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

(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 20212022
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.9002 San Marco CourtOrlandoFL3282132819
(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      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes No
The number of shares outstanding of the issuer’s common stock, par value $0.01 per share, as of May 3, 20212, 2022 was 42,695,158.41,432,080.




MARRIOTT VACATIONS WORLDWIDE CORPORATION
FORM 10-Q TABLE OF CONTENTS
Page
Part I.
Item 1.
Item 2.
Item 3.
Item 4.
Part II.
Item 1.
Item 1A.
Item 2.
Item 6.
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 TM symbols, however such references are not intended to indicate in any way that MVW or the owner, as applicable, will not assert, to the fullest extent under applicable law, all rights to such trademarks, trade names, and service marks.
Capitalized terms used and not specifically defined herein have the same meanings given those terms in our Annual Report on Form 10-K for the year ended December 31, 20202021 (the “2020“2021 Annual Report”). When discussing our properties or markets, we refer to the United States, Mexico, Central America, and the Caribbean as “North America.”
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, is evolving and itsany recovery therefrom, continues to evolve and further potential impactimpacts on our business in the future remainsremain uncertain.


Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
(Unaudited)
Three Months EndedThree Months Ended
March 31, 2021March 31, 2020March 31, 2022March 31, 2021
REVENUESREVENUESREVENUES
Sale of vacation ownership productsSale of vacation ownership products$163 $258 Sale of vacation ownership products$310 $163 
Management and exchangeManagement and exchange193 227 Management and exchange222 193 
RentalRental89 135 Rental133 89 
FinancingFinancing59 72 Financing71 59 
Cost reimbursementsCost reimbursements255 318 Cost reimbursements316 255 
TOTAL REVENUESTOTAL REVENUES759 1,010 TOTAL REVENUES1,052 759 
EXPENSESEXPENSESEXPENSES
Cost of vacation ownership productsCost of vacation ownership products40 60 Cost of vacation ownership products60 40 
Marketing and salesMarketing and sales109 170 Marketing and sales182 109 
Management and exchangeManagement and exchange117 151 Management and exchange127 117 
RentalRental82 98 Rental81 82 
FinancingFinancing21 38 Financing21 21 
General and administrativeGeneral and administrative46 70 General and administrative61 46 
Depreciation and amortizationDepreciation and amortization41 32 Depreciation and amortization33 41 
Litigation chargesLitigation chargesLitigation charges
Royalty feeRoyalty fee25 26 Royalty fee27 25 
Impairment95 
Cost reimbursementsCost reimbursements255 318 Cost reimbursements316 255 
TOTAL EXPENSESTOTAL EXPENSES739 1,060 TOTAL EXPENSES911 739 
Gains (losses) and other income (expense), net(56)
Gains and other income, netGains and other income, net
Interest expenseInterest expense(43)(33)Interest expense(27)(43)
Transaction costs(19)(24)
Transaction and integration costsTransaction and integration costs(28)(19)
LOSS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS(36)(163)
Benefit from income taxes11 58 
NET LOSS(25)(105)
INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTSINCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS90 (36)
(Provision for) benefit from income taxes(Provision for) benefit from income taxes(32)11 
NET INCOME (LOSS)NET INCOME (LOSS)58 (25)
Net income attributable to noncontrolling interestsNet income attributable to noncontrolling interests(3)(1)Net income attributable to noncontrolling interests— (3)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS$(28)$(106)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERSNET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS$58 $(28)
LOSS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERSEARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS
BasicBasic$(0.68)$(2.56)Basic$1.36 $(0.68)
DilutedDiluted$(0.68)$(2.56)Diluted$1.23 $(0.68)
CASH DIVIDENDS DECLARED PER SHARECASH DIVIDENDS DECLARED PER SHARE$$0.54 CASH DIVIDENDS DECLARED PER SHARE$0.62 $— 
See Notes to Interim Consolidated Financial Statements
1


Table of Contents
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
Three Months EndedThree Months Ended
March 31, 2021March 31, 2020March 31, 2022March 31, 2021
NET LOSS$(25)$(105)
NET INCOME (LOSS)NET INCOME (LOSS)$58 $(25)
Foreign currency translation adjustmentsForeign currency translation adjustments(3)(17)Foreign currency translation adjustments(3)
Derivative instrument adjustment, net of taxDerivative instrument adjustment, net of tax(24)Derivative instrument adjustment, net of tax16 
OTHER COMPREHENSIVE GAIN (LOSS), NET OF TAX(41)
OTHER COMPREHENSIVE GAIN, NET OF TAXOTHER COMPREHENSIVE GAIN, NET OF TAX20 
Net income attributable to noncontrolling interestsNet income attributable to noncontrolling interests(3)(1)Net income attributable to noncontrolling interests— (3)
Other comprehensive income attributable to noncontrolling interestsOther comprehensive income attributable to noncontrolling interestsOther comprehensive income attributable to noncontrolling interests— — 
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTSCOMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS(3)(1)COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS— (3)
COMPREHENSIVE LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS$(25)$(147)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERSCOMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS$78 $(25)
See Notes to the Interim Consolidated Financial Statements

2


Table of Contents
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share data)
UnauditedUnaudited
March 31, 2021December 31, 2020March 31, 2022December 31, 2021
ASSETSASSETSASSETS
Cash and cash equivalentsCash and cash equivalents$643 $524 Cash and cash equivalents$354 $342 
Restricted cash (including $73 and $68 from VIEs, respectively)535 468 
Accounts receivable, net (including $10 and $11 from VIEs, respectively)219 276 
Vacation ownership notes receivable, net (including $1,338 and $1,493 from VIEs, respectively)1,769 1,840 
Restricted cash (including $78 and $139 from VIEs, respectively)Restricted cash (including $78 and $139 from VIEs, respectively)296 461 
Accounts receivable, net (including $12 and $12 from VIEs, respectively)Accounts receivable, net (including $12 and $12 from VIEs, respectively)234 279 
Vacation ownership notes receivable, net (including $1,661 and $1,662 from VIEs, respectively)Vacation ownership notes receivable, net (including $1,661 and $1,662 from VIEs, respectively)2,030 2,045 
InventoryInventory785 759 Inventory693 719 
Property and equipment, netProperty and equipment, net887 791 Property and equipment, net1,162 1,136 
GoodwillGoodwill2,817 2,817 Goodwill3,142 3,150 
Intangibles, netIntangibles, net938 952 Intangibles, net978 993 
Other (including $56 and $54 from VIEs, respectively)594 471 
Other (including $74 and $76 from VIEs, respectively)Other (including $74 and $76 from VIEs, respectively)614 488 
TOTAL ASSETSTOTAL ASSETS$9,187 $8,898 TOTAL ASSETS$9,503 $9,613 
LIABILITIES AND EQUITYLIABILITIES AND EQUITYLIABILITIES AND EQUITY
Accounts payableAccounts payable$159 $209 Accounts payable$212 $265 
Advance depositsAdvance deposits167 147 Advance deposits194 160 
Accrued liabilities (including $1 and $1 from VIEs, respectively)345 349 
Accrued liabilities (including $2 and $2 from VIEs, respectively)Accrued liabilities (including $2 and $2 from VIEs, respectively)347 345 
Deferred revenueDeferred revenue524 488 Deferred revenue507 453 
Payroll and benefits liabilityPayroll and benefits liability188 157 Payroll and benefits liability214 201 
Deferred compensation liabilityDeferred compensation liability124 127 Deferred compensation liability136 142 
Securitized debt, net (including $1,446 and $1,604 from VIEs, respectively)1,431 1,588 
Securitized debt, net (including $1,799 and $1,877 from VIEs, respectively)Securitized debt, net (including $1,799 and $1,877 from VIEs, respectively)1,779 1,856 
Debt, netDebt, net3,025 2,680 Debt, net2,751 2,631 
OtherOther200 197 Other206 224 
Deferred taxesDeferred taxes286 274 Deferred taxes333 350 
TOTAL LIABILITIESTOTAL LIABILITIES6,449 6,216 TOTAL LIABILITIES6,679 6,627 
Contingencies and Commitments (Note 11)Contingencies and Commitments (Note 11)00Contingencies and Commitments (Note 11)00
Preferred stock — $0.01 par value; 2,000,000 shares authorized; NaN issued or outstanding
Common stock — $0.01 par value; 100,000,000 shares authorized; 75,454,906 and 75,279,061 shares issued, respectively
Treasury stock — at cost; 34,182,278 and 34,184,813 shares, respectively(1,334)(1,334)
Preferred stock — $0.01 par value; 2,000,000 shares authorized; none issued or outstandingPreferred stock — $0.01 par value; 2,000,000 shares authorized; none issued or outstanding— — 
Common stock — $0.01 par value; 100,000,000 shares authorized; 75,721,548 and 75,519,049 shares issued, respectivelyCommon stock — $0.01 par value; 100,000,000 shares authorized; 75,721,548 and 75,519,049 shares issued, respectively
Treasury stock — at cost; 33,971,376 and 33,235,671 shares, respectivelyTreasury stock — at cost; 33,971,376 and 33,235,671 shares, respectively(1,474)(1,356)
Additional paid-in capitalAdditional paid-in capital3,843 3,760 Additional paid-in capital3,945 4,072 
Accumulated other comprehensive lossAccumulated other comprehensive loss(45)(48)Accumulated other comprehensive loss(16)
Retained earningsRetained earnings244 272 Retained earnings338 275 
TOTAL MVW SHAREHOLDERS' EQUITYTOTAL MVW SHAREHOLDERS' EQUITY2,709 2,651 TOTAL MVW SHAREHOLDERS' EQUITY2,814 2,976 
Noncontrolling interestsNoncontrolling interests29 31 Noncontrolling interests10 10 
TOTAL EQUITYTOTAL EQUITY2,738 2,682 TOTAL EQUITY2,824 2,986 
TOTAL LIABILITIES AND EQUITYTOTAL LIABILITIES AND EQUITY$9,187 $8,898 TOTAL LIABILITIES AND EQUITY$9,503 $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 millions)
(Unaudited)
Three Months EndedThree Months Ended
March 31, 2021March 31, 2020March 31, 2022March 31, 2021
OPERATING ACTIVITIESOPERATING ACTIVITIESOPERATING ACTIVITIES
Net loss$(25)$(105)
Adjustments to reconcile net loss to net cash, cash equivalents and restricted cash used by operating activities:
Net income (loss)Net income (loss)$58 $(25)
Adjustments to reconcile net income (loss) to net cash, cash equivalents and restricted cash provided by (used in) operating activities:Adjustments to reconcile net income (loss) to net cash, cash equivalents and restricted cash provided by (used in) operating activities:
Depreciation and amortization of intangiblesDepreciation and amortization of intangibles41 32 Depreciation and amortization of intangibles33 41 
Amortization of debt discount and issuance costsAmortization of debt discount and issuance costs11 Amortization of debt discount and issuance costs11 
Vacation ownership notes receivable reserveVacation ownership notes receivable reserve14 71 Vacation ownership notes receivable reserve29 14 
Share-based compensationShare-based compensationShare-based compensation
Impairment charges95 
Deferred income taxesDeferred income taxes15 (10)Deferred income taxes18 15 
Net change in assets and liabilities:Net change in assets and liabilities:Net change in assets and liabilities:
Accounts receivableAccounts receivable51 45 Accounts receivable45 51 
Vacation ownership notes receivable originationsVacation ownership notes receivable originations(108)(174)Vacation ownership notes receivable originations(205)(108)
Vacation ownership notes receivable collectionsVacation ownership notes receivable collections165 174 Vacation ownership notes receivable collections188 165 
InventoryInventory(26)(8)Inventory28 (26)
Purchase of vacation ownership units for future transfer to inventory(99)(61)
Other assetsOther assets(138)(83)Other assets(134)(138)
Accounts payable, advance deposits and accrued liabilitiesAccounts payable, advance deposits and accrued liabilities(30)(184)Accounts payable, advance deposits and accrued liabilities12 (30)
Deferred revenueDeferred revenue102 107 Deferred revenue54 102 
Payroll and benefit liabilitiesPayroll and benefit liabilities31 (20)Payroll and benefit liabilities13 31 
Deferred compensation liabilityDeferred compensation liability(2)(7)Deferred compensation liability(7)(2)
Other liabilitiesOther liabilities(7)Other liabilities(3)
Deconsolidation of certain Consolidated Property Owners' AssociationsDeconsolidation of certain Consolidated Property Owners' Associations(71)Deconsolidation of certain Consolidated Property Owners' Associations— (71)
Purchase of vacation ownership units for future transfer to inventoryPurchase of vacation ownership units for future transfer to inventory(12)(99)
Other, netOther, net(4)Other, net(1)(4)
Net cash, cash equivalents and restricted cash used in operating activities(60)(122)
Net cash, cash equivalents and restricted cash provided by (used in) operating activitiesNet cash, cash equivalents and restricted cash provided by (used in) operating activities129 (60)
INVESTING ACTIVITIESINVESTING ACTIVITIESINVESTING ACTIVITIES
Capital expenditures for property and equipment (excluding inventory)Capital expenditures for property and equipment (excluding inventory)(7)(17)Capital expenditures for property and equipment (excluding inventory)(9)(7)
Purchase of company owned life insurancePurchase of company owned life insurance(1)(4)Purchase of company owned life insurance(4)(1)
Dispositions, netDispositions, net— 
Net cash, cash equivalents and restricted cash used in investing activitiesNet cash, cash equivalents and restricted cash used in investing activities(8)(21)Net cash, cash equivalents and restricted cash used in investing activities(10)(8)

Continued

See Notes to Interim Consolidated Financial Statements
4


Table of Contents
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(In millions)
(Unaudited)
Three Months EndedThree Months Ended
March 31, 2021March 31, 2020March 31, 2022March 31, 2021
FINANCING ACTIVITIESFINANCING ACTIVITIESFINANCING ACTIVITIES
Borrowings from securitization transactionsBorrowings from securitization transactions202 Borrowings from securitization transactions102 — 
Repayment of debt related to securitization transactionsRepayment of debt related to securitization transactions(159)(148)Repayment of debt related to securitization transactions(178)(159)
Proceeds from debtProceeds from debt561 666 Proceeds from debt30 561 
Repayments of debtRepayments of debt(100)(102)Repayments of debt(30)(100)
Purchase of convertible note hedgesPurchase of convertible note hedges(100)Purchase of convertible note hedges— (100)
Proceeds from issuance of warrantsProceeds from issuance of warrants70 Proceeds from issuance of warrants— 70 
Finance lease paymentFinance lease payment(9)Finance lease payment(2)— 
Debt issuance costs(2)
Payment of debt issuance costsPayment of debt issuance costs(4)(2)
Repurchase of common stockRepurchase of common stock(82)Repurchase of common stock(119)— 
Payment of dividendsPayment of dividends(45)Payment of dividends(49)— 
Payment of withholding taxes on vesting of restricted stock unitsPayment of withholding taxes on vesting of restricted stock units(15)(14)Payment of withholding taxes on vesting of restricted stock units(22)(15)
Net cash, cash equivalents and restricted cash provided by financing activities255 468 
Net cash, cash equivalents and restricted cash (used in) provided by financing activitiesNet cash, cash equivalents and restricted cash (used in) provided by financing activities(272)255 
Effect of changes in exchange rates on cash, cash equivalents and restricted cashEffect of changes in exchange rates on cash, cash equivalents and restricted cash(1)(6)Effect of changes in exchange rates on cash, cash equivalents and restricted cash— (1)
Change in cash, cash equivalents and restricted cashChange in cash, cash equivalents and restricted cash186 319 Change in cash, cash equivalents and restricted cash(153)186 
Cash, cash equivalents and restricted cash, beginning of periodCash, cash equivalents and restricted cash, beginning of period992 701 Cash, cash equivalents and restricted cash, beginning of period803 992 
Cash, cash equivalents and restricted cash, end of periodCash, cash equivalents and restricted cash, end of period$1,178 $1,020 Cash, cash equivalents and restricted cash, end of period$650 $1,178 
SUPPLEMENTAL DISCLOSURESSUPPLEMENTAL DISCLOSURESSUPPLEMENTAL DISCLOSURES
Non-cash transfer from property and equipment to inventoryNon-cash transfer from property and equipment to inventory$$Non-cash transfer from property and equipment to inventory$$
Non-cash transfer from inventory to property and equipmentNon-cash transfer from inventory to property and equipment65 Non-cash transfer from inventory to property and equipment31 
Non-cash transfer of other assets to property and equipmentNon-cash transfer of other assets to property and equipment13 22 
Non-cash issuance of debt in connection with asset acquisitionNon-cash issuance of debt in connection with asset acquisition11 — 
Non-cash issuance of treasury stock for employee stock purchase planNon-cash issuance of treasury stock for employee stock purchase planNon-cash issuance of treasury stock for employee stock purchase plan— 
Interest paid, net of amounts capitalizedInterest paid, net of amounts capitalized53 58 Interest paid, net of amounts capitalized30 53 
Income taxes paid, net of refunds(30)
Income tax refunds, net of income taxes paidIncome tax refunds, net of income taxes paid(7)(30)

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$$(1,356)$4,072 $(16)$275 $2,976 $10 $2,986 
— 
Impact of adoption of ASU 2020-06
— — (111)— 31 (80)— (80)
75.5 OPENING BALANCE 2022(1,356)3,961 (16)306 2,896 10 2,906 
— Net income— — — — 58 58 — 58 
— Foreign currency translation adjustments— — — — — 
— Derivative instrument adjustment— — — 16 — 16 — 16 
0.2 Share-based compensation plans— (16)— — (15)— (15)
— Repurchase of common stock— (119)— — — (119)— (119)
— Dividends— — — — (26)(26)— (26)
75.7 BALANCE AT MARCH 31, 2022$$(1,474)$3,945 $$338 $2,814 $10 $2,824 
Common
Stock
Issued
Common
Stock
Treasury
Stock
Additional
Paid-In
Capital
Accumulated Other Comprehensive (Loss) GainRetained EarningsTotal MVW Shareholders' EquityNoncontrolling InterestsTotal Equity
75.3 BALANCE AT DECEMBER 31, 2020$$(1,334)$3,760 $(48)$272 $2,651 $31 $2,682 
— Net (loss) income— — — — (28)(28)(25)
— Foreign currency translation adjustments— — — (3)— (3)— (3)
— Derivative instrument adjustment— — — — — 
0.2 Share-based compensation plans— — (4)— — (4)— (4)
— Dividends— — — — — — — 
— 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 
— Employee stock plan issuance— — — — — — — 
— Deconsolidation of certain Consolidated Property Owners' Associations— — — — — — (5)(5)
75.5 BALANCE AT MARCH 31, 2021$$(1,334)$3,843 $(45)$244 $2,709 $29 $2,738 

Common
Stock
Issued
Common
Stock
Issued
Common
Stock
Treasury
Stock
Additional
Paid-In
Capital
Accumulated Other Comprehensive LossRetained EarningsTotal MVW Shareholders' EquityNoncontrolling InterestsTotal EquityCommon
Stock
Issued
Common
Stock
Treasury
Stock
Additional
Paid-In
Capital
Accumulated Other Comprehensive (Loss) IncomeRetained EarningsTotal MVW Shareholders' EquityNoncontrolling InterestsTotal Equity
75.0 BALANCE AT DECEMBER 31, 2019$$(1,253)$3,738 $(36)$569 $3,019 $12 $3,031 
75.3 75.3 BALANCE AT DECEMBER 31, 2020$$(1,334)$3,760 $(48)$272 $2,651 $31 $2,682 
Net (loss) income— — — — (106)(106)(105)Net (loss) income— — — — (28)(28)(25)
Foreign currency translation adjustments— — — (17)— (17)— (17)Foreign currency translation adjustments— — — (3)— (3)— (3)
Derivative instrument adjustment— — — (24)— (24)— (24)Derivative instrument adjustment— — — — — 
0.2 0.2 Share-based compensation plans— — (9)— — (9)— (9)0.2 Share-based compensation plans— — (4)— — (4)— (4)
Repurchase of common stock— (82)— — — (82)— (82)Equity component of convertible notes, net of issuance costs— — 117 — — 117 — 117 
Dividends— — — — (22)(22)— (22)Purchase of convertible note hedges— — (100)— — (100)— (100)
75.2 BALANCE AT MARCH 31, 2020$$(1,335)$3,729 $(77)$441 $2,759 $13 $2,772 
Issuance of warrants— — 70 — — 70 — 70 
Deconsolidation of certain Consolidated Property Owners' Associations— — — — — — (5)(5)
75.5 75.5 BALANCE AT MARCH 31, 2021$$(1,334)$3,843 $(45)$244 $2,709 $29 $2,738 

