What changed in this filing

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Item 1. Financial Statements

2024-05-07 compared with 2023-11-03 · 245 added, 440 removed, 655 unchanged (51% of the section changed)

3 unchanged sentences

(In millions, except per share amounts)

Three Months Ended Nine Months Ended

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

Three Months Ended

March 31, 2024 March 31, 2023

Sale of vacation ownership products $ 352 $ 375

12 unchanged sentences

Litigation charges 3 3

Restructuring 2 —

Royalty fee 28 29

2 unchanged sentences

TOTAL EXPENSES 1,058 1,015

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

Gains and other income, net — 21

Interest expense, net ( 40 ) ( 34 )

4 unchanged sentences

NET INCOME 46 87

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

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

EARNINGS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS

Net loss attributable to noncontrolling interests 1 —

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 47 $ 87

EARNINGS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS

Basic $ 1.32 $ 2.32

5 unchanged sentences

(In millions)

Three Months Ended Nine Months Ended

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

Three Months Ended

March 31, 2024 March 31, 2023

NET INCOME $ 46 $ 87

Foreign currency translation adjustments 1 6

Reclassification of foreign currency translation adjustments realized upon disposition of entities — — — ( 10 )

Derivative instrument adjustment, net of tax ( 2 ) ( 3 )

OTHER COMPREHENSIVE (LOSS) GAIN, NET OF TAX ( 1 ) 3

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

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

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

Net loss attributable to noncontrolling interests 1 —

COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS 1 —

COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 46 $ 90

See Interim Condensed Notes to Consolidated Financial Statements

2 unchanged sentences

(In millions, except share and per share data)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Cash and cash equivalents $ 237 $ 248

33 unchanged sentences

Retained earnings 763 742

TOTAL MVW SHAREHOLDERS' EQUITY 2,408 2,496

TOTAL MVW STOCKHOLDERS' EQUITY 2,379 2,382

Noncontrolling interests ( 1 ) —

6 unchanged sentences

(In millions)

Nine Months Ended

September 30, 2023 September 30, 2022

Three Months Ended

March 31, 2024 March 31, 2023

OPERATING ACTIVITIES

6 unchanged sentences

Impairment charges — 3

Gains and other income, net ( 8 ) ( 48 )

Deferred income taxes 35 6

10 unchanged sentences

Other liabilities ( 19 ) 16

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

Purchase of property for future transfer to inventory — ( 8 )

Other, net 1 ( 5 )

Net cash, cash equivalents and restricted cash provided by operating activities 149 380

Net cash, cash equivalents and restricted cash provided by (used in) operating activities 3 ( 50 )

INVESTING ACTIVITIES

Proceeds from disposition of subsidiaries, net of cash and restricted cash transferred — 94

Capital expenditures for property and equipment (excluding inventory) ( 16 ) ( 37 )

Issuance of note receivable to VIE — ( 47 )

Proceeds from collection of note receivable from VIE — 47

Purchase of company owned life insurance ( 4 ) —

Other dispositions, net 15 5

Net cash, cash equivalents and restricted cash (used in) provided by investing activities ( 85 ) 49

Purchase and development of property for future sale ( 49 ) —

Net cash, cash equivalents and restricted cash used in investing activities ( 69 ) ( 37 )

See Interim Condensed Notes to Consolidated Financial Statements

2 unchanged sentences

(In millions)

Nine Months Ended

September 30, 2023 September 30, 2022

Three Months Ended

March 31, 2024 March 31, 2023

FINANCING ACTIVITIES

9 unchanged sentences

Payment of withholding taxes on vesting of restricted stock units ( 5 ) ( 9 )

Net cash, cash equivalents and restricted cash used in financing activities ( 414 ) ( 685 )

Net cash, cash equivalents and restricted cash provided by (used in) financing activities 43 ( 194 )

Effect of changes in exchange rates on cash, cash equivalents and restricted cash ( 1 ) 1

3 unchanged sentences

SUPPLEMENTAL DISCLOSURES

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

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

1 unchanged sentence

Non-cash transfer from property and equipment to inventory 23 43

Non-cash transfer from other assets to property and equipment — 15

Non-cash transfer from property and equipment to other assets — 2

Right-of-use asset obtained in exchange for finance lease obligation 11 80

Non-cash issuance of debt in connection with finance lease 11 97

Dividends payable 26 24

Interest paid, net of amounts capitalized $ 52 $ 44

2 unchanged sentences

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions)

2 unchanged sentences

Stock Additional

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

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

75.8 BALANCE AT DECEMBER 31, 2023 $ 1 $ ( 2,332 ) $ 3,955 $ 16 $ 742 $ 2,382 $ — $ 2,382

— Net income — — — — 87 87 — 87

— Net income (loss) — — — — 47 47 ( 1 ) 46

— Foreign currency translation adjustments — — — 1 — 1 — 1

4 unchanged sentences

75.8 BALANCE AT MARCH 31, 2024 $ 1 $ ( 2,351 ) $ 3,951 $ 15 $ 763 $ 2,379 $ ( 1 ) $ 2,378

— Net income — — — — 90 90 — 90

— Foreign currency translation adjustments — — — 6 — 6 — 6

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

— Share-based compensation plans — 1 10 — — 11 — 11

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

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

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

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (CONTINUED)

(In millions)

Issued Common

1 unchanged sentence

Stock Additional

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

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

75.7 BALANCE AT DECEMBER 31, 2022 $ 1 $ ( 2,054 ) $ 3,941 $ 15 $ 593 $ 2,496 $ 2 $ 2,498

— 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 — — — — 87 87 — 87

5 unchanged sentences

75.8 BALANCE AT MARCH 31, 2023 $ 1 $ ( 2,132 ) $ 3,937 $ 18 $ 654 $ 2,478 $ 2 $ 2,480

— Net income — — — — 136 136 ( 1 ) 135

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

— Reclassification of foreign currency translation adjustments realized upon disposition of entities — — — ( 10 ) — ( 10 ) — ( 10 )

— Derivative instrument adjustment — — — 7 — 7 — 7

— Adjustment for 2022 Convertible Note Hedges — — 6 — — 6 — 6

— Share-based compensation plans — 1 12 — — 13 — 13

— Repurchase of common stock — ( 193 ) — — — ( 193 ) — ( 193 )

— Deconsolidation of certain Consolidated Property Owners' Associations — — — — — — ( 8 ) ( 8 )

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

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

6 unchanged sentences

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 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.

