Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 22, 2017 | Jun. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | ILG, Inc. | ||
Entity Central Index Key | 1,434,620 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1,714,625,106 | ||
Entity Common Stock, Shares Outstanding | 124,509,536 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues: | |||
Service and membership related | $ 454 | $ 421 | $ 424 |
Sales of vacation ownership products, net | 306 | 28 | 7 |
Rental and ancillary services | 265 | 91 | 70 |
Consumer financing | 57 | 5 | 1 |
Cost reimbursements | 274 | 152 | 112 |
Total revenues | 1,356 | 697 | 614 |
Operating costs and expenses: | |||
Cost of service and membership related sales | 118 | 100 | 111 |
Cost of vacation ownership product sales | 99 | 20 | 6 |
Cost of sales of rental and ancillary services | 185 | 41 | 34 |
Cost of consumer financing | 13 | ||
Cost reimbursements | 274 | 152 | 112 |
Royalty fee expense | 28 | 3 | 1 |
Selling and marketing expense | 194 | 71 | 62 |
General and administrative expense | 198 | 150 | 133 |
Amortization expense of intangibles | 19 | 14 | 12 |
Depreciation expense | 43 | 18 | 16 |
Total operating costs and expenses | 1,171 | 569 | 487 |
Operating income | 185 | 128 | 127 |
Other income (expense): | |||
Interest income | 1 | 1 | |
Interest expense | (23) | (21) | (7) |
Gain on bargain purchase | 163 | ||
Other income (loss), net | (7) | 3 | 2 |
Equity in earnings from unconsolidated entities | 5 | 5 | 5 |
Total other income (expense), net | 139 | (12) | |
Earnings before income taxes and noncontrolling interests | 324 | 116 | 127 |
Income tax provision | (57) | (41) | (45) |
Net income | 267 | 75 | 82 |
Net income attributable to noncontrolling interests | (2) | (2) | (3) |
Net income attributable to common stockholders | $ 265 | $ 73 | $ 79 |
Earnings per share attributable to common stockholders: | |||
Basic (in dollars per share) | $ 2.62 | $ 1.28 | $ 1.38 |
Diluted (in dollars per share) | $ 2.60 | $ 1.26 | $ 1.36 |
Weighted average number of shares of common stock outstanding (in 000's): | |||
Basic (in shares) | 100,868 | 57,400 | 57,343 |
Diluted (in shares) | 101,732 | 57,989 | 57,953 |
Dividends declared per share of common stock (in dollars per share) | $ 0.48 | $ 0.48 | $ 0.44 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income | $ 267 | $ 75 | $ 82 |
Other comprehensive loss, net of tax: | |||
Foreign currency translation adjustments, net of tax | (29) | (11) | (12) |
Total comprehensive income, net of tax | 238 | 64 | 70 |
Less: Net income attributable to noncontrolling interests, net of tax | (2) | (2) | (3) |
Less: Other comprehensive loss attributable to noncontrolling interests | 6 | 2 | 3 |
Total comprehensive loss (income) attributable to noncontrolling interests | 4 | ||
Comprehensive income attributable to common stockholders | $ 242 | $ 64 | $ 70 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
ASSETS | ||
Cash and cash equivalents | $ 126 | $ 93 |
Restricted cash and cash equivalents (including $32 and $0 in variable interest entities, "VIEs," respectively) | 114 | 17 |
Accounts receivable, net of allowance for doubtful accounts of $0.4 and $0.2, respectively | 97 | 48 |
Vacation ownership mortgages receivable, net of allowance of $1 and $0, respectively (including a net $59 and $0 in VIEs, respectively) | 87 | 6 |
Vacation ownership inventory | 197 | 47 |
Prepaid income taxes | 47 | 13 |
Prepaid expenses | 49 | 20 |
Other current assets (including $3 and $0 of interest receivables in VIEs, respectively) | 29 | 14 |
Total current assets | 746 | 258 |
Restricted cash and cash equivalents (including $2 and $0 in VIEs, respectively) | 4 | |
Vacation ownership mortgages receivable, net of allowance of $21 and $2, respectively (including a net $370 and $0 in VIEs, respectively) | 632 | 26 |
Vacation ownership inventory | 189 | |
Investments in unconsolidated entities | 59 | 38 |
Property and equipment, net | 580 | 91 |
Goodwill | 558 | 561 |
Intangible assets, net | 453 | 250 |
Deferred income taxes | 9 | |
Other non-current assets | 74 | 55 |
TOTAL ASSETS | 3,304 | 1,279 |
LIABILITIES: | ||
Accounts payable, trade | 64 | 36 |
Current portion of securitized debt from VIEs | 111 | |
Deferred revenue | 87 | 86 |
Accrued compensation and benefits | 70 | 26 |
Member deposits | 7 | 8 |
Accrued expenses and other current liabilities (including a net $1 and $0 of interest payables in VIEs, respectively) | 180 | 56 |
Total current liabilities | 519 | 212 |
Long-term debt | 580 | 416 |
Securitized debt from VIEs | 319 | |
Income taxes payable, non-current | 5 | |
Other long-term liabilities | 47 | 19 |
Deferred revenue | 79 | 87 |
Deferred income taxes | 161 | 79 |
Total liabilities | 1,710 | 813 |
Redeemable noncontrolling interest | 1 | 1 |
Commitments and contingencies | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock—authorized 25,000,000 shares, of which 100,000 shares are designated Series A Junior Participating Preferred Stock; $0.01 par value; none issued and outstanding | ||
Common stock—authorized 300,000,000 shares; $0.01 par value; issued 133,545,864 and 59,853,933 shares, respectively | 1 | 1 |
Treasury stock— 8,878,489 and 2,363,324 shares at cost, respectively | (136) | (35) |
Additional paid-in capital | 1,262 | 214 |
Retained earnings | 492 | 281 |
Accumulated other comprehensive loss | (52) | (29) |
Total ILG stockholders' equity | 1,567 | 432 |
Noncontrolling interests | 26 | 33 |
Total equity | 1,593 | 465 |
TOTAL LIABILITIES AND EQUITY | $ 3,304 | $ 1,279 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Restricted cash and cash equivalents (including $32 and $0 in variable interest entities, "VIEs," respectively) | $ 114 | $ 17 |
Accounts receivable, allowance | 0.4 | 0.2 |
Vacation ownership mortgages receivable, allowance | 1 | 0 |
Vacation ownership mortgages receivable, net of allowance of $1 and $0, respectively (including a net $59 and $0 in VIEs, respectively) | 87 | 6 |
Other Assets, Current | 29 | 14 |
Restricted cash and cash equivalents (including $2 and $0 in VIEs, respectively) | 4 | |
Vacation ownership mortgages receivable, allowance | 21 | 2 |
Vacation ownership mortgages receivable, net of allowance of $21 and $2, respectively (including a net $370 and $0 in VIEs, respectively) | 632 | 26 |
Accrued expenses and other current liabilities (including a net $1 and $0 of interest payables in VIEs, respectively) | $ 180 | $ 56 |
Preferred stock, authorized shares | 25,000,000 | 25,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, authorized shares | 300,000,000 | 300,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, issued shares | 133,545,864 | 59,853,933 |
Treasury stock, shares | 8,878,489 | 2,363,324 |
Series A Preferred Stock [Member] | ||
Preferred stock, authorized shares | 100,000 | 100,000 |
VIEs | ||
Restricted cash and cash equivalents (including $32 and $0 in variable interest entities, "VIEs," respectively) | $ 32 | $ 0 |
Vacation ownership mortgages receivable, net of allowance of $1 and $0, respectively (including a net $59 and $0 in VIEs, respectively) | 59 | 0 |
Other Assets, Current | 3 | 0 |
Restricted cash and cash equivalents (including $2 and $0 in VIEs, respectively) | 2 | 0 |
Vacation ownership mortgages receivable, net of allowance of $21 and $2, respectively (including a net $370 and $0 in VIEs, respectively) | 370 | 0 |
Accrued expenses and other current liabilities (including a net $1 and $0 of interest payables in VIEs, respectively) | $ 1 | $ 0 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Millions | Noncontrolling Interest [Member] | Parent [Member] | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total |
Balance at Dec. 31, 2013 | $ 33 | $ 344 | $ 1 | $ (21) | $ 191 | $ 183 | $ (10) | $ 377 |
Balance (in shares) at Dec. 31, 2013 | 59,124,834 | 1,697,360 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | 3 | 79 | 79 | 82 | ||||
Other comprehensive income (loss), net of tax | (3) | (10) | (10) | (13) | ||||
Non-cash compensation expense | 11 | 11 | 11 | |||||
Acquisition of noncontrolling interests | 3 | 3 | ||||||
Issuance of common stock upon exercise of stock options (in shares) | 15,629 | |||||||
Issuance of common stock upon vesting of RSUs, net of withholding taxes | (4) | (4) | (4) | |||||
Issuance of common stock upon vesting of RSUs, net of withholding taxes (in shares) | 322,737 | |||||||
Change in excess tax benefits from stock-based awards | 2 | 2 | 2 | |||||
Deferred stock compensation expense | 1 | 1 | 1 | |||||
Dividends declared on common stock | (25) | 1 | (26) | (25) | ||||
Repurchases of common stock | (14) | $ (14) | (14) | |||||
Repurchases of common stock (in shares) | 665,964 | |||||||
Balance at Dec. 31, 2014 | 36 | 384 | $ 1 | $ (35) | 202 | 236 | (20) | 420 |
Balance (in shares) at Dec. 31, 2014 | 59,463,200 | 2,363,324 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | 2 | 73 | 73 | 75 | ||||
Other comprehensive income (loss), net of tax | (2) | (9) | (9) | (11) | ||||
Non-cash compensation expense | 13 | 13 | 13 | |||||
Dividends paid to noncontrolling interest | (3) | (3) | ||||||
Issuance of common stock upon exercise of stock options (in shares) | 11,084 | |||||||
Issuance of common stock upon vesting of RSUs, net of withholding taxes | (4) | (4) | (4) | |||||
Issuance of common stock upon vesting of RSUs, net of withholding taxes (in shares) | 379,649 | |||||||
Change in excess tax benefits from stock-based awards | 2 | 2 | 2 | |||||
Cash dividends declared | (27) | 1 | (28) | (27) | ||||
Balance at Dec. 31, 2015 | 33 | 432 | $ 1 | $ (35) | 214 | 281 | (29) | $ 465 |
Balance (in shares) at Dec. 31, 2015 | 59,853,933 | 2,363,324 | 57,500,000 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | 2 | 265 | 265 | $ 267 | ||||
Other comprehensive income (loss), net of tax | (6) | (23) | (23) | (29) | ||||
Non-cash compensation expense | 18 | 18 | 18 | |||||
Acquisition of partnership interest of noncontrolling interest | (1) | (1) | ||||||
Dividends paid to noncontrolling interest | (2) | (2) | ||||||
Issuance of common stock upon vesting of RSUs, net of withholding taxes | (1) | (1) | (1) | |||||
Issuance of common stock upon vesting of RSUs, net of withholding taxes (in shares) | 638,159 | |||||||
Fair value of restricted stock awards attributable to precombination services converted in connection with the Vistana acquisition | 2 | 2 | 2 | |||||
Issuance of restricted stock for converted shares in connection with the acquisition of Vistana (in shares) | 668,081 | |||||||
Issuance of common stock in connection with the Vistana acquisition | 1,029 | 1,029 | 1,029 | |||||
Issuance of common stock in connection with the Vistana acquisition (in shares) | 72,371,969 | |||||||
Change in excess tax benefits from stock-based awards | (2) | (2) | (2) | |||||
Dividends declared on common stock | (52) | 2 | (54) | (52) | ||||
Dividends declared on common stock (in shares) | 13,722 | |||||||
Treasury stock purchases | (101) | $ (101) | (101) | |||||
Treasury stock purchases (in shares) | 6,515,165 | |||||||
Balance at Dec. 31, 2016 | $ 26 | $ 1,567 | $ 1 | $ (136) | $ 1,262 | $ 492 | $ (52) | $ 1,593 |
Balance (in shares) at Dec. 31, 2016 | 133,545,864 | 8,878,489 | 124,700,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | |||
Net income | $ 267 | $ 75 | $ 82 |
Adjustments to reconcile net income to net cash provided by (used by) operating activities: | |||
Amortization expense of intangibles | 19 | 14 | 12 |
Amortization of debt issuance costs | 2 | 2 | 1 |
Depreciation expense | 43 | 18 | 16 |
Provision for loan losses | 20 | 2 | |
Accretion of mortgages receivable | 2 | ||
Non-cash compensation expense | 18 | 13 | 11 |
Deferred income taxes | 8 | 3 | 7 |
Equity in earnings from unconsolidated entities | (5) | (5) | (5) |
Excess tax benefits from stock-based awards | (2) | (2) | |
Gain on bargain purchase of Vistana acquisition | (163) | ||
Changes in operating assets and liabilities: | |||
Restricted cash | (15) | 4 | (8) |
Accounts receivable | (11) | (3) | 3 |
Vacation ownership mortgages receivable | (28) | 2 | |
Vacation ownership inventory | (97) | 7 | 2 |
Prepaid expenses and other current assets | 4 | 4 | 6 |
Prepaid income taxes and income taxes payable | (43) | 10 | (10) |
Accounts payable and other current liabilities | 33 | 1 | 11 |
Deferred income | (66) | (7) | (7) |
Other, net | 5 | 5 | (8) |
Net cash provided by (used in) operating activities | (7) | 143 | 111 |
Cash flows from investing activities: | |||
Acquisitions net of cash acquired | (84) | (208) | |
Investment in unconsolidated entity | (5) | (4) | |
Capital expenditures | (95) | (20) | (19) |
Purchases of trading investments | (2) | (11) | |
Investment in financing receivables | (3) | (1) | (16) |
Net cash used in investing activities | (189) | (21) | (258) |
