~~0001524358vac:PerformanceBasedRestrictedStockUnitMember2021-01-012021-06-30~~

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2022~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-35219

_________________________

Marriott Vacations Worldwide Corporation

(Exact name of registrant as specified in its charter)

_________________________

Delaware

45-2598330

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

9002 San Marco Court

Orlando

32819

(Address of principal executive offices)

(Zip Code)

(407) 206-6000 (Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value	VAC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the issuer’s common stock, par value $0.01 per share, as of ~~August 3, 2022~~July 31, 2023 was ~~39,285,977.~~36,469,493.

MARRIOTT VACATIONS WORLDWIDE CORPORATION

FORM 10-Q TABLE OF CONTENTS


		Page
Part I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements	1
	Interim Consolidated Statements of Income	1
	Interim Consolidated Statements of Comprehensive Income	2
	Interim Consolidated Balance Sheets	3
	Interim Consolidated Statements of Cash Flows	4
	Interim Consolidated Statements of Shareholders’ Equity	6
	Interim Condensed Notes to Consolidated Financial Statements	8
	1. Basis of Presentation	8
	2. Significant Accounting Policies and Recent Accounting Standards	9
	3. Acquisitions and Dispositions	9
	4. Revenue and Receivables	10
	5. Income Taxes	13
	6. Vacation Ownership Notes Receivable	14
	7. Financial Instruments	19
	8. Earnings Per Share	21
	9. Inventory	22
	10. Contingencies and Commitments	23
	11. Securitized Debt	24
	12. Debt	26
	13. Shareholders’ Equity	29
	14. Share-Based Compensation	30
	15. Variable Interest Entities	31
	16. Business Segments
		33

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4035
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7165
Item 4.	Controls and Procedures	7166
Part II.	OTHER INFORMATION	7166
Item 1.	Legal Proceedings	7166
Item 1A.	Risk Factors	7166
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7266
Item 5.	Other Information	67
Item 6.	Exhibits	7267
	SIGNATURES	7569

Throughout this report, we refer to Marriott Vacations Worldwide Corporation, together with its consolidated subsidiaries, as “Marriott Vacations Worldwide,” “MVW,” “we,” “us,” or ~~“the Company.~~the “Company.” We also refer to brands that we own, as well as those brands that we license, as our brands. All brand names, trademarks, trade names, and service marks ~~and trade names~~ cited in this report are the property of their respective owners, including those of other companies and organizations. Solely for convenience, trademarks, trade names, and service marks referred to in this report may appear without the ® or TM symbols, however, such references are not intended to indicate in any way that MVW or the owner, as applicable, will not assert, to the fullest extent under applicable law, all rights to such trademarks, trade names, and service marks.

Capitalized terms used and not specifically defined herein have the same meanings given those terms in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”). When discussing our properties or markets, we refer to the United States, Mexico, Central America, and the Caribbean as “North America.”

~~Impact of the COVID-19 Pandemic~~

The COVID-19 pandemic has caused significant disruptions in international and U.S. economies and markets, and has also had an unprecedented impact on the travel and hospitality industries, as well as the Company. We discuss the impacts of the COVID-19 pandemic and its potential future implications throughout this report; however, the COVID-19 pandemic, and any recovery therefrom, continues to evolve and further potential impacts on our business in the future remain uncertain.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

(Unaudited)


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
		June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021			June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
REVENUES	REVENUES									REVENUES
Sale of vacation ownership products	Sale of vacation ownership products	$	425	$	296	$	735	$	459	Sale of vacation ownership products	$	391	$	425	$	766	$	735
Management and exchange	Management and exchange	203		220		425		413		Management and exchange	206		203		406		425
Rental	Rental	140		121		273		210		Rental	146		140		297		273
Financing	Financing	72		68		143		127		Financing	80		72		158		143
Cost reimbursements	Cost reimbursements	324		274		640		529		Cost reimbursements	355		324		720		640
TOTAL REVENUES	TOTAL REVENUES	1,164		979		2,216		1,738		TOTAL REVENUES	1,178		1,164		2,347		2,216
EXPENSES	EXPENSES									EXPENSES
Cost of vacation ownership products	Cost of vacation ownership products	80		67		140		107		Cost of vacation ownership products	66		80		124		140
Marketing and sales	Marketing and sales	214		164		396		273		Marketing and sales	206		214		416		396
Management and exchange	Management and exchange	102		126		229		243		Management and exchange	110		102		217		229
Rental	Rental	87		81		168		163		Rental	112		87		225		168
Financing	Financing	23		21		44		42		Financing	25		23		51		44
General and administrative	General and administrative	64		66		125		112		General and administrative	64		64		132		125
Depreciation and amortization	Depreciation and amortization	32		36		65		77		Depreciation and amortization	34		32		66		65
Litigation charges	Litigation charges	2		3		5		6		Litigation charges	2		2		5		5

Royalty fee	Royalty fee	29		27		56		52		Royalty fee	29		29		58		56
Impairment	Impairment	—		5		—		5		Impairment	—		—		4		—
Cost reimbursements	Cost reimbursements	324		274		640		529		Cost reimbursements	355		324		720		640
TOTAL EXPENSES	TOTAL EXPENSES	957		870		1,868		1,609		TOTAL EXPENSES	1,003		957		2,018		1,868
Gains (losses) and other income (expense), net		37		(2)		41		4
Interest expense		(30)		(44)		(57)		(87)
Gains and other income, net										Gains and other income, net	10		37		31		41
Interest expense, net										Interest expense, net	(36)		(30)		(70)		(57)
Transaction and integration costs	Transaction and integration costs	(37)		(29)		(65)		(48)		Transaction and integration costs	(10)		(37)		(23)		(65)
Other	Other	1		1		1		1		Other	1		1		1		1
INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS		178		35		268		(1)
INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS										INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS	140		178		268		268
Provision for income taxes	Provision for income taxes	(43)		(27)		(75)		(16)		Provision for income taxes	(50)		(43)		(91)		(75)
NET INCOME (LOSS)		135		8		193		(17)
Net loss (income) attributable to noncontrolling interests		1		(2)		1		(5)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	136	$	6	$	194	$	(22)
NET INCOME										NET INCOME	90		135		177		193
Net loss attributable to noncontrolling interests										Net loss attributable to noncontrolling interests	—		1		—		1
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS										NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	90	$	136	$	177	$	194

EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS
EARNINGS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS										EARNINGS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS
Basic	Basic	$	3.30	$	0.15	$	4.64	$	(0.52)	Basic	$	2.46	$	3.30	$	4.78	$	4.64
Diluted	Diluted	$	2.97	$	0.15	$	4.18	$	(0.52)	Diluted	$	2.17	$	2.97	$	4.23	$	4.18

CASH DIVIDENDS DECLARED PER SHARE	CASH DIVIDENDS DECLARED PER SHARE	$	0.62	$	—	$	1.24	$	—	CASH DIVIDENDS DECLARED PER SHARE	$	0.72	$	0.62	$	1.44	$	1.24

See Interim Condensed Notes to ~~Interim~~ Consolidated Financial Statements

Table of Contents

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

Three Months Ended Six Months Ended
June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
NET INCOME (LOSS) $ 135 $ 8 $ 193 $ (17)
Foreign currency translation adjustments (2) 4 2 1
Reclassification of foreign currency translation adjustments realized upon disposition of entities (10) — (10) —
Derivative instrument adjustment, net of tax 7 3 23 9
OTHER COMPREHENSIVE (LOSS) GAIN, NET OF TAX (5) 7 15 10
Net loss (income) attributable to noncontrolling interests 1 (2) 1 (5)
Other comprehensive income attributable to noncontrolling interests — — — —
COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS 1 (2) 1 (5)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 131 $ 13 $ 209 $ (12)


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
NET INCOME	$	90	$	135	$	177	$	193

Foreign currency translation adjustments	6		(2)		12		2
Reclassification of foreign currency translation adjustments realized upon disposition of entities	—		(10)		—		(10)
Derivative instrument adjustment, net of tax	(1)		7		(4)		23
OTHER COMPREHENSIVE GAIN (LOSS), NET OF TAX	5		(5)		8		15

Net loss attributable to noncontrolling interests	—		1		—		1

COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—		1		—		1

COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	95	$	131	$	185	$	209

See Interim Condensed Notes to ~~the Interim~~ Consolidated Financial Statements

Table of Contents

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)


		Unaudited					Unaudited
		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	324	$	342	Cash and cash equivalents	$	242	$	524
Restricted cash (including $108 and $139 from VIEs, respectively)		282		461
Accounts receivable, net (including $12 and $12 from VIEs, respectively)		244		279
Vacation ownership notes receivable, net (including $1,659 and $1,662 from VIEs, respectively)		2,075		2,045
Restricted cash (including $78 and $85 from VIEs, respectively)						Restricted cash (including $78 and $85 from VIEs, respectively)	238		330
Accounts and contracts receivable, net (including $14 and $13 from VIEs, respectively)						Accounts and contracts receivable, net (including $14 and $13 from VIEs, respectively)	313		292
Vacation ownership notes receivable, net (including $1,863 and $1,792 from VIEs, respectively)						Vacation ownership notes receivable, net (including $1,863 and $1,792 from VIEs, respectively)	2,272		2,198
Inventory	Inventory	695		719		Inventory	660		660
Property and equipment, net	Property and equipment, net	1,151		1,136		Property and equipment, net	1,221		1,139
Goodwill	Goodwill	3,117		3,150		Goodwill	3,117		3,117
Intangibles, net	Intangibles, net	941		993		Intangibles, net	884		911
Other (including $71 and $76 from VIEs, respectively)		511		488
Other (including $87 and $76 from VIEs, respectively)						Other (including $87 and $76 from VIEs, respectively)	535		468
TOTAL ASSETS	TOTAL ASSETS	$	9,340	$	9,613	TOTAL ASSETS	$	9,482	$	9,639

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Accounts payable	Accounts payable	$	217	$	265	Accounts payable	$	209	$	356
Advance deposits	Advance deposits	195		160		Advance deposits	175		158
Accrued liabilities (including $2 and $2 from VIEs, respectively)		330		345
Accrued liabilities (including $3 and $5 from VIEs, respectively)						Accrued liabilities (including $3 and $5 from VIEs, respectively)	322		369
Deferred revenue	Deferred revenue	372		453		Deferred revenue	417		344
Payroll and benefits liability	Payroll and benefits liability	204		201		Payroll and benefits liability	174		251
Deferred compensation liability	Deferred compensation liability	130		142		Deferred compensation liability	154		139
Securitized debt, net (including $1,868 and $1,877 from VIEs, respectively)		1,846		1,856
Securitized debt, net (including $2,052 and $1,982 from VIEs, respectively)						Securitized debt, net (including $2,052 and $1,982 from VIEs, respectively)	2,028		1,938
Debt, net	Debt, net	2,748		2,631		Debt, net	3,001		3,088
Other	Other	210		224		Other	180		167
Deferred taxes	Deferred taxes	342		350		Deferred taxes	344		331
TOTAL LIABILITIES	TOTAL LIABILITIES	6,594		6,627		TOTAL LIABILITIES	7,004		7,141
Contingencies and Commitments (Note 11)		0		0
Contingencies and Commitments (Note 10)						Contingencies and Commitments (Note 10)
Preferred stock — $0.01 par value; 2,000,000 shares authorized; none issued or outstanding	Preferred stock — $0.01 par value; 2,000,000 shares authorized; none issued or outstanding	—		—		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; 75,741,585 and 75,519,049 shares issued, respectively		1		1
Treasury stock — at cost; 35,377,001 and 33,235,671 shares, respectively		(1,666)		(1,356)
Common stock — $0.01 par value; 100,000,000 shares authorized; 75,806,578 and 75,744,524 shares issued, respectively						Common stock — $0.01 par value; 100,000,000 shares authorized; 75,806,578 and 75,744,524 shares issued, respectively	1		1
Treasury stock — at cost; 39,337,085 and 38,263,442 shares, respectively						Treasury stock — at cost; 39,337,085 and 38,263,442 shares, respectively	(2,213)		(2,054)
Additional paid-in capital	Additional paid-in capital	3,963		4,072		Additional paid-in capital	3,947		3,941
Accumulated other comprehensive loss		(1)		(16)
Accumulated other comprehensive income						Accumulated other comprehensive income	23		15
Retained earnings	Retained earnings	448		275		Retained earnings	718		593
TOTAL MVW SHAREHOLDERS' EQUITY	TOTAL MVW SHAREHOLDERS' EQUITY	2,745		2,976		TOTAL MVW SHAREHOLDERS' EQUITY	2,476		2,496
Noncontrolling interests	Noncontrolling interests	1		10		Noncontrolling interests	2		2
TOTAL EQUITY	TOTAL EQUITY	2,746		2,986		TOTAL EQUITY	2,478		2,498
TOTAL LIABILITIES AND EQUITY	TOTAL LIABILITIES AND EQUITY	$	9,340	$	9,613	TOTAL LIABILITIES AND EQUITY	$	9,482	$	9,639

The abbreviation VIEs above means Variable Interest Entities.

See Interim Condensed Notes to ~~Interim Consolidated~~ Financial Statements

Table of Contents

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


		Six Months Ended					Six Months Ended
		June 30, 2022		June 30, 2021			June 30, 2023		June 30, 2022
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income (loss)		$	193	$	(17)
Adjustments to reconcile net income (loss) to net cash, cash equivalents and restricted cash provided by operating activities:
Net income						Net income	$	177	$	193
Adjustments to reconcile net income to net cash, cash equivalents and restricted cash provided by operating activities:						Adjustments to reconcile net income to net cash, cash equivalents and restricted cash provided by operating activities:
Depreciation and amortization of intangibles	Depreciation and amortization of intangibles	65		77		Depreciation and amortization of intangibles	66		65
Amortization of debt discount and issuance costs	Amortization of debt discount and issuance costs	10		22		Amortization of debt discount and issuance costs	12		10
Vacation ownership notes receivable reserve	Vacation ownership notes receivable reserve	66		42		Vacation ownership notes receivable reserve	79		66
Share-based compensation	Share-based compensation	20		22		Share-based compensation	19		20
Impairment charges	Impairment charges	—		5		Impairment charges	2		—

Gains and other income, net	Gains and other income, net	(47)		(1)		Gains and other income, net	(7)		(47)
Deferred income taxes	Deferred income taxes	29		36		Deferred income taxes	10		29
Net change in assets and liabilities:	Net change in assets and liabilities:					Net change in assets and liabilities:
Accounts receivable		59		60
Accounts and contracts receivable						Accounts and contracts receivable	(31)		59
Vacation ownership notes receivable originations	Vacation ownership notes receivable originations	(483)		(320)		Vacation ownership notes receivable originations	(470)		(483)
Vacation ownership notes receivable collections	Vacation ownership notes receivable collections	365		362		Vacation ownership notes receivable collections	308		365
Inventory	Inventory	25		14		Inventory	46		25

Other assets	Other assets	(63)		(66)		Other assets	(61)		(63)
Accounts payable, advance deposits and accrued liabilities	Accounts payable, advance deposits and accrued liabilities	8		(9)		Accounts payable, advance deposits and accrued liabilities	(129)		8
Deferred revenue	Deferred revenue	19		48		Deferred revenue	69		19
Payroll and benefit liabilities	Payroll and benefit liabilities	7		35		Payroll and benefit liabilities	(78)		7
Deferred compensation liability	Deferred compensation liability	4		11		Deferred compensation liability	7		4
Other liabilities	Other liabilities	—		4		Other liabilities	12		—
Deconsolidation of certain Consolidated Property Owners' Associations	Deconsolidation of certain Consolidated Property Owners' Associations	(48)		(87)		Deconsolidation of certain Consolidated Property Owners' Associations	—		(48)
Purchase of vacation ownership units for future transfer to inventory	Purchase of vacation ownership units for future transfer to inventory	(12)		(99)		Purchase of vacation ownership units for future transfer to inventory	—		(12)
Other, net	Other, net	1		9		Other, net	(4)		1
Net cash, cash equivalents and restricted cash provided by operating activities	Net cash, cash equivalents and restricted cash provided by operating activities	218		148		Net cash, cash equivalents and restricted cash provided by operating activities	27		218
INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Acquisition of a business, net of cash and restricted cash acquired		—		(157)
Proceeds from disposition of subsidiaries, net of cash and restricted cash transferred	Proceeds from disposition of subsidiaries, net of cash and restricted cash transferred	93		—		Proceeds from disposition of subsidiaries, net of cash and restricted cash transferred	—		93
Capital expenditures for property and equipment (excluding inventory)	Capital expenditures for property and equipment (excluding inventory)	(23)		(11)		Capital expenditures for property and equipment (excluding inventory)	(63)		(23)
Issuance of note receivable to VIE	Issuance of note receivable to VIE	(47)		—		Issuance of note receivable to VIE	—		(47)

Purchase of company owned life insurance	Purchase of company owned life insurance	(11)		(8)		Purchase of company owned life insurance	(4)		(11)
Other, net		3		—
Net cash, cash equivalents and restricted cash provided by (used in) investing activities		15		(176)
Other dispositions, net						Other dispositions, net	14		3
Net cash, cash equivalents and restricted cash (used in) provided by investing activities						Net cash, cash equivalents and restricted cash (used in) provided by investing activities	(53)		15

Continued

See Interim Condensed Notes to ~~Interim~~ Consolidated Financial Statements

Table of Contents

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In millions)

(Unaudited)


		Six Months Ended					Six Months Ended
		June 30, 2022		June 30, 2021			June 30, 2023		June 30, 2022
FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Borrowings from securitization transactions	Borrowings from securitization transactions	477		425		Borrowings from securitization transactions	743		477
Repayment of debt related to securitization transactions	Repayment of debt related to securitization transactions	(485)		(420)		Repayment of debt related to securitization transactions	(651)		(485)
Proceeds from debt	Proceeds from debt	125		1,061		Proceeds from debt	515		125
Repayments of debt	Repayments of debt	(125)		(289)		Repayments of debt	(706)		(125)
Purchase of convertible note hedges		—		(100)
Proceeds from issuance of warrants		—		70

Finance lease incentive						Finance lease incentive	10		—
Finance lease payment	Finance lease payment	(2)		(1)		Finance lease payment	(2)		(2)
Payment of debt issuance costs	Payment of debt issuance costs	(9)		(15)		Payment of debt issuance costs	(6)		(9)
Repurchase of common stock	Repurchase of common stock	(312)		—		Repurchase of common stock	(162)		(312)
Payment of dividends	Payment of dividends	(75)		—		Payment of dividends	(80)		(75)
Payment of withholding taxes on vesting of restricted stock units	Payment of withholding taxes on vesting of restricted stock units	(22)		(15)		Payment of withholding taxes on vesting of restricted stock units	(10)		(22)

Net cash, cash equivalents and restricted cash (used in) provided by financing activities		(428)		716
Net cash, cash equivalents and restricted cash used in financing activities						Net cash, cash equivalents and restricted cash used in financing activities	(349)		(428)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash	Effect of changes in exchange rates on cash, cash equivalents and restricted cash	(2)		—		Effect of changes in exchange rates on cash, cash equivalents and restricted cash	1		(2)
Change in cash, cash equivalents and restricted cash	Change in cash, cash equivalents and restricted cash	(197)		688		Change in cash, cash equivalents and restricted cash	(374)		(197)
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	803		992		Cash, cash equivalents and restricted cash, beginning of period	854		803
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	606	$	1,680	Cash, cash equivalents and restricted cash, end of period	$	480	$	606

SUPPLEMENTAL DISCLOSURES	SUPPLEMENTAL DISCLOSURES					SUPPLEMENTAL DISCLOSURES
Non-cash issuance of debt in connection with asset acquisition	Non-cash issuance of debt in connection with asset acquisition	$	11	$	—	Non-cash issuance of debt in connection with asset acquisition	$	—	$	11
Non-cash issuance of treasury stock for employee stock purchase plan	Non-cash issuance of treasury stock for employee stock purchase plan	2		2		Non-cash issuance of treasury stock for employee stock purchase plan	3		2
Non-cash issuance of treasury stock in connection with Welk Acquisition		—		248
Non-cash transfer from inventory to property and equipment	Non-cash transfer from inventory to property and equipment	45		3		Non-cash transfer from inventory to property and equipment	10		45
Non-cash transfer from property and equipment to inventory	Non-cash transfer from property and equipment to inventory	2		2		Non-cash transfer from property and equipment to inventory	63		2
Non-cash transfer of other assets to property and equipment		15		22
Non-cash transfer from other assets to property and equipment						Non-cash transfer from other assets to property and equipment	—		15

Right-of-use asset obtained in exchange for finance lease obligation						Right-of-use asset obtained in exchange for finance lease obligation	80		—
Non-cash issuance of debt in connection with finance lease						Non-cash issuance of debt in connection with finance lease	97		—
Non-cash reduction of debt associated with bifurcation of conversion feature on the 2022 Convertible Notes	Non-cash reduction of debt associated with bifurcation of conversion feature on the 2022 Convertible Notes	5		—		Non-cash reduction of debt associated with bifurcation of conversion feature on the 2022 Convertible Notes	—		5
Non-cash adjustment to additional paid-in capital for 2022 Convertible Note Hedges	Non-cash adjustment to additional paid-in capital for 2022 Convertible Note Hedges	6		—		Non-cash adjustment to additional paid-in capital for 2022 Convertible Note Hedges	—		6

Interest paid, net of amounts capitalized	Interest paid, net of amounts capitalized	69		89		Interest paid, net of amounts capitalized	99		69
Income taxes paid, net of refunds (income tax refunds, net of income taxes paid)		33		(27)
Income taxes paid, net of refunds						Income taxes paid, net of refunds	133		33

See Interim Condensed Notes to ~~Interim~~ Consolidated Financial Statements

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In millions)

(Unaudited)


Common Stock Issued	Common Stock Issued				Common Stock			Treasury Stock				Additional Paid-In Capital			Accumulated Other Comprehensive (Loss) Income				Retained Earnings			Total MVW Shareholders' Equity				Noncontrolling Interests			Total Equity		Common Stock Issued						Common Stock		Treasury Stock				Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)				Retained Earnings		Total MVW Shareholders' Equity				Noncontrolling Interests		Total Equity

		75.5		BALANCE AT DECEMBER 31, 2021						$	1						$	(1,356)						$	4,072							$	(16)		$	275					$	2,976					$	10					$	2,986
—			Impact of adoption of ASU 2020-06				—							—							(111)							—						31			(80)		—				(80)
75.5			OPENING BALANCE 2022		1			(1,356)				3,961			(16)				306			2,896				10			2,906
—			Net income		—			—				—			—				58			58				—			58
—			Foreign currency translation adjustments		—			—				—			4				—			4				—			4
—			Derivative instrument adjustment		—			—				—			16				—			16				—			16
0.2			Share-based compensation plans		—			1				(16)			—				—			(15)				—			(15)
—			Repurchase of common stock		—			(119)				—			—				—			(119)				—			(119)
—			Dividends		—			—				—			—				(26)			(26)				—			(26)

75.7	75.7		BALANCE AT MARCH 31, 2022		1			(1,474)				3,945			4				338			2,814				10			2,824		75.7			BALANCE AT DECEMBER 31, 2022			$	1	$	(2,054)			$	3,941	$	15			$	593	$	2,496			$	2	$	2,498
—	—		Net income (loss)		—			—				—			—				136			136				(1)			135		—			Net income			—		—				—		—				87		87				—		87
—	—		Foreign currency translation adjustments		—			—				—			(2)				—			(2)				—			(2)		—			Foreign currency translation adjustments			—		—				—		6				—		6				—		6
—	—		Reclassification of foreign currency translation adjustments realized upon disposition of entities		—			—				—			(10)				—			(10)				—			(10)		—			Derivative instrument adjustment			—		—				—		(3)				—		(3)				—		(3)
0.1																															0.1			Share-based compensation plans			—		2				(4)		—				—		(2)				—		(2)
—																															—			Repurchase of common stock			—		(80)				—		—				—		(80)				—		(80)
—																															—			Dividends			—		—				—		—				(26)		(26)				—		(26)
75.8																															75.8			BALANCE AT MARCH 31, 2023			1		(2,132)				3,937		18				654		2,478				2		2,480
—	—		Derivative instrument adjustment		—			—				—			7				—			7				—			7		—			Net income			—		—				—		—				90		90				—		90
—	—		Adjustment for 2022 Convertible Note Hedges		—			—				6			—				—			6				—			6		—			Foreign currency translation adjustments			—		—				—		6				—		6				—		6
—	—		Share-based compensation plans		—			1				12			—				—			13				—			13		—			Derivative instrument adjustment			—		—				—		(1)				—		(1)				—		(1)
—	—		Repurchase of common stock		—			(193)				—			—				—			(193)				—			(193)		—			Share-based compensation plans			—		1				10		—				—		11				—		11
—	—		Deconsolidation of certain Consolidated Property Owners' Associations		—			—				—			—				—			—				(8)			(8)		—			Repurchase of common stock			—		(82)				—		—				—		(82)				—		(82)
—	—		Dividends		—			—				—			—				(26)			(26)				—			(26)		—			Dividends			—		—				—		—				(26)		(26)				—		(26)

75.7			BALANCE AT JUNE 30, 2022		$	1		$	(1,666)			$	3,963		$	(1)			$	448		$	2,745			$	1		$	2,746
75.8																															75.8			BALANCE AT JUNE 30, 2023			$	1	$	(2,213)			$	3,947	$	23			$	718	$	2,476			$	2	$	2,478

Continued

See Interim Condensed Notes to ~~Interim~~ Consolidated Financial Statements

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (CONTINUED)

(In millions)

(Unaudited)

Common
Stock
Issued Common
Stock Treasury
Stock Additional
Paid-In
Capital Accumulated Other Comprehensive (Loss) Income Retained Earnings Total MVW Shareholders' Equity Noncontrolling Interests Total Equity
75.3 BALANCE AT DECEMBER 31, 2020 $ 1 $ (1,334) $ 3,760 $ (48) $ 272 $ 2,651 $ 31 $ 2,682
— Net (loss) income — — — — (28) (28) 3 (25)
— Foreign currency translation adjustments — — — (3) — (3) — (3)
— Derivative instrument adjustment — — — 6 — 6 — 6
0.2 Share-based compensation plans — — (4) — — (4) — (4)
— Equity component of convertible notes, net of issuance costs — — 117 — — 117 — 117
— Purchase of convertible note hedges — — (100) — — (100) — (100)
— Issuance of warrants — — 70 — — 70 — 70
— Deconsolidation of certain Consolidated Property Owners' Associations — — — — — — (5) (5)
75.5 BALANCE AT MARCH 31, 2021 1 (1,334) 3,843 (45) 244 2,709 29 2,738
— Net income — — — — 6 6 2 8
— Welk Acquisition — 55 193 — — 248 — 248
— Foreign currency translation adjustments — — — 4 — 4 — 4
— Derivative instrument adjustment — — — 3 — 3 — 3
— Share-based compensation plans — 1 9 — — 10 — 10
— Deconsolidation of certain Consolidated Property Owners' Associations — — — — — — (1) (1)
— Employee stock plan issuance — — 2 — — 2 — 2
75.5 BALANCE AT JUNE 30, 2021 $ 1 $ (1,278) $ 4,047 $ (38) $ 250 $ 2,982 $ 30 $ 3,012


Common Stock Issued		Common Stock		Treasury Stock		Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Retained Earnings		Total MVW Shareholders' Equity		Noncontrolling Interests		Total Equity


75.5	BALANCE AT DECEMBER 31, 2021	$	1	$	(1,356)	$	4,072	$	(16)	$	275	$	2,976	$	10	$	2,986
—	Impact of adoption of ASU 2020-06	—		—		(111)		—		31		(80)		—		(80)
75.5	OPENING BALANCE 2022	1		(1,356)		3,961		(16)		306		2,896		10		2,906
—	Net income	—		—		—		—		58		58		—		58
—	Foreign currency translation adjustments	—		—		—		4		—		4		—		4
—	Derivative instrument adjustment	—		—		—		16		—		16		—		16
0.2	Share-based compensation plans	—		1		(16)		—		—		(15)		—		(15)
—	Repurchase of common stock	—		(119)		—		—		—		(119)		—		(119)
—	Dividends	—		—		—		—		(26)		(26)		—		(26)
75.7	BALANCE AT MARCH 31, 2022	1		(1,474)		3,945		4		338		2,814		10		2,824
—	Net income	—		—		—		—		136		136		(1)		135
—	Foreign currency translation adjustments	—		—		—		(2)		—		(2)		—		(2)
—	Reclassification of foreign currency translation adjustments realized upon disposition of entities	—		—		—		(10)		—		(10)		—		(10)
—	Derivative instrument adjustment	—		—		—		7		—		7		—		7
—	Adjustment for 2022 Convertible Note Hedges	—		—		6		—		—		6		—		6
—	Share-based compensation plans	—		1		12		—		—		13		—		13
—	Repurchase of common stock	—		(193)		—		—		—		(193)		—		(193)
—	Deconsolidation of certain Consolidated Property Owners' Associations	—		—		—		—		—		—		(8)		(8)
—	Dividends	—		—		—		—		(26)		(26)		—		(26)
75.7	BALANCE AT JUNE 30, 2022	$	1	$	(1,666)	$	3,963	$	(1)	$	448	$	2,745	$	1	$	2,746

See Interim Condensed Notes to ~~Interim~~ Consolidated Financial Statements

Table of Contents

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.			BASIS OF PRESENTATION

The Interim 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”~~“MVW,” or ~~“the Company,~~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 Interim Consolidated Financial Statements as our “Financial Statements,” (ii) our Interim Consolidated Statements of Income as our “Income Statements,” (iii) our Interim Consolidated Balance Sheets as our “Balance Sheets,” and (iv) our Interim Consolidated Statements of Cash Flows as our “Cash Flows.” In addition, references throughout to numbered “Footnotes” refer to the numbered Notes in ~~these~~the Interim Condensed Notes to ~~Interim~~ Consolidated Financial Statements, unless otherwise noted. Capitalized terms used and not specifically defined herein have the same meanings given those terms in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 (the ~~“2021~~“2022 Annual Report”). 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”)~~VIEs for which Marriott Vacations Worldwide is the primary beneficiary, as determined in accordance with consolidation accounting guidance. References in these Financial Statements to net income or loss attributable to common shareholders and MVW shareholders’ equity do not include noncontrolling interests, which represent the outside ownership of our consolidated non-wholly owned entities and are reported separately. Intercompany accounts and transactions between consolidated entities have been eliminated in consolidation.

Pursuant to a change in control of certain consolidated owners’ associations, we recorded a non-cash loss of $3 million in Gains (losses) and other income (expense), net on our Income Statement for each of the three and six months ended June 30, 2022, and deconsolidated $110 million of assets, inclusive of $48 million of restricted cash, and $99 million of liabilities, for a decrease in Noncontrolling interests of $8 million during the first half of 2022. We continue to act as manager for these owners’ associations pursuant to existing management contracts and retain membership interests via our ownership of vacation ownership interests.

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, ~~allocations of the purchase price paid in business combinations,~~ cost of vacation ownership products, inventory valuation, goodwill and intangibles valuation, accounting for acquired vacation ownership notes receivable, vacation ownership notes receivable reserves, income taxes, and loss contingencies. The ~~uncertainty created by~~uncertainties in the ~~COVID-19 pandemic, and the uncertainty~~broader macroeconomic environment, including inflationary pressures, as well as effects of the ~~success of ongoing efforts to mitigate the effects of the~~recent COVID-19 pandemic, have made it more challenging to make these estimates. Actual results could differ from our estimates, and such differences may be material.

In our opinion, our Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position, the results of our operations, and cash flows for the periods presented. Interim results may not be indicative of fiscal year performance because of, among other reasons, ~~the impact of the COVID-19 pandemic~~general macroeconomic conditions, including inflationary pressures, rising interest rates, and seasonal and short-term ~~variations.~~variations, as well as any effects of the recent COVID-19 pandemic. These Financial Statements have not been audited. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP. Although we believe our footnote disclosures are adequate to make the information presented not misleading, the Financial Statements in this report should be read in conjunction with the consolidated financial statements and notes thereto in our ~~2021~~2022 Annual Report.

~~Acquisition of Welk~~

On April 1, 2021, 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 brands that we acquired in the acquisition of Welk Hospitality Group, Inc. (“Welk”) in 2021 (the “Welk Acquisition”) as “Legacy-Welk.” ~~See Footnote 3 “Acquisitions~~We refer to the business and ~~Dispositions” for more information on~~brands that we acquired in the ~~Welk Acquisition.~~acquisition of ILG, LLC, formerly known as ILG, Inc. (“ILG”), in 2018 (the “ILG Acquisition”) as “Legacy-ILG.” We refer to the business we conducted, and the associated brands, prior to the ILG Acquisition as “Legacy-MVW.”

Table of Contents

~~Disposition of VRI Americas~~

Our Financial Statements reflect the disposition of the Vacation Resorts International (“VRI”) and Trading Places International (“TPI”) businesses (together the “VRI Americas” business) on April 29, 2022. See Footnote 3 “Acquisitions and Dispositions” for more information on the disposition of VRI Americas.


2.			SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING STANDARDS

New Accounting Standards

Accounting Standards Update ~~2020-06~~2022-02 – “Financial Instruments — Credit Losses (Topic 326) – Troubled Debt ~~— Debt With Conversion~~Restructurings 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”Vintage Disclosures” (“ASU ~~2020-06”~~2022-02”)

In the first quarter of ~~2022,~~2023, we adopted accounting standards update (“ASU”) ~~2020-06, using~~2022-02, which eliminated the ~~modified retrospective method. Upon adoption~~recognition and measurement guidance applicable to troubled debt restructurings for creditors and enhanced disclosure requirements with respect to loan modifications for borrowers experiencing financial difficulty. ASU 2022-02 also requires disclosure of ~~ASU 2020-06, our convertible notes were no longer separated into liability and equity components, and we are required~~current-period gross write-offs by year of origination 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~~presented 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.vintage disclosures for financing receivables. The adoption of ASU ~~2020-06~~2022-02 on January 1, ~~2022 resulted in an increase in debt of $107 million,~~2023, on a decrease in additional paid-in capital of $111 million, and a decrease in deferred taxes of $27 million, as well as a cumulative effect adjustment to the opening balance of retained earnings of $31 million. The remaining debt issuance costs will continue to be amortized over the respective terms of our convertible notes. The prior period consolidated financial statements have not been retrospectively restated and continue to be reported under the accounting standards in effect for those periods. See Footnote 13 “Debt” for further information on accounting for the 2022 Convertible Notes and the 2022 Convertible Note Hedges (as defined in Footnote 13 “Debt”), subsequent to the adoption of ASU 2020-06.

~~Accounting Standards Update 2021-08 - “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”~~ ~~(“ASU 2021-08”)~~

In the first quarter of 2022, we adopted ASU 2021-08, which amended ASC 805 to require entities to apply ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers in a business combination. The adoption of ASU 2021-08 on January 1, 2022prospective basis, did not have a material impact on our financial statements ~~and disclosures. In~~or disclosures other than the ~~event that we complete business combinations in~~incremental disclosures relating to gross write-offs for vacation ownership notes receivable. See Footnote 6 “Vacation Ownership Notes Receivable” for the ~~future,~~incremental disclosures required by the ~~application~~adoption of ASU ~~2021-08 could result in higher acquired deferred revenue.~~

~~Future Adoption of Accounting Standards~~2022-02.

