What changed in this filing

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Item 7. Management’s Discussion and Analysis

2021-03-01 compared with 2020-03-02 · 354 added, 362 removed, 462 unchanged (61% of the section changed)

13 unchanged sentences

Vacation Ownership and Exchange & Third-Party Management.

On September 1, 2018, we completed the ILG Acquisition for approximately $4.2 billion in aggregate consideration.

See additional details on the ILG Acquisition in Footnote 3 “ Acquisitions and Dispositions ” to our Financial Statements.

Corporate and other represents that portion of our results that are not allocable to our segments, including those relating to property owners’ associations consolidated under the voting interest model (“Consolidated Property Owners’ Associations”).

Hurricane Activity

In 2017, over 20 Legacy-MVW properties and two Legacy-ILG properties were negatively impacted by one or both of Hurricane Irma and Hurricane Maria (collectively, the “2017 Hurricanes”).

All of the Legacy-MVW properties reopened prior to the end of 2018.

The Legacy-ILG property in St.

John partially reopened in the first quarter of 2019 and the Legacy-ILG resort in Puerto Rico is expected to open in 2020.

We received $29 million and $9 million of net insurance proceeds in 2018 and 2019, respectively, related to the settlement of Legacy-MVW business interruption insurance claims arising from the 2017 Hurricanes.

We have submitted most of the insurance claims for our Legacy-ILG business interruption losses as well as Legacy-MVW and Legacy-ILG property damage experienced by both us and associated property owners’ associations from these 2017 Hurricanes.

In 2018, we received an initial $25 million advance of insurance proceeds related to the business interruption losses at the Legacy-ILG St.

John property and we received the final payment of $38 million in 2019.

In 2019, we received $7 million of insurance proceeds related to the business interruption losses at the other Legacy-ILG properties and also received advances of $108 million of insurance proceeds related to the Legacy-ILG property damage experienced by the related property owners’ associations.

Repairs are underway at the Legacy-ILG resort in Puerto Rico and the related insurance claim is expected to be submitted in 2020 upon the completion of construction.

However, we cannot quantify the extent of any additional payments under such claims at this time as the claims would not be higher than our deductible.

During the third quarter of 2018, our Legacy-MVW properties in South Carolina and Florida were negatively impacted by Hurricane Florence and Hurricane Michael, respectively (collectively, the “2018 Hurricanes”).

We expect to submit insurance claims for our business interruption losses as well as property damage experienced by both us and associated property owners’ associations from these 2018 Hurricanes.

However, we cannot quantify the extent of any payments under such claims at this time.

During the third quarter of 2019, several properties in our Vacation Ownership segment were negatively impacted by Hurricane Dorian.

The physical damage resulting from the hurricane to the resorts and sales centers operated by the Company was minimal.

We do not expect to submit insurance claims for our business interruption losses, or for property damage experienced by us or associated property owners’ associations, from this hurricane.

Corporate and other represents that portion of our results that are not allocable to our segments, including those relating to Consolidated Property Owners’ Associations.

COVID-19 Pandemic Update

The COVID-19 pandemic has caused significant disruptions in international and U.S.

economies and markets.

We discuss the COVID-19 pandemic and its current and potential future implications in this report;

however, the COVID-19 pandemic is evolving and its potential impact on our business in the future remains uncertain.

Please see “ Impact of COVID-19 Pandemic ” included in “ Item 1.

Business ” for additional discussion on the COVID-19 pandemic and its impact on our business.

As a result of the COVID-19 pandemic, in September 2020, a workforce reduction plan was approved, which impacted approximately 3,000 associates beginning in November 2020.

We expect that we will incur approximately $30 to $35 million in restructuring and related charges primarily related to employee severance and benefit costs, including a portion that is included in cost reimbursements.

See Footnote 3 “Restructuring Charges” to our Financial Statements for more information about the restructuring charges recorded as a result of the COVID-19 pandemic.

Significant Accounting Policies Used in Describing Results of Operations

29 unchanged sentences

citizens or residents who financed a vacation ownership purchase was as follows:

2020 2019 2018

Average FICO score 730 736 738

1 unchanged sentence

Included within our vacation ownership notes receivable are originated vacation ownership notes receivable and vacation ownership notes receivable acquired in connection with the ILG Acquisition.

Acquired vacation ownership notes receivable are accounted for using the expected cash flow method of recognizing discount accretion based on the expected cash flows.

At acquisition, we recorded these vacation ownership notes receivable at a preliminary estimate of fair value, including a credit discount which is accreted as an adjustment to yield over the estimated life of the vacation ownership notes receivable.

Our acquired vacation ownership notes receivable are remeasured at each reporting date based on expected future cash flows which takes into consideration an estimated measure of anticipated defaults and early repayments.

Acquired vacation ownership notes receivable are accounted for using the purchased credit deteriorated assets provision of the current expected credit loss model.

At acquisition, we recorded these vacation ownership notes receivable at fair value.

Upon adoption of Accounting Standards Update 2016-13 – “ Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments ” on January 1, 2020, we established a reserve for credit losses and a corresponding increase in the book value of the acquired vacation ownership notes receivable, resulting in no impact to the recorded balance.

The estimates of the reserve for credit losses on the acquired vacation ownership notes receivable are based on default rates that are an output of our static pool analyses.

Any changes in the reserve for credit losses are recorded as Financing expenses on our Income Statements.

In addition, we established a noncredit discount, which represents the difference between the amortized cost basis and the par value of our acquired vacation ownership notes receivable.

The noncredit discount will be amortized to interest expense over the contractual life of the acquired vacation ownership notes receivable and is recorded as Financing expenses on our Income Statements.

See Footnote 7 “Vacation Ownership Notes Receivable” to our Financial Statements for further information regarding the accounting for acquired vacation ownership notes receivable.

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We do not include resales contract sales in the financing propensity calculation.

Financing propensity was 63 percent in 2019 and 62 percent in 2018 .

We expect to continue to offer financing incentive programs in 2019 and that interest income will continue to increase as new originations of vacation ownership notes receivable outpace the decline in principal of existing vacation ownership notes receivable.

Financing propensity was 51 percent in 2020 and 63 percent in 2019, with the year-over-year decline being driven by programs we offered to incent cash purchases.

We expect to continue offering financing incentive programs in 2021 and that interest income will begin to increase when new originations of vacation ownership notes receivable outpace the decline in principal of existing vacation ownership notes receivable, most likely in 2022.

In the event of a default, we generally have the right to foreclose on or revoke the underlying VOI.

2 unchanged sentences

Historical default rates, which represent defaults as a percentage of each year’s beginning gross vacation ownership notes receivable balance, were as follows:

2020 2019 2018

Historical default rates 6.3% 4.5% 3.8%

The increase in default rates in 2020 was predominantly due to the impact of the COVID-19 pandemic on the performance of our notes receivable portfolio.

See Footnote 7, “Vacation Ownership Notes Receivable” to our Financial Statements for additional information regarding the COVID-19 impact on our vacation ownership notes receivable reserves.

Financing expenses include consumer financing interest expense, which represents interest expense associated with the securitization of our vacation ownership notes receivable.

11 unchanged sentences

• Maintenance fees on unsold inventory;

Costs to provide alternative usage options, including Marriott Bonvoy points and offerings available as part of the Explorer Collection, for owners who elect to exchange their inventory;

• Costs to provide alternative usage options, including Marriott Bonvoy points, offerings available as part of the Explorer Collection and through the Interval Options program, for owners who elect to exchange their inventory;

• Marketing costs and direct operating and related expenses in connection with the rental business (such as housekeeping, credit card expenses and reservation services);

19 unchanged sentences

• Total contract sales include contract sales from the sale of vacation ownership products including joint ventures

Consolidated contract sales exclude contracts sales from the sale of vacation ownership products for joint ventures

• Consolidated contract sales exclude contracts sales from the sale of vacation ownership products for non-consolidated joint ventures

• Development margin percentage;

7 unchanged sentences

Management and exchange 755 949 499

Rental 276 573 371

Financing 267 275 183

Cost reimbursements 1,042 1,108 925

3 unchanged sentences

Management and exchange 442 547 259

Rental 321 357 281

Financing 107 91 65

General and administrative 154 248 198

1 unchanged sentence

Litigation charges 6 7 46

Restructuring 25 — —

Royalty fee 95 106 78

Impairment 100 99 —

Cost reimbursements 1,042 1,108 925

TOTAL EXPENSES 2,984 3,801 2,701

Gains and other income, net

(Losses) gains and other (expense) income, net (26) 16 21

Interest expense (150) (132) (54)

ILG acquisition-related costs (62) (118) (127)

INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

Provision for income taxes

Other (4) 1 (4)

(LOSS) INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS (340) 225 103

Benefit (provision) for income taxes 84 (83) (51)

NET (LOSS) INCOME (256) 142 52

Net (income) loss attributable to noncontrolling interests (19) (4) 3

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (275) $ 138 $ 55

Operating Statistics

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

(Contract sales $ in millions)

(Contract sales $ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Vacation Ownership

4 unchanged sentences

Average revenue per member (1)

$ 144.97 $ 168.73 $ 37.37 $ (23.76) (14%) NM

_______________

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The following table presents our revenues for 2020, 2019, and 2018.

The results for 2018 only include Legacy-ILG for the months of September through December 2018, following the ILG Acquisition on September 1, 2018.

Change 2019 vs.

The results for 2018 include Legacy-ILG for the months of September through December 2018, following the ILG Acquisition on September 1, 2018.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Vacation Ownership $ 2,530 $ 3,761 $ 2,803 $ (1,231) (33%) $ 958 $ 117 5%

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These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.

