EX-99.1 2 pressreleaseschedulesq22017.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1


g309646g57q16.jpg
Jeff Hansen
Investor Relations
Marriott Vacations Worldwide Corporation
407.206.6149
Jeff.Hansen@mvwc.com
Ed Kinney
Corporate Communications
Marriott Vacations Worldwide Corporation
407.206.6278
Ed.Kinney@mvwc.com

Marriott Vacations Worldwide Reports Second Quarter Financial Results
ORLANDO, Fla. – August 3, 2017– Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported second quarter financial results and updated its guidance for the full year 2017. Due to the change in the company’s financial reporting calendar beginning in 2017, the second quarter of 2017 included the period from April 1, 2017 through June 30, 2017 (91 days) compared to the 2016 second quarter, which included the period from March 26, 2016 through June 17, 2016 (84 days). Prior year results have not been restated for the change in the company’s reporting calendar.
Second quarter 2017 highlights:
•
Total company vacation ownership contract sales were $209.9 million, an increase of $43.9 million, or 26 percent, compared to the prior year period. North America vacation ownership contract sales were $190.9 million, an increase of $45.3 million, or 31 percent, compared to the prior year period.
•
Excluding the estimated impact of the change in the company’s financial reporting calendar, total company and North America vacation ownership contract sales would have increased 18 percent and 22 percent, respectively, compared to the prior year period.
•
North America VPG totaled $3,579, a 6 percent increase from the second quarter of 2016.
•
North America tours increased 28 percent year-over-year.
•
Excluding the estimated impact of the change in the company’s financial reporting calendar, tours would have increased 18 percent, compared to the prior year period.
•
Net income was $44.3 million, or $1.58 fully diluted earnings per share (EPS), compared to net income of $36.3 million, or $1.26 fully diluted EPS, in the second quarter of 2016, an increase of 22 percent and 25 percent, respectively.
•
Adjusted net income was $44.6 million, compared to adjusted net income of $31.3 million in the second quarter of 2016, an increase of 43 percent. Adjusted fully diluted EPS was $1.60, compared to adjusted fully diluted EPS of $1.08 in the second quarter of 2016, an increase of 48 percent.
•
Adjusted EBITDA totaled $77.9 million, an increase of $13.7 million, or 21 percent, year-over-year.


Marriott Vacations Worldwide Reports Second Quarter Financial Results / 2

“I am extremely pleased with how 2017 has continued to progress. Contract sales, on a comparable basis, grew over 18 percent, marking the third quarter in a row that we’ve generated sales growth in excess of 15 percent. Adjusted EBITDA grew 21 percent, to $77.9 million, with strong contributions from all lines of business,” said Stephen P. Weisz, president and chief executive officer. “With the performance we’ve delivered through the end of the second quarter, we are raising our full year outlook for contract sales growth to 12 percent to 16 percent, net income to $154 million to $160 million, adjusted EBITDA to $282 million to $292 million, and adjusted free cash flow to $190 million to $210 million.”
Non-GAAP financial measures, such as adjusted net income, adjusted EBITDA, adjusted fully diluted earnings per share, adjusted free cash flow, and adjusted development margin are reconciled and adjustments are shown and described in further detail on pages A-1 through A-11 of the Financial Schedules that follow.
Second Quarter 2017 Results
As a result of the change in the company’s financial reporting calendar, financial results for the second quarter 2017 include the impact of seven additional days of operations.
Company Results
Second quarter 2017 company net income was $44.3 million, an $8.0 million increase from the second quarter of 2016. Excluding the impact of the provision for income taxes, these results were driven by $7.1 million of higher development margin, $5.0 million of higher rental revenues net of expenses, $5.0 million of higher resort management and other services revenues net of expenses, $2.5 million of higher financing revenues net of expenses and consumer financing interest expense, $1.8 million of lower acquisition costs, and $0.3 million of lower interest expense, partially offset by $10.8 million of lower gains and other income, $4.2 million of higher general and administrative costs, $2.3 million of higher royalty fees, and $0.2 million of higher litigation settlement costs.
Total company vacation ownership contract sales were $209.9 million, $43.9 million, or 26 percent, higher than the second quarter of 2016. These results were driven by $45.3 million of higher contract sales in the company’s North America segment and $1.2 million of higher contract sales in the company’s Asia Pacific segment, partially offset by $2.5 million of lower contract sales in the company’s Europe segment. Excluding the estimated impact of the change in the company’s financial reporting calendar, total company vacation ownership contract sales would have increased 18 percent, compared to the prior year period.
Development margin was $40.8 million, a $7.1 million increase from the second quarter of 2016. Development margin percentage was 21.4 percent compared to 23.1 percent in the prior year quarter. The increase in development margin reflected $11.0 million from higher contract sales volumes net of expenses, $6.8 million from lower product costs, and $1.9 million related to favorable revenue reportability year-over-year, partially offset by $7.0 million from lower favorable product cost true-up activity year-over-year, $5.4 million of higher marketing and sales costs including costs to ramp up the company’s new sales distributions, and $0.3 million from higher sales reserve activity. Adjusted development margin percentage, which excludes the impact of revenue reportability year-over-year, was 20.4 percent in the second quarter of 2017 compared to 22.8 percent in the second quarter of 2016.
Rental revenues totaled $84.2 million, a $9.1 million increase from the second quarter of 2016. Rental revenues net of expenses were $14.0 million, a $5.0 million, or 55 percent, increase from the second quarter of 2016.
Resort management and other services revenues totaled $79.2 million, a $5.0 million increase from the second quarter of 2016. Resort management and other services revenues, net of expenses, totaled $35.2 million, a $5.0 million, or 17 percent, increase from the second quarter of 2016.
Financing revenues totaled $32.5 million, a $3.9 million increase from the second quarter of 2016. Financing revenues, net of expenses and consumer financing interest expense, were $23.4 million, a $2.5 million, or 12 percent, increase from the second quarter of 2016.
Net income was $44.3 million, compared to net income of $36.3 million in the second quarter of 2016, an increase of $8.0 million, or 22 percent. Adjusted EBITDA was $77.9 million, a $13.7 million, or 21 percent, increase from $64.2 million in the second quarter of 2016.


