MARRIOTT VACATIONS WORLDWIDE Corp 10-K

Item 8. Financial Statements and Supplementary Data The following financial information is included on the pages indicated. Page Financial Statements and Supplementary Data 67 Management’s Report on Internal Control Over Financial Reporting 68 Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) Internal Control Over Financial Reporting 69 Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) Financial Statements 70 Financial Statements 72 Consolidated Statements of Income 72 Consolidated Statements of Comprehensive Income 73 Consolidated Balance Sheets 74 Consolidated Statements of Cash Flows 75 Consolidated Statements of Stockholders’ Equity 77 Notes to Consolidated Financial Statements 78 1. Basis of Presentation 78 2. Summary of Significant Accounting Policies 79 3. Acquisitions and Dispositions 90 4. Revenue 91 5. Income Taxes 94 6. Vacation Ownership Notes Receivable 96 7. Financial Instruments 101 8. Earnings per Share 103 9. Inventory 104 10. Property and Equipment 104 11. Goodwill 104 12. Intangibles 105 13. Contingencies and Commitments 105 14. Leases 107 15. Securitized Debt 109 16. Debt 111 17. Stockholders' Equity 114 18. Share-based Compensation 115 19. Variable Interest Entities 117 20. Business Segments 119 21. Impairment and Restructuring 122 67 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management of Marriott Vacations Worldwide Corporation (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurance on the reliability of financial reporting and the preparation of the consolidated financial statements in accordance with U.S. generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the Company’s transactions and dispositions of the Company’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and (3) provide reasonable assurance on prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In connection with the preparation of the Company’s annual consolidated financial statements, management has undertaken an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the “COSO criteria”). Based on this assessment, management has concluded that, applying the COSO criteria, as of December 31, 2024, the Company’s internal control over financial reporting was effective to provide reasonable assurance of the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Ernst & Young LLP, the independent registered public accounting firm that audited the Company’s consolidated financial statements included in this report, has issued a report on the effectiveness of the Company’s internal control over financial reporting, a copy of which appears on the next page of this Annual Report on Form 10-K. 68 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Marriott Vacations Worldwide Corporation Opinion on Internal Control Over Financial Reporting We have audited Marriott Vacations Worldwide Corporation’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Marriott Vacations Worldwide Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated February 28, 2025 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Orlando, Florida February 28, 2025 69 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Marriott Vacations Worldwide Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Marriott Vacations Worldwide Corporation (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 28, 2025 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Cost of Vacation Ownership Products Description of the Matter The Company’s cost of vacation ownership products was $200 million for the year ended December 31, 2024. As discussed in Note 2 to the consolidated financial statements, the Company accounts for the cost of vacation ownership products utilizing the relative sales value method in accordance with the authoritative guidance for accounting for real estate time-sharing transactions. Changes in estimates used in applying the relative sales value method are recognized in the period that the changes occur. Auditing the Company’s application of the relative sales value method was challenging due to the nature and extent of audit effort required as the calculations are complex and contain a significant volume of data. Additionally, the determination of the cost of vacation ownership products was sensitive to the selection and application of assumptions, specifically future pricing assumptions, used in estimating future revenues from sale of vacation ownership products which are affected by expectations about future market and economic conditions. 70 Cost of Vacation Ownership Products How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process to determine the cost of vacation ownership products. For example, we tested controls over management’s review of the calculations, including the inputs and certain estimates, such as estimated future revenues from sale of vacation ownership products. To test the cost of vacation ownership products, we performed audit procedures that included, among others, assessing the methodologies used, evaluating the estimates discussed above and testing the completeness and accuracy of the data used by the Company in the calculations. For example, we agreed inputs to the calculations to historical data and source documentation and evaluated the estimates used in the calculations, such as estimated future revenues from sale of vacation ownership products, utilizing historical operating results. We involved real estate subject matter resources on our team because the application of the relative sales value method is unique to companies in the real estate time-sharing industry. Originated Vacation Ownership Notes Receivable Reserve Description of the Matter As of December 31, 2024, the Company’s originated vacation ownership notes receivable reserve was $527 million. As discussed in Note 2 to the consolidated financial statements, for originated notes, the Company records the difference between the vacation ownership note receivable and variable consideration included in the transaction price for the sale of the related vacation ownership products as a reserve on the Company’s originated vacation ownership notes receivable. The estimate of the variable consideration for originated vacation ownership notes receivable is based on default rates that are an output of the Company’s static pool analyses and the estimates regarding future defaults. Auditing the Company’s originated vacation ownership notes receivable reserve was challenging due to the nature and extent of audit effort required to test the static pool analyses, which are complex and contain a significant volume of data. Furthermore, the originated vacation ownership notes receivable reserve was sensitive to management’s assumptions regarding future default rates. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s originated vacation ownership notes receivable reserve process. For example, we tested controls over management’s review of the static pool analyses, including the significant inputs to the analyses, and review of the assumptions regarding future default rates. To test the originated vacation ownership notes receivable reserve, we performed audit procedures that included, among others, assessing the methodology used, evaluating the assumptions regarding future default rates as discussed above, and testing the completeness and accuracy of the static pool analyses, including the significant inputs to the analyses. For example, we agreed inputs to the static pool analyses to historical data and source documentation. We also compared the assumptions regarding future defaults to the Company’s historical and current default rates and performed a retrospective review of the defaults projected from the analyses. We involved real estate subject matter resources on our team because the static pool analyses are unique to companies in the real estate time-sharing industry. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2011. Orlando, Florida February 28, 2025 71 MARRIOTT VACATIONS WORLDWIDE CORPORATION CONSOLIDATED STATEMENTS OF INCOME Fiscal Years 2024, 2023 and 2022 (In millions, except per share amounts) 2024 2023 2022 REVENUES Sale of vacation ownership products $ 1,448 $ 1,460 $ 1,618 Management and exchange 843 813 827 Rental 645 571 551 Financing 342 322 293 Cost reimbursements 1,689 1,561 1,367 TOTAL REVENUES 4,967 4,727 4,656 EXPENSES Cost of vacation ownership products 200 224 289 Marketing and sales 919 823 807 Management and exchange 482 442 444 Rental 481 452 382 Financing 146 113 75 General and administrative 243 273 249 Depreciation and amortization 146 135 132 Litigation charges 17 13 11 Restructuring 10 6 — Royalty fee 114 117 114 Impairment 30 32 2 Cost reimbursements 1,689 1,561 1,367 TOTAL EXPENSES 4,477 4,191 3,872 (Losses) gains and other (expense) income, net ( 1 ) 47 40 Interest expense, net ( 162 ) ( 145 ) ( 118 ) Transaction and integration costs ( 18 ) ( 37 ) ( 125 ) Other ( 3 ) ( 3 ) 1 INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS 306 398 582 Provision for income taxes ( 89 ) ( 146 ) ( 191 ) NET INCOME 217 252 391 Net loss attributable to noncontrolling interests 1 2 — NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 218 $ 254 $ 391 EARNINGS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS Basic $ 6.16 $ 6.96 $ 9.69 Diluted $ 5.61 $ 6.28 $ 8.77 CASH DIVIDENDS DECLARED PER SHARE $ 3.07 $ 2.92 $ 2.58 See Notes to Consolidated Financial Statements 72 MARRIOTT VACATIONS WORLDWIDE CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Fiscal Years 2024, 2023 and 2022 (In millions) 2024 2023 2022 NET INCOME $ 217 $ 252 $ 391 Foreign currency translation adjustments ( 21 ) 11 10 Reclassification of foreign currency translation adjustments realized upon disposition of entities — — ( 10 ) Derivative instrument adjustment, net of tax ( 3 ) ( 10 ) 31 OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX ( 24 ) 1 31 Net loss attributable to noncontrolling interests 1 2 — COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS 1 2 — COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 194 $ 255 $ 422 See Notes to Consolidated Financial Statements 73 MARRIOTT VACATIONS WORLDWIDE CORPORATION CONSOLIDATED BALANCE SHEETS Fiscal Year-End 2024 and 2023 (In millions, except share and per share data) 2024 2023 ASSETS Cash and cash equivalents $ 197 $ 248 Restricted cash (including $ 82 and $ 79 from VIEs, respectively) 331 326 Accounts and contracts receivable, net (including $ 16 and $ 15 from VIEs, respectively) 387 385 Vacation ownership notes receivable, net (including $ 1,917 and $ 1,912 from VIEs, respectively) 2,440 2,343 Inventory 735 634 Property and equipment, net 1,170 1,260 Goodwill 3,117 3,117 Intangibles, net 790 854 Other (including $ 131 and $ 99 from VIEs, respectively) 641 513 TOTAL ASSETS $ 9,808 $ 9,680 LIABILITIES AND EQUITY Accounts payable $ 343 $ 362 Advance deposits 162 164 Accrued liabilities (including $ 4 and $ 4 from VIEs, respectively) 384 343 Deferred revenue 354 382 Payroll and benefits liability 220 205 Deferred compensation liability 195 168 Securitized debt, net (including $ 2,163 and $ 2,121 from VIEs, respectively) 2,136 2,096 Debt, net 3,089 3,049 Other 139 249 Deferred taxes 345 280 TOTAL LIABILITIES 7,367 7,298 Contingencies and Commitments (Note 13) Preferred stock — $ 0.01 par value; 2,000,000 shares authorized; none issued or outstanding — — Common stock — $ 0.01 par value; 100,000,000 shares authorized; 75,852,678 and 75,807,882 shares issued, respectively 1 1 Treasury stock — at cost; 40,974,753 and 40,488,576 shares, respectively ( 2,378 ) ( 2,332 ) Additional paid-in capital 3,975 3,955 Accumulated other comprehensive (loss) income ( 8 ) 16 Retained earnings 852 742 TOTAL MVW STOCKHOLDERS' EQUITY 2,442 2,382 Noncontrolling interests ( 1 ) — TOTAL EQUITY 2,441 2,382 TOTAL LIABILITIES AND EQUITY $ 9,808 $ 9,680 The abbreviation VIEs above means Variable Interest Entities. See Notes to Consolidated Financial Statements 74 MARRIOTT VACATIONS WORLDWIDE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Fiscal Years 2024, 2023 and 2022 (In millions) 2024 2023 2022 OPERATING ACTIVITIES Net income $ 217 $ 252 $ 391 Adjustments to reconcile net income to net cash, cash equivalents, and restricted cash provided by operating activities: Depreciation and amortization of intangibles 146 135 132 Amortization of debt discount and issuance costs 26 23 25 Vacation ownership notes receivable reserve 279 230 150 Share-based compensation 33 31 39 Impairment charges 30 30 — Gains and other income, net ( 5 ) ( 6 ) ( 48 ) Deferred income taxes 38 ( 64 ) 87 Net change in assets and liabilities: Accounts and contracts receivable ( 16 ) ( 105 ) ( 45 ) Vacation ownership notes receivable originations ( 1,015 ) ( 987 ) ( 980 ) Vacation ownership notes receivable collections 632 596 642 Inventory ( 33 ) 87 104 Other assets ( 23 ) ( 44 ) ( 49 ) Accounts payable, advance deposits and accrued liabilities 9 1 112 Deferred revenue ( 27 ) 34 ( 9 ) Payroll and benefit liabilities 16 ( 46 ) 53 Deferred compensation liability 11 15 13 Other liabilities ( 109 ) 78 ( 38 ) Deconsolidation of certain Consolidated Property Owners' Associations — — ( 48 ) Purchase of property for future transfer to inventory ( 10 ) ( 27 ) ( 12 ) Other, net 6 ( 1 ) 3 Net cash, cash equivalents, and restricted cash provided by operating activities 205 232 522 INVESTING ACTIVITIES Proceeds from disposition of subsidiaries, net of cash and restricted cash transferred — — 94 Capital expenditures for property and equipment (excluding inventory) ( 57 ) ( 118 ) ( 65 ) Issuance of note receivable to VIE — — ( 47 ) Proceeds from collection of note receivable from VIE — — 47 Purchase of company owned life insurance ( 16 ) ( 10 ) ( 18 ) Purchase and development of property for future sale ( 50 ) — — Dispositions, net 8 16 3 Other, net — — 2 Net cash, cash equivalents, and restricted cash (used in) provided by investing activities ( 115 ) ( 112 ) 16 Continued See Notes to Consolidated Financial Statements 75 MARRIOTT VACATIONS WORLDWIDE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) Fiscal Years 2024, 2023 and 2022 (In millions) 2024 2023 2022 FINANCING ACTIVITIES Borrowings from securitization transactions 1,324 1,492 1,031 Repayment of debt related to securitization transactions ( 1,282 ) ( 1,331 ) ( 945 ) Proceeds from debt 2,135 1,070 1,266 Repayments of debt ( 2,107 ) ( 1,221 ) ( 935 ) Purchase of convertible note hedges — — ( 107 ) Proceeds from issuance of warrants — — 43 Finance lease incentive — 10 3 Finance lease payment ( 6 ) ( 5 ) ( 4 ) Payment of debt and securitized debt issuance costs ( 25 ) ( 12 ) ( 15 ) Repurchase of common stock ( 56 ) ( 286 ) ( 701 ) Payment of dividends ( 107 ) ( 106 ) ( 99 ) Payment of withholding taxes on vesting of restricted stock units ( 8 ) ( 12 ) ( 23 ) Net cash, cash equivalents, and restricted cash used in financing activities ( 132 ) ( 401 ) ( 486 ) Effect of changes in exchange rates on cash, cash equivalents, and restricted cash ( 4 ) 1 ( 1 ) Change in cash, cash equivalents, and restricted cash ( 46 ) ( 280 ) 51 Cash, cash equivalents, and restricted cash, beginning of year 574 854 803 Cash, cash equivalents, and restricted cash, end of year $ 528 $ 574 $ 854 SUPPLEMENTAL DISCLOSURES Non-cash issuance of debt in connection with asset acquisition $ — $ — $ 11 Non-cash transfer from inventory to property and equipment 21 12 47 Non-cash transfer from property and equipment to inventory 93 57 13 Non-cash transfer from property and equipment to other assets 52 — — Non-cash transfer from other assets to property and equipment — — 14 Non-cash issuance of treasury stock for employee stock purchase plan 5 5 5 Dividends payable 28 27 27 Interest paid, net of amounts capitalized 247 204 149 Income taxes paid, net of refunds 133 141 57 See Notes to Consolidated Financial Statements 76 MARRIOTT VACATIONS WORLDWIDE CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Fiscal Years 2024, 2023 and 2022 (In millions) Common Stock Issued Common Stock Treasury Stock Additional Paid-In Capital Accumulated Other Comprehensive (Loss) Income Retained Earnings Total MVW Stockholders' Equity Non-controlling Interests Total Equity 75.5 BALANCE AT YEAR-END 2021 $ 1 $ ( 1,356 ) $ 4,072 $ ( 16 ) $ 275 $ 2,976 $ 10 $ 2,986 — 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 — — — — 391 391 — 391 — Foreign currency translation adjustments — — — 10 — 10 — 10 — Reclassification of foreign currency translation adjustments realized upon disposition of subsidiary — — — ( 10 ) — ( 10 ) — ( 10 ) — Derivative instrument adjustment — — — 31 — 31 — 31 — Adjustment for 2022 Convertible Note Hedges — — 6 — — 6 — 6 — Tax effect on equity, convertible notes — — 25 — — 25 — 25 0.2 Share-based compensation plans — 2 13 — — 15 — 15 — Purchase of convertible note hedges — — ( 107 ) — — ( 107 ) — ( 107 ) — Issuance of warrants — — 43 — — 43 — 43 — Expiration of warrants — — ( 3 ) — — ( 3 ) — ( 3 ) — Repurchase of common stock — ( 701 ) — — — ( 701 ) — ( 701 ) — Dividends — — — — ( 104 ) ( 104 ) — ( 104 ) — Employee stock plan issuance — 1 3 — — 4 — 4 — Deconsolidation of certain Consolidated Property Owners' Associations — — — — — — ( 8 ) ( 8 ) 75.7 BALANCE AT YEAR-END 2022 1 ( 2,054 ) 3,941 15 593 2,496 2 2,498 — Net income (loss) — — — — 254 254 ( 2 ) 252 — Foreign currency translation adjustments — — — 11 — 11 — 11 — Derivative instrument adjustment — — — ( 10 ) — ( 10 ) — ( 10 ) 0.1 Share-based compensation plans — 8 14 — — 22 — 22 — Repurchase of common stock — ( 286 ) — — — ( 286 ) — ( 286 ) — Dividends — — — — ( 105 ) ( 105 ) — ( 105 ) 75.8 BALANCE AT YEAR-END 2023 1 ( 2,332 ) 3,955 16 742 2,382 — 2,382 — Net income (loss) — — — — 218 218 ( 1 ) 217 — Foreign currency translation adjustments — — — ( 21 ) — ( 21 ) — ( 21 ) — Derivative instrument adjustment — — — ( 3 ) — ( 3 ) — ( 3 ) 0.1 Share-based compensation plans — 10 20 — — 30 — 30 — Repurchase of common stock — ( 56 ) — — — ( 56 ) — ( 56 ) — Dividends — — — — ( 108 ) ( 108 ) — ( 108 ) 75.9 BALANCE AT YEAR-END 2024 $ 1 $ ( 2,378 ) $ 3,975 $ ( 8 ) $ 852 $ 2,442 $ ( 1 ) $ 2,441 See Notes to Consolidated Financial Statements 77 MARRIOTT VACATIONS WORLDWIDE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The Consolidated Financial Statements present the results of operations, financial position and cash flows of Marriott Vacations Worldwide Corporation (referred to in this report as (i) “we,” “us,” “Marriott Vacations Worldwide,” “MVW,” or the “Company,” which includes our consolidated subsidiaries except where the context of the reference is to a single corporate entity, or (ii) “MVWC,” which shall refer only to Marriott Vacations Worldwide Corporation, without its consolidated subsidiaries). In order to make this report easier to read, we refer throughout to (i) our Consolidated Financial Statements as our “Financial Statements,” (ii) our Consolidated Statements of Income as our “Income Statements,” (iii) our Consolidated Balance Sheets as our “Balance Sheets,” and (iv) our Consolidated Statements of Cash Flows as our “Cash Flows.” In addition, references throughout to numbered “Footnotes” refer to the numbered notes in the Financial Statements, unless otherwise noted. We refer to Marriott International, Inc. as “Marriott International” and Marriott International’s Marriott Bonvoy customer loyalty program as “Marriott Bonvoy.” Additionally, we use the term “Marriott Vacation Ownership” to refer to our Marriott, Sheraton, and Westin branded businesses and the term “Hyatt Vacation Ownership” to refer to our Hyatt branded business. 