We evaluate Adjusted EBITDA as an indicator of operating performance because it allows for period-over-period comparisons of our on-going core operations before the impact of the

excluded items.

Adjusted EBITDA also facilitates our comparison of results from our on-going core operations before the impact of these items with results from other vacation companies.

We believe Adjusted EBITDA is useful as an indicator of operating performance because it allows for period-over-period comparisons of our on-going core operations before the impact of the excluded items.

Adjusted EBITDA also facilitates comparison by us, analysts, investors, and others, of results from our on-going core operations before the impact of these items with results from other vacation companies.

EBITDA and Adjusted EBITDA have limitations and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.

In addition, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do or may not calculate them at all, limiting their usefulness as comparative measures.

The table below shows our EBITDA and Adjusted EBITDA calculation and reconciles these measures with Net income attributable to common shareholders , which is the most directly comparable GAAP financial measure.

Change 2019 vs.

The table below shows our EBITDA and Adjusted EBITDA calculation and reconciles these measures with Net (loss) income attributable to common shareholders, which is the most directly comparable GAAP financial measure.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

Net income attributable to common shareholders

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Net (loss) income attributable to common shareholders $ (275) $ 138 $ 55 $ (413) (299%) $ 83 $ (50) (88%)

Interest expense 150 132 54 18 14% 78 77 149%

Tax provision

Tax (benefit) provision (84) 83 51 (167) (201%) 32 (39) (87%)

Depreciation and amortization 123 141 62 (18) (13%) 79 5 23%

Share-based compensation expense

EBITDA (86) 494 222 (580) (117%) 272 (7) (4%)

Share-based compensation 37 37 35 — (1%) 2 4 16%

Certain items 284 227 162 57 25% 65 71 58%

Adjusted EBITDA $ 235 $ 758 $ 419 $ (523) (69%) $ 339 $ 68 21%

2019 Compared to 2018

Certain items for 2019 consisted of $119 million of acquisition costs (including $118 million of ILG acquisition-related costs and $1 million of other acquisition costs), $99 million of asset impairment charges, $17 million of unfavorable purchase price adjustments, $7 million of litigation charges, and $1 million of other severance costs, partially offset by $16 million of miscellaneous gains and other income .

The $16 million of miscellaneous gains and other income included $19 million of gains and other income related to the disposition of excess land parcels in Cancun, Mexico and Avon, Colorado, $9 million of gains and other income related to net insurance proceeds from the final settlement of Legacy-MVW business interruption insurance claims arising from the 2017 Hurricanes, and $3 million of gains and other income resulting from the recovery of a portion of the fraudulently induced electronic payment disbursements made to third parties, partially offset by $15 million of integration related tax matters and other miscellaneous expenses.

These exclusions increased EBITDA by $227 million .

Certain items for 2018 consisted of $127 million of ILG acquisition-related costs, $46 million of litigation charges, $8 million of losses and other expense, $6 million of unfavorable purchase accounting adjustments and $4 million of costs associated with the then anticipated capital efficient acquisitions of operating properties in San Francisco, California and New York, partially offset by $29 million of net insurance proceeds related to the settlement of Legacy-MVW business interruption insurance claims arising from Hurricanes Irma and Maria.

These exclusions increased EBITDA by $162 million.

Adjusted EBITDA margin percentage 13% 24% 21% (11 pts) 4 pts 3 pts

Certain items for 2020 consisted of $100 million of impairment charges, $62 million of ILG acquisition-related costs, $57 million of other charges (including $50 million related to the net sales reserve adjustment, $2 million related to an accrual for the health and welfare costs for furloughed associates, $4 million related to the charge for VAT penalties and interest (see offset included in indemnification below) and $1 million of other miscellaneous charges), $26 million of losses and other expense, $25 million of restructuring costs, $4 million of purchase accounting adjustments, $6 million of litigation charges, and $4 million of transaction costs related to our asset light inventory arrangements.

The $26 million of losses and other expense included $32 million related to a true-up to a Marriott International indemnification receivable upon settlement (the true-up to the offsetting accrual is included in the Benefit (provision) for income taxes line), $11 million related to foreign currency translation losses, and a $5 million loss related to the disposition of a formerly consolidated subsidiary, partially offset by $6 million of gains and other income related to the disposition of excess land parcels in Orlando, Florida and Steamboat Springs, Colorado, a $6 million receivable related to indemnification from Marriott International for certain VAT charges, $4 million related to net insurance proceeds from the final settlement of Legacy-MVW business interruption insurance claims arising from a prior year hurricane, $3 million related to other insurance proceeds, and $3 million of miscellaneous gains and other income.

Certain items for 2019 consisted of $119 million of acquisition-related costs (including $118 million of ILG acquisition-related costs and $1 million of other acquisition costs), $99 million of asset impairment charges, $17 million of unfavorable purchase price adjustments, $7 million of litigation charges, and $1 million of other severance costs, partially offset by $16 million of miscellaneous gains and other income.

The $16 million of miscellaneous gains and other income included $19 million of gains and other income related to the disposition of excess land parcels in Cancun, Mexico and Avon, Colorado, $9 million of gains and other income related to net insurance proceeds from the final settlement of Legacy-MVW business interruption insurance claims arising from prior year hurricanes, and $3 million of gains and other income resulting from the recovery of a portion of the fraudulently induced electronic payment disbursements made to third parties, partially offset by $15 million of integration related tax matters and other miscellaneous expenses.

Segment Adjusted EBITDA

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Vacation Ownership $ 229 $ 794 $ 511 $ (565) (71%) $ 283 $ 79 18%

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Vacation Ownership

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Segment Adjusted EBITDA $ 229 $ 794 $ 511 $ (565) (71%) $ 283 $ 79 5%

Depreciation and amortization (71) (68) (37) (3) (4%) (31) (1) (9%)

Share-based compensation expense

Share-based compensation (6) (8) (7) 2 29% (1) (1) (2%)

Certain items (73) (95) (24) 22 22% (71) (57) (316%)

Segment financial results $ 79 $ 623 $ 443 $ (544) (87%) $ 180 $ 20 5%

2019 Compared to 2018

Certain items in the Vacation Ownership segment for 2020 consisted of $50 million related to the net sales reserve adjustment, $15 million of restructuring costs, $8 million of asset impairment charges, $6 million of litigation charges, $3 million of unfavorable purchase accounting adjustments, and $3 million of transaction costs associated with asset light inventory arrangements, partially offset by $12 million of gains and other income.

Certain items in the Vacation Ownership segment for 2019 consisted of $99 million of asset impairment charges, $17 million of unfavorable purchase accounting adjustments, $6 million of litigation charges, and $1 million of acquisition costs, partially offset by $28 million of gains and other income.

These exclusions decreased segment financial results by $95 million .

Certain items in the Vacation Ownership segment for 2018 consisted of $46 million of litigation charges, $4 million of costs associated with the then anticipated capital efficient vacation ownership acquisitions of operating properties in San Francisco, California and New York, $2 million of unfavorable purchase accounting adjustments and $1 million of miscellaneous losses and other expense, partially offset by $29 million of net insurance proceeds related to the settlement of Legacy-MVW business interruption insurance claims arising from the 2017 Hurricanes.

These exclusions decreased segment financial results by $24 million .

Exchange & Third-Party Management

($ in millions)

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

($ in millions) 2020 2019 2018 Change Change

Segment Adjusted EBITDA $ 119 $ 183 $ 77 $ (64) (36%) $ 106 138%

Depreciation and amortization (19) (47) (16) 28 60% (31) (191%)

Share-based compensation expense

Share-based compensation (2) (3) (1) 1 33% (2) (137%)

Certain items (99) (4) (3) (95) (2215%) (1) (25%)

Segment financial results $ (1) $ 129 $ 57 $ (130) (101%) $ 72 129%

2019 Compared to 2018

Certain items in the Exchange & Third-Party Management segment for 2019 consisted of $1 million of miscellaneous gains and other income offset by $1 million of unfavorable purchase accounting adjustments.

Certain items in the Exchange & Third-Party Management segment for 2018 consisted of $4 million of unfavorable purchase accounting adjustments, partially offset by $1 million of miscellaneous gains and other income.

These items decreased segment financial results by $3 million.

Certain items in the Exchange & Third-Party Management segment for 2020 consisted of $92 million of asset impairment charges, $4 million of restructuring costs, $2 million of miscellaneous losses and other expense, and $1 million of unfavorable purchase accounting adjustments.

Certain items in the Exchange & Third-Party Management segment for 2019 consisted of $3 million of miscellaneous losses and other expense and $1 million of unfavorable purchase accounting adjustments.

BUSINESS SEGMENTS

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Resort management and other services 356 488 359

Rental 239 512 352

Financing 265 271 182

Cost reimbursements 1,124 1,136 920

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Resort management and other services 136 229 190

Rental 363 390 277

Financing 106 89 64

Depreciation and amortization 71 68 37

Litigation charges 6 6 46

Restructuring 15 — —

Royalty fee 95 106 78

Impairment 8 99 —

Cost reimbursements 1,124 1,136 920

1 unchanged sentence

Gains and other income, net 12 28 28

ILG acquisition-related costs — — —

Other (3) 1 (4)

SEGMENT FINANCIAL RESULTS BEFORE NONCONTROLLING INTERESTS 79 623 442

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Contract Sales

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Total consolidated contract sales 654 1,524 1,073 (870) (57%) 451 50 6%

1 unchanged sentence

Total contract sales $ 669 $ 1,569 $ 1,089 $ (900) (57%) $ 480 $ 50 6%

2019 Compared to 2018

Total contract sales increased $480 million , driven largely by the ILG Acquisition during the 2018 third quarter.

