revenues, expenses and cash flows and all entities in which Wyndham Hotels has a controlling financial interest. The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America. All intercompany balances and transactions have been eliminated in the Condensed Consolidated Financial Statements.

In presenting the Condensed Consolidated Financial Statements, management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates. In management’s opinion, the Condensed Consolidated Financial Statements contain all normal recurring adjustments necessary for a fair presentation of interim results reported. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire year or any subsequent interim period. These Condensed Consolidated Financial Statements should be read in conjunction with the Company’s 2019 Consolidated and Combined Financial Statements included in its most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) and any subsequent reports filed with the SEC.

Business description

Wyndham Hotels operates in the following segments:

• Hotel Franchising — licenses the Company’s lodging brands and provides related services to third-party hotel owners and others.

• Hotel Management — provides hotel management services for full-service and limited-service hotels as well as two hotels that are owned by the Company.


2. NEW ACCOUNTING PRONOUNCEMENTS

Recently adopted accounting pronouncements

Measurement of Credit Losses on Financial Instruments. In June 2016, the Financial Accounting Standards Board (the "FASB") issued guidance to replace the existing methodology for estimating credit losses with a methodology that reflects lifetime expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company adopted the guidance on January 1, 2020, as required using the modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date to align the Company’s current processes for establishing an allowance for credit losses with the new guidance. See Note 5 - Accounts Receivable for the impact of adoption.

Simplifying the Test for Goodwill Impairment. In January 2017, the FASB issued guidance which simplifies the current two-step goodwill impairment test by eliminating Step 2 of the test. The guidance requires a one-step impairment test in which an entity compares the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any. This guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, and should be applied on a prospective basis. The Company adopted the guidance on January 1, 2020, as required. There was no material impact on its Condensed Consolidated Financial Statements and related disclosures.

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Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. In August 2018, the FASB issued guidance to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The guidance aligns the requirements for capitalizing implementation costs incurred in such arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. This guidance should be applied on either a retrospective or prospective basis. The Company adopted the guidance on January 1, 2020, as required. There was no material impact on its Condensed Consolidated Financial Statements and related disclosures.

Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In March 2020, the FASB issued optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. Generally Accepted Accounting Principles ("GAAP") to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company adopted the guidance upon issuance, as required. There was no material impact on its Condensed Consolidated Financial Statements and related disclosures.


3. REVENUE RECOGNITION

Deferred revenues

Deferred revenues, or contract liabilities, generally represent payments or consideration received in advance for goods or services that the Company has not yet provided to the customer. Deferred revenues as of September 30, 2020 and December 31, 2019 are as follows:


	September 30, 2020		December 31, 2019
Deferred initial franchise fee revenues	$	137	$	136
Deferred loyalty program revenues	75		86
Deferred co-branded credit card program revenues	6		34
Deferred hotel management fee revenues	1		—
Deferred other revenues	20		27
Total	$	239	$	283

Deferred initial franchise fees represent payments received in advance from prospective franchisees upon the signing of a franchise agreement and are generally recognized to revenue within 12 years. Deferred loyalty revenues represent the portion of loyalty program fees charged to franchisees, net of estimated redemption costs, that have been deferred and will be recognized over time based upon loyalty point redemption patterns. Deferred co-branded credit card program revenue represents payments received in advance from the Company’s co-branded credit card partners primarily for card member activity, which is typically recognized within one year.

As a result of the negative impact that the coronavirus pandemic (“COVID-19”) has had on travel demand, the Company’s assumptions related to redemptions, including estimated member redemption rate, member redemption pattern, and the estimated cost to satisfy such redemptions, have changed. Accordingly, the Company recognized a $16 million cumulative adjustment, which resulted in an increase to loyalty revenues during the second quarter of 2020. Such increase is included within marketing, reservation and loyalty and other revenues on the Condensed Consolidated Statement of Income for the nine months ended September 30, 2020.

