Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 01, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | ILG, Inc. | |
Entity Central Index Key | 1,434,620 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 124,415,714 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues: | ||||
Total Revenues | $ 461 | $ 441 | $ 944 | $ 885 |
Operating costs and expenses: | ||||
Cost of sales | 231 | 231 | 481 | 459 |
Royalty fee expense | 11 | 11 | 22 | 21 |
Selling and marketing expense | 81 | 76 | 159 | 145 |
General and administrative expense | 65 | 58 | 124 | 112 |
Amortization expense of intangibles | 5 | 5 | 10 | 10 |
Depreciation expense | 16 | 15 | 31 | 30 |
Total operating costs and expenses | 409 | 396 | 827 | 777 |
Operating income | 52 | 45 | 117 | 108 |
Other income (expense): | ||||
Interest income | 1 | 1 | ||
Interest expense | (7) | (7) | (15) | (12) |
Gain on bargain purchase | 2 | 2 | ||
Other income (expense), net | (5) | (2) | 8 | |
Equity in earnings from unconsolidated entities | 1 | 1 | 3 | |
Total other income (expense), net | (11) | (6) | (13) | 1 |
Earnings before income taxes and noncontrolling interests | 41 | 39 | 104 | 109 |
Income tax provision | (13) | (13) | (33) | (38) |
Net income | 28 | 26 | 71 | 71 |
Net income attributable to noncontrolling interests | (1) | (2) | (1) | |
Net income attributable to common stockholders | $ 27 | $ 26 | $ 69 | $ 70 |
Earnings per share attributable to common stockholders: | ||||
Basic (in dollars per share) | $ 0.21 | $ 0.21 | $ 0.56 | $ 0.56 |
Diluted (in dollars per share) | $ 0.21 | $ 0.20 | $ 0.55 | $ 0.55 |
Weighted average number of shares of common stock outstanding (in 000's): | ||||
Basic (in shares) | 124,241 | 124,384 | 124,033 | 124,191 |
Diluted (in shares) | 125,874 | 126,141 | 125,813 | 125,862 |
Dividends declared per share of common stock (in dollars per share) | $ 0.175 | $ 0.15 | $ 0.35 | $ 0.30 |
Service and membership related | ||||
Revenues: | ||||
Total Revenues | $ 148 | $ 119 | $ 300 | $ 247 |
Operating costs and expenses: | ||||
Cost of sales | 67 | 33 | 132 | 68 |
Vacation ownership products | ||||
Revenues: | ||||
Total Revenues | 121 | 118 | 244 | 223 |
Operating costs and expenses: | ||||
Cost of sales | 22 | 28 | 61 | 54 |
Rental and ancillary services | ||||
Revenues: | ||||
Total Revenues | 104 | 97 | 222 | 204 |
Operating costs and expenses: | ||||
Cost of sales | 70 | 78 | 142 | 155 |
Consumer financing | ||||
Revenues: | ||||
Total Revenues | 23 | 22 | 47 | 43 |
Operating costs and expenses: | ||||
Cost of sales | 7 | 7 | 15 | 14 |
Cost reimbursements | ||||
Revenues: | ||||
Total Revenues | 65 | 85 | 131 | 168 |
Operating costs and expenses: | ||||
Cost of sales | $ 65 | $ 85 | $ 131 | $ 168 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 28 | $ 26 | $ 71 | $ 71 |
Other comprehensive income, net of tax: | ||||
Foreign currency translation adjustments, net of tax | (12) | 9 | (4) | 15 |
Total comprehensive income, net of tax | 16 | 35 | 67 | 86 |
Less: Net income attributable to noncontrolling interests | (1) | (2) | (1) | |
Less: Other comprehensive income attributable to noncontrolling interests | 2 | (1) | 1 | (2) |
Total comprehensive income attributable to noncontrolling interests | 1 | (1) | (1) | (3) |
Comprehensive income attributable to common stockholders | $ 17 | $ 34 | $ 66 | $ 83 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
ASSETS | ||
Cash and cash equivalents | $ 143 | $ 122 |
Restricted cash and cash equivalents (including $17 and $19 in variable interest entities, "VIEs," respectively) | 215 | 227 |
Accounts receivable, net of allowance for doubtful accounts of $13 for both periods | 115 | 121 |
Vacation ownership mortgages receivable, net of allowance of $5 and $4, respectively (including a net $56 and $61 in VIEs, respectively) | 77 | 79 |
Vacation ownership inventory | 486 | 496 |
Prepaid income taxes | 36 | 58 |
Prepaid expenses | 91 | 64 |
Other current assets (including $3 and $4 of interest receivables in VIEs, respectively) | 30 | 33 |
Total current assets | 1,193 | 1,200 |
Restricted cash and cash equivalents (including $1 in variable interest entities, "VIEs" for both periods) | 4 | 3 |
Vacation ownership mortgages receivable, net of allowance of $69 and $51, respectively (including a net $423 and $498 in VIEs, respectively) | 657 | 658 |
Vacation ownership inventory | 72 | 60 |
Investments in unconsolidated entities | 54 | 55 |
Property and equipment, net | 606 | 616 |
Goodwill | 564 | 564 |
Intangible assets, net | 428 | 440 |
Other non-current assets | 83 | 91 |
TOTAL ASSETS | 3,661 | 3,687 |
LIABILITIES: | ||
Accounts payable, trade | 46 | 46 |
Current portion of securitized debt from VIEs | 128 | 146 |
Deferred revenue | 177 | 162 |
Accrued compensation and benefits | 64 | 72 |
Accrued expenses and other current liabilities (including a net $1 of interest payables in VIEs for both periods) | 256 | 215 |
Total current liabilities | 671 | 641 |
Long-term debt | 548 | 562 |
Securitized debt from VIEs | 361 | 429 |
Income taxes payable, non-current | 2 | 11 |
Other long-term liabilities | 118 | 118 |
Deferred revenue | 82 | 76 |
Deferred income taxes | 142 | 133 |
Total liabilities | 1,924 | 1,970 |
Redeemable noncontrolling interest | 1 | 1 |
Commitments and contingencies | ||
EQUITY: | ||
Preferred stock—authorized 25,000,000 shares, of which 100,000 shares are designated Series A Junior Participating Preferred Stock; $0.01 par value; none issued and outstanding | ||
Common stock—authorized 300,000,000 shares; $0.01 par value; issued 134,403,465 and 134,053,132 shares, respectively | 1 | 1 |
Treasury stock— 9,987,627 shares at cost each period | (164) | (164) |
Additional paid-in capital | 1,281 | 1,278 |
Retained earnings | 615 | 597 |
Accumulated other comprehensive loss | (36) | (33) |
Total ILG stockholders' equity | 1,697 | 1,679 |
Noncontrolling interests | 39 | 37 |
Total equity | 1,736 | 1,716 |
TOTAL LIABILITIES AND EQUITY | $ 3,661 | $ 3,687 |
CONDENSED CONSOLIDATED BALANCE5
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Restricted cash and cash equivalents (including $17 and $19 in variable interest entities, "VIEs," respectively) | $ 215 | $ 227 |
Accounts receivable, allowance | 13 | 13 |
Vacation ownership mortgages receivable, allowance | 5 | 4 |
Vacation ownership mortgages receivable, net of allowance of $5 and $4, respectively (including a net $56 and $61 in VIEs, respectively) | 77 | 79 |
Other current assets (including $3 and $4 of interest receivables in VIEs, respectively) | 30 | 33 |
Restricted cash and cash equivalents (including $1 in variable interest entities, "VIEs" for both periods) | 4 | 3 |
Vacation ownership mortgages receivable, allowance | 69 | 51 |
Vacation ownership mortgages receivable, net of allowance of $69 and $51, respectively (including a net $423 and $498 in VIEs, respectively) | 657 | 658 |
Accrued expenses and other current liabilities (including a net $1 of interest payables in VIEs for both periods) | $ 256 | $ 215 |
Preferred stock, authorized shares | 25,000,000 | 25,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, authorized shares | 300,000,000 | 300,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, issued shares | 134,403,465 | 134,053,132 |
Treasury stock, shares | 9,987,627 | 9,987,627 |
Series A Junior Participating Preferred Stock | ||
Preferred stock, authorized shares | 100,000 | 100,000 |
VIEs | ||
Restricted cash and cash equivalents (including $17 and $19 in variable interest entities, "VIEs," respectively) | $ 17 | $ 19 |
Vacation ownership mortgages receivable, net of allowance of $5 and $4, respectively (including a net $56 and $61 in VIEs, respectively) | 56 | 61 |
Other current assets (including $3 and $4 of interest receivables in VIEs, respectively) | 3 | 4 |
Restricted cash and cash equivalents (including $1 in variable interest entities, "VIEs" for both periods) | 1 | 1 |
Vacation ownership mortgages receivable, net of allowance of $69 and $51, respectively (including a net $423 and $498 in VIEs, respectively) | 423 | 498 |
Accrued expenses and other current liabilities (including a net $1 of interest payables in VIEs for both periods) | $ 1 | $ 1 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - 6 months ended Jun. 30, 2018 - USD ($) $ in Millions | Noncontrolling Interest [Member] | Parent [Member] | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total |
Balance at Dec. 31, 2017 | $ 37 | $ 1,679 | $ 1 | $ (164) | $ 1,278 | $ 597 | $ (33) | $ 1,716 |
Balance (in shares) at Dec. 31, 2017 | 134,053,132 | 9,987,627 | 124,100,000 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | 2 | 69 | 69 | $ 71 | ||||
Cumulative adjustment related to change in accounting principle | (7) | (7) | (7) | |||||
Other comprehensive income, net of tax | (1) | (3) | (3) | (4) | ||||
Non-cash compensation expense | 11 | 11 | 11 | |||||
Issuance of common stock upon vesting of RSUs, net of withholding taxes | (9) | (9) | (9) | |||||
Issuance of common stock upon vesting of RSUs, net of withholding taxes (in shares) | 513,574 | |||||||
Issuance of restricted stock for converted shares in connection with the Vistana acquisition (in shares) | (163,976) | |||||||
Dividends declared on common stock | (43) | 1 | (44) | (43) | ||||
Dividends declared on common stock (in shares) | 735 | |||||||
Other | 1 | 1 | ||||||
Balance at Jun. 30, 2018 | $ 39 | $ 1,697 | $ 1 | $ (164) | $ 1,281 | $ 615 | $ (36) | $ 1,736 |
Balance (in shares) at Jun. 30, 2018 | 134,403,465 | 9,987,627 | 124,400,000 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 71 | $ 71 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization expense of intangibles | 10 | 10 |
Amortization of debt issuance costs | 2 | 2 |
Depreciation expense | 31 | 30 |
Bad debt expense | 4 | 1 |
Allowance for losses on originated loans | 23 | 15 |
Allowance for impairment on acquired loans | 3 | 5 |
Accretion of mortgages receivable | 2 | 3 |
Non-cash compensation expense | 11 | 12 |
Deferred income taxes | 10 | 13 |
Equity in earnings from unconsolidated entities | (1) | (3) |
Distributions from investments in unconsolidated entities | 2 | |
Gain on bargain purchase of Vistana acquisition | (2) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (41) | 4 |
Vacation ownership mortgages receivable (originations) | (171) | (163) |
Vacation ownership mortgages receivable (collections) | 139 | 140 |
Vacation ownership inventory (additions) | (39) | (120) |
Vacation ownership inventory (disposals) | 53 | 49 |
Vacation ownership operating related insurance proceeds | 19 | |
Vacation ownership consolidated HOAs related insurance proceeds | 23 | |
Prepaid expenses and other current assets | (26) | (20) |
Prepaid income taxes and income taxes payable | 11 | 9 |
Accounts payable and other current liabilities | 27 | (1) |
Deferred income | 21 | 36 |
Other, net | (9) | |
Net cash and restricted cash provided by operating activities | 184 | 82 |
Cash flows from investing activities: | ||
Capital expenditures | (22) | (48) |
Purchase of trading investments | 4 | |
Net cash used in investing activities | (18) | (48) |
Cash flows from financing activities: | ||
Borrowings (payments) on revolving credit facility, net | (15) | 71 |
Payments on securitized debt | (86) | (66) |
Purchases of treasury stock | (3) | |
Dividend payments to stockholders | (43) | (37) |
Withholding taxes on vesting of restricted stock units and restricted stock | (9) | (5) |
Net cash and restricted cash used in financing activities | (153) | (40) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (3) | 3 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 10 | (3) |
Cash, cash equivalents and restricted cash at beginning of period | 352 | 244 |
Cash, cash equivalents and restricted cash at end of period | 362 | 241 |
Supplemental disclosures of cash flow information: | ||
Interest paid, net of amounts capitalized | 21 | 17 |
Income taxes paid, net of refunds | $ 12 | $ 16 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2018 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
ORGANIZATION AND BASIS OF PRESENTATION | NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION Organization ILG, Inc. is a leading provider of professionally delivered vacation experiences and the exclusive global licensee for the Hyatt ® , Sheraton ® and Westin ® brands in vacation ownership. We operate in the following two segments: Vacation Ownership (VO) and Exchange and Rental. Our VO segment engages in sales, marketing, financing and development of vacation ownership interests (VOIs); the management of vacation ownership resorts; and related services to owners and associations. The VO operating segment consists of the VOI sales and financing business of Vistana Signature Experiences (Vistana) and Hyatt Vacation Ownership (HVO) as well as the management related lines of business of Vistana, HVO, Vacation Resorts International (VRI), Trading Places International (TPI), VRI Europe and certain homeowners’ associations (HOAs) under our control. Our Exchange and Rental segment offers access to vacation accommodations and other travel-related transactions and services to members of our programs and other leisure travelers, by providing vacation exchange services and vacation rentals, working with resort developers, HOAs and operating vacation rental properties. The Exchange and Rental operating segment consists of Interval International (referred to as Interval), the Vistana Signature Network, the Hyatt Residence Club, the TPI exchange business, and Aqua-Aston Holdings, Inc. (Aqua-Aston). ILG was incorporated as a Delaware corporation in May 2008 under the name Interval Leisure Group, Inc. and commenced trading on The NASDAQ Stock Market in August 2008 under the symbol "IILG" and now trades under “ILG.” On May 11, 2016, we acquired the vacation ownership business of Starwood Hotels & Resorts Worldwide, LLC (Starwood), now known as Vistana. In connection with the acquisition, Vistana entered into an exclusive, 80 - year global license agreement with Starwood for the use of the Sheraton and Westin brands in vacation ownership. The global license agreement may also be extended for two 30 – year terms, subject to meeting certain sales performance tests. Also, Vistana has the non-exclusive license for the existing St. Regis ® and The Luxury Collection ® vacation ownership properties and an affiliation with the Starwood Preferred Guest program. On April 30, 2018, we entered into an Agreement and Plan of Merger (“Merger Agreement”), with Marriott Vacations Worldwide Corporation (“Marriott Vacations”), Ignite Holdco, Inc. and Ignite Holdco Subsidiary, Inc. (two of our wholly owned subsidiaries), and Volt Merger Sub, Inc. and Volt Merger Sub, LLC (two wholly owned subsidiaries of Marriott Vacations), pursuant to which Marriott Vacations will acquire ILG in a series of transactions (the “Combination Transactions”) and ILG stockholders will receive $14.75 in cash (without interest) and 0.165 shares of common stock of Marriott Vacations for each share of ILG common stock held by such stockholder. This will result in ILG stockholders owning approximately 43% of Marriott Vacations following the merger transactions. See Note 23 for further discussion. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the rules and regulations of the Securities and Exchange Commission. Accordingly, these financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of ILG’s management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Interim results are not indicative of the results that may be expected for a full year. Individual amounts presented by quarter in our interim financial statements may not add to the year-to-date amount due to rounding and, in the case of per share amounts, differences in the average common shares outstanding during each period. Additionally, the prior period condensed consolidated financial statements presented in this report have been restated as part of our adoption of ASC 606. See Note 3 for additional information. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of ILG, our wholly‑owned subsidiaries, and companies in which we have a controlling interest, including variable interest entities (“VIEs”) where we are the primary beneficiary in accordance with consolidation guidance. All significant intercompany balances and transactions have been eliminated in these condensed consolidated financial statements. References in these financial statements to net income attributable to common stockholders and ILG stockholders’ equity do not include noncontrolling interests, which represent the outside ownership of our consolidated non‑wholly owned entities and are reported separately. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2017 Annual Report on Form 10‑K. Seasonality Revenue at ILG is influenced by the seasonal nature of travel. Within our VO segment, our sales and financing business experiences a modest impact from seasonality, with higher sales volumes during the traditional vacation periods. Our vacation ownership management businesses by and large do not experience significant seasonality, with the exception of our resort operations revenue which tends to be higher in the first quarter. Within our Exchange and Rental segment, we recognize exchange and Getaway revenue based on confirmation of the vacation, with the first quarter generally experiencing higher revenue and the fourth quarter generally experiencing lower revenue. Remaining rental revenue is recognized based on occupancy. For the vacation rental business, the first and third quarters generally generate higher revenue as a result of increased leisure travel to our Hawaii‑based managed properties during these periods, and the second and fourth quarters generally generate lower revenue. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2018 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2—SIGNIFICANT ACCOUNTING POLICIES Our significant accounting policies were described in Note 2 accompanying our audited consolidated financial statements included in our 2017 Annual Report on Form 10-K. There have been no significant changes in our significant accounting policies for the six months ended June 30, 2018 other than changes related to the adoption of ASU 2014‑09, “Revenue from Contracts with Customers (Topic 606) (“ASU 2014‑09”). See Note 3 for further details and related disclosures. Accounting Estimates ILG’s management is required to make certain estimates and assumptions during the preparation of its consolidated financial statements in accordance with GAAP. These estimates and assumptions impact the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net earnings during any period. Actual results could differ from those estimates. Significant estimates underlying the accompanying condensed consolidated financial statements include: · the recovery of long‑lived assets as well as goodwill and other intangible assets; · purchase price allocations of business combinations; · allowance for loan losses for vacation ownership mortgages receivable; · accounting for acquired vacation ownership mortgages receivable; · cost of vacation ownership product sales related estimates included in our relative sales value calculation, such as future projected sales revenue and expected project costs to complete; · the accounting for income taxes including deferred income taxes and related valuation allowances; · the determination of deferred membership revenue and deferred membership costs; and · the determination of stock‑based compensation. In the opinion of ILG’s management, the assumptions underlying the condensed consolidated financial statements of ILG and its subsidiaries are reasonable. Earnings per Share Basic earnings per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Treasury stock is excluded from the weighted average number of shares of common stock outstanding. Diluted earnings per share attributable to common stockholders is computed based on the weighted average number of shares of common stock and dilutive securities outstanding during the period. Dilutive securities are common stock equivalents that are freely exercisable into common stock at less than market prices or otherwise dilute earnings if converted. The net effect of common stock equivalents is based on the incremental common stock that would be issued upon the assumed exercise of common stock options and the vesting of RSUs and restricted stock using the treasury stock method. Common stock equivalents are not included in diluted earnings per share when their inclusion is antidilutive. The computations of diluted earnings per share available to common stockholders exclude 0.1 million RSUs and restricted shares for each of the three months ended June 30, 2018 and 2017 and 0.3 million and 0.4 million RSUs and restricted shares for the six months ended June 30, 2018 and 2017, respectively, as the effect of their inclusion would have been antidilutive to earnings per share. The computation of weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share is as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Basic weighted average shares of common stock outstanding 124,241 124,384 124,033 124,191 Net effect of common stock equivalents assumed to be vested related to RSUs and restricted stock 1,633 1,757 1,780 1,671 Diluted weighted average shares of common stock outstanding 125,874 126,141 125,813 125,862 Earnings per share for the three and six months ended June 30, 2018 and 2017 are as follows (in thousands, except per share data): Three Months Ended Six Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Net income attributable to common stockholders $ 26,574 $ 25,840 $ 69,483 $ 69,832 Weighted average number of shares of common stock outstanding: Basic 124,241 124,384 124,033 124,191 Diluted 125,874 126,141 125,813 125,862 Earnings per share attributable to common stockholders: Basic $ $ $ $ Diluted $ $ $ $ Recent Accounting Pronouncements: General With the exception of those discussed below, there are no recent accounting pronouncements or changes in accounting pronouncements since the recent accounting pronouncements described in our 2017 Annual Report on Form 10-K that are of significance, or potential significance, to ILG based on our current operations. The following summary of recent accounting pronouncements is not intended to be an exhaustive description of the respective pronouncement, and may include certain accounting standards also disclosed in our 2017 Annual Report on Form 10-K which have not yet been adopted. In July 2018, the FASB issued ASU 2018-09, “Codification Improvements” (“ASU 2018-09”). The amendments in this update affect a wide variety of topics in the codification. To list a few, there are amendments to “Compensation – Stock Compensation – Income Taxes (Subtopic 718-740)”, “Business Combinations – Income Taxes (Subtopic 805-740)”, “Fair Value Measurement – Overall (Subtopic 820-10)”, etc. The transition and effective date guidance is based on the facts and circumstances of each amendment. Some of the amendments in this ASU do not require transition guidance and will be effective upon issuance of this update. However, many of the amendments in this ASU do have transition guidance with effective dates for annual periods beginning after December 15, 2018. We are currently evaluating the methods and impact of adopting this new standard on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718)” (“ASU 2018-07”) to align the measurement and classification guidance for share-based payments to nonemployees with the guidance for share-based payments to employees, with certain exceptions. Under the guidance, the measurement of equity-classified nonemployee awards will be fixed at the grant date, which may lower their cost and reduce volatility in the income statement. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We do not anticipate the adoption of this guidance will have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016 02, “Leases (Topic 842)” (“ASU 2016 02”). ASU 2016 02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The new guidance will be effective for public entities for annual periods beginning after December 15, 2018 and interim periods therein. Originally, entities were required to adopt ASU 2016-02 using a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application. However, in July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements” (“ASU 2018-11”), which now allows entities the option of recognizing the cumulative effect of applying the new standard as an adjustment to the opening balance of retained earnings in the year of adoption while continuing to present all periods under previous lease accounting guidance. In July 2018, the FASB also issued ASU 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”), which clarifies how to apply certain aspects of ASU 2016-02. We expect to adopt ASU 2016-02, ASU 2018-10 and ASU 2018-11 commencing in fiscal year 2019 and are currently in the process of evaluating and analyzing our leases pursuant to this guidance. While we have not yet finalized a quantified impact of adopting this new standard, we do expect our balance sheet presentation to be impacted due to the recognition of right-of-use assets and lease liabilities for operating leases. Adopted Accounting Pronouncements: General In March 2018, the FASB issued ASU 2018-05, “Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118”. The guidance amends SEC paragraphs in Accounting Standards Codification (ASC or Codification) 740, Income Taxes, to reflect SEC Staff Accounting Bulletin (SAB) 118, which provides guidance for companies that are not able to complete their accounting for the income tax effects of the Tax Cuts and Jobs Act (the “Tax Reform Act”) in the period of enactment. For further discussion please see Note 19. This ASU was effective immediately and the adoption of this guidance did not have a material impact on our consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting” to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under this new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The guidance is effective prospectively for annual periods beginning on or after December 15, 2017. The adoption of this guidance did not have a material impact on our consolidated financial statements. In February 2017, the FASB issued ASU 2017-05, “Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets”. The FASB issued this ASU to clarify the scope of subtopic 610-20, which was issued in May 2014 as part of Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The effective date and transition requirements of these amendments are the same as the effective date and transition requirements of ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)". We plan to adopt this standard, as well as other clarifications and technical guidance issued by the FASB related to this new revenue standard, on January 1, 2018. The adoption of this guidance did not have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805),” to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses by clarifying the definition of a business. The definition of a business affects many areas of accounting including acquisition, disposals, goodwill and consolidation. This amendment covers Phase 1 of a three phase project. The update is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments in this update should be applied prospectively on or after the effective date. The adoption of this guidance did not have a material impact on our consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230).” This ASU requires that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The update is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The adoption of this guidance did not have a material impact on our consolidated financial statements. The effect of the adoption of ASU 2016-18 on our consolidated statements of cash flows was to include restricted cash balances in the beginning and end of period balances of cash and cash equivalents and restricted cash. The change in restricted cash was previously disclosed in operating activities and financing activities in the consolidated statements of cash flows. In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (“ASU 2016-16”) as part of the Board’s initiative to reduce complexity in accounting standards. This ASU eliminates an exception in ASC 740, which prohibits the immediate recognition of income tax consequences of intra-entity asset transfers other than inventory. Under ASU 2016-16, entities will be required to recognize the immediate current and deferred income tax effects of intra-entity asset transfers, which often involve a subsidiary of a company transferring intellectual property to another subsidiary. For public entities, the new guidance is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. This ASU’s amendments should be applied on a modified retrospective basis, recognizing the effects in retained earnings as of the beginning of the year of adoption. In accordance with this ASU, during the first quarter of 2018 we recorded a cumulative adjustment of approximately $7 million to opening retained earnings. The adoption of this guidance did not have a material impact on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230).” This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under existing guidance. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The amendments should be applied using a retrospective transition method to each period presented. The adoption of this guidance did not have a material impact on our consolidated financial statements. In January 2016, the FASB issued ASU 2016‑01, “Financial Instruments—Overall (Subtopic 825‑10),” which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Although the ASU retains many current requirements, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. The amendments in this update are effective for fiscal years beginning after December 31, 2017, including interim periods within those fiscal years. The adoption of this guidance did not have a material impact on our consolidated financial statements. Adopted Accounting Pronouncements: Revenue Recognition In May 2014, the FASB issued ASU 2014‑09 (otherwise known as ASC 606). The FASB and the International Accounting Standards Board (“IASB”) initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS that would: (i) remove inconsistencies and weaknesses in revenue requirements; (ii) provide a more robust framework for addressing revenue issues; (iii) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; (iv) provide more useful information to users of financial statements through improved disclosure requirements; and (v) simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. To meet those objectives, the FASB amended the FASB Accounting Standards Codification (“Codification”) and created a new Topic 606, Revenue from Contracts with Customers. The core principle of the guidance in ASU 2014‑09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in this ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry specific guidance throughout the Industry Topics of the Codification. Additionally, ASU 2014‑09 supersedes some cost guidance included in Subtopic 605‑35, Revenue Recognition—Construction‑Type and Production‑Type Contracts. The ASU is effective for fiscal years beginning after December 15, 2017 (and interim periods within that period). In periods subsequent to the initial issuance of this ASU, the FASB has issued additional ASU’s clarifying items within Topic 606, as follows: · In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date," which defers by one year the effective date of ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. · In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”). The amendments in ASU 2016-08 serve to clarify the implementation guidance on principal vs. agent considerations. · In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”). The purpose of ASU 2016-10 is to clarify two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance (while retaining the related principles for those areas). · In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2016-12”). The purpose of ASU 2016-12 is to address certain issues identified to improve Topic 606 by enhancing guidance on assessing collectability, presentation of sales taxes and other similar taxes collected from customers, noncash consideration and completed contracts and contract modifications at transition. · In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,” which amends certain aspects of the Board’s new revenue standard, ASU 2014-09. This ASU addresses thirteen specific issues pertaining to Topic 606 , Revenue from Contracts with Customers. We have adopted this standard, as well as other clarifications and technical guidance issued by the FASB related to this new revenue standard, as of January 1, 2018, using the retrospective adoption method. See Note 3 for further details. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 6 Months Ended |