Excluding the impact of the ILG Acquisition, total contract sales increased $50 million or 6 percent .

The $50 million increase in Legacy-MVW contract sales reflected a 5 percent increase in the number of tours and a 2 percent increase in VPG to $3,574 in 2019 from $3,521 in 2018 .

The increase in the number of tours was due to increases in both owner tours and first time buyer tours.

In addition, the increase in the number of total tours reflected the continued ramp up of newer sales locations as well as an increase in tours from existing sales locations.

The increase in VPG resulted from a slight increase in closing efficiency and higher pricing.

Sale of Vacation Ownership Products

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Total contract sales $ 669 $ 1,569 $ 1,089 $ (900) (57%) $ 480 $ 50 6%

7 unchanged sentences

Sales reserve (129) (112) (64) (17) (48) (13)

(46) (58) (38) 12 (20) 1

Sale of vacation ownership products $ 546 $ 1,354 $ 990 $ (808) (60%) $ 364 $ 22 3%

2 unchanged sentences

2020 Compared to 2019

Excluding the impact of the ILG Acquisition, sale of vacation ownership products revenue increased $22 million , driven by the increase in contract sales in 2019 , partially offset by an unfavorable year-over-year change in revenue reportability and a higher sales reserve.

Revenue reportability had a negative impact in 2019 due to an increase in unclosed contracts during the year while 2018 was positively impacted by a decrease in unclosed contracts during the year.

The higher Legacy-MVW sales reserve reflected a higher required reserve due to higher default activity as compared to the prior year.

Sale of vacation ownership products decreased $808 million due primarily to $852 million of lower consolidated contract sales volumes, net of resales, and $17 million of higher sales reserve activity, partially offset by a $66 million favorable change in revenue reportability.

The lower contract sales performance as well as the higher sales reserve activity were primarily due to the response to the COVID-19 pandemic.

Contract sales and VPG as of March 13, 2020 were 10 percent and 11 percent higher, respectively, than the same period during the first quarter of 2019.

However, during the second half of March 2020, as the virus continued to spread and we closed all of our sales centers, contract sales volumes declined significantly.

We reopened eight sales centers in the second quarter and continued to reopen sales centers throughout the remainder of the year.

At the end of 2020, over 80 percent of our sales centers were open, with the exception of sales centers in Kauai, Hawaii and in California that reopened but closed again in December 2020 due to government restrictions, as well as a handful of our smaller urban sales centers.

The higher sales reserve recorded in 2020 reflected an estimate of higher estimated default activity related primarily to the impact of the COVID-19 pandemic, offset partially by the impact of lower contract sales in 2020.

We will continue to evaluate our estimate of future default activity and compare it to actual default activity, and may adjust our sales reserve based on changes in actual default activity and other factors, as necessary.

Revenue reportability was significantly higher in 2020 as a result of contract sales late in the fourth quarter of 2019 that we recognized as revenue in 2020.

However, this shift of revenues from sales in late 2019 to early 2020 was not fully offset by the shift of revenues from sales late in the fourth quarter of 2020 into 2021, given the lower sales volumes in December 2020 due to the impact of the COVID-19 pandemic.

Development Margin

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Sale of vacation ownership products $ 546 $ 1,354 $ 990 $ (808) (60%) $ 364 $ 22 3%

2 unchanged sentences

Development margin $ 10 $ 310 $ 217 $ (300) (97%) $ 93 $ 24 13%

Development margin percentage

Development margin percentage 1.8% 22.9% 21.9% (21.1 pts) 1.0 pts

2020 Compared to 2019

Excluding the impact of the ILG Acquisition, development margin increased $24 million or 13 percent .

The increase in Legacy-MVW development margin reflected $10 million from higher vacation ownership contract sales volume net of the sales reserve and direct variable expenses (i.e., cost of vacation ownership products and marketing and sales), $25 million from more efficient marketing and sales spend, and $12 million from a favorable mix of lower cost inventory being sold, partially offset by a $13 million decline due to unfavorable revenue reportability compared to 2018 and $10 million due to a higher sales reserve rate from higher delinquency and default activity.

The increase in the development margin percentage reflected a 2.2 percentage point improvement from Legacy-MVW results, partially offset by a negative 1.4 percentage point impact from the inclusion of Legacy-ILG results post acquisition.

The Legacy-MVW results included a 3.0 percentage point improvement in marketing and sales costs due to leveraging fixed costs on the increase in contract sales and a 1.4 percentage point increase due to a favorable mix of lower cost vacation ownership real estate inventory being sold, partially offset by a 1.2 percentage point decline due to the unfavorable revenue reportability and a 1.0 percentage point decline related to higher sales reserve activity.

Development margin decreased $300 million or 97 percent.

The decrease in development margin reflected $174 million of lower vacation ownership contract sales volume, net of the sales reserve and direct variable expenses (i.e., cost of vacation ownership products and marketing and sales), $107 million related to less efficient marketing and sales spend, and $80 million related to the net impact of the higher sales reserve.

These declines were partially offset by $45 million of favorable revenue reportability compared to 2019 and $16 million of lower product cost activity mainly from a favorable mix of lower cost inventory being sold.

Resort Management and Other Services Revenues, Expenses and Margin

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Management fee revenues $ 149 $ 144 $ 114 $ 5 4% $ 30 $ 2 2%

Ancillary revenues 89 224 160 (135) (60%) 64 5 4%

Other management and exchange revenues

Other management and exchange revenue 118 120 85 (2) (3%) 35 7 9%

Resort management and other services revenues 356 488 359 $ (132) (27%) 129 14 5%

1 unchanged sentence

Resort management and other services margin $ 220 $ 259 $ 169 $ (39) (15%) 90 $ 11 7%

Resort management and other services margin percentage

Resort management and other services margin percentage 61.8% 53.0% 47.1% 8.8 pts 5.9 pts

2020 Compared to 2019

Excluding the impact of the ILG Acquisition, resort management and other services revenues reflected $2 million of higher management fees resulting from the cumulative increase in the number of vacation ownership products sold and higher operating costs across the system, $5 million of higher ancillary revenues from food and beverage and golf offerings at our resorts and $7 million of higher annual club dues and other revenues earned in connection with the MVCD program due to the cumulative increase in owners enrolled in the program as well as an increase in the average club dues charged to enrolled owners, partially offset by $3 million of lower refurbishment and other revenues due to a decrease in the number of refurbishment projects completed in 2019 .

Excluding the impact of the ILG Acquisition, the increase in the resort management and other services margin reflected the increases in revenue, partially offset by $3 million of higher ancillary and other expenses primarily from food and beverage and golf offerings at our resorts in support of the higher revenues mentioned above.

Resort management and other services revenues reflected lower ancillary revenues, including revenues from food and beverage and golf offerings, as a result of significant resort and ancillary outlet closings due to the COVID-19 pandemic, partially offset by 4 percent higher management fees resulting from the cumulative increase in the number of vacation ownership products sold and higher operating costs across the system.

The decrease in resort management and other services margin reflected the decrease in resort management and other services revenues, partially offset by lower ancillary expenses as a result of the lower ancillary revenues mentioned above.

Rental Revenues, Expenses and Margin

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Rental revenues $ 239 $ 512 $ 352 $ (273) (53%) $ 160 $ 36 13%

1 unchanged sentence

Rental margin $ (124) $ 122 $ 75 $ (246) (201%) $ 47 $ 18 35%

Rental margin percentage

Change 2019 vs.

Rental margin percentage NM 23.7% 21.5% NM 2.2 pts

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

(Transient keys in millions)

(transient keys in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Transient keys rented (1)

1.1 2.4 1.6 (1.3) (53%) 0.8 0.1 4%

Average transient key rate $ 219.82 $ 228.38 $ 222.10 $ (8.56) (4%) $ 6.28 $ 3.65 2%

Resort occupancy

Resort occupancy 57.2% 88.1% 88.5% (30.9 pts) (0.4 pts) 0.9 pts

_________________________

1 unchanged sentence

2020 Compared to 2019

Excluding the impact of the ILG Acquisition, rental revenue increased $36 million due to a 4 percent increase in transient keys rented ($14 million), higher plus points revenue ( $9 million ), a 2 percent higher average transient rate ($5 million), and higher other revenues ($8 million).

Excluding the impact of the ILG Acquisition, the increase in rental margin reflected the higher rental revenues net of direct variable expenses (such as housekeeping) and the $9 million increase in plus points revenue, partially offset by higher expenses incurred due to owners choosing alternative usage options and higher unsold maintenance fees.

The decline in rental margin resulted from a decline in keys rented and transient rate due to the COVID-19 pandemic.

Rental margin as of the end of February 2020 was nearly $4 million higher than the comparable period of 2019.

In response to quickly evolving travel restrictions and restrictions on business operations, beginning March 25, 2020, we closed our resorts for rental guests with stays at our branded North America vacation ownership resorts.

In late May, as many government restrictions were beginning to be relaxed, we began reopening resorts to rental guests.

Since the end of the second quarter and through the end of the year, we reopened more resorts to rental guests and expect rental revenues to continue to increase from current levels.

At the end of 2020, over 95% of our resorts were open for rental stays.