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

In March 2020, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, as amended, which provides optional expedients and exceptions to existing guidance on contract modifications and hedge accounting in an effort to ease the financial reporting burdens related to the expected market transition from the ~~LIBOR~~USD London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. This update was effective upon issuance and issuers ~~may~~were able to generally elect to adopt the optional expedients and exceptions over time through a period ending on December 31, 2022. ~~As of June 30,~~In December 2022, the ~~interest rates applicable~~FASB issued ASU 2022-06 to ~~borrowings~~extend the temporary accounting rules under Topic 848 from December 31, 2022 to December 31, 2024. During the second quarter of 2023, we amended our ~~existing~~ Term Loan (as defined in Footnote 1312 “Debt”) and ~~Warehouse Credit Facility (as defined in Footnote 12 “Securitized Debt”) generally continued to reference LIBOR, as did certain~~our interest rate swaps and ~~collars. Subsequent~~collar to ~~June 30, 2022, we amended the terms of our Warehouse Credit Facility to, among other things,~~ reference SOFR (as defined in Footnote 12 ~~“Securitized Debt”~~“Debt”) rather than LIBOR.~~Our~~ See Footnote 12 “Debt” for more information. Both our Term Loan and ~~certain~~the related interest rate swaps and ~~collars have not yet discontinued~~collar will transition to SOFR at the ~~use of LIBOR.~~To the extent these instruments are amended to reference a different benchmark interest rate, we may elect to utilize the relief available in ASU 2020-04. When we renew or amend our remaining existing debt instruments, we will determine a replacement rate for LIBOR. We have not adopted any of the optional expedients or exceptions assame time, effective July 31, 2023. As of June 30, ~~2022, but will continue~~2023, we have no other financial instruments to ~~evaluate their adoption during the effective period as circumstances evolve.~~

~~Table of~~ ~~Contents~~

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

In March 2022, the FASB issued ASU 2022-02, which eliminates the recognition and measurement guidance applicable to troubled debt restructurings for creditors and enhances disclosure requirements with respect to loan modifications for borrowers experiencing financial difficulty. ASU 2022-02 also requires disclosure of current-period gross write-offs by year of origination to be presented in the vintage disclosures for financing receivables. This update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. We are evaluating the impact that adoption of ASU 2022-02, including the timing of implementation, will have on our financial statements and disclosures; however, we do not expect adoption to have a material effect on our financial statements or disclosures other than disclosure changes related to vintage disclosures for financing receivables.transition from LIBOR.


3.			ACQUISITIONS AND DISPOSITIONS

~~Welk Acquisition~~Acquisitions

On April 1, 2021 (the “Welk Acquisition Date”), we completed the Welk Acquisition. The following table presents the fair value of each type of consideration transferred at the Welk Acquisition Date, as finalized at March 31, 2022.Charleston, South Carolina


~~(in millions, except per share amounts)~~
~~Equivalent shares of Marriott Vacations Worldwide common stock issued~~	~~1.4~~
~~Marriott Vacations Worldwide common stock price per share as of Welk Acquisition Date~~	$	~~174.18~~
~~Fair value of Marriott Vacations Worldwide common stock issued~~	~~248~~
~~Cash consideration to Welk, net of cash and restricted cash acquired of $48 million~~	~~157~~



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

~~Fair Values of Assets Acquired and Liabilities Assumed~~

We accounted for the Welk Acquisition as a business combination, which required us to record the assets acquired and liabilities assumed at fair value as of the Welk Acquisition Date. The values attributed to Vacation ownership notes receivable, Inventory, Property and equipment, Intangible assets, and Securitized debt from VIEs were based on valuations prepared using Level 3 inputs and assumptions in accordance with ASC Topic 820, “~~Fair Value Measurements” (“ASC 820”). The value attributed to Debt was based on Level 2 inputs in accordance with ASC 820.~~ During the first quarter of ~~2022,~~2023, we ~~finalized our allocation~~acquired a parcel of land and an adjacent retail space in Charleston, South Carolina for $17 million. We plan to develop the parcel of land into a 50-unit vacation ownership resort and use a portion of the ~~purchase price~~retail space to ~~the acquired assets~~operate a sales center. The transaction was accounted for as an asset acquisition and ~~liabilities. The following table presents the fair values of the assets that we acquired~~was recorded in Property and the liabilities that we assumed in connection with the business combination as previously reported at December 31, 2021, and as finalized at March 31, 2022. During the first quarter of 2022, we refined our valuation models related to certain acquired assets and liabilities as follows:

($ in millions) April 1, 2021
(as reported at
December 31, 2021) Adjustments April 1, 2021
(as finalized at
March 31, 2022)
Vacation ownership notes receivable, net $ 255 $ — $ 255
Inventory 111 — 111
Property and equipment 83 — 83
Intangible assets 102 — 102
Other assets 19 — 19
Deferred taxes (32) 8 (24)
Debt (189) — (189)
Securitized debt (184) — (184)
Other liabilities (93) — (93)
Net assets acquired 72 8 80
Goodwill(1)
333 (8) 325
$ 405 $ — $ 405

~~_________________________~~

~~(1)~~Goodwill is calculated as total consideration transferred, net of cash acquired, less identified net assets acquired. It represents the value that we expect to obtain from growth opportunities from our combined operations and is not deductible for tax purposes.

~~Table of~~ ~~Contents~~

~~Pro Forma Results of Operations~~

The following unaudited pro forma information presents the combined results of operations of Marriott Vacations Worldwide and Legacy-Welk as if we had completed the Welk Acquisition on December 31, 2019, the last day of our 2019 fiscal year, but using the fair values of assets and liabilities as of the Welk Acquisition Date set forth above. As required by GAAP, these unaudited pro forma results do not reflect any synergies from operating efficiencies. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the Welk Acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations.

~~There were no Welk Acquisition-related costs included in the unaudited pro forma results below for the six months ended June 30, 2021.~~

~~Six Months Ended~~

~~($ in millions, except per share data)~~

~~June 30, 2021~~

~~Revenues~~

~~1,785~~

~~Net loss~~

~~(4)~~

~~Net loss attributable to common shareholders~~

~~(10)~~

~~LOSS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS~~

~~Basic~~

~~(0.24)~~

~~Diluted~~

~~(0.24)~~

~~Legacy-Welk Results of Operations~~

~~The following table presents the results of Legacy-Welk operations included in our Income Statement for the three months and six months ended June 30, 2022 and June 30, 2021.~~

Three Months Ended Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Revenue $ 56 $ 48 $ 107 $ 48
Net income $ 5 $ 5 $ 12 $ 5

~~Other Acquisitions~~equipment, net.

Bali

During the first quarter of 2022, we acquired 88 completed vacation ownership units, as well as a sales center, located in Bali, Indonesia for $36 million. The transaction was accounted for as an asset acquisition ~~with~~and the purchase price was allocated to Property and ~~equipment.~~equipment, net. As consideration for the acquisition, we paid $12 million in cash and issued a non-interest bearing note payable for $11 ~~million.~~million, of which $6 million was repaid in the first quarter of 2023. Further, during the first quarter of 2022, we reclassified $13 million of previous deposits associated with the project from Other assets to Property and ~~equipment.~~equipment, net.

Dispositions

~~On April 29,~~As part of the ILG Acquisition, we acquired the Vacation Resorts International (“VRI”) and Trading Places International (“TPI”) businesses (together, the “VRI Americas” business), which was part of our Exchange & Third-Party Management segment prior to our disposal of VRI Americas during the second quarter of 2022, as discussed below.

During the second quarter of 2022, we disposed of VRI Americas for proceeds of $55 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

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

Additionally, ~~on June 28,~~during the second quarter of 2022, we disposed of entities that owned and operated a Vacation Ownership segment hotel in Puerto Vallarta, Mexico, for proceeds of $38 million, net of cash and restricted cash transferred to the buyer of $3 million, consistent with our ~~development~~ strategy to dispose of non-strategic assets. The net carrying value of the business disposed of as of the date of the disposition, excluding the cumulative translation adjustment, was $18 million, substantially all of which was for property and equipment. As a result of this disposition, we recorded a gain of $33 million in Gains ~~(losses)~~ and other income, ~~(expense),~~ net on our Income Statements for the three and six months ended June 30, 2022, which included the realization of cumulative foreign currency translation gains of $10 million associated with the disposition of these entities.

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4.			REVENUE AND RECEIVABLES

Sources of Revenue by Segment


		Three Months Ended June 30, 2022									Three Months Ended June 30, 2023
($ in millions)	($ in millions)	Vacation Ownership		Exchange & Third-Party Management		Corporate and Other		Total		($ in millions)	Vacation Ownership		Exchange & Third-Party Management		Corporate and Other		Total
Sale of vacation ownership products	Sale of vacation ownership products	$	425	$	—	$	—	$	425	Sale of vacation ownership products	$	391	$	—	$	—	$	391

Ancillary revenues	Ancillary revenues	66		1		—		67		Ancillary revenues	70		1		—		71
Management fee revenues	Management fee revenues	41		11		(1)		51		Management fee revenues	45		5		(1)		49
Exchange and other services revenues	Exchange and other services revenues	33		46		6		85		Exchange and other services revenues	32		45		9		86
Management and exchange	Management and exchange	140		58		5		203		Management and exchange	147		51		8		206

Rental	Rental	129		11		—		140		Rental	135		11		—		146

Cost reimbursements	Cost reimbursements	325		5		(6)		324		Cost reimbursements	359		3		(7)		355
Revenue from contracts with customers	Revenue from contracts with customers	1,019		74		(1)		1,092		Revenue from contracts with customers	1,032		65		1		1,098

Financing	Financing	72		—		—		72		Financing	80		—		—		80
Total Revenues	Total Revenues	$	1,091	$	74	$	(1)	$	1,164	Total Revenues	$	1,112	$	65	$	1	$	1,178


		Three Months Ended June 30, 2021									Three Months Ended June 30, 2022
($ in millions)	($ in millions)	Vacation Ownership		Exchange & Third-Party Management		Corporate and Other		Total		($ in millions)	Vacation Ownership		Exchange & Third-Party Management		Corporate and Other		Total
Sale of vacation ownership products	Sale of vacation ownership products	$	296	$	—	$	—	$	296	Sale of vacation ownership products	$	425	$	—	$	—	$	425

Ancillary revenues	Ancillary revenues	52		1		—		53		Ancillary revenues	66		1		—		67
Management fee revenues	Management fee revenues	39		9		(5)		43		Management fee revenues	41		11		(1)		51
Exchange and other services revenues	Exchange and other services revenues	32		50		42		124		Exchange and other services revenues	33		46		6		85
Management and exchange	Management and exchange	123		60		37		220		Management and exchange	140		58		5		203

Rental	Rental	110		11		—		121		Rental	129		11		—		140

Cost reimbursements	Cost reimbursements	286		15		(27)		274		Cost reimbursements	325		5		(6)		324
Revenue from contracts with customers	Revenue from contracts with customers	815		86		10		911		Revenue from contracts with customers	1,019		74		(1)		1,092

Financing	Financing	68		—		—		68		Financing	72		—		—		72
Total Revenues	Total Revenues	$	883	$	86	$	10	$	979	Total Revenues	$	1,091	$	74	$	(1)	$	1,164

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		Six Months Ended June 30, 2022									Six Months Ended June 30, 2023
($ in millions)	($ in millions)	Vacation Ownership		Exchange & Third-Party Management		Corporate and Other		Total		($ in millions)	Vacation Ownership		Exchange & Third-Party Management		Corporate and Other		Total
Sale of vacation ownership products	Sale of vacation ownership products	$	735	$	—	$	—	$	735	Sale of vacation ownership products	$	766	$	—	$	—	$	766

Ancillary revenues	Ancillary revenues	120		2		—		122		Ancillary revenues	131		2		—		133
Management fee revenues	Management fee revenues	83		21		(4)		100		Management fee revenues	90		13		(2)		101
Exchange and other services revenues	Exchange and other services revenues	63		99		41		203		Exchange and other services revenues	61		92		19		172
Management and exchange	Management and exchange	266		122		37		425		Management and exchange	282		107		17		406

Rental	Rental	251		22		—		273		Rental	276		21		—		297

Cost reimbursements	Cost reimbursements	652		14		(26)		640		Cost reimbursements	727		8		(15)		720
Revenue from contracts with customers	Revenue from contracts with customers	1,904		158		11		2,073		Revenue from contracts with customers	2,051		136		2		2,189

Financing	Financing	143		—		—		143		Financing	158		—		—		158
Total Revenues	Total Revenues	$	2,047	$	158	$	11	$	2,216	Total Revenues	$	2,209	$	136	$	2	$	2,347

Six Months Ended June 30, 2021
($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total
Sale of vacation ownership products $ 459 $ — $ — $ 459
Ancillary revenues 80 1 — 81
Management fee revenues 77 14 (11) 80
Exchange and other services revenues 60 105 87 252
Management and exchange 217 120 76 413
Rental 187 23 — 210
Cost reimbursements 554 29 (54) 529
Revenue from contracts with customers 1,417 172 22 1,611
Financing 127 — — 127
Total Revenues $ 1,544 $ 172 $ 22 $ 1,738

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	Six Months Ended June 30, 2022
($ in millions)	Vacation Ownership		Exchange & Third-Party Management		Corporate and Other		Total
Sale of vacation ownership products	$	735	$	—	$	—	$	735

Ancillary revenues	120		2		—		122
Management fee revenues	83		21		(4)		100
Exchange and other services revenues	63		99		41		203
Management and exchange	266		122		37		425

Rental	251		22		—		273

Cost reimbursements	652		14		(26)		640
Revenue from contracts with customers	1,904		158		11		2,073

Financing	143		—		—		143
Total Revenues	$	2,047	$	158	$	11	$	2,216

Timing of Revenue from Contracts with Customers by Segment

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


		Three Months Ended June 30, 2022									Three Months Ended June 30, 2023
($ in millions)	($ in millions)	Vacation Ownership		Exchange & Third-Party Management		Corporate and Other		Total		($ in millions)	Vacation Ownership		Exchange & Third-Party Management		Corporate and Other		Total
Services transferred over time	Services transferred over time	$	523	$	34	$	(1)	$	556	Services transferred over time	$	567	$	27	$	1	$	595
Goods or services transferred at a point in time	Goods or services transferred at a point in time	496		40		—		536		Goods or services transferred at a point in time	465		38		—		503
Revenue from contracts with customers	Revenue from contracts with customers	$	1,019	$	74	$	(1)	$	1,092	Revenue from contracts with customers	$	1,032	$	65	$	1	$	1,098

Three Months Ended June 30, 2021
($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total
Services transferred over time $ 463 $ 43 $ 10 $ 516
Goods or services transferred at a point in time 352 43 — 395
Revenue from contracts with customers $ 815 $ 86 $ 10 $ 911

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	Three Months Ended June 30, 2022
($ in millions)	Vacation Ownership		Exchange & Third-Party Management		Corporate and Other		Total
Services transferred over time	$	523	$	34	$	(1)	$	556
Goods or services transferred at a point in time	496		40		—		536
Revenue from contracts with customers	$	1,019	$	74	$	(1)	$	1,092


	Six Months Ended June 30, 2023
($ in millions)	Vacation Ownership		Exchange & Third-Party Management		Corporate and Other		Total
Services transferred over time	$	1,145	$	56	$	2	$	1,203
Goods or services transferred at a point in time	906		80		—		986
Revenue from contracts with customers	$	2,051	$	136	$	2	$	2,189


	Six Months Ended June 30, 2022
($ in millions)	Vacation Ownership		Exchange & Third-Party Management		Corporate and Other		Total
Services transferred over time	$	1,041	$	72	$	11	$	1,124
Goods or services transferred at a point in time	863		86		—		949
Revenue from contracts with customers	$	1,904	$	158	$	11	$	2,073

Six Months Ended June 30, 2021
($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total
Services transferred over time $ 871 $ 80 $ 22 $ 973
Goods or services transferred at a point in time 546 92 — 638
Revenue from contracts with customers $ 1,417 $ 172 $ 22 $ 1,611

Sale of Vacation Ownership Products

~~Revenue declined~~Revenues were reduced during the second quarter and first half of ~~2022~~2023 by $3$11 million and $5$19 million, respectively, due to changes in our estimates of variable consideration for performance obligations that were satisfied in prior periods.

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

The following table shows the composition of our receivables from contracts with customers and contract liabilities. We had no contract assets at either June 30, ~~2022~~2023 or December 31, ~~2021.~~2022.

($ in millions) At June 30, 2022 At December 31, 2021
Receivables from Contracts with Customers
Accounts receivable, net $ 118 $ 172
Vacation ownership notes receivable, net 2,075 2,045
$ 2,193 $ 2,217
Contract Liabilities
Advance deposits $ 195 $ 160
Deferred revenue 372 453
$ 567 $ 613

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($ in millions)	At June 30, 2023		At December 31, 2022
Receivables from Contracts with Customers
Accounts and contracts receivable, net	$	164	$	194
Vacation ownership notes receivable, net	2,272		2,198
	$	2,436	$	2,392
Contract Liabilities
Advance deposits	$	175	$	158
Deferred revenue	417		344
	$	592	$	502

Revenue recognized during the second quarter and first half of ~~2022~~2023 that was included in our contract liabilities balance at December 31, ~~2021~~2022 was ~~$117~~$74 million and ~~$243~~$174 million, respectively.

Remaining Performance Obligations

Our remaining performance obligations represent the expected transaction price allocated to our contracts that we expect to recognize as revenue in future periods when we perform under the contracts. At June 30, ~~2022,~~2023, approximately ~~87%~~91% of this amount is expected to be recognized as revenue over the next two years.

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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 June 30, 2022 At December 31, 2021
Receivables from contracts with customers, net $ 118 $ 172
Note receivable from variable interest entity(1)
47 —
Interest receivable 15 14
Tax receivable 22 48
Indemnification assets 19 22
Employee tax credit receivable 17 19
Other 6 4
$ 244 $ 279

~~_________________________~~

~~(1)~~See Footnote 16 “Variable Interest Entities” for additional information on the loan extended to a VIE during the second quarter of 2022 when we amended our commitment to purchase a property located in Waikiki, Hawaii.


($ in millions)	At June 30, 2023		At December 31, 2022
Receivables from contracts with customers, net	$	164	$	194
Interest receivable	16		16
Tax receivable	64		20
Indemnification assets	40		19
Employee tax credit receivable	15		16
Other	14		27
	$	313	$	292


5.			INCOME TAXES

Our provision for income taxes is calculated using an estimated annual effective tax rate (“AETR”), based upon expected annual income less losses in certain jurisdictions, permanent items, statutory rates and planned tax strategies in the various jurisdictions in which we operate. ~~However, discrete~~Certain items ~~related~~that do not relate directly to ~~prior year tax items~~ordinary income are ~~treated separately.~~excluded from the AETR and included in the period in which they occur.

Our ~~interim~~ effective tax rate was ~~24.3%~~35.4% and ~~75.4%~~24.3% for the three months ended June 30, ~~2022~~2023 and June 30, ~~2021, respectively. Our interim effective tax rate was~~2022, respectively, and 33.9% and 28.1% ~~and (1,737.7%)~~ for the six months ended June 30, ~~2022~~2023 and June 30, ~~2021,~~2022, respectively.

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

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

Unrecognized Tax Benefits

The following table summarizes the activity related to our unrecognized tax benefits (excluding interest and penalties) during the six months ended June 30, ~~2022.~~2023. These unrecognized tax benefits relate to uncertain income tax positions, which would affect the effective tax rate if recognized.



($ in millions)	Unrecognized Tax Benefits
Balance at December 31, ~~2021~~2022	$	2625
Increases related to tax positions taken during a prior period	26



Decreases asrelated to tax positions taken during a ~~result of a lapse of the applicable statute of limitations~~prior period	~~(1)~~(5)

Balance at June 30, ~~2022~~2023	$	2726

The total amount of gross interest and penalties accrued was ~~$47~~$45 million at June 30, ~~2022~~2023 and ~~$42~~$28 million at December 31, ~~2021.~~2022, an increase of $17 million which is predominantly attributable to additional adjustments to the pre-acquisition reserves for uncertain tax positions. We anticipate ~~$14~~$35 million of unrecognized tax benefits, including interest and penalties, to be indemnified pursuant to a Tax Matters Agreement dated May 11, 2016 by and among Starwood Hotels & Resorts Worldwide, Inc., Vistana Signature Experiences, Inc., and Interval Leisure Group, Inc., and consequently have recorded a corresponding indemnification asset. The unrecognized tax benefits, including accrued interest and penalties, are included in Other liabilities on our Balance Sheet.

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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.~~2021. The amount of the unrecognized tax benefits may increase or decrease within the next twelve months as a result of audits or audit settlements.


6.			VACATION OWNERSHIP NOTES RECEIVABLE

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

June 30, 2022 December 31, 2021
($ in millions) Originated Acquired Total Originated Acquired Total
Securitized $ 1,390 $ 269 $ 1,659 $ 1,308 $ 354 $ 1,662
Non-securitized
Eligible for securitization(1)
89 1 90 96 1 97
Not eligible for securitization(1)
305 21 326 267 19 286
Subtotal 394 22 416 363 20 383
$ 1,784 $ 291 $ 2,075 $ 1,671 $ 374 $ 2,045

~~_________________________~~

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


	June 30, 2023						December 31, 2022
($ in millions)	Originated		Acquired		Total		Originated		Acquired		Total
Securitized	$	1,682	$	181	$	1,863	$	1,571	$	221	$	1,792
Non-securitized
Eligible for securitization(1)	51		1		52		63		—		63
Not eligible for securitization(1)	335		22		357		322		21		343
Subtotal	386		23		409		385		21		406
	$	2,068	$	204	$	2,272	$	1,956	$	242	$	2,198

(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.


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021		($ in millions)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Interest income associated with vacation ownership notes receivable — securitized	Interest income associated with vacation ownership notes receivable — securitized	$	60	$	57	$	119	$	105	Interest income associated with vacation ownership notes receivable — securitized	$	68	$	60	$	135	$	119
Interest income associated with vacation ownership notes receivable — non-securitized	Interest income associated with vacation ownership notes receivable — non-securitized	9		8		19		18		Interest income associated with vacation ownership notes receivable — non-securitized	8		9		17		19
Total interest income associated with vacation ownership notes receivable	Total interest income associated with vacation ownership notes receivable	$	69	$	65	$	138	$	123	Total interest income associated with vacation ownership notes receivable	$	76	$	69	$	152	$	138

Credit Quality Indicators - Vacation Ownership Notes Receivable

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

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

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Acquired Vacation Ownership Notes Receivable

Acquired vacation ownership notes receivable represent vacation ownership notes receivable acquired as part of the ILG Acquisition and the Welk Acquisition. The following table shows future contractual principal payments, net of reserves, and interest rates for our acquired vacation ownership notes receivable at June 30, ~~2022.~~2023.

Acquired Vacation Ownership Notes Receivable
($ in millions) Non-Securitized Securitized Total
2022, remaining $ 2 $ 20 $ 22
2023 3 41 44
2024 3 41 44
2025 2 39 41
2026 2 36 38
Thereafter 10 92 102
Balance at June 30, 2022 $ 22 $ 269 $ 291
Weighted average stated interest rate 13.9% 14.2% 14.1%
Range of stated interest rates 0.0% to 21.9% 0.0% to 21.9% 0.0% to 21.9%

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	Acquired Vacation Ownership Notes Receivable
($ in millions)	Non-Securitized		Securitized		Total
2023, remaining	$	3	$	17	$	20
2024	3		34		37
2025	3		32		35
2026	3		28		31
2027	3		23		26
Thereafter	8		47		55
Balance at June 30, 2023	$	23	$	181	$	204
Weighted average stated interest rate	14.0%		14.2%		14.2%
Range of stated interest rates	0.0% to 21.9%		0.0% to 21.9%		0.0% to 21.9%

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


		Acquired Vacation Ownership Notes Receivable Reserve							Acquired Vacation Ownership Notes Receivable Reserve
($ in millions)	($ in millions)	Non-Securitized		Securitized		Total		($ in millions)	Non-Securitized		Securitized		Total
Balance at December 31, 2021		$	47	$	23	$	70
Balance at December 31, 2022								Balance at December 31, 2022	$	11	$	18	$	29
Securitizations	Securitizations	(1)		1		—		Securitizations	(2)		2		—
Clean-up call	Clean-up call	1		(1)		—		Clean-up call	2		(2)		—
Write-offs	Write-offs	(29)		—		(29)		Write-offs	(14)		—		(14)
Recoveries	Recoveries	18		—		18		Recoveries	8		—		8
Defaulted vacation ownership notes receivable repurchase activity(1)	Defaulted vacation ownership notes receivable repurchase activity(1)	14		(14)		—		Defaulted vacation ownership notes receivable repurchase activity(1)	10		(10)		—
(Decrease) increase in vacation ownership notes receivable reserve								(Decrease) increase in vacation ownership notes receivable reserve	(7)		4		(3)
Balance at June 30, 2023								Balance at June 30, 2023	$	8	$	12	$	20

(Decrease) increase in vacation ownership notes receivable reserve		(14)		14		—
Balance at June 30, 2022		$	36	$	23	$	59
(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.								(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.

~~_________________________~~

~~(1)Reflects~~The following tables show the ~~change attributable to the transfer of the reserve from the securitized~~acquired vacation ownership notes receivable, ~~reserve to~~before reserves, by brand and FICO score.


	Acquired Vacation Ownership Notes Receivable as of June 30, 2023
($ in millions)	700+		600 - 699		< 600		No Score		Total
Combined Marriott	$	56	$	38	$	5	$	13	$	112
Hyatt and Welk	65		45		1		1		112
	$	121	$	83	$	6	$	14	$	224


	Acquired Vacation Ownership Notes Receivable as of December 31, 2022
($ in millions)	700+		600 - 699		< 600		No Score		Total
Combined Marriott	$	67	$	47	$	6	$	16	$	136
Hyatt and Welk	80		53		1		1		135
	$	147	$	100	$	7	$	17	$	271

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


	Acquired Vacation Ownership Notes Receivable - Combined Marriott
($ in millions)	2021		2020		2019 & Prior		Total
700 +	$	—	$	—	$	56	$	56
600 - 699	—		—		38		38
< 600	—		—		5		5
No Score	—		—		13		13
	$	—	$	—	$	112	$	112

Gross write-offs	$	—	$	—	$	8	$	8


	Acquired Vacation Ownership Notes Receivable - Hyatt and Welk
($ in millions)	2021		2020		2019 & Prior		Total
700 +	$	5	$	13	$	47	$	65
600 - 699	3		7		35		45
< 600	—		1		—		1
No Score	—		—		1		1
	$	8	$	21	$	83	$	112

Gross write-offs	$	—	$	2	$	4	$	6

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 June 30, ~~2022.~~2023.


		Originated Vacation Ownership Notes Receivable							Originated Vacation Ownership Notes Receivable
($ in millions)	($ in millions)	Non-Securitized		Securitized		Total		($ in millions)	Non-Securitized		Securitized		Total
2022, remaining		$	37	$	64	$	101
2023		34		130		164
2023, remaining								2023, remaining	$	22	$	68	$	90
2024	2024	30		133		163		2024	43		140		183
2025	2025	30		135		165		2025	35		146		181
2026	2026	31		141		172		2026	34		154		188
2027								2027	36		161		197
Thereafter	Thereafter	232		787		1,019		Thereafter	216		1,013		1,229
Balance at June 30, 2022		$	394	$	1,390	$	1,784
Balance at June 30, 2023								Balance at June 30, 2023	$	386	$	1,682	$	2,068
Weighted average stated interest rate	Weighted average stated interest rate	12.7%		13.0%		12.9%		Weighted average stated interest rate	12.1%		13.2%		13.0%
Range of stated interest rates	Range of stated interest rates	0.0% to 20.9%		0.0% to 19.9%		0.0% to 20.9%		Range of stated interest rates	0.0% to 20.9%		0.0% to 19.9%		0.0% to 20.9%

1716

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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							Originated Vacation Ownership Notes Receivable Reserve
($ in millions)	($ in millions)	Non-Securitized		Securitized		Total		($ in millions)	Non-Securitized		Securitized		Total
Balance at December 31, 2021		$	193	$	140	$	333
Balance at December 31, 2022								Balance at December 31, 2022	$	149	$	213	$	362
Increase in vacation ownership notes receivable reserve	Increase in vacation ownership notes receivable reserve	56		10		66		Increase in vacation ownership notes receivable reserve	70		11		81
Securitizations	Securitizations	(55)		55		—		Securitizations	(99)		99		—
Clean-up call	Clean-up call	15		(15)		—		Clean-up call	43		(43)		—
Write-offs	Write-offs	(58)		—		(58)		Write-offs	(61)		—		(61)
Defaulted vacation ownership notes receivable repurchase activity(1)	Defaulted vacation ownership notes receivable repurchase activity(1)	32		(32)		—		Defaulted vacation ownership notes receivable repurchase activity(1)	48		(48)		—
Balance at June 30, 2022		$	183	$	158	$	341
Balance at June 30, 2023								Balance at June 30, 2023	$	150	$	232	$	382

(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.								(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.

~~_________________________~~

~~(1)Reflects the change attributable to the transfer of the reserve from the securitized~~The following tables show originated vacation ownership notes receivable, ~~reserve to~~before reserves, by brand and FICO score.


	Originated Vacation Ownership Notes Receivable as of June 30, 2023
($ in millions)	700 +		600 - 699		< 600		No Score		Total
Combined Marriott	$	1,280	$	572	$	54	$	302	$	2,208
Hyatt and Welk	169		68		2		3		242
	$	1,449	$	640	$	56	$	305	$	2,450


	Originated Vacation Ownership Notes Receivable as of December 31, 2022
($ in millions)	700 +		600 - 699		< 600		No Score		Total
Combined Marriott	$	1,210	$	549	$	55	$	278	2,092
Hyatt and Welk	157		64		3		2		226
	$	1,367	$	613	$	58	$	280	$	2,318

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


	Originated Vacation Ownership Notes Receivable - Combined Marriott
($ in millions)	2023		2022		2021		2020		2019 & Prior		Total
700 +	$	243	$	434	$	250	$	84	$	269	$	1,280
600 - 699	84		181		123		46		138		572
< 600	6		17		13		5		13		54
No Score	85		88		32		21		76		302
	$	418	$	720	$	418	$	156	$	496	$	2,208

Gross write-offs	$	1	$	9	$	17	$	7	$	20	$	54

~~Credit Quality~~

Table of ~~Legacy-MVW~~ Contents


	Originated Vacation Ownership Notes Receivable - Hyatt and Welk
($ in millions)	2023		2022		2021		2020		2019 & Prior		Total
700 +	$	49	$	80	$	35	$	2	$	3	$	169
600 - 699	16		34		15		1		2		68
< 600	—		1		1		—		—		2
No Score	2		1		—		—		—		3
	$	67	$	116	$	51	$	3	$	5	$	242

Gross write-offs	$	—	$	3	$	4	$	—	$	—	$	7

Vacation Ownership Notes Receivable on Non-Accrual Status

For both ~~Legacy-MVW~~ non-securitized and securitized vacation ownership notes receivable, we estimated the average remaining default rates of ~~6.81%~~11.30% as of June 30, ~~2022,~~2023 and ~~6.74%~~11.62% as of December 31, ~~2021.~~2022. A 0.5 percentage point increase in the estimated default rate would have resulted in an increase in the related vacation ownership notes receivable reserve of $6$13 million as of ~~both~~ June 30, ~~2022~~2023 and $12 million as of December 31, ~~2021.~~

We use the aging of the vacation ownership notes receivable as the primary credit quality indicator for our Legacy-MVW vacation ownership notes receivable, as historical performance indicates that there is a relationship between the default behavior of borrowers and the age of the receivable associated with the vacation ownership interest.2022.

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

Legacy-MVW Vacation Ownership Notes Receivable
($ in millions) Non-Securitized Securitized Total
Investment in vacation ownership notes receivable on non-accrual status at June 30, 2022 $ 75 $ 6 $ 81
Investment in vacation ownership notes receivable on non-accrual status at December 31, 2021 $ 88 $ 8 $ 96


	Vacation Ownership Notes Receivable
($ in millions)	Non-Securitized		Securitized		Total
Investment in vacation ownership notes receivable on non-accrual status at June 30, 2023	$	134	$	22	$	156
Investment in vacation ownership notes receivable on non-accrual status at December 31, 2022	$	126	$	24	$	150

The following table shows the aging of the recorded investment in principal, before reserves, in ~~Legacy-MVW~~ vacation ownership notes receivable as of June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.


		Legacy-MVW Vacation Ownership Notes Receivable
		As of June 30, 2022						As of December 31, 2021							As of June 30, 2023						As of December 31, 2022
($ in millions)	($ in millions)	Non-Securitized		Securitized		Total		Non-Securitized		Securitized		Total		($ in millions)	Non-Securitized		Securitized		Total		Non-Securitized		Securitized		Total
31 – 90 days past due	31 – 90 days past due	$	6	$	19	$	25	$	6	$	20	$	26	31 – 90 days past due	$	18	$	51	$	69	$	25	$	56	$	81
91 – 150 days past due		3		6		9		4		8		12
Greater than 150 days past due		72		—		72		84��		—		84
91 – 120 days past due														91 – 120 days past due	6		13		19		7		16		23
Greater than 120 days past due														Greater than 120 days past due	128		9		137		119		8		127
Total past due	Total past due	81		25		106		94		28		122		Total past due	152		73		225		151		80		231
Current	Current	190		1,058		1,248		180		1,027		1,207		Current	415		2,034		2,449		415		1,943		2,358
Total vacation ownership notes receivable	Total vacation ownership notes receivable	$	271	$	1,083	$	1,354	$	274	$	1,055	$	1,329	Total vacation ownership notes receivable	$	567	$	2,107	$	2,674	$	566	$	2,023	$	2,589

~~Table of~~ ~~Contents~~

~~The following table details the origination year of our Legacy-MVW vacation ownership notes receivable as of June 30, 2022.~~

Legacy-MVW Vacation Ownership Notes Receivable
($ in millions) Non-Securitized Securitized Total
Year of Origination
2022 $ 124 $ 112 $ 236
2021 31 339 370
2020 18 135 153
2019 37 205 242
2018 23 130 153
2017 & Prior 38 162 200
$ 271 $ 1,083 $ 1,354

~~Credit Quality of Legacy-ILG and Legacy-Welk Vacation Ownership Notes Receivable~~

At June 30, 2022 and December 31, 2021, the weighted average FICO score within our consolidated Legacy-ILG and Legacy-Welk vacation ownership notes receivable pools was 709 and 707, respectively, based upon the FICO score of the borrower at the time of origination. The average estimated rate for all future defaults for our Legacy-ILG and Legacy-Welk consolidated outstanding pool of vacation ownership notes receivable was 16.85% as of June 30, 2022 and 17.33% as of December 31, 2021. A 0.5 percentage point increase in the estimated default rate on the Legacy-ILG and Legacy-Welk vacation ownership notes receivable would have resulted in an increase in the related vacation ownership notes receivable reserve of $5 million as of June 30, 2022 and $4 million as of December 31, 2021.

We use the origination of the vacation ownership notes receivable by brand (Westin, Sheraton, Hyatt, Welk) and the FICO scores of the customer as the primary credit quality indicators for our Legacy-ILG and Legacy-Welk vacation ownership notes receivable, as historical performance indicates that there is a relationship between the default behavior of borrowers and the brand associated with the vacation ownership interest they have acquired, supplemented by the FICO scores of the customers. Vacation ownership notes receivable with no FICO score in the tables below primarily relate to non-U.S. resident borrowers.

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

Legacy-ILG and Legacy-Welk Vacation Ownership Notes Receivable
($ in millions) Non-Securitized Securitized Total
Investment in vacation ownership notes receivable on non-accrual status at June 30, 2022 $ 95 $ 9 $ 104
Investment in vacation ownership notes receivable on non-accrual status at December 31, 2021 $ 114 $ 10 $ 124

The following table shows the aging of the recorded investment in principal, before reserves, in Legacy-ILG and Legacy-Welk vacation ownership notes receivable as of June 30, 2022 and December 31, 2021.