Marriott Vacations Worldwide Reports Second Quarter Financial Results / 3

Segment Results
North America
North America vacation ownership contract sales were $190.9 million, an increase of $45.3 million, or 31 percent, from the prior year period, reflecting higher sales from existing sales centers driven by the success of our new marketing programs, as well as the continued ramp-up of new sales distributions. VPG increased $195, or 6 percent, to $3,579 in the second quarter of 2017 from the second quarter of 2016. Total tours in the second quarter of 2017 increased 28 percent, reflecting a 34 percent increase in first time buyer tours and a 23 percent increase in owner tours. Excluding the estimated impact of the change in the company’s financial reporting calendar, vacation ownership contract sales and tours would have increased 22 percent and 18 percent, respectively, compared to the prior year period.
Second quarter 2017 North America segment financial results were $118.7 million, an increase of $8.3 million from the second quarter of 2016. The increase was driven primarily by $6.9 million of higher development margin, $5.0 million of higher resort management and other services revenues net of expenses, $4.1 million of higher rental revenues net of expenses, $3.9 million of higher financing revenues, and $1.8 million of lower acquisition costs, partially offset by $12.5 million of lower gains and other income, and $0.8 million of higher royalty fees.
Development margin was $43.4 million, a $6.9 million increase from the second quarter of 2016. Development margin percentage was 24.7 percent compared to 27.5 percent in the prior year quarter. The increase in development margin reflected $11.2 million from higher contract sales volumes net of expenses, $6.5 million from lower product costs, and $1.1 million related to favorable revenue reportability year-over-year, partially offset by $6.8 million from lower favorable product cost true-up activity year-over-year, $3.6 million of higher marketing and sales costs including costs to ramp up the company’s new sales distributions, and $1.5 million from higher sales reserve activity mainly associated with an 11.0 percentage point increase in financing propensity. Adjusted development margin percentage, which excludes the impact of revenue reportability, was 23.4 percent in the second quarter of 2017, compared to 26.5 percent in the second quarter of 2016.
Asia Pacific
Total vacation ownership contract sales in the segment were $11.6 million, an increase of $1.2 million, or 11 percent, from the second quarter of 2016, due primarily to the opening of the new sales distribution in Surfers Paradise, Australia in the second quarter of 2016. Segment financial results were a loss of $1.1 million, a $1.5 million improvement from the second quarter of 2016. Excluding the estimated impact of the change in the company’s financial reporting calendar, vacation ownership contract sales would have increased 6 percent, compared to the prior year period.
Europe
Second quarter 2017 contract sales were $7.4 million, a decrease of $2.5 million, or 25.6 percent, from the second quarter of 2016. Segment financial results were $3.4 million, an increase of $1.3 million, or 58.8 percent, from the second quarter of 2016.
Share Repurchase Program
During the 2017 second quarter, the company repurchased 32,500 shares of its common stock for a total of $3.9 million under its share repurchase program. Subsequent to the end of the 2017 second quarter, the company’s Board of Directors authorized the company to repurchase up to 1 million additional shares under its share repurchase program, bringing the current remaining authorization to approximately 2.0 million shares and extending the program through May 31, 2018.


Marriott Vacations Worldwide Reports Second Quarter Financial Results / 4

Balance Sheet and Liquidity
On June 30, 2017, cash and cash equivalents totaled $85.2 million. Since the beginning of the year, real estate inventory balances increased $31.3 million to $739.4 million, including $421.1 million of finished goods and $318.3 million of land and infrastructure. The company had $789.7 million in gross debt outstanding at the end of the second quarter, an increase of $43.3 million from year-end 2016, consisting primarily of $671.2 million in gross securitized notes receivable, $63.6 million related to a non-interest bearing note issued in conjunction with the capital efficient acquisition of vacation ownership units, $47.5 million outstanding under its revolving corporate credit facility, and approximately $7 million related to capital leases and other miscellaneous debt.
As of June 30, 2017, the company had approximately $147.9 million in available capacity under its revolving credit facility after taking into account outstanding letters of credit, and approximately $239.7 million of gross vacation ownership notes receivable eligible for securitization.
Fiscal Year Change
The table below shows the number of days for each reporting period in 2017 and 2016:
 
2017
 
2016
First Quarter
91 days
 
84 days
Second Quarter
91 days
 
84 days
Third Quarter
92 days
 
84 days
Fourth Quarter
92 days
 
112 days
Full Year
366 days
 
364 days
Outlook
Pages A-1 through A-11 of the Financial Schedules reconcile the non-GAAP financial measures set forth below to the following full year 2017 expected GAAP results:
Net income
$154 million
to
$160 million
Fully diluted EPS
$5.48
to
$5.70
Net cash provided by operating activities
$115 million
to
$130 million
The company is providing the following updated guidance for the full year 2017:
 
Current Guidance
 
Previous Guidance
Adjusted net income
$149 million
to
$155 million
 
$139 million
to
$148 million
Adjusted fully diluted EPS
$5.31
to
$5.52
 
$4.97
to
$5.29
Adjusted EBITDA
$282 million
to
$292 million
 
$276 million
to
$291 million
Adjusted free cash flow
$190 million
to
$210 million
 
$160 million
to
$180 million
Contract sales growth
12 percent
to
16 percent
 
9 percent
to
15 percent
Second Quarter 2017 Earnings Conference Call
The company will hold a conference call at 10:00 a.m. EDT today to discuss these results and the guidance for full year 2017. Participants may access the call by dialing 877-407-8289 or 201-689-8341 for international callers. A live webcast of the call will also be available in the Investor Relations section of the company’s website at www.marriottvacationsworldwide.com.
An audio replay of the conference call will be available for seven days and can be accessed at 877-660-6853 or 201-612-7415 for international callers. The conference ID for the recording is 13666344. The webcast will also be available on the company’s website.
###


Marriott Vacations Worldwide Reports Second Quarter Financial Results / 5

About Marriott Vacations Worldwide Corporation
Marriott Vacations Worldwide Corporation is a leading global pure-play vacation ownership company, offering a diverse portfolio of quality products, programs and management expertise with over 65 resorts. Its brands include Marriott Vacation Club, The Ritz-Carlton Destination Club and Grand Residences by Marriott. Since entering the industry in 1984 as part of Marriott International, Inc., the company earned its position as a leader and innovator in vacation ownership products. The company preserves high standards of excellence in serving its customers, investors and associates while maintaining a long-term relationship with Marriott International. For more information, please visit www.marriottvacationsworldwide.com.

