What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-09 compared with 2021-11-08 · 324 added, 536 removed, 800 unchanged (52% of the section changed)

3 unchanged sentences

(In millions, except per share amounts)

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Three Months Ended

March 31, 2022 March 31, 2021

Sale of vacation ownership products $ 310 $ 163

7 unchanged sentences

Management and exchange 127 117

Rental 84 74 247 245

Financing 21 21

2 unchanged sentences

Litigation charges 3 3

Restructuring — 20 — 20

Royalty fee 27 25

Impairment — 2 5 98

Cost reimbursements 316 255

TOTAL EXPENSES 911 739

Losses and other expense, net ( 31 ) — ( 27 ) ( 42 )

Gains and other income, net 4 6

Interest expense ( 27 ) ( 43 )

Transaction and integration costs ( 28 ) ( 19 )

Other 1 — 2 —

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS 90 ( 36 )

11 unchanged sentences

(In millions)

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Three Months Ended

March 31, 2022 March 31, 2021

NET INCOME (LOSS) $ 58 $ ( 25 )

1 unchanged sentence

Derivative instrument adjustment, net of tax 16 6

OTHER COMPREHENSIVE (LOSS) GAIN, NET OF TAX ( 1 ) 8 9 ( 31 )

OTHER COMPREHENSIVE GAIN, NET OF TAX 20 3

Net income attributable to noncontrolling interests — ( 3 )

6 unchanged sentences

(In millions, except share and per share data)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Cash and cash equivalents $ 354 $ 342

42 unchanged sentences

(In millions)

Nine Months Ended

September 30, 2021 September 30, 2020

Three Months Ended

March 31, 2022 March 31, 2021

OPERATING ACTIVITIES

Net loss $ ( 6 ) $ ( 225 )

Adjustments to reconcile net loss to net cash, cash equivalents and restricted cash used by operating activities:

Net income (loss) $ 58 $ ( 25 )

Adjustments to reconcile net income (loss) to net cash, cash equivalents and restricted cash provided by (used in) operating activities:

Depreciation and amortization of intangibles 33 41

2 unchanged sentences

Share-based compensation 8 8

Impairment charges 5 98

Deferred income taxes 18 15

13 unchanged sentences

Other, net ( 1 ) ( 4 )

Net cash, cash equivalents and restricted cash provided by operating activities 303 158

Net cash, cash equivalents and restricted cash provided by (used in) operating activities 129 ( 60 )

INVESTING ACTIVITIES

Acquisition of a business, net of cash and restricted cash acquired ( 157 ) —

Capital expenditures for property and equipment (excluding inventory) ( 9 ) ( 7 )

6 unchanged sentences

(In millions)

Nine Months Ended

September 30, 2021 September 30, 2020

Three Months Ended

March 31, 2022 March 31, 2021

FINANCING ACTIVITIES

16 unchanged sentences

SUPPLEMENTAL DISCLOSURES

Non-cash issuance of treasury stock in connection with Welk Acquisition $ 248 $ —

Non-cash transfer from property and equipment to inventory $ 2 $ 3

Non-cash transfer from inventory to property and equipment 31 2

Non-cash transfer of other assets to property and equipment 13 22

Non-cash issuance of debt in connection with asset acquisition 11 —

Non-cash issuance of treasury stock for employee stock purchase plan 1 —

Dividends payable 23 —

Interest paid, net of amounts capitalized 30 53

7 unchanged sentences

Stock Additional

Capital Accumulated Other Comprehensive (Loss) Gain Retained Earnings Total MVW Shareholders' Equity Noncontrolling Interests Total Equity

Capital Accumulated Other Comprehensive (Loss) Income Retained Earnings Total MVW Shareholders' Equity Noncontrolling Interests Total Equity

75.5 BALANCE AT DECEMBER 31, 2021 $ 1 $ ( 1,356 ) $ 4,072 $ ( 16 ) $ 275 $ 2,976 $ 10 $ 2,986

— Net (loss) income — — — — ( 28 ) ( 28 ) 3 ( 25 )

— Foreign currency translation adjustments — — — ( 3 ) — ( 3 ) — ( 3 )

— Derivative instrument adjustment — — — 6 — 6 — 6

0.2 Share-based compensation plans — — ( 4 ) — — ( 4 ) — ( 4 )

— Equity component of convertible notes, net of issuance costs — — 117 — — 117 — 117

— Purchase of convertible note hedges — — ( 100 ) — — ( 100 ) — ( 100 )

— Issuance of warrants — — 70 — — 70 — 70

— Deconsolidation of certain Consolidated Property Owners' Associations — — — — — — ( 5 ) ( 5 )

75.5 BALANCE AT MARCH 31, 2021 1 ( 1,334 ) 3,843 ( 45 ) 244 2,709 29 2,738

— Net income — — — — 6 6 2 8

— Welk Acquisition — 55 193 — — 248 — 248

— Foreign currency translation adjustments — — — 4 — 4 — 4

— Derivative instrument adjustment — — — 3 — 3 — 3

— Share-based compensation plans — 1 9 — — 10 — 10

— Deconsolidation of certain Consolidated Property Owners' Associations — — — — — — ( 1 ) ( 1 )

— Employee stock plan issuance — — 2 — — 2 — 2

75.5 BALANCE AT JUNE 30, 2021 1 ( 1,278 ) 4,047 ( 38 ) 250 2,982 30 3,012

— Impact of adoption of ASU 2020-06

— — ( 111 ) — 31 ( 80 ) — ( 80 )

75.5 OPENING BALANCE 2022 1 ( 1,356 ) 3,961 ( 16 ) 306 2,896 10 2,906

— Net income — — — — 58 58 — 58

4 unchanged sentences

— Dividends — — — — ( 26 ) ( 26 ) — ( 26 )

— Employee stock plan issuance — — 1 — — 1 — 1

75.5 BALANCE AT SEPTEMBER 30, 2021 $ 1 $ ( 1,282 ) $ 4,056 $ ( 39 ) $ 237 $ 2,973 $ 31 $ 3,004

See Notes to Interim Consolidated Financial Statements

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In millions)

75.7 BALANCE AT MARCH 31, 2022 $ 1 $ ( 1,474 ) $ 3,945 $ 4 $ 338 $ 2,814 $ 10 $ 2,824

Issued Common

1 unchanged sentence

Stock Additional

Capital Accumulated Other Comprehensive (Loss) Gain Retained Earnings Total MVW Shareholders' Equity Noncontrolling Interests Total Equity

Capital Accumulated Other Comprehensive (Loss) Income Retained Earnings Total MVW Shareholders' Equity Noncontrolling Interests Total Equity

75.3 BALANCE AT DECEMBER 31, 2020 $ 1 $ ( 1,334 ) $ 3,760 $ ( 48 ) $ 272 $ 2,651 $ 31 $ 2,682

3 unchanged sentences

0.2 Share-based compensation plans — — ( 4 ) — — ( 4 ) — ( 4 )

— Repurchase of common stock — ( 82 ) — — — ( 82 ) — ( 82 )

— Dividends — — — — ( 22 ) ( 22 ) — ( 22 )

— Equity component of convertible notes, net of issuance costs — — 117 — — 117 — 117

— Purchase of convertible note hedges — — ( 100 ) — — ( 100 ) — ( 100 )

— Issuance of warrants — — 70 — — 70 — 70

— Deconsolidation of certain Consolidated Property Owners' Associations — — — — — — ( 5 ) ( 5 )

75.5 BALANCE AT MARCH 31, 2021 $ 1 $ ( 1,334 ) $ 3,843 $ ( 45 ) $ 244 $ 2,709 $ 29 $ 2,738

— Net (loss) income — — — — ( 70 ) ( 70 ) 8 ( 62 )

— Foreign currency translation adjustments — — — 3 — 3 — 3

— Derivative instrument adjustment — — — ( 1 ) — ( 1 ) — ( 1 )

— Share-based compensation plans — — 7 — — 7 — 7

— Employee stock plan issuance — 1 — — — 1 — 1

75.2 BALANCE AT JUNE 30, 2020 1 ( 1,334 ) 3,736 ( 75 ) 371 2,699 21 2,720

— Net (loss) income — — — — ( 62 ) ( 62 ) 4 ( 58 )

— Foreign currency translation adjustments — — — 5 — 5 — 5

— Derivative instrument adjustment — — — 3 — 3 — 3

0.1 Share-based compensation plans — — 13 — — 13 — 13

75.3 BALANCE AT SEPTEMBER 30, 2020 $ 1 $ ( 1,334 ) $ 3,749 $ ( 67 ) $ 309 $ 2,658 $ 25 $ 2,683

See Notes to Interim Consolidated Financial Statements

MARRIOTT VACATIONS WORLDWIDE CORPORATION

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

INTERIM CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

BASIS OF PRESENTATION

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We use certain other terms that are defined within these Financial Statements.

The Financial Statements presented herein and discussed below include 100 percent of the assets, liabilities, revenues, expenses, and cash flows of Marriott Vacations Worldwide, all entities in which Marriott Vacations Worldwide has a controlling voting interest (“subsidiaries”), and those variable interest entities (“VIEs”) for which Marriott Vacations Worldwide is the primary beneficiary in accordance with consolidation accounting guidance.

References in these Financial Statements to net income (loss) attributable to common shareholders and MVW shareholders’ equity do not include noncontrolling interests, which represent the outside ownership of our consolidated non-wholly owned entities and are reported separately.

Intercompany accounts and transactions between consolidated companies have been eliminated in consolidation.

Pursuant to a change in control of certain consolidated property owners’ associations, we recorded a non-cash loss of $ 1 million in Losses and other expense, net on our Income Statement for the nine months ended September 30, 2021, and deconsolidated $ 88 million of assets, inclusive of $ 87 million of restricted cash, and $ 83 million of liabilities, for a decrease in Noncontrolling interests of $ 6 million during the first three quarters of 2021.

See our Interim Consolidated Statements of Shareholders’ Equity for further information.

We continue to act as manager for these property owners’ associations pursuant to existing management contracts and retain membership interests via our ownership of vacation ownership interests.

The Financial Statements presented herein and discussed below include 100 % of the assets, liabilities, revenues, expenses, and cash flows of Marriott Vacations Worldwide, all entities in which Marriott Vacations Worldwide has a controlling voting interest (“subsidiaries”), and those variable interest entities (“VIEs”) for which Marriott Vacations Worldwide is the primary beneficiary in accordance with consolidation accounting guidance.

References in these Financial Statements to net income or loss attributable to common shareholders and MVW shareholders’ equity do not include noncontrolling interests, which represent the outside ownership of our consolidated non-wholly owned entities and are reported separately.

Intercompany accounts and transactions between consolidated entities have been eliminated in consolidation.

These Financial Statements reflect our financial position, results of operations, and cash flows as prepared in conformity with United States Generally Accepted Accounting Principles (“GAAP”).

11 unchanged sentences

(“Welk”) through a series of transactions (the “Welk Acquisition”), after which Welk became our indirect wholly-owned subsidiary.

The Financial Statements in this report include Welk’s results of operations for the second and third quarters of 2021 and reflect the financial position of our combined company at September 30, 2021.

We refer to Welk’s business and brands that we acquired as “Legacy-Welk.” See Footnote 3 “Acquisitions and Dispositions” for more information on the Welk Acquisition.

Reclassifications

We have reclassified certain prior year amounts to conform to our current year presentation.

We refer to the business and brands that we acquired as “Legacy-Welk.” See Footnote 3 “Acquisitions” for more information on the Welk Acquisition.

SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING STANDARDS

New Accounting Standards

Accounting Standards Update 2019-12 – “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes” (“ASU 2019-12”)

In the first quarter of 2021, we adopted ASU 2019-12, which amends and simplifies existing guidance in an effort to reduce the complexity of accounting for income taxes while maintaining or enhancing the helpfulness of information provided to financial statement users.

Our adoption of ASU 2019-12 did not have a material impact on our Financial Statements or disclosures.

Future Adoption of Accounting Standards

Accounting Standards Update 2020-04 – “ Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting ” (“ASU 2020-04”)

In March 2020, the FASB issued ASU 2020-04, as amended, which provides optional expedients and exceptions to existing guidance on contract modifications and hedge accounting in an effort to ease the financial reporting burdens related to the expected market transition from the LIBOR and other interbank offered rates to alternative reference rates.

This update can be adopted no later than December 1, 2022, with early adoption permitted.

We expect to adopt ASU 2020-04 in fiscal year 2022 and continue to evaluate the impact that adoption of this update will have on our Financial Statements and disclosures.

Accounting Standards Update 2020-06 – “ Debt — Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”)

In August 2020, the FASB issued ASU 2020-06, which amends and simplifies existing guidance in an effort to reduce the complexity of accounting for convertible instruments and to provide financial statement users with more meaningful information.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods therein, with early adoption permitted for fiscal years beginning after December 15, 2020.

This update may be applied retrospectively or on a modified retrospective basis with the cumulative effect recognized as an adjustment to the opening balance of retained earnings on the date of adoption.

We expect to adopt ASU 2020-06 on January 1, 2022 using the modified retrospective method.

Any transactions that may be settled prior to adoption will not be impacted by the update.

The impacts of the adoption for any remaining instruments will be recorded in its cumulative effect in the opening balance of retained earnings and the conversion feature related to our convertible notes will be reclassified from equity to liabilities.

In addition, we will eliminate the related equity adjustment associated with the deferred tax liability.

Upon adoption, we will also be required to calculate the impact of the convertible notes on diluted earnings per share under the “if-converted” method.

In the first quarter of 2022, we adopted accounting standards update (“ASU”) 2020-06, using the modified retrospective method.

Under ASU 2020-06, we no longer separate our convertible notes into liability and equity components,

and we are required to calculate the impact of our convertible notes on diluted earnings per share using the “if-converted” method, regardless of intent to settle or partially settle the debt in cash.

Under the “if-converted” method, diluted earnings per share would generally be calculated assuming that all of our convertible notes were converted solely into shares of common stock at the beginning of the reporting period, unless the result would be anti-dilutive.

The application of the “if-converted” method is expected to reduce our reported diluted earnings per share.

The application of the “if- converted” method reduces our reported diluted earnings per share.