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 those variable interest entities (“VIEs”) for which Marriott Vacations Worldwide is the primary beneficiary in accordance with consolidation accounting guidance. References in these Financial Statements to net income 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. These Financial Statements reflect our financial position, results of operations, and cash flows as prepared in conformity with United States Generally Accepted Accounting Principles (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates include, but are not limited to, revenue recognition, cost of vacation ownership products, inventory valuation, goodwill and intangibles valuation, vacation ownership notes receivable reserves, income taxes, and loss contingencies. The uncertainties in the broader macroeconomic environment, including inflation, continuing high interest rates, mixed economic indicators, increased consumer debt, continuing global insecurity and political uncertainty, have made it more challenging to make these estimates. Actual results could differ from our estimates, and such differences may be material. Acquisition of Welk On April 1, 2021 (the “Welk Acquisition Date”), we completed the acquisition of Welk Hospitality Group, Inc. (“Welk”) through a series of transactions (the “Welk Acquisition”), after which Welk became our indirect wholly-owned subsidiary. We refer to the business and brand that we acquired in the Welk Acquisition as “Legacy-Welk.” During 2023, we rebranded all Legacy-Welk resorts as Hyatt Vacation Club resorts. Acquisition of ILG and Disposition of VRI Americas On September 1, 2018, we completed the acquisition of ILG, LLC, formerly known as ILG, Inc. (“ILG”), through a series of transactions (the “ILG Acquisition”), after which ILG became our indirect wholly-owned subsidiary. We refer to our business associated with brands that existed prior to the ILG Acquisition as “Legacy-MVW” and to ILG’s business and brands that we acquired as “Legacy-ILG.” The businesses acquired from ILG that we currently operate as part of our Vacation Ownership business include Vistana Signature Experiences, which includes vacation ownership products branded as Sheraton or Westin, and Hyatt Vacation Ownership. The businesses acquired from ILG that we currently operate as part of our Exchange & Third-Party Management business include Interval International and Aqua-Aston Hospitality. As part of the ILG Acquisition, we also acquired the Vacation Resorts International and Trading Places International businesses (together, the “VRI Americas” business). Our Financial Statements reflect the disposition of the VRI Americas business on April 29, 2022. 78 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition We account for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “ Revenue from Contracts with Customers ” (“ASC 606”). Sale of Vacation Ownership Products We market and sell vacation ownership products in our Vacation Ownership segment. Vacation ownership products include deeded vacation ownership products, deeded beneficial interests, rights to use real estate and other interests in trusts that solely hold real estate (collectively “vacation ownership products” or “VOIs”). Vacation ownership products may be sold for cash or we may provide financing. In connection with the sale of vacation ownership products, we provide sales incentives to certain purchasers. Incentives typically include Marriott Bonvoy points, Hyatt’s customer loyalty program points (“World of Hyatt” points), or an alternative sales incentive that we refer to as “plus points.” Plus points are redeemable for stays at our resorts or for use in an exclusive selection of travel packages provided by third-party tour operators (the “Explorer Collection” or “BEYOND”), generally up to two years from the date of issuance. Upon execution of a legal sales agreement, we typically receive an upfront deposit from our customer with the remainder of the purchase price for the vacation ownership product to either be collected at closing (“cash contract”) or financed by the customer through our financing programs (“financed contract”). Refer to “ Financing Revenues ” below for further information regarding financing terms. Customer deposits received for contracts are recorded as Advance deposits on our Balance Sheets until the point in time at which control of the vacation ownership product has transferred to the customer. Our assessment of collectability of the transaction price for sales of vacation ownership products is aligned with our credit granting policies for financed contracts. In determining the consideration to which we expect to be entitled for financed contracts, we include estimated variable consideration in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on the customer class and the results of our static pool analyses, which primarily rely on historical payment data by customer class. 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 VOI they have acquired. Variable consideration which has not been included within the transaction price is presented as a reserve on contracts receivable or vacation ownership notes receivable. Revisions to estimates of variable consideration from the sale of vacation ownership products impact the reserve on contracts receivable and originated vacation ownership notes receivable and can increase or decrease revenue. Revenues were reduced during 2024 by $ 68 million due to changes in our estimates of variable consideration for performance obligations that were satisfied in prior periods due to the increase in our reserve for originated vacation ownership notes receivable. See Footnote 6 “Vacation Ownership Notes Receivable” for additional information on our reserve for vacation ownership notes receivable and adjustments recorded for the years presented. In addition, we account for cash incentives provided to customers as a reduction of the transaction price. Refer to “ Arrangements with Multiple Performance Obligations ” below for a description of our methods of allocating transaction price to each performance obligation. We recognize revenues from the sale of vacation ownership products when control of the vacation ownership product is transferred to the customer and the transaction price is deemed collectible. Based upon the different terms of our contracts with the customer and business practices, control of the vacation ownership product has historically transferred to the customer at different points in time for each brand of VOIs. In the third quarter of 2022 and the fourth quarter of 2024, we aligned our business practices and contract terms for the sale of vacation ownership products (the “Contract Alignments”), resulting in the prospective change in the timing of the transfer of control to the customer for Marriott-branded VOIs and Hyatt-branded VOIs derived from Legacy-Welk sales contracts, respectively. Prior to these changes, control transfer occurred at closing for these vacation ownership products. Subsequent to the Contract Alignments, transfer of control of these vacation ownership products occurs at expiration of the statutory rescission period, consistent with the historical timing of Sheraton-, Westin- and Hyatt- branded transactions. Marriott-branded VOIs and Hyatt-branded VOIs derived from Legacy-Welk sales contracts executed prior to the applicable Contract Alignment have been accounted for with the transfer of control of the VOI occurring at closing. 79 At the time at which we recognize revenue for VOIs, we temporarily record a contract receivable for both cash contracts and financed contracts, until the time at which we collect the cash or originate a vacation ownership note receivable, which occurs at closing. Revenue for plus points is recorded as Deferred revenue on our Balance Sheets at closing and is recognized as rental revenue upon transfer of control to the customer, which typically occurs upon delivery of the incentive, or at the point in time when the incentive is redeemed. For incentives provided by third parties (i.e. Marriott Bonvoy points, World of Hyatt points, third-party Explorer Collection offerings, or BEYOND), we evaluated whether we control the underlying good or service prior to delivery to the customer. We concluded that we are an agent for those incentives which we do not control prior to delivery and as such record the related revenue net of the related cost upon recognition. Management and Exchange Revenues and Cost Reimbursements Revenues Ancillary Revenues Ancillary revenues consist of goods and services that are sold or provided by us at food and beverage outlets, golf courses and other retail and service outlets located at our resorts. Payments for such goods and services are generally received at the point of sale in the form of cash or credit card charges. For goods and services sold, we evaluate whether we control the underlying goods or services prior to delivery to the customer. For transactions where we do not control the goods or services prior to delivery, the related revenue is recorded net of the related cost upon recognition. We recognize ancillary revenue at the point in time when goods have been provided and/or services have been rendered. Management Fee Revenues and Cost Reimbursements Revenues We provide day-to-day-management services, including housekeeping services, operation of reservation systems, maintenance and certain accounting and administrative services for owners’ associations, condominium owners and hotels. We generate revenue from fees we earn for managing vacation ownership resorts, clubs, owners’ associations, condominiums and hotels. In our Vacation Ownership segment, these fees are earned regardless of usage or occupancy and are typically based on either a percentage of the budgeted costs to operate the resorts or a fixed fee arrangement (“VO management fee revenues”). In our Exchange & Third-Party Management segment, we earn base management fees which are typically either (i) fixed amounts, (ii) amounts based on a percentage of adjusted gross lodging revenue, or (iii) various revenue sharing agreements based on stated formulas (“Base management fee revenues”) and incentive management fees, which are generally a percentage of either operating profits or improvement in operating profits (“Incentive management fees”). In addition, we receive reimbursement of costs incurred on behalf of our customers, which consist of actual expenses with no added margin (“cost reimbursements”). Vacation Ownership segment cost reimbursements revenues exclude amounts that we have paid to the owners’ associations related to maintenance fees for unsold vacation ownership products, as we have concluded that such payments are consideration payable to a customer. Management fees are collected over time or upfront depending upon the specific management contract. Cost reimbursements are received over time and considered variable consideration. We have determined that a significant financing component does not exist as a substantial amount of the consideration promised by the customer is paid when the associated variable consideration is determined. We evaluated the nature of the management services provided and concluded that the management services constitute a series of distinct services to be accounted for as a single performance obligation transferred over time. We use an input method, the number of days that management services are provided, to recognize VO management fee revenues and base management fee revenues, which is consistent with the pattern of transfer to the customers who receive and consume the benefits as services are provided each day. We recognize Incentive management fees as earned throughout the incentive period based on actual results, which is subject to estimation of the transaction price. Any consideration we receive in advance of services being rendered is recorded as Deferred revenue on our Balance Sheets and is recognized ratably across the service period to which it relates. We recognize variable consideration for Cost reimbursements revenues when the reimbursable costs are incurred. 80 Other Services Revenues Other services revenues includes revenues from membership fees, club dues and additional fees for services we provide to customers. Membership fees and club dues are received in advance of providing access to the exchange services, are recorded as Deferred revenue on our Balance Sheets and are earned regardless of whether exchange services are provided. Generally, Interval Network memberships are cancellable and refundable on a pro-rata basis, with the exception of the Interval Network’s Platinum tier which is non-refundable. We have determined that exchange services constitute a stand-ready obligation for us to provide unlimited access to exchange services over a defined period of time, when and if a customer (or customer of a customer) requests. We have determined that customers benefit from the stand-ready obligation evenly throughout the period in which the customer has access to exchange services and as such, recognize membership fees and club dues on a straight-line basis over the related period of time. Transaction-based fees are typically collected at a point in time and are recognized as revenue at the point in time at which the relevant goods or services are transferred to the customer. For transaction-based fees, we evaluate whether we control the underlying goods or services prior to delivery to the customer. Transaction-based fees from exchanges and other transactions in our Exchange & Third-Party Management segment are generally recognized when confirmation of the transaction is provided and services have been rendered. For transactions where we do not control the goods or services prior to delivery, the related revenue is recorded net of the related cost upon recognition. Financing Revenues We offer consumer financing as an option to qualifying customers purchasing vacation ownership products, which is collateralized by the underlying vacation ownership products. We recognize interest income on an accrual basis. The contractual terms of the financing agreements require that the contractual level of annual principal payments be sufficient to amortize the loan over a customary period for the vacation ownership product being financed, which is generally ten to fifteen years . Generally, payments commence under the financing contracts 30 to 60 days after closing. We earn interest income from the financing arrangements on the principal balance outstanding over the life of the arrangement and record that interest income in Financing revenues on our Income Statements. Financing revenues include transaction-based fees we charge to owners and other third parties for services. We recognize fee revenues when services have been rendered . Rental Revenues In our Vacation Ownership segment, we generate revenue from rentals of inventory that we hold for sale as interests in our vacation ownership programs, inventory that we control because our owners have elected alternative usage options permitted under our vacation ownership programs and rentals of owned-hotel properties. In our Exchange & Third-Party Management segment, we offer vacation rental opportunities for managed properties and to members of the Interval Network and certain other membership programs from seasonal oversupply or underutilized space, as well as sourced resort accommodations. We receive payments for rentals primarily through credit card charges. We generally recognize rental revenues when occupancy has occurred, which is consistent with the period in which the customer benefits from such service. We recognize rental revenue from the utilization of plus points issued in connection with the sale of vacation ownership products, as described in “ Sale of Vacation Ownership Products ” above, when occupancy has occurred. We also generate revenues from vacation packages sold to our customers. The packages have an expiration period of six to twenty-four months, and payments for such packages are non-refundable and generally paid by the customer in advance. Payments received in advance are recorded as Advance deposits on our Balance Sheets until the revenue is recognized, when occupancy has occurred. For rental revenues associated with vacation ownership products which we own and which are registered and held for sale, to the extent that the proceeds are less than costs, revenues are reported net in accordance with ASC Topic 978, “ Real Estate – Time-Sharing Activities .” For certain rental revenues associated with our Exchange & Third-Party Management segment, revenue is recognized when confirmation of the transaction is provided because we concluded we are an agent for these transactions. 