Legacy-ILG and Legacy-Welk Vacation Ownership Notes Receivable
As of June 30, 2022 As of December 31, 2021
($ in millions) Non-Securitized Securitized Total Non-Securitized Securitized Total
31 – 90 days past due $ 9 $ 20 $ 29 $ 16 $ 24 $ 40
91 – 120 days past due 4 5 9 4 6 10
Greater than 120 days past due 91 4 95 110 4 114
Total past due 104 29 133 130 34 164
Current 259 728 987 219 735 954
Total vacation ownership notes receivable $ 363 $ 757 $ 1,120 $ 349 $ 769 $ 1,118

~~Table of~~ ~~Contents~~

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

Acquired Vacation Ownership Notes Receivable
As of June 30, 2022 As of December 31, 2021
($ in millions) 700 + 600 - 699 < 600 No Score Total 700 + 600 - 699 < 600 No Score Total
Westin $ 42 $ 26 $ 2 $ 6 $ 76 $ 52 $ 32 $ 3 $ 8 $ 95
Sheraton 43 37 6 15 101 54 48 8 23 133
Hyatt 6 4 1 — 11 8 6 1 — 15
Welk 93 63 1 2 159 115 79 1 2 197
Other 1 1 — 1 3 2 — — 2 4
$ 185 $ 131 $ 10 $ 24 $ 350 $ 231 $ 165 $ 13 $ 35 $ 444

~~The following tables detail the origination year of our Legacy-ILG and Legacy-Welk acquired vacation ownership notes receivable by brand and FICO score as of June 30, 2022.~~

Acquired Vacation Ownership Notes Receivable 2018 & Prior
($ in millions) Westin Sheraton Hyatt & Other Total
700 + $ 42 $ 43 $ 7 $ 92
600 - 699 26 37 5 68
< 600 2 6 1 9
No Score 6 15 1 22
$ 76 $ 101 $ 14 $ 191

Acquired Vacation Ownership Notes Receivable - Welk
($ in millions) 2021 2020 2019 2018 & Prior Total
700 + $ 7 $ 20 $ 24 $ 42 $ 93
600 - 699 4 12 16 31 63
< 600 — 1 — — 1
No Score — — 1 1 2
$ 11 $ 33 $ 41 $ 74 $ 159

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

Originated Vacation Ownership Notes Receivable as of June 30, 2022
($ in millions) 700 + 600 - 699 < 600 No Score Total
Westin $ 155 $ 73 $ 8 $ 44 $ 280
Sheraton 146 104 20 41 311
Hyatt 25 12 1 — 38
Welk 99 39 2 1 141
$ 425 $ 228 $ 31 $ 86 $ 770

Originated Vacation Ownership Notes Receivable as of December 31, 2021
($ in millions) 700 + 600 - 699 < 600 No Score Total
Westin $ 143 $ 66 $ 8 $ 34 $ 251
Sheraton 136 94 20 46 296
Hyatt 22 11 — — 33
Welk 65 27 1 1 94
$ 366 $ 198 $ 29 $ 81 $ 674

~~Table of~~ ~~Contents~~

~~The following tables detail the origination year of our Legacy-ILG and Legacy-Welk originated vacation ownership notes receivable by brand and FICO score as of June 30, 2022.~~

Originated Vacation Ownership Notes Receivable - Westin
($ in millions) 2022 2021 2020 2019 2018 Total
700 + $ 39 $ 56 $ 19 $ 34 $ 7 $ 155
600 - 699 15 27 9 18 4 73
< 600 2 3 1 2 — 8
No Score 25 7 4 7 1 44
$ 81 $ 93 $ 33 $ 61 $ 12 $ 280

Originated Vacation Ownership Notes Receivable - Sheraton
($ in millions) 2022 2021 2020 2019 2018 Total
700 + $ 39 $ 51 $ 19 $ 29 $ 8 $ 146
600 - 699 24 40 13 21 6 104
< 600 3 8 3 5 1 20
No Score 8 10 7 13 3 41
$ 74 $ 109 $ 42 $ 68 $ 18 $ 311

Originated Vacation Ownership Notes Receivable - Hyatt
($ in millions) 2022 2021 2020 2019 2018 Total
700 + $ 10 $ 8 $ 2 $ 4 $ 1 $ 25
600 - 699 4 4 1 2 1 12
< 600 — 1 — — — 1
No Score — — — — — —
$ 14 $ 13 $ 3 $ 6 $ 2 $ 38

Originated Vacation Ownership Notes Receivable - Welk
($ in millions) 2022 2021 2020 2019 2018 Total
700 + $ 52 $ 47 $ — $ — $ — $ 99
600 - 699 19 20 — — — 39
< 600 1 1 — — — 2
No Score 1 — — — — 1
$ 73 $ 68 $ — $ — $ — $ 141

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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, Accrued liabilities, and derivative instruments, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.

At June 30, 2022 At December 31, 2021
($ in millions) Carrying
Amount Fair
Value Carrying
Amount Fair
Value
Vacation ownership notes receivable, net $ 2,075 $ 2,160 $ 2,045 $ 2,102
Other assets 71 71 76 76
Total financial assets $ 2,146 $ 2,231 $ 2,121 $ 2,178
Securitized debt, net $ (1,846) $ (1,754) $ (1,856) $ (1,900)
2025 Notes, net (248) (249) (248) (261)
2028 Notes, net (346) (304) (346) (362)
2029 Notes, net (494) (416) (493) (505)
Term Loan, net (777) (745) (776) (784)
2022 Convertible Notes, net(1)
(225) (225) (224) (280)
2026 Convertible Notes, net(1)
(564) (520) (461) (682)
Non-interest bearing note payable, net (10) (10) — —
Total financial liabilities $ (4,510) $ (4,223) $ (4,404) $ (4,774)

~~_________________________~~

~~(1)~~Prior period amounts have not been adjusted to reflect our adoption of ASU 2020-06 under the modified retrospective method. See Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” for information on our adoption of ASU 2020-06.


	At June 30, 2023				At December 31, 2022
($ in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Vacation ownership notes receivable, net	$	2,272	$	2,336	$	2,198	$	2,245
Contracts receivable for financed VOI sales, net	32		32		22		22
Other assets	87		87		76		76
Total financial assets	$	2,391	$	2,455	$	2,296	$	2,343

Securitized debt, net	$	(2,028)	$	(1,933)	$	(1,938)	$	(1,828)
Term Loan, net	(780)		(782)		(778)		(775)
Revolving Corporate Credit Facility, net	(61)		(65)		—		—
2025 Notes, net	—		—		(248)		(258)
2028 Notes, net	(347)		(316)		(347)		(307)
2029 Notes, net	(495)		(432)		(494)		(417)


2026 Convertible Notes, net	(567)		(532)		(565)		(560)
2027 Convertible Notes, net	(561)		(548)		(560)		(568)
Non-interest bearing note payable, net	(4)		(4)		(10)		(10)
Total financial liabilities	$	(4,843)	$	(4,612)	$	(4,940)	$	(4,723)

Vacation Ownership Notes Receivable


		At June 30, 2022				At December 31, 2021					At June 30, 2023				At December 31, 2022
($ in millions)	($ in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		($ in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Vacation ownership notes receivable, net	Vacation ownership notes receivable, net									Vacation ownership notes receivable, net
Securitized	Securitized	$	1,659	$	1,736	$	1,662	$	1,712	Securitized	$	1,863	$	1,926	$	1,792	$	1,837

Eligible for securitization	Eligible for securitization	90		98		97		104		Eligible for securitization	52		53		63		65
Not eligible for securitization	Not eligible for securitization	326		326		286		286		Not eligible for securitization	357		357		343		343
Non-securitized	Non-securitized	416		424		383		390		Non-securitized	409		410		406		408
		$	2,075	$	2,160	$	2,045	$	2,102		$	2,272	$	2,336	$	2,198	$	2,245

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 ABS market. Generally, vacation ownership notes receivable are considered not eligible

~~Table of~~ ~~Contents~~

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 cases, eligibility may also

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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 Marriott-branded VOI sales, we temporarily record a contract receivable for financed VOI sales, until the time at which we originate a vacation ownership note receivable, which occurs at closing. We believe that the carrying value of the contracts receivable for financed VOI sales approximates fair value because the stated, or otherwise imputed, interest rates of these receivables are generally consistent with current market rates and the reserve for these contracts receivable for financed VOI sales appropriately accounts for risks in default rates, prepayment rates, and discount rates. We concluded that this fair value measurement should be categorized within Level 3.

Other Assets

Other assets include ~~$71~~$87 million of company owned insurance policies (the “COLI policies”), acquired on the lives of certain participants in the Marriott Vacations Worldwide Deferred Compensation Plan, that are held in a rabbi trust. 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.

~~Senior Notes~~

We estimate the fair value of our 2025 Notes, 2028 Notes, and 2029 Notes (each as defined in Footnote 13 “Debt”) using quoted market prices as of the last trading day for the quarter; however these notes have only a limited trading history and volume, and as such this fair value estimate is not necessarily indicative of the value at which these notes could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 2.

Term Loan

We estimate the fair value of our Term Loan (as defined in Footnote 1312 “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.

~~Convertible~~Revolving Corporate Credit Facility

We estimate that the gross carrying value of our Revolving Corporate Credit Facility (as defined in Footnote 12 “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 ~~the 2026 Convertible~~our 2025 Notes, ~~(as~~2028 Notes, and 2029 Notes (each as defined in Footnote 1312 “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 ~~the 2026 Convertible Notes~~these notes could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 2. The difference between the carrying value and the fair value is primarily attributed to the underlying conversion feature and the spread between the conversion price and the market value of the shares underlying the 2026 Convertible notes.

Prior to June 2022, we estimated the fair value of the 2022 Convertible Notes (as defined in Footnote 13 “Debt”) using the same approach as the aforementioned 2026 Convertible Notes. In June 2022, the fair value of the 2022 Convertible Notes was calculated using the “with and without” approach (Level 2) based upon comparable debt yields.

2320

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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.

Non-Interest Bearing Note Payable

The carrying value of our non-interest bearing note payable issued in connection with the acquisition of vacation ownership units located in Bali, Indonesia approximates fair ~~value, because the imputed interest rate used to discount this note payable is consistent with current market rates.~~value. We concluded that this fair value measurement should be categorized within Level 3.


8.			EARNINGS PER SHARE

Basic earnings or loss per common share attributable to common shareholders is calculated by dividing net income or loss attributable to common shareholders by the weighted average number of shares of common stock outstanding during the reporting period. Treasury stock is excluded from the weighted average number of shares of common stock outstanding. Diluted earnings or loss per common share attributable to common shareholders is calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period, except in periods when there is a loss because the inclusion of the potential common shares would have an anti-dilutive effect. The dilutive effect of outstanding equity-based compensation awards is reflected in diluted earnings or loss per common share applicable to common shareholders by application of the treasury stock method using average market prices during the period.

We adopted ASU 2020-06 on January 1, 2022 using the modified retrospective method. ASU 2020-06 is applicable to our convertible notes outstanding as of adoption and requires us to calculate the impact of our convertible notes on diluted earnings per share using the “if-converted” method, regardless of our intent to settle or partially settle the debt in cash. Under the “if-converted” method, shares issuable upon conversion of our convertible notes are assumed to be converted into common stock at the beginning of the period, to the extent dilutive. We issued notice of our intent to settle the 2022 Convertible Notes in cash, which became irrevocable on June 15, 2022, and as a result, we suspended the use of the “if-converted” method for the 2022 Convertible Notes at that time, as there was no longer a share settlement option. Earnings per share for the three and six months ended June 30, 2021 have not been retrospectively restated and continue to be reported under the accounting standards in effect for that period.

The shares issuable on exercise of the warrants sold in connection with the issuance of our convertible notes will not impact the total dilutive weighted average shares outstanding unless and until the price of our common stock exceeds the respective strike price. If and when the price of our common stock exceeds the respective strike price of ~~either~~any of the warrants, we will include the dilutive effect of the additional shares that may be issued upon exercise of the warrants in total dilutive weighted average shares outstanding, which we calculate using the treasury stock method. The convertible note hedges purchased in connection with each issuance of our convertible notes are considered to be anti-dilutive and do not impact our calculation of diluted earnings per share attributable to common shareholders for any periods presented herein. ~~See Footnote 13 “Debt” for further information on our convertible notes.~~

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

Three Months Ended Six Months Ended
(in millions, except per share amounts) June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Computation of Basic Earnings (Loss) Per Share Attributable to Common Shareholders
Net income (loss) attributable to common shareholders $ 136 $ 6 $ 194 $ (22)
Shares for basic earnings (loss) per share 41.3 42.9 41.9 42.1
Basic earnings (loss) per share $ 3.30 $ 0.15 $ 4.64 $ (0.52)


	Three Months Ended				Six Months Ended
(in millions, except per share amounts)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Net income attributable to common shareholders	$	90	$	136	$	177	$	194
Shares for basic earnings per share	36.9		41.3		37.1		41.9
Basic earnings per share	$	2.46	$	3.30	$	4.78	$	4.64

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

Three Months Ended Six Months Ended
(in millions, except per share amounts)
June 30, 2022(1)
June 30, 2021(1)
June 30, 2022(1)
June 30, 2021(1)
Computation of Diluted Earnings (Loss) Per Share Attributable to Common Shareholders
Net income (loss) attributable to common shareholders $ 136 $ 6 $ 194 $ (22)
Add back of interest expense related to convertible notes subsequent to the adoption of ASU 2020-06, net of tax 2 — 3 —
Numerator used to calculate diluted EPS $ 138 $ 6 $ 197 $ (22)
Shares for basic earnings (loss) per share 41.3 42.9 41.9 42.1
Effect of dilutive shares outstanding(2)
Employee SARs 0.2 0.2 0.2 —
Restricted stock units 0.3 0.5 0.3 —
2022 Convertible Notes ($230 million of principal)(3)
1.3 0.2 1.4 —
2026 Convertible Notes ($575 million of principal) 3.4 — 3.4 —
Shares for diluted earnings (loss) per share 46.5 43.8 47.2 42.1
Diluted earnings (loss) per share $ 2.97 $ 0.15 $ 4.18 $ (0.52)


	Three Months Ended				Six Months Ended
(in millions, except per share amounts)	June 30, 2023(1)		June 30, 2022(1)		June 30, 2023(1)		June 30, 2022(1)





Net income attributable to common shareholders	$	90	$	136	$	177	$	194
Add back of interest expense related to convertible notes, net of tax	5		2		9		3
Numerator used to calculate diluted earnings per share	$	95	$	138	$	186	$	197

Shares for basic earnings per share	36.9		41.3		37.1		41.9
Effect of dilutive shares outstanding
Employee SARs	0.1		0.2		0.2		0.2
Restricted stock units	0.3		0.3		0.3		0.3
2022 Convertible Notes ($230 million of principal)	—		1.3		—		1.4
2026 Convertible Notes ($575 million of principal)	3.5		3.4		3.5		3.4
2027 Convertible Notes ($575 million of principal)	3.0		—		3.0		—
Shares for diluted earnings per share	43.8		46.5		44.1		47.2
Diluted earnings per share	$	2.17	$	2.97	$	4.23	$	4.18

(1)The computations of diluted earnings per share attributable to common shareholders exclude approximately ~~293,000~~213,000 and ~~299,000~~293,000 shares of common stock, the maximum number of shares issuable as of June 30, ~~2022~~2023 and June 30, ~~2021,~~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.

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

~~Six Months Ended~~

~~(in millions)~~

~~June 30, 2021~~

~~Employee SARs~~

~~0.2~~

~~Restricted stock units~~

~~0.5~~

~~2022 Convertible Notes ($230 million of principal)~~

~~0.2~~

~~0.9~~

~~(3)~~We had the option to settle the 2022 Convertible Notes in cash, stock, or a combination of the two. Therefore, from the beginning of the period through the date on which our notice of our intent to settle the 2022 Convertible Notes in cash became irrevocable, we included shares in the denominator of the diluted earnings per share calculation, applying the “if-converted” method. For the period from June 15, 2022 through June 30, 2022, we excluded the related shares from the denominator of the diluted earnings per share calculation.

In accordance with the applicable accounting guidance for calculating earnings per share, for the second quarter and first half of ~~2022,~~2023, we excluded from our calculation of diluted earnings per share ~~252,314~~289,750 shares underlying stock appreciation rights (“SARs”) that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $143.38 to $173.88, ~~were~~was greater than the average market price of our common stock for the applicable period.

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

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

For the second quarter of 2021, we excluded from our calculation of diluted earnings per share 127,857 shares underlying SARs that may settle in shares of common stock because the exercise price of $173.88 of such SARs was greater than the average market price of our common stock for the applicable period.

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9.			INVENTORY

The following table shows the composition of our inventory balances:

($ in millions) At June 30, 2022 At December 31, 2021
Real estate inventory(1)
$ 686 $ 710
Other 9 9
$ 695 $ 719

~~_________________________~~

~~(1)Represents completed inventory that is registered for sale as vacation ownership interests and vacation ownership inventory expected to be reacquired pursuant to estimated future foreclosures.~~


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


Real estate inventory(1)	$	648	$	651
Other	12		9
	$	660	$	660

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

We value vacation ownership products at the lower of cost or fair market value less costs to sell, in accordance with applicable accounting guidance, and we record operating supplies at the lower of cost (using the first-in, first-out method) or net realizable value. Product cost true-up activity relating to vacation ownership products increased carrying values of inventory by $15 million during the first half of 2023 and $10 million during the first half of ~~2022 and by $1 million during the first half~~2022.

Table of ~~2021.~~Contents

In addition to the above, at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we had ~~$506~~$377 million and ~~$460~~$428 million, respectively, of completed vacation ownership units which are classified as a component of Property and equipment, net until the time at which they are available and legally registered for sale as vacation ownership products.


10.			~~GOODWILL AND INTANGIBLES~~

~~Goodwill~~

~~The following table details the carrying amount of our goodwill at June 30, 2022 and December 31, 2021, and reflects goodwill attributed to the ILG Acquisition and the Welk Acquisition.~~

($ in millions) Vacation Ownership Reporting Unit Exchange & Third-Party Management Reporting Unit Total Consolidated
Balance at December 31, 2021 $ 2,778 $ 372 $ 3,150
Measurement period adjustments (8) — (8)
Disposition of VRI Americas — (25) (25)
Balance at June 30, 2022 $ 2,770 $ 347 $ 3,117

~~Intangible Assets~~

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

($ in millions) At June 30, 2022 At December 31, 2021
Definite-lived intangible assets
Member relationships $ 670 $ 671
Management contracts 427 452
1,097 1,123
Accumulated amortization (219) (194)
878 929
Indefinite-lived intangible assets
Trade names 63 64
$ 941 $ 993

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~~11.~~			CONTINGENCIES AND COMMITMENTS

Commitments and Letters of Credit

As of June 30, ~~2022,~~2023, we had the following commitments outstanding:

•We have various contracts for the use of information technology hardware and software that we use in the normal course of business. Our aggregate commitment under these contracts was ~~$81~~$85 million, of which we expect ~~$28~~$39 million, ~~$30~~$23 million, ~~$13 million, $7~~$16 million, and $3$7 million will be paid in the remainder of ~~2022,~~ 2023, 2024, 2025, and 2026, ~~and thereafter,~~ respectively.

•We have a commitment to acquire real estate for use in our Vacation Ownership segment via our involvement with a VIE. Refer to Footnote 1615 “Variable Interest Entities” for additional information and our activities relating to the VIE involved in this transaction.

•~~We have commitments to acquire inventory from our managed owners’ associations in the remainder of 2022 for $30 million.~~

Surety bonds issued as of June 30, ~~2022~~2023 totaled ~~$127~~$130 million, the majority of which were requested by federal, state, or local governments in connection with our operations.

As of June 30, ~~2022,~~2023, we had $1 million of letters of credit outstanding under our Revolving Corporate Credit Facility (as defined in Footnote 1312 “Debt”). In addition, as of June 30, ~~2022,~~2023, we had $2$1 million in letters of credit outstanding related to and in lieu of reserves required for several vacation ownership notes receivable securitization transactions outstanding. These letters of credit are not issued pursuant to, nor do they impact our borrowing capacity under, the Revolving Corporate Credit Facility.

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.~~deficit if the owners have not received their guaranteed amounts. At June 30, ~~2022,~~2023, our maximum exposure under fixed dollar guarantees was $8$6 million, of which $1 ~~million, $2~~ million, $2 million, $1 million, $1 million, and $1 million relate to the remainder of ~~2022,~~ 2023, 2024, 2025, 2026, and 2027 and thereafter, respectively.

We have a commitment to an owners’ association that we manage to pay for any shortfall between the actual expenses incurred by the owners’ association and the income received by the owners’ association, in lieu of our payment of maintenance fees for unsold inventory. 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 June 30, ~~2022,~~2023, our expected commitment for the remainder of ~~2022~~2023 is ~~$5 million, which will ultimately be recorded as a component of rental expense on our income statement.~~$6 million.

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 alleges that the defendants breached their fiduciary duties related to sale and rental practices, aided and abetted certain breaches of fiduciary duty, engaged in self-dealing as the sponsor and manager of the club, tortiously interfered with the management agreement, were unjustly enriched, and engaged in anticompetitive conduct. The plaintiff is seeking unspecified damages, punitive damages and disgorgement of payments under the management and purchase agreements. In February 2022, the Court granted our motion to dismiss the complaint and dismissed with prejudice all claims except one, with respect to which the plaintiff was granted leave to amend its complaint. The plaintiff ~~has~~ filed an amended complaint and ~~has~~ appealed the dismissal of the other claims.

In ~~April 2019,~~June 2023, the appellate court upheld the dismissal of those claims. Plaintiff filed a ~~purported class-action lawsuit was~~motion for reconsideration of that appellate ruling. In November 2022, the Court granted our motion to dismiss the amended complaint and again granted plaintiff leave to amend its complaint. The plaintiff filed ~~by Alan~~an amended complaint and ~~Marjorie Helman and others against us in~~again appealed the Superior Court of the Virgin Islands, Division of St. Thomas alleging that their fractional interests were devalued by the affiliation of The Ritz-Carlton Club, St. Thomas and other Ritz-Carlton Clubs with our MVCD program. The lawsuit was subsequently removed to the U.S. District Court for the District of the Virgin Islands. The plaintiffs are seeking unspecified damages, disgorgement of profits, fees and costs.

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dismissal. That appeal remains pending. We believe we have meritorious defenses to the claims in ~~each of the above matters~~this matter and intend to vigorously defend ~~each matter.~~against them.

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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. Additionally, the COVID-19 pandemic may give rise to various claims and lawsuits from owners, members and other parties. 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 ~~any of~~ the pending ~~matters~~matter described above and we cannot estimate a range of the potential liability associated with ~~these~~this pending ~~matters,~~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.

~~Leases That Have Not Yet Commenced~~

During 2020, we entered into a finance lease arrangement, which was then amended in 2021, for our new global headquarters office building, which is being constructed in Orlando, Florida. The initial lease term is approximately 16 years with total lease payments of $137 million for the aforementioned period. We expect the new office building to be completed in 2023. Upon commencement of the lease term, a right-of-use asset and corresponding liability will be recorded on our balance sheet.


~~12.~~11.			SECURITIZED DEBT

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

($ in millions) At June 30, 2022 At December 31, 2021
Vacation ownership notes receivable securitizations, gross(1)
$ 1,868 $ 1,877
Unamortized debt discount and issuance costs (22) (21)
$ 1,846 $ 1,856

~~_________________________~~

~~(1)Interest rates as of June 30, 2022 range from 1.5% to 4.6%, with a weighted average interest rate of 2.7%.~~


($ in millions)	At June 30, 2023		At December 31, 2022
Vacation ownership notes receivable securitizations, gross(1)	$	1,863	$	1,799
Unamortized debt discount and issuance costs	(22)		(21)
	1,841		1,778

Warehouse Credit Facility, gross(2)	189		162
Unamortized debt issuance costs	(2)		(2)
	187		160


	$	2,028	$	1,938

(1)Interest rates as of June 30, 2023 range from 1.5% to 6.6%, with a weighted average interest rate of 3.8%.
(2)Effective interest rate as of June 30, 2023 was 6.5%.

All of our securitized debt is ~~non-recourse to MVWC.~~non-recourse. See Footnote 1615 “Variable Interest Entities” for a discussion of the collateral for the non-recourse debt associated with our securitized debt.

The following table shows ~~scheduled~~anticipated future principal payments for our securitized debt as of June 30, ~~2022.~~2023.


		Vacation Ownership Notes Receivable Securitizations						Vacation Ownership Notes Receivable Securitizations		Warehouse Credit Facility(1)		Total
($ in millions)	($ in millions)			($ in millions)	Vacation Ownership Notes Receivable Securitizations	Warehouse Credit Facility(1)
Payments Year	Payments Year
2022, remaining		$	90
2023		183
2023, remaining							2023, remaining	$	89	$	4	$	93
2024	2024	188					2024	181		9		190
2025	2025	189					2025	184		11		195
2026	2026	191					2026	187		165		352
2027							2027	188		—		188
Thereafter	Thereafter	1,027					Thereafter	1,034		—		1,034
		$	1,868					$	1,863	$	189	$	2,052

(1)Excludes future Warehouse Credit Facility renewals.							(1)Excludes future Warehouse Credit Facility renewals.

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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 the second quarter of ~~2022,~~2023, and as of June 30, ~~2022,~~2023, we had 14 securitized vacation ownership notes receivable pools outstanding, none of which were out of compliance with their respective established parameters.

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

During the second quarter of ~~2022,~~2023, we ~~completed the securitization of~~securitized a pool of ~~$383~~$388 million of vacation ownership notes receivable. Approximately $342 million of the vacation ownership notes receivable were purchased by MVW 2022-1 LLC (the “2022-1 LLC”) during the second quarter of 2022, and as of June 30, 2022, the 2022-1 LLC held $40 million of the proceeds, which was released as the remaining vacation ownership notes receivable were purchased subsequent to June 30, 2022.

In connection with the securitization, ~~investors purchased $375~~$380 million in vacation ownership loan backed notes were issued by ~~the 2022-1~~MVW 2023-1 LLC (the “2023-1 LLC”) in a private placement. ~~The 2022-1 LLC issued 4~~Four classes of vacation ownership loan backed ~~notes: $220~~notes were issued by the 2023-1 LLC: $237 million of Class A Notes, ~~$77~~$65 million of Class B Notes, $48 million of Class C Notes, and $30 million of Class D Notes. The Class A Notes have an interest rate of ~~4.15%~~4.93%, the Class B Notes have an interest rate of ~~4.40%~~5.42%, the Class C Notes have an interest rate of ~~5.23%~~6.54%, and the Class D Notes have an interest rate of ~~7.35%, for an overall weighted average interest rate~~8.83%. Investors purchased $369 million of ~~4.59%. Of~~ the $375 million in proceeds from the transaction, approximately $98 million was used to repay all outstanding amounts previously drawn under our Warehouse Credit Facility (as defined below), approximately $7 million was used to pay transaction expenses and fund required reserves, and the remaining $176 million will be used for general corporate purposes. In connection with this securitization, we redeemed the remaining vacation ownership loan backed notes issued ~~in a prior securitization transaction for approximately $38 million. The majority~~by the 2023-1 LLC, composed of the ~~loans acquired through~~Class A Notes, the ~~redemption~~Class B Notes, the Class C Notes, and a portion of the Class D Notes, of which we retained $11 million. Proceeds from the transaction, net of fees and a reserve, were ~~purchased by~~used to repay the ~~2022-1 LLC.~~

~~Subsequent to the end of~~outstanding obligations on our warehouse credit facility (the “Warehouse Credit Facility”) and for other general corporate purposes. The Class D notes that we retained were subsequently sold at par during the second quarter of ~~2022, the 2022-1 LLC purchased the remaining $41 million of vacation ownership notes receivable and $40 million was released from restricted cash.~~2023.

Warehouse Credit Facility

Our warehouse credit facility (the “Warehouse Credit Facility”), which has a borrowing capacity of $350 million, allows for the securitization of vacation ownership notes receivable on a revolving non-recourse basis. During the first quarter of 2022, we securitized vacation ownership notes receivable under our Warehouse Credit Facility. The carrying amount of the vacation ownership notes receivable securitized was $125 million. The average advance rate was 81%, which resulted in gross proceeds of $102 million. Net proceeds were $101 million due to the funding of reserve accounts of $1 million. As of June 30, 2022, there were no cash borrowings outstanding under our Warehouse Credit Facility.

~~Subsequent to the end of~~ the second quarter of ~~2022,~~2023, we amended certain agreements associated with our Warehouse Credit Facility (the “Warehouse Amendment”). The Warehouse Amendment increased the borrowing capacity of the existing facility from ~~$350~~$425 million to ~~$425~~$500 million and extended the revolving period from ~~April 21, 2023 to~~ July 28, ~~2024. The Warehouse Amendment also modified the interest rate applicable~~2024 to most borrowings under the Warehouse Credit Facility. The Warehouse Credit Facility now uses a U.S. Treasury overnight financing rate (Secured Overnight Financing Rate or “SOFR”) plus a 0.10% adjustment (“Adjusted SOFR”) replacing 1-month LIBOR as its benchmark interest rate. As part of the Warehouse Amendment, the credit spread remained at 135 basis points over Adjusted SOFR.May 31, 2025. The Warehouse Amendment made no other material changes to the Warehouse Credit Facility.

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~~13.~~12.			DEBT

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


($ in millions)	($ in millions)		At June 30, 2022		At December 31, 2021		($ in millions)			At June 30, 2023				At December 31, 2022
Corporate Credit Facility							Corporate Credit Facility
								Term Loan		$	784			$	784
								Unamortized debt discount and issuance costs		(4)				(6)
										780				778

								Revolving Corporate Credit Facility(1)		65				—
								Unamortized debt issuance costs(2)		(4)				—
										61				—
Senior Secured Notes	Senior Secured Notes						Senior Secured Notes
		2025 Notes	$	250	$	250		2025 Notes		—				250
		Unamortized debt discount and issuance costs	(2)		(2)			Unamortized debt discount and issuance costs		—				(2)
			248		248					—				248
Senior Unsecured Notes	Senior Unsecured Notes						Senior Unsecured Notes
								2028 Notes		350				350
								Unamortized debt discount and issuance costs		(3)				(3)
										347				347

		2028 Notes	350		350			2029 Notes		500				500
		Unamortized debt discount and issuance costs	(4)		(4)			Unamortized debt discount and issuance costs		(5)				(6)
			346		346					495				494

		2029 Notes	500		500
		Unamortized debt discount and issuance costs	(6)		(7)
			494		493
Corporate Credit Facility
		Term Loan	784		784
		Unamortized debt discount and issuance costs	(7)		(8)
			777		776

Convertible Notes	Convertible Notes						Convertible Notes
		2022 Convertible Notes	230		230			2026 Convertible Notes		575				575
		Unamortized debt discount and issuance costs	(5)		(6)			Unamortized debt issuance costs		(8)				(10)
			225		224					567				565

		2026 Convertible Notes	575		575			2027 Convertible Notes		575				575
		Unamortized debt discount and issuance costs	(11)		(114)			Unamortized debt issuance costs		(14)				(15)
			564		461					561				560

Finance Leases							Finance Leases			186				86

Non-interest bearing note payable	Non-interest bearing note payable		10		—		Non-interest bearing note payable			4				10
								$	3,001			$	3,088

Finance Leases			84		83
			$	2,748	$	2,631
(1)Effective interest rate as of June 30, 2023 was 6.9%.							(1)Effective interest rate as of June 30, 2023 was 6.9%.
(2)Excludes $5 million of unamortized debt issuance costs as of December 31, 2022. As no cash borrowings were outstanding under the Revolving Corporate Credit Facility at that time, the unamortized debt issuance costs were included in Other assets.							(2)Excludes $5 million of unamortized debt issuance costs as of December 31, 2022. As no cash borrowings were outstanding under the Revolving Corporate Credit Facility at that time, the unamortized debt issuance costs were included in Other assets.

Table of Contents

The following table shows scheduled principal payments for our debt, based on contractual terms and maturity dates, excluding finance leases, as of June 30, ~~2022.~~2023.

($ in millions) 2025
Notes 2028
Notes 2029
Notes Term
Loan 2022 Convertible Notes 2026 Convertible Notes Non-Interest Bearing Note Payable Total
Year Payments
2022, remaining $ — $ — $ — $ — $ 230 $ — $ — $ 230
2023 — — — — — — 6 6
2024 — — — — — — 4 4
2025 250 — — 784 — — — 1,034
2026 — — — — — 575 — 575
Thereafter — 350 500 — — — — 850
$ 250 $ 350 $ 500 $ 784 $ 230 $ 575 $ 10 $ 2,699


	Payments Year
($ in millions)	Remaining 2023		2024		2025		2026		2027		Thereafter		Total


Term Loan	$	—	$	—	$	784	$	—	$	—	$	—	$	784
Revolving Corporate Credit Facility	—		—		—		—		65		—		65
2028 Notes	—		—		—		—		—		350		350
2029 Notes	—		—		—		—		—		500		500
2026 Convertible Notes	—		—		—		575		—		—		575
2027 Convertible Notes	—		—		—		—		575		—		575
Non-Interest Bearing Note Payable	—		4		—		—		—		—		4
	$	—	$	4	$	784	$	575	$	640	$	850	$	2,853

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~~Senior Notes~~

~~Our senior notes include:~~

•$500 million aggregate principal amount of 6.125% Senior Secured Notes due 2025 issued in the second quarter of 2020 with a maturity date of September 15, 2025 (the “2025 Notes”), of which $250 million of principal was outstanding as of June 30, 2022.

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

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

Corporate Credit Facility

Our corporate credit facility (“Corporate Credit Facility”), which provides support for our business, including ongoing liquidity and letters of credit, includes a $900 million term loan facility (the “Term Loan”), which matures on August 31, 2025, and ~~bears interest at LIBOR plus 1.75%, and~~ a revolving credit facility ~~(the~~with a borrowing capacity of $750 million(the “Revolving Corporate Credit Facility”) ~~which includes~~, including a letter of credit sub-facility of $75 ~~million.~~million, that terminates on March 31, 2027.

During the ~~first~~second quarter of ~~2022,~~2023, we entered into an amendment to the ~~Revolving~~ Corporate Credit Facility (the ~~“Revolver Amendment”~~“Amendment”), which increased the borrowing capacity of the existing revolving credit facility from $600 million to $750 million and extended the maturity date from August 31, 2023 to March 31, 2027. The Revolver Amendment modified the interest rate applicable to borrowings under the ~~Revolving Corporate Credit Facility to~~Term Loan. Beginning July 31, 2023, the Term Loan will reference ~~SOFR~~the Secured Overnight Financing Rate (“SOFR”) and towill be based on “Adjusted Term SOFR,” which is calculated as Term SOFR (as defined in the ~~Revolver~~ Amendment), plus a 0.10% adjustment for a one-month interest period, a 0.15% adjustment for a three-month interest period, or a 0.25% adjustment for a six-month interest period, subject to a 0.00% floor. Interest rates for other select non-U.S. dollar borrowings were also amended to be based on updated variable rate indices. The applicable margins with respect to the Revolving Corporate Credit Facility were amended to be based on leverage-based measures instead of credit ratings-based measures. The Revolver Amendment made no other material changes to the Corporate Credit Facility.

Prior to ~~2020,~~2022, we entered into ~~$250 million of~~ interest rate swaps and an interest rate collar under which we may pay a fixed rate ~~of 2.9625%~~ and receive a floating interest rate ~~through September 2023 and $200 million of interest rate swaps under which we pay a fixed rate of 2.2480% and receive a floating interest rate through April 2024, in each case~~ to hedge a portion of our interest rate risk on the Term Loan. ~~We also entered into~~During the second quarter of 2023, we amended these interest rate swaps and the collar to reference SOFR rather than LIBOR, effective July 31, 2023. As a result of this transition, the fixed rate on the $250 million of interest rate swaps maturing in September 2023 was amended to 2.88%, the fixed rate on the $200 million of interest rate swaps maturing in April 2024 was amended to 2.17%, and the cap strike price on the $100 million interest rate collar ~~with a cap strike rate of 2.5000% and a floor strike rate of 1.8810% through April 2024~~was amended to ~~further hedge our interest rate risk on the Term Loan.~~2.43%. Both the interest rate swaps and the interest rate collar have been designated and qualify as cash flow hedges of interest rate risk and are recorded in Other assets on our Balance ~~Sheet~~Sheets as of June 30, ~~2022~~2023 and ~~in Other liabilities on our Balance Sheet as of~~ December 31, ~~2021.~~2022. We characterize payments we make or receive in connection with these derivative instruments as interest expense and a reclassification of accumulated other comprehensive income or loss for presentation purposes.

The following table reflects the activity in accumulated other comprehensive income or loss related to our derivative instruments during the first half of ~~2022~~2023 and ~~2021.~~2022. There were no reclassifications to the Income Statement for ~~either~~any of the periods presented below.


