ORLANDO, Fla., Oct. 15, 2015 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported third quarter 2015 financial results and provided updated guidance for the full year 2015.

Third quarter 2015 highlights:

  • Adjusted EBITDA totaled $51.7 million.
  • Adjusted fully diluted earnings per share (EPS) was $0.82, up from $0.81 in the third quarter of 2014.
  • North America contract sales, excluding residential sales, were $142.8 million.
  • Company adjusted development margin was 21.2 percent and North America adjusted development margin was 23.1 percent.
  • Resort management and other services revenues net of expenses totaled $26.4 million, up $3.3 million from the third quarter of 2014.
  • Rental revenues net of expenses totaled $13.5 million, up $2.5 million from the third quarter of 2014.
  • During the third quarter of 2015, the company repurchased $39.9 million of its common stock, bringing total 2015 repurchases through the end of the third quarter to $106.1 million.
  • In August 2015, the company completed a securitization of $264 million of vacation ownership notes receivable at a blended borrowing rate of 2.56 percent, generating gross proceeds of $255 million.

Third quarter 2015 net income was $21.6 million, or $0.67 diluted EPS, compared to net income of $25.6 million, or $0.75 diluted EPS, in the third quarter of 2014. Company development margin was 17.8 percent and North America development margin was 20.0 percent in the third quarter of 2015.

Non-GAAP financial measures such as adjusted EBITDA, adjusted net income, adjusted earnings per share and adjusted development margin are reconciled and adjustments are shown and described in further detail on pages A-1 through A-19 of the Financial Schedules that follow.

'On an overall basis, we are pleased with our third quarter financial results, delivering nearly $52 million of Adjusted EBITDA,' said Stephen P. Weisz, president and chief executive officer. 'While our development business in the quarter was negatively impacted by a stronger U.S. dollar and unfavorable revenue reportability, our rentals, resort management and financing businesses remained strong. Excluding the impact of revenue reportability in the quarter, Adjusted EBITDA would have been nearly $59 million. Even with the headwinds from the stronger U.S dollar, we expect full year Adjusted EBITDA to be at the high end of our guidance of $222 million to $232 million, demonstrating the strength of our diversified business model.' 

Third Quarter 2015 Results

Company Results

Total company contract sales, excluding residential sales, were $159.8 million, $7.5 million lower than the third quarter of last year. The decrease was driven by $5.4 million of lower contract sales in the company's North America segment, $1.2 million of lower contract sales in the company's Europe segment and $0.9 million of lower contract sales in the company's Asia Pacific segment.

Adjusted development margin was $31.3 million, a $4.8 million decrease from the third quarter of 2014. Adjusted development margin percentage was 21.2 percent in the third quarter of 2015 compared to 22.6 percent in the third quarter of 2014. Development margin was $24.4 million, a $9.0 million decrease from the third quarter of 2014. Development margin percentage was 17.8 percent in the third quarter of 2015 compared to 21.5 percent in the third quarter of 2014.

Rental revenues totaled $76.0 million, a $10.4 million increase from the third quarter of 2014, reflecting a 6 percent increase in transient keys rented, $4.3 million from revenue associated with operating hotels in San Diego and Surfers Paradise, Australia prior to conversion to timeshare, and higher plus points revenue. Rental revenues, net of expenses, were $13.5 million, a $2.5 million increase from the third quarter of 2014.

Resort management and other services revenues totaled $73.8 million, a $2.8 million increase from the third quarter of 2014. Resort management and other services revenues, net of expenses, were $26.4 million, a $3.3 million, or 14 percent, increase over the third quarter of 2014.

Financing revenues totaled $28.3 million, a $1.3 million decrease from the third quarter of 2014. Financing revenues, net of expenses and consumer financing interest expense, were $17.5 million, a $1.0 million decrease from the third quarter of 2014.

Adjusted EBITDA was $51.7 million in the third quarter of 2015, a $2.3 million, or 4.3 percent, decrease from $54.0 million in the third quarter of 2014. Excluding the impact of unfavorable revenue reportability in both years, Adjusted EBITDA would have been $58.6 million in the third quarter of 2015, a $1.8 million, or 3.2 percent, increase from $56.8 million in the third quarter of 2014.

Segment Results

North America

North America contract sales, excluding residential sales, were $142.8 million in the third quarter of 2015, a decrease of $5.4 million, or 3.6 percent, from the prior year period, driven by a stronger U.S. dollar that negatively impacted sales to Latin American and Japanese customers at certain sales locations by nearly $7 million year-over-year. 

VPG decreased 1.4 percent to $3,428 in the third quarter of 2015 from $3,477 in the third quarter of 2014, driven by fewer points purchased per contract, offset partially by higher pricing and improved closing efficiency.  Tours decreased 1.3 percent year-over-year. 

Third quarter 2015 North America segment financial results were $85.3 million, a decrease of $0.7 million from the third quarter of 2014. The decrease was driven primarily by $9.2 million of lower development margin and $1.1 million of lower financing revenues, offset partially by $3.3 million of higher resort management and other services revenues net of expenses, $3.1 million of higher rental revenues net of expenses, and $3.0 million related to a litigation settlement in the prior year period.

Adjusted development margin was $30.6 million, a $5.6 million decrease from the prior year quarter. Adjusted development margin percentage was 23.1 percent in the third quarter of 2015 compared to 25.5 percent in the third quarter of 2014. Development margin was $24.5 million, a $9.2 million decrease from the third quarter of 2014. Development margin percentage was 20.0 percent in the third quarter of 2015 compared to 24.4 percent in the prior year quarter.

Asia Pacific

Total contract sales in the segment were $6.9 million, a decrease of $0.9 million in the third quarter of 2015.  Segment financial results were a loss of $4.1 million, a $5.1 million decrease from the third quarter of 2014, reflecting $4.2 million of transaction costs associated with the purchase of an operating Marriott hotel in Surfers Paradise, Australia.  The company plans to convert a portion of this hotel into vacation ownership interests for future use and to sell the remaining downsized hotel to a third party.

Europe

Third quarter 2015 contract sales were $10.1 million, a decrease of $1.2 million from the third quarter of 2014. Segment financial results were $6.2 million, a $0.5 million decrease from the third quarter of 2014 due to lower development margin from lower contract sales and lower rental revenues net of expenses.

Share Repurchase Program

During the third quarter of 2015, the company purchased 479,612 shares of its common stock for a total of nearly $40 million under its share repurchase program.  In total for 2015, through the end of the third quarter, the company repurchased approximately $106.1 million of its common stock.

On October 12, 2015, the Board of Directors authorized the company to repurchase up to 2.0 million additional shares of its common stock under its share repurchase program.  Combined with the shares not yet purchased under its previous authorization, the company is authorized to purchase up to 3.6 million shares.

Balance Sheet and Liquidity

On September 11, 2015, cash and cash equivalents totaled $321.7 million. Since the beginning of the year, real estate inventory balances declined $52.3 million to $716.0 million, including $351.9 million of finished goods and $364.1 million of land and infrastructure. The company had $780.2 million in gross debt outstanding at the end of the third quarter of 2015, an increase of $68.8 million from year-end 2014, consisting primarily of $776.6 million in gross non-recourse securitized notes. In addition, $40.0 million of gross mandatorily redeemable preferred stock of a subsidiary of the company was outstanding at the end of the third quarter of 2015.

In August 2015, the company completed a securitization of $264 million of vacation ownership notes receivable at a blended borrowing rate of 2.56 percent and an advance rate of 96.5 percent. Approximately $211 million of the vacation ownership notes receivable were purchased on August 13, 2015 by the MVW Owner Trust 2015-1 (the '2015-1 Trust'), and all or a portion of the remaining vacation ownership notes receivable may be purchased by the 2015-1 Trust prior to December 31, 2015. This transaction generated approximately $255 million of gross cash proceeds, of which $51 million will be held in restricted cash until the remaining notes are purchased during the fourth quarter. Approximately $6 million was used to pay transaction expenses and fund required reserves and the remainder will be used for general corporate purposes.

As of September 11, 2015, the company had approximately $197 million in available capacity under its revolving credit facility after taking into account outstanding letters of credit.