Cash flows from financing activities: | |||
Proceeds from issuance of senior notes | 350 | ||
Borrowings (payments) on revolving credit facility, net | 165 | (413) | 235 |
Payments of debt issuance costs | (7) | (7) | (2) |
Proceeds from securitized debt | 375 | ||
Payments on securitized debt | (93) | ||
Increase in restricted cash | (25) | ||
Purchases of treasury stock | (101) | (14) | |
Dividend payments to stockholders | (52) | (28) | (25) |
Dividend payments to noncontrolling interest | (2) | (3) | |
Payment to former Vistana owner for subsidiary financing obligation | (24) | ||
Payments of contingent consideration | (7) | ||
Withholding taxes on vesting of restricted stock units | (2) | (4) | (4) |
Excess tax benefits from stock-based awards | 2 | 2 | |
Net cash provided by (used) in financing activities | 234 | (103) | 185 |
Effect of exchange rate changes on cash and cash equivalents | (5) | (7) | (5) |
Net increase in cash and cash equivalents | 33 | 12 | 33 |
Cash and cash equivalents at beginning of year | 93 | 81 | 48 |
Cash and cash equivalents at end of year | $ 126 | $ 93 | $ 81 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2016 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
ORGANIZATION AND BASIS OF PRESENTATION | NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION Organization ILG, Inc., (formerly known as Interval Leisure Group, Inc.), is a leading provider of professionally delivered vacation experiences and the exclusive global licensee for the Hyatt ® , Westin ® and Sheraton ® brands in vacation ownership. We operate in the following two segments: Vacation Ownership (VO) and Exchange and Rental. Vacation Ownership engages in sales, marketing, financing and development of vacation ownership interests (VOIs); the management of vacation ownership resorts; and related services to owners and associations. The Vacation Ownership operating segment consists of the VOI sales and financing business of Vistana Signature Experiences (Vistana) and Hyatt Vacation Ownership (HVO) as well as the management related lines of business of Vistana, HVO, Vacation Resorts International (VRI), Trading Places International (TPI), and VRI Europe. Exchange and Rental offers access to vacation accommodations and other travel-related transactions and services to leisure travelers, by providing vacation exchange services and vacation rentals, working with resort developers, homeowners’ associations (HOAs) and operating vacation rental properties. The Exchange and Rental operating segment consists of Interval International (referred to as Interval), the Vistana Signature Network, the Hyatt Residence Club, TPI operated exchange business, and Aqua-Aston Holdings, Inc. (Aqua-Aston). ILG was incorporated as a Delaware corporation in May 2008 under the name Interval Leisure Group, Inc. and commenced trading on The NASDAQ Stock Market in August 2008 under the symbol "IILG" and now trades under “ILG.” On May 11, 2016, we acquired the vacation ownership business of Starwood Hotels & Resorts Worldwide, LLC (Starwood), now known as Vistana. At closing, Starwood spun-off Vistana to its stockholders immediately prior to the merger of Vistana with and into a wholly owned subsidiary of ILG. In the merger, ILG acquired 100% of the voting equity interests of Vistana and issued approximately 72.4 million shares of ILG common stock to the holders who received Vistana common stock in the spin-off. These shares were valued at $1 billion based on ILG’s closing stock price of $14.24 on May 11, 2016. Additionally, ILG directly purchased certain Mexican entities and a note receivable for total consideration of $128 million. In connection with the acquisition, Vistana entered into an exclusive, 80 - year global license agreement with Starwood for the use of the Westin® and Sheraton® brands in vacation ownership. The global license agreement may also be extended for two 30 – year terms, subject to meeting certain sales performance tests. Also, Vistana has the non-exclusive license for the existing St. Regis® and The Luxury Collection® vacation ownership properties and an affiliation with the Starwood Preferred Guest program. Basis of Presentation Principles of Consolidation The accompanying consolidated financial statements include the accounts of ILG, our wholly‑owned subsidiaries, and companies in which we have a controlling interest, including variable interest entities (“VIEs”) where we are the primary beneficiary in accordance with consolidation guidance. All significant intercompany balances and transactions have been eliminated in the consolidated financial statements. References in these financial statements to net income attributable to common stockholders and ILG stockholders’ equity do not include noncontrolling interests, which represent the outside ownership of our consolidated non‑wholly owned entities and are reported separately. Accounting Estimates ILG’s management is required to make certain estimates and assumptions during the preparation of its consolidated financial statements in accordance with generally accepted accounting principles (“GAAP”). These estimates and assumptions impact the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net earnings during any period. Actual results could differ from those estimates. Significant estimates underlying the accompanying consolidated financial statements include: · the recovery of long‑lived assets as well as goodwill and other intangible assets; · purchase price allocations of business combinations; · loan loss reserves for vacation ownership mortgages receivable; · accounting for acquired vacation ownership mortgages receivable; · revenue recognition pertaining to sales of vacation ownership products pursuant to the percentage of completion method; · cost of vacation ownership product sales related estimates included in our relative sales value calculation, such as future projected sales revenue and expected project costs to complete; · the accounting for income taxes including deferred income taxes and related valuation allowances; · the determination of deferred revenue and membership costs; · and the determination of stock‑based compensation. In the opinion of ILG’s management, the assumptions underlying the historical consolidated financial statements of ILG and its subsidiaries are reasonable Seasonality Revenue at ILG is influenced by the seasonal nature of travel. Within our Vacation Ownership segment, our sales and financing business experiences a modest impact from seasonality, with higher sales volumes during the traditional vacation periods. Our vacation ownership management businesses by and large do not experience significant seasonality, with the exception of our resort operations revenue which tends to be higher in the first quarter. Within our Exchange and Rental segment, our vacation exchange businesses recognize exchange and Getaway revenue based on confirmation of the vacation, with the first quarter generally experiencing higher revenue and the fourth quarter generally experiencing lower revenue. Our vacation rental businesses recognize rental revenue based on occupancy, with the first and third quarters generally generating higher revenue as a result of increased leisure travel to our Hawaii‑based managed properties during these periods, and the second and fourth quarters generally generating lower revenue. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2—SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition Vacation Ownership Revenue from the Vacation Ownership segment is derived principally from sales of VOIs and related fees earned by Vistana and HVO, interest income earned for financing these sales, fees for vacation ownership resort and homeowners’ association management services, and rental and ancillary revenues, including from hotels owned by Vistana and HVO . Sales of VOIs ILG recognizes revenue from sales of VOIs in accordance with Financial Accounting Standard Board (FASB) Accounting Standards Codification (ASC) 970, Real Estate—General , and FASB ASC 978, Real Estate—Time‑Sharing Activities . The stated sales price of the VOI is divided into separate revenue components, which include the revenue earned on the sale of the VOI and the revenue earned on related sales incentives given to the customer as motivation to purchase the VOI. We at times offer several types of sales incentives, including SPG and Hyatt Gold Passport (World of Hyatt) points, free bonus week, and down payment credits to buyers. Consolidated VOI sales are recognized and included in revenues after a binding sales contract has been executed, a 10% minimum down payment has been received as a measure of substantiating the purchaser’s commitment, the rescission period has expired, and construction is substantially complete. Pursuant to accounting rules for real estate time‑sharing transactions, as part of determining when we have met the criteria necessary for revenue recognition we must also take into consideration the fair value of certain incentives provided to the purchaser when assessing the adequacy of the purchaser’s initial down-payment. The agreement for sale generally provides for a down payment and a note secured by a mortgage payable in monthly installments, including interest, over a typical term ranging from 5 - 15 years. All payments received prior to the recognition of the sale as revenue are recognized in deferred revenue in the accompanying consolidated balance sheets. Customer deposits relating to contracts cancelled after the applicable rescission period are forfeited and recorded in revenue at the time of forfeiture. If construction of the vacation ownership product is not complete, we determine the portion of revenues to recognize based upon the percentage of completion method, which includes judgments and estimates, including total project costs to complete. Revenue deferred under the percentage of completion calculations is included in deferred revenue on the consolidated balance sheet as of December 31, 2016, and associated direct selling costs are deferred as prepaid expenses within prepaid expenses and other current assets. The provision for loan losses is recorded as an adjustment to sales of VOIs in the accompanying consolidated income statements rather than as an adjustment to bad debt expense. ILG records an estimate of uncollectible amounts at the time of the interval sale. We capitalize direct costs attributable to the sale of VOIs until the sales are recognized. All such capitalized costs are included in prepaid expenses and other current assets in the consolidated balance sheets. If a contract is cancelled, we charge the unrecoverable direct selling costs to expense. Indirect sales and marketing costs are expensed as incurred. Management fee revenue Management fees in this segment consist of base management fees, service fees, and annual maintenance fees, as applicable. Annual maintenance fees are amounts paid by timeshare owners for maintaining and operating the respective properties, which includes management services, and are recognized on a straight‑line basis over the respective annual maintenance period. Our day-to-day management services include activities such as housekeeping services, operation of a reservation system, maintenance, and certain accounting and administrative services. We receive compensation for such management services, which is generally based on either a percentage of the budgeted cost to operate such resorts or a fixed fee arrangement. Resort operations revenue Our resort operations activities are largely comprised of transient rental income at our vacation ownership and owned-hotel properties. We record rental revenue when occupancy has occurred or, in the case of unused prepaid rentals, upon forfeiture. Other ancillary services revenue consists of goods and services that are sold or provided by us at restaurants, golf courses and other retail and service outlets located at developed resorts. We recognize ancillary services revenue when goods have been provided and/or services have been rendered. Exchange and Rental Membership fee revenue Revenue, net of sales incentives, from membership fees from our Exchange and Rental segment is deferred and recognized over the terms of the applicable memberships, typically ranging from one to five years, on a straight‑line basis. When multiple member benefits and services are provided over the term of the membership, revenue is recognized for each separable deliverable ratably over the membership period, as applicable. Generally, memberships are cancelable and refundable on a pro‑rata basis, with the exception of Interval Network’s Platinum tier which is non‑refundable. Direct costs of acquiring members (primarily commissions) and certain direct fulfillment costs related to deferred membership revenue are also deferred