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 in accordance with consolidation accounting guidance.

References in these Financial Statements to net income attributable to common stockholders and MVW stockholders’ 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.

2 unchanged sentences

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 COVID-19 pandemic, have made it more challenging to make these estimates.

The uncertainties in the broader macroeconomic environment, including inflation outpacing wage growth, continuing high interest rates, mixed economic indicators and increased global insecurity, 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 COVID-19 pandemic.

Interim results may not be indicative of fiscal year performance because of, among other reasons, general macroeconomic conditions, including inflationary pressures and seasonal and short-term variations.

These Financial Statements have not been audited.

1 unchanged sentence

Although we believe our footnote disclosures are adequate to make the information presented not misleading, the Financial Statements in this report should be read in conjunction with the consolidated financial statements and notes thereto in our 2023 Annual Report.

We refer to the business and brands that we acquired in the acquisition of Welk Hospitality Group, Inc.

(“Welk”) in 2021 (the “Welk Acquisition”) as “Legacy-Welk.” We refer to the business and brands that we acquired in the acquisition of ILG, LLC, formerly known as ILG, Inc.

(“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.

We refer to the business and brands that we acquired in the acquisition of ILG, LLC, formerly known as ILG, Inc.

(“ILG”), in 2018 (the “ILG Acquisition”) as “Legacy-ILG.” We refer to the business we conducted prior to the ILG Acquisition and the associated brands as “Legacy-MVW.” We refer to the business and brand that we acquired in the acquisition of Welk Hospitality Group, Inc.

(“Welk”) in 2021 (the “Welk Acquisition”) as “Legacy-Welk.” During 2023, we rebranded all Legacy-Welk resorts as Hyatt Vacation Club resorts.

Additionally, we use the term “Marriott Vacation Ownership” to refer to our Marriott-, Sheraton-, and Westin-brands and the term “Hyatt Vacation Ownership” to refer to our Hyatt-brands.

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

SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING STANDARDS

New Accounting Standards

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

In the first quarter of 2023, we adopted accounting standards update (“ASU”) 2022-02, which eliminated the recognition and measurement guidance applicable to troubled debt restructurings for creditors and enhanced 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.

The adoption of ASU 2022-02 on January 1, 2023, on a prospective basis, did not have a material impact on our financial statements or disclosures other than the incremental disclosures relating to gross write-offs for vacation ownership notes receivable.

See Footnote 6 “Vacation Ownership Notes Receivable” for the incremental disclosures required by the adoption of ASU 2022-02.

Accounting Standards Update 2020-04 – “ Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting ” (“ASU 2020-04”) and Accounting Standards Update 2022-06 – “ Reference Rate Reform (Topic 848), Deferral of the Sunset Date of Topic 848 ” (“ASU 2022-06”)

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 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.

During the second quarter of 2023, we amended our Term Loan (as defined in Footnote 12 “Debt”) and our interest rate swaps and collar to reference SOFR (as defined in Footnote 12 “Debt”) rather than LIBOR.

See Footnote 12 “Debt” for more information.

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

Future Adoption of Accounting Standards

Accounting Standards Update 2023-07 – “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” (“ASU 2023-07”)

In November 2023, the FASB issued ASU 2023-07, which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance.

This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

This update will be applied retrospectively for all prior periods presented in the financial statements.

We will begin providing the enhanced disclosures required by this standard with our Annual Report on Form 10-K for the year ending December 31, 2024.

Accounting Standards Update 2023-09 – “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” (“ASU 2023-09”)

In December 2023, the FASB issued ASU 2023-09, which is intended to enhance the transparency and decision usefulness of income tax disclosures.

ASU 2023-09 primarily enhances and expands both the annual income tax rate reconciliation disclosure and the annual income taxes paid disclosure.

This update is effective for fiscal years beginning after December 15, 2024 and may be adopted on a prospective or retrospective basis, with early adoption permitted.

We will begin providing the enhanced disclosures required by this standard with our Annual Report on Form 10-K for the year ending December 31, 2025.

Savannah, Georgia

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

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

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

4 unchanged sentences

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

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 and the purchase price was allocated to Property and equipment, net.

As consideration for the acquisition, we paid $ 12 million in cash and issued a non-interest bearing note payable for $ 11 million, of which $ 6 million was repaid in the first quarter of 2023.

Further, during the first quarter of 2022, we reclassified $ 13 million of previous deposits associated with the project from Other assets to Property and equipment, net.

As part of the ILG Acquisition, we acquired the Vacation Resorts International (“VRI”) and Trading Places International (“TPI”) businesses (together, the “VRI Americas” business), which was part of our Exchange & Third-Party Management segment prior to our disposal of VRI Americas during the second quarter of 2022, as discussed below.

During the second quarter of 2022, we disposed of VRI Americas for proceeds of $ 56 million, net of cash and restricted cash transferred to the buyer of $ 12 million, after determining that this business was not a core component of our future growth strategy and operating model.

The results of VRI Americas are included in our Exchange and Third-Party Management segment through the date of the sale.

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 $ 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 (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 September 30, 2023

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

Sale of vacation ownership products $ 319 $ — $ — $ 319

Ancillary revenues 62 1 — 63

Management fee revenues 44 5 — 49

Exchange and other services revenues 37 44 12 93

Management and exchange 143 50 12 205

Rental 128 10 — 138

Cost reimbursements 455 4 ( 16 ) 443

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

Financing 81 — — 81

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

Three Months Ended September 30, 2022

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

Sale of vacation ownership products $ 444 $ — $ — $ 444

Ancillary revenues 63 1 — 64

Management fee revenues 41 7 ( 1 ) 47

Exchange and other services revenues 32 47 8 87

Management and exchange 136 55 7 198

Rental 154 11 — 165

Cost reimbursements 374 5 ( 8 ) 371

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

Financing 74 — — 74

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

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

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

9 unchanged sentences

Total Revenues $ 1,130 $ 65 $ — $ 1,195

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

($ 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, 2023

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

Services transferred over time $ 658 $ 27 $ ( 4 ) $ 681

Goods or services transferred at a point in time 387 37 — 424

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

Three Months Ended September 30, 2022

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

Services transferred over time $ 597 $ 31 $ ( 1 ) $ 627

Goods or services transferred at a point in time 511 40 — 551

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

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

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

2 unchanged sentences

Revenue from contracts with customers $ 1,047 $ 65 $ — $ 1,112

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

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

3 unchanged sentences

Sale of Vacation Ownership Products

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.