See Notes to Interim Consolidated Financial Statements
6


Table of Contents
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONDENSED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1.BASIS OF PRESENTATION
The Interim Consolidated Financial Statements present the results of operations, financial position and cash flows of Marriott Vacations Worldwide Corporation (referred to in this report as (i) “we,” “us,” “Marriott Vacations Worldwide,” “MVW” or “the Company,” which includes our consolidated subsidiaries except where the context of the reference is to a single corporate entity, or (ii) “MVWC,” which shall refer only to Marriott Vacations Worldwide Corporation, without its consolidated subsidiaries). In order to make this report easier to read, we refer throughout to (i) our Interim Consolidated Financial Statements as our “Financial Statements,” (ii) our Interim Consolidated Statements of Income as our “Income Statements,” (iii) our Interim Consolidated Balance Sheets as our “Balance Sheets,” and (iv) our Interim Consolidated Statements of Cash Flows as our “Cash Flows.” In addition, references throughout to numbered “Footnotes” refer to the numbered Notes in these Notes to Interim Consolidated Financial Statements, unless otherwise noted. Capitalized terms used and not specifically defined herein have the same meanings given those terms in our Annual Report on Form 10-K for the fiscal year ended December 31, 20202021 (the “2020“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 percent100% 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 (loss) 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 companiesentities have been eliminated in consolidation.
Pursuant to a change in control of certain consolidated property owners’ associations, we recorded a non-cash loss of less than $1 million in Gains (losses) and other income (expense), net on our Income Statement for the three months ended March 31, 2021, and deconsolidated $76 million of assets, inclusive of $71 million of restricted cash and $71 million of liabilities, for a decrease in Noncontrolling interests of $5 million during the first quarter of 2021. See our Interim Consolidated Statement of Shareholder’s Equity for the three months ended March 31, 2021 for further information. We continue to act as manager for these property owners’ associations pursuant to existing management contracts and retain membership interests via our ownership of vacation ownership interests.
These Financial Statements reflect our financial position, results of operations, and cash flows as prepared in conformity with United States Generally Accepted Accounting Principles (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates include, but are not limited to, revenue recognition, allocations of the purchase price paid in business combinations, cost of vacation ownership products, inventory valuation, goodwill and intangibles valuation, property and equipment valuation, accounting for acquired vacation ownership notes receivable, vacation ownership notes receivable reserves, income taxes, and loss contingencies. The uncertainty created by the COVID-19 pandemic, and the ongoing efforts to mitigate it, has made it more challenging to make these estimates. Accordingly, ultimate results could differ from our estimates, and such differences may be material.
In our opinion, our Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position, the results of our operations, and cash flows for the periods presented. Interim results may not be indicative of fiscal year performance because of, among other reasons, the impact of the COVID-19 pandemic and seasonal and short-term variations. These Financial Statements have not been audited. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP. Although we believe our footnote disclosures are adequate to make the information presented not misleading, the Financial Statements in this report should be read in conjunction with the consolidated financial statements and notes thereto in our 20202021 Annual Report.
ReclassificationsAcquisition 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 have reclassified certain prior year amountsrefer to conform to our current year presentation.the business and brands that we acquired as “Legacy-Welk.” See Footnote 3 “Acquisitions” for more information on the Welk Acquisition.
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2.SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING STANDARDS
New Accounting Standards
Accounting Standards Update 2019-122020-06“Income Taxes (Topic 740)Debt — Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Simplifying the Accounting for Income Taxes”Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2019-12”2020-06”)
In the first quarter of 2021,2022, we adopted accounting standards update (“ASU”) 2020-06, using the modified retrospective method. Under ASU 2020-06, we no longer separate our convertible notes into liability and equity components,
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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 would generally be calculated assuming that all of our convertible notes were 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 term 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.
Accounting Standards Update 2021-08 - “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”)
In the first quarter of 2022, we adopted ASU 2019-12,2021-08, which amendsamended ASC 805 to require entities to apply ASC 606 to recognize and simplifies existing guidancemeasure contract assets and contract liabilities from contracts with customers in an effort to reduce the complexity of accounting for income taxes while maintaining or enhancing the helpfulness of information provided to financial statement users. Oura business combination. The adoption of ASU 2019-122021-08 on January 1, 2022 did not have a material impact on our Financial Statements or disclosures.financial statements and disclosure. 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 2020-04 – “Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”)
In March 2020, the FASB issued ASU 2020-04, as amended, which provides optional expedients and exceptions to existing guidance on contract modifications and hedge accounting in an effort to ease the financial reporting burdens related to the expected market transition from the LIBOR and other interbank offered rates to alternative reference rates. This update can be adopted no later than December 1, 2022, with early adoption permitted. We expectwas effective upon issuance and issuers may generally elect to adopt the optional expedients and exceptions over time through December 31, 2022. As of March 31, 2022, the interest rate 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 continue to reference LIBOR, as do certain interest rate swaps and collars. These instruments 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 in fiscal year2020-04. 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 March 31, 2022, andbut will continue to evaluate their adoption during the impact that adoption of this update will have on our financial statements and disclosures.effective period as circumstances evolve.
Accounting Standards Update 2020-062022-02 – “Financial InstrumentsCredit Losses (Topic 326) - Troubled Debt — Debt With ConversionRestructurings and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”Vintage Disclosures (“ASU 2020-06”2022-02”)
In August 2020,March 2022, the FASB issued ASU 2020-06,2022-02, which amendseliminates the recognition and simplifies existingmeasurement guidance applicable to troubled debt restructurings for creditors and enhances disclosure requirements with respect to loan modifications for borrowers experiencing financial difficulty. ASU 2022-02 also requires disclosure of current-period gross write-offs by year of origination to be presented in an effort to reduce the complexity of accountingvintage disclosures for convertible instruments and to provide financial statement users with more meaningful information. ASU 2020-06financing receivables. This update is effective for fiscal years beginning after December 15, 2021,2022, including interim periods therein,within those fiscal years, with early adoption permitted for fiscal years beginning after December 15, 2020. This update may be applied retrospectively or on a modified retrospective basis with the cumulative effect recognized as an adjustment to the opening balance of retained earnings on the date of adoption. Additionally, this update provides for a one-time irrevocable election by entities to apply the fair value option in accordance with ASC Topic 825-10, “Financial Instruments - Overall,” for any liability-classified convertible securities, with the difference between the carrying amount and the fair value recorded as a cumulative-effect adjustment to opening retained earnings as of the beginning of the period of adoption.permitted. We expect to adopt ASU 2020-06 on January 1, 2022, and continue to evaluateare evaluating the impact that adoption of this updateASU 2022-02, including the timing of implementation, will have on our financial statements and disclosures. In accordance with ASU 2020-06,disclosures; however, we will be requireddo not expect adoption to calculate diluted earnings per share under the “if-converted” method. Under the “if-converted” method, diluted earnings per share would generally be calculated assuming that allhave a material effect on our financial statements or disclosures other than disclosure changes related to vintage disclosures for financing receivables.
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Table of our convertible notes were 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 may reduce our reported diluted earnings per share.Contents
3.ACQUISITIONS AND DISPOSITIONS
PlannedWelk Acquisition
On January 26, 2021, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) under which we agreed to acquire, in a series of transactions, Welk Hospitality Group, Inc. (“Welk”), one of the largest independent timeshare companies in North America, in a cash and stock transaction. On April 1, 2021 subsequent to the end of the first quarter of 2021,(the “Welk Acquisition Date”), we completed the acquisitionWelk Acquisition. The following table presents the fair value of each type of consideration transferred at the Welk for consideration of $485 million, including approximately 1.4 million shares of our common stock. Our Balance SheetAcquisition Date, as finalized at March 31, 2021 reflects $152 million within Restricted2022.
(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 Acquired and Liabilities Assumed
We accounted for funds held bythe Welk Acquisition as a third party in advancebusiness combination, which required us to record the assets acquired and liabilities assumed at fair value as of the closing of the acquisition of Welk.
Acquisitions
Costa Rica
Welk Acquisition Date. The values attributed to Vacation ownership notes receivable, Inventory, Property and equipment, Intangible assets, and Securitized debt from VIEs are based on valuations prepared using Level 3 inputs and assumptions in accordance with ASC Topic 820, “Fair Value Measurements” (“ASC 820”). The value attributed to Debt is based on Level 2 inputs in accordance with ASC 820. During the first quarter of 2021,2022, we acquired 24 completed vacation ownership units and an operations building located atfinalized our Marriott Vacation Club at Los Suenos resort in Costa Rica for $14 million. We accounted for the transaction as an asset acquisition withallocation of the purchase price allocated to Inventory ($13 million)the acquired assets and Propertyliabilities. The following table presents the fair values of the assets that we acquired and equipment ($1 million).the liabilities that we assumed in connection with the business combination as previously reported at December 31, 2021, and as finalized at March 31, 2022. During the first quarter of 2022, we refined our valuation models related to certain acquired assets and liabilities as follows:
($ 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)(24)
Debt(189)— (189)
Securitized debt(184)— (184)
Other liabilities(93)— (93)
Net assets acquired72 80 
Goodwill(1)
333 (8)325 
$405 $— $405 
_________________________
(1)Goodwill is calculated as total consideration transferred, net of cash acquired, less identified net assets acquired. It represents the value that we expect to obtain from growth opportunities from our combined operations and is not deductible for tax purposes.
Pro Forma Results of Operations
The following unaudited pro forma information presents the combined results of operations of Marriott Vacations Worldwide and Welk as if we had completed the Welk Acquisition on December 31, 2019, the last day of our 2019 fiscal year, but using the fair values of assets and liabilities as of the Welk Acquisition Date set forth above. As required by GAAP, these unaudited pro forma results do not reflect any synergies from operating efficiencies. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the Welk Acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations.
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New York, New YorkThere were no Welk Acquisition-related costs included in the unaudited pro forma results below for the three months ended March 31, 2021.
Three Months Ended
($ in millions, except per share data)March 31, 2021
Revenues$806 
Net loss$(12)
Net loss attributable to common shareholders$(15)
LOSS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS
Basic$(0.36)
Diluted$(0.36)
Welk Results of Operations
The following table presents the results of Welk operations included in our Income Statement for the three months ended March 31, 2022.
($ in millions)Three Months Ended March 31, 2022
Revenue$51 
Net income$
Other Acquisitions
Bali
During the first quarter of 2021,2022, we acquired the remaining 12088 completed vacation ownership units, as well as a sales center, located at our Marriott Vacation Club Pulse, New York City propertyin Bali, Indonesia for $98$36 million. WeThe transaction was accounted for the transaction as an asset acquisition with the purchase price allocated to Property and equipment.
During As consideration for the first quarter of 2020,acquisition, we acquired 57 completed vacation ownership units, as well as officepaid $12 million in cash and ancillary space, located at our Marriott Vacation Club Pulse, New York City propertyissued a non-interest bearing note payable for $89$11 million. Further, we reclassified $13 million of which $22 million was a prepayment for future tranches of completed vacation ownership units and $20 million was paid in December 2019. We accounted for the transaction as an asset acquisitionprevious deposits associated with the purchase price allocated toproject from Other assets ($22 million) andto Property and equipment ($67 million).
San Francisco, California
During the first quarter of 2021, we acquired 44 completed vacation ownership units located at our Marriott Vacation Club Pulse, San Francisco property for $34 million. We accounted for the transaction as an asset acquisition with the purchase price allocated to Inventory ($29 million) and Other assets ($5 million).
During the first quarter of 2020, we acquired 34 completed vacation ownership units located at our Marriott Vacation Club Pulse, San Francisco property for $26 million, of which $5 million was a prepayment for future tranches of completed vacation ownership units. We accounted for the transaction as an asset acquisition with the purchase price allocated to Inventory ($18 million), Other assets ($5 million), and Property and equipment ($3 million).
See Footnote 16 “Variable Interest Entities” for information on our remaining commitment to purchase future inventory and additional information on our activities relating to the VIE involved in this transaction.
Dispositions
We made no significant dispositions during either the first quarter of 2021 or the first quarter of 2020.equipment.
4.REVENUE AND RECEIVABLES
Sources of Revenue by Segment
The following tables detail the sources of revenue by segment for the time periods presented.
Three Months Ended March 31, 2021Three Months Ended March 31, 2022
($ in millions)($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Sale of vacation ownership productsSale of vacation ownership products$163 $$$163 Sale of vacation ownership products$310 $— $— $310 
Ancillary revenuesAncillary revenues28 28 Ancillary revenues54 — 55 
Management fee revenuesManagement fee revenues38 (6)37 Management fee revenues42 10 (3)49 
Exchange and other services revenuesExchange and other services revenues28 55 45 128 Exchange and other services revenues30 53 35 118 
Management and exchangeManagement and exchange94 60 39 193 Management and exchange126 64 32 222 
RentalRental77 12 89 Rental122 11 — 133 
Cost reimbursementsCost reimbursements268 14 (27)255 Cost reimbursements327 (20)316 
Revenue from contracts with customersRevenue from contracts with customers602 86 12 700 Revenue from contracts with customers885 84 12 981 
FinancingFinancing59 59 Financing71 — — 71 
Total RevenuesTotal Revenues$661 $86 $12 $759 Total Revenues$956 $84 $12 $1,052 
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Three Months Ended March 31, 2020Three Months Ended March 31, 2021
($ in millions)($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Sale of vacation ownership productsSale of vacation ownership products$258 $$$258 Sale of vacation ownership products$163 $— $— $163 
Ancillary revenuesAncillary revenues46 47 Ancillary revenues28 — — 28 
Management fee revenuesManagement fee revenues38 10 (4)44 Management fee revenues38 (6)37 
Exchange and other services revenuesExchange and other services revenues28 61 47 136 Exchange and other services revenues28 55 45 128 
Management and exchangeManagement and exchange112 72 43 227 Management and exchange94 60 39 193 
RentalRental122 13 135 Rental77 12 — 89 
Cost reimbursementsCost reimbursements345 21 (48)318 Cost reimbursements268 14 (27)255 
Revenue from contracts with customersRevenue from contracts with customers837 106 (5)938 Revenue from contracts with customers602 86 12 700 
FinancingFinancing71 72 Financing59 — — 59 
Total RevenuesTotal Revenues$908 $107 $(5)$1,010 Total Revenues$661 $86 $12 $759 
Timing of Revenue from Contracts with Customers by Segment
The following tables detail the timing of revenue from contracts with customers by segment for the time periods presented.
Three Months Ended March 31, 2021Three Months Ended March 31, 2022
($ in millions)($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Services transferred over timeServices transferred over time$408 $37 $12 $457 Services transferred over time$517 $38 $12 $567 
Goods or services transferred at a point in timeGoods or services transferred at a point in time194 49 243 Goods or services transferred at a point in time368 46 — 414 
Revenue from contracts with customersRevenue from contracts with customers$602 $86 $12 $700 Revenue from contracts with customers$885 $84 $12 $981 
Three Months Ended March 31, 2020Three Months Ended March 31, 2021
($ in millions)($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal($ in millions)Vacation OwnershipExchange & Third-Party ManagementCorporate and OtherTotal
Services transferred over timeServices transferred over time$530 $54 $(5)$579 Services transferred over time$408 $37 $12 $457 
Goods or services transferred at a point in timeGoods or services transferred at a point in time307 52 359 Goods or services transferred at a point in time194 49 — 243 
Revenue from contracts with customersRevenue from contracts with customers$837 $106 $(5)$938 Revenue from contracts with customers$602 $86 $12 $700 
Sale of Vacation Ownership Products
Revenues were reducedRevenue recognized during the first quarter of 2021 by $5 million2022 due to changes in our estimates of variable consideration for performance obligations that were satisfied in prior periods.periods was $1 million.
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Receivables from Contracts with Customers, Contract Assets, & Contract Liabilities
The following table shows the composition of our receivables from contracts with customers and contract liabilities. We had 0no contract assets at either March 31, 20212022 or December 31, 2020.2021.
($ in millions)($ in millions)At March 31, 2021At December 31, 2020($ in millions)At March 31, 2022At December 31, 2021
Receivables from Contracts with CustomersReceivables from Contracts with CustomersReceivables from Contracts with Customers
Accounts receivableAccounts receivable$108 $150 Accounts receivable$140 $172 
Vacation ownership notes receivable, netVacation ownership notes receivable, net1,769 1,840 Vacation ownership notes receivable, net2,030 2,045 
$1,877 $1,990 $2,170 $2,217 
Contract LiabilitiesContract LiabilitiesContract Liabilities
Advance depositsAdvance deposits$167 $147 Advance deposits$194 $160 
Deferred revenueDeferred revenue524 488 Deferred revenue507 453 
$691 $635 $701 $613 
Revenue recognized during the first quarter of 20212022 that was included in our contract liabilities balance at December 31, 20202021 was $114$126 million.
Remaining Performance Obligations
Our remaining performance obligations represent the expected transaction price allocated to our contracts that we expect to recognize as revenue in future periods when we perform under the contracts. At March 31, 2021,2022, approximately 80 percent86% of this amount is expected to be recognized as revenue over the next two years.
Accounts Receivable
Accounts receivable is comprised of amounts due from customers, primarily property owners’ associations, resort developers and members, credit card receivables, interest receivables, amounts due from taxing authorities, indemnification assets, and other miscellaneous receivables. The following table shows the composition of our accounts receivable balances:
($ in millions)($ in millions)At March 31, 2021At December 31, 2020($ in millions)At March 31, 2022At December 31, 2021
Receivables from contracts with customersReceivables from contracts with customers$108 $150 Receivables from contracts with customers$140 $172 
Interest receivableInterest receivable12 13 Interest receivable14 14 
Tax receivableTax receivable52 60 Tax receivable34 48 
Indemnification assetsIndemnification assets15 15 Indemnification assets21 22 
Employee tax credit receivableEmployee tax credit receivable20 19 Employee tax credit receivable17 19 
OtherOther12 19 Other
$219 $276 $234 $279 
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 29.8 percent35.6% and 35.4 percent29.8% for the three months ended March 31, 20212022 and March 31, 2020,2021, respectively. The decreasechange in the effective tax rate is predominately attributable to a decreasean increase in pre-tax lossincome and a releasean increase in provisions onthe reserve for uncertain tax benefits included in the three months ended March 31, 2020.
U.S. Tax Law Update
We have considered the income tax accounting and disclosure implications of the relief provided by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), enacted in March 2020, and the Consolidated Appropriations Act, 2021, enacted in December 2020. As of March 31, 2021, we evaluated the income tax provisions of the above mentioned acts and have determined there to be minimal effect on either the March 31, 2021 tax rate or the computation of the estimated effective tax rate for the year ended December 31, 2021. We will continue to evaluate the income tax provisions of the above mentioned acts and monitor the developments in the jurisdictions where we have significant operations for tax law changes that could have additional income tax accounting and disclosure implications.benefits.
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Unrecognized Tax Benefits
The following table summarizes the activity related to our unrecognized tax benefits (excluding interest and penalties) during the three months ended March 31, 2021.2022. These unrecognized tax benefits relate to uncertain income tax positions, which would affect the effective tax rate if recognized.
($ in millions)Unrecognized Tax Benefits
Balance at December 31, 20202021$1426 
Increases related to tax positions taken during the currenta prior period12 
Balance at March 31, 20212022$1528 
The total unrecognized tax benefits related to uncertain income tax positions, which would affect the effective tax rate if recognized, was $15 million at March 31, 2021 and $14 million at December 31, 2020. The total amount of gross interest and penalties accrued was $28$45 million at March 31, 20212022 and $25$42 million at December 31, 2020.
2021. We anticipate $5$14 million of unrecognized tax benefits, including interest and penalties, to be indemnified pursuant to a Tax Matters Agreement dated May 11, 2016 by and among Starwood Hotels & Resorts Worldwide, Inc., Vistana Signature Experiences, Inc., and Interval Leisure Group, Inc., and consequently have recorded a corresponding indemnification asset. The unrecognized tax benefits, including accrued interest and penalties, are included in otherOther liabilities on our Balance Sheet.
Our income tax returns are subject to examination by relevant tax authorities. Certain of our returns are being audited in various jurisdictions for tax years 20132007 through 2018.2019. The amount of the unrecognized tax benefit may increase or decrease within the next twelve months as a result of audits or audit settlements.
6.VACATION OWNERSHIP NOTES RECEIVABLE
The following table shows the composition of our vacation ownership notes receivable balances, net of reserves.
March 31, 2021December 31, 2020March 31, 2022December 31, 2021
($ in millions)($ in millions)OriginatedAcquiredTotalOriginatedAcquiredTotal($ in millions)OriginatedAcquiredTotalOriginatedAcquiredTotal
SecuritizedSecuritized$1,093 $245 $1,338 $1,220 $273 $1,493 Securitized$1,345 $316 $1,661 $1,308 $354 $1,662 
Non-securitizedNon-securitizedNon-securitized
Eligible for securitization(1)
Eligible for securitization(1)
208 211 126 128 
Eligible for securitization(1)
102 103 96 97 
Not eligible for securitization(1)
Not eligible for securitization(1)
183 37 220 185 34 219 
Not eligible for securitization(1)
249 17 266 267 19 286 
SubtotalSubtotal391 40 431 311 36 347 Subtotal351 18 369 363 20 383 
$1,484 $285 $1,769 $1,531 $309 $1,840 $1,696 $334 $2,030 $1,671 $374 $2,045 
_________________________
(1)Refer to Footnote 7 “Financial Instruments” for a discussion of eligibility of our vacation ownership notes receivable for securitization.
We reflect interest income associated with vacation ownership notes receivable in our Income Statements in the Financing revenues caption. The following table summarizes interest income associated with vacation ownership notes receivable.
Three Months Ended
($ in millions)March 31, 2021March 31, 2020
Interest income associated with vacation ownership notes receivable — securitized$48 $63 
Interest income associated with vacation ownership notes receivable — non-securitized
Total interest income associated with vacation ownership notes receivable$57 $69 
COVID-19 Impact on Vacation Ownership Notes Receivable Reserves
We increased our vacation ownership notes receivable reserves by $52 million in the first quarter of 2020 as a result of higher actual and projected default activity related predominantly to the COVID-19 pandemic. In the fourth quarter of 2020, we increased our vacation ownership notes receivable reserve by an additional $17 million due to higher than previously expected default activity. During the first quarter of 2021, there were 0 additional increases to our vacation ownership notes receivable reserves due to the COVID-19 pandemic.
Three Months Ended
($ in millions)March 31, 2022March 31, 2021
Interest income associated with vacation ownership notes receivable — securitized$59 $48 
Interest income associated with vacation ownership notes receivable — non-securitized10 
Total interest income associated with vacation ownership notes receivable$69 $57 
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Acquired Vacation Ownership Notes Receivable
Acquired vacation ownership notes receivable represent vacation ownership notes receivable acquired as part of the ILG Acquisition and the Welk Acquisition. The following table shows future contractual principal payments, net of reserves, and interest rates for our non-securitized and securitized acquired vacation ownership notes receivable at March 31, 2021.2022.
Acquired Vacation Ownership Notes ReceivableAcquired Vacation Ownership Notes Receivable
($ in millions)($ in millions)Non-SecuritizedSecuritizedTotal($ in millions)Non-SecuritizedSecuritizedTotal
2021, remaining$$27 $31 
202236 40 
2022, remaining2022, remaining$$52 $54 
2023202336 40 202347 49 
2024202434 38 202447 49 
2025202530 35 202544 46 
2026202639 41 
ThereafterThereafter19 82 101 Thereafter87 95 
Balance at March 31, 2021$40 $245 $285 
Balance at March 31, 2022Balance at March 31, 2022$18 $316 $334 
Weighted average stated interest rateWeighted average stated interest rate13.5%13.5%13.5%Weighted average stated interest rate13.8%14.2%14.1%
Range of stated interest ratesRange of stated interest rates3.0% to 17.9%6.0% to 15.9%3.0% to 17.9%Range of stated interest rates0.0% to 21.9%0.0% to 21.9%0.0% to 21.9%
The following table summarizes activity related to our acquired vacation ownership notes receivable reserve.
Acquired Vacation Ownership Notes Receivable ReserveAcquired Vacation Ownership Notes Receivable Reserve
($ in millions)($ in millions)Non-SecuritizedSecuritizedTotal($ in millions)Non-SecuritizedSecuritizedTotal
Balance at December 31, 2020$39 $21 $60 
Balance at December 31, 2021Balance at December 31, 2021$47 $23 $70 
Write-offsWrite-offs(3)(3)Write-offs(11)— (11)
RecoveriesRecoveriesRecoveries— 
Defaulted vacation ownership notes receivable repurchase activity(1)