Note on forward-looking statements: This press release and accompanying schedules contain “forward-looking statements” within the meaning of federal securities laws, including statements about future operating results, estimates, and assumptions, and similar statements concerning anticipated future events and expectations that are not historical facts. The company cautions you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including volatility in the economy and the credit markets, supply and demand changes for vacation ownership and residential products, competitive conditions, the availability of capital to finance growth, and other matters referred to under the heading “Risk Factors” contained in the company’s most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) and in subsequent SEC filings, any of which could cause actual results to differ materially from those expressed in or implied in this press release. These statements are made as of August 3, 2017 and the company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Financial Schedules Follow










MARRIOTT VACATIONS WORLDWIDE CORPORATION
FINANCIAL SCHEDULES
QUARTER 2, 2017 1 
TABLE OF CONTENTS
 
Consolidated Statements of Income
A-1
Adjusted Net Income, Adjusted Earnings Per Share - Diluted, EBITDA and Adjusted EBITDA
A-2
North America Segment Financial Results
A-3
Asia Pacific Segment Financial Results
A-4
Europe Segment Financial Results
A-5
Corporate and Other Financial Results
A-6
Consolidated Contract Sales to Sale of Vacation Ownership Products and Adjusted Development Margin
(Adjusted Sale of Vacation Ownership Products Net of Expenses)
A-7
North America Contract Sales to Sale of Vacation Ownership Products and Adjusted Development Margin
(Adjusted Sale of Vacation Ownership Products Net of Expenses)
A-8
2017 Outlook - Adjusted Net Income, Adjusted Earnings Per Share - Diluted, Adjusted EBITDA and Adjusted Free Cash Flow
A-9
Non-GAAP Financial Measures
A-10
Consolidated Balance Sheets
A-12
Consolidated Statements of Cash Flows
A-13
1
Due to the change in the company’s financial reporting calendar beginning in 2017, the 2017 second quarter included the period from April 1, 2017 through June 30, 2017 (91 days) compared to the 2016 second quarter, which included the period from March 26, 2016 to June 17, 2016 (84 days), and the 2017 first half included the period from December 31, 2016 through June 30, 2017 (182 days) compared to the 2016 first half which included the period from January 2, 2016 to June 17, 2016 (168 days). Prior year results have not been restated for the change in fiscal calendar.
 
NOTE: When presenting contract sales performance on a comparable basis, we adjusted the prior year period to include contract sales from the same calendar days as the current year period.





A-1

MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
 
 
Quarter Ended
 
Year to Date Ended
 
June 30, 2017
 
June 17, 2016
 
June 30, 2017
 
June 17, 2016
 
(91 days)
 
(84 days)
 
(182 days)
 
(168 days)
REVENUES
 
 
 
 
 
 
 
Sale of vacation ownership products
$
191,010

 
$
146,450

 
$
363,165

 
$
284,819

Resort management and other services
79,158

 
74,156

 
152,122

 
137,864

Financing
32,530

 
28,654

 
64,641

 
57,878

Rental
84,188

 
75,069

 
169,444

 
155,357

Cost reimbursements
110,734

 
98,842

 
234,367

 
206,375

TOTAL REVENUES
497,620

 
423,171

 
983,739

 
842,293

EXPENSES
 
 
 
 
 
 
 
Cost of vacation ownership products
46,143

 
33,753

 
88,763

 
69,370

Marketing and sales
104,029

 
78,919

 
204,690

 
157,331

Resort management and other services
44,008

 
44,007

 
85,653

 
83,870

Financing
3,449

 
2,621

 
7,466

 
7,201

Rental
70,163

 
66,028

 
140,595

 
130,688

General and administrative
29,534

 
25,361

 
57,073

 
50,720

Litigation settlement
183

 
—

 
183

 
(303
)
Consumer financing interest
5,654

 
5,117

 
11,592

 
10,479

Royalty fee
16,307

 
14,026

 
32,377

 
27,383

Cost reimbursements
110,734

 
98,842

 
234,367

 
206,375

TOTAL EXPENSES
430,204

 
368,674

 
862,759

 
743,114

(Losses) gains and other (expense) income
(166
)
 
10,668

 
(225
)
 
10,675

Interest expense
(1,757
)
 
(2,087
)
 
(2,538
)
 
(4,069
)
Other
(100
)
 
(1,911
)
 
(469
)
 
(4,453
)
INCOME BEFORE INCOME TAXES
65,393

 
61,167

 
117,748

 
101,332

Provision for income taxes
(21,117
)
 
(24,858
)
 
(39,772
)
 
(40,615
)
NET INCOME
$
44,276

 
$
36,309

 
$
77,976

 
$
60,717

 
 
 
 
 
 
 
 
Earnings per share - Basic
$
1.62

 
$
1.28

 
$
2.86

 
$
2.11

Earnings per share - Diluted
$
1.58

 
$
1.26

 
$
2.79

 
$
2.08

Basic Shares
27,319

 
28,345

 
27,285

 
28,734

Diluted Shares
27,965

 
28,834

 
27,929

 
29,244

 
Quarter Ended
 
Year to Date Ended
 
June 30, 2017
 
June 17, 2016
 
June 30, 2017
 
June 17, 2016
 
(91 days)
 
(84 days)
 
(182 days)
 
(168 days)
Vacation ownership contract sales
$
209,892

 
$
165,992

 
$
403,726

 
$
319,486

NOTE: Earnings per share—Basic and Earnings per share—Diluted are calculated using whole dollars. We have reclassified certain prior year amounts to conform to our current period presentation. In addition, we reclassified certain revenues and expenses for the 2016 second quarter and 2016 first half to correct immaterial presentation errors within the following lines: Resort management and other services revenues, Resort management and other services expenses and General and administrative expenses.