Financing Revenues, Expenses and Margin

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

Interest income

Other financing revenues

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Financing revenues $ 265 $ 271 $ 182 $ (6) (2%) $ 89 $ 32 22%

2 unchanged sentences

Financing margin $ 159 $ 182 $ 118 (23) (13%) 64 $ 24 25%

Financing propensity

Financing margin percentage 59.8% 67.3% 64.6% (7.5 pts) 2.7 pts 1.5 pts

Financing propensity 51% 63% 62% (12 pts) 1 pts

2020 Compared to 2019

Excluding the impact of the ILG Acquisition, financing revenues increased $32 million due to an increase in the average gross vacation ownership notes receivable balance and lower financing program incentive costs.

Excluding the impact of the ILG Acquisition, the increase in financing margin reflected the higher financing revenues, partially offset by higher consumer financing interest expense and higher other expenses.

The higher consumer financing interest expense was due to a higher average outstanding debt balance and a higher average interest rate on the outstanding debt

balance due to the higher interest rate applicable to our most recently completed securitizations of vacation ownership notes receivable.

The higher other expenses were due to an increase in variable expenses associated with the increase in the average gross vacation ownership notes receivable balance.

Financing revenues decreased due to higher plus point finance incentive costs related to financing incentive programs we offered prior to the COVID-19 pandemic, as well as a decrease in the average gross vacation ownership notes receivable balance.

The higher financing expenses included $14 million related to the higher reserve on the acquired vacation ownership notes receivable balance due primarily to higher estimated defaults as a result of the COVID-19 pandemic and $5 million related to higher technology related costs year over year, partially offset by lower salaries and wages associated with the furlough and reduced work week programs in the current year.

Higher consumer financing interest expense resulted from higher overall securitized debt balances, partially offset by lower average borrowing rates .

Depreciation and Amortization

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Depreciation and amortization $ 71 $ 68 $ 37 $ 3 4% $ 31 $ 1 8%

Litigation Charges

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Litigation charges $ 6 $ 6 $ 46 $ — 7% $ (40) $ (40) (87%)

2020 Compared to 2019

In 2020, we incurred $6 million of litigation charges related primarily to projects in Europe.

In 2019, we incurred $6 million of litigation charges, including approximately $4 million related to projects in Europe and approximately $1 million related to projects in California.

In 2018, we incurred $46 million of litigation charges, including $28 million related to a previously managed project in Hawaii, $11 million related to a project in San Francisco, $5 million related to a project in Lake Tahoe, $1 million related to an Asia Pacific tax matter and $1 million related to projects in Europe.

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Royalty fee $ 95 $ 106 $ 78 $ (11) (10%) $ 28 $ — —%

2020 Compared to 2019

Excluding the impact of the ILG Acquisition, Legacy-MVW royalty fee expense remained flat year-over-year due to an increase in the mix of sales of pre-owned inventory, which carry a lower royalty fee as compared to initial sales of our inventory (one percent versus two percent), offset by an increase in the dollar volume of closings and an increase in the fixed portion of the royalty fee.

The prior year period benefited from a contractual decrease in the fixed portion of the royalty fee owed to Marriott International as a result of amendments to our license agreements with Marriott International entered into during the first quarter of 2018.

This decrease in the fixed portion of the royalty fee terminated upon completion of the ILG Acquisition.

Change 2019 vs.

Royalty fee expense declined in 2020 as a result of lower contract closings due to the lower contract sales compared to the prior year.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

As a result of the ILG Acquisition, we performed a comprehensive review to evaluate the strategic fit of the land holdings and operating hotels in our Vacation Ownership segment.

A key focus of our comprehensive review was to evaluate opportunities to reduce holdings in markets where we have excess supply so that future inventory spend can be focused on markets that create incremental cost-effective sales locations in areas of high customer demand.

We evaluated each asset in the context of its current and anticipated product form, our inventory needs and our operating strategy.

During the third quarter of 2019, we completed our evaluation and identified several assets for disposition which we believe will generate cash proceeds equivalent to their estimated fair value of $160 million to $220 million over the next several years.

As a result of the change in our development strategy, we recorded a non-cash impairment charge of $72 million, of which $61 million related to land and land improvements associated with future phases of three existing resorts, primarily attributable to the fact that the book values of these assets include the historical allocations of common costs incurred when we built the infrastructure of these resorts, $9 million related to a land parcel held for future development and $2 million related to an ancillary business, as the book values of these assets were in excess of the estimated fair values of these assets.

We also reviewed the remainder of the assets identified for disposition and determined that no other impairment charges were necessary.

During the second quarter of 2019, we entered into a contract to sell land and land improvements associated with a future phase of an existing resort located in Orlando, Florida for $10 million, which was less than the carrying value of the land and land improvements.

As a result, we recorded a non-cash impairment charge of $26 million.

The impairment is primarily attributable to the fact that the book value of the assets to be sold exceeds the sales price because the book value includes allocations of common costs incurred when we built the infrastructure for the resort, including future phases.

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Impairment $ 8 $ 99 $ — $ (91) (91%) $ 99 $ 99 100%

We recorded a non-cash impairment of $6 million related to our Asia Pacific inventory as a result of the COVID-19 pandemic and $2 million of impairment charges for property and equipment.

We recorded a non-cash impairment of $26 million as a result of entering into a contract to sell land and land improvements associated with a future phase of an existing resort located in Orlando, Florida for which the book value of the assets to be sold exceeded the sales price.

This contract was subsequently terminated.

During 2019, we also recorded a non-cash impairment charge of $1 million related to an ancillary asset located at a Vacation Ownership segment property in Europe.

We also recorded a non-cash impairment charge of $72 million due to a change in our development strategy associated with our comprehensive review of the strategic fit of the land holdings and operating hotels in our Vacation Ownership segment as a result of the ILG Acquisition.

Additionally, we recorded a non-cash impairment of $1 million related to an ancillary asset located at a Vacation Ownership segment property in Europe.

Cost Reimbursements

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Cost reimbursements $ 1,124 $ 1,136 $ 920 $ (12) (1%) $ 216 $ 13 2%

2019 Compared to 2018

Excluding the impact of the ILG Acquisition, cost reimbursements increased $13 million , or 2 percent , over 2018 , reflecting $23 million due to additional managed unit weeks in 2019 , partially offset by $8 million of lower costs and a $2 million impact from foreign exchange rates at our Legacy-MVW Vacation Ownership resorts in Europe and Asia.

The lower costs were due to less refurbishment activity in 2019 and non-recurring hurricane remediation related costs in 2018 , partially offset by inflationary wage and operating cost increases.

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Other $ (3) $ 1 $ (4) $ (4) (441%) $ 5 $ 4 NM

2020 Compared to 2019

In 2018, we incurred $4 million of acquisition costs associated with operating properties in San Francisco and New York.

In 2020, we incurred $3 million of transaction costs associated with our asset light inventory arrangements.

Gains and Other Income, Net

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Gains and other income, net $ 12 $ 28 $ 28 $ (16) (56%) $ — $ (1) (6%)

2019 Compared to 2018

In 2019, we recorded $28 million of gains and other income, including $19 million of net gains related to the disposition of excess land in Cancun, Mexico and Avon, Colorado, and $9 million of gains and other income related to net insurance proceeds from the settlement of Legacy-MVW business interruption insurance claims arising from the 2017 Hurricanes.

In 2018, we recorded $28 million of gains and other income, including $29 million of net insurance proceeds related to the settlement of Legacy-MVW business interruption insurance claims arising from the 2017 Hurricanes and a $1 million favorable true up of previously recorded Legacy-MVW costs associated with the 2017 Hurricanes, partially offset by $2 million of Legacy-ILG non-operating foreign exchange losses.

We recorded $12 million of gains and other income, including $6 million of net gains related to the disposition of excess land parcels in Orlando, Florida and Steamboat Springs, Colorado, $4 million of net insurance proceeds related to the settlement of Legacy-MVW business interruption insurance claims arising from a prior year hurricane, $1 million related to foreign currency translation and $1 million related to a miscellaneous insurance refund.

We recorded $28 million of gains and other income, including $19 million of net gains related to the disposition of excess land in Cancun, Mexico, and Avon, Colorado, and $9 million gains and other income related to net insurance proceeds from the settlement of Legacy-MVW business interruption insurance claims arising from the 2017 hurricanes.

EXCHANGE & THIRD-PARTY MANAGEMENT

4 unchanged sentences

Management and exchange $ 211 $ 298 $ 109

Rental 37 61 18

Financing 2 4 1

Cost reimbursements 59 91 33

2 unchanged sentences

Management and exchange 89 101 31

Depreciation and amortization

Rental 11 28 9

Financing 1 2 1

Amortization of intangibles 19 22 6

Depreciation — 25 10

Restructuring 4 — —

Impairment 92 — —

Cost reimbursements 59 91 33

TOTAL EXPENSES 308 322 104

Gains and other income, net

(Losses) gains and other (expense) income, net (2) (3) 1

SEGMENT FINANCIAL RESULTS BEFORE NONCONTROLLING INTERESTS (1) 129 58

1 unchanged sentence

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (1) $ 129 $ 57

Management and Exchange Margin

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

($ in millions) 2020 2019 2018 Change Change

Management and exchange revenue $ 211 $ 298 $ 109 $ (87) (29%) $ 189 173%

Management and exchange expense (89) (101) (31) 12 12% (70) (224%)

Management and exchange margin $ 122 $ 197 $ 78 $ (75) (38%) 119 152%

Management and exchange margin percentage 57.4% 65.9% 71.3% (8.5 pts) (5.4 pts)

2020 Compared to 2019

The decline in management and exchange revenue and margin reflected lower exchange revenues and lower average exchange transaction fees at Interval International, primarily due to the closure of a large number of affiliated resorts and the fact that additional resorts stopped taking reservations in response to the COVID-19 pandemic.