Outlook

The company is reaffirming the following guidance for the full year 2015:





Adjusted EBITDA

$222 million to $232 million



Adjusted net income

$108 million to $114 million



Adjusted company development margin

21 percent to 22 percent



Adjusted free cash flow

$175 million to $200 million







The company is providing the following updated guidance for the full year 2015:





Current Guidance

Previous Guidance

Company contract sales growth (excluding residential)

0 percent to 2 percent

5 percent to 8 percent

Adjusted fully diluted earnings per share

$3.33 to $3.52

$3.29 to $3.48

Pages A-1 through A-19 of the Financial Schedules reconcile the non-GAAP financial measures set forth above to the following full year 2015 expected GAAP results: net income of $112 million to $119 million; fully diluted EPS of $3.46 to $3.68; company development margin of 21.1 percent to 22.1 percent; and net cash provided by operating activities of $165 million to $185 million.

Third Quarter 2015 Earnings Conference Call

The company will hold a conference call at 10:00 a.m. EST today to discuss these results and the updated guidance for full year 2015. Participants may access the call by dialing (877) 407-8289 or (201) 689-8341 for international callers. A live webcast of the call will also be available in the Investor Relations section of the company's website at www.marriottvacationsworldwide.com.

An audio replay of the conference call will be available for seven days and can be accessed at (877) 660-6853 or (201) 612-7415 for international callers. The conference ID for the recording is 13620306. The webcast will also be available on the company's website.

About Marriott Vacations Worldwide Corporation

Marriott Vacations Worldwide Corporation is a leading global pure-play vacation ownership company, offering a diverse portfolio of quality products, programs and management expertise with 61 resorts. Its brands include Marriott Vacation Club, The Ritz-Carlton Destination Club and Grand Residences by Marriott. Since entering the industry in 1984 as part of Marriott International, Inc., the company earned its position as a leader and innovator in vacation ownership products. The company preserves high standards of excellence in serving its customers, investors and associates while maintaining a long-term relationship with Marriott International. For more information, please visit www.marriottvacationsworldwide.com.

Note on forward-looking statements: This press release and accompanying schedules contain 'forward-looking statements' within the meaning of federal securities laws, including statements about future operating results, estimates, and assumptions, and similar statements concerning anticipated future events and expectations that are not historical facts. The company cautions you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including volatility in the economy and the credit markets, supply and demand changes for vacation ownership and residential products, competitive conditions, the availability of capital to finance growth, and other matters referred to under the heading 'Risk Factors' contained in the company's most recent Annual Report on Form 10-K filed with the U.S Securities and Exchange Commission (the 'SEC') and in subsequent SEC filings, any of which could cause actual results to differ materially from those expressed in or implied in this press release. These statements are made as of October 15, 2015 and the company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Financial Schedules Follow


MARRIOTT VACATIONS WORLDWIDE CORPORATION


FINANCIAL SCHEDULES


QUARTER 3, 2015


TABLE OF CONTENTS



































Consolidated Statements of Income - 12 Weeks Ended September 11, 2015 and September 12, 2014


A-1


















Consolidated Statements of Income - 36 Weeks Ended September 11, 2015 and September 12, 2014


A-2


















North America Segment Financial Results - 12 Weeks Ended September 11, 2015 and September 12, 2014


A-3


















North America Segment Financial Results - 36 Weeks Ended September 11, 2015 and September 12, 2014


A-4


















Asia Pacific Segment Financial Results - 12 Weeks Ended September 11, 2015 and September 12, 2014


A-5


















Asia Pacific Segment Financial Results - 36 Weeks Ended September 11, 2015 and September 12, 2014


A-6


















Europe Segment Financial Results - 12 Weeks Ended September 11, 2015 and September 12, 2014


A-7


















Europe Segment Financial Results - 36 Weeks Ended September 11, 2015 and September 12, 2014


A-8


















Corporate and Other Financial Results - 12 Weeks and 36 Weeks Ended September 11, 2015 and September 12, 2014


A-9


















Consolidated Contract Sales to Sale of Vacation Ownership Products and Adjusted Development Margin



(Adjusted Sale of Vacation Ownership Products Net of Expenses) - 12 Weeks Ended September 11, 2015 and September 12, 2014


A-10


















Consolidated Contract Sales to Sale of Vacation Ownership Products and Adjusted Development Margin



(Adjusted Sale of Vacation Ownership Products Net of Expenses) - 36 Weeks Ended September 11, 2015 and September 12, 2014


A-11


















North America Contract Sales to Sale of Vacation Ownership Products and Adjusted Development Margin



(Adjusted Sale of Vacation Ownership Products Net of Expenses) - 12 Weeks Ended September 11, 2015 and September 12, 2014


A-12


















North America Contract Sales to Sale of Vacation Ownership Products and Adjusted Development Margin



(Adjusted Sale of Vacation Ownership Products Net of Expenses) - 36 Weeks Ended September 11, 2015 and September 12, 2014


A-13


















EBITDA and Adjusted EBITDA - 12 Weeks and 36 Weeks Ended September 11, 2015 and September 12, 2014


A-14


















2015 Outlook - Adjusted Net Income and Adjusted Earnings Per Share - Diluted, Adjusted EBITDA and Adjusted Development Margin


A-15


















2015 Outlook - Adjusted Free Cash Flow and Normalized Adjusted Free Cash Flow



A-16


















Non-GAAP Financial Measures



A-17


















Consolidated Balance Sheets



A-20


















Consolidated Statements of Cash Flows


A-21

A-1


MARRIOTT VACATIONS WORLDWIDE CORPORATION


CONSOLIDATED STATEMENTS OF INCOME


12 Weeks Ended September 11, 2015 and September 12, 2014


(In thousands, except per share amounts)
































As Reported




As Adjusted



As Reported




As Adjusted











12 Weeks Ended


Certain


12 Weeks Ended



12 Weeks Ended


Certain


12 Weeks Ended











September 11, 2015


Charges


September 11, 2015

**


September 12, 2014


Charges


September 12, 2014

**


Revenues



















Sale of vacation ownership products

$                         136,802


$              -


$                         136,802



$                         155,384


$              -


$                         155,384




Resort management and other services

73,828


-


73,828



70,981


-


70,981




Financing



28,294


-


28,294



29,545


-


29,545




Rental



76,039


-


76,039



65,620


-


65,620




Cost reimbursements


92,173


-


92,173



91,508


-


91,508






Total revenues

407,136


-


407,136



413,038


-


413,038



Expenses



















Cost of vacation ownership products

40,776


-


40,776



48,640


-


48,640




Marketing and sales



71,628


-


71,628



73,380


-


73,380




Resort management and other services

47,409


-


47,409



47,857


-


47,857




Financing


5,488


-


5,488



5,434


-


5,434




Rental



62,567


-


62,567



54,605


-


54,605




General and administrative

23,214


(1,767)


21,447



21,932


-


21,932




Litigation settlement



-


-


-



3,225


(3,225)


-




Organizational and separation related



439


(439)


-



332


(332)


-




Consumer financing interest



5,289


-


5,289



5,605


-


5,605




Royalty fee



14,000


-


14,000



14,339


-


14,339




Impairment


-


-


-



26


(26)


-




Cost reimbursements

92,173


-


92,173



91,508


-


91,508






Total expenses

362,983


(2,206)


360,777



366,883


(3,583)


363,300



(Losses) gains and other (expense) income

(20)


20


-



207


(207)


-



Interest expense



(2,839)


-


(2,839)



(2,890)


-


(2,890)



Equity in earnings



50


-


50



38


-


38



Other






(5,181)


5,181


-



-


-


-






Income before income taxes

36,163


7,407


43,570



43,510


3,376


46,886



Provision for income taxes

(14,608)


(2,491)


(17,099)



(17,862)


(1,299)


(19,161)



Net income



$                           21,555


$      4,916


$                           26,471



$                           25,648


$      2,077


$                           27,725

























Earnings per share - Basic



$                               0.69




$                               0.84



$                               0.77




$                               0.83

























Earnings per share - Diluted



$                               0.67




$                               0.82



$                               0.75




$                               0.81

























Basic Shares



31,455




31,455



33,374




33,374



Diluted Shares



32,128




32,128



34,366




34,366

































As Reported







As Reported















12 Weeks Ended







12 Weeks Ended















September 11, 2015







September 12, 2014







Contract Sales



















Vacation ownership



$                         159,757







$                         167,245









Residential products



-







4,488










Total contract sales



$                         159,757







$                         171,733








** Denotes non-GAAP financial measures.  Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use.


NOTE: Earnings per share - Basic and Earnings per share - Diluted are calculated using whole dollars.  Beginning with the fourth quarter of 2014, we have combined results from Other into Resort management and other services and have recast prior year presentation for consistency.