($ in millions)	($ in millions)	2022		2021		($ in millions)	2023		2022
Derivative instrument adjustment balance, January 1	Derivative instrument adjustment balance, January 1	$	(18)	$	(39)	Derivative instrument adjustment balance, January 1	$	13	$	(18)
Other comprehensive gain before reclassifications		16		6
Other comprehensive (loss) gain before reclassifications						Other comprehensive (loss) gain before reclassifications	(3)		16

Derivative instrument adjustment balance, March 31	Derivative instrument adjustment balance, March 31	(2)		(33)		Derivative instrument adjustment balance, March 31	10		(2)
Other comprehensive gain before reclassifications		7		3
Other comprehensive (loss) gain before reclassifications						Other comprehensive (loss) gain before reclassifications	(1)		7

Derivative instrument adjustment balance, June 30	Derivative instrument adjustment balance, June 30	$	5	$	(30)	Derivative instrument adjustment balance, June 30	$	9	$	5

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~~Convertible~~Senior Notes

~~2022 Convertible Notes~~Our senior notes include:

~~During 2017, we issued $230~~•$500 million of aggregate principal amount of ~~convertible senior notes (the “2022 Convertible Notes”) that bear interest at~~6.125% Senior Secured Notes due 2025 issued in the second quarter of 2020 with a ~~rate~~maturity date of ~~1.50%, payable in cash semi-annually. The 2022 Convertible Notes mature on~~ September 15, ~~2022, unless repurchased or converted~~2025 (the “2025 Notes”), of which $250 million was outstanding as of December 31, 2022.

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

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

Redemption of Senior Secured Notes

During the first quarter of 2023, we redeemed, prior to ~~that date.~~

~~The conversion rate is subject~~maturity, the remaining $250 million of the 2025 Notes outstanding pursuant to ~~adjustment for certain events as described~~a redemption notice issued in the fourth quarter of 2022 and the terms of the indenture governing the notes, and was subject to adjustment as of June 30, 2022 to 6.8540 shares of common stock per $1,000 principal amount of 2022 Convertible Notes (equivalent to a conversion price of $145.90 per share of our common stock), as a result of the dividends we declared since issuance of the 2022 Convertible Notes that were greater than the quarterly dividend we paid when the 2022 Convertible Notes were issued. As of June 30, 2022, the effective interest rate was 10.85%.

~~The following table reflects the activity related to our 2022 Convertible Notes during the first half of 2022.~~

($ in millions) Principal Amount Unamortized Debt Discount Unamortized Debt Issuance Costs Debt, net Carrying Amount of Equity Component, net of Issuance Costs
At December 31, 2021 $ 230 $ (5) $ (1) $ 224 $ 33
Adoption of ASU 2020-06(1)
— 5 — 5 (33)
At January 1, 2022 230 — (1) 229 —
Amortization of debt issuance costs — — 1 1 —
Fair value of conversion option transferred to other liabilities(2)
— (5) — (5) —
At June 30, 2022 $ 230 $ (5) $ — $ 225 $ —

~~________________________~~

~~(1)~~As a result of the adoption of ASU 2020-06 during the first quarter of 2022, we no longer accounted for the liability and equity components of the convertible notes separately, and we reclassified the conversion feature related to the 2022 Convertible Notes from equity to liabilities. Prior period amounts have not been adjusted to reflect our adoption of ASU 2020-06 under the modified retrospective method. See Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” for information on our adoption of ASU 2020-06.

~~(2)~~We issued notice of our intent to settle the 2022 Convertible Notes in cash, which became irrevocable on June 15, 2022, and as a result, our previous exception to derivative accounting no longer applied and we were required to fair value the conversion feature on the 2022 Convertible Notes at that time. The fair value of the conversion feature of $5 million was recorded as a debt discount and a corresponding increase to Other liabilities on our balance sheet. Subsequent changes to the fair value of the conversion feature will be recorded on our income statement.

~~The following table shows interest expense information related to the 2022 Convertible~~2025 Notes.

Three Months Ended Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
Contractual interest expense $ 1 $ 1 $ 2 $ 2
Amortization of debt discount — 2 — 4
Amortization of debt issuance costs 1 — 1 —
$ 2 $ 3 $ 3 $ 6

~~2022 Convertible Note Hedges and Warrants~~

In connection with this redemption, we incurred charges of $10 million, inclusive of a redemption premium and the ~~offering~~write-off of unamortized debt issuance costs, which was recorded in Gains and other income, net on our Income Statement for the 2022 Convertible Notes, we concurrently entered into the following privately-negotiated separate transactions: convertible note hedge transactions with respect to our common stock (“2022 Convertible Note Hedges”), covering a total of approximately 1.6 million shares of our common stock, and warrant transactions (“2022 Warrants”), whereby we sold to the counterparties to the 2022 Convertible Note Hedges warrants to acquire approximately 1.6 million shares of our common stock. As ofsix months ended June 30, 2022, the strike prices of the 2022 Convertible Note Hedges and the 2022 Warrants were subject to adjustment to approximately $147.99 and $176.45, respectively, and no 2022 Convertible Note Hedges or 2022 Warrants have been exercised.2023.

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~~The 2022 Note Hedges are required to follow the same settlement provisions as the 2022 Convertible Notes. As such, upon issuance of the irrevocable notice of our intent to settle the 2022~~ Convertible Notes in cash, our previous exception to the derivative accounting for the 2022 Convertible Note Hedges no longer applied and we were required to fair value the 2022 Convertible Note Hedges at that time. The fair value of the 2022 Convertible Note Hedges of $6 million was estimated using the Black-Scholes model based on historical and implied volatility and the U.S. Treasury risk-free rate (Level 2 inputs) and recorded in Other assets and Additional paid-in capital on our balance sheet. Subsequent changes to the fair value of the 2022 Convertible Note Hedges will be recorded on our income statement.

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 repurchased or converted in accordance with their terms prior to that date.

The conversion rate is subject to adjustment for certain events as described in the indenture governing the notes, and was subject to adjustment as of June 30, ~~2022~~2023 to ~~5.9395~~6.0609 shares of common stock per $1,000 principal amount of 2026 Convertible Notes (equivalent to a conversion price of ~~$168.36~~$164.99 per share of our common stock), as a result of the dividends we declared since issuance of the 2026 Convertible Notes that were greater than the quarterly dividend we paid when the 2026 Convertible Notes were issued. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election. As of June 30, ~~2022,~~2023, the effective interest rate was 0.55%.

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

($ in millions) At June 30, 2022 At December 31, 2021
Liability component
Principal amount $ 575 $ 575
Unamortized debt discount(1)
— (104)
Unamortized debt issuance costs (11) (10)
Net carrying amount of the liability component $ 564 $ 461
Carrying amount of equity component, net of issuance costs(1)
$ — $ 117

~~________________________~~

~~(1)~~As a result of adoption of ASU 2020-06 during the first quarter of 2022, we no longer account for the liability and equity components of the convertible notes separately, and we reclassified the conversion feature related to the 2026 Convertible Notes from equity to liabilities. Prior period amounts have not been adjusted to reflect our adoption of ASU 2020-06 under the modified retrospective method. See Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” for information on our adoption of ASU 2020-06.

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


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021		($ in millions)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Amortization of debt discount		$	—	$	5	$	—	$	10
Amortization of debt issuance costs	Amortization of debt issuance costs	—		1		1		1		Amortization of debt issuance costs	$	1	$	—	$	2	$	1
		$	—	$	6	$	1	$	11

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 ~~(“2026~~(the “2026 Convertible Note Hedges”), covering a total of ~~approximately 3.4~~3.5 million shares of our common stock, and warrant transactions ~~(“2026~~(the “2026 Warrants”), whereby we sold to the counterparties to the 2026 Convertible Note Hedges warrants to acquire ~~approximately 3.4~~3.5 million shares of our common stock. As of June 30, ~~2022,~~2023, the strike prices of the 2026 Convertible Note Hedges and the 2026 Warrants were subject to adjustment to approximately ~~$168.36~~$164.99 and ~~$210.45,~~$206.24, respectively, 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 2027 Convertible Notes are convertible at a rate of 5.2729 shares of common stock per $1,000 principal amount of 2027 Convertible Notes (equivalent to a conversion price of $189.65 per share of our common stock) as of June 30, 2023. The conversion rate is subject to adjustment for certain events as described in the indenture governing the notes.

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Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election.As of June 30, 2023, the effective interest rate was 3.88%.

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


	Three Months Ended				Six Months Ended
($ in millions)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Contractual interest expense	$	5	$	—	$	9	$	—
Amortization of debt issuance costs	1		—		2		—
	$	6	$	—	$	11	$	—

2027 Convertible Note Hedges and Warrants

In connection with the offering of the 2027 Convertible Notes, we concurrently entered into the following privately-negotiated separate transactions: convertible note hedge transactions with respect to our common stock (the “2027 Convertible Note Hedges”), covering a total of 3.0 million shares of our common stock, and warrant transactions (the “2027 Warrants”), whereby we sold to the counterparties to the 2027 Convertible Note Hedges warrants to acquire 3.0 million shares of our common stock. As of June 30, 2023, the strike prices of the 2027 Convertible Note Hedges and the 2027 Warrants were $189.65 and $286.26, respectively, and no 2027 Convertible Note Hedges or 2027 Warrants have been exercised.

Security and Guarantees

Amounts borrowed under the Corporate Credit Facility, ~~and the 2025 Notes,~~ as well as obligations with respect to letters of credit issued pursuant to the Corporate Credit Facility, are secured by a perfected first priority security interest in substantially all of the assets of the borrowers under, and guarantors of, that facility (which include MVWC and certain of our direct and indirect, existing and future, domestic subsidiaries, excluding certain bankruptcy remote special purpose subsidiaries), in each case including inventory, subject to certain exceptions. In addition, the Corporate Credit Facility, the 2026 Convertible Notes, the ~~2025~~2027 Convertible Notes, the 2028 Notes, and the 2029 Notes are guaranteed by MVWC and certain of our direct and indirect, existing and future, domestic subsidiaries, excluding certain bankruptcy remote special purpose ~~subsidiaries~~.subsidiaries.

~~Non-Interest Bearing Note Payable~~Finance Lease

During 2020, we entered into a finance lease arrangement, which was amended in 2021, for our new global headquarters office building in Orlando, Florida. The lease for the new building commenced for accounting purposes during the first quarter of ~~2022,~~2023, upon the substantial completion of construction. The lease includes a 26-year lease term, consisting of a 16-year initial term plus two five-year renewal options. As of June 30, 2023, the present value of the future lease payments, net of lease incentives, was $80 million, with a corresponding lease liability of $99 million. We record right-of-use assets for our finance leases in Property and equipment, net. Our total payments under this lease are $247 million, of which we ~~issued a non-interest bearing note payable~~expect $1 million, $7 million, $8 million, $8 million, $9 million, and $214 million will be paid in ~~connection with the acquisition of vacation ownership units located in Bali, Indonesia. See Footnote 3 “Acquisitions~~2023, 2024, 2025, 2026, 2027, and ~~Dispositions” for additional information on this transaction.~~thereafter, respectively.


~~14.~~13.			SHAREHOLDERS’ EQUITY

Marriott Vacations Worldwide has 100,000,000 authorized shares of common stock, par value of $0.01 per share. At June 30, ~~2022,~~2023, there were ~~75,741,585~~75,806,578 shares of Marriott Vacations Worldwide common stock issued, of which ~~40,364,584~~36,469,493 shares were outstanding and ~~35,377,001~~39,337,085 shares were held as treasury stock. At December 31, ~~2021,~~2022, there were ~~75,519,049~~75,744,524 shares of Marriott Vacations Worldwide common stock issued, of which ~~42,283,378~~37,481,082 shares were outstanding and ~~33,235,671~~38,263,442 shares were held as treasury stock. Marriott Vacations Worldwide has 2,000,000 authorized shares of preferred stock, par value of $0.01 per share, none of which were issued or outstanding as of June 30, ~~2022~~2023 or December 31, ~~2021.~~2022.

Share Repurchase Program

From time to time, with the approval of our Board of Directors, we may undertake programs to purchase shares of our ~~own shares~~common stock (each, a “Share Repurchase Program” and collectively, the “Share Repurchase Programs”). During the third quarter of 2021, our Board of Directors authorized us to purchase shares of our common stock under a Share Repurchase Program for an aggregate purchase price not to exceed $250 million, prior to December 31, 2022. During the first quarter of 2022, our Board of Directors authorized the purchase of up to an additional $300 million of our common stock under this program, ~~as well as the extension of~~and extended the term of this program to March 31, 2023. During the third quarter of 2022, our

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Board of Directors authorized the purchase of up to an additional $500 million of our common stock under this program, and extended the term of this program to June 30, 2023. During the second quarter of 2023, our Board of Directors increased the remaining authorization to $600 million, and extended the term of this program to December 31, 2024. As of June 30, ~~2022,~~2023, approximately ~~$160~~$561 million remained available for share repurchases under the Share Repurchase Program.

Subsequent to the end of the second quarter of 2022, our Board of Directors authorized the repurchase of up to an additional $500 million of our common stock, as well as the extension of the term of the Share Repurchase Program to June 30, 2023.

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 Inflation Reduction Act of 2022, which was enacted in August 2022, imposes a 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. For purposes of calculating the excise tax, the fair value of certain share issuances may be netted against the fair market value of stock repurchases during the same taxable year. In the first half of 2023, we reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased and recorded a corresponding liability for the excise taxes payable in Accrued liabilities on our Balance Sheet.

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

($ in millions, except per share amounts) Number of Shares Repurchased Cost of Shares Repurchased Average Price
Paid per Share
As of December 31, 2021 17,681,395 $ 1,418 $ 80.17
For the first half of 2022 2,187,336 312 $ 143.02
As of June 30, 2022 19,868,731 $ 1,730 $ 87.09

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($ in millions, except per share amounts)	Number of Shares Repurchased	Cost Basis of Shares Repurchased		Average Price Paid per Share
As of December 31, 2022	22,773,218	$	2,119	$	93.06
For the first half of 2023	1,143,555	162		$	141.84
As of June 30, 2023	23,916,773	$	2,281	$	95.40

Dividends

We declared cash dividends to holders of common stock during the first half of ~~2022~~2023 as follows. Any future dividend payments will be subject to the restrictions imposed under the agreements covering our debt, and Board approval. There can be no assurance that we will pay dividends in the future.

Declaration Date

Shareholder Record Date

Distribution Date

Dividend per Share

February ~~18, 2022~~16, 2023

March ~~3, 2022~~2, 2023

March ~~17, 2022~~16, 2023

$~~0.62~~0.72

May ~~12, 2022~~11, 2023

May ~~26, 2022~~25, 2023

June ~~9, 2022~~8, 2023

$~~0.62~~0.72

~~Noncontrolling Interests - Owners’ Associations~~

We consolidate certain owners’ associations. Noncontrolling interests represent the portion of the owners’ associations related to third-party vacation ownership interest owners. Noncontrolling interests of $1 million and $10 million, as of June 30, 2022 and December 31, 2021, respectively, are included on our Balance Sheets as a component of equity.


~~15.~~14.			SHARE-BASED COMPENSATION

We maintain the Marriott Vacations Worldwide Corporation 2020 Equity Incentive Plan (the “MVW Equity Plan”) 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. A total of 1.8 million shares are authorized for issuance pursuant to grants under the MVW Equity Plan. As of June 30, ~~2022,~~2023, approximately ~~1.0~~0.8 million shares were available for grants under the MVW Equity Plan.

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


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021		($ in millions)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Service-based RSUs	Service-based RSUs	$	10	$	9	$	17	$	15	Service-based RSUs	$	9	$	10	$	15	$	17
Performance-based RSUs	Performance-based RSUs	1		2		1		3		Performance-based RSUs	2		1		3		1
											11		11		18		18
		11		11		18		18
SARs	SARs	1		3		2		4		SARs	1		1		1		2

		$	12	$	14	$	20	$	22		$	12	$	12	$	19	$	20

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


($ in millions)	($ in millions)	At June 30, 2022		At December 31, 2021		($ in millions)	At June 30, 2023		At December 31, 2022
Service-based RSUs	Service-based RSUs	$	42	$	33	Service-based RSUs	$	38	$	26
Performance-based RSUs	Performance-based RSUs	9		—		Performance-based RSUs	11		7
							49		33
		51		33
SARs	SARs	3		2		SARs	2		1

		$	54	$	35		$	51	$	34

Restricted Stock Units

We granted ~~177,951~~194,628 service-based RSUs, which are subject to time-based vesting conditions, with a weighted average grant-date fair value of ~~$152.18,~~$144.52, to our employees and non-employee directors during the first half of ~~2022.~~2023. During the first half of ~~2022,~~2023, we also granted performance-based RSUs, which are subject to performance-based vesting conditions, to members of management. A maximum of ~~135,012~~114,602 RSUs may be earned under the performance-based RSU awards granted during the first half of ~~2022.~~2023.

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Stock Appreciation Rights

We granted ~~77,037~~37,436 SARs, with a weighted average grant-date fair value of ~~$59.68~~$58.50 and a weighted average exercise price of ~~$159.27,~~$153.10, to members of management during the first half of ~~2022.~~2023. 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.

The following table outlines the assumptions used to estimate the fair value of grants during the first half of ~~2022:~~2023:


Expected volatility			~~42.86%~~40.47%
Dividend yield			~~1.53%~~1.87%
Risk-free rate			~~1.77%~~4.07%
Expected term (in years)			6.25


~~16.~~15.			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 ~~liquidity~~funding for general corporate purposes. In a vacation ownership notes receivable securitization, various classes of debt securities issued by a special purpose entity are generally collateralized by a single tranche of transferred assets, which consist of vacation ownership notes receivable. With each vacation ownership notes receivable securitization, we may retain all or a portion of the securities ~~subordinated tranches, interest-only strips, subordinated interests in accrued interest~~that are issued, and ~~fees on the securitized vacation ownership notes receivable or, in some cases, overcollateralization and cash reserve accounts.~~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.

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The following table shows consolidated assets, which are collateral for the obligations of these VIEs, and consolidated liabilities included on our Balance Sheet at June 30, ~~2022:~~2023:

($ in millions) Vacation Ownership
Notes Receivable
Securitizations Warehouse
Credit Facility Total
Consolidated Assets
Vacation ownership notes receivable, net of reserves $ 1,659 $ — $ 1,659
Interest receivable 12 — 12
Restricted cash 108 — 108
Total $ 1,779 $ — $ 1,779
Consolidated Liabilities
Interest payable $ 2 $ — $ 2
Securitized debt 1,868 — 1,868
Total $ 1,870 $ — $ 1,870

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($ in millions)	Vacation Ownership Notes Receivable Securitizations		Warehouse Credit Facility		Total
Consolidated Assets
Vacation ownership notes receivable, net of reserves	$	1,666	$	197	$	1,863
Interest receivable	12		2		14
Restricted cash	68		10		78
Total	$	1,746	$	209	$	1,955
Consolidated Liabilities
Interest payable	$	2	$	1	$	3
Securitized debt	1,863		189		2,052
Total	$	1,865	$	190	$	2,055

The following table shows the interest income and expense recognized as a result of our involvement with these VIEs during the second quarter of ~~2022:~~2023:

($ in millions) Vacation Ownership
Notes Receivable
Securitizations Warehouse
Credit Facility Total
Interest income $ 59 $ 1 $ 60
Interest expense to investors $ 11 $ 1 $ 12
Debt issuance cost amortization $ 2 $ — $ 2


($ in millions)	Vacation Ownership Notes Receivable Securitizations		Warehouse Credit Facility		Total
Interest income	$	65	$	3	$	68
Interest expense to investors	$	18	$	2	$	20
Debt issuance cost amortization	$	2	$	—	$	2

The following table shows the interest income and expense recognized as a result of our involvement with these VIEs during the first half of ~~2022:~~2023:


($ in millions)	($ in millions)	Vacation Ownership Notes Receivable Securitizations		Warehouse Credit Facility		Total		($ in millions)	Vacation Ownership Notes Receivable Securitizations		Warehouse Credit Facility		Total
Interest income	Interest income	$	116	$	3	$	119	Interest income	$	121	$	14	$	135
Interest expense to investors	Interest expense to investors	$	21	$	1	$	22	Interest expense to investors	$	32	$	5	$	37
Debt issuance cost amortization	Debt issuance cost amortization	$	4	$	1	$	5	Debt issuance cost amortization	$	4	$	1	$	5
Administrative expenses	Administrative expenses	$	1	$	—	$	1	Administrative expenses	$	1	$	—	$	1

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


		Six Months Ended					Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		($ in millions)	June 30, 2023		June 30, 2022
Cash Inflows	Cash Inflows					Cash Inflows
Net proceeds from vacation ownership notes receivable securitizations	Net proceeds from vacation ownership notes receivable securitizations	$	371	$	421	Net proceeds from vacation ownership notes receivable securitizations	$	396	$	371
Principal receipts	Principal receipts	280		286		Principal receipts	250		280
Interest receipts	Interest receipts	116		108		Interest receipts	120		116
Reserve release	Reserve release	113		108		Reserve release	16		113
Total	Total	880		923		Total	782		880
Cash Outflows	Cash Outflows					Cash Outflows
Principal to investors	Principal to investors	(299)		(290)		Principal to investors	(259)		(299)
Voluntary repurchases of defaulted vacation ownership notes receivable	Voluntary repurchases of defaulted vacation ownership notes receivable	(46)		(58)		Voluntary repurchases of defaulted vacation ownership notes receivable	(57)		(46)
Voluntary clean-up call	Voluntary clean-up call	(39)		(72)		Voluntary clean-up call	(19)		(39)
Interest to investors	Interest to investors	(21)		(22)		Interest to investors	(34)		(21)
Funding of restricted cash	Funding of restricted cash	(96)		(109)		Funding of restricted cash	(17)		(96)
Total	Total	(501)		(551)		Total	(386)		(501)
Net Cash Flows	Net Cash Flows	$	379	$	372	Net Cash Flows	$	396	$	379

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Under the terms of our vacation ownership notes receivable securitizations, we have the right to substitute loans for, or repurchase, defaulted loans at our option, subject to certain limitations. Our maximum exposure to potential loss relating to the special purpose entities that purchase, sell and own these vacation ownership notes receivable is the overcollateralization amount (the difference between the loan collateral balance and the balance of the outstanding vacation ownership notes receivable), plus cash reserves and any residual interest in future cash flows from collateral.

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


		Six Months Ended					Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		($ in millions)	June 30, 2023		June 30, 2022
Cash Inflows	Cash Inflows					Cash Inflows
Proceeds from vacation ownership notes receivable securitizations	Proceeds from vacation ownership notes receivable securitizations	$	102	$	—	Proceeds from vacation ownership notes receivable securitizations	$	342	$	102
Principal receipts	Principal receipts	8		—		Principal receipts	25		8
Interest receipts	Interest receipts	3		—		Interest receipts	14		3
Reserve release	Reserve release	1		—		Reserve release	8		1
Total	Total	114		—		Total	389		114
Cash Outflows	Cash Outflows					Cash Outflows
Principal to investors	Principal to investors	(3)		—		Principal to investors	(19)		(3)

Voluntary repurchases of defaulted vacation ownership notes receivable						Voluntary repurchases of defaulted vacation ownership notes receivable	(1)		—
Repayment of Warehouse Credit Facility	Repayment of Warehouse Credit Facility	(98)		—		Repayment of Warehouse Credit Facility	(296)		(98)
Interest to investors	Interest to investors	(1)		(1)		Interest to investors	(5)		(1)
Funding of restricted cash	Funding of restricted cash	(1)		—		Funding of restricted cash	(11)		(1)
Total	Total	(103)		(1)		Total	(332)		(103)
Net Cash Flows	Net Cash Flows	$	11	$	(1)	Net Cash Flows	$	57	$	11

Other Variable Interest Entities

We have a commitment to purchase a property located in Waikiki, ~~Hawaii which~~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 during construction. Further, our purchase commitment is generally contingent upon the property being redeveloped to our brand standards. Accordingly, we have not consolidated the VIE. ~~During the second quarter of 2022, we extended a loan~~We expect to ~~the VIE for $47 million and amended the terms of this commitment. If we are unable to negotiate a capital efficient inventory arrangement under which a third party will develop~~acquire the property over time and ~~agree~~as of June 30, 2023, we expect to ~~resell it to us at a later date, we are committed to purchase~~make payments for the property ~~in its then current form, for $80~~as follows: $112 million in ~~the fourth quarter of 2022, unless it has been sold to another party. The loan extended to the VIE is due~~2024, $81 million in ~~full upon the earlier of sale of the property, including a sale to us, or an amendment~~2025 and ~~restatement of our purchase commitment. In the latter case, the existing loan of $47~~$41 million ~~would be repaid to us as part of that revised purchase commitment.~~in 2026. As of June 30, ~~2022,~~2023, our Balance Sheet reflected ~~$48~~$1 million in Accounts Receivable, including ~~the~~a note receivable of ~~$47 million.~~approximately $1 million, $1 million in Property and Equipment, and $1 million in Accrued Liabilities. We believe that our maximum exposure to loss as a result of our involvement with this VIE is approximately ~~$48~~$1 million as of June 30, ~~2022.~~2023.

Deferred Compensation Plan

We consolidate the liabilities of the Marriott Vacations Worldwide Deferred Compensation Plan and the related assets, which consist of the COLI policies held in ~~the~~a rabbi trust. The rabbi trust is considered a VIE. We are considered the primary beneficiary of the rabbi trust because we direct the activities of the trust and are the beneficiary of the trust. At June 30, ~~2022,~~2023, the value of the assets held in the rabbi trust was ~~$71~~$87 million, which is included in the Other line within assets on our Balance Sheets.


~~17.~~16.			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 2two operating and reportable business segments:

•Vacation Ownership includes a diverse portfolio of resorts that includes some of the world’s most iconic brands licensed under exclusive, long-term relationships. We are the exclusive worldwide developer, marketer, seller, and manager of vacation ownership and related products under the Marriott Vacation Club, Grand Residences by Marriott, Sheraton Vacation Club, Westin Vacation Club, and Hyatt Residence Club brands, as well as under Marriott Vacation Club Pulse, an extension toof the Marriott Vacation Club brand. We are also the exclusive worldwide developer, marketer, and seller of vacation ownership and related products under The Ritz-Carlton ~~Destination~~ Club

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brand, we have the non-exclusive right to develop, market, and sell whole ownership residential products under The Ritz-Carlton Residences brand and have a license to use the St. Regis brand for specified fractional ownership resorts.

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•Our Vacation Ownership segment generates most of its revenues from 4four 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 ~~networks~~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.~~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 ~~EBITDA~~Earnings before Interest Expense, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) to evaluate the profitability of our operating segments, and the components of net income or loss attributable to common shareholders excluded from Adjusted EBITDA are not separately evaluated. Adjusted EBITDA is defined as net income or loss attributable to common shareholders, before interest expense (excluding consumer financing interest expense associated with term securitization transactions), income taxes, depreciation and amortization, excluding share-based compensation expense and adjusted for certain items that affect the comparability of our operating performance. Our reconciliation of the aggregate amount of Adjusted EBITDA for our reportable segments to consolidated net income or loss attributable to common shareholders is presented below.

Revenues


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021		($ in millions)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Vacation Ownership	Vacation Ownership	$	1,091	$	883	$	2,047	$	1,544	Vacation Ownership	$	1,112	$	1,091	$	2,209	$	2,047
Exchange & Third-Party Management	Exchange & Third-Party Management	74		86		158		172		Exchange & Third-Party Management	65		74		136		158
Total segment revenues	Total segment revenues	1,165		969		2,205		1,716		Total segment revenues	1,177		1,165		2,345		2,205
Corporate and other	Corporate and other	(1)		10		11		22		Corporate and other	1		(1)		2		11
		$	1,164	$	979	$	2,216	$	1,738		$	1,178	$	1,164	$	2,347	$	2,216

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


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021		($ in millions)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Adjusted EBITDA Vacation Ownership	Adjusted EBITDA Vacation Ownership	$	274	$	182	$	473	$	250	Adjusted EBITDA Vacation Ownership	$	245	$	274	$	474	$	473
Adjusted EBITDA Exchange & Third-Party Management	Adjusted EBITDA Exchange & Third-Party Management	35		37		78		78		Adjusted EBITDA Exchange & Third-Party Management	32		35		69		78
Reconciling items:	Reconciling items:									Reconciling items:
Corporate and other	Corporate and other	(54)		(55)		(108)		(95)		Corporate and other	(55)		(54)		(118)		(108)
Interest expense		(30)		(44)		(57)		(87)
Interest expense, net										Interest expense, net	(36)		(30)		(70)		(57)
Tax provision	Tax provision	(43)		(27)		(75)		(16)		Tax provision	(50)		(43)		(91)		(75)
Depreciation and amortization	Depreciation and amortization	(32)		(36)		(65)		(77)		Depreciation and amortization	(34)		(32)		(66)		(65)
Share-based compensation expense	Share-based compensation expense	(12)		(14)		(20)		(22)		Share-based compensation expense	(12)		(12)		(19)		(20)
Certain items	Certain items	(2)		(37)		(32)		(53)		Certain items	—		(2)		(2)		(32)
Net income (loss) attributable to common shareholders		$	136	$	6	$	194	$	(22)
Net income attributable to common shareholders										Net income attributable to common shareholders	$	90	$	136	$	177	$	194

3934

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Assets


($ in millions)	($ in millions)	At June 30, 2022		At December 31, 2021		($ in millions)	At June 30, 2023		At December 31, 2022
Vacation Ownership	Vacation Ownership	$	7,969	$	7,897	Vacation Ownership	$	8,087	$	8,037
Exchange & Third-Party Management	Exchange & Third-Party Management	837		911		Exchange & Third-Party Management	833		865
Total segment assets	Total segment assets	8,806		8,808		Total segment assets	8,920		8,902
Corporate and other	Corporate and other	534		805		Corporate and other	562		737
		$	9,340	$	9,613		$	9,482	$	9,639

We conduct business globally, and our operations outside the United States represented approximately 11% and 10% of our revenues, excluding cost reimbursements, for the three months ended June 30, 2022 and June 30, 2021, respectively, and 11% and 9% of our revenues, excluding cost reimbursements, for the six months ended June 30, 2022 and June 30, 2021, respectively.Revenues Excluding Cost Reimbursements


	Three Months Ended				Six Months Ended
($ in millions)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
United States	$	710	$	745	$	1,410	$	1,402
All other countries	113		95		217		174
	$	823	$	840	$	1,627	$	1,576

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

We make forward-looking statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Quarterly Report on Form 10-Q, based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include ~~among other things,~~ the information concerning: our possible or assumed future results of operations; financial condition and leverage; dividend payments; our expectations regarding development profit margins, defaults and expected losses, notes receivable balances, commitments to owners’ associations, payments for property acquisitions, that interest income and notes receivable will increase in 2023, interest rates, financing profit margin, general and administrative expenses, inventory costs and inventory spending, taxes, and any effects of the COVID-19 pandemic; business strategies, such as our ~~plans to~~expectations that we will continue to ~~increase our focus on sales of vacation ownership products to first-time buyers~~offer financing incentives; and ~~our expectations regarding resulting increases in financing propensity; financing plans; competitive position; potential growth opportunities;~~ potential operating performance improvements, including the expectations ~~that~~regarding contract sales, resort management and resort occupancies will continue to remain strong for the remainder of 2022 and that interest income will increase in 2022; our expectations regarding availability of inventory for Getaways and exchange transactions; the effects of competition; and the ongoing effect of the COVID-19 pandemic and actions we or others may take in response to the COVID-19 pandemic.financing plans. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “might,” “should,” “could” or the negative of these terms or similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. We caution you that these statements are not guarantees of future performance and are subject to numerous and evolving risks and uncertainties that we may not be able to predict or assess, such as: the ~~continuing~~ effects of ~~the COVID-19 pandemic, including quarantines or other government-imposed travel or health-related restrictions; the length and severity of the COVID-19 pandemic,~~a future health crisis, including its short and longer-term ~~impact~~impacts on consumer confidence and demand for travel, and the pace of recovery following ~~the COVID-19 pandemic or as effective treatments or vaccines against variants of the COVID-19 virus become widely available;~~a health crisis; variations in demand for vacation ownership and exchange products and services; worker absenteeism; price and wage inflation; global supply chain disruptions; volatility in the international and national economy and credit ~~markets, including as a result~~markets; impact of the ~~COVID-19 pandemic and~~current or a future banking crisis; the ongoing ~~conflict~~war between Russia and Ukraine and related sanctions and other measures; our ability to attract and retain our global workforce; competitive conditions; the availability of capital to finance growth; the ~~effects~~impact of ~~steps we have taken and may continue to take to reduce operating costs and/or enhance health and cleanliness protocols at our resorts due to the COVID-19 pandemic;~~rising interest rates; political or social ~~strife,~~strife; difficulties associated with implementing new or maintaining existing technology; changes in privacy laws and other matters referred to under the heading “Risk Factors” contained herein and also in our most recent Annual Report on Form 10-K, and aswhich may be updated in our future periodic filings with the U.S. Securities and Exchange Commission (the “SEC”).

All forward-looking statements in this Quarterly Report on Form 10-Q apply only as of the date of this Quarterly Report on Form 10-Q or as of the date they were made or as otherwise specified herein. We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law. There may be other risks and uncertainties that we cannot predict at this time or that we currently do not expect will have a material adverse effect on our financial position, results of operations or cash flows. Any such risks could cause our results to differ materially from those we express in forward-looking statements.

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Our Financial Statements (as defined below), which we discuss below, reflect our historical financial condition, results of operations and cash flows. However, the financial information discussed below and included in this Quarterly Report on Form 10-Q may not necessarily reflect what our financial condition, results of operations or cash flows may be in the future.

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~~future.~~ In order to make this report easier to read, we refer to (i) our Interim Consolidated Financial Statements as our “Financial Statements,” (ii) our Interim Consolidated Statements of Income as our “Income Statements,” (iii) our Interim Consolidated Balance Sheets as our “Balance Sheets” and (iv) our Interim Consolidated Statements of Cash Flows as our “Cash Flows.” In addition, references throughout to numbered “Footnotes” refer to the numbered Notes in the Interim Condensed Notes to ~~our~~Consolidated Financial Statements that we include in the Financial Statements of this Quarterly Report on Form 10-Q.

Business Overview

We are a leading global vacation company that offers vacation ownership, exchange, rental and resort and property management, along with related businesses, products and services. Our business operates in two reportable segments: Vacation Ownership and Exchange & Third-Party Management.

Our Vacation Ownership segment includes a diverse portfolio of resorts that includes some of the world’s most iconic brands licensed under exclusive long-term relationships. We are the exclusive worldwide developer, marketer, seller and manager of vacation ownership and related products under the Marriott Vacation Club, Grand Residences by Marriott, Sheraton Vacation Club, Westin Vacation Club and Hyatt Residence Club brands, as well as under Marriott Vacation Club Pulse, an extension to the Marriott Vacation Club brand. We are also the exclusive worldwide developer, marketer and seller of vacation ownership and related products under The Ritz-Carlton ~~Destination~~ Club brand, we have the non-exclusive right to develop, market and sell whole ownership residential products under The Ritz-Carlton Residences brand and we have a license to use the St. Regis brand for specified fractional ownership resorts.

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.

Our Exchange & Third-Party Management segment includes an exchange ~~networks~~network and membership programs, as well as the provision of management services to other resorts and lodging properties. ~~As of the end of the second quarter of 2022, we provided these services through Interval International and Aqua-Aston.~~ 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. Since May 2022, we provide these services through our Interval International and Aqua-Aston businesses. In April 2022, we disposed of VRI Americas after determining that the business was not a core component of our future growth strategy and operating model. This business was a component of our Exchange ~~and~~& Third-Party Management segment through the date of the sale. ~~See Footnote 3 “Acquisitions and Dispositions” to our Financial Statements for further information regarding this disposition.~~

Corporate and other represents that portion of our results that are not allocable to our segments, including those relating to consolidated property owners’ associations (“Consolidated Property Owners’ Associations”).