The impacts of the adoption were recorded as a cumulative effect in the opening balance of retained earnings and the conversion feature related to our convertible notes was reclassified from equity to liabilities.

In addition, we eliminated the related equity adjustment associated with the deferred tax liability.

The adoption of ASU 2020-06 on January 1, 2022 resulted in an increase in debt of $ 107 million, a decrease in additional paid-in capital of $ 111 million, and a decrease in deferred taxes of $ 27 million, as well as a cumulative effect adjustment to the opening balance of retained earnings of $ 31 million.

The remaining debt issuance costs will continue to be amortized over the term of our convertible notes.

The prior period consolidated financial statements have not been retrospectively restated and continue to be reported under the accounting standards in effect for those periods.

Accounting Standards Update 2021-08 - “ Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”)

In October 2021, the FASB issued ASU 2021-08, which requires application of ASC 606, Revenue from Contracts with Customers, to recognize and measure contract assets and liabilities from contracts with customers acquired in a business combination.

ASU 2021-08 creates an exception to the general recognition and measurement principle in ASC 805 and will result in recognition of contract assets and contract liabilities consistent with those recorded by the acquiree immediately before the acquisition date.

The guidance eliminates the complexity of determining the fair value of contract liabilities and may result in higher balances for contract liabilities acquired in a business combination, resulting in more post-combination revenue and a higher amount of goodwill being recognized by the acquirer.

This update is effective for fiscal years beginning after December 15, 2022 and interim periods therein, with early adoption permitted.

We expect to adopt ASU 2021-08 on a prospective basis in fiscal year 2022, and do not expect the adoption to have a material impact on our Financial Statements or disclosures.

ACQUISITIONS AND DISPOSITIONS

In the first quarter of 2022, we adopted ASU 2021-08, which amended ASC 805 to require entities to apply ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers in a business combination.

The adoption of ASU 2021-08 on January 1, 2022 did not have a material impact on our financial statements and disclosure.

In the event that we complete business combinations in the future, the application of ASU 2021-08 could result in higher acquired deferred revenue.

Future Adoption of Accounting Standards

Accounting Standards Update 2020-04 – “ Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting ” (“ASU 2020-04”)

This update was effective upon issuance and issuers may generally elect to adopt the optional expedients and exceptions over time through December 31, 2022.

As of March 31, 2022, the interest rate applicable to borrowings under our existing Term Loan (as defined in Footnote 13 “Debt”) and Warehouse Credit Facility (as defined in Footnote 12 “Securitized Debt”) generally continue to reference LIBOR, as do certain interest rate swaps and collars.

These instruments have not yet discontinued the use of LIBOR.

To the extent these instruments are amended to reference a different benchmark interest rate, we may elect to utilize the relief available in ASU 2020-04.

When we renew or amend our remaining existing debt instruments, we will determine a replacement rate for LIBOR.

We have not adopted any of the optional expedients or exceptions as of March 31, 2022, but will continue to evaluate their adoption during the effective period as circumstances evolve.

Accounting Standards Update 2022-02 – “ Financial Instruments – Credit Losses (Topic 326) - Troubled Debt Restructurings and Vintage Disclosures ” (“ASU 2022-02”)

In March 2022, the FASB issued ASU 2022-02, which eliminates the recognition and measurement guidance applicable to troubled debt restructurings for creditors and enhances disclosure requirements with respect to loan modifications for borrowers experiencing financial difficulty.

ASU 2022-02 also requires disclosure of current-period gross write-offs by year of origination to be presented in the vintage disclosures for financing receivables.

This update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted.

We are evaluating the impact that adoption of ASU 2022-02, including the timing of implementation, will have on our financial statements and disclosures;

however, we do not expect adoption to have a material effect on our financial statements or disclosures other than disclosure changes related to vintage disclosures for financing receivables.

Welk Acquisition

On April 1, 2021 (the “Welk Acquisition Date”), we completed the Welk Acquisition for consideration of $ 405 million, including approximately 1.4 million shares of our common stock.

Welk was one of the largest independent vacation ownership companies in North America.

The following table presents the fair value of each type of consideration transferred at the Welk Acquisition Date at September 30, 2021.

On April 1, 2021 (the “Welk Acquisition Date”), we completed the Welk Acquisition.

The following table presents the fair value of each type of consideration transferred at the Welk Acquisition Date, as finalized at March 31, 2022.

(in millions, except per share amounts)

4 unchanged sentences

Total consideration transferred, net of cash and restricted cash acquired $ 405

Preliminary Fair Values of Assets Acquired and Liabilities Assumed

We accounted for the Welk Acquisition as a business combination, which requires us to record the assets acquired and liabilities assumed at fair value as of the Welk Acquisition Date.

The amounts recorded are preliminary in nature and are subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the Welk Acquisition Date.

We continue to evaluate the underlying inputs and assumptions used in our valuation for all assets acquired and liabilities assumed.

The values attributed to Vacation ownership notes receivable, Inventory, Property and equipment, Intangible assets, Deferred taxes and Securitized debt from VIEs are based on preliminary valuations prepared using Level 3 inputs and assumptions in accordance with ASC Topic 820, “ Fair Value Measurements ” (“ASC 820”).

Fair Values of Assets Acquired and Liabilities Assumed

We accounted for the Welk Acquisition as a business combination, which required us to record the assets acquired and liabilities assumed at fair value as of the Welk Acquisition Date.

The values attributed to Vacation ownership notes receivable, Inventory, Property and equipment, Intangible assets, and Securitized debt from VIEs are based on valuations prepared using Level 3 inputs and assumptions in accordance with ASC Topic 820, “ Fair Value Measurements ” (“ASC 820”).

The value attributed to Debt is based on Level 2 inputs in accordance with ASC 820.

We are in the process of finalizing our valuations in accordance with the authoritative guidance by continuing our evaluation of the underlying inputs and assumptions that are being utilized in the valuations.

Our evaluation of Welk’s historical tax positions remains ongoing.

Accordingly, these preliminary estimates are subject to change during the measurement period, which is up to one year from the Welk Acquisition Date, as permitted under GAAP.

Any potential adjustments could be material in relation to the values presented in the table below.

The following table presents our preliminary estimates of the fair value of the assets that we acquired and the liabilities that we assumed in connection with the business combination as previously reported at June 30, 2021 and as adjusted at September 30, 2021.

During the third quarter of 2021, we refined our valuation models related to certain acquired assets and liabilities as follows:

During the first quarter of 2022, we finalized our allocation of the purchase price to the acquired assets and liabilities.

The following table presents the fair values of the assets that we acquired and the liabilities that we assumed in connection with the business combination as previously reported at December 31, 2021, and as finalized at March 31, 2022.

During the first quarter of 2022, we refined our valuation models related to certain acquired assets and liabilities as follows:

($ in millions) April 1, 2021

(as reported at

June 30, 2021) Adjustments April 1, 2021

(as adjusted at September 30, 2021)

December 31, 2021) Adjustments April 1, 2021

(as finalized at

March 31, 2022)

Vacation ownership notes receivable, net $ 255 $ — $ 255

$ 240 $ 14 $ 254

Inventory 111 — 111

10 unchanged sentences

_________________________

(1) Vacation ownership notes receivable, net have been determined to constitute purchased credit deteriorated assets under the provisions of ASC Topic 326, “ Financial Instruments - Credit Losses ,” due to the impact of the COVID-19 pandemic on Welk and the greater vacation ownership industry as a whole, and have been accounted for as such.

($ in millions)

Vacation ownership notes receivable $ 287

Allowance for credit losses ( 33 )

Vacation ownership notes receivable, net $ 254

(2) Inventory consists of completed unsold VOIs.

We valued inventory using an income approach, which includes significant Level 3 assumptions, such as estimates of future income growth, marketing and sales costs and discount rates.

(3) Intangible assets consist of management contracts with an estimated 20 year useful life.

(4) Goodwill is calculated as total consideration transferred, net of cash acquired, less identified net assets acquired and it represents the value that we expect to obtain from growth opportunities from our combined operations, and is not deductible for tax purposes.

(1) Goodwill is calculated as total consideration transferred, net of cash acquired, less identified net assets acquired.

It represents the value that we expect to obtain from growth opportunities from our combined operations and is not deductible for tax purposes.

Pro Forma Results of Operations

The following unaudited pro forma information presents the combined results of operations of Marriott Vacations Worldwide and Welk as if we had completed the Welk Acquisition on December 31, 2019, the last day of our 2019 fiscal year, but using our preliminary estimates of the fair values of assets and liabilities as of the Welk Acquisition Date.

The following unaudited pro forma information presents the combined results of operations of Marriott Vacations Worldwide and Welk as if we had completed the Welk Acquisition on December 31, 2019, the last day of our 2019 fiscal year, but using the fair values of assets and liabilities as of the Welk Acquisition Date set forth above.

As required by GAAP, these unaudited pro forma results do not reflect any synergies from operating efficiencies.

Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the Welk Acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations.

There were no Welk acquisition-related costs included in the unaudited pro forma results below for the nine months ended September 30, 2021, and $ 18 million included for the nine months ended September 30, 2020.

Nine Months Ended

($ in millions, except per share data) September 30, 2021 September 30, 2020

There were no Welk Acquisition-related costs included in the unaudited pro forma results below for the three months ended March 31, 2021.

Three Months Ended

($ in millions, except per share data) March 31, 2021

Revenues $ 806

Net income (loss) $ 6 $ ( 251 )

Net income (loss) attributable to common shareholders $ — $ ( 264 )

EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS

Net loss $ ( 12 )

Net loss attributable to common shareholders $ ( 15 )

LOSS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS

Basic $ ( 0.36 )

1 unchanged sentence

Welk Results of Operations

The following table presents the results of Welk operations included in our Income Statement for the three and nine months ended September 30, 2021.

($ in millions) Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021

Revenue $ 53 $ 101

The following table presents the results of Welk operations included in our Income Statement for the three months ended March 31, 2022.

($ in millions) Three Months Ended March 31, 2022

Net income $ 8

Other Acquisitions

During the first quarter of 2021, we acquired 24 completed vacation ownership units and an operations building located at our Marriott Vacation Club at Los Suenos resort in Costa Rica for $ 14 million.

We accounted for the transaction as an asset acquisition with the purchase price allocated to Inventory ($ 13 million) and Property and equipment ($ 1 million).

New York, New York

During the first quarter of 2021, we acquired the remaining 120 completed vacation ownership units located at our Marriott Vacation Club Pulse, New York City property for $ 98 million.

We accounted for the transaction as an asset acquisition with the purchase price allocated to Property and equipment.

During the first quarter of 2020, we acquired 57 completed vacation ownership units, as well as office and ancillary space, located at our Marriott Vacation Club Pulse, New York City property for $ 89 million, of which $ 22 million was a prepayment for future tranches of completed vacation ownership units and $ 20 million was paid in December 2019.

We accounted for the transaction as an asset acquisition with the purchase price allocated to Property and equipment ($ 67 million) and Other assets ($ 22 million).

San Francisco, California

During the first quarter of 2021, we acquired 44 completed vacation ownership units located at our Marriott Vacation Club Pulse, San Francisco property for $ 34 million.

We accounted for the transaction as an asset acquisition with the purchase price allocated to Inventory ($ 29 million) and Other assets ($ 5 million).

During the first quarter of 2020, we acquired 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.

We accounted for the transaction as an asset acquisition with the purchase price allocated to Inventory ($ 18 million), Property and equipment ($ 3 million), and Other assets ($ 5 million).

See Footnote 16 “Variable Interest Entities” for information on our remaining commitment to purchase future inventory and additional information on our activities relating to the VIE involved in this transaction.

During the third quarter of 2020, we recorded a loss of $ 5 million in the Losses and other expense, net line on our Income Statement for the three and nine months ended September 30, 2020 relating to the redemption of our interest in a joint venture in our Exchange & Third-Party Management segment which was consolidated under the voting interest model.

We received nominal cash proceeds and a note receivable which we measured at a fair value of $ 1 million using Level 3 inputs.

Additionally, during the third quarter of 2020, we disposed of excess Vacation Ownership segment land parcels in Orlando, Florida and Steamboat Springs, Colorado for combined proceeds of $ 15 million, as part of our strategic decision to reduce holdings in markets where we have excess supply.

We recorded a combined net gain of $ 6 million in the Losses and other expense, net line on our Income Statement for the three and nine months ended September 30, 2020 relating to these transactions.

During the first quarter of 2022, we acquired 88 completed vacation ownership units, as well as a sales center, located in Bali, Indonesia for $ 36 million.

The transaction was accounted for as an asset acquisition with the purchase price allocated to Property and equipment.

As consideration for the acquisition, we paid $ 12 million in cash and issued a non-interest bearing note payable for $ 11 million.

Further, we reclassified $ 13 million of previous deposits associated with the project from Other assets to Property and equipment.

REVENUE AND RECEIVABLES

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The following tables detail the sources of revenue by segment for the time periods presented.

Three Months Ended September 30, 2021

($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total

Sale of vacation ownership products $ 330 $ — $ — $ 330

Ancillary revenues 55 1 — 56

Management fee revenues 40 10 ( 4 ) 46

Exchange and other services revenues 31 48 44 123

Management and exchange 126 59 40 225

Rental 121 9 — 130

Cost reimbursements 328 9 ( 39 ) 298

Revenue from contracts with customers 905 77 1 983

Financing 69 — — 69

Total Revenues $ 974 $ 77 $ 1 $ 1,052

Three Months Ended September 30, 2020

($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total

Sale of vacation ownership products $ 98 $ — $ — $ 98

Ancillary revenues 17 — — 17

Management fee revenues 37 4 ( 5 ) 36

Exchange and other services revenues 28 45 50 123

Management and exchange 82 49 45 176

Rental 46 10 — 56

Cost reimbursements 281 12 ( 38 ) 255

Revenue from contracts with customers 507 71 7 585

Financing 64 — — 64

Total Revenues $ 571 $ 71 $ 7 $ 649

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total

9 unchanged sentences

Total Revenues $ 956 $ 84 $ 12 $ 1,052

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total

11 unchanged sentences

The following tables detail the timing of revenue from contracts with customers by segment for the time periods presented.