81 Arrangements with Multiple Performance Obligations Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its relative standalone selling price. In cases where the standalone selling price is not readily available, we generally determine the standalone selling prices utilizing the adjusted market approach, using prices from similar contracts, our historical pricing on similar contracts, our internal marketing and selling data and other internal and external inputs we deem to be appropriate. Significant judgment is required in determining the standalone selling price under the adjusted market approach. Receivables, Contract Assets & Contract Liabilities As discussed above, the payment terms and conditions in our customer contracts vary. In some cases, customers prepay for their goods and services; in other cases, after appropriate credit evaluations, payment is due in arrears. When the timing of our delivery of goods and services is different from the timing of the payments made by customers, we recognize either a contract asset (performance precedes contractual due date) or a contract liability (customer payment precedes performance or when we have a right to consideration that is unconditional before the transfer of goods or services to a customer). Receivables are recorded when the right to consideration becomes unconditional. Contract liabilities are recognized as revenue as (or when) we perform under the contract. See Footnote 4 “Revenue and Receivables” for additional information related to our receivables, contract assets and contract liabilities. Costs Incurred to Sell Vacation Ownership Products We charge marketing and sales costs we incur to sell vacation ownership products to expense when incurred. Earnings Per Share Attributable to Common Stockholders Basic earnings per share attributable to common stockholders is calculated by dividing the net income attributable to common stockholders 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 per share attributable to common stockholders is calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period. The dilutive effect of outstanding equity-based compensation awards is reflected in diluted earnings per share attributable to common stockholders by application of the treasury stock method. Variable Interest Entities We consolidate entities under our control, including VIEs where we are deemed to be the primary beneficiary. In accordance with the applicable accounting guidance for the consolidation of VIEs, we analyze our variable interests, including loans, guarantees and equity investments, to determine if an entity in which we have a variable interest is a VIE. Our analysis includes both quantitative and qualitative reviews. We base our quantitative analysis on the forecasted cash flows of the entity, and our qualitative analysis on our review of the design of the entity, its organizational structure including decision-making ability, and relevant financial agreements. We also use our qualitative analyses to determine if we must consolidate a VIE because we are its primary beneficiary. Fair Value Measurements We have several financial instruments that we are required to disclose at fair value on a recurring basis. See Footnote 7 “Financial Instruments” for further information. We also apply the provisions of fair value measurement to various non-recurring measurements for our financial and non-financial assets and liabilities. The applicable accounting standards define fair value as the price that would be received upon selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). We measure fair value of our assets and liabilities using inputs from the following three levels of the fair value hierarchy: • Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date. • Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). • Level 3 includes unobservable inputs that reflect our assumptions about what factors market participants would use in pricing the asset or liability. We develop these inputs based on the best information available, including our own data. 82 Cash and Cash Equivalents We consider all highly liquid investments with an initial purchase maturity of three months or less at the date of purchase to be cash equivalents. Restricted Cash Restricted cash primarily consists of cash restricted for use by consolidated owners’ associations which is designated for resort operations and other specific uses, such as reserves, cash held in a reserve account related to vacation ownership notes receivable securitizations, cash collected for maintenance fees to be remitted to owners’ associations, and deposits received and held in escrow, primarily associated with the sale of vacation ownership products. Accounts Receivable Accounts receivable are comprised of amounts due from customers, primarily owners’ associations, resort developers, owners and members, credit card receivables, amounts due from taxing authorities, indemnification assets, and other miscellaneous receivables. Accounts receivable outstanding longer than the contractual payment terms are considered past due. We determine our credit loss reserve for accounts receivable by considering a number of factors, including previous loss history, our judgment as to the specific customer’s current ability to pay its obligation and the condition of the general economy. We write off accounts receivable when they become uncollectible once we have exhausted all means of collection. Accounts receivable is presented net of a reserve for credit losses of $ 10 million and $ 5 million at December 31, 2024 and December 31, 2023, respectively. Accounts receivable also includes interest receivable on vacation ownership notes receivable. Write-offs of interest receivable are recorded as a reversal of previously recorded interest income. Loan Loss Reserves Acquired Vacation Ownership Notes Receivable Reserve for Credit Losses As part of both the ILG Acquisition and Welk Acquisition, we acquired existing portfolios of vacation ownership notes receivable. We account for these acquired vacation ownership notes receivable using the purchased credit deteriorated assets provision of the current expected credit loss model, whereby we established a reserve for credit losses and a corresponding increase in the book value of the acquired vacation ownership notes receivable, resulting in no impact to the recorded balance. The estimates of the reserve for credit losses on the acquired vacation ownership notes receivable are based on default rates that are an output of our static pool analyses. Any changes in the reserve for credit losses are recorded as Financing expenses on our Income Statements. For acquired vacation ownership notes receivable, the estimated collateral value is transferred from vacation ownership notes receivable to inventory upon foreclosure or revocation of the related vacation ownership note receivable. Contracts Receivable and Originated Vacation Ownership Notes Receivable Reserve We record the difference between the contract receivable or 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 contracts receivable or originated vacation ownership notes receivable, as applicable. See Footnote 6 “Vacation Ownership Notes Receivable” for further information. Past Due and Defaulted Although we consider loans to owners to be past due if we do not receive payment within 30 days of the due date, we suspend accrual of interest only on those loans that are over 90 days past due. For Legacy-MVW vacation ownership notes receivable, we consider loans over 150 days past due to be in default and fully reserve such amounts, less an estimate for reinstatement. For Legacy-ILG and Legacy-Welk vacation ownership notes receivable, we consider loans over 120 days past due to be in default and fully reserve such amounts, less an estimate for reinstatement. We apply payments we receive for vacation ownership notes receivable on non-accrual status first to interest, then to principal and any remainder to fees. We resume accruing interest when vacation ownership notes receivable are less than 90 days past due. We do not accept payments for vacation ownership notes receivable during the foreclosure process unless the amount is sufficient to pay all past due principal, interest, fees and penalties owed and fully reinstate the note. We write off vacation ownership notes receivable against the reserve once we receive title to the vacation ownership products through the foreclosure or deed-in-lieu process or, in certain circumstances, when revocation is complete. 83 Inventory Our inventory consists primarily of completed vacation ownership products. We carry our inventory at the lower of (1) cost, including costs of improvements and amenities incurred subsequent to acquisition, capitalized interest and real estate taxes plus other costs incurred during construction, or (2) estimated fair value, less costs to sell, which can result in impairment charges and/or recoveries of previous impairments. We account for vacation ownership inventory and cost of vacation ownership products in accordance with the authoritative guidance for accounting for real estate time-sharing transactions, which defines a specific application of the relative sales value method for reducing vacation ownership inventory and recording cost of sales as described in our policy for revenue recognition for vacation ownership products. Also, pursuant to the guidance for accounting for real estate time-sharing transactions, we do not reduce inventory for the cost of vacation ownership products related to variable consideration which has not been included within the transaction price (accordingly, no adjustment is made when inventory is reacquired upon default of the related originated vacation ownership note receivable). These standards provide for changes in estimates within the relative sales value calculations to be accounted for as real estate inventory true-ups, which we refer to as product cost true-up activity, and to be recorded in Cost of vacation ownership product expenses on the Income Statements to retrospectively adjust the margin previously recorded subject to those estimates to the amounts that would have been recorded historically had the revised estimates been used. Product cost true-up activity relating to vacation ownership products increased carrying values of inventory by $ 39 million, $ 36 million and $ 24 million during 2024, 2023 and 2022, respectively. Property and Equipment Property and equipment includes our sales centers, golf courses, information technology, including internal use software, finance lease assets, and other assets used in the normal course of business, as well as land held for future vacation ownership product development, and undeveloped and partially developed land parcels that are not part of an approved development plan and do not meet the criteria to be classified as held for sale. In addition, fully developed VOIs are classified as property and equipment until they are registered and available for sale. We record property and equipment at cost, including capitalized interest and real estate taxes incurred during active development. We capitalize the cost of improvements that extend the useful life of property and equipment when incurred. We expense all repair and maintenance costs as incurred. We compute depreciation using the straight-line method over the estimated useful lives of the assets ( three to forty years ), and we amortize leasehold improvements over the shorter of the asset life or lease term. Cloud Computing Arrangements We have entered into various cloud computing arrangements that are considered service contracts. We capitalize certain qualified implementation costs incurred in connection with these arrangements, including both internal and external costs. Capitalization of costs begins when the preliminary project stage is completed, management with the relevant authority authorizes and commits to the funding of the project, and it is probable that the project will be completed and will be used to perform the function intended. We cease capitalization of such costs when the implementation activities are complete. Capitalized implementation costs of $ 35 million and $ 28 million are recorded in Other assets on our Balance Sheets as of December 31, 2024 and December 31, 2023, respectively. We amortize capitalized implementation costs to an operating expense using the straight-line method over the term of the cloud computing arrangement ( 3 to 5 years). To the extent that we conclude we will not complete a project, we expect to cease using the services such capitalized costs are related to or expect to terminate the cloud computing arrangement early, we write off the remaining capitalized cost. Leases We account for leases in accordance with ASC Topic 842, “ Leases ” (“ASC 842”). We determine if an arrangement is or contains a lease at contract inception. Operating leases include lease arrangements for land, office space, real estate, sales centers, as well as various facilities and equipment supporting our operations, with varying terms and renewal option periods. Finance leases include lease arrangements for our corporate headquarters in Orlando, Florida, as well as other operations space. We also have a long-term finance lease for land underlying an operating hotel. In addition, we lease various equipment supporting our operations and classify these leases as finance leases in accordance with ASC 842. The depreciable life of these assets is limited to the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. 84 Right-of-use assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Short-term leases, which have an initial term of a year or less, are not recorded on the balance sheet. For purposes of calculating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Macroeconomic conditions are the primary factor used to estimate whether an option to extend a lease term will be exercised or not. Because the rate implicit in our leases is not readily determinable, we use our incremental borrowing rate as the discount rate, which approximates the interest rate at which we could borrow on a collateralized basis with similar terms and payments and in similar economic environments. Right-of-use assets exclude the unamortized portion of lease incentives received. Certain of our lease agreements include variable rental payments that are based on a percentage of sales over contractual levels and others include rental payments adjusted periodically for inflation. Additionally, with respect to our real estate leases, we do not separate lease and non-lease components. Impairment of Long-Lived Assets and Other Intangible Assets We assess long-lived assets, including property and equipment, leases, and definite-lived intangible assets, for recoverability when changes in circumstances indicate the carrying value may not be recoverable, for example, when there are material adverse changes in projected revenues or expenses, significant underperformance relative to historical or projected operating results, or significant negative industry or economic trends. We evaluate recoverability of an asset group by comparing its carrying value to the future net undiscounted cash flows that we expect will be generated by the asset group. If the comparison indicates that the carrying value of an asset group is not recoverable, we recognize an impairment loss for the excess of carrying value over the estimated fair value. When we recognize an impairment loss for assets to be held and used, we depreciate the adjusted carrying amount of those assets over their remaining useful life. We assess indefinite-lived intangible assets for potential impairment and continued indefinite use annually, or more frequently if an event or other circumstance indicates that we may not be able to recover the carrying amount of the asset. We may first assess qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible is less than its carrying amount. If the carrying value of the asset exceeds the fair value, we recognize an impairment loss in the amount of that excess. Goodwill We perform an annual review for the potential impairment of the carrying value of goodwill in the fourth quarter, or more frequently if events or circumstances indicate a possible impairment. For purposes of evaluating goodwill for impairment, we have two reporting units, which are also our reportable operating segments. In evaluating goodwill for impairment, we may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If we bypass the qualitative assessment, or if we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then we perform a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount. Qualitative factors that we consider include, for example, macroeconomic and industry conditions, overall financial performance, and other relevant entity-specific events. If the qualitative assessment is not conclusive, then a quantitative impairment analysis for goodwill is performed at the reporting unit level. We may also choose to perform this quantitative impairment analysis instead of the qualitative analysis. The quantitative impairment analysis compares the fair value of the reporting unit, determined using the income and/or market approach, to its recorded amount. If the recorded amount exceeds the fair value, then a goodwill impairment charge is recorded for the difference up to the recorded amount of goodwill. We calculate the estimated fair value of a reporting unit using a weighting of the income and market approaches. For the income approach, we use internally developed discounted cash flow models that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. For the market approach, we use internal analyses based primarily on market comparables. We base these assumptions on our historical data and experience, third-party appraisals, industry projections, micro and macro general economic condition projections, and our expectations. 