In addition, Aqua-Aston was negatively impacted by travel restrictions that significantly affected substantially all of their properties in Hawaii.

Lower management and exchange expense reflected lower costs associated with the furlough and reduced work week programs and lower print and postage costs.

While exchange revenues were down in 2020, exchange transactions increased 8 percent in the second half of the year as compared to the prior year, with the fourth quarter increasing 17 percent, reflecting customers’ more recent desire to travel and pent up demand.

As of December 31, 2020, over 90 percent of Interval International’s affiliated resorts had reopened.

Rental Revenues, Expenses and Margin

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

($ in millions) 2020 2019 2018 Change Change

Rental revenues $ 37 $ 61 $ 18 $ (24) (40%) $ 43 249%

Rental expenses (11) (28) (9) 17 62% (19) (203%)

Rental margin $ 26 $ 33 $ 9 $ (7) (22%) $ 24 300%

Rental margin percentage 71.3% 54.6% 47.7% 16.7 pts 6.9 pts

2020 Compared to 2019

The decline in rental revenue reflected lower Getaways program transactions and lower average Getaways program transaction fees as a result of resort closures in response to the COVID-19 pandemic.

The decline in rental margin reflected the declines in rental revenue, partially offset by a reduction in space procurement costs resulting from fewer bookings into purchased inventory, and adjustments for cancellations and resorts closing for rental stays in response to the COVID-19 pandemic.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

($ in millions) 2020 2019 2018 Change Change

Impairment $ 92 $ — $ — $ 92 NM $ — —%

In 2020, we recorded a non-cash impairment charge of $92 million primarily related to a decrease in the fair value of goodwill and certain trademarks resulting from the impact of the COVID-19 pandemic.

See Footnote 12 “Goodwill” and Footnote 13 “Intangible Assets” to our Financial Statements for additional information.

Losses / Gains and Other Expense / Income

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

($ in millions) 2020 2019 2018 Change Change

(Losses) gains and other (expense) income, net $ (2) $ (3) $ 1 $ 1 11% $ (4) 518%

We recorded $2 million of net losses and other expense, including a $5 million loss related to the disposition of a previously consolidated subsidiary, partially offset by $3 million of gains and other income from other insurance proceeds.

We recorded $3 million of miscellaneous net losses and other expense.

CORPORATE AND OTHER

2 unchanged sentences

($ in millions) 2020 2019 2018

Management and exchange

Resort management and other services $ 188 $ 163 $ 31

Cost reimbursements (141) (119) (28)

TOTAL REVENUES 47 44 4

Management and exchange

Resort management and other services 217 217 38

Rental (53) (61) (5)

General and administrative 154 248 198

1 unchanged sentence

Litigation charges — 1 —

Restructuring 6 — —

Cost reimbursements (141) (119) (28)

4 unchanged sentences

FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS (418) (527) (397)

Provision for income taxes

FINANCIAL RESULTS BEFORE NONCONTROLLING INTERESTS

Benefit (provision) for income taxes 84 (83) (51)

Net (income) loss attributable to noncontrolling interests (19) (4) 3

1 unchanged sentence

Consolidated Property Owners’ Associations

The following table illustrates the impact of the Consolidated Property Owners’ Associations of the acquired Legacy-ILG vacation ownership properties under the voting interest model, which represents the portion related to individual or third-party VOI owners.

The following table illustrates the impact of the Consolidated Property Owners’ Associations of the acquired Legacy-ILG vacation ownership properties under the relevant accounting guidance, which represents the portion related to individual or third-party VOI owners.

($ in millions) 2020 2019 2018

3 unchanged sentences

Resort management and other services 217 217 38

Rental (53) (61) (5)

Cost reimbursements (141) (119) (28)

TOTAL EXPENSES 23 37 5

FINANCIAL RESULTS BEFORE NONCONTROLLING INTERESTS

Gains and other income, net 4 — —

FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS 28 7 (1)

Provision for income taxes (4) — —

Net (income) loss attributable to noncontrolling interests (19) (4) 3

1 unchanged sentence

General and Administrative

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

General and administrative $ 154 $ 248 $ 198 $ (94) (38%) $ 50 $ 15 12%

2020 Compared to 2019

Excluding the impact of the ILG Acquisition, general and administrative expenses increased $15 million due to higher legal and technology costs as well as higher personnel related and other expenses.

The higher personnel related and other expenses included annual merit, bonus and inflationary cost increases.

General and administrative expenses decreased $94 million due to $26 million of savings related to synergy efforts and lower costs associated with the furlough and reduced work week programs, $17 million related to lower personnel related costs, a $14 million credit related to the incentive under the CARES Act for companies to continue paying associates’ benefit costs while they were not working, and $37 million of lower overall spending across the business on technology, travel, training and other costs as a result of the COVID-19 pandemic.

The lower personnel related and other expenses included suspension of annual merit increases and bonuses in response to the COVID-19 pandemic, offset by inflationary cost increases.

Depreciation and Amortization

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Depreciation and amortization $ 33 $ 26 $ 9 $ 7 28% $ 17 $ 4 88%

Gains (Losses) and Other Income (Expense), net

Change 2019 vs.

Losses and Other Expense, net

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Losses and other expense, net $ (36) $ (9) $ (8) $ (27) (255%) $ (1) $ (11) (163%)

2019 Compared to 2018

In 2019, we recorded $13 million of losses and other expense primarily related to $10 million of integration related tax matters, $3 million of miscellaneous losses and other expense, and $2 million of losses and other expense resulting from foreign currency translation, partially offset by $3 million of gains and other income resulting from the recovery of a portion of the fraudulently induced electronic payment disbursements made in the second quarter of 2018.

In 2018, we recorded $4 million of losses and other expenses primarily resulting from fraudulently induced electronic payment disbursements made to third parties, $2 million of other expenses primarily associated with such fraudulently induced electronic payment disbursements and $2 million of Legacy-ILG miscellaneous losses and other expense.

See Footnote 11 “ Contingencies and Commitments ” to our Financial Statements for additional information regarding the fraudulently induced electronic payment disbursements made to third parties in 2018.

We recorded $36 million of net losses and other expense, including $32 million for the true-up to an indemnification receivable from Marriott International as a result of a settlement of an indemnified liability with a taxing authority (the true-up to the offsetting accrual is included in the Benefit (provision) for income taxes line), and $12 million related to foreign currency

translation, partially offset by $6 million of other income related to an indemnification from Marriott International for VAT penalties and interest and $2 million of miscellaneous net gains and other income.

We recorded $9 million of net losses and other expense, including $10 million of ILG integration-related tax matters and $2 million of losses and other expense resulting from foreign currency translation, partially offset by $3 million of gains and other income resulting from the recovery of a portion of the fraudulently induced electronic payment disbursements made in 2018.

Interest Expense

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

Interest expense $ (150) $ (132) $ (54) $ (18) (14%) $ (78) $ (77) (149%)

2020 Compared to 2019

Interest expense increased $78 million due to $73 million of interest expense associated with the new debt issued in the third quarter of 2018 in connection with the ILG Acquisition, $4 million of higher interest expense associated with the Warehouse Credit Facility due to higher usage in 2019, and $4 million of higher interest expense associated with assumed Legacy-ILG debt that was redeemed during the fourth quarter of 2019, as discussed in Footnote 14 “ Debt ” to our Financial Statements.

Interest expense increased $18 million due primarily to $20 million of higher interest expense associated with the new debt issued in May 2020, partially offset by $2 million of lower interest expense associated with various other debt.

ILG Acquisition-Related Costs

3 unchanged sentences

Acquisition and integration costs primarily represent integration employee salaries and share-based compensation, fees paid to change management consultants, and technology-related costs.

Change 2019 vs.

Fiscal Years Change 2020 vs.

2019 Change 2019 vs.

Change Excluding

Legacy-ILG Impact

Change Excluding

Legacy-ILG Impact

($ in millions)

($ in millions) 2020 2019 2018 Change Change Change Excluding Legacy-ILG Impact

ILG acquisition-related costs $ (62) $ (118) $ (127) $ 56 48% $ 9 $ (1) (1%)

($ in millions)

Provision for income taxes

($ in millions) 2020 2019 2018 Change 2020 vs.

2019 Change 2019 vs.

Benefit (provision) for income taxes $ 84 $ (83) $ (51) $ 167 201% $ (32) (61%)

2020 Compared to 2019

For the year ended December 31, 2019, the provision for income taxes increased $32 million , compared with the same period in 2018.

The increase was primarily driven by increases in U.S.

and foreign earnings as a result of the ILG Acquisition.

The change in the Benefit (provision) for income taxes is predominately attributable to a pre-tax loss for fiscal year 2020 compared to pre-tax income for fiscal year 2019 and benefits of the CARES Act.

Liquidity and Capital Resources

1 unchanged sentence

We believe these sources of capital will be adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, satisfy debt service requirements, fulfill other cash requirements and return capital to shareholders .

At the end of 2019 , we had $4.2 billion of total gross debt outstanding, which included $1.9 billion of non-recourse securitized debt, $1.1 billion of gross senior unsecured notes, $0.9 billion of gross secured indebtedness under the Corporate Credit Facility, and $0.2 billion of Convertible Notes.

At the end of 2019 , we had $846 million of real estate inventory on hand, comprised of $777 million of finished goods and $69 million of work-in-progress.

At the end of 2020, we had $4.3 billion of total gross debt outstanding, which included $1.6 billion of non-recourse securitized debt, $1.1 billion of gross senior unsecured notes, $0.9 billion of gross secured indebtedness under the Corporate Credit Facility, $0.5 billion of gross senior secured notes, and $0.2 billion of 2022 Convertible Notes.