Three Months Ended September 30, 2021

($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total

Services transferred over time $ 517 $ 38 $ 1 $ 556

Goods or services transferred at a point in time 388 39 — 427

Revenue from contracts with customers $ 905 $ 77 $ 1 $ 983

Three Months Ended September 30, 2020

($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total

Services transferred over time $ 394 $ 35 $ 7 $ 436

Goods or services transferred at a point in time 113 36 — 149

Revenue from contracts with customers $ 507 $ 71 $ 7 $ 585

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total

2 unchanged sentences

Revenue from contracts with customers $ 885 $ 84 $ 12 $ 981

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total

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Sale of Vacation Ownership Products

Revenues were reduced during the third quarter and first three quarters of 2021 by $ 1 million and $ 9 million, respectively, due to changes in our estimates of variable consideration for performance obligations that were satisfied in prior periods.

Revenue recognized during the first quarter of 2022 due to changes in our estimates of variable consideration for performance obligations that were satisfied in prior periods was $ 1 million.

Receivables from Contracts with Customers, Contract Assets, & Contract Liabilities

The following table shows the composition of our receivables from contracts with customers and contract liabilities.

We had no contract assets at either September 30, 2021 or December 31, 2020.

($ in millions) At September 30, 2021 At December 31, 2020

We had no contract assets at either March 31, 2022 or December 31, 2021.

($ in millions) At March 31, 2022 At December 31, 2021

Receivables from Contracts with Customers

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Deferred revenue 507 453

Revenue recognized during the third quarter and first three quarters of 2021 that was included in our contract liabilities balance at December 31, 2020 was $ 133 million and $ 336 million, respectively.

Revenue recognized during the first quarter of 2022 that was included in our contract liabilities balance at December 31, 2021 was $ 126 million.

Remaining Performance Obligations

Our remaining performance obligations represent the expected transaction price allocated to our contracts that we expect to recognize as revenue in future periods when we perform under the contracts.

At September 30, 2021, approximately 84 percent of this amount is expected to be recognized as revenue over the next two years .

At March 31, 2022, approximately 86 % of this amount is expected to be recognized as revenue over the next two years .

Accounts Receivable

Accounts receivable is comprised of amounts due from customers, primarily property owners’ associations, resort developers and members, credit card receivables, interest receivables, amounts due from taxing authorities, indemnification assets and other miscellaneous receivables.

Accounts receivable is comprised of amounts due from customers, primarily owners’ associations, resort developers and members, credit card receivables, interest receivables, amounts due from taxing authorities, indemnification assets, and other miscellaneous receivables.

The following table shows the composition of our accounts receivable balances:

($ in millions) At September 30, 2021 At December 31, 2020

($ in millions) At March 31, 2022 At December 31, 2021

Receivables from contracts with customers $ 140 $ 172

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However, discrete items related to prior year tax items are treated separately.

Our interim effective tax rate was 81.5 percent and 19.8 percent for the three months ended September 30, 2021 and September 30, 2020, respectively.

The change in the effective tax rate is predominately attributable to an increase in pre-tax income and an increase in the reserve for uncertain tax benefits.

Our interim effective tax rate was 110.6 percent and 28.7 percent for the nine months ended September 30, 2021 and September 30, 2020, respectively.

Our interim effective tax rate was 35.6 % and 29.8 % for the three months ended March 31, 2022 and March 31, 2021, respectively.

The change in the effective tax rate is predominately attributable to an increase in pre-tax income and an increase in the reserve for uncertain tax benefits.

Tax Law Update

We have considered the income tax accounting and disclosure implications of the relief provided by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), enacted in March 2020, and the Consolidated Appropriations Act, 2021, enacted in December 2020.

As of September 30, 2021, we evaluated the income tax provisions of the above mentioned acts and have determined there to be minimal effect on either the September 30, 2021 tax rate or the computation of the estimated effective tax rate for the year ended December 31, 2021.

We will continue to evaluate the income tax provisions of the above mentioned acts and monitor the developments in the jurisdictions where we have significant operations for tax law changes that could have additional income tax accounting and disclosure implications.

Unrecognized Tax Benefits

The following table summarizes the activity related to our unrecognized tax benefits (excluding interest and penalties) during the nine months ended September 30, 2021.

The following table summarizes the activity related to our unrecognized tax benefits (excluding interest and penalties) during the three months ended March 31, 2022.

These unrecognized tax benefits relate to uncertain income tax positions, which would affect the effective tax rate if recognized.

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Increases related to tax positions taken during a prior period 2

Increases related to tax positions taken during the current period 1

Decreases as a result of a lapse of the applicable statute of limitations ( 1 )

Balance at September 30, 2021

The total amount of gross interest and penalties accrued was $ 38 million at September 30, 2021 and $ 25 million at December 31, 2020.

Balance at March 31, 2022

The total amount of gross interest and penalties accrued was $ 45 million at March 31, 2022 and $ 42 million at December 31, 2021.

We anticipate $ 14 million of unrecognized tax benefits, including interest and penalties, to be indemnified pursuant to a Tax Matters Agreement dated May 11, 2016 by and among Starwood Hotels & Resorts Worldwide, Inc., Vistana Signature Experiences, Inc., and Interval Leisure Group, Inc., and consequently have recorded a corresponding indemnification asset.

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The following table shows the composition of our vacation ownership notes receivable balances, net of reserves.

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

($ in millions) Originated Acquired Total Originated Acquired Total

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The following table summarizes interest income associated with vacation ownership notes receivable.

Three Months Ended Nine Months Ended

($ in millions) September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021

Interest income associated with vacation ownership notes receivable — securitized $ 59 $ 48

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Total interest income associated with vacation ownership notes receivable $ 69 $ 57

COVID-19 Impact on Vacation Ownership Notes Receivable Reserves

We increased our vacation ownership notes receivable reserves by $ 52 million in the first quarter of 2020 as a result of higher actual and projected default activity related predominantly to the COVID-19 pandemic.

In the fourth quarter of 2020, we increased our vacation ownership notes receivable reserve by an additional $ 17 million due to higher than previously expected default activity.

During the first three quarters of 2021, there were no additional increases to our vacation ownership notes receivable reserves attributed to the COVID-19 pandemic.

Acquired Vacation Ownership Notes Receivable

Acquired vacation ownership notes receivable represent vacation ownership notes receivable acquired as part of the ILG Acquisition and the Welk Acquisition.

The following table shows future contractual principal payments, net of reserves, and interest rates for our acquired vacation ownership notes receivable at September 30, 2021.

The following table shows future contractual principal payments, net of reserves, and interest rates for our acquired vacation ownership notes receivable at March 31, 2022.

Acquired Vacation Ownership Notes Receivable

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Thereafter 8 87 95

Balance at September 30, 2021 $ 29 $ 389 $ 418

Balance at March 31, 2022 $ 18 $ 316 $ 334

Weighted average stated interest rate 13.8 % 14.2 % 14.1 %

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Balance at December 31, 2021 $ 47 $ 23 $ 70

Securitizations ( 6 ) 6 —

Clean-up call 3 ( 3 ) —

Write-offs ( 11 ) — ( 11 )

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Defaulted vacation ownership notes receivable repurchase activity (1)

Initial allowance for credit losses for Legacy-Welk vacation ownership notes receivable 12 21 33

(Decrease) increase in vacation ownership notes receivable reserve ( 5 ) 5 —

Balance at September 30, 2021 $ 50 $ 26 $ 76

Balance at March 31, 2022 $ 46 $ 20 $ 66

_________________________

(1) Decrease in securitized vacation ownership notes receivable reserve and increase in non-securitized vacation ownership notes receivable reserve are attributable to the transfer of the reserve when we voluntarily repurchased defaulted securitized vacation ownership notes receivable.

(1) Reflects the change attributable to the transfer of the reserve from the securitized vacation ownership notes receivable reserve to the non-securitized vacation ownership notes receivable reserve when we voluntarily repurchase securitized vacation ownership notes receivable.

Originated Vacation Ownership Notes Receivable

Originated vacation ownership notes receivable represent vacation ownership notes receivable originated by Legacy-ILG and Legacy-Welk subsequent to each respective acquisition date and all Legacy-MVW vacation ownership notes receivable.

The following table shows future principal payments, net of reserves, and interest rates for our originated vacation ownership notes receivable at September 30, 2021.

The following table shows future principal payments, net of reserves, and interest rates for our originated vacation ownership notes receivable at March 31, 2022.

Originated Vacation Ownership Notes Receivable

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Thereafter 196 711 907

Balance at September 30, 2021 $ 511 $ 1,097 $ 1,608

Balance at March 31, 2022 $ 351 $ 1,345 $ 1,696

Weighted average stated interest rate 12.8 % 12.9 % 12.9 %

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Securitizations (1)

Clean-up call 3 ( 3 ) —

Write-offs ( 19 ) — ( 19 )

Defaulted vacation ownership notes receivable repurchase activity (2)

Balance at September 30, 2021 $ 219 $ 113 $ 332

Balance at March 31, 2022 $ 193 $ 150 $ 343

_________________________

(1) Reflects the change attributable to the transfer of the reserve from the non-securitized vacation ownership notes receivable reserve to the securitized vacation ownership notes receivable reserve, when MVW 2021-2 LLC purchased the remaining vacation ownership notes receivable that were securitized during the fourth quarter of 2021, and when we securitized vacation ownership notes receivable under our Warehouse Credit Facility (as defined in Footnote 12 “Securitized Debt”) during the first quarter of 2022.

(2) Reflects the change attributable to the transfer of the reserve from the securitized vacation ownership notes receivable reserve to the non-securitized vacation ownership notes receivable reserve when we voluntarily repurchase securitized vacation ownership notes receivable.

Credit Quality of Vacation Ownership Notes Receivable

Legacy-MVW Vacation Ownership Notes Receivable

For both Legacy-MVW non-securitized and securitized vacation ownership notes receivable, we estimated average remaining default rates of 6.67 percent as of September 30, 2021, and 6.74 percent as of December 31, 2020.

A 0.5 percentage point increase in the estimated default rate would have resulted in an increase in the related vacation ownership notes receivable reserve of $ 6 million as of both September 30, 2021 and December 31, 2020.

For both Legacy-MVW non-securitized and securitized vacation ownership notes receivable, we estimated average remaining default rates of 6.71 % as of March 31, 2022, and 6.74 % as of December 31, 2021.

We use the aging of the vacation ownership notes receivable as the primary credit quality indicator for our Legacy-MVW vacation ownership notes receivable, as historical performance indicates that there is a relationship between the default behavior of borrowers and the age of the receivable associated with the vacation ownership interest.

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($ in millions) Non-Securitized Securitized Total

Investment in vacation ownership notes receivable on non-accrual status at September 30, 2021 $ 98 $ 7 $ 105

Investment in vacation ownership notes receivable on non-accrual status at March 31, 2022 $ 84 $ 9 $ 93

Investment in vacation ownership notes receivable on non-accrual status at December 31, 2021 $ 88 $ 8 $ 96

The following table shows the aging of the recorded investment in principal, before reserves, in Legacy-MVW vacation ownership notes receivable as of September 30, 2021 and December 31, 2020.

The following table shows the aging of the recorded investment in principal, before reserves, in Legacy-MVW vacation ownership notes receivable as of March 31, 2022 and December 31, 2021.

Legacy-MVW Vacation Ownership Notes Receivable

As of September 30, 2021

As of March 31, 2022

As of December 31, 2021

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Total vacation ownership notes receivable $ 253 $ 1,069 $ 1,322 $ 274 $ 1,055 $ 1,329

The following table details the origination year of our Legacy-MVW vacation ownership notes receivable as of September 30, 2021.

The following table details the origination year of our Legacy-MVW vacation ownership notes receivable as of March 31, 2022.

Legacy-MVW Vacation Ownership Notes Receivable

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2018 26 145 171

2016 and Prior 40 123 163

2017 & Prior 46 182 228

$ 253 $ 1,069 $ 1,322

Legacy-ILG and Legacy-Welk Vacation Ownership Notes Receivable

At September 30, 2021 and December 31, 2020, the weighted average FICO score within our consolidated Legacy-ILG and Legacy-Welk vacation ownership notes receivable pools was 707 and 708 , respectively, based upon the outstanding vacation ownership notes receivable balance at the time of origination.

The average estimated rate for all future defaults for our Legacy-ILG and Legacy-Welk consolidated outstanding pool of vacation ownership notes receivable was 17.13 percent as of September 30, 2021 and 14.63 percent as of December 31, 2020.

A 0.5 percentage point increase in the estimated default rate on the Legacy-ILG and Legacy-Welk vacation ownership notes receivable would have resulted in an increase in the related vacation ownership notes receivable reserve of $ 4 million as of September 30, 2021, and $ 3 million as of December 31, 2020.

At March 31, 2022 and December 31, 2021, the weighted average FICO score within our consolidated Legacy-ILG and Legacy-Welk vacation ownership notes receivable pools was 708 and 707 , respectively, based upon the FICO score of the borrower at the time of origination.

The average estimated rate for all future defaults for our Legacy-ILG and Legacy-Welk consolidated outstanding pool of vacation ownership notes receivable was 17.14 % as of March 31, 2022 and 17.33 % as of December 31, 2021.

We use the origination of the vacation ownership notes receivable by brand (Westin, Sheraton, Hyatt, Welk) and the FICO scores of the customer as the primary credit quality indicators for our Legacy-ILG and Legacy-Welk vacation ownership notes receivable, as historical performance indicates that there is a relationship between the default behavior of borrowers and the brand associated with the vacation ownership interest they have acquired, supplemented by the FICO scores of the customers.

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($ in millions) Non-Securitized Securitized Total

Investment in vacation ownership notes receivable on non-accrual status at September 30, 2021 $ 116 $ 8 $ 124

Investment in vacation ownership notes receivable on non-accrual status at March 31, 2022 $ 115 $ 9 $ 124

Investment in vacation ownership notes receivable on non-accrual status at December 31, 2021 $ 114 $ 10 $ 124

The following table shows the aging of the recorded investment in principal, before reserves, in Legacy-ILG and Legacy-Welk vacation ownership notes receivable as of September 30, 2021 and December 31, 2020.

The following table shows the aging of the recorded investment in principal, before reserves, in Legacy-ILG and Legacy-Welk vacation ownership notes receivable as of March 31, 2022 and December 31, 2021.