Jun. 30, 2018 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | NOTE 3—REVENUE RECOGNITION The core principle of the guidance in ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. We recognize all revenue related to contracts with customers in accordance with ASC 606. We elected to apply ASC 606, and all related ASUs, using the retrospective adoption method. Under this method, we revised our consolidated financial statements for the years ended December 31, 2017, 2016 and 2015, and applicable interim periods within those years, as if ASC 606 had been effective for those periods. The major areas of impact in applying ASC 606 include the following: 1. earlier recognition of certain VOI sales where the transaction price was deemed collectable yet we were deferring recognition due to specific buyers’ commitment requirements under legacy GAAP (also known as buyers’ commitment deferral or BCD); 2. gross versus net presentation changes, which did not impact profitability, such as incentives provided to customers on VOI sales (e.g., SPG points), management fees and cost reimbursements attributable to unsold VOI inventory, and administrative fees for VOI sales in certain cases; 3. classification of certain trial vacation package sales which also did not impact profitability; 4. capitalization of certain incremental costs to obtain a contract related to trial vacation package sales; 5. the instances in which we can apply the percentage of completion revenue recognition method when construction of a vacation ownership project is not complete; and 6. classification of certain payments to developers in our exchange business who are functioning as agents in the member acquisition process. The tables below summarize the adjustments that were made to our condensed consolidated statement of income for the three and six months ended June 30, 2017 and our condensed consolidated balance sheet as of December 31, 2017, on a line item basis (USD in millions, except per share data): (As reported) (Restated) Three Months Ended June 30, 2017 Reclassification Adjustments (1) BCD Percentage of Completion Related Other (2) Three Months Ended June 30, 2017 Sales of vacation ownership products, net 123 (2) 1 (4) — 118 Cost reimbursements 89 (4) — — — 85 Total revenues 450 (6) 1 (4) — 441 Cost of service and membership related sales 32 1 — — — 33 Cost of vacation ownership products sales 29 — — (1) — 28 Cost reimbursements 89 (4) — — — 85 Selling and marketing expense 80 (3) — — (1) 76 Total operating costs and expenses 404 (6) — (1) (1) 396 Equity in earnings from unconsolidated entities 2 — (1) — — 1 Earnings before income taxes and noncontrolling interest 41 — — (3) 1 39 Income tax benefit (provision) (14) — — 1 — (13) Net income attributable to common stockholders 27 — — (2) 1 26 Earnings per share attributable to common stockholders: Basic 0.22 0.21 Diluted 0.22 0.20 (As reported) (Restated) Six Months Ended June 30, 2017 Reclassification Adjustments (1) BCD Percentage of Completion Related Other (2) Six Months Ended June 30, 2017 Service and membership related 246 1 — — — 247 Sales of vacation ownership products, net 233 (3) 2 (9) — 223 Cost reimbursements 176 (8) — — — 168 Total revenues 902 (10) 2 (9) — 885 Cost of service and membership related sales 64 4 — — — 68 Cost of vacation ownership products sales 56 — — (2) — 54 Cost of sales of rental and ancillary services 156 (1) — — — 155 Cost reimbursements 176 (8) — — — 168 Selling and marketing expense 152 (5) — — (2) 145 Total operating costs and expenses 791 (10) — (2) (2) 777 Equity in earnings from unconsolidated entities 3 — — — — 3 Earnings before income taxes and noncontrolling interest 112 — 2 (7) 2 109 Income tax benefit (provision) (39) — (1) 2 — (38) Net income attributable to common stockholders 72 — 1 (5) 2 70 Earnings per share attributable to common stockholders: Basic 0.58 0.56 Diluted 0.57 0.55 (1) Includes impact of item numbers 2, 3 and 6 described further above. (2) Includes impact of item number 4 described above, and other items of lesser significance. (As reported) (Restated) December 31, 2017 BCD Other (3) December 31, 2017 Vacation ownership mortgages receivable, net (current) 78 1 — 79 Vacation ownership inventory 499 (3) — 496 Prepaid expenses 62 (2) 4 64 Other current assets 32 — 1 33 Total current assets 1,199 (4) 5 1,200 Vacation ownership mortgages receivable, net (noncurrent) 644 14 — 658 Investment in unconsolidated entities 54 1 — 55 TOTAL ASSETS 3,671 11 5 3,687 Accrued expenses and other current liabilities 217 (2) — 215 Total current liabilities 643 (2) — 641 Deferred income taxes 128 4 1 133 TOTAL LIABILITIES 1,967 2 1 1,970 Retained earnings 584 9 4 597 Total shareholders’ equity 1,666 9 4 1,679 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 3,671 11 5 3,687 (3) Includes impact on condensed consolidated balance sheet for all items described above, except BCD. Performance obligations and accounting policies Vacation Ownership Revenue from the VO segment is derived principally from sales of VOIs and related fees earned by Vistana and HVO, interest income earned for financing these sales, maintenance fees, fees for vacation ownership resort and homeowners’ association management services, and rental and ancillary revenues, including from hotels owned by Vistana and HVO. Sales of VOIs We enter into contracts for the purchase of VOIs which include (i) the sale of the VOI, (ii) membership in the Vistana Signature Network or Hyatt Residence Club, and (iii) potential incentives for purchasing the VOI. See the Membership fee revenue section below for the revenue recognition treatment of the club membership fees. Consolidated VOI sales are recognized and included in revenues once control of the VOI has transferred and the purchaser secures the benefits of ownership, which occurs after a binding sales contract has been executed, collectability is reasonably assured, the rescission period has expired, and construction is complete. The agreement for sale generally provides for a down payment and a note secured by a mortgage payable in monthly installments, including interest, over a typical term ranging from 5 -15 years. Customer deposits relating to contracts cancelled after the applicable rescission period are forfeited and recorded in revenue at the time of forfeiture. The provision for loan losses is recorded as an adjustment to sales of VOIs in the consolidated income statements rather than as an adjustment to bad debt expense, as the default on the VOI is deemed to be a right of return. We record an estimate of loan losses at the time of the VOI sale and recognize revenue net of amounts deemed uncollectible. We at times offer several types of sales incentives, including SPG and World of Hyatt points, a bonus week, and down payment credits to buyers. Revenue from sales incentives is recognized when the incentive is provided to the owner of the VOI. If the owner finances the VOI, the incentive may not be provided until six payments have been made. For our primary incentives, SPG and World of Hyatt points, we act as an agent and therefore, recognize revenue for these incentives on a net basis. We routinely sell trial vacation packages where we provide our customers with a stay at a resort and offer a discount on a future VOI sale. The future discount is accounted for as a material right, which is recognized when the purchaser buys a VOI or the discount expires, both of which occur at the time of stay. Our customers have the option to pay upfront for these packages or finance these packages through us. In the case of unused trial vacation packages, we recognize revenue upon forfeiture as we do not expect a significant amount of breakage to occur. Management fee and other revenue Management fees and other revenue in this segment consist of annual maintenance fees, service fees and base management fees, as applicable. Annual maintenance fees are amounts paid by VOI owners for maintaining and operating the respective properties, which includes management services, and are recognized on a straight ‑ line basis over the respective annual maintenance period. Our day-to-day management services include activities such as housekeeping services, operation of a reservation system, maintenance, and certain accounting and administrative services. We receive compensation for such management services, which is generally based on either a percentage of the budgeted cost to operate such resorts or a fixed fee arrangement, on a monthly basis as the services are performed. We generally recognize management fee revenue on a gross basis except for management fees associated with VOIs which remain in our inventory. Resort operations revenue Our resort operations performance obligations are largely comprised of transient rental income at our vacation ownership and owned-hotel properties. We may receive payment for these services upfront or at the time of the stay. We record rental revenue when occupancy has occurred or, in the case of unused prepaid rental deposits, upon forfeiture. Other ancillary services revenue consists of goods and services that are sold or provided by us at restaurants, golf courses and other retail and service outlets located at developed resorts. We receive payment and recognize ancillary services revenue when goods have been provided and/or services have been rendered. Exchange and Rental Membership fee revenue Revenue from membership fees from our Exchange and Rental segment is deferred and recognized over the terms of the applicable memberships, typically ranging from one to five years, on a straight ‑ line basis. When multiple member benefits and services are provided over the term of the membership, revenue is recognized for each separable deliverable ratably over the membership period, as applicable. Membership fees are paid up front at the beginning of the applicable membership period. Generally, memberships are cancelable and refundable on a pro ‑ rata basis, with the exception of Interval Network’s Platinum tier which is non ‑ refundable. Transaction revenue Revenue from exchanges, Getaway transactions and other fee-based services provided to members of our networks is recognized when confirmation of the transaction is provided and services have been rendered, as the earnings process is complete. Reservation servicing fees are generally received on a monthly basis and revenue is recognized when the service is performed or on a straight ‑ line basis over the applicable service period. Club rental revenue Club rental revenue represents rentals generated by the Vistana Signature Network and Hyatt Residence Club mainly to monetize inventory at their vacation ownership resorts to provide exchanges for our members through hotel loyalty programs. We recognize revenue for such rentals when occupancy has occurred. Rental management revenue Revenue from our vacation rental management businesses is comprised of base management fees which are typically either (i) fixed amounts, (ii) amounts based on a percentage of adjusted gross lodging revenue, or (iii) various revenue sharing arrangements with condominium owners based on stated formulas. We generally receive payment from the rental management services on a monthly basis as the services are performed. Base management fees are recognized when earned in accordance with the terms of the contract (i.e., over time as we perform the management services). Incentive management fees for certain hotels and condominium resorts are generally a percentage of either operating profits or improvement in operating profits. We recognize incentive management fees as earned throughout the incentive period based on actual results which are trued‑up at the culmination of the incentive period. Determining the amount of the transaction price related to the incentive management fees may require us to estimate the variable consideration related to the incentive fees based on generated budgets and forecasts until such time as the actual amounts are known (typically at end of calendar year). Such variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal of the related revenue will not occur. Service fee revenue is based on the services provided to owners including reservations, sales and marketing, property accounting and information technology services, either internally or through third party providers. Service fee revenue is recognized when the service is provided. We are considered an agent for these services, and will therefore recognize revenue from the service fees on a net basis per the terms of the respective agreement. General Cost reimbursement revenue Represents the compensation and other employee-related costs directly associated with managing properties that are included in both revenue and cost of sales and that are passed on to the property owners or homeowner associations without mark-up. Cost reimbursement revenue of the Vacation Ownership segment also includes reimbursement of sales and marketing expenses, without mark-up, pursuant to contractual arrangements. Such cost reimbursements are recognized gross when the related services are performed. Deferred revenue in a business combination When we acquire a business which records deferred revenue on its historical financial statements, we are required to re ‑ measure that deferred revenue as of the acquisition date pursuant to rules related to accounting for business combinations, as described further below. The post ‑ acquisition impact of that remeasurement results in recognizing revenue which solely comprises the cost of the associated legal performance obligation we assumed as part of the acquisition, plus a normal profit margin. This purchase accounting treatment typically results in lower amounts of revenue recognized in a reporting period following the acquisition than would have otherwise been recognized on a historical basis. Contracts with multiple performance obligations When we enter into an arrangement which contains multiple promises, we are required to determine whether the promises in these arrangements should be treated as separate performance obligations for revenue recognition purposes and, if so, how the transaction price should be allocated to each performance obligation. We analyze our contracts upon execution to determine the appropriate revenue recognition accounting treatment. Our determination of whether to recognize revenue for separate performance obligation will depend on the terms and specifics of our products and arrangements as well as the nature of changes to our existing products and services, if any. The transaction price is allocated to such distinct performance obligations in accordance with their standalone selling price. As we have observable standalone sales of each of our performance obligations, we utilize the observable standalone selling price for purposes of allocation and we do not exercise significant judgement in determining these standalone selling prices. The allocation of the total transaction price to the various performance obligations does not change the total revenue recognized from a transaction or arrangement, but may impact the timing of revenue recognition. Sales type taxes All taxable revenue transactions are presented on a net ‑ of ‑ tax basis. Costs to Obtain or Fulfill a Contract We capitalize the incremental costs of obtaining a contract when those costs would not have been incurred if the contract had not been obtained, in accordance with ASC Subtopic 340-40, Other Assets and Deferred Costs – Revenue from Contracts with Customers (“ASC 340-40”). Direct costs of acquiring members (primarily commissions) are deferred and amortized on a straight ‑ line basis over the terms of the applicable membership period. We also capitalize commissions related to the sale of prepaid vacation packages. These commissions are expensed when the purchaser stays at the property. If a contract is cancelled, we charge the unrecoverable direct selling costs to expense at cancellation. The ending asset balance related to costs to obtain a contract as of June 30, 2018 and December 31, 2017 were $21 million and $19 million, respectively, and total amortization was $6 million for the six months ended June 30, 2018. There were no associated impairment losses. We apply a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less. We capitalize certain costs incurred to fulfill our contracts with customers, which primarily consists of membership fulfillment and member resort directory costs for active members. Membership fulfillment costs are amortized over the applicable membership term, and costs associated with directories are amortized over the period of benefit. The ending asset balance for fulfillment costs as of June 30, 2018 and December 31, 2017 were $4 million and $5 million, respectively, and total amortization was $1 million for the six months ended June 30, 2018. There were no associated impairment losses. Disaggregation of revenue The following table presents our condensed consolidated income statement revenues disaggregated by type and reportable segments for the three and six months ended June 30, 2018 and 2017 (in millions). For the Three Months Ended June 30, 2018 For the Three Months Ended June 30, 2017 Service and membership related Sales of vacation ownership products Rental and ancillary services Consumer financing Cost reimbursements Total Service and membership related Sales of vacation ownership products Rental and ancillary services Consumer financing Cost reimbursements Total Vacation Ownership Resort operations revenue $ — $ — $ 58 $ — $ — $ 58 $ — $ — $ 53 $ — $ — $ 53 Management fee revenue 61 — — — — 61 33 — — — — 33 Sales of vacation ownership products, net — 121 — — — 121 — 118 — — — 118 Consumer financing revenue — — — 23 — 23 — — — 22 — 22 Cost reimbursement revenue — — — — 45 45 — — — — 59 59 Total Vacation Ownership revenue 61 121 58 23 45 308 33 118 53 22 59 285 Exchange and Rental Transaction revenue 34 — 16 — — 50 34 — 15 — — 49 Membership fee revenue 35 — — — — 35 36 — — — — 36 Ancillary member revenue 2 — — — — 2 2 — — — — 2 Total member revenue 71 — 16 — — 87 72 — 15 — — 87 Club rental revenue — — 29 — — 29 — — 27 — — 27 Other revenue 5 — 1 — — 6 4 — 1 — — 5 Rental management revenue 11 — — — — 11 10 — 1 — — 11 Cost reimbursement revenue — — — — 20 20 — — — — 26 26 Total Exchange and Rental revenue 87 — 46 — 20 153 86 — 44 — 26 156 Total ILG revenue $ 148 $ 121 $ 104 $ 23 $ 65 $ 461 $ 119 $ 118 $ 97 $ 22 $ 85 $ 441 For the Six Months Ended June 30, 2018 For the Six Months Ended June 30, 2017 Service and membership related Sales of vacation ownership products Rental and ancillary services Consumer financing Cost reimbursements Total Service and membership related Sales of vacation ownership products Rental and ancillary services Consumer financing Cost reimbursements Total Vacation Ownership Resort operations revenue $ — $ — $ 124 $ — $ — $ 124 $ — $ — $ 110 $ — $ — $ 110 Management fee revenue 116 — — — — 116 64 — — — — 64 Sales of vacation ownership products, net — 244 — — — 244 — 223 — — — 223 Consumer financing revenue — — — 47 — 47 — — — 43 — 43 Cost reimbursement revenue — — — — 90 90 — — — — 117 117 Total Vacation Ownership revenue 116 244 124 47 90 621 64 223 110 43 117 557 Exchange and Rental Transaction revenue 76 — 33 — — 109 75 — 33 — — 108 Membership fee revenue 71 — — — — 71 71 — — — — 71 Ancillary member revenue 4 — — — — 4 5 — — — — 5 Total member revenue 151 — 33 — — 184 151 — 33 — — 184 Club rental revenue — — 62 — — 62 — — 57 — — 57 Other revenue 10 — 2 — — 12 9 — 1 — — 10 Rental management revenue 23 — 1 — — 24 23 — 3 — — 26 Cost reimbursement revenue — — — — 41 41 — — — — 51 51 Total Exchange and Rental revenue 184 — 98 — 41 323 183 — 94 — 51 328 Total ILG revenue $ 300 $ 244 $ 222 $ 47 $ 131 $ 944 $ 247 $ 223 $ 204 $ 43 $ 168 $ 885 Contract balances The following table provides information about receivables, contracts assets, and contract liabilities from our contracts with customers (in millions): June 30, December 31, 2018 2017 Accounts receivable, net of allowance for doubtful accounts $ 115 $ 121 Vacation ownership mortgages receivable, net of allowance $ 734 $ 737 Contract liabilities (1) $ 259 $ 232 (1) Of this amount, $75 million of revenue recognized in the six months ended June 30, 2018 were included in the contract liabilities balance as of December 31, 2017. Receivables as of June 30, 2018 and December 31, 2017 include amounts related to our contractual right to consideration for completed performance obligations, and are realized when the associated cash is received. Amounts related to our contract assets, aside from those in table above, as of June 30, 2018 and December 31, 2017, are negligible. There were no associated impairment losses. Contract liabilities include payments received in advance of performance under the contract and are realized with the associated revenue recognized under the contract. Transaction price allocated to remaining performance obligations As of June 30, 2018, we have approximately $103 million of revenue expected to be recognized from remaining performance obligations that are unsatisfied (or partially unsatisfied). This revenue is primarily related to membership fees and fixed management fees which are recognized ratably as the performance obligation is satisfied. We expect to recognize this revenue over the next one to eight years. We have elected the following optional exemptions related to the remaining transaction price disclosure: 1) Not to include variable consideration that is allocated entirely to a wholly unsatisfied performance obligation, or to a wholly unsatisfied promise to transfer a distinct good or service, that forms part of a single performance obligation, for which the criteria in ASC 606-10-32-40 have been met. · This optional exemption applies to our management services which are satisfied over time and are substantially the same in any given period. Management fees are variable as these fees are based on a percentage of the budgeted cost to operate resorts. These fees are resolved on a monthly basis as revenue is recognized. 2) Not to disclose the amount of the transaction price allocated to the remaining performance obligations and an explanation of when the entity expects to recognize that amount as revenue for the reporting periods prior to the period of adoption. |
RESTRICTED CASH
RESTRICTED CASH | 6 Months Ended |
Jun. 30, 2018 | |
RESTRICTED CASH | |
RESTRICTED CASH | NOTE 4—RESTRICTED CASH Restricted cash consists of the following (in millions): June 30, December 31, 2018 2017 Escrow deposits on vacation ownership products $ 46 $ 70 HOAs 138 137 Securitization VIEs 18 20 Other 17 3 Total restricted cash $ 219 $ 230 Restricted cash associated with escrow deposits on vacation ownership products represents amounts that are held in escrow until statutory requirements for release are satisfied, at which time that cash is no longer restricted. Restricted cash of securitization VIEs represents cash held in accounts related to vacation ownership mortgages receivable securitizations, which is generally used to pay down securitized vacation ownership debt in the period following the quarter in which the cash is received. HOAs restricted cash predominantly pertains to maintenance fees collected from their respective owners which are designated for resort operations and HOA specific uses, such as reserves, and not freely available for immediate or general business use at ILG’s discretion. |
VACATION OWNERSHIP MORTGAGES RE
VACATION OWNERSHIP MORTGAGES RECEIVABLE | 6 Months Ended |
Jun. 30, 2018 | |
VACATION OWNERSHIP MORTGAGES RECEIVABLE | |
VACATION OWNERSHIP MORTGAGES RECEIVABLE | NOTE 5—VACATION OWNERSHIP MORTGAGES RECEIVABLE Vacation ownership mortgages receivable is comprised of various mortgage loans related to our financing of vacation ownership interval sales. As part of our acquisitions of HVO and Vistana, we acquired existing portfolios of vacation ownership mortgages receivable. These loans are accounted for using the expected cash flows method of recognizing discount accretion based on the acquired loans’ expected cash flows pursuant to ASC 310-30, “Loans acquired with deteriorated credit quality.” At acquisition, we recorded these acquired loans at fair value, including a credit discount or premium, as applicable, which is accreted as an adjustment to yield over the loans’ estimated life. Originated loans as of June 30, 2018 and December 31, 2017 represent vacation ownership mortgages receivable originated by ILG, or more specifically our Vacation Ownership segment, subsequent to the acquisitions of HVO and Vistana on October 1, 2014 and May 11, 2016, respectively. Vacation ownership mortgages receivable carrying amounts as of June 30, 2018 and December 31, 2017 were as follows (in millions): June 30, December 31, 2018 2017 Securitized Unsecuritized (2) Total Securitized Unsecuritized (2) Total Acquired vacation ownership mortgages receivable (1) $ 283 $ 35 $ 318 $ 345 $ 38 $ 383 Originated vacation ownership mortgages receivable (1) 231 266 497 251 163 414 Less: allowance for impairment on acquired loans (6) (1) (7) (4) (1) (5) Less: allowance for losses on originated loans (29) (45) (74) (33) (22) (55) Net vacation ownership mortgages receivable $ 479 $ 255 $ 734 $ 559 $ 178 $ 737 (1) At various interest rates with varying payment terms through 2032 for acquired receivables and for originated receivables. (2) As of June 30, 2018, $13 million of unsecuritized vacation ownership receivables were not eligible for securitization. The fair value of our acquired loans as of the respective acquisition dates was determined by use of a discounted cash flow approach which calculates a present value of expected future cash flows based on scheduled principal and interest payments over the term of the respective loans, while considering anticipated defaults and early repayments determined based on historical experience. Consequently, the fair value of these acquired loans recorded on our condensed consolidated balance sheet as of the acquisition date included an estimate for future loan losses which becomes the historical cost basis for that existing portfolio going forward. As of June 30, 2018 and December 31, 2017, the contractual outstanding balance of the acquired loans, which represents contractually-owed future principal amounts, was $227 million and $296 million, respectively. The table below (in millions) presents a rollforward from December 31, 2017 of the accretable yield (interest income) expected to be earned related to our acquired loans, as well as the amount of non-accretable difference at the end of the period. Nonaccretable difference represents estimated contractually required payments in excess of estimated cash flows expected to be collected. The accretable yield represents the excess of estimated cash flows expected to be collected over the carrying amount of the acquired loans. Six Months Ended Accretable Yield June 30, 2018 Balance, beginning of period $ 99 Accretion (21) Reclassification from nonaccretable difference (2) Balance, end of period $ 76 Nonaccretable difference, end of period balance $ 29 The accretable yield is recognized into interest income (within consolidated revenue) over the estimated life of the acquired loans using the level yield method. The accretable yield may change in future periods due to changes in the anticipated remaining life of the acquired loans, which may alter the amount of future interest income expected to be collected, and changes in expected future principal and interest cash collections which impact the nonaccretable difference. Vacation ownership mortgages receivable as of June 30, 2018 are scheduled to mature as follows (in millions): Vacation Ownership Mortgages Receivable Acquired Originated Twelve month period ending June 30, Securitized Loans Unsecuritized Loans Securitized Loans Unsecuritized Loans Total 2019 $ 31 $ 4 $ 16 $ 19 $ 70 2020 31 3 17 16 67 2021 30 3 19 18 70 2022 28 3 22 20 73 2023 25 2 24 22 73 2024 and thereafter 59 8 133 171 371 Total 204 23 231 266 724 Plus: net premium on acquired loans (1) 79 12 — — 91 Less: allowance for impairment on acquired loans (6) (1) — — (7) Less: allowance for losses on originated loans — — (29) (45) (74) Net vacation ownership mortgages receivable $ 277 $ 34 $ 202 $ 221 $ 734 Weighted average stated interest rate as of June 30, 2018 13.3% 13.5% Range of stated interest rates as of June 30, 2018 8.00% to 15.90% 9.90% to 15.90% (1) The difference between the contractual principal amount of acquired loans of $227 million and the net carrying amount of $311 million as of June 30, 2018 is related to the application of ASC 310-30. Collectability We assess our vacation ownership mortgages receivable portfolio of loans for collectability on an aggregate basis. Estimates of uncollectability pertaining to our originated loans are recorded as provisions in the vacation ownership mortgages receivable allowance for loan losses. For originated loans, we record an estimate of uncollectability as a reduction of sales of vacation ownership products in the accompanying condensed consolidated statements of income at the time revenue is recognized on a vacation ownership product sale. We evaluate our originated loan portfolio collectively as it is comprised of homogeneous, smaller-balance, vacation ownership mortgages receivable. We use a technique referred to as static pool analysis, which tracks uncollectibles over the entire life of those mortgages receivable, as the basis for determining our general reserve requirements on our vacation ownership mortgages receivable. The adequacy of the related allowance is determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio, including defaults, aging, and historical write-offs of these receivables. The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio. As of June 30, 2018, an allowance for loan losses of $74 million for uncollectability was recorded against our vacation ownership mortgages receivable for estimated losses related solely to our originated loans. Our allowance for loan losses as of December 31, 2017 was $55 million; the change in 2018 principally pertains to additional loan loss provision recorded against sales of VO products on our condensed consolidated income statement during the period and adjusted through our periodic static pool analysis. This analysis tracks uncollectibles over the entire life of those mortgages receivable, and forms the basis for determining our general reserve requirements on our originated VO mortgages receivable. Our acquired loans are remeasured at period end based on expected future cash flows which uses an estimated measure of anticipated defaults. We consider the allowance for loan losses on our originated loans and estimates of defaults used in the remeasurements of our acquired loans to be adequate and based on the economic environment and our assessment of the future collectability of the outstanding loans. We use the origination of the notes by brand (Hyatt, Sheraton, Westin and other) and the FICO scores of the buyers as the primary credit quality indicators to calculate the allowance for loan losses for our originated vacation ownership mortgages receivable, as we believe there is a relationship between the default behavior of borrowers and the brand associated with the vacation ownership property they have acquired, supplemented by the FICO scores of the buyers. In addition to quantitatively calculating the allowance based on our static pool analysis, we supplement the process by evaluating certain qualitative data, including the aging of the respective receivables, current default trends by brand and origination year and various macroeconomic indicators. At June 30, 2018, the weighted average FICO score within our consolidated loan pools was 711 based upon the outstanding loan balance at time of origination. The average estimated rate for all future defaults for our consolidated outstanding pool of loans as of June 30, 2018 was 11.8%. Balances of our vacation ownership mortgages receivable by brand and by FICO score (at time of loan origination) were as follows (in millions): As of June 30, 2018 700+ 600-699 <600 No Score (1) Total Westin $ 209 $ 99 $ 7 $ 30 $ 345 Sheraton 178 152 21 69 420 Hyatt 24 14 2 1 41 Other 5 1 — 3 9 Vacation ownership mortgages receivable, gross $ 416 $ 266 $ 30 $ 103 $ 815 (1) Mortgages receivable with no FICO score primarily relate to non-U.S. resident borrowers. On an ongoing basis, we monitor credit quality of our vacation ownership mortgages receivable portfolio based on payment activity as follows: · Current —The consumer’s note is in good standing as payments and reporting are current per the terms contractually stipulated in the agreement. · Delinquent —We consider a vacation ownership mortgage receivable to be delinquent based on the contractual terms of each individual financing agreement. · Non‑performing —Our vacation ownership mortgages receivable are generally considered non‑performing if interest or principal is more than 30 days past due. All non‑performing loans are placed on non‑accrual status and we do not resume interest accrual until the receivable becomes contractually current. We apply payments we receive for vacation ownership notes receivable on non‑performing status first to interest, then to principal, and any remainder to fees. In the event of a default, we generally have the right to recover the mortgaged VOIs and consider loans to be in default upon reaching 120 days outstanding. Our aged analysis of delinquent VO mortgages receivable and the gross balance of VO mortgages receivable greater than 120 days past‑due, as of June 30, 2018 and December 31, 2017, for our originated loans are as follows (in millions): Delinquent Defaulted (1) Receivables Current 30-59 Days 60-89 Days 90-119 Days ≥120 Total Delinquent & Defaulted Originated Loans June 30, 2018 $ 497 $ 474 $ 6 $ 4 $ 3 $ 10 $ 23 December 31, 2017 $ 414 $ 394 $ 6 $ 5 $ 3 $ 6 $ 20 (1) Mortgages receivable equal to or greater than 120 days are considered defaulted and have been fully reserved in our allowance of loan losses for originated loans. |
