What changed in this filing

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Item 1. Financial Statements

2023-11-03 compared with 2023-08-04 · 200 added, 171 removed, 895 unchanged (29% of the section changed)

3 unchanged sentences

(In millions, except per share amounts)

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Sale of vacation ownership products $ 319 $ 444 $ 1,085 $ 1,179

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TOTAL EXPENSES 1,081 1,012 3,099 2,880

Gains and other income, net 10 37 31 41

Gains (losses) and other income (expense), net 3 ( 2 ) 34 39

Interest expense, net ( 36 ) ( 34 ) ( 106 ) ( 91 )

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NET INCOME 42 110 219 303

Net loss attributable to noncontrolling interests — 1 — 1

Net income attributable to noncontrolling interests — ( 1 ) — —

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 42 $ 109 $ 219 $ 303

7 unchanged sentences

(In millions)

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

NET INCOME $ 42 $ 110 $ 219 $ 303

2 unchanged sentences

Derivative instrument adjustment, net of tax ( 3 ) 8 ( 7 ) 31

OTHER COMPREHENSIVE GAIN (LOSS), NET OF TAX 5 ( 5 ) 8 15

Net loss attributable to noncontrolling interests — 1 — 1

COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS — 1 — 1

OTHER COMPREHENSIVE (LOSS) GAIN, NET OF TAX ( 5 ) 7 3 22

Net income attributable to noncontrolling interests — ( 1 ) — —

COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS — ( 1 ) — —

COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 37 $ 116 $ 222 $ 325

3 unchanged sentences

(In millions, except share and per share data)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Cash and cash equivalents $ 265 $ 524

42 unchanged sentences

(In millions)

Six Months Ended

June 30, 2023 June 30, 2022

Nine Months Ended

September 30, 2023 September 30, 2022

OPERATING ACTIVITIES

20 unchanged sentences

Deconsolidation of certain Consolidated Property Owners' Associations — ( 48 )

Purchase of vacation ownership units for future transfer to inventory — ( 12 )

Purchase of property for future transfer to inventory ( 27 ) ( 12 )

Other, net ( 1 ) 8

4 unchanged sentences

Issuance of note receivable to VIE — ( 47 )

Proceeds from collection of note receivable from VIE — 47

Purchase of company owned life insurance ( 8 ) ( 14 )

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(In millions)

Six Months Ended

June 30, 2023 June 30, 2022

Nine Months Ended

September 30, 2023 September 30, 2022

FINANCING ACTIVITIES

22 unchanged sentences

Non-cash issuance of debt in connection with finance lease 97 —

Non-cash reduction of debt associated with bifurcation of conversion feature on the 2022 Convertible Notes — 5

Non-cash adjustment to additional paid-in capital for 2022 Convertible Note Hedges — 6

Dividends payable 26 24

Interest paid, net of amounts capitalized 141 104

23 unchanged sentences

75.8 BALANCE AT JUNE 30, 2023 1 ( 2,213 ) 3,947 23 718 2,476 2 2,478

— Net income — — — — 42 42 — 42

— Foreign currency translation adjustments — — — ( 2 ) — ( 2 ) — ( 2 )

— Derivative instrument adjustment — — — ( 3 ) — ( 3 ) — ( 3 )

— Share-based compensation plans — 1 6 — — 7 — 7

— Repurchase of common stock — ( 86 ) — — — ( 86 ) — ( 86 )

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

75.8 BALANCE AT SEPTEMBER 30, 2023 $ 1 $ ( 2,298 ) $ 3,953 $ 18 $ 734 $ 2,408 $ 2 $ 2,410

See Interim Condensed Notes to Consolidated Financial Statements

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75.7 BALANCE AT JUNE 30, 2022 1 ( 1,666 ) 3,963 ( 1 ) 448 2,745 1 2,746

— Net income — — — — 109 109 1 110

— Foreign currency translation adjustments — — — ( 1 ) — ( 1 ) — ( 1 )

— Derivative instrument adjustment — — — 8 — 8 — 8

— Tax effect on equity, convertible notes — — ( 1 ) — — ( 1 ) — ( 1 )

— Share-based compensation plans — — 5 — — 5 — 5

— Repurchase of common stock — ( 216 ) — — — ( 216 ) — ( 216 )

— Dividends — — — — ( 24 ) ( 24 ) — ( 24 )

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

75.7 BALANCE AT SEPTEMBER 30, 2022 $ 1 $ ( 1,882 ) $ 3,968 $ 6 $ 533 $ 2,626 $ 2 $ 2,628

See Interim Condensed Notes to Consolidated Financial Statements

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

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 VIEs for which Marriott Vacations Worldwide is the primary beneficiary, as determined in accordance with consolidation accounting guidance.

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 variable interest entities (“VIEs”) for which Marriott Vacations Worldwide is the primary beneficiary, as determined 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.

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Such estimates include, but are not limited to, revenue recognition, cost of vacation ownership products, inventory valuation, goodwill and intangibles valuation, accounting for acquired vacation ownership notes receivable, vacation ownership notes receivable reserves, income taxes, and loss contingencies.

The uncertainties in the broader macroeconomic environment, including inflationary pressures, as well as effects of the recent COVID-19 pandemic, have made it more challenging to make these estimates.

The uncertainties in the broader macroeconomic environment, including inflationary pressures, as well as effects of the COVID-19 pandemic, have made it more challenging to make these estimates.

Actual results could differ from our estimates, and such differences may be material.

In our opinion, our Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position, the results of our operations, and cash flows for the periods presented.

Interim results may not be indicative of fiscal year performance because of, among other reasons, general macroeconomic conditions, including inflationary pressures, rising interest rates, and seasonal and short-term variations, as well as any effects of the recent COVID-19 pandemic.

These Financial Statements have not been audited.

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(“ILG”), in 2018 (the “ILG Acquisition”) as “Legacy-ILG.” We refer to the business we conducted, and the associated brands, prior to the ILG Acquisition as “Legacy-MVW.”