and amortized on a straight‑line basis over the terms of the applicable memberships or benefit period, whichever is shorter. The recognition of previously deferred revenue and expense is based on estimates derived from an aggregation of member‑level data. However, following the implementation of a proprietary IT platform in the fourth quarter of 2014, recognition of deferred membership revenue and expense on new Interval Network memberships sold is at the individual member‑level. Transaction revenue Revenue from exchanges, Getaway transactions and other fee-based services provided to members of our networks is recognized when confirmation of the transaction is provided and services have been rendered as the earnings process is complete. Reservation servicing revenue is recognized when the service is performed or on a straight‑line basis over the applicable service period. All taxable revenue transactions are presented on a net‑of‑tax basis. Club rental revenue Club rental revenue represents rentals generated by the Vistana Signature Network and Hyatt Residence Club mainly to monetize inventory at their vacation ownership resorts to provide exchanges for our members through hotel loyalty programs. Revenue related to club rentals is recognized when occupancy has occurred. Rental management revenue Revenue from our vacation rental management businesses is comprised of base management fees which are typically either (i) fixed amounts, (ii) amounts based on a percentage of adjusted gross lodging revenue, or (iii) various revenue sharing arrangements with condominium owners based on stated formulas. Base management fees are recognized when earned in accordance with the terms of the contract. Incentive management fees for certain hotels and condominium resorts are generally a percentage of operating profits or improvement in operating profits. We recognize incentive management fees as earned throughout the incentive period based on actual results which are trued‑up at the culmination of the incentive period. Service fee revenue is based on the services provided to owners including reservations, sales and marketing, property accounting and information technology services either internally or through third party providers. Service fee revenue is recognized when the service is provided. General Cost reimbursement revenue Represents the compensation and other employee-related costs directly associated with managing properties that are included in both revenue and cost of sales and that are passed on to the property owners or homeowner associations without mark-up. Cost reimbursement revenue of the Vacation Ownership segment also includes reimbursement of sales and marketing expenses, without mark-up, pursuant to contractual arrangements. Deferred revenue in a business combination When we acquire a business which records deferred revenue on their historical financial statements, we are required to re‑measure that deferred revenue as of the acquisition date pursuant to rules related to accounting for business combinations, as described further below. The post‑acquisition impact of that remeasurement results in recognizing revenue which solely comprises the cost of the associated legal performance obligation we assumed as part of the acquisition, plus a normal profit margin. This purchase accounting treatment typically results in lower amounts of revenue recognized in a reporting period following the acquisition than would have otherwise been recognized on a historical basis. Multiple‑element arrangements When we enter into multiple‑element arrangements, we are required to determine whether the deliverables in these arrangements should be treated as separate units of accounting for revenue recognition purposes and, if so, how the contract price should be allocated to each element. We analyze our contracts upon execution to determine the appropriate revenue recognition accounting treatment. Our determination of whether to recognize revenue for separate deliverables will depend on the terms and specifics of our products and arrangements as well as the nature of changes to our existing products and services, if any. The allocation of contract revenue to the various elements does not change the total revenue recognized from a transaction or arrangement, but may impact the timing of revenue recognition. Sales type taxes All taxable revenue transactions are presented on a net‑of‑tax basis. Cash and Cash Equivalents Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less. Restricted Cash and Cash Equivalents Restricted cash and cash equivalents at December 31, 2016 and 2015 primarily includes maintenance fees, escrow deposits received on sales of VOIs that are held in escrow until the applicable statutory rescission period has expired, the funds have been released from escrow and the deeding process has begun or title is otherwise transferred. We also may have the opportunity to release escrow funds by issuing a surety bond. Additionally, restricted cash and cash equivalents also include amounts held in trust and lock box accounts in connection with certain transactions related to management of vacation rental properties as well as cash held by our variable interest entities (“VIEs”) from our securitization transactions (refer to Note 13 – Securitized Vacation Ownership Debt). Accounts Receivable Accounts receivable are stated at amounts due from customers, principally resort developers, members and managed properties, net of an allowance for doubtful accounts. Accounts receivable outstanding longer than the contractual payment terms are considered past due. We determine our allowance by considering a number of factors, including the length of time accounts receivable are past due, previous loss history, our judgment as to the specific customer’s current ability to pay its obligation and the condition of the general economy. More specifically, our policy for determining our allowance for doubtful accounts consists of both general and specific reserves. The general reserve methodology is distinct for each ILG business based on its historical collection experience and past practice. Predominantly, receivables greater than 120 days past due are applied a general reserve factor, while receivables 180 days or more past due are fully reserved. The determination of when to apply a specific reserve requires judgment and is directly related to the particular customer collection issue identified, such as known liquidity constraints, insolvency concerns or litigation. The allowance for doubtful accounts is included within general and administrative expense within our consolidated statements of income. We write off accounts receivable when they become uncollectible once we have exhausted all means of collection. Vacation Ownership Inventory and Cost of Sales Our inventory consists of completed unsold vacation ownership interests, which has an operating cycle that generally exceeds twelve months, and vacation ownership projects under construction. On our consolidated balance sheet, completed unsold vacation ownership interests are presented as a current asset, while vacation ownership projects under construction are presented as a non-current asset given this inventory is in the development stage of its operating cycle. We carry our inventory presented within current assets at the lower of cost or fair value, less expected costs to sell, which can result in impairment charges and/or recoveries of previous impairments. We capitalize costs clearly associated with the acquisition, development and construction of a real estate project when it is probable that the project will move forward. We capitalize salary and related costs only to the extent they directly relate to the project. We capitalize interest expense, taxes and insurance costs when activities that are necessary to get the property ready for its intended use are underway. We cease capitalization of costs during prolonged gaps in development when substantially all activities are suspended or when projects are considered substantially complete. We account for our vacation ownership inventory and cost of vacation ownership products in accordance with the authoritative guidance for accounting for real estate time-sharing transactions contained in ASC Topic 978, Real Estate—Time Sharing Activities , which defines a specific application of the relative sales value method for reducing vacation ownership inventory and recording cost of sales. Also, pursuant to the guidance for accounting for real estate time-sharing transactions, we do not reduce inventory for the cost of vacation ownership products related to anticipated credit losses (accordingly, no adjustment is made when inventory is reacquired upon default of originated receivables). These standards provide for changes in estimates within the relative sales value calculations to be accounted for as real estate inventory true-ups, which we refer to as cost of sales true-ups, and are recorded in cost of vacation ownership product sales to retrospectively adjust the margin previously recorded subject to those estimates. These cost of sales true-ups could result in material adjustments to cost of vacation ownership product sales in a given period. Costs Incurred to Sell Vacation Ownership Products We capitalize and defer direct costs attributable to the sale of vacation ownership products until the sales are recognized, in accordance with the guidelines of ASC Topic 978, Real Estate—Time Sharing Activities . All such capitalized costs are included in prepaid expenses and other current assets in the accompanying consolidated balance sheets, and are subsequently reflected in sales and marketing expense when recognized. If a contract is cancelled, we charge the unrecoverable direct selling costs to expense. In accordance with ASC 978, indirect sales and marketing costs are expensed as incurred. Vacation Ownership Mortgages Receivable and Allowance for Loan Losses Vacation ownership mortgages receivable consist of loans to eligible customers who purchase VOIs and choose to finance their purchase. These mortgage receivables are collateralized by the underlying VOI, generally bear interest at a fixed rate, have a typical term ranging from 5-15 years and are generally made available to customers who make a down payment on the purchase price within established credit guidelines. Vacation ownership mortgages receivable are composed of mortgage loans related to our financing of vacation ownership interval sales. Included within our vacation ownership mortgages receivable are originated loans and loans acquired in connection with our acquisitions of Vistana and HVO. Acquired loans are segregated between those with deteriorated credit quality at acquisition and those deemed as performing. To make this determination, we consider such factors as credit collection history, past due status, non‑accrual status, credit risk ratings, interest rates and the underlying collateral securing the loans. The fair value of acquired loans deemed performing is determined by discounting cash flows, both principal and interest, for the loan pool at market interest rates while giving consideration to anticipated future defaults. The difference between fair value and principal balances due at acquisition date is accreted to interest income, within consolidated revenue, over the estimated life of the loan pool. The collection activity associated with our securitized vacation ownership notes receivable determines the amount of our monthly repayments against our securitized debt. Collection activity includes contractual payments due and prepayments. In addition, defaulted loans are generally removed from the securitized pool and are substituted or repurchased, while upgraded loans are repurchased, for debt repayment purposes. The securitized debt is non-recourse without a specific repayment schedule. As the amount of each principal payment is contingent on the cash flows from underlying vacation ownership mortgages receivable in a given period, we have not disclosed future contractual debt repayments. Additionally, our vacation ownership mortgages receivable securitization agreements allow us to receive the net excess cash flows (spread between the collections on the notes and payments for third party obligations as defined in the securitization agreements) from the VIEs provided we do not meet certain triggers related to default levels and collateralization of the securitized pool, as discussed in Note 13. Allowance for Loan Losses For originated loans, we record an estimate of uncollectability as a reduction of sales of VOIs in the accompanying consolidated statements of income at the time revenue is recognized on a VOI sale. We evaluate our originated loan portfolio collectively as they are largely homogeneous, smaller‑balance, vacation