Defaulted vacation ownership notes receivable repurchase activity(1)
(9)
Defaulted vacation ownership notes receivable repurchase activity(1)
(8)— 
(Decrease) increase in vacation ownership notes receivable reserve(Decrease) increase in vacation ownership notes receivable reserve(7)(1)(Decrease) increase in vacation ownership notes receivable reserve(5)— 
Balance at March 31, 2021$39 $18 $57 
Balance at March 31, 2022Balance at March 31, 2022$46 $20 $66 
_________________________
(1)Decrease in securitized vacation ownership notes receivable reserve and increase in non-securitized vacation ownership notes receivable reserve areReflects the change attributable to the transfer of the reserve from the securitized vacation ownership notes receivable reserve to the non-securitized vacation ownership notes receivable reserve when we voluntarily repurchased defaultedrepurchase securitized vacation ownership notes receivable.
Originated Vacation Ownership Notes Receivable
Originated vacation ownership notes receivable represent vacation ownership notes receivable originated by Legacy-ILG and Legacy-Welk subsequent to the Acquisition Dateeach respective acquisition date and all Legacy-MVW vacation ownership notes receivable. The following table shows future principal payments, net of reserves, and interest rates for our originated non-securitized and securitized originated vacation ownership notes receivable at March 31, 2021.2022.
Originated Vacation Ownership Notes ReceivableOriginated Vacation Ownership Notes Receivable
($ in millions)($ in millions)Non-SecuritizedSecuritizedTotal($ in millions)Non-SecuritizedSecuritizedTotal
2021, remaining$32 $87 $119 
202237 118 155 
2022, remaining2022, remaining$45 $97 $142 
2023202333 120 153 202329 130 159 
2024202431 121 152 202427 132 159 
2025202530 124 154 202527 135 162 
2026202627 140 167 
ThereafterThereafter228 523 751 Thereafter196 711 907 
Balance at March 31, 2021$391 $1,093 $1,484 
Balance at March 31, 2022Balance at March 31, 2022$351 $1,345 $1,696 
Weighted average stated interest rateWeighted average stated interest rate12.7%12.7%12.7%Weighted average stated interest rate12.8%12.9%12.9%
Range of stated interest ratesRange of stated interest rates0.0% to 18.0%0.0% to 17.5%0.0% to 18.0%Range of stated interest rates0.0% to 20.9%0.0% to 19.9%0.0% to 20.9%
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For originated vacation ownership notes receivable, we record the difference between the vacation ownership note receivable and the variable consideration included in the transaction price for the sale of the related vacation ownership product as a reserve on our vacation ownership notes receivable. The following table summarizes the activity related to our originated vacation ownership notes receivable reserve.
Originated Vacation Ownership Notes Receivable ReserveOriginated Vacation Ownership Notes Receivable Reserve
($ in millions)($ in millions)Non-SecuritizedSecuritizedTotal($ in millions)Non-SecuritizedSecuritizedTotal
Balance at December 31, 2020$193 $117 $310 
Balance at December 31, 2021Balance at December 31, 2021$193 $140 $333 
Increase in vacation ownership notes receivable reserveIncrease in vacation ownership notes receivable reserve11 15 Increase in vacation ownership notes receivable reserve25 29 
Securitizations(1)
Securitizations(1)
(21)21 — 
Write-offsWrite-offs(17)(17)Write-offs(19)— (19)
Defaulted vacation ownership notes receivable repurchase activity(1)(2)
Defaulted vacation ownership notes receivable repurchase activity(1)(2)
16 (16)
Defaulted vacation ownership notes receivable repurchase activity(1)(2)
15 (15)— 
Balance at March 31, 2021$203 $105 $308 
Balance at March 31, 2022Balance at March 31, 2022$193 $150 $343 
_________________________
(1)Decrease in securitized vacation ownership notes receivable reserve and increase in non-securitized vacation ownership notes receivable reserve areReflects the change attributable to the transfer of the reserve from the non-securitized vacation ownership notes receivable reserve to the securitized vacation ownership notes receivable reserve, when MVW 2021-2 LLC purchased the remaining vacation ownership notes receivable that were securitized during the fourth quarter of 2021, and when we securitized vacation ownership notes receivable under our Warehouse Credit Facility (as defined in Footnote 12 “Securitized Debt”) during the first quarter of 2022.
(2)Reflects the change attributable to the transfer of the reserve from the securitized vacation ownership notes receivable reserve to the non-securitized vacation ownership notes receivable reserve when we voluntarily repurchased defaultedrepurchase securitized vacation ownership notes receivable.
Credit Quality of Vacation Ownership Notes Receivable
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 6.58 percent6.71% as of March 31, 2021,2022, and 6.74 percent6.74% as of December 31, 2020.2021. A 0.5 percentage point increase in the estimated default rate would have resulted in an increase in the related vacation ownership notes receivable reserve of $6 million as of both March 31, 2021,2022 and $6 million as of December 31, 2020.2021.
We use the aging of the vacation ownership notes receivable as the primary credit quality indicator for our Legacy-MVW vacation ownership notes receivable, as historical performance indicates that there is a relationship between the default behavior of borrowers and the age of the receivable associated with the vacation ownership interest.
The following table shows our recorded investment in non-accrual Legacy-MVW vacation ownership notes receivable, which are vacation ownership notes receivable that are 90 days or more past due.
Legacy-MVW Vacation Ownership Notes Receivable
($ in millions)Non-SecuritizedSecuritizedTotal
Investment in vacation ownership notes receivable on non-accrual status at March 31, 2021$100 $11 $111 
Investment in vacation ownership notes receivable on non-accrual status at December 31, 2020$100 $14 $114 
Legacy-MVW Vacation Ownership Notes Receivable
($ in millions)Non-SecuritizedSecuritizedTotal
Investment in vacation ownership notes receivable on non-accrual status at March 31, 2022$84 $$93 
Investment in vacation ownership notes receivable on non-accrual status at December 31, 2021$88 $$96 
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The following table shows the aging of the recorded investment in principal, before reserves, in Legacy-MVW vacation ownership notes receivable as of March 31, 20212022 and December 31, 2020.2021.
Legacy-MVW Vacation Ownership Notes Receivable
As of March 31, 2021As of December 31, 2020
($ in millions)Non-SecuritizedSecuritizedTotalNon-SecuritizedSecuritizedTotal
31 – 90 days past due$$19 $27 $$25 $33 
91 – 150 days past due11 16 14 19 
Greater than 150 days past due95 95 95 95 
Total past due108 30 138 108 39 147 
Current284 905 1,189 231 1,011 1,242 
Total vacation ownership notes receivable$392 $935 $1,327 $339 $1,050 $1,389 
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Legacy-MVW Vacation Ownership Notes Receivable
As of March 31, 2022As of December 31, 2021
($ in millions)Non-SecuritizedSecuritizedTotalNon-SecuritizedSecuritizedTotal
31 – 90 days past due$$18 $24 $$20 $26 
91 – 150 days past due12 12 
Greater than 150 days past due81 — 81 84 — 84 
Total past due90 27 117 94 28 122 
Current163 1,042 1,205 180 1,027 1,207 
Total vacation ownership notes receivable$253 $1,069 $1,322 $274 $1,055 $1,329 
The following table details the origination year of our Legacy-MVW vacation ownership notes receivable as of March 31, 2021.2022.
Legacy-MVW Vacation Ownership Notes ReceivableLegacy-MVW Vacation Ownership Notes Receivable
($ in millions)($ in millions)Non-SecuritizedSecuritizedTotal($ in millions)Non-SecuritizedSecuritizedTotal
Year of OriginationYear of OriginationYear of Origination
20222022$83 $16 $99 
20212021$66 $$66 202137 349 386 
20202020148 82 230 202019 151 170 
2019201969 340 409 201942 226 268 
2018201843 219 262 201826 145 171 
201721 134 155 
2016 and Prior45 160 205 
2017 & Prior2017 & Prior46 182 228 
$392 $935 $1,327 $253 $1,069 $1,322 
Legacy-ILG and Legacy-Welk Vacation Ownership Notes Receivable
At March 31, 20212022 and December 31, 2020,2021, the weighted average FICO score within our consolidated Legacy-ILG and Legacy-Welk vacation ownership notes receivable pools was 708 and 708,707, respectively, based upon the outstanding vacation ownership notes receivable balanceFICO 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 14.62 percent17.14% as of March 31, 20212022 and 14.63 percent17.33% as of December 31, 2020.2021. 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 $3$4 million as of both March 31, 2021,2022 and $3 million as of December 31, 2020.2021.
We use the origination of the vacation ownership notes receivable by brand (Westin, Sheraton, Hyatt)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 Vacation Ownership Notes Receivable
($ in millions)Non-SecuritizedSecuritizedTotal
Investment in vacation ownership notes receivable on non-accrual status at March 31, 2021$118 $$126 
Investment in vacation ownership notes receivable on non-accrual status at December 31, 2020$109 $12 $121 
Legacy-ILG and Legacy-Welk Vacation Ownership Notes Receivable
($ in millions)Non-SecuritizedSecuritizedTotal
Investment in vacation ownership notes receivable on non-accrual status at March 31, 2022$115 $$124 
Investment in vacation ownership notes receivable on non-accrual status at December 31, 2021$114 $10 $124 
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The following table shows the aging of the recorded investment in principal, before reserves, in Legacy-ILG and Legacy-Welk vacation ownership notes receivable as of March 31, 20212022 and December 31, 2020.2021.
Legacy-ILG Vacation Ownership Notes ReceivableLegacy-ILG and Legacy-Welk Vacation Ownership Notes Receivable
As of March 31, 2021As of December 31, 2020As of March 31, 2022As of December 31, 2021
($ in millions)($ in millions)Non-SecuritizedSecuritizedTotalNon-SecuritizedSecuritizedTotal($ in millions)Non-SecuritizedSecuritizedTotalNon-SecuritizedSecuritizedTotal
31 – 90 days past due31 – 90 days past due$$12 $20 $$19 $27 31 – 90 days past due$11 $21 $32 $16 $24 $40 
91 – 120 days past due91 – 120 days past due91 – 120 days past due10 
Greater than 120 days past dueGreater than 120 days past due116 120 107 112 Greater than 120 days past due111 115 110 114 
Total past dueTotal past due126 20 146 117 31 148 Total past due126 30 156 130 34 164 
CurrentCurrent155 506 661 123 550 673 Current229 732 961 219 735 954 
Total vacation ownership notes receivableTotal vacation ownership notes receivable$281 $526 $807 $240 $581 $821 Total vacation ownership notes receivable$355 $762 $1,117 $349 $769 $1,118 
The following tables show the Legacy-ILG and Legacy-Welk acquired vacation ownership notes receivable, before reserves, by brand and FICO score.
Acquired Vacation Ownership Notes Receivable as of March 31, 2022
($ in millions)700 +600 - 699< 600No ScoreTotal
Westin$48 $30 $$$88 
Sheraton49 43 19 118 
Hyatt— 13 
Welk102 71 176 
Other— 
$207 $150 $12 $30 $399 
Acquired Vacation Ownership Notes Receivable as of December 31, 2021
($ in millions)700 +600 - 699< 600No ScoreTotal
Westin$52 $32 $$$95 
Sheraton54 48 23 133 
Hyatt— 15 
Welk115 79 197 
Other— — 
$231 $165 $13 $35 $444 
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The following tables show the Legacy-ILG acquired vacation ownership notes receivable by brand and FICO score, before reserves. Vacation ownership notes receivable with no FICO score primarily relate to non-U.S. resident borrowers.
Acquired Vacation Ownership Notes Receivable as of March 31, 2021
($ in millions)700 +600 - 699< 600No ScoreTotal
Westin$73 $44 $$10 $131 
Sheraton74 69 13 30 186 
Hyatt11 20 
Other
$160 $122 $18 $42 $342 
Acquired Vacation Ownership Notes Receivable as of December 31, 2020
($ in millions)700 +600 - 699< 600No ScoreTotal
Westin$81 $48 $$11 $144 
Sheraton81 73 13 31 198 
Hyatt12 22 
Other
$176 $131 $18 $44 $369 
The following table detailsdetail the origination year of our Legacy-ILG and Legacy-Welk acquired vacation ownership notes receivable by brand and FICO score as of March 31, 2021. Vacation2022.
Acquired Vacation Ownership Notes Receivable 2018 & Prior
($ in millions)WestinSheratonHyatt & OtherTotal
700 +$48 $49 $$105 
600 - 69930 43 79 
< 60011 
No Score19 28 
$88 $118 $17 $223 
Acquired Vacation Ownership Notes Receivable - Welk
($ in millions)2021202020192018 & PriorTotal
700 +$$22 $26 $46 $102 
600 - 69913 19 35 71 
< 600— — — 
No Score— — 
$12 $36 $46 $82 $176 
The following tables show the Legacy-ILG and Legacy-Welk originated vacation ownership notes receivable, with nobefore reserves, by brand and FICO score primarily relate to non-U.S. resident borrowers.score.
Acquired Vacation Ownership Notes Receivable - Westin
($ in millions)202120202019201820172016 & PriorTotal
700 +$$$$20 $20 $33 $73 
600 - 69911 12 21 44 
< 600
No Score10 
$$$$35 $36 $60 $131 
Originated Vacation Ownership Notes Receivable as of March 31, 2022
($ in millions)700 +600 - 699< 600No ScoreTotal
Westin$148 $68 $$40 $265 
Sheraton138 98 20 46 302 
Hyatt23 11 — 35 
Welk79 34 115 
$388 $211 $31 $87 $717 
Acquired Vacation Ownership Notes Receivable - Sheraton
($ in millions)202120202019201820172016 & PriorTotal
700 +$$$$21 $21 $32 $74 
600 - 69918 18 33 69 
< 60013 
No Score12 30 
$$$$56 $50 $80 $186 
Acquired Vacation Ownership Notes Receivable - Hyatt and Other
($ in millions)202120202019201820172016 & PriorTotal
700 +$$$$$$$13 
600 - 699
< 600
No Score
$$$$$$15 $25 
Originated Vacation Ownership Notes Receivable as of December 31, 2021
($ in millions)700 +600 - 699< 600No ScoreTotal
Westin$143 $66 $$34 $251 
Sheraton136 94 20 46 296 
Hyatt22 11 — — 33 
Welk65 27 94 
$366 $198 $29 $81 $674 
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The following tables show the Legacy-ILG originated vacation ownership notes receivable by brand and FICO score, before reserves. Vacation ownership notes receivable with no FICO score primarily relate to non-U.S. resident borrowers.
Originated Vacation Ownership Notes Receivable as of March 31, 2021
($ in millions)700 +600 - 699< 600No ScoreTotal
Westin$111 $54 $$26 $197 
Sheraton108 75 17 43 243 
Hyatt17 25 
$236 $137 $23 $69 $465 
Originated Vacation Ownership Notes Receivable as of December 31, 2020
($ in millions)700 +600 - 699< 600No ScoreTotal
Westin$109 $52 $$23 $190 
Sheraton106 72 16 43 237 
Hyatt16 24 
$231 $132 $22 $66 $451 
The following tables detail the origination year of our Legacy-ILG and Legacy-Welk originated vacation ownership notes receivable by brand and FICO score as of March 31, 2021. Vacation ownership notes receivable with no FICO score primarily relate to non-U.S. resident borrowers.2022.
Originated Vacation Ownership Notes Receivable - WestinOriginated Vacation Ownership Notes Receivable - Westin
($ in millions)($ in millions)202120202019201820172016 & PriorTotal($ in millions)20222021202020192018Total
700 +700 +$14 $30 $55 $12 $$$111 700 +$21 $61 $20 $38 $$148 
600 - 699600 - 69913 29 54 600 - 69929 20 68 
< 600< 600< 600
No ScoreNo Score10 26 No Score18 40 
$28 $51 $97 $21 $$$197 $46 $102 $35 $68 $14 $265 
Originated Vacation Ownership Notes Receivable - SheratonOriginated Vacation Ownership Notes Receivable - Sheraton
($ in millions)($ in millions)202120202019201820172016 & PriorTotal($ in millions)20222021202020192018Total
700 +700 +$10 $31 $53 $14 $$$108 700 +$17 $56 $21 $35 $$138 
600 - 699600 - 69920 38 11 75 600 - 69943 14 25 98 
< 600< 60017 < 60020 
No ScoreNo Score10 25 43 No Score11 18 46 
$19 $66 $125 $33 $$$243 $31 $119 $47 $83 $22 $302 
Originated Vacation Ownership Notes Receivable - HyattOriginated Vacation Ownership Notes Receivable - Hyatt
($ in millions)($ in millions)202120202019201820172016 & PriorTotal($ in millions)20222021202020192018Total
700 +700 +$$$$$$$17 700 +$$$$$$23 
600 - 699600 - 699600 - 69911 
< 600< 600< 600— — — — 
No ScoreNo ScoreNo Score— — — — — — 
$$$13 $$$$25 $$14 $$$$35 
Originated Vacation Ownership Notes Receivable - Welk
($ in millions)20222021202020192018Total
700 +$24 $55 $— $— $— $79 
600 - 69911 23 — — — 34 
< 600— — — — 
No Score— — — — 
$36 $79 $— $— $— $115 
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7.FINANCIAL INSTRUMENTS
The following table shows the carrying values and the estimated fair values of financial assets and liabilities that qualify as financial instruments, determined in accordance with the authoritative guidance for disclosures regarding the fair value of financial instruments. Considerable judgment is required in interpreting market data to develop estimates of fair value. The use of different market assumptions and/or estimation methodologies could have a material effect on the estimated fair value amounts. The table excludes Cash and cash equivalents, Restricted cash, Accounts receivable, deposits included in Other assets, Accounts payable, Advance deposits, and Accrued liabilities, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.
At March 31, 2021At December 31, 2020At March 31, 2022At December 31, 2021
($ in millions)($ in millions)Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
($ in millions)Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Vacation ownership notes receivableVacation ownership notes receivable$1,769 $1,830 $1,840 $1,886 Vacation ownership notes receivable$2,030 $2,091 $2,045 $2,102 
Other assetsOther assets62 62 60 60 Other assets74 74 76 76 
Total financial assetsTotal financial assets$1,831 $1,892 $1,900 $1,946 Total financial assets$2,104 $2,165 $2,121 $2,178 
Securitized debt, netSecuritized debt, net$(1,431)$(1,486)$(1,588)$(1,653)Securitized debt, net$(1,779)$(1,745)$(1,856)$(1,900)
2025 Notes, net2025 Notes, net(494)(532)(494)(533)2025 Notes, net(248)(257)(248)(261)
2026 Notes, net(744)(785)(744)(784)
2028 Notes, net2028 Notes, net(346)(354)(346)(359)2028 Notes, net(346)(338)(346)(362)
2029 Notes, net2029 Notes, net(493)(474)(493)(505)
Term Loan, netTerm Loan, net(775)(760)(873)(864)Term Loan, net(777)(763)(776)(784)
2022 Convertible Notes, net(1)2022 Convertible Notes, net(1)(217)(298)(215)(262)2022 Convertible Notes, net(1)(229)(265)(224)(280)
2026 Convertible Notes, net(1)2026 Convertible Notes, net(1)(442)(684)2026 Convertible Notes, net(1)(563)(632)(461)(682)
Non-interest bearing note payable, netNon-interest bearing note payable, net(11)(11)— — 
Total financial liabilitiesTotal financial liabilities$(4,449)$(4,899)$(4,260)$(4,455)Total financial liabilities$(4,446)$(4,485)$(4,404)$(4,774)
_________________________
(1)Prior period amounts have not been adjusted due to our adoption of ASU 2020-06 under the modified retrospective method. See Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” for information on our adoption of ASU 2020-06.
Vacation Ownership Notes Receivable
At March 31, 2021At December 31, 2020At March 31, 2022At December 31, 2021
($ in millions)($ in millions)Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
($ in millions)Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Vacation ownership notes receivableVacation ownership notes receivableVacation ownership notes receivable
SecuritizedSecuritized$1,338 $1,384 $1,493 $1,530 Securitized$1,661 $1,715 $1,662 $1,712 
Eligible for securitizationEligible for securitization211 226 128 137 Eligible for securitization103 110 97 104 
Not eligible for securitizationNot eligible for securitization220 220 219 219 Not eligible for securitization266 266 286 286 
Non-securitizedNon-securitized431 446 347 356 Non-securitized369 376 383 390 
$1,769 $1,830 $1,840 $1,886 $2,030 $2,091 $2,045 $2,102 
We estimate the fair value of our vacation ownership notes receivable that have been securitized using a discounted cash flow model. We believe this is comparable to the model that an independent third party would use in the current market. Our model uses default rates, prepayment rates, coupon rates, and loan terms for our securitized vacation ownership notes receivable portfolio as key drivers of risk and relative value to determine the fair value of the underlying vacation ownership notes receivable. We concluded that this fair value measurement should be categorized within Level 3.
Due to factors that impact the general marketability of our vacation ownership notes receivable that have not been securitized, as well as current market conditions, we bifurcate our non-securitized vacation ownership notes receivable at each balance sheet date into those eligible and not eligible for securitization using criteria applicable to current securitization transactions in the ABS market. Generally, vacation ownership notes receivable are considered not eligible 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
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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.
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The table above shows the bifurcation of our vacation ownership notes receivable that have not been securitized into those eligible and not eligible for securitization based upon the aforementioned eligibility criteria. We estimate the fair value of the portion of our vacation ownership notes receivable that have not been securitized that we believe will ultimately be securitized in the same manner as vacation ownership notes receivable that have been securitized. We value the remaining vacation ownership notes receivable that have not been securitized at their carrying value, rather than using our pricing model. We believe that the carrying value of these particular vacation ownership notes receivable approximates fair value because the stated, or otherwise imputed, interest rates of these loans are 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
Other assets include $56$74 million of company owned insurance policies (the “COLI policies”), acquired on the lives of certain participants in the Marriott Vacations Worldwide Deferred Compensation Plan, that are held in a rabbi trust. The carrying value of the COLI policies is equal to their cash surrender value (Level 2 inputs). In addition, we have investments in marketable securities of $6 million that are marked to market as trading securities using quoted market prices (Level 1 inputs).
Securitized Debt
We generate cash flow estimates by modeling all bond tranches for our active vacation ownership notes receivable securitization transactions, with consideration for the collateral specific to each tranche. The key drivers in our analysis include default rates, prepayment rates, bond interest rates, and other structural factors, which we use to estimate the projected cash flows. In order to estimate market credit spreads by rating, we obtain indicative credit spreads from investment banks that actively issue and facilitate the market for vacation ownership securities and determine an average credit spread by rating level of the different tranches. We then apply those estimated market spreads to swap rates in order to estimate an underlying discount rate for calculating the fair value of the active bonds payable. We concluded that this fair value measurement should be categorized within Level 3.
Senior Notes
We estimate the fair value of our 2025 Notes, 20262028 Notes, and 20282029 Notes (each as defined in Footnote 13 “Debt”) using quoted market prices as of the last trading day for the quarter; however these notes have only a limited trading history and volume, and as such this fair value estimate is not necessarily indicative of the value at which these notes could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 2.
Term Loan
We estimate the fair value of our Term Loan (as defined in Footnote 13 “Debt”) using quotes from securities dealers as of the last trading day for the quarter; however these notes havethis 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 our 2022 Convertible Notes and 2026 Convertible Notes (each as defined in Footnote 13 “Debt” and referred to collectively as our “convertible notes”) using quoted market prices as of the last trading day for the quarter; however these notes have only a limited trading history and volume, and as such this fair value estimate is not necessarily indicative of the value at which the convertible notes could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 2. 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 convertible notes.
Non-Interest Bearing Note Payable
The carrying value of our non-interest bearing note payable issued in connection with the acquisition of vacation ownership units located in Bali, Indonesia approximates fair value, because the imputed interest rate used to discount this note payable is consistent with current market rates. We concluded that this fair value measurement should be categorized within Level 3.
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8.EARNINGS PER SHARE
Basic earnings or loss per common share attributable to common shareholders is calculated by dividing net income or loss attributable to common shareholders by the weighted average number of shares of common stock outstanding during the reporting period. Treasury stock is excluded from the weighted average number of shares of common stock outstanding. Diluted earnings or loss per common share attributable to common shareholders is calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period, except in periods when there is a loss because the inclusion of the potential common shares would have an anti-dilutive effect. The dilutive effect of outstanding equity-based compensation awards is reflected in diluted earnings or loss per common share applicable to common shareholders by application of the treasury stock method using average market prices during the period.
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TableWe adopted ASU 2020-06 on January 1, 2022 using the modified retrospective method. ASU 2020-06 was applicable to our convertible notes outstanding as of Contents
Our calculationadoption and requires us to calculate the impact of our convertible notes on diluted earnings or loss per share attributable to common shareholders 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 through a combination settlement, which contemplates repayment in cashare assumed to be converted into common stock at the beginning of the principal amount and repayment in shares of our common stock of any excess ofperiod, to the conversion value over the principal amount (the “conversion premium”). Therefore, we include only the shares 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 based upon an average priceextent dilutive. Earnings per share for the quarter.
As ofthree months ended March 31, 2021 a conversion premium existedhave not been retrospectively restated and continue to be reported under the accounting standards in effect for our 2022 Convertible Notes (as defined in Footnote 13 “Debt”). As no conversion premium existed as of March 31, 2020, there was no potential dilutive impact from our 2022 Convertible Notes for the first quarter of 2020. Additionally, as no conversion premium existed for our 2026 Convertible Notes (as defined in Footnote 13 “Debt”) as of March 31, 2021, there was no potential dilutive impact from our 2026 Convertible Notes for the first quarter of 2021.that period.
The shares issuable on exercise of the warrants sold in connection with the issuance of our convertible notes will not impact the total dilutive weighted average shares outstanding unless and until the price of our common stock exceeds the respective strike price. If and when the price of our common stock exceeds the respective strike price of either of the warrants, we will include the dilutive effect of the additional shares that may be issued upon exercise of the warrants in total dilutive weighted average shares outstanding, which we calculate using the treasury stock method. The convertible note hedges purchased in connection with each issuance of convertible notes are considered to be anti-dilutive and do not impact our calculation of diluted earnings per share attributable to common shareholders for any periods presented herein. See Footnote 13 “Debt” for further information on our convertible notes.
The table below illustrates the reconciliation of the earnings or loss and number of shares used in our calculation of basic and diluted earnings or loss per share attributable to common shareholders.
Three Months Ended
(in millions, except per share amounts)March 31, 2021March 31, 2020
Computation of Basic Loss Per Share Attributable to Common Shareholders
Net loss attributable to common shareholders$(28)$(106)
Shares for basic loss per share41.4 41.5 
Basic loss per share$(0.68)$(2.56)
Computation of Diluted Loss Per Share Attributable to Common Shareholders
Net loss attributable to common shareholders$(28)$(106)
Shares for basic loss per share41.4 41.5 
Effect of dilutive shares outstanding (1)
Shares for diluted loss per share41.4 41.5 
Diluted loss per share$(0.68)$(2.56)
Three Months Ended
(in millions, except per share amounts)
March 31, 2022(1)
March 31, 2021
Computation of Basic Earnings (Loss) Per Share Attributable to Common Shareholders
Net income (loss) attributable to common shareholders$58 $(28)
Shares for basic earnings (loss) per share42.4 41.4 
Basic earnings (loss) per share$1.36 $(0.68)
Computation of Diluted Earnings (Loss) Per Share Attributable to Common Shareholders
Net income (loss) attributable to common shareholders$58 $(28)
Add back of interest expense related to convertible notes subsequent to the adoption of ASU 2020-06, net of tax— 
Numerator used to calculate diluted EPS$59 $(28)
Shares for basic earnings (loss) per share42.4 41.4 
Effect of dilutive shares outstanding (2)
Employee SARs0.2 — 
Restricted stock units0.3 — 
2022 Convertible Notes ($230 million of principal)1.6 — 
2026 Convertible Notes ($575 million of principal)3.4 — 
Shares for diluted earnings (loss) per share47.9 41.4 
Diluted earnings (loss) per share$1.23 $(0.68)