During the third quarter of 2023 we launched Hyatt Vacation Club across our former Hyatt Residence Club and Legacy-Welk properties, which connects these properties and associated vacation ownership programs under a single brand.

SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING STANDARDS

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In March 2020, the Financial Accounting Standards Board (“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 USD London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates.

This update was effective upon issuance and issuers were able to generally elect to adopt the optional expedients and exceptions over time through a period ending on December 31, 2022.

This update was effective upon issuance and issuers generally were able to elect to adopt the optional expedients and exceptions over time through a period ending on December 31, 2022.

In December 2022, the FASB issued ASU 2022-06 to extend the temporary accounting rules under Topic 848 from December 31, 2022 to December 31, 2024.

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See Footnote 12 “Debt” for more information.

Both our Term Loan and the related interest rate swaps and collar will transition to SOFR at the same time, effective July 31, 2023.

As of June 30, 2023, we have no other financial instruments to transition from LIBOR.

Both our Term Loan and the related interest rate swaps and collar transitioned to SOFR at the same time, effective July 31, 2023.

As of September 30, 2023, we have no other financial instruments to transition from LIBOR.

ACQUISITIONS AND DISPOSITIONS

Savannah, Georgia

During the third quarter of 2023, we acquired property in Savannah, Georgia for $ 19 million.

We plan to convert the property into a 73 -unit vacation ownership property.

The transaction was accounted for as an asset acquisition and was recorded in Property and equipment, net.

Charleston, South Carolina

During the first quarter of 2023, we acquired a parcel of land and an adjacent retail space in Charleston, South Carolina for $ 17 million.

We plan to develop the parcel of land into a 50 -unit vacation ownership resort and use a portion of the retail space to operate a sales center.

We plan to develop the parcel of land into a 50 -unit vacation ownership property and use a portion of the retail space to operate a sales center.

The transaction was accounted for as an asset acquisition and was recorded in Property and equipment, net.

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The net carrying value of VRI Americas as of the date of the disposition was $ 51 million, including $ 25 million of goodwill and $ 20 million of intangible assets.

As a result of the

disposition, we recorded a gain of $ 16 million in Gains and other income, net on our Income Statements for the three and six months ended June 30, 2022.

As a result of the disposition, we recorded a gain of $ 1 million and $ 17 million in Gains (losses) and other income (expense), net on our Income Statements for the three and nine months ended September 30, 2022, respectively.

Additionally, during the second quarter of 2022, we disposed of entities that owned and operated a Vacation Ownership segment hotel in Puerto Vallarta, Mexico, for proceeds of $ 38 million, net of cash and restricted cash transferred to the buyer of $ 3 million, consistent with our strategy to dispose of non-strategic assets.

The net carrying value of the business disposed of as of the date of the disposition, excluding the cumulative translation adjustment, was $ 18 million, substantially all of which was for property and equipment.

As a result of this disposition, we recorded a gain of $ 33 million in Gains and other income, net on our Income Statements for the three and six months ended June 30, 2022, which included the realization of cumulative foreign currency translation gains of $ 10 million associated with the disposition of these entities.

As a result of this disposition, we recorded a gain of $ 33 million in Gains (losses) and other income (expense), net on our Income Statement for the nine months ended September 30, 2022, which included the realization of cumulative foreign currency translation gains of $ 10 million associated with the disposition of these entities.

REVENUE AND RECEIVABLES

Sources of Revenue by Segment

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

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

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Total Revenues $ 1,126 $ 64 $ ( 4 ) $ 1,186

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

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

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Total Revenues $ 1,182 $ 71 $ ( 1 ) $ 1,252

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

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

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Total Revenues $ 3,335 $ 200 $ ( 2 ) $ 3,533

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

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

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

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

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

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Revenue from contracts with customers $ 1,045 $ 64 $ ( 4 ) $ 1,105

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

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

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Revenue from contracts with customers $ 1,108 $ 71 $ ( 1 ) $ 1,178

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

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

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Revenue from contracts with customers $ 3,096 $ 200 $ ( 2 ) $ 3,294

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

($ 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 second quarter and first half of 2023 by $ 11 million and $ 19 million, respectively, due to changes in our estimates of variable consideration for performance obligations that were satisfied in prior periods.

Revenues were reduced during the third quarter and first three quarters of 2023 by $ 47 million and $ 66 million, respectively, due to changes in our estimates of variable consideration for performance obligations that were satisfied in prior periods.

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 June 30, 2023 or December 31, 2022.

($ in millions) At June 30, 2023 At December 31, 2022

We had no contract assets at either September 30, 2023 or December 31, 2022.

($ in millions) At September 30, 2023 At December 31, 2022

Receivables from Contracts with Customers

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Deferred revenue 371 344

Revenue recognized during the second quarter and first half of 2023 that was included in our contract liabilities balance at December 31, 2022 was $ 74 million and $ 174 million, respectively.

Revenue recognized during the third quarter and first three quarters of 2023 that was included in our contract liabilities balance at December 31, 2022 was $ 67 million and $ 241 million, respectively.

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 June 30, 2023, approximately 91 % of this amount is expected to be recognized as revenue over the next two years .

At September 30, 2023, approximately 91 % of this amount is expected to be recognized as revenue over the next two years .

Accounts and Contracts Receivable

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

($ in millions) At June 30, 2023 At December 31, 2022

($ in millions) At September 30, 2023 At December 31, 2022

Receivables from contracts with customers, net $ 176 $ 194

3 unchanged sentences

Employee tax credit receivable 13 16

Our provision for income taxes is calculated using an estimated annual effective tax rate (“AETR”), based upon expected annual income less losses in certain jurisdictions, permanent items, statutory rates and planned tax strategies in the various jurisdictions in which we operate.

Our provision for income taxes is calculated using an estimated annual effective tax rate (“AETR”), based upon expected annual income less losses in certain jurisdictions, non-deductible expenses under federal and local tax laws, statutory rates and planned tax strategies in the various jurisdictions in which we operate.