Subsequent to the end of 2020, we entered into a definitive agreement to acquire Welk Resorts, one of the largest independent timeshare companies in North America, for approximately $430 million, including approximately 1.4 million shares of our common stock, which will be valued at $134 per share.

The remaining purchase price will be paid in cash.

The acquisition is expected to close early in the second quarter of 2021.

Additionally, subsequent to the end of 2020, we issued $575 million of 0.00% Convertible Senior Notes due 2026 (the “2026 Convertible Notes”) with an initial conversion price of $171.01 per share.

To reduce the potential dilution to earnings per share upon conversion of the 2026 Convertible Notes, we also entered into privately negotiated convertible note hedges at a strike price that initially corresponds to the initial conversion price of the 2026 Convertible Notes and warrant transactions at an initial strike price of $213.76 per share, which represents a premium of 75% over the last reported sale price of our common stock on January 27, 2021.

We expect to use the net proceeds to finance and consummate the acquisition of Welk Resorts, repay certain outstanding Welk Resorts debt, repay a portion of our term loan and pay transaction expenses and other fees in connection therewith, and to the extent of any remaining proceeds, for other general corporate purposes.

At the end of 2020, we had $749 million of completed real estate inventory on hand.

In addition, we had $162 million of completed vacation ownership units that have been classified as a component of Property and equipment until the time at which they are legally registered for sale as vacation ownership products.

4 unchanged sentences

We believe our points-based programs enable us to closely align the timing of our real estate inventory acquisitions with the pace of sales of vacation ownership products.

We expect to standardize our sales inventory acquisition policies across our portfolio of vacation ownership brands acquired as part of the ILG Acquisition.

We are selectively pursuing growth opportunities in North America and Asia Pacific by targeting high-quality inventory that allows us to add desirable new destinations to our system with new on-site sales locations through transactions that limit our up-front capital investment and allow us to purchase finished inventory closer to the time it is needed for sale.

13 unchanged sentences

Our primary sources of funds from operations are (1) cash sales and down payments on financed sales, (2) cash from our financing operations, including principal and interest payments received on outstanding vacation ownership notes receivable, (3) cash from fee-based membership, exchange and rental transactions and (4) net cash generated from our rental and resort management and other services operations.

Outflows include spending for the development of new phases of existing resorts, the acquisition of additional inventory, enhancement of our inventory exchange network and funding our working capital needs.

Outflows include spending for the development of new phases of existing resorts, the acquisition of additional inventory, enhancement of our inventory exchange network of resorts and related technology infrastructure and funding our working capital needs.

We minimize our working capital needs through cash management, strict credit-granting policies and disciplined collection efforts.

Our working capital needs fluctuate throughout the year given the timing of annual maintenance fees on unsold inventory we pay to property owners’ associations and certain annual compensation-related outflows.

In addition, our cash from operations varies due to the timing of our owners’ repayment of vacation ownership notes receivable, the closing or recording of sales contracts for vacation ownership products, financing propensity and cash outlays for real estate inventory acquisition and development.

In 2020, we generated $299 million of cash flows from operating activities compared to $382 million in 2019.

Excluding the impact of changes in net income and adjustments for non-cash items, the change in cash flows from operations reflected lower sales and rentals deposits due to the COVID-19 pandemic and higher net inventory activity, partially offset by higher collections of outstanding vacation ownership notes receivable and lower operational expense spending.

In 2019, we generated $382 million of cash flows from operating activities compared to $97 million in 2018.

Excluding the impact of changes in net income and adjustments for non-cash items, the change in cash flows from operations reflected higher originations of vacation ownership notes receivable driven by higher contract sales and slightly higher financing propensity, higher inventory spending, lower ILG acquisition-related costs, and timing of certain annual compensation-related outflows partially offset by higher collections due to an increasing portfolio of outstanding vacation ownership notes receivable.

The impact of changes in operating cash flows in 2019 also included $118 million of ILG acquisition-related costs, partially offset by business interruption insurance proceeds of $6 million for Legacy-MVW losses and $38 million for Legacy-ILG losses.

In 2018, we generated $97 million of cash flows from operating activities compared to $142 million in 2017.

Excluding the impact of changes in net income and adjustments for non-cash items, the change in cash flows from operations reflected higher originations driven by higher contract sales and higher real estate inventory spending, partially offset by higher collections due to an increasing portfolio of outstanding vacation ownership notes receivable.

The impact of changes in

operating cash flows in 2018 also included $127 million of ILG acquisition-related costs, partially offset by business interruption insurance proceeds of $32 million for Legacy-MVW and $25 million for Legacy-ILG.

In addition to net income and adjustments for non-cash items, the following operating activities are key drivers of our cash flow from operating activities:

Inventory Spending Less Than Cost of Sales

In addition to net (loss) income and adjustments for non-cash items, the following operating activities are key drivers of our cash flow from operating activities:

Inventory Spending (In Excess of) Less Than Cost of Sales

($ in millions) 2020 2019 2018

2 unchanged sentences

Inventory costs 117 292 221

Inventory spending less than cost of sales

Inventory spending (in excess of) less than cost of sales $ (42) $ 44 $ 9

We measure our real estate inventory capital efficiency by comparing the cash outflow for real estate inventory spending (a cash item) to the amount of real estate inventory costs charged to expense on our Income Statements related to sale of vacation ownership products (a non-cash item).

Given the significant level of completed real estate inventory on hand, as well as the capital efficiency resulting from our points programs and capital efficient transactions, our spending for real estate inventory remained below the amount of real estate inventory costs in 2019 and 2018.

In 2020, however, while our spending for real estate inventory remained low, given the slowdown in sales pace as a result of the COVID-19 pandemic, inventory spending was above inventory costs for the year.

Our inventory spending in 2020 included a payment to acquire 34 completed vacation ownership units located at our Marriott Vacation Club Pulse, San Francisco property for $26 million, of which $5 million was a prepayment for future tranches of completed vacation ownership units.

Purchase of vacation ownership units for future transfer to inventory also included the balance of the price allocated to acquire 57 completed vacation ownership units at our Marriott Vacation Club Pulse, New York property.

Our inventory spending in 2019 included a payment to satisfy our commitment to purchase 78 vacation ownership units located in San Francisco, California for $48 million.

Purchase of vacation ownership units for future transfer to inventory for 2019 included a $20 million advance payment to satisfy a portion of our commitment to purchase 57 vacation ownership units located in New York .

Our inventory spending in 2018 included payments to satisfy our then remaining commitments to purchase vacation ownership units located at our resort in Marco Island, Florida.

During 2018, we acquired 92 completed vacation ownership units for $83 million and 20 completed vacation ownership units for $24 million in two separate transactions.

See Footnote 3 “ Acquisitions and Dispositions ” and Footnote 11 “ Contingencies and Commitments ” to our Financial Statements for additional information regarding the transactions discussed above.

See Footnote 4 “Acquisitions and Dispositions” to our Financial Statements for additional information regarding the transactions discussed above.

Through our existing vacation ownership interest repurchase program, we proactively buy back previously sold vacation ownership interests at lower costs than would be required to develop new inventory.

By repurchasing inventory in desirable locations, we expect to be able to stabilize the future cost of vacation ownership products.

Vacation Ownership Notes Receivable Collections Less Than Originations

By repurchasing inventory, we expect to be able to stabilize the future cost of vacation ownership products.

However, given the impact of the COVID-19 pandemic, we have temporarily discontinued the majority of this repurchase activity.

Vacation Ownership Notes Receivable Collections In Excess of (Less Than) Originations

($ in millions) 2020 2019 2018

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Vacation ownership notes receivable originations (377) (817) (630)

Vacation ownership notes receivable collections less than originations

Vacation ownership notes receivable collections in excess of (less than) originations $ 243 $ (324) $ (244)

Vacation ownership notes receivable collections include principal from non-securitized and securitized vacation ownership notes receivable.

Vacation ownership notes receivable collections increased in 2019 compared to 2018 due to an increase in the portfolio of outstanding vacation ownership notes receivable, including full-year collections on the portfolio acquired in 2018 as part of the ILG Acquisition.

Vacation ownership notes receivable originations in 2019 increased due to higher vacation ownership contract sales combined with a slight increase in financing propensity to 63 percent compared to 62 percent for 2018.

Vacation ownership notes receivable collections increased in 2020 compared to 2019 due to a higher portfolio of outstanding vacation ownership notes receivable at the beginning of 2020.

Vacation ownership notes receivable originations in 2020 decreased due to lower sales due to the COVID-19 pandemic and a lower financing propensity.

Financing propensity declined to 51 percent in 2020 from 63 percent in 2019 as a result of the various sales programs that we offered to incentivize cash purchases over financed purchases during the year, in response to the COVID-19 pandemic.

Cash from Investing Activities

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Dispositions, net 15 51 —

Net cash, cash equivalents and restricted cash provided by (used in) investing activities

Acquisition of a Business, Net of Cash and Restricted Cash Acquired

Cash outflows of $1.4 billion in 2018 were due to the ILG Acquisition.

See Footnote 3 “ Acquisitions and Dispositions ” to our Financial Statements for more information.

Disposition of Subsidiary Shares to Noncontrolling Interest

As part of the ILG Acquisition, we acquired a 75.5 percent interest in VRI Europe Limited (“VRI Europe”), a joint venture comprised of a European vacation ownership resort management business, which was consolidated by MVW under the voting interest model.

During the fourth quarter of 2018, we sold our interest in VRI Europe to an affiliate of the noncontrolling interest holder for our book value of $63 million , of which $40 million in cash proceeds was received in 2018.