Performance obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. The consideration received from a customer is allocated to each distinct performance obligation and recognized as revenue when, or as, each

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performance obligation is satisfied. The following table summarizes the Company’s remaining performance obligations for the twelve-month periods set forth below:


	10/1/2020 - 9/30/2021		10/1/2021 - 9/30/2022		10/1/2022 - 9/30/2023		Thereafter		Total
Initial franchise fee revenues	$	22	$	9	$	8	$	98	$	137
Loyalty program revenues	39		23		11		2		75
Co-branded credit card program revenues	6		—		—		—		6
Hotel management fee revenues	1		—		—		—		1
Other revenues	10		2		1		7		20
Total	$	78	$	34	$	20	$	107	$	239

Disaggregation of net revenues

The table below presents a disaggregation of the Company’s net revenues from contracts with customers by major services and products for each of the Company’s segments:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Hotel Franchising
Royalties and franchise fees	$	91	$	136	$	234	$	359
Marketing, reservation and loyalty	99		166		287		418
License and other fees	21		35		63		97
Other	25		42		77		105
Total Hotel Franchising	236		379		661		979

Hotel Management
Royalties and franchise fees	5		4		16		9
Marketing, reservation and loyalty	—		1		1		3
Owned hotel revenues	5		18		29		67
Management fees (a)	7		(6)		21		21
Cost reimbursements	82		161		274		476
Other	2		2		2		2
Total Hotel Management	101		180		343		578

Corporate and Other	—		1		—		4

Net revenues	$	337	$	560	$	1,004	$	1,561

_____________________

(a) 2019 periods include a $20 million fee credit for past services with a customer. See Note 14 - Other Expenses and Charges for more information.

Capitalized contract costs

The Company incurs certain direct and incremental sales commissions costs in order to obtain hotel franchise and management contracts. Such costs are capitalized and subsequently amortized beginning upon hotel opening over the first non-cancellable period of the agreement. In the event an agreement is terminated prior to the end of the first non-cancellable period, any unamortized cost is immediately expensed. In addition, the Company also capitalizes costs associated with the sale and installation of property management systems to its franchisees, which are amortized over the remaining non-cancellable period of the franchise agreement. As of September 30, 2020 and December 31, 2019, capitalized contract costs were $31 million and $33 million, respectively, of which $6 million and $8 million, respectively, were included in other current assets, and $25 million for both periods were included in other non-current assets on its Condensed Consolidated Balance Sheets.

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4. EARNINGS PER SHARE

The computation of basic and diluted earnings (loss) per share (“EPS”) is based on net income (loss) divided by the basic weighted average number of common shares and diluted weighted average number of common shares, respectively.

The following table sets forth the computation of basic and diluted EPS (in millions, except per share data):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net income/(loss)	$	27	$	45	$	(125)	$	93

Basic weighted average shares outstanding	93.3		96.2		93.4		97.0
Stock options and restricted stock units (“RSUs”) (a)	0.1		0.1		—		0.2
Diluted weighted average shares outstanding	93.4		96.3		93.4		97.2

Earnings/(loss) per share:
Basic	$	0.29	$	0.47	$	(1.34)	$	0.95
Diluted	0.29		0.47		(1.34)		0.95

Dividends:
Cash dividends declared per share	$	0.08	$	0.29	$	0.48	$	0.87
Aggregate dividends paid to shareholders	$	7	$	28	$	45	$	84

_____________________

(a) Due to the anti-dilutive effect resulting from the reported net loss for the nine months ended September 30, 2020, 0.1 million of anti-dilutive shares were omitted from the calculation of weighted average shares outstanding for the period.

Stock repurchase program

The following table summarizes stock repurchase activity under the current stock repurchase program (in millions, except per share data):


	Shares	Cost		Average Price Per Share
As of January 1, 2020	6.8	$	363	$	53.67
For the nine months ended September 30, 2020	0.9	45		51.57
As of September 30, 2020	7.7	$	408	$	53.43

The Company had $191 million of remaining availability under its program as of September 30, 2020. On March 17, 2020, the Company suspended its share repurchase activity and as a condition of the amendment to its revolving credit agreement, the Company is restricted from repurchasing shares of its stock until the waiver amendment expires at the beginning of the second quarter of 2021, unless the Company elects to terminate the amendment earlier.