A-2

MARRIOTT VACATIONS WORLDWIDE CORPORATION
(In thousands, except per share amounts)
ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE - DILUTED
 
 
Quarter Ended
 
Year to Date Ended
 
 
June 30, 2017
 
June 17, 2016
 
June 30, 2017
 
June 17, 2016
 
 
(91 days)
 
(84 days)
 
(182 days)
 
(168 days)
Net income
 
$
44,276

 
$
36,309

 
$
77,976

 
$
60,717

Less certain items:
 
 
 
 
 
 
 
 
Acquisition costs
 
199

 
2,005

 
611

 
4,575

Operating results from the sold portion of the Surfers Paradise, Australia property
 
—

 
190

 
—

 
(275
)
Litigation settlement
 
183

 
—

 
183

 
(303
)
Losses (gains) and other expense (income)
 
166

 
(10,668
)
 
225

 
(10,675
)
Certain items before depreciation and provision for income taxes 1
 
548

 
(8,473
)
 
1,019

 
(6,678
)
Depreciation on the sold portion of the Surfers Paradise, Australia property
 
—

 
188

 
—

 
469

Provision for income taxes on certain items
 
(213
)
 
3,261

 
(386
)
 
2,482

Adjusted net income **
 
$
44,611

 
$
31,285

 
$
78,609

 
$
56,990

 
 
 
 
 
 
 
 
 
Earnings per share - Diluted
 
$
1.58

 
$
1.26

 
$
2.79

 
$
2.08

Adjusted earnings per share - Diluted **
 
$
1.60

 
$
1.08

 
$
2.81

 
$
1.95

Diluted Shares
 
27,965

 
28,834

 
27,929

 
29,244

EBITDA AND ADJUSTED EBITDA
 
 
Quarter Ended
 
Year to Date Ended
 
 
June 30, 2017
 
June 17, 2016
 
June 30, 2017
 
June 17, 2016
 
 
(91 days)
 
(84 days)
 
(182 days)
 
(168 days)
Net income
 
$
44,276

 
$
36,309

 
$
77,976

 
$
60,717

Interest expense 2
 
1,757

 
2,087

 
2,538

 
4,069

Tax provision
 
21,117

 
24,858

 
39,772

 
40,615

Depreciation and amortization
 
5,001

 
5,052

 
10,192

 
10,177

EBITDA **
 
72,151

 
68,306

 
130,478

 
115,578

Non-cash share-based compensation
 
5,175

 
4,332

 
8,451

 
6,856

Certain items before depreciation and provision for income taxes 1
 
548

 
(8,473
)
 
1,019

 
(6,678
)
Adjusted EBITDA **
 
$
77,874

 
$
64,165

 
$
139,948

 
$
115,756

**
Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use.
1
Please see pages A-10 and A-11 for additional information regarding these items. The certain items adjustments for the Adjusted EBITDA reconciliations exclude depreciation and the provision for income taxes on certain items included in the Adjusted Net Income reconciliations.
2
Interest expense excludes consumer financing interest expense.



A-3

MARRIOTT VACATIONS WORLDWIDE CORPORATION
NORTH AMERICA SEGMENT
(In thousands)

 
Quarter Ended
 
Year to Date Ended
 
June 30, 2017
 
June 17, 2016
 
June 30, 2017
 
June 17, 2016
 
(91 days)
 
(84 days)
 
(182 days)
 
(168 days)
REVENUES
 
 
 
 
 
 
 
Sale of vacation ownership products
$
175,847

 
$
132,473

 
$
332,504

 
$
257,157

Resort management and other services
71,057

 
63,296

 
138,594

 
119,709

Financing
30,719

 
26,853

 
60,958

 
54,261

Rental
75,990

 
65,629

 
155,130

 
138,137

Cost reimbursements
101,488

 
90,174

 
216,443

 
189,356

TOTAL REVENUES
455,101

 
378,425

 
903,629

 
758,620

EXPENSES
 
 
 
 
 
 
 
Cost of vacation ownership products
41,676

 
29,080

 
79,311

 
59,742

Marketing and sales
90,784

 
66,911

 
179,654

 
135,226

Resort management and other services
37,452

 
34,666

 
74,211

 
67,473

Rental
61,900

 
55,593

 
124,905

 
111,549

Litigation settlement
—

 
—

 
—

 
(303
)
Royalty fee
3,038

 
2,254

 
5,728

 
3,940

Cost reimbursements
101,488

 
90,174

 
216,443

 
189,356

TOTAL EXPENSES
336,338

 
278,678

 
680,252

 
566,983

(Losses) gains and other (expense) income
(162
)
 
12,317

 
(196
)
 
12,324

Other
74

 
(1,733
)
 
125

 
(4,013
)
SEGMENT FINANCIAL RESULTS
$
118,675

 
$
110,331

 
$
223,306

 
$
199,948

 
 
 
 
 
 
 
 
SEGMENT FINANCIAL RESULTS
$
118,675

 
$
110,331

 
$
223,306

 
$
199,948

Less certain items:
 
 
 
 
 
 
 
Acquisition costs
27

 
1,829

 
27

 
4,137

Litigation settlement
—

 
—

 
—

 
(303
)
Losses (gains) and other expense (income)
162

 
(12,317
)
 
196

 
(12,324
)
Certain items
189

 
(10,488
)
 
223

 
(8,490
)
ADJUSTED SEGMENT FINANCIAL RESULTS **
$
118,864

 
$
99,843

 
$
223,529

 
$
191,458

 
 
 
 
 
 
 
 
 
Quarter Ended
 
Year to Date Ended
 
June 30, 2017
 
June 17, 2016
 
June 30, 2017
 
June 17, 2016
 
(91 days)
 
(84 days)
 
(182 days)
 
(168 days)
Vacation ownership contract sales
$
190,883

 
$
145,600

 
$
368,319

 
$
285,250


**
Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use.
NOTE: We have reclassified certain prior year amounts to conform to our current period presentation. In addition, we reclassified certain revenues and expenses for the 2016 second quarter and 2016 first half to correct immaterial presentation errors within the following lines: Resort management and other services revenues, Resort management and other services expenses and General and administrative expenses. Further we have reclassified certain management and other services revenues between the North America and Asia Pacific segments.