VACATION OWNERSHIP INVENTORY
VACATION OWNERSHIP INVENTORY | 6 Months Ended |
Jun. 30, 2018 | |
VACATION OWNERSHIP INVENTORY | |
VACATION OWNERSHIP INVENTORY | NOTE 6—VACATION OWNERSHIP INVENTORY Our inventory consists of completed unsold vacation ownership interests, with an operating cycle that generally exceeds twelve months, and vacation ownership projects under construction. On our condensed consolidated balance sheet, completed unsold vacation ownership interests are presented as a current asset, while vacation ownership projects under construction are presented as a non-current asset given this inventory is in the development stage of its operating cycle. As of June 30, 2018 and December 31, 2017, vacation ownership inventory is comprised of the following (in millions): June 30, December 31, 2018 2017 Completed unsold vacation ownership interests (current asset) $ 483 $ 492 Vacation ownership projects construction in process (non-current asset) 72 60 Other 3 4 Total vacation ownership inventory $ 558 $ 556 Inventory as of June 30, 2018 remained relatively consistent with our balance as of December 31, 2017. The year-to-date inventory activity reflects our ongoing development activities primarily pertaining to our Sheraton Kauai Resort and The Westin Resort and Spa, Cancun, the rebuilding work at The Westin St. John Resort Villas, and an additional phase at the Hyatt Residence Club Bonita Springs, Coconut Plantation; among other resorts to a lesser extent. |
INVESTMENTS IN UNCONSOLIDATED E
INVESTMENTS IN UNCONSOLIDATED ENTITIES | 6 Months Ended |
Jun. 30, 2018 | |
INVESTMENTS IN UNCONSOLIDATED ENTITIES | |
INVESTMENTS IN UNCONSOLIDATED ENTITIES | NOTE 7—INVESTMENTS IN UNCONSOLIDATED ENTITIES Our investments in unconsolidated entities, recorded under the equity method of accounting in accordance with guidance in ASC 323, “Investments—Equity Method and Joint Ventures,” primarily consists of an ownership interest in Maui Timeshare Venture, LLC, a joint venture to develop and operate a Hyatt-branded vacation ownership resort in Hawaii, and Vistana’s Harborside at Atlantis joint venture which performs sales, marketing and management services for a vacation ownership resort in the Bahamas. Our equity income from investments in unconsolidated entities, recorded in equity in earnings from unconsolidated entities in the accompanying condensed consolidated statement of income, was a negligible amount and $1 million for the three months ended June 30, 2018 and 2017, and $1 million and $3 million for the six month period ending June 30, 2018 and 2017, respectively. Our ownership percentages of the Maui Timeshare Venture and Harborside investments are 33% and 50%, respectively, and ownership percentage of the other investments is 25%. The carrying value of our investments in unconsolidated entities as of June 30, 2018 and December 31, 2017 were as follows (in millions): June 30, December 31, 2018 2017 Maui Timeshare Venture, LLC $ 42 $ 42 Harborside at Atlantis 12 11 Other — 2 Total investments in unconsolidated entities $ 54 $ 55 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2018 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 8—PROPERTY AND EQUIPMENT Property and equipment, net is as follows (in millions): June 30, December 31, 2018 2017 Computer equipment $ 47 $ 43 Capitalized software (including internally developed software) 189 177 Land, buildings and leasehold improvements 444 431 Land held for development 56 56 Furniture, fixtures and other equipment 78 72 Construction projects in progress 20 20 Other projects in progress 26 40 Total property and equipment 860 839 Less: accumulated depreciation and amortization (254) (223) Total property and equipment, net $ 606 $ 616 The increase in total property and equipment as of June 30, 2018 from December 31, 2017 is in large part attributable to our development activities. These pertain to the development of assets primarily used to support marketing and sales activities and resort operations at the Sheraton Kauai Resort and The Westin Resort and Spa, Cancun. The increase to total property and equipment was more than offset by transfers to inventory (non-current) related to the conversion of the Sheraton Kauai Resort and depreciation and amortization in normal course. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2018 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 9—GOODWILL AND OTHER INTANGIBLE ASSETS Pursuant to FASB guidance as codified within ASC 350, “Intangibles—Goodwill and Other,” goodwill acquired in business combinations is assigned to the reporting unit(s) expected to benefit from the combination as of the acquisition date. ILG is comprised of two operating and reportable segments: Vacation Ownership and Exchange and Rental, each of which contain two reporting units as follows: OPERATING SEGMENTS Vacation Ownership Exchange and Rental VO management reporting unit Exchange reporting unit VO sales and financing reporting unit Rental reporting unit The following tables present the balance of goodwill by reporting unit, including the changes in carrying amount of goodwill, as of June 30, 2018 and December 31, 2017 (in millions): Foreign Balance as of Currency Goodwill Balance as of January 1, 2018 Additions Deductions Translation Impairment June 30, 2018 VO management $ 37 $ — $ — $ — $ — $ 37 VO sales and financing 11 — — — — 11 Exchange 496 — — — — 496 Rental 20 — — — — 20 Total goodwill $ 564 $ — $ — $ — $ — $ 564 Foreign Balance as of Currency Goodwill Balance as of January 1, 2017 Additions Deductions Translation Impairment December 31, 2017 VO management $ 35 $ — $ — $ 2 $ — $ 37 VO sales and financing 7 4 — — — 11 Exchange 496 — — — — 496 Rental 20 — — — — 20 Total goodwill $ 558 $ 4 $ — $ 2 $ — $ 564 The negligible increase in our goodwill balance as of June 30, 2018 from December 31, 2017 is related to foreign currency translation of goodwill carried on the books of an ILG entity whose functional currency is not the US dollar. Other Intangible Assets The balance of other intangible assets, net as of June 30, 2018 and December 31, 2017 is as follows (in millions): June 30, December 31, 2018 2017 Intangible assets with indefinite lives $ 118 $ 120 Intangible assets with definite lives, net 310 320 Total intangible assets, net $ 428 $ 440 The $2 million decrease in our indefinite‑lived intangible assets during the six months ended June 30, 2018 pertains to associated foreign currency translation of intangible assets carried on the books of an ILG entity whose functional currency is not the US dollar. At June 30, 2018 and December 31, 2017, intangible assets with indefinite lives relate to the following (in millions): June 30, December 31, 2018 2017 Resort management contracts $ 74 $ 76 Trade names and trademarks 44 44 Total intangible assets with indefinite lives $ 118 $ 120 At June 30, 2018, intangible assets with definite lives relate to the following (in millions): Cost Accumulated Amortization Net Customer relationships $ 287 $ (146) $ 141 Purchase agreements 76 (76) — Resort management contracts 246 (77) 169 Technology 25 (25) — Other 23 (23) — Total intangible assets with definite lives $ 657 $ (347) $ 310 At December 31, 2017, intangible assets with definite lives relate to the following (in millions): Cost Accumulated Amortization Net Customer relationships $ 287 $ (143) $ 144 Purchase agreements 76 (76) — Resort management contracts 246 (71) 175 Technology 25 (25) — Other 23 (22) 1 Total intangible assets with definite lives $ 657 $ (337) $ 320 In accordance with our policy on the recoverability of long‑lived assets, we review the carrying value of all long‑lived assets, primarily property and equipment and definite‑lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of a long‑lived asset (asset group) may be impaired. For the six months ended June 30, 2018 and the year ended December 31, 2017, we did not identify any events or changes in circumstances indicating that the carrying value of a long-lived asset (or asset group) may be impaired; accordingly, a recoverability test was not warranted. Amortization of intangible assets with definite lives is primarily computed on a straight‑line basis. Total amortization expense for intangible assets with definite lives was $5 million for the three months ended June 30, 2018 and 2017, respectively, and $10 million for the six months ended June 30, 2018 and 2017, respectively. Based on the June 30, 2018 balances, amortization expense for the next five years and thereafter is estimated to be as follows (in millions): Twelve month period ending June 30, 2019 $ 20 2020 19 2021 19 2022 15 2023 14 2024 and thereafter 223 $ 310 |
CONSOLIDATED VARIABLE INTEREST
CONSOLIDATED VARIABLE INTEREST ENTITIES | 6 Months Ended |
Jun. 30, 2018 | |
CONSOLIDATED VARIABLE INTEREST ENTITIES | |
CONSOLIDATED VARIABLE INTEREST ENTITIES | NOTE 10—CONSOLIDATED VARIABLE INTEREST ENTITIES We have variable interests in the entities associated with Vistana’s three outstanding securitization transactions. As these securitizations consist of similar, homogenous loans, they have been aggregated for disclosure purposes. We applied the variable interest model and determined we are the primary beneficiary of these VIEs and, accordingly, these VIEs are consolidated in our results. In making that determination, we evaluated the activities that significantly impact the economics of the VIEs, including the management of the securitized vacation ownership mortgages receivable and any related non-performing loans. We are the servicer of the securitized vacation ownership mortgages receivable. We also have the option, subject to certain limitations, to repurchase or replace vacation ownership mortgages receivable that are in default at their outstanding principal amounts. Historically, Vistana has been able to resell the vacation ownership products underlying the vacation ownership mortgages repurchased or replaced under these provisions without incurring significant losses. We also hold the risk of potential loss (or gain), as we are the last to be paid out by proceeds of the VIEs under the terms of the agreements. As such, we hold both the power to direct the activities of the VIEs and obligation to absorb the losses (or benefits) from the VIEs. The securitization agreements are without recourse to us, except for breaches of representations and warranties with material adverse effect to the holders. We have the right to substitute loans for, or repurchase, defaulted loans at our option, subject to certain limitations. Based on industry practice and our past practices, we currently expect that we will exercise this option. The following table shows assets which are collateral for the related obligations of the variable interest entities, included in our condensed consolidated balance sheets (in millions): Vacation Ownership Notes Receivable Securitization (1) June 30, December 31, 2018 2017 Assets Restricted cash $ 18 $ 20 Interest receivable 3 4 Vacation ownership mortgages receivable, net 479 559 Total $ 500 $ 583 Liabilities Interest payable $ 1 $ 1 Securitized debt 489 575 Total $ 490 $ 576 (1) The creditors of these entities do not have general recourse to us. Upon transfer of vacation ownership mortgages receivable, net to the VIEs, the receivables and certain cash flows derived from them become restricted for use in meeting obligations to the VIE creditors. The VIEs utilize trusts which have ownership of cash balances that also have restrictions, the amounts of which are reported in our restricted cash. Our interests in trust assets are subordinate to the interests of third-party investors and, as such, may not be realized by us if needed to absorb deficiencies in cash flows that are allocated to the investors in the trusts' debt. Unless we exceed certain triggers related to default levels and collateralization of the securitized pool, we are contractually entitled to receive the excess cash flows (spread between the collections on the mortgages and payment of third party obligations and debt service on the trusts’ debt defined in the securitization agreements) from the VIEs. Such activity totaled $30 million for the six months ended June 30, 2018. The net cash flows generated by the VO mortgages receivable in the VIEs are used to repay our securitized debt from VIEs and, excluding any restricted cash balances, are reflected in the operating activities section of our condensed consolidated statements of cash flows. Proceeds and repayments pertaining to our securitized debt from VIEs is reflected in the financing activities section of our combined statements of cash flows. Refer to Note 13 for additional discussion on our securitized debt from VIEs . |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 6 Months Ended |
Jun. 30, 2018 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 11 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES The following table summarizes the general components of accrued expenses and other current liabilities (in millions): June 30, December 31, 2018 2017 General accrued expenses $ 97 $ 82 Accrued other taxes 20 19 Customer deposits 89 76 Accrued membership-related costs 20 17 Accrued construction costs 24 15 Member deposits 6 6 Total accrued expenses and other current liabilities $ 256 $ 215 |
DEFERRED REVENUE
DEFERRED REVENUE | 6 Months Ended |
Jun. 30, 2018 | |
DEFERRED REVENUE | |
DEFERRED REVENUE | NOTE 12 — DEFERRED REVENUE The following table summarized the general components of deferred revenue (in millions): June 30, December 31, 2018 2017 Deferred membership-related revenue $ 177 $ 152 HOAs 69 76 Other 13 10 Total deferred revenue $ 259 $ 238 Deferred membership-related revenue primarily relates to membership fees from our Exchange and Rental segment, which are deferred and recognized over the terms of the applicable memberships, typically ranging from one to five years, on a straight-line basis. HOAs deferred revenue predominantly pertains to maintenance fees collected from their respective owners which are earned over the applicable maintenance period. Other deferred revenue pertains primarily to annual maintenance fees collected in our European VO management business which are not yet earned. |
SECURITIZED VACATION OWNERSHIP
SECURITIZED VACATION OWNERSHIP DEBT | 6 Months Ended |
Jun. 30, 2018 | |
SECURITIZED VACATION OWNERSHIP DEBT | |
SECURITIZED VACATION OWNERSHIP DEBT | NOTE 13 — SECURITIZED VACATION OWNERSHIP DEBT As discussed in Note 10, the VIEs associated with the securitization of our VOI mortgages receivable are consolidated in our financial statements. Securitized vacation ownership debt consisted of the following (in millions): June 30, December 31, 2018 2017 2012 securitization, interest rates ranging from 2.00% to 2.76%, maturing 2023 $ 27 $ 33 2016 securitization, interest rates ranging from 2.54% to 2.74%, maturing 2026 203 244 2017 securitization, interest rates ranging from 2.33% to 2.93%, maturing 2029 265 305 Unamortized debt issuance costs (2016 & 2017 securitization) (6) (7) Total securitized vacation ownership debt, net of debt issuance costs $ 489 $ 575 On September 22, 2017, we completed a term securitization transaction involving the issuance of $325 million of asset-backed notes. An indirect wholly-owned subsidiary of Vistana issued $240 million of Class A notes, $59 million of Class B notes and $26 million of Class C notes. The notes are backed by vacation ownership loans and have coupons of 2.33%, 2.63% and 2.93%, respectively, for an overall weighted average coupon of 2.43%. The advance rate for this transaction was approximately 97%. During the three and six months ended June 30, 2018, interest expense associated with securitized vacation ownership debt totaled $3 million and $7 million, respectively, and totaled $2 million and $5 million during the three and six months ended June 30, 2017, respectively, and is reflected within consumer financing expenses in our condensed consolidated statements of income. The securitized debt is non-recourse with no contractual minimum repayment amounts throughout its term. The amount of each principal payment is contingent on the cash flows from the underlying vacation ownership notes in a given period. Refer to Note 5 for the stated maturities of our securitized vacation ownership notes receivable, which provide an indication of the potential repayment pattern before the impact of any prepayments or defaults. As of the June 30, 2018 and December 31, 2017, total unamortized debt issuance costs pertaining to the 2016 and 2017 securitizations were $6 million and $7 million, respectively, which is presented as a reduction of securitized debt from VIEs in the accompanying condensed consolidated balance sheets. Unamortized debt issuance costs pertaining to our securitized debt are amortized to interest expense using the effective interest method through the estimated life of the respective debt instruments. |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Jun. 30, 2018 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | NOTE 14—LONG-TERM DEBT Long‑term debt is as follows (in millions): June 30, December 31, 2018 2017 Revolving credit facility (interest rate of 3.78% at June 30, 2018 and of 3.10% at December 31, 2017) $ 205 $ 220 5.625% senior notes 350 350 Unamortized debt issuance costs (revolving credit facility) (2) (3) Unamortized debt issuance costs (senior notes) (5) (5) Total long-term debt, net of debt issuance costs $ 548 $ 562 Credit Facility As of June 30, 2018, there was $205 million outstanding with $382 million available to be drawn under our revolving credit facility, net of any letters of credit. Any principal amounts outstanding under the revolving credit facility are due at maturity in May 2021. The interest rate on the amended credit agreement is based on (at our election) either LIBOR plus a predetermined margin that ranges from 1.25% to 2.5%, or the Base Rate as defined in the amended credit agreement plus a predetermined margin that ranges from 0.25% to 1.5%, in each case based on our consolidated total leverage ratio. At June 30, 2018, the applicable margin was 1.75% per annum for LIBOR revolving loans and 0.75% per annum for Base Rate loans. The amended credit agreement has a commitment fee on undrawn amounts that ranges from 0.25% to 0.40% per annum based on our leverage ratio and the commitment fee was 0.275% at quarter end. Pursuant to the amended credit agreement, all obligations under the revolving credit facility are unconditionally guaranteed by ILG and certain of its subsidiaries. Borrowings are further secured by (1) 100% of the voting equity securities of ILG’s U.S. subsidiaries and 65% of the equity in our first‑tier foreign subsidiaries and (2) substantially all of our domestic tangible and intangible property. Senior Notes As of June 30, 2018, total unamortized debt issuance costs relating to our $350 million of 5.625% senior notes due in 2023 were $5 million, which are presented as a direct deduction from the principal amount. Interest on the senior notes is paid semi-annually in arrears on April 15 and October 15 of each year. The senior notes are unsecured and fully and unconditionally guaranteed on a joint and several basis by our domestic subsidiaries that are required to guarantee the amended credit facility. Additionally, the voting stock of the issuer and the subsidiary guarantors is 100% owned by ILG. The senior notes are redeemable from April 15, 2018 at a redemption price starting at 104.219% which declines over time. Restrictions and Covenants The senior notes and amended credit agreement have various financial and operating covenants that place significant restrictions on us, including our ability to incur additional indebtedness, incur additional liens, issue redeemable stock and preferred stock, pay dividends or distributions or redeem or repurchase capital stock, prepay, redeem or repurchase debt, make loans and investments, enter into agreements that restrict distributions from our subsidiaries, sell assets and capital stock of our subsidiaries, enter into certain transactions with affiliates and consolidate or merge with or into or sell substantially all of our assets to another person. The indenture governing the senior notes restricts our ability to issue additional debt in the event we are not in compliance with the minimum fixed charge coverage ratio of 2.0 to 1.0 and limits restricted payments and investments unless we are in compliance with the minimum fixed charge coverage ratio and the amount is within a bucket that grows with our consolidated net income. We met the minimum fixed charge coverage ratio as of June 30, 2018. In addition, the amended credit agreement requires us to meet certain financial covenants regarding the maintenance of a maximum consolidated secured leverage ratio of consolidated secured debt, over consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), as defined. We are also required to maintain a minimum consolidated interest coverage ratio of consolidated EBITDA over consolidated interest expense. As of June 30, 2018, the maximum consolidated secured leverage ratio was 3.25x and the minimum consolidated interest coverage ratio was 3.0x. ILG was in compliance in all material respects with the requirements of all applicable financial and operating covenants, and our consolidated secured leverage ratio and consolidated interest coverage ratio under the amended credit agreement were 0.63 and 13.09, respectively. Interest Expense and Debt Issuance Costs Interest expense for each of the three months ended June 30, 2018 and 2017 was $7 million, and for the six months ended June 30, 2018 and 2017 was $15 million and $12 million, respectively. Interest expense is net of capitalized interest which was negligible for the three months ended June 30, 2018 and $1 million for the six months ended June 30, 2018, primarily relating to our vacation ownership projects under development and internally-developed software. Capitalized interest was $1 million and $3 million for the three months ended and six months ended June 30, 2017, respectively. As of June 30, 2018, total unamortized debt issuance costs were $7 million, net of $8 million of accumulated amortization, incurred in connection with the issuance and various amendments to our amended credit agreement, the issuance of our senior notes in April 2015 and the exchange for registered notes in June 2016. As of December 31, 2017, total unamortized debt issuance costs were $8 million, net of $7 million of accumulated amortization. Unamortized debt issuance costs are presented as a reduction of long-term debt in the accompanying condensed consolidated balance sheets, pursuant to ASU 2015-03. These costs are amortized to interest expense through the maturity date of our respective debt instruments using the effective interest method for those costs related to our senior notes, and on a straight-line basis for costs related to our amended credit agreement. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2018 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 15—FAIR VALUE MEASUREMENTS Fair Value of Financial Instruments The estimated fair value of financial instruments below has been determined using available market information and appropriate valuation methodologies, as applicable. There have been no changes in the methods and significant assumptions used to estimate the fair value of financial instruments during the six months ended June 30, 2018. Our financial instruments are detailed in the following table. June 30, 2018 December 31, 2017 Carrying Fair Carrying Fair Amount Value Amount Value (In millions) Cash and cash equivalents $ 143 $ 143 $ 122 $ 122 Restricted cash and cash equivalents 219 219 230 230 Financing receivables 37 37 36 36 Vacation ownership mortgages receivable 734 786 737 770 Investments in marketable securities 8 8 13 13 Securitized debt 489 482 575 563 Revolving credit facility (1) 203 205 217 220 Senior notes (1) 345 353 345 364 (1) The carrying value of our revolving credit facility and senior notes as of June 30, 2018 include $2 million and $5 million of unamortized debt issuance costs, respectively, and $3 million and $5 million as of December 31, 2017, which are presented as a direct reduction of the corresponding liability. The carrying amounts of cash and cash equivalents and restricted cash and cash equivalents reflected in the accompanying condensed consolidated balance sheets approximate fair value as they are redeemable at par upon notice or maintained with various high‑quality financial institutions and have original maturities of three months or less. Under the fair value hierarchy established in ASC 820, cash and cash equivalents and restricted cash and cash equivalents are stated at fair value based on quoted prices in active markets for identical assets (Level 1). The financing receivables as of June 30, 2018 are presented in our condensed consolidated balance sheet within other non‑current assets and principally pertain to financing receivables issued to individual purchasers by our consolidated Great Destinations joint-venture as part of their VOI reselling activities, as well as a convertible secured loan to CLC that matures October 2019 with interest payable monthly. The outstanding CLC loan is to be repaid in full at maturity either in cash or by means of a share option exercisable by ILG, at its sole discretion. The carrying value of these financing receivables approximate fair value through inputs inherent to the originating value of these loans, such as interest rates and ongoing credit risk accounted for through non‑recurring adjustments for estimated credit losses as necessary (Level 2). The stated interest rates on these financing receivables are comparable to their respective market rates. In our condensed consolidated income statement, interest on the CLC loan is recognized within our “Interest income” line item, while interest from our Great Destinations financing receivables is recognized as revenue within our “Consumer financing” line item. We estimate the fair value of vacation ownership mortgages receivable 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 incorporates default rates, prepayment rates, coupon rates and loan terms respective to the portfolio based on current market assumptions for similar types of arrangements. Based upon the availability of market data, we have classified inputs used in the valuation of our vacation ownership mortgages receivable as Level 3. The primary sensitivity in these assumptions relates to forecasted defaults and projected prepayments which could cause the estimated fair value to vary. These loans are secured by the underlying VOI. Investments in marketable securities consist of marketable securities (mutual funds) related to deferred compensation plans which are funded in a Rabbi trust as of June 30, 2018 and December 31, 2017 and classified as other noncurrent assets in the accompanying condensed consolidated balance sheets. Participants in the deferred compensation plan unilaterally determine how their compensation deferrals are invested within the confines of the Rabbi trust which holds the marketable securities. Consequently, management has designated these marketable securities as trading investments, as allowed by applicable accounting guidance, even though there is no intent by ILG to actively buy or sell securities with the objective of generating profits on short‑term differences in market prices. These marketable securities are recorded at a fair value of $8 million and $13 million at June 30, 2018 and December 31, 2017, respectively, based on quoted market prices in active markets for identical assets (Level 1). We recognized a negligible amount of unrealized trading loss for the three and six months ended June 30, 2018. These unrealized trading losses have an accompanying offsetting adjustment to employee compensation expense and are each included within general and administrative expenses in the accompanying condensed consolidated statement of income. See Note 17 for further discussion in regard to this deferred compensation plan. Our non-public, securitized debt fair value is determined based upon discounted cash flows for the debt using Level 3 inputs such as rates deemed reasonable for the type of debt, prevailing market conditions and the length of maturity for the debt. Borrowings under our senior notes (issued April 2015) and revolving credit facility are carried at historical cost and adjusted for principal payments. The fair value of our senior notes was estimated at June 30, 2018 and December 31, 2017 using an input of quoted prices from an inactive market due to the infrequency at which trades occur on our senior notes (Level 2). The carrying value of the outstanding balance under our revolving credit facility, exclusive of debt issuance costs, approximates fair value as of June 30, 2018 and December 31, 2017 through inputs inherent to the debt such as variable interest rates and credit risk (Level 2). |
EQUITY
EQUITY | 6 Months Ended |
Jun. 30, 2018 | |
EQUITY | |