Revenues were reduced during the first quarter of 2024 by $ 4 million 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 September 30, 2023 or December 31, 2022.

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

We had no contract assets at either March 31, 2024 or December 31, 2023.

($ in millions) At March 31, 2024 At December 31, 2023

Receivables from Contracts with Customers

5 unchanged sentences

Deferred revenue 482 382

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.

Revenue recognized during the first quarter of 2024 that was included in our contract liabilities balance at December 31, 2023 was $ 121 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, 2023, approximately 91 % of this amount is expected to be recognized as revenue over the next two years .

At March 31, 2024, approximately 93 % of this amount is expected to be recognized as revenue over the next two years .

Accounts and Contracts Receivable

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

Accounts and contracts receivable is composed of amounts due from customers, primarily owners’ associations, resort developers, owners 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 and contracts receivable balances:

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

($ in millions) At March 31, 2024 At December 31, 2023

Receivables from contracts with customers, net $ 272 $ 259

5 unchanged sentences

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 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.

Our effective tax rate was 43.0 % and 32.3 % for the three months ended March 31, 2024 and March 31, 2023, respectively.

The effective tax rate for the three months ended March 31, 2024 differed from the blended statutory tax rate for the same period due to income tax adjustments for discrete items, including $ 11 million primarily related to a $ 20 million increase to remove the permanent reinvestment assertion for certain non-U.S.

entities offset by a $ 9 million decrease for the expiration of statutes of limitation on certain unrecognized tax benefits.

The effective tax rate for the three months ended March 31, 2023 differed from the blended statutory tax rate for the same period due to income tax adjustments for discrete items, including $ 9 million primarily related to an increase in uncertain tax benefits of $ 20 million for new unrecognized tax benefits in a foreign jurisdiction, offset by decreases in stock compensation of $ 7 million and $ 4 million related to prior year true-up adjustments.

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, 2023.

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

The following table summarizes the activity related to our unrecognized tax benefits (excluding interest and penalties) during the three months ended March 31, 2024.

($ in millions) Unrecognized Tax Benefits

2 unchanged sentences

Decreases to tax positions related to a prior period ( 7 )

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.

Decreases as a result of a lapse of the applicable statute of limitation ( 6 )

Balance at March 31, 2024

The total amount of gross interest and penalties accrued related to unrecognized tax benefits was $ 41 million at March 31, 2024 and $ 48 million at December 31, 2023, a decrease of $ 7 million, which is predominantly attributable to the expiration of statutes of limitation, partially offset by additional interest and penalties related to non-U.S.

uncertain tax positions.

At March 31, 2024, unrecognized tax benefits (including interest and penalties) of $ 26 million, net of indemnification, would impact the effective tax rate if recognized.

We anticipate $ 38 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.

5 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

($ in millions) Originated Acquired Total Originated Acquired Total

Securitized $ 1,785 $ 129 $ 1,914 $ 1,764 $ 148 $ 1,912

Non-securitized

Eligible for securitization (1)

2 unchanged sentences

351 18 369 363 16 379

Subtotal 386 20 406 385 21 406

Non-securitized 402 20 422 414 17 431

$ 2,187 $ 149 $ 2,336 $ 2,178 $ 165 $ 2,343

(1) Refer to Footnote 7 “Financial Instruments” for discussion of eligibility of our vacation ownership notes receivable for securitization.

We reflect interest income associated with vacation ownership notes receivable in our Income Statements in the Financing revenues caption.

We reflect interest income associated with vacation ownership notes receivable on our Income Statements in the Financing revenues caption.

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

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

Interest income associated with vacation ownership notes receivable — non-securitized 9 11 26 30

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

Interest income associated with securitized vacation ownership notes receivable

Interest income associated with non-securitized vacation ownership notes receivable

Total interest income associated with vacation ownership notes receivable $ 81 $ 76

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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 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.

The estimates of the variable consideration 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.

The weighted average FICO score within our consolidated vacation ownership notes receivable pool was 724 and 723 , at March 31, 2024 and December 31, 2023, respectively, based upon 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 September 30, 2023.

The following table shows future contractual principal payments, net of a $ 14 million reserve, and interest rates for our acquired vacation ownership notes receivable at March 31, 2024.

Acquired Vacation Ownership Notes Receivable

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Thereafter 5 25 30

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

Balance at March 31, 2024 $ 20 $ 129 $ 149

Weighted average stated interest rate 13.8 % 14.2 % 14.1 %

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0.0 % to 21.9 %

The following table summarizes activity related to our acquired vacation ownership notes receivable reserve.

Acquired Vacation Ownership Notes Receivable Reserve

($ in millions) Non-Securitized Securitized Total

Balance at December 31, 2022 $ 11 $ 18 $ 29

Securitizations ( 2 ) 2 —

Clean-up call 2 ( 2 ) —

Write-offs ( 21 ) — ( 21 )

Recoveries 13 — 13

Defaulted vacation ownership notes receivable repurchase activity (1)

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

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 borrower FICO score.