Certain items that do not relate directly to ordinary income are excluded from the AETR and included in the period in which they occur.

Our effective tax rate was 35.4 % and 24.3 % for the three months ended June 30, 2023 and June 30, 2022, respectively, and 33.9 % and 28.1 % for the six months ended June 30, 2023 and June 30, 2022, respectively.

The increase in the effective tax rate for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 is predominately attributable to a decrease in Income before income taxes and noncontrolling interests, including foreign gains from the sale of a hotel in Puerto Vallarta, Mexico (see Footnote 3 “Acquisitions and Dispositions” for more information on this disposition) in the three months ending June 30, 2022 ( 725 basis points) and a net increase in discrete items of 385 basis points, including a decrease in favorable foreign return to provision income tax adjustments and a decrease in our share-based compensation benefit, partially offset by a net decrease in the reserve for foreign uncertain tax benefits.

The increase in the effective tax rate for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 is predominately attributable to a net increase in discrete items ( 485 basis points), including a net increase in the reserve for foreign uncertain tax benefits which we believe are fully indemnified.

Our effective tax rate was 36.1 % and 34.7 % for the three months ended September 30, 2023 and September 30, 2022, respectively, and 34.3 % and 30.6 % for the nine months ended September 30, 2023 and September 30, 2022, respectively.

The increase in the effective tax rate for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 is predominately attributable to a decrease in Income before income taxes and noncontrolling interests from 2022 to 2023 without a proportional decrease to non-deductible tax expenses, in addition to a net decrease in the tax expense for foreign uncertain tax benefits in 2023.

The increase in the effective tax rate for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 is attributable to a decrease in Income before income taxes and noncontrolling interests from 2022 to 2023 without a proportional decrease to non-deductible tax expenses, partially offset by a net increase in the tax expense for foreign uncertain tax benefits in 2023.

Unrecognized Tax Benefits

The following table summarizes the activity related to our unrecognized tax benefits (excluding interest and penalties) during the six months ended June 30, 2023.

The following table summarizes the activity related to our unrecognized tax benefits (excluding interest and penalties) during the nine months ended September 30, 2023.

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

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Balance at December 31, 2022 $ 25

Increases related to tax positions taken during a prior period 6

Decreases related to tax positions taken during a prior period ( 5 )

Balance at June 30, 2023

The total amount of gross interest and penalties accrued was $ 45 million at June 30, 2023 and $ 28 million at December 31, 2022, an increase of $ 17 million which is predominantly attributable to additional adjustments to the pre-acquisition reserves for uncertain tax positions.

Increases to tax positions related to a prior period 8

Decreases to tax positions related to a prior period ( 8 )

Balance at September 30, 2023

The total amount of gross interest and penalties accrued was $ 46 million at September 30, 2023 and $ 28 million at December 31, 2022, an increase of $ 18 million, which is predominantly attributable to additional interest and penalties related to the pre-acquisition reserves for uncertain tax positions.

We anticipate $ 35 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.

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

($ 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 Six Months Ended

($ in millions) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

($ in millions) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Interest income associated with vacation ownership notes receivable — securitized $ 70 $ 60 $ 205 $ 179

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Credit Quality Indicators - Vacation Ownership Notes Receivable

We use the origination of vacation ownership notes receivable and the FICO scores of the customer by brand as the primary credit quality indicators, as historical performance indicates that there is a relationship between the default behavior of borrowers by FICO and the brand associated with the vacation ownership interest (“VOI”) they have acquired.

We use the origination of vacation ownership notes receivable and the FICO scores of the customer by brand as the primary credit quality indicators, as historical performance indicates that there is a relationship between the default behavior of borrowers by FICO score and the brand associated with the vacation ownership interest (“VOI”) they have acquired.

The estimates of the variable consideration included in the transaction price for the sale of the related vacation ownership product for originated vacation ownership notes receivable and the reserve for credit losses on the acquired vacation ownership notes receivable are based on default rates that are an output of our static pool analyses and estimates regarding future defaults.

In the third quarter of 2023, we evaluated our vacation ownership notes receivable reserve in light of trends in delinquencies and default rates.

As a result, we increased our originated vacation ownership notes receivable reserve by $ 59 million.

We primarily used a historical period of increased defaults as a basis for estimating the increase in our reserve.

This additional reserve adjusts our future default rate estimate to reflect current macroeconomic conditions, including inflation outpacing wage growth, continuing high interest rates, mixed economic indicators and increased global insecurity.

In the third quarter of 2022, in connection with the combination of the reserves for Marriott-, Sheraton-, and Westin-brands, we recorded a reversal of credit loss expense for the acquired vacation ownership notes receivable of $ 19 million in Financing expense and an increase in the reserve for our originated vacation ownership notes receivable of $ 21 million, which was recorded as a reduction of sales of vacation ownership products revenues.

We use the term “Combined Marriott” to refer to our Marriott-, Sheraton-, and Westin-brands.

The weighted average FICO score within our consolidated vacation ownership notes receivable pool was 722 and 721 , at June 30, 2023 and December 31, 2022, respectively, based on the FICO score of the borrower at the time of origination.

The weighted average FICO score of the borrowers within our consolidated vacation ownership notes receivable pool was 722 and 721 , at September 30, 2023 and December 31, 2022, respectively, based on the FICO score of the borrower at the time of origination.

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 June 30, 2023.

The following table shows future contractual principal payments, net of reserves, and interest rates for our acquired vacation ownership notes receivable at September 30, 2023.

Acquired Vacation Ownership Notes Receivable

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Thereafter 7 43 50

Balance at June 30, 2023 $ 23 $ 181 $ 204

Balance at September 30, 2023 $ 20 $ 163 $ 183

Weighted average stated interest rate 14.0 % 14.2 % 14.2 %

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(Decrease) increase in vacation ownership notes receivable reserve ( 10 ) 7 ( 3 )

Balance at June 30, 2023 $ 8 $ 12 $ 20

Balance at September 30, 2023 $ 7 $ 11 $ 18

(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 repurchased securitized vacation ownership notes receivable.