A-4

MARRIOTT VACATIONS WORLDWIDE CORPORATION
ASIA PACIFIC SEGMENT
(In thousands)
 
 
Quarter Ended
 
Year to Date Ended
 
June 30, 2017
 
June 17, 2016
 
June 30, 2017
 
June 17, 2016
 
(91 days)
 
(84 days)
 
(182 days)
 
(168 days)
REVENUES
 
 
 
 
 
 
 
Sale of vacation ownership products
$
10,094

 
$
8,110

 
$
21,016

 
$
16,635

Resort management and other services
1,030

 
4,412

 
2,033

 
7,778

Financing
1,105

 
1,007

 
2,228

 
1,988

Rental
2,644

 
4,828

 
6,382

 
10,449

Cost reimbursements
724

 
685

 
1,871

 
1,558

TOTAL REVENUES
15,597

 
19,042

 
33,530

 
38,408

EXPENSES
 
 
 
 
 
 
 
Cost of vacation ownership products
1,866

 
1,597

 
3,955

 
3,306

Marketing and sales
8,717

 
6,695

 
16,918

 
12,906

Resort management and other services
1,060

 
4,145

 
2,153

 
7,646

Rental
4,097

 
6,766

 
8,234

 
12,554

Royalty fee
221

 
179

 
449

 
325

Cost reimbursements
724

 
685

 
1,871

 
1,558

TOTAL EXPENSES
16,685

 
20,067

 
33,580

 
38,295

Losses and other expense
—

 
(1,498
)
 
(20
)
 
(1,498
)
Other
(2
)
 
(21
)
 
(10
)
 
(229
)
SEGMENT FINANCIAL RESULTS
$
(1,090
)
 
$
(2,544
)
 
$
(80
)
 
$
(1,614
)
 
 
 
 
 
 
 
 
SEGMENT FINANCIAL RESULTS
$
(1,090
)
 
$
(2,544
)
 
$
(80
)
 
$
(1,614
)
Less certain items:
 
 
 
 
 
 
 
Acquisition costs
—

 
19

 
—

 
227

Operating results from the sold portion of the Surfers Paradise, Australia property
—

 
378

 
—

 
194

Losses and other expense
—

 
1,498

 
20

 
1,498

Certain items
—

 
1,895

 
20

 
1,919

ADJUSTED SEGMENT FINANCIAL RESULTS **
$
(1,090
)
 
$
(649
)
 
$
(60
)
 
$
305

 
 
 
 
 
 
 
 
 
Quarter Ended
 
Year to Date Ended
 
June 30, 2017
 
June 17, 2016
 
June 30, 2017
 
June 17, 2016
 
(91 days)
 
(84 days)
 
(182 days)
 
(168 days)
Vacation ownership contract sales
$
11,614

 
$
10,454

 
$
23,562

 
$
19,880

 
**
Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use.
NOTE: We have reclassified certain prior year amounts to conform to our current period presentation. In addition, we reclassified certain revenues and expenses for the 2016 second quarter and 2016 first half to correct immaterial presentation errors within the following lines: Resort management and other services revenues and Resort management and other services expenses. Further we have reclassified certain management and other services revenues between the North America and Asia Pacific segments.


A-5

MARRIOTT VACATIONS WORLDWIDE CORPORATION
EUROPE SEGMENT
(In thousands)
 
 
Quarter Ended
 
Year to Date Ended
 
June 30, 2017
 
June 17, 2016
 
June 30, 2017
 
June 17, 2016
 
(91 days)
 
(84 days)
 
(182 days)
 
(168 days)
REVENUES
 
 
 
 
 
 
 
Sale of vacation ownership products
$
5,069

 
$
5,867

 
$
9,645

 
$
11,027

Resort management and other services
7,071

 
6,448

 
11,495

 
10,377

Financing
706

 
794

 
1,455

 
1,629

Rental
5,554

 
4,612

 
7,932

 
6,771

Cost reimbursements
8,522

 
7,983

 
16,053

 
15,461

TOTAL REVENUES
26,922

 
25,704

 
46,580

 
45,265

EXPENSES
 
 
 
 
 
 
 
Cost of vacation ownership products
705

 
1,268

 
1,366

 
2,559

Marketing and sales
4,528

 
5,313

 
8,118

 
9,199

Resort management and other services
5,496

 
5,196

 
9,289

 
8,751

Rental
4,166

 
3,669

 
7,456

 
6,585

Royalty fee
79

 
118

 
125

 
167

Cost reimbursements
8,522

 
7,983

 
16,053

 
15,461

TOTAL EXPENSES
23,496

 
23,547

 
42,407

 
42,722

SEGMENT FINANCIAL RESULTS
$
3,426

 
$
2,157

 
$
4,173

 
$
2,543

 
 
 
 
 
 
 
 
 
Quarter Ended
 
Year to Date Ended
 
June 30, 2017
 
June 17, 2016
 
June 30, 2017
 
June 17, 2016
 
(91 days)
 
(84 days)
 
(182 days)
 
(168 days)
Vacation ownership contract sales
$
7,395

 
$
9,938

 
$
11,845

 
$
14,356

 
**
Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use.
NOTE: We have reclassified certain prior year amounts to conform to our current period presentation. In addition, we reclassified certain revenues and expenses for the 2016 second quarter and 2016 first half to correct immaterial presentation errors within the following lines: Resort management and other services revenues and Resort management and other services expenses.


A-6

MARRIOTT VACATIONS WORLDWIDE CORPORATION
CORPORATE AND OTHER
(In thousands)
 
 
Quarter Ended
 
Year to Date Ended
 
June 30, 2017
 
June 17, 2016
 
June 30, 2017
 
June 17, 2016
 
(91 days)
 
(84 days)
 
(182 days)
 
(168 days)
EXPENSES
 
 
 
 
 
 
 
Cost of vacation ownership products
$
1,896

 
$
1,808

 
$
4,131

 
$
3,763

Financing
3,449

 
2,621

 
7,466

 
7,201

General and administrative
29,534

 
25,361

 
57,073

 
50,720

Litigation settlement
183

 
—

 
183

 
—

Consumer financing interest
5,654

 
5,117

 
11,592

 
10,479

Royalty fee
12,969

 
11,475

 
26,075

 
22,951

TOTAL EXPENSES
53,685

 
46,382

 
106,520

 
95,114

Losses and other expense
(4
)
 
(151
)
 
(9
)
 
(151
)
Interest expense
(1,757
)
 
(2,087
)
 
(2,538
)
 
(4,069
)
Other
(172
)
 
(157
)
 
(584
)
 
(211
)
TOTAL FINANCIAL RESULTS
$
(55,618
)
 
$
(48,777
)
 
$
(109,651
)
 
$
(99,545
)
 
 
 
 
 
 
 
 
TOTAL FINANCIAL RESULTS
$
(55,618
)
 
$
(48,777
)
 
$
(109,651
)
 
$
(99,545
)
Less certain items:
 
 
 
 
 
 
 
Acquisition costs
172

 
157

 
584

 
211

Litigation settlement
183

 
—

 
183

 
—

Losses and other expense
4

 
151

 
9

 
151

Certain items
359

 
308

 
776

 
362

ADJUSTED FINANCIAL RESULTS **
$
(55,259
)
 
$
(48,469
)
 
$
(108,875
)
 
$
(99,183
)
 
**
Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use.
NOTE: We have reclassified certain prior year amounts to conform to our current period presentation. In addition, we reclassified certain revenues and expenses for the 2016 second quarter and 2016 first half to correct immaterial presentation errors within the following lines: Resort management and other services revenues, Resort management and other services expenses and General and administrative expenses.