(1)The computation of diluted earnings per share attributable to common shareholders excludes approximately 300,000 shares of common stock, the maximum number of shares issuable as of March 31, 2022, 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.
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(2)For the first quarter 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 there was a net loss attributable to common shareholders and as such, the effects of including these securities would have been anti-dilutive.
Three Months Ended
(in millions)March 31, 2021March 31, 2020
Employee stock options and SARs0.2 0.2 
Restricted stock units0.5 0.3 
2022 Convertible Notes0.1 
0.8 0.5 
Three Months Ended
(in millions)March 31, 2021
Employee SARs0.2 
Restricted stock units0.5 
2022 Convertible Notes ($230 million of principal)0.1 
0.8 
20In accordance with the applicable accounting guidance for calculating earnings per share, for the first quarter of 2022, we excluded from our calculation of diluted earnings per share 126,169 shares underlying stock appreciation rights (“SARs”) that may settle in shares of common stock because the exercise price of $173.88 of such SARs was greater than the average market price for the applicable period.


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9.INVENTORY
The following table shows the composition of our inventory balances:
($ in millions)($ in millions)At March 31, 2021At December 31, 2020($ in millions)At March 31, 2022At December 31, 2021
Finished goods(1)
$776 $749 
Work-in-progress
Real estate inventory(1)Real estate inventory(1)776 749 Real estate inventory(1)$684 $710 
OtherOther10 Other
$785 $759 $693 $719 
_________________________
(1)Represents completed inventory that is registered for sale as vacation ownership interests and vacation ownership inventory expected to be acquiredreacquired pursuant to estimated future foreclosures.
We value vacation ownership products at the lower of cost or fair market value less costs to sell, in accordance with applicable accounting guidance, and we record operating supplies at the lower of cost (using the first-in, first-out method) or net realizable value.
Product cost true-up activity relating to vacation ownership products increased carrying values of inventory by $7 million during the first quarter of 2022 and by $1 million during the first quarter of 2021 and by $8 million during the first quarter of 2020.2021.
In addition to the above, at March 31, 20212022 and December 31, 2020,2021, we had $291$496 million and $162$460 million, respectively, of completed vacation ownership units which are classified as a component of Property and equipment, net until the time at which they are available and legally registered for sale as vacation ownership products. We also have $24 million and $43 million of deposits on future purchases of inventory at March 31, 2021 and December 31, 2020, respectively, which are included in the Other assets line on our Balance Sheets.
10.GOODWILL AND INTANGIBLES
Goodwill
The following table details the carrying amount of our goodwill at March 31, 20212022 and December 31, 2020,2021, and reflects goodwill attributed to the ILG Acquisition which was allocated to our Vacation Ownership and our Exchange & Third-party Management reporting units.the Welk Acquisition.
($ in millions)Vacation Ownership SegmentExchange & Third-Party Management SegmentTotal Consolidated
Balance at December 31, 2020$2,445 $372 $2,817 
Impairment
Foreign exchange adjustments
Balance at March 31, 2021$2,445 $372 $2,817 
Q1 2021
We performed a qualitative analysis of the impact of recent events, including business and industry specific considerations, on the fair value of our reporting units as of the end of the first quarter of 2021 and determined that an interim quantitative impairment test was not required for either of our reporting units.
While the goodwill of our reporting units was not impaired as of the first quarter of 2021, we cannot assure you that goodwill will not be impaired in future periods. We will continue to monitor the operating results, cash flow forecasts and impact from changes in market conditions, as well as impacts of COVID-19, for these reporting units.
Q1 2020
During the first quarter of 2020, we recognized a non-cash impairment charge of $73 million in the Impairment line on our Income Statement for the three months ended March 31, 2020, related to the Exchange & Third-Party Management reporting unit, which was primarily driven by the change in expected future operating results as a result of the impact of the COVID-19 pandemic.
($ 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)
Balance at March 31, 2022$2,770 $372 $3,142 
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Intangible Assets
The following table details the composition of our intangible asset balances:
($ in millions)At March 31, 2021At December 31, 2020
Definite-lived intangible assets
Member relationships$671 $671 
Management contracts351 351 
1,022 1,022 
Accumulated amortization(148)(134)
874 888 
Indefinite-lived intangible assets
Trade names64 64 
$938 $952 
Q1 2020
During the first quarter of 2020, we recognized a non-cash impairment charge of $18 million in the Impairment line on our Income Statement for the three months ended March 31, 2020, related to the indefinite-lived intangible assets in our Exchange & Third-Party Management reporting unit. The impairment charge was primarily attributed to the impact of the COVID-19 pandemic.
($ in millions)At March 31, 2022At December 31, 2021
Definite-lived intangible assets
Member relationships$671 $671 
Management contracts452 452 
1,123 1,123 
Accumulated amortization(209)(194)
914 929 
Indefinite-lived intangible assets
Trade names64 64 
$978 $993 
11.CONTINGENCIES AND COMMITMENTS
Commitments and Letters of Credit
As of March 31, 2021,2022, 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 $92was $97 million, of which we expect $28$43 million, $35$30 million, $20$13 million, $6$8 million, and $3 million will be paid in the remainder of 2021, 2022, 2023, 2024, 2025, and 20252026 and thereafter, respectively.
We have various commitmentsa commitment to acquire real estate for use in our Vacation Ownership segment via our involvement with VIEs.a VIE. Refer to Footnote 16 “Variable Interest Entities” for additional information and our activities relating to the VIEsVIE involved in these transactions.this transaction.
We have a remaining commitmentcommitments to purchase 88 vacation ownership units locatedacquire inventory from our managed owners’ associations in Bali, Indonesiathe remainder of 2022 for use in our Vacation Ownership segment, contingent upon completion of construction to agreed-upon standards. We expect to complete the acquisition in 2021 and to make the remaining payments with respect to these units when specific construction milestones are completed, as follows: $21 million in late 2021 and $2 million in 2022.$79 million.
Surety bonds issued as of March 31, 20212022 totaled $85$120 million, the majority of which were requested by federal, state, or local governments in connection with our operations.
As of March 31, 2021,2022, we had $2 million of letters of credit outstanding under our Revolving Corporate Credit Facility (as defined in Footnote 13 “Debt”). In addition, as of March 31, 2021,2022, 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.
We estimate the cash outflow associated with completing the phases of our existing portfolio of vacation ownership projects currently under development will be approximately $3 million, of which $1 million is included within liabilities on our Balance Sheet at March 31, 2021. This estimate is based on our current development plans, which remain subject to change, and we expect the phases currently under development will be completed by the end of 2021.
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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 of the rental revenue 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 our vacation rental business either retains the balance (if any) as its fee or makes up the deficit. At March 31, 2021,2022, our maximum exposure under fixed dollar guarantees was $15$8 million, of which $4 million, $4$1 million, $2 million, $2 million, $1 million, $1 million, and $2$1 million relate to the remainder of 2021, 2022, 2023, 2024, 2025, 2026, and thereafter, respectively. Based
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 impactearlier of: 1) sale of 95% of the COVID-19 pandemic on our rental operations, we declared the occurrence of a force majeure event under many of these agreements, generally effective as of April 1, 2020. As a result, owner distributions made under such agreements will be paid on a net operating income basis, rather than as guaranteed amounts, until such time as force majeure event conditions abate.
Loss Contingencies
In March 2017, RCHFU, L.L.C. and other owners at The Ritz-Carlton Club, Aspen Highlands (“RCC Aspen Highlands”) filed a complaint in an action pending in the U.S. District Court for the District of Colorado against us and certain third parties, alleging that their fractional interests were devalued by the affiliation of the RCC Aspen Highlands and other Ritz-Carlton Clubs with our points-based Marriott Vacation Club Destinations (“MVCD”) program. The plaintiffs are seeking compensatory damages, disgorgement, punitive damages, fees and costs. A trial is scheduled to begin in January 2022.
In May 2016, a purported class-action lawsuit was filed in the U.S. District Court for the Middle District of Florida by Anthony and Beth Lennen against us and certain third parties. The complaint challenged the characterization of the beneficialtotal ownership interests in the MVCD trust that are sold to customersowners’ association; or 2) written notification of termination by either party. At March 31, 2022, our expected commitment for the remainder of 2022 is $10 million, which will ultimately be recorded as real estate interests under Florida law, the structurea component of the trust, and associated operational aspects of the trust. The plaintiffs sought declaratory relief, an unwinding of the MVCD product, and punitive damages. In August 2019, the District Court grantedrental expense on our motion for judgment on the pleadings and dismissed the case. The plaintiffs have appealed the ruling.income statement.
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Loss Contingencies    
In February 2019, the owners’ association for the St. Regis Residence Club, New York filed a lawsuit in the Supreme Court for the State of New York, New York County, Commercial Division against ILG and several of its subsidiaries and certain third parties. The operative complaint alleges that the defendants breached their fiduciary duties related to sale and rental practices, aided and abetted certain breaches of fiduciary duty, engaged in self-dealing as the sponsor and manager of the club, tortiously interfered with the management agreement, waswere unjustly enriched, and engaged in anticompetitive conduct. The plaintiff is seeking unspecified damages, punitive damages and disgorgement of payments under the management and purchase agreements. In February 2022, the Court granted our motion to dismiss the complaint and dismissed with prejudice all claims except one, with respect to which the plaintiff was granted leave to amend its complaint. The plaintiff has filed an amended complaint and has appealed the dismissal of the other claims.
In April 2019, a purported class-action lawsuit was filed by Alan and Marjorie Helman and others against us in the Superior Court of the Virgin Islands, Division of St. Thomas alleging that their fractional interests were devalued by the affiliation of The Ritz-Carlton Club, St. Thomas and other Ritz-Carlton Clubs with our MVCD program. The lawsuit was subsequently removed to the U.S. District Court for the District of the Virgin Islands. The plaintiffs are seeking unspecified damages, disgorgement of profits, fees and costs.
In May 2019, the G.A. Resort Condominium Association Inc., the owners’ association for the fractional owners at the Hyatt Residence Club Grand Aspen resort (“HRC Grand Aspen”) filed a lawsuit against us in the District Court for the County of Pitkin, Colorado relating to the transfer of ownership of developer-owned fractional interests at HRC Grand Aspen to the HPC Trust Club for sale and use as a part of the Hyatt Residence Club Portfolio Program. The lawsuit was subsequently removed to the U.S. District Court for the District of Colorado. The plaintiff is seeking termination of the management agreement with the owners’ association, the annulment of certain amendments to governing documents at HRC Grand Aspen, the removal of fractional interests at HRC Grand Aspen from the HPC Trust Club, unspecified damages, disgorgement of profits, fees and costs. In November 2020, the District Court granted our motion to dismiss and dismissed the case. The plaintiffs have appealed the ruling.
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 business, various claims and lawsuits have been filed or are pending against us. A number of these lawsuits and claims may exist at any given time. Additionally, the COVID-19 pandemic may give rise to various claims and lawsuits from owners, members and other parties. We record and accrue for legal contingencies when we determine that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In making such determinations, we evaluate, among other things, the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, our ability to make a reasonable estimate of loss. We review these accruals each reporting period and make revisions based on changes in facts and circumstances.
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We have not accrued for any of the pending matters described above and we cannot estimate a range of the potential liability associated with these pending matters, if any, at this time. We have accrued for other claims and lawsuits, but the amount accrued is not material individually or in the aggregate. For matters not requiring accrual, we do not believe that the ultimate outcome of such matters, individually andor in the aggregate, will materially harm our financial position, cash flows, or overall trends in results of operations based on information currently available. However, legal proceedings are inherently uncertain, and while we believe that our accruals are adequate and thatand/or we have valid defenses to the claims asserted, unfavorable rulings could occur that could, individually or in the aggregate, have a material adverse effect on our business, financial condition, or operating results.
Leases That Have Not Yet Commenced
During the first quarter of 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 is currently expected to be completed in 2023, at which time2023. Upon commencement of 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 $129 million for the aforementioned period. During 2020, in response to the COVID-19 pandemic and our ongoing evaluation of future space needs, we entered into a standstill arrangement with the developer/lessor, which expires in June 2021. The agreement provides for a standstill on certain project spending, extends certain deliverable dates pertaining to the development and lease, and grants us a limited termination option in exchange for reimbursement of certain developer soft costs.
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12.SECURITIZED DEBT
The following table provides detail on our securitized debt, net of unamortized debt discount and issuance costs.
($ in millions)($ in millions)At March 31, 2021At December 31, 2020($ in millions)At March 31, 2022At December 31, 2021
Vacation ownership notes receivable securitizations, gross(1)
Vacation ownership notes receivable securitizations, gross(1)
$1,446 $1,604 
Vacation ownership notes receivable securitizations, gross(1)
$1,698 $1,877 
Unamortized debt discount and issuance costsUnamortized debt discount and issuance costs(15)(16)Unamortized debt discount and issuance costs(19)(21)
1,679 1,856 
Warehouse Credit Facility, grossWarehouse Credit Facility, gross101 — 
Unamortized debt issuance costs(2)
Unamortized debt issuance costs(2)
(1)— 
100 — 
$1,779 $1,856 
$1,431 $1,588 
_________________________
(1)Interest rates as of March 31, 20212022 range from 2.3%1.5% to 4.4%, with a weighted average interest rate of 2.8%2.3%.
(2)Excludes $2 million of unamortized debt issuance costs as of December 31, 2021, as no cash borrowings were outstanding on the Warehouse Credit Facility at that time.
All of our securitized debt is non-recourse to us.MVWC. See Footnote 16 “Variable Interest Entities” for a discussion of the collateral for the non-recourse debt associated with our securitized debt.
The following table shows scheduled future principal payments for our securitized debt as of March 31, 2021.2022.
Vacation Ownership
Notes Receivable Securitizations
Vacation Ownership
Notes Receivable Securitizations
Warehouse Credit
Facility
Total
($ in millions)($ in millions)($ in millions)Vacation Ownership
Notes Receivable Securitizations
Warehouse Credit
Facility
Payments YearPayments Year
2021, remaining$119 
2022161 
2022, remaining2022, remaining$135 $$138 
20232023163 2023182 187 
20242024164 2024185 93 278 
20252025165 2025185 — 185 
20262026183 — 183 
ThereafterThereafter674 Thereafter828 — 828 
$1,446 $1,698 $101 $1,799 
Vacation Ownership Notes Receivable Securitizations
Each of the securitized vacation ownership notes receivable transactions contains various triggers relating to the performance of the underlying vacation ownership notes receivable. If a pool of securitized vacation ownership notes receivable fails to perform within the pool’s established parameters (default or delinquency thresholds vary by transaction), transaction provisions effectively redirect the monthly excess spread we would otherwise receive from that pool (attributable to the interests we retained) to accelerate the principal payments to investors (taking into account the subordination of the different tranches to the extent there are multiple tranches) until the performance trigger is cured. During the first quarter of 2021,2022, and as of March 31, 2021, 02022, we had 14 securitized vacation ownership notes receivable pools outstanding, none of which were out of compliance with their respective established parameters. As of March 31, 2021, we had 12 securitized vacation ownership notes receivable pools outstanding.
As the contractual terms of the underlying securitized vacation ownership notes receivable determine the maturities of the non-recourse debt associated with them, actual maturities may occur earlier than shown above due to prepayments by the vacation ownership notes receivable obligors.
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Warehouse Credit Facility
Our warehouse credit facility (the “Warehouse Credit Facility”), which has a borrowing capacity of $350 million, allows for the securitization of vacation ownership notes receivable on a revolving non-recourse basis. Subsequent to the end ofDuring the first quarter of 2021,2022, we amended certain agreements associated with this facility, and as a result, the revolving period was extended from December 20, 2021 to April 21, 2023 and the interest rate increased from primarily LIBOR plus 1.1% to primarily LIBOR plus 1.35%. Our borrowing capacity was not modified by these amendments. The amended facility expands our ability to monetizesecuritized vacation ownership notes receivable loans originated by Welk,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 was acquired subsequentresulted in gross proceeds of $102 million. Net proceeds were $101 million due to the endfunding of the first quarterreserve accounts of 2021. The other terms are substantially similar to those in effect prior to the execution of the amendments.$1 million.
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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 March 31, 2021At December 31, 2020
Senior Secured Notes
2025 Notes$500 $500 
Unamortized debt discount and issuance costs(6)(6)
494 494 
Senior Unsecured Notes
2026 Notes750 750 
Unamortized debt discount and issuance costs(6)(6)
744 744 
2028 Notes350 350 
Unamortized debt discount and issuance costs(4)(4)
346 346 
Corporate Credit Facility
Term Loan784 884 
Unamortized debt discount and issuance costs(9)(11)
775 873 
Convertible Notes
2022 Convertible Notes230 230 
Unamortized debt discount and issuance costs(13)(15)
217 215 
2026 Convertible Notes575 
Unamortized debt discount and issuance costs(133)
442 
Finance Leases
$3,025 $2,680 
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($ in millions)At March 31, 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(7)(7)
493 493 
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(1)(6)
229 224 
2026 Convertible Notes575 575 
Unamortized debt discount and issuance costs(12)(114)
563 461 
Non-interest bearing note payable11 — 
Finance Leases84 83 
$2,751 $2,631 
The following table shows scheduled future principal payments for our debt, excluding finance leases, as of March 31, 2021.2022.
($ in millions)($ in millions)2025
Notes
2026
Notes
2028
Notes
Term
Loan
2022 Convertible Notes2026 Convertible NotesTotal($ in millions)2025
Notes
2028
Notes
2029
Notes
Term
Loan
2022 Convertible Notes2026 Convertible NotesNon-Interest Bearing Note PayableTotal
Payments YearPayments YearPayments Year
2021, remaining$$$$$$$
2022230 230 
2022, remaining2022, remaining$— $— $— $— $230 $— $— $230 
202320232023— — — — — — 
202420242024— — — — — — 
20252025500 784 1,284 2025250 — — 784 — — — 1,034 
20262026— — — — — 575 — 575 
ThereafterThereafter750 350 575 1,675 Thereafter— 350 500 — — — — 850 
$500 $750 $350 $784 $230 $575 $3,189 $250 $350 $500 $784 $230 $575 $11 $2,700 
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Senior Notes
Our senior notes include:
$500 million aggregate principal amount of 6.125% Senior Secured Notes due 2025 issued in the second quarter of 2020 with a maturity date of September 15, 2025 (the “2025 Notes”).
$750, of which $250 million aggregateof principal amountwas outstanding as of 6.500% Senior Unsecured Notes due 2026 issued in the third quarter of 2018 with a maturity date of September 15, 2026 (the “2026 Notes”); andMarch 31, 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 with a borrowing capacity of $600 million (the “Revolving Corporate Credit Facility”), including that 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 “Amendment”), which increased the borrowing capacity of the existing revolving credit facility from $600 million that terminates onto $750 million and extended the maturity date from August 31, 2023.
2023 to March 31, 2027. The Term Loan bearsAmendment modified the interest at LIBOR plus 1.75 percent. Borrowingsrate applicable to borrowings under the Revolving Corporate Credit Facility generally bear interest atto reference the Secured Overnight Financing Rate (“SOFR”) and to be based on “Adjusted Term SOFR,” which is calculated as Term SOFR (as defined in the Amendment), plus a floating0.10% 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 plus anindices. The applicable margin that varies from 0.50 percentmargins with respect 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 20were amended to 40 basis points per annum, also dependingbe based on ourleverage-based measures instead of credit rating.
In 2020, we entered into a waiver (the “Waiver”)ratings-based measures. The Amendment made no other material changes to the agreement that governs our Corporate Credit Facility, which, among other things, suspended the requirement to comply with the leverage covenant in the Revolving Corporate Credit Facility, commencing with the fiscal quarter ending June 30, 2020. The initial suspension period included in the Waiver was up to four quarters, however in February 2021, we further amended the agreement governing our Corporate Credit Facility to extend the suspension period included in the Waiver through the end of 2021. We are required to maintain monthly minimum liquidity of at least $300 million until the later of December 31, 2021, or the end of the suspension period. In addition, for the duration of the period during which the waiver of the leverage covenant remains in effect, we are prohibited from making certain restricted payments, including share repurchases and dividends. If we are not in compliance with the leverage covenant at the end of the suspension period, we will seek to negotiate with our lenders to amend such covenant, as needed.Facility.
Prior to 2020, we entered into $250 million of interest rate swaps under which we pay a fixed rate of 2.9625 percent2.9625% 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 percent2.2480% 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 percent2.5000% and a floor strike rate of 1.8810 percent1.8810% 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 liabilities on our Balance Sheet as of March 31, 20212022 and December 31, 2020.2021. We characterize payments we make in connection with these derivative instruments as interest expense and a reclassification of accumulated other comprehensive income for presentation purposes.
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The following table reflects the activity in accumulated other comprehensive loss related to our derivative instruments during the first quarters of 20212022 and 2020:2021. There were no reclassifications to the Income Statement for either of the periods presented below.
($ in millions)($ in millions)20212020($ in millions)20222021
Derivative instrument adjustment balance, January 1Derivative instrument adjustment balance, January 1$(39)$(21)Derivative instrument adjustment balance, January 1$(18)$(39)
Other comprehensive gain (loss) before reclassifications(24)
Reclassification to Income Statement
Net other comprehensive income (loss)(24)
Other comprehensive gain before reclassificationsOther comprehensive gain before reclassifications16 
Derivative instrument adjustment balance, March 31Derivative instrument adjustment balance, March 31$(33)$(45)Derivative instrument adjustment balance, March 31$(2)$(33)
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 percent,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 March 31, 20212022 to 6.81156.8402 shares of common stock per $1,000 principal amount of 2022 Convertible Notes (equivalent to a conversion price of approximately $146.81$146.19 per share of our common stock), as a result of the dividends that have beenwe declared since issuance of the 2022 Convertible Notes that were greater than the quarterly dividend we paid when the 2022 Convertible Notes were issued. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our
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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 2022 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. As of March 31, 2021,2022, the effective interest rate was 4.73% and the remaining discount amortization period was 1.5 years.2.19%.
The following table shows the net carrying value of the 2022 Convertible Notes.
($ in millions)($ in millions)At March 31, 2021At December 31, 2020($ in millions)At March 31, 2022At December 31, 2021
Liability componentLiability componentLiability component
Principal amountPrincipal amount$230 $230 Principal amount$230 $230 
Unamortized debt discount(1)Unamortized debt discount(1)(11)(13)Unamortized debt discount(1)— (5)
Unamortized debt issuance costsUnamortized debt issuance costs(2)(2)Unamortized debt issuance costs(1)(1)
Net carrying amount of the liability componentNet carrying amount of the liability component$217 $215 Net carrying amount of the liability component$229 $224 
Carrying amount of equity component, net of issuance costs(1)Carrying amount of equity component, net of issuance costs(1)$33 $33 Carrying amount of equity component, net of issuance costs(1)$— $33 
________________________
(1)As a result of the 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 2022 Convertible Notes from equity to liabilities. Prior period amounts have not been adjusted due to 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 2022 Convertible Notes.
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020($ in millions)March 31, 2022March 31, 2021
Contractual interest expenseContractual interest expense$$Contractual interest expense$$
Amortization of debt discountAmortization of debt discountAmortization of debt discount— 
$$$$
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 1.551.6 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 1.551.6 million shares of our common stock. As of March 31, 2021,2022, the strike prices of the 2022 Convertible Note Hedges and the 2022 Warrants were subject to adjustment to approximately $148.61$148.29 and $177.19,$176.80, respectively, and 0no 2022 Convertible Note Hedges or 2022 Warrants have been exercised.
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2026 Convertible Notes
During the first quarter of 2021, we issued $575 million aggregate principal amount of 0.00% Convertible Senior Notes due 2026convertible senior notes (the “2026 Convertible Notes”) that bear interest at a rate of 0.00%. The 2026 Convertible Notes are governed by an indenture dated February 2, 2021 (the Indenture) between the Company, Marriott Ownership Resorts, Inc. and the other guarantors party thereto (the “Guarantors”) and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). We received net proceeds from the offering of approximately $530 million after adjusting for debt issuance costs, including the discount to the initial purchasers, the cost of the 2026 Convertible Note Hedges, and proceeds from the 2026 Warrants (both as defined below).
The 2026 Convertible Notes will not bear regular interest and will mature on January 15, 2026, unless earlier repurchased or converted in accordance with their terms prior to that date. On or after October 15, 2025,
The conversion rate is subject to adjustment for certain events as described in the indenture governing the notes, and priorwas subject to the closeadjustment as of business on the second scheduled trading day immediately preceding the stated maturity date of the 2026 Convertible Notes, holders may convert their 2026 Convertible Notes at their option. The 2026 Convertible Notes are convertible at a rate of 5.8476March 31, 2022 to 5.9122 shares of common stock per $1,000 principal amount of 2026 Convertible Notes (equivalent to an initiala conversion price of $171.01$169.14 per share of our common stock), as a result of March 31, 2021. The conversion rate is subject to adjustment for certain events as described in the Indenture.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. It is our intent to settle conversionsAs of the 2026 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 2026 Convertible Notes prior to October 15, 2025 only under the following circumstances:
during any calendar quarter commencing after the calendar quarter ending on March 31, 2021 (and only during such calendar quarter), if2022, 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 5 business day period after any 5 consecutive trading day period in which the trading price per $1,000 principal amount of 2026 Convertible Notes for each trading day of the measurement periodeffective interest rate was less than 98 percent of the product of the last reported sale price of the 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 2026 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 2026 Convertible Notes. The repurchase price as a result of a fundamental change is equal to 100 percent of the principal amount of the 2026 Convertible Notes to be repurchased, plus accrued and unpaid special interest, if any, 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 2026 Convertible Notes may increase.
The 2026 Convertible Notes are unconditionally guaranteed, on a joint and several basis, by the Guarantors on a senior, unsecured basis. The 2026 Convertible Notes are our general senior unsecured obligations and rank equally in right of payment with all of our existing and future senior indebtedness, and senior in right of payment to all of our future subordinated debt. The 2026 Convertible Notes will be effectively subordinated to any of our existing and future secured debt to the extent of the value of the assets securing such debt, including the guarantees of borrowings outstanding under the Corporate Credit Facility and our 2025 Notes. The 2026 Convertible Notes will be structurally subordinated to any existing and future indebtedness and any other liabilities and obligations of any of our subsidiaries that are not guarantors of the 2026 Convertible Notes. The guarantees will be the Guarantors’ general senior unsecured obligations and will rank equally in right of payment with all of the Guarantors’ existing and future senior indebtedness, and senior in right of payment to all of the Guarantors’ future subordinated debt. The guarantees will be effectively subordinated to any of the Guarantors’ existing and future secured debt to the extent of the value of the assets securing such debt, including any borrowings outstanding under the Corporate Credit Facility and the 2025 Notes. The guarantees will be structurally subordinated to any existing and future indebtedness and any other liabilities and obligations of any of our subsidiaries that are not guarantors of the 2026 Convertible Notes.
There are no financial or operating covenants related to the 2026 Convertible Notes. The indenture governing these notes contains customary events of default with respect to the 2026 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 2026 Convertible Notes then outstanding, may declare all principal of, and accrued and any unpaid interest on, the 2026 Convertible Notes then outstanding to be immediately due and payable. In case of certain events of bankruptcy or insolvency involving the Company, all of the principal of and accrued and unpaid interest on the 2026 Convertible Notes will automatically become immediately due and payable.0.55%.
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In accounting for the issuance of the 2026 Convertible Notes, we separated the 2026 Convertible Notes into liability and equity components, and allocated $449 million to the liability component and $126 million to the equity component. The resulting debt discount is amortized as interest expense. As of March 31, 2021, the effective interest rate was 4.96% and the remaining debt discount amortization period was 4.8 years. We had debt issuance costs, including initial purchasers’ discount to underwriters, of $15 million related to the 2026 Convertible Notes, which were allocated to the liability and equity components based on their relative values. Issuance costs attributable to the liability component are amortized to interest expense over the term of the 2026 Convertible Notes, and issuance costs attributable to the equity component are included along with the equity component in shareholders’ equity. During the first quarter of 2021, our interest expense related to the 2026 Convertible Notes was $5 million, all of which related to the amortization of the debt discount.
The following table shows the net carrying value of the 2026 Convertible Notes.
($ in millions)At March 31, 2022At December 31, 2021
Liability component
Principal amount$575 $575 
Unamortized debt discount(1)
— (104)
Unamortized debt issuance costs(12)(10)
Net carrying amount of the liability component$563 $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 at March 31, 2021:from equity to liabilities. Prior period amounts have not been adjusted due to 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.
($ in millions)At March 31, 2021
Liability component
Principal amount$575 
Unamortized debt discount(121)
Unamortized debt issuance costs(12)
Net carrying amount of the liability component$442 
Carrying amount of equity component, net of issuance costs$117 
The following table shows interest expense information related to the 2026 Convertible Notes.
Three Months Ended
($ in millions)March 31, 2022March 31, 2021
Amortization of debt discount$— $
Amortization of debt issuance costs— 
$$
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 with certain counterparties (the “2026(“2026 Convertible Note Hedges”), covering a total of approximately 3.4 million shares of our common stock, at a cost of $100 million. The 2026 Convertible Note Hedges are subject to anti-dilution provisions substantially similar to those of the 2026 Convertible Notes, have a strike price that initially corresponds to the initial conversion price of the 2026 Convertible Notes, are exercisable by us upon any conversion under the 2026 Convertible Notes, and expire when the 2026 Convertible Notes mature. The cost of the 2026 Convertible Note Hedges is expected to be tax deductible as an original issue discount over the life of the 2026 Convertible Notes, as the 2026 Convertible Notes and the 2026 Convertible Note Hedges represent an integrated debt instrument for tax purposes. The cost of the 2026 Convertible Note Hedges was recorded as a reduction of Additional paid-in capital on our Balance Sheet as of March 31, 2021.
Concurrently with the entry into the 2026 Convertible Note Hedges, we separately entered into privately-negotiated warrant transactions (the “2026(“2026 Warrants”), whereby we sold to the counterparties to the 2026 Convertible Note Hedges, warrants to acquire collectively, subject to anti-dilution adjustments, approximately 3.4 million shares of our common stock at an initial strike price of $213.76 per share. We received aggregate proceeds of $70 million from the sale of the 2026 Warrants to the counterparties. The proceeds from the issuance of the 2026 Warrants were recorded as an increase to Additional paid-in capital on our Balance Sheet asstock. As of March 31, 2021.
Taken together,2022, the strike prices of the 2026 Convertible Note Hedges and the 2026 Warrants are generally expectedwere subject to reduce the potential dilutionadjustment to our common stock (or, in the event the conversion of the 2026 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 2026 Convertible Notesapproximately $169.14 and to effectively increase the overall conversion price to the Company from $171.01 per share to $213.76 per share. The 2026 Warrants will expire in ratable portions on a series of expiration dates commencing on April 15, 2026.
The 2026 Convertible Notes, the$211.43, respectively, and no 2026 Convertible Note Hedges and the 2026 Warrants are transactions that are separate from each other. Holders of any such instrument have no rights with respect to the other instruments. As of March 31, 2021, 0 2026 Convertible Notes or 2026 Warrants have been exercised.
Security and Guarantees
Amounts borrowed under the Corporate Credit Facility and the 2025 Notes, as well as obligations with respect to letters of credit issued pursuant to the Corporate Credit Facility, are secured by a perfected first priority security interest in substantially all of the assets of the borrowers under, and guarantors of, that facility (which include MVWC and certain of our direct and indirect, existing and future, domestic subsidiaries, excluding certain bankruptcy remote special purpose subsidiaries), in each case including inventory, subject to certain exceptions. In addition, the Corporate Credit Facility, the 2026 Convertible Notes, the 2025 Notes, the 20262028 Notes, and the 20282029 Notes are guaranteed by MVWC and certain of our direct and indirect, existing and future, domestic subsidiaries, excluding bankruptcy remote special purpose subsidiaries.subsidiaries.
29Non-Interest Bearing Note Payable

During the first quarter of 2022, we issued a non-interest bearing note payable in connection with the acquisition of vacation ownership units located in Bali, Indonesia. See Footnote 3 “Acquisitions” for additional information on this transaction.