Legacy-ILG and Legacy-Welk Vacation Ownership Notes Receivable

As of September 30, 2021

As of March 31, 2022

As of December 31, 2021

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The following tables show the Legacy-ILG and Legacy-Welk acquired vacation ownership notes receivable, before reserves, by brand and FICO score.

Acquired Vacation Ownership Notes Receivable as of September 30, 2021

Acquired Vacation Ownership Notes Receivable as of March 31, 2022

($ in millions) 700 + 600 - 699 < 600 No Score Total

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Hyatt 8 6 1 — 15

Welk 115 79 1 2 197

Other 2 — — 2 4

$ 231 $ 165 $ 13 $ 35 $ 444

The following tables detail the origination year of our Legacy-ILG and Legacy-Welk acquired vacation ownership notes receivable by brand and FICO score as of September 30, 2021.

Acquired Vacation Ownership Notes Receivable - Westin

($ in millions) 2021 2020 2019 2018 2017 2016 & Prior Total

700 + $ — $ — $ — $ 16 $ 17 $ 26 $ 59

600 - 699 — — — 9 10 17 36

< 600 — — — 2 — 1 3

No Score — — — 2 3 4 9

$ — $ — $ — $ 29 $ 30 $ 48 $ 107

Acquired Vacation Ownership Notes Receivable - Sheraton

($ in millions) 2021 2020 2019 2018 2017 2016 & Prior Total

700 + $ — $ — $ — $ 17 $ 17 $ 25 $ 59

600 - 699 — — — 14 15 25 54

< 600 — — — 6 2 2 10

No Score — — — 7 7 10 24

$ — $ — $ — $ 44 $ 41 $ 62 $ 147

Acquired Vacation Ownership Notes Receivable - Hyatt and Other

($ in millions) 2021 2020 2019 2018 2017 2016 & Prior Total

The following tables detail the origination year of our Legacy-ILG and Legacy-Welk acquired vacation ownership notes receivable by brand and FICO score as of March 31, 2022.

Acquired Vacation Ownership Notes Receivable 2018 & Prior

($ in millions) Westin Sheraton Hyatt & Other Total

700 + $ 48 $ 49 $ 8 $ 105

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The following tables show the Legacy-ILG and Legacy-Welk originated vacation ownership notes receivable, before reserves, by brand and FICO score.

Originated Vacation Ownership Notes Receivable as of September 30, 2021

Originated Vacation Ownership Notes Receivable as of March 31, 2022

($ in millions) 700 + 600 - 699 < 600 No Score Total

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Hyatt 22 11 — — 33

Welk 65 27 1 1 94

$ 366 $ 198 $ 29 $ 81 $ 674

The following tables detail the origination year of our Legacy-ILG and Legacy-Welk originated vacation ownership notes receivable by brand and FICO score as of September 30, 2021.

The following tables detail the origination year of our Legacy-ILG and Legacy-Welk originated vacation ownership notes receivable by brand and FICO score as of March 31, 2022.

Originated Vacation Ownership Notes Receivable - Westin

($ in millions) 2021 2020 2019 2018 2017 2016 & Prior Total

($ in millions) 2022 2021 2020 2019 2018 Total

700 + $ 21 $ 61 $ 20 $ 38 $ 8 $ 148

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Originated Vacation Ownership Notes Receivable - Sheraton

($ in millions) 2021 2020 2019 2018 2017 2016 & Prior Total

($ in millions) 2022 2021 2020 2019 2018 Total

700 + $ 17 $ 56 $ 21 $ 35 $ 9 $ 138

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Originated Vacation Ownership Notes Receivable - Hyatt

($ in millions) 2021 2020 2019 2018 2017 2016 & Prior Total

($ in millions) 2022 2021 2020 2019 2018 Total

700 + $ 5 $ 9 $ 3 $ 5 $ 1 $ 23

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Originated Vacation Ownership Notes Receivable - Welk

($ in millions) 2021 2020 2019 2018 2017 2016 & Prior Total

($ in millions) 2022 2021 2020 2019 2018 Total

700 + $ 24 $ 55 $ — $ — $ — $ 79

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The table excludes Cash and cash equivalents, Restricted cash, Accounts receivable, deposits included in Other assets, Accounts payable, Advance deposits, and Accrued liabilities, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.

At September 30, 2021 At December 31, 2020

At March 31, 2022 At December 31, 2021

($ in millions) Carrying

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2029 Notes, net ( 493 ) ( 474 ) ( 493 ) ( 505 )

2029 Notes, net ( 493 ) ( 507 ) — —

Term Loan, net ( 777 ) ( 763 ) ( 776 ) ( 784 )

2022 Convertible Notes, net (1)

( 229 ) ( 265 ) ( 224 ) ( 280 )

2026 Convertible Notes, net (1)

( 563 ) ( 632 ) ( 461 ) ( 682 )

Non-interest bearing note payable, net ( 11 ) ( 11 ) — —

Total financial liabilities $ ( 4,446 ) $ ( 4,485 ) $ ( 4,404 ) $ ( 4,774 )

_________________________

(1) Prior period amounts have not been adjusted due to our adoption of ASU 2020-06 under the modified retrospective method.

See Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” for information on our adoption of ASU 2020-06.

Vacation Ownership Notes Receivable

At September 30, 2021 At December 31, 2020

At March 31, 2022 At December 31, 2021

($ in millions) Carrying

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or (3) the collateral is located in Asia or Europe.

In some cases, eligibility may also be determined based on the credit score of the borrower, the remaining term of the loans and other similar factors that may reflect investor demand in a securitization transaction or the cost to effectively securitize the vacation ownership notes receivable.

In some cases, eligibility may also be determined based on

the credit score of the borrower, the remaining term of the loans and other similar factors that may reflect investor demand in a securitization transaction or the cost to effectively securitize the vacation ownership notes receivable.

The table above shows the bifurcation of our vacation ownership notes receivable that have not been securitized into those eligible and not eligible for securitization based upon the aforementioned eligibility criteria.

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We concluded that this fair value measurement should be categorized within Level 3.

We estimate the fair value of our 2025 Notes, 2026 Notes, 2028 Notes, and 2029 Notes (each as defined in Footnote 13 “Debt”) using quoted market prices as of the last trading day for the quarter;

We estimate the fair value of our 2025 Notes, 2028 Notes, and 2029 Notes (each as defined in Footnote 13 “Debt”) using quoted market prices as of the last trading day for the quarter;

however these notes have only a limited trading history and volume, and as such this fair value estimate is not necessarily indicative of the value at which these notes could be retired or transferred.

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The difference between the carrying value and the fair value is primarily attributed to the underlying conversion feature and the spread between the conversion price and the market value of the shares underlying the convertible notes.

Non-Interest Bearing Note Payable

The carrying value of our non-interest bearing note payable issued in connection with the acquisition of vacation ownership units located in Bali, Indonesia approximates fair value, because the imputed interest rate used to discount this note payable is consistent with current market rates.

We concluded that this fair value measurement should be categorized within Level 3.

EARNINGS PER SHARE

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The dilutive effect of outstanding equity-based compensation awards is reflected in diluted earnings or loss per common share applicable to common shareholders by application of the treasury stock method using average market prices during the period.

Our calculation of diluted earnings or loss per share attributable to common shareholders reflects our intent to settle conversions of our convertible notes through a combination settlement, which contemplates repayment in cash of the principal amount and repayment in shares of our common stock of any excess of the conversion value over the principal amount (the “conversion premium”).

Therefore, we include only the shares that may be issued with respect to any conversion premium in total dilutive weighted average shares outstanding, which we calculate using the treasury stock method based upon an average price per share for the quarter.

As of September 30, 2021, a conversion premium existed for our 2022 Convertible Notes (as defined in Footnote 13 “Debt”).

As no conversion premium existed as of September 30, 2020, there was no potential dilutive impact from our 2022 Convertible Notes for the third quarter or first three quarters of 2020.

Additionally, as no conversion premium existed for our 2026 Convertible Notes (as defined in Footnote 13 “Debt”) as of September 30, 2021, there was no potential dilutive impact from our 2026 Convertible Notes for the third quarter or first three quarters of 2021.

We adopted ASU 2020-06 on January 1, 2022 using the modified retrospective method.

ASU 2020-06 was applicable to our convertible notes outstanding as of adoption and requires us to calculate the impact of our convertible notes on diluted earnings per share using the “if-converted” method, regardless of our intent to settle or partially settle the debt in cash.

Under the “if-converted” method, shares issuable upon conversion of our convertible notes are assumed to be converted into common stock at the beginning of the period, to the extent dilutive.

Earnings per share for the three months ended March 31, 2021 have not been retrospectively restated and continue to be reported under the accounting standards in effect for that period.

The shares issuable on exercise of the warrants sold in connection with the issuance of our convertible notes will not impact the total dilutive weighted average shares outstanding unless and until the price of our common stock exceeds the respective strike price.

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See Footnote 13 “Debt” for further information on our convertible notes.

The table below illustrates the reconciliation of the earnings and number of shares used in our calculation of basic and diluted earnings or loss per share attributable to common shareholders.

Three Months Ended Nine Months Ended

(in millions, except per share amounts) September 30, 2021 (1)

September 30, 2020 September 30, 2021 September 30, 2020

The table below illustrates the reconciliation of the earnings or loss and number of shares used in our calculation of basic and diluted earnings or loss per share attributable to common shareholders.

Three Months Ended

(in millions, except per share amounts) March 31, 2022 (1)

March 31, 2021

Computation of Basic Earnings (Loss) Per Share Attributable to Common Shareholders

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Net income (loss) attributable to common shareholders $ 58 $ ( 28 )

Add back of interest expense related to convertible notes subsequent to the adoption of ASU 2020-06, net of tax 1 —

Numerator used to calculate diluted EPS $ 59 $ ( 28 )

Shares for basic earnings (loss) per share 42.4 41.4

Effect of dilutive shares outstanding (2)

Employee stock options and SARs 0.2 — — —

Employee SARs 0.2 —

Restricted stock units 0.3 —

2022 Convertible Notes 0.1 — — —

2022 Convertible Notes ($ 230 million of principal)

2026 Convertible Notes ($ 575 million of principal)

Shares for diluted earnings (loss) per share 47.9 41.4

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_______________________________

(1) The computation of diluted earnings per share attributable to common shareholders excludes approximately 298,000 shares of common stock, the maximum number of shares issuable as of September 30, 2021, upon the vesting of certain performance-based awards because the performance condition required to be met for the shares subject to such awards to vest were not achieved by the end of the reporting period.

(2) For the first three quarters of 2021 and the third quarter and the first three quarters of 2020, the following potentially dilutive securities were excluded from the above calculation of diluted net loss per share attributable to common shareholders during the periods presented, as the effects of including these securities would have been anti-dilutive.

Three Months Ended Nine Months Ended

(in millions) September 30, 2020 September 30, 2021 September 30, 2020

Employee stock options and SARs 0.1 0.2 0.2

(1) The computation of diluted earnings per share attributable to common shareholders excludes approximately 300,000 shares of common stock, the maximum number of shares issuable as of March 31, 2022, upon the vesting of certain performance-based awards, because the performance conditions required to be met for the shares subject to such awards to vest were not achieved by the end of the reporting period.

(2) For the first quarter of 2021, the following potentially dilutive securities were excluded from the above calculation of diluted net loss per share attributable to common shareholders during the periods presented, as the effects of including these securities would have been anti-dilutive.

Three Months Ended

(in millions) March 31, 2021

Employee SARs 0.2

Restricted stock units 0.5

2022 Convertible Notes — 0.1 —

In accordance with the applicable accounting guidance for calculating earnings per share, for the third quarter of 2021, we excluded from our calculation of diluted earnings per share 127,008 shares underlying stock appreciation rights (“SARs”) that may settle in shares of common stock because the exercise price of $ 173.88 of such SARs was greater than the average market price for the applicable period.

2022 Convertible Notes ($ 230 million of principal)

In accordance with the applicable accounting guidance for calculating earnings per share, for the first quarter of 2022, we excluded from our calculation of diluted earnings per share 126,169 shares underlying stock appreciation rights (“SARs”) that may settle in shares of common stock because the exercise price of $ 173.88 of such SARs was greater than the average market price for the applicable period.

The following table shows the composition of our inventory balances:

($ in millions) At September 30, 2021 At December 31, 2020

($ in millions) At March 31, 2022 At December 31, 2021

Real estate inventory (1)

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We value vacation ownership products at the lower of cost or fair market value less costs to sell, in accordance with applicable accounting guidance, and we record operating supplies at the lower of cost (using the first-in, first-out method) or net realizable value.

Product cost true-up activity relating to vacation ownership products increased carrying values of inventory by $ 6 million during the first three quarters of 2021 and by $ 4 million during the first three quarters of 2020.

In addition to the above, at September 30, 2021 and December 31, 2020, we had $ 465 million and $ 162 million, respectively, of completed vacation ownership units which are classified as a component of Property and equipment, net until the time at which they are legally registered for sale as vacation ownership products.

We also have $ 24 million and $ 43 million of deposits on future purchases of inventory at September 30, 2021 and December 31, 2020, respectively, which are included in the Other assets line on our Balance Sheets.

Product cost true-up activity relating to vacation ownership products increased carrying values of inventory by $ 7 million during the first quarter of 2022 and by $ 1 million during the first quarter of 2021.

In addition to the above, at March 31, 2022 and December 31, 2021, we had $ 496 million and $ 460 million, respectively, of completed vacation ownership units which are classified as a component of Property and equipment, net until the time at which they are available and legally registered for sale as vacation ownership products.

GOODWILL AND INTANGIBLES

The following table details the carrying amount of our goodwill at September 30, 2021 and December 31, 2020, and reflects goodwill attributed to the ILG Acquisition and the Welk Acquisition.

The following table details the carrying amount of our goodwill at March 31, 2022 and December 31, 2021, and reflects goodwill attributed to the ILG Acquisition and the Welk Acquisition.