ownership mortgages receivable. We use a technique referred to as static pool analysis, which tracks uncollectibles over the entire life of those mortgages receivable, as the basis for determining our general reserve requirements on our vacation ownership mortgages receivable. The adequacy of the related allowance is determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio, including defaults, aging, and historical write‑offs of these receivables. The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio. We generally determine our originated vacation ownership mortgages receivable to be nonperforming if either interest or principal is more than 30 days past due. All non‑performing loans are placed on non‑accrual status and we do not resume interest accrual until the receivable becomes contractually current. We apply payments we receive for vacation ownership notes receivable on non‑performing status first to interest, then to principal, and any remainder to fees. Loans acquired in connection with a business combination are recorded at their estimated fair value on their purchase date with no carryover of the related allowance for loan losses. Performing acquired loans are subsequently evaluated for any required allowance at each reporting date. Refer to Note 5 for additional information on our acquired loans. Investments in Unconsolidated Entities We consolidate entities under our control, including variable interest entities (VIEs) where we are deemed to be the primary beneficiary as a result of qualitative and/or quantitative characteristics. The primary beneficiary is the party who has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and who has an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be disproportionate to the entity. Investments in unconsolidated affiliates over which we exercise significant influence, but do not control, including joint ventures, are accounted for by the equity method. In addition, our limited partnership investments in which we hold more than a minimal investment are accounted for under the equity method of accounting. We assess investments in unconsolidated entities for impairment quarterly to determine whether there is an indication that a loss in value that is other‑than‑temporary has occurred. If so, we evaluate the carrying value compared to the estimated fair value of the investment. Fair value is based upon internally developed discounted cash flow models, third‑party appraisals, or if appropriate, current estimated net sales proceeds from pending offers. If the estimated fair value is less than carrying value, we use our judgment to determine if the decline in value is other‑than‑temporary. In making this determination, we consider factors including, but not limited to, the length of time and extent of the decline, loss of values as a percentage of the cost, financial condition and near‑term financial projections, our intent and ability to recover the lost value, and current economic conditions. Impairments that are deemed other‑than‑temporary are charged to equity in losses from unconsolidated entities in our accompanying consolidated statements of income. Property and Equipment Property and equipment, including capitalized improvements, are recorded at cost. Repairs and maintenance and any gains or losses on dispositions are included in results of operations. Gains or losses on the sale or retirement of assets are included in net income when the assets are retired or sold provided there is reasonable assurance of the collectability of the sales price, if applicable, and any future activities to be performed by us relating to the assets sold are insignificant. Depreciation is recorded on a straight‑line basis to allocate the cost of depreciable assets to operations over their estimated useful lives. The following table summarizes depreciable life by asset category. Asset Category Depreciation Period Computer equipment 3 to 5 Years Capitalized software (including internally-developed software) 3 to 7 Years Buildings and leasehold improvements 1 to 40 Years Furniture and other equipment 3 to 10 Years (1) The depreciation period for leasehold improvements is the lesser of the lease term or the economic useful life for leasehold improvements. In accordance with ASC Topic 350, “Intangibles‑Goodwill and Other” (“ASC 350”), we capitalize certain qualified costs incurred in connection with the development of internal use software. Capitalization of internal use software costs begins when the preliminary project stage is completed, management with the relevant authority authorizes and commits to the funding of the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. Depreciation of property and equipment is presented as a separate line item in the accompanying income statement. Fair Value Measurements In accordance with ASC Topic 820, “Fair Value Measurement,” (“ASC 820”) the fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. We categorize assets and liabilities recorded at fair value using a three‑tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: · Level 1—Observable inputs that reflect quoted prices in active markets · Level 2—Inputs other than quoted prices in active markets that are either directly or indirectly observable · Level 3—Unobservable inputs in which little or no market data exists, therefore requiring the company to develop its own assumptions Our non‑financial assets, such as goodwill, intangible assets, vacation ownership inventory and long‑lived assets, are adjusted to fair value only when an impairment charge is recognized. Such fair value measurements are based predominantly on Level 3 inputs. Accounting for Business Combinations In accordance with ASC Topic 805, “Business Combinations,” when accounting for business combinations we are required to recognize the assets acquired, liabilities assumed, contractual contingencies, noncontrolling interests and contingent consideration at their fair value as of the acquisition date. These items are recorded on our consolidated balance sheets as of the respective acquisition dates based upon their estimated fair values at such dates. The results of operations of acquired businesses are included in the consolidated statements of income since their respective acquisition dates. The purchase price allocation process requires management to make significant estimates and assumptions with respect to intangible assets, estimated contingent consideration payments and/or pre‑acquisition contingencies, all of which ultimately affect the fair value of goodwill established as of the acquisition date. Goodwill acquired in business combinations is assigned to the reporting unit(s) expected to benefit from the combination as of the acquisition date and is then subsequently tested for impairment at least annually. If the fair value of the net assets acquired exceeds the purchase price consideration, we record a gain on bargain purchase. However, in such a case, before the measurement period closes we perform a reassessment to reconfirm whether we have correctly identified all of the assets acquired and all of the liabilities assumed as of the acquisition date. As part of our accounting for business combinations we are required to determine the useful lives of identifiable intangible assets recognized separately from goodwill. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the acquired business. An intangible asset with a finite useful life shall be amortized; an intangible asset with an indefinite useful life shall not be amortized. We base the estimate of the useful life of an intangible asset on an analysis of all pertinent factors, in particular, all of the following factors with no one factor being more presumptive than the other: · The expected use of the asset. · The expected useful life of another asset or a group of assets to which the useful life of the intangible asset may relate. · Any legal, regulatory, or contractual provisions that may limit the useful life. · Our own historical experience in renewing or extending similar arrangements, consistent with our intended use of the asset, regardless of whether those arrangements have explicit renewal or extension provisions. · The effects of obsolescence, demand, competition, and other economic factors. · The level of maintenance expenditures required to obtain the expected future cash flows from the asset. If no legal, regulatory, contractual, competitive, economic, or other factors limit the useful life of an intangible asset to the reporting entity, the useful life of the asset shall be considered to be indefinite. The term indefinite does not mean the same as infinite or indeterminate. The useful life of an intangible asset is indefinite if that life extends beyond the foreseeable horizon—that is, there is no foreseeable limit on the period of time over which it is expected to contribute to the cash flows of the acquired business. Although we believe the assumptions and estimates we have made have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired entity and are inherently uncertain. Examples of critical estimates in accounting for acquisitions include but are not limited to: · future expected cash flows from sales of products and services and related contracts and agreements; · discount and long‑term growth rates; and · the estimated fair value of the acquisition‑related contingent consideration, which is performed using a probability‑weighted income approach based upon the forecasted achievement of post‑acquisition pre‑determined targets; Unanticipated events and circumstances may occur which could affect the accuracy or validity of our assumptions, estimates or actual results. Additionally, any change in the fair value of the acquisition‑related contingent consideration subsequent to the acquisition date, including changes resulting from events that occur after the acquisition date, such as changes in our estimated fair value of the targets that are expected to be achieved, will be recognized in earnings in the period of the change in estimated fair value. Additionally, when acquiring a company who has recorded deferred revenue in its historical, pre‑acquisition financial statements, we are required as part of purchase accounting to re‑measure the deferred revenue as of the acquisition date. Deferred revenue is re‑measured to represent solely the cost that relates to the associated legal performance obligation which we assumed as part of the acquisition, plus a normal profit margin representing the level of effort or risk assumed. Legal performance obligations that simply relate to the passage of time would not result in recognized deferred revenue as there is little to no associated cost. Goodwill and Other Intangible Assets Goodwill and other intangible assets are significant components of our consolidated balance sheets. Our policies regarding the valuation of intangible assets affect the amount of future amortization and possible impairment charges we may incur. Assumptions and estimates about future values and remaining useful lives of our intangible and other long‑lived assets are complex and subjective. They can be affected by a variety of factors, including external factors such as consumer spending habits and general economic trends, and internal factors such as changes in our business strategy and our internal forecasts. Goodwill acquired in business combinations is assigned to the reporting unit(s) expected to benefit from the combination as of the acquisition date. In accordance with ASC 350, we review the carrying value of goodwill and other intangible assets of each of our reporting units on an annual basis as of October 1, or more frequently upon the occurrence of certain events or substantive changes in circumstances, based on either a qualitative assessment or a two‑step impairment test. Our reporting units within each of our Vacation Ownership and Exchange and Rental operating segments are as follows: OPERATING SEGMENTS Vacation Ownership Exchange and Rental VO management reporting unit Exchange reporting unit VO sales and financing reporting unit Rental reporting unit During the year, we monitor the actual performance of our reporting units relative to the fair value assumptions used in our annual impairment test, including potential events and changes in circumstance affecting our key estimates and assumptions. Qualitative Assessment The qualitative assessment may be elected in any given year pursuant to ASC 350. Under this guidance, entities testing goodwill for impairment have the option of performing a qualitative assessment before calculating the fair value of a reporting unit. If entities determine, on the basis of qualitative factors, that it is more‑likely‑than‑not (i.e., a likelihood of more than 50 percent) that the fair value of the reporting unit is below the carrying amount, the two‑step impairment test would be required. The guidance also provides the option to skip the qualitative assessment in any given year and proceed directly with the two‑step impairment test at our discretion. Our qualitative assessment is performed for the purpose of assessing whether events or circumstances have occurred in the intervening period between the date of our last two‑step impairment test (the “Baseline Valuation”) and the date of our current annual impairment |