5. ACCOUNTS RECEIVABLE

Allowance for doubtful accounts

The Company generates trade receivables in the ordinary course of its business and provides for estimated bad debts on such receivables. The Company adopted the new accounting guidance, ASU 2016-13, Measurement of Credit Losses on Financial Instruments on January 1, 2020. As a result of adopting the new guidance, the Company recorded a $10 million (net of a $2 million income tax benefit) cumulative effect adjustment to retained earnings at January 1, 2020. Since adoption, the Company measures the expected credit losses of its receivables on a collective (pool) basis which aggregates receivables with similar risk characteristics and uses historical collection attrition rates for periods ranging from seven to ten years to estimate its expected credit losses. As such, the Company measures the expected credit losses of its receivables by segment and geographical area. Beginning January 1, 2020, the Company provides an estimate of expected credit losses for its receivables immediately upon origination or acquisition and may adjust this estimate in subsequent reporting periods as required. When the

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Company determines that an account is not collectible, the account is written-off to the allowance for doubtful accounts. The Company also considers whether the historical economic conditions are comparable to current economic conditions. If current or expected future conditions differ from the conditions in effect when the historical experience was generated, the Company would adjust the allowance for doubtful accounts to reflect the expected effects of the current environment on the collectability of the Company’s trade receivables which may be material.

The following table sets forth the activity in the Company's allowance for doubtful accounts on trade accounts receivables for the nine months ended:


	September 30, 2020
Beginning balance	$	47
Cumulative effect of change in accounting standard	12
Provision for doubtful accounts	32
Bad debt write-offs	(17)
Ending balance	$	74

Notes receivable

The Company had notes receivables of $16 million, net of a $2 million allowance as of September 30, 2020. For a significant portion of such notes receivables, the Company has received personal guarantees from the owners of these hotels. In addition, the Company had $17 million of notes receivables which are fully offset in deferred revenues.


6. LONG-LIVED ASSETS

Property, plant and equipment

As a result of COVID-19 and the related governmental preventative and protective actions to slow the spread of the virus, the travel industry is continuing to experience a sharp decline in travel demand. As a result, the Company closed its two owned hotels temporarily for April and May 2020. Due to the temporary closure of such hotels and the continued decrease in travel demand, the Company has evaluated the recoverability of its net property plant and equipment associated with its two owned hotels for impairment in each of the quarters of 2020 and believes that it is more likely than not that the carrying value of those assets are recoverable from future expected cash flows, on an undiscounted basis, from such assets.

Although the Company believes that it is more likely than not that the carrying values of its net property, plant and equipment for its two owned hotels are not impaired, the impact of COVID-19 and the ultimate duration remains highly uncertain. Should the current effects of COVID-19 persist for a prolonged duration, the Company's results of operations may continue to be negatively impacted and the property, plant and equipment associated with its owned hotels may be exposed to impairment.

Property, plant and equipment, net as of September 30, 2020 and December 31, 2019 was $284 million and $307 million, respectively.

Intangible assets

As a result of COVID-19 and the significant negative impact it has had on travel demand, the Company performed an impairment analysis on all its intangible assets in the second quarter of 2020. The Company evaluated the carrying value of each of its indefinite-lived intangible assets compared to their respective estimated fair values. The fair value of each of its indefinite-lived intangible assets is estimated using a discounted cash flow methodology. The Company also evaluated the recoverability of its amortizable intangible assets by comparing the respective carrying values of the assets to the future expected cash flows on an undiscounted basis, to be generated from such assets. The Company has determined through such analyses that certain of its trademarks, as well as, goodwill associated with its owned hotel reporting unit were impaired. Accordingly, the Company recorded impairment charges totaling $205 million in the second quarter of 2020 to reduce the carrying value of those assets to their estimated fair values. Such charges were reported within impairments, net on the Condensed Consolidated Statement of Income and $191 million and $14 million were charged to the hotel franchising segment and the hotel management segment, respectively.

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The following is the breakout of the intangible impairment charges recorded in the second quarter of 2020:

Intangible Asset