A-7

MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS
(In thousands)
 
 
 
Quarter Ended
 
Year to Date Ended
 
 
June 30, 2017
 
June 17, 2016
 
June 30, 2017
 
June 17, 2016
 
 
(91 days)
 
(84 days)
 
(182 days)
 
(168 days)
Vacation ownership contract sales
 
$
209,892

 
$
165,992

 
$
403,726

 
$
319,486

Revenue recognition adjustments:
 
 
 
 
 
 
 
 
Reportability 1
 
4,045

 
1,179

 
15

 
1,965

Sales reserve 2
 
(14,636
)
 
(11,352
)
 
(26,857
)
 
(19,575
)
Other 3
 
(8,291
)
 
(9,369
)
 
(13,719
)
 
(17,057
)
Sale of vacation ownership products
 
$
191,010

 
$
146,450

 
$
363,165

 
$
284,819


1
Adjustment for lack of required downpayment or contract sales in rescission period.
2
Represents allowance for bad debts for our financed vacation ownership product sales, which we also refer to as sales reserve.
3
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED ADJUSTED DEVELOPMENT MARGIN
(ADJUSTED SALE OF VACATION OWNERSHIP PRODUCTS NET OF EXPENSES)
(In thousands)
 
 
 
Quarter Ended
 
Year to Date Ended
 
 
June 30, 2017
 
June 17, 2016
 
June 30, 2017
 
June 17, 2016
 
 
(91 days)
 
(84 days)
 
(182 days)
 
(168 days)
Sale of vacation ownership products
 
$
191,010

 
$
146,450

 
$
363,165

 
$
284,819

Less:
 
 
 
 
 
 
 
 
Cost of vacation ownership products
 
46,143

 
33,753

 
88,763

 
69,370

Marketing and sales
 
104,029

 
78,919

 
204,690

 
157,331

Development margin
 
40,838

 
33,778

 
69,712

 
58,118

Revenue recognition reportability adjustment
 
(2,662
)
 
(726
)
 
27

 
(1,326
)
Adjusted development margin **
 
$
38,176

 
$
33,052

 
$
69,739

 
$
56,792

Development margin percentage 1
 
21.4
%
 
23.1
%
 
19.2
%
 
20.4
%
Adjusted development margin percentage
 
20.4
%
 
22.8
%
 
19.2
%
 
20.1
%

**
Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use.
1
Development margin percentage represents Development margin divided by Sale of vacation ownership products.


A-8

MARRIOTT VACATIONS WORLDWIDE CORPORATION
NORTH AMERICA CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS
(In thousands)
 
 
 
Quarter Ended
 
Year to Date Ended
 
 
June 30, 2017
 
June 17, 2016
 
June 30, 2017
 
June 17, 2016
 
 
(91 days)
 
(84 days)
 
(182 days)
 
(168 days)
Vacation ownership contract sales
 
$
190,883

 
$
145,600

 
$
368,319

 
$
285,250

Revenue recognition adjustments:
 
 
 
 
 
 
 
 
Reportability 1
 
5,135

 
3,783

 
441

 
3,871

Sales reserve 2
 
(12,131
)
 
(7,631
)
 
(22,813
)
 
(15,037
)
Other 3
 
(8,040
)
 
(9,279
)
 
(13,443
)
 
(16,927
)
Sale of vacation ownership products
 
$
175,847

 
$
132,473

 
$
332,504

 
$
257,157

1
Adjustment for lack of required downpayment or contract sales in rescission period.
2
Represents allowance for bad debts for our financed vacation ownership product sales, which we also refer to as sales reserve.
3
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
MARRIOTT VACATIONS WORLDWIDE CORPORATION
NORTH AMERICA ADJUSTED DEVELOPMENT MARGIN
(ADJUSTED SALE OF VACATION OWNERSHIP PRODUCTS NET OF EXPENSES)
(In thousands)
 
 
 
Quarter Ended
 
Year to Date Ended
 
 
June 30, 2017
 
June 17, 2016
 
June 30, 2017
 
June 17, 2016
 
 
(91 days)
 
(84 days)
 
(182 days)
 
(168 days)
Sale of vacation ownership products
 
$
175,847

 
$
132,473

 
$
332,504

 
$
257,157

Less:
 
 
 
 
 
 
 
 
Cost of vacation ownership products
 
41,676

 
29,080

 
79,311

 
59,742

Marketing and sales
 
90,784

 
66,911

 
179,654

 
135,226

Development margin
 
43,387

 
36,482

 
73,539

 
62,189

Revenue recognition reportability adjustment
 
(3,475
)
 
(2,417
)
 
(289
)
 
(2,473
)
Adjusted development margin **
 
$
39,912

 
$
34,065

 
$
73,250

 
$
59,716

Development margin percentage 1
 
24.7
%
 
27.5
%
 
22.1
%
 
24.2
%
Adjusted development margin percentage
 
23.4
%
 
26.5
%
 
22.1
%
 
23.6
%
 
**
Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use.
1
Development margin percentage represents Development margin divided by Sale of vacation ownership products.


A-9

MARRIOTT VACATIONS WORLDWIDE CORPORATION
(In millions, except per share amounts)
2017 ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE - DILUTED OUTLOOK
 
 
Fiscal Year
2017 (low)
 
Fiscal Year
2017 (high)
Net income
 
$
154

 
$
160

Adjustments to reconcile Net income to Adjusted net income
 
 
 
 
Certain items1
 
1

 
1

Business interruption insurance proceeds2 
 
(9
)
 
(9
)
Provision for income taxes on adjustments to net income
 
3

 
3

Adjusted net income **
 
$
149

 
$
155

Earnings per share - Diluted3
 
$
5.48

 
$
5.70

Adjusted earnings per share - Diluted **, 3
 
$
5.31

 
$
5.52

Diluted shares2
 
28.1

 
28.1

1
Certain items adjustment primarily includes approximately $1 million of after tax combined acquisition costs, litigation settlements and losses and other expenses that have been incurred in the first half of 2017.
2
Includes estimated net business interruption insurance proceeds associated with Hurricane Matthew.
3
Earnings per share - Diluted, Adjusted earnings per share - Diluted, and Diluted shares outlook includes the impact of share repurchase activity only through August 3, 2017.