85 Convertible Notes In the first quarter of 2022, we adopted Accounting Standards Update (“ASU”) 2020-06 – “ Debt — Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), using the modified retrospective method. Subsequent to the adoption of ASU 2020-06, our convertible senior notes are accounted for entirely as a liability and measured at their amortized cost as we are no longer required to separate our convertible notes into liability and equity components, and are required to calculate the impact of our convertible notes on diluted earnings per share using the “if-converted” method, regardless of intent to settle or partially settle the debt in cash. Under the “if-converted” method, diluted earnings per share is generally calculated assuming that all of our convertible notes are converted solely into shares of common stock at the beginning of the reporting period, unless the result would be anti-dilutive. The application of the “if-converted” method reduces our reported diluted earnings per share. The impacts of the adoption were recorded as a cumulative effect in the opening balance of retained earnings and the conversion feature related to our convertible notes was reclassified from equity to liabilities. In addition, we eliminated the related equity adjustment associated with the deferred tax liability. The adoption of ASU 2020-06 on January 1, 2022 resulted in an increase in debt of $ 107 million, a decrease in additional paid-in capital of $ 111 million, and a decrease in deferred taxes of $ 27 million, as well as a cumulative effect adjustment to the opening balance of retained earnings of $ 31 million. We continue to amortize the remaining debt issuance costs associated with our convertible notes over the respective terms of our convertible notes. Derivative Instruments We record derivatives at fair value. The designation of a derivative instrument as a hedge and its ability to meet the hedge accounting criteria determine how we reflect the change in fair value of the derivative instrument in our financial statements. A derivative qualifies for hedge accounting if we expect it to be highly effective in offsetting the underlying hedged exposure and we fulfill the hedge documentation requirements. We may designate a hedge as a cash flow hedge, fair value hedge, or a net investment in non-U.S. operations hedge based on the exposure we are hedging. If a qualifying hedge is deemed effective, we record changes in fair value in other comprehensive income. We assess the effectiveness of our hedging instruments quarterly, recognize current period hedge ineffectiveness immediately in earnings, and discontinue hedge accounting for any hedge that we no longer consider to be highly effective. We recognize changes in fair value for derivatives not designated as hedges or those not qualifying for hedge accounting in current period earnings. We are exposed to market risk from changes in interest rates, currency exchange rates, and debt prices. We manage our exposure to these risks by monitoring available financing alternatives, through pricing policies that may take into account currency exchange rates, and by entering into derivative arrangements. We may use derivative instruments as part of our overall strategy to manage our exposure to market risks associated with fluctuations in interest rates and currency exchange rates. As a matter of policy, we only enter into transactions that we believe will be highly effective at offsetting the underlying risk and we do not use derivatives for trading or speculative purposes. We have no outstanding derivative instruments as of December 31, 2024. Loss Contingencies We are subject to various legal proceedings and claims in the normal course of business, the outcomes of which are subject to significant uncertainty. We record an accrual for loss contingencies when we determine that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In making such determinations we evaluate, among other things, the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, our ability to make a reasonable estimate of the loss. We review these accruals each reporting period and make revisions based on changes in facts and circumstances. Defined Contribution Plan We administer and maintain a defined contribution plan for the benefit of all employees meeting certain eligibility requirements who elect to participate in the plan. Contributions are determined based on a specified percentage of salary deferrals by participating employees. We recognized compensation expense (net of cost reimbursements from owners’ associations) for our participating employees totaling $ 24 million in 2024, $ 24 million in 2023, and $ 23 million in 2022. 86 Deferred Compensation Plan Certain members of our senior management have the opportunity to participate in the Marriott Vacations Worldwide Deferred Compensation Plan (the “Deferred Compensation Plan”), which we maintain and administer. Under both the Deferred Compensation Plan and the Marriott International EDC (as defined below), participating employees are able to defer payment and income taxation of a portion of their salary and bonus. It also provides participants with the opportunity for long-term capital appreciation by crediting their accounts with notional earnings. Prior to the spin-off of MVW from Marriott International (the “Marriott Spin-Off”), certain members of our senior management had the opportunity to participate in the Marriott International, Inc. Executive Deferred Compensation Plan (the “Marriott International EDC”), which Marriott International maintains and administers. Subsequent to the Marriott Spin-Off, we remain liable to reimburse Marriott International for distributions to participants who were employees of Marriott Vacations Worldwide at the time of the Marriott Spin-Off, including earnings thereon. To support our ability to meet a portion of our obligations under the Deferred Compensation Plan, we acquired company owned insurance policies (the “COLI policies”) on the lives of certain participants in the Deferred Compensation Plan, the proceeds of which are intended to be aligned with the investment alternatives elected by plan participants and are payable to a rabbi trust with the Company as grantor. For both 2024 and 2023, participants were able to select a rate of return based on market-based investment alternatives for up to 100% of their contributions and existing balances, with one of those options being a fixed rate of return of 3.5 %. We consolidate the liabilities of the Deferred Compensation Plan and the related assets, which consist of the COLI policies held in the rabbi trust. The rabbi trust is considered a VIE. 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 December 31, 2024 and December 31, 2023, the value of the assets held in the rabbi trust was $ 131 million and $ 99 million, respectively, and is included in the Other line within assets on our Balance Sheets. Share-Based Compensation Costs During the second quarter of 2024, our stockholders approved the Amended and Restated Marriott Vacations Worldwide Corporation 2020 Equity Incentive Plan (the “MVW Equity Plan”), which supersedes the Marriott Vacations Worldwide Corporation Stock and Cash Incentive Plan and the Interval Leisure Group, Inc. 2013 Stock and Incentive Plan (collectively, the “Prior Plans”). No new awards will be granted under the Prior Plans and all awards that were granted under the Prior Plans will remain outstanding and continue to be governed by the Prior Plans. The MVW Equity Plan is maintained for the benefit of our officers, directors, and employees. Under the MVW Equity Plan, we are authorized to award: (1) restricted stock and restricted stock units (“RSUs”) of our common stock, (2) stock appreciation rights (“SARs”) relating to our common stock, and (3) stock options to purchase our common stock. We follow the provisions of ASC Topic 718 “ Compensation—Stock Compensation ,” which requires that a company measure the expense of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Generally, share-based awards granted to our employees, other than RSUs with performance vesting conditions, vest ratably over a four-year period. For share-based awards with service-only vesting conditions, we record compensation expense on a straight-line basis over the requisite service period. For RSUs with performance vesting conditions, the number of RSUs earned, if any, is determined following the end of a performance period (typically three years ) based upon the achievement over that period of specific quantitative operating financial measures and we recognize compensation expense once it is probable that the corresponding performance condition will be achieved. SARs awarded under the MVW Equity Plan are granted at exercise prices or strike prices equal to the market price of our common stock on the date of grant (this price is referred to as the “base value”). SARs generally expire ten years after the date of grant and both vest and become exercisable in cumulative installments of one quarter of the grant per year in each of the first four years following the date of grant. Upon exercise of SARs, our employees and non-employee directors receive a number of shares of our common stock equal to the number of SARs being exercised, multiplied by the quotient of (a) the market price of the common stock on the date of exercise (this price is referred to as the “final value”) minus the base value, divided by (b) the final value. We recognize the expense associated with these awards on our Income Statements based on the fair value of the awards as of the date that the share-based awards are granted and adjust that expense to the estimated number of awards that we expect will vest or be earned. The fair value of RSUs represents the number of awards granted multiplied by the average 87 of the high and low market price of our common stock on the date the awards are granted, reduced by the present value of the dividends expected to be paid on the shares during the vesting period, discounted at a risk-free interest rate. We generally determine the fair value of SARs using the Black-Scholes option valuation model, which incorporates assumptions about expected volatility, risk free interest rate, dividend yield and expected term. We issue shares from authorized shares upon the exercise of SARs held by our employees and directors. For share-based awards granted to non-employee directors, we recognize compensation expense on the grant date based on the fair value of the awards as of that date. See Footnote 18 “Share-Based Compensation” for more information on the MVW Equity Plan. Employee Stock Purchase Plan During 2015, our Board of Directors adopted, and our stockholders subsequently approved, the Marriott Vacations Worldwide Corporation Employee Stock Purchase Plan (the “ESPP”), which became effective during 2015. A total of 500,000 shares of common stock may be purchased under the ESPP. The ESPP allows eligible employees to purchase shares of our common stock at a price per share not less than 95 % of the fair market value per share of common stock on the purchase date, up to a maximum threshold established by the plan administrator for the offering period. Non-U.S. Operations The U.S. dollar is the functional currency of our consolidated entities operating in the United States. The functional currency for our consolidated entities operating outside of the United States is generally the currency of the economic environment in which the entity primarily generates and expends cash. For consolidated entities whose functional currency is not the U.S. dollar, we translate their financial statements into U.S. dollars. We translate assets and liabilities at the exchange rate in effect as of the financial statement date and translate Income Statement accounts using the weighted average exchange rate for the period. We include translation adjustments from currency exchange and the effect of exchange rate changes on intercompany transactions of a long-term investment nature as a separate component of equity. We report gains and losses from currency exchange rate changes related to intercompany receivables and payables that are not of a long-term investment nature, as well as gains and losses from non-U.S. currency transactions, in the (Losses) gains and other (expense) income, net line on our Income Statements. Income Taxes We file income tax returns, including with respect to our subsidiaries, in various jurisdictions around the world. We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the provision for income tax in the period that includes the enactment date. Changes in existing tax laws and rates, their related interpretations, and the uncertainty generated by the current economic environment may affect the amounts of deferred tax liabilities or the valuations of deferred tax assets over time. Our accounting for deferred tax consequences represents management’s best estimate of future events that can be appropriately reflected in the accounting estimates. We record a valuation allowance on deferred taxes if we determine it is more likely than not that we will not fully realize the future benefit of deferred tax assets. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. In the event we determine that we would be able to realize our deferred income tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which impacts the provision for income taxes. We file tax returns after the close of our fiscal year end and adjust our estimated tax receivable or liability to the actual tax receivable or tax due per the filed tax returns in the provision for income tax. For purposes of Global Intangible Low-Taxed Income, we have elected to use the period cost method and therefore have not recorded deferred taxes for basis differences expected to reverse in future periods. 88 For tax positions we have taken, or expect to take, in a tax return we apply a more likely than not threshold, under which we must conclude a tax position is more likely than not to be sustained, assuming that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information, in order to continue to recognize the benefit. In determining our provision for income taxes, we use judgment, reflecting our estimates and assumptions, in applying the more likely than not threshold. Based on our evaluations of tax positions, we believe that potential tax exposures have been recorded appropriately. Additionally, we recognize accrued interest and penalties related to our unrecognized tax benefits as a component of tax expense. New Accounting Standards Accounting Standards Update 2023-07 – “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”) In the fourth quarter of 2024, we adopted ASU 2023-07, which updated reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information to help users of financial statements understand how the chief operating decision maker evaluates segment expenses and operating results. The ASU did not change how we identify operating segments. The adoption of ASU 2023-07 on a retrospective basis, did not have a material impact on our financial statements, but rather enhanced our disclosure of segment information. See Footnote 20 “Business Segments” for the additional disclosures required by the adoption of ASU 2023-07. Future Adoption of Accounting Standards Accounting Standards Update 2023-09 – “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”) In December 2023, the Financial Accounting Standards Board (“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 expect to begin providing the enhanced disclosures required by this ASU in our Annual Report on Form 10-K for the year ending December 31, 2025. Accounting Standards Update 2024-03 - “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”) In November 2024, the FASB issued ASU 2024-03, which requires additional information about specific expense categories in the notes to financial statements for both interim and annual reporting periods. This update is effective for annual periods beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027, with early adoption permitted. We are evaluating the impact that the adoption of this update, including the timing of implementation, will have on our disclosures. Accounting Standards Update 2024-04 - “Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments” (“ASU 2024-04”) In November 2024, the FASB issued ASU 2024-04, which requires an entity to account for certain early settlements of convertible debt instruments as an induced conversion if the inducement offer includes the issuance of all consideration (in form and amount) issuable under the conversion privileges provided in the terms of the existing convertible debt instrument. This update is effective for annual periods beginning after December 15, 2025, and interim periods within those annual reporting periods, with early adoption permitted for all entities that have adopted the amendments in ASU 2020-06. We adopted ASU 2020-06 on January 1, 2022 using the modified retrospective method. We are evaluating the impact that the adoption of this update, including the timing of implementation, will have on our disclosures. 