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14.SHAREHOLDERS’ EQUITY
Marriott Vacations Worldwide has 100,000,000 authorized shares of common stock, par value of $0.01 per share. At March 31, 2021,2022, there were 75,454,90675,721,548 shares of Marriott Vacations Worldwide common stock issued, of which 41,272,62841,750,172 shares were outstanding and 34,182,27833,971,376 shares were held as treasury stock. At December 31, 2020,2021, there were 75,279,06175,519,049 shares of Marriott Vacations Worldwide common stock issued, of which 41,094,24842,283,378 shares were outstanding and 34,184,81333,235,671 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, NaNnone of which were issued or outstanding as of March 31, 20212022 or December 31, 2020.2021.
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Share Repurchase Program
During the third quarter of 2021, 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. Share repurchases may be made through open market purchases, privately negotiated transactions, block transactions, tender offers, or otherwise. The specific timing, amount and other terms of the repurchases will depend on market conditions, corporate and regulatory requirements, contractual restrictions, and other factors. Acquired shares of our common stock are held as treasury shares carried at cost in our Financial Statements. In connection with the repurchase program, we are authorized to adopt one or more plans pursuant to the provisions of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.
During the first quarter of 2022, 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.
As of March 31, 2022, $353 million remained available for repurchase under the share repurchase program approved by the Board of Directors. The authorization for the current share repurchase program may be suspended, terminated, increased or decreased by our Board of Directors at any time without prior notice.
The following table summarizes share repurchase activity under our share repurchase programs:
($ 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 quarter of 2022764,824 119 $156.50 
As of March 31, 202218,446,219 $1,537 $83.34 
Dividends
DueWe declared cash dividends to holders of common stock during the impact of the COVID-19 pandemic, we temporarily suspended cash dividends.quarter ended March 31, 2022 as follows. Any future dividend payments will be subject to both the restrictions imposed under the Waiver and other 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
Noncontrolling Interests - Property Owners’ Associations
We consolidate certain property owners’ associations. Noncontrolling interests representsrepresent the portion of the property owners’ associations related to individual or third-party vacation ownership interest owners. Noncontrolling interests of $29 million and $31$10 million as of both March 31, 20212022 and December 31, 2020, respectively,2021 are included on our Balance Sheets as a component of equity.
15.SHARE-BASED COMPENSATION
We maintain the Marriott Vacations Worldwide Corporation 2020 Equity Incentive Plan (the “MVW Equity Plan”), for the benefit of our officers, directors, and employees. Under the MVW Equity Plan, we are authorized to award: (1) restricted stock units (“RSUs”) of our common stock, (2) stock appreciation rights (“SARs”) relating to our common stock, and (3) stock options to purchase our common stock. A total of 1.8 million shares are authorized for issuance pursuant to grants under the MVW Equity Plan. As of March 31, 2021,2022, approximately 1.51.0 million shares were available for grants under the MVW Equity Plan.
The following table details our share-based compensation expense related to award grants to our officers, directors, and employees:
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020($ in millions)March 31, 2022March 31, 2021
Service-based RSUsService-based RSUs$$Service-based RSUs$$
Performance-based RSUsPerformance-based RSUs(2)Performance-based RSUs— 
ILG Acquisition Converted RSUs
SARsSARsSARs
$$$$
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The following table details our deferred compensation costs related to unvested awards:
($ in millions)($ in millions)At March 31, 2021At December 31, 2020($ in millions)At March 31, 2022At December 31, 2021
Service-based RSUsService-based RSUs$48 $27 Service-based RSUs$51 $33 
Performance-based RSUsPerformance-based RSUsPerformance-based RSUs10 — 
52 33 61 33 
SARsSARsSARs
$61 $34 $66 $35 
Restricted Stock Units
We granted 161,392165,392 service-based RSUs, which are subject to time-based vesting conditions, with a weighted average grant-date fair value of $169.17,$153.25, to our employees and non-employee directors during the first quarter of 2021.
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2022, we also granted performance-based RSUs, which are subject to performance-based vesting conditions, to members of management. A maximum of 135,012 RSUs may be earned under the performance-based RSU awards granted during the first quarter of 2022.
Stock Appreciation Rights
We granted 127,85777,037 SARs, with a weighted average grant-date fair value of $70.66$59.68 and a weighted average exercise price of $173.88,$159.27, to members of management during the first quarter of 2021.2022. 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, as we have insufficient historical information to provide a basis for estimating average expected life. The risk-free interest rate was calculated based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. The dividend yield assumption listed below is based on the expectation of future payouts.
The following table outlines the assumptions used to estimate the fair value of grants during the first quarter of 2021:2022:
Expected volatility48.35%42.86%
Dividend yield1.48%1.53%
Risk-free rate0.97%1.77%
Expected term (in years)6.25
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 funding for us and transfer the economic risks and substantially all the benefits of the consumer loans we originate to third parties. 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 VIEs. We continue to service the vacation ownership notes receivable, transfer all proceeds collected to these special purpose entities, and retain rights to receive benefits that are potentially significant to the entities. Accordingly, we concluded that we are the entities’ primary beneficiary and, therefore, consolidate them. There is no noncontrolling interest balance related to these entities and the creditors of these entities do not have general recourse to us.
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The following table shows consolidated assets, which are collateral for the obligations of these VIEs, and consolidated liabilities included on our Balance Sheet at March 31, 2021:2022:
($ in millions)Vacation Ownership
Notes Receivable
Securitizations
Warehouse
Credit Facility
Total
Consolidated Assets
Vacation ownership notes receivable, net of reserves$1,338 $$1,338 
Interest receivable10 10 
Restricted cash73 73 
Total$1,421 $$1,421 
Consolidated Liabilities
Interest payable$$$
Securitized Debt1,446 1,446 
Total$1,447 $$1,447 
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($ in millions)Vacation Ownership
Notes Receivable
Securitizations
Warehouse
Credit Facility
Total
Consolidated Assets
Vacation ownership notes receivable, net of reserves$1,552 $109 $1,661 
Interest receivable11 12 
Restricted cash73 78 
Total$1,636 $115 $1,751 
Consolidated Liabilities
Interest payable$$$
Securitized Debt1,698 101 1,799 
Total$1,699 $102 $1,801 
The following table shows the interest income and expense recognized as a result of our involvement with these VIEs during the first quarter of 2021:2022:
($ in millions)($ in millions)Vacation Ownership
Notes Receivable
Securitizations
Warehouse
Credit Facility
Total($ in millions)Vacation Ownership
Notes Receivable
Securitizations
Warehouse
Credit Facility
Total
Interest incomeInterest income$48 $$48 Interest income$57 $$59 
Interest expense to investorsInterest expense to investors$11 $$11 Interest expense to investors$10 $— $10 
Debt issuance cost amortizationDebt issuance cost amortization$$$Debt issuance cost amortization$$— $
The following table shows cash flows between us and the vacation ownership notes receivable securitization VIEs:
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020($ in millions)March 31, 2022March 31, 2021
Cash InflowsCash InflowsCash Inflows
Principal receiptsPrincipal receipts$130 $121 Principal receipts$139 $130 
Interest receiptsInterest receipts50 56 Interest receipts58 50 
Reserve release(1)
Reserve release(1)
57 — 
TotalTotal180 177 Total254 180 
Cash OutflowsCash OutflowsCash Outflows
Principal to investorsPrincipal to investors(129)(129)Principal to investors(155)(129)
Voluntary repurchases of defaulted vacation ownership notes receivableVoluntary repurchases of defaulted vacation ownership notes receivable(30)(15)Voluntary repurchases of defaulted vacation ownership notes receivable(23)(30)
Interest to investorsInterest to investors(11)(13)Interest to investors(11)(11)
TotalTotal(170)(157)Total(189)(170)
Net Cash FlowsNet Cash Flows$10 $20 Net Cash Flows$65 $10 
_________________________
(1)Relates to the release of funds when MVW 2021-2 LLC purchased the remaining vacation ownership notes receivable that were securitized during the fourth quarter of 2021.
Under the terms of our vacation ownership notes receivable securitizations, we have the right to substitute loans for, or repurchase, defaulted loans at our option, subject to certain limitations. Our maximum exposure to potential loss relating to the special purpose entities that purchase, sell and own these vacation ownership notes receivable is the overcollateralization amount (the difference between the loan collateral balance and the balance of the outstanding vacation ownership notes receivable), plus cash reserves and any residual interest in future cash flows from collateral.
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The following table shows cash flows between us and the Warehouse Credit Facility VIE:
Three Months Ended
($ in millions)March 31, 2021March 31, 2020
Cash Inflows
Proceeds from vacation ownership notes receivable securitizations$$202 
Principal receipts11 
Interest receipts
Total217 
Cash Outflows
Principal to investors(4)
Interest to investors(1)
Funding of restricted cash(1)
Total(6)
Net Cash Flows$$211 
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Three Months Ended
($ in millions)March 31, 2022March 31, 2021
Cash Inflows
Proceeds from vacation ownership notes receivable securitizations$102 $— 
Principal receipts— 
Interest receipts— 
Total107 — 
Cash Outflows
Funding of restricted cash(1)— 
Total(1)— 
Net Cash Flows$106 $— 
Other Variable Interest Entities
We have a commitment to purchase an operatinga property located in San Francisco, California, thatWaikiki, Hawaii, which we currently manage as Marriott Vacation Club Pulse, San Francisco. We expectassigned to acquire the operating property over time and as of March 31, 2021 are committed to make payments for the operating property as follows: $25 million in 2022 and $32 million in 2023. See Footnote 3 “Acquisitions and Dispositions” for information on the purchases that occurreda third party during the first quarters of 2021 and 2020. We are required to purchase the property from the third-party developer unless the developer has sold the property to another party. The property is held by a VIE for which we are not the primary beneficiary as we cannot prevent the VIE from selling the property to another party at a higher price.beneficiary. Accordingly, we have not consolidated the VIE. As of March 31, 2021, our Balance Sheet reflected $2 million in Accounts Receivable, including a note receivable of less than $1 million, and $10 million in Other assets for a deposit related to the future acquisition of a portion of this property. We believe that our maximum exposure to loss as a result of our involvement with this VIE is approximately $12 million as of March 31, 2021.
We have a commitment to purchase a property located in Waikiki, Hawaii, which was assigned to a third party during 2020. If we are unable to negotiate a capital efficient inventory arrangement, we are committed to purchase the property, in its then current form, for $98 million in 2021, unless it has been sold to another party. The property is held by a VIE for which we are not the primary beneficiary as we do not control the operations of the VIE. Accordingly, we have not consolidated the VIE. As of March 31, 2021,2022, our Balance Sheet reflected $1 million in Accounts Receivable, including a note receivable of less than $1 million. We believe that our maximum exposure to loss as a result of our involvement with this VIE is approximately $1 million as of March 31, 2021.2022. Subsequent to the end of the first quarter of 2022, we extended a loan to the VIE for $47 million and amended the terms of this commitment. As a result of the amended commitment, if we are unable to negotiate a capital efficient inventory arrangement under which a third party will purchase 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 on the part of MVW.
Deferred Compensation Plan
We consolidate the liabilities of the Marriott Vacations Worldwide Deferred Compensation Plan and the related assets, which consist of the COLI policies held in the rabbi trust. The rabbi trust is considered a VIE. We are considered the primary beneficiary of the rabbi trust because we direct the activities of the trust and are the beneficiary of the trust. At March 31, 2021,2022, the value of the assets held in the rabbi trust was $56$74 million, which is included in the Other line within assets on our Balance Sheets.
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 Company for purposes of allocating resources and assessing performance. We operate in 2 operating and reportable business segments:
Vacation Ownership includes a diverse portfolio of resorts that includes 7 vacation ownershipsome of the world’s most iconic brands licensed under exclusive, long-term relationships with Marriott International and Hyatt Hotels Corporation.relationships. We are the exclusive worldwide developer, marketer, seller, and manager of vacation ownership and related products under the Marriott Vacation Club, Grand Residences by Marriott, Sheraton Vacation Club, Westin Vacation Club, and Hyatt Residence Club brands, as well as under Marriott Vacation Club Pulse, an extension to the Marriott Vacation Club brand. We are also the exclusive worldwide developer, marketer, and seller of vacation ownership and related products under The Ritz-Carlton Destination Club brand, we have the non-exclusive right to develop, market, and sell whole ownership residential products under The Ritz-Carlton Residences brand and we have a license to use the St. Regis brand for specified fractional ownership resorts.
Our Vacation Ownership segment generates most of its revenues from four4 primary sources: selling vacation ownership products; managing vacation ownership resorts, clubs, and owners’ associations; financing consumer purchases of vacation ownership products; and renting vacation ownership inventory.
Exchange & Third-Party Management includes exchange networks and membership programs, as well as provision of management ofservices to other resorts and lodging properties. We provide these services through a variety of brands including Interval International, Trading Places International (“TPI”), Vacation Resorts International (“VRI”), and Aqua-Aston. Exchange & Third-Party Management revenue generally is fee-based
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and derived from membership, exchange and rental transactions, property andowners’ association management, and other related products and services.
Our CODM evaluates the performance of our segments based primarily on the results of the segment without allocating corporate expenses or income taxes. We do not allocate corporate interest expense or indirect general and administrative expenses to our segments. We include interest income specific to segment activities within the appropriate segment. We allocate depreciation, other gains and losses, equity in earnings or losses from our joint ventures, and noncontrolling interest to each of our segments as appropriate. Corporate and other represents that portion of our results that are not allocable to our segments, including those relating to propertyconsolidated owners’ associations, consolidated under the voting interest
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model, as our CODM does not use this information to make operating segment resource allocations. Prior year segment information has been reclassified to conform to the current reportable segment presentation.
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 term loan 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 EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020($ in millions)March 31, 2022March 31, 2021
Vacation OwnershipVacation Ownership$661 $908 Vacation Ownership$956 $661 
Exchange & Third-Party ManagementExchange & Third-Party Management86 107 Exchange & Third-Party Management84 86 
Total segment revenuesTotal segment revenues747 1,015 Total segment revenues1,040 747 
Corporate and otherCorporate and other12 (5)Corporate and other12 12 
$759 $1,010 $1,052 $759 
Adjusted EBITDA and Reconciliation to Net Income or Loss Attributable to Common Shareholders
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020($ in millions)March 31, 2022March 31, 2021
Adjusted EBITDA Vacation OwnershipAdjusted EBITDA Vacation Ownership$68 $147 Adjusted EBITDA Vacation Ownership$199 $68 
Adjusted EBITDA Exchange & Third-Party ManagementAdjusted EBITDA Exchange & Third-Party Management41 41 Adjusted EBITDA Exchange & Third-Party Management43 41 
Reconciling items:Reconciling items:Reconciling items:
Corporate and otherCorporate and other(40)(50)Corporate and other(54)(40)
Interest expenseInterest expense(43)(33)Interest expense(27)(43)
Tax benefit11 58 
Tax (provision) benefitTax (provision) benefit(32)11 
Depreciation and amortizationDepreciation and amortization(41)(32)Depreciation and amortization(33)(41)
Share-based compensation expenseShare-based compensation expense(8)(4)Share-based compensation expense(8)(8)
Certain itemsCertain items(16)(233)Certain items(30)(16)
Net loss attributable to common shareholders$(28)$(106)
Net income (loss) attributable to common shareholdersNet income (loss) attributable to common shareholders$58 $(28)
Assets
($ in millions)($ in millions)At March 31, 2021At December 31, 2020($ in millions)At March 31, 2022At December 31, 2021
Vacation OwnershipVacation Ownership$7,004 $6,859 Vacation Ownership$7,946 $7,897 
Exchange & Third-Party ManagementExchange & Third-Party Management930 951 Exchange & Third-Party Management903 911 
Total segment assetsTotal segment assets7,934 7,810 Total segment assets8,849 8,808 
Corporate and otherCorporate and other1,253 1,088 Corporate and other654 805 
$9,187 $8,898 $9,503 $9,613 
We conduct business globally, and our operations outside the United States represented approximately 9 percent11% and 12 percent9% of our revenues, excluding cost reimbursements, for the three months ended March 31, 20212022 and March 31, 2020,2021, respectively.
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18.SUBSEQUENT EVENT
In April 2022, we disposed of the VRI and TPI after determining that these businesses did not meet our future growth strategy and operating model, for net proceeds of approximately $60 million. Both of these businesses are components of our Exchange and Third-Party Management segment.
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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
We make forward-looking statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Quarterly Report on Form 10-Q, based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include, among other things, the information concerning: our possible or assumed future results of operations; business strategies, such as our plans to continue to increase our focus on sales of vacation ownership products to first-time buyers;buyers and our expectations regarding resulting increases in financing propensity; financing plans; competitive position; potential growth opportunities; potential operating performance improvements, including the expectations that contract sales, resort management, and rental occupancies will continue to remain strong and/or improve throughout 2021;2022 and that interest income will increase in 2022; our expectations regarding availability of inventory for Getaways; the effects of competition; and the ongoing effect of the COVID-19 pandemic and actions we or others may take in response to the COVID-19 pandemic. 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.
The Company cautionsForward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. We caution you that these statements are not guarantees of future performance and are subject to numerous and evolving risks and uncertainties that we may not be able to predict or assess, such as: the continuing effects of the COVID-19 pandemic, including reducedvariations in demand for vacation ownership and exchange products and services, volatility in the international and national economy and credit markets, worker absenteeism, 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 the demand for travel and on consumer confidence; the impact of the availability and distribution of effective vaccines on the demand for travel and consumer confidence; the effectiveness of available vaccines against variants of the virus; the pace of recovery following the COVID-19 pandemic or as effective treatments or vaccines become widely available; competitive conditions; the availability of capital to finance growth; the effects of steps we have taken and may continue to take to reduce operating costs and/or enhance health and cleanliness protocolprotocols at our resorts due to the COVID-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 which may be discussed in our periodicfuture filings with the U.S. Securities and Exchange Commission (the “SEC”),. You should not put undue reliance on any forward-looking statements in this Report. We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of which could cause actual resultsnew information, future events, or otherwise. We do not have any intention or obligation to differ materially from those expressed or implied herein.update forward-looking statements after the date of this Quarterly Report on Form 10-Q, 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. We do not undertake any obligationAny such risks could cause our results to publicly update or revise anydiffer materially from those we express in forward-looking statement, whether as a result of new information, future events, or otherwise.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 future. In order to make this report easier to read, we refer to (i) our Interim Consolidated Financial Statements as our “Financial Statements,” (ii) our Interim Consolidated Statements of Income as our “Income Statements,” (iii) our Interim Consolidated Balance Sheets as our “Balance Sheets” and (iv) our Interim Consolidated Statements of Cash Flows as our “Cash Flows.” In addition, references throughout to numbered “Footnotes” refer to the numbered Notes to our Financial Statements that we include in the Financial Statements of this Quarterly Report on Form 10-Q.
Business Overview
We are a leading global vacation company that offers vacation ownership, exchange, rental, and resort and property management, along with related businesses, products and services. Our business operates in two reportable segments: Vacation Ownership and Exchange & Third-Party Management.
Our Vacation Ownership segment includes seven vacation ownershipa diverse portfolio of resorts that includes some of the world’s most iconic brands licensed under exclusive long-term relationships with Marriott International and Hyatt Hotels Corporation.relationships. We are the exclusive worldwide developer, marketer, seller and manager of vacation ownership and related products under the Marriott Vacation Club, Grand Residences by Marriott, Sheraton Vacation Club, Westin Vacation Club, and Hyatt Residence Club brands, as well as under Marriott Vacation Club Pulse, an extension to the Marriott Vacation Club brand. We are also the exclusive worldwide developer, marketer and seller of vacation ownership and related products under The Ritz-Carlton Destination Club brand, we have the non-exclusive right
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to develop, market and sell whole ownership residential products under The Ritz-Carlton Residences brand and we have a license to use the St. Regis brand for specified fractional ownership resorts.
Our Vacation Ownership segment generates most of its revenues from four primary sources: selling vacation ownership products; managing vacation ownership resorts, clubs and owners’ associations; financing consumer purchases of vacation ownership products; and renting vacation ownership inventory.
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Our Exchange & Third-Party Management segment includes exchange networks and membership programs, as well as provision of management ofservices to other resorts and lodging properties. We provideAs of the end of the first quarter of 2022, we provided these services through a variety of brands including Interval International, Trading Places International (“TPI”), Vacation Resorts International (“VRI”),VRI, TPI, 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. Subsequent to the end of the first quarter of 2022, we disposed of the VRI and TPI businesses. See Footnote 18 “Subsequent Event” to our Financial Statements for further information regarding this disposition.
Corporate and other represents that portion of our results that are not allocable to our segments, including those relating to consolidated property owners’ associations consolidated under the voting interest model (“Consolidated Property Owners’ Associations”).
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.
COVID-19 Pandemic Update
The COVID-19 pandemic has caused significant disruptions in international and U.S. economies and markets.markets, and has had an unprecedented impact on the travel and hospitality industries, as well as our Company. We discuss the impacts of the COVID-19 pandemic and its current and potential future implications inthroughout this report; however, the COVID-19 pandemic, and any recovery therefrom, is evolvingcontinues to evolve and itsfurther potential impactimpacts on our business in the future remainsremain uncertain.
Significant Accounting Policies Used in Describing Results of Operations
Sale of Vacation Ownership Products
We recognize revenues from the sale of vacation ownership products (“VOIs”) when control of the vacation ownership product is transferred to the customer and the transaction price is deemed collectible. Based upon the different terms of the contracts with the customer and business practices, control of the vacation ownership product is transferred to the customer at closing for Legacy-MVWMarriott-branded and Legacy-Welk transactions and upon expiration of the statutory rescission period for Legacy-ILGSheraton-,Westin-, and Hyatt-branded transactions. Sales of vacation ownership products may be made for cash or we may provide financing. In addition, we recognize settlement fees associated with the transfer of vacation ownership products and commission revenues from sales of vacation ownership products on behalf of third parties, which we refer to as “resales revenue.”
We also provide sales incentives to certain purchasers. These sales incentives typically include Marriott Bonvoy points, World of Hyatt points or an alternative sales incentive that we refer to as “plus points.” These plus points are redeemable for stays at our resorts or for use in other third-party offerings, generally up to two years from the date of issuance. Typically, sales incentives are only awarded if the sale is closed.
There may be timing differences between the date of the contract with the customer and when revenue is recognized. When comparing results year-over-year, this timing difference may generate significant variances, which we refer to as the impact of revenue reportability.
Finally, as more fully described in “Financing” below, we record the difference between the vacation ownership note receivable and the consideration to which we expect to be entitled (also known as a vacation ownership notes receivable reserve or a sales reserve) as a reduction of revenues from the sale of vacation ownership products at the time we recognize revenues from a sale.
We report, on a supplemental basis, contract sales for our Vacation Ownership segment. Contract sales consist of the total amount of vacation ownership product sales under contract 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, 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 income statements due to the requirements for revenue
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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), other non-capitalizable costs associated with the overall project development process and settlement expenses associated with the closing process. For each project, we expense real estate inventory costs in the same proportion as the revenue recognized. Consistent with the applicable accounting guidance, to the extent there is a change in the estimated sales revenues or inventory costs for the project in a period, a non-cash adjustment is recorded on our income statements to true-up costs in that period to those that would have been recorded historically if the revised estimates had been used. These true-ups, which we refer to as product cost true-up activity, can have a positive or negative impact on our income statements.
We refer to revenues from the sale of vacation ownership products less the cost of vacation ownership products and marketing and sales costs as Development profit. Development profit margin is calculated by dividing Development profit by revenues from the saleSale of vacation ownership products. We previously used the term Development margin to refer to revenues from the Sale of vacation ownership products less the Cost of vacation ownership products and marketing and sales costs.
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Beginning in the first quarter of 2021, we now refer to this financial measure as Development profit. While the calculation remains unchanged, we believe the revised term better depicts the financial results being presented.
Management and Exchange
Our management and exchange revenues include revenues generated from fees we earn for managing each of our vacation ownership resorts, providing property management, property owners’ association management and related services to third-party vacation ownership resorts and fees we earn for providing rental services and related hotel, condominium resort, and property owners’ association management services to vacation property owners.
In addition, we earn revenue from ancillary offerings, including food and beverage outlets, golf courses and other retail and service outlets located at our Vacation Ownership resorts. We also receive annual membership fees, club dues and certain transaction-based fees from members, owners and other third parties.
Management and exchange expenses include costs to operate the food and beverage outlets and other ancillary operations and to provide overall customer support services, including reservations, and certain transaction-based expenses relating to external exchange service providers.
In our Vacation Ownership segment and Consolidated Property Owners’ Associations, we refer to these activities as “Resort Management and Other Services.”
Financing
We offer financing to qualified customers for the purchase of most types of our vacation ownership products. The average FICO score of customers who were U.S. citizens or residents who financed a vacation ownership purchase was as follows:
Three Months Ended
March 31, 2021March 31, 2020
Average FICO score732739
Three Months Ended
March 31, 2022March 31, 2021
Average FICO score736732
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. 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 the originatedour vacation ownership financing arrangements is earned on an accrual basis on the principal balance outstanding over the contractual life of the arrangement and is recorded as Financing revenues on our Income Statements. Financing revenues also include fees earned from servicing the existing vacation ownership notes receivable portfolio. Financing expenses include costs in support of the financing, servicing and securitization processes and changes in expected credit losses related to acquired vacation ownership notes receivable. The amount of interest income earned in a period depends on the amount of outstanding vacation ownership notes receivable, which for originated vacation ownership notes receivable, 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 financefinanced contracts originated in the period divided by contract sales volume of all contracts originated in the period. We do not include resales contract sales in the financing propensity calculation. Financing propensity was 46 percent50% in the first quarter of 20212022 and 57 percent46% in the first quarter of 2020;2021; the lowerhigher financing propensity in the first quarter of 20212022 is due to a higher percentage of sales during this period to existing owners,first-time buyers, who tend to have a lowerhigher financing propensity. Going forward, weWe expect to continue offering financing incentive programs in 2022. We also plan to shift back to anthe increased focus we placed pre-pandemic on sales to first-time buyers, who are more likely to finance their purchases, which should further increase propensity and increase interest income as new originations of vacation ownership notes receivable outpace the decline in principal of existing vacation ownership notes receivable.
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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.
In the event of a default, we generally have the right to foreclose on or revoke the underlying VOI. We return VOIs that we reacquire through foreclosure or revocation back to inventory. As discussed above, for originated vacation ownership notes receivable, we record a reserve at the time of sale and classify the reserve as a reduction to revenues from the sale of vacation ownership products on our Income Statements. Revisions to estimates of variable consideration from the sale of vacation ownership products impact the reserve on originated vacation ownership notes receivable and can increase or decrease revenues. In contrast, for acquired vacation ownership notes receivable, we record changes to the reserve, net of collateral value, as an adjustment 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:
Three Months Ended
March 31, 2021March 31, 2020
Historical default rates1.3%1.3%
Three Months Ended
March 31, 2022March 31, 2021
Historical default rates1.1%1.3%
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the performance of our notes receivable portfolio to pre-pandemic levels.
Financing expenses include consumer financing interest expense, which represents interest expense associated with the securitization of our vacation ownership notes receivable, costs to support the financing, servicing and securitization processes and changes in expected credit losses related to acquired vacation ownership notes receivable. We distinguish consumer financing interest expense from all other interest expense because the debt associated with the consumer financing interest expense is secured by vacation ownership notes receivable that have been sold to bankruptcy remote special purpose entities and is generally non-recourse to us.
Rental
In our Vacation Ownership segment, we operate a rental business to provide owner flexibility and to help mitigate carrying costs associated with our inventory. We generate revenue from rentals of inventory that we hold for sale as interests in our vacation ownership programs, inventory that we control because our owners have elected alternative usage options permitted under our vacation ownership programs and rentals of owned-hotel properties. We also recognize rental revenue from the utilization of plus points under our points-based Marriott Vacation Club Destinations programproducts when the points are redeemed for rental stays at one of our resorts or in other third-party offerings.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 through VRI, TPI, and Aqua-Aston Hospitality.properties. We also offer vacation rental offers knowsopportunities known as Getaways to members of the Interval International Networknetwork and certain other membership programs. The offering of Getaways allowsallow 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 typicallyas a result fromof seasonal oversupply or underutilized space in the applicable exchange program, as well asprogram. We also source resort accommodations specifically sourced for the Getaways program.
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Rental expenses include:
Maintenance and other fees on unsold inventory;
Costs to provide alternative usage options, including Marriott Bonvoy points, World of Hyatt points and offerings available as part of third-party offerings, for owners who elect to exchange their inventory;
Marketing costs and direct operating and related expenses in connection with the rental business (such as housekeeping, labor costs, credit card expenses and reservation services); and
Costs to secure resort accommodations for use in Getaways.
Rental metrics, including the average daily transient rate or the number of transient keys rented, may not be comparable between periods given fluctuation in available occupancy by location, unit size (such as two bedroom, one bedroom or studio unit), owner use and exchange behavior. In addition, rental metrics may not correlate with rental revenues due to the requirement to report certain rental revenues net of rental expenses in accordance with ASC 978 (as discussed above). Further, as our ability to rent certain luxury and other inventory is often limited on a site-by-site basis, rental operations may not generate adequate rental revenues to cover associated costs. Our Vacation Ownership segment units are either “full villas” or “lock-off” villas. Lock-off villas are units that can be separated into a master 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 typically represent two keys and non-lock-off villas represent one key. The “transient keys” metric represents the blended mix of inventory available for rent and includes all of the combined inventory configurations available in our resort system.
Cost Reimbursements
Cost reimbursements include direct and indirect costs that are reimbursed to us by customers under management contracts. All costs reimbursed to us by customers, with the exception of taxes assessed by a governmental authority, reimbursed to us by customers are reported on a gross basis. We recognize cost reimbursements when we incur the related reimbursable costs. Cost reimbursements consist of actual expenses with no added margin.
Interest Expense
Interest expense consists of all interest expense other than consumer financing interest expense, which is included within Financing expense.
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Transaction and Integration Costs
Transaction Costs
Transactionand integration costs represent costs related to the acquisitions of ILG and Welk Acquisitions, primarily for financial advisory, legal, and other professional service fees, as well as certain tax related accruals. Transaction and integration costs also include charges for employee retention, severance and other termination related benefits, fees paid to change managementchange-management consultants and technology-related costs related to the integration and transformation of ILG and Welk.
Other Items
We measure operating performance using the following key metrics:
Contract sales from the sale of vacation ownership products;
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 sale of vacation ownership products for non-consolidated joint venturesventures;
Development profit margin;
Volume per guest (“VPG”), which we calculate by dividing consolidated vacation ownership contract sales, excluding fractional sales, telesales, resales, joint venture sales 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 (which we refer to as “tour flow”).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;
Total active members, which is the number of Interval International network active members at the end of the applicable period; and
Average revenue per member, which we calculate by dividing membership fee revenue, transaction 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.