BUSINESS COMBINATION
BUSINESS COMBINATION | 12 Months Ended |
Dec. 31, 2016 | |
BUSINESS COMBINATION | |
BUSINESS COMBINATION | NOTE 3—BUSINESS COMBINATION On May 11, 2016, we completed the acquisition of Vistana from wholly‑owned subsidiaries of Starwood Hotels & Resorts Worldwide, Inc. as discussed in Note 1 to these consolidated financial statements. The Vistana acquisition is recorded on our consolidated balance sheet as of May 11, 2016 based upon estimated fair values as of such date. The results of operations related to this business are included in our consolidated statements of income beginning on May 12, 2016 and within our Exchange and Rental and Vacation Ownership segments for segment reporting purposes on the basis of its respective business activities. Purchase Price Allocation The following table presents the preliminary allocation of total purchase price consideration to the assets acquired and liabilities assumed, based on their estimated fair values as of their respective acquisition dates (in millions): Preliminary PPA Adjustments to PPA (3) Revised Preliminary PPA (4) Cash $ $ - $ Vacation ownership inventory Vacation ownership mortgages receivable Other current assets Intangibles Property plant and equipment Other non-current assets Deferred revenue Securitized debt - Other current liabilities (2) Other non-current liabilities Gain on bargain purchase (1) Net assets acquired $ $ $ (1) Gain on bargain purchase represents the excess of the fair value of the net tangible and intangible assets acquired over the purchase price. This gain of $163 million is presented within Other income (expense), net, in our consolidated statement of income for the year ended December 31, 2016, and includes a negative adjustment of $34 million in the 2016 period subsequent to the respective quarter of the acquisition. The existence of a gain on bargain purchase pertaining to this transaction is principally related to the decrease in our stock price leading up to the acquisition date. (2) Includes a $24 million accrual pertaining to a dividend declared by a subsidiary of Vistana to Starwood prior to our acquisition date which was settled subsequent to the acquisition closing. (3) Represents adjustments to the preliminary purchase price allocation first presented in our June 30, 2016 Form 10-Q resulting from our ongoing activities, including our reassessment of assets acquired and liabilities assumed, with respect to finalizing our purchase price allocation for this acquisition. The larger adjustments primarily pertained to refinements of certain estimates related to the valuation of our mortgages receivable and vacation ownership inventory based on additional information, adjustments to tax related accounts as new information became available, and certain other reclasses between line items. (4) Measurement period is considered closed as of December 31, 2016 for all balance sheet items except those that are tax related, as discussed further below. The purchase price allocated to the fair value of identifiable intangible assets associated with the Vistana acquisition is as follows (in millions): Fair Value Useful Life (years) Resort management contracts $ Customer relationships Other < 1 Total $ In connection with the Vistana acquisition we recorded identifiable intangible assets of $238 million, all of which were definite-lived intangible assets, related to Vistana’s membership base in their Vistana Signature Network (described in table above as customer relationships) and their resort management contracts. The valuation of the assets acquired and liabilities assumed in connection with this acquisition was based on fair values at the acquisition date. The assets purchased and liabilities assumed for the Vistana acquisition have been reflected in the accompanying consolidated balance sheet as of December 31, 2016. The measurement period with respect to this acquisition was considered closed as of December 31, 2016, with the exception of tax related items which are pending additional analysis of tax attributes and tax returns, which will not be made available until 2017. Consequently, with respect to tax related items, the purchase price allocation disclosed herein (as well as the related gain on bargain purchase) remains provisional at this time and subject to further adjustment to reflect new information obtained about factors and circumstances that existed as of the acquisition date that if known would have affected the measurement of the amounts recognized as of that date, while the measurement period remains open. Results of operations Revenue and net income related to the Vistana acquisition was recognized in our consolidated statements of income totaling $654 million and $45 million for the year ended December 31, 2016. Transaction costs, consisting primarily of professional fees, directly related to this acquisition and expensed as incurred totaled $18 million for the year ended December 31, 2016 and are classified within the general and administrative expense line item in our consolidated statements of income included herein. Pro forma financial information (unaudited) The following unaudited pro forma financial information presents the consolidated results of ILG and Vistana as if the acquisition had occurred on January 1, 2015. The pro forma results presented below for the years ended December 31, 2016 and 2015 are based on the historical financial statements of ILG and Vistana, adjusted to reflect the purchase method of accounting, with ILG as accounting acquirer. The pro forma information is not necessarily indicative of the consolidated results of operations that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the combined company. It does not reflect cost savings expected to be realized from the elimination of certain expenses and from synergies expected to be created or the costs to achieve such cost savings or synergies, if any. Income taxes do not reflect the amounts that would have resulted had ILG and Vistana filed consolidated income tax returns during the periods presented. Pro forma adjustments reflect non-recurring adjustments in 2015 of $163 million pertaining to the gain on bargain purchase discussed above and a $14 million reduction in revenue for the year ended December 31, 2015, respectively, related to the remeasurement of deferred revenue balances as part of purchase accounting. Additionally, net income for the year ended December 31, 2015 was adjusted for other non-recurring items such as the remeasurement of deferred expenses. Pro forma adjustments are tax -effected at ILG's estimated statutory tax rate of 37.2% for the 2015 period and 35% for the 2016 period, with the exception of the $163 million gain which is not subject to income taxation. Year Ended December 31, (In millions, except per share data) 2016 2015 Revenue $ $ Net income attributable to common stockholders $ $ Earnings per share: Basic $ $ Diluted $ $ |
RESTRICTED CASH
RESTRICTED CASH | 12 Months Ended |
Dec. 31, 2016 | |
RESTRICTED CASH | |
RESTRICTED CASH | NOTE 4—RESTRICTED CASH Restricted cash consists of the following (in millions): December 31, December 31, 2016 2015 Escrow deposits on vacation ownership products $ $ Securitization VIEs — Other Total restricted cash $ $ Restricted cash associated with escrow deposits on vacation ownership products represents amounts that are held in escrow until statutory requirements for release are satisfied, at which time that cash is no longer restricted. Restricted cash of securitization VIEs represents cash held in accounts related to vacation ownership mortgages receivable securitizations, which is generally used to pay down securitized vacation ownership debt in the period following the quarter in which the cash is received. As of December 31, 2016, this balance also includes $19 million of cash collateral pending transfer of additional vacation ownership mortgages receivable into the September 2016 securitized pool, as described in Note 13. |
VACATION OWNERSHIP MORTGAGES RE
VACATION OWNERSHIP MORTGAGES RECEIVABLE | 12 Months Ended |
Dec. 31, 2016 | |
VACATION OWNERSHIP MORTGAGES RECEIVABLE | |
VACATION OWNERSHIP MORTGAGES RECEIVABLE | NOTE 5—VACATION OWNERSHIP MORTGAGES RECEIVABLE Vacation ownership mortgages receivable is comprised of various mortgage loans related to our financing of vacation ownership interval sales. As part of our acquisitions of HVO and Vistana, we acquired existing portfolios of vacation ownership mortgages receivable. These loans are accounted for using the expected cash flows method of recognizing discount accretion based on the acquired loans’ expected cash flows pursuant to ASC 310-30, “Loans acquired with deteriorated credit quality.” At acquisition, we recorded these acquired loans at fair value, including a credit discount or premium, as applicable, which is accreted as an adjustment to yield over the loans’ estimated life. Originated loans as of December 31, 2016 and 2015 represent vacation ownership mortgages receivable originated by ILG, or more specifically our Vacation Ownership segment, subsequent to the acquisitions of HVO and Vistana on October 1, 2014 and May 11, 2016, respectively. Vacation ownership mortgages receivable carrying amounts as of December 31, 2016 and 2015 were as follows (in millions): December 31, December 31, 2016 2015 Securitized Unsecuritized (2) Total Securitized Unsecuritized (2) Total Acquired vacation ownership mortgages receivable (1) $ $ $ $ — $ $ Originated vacation ownership mortgages receivable (1) — Less allowance for loan losses on originated loans — Net vacation ownership mortgages receivable $ $ $ $ — $ $ (1) At various interest rates with varying payment terms through 2030 for acquired receivables and for originated receivables (2) As of December 31, 2016, $9 million of unsecuritized vacation ownership receivables were not eligible for securitization. Additionally, as part of the September 2016 securitization described in Note 13, approximately $19 million of currently unsecuritized receivables may be added in the future to the September 2016 securitized pool and thereby releasing the same amount from restricted cash. The fair value of our acquired loans as of the respective acquisition dates were determined by use of a discounted cash flow approach which calculates a present value of expected future cash flows based on scheduled principal and interest payments over the term of the respective loans, while considering anticipated defaults and early repayments determined based on historical experience. Consequently, the fair value of these acquired loans recorded on our consolidated balance sheet as of the acquisition date includes an estimate for future loan losses which becomes the historical cost basis for that existing portfolio going forward. As of December 31, 2016 and 2015, the contractual outstanding balance of the acquired loans, which represents contractually-owed future principal amounts, was $466 million and $26 million, respectively. The change as of December 31, 2016 from year-end reflects the acquired loans pertaining to the Vistana acquisition. The table below (in millions) presents a rollforward from December 31, 2015 of the accretable yield (interest income) expected to be earned related to our acquired loans, as well as the amount of non-accretable difference at the end of the period. Nonaccretable difference represents estimated contractually required payments in excess of estimated cash flows expected to be collected. The accretable yield represents the excess of estimated cash flows expected to be collected over the carrying amount of the acquired loans. Year Ended Accretable Yield December 31, 2016 Balance, beginning of period $ Vistana acquired accretable yield Accretion Reclassification from nonaccretable difference Balance, end of period $ Nonaccretable difference, end of period balance $ The accretable yield is recognized into interest income (within consolidated revenue) over the estimated life of the acquired loans using the level yield method. The accretable yield may change in future periods due to changes in the anticipated remaining life of the acquired loans, which may alter the amount of future interest income expected to be collected, and changes in expected future principal and interest cash collections which impacts