($ in millions) Vacation Ownership Reporting Unit Exchange & Third-Party Management Reporting Unit Total Consolidated

Balance at December 31, 2021 $ 2,778 $ 372 $ 3,150

Welk Acquisition 299 — 299

Balance at June 30, 2021 2,744 372 3,116

Measurement period adjustments ( 8 ) — ( 8 )

Balance at September 30, 2021 $ 2,714 $ 372 $ 3,086

Q1 2021, Q2 2021, and Q3 2021

We periodically monitor for indicators of impairment of our goodwill and none were identified during the third quarter or first three quarters of 2021.

While the goodwill of our reporting units was not impaired during the first three quarters of 2021, we cannot assure you that our goodwill will not be impaired in future periods.

We recognized a non-cash impairment charge of $ 73 million in the Impairment line on our Income Statement during the first quarter of 2020 related to the Exchange & Third-Party Management reporting unit, which was primarily driven by the change in expected future operating results as a result of the impact of the COVID-19 pandemic.

Balance at March 31, 2022 $ 2,770 $ 372 $ 3,142

Intangible Assets

The following table details the composition of our intangible asset balances:

($ in millions) At September 30, 2021 At December 31, 2020

($ in millions) At March 31, 2022 At December 31, 2021

Definite-lived intangible assets

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Trade names 64 64

$ 1,007 $ 952

We recognized a non-cash impairment charge of $ 18 million in the Impairment line on our Income Statement during the first quarter of 2020 related to the indefinite-lived intangible assets in our Exchange & Third-Party Management segment, which was primarily attributed to the decline in estimated near-term revenues and related recovery of long-term revenues as a result of the impact of the COVID-19 pandemic.

CONTINGENCIES AND COMMITMENTS

Commitments and Letters of Credit

As of September 30, 2021, we had the following commitments outstanding:

As of March 31, 2022, we had the following commitments outstanding:

• We have various contracts for the use of information technology hardware and software that we use in the normal course of business.

Our aggregate commitment under these contracts was $ 87 million, of which we expect $ 14 million, $ 40 million, $ 21 million, $ 6 million, $ 5 million and $ 1 million will be paid in the remainder of 2021, 2022, 2023, 2024, 2025, and thereafter, respectively.

• We have various commitments to acquire real estate for use in our Vacation Ownership segment via our involvement with VIEs.

Refer to Footnote 16 “Variable Interest Entities” for additional information and our activities relating to the VIEs involved in these transactions.

• We have a remaining commitment to purchase 88 vacation ownership units located in Bali, Indonesia for use in our Vacation Ownership segment, contingent upon completion of construction to agreed-upon standards.

We expect to complete the acquisition in 2022 and to make the remaining payments of $ 23 million in 2022 with respect to these units, when specific construction milestones are completed.

Surety bonds issued as of September 30, 2021 totaled $ 123 million, the majority of which were requested by federal, state, or local governments in connection with our operations.

As of September 30, 2021, we had $ 2 million of letters of credit outstanding under our Revolving Corporate Credit Facility (as defined in Footnote 13 “Debt”).

In addition, as of September 30, 2021, we had $ 2 million in letters of credit outstanding related to and in lieu of reserves required for several vacation ownership notes receivable securitization transactions outstanding.

Our aggregate commitment under these contracts was $ 97 million, of which we expect $ 43 million, $ 30 million, $ 13 million, $ 8 million, and $ 3 million will be paid in the remainder of 2022, 2023, 2024, 2025, and 2026 and thereafter, respectively.

• We have a commitment to acquire real estate for use in our Vacation Ownership segment via our involvement with a VIE.

Refer to Footnote 16 “Variable Interest Entities” for additional information and our activities relating to the VIE involved in this transaction.

• We have commitments to acquire inventory from our managed owners’ associations in the remainder of 2022 for $ 79 million.

Surety bonds issued as of March 31, 2022 totaled $ 120 million, the majority of which were requested by federal, state, or local governments in connection with our operations.

As of March 31, 2022, we had $ 2 million of letters of credit outstanding under our Revolving Corporate Credit Facility (as defined in Footnote 13 “Debt”).

In addition, as of March 31, 2022, we had $ 2 million in letters of credit outstanding related to and in lieu of reserves required for several vacation ownership notes receivable securitization transactions outstanding.

These letters of credit are not issued pursuant to, nor do they impact our borrowing capacity under, the Revolving Corporate Credit Facility.

We estimate the cash outflow associated with completing the phases of our existing portfolio of vacation ownership projects currently under development will be approximately $ 2 million, of which $ 1 million is included within liabilities on our Balance Sheet at September 30, 2021.

This estimate is based on our current development plans, which remain subject to change, and we expect the phases currently under development will be completed in 2022.

Certain of our rental management agreements in our Exchange & Third-Party Management segment provide for owners of properties we manage to receive specified percentages of rental revenue or guaranteed amounts generated under our management.

In these cases, the operating expenses for the rental operations are paid from the revenue generated by the rentals, the owners are then paid their contractual percentages or guaranteed amounts, and our vacation rental business either retains the balance (if any) as its fee or makes up the deficit.

At September 30, 2021, our maximum exposure under fixed dollar guarantees was $ 12 million, of which $ 1 million, $ 4 million, $ 2 million, $ 2 million, $ 1 million, and $ 2 million relate to the remainder of 2021, 2022, 2023, 2024, 2025, and thereafter, respectively.

We have a commitment to a property owners’ association that we manage to pay for any shortfall between the actual expenses incurred by the property owners’ association and the income received by the property owners’ association.

At March 31, 2022, our maximum exposure under fixed dollar guarantees was $ 8 million, of which $ 1 million, $ 2 million, $ 2 million, $ 1 million, $ 1 million, and $ 1 million relate to the remainder of 2022, 2023, 2024, 2025, 2026, and thereafter, respectively.

We have a commitment to an owners’ association that we manage to pay for any shortfall between the actual expenses incurred by the owners’ association and the income received by the owners’ association, in lieu of maintenance fees for unsold inventory.

The agreement will terminate on the earlier of:

1) sale of 80% of the total ownership interests;

or 2) upon our written notification of termination.

At September 30, 2021, our expected commitment for the remainder of 2021 is $ 3 million.

1) sale of 95 % of the total ownership interests in the owners’ association;

or 2) written notification of termination by either party.

At March 31, 2022, our expected commitment for the remainder of 2022 is $ 10 million, which will ultimately be recorded as a component of rental expense on our income statement.

Loss Contingencies

In March 2017, RCHFU, L.L.C.

and other owners at The Ritz-Carlton Club, Aspen Highlands (“RCC Aspen Highlands”) filed a complaint in an action pending in the U.S.

District Court for the District of Colorado against us and certain third parties, alleging that their fractional interests were devalued by the affiliation of the RCC Aspen Highlands and other Ritz-Carlton Clubs with our points-based Marriott Vacation Club Destinations (“MVCD”) program.

The plaintiffs sought compensatory damages, disgorgement, punitive damages, fees and costs.

In September 2021, the District Court granted our motion for summary judgment and dismissed the case.

In October 2021, the plaintiffs appealed the ruling.

Subsequently, the parties have agreed in principle to the dismissal of plaintiffs’ appeal in exchange for a dismissal of our claim for attorneys’ fees and expenses.

In May 2016, a purported class-action lawsuit was filed in the U.S.

District Court for the Middle District of Florida by Anthony and Beth Lennen against us and certain third parties.

The complaint challenged the characterization of the beneficial interests in the MVCD trust that are sold to customers as real estate interests under Florida law, the structure of the trust, and associated operational aspects of the trust.

The plaintiffs sought declaratory relief, an unwinding of the MVCD product, and punitive damages.

In August 2019, the District Court granted our motion for judgment on the pleadings and dismissed the case.

The plaintiffs have appealed the ruling.

In February 2019, the owners’ association for the St.

Regis Residence Club, New York filed a lawsuit in the Supreme Court for the State of New York, New York County, Commercial Division against ILG and several of its subsidiaries and certain third parties.

The operative complaint alleges that the defendants breached their fiduciary duties related to sale and rental practices, aided and abetted certain breaches of fiduciary duty, engaged in self-dealing as the sponsor and manager of the club, tortiously interfered with the management agreement, was unjustly enriched, and engaged in anticompetitive conduct.

The operative complaint alleges that the defendants breached their fiduciary duties related to sale and rental practices, aided and abetted certain breaches of fiduciary duty, engaged in self-dealing as the sponsor and manager of the club, tortiously interfered with the management agreement, were unjustly enriched, and engaged in anticompetitive conduct.

The plaintiff is seeking unspecified damages, punitive damages and disgorgement of payments under the management and purchase agreements.

In February 2022, the Court granted our motion to dismiss the complaint and dismissed with prejudice all claims except one, with respect to which the plaintiff was granted leave to amend its complaint.

The plaintiff has filed an amended complaint and has appealed the dismissal of the other claims.

In April 2019, a purported class-action lawsuit was filed by Alan and Marjorie Helman and others against us in the Superior Court of the Virgin Islands, Division of St.

4 unchanged sentences

The plaintiffs are seeking unspecified damages, disgorgement of profits, fees and costs.

In May 2019, the G.A.

Resort Condominium Association Inc., the owners’ association for the fractional owners at the Hyatt Residence Club Grand Aspen resort (“HRC Grand Aspen”) filed a lawsuit against us in the District Court for the County of Pitkin, Colorado relating to the transfer of ownership of developer-owned fractional interests at HRC Grand Aspen to the HPC Trust Club for sale and use as a part of the Hyatt Residence Club Portfolio Program.

The lawsuit was subsequently removed to the U.S.

District Court for the District of Colorado.

The plaintiff sought termination of the management agreement with the owners’ association, the annulment of certain amendments to governing documents at HRC Grand Aspen, the removal of fractional interests at HRC Grand Aspen from the HPC Trust Club, unspecified damages, disgorgement of profits, fees and costs.

In November 2020, the District Court granted our motion to dismiss and dismissed the case.

The plaintiffs have appealed the ruling.

We believe we have meritorious defenses to the claims in each of the above matters and intend to vigorously defend each matter.

10 unchanged sentences

Leases That Have Not Yet Commenced

During the first quarter of 2020, we entered into a finance lease arrangement for our new global headquarters in Orlando, Florida.

During 2020, we entered into a finance lease arrangement, which was then amended in 2021, for our new global headquarters office building, which is being constructed in Orlando, Florida.

The initial lease term is approximately 16 years with total lease payments of $ 137 million for the aforementioned period.

During 2020, in response to the COVID-19 pandemic and our ongoing evaluation of future space needs, we entered into a standstill arrangement with the developer/lessor, which expired in June 2021.

During the second quarter of 2021, we amended our lease agreement with the developer/lessor and expect the new office building to be completed in 2023.

We expect the new office building to be completed in 2023.

Upon commencement of the lease term, a right-of-use asset and corresponding liability will be recorded on our balance sheet.

1 unchanged sentence

The following table provides detail on our securitized debt, net of unamortized debt discount and issuance costs.

($ in millions) At September 30, 2021 At December 31, 2020

($ in millions) At March 31, 2022 At December 31, 2021

Vacation ownership notes receivable securitizations, gross (1)

1 unchanged sentence

Unamortized debt discount and issuance costs ( 19 ) ( 21 )

Warehouse Credit Facility, gross 101 —

Unamortized debt issuance costs (2)

$ 1,779 $ 1,856

_________________________

(1) Interest rates as of September 30, 2021 range from 1.5 % to 4.4 %, with a weighted average interest rate of 2.5 %

All of our securitized debt is non-recourse to us.

(1) Interest rates as of March 31, 2022 range from 1.5 % to 4.4 %, with a weighted average interest rate of 2.3 %.

(2) Excludes $ 2 million of unamortized debt issuance costs as of December 31, 2021, as no cash borrowings were outstanding on the Warehouse Credit Facility at that time.

All of our securitized debt is non-recourse to MVWC.

See Footnote 16 “Variable Interest Entities” for a discussion of the collateral for the non-recourse debt associated with our securitized debt.

The following table shows scheduled future principal payments for our securitized debt as of September 30, 2021.

The following table shows scheduled future principal payments for our securitized debt as of March 31, 2022.

Vacation Ownership

Notes Receivable Securitizations

Notes Receivable Securitizations Warehouse Credit

Facility Total

($ in millions)

1 unchanged sentence

2022, remaining $ 135 $ 3 $ 138

2023 182 5 187

2024 185 93 278

2025 185 — 185

2026 183 — 183

Thereafter 828 — 828

$ 1,698 $ 101 $ 1,799

Vacation Ownership Notes Receivable Securitizations

1 unchanged sentence

If a pool of securitized vacation ownership notes receivable fails to perform within the pool’s established parameters (default or delinquency thresholds vary by transaction), transaction provisions effectively redirect the monthly excess spread we would otherwise receive from that pool (attributable to the interests we retained) to accelerate the principal payments to investors (taking into account the subordination of the different tranches to the extent there are multiple tranches) until the performance trigger is cured.

During the third quarter of 2021, and as of September 30, 2021, no securitized vacation ownership notes receivable pools were out of compliance with their respective established parameters.

As of September 30, 2021, we had 13 securitized vacation ownership notes receivable pools outstanding.

During the first quarter of 2022, and as of March 31, 2022, we had 14 securitized vacation ownership notes receivable pools outstanding, none of which were out of compliance with their respective established parameters.

As the contractual terms of the underlying securitized vacation ownership notes receivable determine the maturities of the non-recourse debt associated with them, actual maturities may occur earlier than shown above due to prepayments by the vacation ownership notes receivable obligors.

During the second quarter of 2021, we completed the securitization of a pool of $ 434 million of vacation ownership notes receivable.

In connection with the securitization, investors purchased in a private placement $ 425 million in vacation ownership loan backed notes from MVW 2021-1W LLC (the “2021-1W LLC”).

Four classes of vacation ownership loan backed notes were issued by the 2021-1W LLC:

$ 207 million of Class A Notes, $ 107 million of Class B Notes, $ 80 million of Class C Notes, and $ 31 million of Class D Notes.

The Class A Notes have an interest rate of 1.14 percent, the Class B Notes have an interest rate of 1.44 percent, the Class C Notes have an interest rate of 1.94 percent, and the Class D Notes have an interest rate of 3.17 percent, for an overall weighted average interest rate of 1.52 percent.

Of the $ 425 million in proceeds from the transaction, $ 8 million was used to pay transaction expenses and fund required reserves, and the remainder will be used for general corporate purposes.