Integration of ~~Marriott, Sheraton~~Marriott-, Sheraton- and ~~Westin~~Westin- Branded Vacation Ownership Products

Part of the rationale for our acquisition of ILG in 2018 was to achieve operating efficiencies and business growth by leveraging the brands licensed by Marriott International and its subsidiaries to us and to ILG. In 2016, Marriott International purchased Starwood Hotels and Resorts Worldwide, Inc., which at the time exclusively licensed the Sheraton and Westin vacation ownership brands to Legacy-ILG. Part of the rationale for our acquisition of ILG in 2018 was to achieve operating efficiencies and business growth by leveraging the brands then licensed by Marriott International and its subsidiaries to us and to ILG. In August 2022, we launched Abound by Marriott Vacations, a new owner benefit and exchange program which affiliates the Marriott, Sheraton and Westin vacation ownership brands to offer similar benefits to owners of our products under these brands. Under this program, owners of Marriott-, Sheraton- and Westin-branded ~~vacation ownership interests~~VOIs can access over 90 resorts under the Marriott Vacation Club, Sheraton Vacation Club and Westin Vacation Club ~~resorts~~brands using a common currency. The program also harmonizes fee structures and owner benefit levels and ~~allows~~has allowed us to transition ~~certain~~most of our Legacy-ILG sales galleries to sell our Marriott Vacation Club Destinations product. ~~Later~~Further, in late 2022, we ~~plan to add~~added certain Sheraton- and ~~Westin-branded vacation ownership interests~~Westin- branded VOIs to the Marriott Vacation Club Destinations product.

~~Acquisition of Welk~~

On April 1, 2021, we completed the Welk Acquisition, after which Welk became our indirect wholly-owned subsidiary. We refer to Welk’s business and brands that we acquired as “Legacy-Welk.” In April 2022, we introduced the Hyatt Vacation Club and rebranded Welk’s vacation ownership program as the Hyatt Vacation Club Platinum Program, enabling Legacy-Welk sales centers to sell a Hyatt-branded vacation ownership product. Most Legacy-Welk resorts are now available for rental stays through Hyatt.com.

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~~COVID-19 Pandemic~~

The COVID-19 pandemic has caused significant disruptions in international and U.S. economies and markets, and has had an unprecedented impact on the travel and hospitality industries, as well as our Company. We discuss the impacts of the COVID-19 pandemic and its potential future implications throughout this report; however, the COVID-19 pandemic, and any recovery therefrom, continues to evolve and further potential impacts on our business in the future remain uncertain.

~~Significant Accounting Policies Used in Describing Results of Operations~~

~~Sale of Vacation Ownership Products~~

We recognize revenues from the sale of vacation ownership products (also referred to as ~~vacation ownership interests or “VOIs”)~~VOIs) 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 ~~the~~our contracts with the customer and business practices, control of the vacation ownership product ishas historically transferred to the customer at ~~closing~~different points in time for each brand of VOIs. In the third quarter of 2022, we aligned our business practices and contract terms, resulting in the prospective change in the timing of the transfer of control to the customer for Marriott-branded ~~and Legacy-Welk transactions and upon~~VOIs. Prior to these changes, control transfer occurred at closing for

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Marriott-branded vacation ownership products. Subsequent to this alignment, transfer of control of Marriott-branded 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 VOI sales contracts executed prior to these modifications have been accounted for ~~Sheraton-,Westin-~~with transfer of control of the VOI occurring at closing. Control transfer for Legacy-Welk VOIs continues to occur at closing.

As a result of the unification of our Marriott-, Sheraton- and ~~Hyatt-branded transactions. Sales of~~Westin- branded vacation ownership products ~~may be made~~under the Abound by Marriott Vacations program and stabilization of default rates following the initial impact of the COVID-19 pandemic, in the third quarter of 2022, we combined and aligned our reserve methodology for cash or we may provide financing. In addition, we recognize settlement fees associated with the transfer of vacation ownership products and commission revenues from sales of vacation ownership products on behalf of third parties, which we refer to as “resales revenue.”

We also provide sales incentives to certain purchasers. These sales incentives typically include Marriott Bonvoy points, World of Hyatt points or an alternative sales incentive that we refer to as “plus points.” These plus points are redeemable for stays at our resorts or for use in other third-party offerings, generally up to two years from the date of issuance. Typically, sales incentives are only awarded if the sale is closed.

~~Finally, as more fully described in “Financing” below, we record the difference between the vacation ownership note receivable and the consideration to which we expect to be entitled (also known as a~~ vacation ownership notes receivable ~~reserve or a~~for our Marriott, Sheraton and Westin brands.

Performance Measures

We measure operating performance using the key metrics described below:

•Contract sales ~~reserve) as a reduction of revenues~~ from the sale of vacation ownership products, ~~at the time we recognize revenues from a sale.~~

~~We report, on a supplemental basis, contract sales for our Vacation Ownership segment. Contract sales consist~~which consists of the total amount of vacation ownership product sales under ~~contract~~contracts signed during the period where we have generally received a down payment of at least ~~10%~~ten percent of the contract price, reduced by actual rescissions during the period, inclusive of contracts associated with sales of vacation ownership products on behalf of ~~third-parties,~~third parties, which we refer to as “resales contract sales.” In circumstances where ~~a customer applies~~customers apply any or all of their existing ownership interests as part of the purchase price for additional interests, we include only the incremental value purchased as contract sales. Contract sales differ from revenues from the sale of vacation ownership products that we report on our income statements due to the requirements for revenue recognition described ~~above.~~above and adjustments for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue. We consider contract sales to be an important operating measure because it reflects the pace of sales in our business.

Cost of vacation ownership products includes costs to develop and construct our projects (also known as real estate inventory costs), other non-capitalizable costs associated with the overall project development process and settlement expenses associated with the closing process. For each project, we expense real estate inventory costs in the same proportion as the revenue recognized. Consistent with the applicable accounting guidance, to the extent there is a change in the estimated sales revenues or inventory costs for the project in a period, a non-cash adjustment is recorded on our income statements to true-up costs in that period to those that would have been recorded historically if the revised estimates had been used. These true-ups, which we refer to as product cost true-up activity, can have a positive or negative impact on our income statements.

We refer to revenues from the sale of vacation ownership products less the cost of vacation ownership products and marketing and sales costs as Development profit. Development profit margin is calculated by dividing Development profit by revenues from the Sale of vacation ownership products.

~~Revenue Recognition Change Commencing in August 2022~~

In connection with the affiliation of the Marriott-, Sheraton-, and Westin-branded vacation ownership products discussed above, in mid-August, we intend to modify our business practices and the terms of our Marriott-branded VOI sales contracts to be consistent with the existing terms of our Sheraton- and Westin-branded VOI sales contracts. As a result of these modifications, control of Marriott-branded vacation ownership products will be transferred to the customer upon expiration of the statutory rescission period, consistent with the current method for Sheraton- and Westin-branded vacation ownership products. This will result in the acceleration of revenue and a one-time benefit to development profit, net income attributable to common shareholders and Adjusted EBITDA (defined below), however at this time we are

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unable to quantify the magnitude of this impact. Marriott-branded VOI sales contracts executed prior to these modifications will continue to be accounted for as outlined above, with transfer of control of the VOI occurring at closing.

~~Management and Exchange~~

Our management and exchange revenues include revenues generated from fees we earn for managing each of our vacation ownership resorts, providing property management, owners’ association management and related services and fees we earn for providing rental services and related hotel, condominium resort, and owners’ association management services to vacation property owners.

In addition, we earn revenue from ancillary offerings, including food and beverage outlets, golf courses and other retail and service outlets located at our Vacation Ownership resorts. We also receive annual membership fees, club dues and certain transaction-based fees from members, owners and other third parties.

Management and exchange expenses include costs to operate the food and beverage outlets and other ancillary operations and to provide overall customer support services, including reservations, and certain transaction-based expenses relating to external exchange service providers.

~~In our Vacation Ownership segment and Consolidated Property Owners’ Associations, we refer to these activities as “Resort Management and Other Services.”~~

~~Financing~~

We offer financing to qualified customers for the purchase of most types of our vacation ownership products. The average FICO score of customers who were U.S. citizens or residents who financed a vacation ownership purchase was as follows:

Six Months Ended
June 30, 2022 June 30, 2021
Average FICO score 735 733

The typical financing agreement provides for monthly payments of principal and interest with the principal balance of the loan fully amortizing over the term of the related vacation ownership note receivable, which is generally ten to fifteen years. While we adjust interest rates from time to time, such changes are typically not made in step with the timing and magnitude of changes in broader market rates. We do use incentives to encourage our customers to take our financing. Included within our vacation ownership notes receivable are originated vacation ownership notes receivable and vacation ownership notes receivable acquired in connection with the ILG Acquisition and the Welk Acquisition.

The interest income earned from our vacation ownership financing arrangements is earned on an accrual basis on the principal balance outstanding over the contractual life of the arrangement and is recorded as Financing revenues on our Income Statements. Financing revenues also include fees earned from servicing the existing vacation ownership notes receivable portfolio. The amount of interest income earned in a period depends on the amount of outstanding vacation ownership notes receivable, which is impacted positively by the origination of new vacation ownership notes receivable and negatively by principal collections. We calculate financing propensity as contract sales volume of financed contracts originated in the period divided by contract sales volume of all contracts originated in the period. We do not include resales contract sales in the financing propensity calculation. Financing propensity was 53% in the second quarter of 2022 and 52% in the second quarter of 2021. We expect to continue offering financing incentive programs throughout the remainder of 2022. Growing sales to first-time buyers, who are more likely to finance their purchases, remains an integral part of our overall marketing and sales strategy. We expect the current financing incentives and other initiatives to increase sales to first-time buyers to further increase propensity and interest income as new originations of vacation ownership notes receivable outpace the decline in principal of existing vacation ownership notes receivable.

Acquired vacation ownership notes receivable are accounted for using the purchased credit deteriorated assets provision of the current expected credit loss model. 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 and estimated value of collateral securing the acquired vacation ownership notes receivable. See Footnote 6 “Vacation Ownership Notes Receivable” to our Financial Statements for further information regarding the accounting for acquired vacation ownership notes receivable.

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In the event of a default, we generally have the right to foreclose on or revoke the underlying VOI. We return VOIs that we reacquire through foreclosure or revocation back to inventory. As discussed above, for originated vacation ownership notes receivable, we record a reserve at the time of sale and classify the reserve as a reduction to revenues from the sale of vacation ownership products on our Income Statements. Revisions to estimates of variable consideration from the sale of vacation ownership products impact the reserve on originated vacation ownership notes receivable and can increase or decrease revenues. In contrast, for acquired vacation ownership notes receivable, we record changes to the reserves, net of collateral value, as adjustments to Financing expenses on our Income Statements.

~~Historical default rates, which represent defaults as a percentage of each year’s beginning gross vacation ownership notes receivable balance, were as follows:~~

Six Months Ended
June 30, 2022 June 30, 2021
Historical default rates 2.1% 2.4%

The decrease in default rates in 2022 reflects the continued improvement in the performance of our vacation ownership notes receivable portfolio subsequent to the increased default rates experienced in 2020 as a result of the COVID-19 pandemic.

Financing expenses include consumer financing interest expense, which represents interest expense associated with the securitization of our vacation ownership notes receivable, costs to support the financing, servicing and securitization processes and changes in expected credit losses related to acquired vacation ownership notes receivable. We distinguish consumer financing interest expense from all other interest expense because the debt associated with the consumer financing interest expense is secured by vacation ownership notes receivable that have been sold to bankruptcy remote special purpose entities and is generally non-recourse to us.

~~Rental~~

In our Vacation Ownership segment, we operate a rental business to provide owner flexibility and to help mitigate carrying costs associated with our inventory. 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. We also recognize rental revenue from the utilization of plus points under our points-based products when the points are redeemed for rental stays at one of our resorts or in other third-party offerings, or upon expiration of the points. We obtain rental inventory from unsold inventory and inventory we control because owners have elected alternative usage options offered through our vacation ownership programs. For rental revenues associated with vacation ownership products which we own and which are registered and held for sale, to the extent that the revenues from rental are less than costs, revenues are reported net in accordance with ASC Topic 978, “~~Real Estate - Time-Sharing Activities~~” (“ASC 978”). The rental activity associated with discounted vacation packages requiring a tour (“preview stays”) is not included in transient rental metrics, and because the majority of these preview stays are sourced directly or indirectly from unsold inventory, the associated revenues and expenses are reported net in Marketing and sales expense.

In our Exchange & Third-Party Management segment, we offer vacation rental opportunities at managed properties. We also offer vacation rental opportunities known as Getaways to members of the Interval International network and certain other membership programs. Getaways allow us to monetize excess availability of resort accommodations within the applicable exchange network, as well as provide additional vacation opportunities to members. Resort accommodations typically become available as Getaways as a result of seasonal oversupply or underutilized space in the applicable exchange program. We also source resort accommodations specifically for the Getaways program. Rental revenues associated with Getaways are reported net of related expenses.

~~Rental expenses include:~~

•~~Maintenance and other fees on unsold inventory;~~

•Costs to provide alternative usage options, including Marriott Bonvoy points, World of Hyatt points and offerings available as part of third-party offerings, for owners who elect to exchange their inventory;

•~~Marketing costs and direct operating and related expenses in connection with the rental business (such as housekeeping, labor costs, credit card expenses and reservation services); and~~

•~~Costs to secure resort accommodations for use in Getaways.~~

Rental metrics, including the average daily transient rate or the number of transient keys rented, may not be comparable between periods given fluctuation in available occupancy by location, unit size (such as two bedroom, one bedroom or studio unit), owner use and exchange behavior. In addition, rental metrics may not correlate with rental revenues due to

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the requirement to report certain rental revenues net of rental expenses in accordance with ASC 978 (as discussed above). Further, as our ability to rent certain luxury and other inventory is often limited on a site-by-site basis, rental operations may not generate adequate rental revenues to cover associated costs. Our Vacation Ownership segment units are either “full villas” or “lock-off” villas. Lock-off villas are units that can be separated into a primary unit and a guest room. Full villas are “non-lock-off” villas because they cannot be separated. A “key” is the lowest increment for reporting occupancy statistics based upon the mix of non-lock-off and lock-off villas. Lock-off villas represent two keys and non-lock-off villas represent one key. The “transient keys” metric represents the blended mix of inventory available for rent and includes all of the combined inventory configurations available in our resort system.

~~Cost Reimbursements~~

Cost reimbursements include direct and indirect costs that are reimbursed to us by customers under management contracts. All costs reimbursed to us by customers, with the exception of taxes assessed by a governmental authority, are reported on a gross basis. We recognize cost reimbursements when we incur the related reimbursable costs. Cost reimbursements consist of actual expenses with no added margin.

~~Interest Expense~~

~~Interest expense consists of all interest expense other than consumer financing interest expense, which is included within Financing expense.~~

~~Transaction and Integration Costs~~

Transaction and integration costs include fees paid to change-management consultants and technology-related costs associated with the integration of ILG and Welk and charges for employee retention, severance and other termination related benefits. Transaction and integration costs also include costs related to the ILG and Welk Acquisitions, primarily for financial advisory, legal, and other professional service fees, as well as certain tax related accruals.

~~Other Items~~

~~We measure operating performance using the key metrics described below.~~

•~~Contract sales from the sale of vacation ownership products~~:

•Total contract sales include contract sales from the sale of vacation ownership products including non-consolidated joint ventures. ~~and~~

•Consolidated contract sales exclude ~~contract~~contracts sales from the sale of vacation ownership products for non-consolidated joint ventures.

~~We consider contract sales to be an important operating measure because it reflects the pace of our business.~~

•Volume per guest (“VPG”) is calculated by dividing consolidated vacation ownership contract sales, excluding fractional sales, telesales, resales, and other sales that are not attributed to a tour at a sales location, by the number of tours at sales locations in a given period. We believe that this operating metric is valuable in evaluating the effectiveness of the sales process as it combines the impact of average contract price with the number of touring guests who make a purchase.

•Development profit margin is calculated by dividing Development profit by revenues from the sale of vacation ownership products. We refer to revenues from the sale of vacation ownership products less the cost of vacation ownership products and marketing and sales costs as Development profit. We believe that Development profit margin is an important measure of the profitability of our development and subsequent marketing and sales of VOIs.

•Total active members is the number of Interval International network active members at the end of the applicable period. We consider active members to be an important metric asbecause it ~~provides~~represents the population of owners eligible to book transactions using the Interval International network.

•Average revenue per member is calculated by dividing membership fee revenue, transaction revenue, rental revenue, and other member revenue for the Interval International network by the monthly weighted average number of Interval International network active members during the applicable period. We believe this metric is valuable in measuring the overall engagement of our Interval International network active members.

•Segment financial results attributable to common shareholders represents revenues less expenses directly attributable to each applicable reportable business segment (Vacation Ownership and Exchange & Third-Party Management). We consider this measure to be important in evaluating the performance of our reportable business segments. See Footnote 1716 “Business Segments” to our Financial Statements for further information on our reportable business segments.

NM = Not meaningful.

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Consolidated Results

Three Months Ended Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
REVENUES
Sale of vacation ownership products $ 425 $ 296 $ 735 $ 459
Management and exchange 203 220 425 413
Rental 140 121 273 210
Financing 72 68 143 127
Cost reimbursements 324 274 640 529
TOTAL REVENUES 1,164 979 2,216 1,738
EXPENSES
Cost of vacation ownership products 80 67 140 107
Marketing and sales 214 164 396 273
Management and exchange 102 126 229 243
Rental 87 81 168 163
Financing 23 21 44 42
General and administrative 64 66 125 112
Depreciation and amortization 32 36 65 77
Litigation charges 2 3 5 6
Royalty fee 29 27 56 52
Impairment — 5 — 5
Cost reimbursements 324 274 640 529
TOTAL EXPENSES 957 870 1,868 1,609
Gains (losses) and other income (expense), net 37 (2) 41 4
Interest expense (30) (44) (57) (87)
Transaction and integration costs (37) (29) (65) (48)
Other 1 1 1 1
INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS 178 35 268 (1)
Provision for income taxes (43) (27) (75) (16)
NET INCOME (LOSS) 135 8 193 (17)
Net loss (income) attributable to noncontrolling interests 1 (2) 1 (5)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 136 $ 6 $ 194 $ (22)

~~Operating Statistics~~

~~2022 Second Quarter~~

Three Months Ended
(Contract sales $ in millions) June 30, 2022 June 30, 2021 Change % Change
Vacation Ownership
Total contract sales $ 516 $ 372 $ 144 39%
Consolidated contract sales $ 506 $ 362 $ 144 40%
Joint venture contract sales $ 10 $ 10 $ — 6%
VPG $ 4,613 $ 4,304 $ 309 7%
Exchange & Third-Party Management
Total active members at end of period (000's) 1,596 1,321 275 21%
Average revenue per member $ 38.79 $ 46.36 $ (7.57) (16%)


	Three Months Ended				Six Months Ended
($ in millions)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
REVENUES
Sale of vacation ownership products	$	391	$	425	$	766	$	735
Management and exchange	206		203		406		425
Rental	146		140		297		273
Financing	80		72		158		143
Cost reimbursements	355		324		720		640
TOTAL REVENUES	1,178		1,164		2,347		2,216
EXPENSES
Cost of vacation ownership products	66		80		124		140
Marketing and sales	206		214		416		396
Management and exchange	110		102		217		229
Rental	112		87		225		168
Financing	25		23		51		44
General and administrative	64		64		132		125
Depreciation and amortization	34		32		66		65
Litigation charges	2		2		5		5

Royalty fee	29		29		58		56
Impairment	—		—		4		—
Cost reimbursements	355		324		720		640
TOTAL EXPENSES	1,003		957		2,018		1,868
Gains and other income, net	10		37		31		41
Interest expense, net	(36)		(30)		(70)		(57)
Transaction and integration costs	(10)		(37)		(23)		(65)
Other	1		1		1		1
INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS	140		178		268		268
Provision for income taxes	(50)		(43)		(91)		(75)
NET INCOME	90		135		177		193
Net loss attributable to noncontrolling interests	—		1		—		1
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	90	$	136	$	177	$	194

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~~2022~~Operating Statistics

2023 Second Quarter


	Three Months Ended
(Contract sales $ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Vacation Ownership
Total contract sales	$	462	$	516	$	(54)	(10%)
Consolidated contract sales	$	453	$	506	$	(53)	(10%)
Joint venture contract sales	$	9	$	10	$	(1)	(7%)
VPG	$	3,968	$	4,613	$	(645)	(14%)
Exchange & Third-Party Management
Total active members at end of period (000's)	1,566		1,596		(30)		(2%)
Average revenue per member	$	39.30	$	38.79	$	0.51	1%

2023 First Half


		Six Months Ended								Six Months Ended
(Contract sales $ in millions)	(Contract sales $ in millions)	June 30, 2022		June 30, 2021		Change		% Change	(Contract sales $ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Vacation Ownership	Vacation Ownership								Vacation Ownership
Total contract sales	Total contract sales	$	919	$	604	$	315	52%	Total contract sales	$	906	$	919	$	(13)	(1%)
Consolidated contract sales	Consolidated contract sales	$	900	$	588	$	312	53%	Consolidated contract sales	$	887	$	900	$	(13)	(1%)
Joint venture contract sales	Joint venture contract sales	$	19	$	16	$	3	22%	Joint venture contract sales	$	19	$	19	$	—	NM
VPG	VPG	$	4,653	$	4,428	$	225	5%	VPG	$	4,150	$	4,653	$	(503)	(11%)
Exchange & Third-Party Management	Exchange & Third-Party Management								Exchange & Third-Party Management
Total active members at end of period (000's)	Total active members at end of period (000's)	1,596		1,321		275		21%	Total active members at end of period (000's)	1,566		1,596		(30)		(2%)
Average revenue per member	Average revenue per member	$	83.32	$	93.77	$	(10.45)	(11%)	Average revenue per member	$	81.35	$	83.32	$	(1.97)	(2%)

Revenues

~~2022~~2023 Second Quarter


		Three Months Ended								Three Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Vacation Ownership	Vacation Ownership	$	1,091	$	883	$	208	24%	Vacation Ownership	$	1,112	$	1,091	$	21	2%
Exchange & Third-Party Management	Exchange & Third-Party Management	74		86		(12)		(15%)	Exchange & Third-Party Management	65		74		(9)		(12%)
Total Segment Revenues	Total Segment Revenues	1,165		969		196		20%	Total Segment Revenues	1,177		1,165		12		1%
Consolidated Property Owners’ Associations	Consolidated Property Owners’ Associations	(1)		10		(11)		(108%)	Consolidated Property Owners’ Associations	1		(1)		2		NM
Total Revenues	Total Revenues	$	1,164	$	979	$	185	19%	Total Revenues	$	1,178	$	1,164	$	14	1%

~~2022~~2023 First Half


		Six Months Ended								Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022	Change		% Change
Vacation Ownership	Vacation Ownership	$	2,047	$	1,544	$	503	33%	Vacation Ownership	$	2,209	2,047	$	162	8%
Exchange & Third-Party Management	Exchange & Third-Party Management	158		172		(14)		(8%)	Exchange & Third-Party Management	136		158	(22)		(14%)
Total Segment Revenues	Total Segment Revenues	2,205		1,716		489		28%	Total Segment Revenues	2,345		2,205	140		6%
Consolidated Property Owners’ Associations	Consolidated Property Owners’ Associations	11		22		(11)		(48%)	Consolidated Property Owners’ Associations	2		11	(9)		(85%)
Total Revenues	Total Revenues	$	2,216	$	1,738	$	478	28%	Total Revenues	2,347		2,216	$	131	6%

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Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA

EBITDA, a financial measure that is not prescribed by GAAP, is defined as earnings, or net income or loss attributable to common shareholders, before interest expense, net (excluding consumer financing interest expense associated with term ~~loan~~ securitization transactions), income taxes, depreciation and amortization. Adjusted EBITDA reflects additional adjustments for certain items, ~~described below,~~ and excludes 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. For purposes of our EBITDA and Adjusted EBITDA calculations, we do not adjust for consumer financing interest expense associated with term ~~loan~~ securitization transactions because we consider it to be an operating expense of our business. We consider Adjusted EBITDA to be an indicator of operating performance, which we use to measure our ability to service debt, fund capital expenditures, expand our business, and return cash to shareholders. We also use Adjusted EBITDA, as do analysts, lenders, investors, and others, because this measure excludes 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~~provisions 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. We believe Adjusted EBITDA is useful 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. Adjusted EBITDA also facilitates comparison by us, analysts, investors, and others of results from our on-going core operations before the impact of these items with results from other ~~vacation~~ companies.

EBITDA and Adjusted EBITDA have limitations and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. In addition, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do or may not calculate them at all, limiting their usefulness as comparative measures. The table below shows our EBITDA and Adjusted EBITDA calculation and reconciles these measures with Net income ~~(loss)~~ attributable to common shareholders, which is the most directly comparable GAAP financial measure.

~~2022 Second Quarter~~

Three Months Ended Change
($ in millions) June 30, 2022 June 30, 2021 % Change
Net income attributable to common shareholders $ 136 $ 6 $ 130 NM
Interest expense 30 44 (14) (32%)
Provision for income taxes 43 27 16 65%
Depreciation and amortization 32 36 (4) (11%)
EBITDA 241 113 128 NM
Share-based compensation expense 12 14 (2) (12%)
Certain items 2 37 (35) (96%)
Adjusted EBITDA $ 255 $ 164 $ 91 55%

Certain items for the second quarter of 2022 consisted of $37 million of gains and other income, $2 million of revenue associated with an early termination of a VRI management contract, and $3 million of miscellaneous other adjustments, partially offset by $37 million of transaction and integration costs (including $23 million of ILG integration related costs, $10 million of other integration costs, $2 million of Welk Acquisition and integration related costs, and $2 million of other transaction costs), $5 million of purchase accounting adjustments, and $2 million of litigation charges.

The $37 million of gains and other income included $33 million of gains and other income related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, $16 million of gains and other income related to the strategic decision to dispose of our VRI Americas business, and $2 million of proceeds from corporate owned life insurance, partially offset by $8 million of foreign currency translation losses, $3 million of non-cash losses pursuant to a change in control of certain Consolidated Property Owners’ Associations, and $3 million of ~~non-income tax related adjustments to the receivable for the indemnification payment we expect to receive from Marriott International.~~ ~~See Footnote 5 “Income Taxes” to our Financial Statements for further information regarding our indemnification assets.~~

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2023 Second Quarter


	Three Months Ended				Change
($ in millions)	June 30, 2023		June 30, 2022				% Change
Net income attributable to common shareholders	$	90	$	136	$	(46)	(34%)
Interest expense, net	36		30		6		18%
Provision for income taxes	50		43		7		14%
Depreciation and amortization	34		32		2		5%
EBITDA	210		241		(31)		(14%)
Share-based compensation expense	12		12		—		NM
Certain items	—		2		(2)		NM
Adjusted EBITDA	$	222	$	255	$	(33)	(13%)
Adjusted EBITDA Margin	27%		30%		(3 pts)

The table below details the components of Certain items for the ~~second quarter of 2021 consisted of $29 million of transaction costs (including $25 million of ILG integration related costs~~three months ended June 30, 2023 and $3 million of Welk Acquisition and integration related costs), $5 million of impairment charges, $3 million of litigation charges, $2 million of purchase accounting adjustments, and $2 million of losses and other expense, partially offset by $2 million to eliminate the impact of consolidating certain property owners’ associations, and $2 million of activity related to the accrual for health and welfare costs for furloughed associates.June 30, 2022.

~~2022 First Half~~

Six Months Ended Change
($ in millions) June 30, 2022 June 30, 2021 % Change
Net income (loss) attributable to common shareholders $ 194 $ (22) $ 216 NM
Interest expense 57 87 (30) (34%)
Provision for income taxes 75 16 59 NM
Depreciation and amortization 65 77 (12) (16%)
EBITDA 391 158 233 NM
Share-based compensation expense 20 22 (2) (8%)
Certain items 32 53 (21) (42%)
Adjusted EBITDA $ 443 $ 233 $ 210 90%

Certain items for the first half of 2022 consisted of $65 million of transaction and integration costs (including $48 million of ILG integration related costs, $10 million of other integration costs, $5 million of Welk Acquisition and integration related costs, and $2 million of other transaction costs), $8 million of purchase accounting adjustments, and $5 million of litigation charges, partially offset by $41 million of gains and other income, $2 million of revenue associated with an early termination of a VRI management contract, and $3 million of miscellaneous other adjustments.

The $41 million of gains and other income included $33 million of gains and other income related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, $16 million of gains and other income related to the strategic decision to dispose of our VRI Americas business, $3 million of business interruption insurance proceeds received and $2 million of proceeds from corporate owned life insurance, partially offset by $7 million of foreign currency translation charges, $3 million of non-cash losses pursuant to a change in control of certain Consolidated Property Owners’ Associations, and $3 million of non-income tax related adjustments to the receivable for the indemnification payment we expect to receive from Marriott International. See Footnote 5 “Income Taxes” to our Financial Statements for further information regarding our indemnification assets.

Certain items for the first half of 2021 consisted of $48 million of transaction costs (including $42 million of ILG integration related costs and $5 million of Welk Acquisition and integration related costs), $6 million of litigation charges, $5 million of impairment charges and $2 million of purchase accounting adjustments, partially offset by $4 million of gains and other income net (including $6 million of foreign currency translation gains, partially offset by $2 million of non-income tax related charges), $2 million to eliminate the impact of consolidating certain property owners’ associations, and $2 million of activity related to the accrual for health and welfare costs for furloughed associates.


	Three Months Ended
($ in millions)	June 30, 2023				June 30, 2022
ILG integration	$	6			$	33
Welk acquisition and integration	4				2


Other transaction costs	—				2
Transaction and integration costs			10				37
Purchase accounting adjustments			1				5
Litigation charges			2				2


Gain on disposition of hotel/land	(7)				(33)
Gain on disposition of VRI Americas	—				(16)

Foreign currency translation	(2)				8
Insurance proceeds	—				(2)
Change in indemnification asset	(1)				3
Other	—				3
Gains and other income, net			(10)				(37)

Early termination of VRI management contract			—				(2)
Change in estimate relating to pre-acquisition contingencies			—				(3)

Other			(3)				—
Total Certain items			$	—			$	2

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2023 First Half


	Six Months Ended				Change
($ in millions)	June 30, 2023		June 30, 2022				% Change
Net income attributable to common shareholders	$	177	$	194	$	(17)	(9%)
Interest expense, net	70		57		13		22%
Provision for income taxes	91		75		16		21%
Depreciation and amortization	66		65		1		1%
EBITDA	404		391		13		3%
Share-based compensation expense	19		20		(1)		(6%)
Certain items	2		32		(30)		(93%)
Adjusted EBITDA	$	425	$	443	$	(18)	(4%)
Adjusted EBITDA Margin	26%		28%		(2%)

The table below details the components of Certain items for the six months ended June 30, 2023 and June 30, 2022.


	Six Months Ended
($ in millions)	June 30, 2023				June 30, 2022
ILG integration	$	15			$	58
Welk acquisition and integration	8				5


Other transaction costs	—				2
Transaction and integration costs			23				65
Early redemption of senior secured notes	10				—
Gain on disposition of hotel/land	(7)				(33)
Gain on disposition of VRI Americas	—				(16)
Foreign currency translation	(4)				7
Insurance proceeds	(2)				(5)
Change in indemnification asset	(24)				3
Other	(4)				3
Gains and other income, net			(31)				(41)
Purchase accounting adjustments			3				8
Litigation charges			5				5
Impairment			4				—

Early termination of VRI management contract			—				(2)
Change in estimate relating to pre-acquisition contingencies			—				(3)

Other			(2)				—
Total Certain items			$	2			$	32

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Segment Adjusted EBITDA

~~2022~~2023 Second Quarter


		Three Months Ended								Three Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Vacation Ownership	Vacation Ownership	$	274	$	182	$	92	51%	Vacation Ownership	$	245	$	274	$	(29)	(11%)
Exchange & Third-Party Management	Exchange & Third-Party Management	35		37		(2)		(5%)	Exchange & Third-Party Management	32		35		(3)		(10%)
Segment adjusted EBITDA	Segment adjusted EBITDA	309		219		90		41%	Segment adjusted EBITDA	277		309		(32)		(11%)
General and administrative	General and administrative	(54)		(55)		1		1%	General and administrative	(55)		(54)		(1)		(1%)

Adjusted EBITDA	Adjusted EBITDA	$	255	$	164	$	91	55%	Adjusted EBITDA	$	222	$	255	$	(33)	(13%)

~~2022~~2023 First Half


		Six Months Ended								Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Vacation Ownership	Vacation Ownership	$	473	$	250	$	223	89%	Vacation Ownership	$	474	$	473	$	1	NM
Exchange & Third-Party Management	Exchange & Third-Party Management	78		78		—		—%	Exchange & Third-Party Management	69		78		(9)		(12%)
Segment adjusted EBITDA	Segment adjusted EBITDA	551		328		223		68%	Segment adjusted EBITDA	543		551		(8)		(2%)
General and administrative	General and administrative	(108)		(95)		(13)		(14%)	General and administrative	(118)		(108)		(10)		(8%)

Adjusted EBITDA	Adjusted EBITDA	$	443	$	233	$	210	90%	Adjusted EBITDA	$	425	$	443	$	(18)	(4%)

The following tables present ~~Adjusted EBITDA for our reportable segments reconciled to~~ segment financial results attributable to common ~~shareholders.~~shareholders reconciled to segment Adjusted EBITDA.

Vacation Ownership

~~2022~~2023 Second Quarter


		Three Months Ended								Three Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Segment adjusted EBITDA		$	274	$	182	$	92	51%
Segment financial results									Segment financial results	$	224	$	277	$	(53)	(19%)
Depreciation and amortization	Depreciation and amortization	(22)		(23)		1		5%	Depreciation and amortization	23		22		1		6%
Share-based compensation expense	Share-based compensation expense	(2)		(2)		—		(20%)	Share-based compensation expense	3		2		1		27%
Certain items	Certain items	27		(6)		33		NM	Certain items	(5)		(27)		22		83%
Segment financial results attributable to common shareholders		$	277	$	151	$	126	85%
Segment adjusted EBITDA									Segment adjusted EBITDA	$	245	$	274	$	(29)	(11%)

The table below details the components of Certain items ~~in the Vacation Ownership segment~~ for the ~~second quarter of 2022 consisted of $32 million of gains~~three months ended June 30, 2023 and other income, net (including $33 million related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, partially offset by $1 million of foreign currency translation charges) and $3 million of miscellaneous other adjustments, partially offset by $5 million of purchase accounting adjustments, $2 million of litigation charges and $1 million of miscellaneous other transaction costs.June 30, 2022.

Certain items in the Vacation Ownership segment for the second quarter of 2021 consisted of $3 million of litigation charges, $2 million of purchase accounting adjustments and $1 million of transaction and integration costs.


	Three Months Ended
($ in millions)	June 30, 2023			June 30, 2022





Transaction and integration costs		$	—		$	1
Purchase accounting adjustments		1			5
Litigation charges		3			2


Gain on disposition of hotel/land	(7)			(33)


Foreign currency translation	—			1



Gains and other income, net		(7)			(32)


Change in estimate relating to pre-acquisition contingencies		—			(3)

Other		(2)			—
Total Certain items		$	(5)		$	(27)

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~~2022~~2023 First Half


		Six Months Ended								Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Segment adjusted EBITDA		$	473	$	250	$	223	89%
Segment financial results									Segment financial results	$	429	$	450	$	(21)	(5%)
Depreciation and amortization	Depreciation and amortization	(44)		(42)		(2)		(4%)	Depreciation and amortization	46		44		2		4%
Share-based compensation expense	Share-based compensation expense	(3)		(3)		—		(21%)	Share-based compensation expense	4		3		1		28%
Certain items	Certain items	24		(10)		34		NM	Certain items	(5)		(24)		19		78%
Segment financial results attributable to common shareholders		$	450	$	195	$	255	NM
Segment adjusted EBITDA									Segment adjusted EBITDA	$	474	$	473	$	1	NM

~~Certain items in~~The table below details the ~~Vacation Ownership segment for the first half~~components of 2022 consisted primarily of $35 million of gains and other income, net (including $33 million related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, and $3 million related to business interruption insurance proceeds, partially offset by $1 million of foreign currency translation charges) and $3 million of miscellaneous other adjustments, partially offset by $8 million of purchase accounting adjustments, $5 million of litigation charges, and $1 million of miscellaneous other transaction costs.

Certain items in the Vacation Ownership segment for the first half of 2021 consisted of $6 million of litigation charges, $2 million of purchase accounting adjustments, $1 million of transaction and integration costs, and $1 million of restructuring costs.