2017 ADJUSTED EBITDA OUTLOOK
 
 
Fiscal Year
2017 (low)
 
Fiscal Year
2017 (high)
Net income
 
$
154

 
$
160

Interest expense1
 
7

 
7

Tax provision
 
90

 
94

Depreciation and amortization
 
22

 
22

EBITDA **
 
273

 
283

Non-cash share-based compensation
 
17

 
17

Certain items2 and business interruption insurance proceeds3
 
(8
)
 
(8
)
Adjusted EBITDA **
 
$
282

 
$
292

1
Interest expense excludes consumer financing interest expense.
2
Certain items adjustment primarily includes approximately $1 million of after tax combined acquisition costs, litigation settlements and losses and other expenses that have been incurred in the first half of 2017.
3
Includes estimated net business interruption insurance proceeds associated with Hurricane Matthew.

2017 ADJUSTED FREE CASH FLOW OUTLOOK
 
 
Fiscal Year
2017 (low)
 
Fiscal Year
2017 (high)
Net cash provided by operating activities
 
$
115

 
$
130

Capital expenditures for property and equipment (excluding inventory):
 
 
 
 
New sales centers1
 
(9
)
 
(7
)
Other
 
(28
)
 
(25
)
Borrowings from securitization transactions
 
393

 
398

Repayment of debt related to securitizations
 
(281
)
 
(286
)
Free cash flow **
 
190

 
210

Adjustments:
 
 
 
 
Net change in borrowings available from the securitization of eligible vacation ownership notes receivable through the warehouse credit facility 2
 
10

 
10

Increase in restricted cash
 
(10
)
 
(10
)
Adjusted free cash flow **
 
$
190

 
$
210

1
Represents the incremental investment in new sales centers.
2
Represents the net change in borrowings available from the securitization of eligible vacation ownership notes receivable through the warehouse credit facility between the 2016 and 2017 year ends.
**
Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-10

MARRIOTT VACATIONS WORLDWIDE CORPORATION
NON-GAAP FINANCIAL MEASURES
In our press release and schedules, and on the related conference call, we report certain financial measures that are not prescribed by United States generally accepted accounting principles (“GAAP”). We discuss our reasons for reporting these non-GAAP financial measures below, and the financial schedules reconcile the most directly comparable GAAP financial measure to each non-GAAP financial measure that we report (identified by a double asterisk (“**”) on the preceding pages). Although we evaluate and present these non-GAAP financial measures for the reasons described below, please be aware that these non-GAAP financial measures have limitations and should not be considered in isolation or as a substitute for revenues, net income, earnings per share or any other comparable operating measure prescribed by GAAP. In addition, these non-GAAP financial measures may be calculated and / or presented differently than measures with the same or similar names that are reported by other companies, and as a result, the non-GAAP financial measures we report may not be comparable to those reported by others.
Adjusted Net Income 
We evaluate non-GAAP financial measures, including Adjusted Net Income, Adjusted EBITDA, and Adjusted Development Margin, that exclude certain items in the quarters and first halves ended June 30, 2017 and June 17, 2016 because these non-GAAP financial measures allow for period-over-period comparisons of our on-going core operations before the impact of these items. These non-GAAP financial measures also facilitate our comparison of results from our on-going core operations before these items with results from other vacation ownership companies.
Certain items - Quarter and First Half Ended June 30, 2017
In our Statement of Income for the quarter ended June 30, 2017, we recorded $0.5 million of net pre-tax items, which included $0.2 million of acquisition costs, less than $0.2 million of litigation settlement expenses and less than $0.2 million of losses and other expense. In our Statement of Income for the first half ended June 30, 2017, we recorded $1.0 million of net pre-tax items, which included $0.6 million of acquisition costs, $0.2 million of litigation settlement expenses and $0.2 million of losses and other expense.
Certain items - Quarter and First Half Ended June 17, 2016
In our Statement of Income for the quarter ended June 17, 2016, we recorded $8.3 million of net pre-tax items, which included $10.7 million of gains and other income, $2.0 million of acquisition costs, and $0.4 million of losses (including $0.2 million of depreciation) from the operations of the property we acquired in Australia in 2015 that we sold in the second quarter of 2016. In our Statement of Income for the first half ended June 17, 2016, we recorded $6.2 million of net pre-tax items, which included $10.7 million of gains and other income, $4.6 million of acquisition costs, a $0.3 million reversal of litigation settlement expense, and $0.2 million of losses (including $0.5 million of depreciation) from the operations of the property we acquired in Australia in 2015 that we sold in the second quarter of 2016.
Adjusted Development Margin (Adjusted Sale of Vacation Ownership Products Net of Expenses)
We evaluate Adjusted Development Margin (Adjusted Sale of Vacation Ownership Products Net of Expenses) as an indicator of operating performance. Adjusted Development Margin adjusts Sale of vacation ownership products revenues for the impact of revenue reportability, includes corresponding adjustments to Cost of vacation ownership products expense and Marketing and sales expense associated with the change in revenues from the Sale of vacation ownership products, and may include adjustments for certain items as itemized in the discussion of Adjusted Net Income above. We evaluate Adjusted Development Margin because it allows for period-over-period comparisons of our on-going core operations before the impact of revenue reportability and certain items to our Development Margin.