Acquired Vacation Ownership Notes Receivable as of September 30, 2023

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

Acquired Vacation Ownership Notes Receivable as of March 31, 2024

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

Combined Marriott $ 51 $ 35 $ 4 $ 11 $ 101

Hyatt and Welk 59 39 1 1 100

Marriott Vacation Ownership $ 42 $ 28 $ 4 $ 8 $ 82

Hyatt Vacation Ownership 48 31 1 1 81

$ 90 $ 59 $ 5 $ 9 $ 163

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

Combined Marriott $ 67 $ 47 $ 6 $ 16 $ 136

Hyatt and Welk 80 53 1 1 135

$ 147 $ 100 $ 7 $ 17 $ 271

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

($ in millions) 2021 2020 2019 & Prior Total

700 + $ — $ — $ 51 $ 51

600 - 699 — — 35 35

< 600 — — 4 4

No Score — — 11 11

$ — $ — $ 101 $ 101

Gross write-offs $ — $ — $ 11 $ 11

Acquired Vacation Ownership Notes Receivable - Hyatt and Welk

($ in millions) 2021 2020 2019 & Prior Total

700 + $ 4 $ 13 $ 42 $ 59

600 - 699 2 7 30 39

< 600 — — 1 1

No Score — — 1 1

Marriott Vacation Ownership $ 46 $ 32 $ 4 $ 9 $ 91

Hyatt Vacation Ownership 53 34 1 1 89

$ 99 $ 66 $ 5 $ 10 $ 180

Gross write-offs $ 1 $ 2 $ 7 $ 10

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, 2023.

The following table shows future principal payments, net of reserves, and interest rates for our originated vacation ownership notes receivable at March 31, 2024.

Originated Vacation Ownership Notes Receivable

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Thereafter 187 1,049 1,236

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

Balance at March 31, 2024 $ 402 $ 1,785 $ 2,187

Weighted average stated interest rate 11.9 % 13.3 % 13.0 %

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0.0 % to 20.9 %

For originated vacation ownership notes receivable, we record the difference between the vacation ownership note receivable and the variable consideration included in the transaction price for the sale of the related vacation ownership product as a reserve on our vacation ownership notes receivable.

The following table summarizes the activity related to our originated vacation ownership notes receivable reserve.

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Balance at December 31, 2023 $ 195 $ 260 $ 455

Increase in vacation ownership notes receivable reserve 162 21 183

Increase (decrease) in vacation ownership notes receivable reserve

Securitizations ( 63 ) 63 —

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Defaulted vacation ownership notes receivable repurchase activity (1)

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

Balance at March 31, 2024 $ 201 $ 251 $ 452

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

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

Originated Vacation Ownership Notes Receivable as of March 31, 2024

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

Combined Marriott $ 1,341 $ 602 $ 57 $ 307 $ 2,307

Hyatt and Welk 180 72 2 4 258

Marriott Vacation Ownership $ 1,381 $ 608 $ 57 $ 327 $ 2,373

Hyatt Vacation Ownership 191 70 2 3 266

$ 1,572 $ 678 $ 59 $ 330 $ 2,639

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

Combined Marriott $ 1,210 $ 549 $ 55 $ 278 2,092

Hyatt and Welk 157 64 3 2 226

Marriott Vacation Ownership $ 1,381 $ 609 $ 57 $ 323 2,370

Hyatt Vacation Ownership 188 70 2 3 263

$ 1,569 $ 679 $ 59 $ 326 $ 2,633

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

The following tables detail the origination year of our originated vacation ownership notes receivable, before reserves, by brand and borrower FICO score at origination as of March 31, 2024, and gross write-offs by brand for the first quarter of 2024.

Originated Vacation Ownership Notes Receivable - Marriott Vacation Ownership

($ in millions) 2024 2023 2022 2021 2020 & Prior Total

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Gross write-offs $ — $ 7 $ 12 $ 8 $ 12 $ 39

Originated Vacation Ownership Notes Receivable - Hyatt and Welk

Originated Vacation Ownership Notes Receivable - Hyatt Vacation Ownership

($ in millions) 2024 2023 2022 2021 2020 & Prior Total

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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 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.

For both non-securitized and securitized vacation ownership notes receivable, we estimated the average remaining default rates of 12.62 % as of March 31, 2024 and 13.00 % as of December 31, 2023.

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 both March 31, 2024 and December 31, 2023.

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 September 30, 2023

Investment in vacation ownership notes receivable on non-accrual status at March 31, 2024

$ 153 $ 27 $ 180

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$ 141 $ 27 $ 168

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

The following table shows the aging of the recorded investment in principal, before reserves, in vacation ownership notes receivable as of March 31, 2024 and December 31, 2023.

As of March 31, 2024 As of December 31, 2023

($ 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 September 30, 2023 At December 31, 2022

At March 31, 2024 At December 31, 2023

($ in millions) Carrying

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2029 Notes, net ( 495 ) ( 457 ) ( 495 ) ( 445 )

2029 Notes, net ( 495 ) ( 419 ) ( 494 ) ( 417 )

2026 Convertible Notes, net ( 569 ) ( 543 ) ( 568 ) ( 508 )

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Vacation Ownership Notes Receivable

At September 30, 2023 At December 31, 2022

At March 31, 2024 At December 31, 2023

($ in millions) Carrying

Value Carrying

Vacation ownership notes receivable, net

Securitized $ 1,914 $ 1,995 $ 1,912 $ 1,994

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

Due to factors that impact the general marketability of our vacation ownership notes receivable that have not been securitized, as well as current market conditions, we bifurcate our non-securitized vacation ownership notes receivable at each balance sheet date into those eligible and not eligible for securitization using criteria applicable to current securitization transactions in the ABS market.

Generally, vacation ownership notes receivable are considered not eligible for securitization if any of the following attributes are present:

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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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At the time at which we recognize revenue for Marriott-branded VOI sales, we temporarily record a contract receivable for financed VOI sales, until the time at which we originate a vacation ownership note receivable, which occurs at closing.

We believe that the carrying value of the contracts receivable for financed VOI sales approximates fair value because the stated, or otherwise imputed, interest rates of these receivables are generally consistent with current market rates and the reserve for these contracts receivable for financed VOI sales appropriately accounts for risks in default rates, prepayment rates, and discount rates.

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

Other assets include $ 88 million of company owned insurance policies (the “COLI policies”), acquired on the lives of certain participants in the Marriott Vacations Worldwide Deferred Compensation Plan, that are held in a rabbi trust.

Other assets include $ 110 million and $ 99 million of company owned insurance policies (the “COLI policies”) acquired on the lives of certain participants in the Marriott Vacations Worldwide Deferred Compensation Plan (the “Deferred Compensation Plan”) at March 31, 2024 and December 31, 2023, respectively, that are held in a rabbi trust.

The carrying value of the COLI policies is equal to their cash surrender value (Level 2 inputs).