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

Acquired Vacation Ownership Notes Receivable as of June 30, 2023

The following tables show the acquired vacation ownership notes receivable, before reserves, by brand and borrower FICO score.

Acquired Vacation Ownership Notes Receivable as of September 30, 2023

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

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$ 147 $ 100 $ 7 $ 17 $ 271

The following tables detail the origination year of our acquired vacation ownership notes receivable, before reserves, by brand and FICO score as of June 30, 2023, and gross write-offs by brand for the first half of 2023.

The following tables detail the origination year of our acquired vacation ownership notes receivable, before reserves, by brand and borrower FICO score as of September 30, 2023, and gross write-offs by brand for the first three quarters of 2023.

Acquired Vacation Ownership Notes Receivable - Combined Marriott

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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 June 30, 2023.

The following table shows future principal payments, net of reserves, and interest rates for our originated vacation ownership notes receivable at September 30, 2023.

Originated Vacation Ownership Notes Receivable

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Thereafter 229 1,082 1,311

Balance at June 30, 2023 $ 386 $ 1,682 $ 2,068

Balance at September 30, 2023 $ 386 $ 1,722 $ 2,108

Weighted average stated interest rate 12.1 % 13.2 % 13.0 %

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Defaulted vacation ownership notes receivable repurchase activity (1)

Balance at June 30, 2023 $ 150 $ 232 $ 382

Balance at September 30, 2023 $ 216 $ 241 $ 457

The following tables show originated vacation ownership notes receivable, before reserves, by brand and FICO score.

Originated Vacation Ownership Notes Receivable as of June 30, 2023

The following tables show originated vacation ownership notes receivable, before reserves, by brand and borrower FICO score.

Originated Vacation Ownership Notes Receivable as of September 30, 2023

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

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$ 1,367 $ 613 $ 58 $ 280 $ 2,318

The following tables detail the origination year of our originated vacation ownership notes receivable, before reserves, by brand and FICO score as of June 30, 2023, and gross write-offs by brand for the first half of 2023.

The following tables detail the origination year of our originated vacation ownership notes receivable, before reserves, by brand and FICO score as of September 30, 2023, and gross write-offs by brand for the first three quarters of 2023.

Originated Vacation Ownership Notes Receivable - Combined Marriott

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Vacation Ownership Notes Receivable on Non-Accrual Status

For both non-securitized and securitized vacation ownership notes receivable, we estimated the average remaining default rates of 11.30 % as of June 30, 2023 and 11.62 % as of December 31, 2022.

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 $ 13 million as of June 30, 2023 and $ 12 million as of December 31, 2022.

For both non-securitized and securitized vacation ownership notes receivable, we estimated the average remaining default rates of 13.35 % as of September 30, 2023 and 11.62 % as of December 31, 2022.

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 $ 13 million as of September 30, 2023 and $ 12 million as of December 31, 2022.

The following table shows our recorded investment in non-accrual vacation ownership notes receivable, which are vacation ownership notes receivable that are 90 days or more past due.

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($ in millions) Non-Securitized Securitized Total

Investment in vacation ownership notes receivable on non-accrual status at June 30, 2023

Investment in vacation ownership notes receivable on non-accrual status at September 30, 2023

$ 144 $ 25 $ 169

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$ 126 $ 24 $ 150

The following table shows the aging of the recorded investment in principal, before reserves, in vacation ownership notes receivable as of June 30, 2023 and December 31, 2022.

As of June 30, 2023 As of December 31, 2022

The following table shows the aging of the recorded investment in principal, before reserves, in vacation ownership notes receivable as of September 30, 2023 and December 31, 2022.

As of September 30, 2023 As of December 31, 2022

($ in millions) Non-Securitized Securitized Total Non-Securitized Securitized Total

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The table excludes Cash and cash equivalents, Restricted cash, Accounts and contracts receivable (excluding contracts receivable for financed VOI sales, net), deposits included in Other assets, Accounts payable, Advance deposits, Accrued liabilities, and derivative instruments, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.

At June 30, 2023 At December 31, 2022

At September 30, 2023 At December 31, 2022

($ in millions) Carrying

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Vacation Ownership Notes Receivable

At June 30, 2023 At December 31, 2022

At September 30, 2023 At December 31, 2022

($ in millions) Carrying

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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.

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.

The shares issuable upon 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.

If and when the price of our common stock exceeds the respective strike price of any of the warrants, we will include the dilutive effect of the additional shares that may be issued upon exercise of the warrants in total dilutive weighted average shares outstanding, which we calculate using the treasury stock method.

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

Three Months Ended Six Months Ended

(in millions, except per share amounts) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

(in millions, except per share amounts) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Net income attributable to common shareholders $ 42 $ 109 $ 219 $ 303

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

Three Months Ended Six Months Ended

(in millions, except per share amounts) June 30, 2023 (1)

June 30, 2022 (1)

June 30, 2023 (1)

June 30, 2022 (1)

Three Months Ended Nine Months Ended

(in millions, except per share amounts) September 30, 2023 (1)

September 30, 2022 (1)

September 30, 2023 (1)

September 30, 2022 (1)

Net income attributable to common shareholders $ 42 $ 109 $ 219 $ 303

11 unchanged sentences

Diluted earnings per share $ 1.09 $ 2.53 $ 5.33 $ 6.68

(1) The computations of diluted earnings per share attributable to common shareholders exclude approximately 213,000 and 293,000 shares of common stock, the maximum number of shares issuable as of June 30, 2023 and June 30, 2022, respectively, 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.

In accordance with the applicable accounting guidance for calculating earnings per share, for the second quarter and first half of 2023, we excluded from our calculation of diluted earnings per share 289,750 shares underlying stock appreciation rights (“SARs”) that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $ 143.38 to $ 173.88 , was greater than the average market price of our common stock for the applicable period.