In connection with the 2021-1W securitization, we redeemed certain remaining vacation ownership notes receivable securitizations from 2014 and 2015, as well as certain vacation ownership notes receivable securitizations acquired as part of the Welk Acquisition.

Warehouse Credit Facility

Our warehouse credit facility (the “Warehouse Credit Facility”), which has a borrowing capacity of $ 350 million, allows for the securitization of vacation ownership notes receivable on a revolving non-recourse basis.

During the second quarter of 2021, we amended certain agreements associated with this facility, and as a result, the revolving period was extended from December 20, 2021 to April 21, 2023 and the interest rate increased from primarily LIBOR plus 1.1 % to primarily LIBOR plus 1.35 %.

Our borrowing capacity was not modified by these amendments.

The amended facility expanded our ability to monetize vacation ownership notes receivable loans originated by Welk.

The other terms were substantially similar to those in effect prior to the execution of the amendments.

As of September 30, 2021, there were no cash borrowings outstanding under our Warehouse Credit Facility.

During the first quarter of 2022, we securitized vacation ownership notes receivable under our Warehouse Credit Facility.

The carrying amount of the vacation ownership notes receivable securitized was $ 125 million.

The average advance rate was 81 %, which resulted in gross proceeds of $ 102 million.

Net proceeds were $ 101 million due to the funding of reserve accounts of $ 1 million.

The following table provides detail on our debt balances, net of unamortized debt discount and issuance costs.

($ in millions) At September 30, 2021 At December 31, 2020

($ in millions) At March 31, 2022 At December 31, 2021

Senior Secured Notes

6 unchanged sentences

Unamortized debt discount and issuance costs ( 7 ) ( 7 )

2029 Notes 500 —

Unamortized debt discount and issuance costs ( 7 ) —

Corporate Credit Facility

6 unchanged sentences

Unamortized debt discount and issuance costs ( 12 ) ( 114 )

Non-interest bearing note payable 11 —

Finance Leases 84 83

$ 2,751 $ 2,631

The following table shows scheduled future principal payments for our debt, excluding finance leases, as of September 30, 2021.

The following table shows scheduled future principal payments for our debt, excluding finance leases, as of March 31, 2022.

($ in millions) 2025

Loan 2022 Convertible Notes 2026 Convertible Notes Total

Loan 2022 Convertible Notes 2026 Convertible Notes Non-Interest Bearing Note Payable Total

Payments Year

7 unchanged sentences

Our senior notes include:

• $ 500 million aggregate principal amount of 6.125 % Senior Secured Notes due 2025 issued in the second quarter of 2020 with a maturity date of September 15, 2025 (the “2025 Notes”).

• $ 500 million aggregate principal amount of 6.125 % Senior Secured Notes due 2025 issued in the second quarter of 2020 with a maturity date of September 15, 2025 (the “2025 Notes”), of which $ 250 million of principal was outstanding as of March 31, 2022.

• $ 350 million aggregate principal amount of 4.750 % Senior Unsecured Notes due 2028 issued in the fourth quarter of 2019 with a maturity date of January 15, 2028 (the “2028 Notes”).

• $ 500 million aggregate principal amount of 4.500 % Senior Unsecured Notes due 2029 issued in the second quarter of 2021 with a maturity date of June 15, 2029 (the “2029 Notes”).

Issuance and Redemption of Senior Notes

The 2029 Notes were issued under an indenture dated June 21, 2021 with The Bank of New York Mellon Trust Company, N.A., as trustee.

We received net proceeds of $ 493 million from the offering, after deducting the underwriting fees and transaction expenses.

We used these proceeds in July 2021 to redeem, prior to maturity, $ 500 million of the $ 750 million aggregate principal amount of 6.500 % Senior Unsecured Notes due 2026 issued in the third quarter of 2018 with a maturity date of September 15, 2026 (the “2026 Notes”) and pay transaction expenses and fees in connection with the transaction.

We will pay interest on the 2029 Notes on June 15 and December 15 of each year, commencing on December 15, 2021.

We may redeem some or all of the 2029 Notes prior to maturity under the terms provided in the indenture.

As noted above, in July 2021, we redeemed, prior to maturity, $ 500 million aggregate principal amount of the 2026 Notes pursuant to a redemption notice issued in June 2021 and the terms of the indenture governing the 2026 Notes.

Additionally, in September 2021, we issued a redemption notice and redeemed, prior to maturity, the remaining $ 250 million aggregate principal amount of the 2026 Notes pursuant to the terms of the indenture governing the 2026 Notes.

In connection with the redemptions that occurred during the third quarter of 2021, we incurred charges of $ 36 million, inclusive of a redemption premium and the write-off of unamortized debt issuance costs, which was recorded in the Losses and other expense, net line on our Income Statement for the three and nine months ended September 30, 2021.

During the third quarter of 2021, we delivered a redemption notice of $ 250 million aggregate principal amount of the 2025 Notes pursuant to the terms of the indenture governing the 2025 Notes.

Subsequent to the end of the third quarter of 2021, we redeemed, prior to maturity, $ 250 million aggregate principal amount of the 2025 Notes.

In connection with this redemption, we expect to incur charges of approximately $ 19 million, inclusive of a redemption premium and the write-off of unamortized debt issuance costs, which will be recorded in the fourth quarter of 2021.

Corporate Credit Facility

Our corporate credit facility (“Corporate Credit Facility”), which provides support for our business, including ongoing liquidity and letters of credit, includes a $ 900 million term loan facility (the “Term Loan”), which matures on August 31, 2025, and a revolving credit facility with a borrowing capacity of $ 600 million (the “Revolving Corporate Credit Facility”), including a letter of credit sub-facility of $ 75 million, that terminates on August 31, 2023.

The Term Loan bears interest at LIBOR plus 1.75 percent.

Borrowings under the Revolving Corporate Credit Facility generally bear interest at a floating rate plus an applicable margin that varies from 0.50 percent to 2.75 percent depending on the type of loan and our credit rating.

In addition, we pay a commitment fee on the unused availability under the Revolving Corporate Credit Facility at a rate that varies from 20 to 40 basis points per annum, also depending on our credit rating.

In 2020, we entered into a waiver (the “Waiver”) to the agreement that governs our Corporate Credit Facility, which, among other things, suspended the requirement to comply with the leverage covenant in the Revolving Corporate Credit Facility, commencing with the fiscal quarter ending June 30, 2020.

The initial suspension period included in the Waiver was up to four quarters, however in February 2021, we further amended the agreement governing our Corporate Credit Facility to extend the suspension period included in the Waiver through the end of 2021.

The Waiver prohibited us from making certain restricted payments, including share repurchases and dividends.

On September 9, 2021, we elected to terminate the Waiver.

Prior to 2020, we entered into $ 250 million of interest rate swaps under which we pay a fixed rate of 2.9625 percent and receive a floating interest rate through September 2023 and $ 200 million of interest rate swaps under which we pay a fixed rate of 2.2480 percent and receive a floating interest rate through April 2024, in each case to hedge a portion of our interest rate risk on the Term Loan.

We also entered into a $ 100 million interest rate collar with a cap strike rate of 2.5000 percent and a floor strike rate of 1.8810 percent through April 2024 to further hedge our interest rate risk on the Term Loan.

Both the interest rate swaps and the interest rate collar have been designated and qualify as cash flow hedges of interest rate risk and recorded in Other liabilities on our Balance Sheet as of September 30, 2021 and December 31, 2020.

characterize payments we make in connection with these derivative instruments as interest expense and a reclassification of accumulated other comprehensive income for presentation purposes.

The following table reflects the activity in accumulated other comprehensive loss related to our derivative instruments during the first three quarters of 2021 and 2020.

There were no reclassifications to the Income Statement for any of the periods presented below.

Our corporate credit facility (“Corporate Credit Facility”), which provides support for our business, including ongoing liquidity and letters of credit, includes a $ 900 million term loan facility (the “Term Loan”), which matures on August 31, 2025, and bears interest at LIBOR plus 1.75 %, and a revolving credit facility (the “Revolving Corporate Credit Facility”) that includes a letter of credit sub-facility of $ 75 million.

During the first quarter of 2022, we entered into an amendment to the Revolving Corporate Credit Facility (the “Amendment”), which increased the borrowing capacity of the existing revolving credit facility from $ 600 million to $ 750 million and extended the maturity date from August 31, 2023 to March 31, 2027.

The Amendment modified the interest rate applicable to borrowings under the Revolving Corporate Credit Facility to reference the Secured Overnight Financing Rate (“SOFR”) and to be based on “Adjusted Term SOFR,” which is calculated as Term SOFR (as defined in the Amendment), plus a 0.10 % adjustment, subject to a 0.00 % floor.

Interest rates for other select non-U.S.

dollar borrowings were also amended to be based on updated variable rate indices.

The applicable margins with respect to the Revolving Corporate Credit Facility were amended to be based on leverage-based measures instead of credit ratings-based measures.

The Amendment made no other material changes to the Corporate Credit Facility.

Prior to 2020, we entered into $ 250 million of interest rate swaps under which we pay a fixed rate of 2.9625 % and receive a floating interest rate through September 2023 and $ 200 million of interest rate swaps under which we pay a fixed rate of 2.2480 % and receive a floating interest rate through April 2024, in each case to hedge a portion of our interest rate risk on the Term Loan.

We also entered into a $ 100 million interest rate collar with a cap strike rate of 2.5000 % and a floor strike rate of 1.8810 % through April 2024 to further hedge our interest rate risk on the Term Loan.

We characterize payments we make in connection with these derivative instruments as interest expense and a reclassification of accumulated other comprehensive income for presentation purposes.

The following table reflects the activity in accumulated other comprehensive loss related to our derivative instruments during the first quarters of 2022 and 2021.

There were no reclassifications to the Income Statement for either of the periods presented below.

($ in millions) 2022 2021

Derivative instrument adjustment balance, January 1 $ ( 18 ) $ ( 39 )

Other comprehensive gain (loss) before reclassifications 6 ( 24 )

Derivative instrument adjustment balance, March 31 ( 33 ) ( 45 )

Other comprehensive gain (loss) before reclassifications 3 ( 1 )

Derivative instrument adjustment balance, June 30 ( 30 ) ( 46 )

Other comprehensive gain before reclassifications 16 6

Derivative instrument adjustment balance, September 30 $ ( 27 ) $ ( 43 )

Derivative instrument adjustment balance, March 31 $ ( 2 ) $ ( 33 )

Convertible Notes

2022 Convertible Notes

During 2017, we issued $ 230 million of aggregate principal amount of convertible senior notes (the “2022 Convertible Notes”) that bear interest at a rate of 1.50 percent, payable in cash semi-annually.

During 2017, we issued $ 230 million of aggregate principal amount of convertible senior notes (the “2022 Convertible Notes”) that bear interest at a rate of 1.50 %, payable in cash semi-annually.

The 2022 Convertible Notes mature on September 15, 2022, unless repurchased or converted in accordance with their terms prior to that date.

The conversion rate is subject to adjustment for certain events as described in the indenture governing the notes, and was subject to adjustment as of September 30, 2021 to 6.8201 shares of common stock per $ 1,000 principal amount of 2022 Convertible Notes (equivalent to a conversion price of $ 146.63 per share of our common stock), as a result of the dividends that have been declared since issuance that were greater than the quarterly dividend when the 2022 Convertible Notes were issued.

Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.

It is our intent to settle conversions of the 2022 Convertible Notes through combination settlement, which contemplates repayment in cash of the principal amount and repayment in shares of our common stock of any excess of the conversion value over the principal amount.

As of September 30, 2021, the effective interest rate was 4.73 % and the remaining discount amortization period was one year .

The conversion rate is subject to adjustment for certain events as described in the indenture governing the notes, and was subject to adjustment as of March 31, 2022 to 6.8402 shares of common stock per $1,000 principal amount of 2022 Convertible Notes (equivalent to a conversion price of $ 146.19 per share of our common stock), as a result of the dividends we declared since issuance of the 2022 Convertible Notes that were greater than the quarterly dividend we paid when the 2022 Convertible Notes were issued.

Upon conversion, we will pay or deliver, as the case may be, cash, shares of our

common stock, or a combination of cash and shares of our common stock, at our election.

As of March 31, 2022, the effective interest rate was 2.19 %.

The following table shows the net carrying value of the 2022 Convertible Notes.

($ in millions) At September 30, 2021 At December 31, 2020

($ in millions) At March 31, 2022 At December 31, 2021

Liability component

4 unchanged sentences

Carrying amount of equity component, net of issuance costs (1)

________________________

(1) As a result of the adoption of ASU 2020-06 during the first quarter of 2022, we no longer account for the liability and equity components of the convertible notes separately, and we reclassified the conversion feature related to the 2022 Convertible Notes from equity to liabilities.

Prior period amounts have not been adjusted due to our adoption of ASU 2020-06 under the modified retrospective method.

See Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” for information on our adoption of ASU 2020-06.

The following table shows interest expense information related to the 2022 Convertible Notes.

Three Months Ended Nine Months Ended

($ in millions) September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021

Contractual interest expense $ 1 $ 1

Amortization of debt discount — 2

Amortization of debt issuance costs — — 1 1

$ 2 $ 2 $ 9 $ 9

2022 Convertible Note Hedges and Warrants

1 unchanged sentence

convertible note hedge transactions with respect to our common stock (“2022 Convertible Note Hedges”), covering a total of approximately 1.6 million shares of our common stock, and warrant transactions (“2022 Warrants”), whereby we sold to the counterparties to the 2022 Convertible Note Hedges warrants to acquire approximately 1.6 million shares of our common stock.

As of September 30, 2021, the strike prices of the 2022 Convertible Note Hedges and the 2022 Warrants were subject to adjustment to approximately $ 148.73 and $ 177.33 , respectively, and no 2022 Convertible Note Hedges or 2022 Warrants have been exercised.

As of March 31, 2022, the strike prices of the 2022 Convertible Note Hedges and the 2022 Warrants were subject to adjustment to approximately $ 148.29 and $ 176.80 , respectively, and no 2022 Convertible Note Hedges or 2022 Warrants have been exercised.