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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, 2028 Notes, and 2029 Notes (each as defined in Footnote 12 “Debt”) using quoted market prices as of the last trading day for the quarter;

We estimate the fair value of our 2028 Notes and 2029 Notes (each as defined in Footnote 12 “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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We concluded that this fair value measurement should be categorized within Level 2.

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.

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

EARNINGS PER SHARE

Basic earnings or loss per common share attributable to common shareholders is calculated by dividing net income or loss attributable to common shareholders by the weighted average number of shares of common stock outstanding during the reporting period.

Treasury stock is excluded from the weighted average number of shares of common stock outstanding.

Diluted earnings or loss per common share attributable to common shareholders is calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period, except in periods when there is a loss because the inclusion of the potential common shares would have an anti-dilutive effect.

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 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.

The convertible note hedges purchased in connection with each issuance of our convertible notes are considered to be anti-dilutive and do not impact our calculation of diluted earnings per share attributable to common shareholders for any periods presented herein.

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 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

Basic earnings per common share attributable to common stockholders is calculated by dividing net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the reporting period.

Diluted earnings per common share attributable to common stockholders reflects the assumed conversion of all dilutive securities, calculated using the treasury stock method.

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

Three Months Ended

(in millions, except per share amounts) March 31, 2024 March 31, 2023

Net income attributable to common stockholders

Shares for basic earnings per share 35.5 37.4

Basic earnings per share $ 1.32 $ 2.32

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 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

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

Three Months Ended

(in millions, except per share amounts) March 31, 2024 March 31, 2023

Net income attributable to common stockholders

Add back of interest expense related to convertible notes, net of tax 5 4

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2027 Convertible Notes ($ 575 million of principal)

3.5 3.4 3.5 3.4

2027 Convertible Notes ($ 575 million of principal)

Shares for diluted earnings per share 42.2 44.4

Diluted earnings per share $ 1.22 $ 2.06

(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 computations of diluted earnings per share attributable to common stockholders in the table above exclude approximately 396,000 and 239,000 shares of common stock, the maximum number of shares issuable as of March 31, 2024 and March 31, 2023, 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 first quarter of 2024, we excluded from our calculation of diluted earnings per share 645,524 shares underlying stock appreciation rights (“SARs”) that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $ 93.73 to $ 173.88 , were greater than the average market price of our common stock for the applicable period.

For the first quarter of 2023, we excluded from our calculation of diluted earnings per share 237,249 shares underlying SARs that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $ 153.10 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 September 30, 2023 At December 31, 2022

($ in millions) At March 31, 2024 At December 31, 2023

Finished goods (1)

Work-in-progress 2 —

Real estate inventory

(1) Represents completed inventory that is registered for sale as VOIs and vacation ownership inventory expected to be reacquired pursuant to estimated future defaults on originated vacation ownership notes receivable.

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 $ 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.

Product cost true-up activity relating to vacation ownership products increased carrying values of inventory by $ 5 million during the first quarter of 2024 and $ 11 million during the first quarter of 2023.

In addition to the above, at March 31, 2024 and December 31, 2023, we had $ 349 million and $ 370 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.

We also had deposits on future purchases of inventory of $ 9 million at March 31, 2024, of which $ 5 million was included in Other assets and $ 4 million was included in Accounts and contracts receivable, net on our Balance Sheet, and $ 3 million at December 31, 2023, which was included in Other assets on our Balance Sheet.

CONTINGENCIES AND COMMITMENTS

Commitments and Letters of Credit

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

As of March 31, 2024, 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 $ 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.

Our aggregate commitment under these contracts was $ 81 million, of which we expect $ 29 million, $ 26 million, $ 16 million, $ 6 million, $ 4 million and less than $ 1 million will be paid in the remainder of 2024, 2025, 2026, 2027, 2028, and thereafter, respectively.

• We have remaining commitments of $ 36 million to purchase vacation ownership units located in Bali, Indonesia in two separate transactions, contingent upon completion of construction to agreed-upon standards within specified timeframes, for use in our Vacation Ownership segment.

We expect to complete the acquisition of 32 vacation ownership units in 2025 pursuant to one of the commitments, and to make remaining payments with respect to these units when specific construction milestones are completed as follows:

$ 4 million in the remainder of 2024, $ 10 million in 2025, and $ 1 million in 2026.

We expect to complete the acquisition of 26 vacation ownership units in 2026 pursuant to the other commitment, and to make remaining payments with respect to these units when specific construction milestones are completed as follows:

$ 4 million in the remainder of 2024, $ 2 million in 2025, $ 14 million in 2026, and $ 1 million in 2027.

• We have a remaining commitment of $ 37 million to purchase 60 vacation ownership units located in Khao Lak, Thailand, contingent upon completion of construction to agreed-upon standards within specified timeframes, for use in our Vacation Ownership segment.

We expect to complete the acquisition of these vacation ownership units in 2026.

We expect to make remaining payments when specific construction milestones are completed as follows:

$ 4 million in 2025, $ 31 million in 2026 and $ 2 million in 2027.

• We have a commitment to acquire real estate in Waikiki, Hawaii 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 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.

As of March 31, 2024, we had $ 33 million of letters of credit outstanding under our Revolving Corporate Credit Facility (as defined in Footnote 12 “Debt”), of which $ 32 million were related to and in lieu of reserves required for our most recent outstanding securitization transactions completed during the first quarter of 2024 and the fourth quarter of 2023.

In addition, as of March 31, 2024, we had $ 1 million in letters of credit outstanding that were not issued pursuant to, nor do they impact our borrowing capacity under, the Revolving Corporate Credit Facility.

Surety bonds issued as of March 31, 2024 totaled $ 122 million, the majority of which were requested by federal, state or local governments in connection with our operations.

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 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 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.

At March 31, 2024, our maximum exposure under fixed dollar guarantees was $ 4 million, of which $ 1 million, $ 1 million, $ 1 million, $ 1 million, and less than $ 1 million relate to the remainder of 2024, 2025, 2026, 2027, and 2028, 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 September 30, 2023, our expected commitment for the remainder of 2023 is $ 3 million.

At March 31, 2024, our expected commitment for the remainder of 2024 is $ 9 million, which will ultimately be recorded as a component of rental expense on our income statement.