For the second quarter of 2022, we excluded from our calculation of diluted earnings per share 252,314 shares underlying SARs that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $ 143.38 to $ 173.88 , was greater than the average market price of our common stock for the applicable period.

For the first half of 2022, we excluded from our calculation of diluted earnings per share 199,813 shares underlying SARs that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $ 159.27 to $ 173.88 , was greater than the average market price of our common stock for the applicable period.

(1) The computations of diluted earnings per share attributable to common shareholders exclude approximately 200,000 and 293,000 shares of common stock, the maximum number of shares issuable as of September 30, 2023 and September 30, 2022, respectively, 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.

In accordance with the applicable accounting guidance for calculating earnings per share, for the third quarter and first three quarters of 2023, we excluded from our calculation of diluted earnings per share 287,125 shares underlying stock appreciation rights (“SARs”) that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $ 143.38 to $ 173.88 , were greater than the average market price of our common stock for the applicable period.

For the third quarter of 2022, we excluded from our calculation of diluted earnings per share 252,314 shares underlying SARs that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $ 143.38 to $ 173.88 , were greater than the average market price of our common stock for the applicable period.

For the first three quarters of 2022, we excluded from our calculation of diluted earnings per share 199,813 shares underlying SARs that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $ 159.27 to $ 173.88 , were greater than the average market price of our common stock for the applicable period.

The following table shows the composition of our inventory balances:

($ in millions) At June 30, 2023 At December 31, 2022

($ in millions) At September 30, 2023 At December 31, 2022

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 $ 15 million during the first half of 2023 and $ 10 million during the first half of 2022.

In addition to the above, at June 30, 2023 and December 31, 2022, we had $ 377 million and $ 428 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.

Product cost true-up activity relating to vacation ownership products increased carrying values of inventory by $ 24 million during the first three quarters of 2023 and $ 15 million during the first three quarters of 2022.

In addition to the above, at September 30, 2023 and December 31, 2022, we had $ 369 million and $ 428 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.

CONTINGENCIES AND COMMITMENTS

Commitments and Letters of Credit

As of June 30, 2023, we had the following commitments outstanding:

As of September 30, 2023, 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 $ 85 million, of which we expect $ 39 million, $ 23 million, $ 16 million, and $ 7 million will be paid in the remainder of 2023, 2024, 2025, and 2026, respectively.

Our aggregate commitment under these contracts was $ 107 million, of which we expect $ 17 million, $ 42 million, $ 24 million, $ 14 million, $ 6 million and $ 4 million will be paid in the remainder of 2023, 2024, 2025, 2026, 2027, 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 15 “Variable Interest Entities” for additional information and our activities relating to the VIE involved in this transaction.

Surety bonds issued as of June 30, 2023 totaled $ 130 million, the majority of which were requested by federal, state, or local governments in connection with our operations.

As of June 30, 2023, we had $ 1 million of letters of credit outstanding under our Revolving Corporate Credit Facility (as defined in Footnote 12 “Debt”).

In addition, as of June 30, 2023, we had $ 1 million in letters of credit outstanding related to and in lieu of reserves required for several vacation ownership notes receivable securitization transactions outstanding.

Surety bonds issued as of September 30, 2023 totaled $ 121 million, the majority of which were requested by federal, state, or local governments in connection with our operations.

As of September 30, 2023, we had $ 1 million of letters of credit outstanding under our Revolving Corporate Credit Facility (as defined in Footnote 12 “Debt”).

In addition, as of September 30, 2023, we had $ 1 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.

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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 we either retain the balance of the rental revenue (if any) as our fee or we make up the deficit if the owners have not received their guaranteed amounts.

At June 30, 2023, our maximum exposure under fixed dollar guarantees was $ 6 million, of which $ 1 million, $ 2 million, $ 1 million, $ 1 million, and $ 1 million relate to the remainder of 2023, 2024, 2025, 2026, and 2027 and thereafter, respectively.

At September 30, 2023, our maximum exposure under fixed dollar guarantees was $ 5 million, of which $ 2 million, $ 1 million, $ 1 million, and $ 1 million relate to 2024, 2025, 2026, and 2027 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 our payment of maintenance fees for unsold inventory.

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or 2) written notification of termination by either party.

At June 30, 2023, our expected commitment for the remainder of 2023 is $ 6 million.

At September 30, 2023, our expected commitment for the remainder of 2023 is $ 3 million.

Loss Contingencies

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

In February 2022, the Court granted our motion to dismiss the complaint and dismissed with prejudice all claims except one (such claim, the “Remaining Claim”), with respect to which the plaintiff was granted leave to amend its complaint.

The plaintiff filed an amended complaint with respect to the Remaining Claim and appealed the dismissal of the other claims.

In June 2023, the appellate court upheld the dismissal of those claims.

Plaintiff filed a motion for reconsideration of that appellate ruling.

In November 2022, the Court granted our motion to dismiss the amended complaint and again granted plaintiff leave to amend its complaint.

The plaintiff filed an amended complaint and again appealed the dismissal.

Plaintiff filed a motion for reconsideration of that appellate ruling, and in October 2023, the appellate court denied that motion.

In November 2022, the Court granted our motion to dismiss the amended complaint with respect to the Remaining Claim and again granted plaintiff leave to amend its complaint.

The plaintiff filed an amended complaint with respect to the Remaining Claim and again appealed the dismissal of the other claims.

That appeal remains pending.

In September 2023, the Court granted our motion to dismiss the amended complaint with respect to the Remaining Claim and denied plaintiff permission to file any additional amended complaints.

We believe we have meritorious defenses to the claims in this matter and intend to vigorously defend against them.

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

($ in millions) At June 30, 2023 At December 31, 2022

($ in millions) At September 30, 2023 At December 31, 2022

Vacation ownership notes receivable securitizations, gross (1)

4 unchanged sentences

$ 2,026 $ 1,938

(1) Interest rates as of June 30, 2023 range from 1.5 % to 6.6 %, with a weighted average interest rate of 3.8 %.

(2) Effective interest rate as of June 30, 2023 was 6.5 %.