~~Exchange & Third-Party Management~~

~~2022 Second Quarter~~

Three Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
Segment adjusted EBITDA $ 35 $ 37 $ (2) (5%)
Depreciation and amortization (7) (9) 2 16%
Share-based compensation expense — (1) 1 (10%)
Certain items 18 — 18 NM
Segment financial results attributable to common shareholders $ 46 $ 27 $ 19 66%

Certain items for the ~~Exchange & Third-Party Management segment for the second quarter of 2022 consisted of $16 million of gains~~six months ended June 30, 2023 and ~~other income related to the strategic decision to dispose of our VRI Americas business and $2 million of revenue associated with an early termination of a VRI management contract.~~June 30, 2022.

~~2022 First Half~~

Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
Segment adjusted EBITDA $ 78 $ 78 $ — —%
Depreciation and amortization (16) (29) 13 43%
Share-based compensation expense (1) (1) — (23%)
Certain items 18 — 18 NM
Segment financial results attributable to common shareholders $ 79 $ 48 $ 31 63%

Certain items for the Exchange & Third-Party Management segment for the first half of 2022 consisted of $16 million of gains and other income related to the strategic decision to dispose of our VRI Americas business and $2 million of revenue associated with an early termination of a VRI management contract.


	Six Months Ended
($ in millions)	June 30, 2023			June 30, 2022





Transaction and integration costs		$	—		1
Purchase accounting adjustments		3			8
Litigation charges		6			5
Impairment		4			—

Gain on disposition of hotel/land	(7)			(33)


Foreign currency translation	—			1
Insurance proceeds	(2)			(3)
Change in indemnification asset	(3)			—
Other	(4)			—
Gains and other income, net		(16)			(35)


Change in estimate relating to pre-acquisition contingencies		—			(3)

Other		(2)			—
Total Certain items		$	(5)		$	(24)

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Exchange & Third-Party Management

2023 Second Quarter


	Three Months Ended
($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Segment financial results	$	24	$	46	$	(22)	(47%)
Depreciation and amortization	8		7		1		5%

Certain items	—		(18)		18		NM
Segment adjusted EBITDA	$	32	$	35	$	(3)	(10%)

The table below details the components of Certain items for the three months ended June 30, 2023 and June 30, 2022.


	Three Months Ended
($ in millions)	June 30, 2023		June 30, 2022











Gain on disposition of VRI Americas	$	—	$	(16)







Early termination of VRI management contract	—		(2)


Total Certain items	$	—	$	(18)

2023 First Half


	Six Months Ended
($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Segment financial results	$	52	$	79	$	(27)	(34%)
Depreciation and amortization	16		16		—		NM
Share-based compensation expense	1		1		—		NM
Certain items	—		(18)		18		NM
Segment adjusted EBITDA	$	69	$	78	$	(9)	(12%)

The table below details the components of Certain items for the six months ended June 30, 2023 and June 30, 2022.


	Six Months Ended
($ in millions)	June 30, 2023		June 30, 2022











Gain on disposition of VRI Americas	$	—	$	(16)







Early termination of VRI management contract	—		(2)


Total Certain items	$	—	$	(18)

Table of Contents

Business Segments

Our business is grouped into two reportable business segments: Vacation Ownership and Exchange & Third-Party Management. See Footnote 1716 “Business Segments” to our Financial Statements for further information on our segments.

Vacation Ownership

Three Months Ended Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
REVENUES
Sale of vacation ownership products $ 425 $ 296 $ 735 $ 459
Resort management and other services 140 123 266 217
Rental 129 110 251 187
Financing 72 68 143 127
Cost reimbursements 325 286 652 554
TOTAL REVENUES 1,091 883 2,047 1,544
EXPENSES
Cost of vacation ownership products 80 67 140 107
Marketing and sales 214 164 396 273
Resort management and other services 60 46 114 81
Rental 91 95 181 191
Financing 23 21 44 42
Depreciation and amortization 22 23 44 42
Litigation charges 2 3 5 6
Restructuring — — — 1
Royalty fee 29 27 56 52
Cost reimbursements 325 286 652 554
TOTAL EXPENSES 846 732 1,632 1,349
Gains and other income, net 32 — 35 —
Transaction and integration costs (1) (1) (1) (1)
Other 1 1 1 1
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 277 $ 151 $ 450 $ 195

~~Contract Sales~~

~~2022 Second Quarter~~

Three Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
Total consolidated contract sales $ 506 $ 362 $ 144 40%
Joint venture contract sales 10 10 — 6%
Total contract sales $ 516 $ 372 $ 144 39%

~~2022 First Half~~

Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
Total consolidated contract sales $ 900 $ 588 $ 312 53%
Joint venture contract sales 19 16 3 22%
Total contract sales $ 919 $ 604 $ 315 52%


	Three Months Ended				Six Months Ended
($ in millions)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
REVENUES
Sale of vacation ownership products	$	391	$	425	$	766	$	735
Resort management and other services	147		140		282		266
Rental	135		129		276		251
Financing	80		72		158		143
Cost reimbursements	359		325		727		652
TOTAL REVENUES	1,112		1,091		2,209		2,047
EXPENSES
Cost of vacation ownership products	66		80		124		140
Marketing and sales	206		214		416		396
Resort management and other services	69		60		133		114
Rental	116		91		232		181
Financing	25		23		51		44
Depreciation and amortization	23		22		46		44
Litigation charges	3		2		6		5

Royalty fee	29		29		58		56
Impairment	—		—		4		—
Cost reimbursements	359		325		727		652
TOTAL EXPENSES	896		846		1,797		1,632
Gains and other income, net	7		32		16		35
Transaction and integration costs	—		(1)		—		(1)
Other	1		1		1		1
SEGMENT FINANCIAL RESULTS BEFORE NONCONTROLLING INTERESTS	224		277		429		450
Net income attributable to noncontrolling interests	—		—		—		—
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	224	$	277	$	429	$	450

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Sale of Vacation Ownership Products

~~2022~~2023 Second Quarter

Three Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
Total contract sales $ 516 $ 372 $ 144 39%
Less: resales contract sales (11) (7) (4)
Less: joint venture contract sales (10) (10) —
Consolidated contract sales, net of resales 495 355 140 39%
Plus:
Settlement revenue 9 8 1
Resales revenue 4 1 3
Revenue recognition adjustments:
Reportability (14) (17) 3
Sales reserve (37) (28) (9)
Other(1)
(32) (23) (9)
Sale of vacation ownership products $ 425 $ 296 $ 129 44%

~~_______________~~


	Three Months Ended
($ in millions)	June 30, 2023		% of Consolidated Contract Sales, Net of Resales	June 30, 2022		% of Consolidated Contract Sales, Net of Resales	Change		% Change
Total consolidated contract sales	$	453		$	506		$	(53)	(10%)
Joint venture contract sales	9			10			(1)		(7%)
Total contract sales	462			516			(54)		(10%)
Less: resales contract sales	(10)			(11)			1
Less: joint venture contract sales	(9)			(10)			1
Consolidated contract sales, net of resales	443			495			(52)		(11%)
Plus:
Settlement revenue	9		2%	9		2%	—
Resales revenue	6		1%	4		1%	2
Revenue recognition adjustments:
Reportability	5		1%	(14)		(3%)	19
Sales reserve	(45)		(10%)	(37)		(8%)	(8)
Other(1)	(27)		(6%)	(32)		(7%)	5
Sale of vacation ownership products	$	391	88%	$	425	86%	$	(34)	(8%)

(1)Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue.

Contract sales in the 2023 second quarter declined, despite tour growth of 4%, due to a 14% decrease in VPG. The ~~higher~~decline in VPG was attributed to lower closing efficiencies due to the continued transition associated with the launch of Abound by Marriott Vacations (which commenced in the 2022 third quarter) and the continued integration of the Hyatt and Legacy-Welk business models and sales processes. We expect contract sales ~~performance reflects~~for the ~~continued ramp-up~~remainder of 2023 to exceed 2022 results.

Financing propensity was 56% in the ~~business subsequent~~second quarter of 2023, a 300 basis point increase over the second quarter of 2022. We expect to continue offering financing incentive programs in 2023. The average FICO score of customers who were U.S. citizens or residents who financed a vacation ownership purchase was 736 and 735 for the ~~initial impact of~~three months ended June 30, 2023 and June 30, 2022, respectively.

The increase in the ~~COVID-19 pandemic. Higher settlement and resales revenues, sales incentives issued, and~~ sales reserve ~~activity were driven by the higher~~as a percentage of Consolidated contract sales, ~~volumes.~~net of resales is attributed to $11 million of defaults in excess of expected losses (220 basis points), higher financing propensity and reportability (80 basis points), and an increase in our reserve rate (25 basis points), partially offset by a decrease in Legacy-Welk sales, which carry a higher reserve on originated vacation ownership notes receivable (65 basis points). Defaults in excess of expected losses have been reserved as if they are permanent differences, as opposed to an acceleration in timing of defaults.

~~2022~~

Table of Contents

2023 First Half

Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
Total contract sales $ 919 $ 604 $ 315 52%
Less: resales contract sales (20) (12) (8)
Less: joint venture contract sales (19) (16) (3)
Consolidated contract sales, net of resales 880 576 304 53%
Plus:
Settlement revenue 16 13 3
Resales revenue 8 3 5
Revenue recognition adjustments:
Reportability (47) (53) 6
Sales reserve (66) (42) (24)
Other(1)
(56) (38) (18)
Sale of vacation ownership products $ 735 $ 459 $ 276 60%

~~_______________~~


	Six Months Ended
($ in millions)	June 30, 2023		% of Consolidated Contract Sales, Net of Resales	June 30, 2022		% of Consolidated Contract Sales, Net of Resales	Change		% Change
Total consolidated contract sales	$	887		$	900		$	(13)	(1%)
Joint venture contract sales	19			19			—		NM
Total contract sales	906			919			(13)		(1%)
Less: resales contract sales	(21)			(20)			(1)
Less: joint venture contract sales	(19)			(19)			—
Consolidated contract sales, net of resales	866			880			(14)		(2%)
Plus:
Settlement revenue	17		2%	16		2%	1
Resales revenue	12		1%	8		1%	4
Revenue recognition adjustments:
Reportability	5		1%	(47)		(5%)	52
Sales reserve	(83)		(10%)	(66)		(8%)	(17)
Other(1)	(51)		(6%)	(56)		(6%)	5
Sale of vacation ownership products	$	766	88%	$	735	83%	$	31	4%

(1)Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue.

Contract sales in the first half of 2023 declined, despite tour growth of 10%, due to an 11% decrease in VPG. The ~~higher~~decline in VPG was attributed to lower closing efficiencies due to the continued transition associated with the launch of Abound by Marriott Vacations (which commenced in the 2022 third quarter) and the continued integration of the Hyatt and Legacy-Welk business models and sales processes.

Financing propensity was 55% in the first half of 2023, a 300 basis point increase over the first half of 2022. We expect to continue offering financing incentive programs in 2023. The average FICO score of customers who were U.S. citizens or residents who financed a vacation ownership purchase was 737 and 735 for the six months ended June 30, 2023 and June 30, 2022, respectively.

The increase in the sales reserve as a percentage of Consolidated contract sales, ~~performance reflects the continued ramp-up~~net of ~~the business subsequent~~resales is attributed to ~~the initial impact~~$19 million of ~~the COVID-19 pandemic,~~defaults in excess of expected losses (130 basis points), higher financing propensity and reportability (100 basis points), and an increase in our reserve rate (30 basis points), partially offset by a decrease in Legacy-Welk sales, which carry a higher reserve on originated vacation ownership notes receivable (50 basis points). Defaults in excess of expected losses have been reserved as ~~well~~if they are permanent differences, as ~~$29 million~~opposed to an acceleration in ~~contract sales relating to the Welk Acquisition, which we acquired in the second quarter~~timing of ~~2021. Higher settlement and resales revenues, sales incentives issued and sales reserve activity were driven by the higher contract sales volumes as well as the Welk Acquisition.~~defaults.

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Development Profit

~~2022~~2023 Second Quarter


		Three Months Ended								Three Months Ended						Change				% Change
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		% of Revenue	June 30, 2022		% of Revenue
Sale of vacation ownership products	Sale of vacation ownership products	$	425	$	296	$	129	44%	Sale of vacation ownership products	$	391		$	425				$	(34)		(8%)
Cost of vacation ownership products	Cost of vacation ownership products	(80)		(67)		(13)		(18%)	Cost of vacation ownership products	(66)		(17%)	(80)		(19%)	14				18%
Marketing and sales	Marketing and sales	(214)		(164)		(50)		(32%)	Marketing and sales	(206)		(53%)	(214)		(50%)	8				4%
Development profit	Development profit	$	131	$	65	$	66	(100%)	Development profit	$	119		$	131		$	(12)			(9%)
Development profit margin	Development profit margin	31.0%		22.3%		8.7 pts			Development profit margin	30.8%			31.0%			(0.2 pts)

The decrease in Development profit reflects $28 million from lower contract sales volumes and $10 million related to higher sales reserves, partially offset by $14 million from favorable revenue reportability, $10 million of favorable product cost due mainly to the sale of lower cost inventory, and $2 million of favorable product cost true-up activity. We expect development profit margins for the remainder of 2023 to be consistent with 2023 second quarter results.

2023 First Half


	Six Months Ended
($ in millions)	June 30, 2023		% of Revenue	June 30, 2022		% of Revenue	Change		% Change
Sale of vacation ownership products	$	766		$	735		$	31	4%
Cost of vacation ownership products	(124)		(16%)	(140)		(19%)	16		11%
Marketing and sales	(416)		(54%)	(396)		(54%)	(20)		(5%)
Development profit	$	226		$	199		$	27	14%
Development profit margin	29.6%			27.1%			2.5 pts

The increase in Development profit reflects $50 million as a result of higher contract sales volumes net of the sales reserve and direct variable expenses (i.e. cost of vacation ownership products and marketing and sales), in part from continued strong VPG and lower marketing and sales spending as a percentage of revenue, $11$38 million from a favorable ~~mix~~revenue reportability, $20 million of favorable product cost due mainly to the sale of lower cost inventory, ~~being sold, $3~~and $6 million of favorable product cost true-up activity, ~~and $2~~partially offset by $23 million of ~~favorable revenue reportability.~~

~~2022 First Half~~

Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
Sale of vacation ownership products $ 735 $ 459 $ 276 60%
Cost of vacation ownership products (140) (107) (33) (31%)
Marketing and sales (396) (273) (123) (45%)
Development profit $ 199 $ 79 $ 120 NM
Development profit margin 27.1% 17.3% 9.8 pts

~~The increase in Development profit reflects $93 million as a result of higher~~lower contract sales volumes ~~net of the sales reserve~~ and ~~direct variable expenses (i.e. cost of vacation ownership products and marketing and sales), in part from continued strong VPGs and lower marketing and sales spending as a percentage of revenue,~~ $14 million ~~from a favorable mix~~related to higher sales reserves.

Table of ~~lower cost inventory being sold, $9 million of favorable product cost true-up activity, and $4 million of favorable revenue reportability.~~Contents

Resort Management and Other Services Revenues, Expenses and Profit

~~2022~~2023 Second Quarter


		Three Months Ended								Three Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Management fee revenues	Management fee revenues	$	41	$	39	$	2	3%	Management fee revenues	$	45	$	41	$	4	10%
Ancillary revenues	Ancillary revenues	66		52		14		27%	Ancillary revenues	70		66		4		6%
Other management and exchange revenues	Other management and exchange revenues	33		32		1		5%	Other management and exchange revenues	32		33		(1)		(3%)
Resort management and other services revenues	Resort management and other services revenues	140		123		17		14%	Resort management and other services revenues	147		140		7		5%
Resort management and other services expenses	Resort management and other services expenses	(60)		(46)		(14)		(31%)	Resort management and other services expenses	(69)		(60)		(9)		(14%)
Resort management and other services profit	Resort management and other services profit	$	80	$	77	$	3	3%	Resort management and other services profit	$	78	$	80	$	(2)	(2%)
Resort management and other services profit margin	Resort management and other services profit margin	56.7%		62.4%		(5.7 pts)			Resort management and other services profit margin	52.9%		56.7%		(3.8 pts)
Resort occupancy (1)									Resort occupancy (1)	88.7%		90.5%		(1.8 pts)

(1)Resort occupancy represents all transient, previews, and owner keys divided by total keys available, net of keys out of service.									(1)Resort occupancy represents all transient, previews, and owner keys divided by total keys available, net of keys out of service.

Resort management and other services revenues ~~reflected~~reflect higher ancillary revenues, including revenues from food and beverage and golf offerings as(as a result of ~~the continued ramp-up of the business subsequent to the initial impact of the COVID-19 pandemic,~~a 10% increase in revenue per occupied key, partially offset by a 4% decline in occupied keys at resorts with ancillary businesses) and higher management ~~fees. attributed to budgeted expense increases at owners’ associations, as our management~~ fees, ~~are largely calculated as a percentage~~partially offset by $1 million of budgeted costs to operate resorts. Resort occupancies continued to increase subsequent to the initial impact of the pandemic as travel and tourism trends continue to recover. We expect resort occupancies to remain strong for the remainder of 2022 and this trend in business improvement to continue for the remainder of 2022.lower refurbishment project revenues.

The $9 million increase in resort management and other services ~~profit reflected the higher~~expenses reflects an increase in ancillary expenses asof $5 million due to inflation and increased volumes sold, and an increase in customer services and exchange company expenses of $4 million due to incremental headcount, wages, benefits, and other operating cost increases.

As a result of the ~~higher ancillary~~changes in resort management and other services revenues ~~mentioned above.~~

and expenses, resort management and other services profit declined $2 million.

~~Table of~~ ~~Contents~~

~~2022~~2023 First Half


		Six Months Ended								Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Management fee revenues	Management fee revenues	$	83	$	77	$	6	7%	Management fee revenues	$	90	$	83	$	7	8%
Ancillary revenues	Ancillary revenues	120		80		40		50%	Ancillary revenues	131		120		11		9%
Other management and exchange revenues	Other management and exchange revenues	63		60		3		6%	Other management and exchange revenues	61		63		(2)		(2%)
Resort management and other services revenues	Resort management and other services revenues	266		217		49		23%	Resort management and other services revenues	282		266		16		6%
Resort management and other services expenses	Resort management and other services expenses	(114)		(81)		(33)		(41%)	Resort management and other services expenses	(133)		(114)		(19)		(17%)
Resort management and other services profit	Resort management and other services profit	$	152	$	136	$	16	12%	Resort management and other services profit	$	149	$	152	$	(3)	(2%)
Resort management and other services profit margin	Resort management and other services profit margin	57.1%		62.7%		(5.6 pts)			Resort management and other services profit margin	52.8%		57.1%		(4.3 pts)
Resort occupancy (1)									Resort occupancy (1)	88.8%		89.1%		(0.3 pts)

(1)Resort occupancy represents all transient, previews, and owner keys divided by total keys available, net of keys out of service.									(1)Resort occupancy represents all transient, previews, and owner keys divided by total keys available, net of keys out of service.

The $19 million increase in resort management and other services ~~profit reflected the higher~~expenses reflects an increase in ancillary expenses asof $13 million due to inflation and increased volumes sold, and an increase in customer services and exchange company expenses of $6 million due to incremental headcount, wages, benefits, and other operating cost increases.

As a result of the ~~higher ancillary~~changes in resort management and other services revenues ~~mentioned above.~~and expenses, resort management and other services profit declined $3 million.

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Rental Revenues, Expenses and Profit

~~2022~~2023 Second Quarter


		Three Months Ended								Three Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Rental revenues	Rental revenues	$	129	$	110	$	19	18%	Rental revenues	$	135	$	129	$	6	4%
Rental expenses	Rental expenses	(91)		(95)		4		4%	Rental expenses	(116)		(91)		(25)		(28%)
Rental profit	Rental profit	$	38	$	15	$	23	NM	Rental profit	$	19	$	38	$	(19)	(53%)
Rental profit margin	Rental profit margin	29.5%		13.2%		16.3 pts			Rental profit margin	13.4%		29.5%		(16.1 pts)

Three Months Ended
June 30, 2022 June 30, 2021 Change % Change
Transient keys rented(1)
577,114 547,041 30,073 5%
Average transient key rate $ 262.38 $ 230.67 $ 31.71 14%
Resort occupancy 90.5% 85.0% 5.5 pts

~~_________________________~~


	Three Months Ended
	June 30, 2023		June 30, 2022		Change		% Change
Transient keys rented(1)	549,329		577,114		(27,785)		(5%)
Average transient rate	$	263	$	262	$	1	NM
Rental occupancy(2)	70.8%		74.8%		(4.0 pts)

(1)Transient keys rented exclude those occupied through the use of plus points and preview stays.

(2)Rental ~~revenues increased~~occupancy represents transient and preview keys divided by ~~$37~~keys available to rent, which is total available keys excluding owner usage.

Rental profit for transient keys, including plus points and excluding keys from owned hotels, declined by $18 million due to ~~additional transient~~a $12 million increase in unsold maintenance fees associated with developer owned inventory, $10 million of decreased profit from fewer keys rented ~~at a higher average transient rate, partially offset by $18~~due to lower demand and an unfavorable change in the mix of keys available to rent, and $3 million of increased ~~rental expenses recorded as a reduction to rental revenues.~~

~~Rental expenses decreased by $4 million attributed to $18 million~~costs associated with higher owner utilization of ~~costs recorded as a reduction to rental revenues~~third-party vacation and ~~$1 million of lower administrative expenses,~~other offerings. These decreases were partially offset by ~~a $6 million increase in operating hotel expenses attributable to higher revenues,~~ $5 million of higher ~~carry~~plus points revenue and a $2 million reduction in rental costs recorded as marketing and sales expense for increased marketing purposes. In addition to these variances, there was a $16 million higher net down of ~~excess inventory on hand resulting from~~rental revenues and expense in the 2023 second quarter associated with unsold VOIs that are registered and held for sale.

Rental profit for our ~~fulfillment of purchase commitments in 2021 and $4~~owned hotels decreased by $1 million, ~~of additional costs attributed~~or 25%, due to ~~higher utilization in 2022 of third-party vacation offerings by owners.~~

~~As the majority of the governmental restrictions in response~~a $1 million decrease related to the COVID-19 pandemic that caused rental activity to decline (such as travel restrictions and quarantine requirements) have been lifted, we expect high resort occupancies throughout the remainder of 2022. However, we do not expect this partdisposition of our ~~business to fully recover to pre-pandemic levels~~Puerto Vallarta hotel in ~~2022 as a result of reduced rental inventory availability due to higher owner usage as well as higher inventory carrying costs, as described above.~~

2022.

~~Table of~~ ~~Contents~~

~~2022~~2023 First Half


		Six Months Ended								Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Rental revenues	Rental revenues	$	251	$	187	$	64	34%	Rental revenues	$	276	$	251	$	25	10%
Rental expenses	Rental expenses	(181)		(191)		10		5%	Rental expenses	(232)		(181)		(51)		(28%)
Rental profit (loss)	Rental profit (loss)	$	70	$	(4)	$	74	NM	Rental profit (loss)	$	44	$	70	$	(26)	(38%)
Rental profit margin	Rental profit margin	27.7%		NM					Rental profit margin	15.7%		27.7%		(12.0 pts)

Six Months Ended
June 30, 2022 June 30, 2021 Change % Change
Transient keys rented(1)
1,116,673 932,786 183,887 20%
Average transient key rate $ 268.71 $ 229.99 $ 38.72 17%
Resort occupancy 89.1% 76.1% 13.0 pts

~~_________________________~~


	Six Months Ended
	June 30, 2023		June 30, 2022		Change		% Change
Transient keys rented(1)	1,096,869		1,116,673		(19,804)		(2%)
Average transient key rate	$	275	$	269	$	6	2%
Rental occupancy(2)	70.6%		70.9%		(0.3 pts)

(1)Transient keys rented exclude those occupied through the use of plus points and preview stays.

(2)Rental ~~revenues increased~~occupancy represents transient and preview keys divided by ~~$115~~keys available to rent, which is total available keys excluding owner usage.

Rental profit for transient keys, including plus points and excluding keys from owned hotels, declined by $23 million due to ~~the~~a $23 million increase in ~~transient~~unsold maintenance fees associated with developer owned inventory, $8 million of increased costs associated with higher owner utilization of third-party vacation and other offerings, and $4 million of decreased profit from fewer keys rented due to lower demand and ~~a higher average transient rate,~~an unfavorable change in the mix of keys available to rent. These decreases were partially offset by ~~$51 million of increased rental expenses recorded as a reduction to rental revenues.~~

~~Rental expenses decreased by $10 million attributed to $51 million of costs recorded as a reduction to rental revenues and $11~~$8 million of higher ~~allocations~~plus points revenue and a $4 million reduction of rental costs to

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recorded as marketing and sales expense for marketing ~~purposes partially offset by $15~~purposes. In addition to these variances, there was a $28 million higher net down of rental revenues and expense in ~~operating hotel expenses attributable to higher revenues, $13 million~~the first half of ~~additional tidy and variable costs~~2023 associated with ~~increased transient keys rented, $8 million of higher carry costs of excess inventory on hand resulting from~~unsold VOIs that are registered and held for sale.

Rental profit for our ~~fulfillment of purchase commitments in 2021, $8 million of additional costs attributed to higher utilization in 2022 of third-party vacation offerings~~owned hotels decreased by ~~owners, $5 million of higher subsidy expenses, and~~ $3 million, or 34%, due to a $3 million decrease related to the disposition of ~~higher owner list for rent costs.~~our Puerto Vallarta hotel in 2022.

Financing Revenues, Expenses and Profit

~~2022~~2023 Second Quarter


		Three Months Ended								Three Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Financing revenues	Financing revenues	72		68		4		5%	Financing revenues	$	80	$	72	$	8	11%
Financing expenses	Financing expenses	(10)		(8)		(2)		(22%)	Financing expenses	(5)		(10)		5		54%
Consumer financing interest expense	Consumer financing interest expense	(13)		(13)		—		4%	Consumer financing interest expense	(20)		(13)		(7)		(52%)
Financing profit	Financing profit	$	49	$	47	$	2	5%	Financing profit	$	55	$	49	$	6	13%
Financing profit margin									Financing profit margin	69.1%		67.7%		1.4 pts
Financing propensity	Financing propensity	53.1%		52.0%					Financing propensity	56.2%		53.1%

Financing revenues ~~reflected $3~~reflect $9 million of higher interest income as a result of a higher average notes receivable balance ~~a slightly higher average interest rate driven~~partially offset by ~~mix of customers and brands, and~~ $1 million of lower plus point financing incentive ~~costs year-over-year.~~ costs.The higher average notes receivable balance was the result of new loan originations in excess of the ~~amount of the continued~~ pay-down of ~~the~~ existing vacation ownership notes ~~receivable portfolio.~~receivable. We expect the average notes receivable balance, and resulting interest income, to continue to increase ~~with~~during the remainder of 2023 as a result of the expected growth in contract sales and related loan originations. ~~Financing~~In the second quarter of 2023, we recorded a $3 million reduction in the reserve for acquired vacation ownership notes receivable as an offset to financing expenses. Excluding this adjustment, financing expenses ~~increased primarily~~decreased $2 million due to the timing of ~~when~~ lien fee income recognition.

The increase in consumer financing interest expense is ~~recognized. As we move through 2022,~~attributable to the higher average securitized debt at a higher average interest rate for the more recent term securitization transactions. We expect consumer financing interest expense to continue to remain elevated over our average outstanding interest rates on existing securitization transactions as a result of rising interest rates for the remainder of 2023. We do not adjust interest rates on consumer financing offerings at the same pace as, or in lock-step with, broader market interest rates; thus we expect our financing profit margin to continue to decrease in 2023, as we repay existing securitization transactions with lower interest rates and enter into new securitization transactions with higher interest rates.

2023 First Half


	Six Months Ended
($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Financing revenues	158		143		15		10%
Financing expenses	(15)		(19)		4		22%
Consumer financing interest expense	(36)		(25)		(11)		(45%)
Financing profit	$	107	$	99	$	8	8%
Financing profit margin	67.4%		69.0%		(1.6 pts)
Financing propensity	55.3%		51.9%

Financing revenues reflect $17 million of higher interest income as a result of a higher average notes receivable balance partially offset by $2 million of lower plus point financing incentive costs. The higher average notes receivable balance was the result of new loan originations in excess of the pay-down of existing vacation ownership notes receivable. We expect the average notes receivable balance, and resulting interest income, to continue to increase ~~our focus on~~during the remainder of 2023 as a result of the expected growth in contract sales and related loan originations. In the second quarter of 2023, we recorded a $3 million reduction in the reserve for acquired vacation ownership notes receivable as an offset to ~~first-time buyers, which should further increase~~ financing ~~propensity.~~expenses. Excluding this adjustment, financing expenses decreased $1 million due to the timing of lien fee income recognition.

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~~2022 First Half~~

Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
Financing revenues 143 127 16 12%
Financing expenses (19) (16) (3) (17%)
Consumer financing interest expense (25) (26) 1 4%
Financing profit $ 99 $ 85 $ 14 17%
Financing propensity 51.9% 49.2%

Financing revenues reflected $13 million of higher interest income (including $10 million due to the Welk Acquisition and $3 million as a result of a higher average vacation ownership notes receivable balance and a slightly higher average interest rate driven by mix of customers and brands) and $3 million of lower plus point financing incentive costs year-over-year. Financing expenses increased primarily due to the timing of when lien fee income is recognized. The higher financing propensity is primarily a result of the Welk Acquisition in the second quarter of 2021. Legacy-Welk customers have a higher financing propensity than Legacy-MVW customers.

Royalty Fee

~~2022~~2023 Second Quarter


		Three Months Ended								Three Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Royalty fee	Royalty fee	$	29	$	27	$	2	7%	Royalty fee	$	29	$	29	$	—	NM

~~The increase in royalty~~Royalty fee expense in the second quarter of 2023 remained flat to the second quarter of 2022 ~~included $2~~due to a decrease of $1 million ~~from~~in the dollar volume of closings on Marriott-branded products, offset by $1 million of increased variable royalty fees paid to Hyatt, which commenced in the fourth quarter of 2022.

2023 First Half


	Six Months Ended
($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Royalty fee	$	58	$	56	$	2	4%

Royalty fee expense increased $1 million in the first half of 2023 due to an increase in the dollar volume of closings on Marriott-branded products and $1 million ~~from a contractual increase in the fixed portion of the~~relating to variable royalty ~~fee owed~~fees paid to Marriott International, partially offset by $1 million from an increase in sales of pre-owned inventory, which carry a lower royalty fee as compared to initial sales of our inventory (one percent versus two percent).Hyatt.

~~2022 First Half~~

Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
Royalty fee $ 56 $ 52 $ 4 8%

The increase in royalty fee expense in the first half of 2022 included $4 million from an increase in the dollar volume of closings and $2 million from a contractual increase in the fixed portion of the royalty fee owed to Marriott International, partially offset by $2 million from an increase in sales of pre-owned inventory, which carry a lower royalty fee as compared to initial sales of our inventory (one percent versus two percent).

~~Litigation Charges~~

~~2022 Second Quarter~~

Three Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
Litigation charges $ 2 $ 3 $ (1) (42%)

~~2022 First Half~~

Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
Litigation charges $ 5 $ 6 $ (1) (26%)

~~During the second quarter and first half of 2022, as well as the second quarter and first half of 2021, the litigation charges related primarily to projects in Europe.~~

~~Table of~~ ~~Contents~~

Gains and Other Income

~~2022~~2023 Second Quarter


		Three Months Ended								Three Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Gains and other income, net	Gains and other income, net	$	32	$	—	$	32	NM	Gains and other income, net	$	7	$	32	$	(25)	(79%)

During the second quarter of 2023, we recorded $7 million of gains on the disposition of excess real estate.

During the second quarter of 2022, we recorded a $33 million gain related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, partially offset by $1 million of foreign currency translation charges.

~~2022~~2023 First Half


		Six Months Ended								Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Gains and other income, net	Gains and other income, net	$	35	$	—	$	35	NM	Gains and other income, net	$	16	$	35	$	(19)	55%

During the first half of 2023, we recorded $7 million of gains on the disposition of excess real estate, a $4 million gain associated with the earn out of additional proceeds from the 2019 disposition of a land parcel in Cancun, Mexico, a $3 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition, and $2 million related to receipt of business interruption insurance proceeds.

During the first half of 2022, we recorded a $33 million gain related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, and $3 million related to receipt of business interruption insurance proceeds, partially offset by $1 million of foreign currency translation charges.

~~Exchange & Third-Party Management~~

Three Months Ended Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021
REVENUES
Management and exchange $ 58 $ 60 $ 122 $ 120
Rental 11 11 22 23
Cost reimbursements 5 15 14 29
TOTAL REVENUES 74 86 158 172
EXPENSES
Management and exchange 32 35 65 66
Depreciation and amortization 7 9 16 29
Cost reimbursements 5 15 14 29
TOTAL EXPENSES 44 59 95 124
Gains and other income, net 16 — 16 —
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 46 $ 27 $ 79 $ 48

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Exchange & Third-Party Management


	Three Months Ended				Six Months Ended
($ in millions)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
REVENUES
Management and exchange	$	51	$	58	$	107	$	122
Rental	11		11		21		22

Cost reimbursements	3		5		8		14
TOTAL REVENUES	65		74		136		158
EXPENSES

Management and exchange	30		32		60		65


Depreciation and amortization	8		7		16		16


Cost reimbursements	3		5		8		14
TOTAL EXPENSES	41		44		84		95
Gains and other income, net	—		16		—		16
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	24	$	46	$	52	$	79

Management and Exchange Profit

~~2022~~2023 Second Quarter


		Three Months Ended								Three Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Management and exchange revenue	Management and exchange revenue	$	58	$	60	$	(2)	(4%)	Management and exchange revenue	$	51	$	58	$	(7)	(13%)
Management and exchange expense	Management and exchange expense	(32)		(35)		3		9%	Management and exchange expense	(30)		(32)		2		6%
Management and exchange profit	Management and exchange profit	$	26	$	25	$	1	3%	Management and exchange profit	$	21	$	26	$	(5)	(23%)
Management and exchange profit margin	Management and exchange profit margin	45.2%		42.2%		3.0 pts			Management and exchange profit margin	40.4%		45.2%		(4.8 pts)

~~The~~Excluding the $5 million decrease ~~in management and exchange revenue reflected $4 million of lower revenue due~~attributed to the disposition of our VRI Americas business during the second quarter of 2022, management and $1exchange revenue decreased $2 million or 6% compared to the second quarter of 2022, primarily attributed to a decline in Aqua-Aston management revenues resulting from a lower average daily rate in the Hawaii market. Interval International transaction ~~fee revenue due to fewer exchanges as more members chose to occupy their home resorts rather than exchange for usage through Interval International, partially~~volume declined 5% and was offset by ~~$2 million of higher management fees at Aqua-Aston managed properties due to~~a 1% increase in average revenue per member.

Excluding the ~~continued ramp-up of the business in Hawaii subsequent to the initial~~ impact of the COVID-19 pandemic. For Interval International, average revenue per member decreased 16% over the prior year comparable period. This decline was due, in part, to recently added affiliations, for which we expect exchange activity to ramp-up over time, as well as the decline in exchange revenue. The increase indisposition of VRI Americas, management and exchange profit would have decreased by $2 million or 13% in the second quarter of 2023, primarily ~~reflected the higher~~attributed to a decline in Aqua-Aston management ~~fees at Aqua Aston.~~profit and a slight decline in Interval International revenue.