Loss Contingencies

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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 January 2024, the appellate court upheld the dismissal of the other claims.

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.

Plaintiff has appealed that dismissal.

As of March 31, 2024, the appeal remains pending.

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 September 30, 2023 At December 31, 2022

($ in millions) At March 31, 2024 At December 31, 2023

Vacation ownership notes receivable securitizations, gross (1)

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$ 2,178 $ 2,096

(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 %.

(1) Interest rates as of March 31, 2024 range from 1.5 % to 6.6 %, with a weighted average interest rate of 4.7 %.

(2) Excludes $ 1 million of unamortized debt issuance costs as of March 31, 2024, as no cash borrowings were outstanding on the Warehouse Credit Facility at that time.

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 September 30, 2023.

The following table shows anticipated future principal payments for our securitized debt as of March 31, 2024.

Vacation Ownership

Notes Receivable Securitizations Warehouse Credit

Notes Receivable Securitizations

($ in millions)

Payments Year

2024, remaining $ 143

2024 171 17 188

2025 173 18 191

2026 176 306 482

2027 176 — 176

Thereafter 1,261

$ 1,703 $ 345 $ 2,048

(1) Excludes future Warehouse Credit Facility renewals.

Vacation Ownership Notes Receivable Securitizations

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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 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.

During the first quarter of 2024, and as of March 31, 2024, 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 2023, we securitized a pool of $ 388 million of vacation ownership notes receivable.

During the first quarter of 2024, we securitized a pool of $ 439 million of vacation ownership notes receivable.

In connection with the securitization, $ 430 million in vacation ownership loan backed notes were issued by MVW 2024-1 LLC (the “2024-1 LLC”) in a private placement.

Four classes of vacation ownership loan backed notes were issued by the 2023-1 LLC:

$ 237 million of Class A Notes, $ 65 million of Class B Notes, $ 48 million of Class C Notes, and $ 30 million of Class D Notes.

The Class A Notes have an interest rate of 4.93 %, the Class B Notes have an interest rate of 5.42 %, the Class C Notes have an interest rate of 6.54 %, and the Class D Notes have an interest rate of 8.83 %.

Investors purchased $ 369 million of the vacation ownership loan backed notes issued by the 2023-1 LLC, composed of the Class A Notes, the Class B Notes, the Class C Notes, and a portion of the Class D Notes, of which we retained $ 11 million.

Three classes of vacation ownership loan backed notes were issued by the 2024-1 LLC:

$ 284 million of Class A Notes, $ 89 million of Class B Notes, and $ 57 million of Class C Notes.

The Class A Notes have an interest rate of 5.32 %, the Class B Notes have an interest rate of 5.51 %, and the Class C Notes have an interest rate of 6.20 %, for an overall weighted average interest rate of 5.48 %.

Proceeds from the transaction, net of fees and a reserve, were used to repay the outstanding obligations on our warehouse credit facility (the “Warehouse Credit Facility”) and for other general corporate purposes.

The Class D notes that we retained were subsequently sold at par during the second quarter of 2023.

Warehouse Credit Facility

During the second quarter of 2023, we amended certain agreements associated with our Warehouse Credit Facility (the “Warehouse Amendment”).

The Warehouse Amendment increased the borrowing capacity of the existing facility from $ 425 million to $ 500 million and extended the revolving period from July 28, 2024 to May 31, 2025.

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

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

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

($ in millions) At March 31, 2024 At December 31, 2023

Corporate Credit Facility

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Unamortized debt issuance costs

Senior Secured Notes

2025 Notes — 250

Unamortized debt discount and issuance costs — ( 2 )

Senior Unsecured Notes

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$ 3,111 $ 3,049

(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 September 30, 2023.

(1) Effective interest rate as of March 31, 2024 was 7.2 %.

The following table shows scheduled principal payments for our debt, excluding finance leases, as of March 31, 2024.

Payments Year

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2027 Convertible Notes — — — 575 — — 575

Non-Interest Bearing Note Payable — 4 — — — — 4

$ — $ 784 $ 575 $ 735 $ 350 $ 500 $ 2,944

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 $ 750 million (the “Revolving Corporate Credit Facility”), including a letter of credit sub-facility of $ 75 million, that terminates on March 31, 2027.

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 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 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 %.

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 September 30, 2023 and December 31, 2022.

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, as of March 31, 2024, was scheduled to mature on August 31, 2025, and a revolving credit facility with a borrowing capacity of $ 750 million (the “Revolving Corporate Credit Facility”), which includes a letter of credit sub-facility of $ 75 million, that terminates on March 31, 2027.

Subsequent to the end of the first quarter of 2024, we entered into an amendment to the Corporate Credit Facility (the “Amendment”), which, among other things, provides for a new $ 800 million term loan facility scheduled to mature on April 1, 2031 (the “New Term Loan”).

The proceeds of the New Term Loan were used to refinance in full the Term Loan, which was scheduled to mature on August 31, 2025.

The interest rate applicable to the New Term Loan is the Secured Overnight Financing Rate (“SOFR”) plus 2.25 %.

There were no changes to the borrowing capacity or the termination date of the Revolving Corporate Credit Facility or its letter of credit sub-facility.

As of March 31, 2024, we have $ 200 million of interest rate swaps, under which we may pay a fixed rate of 2.17 % and receive a floating interest rate through April 2024, and a $ 100 million interest rate collar with a cap strike price of 2.43 % through April 2024, in each case, that we entered into prior to 2023 to hedge a portion of our interest rate risk on the Term Loan.

Both the interest rate swap 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 March 31, 2024 and December 31, 2023.

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 three quarters 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 quarter of 2024 and 2023.

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

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Derivative instrument adjustment balance, January 1 $ 3 $ 13

Other comprehensive (loss) gain before reclassifications ( 3 ) 16

Other comprehensive loss before reclassifications ( 2 ) ( 3 )

Derivative instrument adjustment balance, March 31 1 10

Other comprehensive (loss) gain before reclassifications ( 1 ) 7

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:

• $ 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 was outstanding as of December 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”).

Redemption of Senior Secured Notes

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 (losses) and other income (expense), net on our Income Statement for the nine months ended September 30, 2023.