(1) Interest rates as of September 30, 2023 range from 1.5 % to 6.6 %, with a weighted average interest rate of 3.8 %.

(2) Effective interest rate as of September 30, 2023 was 6.8 %.

All of our securitized debt is non-recourse.

See Footnote 15 “Variable Interest Entities” for a discussion of the collateral for the non-recourse debt associated with our securitized debt.

The following table shows anticipated future principal payments for our securitized debt as of June 30, 2023.

The following table shows anticipated future principal payments for our securitized debt as of September 30, 2023.

Vacation Ownership

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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 second quarter of 2023, and as of June 30, 2023, we had 14 securitized vacation ownership notes receivable pools outstanding, none of which were out of compliance with their respective established parameters.

During the third quarter of 2023, and as of September 30, 2023, 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.

12 unchanged sentences

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

($ in millions) At June 30, 2023 At December 31, 2022

($ in millions) At September 30, 2023 At December 31, 2022

Corporate Credit Facility

19 unchanged sentences

$ 3,031 $ 3,088

(1) Effective interest rate as of June 30, 2023 was 6.9 %.

(1) Effective interest rate as of September 30, 2023 was 7.2 %.

(2) Excludes $ 5 million of unamortized debt issuance costs as of December 31, 2022.

As no cash borrowings were outstanding under the Revolving Corporate Credit Facility at that time, the unamortized debt issuance costs were included in Other assets.

The following table shows scheduled principal payments for our debt, based on contractual terms and maturity dates, excluding finance leases, as of June 30, 2023.

The following table shows scheduled principal payments for our debt, based on contractual terms and maturity dates, excluding finance leases, as of September 30, 2023.

Payments Year

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During the second quarter of 2023, we entered into an amendment to the Corporate Credit Facility (the “Amendment”), which modified the interest rate applicable to borrowings under the Term Loan.

Beginning July 31, 2023, the Term Loan will reference the Secured Overnight Financing Rate (“SOFR”) and will be based on “Adjusted Term SOFR,” which is calculated as Term SOFR (as defined in the Amendment), plus a 0.10 % adjustment for a one-month interest period, a 0.15 % adjustment for a three-month interest period, or a 0.25 % adjustment for a six-month interest period, subject to a 0.00 % floor.

Beginning July 31, 2023, the Term Loan references the Secured Overnight Financing Rate (“SOFR”) and is based on “Adjusted Term SOFR,” which is calculated as Term SOFR (as defined in the Amendment), plus a 0.10 % adjustment for a one-month interest period, a 0.15 % adjustment for a three-month interest period, or a 0.25 % adjustment for a six-month interest period, subject to a 0.00 % floor.

Prior to 2022, we entered into interest rate swaps and an interest rate collar under which we may pay a fixed rate and receive a floating interest rate to hedge a portion of our interest rate risk on the Term Loan.

During the second quarter of 2023, we amended these interest rate swaps and the collar to reference SOFR rather than LIBOR, effective July 31, 2023.

As a result of this transition, the fixed rate on the $ 250 million of interest rate swaps maturing in September 2023 was amended to 2.88 %, the fixed rate on the $ 200 million of interest rate swaps maturing in April 2024 was amended to 2.17 %, and the cap strike price on the $ 100 million interest rate collar was amended to 2.43 %.

Both the interest rate swaps and the interest rate collar have been designated and qualify as cash flow hedges of interest rate risk and are recorded in Other assets on our Balance Sheets as of June 30, 2023 and December 31, 2022.

As a result of this transition, the fixed rate on the $ 250 million of interest rate swaps that matured in September 2023 was amended to 2.88 %, the fixed rate on the $ 200 million of interest rate swaps maturing in April 2024 was amended to 2.17 %, and the cap strike price on the $ 100 million interest rate collar was amended to 2.43 %.

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

The following table reflects the activity in accumulated other comprehensive income or loss related to our derivative instruments during the first half of 2023 and 2022.

The following table reflects the activity in accumulated other comprehensive income or loss related to our derivative instruments during the first three quarters of 2023 and 2022.

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

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Derivative instrument adjustment balance, June 30 9 5

Other comprehensive (loss) gain before reclassifications ( 3 ) 8

Derivative instrument adjustment balance, September 30 $ 6 $ 13

Our senior notes include:

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During the first quarter of 2023, we redeemed, prior to maturity, the remaining $ 250 million of the 2025 Notes outstanding pursuant to a redemption notice issued in the fourth quarter of 2022 and the terms of the indenture governing the 2025 Notes.

In connection with this redemption, we incurred charges of $ 10 million, inclusive of a redemption premium and the write-off of unamortized debt issuance costs, which was recorded in Gains and other income, net on our Income Statement for the six months ended June 30, 2023.

In connection with this redemption, we incurred charges of $ 10 million, inclusive of a redemption premium and the write-off of unamortized debt issuance costs, which was recorded in Gains (losses) and other income (expense), net on our Income Statement for the nine months ended September 30, 2023.

Convertible Notes

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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 June 30, 2023 to 6.0609 shares of common stock per $1,000 principal amount of 2026 Convertible Notes (equivalent to a conversion price of $ 164.99 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.

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, 2023 to 6.1044 shares of common stock per $1,000 principal amount of 2026 Convertible Notes (equivalent to a conversion price of $ 163.82 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.

As of June 30, 2023, the effective interest rate was 0.55 %.

As of September 30, 2023, the effective interest rate was 0.55 %.

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

Three Months Ended Six Months Ended

($ in millions) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

($ in millions) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Amortization of debt issuance costs $ — $ 1 $ 2 $ 2

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convertible note hedge transactions with respect to our common stock (the “2026 Convertible Note Hedges”), covering a total of 3.5 million shares of our common stock, and warrant transactions (the “2026 Warrants”), whereby we sold to the counterparties to the 2026 Convertible Note Hedges warrants to acquire 3.5 million shares of our common stock.