A-11

MARRIOTT VACATIONS WORLDWIDE CORPORATION
NON-GAAP FINANCIAL MEASURES
Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA
EBITDA is defined as earnings, or net income, before interest expense (excluding consumer financing interest expense), provision for income taxes, depreciation and amortization. For purposes of our EBITDA and Adjusted EBITDA calculations, we do not adjust for consumer financing interest expense because the associated debt is secured by vacation ownership notes receivable that have been sold to bankruptcy remote special purpose entities and is generally non-recourse to us. Further, we consider consumer financing interest expense to be an operating expense of our business. We consider EBITDA and Adjusted EBITDA to be indicators of operating performance, which we use to measure our ability to service debt, fund capital expenditures and expand our business. We also use EBITDA and Adjusted EBITDA, as do analysts, lenders, investors and others, because these measures exclude certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company’s capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. EBITDA and Adjusted EBITDA also exclude depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. Adjusted EBITDA reflects additional adjustments for certain items, as itemized in the discussion of Adjusted Net Income above, and excludes non-cash share-based compensation expense to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted. Prior period presentation has been recast for consistency. We evaluate Adjusted EBITDA as an indicator of operating performance because it allows for period-over-period comparisons of our on-going core operations before the impact of the excluded items. Together, EBITDA and Adjusted EBITDA facilitate our comparison of results from our on-going core operations before the impact of these items with results from other vacation ownership companies.
Free Cash Flow and Adjusted Free Cash Flow
We evaluate Free Cash Flow and Adjusted Free Cash Flow as liquidity measures that provide useful information to management and investors about the amount of cash provided by operating activities after capital expenditures for property and equipment, changes in restricted cash, and the borrowing and repayment activity related to our securitizations, which cash can be used for strategic opportunities, including acquisitions and strengthening the balance sheet. Adjusted Free Cash Flow, which reflects additional adjustments to Free Cash Flow for the impact of organizational and separation related, litigation, and other cash charges, allows for period-over-period comparisons of the cash generated by our business before the impact of these items. Analysis of Free Cash Flow and Adjusted Free Cash Flow also facilitates management’s comparison of our results with our competitors’ results.



A-12

MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
 
 
(Unaudited) June 30, 2017
 
December 30, 2016
ASSETS
 
 
 
Cash and cash equivalents
$
85,151

 
$
147,102

Restricted cash (including $31,005 and $27,525 from VIEs, respectively)
58,753

 
66,000

Accounts and contracts receivable, net (including $4,311 and $4,865 from VIEs, respectively)
131,395

 
161,733

Vacation ownership notes receivable, net (including $655,180 and $717,543 from VIEs, respectively)
1,036,449

 
972,311

Inventory
744,430

 
712,536

Property and equipment
249,264

 
202,802

Other (including $10,647 and $0 from VIEs, respectively)
127,994

 
128,935

TOTAL ASSETS
$
2,433,436

 
$
2,391,419

LIABILITIES AND EQUITY
 
 
 
Accounts payable
$
76,456

 
$
124,439

Advance deposits
59,401

 
55,542

Accrued liabilities (including $537 and $584 from VIEs, respectively)
112,916

 
147,469

Deferred revenue
115,536

 
95,495

Payroll and benefits liability
87,000

 
95,516

Deferred compensation liability
69,928

 
62,874

Debt, net (including $671,221 and $738,362 from VIEs, respectively)
773,557

 
737,224

Other
12,989

 
15,873

Deferred taxes
156,835

 
149,168

TOTAL LIABILITIES
1,464,618

 
1,483,600

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; 36,839,064 and 36,633,868 shares issued, respectively
368

 
366

Treasury stock — at cost; 9,669,970 and 9,643,562 shares, respectively
(610,115
)
 
(606,631
)
Additional paid-in capital
1,161,507

 
1,162,283

Accumulated other comprehensive income
12,189

 
5,460

Retained earnings
404,869

 
346,341

TOTAL EQUITY
968,818

 
907,819

TOTAL LIABILITIES AND EQUITY
$
2,433,436

 
$
2,391,419

The abbreviation VIEs above means Variable Interest Entities.

A-13

MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
Year to Date Ended
 
June 30, 2017
 
June 17, 2016
 
(182 days)
 
(168 days)
OPERATING ACTIVITIES
 
 
 
Net income
$
77,976

 
$
60,717

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation
10,192

 
10,177

Amortization of debt issuance costs
2,726

 
2,559

Provision for loan losses
26,821

 
19,591

Share-based compensation
8,451

 
6,856

Loss (gain) on disposal of property and equipment, net
225

 
(10,675
)
Deferred income taxes
11,778

 
15,792

Net change in assets and liabilities:
 
 
 
Accounts and contracts receivable
30,079

 
(11,084
)
Notes receivable originations
(227,643
)
 
(124,318
)
Notes receivable collections
136,731

 
120,548

Inventory
16,007

 
(13,924
)
Purchase of vacation ownership units for future transfer to inventory
(33,594
)
 
—

Other assets
4,406

 
26,111

Accounts payable, advance deposits and accrued liabilities
(70,470
)
 
(86,355
)
Deferred revenue
19,654

 
22,627

Payroll and benefit liabilities
(8,698
)
 
(27,313
)
Deferred compensation liability
7,053

 
6,536

Other liabilities
(585
)
 
1,081

Other, net
3,021

 
2,152

Net cash provided by operating activities
14,130

 
21,078

INVESTING ACTIVITIES
 
 
 
Capital expenditures for property and equipment (excluding inventory)
(11,344
)
 
(15,142
)
Purchase of company owned life insurance
(10,092
)
 
—

Dispositions, net
11

 
69,738

Net cash (used in) provided by investing activities
(21,425
)
 
54,596

FINANCING ACTIVITIES
 
 
 
Borrowings from securitization transactions
50,260

 
91,281

Repayment of debt related to securitization transactions
(117,400
)
 
(84,040
)
Borrowings from Revolving Corporate Credit Facility
60,000

 
85,000

Repayment of Revolving Corporate Credit Facility
(12,500
)
 
(40,000
)
Debt issuance costs
(1,219
)
 
(231
)
Repurchase of common stock
(3,868
)
 
(163,359
)
Accelerated stock repurchase forward contract
—

 
(14,470
)
Payment of dividends
(28,552
)
 
(26,067
)
Payment of withholding taxes on vesting of restricted stock units
(9,962
)
 
(3,876
)
Other, net
(624
)
 
572

Net cash used in financing activities
(63,865
)
 
(155,190
)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash
1,962

 
(3,238
)
Decrease in cash, cash equivalents, and restricted cash
(69,198
)
 
(82,754
)
Cash, cash equivalents and restricted cash, beginning of period
213,102

 
248,512

Cash, cash equivalents and restricted cash, end of period
$
143,904

 
$
165,758