NM = Not meaningful.
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Consolidated Results
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020($ in millions)March 31, 2022March 31, 2021
REVENUESREVENUESREVENUES
Sale of vacation ownership productsSale of vacation ownership products$163 $258 Sale of vacation ownership products$310 $163 
Management and exchangeManagement and exchange193 227 Management and exchange222 193 
RentalRental89 135 Rental133 89 
FinancingFinancing59 72 Financing71 59 
Cost reimbursementsCost reimbursements255 318 Cost reimbursements316 255 
TOTAL REVENUESTOTAL REVENUES759 1,010 TOTAL REVENUES1,052 759 
EXPENSESEXPENSESEXPENSES
Cost of vacation ownership productsCost of vacation ownership products40 60 Cost of vacation ownership products60 40 
Marketing and salesMarketing and sales109 170 Marketing and sales182 109 
Management and exchangeManagement and exchange117 151 Management and exchange127 117 
RentalRental82 98 Rental81 82 
FinancingFinancing21 38 Financing21 21 
General and administrativeGeneral and administrative46 70 General and administrative61 46 
Depreciation and amortizationDepreciation and amortization41 32 Depreciation and amortization33 41 
Litigation chargesLitigation chargesLitigation charges
Royalty feeRoyalty fee25 26 Royalty fee27 25 
Impairment— 95 
Cost reimbursementsCost reimbursements255 318 Cost reimbursements316 255 
TOTAL EXPENSESTOTAL EXPENSES739 1,060 TOTAL EXPENSES911 739 
Gains (losses) and other income (expense), net(56)
Gains and other income, netGains and other income, net
Interest expenseInterest expense(43)(33)Interest expense(27)(43)
Transaction costs(19)(24)
Transaction and integration costsTransaction and integration costs(28)(19)
LOSS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS(36)(163)
Benefit from income taxes11 58 
NET LOSS(25)(105)
INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTSINCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS90 (36)
(Provision for) benefit from income taxes(Provision for) benefit from income taxes(32)11 
NET INCOME (LOSS)NET INCOME (LOSS)58 (25)
Net income attributable to noncontrolling interestsNet income attributable to noncontrolling interests(3)(1)Net income attributable to noncontrolling interests— (3)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS$(28)$(106)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERSNET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS$58 $(28)
Operating Statistics
20212022 First Quarter
Three Months EndedThree Months Ended
(Contract sales $ in millions)(Contract sales $ in millions)March 31, 2021March 31, 2020Change% Change(Contract sales $ in millions)March 31, 2022March 31, 2021Change% Change
Vacation OwnershipVacation OwnershipVacation Ownership
Total contract salesTotal contract sales$232 $315 $(83)(26%)Total contract sales$403 $232 $171 74%
Consolidated contract salesConsolidated contract sales$226 $306 $(80)(26%)Consolidated contract sales$394 $226 $168 75%
Joint venture contract salesJoint venture contract sales$$$(3)(30%)Joint venture contract sales$$$45%
VPGVPG$4,706 $4,644 $62 1%
Exchange & Third-Party ManagementExchange & Third-Party ManagementExchange & Third-Party Management
Total active members at end of period (000's)(1)
Total active members at end of period (000's)(1)
1,479 1,636 (157)(10%)
Total active members at end of period (000's)(1)
1,606 1,479 127 9%
Average revenue per member(1)
Average revenue per member(1)
$47.13 $41.37 $5.76 14%
Average revenue per member(1)
$44.33 $47.13 $(2.80)(6%)
_______________
(1)Only includes members of the Interval International exchange network.
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Revenues
20212022 First Quarter
The following table presents our revenues for the first quarter of 2021 compared to the first quarter of 2020.
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020Change% Change($ in millions)March 31, 2022March 31, 2021Change% Change
Vacation OwnershipVacation Ownership$661 $908 $(247)(27%)Vacation Ownership$956 $661 $295 45%
Exchange & Third-Party ManagementExchange & Third-Party Management86 107 (21)(20%)Exchange & Third-Party Management84 86 (2)(1%)
Total Segment RevenuesTotal Segment Revenues747 1,015 (268)(26%)Total Segment Revenues1,040 747 293 39%
Consolidated Property Owners’ AssociationsConsolidated Property Owners’ Associations12 (5)17 382%Consolidated Property Owners’ Associations12 12 — (6%)
Total RevenuesTotal Revenues$759 $1,010 $(251)(25%)Total Revenues$1,052 $759 $293 39%
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 associated with term loan securitization transactions), income taxes, depreciation and amortization. Adjusted EBITDA reflects additional adjustments for certain items described below, and excludes share-based compensation expense to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted. For purposes of our EBITDA and Adjusted EBITDA calculations, we do not adjust for consumer financing interest expense associated with term loan securitization transactions because we consider it to be an operating expense of our business. We consider Adjusted EBITDA to be an indicator of operating performance, which we use to measure our ability to service debt, fund capital expenditures and expand our business. We also use Adjusted EBITDA, as do analysts, lenders, investors and others, because this measure excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company’s capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. EBITDA and Adjusted EBITDA also exclude depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. We believe Adjusted EBITDA is useful as an indicator of operating performance because it allows for period-over-period comparisons of our on-going core operations before the impact of the excluded items. Adjusted EBITDA also facilitates comparison by us, analysts, investors, and others, of results from our on-going core operations before the impact of these items with results from other vacation companies.
EBITDA and Adjusted EBITDA have limitations and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. In addition, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do or may not calculate them at all, limiting their usefulness as comparative measures. The table below shows our EBITDA and Adjusted EBITDA calculation and reconciles these measures withNet lossincome (loss) attributable to common shareholders, which is the most directly comparable GAAP financial measure.
20212022 First Quarter
Three Months EndedChangeThree Months EndedChange
($ in millions)($ in millions)March 31, 2021March 31, 2020% Change($ in millions)March 31, 2022March 31, 2021% Change
Net loss attributable to common shareholders$(28)$(106)$78 73%
Net income (loss) attributable to common shareholdersNet income (loss) attributable to common shareholders$58 $(28)$86 NM
Interest expenseInterest expense43 33 10 29%Interest expense27 43 (16)(37%)
Benefit from income taxes(11)(58)47 81%
Provision for (benefit from) income taxesProvision for (benefit from) income taxes32 (11)43 NM
Depreciation and amortizationDepreciation and amortization41 32 30%Depreciation and amortization33 41 (8)(21%)
EBITDAEBITDA45 (99)144 146%EBITDA150 45 105 NM
Share-based compensation expenseShare-based compensation expense135%Share-based compensation expense— —%
Certain itemsCertain items16 233 (217)(94%)Certain items30 16 14 97%
Adjusted EBITDAAdjusted EBITDA$69 $138 $(69)(50%)Adjusted EBITDA$188 $69 $119 NM
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Certain items for the first quarter of 2022 consisted of $28 million of transaction and integration costs (including $25 million of ILG Acquisition and integration related costs and $3 million of Welk Acquisition and integration related costs), $3 million of purchase accounting adjustments, and $3 million of litigation charges, partially offset by $4 million of gains and other income, net (including $3 million of business interruption insurance proceeds received during the quarter and $1 million of foreign currency translation gains).
Certain items for the first quarter of 2021 consisted of $19 million of transaction costs (including $17 million of ILG acquisitionAcquisition and integration related costs and $2 million of Welk acquisitionAcquisition and integration related costs) and $3 million of litigation charges, partially offset by $4 million of foreign currency translation gains, and $2 million of miscellaneous gains and other income.
Segment Adjusted EBITDA
2022 First Quarter
Three Months Ended
($ in millions)March 31, 2022March 31, 2021Change% Change
Vacation Ownership$199 $68 $131 NM
Exchange & Third-Party Management43 41 4%
Segment adjusted EBITDA242 109 133 NM
General and administrative(54)(40)(14)(35%)
Consolidated property owners’ associations— — — NM
Adjusted EBITDA$188 $69 $119 NM
Vacation Ownership
2022 First Quarter
Three Months Ended
($ in millions)March 31, 2022March 31, 2021Change% Change
Segment adjusted EBITDA$199 $68 $131 NM
Depreciation and amortization(22)(19)(3)(14%)
Share-based compensation expense(1)(1)— (22%)
Certain items(3)(4)17%
Segment financial results$173 $44 $129 NM
Certain items in the Vacation Ownership segment for the first quarter of 20202022 consisted of $95$3 million of asset impairmentlitigation charges $56 million of losses and other expense, $54 million of other charges, $24 million of transaction costs, $2$3 million of purchase priceaccounting adjustments, and $2offset by $3 million of litigation charges.
The $54 million ofgains and other charges included $37 millionincome, net related to a net sales reserve adjustment due primarily tobusiness interruption insurance proceeds received during the impact of the COVID-19 pandemic, $11 million related to an accrual for certain health and welfare costs for furloughed associates, and $6 million related to VAT charges.
Segment Adjusted EBITDA
2021 First Quarter
Three Months Ended
($ in millions)March 31, 2021March 31, 2020Change% Change
Vacation Ownership$68 $147 $(79)(54%)
Exchange & Third-Party Management41 41 — 1%
Segment adjusted EBITDA109 188 (79)(42%)
General and administrative(40)(51)11 21%
Consolidated property owners’ associations— (1)(116%)
Adjusted EBITDA$69 $138 $(69)(50%)
The following tables present Adjusted EBITDA for our reportable segments reconciled to segment financial results.
Vacation Ownership
2021 First Quarter
Three Months Ended
($ in millions)March 31, 2021March 31, 2020Change% Change
Segment adjusted EBITDA$68 $147 $(79)(54%)
Depreciation and amortization(19)(21)7%
Share-based compensation expense(1)(1)— (50%)
Certain items(4)(47)43 92%
Segment financial results$44 $78 $(34)(45%)
quarter.
Certain items in the Vacation Ownership segment for the first quarter of 2021 consisted of $3 million of litigation charges and $1 million of restructuring costs.
Certain items in the Vacation Ownership segment for the first quarter of 2020 consisted of $37 million related to a net sales reserve adjustment due primarily to the impact of the COVID-19 pandemic, $4 million of asset impairment charges, $2 million of purchase accounting adjustments, $2 million of litigation charges, and $3 million of acquisition costs, partially offset by $1 million of gains and other income.
Exchange & Third-Party Management
2022 First Quarter
Three Months Ended
($ in millions)March 31, 2022March 31, 2021Change% Change
Segment adjusted EBITDA$43 $41 $4%
Depreciation and amortization(9)(20)11 56%
Share-based compensation expense(1)— (1)(40%)
Certain items— — — NM
Segment financial results$33 $21 $12 59%
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Exchange & Third-Party Management
2021 First Quarter
Three Months Ended
($ in millions)March 31, 2021March 31, 2020Change% Change
Segment adjusted EBITDA$41 $41 $— 1%
Depreciation and amortization(20)(9)(11)(122%)
Share-based compensation expense— (1)26%
Certain items— (90)90 100%
Segment financial results$21 $(59)$80 136%
Certain items in the Exchange & Third-Party Management segment for the first quarter of 2020 consisted primarily of $91 million of impairment charges related to Goodwill and certain trademarks resulting from the impact of the COVID-19 pandemic.
Business Segments
Our business is grouped into two reportable business segments: Vacation Ownership and Exchange & Third-Party Management. See Footnote 17 “Business Segments” to our Financial Statements for further information on our segments.
Vacation Ownership
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020($ in millions)March 31, 2022March 31, 2021
REVENUESREVENUESREVENUES
Sale of vacation ownership productsSale of vacation ownership products$163 $258 Sale of vacation ownership products$310 $163 
Resort management and other servicesResort management and other services94 112 Resort management and other services126 94 
RentalRental77 122 Rental122 77 
FinancingFinancing59 71 Financing71 59 
Cost reimbursementsCost reimbursements268 345 Cost reimbursements327 268 
TOTAL REVENUESTOTAL REVENUES661 908 TOTAL REVENUES956 661 
EXPENSESEXPENSESEXPENSES
Cost of vacation ownership productsCost of vacation ownership products40 60 Cost of vacation ownership products60 40 
Marketing and salesMarketing and sales109 170 Marketing and sales182 109 
Resort management and other servicesResort management and other services35 56 Resort management and other services54 35 
RentalRental96 107 Rental90 96 
FinancingFinancing21 37 Financing21 21 
Depreciation and amortizationDepreciation and amortization19 21 Depreciation and amortization22 19 
Litigation chargesLitigation chargesLitigation charges
RestructuringRestructuring— Restructuring— 
Royalty feeRoyalty fee25 26 Royalty fee27 25 
Impairment— 
Cost reimbursementsCost reimbursements268 345 Cost reimbursements327 268 
TOTAL EXPENSESTOTAL EXPENSES617 828 TOTAL EXPENSES786 617 
Gains and other income, netGains and other income, net— Gains and other income, net— 
Transaction costs— (3)
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERSSEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS$44 $78 SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS$173 $44 
Contract Sales
2022 First Quarter
Three Months Ended
($ in millions)March 31, 2022March 31, 2021Change% Change
Total consolidated contract sales$394 $226 $168 75%
Joint venture contract sales45%
Total contract sales$403 $232 $171 74%
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Contract Sales
2021 First Quarter
Three Months Ended
($ in millions)March 31, 2021March 31, 2020Change% Change
Total consolidated contract sales$226 $306 $(80)(26%)
Joint venture contract sales(3)(30%)
Total contract sales$232 $315 $(83)(26%)
Sale of Vacation Ownership Products
20212022 First Quarter
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020Change% Change($ in millions)March 31, 2022March 31, 2021Change% Change
Total contract salesTotal contract sales$232 $315 $(83)(26%)Total contract sales$403 $232 $171 74%
Less resales contract sales(5)(7)
Less joint venture contract sales(6)(9)
Less: resales contract salesLess: resales contract sales(9)(5)(4)
Less: joint venture contract salesLess: joint venture contract sales(9)(6)(3)
Consolidated contract sales, net of resalesConsolidated contract sales, net of resales221 299 (78)Consolidated contract sales, net of resales385 221 164 74%
Plus:Plus:Plus:
Settlement revenueSettlement revenue(1)Settlement revenue
Resales revenueResales revenue(2)Resales revenue
Revenue recognition adjustments:Revenue recognition adjustments:Revenue recognition adjustments:
ReportabilityReportability(36)34 (70)Reportability(33)(36)
Sales reserveSales reserve(14)(71)57 Sales reserve(29)(14)(15)
Other(1)
Other(1)
(15)(14)(1)
Other(1)
(24)(15)(9)
Sale of vacation ownership productsSale of vacation ownership products$163 $258 $(95)(37%)Sale of vacation ownership products$310 $163 $147 90%
_______________
(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.
Sale of vacation ownership products decreased $95 million due primarily to $78 million of lower consolidated contract sales volume net of resales and a $70 million unfavorable change in revenue reportability, partially offset by $57 million of lower sales reserve activity.
LowerThe higher contract sales performance was primarily duereflects the continued ramp-up of the business subsequent to the ongoinginitial impact of the COVID-19 pandemic. However, withpandemic, as well as $24 million in contract sales relating to the reopeningWelk Acquisition, which we acquired in the second quarter of many of our2021. Higher settlement revenue, sales centers throughout 2020incentives issued, and so far in 2021, oursales reserve activity were driven primarily by the higher contract sales volumes have continued to improve on a sequential basis each quarter and we expect that improvement to continue throughas well as the remainder of 2021.Welk Acquisition.
Revenue reportability was negative
Development Profit
2022 First Quarter
Three Months Ended
($ in millions)March 31, 2022March 31, 2021Change% Change
Sale of vacation ownership products$310 $163 $147 90%
Cost of vacation ownership products(60)(40)(20)(52%)
Marketing and sales(182)(109)(73)(66%)
Development profit$68 $14 $54 NM
The increase in the first quarter of 2021. While we benefited from contract sales in the fourth quarter of 2020 being recognized as revenue in the first quarter of 2021, given the increasing sales volumes due to our recovery from the COVID-19 pandemic, we saw a higher shift of contract sales late in the first quarter of 2021 into the second quarter for revenue recognition. In contrast, revenue reportability was significantly positive in the first quarter of 2020. The first quarter of 2020 benefited from the contract sales from late in the fourth quarter of 2019 that were recognized as revenue in 2020. However, it was not impacted by an offsetting shift of revenues into the second quarter, given the low sales volumes in March 2020 from the impact of the COVID-19 pandemic.
The lower sales reserve recorded in the first quarter of 2021Development profit reflects the prior year increase made to the sales reserve to take into account higher expected default and delinquency activity$51 million as a result of higher contract sales volumes, in part from continued strong VPGs, and lower marketing and sales spending as a percentage of revenue and $9 million of favorable product cost, due to the COVID-19 pandemic.sale of lower cost inventory as well as favorable product cost true-up activity, partially offset by $5 million of higher sales reserve activity due to higher contract sales volumes and $1 million of unfavorable revenue reportability.
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Development Profit
2021 First Quarter
Three Months Ended
($ in millions)March 31, 2021March 31, 2020Change% Change
Sale of vacation ownership products$163 $258 $(95)(37%)
Cost of vacation ownership products(40)(60)20 34%
Marketing and sales(109)(170)61 36%
Development profit$14 $28 $(14)(50%)
Development profit decreased $14 million year-over-year. The change reflected $49 million of unfavorable revenue reportability compared to the first quarter of 2021, $7 million of lower product cost related mainly to more favorable product cost true-up activity in the prior year first quarter, and $3 million related to lower sales volumes as compared to the prior year period. These declines were partially offset by $25 million related to lower marketing and sales spending and $20 million related to lower sales reserve activity.
Resort Management and Other Services Revenues, Expenses and Profit
20212022 First Quarter
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020Change% Change($ in millions)March 31, 2022March 31, 2021Change% Change
Management fee revenuesManagement fee revenues$38 $38 $— (1%)Management fee revenues$42 $38 $12%
Ancillary revenuesAncillary revenues28 46 (18)(40%)Ancillary revenues54 28 26 93%
Other management and exchange revenuesOther management and exchange revenues28 28 — 5%Other management and exchange revenues30 28 7%
Resort management and other services revenuesResort management and other services revenues94 112 (18)(16%)Resort management and other services revenues126 94 32 34%
Resort management and other services expensesResort management and other services expenses(35)(56)21 37%Resort management and other services expenses(54)(35)(19)(54%)