As of June 30, 2023, the strike prices of the 2026 Convertible Note Hedges and the 2026 Warrants were subject to adjustment to approximately $ 164.99 and $ 206.24 , respectively, and no 2026 Convertible Note Hedges or 2026 Warrants have been exercised.

As of September 30, 2023, the strike prices of the 2026 Convertible Note Hedges and the 2026 Warrants were subject to adjustment to approximately $ 163.82 and $ 204.77 , respectively, and no 2026 Convertible Note Hedges or 2026 Warrants have been exercised.

2027 Convertible Notes

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The 2027 Convertible Notes mature on December 15, 2027, unless earlier repurchased or converted in accordance with their terms prior to that date.

The 2027 Convertible Notes are convertible at a rate of 5.2729 shares of common stock per $1,000 principal amount of 2027 Convertible Notes (equivalent to a conversion price of $ 189.65 per share of our common stock) as of June 30, 2023.

The conversion rate is subject to adjustment for certain events as described in the indenture governing the notes.

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 June 30, 2023, the effective interest rate was 3.88 %.

As of September 30, 2023, the effective interest rate was 3.88 %.

The following table shows interest expense information related to the 2027 Convertible Notes.

Three Months Ended Six Months Ended

($ in millions) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

($ in millions) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Contractual interest expense $ 5 $ — $ 14 $ —

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convertible note hedge transactions with respect to our common stock (the “2027 Convertible Note Hedges”), covering a total of 3.0 million shares of our common stock, and warrant transactions (the “2027 Warrants”), whereby we sold to the counterparties to the 2027 Convertible Note Hedges warrants to acquire 3.0 million shares of our common stock.

As of June 30, 2023, the strike prices of the 2027 Convertible Note Hedges and the 2027 Warrants were $ 189.65 and $ 286.26 , respectively, and no 2027 Convertible Note Hedges or 2027 Warrants have been exercised.

As of September 30, 2023, the strike prices of the 2027 Convertible Note Hedges and the 2027 Warrants were $ 189.65 and $ 286.26 , respectively, and no 2027 Convertible Note Hedges or 2027 Warrants have been exercised.

Security and Guarantees

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The lease includes a 26-year lease term, consisting of a 16-year initial term plus two five-year renewal options.

As of June 30, 2023, the present value of the future lease payments, net of lease incentives, was $ 80 million, with a corresponding lease liability of $ 99 million.

As of September 30, 2023, the present value of the future lease payments, net of lease incentives, was $ 78 million, with a corresponding lease liability of $ 99 million.

We record right-of-use assets for our finance leases in Property and equipment, net.

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

At June 30, 2023, there were 75,806,578 shares of Marriott Vacations Worldwide common stock issued, of which 36,469,493 shares were outstanding and 39,337,085 shares were held as treasury stock.

At September 30, 2023, there were 75,807,873 shares of Marriott Vacations Worldwide common stock issued, of which 35,685,051 shares were outstanding and 40,122,822 shares were held as treasury stock.

At December 31, 2022, there were 75,744,524 shares of Marriott Vacations Worldwide common stock issued, of which 37,481,082 shares were outstanding and 38,263,442 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 June 30, 2023 or December 31, 2022.

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, 2023 or December 31, 2022.

Share Repurchase Program

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During the first quarter of 2022, our Board of Directors authorized the purchase of up to an additional $ 300 million of our common stock under this program and extended the term of this program to March 31, 2023.

During the third quarter of 2022, our

Board of Directors authorized the purchase of up to an additional $ 500 million of our common stock under this program, and extended the term of this program to June 30, 2023.

During the second quarter of 2023, our Board of Directors increased the remaining authorization to $ 600 million, and extended the term of this program to December 31, 2024.

As of June 30, 2023, approximately $ 561 million remained available for share repurchases under the Share Repurchase Program.

During the third quarter of 2022, our Board of Directors authorized the purchase of up to an additional $ 500 million of our common stock under this program and extended the term of this program to June 30, 2023.

During the second quarter of 2023, our Board of Directors increased the remaining authorization to authorize purchases of up to $ 600 million and extended the term of this program

to December 31, 2024.

As of September 30, 2023, approximately $ 476 million remained available for share repurchases under the Share Repurchase Program.

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

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For purposes of calculating the excise tax, the fair value of certain share issuances may be netted against the fair market value of stock repurchases during the same taxable year.

In the first half of 2023, we reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased and recorded a corresponding liability for the excise taxes payable in Accrued liabilities on our Balance Sheet.

In the first three quarters of 2023, we reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased and recorded a corresponding liability for the excise taxes payable in Accrued liabilities on our Balance Sheet.

The following table summarizes share repurchase activity under our Share Repurchase Programs:

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As of December 31, 2022 22,773,218 $ 2,119 $ 93.06

For the first half of 2023 1,143,555 162 $ 141.84

As of June 30, 2023 23,916,773 $ 2,281 $ 95.40

We declared cash dividends to holders of common stock during the first half of 2023 as follows.

For the first three quarters of 2023 1,936,855 248 $ 128.03

As of September 30, 2023 24,710,073 $ 2,367 $ 95.80

We declared cash dividends to holders of common stock during the first three quarters of 2023 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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May 11, 2023 May 25, 2023 June 8, 2023 $ 0.72

September 7, 2023 September 21, 2023 October 5, 2023 $ 0.72

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 June 30, 2023, approximately 0.8 million shares were available for grants under the MVW Equity Plan.

As of September 30, 2023, approximately 0.8 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 Six Months Ended

($ in millions) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

($ in millions) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Service-based RSUs $ 7 $ 7 $ 22 $ 24

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

($ in millions) At June 30, 2023 At December 31, 2022

($ in millions) At September 30, 2023 At December 31, 2022

Service-based RSUs $ 30 $ 26

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Restricted Stock Units

We granted 194,628 service-based RSUs, which are subject to time-based vesting conditions, with a weighted average grant-date fair value of $ 144.52 , to our employees and non-employee directors during the first half of 2023.

During the first half of 2023, we also granted performance-based RSUs, which are subject to performance-based vesting conditions, to members of management.