Convertible Notes

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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 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.

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

The conversion rate of the 2026 Convertible Notes is subject to adjustment for certain events as described in the indenture governing the notes, and was subject to adjustment as of March 31, 2024 to 6.2076 shares of common stock per $1,000 principal amount of 2026 Convertible Notes (equivalent to a conversion price of $ 161.09 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 September 30, 2023, the effective interest rate was 0.55 %.

As of March 31, 2024, the effective interest rate was 0.55 %.

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

Three Months Ended Nine Months Ended

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

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

Amortization of debt issuance costs $ 1 $ 1

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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 (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 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.

convertible note hedge transactions with respect to our common stock (the “2026 Convertible Note Hedges”), covering a total of 3.6 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 3.6 million shares of our common stock, in each case, as of March 31, 2024.

The strike prices of the 2026 Convertible Note Hedges and the 2026 Warrants were subject to adjustment to $ 161.09 and $ 201.36 , respectively, as of March 31, 2024, 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 September 30, 2023.

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

The conversion rate of the 2027 Convertible Notes is subject to adjustment for certain events as described in the indenture governing the notes, and was subject to adjustment as of March 31, 2024 to 5.2776 shares of common stock per $1,000 principal amount of 2027 Convertible Notes (equivalent to a conversion price of $ 189.48 per share of our common stock), as a result of the dividends we declared since issuance of the 2027 Convertible Notes that were greater than the quarterly dividend we paid when the 2027 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 September 30, 2023, the effective interest rate was 3.88 %.

As of March 31, 2024, the effective interest rate was 3.88 %.

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

Three Months Ended Nine Months Ended

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

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

Contractual interest expense $ 4 $ 4

Amortization of debt issuance costs 1 1

$ 5 $ — $ 16 $ —

2027 Convertible Note Hedges and Warrants

In connection with the offering of the 2027 Convertible Notes, we concurrently entered into the following privately-negotiated separate transactions:

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 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.

The strike prices of the 2027 Convertible Note Hedges and the 2027 Warrants were subject to adjustment to $ 189.48 and $ 286.01 , respectively, as of March 31, 2024, and no 2027 Convertible Note Hedges or 2027 Warrants have been exercised.

Security and Guarantees

Amounts borrowed under the Corporate Credit Facility, as well as obligations with respect to letters of credit issued pursuant to the Corporate Credit Facility, are secured by a perfected first priority security interest in substantially all of the assets of the borrowers under, and guarantors of, that facility (which include MVWC and certain of our direct and indirect, existing and future, domestic subsidiaries, excluding certain bankruptcy remote special purpose subsidiaries), in each case including inventory, subject to certain exceptions.

In addition, the Corporate Credit Facility, the 2026 Convertible Notes, the 2027 Convertible 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 certain bankruptcy remote special purpose subsidiaries.

Finance Lease

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

The lease for the new building commenced for accounting purposes during the first quarter of 2023, upon the substantial completion of construction.

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

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.

Our total payments under this lease are $ 245 million, of which we expect $ 1 million, $ 7 million, $ 8 million, $ 8 million, $ 9 million, and $ 212 million will be paid in 2023, 2024, 2025, 2026, 2027, and thereafter, respectively.

SHAREHOLDERS’ EQUITY

STOCKHOLDERS’ EQUITY

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

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 March 31, 2024, there were 75,847,526 shares of Marriott Vacations Worldwide common stock issued, of which 35,163,680 shares were outstanding and 40,683,846 shares were held as treasury stock.

At December 31, 2023, there were 75,807,882 shares of Marriott Vacations Worldwide common stock issued, of which 35,319,306 shares were outstanding and 40,488,576 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, 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 March 31, 2024 or December 31, 2023.

Share Repurchase Program

From time to time, with the approval of our Board of Directors, we may undertake programs to purchase shares of our common stock (each, a “Share Repurchase Program” and collectively, the “Share Repurchase Programs”).

During the third quarter of 2021, our Board of Directors authorized us to purchase shares of our common stock under a Share Repurchase Program for an aggregate purchase price not to exceed $ 250 million, prior to December 31, 2022.

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 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.

From time to time, with the approval of our Board of Directors, we may undertake programs to purchase shares of our common stock (each, a “Share Repurchase Program”).

As of March 31, 2024, approximately $ 414 million remained available for share repurchases under the current 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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Acquired shares of our common stock are currently held as treasury shares and carried at cost in our Financial Statements.

The Inflation Reduction Act of 2022, which was enacted in August 2022, imposes a 1% excise tax on the net value of certain stock repurchases made after December 31, 2022.

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 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:

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

($ in millions, except per share amounts) Number of Shares Repurchased Cost Basis of Shares Repurchased Average Price

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As of December 31, 2023 25,141,073 $ 2,405 $ 95.65

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.

For the first quarter of 2024 279,577 24 $ 87.37

As of March 31, 2024 25,420,650 $ 2,429 $ 95.56

We declared cash dividends to holders of common stock during the first quarter of 2024 as follows.

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

There can be no assurance that we will pay dividends in the future.

Declaration Date Shareholder Record Date Distribution Date Dividend per Share

February 16, 2023 March 2, 2023 March 16, 2023 $ 0.72

May 11, 2023 May 25, 2023 June 8, 2023 $ 0.72

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

Declaration Date Stockholder Record Date

Distribution Date Dividend per Share

February 15, 2024 February 29, 2024 March 14, 2024 $ 0.76

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

As of March 31, 2024, less than 1 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, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

Service-based RSUs $ 6 $ 6

Performance-based RSUs 1 1

$ 6 $ 10 $ 25 $ 30

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

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

($ in millions) At March 31, 2024 At December 31, 2023

Service-based RSUs $ 50 $ 22

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Restricted Stock Units

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.

We granted 380,924 service-based RSUs, which are subject to time-based vesting conditions, with a weighted average grant-date fair value of $ 87.00 , to our employees and non-employee directors during the first quarter of 2024.

During the first quarter of 2024, we also granted performance-based RSUs, which are subject to performance-based vesting conditions, to members of management.

A maximum of 204,020 RSUs may be earned under the performance-based RSU awards granted during the first quarter of 2024.