Resort management and other services profitResort management and other services profit$59 $56 $5%Resort management and other services profit$72 $59 $13 22%
Resort management and other services profit marginResort management and other services profit margin63.0%50.5%12.5 ptsResort management and other services profit margin57.5%63.0%(5.5 pts)
Resort management and other services revenues reflected lowerreflects 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. While resortpandemic, higher management fees, and $6 million of revenues from the Welk Acquisition. Resort occupancies have continued to increase as an increasing number of resorts that were closed atsince the start of the COVID-19 pandemic have reopened, given the ongoing effectsinitial impact of the pandemic ancillary activity remains below prior year levels.as travel and tourism trends continue to recover.We expect this trend in business improvement to continue throughout 2022.
The increase in resort management and other services profit reflectedreflects the decrease in resort management and other services revenues partially offset by lowerhigher ancillary expenses as a result of the lowerhigher ancillary revenues mentioned above, as well as lower customer services expenses compared to the prior year period.above.
Rental Revenues, Expenses and Profit
20212022 First Quarter
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020Change% Change($ in millions)March 31, 2022March 31, 2021Change% Change
Rental revenuesRental revenues$77 $122 $(45)(37%)Rental revenues$122 $77 $45 58%
Rental expensesRental expenses(96)(107)11 10%Rental expenses(90)(96)6%
Rental profit$(19)$15 $(34)(227%)
Rental profit (loss)Rental profit (loss)$32 $(19)$51 NM
Rental profit marginRental profit marginNM12.4%Rental profit margin25.8%NM
Three Months EndedThree Months Ended
March 31, 2021March 31, 2020Change% ChangeMarch 31, 2022March 31, 2021Change% Change
Transient keys rented(1)
Transient keys rented(1)
385,745 533,583 (147,838)(28%)
Transient keys rented(1)
539,559 385,745 153,814 40%
Average transient key rateAverage transient key rate$230.32 $244.20 $(13.88)(6%)Average transient key rate$275.49 $230.32 $45.17 20%
Resort occupancyResort occupancy66.7%79.7%(13.0 pts)Resort occupancy87.6%66.7%20.9 pts
_________________________
(1)Transient keys rented exclude those occupied through the use of plus points and preview stays.
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The declineimprovement in rental profit resulted from a declinean increase in transient keys rented and a decline inhigher average transient rate due to the continued ramp-up of the business subsequent to the initial impact of the COVID-19 pandemic andas COVID-19-related restrictions continued to ease, as well as from higher plus point revenue. These increases were partially offset by higher inventory carrycarrying costs due(due to low sales volumes in the first quarter of 2020 and into the first quarter of 2021 as well asa result of the COVID-19 pandemic, the acquisition of new inventory in 2021, and higher utilization in 2022 of third-party vacation offerings for owners who elect to exchange the first quarterusage of 2021.their inventory).
As the majority of the governmental restrictions in response to the pandemic that caused rental activity to decline, such as travel restrictions and quarantine requirements, either werehave been lifted, by the end of the first quarter of 2021 or shortly thereafter, we expect rental occupancies to continue to increaseremain strong throughout 2021.the remainder of 2022. However, we do not expect this part of our business to fully recover to pre-pandemic levels in 2022 as a result of reduced rental inventory availability due to higher owner usage as well as higher inventory carry costs.
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Financing Revenues, Expenses and Profit
20212022 First Quarter
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020Change% Change($ in millions)March 31, 2022March 31, 2021Change% Change
Financing revenuesFinancing revenues59 71 (12)(17%)Financing revenues71 59 12 21%
Financing expensesFinancing expenses(8)(22)14 62%Financing expenses(9)(8)(1)(12%)
Consumer financing interest expenseConsumer financing interest expense(13)(15)17%Consumer financing interest expense(12)(13)5%
Financing profitFinancing profit$38 $34 $13%Financing profit$50 $38 $12 31%
Financing propensityFinancing propensity46%57%Financing propensity50.3%46.0%
Financing revenues decreasedincreased due primarily to a $391the Welk Acquisition, which contributed $10 million decrease in the average net vacation ownership notes receivable balance resulting fromfirst quarter of 2022. Excluding the impact of the Welk Acquisition, financing revenues increased $2 million due mainly to lower plus point financing incentive costs year-over-year. New loan originations are beginning to offset the continued pay-down of the existing vacation ownership notes receivable portfolio, without a corresponding increasesuch that interest income is relatively flat compared to the prior year quarter. As contract sales volumes continue to grow, we expect that the growth from new loan originations. Financing expenses decreased due to lower bad debt expense associated with acquiredoriginations will more than offset the normal decline in the existing vacation ownership notes receivable inportfolio due to loan payment activity, and cause interest income to increase. Financing expenses increased due to the current year quarterWelk Acquisition and increased foreclosure costs, offset partially by the benefittiming of synergy savings and lower salaries and wages associated with the furlough, reduced work week and workforce reduction programs implemented as a result of the COVID-19 pandemic. Lower consumer financing interest expense resulted from the continued pay-down of securitized debt balances.when lien fee income is recognized. The lowerhigher financing propensity inreflects a higher mix of sales to first-time buyers, who tend to have a higher financing propensity. As we move through 2022, we expect to continue to increase our focus on sales to first-time buyers, which should further increase financing propensity.
Royalty Fee
2022 First Quarter
Three Months Ended
($ in millions)March 31, 2022March 31, 2021Change% Change
Royalty fee$27 $25 $8%
Litigation Charges
2022 First Quarter
Three Months Ended
($ in millions)March 31, 2022March 31, 2021Change% Change
Litigation charges$$$— (5%)
During the first quarter of 2022 and the first quarter of 2021, is duethe litigation charges related primarily to a higher percentage of sales during this period to existing owners, who tend to have a lower financing propensity. Going forward, we expect to shift back to an increased focus on first-time buyers, which should increase propensity and increase interest income as new originations of vacation ownership notes receivable outpace the declineprojects in principal of existing vacation ownership notes receivable.Europe.
Royalty FeeGains and Other Income
20212022 First Quarter
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020Change% Change($ in millions)March 31, 2022March 31, 2021Change% Change
Royalty fee$25 $26 $(1)(5%)
Gains and other income, netGains and other income, net$$— $NM
Royalty fee expense declined inDuring the first quarter of 2021 as a result2022, we recorded $3 million of lower contract closings comparedgains and other income, net related to business interruption insurance proceeds received during the prior year quarter.
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Exchange & Third-Party Management
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020($ in millions)March 31, 2022March 31, 2021
REVENUESREVENUESREVENUES
Management and exchangeManagement and exchange$60 $72 Management and exchange$64 $60 
RentalRental12 13 Rental11 12 
Financing— 
Cost reimbursementsCost reimbursements14 21 Cost reimbursements14 
TOTAL REVENUESTOTAL REVENUES86 107 TOTAL REVENUES84 86 
EXPENSESEXPENSESEXPENSES
Management and exchangeManagement and exchange31 40 Management and exchange33 31 
Rental— 
Financing— 
Depreciation and amortizationDepreciation and amortization20 Depreciation and amortization20 
Impairment— 91 
Cost reimbursementsCost reimbursements14 21 Cost reimbursements14 
TOTAL EXPENSESTOTAL EXPENSES65 167 TOTAL EXPENSES51 65 
Gains and other income, net— 
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERSSEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS$21 $(59)SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS$33 $21 
Rental Revenues, Expenses and Profit
2022 First Quarter
Three Months Ended
($ in millions)March 31, 2022March 31, 2021Change% Change
Rental revenues$11 $12 $(1)(8%)
Rental expenses— — — NM
Rental profit$11 $12 $(1)(8%)
Rental profit margin100.0%100.0%— pts
Results reflect a 12% decline in Getaways transactions, offset partially by a 15% increase in average fees. The decline in transactions reflects increased owner usage which is putting pressure on the volume of member deposits available as inventory for Getaways as members choose to occupy their accommodations rather than exchange usage through Interval International, offset partially by pricing increases.
Management and Exchange Profit
20212022 First Quarter
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020Change% Change($ in millions)March 31, 2022March 31, 2021Change% Change
Management and exchange revenueManagement and exchange revenue$60 $72 $(12)(16%)Management and exchange revenue$64 $60 $7%
Management and exchange expenseManagement and exchange expense(31)(40)23%Management and exchange expense(33)(31)(2)(6%)
Management and exchange profitManagement and exchange profit$29 $32 $(3)(9%)Management and exchange profit$31 $29 $8%
Management and exchange profit marginManagement and exchange profit margin48.0%43.9%4.1 ptsManagement and exchange profit margin48.6%48.0%0.6 pts
The declineincrease in management and exchange revenue and profit reflected lowerreflects higher management fees and membership revenueat Aqua-Aston managed properties due primarily to the ongoingcontinued ramp-up of the business in Hawaii subsequent to the initial impact of the COVID-19 pandemic. In addition, Aqua-AstonFor Interval International, average revenue per member decreased 6% over the prior year comparable period. This decline was negatively impacted by travel restrictions that significantly impacted the majority of their propertiesdue in Hawaii. These declines were partially offset by higherpart to new, recently added affiliations for which we expect any exchange activity and average exchange transaction fees at Interval International, reflecting customers’ more recent desire to take time to ramp-up as many of the new members have already booked near term travel and pent up demand, as well as lower management and exchange expense which reflected lower costs associated with the furlough, reduced work week and workforce reduction programs, and lower marketing and sales, print and postage costs. Exchange transactions increased 17 percent year-over-year.plans.
Rental Revenues, ExpensesDepreciation and ProfitAmortization
20212022 First Quarter
Three Months Ended
($ in millions)March 31, 2021March 31, 2020Change% Change
Rental revenues$12 $13 $(1)(6%)
Rental expenses— (5)(100%)
Rental profit$12 $$43%
Rental profit margin100.0%65.8%34.2 pts
Three Months Ended
($ in millions)March 31, 2022March 31, 2021Change% Change
Depreciation and amortization$$20 $(11)(56%)
The increasedecrease in rental profit reflecteddepreciation expense relates to a 26 percent increase in Getaway program transactions reflecting customers’ desire to travel and pent up demand and the benefit of cost savings initiatives. Latetrue-up made in the first quarter of 2021, we also introduced Getaway rentals of less than seven nights, providing members more opportunitiesprior year to use their membership in ways that better fit their lifestyle.accelerate depreciation on a technology asset.
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Depreciation and Amortization
2021 First Quarter
Three Months Ended
($ in millions)March 31, 2021March 31, 2020Change% Change
Depreciation and amortization$20 $$11 122%
Increase in depreciation expense relates to a true-up made to accelerate depreciation on a technology asset.
Corporate and Other
Corporate and Other consists of results that are not allocable to our segments, including company-wide general and administrative costs, corporate interest expense, transaction and integration costs, and benefit from income taxes. In addition, Corporate and Other includes the revenues and expenses from the Consolidated Property Owners’ Associations.
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020($ in millions)March 31, 2022March 31, 2021
REVENUESREVENUESREVENUES
Resort management and other servicesResort management and other services$39 $43 Resort management and other services$32 $39 
Cost reimbursementsCost reimbursements(27)(48)Cost reimbursements(20)(27)
TOTAL REVENUESTOTAL REVENUES12 (5)TOTAL REVENUES12 12 
EXPENSESEXPENSESEXPENSES
Resort management and other servicesResort management and other services51 55 Resort management and other services40 51 
RentalRental(14)(14)Rental(9)(14)
General and administrativeGeneral and administrative46 70 General and administrative61 46 
Depreciation and amortizationDepreciation and amortizationDepreciation and amortization
RestructuringRestructuring(1)— Restructuring— (1)
Cost reimbursementsCost reimbursements(27)(48)Cost reimbursements(20)(27)
TOTAL EXPENSESTOTAL EXPENSES57 65 TOTAL EXPENSES74 57 
Gains (losses) and other income (expense), net(58)
Gains and other income, netGains and other income, net
Interest expenseInterest expense(43)(33)Interest expense(27)(43)
Transaction costs(19)(21)
Transaction and integration costsTransaction and integration costs(28)(19)
FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTSFINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS(101)(182)FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS(116)(101)
Benefit from income taxes11 58 
(Provision for) benefit from income taxes(Provision for) benefit from income taxes(32)11 
Net income attributable to noncontrolling interestsNet income attributable to noncontrolling interests(3)(1)Net income attributable to noncontrolling interests— (3)
FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERSFINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS$(93)$(125)FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS$(148)$(93)
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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, which represents the portion related to individual or third-party VOI owners.
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020($ in millions)March 31, 2022March 31, 2021
REVENUESREVENUESREVENUES
Resort management and other servicesResort management and other services$39 $43 Resort management and other services$32 $39 
Cost reimbursementsCost reimbursements(27)(48)Cost reimbursements(20)(27)
TOTAL REVENUESTOTAL REVENUES12 (5)TOTAL REVENUES12 12 
EXPENSESEXPENSESEXPENSES
Resort management and other servicesResort management and other services51 55 Resort management and other services40 51 
RentalRental(14)(14)Rental(9)(14)
Cost reimbursementsCost reimbursements(27)(48)Cost reimbursements(20)(27)
TOTAL EXPENSESTOTAL EXPENSES10 (7)TOTAL EXPENSES11 10 
Gains and other income, netGains and other income, net— Gains and other income, net— 
FINANCIAL RESULTS BEFORE NONCONTROLLING INTERESTS
FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTSFINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS
Net income attributable to noncontrolling interestsNet income attributable to noncontrolling interests(3)(1)Net income attributable to noncontrolling interests— (3)
FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERSFINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS$$FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS$$
Pursuant to a change in control of certain consolidated property owners’ associations, we recorded a non-cash loss of less than $1 million, which is recorded in Gains (losses) and other income (expense), net on our Income Statement for the three months ended March 31, 2021. We continue to act as manager for these property owners’ associations pursuant to existing management contracts and retain membership interests via our ownership of vacation ownership interests.
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General and Administrative
20212022 First Quarter
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020Change% Change($ in millions)March 31, 2022March 31, 2021Change% Change
General and administrativeGeneral and administrative$46 $70 $(24)(35%)General and administrative$61 $46 $15 33%
For the first quarter of 2022, General and administrative expenses decreased $24 millionincreased due primarily to $25$11 million of savings relatedhigher salary costs due to synergy efforts and lower costs associated with the furlough, reduced work week and workforce reduction programs $6in the prior year, $3 million of lower net overall spending across the business on technology, travel, training and other costs that we have deferred duerelated to the COVID-19 pandemic,higher bonus expense, and a $2 million creditdecrease in credits related to incentives under the CARES Act, for companies to continue paying associates' benefit costs while they are not working, partially offset by $9$1 million in lower overall spending.
Restructuring
2022 First Quarter
Three Months Ended
($ in millions)March 31, 2022March 31, 2021Change% Change
Restructuring$— $(1)$(100%)
No restructuring costs were recorded for the first quarter of higher bonus expense.2022. During the first quarter of 2021, we reversed an accrual for $1 million associated with a restructuring plan that we adopted as a result of the COVID-19 pandemic.
Gains / Losses and Other Income / Expense
20212022 First Quarter
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020Change% Change($ in millions)March 31, 2022March 31, 2021Change% Change
Gains (losses) and other income (expense), net$$(58)$64 110%
Gains and other income, netGains and other income, net$$$(5)(74%)
We recorded $1 million and $6 million of foreign currency translation gains in the first quarter of 2022 and the first quarter of 2021, respectively.
Interest Expense
2022 First Quarter
Three Months Ended
($ in millions)March 31, 2022March 31, 2021Change% Change
Interest expense$(27)$(43)$16 37%
Interest expense decreased $16 million, including $13 million due to the early redemption of the 2026 Notes in 2021, $6 million due to the adoption of new accounting guidance related to our convertible debt (see Footnote 2 “Significant Accounting Policies and Recent Accounting Standards”), and $4 million due to the early redemption of a portion of the 2025 Notes, partially offset by $6 million due to the issuance of the 2029 Notes in 2021 and $1 million of higher interest related to a leased asset.
Transaction and Integration Costs
2022 First Quarter
Three Months Ended
($ in millions)March 31, 2022March 31, 2021Change% Change
Transaction and integration costs$(28)$(19)$(9)(49%)
In the first quarter of 2022, Transaction and integration costs included $25 million of ILG Acquisition and integration related costs, and $3 million of Welk Acquisition and integration related costs.
In the first quarter of 2021, we recorded a gain of $6 million driven mainly by foreign currency translation.
In the first quarter of 2020, we recorded a loss of $58 million, including $33 million for the true-up to an indemnification receivable from Marriott International as a result of the settlement of an indemnified liability with a taxing authority (the true-up to the offsetting accrual isTransaction and integration costs included in the Benefit from income taxes line) and $31 million related to foreign currency translation, offset partially by $6$17 million of other incomeILG Acquisition and integration related to an indemnification from Marriott International for VAT penaltiescosts, and interest.$2 million of Welk Acquisition and integration related costs.
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Interest ExpenseIncome Tax
20212022 First Quarter
Three Months Ended
($ in millions)March 31, 2021March 31, 2020Change% Change
Interest expense$(43)$(33)$(10)(29%)