~~2022~~2023 First Half


		Six Months Ended								Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Management and exchange revenue	Management and exchange revenue	$	122	$	120	$	2	1%	Management and exchange revenue	$	107	$	122	$	(15)	(13%)
Management and exchange expense	Management and exchange expense	(65)		(66)		1		2%	Management and exchange expense	(60)		(65)		5		8%
Management and exchange profit	Management and exchange profit	$	57	$	54	$	3	6%	Management and exchange profit	$	47	$	57	$	(10)	(18%)
Management and exchange profit margin	Management and exchange profit margin	47.0%		45.1%		1.9 pts			Management and exchange profit margin	44.0%		47.0%		(3.0 pts)

~~The increase in management and exchange revenue and profit reflects higher management fees at Aqua-Aston managed properties due~~Excluding the $12 million decrease attributed to continued ramp-up of business in Hawaii subsequent to the initial impact of the COVID-19 pandemic, partially offset by lower Interval International transaction fee revenue and profit due to fewer exchanges as more members chose to occupy their home resorts rather than exchange for usage through Interval International. The management and exchange revenue was also negatively impacted by the disposition of our VRI Americas business during the second quarter of 2022, ~~as discussed above. For~~management and exchange revenue decreased $3 million or 3%. Aqua-Aston management revenue declined $1 million resulting from higher property level expenses adversely impacting management fees. Interval International management and exchange revenues declined $2 million, primarily attributed to lower membership fees. Interval International average revenue per member decreased ~~11% over~~2% compared to the prior year comparable period. ~~This decline was due,~~

Excluding the impact of the disposition of VRI Americas, management and exchange profit would have decreased by $5 million or 11% in ~~part,~~the first half of 2023, primarily attributed to ~~recently added affiliations, for which we expect exchange activity to ramp-up over time, as well as the decline in exchange revenue.~~higher information technology costs and higher wages and benefits and lower revenues.

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Rental Revenues

~~2022~~2023 Second Quarter


		Three Months Ended								Three Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Rental revenues	Rental revenues	$	11	$	11	$	—	(3%)	Rental revenues	$	11	$	11	$	—	NM

~~Results reflect a $2 million decrease in gross Getaway~~Rental revenues, ~~which resulted from an 18% decline in transactions, partially offset by a 7% increase in~~ the average Getaway ~~fee. Rental revenues remain flat to the prior year, as~~fee, and rental inventory procurement costs, which are recorded net within Rental revenues, ~~declined by $2 million. The decline~~were in ~~Getaway transactions reflected fewer owner deposits as more members chose to occupy their home resorts rather than exchange for usage through Interval International, which put pressure on~~line with the ~~inventory available for Getaways. We expect the reduced exchange volume and Getaway specific inventory sourcing to continue through the remainder of the~~prior year.

~~Table of~~ ~~Contents~~

~~2022~~2023 First Half


		Six Months Ended								Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Rental revenues	Rental revenues	$	22	$	23	$	(1)	(6%)	Rental revenues	$	21	$	22	$	(1)	(4%)

Results reflect a $2$1 million decrease in ~~gross~~ Getaway revenues, which resulted from a ~~15% decline~~4% decrease in transactions driven by lower bookings, partially offset by ~~an 11%~~a 1% increase in the average Getaway fee. ~~This was partially offset by lower rental~~Rental inventory procurement costs, which are recorded net within Rental revenues, ~~of $1 million. The decline~~were in Getaway transactions reflected fewer owner deposits as more members chose to occupy their home resorts rather than exchange for usage through Interval International, which put pressure on the inventory available for Getaways.

~~Depreciation and Amortization~~

~~2022 Second Quarter~~

Three Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
Depreciation and amortization $ 7 $ 9 $ (2) (16%)

~~2022 First Half~~

Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
Depreciation and amortization $ 16 $ 29 $ (13) (43%)

~~The decrease in depreciation expense in the first half of 2022 relates to a true-up made in~~line with the prior ~~year to accelerate depreciation on a technology asset.~~year.

Gains and Other Income

~~2022~~2023 Second Quarter


		Three Months Ended								Three Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Gains and other income, net	Gains and other income, net	$	16	$	—	$	16	NM	Gains and other income, net	$	—	$	16	$	(16)	NM

~~2022~~

2023 First Half


		Six Months Ended								Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Gains and other income, net	Gains and other income, net	$	16	$	—	$	16	NM	Gains and other income, net	$	—	$	16	$	(16)	NM

During the second quarter and first half of 2022, we recorded a $16 million gain related to the ~~strategic decision to dispose~~sale of our VRI Americas ~~business~~. business. See Footnote 3 “Acquisitions and Dispositions” for more information on the disposition of VRI Americas.

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Corporate and Other

Corporate and Other consists of results that are not allocable to our segments, including company-wide general and administrative costs, corporate interest expense, transaction and integration costs, and income taxes. In addition, Corporate and Other includes the revenues and expenses from ~~the~~ Consolidated Property Owners’ Associations.


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021		($ in millions)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
REVENUES	REVENUES									REVENUES
Resort management and other services	Resort management and other services	$	5	$	37	$	37	$	76	Resort management and other services	$	8	$	5	$	17	$	37

Cost reimbursements	Cost reimbursements	(6)		(27)		(26)		(54)		Cost reimbursements	(7)		(6)		(15)		(26)
TOTAL REVENUES	TOTAL REVENUES	(1)		10		11		22		TOTAL REVENUES	1		(1)		2		11
EXPENSES	EXPENSES									EXPENSES
Resort management and other services	Resort management and other services	10		45		50		96		Resort management and other services	11		10		24		50
Rental	Rental	(4)		(14)		(13)		(28)		Rental	(4)		(4)		(7)		(13)
General and administrative	General and administrative	64		66		125		112		General and administrative	64		64		132		125
Depreciation and amortization	Depreciation and amortization	3		4		5		6		Depreciation and amortization	3		3		4		5
Litigation charges										Litigation charges	(1)		—		(1)		—

Restructuring		—		—		—		(1)
Impairment		—		5		—		5

Cost reimbursements	Cost reimbursements	(6)		(27)		(26)		(54)		Cost reimbursements	(7)		(6)		(15)		(26)
TOTAL EXPENSES	TOTAL EXPENSES	67		79		141		136		TOTAL EXPENSES	66		67		137		141
(Losses) gains and other (expense) income, net		(11)		(2)		(10)		4
Interest expense		(30)		(44)		(57)		(87)
Gains (losses) and other income (expense), net										Gains (losses) and other income (expense), net	3		(11)		15		(10)
Interest expense, net										Interest expense, net	(36)		(30)		(70)		(57)
Transaction and integration costs	Transaction and integration costs	(36)		(28)		(64)		(47)		Transaction and integration costs	(10)		(36)		(23)		(64)
FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS	FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS	(145)		(143)		(261)		(244)		FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS	(108)		(145)		(213)		(261)
Provision for income taxes	Provision for income taxes	(43)		(27)		(75)		(16)		Provision for income taxes	(50)		(43)		(91)		(75)

Net loss (income) attributable to noncontrolling interests		1		(2)		1		(5)
Net loss attributable to noncontrolling interests										Net loss attributable to noncontrolling interests	—		1		—		1
FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS	FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(187)	$	(172)	$	(335)	$	(265)	FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(158)	$	(187)	$	(304)	$	(335)

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Consolidated Property Owners’ Associations

The following table illustrates the impact of certain Consolidated Property Owners’ Associations under the relevant accounting ~~guidance.~~guidance and the changes attributed to the deconsolidation of individual Consolidated Property Owners’ Associations.


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021		($ in millions)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
REVENUES	REVENUES									REVENUES
Resort management and other services	Resort management and other services	$	4	$	37	$	36	$	76	Resort management and other services	$	8	$	4	$	17	$	36

Cost reimbursements	Cost reimbursements	(6)		(27)		(26)		(54)		Cost reimbursements	(7)		(6)		(15)		(26)
TOTAL REVENUES	TOTAL REVENUES	(2)		10		10		22		TOTAL REVENUES	1		(2)		2		10
EXPENSES	EXPENSES									EXPENSES
Resort management and other services	Resort management and other services	10		45		50		96		Resort management and other services	11		10		24		50
Rental	Rental	(4)		(14)		(13)		(28)		Rental	(4)		(4)		(7)		(13)
Cost reimbursements	Cost reimbursements	(6)		(27)		(26)		(54)		Cost reimbursements	(7)		(6)		(15)		(26)
TOTAL EXPENSES	TOTAL EXPENSES	—		4		11		14		TOTAL EXPENSES	—		—		2		11
Losses and other expense, net	Losses and other expense, net	(3)		(2)		(3)		—		Losses and other expense, net	—		(3)		—		(3)
Interest expense, net										Interest expense, net	1		—		1		—
FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS	FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS	(5)		4		(4)		8		FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS	2		(5)		1		(4)
Provision for income taxes		—		(1)		—		(1)
Net loss (income) attributable to noncontrolling interests		1		(2)		1		(5)

Net loss attributable to noncontrolling interests										Net loss attributable to noncontrolling interests	—		1		—		1
FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS	FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(4)	$	1	$	(3)	$	2	FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	2	$	(4)	$	1	$	(3)

General and Administrative

~~2022~~2023 Second Quarter


		Three Months Ended								Three Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
General and administrative	General and administrative	$	64	$	66	$	(2)	(2%)	General and administrative	$	64	$	64	$	—	NM

~~For the second quarter of 2022, General and administrative expenses decreased due primarily to lower bonus expenses.~~

~~2022 First Half~~

Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
General and administrative $ 125 $ 112 $ 13 12%

~~For the first half of 2022,~~ General and administrative expenses increased ~~primarily due~~$4 million for costs related to ~~$12~~the implementation of technology associated with the integration of Legacy-ILG, $6 million of ~~higher salary~~incremental costs primarily related to compliance activities and new product development initiatives, and a $3 million increase in insurance expense, offset by a $13 million decrease in compensation-related costs due to ~~reduced work week programs~~lower variable compensation expense partially offset by an increase in wages.

We expect General and administrative expenses for the ~~prior year~~remainder of 2023 to increase due the continued impact of increased wages and additional investment in upgrading, maintaining, and implementing technology, including the continued transition to software as a $2service, which are recorded as a component of General and administrative expense as opposed to Depreciation expense.

2023 First Half


	Six Months Ended
($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
General and administrative	$	132	$	125	$	7	5%

General and administrative expenses increased $11 million for costs related to the implementation of technology associated with the integration of Legacy-ILG, $10 million of incremental costs primarily related to compliance activities and new product development initiatives, a $4 million increase in insurance expense, and $1 million of business travel related expenses, partially offset by a $19 million decrease in ~~credits related~~compensation-related costs due to ~~incentives under the CARES Act,~~lower variable compensation expense partially offset by ~~$1 million~~an increase in ~~lower overall spending.~~wages.

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Gains ~~/ Losses~~(Losses) and Other Income ~~/ Expense~~(Expense)

~~2022~~2023 Second Quarter


		Three Months Ended								Three Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Losses and other expense, net		$	(11)	$	(2)	$	(9)	NM
Gains (losses) and other income (expense), net									Gains (losses) and other income (expense), net	$	3	$	(11)	$	14	NM

In the second quarter of 2023, we recorded a $1 million increase in our receivable from Marriott International for indemnified income tax matters (the offsetting accrual is included in the Provision for income taxes line) and $2 million of foreign currency translation gains.

In the second quarter of 2022, we recorded $7 million of foreign currency translation losses, a$3 million of non-income tax related ~~charge of $3 million,~~adjustments to the receivable for the indemnification we expect to receive from Marriott International for indemnified tax matters, and $3 million of non-cash losses pursuant to a change in control of certain Consolidated Property Owners’ Associations, partially offset by $2 million of proceeds from corporate owned life insurance.

2023 First Half


	Six Months Ended
($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Gains (losses) and other income (expense), net	$	15	$	(10)	$	25	NM

In the ~~second quarter~~first half of ~~2021,~~2023, we recorded a $21 million increase in our receivable from Marriott International for indemnified income tax ~~related charge~~matters (the offsetting accrual is included in the Provision for income taxes line) and $4 million of ~~$2 million.~~

~~Table~~foreign currency translation gains, partially offset by $10 million attributed to the redemption premium and write-off of ~~Contents~~

~~2022 First Half~~

Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
(Losses) gains and other (expense) income, net $ (10) $ 4 $ (14) NM
unamortized debt issuance costs attributed to the early redemption of our senior secured notes.

In the first half of 2022, we recorded $6 million of foreign currency translation losses, a$3 million of non-income tax related ~~charge of $3 million,~~adjustments to the receivable for the indemnification we expect to receive from Marriott International for indemnified tax matters, and $3 million of non-cash losses pursuant to a change in control of certain Consolidated Property Owners’ Associations, partially offset by $2 million of proceeds from corporate owned life insurance. ~~In the first half of 2021, we recorded $6 million of foreign currency translation gains, partially offset by a tax related charge of $2 million.~~

Interest Expense

~~2022~~2023 Second Quarter


		Three Months Ended								Three Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Interest expense		$	(30)	$	(44)	$	14	32%
Interest expense, net									Interest expense, net	$	(36)	$	(30)	$	(6)	(18%)

The increase in Interest expense, ~~decreased $14~~net is attributed to $4 million ~~including $12~~associated with higher borrowings and higher variable interest rates on both the Warehouse Credit Facility and the Revolving Corporate Credit Facility, $4 million ~~due~~of higher interest expense associated with our convertible notes, $3 million of higher variable interest expense on the Term Loan, and $2 million of interest expense related to leased assets. This was partially offset by $4 million of lower interest expense associated with the early redemption of our senior secured notes, $2 million of lower interest on non-income tax related items and $1 million of interest income.

2023 First Half


	Six Months Ended
($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Interest expense, net	$	(70)	$	(57)	$	(13)	(22%)

The increase in Interest expense, net is attributed to $10 million associated with higher borrowings and higher variable interest rates on both the ~~2026 Notes in 2021, $7~~Warehouse Credit Facility and the Revolving Corporate Credit Facility, $9 million ~~due to~~of higher interest expense associated with our convertible notes, $5 million of higher variable interest expense on the ~~adoption~~Term Loan, and $3 million of ~~new accounting guidance~~interest expense related to ~~our convertible debt (see Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” to our Financial Statements), and $4~~leased assets. This was partially offset by $8 million ~~due to~~of lower interest expense associated with the early redemption of ~~a portion~~our senior secured notes, $4 million of ~~the 2025 Notes in 2021, partially offset by $5 million due to the issuance of the 2029 Notes in June 2021, $3 million of~~lower interest on non-income tax related ~~interest expense and $1 million of higher interest related to finance leases.~~

~~2022 First Half~~

Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
Interest expense $ (57) $ (87) $ 30 34%

Interest expense decreased $30 million, including $25 million due to the early redemption of the 2026 Notes in 2021, $13 million due to the adoption of new accounting guidance related to our convertible debt (see Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” to our Financial Statements), and $8 million due to the early redemption of a portion of the 2025 Notes in 2021, partially offset by $11 million due to the issuance of the 2029 Notes in June 2021, $3 million of non-income tax related interest expenseitems and $2 million of ~~higher~~ interest ~~related to finance leases.~~

~~Transaction and Integration Costs~~

~~2022 Second Quarter~~

Three Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
Transaction and integration costs $ (36) $ (28) $ (8) (27%)

In the second quarter of 2022, Transaction and integration costs included $23 million of ILG integration related costs, $10 million of other integration costs, $2 million of Welk Acquisition and integration related costs, and $1 million of other transactions costs.

~~In the second quarter of 2021, Transaction and integration costs included $25 million of ILG integration related costs, and $3 million of Welk Acquisition and integration related costs.~~income.

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~~2022 First Half~~

Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
Transaction and integration costs $ (64) $ (47) $ (17) (36%)

In the first half of 2022, Transaction and integration costs included $48 million of ILG integration related costs, $10 million of other integration costs, $5 million of Welk Acquisition and integration related costs and $1 million of other transaction costs.

~~In the first half of 2021, Transaction and integration costs included $42 million of ILG integration related costs and $5 million of Welk Acquisition and integration related costs.~~

Income Tax

~~2022~~2023 Second Quarter


		Three Months Ended								Three Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		Change		% Change	($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Provision for income taxes	Provision for income taxes	$	(43)	$	(27)	$	(16)	(65%)	Provision for income taxes	$	(50)	$	(43)	$	(7)	(14%)

~~The change in the Provision for income taxes is predominately attributable to an increase in pre-tax income~~Our effective tax rate was 35.4% and 24.3% for the three months ended June 30, ~~2022.~~

2023 and June 30, 2022, ~~First Half~~

Six Months Ended
($ in millions) June 30, 2022 June 30, 2021 Change % Change
Provision for income taxes $ (75) $ (16) $ (59) NM

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

2023 First Half


	Six Months Ended
($ in millions)	June 30, 2023		June 30, 2022		Change		% Change
Provision for income taxes	$	(91)	$	(75)	$	(16)	(21%)

Our interim effective tax rate was 33.9% and 28.1% for the six months ended June 30, ~~2022.~~2023 and June 30, 2022, respectively. The increase in the effective tax rate is predominately attributable to a net increase in discrete items (485 basis points), including a net increase in the reserve for foreign uncertain tax benefits which we believe are fully indemnified.

Liquidity and Capital Resources

Typically, our capital needs are supported by cash on hand, ~~($0.3 billion at the end of the second quarter of 2022),~~ cash generated from operations, ~~our ability to raise capital through securitizations in the asset-backed securities market, our ability to issue new, and refinance existing, debt and, to the extent necessary,~~ our ability to access funds under the Warehouse Credit Facility and the Revolving Corporate Credit ~~Facility.~~Facility, our ability to raise capital through securitizations in the ABS market, and, to the extent necessary, our ability to issue new debt and refinance existing debt. We believe these sources of capital will be adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, satisfy debt service requirements, fulfill other cash requirements, and return capital to shareholders. We continuously monitor the capital markets to evaluate the effect that changes in market conditions may have on our ability to fund our liquidity needs.

~~During the first quarter~~Our corporate debt, net of ~~2022, we entered into an amendment~~cash and equivalents, to ~~the Revolving Corporate Credit Facility, which increased the borrowing capacity~~Adjusted EBITDA ratio was 3.1 at June 30, 2023, roughly in-line with our targeted leverage range of ~~the existing revolving credit facility from $600 million~~2.5x to ~~$750 million and extended the maturity date from August 31, 2023 to March 31, 2027.~~3.0x. We have no material maturities of corporate debt until 2025.

~~Subsequent to~~At the end of the second quarter of ~~2022, we amended certain agreements associated with our Warehouse Credit Facility, which increased~~2023, the ~~borrowing capacity of the existing facility from $350 million~~interest rate applicable to ~~$425 million and extended the revolving period from April 21, 2023 to July 28, 2024.~~

At June 30, 2022, we had $4.7 billion of total gross debt outstanding, which included $1.9 billion of non-recourse debt associated with vacation ownership notes receivable securitizations, $1.1 billion of senior notes, $0.8 billion of convertible notes, $0.8 billion of debt under our Corporate Credit Facility, $84 million related to finance lease obligations, and $10 million related to a non-interest bearing note payable. During the second quarter of 2022, we issued irrevocable noticeapproximately 90% of our ~~intent to settle~~total corporate debt, excluding finance leases and including the ~~2022 Convertible Notes in cash. Excluding repayment~~impact of ~~non-recourse~~interest rate hedges, was effectively fixed. The weighted average interest rate of our total corporate debt, ~~which is funded by~~excluding finance leases and including the ~~performance~~impact of vacation ownership notes receivable, principal repayments for the remainder of 2022 and 2023 consist of $230 million related to the 2022 Convertible Notes and $6 million related to a non-interest bearing note payable, respectively.

At June 30, 2022, we had $686 million of completed real estate inventory on hand and $506 million of completed vacation ownership units that have been classified as a component of Property and equipment until the time at which they are legally registered and available for sale as vacation ownership products.

~~Table of~~ ~~Contents~~

~~Our material cash requirements from known contractual or other obligations were $6 billion~~interest rate hedges, was 3.6% as of June 30, ~~2022,~~2023.

Sources of which we expect $569 million to be payable during the second half of 2022. These obligations primarily relate to our debt, securitized debt, and purchase obligations. See “Material Cash Requirements” below for additional information.

~~The following table summarizes the changes in cash, cash equivalents, and restricted cash:~~

Six Months Ended
($ in millions) June 30, 2022 June 30, 2021
Cash, cash equivalents, and restricted cash provided by (used in):
Operating activities $ 218 $ 148
Investing activities 15 (176)
Financing activities (428) 716
Effect of change in exchange rates on cash, cash equivalents, and restricted cash (2) —
Net change in cash, cash equivalents, and restricted cash $ (197) $ 688
Liquidity

Cash from ~~Operating Activities~~Operations

Our primary sources of funds from operations are (1) cash sales and down payments on financed sales, (2) cash from our financing operations, including principal and interest payments received on outstanding vacation ownership notes receivable, (3) cash from fee-based membership, exchange and rental transactions, and (4) net cash generated from our rental and resort management and other services operations. ~~Outflows include spending~~

Vacation Ownership Notes Receivable Securitizations

We periodically securitize, without recourse, through bankruptcy remote special purpose entities, the majority of the notes receivable originated in connection with the sale of vacation ownership products to institutional investors in the ABS term securitization market. These vacation ownership notes receivable securitizations provide liquidity for general corporate purposes. In a vacation ownership notes receivable term securitization, several classes of debt securities issued by a special purpose entity are generally collateralized by a single tranche of transferred assets, which consist of vacation

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ownership notes receivable. In connection with each vacation ownership notes receivable securitization, we may retain all or a portion of the securities that are issued. Typically, we receive cash at inception of the term securitization transaction for the ~~development~~amount of ~~new phases~~notes issued less fees and monies held in reserve and we receive cash during the life of the transaction in amounts reflecting the excess spread of interest received on the related vacation ownership notes receivable less the interest payable on the ABS securities, less administrative fees and amounts from related vacation ownership notes receivable that default.

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 parameters (default or delinquency thresholds vary by transaction), transaction provisions effectively redirect the monthly excess spread of interest accruing on the related vacation ownership notes receivable less the interest accruing on the ABS securities and fees we would otherwise receive from that pool (attributable to the interests we retained) to accelerate the principal payments to investors (taking into account the subordination of the different tranches to the extent there are multiple tranches) until the performance trigger is cured. During the second quarter of 2023, and as of June 30, 2023, we had 14 term securitization transactions outstanding, all of which were in compliance with their respective required parameters. Since 2000, we have issued almost $8.5 billion of debt securities in securitization transactions in the term ABS market, excluding amounts securitized through warehouse credit facilities or private bank transactions.

On an ongoing basis, we have the ability to use our Warehouse Credit Facility to securitize, on a revolving non-recourse basis, eligible consumer loans derived from certain vacation ownership sales. Those loans may later be transferred to term securitization transactions in the ABS market, which typically occur twice a year. During the second quarter of 2023, we amended certain agreements associated with our Warehouse Credit Facility, which increased the borrowing capacity of the existing ~~resorts,~~facility from $425 million to $500 million and extended the ~~acquisition~~revolving period from July 28, 2024 to May 31, 2025. At June 30, 2023, we had $189 million of ~~additional inventory, enhancement~~borrowings outstanding on our Warehouse Credit Facility.

As of ~~our inventory exchange network~~June 30, 2023, $59 million of ~~resorts and related technology infrastructure and funding our~~gross vacation ownership notes receivable were eligible for securitization.

Revolving Corporate Credit Facility

Our Revolving Corporate Credit Facility, which expires on March 31, 2027, provides for up to $750 million of aggregate borrowings for general corporate needs, including working capital, ~~needs.~~capital expenditures, letters of credit, and acquisitions. At June 30, 2023, $65 million of borrowings were outstanding on our Revolving Corporate Credit Facility, and $1 million of letters of credit were outstanding.

Redemption of Senior Secured Notes

During the first quarter of 2023, we redeemed, prior to maturity, the remaining $250 million of the 2025 Notes outstanding pursuant to a redemption notice issued in the fourth quarter of 2022 and the terms of the indenture governing the 2025 Notes. In connection with this redemption, we incurred charges of $10 million, including a redemption premium and the write-off of unamortized debt issuance costs, which were recorded in Gains and other income, net on our Income Statement for the six months ended June 30, 2023.

Uses of Cash

We minimize our working capital needs through cash management, strict credit-granting policies, and disciplined collection efforts. Our working capital needs fluctuate throughout the year given the timing of annual maintenance fees on unsold inventory we pay to owners’ associations and certain annual compensation-related outflows. In addition, our cash from operations varies due to the timing of repayment by owners of vacation ownership notes receivable, the closing or recording of sales contracts for vacation ownership products, financing propensity, and cash outlays for inventory ~~acquisition~~acquisitions and development.

~~Excluding~~Cash and cash equivalents on hand at June 30, 2023 totaled $242 million, a decrease of $282 million from December 31, 2022, primarily reflecting the ~~impact~~redemption of senior notes of $250 million, the repurchase of common stock of $162 million, payment of dividends of $80 million, capital expenditures for property and equipment (excluding inventory) of $63 million, $10 million for payment of withholding taxes on vesting of restricted stock units, and $10 million of other uses of cash, partially offset by $119 million associated with net cash and cash equivalents provided by operating activities, new borrowings in excess of repayments of securitized debt of $92 million, other debt borrowings in excess of repayments of $59 million, $14 million of proceeds from dispositions of real property, $8 million of finance lease incentives in excess of payments, and $1 million due to the effect of changes in ~~net income or loss and adjustments for non-cash items, the change in~~exchange rates.

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Seasonality

Our cash ~~flows~~flow from operations ~~increased as a result of lower inventory spending, higher collections of vacation ownership notes receivable, higher sales and rental deposits~~fluctuates during the year due to the ~~continued ramp-up of the business, and higher operational expense accruals, partially offset by~~ timing of certain ~~employee benefit~~receipts and contractual and compensation-related payments. Significant changes in cash flow can result from the timing of our collection of maintenance fees, club dues, and other customer payments, which typically occur in either the fourth quarter or the first quarter of each year. Generally, cash outflows related to our payment of maintenance fees associated with unsold inventory occurs in the fourth quarter for our points-based products, and ~~recognition~~in the first quarter for our weeks-based products. In addition, during the first quarter of ~~previously deferred revenues.~~each year we generally have significant compensation-related cash outflows associated with payment of annual bonuses.

Operations

In addition to net income or loss and adjustments for non-cash items, the following ~~operating activities~~ are key drivers of our cash flow from operating activities:

Inventory Spending Less Than ~~(In Excess of)~~ Cost of Sales


		Six Months Ended					Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		($ in millions)	June 30, 2023		June 30, 2022
Inventory spending	Inventory spending	$	(92)	$	(77)	Inventory spending	$	(49)	$	(92)
Purchase of vacation ownership units for future transfer to inventory	Purchase of vacation ownership units for future transfer to inventory	(12)		(99)		Purchase of vacation ownership units for future transfer to inventory	—		(12)
Inventory costs	Inventory costs	118		90		Inventory costs	98		118
Inventory spending less than (in excess of) cost of sales		$	14	$	(86)
Inventory spending less than cost of sales						Inventory spending less than cost of sales	$	49	$	14

~~While~~Although we have significant excess inventory on hand, we ~~will~~intend to continue to selectively ~~pursue~~pursuing growth opportunities ~~in North America and Asia Pacific~~ by targeting high-quality inventory that allows us to add desirable new destinations to our ~~system~~systems with new on-site sales ~~locations through~~locations. Where possible, we will structure transactions that limit our up-front capital investment and allow us to purchase finished inventory closer to the time it is needed for sale. These capital efficient vacation ownership ~~deal~~transaction structures may consist of the development of new inventory, or the conversion of previously built units, by third ~~parties, just prior to sale.~~parties. In addition, we may develop inventory in key markets where opportunities generate acceptable risk adjusted returns.

Through our existing ~~vacation ownership interest~~VOI repurchase program, we proactively acquire previously sold ~~vacation ownership interests~~VOIs from owners’ associations and individual owners at lower costs than would be required to develop new inventory. ByAmong other reasons, by repurchasing inventory, we expect to be able to help stabilize the future cost of our vacation ownership products.

Our spending for real estate inventory in the first half of ~~2022~~2023 was lower than ~~real estate inventory costs~~cost of sales and was primarily related to our ~~vacation ownership interest~~VOI repurchase ~~program. We acquired a higher amount of previously sold~~

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vacation ownership interests in the first half of 2022 due to the reinstatement of our vacation ownership interest repurchase program that was suspended as part of the cash preservation measures implemented in response to the COVID-19 pandemic.programs. We expect inventory spending to be less than cost of sales for the remainder of 2022 as we intend to repurchase less inventory and provided we are able to negotiate a capital efficient inventory arrangement under which a third party will develop the Waikiki property we are committed to purchase and agree to resell it to us at a later date. See Footnote 16 “Variable Interest Entities” to our Financial Statements for more information.2023.

Vacation Ownership Notes Receivable Collections ~~(Less Than) In Excess of~~Less Than Originations


		Six Months Ended					Six Months Ended
($ in millions)	($ in millions)	June 30, 2022		June 30, 2021		($ in millions)	June 30, 2023		June 30, 2022
Vacation ownership notes receivable collections — non-securitized	Vacation ownership notes receivable collections — non-securitized	$	133	$	110	Vacation ownership notes receivable collections — non-securitized	$	90	$	133
Vacation ownership notes receivable collections — securitized	Vacation ownership notes receivable collections — securitized	232		252		Vacation ownership notes receivable collections — securitized	218		232
Vacation ownership notes receivable originations	Vacation ownership notes receivable originations	(483)		(320)		Vacation ownership notes receivable originations	(470)		(483)
Vacation ownership notes receivable collections (less than) in excess of originations		$	(118)	$	42
Vacation ownership notes receivable collections less than originations						Vacation ownership notes receivable collections less than originations	$	(162)	$	(118)

Vacation ownership notes receivable collections ~~increased during~~were less than originations in each of the first ~~half~~halves of 2023 and 2022 ~~as compared~~due to the ~~first half~~growth of ~~2021, due to an increase in~~ the ~~portfolio of outstanding~~average vacation ownership notes receivable ~~reflecting the continued ramp up~~pool attributed to sales of ~~sales and higher financing propensity (52% for the first half of 2022, compared to 49% for the first half of 2021).~~VOIs.

~~Cash from Investing Activities~~

~~Acquisition of a Business, Net of Cash and Restricted Cash Acquired~~

~~Net cash outflows of $157 million in the first half of 2021 were due to the Welk Acquisition. See Footnote 3 “Acquisitions and Dispositions” to our Financial Statements for more information.~~

~~Proceeds from Disposition of Subsidiaries, Net of Cash and Restricted Cash Transferred~~

Proceeds from disposition of subsidiaries, net of cash and restricted cash transferred of $93 million in the first half of 2022 were due to the disposition of various subsidiaries, including $55 million for the VRI Americas business entities and $38 million for the entities that owned and operated the hotel in Puerto Vallarta, Mexico. See Footnote 3 “Acquisitions and Dispositions” to our Financial Statements for more information.

~~Capital Expenditures for Property and Equipment~~

In the first half of 2022, capital expenditures for property and equipment included $23 million to support business operations (including $15 million for ancillary and other operations assets and $7 million for sales locations) and $1 million for technology.

In the first half of 2021, capital expenditures for property and equipment of $11 million included $8 million to support business operations (including $5 million for ancillary and other operations assets and $3 million for sales locations) and $3 million for technology.

~~Issuance of Note Receivable to VIE~~

During the second quarter of 2022, in connection with the amendment of an inventory purchase commitment, we extended a loan to a VIE, which we do not consolidate, for $47 million. The loan is due in full upon the earlier of either a sale of the property, including a sale to us, or an amendment and restatement of our purchase commitment, one of which is expected to occur in 2022. See Footnote 16 “Variable Interest Entities” to our Financial Statements for more information.

~~Cash from Financing Activities~~

~~Borrowings from / Repayment of Debt Related to Securitization Transactions~~

During the first quarter of 2022, we securitized vacation ownership notes receivable under our Warehouse Credit Facility. The carrying amount of the vacation ownership notes receivable securitized was $125 million. The average advance rate was 81%, which resulted in gross proceeds of $102 million. Net proceeds were $101 million due to the funding of reserve accounts of $1 million.

~~Table of~~ ~~Contents~~

During the second quarter of 2022, we completed the securitization of a pool of $383 million of vacation ownership notes receivable. Approximately $342 million of the vacation ownership notes receivable were purchased by the 2022-1 LLC during the second quarter of 2022.

Of the $375 million in proceeds from the transaction, $40 million was held by the 2022-1 LLC as of June 30, 2022 and released subsequently as it purchased all of the remaining loans. In addition, approximately $98 million was used to repay all outstanding amounts previously drawn under our Warehouse Credit Facility, approximately $7 million was used to pay transaction expenses and fund required reserves, and the remaining $176 million will be used for general corporate purposes. In connection with this securitization, we redeemed the remaining vacation ownership loan backed notes, issued in a prior securitization, for approximately $38 million; the majority of the loans acquired through the redemption were purchased by the 2022-1 LLC.

~~As of June 30, 2022, $106 million of gross vacation ownership notes receivable were eligible for securitization.~~

~~Proceeds from / Repayments of Debt~~

All proceeds from and repayments of debt during the first half of 2022 were related to borrowings from and repayments of our Corporate Credit Facility. Our Corporate Credit Facility includes the Term Loan and our Revolving Corporate Credit Facility, which is further discussed in Footnote 13 “Debt” to our Financial Statements. No principal payments were made on our Term Loan during the first half of 2022. During the first half of 2022, we borrowed and repaid $125 million under our Revolving Corporate Credit Facility. There were no borrowed amounts outstanding under our Revolving Corporate Credit Facility as of June 30, 2022. As of June 30, 2022, w~~e had $1 million of letters of credit outstanding under our Revolving Corporate Credit Facility.~~

During the first half of 2021, we repaid $100 million of the amount outstanding under the Term Loan. We had no borrowings or repayments under our Revolving Corporate Credit Facility during the first half of 2021.

~~Finance Lease Payment~~

~~During the first half of 2022, we paid $2 million related to our finance lease obligations for technology and business operations equipment.~~

~~Debt Issuance Costs~~

During the first half of 2022, we paid $9 million of debt issuance costs, which included $5 million associated with the vacation ownership notes receivable securitization completed in 2022 and $4 million associated with an amendment to the Revolving Corporate Credit Facility, which is further discussed in Footnote 13 “Debt” to our Financial Statements.

During the first half of 2021, we paid $15 million of debt issuance costs, which included $6 million associated with the vacation ownership notes receivable securitization we completed in 2021, $7 million associated with the issuance of the 2029 Notes, $1 million associated with the issuance of the 2026 Convertible Notes, and $1 million associated with the amendment of a waiver to the agreement that governs our Corporate Credit Facility.

Repurchase of Common Stock

The following table summarizes share repurchase activity under our current share repurchase program:

($ in millions, except per share amounts) Number of Shares Repurchased Cost of Shares Repurchased Average Price
Paid per Share
As of December 31, 2021 17,681,395 $ 1,418 $ 80.17
For the first half of 2022 2,187,336 312 143.02
As of June 30, 2022 19,868,731 $ 1,730 $ 87.09


($ in millions, except per share amounts)	Number of Shares Repurchased	Cost Basis of Shares Repurchased		Average Price Paid per Share
As of December 31, 2022	22,773,218	$	2,119	$	93.06
For the first half of 2023	1,143,555	162		141.84
As of June 30, 2023	23,916,773	$	2,281	$	95.40

See Footnote 1413 “Shareholders' Equity” to our Financial Statements for further information related to our current share repurchase ~~program, including the additional share repurchase authorization and extension approved by our Board of Directors during the first half of 2022.~~program.

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Payment of Dividends to Common Shareholders

We distributed cash dividends to holders of ~~our~~ common stock during the first half of ~~2022~~2023 as follows:

Declaration Date

Shareholder Record Date

Distribution Date

Dividend per Share

December ~~9, 2021~~1, 2022

December ~~23, 2021~~22, 2022

January ~~6, 2022~~5, 2023

$~~0.54~~0.72

February ~~18, 2022~~16, 2023

March ~~3, 2022~~2, 2023

March ~~17, 2022~~16, 2023

$~~0.62~~0.72

May ~~12, 2022~~11, 2023

May ~~26, 2022~~25, 2023

June ~~9, 2022~~8, 2023

$~~0.62~~0.72

We currently expect to pay quarterly dividends in the future, but any future dividend payments will be subject to Board of Directors approval, which will depend on our financial condition, results of operations and capital requirements, as well as applicable law, regulatory constraints, industry practice, and other business considerations that our Board of Directors considers relevant. In addition, our Corporate Credit Facility and the indentures governing our senior notes contain restrictions on our ability to pay dividends, and the terms of agreements governing debt that we may incur in the future may also limit or prohibit the payment of dividends. The payment of certain cash dividends may also result in an adjustment to the conversion rate of our convertible notes in a manner adverse to us. Accordingly, there can be no assurance that we will pay dividends in the future at any particular rate or at all.