A-2


MARRIOTT VACATIONS WORLDWIDE CORPORATION


CONSOLIDATED STATEMENTS OF INCOME


36 Weeks Ended September 11, 2015 and September 12, 2014


(In thousands, except per share amounts)
































As Reported




As Adjusted



As Reported




As Adjusted











36 Weeks Ended


Certain


36 Weeks Ended



36 Weeks Ended


Certain


36 Weeks Ended











September 11, 2015


Charges


September 11, 2015

**


September 12, 2014


Charges


September 12, 2014

**


Revenues



















Sale of vacation ownership products

$                         476,078


$            (28,420)


$                         447,658



$                         452,796


$                       -


$                        452,796




Resort management and other services

212,308


-


212,308



209,348


-


209,348




Financing

85,640


-


85,640



90,002


-


90,002




Rental

224,880


-


224,880



190,972


-


190,972




Cost reimbursements

285,937


-


285,937



281,769


-


281,769








Total revenues

1,284,843


(28,420)


1,256,423



1,224,887


-


1,224,887



Expenses



















Cost of vacation ownership products

150,857


(21,583)


129,274



138,925


-


138,925




Marketing and sales

228,760


(922)


227,838



216,827


(287)


216,540




Resort management and other services

135,298


-


135,298



141,061


200


141,261




Financing

16,478


-


16,478



15,976


-


15,976




Rental

184,560


-


184,560



166,386


-


166,386




General and administrative

68,883


(1,767)


67,116



66,913


-


66,913




Litigation settlement


(236)


236


-



(4,350)


4,350


-




Organizational and separation related


732


(732)


-



2,272


(2,272)


-




Consumer financing interest


16,558


-


16,558



17,967


-


17,967




Royalty fee

40,431


-


40,431



41,420


-


41,420




Impairment

-


-


-



860


(860)


-




Cost reimbursements

285,937


-


285,937



281,769


-


281,769








Total expenses

1,128,258


(24,768)


1,103,490



1,086,026


1,131


1,087,157



Gains and other income

9,492


(9,492)


-



1,849


(1,849)


-



Interest expense


(8,822)


-


(8,822)



(7,638)


-


(7,638)



Equity in earnings


148


-


148



156


-


156



Other






(6,453)


6,453


-



-


-


-








Income before income taxes

150,950


(6,691)


144,259



133,228


(2,980)


130,248



Provision for income taxes

(61,300)


1,288


(60,012)



(52,969)


1,238


(51,731)



Net income


$                           89,650


$              (5,403)


$                           84,247



$                           80,259


$              (1,742)


$                          78,517

























Earnings per share - Basic


$                               2.81




$                               2.64



$                               2.35




$                              2.30

























Earnings per share - Diluted


$                               2.75




$                               2.59



$                               2.28




$                              2.23

























Basic Shares



31,870




31,870



34,180




34,180



Diluted Shares


32,550




32,550



35,161




35,161

































As Reported







As Reported















36 Weeks Ended







36 Weeks Ended















September 11, 2015







September 12, 2014







Contract Sales


















Vacation ownership


$                         495,645







$                         487,082









Residential products


28,420







10,814











Total contract sales


$                         524,065







$                         497,896








** Denotes non-GAAP financial measures.  Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use.


NOTE: Earnings per share - Basic and Earnings per share - Diluted are calculated using whole dollars.  Beginning with the fourth quarter of 2014, we have combined results from Other into Resort management and other services and have recast prior year presentation for consistency.

A-3


MARRIOTT VACATIONS WORLDWIDE CORPORATION


NORTH AMERICA SEGMENT


12 Weeks Ended September 11, 2015 and September 12, 2014


(In thousands)



















































As Reported




As Adjusted



As Reported




As Adjusted










12 Weeks Ended


Certain


12 Weeks Ended



12 Weeks Ended


Certain


12 Weeks Ended










September 11, 2015


Charges


September 11, 2015

**


September 12, 2014


Charges


September 12, 2014

**


Revenues


















Sale of vacation ownership products


$                         122,908


$              -


$                         122,908



$                         138,179


$              -


$                         138,179




Resort management and other services


64,437


-


64,437



61,956


-


61,956




Financing


26,399


-


26,399



27,519


-


27,519




Rental


65,135


-


65,135



55,216


-


55,216




Cost reimbursements


83,561


-


83,561



81,031


-


81,031








Total revenues


362,440


-


362,440



363,901


-


363,901



Expenses


















Cost of vacation ownership products


35,736


-


35,736



41,394


-


41,394




Marketing and sales


62,652


-


62,652



63,092


-


63,092




Resort management and other services


39,175


-


39,175



40,021


-


40,021




Rental


53,742


-


53,742



46,962


-


46,962




Litigation settlement


-


-


-



2,975


(2,975)


-




Organizational and separation related


59


(59)


-



120


(120)


-




Royalty fee


2,228


-


2,228



2,529


-


2,529




Impairment


-


-


-



26


(26)


-




Cost reimbursements


83,561


-


83,561



81,031


-


81,031








Total expenses


277,153


(59)


277,094



278,150


(3,121)


275,029



(Losses) gains and other (expense) income


(4)


4


-



207


(207)


-



Equity in earnings


54


-


54



50


-


50








Segment financial results


$                           85,337


$           63


$                           85,400



$                           86,008


$      2,914


$                           88,922































As Reported







As Reported














12 Weeks Ended







12 Weeks Ended














September 11, 2015







September 12, 2014







Contract Sales


















Vacation ownership


$                         142,787







$                         148,154









Residential products


-







4,488











Total contract sales


$                         142,787







$                         152,642









**  Denotes non-GAAP financial measures.  Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use. 























NOTE:  Beginning with the fourth quarter of 2014 we have combined results from Other into Resort management and other services and have recast prior year presentation for consistency.

A-4


MARRIOTT VACATIONS WORLDWIDE CORPORATION


NORTH AMERICA SEGMENT


36 Weeks Ended September 11, 2015 and September 12, 2014


(In thousands)



















































As Reported




As Adjusted



As Reported




As Adjusted










36 Weeks Ended


Certain


36 Weeks Ended



36 Weeks Ended


Certain


36 Weeks Ended










September 11, 2015


Charges


September 11, 2015

**


September 12, 2014


Charges


September 12, 2014

**


Revenues


















Sale of vacation ownership products


$                         406,784


$              -


$                         406,784



$                         404,111


$              -


$                         404,111




Resort management and other services


189,206


-


189,206



184,596


-


184,596




Financing


79,809


-


79,809



83,887


-


83,887




Rental


202,606


-


202,606



168,943


-


168,943




Cost reimbursements


260,452


-


260,452



251,616


-


251,616








Total revenues


1,138,857


-


1,138,857



1,093,153


-


1,093,153



Expenses


















Cost of vacation ownership products


117,071


-


117,071



120,332


-


120,332




Marketing and sales


199,506


-


199,506



187,501


-


187,501




Resort management and other services


115,244


-


115,244



119,637


-


119,637




Rental


163,481


-


163,481



145,984


-


145,984




Litigation settlement


(370)


370


-



(4,600)


4,600


-




Organizational and separation related


313


(313)


-



525


(525)


-




Royalty fee


5,174


-


5,174



6,026


-


6,026




Impairment


-


-


-



860


(860)


-




Cost reimbursements


260,452


-


260,452



251,616


-


251,616








Total expenses


860,871


57


860,928



827,881


3,215


831,096



Gains and other income


9,534


(9,534)


-



1,897


(1,897)


-



Equity in earnings


156


-


156



170


-


170








Segment financial results


$                         287,676


$    (9,591)


$                         278,085



$                         267,339


$    (5,112)


$                         262,227































As Reported







As Reported














36 Weeks Ended







36 Weeks Ended














September 11, 2015







September 12, 2014







Contract Sales


















Vacation ownership


$                         449,385







$                         433,928









Residential products


-







10,814











Total contract sales


$                         449,385







$                         444,742









**  Denotes non-GAAP financial measures.  Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use. 























NOTE:  Beginning with the fourth quarter of 2014 we have combined results from Other into Resort management and other services and have recast prior year presentation for consistency.