EQUITY | NOTE 16—EQUITY ILG has 300 million authorized shares of common stock, par value of $0.01 per share. At June 30, 2018, there were 134. 4 million shares of ILG common stock issued, of which 124. 4 million are outstanding with 10.0 million shares held as treasury stock. At December 31, 2017, there were 134.1 million shares of ILG common stock issued, of which 124.1 million were outstanding with 10.0 million shares held as treasury stock. ILG has 25 million authorized shares of preferred stock, par value of $0.01 per share, none of which are issued or outstanding as of June 30, 2018 and December 31, 2017. The Board of Directors has the authority to issue the preferred stock in one or more series and to establish the rights, preferences and dividends. In connection with the acquisition of Vistana in May 2016, we issued 72.4 million shares of ILG common stock, valued at $1 billion as of the acquisition date, to the holders who received Vistana common stock in the spin-off from its former parent. Dividend Declared In February 2018, our Board of Directors declared a quarterly dividend payment of $0.175 per share paid in March 2018 of $22 million. In May 2018, our Board of Directors declared a quarterly dividend payment of $0.175 per share paid in June 2018 of $22 million. Share Repurchase Program During the year ended December 31, 2017, we repurchased 1.1 million shares for $28 million, including commissions, with $21 million available for future repurchases as of December 31, 2017. There were no repurchases of common stock during the six months ended June 30, 2018. Acquired shares of our common stock are held as treasury shares carried at cost on our condensed consolidated balance sheets. Common stock repurchases may be conducted in the open market or in privately negotiated transactions. The amount and timing of all repurchase transactions are contingent upon market conditions, applicable legal requirements, restrictions under our Tax Matters Agreement with Starwood, and other factors. This program may be modified, suspended or terminated by us at any time without notice. Accumulated Other Comprehensive Loss Entities are required to disclose additional information about reclassification adjustments within accumulated other comprehensive income/loss, referred to as AOCL including (1) changes in AOCL balances by component and (2) significant items reclassified out of AOCL in the period. For the three and six months ended June 30, 2018, there were no significant items reclassified out of AOCL, and the change in AOCL pertains to current period foreign currency translation adjustments, as disclosed in our accompanying condensed consolidated statements of comprehensive income. Noncontrolling Interests Noncontrolling Interest—VRI Europe In connection with the VRI Europe transaction on November 4, 2013, CLC was issued a noncontrolling interest in VRI Europe representing 24.5% of the business, which was determined based on the purchase price paid by ILG for its 75.5% ownership interest as of the acquisition date. As of June 30, 2018 and December 31, 2017, this noncontrolling interest amounts to $30 million and $29 million, respectively, and is presented on our condensed consolidated balance sheets as a component of equity. The parties have agreed not to transfer their interests in VRI Europe or CLC’s related development business for a period of five years from the acquisition. In addition, they have agreed to certain rights of first refusal, and customary drag along and tag along rights, including a right by CLC to drag along ILG’s VRI Europe shares in connection with a sale of the entire CLC resort business subject to achieving minimum returns and a preemptive right by ILG. As of June 30, 2018, there have been no changes in ILG’s ownership interest in VRI Europe. Additionally, in connection with this arrangement, ILG and CLC entered into a loan agreement whereby ILG made available to CLC a convertible secured loan facility of $15 million that matures in October of 2019 with interest payable monthly. The outstanding loan is to be repaid in full at maturity either in cash or by means of a share option exercisable by ILG, at its sole discretion, which would allow for settlement of the loan in CLC’s shares of VRI Europe for contractually determined equivalent value. ILG has the right to exercise this share option at any time prior to maturity of the loan; however, the equivalent value for these shares would be measured at a 20% premium to its acquisition date value. We have determined the value of this embedded derivative is not material to warrant bifurcating from the host instrument (loan) at this time. Noncontrolling Interest – HOAs A component of ILG’s noncontrolling interest balance pertains to our consolidated HOAs and represents the portion related to individual or third-party VOI owners. As of June 30, 2018 and December 31, 2017, this noncontrolling interest amounted to $12 million and $8 million, respectively, and is presented on our condensed consolidated balance sheets as a component of equity. |
BENEFIT PLANS
BENEFIT PLANS | 6 Months Ended |
Jun. 30, 2018 | |
BENEFIT PLANS | |
BENEFIT PLANS | NOTE 17—BENEFIT PLANS Under retirement savings plans sponsored by ILG, qualified under Section 401(k) of the Internal Revenue Code, participating employees may contribute up to 50.0% of their pre‑tax earnings, but not more than statutory limits. ILG provides a discretionary match of fifty cents for each dollar a participant contributes into a plan with a maximum contribution of 3% of a participant’s eligible earnings, with employees participating in the safe harbor plan, also receiving a 100% match for the first 1% of the participant’s eligible earnings, subject to Internal Revenue Service (“IRS”) restrictions. Net matching contributions for the ILG plans were $2 million and $1 million for the three months ended June 30, 2018 and 2017, respectively, and $5 million and $3 million for the six months ended June 30, 2018 and 2017, respectively. Matching contributions were invested in the same manner as each participant’s voluntary contributions in the investment options provided under the plans. Effective August 20, 2008, a deferred compensation plan (the “Director Plan”) was established to provide non‑employee directors of ILG an option to defer director fees on a tax‑deferred basis. Participants in the Director Plan are allowed to defer a portion or all of their compensation and are 100% vested in their respective deferrals and earnings. With respect to director fees earned for services performed after the date of such election, participants may choose from receiving cash or stock at the end of the deferral period. ILG has reserved 100,000 shares of common stock for issuance pursuant to this plan, of which 73,429 share units were outstanding at June 30, 2018. ILG does not provide matching or discretionary contributions to participants in the Director Plan. Any deferred compensation elected to be received in stock is included in diluted earnings per share. Effective October 1, 2014, a non-qualified deferred compensation plan (the “DCP”) was established to allow eligible employees of ILG an option to defer compensation on a tax-deferred basis. Participants in the DCP currently include only certain HVO and Vistana employees that participated in similar plans prior to the respective acquisitions. Participants are fully vested in all amounts held in their individual accounts. Participants have only an unsecured claim against ILG for the future payment of the deferred amounts, although payment is indirectly secured through a fully funded Rabbi trust. The Rabbi trust is subject to creditor claims in the event of insolvency, but the assets held in the Rabbi trust are not available for general corporate purposes. Amounts in the Rabbi trust are invested in mutual funds, as selected by participants, which are designated as trading securities and carried at fair value. As of June 30, 2018, the fair value of the investments in the Rabbi trust was $8 million, which is recorded in other non-current assets with the corresponding deferred compensation liability recorded in other long-term liabilities in the condensed consolidated balance sheets. Unrealized gains or losses are offset by a corresponding adjustment to compensation expense, all within general and administrative expense in our condensed consolidated income statements. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2018 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 18—STOCK‑BASED COMPENSATION On May 21, 2013, ILG adopted the Interval Leisure Group, Inc. 2013 Stock and Incentive Plan which provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock‑based awards. RSUs are awards in the form of phantom shares or units, denominated in a hypothetical equivalent number of shares of ILG common stock and with the value of each award equal to the fair value of ILG common stock at the date of grant, except for RSUs subject to relative total shareholder return performance criteria, for which the fair value is based on a Monte Carlo simulation analysis. Each RSU and share of restricted stock is subject to service‑based vesting, where a specific period of continued employment must pass before an award vests. We grant awards subject to graded vesting (i.e., portions of the award vest at different times during the vesting period) or to cliff vesting (i.e., all awards vest at the end of the vesting period). In addition, certain RSUs are subject to attaining specific performance criteria. As of June 30, 2018, 2.8 million shares were available for future issuance under the 2013 Stock and Incentive Compensation Plan. During the first six months of 2018 and 2017, the Compensation Committee granted, 620,000 and 925,000 RSUs, respectively, generally vesting over three years, to certain officers, board of directors and employees of ILG and its subsidiaries. Of these RSUs granted in 2018 and 2017, approximately 169,000 and 229,000, respectively, cliff vest in three years and approximately 147,000 and 213,000, respectively, are subject to performance criteria that could result between 0% and up to 200% of these awards being earned either based on defined adjusted EBITDA, or relative total shareholder return targets over the respective performance period, as specified in the award document. For the 2018 and 2017 RSUs subject to relative total shareholder return performance criteria, the number of RSUs that may ultimately be awarded depends on whether the market condition is achieved. We used a Monte Carlo simulation analysis to estimate a per unit grant date fair value of $50.37 for 2018 and $28.23 for 2017, for these performance based RSUs. This analysis estimates the total shareholder return ranking of ILG as of the grant date relative to two peer groups approved by the Compensation Committee, over the remaining performance period. The expected volatility of ILG’s common stock at the date of grant was estimated based on a historical average volatility rate for the approximate three-year performance period. The dividend yield assumption was based on historical and anticipated dividend payouts. The risk‑free interest rate assumption was based on observed interest rates consistent with the approximate three-year performance measurement period. Non‑cash compensation expense related to RSUs and restricted stock for the three months ended June 30, 2018 and 2017 was $5 million and $7 million, respectively, and for the six months ended June 30, 2018 and 2017 was $11 million and $12 million, respectively. At June 30, 2018, there was approximately $32 million of unrecognized compensation cost related to RSUs and restricted stock, which is currently expected to be recognized over a weighted average period of approximately 2.07 years. Stock-based compensation is not reduced for estimated forfeitures. We account for forfeitures when they occur. For any vesting tranche of an award, the cumulative amount of compensation cost recognized is equal to the portion of the grant‑date value of the award tranche that is actually vested at that date. Non‑cash stock‑based compensation expense related to equity awards is included in the following line items in the accompanying condensed consolidated statements of income for the three and six months ended June 30, 2018 and 2017 (in millions): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Cost of sales $ 1 $ — $ 1 $ 1 Selling and marketing expense — — 1 1 General and administrative expense 4 7 9 10 Non-cash compensation expense $ 5 $ 7 $ 11 $ 12 The following table summarizes RSU activity during the six months ended June 30, 2018: Weighted-Average Grant Date Shares Fair Value (In millions) Non-vested RSUs at January 1, 2018 3 $ 17.53 Granted 1 33.24 Vested (1) 19.54 Forfeited — 18.30 Non-vested RSUs at June 30, 2018 3 $ 20.93 |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2018 | |
INCOME TAXES | |
INCOME TAXES | NOTE 19—INCOME TAXES ILG calculates its interim income tax provision in accordance with ASC 740, “Income Taxes.” At the end of each interim period, ILG makes its best estimate of the annual expected effective tax rate and applies that rate to its ordinary year‑to‑date earnings or loss. The income tax provision or benefit related to significant, unusual, or extraordinary items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which those items occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or the liabilities for uncertain tax positions is recognized in the interim period in which the change occurs. The computation of the annual expected effective tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences, and the likelihood of the realization of deferred tax assets generated in the current year. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, more experience is acquired, additional information is obtained or ILG’s tax environment changes. To the extent that the estimated annual effective tax rate changes during a quarter, the effect of the change on prior quarters is included in income tax expense in the quarter in which the change occurs. A valuation allowance for deferred tax assets is provided when it is more likely than not that certain deferred tax assets will not be realized. Realization is dependent upon the generation of future taxable income or the reversal of deferred tax liabilities during the periods in which those temporary differences become deductible. We consider the history of taxable income in recent years, the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies to make this assessment. For the three and six months ended June 30, 2018, ILG recorded income tax provisions for continuing operations of $13 million and $33 million, respectively, which represent effective tax rates of 32.1% and 31.5% for the respective periods. On December 22, 2017, the President of the United States signed into law the Tax Reform Act, which among other things, lowered the statutory corporate tax rate from 35% to 21% effective in 2018. The tax rate for the three and six months ended June 30, 2018 is higher than the federal statutory rate of 21% due principally to state, local, and foreign income taxes, and other tax items. The other tax items increasing the rate include the projected impact of certain provisions enacted in the Tax Reform Act effective in 2018 such as the global intangible low-taxed income provisions. For the three and six months ended June 30, 2017, ILG recorded income tax provisions for continuing operations of $13 million and $38 million, respectively, which represent effective tax rates of 32.8% and 34.7% for the respective periods. These tax rates are lower than the federal statutory rate of 35% due principally to the discrete impact of excess tax benefits associated with stock-based awards recorded in the income statement and the impact of foreign income taxed at lower rates, partially offset by state and local income taxes and other tax items. As of June 30, 2018, there were no material changes to ILG’s unrecognized tax benefits and related interest. In connection with the acquisition of Vistana, Starwood and ILG entered into a Tax Matters Agreement. Under the Tax Matters Agreement, Starwood indemnifies ILG for all consolidated tax liabilities and related interest and penalties for the pre-close period. Accordingly, any unrecognized tax benefits for Vistana related to the pre-close period that are the obligation of its former parent have not been recorded. ILG recognizes interest and, if applicable, penalties related to unrecognized tax benefits in income tax expense. ILG files income tax returns in the U.S. federal jurisdiction and various state, local, and foreign jurisdictions. As of June 30, 2018, no open tax years are currently under examination by the IRS. The U.S. federal statute of limitations for years prior to and including 2013 has closed. No open tax years are currently under examination in any material state and local jurisdictions. Vistana, by virtue of previously filed consolidated tax returns with Starwood, is under audit by the IRS for several pre-close periods. Vistana is also under audit in Mexico for the tax year 2017 and for the pre-close periods 2012, 2013, and 2015. Under the Tax Matters Agreement, Starwood indemnifies ILG for all income tax liabilities and related interest and penalties for the pre-close period. The Tax Reform Act significantly changed U.S. tax law by, among other things, lowering the statutory corporate tax rate, as discussed above, eliminating certain deductions, requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries, introducing new tax regimes, and changing how foreign earnings are subject to U.S. tax. The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which was codified in ASU 2018-05 during the first quarter of 2018, to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. SAB 118 allows registrants to record provisional amounts during a one year “measurement period” similar to that used when accounting for business combinations. During 2017, we reasonably estimated the effects of the Tax Reform Act and recorded a provisional tax benefit for the impact of the Tax Reform Act of approximately $53 million in our financial statements as of December 31, 2017. This amount is primarily comprised of the remeasurement of federal net deferred tax liabilities resulting from the permanent reduction in the U.S. statutory corporate tax rate from 35% to 21%, partially offset by the mandatory one-time tax on the accumulated earnings of our foreign subsidiaries. We have not completed our determination of the accounting implications of the Tax Reform Act on our tax accruals as we continue to gather and review information necessary to complete the analysis as part of our 2017 tax return. We have not made any material changes during the six months ended June 30, 2018 to the provisional amounts recorded. The ultimate impact of the Tax Reform Act may differ, possibly materially, from these provisional amounts due to among other things, additional analysis, changes in interpretations and assumptions ILG has made, additional regulatory guidance that may be issued, and actions ILG may take as a result of the Tax Reform Act. Any such revisions will be treated in accordance with the measurement period guidance outlined in SAB 118. As such, we expect to complete our analysis no later than December 22, 2018. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2018 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 20—SEGMENT INFORMATION Pursuant to FASB guidance as codified in ASC 280, an operating segment is a component of a public entity (1) that engages in business activities that may earn revenues and incur expenses; (2) for which operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segments and assess its performance; and (3) for which discrete financial information is available. We also considered how the businesses are organized as to segment management, and the focus of the businesses with regards to the types of products or services offered. ILG is comprised of two operating and reportable segments: Vacation Ownership and Exchange and Rental. Our Vacation Ownership segment engages in the management, sales, marketing, financing, rental and ancillary services, and development of VOIs as well as related services to owners and associations. Our Exchange and Rental segment offers access to vacation accommodations and other travel‑related transactions and services to members of our programs and other leisure travelers, by providing vacation exchange services and vacation rental, working with resort developers, HOAs and operating vacation rental properties. ILG provides certain corporate functions that benefit the organization as a whole. Such corporate functions include corporate services relating to oversight, corporate development, finance and accounting, legal, treasury, tax, internal audit, human resources, and certain IT functions. Costs relating to such corporate functions that are not directly cross‑charged to individual businesses are being allocated to our two operating and reportable segments based on a pre‑determined measure of profitability relative to total ILG. All such allocations relate only to general and administrative expenses. The condensed consolidated statements of income are not impacted by this cross‑segment allocation. Information on reportable segments and reconciliation to consolidated operating income is as follows (in millions): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Vacation Ownership: Resort operations revenue $ 58 $ 53 $ 124 $ 110 Management fee and other revenue 61 33 116 64 Sales of vacation ownership products, net 121 118 244 223 Consumer financing revenue 23 22 47 43 Cost reimbursement revenue 45 59 90 117 Total revenue 308 285 621 557 Cost of service and membership related 49 14 94 26 Cost of sales of vacation ownership products 22 28 61 54 Cost of sales of rental and ancillary services 45 57 89 107 Cost of consumer financing 7 7 15 14 Cost reimbursements 45 59 90 117 Total cost of sales 168 165 349 318 Royalty fee expense 11 10 21 20 Selling and marketing expense 68 63 134 119 General and administrative expense 31 27 57 53 Amortization expense of intangibles 2 2 4 4 Depreciation expense 11 10 21 20 Segment operating income $ 17 $ 8 $ 35 $ 23 Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Exchange and Rental: Transaction revenue $ 50 $ 49 $ 109 $ 108 Membership fee revenue 35 36 71 71 Ancillary member revenue 2 2 4 5 Total member revenue 87 87 184 184 Club rental revenue 29 27 62 57 Other revenue 6 5 12 10 Rental management revenue 11 11 24 26 Cost reimbursement revenue 20 26 41 51 Total revenue 153 156 323 328 Cost of service and membership related 18 19 38 42 Cost of sales of rental and ancillary services 25 21 53 48 Cost reimbursements 20 26 41 51 Total cost of sales 63 66 132 141 Royalty fee expense — 1 1 1 Selling and marketing expense 13 13 25 26 General and administrative expense 34 31 67 59 Amortization expense of intangibles 3 3 6 6 Depreciation expense 5 5 10 10 Segment operating income $ 35 $ 37 $ 82 $ 85 Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Consolidated: Revenue $ 461 $ 441 $ 944 $ 885 Cost of sales 231 231 481 459 Operating expenses 178 165 346 318 Operating income $ 52 $ 45 $ 117 $ 108 Selected financial information by reporting segment is presented below (in millions). June 30, December 31, 2018 2017 Total Assets: Vacation Ownership $ 2,579 $ 2,603 Exchange and Rental 1,082 1,084 Total $ 3,661 $ 3,687 Geographic Information We conduct operations through offices in the U.S. and 14 other countries. For the six months ended June 30, 2018 and 2017, revenue is sourced from over 100 countries worldwide. Other than the United States, no revenue sourced from any individual country or geographic region exceeded 10% of consolidated revenue for the three and six months ended June 30, 2018 and 2017. Geographic information on revenue, based on sourcing, and long‑lived assets, based on physical location, is presented in the table below (in millions). Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Revenue: United States $ 409 $ 374 $ 834 $ 748 All other countries (1) 52 67 110 137 Total $ 461 $ 441 $ 944 $ 885 (1) Includes countries within the following continents: Africa, Asia, Australia, Europe, North America and South America. June 30, December 31, 2018 2017 Long-lived assets, net (excluding goodwill and intangible assets): United States $ 477 $ 486 Mexico 125 126 Europe 4 4 Total $ 606 $ 616 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 21—COMMITMENTS AND CONTINGENCIES In the ordinary course of business, ILG is a party to various legal proceedings. ILG establishes reserves for specific legal matters when it determines that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. ILG does not establish reserves for identified legal matters when ILG believes that the likelihood of an unfavorable outcome is not probable. Although management currently believes that an unfavorable resolution of claims against ILG, including claims where an unfavorable outcome is reasonably possible, will not have a material impact on the liquidity, results of operations, or financial condition of ILG, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future. ILG also evaluates other contingent matters, including tax contingencies, to assess the probability and estimated extent of potential loss. See Note 19 for a discussion of income tax contingencies. Litigation On December 5, 2016, individuals and entities who own or owned 107 fractional interests of a total of 372 interests created in the Fifth and Fifty-Fifth Residence Club located within The St. Regis, New York (the “Club”) filed suit against ILG, certain of our subsidiaries, Marriott International Inc. (“Marriott”) and certain of its subsidiaries including Starwood. The case is filed as a mass action in federal court in the Southern District of New York, not as a class action. In response to our request to file a motion to dismiss, the plaintiffs filed an amended complaint on March 6, 2017. Plaintiffs principally challenge the sale of less than all interests offered in the fractional offering plan, the amendment of the plan to include additional units, and the rental of unsold fractional interests by the plan’s sponsor, claiming that alleged acts by us and the other defendants breached the relevant agreements and harmed the value of plaintiffs’ fractional interests. The relief sought includes, among other things, compensatory damages, rescission, disgorgement, attorneys’ fees, and pre- and post-judgment interest. We filed a motion to dismiss the amended complaint on April 21, 2017. The court has not yet rendered any decision on the motion. Fact discovery is complete and expert discovery is proceeding. We dispute the material allegations in the amended complaint and intend to defend against the action vigorously. Given the early stages of the action and the inherent uncertainties of litigation, we cannot estimate a range of the potential liability, if any, at this time. On February 28, 2017, the owners’ association for the Club filed a separate suit against us and certain of our subsidiaries in federal court in the Southern District of New York. On March 13, 2017, before it had served the initial complaint, Plaintiff filed an amended complaint that added Marriott and Starwood as defendants and added additional claims. Plaintiff then filed a second amended complaint on July 14, 2017. The complaint, as amended, asserts claims against the sponsor of the Club, St. Regis Residence Club, New York, Inc., the Club manager, St. Regis New York Management, Inc., and certain affiliated entities, as well as against Marriott and Starwood, for alleged breach of fiduciary duties principally related to sale and rental practices, tortious interference with the management agreement, alleged unjust enrichment, seeks certain declaratory relief in connection with the Starpoints conversion program and the exchange program at the Club, and asserts claims based on alleged anticompetitive conduct by the defendants in connection with Plaintiff’s renewal of the Club management agreement. In addition to the declaratory relief sought, Plaintiff seeks unspecified actual damages, punitive damages, and disgorgement of payments under the management and purchase agreements, as well as related agreements. We filed a motion to dismiss the second amended complaint on September 8, 2017. The court has not yet rendered any decision on the motion. We dispute the material allegations in the second amended complaint and intend to defend against the action vigorously. Given the early stages of the action and the inherent uncertainties of litigation, we cannot estimate a range of the potential liability, if any, at this time. On July 6, 2018, a complaint challenging the proposed combination transactions involving ILG and Marriott Vacations (the “Combination Transactions”) was filed allegedly on behalf of stockholders of ILG in the District Court for the District of Delaware, captioned Scarantino v. ILG, Inc., et al., Case No. 1:18-cv-00999-UNA. The complaint names as defendants ILG, ILG’s directors, Ignite Holdco, Inc., Ignite Holdco Subsidiary, Inc., Marriott Vacations, Volt Merger Sub, Inc., and Volt Merger Sub LLC. The complaint alleges that (i) ILG and ILG’s directors issued a false and misleading registration statement in violation of Section 14(a) of the Securities Exchange Act of 1934, as amended and Rule 14a-9 promulgated thereunder; and (ii) ILG’s directors, Marriott Vacations, Volt Corporate Merger Sub and Volt LLC Merger Sub violated Rule 20(a) of the Securities Exchange Act of 1934, as amended by allegedly exercising control over ILG and ILG’s directors while they issued a false and misleading registration statement. The complaint seeks an injunction preventing the defendants from consummating the Combination Transactions and attorneys’ fees and costs, as well as other remedies. ILG and Marriott Vacations believe that this lawsuit is without merit, and intend to defend themselves vigorously. On July 13, 2018, a complaint challenging the Combination Transactions was filed allegedly on behalf of an alleged stockholder of ILG in the District Court for the Southern District of Florida, captioned Patricia Stephens v. ILG, Inc., et al., Case No. 1:18-cv-22844-CMA. The complaint names ILG and ILG’s directors as defendants. The complaint alleges that (i) ILG and ILG’s directors issued a false and misleading registration statement in violation of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder and (ii) ILG’s directors violated Section 20(a) of the Exchange Act by allegedly exercising control over ILG while issuing a false and misleading registration statement. The complaint seeks an injunction preventing the defendants from consummating the Combination Transactions and attorneys’ fees and costs, as well as other remedies. ILG and Marriott Vacations believe that this lawsuit is without merit, and intend to defend themselves vigorously. Similar lawsuits could be filed in the future. On July 31, 2018, a class action complaint challenging the Combination Transactions was filed on behalf of an alleged stockholder of ILG in the District Court for the District of Delaware, captioned Dina A. Hohman v. ILG, Inc., et al., Case No. 1:18-cv-01126. The complaint names ILG and ILG’s directors as defendants. The complaint alleges that (i) ILG and ILG’s directors issued a false and misleading registration statement in violation of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder and (ii) ILG’s directors violated Section 20(a) of the Exchange Act by allegedly exercising control over ILG while issuing a false and misleading registration statement. The complaint seeks an injunction preventing the defendants from consummating the Combination Transactions and attorneys’ fees and costs, as well as other remedies. ILG believes that the claims asserted in this matter are without merit. Purchase Obligations and Other Commitments Other items, such as certain purchase commitments and guarantees are not recognized as liabilities in our condensed consolidated financial statements but are required to be disclosed in the footnotes to the financial statements. These funding commitments could potentially require our performance in the event of demands by third parties or contingent events. The following table summarizes these items, on an undiscounted basis, at June 30, 2018 and the future periods in which such obligations are expected to be settled in cash. In addition, the table reflects the timing of principal and interest payments on outstanding borrowings. Payments Due by Period Up to More than Contractual Obligations Total 1 year 1 ‑ 3 years 3 ‑ 5 years 5 years (Dollars in millions) Debt principal (a) $ 555 $ — $ 205 $ 350 $ — Debt interest (a) 122 29 57 36 — Purchase obligations and other commitments (b) 56 30 22 4 — Operating leases 141 20 31 19 71 Total contractual obligations $ 874 $ 79 $ 315 $ 409 $ 71 (a) Debt principal and projected debt interest represent principal and interest to be paid on our senior notes and revolving credit facility based on the balance outstanding as of June 30, 2018, exclusive of debt issuance costs. In addition, also included are certain fees associated with our revolving credit facility based on the unused borrowing capacity and outstanding letters of credit balances, if any, as of June 30, 2018. Interest on the revolving credit facility is calculated using the prevailing rates as of June 30, 2018. (b) At June 30, 2018, guarantees, surety bonds and letters of credit totaled $101 million, with the highest annual amount of $70 million occurring in year one. The total also includes maximum exposure under guarantees of $48 million which primarily relates to our Exchange and Rental segment’s rental management agreements, including those with guaranteed dollar amounts, and accommodation leases supporting the segment’s management activities that are entered into on behalf of the property owners for which either party generally may terminate such leases upon 60 to 90 days prior written notice to the other party. In addition, certain of our rental management agreements provide that owners receive specified percentages or guaranteed amounts of the rental revenue generated under its 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 our vacation rental business either retain the balance (if any) as its fee or makes up the deficit. Although such deficits are reasonably possible in a few of these agreements, as of June 30, 2018 future amounts are not expected to be material either individually or in the aggregate. Our operating and purchase obligations primarily relate to future guaranteed purchases of rental inventory, operational support services, marketing related benefits and membership fulfillment benefits. Certain of our vacation rental businesses also enter into agreements, as principal, for services purchased on behalf of property owners for which we are subsequently reimbursed. As such, we are the primary obligor and may be liable for unreimbursed costs. As of June 30, 2018, amounts pending reimbursements are not material. Letters of Credit Additionally, as of June 30, 2018, our letters of credit totaled $13 million and were principally related to our Vacation Ownership sales and financing activities. More specifically, these letters of credit provide alternate assurance on amounts required to be held in escrow which enable our developer entities to access purchaser deposits prior to closings, as well as provide a guarantee of maintenance fees owed by our developer entities during subsidy periods at a particular vacation ownership resort, among other items. Insurance Recoveries During September 2017 we sustained damages at our Westin St. John Resort Villas property as a result of Hurricane Irma. The resort has remained closed while rebuilding activities are in process. The reopening of the resort is currently targeted for January 2019. As of June 30, 2018, our property insurance claim receivable related to this event and other 2017 storms amounts to $17 million and is presented within accounts receivable on our condensed consolidated balance sheet. This balance is subject to change. |