In addition, we recorded total receivables of $23 million relating to this transaction, which was received in 2019 and is included in the Proceeds from collection of notes receivable line on our Cash Flows as discussed below.

Net cash, cash equivalents, and restricted cash (used in) provided by investing activities $ (32) $ 37 $ (1,407)

Proceeds from Collection of Notes Receivable

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In 2020, capital expenditures for property and equipment of $41 million included $40 million to support business operations (including $27 million for ancillary and other operations assets and $13 million for sales locations) and $1 million for technology spending.

Given the impact of the COVID-19 pandemic, we significantly reduced our planned spending for property and equipment beginning with the second quarter of 2020.

In 2019, capital expenditures for property and equipment of $46 million included $32 million to support business operations (including $19 million for ancillary and other operations assets and $13 million for sales locations) and $14 million for technology spending.

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To support our ability to meet a portion of our obligations under the Marriott Vacations Worldwide Corporation Deferred Compensation Plan (the “Deferred Compensation Plan”), we acquired company owned insurance policies on the lives of certain participants in the Deferred Compensation Plan, the proceeds of which are intended to be aligned with the investment alternatives elected by plan participants as discussed in Footnote 2 “Summary of Significant Accounting Policies” to our Financial Statements.

During 2019 and 2018 , we paid $6 million and $14 million , respectively, to acquire these policies.

During 2020, 2019, and 2018 we paid $6 million, $6 million, and $14 million, respectively, to acquire these policies.

Dispositions, net

Dispositions of $15 million during 2020 related to the disposition of excess land parcels in Orlando, Florida and Steamboat Springs, Colorado as part of our strategic decision to reduce holdings in markets where we have excess supply.

Dispositions of $51 million during 2019 related to our dispositions of excess land parcels in Cancun, Mexico and Avon, Colorado as part of our strategic decision to reduce holdings in markets where we have excess supply.

See discussion included in Footnote 3 “ Acquisitions and Dispositions ” to our Financial Statements for additional information.

We did not have any significant dispositions of property and assets in 2018.

See additional information on these dispositions in Footnote 4 “Acquisitions and Dispositions” to our Financial Statements for additional information.

Cash from Financing Activities

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Finance lease payment (11) (12) —

Purchase of convertible note hedges

Proceeds from issuance of warrants

Debt issuance costs (14) (20) (34)

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Payment of withholding taxes on vesting of restricted stock units (16) (15) (18)

Net cash, cash equivalents and restricted cash (used in) provided by financing activities

Other, net — 1 —

Net cash, cash equivalents, and restricted cash provided by (used in) by financing activities $ 23 $ (331) $ 1,433

Borrowings from / Repayment of Debt Related to Securitization Transactions

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The results of operations for the securitization entities are consolidated within our results of operations as these entities are variable interest entities for which we are the primary beneficiary.

During the second quarter of 2019, we completed the securitization of a pool of $459 million of vacation ownership notes receivable.

In connection with the securitization, investors purchased in a private placement, $450 million in vacation ownership loan backed notes from MVW 2019-1 LLC (the “2019-1 LLC”).

Three classes of vacation ownership loan backed notes were issued by the 2019-1 LLC:

$350 million of Class A Notes, $67 million of Class B Notes and $33 million of Class C Notes.

The Class A Notes have an interest rate of 2.89 percent , the Class B Notes have an interest rate of 3.00 percent and the Class C Notes have an interest rate of 3.33 percent , for an overall weighted average interest rate of 2.94 percent .

We completed two securitization transactions during the fourth quarter of 2019.

In October 2019, we completed the securitization of a pool of $315 million of vacation ownership notes receivable.

During the third quarter of 2020, we completed the securitization of a pool of $383 million of vacation ownership notes receivable.

In connection with the securitization, investors purchased in a private placement $375 million in vacation ownership loan backed notes from MVW 2020-1 LLC (the “2020-1 LLC”).

Three classes of vacation ownership loan backed notes were issued by the 2019-2 LLC:

$232 million of Class A Notes, $54 million of Class B Notes and $23 million of Class C Notes.

The Class A Notes have an interest rate of 2.22 percent , the Class B Notes have an interest rate of 2.44 percent and the Class C Notes have an interest rate of 2.68 percent , for an overall weighted average interest rate of 2.29 percent .

Additionally, in December 2019, we completed the securitization of a pool of $90 million of primarily Asia-Pacific vacation ownership notes receivable that we previously classified as not eligible for securitization.

In connection with the securitization, an investor purchased in a private placement $65 million in vacation ownership loan backed notes from Vacanza 2019-A LLC with an interest rate of 4.42% .

The securitized loans previously were classified as not eligible for securitization using criteria applicable to then current securitization transactions in the ABS market because they did not meet certain representation criteria required in such securitizations, or because of other factors that may have reflected investor demand in a securitization transaction.

Four classes of vacation ownership loan backed notes were issued by the 2020-1 LLC:

$238 million of Class A Notes, $72 million of Class B Notes, $44 million of Class C Notes, and $21 million of Class D Notes.

The Class A Notes have an interest rate of 1.74 percent, the Class B Notes have an interest rate of 2.73 percent, the Class C Notes have an interest rate of 4.21 percent, and the Class D Notes have an interest rate of 7.14 percent, for an overall weighted average interest rate of 2.53 percent.

Of the $375 million in proceeds from the transaction, $300 million was used to repay all outstanding amounts previously drawn under the Warehouse Credit Facility, as defined below, $7 million was used to pay transaction expenses and fund required reserves, and the remainder will be used for general corporate purposes.

During 2020, we securitized vacation ownership notes receivable under our Warehouse Credit Facility.

The total carrying amount of the vacation ownership notes receivable securitized was $372 million.

The average advance rate was 85 percent, which resulted in total gross proceeds of $315 million.

Total net proceeds were $313 million due to the funding of reserve accounts of $2 million.

As of December 31, 2020, $147 million of gross vacation ownership notes receivable were eligible for securitization.

Proceeds from / Repayments of Debt

Borrowings from / Repayment of Revolving Corporate Credit Facility

Borrowings from / Repayment of Corporate Credit Facility

During 2020, we borrowed an additional $666 million under our Revolving Corporate Credit Facility, which is part of our Corporate Credit Facility, to facilitate the funding of our short-term working capital needs and to increase our cash position and preserve financial flexibility in light of the impact on global markets resulting from the COVID-19 pandemic.

During 2020, we repaid $696 million under the Revolving Corporate Credit Facility and no amounts were outstanding as of December 31, 2020.

Additionally, during 2020, we repaid $9 million of the amount outstanding under the Term Loan, which is also part of our Corporate Credit Facility.

During 2019, we borrowed $585 million under our Revolving Corporate Credit Facility to facilitate the funding of our short-term working capital needs, of which $554 million was repaid during 2019.

As of December 31, 2019, $30 million was outstanding under our Revolving Corporate Credit Facility.

During 2018, we borrowed $40 million under our Revolving Corporate Credit Facility to facilitate the funding of our short-term working capital needs, all of which was repaid as of December 31, 2018.

See Footnote 14 “ Debt ” to our Financial Statements for additional information regarding our Revolving Corporate Credit Facility.

Proceeds from Senior Unsecured Debt and Term Loan

During 2019, we issued $350 million of senior unsecured notes, the 2028 Notes , under an indenture dated October 1, 2019 with The Bank of New York Mellon Trust, as trustee.

Also during 2019, we repaid $7 million of the amount outstanding under the Term Loan.

See Footnote 17 “Debt” to our Financial Statements for additional information regarding our Corporate Credit Facility.

Proceeds from Senior Secured Debt

During the second quarter of 2020, we issued $500 million of senior secured notes, the 2025 Notes, as discussed further in Footnote 17 “Debt” to our Financial Statements.

After deducting offering expenses and the underwriting discount, we received net proceeds of approximately $493 million from the offering of the 2025 Notes, which we used to repay all amounts outstanding at that time on our Revolving Corporate Credit Facility.

Proceeds from Senior Unsecured Debt

During 2019, we issued $350 million of senior unsecured notes, the 2028 Notes, as discussed further in Footnote 17 “Debt” to our Financial Statements.

The net proceeds from the 2028 Notes were used (i) to redeem all of the outstanding IAC Notes, (ii) to redeem all of the outstanding Exchange Notes, (iii) to repay a portion of the outstanding borrowings under our Revolving Corporate Credit Facility, (iv) to pay transaction expenses and fees in connection with each of the foregoing and (v) for general corporate purposes.

During 2018, in connection with the ILG Acquisition, we issued $750 million of senior unsecured notes, the 2026 Notes, and borrowed $900 million under a Term Loan, which was included as part of our Corporate Credit Facility.

See Footnote 14 “ Debt ” to our Financial Statements for additional information on these transactions.

Repayments of Non-interest Bearing Note Payable

During 2019, we paid the last installment of $31 million on a non-interest bearing note payable related to the acquisition of 112 completed vacation ownership units located on the Big Island of Hawaii in 2017.

During 2018, we paid $33 million on this non-interest bearing note payable.

Debt Issuance Costs

In 2019, we incurred $20 million of debt issuance costs, which included $12 million associated with the 2019 vacation ownership notes receivable securitizations, $5 million associated with the issuance of Senior Unsecured Notes, $2 million associated with the amendment and extension of the Warehouse Credit Facility, and $1 million related to the amendment of the Revolving Corporate Credit Facility.