2026 Convertible Notes

During the first quarter of 2021, we issued $ 575 million aggregate principal amount of 0.00 % Convertible Senior Notes due 2026 (the “2026 Convertible Notes”).

The 2026 Convertible Notes are governed by an indenture dated February 2, 2021 (the Indenture) among the Company, Marriott Ownership Resorts, Inc.

and the other guarantors party thereto (the “Guarantors”) and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).

We received net proceeds from the offering of approximately $ 530 million after adjusting for debt issuance costs, including the discount to the initial purchasers, the cost of the 2026 Convertible Note Hedges, and proceeds from the 2026 Warrants (both as defined below).

The 2026 Convertible Notes will not bear regular interest and will mature on January 15, 2026, unless earlier repurchased or converted in accordance with their terms prior to that date.

On or after October 15, 2025, and prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date of the 2026 Convertible Notes, holders may convert their 2026 Convertible Notes at their option.

The conversion rate is subject to adjustment for certain events as described in the indenture governing the notes, and was subject to adjustment as of September 30, 2021 to 5.8685 shares of common stock per $1,000 principal amount of 2026 Convertible Notes (equivalent to a conversion price of $ 170.40 per share of our common stock), as a result of the dividends that have been declared since issuance.

During 2021, we issued $ 575 million aggregate principal amount of convertible senior notes (the “2026 Convertible Notes”) that bear interest at a rate of 0.00 %.

The 2026 Convertible Notes mature on January 15, 2026, unless repurchased or converted in accordance with their terms prior to that date.

The conversion rate is subject to adjustment for certain events as described in the indenture governing the notes, and was subject to adjustment as of March 31, 2022 to 5.9122 shares of common stock per $1,000 principal amount of 2026 Convertible Notes (equivalent to a conversion price of $ 169.14 per share of our common stock), as a result of the dividends we declared since issuance of the 2026 Convertible Notes that were greater than the quarterly dividend we paid when the 2026 Convertible Notes were issued.

Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election.

It is our intent to settle conversions of the 2026 Convertible Notes through combination settlement, which contemplates repayment in cash of the principal amount and repayment in shares of our common stock of any excess of the conversion value over the principal amount.

Holders may convert their 2026 Convertible Notes prior to October 15, 2025 only under the following circumstances:

• during any calendar quarter commencing after the calendar quarter ending on March 31, 2021 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 percent of the conversion price on each applicable trading day;

• during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of 2026 Convertible Notes for each trading day of the measurement period was less than 98 percent of the product of the last reported sale price of the common stock and the conversion rate on each such trading day;

• upon the occurrence of specified corporate events as described in the Indenture.

We may not redeem the 2026 Convertible Notes prior to their maturity date, and no sinking fund is provided for them.

If we undergo a fundamental change, as described in the Indenture, subject to certain conditions, holders may require us to repurchase for cash all or any portion of their 2026 Convertible Notes.

The repurchase price as a result of a fundamental change is equal to 100 percent of the principal amount of the 2026 Convertible Notes to be repurchased, plus accrued and unpaid special interest, if any, to, but excluding, the repurchase date.

If certain fundamental changes referred to in the Indenture as make-whole fundamental changes occur, the conversion rate applicable to the 2026 Convertible Notes may increase.

The 2026 Convertible Notes are unconditionally guaranteed, on a joint and several basis, by the Guarantors on a senior, unsecured basis.

The 2026 Convertible Notes are our general senior unsecured obligations and rank equally in right of payment with all of our existing and future senior indebtedness, and senior in right of payment to all of our future subordinated debt.

The 2026 Convertible Notes will be effectively subordinated to any of our existing and future secured debt to the extent of the value of the assets securing such debt, including the guarantees of borrowings outstanding under the Corporate Credit Facility and our 2025 Notes.

The 2026 Convertible Notes will be structurally subordinated to any existing and future indebtedness and any other liabilities and obligations of any of our subsidiaries that are not guarantors of the 2026

Convertible Notes.

The guarantees will be the Guarantors’ general senior unsecured obligations and will rank equally in right of payment with all of the Guarantors’ existing and future senior indebtedness, and senior in right of payment to all of the Guarantors’ future subordinated debt.

The guarantees will be effectively subordinated to any of the Guarantors’ existing and future secured debt to the extent of the value of the assets securing such debt, including any borrowings outstanding under the Corporate Credit Facility and the 2025 Notes.

The guarantees will be structurally subordinated to any existing and future indebtedness and any other liabilities and obligations of any of our subsidiaries that are not guarantors of the 2026 Convertible Notes.

There are no financial or operating covenants related to the 2026 Convertible Notes.

The indenture governing these notes contains customary events of default with respect to the 2026 Convertible Notes and provides that upon the occurrence and continuation of certain events of default, the Trustee or the holders of at least 25 percent in aggregate principal amount of the 2026 Convertible Notes then outstanding may declare all principal of and accrued and any unpaid interest on the 2026 Convertible Notes then outstanding to be immediately due and payable.

In case of certain events of bankruptcy or insolvency involving the Company, all of the principal of and accrued and unpaid interest on the 2026 Convertible Notes will automatically become immediately due and payable.

In accounting for the issuance of the 2026 Convertible Notes, we separated the 2026 Convertible Notes into liability and equity components and allocated $ 449 million to the liability component and $ 126 million to the equity component.

The resulting debt discount is amortized as interest expense.

As of September 30, 2021, the effective interest rate was 4.96 % and the remaining debt discount amortization period was 4.3 years.

We had debt issuance costs, including initial purchasers’ discount to underwriters, of $ 15 million related to the 2026 Convertible Notes, which were allocated to the liability and equity components based on their relative values.

Issuance costs attributable to the liability component are amortized to interest expense over the term of the 2026 Convertible Notes, and issuance costs attributable to the equity component are included along with the equity component in shareholders’ equity.

As of March 31, 2022, the effective interest rate was 0.55 %.

The following table shows the net carrying value of the 2026 Convertible Notes.

($ in millions) At September 30, 2021 At December 31, 2020

($ in millions) At March 31, 2022 At December 31, 2021

Liability component

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Carrying amount of equity component, net of issuance costs (1)

________________________

(1) As a result of adoption of ASU 2020-06 during the first quarter of 2022, we no longer account for the liability and equity components of the convertible notes separately, and we reclassified the conversion feature related to the 2026 Convertible Notes from equity to liabilities.

Prior period amounts have not been adjusted due to our adoption of ASU 2020-06 under the modified retrospective method.

See Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” for information on our adoption of ASU 2020-06.

The following table shows interest expense information related to the 2026 Convertible Notes.

Three Months Ended Nine Months Ended

($ in millions) September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021

Amortization of debt discount $ — $ 5

Amortization of debt issuance costs 1 —

$ 7 $ — $ 18 $ —

2026 Convertible Note Hedges and Warrants

In connection with the offering of the 2026 Convertible Notes, we entered into privately-negotiated convertible note hedge transactions with respect to our common stock with certain counterparties (the “2026 Convertible Note Hedges”), covering a total of 3.4 million shares of our common stock at a cost of $ 100 million.

The 2026 Convertible Note Hedges are subject to anti-dilution provisions substantially similar to those of the 2026 Convertible Notes, have a strike price that initially corresponded to the initial conversion price of the 2026 Convertible Notes, are exercisable by us upon any conversion under the 2026 Convertible Notes, and expire when the 2026 Convertible Notes mature.

The cost of the 2026 Convertible Note Hedges is expected to be tax deductible as an original issue discount over the life of the 2026 Convertible Notes, as the 2026 Convertible Notes and the 2026 Convertible Note Hedges represent an integrated debt instrument for tax purposes.

The cost of the 2026 Convertible Note Hedges was recorded as a reduction of Additional paid-in capital on our Balance Sheet.

Concurrently with the entry into the 2026 Convertible Note Hedges, we separately entered into privately-negotiated warrant transactions (the “2026 Warrants”), whereby we sold to the counterparties to the 2026 Convertible Note Hedges warrants to acquire, collectively, subject to anti-dilution adjustments, approximately 3.4 million shares of our common stock at an initial strike price of $ 213.76 per share.

We received aggregate proceeds of $ 70 million from the sale of the 2026 Warrants to the counterparties.

The proceeds from the issuance of the 2026 Warrants were recorded as an increase to Additional paid-in capital on our Balance Sheet.

Taken together, the 2026 Convertible Note Hedges and the 2026 Warrants are generally expected to reduce the potential dilution to our common stock (or, in the event the conversion of the 2026 Convertible Notes is settled in cash, to reduce our cash payment obligation) in the event that at the time of conversion our stock price exceeds the conversion price under the 2026 Convertible Notes and to effectively increase the overall conversion price to the Company from $ 171.01 per share to $ 213.76 per share.

The 2026 Warrants will expire in ratable portions on a series of expiration dates commencing on April 15, 2026.

The 2026 Convertible Notes, the 2026 Convertible Note Hedges, and the 2026 Warrants are transactions that are separate from each other.

Holders of any such instrument have no rights with respect to the other instruments.

As of September 30, 2021, the strike prices of the 2026 Convertible Note Hedges and the 2026 Warrants were subject to adjustment to approximately $ 170.40 and $ 213.00 , respectively, and no 2026 Convertible Notes or 2026 Warrants have been exercised.

In connection with the offering of the 2026 Convertible Notes, we concurrently entered into the following privately-negotiated separate transactions:

convertible note hedge transactions with respect to our common stock (“2026 Convertible Note Hedges”), covering a total of approximately 3.4 million shares of our common stock, and warrant transactions (“2026 Warrants”), whereby we sold to the counterparties to the 2026 Convertible Note Hedges, warrants to acquire approximately 3.4 million shares of our common stock.

As of March 31, 2022, the strike prices of the 2026 Convertible Note Hedges and the 2026 Warrants were subject to adjustment to approximately $ 169.14 and $ 211.43 , respectively, and no 2026 Convertible Note Hedges or 2026 Warrants have been exercised.

Security and Guarantees

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In addition, the Corporate Credit Facility, the 2026 Convertible Notes, the 2025 Notes, the 2028 Notes, and the 2029 Notes are guaranteed by MVWC and certain of our direct and indirect, existing and future, domestic subsidiaries, excluding bankruptcy remote special purpose subsidiaries .

Non-Interest Bearing Note Payable

During the first quarter of 2022, we issued a non-interest bearing note payable in connection with the acquisition of vacation ownership units located in Bali, Indonesia.

See Footnote 3 “Acquisitions” for additional information on this transaction.

SHAREHOLDERS’ EQUITY

Marriott Vacations Worldwide has 100,000,000 authorized shares of common stock, par value of $ 0.01 per share.

At September 30, 2021, there were 75,491,621 shares of Marriott Vacations Worldwide common stock issued, of which 42,715,459 shares were outstanding and 32,776,162 shares were held as treasury stock.

At March 31, 2022, there were 75,721,548 shares of Marriott Vacations Worldwide common stock issued, of which 41,750,172 shares were outstanding and 33,971,376 shares were held as treasury stock.

At December 31, 2021, there were 75,519,049 shares of Marriott Vacations Worldwide common stock issued, of which 42,283,378 shares were outstanding and 33,235,671 shares were held as treasury stock.

Marriott Vacations Worldwide has 2,000,000 authorized shares of preferred stock, par value of $ 0.01 per share, none of which were issued or outstanding as of September 30, 2021 or December 31, 2020.

Marriott Vacations Worldwide has 2,000,000 authorized shares of preferred stock, par value of $ 0.01 per share, none of which were issued or outstanding as of March 31, 2022 or December 31, 2021.

Share Repurchase Program

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Share repurchases may be made through open market purchases, privately negotiated transactions, block transactions, tender offers, or otherwise.

The specific timing, amount and other terms of the repurchases will depend on market conditions, corporate and regulatory requirements and other factors.

The specific timing, amount and other terms of the repurchases will depend on market conditions, corporate and regulatory requirements, contractual restrictions, and other factors.

Acquired shares of our common stock are held as treasury shares carried at cost in our Financial Statements.

In connection with the repurchase program, we are authorized to adopt one or more plans pursuant to the provisions of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

During the first quarter of 2022, our Board of Directors authorized the repurchase of up to an additional $ 300 million of our common stock, as well as the extension of the term of our existing share repurchase program to March 31, 2023.

As of March 31, 2022, $ 353 million remained available for repurchase under the share repurchase program approved by the Board of Directors.

The authorization for the current share repurchase program may be suspended, terminated, increased or decreased by our Board of Directors at any time without prior notice.

The following table summarizes share repurchase activity under our share repurchase programs:

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As of December 31, 2021 17,681,395 $ 1,418 $ 80.17

For the first three quarters of 2021 29,035 4 $ 154.84

As of September 30, 2021 17,217,920 $ 1,344 $ 78.08

As of September 30, 2021, $ 246 million remained available for repurchase under the authorization approved by the Board of Directors in the third quarter of 2021.

The authorization for the current share repurchase program may be suspended, terminated, increased or decreased by our Board of Directors at any time without prior notice.

We declared cash dividends to holders of common stock during the quarter ended September 30, 2021 as follows.

For the first quarter of 2022 764,824 119 $ 156.50

As of March 31, 2022 18,446,219 $ 1,537 $ 83.34

We declared cash dividends to holders of common stock during the quarter ended March 31, 2022 as follows.

Any future dividend payments will be subject to the restrictions imposed under the agreements covering our debt, and Board approval.

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Declaration Date Shareholder Record Date Distribution Date Dividend per Share

September 10, 2021 September 23, 2021 October 7, 2021 $ 0.54

Noncontrolling Interests - Property Owners’ Associations

We consolidate certain property owners’ associations.

Noncontrolling interests represent the portion of the property owners’ associations related to third-party vacation ownership interest owners.

Noncontrolling interests of $ 31 million as of both September 30, 2021 and December 31, 2020 are included on our Balance Sheets as a component of equity.

February 18, 2022 March 3, 2022 March 17, 2022 $ 0.62

Noncontrolling Interests - Owners’ Associations

We consolidate certain owners’ associations.

Noncontrolling interests represent the portion of the owners’ associations related to third-party vacation ownership interest owners.

Noncontrolling interests of $ 10 million as of both March 31, 2022 and December 31, 2021 are included on our Balance Sheets as a component of equity.