89 3. ACQUISITIONS AND DISPOSITIONS Acquisitions Orlando, Florida During the fourth quarter of 2024, we acquired a parcel of land in Orlando, Florida for $ 11 million, which we plan to develop into a 289 -unit Hyatt-branded vacation ownership property. The transaction was accounted for as an asset acquisition and was recorded in Property and equipment, net. Waikiki, Hawaii During the third quarter of 2024, we acquired 38 completed vacation ownership units located at our Marriott Vacation Club, Waikiki property for $ 65 million. The transaction was accounted for as an asset acquisition with all of the purchase price allocated to Inventory. See Footnote 19 “Variable Interest Entities” for additional information about this transaction, including our remaining commitment related to this property, and our activities relating to the VIE involved in this transaction. Additionally, during the first quarter of 2024, we acquired retail space located at our Marriott Vacation Club, Waikiki property for $ 48 million. The transaction was accounted for as an asset acquisition and was classified as held-for-sale and included in Other assets as of December 31, 2024. Savannah, Georgia During 2023, we acquired a property in Savannah, Georgia for $ 19 million. We plan to convert the property into a 73 -unit Westin-branded vacation ownership property. The transaction was accounted for as an asset acquisition and was recorded in Property and equipment, net. Charleston, South Carolina During 2023, we acquired a parcel of land and an adjacent retail space in Charleston, South Carolina for $ 17 million. We plan to develop the parcel of land into a 50 -unit Westin-branded vacation ownership property and use a portion of the retail space to operate a sales center. The transaction was accounted for as an asset acquisition and was recorded in Property and equipment, net. Bali During 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 and the remainder was repaid in the first quarter of 2024. Further, we reclassified $ 13 million of previous deposits associated with the project from Other assets to Property and equipment, net. Dispositions During 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 $ 17 million in (Losses) gains and other (expense) income, net on our Income Statement for the year ended December 31, 2022. Additionally, during 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 (Losses) gains and other (expense) income, net on our Income Statement for the year ended December 31, 2022, which included the realization of cumulative foreign currency translation gains of $ 10 million associated with the disposition of these entities. 90 4. REVENUE AND RECEIVABLES Sources of Revenue by Segment 2024 ($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total Sale of vacation ownership products $ 1,448 $ — $ — $ 1,448 Ancillary revenues 266 4 — 270 Management fee revenues 207 12 ( 5 ) 214 Exchange and other services revenues 139 166 54 359 Management and exchange 612 182 49 843 Rental 605 40 — 645 Cost reimbursements 1,723 9 ( 43 ) 1,689 Revenue from contracts with customers 4,388 231 6 4,625 Financing 342 — — 342 Total Revenues $ 4,730 $ 231 $ 6 $ 4,967 2023 ($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total Sale of vacation ownership products $ 1,460 $ — $ — $ 1,460 Ancillary revenues 252 5 — 257 Management fee revenues 180 24 ( 3 ) 201 Exchange and other services revenues 136 177 42 355 Management and exchange 568 206 39 813 Rental 531 40 — 571 Cost reimbursements 1,587 16 ( 42 ) 1,561 Revenue from contracts with customers 4,146 262 ( 3 ) 4,405 Financing 322 — — 322 Total Revenues $ 4,468 $ 262 $ ( 3 ) $ 4,727 91 2022 ($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total Sale of vacation ownership products $ 1,618 $ — $ — $ 1,618 Ancillary revenues 241 4 — 245 Management fee revenues 166 34 ( 5 ) 195 Exchange and other services revenues 127 188 72 387 Management and exchange 534 226 67 827 Rental 509 42 — 551 Cost reimbursements 1,388 23 ( 44 ) 1,367 Revenue from contracts with customers 4,049 291 23 4,363 Financing 293 — — 293 Total Revenues $ 4,342 $ 291 $ 23 $ 4,656 Timing of Revenue from Contracts with Customers by Segment The following tables detail the timing of revenue from contracts with customers by segment for each of the last three fiscal years. 2024 ($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total Services transferred over time $ 2,652 $ 91 $ 6 $ 2,749 Goods or services transferred at a point in time 1,736 140 — 1,876 Revenue from contracts with customers $ 4,388 $ 231 $ 6 $ 4,625 2023 ($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total Services transferred over time $ 2,411 $ 111 $ ( 3 ) $ 2,519 Goods or services transferred at a point in time 1,735 151 — 1,886 Revenue from contracts with customers $ 4,146 $ 262 $ ( 3 ) $ 4,405 2022 ($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total Services transferred over time $ 2,168 $ 130 $ 23 $ 2,321 Goods or services transferred at a point in time 1,881 161 — 2,042 Revenue from contracts with customers $ 4,049 $ 291 $ 23 $ 4,363 92 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 December 31, 2024 or December 31, 2023. ($ in millions) At December 31, 2024 At December 31, 2023 Receivables Accounts and contracts receivable, net $ 250 $ 265 Vacation ownership notes receivable, net 2,440 2,343 $ 2,690 $ 2,608 Contract Liabilities Advance deposits $ 162 $ 164 Deferred revenue 354 382 $ 516 $ 546 Revenue recognized during the year ended December 31, 2024 that was included in our contract liabilities balance at December 31, 2023 was $ 367 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 December 31, 2024, approximately 95 % 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. The following table shows the composition of our accounts and contracts receivable balances: ($ in millions) At December 31, 2024 At December 31, 2023 Receivables from contracts with customers, net $ 250 $ 265 Interest receivable 20 18 Tax receivable 57 44 Indemnification assets 34 40 Employee tax credit receivable 10 11 Other 16 7 $ 387 $ 385 93 5. INCOME TAXES Income Tax Provision The following table presents the components of our Income before income taxes and noncontrolling interests for the last three fiscal years: ($ in millions) 2024 2023 2022 United States $ 281 $ 419 $ 508 Non-U.S. jurisdictions 25 ( 21 ) 74 $ 306 $ 398 $ 582 Our (provision for) benefit from income taxes consisted of: ($ in millions) 2024 2023 2022 Current – U.S. Federal $ ( 28 ) $ ( 123 ) $ ( 91 ) – U.S. State ( 20 ) ( 21 ) ( 23 ) – Non-U.S. ( 7 ) ( 62 ) 5 ( 55 ) ( 206 ) ( 109 ) Deferred – U.S. Federal ( 23 ) 27 ( 13 ) – U.S. State ( 15 ) 12 ( 26 ) – Non-U.S. 4 21 ( 43 ) ( 34 ) 60 ( 82 ) $ ( 89 ) $ ( 146 ) $ ( 191 ) Reconciliation of U.S. Federal Statutory Income Tax Rate to Actual Income Tax Rate The following table reconciles the U.S. statutory income tax rate to our effective income tax rate: 2024 2023 2022 U.S. statutory income tax rate 21.0 % 21.0 % 21.0 % U.S. state income taxes, net of U.S. federal tax benefit 4.6 4.5 5.0 Share-based compensation, net of Section 162(m) limitation 0.8 0.3 ( 0.2 ) Other permanent differences (1) 1.0 ( 3.0 ) 1.5 Tax rate changes 0.3 ( 0.8 ) 2.8 Non-U.S. income 9.4 2.7 5.5 Tax credits ( 0.8 ) ( 0.6 ) ( 0.2 ) Unrecognized tax benefits ( 6.3 ) 5.5 ( 2.7 ) Change in valuation allowance ( 2.6 ) 7.1 1.0 Other items 1.6 ( 0.2 ) ( 0.8 ) Effective rate 29.0 % 36.5 % 32.9 % (1) The 2024 permanent differences are primarily related to non-deductible interest, other expenses and foreign taxes partially offset by non-taxable income. The 2023 permanent differences are primarily related to non-taxable income and foreign taxes deducted in the U.S. The 2022 permanent differences primarily relate to non-deductible interest. We conduct business in countries that grant “holidays” from income taxes for ten to thirty-year periods. These holidays expire through 2034 and may be impacted by the global minimum tax rules (Pillar 2) set forth for large multinational corporations. 94 Deferred Income Taxes The following table presents the significant components of our deferred tax assets and liabilities: ($ in millions) At Year-End 2024 At Year-End 2023 Deferred Tax Assets Inventory $ 74 $ 193 Reserves 166 139 Convertible debt 24 34 Deferred compensation 42 35 Property and equipment 73 56 Non-cash compensation 15 15 Net operating loss and capital loss carryforwards 143 153 Accrued expenses 30 21 Tax credits 30 27 Right-of-use asset 50 50 Other, net 31 25 Deferred tax assets 678 748 Less valuation allowance ( 163 ) ( 179 ) Net deferred tax assets 515 569 Deferred Tax Liabilities Long lived intangible assets ( 189 ) ( 199 ) Deferred sales of VOIs ( 549 ) ( 578 ) Right-of-use liability ( 43 ) ( 44 ) Other, net ( 41 ) ( 14 ) Deferred tax liabilities ( 822 ) ( 835 ) Total net deferred tax liabilities $ ( 307 ) $ ( 266 ) In 2024, the change in our valuation allowance is primarily related to realization of non-U.S. loss carryforwards. We have $ 6 million in foreign capital loss carryforwards and $ 126 million of foreign net operating loss carryforwards, some of which begin expiring in 2025; however, a significant portion of the net operating loss carryforwards have indefinite carryforward periods. We have $ 8 million of state net operating loss carryforwards, the majority of which will not expire within the next five years, $ 3 million of business interest deduction carryforwards and $ 7 million of state tax credit carryforwards, both of which have an indefinite carryforward period. In 2024, we elected to remove our permanent reinvestment assertion related to the undistributed earnings of certain foreign subsidiaries and accrued the applicable taxes of $ 20 million related to this decision. Subsequent to this change, we no longer have any subsidiaries for which undistributed earnings are treated as permanently reinvested. Unrecognized Tax Benefits A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) is as follows: ($ in millions) 2024 2023 2022 Unrecognized tax benefits at beginning of year $ 106 $ 25 $ 26 Increases related to tax positions taken during a prior period 8 87 3 Decreases related to tax positions taken during a prior period ( 82 ) ( 6 ) ( 4 ) Decreases as a result of a lapse of the applicable statute of limitations ( 9 ) — — Unrecognized tax benefits at end of year $ 23 $ 106 $ 25 95 The increase in the unrecognized tax benefits during 2023 and subsequent decrease during 2024 is primarily related to an $ 80 million proposed tax method change in 2023, which was filed with the IRS in 2024. The total amount of gross interest and penalties accrued relating to unrecognized tax benefits was $ 37 million at December 31, 2024 and $ 48 million at December 31, 2023, which is predominantly attributable to non-U.S. jurisdictions. We recognized an income tax benefit of $ 11 million in 2024, an income tax expense of $ 20 million in 2023, and an income tax benefit of $ 14 million in 2022, related to accrued interest and penalties. Unrecognized tax benefits (including interest and penalties) of $ 29 million and $ 38 million, net of indemnification, would have impacted the effective tax rate for the years ended December 31, 2024 and December 31, 2023, respectively, if recognized. We anticipate $ 31 million of unrecognized tax benefits, including interest and penalties, will 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., (the “Tax Matters Agreement”) and consequently have recorded a corresponding indemnification asset. The unrecognized tax benefits, including accrued interest and penalties, are included in Other liabilities on our Balance Sheets. Our income tax returns are subject to examination by relevant tax authorities. Certain of our returns are being audited in various jurisdictions for tax years 2007 through 2020. The amount of the unrecognized tax benefits may increase or decrease within the next twelve months as a result of audits or audit settlements. Other As of December 31, 2024, the $ 16 million tax reserve for non-income tax issues is predominantly related to the ILG Acquisition. We expect that we will be indemnified for liabilities of $ 3 million in connection with the Legacy-ILG non-income tax matters pursuant to the Tax Matters Agreement and consequently have recorded a corresponding indemnification asset. 6. VACATION OWNERSHIP NOTES RECEIVABLE The following table shows the composition of our vacation ownership notes receivable balances, net of reserves. December 31, 2024 December 31, 2023 ($ in millions) Originated Acquired Total Originated Acquired Total Securitized $ 1,824 $ 93 $ 1,917 $ 1,764 $ 148 $ 1,912 Eligible for securitization (1) 92 2 94 51 1 52 Not eligible for securitization (1) 417 12 429 363 16 379 Non-securitized 509 14 523 414 17 431 Total $ 2,333 $ 107 $ 2,440 $ 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. The following table summarizes interest income associated with vacation ownership notes receivable. ($ in millions) 2024 2023 2022 Interest income associated with vacation ownership notes receivable — securitized $ 288 $ 276 $ 243 Interest income associated with vacation ownership notes receivable — non-securitized 43 36 41 Total interest income associated with vacation ownership notes receivable $ 331 $ 312 $ 284 96 Vacation Ownership Notes Receivable Reserve 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. In the third quarter of 2023, we increased our vacation ownership notes receivable reserve to reflect then-current trends in delinquencies and default rates. As a result, we increased our originated vacation ownership notes receivable reserve by $ 59 million. We estimated the amount of the increase in our sales reserve primarily using information from a historical period of increased defaults. The additional reserve recorded in 2023 was the result of an adjustment to our future default rate estimate to reflect then-current macroeconomic conditions, including inflation outpacing wage growth, continuing high interest rates, mixed economic indicators and increased global insecurity. During the second quarter of 2024, we increased our sales reserve to reflect increases in expected cumulative loss rates for our vacation ownership notes receivable originated during 2021 to 2024. As a result, we increased our originated vacation ownership notes receivable reserve by $ 70 million. Consistent with our analysis in the third quarter of 2023, we considered the cumulative impact of inflation and the mixed economic environment on delinquencies and default rates. We believed the related impact of higher than historical year-over-year increases in maintenance fees for 2023 and 2024 would continue to drive elevated delinquencies and defaults. As expected, maintenance fee increases for our points-based products for 2025, which were approved by the relevant property owners’ association, returned to levels consistent with historical experience. We have increased our sales reserve rate to reflect higher expected cumulative losses on new originations and do not expect to lower the sales reserve rate until we have sufficient evidence of improvement in delinquency and default rates. Credit Quality Indicators - Vacation Ownership Notes Receivable We use the origination of vacation ownership notes receivable and the FICO scores of the customer by brand as the primary credit quality indicators, as historical performance indicates that there is a relationship between the default behavior of borrowers by FICO score and the brand associated with the VOI they have acquired. The weighted average FICO score within our consolidated vacation ownership notes receivable pool was 725 and 723 at December 31, 2024 and December 31, 2023, respectively, based upon the FICO score of the borrower at the time of origination. 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 December 31, 2024. Originated Vacation Ownership Notes Receivable ($ in millions) Non-Securitized Securitized Total 2025 $ 84 $ 141 $ 225 2026 60 150 210 2027 56 158 214 2028 49 165 214 2029 39 165 204 Thereafter 221 1,045 1,266 Balance at December 31, 2024 $ 509 $ 1,824 $ 2,333 Weighted average stated interest rate 11.7 % 13.4 % 12.9 % Range of stated interest rates 0.0 % to 20.9 % 0.0 % to 20.9 % 0.0 % to 20.9 % 97 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. Originated Vacation Ownership Notes Receivable Reserve ($ in millions) Non-Securitized Securitized Total Balance at December 31, 2021 193 140 333 Increase in vacation ownership notes receivable reserve 118 47 165 Securitizations ( 132 ) 132 — Clean-up call 37 ( 37 ) — Write-offs ( 136 ) — ( 136 ) Defaulted vacation ownership notes receivable repurchase activity (1) 69 ( 69 ) — Balance at December 31, 2022 149 213 362 Increase in vacation ownership notes receivable reserve 188 40 228 Securitizations ( 211 ) 211 — Clean-up call 99 ( 99 ) — Write-offs ( 135 ) — ( 135 ) Defaulted vacation ownership notes receivable repurchase activity (1) 105 ( 105 ) — Balance at December 31, 2023 195 260 455 Increase in vacation ownership notes receivable reserve 218 53 271 Securitizations ( 193 ) 193 — Clean-up call 80 ( 80 ) — Write-offs ( 199 ) — ( 199 ) Defaulted vacation ownership notes receivable repurchase activity (1) 151 ( 151 ) — Balance at December 31, 2024 $ 252 $ 275 $ 527 (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 originated vacation ownership notes receivable, before reserves, by brand and borrower FICO score at origination. Originated Vacation Ownership Notes Receivable as of December 31, 2024 ($ in millions) 700 + 600 - 699 < 600 No Score Total Marriott Vacation Ownership $ 1,513 $ 634 $ 58 $ 365 $ 2,570 Hyatt Vacation Ownership 210 75 2 3 290 $ 1,723 $ 709 $ 60 $ 368 $ 2,860 Originated Vacation Ownership Notes Receivable as of December 31, 2023 ($ in millions) 700 + 600 - 699 < 600 No Score Total 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 98 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 December 31, 2024, and gross write-offs by brand for the year ended December 31, 2024. Originated Vacation Ownership Notes Receivable - Marriott Vacation Ownership ($ in millions) 2024 2023 2022 2021 2020 & Prior Total 700 + $ 529 $ 378 $ 256 $ 148 $ 202 $ 1,513 600 - 699 180 150 120 76 108 634 < 600 17 14 10 7 10 58 No Score 176 88 41 14 46 365 $ 902 $ 630 $ 427 $ 245 $ 366 $ 2,570 Gross write-offs $ 8 $ 44 $ 49 $ 27 $ 38 $ 166 Originated Vacation Ownership Notes Receivable - Hyatt Vacation Ownership ($ in millions) 2024 2023 2022 2021 2020 & Prior Total 700 + $ 94 $ 53 $ 41 $ 19 $ 3 $ 210 600 - 699 32 19 15 7 2 75 < 600 1 1 — — — 2 No Score 1 1 1 — — 3 $ 128 $ 74 $ 57 $ 26 $ 5 $ 290 Gross write-offs $ 2 $ 12 $ 13 $ 6 $ — $ 33 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 a $ 9 million reserve, and interest rates for our acquired vacation ownership notes receivable at December 31, 2024. Acquired Vacation Ownership Notes Receivable ($ in millions) Non-Securitized Securitized Total 2025 $ 6 $ 23 $ 29 2026 3 21 24 2027 2 17 19 2028 1 11 12 2029 1 7 8 Thereafter 1 14 15 Balance at December 31, 2024 $ 14 $ 93 $ 107 Weighted average stated interest rate 13.8 % 14.2 % 14.2 % Range of stated interest rates 0.0 % to 21.9 % 0.0 % to 21.9 % 0.0 % to 21.9 % 99 The following tables show acquired vacation ownership notes receivable, before reserves, by brand and borrower FICO score at origination. Acquired Vacation Ownership Notes Receivable as of December 31, 2024 ($ in millions) 700 + 600 - 699 < 600 No Score Total Marriott Vacation Ownership $ 30 $ 21 $ 3 $ 5 $ 59 Hyatt Vacation Ownership 34 22 — 1 57 $ 64 $ 43 $ 3 $ 6 $ 116 Acquired Vacation Ownership Notes Receivable as of December 31, 2023 ($ in millions) 700 + 600 - 699 < 600 No Score Total Marriott Vacation Ownership $ 46 $ 32 $ 4 $ 9 $ 91 Hyatt Vacation Ownership 53 34 1 1 89 $ 99 $ 66 $ 5 $ 10 $ 180 Vacation Ownership Notes Receivable on Non-Accrual Status For both non-securitized and securitized vacation ownership notes receivable, we estimated the average remaining default rate of 13.96 % as of December 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 $ 14 million as of December 31, 2024 and $ 13 million as of 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. Vacation Ownership Notes Receivable ($ in millions) Non-Securitized Securitized Total Investment in vacation ownership notes receivable on non-accrual status at December 31, 2024 $ 171 $ 24 $ 195 Investment in vacation ownership notes receivable on non-accrual status at December 31, 2023 $ 141 $ 27 $ 168 The following table shows the aging of the recorded investment in principal, before reserves, in vacation ownership notes receivable as of December 31, 2024 and December 31, 2023. December 31, 2024 December 31, 2023 ($ in millions) Non-Securitized Securitized Total Non-Securitized Securitized Total 31 – 90 days past due $ 29 $ 74 $ 103 $ 31 $ 72 $ 103 91 – 120 days past due 11 19 30 7 19 26 Greater than 120 days past due 160 5 165 134 8 142 Total past due 200 98 298 172 99 271 Current 579 2,099 2,678 460 2,082 2,542 Total vacation ownership notes receivable $ 779 $ 2,197 $ 2,976 $ 632 $ 2,181 $ 2,813 100 7. FINANCIAL INSTRUMENTS The following table shows the carrying values and the estimated fair values of financial assets and liabilities that qualify as financial instruments, determined in accordance with the authoritative guidance for disclosures regarding the fair value of financial instruments. Considerable judgment is required in interpreting market data to develop estimates of fair value. The use of different market assumptions and/or estimation methodologies could have a material effect on the estimated fair value amounts. 