A maximum of 114,602 RSUs may be earned under the performance-based RSU awards granted during the first half of 2023.

We granted 199,468 service-based RSUs, which are subject to time-based vesting conditions, with a weighted average grant-date fair value of $ 143.54 , to our employees and non-employee directors during the first three quarters of 2023.

During the first three quarters of 2023, we also granted performance-based RSUs, which are subject to performance-based vesting conditions, to members of management.

A maximum of 114,602 RSUs may be earned under the performance-based RSU awards granted during the first three quarters of 2023.

Stock Appreciation Rights

We granted 37,436 SARs, with a weighted average grant-date fair value of $ 58.50 and a weighted average exercise price of $ 153.10 , to members of management during the first half of 2023.

We granted 37,436 SARs, with a weighted average grant-date fair value of $ 58.50 and a weighted average exercise price of $ 153.10 , to members of management during the first three quarters of 2023.

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 half of 2023:

The following table outlines the assumptions used to estimate the fair value of grants during the first three quarters of 2023:

Expected volatility 40.47 %

12 unchanged sentences

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 June 30, 2023:

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, 2023:

($ in millions) Vacation Ownership

11 unchanged sentences

Total $ 1,705 $ 346 $ 2,051

The following table shows the interest income and expense recognized as a result of our involvement with these VIEs during the second quarter of 2023:

The following table shows the interest income and expense recognized as a result of our involvement with these VIEs during the third quarter of 2023:

($ in millions) Vacation Ownership

3 unchanged sentences

Interest income $ 59 $ 11 $ 70

Interest expense to investors $ 18 $ 2 $ 20

Interest expense $ 17 $ 4 $ 21

Debt issuance cost amortization $ 2 $ — $ 2

The following table shows the interest income and expense recognized as a result of our involvement with these VIEs during the first half of 2023:

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 2023:

($ in millions) Vacation Ownership

3 unchanged sentences

Interest income $ 180 $ 25 $ 205

Interest expense to investors $ 32 $ 5 $ 37

Interest expense $ 48 $ 11 $ 59

Debt issuance cost amortization $ 7 $ 1 $ 8

1 unchanged sentence

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

Six Months Ended

($ in millions) June 30, 2023 June 30, 2022

Nine Months Ended

($ in millions) September 30, 2023 September 30, 2022

Net proceeds from vacation ownership notes receivable securitizations $ 396 $ 371

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Cash Outflows

Principal to investors ( 259 ) ( 299 )

Principal payments ( 389 ) ( 446 )

Voluntary repurchases of defaulted vacation ownership notes receivable ( 88 ) ( 69 )

Voluntary clean-up call ( 19 ) ( 39 )

Interest to investors ( 34 ) ( 21 )

Interest payments ( 51 ) ( 34 )

Funding of restricted cash ( 17 ) ( 95 )

4 unchanged sentences

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

Six Months Ended

($ in millions) June 30, 2023 June 30, 2022

Nine Months Ended

($ in millions) September 30, 2023 September 30, 2022

Proceeds from vacation ownership notes receivable securitizations $ 515 $ 234

4 unchanged sentences

Cash Outflows

Principal to investors ( 19 ) ( 3 )

Principal payments ( 34 ) ( 3 )

Voluntary repurchases of defaulted vacation ownership notes receivable ( 2 ) —

Repayment of Warehouse Credit Facility ( 296 ) ( 98 )

Interest to investors ( 5 ) ( 1 )

Interest payments ( 9 ) ( 2 )

Funding of restricted cash ( 18 ) ( 2 )

7 unchanged sentences

Accordingly, we have not consolidated the VIE.

We expect to acquire the property over time and as of June 30, 2023, we expect to make payments for the property as follows:

We expect to acquire the property over time and as of September 30, 2023, we expect to make payments for the property as follows:

$ 112 million in 2024, $ 81 million in 2025 and $ 41 million in 2026.

As of June 30, 2023, our Balance Sheet reflected $ 1 million in Accounts Receivable, including a note receivable of approximately $ 1 million, $ 1 million in Property and Equipment, and $ 1 million in Accrued Liabilities.

We believe that our maximum exposure to loss as a result of our involvement with this VIE is approximately $ 1 million as of June 30, 2023.

As of September 30, 2023, our Balance Sheet reflected $ 1 million in Accounts Receivable, including a note receivable of approximately $ 1 million, $ 3 million in Property and Equipment, and $ 1 million in Accrued Liabilities.

We believe that our maximum exposure to loss as a result of our involvement with this VIE is approximately $ 3 million as of September 30, 2023.

Deferred Compensation Plan

2 unchanged sentences

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 June 30, 2023, the value of the assets held in the rabbi trust was $ 87 million, which is included in the Other line within assets on our Balance Sheets.

At September 30, 2023, the value of the assets held in the rabbi trust was $ 88 million, which is included in the Other line within assets on our Balance Sheets.

BUSINESS SEGMENTS

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• 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 of 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 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.

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 Vacation Club brands, as well as under Marriott Vacation Club Pulse, an extension of 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 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.

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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 Six Months Ended

($ in millions) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

($ in millions) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Vacation Ownership $ 1,126 $ 1,182 $ 3,335 $ 3,229

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Adjusted EBITDA and Reconciliation to Net Income Attributable to Common Shareholders

Three Months Ended Six Months Ended

($ in millions) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

($ in millions) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Adjusted EBITDA Vacation Ownership $ 173 $ 299 $ 647 $ 772

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Net income attributable to common shareholders $ 42 $ 109 $ 219 $ 303

($ in millions) At June 30, 2023 At December 31, 2022

($ in millions) At September 30, 2023 At December 31, 2022

Vacation Ownership $ 8,057 $ 8,037

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Revenues Excluding Cost Reimbursements

Three Months Ended Six Months Ended

($ in millions) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

($ in millions) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

United States $ 622 $ 771 $ 2,038 $ 2,173

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

What changed 10-Q

Item 1. Financial Statements