SHARE-BASED COMPENSATION

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A total of 1.8 million shares are authorized for issuance pursuant to grants under the MVW Equity Plan.

As of September 30, 2021, approximately 1.5 million shares were available for grants under the MVW Equity Plan.

As of March 31, 2022, approximately 1.0 million shares were available for grants under the MVW Equity Plan.

The following table details our share-based compensation expense related to award grants to our officers, directors, and employees:

Three Months Ended Nine Months Ended

($ in millions) September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021

Service-based RSUs $ 7 $ 6

Performance-based RSUs — 1

ILG Acquisition Converted RSUs — 1 — 2

$ 11 $ 11 $ 33 $ 24

The following table details our deferred compensation costs related to unvested awards:

($ in millions) At September 30, 2021 At December 31, 2020

($ in millions) At March 31, 2022 At December 31, 2021

Service-based RSUs $ 51 $ 33

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Restricted Stock Units

We granted 171,625 service-based RSUs, which are subject to time-based vesting conditions, with a weighted average grant-date fair value of $ 169.19 , to our employees and non-employee directors during the first three quarters of 2021.

We granted 165,392 service-based RSUs, which are subject to time-based vesting conditions, with a weighted average grant-date fair value of $ 153.25 , to our employees and non-employee directors during the first quarter of 2022.

During the first quarter of 2022, we also granted performance-based RSUs, which are subject to performance-based vesting conditions, to members of management.

A maximum of 135,012 RSUs may be earned under the performance-based RSU awards granted during the first quarter of 2022.

Stock Appreciation Rights

We granted 127,857 SARs, with a weighted average grant-date fair value of $ 70.66 and a weighted average exercise price of $ 173.88 , to members of management during the first three quarters of 2021.

We granted 77,037 SARs, with a weighted average grant-date fair value of $ 59.68 and a weighted average exercise price of $ 159.27 , to members of management during the first quarter of 2022.

We use the Black-Scholes model to estimate the fair value of the SARs granted.

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The dividend yield assumption listed below is based on the expectation of future payouts.

The following table outlines the assumptions used to estimate the fair value of grants during the first three quarters of 2021:

The following table outlines the assumptions used to estimate the fair value of grants during the first quarter of 2022:

Expected volatility 42.86 %

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There is no noncontrolling interest balance related to these entities and the creditors of these entities do not have general recourse to us.

The following table shows consolidated assets, which are collateral for the obligations of these VIEs, and consolidated liabilities included on our Balance Sheet at September 30, 2021:

The following table shows consolidated assets, which are collateral for the obligations of these VIEs, and consolidated liabilities included on our Balance Sheet at March 31, 2022:

($ in millions) Vacation Ownership

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Consolidated Assets

Vacation ownership notes receivable, net $ 1,486 $ — $ 1,486

Vacation ownership notes receivable, net of reserves $ 1,552 $ 109 $ 1,661

Interest receivable 11 1 12

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Total $ 1,699 $ 102 $ 1,801

The following table shows the interest income and expense recognized as a result of our involvement with these VIEs during the third quarter of 2021:

($ in millions) Vacation Ownership

Notes Receivable

Securitizations Warehouse

Credit Facility Total

Interest income $ 55 $ — $ 55

Interest expense to investors $ 11 $ — $ 11

Debt issuance cost amortization $ 2 $ — $ 2

Administrative expenses $ 1 $ — $ 1

The following table shows the interest income and expense recognized as a result of our involvement with these VIEs during the first three quarters of 2021:

The following table shows the interest income and expense recognized as a result of our involvement with these VIEs during the first quarter of 2022:

($ in millions) Vacation Ownership

5 unchanged sentences

Debt issuance cost amortization $ 2 $ — $ 2

Administrative expenses $ 2 $ — $ 2

The following table shows cash flows between us and the vacation ownership notes receivable securitization VIEs:

Nine Months Ended

($ in millions) September 30, 2021 September 30, 2020

Net proceeds from vacation ownership notes receivable securitizations $ 421 $ 371

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021

Principal receipts $ 139 $ 130

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Voluntary repurchases of defaulted vacation ownership notes receivable ( 23 ) ( 30 )

Voluntary clean-up call ( 72 ) ( 18 )

Interest to investors ( 11 ) ( 11 )

Funding of restricted cash ( 110 ) ( 20 )

Total ( 189 ) ( 170 )

Net Cash Flows $ 65 $ 10

_________________________

(1) Relates to the release of funds when MVW 2021-2 LLC purchased the remaining vacation ownership notes receivable that were securitized during the fourth quarter of 2021.

Under the terms of our vacation ownership notes receivable securitizations, we have the right to substitute loans for, or repurchase, defaulted loans at our option, subject to certain limitations.

1 unchanged sentence

The following table shows cash flows between us and the Warehouse Credit Facility VIE:

Nine Months Ended

($ in millions) September 30, 2021 September 30, 2020

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021

Proceeds from vacation ownership notes receivable securitizations $ 102 $ —

1 unchanged sentence

Interest receipts 1 —

Reserve release — 2

Cash Outflows

Principal to investors — ( 33 )

Voluntary repurchases of defaulted vacation ownership notes receivable — ( 3 )

Repayment of Warehouse Credit Facility — ( 300 )

Interest to investors ( 1 ) ( 4 )

Funding of restricted cash ( 1 ) —

2 unchanged sentences

Other Variable Interest Entities

We have a commitment to purchase an operating property located in San Francisco, California, that we currently manage as Marriott Vacation Club Pulse, San Francisco.

We expect to acquire the operating property over time and as of September 30, 2021 are committed to make payments for the operating property as follows:

$ 25 million in 2022 and $ 32 million in 2023.

See Footnote 3 “Acquisitions and Dispositions” for information on the purchases that occurred during the first quarters of 2021 and 2020.

We are required to purchase the property from the third-party developer unless the developer has sold the property to another party.

The property is held by a VIE for which we are not the primary beneficiary as we cannot prevent the VIE from selling the property to another party at a higher price.

Accordingly, we have not consolidated the VIE.

As of September 30, 2021, our Balance Sheet reflected $ 2 million in Accounts Receivable, including a note receivable of less than $ 1 million, and $ 10 million in Other assets for a deposit related to the future acquisition of a portion of this property.

We believe that our maximum exposure to loss as a result of our involvement with this VIE is approximately $ 12 million as of September 30, 2021.

We have a commitment to purchase a property located in Waikiki, Hawaii, which was assigned to a third party during 2020.

If we are unable to negotiate a capital efficient inventory arrangement, we are committed to purchase the property, in its then current form, for $ 104 million in 2022, unless it has been sold to another party.

The property is held by a VIE for which we are not the primary beneficiary as we do not control the operations of the VIE.

We have a commitment to purchase a property located in Waikiki, Hawaii, which we assigned to a third party during 2020.

The property is held by a VIE for which we are not the primary beneficiary.

Accordingly, we have not consolidated the VIE.

As of September 30, 2021, our Balance Sheet reflected $ 1 million in Accounts Receivable, including a note receivable of less than $ 1 million.

We believe that our maximum exposure to loss as a result of our involvement with this VIE is approximately $ 1 million as of September 30, 2021.

As of March 31, 2022, our Balance Sheet reflected $ 1 million in Accounts Receivable, including a note receivable of less than $ 1 million.

We believe that our maximum exposure to loss as a result of our involvement with this VIE is approximately $ 1 million as of March 31, 2022.

Subsequent to the end of the first quarter of 2022, we extended a loan to the VIE for $ 47 million and amended the terms of this commitment.

As a result of the amended commitment, if we are unable to negotiate a capital efficient inventory arrangement under which a third party will purchase the property and agree to resell it to us at a later date, we are committed to purchase the property, in its then current form, for $ 80 million in the fourth quarter of 2022, unless it has been sold to another party.

The loan extended to the VIE is due in full upon the earlier of sale of the property, including a sale to us, or an amendment and restatement of our purchase commitment.

In the latter case, the existing loan of $ 47 million would be repaid to us as part of that revised purchase commitment on the part of MVW.

Deferred Compensation Plan

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We are considered the primary beneficiary of the rabbi trust because we direct the activities of the trust and are the beneficiary of the trust.

At September 30, 2021, the value of the assets held in the rabbi trust was $ 70 million, which is included in the Other line within assets on our Balance Sheets.

At March 31, 2022, the value of the assets held in the rabbi trust was $ 74 million, which is included in the Other line within assets on our Balance Sheets.

BUSINESS SEGMENTS

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We operate in two operating and reportable business segments:

• Vacation Ownership includes a diverse portfolio of resorts that includes seven vacation ownership brands licensed under exclusive, long-term relationships with Marriott International and Hyatt Hotels Corporation.

• Vacation Ownership includes a diverse portfolio of resorts that includes some of the world’s most iconic brands licensed under exclusive, long-term relationships.

We are the exclusive worldwide developer, marketer, seller, and manager of vacation ownership and related products under the Marriott Vacation Club, Grand Residences by Marriott, Sheraton Vacation Club, Westin Vacation Club, and Hyatt Residence Club brands, as well as under Marriott Vacation Club Pulse, an extension to the Marriott Vacation Club brand.

We are also the exclusive worldwide developer, marketer and seller of vacation ownership and related products under The Ritz-Carlton Destination Club brand, we have the non-exclusive right to develop, market and sell whole ownership residential products under The Ritz-Carlton Residences brand and we have a license to use the St.

We are also the exclusive worldwide developer, marketer, and seller of vacation ownership and related products under The Ritz-Carlton Destination Club brand, we have the non-exclusive right to develop, market, and sell whole ownership residential products under The Ritz-Carlton Residences brand and have a license to use the St.

Regis brand for specified fractional ownership resorts.

In addition, as part of the Welk Acquisition, we acquired a short-term license to use the Welk brand in connection with the continued operations of that business.

MVW intends to rebrand all Welk resorts as Hyatt-branded resorts once it has obtained all necessary approvals.

• Our Vacation Ownership segment generates most of its revenues from four primary sources:

3 unchanged sentences

and renting vacation ownership inventory.

• Exchange & Third-Party Management includes exchange networks and membership programs, as well as management of resorts and lodging properties.

We provide these services through a variety of brands including Interval International, Trading Places International, Vacation Resorts International, and Aqua-Aston.

Exchange & Third-Party Management revenue generally is fee-based and derived from membership, exchange and rental transactions, property and association management, and other related products and services.

• Exchange & Third-Party Management includes exchange networks and membership programs, as well as provision of management services to other resorts and lodging properties.

We provide these services through a variety of brands including Interval International, Trading Places International (“TPI”), Vacation Resorts International (“VRI”), and Aqua-Aston.

Exchange & Third-Party Management revenue generally is fee-based

and derived from membership, exchange and rental transactions, owners’ association management, and other related products and services.

Our CODM evaluates the performance of our segments based primarily on the results of the segment without allocating corporate expenses or income taxes.

We do not allocate corporate interest expense or indirect general and administrative expenses to our segments.

We include interest income specific to segment activities within the appropriate

We include interest income specific to segment activities within the appropriate segment.

We allocate depreciation, other gains and losses, equity in earnings or losses from our joint ventures, and noncontrolling interest to each of our segments as appropriate.

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, as our CODM does not use this information to make operating segment resource allocations.

Prior year segment information has been reclassified to conform to the current reportable segment presentation.

Our CODM uses Adjusted EBITDA to evaluate the profitability of our operating segments, and the components of net income attributable to common shareholders excluded from Adjusted EBITDA are not separately evaluated.

Adjusted EBITDA is defined as net income or loss attributable to common shareholders, before interest expense (excluding consumer financing interest expense associated with term loan securitization transactions), income taxes, depreciation and amortization, excluding share-based compensation expense and adjusted for certain items that affect the comparability of our operating performance.

Our reconciliation of the aggregate amount of Adjusted EBITDA for our reportable segments to consolidated net income (loss) attributable to common shareholders is presented below.

Three Months Ended Nine Months Ended

($ in millions) September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Corporate and other represents that portion of our results that are not allocable to our segments, including those relating to consolidated owners’ associations, as our CODM does not use this information to make operating segment resource allocations.

Our CODM uses Adjusted EBITDA to evaluate the profitability of our operating segments, and the components of net income or loss attributable to common shareholders excluded from Adjusted EBITDA are not separately evaluated.

Adjusted EBITDA is defined as net income or loss attributable to common shareholders, before interest expense (excluding consumer financing interest expense associated with securitization transactions), income taxes, depreciation and amortization, excluding share-based compensation expense and adjusted for certain items that affect the comparability of our operating performance.

Our reconciliation of the aggregate amount of Adjusted EBITDA for our reportable segments to consolidated net income or loss attributable to common shareholders is presented below.

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021

Vacation Ownership $ 956 $ 661

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$ 1,052 $ 759

Adjusted EBITDA and Reconciliation to Net Income (Loss) Attributable to Common Shareholders

Three Months Ended Nine Months Ended

($ in millions) September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Adjusted EBITDA and Reconciliation to Net Income or Loss Attributable to Common Shareholders

Three Months Ended

($ in millions) March 31, 2022 March 31, 2021

Adjusted EBITDA Vacation Ownership $ 199 $ 68

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Net income (loss) attributable to common shareholders $ 58 $ ( 28 )

($ in millions) At September 30, 2021 At December 31, 2020

($ in millions) At March 31, 2022 At December 31, 2021

Vacation Ownership $ 7,946 $ 7,897

3 unchanged sentences

$ 9,503 $ 9,613

We conduct business globally, and our operations outside the United States represented approximately 10 percent and 8 percent of our revenues, excluding cost reimbursements, for the three months ended September 30, 2021 and September 30, 2020, respectively, and 10 percent of our revenues, excluding cost reimbursements, for each of the nine months ended September 30, 2021 and September 30, 2020.

We conduct business globally, and our operations outside the United States represented approximately 11 % and 9 % of our revenues, excluding cost reimbursements, for the three months ended March 31, 2022 and March 31, 2021, respectively .

SUBSEQUENT EVENT

In April 2022, we disposed of the VRI and TPI after determining that these businesses did not meet our future growth strategy and operating model, for net proceeds of approximately $ 60 million.

Both of these businesses are components of our Exchange and Third-Party Management segment.

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-Q

Item 1. Financial Statements