Interest expense increased $10 million, including $8 million of higher interest expense associated with the 2025 Notes that were issued in the second quarter of 2020 and $5 million higher non-cash interest expense associated with the 2026 Convertible Notes that were issued in the first quarter of 2021; partially offset by $3 million of lower interest expense associated with various other debt facilities.
Transaction Costs
2021 First Quarter
Three Months Ended
($ in millions)March 31, 2021March 31, 2020Change% Change
Transaction costs$(19)$(21)$10%
In the first quarter of 2021, Transaction costs included $17 million of ILG acquisition and integration related costs and $2 million of costs associated with the acquisition of Welk Resorts that was completed subsequent to the end of the quarter.
In the first quarter of 2020, Transaction costs included $21 million of ILG acquisition-related costs.
Income Tax
2021 First Quarter
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020Change% Change($ in millions)March 31, 2022March 31, 2021Change% Change
Benefit from income taxes$11 $58 $(47)(81%)
(Provision for) benefit from income taxes(Provision for) benefit from income taxes$(32)$11 $(43)NM
The change in the Benefit(Provision for) benefit from income taxes is predominately attributable to a decreasean increase in pre-tax lossincome and a releasean increase in provisions on uncertainthe reserve for unrecognized tax benefits for the three months ended March 31, 2020.2022.
Liquidity and Capital Resources
Typically, our capital needs are supported by cash on hand ($643 million0.4 billion at the end of the first quarter of 2021)2022), cash generated from operations, our ability to raise capital through securitizations in the ABSasset-backed securities market, our ability to issue new, and refinance existing, debt and, to the extent necessary, our ability to access funds available 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 with a(the “Amendment”), which increased the borrowing capacity of the existing revolving credit facility from $600 million.million to $750 million and extended the maturity date from August 31, 2023 to March 31, 2027.
At March 31, 2021,2022, we had $4.6 billion of total gross debt outstanding, which included $1.4$1.8 billion of non-recourse debt associated with vacation ownership notes receivable securitizations, $1.1 billion of senior unsecurednotes, $0.8 billion of convertible notes, $0.8 billion of debt under our Corporate Credit Facility, $0.8 billion of convertible notes, $0.5 billion of senior secured notes, and $7$84 million related to finance lease obligations.obligations, and $11 million related to a non-interest bearing note payable.
At March 31, 2021,2022, we had $776$684 million of completed real estate inventory on hand. In addition, we had $291$496 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 heldavailable for sale as vacation ownership products.
Our material cash requirements from known contractual or other obligations were $6 billion as of March 31, 2022, of which we expect $748 million to be payable during 2022. These obligations primarily relate to our debt, securitized debt and purchase obligations. Please see “Material Cash Requirements” below for additional information.
The following table summarizes the changes in cash, cash equivalents and restricted cash:
Three Months Ended
($ in millions)March 31, 2021March 31, 2020
Cash, cash equivalents and restricted cash provided by (used in):
Operating activities$(60)$(122)
Investing activities(8)(21)
Financing activities255 468 
Effect of change in exchange rates on cash, cash equivalents and restricted cash(1)(6)
Net change in cash, cash equivalents and restricted cash$186 $319 
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Three Months Ended
($ in millions)March 31, 2022March 31, 2021
Cash, cash equivalents and restricted cash provided by (used in):
Operating activities$129 $(60)
Investing activities(10)(8)
Financing activities(272)255 
Effect of change in exchange rates on cash, cash equivalents and restricted cash— (1)
Net change in cash, cash equivalents and restricted cash$(153)$186 
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 property owners’ associations and certain annual compensation-related outflows. In addition, our cash from operations varies due to the timing of our owners’ 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.
In the first quarter
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Table of 2021, we had $60 million of cash outflows for operating activities, compared to $122 million in the first quarter of 2020. Contents
Excluding the impact of changes in net income or loss and adjustments for non-cash items, severance and benefit payments related to cost management activities, and higherthe change in cash flows from operations increased as a result of lower inventory spending, partially offset by higher operational expense accruals, and higher sales and rental deposits due to the partial recovery fromcontinued ramp-up of the COVID-19 pandemic.business, and higher collections of vacation ownership notes receivable, partially offset by timing of certain employee benefit payments.
In addition to net income or loss and adjustments for non-cash items, the following operating activities are key drivers of our cash flow from operating activities:
Inventory Spending InLess Than (In Excess ofof) Cost of Sales
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020($ in millions)March 31, 2022March 31, 2021
Inventory spendingInventory spending$(57)$(54)Inventory spending$(22)$(57)
Purchase of vacation ownership units for future transfer to inventoryPurchase of vacation ownership units for future transfer to inventory(99)(61)Purchase of vacation ownership units for future transfer to inventory(12)(99)
Inventory costsInventory costs31 49 Inventory costs50 31 
Inventory spending in excess of cost of sales$(125)$(66)
Inventory spending less than (in excess of) cost of salesInventory spending less than (in excess of) cost of sales$16 $(125)
Our Vacation Ownership segment product offerings allow usWhile we have significant inventory on hand, we will continue to utilize our 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 do not 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 inventory acquisitions with the pace of sales of vacation ownership products.
As part of our long-term strategy, we selectively pursue growth opportunities in our Vacation Ownership segmentNorth America and Asia Pacific by targeting high-quality inventory that allows us to add desirable new destinations to our systemssystem 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.
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 Income Statements related to sale of vacation ownership products (a non-cash item).
Our spending for real estate inventory in the first quarter of 20212022 was higherlower than the amount of real estate inventory costs given the timing of paymentsdue to satisfy our remaining commitments to purchase vacation ownership units and the slowdown in sales pace as a result of the COVID-19 pandemic. We entered into these commitments in prior periods as part of our capital efficient strategy to limit our up-front capital investment and purchase finishedminimize spending because we have a significant amount of inventory closer to the time it is needed for sale. See Footnote 11 “Contingencies and Commitments” to our Financial Statements for additional information regarding our remaining commitments.on hand.
Through our existing vacation ownership interest repurchase program, we proactively buy back 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. However, given the impact of the COVID-19 pandemic, we have temporarily discontinued the majority of this repurchase activity.
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Vacation Ownership Notes Receivable Collections (Less Than) In Excess of Originations
Three Months EndedThree Months Ended
($ in millions)($ in millions)March 31, 2021March 31, 2020($ in millions)March 31, 2022March 31, 2021
Vacation ownership notes receivable collections — non-securitizedVacation ownership notes receivable collections — non-securitized$42 $88 Vacation ownership notes receivable collections — non-securitized$67 $42 
Vacation ownership notes receivable collections — securitizedVacation ownership notes receivable collections — securitized123 86 Vacation ownership notes receivable collections — securitized121 123 
Vacation ownership notes receivable originationsVacation ownership notes receivable originations(108)(174)Vacation ownership notes receivable originations(205)(108)
Vacation ownership notes receivable collections in excess of originations$57 $— 
Vacation ownership notes receivable collections (less than) in excess of originationsVacation ownership notes receivable collections (less than) in excess of originations$(17)$57 
Vacation ownership notes receivable collections include principal from non-securitized and securitized vacation ownership notes receivable. Vacation ownership notes receivable collections decreasedincreased during the first quarter of 2021,2022, as compared to the first quarter of 2020,2021, due to a decreasean increase in the portfolio of outstanding vacation ownership notes receivable.Vacation ownership notes receivable originations in the first quarter of 2021 decreased due2022 increased, as compared to lower sales in the first quarter of 2021, due to the COVID-19 pandemic andhigher sales combined with a lowerhigher financing propensity. Financing propensity declinedincreased to 46 percent50% for the first quarter of 2022, compared to 46% for the first quarter of 2021, compared to 57 percent for the first quarter of 2020 due toreflecting a higher percentagemix of sales during this period to existing owners,first-time buyers, who tend to have a lowerhigher financing propensity. Going forward, we expect to shift back to an increased focus on first-time buyers, which should increase propensity and increase interest income as new originations of vacation ownership notes receivable outpace the decline in principal of existing vacation ownership notes receivable.
Cash from Investing Activities
Three Months Ended
($ in millions)March 31, 2021March 31, 2020
Capital expenditures for property and equipment (excluding inventory)$(7)$(17)
Purchase of company owned life insurance(1)(4)
Net cash, cash equivalents and restricted cash used in investing activities$(8)$(21)
Capital Expenditures for Property and Equipment
CapitalIn the first quarter of 2022, capital expenditures for property and equipment relateincluded $9 million to spendingsupport business operations (including $6 million for technology development, buildingsancillary and equipment used atother operations assets and $3 million for sales locations and ancillary offerings, such as food and beverage offerings, at locations where such offerings are provided. Additionally, it includes spending related to maintenance of buildings and equipment used in common areas at some of our resorts.locations).
In the first quarter of 2021, capital expenditures for property and equipment of $7 million included $5 million to support business operations (including $3 million for ancillary and other operations assets and $2 million for sales locations) and $2 million for technology spending. Given the impact of the COVID-19 pandemic, we significantly reduced our spending for property and equipment beginning in the second quarter of 2020. However, during the first quarter of 2021, we began to add back business critical spending with long term strategic impacts to our operations.
In the first quarter of 2020, capital expenditures for property and equipment of $17 million included $14 million to support business operations (including $9 million for ancillary and other operations assets and $5 million for sales locations) and $3 million for technology spending.
Purchase of Company Owned Life Insurance
To support our ability to meet a portion 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 proceeds of which are intended to be aligned with the investment alternatives elected by plan participants. We paid $1 million to acquire these policies during the first quarter of 2021 but we paid $4 million during the first quarter of 2020.technology.
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Cash from Financing Activities
Three Months Ended
($ in millions)March 31, 2021March 31, 2020
Borrowings from securitization transactions$— $202 
Repayment of debt related to securitization transactions(159)(148)
Proceeds from debt561 666 
Repayments of debt(100)(102)
Purchase of convertible note hedges(100)— 
Proceeds from issuance of warrants70 — 
Finance lease payment— (9)
Debt issuance costs(2)— 
Repurchase of common stock— (82)
Payment of dividends— (45)
Payment of withholding taxes on vesting of restricted stock units(15)(14)
Net cash, cash equivalents and restricted cash provided by financing activities$255 $468 
Borrowings from / Repayment of Debt Related to Securitization Transactions
We reflect proceeds from securitizationsDuring the first quarter of 2022, we securitized vacation ownership notes receivable including draw downs on theunder our Warehouse Credit Facility, as “Borrowings from securitization transactions.” We reflect repaymentsFacility. The carrying amount of bonds associated withthe vacation ownership notes receivable securitizations and repayments onsecuritized 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 Warehouse Credit Facility (including vacation ownership notes receivable repurchases) as “Repaymentfunding of debt related to securitization transactions.”reserve accounts of $1 million.
As of March 31, 2021, $2402022, $120 million of gross vacation ownership notes receivable were eligible for securitization.
Proceeds from / Repayments of Debt
Borrowings from / Repayment of 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 quarter of 2022. During the first quarter of 2022, we borrowed $30 million under our Revolving Corporate Credit Facility, all of which was repaid prior to the end of the quarter. There were no borrowed amounts outstanding under our Revolving Corporate Credit Facility as of March 31, 2022. As of March 31, 2022, we had $2 million of letters of credit outstanding under our Revolving Corporate Credit Facility.
During the first quarter of 2021, we repaid $100 million of the amount outstanding under the Term Loan, which is part of our Corporate Credit Facility.Loan. We had no borrowings or repayments under our Revolving Corporate Credit Facility during the first quarter of 2021 and also had no amounts outstanding as of March 31, 2021.
During the first quarter of 2020, we borrowed $666 million under our Revolving Corporate Credit Facility to facilitate the funding of our short-term working capital needs and to increase our cash position and preserve financial flexibility in light of the impact on global markets resulting from the COVID-19 pandemic. We later repaid $100 million during the first quarter of 2020 and had $596 million outstanding as of March 31, 2020. During the first quarter of 2020, we also repaid $2 million of the amount outstanding under the Term Loan.
See Footnote 13 “Debt” to our Financial Statements for additional information regarding our Corporate Credit Facility that includes our Revolving Corporate Credit Facility and the Term Loan.
Proceeds from Convertible Notes
During the first quarter of 2021, we issued $575 million of convertible notes, the 2026 Convertible Notes, as discussed further in Footnote 13 “Debt” to our Financial Statements. We received net proceeds from the offering of approximately $530 million after adjusting for debt issuance costs, including the discount to the initial purchasers, the cost of the 2026 Convertible Note Hedges, and proceeds from the 2026 Warrants. We used, or expect to use, the net proceeds from the 2026 Convertible Notes to (i) complete the acquisition of Welk Resorts, (ii) repay a portion of our term loan and (iii) in each case, pay transaction expenses and other fees in connection therewith, and to the extent of any remaining proceeds, for other general corporate purposes.
Purchase of Convertible Note Hedges / Proceeds from Issuance of Warrants
In connection with the issuance of the 2026 Convertible Notes, we entered into the 2026 Convertible Note Hedges with respect to our common stock with certain counterparties, covering a total of 3.4 million shares of our common stock at a cost of $100 million. Concurrently with the entry into the 2026 Convertible Note Hedges, we separately entered into the 2026 Warrants, whereby we sold to the counterparties to the 2026 Convertible Note Hedges warrants to acquire, collectively, subject to anti-dilution adjustments, approximately 3.4 million shares of our common stock at an initial strike price of $213.76 per share. We received aggregate proceeds of $70 million from the sale of the 2026 Warrants to the counterparties.
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See Footnote 13 “Debt” to our Financial Statements for additional information regarding the issuance of the 2026 Convertible Notes, including the 2026 Convertible Note Hedges and the 2026 Warrants.
As of March 31, 2021, no 2026 Convertible Note Hedges or 2026 Warrants have been exercised.
Finance Lease Payment
During the first quarter of 2020, in conjunction with the acquisition of the 57 completed vacation ownership units at our Marriott Vacation Club Pulse, New York City property, we made finance lease payments of $7 million related to the purchase of the accompanying ancillary and office space. Additionally,2022, we paid $2 million related to our finance lease obligations for technology and business operations equipment.
Debt Issuance Costs
During the first quarter of 2022, we paid $4 million of debt issuance costs 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 quarter of 2021, we paid $2 million of debt issuance costs, which included$1 $1 million associated with the 2026 Convertible Notes and $1 million associated with the extension of the Waiver associated withwhich suspended certain requirements under the Revolving Corporate Credit FacilityFacility.
Repurchase of Common Stock
The following table summarizes share repurchase activity under our current share repurchase program:.
($ 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 quarter of 2022764,824 119 156.50 
As of March 31, 202218,446,219 $1,537 $83.34 
See Footnote 14 “Shareholders' Equity” to our Financial Statements for further information related to our share repurchase program, including the additional share repurchase authorization approved by our Board of Directors during the first quarter of 2022.
Dividends
GivenWe distributed cash dividends to holders of our common stock during the impactfirst quarter of the COVID-19 pandemic, we have temporarily suspended cash dividends. In addition, our Corporate Credit Facility and the indentures governing our senior notes contain restrictions on our ability2022 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$0.62
We currently expect to pay dividends. Futurequarterly dividends in the future, but any future dividend payments will also be subject to both the restrictions imposed under the Waiver and Board approval, which will depend on our financial condition, results of operations and capital requirements, as well as applicable law, regulatory and contractual constraints, industry practice, and other business considerations that our Board of Directors
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considers relevant. In addition, our Corporate Credit Facility and the indentures governing our senior notes contain restrictions on our ability to pay dividends, and the terms of agreements governing debt that we may incur in the future may also limit or prohibit the payment of dividends. The payment of certain cash dividends may also result in an adjustment to the conversion rate of our convertible notes in a manner adverse to us. Accordingly, there can be no assurance that we will pay dividends in the future at the sameany particular rate or at all.
Material Cash Requirements
The following table summarizes our future material cash requirements from known contractual or other obligations as of March 31, 2022:
  Payments Due by Period
($ in millions)TotalRemainder
of 2022
Years
2023 - 2024
Years
2025 - 2026
Thereafter
Contractual Obligations
Debt obligations(1)
$3,088 $294 $155 $1,710 $929 
Securitized debt(1)(2)
1,994 167 529 410 888 
Purchase obligations(3)
377 250 86 41 — 
Operating lease obligations122 18 44 35 25 
Finance lease obligations(4)
283 11 259 
Other long-term obligations(5)
24 13 
$5,888 $748 $832 $2,206 $2,102 
_________________________
(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 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 $10 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.
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 $137 million for the aforementioned period.
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Supplemental Guarantor Information
The 2026 Notes and 2028 Notes are guaranteed by MVWC, Marriott Ownership Resorts, Inc. (“MORI”), and certain other subsidiaries whose voting securities are wholly owned directly or indirectly by MORI (such subsidiaries collectively, the “Senior Notes Guarantors”). These guarantees are full and unconditional and joint and several. The guarantees of the Senior Notes Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions.
The following tables present consolidating financial information as of March 31, 2022 and December 31, 2021, and for the three months ended March 31, 20212022 for MVWC and MORI on a stand-alone basis (collectively, the “Issuers”), the Senior Notes Guarantors, the combined non-guarantor subsidiaries of MVW, and MVW on a consolidated basis.
Condensed Consolidating Balance Sheet
As of March 31, 2021As of March 31, 2022
IssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW ConsolidatedIssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW Consolidated
($ in millions)($ in millions)MVWCMORI($ in millions)MVWCMORI
Cash and cash equivalentsCash and cash equivalents$— $489 $43 $111 $— $643 Cash and cash equivalents$— $129 $77 $148 $— $354 
Restricted cashRestricted cash152 19 36 328 — 535 Restricted cash— 22 76 198 — 296 
Accounts receivable, netAccounts receivable, net124 49 46 (7)219 Accounts receivable, net55 117 67 (9)234 
Vacation ownership notes receivable, netVacation ownership notes receivable, net— 214 150 1,405 — 1,769 Vacation ownership notes receivable, net— 109 204 1,717 — 2,030 
InventoryInventory— 290 379 116 — 785 Inventory— 227 374 92 — 693 
Property and equipmentProperty and equipment— 208 446 233 — 887 Property and equipment— 196 641 325 — 1,162 
GoodwillGoodwill— — 2,817 — — 2,817 Goodwill— — 3,142 — — 3,142 
Intangibles, netIntangibles, net— — 881 57 — 938 Intangibles, net— — 827 151 — 978 
Investments in subsidiariesInvestments in subsidiaries3,215 4,450 — — (7,665)— Investments in subsidiaries3,582 4,211 — — (7,793)— 
OtherOther56 112 295 162 (31)594 Other74 116 275 189 (40)614 
Total assetsTotal assets$3,430 $5,906 $5,096 $2,458 $(7,703)$9,187 Total assets$3,660 $5,065 $5,733 $2,887 $(7,842)$9,503 
Accounts payableAccounts payable$57 $11 $53 $38 $— $159 Accounts payable$48 $15 $91 $58 $— $212 
Advance depositsAdvance deposits— 79 65 23 — 167 Advance deposits— 83 85 26 — 194 
Accrued liabilitiesAccrued liabilities— 97 162 94 (8)345 Accrued liabilities102 147 102 (9)347 
Deferred revenueDeferred revenue— 10 195 334 (15)524 Deferred revenue— 10 241 276 (20)507 
Payroll and benefits liabilityPayroll and benefits liability— 89 74 25 — 188 Payroll and benefits liability100 88 25 — 214 
Deferred compensation liabilityDeferred compensation liability— 100 22 — 124 Deferred compensation liability— 109 25 — 136 
Securitized debt, netSecuritized debt, net— — — 1,446 (15)1,431 Securitized debt, net— — — 1,799 (20)1,779 
Debt, netDebt, net659 2,364 — 3,025 Debt, net792 1,871 76 12 — 2,751 
OtherOther— 32 114 54 — 200 Other— 171 32 — 206 
Deferred taxesDeferred taxes106 145 30 — 286 Deferred taxes— 60 272 — 333 
MVW shareholders' equityMVW shareholders' equity2,709 3,018 4,265 382 (7,665)2,709 MVW shareholders' equity2,814 2,712 4,537 545 (7,794)2,814 
Noncontrolling interestsNoncontrolling interests— — — 29 — 29 Noncontrolling interests— — — 10 — 10 
Total liabilities and equityTotal liabilities and equity$3,430 $5,906 $5,096 $2,458 $(7,703)$9,187 Total liabilities and equity$3,660 $5,065 $5,733 $2,887 $(7,842)$9,503 
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As of December 31, 2020As of December 31, 2021
IssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW ConsolidatedIssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW Consolidated
($ in millions)($ in millions)MVWCMORI($ in millions)MVWCMORISenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW Consolidated
Cash and cash equivalentsCash and cash equivalents$25 $347 $50 $102 $— $524 Cash and cash equivalents$— $126 $77 $139 $— $342 
Restricted cashRestricted cash— 19 72 377 — 468 Restricted cash— 18 94 349 — 461 
Accounts receivable, netAccounts receivable, net44 59 121 57 (5)276 Accounts receivable, net14 49 172 119 (75)279 
Vacation ownership notes receivable, netVacation ownership notes receivable, net— 164 116 1,560 — 1,840 Vacation ownership notes receivable, net— 127 203 1,715 — 2,045 
InventoryInventory— 276 383 100 — 759 Inventory— 244 381 94 — 719 
Property and equipmentProperty and equipment— 213 341 237 — 791 Property and equipment— 200 644 292 — 1,136 
GoodwillGoodwill— — 2,817 — — 2,817 Goodwill— — 2,841 309 — 3,150 
Intangibles, netIntangibles, net— — 894 58 — 952 Intangibles, net— — 840 153 — 993 
Investments in subsidiariesInvestments in subsidiaries2,775 4,384 — — (7,159)— Investments in subsidiaries3,645 4,371 — — (8,016)— 
OtherOther54 115 214 133 (45)471 Other76 108 211 107 (14)488 
Total assetsTotal assets$2,898 $5,577 $5,008 $2,624 $(7,209)$8,898 Total assets$3,735 $5,243 $5,463 $3,277 $(8,105)$9,613 
Accounts payableAccounts payable$29 $29 $145 $$— $209 Accounts payable$63 $22 $121 $59 $— $265 
Advance depositsAdvance deposits— 70 57 20 — 147 Advance deposits— 69 70 21 — 160 
Accrued liabilitiesAccrued liabilities99 157 99 (7)349 Accrued liabilities12 151 145 114 (77)345 
Deferred revenueDeferred revenue— 126 355 (1)488 Deferred revenue— 11 151 291 — 453 
Payroll and benefits liabilityPayroll and benefits liability81 55 20 — 157 Payroll and benefits liability— 102 72 27 — 201 
Deferred compensation liabilityDeferred compensation liability— 104 22 — 127 Deferred compensation liability— 114 25 — 142 
Securitized debt, netSecuritized debt, net— — — 1,604 (16)1,588 Securitized debt, net— — — 1,877 (21)1,856 
Debt, netDebt, net215 2,464 — — 2,680 Debt, net684 1,870 76 — 2,631 
OtherOther39 130 27 — 197 Other— 19 172 33 — 224 
Deferred taxesDeferred taxes— 103 143 28 — 274 Deferred taxes— 91 250 — 350 
MVW shareholders' equityMVW shareholders' equity2,651 2,580 4,173 432 (7,185)2,651 MVW shareholders' equity2,976 2,794 4,381 841 (8,016)2,976 
Noncontrolling interestsNoncontrolling interests— — — 31 — 31 Noncontrolling interests— — — 10 — 10 
Total liabilities and equityTotal liabilities and equity$2,898 $5,577 $5,008 $2,624 $(7,209)$8,898 Total liabilities and equity$3,735 $5,243 $5,463 $3,277 $(8,105)$9,613 
Condensed Consolidating Statements of Income
Three Months Ended March 31, 2021Three Months Ended March 31, 2022
IssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW ConsolidatedIssuersSenior Notes GuarantorsNon-Guarantor SubsidiariesTotal EliminationsMVW Consolidated
($ in millions)($ in millions)MVWCMORI($ in millions)MVWCMORI
RevenuesRevenues$— $98 $472 $197 $(8)$759 Revenues$— $161 $658 $241 $(8)$1,052 
ExpensesExpenses(8)(181)(454)(160)(795)Expenses(2)(236)(533)(199)(962)
Benefit (provision) for income taxesBenefit (provision) for income taxes50 (11)(33)— 11 Benefit (provision) for income taxes— 24 (38)(18)— (32)
Equity in net (loss) income of subsidiaries(25)18 — — — 
Equity in net income (loss) of subsidiariesEquity in net income (loss) of subsidiaries60 117 — — (177)— 
Net (loss) incomeNet (loss) income(28)(15)(25)Net (loss) income58 66 87 24 (177)58 
Net loss attributable to noncontrolling interests— — — (3)— (3)
Net income attributable to noncontrolling interestsNet income attributable to noncontrolling interests— — — — — — 
Net (loss) income attributable to common shareholdersNet (loss) income attributable to common shareholders$(28)$(15)$$$$(28)Net (loss) income attributable to common shareholders$58 $66 $87 $24 $(177)$58 
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Contractual Obligations and Off-Balance Sheet Arrangements
The following table summarizes our contractual obligations as of March 31, 2021:
  Payments Due by Period
($ in millions)TotalRemainder
of 2021
Years
2022 - 2023
Years
2024 - 2025
Thereafter
Contractual Obligations
Debt(1)
$5,478 $237 $874 $1,876 $2,491 
Purchase obligations(2)
295 158 126 11 — 
Operating lease obligations231 19 42 35 135 
Finance lease obligations(3)
— 
Other long-term obligations(4)
21 10 
Total contractual obligations$6,033 $427 $1,052 $1,926 $2,628 
_________________________
(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 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.
(4)Primarily relates to future guaranteed purchases of rental inventory, operational support services, marketing related benefits, membership fulfillment benefits, and other commitments.
In the normal course of our resort management business, we enter into purchase commitments on behalf of property 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.
Leases That Have Not Yet Commenced
During the first quarter of 2020, we entered into a finance lease arrangement for a new corporate office building 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 $129 million for the aforementioned period. See Footnote 11 “Contingencies and Commitments” to our Financial Statements for additional information on this lease, including additional arrangements made as a result of the COVID-19 pandemic.
Recent Accounting Pronouncements
See Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” to our Financial Statements for a discussion of recently issued accounting pronouncements, including information on new accounting standards and the future adoption of such standards.
Critical Accounting Policies and Estimates
Our preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. We have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application in our most recent Annual Report on Form 10-K. Since the date of our most recent Annual Report on Form 10-K, there have been no material changes to our critical accounting policies or the methodologies or assumptions we apply under them.
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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 our Annual Report on Form 10-K for the year ended December 31, 2020, other than as set forth below.
During the first quarter of 2021, we issued $575 million of 2026 Convertible Notes. Holders may convert the 2026 Convertible Notes prior to maturity upon the occurrence of certain circumstances. Upon conversion, holders of the 2026 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 2026 Convertible Notes, we entered into convertible note hedges and warrants as discussed further in Footnote 13 “Debt” to these Financial Statements. Taken together, these separate transactions were intended to reduce the potential economic dilution to our common stock from the conversion of the 2026 Convertible Notes.
The 2026 Convertible Notes have a fixed annual interest rate of 0.00 percent and, therefore, we do not have economic interest rate exposure on our 2026 Convertible Notes. However, the fair market value of the 2026 Convertible Notes is exposed to interest rate risk. Generally, the fair market value of the 2026 Convertible Notes will increase as interest rates fall and decrease as interest rates rise. In addition, the fair market value of the 2026 Convertible Notes is affected by our stock price and will increase as our stock price increases and decrease as our stock price decreases. The net carrying value of the 2026 Convertible Notes was $442 million as of March 31, 2021. This represents the liability component of the principal balance of the 2026 Convertible Notes, net of unamortized debt discount and issuance costs, as of March 31, 2021. The total estimated fair market value of the 2026 Convertible Notes was $684 million as of March 31, 2021, and the fair market value was determined based on the quoted market price of the 2026 Convertible Notes in an over-the-counter market as of the last day of trading for the quarter ended March 31, 2021. For further information see Footnote 7 “Financial Instruments” and Footnote 13 “Debt” to these 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 March 31, 2021,2022, 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 11 “Contingencies and Commitments” to our Financial Statements. While management presently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm our financial position, cash flows, or overall trends in results of operations, legal proceedings are inherently uncertain, and unfavorable rulings could, individually or in aggregate, have a material adverse effect on our business, financial condition, or operating results.
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Item 1A. Risk Factors
The COVID-19 pandemic has heightened, and in some cases, manifested, certain of the risks we normally face in our business, including those disclosed in the 2021 Annual Report. There have been no material changes from the risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 20202021 (the “2020“2021 Annual Report”). The COVID-19 pandemic has heightened,
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Item 2.    Unregistered Sales of Equity Securities and in some cases, manifested, certainUse of Proceeds
Issuer Purchases of Equity Securities
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)
January 1, 2022 – January 31, 2022112,662 $162.72 112,662 $153,963,268 
February 1, 2022 – February 28, 2022198,735 $161.69 198,735 $421,829,349 
March 1, 2022 – March 31, 2022453,427 $152.68 453,427 $352,598,477 
Total764,824 $156.50 764,824 $352,598,477 
_________________________
(1)On September 10, 2021, 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 18, 2022, 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 risks we normally face induration of our business, including those disclosed in the 2020 Annual Report.existing share repurchase program to March 31, 2023.
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
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
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
Restated Certificate of Incorporation of Marriott Vacations Worldwide Corporation8-K3.111/22/2011
Restated Bylaws of Marriott Vacations Worldwide Corporation8-K3.211/22/2011
Form of certificate representing shares of common stock, par value $0.01 per share, of Marriott Vacations Worldwide Corporation104.110/14/2011
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
Form of 1.50% Convertible Senior Note due 2022 (included as Exhibit A to Exhibit 4.2 above)10-Q4.111/2/2017
Indenture, dated as of August 23, 2018, 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-K4.18/23/2018
First Supplemental Indenture, dated September 1, 2018, by and among Marriott Ownership Resorts, Inc., ILG, LLC, the guarantors party thereto and the Bank of New York Mellon Trust Company, N.A., as trustee8-K4.79/5/2018
Second Supplemental Indenture, dated December 31, 2019, by and among Marriott Ownership Resorts, Inc., ILG, LLC, MVW Vacations, LLC and the Bank of New York Mellon Trust Company, N.A., as trustee10-K4.63/2/2020
Third Supplemental Indenture, dated February 26, 2020, by and among Marriott Ownership Resorts, Inc., ILG, LLC, MVW Services Corporation, and the Bank of New York Mellon Trust Company, N.A., as trustee10-K4.73/2/2020
Form of 6.500% Senior Note due 2026 (included as Exhibit A to Exhibit 4.4 above)8-K4.18/23/2018
Registration Rights Agreement, dated as of August 23, 2018, by and among Marriott Ownership Resorts, Inc., Marriott Vacations Worldwide Corporation, as guarantor, the other guarantors party thereto and Merrill Lynch, Pierce, Fenner & Smith Incorporated8-K4.38/23/2018
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
Exhibit NumberDescriptionFiled
Herewith
Incorporation By Reference From
FormExhibitDate Filed
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
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
Restated Certificate of Incorporation of Marriott Vacations Worldwide Corporation8-K3.111/22/2011
Restated Bylaws of Marriott Vacations Worldwide Corporation8-K3.211/22/2011
Form of certificate representing shares of common stock, par value $0.01 per share, of Marriott Vacations Worldwide Corporation104.110/14/2011
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
Form of 1.50% Convertible Senior Note due 2022 (included as Exhibit A to Exhibit 4.2 above)10-Q4.111/2/2017
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
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
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
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
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Exhibit NumberDescriptionFiled
Herewith
Incorporation By Reference From
FormExhibitDate Filed
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
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
Second Supplemental Indenture, dated February 26, 2020, by and among Marriott Ownership Resorts, Inc., MVW Services Corporation, and the Bank of New York Mellow Trust Company, N.A., as trustee10-K4.133/2/2020
Form of 4.750% Senior Notes due 2028 (included as Exhibit A to Exhibit 4.11 above)8-K4.210/1/2019
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
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
Form of 6.125% Senior Secured Notes due 2025 (included as Exhibit A to Exhibit 4.16)8-K4.15/15/2020
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
Form of 0.00% Convertible Senior Note due 2026 (included as Exhibit A to Exhibit 4.18 above)8-K4.12/3/2021
Waiver to Credit Agreement, dated as of May 14, 2020, by and among Marriott Vacations Worldwide Corporation, Marriott Ownership Resorts, Inc., the Revolving Credit Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent8-K4.35/15/2020
Description of Registered Securities10-K4.163/2/2020
List of the Issuer and its Guarantor Subsidiaries10-Q22.111/5/2020
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934X
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934X
Certification of Chief Executive Officer pursuant to Rule 13a-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002Furnished
Certification of Chief Financial Officer pursuant to Rule 13a-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002Furnished
101The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, 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 Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline XBRL and contained in Exhibit 101
Exhibit NumberDescriptionFiled
Herewith
Incorporation By Reference From
FormExhibitDate Filed
Form of 4.750% Senior Notes due 2028 (included as Exhibit A to Exhibit 4.5 above)8-K4.210/1/2019
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
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
Form of 6.125% Senior Secured Notes due 2025 (included as Exhibit A to Exhibit 4.10)8-K4.15/15/2020
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
Form of 0.00% Convertible Senior Note due 2026 (included as Exhibit A to Exhibit 4.12 above)8-K4.12/3/2021
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
Form of 4.500% Senior Notes due 2029 (included as Exhibit A to Exhibit 4.14 above)8-K4.26/22/2021
Description of Registered Securities10-K4.163/2/2020
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
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.X
List of the Issuer and its Guarantor Subsidiaries10-K22.103/1/2022
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934X
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934X
Certification of Chief Executive Officer pursuant to Rule 13a-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002Furnished
Certification of Chief Financial Officer pursuant to Rule 13a-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002Furnished
101The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 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 Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in Inline XBRL and contained in Exhibit 101
*Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplemental copies to the SEC of any omitted schedule upon request by the SEC.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
MARRIOTT VACATIONS WORLDWIDE CORPORATION
Date:May 7, 20219, 2022/s/ Stephen P. Weisz
Stephen P. Weisz
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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