A-5

MARRIOTT VACATIONS WORLDWIDE CORPORATION

ASIA PACIFIC SEGMENT

12 Weeks Ended September 11, 2015 and September 12, 2014

(In thousands)
















































As Reported




As Adjusted



As Reported




As Adjusted









12 Weeks Ended


Certain


12 Weeks Ended



12 Weeks Ended


Certain


12 Weeks Ended









September 11, 2015


Charges


September 11, 2015

**


September 12, 2014


Charges


September 12, 2014

**

Revenues

















Sale of vacation ownership products


$                             6,303


$              -


$                             6,303



$                             7,641


$              -


$                             7,641



Resort management and other services


2,212


-


2,212



891


-


891



Financing


1,008


-


1,008



1,038


-


1,038



Rental


2,569


-


2,569



1,573


-


1,573



Cost reimbursements


609


-


609



703


-


703







Total revenues


12,701


-


12,701



11,846


-


11,846


Expenses

















Cost of vacation ownership products


1,432


-


1,432



1,959


-


1,959



Marketing and sales


4,022


-


4,022



4,526


-


4,526



Resort management and other services


2,264


-


2,264



695


-


695



Rental


4,129


-


4,129



2,762


-


2,762



Royalty fee


139


-


139



159


-


159



Cost reimbursements


609


-


609



703


-


703







Total expenses


12,595


-


12,595



10,804


-


10,804


Gains and other income


1


(1)


-



-


-


-


Equity in earnings


(4)


-


(4)



(12)


-


(12)


Other





(4,159)


4,159


-



-


-


-







Segment financial results


$                           (4,056)


$      4,158


$                                102



$                             1,030


$              -


$                             1,030

















































As Reported







As Reported













12 Weeks Ended







12 Weeks Ended






Contract Sales


September 11, 2015







September 12, 2014









Vacation ownership


$                            6,877







$                            7,784









Residential products


-







-










Total contract sales


$                            6,877







$                            7,784







**  Denotes non-GAAP financial measures.  Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use. 





















NOTE:   Beginning with the fourth quarter of 2014 we have combined results from Other into Resort management and other services and have recast prior year presentation for consistency.

A-6


MARRIOTT VACATIONS WORLDWIDE CORPORATION


ASIA PACIFIC SEGMENT


36 Weeks Ended September 11, 2015 and September 12, 2014


(In thousands)



















































As Reported




As Adjusted



As Reported




As Adjusted










36 Weeks Ended


Certain


36 Weeks Ended



36 Weeks Ended


Certain


36 Weeks Ended










September 11, 2015


Charges


September 11, 2015

**


September 12, 2014


Charges


September 12, 2014

**


Revenues


















Sale of vacation ownership products


$                           50,156


$   (28,420)


$                           21,736



$                           21,863


$              -


$                           21,863




Resort management and other services


4,039


-


4,039



2,723


-


2,723




Financing


3,057


-


3,057



3,142


-


3,142




Rental


6,424


-


6,424



5,129


-


5,129




Cost reimbursements


2,107


-


2,107



2,366


-


2,366








Total revenues


65,783


(28,420)


37,363



35,223


-


35,223



Expenses


















Cost of vacation ownership products


25,231


(21,583)


3,648



5,459


-


5,459




Marketing and sales


14,011


(922)


13,089



12,547


-


12,547




Resort management and other services


3,769


-


3,769



2,037


-


2,037




Rental


9,419


-


9,419



8,294


-


8,294




Royalty fee


446


-


446



483


-


483




Cost reimbursements


2,107


-


2,107



2,366


-


2,366








Total expenses


54,983


(22,505)


32,478



31,186


-


31,186



Losses and other expense


(29)


29


-



(8)


8


-



Equity in earnings


(8)


-


(8)



(14)


-


(14)



Other





(5,431)


5,431


-



-


-


-








Segment financial results


$                             5,332


$        (455)


$                             4,877



$                             4,015


$             8


$                             4,023




















































As Reported







As Reported














36 Weeks Ended







36 Weeks Ended







Contract Sales


September 11, 2015







September 12, 2014









Vacation ownership


$                           23,528







$                           21,744









Residential products


28,420







-










Total contract sales


$                           51,948







$                           21,744









**  Denotes non-GAAP financial measures.  Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use. 























NOTE:   Asia Pacific segment revenues and expenses for the twelve weeks ended March 28, 2014 have been restated to reclassify a portion of Cost reimbursements from the Asia Pacific segment to the Europe segment to correct certain immaterial prior period errors.  Beginning with the fourth quarter of 2014 we have combined results from Other into Resort management and other services and have recast prior year presentation for consistency.


A-7

MARRIOTT VACATIONS WORLDWIDE CORPORATION

EUROPE SEGMENT

12 Weeks Ended September 11, 2015 and September 12, 2014

(In thousands)
















































As Reported




As Adjusted



As Reported




As Adjusted









12 Weeks Ended


Certain


12 Weeks Ended



12 Weeks Ended


Certain


12 Weeks Ended









September 11, 2015


Charges


September 11, 2015

**


September 12, 2014


Charges


September 12, 2014

**

Revenues

















Sale of vacation ownership products


$                             7,591


$              -


$                             7,591



$                             9,564


$              -


$                             9,564



Resort management and other services


7,179


-


7,179



8,134


-


8,134



Financing


887


-


887



988


-


988



Rental


8,335


-


8,335



8,831


-


8,831



Cost reimbursements


8,003


-


8,003



9,774


-


9,774







Total revenues


31,995


-


31,995



37,291


-


37,291


Expenses

















Cost of vacation ownership products


2,070


-


2,070



2,888


-


2,888



Marketing and sales


4,954


-


4,954



5,762


-


5,762



Resort management and other services


5,970


-


5,970



7,141


-


7,141



Rental


4,696


-


4,696



4,881


-


4,881



Royalty fee


126


-


126



144


-


144



Cost reimbursements


8,003


-


8,003



9,774


-


9,774







Total expenses


25,819


-


25,819



30,590


-


30,590


Losses and other expense


(17)


17


-



-


-


-







Segment financial results


$                             6,159


$           17


$                             6,176



$                             6,701


$              -


$                             6,701

















































As Reported







As Reported













12 Weeks Ended







12 Weeks Ended













September 11, 2015







September 12, 2014






Contract Sales


$                           10,093







$                           11,307







**  Denotes non-GAAP financial measures.  Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use. 





















NOTE:   Beginning with the fourth quarter of 2014 we have combined results from Other into Resort management and other services and have recast prior year presentation for consistency.

A-8
MARRIOTT VACATIONS WORLDWIDE CORPORATION
EUROPE SEGMENT
36 Weeks Ended September 11, 2015 and September 12, 2014
(In thousands)
















































As Reported




As Adjusted



As Reported




As Adjusted









36 Weeks Ended


Certain


36 Weeks Ended



36 Weeks Ended


Certain


36 Weeks Ended









September 11, 2015


Charges


September 11, 2015

**


September 12, 2014


Charges


September 12, 2014

**

Revenues

















Sale of vacation ownership products


$                           19,138


$              -


$                           19,138



$                           26,822


$              -


$                           26,822



Resort management and other services


19,063


-


19,063



22,029


-


22,029



Financing


2,774


-


2,774



2,973


-


2,973



Rental


15,850


-


15,850



16,900


-


16,900



Cost reimbursements


23,378


-


23,378



27,787


-


27,787







Total revenues


80,203


-


80,203



96,511


-


96,511


Expenses

















Cost of vacation ownership products


4,155


-


4,155



6,723


-


6,723



Marketing and sales


15,243


-


15,243



16,779


(287)


16,492



Resort management and other services


16,285


-


16,285



19,387


200


19,587



Rental


11,660


-


11,660



12,108


-


12,108



Royalty fee


290


-


290



426


-


426



Cost reimbursements


23,378


-


23,378



27,787


-


27,787







Total expenses


71,011


-


71,011



83,210


(87)


83,123


Losses and other expense


(13)


13


-



(39)


39


-







Segment financial results


$                             9,179


$           13


$                             9,192



$                           13,262


$         126


$                           13,388

















































As Reported







As Reported













36 Weeks Ended







36 Weeks Ended













September 11, 2015







September 12, 2014






Contract Sales


$                           22,732







$                           31,410







**  Denotes non-GAAP financial measures.  Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use. 





















NOTE:   Europe segment revenues and expenses for the twelve weeks ended March 28, 2014 have been restated to reclassify a portion of Cost reimbursements from the Asia Pacific segment to the Europe segment to correct certain immaterial prior period errors.  Beginning with the fourth quarter of 2014 we have combined results from Other into Resort management and other services and have recast prior year presentation for consistency.