the nonaccretable difference. Vacation ownership mortgages receivable as of December 31, 2016 are scheduled to mature as follows (in millions): Vacation Ownership Mortgages Receivable Acquired Originated Twelve month period ending December 31, Securitized Loans Unsecuritized Loans Securitized Loans Unsecuritized Loans Total 2017 $ $ $ $ $ 2018 2019 2020 2021 2021 and thereafter Total Plus: net premium on acquired loans (1) — — Less: allowance for losses — — Net vacation ownership mortgages receivable $ $ $ $ $ Weighted average stated interest rate as of December 31, 2016 13.4% 13.5% Range of stated interest rates as of December 31, 2016 9.9% to 15.9% 10.9% to 15.9% (1) The difference between the contractual principal amount of acquired loans of $466 million and the net carrying amount of $546 million as of December 31, 2016 is related to the application of ASC 310-30. Collectability We assess our vacation ownership mortgages receivable portfolio of loans for collectability on an aggregate basis. Estimates of uncollectability pertaining to our originated loans are recorded as provisions in the vacation ownership mortgages receivable allowance for loan losses. For originated loans, we record an estimate of uncollectability as a reduction of sales of vacation ownership products in the accompanying consolidated statements of income at the time revenue is recognized on a vacation ownership product sale. We evaluate our originated loan portfolio collectively as it is comprised of homogeneous, smaller-balance, vacation ownership mortgages receivable. We use a technique referred to as static pool analysis, which tracks uncollectibles over the entire life of those mortgages receivable, as the basis for determining our general reserve requirements on our vacation ownership mortgages receivable. The adequacy of the related allowance is determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio, including defaults, aging, and historical write-offs of these receivables. The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio. As of December 31, 2016, allowance for loan losses of $22 million for uncollectability was recorded against our vacation ownership mortgages receivable for estimated losses related solely to our originated loans. Our allowance for loan losses as of December 31, 2015 was $2 million; the change in 2016 pertains to additional loan loss provision recorded against sales of vacation ownership products on our consolidated income statement during the year. Our acquired loans are remeasured at period end based on expected future cash flows which uses an estimated measure of anticipated defaults. We consider the allowance for loan losses on our originated loans and estimates of defaults used in the remeasurements of our acquired loans to be adequate and based on the economic environment and our assessment of the future collectability of the outstanding loans. We use the origination of the notes by brand (Westin, Sheraton, Hyatt, and other) and the FICO scores of the buyers as the primary credit quality indicators to calculate the allowance for loan losses for our originated vacation ownership mortgages receivable, as we believe there is a relationship between the default behavior of borrowers and the brand associated with the vacation ownership property they have acquired, supplemented by the FICO scores of the buyers. In addition to quantitatively calculating the allowance based on our static pool analysis, we supplement the process by evaluating certain qualitative data, including the aging of the respective receivables, current default trends by brand and origination year and various macroeconomic indicators. At December 31, 2016, the weighted average FICO score within our consolidated loan pools was 712 based upon the outstanding loan balance at time of origination. The average estimated rate for all future defaults for our consolidated outstanding pool of loans as of December 31, 2016 was 10.2%. Balances of our vacation ownership mortgages receivable by brand and by FICO score (at time of loan origination) were as follows (in millions): As of December 31, 2016 700+ 600-699 <600 No Score (1) Total Westin $ $ $ $ $ Sheraton Hyatt Other - Vacation ownership mortgages receivable, gross $ $ $ $ $ (1) Mortgages receivable with no FICO score primarily relate to non-U.S. resident borrowers. On an ongoing basis, we monitor credit quality of our vacation ownership mortgages receivable portfolio based on payment activity as follows: · Current —The consumer’s note is in good standing as payments and reporting are current per the terms contractually stipulated in the agreement. · Delinquent —We consider a vacation ownership mortgage receivable to be delinquent based on the contractual terms of each individual financing agreement. · Non‑performing —Our vacation ownership mortgages receivable are generally considered non‑performing if interest or principal is more than 30 days past due. All non‑performing loans are placed on non‑accrual status and we do not resume interest accrual until the receivable becomes contractually current. We apply payments we receive for vacation ownership notes receivable on non‑performing status first to interest, then to principal, and any remainder to fees. In the event of a default, we generally have the right to recover the mortgaged VOIs and consider loans to be in default upon reaching 120 days outstanding. Our aged analysis of delinquent vacation ownership mortgages receivable and the gross balance of vacation ownership mortgages receivable greater than 120 days past‑due as of December 31, 2016 and December 31, 2015 for our originated loans is as follows (in millions): Delinquent Defaulted (1) Receivables Current 30-59 Days 60-89 Days 90-119 Days ≥120 Total Delinquent & Defaulted Originated Loans December 31, 2016 $ $ $ $ $ $ $ December 31, 2015 $ $ $ — $ — $ — $ — $ — (1) Mortgages receivable equal to or greater than 120 days are considered defaulted and have been fully reserved in our allowance of loan losses for originated loans . |
VACATION OWNERSHIP INVENTORY
VACATION OWNERSHIP INVENTORY | 12 Months Ended |
Dec. 31, 2016 | |
VACATION OWNERSHIP INVENTORY | |
VACATION OWNERSHIP INVENTORY | NOTE 6—VACATION OWNERSHIP INVENTORY Our inventory consists of completed unsold vacation ownership interests, which has an operating cycle that generally exceeds twelve months, and vacation ownership projects under construction. On our consolidated balance sheet, completed unsold vacation ownership interests are presented as a current asset, while vacation ownership projects under construction are presented as a non-current asset given this inventory is in the development stage of its operating cycle. In connection with the acquisition of Vistana on May 11, 2016, we acquired $22 8 million in unsold vacation ownership inventory stated at fair value. As of and December 31, 2016 and 2015, vacation ownership inventory is comprised of the following (in millions): December 31, December 31, 2016 2015 Completed unsold vacation ownership interests (current asset) $ $ Vacation ownership products construction in process (non-current asset) — Other — Total vacation ownership inventory $ $ The change in inventory balances as of December 31, 2016 compared to December 31, 2015 principally pertains to the acquisition of Vistana on May 11, 2016. |
INVESTMENTS IN UNCONSOLIDATED E
INVESTMENTS IN UNCONSOLIDATED ENTITIES | 12 Months Ended |
Dec. 31, 2016 | |
INVESTMENTS IN UNCONSOLIDATED ENTITIES | |
INVESTMENTS IN UNCONSOLIDATED ENTITIES | NOTE 7—INVESTMENTS IN UNCONSOLIDATED ENTITIES Our investments in unconsolidated entities, recorded under the equity method of accounting in accordance with guidance in ASC 323, “Investments—Equity Method and Joint Ventures,” primarily consists of an ownership interest in Maui Timeshare Venture, LLC, a joint venture to develop and operate a Hyatt branded vacation ownership resort in Hawaii, and Vistana’s Harborside at Atlantis joint venture, which performs sales, marketing and management services for a vacation ownership resort in the Bahamas. These joint ventures were acquired in connection with our acquisitions of HVO and Vistana and were recorded at fair value on the respective acquisition dates and are carried as investments in unconsolidated entities in our Vacation Ownership segment. Our equity income from investments in unconsolidated entities, recorded in equity in earnings from unconsolidated entities in the accompanying consolidated statement of income, was $5 million each year for the years ended December 31, 2016, 2015 and 2014. The ownership percentages of the Maui Timeshare Venture and Harborside investments are 33% and 50%, respectively, and ownership percentages of the other investments range from 25% to 50%. The carrying value of our investments in unconsolidated entities as of December 31, 2016 and 2015 were as follows (in millions): December 31, December 31, 2016 2015 Maui Timeshare Venture, LLC $ $ Harborside at Atlantis joint venture — Other Total $ $ The change from December 31, 2015 principally represents the equity interest acquired in Harborside at Atlantis in connection with the Vistana acquisition in the second quarter and, within Other, an investment made in the first quarter in a fee-for-service, real-estate brokerage firm that specializes in reselling resort timeshare properties on behalf of independent homeowners’ associations. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 8—PROPERTY AND EQUIPMENT Property and equipment, net is as follows (in millions): December 31, 2016 2015 Computer equipment $ $ Capitalized software (including internally developed software) Land, buildings and leasehold improvements Land held for development — Furniture, fixtures and other equipment Construction projects in progress — Other projects in progress Less: accumulated depreciation and amortization Total property and equipment, net $ $ Capitalized software, net of accumulated amortization, totaled $47 million and $38 million at December 31, 2016 and 2015, respectively, and is included in “Property and equipment, net” in the accompanying consolidated balance sheets. Depreciation expense for capitalized software recognized in our consolidated income statement for the years ended December 31, 2016, 2015 and 2014 was $14 million, $12 million and $10 million, respectively. The change in total property and equipment as of December 31, 2016 compared to December 31, 2015 principally pertains to the acquisition of Vistana on May 11, 2016. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 9—GOODWILL AND OTHER INTANGIBLE ASSETS Pursuant to FASB guidance as codified within ASC 350, “Intangibles—Goodwill and Other,” goodwill acquired in business combinations is assigned to the reporting unit(s) expected to benefit from the combination as of the acquisition date. ILG is comprised of two operating and reportable segments: Vacation Ownership and Exchange and Rental, each of which contain two reporting units as follows: OPERATING SEGMENTS Vacation Ownership Exchange and Rental VO management reporting unit Exchange reporting unit VO sales and financing reporting unit Rental reporting unit The following tables present the balance of goodwill by reporting unit, including the changes in carrying amount of goodwill, for the years ended December 31, 2016 and 2015 (in millions): Foreign Balance as of Currency Goodwill Balance as of January 1, 2016 Additions Deductions Translation Impairment December 31, 2016 VO management $ $ — $ — $ $ — $ VO sales and financing — — — — Exchange — — — — Rental — — — — Total $ $ — $ — $ $ — $ Foreign Balance as of Currency Goodwill Balance as of January 1, 2015 Additions Deductions Translation Impairment December 31, 2015 VO management $ $ — $ — $ $ — $ VO sales and financing — — — — Exchange — — — — Rental — — — — Total $ $ — $ — $ $ — $ Goodwill Impairment Tests ILG tests goodwill and other indefinite‑lived intangible assets for impairment annually as of October 1, or more frequently if events or changes in circumstances indicate that the assets might be impaired. Goodwill is tested for impairment based on either a qualitative assessment or a two‑step impairment test, as more fully described in Note 2 of these consolidated financial statements. When performing the two‑step impairment test, if the carrying amount of a reporting unit’s goodwill exceeds its implied fair value, an impairment loss equal to the excess is recorded. As of October 1, 2016, we assessed the carrying value of goodwill and other intangible assets of each of our four reporting units pursuant to the two-step impairment approach. Goodwill assigned to VO Sales and Financing, VO Management, Exchange and Rental, our reporting units as of that date, was $7 million, $36 million, $496 million and $20 million, respectively. The first step