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, and Accrued liabilities, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments. At December 31, 2024 At December 31, 2023 ($ in millions) Carrying Amount Fair Value Carrying Amount Fair Value Vacation ownership notes receivable, net $ 2,440 $ 2,508 $ 2,343 $ 2,427 Contracts receivable for financed VOI sales, net 46 46 37 37 Other assets 131 131 99 99 Total financial assets $ 2,617 $ 2,685 $ 2,479 $ 2,563 Securitized debt, net $ ( 2,136 ) $ ( 2,147 ) $ ( 2,096 ) $ ( 2,068 ) Term Loan, net ( 786 ) ( 796 ) ( 781 ) ( 784 ) Revolving Corporate Credit Facility, net ( 122 ) ( 125 ) ( 101 ) ( 105 ) 2028 Notes, net ( 348 ) ( 336 ) ( 348 ) ( 322 ) 2029 Notes, net ( 496 ) ( 467 ) ( 495 ) ( 445 ) 2026 Convertible notes, net ( 572 ) ( 546 ) ( 568 ) ( 508 ) 2027 Convertible notes, net ( 566 ) ( 541 ) ( 563 ) ( 513 ) Non-interest bearing note payable, net — — ( 4 ) ( 4 ) Total financial liabilities $ ( 5,026 ) $ ( 4,958 ) $ ( 4,956 ) $ ( 4,749 ) Vacation Ownership Notes Receivable At December 31, 2024 At December 31, 2023 ($ in millions) Carrying Amount Fair Value Carrying Amount Fair Value Securitized $ 1,917 $ 1,981 $ 1,912 $ 1,994 Eligible for securitization 94 98 52 54 Not eligible for securitization 429 429 379 379 Non-securitized 523 527 431 433 Total $ 2,440 $ 2,508 $ 2,343 $ 2,427 We estimate the fair value of our vacation ownership notes receivable that have been securitized using a discounted cash flow model. We believe this is comparable to the model that an independent third party would use in the current market. Our model uses default rates, prepayment rates, coupon rates, and loan terms for our securitized vacation ownership notes receivable portfolio as key drivers of risk and relative value to determine the fair value of the underlying vacation ownership notes receivable. 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 asset-backed securities (“ABS”) market. Generally, vacation ownership notes receivable are considered not eligible for securitization if any of the following attributes are present: (1) payments are greater than 30 days past due; (2) the first payment has not been received; or (3) the collateral is located in Asia or Europe. In some 101 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. We estimate the fair value of the portion of our vacation ownership notes receivable that have not been securitized that we believe will ultimately be securitized in the same manner as vacation ownership notes receivable that have been securitized. We value the remaining vacation ownership notes receivable that have not been securitized at their carrying value, rather than using our pricing model. We believe that the carrying value of these particular vacation ownership notes receivable approximates fair value because the stated, or otherwise imputed, interest rates of these loans are generally consistent with current market rates and the reserve for these vacation ownership notes receivable appropriately accounts for risks in default rates, prepayment rates, discount rates, and loan terms. We concluded that this fair value measurement should be categorized within Level 3. Contracts Receivable for Financed VOI Sales At the time at which we recognize revenue for our 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. We concluded that this fair value measurement should be categorized within Level 3. Other Assets Other assets include $ 131 million and $ 99 million of COLI policies acquired on the lives of certain participants in the Marriott Vacations Worldwide Deferred Compensation Plan at December 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). Securitized Debt We generate cash flow estimates by modeling all bond tranches for our active vacation ownership notes receivable securitization transactions, with consideration for the collateral specific to each tranche. The key drivers in our analysis include default rates, prepayment rates, bond interest rates, and other structural factors, which we use to estimate the projected cash flows. In order to estimate market credit spreads by rating, we obtain indicative credit spreads from investment banks that actively issue and facilitate the market for vacation ownership securities and determine an average credit spread by rating level of the different tranches. We then apply those estimated market spreads to swap rates in order to estimate an underlying discount rate for calculating the fair value of the active bonds payable. We concluded that this fair value measurement should be categorized within Level 3. Term Loan We estimate the fair value of our Term Loan (as defined in Footnote 16 “Debt”) using quotes from securities dealers as of the last trading day for the quarter; however, this loan has only a limited trading history and volume, and as such, this fair value estimate is not necessarily indicative of the value at which the Term Loan could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 3. Revolving Corporate Credit Facility We estimate that the gross carrying value of our Revolving Corporate Credit Facility (as defined in Footnote 16 “Debt”) approximates fair value as the contractual interest rate is variable plus an applicable margin. We concluded that this fair value measurement should be categorized within Level 3. Senior Notes We estimate the fair value of our 2028 Notes and 2029 Notes (each as defined in Footnote 16 “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. We concluded that this fair value measurement should be categorized within Level 2. 102 Convertible Notes We estimate the fair value of our convertible notes 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 the convertible notes could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 2. 8. EARNINGS PER SHARE Basic earnings per 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. Treasury stock is excluded from the weighted average number of shares of common stock outstanding. Diluted earnings per share attributable to common stockholders is calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period. The dilutive effect of outstanding equity-based compensation awards is reflected in diluted earnings per share applicable to common stockholders by application of the treasury stock method using average market prices during the period. The shares issuable on exercise of the warrants sold in connection with the issuance of our convertible notes will not impact the total dilutive weighted average shares outstanding unless and until the price of our common stock exceeds the respective strike price. 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 the convertible notes are considered to be anti-dilutive and do not impact our calculation of diluted earnings per share attributable to common stockholders for any periods presented herein. The tables below illustrate the reconciliation of the earnings and number of shares used in our calculation of basic and diluted earnings per share attributable to common stockholders. (in millions, except per share amounts) 2024 2023 2022 Net income attributable to common stockholders $ 218 $ 254 $ 391 Shares for basic earnings per share 35.4 36.5 40.4 Basic earnings per share $ 6.16 $ 6.96 $ 9.69 (in millions, except per share amounts) 2024 2023 2022 Net income attributable to common stockholders $ 218 $ 254 $ 391 Add back of interest expense related to convertible notes, net of tax 19 19 5 Numerator used to calculate diluted earnings per share $ 237 $ 273 $ 396 Shares for basic earnings per share 35.4 36.5 40.4 Effect of dilutive shares outstanding Employee SARs — 0.1 0.2 Restricted stock units 0.1 0.3 0.3 2022 Convertible Notes — — 0.7 2026 Convertible Notes 3.6 3.5 3.4 2027 Convertible Notes 3.0 3.1 0.2 Shares for diluted earnings per share 42.1 43.5 45.2 Diluted earnings per share $ 5.61 $ 6.28 $ 8.77 The computations of diluted earnings per share attributable to common stockholders above exclude approximately 222,000 , 193,000 , and 129,000 shares of common stock, the maximum number of shares issuable as of December 31, 2024, December 31, 2023, and December 31, 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. 103 In accordance with the applicable accounting guidance for calculating earnings per share, for the year ended December 31, 2024, we excluded from our calculation of diluted earnings per share 643,167 shares underlying 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 year ended December 31, 2023, we excluded from our calculation of diluted earnings per share 287,125 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 year ended December 31, 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. 9. INVENTORY The following table shows the composition of our inventory balances: ($ in millions) At Year-End 2024 At Year-End 2023 Real estate inventory (1) $ 725 $ 624 Other 10 10 $ 735 $ 634 (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. In addition to the above, at December 31, 2024 and December 31, 2023, we had $ 271 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 $ 33 million at December 31, 2024, of which $ 29 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. See Footnote 21 “Impairment and Restructuring” for information on the impairment of inventory recorded during 2024. 10. PROPERTY AND EQUIPMENT The following table details the composition of our property and equipment balances: ($ in millions) At Year-End 2024 At Year-End 2023 Land and land improvements $ 427 $ 428 Buildings and leasehold improvements 854 906 Furniture, fixtures and other equipment 148 139 Information technology 401 393 Construction in progress 43 52 1,873 1,918 Accumulated depreciation ( 703 ) ( 658 ) $ 1,170 $ 1,260 11. GOODWILL At both December 31, 2024 and December 31, 2023, the balance of our goodwill was $ 3,117 million, of which $ 2,770 million was in our Vacation Ownership reporting unit and $ 347 million was in our Exchange & Third-Party Management reporting unit, and reflects goodwill attributed to the ILG Acquisition and the Welk Acquisition. We performed our annual goodwill impairment test as of October 1, 2024 and prepared a qualitative assessment for both the Vacation Ownership and the Exchange & Third-Party Management reporting units, and determined that no impairment exists. 104 12. INTANGIBLE ASSETS The following table details the composition of our intangible asset balances: ($ in millions) At Year-End 2024 At Year-End 2023 Definite-lived intangible assets Member relationships $ 670 $ 670 Management contracts 427 431 1,097 1,101 Accumulated amortization ( 370 ) ( 310 ) 727 791 Indefinite-lived intangible assets Trade names 63 63 $ 790 $ 854 Definite-Lived Intangible Assets Definite-lived intangible assets, all of which were acquired as part of the ILG and Welk Acquisitions, are amortized on a straight-line basis over their estimated useful lives, ranging from 15 to 20 years. We recorded amortization expense of $ 60 million for the year ended December 31, 2024, and $ 61 million for each of the years ended December 31, 2023 and 2022, in the Depreciation and amortization line of our Income Statements. We estimate that our annual amortization expense will continue to be approximately $ 60 million for each of the next five fiscal years. Indefinite-Lived Intangible Assets All of our indefinite-lived intangible assets are related to the Exchange & Third-Party Management segment. We performed our annual impairment test of indefinite-lived intangible assets during the fourth quarters of 2024 and 2023, and no impairment charges were recorded in either year. 13. CONTINGENCIES AND COMMITMENTS Commitments and Letters of Credit As of December 31, 2024, we had the following commitments outstanding: • We have various contracts for the use of information technology hardware and software, including cloud computing arrangements, that we use in the normal course of business. Our aggregate commitment under these contracts was $ 82 million, of which we expect $ 49 million, $ 24 million, $ 7 million, and $ 2 million will be paid in 2025, 2026, 2027, and 2028, respectively. • We have a commitment of $ 122 million to purchase property and vacation ownership units located in Nashville, Tennessee, 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 168 vacation ownership units in 2027, and we expect to make payments when specific construction milestones are completed as follows: $ 14 million in 2026 and $ 108 million in 2027. • We have remaining commitments of $ 32 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: $ 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: $ 6 million in 2025, $ 14 million in 2026, and $ 1 million in 2027. 105 • We have remaining commitments of $ 80 million to purchase vacation ownership units located in Thailand, in two separate transactions for use in our Vacation Ownership segment. • We expect to complete the acquisition of 52 vacation ownership units in 2025 pursuant to one of the commitments, subject to performance of agreed-upon pre-closing obligations by the seller, and to make a remaining payment with respect to these units upon closing as follows: $ 43 million in 2025. • We expect to complete the acquisition of 60 vacation ownership units in 2026 pursuant to the other commitment, contingent upon completion of construction to agreed-upon standards within specified timeframes, and to make remaining payments with respect to these units 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 3 “Acquisitions and Dispositions” for information about purchases that occurred in 2024 pursuant to this commitment and Footnote 19 “Variable Interest Entities” for additional information about this commitment and our activities relating to the VIE involved in this commitment. Surety bonds issued as of December 31, 2024 totaled $ 130 million, the majority of which were requested by federal, state or local governments in connection with our operations. As of December 31, 2024, we had $ 18 million of letters of credit outstanding under our Revolving Corporate Credit Facility (as defined in Footnote 16 “Debt”), of which $ 17 million were related to and in lieu of reserves required for our outstanding securitization transactions completed during the first quarter of 2024 and the fourth quarter of 2023. In addition, as of December 31, 2024, we had $ 22 million in letters of credit outstanding that were related to and in lieu of reserves required for our most recent outstanding securitization transaction completed in the third quarter of 2024, which were not issued pursuant to, nor do they impact our borrowing capacity under, the Revolving Corporate Credit Facility. Guarantees 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 December 31, 2024, our maximum exposure under fixed dollar guarantees was $ 3 million, of which $ 1 million, $ 1 million, $ 1 million, and less than $ 1 million relate to 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. The agreement will terminate on the earlier of: 1) sale of 95 % of the total ownership interests in the owners’ association; or 2) written notification of termination by either party. At December 31, 2024, our expected commitment for 2025 is $ 20 million, which will ultimately be recorded as a component of rental expense on our income statement. Loss Contingencies In February 2019, the owners’ association for the St. Regis Residence Club, New York filed a lawsuit in the Supreme Court for the State of New York, New York County, Commercial Division against ILG and several of its subsidiaries and certain third parties. The operative complaint alleged that the defendants breached their fiduciary duties related to sale and rental practices, aided and abetted certain breaches of fiduciary duty, engaged in self-dealing as the sponsor and manager of the club, tortiously interfered with the management agreement, were unjustly enriched, and engaged in anticompetitive conduct. The plaintiff sought unspecified damages, punitive damages and disgorgement of payments under the management and purchase agreements. In February 2022, the Court granted our motion to dismiss the complaint and dismissed with prejudice all claims except one (such claim, the “Remaining Claim”), with respect to which the plaintiff was granted leave to amend its complaint. The plaintiff filed an amended complaint with respect to the Remaining Claim and appealed the dismissal of the other claims. In June 2023, the appellate court upheld the dismissal of those claims. Plaintiff filed a motion for reconsideration of that appellate ruling, and in October 2023, the appellate court denied that motion. In November 2022, the Court granted our motion to dismiss the amended complaint 106 with respect to the Remaining Claim and again granted plaintiff leave to amend its complaint. The plaintiff filed an amended complaint with respect to the Remaining Claim and again appealed the dismissal of the other claims. 