SUPPLEMENTAL GUARANTOR INFORMAT
SUPPLEMENTAL GUARANTOR INFORMATION | 6 Months Ended |
Jun. 30, 2018 | |
SUPPLEMENTAL GUARANTOR INFORMATION | |
SUPPLEMENTAL GUARANTOR INFORMATION | NOTE 22— SUPPLEMENTAL GUARANTOR INFORMATION The senior notes are guaranteed by ILG and certain other subsidiaries for which 100% of the voting securities are owned directly or indirectly by ILG (collectively, the “Guarantor Subsidiaries”). These guarantees are full and unconditional and joint and several. The guarantees of the Guarantor Subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions. The indenture governing the senior notes contains covenants that, among other things, limit the ability of Interval Acquisition Corp. (the “Issuer”) and the Guarantor Subsidiaries to pay dividends to us or make distributions, loans or advances to us. The following tables present consolidating financial information as of June 30, 2018 and December 31, 2017 and for the three and six months ended June 30, 2018 and 2017 for ILG on a stand‑alone basis, the Issuer on a stand‑alone basis, the combined Guarantor Subsidiaries of ILG (collectively, the “Guarantor Subsidiaries”), the combined non-guarantor subsidiaries of ILG (collectively, the “Non-Guarantor Subsidiaries”) and ILG on a consolidated basis (in millions). Balance Sheet as of June 30, 2018 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Current assets $ 2 $ 2 $ 750 $ 439 $ — $ 1,193 Property and equipment, net 1 — 455 150 — 606 Goodwill and intangible assets, net — 266 619 107 — 992 Investments in subsidiaries 888 1,605 1,038 — (3,531) — Other assets — — 394 476 — 870 Total assets $ 891 $ 1,873 $ 3,256 $ 1,172 $ (3,531) $ 3,661 Current liabilities $ 3 $ 5 $ 384 $ 279 $ — $ 671 Other long-term liabilities — — 232 112 — 344 Long term debt and securitized debt from VIEs (noncurrent portion) — 548 — 361 — 909 Intercompany liabilities (receivables) / equity (809) 432 1,036 (659) — — Redeemable noncontrolling interest — — 1 — — 1 ILG stockholders' equity 1,697 888 1,605 1,038 (3,531) 1,697 Noncontrolling interests — — (2) 41 — 39 Total liabilities and equity $ 891 $ 1,873 $ 3,256 $ 1,172 $ (3,531) $ 3,661 Balance Sheet as of December 31, 2017 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Current assets $ 1 $ 3 $ 790 $ 406 $ — $ 1,200 Property and equipment, net 1 — 464 151 — 616 Goodwill and intangible assets, net — 266 628 110 — 1,004 Investments in subsidiaries 824 1,521 1,022 — (3,367) — Other assets — — 285 582 — 867 Total assets $ 826 $ 1,790 $ 3,189 $ 1,249 $ (3,367) $ 3,687 Current liabilities $ 3 $ 5 $ 339 $ 294 $ — $ 641 Other long-term liabilities — — 236 102 — 338 Long term debt and securitized debt from VIEs (noncurrent portion) — 562 — 429 — 991 Intercompany liabilities (receivables) / equity (856) 399 1,093 (636) — — Redeemable noncontrolling interest — — 1 — — 1 ILG stockholders' equity 1,679 824 1,521 1,022 (3,367) 1,679 Noncontrolling interests — — (1) 38 — 37 Total liabilities and equity $ 826 $ 1,790 $ 3,189 $ 1,249 $ (3,367) $ 3,687 Statement of Income for the Three Months Ended June 30, 2018 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ — $ — $ 401 $ 60 $ — $ 461 Operating expenses (2) — (361) (46) — (409) Interest income (expense), net — (6) 1 (1) — (6) Other income (expense), net (1) 29 33 3 (3) (67) (5) Income tax benefit (provision) — 2 (11) (4) — (13) Equity in earnings from unconsolidated entities — — — — — — Net income (loss) 27 29 33 6 (67) 28 Net loss attributable to noncontrolling interests — — — (1) — (1) Net income (loss) attributable to common stockholders $ 27 $ 29 $ 33 $ 5 $ (67) $ 27 Statement of Income for the Three Months Ended June 30, 2017 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ — $ — $ 371 $ 70 $ — $ 441 Operating expenses (2) — (340) (54) — (396) Interest income (expense), net — (7) 2 (2) — (7) Other income (expense), net 28 30 (3) 4 (59) — Income tax benefit (provision) — 2 (2) (13) — (13) Equity in earnings from unconsolidated entities — — 1 — — 1 Net income (loss) 26 25 29 5 (59) 26 Net income (loss) attributable to noncontrolling interests — — 1 (1) — — Net income (loss) attributable to common stockholders $ 26 $ 25 $ 30 $ 4 $ (59) $ 26 Statement of Income for the Six Months Ended June 30, 2018 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ — $ — $ 816 $ 128 $ — $ 944 Operating expenses (4) — (731) (92) — (827) Interest income (expense), net — (14) 2 (2) — (14) Other income (expense), net 72 82 18 5 (177) — Income tax benefit (provision) 1 4 (25) (13) — (33) Equity in earnings from unconsolidated entities — — 1 — — 1 Net income (loss) 69 72 81 26 (177) 71 Net income (loss) attributable to noncontrolling interests — — 1 (3) — (2) Net income (loss) attributable to common stockholders $ 69 $ 72 $ 82 $ 23 $ (177) $ 69 Statement of Income for the Six Months Ended June 30, 2017 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ — $ — $ 744 $ 141 $ — $ 885 Operating expenses (4) — (681) (92) — (777) Interest income (expense), net — (13) 5 (4) — (12) Other income (expense), net 72 79 26 16 (183) 10 Income tax benefit (provision) 1 4 (18) (25) — (38) Equity in earnings from unconsolidated entities — — 3 — — 3 Net income (loss) 69 70 79 36 (183) 71 Net income (loss) attributable to noncontrolling interests — — 1 (2) — (1) Net income (loss) attributable to common stockholders $ 69 $ 70 $ 80 $ 34 $ (183) $ 70 Statement of Cash Flows for the Six Months Ended June 30, 2018 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries ILG Consolidated Cash flows provided by (used in) operating activities $ (2) $ (8) $ 90 $ 104 $ 184 Cash flows provided by (used in) investing activities — — (21) 3 (18) Cash flows provided by (used in) financing activities 3 8 (51) (113) (153) Effect of exchange rate changes on cash, cash equivalents and restricted cash — — — (3) (3) Cash, cash equivalents and restricted cash at beginning of period — 2 82 268 352 Cash, cash equivalents and restricted cash at end of period $ 1 $ 2 $ 100 $ 259 $ 362 Statement of Cash Flows for the Six Months Ended June 30, 2017 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries ILG Consolidated Cash flows provided by (used in) operating activities $ (1) $ (7) $ (31) $ 121 $ 82 Cash flows used in investing activities — — (39) (9) (48) Cash flows provided by (used in) financing activities 1 7 52 (100) (40) Effect of exchange rate changes on cash, cash equivalents and restricted cash — — — 3 3 Cash, cash equivalents and restricted cash at beginning of period — — 100 144 244 Cash, cash equivalents and restricted cash at end of period $ — $ — $ 82 $ 159 $ 241 |
PENDING BUSINESS COMBINATION
PENDING BUSINESS COMBINATION | 6 Months Ended |
Jun. 30, 2018 | |
PENDING BUSINESS COMBINATION | |
PENDING BUSINESS COMBINATION | NOTE 23— PENDING BUSINESS COMBINATION On April 30, 2018, we entered into an Agreement and Plan of Merger (“Merger Agreement”), with Marriott Vacations, Ignite Holdco, Inc. and Ignite Holdco Subsidiary, Inc. (two of our wholly owned subsidiaries), and Volt Merger Sub, Inc. and Volt Merger Sub, LLC (two wholly owned subsidiaries of Marriott Vacations), pursuant to which Marriott Vacations will acquire ILG in a series of transactions (the “Combination Transactions”) and ILG stockholders will receive $14.75 in cash (without interest) and 0.165 shares of common stock of Marriott Vacations for each share of ILG common stock held by such stockholder. This will result in ILG stockholders owning approximately 43% of Marriott Vacations following the merger transactions. Consummation of the Combination Transactions is subject to customary conditions, including customary conditions relating to: · the approval of the merger by holders of a majority of the outstanding shares of ILG common stock entitled to vote thereon at a duly convened meeting, · the approval of the issuance of the stock consideration by Marriott Vacations by a majority of the votes cast at a duly convened meeting of the stockholders of Marriott Vacations, and · the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and receipt of other required regulatory approvals. The obligation of each party to consummate the merger is also conditioned upon the other party’s representations and warranties being true and correct (subject to certain materiality exceptions) and the other party having performed in all material respects its obligations under the Merger Agreement. The Merger Agreement contains customary representations and warranties of ILG and Marriott Vacations. Additionally, the Merger Agreement contains customary pre-closing covenants, including covenants requiring each party (1) to use reasonable best efforts to cause the consummation of the transactions contemplated by the Merger Agreement, (2) to conduct its business in the ordinary course and (3) to refrain from taking certain actions prior to the consummation of the transactions without the other party’s consent. The Merger Agreement also contains “no shop” provisions that restrict ILG’s and Marriott Vacations’ ability to solicit or initiate discussions or negotiations with third parties regarding other proposals to acquire ILG or Marriott Vacations, as applicable, and ILG and Marriott Vacations have each agreed to certain terms relating to their ability to respond to such proposals. In addition, the Merger Agreement requires that, subject to certain exceptions, the board of directors of ILG recommend that ILG’s stockholders approve the mergers and that the board of directors of Marriott Vacations recommend that Marriott Vacations’ stockholders approve the issuance of the stock consideration. Prior to obtaining ILG’s stockholder approval, our board of directors may, among other things, (1) withhold, withdraw, modify or qualify its recommendation of the Combination Transactions or approve, endorse or recommend any Ignite Alternative Transaction (as defined in the Merger Agreement) or (2) terminate the Merger Agreement to enter into an agreement providing for an Ignite Superior Proposal (as defined in the Merger Agreement), subject to complying with notice and other specified conditions, including giving Marriott Vacations the opportunity to propose revisions to the terms of the transactions contemplated by the Merger Agreement during a period following notice, and the payment of the Termination Fee (as defined below). Marriott Vacations has reciprocal rights and obligations under the Merger Agreement. The Merger Agreement contains specified termination rights for the parties and provides that, in connection with the termination of the Merger Agreement under specified circumstances, including termination of the Merger Agreement by the Company or Marriott Vacations to enter into a definitive agreement for an acquisition proposal that constitutes an Ignite Qualifying Transaction or a Volt Qualifying Transaction, as applicable (each as defined in the Merger Agreement), the Company or Marriott Vacations, as applicable, will be required to pay a termination fee equal to $146 million (such amount, the “Termination Fee”). The foregoing summary description of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement. In connection with the transactions contemplated by the Merger Agreement, Qurate Retail, Inc. (formerly Liberty Interactive Corp.) and one of its wholly owned subsidiaries entered into a voting and support with ILG and Marriott Vacations. Subject to certain exceptions set forth therein, Qurate has agreed to vote all of its shares of ILG common stock in favor of the adoption of the Merger Agreement and the transactions contemplated thereby and has also agreed to vote its shares of ILG common stock against any Competing Proposal (as defined in the Voting and Support Agreement) and any actions that are intended to prevent or delay the consummation of the Combination Transactions. Additionally, there were certain litigation matters that arose subsequent to quarter-end, see Note 21 for further details. |
SIGNIFICANT ACCOUNTING POLICI31
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the rules and regulations of the Securities and Exchange Commission. Accordingly, these financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of ILG’s management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Interim results are not indicative of the results that may be expected for a full year. Individual amounts presented by quarter in our interim financial statements may not add to the year-to-date amount due to rounding and, in the case of per share amounts, differences in the average common shares outstanding during each period. Additionally, the prior period condensed consolidated financial statements presented in this report have been restated as part of our adoption of ASC 606. See Note 3 for additional information. |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of ILG, our wholly‑owned subsidiaries, and companies in which we have a controlling interest, including variable interest entities (“VIEs”) where we are the primary beneficiary in accordance with consolidation guidance. All significant intercompany balances and transactions have been eliminated in these condensed consolidated financial statements. References in these financial statements to net income attributable to common stockholders and ILG stockholders’ equity do not include noncontrolling interests, which represent the outside ownership of our consolidated non‑wholly owned entities and are reported separately. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2017 Annual Report on Form 10‑K. |
Seasonality | Seasonality Revenue at ILG is influenced by the seasonal nature of travel. Within our VO segment, our sales and financing business experiences a modest impact from seasonality, with higher sales volumes during the traditional vacation periods. Our vacation ownership management businesses by and large do not experience significant seasonality, with the exception of our resort operations revenue which tends to be higher in the first quarter. Within our Exchange and Rental segment, we recognize exchange and Getaway revenue based on confirmation of the vacation, with the first quarter generally experiencing higher revenue and the fourth quarter generally experiencing lower revenue. Remaining rental revenue is recognized based on occupancy. For the vacation rental business, the first and third quarters generally generate higher revenue as a result of increased leisure travel to our Hawaii‑based managed properties during these periods, and the second and fourth quarters generally generate lower revenue. |
Accounting Estimates | Accounting Estimates ILG’s management is required to make certain estimates and assumptions during the preparation of its consolidated financial statements in accordance with GAAP. These estimates and assumptions impact the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net earnings during any period. Actual results could differ from those estimates. Significant estimates underlying the accompanying condensed consolidated financial statements include: · the recovery of long‑lived assets as well as goodwill and other intangible assets; · purchase price allocations of business combinations; · allowance for loan losses for vacation ownership mortgages receivable; · accounting for acquired vacation ownership mortgages receivable; · cost of vacation ownership product sales related estimates included in our relative sales value calculation, such as future projected sales revenue and expected project costs to complete; · the accounting for income taxes including deferred income taxes and related valuation allowances; · the determination of deferred membership revenue and deferred membership costs; and · the determination of stock‑based compensation. In the opinion of ILG’s management, the assumptions underlying the condensed consolidated financial statements of ILG and its subsidiaries are reasonable. |
Earnings per Share | Earnings per Share Basic earnings per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Treasury stock is excluded from the weighted average number of shares of common stock outstanding. Diluted earnings per share attributable to common stockholders is computed based on the weighted average number of shares of common stock and dilutive securities outstanding during the period. Dilutive securities are common stock equivalents that are freely exercisable into common stock at less than market prices or otherwise dilute earnings if converted. The net effect of common stock equivalents is based on the incremental common stock that would be issued upon the assumed exercise of common stock options and the vesting of RSUs and restricted stock using the treasury stock method. Common stock equivalents are not included in diluted earnings per share when their inclusion is antidilutive. The computations of diluted earnings per share available to common stockholders exclude 0.1 million RSUs and restricted shares for each of the three months ended June 30, 2018 and 2017 and 0.3 million and 0.4 million RSUs and restricted shares for the six months ended June 30, 2018 and 2017, respectively, as the effect of their inclusion would have been antidilutive to earnings per share. The computation of weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share is as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Basic weighted average shares of common stock outstanding 124,241 124,384 124,033 124,191 Net effect of common stock equivalents assumed to be vested related to RSUs and restricted stock 1,633 1,757 1,780 1,671 Diluted weighted average shares of common stock outstanding 125,874 126,141 125,813 125,862 Earnings per share for the three and six months ended June 30, 2018 and 2017 are as follows (in thousands, except per share data): Three Months Ended Six Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Net income attributable to common stockholders $ 26,574 $ 25,840 $ 69,483 $ 69,832 Weighted average number of shares of common stock outstanding: Basic 124,241 124,384 124,033 124,191 Diluted 125,874 126,141 125,813 125,862 Earnings per share attributable to common stockholders: Basic $ $ $ $ Diluted $ $ $ $ |
Recent Accounting Pronouncements | Recent Accounting Pronouncements: General With the exception of those discussed below, there are no recent accounting pronouncements or changes in accounting pronouncements since the recent accounting pronouncements described in our 2017 Annual Report on Form 10-K that are of significance, or potential significance, to ILG based on our current operations. The following summary of recent accounting pronouncements is not intended to be an exhaustive description of the respective pronouncement, and may include certain accounting standards also disclosed in our 2017 Annual Report on Form 10-K which have not yet been adopted. In July 2018, the FASB issued ASU 2018-09, “Codification Improvements” (“ASU 2018-09”). The amendments in this update affect a wide variety of topics in the codification. To list a few, there are amendments to “Compensation – Stock Compensation – Income Taxes (Subtopic 718-740)”, “Business Combinations – Income Taxes (Subtopic 805-740)”, “Fair Value Measurement – Overall (Subtopic 820-10)”, etc. The transition and effective date guidance is based on the facts and circumstances of each amendment. Some of the amendments in this ASU do not require transition guidance and will be effective upon issuance of this update. However, many of the amendments in this ASU do have transition guidance with effective dates for annual periods beginning after December 15, 2018. We are currently evaluating the methods and impact of adopting this new standard on our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718)” (“ASU 2018-07”) to align the measurement and classification guidance for share-based payments to nonemployees with the guidance for share-based payments to employees, with certain exceptions. Under the guidance, the measurement of equity-classified nonemployee awards will be fixed at the grant date, which may lower their cost and reduce volatility in the income statement. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We do not anticipate the adoption of this guidance will have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016 02, “Leases (Topic 842)” (“ASU 2016 02”). ASU 2016 02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The new guidance will be effective for public entities for annual periods beginning after December 15, 2018 and interim periods therein. Originally, entities were required to adopt ASU 2016-02 using a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application. However, in July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements” (“ASU 2018-11”), which now allows entities the option of recognizing the cumulative effect of applying the new standard as an adjustment to the opening balance of retained earnings in the year of adoption while continuing to present all periods under previous lease accounting guidance. In July 2018, the FASB also issued ASU 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”), which clarifies how to apply certain aspects of ASU 2016-02. We expect to adopt ASU 2016-02, ASU 2018-10 and ASU 2018-11 commencing in fiscal year 2019 and are currently in the process of evaluating and analyzing our leases pursuant to this guidance. While we have not yet finalized a quantified impact of adopting this new standard, we do expect our balance sheet presentation to be impacted due to the recognition of right-of-use assets and lease liabilities for operating leases. Adopted Accounting Pronouncements: General In March 2018, the FASB issued ASU 2018-05, “Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118”. The guidance amends SEC paragraphs in Accounting Standards Codification (ASC or Codification) 740, Income Taxes, to reflect SEC Staff Accounting Bulletin (SAB) 118, which provides guidance for companies that are not able to complete their accounting for the income tax effects of the Tax Cuts and Jobs Act (the “Tax Reform Act”) in the period of enactment. For further discussion please see Note 19. This ASU was effective immediately and the adoption of this guidance did not have a material impact on our consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting” to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under this new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The guidance is effective prospectively for annual periods beginning on or after December 15, 2017. The adoption of this guidance did not have a material impact on our consolidated financial statements. In February 2017, the FASB issued ASU 2017-05, “Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets”. The FASB issued this ASU to clarify the scope of subtopic 610-20, which was issued in May 2014 as part of Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The effective date and transition requirements of these amendments are the same as the effective date and transition requirements of ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)". We plan to adopt this standard, as well as other clarifications and technical guidance issued by the FASB related to this new revenue standard, on January 1, 2018. The adoption of this guidance did not have a material impact on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805),” to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses by clarifying the definition of a business. The definition of a business affects many areas of accounting including acquisition, disposals, goodwill and consolidation. This amendment covers Phase 1 of a three phase project. The update is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments in this update should be applied prospectively on or after the effective date. The adoption of this guidance did not have a material impact on our consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230).” This ASU requires that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The update is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The adoption of this guidance did not have a material impact on our consolidated financial statements. The effect of the adoption of ASU 2016-18 on our consolidated statements of cash flows was to include restricted cash balances in the beginning and end of period balances of cash and cash equivalents and restricted cash. The change in restricted cash was previously disclosed in operating activities and financing activities in the consolidated statements of cash flows. In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (“ASU 2016-16”) as part of the Board’s initiative to reduce complexity in accounting standards. This ASU eliminates an exception in ASC 740, which prohibits the immediate recognition of income tax consequences of intra-entity asset transfers other than inventory. Under ASU 2016-16, entities will be required to recognize the immediate current and deferred income tax effects of intra-entity asset transfers, which often involve a subsidiary of a company transferring intellectual property to another subsidiary. For public entities, the new guidance is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. This ASU’s amendments should be applied on a modified retrospective basis, recognizing the effects in retained earnings as of the beginning of the year of adoption. In accordance with this ASU, during the first quarter of 2018 we recorded a cumulative adjustment of approximately $7 million to opening retained earnings. The adoption of this guidance did not have a material impact on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230).” This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under existing guidance. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The amendments should be applied using a retrospective transition method to each period presented. The adoption of this guidance did not have a material impact on our consolidated financial statements. In January 2016, the FASB issued ASU 2016‑01, “Financial Instruments—Overall (Subtopic 825‑10),” which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Although the ASU retains many current requirements, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. The amendments in this update are effective for fiscal years beginning after December 31, 2017, including interim periods within those fiscal years. The adoption of this guidance did not have a material impact on our consolidated financial statements. Adopted Accounting Pronouncements: Revenue Recognition In May 2014, the FASB issued ASU 2014‑09 (otherwise known as ASC 606). The FASB and the International Accounting Standards Board (“IASB”) initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS that would: (i) remove inconsistencies and weaknesses in revenue requirements; (ii) provide a more robust framework for addressing revenue issues; (iii) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; (iv) provide more useful information to users of financial statements through improved disclosure requirements; and (v) simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. To meet those objectives, the FASB amended the FASB Accounting Standards Codification (“Codification”) and created a new Topic 606, Revenue from Contracts with Customers. The core principle of the guidance in ASU 2014‑09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in this ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry specific guidance throughout the Industry Topics of the Codification. Additionally, ASU 2014‑09 supersedes some cost guidance included in Subtopic 605‑35, Revenue Recognition—Construction‑Type and Production‑Type Contracts. The ASU is effective for fiscal years beginning after December 15, 2017 (and interim periods within that period). In periods subsequent to the initial issuance of this ASU, the FASB has issued additional ASU’s clarifying items within Topic 606, as follows: · In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date," which defers by one year the effective date of ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. · In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”). The amendments in ASU 2016-08 serve to clarify the implementation guidance on principal vs. agent considerations. · In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”). The purpose of ASU 2016-10 is to clarify two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance (while retaining the related principles for those areas). · In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2016-12”). The purpose of ASU 2016-12 is to address certain issues identified to improve Topic 606 by enhancing guidance on assessing collectability, presentation of sales taxes and other similar taxes collected from customers, noncash consideration and completed contracts and contract modifications at transition. · In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,” which amends certain aspects of the Board’s new revenue standard, ASU 2014-09. This ASU addresses thirteen specific issues pertaining to Topic 606 , Revenue from Contracts with Customers. We have adopted this standard, as well as other clarifications and technical guidance issued by the FASB related to this new revenue standard, as of January 1, 2018, using the retrospective adoption method. See Note 3 for further details. |
SIGNIFICANT ACCOUNTING POLICI32
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of computation of weighted average common and common equivalent shares | The computation of weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share is as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Basic weighted average shares of common stock outstanding 124,241 124,384 124,033 124,191 Net effect of common stock equivalents assumed to be vested related to RSUs and restricted stock 1,633 1,757 1,780 1,671 Diluted weighted average shares of common stock outstanding 125,874 126,141 125,813 125,862 |