A-9

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CORPORATE AND OTHER

12 Weeks and 36 Weeks Ended September 11, 2015 and September 12, 2014

(In thousands)
















































As Reported




As Adjusted



As Reported




As Adjusted









12 Weeks Ended


Certain


12 Weeks Ended



12 Weeks Ended


Certain


12 Weeks Ended









September 11, 2015


Charges


September 11, 2015

**


September 12, 2014


Charges


September 12, 2014

**

Expenses

















Cost of vacation ownership products


$                             1,538


$              -


$                             1,538



$                             2,399


$              -


$                             2,399



Financing


5,488


-


5,488



5,434


-


5,434



General and administrative


23,214


(1,767)


21,447



21,932


-


21,932



Litigation settlement


-


-


-



250


(250)


-



Organizational and separation related


380


(380)


-



212


(212)


-



Consumer financing interest


5,289


-


5,289



5,605


-


5,605



Royalty fee


11,507


-


11,507



11,507


-


11,507







Total expenses


47,416


(2,147)


45,269



47,339


(462)


46,877


Interest expense


(2,839)


-


(2,839)



(2,890)


-


(2,890)


Other





(1,022)


1,022


-



-


-


-







Financial results


$                         (51,277)


$      3,169


$                         (48,108)



$                         (50,229)


$         462


$                         (49,767)

















































As Reported




As Adjusted



As Reported




As Adjusted









36 Weeks Ended


Certain


36 Weeks Ended



36 Weeks Ended


Certain


36 Weeks Ended









September 11, 2015


Charges


September 11, 2015

**


September 12, 2014


Charges


September 12, 2014

**

Expenses

















Cost of vacation ownership products


$                             4,400


$              -


$                             4,400



$                             6,411


$              -


$                             6,411



Financing


16,478


-


16,478



15,976


-


15,976



General and administrative


68,883


(1,767)


67,116



66,913


-


66,913



Litigation settlement


134


(134)


-



250


(250)


-



Organizational and separation related


419


(419)


-



1,747


(1,747)


-



Consumer financing interest


16,558


-


16,558



17,967


-


17,967



Royalty fee


34,521


-


34,521



34,485


-


34,485







Total expenses


141,393


(2,320)


139,073



143,749


(1,997)


141,752


Interest expense


(8,822)


-


(8,822)



(7,638)


-


(7,638)


Other





(1,022)


1,022


-



-


-


-







Financial results


$                       (151,237)


$      3,342


$                       (147,895)



$                       (151,389)


$      1,999


$                       (149,390)



**  Denotes non-GAAP financial measures.  Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use. 





















NOTE:  Corporate and Other consists of results not specifically attributable to an individual segment, including expenses incurred to support our financing operations, non-capitalizable development expenses supporting  overall company development, company-wide general and administrative costs, and the fixed royalty fee payable under the license agreements that we entered into with Marriott International in connection with the spin-off, as well as consumer financing interest expense.

A-10

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS

(In thousands)













12 Weeks Ended





September 11, 2015



September 12, 2014









Contract sales







Vacation ownership


$                        159,757



$                        167,245


Residential products


-



4,488



Total contract sales


159,757



171,733









Revenue recognition adjustments:







Reportability1


(11,051)



(4,503)


Sales Reserve2


(7,600)



(7,310)


Other3


(4,304)



(4,536)

Sale of vacation ownership products


$                        136,802



$                        155,384


1  Adjustment for lack of required downpayment or contract sales in rescission period.

2   Represents allowance for bad debts for our financed vacation ownership product sales, which we also refer to as sales reserve.

3  Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.




MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED ADJUSTED DEVELOPMENT MARGIN (ADJUSTED SALE OF VACATION OWNERSHIP PRODUCTS NET OF EXPENSES)
(In thousands)


































































Revenue









Revenue













As Reported




Recognition


As Adjusted



As Reported




Recognition


As Adjusted











12 Weeks Ended


Certain


Reportability


12 Weeks Ended



12 Weeks Ended


Certain


Reportability


12 Weeks Ended











September 11, 2015


Charges


Adjustment


September 11, 2015

**


September 12, 2014


Charges


Adjustment


September 12, 2014

**


Sale of vacation ownership products



$                         136,802


$              -


$              11,051


$                         147,853



$                         155,384


$              -


$                4,503


$                         159,887



Less:


























Cost of vacation ownership products


40,776


-


3,137


43,913



48,640


-


1,329


49,969




Marketing and sales





71,628


-


986


72,614



73,380


-


385


73,765





























Development margin






$                           24,398


$              -


$                6,928


$                           31,326



$                           33,364


$              -


$                2,789


$                           36,153
























































Development margin percentage1


17.8%






21.2%



21.5%






22.6%




**  Denotes non-GAAP financial measures.  Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use.



























1   Development margin percentage represents Development margin divided by Sale of vacation ownership products.  Development margin percentage is calculated using whole dollars.




A-11

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS

(In thousands)















36 Weeks Ended






September 11, 2015



September 12, 2014










Contract sales








Vacation ownership


$                        495,645



$                          487,082


Residential products


28,420



10,814



Total contract sales


524,065



497,896










Revenue recognition adjustments:







Reportability1


(11,124)



(8,228)


Sales Reserve2


(23,146)



(23,008)


Other3


(13,717)



(13,864)

Sale of vacation ownership products


$                        476,078



$                          452,796







1  Adjustment for lack of required downpayment or contract sales in rescission period.






2   Represents allowance for bad debts for our financed vacation ownership product sales, which we also refer to as sales reserve.






3  Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.







MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED ADJUSTED DEVELOPMENT MARGIN (ADJUSTED SALE OF VACATION OWNERSHIP PRODUCTS NET OF EXPENSES)

(In thousands)













Revenue









Revenue












As Reported




Recognition


As Adjusted



As Reported




Recognition


As Adjusted










36 Weeks Ended


Certain


Reportability


36 Weeks Ended



36 Weeks Ended


Certain


Reportability


36 Weeks Ended










September 11, 2015


Charges


Adjustment


September 11, 2015

**


September 12, 2014


Charges


Adjustment


September 12, 2014

**

Sale of vacation ownership products



$                         476,078


$   (28,420)


$       11,124


$                         458,782



$                           452,796


$              -


$         8,228


$                         461,024


Less:

























Cost of vacation ownership products 


150,857


(21,583)


3,235


132,509



138,925


-


2,545


141,470



Marketing and sales





228,760


(922)


934


228,772



216,827


(287)


638


217,178



























Development margin






$                           96,461


$     (5,915)


$         6,955


$                           97,501



$                             97,044


$         287


$         5,045


$                         102,376





















































Development margin percentage1


20.3%






21.3%



21.4%






22.2%



**  Denotes non-GAAP financial measures.  Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use.



























1   Development margin percentage represents Development margin divided by Sale of vacation ownership products.  Development margin percentage is calculated using whole dollars.



A-12

MARRIOTT VACATIONS WORLDWIDE CORPORATION

NORTH AMERICA CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS

(In thousands)















12 Weeks Ended






September 11, 2015



September 12, 2014










Contract sales








Vacation ownership


$                      142,787



$                    148,154


Residential products


-



4,488



Total contract sales


142,787



152,642










Revenue recognition adjustments:







Reportability1


(9,849)



(4,104)


Sales Reserve 2


(5,901)



(5,867)


Other 3


(4,129)



(4,492)

Sale of vacation ownership products


$                      122,908



$                    138,179
















1  Adjustment for lack of required downpayment or contract sales in rescission period.






2   Represents allowance for bad debts for our financed vacation ownership product sales, which we also refer to as sales reserve.






3  Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.







MARRIOTT VACATIONS WORLDWIDE CORPORATION

NORTH AMERICA ADJUSTED DEVELOPMENT MARGIN (ADJUSTED SALE OF VACATION OWNERSHIP PRODUCTS NET OF EXPENSES)

(In thousands)













Revenue









Revenue













As Reported




Recognition


As Adjusted



As Reported




Recognition


As Adjusted











12 Weeks Ended


Certain


Reportability


12 Weeks Ended



12 Weeks Ended


Certain


Reportability


12 Weeks Ended











September 11, 2015


Charges


Adjustment


September 11, 2015

**


September 12, 2014


Charges


Adjustment


September 12, 2014

**


Sale of vacation ownership products



$                       122,908


$                      -


$         9,849


$                       132,757



$                     138,179


$            -


$            4,104


$                     142,283



Less:


























Cost of vacation ownership products


35,736


-


2,808


38,544



41,394


-


1,191


42,585




Marketing and sales





62,652


-


925


63,577



63,092


-


385


63,477





























Development margin






$                         24,520


$                      -


$         6,116


$                         30,636



$                       33,693


$            -


$            2,528


$                       36,221
























































Development margin percentage1


20.0%






23.1%



24.4%






25.5%





























**  Denotes non-GAAP financial measures.  Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use.



























1   Development margin percentage represents Development margin divided by Sale of vacation ownership products.  Development margin percentage is calculated using whole dollars.