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’s appeal of the September 2023 ruling was dismissed as untimely by the appellate court on June 10, 2024. In the ordinary course of our business, various claims and lawsuits have been filed or are pending against us. A number of these lawsuits and claims may exist at any given time. We record and accrue for legal contingencies when we determine that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In making such determinations, we evaluate, among other things, the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, our ability to make a reasonable estimate of loss. We review these accruals each reporting period and make revisions based on changes in facts and circumstances. We have not accrued for the matter described above and we cannot estimate a range of the potential liability associated with this matter, if any, at this time. We have accrued for other claims and lawsuits, but the amount accrued is not material individually or in the aggregate. For matters not requiring accrual, we do not believe that the ultimate outcome of such matters, individually or in the aggregate, will materially harm our financial position, cash flows, or overall trends in results of operations based on information currently available. However, legal proceedings are inherently uncertain, and while we believe that our accruals, where required, are adequate and/or we have valid defenses to the claims asserted, unfavorable rulings could occur that could, individually or in the aggregate, have a material adverse effect on our business, financial condition, or operating results. 14. LEASES The following table presents the carrying values of our leases and the classification on our Balance Sheet. ($ in millions) Balance Sheet Classification At December 31, 2024 At December 31, 2023 Operating lease assets Other assets $ 74 $ 77 Finance lease assets Property and equipment, net 168 165 $ 242 $ 242 Operating lease liabilities Accrued liabilities $ 94 $ 102 Finance lease liabilities Debt, net 199 189 $ 293 $ 291 The following table presents the lease costs and the classification on our Income Statements for 2024, 2023, and 2022. ($ in millions) Income Statement Classification 2024 2023 2022 Operating lease cost Marketing and sales expense General and administrative expense $ 19 $ 31 $ 31 Finance lease cost Amortization of right-of-use assets Depreciation and amortization 12 10 7 Interest on lease liabilities Financing expense 13 11 4 Variable lease cost Marketing and sales expense 2 3 3 $ 46 $ 55 $ 45 107 The following table presents the maturity of our operating and finance lease liabilities as of December 31, 2024. ($ in millions) Operating Leases Finance Leases Total 2025 $ 25 $ 18 $ 43 2026 23 16 39 2027 16 14 30 2028 12 13 25 2029 10 13 23 Thereafter 31 461 492 Total lease payments 117 535 652 Less: Imputed interest ( 23 ) ( 336 ) ( 359 ) $ 94 $ 199 $ 293 Lease Term and Discount Rate The following table presents additional information about our lease obligations. At December 31, 2024 At December 31, 2023 Weighted-average remaining lease term Operating leases 6.2 years 7.6 years Finance leases 35.1 years 36.4 years Weighted-average discount rate Operating leases 6.5 % 6.6 % Finance leases 6.5 % 6.5 % Other Information The following table presents supplemental cash flow information for 2024, 2023, and 2022. ($ in millions) 2024 2023 2022 Cash paid for amounts included in measurement of lease liabilities Operating cash flows for finance leases $ 14 $ 7 $ 5 Operating cash flows for operating leases $ 24 $ 33 $ 32 Financing cash flows for finance leases $ 6 $ 5 $ 4 Right-of-use assets obtained in exchange for lease obligations Operating leases $ 23 $ 31 $ 6 Finance leases $ 16 $ 88 $ 8 108 15. SECURITIZED DEBT The following table provides detail on our securitized debt, net of unamortized debt discount and issuance costs. ($ in millions) At December 31, 2024 At December 31, 2023 Vacation ownership notes receivable securitizations, gross (1) $ 2,039 $ 1,971 Unamortized debt discount and issuance costs ( 25 ) ( 23 ) 2,014 1,948 Warehouse Credit Facility, gross (2) 124 150 Unamortized debt issuance costs ( 2 ) ( 2 ) 122 148 $ 2,136 $ 2,096 (1) Interest rates as of December 31, 2024 range from 1.5 % to 6.6 %, with a weighted average interest rate of 4.7 %. (2) Effective interest rate as of December 31, 2024 was 5.7 %. All of our securitized debt is non-recourse. See Footnote 19 “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 December 31, 2024. Vacation Ownership Notes Receivable Securitizations Warehouse Credit Facility (1) Total ($ in millions) Payments Year 2025 $ 177 $ 6 $ 183 2026 183 6 189 2027 186 112 298 2028 187 — 187 2029 183 — 183 Thereafter 1,123 — 1,123 $ 2,039 $ 124 $ 2,163 (1) Excludes future Warehouse Credit Facility renewals. Vacation Ownership Notes Receivable Securitizations Each of the securitized vacation ownership notes receivable transactions contains various triggers relating to the performance of the underlying vacation ownership notes receivable. 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 2024, and as of December 31, 2024, no securitized vacation ownership notes receivable pools were out of compliance with their respective established parameters. As of December 31, 2024, we had 12 securitized vacation ownership notes receivable pools outstanding. 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. 109 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. 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, were used to repay the outstanding obligations on our warehouse credit facility (as defined below) and for other general corporate purposes. During the third quarter of 2024, we securitized a pool of $ 454 million of vacation ownership notes receivable. In connection with the securitization, $ 445 million in vacation ownership loan backed notes were issued by MVW 2024-2 LLC (the “2024-2 LLC”) in a private placement. Three classes of vacation ownership loan backed notes were issued by the 2024-2 LLC: $ 307 million of Class A Notes, $ 86 million of Class B Notes, and $ 52 million of Class C Notes. The Class A Notes have an interest rate of 4.43 %, the Class B Notes have an interest rate of 4.58 %, and the Class C Notes have an interest rate of 4.92 %, for an overall weighted average interest rate of 4.52 %. Proceeds from the transaction, net of fees, were used to repay the outstanding obligations on our warehouse credit facility (as defined below) and for other general corporate purposes. Warehouse Credit Facility Our warehouse credit facility (the “Warehouse Credit Facility”), which has a borrowing capacity of $ 500 million, allows for the securitization of vacation ownership notes receivable on a revolving non-recourse basis. If not renewed prior to termination, any amounts outstanding under the Warehouse Credit Facility would become due and payable 13 months after termination, at which time all principal and interest collected with respect to the vacation ownership notes receivable held in the Warehouse Credit Facility would be redirected to the lenders to pay down the outstanding debt under the facility. During the second quarter of 2024, we amended certain agreements associated with our Warehouse Credit Facility (the “Warehouse Amendment”). The Warehouse Amendment extended the revolving period from May 31, 2025 to June 11, 2026, and modified the benchmark interest rate applicable to most borrowings under the Warehouse Credit Facility to the Secured Overnight Financing Rate (“SOFR”). The Warehouse Amendment also removed the use of Adjusted SOFR, which was defined as SOFR plus a 0.10 % adjustment. Additionally, as part of the Warehouse Amendment, the credit spread was changed from 135 basis points over Adjusted SOFR to 115 basis points over SOFR. The Warehouse Amendment made no other material changes to the Warehouse Credit Facility. The advance rate for vacation ownership notes receivable securitized using the Warehouse Credit Facility varies based on the characteristics of the securitized vacation ownership notes receivable. We also pay unused facility and other fees under the Warehouse Credit Facility. We generally expect to securitize our vacation ownership notes receivable, including any vacation ownership notes receivable held in the Warehouse Credit Facility, in the ABS market typically twice a year. 110 16. DEBT The following table provides detail on our debt balances, net of unamortized debt discount and issuance costs: ($ in millions) At December 31, 2024 At December 31, 2023 Corporate Credit Facility Term Loan (1) $ 796 $ 784 Unamortized debt discount and issuance costs ( 10 ) ( 3 ) 786 781 Revolving Corporate Credit Facility (2) 125 105 Unamortized debt issuance costs ( 3 ) ( 4 ) 122 101 Senior Unsecured Notes 2028 Notes 350 350 Unamortized debt discount and issuance costs ( 2 ) ( 2 ) 348 348 2029 Notes 500 500 Unamortized debt discount and issuance costs ( 4 ) ( 5 ) 496 495 Convertible Notes 2026 Convertible Notes 575 575 Unamortized debt discount and issuance costs ( 3 ) ( 7 ) 572 568 2027 Convertible Notes 575 575 Unamortized debt discount and issuance costs ( 9 ) ( 12 ) 566 563 Finance Leases 199 189 Non-Interest Bearing Note Payable — 4 $ 3,089 $ 3,049 (1) The effective interest rate as of December 31, 2024 was 6.6 %. (2) The effective interest rate as of December 31, 2024 was 6.3 %. The following table shows scheduled principal payments for our debt, excluding finance leases, as of December 31, 2024. Payments Year ($ in millions) 2025 2026 2027 2028 2029 Thereafter Total Term Loan $ 8 $ 8 $ 8 $ 8 $ 8 $ 756 $ 796 Revolving Corporate Credit Facility — — 125 — — — 125 2028 Notes — — — 350 — — 350 2029 Notes — — — — 500 — 500 2026 Convertible Notes — 575 — — — — 575 2027 Convertible Notes — — 575 — — — 575 $ 8 $ 583 $ 708 $ 358 $ 508 $ 756 $ 2,921 111 Corporate Credit Facility Our corporate credit facility (the “Corporate Credit Facility”), which consists of a term loan facility (the “Term Loan”) and a revolving credit facility (the “Revolving Corporate Credit Facility”), provides support for our business, including ongoing liquidity and letters of credit. During the second quarter of 2024, we entered into an amendment to the Corporate Credit Facility (the “Amendment”), which, among other things, provided for a new $ 800 million term loan facility scheduled to mature on April 1, 2031 (the “New Term Loan”). Prior to the Amendment, the Corporate Credit Facility included a $ 900 million term loan facility. The proceeds of the New Term Loan were used to refinance, in full, the Term Loan, which had a balance of $ 784 million as of March 31, 2024 and was scheduled to mature on August 31, 2025. The interest rate applicable to the New Term Loan is 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. Our Revolving Corporate Credit Facility has a borrowing capacity of $ 750 million, which includes a letter of credit sub-facility of $ 75 million, and terminates on March 31, 2027. Borrowings under the Revolving Corporate Credit Facility generally bear interest at a floating rate plus an applicable margin that varies from 0.75 % to 2.25 % depending on the type of loan and our leverage. The interest rate applicable to borrowings under the Revolving Corporate Credit Facility references SOFR and is based on “Adjusted Term SOFR,” which is calculated as Term SOFR (as defined in the Revolver Amendment), plus a 0.10 % adjustment, subject to a 0.00 % floor. In addition, we pay a commitment fee on the unused availability under the Revolving Corporate Credit Facility at a rate that varies from 25 to 35 basis points per annum, also depending on our leverage. Any amounts borrowed under the Corporate Credit Facility, as well as obligations with respect to letters of credit issued pursuant to the Revolving Corporate Credit Facility, are secured by a perfected first priority security interest in substantially all of the assets of the borrower 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 entities). During the second quarter of 2024, $ 200 million of interest rate swaps and a $ 100 million interest rate collar that were entered into prior to 2023 to hedge a portion of our interest rate risk on the Term Loan expired and are no longer recorded on our Balance Sheet as of December 31, 2024. We characterized payments we made or received 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 2024, 2023 and 2022. There were no reclassifications to the Income Statement for any of the periods presented below. ($ in millions) 2024 2023 2022 Derivative Instrument Adjustment, Beginning of Year $ 3 $ 13 $ ( 18 ) Other comprehensive (loss) gain before reclassifications ( 3 ) ( 10 ) 31 Derivative Instrument Adjustment, End of Year $ — $ 3 $ 13 Senior Notes Our senior notes include: • $ 350 million aggregate principal amount of 4.750 % Senior Unsecured Notes due 2028 issued in 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 2021 with a maturity date of June 15, 2029 (the “2029 Notes”). 2028 Notes We issued the 2028 Notes under an indenture with The Bank of New York Mellon Trust Company, N.A., as trustee. We received net proceeds of $ 346 million from the offering, after deducting the underwriting discount and estimated expenses. We pay interest on the 2028 Notes on March 15 and September 15 of each year. We may redeem some or all of the 2028 Notes prior to maturity under the terms provided in the indenture. 112 2029 Notes We issued the 2029 Notes under an indenture with The Bank of New York Mellon Trust Company, N.A., as trustee. We received net proceeds of $ 493 million from the offering, after deducting the underwriting fees and transaction expenses. We pay interest on the 2029 Notes on June 15 and December 15 of each year. We may redeem some or all of the 2029 Notes prior to maturity under the terms provided in the indenture. Convertible Notes 2026 Convertible Notes 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 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 December 31, 2024 to 6.3809 shares of common stock per $1,000 principal amount of 2026 Convertible Notes (equivalent to a conversion price of $ 156.72 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 December 31, 2024, the effective interest rate was 0.55 %. Amortization of debt issuance costs related to the 2026 Convertible Notes was $ 3 million in each of the three years ended December 31, 2024, 2023, and 2022. 2026 Convertible Note Hedges and Warrants 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 3.7 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 3.7 million shares of our common stock, in each case, as of December 31, 2024. The strike prices of the 2026 Convertible Note Hedges and the 2026 Warrants were subject to adjustment to $ 156.72 and $ 195.89 , respectively, as of December 31, 2024 and no 2026 Convertible Note Hedges or 2026 Warrants have been exercised. 2027 Convertible Notes During 2022, we issued $ 575 million aggregate principal amount of convertible senior notes (the “2027 Convertible Notes”) that bear interest at a rate of 3.25 %. The 2027 Convertible Notes mature on December 15, 2027, unless earlier repurchased or converted in accordance with their terms prior to that date. 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 December 31, 2024 to 5.2870 shares of common stock per $1,000 principal amount of 2027 Convertible Notes (equivalent to a conversion price of $ 189.14 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 December 31, 2024, the effective interest rate was 3.88 %. The following table provides the components of interest expense related to the 2027 Convertible Notes. ($ in millions) 2024 2023 2022 Contractual interest expense $ 19 $ 19 $ 1 Amortization of debt issuance costs 3 3 — $ 22 $ 22 $ 1 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 113 “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, in each case, as of December 31, 2024. The strike prices of the 2027 Convertible Note Hedges and the 2027 Warrants were subject to adjustment to $ 189.14 and $ 285.49 , respectively, as of December 31, 2024, and no 2027 Convertible Note Hedges or 2027 Warrants have been exercised. Finance Leases See Footnote 14 “Leases” for information on our finance leases. Non-cash financing activities related to our lease liabilities during 2024, 2023, and 2022, were $ 16 million, $ 108 million, and $ 7 million, respectively . 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 entities), 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 entities. 17. STOCKHOLDERS’ EQUITY Marriott Vacations Worldwide has 100,000,000 authorized shares of common stock, par value of $ 0.01 per share. At December 31, 2024, there were 75,852,678 shares of Marriott Vacations Worldwide common stock issued, of which 34,877,925 shares were outstanding and 40,974,753 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 December 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”). During the second quarter of 2023, our Board of Directors increased the then-remaining authorization under our previously approved Share Repurchase Program to authorize purchases up to $ 600 million and extended the term of this program to December 31, 2024. During the fourth quarter of 2024, our Board of Directors extended the term of this program to December 31, 2025. As of December 31, 2024, approximately $ 383 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. The specific timing, amount and other terms of the repurchases will depend on market conditions, corporate and regulatory requirements, contractual restrictions, and other factors. In connection with the current Share Repurchase Program, we are authorized to adopt one or more plans pursuant to the provisions of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The authorization for the current Share Repurchase Program may be suspended, terminated, increased or decreased by our Board of Directors at any time without prior notice. Acquired shares of our common stock are currently held as treasury shares and carried at cost in our Financial Statements. 