Schedule of earnings per share | Earnings per share for the three and six months ended June 30, 2018 and 2017 are as follows (in thousands, except per share data): Three Months Ended Six Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Net income attributable to common stockholders $ 26,574 $ 25,840 $ 69,483 $ 69,832 Weighted average number of shares of common stock outstanding: Basic 124,241 124,384 124,033 124,191 Diluted 125,874 126,141 125,813 125,862 Earnings per share attributable to common stockholders: Basic $ $ $ $ Diluted $ $ $ $ |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Schedule of revenues disaggregated by type and reportable segments | The following table presents our condensed consolidated income statement revenues disaggregated by type and reportable segments for the three and six months ended June 30, 2018 and 2017 (in millions). For the Three Months Ended June 30, 2018 For the Three Months Ended June 30, 2017 Service and membership related Sales of vacation ownership products Rental and ancillary services Consumer financing Cost reimbursements Total Service and membership related Sales of vacation ownership products Rental and ancillary services Consumer financing Cost reimbursements Total Vacation Ownership Resort operations revenue $ — $ — $ 58 $ — $ — $ 58 $ — $ — $ 53 $ — $ — $ 53 Management fee revenue 61 — — — — 61 33 — — — — 33 Sales of vacation ownership products, net — 121 — — — 121 — 118 — — — 118 Consumer financing revenue — — — 23 — 23 — — — 22 — 22 Cost reimbursement revenue — — — — 45 45 — — — — 59 59 Total Vacation Ownership revenue 61 121 58 23 45 308 33 118 53 22 59 285 Exchange and Rental Transaction revenue 34 — 16 — — 50 34 — 15 — — 49 Membership fee revenue 35 — — — — 35 36 — — — — 36 Ancillary member revenue 2 — — — — 2 2 — — — — 2 Total member revenue 71 — 16 — — 87 72 — 15 — — 87 Club rental revenue — — 29 — — 29 — — 27 — — 27 Other revenue 5 — 1 — — 6 4 — 1 — — 5 Rental management revenue 11 — — — — 11 10 — 1 — — 11 Cost reimbursement revenue — — — — 20 20 — — — — 26 26 Total Exchange and Rental revenue 87 — 46 — 20 153 86 — 44 — 26 156 Total ILG revenue $ 148 $ 121 $ 104 $ 23 $ 65 $ 461 $ 119 $ 118 $ 97 $ 22 $ 85 $ 441 For the Six Months Ended June 30, 2018 For the Six Months Ended June 30, 2017 Service and membership related Sales of vacation ownership products Rental and ancillary services Consumer financing Cost reimbursements Total Service and membership related Sales of vacation ownership products Rental and ancillary services Consumer financing Cost reimbursements Total Vacation Ownership Resort operations revenue $ — $ — $ 124 $ — $ — $ 124 $ — $ — $ 110 $ — $ — $ 110 Management fee revenue 116 — — — — 116 64 — — — — 64 Sales of vacation ownership products, net — 244 — — — 244 — 223 — — — 223 Consumer financing revenue — — — 47 — 47 — — — 43 — 43 Cost reimbursement revenue — — — — 90 90 — — — — 117 117 Total Vacation Ownership revenue 116 244 124 47 90 621 64 223 110 43 117 557 Exchange and Rental Transaction revenue 76 — 33 — — 109 75 — 33 — — 108 Membership fee revenue 71 — — — — 71 71 — — — — 71 Ancillary member revenue 4 — — — — 4 5 — — — — 5 Total member revenue 151 — 33 — — 184 151 — 33 — — 184 Club rental revenue — — 62 — — 62 — — 57 — — 57 Other revenue 10 — 2 — — 12 9 — 1 — — 10 Rental management revenue 23 — 1 — — 24 23 — 3 — — 26 Cost reimbursement revenue — — — — 41 41 — — — — 51 51 Total Exchange and Rental revenue 184 — 98 — 41 323 183 — 94 — 51 328 Total ILG revenue $ 300 $ 244 $ 222 $ 47 $ 131 $ 944 $ 247 $ 223 $ 204 $ 43 $ 168 $ 885 |
Schedule of receivables, contract assets and contract liabilities from contracts with customers | June 30, December 31, 2018 2017 Accounts receivable, net of allowance for doubtful accounts $ 115 $ 121 Vacation ownership mortgages receivable, net of allowance $ 734 $ 737 Contract liabilities (1) $ 259 $ 232 (1) Of this amount, $75 million of revenue recognized in the six months ended June 30, 2018 were included in the contract liabilities balance as of December 31, 2017. |
Accounting Standards Update 2014-09 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Schedule of Adopted Accounting Pronouncement | The tables below summarize the adjustments that were made to our condensed consolidated statement of income for the three and six months ended June 30, 2017 and our condensed consolidated balance sheet as of December 31, 2017, on a line item basis (USD in millions, except per share data): (As reported) (Restated) Three Months Ended June 30, 2017 Reclassification Adjustments (1) BCD Percentage of Completion Related Other (2) Three Months Ended June 30, 2017 Sales of vacation ownership products, net 123 (2) 1 (4) — 118 Cost reimbursements 89 (4) — — — 85 Total revenues 450 (6) 1 (4) — 441 Cost of service and membership related sales 32 1 — — — 33 Cost of vacation ownership products sales 29 — — (1) — 28 Cost reimbursements 89 (4) — — — 85 Selling and marketing expense 80 (3) — — (1) 76 Total operating costs and expenses 404 (6) — (1) (1) 396 Equity in earnings from unconsolidated entities 2 — (1) — — 1 Earnings before income taxes and noncontrolling interest 41 — — (3) 1 39 Income tax benefit (provision) (14) — — 1 — (13) Net income attributable to common stockholders 27 — — (2) 1 26 Earnings per share attributable to common stockholders: Basic 0.22 0.21 Diluted 0.22 0.20 (As reported) (Restated) Six Months Ended June 30, 2017 Reclassification Adjustments (1) BCD Percentage of Completion Related Other (2) Six Months Ended June 30, 2017 Service and membership related 246 1 — — — 247 Sales of vacation ownership products, net 233 (3) 2 (9) — 223 Cost reimbursements 176 (8) — — — 168 Total revenues 902 (10) 2 (9) — 885 Cost of service and membership related sales 64 4 — — — 68 Cost of vacation ownership products sales 56 — — (2) — 54 Cost of sales of rental and ancillary services 156 (1) — — — 155 Cost reimbursements 176 (8) — — — 168 Selling and marketing expense 152 (5) — — (2) 145 Total operating costs and expenses 791 (10) — (2) (2) 777 Equity in earnings from unconsolidated entities 3 — — — — 3 Earnings before income taxes and noncontrolling interest 112 — 2 (7) 2 109 Income tax benefit (provision) (39) — (1) 2 — (38) Net income attributable to common stockholders 72 — 1 (5) 2 70 Earnings per share attributable to common stockholders: Basic 0.58 0.56 Diluted 0.57 0.55 (1) Includes impact of item numbers 2, 3 and 6 described further above. (2) Includes impact of item number 4 described above, and other items of lesser significance. (As reported) (Restated) December 31, 2017 BCD Other (3) December 31, 2017 Vacation ownership mortgages receivable, net (current) 78 1 — 79 Vacation ownership inventory 499 (3) — 496 Prepaid expenses 62 (2) 4 64 Other current assets 32 — 1 33 Total current assets 1,199 (4) 5 1,200 Vacation ownership mortgages receivable, net (noncurrent) 644 14 — 658 Investment in unconsolidated entities 54 1 — 55 TOTAL ASSETS 3,671 11 5 3,687 Accrued expenses and other current liabilities 217 (2) — 215 Total current liabilities 643 (2) — 641 Deferred income taxes 128 4 1 133 TOTAL LIABILITIES 1,967 2 1 1,970 Retained earnings 584 9 4 597 Total shareholders’ equity 1,666 9 4 1,679 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 3,671 11 5 3,687 (3) Includes impact on condensed consolidated balance sheet for all items described above, except BCD. |
RESTRICTED CASH (Tables)
RESTRICTED CASH (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
RESTRICTED CASH | |
Schedule of restricted cash | Restricted cash consists of the following (in millions): June 30, December 31, 2018 2017 Escrow deposits on vacation ownership products $ 46 $ 70 HOAs 138 137 Securitization VIEs 18 20 Other 17 3 Total restricted cash $ 219 $ 230 |
VACATION OWNERSHIP MORTGAGES 35
VACATION OWNERSHIP MORTGAGES RECEIVABLE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
VACATION OWNERSHIP MORTGAGES RECEIVABLE | |
Schedule of mortgages receivable | Vacation ownership mortgages receivable carrying amounts as of June 30, 2018 and December 31, 2017 were as follows (in millions): June 30, December 31, 2018 2017 Securitized Unsecuritized (2) Total Securitized Unsecuritized (2) Total Acquired vacation ownership mortgages receivable (1) $ 283 $ 35 $ 318 $ 345 $ 38 $ 383 Originated vacation ownership mortgages receivable (1) 231 266 497 251 163 414 Less: allowance for impairment on acquired loans (6) (1) (7) (4) (1) (5) Less: allowance for losses on originated loans (29) (45) (74) (33) (22) (55) Net vacation ownership mortgages receivable $ 479 $ 255 $ 734 $ 559 $ 178 $ 737 (1) At various interest rates with varying payment terms through 2032 for acquired receivables and for originated receivables. (2) As of June 30, 2018, $13 million of unsecuritized vacation ownership receivables were not eligible for securitization. |
Schedule of changes in accretable yield | Six Months Ended Accretable Yield June 30, 2018 Balance, beginning of period $ 99 Accretion (21) Reclassification from nonaccretable difference (2) Balance, end of period $ 76 Nonaccretable difference, end of period balance $ 29 |
Schedule to mature mortgages receivables | Vacation ownership mortgages receivable as of June 30, 2018 are scheduled to mature as follows (in millions): Vacation Ownership Mortgages Receivable Acquired Originated Twelve month period ending June 30, Securitized Loans Unsecuritized Loans Securitized Loans Unsecuritized Loans Total 2019 $ 31 $ 4 $ 16 $ 19 $ 70 2020 31 3 17 16 67 2021 30 3 19 18 70 2022 28 3 22 20 73 2023 25 2 24 22 73 2024 and thereafter 59 8 133 171 371 Total 204 23 231 266 724 Plus: net premium on acquired loans (1) 79 12 — — 91 Less: allowance for impairment on acquired loans (6) (1) — — (7) Less: allowance for losses on originated loans — — (29) (45) (74) Net vacation ownership mortgages receivable $ 277 $ 34 $ 202 $ 221 $ 734 Weighted average stated interest rate as of June 30, 2018 13.3% 13.5% Range of stated interest rates as of June 30, 2018 8.00% to 15.90% 9.90% to 15.90% (1) The difference between the contractual principal amount of acquired loans of $227 million and the net carrying amount of $311 million as of June 30, 2018 is related to the application of ASC 310-30. |
Schedule of vacation ownership notes receivable by brand and by FICO score | Balances of our vacation ownership mortgages receivable by brand and by FICO score (at time of loan origination) were as follows (in millions): As of June 30, 2018 700+ 600-699 <600 No Score (1) Total Westin $ 209 $ 99 $ 7 $ 30 $ 345 Sheraton 178 152 21 69 420 Hyatt 24 14 2 1 41 Other 5 1 — 3 9 Vacation ownership mortgages receivable, gross $ 416 $ 266 $ 30 $ 103 $ 815 (1) Mortgages receivable with no FICO score primarily relate to non-U.S. resident borrowers. |
Schedule of past-due and nonaccrual status of mortgages receivable | Our aged analysis of delinquent VO mortgages receivable and the gross balance of VO mortgages receivable greater than 120 days past‑due, as of June 30, 2018 and December 31, 2017, for our originated loans are as follows (in millions): Delinquent Defaulted (1) Receivables Current 30-59 Days 60-89 Days 90-119 Days ≥120 Total Delinquent & Defaulted Originated Loans June 30, 2018 $ 497 $ 474 $ 6 $ 4 $ 3 $ 10 $ 23 December 31, 2017 $ 414 $ 394 $ 6 $ 5 $ 3 $ 6 $ 20 (1) Mortgages receivable equal to or greater than 120 days are considered defaulted and have been fully reserved in our allowance of loan losses for originated loans. |
VACATION OWNERSHIP INVENTORY (T
VACATION OWNERSHIP INVENTORY (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
VACATION OWNERSHIP INVENTORY | |
Schedule of ownership inventory | As of June 30, 2018 and December 31, 2017, vacation ownership inventory is comprised of the following (in millions): June 30, December 31, 2018 2017 Completed unsold vacation ownership interests (current asset) $ 483 $ 492 Vacation ownership projects construction in process (non-current asset) 72 60 Other 3 4 Total vacation ownership inventory $ 558 $ 556 |
INVESTMENTS IN UNCONSOLIDATED37
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
INVESTMENTS IN UNCONSOLIDATED ENTITIES | |
Schedule of carrying value of our investments in unconsolidated entities | The carrying value of our investments in unconsolidated entities as of June 30, 2018 and December 31, 2017 were as follows (in millions): June 30, December 31, 2018 2017 Maui Timeshare Venture, LLC $ 42 $ 42 Harborside at Atlantis 12 11 Other — 2 Total investments in unconsolidated entities $ 54 $ 55 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
PROPERTY AND EQUIPMENT | |
Schedule of Property and equipment, net | Property and equipment, net is as follows (in millions): June 30, December 31, 2018 2017 Computer equipment $ 47 $ 43 Capitalized software (including internally developed software) 189 177 Land, buildings and leasehold improvements 444 431 Land held for development 56 56 Furniture, fixtures and other equipment 78 72 Construction projects in progress 20 20 Other projects in progress 26 40 Total property and equipment 860 839 Less: accumulated depreciation and amortization (254) (223) Total property and equipment, net $ 606 $ 616 |
GOODWILL AND OTHER INTANGIBLE39
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Schedule of balance of goodwill by reporting unit | The following tables present the balance of goodwill by reporting unit, including the changes in carrying amount of goodwill, as of June 30, 2018 and December 31, 2017 (in millions): Foreign Balance as of Currency Goodwill Balance as of January 1, 2018 Additions Deductions Translation Impairment June 30, 2018 VO management $ 37 $ — $ — $ — $ — $ 37 VO sales and financing 11 — — — — 11 Exchange 496 — — — — 496 Rental 20 — — — — 20 Total goodwill $ 564 $ — $ — $ — $ — $ 564 Foreign Balance as of Currency Goodwill Balance as of January 1, 2017 Additions Deductions Translation Impairment December 31, 2017 VO management $ 35 $ — $ — $ 2 $ — $ 37 VO sales and financing 7 4 — — — 11 Exchange 496 — — — — 496 Rental 20 — — — — 20 Total goodwill $ 558 $ 4 $ — $ 2 $ — $ 564 |
Schedule of balance of intangible assets, net | The balance of other intangible assets, net as of June 30, 2018 and December 31, 2017 is as follows (in millions): June 30, December 31, 2018 2017 Intangible assets with indefinite lives $ 118 $ 120 Intangible assets with definite lives, net 310 320 Total intangible assets, net $ 428 $ 440 |
Schedule of intangible assets with indefinite lives | At June 30, 2018 and December 31, 2017, intangible assets with indefinite lives relate to the following (in millions): June 30, December 31, 2018 2017 Resort management contracts $ 74 $ 76 Trade names and trademarks 44 44 Total intangible assets with indefinite lives $ 118 $ 120 |
Schedule of intangible assets with definite lives | At June 30, 2018, intangible assets with definite lives relate to the following (in millions): Cost Accumulated Amortization Net Customer relationships $ 287 $ (146) $ 141 Purchase agreements 76 (76) — Resort management contracts 246 (77) 169 Technology 25 (25) — Other 23 (23) — Total intangible assets with definite lives $ 657 $ (347) $ 310 At December 31, 2017, intangible assets with definite lives relate to the following (in millions): Cost Accumulated Amortization Net Customer relationships $ 287 $ (143) $ 144 Purchase agreements 76 (76) — Resort management contracts 246 (71) 175 Technology 25 (25) — Other 23 (22) 1 Total intangible assets with definite lives $ 657 $ (337) $ 320 |
Schedule of amortization expense of intangible assets with definite lives | Based on the June 30, 2018 balances, amortization expense for the next five years and thereafter is estimated to be as follows (in millions): Twelve month period ending June 30, 2019 $ 20 2020 19 2021 19 2022 15 2023 14 2024 and thereafter 223 $ 310 |
CONSOLIDATED VARIABLE INTERES40
CONSOLIDATED VARIABLE INTEREST ENTITIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
CONSOLIDATED VARIABLE INTEREST ENTITIES | |
Schedule of assets which are collateral for related obligations of the variable interest entities | The following table shows assets which are collateral for the related obligations of the variable interest entities, included in our condensed consolidated balance sheets (in millions): Vacation Ownership Notes Receivable Securitization (1) June 30, December 31, 2018 2017 Assets Restricted cash $ 18 $ 20 Interest receivable 3 4 Vacation ownership mortgages receivable, net 479 559 Total $ 500 $ 583 Liabilities Interest payable $ 1 $ 1 Securitized debt 489 575 Total $ 490 $ 576 (1) The creditors of these entities do not have general recourse to us. |
ACCRUED EXPENSES AND OTHER CU41
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of general components of accrued liabilities | The following table summarizes the general components of accrued expenses and other current liabilities (in millions): June 30, December 31, 2018 2017 General accrued expenses $ 97 $ 82 Accrued other taxes 20 19 Customer deposits 89 76 Accrued membership-related costs 20 17 Accrued construction costs 24 15 Member deposits 6 6 Total accrued expenses and other current liabilities $ 256 $ 215 |
DEFERRED REVENUE (Tables)
DEFERRED REVENUE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
DEFERRED REVENUE | |
Schedule of general components of deferred revenue | The following table summarized the general components of deferred revenue (in millions): June 30, December 31, 2018 2017 Deferred membership-related revenue $ 177 $ 152 HOAs 69 76 Other 13 10 Total deferred revenue $ 259 $ 238 |
SECURITIZED VACATION OWNERSHI43
SECURITIZED VACATION OWNERSHIP DEBT (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
SECURITIZED VACATION OWNERSHIP DEBT | |
Schedule of securitized vacation ownership debt | Securitized vacation ownership debt consisted of the following (in millions): June 30, December 31, 2018 2017 2012 securitization, interest rates ranging from 2.00% to 2.76%, maturing 2023 $ 27 $ 33 2016 securitization, interest rates ranging from 2.54% to 2.74%, maturing 2026 203 244 2017 securitization, interest rates ranging from 2.33% to 2.93%, maturing 2029 265 305 Unamortized debt issuance costs (2016 & 2017 securitization) (6) (7) Total securitized vacation ownership debt, net of debt issuance costs $ 489 $ 575 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
LONG-TERM DEBT | |
Schedule of Long-term debt | Long‑term debt is as follows (in millions): June 30, December 31, 2018 2017 Revolving credit facility (interest rate of 3.78% at June 30, 2018 and of 3.10% at December 31, 2017) $ 205 $ 220 5.625% senior notes 350 350 Unamortized debt issuance costs (revolving credit facility) (2) (3) Unamortized debt issuance costs (senior notes) (5) (5) Total long-term debt, net of debt issuance costs $ 548 $ 562 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
FAIR VALUE MEASUREMENTS | |
Schedule of estimated fair value of financial instruments | June 30, 2018 December 31, 2017 Carrying Fair Carrying Fair Amount Value Amount Value (In millions) Cash and cash equivalents $ 143 $ 143 $ 122 $ 122 Restricted cash and cash equivalents 219 219 230 230 Financing receivables 37 37 36 36 Vacation ownership mortgages receivable 734 786 737 770 Investments in marketable securities 8 8 13 13 Securitized debt 489 482 575 563 Revolving credit facility (1) 203 205 217 220 Senior notes (1) 345 353 345 364 (1) The carrying value of our revolving credit facility and senior notes as of June 30, 2018 include $2 million and $5 million of unamortized debt issuance costs, respectively, and $3 million and $5 million as of December 31, 2017, which are presented as a direct reduction of the corresponding liability. |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
STOCK-BASED COMPENSATION | |
Schedule of allocation of recognized compensation cost | Non‑cash stock‑based compensation expense related to equity awards is included in the following line items in the accompanying condensed consolidated statements of income for the three and six months ended June 30, 2018 and 2017 (in millions): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Cost of sales $ 1 $ — $ 1 $ 1 Selling and marketing expense — — 1 1 General and administrative expense 4 7 9 10 Non-cash compensation expense $ 5 $ 7 $ 11 $ 12 |
Schedule of RSU award activity | The following table summarizes RSU activity during the six months ended June 30, 2018: Weighted-Average Grant Date Shares Fair Value (In millions) Non-vested RSUs at January 1, 2018 3 $ 17.53 Granted 1 33.24 Vested (1) 19.54 Forfeited — 18.30 Non-vested RSUs at June 30, 2018 3 $ 20.93 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
SEGMENT INFORMATION | |
Schedule of information on reportable segments and reconciliation to consolidated operating income | Information on reportable segments and reconciliation to consolidated operating income is as follows (in millions): Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Vacation Ownership: Resort operations revenue $ 58 $ 53 $ 124 $ 110 Management fee and other revenue 61 33 116 64 Sales of vacation ownership products, net 121 118 244 223 Consumer financing revenue 23 22 47 43 Cost reimbursement revenue 45 59 90 117 Total revenue 308 285 621 557 Cost of service and membership related 49 14 94 26 Cost of sales of vacation ownership products 22 28 61 54 Cost of sales of rental and ancillary services 45 57 89 107 Cost of consumer financing 7 7 15 14 Cost reimbursements 45 59 90 117 Total cost of sales 168 165 349 318 Royalty fee expense 11 10 21 20 Selling and marketing expense 68 63 134 119 General and administrative expense 31 27 57 53 Amortization expense of intangibles 2 2 4 4 Depreciation expense 11 10 21 20 Segment operating income $ 17 $ 8 $ 35 $ 23 Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Exchange and Rental: Transaction revenue $ 50 $ 49 $ 109 $ 108 Membership fee revenue 35 36 71 71 Ancillary member revenue 2 2 4 5 Total member revenue 87 87 184 184 Club rental revenue 29 27 62 57 Other revenue 6 5 12 10 Rental management revenue 11 11 24 26 Cost reimbursement revenue 20 26 41 51 Total revenue 153 156 323 328 Cost of service and membership related 18 19 38 42 Cost of sales of rental and ancillary services 25 21 53 48 Cost reimbursements 20 26 41 51 Total cost of sales 63 66 132 141 Royalty fee expense — 1 1 1 Selling and marketing expense 13 13 25 26 General and administrative expense 34 31 67 59 Amortization expense of intangibles 3 3 6 6 Depreciation expense 5 5 10 10 Segment operating income $ 35 $ 37 $ 82 $ 85 Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Consolidated: Revenue $ 461 $ 441 $ 944 $ 885 Cost of sales 231 231 481 459 Operating expenses 178 165 346 318 Operating income $ 52 $ 45 $ 117 $ 108 |
Schedule of financial information by reportable segment | Selected financial information by reporting segment is presented below (in millions). June 30, December 31, 2018 2017 Total Assets: Vacation Ownership $ 2,579 $ 2,603 Exchange and Rental 1,082 1,084 Total $ 3,661 $ 3,687 |
Schedule of geographic information on revenue, based on sourcing, and long-lived assets, based on physical location | Geographic information on revenue, based on sourcing, and long‑lived assets, based on physical location, is presented in the table below (in millions). Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 Revenue: United States $ 409 $ 374 $ 834 $ 748 All other countries (1) 52 67 110 137 Total $ 461 $ 441 $ 944 $ 885 (1) Includes countries within the following continents: Africa, Asia, Australia, Europe, North America and South America. June 30, December 31, 2018 2017 Long-lived assets, net (excluding goodwill and intangible assets): United States $ 477 $ 486 Mexico 125 126 Europe 4 4 Total $ 606 $ 616 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
Summary of future periods in which such obligations are expected to be settled in cash | The following table summarizes these items, on an undiscounted basis, at June 30, 2018 and the future periods in which such obligations are expected to be settled in cash. In addition, the table reflects the timing of principal and interest payments on outstanding borrowings. Payments Due by Period Up to More than Contractual Obligations Total 1 year 1 ‑ 3 years 3 ‑ 5 years 5 years (Dollars in millions) Debt principal (a) $ 555 $ — $ 205 $ 350 $ — Debt interest (a) 122 29 57 36 — Purchase obligations and other commitments (b) 56 30 22 4 — Operating leases 141 20 31 19 71 Total contractual obligations $ 874 $ 79 $ 315 $ 409 $ 71 (a) Debt principal and projected debt interest represent principal and interest to be paid on our senior notes and revolving credit facility based on the balance outstanding as of June 30, 2018, exclusive of debt issuance costs. In addition, also included are certain fees associated with our revolving credit facility based on the unused borrowing capacity and outstanding letters of credit balances, if any, as of June 30, 2018. Interest on the revolving credit facility is calculated using the prevailing rates as of June 30, 2018. (b) |
SUPPLEMENTAL GUARANTOR INFORM49
SUPPLEMENTAL GUARANTOR INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
SUPPLEMENTAL GUARANTOR INFORMATION | |
Schedule of condensed consolidating balance sheet | Balance Sheet as of June 30, 2018 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Current assets $ 2 $ 2 $ 750 $ 439 $ — $ 1,193 Property and equipment, net 1 — 455 150 — 606 Goodwill and intangible assets, net — 266 619 107 — 992 Investments in subsidiaries 888 1,605 1,038 — (3,531) — Other assets — — 394 476 — 870 Total assets $ 891 $ 1,873 $ 3,256 $ 1,172 $ (3,531) $ 3,661 Current liabilities $ 3 $ 5 $ 384 $ 279 $ — $ 671 Other long-term liabilities — — 232 112 — 344 Long term debt and securitized debt from VIEs (noncurrent portion) — 548 — 361 — 909 Intercompany liabilities (receivables) / equity (809) 432 1,036 (659) — — Redeemable noncontrolling interest — — 1 — — 1 ILG stockholders' equity 1,697 888 1,605 1,038 (3,531) 1,697 Noncontrolling interests — — (2) 41 — 39 Total liabilities and equity $ 891 $ 1,873 $ 3,256 $ 1,172 $ (3,531) $ 3,661 Balance Sheet as of December 31, 2017 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Current assets $ 1 $ 3 $ 790 $ 406 $ — $ 1,200 Property and equipment, net 1 — 464 151 — 616 Goodwill and intangible assets, net — 266 628 110 — 1,004 Investments in subsidiaries 824 1,521 1,022 — (3,367) — Other assets — — 285 582 — 867 Total assets $ 826 $ 1,790 $ 3,189 $ 1,249 $ (3,367) $ 3,687 Current liabilities $ 3 $ 5 $ 339 $ 294 $ — $ 641 Other long-term liabilities — — 236 102 — 338 Long term debt and securitized debt from VIEs (noncurrent portion) — 562 — 429 — 991 Intercompany liabilities (receivables) / equity (856) 399 1,093 (636) — — Redeemable noncontrolling interest — — 1 — — 1 ILG stockholders' equity 1,679 824 1,521 1,022 (3,367) 1,679 Noncontrolling interests — — (1) 38 — 37 Total liabilities and equity $ 826 $ 1,790 $ 3,189 $ 1,249 $ (3,367) $ 3,687 |
Schedule of condensed consolidating statement of income | Statement of Income for the Three Months Ended June 30, 2018 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ — $ — $ 401 $ 60 $ — $ 461 Operating expenses (2) — (361) (46) — (409) Interest income (expense), net — (6) 1 (1) — (6) Other income (expense), net (1) 29 33 3 (3) (67) (5) Income tax benefit (provision) — 2 (11) (4) — (13) Equity in earnings from unconsolidated entities — — — — — — Net income (loss) 27 29 33 6 (67) 28 Net loss attributable to noncontrolling interests — — — (1) — (1) Net income (loss) attributable to common stockholders $ 27 $ 29 $ 33 $ 5 $ (67) $ 27 Statement of Income for the Three Months Ended June 30, 2017 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ — $ — $ 371 $ 70 $ — $ 441 Operating expenses (2) — (340) (54) — (396) Interest income (expense), net — (7) 2 (2) — (7) Other income (expense), net 28 30 (3) 4 (59) — Income tax benefit (provision) — 2 (2) (13) — (13) Equity in earnings from unconsolidated entities — — 1 — — 1 Net income (loss) 26 25 29 5 (59) 26 Net income (loss) attributable to noncontrolling interests — — 1 (1) — — Net income (loss) attributable to common stockholders $ 26 $ 25 $ 30 $ 4 $ (59) $ 26 Statement of Income for the Six Months Ended June 30, 2018 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ — $ — $ 816 $ 128 $ — $ 944 Operating expenses (4) — (731) (92) — (827) Interest income (expense), net — (14) 2 (2) — (14) Other income (expense), net 72 82 18 5 (177) — Income tax benefit (provision) 1 4 (25) (13) — (33) Equity in earnings from unconsolidated entities — — 1 — — 1 Net income (loss) 69 72 81 26 (177) 71 Net income (loss) attributable to noncontrolling interests — — 1 (3) — (2) Net income (loss) attributable to common stockholders $ 69 $ 72 $ 82 $ 23 $ (177) $ 69 Statement of Income for the Six Months Ended June 30, 2017 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ — $ — $ 744 $ 141 $ — $ 885 Operating expenses (4) — (681) (92) — (777) Interest income (expense), net — (13) 5 (4) — (12) Other income (expense), net 72 79 26 16 (183) 10 Income tax benefit (provision) 1 4 (18) (25) — (38) Equity in earnings from unconsolidated entities — — 3 — — 3 Net income (loss) 69 70 79 36 (183) 71 Net income (loss) attributable to noncontrolling interests — — 1 (2) — (1) Net income (loss) attributable to common stockholders $ 69 $ 70 $ 80 $ 34 $ (183) $ 70 |
Schedule of condensed consolidating statement of cash flows | Statement of Cash Flows for the Six Months Ended June 30, 2018 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries ILG Consolidated Cash flows provided by (used in) operating activities $ (2) $ (8) $ 90 $ 104 $ 184 Cash flows provided by (used in) investing activities — — (21) 3 (18) Cash flows provided by (used in) financing activities 3 8 (51) (113) (153) Effect of exchange rate changes on cash, cash equivalents and restricted cash — — — (3) (3) Cash, cash equivalents and restricted cash at beginning of period — 2 82 268 352 Cash, cash equivalents and restricted cash at end of period $ 1 $ 2 $ 100 $ 259 $ 362 Statement of Cash Flows for the Six Months Ended June 30, 2017 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries ILG Consolidated Cash flows provided by (used in) operating activities $ (1) $ (7) $ (31) $ 121 $ 82 Cash flows used in investing activities — — (39) (9) (48) Cash flows provided by (used in) financing activities 1 7 52 (100) (40) Effect of exchange rate changes on cash, cash equivalents and restricted cash — — — 3 3 Cash, cash equivalents and restricted cash at beginning of period — — 100 144 244 Cash, cash equivalents and restricted cash at end of period $ — $ — $ 82 $ 159 $ 241 |
ORGANIZATION AND BASIS OF PRE50
ORGANIZATION AND BASIS OF PRESENTATION (Details) - item | May 11, 2016 | Jun. 30, 2018 |
Organization | ||
Number of operating segments | 2 | |
Vistana | ||
Organization | ||
Global license agreement term | 80 years | |
Number of extended term Of Global License Agreement | 2 | |
Term of Global License Agreement | 30 years |
ORGANIZATION AND BASIS OF PRE51
ORGANIZATION AND BASIS OF PRESENTATION - Merger Agreement with Marriott Vacations (Details) - Merger Agreement - Marriott Vacations | Apr. 30, 2018$ / shares |
ORGANIZATION AND BASIS OF PRESENTATION | |
Consideration received (in dollars per share) | $ 14.75 |
Shares received (in dollars per share) | $ 0.165 |
Ownership interest acquired post merger | 43.00% |
SIGNIFICANT ACCOUNTING POLICI52
SIGNIFICANT ACCOUNTING POLICIES - Earnings per Share Narrative (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Restricted Stock Units (RSUs) | ||||
Securities not included in the computations of diluted earnings per share | ||||
Securities excluded from computation of diluted earnings per share (in shares) | 0.1 | 0.1 | 0.3 | 0.4 |
SIGNIFICANT ACCOUNTING POLICI53
SIGNIFICANT ACCOUNTING POLICIES - Earnings per Share Table (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share | ||||
Basic weighted average shares of common stock outstanding | 124,241 | 124,384 | 124,033 | 124,191 |
Diluted weighted average shares of common stock outstanding | 125,874 | 126,141 | 125,813 | 125,862 |
Net income attributable to common stockholders | $ 27 | $ 26 | $ 69 | $ 70 |