A-13

MARRIOTT VACATIONS WORLDWIDE CORPORATION

NORTH AMERICA CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS

(In thousands)
















36 Weeks Ended







September 11, 2015



September 12, 2014












Contract sales









Vacation ownership


$                      449,385



$                    433,928



Residential products


-



10,814




Total contract sales


449,385



444,742












Revenue recognition adjustments:








Reportability1


(11,351)



(8,296)



Sales Reserve 2


(17,886)



(18,618)



Other 3


(13,364)



(13,717)


Sale of vacation ownership products


$                      406,784



$                    404,111












1  Adjustment for lack of required downpayment or contract sales in rescission period.







2   Represents allowance for bad debts for our financed vacation ownership product sales, which we also refer to as sales reserve.







3  Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.








MARRIOTT VACATIONS WORLDWIDE CORPORATION

NORTH AMERICA ADJUSTED DEVELOPMENT MARGIN (ADJUSTED SALE OF VACATION OWNERSHIP PRODUCTS NET OF EXPENSES)

(In thousands)






































Revenue









Revenue












As Reported




Recognition


As Adjusted



As Reported




Recognition


As Adjusted










36 Weeks Ended


Certain


Reportability


36 Weeks Ended



36 Weeks Ended


Certain


Reportability


36 Weeks Ended










September 11, 2015


Charges


Adjustment


September 11, 2015

**


September 12, 2014


Charges


Adjustment


September 12, 2014

**

Sale of vacation ownership products



$                     406,784


$            -


$          11,351


$                       418,135



$                     404,111


$            -


$            8,296


$                     412,407


Less:

























Cost of vacation ownership products 


117,071


-


3,235


120,306



120,332


-


2,509


122,841



Marketing and sales





199,506


-


1,067


200,573



187,501


-


779


188,280



























Development margin






$                       90,207


$            -


$            7,049


$                         97,256



$                       96,278


$            -


$            5,008


$                     101,286





















































Development margin percentage1


22.2%






23.3%



23.8%






24.6%



























**  Denotes non-GAAP financial measures.  Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use.


























1   Development margin percentage represents Development margin divided by Sale of vacation ownership products.  Development margin percentage is calculated using whole dollars.

A-14

MARRIOTT VACATIONS WORLDWIDE CORPORATION

EBITDA AND ADJUSTED EBITDA

12 Weeks and 36 Weeks Ended September 11, 2015 and September 12, 2014

(In thousands)


























As Reported




As Adjusted


As Reported




As Adjusted









12 Weeks Ended


Certain


12 Weeks Ended


12 Weeks Ended


Certain


12 Weeks Ended









September 11, 2015


Charges


September 11, 2015

**

September 12, 2014


Charges


September 12, 2014

**







































Net income

$                       21,555


$    4,916


$                         26,471


$                       25,648


$    2,077


$                       27,725



Interest expense1

2,839


-


2,839


2,890


-


2,890



Tax provision

14,608


2,491


17,099


17,862


1,299


19,161



Depreciation and amortization

5,292


-


5,292


4,261


-


4,261





EBITDA **




$                       44,294


$    7,407


$                         51,701


$                       50,661


$    3,376


$                       54,037





















































































As Reported




As Adjusted


As Reported




As Adjusted









36 Weeks Ended


Certain


36 Weeks Ended


36 Weeks Ended


Certain


36 Weeks Ended









September 11, 2015


Charges


September 11, 2015

**

September 12, 2014


Charges


September 12, 2014

**







































Net income

$                       89,650


$  (5,403)


$                         84,247


$                       80,259


$  (1,742)


$                       78,517



Interest expense1

8,822


-


8,822


7,638


-


7,638



Tax provision

61,300


(1,288)


60,012


52,969


(1,238)


51,731



Depreciation and amortization

13,850


-


13,850


13,183


-


13,183





EBITDA **




$                     173,622


$  (6,691)


$                       166,931


$                     154,049


$  (2,980)


$                     151,069





**  Denotes non-GAAP financial measures.  Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use
























1   Interest expense excludes consumer financing interest expense


A-15

MARRIOTT VACATIONS WORLDWIDE CORPORATION

2015 ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE - DILUTED OUTLOOK

(In millions, except per share amounts)


Fiscal Year 2015 (low)


Fiscal Year 2015 (high)

Net income

$                                112


$                                  119


Adjustments to reconcile Net income to Adjusted net income





Organizational and separation related and other charges1

11


10


Gain on dispositions 2

(10)


(10)


Bulk sales 3

(6)


(6)


Provision for income taxes on adjustments to net income

1


1


Adjusted net income**

$                                108


$                                  114







Earnings per share - Diluted 4

$                               3.46


$                                 3.68


Adjusted earnings per share - Diluted**, 4                          

$                               3.33


$                                 3.52


Diluted shares4                                               

32.4


32.4






**  Denotes non-GAAP financial measures.  Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use.


1   Organizational and separation related and other charges adjustment includes $2.1 million for organizational and separation related efforts, $1.8 million for refurbishment costs at a project in our North America segment, and $6 million to $7 million of non-capitalizable transaction costs.

2   Gain on dispositions adjustment includes a $0.9 million gain associated with the sale of a golf course and adjacent undeveloped land and an $8.7 million gain on the sale of undeveloped land in our North America segment. 

3     Bulk sales adjustment includes the net $5.9 million of pre-tax income associated with the sale of the 18 units in the Asia Pacific segment.

4      Earnings per share - Diluted, Adjusted earnings per share - Diluted, and Diluted shares outlook includes the impact of share repurchase activity only through September 11, 2015.





MARRIOTT VACATIONS WORLDWIDE CORPORATION
2015 ADJUSTED EBITDA OUTLOOK
(In millions)














Fiscal Year 2015 (low)


Fiscal Year 2015 (high)

Adjusted net income **                                                                   


$                                108


$                                  114

Interest expense1                                  


12


12

Tax provision                                                                    


81


85

Depreciation and amortization                                                                    


21


21


Adjusted EBITDA**                                                                    


$                                222


$                                  232




MARRIOTT VACATIONS WORLDWIDE CORPORATION
2015 ADJUSTED DEVELOPMENT MARGIN OUTLOOK














Total MVW






Fiscal Year 2015 (low)


Fiscal Year 2015 (high)

Development margin1


21.1%


22.1%


Adjustments to reconcile Development margin to Adjusted development margin






Revenue recognition reportability


(0.1%)


(0.1%)




Adjusted development margin**, 1


21.0%


22.0%

**  Denotes non-GAAP financial measures.  Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use.

1   Development margin represents Development margin dollars divided by Sale of vacation ownership products revenues.  Development margin is calculated using whole dollars.

A-16

MARRIOTT VACATIONS WORLDWIDE CORPORATION

2015 ADJUSTED FREE CASH FLOW AND NORMALIZED ADJUSTED FREE CASH FLOW OUTLOOK

(In millions)



























Current Guidance















Low


High



Mid-Point



Adjustments



Normalized



Adjusted net income **                                                                 


$  108


$  114



$                    111



$                       -



$                    111




Adjustments to reconcile Adjusted net income to net cash 

















provided by operating activities:                                                                    


















Adjustments for non-cash items1


75


78



77



-



77





Deferred income taxes / income taxes payable


12


16



14



-



14





Net changes in assets and liabilities:



















Notes receivable originations


(305)


(310)



(308)



-



(308)






Notes receivable collections


270


274



272



20

6


292






Inventory 



55


60



58



(68)

7


(10)






Purchase of operating hotels for future conversion to inventory2


(62)


(62)



(62)



62

2


-






Liability for Marriott Rewards customer loyalty program


(20)


(20)



(20)



20

8


-






Organizational and separation related and other charges


(5)


(5)



(5)



5

9


-






Other working capital changes


37


40



39



(24)

10


15



Net cash provided by operating activities                                                                    


165


185



176



15



191




Capital expenditures for property and equipment (excluding inventory):


















New sales centers 3


(13)


(12)



(13)



13

3


-





Organizational and separation related capital expenditures


(3)


(3)



(3)



3

9


-





Other



(24)


(22)



(23)



3

11


(20)





Investment in operating portion of Surfers Paradise hotel that will be sold 4

(47)


(47)



(47)



47

4


-




Decrease in restricted cash


3


4



4



-



4




Borrowings from securitization transactions                                                                     


253


257



255



(45)

12


210




Repayment of debt related to securitizations                                                                     

(255)


(259)



(257)



-



(257)






Free cash flow**                                                                    


79


103



92



36



128



Adjustments:


















Organizational and separation related and other charges


8


8



8



(8)

9


-




Proceeds from sale of operating portion of Surfers Paradise hotel4


47


47



47



(47)

4


-




Net change in borrowings available from the securitization of eligible vacation 

41


42



42



-



42





ownership notes receivable through the warehouse credit facility 5



















Adjusted free cash flow**                                                                    


$  175


$  200



$                    189



$                    (19)



$                    170
























**  Denotes non-GAAP financial measures.  Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use.


1  Includes depreciation, amortization of debt issuance costs, provision for loan losses, and share-based compensation.

2  Represents adjustment for the investment in operating hotels prior to future conversion to inventory.

3  Represents incremental investment in new sales centers, mainly to support new sales distributions.

4  Represents the estimated investment in, as well as the estimated proceeds from the subsequent sale of, the operating portion of the Surfers Paradise hotel.

5  Represents the net change in borrowings available from the securitization of eligible vacation ownership notes receivable through the warehouse credit facility between the 2014 and 2015 year ends.   

6  Represents normalized notes receivable collections.

7  Represents adjustment to align real estate inventory spending with real estate inventory costs (i.e., product costs). 

8  Represents payment for Marriott Rewards Points issued prior to the Spin-off.  Liability to be fully paid in 2016.

9  Represents costs associated with organizational and separation related efforts.

10  Represents normalized other working capital changes.

11  Represents normalized capital expenditures for property and equipment.

12  Represents normalized borrowings from securitization transactions.

A-17

MARRIOTT VACATIONS WORLDWIDE CORPORATION

NON-GAAP FINANCIAL MEASURES
















In our press release and schedules, and on the related conference call, we report certain financial measures that are not prescribed or authorized by United States generally accepted accounting principles ('GAAP').  We discuss our reasons for reporting these non-GAAP financial measures below, and the financial schedules reconcile the most directly comparable GAAP financial measure to each non-GAAP financial measure that we report (identified by a double asterisk ('**') on the preceding pages).  Although we evaluate and present these non-GAAP financial measures for the reasons described below, please be aware that these non-GAAP financial measures have limitations and should not be considered in isolation or as a substitute for revenues, net income, earnings per share or any other comparable operating measure prescribed by GAAP.  In addition, these non-GAAP financial measures may be calculated and / or presented differently than measures with the same or similar names that are reported by other companies, and as a result, the non-GAAP financial measures we report may not be comparable to those reported by others.
















Adjusted Net Income.   We evaluate non-GAAP financial measures, including Adjusted Net Income, Adjusted EBITDA, and Adjusted Development Margin, that exclude certain items and gains (losses) and other income (expense) in the 12 weeks and 36 weeks ended September 11, 2015 and September 12, 2014 because these non-GAAP financial measures allow for period-over-period comparisons of our on-going core operations before the impact of certain items and gains (losses) and other income (expense).  These non-GAAP financial measures also facilitate our comparison of results from our on-going core operations before certain items and gains (losses) and other income (expense) with results from other vacation ownership companies.
















Certain items - 12 weeks and 36 weeks ended September 11, 2015.  In our Statement of Income for the 12 weeks ended September 11, 2015, we recorded $7.4 million of net pre-tax items, which included a $4.2 million adjustment for transaction costs in our Asia Pacific segment and a $1.0 million adjustment for transaction costs in our Corporate and Other segment, both recorded under the 'Other' caption, a $1.8 million adjustment for refurbishment costs at a project in our North America segment, and $0.4 million of organizational and separation related costs recorded under the 'Organizational and separation related' caption. In our Statement of Income for the 36 weeks ended September 11, 2015, we recorded $2.8 million of net pre-tax items, which included a $28.4 million adjustment to exclude the bulk sale of 18 units in our Asia Pacific segment recorded under the 'Sale of vacation ownership products' caption, with corresponding adjustments of $21.6 million and $0.9 million to the 'Cost of vacation ownership products' and Marketing and sales' captions, respectively, a $5.4 million adjustment for transaction costs in our Asia Pacific segment and a $1.0 million adjustment for transaction costs in our Corporate and Other segment, both recorded under the 'Other' caption, a $1.8 million adjustment for refurbishment costs at a project in our North America segment, $0.7 million of organizational and separation related costs recorded under the 'Organizational and separation related' caption and less than $0.1 million of net litigation related matters recorded under the 'Litigation settlement' caption, and a $0.3 million reversal of an accrual associated with a 2014 golf course disposition recorded under the 'Litigation settlement' caption because actual costs were lower than expected. 
















Certain items - 12 weeks and 36 weeks ended September 12, 2014.  In our Statement of Income for the 12 weeks ended September 12, 2014, we recorded $3.6 million of net pre-tax items, which included a $3.0 million accrual for a litigation settlement in our North America segment and a $0.3 million accrual for a litigation settlement in our Corporate and Other segment, both recorded under the 'Litigation settlement' caption, $0.3 million of organizational and separation related costs recorded under the 'Organizational and separation related' caption, and less than a $0.1 million impairment charge associated with a project in our North America segment recorded under the 'Impairment' caption.  In our Statement of Income for the 36 weeks ended September 12, 2014, we recorded $1.1 million of net pre-tax income, which included $7.6 million of income associated with the settlement of a dispute with a former service provider in our North America segment recorded under the 'Litigation settlement' caption and a $0.2 million reversal of a severance accrual in our Europe segment recorded under the 'Resort management and other services' caption because actual costs were lower than expected, partially offset by a $3.0 million accrual for a litigation settlement in our North America segment and a $0.3 million accrual for a litigation settlement in our Corporate and other segment, both recorded under the 'Litigation settlement' caption, $2.3 million of organizational and separation related costs recorded under the 'Organizational and separation related' caption, a $0.9 million impairment charge associated with a project in our North America segment recorded under the 'Impairment' caption and $0.3 million of severance charges in our Europe segment recorded under the 'Marketing and sales' caption. 

A-18



MARRIOTT VACATIONS WORLDWIDE CORPORATION



NON-GAAP FINANCIAL MEASURES




















Gains (losses) and other income (expense) - 12 weeks and 36 weeks ended September 11, 2015.   In our Statement of Income for the 12 weeks ended September 11, 2015, we recorded net losses and other expense of less than $0.1 million on the '(Losses) gains and other (expense) income' caption.  In our Statement of Income for the 36 weeks ended September 11, 2015, we recorded $9.5 million of net gains associated with the sale of undeveloped land and the sale of a golf course and adjacent undeveloped land in our North America segment under the 'Gains and other income' caption.




















Gains (losses) and other income (expense) - 12 weeks and 36 weeks ended September 12, 2014.   In our Statement of Income for the 12 weeks ended September 12, 2014, we recorded a $0.2 million gain associated with the sale of a golf course and adjacent undeveloped land in our North America segment under the '(Losses) gains and other (expense) income' caption.  In our Statement of Income for the 36 weeks ended September 12, 2014, we recorded $1.8 million of net gains associated with the sale of a golf course and adjacent undeveloped land, the sale of an undeveloped parcel of land, and the disposition of a project, all of which occurred in our North America segment and were recorded under the 'Gains and other income' caption.  




















Adjusted Development Margin (Adjusted Sale of Vacation Ownership Products Net of Expenses).  We evaluate Adjusted Development Margin (Adjusted Sale of Vacation Ownership Products Net of Expenses) as an indicator of operating performance.  Adjusted Development Margin adjusts Sale of vacation ownership products revenues for the impact of revenue reportability, includes corresponding adjustments to Cost of vacation ownership products expense and Marketing and sales expense associated with the change in revenues from the Sale of vacation ownership products, and includes adjustments for certain items as itemized in the discussion of Adjusted Net Income above.  We evaluate Adjusted Development Margin because it allows for period-over-period comparisons of our on-going core operations before the impact of revenue reportability and certain items to our Development Margin.




















Earnings Before Interest, Taxes, Depreciation and Amortization ('EBITDA').  EBITDA is defined as earnings, or net income, before interest expense (excluding consumer financing interest expense), provision for income taxes, depreciation and amortization.  For purposes of our EBITDA calculation (which previously adjusted for consumer financing interest expense), we do not adjust for consumer financing interest expense because the associated debt is secured by vacation ownership notes receivable that have been sold to bankruptcy remote special purpose entities and is generally non-recourse to us.  Further, we consider consumer financing interest expense to be an operating expense of our business.


















We consider EBITDA to be an indicator of operating performance, and we use it to measure our ability to service debt, fund capital expenditures and expand our business. We also use it, as do analysts, lenders, investors and others, because it excludes certain items that can vary widely across different industries or among companies within the same industry.  For example, interest expense can be dependent on a company's capital structure, debt levels and credit ratings.  Accordingly, the impact of interest expense on earnings can vary significantly among companies.  The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate.  As a result, effective tax rates and provision for income taxes can vary considerably among companies.  EBITDA also excludes depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets.  These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. 



Adjusted EBITDA.  We also evaluate Adjusted EBITDA, which reflects additional adjustments for certain items and gains (losses) and other income (expense), as itemized in the discussion of Adjusted Net Income above.  We evaluate Adjusted EBITDA as an indicator of operating performance because it allows for period-over-period comparisons of our on-going core operations before the impact of certain items and gains (losses) and other income (expense).  Together, EBITDA and Adjusted EBITDA facilitate our comparison of results from our on-going core operations before the impact of certain items and gains (losses) and other income (expense) with results from other vacation ownership companies. 

A-19

MARRIOTT VACATIONS WORLDWIDE CORPORATION

NON-GAAP FINANCIAL MEASURES





































Free Cash Flow.  We also evaluate Free Cash Flow as a liquidity measure that provides useful information to management and investors about the amount of cash provided by operating activities after capital expenditures for property and equipment, changes in restricted cash, and the borrowing and repayment activity related to our securitizations.  We consider Free Cash Flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can be used for strategic opportunities, including acquisitions and strengthening the balance sheet.  Analysis of Free Cash Flow also facilitates management's comparison of our results with our competitors' results.  



















Adjusted Free Cash Flow.  We also evaluate Adjusted Free Cash Flow, which reflects additional adjustments for organizational and separation related, litigation, and other cash items, as referred to in the discussion of Adjusted Net Income above.  We evaluate Adjusted Free Cash Flow as a liquidity measure that provides useful information to management and investors about the amount of cash provided by operating activities after capital expenditures for property and equipment, changes in restricted cash, and the borrowing and repayment activity related to our securitizations, excluding the impact of organizational and separation related, litigation, and other cash charges.  We consider Adjusted Free Cash Flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can be used for strategic opportunities, including acquisitions and strengthening the balance sheet.  Analysis of Adjusted Free Cash Flow also facilitates management's comparison of our results with our competitors' results.  



















Normalized Adjusted Free Cash Flow.  We also evaluate Normalized Adjusted Free Cash Flow as a liquidity measure that provides useful information to management and investors about the amount of cash provided by operating activities after capital expenditures for property and equipment, changes in restricted cash, the borrowing and repayment activity related to our securitizations, and adjustments to remove the impact of cash flow items not expected to occur on a regular basis.  Adjustments eliminate the impact of excess cash taxes, payments for Marriott Rewards Points issued prior to the Spin-off, payments for organizational and separation related efforts, litigation cash settlements and other working capital changes.  We consider Normalized Adjusted Free Cash Flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can be used for strategic opportunities, including acquisitions and strengthening the balance sheet.  Analysis of Normalized Adjusted Free Cash Flow also facilitates management's comparison of our results with our competitors' results.  

A-20

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)









(unaudited)






September 11, 2015


January 2, 2015


ASSETS





Cash and cash equivalents

$                    321,690


$             346,515


Restricted cash (including $93,803 and $34,986 from VIEs, respectively)

121,752


109,907


Accounts and contracts receivable, net (including $4,211 and $4,992 from VIEs, respectively)

128,321


109,700


Vacation ownership notes receivable, net (including $704,349 and $750,680 from VIEs, respectively)

887,456


917,228


Inventory

721,664


772,784


Property and equipment

247,317


147,379


Other 

98,827


127,066


Total Assets

$                 2,527,027


$          2,530,579








LIABILITIES AND EQUITY





Accounts payable

$                      77,516


$             114,079


Advance deposits

66,436


60,192


Accrued liabilities (including $1,635 and $1,088 from VIEs, respectively)

150,928


165,969


Deferred revenue

44,499


38,818


Payroll and benefits liability

87,871


93,073


Liability for Marriott Rewards customer loyalty program

73,904


89,285


Deferred compensation liability

48,468


41,677


Mandatorily redeemable preferred stock of consolidated subsidiary, net

38,935


38,816


Debt, net (including $776,648 and $708,031 from VIEs, respectively)

769,716


703,013


Other

38,239


27,071


Deferred taxes

94,544


78,883


Total Liabilities

1,491,056


1,450,876








Preferred stock - $.01 par value; 2,000,000 shares authorized; none issued or outstanding

-


-


Common stock - $.01 par value; 100,000,000 shares authorized; 36,355,412 and 36,089,513 shares





issued, respectively

363


361


Treasury stock - at cost; 5,294,063 and 3,996,725 shares, respectively

(335,339)


(229,229)


Additional paid-in capital

1,138,049


1,137,785


Accumulated other comprehensive income

13,305


17,054


Retained earnings

219,593


153,732


Total Equity

1,035,971


1,079,703








Total Liabilities and Equity

$                 2,527,027


$          2,530,579








The abbreviation VIEs above means Variable Interest Entities.





A-21

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)




36 weeks ended




September 11, 2015


September 12, 2014

 OPERATING ACTIVITIES 





Net income 


$89,650


$80,259

Adjustments to reconcile net income to net cash provided by operating activities: 






Depreciation 


13,850


13,183


Amortization of debt issuance costs 


3,739


3,762


Provision for loan losses 


22,753


22,725


Share-based compensation 


9,633


9,354


Deferred income taxes 


17,261


29,523


Equity method income 


(148)


(156)


Gain on disposal of property and equipment, net 


(9,492)


(1,849)


Non-cash litigation settlement 


(262)


-


Impairment charges 


-


860


Net change in assets and liabilities: 






Accounts and contracts receivable


(17,799)


(8,609)


Notes receivable originations


(189,029)


(169,784)


Notes receivable collections


192,852


203,728


Inventory


51,467


61,740


Purchase of operating hotels for future conversion to inventory


(61,554)


-


Other assets


26,524


45,650


Accounts payable, advance deposits and accrued liabilities


(52,380)


(67,160)


Deferred revenue


5,742


4,228


Payroll and benefit liabilities


(4,959)


(4,855)


Liability for Marriott Rewards customer loyalty program


(15,384)


(22,737)


Deferred compensation liability


6,791


3,340


Other liabilities


6,236


3,196


Other, net 


5,233


80

Net cash provided by operating activities


100,724


206,478

 INVESTING ACTIVITIES 






Capital expenditures for property and equipment (excluding inventory) 


(20,873)


(7,753)


Purchase of operating hotel to be sold 


(47,658)


-


(Increase) decrease in restricted cash 


(12,616)


20,656


Dispositions, net 


20,605


33,310


Net cash (used in) provided by investing activities


(60,542)


46,213

 FINANCING ACTIVITIES 






Borrowings from securitization transactions 


255,000


22,638


Repayment of debt related to securitization transactions 


(186,383)


(162,680)


Proceeds from vacation ownership inventory arrangement 


5,375


-


Debt issuance costs 


(4,405)


(1,676)


Repurchase of common stock 


(106,110)


(160,155)


Payment of dividends 


(16,003)


-


Proceeds from stock option exercises 


96


1,723


Excess tax benefits from share-based compensation 


68


-


Payment of withholding taxes on vesting of restricted stock units 


(9,615)


(5,130)


Other 


213


-

Net cash used in financing activities 


(61,764)


(305,280)


Effect of changes in exchange rates on cash and cash equivalents 


(3,243)


(790)

DECREASE IN CASH AND CASH EQUIVALENTS 


(24,825)


(53,379)

CASH AND CASH EQUIVALENTS, beginning of period 


346,515


199,511

CASH AND CASH EQUIVALENTS, end of period 


$321,690


$146,132







Logo - http://photos.prnewswire.com/prnh/20130702/CG40568LOGO

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/marriott-vacations-worldwide-reports-third-quarter-2015-financial-results-300159841.html

SOURCE Marriott Vacations Worldwide Corporation

distributed by