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 Paid per Share As of December 31, 2023 25,141,073 $ 2,405 $ 95.65 For the year ended December 31, 2024 649,477 56 $ 85.79 As of December 31, 2024 25,790,550 $ 2,461 $ 95.40 114 Dividends We declared cash dividends to holders of common stock during the year ended December 31, 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 Stockholder Record Date Distribution Date Dividend per Share February 15, 2024 February 29, 2024 March 14, 2024 $ 0.76 May 9, 2024 May 23, 2024 June 6, 2024 $ 0.76 September 4, 2024 September 19, 2024 October 3, 2024 $ 0.76 December 6, 2024 December 19, 2024 January 3, 2025 $ 0.79 Subsequent to the end of 2024, on February 20, 2025, our Board of Directors declared a quarterly dividend of $ 0.79 per share to be paid on March 19, 2025 to stockholders of record as of March 5, 2025. 18. SHARE-BASED COMPENSATION The MVW Equity Plan is maintained for the benefit of our officers, directors, and employees. Under the MVW Equity Plan, we are authorized to award: (1) RSUs of our common stock, (2) SARs relating to our common stock, and (3) stock options to purchase our common stock. A total of approximately 3 million shares are authorized for issuance pursuant to grants under the MVW Equity Plan. As of December 31, 2024, approximately 2 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. We recognized $ 7 million, $ 7 million, and $ 6 million of tax benefits associated with share-based compensation during 2024, 2023, and 2022, respectively. ($ in millions) 2024 2023 2022 Service-based RSUs $ 30 $ 29 $ 31 Performance-based RSUs — — 3 30 29 34 SARs 3 2 5 $ 33 $ 31 $ 39 The following table details our deferred compensation costs related to unvested awards: ($ in millions) At Year-End 2024 (1) At Year-End 2023 Service-based RSUs $ 24 $ 22 Performance-based RSUs 5 1 29 23 SARs 1 1 $ 30 $ 24 (1) As of December 31, 2024, the weighted average remaining term for RSU grants outstanding at year-end 2024 was one to three years and we expect that deferred compensation expense will be recognized over a weighted average period of one to three years . 115 Restricted Stock Units We have issued RSUs that vest over time, which we refer to as service-based RSUs, and RSUs that vest based on performance with respect to established criteria, which we refer to as performance-based RSUs. The following table shows the changes in our outstanding RSUs and the associated weighted average grant-date fair values: 2024 Service-based Performance-based Total Number of RSUs Weighted Average Grant-Date Fair Value Per RSU Number of RSUs Weighted Average Grant-Date Fair Value Per RSU Number of RSUs Weighted Average Grant-Date Fair Value Per RSU Outstanding at year-end 2023 655,114 $ 123.91 192,724 $ 148.29 847,838 $ 129.45 Granted 403,071 $ 87.54 204,020 $ 85.12 607,091 $ 86.73 Distributed ( 249,097 ) $ 134.08 — $ — ( 249,097 ) $ 134.08 Forfeited ( 25,561 ) $ 107.54 ( 20,912 ) $ 109.86 ( 46,473 ) $ 108.59 Outstanding at year-end 2024 783,527 $ 102.50 375,832 $ 116.13 1,159,359 $ 106.92 The weighted average grant-date fair value per RSU granted in 2023 and 2022 was $ 143.08 and $ 151.86 , respectively. The fair value of the RSUs which vested in 2024, 2023, and 2022 was $ 22 million, $ 36 million, and $ 65 million, respectively. Stock Appreciation Rights The following table shows the changes in our outstanding SARs and the associated weighted average exercise prices: 2024 Number of SARs Weighted Average Exercise Price Per SAR Outstanding at year-end 2023 720,028 $ 116.56 Granted 86,759 $ 93.73 Exercised ( 45,022 ) $ 73.65 Forfeited or expired ( 3,036 ) $ 93.73 Outstanding at year-end 2024 (1)(2) 758,729 $ 116.59 (1) As of December 31, 2024, outstanding SARs had an aggregate intrinsic value of $ 3 million and a weighted average remaining term of 5 years. (2) As of December 31, 2024, 580,534 SARs with a weighted average exercise price of $ 112.42 , an aggregate intrinsic value of $ 3 million and a weighted average remaining contractual term of 4 years were exercisable. The weighted average grant-date fair value per SAR granted in 2024, 2023, and 2022 was $ 34.58 , $ 58.50 , and $ 59.68 , respectively. The SARs which vested in 2024 and 2023 did not have any intrinsic value. The intrinsic value of SARs which vested in 2022 was $ 2 million. The aggregate intrinsic value of SARs which were exercised in 2024, 2023, and 2022 was $ 1 million, less than $ 1 million, and $ 1 million, respectively. We use the Black-Scholes model to estimate the fair value of the SARs granted. The expected stock price volatility was calculated based on the average of the historical and implied volatility of our stock price. The average expected life was calculated using the simplified method, as we have insufficient historical information to provide a basis for estimating average expected life. The risk-free interest rate was calculated based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. The dividend yield assumption listed below is based on the expectation of future payouts. 116 The following table outlines the assumptions used to estimate the fair value of grants in 2024, 2023, and 2022: 2024 2023 2022 Expected volatility 45.78 % 40.47 % 42.86 % Dividend yield 3.21 % 1.87 % 1.53 % Risk-free rate 4.23 % 4.07 % 1.77 % Expected term (in years) 6.25 6.25 6.25 19. VARIABLE INTEREST ENTITIES 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, several classes of debt securities issued by a special purpose entity are generally collateralized by a single pool 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 the VIEs related to our vacation ownership notes receivable securitizations, and consolidated liabilities included on our Balance Sheet at December 31, 2024: ($ in millions) Vacation Ownership Notes Receivable Securitizations Warehouse Credit Facility Total Consolidated Assets Vacation ownership notes receivable, net of reserves $ 1,788 $ 129 $ 1,917 Interest receivable 15 1 16 Restricted cash 77 5 82 Total $ 1,880 $ 135 $ 2,015 Consolidated Liabilities Interest payable $ 3 $ 1 $ 4 Securitized debt 2,039 124 2,163 Total $ 2,042 $ 125 $ 2,167 The following table shows the interest income and expense recognized as a result of our involvement with these VIEs during 2024: ($ in millions) Vacation Ownership Notes Receivable Securitizations Warehouse Credit Facility Total Interest income $ 272 $ 16 $ 288 Interest expense $ 95 $ 9 $ 104 Debt issuance cost amortization $ 10 $ 1 $ 11 Administrative expenses $ 1 $ — $ 1 117 The following table shows cash flows between us and the vacation ownership notes receivable securitization VIEs: ($ in millions) 2024 2023 Cash Inflows Net proceeds from vacation ownership notes receivable securitizations $ 866 $ 841 Principal receipts 565 510 Interest receipts 266 240 Reserve release 245 49 Total 1,942 1,640 Cash Outflows Principal payments ( 553 ) ( 508 ) Voluntary repurchases of defaulted vacation ownership notes receivable ( 161 ) ( 118 ) Voluntary clean-up call ( 92 ) ( 51 ) Interest payments ( 95 ) ( 70 ) Funding of restricted cash ( 243 ) ( 48 ) Total ( 1,144 ) ( 795 ) Net Cash Flows $ 798 $ 845 The following table shows cash flows between us and the Warehouse Credit Facility VIE: ($ in millions) 2024 2023 Cash Inflows Proceeds from vacation ownership notes receivable securitizations $ 449 $ 642 Principal receipts 25 54 Interest receipts 16 31 Reserve release 11 11 Total 501 738 Cash Outflows Principal payments ( 18 ) ( 39 ) Voluntary repurchases of defaulted vacation ownership notes receivable ( 3 ) ( 5 ) Repayment of Warehouse Credit Facility ( 455 ) ( 610 ) Interest payments ( 9 ) ( 14 ) Funding of restricted cash ( 9 ) ( 21 ) Total ( 494 ) ( 689 ) Net Cash Flows $ 7 $ 49 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. We made voluntary repurchases of defaulted vacation ownership notes receivable of $ 164 million during 2024, $ 123 million during 2023 and $ 94 million during 2022. We also made voluntary repurchases of $ 615 million, $ 774 million and $ 338 million of other non-defaulted vacation ownership notes receivable during 2024, 2023 and 2022, respectively, to retire previous vacation ownership notes receivable securitizations. 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 We have a commitment to purchase a property located in Waikiki, Hawaii. The property is held by a VIE for which we are not the primary beneficiary. We do not control the decisions that most significantly impact the economic performance of the entity because we cannot prevent the variable interest entity from selling the property at a higher price. Accordingly, we have not consolidated the VIE. We expect to acquire the property over time and as of 118 December 31, 2024, we expect to make payments for the property as follows: $ 82 million in 2025, and $ 41 million in 2026. As of December 31, 2024, our Balance Sheet reflected $ 1 million in Accounts and contracts receivable, net, including a note receivable of less than $ 1 million, $ 12 million in Property and equipment, net, and $ 1 million in the Other line within liabilities on our Balance Sheet. We believe that our maximum exposure to loss as a result of our involvement with this VIE is approximately $ 15 million as of December 31, 2024. Refer to Footnote 3 “Acquisitions and Dispositions” for information about purchases pursuant to this commitment that occurred during 2024 . 20. BUSINESS SEGMENTS We define our reportable segments based on the way in which the chief operating decision maker (“CODM”), currently our chief executive officer, manages the operations of the Company for purposes of allocating resources and assessing performance. We operate in two operating and reportable business segments: Vacation Ownership and Exchange & Third-Party Management. These segments are managed independently due to the differing nature of their products and services. 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. 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: selling vacation ownership products; managing vacation ownership resorts, clubs, and owners’ associations; financing consumer purchases of vacation ownership products; and renting vacation ownership inventory. Exchange & Third-Party Management includes an exchange network and membership programs, as well as provision of management services to other resorts and lodging properties. We provide these services through our Interval International and Aqua-Aston businesses. 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. See Footnote 3 “Acquisitions and Dispositions” for more information on the disposition of VRI Americas. Our CODM evaluates the performance of our segments based primarily on the results of the segment without allocating corporate expenses or income taxes. We do not allocate corporate interest expense or indirect general and administrative expenses to our segments. We include interest income specific to segment activities within the appropriate segment. We allocate depreciation and amortization, other gains and losses, equity in earnings or losses from our joint ventures, and noncontrolling interest to each of our segments as appropriate. Corporate and other represents that portion of our results that are not allocable to our segments, including those relating to 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 attributable to common stockholders excluded from Adjusted EBITDA are not separately evaluated. Our CODM reviews budget-to-actual variances on a monthly basis using Adjusted EBITDA to make decisions about capital allocation and resource distribution to the segments. 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. 119 Segment Revenues and Adjusted EBITDA The table below presents the following for the periods presented: revenues, disaggregated by segment, reconciled to consolidated revenue; segment expenses, including significant expense categories and amounts that align with segment-level information regularly provided to our CODM; and segment Adjusted EBITDA reconciled to Net income attributable to common stockholders. 2024 2023 2022 ($ in millions) Vacation Ownership Exchange & Third-Party Management Total Vacation Ownership Exchange & Third-Party Management Total Vacation Ownership Exchange & Third-Party Management Total Revenues from external customers $ 4,730 $ 231 $ 4,961 $ 4,468 $ 262 $ 4,730 $ 4,342 $ 291 $ 4,633 Reconciliation of revenues Corporate and other (1) 6 ( 3 ) 23 Total consolidated revenues $ 4,967 $ 4,727 $ 4,656 Cost of vacation ownership products ( 200 ) — ( 224 ) — ( 289 ) — Marketing and sales ( 919 ) — ( 823 ) — ( 807 ) — Management and exchange ( 293 ) ( 122 ) ( 270 ) ( 118 ) ( 240 ) ( 120 ) Rental ( 498 ) — ( 466 ) — ( 400 ) — Financing ( 146 ) — ( 113 ) — ( 75 ) — Royalty fee ( 114 ) — ( 117 ) — ( 114 ) — Other segment items (2) ( 1,715 ) ( 7 ) ( 1,572 ) ( 14 ) ( 1,384 ) ( 23 ) Segment Adjusted EBITDA 845 102 947 883 130 1,013 1,033 148 1,181 Corporate and other (1) ( 220 ) ( 252 ) ( 215 ) Interest expense, net ( 162 ) ( 145 ) ( 118 ) Depreciation and amortization ( 146 ) ( 135 ) ( 132 ) Share-based compensation expense ( 33 ) ( 31 ) ( 39 ) Certain items ( 79 ) ( 50 ) ( 95 ) Provision for income taxes ( 89 ) ( 146 ) ( 191 ) Net income attributable to common stockholders $ 218 $ 254 $ 391 (1) Corporate and Other consist of results that are not allocable to our segments, including company-wide general and administrative expenses, corporate interest expense, transaction and integration costs, and income taxes. In addition, Corporate and Other includes revenues and expenses from Consolidated Property Owners’ Associations. Our CODM does not use this information for operating segment resource allocations. (2) Other segment items include cost reimbursements, non-cash share-based compensation, purchase accounting adjustments related to the Welk acquisition, and other. 120 Depreciation and Amortization ($ in millions) 2024 2023 2022 Vacation Ownership $ 100 $ 93 $ 92 Exchange & Third-Party Management 28 31 31 Total segment depreciation and amortization 128 124 123 Corporate and other 18 11 9 $ 146 $ 135 $ 132 Assets ($ in millions) At December 31, 2024 At December 31, 2023 Vacation Ownership $ 8,296 $ 8,167 Exchange & Third-Party Management 777 813 Total segment assets 9,073 8,980 Corporate and other 735 700 $ 9,808 $ 9,680 Capital Expenditures (including inventory) ($ in millions) 2024 2023 2022 Vacation Ownership $ 237 $ 171 $ 182 Exchange & Third-Party Management 2 — — Total segment capital expenditures 239 171 182 Corporate and other 11 63 33 $ 250 $ 234 $ 215 Revenues Excluding Cost Reimbursements ($ in millions) 2024 2023 2022 United States $ 2,797 $ 2,722 $ 2,886 All other countries 481 444 403 $ 3,278 $ 3,166 $ 3,289 Property and Equipment, net ($ in millions) At December 31, 2024 At December 31, 2023 United States $ 1,033 $ 1,103 All other countries 137 157 $ 1,170 $ 1,260 121 21. IMPAIRMENT AND RESTRUCTURING Impairment We incurred impairment charges during 2024, 2023, and 2022 as follows: ($ in millions) 2024 2023 2022 Inventory $ 28 $ — $ — Lease — 16 — Equity method investment — 8 — Investment in management contract 2 4 — Hotel — 2 — Property & equipment — 2 2 $ 30 $ 32 $ 2 Inventory Impairment During 2024, we recorded a non-cash impairment charge of $ 28 million related to Legacy-Welk inventory. The impairment charge reflects an elongated pace of sales at a higher marketing and selling cost than that estimated in purchase accounting. We used the income approach to estimate the fair value less costs to sell of the assets. Under the income approach, a Level 3 input, fair value is measured through a discounted cash flow. Under the income approach, we contemplated alternative uses to comply with the highest and best use provisions of ASC Topic 820, “Fair Value Measurements.” Lease Impairment During the first quarter of 2023, the lease term commenced for the finance lease arrangement for our new corporate headquarters in Orlando, Florida, upon the substantial completion of construction. Upon our relocation to the new corporate headquarters during the fourth quarter of 2023, we recorded a non-cash impairment charge of $ 16 million to the right-to-use asset related to the operating leases for our previous corporate headquarters as we did not expect proceeds from subleasing these spaces to exceed our future obligations under the operating leases. Restructuring Costs In November 2024, we announced the creation of a Strategic Business Operations office focused on accelerating our growth and driving operating efficiencies in all areas of our business while increasing organizational agility. We intend to modernize and optimize our processes and systems, including through advanced technology and automation, while focusing on efforts to increase sales efficiency and inventory optimization while capturing significant savings from initiatives related to procurement and corporate overhead. During 2024, we incurred $ 10 million of restructuring charges, including $ 6 million of severance and $ 4 million of other costs associated with these efforts. As of December 31, 2024, $ 6 million was accrued on our Balance Sheet related to these charges. During 2023, we realigned our management structure and made headcount reductions, resulting in severance costs of $ 6 million associated with the elimination of certain positions. As of December 31, 2023, $ 5 million was accrued on our Balance Sheet related to these charges. 122 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.