In 2018, we incurred $34 million of debt issuance costs, which included $13 million associated with the Term Loan, $9 million associated with the issuance of Senior Unsecured Notes, $6 million associated with the 2018 vacation ownership notes receivable securitizations, $4 million related to the current $600 million Revolving Corporate Credit Facility, $1 million associated with the amendment and extension of the Warehouse Credit Facility and $1 million associated with the issuance of the Exchange Notes.

In 2020, we incurred $14 million of debt issuance costs, which included $7 million associated with the issuance of senior secured notes (the 2025 Notes), $5 million associated with the 2020-1 vacation ownership notes receivable securitization, $1 million associated with the Waiver, and $1 million associated with an amendment of the Warehouse Credit Facility

In 2019, we incurred $20 million of debt issuance costs, which included $12 million associated with the 2019 vacation ownership notes receivable securitizations, $5 million associated with the issuance of senior unsecured notes (the 2028 Notes), $2 million associated with an amendment and extension of the Warehouse Credit Facility, and $1 million related to an amendment of the Revolving Corporate Credit Facility.

Repurchase of Common Stock

The following table summarizes share repurchase activity under our current share repurchase program:

($ in millions, except per share amounts)

Number of Shares

Cost of Shares

Average Price

The following table summarizes share repurchase activity under our share repurchase program, which expired on December 31, 2020:

($ in millions, except per share amounts) Number of Shares

Repurchased Cost of Shares

Repurchased Average Price

Paid per Share

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See Footnote 18 “Shareholders' Equity” to our Financial Statements for further information related to our share repurchase program.

Due to the impact of the COVID-19 pandemic, we temporarily suspended repurchasing shares of our common stock.

Future share repurchases will be subject to the restrictions imposed under the Waiver as well as Board approval of a new repurchase program, which will depend on our financial condition, results of operations and capital requirements, in addition to applicable law, regulatory constraints, industry practice and other business considerations that our Board of Directors considers relevant.

Payment of Dividends to Common Shareholders

We distributed cash dividends to holders of common stock for the year ended December 31, 2020 as follows:

Declaration Date

Shareholder Record Date

Distribution Date

Dividend per Share

December 6, 2018

December 20, 2018

January 3, 2019

February 15, 2019

February 28, 2019

March 14, 2019

September 5, 2019

September 19, 2019

October 3, 2019

On December 9, 2019 , our Board of Directors declared a quarterly dividend of $0.54 per share that was paid on January 6, 2020 to shareholders of record as of December 23, 2019 .

On February 14, 2020 , subsequent to the end of 2019, our Board of Directors declared a quarterly dividend of $0.54 per share to be paid on March 12, 2020 to shareholders of record as of February 27, 2020 .

We currently expect to pay quarterly cash dividends in the future, but any future dividend payments will be subject to Board approval, which will depend on our financial condition, results of operations and capital requirements, as well as applicable law, regulatory constraints, industry practice and other business considerations that our Board of Directors considers relevant.

In addition, our Corporate Credit Facility and the indentures governing our senior notes contain restrictions on our ability to pay dividends, and the terms of agreements governing debt that we may incur in the future may also limit or prohibit dividend payments.

Declaration Date Shareholder Record Date Distribution Date Dividend per Share

December 9, 2019 December 23, 2019 January 6, 2020 $0.54

February 14, 2020 February 27, 2020 March 12, 2020 $0.54

Given the impact of the COVID-19 pandemic, we temporarily suspended cash dividends.

In addition, our Corporate Credit Facility and the indentures governing our senior notes contain restrictions on our ability to pay dividends.

Future dividend payments will also be subject to both the restrictions imposed under the Waiver and Board approval, which will depend on our financial condition, results of operations and capital requirements, as well as applicable law, regulatory and contractual constraints, industry practice and other business considerations that our Board of Directors considers relevant.

The payment of certain cash dividends may also result in an adjustment to the conversion rate of the 2022 Convertible Notes in a manner adverse to us.

Accordingly, there can be no assurance that we will pay dividends in the future at the same rate or at all.

Supplemental Guarantor Information

The 2026 Notes and 2028 Notes are guaranteed by MVWC, Marriott Ownership Resorts, Inc.

(“MORI”), and certain other subsidiaries whose voting securities are wholly owned directly or indirectly by MORI (such subsidiaries collectively, the “Senior Notes Guarantors”).

These guarantees are full and unconditional and joint and several.

The guarantees of the Senior Notes Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions.

The following tables present consolidating financial information as of December 31, 2020, and for the twelve months ended December 31, 2020, for MVWC and MORI on a stand-alone basis (collectively, the “Issuers”), the Senior Notes Guarantors, the combined non-guarantor subsidiaries of MVW, and MVW on a consolidated basis.

Condensed Consolidating Balance Sheet

As of December 31, 2020

Issuers Senior Notes Guarantors Non-Guarantor Subsidiaries Total Eliminations MVW Consolidated

($ in millions) MVWC MORI

Cash and cash equivalents $ 25 $ 347 $ 50 $ 102 $ — $ 524

Restricted cash — 19 72 377 — 468

Accounts receivable, net 44 59 121 57 (5) 276

Vacation ownership notes receivable, net — 164 116 1,560 — 1,840

Inventory — 276 383 100 — 759

Property and equipment, net — 213 341 237 — 791

Goodwill — — 2,817 — — 2,817

Intangibles, net — — 894 58 — 952

Investments in subsidiaries 2,775 4,384 — — (7,159) —

Other 54 115 214 133 (45) 471

Total assets $ 2,898 $ 5,577 $ 5,008 $ 2,624 $ (7,209) $ 8,898

Accounts payable $ 29 $ 29 $ 145 $ 6 $ — $ 209

Advance deposits — 70 57 20 — 147

Accrued liabilities 1 99 157 99 (7) 349

Deferred revenue — 8 126 355 (1) 488

Payroll and benefits liability 1 81 55 20 — 157

Deferred compensation liability — 104 22 1 — 127

Securitized debt, net — — — 1,604 (16) 1,588

Debt, net 215 2,464 — 1 — 2,680

Other 1 39 130 27 — 197

Deferred taxes — 103 143 28 — 274

MVW shareholders' equity 2,651 2,580 4,173 432 (7,185) 2,651

Noncontrolling interests — — — 31 — 31

Total liabilities and equity $ 2,898 $ 5,577 $ 5,008 $ 2,624 $ (7,209) $ 8,898

Condensed Consolidating Statement of Income

Issuers Senior Notes Guarantors Non-Guarantor Subsidiaries Total Eliminations MVW Consolidated

($ in millions) MVWC MORI

Revenues $ — $ 375 $ 1,753 $ 789 $ (31) $ 2,886

Expenses (17) (648) (1,955) (637) 31 (3,226)

Benefit (provision) for income taxes 5 80 53 (54) — 84

Equity in net (loss) income of subsidiaries (263) (34) — — 297 —

Net (loss) income (275) (227) (149) 98 297 (256)

Net income attributable to noncontrolling interests — — — (19) — (19)

Net (loss) income attributable to common shareholders $ (275) $ (227) $ (149) $ 79 $ 297 $ (275)

Contractual Obligations and Off-Balance Sheet Arrangements

The following table summarizes our contractual obligations as of December 31, 2019 :

The following table summarizes our contractual obligations, including material off-balance sheet arrangements as of December 31, 2020:

Payments Due by Period

($ in millions)

($ in millions) Total Less Than

1 Year 1 - 3 Years 3 - 5 Years More Than

Contractual Obligations

$ 5,247 $ 357 $ 925 $ 1,989 $ 1,976

Purchase obligations (2)

429 307 111 11 —

Operating lease obligations 237 27 42 34 134

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Leases That Have Not Yet Commenced

Subsequent to the end of 2019, we entered into a finance lease arrangement for a new corporate office building in Orlando, Florida.

The new Orlando corporate office building is expected to be completed in 2021, at which time the lease term will commence and a right-of-use asset and corresponding liability will be recorded on our balance sheet.

During the first quarter of 2020, we entered into a finance lease arrangement for a new corporate office building in Orlando, Florida.

The new Orlando corporate office building is currently expected to be completed in 2024, at which time the lease term will commence and a right-of-use asset and corresponding liability will be recorded on our balance sheet.

The initial lease term is approximately 16 years with total lease payments of $129 million for the aforementioned period.

See Footnote 15 “Leases” to our Financial Statements for additional information on this lease, including additional arrangements made as a result of the COVID-19 pandemic.

Recent Accounting Pronouncements

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Actual results may differ significantly.

Additionally, changes in our assumptions, estimates or assessments

as a result of unforeseen events or otherwise could have a material impact on our consolidated financial position or results of operations.

Additionally, changes in our assumptions, estimates or assessments as a result of unforeseen events or otherwise could have a material impact on our consolidated financial position or results of operations.

See Footnote 2 “Summary of Significant Accounting Policies” to our Financial Statements for further information on accounting policies that we believe to be critical, including our policies on:

Revenue recognition , including how we recognize revenue under Accounting Standards Codification (“ASC”) Topic 606, “ Revenue from Contracts with Customers ” (“ASC 606”);

Purchase price allocations of business combinations , which is also discussed in Footnote 3 “ Acquisitions and Dispositions ” to our Financial Statements;

Purchase price allocations of business combinations , which is also discussed in Footnote 2 “Summary of Significant Accounting Policies” and Footnote 4 “Acquisitions and Dispositions” to our Financial Statements;

Inventories and cost of vacation ownership products, which requires estimation of future revenues, including incremental revenues from future price increases or from the sale of reacquired inventory resulting from defaulted vacation ownership notes receivable, and development costs to apply a relative sales value method specific to the vacation ownership industry and how we evaluate the fair value of our vacation ownership inventory;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis