0001524358vac:PerformanceBasedRestrictedStockUnitMember2021-01-012021-06-30
Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM 10-Q

(Mark One)
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20172022
OR
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-35219
_________________________
Marriott Vacations Worldwide Corporation
(Exact name of registrant as specified in its charter)
_________________________
Delaware45-2598330
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)
6649 Westwood Blvd.
Orlando, FL
9002 San Marco Court32821OrlandoFL32819
(Address of principal executive offices)(Zip Code)
(407) 206-6000
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 Par ValueVACNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x☒    No  ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x☒    No  ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐Non-accelerated filer
☐
Smaller reporting company☐
Emerging growth company☐
Large accelerated filerxAccelerated filer¨
Non-accelerated filer
¨ (Do not check if a smaller reporting company)
Smaller reporting company¨
Emerging growth company¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes¨☐ Nox☒
The number of shares outstanding of the issuer’s common stock, par value $0.01 per share, as of October 27, 2017August 3, 2022 was 26,494,634.
39,285,977.

MARRIOTT VACATIONS WORLDWIDE CORPORATION
FORM 10-Q TABLE OF CONTENTS
Page No.
Part I.
FINANCIAL INFORMATION (UNAUDITED)
1
Item 1.
Financial Statements
1
Interim Consolidated Statements of Income
1
Interim Consolidated Statements of Comprehensive Income
2
Interim Consolidated Balance Sheets
3
Interim Consolidated Statements of Cash Flows
4
Notes to Interim Consolidated Financial Statements
6
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
30
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
65
Item 4.
Controls and Procedures
65
Part II.
OTHER INFORMATION
66
Item 1.
Legal Proceedings
66
Item 1A.
Risk Factors
66
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
68
Item 3.
Defaults Upon Senior Securities
68
Item 4.
Mine Safety Disclosures
69
Item 5.
Other Information
69
Item 6.
Exhibits
69
SIGNATURES
71


Throughout this report, we refer to brands that we own, as well as those brands that we license from Marriott International, Inc. (“Marriott International”) or its affiliates, as our brands. Brand names, trademarks, service marks and trade names that we own or license from Marriott International include Marriott Vacation Club®, Marriott Vacation Club DestinationsTM, Marriott Vacation Club PulseSM, Marriott Grand Residence Club��, Grand Residences by Marriott®, and The Ritz-Carlton Club®. We also refer to Marriott International’s Marriott Rewards® customer loyalty program. We may also refer to brand names, trademarks, service marks and trade names of other companies and organizations, and these brand names, trademarks, service marks and trade names are the property of their respective owners.




PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements
MARRIOTT VACATIONS WORLDWIDE CORPORATION
FORM 10-Q TABLE OF CONTENTS
Page
Part I.
1
Item 1.
Financial Statements
1
Interim Consolidated Statements of Income
1
Interim Consolidated Statements of Comprehensive Income
2
Interim Consolidated Balance Sheets
3
Interim Consolidated Statements of Cash Flows
4
Interim Consolidated Statements of Shareholders’ Equity
6
Interim Condensed Notes to Consolidated Financial Statements
8
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
40
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
71
Item 4.
Controls and Procedures
71
Part II.
71
Item 1.
Legal Proceedings
71
Item 1A.
Risk Factors
71
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
72
Item 6.
Exhibits
72
75
Throughout this report, we refer to Marriott Vacations Worldwide Corporation, together with its consolidated subsidiaries, as “Marriott Vacations Worldwide,” “MVW,” “we,” “us,” or “the Company.” We also refer to brands that we own, as well as those brands that we license, as our brands. All brand names, trademarks, service marks, and trade names cited in this report are the property of their respective owners, including those of other companies and organizations. Solely for convenience, trademarks, trade names, and service marks referred to in this report may appear without the ® or TMsymbols, however such references are not intended to indicate in any way that MVW or the owner, as applicable, will not assert, to the fullest extent under applicable law, all rights to such trademarks, trade names, and service marks.
Capitalized terms used and not specifically defined herein have the same meanings given those terms in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”). When discussing our properties or markets, we refer to the United States, Mexico, Central America, and the Caribbean as “North America.”
Impact of the COVID-19 Pandemic
The COVID-19 pandemic has caused significant disruptions in international and U.S. economies and markets, and has also had an unprecedented impact on the travel and hospitality industries, as well as the Company. We discuss the impacts of the COVID-19 pandemic and its potential future implications throughout this report; however, the COVID-19 pandemic, and any recovery therefrom, continues to evolve and further potential impacts on our business in the future remain uncertain.

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF INCOME
(In thousands,millions, except per share amounts)
(Unaudited)
Quarter Ended Year to Date Ended
September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016Three Months EndedSix Months Ended
(92 days) (84 days) (274 days) (252 days)June 30, 2022June 30, 2021June 30, 2022June 30, 2021
REVENUES       REVENUES
Sale of vacation ownership products$180,522
 $131,012
 $543,687
 $415,831
Sale of vacation ownership products$425 $296 $735 $459 
Resort management and other services76,882
 70,185
 229,004
 208,049
Management and exchangeManagement and exchange203 220 425 413 
RentalRental140 121 273 210 
Financing34,685
 29,066
 99,326
 86,944
Financing72 68 143 127 
Rental81,177
 73,776
 250,621
 229,133
Cost reimbursements113,724
 97,598
 348,091
 303,973
Cost reimbursements324 274 640 529 
TOTAL REVENUES486,990
 401,637
 1,470,729
 1,243,930
TOTAL REVENUES1,164 979 2,216 1,738 
EXPENSES       EXPENSES
Cost of vacation ownership products42,826
 34,779
 131,589
 104,149
Cost of vacation ownership products80 67 140 107 
Marketing and sales100,527
 79,017
 305,217
 236,348
Marketing and sales214 164 396 273 
Resort management and other services44,696
 39,825
 130,349
 123,695
Management and exchangeManagement and exchange102 126 229 243 
RentalRental87 81 168 163 
Financing5,062
 4,581
 12,528
 11,782
Financing23 21 44 42 
Rental71,048
 60,970
 211,643
 191,658
General and administrative26,666
 22,151
 83,739
 72,871
General and administrative64 66 125 112 
Litigation settlement2,033
 —
 2,216
 (303)
Consumer financing interest6,498
 5,361
 18,090
 15,840
Depreciation and amortizationDepreciation and amortization32 36 65 77 
Litigation chargesLitigation charges2 3 5 6 
Royalty fee15,220
 14,624
 47,597
 42,007
Royalty fee29 27 56 52 
ImpairmentImpairment— 5 — 5 
Cost reimbursements113,724
 97,598
 348,091
 303,973
Cost reimbursements324 274 640 529 
TOTAL EXPENSES428,300
 358,906
 1,291,059
 1,102,020
TOTAL EXPENSES957 870 1,868 1,609 
Gains and other income, net6,977
 454
 6,752
 11,129
Gains (losses) and other income (expense), netGains (losses) and other income (expense), net37 (2)41 4 
Interest expense(2,642) (2,262) (5,180) (6,331)Interest expense(30)(44)(57)(87)
Transaction and integration costsTransaction and integration costs(37)(29)(65)(48)
Other104
 (75) (365) (4,528)Other1 1 1 1 
INCOME BEFORE INCOME TAXES63,129
 40,848
 180,877
 142,180
INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTSINCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS178 35 268 (1)
Provision for income taxes(22,367) (14,041) (62,139) (54,656)Provision for income taxes(43)(27)(75)(16)
NET INCOME$40,762
 $26,807
 $118,738
 $87,524
NET INCOME (LOSS)NET INCOME (LOSS)135 8 193 (17)
Net loss (income) attributable to noncontrolling interestsNet loss (income) attributable to noncontrolling interests1 (2)1 (5)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERSNET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS$136 $6 $194 $(22)
       
EARNINGS PER SHARE       
Earnings per share - Basic$1.50
 $0.99
 $4.36
 $3.10
Earnings per share - Diluted$1.47
 $0.97
 $4.26
 $3.05
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERSEARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS
BasicBasic$3.30 $0.15 $4.64 $(0.52)
DilutedDiluted$2.97 $0.15 $4.18 $(0.52)
       
CASH DIVIDENDS DECLARED PER SHARE$0.35
 $0.30
 $1.05
 $0.90
CASH DIVIDENDS DECLARED PER SHARE$0.62 $— $1.24 $— 
See Notes to Interim Consolidated Financial Statements

1

Table of Contents
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)millions)
(Unaudited)
 Quarter Ended Year to Date Ended
 September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
 (92 days) (84 days) (274 days) (252 days)
Net income$40,762
 $26,807
 $118,738
 $87,524
Other comprehensive income (loss):       
Foreign currency translation adjustments4,945
 (664) 11,626
 1,089
Derivative instrument adjustment, net of tax22
 33
 70
 (366)
Total other comprehensive income (loss), net of tax4,967
 (631) 11,696
 723
COMPREHENSIVE INCOME$45,729
 $26,176
 $130,434
 $88,247


Three Months EndedSix Months Ended
June 30, 2022June 30, 2021June 30, 2022June 30, 2021
NET INCOME (LOSS)$135 $8 $193 $(17)
Foreign currency translation adjustments(2)4 2 1 
Reclassification of foreign currency translation adjustments realized upon disposition of entities(10)— (10)— 
Derivative instrument adjustment, net of tax7 3 23 9 
OTHER COMPREHENSIVE (LOSS) GAIN, NET OF TAX(5)7 15 10 
Net loss (income) attributable to noncontrolling interests1 (2)1 (5)
Other comprehensive income attributable to noncontrolling interests— — — — 
COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS1 (2)1 (5)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS$131 $13 $209 $(12)
See Notes to the Interim Consolidated Financial Statements



2

Table of Contents
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED BALANCE SHEETS
(In thousands,millions, except share and per share data)
Unaudited
(Unaudited)
September 30, 2017		 December 30, 2016June 30, 2022December 31, 2021
ASSETS   ASSETS
Cash and cash equivalents$440,074
 $147,102
Cash and cash equivalents$324 $342 
Restricted cash (including $34,413 and $27,525 from VIEs, respectively)61,701
 66,000
Accounts and contracts receivable, net (including $5,702 and $4,865 from VIEs, respectively)136,107
 161,733
Vacation ownership notes receivable, net (including $875,237 and $717,543 from VIEs, respectively)1,076,402
 972,311
Restricted cash (including $108 and $139 from VIEs, respectively)Restricted cash (including $108 and $139 from VIEs, respectively)282 461 
Accounts receivable, net (including $12 and $12 from VIEs, respectively)Accounts receivable, net (including $12 and $12 from VIEs, respectively)244 279 
Vacation ownership notes receivable, net (including $1,659 and $1,662 from VIEs, respectively)Vacation ownership notes receivable, net (including $1,659 and $1,662 from VIEs, respectively)2,075 2,045 
Inventory735,072
 712,536
Inventory695 719 
Property and equipment253,738
 202,802
Other (including $13,153 and $0 from VIEs, respectively)119,942
 128,935
Property and equipment, netProperty and equipment, net1,151 1,136 
GoodwillGoodwill3,117 3,150 
Intangibles, netIntangibles, net941 993 
Other (including $71 and $76 from VIEs, respectively)Other (including $71 and $76 from VIEs, respectively)511 488 
TOTAL ASSETS$2,823,036
 $2,391,419
TOTAL ASSETS$9,340 $9,613 
   
LIABILITIES AND EQUITY   LIABILITIES AND EQUITY
Accounts payable$76,766
 $124,439
Accounts payable$217 $265 
Advance deposits60,247
 55,542
Advance deposits195 160 
Accrued liabilities (including $739 and $584 from VIEs, respectively)128,236
 147,469
Accrued liabilities (including $2 and $2 from VIEs, respectively)Accrued liabilities (including $2 and $2 from VIEs, respectively)330 345 
Deferred revenue103,376
 95,495
Deferred revenue372 453 
Payroll and benefits liability97,080
 95,516
Payroll and benefits liability204 201 
Deferred compensation liability72,803
 62,874
Deferred compensation liability130 142 
Debt, net (including $906,701 and $738,362 from VIEs, respectively)1,153,222
 737,224
Securitized debt, net (including $1,868 and $1,877 from VIEs, respectively)Securitized debt, net (including $1,868 and $1,877 from VIEs, respectively)1,846 1,856 
Debt, netDebt, net2,748 2,631 
Other12,789
 15,873
Other210 224 
Deferred taxes169,295
 149,168
Deferred taxes342 350 
TOTAL LIABILITIES1,873,814
 1,483,600
TOTAL LIABILITIES6,594 6,627 
Contingencies and Commitments (Note 8)
 
Contingencies and Commitments (Note 11)Contingencies and Commitments (Note 11)00
Preferred stock — $0.01 par value; 2,000,000 shares authorized; none issued or outstanding—
 —
Preferred stock — $0.01 par value; 2,000,000 shares authorized; none issued or outstanding— — 
Common stock — $0.01 par value; 100,000,000 shares authorized; 36,857,186 and 36,633,868 shares issued, respectively369
 366
Treasury stock — at cost; 10,363,139 and 9,643,562 shares, respectively(689,134) (606,631)
Common stock — $0.01 par value; 100,000,000 shares authorized; 75,741,585 and 75,519,049 shares issued, respectivelyCommon stock — $0.01 par value; 100,000,000 shares authorized; 75,741,585 and 75,519,049 shares issued, respectively1 1 
Treasury stock — at cost; 35,377,001 and 33,235,671 shares, respectivelyTreasury stock — at cost; 35,377,001 and 33,235,671 shares, respectively(1,666)(1,356)
Additional paid-in capital1,184,635
 1,162,283
Additional paid-in capital3,963 4,072 
Accumulated other comprehensive income17,156
 5,460
Accumulated other comprehensive lossAccumulated other comprehensive loss(1)(16)
Retained earnings436,196
 346,341
Retained earnings448 275 
TOTAL MVW SHAREHOLDERS' EQUITYTOTAL MVW SHAREHOLDERS' EQUITY2,745 2,976 
Noncontrolling interestsNoncontrolling interests1 10 
TOTAL EQUITY949,222
 907,819
TOTAL EQUITY2,746 2,986 
TOTAL LIABILITIES AND EQUITY$2,823,036
 $2,391,419
TOTAL LIABILITIES AND EQUITY$9,340 $9,613 
The abbreviation VIEs above means Variable Interest Entities.


See Notes to Interim Consolidated Financial Statements

3

Table of Contents
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)millions)
(Unaudited)

Six Months Ended
June 30, 2022June 30, 2021
OPERATING ACTIVITIES
Net income (loss)$193 $(17)
Adjustments to reconcile net income (loss) to net cash, cash equivalents and restricted cash provided by operating activities:
Depreciation and amortization of intangibles65 77 
Amortization of debt discount and issuance costs10 22 
Vacation ownership notes receivable reserve66 42 
Share-based compensation20 22 
Impairment charges— 5 
Gains and other income, net(47)(1)
Deferred income taxes29 36 
Net change in assets and liabilities:
Accounts receivable59 60 
Vacation ownership notes receivable originations(483)(320)
Vacation ownership notes receivable collections365 362 
Inventory25 14 
Other assets(63)(66)
Accounts payable, advance deposits and accrued liabilities8 (9)
Deferred revenue19 48 
Payroll and benefit liabilities7 35 
Deferred compensation liability4 11 
Other liabilities— 4 
Deconsolidation of certain Consolidated Property Owners' Associations(48)(87)
Purchase of vacation ownership units for future transfer to inventory(12)(99)
Other, net1 9 
Net cash, cash equivalents and restricted cash provided by operating activities218 148 
INVESTING ACTIVITIES
Acquisition of a business, net of cash and restricted cash acquired— (157)
Proceeds from disposition of subsidiaries, net of cash and restricted cash transferred93 — 
Capital expenditures for property and equipment (excluding inventory)(23)(11)
Issuance of note receivable to VIE(47)— 
Purchase of company owned life insurance(11)(8)
Other, net3 — 
Net cash, cash equivalents and restricted cash provided by (used in) investing activities15 (176)

 Year to Date Ended
 September 30, 2017 September 9, 2016
 (274 days) (252 days)
OPERATING ACTIVITIES   
Net income$118,738
 $87,524
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation15,802
 14,856
Amortization of debt discount and issuance costs5,783
 3,784
Provision for loan losses38,577
 31,817
Share-based compensation12,349
 9,995
Loss (gain) on disposal of property and equipment, net1,683
 (11,129)
Deferred income taxes20,769
 21,823
Net change in assets and liabilities:   
Accounts and contracts receivable25,094
 (2,824)
Notes receivable originations(345,663) (218,190)
Notes receivable collections203,840
 177,451
Inventory27,112
 (6,118)
Purchase of vacation ownership units for future transfer to inventory(33,594) —
Other assets23,110
 38,103
Accounts payable, advance deposits and accrued liabilities(64,994) (73,935)
Deferred revenue7,121
 26,832
Payroll and benefit liabilities1,241
 (20,898)
Deferred compensation liability9,928
 8,846
Other liabilities(638) 1,190
Other, net4,529
 1,758
Net cash provided by operating activities70,787
 90,885
INVESTING ACTIVITIES   
Capital expenditures for property and equipment (excluding inventory)(21,167) (22,445)
Purchase of company owned life insurance(12,100) —
Dispositions, net17
 68,525
Net cash (used in) provided by investing activities(33,250) 46,080

Continued



See Notes to Interim Consolidated Financial Statements

4


Table of Contents
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(In thousands)millions)
(Unaudited)

Six Months Ended
June 30, 2022June 30, 2021
FINANCING ACTIVITIES
Borrowings from securitization transactions477 425 
Repayment of debt related to securitization transactions(485)(420)
Proceeds from debt125 1,061 
Repayments of debt(125)(289)
Purchase of convertible note hedges— (100)
Proceeds from issuance of warrants— 70 
Finance lease payment(2)(1)
Payment of debt issuance costs(9)(15)
Repurchase of common stock(312)— 
Payment of dividends(75)— 
Payment of withholding taxes on vesting of restricted stock units(22)(15)
Net cash, cash equivalents and restricted cash (used in) provided by financing activities(428)716 
Effect of changes in exchange rates on cash, cash equivalents and restricted cash(2)— 
Change in cash, cash equivalents and restricted cash(197)688 
Cash, cash equivalents and restricted cash, beginning of period803 992 
Cash, cash equivalents and restricted cash, end of period$606 $1,680 
SUPPLEMENTAL DISCLOSURES
Non-cash issuance of debt in connection with asset acquisition$11 $— 
Non-cash issuance of treasury stock for employee stock purchase plan2 2 
Non-cash issuance of treasury stock in connection with Welk Acquisition— 248 
Non-cash transfer from inventory to property and equipment45 3 
Non-cash transfer from property and equipment to inventory2 2 
Non-cash transfer of other assets to property and equipment15 22 
Non-cash reduction of debt associated with bifurcation of conversion feature on the 2022 Convertible Notes5 — 
Non-cash adjustment to additional paid-in capital for 2022 Convertible Note Hedges6 — 
Interest paid, net of amounts capitalized69 89 
Income taxes paid, net of refunds (income tax refunds, net of income taxes paid)33 (27)

 Year to Date Ended
 September 30, 2017 September 9, 2016
 (274 days) (252 days)
FINANCING ACTIVITIES   
Borrowings from securitization transactions400,260
 376,622
Repayment of debt related to securitization transactions(231,921) (254,510)
Borrowings from Revolving Corporate Credit Facility87,500
 85,000
Repayment of Revolving Corporate Credit Facility(87,500) (85,000)
Proceeds from issuance of Convertible Notes230,000
 —
Purchase of Convertible Note Hedges(33,235) —
Proceeds from issuance of Warrants20,332
 —
Debt issuance costs(14,459) (4,065)
Repurchase of common stock(83,067) (163,359)
Accelerated stock repurchase forward contract—
 (14,470)
Payment of dividends(28,590) (26,067)
Payment of withholding taxes on vesting of restricted stock units(10,713) (3,972)
Other, net(502) 194
Net cash provided by (used in) financing activities248,105
 (89,627)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash3,031
 (3,247)
Increase in cash, cash equivalents, and restricted cash288,673
 44,091
Cash, cash equivalents and restricted cash, beginning of period213,102
 248,512
Cash, cash equivalents and restricted cash, end of period$501,775
 $292,603
    
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES   
Property acquired via capital lease$—
 $7,221
Non-cash issuance of treasury stock for employee stock purchase plan942
 673
Disposition accruals not yet paid—
 2,931
Non-cash transfer from Inventory to Property and equipment—
 9,741
Non-cash issuance of debt in connection with acquisition of vacation ownership units63,558
 —
Non-cash debt issuance costs1,000
 —
Dividends payable9,394
 8,127





See Notes to Interim Consolidated Financial Statements



5


MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In millions)
(Unaudited)
Common
Stock
Issued		Common
Stock		Treasury
Stock		Additional
Paid-In
Capital		Accumulated Other Comprehensive (Loss) IncomeRetained EarningsTotal MVW Shareholders' EquityNoncontrolling InterestsTotal Equity
75.5 BALANCE AT DECEMBER 31, 2021$1 $(1,356)$4,072 $(16)$275 $2,976 $10 $2,986 
— 
Impact of adoption of ASU 2020-06
— — (111)— 31 (80)— (80)
75.5 OPENING BALANCE 20221 (1,356)3,961 (16)306 2,896 10 2,906 
— Net income— — — — 58 58 — 58 
— Foreign currency translation adjustments— — — 4 — 4 — 4 
— Derivative instrument adjustment— — — 16 — 16 — 16 
0.2 Share-based compensation plans— 1 (16)— — (15)— (15)
— Repurchase of common stock— (119)— — — (119)— (119)
— Dividends— — — — (26)(26)— (26)
75.7 BALANCE AT MARCH 31, 20221 (1,474)3,945 4 338 2,814 10 2,824 
— Net income (loss)— — — — 136 136 (1)135 
— Foreign currency translation adjustments— — — (2)— (2)— (2)
— Reclassification of foreign currency translation adjustments realized upon disposition of entities— — — (10)— (10)— (10)
— Derivative instrument adjustment— — — 7 — 7 — 7 
— Adjustment for 2022 Convertible Note Hedges— — 6 — — 6 — 6 
— Share-based compensation plans— 1 12 — — 13 — 13 
— Repurchase of common stock— (193)— — — (193)— (193)
— Deconsolidation of certain Consolidated Property Owners' Associations— — — — — — (8)(8)
— Dividends— — — — (26)(26)— (26)
75.7 BALANCE AT JUNE 30, 2022$1 $(1,666)$3,963 $(1)$448 $2,745 $1 $2,746 


See Notes to Interim Consolidated Financial Statements
6


MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In millions)
(Unaudited)

Common
Stock
Issued		Common
Stock		Treasury
Stock		Additional
Paid-In
Capital		Accumulated Other Comprehensive (Loss) IncomeRetained EarningsTotal MVW Shareholders' EquityNoncontrolling InterestsTotal Equity
75.3 BALANCE AT DECEMBER 31, 2020$1 $(1,334)$3,760 $(48)$272 $2,651 $31 $2,682 
— Net (loss) income— — — — (28)(28)3 (25)
— Foreign currency translation adjustments— — — (3)— (3)— (3)
— Derivative instrument adjustment— — — 6 — 6 — 6 
0.2 Share-based compensation plans— — (4)— — (4)— (4)
— Equity component of convertible notes, net of issuance costs— — 117 — — 117 — 117 
— Purchase of convertible note hedges— — (100)— — (100)— (100)
— Issuance of warrants— — 70 — — 70 — 70 
— Deconsolidation of certain Consolidated Property Owners' Associations— — — — — — (5)(5)
75.5 BALANCE AT MARCH 31, 20211 (1,334)3,843 (45)244 2,709 29 2,738 
— Net income— — — — 6 6 2 8 
— Welk Acquisition— 55 193 — — 248 — 248 
— Foreign currency translation adjustments— — — 4 — 4 — 4 
— Derivative instrument adjustment— — — 3 — 3 — 3 
— Share-based compensation plans— 1 9 — — 10 — 10 
— Deconsolidation of certain Consolidated Property Owners' Associations— — — — — — (1)(1)
— Employee stock plan issuance— — 2 — — 2 — 2 
75.5 BALANCE AT JUNE 30, 2021$1 $(1,278)$4,047 $(38)$250 $2,982 $30 $3,012 







See Notes to Interim Consolidated Financial Statements
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Table of Contents
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONDENSED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.BASIS OF PRESENTATION
Our Business
The Interim Consolidated Financial Statements present the results of operations, financial position and cash flows of Marriott Vacations Worldwide Corporation (“we,(referred to in this report as (i) “we,” “us,” “Marriott Vacations Worldwide”Worldwide,” “MVW” or the “Company,“the Company,” which includes our consolidated subsidiaries except where the context of the reference is to a single corporate entity) is the exclusive worldwide developer, marketer, seller and manager of vacation ownership and related products under the Marriott Vacation Club and Grand Residences by Marriott brands. In 2016, we introduced Marriott Vacation Club Pulse, an extensionentity, or (ii) “MVWC,” which shall refer only to the Marriott Vacation Club brand. We are also the exclusive worldwide developer, marketer and seller of vacation ownership and related products under The Ritz-Carlton Destination Club brand, and we have the non-exclusive right to develop, market and sell whole ownership residential products under The Ritz-Carlton Residences brand. The Ritz-Carlton Hotel Company, L.L.C., a subsidiary of Marriott International, provides on-site management for Ritz-Carlton branded properties.
Our business is grouped into three reportable segments: North America, Asia Pacific and Europe. As of September 30, 2017, our portfolio consisted of over 65 properties in the United States and nine other countries and territories. We generate most of our revenues from four primary sources: selling vacation ownership products; managing our resorts; financing consumer purchases of vacation ownership products; and renting vacation ownership inventory.
Principles of Consolidation and Basis of Presentation
The interim consolidated financial statements presented herein and discussed below include 100 percent of the assets, liabilities, revenues, expenses and cash flows of Marriott Vacations Worldwide all entities in which Marriott Vacations Worldwide has a controlling voting interest (“subsidiaries”), and those variable interest entities for which Marriott Vacations Worldwide is the primary beneficiary in accordance with consolidation accounting guidance. Intercompany accounts and transactions betweenCorporation, without its consolidated companies have been eliminated in consolidation. The interim consolidated financial statements reflect our financial position, results of operations and cash flows as prepared in conformity with United States Generally Accepted Accounting Principles (“GAAP”)subsidiaries).
In order to make this report easier to read, we refer throughout to (i) our Interim Consolidated Financial Statements as our “Financial Statements,” (ii) our Interim Consolidated Statements of Income as our “Statements of Income,“Income Statements,” (iii) our Interim Consolidated Balance Sheets as our “Balance Sheets,” and (iv) our Interim Consolidated Statements of Cash Flows as our “Cash Flows.” In addition, references throughout to numbered “Footnotes” refer to the numbered Notes in these Notes to Interim Consolidated Financial Statements, unless otherwise noted.
Beginning with our 2017 fiscal year, we changed our financial reporting cycle to a calendar year-end Capitalized terms used and end-of-month quarterly reporting cycle. Accordingly, our 2017 fiscal year began on December 31, 2016 (the day afternot specifically defined herein have the end of the 2016 fiscal year) and will end on December 31, 2017, and our 2017 quarters include the three month periods ended March 31, June 30, September 30, and December 31, except that the period ended March 31, 2017 also includes December 31, 2016. Our future fiscal years will begin on January 1 and end on December 31. Historically, our fiscal year was a 52 or 53 week fiscal year that ended on the Friday nearest to December 31, and our quarterly reporting cycle included twelve week periods for the first, second, and third quarters and a sixteen week period (or in some cases a seventeen week period) for the fourth quarter. We have not restated, and do not plan to restate, historical results.
The table below shows the reporting periods as we refer to them in this report, their date ranges, and the number of days in each:
Reporting PeriodDate RangeNumber of Days
2017 third quarterJuly 1, 2017 — September 30, 201792
2016 third quarterJune 18, 2016 — September 9, 201684
2017 first three quartersDecember 31, 2016 — September 30, 2017274
2016 first three quartersJanuary 2, 2016 — September 9, 2016252
2017 fiscal yearDecember 31, 2016 — December 31, 2017366
2016 fiscal yearJanuary 2, 2016 — December 30, 2016364
As a result of the change in our financial reporting cycle, our 2017 third quarter had eight more days of activity than our 2016 third quarter, and our 2017 first three quarters had 22 more days of activity than our 2016 first three quarters. While our 2017 full fiscal year will have two additional days of activity as compared to our 2016 full fiscal year, our 2017 fourth quarter will have 20 fewer days of activity than the corresponding periods in our 2016 fiscal year.

In our opinion, our Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position and the results of our operations and cash flows for the periods presented. Interim results may not be indicative of fiscal year performance because of, among other reasons, seasonal and short-term variations.
These Financial Statements have not been audited. Amounts as of December 30, 2016 included in these Financial Statements have been derived from the audited consolidated financial statements as of that date. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP. Although we believe our footnote disclosures are adequate to make the information presented not misleading, you should read these Financial Statements in conjunction with the consolidated financial statements and notes tosame meanings given those consolidated financial statements includedterms in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “2021 Annual Report”). We use certain other terms that are defined within these Financial Statements.
The Financial Statements presented herein and discussed below include 100% of the assets, liabilities, revenues, expenses, and cash flows of Marriott Vacations Worldwide, all entities in which Marriott Vacations Worldwide has a controlling voting interest (“subsidiaries”), and those variable interest entities (“VIEs”) for which Marriott Vacations Worldwide is the primary beneficiary in accordance with consolidation accounting guidance. References in these Financial Statements to net income or loss attributable to common shareholders and MVW shareholders’ equity do not include noncontrolling interests, which represent the outside ownership of our consolidated non-wholly owned entities and are reported separately. Intercompany accounts and transactions between consolidated entities have been eliminated in consolidation.
Pursuant to a change in control of certain consolidated owners’ associations, we recorded a non-cash loss of $3 million in Gains (losses) and other income (expense), net on our Income Statement for each of the three and six months ended June 30, 2016.2022, and deconsolidated $110 million of assets, inclusive of $48 million of restricted cash, and $99 million of liabilities, for a decrease in Noncontrolling interests of $8 million during the first half of 2022. We continue to act as manager for these owners’ associations pursuant to existing management contracts and retain membership interests via our ownership of vacation ownership interests.
These Financial Statements reflect our financial position, results of operations, and cash flows as prepared in conformity with United States Generally Accepted Accounting Principles (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates include, but are not limited to, revenue recognition, allocations of the purchase price paid in business combinations, cost of vacation ownership products, inventory valuation, propertygoodwill and equipmentintangibles valuation, loanaccounting for acquired vacation ownership notes receivable, vacation ownership notes receivable reserves, income taxes, and loss reserves, loss contingenciescontingencies. The uncertainty created by the COVID-19 pandemic, and income taxes. Accordingly, actual amounts maythe uncertainty of the success of ongoing efforts to mitigate the effects of the COVID-19 pandemic, have made it more challenging to make these estimates. Actual results could differ from these estimated amounts.our estimates, and such differences may be material.
In our opinion, our Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position, the results of our operations, and cash flows for the periods presented. Interim results may not be indicative of fiscal year performance because of, among other reasons, the impact of the COVID-19 pandemic and seasonal and short-term variations. These Financial Statements have not been audited. We have reclassifiedcondensed or omitted certain prior year amountsinformation and footnote disclosures normally included in financial statements presented in accordance with GAAP. Although we believe our footnote disclosures are adequate to conformmake the information presented not misleading, the Financial Statements in this report should be read in conjunction with the consolidated financial statements and notes thereto in our 2021 Annual Report.
Acquisition of Welk
On April 1, 2021, we completed the acquisition of Welk Hospitality Group, Inc. (“Welk”) through a series of transactions (the “Welk Acquisition”), after which Welk became our indirect wholly-owned subsidiary. We refer to our current period presentation. the business and brands that we acquired as “Legacy-Welk.” See Footnote 3 “Acquisitions and Dispositions” for more information on the Welk Acquisition.
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Disposition of VRI Americas
Our Financial Statements include adjustmentsreflect the disposition of the Vacation Resorts International (“VRI”) and Trading Places International (“TPI”) businesses (together the “VRI Americas” business) on April 29, 2022. See Footnote 3 “Acquisitions and Dispositions” for the 2016 third quarter and 2016 first three quarters to correct immaterial presentation errors, consistent with those reported in our Annual Report on Form 10-K for the fiscal year ended December 30, 2016, within the following line items on our Statements of Income: Resort management and other services revenues, Resort management and other services expenses and General and administrative expenses. Correction of these immaterial errors had no impact on our consolidated Net income.
The impact of these adjustmentsmore information on the Financial Statements is as follows:disposition of VRI Americas.
  Quarter Ended Year to Date Ended
  September 9, 2016 September 9, 2016
  (84 days) (252 days)
($ in thousands) As Revised Previous Filing As Revised Previous Filing
Resort management and other services $70,185
 $75,539
 $208,049
 $226,098
TOTAL REVENUES $401,637
 $406,991
 $1,243,930
 $1,261,979
Resort management and other services $39,825
 $45,437
 $123,695
 $140,545
General and administrative $22,151
 $21,619
 $72,871
 $71,504
TOTAL EXPENSES $358,906
 $364,260
 $1,102,020
 $1,120,069
2.SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING STANDARDS
Deferred Compensation Plan
Beginning in our 2017 fiscal year, participants in the Marriott Vacations Worldwide Deferred Compensation Plan (the “Deferred Compensation Plan”) may select a rate of return based on various market-based investment alternatives for a portion of their contributions, as well as any future Company contributions, to the Deferred Compensation Plan, and may also select such a rate for a portion of their existing account balances. To support our ability to meet a portion of our obligations under the Deferred Compensation Plan, we acquired company owned insurance policies (the “COLI policies”) on the lives of certain participants in the Deferred Compensation Plan, the proceeds of which are intended to be aligned with the investment alternatives elected by plan participants and are payable to a rabbi trust with the Company as grantor. A portion of a participant’s contributions to the Deferred Compensation Plan must be subject to a fixed rate of return, which for our 2017 fiscal year was reduced to 3.5 percent.
We consolidate the liabilities of the Deferred Compensation Plan and the related assets, which consist of the COLI policies held in the rabbi trust. The rabbi trust is considered a variable interest entity (“VIE”). We are considered the primary beneficiary of the rabbi trust because we direct the activities of the trust and are the beneficiary of the trust. At September 30, 2017, the value of the assets held in the rabbi trust was $13.2 million, which is included in the Other line within assets on our Balance Sheets.

New Accounting Standards
Accounting Standards Update No. 2017-092020-06 – “Compensation - Stock Compensation (Topic 718)Debt — Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Scope of Modification Accounting” for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2017-09”2020-06”)
In May 2017, the Financial Accounting Standards Boardfirst quarter of 2022, we adopted accounting standards update (“FASB”ASU”) issued 2020-06, using the modified retrospective method. Upon adoption of ASU 2020-06, our convertible notes were no longer separated into liability and equity components, and we are required to calculate the impact of our convertible notes on diluted earnings per share using the “if-converted” method, regardless of intent to settle or partially settle the debt in cash. Under the “if-converted” method, diluted earnings per share is generally calculated assuming that all of our convertible notes are converted solely into shares of common stock at the beginning of the reporting period, unless the result would be anti-dilutive. The application of the “if-converted” method reduces our reported diluted earnings per share. The impacts of the adoption were recorded as a cumulative effect in the opening balance of retained earnings and the conversion feature related to our convertible notes was reclassified from equity to liabilities. In addition, we eliminated the related equity adjustment associated with the deferred tax liability. The adoption of ASU 2020-06 on January 1, 2022 resulted in an increase in debt of $107 million, a decrease in additional paid-in capital of $111 million, and a decrease in deferred taxes of $27 million, as well as a cumulative effect adjustment to the opening balance of retained earnings of $31 million. The remaining debt issuance costs will continue to be amortized over the respective terms of our convertible notes. The prior period consolidated financial statements have not been retrospectively restated and continue to be reported under the accounting standards in effect for those periods. See Footnote 13 “Debt” for further information on accounting for the 2022 Convertible Notes and the 2022 Convertible Note Hedges (as defined in Footnote 13 “Debt”), subsequent to the adoption of ASU 2020-06.
Accounting Standards Update 2021-08 - “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”(“ASU”ASU 2021-08”) 2017-09,
In the first quarter of 2022, we adopted ASU 2021-08, which clarifies when changesamended ASC 805 to the terms or conditions ofrequire entities to apply ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers in a share-based payment award must be accounted for as modifications for the purpose of applying the modification guidance in Accounting Standards Codification Topic 718. This update is effective for all entities for annual periods beginning after December 15, 2017, and for interim periods within those annual periods, with early adoption permitted. Our earlybusiness combination. The adoption of ASU 2017-09 in the 2017 second quarter2021-08 on January 1, 2022 did not have ana material impact on our financial statements orand disclosures. In the event that we complete business combinations in the future, the application of ASU 2021-08 could result in higher acquired deferred revenue.
Future Adoption of Accounting Standards
Accounting Standards Update No. 2016-182020-04 – “Restricted CashReference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2016-18”2020-04”)
In November 2016,March 2020, the FASB issued ASU 2016-18,2020-04, as amended, which provides optional expedients and exceptions to existing guidance on contract modifications and hedge accounting in an effort to ease the financial reporting burdens related to the expected market transition from the LIBOR and other interbank offered rates to alternative reference rates. This update was effective upon issuance and issuers may generally elect to adopt the optional expedients and exceptions over time through December 31, 2022. As of June 30, 2022, the interest rates applicable to borrowings under our existing Term Loan (as defined in Footnote 13 “Debt”) and Warehouse Credit Facility (as defined in Footnote 12 “Securitized Debt”) generally continued to reference LIBOR, as did certain interest rate swaps and collars. Subsequent to June 30, 2022, we amended the terms of our Warehouse Credit Facility to, among other things, reference SOFR (as defined in Footnote 12 “Securitized Debt”) rather than LIBOR.Our Term Loan and certain interest rate swaps and collars have not yet discontinued the use of LIBOR.To the extent these instruments are amended to reference a different benchmark interest rate, we may elect to utilize the relief available in ASU 2020-04. When we renew or amend our remaining existing debt instruments, we will determine a replacement rate for LIBOR. We have not adopted any of the optional expedients or exceptions as of June 30, 2022, but will continue to evaluate their adoption during the effective period as circumstances evolve.
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Accounting Standards Update 2022-02 – “Financial Instruments–Credit Losses (Topic 326) - Troubled Debt Restructurings and Vintage Disclosures” (“ASU 2022-02”)
In March 2022, the FASB issued ASU 2022-02, which eliminates the recognition and measurement guidance applicable to troubled debt restructurings for creditors and enhances disclosure requirements with respect to loan modifications for borrowers experiencing financial difficulty. ASU 2022-02 also requires entitiesdisclosure of current-period gross write-offs by year of origination to show the changesbe presented in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, we no longer present changes in restricted cash as a component of investing activities.vintage disclosures for financing receivables. This update is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We adopted ASU 2016-18 on a retrospective basis commencing in the 2017 first quarter.
Accounting Standards Update No. 2016-09 – “Compensation – Stock Compensation (Topic 718)” (“ASU 2016-09”)
In March 2016, the FASB issued ASU 2016-09, which changes how entities account for certain aspects of share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The new guidance requires all income tax effects of awards, including excess tax benefits, to be recorded as income tax expense (or benefit) in the income statement, which resulted in benefits to our provision for income taxes of $0.9 million in the 2017 third quarter and $6.1 million in the 2017 first three quarters. The new guidance requires excess tax benefits to be presented as an operating inflow rather than as a financing inflow in the statement of cash flows. Prior to the adoption of ASU 2016-09, excess tax benefits were recorded in additional paid-in-capital on the balance sheet. This update is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. We adopted ASU 2016-09 in the 2017 first quarter. The adoption of ASU 2016-09 decreased our provision for income taxes, the amount of which depends on the vesting activity of our share-based compensation awards in any given period, and eliminated the presentation of excess tax benefits as a financing inflow on our statement of cash flows. Further, we made an accounting policy election to recognize forfeitures of share-based compensation awards as they occur, the cumulative effect of which resulted in an adjustment of $0.4 million to opening retained earnings. The adoption of ASU 2016-09 did not have any other material impacts on our financial statements or disclosures.
Future Adoption of Accounting Standards
Accounting Standards Update No. 2017-12 – “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”)
In August 2017, the FASB issued ASU 2017-12, which amends and simplifies existing guidance in order to allow companies to better portray the economic effects of risk management activities in the financial statements and enhance the transparency and understandability of the results of hedging activities. ASU 2017-12 eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also eases certain documentation and assessment requirements. This update is effective for public companies for fiscal years beginning after December 15, 2018,2022, including interim periods within those fiscal years, with early adoption permitted. We are evaluating the impact that adoption of ASU 2017-12,2022-02, including the timing of implementation, will have on our financial statements and disclosures.disclosures; however, we do not expect adoption to have a material effect on our financial statements or disclosures other than disclosure changes related to vintage disclosures for financing receivables.
Accounting Standards Update No. 2016-16 – “Income Taxes (Topic 740): Intra-Entity Transfers
3.ACQUISITIONS AND DISPOSITIONS
Welk Acquisition
On April 1, 2021 (the “Welk Acquisition Date”), we completed the Welk Acquisition. The following table presents the fair value of each type of consideration transferred at the Welk Acquisition Date, as finalized at March 31, 2022.
(in millions, except per share amounts)
Equivalent shares of Marriott Vacations Worldwide common stock issued1.4 
Marriott Vacations Worldwide common stock price per share as of Welk Acquisition Date$174.18 
Fair value of Marriott Vacations Worldwide common stock issued248 
Cash consideration to Welk, net of cash and restricted cash acquired of $48 million157 
Total consideration transferred, net of cash and restricted cash acquired$405 
Fair Values of Assets Other ThanAcquired and Liabilities Assumed
We accounted for the Welk Acquisition as a business combination, which required us to record the assets acquired and liabilities assumed at fair value as of the Welk Acquisition Date. The values attributed to Vacation ownership notes receivable, Inventory, Property and equipment, Intangible assets, and Securitized debt from VIEs were based on valuations prepared using Level 3 inputs and assumptions in accordance with ASC Topic 820, “Fair Value Measurements” (“ASU 2016-16”ASC 820”)
In October 2016, the FASB issued ASU 2016-16, which changes the timing of when certain intercompany transactions are recognized within the provision for income taxes. This update is effective for public companies for annual periods beginning after December 15, 2017, and for annual periods and interim periods thereafter,. The value attributed to Debt was based on Level 2 inputs in accordance with early adoption permitted. We are evaluating the impact that adoption of ASU 2016-16 inASC 820. During the first quarter of 2022, we finalized our allocation of the purchase price to the acquired assets and liabilities. The following table presents the fair values of the assets that we acquired and the liabilities that we assumed in connection with the business combination as previously reported at December 31, 2021, and as finalized at March 31, 2022. During the first quarter of 2022, we refined our valuation models related to certain acquired assets and liabilities as follows:
($ in millions)April 1, 2021
(as reported at
December 31, 2021)		AdjustmentsApril 1, 2021
(as finalized at
March 31, 2022)
Vacation ownership notes receivable, net$255 $— $255 
Inventory111 — 111 
Property and equipment83 — 83 
Intangible assets102 — 102 
Other assets19 — 19 
Deferred taxes(32)8 (24)
Debt(189)— (189)
Securitized debt(184)— (184)
Other liabilities(93)— (93)
Net assets acquired72 8 80 
Goodwill(1)
333 (8)325 
$405 $— $405 
_________________________
(1)Goodwill is calculated as total consideration transferred, net of cash acquired, less identified net assets acquired. It represents the value that we expect to obtain from growth opportunities from our combined operations and is not deductible for tax purposes.
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Pro Forma Results of Operations
The following unaudited pro forma information presents the combined results of operations of Marriott Vacations Worldwide and Legacy-Welk as if we had completed the Welk Acquisition on December 31, 2019, the last day of our 2019 fiscal year, 2018 willbut using the fair values of assets and liabilities as of the Welk Acquisition Date set forth above. As required by GAAP, these unaudited pro forma results do not reflect any synergies from operating efficiencies. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have onbeen if the Welk Acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations.
There were no Welk Acquisition-related costs included in the unaudited pro forma results below for the six months ended June 30, 2021.
Six Months Ended
($ in millions, except per share data)June 30, 2021
Revenues$1,785 
Net loss$(4)
Net loss attributable to common shareholders$(10)
LOSS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS
Basic$(0.24)
Diluted$(0.24)
Legacy-Welk Results of Operations
The following table presents the results of Legacy-Welk operations included in our financial statementsIncome Statement for the three months and disclosures.six months ended June 30, 2022 and June 30, 2021.

Three Months EndedSix Months Ended
($ in millions)June 30, 2022June 30, 2021June 30, 2022June 30, 2021
Revenue$56 $48 $107 $48 
Net income$5 $5 $12 $5 
Accounting Standards Update No. 2016-13 – “Financial Instruments – Credit Losses (Topic 326), MeasurementOther Acquisitions
Bali
During the first quarter of Credit Losses on Financial Instruments” (“ASU 2016-13”)2022, we acquired 88 completed vacation ownership units, as well as a sales center, located in Bali, Indonesia for $36 million. The transaction was accounted for as an asset acquisition with the purchase price allocated to Property and equipment. As consideration for the acquisition, we paid $12 million in cash and issued a non-interest bearing note payable for $11 million. Further, we reclassified $13 million of previous deposits associated with the project from Other assets to Property and equipment.
In June 2016,Dispositions
On April 29, 2022, we disposed of VRI Americas for proceeds of $55 million, net of cash and restricted cash transferred to the FASB issued ASU 2016-13, which replaces the incurred loss impairment methodologybuyer of $12 million, after determining that this business was not a core component of our future growth strategy and operating model. The results of VRI Americas are included in current GAAP with a methodology that reflects expected credit losses. The update is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instrumentsour Exchange and other commitments to extend credit held by a reporting entity at each reporting date. This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted for fiscal years beginning after December 15, 2018. We are evaluating the impact that ASU 2016-13, including the timing of implementation, will have on our financial statements and disclosures.
Accounting Standards Update No. 2016-02 – “Leases (Topic 842)” (“ASU 2016-02”)
In February 2016, the FASB issued ASU 2016-02 to increase transparency and comparability of information regarding an entity’s leasing activities by providing additional information to users of financial statements. 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 standard requires a modified retrospective transition approach for all leases existing at, or entered into after,Third-Party Management segment through the date of initial application,the sale. The net carrying value of VRI Americas as of the date of the disposition was $51 million, including $25 million of goodwill and $20 million of intangible assets. As a result of the disposition, we recorded a gain of $16 million in Gains (losses) and other income (expense), net on our Income Statements for the three and six months ended June 30, 2022.
Additionally, on June 28, 2022, we disposed of entities that owned and operated a Vacation Ownership segment hotel in Puerto Vallarta, Mexico, for proceeds of $38 million, net of cash and restricted cash transferred to the buyer of $3 million, consistent with an optionour development strategy to use certain transition relief. This update is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. Although we expect to adopt ASU 2016-02 in fiscal year 2019dispose of non-strategic assets. The net carrying value of the business disposed of as of the date of the disposition, excluding the cumulative translation adjustment, was $18 million, substantially all of which was property and have commenced our implementation efforts, we continue to evaluate the impact that adoptionequipment. As a result of this accounting standards update will havedisposition, we recorded a gain of $33 million in Gains (losses) and other income (expense), net on our financial statementsIncome Statements for the three and disclosures.six months ended June 30, 2022, which included the realization of cumulative foreign currency translation gains of $10 million associated with the disposition of these entities.
Accounting Standards Update No. 2016-01 – “Financial Instruments – Overall (Subtopic 825-10)”(“ASU 2016-01”)
11
In January 2016, the FASB issued ASU 2016-01, which updates certain aspects
Table of recognition, measurement, presentation and disclosureContents
4.REVENUE AND RECEIVABLES
Sources of financial instruments. For public business entities, the amendments in ASU 2016-01 will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We do not expect the adoptionRevenue by Segment
Three Months Ended June 30, 2022
($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Sale of vacation ownership products$425 $— $— $425 
Ancillary revenues66 1 — 67 
Management fee revenues41 11 (1)51 
Exchange and other services revenues33 46 6 85 
Management and exchange140 58 5 203 
Rental129 11 — 140 
Cost reimbursements325 5 (6)324 
Revenue from contracts with customers1,019 74 (1)1,092 
Financing72 — — 72 
Total Revenues$1,091 $74 $(1)$1,164 
Three Months Ended June 30, 2021
($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Sale of vacation ownership products$296 $— $— $296 
Ancillary revenues52 1 — 53 
Management fee revenues39 9 (5)43 
Exchange and other services revenues32 50 42 124 
Management and exchange123 60 37 220 
Rental110 11 — 121 
Cost reimbursements286 15 (27)274 
Revenue from contracts with customers815 86 10 911 
Financing68 — — 68 
Total Revenues$883 $86 $10 $979 
12

Table of ASU 2016-01 to have a material impact on our financial statements.Contents
Accounting Standards Update No. 2014-09 – “
Six Months Ended June 30, 2022
($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Sale of vacation ownership products$735 $— $— $735 
Ancillary revenues120 2 — 122 
Management fee revenues83 21 (4)100 
Exchange and other services revenues63 99 41 203 
Management and exchange266 122 37 425 
Rental251 22 — 273 
Cost reimbursements652 14 (26)640 
Revenue from contracts with customers1,904 158 11 2,073 
Financing143 — — 143 
Total Revenues$2,047 $158 $11 $2,216 
Six Months Ended June 30, 2021
($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Sale of vacation ownership products$459 $— $— $459 
Ancillary revenues80 1 — 81 
Management fee revenues77 14 (11)80 
Exchange and other services revenues60 105 87 252 
Management and exchange217 120 76 413 
Rental187 23 — 210 
Cost reimbursements554 29 (54)529 
Revenue from contracts with customers1,417 172 22 1,611 
Financing127 — — 127 
Total Revenues$1,544 $172 $22 $1,738 

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Timing of Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), as Amendedby Segment
In May 2014,The following tables detail the FASB issued ASU 2014-09, which, as amended, supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, as well as most industry-specific guidance, and significantly enhances comparabilitytiming of revenue recognition practices across entitiesfrom contracts with customers by segment for the time periods presented.
Three Months Ended June 30, 2022
($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Services transferred over time$523 $34 $(1)$556 
Goods or services transferred at a point in time496 40 — 536 
Revenue from contracts with customers$1,019 $74 $(1)$1,092 
Three Months Ended June 30, 2021
($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Services transferred over time$463 $43 $10 $516 
Goods or services transferred at a point in time352 43 — 395 
Revenue from contracts with customers$815 $86 $10 $911 

Six Months Ended June 30, 2022
($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Services transferred over time$1,041 $72 $11 $1,124 
Goods or services transferred at a point in time863 86 — 949 
Revenue from contracts with customers$1,904 $158 $11 $2,073 
Six Months Ended June 30, 2021
($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Services transferred over time$871 $80 $22 $973 
Goods or services transferred at a point in time546 92 — 638 
Revenue from contracts with customers$1,417 $172 $22 $1,611 
Sale of Vacation Ownership Products
Revenue declined during the second quarter and industriesfirst half of 2022 by providing a principle-based, comprehensive framework$3 million and $5 million, respectively, due to changes in our estimates of variable consideration for addressing revenue recognition issues. In order for a providerperformance obligations that were satisfied in prior periods.
Receivables from Contracts with Customers, Contract Assets, & Contract Liabilities
The following table shows the composition of promised goodsour receivables from contracts with customers and contract liabilities. We had no contract assets at either June 30, 2022 or servicesDecember 31, 2021.
($ in millions)At June 30, 2022At December 31, 2021
Receivables from Contracts with Customers
Accounts receivable, net$118 $172 
Vacation ownership notes receivable, net2,075 2,045 
$2,193 $2,217 
Contract Liabilities
Advance deposits$195 $160 
Deferred revenue372 453 
$567 $613 
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Revenue recognized during the second quarter and first half of 2022 that was included in our contract liabilities balance at December 31, 2021 was $117 million and $243 million, respectively.
Remaining Performance Obligations
Our remaining performance obligations represent the expected transaction price allocated to our contracts that we expect to recognize as revenue in future periods when we perform under the consideration that it expectscontracts. At June 30, 2022, approximately 87% of this amount is expected to receivebe recognized as revenue over the next two years.
Accounts Receivable
Accounts receivable is comprised of amounts due from customers, primarily owners’ associations, resort developers and members, credit card receivables, interest receivables, amounts due from taxing authorities, indemnification assets, and other miscellaneous receivables. The following table shows the composition of our accounts receivable balances:
($ in millions)At June 30, 2022At December 31, 2021
Receivables from contracts with customers, net$118 $172 
Note receivable from variable interest entity(1)
47 — 
Interest receivable15 14 
Tax receivable22 48 
Indemnification assets19 22 
Employee tax credit receivable17 19 
Other6 4 
$244 $279 
_________________________
(1)See Footnote 16 “Variable Interest Entities” for additional information on the loan extended to a VIE during the second quarter of 2022 when we amended our commitment to purchase a property located in exchangeWaikiki, Hawaii.
5.INCOME TAXES
Our provision for income taxes is calculated using an estimated annual effective tax rate, based upon expected annual income, less losses in certain jurisdictions, permanent items, statutory rates and planned tax strategies in the various jurisdictions in which we operate. However, discrete items related to prior year tax items are treated separately.
Our interim effective tax rate was 24.3% and 75.4% for the promised goods or services,three months ended June 30, 2022 and June 30, 2021, respectively. Our interim effective tax rate was 28.1% and (1,737.7%) for the provider should apply the following five steps: (1) identify the contract with a customer; (2) identify the performance obligationssix months ended June 30, 2022 and June 30, 2021, respectively. The change in the contract; (3) determineeffective tax rate for both the transaction price; (4) allocate the transaction pricethree and six months ended June 30, 2022 is predominately attributable to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09, as amended, will be effective for annual reporting periods, and interim periods within those reporting periods, beginning after December 15, 2017. The new standard may be applied retrospectively or on a modified retrospective basis with the cumulative effect recognized on the date of adoption. We will adopt ASU 2014-09, as amended, commencing in fiscal year 2018, on a retrospective basis. Our analysis of the impact that adoption of this accounting standards update will have on our financial statements and disclosures is substantially complete, with the exception of accounting for the sale of vacation ownership products in our Asia Pacific and Europe segments.
We expect adoption of ASU 2014-09 will result in the following with respect to the recognition of revenues from the sale of vacation ownership products within our North America segment:
alignment of our assessment of collectibility of the transaction price with our credit granting policies;
deferral of revenue recognition deemed collectible from expiration of the statutory rescission period to closing, when control of the vacation ownership product is transferred to the customer;
reclassification of revenues and incidental expenses from rental revenues and expenses to marketing and sales expenses;
no impact on sales reserve accounting; and
net presentation of certain sales incentives (e.g., Marriott Rewards Points).
In addition, we expect to elect the practical expedient available in ASU 2014-09 to expense all marketing and sales costs as they are incurred.

We expect no material changes to our consolidated financial reporting for resort management and other services revenues, financing revenues or rental revenues, other than as outlined above pertaining to reclassification of activity to different lines in our statements of income. We expect a materialan increase in our consolidated cost reimbursements revenues and cost reimbursements expenses, as all costs reimbursed to us by property owners’ associations will be reported on a gross basis upon adoption of ASU 2014-09.pre-tax income.
We are inUnrecognized Tax Benefits
The following table summarizes the process of quantifying the impact of the adoption of ASU 2014-09 and will disclose additional detail on the impact of adoption of this accounting standards update in our 2017 Form 10-K.
2. INCOME TAXES
We file income tax returns with U.S. federal and state and non-U.S. jurisdictions and are subject to audits in these jurisdictions. Although we do not anticipate that a significant impactactivity related to our unrecognized tax benefit balance will occurbenefits (excluding interest and penalties) during the next fiscal year, the amount of our liability forsix months ended June 30, 2022. These unrecognized tax benefits could changerelate to uncertain income tax positions, which would affect the effective tax rate if recognized.
($ in millions)Unrecognized Tax Benefits
Balance at December 31, 2021$26 
Increases related to tax positions taken during a prior period2 
Decreases as a result of a lapse of the applicable statute of limitations(1)
Balance at June 30, 2022$27 
The total amount of gross interest and penalties accrued was $47 million at June 30, 2022 and $42 million at December 31, 2021. We anticipate $14 million of unrecognized tax benefits, including interest and penalties, to be indemnified pursuant to a Tax Matters Agreement dated May 11, 2016 by and among Starwood Hotels & Resorts Worldwide, Inc., Vistana Signature Experiences, Inc., and Interval Leisure Group, Inc., and consequently have recorded a corresponding indemnification asset. The unrecognized tax benefits, including accrued interest and penalties, are included in Other liabilities on our Balance Sheet.
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Our income tax returns are subject to examination by relevant tax authorities. Certain of our returns are being audited in various jurisdictions for tax years 2007 through 2020. The amount of the unrecognized tax benefits may increase or decrease within the next twelve months as a result of audits in these jurisdictions. Our total unrecognized tax benefit balance that, if recognized, would impact our effective tax rate, was $1.5 million at both September 30, 2017 and December 30, 2016.or audit settlements.
3.
6.VACATION OWNERSHIP NOTES RECEIVABLE
The following table shows the composition of our vacation ownership notes receivable balances, net of reserves:reserves.
($ in thousands)At September 30, 2017 At December 30, 2016
Vacation ownership notes receivable — securitized$875,237
 $717,543
Vacation ownership notes receivable — non-securitized   
Eligible for securitization(1)
44,907
 98,508
Not eligible for securitization(1)
156,258
 156,260
Subtotal201,165
 254,768
Total vacation ownership notes receivable$1,076,402
 $972,311
June 30, 2022December 31, 2021
($ in millions)OriginatedAcquiredTotalOriginatedAcquiredTotal
Securitized$1,390 $269 $1,659 $1,308 $354 $1,662 
Non-securitized
Eligible for securitization(1)
89 1 90 96 1 97 
Not eligible for securitization(1)
305 21 326 267 19 286 
Subtotal394 22 416 363 20 383 
$1,784 $291 $2,075 $1,671 $374 $2,045 
_________________________
(1)
Refer to Footnote No. 4, “Financial Instruments,”
(1)Refer to Footnote 7 “Financial Instruments” for a discussion of eligibility of our vacation ownership notes receivable for securitization.
The following tables show future principal payments, net of reserves, as well as interest rates for our non-securitized and securitized vacation ownership notes receivable at September 30, 2017:
($ in thousands)
Non-Securitized
Vacation Ownership
Notes Receivable
 
Securitized
Vacation Ownership
Notes Receivable
 Total
2017, remaining$11,833
 $25,594
 $37,427
201837,988
 97,634
 135,622
201926,664
 94,676
 121,340
202021,575
 96,259
 117,834
202116,952
 97,628
 114,580
Thereafter86,153
 463,446
 549,599
Balance at September 30, 2017$201,165
 $875,237
 $1,076,402
Weighted average stated interest rate at September 30, 201711.2% 12.6% 12.3%
Range of stated interest rates at September 30, 20170.0% to 18.0% 4.9% to 18.0% 0.0% to 18.0%

for securitization.
We reflect interest income associated with vacation ownership notes receivable in our Income Statements of Income in the Financing revenues caption. The following table summarizes interest income associated with vacation ownership notes receivable:receivable.
Three Months EndedSix Months Ended
($ in millions)June 30, 2022June 30, 2021June 30, 2022June 30, 2021
Interest income associated with vacation ownership notes receivable — securitized$60 $57 $119 $105 
Interest income associated with vacation ownership notes receivable — non-securitized9 8 19 18 
Total interest income associated with vacation ownership notes receivable$69 $65 $138 $123 
 Quarter Ended Year to Date Ended
 September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
($ in thousands)(92 days) (84 days) (274 days) (252 days)
Interest income associated with vacation ownership notes receivable — securitized$26,538
 $22,908
 $72,832
 $65,300
Interest income associated with vacation ownership notes receivable — non-securitized6,407
 4,795
 21,272
 17,430
Total interest income associated with vacation ownership notes receivable$32,945
 $27,703
 $94,104
 $82,730
Acquired Vacation Ownership Notes Receivable
We record an estimate of expected uncollectibility on all notes receivable from vacation ownership purchasers as a reduction of revenues from the sale of vacation ownership products at the time we recognize profit on a vacation ownership product sale. We fully reserve for all defaultedAcquired vacation ownership notes receivable in addition to recording a reserve on the estimated uncollectible portion of the remaining vacation ownership notes receivable. For thoserepresent vacation ownership notes receivable that are not in default, we assess collectibility based on poolsacquired as part of the ILG Acquisition and the Welk Acquisition. The following table shows future contractual principal payments, net of reserves, and interest rates for our acquired vacation ownership notes receivable because we hold large numbersat June 30, 2022.
Acquired Vacation Ownership Notes Receivable
($ in millions)Non-SecuritizedSecuritizedTotal
2022, remaining$2 $20 $22 
20233 41 44 
20243 41 44 
20252 39 41 
20262 36 38 
Thereafter10 92 102 
Balance at June 30, 2022$22 $269 $291 
Weighted average stated interest rate13.9%14.2%14.1%
Range of stated interest rates0.0% to 21.9%0.0% to 21.9%0.0% to 21.9%
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The following table summarizes activity related to our acquired vacation ownership notes receivable. We usereceivable reserve.
Acquired Vacation Ownership Notes Receivable Reserve
($ in millions)Non-SecuritizedSecuritizedTotal
Balance at December 31, 2021$47 $23 $70 
Securitizations(1)1 — 
Clean-up call1 (1)— 
Write-offs(29)— (29)
Recoveries18 — 18 
Defaulted vacation ownership notes receivable repurchase activity(1)
14 (14)— 
(Decrease) increase in vacation ownership notes receivable reserve(14)14 — 
Balance at June 30, 2022$36 $23 $59 
_________________________
(1)Reflects the same criteriachange attributable to estimate uncollectibility forthe transfer of the reserve from the securitized vacation ownership notes receivable reserve to the non-securitized vacation ownership notes receivable andreserve when we voluntarily repurchase securitized vacation ownership notes receivable because they perform similarly. We estimate uncollectibility for each pool based on historical activity for similarreceivable.
Originated Vacation Ownership Notes Receivable
Originated vacation ownership notes receivable represent vacation ownership notes receivable originated by Legacy-ILG and Legacy-Welk subsequent to each respective acquisition date and all Legacy-MVW vacation ownership notes receivable. The following table shows future principal payments, net of reserves, and interest rates for our originated vacation ownership notes receivable at June 30, 2022.
Originated Vacation Ownership Notes Receivable
($ in millions)Non-SecuritizedSecuritizedTotal
2022, remaining$37 $64 $101 
202334 130 164 
202430 133 163 
202530 135 165 
202631 141 172 
Thereafter232 787 1,019 
Balance at June 30, 2022$394 $1,390 $1,784 
Weighted average stated interest rate12.7%13.0%12.9%
Range of stated interest rates0.0% to 20.9%0.0% to 19.9%0.0% to 20.9%
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For originated vacation ownership notes receivable, we record the difference between the vacation ownership note receivable and the variable consideration included in the transaction price for the sale of the related vacation ownership product as a reserve on our vacation ownership notes receivable. The following table summarizes the activity related to our originated vacation ownership notes receivable reserve.
Originated Vacation Ownership Notes Receivable Reserve
($ in millions)Non-SecuritizedSecuritizedTotal
Balance at December 31, 2021$193 $140 $333 
Increase in vacation ownership notes receivable reserve56 10 66 
Securitizations(55)55 — 
Clean-up call15 (15)— 
Write-offs(58)— (58)
Defaulted vacation ownership notes receivable repurchase activity(1)
32 (32)— 
Balance at June 30, 2022$183 $158 $341 
_________________________
(1)Reflects the change attributable to the transfer of the reserve from the securitized vacation ownership notes receivable reserve forto the 2017 first three quarters:
($ in thousands)
Non-Securitized
Vacation Ownership
Notes Receivable
 
Securitized
Vacation Ownership
Notes Receivable
 Total
Balance at December 30, 2016$56,628
 $53,735
 $110,363
Provision for loan losses31,711
 7,206
 38,917
Securitizations(29,071) 29,071
 —
Clean-up of Warehouse Credit Facility(1)
3,995
 (3,995) —
Write-offs(35,264) —
 (35,264)
Defaulted vacation ownership notes receivable repurchase activity(2)
22,356
 (22,356) —
Balance at September 30, 2017$50,355
 $63,661
 $114,016
_________________________
(1)
Refers to our voluntary repurchase of previously securitized non-defaulted vacation ownership notes receivable from our non-recourse warehouse credit facility (the “Warehouse Credit Facility”).
(2)
Decrease in securitized vacation ownership notes receivable reserve and increase in non-securitized vacation ownership notes receivable reserve was attributable to the transfer of the reserve when we voluntarily repurchased defaulted securitized vacation ownership notes receivable.
Although we consider loans to owners to be past due if we do not receive payment within 30 days of the due date, we suspend accrual of interest only on those loans that are over 90 days past due. We consider loans over 150 days past due to be in default. We apply payments we receive for vacation ownership notes receivable on non-accrual status first to interest, then to principal and any remainder to fees. We resume accruing interestreserve when we voluntarily repurchase securitized vacation ownership notes receivable are less than 90 days past due. We do not accept payments for vacation ownership notes receivable during the foreclosure process unless the amount is sufficient to pay all past due principal, interest, fees and penalties owed and fully reinstate the note. We write off uncollectible vacation ownership notes receivable against the reserve once we receive title to the vacation ownership products through the foreclosure or deed-in-lieu process or, in Asia Pacific or Europe, when revocation is complete. receivable.
Credit Quality of Legacy-MVW Vacation Ownership Notes Receivable
For both Legacy-MVW non-securitized and securitized vacation ownership notes receivable, we estimated average remaining default rates of 7.18 percent and 7.09 percent6.81% as of SeptemberJune 30, 20172022, and 6.74% as of December 30, 2016, respectively.31, 2021. A 0.5 percentage point increase in the estimated default rate would have resulted in an increase in our allowance for loan lossesthe related vacation ownership notes receivable reserve of $5.6 million and $5.0$6 million as of Septemberboth June 30, 20172022 and December 30, 2016, respectively.31, 2021.

We use the aging of the vacation ownership notes receivable as the primary credit quality indicator for our Legacy-MVW vacation ownership notes receivable, as historical performance indicates that there is a relationship between the default behavior of borrowers and the age of the receivable associated with the vacation ownership interest.
The following table shows our recorded investment in non-accrual Legacy-MVW vacation ownership notes receivable, which are vacation ownership notes receivable that are 90 days or more past due:due.
($ in thousands)
Non-Securitized
Vacation Ownership
Notes Receivable
 
Securitized
Vacation Ownership
Notes Receivable
 Total
Investment in vacation ownership notes receivable on non-accrual status at September 30, 2017$40,368
 $5,618
 $45,986
Investment in vacation ownership notes receivable on non-accrual status at December 30, 2016$43,792
 $6,687
 $50,479
Average investment in vacation ownership notes receivable on non-accrual status during the 2017 third quarter$39,423
 $6,304
 $45,727
Average investment in vacation ownership notes receivable on non-accrual status during the 2016 third quarter$47,038
 $8,278
 $55,316
Average investment in vacation ownership notes receivable on non-accrual status during the 2017 first three quarters$42,080
 $6,153
 $48,233
Average investment in vacation ownership notes receivable on non-accrual status during the 2016 first three quarters$45,926
 $7,296
 $53,222
Legacy-MVW Vacation Ownership Notes Receivable
($ in millions)Non-SecuritizedSecuritizedTotal
Investment in vacation ownership notes receivable on non-accrual status at June 30, 2022$75 $6 $81 
Investment in vacation ownership notes receivable on non-accrual status at December 31, 2021$88 $8 $96 
The following table shows the aging of the recorded investment in principal, before reserves, in Legacy-MVW vacation ownership notes receivable as of SeptemberJune 30, 2017:2022 and December 31, 2021.
Legacy-MVW Vacation Ownership Notes Receivable
As of June 30, 2022As of December 31, 2021
($ in millions)Non-SecuritizedSecuritizedTotalNon-SecuritizedSecuritizedTotal
31 – 90 days past due$6 $19 $25 $6 $20 $26 
91 – 150 days past due3 6 9 4 8 12 
Greater than 150 days past due72 — 72 84��— 84 
Total past due81 25 106 94 28 122 
Current190 1,058 1,248 180 1,027 1,207 
Total vacation ownership notes receivable$271 $1,083 $1,354 $274 $1,055 $1,329 
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($ in thousands)
Non-Securitized
Vacation Ownership
Notes Receivable
 
Securitized
Vacation Ownership
Notes Receivable
 Total
31 – 90 days past due$5,751
 $15,354
 $21,105
91 – 150 days past due4,297
 5,618
 9,915
Greater than 150 days past due36,071
 —
 36,071
Total past due46,119
 20,972
 67,091
Current205,401
 917,926
 1,123,327
Total vacation ownership notes receivable$251,520
 $938,898
 $1,190,418
The following table details the origination year of our Legacy-MVW vacation ownership notes receivable as of June 30, 2022.
Legacy-MVW Vacation Ownership Notes Receivable
($ in millions)Non-SecuritizedSecuritizedTotal
Year of Origination
2022$124 $112 $236 
202131 339 370 
202018 135 153 
201937 205 242 
201823 130 153 
2017 & Prior38 162 200 
$271 $1,083 $1,354 
Credit Quality of Legacy-ILG and Legacy-Welk Vacation Ownership Notes Receivable
At June 30, 2022 and December 31, 2021, the weighted average FICO score within our consolidated Legacy-ILG and Legacy-Welk vacation ownership notes receivable pools was 709 and 707, respectively, based upon the FICO score of the borrower at the time of origination. The average estimated rate for all future defaults for our Legacy-ILG and Legacy-Welk consolidated outstanding pool of vacation ownership notes receivable was 16.85% as of June 30, 2022 and 17.33% as of December 31, 2021. A 0.5 percentage point increase in the estimated default rate on the Legacy-ILG and Legacy-Welk vacation ownership notes receivable would have resulted in an increase in the related vacation ownership notes receivable reserve of $5 million as of June 30, 2022 and $4 million as of December 31, 2021.
We use the origination of the vacation ownership notes receivable by brand (Westin, Sheraton, Hyatt, Welk) and the FICO scores of the customer as the primary credit quality indicators for our Legacy-ILG and Legacy-Welk vacation ownership notes receivable, as historical performance indicates that there is a relationship between the default behavior of borrowers and the brand associated with the vacation ownership interest they have acquired, supplemented by the FICO scores of the customers. Vacation ownership notes receivable with no FICO score in the tables below primarily relate to non-U.S. resident borrowers.
The following table shows our recorded investment in non-accrual Legacy-ILG and Legacy-Welk vacation ownership notes receivable, which are vacation ownership notes receivable that are 90 days or more past due.
Legacy-ILG and Legacy-Welk Vacation Ownership Notes Receivable
($ in millions)Non-SecuritizedSecuritizedTotal
Investment in vacation ownership notes receivable on non-accrual status at June 30, 2022$95 $9 $104 
Investment in vacation ownership notes receivable on non-accrual status at December 31, 2021$114 $10 $124 
The following table shows the aging of the recorded investment in principal, before reserves, in Legacy-ILG and Legacy-Welk vacation ownership notes receivable as of June 30, 2022 and December 30, 2016:31, 2021.
Legacy-ILG and Legacy-Welk Vacation Ownership Notes Receivable
As of June 30, 2022As of December 31, 2021
($ in millions)Non-SecuritizedSecuritizedTotalNon-SecuritizedSecuritizedTotal
31 – 90 days past due$9 $20 $29 $16 $24 $40 
91 – 120 days past due4 5 9 4 6 10 
Greater than 120 days past due91 4 95 110 4 114 
Total past due104 29 133 130 34 164 
Current259 728 987 219 735 954 
Total vacation ownership notes receivable$363 $757 $1,120 $349 $769 $1,118 
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($ in thousands)
Non-Securitized
Vacation Ownership
Notes Receivable
 
Securitized
Vacation Ownership
Notes Receivable
 Total
31 – 90 days past due$7,780
 $16,468
 $24,248
91 – 150 days past due3,981
 6,687
 10,668
Greater than 150 days past due39,811
 —
 39,811
Total past due51,572
 23,155
 74,727
Current259,824
 748,123
 1,007,947
Total vacation ownership notes receivable$311,396
 $771,278
 $1,082,674
The following tables show the Legacy-ILG and Legacy-Welk acquired vacation ownership notes receivable, before reserves, by brand and FICO score.

Acquired Vacation Ownership Notes Receivable
As of June 30, 2022As of December 31, 2021
($ in millions)700 +  600 - 699< 600No ScoreTotal700 +  600 - 699< 600No ScoreTotal
Westin$42 $26 $2 $6 $76 $52 $32 $3 $8 $95 
Sheraton43 37 6 15 101 54 48 8 23 133 
Hyatt6 4 1 — 11 8 6 1 — 15 
Welk93 63 1 2 159 115 79 1 2 197 
Other1 1 — 1 3 2 — — 2 4 
$185 $131 $10 $24 $350 $231 $165 $13 $35 $444 
4. The following tables detail the origination year of our Legacy-ILG and Legacy-Welk acquired vacation ownership notes receivable by brand and FICO score as of June 30, 2022.
Acquired Vacation Ownership Notes Receivable 2018 & Prior
($ in millions)WestinSheratonHyatt & OtherTotal
700 +$42 $43 $7 $92 
600 - 69926 37 5 68 
< 6002 6 1 9 
No Score6 15 1 22 
$76 $101 $14 $191 
Acquired Vacation Ownership Notes Receivable - Welk
($ in millions)2021202020192018 & PriorTotal
700 +$7 $20 $24 $42 $93 
600 - 6994 12 16 31 63 
< 600— 1 — — 1 
No Score— — 1 1 2 
$11 $33 $41 $74 $159 
The following tables show the Legacy-ILG and Legacy-Welk originated vacation ownership notes receivable, before reserves, by brand and FICO score.
Originated Vacation Ownership Notes Receivable as of June 30, 2022
($ in millions)700 +600 - 699< 600No ScoreTotal
Westin$155 $73 $8 $44 $280 
Sheraton146 104 20 41 311 
Hyatt25 12 1 — 38 
Welk99 39 2 1 141 
$425 $228 $31 $86 $770 
Originated Vacation Ownership Notes Receivable as of December 31, 2021
($ in millions)700 +600 - 699< 600No ScoreTotal
Westin$143 $66 $8 $34 $251 
Sheraton136 94 20 46 296 
Hyatt22 11 — — 33 
Welk65 27 1 1 94 
$366 $198 $29 $81 $674 
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The following tables detail the origination year of our Legacy-ILG and Legacy-Welk originated vacation ownership notes receivable by brand and FICO score as of June 30, 2022.
Originated Vacation Ownership Notes Receivable - Westin
($ in millions)20222021202020192018Total
700 +$39 $56 $19 $34 $7 $155 
600 - 69915 27 9 18 4 73 
< 6002 3 1 2 — 8 
No Score25 7 4 7 1 44 
$81 $93 $33 $61 $12 $280 
Originated Vacation Ownership Notes Receivable - Sheraton
($ in millions)20222021202020192018Total
700 +$39 $51 $19 $29 $8 $146 
600 - 69924 40 13 21 6 104 
< 6003 8 3 5 1 20 
No Score8 10 7 13 3 41 
$74 $109 $42 $68 $18 $311 
Originated Vacation Ownership Notes Receivable - Hyatt
($ in millions)20222021202020192018Total
700 +$10 $8 $2 $4 $1 $25 
600 - 6994 4 1 2 1 12 
< 600— 1 — — — 1 
No Score— — — — — — 
$14 $13 $3 $6 $2 $38 
Originated Vacation Ownership Notes Receivable - Welk
($ in millions)20222021202020192018Total
700 +$52 $47 $— $— $— $99 
600 - 69919 20 — — — 39 
< 6001 1 — — — 2 
No Score1 — — — — 1 
$73 $68 $— $— $— $141 
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7.FINANCIAL INSTRUMENTS
The following table shows the carrying values and the estimated fair values of financial assets and liabilities that qualify as financial instruments, determined in accordance with the authoritative guidance for disclosures regarding the fair value of financial instruments. Considerable judgment is required in interpreting market data to develop estimates of fair value. The use of different market assumptions and/or estimation methodologies could have a material effect on the estimated fair value amounts. The table excludes Cash and cash equivalents, Restricted cash, Accounts and contracts receivable, deposits included in Other assets, Accounts payable, Advance deposits, and Accrued liabilities, and derivative instruments, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.
At June 30, 2022At December 31, 2021
($ in millions)Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Vacation ownership notes receivable, net$2,075 $2,160 $2,045 $2,102 
Other assets71 71 76 76 
Total financial assets$2,146 $2,231 $2,121 $2,178 
Securitized debt, net$(1,846)$(1,754)$(1,856)$(1,900)
2025 Notes, net(248)(249)(248)(261)
2028 Notes, net(346)(304)(346)(362)
2029 Notes, net(494)(416)(493)(505)
Term Loan, net(777)(745)(776)(784)
2022 Convertible Notes, net(1)
(225)(225)(224)(280)
2026 Convertible Notes, net(1)
(564)(520)(461)(682)
Non-interest bearing note payable, net(10)(10)— — 
Total financial liabilities$(4,510)$(4,223)$(4,404)$(4,774)
 At September 30, 2017 At December 30, 2016
($ in thousands)
Carrying
Amount
 
Fair
Value(1)
 
Carrying
Amount
 
Fair
Value(1)
Vacation ownership notes receivable — securitized$875,237
 $1,028,374
 $717,543
 $834,009
Vacation ownership notes receivable — non-securitized201,165
 207,592
 254,768
 269,161
Other assets13,153
 13,153
 —
 —
Total financial assets$1,089,555
 $1,249,119
 $972,311
 $1,103,170
Non-recourse debt associated with vacation ownership notes receivable securitizations, net$(895,405) $(902,213) $(729,188) $(725,963)
Convertible notes, net(190,739) (241,562) —
 —
Non-interest bearing note payable, net(59,677) (59,677) —
 —
Total financial liabilities$(1,145,821) $(1,203,452) $(729,188) $(725,963)
_________________________
_________________________
(1)Prior period amounts have not been adjusted to reflect our adoption of ASU 2020-06 under the modified retrospective method. See Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” for information on our adoption of ASU 2020-06.
(1)
Fair value of financial instruments, with the exception of other assets and convertible notes, has been determined using Level 3 inputs. Fair value of other assets and convertible notes that are financial instruments has been determined using Level 2 inputs.
Vacation Ownership Notes Receivable
At June 30, 2022At December 31, 2021
($ in millions)Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Vacation ownership notes receivable, net
Securitized$1,659 $1,736 $1,662 $1,712 
Eligible for securitization90 98 97 104 
Not eligible for securitization326 326 286 286 
Non-securitized416 424 383 390 
$2,075 $2,160 $2,045 $2,102 
We estimate the fair value of our securitized vacation ownership notes receivable that have been securitized using a discounted cash flow model. We believe this is comparable to the model that an independent third party would use in the current market. Our model uses default rates, prepayment rates, coupon rates, and loan terms for our securitized vacation ownership notes receivable portfolio as key drivers of risk and relative value that, when applied in combination with pricing parameters,to determine the fair value of the underlying vacation ownership notes receivable. We concluded that this fair value measurement should be categorized within Level 3.
Due to factors that impact the general marketability of our non-securitized vacation ownership notes receivable that have not been securitized, as well as current market conditions, we bifurcate our non-securitized vacation ownership notes receivable at each balance sheet date into those eligible and not eligible for securitization using criteria applicable to current securitization transactions in the asset-backed securities (“ABS”)ABS market. Generally, vacation ownership notes receivable are considered not eligible
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for securitization if any of the following attributes are present: (1) payments are greater than 30 days past due; (2) the first payment has not been received; or (3) the collateral is located in Asia or Europe. In some cases, eligibility may also be determined based on the credit score of the borrower, the remaining term of the loans and other similar factors that may reflect investor demand in a securitization transaction or the cost to effectively securitize the vacation ownership notes receivable.
The following table above shows the bifurcation of our non-securitized vacation ownership notes receivable that have not been securitized into those eligible and not eligible for securitization based upon the aforementioned eligibility criteria:
 At September 30, 2017 At December 30, 2016
($ in thousands)
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
Vacation ownership notes receivable       
Eligible for securitization$44,907
 $51,334
 $98,508
 $112,901
Not eligible for securitization156,258
 156,258
 156,260
 156,260
Total non-securitized$201,165
 $207,592
 $254,768
 $269,161

criteria. We estimate the fair value of the portion of our non-securitized vacation ownership notes receivable that have not been securitized that we believe will ultimately be securitized in the same manner as securitized vacation ownership notes receivable.receivable that have been securitized. We value the remaining non-securitized vacation ownership notes receivable that have not been securitized at their carrying value, rather than using our pricing model. We believe that the carrying value of these particular vacation ownership notes receivable approximates fair value because the stated, or otherwise imputed, interest rates of these loans are consistent with current market rates and the reserve for these vacation ownership notes receivable appropriately accounts for risks in default rates, prepayment rates, discount rates, and loan terms. We concluded that this fair value measurement should be categorized within Level 3.
Other Assets
We estimateOther assets include $71 million of company owned insurance policies (the “COLI policies”), acquired on the fair valuelives of our other assetscertain participants in the Marriott Vacations Worldwide Deferred Compensation Plan, that are financial instruments using Level 2 inputs. These assets consist of COLI policies held in a rabbi trust. The carrying value of the COLI policies is equal to their cash surrender value.value (Level 2 inputs).
Non-RecourseSecuritized Debt Associated with Securitized Vacation Ownership Notes Receivable
We generate cash flow estimates by modeling all bond tranches for our active vacation ownership notes receivable securitization transactions, with consideration for the collateral specific to each tranche. The key drivers in our analysis include default rates, prepayment rates, bond interest rates, and other structural factors, which we use to estimate the projected cash flows. In order to estimate market credit spreads by rating, we obtain indicative credit spreads from investment banks that actively issue and facilitate the market for vacation ownership securities and determine an average credit spread by rating level of the different tranches. We then apply those estimated market spreads to swap rates in order to estimate an underlying discount rate for calculating the fair value of the active bonds payable. We concluded that this fair value measurement should be categorized within Level 3.
ConvertibleSenior Notes
We estimate the fair value of our Convertible2025 Notes, (as2028 Notes, and 2029 Notes (each as defined in Footnote No. 9, “Debt,”13 “Debt”) based onusing quoted market prices as of the last trading day for the 2017 third quarter; however these notes have only a limited trading history and volume, and as such this fair value estimate is not necessarily indicative of the value at which theythese notes could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 2.
Term Loan
We estimate the fair value of our Term Loan (as defined in Footnote 13 “Debt”) using quotes from securities dealers as of the last trading day for the quarter; however this loan has only a limited trading history and volume, and as such this fair value estimate is not necessarily indicative of the value at which the Term Loan could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 3.
Convertible Notes
We estimate the fair value of the 2026 Convertible Notes (as defined in Footnote 13 “Debt”) using quoted market prices as of the last trading day for the quarter; however these notes have only a limited trading history and volume, and as such this fair value estimate is not necessarily indicative of the value at which the 2026 Convertible Notes could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 2. The difference between the carrying value and the fair value is primarily attributed to the underlying conversion feature and the spread between the conversion price and the market value of the shares underlying the 2026 Convertible notes.
Prior to June 2022, we estimated the fair value of the 2022 Convertible Notes (as defined in Footnote 13 “Debt”) using the same approach as the aforementioned 2026 Convertible Notes. In June 2022, the fair value of the 2022 Convertible Notes was calculated using the “with and without” approach (Level 2) based upon comparable debt yields.
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Non-Interest Bearing Note Payable
The carrying value of our non-interest bearing note payable issued in connection with the acquisition of vacation ownership units located on the Big Island of Hawaiiin Bali, Indonesia approximates fair value, because the imputed interest rate used to discount this note payable is consistent with current market rates. See Footnote No. 5, “Acquisitions and Dispositions,” and Footnote No. 9, “Debt,” for additional information onWe concluded that this transaction.fair value measurement should be categorized within Level 3.
5. ACQUISITIONS AND DISPOSITIONS
Acquisitions
Bali, Indonesia
During the 2017 third quarter, we acquired 51 completed vacation ownership units, as well as a sales gallery and related amenities and infrastructure, located in Bali, Indonesia for $23.8 million. The transaction was accounted for as an asset acquisition with the purchase price allocated to Inventory ($21.7 million) and Property and equipment ($2.1 million).
Marco Island, Florida
During the 2017 second quarter, we acquired 36 completed vacation ownership units located at our resort in Marco Island, Florida for $33.6 million. The transaction was accounted for as an asset acquisition with all of the purchase price allocated to Property and equipment. To ensure consistency with the expected related future cash flow presentation, the cash purchase price was included as an operating activity in the Purchase of vacation ownership units for future transfer to inventory line on our Cash Flows. See Footnote No. 8, “Contingencies and Commitments,” for information on our remaining commitment related to this property.
Big Island of Hawaii
During the 2017 second quarter, we acquired 112 completed vacation ownership units located on the Big Island of Hawaii. The transaction was accounted for as an asset acquisition with all of the purchase price allocated to Inventory. As consideration for the acquisition, we paid $27.3 million in cash, settled a $0.5 million note receivable from the seller on a non-cash basis, and issued a non-interest bearing note payable for $63.6 million. See Footnote No. 9, “Debt,” for information on the non-interest bearing note payable.

Miami Beach, Florida
During the 2016 first quarter, we completed the acquisition of an operating property located in the South Beach area of Miami Beach, Florida for $23.5 million. The acquisition was treated as a business combination, accounted for using the acquisition method of accounting and included within Operating activities on our Cash Flows. As consideration for the acquisition, we paid $23.5 million in cash; the value of the acquired property was allocated to Inventory. We rebranded this property as Marriott Vacation Club Pulse, South Beach and converted it, in its entirety, into vacation ownership inventory.
Dispositions
San Francisco, California
During the 2016 second quarter, we disposed of 19 residential units located at The Ritz-Carlton Club and Residences, San Francisco (the “RCC San Francisco”) for gross cash proceeds of $19.5 million. We accounted for the sale under the full accrual method in accordance with the authoritative guidance on accounting for sales of real estate and recorded a gain of $10.5 million in the Gains and other income line on our Statements of Income for the 2016 first three quarters.
Surfers Paradise, Australia
During 2015, we completed the acquisition of an operating property located in Surfers Paradise, Australia. During the 2016 second quarter, we disposed of the portion of this operating property that we did not intend to convert into vacation ownership inventory for gross cash proceeds of AUD $70.5 million ($50.9 million). We accounted for the sale under the full accrual method in accordance with the authoritative guidance on accounting for sales of real estate. As part of the disposition, we guaranteed the net operating income of this portion of the operating property through 2021 up to a specified maximum of AUD $2.9 million ($2.3 million), which was recorded as a deferred gain in the Other line within liabilities on our balance sheet. We recognized a loss, inclusive of the deferred gain, of AUD $1.4 million ($1.0 million) in connection with the sale, which was recorded in the Gains and other income line on the Statement of Income for the 2016 first three quarters.
6.
8.EARNINGS PER SHARE
Basic earnings or loss per common share attributable to common shareholders is calculated by dividing net income or loss attributable to common shareholders by the weighted average number of shares of common stock outstanding during the reporting period. Treasury stock is excluded from the weighted average number of shares of common stock outstanding. Diluted earnings or loss per common share attributable to common shareholders is calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period.period, except in periods when there is a loss because the inclusion of the potential common shares would have an anti-dilutive effect. The dilutive effect of outstanding equity-based compensation awards is reflected in diluted earnings or loss per common share applicable to common shareholders by application of the treasury stock method using average market prices during the period.
Our calculationWe adopted ASU 2020-06 on January 1, 2022 using the modified retrospective method. ASU 2020-06 is applicable to our convertible notes outstanding as of adoption and requires us to calculate the impact of our convertible notes on diluted earnings per share reflectsusing the “if-converted” method, regardless of our intent to settle conversionsor partially settle the debt in cash. Under the “if-converted” method, shares issuable upon conversion of our convertible notes are assumed to be converted into common stock at the beginning of the period, to the extent dilutive. We issued notice of our intent to settle the 2022 Convertible Notes (as defined in Footnote No. 9, “Debt”) through a combination settlement, which contemplates repayment in cash, which became irrevocable on June 15, 2022, and as a result, we suspended the use of the principal amount and repayment in shares of our common stock of any excess of“if-converted” method for the conversion value over the principal amount (the “conversion premium”). Therefore, we will include only the shares2022 Convertible Notes at that may be issued with respect to any conversion premium in total dilutive weighted average shares outstanding, which we calculate using the treasury stock method. As no conversion premium existedtime, as of September 30, 2017, there was no dilutive impact from the Convertible Noteslonger a share settlement option. Earnings per share for the 2017 third quarter orthree and six months ended June 30, 2021 have not been retrospectively restated and continue to be reported under the 2017 first three quarters.accounting standards in effect for that period.
The shares issuable on exercise of the Warrants (as defined in Footnote No. 9, “Debt”)warrants sold in connection with the issuance of the Convertible Notesour convertible notes will not impact the total dilutive weighted average shares outstanding unless and until the price of our common stock exceeds the respective strike price of $176.68, as described in Footnote No. 9, “Debt.”price. If and when the price of our common stock exceeds the respective strike price of either of the Warrants,warrants, we will include the dilutive effect of the additional shares that may be issued upon exercise of the Warrantswarrants in total dilutive weighted average shares outstanding, which we calculate using the treasury stock method. The Convertible Note Hedges (as defined in Footnote No. 9, “Debt”)convertible note hedges purchased in connection with theeach issuance of the Convertible Notesconvertible notes are considered to be anti-dilutive and willdo not impact our calculation of diluted earnings per share.

share attributable to common shareholders for any periods presented herein. See Footnote 13 “Debt” for further information on our convertible notes.
The table below illustrates the reconciliation of the earnings or loss and number of shares used in our calculation of basic earnings or loss per share attributable to common shareholders.
Three Months EndedSix Months Ended
(in millions, except per share amounts)June 30, 2022June 30, 2021June 30, 2022June 30, 2021
Computation of Basic Earnings (Loss) Per Share Attributable to Common Shareholders
Net income (loss) attributable to common shareholders$136 $6 $194 $(22)
Shares for basic earnings (loss) per share41.3 42.9 41.9 42.1 
Basic earnings (loss) per share$3.30 $0.15 $4.64 $(0.52)
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The table below illustrates the reconciliation of the earnings or loss and number of shares used in our calculation of diluted earnings or loss per share attributable to common shareholders.
Three Months EndedSix Months Ended
(in millions, except per share amounts)
June 30, 2022(1)
June 30, 2021(1)
June 30, 2022(1)
June 30, 2021(1)
Computation of Diluted Earnings (Loss) Per Share Attributable to Common Shareholders
Net income (loss) attributable to common shareholders$136 $6 $194 $(22)
Add back of interest expense related to convertible notes subsequent to the adoption of ASU 2020-06, net of tax2 — 3 — 
Numerator used to calculate diluted EPS$138 $6 $197 $(22)
Shares for basic earnings (loss) per share41.3 42.9 41.9 42.1 
Effect of dilutive shares outstanding(2)
Employee SARs0.2 0.2 0.2 — 
Restricted stock units0.3 0.5 0.3 — 
2022 Convertible Notes ($230 million of principal)(3)
1.3 0.2 1.4 — 
2026 Convertible Notes ($575 million of principal)3.4 — 3.4 — 
Shares for diluted earnings (loss) per share46.5 43.8 47.2 42.1 
Diluted earnings (loss) per share$2.97 $0.15 $4.18 $(0.52)

(1)The computations of diluted earnings per share.share attributable to common shareholders exclude approximately 293,000 and 299,000 shares of common stock, the maximum number of shares issuable as of June 30, 2022 and June 30, 2021, respectively, upon the vesting of certain performance-based awards, because the performance conditions required to be met for the shares subject to such awards to vest were not achieved by the end of the reporting period.
(2)For the first half of 2021, the following potentially dilutive securities were excluded from the above calculation of diluted net loss per share attributable to common shareholders during the periods presented, as the effects of including these securities would have been anti-dilutive.
 Quarter Ended Year to Date Ended
 
September 30, 2017(1)
 
September 9, 2016(2)
 
September 30, 2017(1)
 
September 9, 2016(2)
(in thousands, except per share amounts)(92 days) (84 days) (274 days) (252 days)
Computation of Basic Earnings Per Share       
Net income$40,762
 $26,807
 $118,738
 $87,524
Shares for basic earnings per share27,090
 27,152
 27,219
 28,207
Basic earnings per share$1.50
 $0.99
 $4.36
 $3.10
Computation of Diluted Earnings Per Share       
Net income$40,762
 $26,807
 $118,738
 $87,524
Shares for basic earnings per share27,090
 27,152
 27,219
 28,207
Effect of dilutive shares outstanding       
Employee stock options and SARs403
 356
 440
 366
Restricted stock units220
 172
 199
 145
Shares for diluted earnings per share27,713
 27,680
 27,858
 28,718
Diluted earnings per share$1.47
 $0.97
 $4.26
 $3.05
_________________________
(1)
The computationsSix Months Ended
(in millions)June 30, 2021
Employee SARs0.2 
Restricted stock units0.5 
2022 Convertible Notes ($230 million of diluted earnings per share exclude approximately 289,000 shares of common stock, the maximum number of shares issuable as of September 30, 2017 upon the vesting of certain performance-based awards, because the performance conditions required to be met for the shares subject to such awards to vest were not achieved by the end of the reporting period.principal)0.2 
(2)
The computations of diluted earnings per share exclude approximately 254,000 shares of common stock, the maximum number of shares issuable as of September 9, 2016 upon the vesting of certain performance-based awards, because the performance conditions required to be met for the shares subject to such awards to vest were not achieved by the end of the reporting period.0.9 
(3)We had the option to settle the 2022 Convertible Notes in cash, stock, or a combination of the two. Therefore, from the beginning of the period through the date on which our notice of our intent to settle the 2022 Convertible Notes in cash became irrevocable, we included shares in the denominator of the diluted earnings per share calculation, applying the “if-converted” method. For the period from June 15, 2022 through June 30, 2022, we excluded the related shares from the denominator of the diluted earnings per share calculation.
In accordance with the applicable accounting guidance for calculating earnings per share, for the 2017 thirdsecond quarter and the 2017 first three quarters,of 2022, we excluded from our calculation of diluted earnings per share included252,314 shares underlying stock appreciation rights (“SARs”) that may be settledsettle in shares of common stock because the exercise prices of such SARs, which ranged from $143.38 to $173.88, were lessgreater than or equal to the average market pricesprice of our common stock for the applicable period.
For the 2016 third quarter and the 2016 first three quarters,half of 2022, we excluded from our calculation of diluted earnings per share 62,018199,813 shares underlying SARs that may be settledsettle in shares of common stock because the exercise prices of such SARs, which ranged from $159.27 to $173.88, were greater than the average market price of our common stock for the applicable period.
For the second quarter of 2021, we excluded from our calculation of diluted earnings per share 127,857 shares underlying SARs that may settle in shares of common stock because the exercise price of $77.42$173.88 of such SARs was greater than the average market price of our common stock for the applicable period.
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9.INVENTORY
The following table shows the composition of our inventory balances:
($ in millions)At June 30, 2022At December 31, 2021
Real estate inventory(1)
$686 $710 
Other9 9 
$695 $719 
($ in thousands)At September 30, 2017 At December 30, 2016
Finished goods(1)
$390,383
 $337,949
Work-in-progress1,964
 39,486
Land and infrastructure(2)
338,149
 330,728
Real estate inventory730,496
 708,163
Operating supplies and retail inventory4,576
 4,373
 $735,072
 $712,536
_________________________
_________________________
(1)
Represents completed inventory that is either registered for sale as vacation ownership interests, or unregistered and available for sale in its current form.
(2)
Includes $66.0 million of inventory related to estimated future foreclosures at September 30, 2017.

(1)Represents completed inventory that is registered for sale as vacation ownership interests and vacation ownership inventory expected to be reacquired pursuant to estimated future foreclosures.
We value vacation ownership and residential products at the lower of cost or fair market value less costs to sell, in accordance with applicable accounting guidance, and we record operating supplies at the lower of cost (using the first-in, first-out method) or net realizable value. During the 2017 and 2016 first three quarters, productProduct cost true-up activity relating to vacation ownership products increased carrying values of inventory by $1.0$10 million during the first half of 2022 and $12.2by $1 million respectively.during the first half of 2021.
In addition to the above, at SeptemberJune 30, 2017,2022 and December 31, 2021, we had $49.1$506 million and $460 million, respectively, of completed vacation ownership units which have beenare classified as a component of Property and equipment, net until the time at which they are available and legally registered for sale as vacation ownership products. Furthermore,
10.GOODWILL AND INTANGIBLES
Goodwill
The following table details the carrying amount of our goodwill at SeptemberJune 30, 2017, we also had $305.8 million2022 and December 31, 2021, and reflects goodwill attributed to the ILG Acquisition and the Welk Acquisition.
($ in millions)Vacation Ownership Reporting UnitExchange & Third-Party Management Reporting UnitTotal Consolidated
Balance at December 31, 2021$2,778 $372 $3,150 
Measurement period adjustments(8)— (8)
Disposition of VRI Americas— (25)(25)
Balance at June 30, 2022$2,770 $347 $3,117 
Intangible Assets
The following table details the composition of commitments to acquire completed vacation ownership units as discussed below in Footnote No. 8, “Contingencies and Commitments.”our intangible asset balances:
($ in millions)At June 30, 2022At December 31, 2021
Definite-lived intangible assets
Member relationships$670 $671 
Management contracts427 452 
1,097 1,123 
Accumulated amortization(219)(194)
878 929 
Indefinite-lived intangible assets
Trade names63 64 
$941 $993 
8. CONTINGENCIES AND COMMITMENTS
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11.CONTINGENCIES AND COMMITMENTS
Commitments and Letters of Credit
As of SeptemberJune 30, 2017,2022, we had the following commitments outstanding:
•We have various contracts for the use of information technology hardware and software that we use in the normal course of business. Our aggregate commitmentscommitment under these contracts were $26.6was $81 million, of which we expect $4.9$28 million, $12.9$30 million, $5.3$13 million, $1.3 million, $0.8$7 million, and $1.4$3 million will be paid in 2017, 2018, 2019, 2020, 2021the remainder of 2022, 2023, 2024, 2025, and 2026 and thereafter, respectively.
•We have a commitment to purchase an operating property located in New York, New York for $158.5 million, of which $7.2 million is attributed to a related capital lease arrangement and recorded in Debt. We expect to acquire the units in the property in their current form, over time. We currently manage this property, which we have rebranded as Marriott Vacation Club Pulse, New York City. See Footnote No. 12, “Variable Interest Entities,” for additional information on this transaction. As of the end of the 2017 third quarter, we had expected to make payments for these units of $96.8 million and $61.7 million in 2018 and 2019, respectively. Subsequent to the 2017 third quarter, we amended the terms of this commitment and, as a result, we expect to make payments of $108.5 million and $61.7 million in 2019 and 2020, respectively, for these units.
We have a commitment to purchase 88 vacation ownership units located in Bali, Indonesiareal estate for use in our Asia PacificVacation Ownership segment contingent upon completion of constructionvia our involvement with a VIE. Refer to agreed-upon standards within specified timeframes. We expect to complete the acquisition in 2019 and to make payments with respect to these units when specific construction milestones are completed, as follows: $7.8 million in 2017, $5.9 million in 2018 and $25.4 million in 2019.
We have a remaining commitment to purchase vacation ownership units located at our resort in Marco Island, Florida for $108.2 million, which we expect will be paid as follows: $23.7 million in 2018 and $84.5 million in 2019. See Footnote No. 5, “Acquisitions and Dispositions,” and Footnote No. 12,16 “Variable Interest Entities,”Entities” for additional information onand our activities relating to the VIE involved in this transaction.
In addition•We have commitments to those disclosedacquire inventory from our managed owners’ associations in our Annual Report on Form 10-Kthe remainder of 2022 for the fiscal year ended December 30, 2016, we have operating lease commitments that expire in 2029. Our aggregate minimum lease payments under these contracts are $17.5 million, of which we expect $0.1 million, $0.4 million, $1.7 million, $1.7 million, $1.9 million and $11.7 million will be paid in 2017, 2018, 2019, 2020, 2021 and thereafter, respectively.
$30 million.
Surety bonds issued as of SeptemberJune 30, 20172022 totaled $37.7$127 million, the majority of which were requested by federal, state, or local governments in connection with our operations.
Additionally, asAs of SeptemberJune 30, 2017,2022, we had $4.6$1 million of letters of credit outstanding under our $250.0 million revolving credit facility (the “RevolvingRevolving Corporate Credit Facility”Facility (as defined in Footnote 13 “Debt”). In addition, as of June 30, 2022, we had $2 million in letters of credit outstanding related to and in lieu of reserves required for several vacation ownership notes receivable securitization transactions outstanding. These letters of credit are not issued pursuant to, nor do they impact our borrowing capacity under, the Revolving Corporate Credit Facility.
Guarantees
Certain of our rental management agreements in our Exchange & Third-Party Management segment provide for owners of properties we manage to receive specified percentages of rental revenue or guaranteed amounts generated under our management. In these cases, the operating expenses for the rental operations are paid from the revenue generated by the rentals, the owners are then paid their contractual percentages or guaranteed amounts, and we either retain the balance (if any) as our fee or we make up the deficit. At June 30, 2022, our maximum exposure under fixed dollar guarantees was $8 million, of which $1 million, $2 million, $2 million, $1 million, $1 million, and $1 million relate to the remainder of 2022, 2023, 2024, 2025, 2026, and thereafter, respectively.
We have a commitment to an owners’ association that we manage to pay for any shortfall between the actual expenses incurred by the owners’ association and the income received by the owners’ association, in lieu of maintenance fees for unsold inventory. The agreement will terminate on the earlier of: 1) sale of 95% of the total ownership interests in the owners’ association; or 2) written notification of termination by either party. At June 30, 2022, our expected commitment for the remainder of 2022 is $5 million, which will ultimately be recorded as a component of rental expense on our income statement.
Loss Contingencies
In April 2013, KrishnaFebruary 2019, the owners’ association for the St. Regis Residence Club, New York filed a lawsuit in the Supreme Court for the State of New York, New York County, Commercial Division against ILG and Sherrie Narayanseveral of its subsidiaries and other ownerscertain third parties. The operative complaint alleges that the defendants breached their fiduciary duties related to sale and rental practices, aided and abetted certain breaches of 12 residential units (ownersfiduciary duty, engaged in self-dealing as the sponsor and manager of twothe club, tortiously interfered with the management agreement, were unjustly enriched, and engaged in anticompetitive conduct. The plaintiff is seeking unspecified damages, punitive damages and disgorgement of payments under the management and purchase agreements. In February 2022, the Court granted our motion to dismiss the complaint and dismissed with prejudice all claims except one, with respect to which subsequently agreedthe plaintiff was granted leave to release their claims) at the resort formerly known asamend its complaint. The Ritz-Carlton Club & Residences, Kapalua Bay (“Kapalua Bay”)plaintiff has filed an amended complaint and has appealed the dismissal of the other claims.
In April 2019, a purported class-action lawsuit was filed by Alan and Marjorie Helman and others against us in Circuitthe Superior Court of the Virgin Islands, Division of St. Thomas alleging that their fractional interests were devalued by the affiliation of The Ritz-Carlton Club, St. Thomas and other Ritz-Carlton Clubs with our MVCD program. The lawsuit was subsequently removed to the U.S. District Court for Maui County, Hawaii against us, certainthe District of the Virgin Islands. The plaintiffs are seeking unspecified damages, disgorgement of profits, fees and costs.
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We believe we have meritorious defenses to the claims in each of the above matters and intend to vigorously defend each matter.
In the ordinary course of our subsidiaries, Marriott International, certainbusiness, various claims and lawsuits have been filed or are pending against us. A number of its subsidiaries,these lawsuits and claims may exist at any given time. Additionally, the COVID-19 pandemic may give rise to various claims and lawsuits from owners, members and other parties. We record and accrue for legal contingencies when we determine that it is probable that a liability has been incurred and the joint venture in which we have an equity investment that developed and marketed vacation ownership and residential products at Kapalua Bay (the “Joint Venture”). In the original complaint, the plaintiffs alleged that defendants mismanaged fundsamount of the residential owners association (the “Kapalua Bay Association”), createdloss can be reasonably estimated. In making such determinations, we evaluate, among other things, the degree of probability of an unfavorable outcome and, when it is probable that a conflictliability has been incurred, our ability to make a reasonable estimate of interest by permitting their employees to serveloss. We review these accruals each reporting period and make revisions based on the Kapalua Bay Association’s board,changes in facts and failed to disclose documents to which the plaintiffs were allegedly entitled. The amended complaint alleges breach of fiduciary duty, violationscircumstances.
We have not accrued for any of the Hawaii Unfairpending matters described above and Deceptive Trade Practices Act and the Hawaii condominium statute, intentional misrepresentation and concealment, unjust enrichment and civil conspiracy. The relief sought in the amended complaint

includes injunctive relief, repayment of all sums paid to us and our subsidiaries and Marriott International and its subsidiaries, compensatory and punitive damages, and treble damages under the Hawaii Unfair and Deceptive Trade Practices Act. We filed a motion in the Circuit Court to compel arbitration of plaintiffs’ claims. That motion was denied, but on appeal the Hawaii Intermediate Court of Appeals reversed. The Hawaii Supreme Court reversed the decision of the Intermediate Court of Appeals and reinstated the action in Circuit Court, which set the case for trial. We filed a petition with the United States Supreme Court seeking review of the Hawaii Supreme Court’s decision. In January 2016, the U.S. Supreme Court issued an order vacating the Hawaii Supreme Court’s decision and remanding the case with instructions to reconsider its ruling in light of a recent U.S. Supreme Court decision reiterating the obligation of courts to enforce arbitration agreements. On July 14, 2017, the Hawaii Supreme Court issued a decision reaffirming its prior ruling and remanding the case to the Circuit Court for trial. Our motion for reconsideration of that decision was denied on August 9, 2017. We dispute the material allegations in the amended complaint and continue to defend against the action vigorously. Given the inherent uncertainties of litigation, we cannot estimate a range of the potential liability associated with these pending matters, if any, at this time.
In June 2013, Earl C. We have accrued for other claims and Patricia A. Charles, owners of a fractional interest at Kapalua Bay, together with owners of 38 other fractional interests (owners of two of which subsequently agreed to release their claims) at Kapalua Bay, filed an amended complaintlawsuits, but the amount accrued is not material individually or in the Circuit Courtaggregate. For matters not requiring accrual, we do not believe that the ultimate outcome of the Second Circuit for the State of Hawaii against us, certain of our subsidiaries, Marriott International, certain of its subsidiaries, the Joint Venture, and other entities that have equity investmentssuch matters, individually or in the Joint Venture. The plaintiffs allegeaggregate, will materially harm our financial position, cash flows, or overall trends in results of operations based on information currently available. However, legal proceedings are inherently uncertain, and while we believe that the defendants failedour accruals are adequate and/or we have valid defenses to disclose the financial condition of the Joint Venture and the commitment of the defendants to the Joint Venture, and that defendants’ actions constituted fraud and violated the Hawaii Unfair and Deceptive Trade Practices Act, the Hawaii Condominium Property Act and the Hawaii Time Sharing Plans statute. The relief sought includes compensatory and punitive damages, attorneys’ fees, pre-judgment interest, declaratory relief, rescission and treble damages under the Hawaii Unfair and Deceptive Trade Practices Act. The complaint was subsequently further amended to add owners of two additional fractional interests as plaintiffs. The Circuit Court granted our motion to compel arbitration of the claims asserted, byunfavorable rulings could occur that could, individually or in the plaintiffs. Plaintiffs appealed that decisionaggregate, have a material adverse effect on our business, financial condition, or operating results.
Leases That Have Not Yet Commenced
During 2020, we entered into a finance lease arrangement, which was then amended in 2021, for our new global headquarters office building, which is being constructed in Orlando, Florida. The initial lease term is approximately 16 years with total lease payments of $137 million for the aforementioned period. We expect the new office building to the Hawaii Intermediate Court of Appeals and also initiated arbitration. In July 2015, the Intermediate Court of Appeals reversed the decisionbe completed in 2023. Upon commencement of the Circuit Courtlease term, a right-of-use asset and directed that the action be reinstated in the Circuit Court, based on the Hawaii Supreme Court’s decision in the Narayan case discussed above. On October 10, 2017, following the most recent action of the Hawaii Supreme Court in the Narayan case, the Circuit Court set the Charles case for trial beginning in January 2019. 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 potentialcorresponding liability if any, at this time.
In May 2015, we and certain of our subsidiaries were named as defendants in an action filed in the Superior Court of San Francisco County, California, by William and Sharon Petrick and certain other present and former owners of 69 fractional interests at the RCC San Francisco. The plaintiffs allege that the affiliation of the RCC San Francisco with our points-based Marriott Vacation Club Destinations (“MVCD”) program, certain alleged sales practices, and other acts we and the other defendants allegedly took caused an actionable decrease in the value of their fractional interests. The relief sought includes, among other things, compensatory and punitive damages, rescission, and pre- and post-judgment interest. Plaintiffs filed an amended complaint in April 2016. We filed a motion to dismiss, which the Court granted in part and denied in part on September 13, 2017. The Court also granted leave to plaintiffs to file a second amended complaint, which plaintiffs filed on October 17, 2017. We dispute the plaintiffs’ material allegations 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.
In March 2017, RCHFU, L.L.C. and other owners of 232 fractional interests at The Ritz-Carlton Club, Aspen Highlands (“RCC Aspen Highlands”) served an amended complaint in an action pending in the court against us, certain of our subsidiaries, and other third party defendants. The U.S. District Court for the District of Colorado has ordered that no further amendments will be permitted. The amended complaint alleges that the plaintiffs’ fractional interests were devalued by the affiliation of RCC Aspen Highlands and other Ritz-Carlton Clubs withrecorded on our points-based MVCD program. The relief sought includes, among other things, unspecified damages, pre- and post-judgment interest, and attorneys’ fees. We filed a motion to dismiss the amended complaint, which remains pending. We dispute the plaintiffs’ material allegations 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.balance sheet.
In May 2016, we, certain of our subsidiaries, and other third parties were named as defendants in an action filed in the U.S. District Court for the Middle District of Florida by Anthony and Beth Lennen. The case is filed as a putative class action; the plaintiffs seek to represent a class consisting of themselves and all other purchasers of MVCD points, from inception of the MVCD program in June 2010 to the present, as well as all individuals who own or have owned weeks in any resorts for which weeks have been added to the MVCD program. Plaintiffs challenge the characterization of the beneficial interests in the MVCD trust that are sold to customers as real estate interests under Florida law. They also challenge the structure of the trust and associated operational aspects of the trust product. The relief sought includes, among other things, declaratory relief, an unwinding of the MVCD product, and punitive damages. On September 15, 2016, we filed a motion to dismiss the complaint

12.SECURITIZED DEBT
and a motion to stay the case pending referral of certain questions to Florida state regulators. On September 27, 2017, the Court granted the motion to dismiss and denied the motion to stay. The Court granted leave to plaintiffs to file an amended complaint, which plaintiffs filed on October 25, 2017. We dispute the plaintiffs’ material allegations 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.
Other
In September 2017, over 20 of our properties were impacted by Hurricane Irma and Hurricane Maria and, as a result, we have accrued $1.7 million of expense for the estimated property damage insurance deductibles, which was recorded in the Gains and other income, net line on the Statement of Income.
During 2016, our properties in Hilton Head and Myrtle Beach, South Carolina were temporarily closed as a result of damage from Hurricane Matthew. In the 2017 third quarter, we received $8.7 million in net insurance proceeds related to the settlement of business interruption insurance claims arising from Hurricane Matthew, which were recorded in the Gains and other income line on the Statement of Income.
9. DEBT
The following table provides detail on our securitized debt, balances, net of unamortized debt discount and issuance costs:costs.
($ in millions)At June 30, 2022At December 31, 2021
Vacation ownership notes receivable securitizations, gross(1)
$1,868 $1,877 
Unamortized debt discount and issuance costs(22)(21)
$1,846 $1,856 
($ in thousands)At September 30, 2017 At December 30, 2016
Vacation ownership notes receivable securitizations, gross(1)
$906,701
 $738,362
Unamortized debt issuance costs(11,296) (9,174)
 895,405
 729,188
    
Convertible notes, gross(2)
230,000
 —
Unamortized debt discount and issuance costs(39,261) —
 190,739
 —
    
Non-interest bearing note payable63,558
 —
Unamortized debt discount(3)
(3,881) —
 59,677
 —
    
Other debt, gross196
 834
Unamortized debt issuance costs(16) (19)
 180
 815
    
Capital leases7,221
 7,221
 $1,153,222
 $737,224
_________________________
_________________________
(1)Interest rates as of June 30, 2022 range from 1.5% to 4.6%, with a weighted average interest rate of 2.7%.
(1)
Interest rates as of September 30, 2017 range from 2.2% to 6.3% with a weighted average interest rate of 2.5%.
(2)
The effective interest rate as of September 30, 2017 was 4.7%.
(3)
Debt discount based on imputed interest rate of 6.0%.
All of our securitized debt is non-recourse to MVWC. See Footnote No. 12,16 “Variable Interest Entities,”Entities” for a discussion of the collateral for the non-recourse debt associated with theour securitized vacation ownership notes receivable and our Warehouse Credit Facility.

debt.
The following table shows scheduled future principal payments for our securitized debt as of SeptemberJune 30, 2017:2022.
Vacation Ownership
Notes Receivable Securitizations
($ in millions)
Payments Year
2022, remaining$90 
2023183 
2024188 
2025189 
2026191 
Thereafter1,027 
$1,868 
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($ in thousands)
Vacation Ownership
Notes Receivable
Securitizations(1)
 Convertible Notes Non-Interest Bearing Note Payable 
Other
Debt
 
Capital
Leases
 Total
Debt Principal Payments Year           
2017, remaining$26,213
 $—
 $—
 $4
 $—
 $26,217
201898,949
 —
 32,680
 4
 7,221
 138,854
201996,249
 —
 30,878
 4
 —
 127,131
202098,215
 —
 —
 5
 —
 98,220
202199,010
 —
 —
 5
 —
 99,015
Thereafter488,065
 230,000
 —
 174
 —
 718,239
 $906,701
 $230,000
 $63,558
 $196
 $7,221
 $1,207,676
Vacation Ownership Notes Receivable Securitizations
_________________________
(1)
The debt associated with our vacation ownership notes receivable securitizations is non-recourse to us.
As the contractual termsEach of the underlying securitized vacation ownership notes receivable determine the maturities of the non-recourse debt associated with them, actual maturities may occur earlier than shown above due to prepayments by the vacation ownership notes receivable obligors.
We paid cash for interest, net of amounts capitalized, of $15.6 million and $14.6 million in the 2017 first three quarters and the 2016 first three quarters, respectively.
Debt Associated with Vacation Ownership Notes Receivable Securitizations
During the 2017 third quarter, we completed the securitization of a pool of $360.8 million of vacation ownership notes receivable. In connection with the securitization, investors purchased in a private placement $350.0 million in vacation ownership loan backed notes from the MVW Owner Trust 2017-1 (the “2017-1 Trust”). Three classes of vacation ownership loan backed notes were issued by the 2017-1 Trust: $276.0 million of Class A Notes, $46.9 million of Class B Notes and $27.1 million of Class C Notes. The Class A Notes have an interest rate of 2.42 percent, the Class B Notes have an interest rate of 2.75 percent and the Class C Notes have an interest rate of 2.99 percent, for an overall weighted average interest rate of 2.51 percent.
Each of the transactions in which we have securitized vacation ownership notes receivable contains various triggers relating to the performance of the underlying vacation ownership notes receivable. If a pool of securitized vacation ownership notes receivable fails to perform within the pool’s established parameters (default or delinquency thresholds vary by transaction), transaction provisions effectively redirect the monthly excess spread we would otherwise receive from that pool (attributable to the interests we retained) to accelerate the principal payments to investors (taking into account the subordination of the different tranches to the extent there are multiple tranches) until the performance trigger is cured. During the 2017 first three quarters,second quarter of 2022, and as of SeptemberJune 30, 2017, no2022, we had 14 securitized vacation ownership notes receivable pools outstanding, none of which were out of compliance with their respective established parameters.
As the contractual terms of September 30, 2017, we had 8the underlying securitized vacation ownership notes receivable pools outstanding.
Convertible Notesdetermine the maturities of the non-recourse debt associated with them, actual maturities may occur earlier than shown above due to prepayments by the vacation ownership notes receivable obligors.
During the 2017 thirdsecond quarter of 2022, we issued $230.0 million aggregate principal amount of our 1.50% Convertible Senior Notes due 2022 (the “Convertible Notes”), which includedcompleted the exercise in full of the over-allotment option we granted to the initial purchasers of the Convertible Notes to purchase up to an additional $30.0 million aggregate principal amount of Convertible Notes. The Convertible Notes are governed by an indenture dated September 25, 2017 (the “Indenture”) between us and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). We received net proceeds from the offering of approximately $223.7 million after adjusting for debt issuance costs, including the discount to the initial purchasers.
The Convertible Notes bear interest at a rate of 1.50 percent, payable in cash semi-annually on March 15 and September 15 of each year beginning on March 15, 2018. The Convertible Notes mature on September 15, 2022, unless repurchased or converted in accordance with their terms prior to that date. On or after June 15, 2022, and until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Convertible Notes at their option. The Convertible Notes are convertible at an initial rate of 6.7482 shares of common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $148.19 per share of our common stock). The conversion rate is subject to adjustment for certain events as described in the Indenture. Upon conversion,

we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. It is our intent to settle conversions of the Convertible Notes through combination settlement, which contemplates repayment in cash of the principal amount and repayment in shares of our common stock of any excess of the conversion value over the principal amount.
Holders may convert their Convertible Notes prior to June 15, 2022 only under the following circumstances:
during any calendar quarter commencing after the calendar quarter ending on December 31, 2017 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 percent of the conversion price on each applicable trading day;
during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of that five consecutive trading day period was less than 98 percent of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or
upon the occurrence of specified corporate events as described in the Indenture.
We may not redeem the Convertible Notes prior to their maturity date, and no sinking fund is provided for them. If we undergo a fundamental change, as described in the Indenture, subject to certain conditions, holders may require us to repurchase for cash all or any portion of their Convertible Notes. The repurchase price as a resultsecuritization of a fundamental change is equal to 100 percentpool of the principal amount$383 million of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. If certain fundamental changes referred to in the Indenture as make-whole fundamental changes occur, the conversion rate applicable to the Convertible Notes may increase.
The Convertible Notes are our general senior unsecured obligations, ranking senior in right of payment to any future debt that is expressly subordinated in right of payment to the Convertible Notes and equally in right of payment with all of our existing and future liabilities that are not so subordinated. The Convertible Notes are effectively subordinated to all of our existing and future secured debt to the extent of the value of the assets securing such debt. The Convertible Notes are structurally subordinated to all of the existing and future liabilities and obligations of our subsidiaries. The Convertible Notes are not guaranteed by any of our subsidiaries.
There are no financial or operating covenants related to the Convertible Notes. The Indenture contains customary events of default with respect to the Convertible Notes and provides that upon the occurrence and continuation of certain events of default, the Trustee or the holders of at least 25 percent in aggregate principal amount of the Convertible Notes then outstanding, may declare all principal of, and accrued and any unpaid interest on, the Convertible Notes then outstanding to be immediately due and payable. In case of certain events of bankruptcy or insolvency involving the Company or certain of its subsidiaries, all of the principal of and accrued and unpaid interest on the Convertible Notes will automatically become immediately due and payable.
In accounting for the issuance of the Convertible Notes, we separated the Convertible Notes into liability and equity components. We allocated $196.8vacation ownership notes receivable. Approximately $342 million of the Convertible Notes tovacation ownership notes receivable were purchased by MVW 2022-1 LLC (the “2022-1 LLC”) during the liability component,second quarter of 2022, and $33.2as of June 30, 2022, the 2022-1 LLC held $40 million to the equity component. The excess of the principal amount ofproceeds, which was released as the liability component over its carrying amount is amortizedremaining vacation ownership notes receivable were purchased subsequent to interest expense over the term of the Convertible Notes using the effective interest method. The equity component will not be remeasured as long as it continues to meet the conditions for equity classification.
We incurred issuance costs of $7.3 million related to the Convertible Notes. Issuance costs were allocated to the liability and equity components based on their relative values. Issuance costs attributable to the liability component are being amortized to interest expense over the term of the Convertible Notes, and issuance costs attributable to the equity component are included along with the equity component in stockholders' equity.
The following table shows the net carrying value of the Convertible Notes at SeptemberJune 30, 2017:
($ in thousands) 
Liability component 
Principal amount$230,000
Unamortized debt discount(33,076)
Unamortized debt issuance costs(6,185)
 $190,739
  
Equity component, net of issuance costs$32,573

The following table shows the total interest expense related to the Convertible Notes for the 2017 third quarter and the 2017 first three quarters:
($ in thousands) 
Contractual interest expense$58
Amortization of debt discount148
Amortization of debt issuance costs26
 $232
Convertible Note Hedges and Warrants2022.
In connection with the offeringsecuritization, investors purchased $375 million in vacation ownership loan backed notes issued by the 2022-1 LLC in a private placement. The 2022-1 LLC issued 4 classes of the Convertiblevacation ownership loan backed notes: $220 million of Class A Notes, we entered into privately-negotiated convertible note hedge transactions with respect to our common stock with two counterparties on each$77 million of September 20, 2017Class B Notes, $48 million of Class C Notes, and September 21, 2017 (“Convertible Note Hedges”), covering a total$30 million of approximately 1.55 million shares of our common stock at a cost of $33.2 million.Class D Notes. The Convertible Note Hedges are subject to anti-dilution provisions substantially similar to those of the ConvertibleClass A Notes have a strike price that initially corresponds toan interest rate of 4.15%, the initial conversion priceClass B Notes have an interest rate of 4.40%, the ConvertibleClass C Notes are exercisable by us upon any conversion under the Convertible Notes, and expire when the Convertible Notes mature. The costhave an interest rate of the Convertible Note Hedges is expected to be tax deductible as an original issue discount over the life of the Convertible Notes, as the Convertible Notes5.23%, and the Convertible Note Hedges representClass D Notes have an integrated debt instrumentinterest rate of 7.35%, for tax purposes. The costan overall weighted average interest rate of 4.59%. Of the Convertible Note Hedges was recorded as a reduction of Additional paid-in capital on our Balance Sheet as of September 30, 2017.
Concurrently with the entry into the Convertible Note Hedges, we separately entered into privately-negotiated warrant transactions (the “Warrants”), whereby we sold to the counterparties to the Convertible Note Hedges warrants to acquire, collectively, subject to anti-dilution adjustments, approximately 1.55$375 million shares of our common stock at an initial strike price of $176.68 per share. We received aggregate proceeds of approximately $20.3 million from the sale of the Warrants to the counterparties. Taken together, the Convertible Note Hedges and the Warrants are generally expected to reduce the potential dilution to our common stock (or, in the event the conversion of the Convertible Notes is settled in cash, to reduce our cash payment obligation) in the event that at the time of conversion our stock price exceeds the conversion price under the Convertible Notes and to effectively increase the overall conversion price from $148.19 (or a conversion premium of 30 percent) to $176.68 per share (or a conversion premium of 55 percent). The Warrants will expire in ratable portions on a series of expiration dates commencing on December 15, 2022. The proceeds from the issuancetransaction, approximately $98 million was used to repay all outstanding amounts previously drawn under our Warehouse Credit Facility (as defined below), approximately $7 million was used to pay transaction expenses and fund required reserves, and the remaining $176 million will be used for general corporate purposes. In connection with this securitization, we redeemed the remaining vacation ownership loan backed notes issued in a prior securitization transaction for approximately $38 million. The majority of the Warrantsloans acquired through the redemption were recorded as an increase to Additional paid-in capital on our Balance Sheet as of September 30, 2017.purchased by the 2022-1 LLC.
The Convertible Notes, the Convertible Note Hedges and the Warrants are transactions that are separate from each other. Holders of any such instrument have no rights with respectSubsequent to the other instruments. As of September 30, 2017, no Convertible Note Hedges or Warrants have been exercised.
Revolving Corporate Credit Facility
During the 2017 third quarter, we terminated our $200.0 million revolving credit facility (the “Previous Revolving Corporate Credit Facility”) and entered into a new Revolving Corporate Credit Facility with a borrowing capacity of $250.0 million, including a letter of credit sub-facility of $30.0 million, that terminates on August 16, 2022. All outstanding cash borrowings under our Previous Revolving Corporate Credit Facility were repaid in full prior to termination. The Revolving Corporate Credit Facility will provide support for our business, including ongoing liquidity and letters of credit. Borrowings under this facility generally bear interest at a floating rate plus an applicable margin that varies from 0.50 percent to 2.75 percent depending on the type of loan and our credit rating. In addition, we pay a commitment fee on the unused availability under the Revolving Corporate Credit Facility at a rate that varies from 20 basis points per annum to 40 basis points per annum, also depending on our credit rating.
No cash borrowings were outstanding as of September 30, 2017 under our Revolving Corporate Credit Facility. Any amounts borrowed under that facility, as well as obligations with respect to letters of credit issued pursuant to that facility, are secured by a perfected first priority security interest in substantially allend of the assetssecond quarter of 2022, the borrower under,2022-1 LLC purchased the remaining $41 million of vacation ownership notes receivable and guarantors of, that facility (which include Marriott Vacations Worldwide and each of our direct and indirect, existing and future, domestic subsidiaries, excluding certain bankruptcy remote special purpose subsidiaries), in each case including inventory, subject to certain exceptions. As of September 30, 2017, we were in compliance with the applicable financial and operating covenants under the Revolving Credit Facility.$40 million was released from restricted cash.

Warehouse Credit Facility
The WarehouseOur warehouse credit facility (the “Warehouse Credit Facility,Facility”), which has a borrowing capacity of $250.0$350 million, allows for the securitization of vacation ownership notes receivable on a revolving non-recourse basis. During the 2017 thirdfirst quarter we amended certain agreements associated with this facility (the “Warehouse Amendment”). The Warehouse Amendment requires us to comply with the financial covenants in the Revolving Corporate Credit Facility and eliminates the requirement to comply with the covenants contained in the Previous Revolving Corporate Credit Facility. The Warehouse Amendment did not modify the borrowing capacity or the term of the Warehouse Credit Facility. The Warehouse Credit Facility terminates on March 7, 2019 and if not renewed, any amounts outstanding thereunder would become due and payable 13 months after termination, at which time all principal and interest collected with respect to the vacation ownership notes receivable held in the Warehouse Credit Facility would be redirected to the lenders to pay down the outstanding debt under the facility. The advance rate for vacation ownership notes receivable securitized using the Warehouse Credit Facility varies based on the characteristics of the securitized vacation ownership notes receivable. We also pay unused facility and other fees under the Warehouse Credit Facility.
During the 2017 second quarter,2022, we securitized vacation ownership notes receivable under our Warehouse Credit Facility. The carrying amount of the vacation ownership notes receivable securitized was $59.1$125 million. The average advance rate was 85 percent,81%, which resulted in gross proceeds of $50.3$102 million. Net proceeds were $50.0$101 million due to the funding of reserve accounts in the amount of $0.3$1 million.
As of SeptemberJune 30, 2017,2022, there were no cash borrowings outstanding under our Warehouse Credit Facility. We generally expect
Subsequent to securitizethe end of the second quarter of 2022, we amended certain agreements associated with our vacation ownership notes receivable, including any vacation ownership notes receivable held inWarehouse Credit Facility (the “Warehouse Amendment”). The Warehouse Amendment increased the borrowing capacity of the existing facility from $350 million to $425 million and extended the revolving period from April 21, 2023 to July 28, 2024. The Warehouse Amendment also modified the interest rate applicable to most borrowings under the Warehouse Credit Facility. The Warehouse Credit Facility now uses a U.S. Treasury overnight financing rate (Secured Overnight Financing Rate or “SOFR”) plus a 0.10% adjustment (“Adjusted SOFR”) replacing 1-month LIBOR as its benchmark interest rate. As part of the Warehouse Amendment, the credit spread remained at 135 basis points over Adjusted SOFR. The Warehouse Amendment made no other material changes to the Warehouse Credit Facility.
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13.DEBT
The following table provides detail on our debt balances, net of unamortized debt discount and issuance costs.
($ in millions)At June 30, 2022At December 31, 2021
Senior Secured Notes
2025 Notes$250 $250 
Unamortized debt discount and issuance costs(2)(2)
248 248 
Senior Unsecured Notes
2028 Notes350 350 
Unamortized debt discount and issuance costs(4)(4)
346 346 
2029 Notes500 500 
Unamortized debt discount and issuance costs(6)(7)
494 493 
Corporate Credit Facility
Term Loan784 784 
Unamortized debt discount and issuance costs(7)(8)
777 776 
Convertible Notes
2022 Convertible Notes230 230 
Unamortized debt discount and issuance costs(5)(6)
225 224 
2026 Convertible Notes575 575 
Unamortized debt discount and issuance costs(11)(114)
564 461 
Non-interest bearing note payable10 — 
Finance Leases84 83 
$2,748 $2,631 
The following table shows scheduled principal payments for our debt, excluding finance leases, as of June 30, 2022.
($ in millions)2025
Notes		2028
Notes		2029
Notes		Term
Loan		2022 Convertible Notes2026 Convertible NotesNon-Interest Bearing Note PayableTotal
Year Payments
2022, remaining$— $— $— $— $230 $— $— $230 
2023— — — — — — 6 6 
2024— — — — — — 4 4 
2025250 — — 784 — — — 1,034 
2026— — — — — 575 — 575 
Thereafter— 350 500 — — — — 850 
$250 $350 $500 $784 $230 $575 $10 $2,699 
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Senior Notes
Our senior notes include:
•$500 million aggregate principal amount of 6.125% Senior Secured Notes due 2025 issued in the ABS market oncesecond quarter of 2020 with a maturity date of September 15, 2025 (the “2025 Notes”), of which $250 million of principal was outstanding as of June 30, 2022.
•$350 million aggregate principal amount of 4.750% Senior Unsecured Notes due 2028 issued in the fourth quarter of 2019 with a maturity date of January 15, 2028 (the “2028 Notes”).
•$500 million aggregate principal amount of 4.500% Senior Unsecured Notes due 2029 issued in the second quarter of 2021 with a maturity date of June 15, 2029 (the “2029 Notes”).
Corporate Credit Facility
Our corporate credit facility (“Corporate Credit Facility”), which provides support for our business, including ongoing liquidity and letters of credit, includes a $900 million term loan facility (the “Term Loan”), which matures on August 31, 2025, and bears interest at LIBOR plus 1.75%, and a revolving credit facility (the “Revolving Corporate Credit Facility”) which includes a letter of credit sub-facility of $75 million.
During the first quarter of 2022, we entered into an amendment to the Revolving Corporate Credit Facility (the “Revolver Amendment”), which increased the borrowing capacity of the existing revolving credit facility from $600 million to $750 million and extended the maturity date from August 31, 2023 to March 31, 2027. The Revolver Amendment modified the interest rate applicable to borrowings under the Revolving Corporate Credit Facility to reference SOFR and to be based on “Adjusted Term SOFR,” which is calculated as Term SOFR (as defined in the Revolver Amendment), plus a 0.10% adjustment, subject to a 0.00% floor. Interest rates for other select non-U.S. dollar borrowings were also amended to be based on updated variable rate indices. The applicable margins with respect to the Revolving Corporate Credit Facility were amended to be based on leverage-based measures instead of credit ratings-based measures. The Revolver Amendment made no other material changes to the Corporate Credit Facility.
Prior to 2020, we entered into $250 million of interest rate swaps under which we pay a fixed rate of 2.9625% and receive a floating interest rate through September 2023 and $200 million of interest rate swaps under which we pay a fixed rate of 2.2480% and receive a floating interest rate through April 2024, in each case to hedge a portion of our interest rate risk on the Term Loan. We also entered into a $100 million interest rate collar with a cap strike rate of 2.5000% and a floor strike rate of 1.8810% through April 2024 to further hedge our interest rate risk on the Term Loan. Both the interest rate swaps and the interest rate collar have been designated and qualify as cash flow hedges of interest rate risk and recorded in Other assets on our Balance Sheet as of June 30, 2022 and in Other liabilities on our Balance Sheet as of December 31, 2021. We characterize payments we make in connection with these derivative instruments as interest expense and a reclassification of accumulated other comprehensive income or loss for presentation purposes.
The following table reflects the activity in accumulated other comprehensive income or loss related to our derivative instruments during the first half of 2022 and 2021. There were no reclassifications to the Income Statement for either of the periods presented below.
($ in millions)20222021
Derivative instrument adjustment balance, January 1$(18)$(39)
Other comprehensive gain before reclassifications16 6 
Derivative instrument adjustment balance, March 31(2)(33)
Other comprehensive gain before reclassifications7 3 
Derivative instrument adjustment balance, June 30$5 $(30)
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Convertible Notes
2022 Convertible Notes
During 2017, we issued $230 million of aggregate principal amount of convertible senior notes (the “2022 Convertible Notes”) that bear interest at a rate of 1.50%, payable in cash semi-annually. The 2022 Convertible Notes mature on September 15, 2022, unless repurchased or converted in accordance with their terms prior to that date.
The conversion rate is subject to adjustment for certain events as described in the indenture governing the notes, and was subject to adjustment as of June 30, 2022 to 6.8540 shares of common stock per year.$1,000 principal amount of 2022 Convertible Notes (equivalent to a conversion price of $145.90 per share of our common stock), as a result of the dividends we declared since issuance of the 2022 Convertible Notes that were greater than the quarterly dividend we paid when the 2022 Convertible Notes were issued. As of June 30, 2022, the effective interest rate was 10.85%.
The following table reflects the activity related to our 2022 Convertible Notes during the first half of 2022.
($ in millions)Principal AmountUnamortized Debt DiscountUnamortized Debt Issuance CostsDebt, netCarrying Amount of Equity Component, net of Issuance Costs
At December 31, 2021$230 $(5)$(1)$224 $33 
Adoption of ASU 2020-06(1)
— 5 — 5 (33)
At January 1, 2022230 — (1)229 — 
Amortization of debt issuance costs— — 1 1 — 
Fair value of conversion option transferred to other liabilities(2)
— (5)— (5)— 
At June 30, 2022$230 $(5)$— $225 $— 
________________________
(1)As a result of the adoption of ASU 2020-06 during the first quarter of 2022, we no longer accounted for the liability and equity components of the convertible notes separately, and we reclassified the conversion feature related to the 2022 Convertible Notes from equity to liabilities. Prior period amounts have not been adjusted to reflect our adoption of ASU 2020-06 under the modified retrospective method. See Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” for information on our adoption of ASU 2020-06.
(2)We issued notice of our intent to settle the 2022 Convertible Notes in cash, which became irrevocable on June 15, 2022, and as a result, our previous exception to derivative accounting no longer applied and we were required to fair value the conversion feature on the 2022 Convertible Notes at that time. The fair value of the conversion feature of $5 million was recorded as a debt discount and a corresponding increase to Other liabilities on our balance sheet. Subsequent changes to the fair value of the conversion feature will be recorded on our income statement.
The following table shows interest expense information related to the 2022 Convertible Notes.
Three Months EndedSix Months Ended
($ in millions)June 30, 2022June 30, 2021June 30, 2022June 30, 2021
Contractual interest expense$1 $1 $2 $2 
Amortization of debt discount— 2 — 4 
Amortization of debt issuance costs1 — 1 — 
$2 $3 $3 $6 
2022 Convertible Note Hedges and Warrants
In connection with the offering of the 2022 Convertible Notes, we concurrently entered into the following privately-negotiated separate transactions: convertible note hedge transactions with respect to our common stock (“2022 Convertible Note Hedges”), covering a total of approximately 1.6 million shares of our common stock, and warrant transactions (“2022 Warrants”), whereby we sold to the counterparties to the 2022 Convertible Note Hedges warrants to acquire approximately 1.6 million shares of our common stock. As of June 30, 2022, the strike prices of the 2022 Convertible Note Hedges and the 2022 Warrants were subject to adjustment to approximately $147.99 and $176.45, respectively, and no 2022 Convertible Note Hedges or 2022 Warrants have been exercised.
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The 2022 Note Hedges are required to follow the same settlement provisions as the 2022 Convertible Notes. As such, upon issuance of the irrevocable notice of our intent to settle the 2022 Convertible Notes in cash, our previous exception to the derivative accounting for the 2022 Convertible Note Hedges no longer applied and we were required to fair value the 2022 Convertible Note Hedges at that time. The fair value of the 2022 Convertible Note Hedges of $6 million was estimated using the Black-Scholes model based on historical and implied volatility and the U.S. Treasury risk-free rate (Level 2 inputs) and recorded in Other assets and Additional paid-in capital on our balance sheet. Subsequent changes to the fair value of the 2022 Convertible Note Hedges will be recorded on our income statement.
2026 Convertible Notes
During 2021, we issued $575 million aggregate principal amount of convertible senior notes (the “2026 Convertible Notes”) that bear interest at a rate of 0.00%. The 2026 Convertible Notes mature on January 15, 2026, unless repurchased or converted in accordance with their terms prior to that date.
The conversion rate is subject to adjustment for certain events as described in the indenture governing the notes, and was subject to adjustment as of June 30, 2022 to 5.9395 shares of common stock per $1,000 principal amount of 2026 Convertible Notes (equivalent to a conversion price of $168.36 per share of our common stock), as a result of the dividends we declared since issuance of the 2026 Convertible Notes that were greater than the quarterly dividend we paid when the 2026 Convertible Notes were issued. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election. As of June 30, 2022, the effective interest rate was 0.55%.
The following table shows the net carrying value of the 2026 Convertible Notes.
($ in millions)At June 30, 2022At December 31, 2021
Liability component
Principal amount$575 $575 
Unamortized debt discount(1)
— (104)
Unamortized debt issuance costs(11)(10)
Net carrying amount of the liability component$564 $461 
Carrying amount of equity component, net of issuance costs(1)
$— $117 
________________________
(1)As a result of adoption of ASU 2020-06 during the first quarter of 2022, we no longer account for the liability and equity components of the convertible notes separately, and we reclassified the conversion feature related to the 2026 Convertible Notes from equity to liabilities. Prior period amounts have not been adjusted to reflect our adoption of ASU 2020-06 under the modified retrospective method. See Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” for information on our adoption of ASU 2020-06.
The following table shows interest expense information related to the 2026 Convertible Notes.
Three Months EndedSix Months Ended
($ in millions)June 30, 2022June 30, 2021June 30, 2022June 30, 2021
Amortization of debt discount$— $5 $— $10 
Amortization of debt issuance costs— 1 1 1 
$— $6 $1 $11 
2026 Convertible Note Hedges and Warrants
In connection with the offering of the 2026 Convertible Notes, we concurrently entered into the following privately-negotiated separate transactions: convertible note hedge transactions with respect to our common stock (“2026 Convertible Note Hedges”), covering a total of approximately 3.4 million shares of our common stock, and warrant transactions (“2026 Warrants”), whereby we sold to the counterparties to the 2026 Convertible Note Hedges, warrants to acquire approximately 3.4 million shares of our common stock. As of June 30, 2022, the strike prices of the 2026 Convertible Note Hedges and the 2026 Warrants were subject to adjustment to approximately $168.36 and $210.45, respectively, and no 2026 Convertible Note Hedges or 2026 Warrants have been exercised.
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Security and Guarantees
Amounts borrowed under the Corporate Credit Facility and the 2025 Notes, as well as obligations with respect to letters of credit issued pursuant to the Corporate Credit Facility, are secured by a perfected first priority security interest in substantially all of the assets of the borrowers under, and guarantors of, that facility (which include MVWC and certain of our direct and indirect, existing and future, domestic subsidiaries, excluding certain bankruptcy remote special purpose subsidiaries), in each case including inventory, subject to certain exceptions. In addition, the Corporate Credit Facility, the 2026 Convertible Notes, the 2025 Notes, the 2028 Notes, and the 2029 Notes are guaranteed by MVWC and certain of our direct and indirect, existing and future, domestic subsidiaries, excluding bankruptcy remote special purpose subsidiaries.
Non-Interest Bearing Note Payable
During the 2017 secondfirst quarter of 2022, we issued a non-interest bearing note payable in connection with the acquisition of vacation ownership units located on the Big Island of Hawaii.in Bali, Indonesia. See Footnote No. 5,3 “Acquisitions and Dispositions,”Dispositions” for additional information regardingon this transaction.
10.
14.SHAREHOLDERS’ EQUITY
Marriott Vacations Worldwide has 100,000,000 authorized shares of common stock, par value of $0.01 per share. At SeptemberJune 30, 2017,2022, there were 36,857,18675,741,585 shares of Marriott Vacations Worldwide common stock issued, of which 26,494,04740,364,584 shares were outstanding and 10,363,13935,377,001 shares were held as treasury stock. At December 30, 2016,31, 2021, there were 36,633,86875,519,049 shares of Marriott Vacations Worldwide common stock issued, of which 26,990,30642,283,378 shares were outstanding and 9,643,56233,235,671 shares were held as treasury stock. Marriott Vacations Worldwide has 2,000,000 authorized shares of preferred stock, par value of $0.01 per share, none of which were issued or outstanding as of SeptemberJune 30, 20172022 or December 30, 2016.
The following table details changes in shareholders’ equity during three quarters ended September 30, 2017:
($ in thousands)Common Stock 
Treasury
Stock
 
Additional
Paid-In
Capital
 
Accumulated
Other
Comprehensive
Income
 
Retained
Earnings
 
Total
Equity
Balance at December 30, 2016$366
 $(606,631) $1,162,283
 $5,460
 $346,341
 $907,819
Impact of adoption of ASU 2016-09—
 —
 371
 ��
 (371) —
Opening balance 2017366
 (606,631) 1,162,654
 5,460
 345,970
 907,819
Net income—
 —
 —
 —
 118,738
 118,738
Foreign currency translation adjustments—
 —
 —
 11,626
 —
 11,626
Derivative instrument adjustment—
 —
 —
 70
 —
 70
Amounts related to share-based compensation3
 —
 1,933
 —
 —
 1,936
Repurchase of common stock—
 (83,067) —
 —
 —
 (83,067)
Dividends—
 —
 —
 —
 (28,512) (28,512)
Equity component of convertible notes, net of issuance costs—
 —
 32,573
 —
 —
 32,573
Purchase of convertible note hedges—
 —
 (33,235) —
 —
 (33,235)
Issuance of warrants—
 —
 20,332
 —
 —
 20,332
Employee stock plan issuance—
 564
 378
 —
 —
 942
Balance at September 30, 2017$369
 $(689,134) $1,184,635
 $17,156
 $436,196
 $949,222

31, 2021.
Share Repurchase Program
The following table summarizesFrom time to time, with the approval of our Board of Directors, we may undertake programs to purchase our own shares (each, a “Share Repurchase Program” and collectively, the “Share Repurchase Programs”). During the third quarter of 2021, our Board of Directors authorized us to purchase shares of our common stock under a Share Repurchase Program for an aggregate purchase price not to exceed $250 million, prior to December 31, 2022. During the first quarter of 2022, our Board of Directors authorized the purchase of up to an additional $300 million of our common stock under this program, as well as the extension of the term of this program to March 31, 2023.
As of June 30, 2022, approximately $160 million remained available for share repurchase activityrepurchases under our current share repurchase program:the Share Repurchase Program.
($ in thousands, except per share amounts)Number of Shares Repurchased Cost of Shares Repurchased Average Price Paid per Share
As of December 30, 20169,672,629
 $608,439
 $62.90
For the 2017 first three quarters728,385
 83,067
 114.04
As of September 30, 201710,401,014
 $691,506
 $66.48
On August 1, 2017,Subsequent to the end of the second quarter of 2022, our Board of Directors authorized the repurchase of up to 1.0an additional $500 million additional shares of our common stock, under our existing share repurchase program and extendedas well as the durationextension of the program through May 31, 2018. As of September 30, 2017, our Board of Directors had authorized the repurchase of an aggregate of up to 11.9 million shares of our common stock under the share repurchase program since the initiationterm of the program in October 2013. Share Repurchase Program to June 30, 2023.
Share repurchases may be made through open market purchases, privately negotiated transactions, block transactions, tender offers, accelerated share repurchase agreements or otherwise. The specific timing, amount and other terms of the repurchases will depend on market conditions, corporate and regulatory requirements, contractual restrictions, and other factors. Acquired shares of our common stock are held as treasury shares carried at cost in our Financial Statements. In connection with the repurchase program,Share Repurchase Program, we are authorized to adopt one or more trading plans pursuant to the provisions of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.
As of September 30, 2017, 1.5 million shares remained available for repurchase under the authorization approved by our Board of Directors. The authorization for the share repurchase programcurrent Share Repurchase Program may be suspended, terminated, increased or decreased by our Board of Directors at any time without prior notice. Acquired shares of our common stock are currently held as treasury shares and carried at cost in our Financial Statements.
The following table summarizes share repurchase activity under our Share Repurchase Programs:
($ in millions, except per share amounts)Number of Shares RepurchasedCost of Shares RepurchasedAverage Price
Paid per Share
As of December 31, 202117,681,395 $1,418 $80.17 
For the first half of 20222,187,336 312 $143.02 
As of June 30, 202219,868,731 $1,730 $87.09 
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Dividends
We declared cash dividends to holders of common stock during the 2017 first three quartershalf of 2022 as follows:
Declaration DateShareholder Record DateDistribution DateDividend per Share
February 9, 2017February 23, 2017March 9, 2017$0.35
May 11, 2017May 25, 2017June 8, 2017$0.35
September 7, 2017September 21, 2017October 5, 2017$0.35
follows. Any future dividend payments will be subject to the restrictions imposed under the agreements covering our debt, and Board approval, and thereapproval. There can be no assurance that we will pay dividends in the future.
Declaration DateShareholder Record DateDistribution DateDividend per Share
February 18, 2022March 3, 2022March 17, 2022$0.62
May 12, 2022May 26, 2022June 9, 2022$0.62
11. Noncontrolling Interests - Owners’ Associations
We consolidate certain owners’ associations. Noncontrolling interests represent the portion of the owners’ associations related to third-party vacation ownership interest owners. Noncontrolling interests of $1 million and $10 million, as of June 30, 2022 and December 31, 2021, respectively, are included on our Balance Sheets as a component of equity.
15.SHARE-BASED COMPENSATION
We maintain the Marriott Vacations Worldwide Corporation Stock and Cash2020 Equity Incentive Plan (the “Stock“MVW Equity Plan”) for the benefit of our officers, directors, and employees. Under the StockMVW Equity Plan, we are authorized to award: (1) restricted stock units (“RSUs”) of our common stock, (2) SARsstock appreciation rights (“SARs”) relating to our common stock, and (3) stock options to purchase our common stock. A total of 61.8 million shares are authorized for issuance pursuant to grants under the StockMVW Equity Plan. As of SeptemberJune 30, 2017, 1.42022, approximately 1.0 million shares were available for grants under the StockMVW Equity Plan.
The following table details our share-based compensation expense related to award grants to our officers, directors, and employees for the following periods:employees:
  Quarter Ended Year to Date Ended
  September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
($ in thousands) (92 days) (84 days) (274 days) (252 days)
Service based RSUs $2,367
 $2,065
 $7,814
 $6,618
Performance based RSUs 904
 560
 2,775
 2,003
  3,271
 2,625
 10,589
 8,621
SARs 627
 514
 1,760
 1,374
Stock options —
 —
 —
 —
  $3,898
 $3,139
 $12,349
 $9,995

Three Months EndedSix Months Ended
($ in millions)June 30, 2022June 30, 2021June 30, 2022June 30, 2021
Service-based RSUs$10 $9 $17 $15 
Performance-based RSUs1 2 1 3 
11 11 18 18 
SARs1 3 2 4 
$12 $14 $20 $22 
The following table details our deferred compensation costs related to unvested awards:
($ in thousands) At September 30, 2017 At December 30, 2016
Service based RSUs $10,931
 $9,000
Performance based RSUs 5,754
 3,307
  16,685
 12,307
SARs 1,626
 1,146
Stock options —
 —
  $18,311
 $13,453
($ in millions)At June 30, 2022At December 31, 2021
Service-based RSUs$42 $33 
Performance-based RSUs9 — 
51 33 
SARs3 2 
$54 $35 
Restricted Stock Units
We granted 111,992 service based177,951 service-based RSUs, which are subject to time-based vesting conditions, with a weighted average grant-date fair value of $95.57,$152.18, to our employees and non-employee directors during the 2017 first three quarters.half of 2022. During the 2017 first three quarters,half of 2022, we also granted performance basedperformance-based RSUs, which are subject to performance basedperformance-based vesting conditions, to members of management. A maximum of 94,436135,012 RSUs may be earned under the performance based RSUsperformance-based RSU awards granted during the 2017 first three quarters.half of 2022.
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Stock Appreciation Rights
We granted 81,97777,037 SARs, with a weighted average grant-date fair value of $27.63$59.68 and a weighted average exercise price of $97.53,$159.27, to members of management during the 2017 first three quarters.half of 2022. We use the Black-Scholes model to estimate the fair value of the SARs granted. The expected stock price volatility was calculated based on the average of the historical and implied volatility of our stock price. The average expected life was calculated using the simplified method.method, as we have insufficient historical information to provide a basis for estimating average expected life. The risk-free interest rate was calculated based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. The dividend yield assumption listed below is based on the expectation of future payouts.
The following table outlines the assumptions used to estimate the fair value of grants during the 2017 first three quarters:
half of 2022:
Expected volatility30.41%42.86%
Dividend yield1.44%1.53%
Risk-free rate2.06%1.77%
Expected term (in years)6.25
12.
16.VARIABLE INTEREST ENTITIES
Variable Interest Entities Related to Our Vacation Ownership Notes Receivable Securitizations
We periodically securitize, without recourse, through bankruptcy remote special purpose entities, notes receivable originated in connection with the sale of vacation ownership products. These vacation ownership notes receivable securitizations provide fundingliquidity for us and transfer the economic risks and substantially all the benefits of the consumer loans we originate to third parties.general corporate purposes. In a vacation ownership notes receivable securitization, various classes of debt securities issued by a special purpose entity are generally collateralized by a single tranche of transferred assets, which consist of vacation ownership notes receivable. With each vacation ownership notes receivable securitization, we may retain a portion of the securities, subordinated tranches, interest-only strips, subordinated interests in accrued interest and fees on the securitized vacation ownership notes receivable or, in some cases, overcollateralization and cash reserve accounts.
We created these bankruptcy remote special purpose entities to serve as a mechanism for holding assets and related liabilities, and the entities have no equity investment at risk, making them variable interest entities.VIEs. We continue to service the vacation ownership notes receivable, transfer all proceeds collected to these special purpose entities, and retain rights to receive benefits that are potentially significant to the entities. Accordingly, we concluded that we are the entities’ primary beneficiary and, therefore, consolidate them.

There is no noncontrolling interest balance related to these entities and the creditors of these entities do not have general recourse to us.
The following table shows consolidated assets, which are collateral for the obligations of these variable interest entities,VIEs, and consolidated liabilities included on our Balance Sheet at SeptemberJune 30, 2017:2022:
($ in millions)Vacation Ownership
Notes Receivable
Securitizations		Warehouse
Credit Facility		Total
Consolidated Assets
Vacation ownership notes receivable, net of reserves$1,659 $— $1,659 
Interest receivable12 — 12 
Restricted cash108 — 108 
Total$1,779 $— $1,779 
Consolidated Liabilities
Interest payable$2 $— $2 
Securitized debt1,868 — 1,868 
Total$1,870 $— $1,870 
36

($ in thousands)
Vacation Ownership
Notes Receivable
Securitizations
 
Warehouse
Credit Facility
 Total
Consolidated Assets:     
Vacation ownership notes receivable, net of reserves$875,237
 $—
 $875,237
Interest receivable5,702
 —
 5,702
Restricted cash34,413
 —
 34,413
Total$915,352
 $—
 $915,352
Consolidated Liabilities:     
Interest payable$697
 $42
 $739
Debt906,701
 —
 906,701
Total$907,398
 $42
 $907,440
The noncontrolling interest balance was zero. The creditorsTable of these entities do not have general recourse to us.Contents
The following table shows the interest income and expense recognized as a result of our involvement with these variable interest entitiesVIEs during the 2017 third quarter:second quarter of 2022:
($ in millions)Vacation Ownership
Notes Receivable
Securitizations		Warehouse
Credit Facility		Total
Interest income$59 $1 $60 
Interest expense to investors$11 $1 $12 
Debt issuance cost amortization$2 $— $2 
($ in thousands)
Vacation Ownership
Notes Receivable
Securitizations
 
Warehouse
Credit Facility
 Total
Interest income$25,900
 $638
 $26,538
Interest expense to investors$4,837
 $474
 $5,311
Debt issuance cost amortization$947
 $240
 $1,187
Administrative expenses$92
 $37
 $129

The following table shows the interest income and expense recognized as a result of our involvement with these variable interest entitiesVIEs during the 2017 first three quarters:half of 2022:
($ in thousands)
Vacation Ownership
Notes Receivable
Securitizations
 
Warehouse
Credit Facility
 Total
($ in millions)($ in millions)Vacation Ownership
Notes Receivable
Securitizations		Warehouse
Credit Facility		Total
Interest income$70,501
 $2,331
 $72,832
Interest income$116 $3 $119 
Interest expense to investors$13,389
 $1,325
 $14,714
Interest expense to investors$21 $1 $22 
Debt issuance cost amortization$2,677
 $699
 $3,376
Debt issuance cost amortization$4 $1 $5 
Administrative expenses$301
 $116
 $417
Administrative expenses$1 $— $1 
The following table shows cash flows between us and the vacation ownership notes receivable securitization variable interest entities during the 2017 first three quarters and the 2016 first three quarters:VIEs:
 Year to Date Ended
 September 30, 2017 September 9, 2016
($ in thousands)(274 days) (252 days)
Cash inflows:   
Net proceeds from vacation ownership notes receivable securitizations$346,469
 $247,453
Principal receipts170,920
 118,015
Interest receipts71,464
 60,863
Reserve release32
 405
Total588,885
 426,736
Cash outflows:   
Principal to investors(159,305) (105,863)
Voluntary repurchases of defaulted vacation ownership notes receivable(22,356) (22,025)
Interest to investors(13,121) (10,823)
Funding of restricted cash(1)
(1,804) (51,770)
Total(196,586) (190,481)
Net Cash Flows$392,299
 $236,255
_________________________
(1)
Includes $50.0 million of the proceeds from the securitization transaction completed during the 2016 third quarter, which were released when the remaining vacation ownership notes receivable were purchased by the MVW Owner Trust 2016-1 subsequent to the end of the 2016 third quarter.
The following table shows cash flows between us and the Warehouse Credit Facility variable interest entity during the 2017 first three quarters and the 2016 first three quarters:
Six Months Ended
Year to Date Ended
September 30, 2017 September 9, 2016
($ in thousands)(274 days) (252 days)
Cash inflows:   
Proceeds from vacation ownership notes receivable securitizations$50,260
 $126,622
($ in millions)($ in millions)June 30, 2022June 30, 2021
Cash InflowsCash Inflows
Net proceeds from vacation ownership notes receivable securitizationsNet proceeds from vacation ownership notes receivable securitizations$371 $421 
Principal receipts1,403
 5,227
Principal receipts280 286 
Interest receipts2,093
 5,048
Interest receipts116 108 
Reserve release296
 909
Reserve release113 108 
Total54,052
 137,806
Total880 923 
Cash outflows:   
Cash OutflowsCash Outflows
Principal to investors(1,160) (3,771)Principal to investors(299)(290)
Voluntary repurchases of defaulted vacation ownership notes receivable—
 (661)Voluntary repurchases of defaulted vacation ownership notes receivable(46)(58)
Repayment of Warehouse Credit Facility(49,100) (122,190)
Voluntary clean-up callVoluntary clean-up call(39)(72)
Interest to investors(1,324) (1,338)Interest to investors(21)(22)
Funding of restricted cash(296) (447)Funding of restricted cash(96)(109)
Total(51,880) (128,407)Total(501)(551)
Net Cash Flows$2,172
 $9,399
Net Cash Flows$379 $372 
Under the terms of our vacation ownership notes receivable securitizations, we have the right to substitute loans for, or repurchase, defaulted loans at our option, subject to repurchase defaulted vacation ownership notes receivable at the outstanding principal balance. The transaction documents typically limit such repurchases to 15 to 20 percent of the transaction’s initial vacation ownership notes receivable principal balance.certain limitations. Our maximum exposure to potential loss relating to the special purpose entities that purchase, sell and own these vacation ownership notes receivable is the overcollateralization amount (the difference between the loan collateral balance and the balance onof the outstanding vacation ownership notes receivable), plus cash reserves and any residual interest in future cash flows from collateral. In addition, we could be required to fund up to an aggregate
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Table of $5.0 million upon presentation of demand notes related to certain vacation ownership notes receivable securitization transactions outstanding at September 30, 2017.Contents

The following table shows cash flows between us and the Warehouse Credit Facility VIE:
Six Months Ended
($ in millions)June 30, 2022June 30, 2021
Cash Inflows
Proceeds from vacation ownership notes receivable securitizations$102 $— 
Principal receipts8 — 
Interest receipts3 — 
Reserve release1 — 
Total114 — 
Cash Outflows
Principal to investors(3)— 
Repayment of Warehouse Credit Facility(98)— 
Interest to investors(1)(1)
Funding of restricted cash(1)— 
Total(103)(1)
Net Cash Flows$11 $(1)
Other Variable Interest Entities
We have a commitment to purchase an operatinga property located in New York, New York, that we currently manage as Marriott Vacation Club Pulse, New York City. Refer to Footnote No. 8, “Contingencies and Commitments” for additional information on the commitment. We are required to purchase the completed property from the third party developer unless the developer has sold the property to another party. The propertyWaikiki, Hawaii which is held by a variable interest entityVIE for which we are not the primary beneficiary as we cannot prevent the variable interest entity from selling the property at a higher price.beneficiary. Accordingly, we have not consolidated the variable interest entity.VIE. During the second quarter of 2022, we extended a loan to the VIE for $47 million and amended the terms of this commitment. If we are unable to negotiate a capital efficient inventory arrangement under which a third party will develop the property and agree to resell it to us at a later date, we are committed to purchase the property, in its then current form, for $80 million in the fourth quarter of 2022, unless it has been sold to another party. The loan extended to the VIE is due in full upon the earlier of sale of the property, including a sale to us, or an amendment and restatement of our purchase commitment. In the latter case, the existing loan of $47 million would be repaid to us as part of that revised purchase commitment. As of SeptemberJune 30, 2017,2022, our Balance Sheet reflected $8.4$48 million in Property and equipment related to a capital lease and leasehold improvements and $7.2 million in Debt related toAccounts Receivable, including the capital lease liability for ancillary and operations space we lease from the variable interest entity. In addition, a note receivable of $0.5 million is included in the Accounts and contracts receivable line on the Balance Sheet as of September 30, 2017.$47 million. We believe that our maximum exposure to loss as a result of our involvement with this variable interest entityVIE is $2.2approximately $48 million as of SeptemberJune 30, 2017.2022.
Pursuant to a commitment to repurchase an operating property located in Marco Island, Florida that was previously sold to a third-party developer, we acquired 36 completed vacation ownership units duringDeferred Compensation Plan
We consolidate the 2017 second quarter. Refer to Footnote No. 5, “Acquisitions and Dispositions” for additional information on this transaction. We remain obligated to repurchase the remaining portionliabilities of the operating property. Refer to Footnote No. 8, “ContingenciesMarriott Vacations Worldwide Deferred Compensation Plan and Commitments” for additional information on our remaining commitment.the related assets, which consist of the COLI policies held in the rabbi trust. The developerrabbi trust is considered a variable interest entity for which weVIE. We are notconsidered the primary beneficiary as we do not control the variable interest entity’s development activities and cannot prevent the variable interest entity from selling the property at a higher price. Accordingly, we have not consolidated the variable interest entity. We are obligated to repurchase the remaining portion of the property fromrabbi trust because we direct the developer contingent uponactivities of the property meeting our brand standards upon completion, provided thattrust and are the third-party developer has not soldbeneficiary of the property to another party. Astrust. At June 30, 2022, the value of September 30, 2017, our Balance Sheet reflected $3.5 million of Inventory, $2.4 million of Otherthe assets that relate to prepaid and other deposits, and $7.5 million of Other liabilities that relate to the deferral of gain recognition on the previous sale transaction and the deferral of revenue for development management services for the remaining purchase commitment, both of which will reduce our basisheld in the asset if we repurchase the property. In addition, a note receivable of $0.5rabbi trust was $71 million, which is included in the Accounts and contracts receivableOther line within assets on theour Balance Sheet as of September 30, 2017. We believe that our maximum exposure to loss as a result of our involvement with this variable interest entity is less than $1 million as of September 30, 2017.Sheets.
13.
17.BUSINESS SEGMENTS
We define our reportable segments based on the way in which the chief operating decision maker (“CODM”), currently our chief executive officer, manages the operations of the companyCompany for purposes of allocating resources and assessing performance. We operate in three2 operating and reportable business segments:
In our North America segment, we develop, market, sell•Vacation Ownership includes a diverse portfolio of resorts that includes some of the world’s most iconic brands licensed under exclusive, long-term relationships. We are the exclusive worldwide developer, marketer, seller, and managemanager of vacation ownership and related products under the Marriott Vacation Club, and Grand Residences by Marriott, brands. In 2016, we introducedSheraton Vacation Club, Westin Vacation Club, and Hyatt Residence Club brands, as well as under Marriott Vacation Club Pulse, an extension to the Marriott Vacation Club brand. We are also develop, marketthe exclusive worldwide developer, marketer, and sellseller of vacation ownership and related products under The Ritz-Carlton Destination Club brand, as well aswe have the non-exclusive right to develop, market, and sell whole ownership residential products under The Ritz-Carlton Residences brand.brand and have a license to use the St. Regis brand for specified fractional ownership resorts.
In our Asia Pacific
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•Our Vacation Ownership segment we develop, market, sellgenerates most of its revenues from 4 primary sources: selling vacation ownership products; managing vacation ownership resorts, clubs, and manage two points-basedowners’ associations; financing consumer purchases of vacation ownership products; and renting vacation ownership inventory.
•Exchange & Third-Party Management includes exchange networks and membership programs, that we specifically designed to appeal to the vacation preferences of the market, Marriott Vacation Club, Asia Pacific and Marriott Vacation Club Destinations, Australia, as well as a weeks-based right-to-use product.provision of management services to other resorts and lodging properties. We provide these services through Interval International and Aqua-Aston. Exchange & Third-Party Management revenue generally is fee-based and derived from membership, exchange and rental transactions, owners’ association management, and other related products and services. VRI Americas was part of the Exchange & Third-Party Management segment through the date of sale in April 2022. See Footnote 3 “Acquisitions and Dispositions” for more information on the disposition of VRI Americas.
In our Europe segment, we are focusing on selling our existing projects and managing existing resorts. We do not have any current plans for new development in this segment.
We evaluateOur CODM evaluates the performance of our segments based primarily on the results of the segment without allocating corporate expenses or income taxes. We do not allocate corporate interest expense consumer financing interest expense, other financing expenses or indirect general and administrative expenses to our segments. We include interest income specific to segment activities within the appropriate segment. We allocate depreciation, other gains and losses, and equity in earnings or losses from our joint ventures, and noncontrolling interest to each of our segments as appropriate. Corporate and other represents that portion of our revenues and other gains or lossesresults that are not allocable to our segments.segments, including those relating to consolidated owners’ associations, as our CODM does not use this information to make operating segment resource allocations.

Our CODM uses Adjusted EBITDA to evaluate the profitability of our operating segments, and the components of net income or loss attributable to common shareholders excluded from Adjusted EBITDA are not separately evaluated. Adjusted EBITDA is defined as net income or loss attributable to common shareholders, before interest expense (excluding consumer financing interest expense associated with securitization transactions), income taxes, depreciation and amortization, excluding share-based compensation expense and adjusted for certain items that affect the comparability of our operating performance. Our reconciliation of the aggregate amount of Adjusted EBITDA for our reportable segments to consolidated net income or loss attributable to common shareholders is presented below.
Revenues
Three Months EndedSix Months Ended
($ in millions)June 30, 2022June 30, 2021June 30, 2022June 30, 2021
Vacation Ownership$1,091 $883 $2,047 $1,544 
Exchange & Third-Party Management74 86 158 172 
Total segment revenues1,165 969 2,205 1,716 
Corporate and other(1)10 11 22 
$1,164 $979 $2,216 $1,738 
 Quarter Ended Year to Date Ended
 September 30, 2017 
  September 9, 2016 (1)
 September 30, 2017 
  September 9, 2016 (1)
($ in thousands)(92 days) (84 days) (274 days) (252 days)
North America$437,801
 $358,799
 $1,341,430
 $1,117,419
Asia Pacific16,952
 14,760
 50,482
 53,168
Europe32,237
 28,078
 78,817
 73,343
Total segment revenues486,990
 401,637
 1,470,729
 1,243,930
Corporate and other—
 —
 —
 —
 $486,990
 $401,637
 $1,470,729
 $1,243,930
_________________________
(1)
Includes an immaterial reclassification of activity between the North America and Asia Pacific segments.
Adjusted EBITDA and Reconciliation to Net Income or Loss Attributable to Common Shareholders
Three Months EndedSix Months Ended
($ in millions)June 30, 2022June 30, 2021June 30, 2022June 30, 2021
Adjusted EBITDA Vacation Ownership$274 $182 $473 $250 
Adjusted EBITDA Exchange & Third-Party Management35 37 78 78 
Reconciling items:
Corporate and other(54)(55)(108)(95)
Interest expense(30)(44)(57)(87)
Tax provision(43)(27)(75)(16)
Depreciation and amortization(32)(36)(65)(77)
Share-based compensation expense(12)(14)(20)(22)
Certain items(2)(37)(32)(53)
Net income (loss) attributable to common shareholders$136 $6 $194 $(22)
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 Quarter Ended Year to Date Ended
 September 30, 2017 
  September 9, 2016 (1)
 September 30, 2017 
  September 9, 2016 (1)
($ in thousands)(92 days) (84 days) (274 days) (252 days)
North America$103,904
 $82,294
 $327,210
 $282,242
Asia Pacific(472) 1,191
 (552) (423)
Europe6,766
 4,536
 10,939
 7,079
Total segment financial results110,198
 88,021
 337,597
 288,898
Corporate and other(47,069) (47,173) (156,720) (146,718)
Provision for income taxes(22,367) (14,041) (62,139) (54,656)
 $40,762
 $26,807
 $118,738
 $87,524
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_________________________
(1)
Includes an immaterial reclassification of activity between the North America and Asia Pacific segments.
Assets
($ in millions)At June 30, 2022At December 31, 2021
Vacation Ownership$7,969 $7,897 
Exchange & Third-Party Management837 911 
Total segment assets8,806 8,808 
Corporate and other534 805 
$9,340 $9,613 
($ in thousands)At September 30, 2017 At December 30, 2016
North America$2,102,691
 $1,968,021
Asia Pacific131,486
 102,348
Europe67,433
 62,245
Total segment assets2,301,610
 2,132,614
Corporate and other521,426
 258,805
 $2,823,036
 $2,391,419
We conduct business globally, and our operations outside the United States represented approximately 11% and 10% of our revenues, excluding cost reimbursements, for the three months ended June 30, 2022 and June 30, 2021, respectively, and 11% and 9% of our revenues, excluding cost reimbursements, for the six months ended June 30, 2022 and June 30, 2021, respectively.

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
We make forward-looking statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Quarterly Report on Form 10-Q, based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include, among other things, the information concerningconcerning: our possible or assumed future results of operations,operations; business strategies, such as our plans to continue to increase our focus on sales of vacation ownership products to first-time buyers and our expectations regarding resulting increases in financing plans,propensity; financing plans; competitive position,position; potential growth opportunities,opportunities; potential operating performance improvements, including the expectations that contract sales, resort management, and resort occupancies will continue to remain strong for the remainder of 2022 and that interest income will increase in 2022; our expectations regarding availability of inventory for Getaways and exchange transactions; the effects of competition.competition; and the ongoing effect of the COVID-19 pandemic and actions we or others may take in response to the COVID-19 pandemic. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “might,” “should,” “could” or the negative of these terms or similar expressions.
Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. You shouldWe caution you that these statements are not put undue relianceguarantees of future performance and are subject to numerous and evolving risks and uncertainties that we may not be able to predict or assess, such as: the continuing effects of the COVID-19 pandemic, including quarantines or other government-imposed travel or health-related restrictions; the length and severity of the COVID-19 pandemic, including its short and longer-term impact on any forward-looking statementsconsumer confidence and demand for travel, and the pace of recovery following the COVID-19 pandemic or as effective treatments or vaccines against variants of the COVID-19 virus become widely available; variations in this Quarterly Report. We do notdemand for vacation ownership and exchange products and services; worker absenteeism; price inflation; global supply chain disruptions; volatility in the international and national economy and credit markets, including as a result of the COVID-19 pandemic and the ongoing conflict between Russia and Ukraine and related sanctions and other measures; our ability to attract and retain our global workforce; competitive conditions; the availability of capital to finance growth; the effects of steps we have any intention taken and may continue to take to reduce operating costs and/or obligationenhance health and cleanliness protocols at our resorts due to update forward-looking statements after the date of this Quarterly Report on Form 10-Q, except as required by law.
The risk factors discussed inCOVID-19 pandemic; political or social strife, and other matters referred to under the heading “Risk Factors” contained herein and also in our most recent Annual Report on Form 10-K, and as may be updated in our future periodic filings with the U.S. Securities and Exchange Commission (the “SEC”).
All forward-looking statements in this Quarterly Report on Form 10-Q and which may be discussed in subsequentapply only as of the date of this Quarterly ReportsReport on Form 10-Q could cause our resultsor as of the date they were made or as otherwise specified herein. We do not undertake any obligation to differ materially from those expressed inpublicly update or revise any forward-looking statements.statement, whether as a result of new information, future events, or otherwise, except as required by law. There may be other risks and uncertainties that we cannot predict at this time or that we currently do not expect will have a material adverse effect on our financial position, results of operations or cash flows. Any such risks could cause our results to differ materially from those we express in forward-looking statements.
Our Financial Statements (as defined below), which we discuss below, reflect our historical financial condition, results of operations and cash flows. TheHowever, the financial information discussed below and included in this Quarterly Report on Form 10-Q may not necessarily reflect what our financial condition, results of operations or cash flows may be in the
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future. In order to make this report easier to read, we refer to (i) our Interim Consolidated Financial Statements as our “Financial Statements,” (ii) our Interim Consolidated Statements of Income as our “Statements of Income,“Income Statements,” (iii) our Interim Consolidated Balance Sheets as our “Balance Sheets,”Sheets” and (iv) our Interim Consolidated Statements of Cash Flows as our “Cash Flows.” In addition, references throughout to numbered “Footnotes” refer to the numbered Notes to our Financial Statements that we include in the Financial Statements section of this Quarterly Report on Form 10-Q.
Business Overview
We are onea leading global vacation company that offers vacation ownership, exchange, rental, and resort and property management, along with related businesses, products and services. Our business operates in two reportable segments: Vacation Ownership and Exchange & Third-Party Management.
Our Vacation Ownership segment includes a diverse portfolio of resorts that includes some of the world’s largest companies whose business is focused almost entirely on vacation ownership, based on number of owners, number of resorts and revenues.most iconic brands licensed under exclusive long-term relationships. We are the exclusive worldwide developer, marketer, seller and manager of vacation ownership and related products under the Marriott Vacation Club, and Grand Residences by Marriott, brands.Sheraton Vacation Club, Westin Vacation Club, and Hyatt Residence Club brands, as well as under Marriott Vacation Club Pulse, an extension to the Marriott Vacation Club brand. We are also the exclusive worldwide developer, marketer and seller of vacation ownership and related products under The Ritz-Carlton Destination Club brand, and we have the non-exclusive right to develop, market and sell whole ownership residential products under The Ritz-Carlton Residences brand.
In 2016,brand and we introduced Marriott Vacation Club Pulse, an extensionhave a license to use the Marriott Vacation ClubSt. Regis brand which features unique properties that embrace the spirit and culture of their urban locations, creating an authentic sense of place while delivering easy access to local interests, attractions and transportation.for specified fractional ownership resorts.
Our business is grouped into three reportable segments: North America, Asia Pacific and Europe. As of September 30, 2017, our portfolio consisted of over 65 properties in the United States and nine other countries and territories. We generateVacation Ownership segment generates most of ourits revenues from four primary sources: selling vacation ownership products; managing our resorts;vacation ownership resorts, clubs and owners’ associations; financing consumer purchases of vacation ownership products; and renting vacation ownership inventory.
Our Exchange & Third-Party Management segment includes exchange networks and membership programs, as well as provision of management services to other resorts and lodging properties. As further detailed inof the end of the second quarter of 2022, we provided these services through Interval International and Aqua-Aston. Exchange & Third-Party Management revenue generally is fee-based and derived from membership, exchange and rental transactions, property and association management, and other related products and services. In April 2022, we disposed of VRI Americas after determining that the business was not a core component of our future growth strategy and operating model. This business was a component of our Exchange and Third-Party Management segment through the date of the sale. See Footnote No. 1, “Summary of Significant Accounting Policies,”3 “Acquisitions and Dispositions” to our Financial Statements beginning withfor further information regarding this disposition.
Corporate and other represents that portion of our 2017 fiscal year, we changedresults that are not allocable to our financial reporting cyclesegments, including those relating to a calendar year-endconsolidated property owners’ associations (“Consolidated Property Owners’ Associations”).
Integration of Marriott, Sheraton and end-of-month quarterly reporting cycle. Accordingly, our 2017 fiscal year began on December 31, 2016 (the day after the endWestin Branded Vacation Ownership Products
Part of the rationale for our acquisition of ILG in 2018 was to achieve operating efficiencies and business growth by leveraging the brands licensed by Marriott International and its subsidiaries to us and to ILG. In 2016, fiscal year)Marriott International purchased Starwood Hotels and will end on December 31, 2017.Resorts Worldwide, Inc., which at the time exclusively licensed the Sheraton and Westin vacation ownership brands to Legacy-ILG. In August 2022, we launched Abound by Marriott Vacations, a new owner benefit and exchange program which affiliates the Marriott, Sheraton and Westin vacation ownership brands to offer similar benefits to owners of our products under these brands. Under this program, owners of Marriott-, Sheraton- and Westin-branded vacation ownership interests can access over 90 Marriott Vacation Club, Sheraton Vacation Club and Westin Vacation Club resorts using a common currency. The program also harmonizes fee structures and owner benefit levels and allows us to transition certain of our Legacy-ILG sales galleries to sell our Marriott Vacation Club Destinations product. Later in 2022, we plan to add certain Sheraton- and Westin-branded vacation ownership interests to the Marriott Vacation Club Destinations product.

Acquisition of Welk
On April 1, 2021, we completed the Welk Acquisition, after which Welk became our indirect wholly-owned subsidiary. We refer to Welk’s business and brands that we acquired as “Legacy-Welk.” In April 2022, we introduced the Hyatt Vacation Club and rebranded Welk’s vacation ownership program as the Hyatt Vacation Club Platinum Program, enabling Legacy-Welk sales centers to sell a Hyatt-branded vacation ownership product. Most Legacy-Welk resorts are now available for rental stays through Hyatt.com.
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COVID-19 Pandemic
The table below showsCOVID-19 pandemic has caused significant disruptions in international and U.S. economies and markets, and has had an unprecedented impact on the reporting periodstravel and hospitality industries, as we refer to them in this report, their date ranges, andwell as our Company. We discuss the number of days in each:
Reporting PeriodDate RangeNumber of Days
2017 third quarterJuly 1, 2017 — September 30, 201792
2016 third quarterJune 18, 2016 — September 9, 201684
2017 first three quartersDecember 31, 2016 — September 30, 2017274
2016 first three quartersJanuary 2, 2016 — September 9, 2016252
2017 fiscal yearDecember 31, 2016 — December 31, 2017366
2016 fiscal yearJanuary 2, 2016 — December 30, 2016364
As a resultimpacts of the change in our financial reporting calendar, we had eight more days inCOVID-19 pandemic and its potential future implications throughout this report; however, the 2017 third quarter than we had in the 2016 third quarter,COVID-19 pandemic, and 22 more days in the 2017 first three quarters than we had in the 2016 first three quarters. We estimate that 2016 third quarter contract sales would have been approximately $17 million higherany recovery therefrom, continues to evolve and that 2016 first three quarters contract sales would have been approximately $43 million higher on a comparable basis. Prior year results have not been restated for the impact of the change in our financial reporting calendar.
2017 Hurricane Activity
During the third quarter of 2017, over 20 properties within our North America segment were negatively impacted by one or both of Hurricane Irma and Hurricane Maria (the “Hurricanes”). As a result of the mandatory evacuations, shutdowns and cancellations of reservations and scheduled tours resulting from the Hurricanes, the sales operations at several of our locations, primarily those located on St. Thomas (USVI) and on Marco Island and Singer Island in Florida, were adversely impacted along with rental and ancillary operations.
While many of the properties and sales centers impacted by the Hurricanes were fully or partially open by the end of September, two resorts and a sales center on St. Thomas remain closed and we are not currently in a position to predict when they will reopen. Further, while some of the properties were fully or partially open, many of the operations will continue to ramp-up throughout the fourth quarter of 2017, and potentially into 2018. We have estimated the impact these Hurricanes had on our third quarter contract sales and tours and included them in our discussion of the results below. Given the continued ramp-up throughout the fourth quarter of 2017, we expect additionalfurther potential impacts on our fourth quarter contract sales and tours. We expect to submit a claim for our business interruption losses as well as property damage experienced by both us and our owners’ associations from these Hurricanes; however, we cannot quantifyin the extentfuture remain uncertain.
Significant Accounting Policies Used in Describing Results of any such mitigation at this time and we do not expect any insurance proceeds to be received in 2017.
Below is a summary of significant accounting policies used in our business that will be used in describing our results of operations.Operations
Sale of Vacation Ownership Products
We recognize revenues from the sale of vacation ownership products (also referred to as vacation ownership interests or “VOIs”) when allcontrol of the following conditions exist: a binding sales contract has been executed;vacation ownership product is transferred to the customer and the transaction price is deemed collectible. Based upon the different terms of the contracts with the customer and business practices, control of the vacation ownership product is transferred to the customer at closing for Marriott-branded and Legacy-Welk transactions and upon expiration of the statutory rescission period has expired; the receivable is deemed collectible;for Sheraton-,Westin-, and the remainder of our obligations are substantially completed.
Hyatt-branded transactions. Sales of vacation ownership products may be made for cash or we may provide financing. ForIn addition, we recognize settlement fees associated with the transfer of vacation ownership products and commission revenues from sales whereof vacation ownership products on behalf of third parties, which we provide financing, we defer revenue recognition until we receive a minimum down payment equalrefer to ten percent of the purchase price plus the fair value of certainas “resales revenue.”
We also provide sales incentives provided to the purchaser.certain purchasers. These sales incentives typically include Marriott Rewards PointsBonvoy points, World of Hyatt points or an alternative sales incentive that we refer to as “plus points.” These plus points are redeemable for stays at our resorts or for use in the Explorer Collection,other third-party offerings, generally up to two years from the date of issuance. Typically, sales incentives are only awarded if the sale is closed.
As a result of the down payment requirement described above and the requirement that the statutory rescission period has expired, we often defer revenues associated with the sale of vacation ownership products from the date of the purchase agreement to a future period. When comparing results year-over-year, this deferral frequently generates significant variances, which we refer to as the impact of revenue reportability.
Finally, as more fully described in the “Financing” section“Financing” below, we record an estimate of expected uncollectibility on allthe difference between the vacation ownership notesnote receivable and the consideration to which we expect to be entitled (also known as a vacation ownership notes receivable reserve or a sales reserve) as a reduction of revenues from the sale of vacation ownership products at the time we recognize revenues from a sale.
We report, on a supplemental basis, contract sales for each of our three segments.Vacation Ownership segment. Contract sales consist of the total amount of vacation ownership product sales under purchase agreementscontract signed during the period where we have generally received a

down payment of at least ten percent10% of the contract price, reduced by actual rescissions during the period.period, inclusive of contracts associated with sales of vacation ownership products on behalf of third-parties, which we refer to as “resales contract sales.” In circumstances where a customer applies any or all of their existing ownership interests as part of the purchase price for additional interests, we include only the incremental value purchased as contract sales. Contract sales differ from revenues from the sale of vacation ownership products that we report on our Statements of Incomeincome statements due to the requirements for revenue recognition described above. We consider contract sales to be an important operating measure because it reflects the pace of sales in our business.
Cost of vacation ownership products includes costs to develop and construct our projects (also known as real estate inventory costs) as well as, other non-capitalizable costs associated with the overall project development process and settlement expenses associated with the closing process. For each project, we expense real estate inventory costs in the same proportion as the revenue recognized. Consistent with the applicable accounting guidance, to the extent there is a change in the estimated sales revenues or real estate inventory costs for the project in a period, a non-cash adjustment is recorded on our Statements of Incomeincome statements to true-up costs in that period to those that would have been recorded historically if the revised estimates had been used. These true-ups, which we refer to as product cost true-up activity, willcan have a positive or negative impact on our Statements of Income.income statements.
We refer to revenues from the sale of vacation ownership products less the cost of vacation ownership products and marketing and sales costs as development margin. Development profit. Development profit margin percentage is calculated by dividing development marginDevelopment profit by revenues from the saleSale of vacation ownership products.
Resort Revenue Recognition Change Commencing in August 2022
In connection with the affiliation of the Marriott-, Sheraton-, and Westin-branded vacation ownership products discussed above, in mid-August, we intend to modify our business practices and the terms of our Marriott-branded VOI sales contracts to be consistent with the existing terms of our Sheraton- and Westin-branded VOI sales contracts. As a result of these modifications, control of Marriott-branded vacation ownership products will be transferred to the customer upon expiration of the statutory rescission period, consistent with the current method for Sheraton- and Westin-branded vacation ownership products. This will result in the acceleration of revenue and a one-time benefit to development profit, net income attributable to common shareholders and Adjusted EBITDA (defined below), however at this time we are
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unable to quantify the magnitude of this impact. Marriott-branded VOI sales contracts executed prior to these modifications will continue to be accounted for as outlined above, with transfer of control of the VOI occurring at closing.
Management and Other ServicesExchange
Our resort management and other servicesexchange revenues include revenues generated from fees we earn for managing each of our resorts. vacation ownership resorts, providing property management, owners’ association management and related services and fees we earn for providing rental services and related hotel, condominium resort, and owners’ association management services to vacation property owners.
In addition, we earn revenue for providingfrom ancillary offerings, including food and beverage outlets, golf courses and other retail and golf and spa offerings,service outlets located at our Vacation Ownership resorts. We also receive annual membership fees, club dues settlement fees from the sale of vacation ownership products and certain transaction-based fees from members, owners and other third parties, including externalparties.
Management and exchange service providers with which we are associated.
We provide day-to-day management services, including housekeeping services, operation of reservation systems, maintenance, and certain accounting and administrative services for property owners’ associations. We receive compensation for these management services; this compensation is typically based on either a percentage of the budgeted costs to operate the resorts or a fixed fee arrangement. We earn these fees regardless of usage or occupancy.
Resort management and other services expenses include costs to operate the food and beverage outlets and other ancillary operations and to provide overall customer support services, including reservations, and certain transaction-based expenses relating to external exchange service providersproviders.
In our Vacation Ownership segment and settlement expenses from the sale of vacation ownership products.Consolidated Property Owners’ Associations, we refer to these activities as “Resort Management and Other Services.”
Financing
We offer financing to qualified customers for the purchase of most types of our vacation ownership products. The average FICO score of customers who were U.S. citizens or residents who financed a vacation ownership purchase was as follows:
 Year to Date Ended
 September 30, 2017 September 9, 2016
 (274 days) (252 days)
Average FICO score743 742
Six Months Ended
June 30, 2022June 30, 2021
Average FICO score735733
The typical financing agreement provides for monthly payments of principal and interest with the principal balance of the loan fully amortizing over the term of the related vacation ownership note receivable, which is generally ten to fifteen years. While we adjust interest rates from time to time, such changes are typically not made in step with the timing and magnitude of changes in broader market rates. We do use incentives to encourage our customers to take our financing. Included within our vacation ownership notes receivable are originated vacation ownership notes receivable and vacation ownership notes receivable acquired in connection with the ILG Acquisition and the Welk Acquisition.
The interest income earned from theour vacation ownership financing arrangements is earned on an accrual basis on the principal balance outstanding over the contractual life of the arrangement and is recorded as Financing revenues on our Statements of Income.
Income Statements. Financing revenues also include interest income earned on vacation ownership notes receivable as well as fees earned from servicing the existing vacation ownership notes receivable portfolio. Financing expenses include costs in support of the financing, servicing and securitization processes. The amount of interest income earned in a period depends on the amount of outstanding vacation ownership notes receivable, which is impacted positively by the origination of new vacation ownership notes receivable and negatively by principal collections. We calculate financing propensity as contract sales volume of financed contracts closedoriginated in the period divided by contract sales volume of all contracts closedoriginated in the period. We do not include resales contract sales in the financing propensity calculation. Financing propensity was 60.1 percent53% in the 2016 fiscal yearsecond quarter of 2022 and 64.9 percent52% in the 2017 first three quarters, reflecting successful incentive programs that have been helping to increase financing propensity.second quarter of 2021. We expect financing propensity in 2017 to approximate 65 percent as we intend to continue to offer theoffering financing incentive programs throughout the remainder of 2022. Growing sales to first-time buyers, who are more likely to finance their purchases, remains an integral part of our overall marketing and thatsales strategy. We expect the current financing incentives and other initiatives to increase sales to first-time buyers to further increase propensity and interest income will continue to increase as new originations of vacation ownership notes receivable outpace the decline in principal of existing vacation ownership notes receivable.

Acquired vacation ownership notes receivable are accounted for using the purchased credit deteriorated assets provision of the current expected credit loss model. The estimates of the reserve for credit losses on the acquired vacation ownership notes receivable are based on default rates that are an output of our static pool analyses and estimated value of collateral securing the acquired vacation ownership notes receivable. See Footnote 6 “Vacation Ownership Notes Receivable” to our Financial Statements for further information regarding the accounting for acquired vacation ownership notes receivable.
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In the event of a default, we generally have the right to foreclose on or revoke the vacation ownership interest.underlying VOI. We return vacation ownership interestsVOIs that we reacquire through foreclosure or revocation back to real estate inventory. As discussed above, we record afor originated vacation ownership notes receivable, we record a reserve at the time of sale and classify the reserve as a reduction to revenues from the sale of vacation ownership products on our StatementsIncome Statements. Revisions to estimates of Income. variable consideration from the sale of vacation ownership products impact the reserve on originated vacation ownership notes receivable and can increase or decrease revenues. In contrast, for acquired vacation ownership notes receivable, we record changes to the reserves, net of collateral value, as adjustments to Financing expenses on our Income Statements.
Historical default rates, which represent defaults as a percentage of each year’s beginning gross vacation ownership notes receivable balance, were as follows:
Six Months Ended
June 30, 2022June 30, 2021
Historical default rates2.1%2.4%
 Year to Date Ended
 September 30, 2017 September 9, 2016
 (274 days) (252 days)
Historical default rates2.8% 3.0%
The decrease in default rates in 2022 reflects the continued improvement in the performance of our vacation ownership notes receivable portfolio subsequent to the increased default rates experienced in 2020 as a result of the COVID-19 pandemic.
Financing expenses include consumer financing interest expense, which represents interest expense associated with the securitization of our vacation ownership notes receivable, costs to support the financing, servicing and securitization processes and changes in expected credit losses related to acquired vacation ownership notes receivable. We distinguish consumer financing interest expense from all other interest expense because the debt associated with the consumer financing interest expense is secured by vacation ownership notes receivable that have been sold to bankruptcy remote special purpose entities and is generally non-recourse to us.
Rental
WeIn our Vacation Ownership segment, we operate a rental business to provide owner flexibility and to help mitigate carrying costs associated with our inventory. We generate revenue from rentals of inventory that we hold for sale as interests in our vacation ownership programs, inventory that we control because our owners have elected alternative usage options permitted under our vacation ownership programs and rentals of owned-hotel properties. We also recognize rental revenue from the utilization of plus points under our points-based products when the points are redeemed for rental stays at one of our resorts or in other third-party offerings, or upon expiration of the points. We obtain rental inventory from unsold inventory and inventory we control because owners have elected alternative usage options offered through our vacation ownership programs. For rental revenues associated with vacation ownership products which we own and which are registered and held for sale, to the extent that the revenues from rental are less than costs, revenues are reported net in accordance with ASC Topic 978, “Real Estate - Time-Sharing Activities” (“ASC 978”). The rental activity associated with discounted vacation packages requiring a tour (“preview stays”) is not included in transient rental metrics, and because the majority of these preview stays are sourced directly or indirectly from unsold inventory, the associated revenues and expenses are reported net in Marketing and sales expense.
In our Exchange & Third-Party Management segment, we offer vacation rental opportunities at managed properties. We also offer vacation rental opportunities known as Getaways to members of the Interval International network and certain other membership programs. Getaways allow us to monetize excess availability of resort accommodations within the applicable exchange network, as well as provide additional vacation opportunities to members. Resort accommodations typically become available as Getaways as a result of seasonal oversupply or underutilized space in the applicable exchange program. We also source resort accommodations specifically for the Getaways program. Rental revenues associated with Getaways are primarily the revenues we earn from renting this inventory. We also recognize rental revenue from the utilizationreported net of plus points under the Marriott Vacation Club Destinations (“MVCD”) program when the points are redeemed for rental stays at one of our resorts or in the Explorer Collection, or upon expiration of the points.related expenses.
Rental expenses include:
•Maintenance and other fees on unsold inventory;
•Costs to provide alternative usage options, including Marriott Rewards PointsBonvoy points, World of Hyatt points and offerings available as part of the Explorer Collection,third-party offerings, for owners who elect to exchange their inventory;
•Marketing costs and direct operating and related expenses in connection with the rental business (such as housekeeping, labor costs, credit card expenses and reservation services); and
•Costs associated with the banking and borrowing usage option that is available under our points-based programs.to secure resort accommodations for use in Getaways.
Rental metrics, including the average daily transient rate or the number of transient keys rented, may not be comparable between periods given fluctuation in available occupancy by location, unit size (such as two bedroom, one bedroom or studio unit), and owner use and exchange behavior. In addition, rental metrics may not correlate with rental revenues due to
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the requirement to report certain rental revenues net of rental expenses in accordance with ASC 978 (as discussed above). Further, as our ability to rent certain luxury inventory and other inventory in our Asia Pacific segment is often limited on a site-by-site basis, rental operations may not generate adequate rental revenues to cover associated costs. Our vacationVacation Ownership segment units are either “full villas” or “lock-off” villas. Lock-off villas are units that can be separated into a masterprimary unit and a guest room. Full villas are “non-lock-off” villas because they cannot be separated. A “key” is the lowest increment for reporting occupancy statistics based upon the mix of non-lock-off and lock-off villas. Lock-off villas represent two keys and non-lock-off villas represent one key. The “transient keys” metric represents the blended mix of inventory available for rent and includes all of the combined inventory configurations available in our resort system.
Cost Reimbursements
Cost reimbursements include direct and indirect costs that property owners’ associations reimburse to us. In accordance with the accounting guidance for “gross versus net” presentation, we record these revenues and expenses on a gross basis. We recognize cost reimbursements when we incur the related reimbursable costs. These costs primarily consist of payroll and payroll related expenses for management of the property owners’ associations and other services we provide where we are the employer. Cost reimbursements consist of actual expenses with no added margin.
Consumer Financing Interest Expense
Consumer financing interest expense represents interest expense associated with the debt from our non-recourse warehouse credit facility (the “Warehouse Credit Facility”) and from the securitization of our vacation ownership notes receivable. We distinguish consumer financing interest expense from all other interest expense because the debt associated with the consumer financing interest expense is secured by vacation ownership notes receivable that have been sold to bankruptcy remote special purpose entities and is generally non-recourse to us.
Interest Expense
Interest expense consists of all interest expense other than consumer financing interest expense.

Other Items
We measure operating performance using the following key metrics:
Contract sales from the sale of vacation ownership products;
Development margin percentage; and
Volume per guest (“VPG”), which we calculate by dividing vacation ownership contract sales, excluding fractional sales, telesales and other sales that are not attributed to a tour at a sales location, by the number of tours at sales locations in a given period. We believe that this operating metric is valuable in evaluating the effectiveness of the sales process as it combines the impact of average contract price with the number of touring guests who make a purchase.
Consolidated Results
The following discussion presents an analysis of our results of operations for the 2017 third quarter compared to the 2016 third quarter, and the 2017 first three quarters compared to the 2016 first three quarters.
 Quarter Ended Year to Date Ended
 September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
($ in thousands)(92 days) (84 days) (274 days) (252 days)
REVENUES       
Sale of vacation ownership products$180,522
 $131,012
 $543,687
 $415,831
Resort management and other services76,882
 70,185
 229,004
 208,049
Financing34,685
 29,066
 99,326
 86,944
Rental81,177
 73,776
 250,621
 229,133
Cost reimbursements113,724
 97,598
 348,091
 303,973
TOTAL REVENUES486,990
 401,637
 1,470,729
 1,243,930
EXPENSES       
Cost of vacation ownership products42,826
 34,779
 131,589
 104,149
Marketing and sales100,527
 79,017
 305,217
 236,348
Resort management and other services44,696
 39,825
 130,349
 123,695
Financing5,062
 4,581
 12,528
 11,782
Rental71,048
 60,970
 211,643
 191,658
General and administrative26,666
 22,151
 83,739
 72,871
Litigation settlement2,033
 —
 2,216
 (303)
Consumer financing interest6,498
 5,361
 18,090
 15,840
Royalty fee15,220
 14,624
 47,597
 42,007
Cost reimbursements113,724
 97,598
 348,091
 303,973
TOTAL EXPENSES428,300
 358,906
 1,291,059
 1,102,020
Gains and other income, net6,977
 454
 6,752
 11,129
Interest expense(2,642) (2,262) (5,180) (6,331)
Other104
 (75) (365) (4,528)
INCOME BEFORE INCOME TAXES63,129
 40,848
 180,877
 142,180
Provision for income taxes(22,367) (14,041) (62,139) (54,656)
NET INCOME$40,762
 $26,807
 $118,738
 $87,524

Contract Sales
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(92 days) (84 days) 
Contract sales       
Vacation ownership       
North America$179,227
 $150,964
 $28,263
 19%
Asia Pacific12,569
 11,169
 1,400
 13%
Europe6,664
 7,698
 (1,034) (13%)
Total contract sales$198,460
 $169,831
 $28,629
 17%
The changes in contract sales are described within the discussions of our segment results below. Our 2017 third quarter had eight more days than our 2016 third quarter due to the change to an end-of-month quarterly reporting cycle in 2017. We estimate that 2016 third quarter contract sales would have been approximately $17 million higher on a comparable basis. We estimate the Hurricanes negatively impacted contract sales by $12 million in the 2017 third quarter.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(274 days) (252 days) 
Contract sales       
Vacation ownership       
North America$547,546
 $436,214
 $111,332
 26%
Asia Pacific36,131
 31,049
 5,082
 16%
Europe18,509
 22,054
 (3,545) (16%)
Total contract sales$602,186
 $489,317
 $112,869
 23%
The changes in contract sales are described within the discussions of our segment results below. Our 2017 first three quarters had 22 more days than our 2016 first three quarters due to the change to an end-of-month quarterly reporting cycle in 2017. We estimate that 2016 first three quarters contract sales would have been approximately $43 million higher on a comparable basis. We estimate the Hurricanes negatively impacted contract sales by $12 million in the 2017 first three quarters.
Sale of Vacation Ownership Products
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(92 days) (84 days) 
Contract sales$198,460
 $169,831
 $28,629
 17%
Revenue recognition adjustments:       
Reportability1,135
 (18,994) 20,129
  
Sales reserve(11,740) (13,872) 2,132
  
Other(1)
(7,333) (5,953) (1,380)  
Sale of vacation ownership products$180,522
 $131,012
 $49,510
 38%
_________________________
(1)
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
Revenue reportability had a positive impact in the 2017 third quarter due to a decrease in the amount of sales that remained in the rescission period as of the end of the quarter. Revenue reportability had a negative impact in the 2016 third quarter due to a decrease in the amount of sales that met the down payment requirement for revenue reportability during the period and an increase in the amount of sales that remained in the rescission period as of the end of the quarter.

The lower sales reserve reflected a lower required reserve in the 2017 third quarter ($2.7 million) due to lower default and delinquency activity, an unfavorable sales reserve adjustment in our North America segment in the 2016 third quarter ($0.9 million), and a favorable sales reserve adjustment in our Asia Pacific segment in the 2017 third quarter ($0.7 million), partially offset by higher vacation ownership contract sales volume ($2.2 million).
The increase in other adjustments for sales incentives was driven by an increase in the utilization of plus points as a sales incentive in our North America segment in the 2017 third quarter due to the higher vacation ownership contract sales.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(274 days) (252 days) 
Contract sales$602,186
 $489,317
 $112,869
 23%
Revenue recognition adjustments:       
Reportability1,150
 (17,029) 18,179
  
Sales reserve(38,597) (33,447) (5,150)  
Other(1)
(21,052) (23,010) 1,958
  
Sale of vacation ownership products$543,687
 $415,831
 $127,856
 31%
_________________________
(1)
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
Revenue reportability had a positive impact in the 2017 first three quarters due to an increase in the amount of sales that met the down payment requirement for revenue reportability during the period, partially offset by an increase in the amount of sales that remained in the rescission period as of the end of the period. Revenue reportability had a negative impact in the 2016 first three quarters due to a decrease in the amount of sales that met the down payment requirement for revenue reportability during the period and an increase in the amount of sales that remained in the rescission period as of the end of the period.
The higher sales reserve reflected the higher vacation ownership contract sales volume ($6.8 million of the increase), partially offset by an unfavorable sales reserve adjustment in our North America segment in the 2016 third quarter ($0.9 million) and a favorable sales reserve adjustment in our Asia Pacific segment in the 2017 third quarter ($0.7 million).
The decrease in other adjustments for sales incentives was driven by a decrease in the utilization of plus points as a sales incentive in our North America segment in the 2017 first three quarters.
Development Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(92 days) (84 days) 
Sale of vacation ownership products$180,522
 $131,012
 $49,510
 38%
Cost of vacation ownership products(42,826) (34,779) (8,047) (23%)
Marketing and sales(100,527) (79,017) (21,510) (27%)
Development margin$37,169
 $17,216
 $19,953
 116%
Development margin percentage20.6% 13.1% 7.5 pts  
The increase in development margin reflected the following:
$13.1 million of favorable revenue reportability compared to the 2016 third quarter;
$5.5 million from higher vacation ownership contract sales volume net of the sales reserve and direct variable expenses (i.e., cost of vacation ownership products and marketing and sales);
$4.5 million from a favorable mix of lower cost real estate inventory being sold; and
$3.4 million from lower sales reserve activity.
These increases in development margin were partially offset by $6.5 million from higher marketing and sales costs (of which $1.1 million was due to the ramp-up of our six newest sales distributions).

The 7.5 percentage point increase in the development margin percentage reflected a 6.9 percentage point increase due to the favorable revenue reportability year-over-year, a 2.5 percentage point increase due to a favorable mix of lower cost vacation ownership real estate inventory being sold in the 2017 third quarter, a 1.4 percentage point increase from the lower sales reserve activity, and a 0.3 percentage point increase from the higher North America vacation ownership contract sales (which have a development margin that is higher than the company-wide average). These increases were partially offset by a 3.6 percentage point decline due to higher marketing and sales costs (of which 0.6 percentage points was due to the higher ramp-up expenses associated with our newest sales distributions). We estimate the Hurricanes negatively impacted development margin percentage by 0.5 percentage points in the 2017 third quarter.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(274 days) (252 days) 
Sale of vacation ownership products$543,687
 $415,831
 $127,856
 31%
Cost of vacation ownership products(131,589) (104,149) (27,440) (26%)
Marketing and sales(305,217) (236,348) (68,869) (29%)
Development margin$106,881
 $75,334
 $31,547
 42%
Development margin percentage19.7% 18.1% 1.6 pts  
The increase in development margin reflected the following:
$27.4 million from higher vacation ownership contract sales volume net of the sales reserve and direct variable expenses (i.e., cost of vacation ownership products and marketing and sales);
$18.5 million from a favorable mix of lower cost real estate inventory being sold;
$11.7 million of favorable revenue reportability compared to the 2016 first three quarters; and
$1.6 million from lower sales reserve activity.
  These increases in development margin were partially offset by the following:
$14.9 million from higher marketing and sales costs (of which $6.3 million was due to the ramp-up of our six newest sales distributions);
$11.2 million of unfavorable changes in product cost true-up activity ($1.0 million of favorable true-up activity in the 2017 first three quarters compared to $12.2 million of favorable true-up activity in the 2016 first three quarters); and
$1.6 million from higher other development and inventory expenses.
The 1.6 percentage point increase in the development margin percentage reflected a 3.4 percentage point increase due to a favorable mix of lower cost vacation ownership real estate inventory being sold in the 2017 first three quarters, a 2.0 percentage point increase due to the favorable revenue reportability year-over-year, a 0.9 percentage point increase from the higher North America vacation ownership contract sales (which have a development margin that is higher than the company-wide average) and a 0.3 percentage point increase from the lower sales reserve activity. These increases were partially offset by a 2.0 percentage point decrease due to the unfavorable changes in product cost true-up activity year-over-year, a 2.7 percentage point decline due to higher marketing and sales costs (of which 1.2 percentage points was due to the higher ramp-up expenses associated with our newest sales distributions) and a 0.3 percentage point decrease from higher other development and inventory expenses.

Resort Management and Other Services Revenues, Expenses and Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(92 days) (84 days) 
Management fee revenues$22,249
 $19,460
 $2,789
 14%
Ancillary revenues31,095
 30,471
 624
 2%
Other services revenues23,538
 20,254
 3,284
 16%
Resort management and other services revenues76,882
 70,185
 6,697
 10%
Resort management and other services expenses(44,696) (39,825) (4,871) (12%)
Resort management and other services margin$32,186
 $30,360
 $1,826
 6%
Resort management and other services margin percentage41.9% 43.3% (1.4 pts)  
The increase in resort management and other services revenues reflected $2.8 million of higher management fees resulting from the cumulative increase in the number of vacation ownership products sold and higher operating costs across the system, $2.1 million of additional annual club dues and other revenues earned in connection with the MVCD program due to the cumulative increase in owners enrolled in the program, $1.2 million of higher resales commissions and other revenues and $0.6 million of higher ancillary revenues. The increase in ancillary revenues included $2.3 million of higher revenues from food and beverage and golf offerings at our resorts, partially offset by $1.7 million of lower revenue due to outsourcing multiple operations in our North America segment.
The improvement in the resort management and other services margin reflected the increases in revenue, partially offset by $4.9 million of higher expenses. Compared to the 2016 third quarter, expenses in the 2017 third quarter included $3.2 million of higher ancillary expenses from food and beverage and golf offerings at our resorts, $2.6 million of higher customer service expenses and expenses associated with the MVCD program, and $0.9 million of higher resales and other expenses, partially offset by $1.8 million of lower expenses due to outsourcing multiple operations in our North America segment.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(274 days) (252 days) 
Management fee revenues$65,680
 $57,311
 $8,369
 15%
Ancillary revenues91,404
 92,142
 (738) (1%)
Other services revenues71,920
 58,596
 13,324
 23%
Resort management and other services revenues229,004
 208,049
 20,955
 10%
Resort management and other services expenses(130,349) (123,695) (6,654) (5%)
Resort management and other services margin$98,655
 $84,354
 $14,301
 17%
Resort management and other services margin percentage43.1% 40.5% 2.6 pts  
The increase in resort management and other services revenues reflected $8.4 million of higher management fees resulting from the cumulative increase in the number of vacation ownership products sold and higher operating costs across the system, $5.3 million of additional annual club dues and other revenues earned in connection with the MVCD program due to the cumulative increase in owners enrolled in the program, $2.7 million of higher refurbishment revenue due to an increase in the number of refurbishment projects completed in the 2017 first three quarters, $3.1 million of higher resales commissions, brand fees and other revenues and $2.2 million of higher settlement fees due to an increase in the number of closed contracts in the 2017 first three quarters. These increases were partially offset by $0.7 million of lower ancillary revenues. The decline in ancillary revenues included $6.2 million of lower ancillary revenues from the operating property in Surfers Paradise, Australia (a portion of which was disposed of in the 2016 second quarter) and $5.4 million of lower revenue due to outsourcing multiple operations in our North America segment, partially offset by $10.9 million of higher revenues from food and beverage and golf offerings at our resorts.
The improvement in the resort management and other services margin reflected the increases in revenue, partially offset by $6.7 million of higher expenses. The higher expenses included $8.9 million of higher ancillary expenses from food and beverage and golf offerings at our resorts, $5.4 million of higher customer service expenses and expenses associated with

the MVCD program, $2.1 million of higher refurbishment expenses due to an increase in the number of projects being refurbished in the 2017 first three quarters and $0.8 million of higher resales and other expenses, partially offset by $5.5 million of lower ancillary expenses from the operating property in Surfers Paradise, Australia and$5.0 million of lower ancillary expenses due to outsourcing multiple operations in our North America segment.
The ancillary revenue producing portions of the operating property in Surfers Paradise, Australia were included in the portion of the operating property sold in the second quarter of 2016. Therefore, we do not anticipate future ancillary revenues or expenses at this property.
Financing Revenues, Expenses and Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(92 days) (84 days) 
Interest income$32,945
 $27,703
 $5,242
 19%
Other financing revenues1,740
 1,363
 377
 28%
Financing revenues34,685
 29,066
 5,619
 19%
Financing expenses(5,062) (4,581) (481) (10%)
Consumer financing interest expense(6,498) (5,361) (1,137) (21%)
Financing margin$23,125
 $19,124
 $4,001
 21%
Financing propensity65.8% 63.4%    
The increase in financing revenues was due to a $147 million increase in the average gross vacation ownership notes receivable balance ($7.4 million) and higher other financing revenues ($0.4 million), partially offset by financing program incentive costs ($1.4 million) and a decrease in the weighted average coupon rate of our vacation ownership notes receivable ($0.8 million).
The increase in financing margin reflected the higher financing revenues, partially offset by higher other expenses and higher consumer financing interest expense. The higher other expenses were due to an increase in variable expenses associated with the increase in the average gross vacation ownership notes receivable balance. The higher consumer financing interest expense was due to a higher average outstanding debt balance and the change to an end-of-month quarterly reporting cycle in 2017 that resulted in eight additional days in the 2017 third quarter.
We expect financing propensity for the 2017 fiscal year to approximate 65 percent as we intend to continue to offer financing incentive programs, and that interest income will continue to increase as new originations of vacation ownership notes receivable outpace the decline in principal of existing vacation ownership notes receivable.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(274 days) (252 days) 
Interest income$94,104
 $82,730
 $11,374
 14%
Other financing revenues5,222
 4,214
 1,008
 24%
Financing revenues99,326
 86,944
 12,382
 14%
Financing expenses(12,528) (11,782) (746) (6%)
Consumer financing interest expense(18,090) (15,840) (2,250) (14%)
Financing margin$68,708
 $59,322
 $9,386
 16%
Financing propensity64.9% 59.1%    
The increase in financing revenues was due to a $111 million increase in the average gross vacation ownership notes receivable balance ($18.8 million) and higher other financing revenues ($1.0 million), partially offset by financing program incentive costs ($5.2 million) and a slight decrease in the weighted average coupon rate of our vacation ownership notes receivable ($2.2 million).
The increase in financing margin reflected the higher financing revenues, partially offset by higher consumer financing interest expense and higher other expenses. The higher other expenses were due to an increase in variable expenses

associated with the increase in the average gross vacation ownership notes receivable balance. The higher consumer financing interest expense was due to a higher average outstanding debt balance and the change to an end-of-month quarterly reporting cycle in 2017 that resulted in 22 additional days in the 2017 first three quarters.
We expect financing propensity for the 2017 fiscal year to approximate 65 percent as we intend to continue to offer financing incentive programs, and that interest income will continue to increase as new originations of vacation ownership notes receivable outpace the decline in principal of existing vacation ownership notes receivable.
Rental Revenues, Expenses and Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(92 days) (84 days) 
Rental revenues$81,177
 $73,776
 $7,401
 10%
Unsold maintenance fees(19,186) (18,475) (711) (4%)
Other rental expenses(51,862) (42,495) (9,367) (22%)
Rental margin$10,129
 $12,806
 $(2,677) (21%)
Rental margin percentage12.5% 17.4% (4.9 pts)  
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016  
 (92 days) (84 days) 
Transient keys rented(1)
323,985
 287,911
 36,074 13%
Average transient key rate$213.20
 $218.46
 $(5.26) (2%)
Resort occupancy89.1% 91.7% (2.6 pts)  
_________________________
(1)
Transient keys rented exclude those obtained through the use of plus points, preview stays and those associated with our operating properties in San Diego, California and Surfers Paradise, Australia prior to their respective conversions to vacation ownership inventory.
The increase in rental revenues was due to a 13 percent increase in transient keys rented ($7.9 million) driven by a 20 percent increase in available keys, $1.1 million of higher plus points revenue (which is recognized when the points are redeemed or expire) and a $0.7 million increase in preview keys rented and other revenue, partially offset by a 2 percent lower average transient rate ($1.7 million) and $0.6 million of revenue in the 2016 third quarter at our operating property in San Diego, California prior to the conversion of the property to vacation ownership inventory.
The decrease in rental margin reflected higher expenses incurred due to owners choosing alternative usage options and higher unsold maintenance fees. These higher expenses more than offset the higher rental revenues net of direct variable expenses (such as housekeeping) and the $1.1 million increase in plus points revenue.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016  
($ in thousands)(274 days) (252 days) 
Rental revenues$250,621
 $229,133
 $21,488
 9%
Unsold maintenance fees(57,085) (48,811) (8,274) (17%)
Other rental expenses(154,558) (142,847) (11,711) (8%)
Rental margin$38,978
 $37,475
 $1,503
 4%
Rental margin percentage15.6% 16.4% (0.8 pts)  

 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016  
 (274 days) (252 days) 
Transient keys rented(1)
984,198
 864,945
 119,253
 14%
Average transient key rate$217.89
 $220.06
 $(2.17) (1%)
Resort occupancy88.7% 89.3% (0.6 pts)  
_________________________
(1)
Transient keys rented exclude those obtained through the use of plus points, preview stays and those associated with our operating properties in San Diego, California and Surfers Paradise, Australia prior to their respective conversions to vacation ownership inventory.
The increase in rental revenues was due to a 14 percent increase in transient keys rented ($26.2 million) driven by a 15 percent increase in available keys, a $4.3 million increase in preview keys rented and other revenue and $2.6 million of higher plus points revenue (which is recognized when the points are redeemed or expire), partially offset by $6.1 million of revenue in the 2016 first three quarters from the operating property in Surfers Paradise, Australia prior to the conversion of the property to vacation ownership inventory (a portion of which was disposed of in the second quarter of 2016), $3.4 million of revenue in the 2016 first three quarters at our operating property in San Diego, California prior to the conversion of the property to vacation ownership inventory and a 1 percent lower average transient rate ($2.1 million).
The increase in rental margin reflected the $2.6 million increase in plus points revenue and higher rental revenues net of direct variable expenses (such as housekeeping), partially offset by higher expenses incurred due to owners choosing alternative usage options and higher unsold maintenance fees.
Cost Reimbursements
2017 Third Quarter
Cost reimbursements increased $16.1 million, or 17 percent, overinclude direct and indirect costs that are reimbursed to us by customers under management contracts. All costs reimbursed to us by customers, with the 2016 third quarter, reflecting an increaseexception of $9.5 million due totaxes assessed by a governmental authority, are reported on a gross basis. We recognize cost reimbursements when we incur the change to an end-of-month quarterly reporting cycle in 2017, $5.3 million due to higher costs, $1.0 million due to additional managed unit weeks in the 2017 third quarter and a $0.3 million impact from foreign exchange rates in our Europe segment.
2017 First Three Quarters
related reimbursable costs. Cost reimbursements increased $44.1 million, or 15 percent, over the 2016 first three quarters, reflecting an increaseconsist of $22.4 million due to the change to an end-of-month quarterly reporting cycle in 2017, $17.3 million due to higher costs and $4.7 million due to additional managed unit weeks in the 2017 first three quarters, partially offset by a $0.3 million negative impact from foreign exchange rates in our Europe segment.
General and Administrative
2017 Third Quarter
General and administrativeactual expenses increased $4.5 million due to approximately $2.0 million from the change to an end-of-month quarterly reporting cycle in 2017 and $2.5 million due to higher personnel related and other expenses. The higher personnel related and other expenses included annual merit, bonus and inflationary cost increases.
2017 First Three Quarters
General and administrative expenses increased $10.9 million due to approximately $6.0 million from the change to an end-of-month quarterly reporting cycle in 2017 and $6.4 million due to higher personnel related and other expenses, partially offset by $1.5 million of lower litigation related costs. The higher personnel related and other expenses included annual merit, bonus and inflationary cost increases.

Royalty Fee
2017 Third Quarter
Royalty fee expense increased $0.6 million in the 2017 third quarter (from $14.6 million to $15.2 million) due to an increase in the dollar volume of closings ($0.5 million), the change to an end-of-month quarterly reporting cycle in 2017 that resulted in eight additional days in the 2017 third quarter ($1.0 million) and a contractual increase late in 2016 in the fixed portion of the royalty fee owed to Marriott International ($0.5 million), partially offset by $1.4 million of lower costs due to an increase in sales of pre-owned inventory, which carry a lower royalty fee as compared to initial sales of our inventory (one percent versus two percent).
2017 First Three Quarters
Royalty fee expense increased $5.6 million in the 2017 first three quarters (from $42.0 million to $47.6 million) due to an increase in the dollar volume of closings ($3.0 million), the change to an end-of-month quarterly reporting cycle in 2017 that resulted in 22 additional days in the 2017 first three quarters ($2.9 million) and a contractual increase late in 2016 in the fixed portion of the royalty fee owed to Marriott International ($1.7 million), partially offset by $2.0 million of lower costs due to an increase in sales of pre-owned inventory, which carry a lower royalty fee as compared to initial sales of our inventory (one percent versus two percent).
with no added margin.
Interest Expense
2017 Third Quarter
Interest expense increased $0.4 million dueconsists of all interest expense other than consumer financing interest expense, which is included within Financing expense.
Transaction and Integration Costs
Transaction and integration costs include fees paid to $0.9 million of imputed interest on a non-interest bearing note payablechange-management consultants and technology-related costs associated with the acquisitionintegration of vacation ownership units located on the Big Island of Hawaii, $0.4 million of higher other expensesILG and $0.2 million of interest expense associated with the Convertible Notes that were issued during the 2017 third quarter, partially offset by $1.1 million of expense incurred in the 2016 third quarter associated with the mandatorily redeemable preferred stock of a consolidated subsidiary. Due to the redemption of the mandatorily redeemable preferred stock in 2016, we will not incur further interest expense associated with this liability in the future.
2017 First Three Quarters
Interest expense decreased $1.2 million due to $3.4 million of expense incurred in the 2016 first three quarters associated with the mandatorily redeemable preferred stock of a consolidated subsidiary that we redeemed in 2016, partially offset by $1.4 million of imputed interest on a non-interest bearing note payable associated with the acquisition of vacation ownership units located on the Big Island of Hawaii, $0.6 million of higher other expensesWelk and $0.2 million of interest expense associated with the Convertible Notes that were issued during the 2017 third quarter.
Gains and Other Income, Net
2017 First Three Quarters
In the 2017 third quarter, we recorded $7.0 million of gainscharges for employee retention, severance and other income, including $8.7 million in net insurance proceedstermination related to the settlement of business interruption insurance claims arising from Hurricane Matthew, partially offset by a charge of $1.7 million associated with the estimated property damage insurance deductiblesbenefits. Transaction and impairment of property and equipment at several of our resorts, primarily in Florida and the Caribbean, that were impacted by Hurricane Irma and Hurricane Maria.
In the 2017 second quarter, we recorded $0.2 million of miscellaneous losses and other expense.
2016 First Three Quarters
In the 2016 third quarter, we recorded a $0.5 million favorable true-up of estimatedintegration costs also include costs related to the sale ofILG and Welk Acquisitions, primarily for financial advisory, legal, and other professional service fees, as well as certain tax related accruals.
Other Items
We measure operating performance using the portion of the operating property in Surfers Paradise, Australia in the 2016 second quarter that we did not intend to convert to vacation ownership inventory.key metrics described below.
In the 2016 second quarter, we recorded a $10.5 million gain on the disposition of excess inventory at The Ritz-Carlton Club and Residences, San Francisco (the “RCC San Francisco”), the reversal of the remaining $1.7 million accrual associated with the disposition of a golf course and related assets in Kauai, Hawaii because we no longer expected to incur additional costs in connection with this sale and a $1.5 million loss on•Contract sales from the sale of the portion of the operating property in Surfers Paradise, Australia that we did not intend to convert to vacation ownership inventory.products:

Other
2017 First Three Quarters
During the 2017 first three quarters, we incurred $0.6 million of acquisition costs.
2016 First Three Quarters
During the 2016 first quarter, we incurred $2.3 million of acquisition costs associated with an operating property in the South Beach area of Miami Beach and the anticipated future acquisition of the operating property in New York that we currently manage, and $0.2 million of transaction related costs associated with•Total contract sales include contract sales from the sale of vacation ownership products including joint ventures. and
•Consolidated contract sales exclude contract sales from the portionsale of vacation ownership products for non-consolidated joint ventures.
We consider contract sales to be an important operating measure because it reflects the pace of our business.
•Volume per guest (“VPG”) is calculated by dividing consolidated vacation ownership contract sales, excluding fractional sales, telesales, resales, and other sales that are not attributed to a tour at a sales location, by the number of tours at sales locations in a given period. We believe that this operating metric is valuable in evaluating the effectiveness of the operating property locatedsales process as it combines the impact of average contract price with the number of touring guests who make a purchase.
•Total active members is the number of Interval International network active members at the end of the applicable period. We consider active members to be an important metric as it provides the population of owners eligible to book transactions using the Interval International network.
•Average revenue per member is calculated by dividing membership fee revenue, transaction revenue, rental revenue, and other member revenue for the Interval International network by the monthly weighted average number of Interval International network active members during the applicable period. We believe this metric is valuable in Surfers Paradise, Australia that we did not intendmeasuring the overall engagement of our members.
•Segment financial results attributable to convertcommon shareholders represents revenues less expenses directly attributable to vacation ownership inventory.each applicable reportable business segment (Vacation Ownership and Exchange & Third-Party Management). We consider this measure to be important in evaluating the performance of our reportable business segments. See Footnote No. 5, “Acquisitions and Dispositions” and Footnote No. 8, “Contingencies and Commitments,”17 “Business Segments” to our Financial Statements for further information related to these transactions.on our reportable business segments.
During the 2016 second quarter, we incurred $1.9 millionNM = Not meaningful.
45

Table of costs associated with the anticipated future acquisitionContents
Consolidated Results
Three Months EndedSix Months Ended
($ in millions)June 30, 2022June 30, 2021June 30, 2022June 30, 2021
REVENUES
Sale of vacation ownership products$425 $296 $735 $459 
Management and exchange203 220 425 413 
Rental140 121 273 210 
Financing72 68 143 127 
Cost reimbursements324 274 640 529 
TOTAL REVENUES1,164 979 2,216 1,738 
EXPENSES
Cost of vacation ownership products80 67 140 107 
Marketing and sales214 164 396 273 
Management and exchange102 126 229 243 
Rental87 81 168 163 
Financing23 21 44 42 
General and administrative64 66 125 112 
Depreciation and amortization32 36 65 77 
Litigation charges2 3 5 6 
Royalty fee29 27 56 52 
Impairment— 5 — 5 
Cost reimbursements324 274 640 529 
TOTAL EXPENSES957 870 1,868 1,609 
Gains (losses) and other income (expense), net37 (2)41 4 
Interest expense(30)(44)(57)(87)
Transaction and integration costs(37)(29)(65)(48)
Other1 1 1 1 
INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS178 35 268 (1)
Provision for income taxes(43)(27)(75)(16)
NET INCOME (LOSS)135 8 193 (17)
Net loss (income) attributable to noncontrolling interests1 (2)1 (5)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS$136 $6 $194 $(22)
Operating Statistics
2022 Second Quarter
Three Months Ended
(Contract sales $ in millions)June 30, 2022June 30, 2021Change% Change
Vacation Ownership
Total contract sales$516 $372 $144 39%
Consolidated contract sales$506 $362 $144 40%
Joint venture contract sales$10 $10 $— 6%
VPG$4,613 $4,304 $309 7%
Exchange & Third-Party Management
Total active members at end of period (000's)1,596 1,321 275 21%
Average revenue per member$38.79 $46.36 $(7.57)(16%)
46

Table of vacation ownership units located on the Big IslandContents
2022 First Half
Six Months Ended
(Contract sales $ in millions)June 30, 2022June 30, 2021Change% Change
Vacation Ownership
Total contract sales$919 $604 $315 52%
Consolidated contract sales$900 $588 $312 53%
Joint venture contract sales$19 $16 $3 22%
VPG$4,653 $4,428 $225 5%
Exchange & Third-Party Management
Total active members at end of period (000's)1,596 1,321 275 21%
Average revenue per member$83.32 $93.77 $(10.45)(11%)
Revenues
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Vacation Ownership$1,091 $883 $208 24%
Exchange & Third-Party Management74 86 (12)(15%)
Total Segment Revenues1,165 969 196 20%
Consolidated Property Owners’ Associations(1)10 (11)(108%)
Total Revenues$1,164 $979 $185 19%
2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Vacation Ownership$2,047 $1,544 $503 33%
Exchange & Third-Party Management158 172 (14)(8%)
Total Segment Revenues2,205 1,716 489 28%
Consolidated Property Owners’ Associations11 22 (11)(48%)
Total Revenues$2,216 $1,738 $478 28%
47

Table of Hawaii and the anticipated future acquisition of the operating property in New York that we currently manage.Contents
During the 2016 third quarter, we incurred $0.1 million of acquisition costs.
Income Tax
2017 Third Quarter
Our provision for income taxes increased $8.4 million (from $14.0 million to $22.4 million) from the 2016 third quarter. The increase was primarily due to an increase in U.S. earnings.
2017 First Three Quarters
Our provision for income taxes increased $7.4 million (from $54.7 million to $62.1 million) from the 2016 first three quarters. The increase was primarily due to increases in U.S. and foreign earnings, partially offset by the favorable impact of the adoption of ASU 2016-09. See Footnote No. 1, “Summary of Significant Accounting Policies,” to our Financial Statements for additional information on ASU 2016-09.
Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA
EBITDA, a financial measure that is not prescribed by GAAP, is defined as earnings, or net income or loss attributable to common shareholders, before interest expense (excluding consumer financing interest expense)expense associated with term loan securitization transactions), provision for income taxes, depreciation and amortization. Adjusted EBITDA reflects additional adjustments for certain items described below, and excludes share-based compensation expense to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted. For purposes of our EBITDA and Adjusted EBITDA calculations, we do not adjust for consumer financing interest expense 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,with term loan securitization transactions because we consider consumer financing interest expenseit to be an operating expense of our business. We consider EBITDA and Adjusted EBITDA to be indicatorsan indicator of operating performance, which we use to measure our ability to service debt, fund capital expenditures, and expand our business.business, and return cash to shareholders. We also use EBITDA and Adjusted EBITDA, as do analysts, lenders, investors and others, because these measures excludethis measure excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company’s capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. EBITDA and Adjusted EBITDA also exclude depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. We believe Adjusted EBITDA reflects additional adjustments for certain items described below, and excludes non-cash share-based compensation expense to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted. We evaluate Adjusted EBITDAis useful as an indicator of operating performance because it allows for period-over-period comparisons of our on-going core operations before the impact of the excluded items. Together, EBITDA and Adjusted EBITDA facilitate ouralso facilitates comparison by us, analysts, investors, and others, of results from our on-going core operations before the impact of these items with results from other vacation ownership companies.

EBITDA and Adjusted EBITDA have limitations and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. In addition, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do or may not calculate them at all, limiting their usefulness as comparative measures. The table below shows our EBITDA and Adjusted EBITDA calculation and reconciles these measures with Net income (loss) attributable to common shareholders, which is the most directly comparable GAAP financial measure.
2022 Second Quarter
Three Months EndedChange
Quarter Ended Year to Date Ended
September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
($ in thousands)(92 days) (84 days) (274 days) (252 days)
Net income$40,762
 $26,807
 $118,738
 $87,524
($ in millions)($ in millions)June 30, 2022June 30, 2021Change% Change
Net income attributable to common shareholdersNet income attributable to common shareholders$136 $6 NM
Interest expense2,642
 2,262
 5,180
 6,331
Interest expense30 44 (14)(32%)
Tax provision22,367
 14,041
 62,139
 54,656
Provision for income taxesProvision for income taxes43 27 16 65%
Depreciation and amortization5,610
 4,679
 15,802
 14,856
Depreciation and amortization32 36 (4)(11%)
EBITDA71,381
 47,789
 201,859
 163,367
EBITDA241 113 128 NM
Non-cash share-based compensation3,898
 3,139
 12,349
 9,995
Share-based compensation expenseShare-based compensation expense12 14 (2)(12%)
Certain items(1,327) (316) (308) (6,994)Certain items2 37 (35)(96%)
Adjusted EBITDA$73,952
 $50,612
 $213,900
 $166,368
Adjusted EBITDA$255 $164 $91 55%
2017 Third Quarter
The certainCertain items for the 2017 thirdsecond quarter of 2022 consisted of $8.7 million in net insurance proceeds related to the settlement of business interruption insurance claims arising from Hurricane Matthew and a charge of $1.7 million associated with the estimated property damage insurance deductibles at several of our properties, primarily in Florida and the Caribbean, that were impacted by Hurricane Irma and Hurricane Maria (both of which were recorded in gains and other income), $3.7 million of variable compensation expense related to the impact of the Hurricanes, $2.0 million of litigation settlement expenses and a $0.1 million favorable true up of previously recorded acquisition costs. These exclusions decreased EBITDA by $1.3 million.
The certain items for the 2016 third quarter consisted of $0.5$37 million of gains and other income, and $0.1$2 million of acquisition costs. These exclusions decreased EBITDA by $0.3 million.
2017 First Three Quarters
The certain items for the 2017 first three quarters consisted of $8.7 million in net insurance proceeds related to the settlement of business interruption insurance claims arising from Hurricane Matthew and a charge of $1.7 millionrevenue associated with the estimated property damage insurance deductibles at severalan early termination of our properties, primarily in Floridaa VRI management contract, and the Caribbean, that were impacted by Hurricane Irma and Hurricane Maria (both of which were recorded in gains and other income), $3.7$3 million of variable compensation expensemiscellaneous other adjustments, partially offset by $37 million of transaction and integration costs (including $23 million of ILG integration related to the impactcosts, $10 million of the Hurricanes, $2.2other integration costs, $2 million of Welk Acquisition and integration related costs, and $2 million of other transaction costs), $5 million of purchase accounting adjustments, and $2 million of litigation settlement expenses, $0.6 million of acquisition costs and $0.2 million of losses and other expense. These exclusions decreased EBITDA by $0.3 million.charges.
The certain items for the 2016 first three quarters consisted of $11.1$37 million of gains and other income $4.7included $33 million of acquisition costs, a $0.3 million reversalgains and other income related to the strategic decision to dispose of litigation settlement expense, and $0.3our hotel in Puerto Vallarta, Mexico, $16 million of profitgains and other income related to the strategic decision to dispose of our VRI Americas business, and $2 million of proceeds from corporate owned life insurance, partially offset by $8 million of foreign currency translation losses, $3 million of non-cash losses pursuant to a change in control of certain Consolidated Property Owners’ Associations, and $3 million of non-income tax related adjustments to the operationsreceivable for the indemnification payment we expect to receive from Marriott International. See Footnote 5 “Income Taxes” to our Financial Statements for further information regarding our indemnification assets.
48

Table of the portion of the property we acquired in Surfers Paradise, Australia in 2015 that we sold inContents
Certain items for the second quarter of 2016. These exclusions decreased2021 consisted of $29 million of transaction costs (including $25 million of ILG integration related costs and $3 million of Welk Acquisition and integration related costs), $5 million of impairment charges, $3 million of litigation charges, $2 million of purchase accounting adjustments, and $2 million of losses and other expense, partially offset by $2 million to eliminate the impact of consolidating certain property owners’ associations, and $2 million of activity related to the accrual for health and welfare costs for furloughed associates.
2022 First Half
Six Months EndedChange
($ in millions)June 30, 2022June 30, 2021% Change
Net income (loss) attributable to common shareholders$194 $(22)$216 NM
Interest expense57 87 (30)(34%)
Provision for income taxes75 16 59 NM
Depreciation and amortization65 77 (12)(16%)
EBITDA391 158 233 NM
Share-based compensation expense20 22 (2)(8%)
Certain items32 53 (21)(42%)
Adjusted EBITDA$443 $233 $210 90%
Certain items for the first half of 2022 consisted of $65 million of transaction and integration costs (including $48 million of ILG integration related costs, $10 million of other integration costs, $5 million of Welk Acquisition and integration related costs, and $2 million of other transaction costs), $8 million of purchase accounting adjustments, and $5 million of litigation charges, partially offset by $41 million of gains and other income, $2 million of revenue associated with an early termination of a VRI management contract, and $3 million of miscellaneous other adjustments.
The $41 million of gains and other income included $33 million of gains and other income related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, $16 million of gains and other income related to the strategic decision to dispose of our VRI Americas business, $3 million of business interruption insurance proceeds received and $2 million of proceeds from corporate owned life insurance, partially offset by $7 million of foreign currency translation charges, $3 million of non-cash losses pursuant to a change in control of certain Consolidated Property Owners’ Associations, and $3 million of non-income tax related adjustments to the receivable for the indemnification payment we expect to receive from Marriott International. See Footnote 5 “Income Taxes” to our Financial Statements for further information regarding our indemnification assets.
Certain items for the first half of 2021 consisted of $48 million of transaction costs (including $42 million of ILG integration related costs and $5 million of Welk Acquisition and integration related costs), $6 million of litigation charges, $5 million of impairment charges and $2 million of purchase accounting adjustments, partially offset by $4 million of gains and other income net (including $6 million of foreign currency translation gains, partially offset by $2 million of non-income tax related charges), $2 million to eliminate the impact of consolidating certain property owners’ associations, and $2 million of activity related to the accrual for health and welfare costs for furloughed associates.
49

Table of Contents
Segment Adjusted EBITDA
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Vacation Ownership$274 $182 $92 51%
Exchange & Third-Party Management35 37 (2)(5%)
Segment adjusted EBITDA309 219 90 41%
General and administrative(54)(55)1 1%
Adjusted EBITDA$255 $164 $91 55%
2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Vacation Ownership$473 $250 $223 89%
Exchange & Third-Party Management78 78 — —%
Segment adjusted EBITDA551 328 223 68%
General and administrative(108)(95)(13)(14%)
Adjusted EBITDA$443 $233 $210 90%
The following tables present Adjusted EBITDA for our reportable segments reconciled to segment financial results attributable to common shareholders.
Vacation Ownership
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Segment adjusted EBITDA$274 $182 $92 51%
Depreciation and amortization(22)(23)1 5%
Share-based compensation expense(2)(2)— (20%)
Certain items27 (6)33 NM
Segment financial results attributable to common shareholders$277 $151 $126 85%
Certain items in the Vacation Ownership segment for the second quarter of 2022 consisted of $32 million of gains and other income, net (including $33 million related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, partially offset by $7.0 million.$1 million of foreign currency translation charges) and $3 million of miscellaneous other adjustments, partially offset by $5 million of purchase accounting adjustments, $2 million of litigation charges and $1 million of miscellaneous other transaction costs.
Certain items in the Vacation Ownership segment for the second quarter of 2021 consisted of $3 million of litigation charges, $2 million of purchase accounting adjustments and $1 million of transaction and integration costs.
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2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Segment adjusted EBITDA$473 $250 $223 89%
Depreciation and amortization(44)(42)(2)(4%)
Share-based compensation expense(3)(3)— (21%)
Certain items24 (10)34 NM
Segment financial results attributable to common shareholders$450 $195 $255 NM
Certain items in the Vacation Ownership segment for the first half of 2022 consisted primarily of $35 million of gains and other income, net (including $33 million related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, and $3 million related to business interruption insurance proceeds, partially offset by $1 million of foreign currency translation charges) and $3 million of miscellaneous other adjustments, partially offset by $8 million of purchase accounting adjustments, $5 million of litigation charges, and $1 million of miscellaneous other transaction costs.
Certain items in the Vacation Ownership segment for the first half of 2021 consisted of $6 million of litigation charges, $2 million of purchase accounting adjustments, $1 million of transaction and integration costs, and $1 million of restructuring costs.
Exchange & Third-Party Management
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Segment adjusted EBITDA$35 $37 $(2)(5%)
Depreciation and amortization(7)(9)2 16%
Share-based compensation expense— (1)1 (10%)
Certain items18 — 18 NM
Segment financial results attributable to common shareholders$46 $27 $19 66%
Certain items for the Exchange & Third-Party Management segment for the second quarter of 2022 consisted of $16 million of gains and other income related to the strategic decision to dispose of our VRI Americas business and $2 million of revenue associated with an early termination of a VRI management contract.
2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Segment adjusted EBITDA$78 $78 $— —%
Depreciation and amortization(16)(29)13 43%
Share-based compensation expense(1)(1)— (23%)
Certain items18 — 18 NM
Segment financial results attributable to common shareholders$79 $48 $31 63%
Certain items for the Exchange & Third-Party Management segment for the first half of 2022 consisted of $16 million of gains and other income related to the strategic decision to dispose of our VRI Americas business and $2 million of revenue associated with an early termination of a VRI management contract.
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Business Segments
Our business is grouped into threetwo reportable business segments: North America, Asia PacificVacation Ownership and Europe.Exchange & Third-Party Management. See Footnote No. 13,17 “Business Segments,”Segments” to our Financial Statements for further information on our segments.

North AmericaVacation Ownership
The following discussion presents an analysis of our results of operations for the North America segment for the 2017 third quarter compared to the 2016 third quarter, and the 2017 first three quarters compared to the 2016 first three quarters.
Three Months EndedSix Months Ended
($ in millions)June 30, 2022June 30, 2021June 30, 2022June 30, 2021
REVENUES
Sale of vacation ownership products$425 $296 $735 $459 
Resort management and other services140 123 266 217 
Rental129 110 251 187 
Financing72 68 143 127 
Cost reimbursements325 286 652 554 
TOTAL REVENUES1,091 883 2,047 1,544 
EXPENSES
Cost of vacation ownership products80 67 140 107 
Marketing and sales214 164 396 273 
Resort management and other services60 46 114 81 
Rental91 95 181 191 
Financing23 21 44 42 
Depreciation and amortization22 23 44 42 
Litigation charges2 3 5 6 
Restructuring— — — 1 
Royalty fee29 27 56 52 
Cost reimbursements325 286 652 554 
TOTAL EXPENSES846 732 1,632 1,349 
Gains and other income, net32 — 35 — 
Transaction and integration costs(1)(1)(1)(1)
Other1 1 1 1 
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS$277 $151 $450 $195 
 Quarter Ended Year to Date Ended
 September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
($ in thousands)(92 days) (84 days) (274 days) (252 days)
REVENUES       
Sale of vacation ownership products$163,454
 $116,184
 $495,958
 $373,341
Resort management and other services68,236
 62,956
 206,830
 182,665
Financing32,854
 27,438
 93,812
 81,699
Rental69,458
 63,387
 224,588
 201,524
Cost reimbursements103,799
 88,834
 320,242
 278,190
TOTAL REVENUES437,801
 358,799
 1,341,430
 1,117,419
EXPENSES       
Cost of vacation ownership products37,404
 30,134
 116,715
 89,876
Marketing and sales87,308
 67,662
 266,962
 202,888
Resort management and other services37,453
 33,849
 111,664
 101,322
Rental62,236
 53,131
 187,141
 164,680
Litigation settlement2,033
 —
 2,033
 (303)
Royalty fee1,956
 2,813
 7,684
 6,753
Cost reimbursements103,799
 88,834
 320,242
 278,190
TOTAL EXPENSES332,189
 276,423
 1,012,441
 843,406
(Losses) gains and other (expense) income, net(1,754) (27) (1,950) 12,297
Other46
 (55) 171
 (4,068)
SEGMENT FINANCIAL RESULTS$103,904
 $82,294
 $327,210
 $282,242
Contract Sales
2017 Third2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Total consolidated contract sales$506 $362 $144 40%
Joint venture contract sales10 10 — 6%
Total contract sales$516 $372 $144 39%
2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Total consolidated contract sales$900 $588 $312 53%
Joint venture contract sales19 16 3 22%
Total contract sales$919 $604 $315 52%
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 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Contract sales       
Vacation ownership$179,227
 $150,964
 $28,263
 19%
Total contract sales$179,227
 $150,964
 $28,263
 19%
The increase in North America vacation ownership contract sales reflected a $30.7 million increase in sales at on-site sales locations, partially offset by a $2.3 million decrease in sales at off-site (non tour-based) sales locations and a $0.1 million decrease in fractional sales as we continue to sell through remaining luxury inventory. Our 2017 third quarter had eight more days than our 2016 third quarter due to the change to an end-of-month quarterly reporting cycle in 2017. We estimate that 2016 third quarter contract sales would have been approximately $15 million higher on a comparable basis, the majority
Table of which would have occurred at on-site sales locations. We estimate the Hurricanes negatively impacted contract sales by $12 million in the 2017 third quarter.Contents
The increase in sales at North America on-site locations reflected an 18 percent increase in the number of tours and a 3 percent increase in VPG to $3,482 in the 2017 third quarter from $3,371 in the 2016 third quarter. The increase in the number of tours was due to increases in both owner tours and first time buyer tours, and was driven by programs that were implemented in 2015 or later to generate additional tours. The 18 percent increase in the number of total tours included an increase of approximately 11 percent due to the change in the financial reporting calendar in 2017 and an increase of 9 percent from new sales locations, partially offset by a decrease of 2 percent from existing sales locations. We estimate the Hurricanes negatively impacted the year over year change in tours by roughly 6.5 percent; the vast majority of this impact was at our exiting sales

locations. The increase in VPG resulted from a 0.2 percentage point increase in closing efficiency and higher pricing. The sales at North America off-site locations were negatively impacted by lower sales in Latin America.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Contract sales       
Vacation ownership$547,546
 $436,214
 $111,332
 26%
Total contract sales$547,546
 $436,214
 $111,332
 26%
The increase in North America vacation ownership contract sales reflected a $116.0 million increase in sales at on-site sales locations, partially offset by a $4.3 million decrease in sales at off-site (non tour-based) sales locations and a $0.4 million decrease in fractional sales as we continue to sell through remaining luxury inventory. Our 2017 first three quarters had 22 more days than our 2016 first three quarters due to the change to an end-of-month quarterly reporting cycle in 2017. We estimate that 2016 first three quarters contract sales would have been approximately $38 million higher on a comparable basis, the majority of which would have occurred at on-site sales locations. We estimate the Hurricanes negatively impacted contract sales by $12 million in the 2017 first three quarters.
The increase in sales at North America on-site locations reflected a 23 percent increase in the number of tours and a 5 percent increase in VPG to $3,580 in the 2017 first three quarters from $3,414 in the 2016 first three quarters. The increase in the number of tours was due to increases in both owner tours and first time buyer tours, and was driven by programs that were implemented in 2015 or later to generate additional tours. The 23 percent increase in the number of total tours included an increase of approximately 11 percent due to the change in the financial reporting calendar in 2017, an increase of 9 percent from new sales locations and an increase of 3 percent from existing sales locations. We estimate the Hurricanes negatively impacted the year over year change in tours by nearly 3 percent; the vast majority of this impact was at our exiting sales locations. The increase in VPG resulted from a 0.3 percentage point increase in closing efficiency and higher pricing. The sales at North America off-site locations were negatively impacted by lower sales in Latin America, which were negatively impacted by currency fluctuations.
Sale of Vacation Ownership Products
2017 Third2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Total contract sales$516 $372 $144 39%
Less: resales contract sales(11)(7)(4)
Less: joint venture contract sales(10)(10)— 
Consolidated contract sales, net of resales495 355 140 39%
Plus:
Settlement revenue9 8 1 
Resales revenue4 1 3 
Revenue recognition adjustments:
Reportability(14)(17)3 
Sales reserve(37)(28)(9)
Other(1)
(32)(23)(9)
Sale of vacation ownership products$425 $296 $129 44%
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Contract sales$179,227
 $150,964
 $28,263
 19%
Revenue recognition adjustments:       
Reportability1,446
 (16,853) 18,299
  
Sales reserve(10,277) (11,923) 1,646
  
Other(1)
(6,942) (6,004) (938)  
Sale of vacation ownership products$163,454
 $116,184
 $47,270
 41%
_______________
_________________________
(1)Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue.
(1)
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
Revenue reportability positively impactedThe higher contract sales performance reflects the 2017 third quarter due to a decrease in the amount of sales that remained in the rescission period ascontinued ramp-up of the endbusiness subsequent to the initial impact of the quarter. Revenue reportability negatively impacted the 2016 third quarter due to a decrease in the amount ofCOVID-19 pandemic. Higher settlement and resales revenues, sales that met the down payment requirement for revenue reportability during the periodincentives issued, and an increase in the amount of sales that remained in the rescission period as of the end of the quarter.
The lower sales reserve reflected a lower required reserve in the 2017 third quarter ($2.9 million) due to lower default and delinquency activity and an unfavorable sales reserve adjustment in the 2016 third quarter ($0.9 million), partially offsetwere driven by the higher contract sales volumes.
2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Total contract sales$919 $604 $315 52%
Less: resales contract sales(20)(12)(8)
Less: joint venture contract sales(19)(16)(3)
Consolidated contract sales, net of resales880 576 304 53%
Plus:
Settlement revenue16 13 3 
Resales revenue8 3 5 
Revenue recognition adjustments:
Reportability(47)(53)6 
Sales reserve(66)(42)(24)
Other(1)
(56)(38)(18)
Sale of vacation ownership products$735 $459 $276 60%
_______________
(1)Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue.
The higher contract sales volume ($2.2 millionperformance reflects the continued ramp-up of the increase).business subsequent to the initial impact of the COVID-19 pandemic, as well as $29 million in contract sales relating to the Welk Acquisition, which we acquired in the second quarter of 2021. Higher settlement and resales revenues, sales incentives issued and sales reserve activity were driven by the higher contract sales volumes as well as the Welk Acquisition.
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Development Profit
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Sale of vacation ownership products$425 $296 $129 44%
Cost of vacation ownership products(80)(67)(13)(18%)
Marketing and sales(214)(164)(50)(32%)
Development profit$131 $65 $66 (100%)
Development profit margin31.0%22.3%8.7 pts
The increase in other adjustments for sales incentives was driven by an increase in the utilization of plus pointsDevelopment profit reflects $50 million as a sales incentive in the 2017 third quarter due to theresult of higher vacation ownership contract sales.

2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Contract sales$547,546
 $436,214
 $111,332
 26%
Revenue recognition adjustments:       
Reportability1,887
 (12,982) 14,869
  
Sales reserve(33,090) (26,960) (6,130)  
Other(1)
(20,385) (22,931) 2,546
  
Sale of vacation ownership products$495,958
 $373,341
 $122,617
 33%
_________________________
(1)
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
Revenue reportability positively impacted the 2017 first three quarters due to an increase in the amount of sales that met the down payment requirement for revenue reportability during the period, partially offset by an increase in the amount of sales that remained in the rescission period as of the end of the period. Revenue reportability negatively impacted the 2016 first three quarters due to a decrease in the amount of sales that met the down payment requirement for revenue reportability during the period and an increase in the amount of sales that remained in the rescission period as of the end of the period.
The higher sales reserve reflected the higher vacation ownership contract sales volume, partially offset by an unfavorable sales reserve adjustment in the 2016 first three quarters.
The decrease in other adjustments for sales incentives was driven by a decrease in the utilization of plus points as a sales incentive in the 2017 first three quarters.
Development Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Sale of vacation ownership products$163,454
 $116,184
 47,270
 41%
Cost of vacation ownership products(37,404) (30,134) (7,270) (24%)
Marketing and sales(87,308) (67,662) (19,646) (29%)
Development margin$38,742
 $18,388
 $20,354
 111%
Development margin percentage23.7% 15.8% 7.9 pts  
The increase in development margin reflected the following:
$11.8 million of favorable revenue reportability compared to the 2016 third quarter;
$5.9 million from higher vacation ownership contract sales volumevolumes net of the sales reserve and direct variable expenses (i.e., cost of vacation ownership products and marketing and sales);
$4.4, in part from continued strong VPG and lower marketing and sales spending as a percentage of revenue, $11 million from a favorable mix of lower cost real estate inventory being sold;
$2.8 million from lower sales reserve activity in the 2017 third quarter; and
$0.5sold, $3 million of favorable changes in product cost true-up activity, ($1.5and $2 million of favorable true-up activity in the 2017 third quarter compared to $1.0 million of favorable true-up activity in the 2016 third quarter).revenue reportability.
These increases in development margin were partially offset by $5.1 million from higher marketing and sales costs (of which $1.3 million was due to the ramp-up of our newest sales distributions).
The 7.9 percentage point increase in the development margin percentage reflected a 6.6 percentage point increase due to the favorable revenue reportability year-over-year, a 2.7 percentage point increase due to a favorable mix of lower cost vacation ownership real estate inventory being sold in the 2017 third quarter, a 1.2 percentage point increase from the lower sales reserve activity, and 0.3 percentage point increase due to the favorable changes in product cost true-up activity year-over-year. These increases were partially offset by a 2.9 percentage point decline due to higher marketing and sales costs (of which2022 First Half

0.8 percentage points was due to the higher ramp-up expenses associated with our newest sales distributions).We estimate the Hurricanes negatively impacted development margin percentage by 0.3 percentage points in the 2017 third quarter.
2017 First Three Quarters
Six Months Ended
Year to Date Ended Change % Change
September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
($ in millions)($ in millions)June 30, 2022June 30, 2021Change% Change
Sale of vacation ownership products$495,958
 $373,341
 122,617
 33%Sale of vacation ownership products$735 $459 $276 60%
Cost of vacation ownership products(116,715) (89,876) (26,839) (30%)Cost of vacation ownership products(140)(107)(33)(31%)
Marketing and sales(266,962) (202,888) (64,074) (32%)Marketing and sales(396)(273)(123)(45%)
Development margin$112,281
 $80,577
 $31,704
 39%
Development margin percentage22.6% 21.6% 1.0 pts 
Development profitDevelopment profit$199 $79 $120 NM
Development profit marginDevelopment profit margin27.1%17.3%9.8 pts
The increase in development margin reflected the following:
$28.0Development profit reflects $93 million fromas a result of higher vacation ownership contract sales volumevolumes net of the sales reserve and direct variable expenses (i.e., cost of vacation ownership products and marketing and sales);
$17.6, in part from continued strong VPGs and lower marketing and sales spending as a percentage of revenue, $14 million from a favorable mix of lower cost real estate inventory being sold;
$9.6sold, $9 million of favorable product cost true-up activity, and $4 million of favorable revenue reportability compared to the 2016 first three quarters; andreportability.
$0.4 million from lower sales reserve activity in the 2017 first three quarters.
These increases in development margin were partially offset by the following:
$11.8 million from higher marketing and sales costs (of which $7.3 million was due to the ramp-up of our newest sales distributions);
$10.7 million of unfavorable changes in product cost true-up activity ($0.7 million of favorable true-up activity in the 2017 first three quarters compared to $11.4 million of favorable true-up activity in the 2016 first three quarters); and
$1.4 million from higher other development and inventory expenses.
The 1.0 percentage point increase in the development margin percentage reflected a 3.6 percentage point increase due to a favorable mix of lower cost vacation ownership real estate inventory being sold in the 2017 first three quarters, a 1.5 percentage point increase due to the favorable revenue reportability year-over-year and a 0.1 percentage point increase from the lower sales reserve activity. These increases were partially offset by a 2.2 percentage point decrease due to the unfavorable changes in product cost true-up activity year-over-year and a 1.9 percentage point decline due to higher marketing and sales costs (of which 1.5 percentage points was due to the higher ramp-up expenses associated with our newest sales distributions).
Resort Management and Other Services Revenues, Expenses and MarginProfit
2017 Third2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Management fee revenues$41 $39 $2 3%
Ancillary revenues66 52 14 27%
Other management and exchange revenues33 32 1 5%
Resort management and other services revenues140 123 17 14%
Resort management and other services expenses(60)(46)(14)(31%)
Resort management and other services profit$80 $77 $3 3%
Resort management and other services profit margin56.7%62.4%(5.7 pts)
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Management fee revenues$19,810
 $17,330
 $2,480
 14%
Ancillary revenues25,924
 25,992
 (68) —%
Other services revenues22,502
 19,634
 2,868
 15%
Resort management and other services revenues68,236
 62,956
 5,280
 8%
Resort management and other services expenses(37,453) (33,849) (3,604) (11%)
Resort management and other services margin$30,783
 $29,107
 $1,676
 6%
Resort management and other services margin
percentage		45.1% 46.2% (1.1 pts)  
Resort management and other services revenues reflected higher ancillary revenues, including revenues from food and beverage and golf offerings, as a result of the continued ramp-up of the business subsequent to the initial impact of the COVID-19 pandemic, and higher management fees. attributed to budgeted expense increases at owners’ associations, as our management fees are largely calculated as a percentage of budgeted costs to operate resorts. Resort occupancies continued to increase subsequent to the initial impact of the pandemic as travel and tourism trends continue to recover. We expect resort occupancies to remain strong for the remainder of 2022 and this trend in business improvement to continue for the remainder of 2022.
The increase in resort management and other services profit reflected the higher ancillary expenses as a result of the higher ancillary revenues mentioned above.
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2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Management fee revenues$83 $77 $6 7%
Ancillary revenues120 80 40 50%
Other management and exchange revenues63 60 3 6%
Resort management and other services revenues266 217 49 23%
Resort management and other services expenses(114)(81)(33)(41%)
Resort management and other services profit$152 $136 $16 12%
Resort management and other services profit margin57.1%62.7%(5.6 pts)
Resort management and other services revenues reflected $2.5 million of higher management fees resulting from the cumulative increase in the number of vacation ownership products sold and higher operating costs across the system, $2.0 million of additional annual club dues and other revenues earned in connection with the MVCD program due to

the cumulative increase in owners enrolled in the program, and $0.9 million of higher resales commissions and other revenues. These increases were partially offset by $0.1 million of lower ancillary revenues. The decrease in ancillary revenues, included $1.7 million of lower revenue due to outsourcing multiple operations, partially offset by $1.6 million of higherincluding revenues from food and beverage and golf offerings, at our resorts.
The increaseas a result of the continued ramp-up of the business subsequent to the initial impact of the COVID-19 pandemic, $5 million of revenues relating to the Welk Acquisition, which we acquired in the resortsecond quarter of 2021, and higher management and other services margin reflected the increases in revenue, partially offset by $3.6 million of higher expenses. The higher expenses included $2.5 million of higher customer service expenses and expenses associated with the MVCD program, $2.2 million of higher ancillary expenses from food and beverage and golf offerings at our resorts and $0.7 million of higher resales and other expenses, partially offset by $1.8 million of lower expenses due to outsourcing multiple operations.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Management fee revenues$58,725
 $51,182
 $7,543
 15%
Ancillary revenues78,522
 74,633
 3,889
 5%
Other services revenues69,583
 56,850
 12,733
 22%
Resort management and other services revenues206,830
 182,665
 24,165
 13%
Resort management and other services expenses(111,664) (101,322) (10,342) (10%)
Resort management and other services margin$95,166
 $81,343
 $13,823
 17%
Resort management and other services margin
percentage		46.0% 44.5% 1.5 pts  
fees.
The increase in resort management and other services revenuesprofit reflected $7.5 millionthe higher ancillary expenses as a result of higher management fees resulting from the cumulative increase in the number of vacation ownership products sold and higher operating costs across the system, $4.9 million of additional annual club dues and other revenues earned in connection with the MVCD program due to the cumulative increase in owners enrolled in the program, $9.3 million of higher ancillary revenues mentioned above.
Rental Revenues, Expenses and Profit
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Rental revenues$129 $110 $19 18%
Rental expenses(91)(95)4 4%
Rental profit$38 $15 $23 NM
Rental profit margin29.5%13.2%16.3 pts
Three Months Ended
June 30, 2022June 30, 2021Change% Change
Transient keys rented(1)
577,114 547,041 30,073 5%
Average transient key rate$262.38 $230.67 $31.71 14%
Resort occupancy90.5%85.0%5.5 pts
_________________________
(1)Transient keys rented exclude those occupied through the use of plus points and preview stays.
Rental revenues increased by $37 million due to additional transient keys rented at a higher revenues from food and beverage and golf offerings at our resorts, $3.1 million of higher resales commissions, brand fees and other revenues, $2.7 million of higher refurbishment revenue due to an increase in the number of refurbishment projects completed in the 2017 first three quarters, and $2.1 million of higher settlement fees due to an increase in the number of closed contracts in the 2017 first three quarters,average transient rate, partially offset by $5.4$18 million of increased rental expenses recorded as a reduction to rental revenues.
Rental expenses decreased by $4 million attributed to $18 million of costs recorded as a reduction to rental revenues and $1 million of lower revenue due to outsourcing multiple operations.
The increase in the resort management and other services margin reflected the increases in revenue, partially offset by $10.3 million of higher expenses, including $5.1 million of higher customer service expenses and expenses associated with the MVCD program, $7.4 million of higher ancillary expenses from food and beverage and golf offerings at our resorts, $2.1 million of higher refurbishment expenses due to an increase in the number of projects being refurbished in the 2017 first three quarters, and $0.7 million of higher resales and otheradministrative expenses, partially offset by $5.0a $6 million increase in operating hotel expenses attributable to higher revenues, $5 million of higher carry costs of excess inventory on hand resulting from our fulfillment of purchase commitments in 2021 and $4 million of additional costs attributed to higher utilization in 2022 of third-party vacation offerings by owners.
As the majority of the governmental restrictions in response to the COVID-19 pandemic that caused rental activity to decline (such as travel restrictions and quarantine requirements) have been lifted, we expect high resort occupancies throughout the remainder of 2022. However, we do not expect this part of our business to fully recover to pre-pandemic levels in 2022 as a result of reduced rental inventory availability due to higher owner usage as well as higher inventory carrying costs, as described above.
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2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Rental revenues$251 $187 $64 34%
Rental expenses(181)(191)10 5%
Rental profit (loss)$70 $(4)$74 NM
Rental profit margin27.7%NM
Six Months Ended
June 30, 2022June 30, 2021Change% Change
Transient keys rented(1)
1,116,673 932,786 183,887 20%
Average transient key rate$268.71 $229.99 $38.72 17%
Resort occupancy89.1%76.1%13.0 pts
_________________________
(1)Transient keys rented exclude those occupied through the use of plus points and preview stays.
Rental revenues increased by $115 million due to the increase in transient keys rented and a higher average transient rate, partially offset by $51 million of increased rental expenses recorded as a reduction to rental revenues.
Rental expenses decreased by $10 million attributed to $51 million of costs recorded as a reduction to rental revenues and $11 million of higher allocations of rental costs to marketing and sales expense for marketing purposes partially offset by $15 million in operating hotel expenses attributable to higher revenues, $13 million of additional tidy and variable costs associated with increased transient keys rented, $8 million of higher carry costs of excess inventory on hand resulting from our fulfillment of purchase commitments in 2021, $8 million of additional costs attributed to higher utilization in 2022 of third-party vacation offerings by owners, $5 million of higher subsidy expenses, and $3 million of higher owner list for rent costs.
Financing Revenues, Expenses and Profit
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Financing revenues72 68 4 5%
Financing expenses(10)(8)(2)(22%)
Consumer financing interest expense(13)(13)— 4%
Financing profit$49 $47 $2 5%
Financing propensity53.1%52.0%
Financing revenues reflected $3 million of higher interest income as a result of a higher average notes receivable balance, a slightly higher average interest rate driven by mix of customers and brands, and $1 million of lower plus point financing incentive costs year-over-year. The higher average notes receivable balance was the result of new loan originations in excess of the amount of the continued pay-down of the existing vacation ownership notes receivable portfolio. We expect the average notes receivable balance, and resulting interest income, to continue to increase with the expected growth in contract sales and loan originations. Financing expenses increased primarily due to outsourcing multiple operations.the timing of when lien fee income is recognized. As we move through 2022, we expect to continue to increase our focus on sales to first-time buyers, which should further increase financing propensity.
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Table of Contents
2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Financing revenues143 127 16 12%
Financing expenses(19)(16)(3)(17%)
Consumer financing interest expense(25)(26)1 4%
Financing profit$99 $85 $14 17%
Financing propensity51.9%49.2%
Financing Revenues
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Interest income$31,146
 $26,107
 $5,039
 19%
Other financing revenues1,708
 1,331
 377
 28%
Financing revenues$32,854
 $27,438
 $5,416
 20%
Financing propensity66.1% 62.4%    
The increase in financing revenues wasreflected $13 million of higher interest income (including $10 million due to an increase in the Welk Acquisition and $3 million as a result of a higher average gross vacation ownership notes receivable balance ($7.2 million) and a slightly higher otheraverage interest rate driven by mix of customers and brands) and $3 million of lower plus point financing revenues ($0.4 million), partially offset by financing program incentive costs ($1.4 million) and a decrease in the weighted average coupon rate of our vacation ownership notes receivable ($0.8 million). We expect financing propensity for the 2017 fiscal year to approximate 65 percent as we intend to continue to offer financing incentive programs, and that interest income will continue to increase as new originations of vacation ownership notes receivable outpace the decline in principal of existing vacation ownership notes receivable.

2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Interest income$88,698
 $77,582
 $11,116
 14%
Other financing revenues5,114
 4,117
 997
 24%
Financing revenues$93,812
 $81,699
 $12,113
 15%
Financing propensity65.0% 57.5%    
The increase in financing revenues was due to an increase in the average gross vacation ownership notes receivable balance ($18.3 million) and higher other financing revenues ($1.0 million), partially offset by financing program incentive costs ($5.2 million) and a decrease in the weighted average coupon rate of our vacation ownership notes receivable ($2.0 million). We expect financing propensity for the 2017 fiscal year to approximate 65 percent as we intend to continue to offer financing incentive programs, and that interest income will continue to increase as new originations of vacation ownership notes receivable outpace the decline in principal of existing vacation ownership notes receivable.
Rental Revenues, Expenses and Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Rental revenues$69,458
 $63,387
 $6,071
 10%
Unsold maintenance fees(17,105) (16,688) (417) (2%)
Other rental expenses(45,131) (36,443) (8,688) (24%)
Rental margin$7,222
 $10,256
 $(3,034) (30%)
Rental margin percentage10.4% 16.2% (5.8 pts)  
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
 (92 days) (84 days) 
Transient keys rented(1)
296,159
 262,038
 34,121
 13%
Average transient key rate$198.05
 $204.89
 $(6.84) (3%)
Resort occupancy89.0% 92.3% (3.3 pts)  
_________________________
(1)
Transient keys rented exclude those obtained through the use of plus points, preview stays and those associated with our operating property in San Diego, California prior to conversion to vacation ownership inventory.
The increase in rental revenues was due to a 13 percent increase in transient keys rented ($7.1 million) driven by a 24 percent increase in available keys, a $0.5 million increase in preview keys rented and other revenue and $1.1 million of higher plus points revenue (which is recognized when the points are redeemed or expire), partially offset by a 3 percent decrease in average transient rate ($2.0 million) and $0.6 million of revenue in the 2016 third quarter at our operating property in San Diego, California prior to the conversion of the property to vacation ownership inventory.
The decrease in rental margin reflected higheryear-over-year. Financing expenses incurred due to owners choosing alternative usage options and higher unsold maintenance fees. These higher expenses more than offset the higher rental revenues net of direct variable expenses (such as housekeeping) and the $1.1 million increase in plus points revenue.

2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Rental revenues$224,588
 $201,524
 $23,064
 11%
Unsold maintenance fees(50,814) (44,659) (6,155) (14%)
Other rental expenses(136,327) (120,021) (16,306) (14%)
Rental margin$37,447
 $36,844
 $603
 2%
Rental margin percentage16.7% 18.3% (1.6 pts)  
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
 (274 days) (252 days) 
Transient keys rented(1)
907,935
 797,729
 110,206
 14%
Average transient key rate$211.32
 $214.84
 $(3.52) (2%)
Resort occupancy89.1% 90.2% (1.1 pts)  
_________________________
(1)
Transient keys rented exclude those obtained through the use of plus points, preview stays and those associated with our operating property in San Diego, California prior to conversion to vacation ownership inventory.
The increase in rental revenues was due to a 14 percent increase in transient keys rented ($23.8 million) driven by a 17 percent increase in available keys, a $3.3 million increase in preview keys rented and other revenue and $2.6 million of higher plus points revenue (which is recognized when the points are redeemed or expire), partially offset by $3.4 million of revenue in the 2017 first three quarters at our operating property in San Diego, California prior to the conversion of the property to vacation ownership inventory and a 2 percent decrease in average transient rate ($3.2 million).
The increase in rental margin reflected the $2.6 million increase in plus points revenue and higher rental revenues net of direct variable expenses (such as housekeeping), partially offset by higher expenses incurred due to owners choosing alternative usage options and higher unsold maintenance fees.

Asia Pacific
The following discussion presents an analysis of our results of operations for the Asia Pacific segment for the 2017 third quarter compared to the 2016 third quarter, and the 2017 first three quarters compared to the 2016 first three quarters.
 Quarter Ended Year to Date Ended
 September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
($ in thousands)(92 days) (84 days) (274 days) (252 days)
REVENUES       
Sale of vacation ownership products$11,362
 $10,010
 $32,378
 $26,645
Resort management and other services1,022
 816
 3,055
 8,594
Financing1,122
 918
 3,350
 2,906
Rental2,733
 2,324
 9,115
 12,773
Cost reimbursements713
 692
 2,584
 2,250
TOTAL REVENUES16,952
 14,760
 50,482
 53,168
EXPENSES       
Cost of vacation ownership products2,687
 1,712
 6,642
 5,018
Marketing and sales8,754
 7,166
 25,672
 20,072
Resort management and other services1,144
 900
 3,297
 8,546
Rental3,902
 3,330
 12,136
 15,884
Royalty fee225
 239
 674
 564
Cost reimbursements713
 692
 2,584
 2,250
TOTAL EXPENSES17,425
 14,039
 51,005
 52,334
Gains (losses) and other income (expense), net—
 490
 (20) (1,008)
Other1
 (20) (9) (249)
SEGMENT FINANCIAL RESULTS$(472) $1,191
 $(552) $(423)
Overview
In our Asia Pacific segment, we continue to identify opportunities for development margin growth and improvement. We plan to continue to focus on future inventory acquisitions with strong on-site sales locations. In 2015, we purchased an operating property located in Surfers Paradise, Australia and in 2016, we sold the portion of this operating property that we did not intend to convert to vacation ownership inventory and converted the remaining portion of this operating property to vacation ownership inventory, a portion of which was contributed to our points-based programs within this segment. We began selling from this new location at the end of the 2016 first quarter. During the 2017 third quarter, we completed the purchase of 51 completed vacation ownership units, as well as a sales gallery and related amenities and infrastructure, in Bali, Indonesia. We expect to begin selling from this new location in the coming months.
Contract Sales
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Contract sales       
Vacation ownership$12,569
 $11,169
 $1,400
 13%
Total contract sales$12,569
 $11,169
 $1,400
 13%
The increase in Asia Pacific vacation ownership contract sales was driven by a 37 percent increase in tours, partially offset by an 18 percent decrease in VPG. The increase in tours included an increase of approximately 14 percentincreased primarily due to the change in the financial reporting calendar in 2017,timing of when lien fee income is recognized. The higher financing propensity is primarily a 15 percent increase from the new sales location in Surfers Paradise, Australia and an 8 percent increase at the existing sales locations. The decrease in VPG was driven by an increase in sales to first time buyers, which generally have a lower VPG than sales to existing owners. Contract sales at the new sales location in Surfers Paradise, Australia are not reported as sale of vacation ownership products until closing.

2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Contract sales       
Vacation ownership$36,131
 $31,049
 $5,082
 16%
Total contract sales$36,131
 $31,049
 $5,082
 16%
The increase in Asia Pacific vacation ownership contract sales was driven by a 45 percent increase in tours, partially offset by a 20 percent decrease in VPG. The increase in tours included an increase of approximately 13 percent due to the change in the financial reporting calendar in 2017, a 26 percent increase from the new sales location in Surfers Paradise, Australia and a 6 percent increase at the existing sales locations. The decrease in VPG was driven by an increase in sales to first time buyers, which generally have a lower VPG than sales to existing owners. Contract sales at the new sales location in Surfers Paradise, Australia are not reported as sale of vacation ownership products until closing.
Sale of Vacation Ownership Products
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Contract sales$12,569
 $11,169
 $1,400
 13%
Revenue recognition adjustments:       
Reportability(264) 24
 (288)  
Sales reserve(572) (1,112) 540
  
Other(1)
(371) (71) (300)  
Sale of vacation ownership products$11,362
 $10,010
 $1,352
 14%
_________________________
(1)
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
The decrease in the sales reserve was due to a favorable sales reserve adjustment in the 2017 third quarter.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Contract sales$36,131
 $31,049
 $5,082
 16%
Revenue recognition adjustments:       
Reportability(385) (539) 154
  
Sales reserve(2,827) (3,748) 921
  
Other(1)
(541) (117) (424)  
Sale of vacation ownership products$32,378
 $26,645
 $5,733
 22%
_________________________
(1)
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
Revenue reportability had an unfavorable $0.4 million impact in the 2017 first three quarters compared to an unfavorable $0.5 million impact in the 2016 first three quarters. The decrease in the sales reserve was due to an unfavorable sales reserve adjustment made in the 2016 second quarter to correct an immaterial error with respect to historical static pool data and a favorable sales reserve adjustment in the 2017 third quarter, partially offset by the higher vacation ownership contract sales.

Development Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Sale of vacation ownership products$11,362
 $10,010
 $1,352
 14%
Cost of vacation ownership products(2,687) (1,712) (975) (57%)
Marketing and sales(8,754) (7,166) (1,588) (22%)
Development margin$(79) $1,132
 $(1,211) (107%)
Development margin percentage(0.7%) 11.3% (12.0 pts)  
The decrease in development margin reflected higher marketing and sales costs due to the shift to more first time buyer tours and lower favorable product cost true-up activity, partially offset by the higher vacation ownership contract sales volume netresult of the sales reserve and direct variable expenses (i.e., cost of vacation ownership products and marketing and sales).
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Sale of vacation ownership products$32,378
 $26,645
 $5,733
 22%
Cost of vacation ownership products(6,642) (5,018) (1,624) (32%)
Marketing and sales(25,672) (20,072) (5,600) (28%)
Development margin$64
 $1,555
 $(1,491) (96%)
Development margin percentage0.2% 5.8% (5.6 pts)  
The decrease in development margin reflected higher marketing and sales costs due to the shift to more first time buyer tours and lower favorable product cost true-up activity, partially offset by the higher vacation ownership contract sales volume net of the sales reserve and direct variable expenses (i.e., cost of vacation ownership products and marketing and sales).
Resort Management and Other Services Revenues, Expenses and Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Management fee revenues$674
 $582
 $92
 16%
Ancillary revenues—
 8
 (8) (100%)
Other services revenues348
 226
 122
 54%
Resort management and other services revenues1,022
 816
 206
 25%
Resort management and other services expenses(1,144) (900) (244) (27%)
Resort management and other services margin$(122) $(84) $(38) (45%)
Resort management and other services margin percentage(11.9%) (10.3%) (1.6 pts)  
The increase in resort management and other services revenues reflected $0.1 million of higher management fees and $0.1 million of higher other services revenues. The slight decline in the resort management and other services margin reflected the higher customer service expenses, partially offset by the increase in revenues.

2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Management fee revenues$2,059
 $1,657
 $402
 24%
Ancillary revenues—
 6,246
 (6,246) (100%)
Other services revenues996
 691
 305
 44%
Resort management and other services revenues3,055
 8,594
 (5,539) (64%)
Resort management and other services expenses(3,297) (8,546) 5,249
 61%
Resort management and other services margin$(242) $48
 $(290) (604%)
Resort management and other services margin percentage(7.9%) 0.6% (8.5 pts)  
The decrease in resort management and other services revenues reflected $6.2 million of lower ancillary revenues from the operating property in Surfers Paradise, Australia (a portion of which was disposed ofWelk Acquisition in the second quarter of 2016), partially offset by increases in management fees ($0.4 million) and other services revenues ($0.3 million). The decline in the resort management and other services margin reflected $0.8 million of ancillary profit from the operating property in Surfers Paradise, Australia in the 2016 first three quarters (compared to no ancillary activity in the 2017 first three quarters), partially offset by the2021. Legacy-Welk customers have a higher management fees in the 2017 first three quarters compared to the 2016 first three quarters.financing propensity than Legacy-MVW customers.
Royalty Fee
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Royalty fee$29 $27 $2 7%
The ancillary revenue producing portions of the operating propertyincrease in Surfers Paradise, Australia were included in the portion of the operating property soldroyalty fee expense in the second quarter of 2016. Therefore, we do not anticipate future ancillary revenues or expenses at this property.
Rental Revenues, Expenses and Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Rental revenues$2,733
 $2,324
 $409
 18%
Rental expenses(3,902) (3,330) (572) (17%)
Rental margin$(1,169) $(1,006) $(163) (16%)
Rental margin percentage(42.8%) (43.3%) 0.5 pts  
The2022 included $2 million from an increase in rental revenues was due to increases in transient keys rented, preview keys rentedthe dollar volume of closings and the average transient rate. The higher expenses were due to higher expenses incurred due to owners choosing alternative usage options and higher variable expenses (such as housekeeping) in the 2017 third quarter.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Rental revenues$9,115
 $12,773
 $(3,658) (29%)
Rental expenses(12,136) (15,884) 3,748
 24%
Rental margin$(3,021) $(3,111) $90
 3%
Rental margin percentage(33.1%) (24.4%) (8.7 pts)  
The decline in rental revenues was due to $4.9 million of lower revenue from the operating property in Surfers Paradise, Australia (a portion of which was disposed of in the 2016 second quarter), partially offset by $1.2 million of higher revenues at the other resorts in the region due to increases in transient keys rented, preview keys rented and the average transient rate. The lower expenses were due to $4.8 million of lower expenses from the operating property in Surfers Paradise, Australia (a portion of which was disposed of in the 2016 second quarter), partially offset by $1.1 million of higher other rental expenses in the 2017 first three quarters.

Europe
The following discussion presents an analysis of our results of operations for the Europe segment for the 2017 third quarter compared to the 2016 third quarter, and the 2017 first three quarters compared to the 2016 first three quarters.
 Quarter Ended Year to Date Ended
 September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
($ in thousands)(92 days) (84 days) (274 days) (252 days)
REVENUES       
Sale of vacation ownership products$5,706
 $4,818
 $15,351
 $15,845
Resort management and other services7,624
 6,413
 19,119
 16,790
Financing709
 710
 2,164
 2,339
Rental8,986
 8,065
 16,918
 14,836
Cost reimbursements9,212
 8,072
 25,265
 23,533
TOTAL REVENUES32,237
 28,078
 78,817
 73,343
EXPENSES       
Cost of vacation ownership products715
 1,599
 2,081
 4,158
Marketing and sales4,465
 4,189
 12,583
 13,388
Resort management and other services6,099
 5,076
 15,388
 13,827
Rental4,910
 4,509
 12,366
 11,094
Royalty fee70
 97
 195
 264
Cost reimbursements9,212
 8,072
 25,265
 23,533
TOTAL EXPENSES25,471
 23,542
 67,878
 66,264
SEGMENT FINANCIAL RESULTS$6,766
 $4,536
 $10,939
 $7,079
Overview
In our Europe segment, we are focused on selling our existing projects and managing existing resorts. We do not have any current plans for new development in this segment.
Contract Sales
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Contract sales       
Vacation ownership$6,664
 $7,698
 $(1,034) (13%)
Total contract sales$6,664
 $7,698
 $(1,034) (13%)
The decrease in contract sales was primarily due to lower fractional sales due to limited reacquired inventory available and several large multi-week purchases in the 2016 third quarter.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Contract sales       
Vacation ownership$18,509
 $22,054
 $(3,545) (16%)
Total contract sales$18,509
 $22,054
 $(3,545) (16%)
The decrease in contract sales was primarily due to several large multi-week purchases in the 2016 first three quarters.

Sale of Vacation Ownership Products
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Contract sales$6,664
 $7,698
 $(1,034) (13%)
Revenue recognition adjustments:       
Reportability(47) (2,165) 2,118
  
Sales reserve(891) (837) (54)  
Other(1)
(20) 122
 (142)  
Sale of vacation ownership products$5,706
 $4,818
 $888
 18%
_________________________
(1)
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Contract sales$18,509
 $22,054
 $(3,545) (16%)
Revenue recognition adjustments:       
Reportability(352) (3,508) 3,156
  
Sales reserve(2,680) (2,739) 59
  
Other(1)
(126) 38
 (164)  
Sale of vacation ownership products$15,351
 $15,845
 $(494) (3%)
_________________________
(1)
Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.
Development Margin
2017 Third Quarter
 Quarter Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(92 days) (84 days) 
Sale of vacation ownership products$5,706
 $4,818
 $888
 18%
Cost of vacation ownership products(715) (1,599) 884
 55%
Marketing and sales(4,465) (4,189) (276) (7%)
Development margin$526
 $(970) $1,496
 154%
Development margin percentage9.2% (20.1%) 29.3 pts  
2017 First Three Quarters
 Year to Date Ended Change % Change
 September 30, 2017 September 9, 2016 
($ in thousands)(274 days) (252 days) 
Sale of vacation ownership products$15,351
 $15,845
 $(494) (3%)
Cost of vacation ownership products(2,081) (4,158) 2,077
 50%
Marketing and sales(12,583) (13,388) 805
 6%
Development margin$687
 $(1,701) $2,388
 140%
Development margin percentage4.5% (10.7%) 15.2 pts  


Corporate and Other
 Quarter Ended Year to Date Ended
 September 30, 2017 September 9, 2016 September 30, 2017 September 9, 2016
($ in thousands)(92 days) (84 days) (274 days) (252 days)
EXPENSES       
Cost of vacation ownership products$2,020
 $1,334
 $6,151
 $5,097
Financing5,062
 4,581
 12,528
 11,782
General and administrative26,666
 22,151
 83,739
 72,871
Litigation settlement—
 —
 183
 —
Consumer financing interest6,498
 5,361
 18,090
 15,840
Royalty fee12,969
 11,475
 39,044
 34,426
TOTAL EXPENSES53,215
 44,902
 159,735
 140,016
Gains (losses) and other income (expense), net8,731
 (9) 8,722
 (160)
Interest expense(2,642) (2,262) (5,180) (6,331)
Other57
 —
 (527) (211)
TOTAL FINANCIAL RESULTS$(47,069) $(47,173) $(156,720) $(146,718)
Corporate and Other consists of results not specifically attributable to an individual segment, including expenses in support of our financing operations, non-capitalizable development expenses incurred to support overall company development, company-wide general and administrative costs, corporate interest expense, consumer financing interest expense and the fixed royalty fee payable under the license agreements that we entered into with Marriott International in connection with our spin-off from Marriott International.
Total Expenses
2017 Third Quarter
Total expenses increased $8.3$1 million from the 2016 third quarter. The $8.3 million increase resulted from $4.5 million of higher general and administrative expenses, $1.5 million of higher royalty fees due to the change to an end-of-month quarterly reporting cycle in 2017 that resulted in eight additional days in the 2017 third quarter ($1.0 million) and a contractual increase late in 2016 in the fixed portion of the royalty fee owed to Marriott International, ($0.5 million), $1.1partially offset by $1 million from an increase in sales of higher consumer financing interestpre-owned inventory, which carry a lower royalty fee as compared to initial sales of our inventory (one percent versus two percent).
2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Royalty fee$56 $52 $4 8%
The increase in royalty fee expense $0.7in the first half of 2022 included $4 million of higher cost of vacation ownership products expenses due to higher development expenses, $0.5 million of higher financing expenses due to the change tofrom an end-of-month quarterly reporting cycle in 2017 and the increase in the average gross vacation ownership notes receivable balance.
Generaldollar volume of closings and administrative expenses increased $4.5 million due to approximately $2.0$2 million from the change to an end-of-month quarterly reporting cycle in 2017 and $2.5 million due to higher personnel related and other expenses. The higher personnel related and other expenses included annual merit, bonus and inflationary cost increases.
The $1.1 million increase in consumer financing interest expense was due to a higher average outstanding debt balance and the change to an end-of-month quarterly reporting cycle in 2017.
2017 First Three Quarters
Total expenses increased $19.7 million from the 2016 first three quarters. The $19.7 million increase resulted from $10.9 million of higher general and administrative expenses, $4.6 million of higher royalty fees due to the change to an end-of-month quarterly reporting cycle in 2017 that resulted in 22 additional days in the 2017 first three quarters ($2.9 million) and a contractual increase late in 2016 in the fixed portion of the royalty fee owed to Marriott International, ($1.7 million), $2.3partially offset by $2 million from an increase in sales of pre-owned inventory, which carry a lower royalty fee as compared to initial sales of our inventory (one percent versus two percent).
Litigation Charges
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Litigation charges$2 $3 $(1)(42%)
2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Litigation charges$5 $6 $(1)(26%)
During the second quarter and first half of 2022, as well as the second quarter and first half of 2021, the litigation charges related primarily to projects in Europe.
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Gains and Other Income
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Gains and other income, net$32 $— $32 NM
During the second quarter of 2022, we recorded $33 million related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, partially offset by $1 million of foreign currency translation charges.
2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Gains and other income, net$35 $— $35 NM
During the first half of 2022, we recorded $33 million related to the strategic decision to dispose of our hotel in Puerto Vallarta, Mexico, and $3 million related to receipt of business interruption insurance proceeds, partially offset by $1 million of foreign currency translation charges.
Exchange & Third-Party Management
Three Months EndedSix Months Ended
($ in millions)June 30, 2022June 30, 2021June 30, 2022June 30, 2021
REVENUES
Management and exchange$58 $60 $122 $120 
Rental11 11 22 23 
Cost reimbursements5 15 14 29 
TOTAL REVENUES74 86 158 172 
EXPENSES
Management and exchange32 35 65 66 
Depreciation and amortization7 9 16 29 
Cost reimbursements5 15 14 29 
TOTAL EXPENSES44 59 95 124 
Gains and other income, net16 — 16 — 
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS$46 $27 $79 $48 
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Management and Exchange Profit
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Management and exchange revenue$58 $60 $(2)(4%)
Management and exchange expense(32)(35)3 9%
Management and exchange profit$26 $25 $1 3%
Management and exchange profit margin45.2%42.2%3.0 pts
The decrease in management and exchange revenue reflected $4 million of lower revenue due to the disposition of our VRI Americas business during the second quarter of 2022 and $1 million of lower Interval International transaction fee revenue due to fewer exchanges as more members chose to occupy their home resorts rather than exchange for usage through Interval International, partially offset by $2 million of higher consumer financingmanagement fees at Aqua-Aston managed properties due to the continued ramp-up of the business in Hawaii subsequent to the initial impact of the COVID-19 pandemic. For Interval International, average revenue per member decreased 16% over the prior year comparable period. This decline was due, in part, to recently added affiliations, for which we expect exchange activity to ramp-up over time, as well as the decline in exchange revenue. The increase in management and exchange profit primarily reflected the higher management fees at Aqua Aston.
2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Management and exchange revenue$122 $120 $2 1%
Management and exchange expense(65)(66)1 2%
Management and exchange profit$57 $54 $3 6%
Management and exchange profit margin47.0%45.1%1.9 pts
The increase in management and exchange revenue and profit reflects higher management fees at Aqua-Aston managed properties due to continued ramp-up of business in Hawaii subsequent to the initial impact of the COVID-19 pandemic, partially offset by lower Interval International transaction fee revenue and profit due to fewer exchanges as more members chose to occupy their home resorts rather than exchange for usage through Interval International. The management and exchange revenue was also negatively impacted by the disposition of our VRI Americas business during the second quarter of 2022 as discussed above. For Interval International, average revenue per member decreased 11% over the prior year comparable period. This decline was due, in part, to recently added affiliations, for which we expect exchange activity to ramp-up over time, as well as the decline in exchange revenue.
Rental Revenues
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Rental revenues$11 $11 $— (3%)
Results reflect a $2 million decrease in gross Getaway revenues, which resulted from an 18% decline in transactions, partially offset by a 7% increase in the average Getaway fee. Rental revenues remain flat to the prior year, as rental inventory procurement costs, which are recorded net within Rental revenues, declined by $2 million. The decline in Getaway transactions reflected fewer owner deposits as more members chose to occupy their home resorts rather than exchange for usage through Interval International, which put pressure on the inventory available for Getaways. We expect the reduced exchange volume and Getaway specific inventory sourcing to continue through the remainder of the year.

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2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Rental revenues$22 $23 $(1)(6%)
Results reflect a $2 million decrease in gross Getaway revenues, which resulted from a 15% decline in transactions, partially offset by an 11% increase in the average Getaway fee. This was partially offset by lower rental inventory procurement costs, which are recorded net within Rental revenues, of $1 million. The decline in Getaway transactions reflected fewer owner deposits as more members chose to occupy their home resorts rather than exchange for usage through Interval International, which put pressure on the inventory available for Getaways.
Depreciation and Amortization
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Depreciation and amortization$7 $9 $(2)(16%)
2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Depreciation and amortization$16 $29 $(13)(43%)
The decrease in depreciation expense in the first half of 2022 relates to a true-up made in the prior year to accelerate depreciation on a technology asset.
Gains and Other Income
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Gains and other income, net$16 $— $16 NM
2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Gains and other income, net$16 $— $16 NM
During the second quarter and first half of 2022, we recorded a $16 million gain related to the strategic decision to dispose of our VRI Americas business. See Footnote 3 “Acquisitions and Dispositions” for more information on the disposition of VRI Americas.
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Corporate and Other
Corporate and Other consists of results that are not allocable to our segments, including company-wide general and administrative costs, corporate interest expense, $1.1transaction and integration costs, and income taxes. In addition, Corporate and Other includes the revenues and expenses from the Consolidated Property Owners’ Associations.
Three Months EndedSix Months Ended
($ in millions)June 30, 2022June 30, 2021June 30, 2022June 30, 2021
REVENUES
Resort management and other services$5 $37 $37 $76 
Cost reimbursements(6)(27)(26)(54)
TOTAL REVENUES(1)10 11 22 
EXPENSES
Resort management and other services10 45 50 96 
Rental(4)(14)(13)(28)
General and administrative64 66 125 112 
Depreciation and amortization3 4 5 6 
Restructuring— — — (1)
Impairment— 5 — 5 
Cost reimbursements(6)(27)(26)(54)
TOTAL EXPENSES67 79 141 136 
(Losses) gains and other (expense) income, net(11)(2)(10)4 
Interest expense(30)(44)(57)(87)
Transaction and integration costs(36)(28)(64)(47)
FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS(145)(143)(261)(244)
Provision for income taxes(43)(27)(75)(16)
Net loss (income) attributable to noncontrolling interests1 (2)1 (5)
FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS$(187)$(172)$(335)$(265)
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Consolidated Property Owners’ Associations
The following table illustrates the impact of certain Consolidated Property Owners’ Associations under the relevant accounting guidance.
Three Months EndedSix Months Ended
($ in millions)June 30, 2022June 30, 2021June 30, 2022June 30, 2021
REVENUES
Resort management and other services$4 $37 $36 $76 
Cost reimbursements(6)(27)(26)(54)
TOTAL REVENUES(2)10 10 22 
EXPENSES
Resort management and other services10 45 50 96 
Rental(4)(14)(13)(28)
Cost reimbursements(6)(27)(26)(54)
TOTAL EXPENSES— 4 11 14 
Losses and other expense, net(3)(2)(3)— 
FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS(5)4 (4)8 
Provision for income taxes— (1)— (1)
Net loss (income) attributable to noncontrolling interests1 (2)1 (5)
FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS$(4)$1 $(3)$2 
General and Administrative
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
General and administrative$64 $66 $(2)(2%)
For the second quarter of 2022, General and administrative expenses decreased due primarily to lower bonus expenses.
2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
General and administrative$125 $112 $13 12%
For the first half of 2022, General and administrative expenses increased primarily due to $12 million of higher salary costs due to reduced work week programs in the prior year and a $2 million decrease in credits related to incentives under the CARES Act, partially offset by $1 million in lower overall spending.
Gains / Losses and Other Income / Expense
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Losses and other expense, net$(11)$(2)$(9)NM
In the second quarter of 2022, we recorded $7 million of foreign currency translation losses, a tax related charge of $3 million, and $3 million of non-cash losses pursuant to a change in control of certain Consolidated Property Owners’ Associations, partially offset by $2 million of proceeds from corporate owned life insurance. In the second quarter of 2021, we recorded a tax related charge of $2 million.
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2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
(Losses) gains and other (expense) income, net$(10)$4 $(14)NM
In the first half of 2022, we recorded $6 million of foreign currency translation losses, a tax related charge of $3 million, and $3 million of non-cash losses pursuant to a change in control of certain Consolidated Property Owners’ Associations, partially offset by $2 million of proceeds from corporate owned life insurance. In the first half of 2021, we recorded $6 million of foreign currency translation gains, partially offset by a tax related charge of $2 million.
Interest Expense
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Interest expense$(30)$(44)$14 32%
Interest expense decreased $14 million, including $12 million due to the early redemption of the 2026 Notes in 2021, $7 million due to the adoption of new accounting guidance related to our convertible debt (see Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” to our Financial Statements), and $4 million due to the early redemption of a portion of the 2025 Notes in 2021, partially offset by $5 million due to the issuance of the 2029 Notes in June 2021, $3 million of non-income tax related interest expense and $1 million of higher interest related to finance leases.
2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Interest expense$(57)$(87)$30 34%
Interest expense decreased $30 million, including $25 million due to the early redemption of the 2026 Notes in 2021, $13 million due to the adoption of new accounting guidance related to our convertible debt (see Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” to our Financial Statements), and $8 million due to the early redemption of a portion of the 2025 Notes in 2021, partially offset by $11 million due to the issuance of the 2029 Notes in June 2021, $3 million of non-income tax related interest expense and $2 million of higher interest related to finance leases.
Transaction and Integration Costs
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Transaction and integration costs$(36)$(28)$(8)(27%)
In the second quarter of 2022, Transaction and integration costs included $23 million of ILG integration related costs, $10 million of other integration costs, $2 million of Welk Acquisition and integration related costs, and $1 million of other transactions costs.
In the second quarter of 2021, Transaction and integration costs included $25 million of ILG integration related costs, and $3 million of Welk Acquisition and integration related costs.
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2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Transaction and integration costs$(64)$(47)$(17)(36%)
In the first half of 2022, Transaction and integration costs included $48 million of ILG integration related costs, $10 million of other integration costs, $5 million of Welk Acquisition and integration related costs and $1 million of other transaction costs.
In the first half of 2021, Transaction and integration costs included $42 million of ILG integration related costs and $5 million of Welk Acquisition and integration related costs.
Income Tax
2022 Second Quarter
Three Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Provision for income taxes$(43)$(27)$(16)(65%)
The change in the Provision for income taxes is predominately attributable to an increase in pre-tax income for the three months ended June 30, 2022.
2022 First Half
Six Months Ended
($ in millions)June 30, 2022June 30, 2021Change% Change
Provision for income taxes$(75)$(16)$(59)NM
The change in the Provision for income taxes is predominately attributable to an increase in pre-tax income for the six months ended June 30, 2022.
Liquidity and Capital Resources
Typically, our capital needs are supported by cash on hand ($0.3 billion at the end of the second quarter of 2022), cash generated from operations, our ability to raise capital through securitizations in the asset-backed securities market, our ability to issue new, and refinance existing, debt and, to the extent necessary, our ability to access funds under the Warehouse Credit Facility and the Revolving Corporate Credit Facility. We believe these sources of capital will be adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, satisfy debt service requirements, fulfill other cash requirements, and return capital to shareholders.
During the first quarter of 2022, we entered into an amendment to the Revolving Corporate Credit Facility, which increased the borrowing capacity of the existing revolving credit facility from $600 million to $750 million and extended the maturity date from August 31, 2023 to March 31, 2027.
Subsequent to the end of the second quarter of 2022, we amended certain agreements associated with our Warehouse Credit Facility, which increased the borrowing capacity of the existing facility from $350 million to $425 million and extended the revolving period from April 21, 2023 to July 28, 2024.
At June 30, 2022, we had $4.7 billion of total gross debt outstanding, which included $1.9 billion of non-recourse debt associated with vacation ownership notes receivable securitizations, $1.1 billion of senior notes, $0.8 billion of convertible notes, $0.8 billion of debt under our Corporate Credit Facility, $84 million related to finance lease obligations, and $10 million related to a non-interest bearing note payable. During the second quarter of 2022, we issued irrevocable notice of our intent to settle the 2022 Convertible Notes in cash. Excluding repayment of non-recourse debt, which is funded by the performance of vacation ownership notes receivable, principal repayments for the remainder of 2022 and 2023 consist of $230 million related to the 2022 Convertible Notes and $6 million related to a non-interest bearing note payable, respectively.
At June 30, 2022, we had $686 million of completed real estate inventory on hand and $506 million of completed vacation ownership units that have been classified as a component of Property and equipment until the time at which they are legally registered and available for sale as vacation ownership products.
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Our material cash requirements from known contractual or other obligations were $6 billion as of June 30, 2022, of which we expect $569 million to be payable during the second half of 2022. These obligations primarily relate to our debt, securitized debt, and purchase obligations. See “Material Cash Requirements” below for additional information.
The following table summarizes the changes in cash, cash equivalents, and restricted cash:
Six Months Ended
($ in millions)June 30, 2022June 30, 2021
Cash, cash equivalents, and restricted cash provided by (used in):
Operating activities$218 $148 
Investing activities15 (176)
Financing activities(428)716 
Effect of change in exchange rates on cash, cash equivalents, and restricted cash(2)— 
Net change in cash, cash equivalents, and restricted cash$(197)$688 
Cash from Operating Activities
Our primary sources of funds from operations are (1) cash sales and down payments on financed sales, (2) cash from our financing operations, including principal and interest payments received on outstanding vacation ownership notes receivable, (3) cash from fee-based membership, exchange and rental transactions and (4) net cash generated from our rental and resort management and other services operations. Outflows include spending for the development of new phases of existing resorts, the acquisition of additional inventory, enhancement of our inventory exchange network of resorts and related technology infrastructure and funding our working capital needs.
We minimize our working capital needs through cash management, strict credit-granting policies and disciplined collection efforts. Our working capital needs fluctuate throughout the year given the timing of annual maintenance fees on unsold inventory we pay to owners’ associations and certain annual compensation-related outflows. In addition, our cash from operations varies due to the timing of repayment by owners of vacation ownership notes receivable, the closing or recording of sales contracts for vacation ownership products, financing propensity, and cash outlays for inventory acquisition and development.
Excluding the impact of changes in net income or loss and adjustments for non-cash items, the change in cash flows from operations increased as a result of lower inventory spending, higher collections of vacation ownership notes receivable, higher sales and rental deposits due to the continued ramp-up of the business, and higher operational expense accruals, partially offset by timing of certain employee benefit payments and recognition of previously deferred revenues.
In addition to net income or loss and adjustments for non-cash items, the following operating activities are key drivers of our cash flow from operating activities:
Inventory Spending Less Than (In Excess of) Cost of Sales
Six Months Ended
($ in millions)June 30, 2022June 30, 2021
Inventory spending$(92)$(77)
Purchase of vacation ownership units for future transfer to inventory(12)(99)
Inventory costs118 90 
Inventory spending less than (in excess of) cost of sales$14 $(86)
While we have significant excess inventory on hand, we will continue to selectively pursue growth opportunities in North America and Asia Pacific by targeting high-quality inventory that allows us to add desirable new destinations to our system with new on-site sales locations through transactions that limit our up-front capital investment and allow us to purchase finished inventory closer to the time it is needed for sale. These capital efficient vacation ownership deal structures may consist of the development of new inventory, or the conversion of previously built units by third parties, just prior to sale.
Through our existing vacation ownership interest repurchase program, we proactively acquire previously sold vacation ownership interests at lower costs than would be required to develop new inventory. By repurchasing inventory, we expect to be able to help stabilize the future cost of vacation ownership products expenses dueproducts.
Our spending for real estate inventory in the first half of 2022 was lower than real estate inventory costs and was primarily related to our vacation ownership interest repurchase program. We acquired a higher development expenses, $0.7 millionamount of higher financing expensespreviously sold
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vacation ownership interests in the first half of 2022 due to the changereinstatement of our vacation ownership interest repurchase program that was suspended as part of the cash preservation measures implemented in response to an end-of-month quarterly reporting cycle in 2017the COVID-19 pandemic. We expect inventory spending to be less than cost of sales for the remainder of 2022 as we intend to repurchase less inventory and provided we are able to negotiate a capital efficient inventory arrangement under which a third party will develop the Waikiki property we are committed to purchase and agree to resell it to us at a later date. See Footnote 16 “Variable Interest Entities” to our Financial Statements for more information.
Vacation Ownership Notes Receivable Collections (Less Than) In Excess of Originations
Six Months Ended
($ in millions)June 30, 2022June 30, 2021
Vacation ownership notes receivable collections — non-securitized$133 $110 
Vacation ownership notes receivable collections — securitized232 252 
Vacation ownership notes receivable originations(483)(320)
Vacation ownership notes receivable collections (less than) in excess of originations$(118)$42 
Vacation ownership notes receivable collections increased during the first half of 2022, as compared to the first half of 2021, due to an increase in the portfolio of outstanding vacation ownership notes receivable, reflecting the continued ramp up of sales and higher financing propensity (52% for the first half of 2022, compared to 49% for the first half of 2021).
Cash from Investing Activities
Acquisition of a Business, Net of Cash and Restricted Cash Acquired
Net cash outflows of $157 million in the first half of 2021 were due to the Welk Acquisition. See Footnote 3 “Acquisitions and Dispositions” to our Financial Statements for more information.
Proceeds from Disposition of Subsidiaries, Net of Cash and Restricted Cash Transferred
Proceeds from disposition of subsidiaries, net of cash and restricted cash transferred of $93 million in the first half of 2022 were due to the disposition of various subsidiaries, including $55 million for the VRI Americas business entities and $38 million for the entities that owned and operated the hotel in Puerto Vallarta, Mexico. See Footnote 3 “Acquisitions and Dispositions” to our Financial Statements for more information.
Capital Expenditures for Property and Equipment
In the first half of 2022, capital expenditures for property and equipment included $23 million to support business operations (including $15 million for ancillary and other operations assets and $7 million for sales locations) and $1 million for technology.
In the first half of 2021, capital expenditures for property and equipment of $11 million included $8 million to support business operations (including $5 million for ancillary and other operations assets and $3 million for sales locations) and $3 million for technology.
Issuance of Note Receivable to VIE
During the second quarter of 2022, in connection with the amendment of an inventory purchase commitment, we extended a loan to a VIE, which we do not consolidate, for $47 million. The loan is due in full upon the earlier of either a sale of the property, including a sale to us, or an amendment and restatement of our purchase commitment, one of which is expected to occur in 2022. See Footnote 16 “Variable Interest Entities” to our Financial Statements for more information.
Cash from Financing Activities
Borrowings from / Repayment of Debt Related to Securitization Transactions
During the first quarter of 2022, we securitized vacation ownership notes receivable under our Warehouse Credit Facility. The carrying amount of the vacation ownership notes receivable securitized was $125 million. The average advance rate was 81%, which resulted in gross proceeds of $102 million. Net proceeds were $101 million due to the funding of reserve accounts of $1 million.
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During the second quarter of 2022, we completed the securitization of a pool of $383 million of vacation ownership notes receivable. Approximately $342 million of the vacation ownership notes receivable were purchased by the 2022-1 LLC during the second quarter of 2022.
Of the $375 million in proceeds from the transaction, $40 million was held by the 2022-1 LLC as of June 30, 2022 and released subsequently as it purchased all of the remaining loans. In addition, approximately $98 million was used to repay all outstanding amounts previously drawn under our Warehouse Credit Facility, approximately $7 million was used to pay transaction expenses and fund required reserves, and the remaining $176 million will be used for general corporate purposes. In connection with this securitization, we redeemed the remaining vacation ownership loan backed notes, issued in a prior securitization, for approximately $38 million; the majority of the loans acquired through the redemption were purchased by the 2022-1 LLC.
As of June 30, 2022, $106 million of gross vacation ownership notes receivable balancewere eligible for securitization.
Proceeds from / Repayments of Debt
All proceeds from and $0.2repayments of debt during the first half of 2022 were related to borrowings from and repayments of our Corporate Credit Facility. Our Corporate Credit Facility includes the Term Loan and our Revolving Corporate Credit Facility, which is further discussed in Footnote 13 “Debt” to our Financial Statements. No principal payments were made on our Term Loan during the first half of 2022. During the first half of 2022, we borrowed and repaid $125 million under our Revolving Corporate Credit Facility. There were no borrowed amounts outstanding under our Revolving Corporate Credit Facility as of June 30, 2022. As of June 30, 2022, we had $1 million of litigation settlementsletters of credit outstanding under our Revolving Corporate Credit Facility.
During the first half of 2021, we repaid $100 million of the amount outstanding under the Term Loan. We had no borrowings or repayments under our Revolving Corporate Credit Facility during the first half of 2021.
Finance Lease Payment
During the first half of 2022, we paid $2 million related to our finance lease obligations for technology and business operations equipment.
Debt Issuance Costs
During the first half of 2022, we paid $9 million of debt issuance costs, which included $5 million associated with the vacation ownership notes receivable securitization completed in 2022 and $4 million associated with an amendment to the Revolving Corporate Credit Facility, which is further discussed in Footnote 13 “Debt” to our Financial Statements.
During the first half of 2021, we paid $15 million of debt issuance costs, which included $6 million associated with the vacation ownership notes receivable securitization we completed in 2021, $7 million associated with the issuance of the 2029 Notes, $1 million associated with the issuance of the 2026 Convertible Notes, and $1 million associated with the amendment of a waiver to the agreement that governs our Corporate Credit Facility.
Repurchase of Common Stock
The following table summarizes share repurchase activity under our current share repurchase program:
($ in millions, except per share amounts)Number of Shares RepurchasedCost of Shares RepurchasedAverage Price
Paid per Share
As of December 31, 202117,681,395 $1,418 $80.17 
For the first half of 20222,187,336 312 143.02 
As of June 30, 202219,868,731 $1,730 $87.09 
See Footnote 14 “Shareholders' Equity” to our Financial Statements for further information related to our share repurchase program, including the additional share repurchase authorization and extension approved by our Board of Directors during the first half of 2022.
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Dividends
We distributed cash dividends to holders of our common stock during the first half of 2022 as follows:
Declaration DateShareholder Record DateDistribution DateDividend per Share
December 9, 2021December 23, 2021January 6, 2022$0.54
February 18, 2022March 3, 2022March 17, 2022$0.62
May 12, 2022May 26, 2022June 9, 2022$0.62
We currently expect to pay quarterly dividends in the 2017 first three quarters.future, but any future dividend payments will be subject to Board approval, which will depend on our financial condition, results of operations and capital requirements, as well as applicable law, regulatory constraints, industry practice, and other business considerations that our Board of Directors considers relevant. In addition, our Corporate Credit Facility and the indentures governing our senior notes contain restrictions on our ability to pay dividends, and the terms of agreements governing debt that we may incur in the future may also limit or prohibit the payment of dividends. The payment of certain cash dividends may also result in an adjustment to the conversion rate of our convertible notes in a manner adverse to us. Accordingly, there can be no assurance that we will pay dividends in the future at any particular rate or at all.
General
Material Cash Requirements
The following table summarizes our future material cash requirements from known contractual or other obligations as of June 30, 2022:
  Payments Due by Period
($ in millions)TotalRemainder
of 2022		2023202420252026Thereafter
Contractual Obligations
Debt obligations(1)
$3,111 $276 $94 $89 $1,107 $616 $929 
Securitized debt(1)(2)
2,166 116 229 228 224 221 1,148 
Purchase obligations(3)
279 154 55 31 22 17 — 
Operating lease obligations(4)
128 12 25 21 20 18 32 
Finance lease obligations(4)
283 4 6 6 4 4 259 
Other long-term obligations(5)
18 7 4 3 2 1 1 
$5,985 $569 $413 $378 $1,379 $877 $2,369 
_________________________
(1)Includes principal as well as interest payments and administrative expenses increased $10.9 million dueexcludes unamortized debt discount and issuance costs.
(2)Payments based on estimated timing of cash flow associated with securitized notes receivable.
(3)Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to approximately $6.0 millionbe purchased, a pricing structure, and approximate timing of the transaction. Amounts reflected herein represent expected funding under such contracts. Amounts reflected on the consolidated balance sheet as accounts payable and accrued liabilities are excluded from the changetable above.
(4)Includes interest.
(5)Primarily relates to future guaranteed purchases of rental inventory of $8 million and our commitment to an end-of-month quarterly reporting cycleowners’ association that we manage to pay for any shortfall between the actual expenses incurred by the owners’ association and the income received by the owners’ association, in 2017lieu of maintenance fees, of $5 million.
In the normal course of our resort management business, we enter into purchase commitments on behalf of owners’ associations to manage the daily operating needs of our resorts. Since we are reimbursed for these commitments from the cash flows of the resorts, these obligations have minimal impact on our net income and $6.4cash flow. These purchase commitments are excluded from the table above.
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Leases That Have Not Yet Commenced
During 2020, we entered into a finance lease arrangement, that was amended in 2021, for our new global headquarters office building, which is being constructed in Orlando, Florida. The new Orlando corporate office building is currently expected to be completed in 2023, at which time the lease term will commence and a right-of-use asset and corresponding liability will be recorded on our balance sheet. The initial lease term is approximately 16 years with total lease payments of $137 million due to higher personnel related and other expenses, partially offset by $1.5 million of lower litigation related costs. The higher personnel related and other expenses included annual merit, bonus and inflationary cost increases.for the aforementioned period.

Supplemental Guarantor Information
The $2.3 million increase2028 Notes are guaranteed by MVWC, Marriott Ownership Resorts, Inc. (“MORI”), and certain other subsidiaries whose voting securities are wholly owned directly or indirectly by MORI (such subsidiaries collectively, the “Senior Notes Guarantors”). These guarantees are full and unconditional and joint and several. The guarantees of the Senior Notes Guarantors are subject to release in consumer financing interest expense was due tolimited circumstances only upon the occurrence of certain customary conditions.
The following tables present consolidating financial information as of June 30, 2022 and December 31, 2021, and for the six months ended June 30, 2022 for MVWC and MORI on a higher average outstanding debt balancestand-alone basis (collectively, the “Issuers”), the Senior Notes Guarantors, the combined non-guarantor subsidiaries of MVW, and the change to an end-of-month quarterly reporting cycle in 2017.MVW on a consolidated basis.
Condensed Consolidating Balance Sheet
As of June 30, 2022
IssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW Consolidated
($ in millions)MVWCMORI
Cash and cash equivalents$— $82 $102 $140 $— $324 
Restricted cash— 22 90 170 — 282 
Accounts receivable, net6 112 93 58 (25)244 
Vacation ownership notes receivable, net— 129 225 1,721 — 2,075 
Inventory— 213 407 75 — 695 
Property and equipment— 195 636 320 — 1,151 
Goodwill— — 3,117 — — 3,117 
Intangibles, net— — 909 32 — 941 
Investments in subsidiaries3,497 4,211 — — (7,708)— 
Other76 120 224 130 (39)511 
Total assets$3,579 $5,084 $5,803 $2,646 $(7,772)$9,340 
Accounts payable$25 $43 $84 $65 $— $217 
Advance deposits— 85 89 21 — 195 
Accrued liabilities15 77 157 107 (26)330 
Deferred revenue— 9 217 161 (15)372 
Payroll and benefits liability— 111 72 21 — 204 
Deferred compensation liability— 103 25 2 — 130 
Securitized debt, net— — — 1,868 (22)1,846 
Debt, net788 1,873 76 11 — 2,748 
Other6 1 174 29 — 210 
Deferred taxes— 60 283 — (1)342 
MVW shareholders' equity2,745 2,722 4,626 360 (7,708)2,745 
Noncontrolling interests— — — 1 — 1 
Total liabilities and equity$3,579 $5,084 $5,803 $2,646 $(7,772)$9,340 
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As of December 31, 2021
IssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW Consolidated
($ in millions)MVWCMORI
Cash and cash equivalents$— $126 $77 $139 $— $342 
Restricted cash— 18 94 349 — 461 
Accounts receivable, net14 49 172 119 (75)279 
Vacation ownership notes receivable, net— 127 203 1,715 — 2,045 
Inventory— 244 381 94 — 719 
Property and equipment— 200 644 292 — 1,136 
Goodwill— — 2,841 309 — 3,150 
Intangibles, net— — 840 153 — 993 
Investments in subsidiaries3,645 4,371 — — (8,016)— 
Other76 108 211 107 (14)488 
Total assets$3,735 $5,243 $5,463 $3,277 $(8,105)$9,613 
Accounts payable$63 $22 $121 $59 $— $265 
Advance deposits— 69 70 21 — 160 
Accrued liabilities12 151 145 114 (77)345 
Deferred revenue— 11 151 291 — 453 
Payroll and benefits liability— 102 72 27 — 201 
Deferred compensation liability— 114 25 3 — 142 
Securitized debt, net— — — 1,877 (21)1,856 
Debt, net684 1,870 76 1 — 2,631 
Other— 19 172 33 — 224 
Deferred taxes— 91 250 — 9 350 
MVW shareholders' equity2,976 2,794 4,381 841 (8,016)2,976 
Noncontrolling interests— — — 10 — 10 
Total liabilities and equity$3,735 $5,243 $5,463 $3,277 $(8,105)$9,613 
Condensed Consolidating Statements of Income
Six Months Ended June 30, 2022
IssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW Consolidated
($ in millions)MVWCMORI
Revenues$— $390 $1,366 $476 $(16)$2,216 
Expenses(4)(510)(1,053)(397)16 (1,948)
Benefit (provision) for income taxes1 40 (92)(24)— (75)
Equity in net income (loss) of subsidiaries197 294 — — (491)— 
Net income (loss)194 214 221 55 (491)193 
Net loss attributable to noncontrolling interests— — — 1 — 1 
Net income (loss) attributable to common shareholders$194 $214 $221 $56 $(491)$194 
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Recent Accounting PronouncementsCash from Investing Activities
Acquisition of a Business, Net of Cash and Restricted Cash Acquired
Net cash outflows of $157 million in the first half of 2021 were due to the Welk Acquisition. See Footnote No. 1, “Summary of Significant Accounting Policies,”3 “Acquisitions and Dispositions” to our Financial Statements for a discussionmore information.
Proceeds from Disposition of recently issued accounting pronouncements, including information on new accounting standardsSubsidiaries, Net of Cash and the future adoptionRestricted Cash Transferred
Proceeds from disposition of such standards.
Liquidity and Capital Resources
Our capital needs are supported bysubsidiaries, net of cash on hand ($440.1 million at the end of the 2017 third quarter), cash generated from operations, our ability to raise capital through securitizations in the asset-backed securities market and, to the extent necessary, funds available under the Warehouse Credit Facility and our $250.0 million revolving credit facility (the “Revolving Corporate Credit Facility”). We believe these sources of capital will be adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, satisfy debt service requirements, fulfill other cash requirements and return capital to shareholders. At the end of the 2017 third quarter, we had $1.2 billion of total gross debt outstanding, which included $906.7 million of non-recourse debt associated with vacation ownership notes receivable securitizations, $230.0 million of Convertible Notes and a $63.6 million non-interest bearing note payable issued in connection with the acquisition of completed vacation ownership units located on the Big Island of Hawaii.
In September 2017, we completed a private offering of $230.0 million of Convertible Notes. While we do not have an immediate need for the proceeds, we felt that it was an opportune time for us to capitalize on the current interest rate environment and the strength of our stock price to optimize our capital structure. We evaluated several different debt instruments and believe that the one we chose provided the most flexibility for us in terms of covenants and use of proceeds, while enabling us to take advantage of the strength of our stock price and a very low current rate of interest. In connection with the Convertible Notes, we also entered into Convertible Note Hedges at a cost of $33.2 million, and received proceeds of $20.3 million from the issuance of Warrants. Issuance of the Convertible Notes resulted in the receipt of net proceeds, after adjusting for debt issue costs, including underwriting discount, and the net cash used to purchase the Convertible Note Hedges and sell the Warrants, of $210.8 million. See additional discussion in “Cash from Financing Activities” below and in Footnote No. 9, “Debt,” to our Financial Statements.
At the end of the 2017 third quarter, we had $730.5 million of real estate inventory on hand, comprised of $390.4 million of finished goods, $338.1 million of land and infrastructure and $2.0 million of work-in-progress. In addition, we had $49.1 million of completed vacation ownership units that have been classified as a component of Property and equipment until the time at which they are legally registered for sale as vacation ownership products.
Our vacation ownership product offerings allow us to utilize our real estate inventory efficiently. The majority of our sales are of points-based products, which permits us to sell vacation ownership products at most of our sales locations, including those where little or no weeks-based inventory remains available for sale. Because we no longer need specific resort-based inventory at each sales location, we need to have only a few resorts under construction at any given time and can leverage successful sales locations at completed resorts. This allows us to maintain long-term sales locations and reduces the need to develop and staff on-site sales locations at smaller projects in the future. We believe our points-based programs enable us to align our real estate inventory acquisitions with the pace of sales of vacation ownership products.
We are selectively pursuing growth opportunities in North America and Asia Pacific by targeting high-quality inventory that allows us to add desirable new destinations to our system with new on-site sales locations through transactions that limit our up-front capital investment and allow us to purchase finished inventory closer to the time it is needed for sale. These capital efficient deal structures may consist of the development of new inventory, or the conversion of previously built units by third parties, just prior to sale.
We intend for our capital allocation strategy to strike a balance between enhancing our operations and using our capital to provide returns to our shareholders through programs such as share repurchase programs and payment of dividends.

During the 2017 first three quarters, we had a net increase in cash, cash equivalents and restricted cash transferred of $288.7$93 million compared to a net increasein the first half of $44.1 million during the 2016 first three quarters. The following table summarizes these changes:
 Year to Date Ended
 September 30, 2017 September 9, 2016
($ in thousands)(274 days) (252 days)
Cash, cash equivalents and restricted cash provided by (used in):   
Operating activities$70,787
 $90,885
Investing activities(33,250) 46,080
Financing activities248,105
 (89,627)
Effect of change in exchange rates on cash, cash equivalents and restricted cash3,031
 (3,247)
Net change in cash, cash equivalents and restricted cash$288,673
 $44,091
Cash from Operating Activities
Our primary sources of funds from operations are (1) cash sales and down payments on financed sales, (2) cash from our financing operations, including principal and interest payments received on outstanding vacation ownership notes receivable and (3) net cash generated from our rental and resort management and other services operations. Outflows include spending for the development of new phases of existing resorts, the acquisition of additional inventory and funding our working capital needs.
We minimize our working capital needs through cash management, strict credit-granting policies and disciplined collection efforts. Our working capital needs fluctuate throughout the year given the timing of annual maintenance fees on unsold inventory we pay to property owners’ associations and certain annual compensation-related outflows. In addition, our cash from operations varies2022 were due to the timingdisposition of our owners’ repayment of vacation ownership notes receivable,various subsidiaries, including $55 million for the closing of sales contractsVRI Americas business entities and $38 million for vacation ownership products, financing propensitythe entities that owned and cash outlays for real estate inventory acquisition and development.
Inoperated the 2017 first three quarters, we generated $70.8 million of cash flows from operating activities, compared to $90.9 millionhotel in the 2016 first three quarters. Excluding the impact of changes in net income and adjustments for non-cash items, the change in cash flows from operations reflected higher originations driven by higher contract sales and higher financing propensity due to the continued success of the financing incentive programs offered in our North America segment, higher real estate inventory spending and timing of payments related to unsold inventory, partially offset by higher closings on vacation ownership contract sales, higher collections due to an increasing portfolio of outstanding vacation ownership notes receivable and lower payments related to employee benefits programs.
In addition to net income and adjustments for non-cash items, the following operating activities are key drivers of our cash flow from operating activities:
Real Estate Inventory Spending in Excess of Cost of Sales
 Year to Date Ended
 September 30, 2017 September 9, 2016
($ in thousands)(274 days) (252 days)
Real estate inventory spending$(94,318) $(102,645)
Purchase of vacation ownership units for future transfer to inventory(33,594) —
Real estate inventory costs121,582
 95,746
Real estate inventory spending in excess of cost of sales
$(6,330) $(6,899)
We measure our real estate inventory capital efficiency by comparing the cash outflow for real estate inventory spending (a cash item) to the amount of real estate inventory costs charged to expense on our Statements of Income related to sale of vacation ownership products (a non-cash item).
Our real estate inventory spending exceeded real estate inventory costs in the 2017 first three quarters as we satisfied a portion of our commitments to purchase vacation ownership units in our North America and Asia Pacific segments.However, we expect our inventory spending to be in line with inventory costs throughout the remainder of 2017. Real estate inventory spending included the acquisition of 112 completed vacation ownership units located on the Big Island of Hawaii for $27.3 million, as well as 51 completed vacation ownership units located in Bali, Indonesia for $12.1 million. In connection with the acquisition on the Big Island of Hawaii, we also settled a $0.5 million note receivable from the seller on a non-cash basis, and

issued a non-interest bearing note payable for $63.6 million. Purchase of vacation ownership units for future transfer to inventory included the acquisition of 36 completed vacation ownership units located at our resort in Marco Island, Florida, for $33.6 million. We entered into these commitments in prior periods as part of our capital efficiency strategy to limit our up-front capital investment and purchase finished inventory closer to the time it is needed for sale.Puerto Vallarta, Mexico. See Footnote No. 5,3 “Acquisitions and Dispositions,” and Footnote No. 8, “Contingencies and Commitments,”Dispositions” to our Financial Statements for additional information regarding these transactions.more information.
Our real estateCapital Expenditures for Property and Equipment
In the first half of 2022, capital expenditures for property and equipment included $23 million to support business operations (including $15 million for ancillary and other operations assets and $7 million for sales locations) and $1 million for technology.
In the first half of 2021, capital expenditures for property and equipment of $11 million included $8 million to support business operations (including $5 million for ancillary and other operations assets and $3 million for sales locations) and $3 million for technology.
Issuance of Note Receivable to VIE
During the second quarter of 2022, in connection with the amendment of an inventory spending exceeded real estate inventory costspurchase commitment, we extended a loan to a VIE, which we do not consolidate, for $47 million. The loan is due in full upon the 2016 first three quarters, asearlier of either a resultsale of the property, including a sale to us, or an amendment and restatement of our opportunistic acquisition efforts. Real estate inventory spending included $23.5 million for the acquisitionpurchase commitment, one of an operating property locatedwhich is expected to occur in the South Beach area of Miami Beach, Florida. We rebranded this property as Marriott Vacation Club Pulse, South Beach and converted it, in its entirety, into vacation ownership inventory.2022. See Footnote No. 5, “Acquisitions and Dispositions,”16 “Variable Interest Entities” to our Financial Statements for additional information regarding this transaction.more information.
Through our existing vacation ownership interest repurchase program,Cash from Financing Activities
Borrowings from / Repayment of Debt Related to Securitization Transactions
During the first quarter of 2022, we proactively buy back previously sold vacation ownership interests at lower costs than would be required to develop new inventory. By repurchasing inventory in desirable locations, we expect to be able to stabilize the future cost of vacation ownership products.
Vacation Ownership Notes Receivable Collections Less Than Originations
 Year to Date Ended
 September 30, 2017 September 9, 2016
($ in thousands)(274 days) (252 days)
Vacation ownership notes receivable collections — non-securitized$59,115
 $54,209
Vacation ownership notes receivable collections — securitized144,725
 123,242
Vacation ownership notes receivable originations(345,663) (218,190)
Vacation ownership notes receivable collections less than originations$(141,823) $(40,739)
Vacation ownership notes receivable collections include principal from non-securitized and securitized vacation ownership notes receivable. Vacationreceivable under our Warehouse Credit Facility. The carrying amount of the vacation ownership notes receivable collections increased during the 2017 first three quarters, as comparedsecuritized was $125 million. The average advance rate was 81%, which resulted in gross proceeds of $102 million. Net proceeds were $101 million due to the 2016 first three quarters, due to an increase infunding of reserve accounts of $1 million.
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During the portfoliosecond quarter of outstanding2022, we completed the securitization of a pool of $383 million of vacation ownership notes receivable. VacationApproximately $342 million of the vacation ownership notes receivable originationswere purchased by the 2022-1 LLC during the second quarter of 2022.
Of the $375 million in proceeds from the transaction, $40 million was held by the 2022-1 LLC as of June 30, 2022 and released subsequently as it purchased all of the remaining loans. In addition, approximately $98 million was used to repay all outstanding amounts previously drawn under our Warehouse Credit Facility, approximately $7 million was used to pay transaction expenses and fund required reserves, and the remaining $176 million will be used for general corporate purposes. In connection with this securitization, we redeemed the remaining vacation ownership loan backed notes, issued in a prior securitization, for approximately $38 million; the majority of the loans acquired through the redemption were purchased by the 2022-1 LLC.
As of June 30, 2022, $106 million of gross vacation ownership notes receivable were eligible for securitization.
Proceeds from / Repayments of Debt
All proceeds from and repayments of debt during the first half of 2022 were related to borrowings from and repayments of our Corporate Credit Facility. Our Corporate Credit Facility includes the Term Loan and our Revolving Corporate Credit Facility, which is further discussed in Footnote 13 “Debt” to our Financial Statements. No principal payments were made on our Term Loan during the first half of 2022. During the first half of 2022, we borrowed and repaid $125 million under our Revolving Corporate Credit Facility. There were no borrowed amounts outstanding under our Revolving Corporate Credit Facility as of June 30, 2022. As of June 30, 2022, we had $1 million of letters of credit outstanding under our Revolving Corporate Credit Facility.
During the first half of 2021, we repaid $100 million of the amount outstanding under the Term Loan. We had no borrowings or repayments under our Revolving Corporate Credit Facility during the first half of 2021.
Finance Lease Payment
During the first half of 2022, we paid $2 million related to our finance lease obligations for technology and business operations equipment.
Debt Issuance Costs
During the first half of 2022, we paid $9 million of debt issuance costs, which included $5 million associated with the vacation ownership notes receivable securitization completed in 2022 and $4 million associated with an amendment to the Revolving Corporate Credit Facility, which is further discussed in Footnote 13 “Debt” to our Financial Statements.
During the first half of 2021, we paid $15 million of debt issuance costs, which included $6 million associated with the vacation ownership notes receivable securitization we completed in 2021, $7 million associated with the issuance of the 2029 Notes, $1 million associated with the issuance of the 2026 Convertible Notes, and $1 million associated with the amendment of a waiver to the agreement that governs our Corporate Credit Facility.
Repurchase of Common Stock
The following table summarizes share repurchase activity under our current share repurchase program:
($ in millions, except per share amounts)Number of Shares RepurchasedCost of Shares RepurchasedAverage Price
Paid per Share
As of December 31, 202117,681,395 $1,418 $80.17 
For the first half of 20222,187,336 312 143.02 
As of June 30, 202219,868,731 $1,730 $87.09 
See Footnote 14 “Shareholders' Equity” to our Financial Statements for further information related to our share repurchase program, including the additional share repurchase authorization and extension approved by our Board of Directors during the first half of 2022.
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Dividends
We distributed cash dividends to holders of our common stock during the first half of 2022 as follows:
Declaration DateShareholder Record DateDistribution DateDividend per Share
December 9, 2021December 23, 2021January 6, 2022$0.54
February 18, 2022March 3, 2022March 17, 2022$0.62
May 12, 2022May 26, 2022June 9, 2022$0.62
We currently expect to pay quarterly dividends in the 2017 first three quarters increased duefuture, but any future dividend payments will be subject to higher vacation ownershipBoard approval, which will depend on our financial condition, results of operations and capital requirements, as well as applicable law, regulatory constraints, industry practice, and other business considerations that our Board of Directors considers relevant. In addition, our Corporate Credit Facility and the indentures governing our senior notes contain restrictions on our ability to pay dividends, and the terms of agreements governing debt that we may incur in the future may also limit or prohibit the payment of dividends. The payment of certain cash dividends may also result in an adjustment to the conversion rate of our convertible notes in a manner adverse to us. Accordingly, there can be no assurance that we will pay dividends in the future at any particular rate or at all.
Material Cash Requirements
The following table summarizes our future material cash requirements from known contractual or other obligations as of June 30, 2022:
  Payments Due by Period
($ in millions)TotalRemainder
of 2022		2023202420252026Thereafter
Contractual Obligations
Debt obligations(1)
$3,111 $276 $94 $89 $1,107 $616 $929 
Securitized debt(1)(2)
2,166 116 229 228 224 221 1,148 
Purchase obligations(3)
279 154 55 31 22 17 — 
Operating lease obligations(4)
128 12 25 21 20 18 32 
Finance lease obligations(4)
283 4 6 6 4 4 259 
Other long-term obligations(5)
18 7 4 3 2 1 1 
$5,985 $569 $413 $378 $1,379 $877 $2,369 
_________________________
(1)Includes principal as well as interest payments and excludes unamortized debt discount and issuance costs.
(2)Payments based on estimated timing of cash flow associated with securitized notes receivable.
(3)Arrangements are considered purchase obligations if a contract sales,specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure, and approximate timing of the impacttransaction. Amounts reflected herein represent expected funding under such contracts. Amounts reflected on the consolidated balance sheet as accounts payable and accrued liabilities are excluded from the changetable above.
(4)Includes interest.
(5)Primarily relates to future guaranteed purchases of rental inventory of $8 million and our commitment to an owners’ association that we manage to pay for any shortfall between the actual expenses incurred by the owners’ association and the income received by the owners’ association, in lieu of maintenance fees, of $5 million.
In the quarterly reporting cycle,normal course of our resort management business, we enter into purchase commitments on behalf of owners’ associations to manage the daily operating needs of our resorts. Since we are reimbursed for these commitments from the cash flows of the resorts, these obligations have minimal impact on our net income and an increasecash flow. These purchase commitments are excluded from the table above.
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Leases That Have Not Yet Commenced
During 2020, we entered into a finance lease arrangement, that was amended in financing propensity2021, for our new global headquarters office building, which is being constructed in Orlando, Florida. The new Orlando corporate office building is currently expected to 64.9 percentbe completed in 2023, at which time the lease term will commence and a right-of-use asset and corresponding liability will be recorded on our balance sheet. The initial lease term is approximately 16 years with total lease payments of $137 million for the 2017 first three quarters comparedaforementioned period.
Supplemental Guarantor Information
The 2028 Notes are guaranteed by MVWC, Marriott Ownership Resorts, Inc. (“MORI”), and certain other subsidiaries whose voting securities are wholly owned directly or indirectly by MORI (such subsidiaries collectively, the “Senior Notes Guarantors”). These guarantees are full and unconditional and joint and several. The guarantees of the Senior Notes Guarantors are subject to 59.1 percentrelease in limited circumstances only upon the occurrence of certain customary conditions.
The following tables present consolidating financial information as of June 30, 2022 and December 31, 2021, and for the 2016 first three quarters, due tosix months ended June 30, 2022 for MVWC and MORI on a stand-alone basis (collectively, the continued success“Issuers”), the Senior Notes Guarantors, the combined non-guarantor subsidiaries of the financing incentive programs that we offer in our North America segment. Given the successMVW, and MVW on a consolidated basis.
Condensed Consolidating Balance Sheet
As of June 30, 2022
IssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW Consolidated
($ in millions)MVWCMORI
Cash and cash equivalents$— $82 $102 $140 $— $324 
Restricted cash— 22 90 170 — 282 
Accounts receivable, net6 112 93 58 (25)244 
Vacation ownership notes receivable, net— 129 225 1,721 — 2,075 
Inventory— 213 407 75 — 695 
Property and equipment— 195 636 320 — 1,151 
Goodwill— — 3,117 — — 3,117 
Intangibles, net— — 909 32 — 941 
Investments in subsidiaries3,497 4,211 — — (7,708)— 
Other76 120 224 130 (39)511 
Total assets$3,579 $5,084 $5,803 $2,646 $(7,772)$9,340 
Accounts payable$25 $43 $84 $65 $— $217 
Advance deposits— 85 89 21 — 195 
Accrued liabilities15 77 157 107 (26)330 
Deferred revenue— 9 217 161 (15)372 
Payroll and benefits liability— 111 72 21 — 204 
Deferred compensation liability— 103 25 2 — 130 
Securitized debt, net— — — 1,868 (22)1,846 
Debt, net788 1,873 76 11 — 2,748 
Other6 1 174 29 — 210 
Deferred taxes— 60 283 — (1)342 
MVW shareholders' equity2,745 2,722 4,626 360 (7,708)2,745 
Noncontrolling interests— — — 1 — 1 
Total liabilities and equity$3,579 $5,084 $5,803 $2,646 $(7,772)$9,340 
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Table of these incentives to date, we expect financing propensity levels during the 2017 fiscal year to approximate 65 percent as we intend to continue to offer financing incentive programs.Contents
As of December 31, 2021
IssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW Consolidated
($ in millions)MVWCMORI
Cash and cash equivalents$— $126 $77 $139 $— $342 
Restricted cash— 18 94 349 — 461 
Accounts receivable, net14 49 172 119 (75)279 
Vacation ownership notes receivable, net— 127 203 1,715 — 2,045 
Inventory— 244 381 94 — 719 
Property and equipment— 200 644 292 — 1,136 
Goodwill— — 2,841 309 — 3,150 
Intangibles, net— — 840 153 — 993 
Investments in subsidiaries3,645 4,371 — — (8,016)— 
Other76 108 211 107 (14)488 
Total assets$3,735 $5,243 $5,463 $3,277 $(8,105)$9,613 
Accounts payable$63 $22 $121 $59 $— $265 
Advance deposits— 69 70 21 — 160 
Accrued liabilities12 151 145 114 (77)345 
Deferred revenue— 11 151 291 — 453 
Payroll and benefits liability— 102 72 27 — 201 
Deferred compensation liability— 114 25 3 — 142 
Securitized debt, net— — — 1,877 (21)1,856 
Debt, net684 1,870 76 1 — 2,631 
Other— 19 172 33 — 224 
Deferred taxes— 91 250 — 9 350 
MVW shareholders' equity2,976 2,794 4,381 841 (8,016)2,976 
Noncontrolling interests— — — 10 — 10 
Total liabilities and equity$3,735 $5,243 $5,463 $3,277 $(8,105)$9,613 
Condensed Consolidating Statements of Income
Six Months Ended June 30, 2022
IssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW Consolidated
($ in millions)MVWCMORI
Revenues$— $390 $1,366 $476 $(16)$2,216 
Expenses(4)(510)(1,053)(397)16 (1,948)
Benefit (provision) for income taxes1 40 (92)(24)— (75)
Equity in net income (loss) of subsidiaries197 294 — — (491)— 
Net income (loss)194 214 221 55 (491)193 
Net loss attributable to noncontrolling interests— — — 1 — 1 
Net income (loss) attributable to common shareholders$194 $214 $221 $56 $(491)$194 
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Cash from Investing Activities
Acquisition of a Business, Net of Cash and Restricted Cash Acquired
 Year to Date Ended
 September 30, 2017 September 9, 2016
($ in thousands)(274 days) (252 days)
Capital expenditures for property and equipment (excluding inventory)$(21,167) $(22,445)
Purchase of company owned life insurance(12,100) —
Dispositions, net17
 68,525
Net cash (used in) provided by investing activities$(33,250) $46,080
Net cash outflows of $157 million in the first half of 2021 were due to the Welk Acquisition. See Footnote 3 “Acquisitions and Dispositions” to our Financial Statements for more information.
Proceeds from Disposition of Subsidiaries, Net of Cash and Restricted Cash Transferred
Proceeds from disposition of subsidiaries, net of cash and restricted cash transferred of $93 million in the first half of 2022 were due to the disposition of various subsidiaries, including $55 million for the VRI Americas business entities and $38 million for the entities that owned and operated the hotel in Puerto Vallarta, Mexico. See Footnote 3 “Acquisitions and Dispositions” to our Financial Statements for more information.
Capital Expenditures for Property and Equipment
Capital expenditures for property and equipment relate to spending for technology development, buildings and equipment used at sales locations and ancillary offerings, such as food and beverage offerings, at locations where such offerings are provided.
In the 2017 first three quarters,half of 2022, capital expenditures for property and equipment of $21.2 million included $19.7$23 million to support business operations (including $11.4$15 million for ancillary and other operations assets and $8.3$7 million for sales locations) and $1.5$1 million for technology spending.technology.
In the 2016 first three quarters,half of 2021, capital expenditures for property and equipment of $22.4$11 million included $16.8$8 million to support business operations (including $13.7 million for sales locations and $3.1$5 million for ancillary and other operations assets)assets and $5.6$3 million for technology spending.sales locations) and $3 million for technology.

Issuance of Note Receivable to VIE
PurchaseDuring the second quarter of Company Owned Life Insurance
To support our ability2022, in connection with the amendment of an inventory purchase commitment, we extended a loan to meet a portionVIE, which we do not consolidate, for $47 million. The loan is due in full upon the earlier of either a sale of the property, including a sale to us, or an amendment and restatement of our obligations under the Marriott Vacations Worldwide Corporation Deferred Compensation Plan (the “Deferred Compensation Plan”), we acquired company owned insurance policies on the lives of certain participants in the Deferred Compensation Plan, the proceedspurchase commitment, one of which are intendedis expected to be aligned with the investment alternatives elected by plan participants as discussedoccur in 2022. See Footnote No. 1, “Summary of Significant Accounting Policies”,16 “Variable Interest Entities” to our Financial Statements. During the 2017 first three quarters, we paid $12.1 millionStatements for the acquisition of these policies.
Dispositions, net
Dispositions in the 2016 first three quarters related to the sale of the remaining downsized portion of the operating property in Surfers Paradise, Australia for $49.1 million, the sale of excess inventory at the RCC San Francisco for $19.3 million and the sale of undeveloped land in Absecon, New Jersey for $0.1 million.more information.
Cash from Financing Activities
 Year to Date Ended
 September 30, 2017 September 9, 2016
($ in thousands)(274 days) (252 days)
Borrowings from securitization transactions$400,260
 $376,622
Repayment of debt related to securitization transactions(231,921) (254,510)
Borrowings from Revolving Corporate Credit Facility87,500
 85,000
Repayment of Revolving Corporate Credit Facility(87,500) (85,000)
Proceeds from issuance of Convertible Notes230,000
 —
Purchase of Convertible Note Hedges(33,235) —
Proceeds from issuance of Warrants20,332
 —
Debt issuance costs(14,459) (4,065)
Repurchase of common stock(83,067) (163,359)
Accelerated stock repurchase forward contract—
 (14,470)
Payment of dividends(28,590) (26,067)
Payment of withholding taxes on vesting of restricted stock units(10,713) (3,972)
Other, net(502) 194
Net cash provided by (used in) financing activities$248,105
 $(89,627)
Borrowings from / Repayment of Debt Related to Securitization Transactions
We reflect proceeds from securitizations of vacation ownership notes receivable, including draw downs on the Warehouse Credit Facility, as “Borrowings from securitization transactions.” We reflect repayments of bonds associated with vacation ownership notes receivable securitizations and repayments on the Warehouse Credit Facility (including vacation ownership notes receivable repurchases) as “Repayment of debt related to securitization transactions.”
In the 2017 third quarter, we completed the securitization of a pool of $360.8 million of vacation ownership notes receivable generating gross cash proceeds of $349.9 million. In connection with the securitization, investors purchased in a private placement $350.0 million in vacation ownership loan backed notes from the MVW Owner Trust 2017-1 (the “2017-1 Trust”). Three classes of vacation ownership loan backed notes were issued by the 2017-1 Trust: $276.0 million of Class A Notes, $46.9 million of Class B Notes and $27.1 million of Class C Notes. The Class A Notes have an interest rate of 2.42 percent, the Class B Notes have an interest rate of 2.75 percent and the Class C Notes have an interest rate of 2.99 percent, for an overall weighted average interest rate of 2.51 percent.
During the 2017 secondfirst quarter of 2022, we securitized vacation ownership notes receivable under our Warehouse Credit Facility. The carrying amount of the vacation ownership notes receivable securitized was $59.1$125 million. The average advance rate was 85 percent,81%, which resulted in gross proceeds of $50.3$102 million. Net proceeds were $50.0$101 million due to the funding of reserve accounts of $1 million.
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During the second quarter of 2022, we completed the securitization of a pool of $383 million of vacation ownership notes receivable. Approximately $342 million of the vacation ownership notes receivable were purchased by the 2022-1 LLC during the second quarter of 2022.
Of the $375 million in proceeds from the amount of $0.3 million. There were no amounts outstanding under this facilitytransaction, $40 million was held by the 2022-1 LLC as of SeptemberJune 30, 2017.2022 and released subsequently as it purchased all of the remaining loans. In addition, approximately $98 million was used to repay all outstanding amounts previously drawn under our Warehouse Credit Facility, approximately $7 million was used to pay transaction expenses and fund required reserves, and the remaining $176 million will be used for general corporate purposes. In connection with this securitization, we redeemed the remaining vacation ownership loan backed notes, issued in a prior securitization, for approximately $38 million; the majority of the loans acquired through the redemption were purchased by the 2022-1 LLC.
At SeptemberAs of June 30, 2017, $47.62022, $106 million of gross vacation ownership notes receivable were eligible for securitization. See Footnote No. 9, “Debt,”
Proceeds from / Repayments of Debt
All proceeds from and repayments of debt during the first half of 2022 were related to borrowings from and repayments of our Financial Statements for additional information regarding our Warehouse Credit Facility.
In the 2016 third quarter, we completed the securitization of a pool of $259.1 million of vacation ownership notes receivable generating gross cash proceeds of $250.0 million. In connection with the securitization, investors purchased in a private placement $250.0 million in vacation ownership loan backed notes from the MVW Owner Trust 2016-1 (the “2016-1

Trust”). Two classes of vacation ownership loan backed notes were issued by the 2016-1 Trust: $230.6 million of Class A Notes and $19.4 million of Class B Notes. The Class A Notes have an interest rate of 2.25 percent and the Class B Notes have an interest rate of 2.64 percent, for an overall weighted average interest rate of 2.28 percent.
During 2016, we securitized vacation ownership notes receivable under our WarehouseCorporate Credit Facility. The carrying amount of the vacation ownership notes receivable securitized was $149.5 million. The advance rate was 85 percent, which resulted in gross proceeds of $126.6 million. Net proceeds were $125.7 million due to the funding of reserve accounts in the amount of $0.9 million.
Borrowings from / Repayment of RevolvingOur Corporate Credit Facility
During includes the 2017 first three quarters, we borrowed $87.5 million underTerm Loan and our Previous Revolving Corporate Credit Facility, to facilitate the funding of our short-term working capital needs, all of which was repaid as of September 30, 2017. Seeis further discussed in Footnote No. 9, “Debt,”13 “Debt” to our Financial Statements for additional information regardingStatements. No principal payments were made on our Term Loan during the first half of 2022. During the first half of 2022, we borrowed and repaid $125 million under our Revolving Corporate Credit Facility.
Proceeds from Issuance There were no borrowed amounts outstanding under our Revolving Corporate Credit Facility as of Convertible NotesJune 30, 2022. As of June 30, 2022, we had $1 million of letters of credit outstanding under our Revolving Corporate Credit Facility.
During the 2017 third quarter,first half of 2021, we issued $230.0 million of Convertible Notes, which included the exercise in full of the $30.0 million over-allotment option we granted to the initial purchasers of the Convertible Notes. We received net proceeds from the offering of approximately $223.7 million after adjusting for debt issuance costs, including the discount to the initial purchasers. We used $40.1repaid $100 million of the net proceeds to repurchase sharesamount outstanding under the Term Loan. We had no borrowings or repayments under our Revolving Corporate Credit Facility during the first half of our common stock from purchasers2021.
Finance Lease Payment
During the first half of the Convertible Notes in privately negotiated repurchase transactions, which is included as a Financing Activity in Repurchase of Common Stock as discussed below, and approximately $12.92022, we paid $2 million of the net proceeds to pay the cost of the Convertible Note Hedges, after such cost was partially offset by the proceeds from the issuance of the Warrants, as discussed below. See Footnote No. 9, “Debt,”related to our Financial Statementsfinance lease obligations for additional information on our Convertible Notes transaction.
Purchase of Convertible Note Hedges / Proceeds from Issuance of Warrants
In connection with the offering of the Convertible Notes, we entered into Convertible Note Hedges with respect to our common stock, covering approximately 1.55 million shares of our common stock at a cost of $33.2 million. Concurrently, we sold Warrants to acquire approximately 1.55 million shares of our common stock at an initial strike price of $176.68 per sharetechnology and received aggregate proceeds of $20.3 million. Taken together, the Convertible Note Hedges and the Warrants are generally expected to reduce the potential dilution to our common stock (or, in the event the conversion is settled in cash, to reduce our cash payment obligation) in the event that at the time of conversion our stock price exceeds the conversion price under the Convertible Notes and to effectively increase the overall conversion price from $148.19 (or a conversion premium of 30 percent) to $176.68 per share (or a conversion premium of 55 percent). See Footnote No. 9, “Debt,” to our Financial Statements for additional information on our Convertible Notes transaction.business operations equipment.
Debt Issuance Costs
InDuring the 2017 first three quarters,half of 2022, we paid $14.5$9 million of debt issuance costs, which included $6.3$5 million associated with the initial purchaser discounts related to the Convertible Notes, $4.8 million associated with the 2017 vacation ownership notes receivable securitization $2.2completed in 2022 and $4 million relatedassociated with an amendment to the new $250.0 million Revolving Corporate Credit Facility, and $1.2 million associated withwhich is further discussed in Footnote 13 “Debt” to our Financial Statements.
During the amendment and extensionfirst half of the Warehouse Credit Facility.
In the 2016 first three quarters,2021, we incurred $4.1paid $15 million of debt issuance costs, which included $3.8$6 million associated with the 2016 vacation ownership notes receivable securitization we completed in 2021, $7 million associated with the issuance of the 2029 Notes, $1 million associated with the issuance of the 2026 Convertible Notes, and $0.2$1 million related toassociated with the amendment of a waiver to the Previous Revolvingagreement that governs our Corporate Credit Facility.
Share Repurchase Programof Common Stock
The following table summarizes share repurchase activity under our current share repurchase program:
($ in millions, except per share amounts)Number of Shares RepurchasedCost of Shares RepurchasedAverage Price
Paid per Share
As of December 31, 202117,681,395 $1,418 $80.17 
For the first half of 20222,187,336 312 143.02 
As of June 30, 202219,868,731 $1,730 $87.09 
($ in thousands, except per share amounts)Number of Shares Repurchased Cost of Shares Repurchased Average Price Paid per Share
As of December 30, 20169,672,629
 $608,439
 $62.90
For the 2017 first three quarters728,385
 83,067
 114.04
As of September 30, 201710,401,014
 $691,506
 $66.48

As discussed above, we used $40.1 million of the proceeds from the sale of the Convertible Notes to repurchase 351,900 shares of our common stock under our existing share repurchase program. See Footnote No. 9, “Debt,” to our Financial Statements for additional information on our Convertible Notes transaction and Footnote No. 10, “Shareholders’ Equity,”14 “Shareholders' Equity” to our Financial Statements for further information related to our share repurchase program.program, including the additional share repurchase authorization and extension approved by our Board of Directors during the first half of 2022.
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Dividends
We distributed cash dividends to holders of our common stock during the 2017 first three quartershalf of 2022 as follows:
Declaration DateShareholder Record DateDistribution DateDividend per Share
December 9, 20162021December 22, 201623, 2021January 4, 20176, 2022$0.350.54
February 9, 201718, 2022February 23, 2017March 3, 2022March 9, 201717, 2022$0.350.62
May 11, 201712, 2022May 25, 201726, 2022June 8, 20179, 2022$0.350.62
We currently expect to pay quarterly cash dividends in the future, but any future dividend payments will be subject to Board approval, which will depend on our financial condition, results of operations and capital requirements, as well as applicable law, regulatory constraints, industry practice, and other business considerations that our Board of Directors considers relevant. In addition, our Revolving Corporate Credit Facility containsand the indentures governing our senior notes contain restrictions on our ability to pay dividends, and the terms of agreements governing debt that we may incur in the future may also limit or prohibit dividend payments.the payment of dividends. The payment of certain cash dividends may also result in an adjustment to the conversion rate of our convertible notes in a manner adverse to us. Accordingly, there can be no assurance that we will pay dividends in the future at the sameany particular rate or at all.
Contractual Obligations and Off-Balance Sheet Arrangements
There have been no significant changes to our “Contractual Obligations and Off-Balance Sheet Arrangements” as presented in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the year ended December 30, 2016, other than as set forth below.Material Cash Requirements
The following table summarizes our future material cash requirements from known contractual or other obligations as of SeptemberJune 30, 2017:2022:
    Payments Due by Period
($ in thousands) Total 
Remainder
of 2017
 
Years
2018 - 2019
 
Years
2020 - 2021
 Thereafter
Contractual Obligations          
Debt(1)
 $1,332,995
 $32,256
 $306,787
 $234,069
 $759,883
Operating leases 87,116
 4,268
 26,497
 20,010
 36,341
Purchase obligations(2)
 336,416
 15,463
 316,386
 3,134
 1,433
Capital lease obligations(3)
 7,582
 361
 7,221
 —
 —
Other long-term obligations 547
 547
 —
 —
 —
Total contractual obligations $1,764,656
 $52,895
 $656,891
 $257,213
 $797,657
  Payments Due by Period
($ in millions)TotalRemainder
of 2022		2023202420252026Thereafter
Contractual Obligations
Debt obligations(1)
$3,111 $276 $94 $89 $1,107 $616 $929 
Securitized debt(1)(2)
2,166 116 229 228 224 221 1,148 
Purchase obligations(3)
279 154 55 31 22 17 — 
Operating lease obligations(4)
128 12 25 21 20 18 32 
Finance lease obligations(4)
283 4 6 6 4 4 259 
Other long-term obligations(5)
18 7 4 3 2 1 1 
$5,985 $569 $413 $378 $1,379 $877 $2,369 
_________________________
(1)Includes principal as well as interest payments and excludes unamortized debt discount and issuance costs.
(2)Payments based on estimated timing of cash flow associated with securitized notes receivable.
(3)Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure, and approximate timing of the transaction. Amounts reflected herein represent expected funding under such contracts. Amounts reflected on the consolidated balance sheet as accounts payable and accrued liabilities are excluded from the table above.
(4)Includes interest.
(5)Primarily relates to future guaranteed purchases of rental inventory of $8 million and our commitment to an owners’ association that we manage to pay for any shortfall between the actual expenses incurred by the owners’ association and the income received by the owners’ association, in lieu of maintenance fees, of $5 million.
In the normal course of our resort management business, we enter into purchase commitments on behalf of owners’ associations to manage the daily operating needs of our resorts. Since we are reimbursed for these commitments from the cash flows of the resorts, these obligations have minimal impact on our net income and cash flow. These purchase commitments are excluded from the table above.
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Leases That Have Not Yet Commenced
During 2020, we entered into a finance lease arrangement, that was amended in 2021, for our new global headquarters office building, which is being constructed in Orlando, Florida. The new Orlando corporate office building is currently expected to be completed in 2023, at which time the lease term will commence and a right-of-use asset and corresponding liability will be recorded on our balance sheet. The initial lease term is approximately 16 years with total lease payments of $137 million for the aforementioned period.
Supplemental Guarantor Information
The 2028 Notes are guaranteed by MVWC, Marriott Ownership Resorts, Inc. (“MORI”), and certain other subsidiaries whose voting securities are wholly owned directly or indirectly by MORI (such subsidiaries collectively, the “Senior Notes Guarantors”). These guarantees are full and unconditional and joint and several. The guarantees of the Senior Notes Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions.
The following tables present consolidating financial information as of June 30, 2022 and December 31, 2021, and for the six months ended June 30, 2022 for MVWC and MORI on a stand-alone basis (collectively, the “Issuers”), the Senior Notes Guarantors, the combined non-guarantor subsidiaries of MVW, and MVW on a consolidated basis.
Condensed Consolidating Balance Sheet
As of June 30, 2022
IssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW Consolidated
($ in millions)MVWCMORI
Cash and cash equivalents$— $82 $102 $140 $— $324 
Restricted cash— 22 90 170 — 282 
Accounts receivable, net6 112 93 58 (25)244 
Vacation ownership notes receivable, net— 129 225 1,721 — 2,075 
Inventory— 213 407 75 — 695 
Property and equipment— 195 636 320 — 1,151 
Goodwill— — 3,117 — — 3,117 
Intangibles, net— — 909 32 — 941 
Investments in subsidiaries3,497 4,211 — — (7,708)— 
Other76 120 224 130 (39)511 
Total assets$3,579 $5,084 $5,803 $2,646 $(7,772)$9,340 
Accounts payable$25 $43 $84 $65 $— $217 
Advance deposits— 85 89 21 — 195 
Accrued liabilities15 77 157 107 (26)330 
Deferred revenue— 9 217 161 (15)372 
Payroll and benefits liability— 111 72 21 — 204 
Deferred compensation liability— 103 25 2 — 130 
Securitized debt, net— — — 1,868 (22)1,846 
Debt, net788 1,873 76 11 — 2,748 
Other6 1 174 29 — 210 
Deferred taxes— 60 283 — (1)342 
MVW shareholders' equity2,745 2,722 4,626 360 (7,708)2,745 
Noncontrolling interests— — — 1 — 1 
Total liabilities and equity$3,579 $5,084 $5,803 $2,646 $(7,772)$9,340 
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As of December 31, 2021
IssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW Consolidated
($ in millions)MVWCMORI
Cash and cash equivalents$— $126 $77 $139 $— $342 
Restricted cash— 18 94 349 — 461 
Accounts receivable, net14 49 172 119 (75)279 
Vacation ownership notes receivable, net— 127 203 1,715 — 2,045 
Inventory— 244 381 94 — 719 
Property and equipment— 200 644 292 — 1,136 
Goodwill— — 2,841 309 — 3,150 
Intangibles, net— — 840 153 — 993 
Investments in subsidiaries3,645 4,371 — — (8,016)— 
Other76 108 211 107 (14)488 
Total assets$3,735 $5,243 $5,463 $3,277 $(8,105)$9,613 
Accounts payable$63 $22 $121 $59 $— $265 
Advance deposits— 69 70 21 — 160 
Accrued liabilities12 151 145 114 (77)345 
Deferred revenue— 11 151 291 — 453 
Payroll and benefits liability— 102 72 27 — 201 
Deferred compensation liability— 114 25 3 — 142 
Securitized debt, net— — — 1,877 (21)1,856 
Debt, net684 1,870 76 1 — 2,631 
Other— 19 172 33 — 224 
Deferred taxes— 91 250 — 9 350 
MVW shareholders' equity2,976 2,794 4,381 841 (8,016)2,976 
Noncontrolling interests— — — 10 — 10 
Total liabilities and equity$3,735 $5,243 $5,463 $3,277 $(8,105)$9,613 
Condensed Consolidating Statements of Income
Six Months Ended June 30, 2022
IssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW Consolidated
($ in millions)MVWCMORI
Revenues$— $390 $1,366 $476 $(16)$2,216 
Expenses(4)(510)(1,053)(397)16 (1,948)
Benefit (provision) for income taxes1 40 (92)(24)— (75)
Equity in net income (loss) of subsidiaries197 294 — — (491)— 
Net income (loss)194 214 221 55 (491)193 
Net loss attributable to noncontrolling interests— — — 1 — 1 
Net income (loss) attributable to common shareholders$194 $214 $221 $56 $(491)$194 
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Recent Accounting Pronouncements
See Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” to our Financial Statements for a discussion of recently issued accounting pronouncements, including information on new accounting standards and the future adoption of such standards.
(1)
Includes principal as well as interest payments and excludes unamortized debt discount and issuance costs.
(2)
Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure, and approximate timing of the transaction. Amounts reflected herein represent expected funding under such contracts. Amounts reflected on the consolidated balance sheet as accounts payable and accrued liabilities are excluded from the table above.
(3)
Includes interest.
Critical Accounting Policies and Estimates
TheOur preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. Management considers an accounting estimate to be critical if: (1) it requires assumptions to be made that are uncertain at the time the estimate is made; and (2) changes in the estimate, or different estimates that could have been selected, could have a material effect on our consolidated results of operations or financial condition.
While we believe that our estimates, assumptions, and judgments are reasonable, they are based on information presently available. Actual results may differ significantly. Additionally, changes in our assumptions, estimates or assessments as a result of unforeseen events or otherwise could have a material impact on our consolidated financial position or results of operations. We have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application in our most recent Annual Report on Form 10-K. Since the date of our most recent Annual Report on Form 10-K,

there have been no material changes to our critical accounting policies or the methodologies or assumptions we apply under them.
Item 3.    Quantitative and Qualitative Disclosures About Market Risk
Our exposure to market risk has not changed materially from that disclosed in Part I, Item 7A of ourthe 2021 Annual Report on Form 10-K for the year ended December 30, 2016, other than as set forth below.Report.
In September 2017, we issued $230 million of Convertible Notes. Holders may convert the Convertible Notes prior to maturity upon the occurrence of certain circumstances. Upon conversion, holders of the Convertible Notes will receive cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.
Concurrently with the issuance of the Convertible Notes, we entered into Convertible Note Hedges and Warrants. These separate transactions were intended to reduce the potential economic dilution from the conversion of the Convertible Notes.
The Convertible Notes have fixed annual interest rates at 1.50 percent and, therefore, we do not have economic interest rate exposure on our Convertible Notes. However, the value of the Convertible Notes is exposed to interest rate risk. Generally, the fair market value of the Convertible Notes will increase as interest rates fall and decrease as interest rates rise. In addition, the fair value of the Convertible Notes is affected by our stock price. The net carrying value of the Convertible Notes was $190.7 million as of September 30, 2017. This represents the liability component of the principal balance of the Convertible Notes, net of unamortized debt discount and issuance costs, as of September 30, 2017. The total estimated fair value of the Convertible Notes at September 30, 2017 was $241.6 million, and the fair value was determined based on the quoted market price of the Convertible Notes in an over-the-counter market as of the last day of trading for the quarter ended September 30, 2017. For further information, see Footnote No. 4, “Financial Instruments” and Footnote No. 9, “Debt,” to our Financial Statements.
Item 4.    Controls and Procedures
Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, we evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), and management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which by their nature, can provide only reasonable assurance about management’s control objectives. Our disclosure controls and procedures have been designed to provide reasonable assurance of achieving the desired control objectives. However, you should note that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Based upon the foregoing evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2022, our disclosure controls and procedures were effective and operating to provide reasonable assurance that we record, process, summarize and report the information we are required to disclose in the reports that we file or submit under the Exchange Act within the time periods specified in the rules and forms of the SEC, and to provide reasonable assurance that we accumulate and communicate such information to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions about required disclosure.
Changes in Internal Control Over Financial Reporting
There wereWe made no changes in our internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.reporting other than changes in control over financial reporting to integrate the business we acquired in the Welk Acquisition.

Part II. OTHER INFORMATION
Item 1.    Legal Proceedings
Currently, and from time to time, we are subject to claims in legal proceedings arising in the normal course of business, including, among others, the legal actions discussed under “Loss Contingencies” in Footnote No. 8,11 “Contingencies and Commitments,”Commitments” to our Financial Statements. While management presently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm our financial position, cash flows, or overall trends in results of operations, legal proceedings are inherently uncertain, and unfavorable rulings could, individually or in aggregate, have a material adverse effect on our business, financial condition, or operating results.
Item 1A. Risk Factors
There have been no material changes to the risk factors disclosedset forth in Part I, Item 1A to Part 1 of our 2021 Annual Report, on Form 10-K for the fiscal year ended December 30, 2016, other than as set forth below.
The degree to which we are leveraged may have a material adverse effect on our financial position, results of operations and cash flows.
We can borrow up to $250 million under the Revolving Corporate Credit Facility and could also incur additional debt to the extent permitted under the Revolving Corporate Credit Facility. Our ability to make dividend payments to holders of our common stock and to make payments on and refinance our indebtedness, including debt under the Revolving Corporate Credit Facility, the Convertible Notes or any future debt that we may incur, will depend on our ability to generate cash in the future from operations, financings or asset sales. Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors that we cannot control. If we cannot repay or refinance our debt on commercially reasonable terms as it becomes due, we may be forced to sell assets or take other disadvantageous actions, including (1) reducing or delaying capital expenditures, (2) limiting financing offered to customers, which could result in reduced sales, and (3) dedicating an unsustainable level of our cash flow from operations to the payment of principal and interest on our indebtedness. In addition, our ability to withstand competitive pressures and to react to changes in the vacation ownership industry could be impaired. If we cannot make scheduled payments on our debt, we will be in default and holders of the Convertible Notes could declare all outstanding principal and interest to be due and payable, the lenders under the Revolving Corporate Credit Facility could terminate their commitments to loan money, lenders under our secured debt (including any borrowings outstanding under the Revolving Corporate Credit Facility) could foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation. If lenders of any of our debt are able to accelerate amounts due to them, a default or acceleration of our other debt could be triggered.
A lowering or withdrawal of the ratings assigned to our company or any of our debt securities by rating agencies may increase our future borrowing costs and reduce our access to capital.
Any rating assigned to our company or our debt, including the Convertible Notes, could be lowered or withdrawn entirely by a rating agency if, in that rating agency’s judgment, future circumstances relating to the basis of the rating, such as adverse changes, so warrant. Any future lowering of our ratings likely would make it more difficult or more expensive for us to obtain additional debt financing.
The fundamental change repurchase feature of the Convertible Notes may delay or prevent an otherwise beneficial attempt to take over our company.
The terms of the Convertible Notes require us to repurchase the Convertible Notes in the event of certain fundamental changes with respect to our company. A takeover of our company would trigger an option of the holders of the Convertible Notes to require us to repurchase the Convertible Notes. This may have the effect of delaying or preventing a takeover of our company that would otherwise be beneficial to holders of our common stock and holders of the Convertible Notes.
The terms of any future preferred equity or debt financing may give holders of any preferred equity or debt securities rights that are senior to rights of our common shareholders or dilute the ownership percentage of existing shareholders or impose more stringent operating restrictions on our company.
Debt or equity financing may not be available to us on acceptable terms. If we incur additional debt or raise equity through the issuance of preferred stock or convertible securities such as the Convertible Notes, the terms of the debt or the preferred stock issued may give the holders rights, preferences and privileges senior to those of holders of our common stock, particularly in the event of liquidation. The terms of the debt may also impose additional and more stringent restrictions on our operations. If we raise funds through the issuance of additional equity, the ownership percentage of our existing shareholders would be diluted.

The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results.
Although holders of the Convertible Notes are generally not permitted to convert the Convertible Notes until June 15, 2022, in the event the conditional conversion feature of the Convertible Notes is triggered due to the trading price of the Convertible Notes or our common stock, holders of the Convertible Notes will be entitled to convert the Convertible Notes at any time during specified periods at their option. See Footnote No. 9, “Debt,” to our Financial Statements for additional information. If one or more holders elect to convert their Convertible Notes, we may elect to settle all or a portion of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
We may not have the ability to raise the funds necessary to settle conversions of the Convertible Notes or to repurchase the Convertible Notes upon a fundamental change.
Upon the occurrence of certain fundamental changes with respect to our company, holders of the Convertible Notes have the right to require us to repurchase their Convertible Notes at a purchase price equal to 100 percent of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but not including, the repurchase date. In addition, unless we elect to deliver solely shares of our common stock, we will be required to make cash payments in respect of the Convertible Notes being converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make purchases of Convertible Notes surrendered therefor or Convertible Notes being converted. In addition, our ability to repurchase the Convertible Notes or to pay cash upon conversions of the Convertible Notes is limited by the agreements governing our existing indebtedness (including the credit agreement governing the Revolving Corporate Credit Facility) and may also be limited by law, by regulatory authority or by agreements that will govern our future indebtedness. Our failure to repurchase Convertible Notes at a time when the repurchase is required by the Indenture or to pay cash payable on future conversions of the Convertible Notes as required by the Indenture would constitute a default under the Indenture. A default under the Indenture or the fundamental change itself could also lead to a default under agreements governing our existing or future indebtedness (including the credit agreement governing the Revolving Corporate Credit Facility). If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Convertible Notes or make cash payments upon conversions thereof.
The accounting method for convertible debt securities that may be settled in cash, such as the Convertible Notes, may have a material effect on our reported financial results.
Under Accounting Standards Codification 470-20, Debt with Conversion and Other Options (“ASC 470-20”), an entity must separately account for the liability and equity components of certain convertible debt instruments (such as the Convertible Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The effect of ASC 470-20 on the accounting for the Convertible Notes is that the equity component is required to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance sheet, and the value of the equity component has been treated as original issue discount for purposes of accounting for the debt component of the Convertible Notes. As a result, we will be required to record a greater amount of non-cash interest expense in current periods presented as a result of the amortization of the discounted carrying value of the Convertible Notes to their face amount over the term of the Convertible Notes. We will report lower net income (or greater net loss) in our financial results because ASC 470-20 requires interest to include both the current period’s amortization of the debt discount and the instrument’s coupon interest, which could adversely affect our reported or future financial results, the market price of our common stock and the trading price of the Convertible Notes.
In addition, under certain circumstances, convertible debt instruments (such as the Convertible Notes) that may be settled entirely or partly in cash are currently accounted for utilizing the treasury stock method if we have the ability and intent to settle in cash, the effect of which is that the shares issuable upon conversion of the Convertible Notes are not included in the calculation of diluted earnings per share except to the extent that the conversion valuefactual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors, which is incorporated herein by reference.
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Table of the Convertible Notes exceeds their principal amount. Under the treasury stock method, for diluted earnings per share purposes, the transaction is accounted for as if the number of shares of common stock that would be necessary to settle such excess, if we elected to settle such excess in shares, are issued. We cannot be sure that we will be able to continue to demonstrate the ability or intent to settle in cash or that the accounting standards in the future will continue to permit the use of the treasury stock method. If we are unable to use the treasury stock method in accounting for the shares issuable upon conversion of the Convertible Notes, then our diluted earnings per share would be adversely affected.Contents

The Convertible Note Hedges and Warrants may affect the value of our common stock.
In connection with the Convertible Notes, we entered into privately negotiated Convertible Note Hedges with affiliates of two of the initial purchasers. The Convertible Note Hedges cover, subject to customary anti-dilution adjustments substantially similar to those applicable to the Convertible Notes, the same number of shares of common stock that will initially underlie the Convertible Notes. The Convertible Note Hedges are expected generally to reduce potential dilution to our common stock and/or offset cash payments we are required to make in excess of the principal amount, in each case, upon any conversion of Convertible Notes. Concurrently with our entry into the Convertible Note Hedges, we entered into Warrant transactions with the hedge counterparties relating to the same number of shares of common stock. The Warrants could separately have a dilutive effect on our shares of common stock to the extent that the market price per share exceeds the applicable strike price of the Warrants on one or more of the applicable expiration dates.
In connection with establishing their initial hedges of the convertible note hedge transactions and warrant transactions, the hedge counterparties and/or their respective affiliates advised us that they expected to purchase shares of our common stock in secondary market transactions and/or enter into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the Convertible Notes. The hedge counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock in secondary market. The effect, if any, of these activities on the market price of our common stock or the Convertible Notes will depend in part on market conditions and cannot be ascertained at this time, but any of these activities could cause or prevent an increase or a decline in the market price of our common stock or the Convertible Notes.
We are subject to counterparty risk with respect to the Convertible Note Hedges.
The counterparties to the Convertible Note Hedges are financial institutions, and we are subject to the risk that one or more of the hedge counterparties may default under the Convertible Note Hedges. Our exposure to the credit risk of the hedge counterparties is not secured by any collateral. If any of the hedge counterparties become subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions with such counterparties. Our exposure will depend on many factors but, generally, the increase in our exposure will be correlated to the increase in the market price and in the volatility of our common stock. In addition, upon a default by a hedge counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability of the hedge counterparties.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
PeriodTotal Number of Shares Purchased 
Average
Price per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
 
Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs(1)
July 1, 2017 – July 31, 2017147,500
 $116.00 147,500
 1,047,371
August 1, 2017 – August 31, 2017196,282
 $111.84 196,282
 1,851,089
September 1, 2017 – September 30, 2017(2)
352,103
 $114.00 352,103
 1,498,986
Total695,885
 $113.81 695,885
 1,498,986
PeriodTotal Number of Shares PurchasedAverage
Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
Maximum Dollar Amount of Shares That May Yet Be Purchased Under the Plans or Programs(1)
April 1, 2022 – April 30, 2022305,037 $149.82 305,037 $306,897,878 
May 1, 2022 – May 31, 2022528,675 $141.15 528,675 $232,275,751 
June 1, 2022 – June 30, 2022588,800 $123.66 588,800 $159,463,717 
Total1,422,512 $135.77 1,422,512 $159,463,717 
_________________________
(1)
On August 1, 2017, our Board of Directors authorized the repurchase of up to 1.0 million additional shares of our common stock under our existing share repurchase program and extended the duration of the program through May 31, 2018. Prior to that authorization, our Board of Directors had authorized the repurchase of an aggregate of up to 10.9 million shares of our common stock under the share repurchase program since the initiation of the program in October 2013.
(2)
On September 25, 2017, we used $40.1 million of the proceeds from the sale of the Convertible Notes to repurchase 351,900 shares of our common stock under our existing share repurchase program.
Item 3.    Defaults Upon Senior Securities(1)On September 13, 2021, we announced that our Board of Directors authorized a share repurchase program under which we may purchase shares of our common stock for an aggregate purchase price not to exceed $250 million, prior to December 31, 2022. On February 22, 2022, we announced that our Board of Directors authorized the repurchase of up to an additional $300 million of our common stock, as well as the extension of the term of our existing share repurchase program to March 31, 2023.
None.Additionally, on August 1, 2022, we announced that our Board of Directors authorized the repurchase of up to an additional $500 million of our common stock, as well as the extension of the term of our existing share repurchase program to June 30, 2023. Prior to this authorization we had approximately $28 million of capacity remaining under our previous authorization.

Item 4.    Mine Safety Disclosures
Not applicable.
Item 5.    Other Information
None.
Item 6.    Exhibits
All documents referenced below are being filed as a part of this Quarterly Report on Form 10-Q, unless otherwise noted.
Exhibit NumberDescriptionFiled
Herewith		Incorporation By Reference From
FormExhibitDate Filed
2.1
Agreement and Plan of Merger, dated as of April 30, 2018, by and among Marriott Vacations Worldwide Corporation, ILG, Inc., Ignite Holdco, Inc., Ignite Holdco Subsidiary, Inc., Volt Merger Sub, Inc., and Volt Merger Sub LLC*8-K2.15/1/2018
2.2
Agreement and Plan of Merger by and among Marriott Vacations Worldwide Corporation, Sommelier Acquisition Corp., Champagne Resorts, Inc., Welk Hospitality Group, Inc. and the Shareholder Representative, dated as of January 26, 20218-K2.11/26/2021
3.1
Restated Certificate of Incorporation of Marriott Vacations Worldwide Corporation8-K3.111/22/2011
3.2
Restated Bylaws of Marriott Vacations Worldwide Corporation8-K3.211/22/2011
4.1
Form of certificate representing shares of common stock, par value $0.01 per share, of Marriott Vacations Worldwide Corporation104.110/14/2011
4.2
Indenture between Marriott Vacations Worldwide Corporation and The Bank of New York Mellon Trust Company, N.A., as trustee, dated September 25, 201710-Q4.111/2/2017
4.3
Form of 1.50% Convertible Senior Note due 2022 (included as Exhibit A to Exhibit 4.2 above)10-Q4.111/2/2017
4.4
Joinder Agreement to Registration Rights Agreement, dated as of September 1, 2018, by and among ILG, LLC, the guarantors party thereto and Merrill Lynch, Pierce, Fenner & Smith Incorporated as the representative of the initial purchasers8-K4.89/5/2018
4.5
Indenture, dated as of October 1, 2019, by and among Marriott Ownership Resorts, Inc., Marriott Vacations Worldwide Corporation, as guarantor, the other guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee8-K4.110/1/2019
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Table of Contents
Exhibit NumberDescriptionFiled
Herewith		Incorporation By Reference From
FormExhibitDate Filed
4.6
Supplemental Indenture, dated December 31, 2019, by and among Marriott Ownership Resorts, Inc., MVW Vacations, LLC and the Bank of New York Mellon Trust Company, N.A., as trustee10-K4.123/2/2020
4.7
Second Supplemental Indenture, dated February 26, 2020, by and among Marriott Ownership Resorts, Inc., MVW Services Corporation, and the Bank of New York Mellon Trust Company, N.A., as trustee10-K4.133/2/2020
4.8
Form of 4.750% Senior Notes due 2028 (included as Exhibit A to Exhibit 4.5 above)8-K4.210/1/2019
4.9
Registration Rights Agreement, dated as of October 1, 2019, by and among Marriott Ownership Resorts, Inc., Marriott Vacations Worldwide Corporation, as guarantor, the other guarantors party thereto and J.P. Morgan Securities LLC8-K4.310/1/2019
4.10
Indenture, dated as of May 13, 2020, by and among Marriott Ownership Resorts, Inc., Marriott Vacations Worldwide Corporation, as guarantor, the other guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent8-K4.15/15/2020
4.11
Form of 6.125% Senior Secured Notes due 2025 (included as Exhibit A to Exhibit 4.10)8-K4.15/15/2020
4.12
Indenture, dated as of February 2, 2021, by and among Marriott Vacations Worldwide Corporation, Marriott Ownership Resorts, Inc. and the other guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee8-K4.12/3/2021
4.13
Form of 0.00% Convertible Senior Note due 2026 (included as Exhibit A to Exhibit 4.12 above)8-K4.12/3/2021
4.14
Indenture, dated as of June 21, 2021, by and among Marriott Ownership Resorts, Inc., Marriott Vacations Worldwide Corporation, as guarantor, the other guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee8-K4.16/22/2021
4.15
Form of 4.500% Senior Notes due 2029 (included as Exhibit A to Exhibit 4.14 above)8-K4.26/22/2021
4.16
Description of Registered Securities10-K4.163/2/2020
10.1
Incremental Facility Amendment, dated as of March 31, 2022, by and among Marriott Vacations Worldwide Corporation, Marriott Ownership Resorts, Inc., as borrower, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and the incremental lenders party thereto8-K10.104/4/2022
10.2
Umbrella IP Amendment, dated as of March 4, 2022, to the Marriott License, Services and Development Agreement for Marriott Projects dated November 19, 2011, by and among Marriott International, Inc., Marriott Worldwide Corporation, and Marriott Vacations Worldwide Corporation.10-Q10.25/9/2022
10.3
Marketing Track Amendment, dated as of May 19, 2022, to the Marriott License, Services and Development Agreement for Marriott Projects dated November 19, 2011, by and among Marriott International, Inc., Marriott Worldwide Corporation, and Marriott Vacations Worldwide Corporation.X
10.4
Marriott Vacations Worldwide Corporation Deferred Compensation Plan Revised July 29, 2022**X
22.1
List of the Issuer and its Guarantor Subsidiaries10-K22.103/1/2022
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934X
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Table of Contents
Exhibit NumberDescription
Filed

Herewith
Incorporation By Reference From
FormExhibitDate Filed
3.131.2
Restated Certificate of Incorporation of Marriott Vacations Worldwide Corporation8-K11/22/2011
3.2
Restated Bylaws of Marriott Vacations Worldwide Corporation8-K11/22/2011
4.1
Indenture between Marriott Vacations Worldwide Corporation and The Bank of New York Mellon Trust Company, N.A., as trustee, dated September 25, 2017X
4.2
Form of 1.50% Convertible Senior Note due 2022 (included in Exhibit 4.1)X
10.1
Form of Call Option Transaction ConfirmationX
10.2
Form of Warrant ConfirmationX
10.3
Credit Agreement, dated as of August 16, 2017, among Marriott Vacations Worldwide Corporation, Marriott Ownership Resorts, Inc., the several banks and other financial institutions or entities from time to time parties thereto and JPMorgan Chase Bank, N.A., as administrative agent8-K8/21/2017
10.4
Guarantee and Collateral Agreement, dated as of August 16, 2017, made by Marriott Vacations Worldwide Corporation, Marriott Ownership Resorts, Inc. and certain other subsidiaries of Marriott Vacations Worldwide Corporation, in favor or JPMorgan Chase Bank, N.A., as Administrative Agent for the banks and other financial institutions or entities from time to time parties to the Credit Agreement8-K8/21/2017
10.5
Omnibus Agreement No. 6, dated August 17, 2017, relating to, among other agreements, the Third Amended and Restated Indenture and the Second Amended and Restated Sale Agreement, by and among Marriott Vacations Worldwide Owner Trust 2011-1, Marriott Ownership Resorts, Inc., Wells Fargo Bank, National Association, MORI SPC Series Corp., Marriott Vacations Worldwide Corporation, the Purchasers signatory thereto, Deutsche Bank AG, New York Branch, Wilmington Trust, National Association, and MVCO Series LLC8-K8/21/2017
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934X
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934X
32.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002Furnished
32.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002Furnished
101.INS101XBRL Instance Document - The instance document does not appearfollowing financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Inline XBRL: (i) Interim Consolidated Statements of Income, (ii) Interim Consolidated Statements of Comprehensive Income, (iii) Interim Consolidated Balance Sheets, (iv) Interim Consolidated Statements of Cash Flows, (v) Interim Consolidated Statements of Shareholders’ Equity, and (vi) Notes to Interim Consolidated Financial Statements
104The cover page from the Interactive Data File because its XBRL tags are embedded withinCompany’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Inline XBRL document.Electronically Submitted
101.SCHXBRL Taxonomy Extension Schema DocumentElectronically Submitted
101.CALXBRL Taxonomy Extension Calculation Linkbase DocumentElectronically Submitted
101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentElectronically Submitted
101.LABXBRL Taxonomy Extension Label Linkbase DocumentElectronically Submitted
101.PREXBRL Taxonomy Extension Presentation Linkbase DocumentElectronically Submittedand contained in Exhibit 101
We have submitted electronically the following documents formatted in XBRL (Extensible Business Reporting Language) as Exhibit 101 to this report: (i) the Interim Consolidated Statements of Income for the 92 days ended September 30, 2017 and the 84 days ended September 9, 2016, as well as the 274 days ended September 30, 2017 and the 252 days ended September 9, 2016; (ii) the Interim Consolidated Statements of Comprehensive Income for the 92 days ended September 30,
*Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplemental copies to the SEC of any omitted schedule upon request by the SEC.
**Management contract or compensatory plan or arrangement.

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2017 and the 84 days ended September 9, 2016, as well as the 274 days ended September 30, 2017 and the 252 days ended September 9, 2016; (iii) the Interim Consolidated Balance Sheets at September 30, 2017 and December 30, 2016; and (iv) the Interim Consolidated Statements of Cash Flows for the 274 days ended September 30, 2017 and the 252 days ended September 9, 2016.


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
MARRIOTT VACATIONS WORLDWIDE CORPORATION
November 2, 2017Date:August 9, 2022/s/ Stephen P. Weisz
Stephen P. Weisz
President and Chief Executive Officer
/s/ JohnAnthony E. Geller, Jr.Terry
JohnAnthony E. Geller, Jr.Terry
Executive Vice President and Chief Financial Officer

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