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 three quarters of 2023.

We granted 86,759 SARs, with a weighted average grant-date fair value of $ 34.58 and a weighted average exercise price of $ 93.73 , to members of management during the first quarter of 2024.

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 2023:

The following table outlines the assumptions used to estimate the fair value of grants during the first quarter of 2024:

Expected volatility 45.78 %

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Variable Interest Entities Related to Our Vacation Ownership Notes Receivable Securitizations

We periodically securitize, without recourse, through bankruptcy remote special purpose entities, notes receivable originated in connection with the sale of vacation ownership products.

These vacation ownership notes receivable securitizations provide funding for general corporate purposes.

In a vacation ownership notes receivable securitization, various classes of debt securities issued by a special purpose entity are generally collateralized by a single tranche of transferred assets, which consist of vacation ownership notes receivable.

With each vacation ownership notes receivable securitization, we may retain all or a portion of the securities that are issued, and certain residual interests.

We created these bankruptcy remote special purpose entities to serve as a mechanism for holding assets and related liabilities, and the entities have no equity investment at risk, making them VIEs.

We continue to service the vacation ownership notes receivable, transfer all proceeds collected to these special purpose entities, and retain rights to receive benefits that are potentially significant to the entities.

Accordingly, we concluded that we are the entities’ primary beneficiary and, therefore, consolidate them.

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, 2023:

The following table shows consolidated assets, which are collateral for the obligations of the VIEs related to our vacation ownership notes receivable securitizations, and consolidated liabilities included on our Balance Sheet at March 31, 2024:

($ in millions) Vacation Ownership

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Total $ 2,208 $ 1 $ 2,209

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

Notes Receivable

Securitizations Warehouse

Credit Facility Total

Interest income $ 59 $ 11 $ 70

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 three quarters of 2023:

The following table shows the interest income and expense recognized as a result of our involvement with these VIEs during the first quarter of 2024:

($ in millions) Vacation Ownership

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Debt issuance cost amortization $ 3 $ — $ 3

Administrative expenses $ 1 $ — $ 1

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

Nine Months Ended

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

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

Net proceeds from vacation ownership notes receivable securitizations $ 425 $ 21

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Net Cash Flows $ 362 $ 28

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.

Our maximum exposure to potential loss relating to the special purpose entities that purchase, sell and own these vacation ownership notes receivable is the overcollateralization amount (the difference between the loan collateral balance and the balance of the outstanding vacation ownership notes receivable), plus cash reserves and any residual interest in future cash flows from collateral.

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

Nine Months Ended

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

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

Proceeds from vacation ownership notes receivable securitizations $ 94 $ 150

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Net Cash Flows $ ( 134 ) $ 155

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.

Our maximum exposure to potential loss relating to the special purpose entities that purchase, sell, and own these vacation ownership notes receivable is the overcollateralization amount (the difference between the loan collateral balance and the balance of the outstanding vacation ownership notes receivable), plus cash reserves and any residual interest in future cash flows from collateral.

Other Variable Interest Entities

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Accordingly, we have not consolidated the VIE.

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 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.

We expect to acquire the property over time and as of March 31, 2024, we expect to make remaining payments for the property as follows:

$ 65 million in the remainder of 2024, $ 82 million in 2025, and $ 41 million in 2026.

As of March 31, 2024, our Balance Sheet reflected $ 1 million in Accounts and contracts receivable, net, including a note receivable of less than $ 1 million, $ 8 million in Property and equipment, net, $ 1 million in Accrued liabilities and $ 1 million in the Other line within liabilities on our Balance Sheets.

We believe that our maximum exposure to loss as a result of our involvement with this VIE is approximately $ 10 million as of March 31, 2024.

During the first quarter of 2024, we fulfilled our outstanding commitment to purchase retail space for $ 48 million and incurred $ 1 million of cost related to the fit-out of this space.

We have an agreement to sell the retail space to a third party, at cost, upon completion of construction, which we expect to occur in the second half of 2024.

Deferred Compensation Plan

We consolidate the liabilities of the Marriott Vacations Worldwide Deferred Compensation Plan and the related assets, which consist of the COLI policies held in a rabbi trust.

We consolidate the liabilities of the Deferred Compensation Plan and the related assets, which consist of the COLI policies held in a rabbi trust.

The rabbi trust is considered a VIE.

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, 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.

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

At March 31, 2024 and December 31, 2023, the value of the assets held in the rabbi trust was $ 110 million and $ 99 million, respectively, and was 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 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.

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.

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

We also have a license to use the St.

Regis brand for specified fractional ownership products.

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

6 unchanged sentences

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

VRI Americas was part of the Exchange & Third-Party Management segment through the date of sale in April 2022.

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

3 unchanged sentences

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 Earnings before Interest Expense, Taxes, Depreciation and Amortization (“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 term 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 Nine Months Ended

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

Our CODM uses Adjusted Earnings before Interest Expense, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) to evaluate the profitability of our operating segments, and the components of net income attributable to common stockholders excluded from Adjusted EBITDA are not separately evaluated.

Adjusted EBITDA is defined as net income attributable to common stockholders, before interest expense (excluding consumer financing interest expense associated with term 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 attributable to common stockholders is presented below.

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

Vacation Ownership $ 1,130 $ 1,097

1 unchanged sentence

Total segment revenues 1,195 1,168

Corporate and other ( 4 ) ( 1 ) ( 2 ) 10

Consolidated Property Owners’ Associations

$ 1,195 $ 1,169

Adjusted EBITDA and Reconciliation to Net Income Attributable to Common Shareholders

Three Months Ended Nine Months Ended

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

Adjusted EBITDA and Reconciliation to Net Income Attributable to Common Stockholders

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

Adjusted EBITDA Vacation Ownership $ 213 $ 229

7 unchanged sentences

Certain items ( 20 ) ( 2 )

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

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

Net income attributable to common stockholders

($ in millions) At March 31, 2024 At December 31, 2023

Vacation Ownership $ 8,327 $ 8,167

4 unchanged sentences

Revenues Excluding Cost Reimbursements

Three Months Ended Nine Months Ended

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

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

United States $ 699 $ 700

All other countries 105 104

$ 743 $ 881 $ 2,370 $ 2,457

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