Weighted average number of shares of common stock outstanding (in 000's): | ||||
Basic (in shares) | 124,241 | 124,384 | 124,033 | 124,191 |
Diluted (in shares) | 125,874 | 126,141 | 125,813 | 125,862 |
Earnings per share attributable to common stockholders: | ||||
Basic (in dollars per share) | $ 0.21 | $ 0.21 | $ 0.56 | $ 0.56 |
Diluted (in dollars per share) | $ 0.21 | $ 0.20 | $ 0.55 | $ 0.55 |
Restricted Stock Units (RSUs) | ||||
Weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share | ||||
Net effect of common stock equivalents (in shares) | 1,633 | 1,757 | 1,780 | 1,671 |
SIGNIFICANT ACCOUNTING POLICI54
SIGNIFICANT ACCOUNTING POLICIES - New ASU Adoption (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Recent Accounting Pronouncements | |||
Retained earnings | $ 615 | $ 597 | |
Accounting Standards Update 2016-16 | Early adopted | |||
Recent Accounting Pronouncements | |||
Retained earnings | $ 7 |
REVENUE RECOGNITION - Adjustmen
REVENUE RECOGNITION - Adjustments to income statement (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | $ 461 | $ 441 | $ 944 | $ 885 |
Cost of sales | 231 | 231 | 481 | 459 |
Selling and marketing expense | 81 | 76 | 159 | 145 |
Total operating costs and expenses | 409 | 396 | 827 | 777 |
Equity income from investments in unconsolidated entities | 1 | 1 | 3 | |
Earnings before income taxes and noncontrolling interests | 41 | 39 | 104 | 109 |
Income tax benefit (provision) | (13) | (13) | (33) | (38) |
Net income attributable to common stockholders | $ 27 | $ 26 | $ 69 | $ 70 |
Earnings per share attributable to common stockholders: | ||||
Basic (in dollars per share) | $ 0.21 | $ 0.21 | $ 0.56 | $ 0.56 |
Diluted (in dollars per share) | $ 0.21 | $ 0.20 | $ 0.55 | $ 0.55 |
As Reported | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | $ 450 | $ 902 | ||
Selling and marketing expense | 80 | 152 | ||
Total operating costs and expenses | 404 | 791 | ||
Equity income from investments in unconsolidated entities | 2 | 3 | ||
Earnings before income taxes and noncontrolling interests | 41 | 112 | ||
Income tax benefit (provision) | (14) | (39) | ||
Net income attributable to common stockholders | $ 27 | $ 72 | ||
Earnings per share attributable to common stockholders: | ||||
Basic (in dollars per share) | $ 0.22 | $ 0.58 | ||
Diluted (in dollars per share) | $ 0.22 | $ 0.57 | ||
Reclassification Adjustments | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | $ (6) | $ (10) | ||
Selling and marketing expense | (3) | (5) | ||
Total operating costs and expenses | (6) | (10) | ||
BCD Adjustments | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | 1 | 2 | ||
Equity income from investments in unconsolidated entities | (1) | |||
Earnings before income taxes and noncontrolling interests | 2 | |||
Income tax benefit (provision) | (1) | |||
Net income attributable to common stockholders | 1 | |||
Percentage of Completion Adjustments | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | (4) | (9) | ||
Total operating costs and expenses | (1) | (2) | ||
Earnings before income taxes and noncontrolling interests | (3) | (7) | ||
Income tax benefit (provision) | 1 | 2 | ||
Net income attributable to common stockholders | (2) | (5) | ||
Other Adjustments | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Selling and marketing expense | (1) | (2) | ||
Total operating costs and expenses | (1) | (2) | ||
Earnings before income taxes and noncontrolling interests | 1 | 2 | ||
Net income attributable to common stockholders | 1 | 2 | ||
Service and membership related | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | $ 148 | 119 | $ 300 | 247 |
Cost of sales | 67 | 33 | 132 | 68 |
Service and membership related | As Reported | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | 246 | |||
Cost of sales | 32 | 64 | ||
Service and membership related | Reclassification Adjustments | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | 1 | |||
Cost of sales | 1 | 4 | ||
Vacation ownership products | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | 121 | 118 | 244 | 223 |
Cost of sales | 22 | 28 | 61 | 54 |
Vacation ownership products | As Reported | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | 123 | 233 | ||
Cost of sales | 29 | 56 | ||
Vacation ownership products | Reclassification Adjustments | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | (2) | (3) | ||
Vacation ownership products | BCD Adjustments | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | 1 | 2 | ||
Vacation ownership products | Percentage of Completion Adjustments | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | (4) | (9) | ||
Cost of sales | (1) | (2) | ||
Rental and ancillary services | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | 104 | 97 | 222 | 204 |
Cost of sales | 70 | 78 | 142 | 155 |
Rental and ancillary services | As Reported | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Cost of sales | 156 | |||
Rental and ancillary services | Reclassification Adjustments | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Cost of sales | (1) | |||
Consumer financing | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | 23 | 22 | 47 | 43 |
Cost of sales | 7 | 7 | 15 | 14 |
Cost reimbursements | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | 65 | 85 | 131 | 168 |
Cost of sales | $ 65 | 85 | $ 131 | 168 |
Cost reimbursements | As Reported | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | 89 | 176 | ||
Cost of sales | 89 | 176 | ||
Cost reimbursements | Reclassification Adjustments | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | (4) | (8) | ||
Cost of sales | $ (4) | $ (8) |
REVENUE RECOGNITION - Adjustm56
REVENUE RECOGNITION - Adjustments to Balance sheets (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Receivables | $ 77 | $ 79 |
Vacation ownership inventory | 486 | 496 |
Prepaid expenses | 91 | 64 |
Other current assets | 30 | 33 |
Total current assets | 1,193 | 1,200 |
Vacation ownership mortgages receivable, net | 657 | 658 |
Investments in unconsolidated entities | 54 | 55 |
TOTAL ASSETS | 3,661 | 3,687 |
Accrued expenses and other current liabilities | 256 | 215 |
Total current liabilities | 671 | 641 |
Deferred income taxes | 142 | 133 |
TOTAL LIABILITIES | 1,924 | 1,970 |
Retained earnings | 615 | 597 |
Total shareholders' equity | 1,697 | 1,679 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 3,661 | 3,687 |
As Reported | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Receivables | 78 | |
Vacation ownership inventory | 499 | |
Prepaid expenses | 62 | |
Other current assets | 32 | |
Total current assets | 1,199 | |
Vacation ownership mortgages receivable, net | 644 | |
Investments in unconsolidated entities | 54 | |
TOTAL ASSETS | 3,671 | |
Accrued expenses and other current liabilities | 217 | |
Total current liabilities | 643 | |
Deferred income taxes | 128 | |
TOTAL LIABILITIES | 1,967 | |
Retained earnings | 584 | |
Total shareholders' equity | 1,666 | |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 3,671 | |
BCD Adjustments | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Receivables | 1 | |
Vacation ownership inventory | (3) | |
Prepaid expenses | (2) | |
Total current assets | (4) | |
Vacation ownership mortgages receivable, net | 14 | |
Investments in unconsolidated entities | 1 | |
TOTAL ASSETS | 11 | |
Accrued expenses and other current liabilities | (2) | |
Total current liabilities | (2) | |
Deferred income taxes | 4 | |
TOTAL LIABILITIES | 2 | |
Retained earnings | 9 | |
Total shareholders' equity | 9 | |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 11 | |
Other Adjustments | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Prepaid expenses | 4 | |
Other current assets | 1 | |
Total current assets | 5 | |
TOTAL ASSETS | 5 | |
Deferred income taxes | 1 | |
TOTAL LIABILITIES | 1 | |
Retained earnings | 4 | |
Total shareholders' equity | 4 | |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 5 |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) | 6 Months Ended |
Jun. 30, 2018payment | |
Vacation Ownership | |
Segment Reporting Information [Line Items] | |
Number of financing payments to be made to provide incentives | 6 |
Minimum | Vacation Ownership | |
Segment Reporting Information [Line Items] | |
Mortgage payable, term | 5 years |
Minimum | Exchange and Rental | |
Segment Reporting Information [Line Items] | |
Membership fee revenue recognition period | 1 year |
Maximum | Vacation Ownership | |
Segment Reporting Information [Line Items] | |
Mortgage payable, term | 15 years |
Maximum | Exchange and Rental | |
Segment Reporting Information [Line Items] | |
Membership fee revenue recognition period | 5 years |
REVENUE RECOGNITION - Capitaliz
REVENUE RECOGNITION - Capitalized Contract (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Costs to Obtain Contract | ||
Capitalized Contract Cost [Line Items] | ||
Asset balance | $ 21 | $ 19 |
Total amortization | 6 | |
Associated impairment losses | 0 | |
Fulfillment Costs | ||
Capitalized Contract Cost [Line Items] | ||
Asset balance | 4 | $ 5 |
Total amortization | 1 | |
Associated impairment losses | $ 0 |
REVENUE RECOGNITION - Disaggreg
REVENUE RECOGNITION - Disaggregation of revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 461 | $ 441 | $ 944 | $ 885 |
Service and membership related | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 148 | 119 | 300 | 247 |
Vacation ownership products | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 121 | 118 | 244 | 223 |
Rental and ancillary services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 104 | 97 | 222 | 204 |
Consumer financing | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 23 | 22 | 47 | 43 |
Cost reimbursements | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 65 | 85 | 131 | 168 |
Vacation Ownership | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 308 | 285 | 621 | 557 |
Vacation Ownership | Service and membership related | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 61 | 33 | 116 | 64 |
Vacation Ownership | Vacation ownership products | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 121 | 118 | 244 | 223 |
Vacation Ownership | Rental and ancillary services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 58 | 53 | 124 | 110 |
Vacation Ownership | Consumer financing | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 23 | 22 | 47 | 43 |
Vacation Ownership | Cost reimbursements | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 45 | 59 | 90 | 117 |
Operations | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 58 | 53 | 124 | 110 |
Operations | Rental and ancillary services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 58 | 53 | 124 | 110 |
Management Service | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 61 | 33 | 116 | 64 |
Management Service | Service and membership related | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 61 | 33 | 116 | 64 |
Service and membership related | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 121 | 118 | 244 | 223 |
Service and membership related | Vacation ownership products | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 121 | 118 | 244 | 223 |
Consumer financing | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 23 | 22 | 47 | 43 |
Consumer financing | Consumer financing | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 23 | 22 | 47 | 43 |
Cost reimbursements | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 45 | 59 | 90 | 117 |
Cost reimbursements | Cost reimbursements | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 45 | 59 | 90 | 117 |
Exchange and Rental | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 153 | 156 | 323 | 328 |
Exchange and Rental | Service and membership related | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 87 | 86 | 184 | 183 |
Exchange and Rental | Rental and ancillary services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 46 | 44 | 98 | 94 |
Exchange and Rental | Cost reimbursements | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 20 | 26 | 41 | 51 |
Members Revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 87 | 87 | 184 | 184 |
Members Revenue | Service and membership related | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 71 | 72 | 151 | 151 |
Members Revenue | Rental and ancillary services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 16 | 15 | 33 | 33 |
Transaction revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 50 | 49 | 109 | 108 |
Transaction revenue | Service and membership related | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 34 | 34 | 76 | 75 |
Transaction revenue | Rental and ancillary services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 16 | 15 | 33 | 33 |
Membership fee revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 35 | 36 | 71 | 71 |
Membership fee revenue | Service and membership related | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 35 | 36 | 71 | 71 |
Ancillary Member Revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 2 | 2 | 4 | 5 |
Ancillary Member Revenue | Service and membership related | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 2 | 2 | 4 | 5 |
Club Rental | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 29 | 27 | 62 | 57 |
Club Rental | Rental and ancillary services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 29 | 27 | 62 | 57 |
Other revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 6 | 5 | 12 | 10 |
Other revenue | Service and membership related | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 5 | 4 | 10 | 9 |
Other revenue | Rental and ancillary services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1 | 1 | 2 | 1 |
Rental management | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 11 | 11 | 24 | 26 |
Rental management | Service and membership related | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 11 | 10 | 23 | 23 |
Rental management | Rental and ancillary services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1 | 1 | 3 | |
Cost reimbursement revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 20 | 26 | 41 | 51 |
Cost reimbursement revenue | Cost reimbursements | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 20 | $ 26 | $ 41 | $ 51 |
REVENUE RECOGNITION - Contract
REVENUE RECOGNITION - Contract balances (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
REVENUE RECOGNITION | ||
Accounts receivable, net of allowance for doubtful accounts | $ 115 | $ 121 |
Vacation ownership mortgages receivable, net of allowance | 734 | 737 |
Contract liabilities | 259 | $ 232 |
Revenue recognized | $ 75 |
REVENUE RECOGNITION - Practical
REVENUE RECOGNITION - Practical expedient (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2018 | |
Contract with Customer, Asset, Net [Abstract] | ||
Practical expedient, expenses these costs as incurred | true | |
Associated impairment losses | $ 0 | |
Revenue expected to be recognized from remaining performance obligation | $ 103 |
REVENUE RECOGNITION - Transacti
REVENUE RECOGNITION - Transaction price allocated to remaining performance obligations (Details) | 6 Months Ended |
Jun. 30, 2018 | |
Membership Fees [Member] | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue recognition period | 1 year |
Membership Fees [Member] | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue recognition period | 8 years |
Fixed Management Fees [Member] | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue recognition period | 1 year |
Fixed Management Fees [Member] | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue recognition period | 8 years |
RESTRICTED CASH (Details)
RESTRICTED CASH (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Restricted cash | ||
Escrow deposits on vacation ownership products | $ 46 | $ 70 |
HOAs | 138 | 137 |
Securitization VIEs | 18 | 20 |
Other | 17 | 3 |
Total restricted cash | $ 219 | $ 230 |
VACATION OWNERSHIP MORTGAGES 64
VACATION OWNERSHIP MORTGAGES RECEIVABLE - Carrying amounts and Accretable yield (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Vacation ownership mortgages receivable | ||
Net vacation ownership mortgages receivable | $ 734 | $ 737 |
Accretable yield expected to be collected over the carrying amount | ||
Balance, beginning of period | 99 | |
Accretion | (21) | |
Reclassification between nonaccretable difference | (2) | |
Balance, end of period | 76 | |
Nonaccretable difference, end of period balance | 29 | |
Acquired vacation | ||
Vacation ownership mortgages receivable | ||
Vacation ownership mortgages receivable | 318 | 383 |
Less: allowance for loan impairment and losses | (7) | (5) |
Net vacation ownership mortgages receivable | 311 | |
Expected remaining principal payment | 227 | 296 |
Originated vacation | ||
Vacation ownership mortgages receivable | ||
Vacation ownership mortgages receivable | 497 | 414 |
Less: allowance for loan impairment and losses | (74) | (55) |
Securitized | ||
Vacation ownership mortgages receivable | ||
Net vacation ownership mortgages receivable | 479 | 559 |
Securitized | Acquired vacation | ||
Vacation ownership mortgages receivable | ||
Vacation ownership mortgages receivable | 283 | 345 |
Less: allowance for loan impairment and losses | (6) | (4) |
Net vacation ownership mortgages receivable | 277 | |
Securitized | Originated vacation | ||
Vacation ownership mortgages receivable | ||
Vacation ownership mortgages receivable | 231 | 251 |
Less: allowance for loan impairment and losses | (29) | (33) |
Net vacation ownership mortgages receivable | 202 | |
Unsecuritized | ||
Vacation ownership mortgages receivable | ||
Net vacation ownership mortgages receivable | 255 | 178 |
Unsecuritized vacation ownership receivables not eligible for securitization | 13 | |
Unsecuritized | Acquired vacation | ||
Vacation ownership mortgages receivable | ||
Vacation ownership mortgages receivable | 35 | 38 |
Less: allowance for loan impairment and losses | (1) | (1) |
Net vacation ownership mortgages receivable | 34 | |
Unsecuritized | Originated vacation | ||
Vacation ownership mortgages receivable | ||
Vacation ownership mortgages receivable | 266 | 163 |
Less: allowance for loan impairment and losses | (45) | $ (22) |
Net vacation ownership mortgages receivable | $ 221 |
VACATION OWNERSHIP MORTGAGES 65
VACATION OWNERSHIP MORTGAGES RECEIVABLE - Schedule of maturities (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Schedule of maturities for vacation ownership mortgages receivable | ||
2,019 | $ 70 | |
2,020 | 67 | |
2,021 | 70 | |
2,022 | 73 | |
2,023 | 73 | |
2024 and thereafter | 371 | |
Total | 724 | |
Net vacation ownership mortgages receivable | 734 | $ 737 |
Acquired vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Plus: net premium on acquired loans | 91 | |
Less: allowance for losses | (7) | (5) |
Net vacation ownership mortgages receivable | 311 | |
Expected remaining principal payment | 227 | 296 |
Originated vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Less: allowance for losses | $ (74) | (55) |
Minimum | Acquired vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Stated interest rates | 8.00% | |
Minimum | Originated vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Stated interest rates | 9.90% | |
Maximum | Acquired vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Stated interest rates | 15.90% | |
Maximum | Originated vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Stated interest rates | 15.90% | |
Securitized | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Net vacation ownership mortgages receivable | $ 479 | 559 |
Securitized | Acquired vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
2,019 | 31 | |
2,020 | 31 | |
2,021 | 30 | |
2,022 | 28 | |
2,023 | 25 | |
2024 and thereafter | 59 | |
Total | 204 | |
Plus: net premium on acquired loans | 79 | |
Less: allowance for losses | (6) | (4) |
Net vacation ownership mortgages receivable | 277 | |
Securitized | Originated vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
2,019 | 16 | |
2,020 | 17 | |
2,021 | 19 | |
2,022 | 22 | |
2,023 | 24 | |
2024 and thereafter | 133 | |
Total | 231 | |
Less: allowance for losses | (29) | (33) |
Net vacation ownership mortgages receivable | 202 | |
Unsecuritized | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Net vacation ownership mortgages receivable | 255 | 178 |
Unsecuritized | Acquired vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
2,019 | 4 | |
2,020 | 3 | |
2,021 | 3 | |
2,022 | 3 | |
2,023 | 2 | |
2024 and thereafter | 8 | |
Total | 23 | |
Plus: net premium on acquired loans | 12 | |
Less: allowance for losses | (1) | (1) |
Net vacation ownership mortgages receivable | 34 | |
Unsecuritized | Originated vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
2,019 | 19 | |
2,020 | 16 | |
2,021 | 18 | |
2,022 | 20 | |
2,023 | 22 | |
2024 and thereafter | 171 | |
Total | 266 | |
Less: allowance for losses | (45) | $ (22) |
Net vacation ownership mortgages receivable | $ 221 | |
Unsecuritized | Weighted Average | Acquired vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Stated interest rates | 13.30% | |
Unsecuritized | Weighted Average | Originated vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Stated interest rates | 13.50% |
VACATION OWNERSHIP MORTGAGES 66
VACATION OWNERSHIP MORTGAGES RECEIVABLE - Collectability (Details) $ in Millions | Jun. 30, 2018USD ($)item | Dec. 31, 2017USD ($) |
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Weighted average FICO score within originated loan pool | item | 711 | |
Average estimated rate of default for all outstanding loans | 11.80% | |
Vacation ownership mortgages receivable, gross | $ 815 | |
Receivables | 77 | $ 79 |
Greater than 700 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 416 | |
600 to 699 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 266 | |
Less than 600 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 30 | |
No Score | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 103 | |
Westin | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 345 | |
Westin | Greater than 700 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 209 | |
Westin | 600 to 699 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 99 | |
Westin | Less than 600 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 7 | |
Westin | No Score | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 30 | |
Sheraton | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 420 | |
Sheraton | Greater than 700 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 178 | |
Sheraton | 600 to 699 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 152 | |
Sheraton | Less than 600 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 21 | |
Sheraton | No Score | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 69 | |
Hyatt | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 41 | |
Hyatt | Greater than 700 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 24 | |
Hyatt | 600 to 699 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 14 | |
Hyatt | Less than 600 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 2 | |
Hyatt | No Score | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 1 | |
Other | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 9 | |
Other | Greater than 700 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 5 | |
Other | 600 to 699 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 1 | |
Other | No Score | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 3 | |
Acquired vacation | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Allowance for loan losses | 7 | 5 |
Originated vacation | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Allowance for loan losses | 74 | 55 |
Receivables | 497 | 414 |
Receivables Past Due | 23 | 20 |
Originated vacation | Current | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Receivables current | 474 | 394 |
Originated vacation | 30-59 Days | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Receivables Past Due | 6 | 6 |
Originated vacation | 60-89 Days | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Receivables Past Due | 4 | 5 |
Originated vacation | 90-119 Days | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Receivables Past Due | 3 | 3 |
Originated vacation | Defaulted | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Receivables Past Due | $ 10 | $ 6 |
VACATION OWNERSHIP INVENTORY (D
VACATION OWNERSHIP INVENTORY (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
VACATION OWNERSHIP INVENTORY | ||
Completed unsold vacation ownership interests (Current asset) | $ 483 | $ 492 |
Vacation ownership products construction in process (non-current asset) | 72 | 60 |
Other | 3 | 4 |
Total vacation ownership inventory | $ 558 | $ 556 |
INVESTMENTS IN UNCONSOLIDATED68
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Carrying value of our investments in unconsolidated entities | ||||
Equity income from investments in unconsolidated entities | $ 1 | $ 1 | $ 3 | |
Carrying value of investments in unconsolidated entities | $ 54 | $ 55 | ||
Maui Timeshare Venture, LLC | ||||
Carrying value of our investments in unconsolidated entities | ||||
Ownership percentages of investments in unconsolidated entities | 33.00% | |||
Carrying value of investments in unconsolidated entities | $ 42 | 42 | ||
Harborside Investments | ||||
Carrying value of our investments in unconsolidated entities | ||||
Ownership percentages of investments in unconsolidated entities | 50.00% | |||
Carrying value of investments in unconsolidated entities | $ 12 | 11 | ||
Other | ||||
Carrying value of our investments in unconsolidated entities | ||||
Ownership percentages of investments in unconsolidated entities | 25.00% | |||
Carrying value of investments in unconsolidated entities | $ 2 | |||
Other | Minimum | ||||
Carrying value of our investments in unconsolidated entities | ||||
Ownership percentages of investments in unconsolidated entities | 25.00% |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | $ 860 | $ 839 |
Less: accumulated depreciation and amortization | (254) | (223) |
Total property and equipment, net | 606 | 616 |
Computer Equipment | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | 47 | 43 |
Capitalized Software | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | 189 | 177 |
Land, Buildings and Leasehold Improvements | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | 444 | 431 |
Land held for development | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | 56 | 56 |
Furniture, fixtures and other equipment | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | 78 | 72 |
Construction projects in progress | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | 20 | 20 |
Other projects in progress | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | $ 26 | $ 40 |
GOODWILL AND OTHER INTANGIBLE70
GOODWILL AND OTHER INTANGIBLE ASSETS - Changes in carrying amount of goodwill (Details) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018USD ($)item | Dec. 31, 2017USD ($) | |
Goodwill | ||
Number of Operating Segments | item | 2 | |
Number of reporting segments | item | 2 | |
Changes in carrying amount of goodwill | ||
Balance at the beginning of the period | $ 564 | $ 558 |
Additions | 4 | |
Foreign Currency Translation | 2 | |
Balance at the end of the period | 564 | 564 |
VO management reporting unit | ||
Changes in carrying amount of goodwill | ||
Balance at the beginning of the period | 37 | 35 |
Foreign Currency Translation | 2 | |
Balance at the end of the period | 37 | 37 |
VO sales and financing reporting unit | ||
Changes in carrying amount of goodwill | ||
Balance at the beginning of the period | 11 | 7 |
Additions | 4 | |
Balance at the end of the period | 11 | 11 |
Exchange reporting unit | ||
Changes in carrying amount of goodwill | ||
Balance at the beginning of the period | 496 | 496 |
Balance at the end of the period | 496 | 496 |
Rental reporting unit | ||
Changes in carrying amount of goodwill | ||
Balance at the beginning of the period | 20 | 20 |
Balance at the end of the period | $ 20 | $ 20 |
GOODWILL AND OTHER INTANGIBLE71
GOODWILL AND OTHER INTANGIBLE ASSETS - Intangibles assets, net (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Intangibles assets, net | ||
Intangible assets with indefinite lives | $ 118 | $ 120 |
Intangible assets with definite lives, net | 310 | 320 |
Total intangible assets, net | 428 | 440 |
Change in indefinite-lived intangible assets | (2) | |
Resort Management Contracts | ||
Intangibles assets, net | ||
Intangible assets with indefinite lives | 74 | 76 |
Trade Names and Trademarks | ||
Intangibles assets, net | ||
Intangible assets with indefinite lives | $ 44 | $ 44 |
GOODWILL AND OTHER INTANGIBLE72
GOODWILL AND OTHER INTANGIBLE ASSETS - Intangible assets with definite lives (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Other intangible assets | |||||
Cost | $ 657 | $ 657 | $ 657 | ||
Accumulated Amortization | (347) | (347) | (337) | ||
Net | 310 | 310 | 320 | ||
Amortization expense for intangible assets | 5 | $ 5 | 10 | $ 10 | |
Customer relationships | |||||
Other intangible assets | |||||
Cost | 287 | 287 | 287 | ||
Accumulated Amortization | (146) | (146) | (143) | ||
Net | 141 | 141 | 144 | ||
Purchase Agreements | |||||
Other intangible assets | |||||
Cost | 76 | 76 | 76 | ||
Accumulated Amortization | (76) | (76) | (76) | ||
Resort Management Contracts | |||||
Other intangible assets | |||||
Cost | 246 | 246 | 246 | ||
Accumulated Amortization | (77) | (77) | (71) | ||
Net | 169 | 169 | 175 | ||
Technology | |||||
Other intangible assets | |||||
Cost | 25 | 25 | 25 | ||
Accumulated Amortization | (25) | (25) | (25) | ||
Other | |||||
Other intangible assets | |||||
Cost | 23 | 23 | 23 | ||
Accumulated Amortization | $ (23) | $ (23) | (22) | ||
Net | $ 1 |
GOODWILL AND OTHER INTANGIBLE73
GOODWILL AND OTHER INTANGIBLE ASSETS - Amortization expense for the next five years (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Amortization of intangible assets | ||
2,019 | $ 20 | |
2,020 | 19 | |
2,021 | 19 | |
2,022 | 15 | |
2,023 | 14 | |
2024 and thereafter | 223 | |
Net | $ 310 | $ 320 |
CONSOLIDATED VARIABLE INTERES74
CONSOLIDATED VARIABLE INTEREST ENTITIES (Details) $ in Millions | 6 Months Ended | |
Jun. 30, 2018USD ($)item | Dec. 31, 2017USD ($) | |
Assets | ||
Restricted cash and cash equivalents | $ 215 | $ 227 |
Vistana's outstanding securitization transactions | ||
Consolidated variable interest entities | ||
Number of outstanding securitization transactions | item | 3 | |
Excess cash flows | $ 30 | |
Assets | ||
Restricted cash and cash equivalents | 18 | 20 |
Interest receivable | 3 | 4 |
Vacation ownership notes receivable, net | 479 | 559 |
Total | 500 | 583 |
Liabilities | ||
Interest payable | 1 | 1 |
Securitized debt | 489 | 575 |
Total | $ 490 | $ 576 |
ACCRUED EXPENSES AND OTHER CU75
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||
General accrued expenses | $ 97 | $ 82 |
Accrued other taxes | 20 | 19 |
Customer deposits | 89 | 76 |
Accrued membership-related costs | 20 | 17 |
Accrued construction costs | 24 | 15 |
Member deposits | 6 | 6 |
Total accrued expenses and other current liabilities | $ 256 | $ 215 |
DEFERRED REVENUE (Details)
DEFERRED REVENUE (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
DEFERRED REVENUE | ||
Deferred revenue | $ 259 | $ 238 |
Deferred Membership Related Revenue [Member] | ||
DEFERRED REVENUE | ||
Deferred revenue | 177 | 152 |
HOAs | ||
DEFERRED REVENUE | ||
Deferred revenue | 69 | 76 |
Other | ||
DEFERRED REVENUE | ||
Deferred revenue | $ 13 | $ 10 |
Minimum | ||
DEFERRED REVENUE | ||
Membership period | 1 year | |
Maximum | ||
DEFERRED REVENUE | ||
Membership period | 5 years |
SECURITIZED VACATION OWNERSHI77
SECURITIZED VACATION OWNERSHIP DEBT (Details) - USD ($) $ in Millions | Sep. 22, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Securitized vacation ownership debt | ||||||
Unamortized debt issuance costs | $ (7) | $ (7) | $ (8) | |||
Escrow deposit | 46 | 46 | $ 70 | |||
Interest expense | $ 7 | $ 7 | $ 15 | $ 12 | ||
Revolving Credit Facility | ||||||
Securitized vacation ownership debt | ||||||
Stated interest rate (as a percent) | 3.78% | 3.78% | 3.10% | |||
Unamortized debt issuance costs | $ (2) | $ (2) | $ (3) | |||
Vistana's outstanding securitization transactions | ||||||
Securitized vacation ownership debt | ||||||
Unamortized debt issuance costs | (6) | (6) | (7) | |||
Total securitized vacation ownership debt | 489 | 489 | 575 | |||
Interest expense | 3 | $ 2 | 7 | $ 5 | ||