Material Cash Requirements

The following table summarizes our future material cash requirements from known contractual or other obligations as of June 30, ~~2022:~~2023:

Payments Due by Period
($ in millions) Total Remainder
of 2022 2023 2024 2025 2026 Thereafter
Contractual Obligations
Debt obligations(1)
$ 3,111 $ 276 $ 94 $ 89 $ 1,107 $ 616 $ 929
Securitized debt(1)(2)
2,166 116 229 228 224 221 1,148
Purchase obligations(3)
279 154 55 31 22 17 —
Operating lease obligations(4)
128 12 25 21 20 18 32
Finance lease obligations(4)
283 4 6 6 4 4 259
Other long-term obligations(5)
18 7 4 3 2 1 1
$ 5,985 $ 569 $ 413 $ 378 $ 1,379 $ 877 $ 2,369

~~_________________________~~


			Payments Due by Period
($ in millions)	Total		Remainder of 2023		2024		2025		2026		2027		Thereafter
Contractual Obligations
Debt(1)	$	3,266	$	52	$	117	$	881	$	635	$	698	$	883
Securitized debt(1)(2)	2,510		137		266		263		409		233		1,202
Purchase obligations(3)	379		74		144		104		51		1		5
Operating lease obligations(4)	117		12		23		20		19		12		31
Finance lease obligations(4)(5)	530		6		16		14		12		12		470
Other long-term obligations(6)	15		7		3		2		1		1		1
	$	6,817	$	288	$	569	$	1,284	$	1,127	$	957	$	2,592

(1)Includes principal as well as interest payments and excludes unamortized debt discount and issuance costs.

(2)Payments based on estimated timing of cash flow associated with securitized notes receivable.

(3)Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure, and approximate timing of the transaction. Amounts reflected herein represent expected funding under such contracts. Amounts reflected on the consolidated balance sheet as accounts payable and accrued liabilities are excluded from the table above.

(4)Includes interest.

(5)The lease term of the finance lease arrangement for our new global headquarters office building located in Orlando, Florida commenced for accounting purposes during the first quarter of 2023, upon substantial completion of construction. See Footnote 12 “Debt” to our Financial Statements for additional information on this lease.

(6)Primarily relates to future guaranteed purchases of rental inventory of $8$6 million and our commitment to an owners’ association that we manage to pay for any shortfall between the actual expenses incurred by the owners’ association and the income received by the owners’ association, in lieu of maintenance fees, of $5$6 million.

In the normal course of our resort management business, we enter into purchase commitments on behalf of owners’ associations to manage the daily operating needs of our resorts. Since we are reimbursed for these commitments from the cash flows of the ~~resorts,~~owners’ associations, these obligations have minimal impact on our net income and cash flow. These purchase commitments are excluded from the table above.

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~~Leases That Have Not Yet Commenced~~

During 2020, we entered into a finance lease arrangement, that was amended in 2021, for our new global headquarters office building, which is being constructed in Orlando, Florida. The new Orlando corporate office building is currently expected to be completed in 2023, at which time the lease term will commence and a right-of-use asset and corresponding liability will be recorded on our balance sheet. The initial lease term is approximately 16 years with total lease payments of $137 million for the aforementioned period.

Supplemental Guarantor Information

The 2028 Notes are guaranteed by MVWC, Marriott Ownership Resorts, Inc. (“MORI”), and certain other subsidiaries whose voting securities are wholly owned directly or indirectly by MORI (such subsidiaries collectively, the “Senior Notes Guarantors”). These guarantees are full and unconditional and joint and several. The guarantees of the Senior Notes Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions.

The following tables present consolidating financial information as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, and for the six months ended June 30, ~~2022~~2023 for MVWC and MORI on a stand-alone basis (collectively, the “Issuers”), the Senior Notes Guarantors, the combined non-guarantor subsidiaries of ~~MVW,~~MVWC, and MVW on a consolidated basis.

Condensed Consolidating Balance Sheet


		As of June 30, 2022																As of June 30, 2023
		Issuers				Senior Notes Guarantors				Non-Guarantor Subsidiaries				Total Eliminations					MVW Consolidated				Issuers								Senior Notes Guarantors				Non-Guarantor Subsidiaries				Total Eliminations				MVW Consolidated
($ in millions)	($ in millions)	MVWC		MORI								($ in millions)	MVWC									MORI
Cash and cash equivalents	Cash and cash equivalents	$	—	$	82			$	102							$	140				$	—			$	324	Cash and cash equivalents		$	—			$	32			$	91			$	119			$	—	$	242
Restricted cash	Restricted cash	—		22		90				170				—					282			Restricted cash	—				26					68				144				—				238
Accounts receivable, net		6		112		93				58				(25)					244
Accounts and contracts receivable, net																						Accounts and contracts receivable, net	8				137				85				94				(11)				313
Vacation ownership notes receivable, net	Vacation ownership notes receivable, net	—		129		225				1,721				—					2,075			Vacation ownership notes receivable, net	—				124				181				1,967				—				2,272
Inventory	Inventory	—		213		407				75				—					695			Inventory	—				225				327				108				—				660
Property and equipment		—		195		636				320				—					1,151
Property and equipment, net																						Property and equipment, net	—				235				725				261				—				1,221
Goodwill	Goodwill	—		—		3,117				—				—					3,117			Goodwill	—				—				3,117				—				—				3,117
Intangibles, net	Intangibles, net	—		—		909				32				—					941			Intangibles, net	—				—				851				33				—				884

Investments in subsidiaries	Investments in subsidiaries	3,497		4,211		—				—				(7,708)					—			Investments in subsidiaries	3,508				3,948				—				—				(7,456)				—
Other	Other	76		120		224				130				(39)					511			Other	115				131				255				138				(104)				535
Total assets	Total assets	$	3,579	$	5,084	$	5,803			$	2,646			$	(7,772)				$	9,340		Total assets	$	3,631			$	4,858			$	5,700			$	2,864			$	(7,571)			$	9,482

Accounts payable	Accounts payable	$	25	$	43	$	84			$	65			$	—				$	217		Accounts payable	$	24			$	30			$	82			$	73			$	—			$	209
Advance deposits	Advance deposits	—		85		89				21				—					195			Advance deposits	—				68				89				18				—				175
Accrued liabilities	Accrued liabilities	15		77		157				107				(26)					330			Accrued liabilities	3				84				142				104				(11)				322
Deferred revenue	Deferred revenue	—		9		217				161				(15)					372			Deferred revenue	—				10				203				219				(15)				417
Payroll and benefits liability	Payroll and benefits liability	—		111		72				21				—					204			Payroll and benefits liability	—				78				73				23				—				174
Deferred compensation liability	Deferred compensation liability	—		103		25				2				—					130			Deferred compensation liability	—				117				34				3				—				154
Securitized debt, net	Securitized debt, net	—		—		—				1,868				(22)					1,846			Securitized debt, net	—				—				—				2,052				(24)				2,028
Debt, net	Debt, net	788		1,873		76				11				—					2,748			Debt, net	1,128				1,693				175				5				—				3,001

Other	Other	6		1		174				29				—					210			Other	—				1				161				18				—				180
Deferred taxes	Deferred taxes	—		60		283				—				(1)					342			Deferred taxes	—				115				291				3				(65)				344
MVW shareholders' equity	MVW shareholders' equity	2,745		2,722		4,626				360				(7,708)					2,745			MVW shareholders' equity	2,476				2,662				4,450				344				(7,456)				2,476
Noncontrolling interests	Noncontrolling interests	—		—		—				1				—					1			Noncontrolling interests	—				—				—				2				—				2
Total liabilities and equity	Total liabilities and equity	$	3,579	$	5,084	$	5,803			$	2,646			$	(7,772)				$	9,340		Total liabilities and equity	$	3,631			$	4,858			$	5,700			$	2,864			$	(7,571)			$	9,482

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		As of December 31, 2021																As of December 31, 2022
		Issuers				Senior Notes Guarantors			Non-Guarantor Subsidiaries			Total Eliminations					MVW Consolidated				Issuers							Senior Notes Guarantors				Non-Guarantor Subsidiaries				Total Eliminations				MVW Consolidated
($ in millions)	($ in millions)	MVWC		MORI										($ in millions)		MVWC						MORI		Senior Notes Guarantors	Non-Guarantor Subsidiaries		Total Eliminations			MVW Consolidated
Cash and cash equivalents	Cash and cash equivalents	$	—	$	126		$	77				$	139					$	—				$						342			Cash and cash equivalents	$	150			$	119
Restricted cash	Restricted cash	—		18			94			349				—					461			Restricted cash	—			25				145				160				—			330
Accounts receivable, net		14		49			172			119				(75)					279
Accounts and contracts receivable, net																						Accounts and contracts receivable, net	10			120				116				73				(27)			292
Vacation ownership notes receivable, net	Vacation ownership notes receivable, net	—		127			203			1,715				—					2,045			Vacation ownership notes receivable, net	—			132				195				1,871				—			2,198
Inventory	Inventory	—		244			381			94				—					719			Inventory	—			204				375				81				—			660
Property and equipment		—		200			644			292				—					1,136
Property and equipment, net																						Property and equipment, net	—			202				659				278				—			1,139
Goodwill	Goodwill	—		—			2,841			309				—					3,150			Goodwill	—			—				3,117				—				—			3,117
Intangibles, net	Intangibles, net	—		—			840			153				—					993			Intangibles, net	—			—				880				31				—			911

Investments in subsidiaries	Investments in subsidiaries	3,645		4,371			—			—				(8,016)					—			Investments in subsidiaries	3,417			4,076				—				—				(7,493)			—
Other	Other	76		108			211			107				(14)					488			Other	106			129				228				78				(73)			468
Total assets	Total assets	$	3,735	$	5,243		$	5,463		$	3,277			$	(8,105)				$	9,613		Total assets	$	3,683		$	5,007			$	5,804			$	2,738			$	(7,593)		$	9,639

Accounts payable	Accounts payable	$	63	$	22		$	121		$	59			$	—				$	265		Accounts payable	$	60		$	45			$	166			$	85			$	—		$	356
Advance deposits	Advance deposits	—		69			70			21				—					160			Advance deposits	—			63				79				16				—			158
Accrued liabilities	Accrued liabilities	12		151			145			114				(77)					345			Accrued liabilities	2			75				193				121				(22)			369
Deferred revenue	Deferred revenue	—		11			151			291				—					453			Deferred revenue	—			9				169				172				(6)			344
Payroll and benefits liability	Payroll and benefits liability	—		102			72			27				—					201			Payroll and benefits liability	—			139				86				26				—			251
Deferred compensation liability	Deferred compensation liability	—		114			25			3				—					142			Deferred compensation liability	—			110				27				2				—			139
Securitized debt, net	Securitized debt, net	—		—			—			1,877				(21)					1,856			Securitized debt, net	—			—				—				1,961				(23)			1,938
Debt, net	Debt, net	684		1,870			76			1				—					2,631			Debt, net	1,125			1,876				76				11				—			3,088

Other	Other	—		19			172			33				—					224			Other	—			1				148				18				—			167
Deferred taxes	Deferred taxes	—		91			250			—				9					350			Deferred taxes	—			89				291				—				(49)			331

MVW shareholders' equity	MVW shareholders' equity	2,976		2,794			4,381			841				(8,016)					2,976			MVW shareholders' equity	2,496			2,600				4,569				324				(7,493)			2,496
Noncontrolling interests	Noncontrolling interests	—		—			—			10				—					10			Noncontrolling interests	—			—				—				2				—			2
Total liabilities and equity	Total liabilities and equity	$	3,735	$	5,243		$	5,463		$	3,277			$	(8,105)				$	9,613		Total liabilities and equity	$	3,683		$	5,007			$	5,804			$	2,738			$	(7,593)		$	9,639

Condensed Consolidating ~~Statements~~Statement of Income


		Six Months Ended June 30, 2022														Six Months Ended June 30, 2023
		Issuers				Senior Notes Guarantors		Non-Guarantor Subsidiaries				Total Eliminations					MVW Consolidated			Issuers								Senior Notes Guarantors				Non-Guarantor Subsidiaries				Total Eliminations				MVW Consolidated
($ in millions)	($ in millions)	MVWC		MORI										($ in millions)		MVWC					MORI
Revenues	Revenues	$	—	$	390	$	1,366			$	476			$	(16)					$	2,216	Revenues	$	—		$	487				$	1,354			$	526			$	(20)			$	2,347
Expenses	Expenses	(4)		(510)		(1,053)		(397)				16					(1,948)		Expenses	(17)				(561)						(1,156)				(365)				20				(2,079)
Benefit (provision) for income taxes		1		40		(92)		(24)				—					(75)
Provision for income taxes																			Provision for income taxes	5				8				(65)				(39)				—				(91)
Equity in net income (loss) of subsidiaries	Equity in net income (loss) of subsidiaries	197		294		—		—				(491)					—		Equity in net income (loss) of subsidiaries	189				260				—				—				(449)				—
Net income (loss)	Net income (loss)	194		214		221		55				(491)					193		Net income (loss)	177				194				133				122				(449)				177
Net loss attributable to noncontrolling interests		—		—		—		1				—					1
Net income attributable to noncontrolling interests																			Net income attributable to noncontrolling interests	—				—				—				—				—				—
Net income (loss) attributable to common shareholders	Net income (loss) attributable to common shareholders	$	194	$	214	$	221	$	56			$	(491)				$	194	Net income (loss) attributable to common shareholders	$	177			$	194			$	133			$	122			$	(449)			$	177

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Recent Accounting Pronouncements

See Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” to our Financial Statements for a discussion of recently issued accounting pronouncements, including information on new accounting standards and the future adoption of such standards.

Critical Accounting Policies and Estimates

Our preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. We have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application in our most recent Annual Report on Form 10-K. Since the date of our most recent Annual Report on Form 10-K, there have been no material changes to our critical accounting policies or the methodologies or assumptions we apply under them.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our exposure to market risk has not changed materially from that disclosed in Part I, Item 7A of the ~~2021~~2022 Annual ~~Report.~~Report, other than as set forth below.

We manage the interest rate risk on our corporate debt through the use of a combination of fixed-rate debt and interest rate swaps (certain of which begin to expire in the 2023 third quarter) that fix a portion of our variable-rate debt. At June 30, 2023, after considering the impact of interest rate swap agreements and excluding finance leases, the interest rate applicable to approximately 90% of our total corporate debt was effectively fixed and the interest rate applicable to the remaining 10% (approximately $299 million) is variable. Assuming no outstanding balance on our Revolving Corporate Credit Facility, a 100 basis point increase in the underlying benchmark rate on our variable-rate debt would result in an increase of approximately $2 million in annual cash interest due to the impact of our hedging arrangements discussed in Footnote 12 “Debt” to our Financial Statements. Assuming we had no outstanding hedging arrangements and no outstanding balance on our Revolving Corporate Credit Facility, a 100 basis point increase in the underlying benchmark rate would result in an annual increase in cash interest of approximately $8 million.

The following table presents the scheduled maturities and the total fair value as of June 30, 2023 for our financial instruments that are impacted by market risks:


($ in millions)	Average Interest Rate	Maturities by Period
		Remainder of 2023		2024		2025		2026		2027		Thereafter		Total Carrying Value		Total Fair Value
Assets – Maturities represent expected principal receipts; fair values represent assets
Vacation ownership notes receivable — non-securitized	12.2%	$	25	$	46	$	38	$	37	$	39	$	224	$	409	$	410
Vacation ownership notes receivable — securitized	13.3%	$	85	$	174	$	178	$	182	$	184	$	1,060	$	1,863	$	1,926
Contracts receivable for financed VOI sales, net	13.2%	$	1	$	3	$	3	$	3	$	3	$	19	$	32	$	32
Liabilities – Maturities represent expected principal payments; fair values represent liabilities
Securitized debt	4.0%	$	(93)	$	(190)	$	(195)	$	(352)	$	(188)	$	(1,034)	$	(2,052)	$	(1,933)
Term Loan	6.9%	$	—	$	—	$	(784)	$	—	$	—	$	—	$	(784)	$	(782)
Revolving Corporate Credit Facility	6.9%	$	—	$	—	$	—	$	—	$	(65)	$	—	$	(65)	$	(65)
Senior notes
2028 Notes	4.8%	$	—	$	—	$	—	$	—	$	—	$	(350)	$	(350)	$	(316)
2029 Notes	4.5%	$	—	$	—	$	—	$	—	$	—	$	(500)	$	(500)	$	(432)


2026 Convertible Notes	—%	$	—	$	—	$	—	$	(575)	$	—	$	—	$	(575)	$	(532)
2027 Convertible Notes	3.3%	$	—	$	—	$	—	$	—	$	(575)	$	—	$	(575)	$	(548)
Non-interest bearing note payable	—%	$	—	$	(4)	$	—	$	—	$	—	$	—	$	(4)	$	(4)

Table of Contents

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), and management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which by their nature, can provide only reasonable assurance about management’s control objectives. Our disclosure controls and procedures have been designed to provide reasonable assurance of achieving the desired control objectives. However, the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Based upon the foregoing evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of June 30, ~~2022,~~2023, our disclosure controls and procedures were effective and operating to provide reasonable assurance that we record, process, summarize and report the information we are required to disclose in the reports that we file or submit under the Exchange Act within the time periods specified in the rules and forms of the SEC, and to provide reasonable assurance that we accumulate and communicate such information to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions about required disclosure.

Changes in Internal Control Over Financial Reporting

We made no changes in our internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial ~~reporting other than changes in control over financial reporting to integrate the business we acquired in the Welk Acquisition.~~reporting.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

Currently, and from time to time, we are subject to claims in legal proceedings arising in the normal course of business, including, among others, the legal actions discussed under “Loss Contingencies” in Footnote 1110 “Contingencies and Commitments” to our Financial Statements. While management presently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm our financial position, cash flows, or overall trends in results of operations, legal proceedings are inherently uncertain, and unfavorable rulings could, individually or in aggregate, have a material adverse effect on our business, financial condition, or operating results.

Item 1A. Risk Factors

There have been no material changes to the risk factors set forth in Item 1A to Part 1 of our ~~2021~~2022 Annual Report, except to the extent factual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors, which is incorporated herein by reference.

~~Table of~~ ~~Contents~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Period Total Number of Shares Purchased Average
Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
Maximum Dollar Amount of Shares That May Yet Be Purchased Under the Plans or Programs(1)
April 1, 2022 – April 30, 2022 305,037 $ 149.82 305,037 $ 306,897,878
May 1, 2022 – May 31, 2022 528,675 $ 141.15 528,675 $ 232,275,751
June 1, 2022 – June 30, 2022 588,800 $ 123.66 588,800 $ 159,463,717
Total 1,422,512 $ 135.77 1,422,512 $ 159,463,717
~~_________________________~~


Period	Total Number of Shares Purchased	Average Price Paid per Share(2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)	Maximum Dollar Amount of Shares That May Yet Be Purchased Under the Plans or Programs(1)(2)
April 1, 2023 – April 30, 2023	240,500	$	134.82	240,500	$	158,376,393
May 1, 2023 – May 31, 2023	268,633	$	127.21	268,633	$	575,193,483
June 1, 2023 – June 30, 2023	112,000	$	129.58	112,000	$	560,680,772
Total	621,133	$	130.58	621,133	$	560,680,772

(1)On September 13, 2021, ~~we announced that~~ our Board of Directors authorized a share repurchase program under which we ~~may~~were authorized to purchase shares of our common stock for an aggregate purchase price not to exceed $250 million, prior to December 31, 2022. On February 22, 2022, we announced that our Board of Directors authorized the repurchase of up to an additional $300 million of our common stock, ~~as well as the extension of~~and extended the term of our ~~existing~~ share repurchase program to

Table of Contents

March 31, 2023.

~~Additionally, on~~ On August 1, 2022, we announced that our Board of Directors authorized the repurchase of up to an additional $500 million of our common stock ~~as well as the extension of~~and extended the term of our ~~existing~~ share repurchase program to June 30, 2023. ~~Prior~~On May 11, 2023, we announced that our Board of Directors increased the remaining authorization to ~~this authorization we had approximately $28~~$600 million of ~~capacity remaining under~~ our ~~previous authorization.~~common stock and extended the term of our share repurchase program to December 31, 2024.

(2)The Inflation Reduction Act of 2022 imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. See Footnote 13 “Shareholders' Equity” to our Financial Statements for further information. All dollar amounts presented exclude such excise tax, as applicable.

Item 5. Other Information

During the quarter ended June 30, 2023, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-K).

Item 6. Exhibits

All documents referenced below are being filed as a part of this Quarterly Report on Form 10-Q, unless otherwise noted.

Exhibit Number Description Filed
Herewith Incorporation By Reference From
Form Exhibit Date Filed
2.1
Agreement and Plan of Merger, dated as of April 30, 2018, by and among Marriott Vacations Worldwide Corporation, ILG, Inc., Ignite Holdco, Inc., Ignite Holdco Subsidiary, Inc., Volt Merger Sub, Inc., and Volt Merger Sub LLC* 8-K 2.1 5/1/2018
2.2
Agreement and Plan of Merger by and among Marriott Vacations Worldwide Corporation, Sommelier Acquisition Corp., Champagne Resorts, Inc., Welk Hospitality Group, Inc. and the Shareholder Representative, dated as of January 26, 2021 8-K 2.1 1/26/2021
3.1
Restated Certificate of Incorporation of Marriott Vacations Worldwide Corporation 8-K 3.1 11/22/2011
3.2
Restated Bylaws of Marriott Vacations Worldwide Corporation 8-K 3.2 11/22/2011
4.1
Form of certificate representing shares of common stock, par value $0.01 per share, of Marriott Vacations Worldwide Corporation 10 4.1 10/14/2011
4.2
Indenture between Marriott Vacations Worldwide Corporation and The Bank of New York Mellon Trust Company, N.A., as trustee, dated September 25, 2017 10-Q 4.1 11/2/2017
4.3
Form of 1.50% Convertible Senior Note due 2022 (included as Exhibit A to Exhibit 4.2 above) 10-Q 4.1 11/2/2017
4.4
Joinder Agreement to Registration Rights Agreement, dated as of September 1, 2018, by and among ILG, LLC, the guarantors party thereto and Merrill Lynch, Pierce, Fenner & Smith Incorporated as the representative of the initial purchasers 8-K 4.8 9/5/2018
4.5
Indenture, dated as of October 1, 2019, by and among Marriott Ownership Resorts, Inc., Marriott Vacations Worldwide Corporation, as guarantor, the other guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee 8-K 4.1 10/1/2019

Exhibit Number

Description

Filed
Herewith

Incorporation By Reference From

Form

Exhibit

Date Filed

2.1

Agreement and Plan of Merger, dated as of April 30, 2018, by and among Marriott Vacations Worldwide Corporation, ILG, Inc., Ignite Holdco, Inc., Ignite Holdco Subsidiary, Inc., Volt Merger Sub, Inc., and Volt Merger Sub LLC*

8-K

2.1

5/1/2018

2.2

Agreement and Plan of Merger by and among Marriott Vacations Worldwide Corporation, Sommelier Acquisition Corp., Champagne Resorts, Inc., Welk Hospitality Group, Inc. and the Shareholder Representative, dated as of January 26, 2021

8-K

2.1

1/26/2021

3.1

Certificate of Amendment of the Restated Certificate of Incorporation of Marriott Vacations Worldwide Corporation

8-K

3.1

5/15/2023

3.2

Second Restated Certificate of Incorporation of Marriott Vacations Worldwide Corporation

8-K

3.2

5/15/2023

3.3

Restated Bylaws of Marriott Vacations Worldwide Corporation (effective May 12, 2023)

3.4

Restated Bylaws of Marriott Vacations Worldwide Corporation (effective May 12, 2023) (redline version of amended sections)

4.1

Form of certificate representing shares of common stock, par value $0.01 per share, of Marriott Vacations Worldwide Corporation

4.1

10/14/2011

4.2

Indenture, dated as of October 1, 2019, by and among Marriott Ownership Resorts, Inc., Marriott Vacations Worldwide Corporation, as guarantor, the other guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee

8-K

4.1

10/1/2019

4.3

Supplemental Indenture, dated December 31, 2019, by and among Marriott Ownership Resorts, Inc., MVW Vacations, LLC and the Bank of New York Mellon Trust Company, N.A., as trustee

10-K

4.12

3/2/2020

4.4

Second Supplemental Indenture, dated February 26, 2020, by and among Marriott Ownership Resorts, Inc., MVW Services Corporation, and the Bank of New York Mellon Trust Company, N.A., as trustee

10-K

4.13

3/2/2020

4.5

Form of 4.750% Senior Notes due 2028 (included as Exhibit A to Exhibit 4.2 above)

8-K

4.2

10/1/2019

4.6

Registration Rights Agreement, dated as of October 1, 2019, by and among Marriott Ownership Resorts, Inc., Marriott Vacations Worldwide Corporation, as guarantor, the other guarantors party thereto and J.P. Morgan Securities LLC

8-K

4.3

10/1/2019

7267

Table of Contents

Exhibit Number Description Filed
Herewith Incorporation By Reference From
Form Exhibit Date Filed
4.6
Supplemental Indenture, dated December 31, 2019, by and among Marriott Ownership Resorts, Inc., MVW Vacations, LLC and the Bank of New York Mellon Trust Company, N.A., as trustee 10-K 4.12 3/2/2020
4.7
Second Supplemental Indenture, dated February 26, 2020, by and among Marriott Ownership Resorts, Inc., MVW Services Corporation, and the Bank of New York Mellon Trust Company, N.A., as trustee 10-K 4.13 3/2/2020
4.8
Form of 4.750% Senior Notes due 2028 (included as Exhibit A to Exhibit 4.5 above) 8-K 4.2 10/1/2019
4.9
Registration Rights Agreement, dated as of October 1, 2019, by and among Marriott Ownership Resorts, Inc., Marriott Vacations Worldwide Corporation, as guarantor, the other guarantors party thereto and J.P. Morgan Securities LLC 8-K 4.3 10/1/2019
4.10
Indenture, dated as of May 13, 2020, by and among Marriott Ownership Resorts, Inc., Marriott Vacations Worldwide Corporation, as guarantor, the other guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent 8-K 4.1 5/15/2020
4.11
Form of 6.125% Senior Secured Notes due 2025 (included as Exhibit A to Exhibit 4.10) 8-K 4.1 5/15/2020
4.12
Indenture, dated as of February 2, 2021, by and among Marriott Vacations Worldwide Corporation, Marriott Ownership Resorts, Inc. and the other guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee 8-K 4.1 2/3/2021
4.13
Form of 0.00% Convertible Senior Note due 2026 (included as Exhibit A to Exhibit 4.12 above) 8-K 4.1 2/3/2021
4.14
Indenture, dated as of June 21, 2021, by and among Marriott Ownership Resorts, Inc., Marriott Vacations Worldwide Corporation, as guarantor, the other guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee 8-K 4.1 6/22/2021
4.15
Form of 4.500% Senior Notes due 2029 (included as Exhibit A to Exhibit 4.14 above) 8-K 4.2 6/22/2021
4.16
Description of Registered Securities 10-K 4.16 3/2/2020
10.1
Incremental Facility Amendment, dated as of March 31, 2022, by and among Marriott Vacations Worldwide Corporation, Marriott Ownership Resorts, Inc., as borrower, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and the incremental lenders party thereto 8-K 10.1 04/4/2022
10.2
Umbrella IP Amendment, dated as of March 4, 2022, to the Marriott License, Services and Development Agreement for Marriott Projects dated November 19, 2011, by and among Marriott International, Inc., Marriott Worldwide Corporation, and Marriott Vacations Worldwide Corporation. 10-Q 10.2 5/9/2022
10.3
Marketing Track Amendment, dated as of May 19, 2022, to the Marriott License, Services and Development Agreement for Marriott Projects dated November 19, 2011, by and among Marriott International, Inc., Marriott Worldwide Corporation, and Marriott Vacations Worldwide Corporation. X
10.4
Marriott Vacations Worldwide Corporation Deferred Compensation Plan Revised July 29, 2022** X
22.1
List of the Issuer and its Guarantor Subsidiaries 10-K 22.1 03/1/2022
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 X

~~Table of~~ ~~Contents~~

~~Exhibit Number~~

~~Description~~

Filed
Herewith

~~Incorporation By Reference From~~

~~Form~~

~~Exhibit~~

~~Date Filed~~

~~31.2~~

~~Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934~~

~~32.1~~

~~Certification of Chief Executive Officer pursuant to Rule 13a-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002~~

~~Furnished~~

~~32.2~~

~~Certification of Chief Financial Officer pursuant to Rule 13a-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002~~

~~Furnished~~

~~101~~

The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Inline XBRL: (i) Interim Consolidated Statements of Income, (ii) Interim Consolidated Statements of Comprehensive Income, (iii) Interim Consolidated Balance Sheets, (iv) Interim Consolidated Statements of Cash Flows, (v) Interim Consolidated Statements of Shareholders’ Equity, and (vi) Notes to Interim Consolidated Financial Statements

~~104~~

~~The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Inline XBRL and contained in Exhibit 101~~

Exhibit Number

Description

Filed
Herewith

Incorporation By Reference From

Form

Exhibit

Date Filed

4.7

Indenture, dated as of May 13, 2020, by and among Marriott Ownership Resorts, Inc., Marriott Vacations Worldwide Corporation, as guarantor, the other guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent

8-K

4.1

5/15/2020

4.8

Form of 6.125% Senior Secured Notes due 2025 (included as Exhibit A to Exhibit 4.7)

8-K

4.1

5/15/2020

4.9

Indenture, dated as of February 2, 2021, by and among Marriott Vacations Worldwide Corporation, Marriott Ownership Resorts, Inc. and the other guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee

8-K

4.1

2/3/2021

4.10

Form of 0.00% Convertible Senior Note due 2026 (included as Exhibit A to Exhibit 4.9 above)

8-K

4.1

2/3/2021

4.11

Indenture, dated as of June 21, 2021, by and among Marriott Ownership Resorts, Inc., Marriott Vacations Worldwide Corporation, as guarantor, the other guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee

8-K

4.1

6/22/2021

4.12

Form of 4.500% Senior Notes due 2029 (included as Exhibit A to Exhibit 4.11 above)

8-K

4.2

6/22/2021

4.13

Indenture, dated as of December 8, 2022, by and among Marriott Vacations Worldwide Corporation, as issuer, Marriott Ownership Resorts, Inc. and the other guarantors party thereto from time to time and The New York Bank of Mellon Trust Company, N.A., as trustee

8-K

4.1

12/8/2022

4.14

Form of 3.25% Convertible Senior Notes due 2027 (included as Exhibit A to Exhibit 4.13 above)

8-K

4.2

12/8/2022

4.15

Description of Registered Securities

10-K

4.16

3/2/2020

10.1

Marriott Vacations Worldwide Corporation Change in Control Severance Plan**

10-Q

10.1

05/5/2023

10.2

Amendment No. 2 to Credit Agreement dated as of April 27, 2023, among Marriott Vacations Worldwide Corporation, Marriott Ownership Resorts, Inc., and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent

10.3

Form of Non-Employee Director Share Award Confirmation*

10.4

Form of Non-Employee Director Stock Appreciation Right Award Agreement*

10.5

Form of Director Stock Unit Agreement*

22.1

List of the Issuer and its Guarantor Subsidiaries

31.1

Certification by Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

31.2

Certification by Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

32.1

Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Furnished

32.2

Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Furnished

101

The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in Inline XBRL: (i) Interim Consolidated Statements of Income, (ii) Interim Consolidated Statements of Comprehensive Income, (iii) Interim Consolidated Balance Sheets, (iv) Interim Consolidated Statements of Cash Flows, (v) Interim Consolidated Statements of Shareholders’ Equity, and (vi) Notes to Interim Consolidated Financial Statements

104

The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in Inline XBRL and contained in Exhibit 101

Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplemental copies to the SEC of any omitted schedule upon request by the SEC.

Management contract or compensatory plan or arrangement.

7468

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		MARRIOTT VACATIONS WORLDWIDE CORPORATION

Date:	August ~~9, 2022~~4, 2023	/s/ ~~Stephen P. Weisz~~John E. Geller, Jr.
		~~Stephen P. Weisz~~John E. Geller, Jr.
		President and Chief Executive Officer

		/s/ Anthony E. Terry
		Anthony E. Terry
		Executive Vice President and Chief Financial Officer

7569



($ in millions)	April 1, 2021 (as reported at December 31, 2021)		Adjustments		April 1, 2021 (as finalized at March 31, 2022)
Vacation ownership notes receivable, net	$	255	$	—	$	255
Inventory	111		—		111
Property and equipment	83		—		83
Intangible assets	102		—		102
Other assets	19		—		19

Deferred taxes	(32)		8		(24)
Debt	(189)		—		(189)
Securitized debt	(184)		—		(184)
Other liabilities	(93)		—		(93)
Net assets acquired	72		8		80
Goodwill(1)	333		(8)		325
	$	405	$	—	$	405


	Six Months Ended June 30, 2021
($ in millions)	Vacation Ownership		Exchange & Third-Party Management		Corporate and Other		Total
Sale of vacation ownership products	$	459	$	—	$	—	$	459

Ancillary revenues	80		1		—		81
Management fee revenues	77		14		(11)		80
Exchange and other services revenues	60		105		87		252
Management and exchange	217		120		76		413

Rental	187		23		—		210

Cost reimbursements	554		29		(54)		529
Revenue from contracts with customers	1,417		172		22		1,611

Financing	127		—		—		127
Total Revenues	$	1,544	$	172	$	22	$	1,738


	Acquired Vacation Ownership Notes Receivable 2018 & Prior
($ in millions)	Westin		Sheraton		Hyatt & Other		Total
700 +	$	42	$	43	$	7	$	92
600 - 699	26		37		5		68
< 600	2		6		1		9
No Score	6		15		1		22
	$	76	$	101	$	14	$	191


($ in millions)	Vacation Ownership Reporting Unit		Exchange & Third-Party Management Reporting Unit		Total Consolidated
Balance at December 31, 2021	$	2,778	$	372	$	3,150

Measurement period adjustments	(8)		—		(8)




Disposition of VRI Americas	—		(25)		(25)

Balance at June 30, 2022	$	2,770	$	347	$	3,117


($ in millions)	2025 Notes		2028 Notes		2029 Notes		Term Loan		2022 Convertible Notes		2026 Convertible Notes		Non-Interest Bearing Note Payable		Total
Year Payments
2022, remaining	$	—	$	—	$	—	$	—	$	230	$	—	$	—	$	230
2023	—		—		—		—		—		—		6		6
2024	—		—		—		—		—		—		4		4
2025	250		—		—		784		—		—		—		1,034
2026	—		—		—		—		—		575		—		575
Thereafter	—		350		500		—		—		—		—		850
	$	250	$	350	$	500	$	784	$	230	$	575	$	10	$	2,699


($ in millions)	Principal Amount		Unamortized Debt Discount		Unamortized Debt Issuance Costs		Debt, net		Carrying Amount of Equity Component, net of Issuance Costs
At December 31, 2021	$	230	$	(5)	$	(1)	$	224	$	33
Adoption of ASU 2020-06(1)	—		5		—		5		(33)
At January 1, 2022	230		—		(1)		229		—
Amortization of debt issuance costs	—		—		1		1		—
Fair value of conversion option transferred to other liabilities(2)	—		(5)		—		(5)		—
At June 30, 2022	$	230	$	(5)	$	—	$	225	$	—


($ in millions, except per share amounts)	Number of Shares Repurchased	Cost of Shares Repurchased		Average Price Paid per Share
As of December 31, 2021	17,681,395	$	1,418	$	80.17
For the first half of 2022	2,187,336	312		$	143.02
As of June 30, 2022	19,868,731	$	1,730	$	87.09


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)	Maximum Dollar Amount of Shares That May Yet Be Purchased Under the Plans or Programs(1)
April 1, 2022 – April 30, 2022	305,037	$	149.82	305,037	$	306,897,878
May 1, 2022 – May 31, 2022	528,675	$	141.15	528,675	$	232,275,751
June 1, 2022 – June 30, 2022	588,800	$	123.66	588,800	$	159,463,717
Total	1,422,512	$	135.77	1,422,512	$	159,463,717