of the impairment test concluded the carrying value of our reporting units did not exceed its fair value; consequently, the second step of the impairment test was not necessary and goodwill was not determined to be impaired. As of October 1, 2015, we assessed the carrying value of goodwill and other intangible assets of each of our four reporting units. We performed a qualitative assessment on our VO Management, Exchange and Rental reporting units for our 2015 annual test and concluded that it was more-likely-than-not that the fair value of each reporting exceeded its carrying value and, therefore, a two-step impairment test was not necessary. With regards to our VO Sales and Financing reporting unit, we elected to bypass the qualitative assessment and assessed the carrying value of goodwill pursuant to the two-step impairment approach. The first step of the impairment test concluded the carrying value of this reporting unit did not exceed its fair value; consequently, the second step of the impairment test was not necessary and goodwill was not determined to be impaired. Accumulated historical goodwill impairment losses as of January 1, 2015 were $34.3 million which related to components within our Rental reporting unit. There have been no accumulated historical impairments of goodwill for any of our other reporting units through December 31, 2016. Other Intangible Assets As of October 1, 2016, we performed a full impairment test on our indefinite-lived intangible assets which was comprised of calculating the fair value of these intangible assets and comparing such against their carrying amount. At the conclusion of that impairment test, we determined no impairment was present. As of October 1, 2015, we performed a qualitative assessment on our indefinite‑lived intangible assets and concluded that the likelihood of our indefinite‑lived intangible assets being impaired was below the more‑likely‑than‑not threshold and, therefore, calculating the fair value of these intangible assets was not warranted as of October 1, 2015. The balance of other intangible assets, net for the years ended December 31, 2016 and 2015 is as follows (in millions): December 31, December 31, 2016 2015 Intangible assets with indefinite lives $ $ Intangible assets with definite lives, net Total intangible assets, net $ $ The $13 million decrease in our indefinite‑lived intangible assets during the year ended December 31, 2016 pertains to associated foreign currency translation of intangible assets carried on the books of an ILG entity whose functional currency is not the US dollar. At December 31, 2016 and 2015, intangible assets with indefinite lives relate to the following (in millions): December 31, December 31, 2016 2015 Resort management contracts $ $ Trade names and trademarks Total $ $ At December 31, 2016, intangible assets with definite lives relate to the following (in millions): Cost Accumulated Amortization Net Weighted Average Remaining Customer relationships $ $ $ Purchase agreements — — Resort management contracts Technology — — Other $ $ $ At December 31, 2015, intangible assets with definite lives relate to the following (in millions): Weighted Average Remaining Accumulated Amortization Cost Amortization Net Life (Years) Customer relationships $ $ $ Purchase agreements — - Resort management contracts Technology — - Other Total $ $ $ In accordance with our policy on the recoverability of long‑lived assets, as further described in Note 2 of these consolidated financial statements, we review the carrying value of all long‑lived assets, primarily property and equipment and definite‑lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of a long‑lived asset (asset group) may be impaired. For the years ended December 31, 2016 and 2015, we did not identify any events or changes in circumstances indicating that the carrying value of a long lived asset (or asset group) may be impaired; accordingly, a recoverability test has not been warranted. Amortization of intangible assets with definite lives is primarily computed on a straight‑line basis. Total amortization expense for intangible assets with definite lives was $19 million, $14 million and $12 million for the years ended December 31, 2016, 2015 and 2014, respectively. Based on the December 31, 2016 balances, amortization expense for the next five years and thereafter is estimated to be as follows (in millions): Year Ended December 31, 2017 $ 2018 2019 2020 2021 2021 and thereafter $ |
CONSOLIDATED VARIABLE INTEREST
CONSOLIDATED VARIABLE INTEREST ENTITIES | 12 Months Ended |
Dec. 31, 2016 | |
CONSOLIDATED VARIABLE INTEREST ENTITIES | |
CONSOLIDATED VARIABLE INTEREST ENTITIES | NOTE 10—CONSOLIDATED VARIABLE INTEREST ENTITIES We have variable interests in the entities associated with Vistana’s three outstanding securitization transactions. As these securitizations consist of similar, homogenous loans, they have been aggregated for disclosure purposes. We applied the variable interest model and determined we are the primary beneficiary of these VIEs and, accordingly, these VIEs are consolidated in our results. In making that determination, we evaluated the activities that significantly impact the economics of the VIEs, including the management of the securitized vacation ownership mortgages receivable and any related non-performing loans. We are the servicer of the securitized vacation ownership mortgages receivable. We also have the option, subject to certain limitations, to repurchase or replace vacation ownership mortgages receivable that are in default at their outstanding principal amounts. Historically, Vistana has been able to resell the vacation ownership products underlying the vacation ownership mortgages repurchased or replaced under these provisions without incurring significant losses. We also hold the risk of potential loss (or gain), as we are the last to be paid out by proceeds of the VIEs under the terms of the agreements. As such, we hold both the power to direct the activities of the VIEs and obligation to absorb the losses (or benefits) from the VIEs. The securitization agreements are without recourse to us, except for breaches of representations and warranties with material adverse effect to the holders. We have the right to substitute loans for, or repurchase, defaulted loans at our option, subject to certain limitations. Based on industry practice and Vistana’s past practices, we currently expect that we will exercise this option. The following table shows assets which are collateral for the related obligations of the variable interest entities, included in our consolidated balance sheets (in millions): Vacation Ownership Notes Receivable Securitization (1) December 31, 2016 Assets Restricted cash $ Interest receivable Vacation ownership mortgages receivable, net Total $ Liabilities Interest payable $ Securitized debt Total $ (1) The creditors of these entities do not have general recourse to us. Upon transfer of vacation ownership mortgage receivable, net to the VIEs, the receivables and certain cash flows derived from them become restricted for use in meeting obligations to the VIE creditors. The VIEs utilize trusts which have ownership of cash balances that also have restrictions, the amounts of which are reported in our restricted cash. Our interests in trust assets are subordinate to the interests of third-party investors and, as such, may not be realized by us if needed to absorb deficiencies in cash flows that are allocated to the investors in the trusts' debt. Unless we exceed certain triggers related to default levels and collateralization of the securitized pool, we are contractually entitled to receive the excess cash flows (spread between the collections on the mortgages and payment of third party obligations and debt service on the trusts’ debt defined in the securitization agreements) from the VIEs. Such activity totaled $20 million since our May 11, 2016 acquisition of Vistana through December 31, 2016. The net cash flows generated by the VIEs are used to repay our securitized debt from VIEs and, excluding any restricted cash balances, are reflected in the operating activities section of our combined statements of cash flows. The repayment of our securitized debt from VIEs is reflected in the financing activities section of our combined statements of cash flows. Refer to Note 13 of these consolidated financial statements for additional discussion on our securitized debt from VIEs . |
ACCRUED LIABILITIES AND OTHER C
ACCRUED LIABILITIES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2016 | |
ACCRUED LIABILITIES AND OTHER CURRENT LIABILITIES | |
ACCRUED LIABILITIES AND OTHER CURRENT LIABILITIES | NOTE 11 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES The following table summarizes the general components of accrued expenses and other current liabilities (in millions): December 31, December 31, 2016 2015 General accrued expenses $ $ Accrued other taxes Customer deposits Accrued membership related Accrued construction costs — Accrued expenses and other current liabilities $ $ |
DEFERRED REVENUE
DEFERRED REVENUE | 12 Months Ended |
Dec. 31, 2016 | |
DEFERRED REVENUE | |
DEFERRED REVENUE | NOTE 12 — DEFERRED REVENUE The following table summarized the general components of deferred revenue (in millions): December 31, December 31, 2016 2015 Deferred membership-related revenue $ $ Other Total $ $ Deferred membership-related revenue primarily relates to membership fees from our Exchange and Rental segment, which are deferred and recognized over the terms of the applicable memberships, typically ranging from one to five years, on a straight-line basis. Other deferred revenue pertains primarily to annual maintenance fees collected that are not yet earned. |
SECURITIZED VACATION OWNERSHIP
SECURITIZED VACATION OWNERSHIP DEBT | 12 Months Ended |
Dec. 31, 2016 | |
SECURITIZED VACATION OWNERSHIP DEBT | |
SECURITIZED VACATION OWNERSHIP DEBT | NOTE 13 — SECURITIZED VACATION OWNERSHIP DEBT As discussed in Note 10, the VIEs associated with the securitization of our VOI mortgages receivable acquired in connection with the Vistana acquisition are consolidated in our financial statements. Securitized vacation ownership debt consisted of the following (in millions): December 31, 2016 2011 securitization, interest rates ranging from 3.67% to 4.82%, maturing 2025 $ 2012 securitization, interest rates ranging from 2.00% to 2.76%, maturing 2023 2016 securitization, interest rates ranging from 2.54% to 2.74%, maturing 2024 Unamortized debt issuance costs (2016 securitization) Total securitized vacation ownership debt, net of debt issuance costs $ On September 20, 2016, we completed a term securitization transaction involving the issuance of $375 million of asset-backed notes. An indirect wholly-owned subsidiary of Vistana issued $346 million of Class A notes and $29 million of Class B notes. The notes are backed by vacation ownership loans and have coupons of 2.54% and 2.74%, respectively, for an overall weighted average coupon of 2.56%. The advance rate for this transaction was 96.5%. Of the $375 million in proceeds from the transaction, $19 million is being held in escrow until the associated VIE purchases up to $19 million of additional loans by March 15, 2017 with any unused cash returned to the investors. Approximately $33 million was used to repay the outstanding balance on Vistana’s 2010 securitization and the remainder was used to pay transaction expenses, fund required reserves, pay down a portion of the borrowings outstanding under our $600 million revolving credit facility and for general corporate purposes. During the year ended December 31, 2016, interest expense associated with securitized vacation ownership debt totaled $5 million, and is reflected within consumer financing expenses in our consolidated statements of income. The securitized debt is non-recourse with no contractual minimum repayment amounts throughout its term. The amount of each principal payment is contingent on the cash flows from the underlying vacation ownership notes in a given period. Refer to Note 5—Vacation Ownership Mortgages Receivable for the stated maturities of our securitized vacation ownership notes receivable, which provide an indication of the potential repayment pattern before the impact of any prepayments or defaults. As of December 31, 2016, total unamortized debt issuance costs pertaining to the 2016 securitization were $5 million, which is presented as a reduction of securitized debt from VIEs in the accompanying consolidated balance sheet. Unamortized debt issuance costs pertaining to our securitized debt are amortized to interest expense using the effective interest method through the estimated life of the respective debt instruments. |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2016 