Vistana's outstanding securitization transactions | 2012 securitization, interest rates ranging from 2.00% to 2.76%, maturing 2023 | ||||||
Securitized vacation ownership debt | ||||||
Securitized vacation ownership debt | 27 | 27 | 33 | |||
Vistana's outstanding securitization transactions | 2016 securitization, interest rates ranging from 2.54% to 2.74%, maturing 2026 | ||||||
Securitized vacation ownership debt | ||||||
Securitized vacation ownership debt | 203 | 203 | 244 | |||
Vistana's outstanding securitization transactions | 2017 securitization, interest rates ranging from 2.33% to 2.93%, maturing 2029 | ||||||
Securitized vacation ownership debt | ||||||
Securitized vacation ownership debt | $ 265 | $ 265 | $ 305 | |||
Securitization of asset backed notes | $ 325 | |||||
Overall weighted average coupon rate (in percentage) | 2.43% | |||||
Advance rate | 97.00% | |||||
Vistana's outstanding securitization transactions | Class A notes | ||||||
Securitized vacation ownership debt | ||||||
Stated interest rate (as a percent) | 2.33% | |||||
Securitization of asset backed notes | $ 240 | |||||
Vistana's outstanding securitization transactions | Class B notes | ||||||
Securitized vacation ownership debt | ||||||
Stated interest rate (as a percent) | 2.63% | |||||
Securitization of asset backed notes | $ 59 | |||||
Vistana's outstanding securitization transactions | Class C notes | ||||||
Securitized vacation ownership debt | ||||||
Stated interest rate (as a percent) | 2.93% | |||||
Securitization of asset backed notes | $ 26 | |||||
Vistana's outstanding securitization transactions | Minimum | 2012 securitization, interest rates ranging from 2.00% to 2.76%, maturing 2023 | ||||||
Securitized vacation ownership debt | ||||||
Stated interest rate (as a percent) | 2.00% | 2.00% | ||||
Vistana's outstanding securitization transactions | Minimum | 2016 securitization, interest rates ranging from 2.54% to 2.74%, maturing 2026 | ||||||
Securitized vacation ownership debt | ||||||
Stated interest rate (as a percent) | 2.54% | 2.54% | ||||
Vistana's outstanding securitization transactions | Minimum | 2017 securitization, interest rates ranging from 2.33% to 2.93%, maturing 2029 | ||||||
Securitized vacation ownership debt | ||||||
Stated interest rate (as a percent) | 2.33% | 2.33% | ||||
Vistana's outstanding securitization transactions | Maximum | 2012 securitization, interest rates ranging from 2.00% to 2.76%, maturing 2023 | ||||||
Securitized vacation ownership debt | ||||||
Stated interest rate (as a percent) | 2.76% | 2.76% | ||||
Vistana's outstanding securitization transactions | Maximum | 2016 securitization, interest rates ranging from 2.54% to 2.74%, maturing 2026 | ||||||
Securitized vacation ownership debt | ||||||
Stated interest rate (as a percent) | 2.74% | 2.74% | ||||
Vistana's outstanding securitization transactions | Maximum | 2017 securitization, interest rates ranging from 2.33% to 2.93%, maturing 2029 | ||||||
Securitized vacation ownership debt | ||||||
Stated interest rate (as a percent) | 2.93% | 2.93% |
LONG-TERM DEBT - Long term debt
LONG-TERM DEBT - Long term debt table (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
LONG-TERM DEBT | ||
Unamortized debt issuance costs | $ (7) | $ (8) |
Total long-term debt, net of unamortized debt issuance costs | 548 | 562 |
5.625% Senior Notes | ||
LONG-TERM DEBT | ||
5.625% senior notes | 350 | 350 |
Unamortized debt issuance costs | $ (5) | $ (5) |
Stated interest rate (as a percent) | 5.625% | 5.625% |
Revolving Credit Facility | ||
LONG-TERM DEBT | ||
Revolving credit facility | $ 205 | $ 220 |
Unamortized debt issuance costs | $ (2) | $ (3) |
Stated interest rate (as a percent) | 3.78% | 3.10% |
LONG-TERM DEBT - Narrative (Det
LONG-TERM DEBT - Narrative (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Senior Secured Credit Facility and Covenants | |||||
Unamortized debt issuance costs | $ 7 | $ 7 | $ 8 | ||
Accumulated amortization on debt issuance costs | 8 | 8 | 7 | ||
Interest expense | 7 | $ 7 | 15 | $ 12 | |
Interest expense capitalized | $ 1 | 1 | $ 3 | ||
5.625% Senior Notes | |||||
Senior Secured Credit Facility and Covenants | |||||
Unamortized debt issuance costs | 5 | 5 | 5 | ||
5.625% senior notes | $ 350 | $ 350 | $ 350 | ||
Stated interest rate (as a percent) | 5.625% | 5.625% | 5.625% | ||
Redemption price ( as a percent) | 104.219% | ||||
Minimum fixed charge coverage ratio | 2 | ||||
Revolving Credit Facility | |||||
Senior Secured Credit Facility and Covenants | |||||
Amount outstanding | $ 205 | $ 205 | $ 220 | ||
Available to be drawn | 382 | $ 382 | |||
Commitment fee (as a percent) | 0.275% | ||||
Percentage of voting equity securities of the Borrower and its U.S. subsidiaries by which credit facility is secured | 100.00% | ||||
Percentage of equity in the first-tier foreign subsidiaries of the Borrower by which credit facility is secured | 65.00% | ||||
Unamortized debt issuance costs | $ 2 | $ 2 | $ 3 | ||
Stated interest rate (as a percent) | 3.78% | 3.78% | 3.10% | ||
Revolving Credit Facility | Financial Covenant | |||||
Senior Secured Credit Facility and Covenants | |||||
Consolidated leverage ratio of debt over EBITDA | 0.63 | ||||
Consolidated interest coverage ratio | 13.09 | ||||
Revolving Credit Facility | Minimum | |||||
Senior Secured Credit Facility and Covenants | |||||
Commitment fee (as a percent) | 0.25% | ||||
Revolving Credit Facility | Minimum | Financial Covenant | |||||
Senior Secured Credit Facility and Covenants | |||||
Consolidated interest coverage ratio | 3 | ||||
Revolving Credit Facility | Maximum | |||||
Senior Secured Credit Facility and Covenants | |||||
Commitment fee (as a percent) | 0.40% | ||||
Revolving Credit Facility | Maximum | Financial Covenant | |||||
Senior Secured Credit Facility and Covenants | |||||
Consolidated leverage ratio of debt over EBITDA | 3.25 | ||||
Revolving Credit Facility | Base Rate | |||||
Senior Secured Credit Facility and Covenants | |||||
Applicable margin (as a percent) | 0.75% | ||||
Revolving Credit Facility | Base Rate | Minimum | |||||
Senior Secured Credit Facility and Covenants | |||||
Applicable margin (as a percent) | 0.25% | ||||
Revolving Credit Facility | Base Rate | Maximum | |||||
Senior Secured Credit Facility and Covenants | |||||
Applicable margin (as a percent) | 1.50% | ||||
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | |||||
Senior Secured Credit Facility and Covenants | |||||
Applicable margin (as a percent) | 1.75% | ||||
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Minimum | |||||
Senior Secured Credit Facility and Covenants | |||||
Applicable margin (as a percent) | 1.25% | ||||
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Maximum | |||||
Senior Secured Credit Facility and Covenants | |||||
Applicable margin (as a percent) | 2.50% | ||||
Issuer and subsidiary guarantors | 5.625% Senior Notes | |||||
Senior Secured Credit Facility and Covenants | |||||
Ownership interest ( as a percent) | 100.00% | 100.00% |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value of Financial Instruments | ||
Restricted cash and cash equivalents | $ 215 | $ 227 |
Debt issuance costs | 7 | 8 |
5.625% Senior Notes | ||
Fair Value of Financial Instruments | ||
Senior notes | 350 | 350 |
Debt issuance costs | 5 | 5 |
Revolving Credit Facility | ||
Fair Value of Financial Instruments | ||
Revolving credit facility | 205 | 220 |
Debt issuance costs | 2 | 3 |
Carrying Amount | ||
Fair Value of Financial Instruments | ||
Cash and cash equivalents | 143 | 122 |
Restricted cash and cash equivalents | 219 | 230 |
Financing receivables | 37 | 36 |
Vacation ownership mortgages receivable | 734 | 737 |
Investments in marketable securities | 8 | 13 |
Securitized debt | 489 | 575 |
Revolving credit facility | 203 | 217 |
Senior notes | 345 | 345 |
Carrying Amount | 5.625% Senior Notes | ||
Fair Value of Financial Instruments | ||
Debt issuance costs | 5 | 5 |
Carrying Amount | Revolving Credit Facility | ||
Fair Value of Financial Instruments | ||
Debt issuance costs | 2 | 3 |
Fair Value | ||
Fair Value of Financial Instruments | ||
Cash and cash equivalents | 143 | 122 |
Restricted cash and cash equivalents | 219 | 230 |
Financing receivables | 37 | 36 |
Vacation ownership mortgages receivable | 786 | 770 |
Investments in marketable securities | 8 | 13 |
Securitized debt | 482 | 563 |
Revolving credit facility | 205 | 220 |
Senior notes | 353 | 364 |
Fair Value | HVO | ||
Fair Value of Financial Instruments | ||
Investments in marketable securities | $ 8 | $ 13 |
EQUITY (Details)
EQUITY (Details) $ / shares in Units, $ in Millions | May 11, 2016USD ($)shares | Nov. 04, 2013USD ($) | Jun. 30, 2018USD ($)$ / sharesshares | May 31, 2018$ / shares | Mar. 31, 2018USD ($) | Feb. 28, 2018$ / shares | Jun. 30, 2018USD ($)$ / sharesshares | Jun. 30, 2017$ / shares | Jun. 30, 2018USD ($)item$ / sharesshares | Jun. 30, 2017USD ($)$ / shares | Dec. 31, 2017USD ($)$ / sharesshares |
Equity | |||||||||||
Authorized shares of common stock | shares | 300,000,000 | 300,000,000 | 300,000,000 | 300,000,000 | |||||||
Par value of common stock (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |||||||
Shares of common stock issued | shares | 134,403,465 | 134,403,465 | 134,403,465 | 134,053,132 | |||||||
Shares of common stock outstanding | shares | 124,400,000 | 124,400,000 | 124,400,000 | 124,100,000 | |||||||
Shares held as treasury stock | shares | 9,987,627 | 9,987,627 | 9,987,627 | 9,987,627 | |||||||
Authorized shares of preferred stock | shares | 25,000,000 | 25,000,000 | 25,000,000 | 25,000,000 | |||||||
Par value of preferred stock (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |||||||
Preferred stock, issued shares | shares | 0 | 0 | 0 | 0 | |||||||
Preferred stock, outstanding shares | shares | 0 | 0 | 0 | 0 | |||||||
Minimum number of series to issue preferred stock | item | 1 | ||||||||||
Dividends declared per common share (in dollars per share) | $ / shares | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.15 | $ 0.35 | $ 0.30 | |||||
Cash dividend paid | $ | $ 22 | $ 22 | |||||||||
Equity and Share Repurchase Program | |||||||||||
Common stock repurchased | $ | $ 3 | ||||||||||
Stockholders' Equity Attributable to Noncontrolling Interest | $ | 39 | $ 39 | $ 39 | $ 37 | |||||||
Share Repurchase Program | |||||||||||
Equity and Share Repurchase Program | |||||||||||
Treasury stock purchases (in shares) | shares | 0 | 1,100,000 | |||||||||
Common stock repurchased | $ | $ 28 | ||||||||||
Remaining availability for future repurchases of common stock | $ | 21 | ||||||||||
CLC | |||||||||||
Equity and Share Repurchase Program | |||||||||||
Premium upon exercise of share options to settle loan (as a percent) | 20.00% | ||||||||||
CLC | VRI Europe Limited | |||||||||||
Equity and Share Repurchase Program | |||||||||||
Equity of VRIE issued as consideration for acquisition (as a percent) | 24.50% | ||||||||||
Ownership interest ( as a percent) | 75.50% | ||||||||||
Stockholders' Equity Attributable to Noncontrolling Interest | $ | 30 | 30 | $ 30 | 29 | |||||||
Period from acquisition during which parties have agreed not to transfer their interests | 5 years | ||||||||||
CLC | Convertible Secured Loan Facility | |||||||||||
Equity and Share Repurchase Program | |||||||||||
Convertible secured loan available, subject to certain conditions being met | $ | $ 15 | ||||||||||
Vistana | |||||||||||
Equity | |||||||||||
Common stock issued (in shares) | shares | 72,400,000 | ||||||||||
Common stock value | $ | $ 1,000 | ||||||||||
HOA | |||||||||||
Equity and Share Repurchase Program | |||||||||||
Stockholders' Equity Attributable to Noncontrolling Interest | $ | $ 12 | $ 12 | $ 12 | $ 8 |
BENEFIT PLANS (Details)
BENEFIT PLANS (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Retirement savings plan qualified under Section 401(k) of the Internal Revenue Code and other various benefit plans | ||||
Employee contribution as maximum percentage of pre-tax earnings | 50.00% | |||
Employer contribution against each dollar contributed by employee | 50.00% | |||
Net matching contributions | $ 2 | $ 1 | $ 5 | $ 3 |
Deferred compensation plan | ||||
Vesting percentage under deferred compensation plan | 100.00% | |||
Shares of common stock reserved for issuance pursuant to deferred compensation plan | 100,000 | 100,000 | ||
Shares outstanding under the deferred compensation plan | 73,429 | 73,429 | ||
Fair value of investments in the Rabbi Trust | $ 8 | $ 8 | ||
Maximum | ||||
Retirement savings plan qualified under Section 401(k) of the Internal Revenue Code and other various benefit plans | ||||
Employer's contribution of participant's eligible earnings (as a percent) | 3.00% | |||
Vistana | ||||
Retirement savings plan qualified under Section 401(k) of the Internal Revenue Code and other various benefit plans | ||||
Employer contribution against each dollar contributed by employee (as a percent) | 100.00% | |||
Employer's contribution of participant's eligible earnings (as a percent) | 1.00% |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018USD ($)shares | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)item$ / sharesshares | Jun. 30, 2017USD ($)$ / sharesshares | |
STOCK-BASED COMPENSATION | ||||
Per unit grant date fair value (in dollars per unit) | $ / shares | $ 33.24 | |||
Unrecognized compensation expense | ||||
Non-cash compensation expense | $ | $ 5 | $ 7 | $ 11 | $ 12 |
Unrecognized compensation cost, net of estimated forfeitures | $ | $ 32 | $ 32 | ||
Weighted average period for recognition of unrecognized compensation expense | 2 years 26 days | |||
Restricted Stock Units (RSUs) | ||||
STOCK-BASED COMPENSATION | ||||
New awards granted (in shares) | 620,000 | 925,000 | ||
Award vesting period | 3 years | |||
Restricted Stock Units (RSUs) | Cliff vesting | ||||
STOCK-BASED COMPENSATION | ||||
New awards granted (in shares) | 169,000 | 229,000 | ||
Award vesting period | 3 years | |||
Restricted Stock Units (RSUs) | Vesting Based on Performance | ||||
STOCK-BASED COMPENSATION | ||||
New awards granted (in shares) | 147,000 | 213,000 | ||
Per unit grant date fair value (in dollars per unit) | $ / shares | $ 50.37 | $ 28.23 | ||
Number of peer groups for estimating total shareholder return ranking | item | 2 | |||
The estimated performance period to be considered for historical average volatility rate | 3 years | |||
The performance measurement period to be considered for risk free interest rate assumption | 3 years | |||
Restricted Stock Units (RSUs) | Vesting Based on Performance | Minimum | ||||
STOCK-BASED COMPENSATION | ||||
Percentage of target shares which can be earned by the participants (as a percent) | 0.00% | 0.00% | ||
Restricted Stock Units (RSUs) | Vesting Based on Performance | Maximum | ||||
STOCK-BASED COMPENSATION | ||||
Percentage of target shares which can be earned by the participants (as a percent) | 200.00% | 200.00% | ||
2013 Stock and Incentive Compensation Plan | ||||
STOCK-BASED COMPENSATION | ||||
Remaining shares available for future issuance | 2,800,000 | 2,800,000 |
STOCK-BASED COMPENSATION - Non-
STOCK-BASED COMPENSATION - Non-cash stock-based compensation expense (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Non-cash stock-based compensation expense | ||||
Non-cash compensation expense | $ 5 | $ 7 | $ 11 | $ 12 |
Cost of Sales | ||||
Non-cash stock-based compensation expense | ||||
Non-cash compensation expense | 1 | 1 | 1 | |
Selling and Marketing Expense | ||||
Non-cash stock-based compensation expense | ||||
Non-cash compensation expense | 1 | 1 | ||
General and Administrative Expense | ||||
Non-cash stock-based compensation expense | ||||
Non-cash compensation expense | $ 4 | $ 7 | $ 9 | $ 10 |
STOCK-BASED COMPENSATION - RSU
STOCK-BASED COMPENSATION - RSU activity (Details) shares in Millions | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Shares | |
Outstanding at the beginning of the period (in shares) | shares | 3 |
Granted (in shares) | shares | 1 |
Vested (in shares) | shares | (1) |
Outstanding at the end of the period (in shares) | shares | 3 |
Weighted-Average Grant Date Fair Value | |
Outstanding at the beginning of the period (in dollars per share) | $ 17.53 |
Granted (in dollars per share) | 33.24 |
Vested (in dollars per share) | 19.54 |
Forfeited (in dollars per share) | 18.30 |
Outstanding at the end of the period (in dollars per share) | $ 20.93 |
INCOME TAXES - (Details)
INCOME TAXES - (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Income taxes | |||||
Income tax provision | $ 13 | $ 13 | $ 33 | $ 38 | |
Effective tax rate (as a percent) | 32.10% | 32.80% | 31.50% | 34.70% | |
Federal statutory rate (as a percent) | 21.00% | 35.00% | |||
Provisional tax benefit for the impact of the Tax Reform Act | $ (53) |
SEGMENT INFORMATION - Reportabl
SEGMENT INFORMATION - Reportable segments (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)item | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
SEGMENT INFORMATION | |||||
Number of operating segments which are also reportable segments | item | 2 | ||||
Total Revenues | $ 461 | $ 441 | $ 944 | $ 885 | |
Cost of sales | 231 | 231 | 481 | 459 | |
Royalty fee expense | 11 | 11 | 22 | 21 | |
Selling and marketing expense | 81 | 76 | 159 | 145 | |
General and administrative expense | 65 | 58 | 124 | 112 | |
Amortization expense of intangibles | 5 | 5 | 10 | 10 | |
Depreciation expense | 16 | 15 | 31 | 30 | |
Operating expenses | 178 | 165 | 346 | 318 | |
Operating income | 52 | 45 | 117 | 108 | |
Total assets | |||||
Total assets | 3,661 | 3,661 | $ 3,687 | ||
Capital expenditures | |||||
Capital expenditures | 22 | 48 | |||
Vacation Ownership | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 308 | 285 | 621 | 557 | |
Cost of sales | 168 | 165 | 349 | 318 | |
Royalty fee expense | 11 | 10 | 21 | 20 | |
Selling and marketing expense | 68 | 63 | 134 | 119 | |
General and administrative expense | 31 | 27 | 57 | 53 | |
Amortization expense of intangibles | 2 | 2 | 4 | 4 | |
Depreciation expense | 11 | 10 | 21 | 20 | |
Operating income | 17 | 8 | 35 | 23 | |
Total assets | |||||
Total assets | 2,579 | 2,579 | 2,603 | ||
Exchange and Rental | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 153 | 156 | 323 | 328 | |
Cost of sales | 63 | 66 | 132 | 141 | |
Royalty fee expense | 1 | 1 | 1 | ||
Selling and marketing expense | 13 | 13 | 25 | 26 | |
General and administrative expense | 34 | 31 | 67 | 59 | |
Amortization expense of intangibles | 3 | 3 | 6 | 6 | |
Depreciation expense | 5 | 5 | 10 | 10 | |
Operating income | 35 | 37 | 82 | 85 | |
Total assets | |||||
Total assets | 1,082 | 1,082 | $ 1,084 | ||
Operations | Vacation Ownership | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 58 | 53 | 124 | 110 | |
Management Service | Vacation Ownership | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 61 | 33 | 116 | 64 | |
Management Service | Exchange and Rental | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 35 | 36 | 71 | 71 | |
Service and membership related | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 148 | 119 | 300 | 247 | |
Cost of sales | 67 | 33 | 132 | 68 | |
Service and membership related | Vacation Ownership | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 61 | 33 | 116 | 64 | |
Cost of sales | 49 | 14 | 94 | 26 | |
Service and membership related | Exchange and Rental | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 87 | 86 | 184 | 183 | |
Cost of sales | 18 | 19 | 38 | 42 | |
Vacation ownership products | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 121 | 118 | 244 | 223 | |
Cost of sales | 22 | 28 | 61 | 54 | |
Vacation ownership products | Vacation Ownership | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 121 | 118 | 244 | 223 | |
Cost of sales | 22 | 28 | 61 | 54 | |
Rental and ancillary services | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 104 | 97 | 222 | 204 | |
Cost of sales | 70 | 78 | 142 | 155 | |
Rental and ancillary services | Vacation Ownership | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 58 | 53 | 124 | 110 | |
Cost of sales | 45 | 57 | 89 | 107 | |
Rental and ancillary services | Exchange and Rental | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 46 | 44 | 98 | 94 | |
Cost of sales | 25 | 21 | 53 | 48 | |
Consumer financing | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 23 | 22 | 47 | 43 | |
Cost of sales | 7 | 7 | 15 | 14 | |
Consumer financing | Vacation Ownership | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 23 | 22 | 47 | 43 | |
Cost of sales | 7 | 7 | 15 | 14 | |
Cost reimbursements | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 65 | 85 | 131 | 168 | |
Cost of sales | 65 | 85 | 131 | 168 | |
Cost reimbursements | Vacation Ownership | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 45 | 59 | 90 | 117 | |
Cost of sales | 45 | 59 | 90 | 117 | |
Cost reimbursements | Exchange and Rental | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 20 | 26 | 41 | 51 | |
Cost of sales | 20 | 26 | 41 | 51 | |
Members Revenue | Exchange and Rental | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 87 | 87 | 184 | 184 | |
Transaction revenue | Exchange and Rental | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 50 | 49 | 109 | 108 | |
Ancillary Member Revenue | Exchange and Rental | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 2 | 2 | 4 | 5 | |
Club Rental | Exchange and Rental | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 29 | 27 | 62 | 57 | |
Other revenue | Exchange and Rental | |||||
SEGMENT INFORMATION | |||||
Total Revenues | 6 | 5 | 12 | 10 | |
Rental management | Exchange and Rental | |||||
SEGMENT INFORMATION | |||||
Total Revenues | $ 11 | $ 11 | $ 24 | $ 26 |
SEGMENT INFORMATION - Geographi
SEGMENT INFORMATION - Geographic Information (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($)item | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)item | Jun. 30, 2017USD ($)item | Dec. 31, 2017USD ($) | |
Geographic Information | |||||
Number of other countries in which entity operates | item | 14 | 14 | |||
Revenue: | |||||
Total Revenues | $ 461 | $ 441 | $ 944 | $ 885 | |
Long-lived assets, net (excluding goodwill and intangible assets): | |||||
Total long-lived assets | 606 | $ 606 | $ 616 | ||
Minimum | |||||
Geographic Information | |||||
Number of countries from which revenue is sourced | item | 100 | 100 | |||
UNITED STATES | |||||
Revenue: | |||||
Total Revenues | 409 | 374 | $ 834 | $ 748 | |
Long-lived assets, net (excluding goodwill and intangible assets): | |||||
Total long-lived assets | 477 | 477 | 486 | ||
Mexico | |||||
Long-lived assets, net (excluding goodwill and intangible assets): | |||||
Total long-lived assets | 125 | 125 | 126 | ||
Europe | |||||
Long-lived assets, net (excluding goodwill and intangible assets): | |||||
Total long-lived assets | 4 | 4 | $ 4 | ||
All Other Countries | |||||
Revenue: | |||||
Total Revenues | $ 52 | $ 67 | $ 110 | $ 137 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Lease Commitments (Details) $ in Millions | Jun. 30, 2018USD ($) |
Contractual obligations payment schedule | |
Total commitments | $ 874 |
Up to 1 year | 79 |
1 - 3 years | 315 |
3 - 5 years | 409 |
More than 5 years | 71 |
Debt principal | |
Contractual obligations payment schedule | |
Total commitments | 555 |
1 - 3 years | 205 |
3 - 5 years | 350 |
Debt interest (projected) | |
Contractual obligations payment schedule | |
Total commitments | 122 |
Up to 1 year | 29 |
1 - 3 years | 57 |
3 - 5 years | 36 |
Purchase obligations and other commitments | |
Contractual obligations payment schedule | |
Total commitments | 56 |
Up to 1 year | 30 |
1 - 3 years | 22 |
3 - 5 years | 4 |
Operating leases | |
Contractual obligations payment schedule | |
Total commitments | 141 |
Up to 1 year | 20 |
1 - 3 years | 31 |
3 - 5 years | 19 |
More than 5 years | $ 71 |
COMMITMENTS AND CONTINGENCIES90
COMMITMENTS AND CONTINGENCIES - Narrative (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Commitments and Contingencies | |
Amount of guarantees and commitments, year one | $ 79 |
Letter of credit outstanding amount | 13 |
Insurance claims receivable | 17 |
Guarantees, surety bonds, and letters of credit | |
Commitments and Contingencies | |
Guarantees and commitments amount | 101 |
Amount of guarantees and commitments, year one | 70 |
Guarantees | |
Commitments and Contingencies | |
Guarantees and commitments amount | $ 48 |
Guarantees | Minimum | |
Commitments and Contingencies | |
Notice period for termination of lease | 60 days |
Guarantees | Maximum | |
Commitments and Contingencies | |
Notice period for termination of lease | 90 days |
SUPPLEMENTAL GUARANTOR INFORM91
SUPPLEMENTAL GUARANTOR INFORMATION - Balance Sheet (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Balance Sheet | ||
Current assets | $ 1,193 | $ 1,200 |
Property and equipment, net | 606 | 616 |
Goodwill and intangible assets, net | 992 | 1,004 |
Other assets | 870 | 867 |
TOTAL ASSETS | 3,661 | 3,687 |
Current liabilities | 671 | 641 |
Other long term liabilities | 344 | 338 |
Long term debt and securitized debt from VIEs (noncurrent portion) | 909 | 991 |
Redeemable noncontrolling interest | 1 | 1 |
ILG stockholders' equity | 1,697 | 1,679 |
Noncontrolling interests | 39 | 37 |
TOTAL LIABILITIES AND EQUITY | 3,661 | 3,687 |
Total Eliminations | ||
Balance Sheet | ||
Investments in subsidiaries | (3,531) | (3,367) |
TOTAL ASSETS | (3,531) | (3,367) |
ILG stockholders' equity | (3,531) | (3,367) |
TOTAL LIABILITIES AND EQUITY | (3,531) | (3,367) |
ILG | ||
Balance Sheet | ||
Current assets | 2 | 1 |
Property and equipment, net | 1 | 1 |
Investments in subsidiaries | 888 | 824 |
TOTAL ASSETS | 891 | 826 |
Current liabilities | 3 | 3 |
Intercompany liabilities (receivables)/equity | (809) | (856) |
ILG stockholders' equity | 1,697 | 1,679 |
TOTAL LIABILITIES AND EQUITY | 891 | 826 |
Interval Acquisition Corp | ||
Balance Sheet | ||
Current assets | 2 | 3 |
Goodwill and intangible assets, net | 266 | 266 |
Investments in subsidiaries | 1,605 | 1,521 |
TOTAL ASSETS | 1,873 | 1,790 |
Current liabilities | 5 | 5 |
Long term debt and securitized debt from VIEs (noncurrent portion) | 548 | 562 |
Intercompany liabilities (receivables)/equity | 432 | 399 |
ILG stockholders' equity | 888 | 824 |
TOTAL LIABILITIES AND EQUITY | 1,873 | 1,790 |
Guarantor Subsidiaries | ||
Balance Sheet | ||
Current assets | 750 | 790 |
Property and equipment, net | 455 | 464 |
Goodwill and intangible assets, net | 619 | 628 |
Investments in subsidiaries | 1,038 | 1,022 |
Other assets | 394 | 285 |
TOTAL ASSETS | 3,256 | 3,189 |
Current liabilities | 384 | 339 |
Other long term liabilities | 232 | 236 |
Intercompany liabilities (receivables)/equity | 1,036 | 1,093 |
Redeemable noncontrolling interest | 1 | 1 |
ILG stockholders' equity | 1,605 | 1,521 |
Noncontrolling interests | (2) | (1) |
TOTAL LIABILITIES AND EQUITY | 3,256 | 3,189 |
Non-Guarantor Subsidiaries | ||
Balance Sheet | ||
Current assets | 439 | 406 |
Property and equipment, net | 150 | 151 |
Goodwill and intangible assets, net | 107 | 110 |
Other assets | 476 | 582 |
TOTAL ASSETS | 1,172 | 1,249 |
Current liabilities | 279 | 294 |
Other long term liabilities | 112 | 102 |
Long term debt and securitized debt from VIEs (noncurrent portion) | 361 | 429 |
Intercompany liabilities (receivables)/equity | (659) | (636) |
ILG stockholders' equity | 1,038 | 1,022 |
Noncontrolling interests | 41 | 38 |
TOTAL LIABILITIES AND EQUITY | $ 1,172 | $ 1,249 |
SUPPLEMENTAL GUARANTOR INFORM92
SUPPLEMENTAL GUARANTOR INFORMATION - Statement of Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Income | ||||
Revenues | $ 461 | $ 441 | $ 944 | $ 885 |
Operating expenses | (409) | (396) | (827) | (777) |
Interest income (expense), net | (6) | (7) | (14) | (12) |
Other income (expense), net | (5) | 10 | ||
Income tax benefit (provision) | (13) | (13) | (33) | (38) |
Equity in earnings from unconsolidated entities | 1 | 1 | 3 | |
Net income | 28 | 26 | 71 | 71 |
Net income (loss) attributable to noncontrolling interests | (1) | (2) | (1) | |
Net income attributable to common stockholders | 27 | 26 | 69 | 70 |
Total Eliminations | ||||
Statement of Income | ||||
Other income (expense), net | (67) | (59) | (177) | (183) |
Net income | (67) | (59) | (177) | (183) |
Net income attributable to common stockholders | (67) | (59) | (177) | (183) |
ILG | ||||
Statement of Income | ||||
Operating expenses | (2) | (2) | (4) | (4) |
Other income (expense), net | 29 | 28 | 72 | 72 |
Income tax benefit (provision) | 1 | 1 | ||
Net income | 27 | 26 | 69 | 69 |
Net income attributable to common stockholders | 27 | 26 | 69 | 69 |
Interval Acquisition Corp | ||||
Statement of Income | ||||
Interest income (expense), net | (6) | (7) | (14) | (13) |
Other income (expense), net | 33 | 30 | 82 | 79 |
Income tax benefit (provision) | 2 | 2 | 4 | 4 |
Net income | 29 | 25 | 72 | 70 |
Net income attributable to common stockholders | 29 | 25 | 72 | 70 |
Guarantor Subsidiaries | ||||
Statement of Income | ||||
Revenues | 401 | 371 | 816 | 744 |
Operating expenses | (361) | (340) | (731) | (681) |
Interest income (expense), net | 1 | 2 | 2 | 5 |
Other income (expense), net | 3 | (3) | 18 | 26 |
Income tax benefit (provision) | (11) | (2) | (25) | (18) |
Equity in earnings from unconsolidated entities | 1 | 1 | 3 | |
Net income | 33 | 29 | 81 | 79 |
Net income (loss) attributable to noncontrolling interests | 1 | 1 | 1 | |
Net income attributable to common stockholders | 33 | 30 | 82 | 80 |
Non-Guarantor Subsidiaries | ||||
Statement of Income | ||||
Revenues | 60 | 70 | 128 | 141 |
Operating expenses | (46) | (54) | (92) | (92) |
Interest income (expense), net | (1) | (2) | (2) | (4) |
Other income (expense), net | (3) | 4 | 5 | 16 |
Income tax benefit (provision) | (4) | (13) | (13) | (25) |
Net income | 6 | 5 | 26 | 36 |
Net income (loss) attributable to noncontrolling interests | (1) | (1) | (3) | (2) |
Net income attributable to common stockholders | $ 5 | $ 4 | $ 23 | $ 34 |
SUPPLEMENTAL GUARANTOR INFORM93
SUPPLEMENTAL GUARANTOR INFORMATION - Statement of Cash Flows (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Cash Flows | ||
Cash flows provided by (used in) operating activities | $ 184 | $ 82 |
Cash flows provided by (used in) investing activities | (18) | (48) |
Cash flows provided by (used in) financing activities | (153) | (40) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (3) | 3 |
Cash, cash equivalents and restricted cash at beginning of period | 352 | 244 |
Cash, cash equivalents and restricted cash at end of period | 362 | 241 |
ILG | ||
Statement of Cash Flows | ||
Cash flows provided by (used in) operating activities | (2) | (1) |
Cash flows provided by (used in) financing activities | 3 | 1 |
Cash, cash equivalents and restricted cash at end of period | 1 | |
Interval Acquisition Corp | ||
Statement of Cash Flows | ||
Cash flows provided by (used in) operating activities | (8) | (7) |
Cash flows provided by (used in) financing activities | 8 | 7 |
Cash, cash equivalents and restricted cash at beginning of period | 2 | |
Cash, cash equivalents and restricted cash at end of period | 2 | |
Guarantor Subsidiaries | ||
Statement of Cash Flows | ||
Cash flows provided by (used in) operating activities | 90 | (31) |
Cash flows provided by (used in) investing activities | (21) | (39) |
Cash flows provided by (used in) financing activities | (51) | 52 |
Cash, cash equivalents and restricted cash at beginning of period | 82 | 100 |
Cash, cash equivalents and restricted cash at end of period | 100 | 82 |
Non-Guarantor Subsidiaries | ||
Statement of Cash Flows | ||
Cash flows provided by (used in) operating activities | 104 | 121 |
Cash flows provided by (used in) investing activities | 3 | (9) |
Cash flows provided by (used in) financing activities | (113) | (100) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (3) | 3 |
Cash, cash equivalents and restricted cash at beginning of period | 268 | 144 |
Cash, cash equivalents and restricted cash at end of period | $ 259 | $ 159 |
PENDING BUSINESS COMBINATION -
PENDING BUSINESS COMBINATION - (Details) - Merger Agreement - Marriott Vacations $ / shares in Units, $ in Millions | Apr. 30, 2018USD ($)$ / shares |
PENDING BUSINESS COMBINATION | |
Consideration received (in dollars per share) | $ 14.75 |
Shares received (in dollars per share) | $ 0.165 |
Ownership interest acquired post merger | 43.00% |
Termination fee | $ | $ 146 |