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | NOTE 14—LONG-TERM DEBT Long‑term debt is as follows (in millions): December 31, December 31, 2016 2015 Revolving credit facility (interest rate of 2.27% at December 31, 2016 and 2.68% at December 31, 2015) $ $ 5.625% senior notes Unamortized debt issuance costs (revolving credit facility) Unamortized debt issuance costs (senior notes) Total long-term debt, net of debt issuance costs $ $ Credit Facility On April 10, 2015, we entered into a third amendment to our amended and restated credit agreement (the “Amended Credit Agreement”) which changed the leverage-based financial covenant from a maximum consolidated total leverage to EBITDA ratio of 3.5 to 1.0 to a maximum consolidated secured leverage to EBITDA ratio of 3.25 to 1.0. In addition, the amendment adds an incurrence test allowing a maximum consolidated total leverage to EBITDA ratio of 4.5 to 1.0 on a pro forma basis in certain circumstances in which we make acquisitions or investments, incur additional indebtedness or make restricted payments. Also, the amendment added a new pricing level to the pricing grid applicable when the consolidated total leverage to EBITDA ratio equals or exceeds 3.5 to 1.0. This pricing level is either LIBOR plus 2.5% or the base rate plus 1.5% and requires a commitment fee on undrawn amounts of 0.4% per annum. There were no other material changes under this amendment. On May 5, 2015, we entered into a fourth amendment to the Amended Credit Agreement which changed the definition of change of control to remove the provision that certain changes in the composition of the board of directors would constitute a change of control and therefore be a default under the credit agreement. The amendment also included clarifying language regarding provisions that relate to our 5.625% senior notes due in 2023. There were no other material changes under this amendment. Additionally, on May 17, 2016, we entered into a fifth amendment to the Amended Credit Agreement which extended the maturity of the credit facility through May 17, 2021, and modified requirements with respect to assignments by lenders in connection with the acquisition of Vistana in May of 2016. There were no other material changes under this amendment. As of December 31, 2016, there was $240 million outstanding with $349 million available to be drawn, net of any letters of credit. Any principal amounts outstanding under the revolving credit facility are due at maturity. As of December 31, 2016, the interest rate on the Amended Credit Agreement is based on (at our election) either LIBOR plus a predetermined margin that ranged from 1.25% to 2.5%, or the Base Rate as defined in the Amended Credit Agreement plus a predetermined margin that ranged from 0.25% to 1.5%, in each case based on our consolidated total leverage ratio. As of December 31, 2016, the applicable margin was 1.5% per annum for LIBOR revolving loans and 0.5% per annum for Base Rate loans. As of December 31, 2016, the Amended Credit Agreement has a commitment fee on undrawn amounts that ranged from 0.25% to 0.40% per annum based on our leverage ratio and as of December 31, 2016 the commitment fee was 0.275%. Pursuant to the Amended Credit Agreement, all obligations under the revolving credit facility are unconditionally guaranteed by ILG and certain of its subsidiaries. Borrowings are further secured by (1) 100% of the voting equity securities of ILG’s U.S. subsidiaries and 65% of the equity in our first‑tier foreign subsidiaries and (2) substantially all of our domestic tangible and intangible property. Senior Notes On April 10, 2015, we completed a private offering of $350 million in aggregate principal amount of our 5.625% senior notes due in 2023. The net proceeds from the offering, after deducting offering related expenses, were $343 million. We used the proceeds to repay indebtedness outstanding on our revolving credit facility. In June 2016, we completed an exchange offer to exchange these unregistered notes with registered notes that otherwise have the same terms. As of December 31, 2016, total unamortized debt issuance costs relating to these senior notes were $6 million, which are presented as a direct deduction from the principal amount. Interest on the senior notes is paid semi-annually in arrears on April 15 and October 15 of each year and the senior notes are unsecured and fully and unconditionally guaranteed on a joint and several basis by our domestic subsidiaries that are required to guarantee the Amended Credit Facility. Additionally, the voting stock of the issuer and the subsidiary guarantors is 100% owned by ILG. The senior notes are redeemable from April 15, 2018 at a redemption price starting at 104.219% which declines over time. Restrictions and Covenants The senior notes and Amended Credit Agreement have various financial and operating covenants that place significant restrictions on us, including our ability to incur additional indebtedness, incur additional liens, issue redeemable stock and preferred stock, pay dividends or distributions or redeem or repurchase capital stock, prepay, redeem or repurchase debt, make loans and investments, enter into agreements that restrict distributions from our subsidiaries, sell assets and capital stock of our subsidiaries, enter into certain transactions with affiliates and consolidate or merge with or into or sell substantially all of our assets to another person. The indenture governing the senior notes restricts our ability to issue additional debt in the event we are not in compliance with the minimum fixed charge coverage ratio of 2.0 to 1.0 and limits restricted payments and investments unless we are in compliance with the minimum fixed charge coverage ratio and the amount is within a bucket that grows with our consolidated net income. We meet the minimum fixed charge coverage ratio as of December 31, 2016. In addition, the Amended Credit Agreement requires us to meet certain financial covenants regarding the maintenance of a maximum consolidated secured leverage ratio of consolidated secured debt, over consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), as defined. We are also required to maintain a minimum consolidated interest coverage ratio of consolidated EBITDA over consolidated interest expense. As of December 31, 2016, the maximum consolidated secured leverage ratio was 3.25x and the minimum consolidated interest coverage ratio was 3.0x. As of December 31, 2016, ILG was in compliance in all material respects with the requirements of all applicable financial and operating covenants, and our consolidated secured leverage ratio and consolidated interest coverage ratio under the Amended Credit Agreement were 0.72 and 15.77, respectively. Interest Expense and Debt Issuance Costs Interest expense for the years ended December 31, 2016, 2015 and 2014 was $23 million, $21 million and $7 million, respectively. Interest expense for these periods is net of negligible capitalized interest relating to internally-developed software. As of December 31, 2016, total unamortized debt issuance costs were $10 million, net of $5 million of accumulated amortization, incurred in connection with the issuance and various amendments to our Amended Credit Agreement, the issuance of our senior notes in April 2015 and the exchange for registered notes in June 2016. As of December 31, 2015, total unamortized debt issuance costs were $9 million, net of $4 million of accumulated amortization. Unamortized debt issuance costs are presented as a reduction of long-term debt in the accompanying consolidated balance sheets, pursuant to ASC 2015-03. Unamortized debt issuance costs are amortized to interest expense through the maturity date of our respective debt instruments using the effective interest method for those costs related to our senior notes, and on a straight-line basis for costs related to our Amended Credit Agreement. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2016 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 15—FAIR VALUE MEASUREMENTS Fair Value of Financial Instruments The estimated fair value of financial instruments below has been determined using available market information and appropriate valuation methodologies, as applicable. There have been no changes in the methods and significant assumptions used to estimate the fair value of financial instruments during the year ended December 31, 2016. Our financial instruments are detailed in the following table. December 31, 2016 December 31, 2015 Carrying Fair Carrying Fair Amount Value Amount Value (In millions) Cash and cash equivalents $ $ $ $ Restricted cash and cash equivalents Financing receivables Vacation ownership mortgages receivable Investments in marketable securities Securitized debt — — Revolving credit facility (1) Senior notes (1) (1) The carrying value of our revolving credit facility and senior notes include $4 million and $6 million of debt issuance costs, respectively, which are presented as a direct reduction of the corresponding liability. The carrying amounts of cash and cash equivalents and restricted cash and cash equivalents reflected in the accompanying consolidated balance sheets approximate fair value as they are redeemable at par upon notice or maintained with various high‑quality financial institutions and have original maturities of three months or less. Under the fair value hierarchy established in ASC 820, cash and cash equivalents and restricted cash and cash equivalents are stated at fair value based on quoted prices in active markets for identical assets (Level 1). The financing receivables as of December 31, 2016 are presented in our consolidated balance sheet within other non‑current assets and principally pertain to a convertible secured loan to CLC that matures October of 2019 with interest payable monthly. The outstanding loan is to be repaid in full at maturity either in cash or by means of a share option exercisable by ILG, at its sole discretion. The carrying value of this financing receivable approximates fair value through inputs inherent to the originating value of this loan, such as interest rates and ongoing credit risk accounted for through non‑recurring adjustments for estimated credit losses as necessary (Level 2). The stated interest rate on this loan is comparable to market. Interest is recognized within our “Interest income” line item in our consolidated statement of income for the year ended December 31, 2016. We estimate the fair value of vacation ownership mortgages receivable using a discounted cash flow model. We believe this is comparable to the model that an independent third party would use in the current market. Our model incorporates default rates, prepayment rates, coupon rates and loan terms respective to the portfolio based on current market assumptions for similar types of arrangements. Based upon the availability of market data, we have classified inputs used in the valuation of our vacation ownership mortgages receivable as Level 3. The primary sensitivity in these assumptions relates to forecasted defaults and projected prepayments which could cause the estimated fair value to vary. Investments in marketable securities consist of marketable securities (mutual funds) related to deferred compensation plans which are funded in a Rabbi trust as of December 31, 2016 and classified as other noncurrent assets in the accompanying consolidated balance sheets. This deferred compensation plan was created in connection with the HVO acquisition and funded following both the HVO and Vistana acquisitions. Participants in the deferred compensation plan unilaterally determine how their compensation deferrals are invested within the confines of the Rabbi trust which holds the marketable securities. Consequently, management has designated these marketable securities as trading investments, as allowed by applicable accounting guidance, even though there is no intent by ILG to actively buy or sell securities with the objective of generating profits on short‑term differences in market prices. These marketable securities are recorded at a fair value of $14 million as of December 31, 2016 based on quoted market prices in active markets for identical assets (Level 1). We recognized a $1 million unrealized trading gain for the year ended December 31, 2016 and minimal unrealized trading gains for the year ended December 31, 2015. These unrealized trading gains have an accompanying offsetting adjustment to employee compensation expense, and are each included within general and administrative expenses in the accompanying consolidated statement of income. See Note 17 for further discussion in regards to this deferred compensation plan. Our non-public, securitized debt fair value is determined based upon discounted cash flows for the debt using Level 3 inputs such as rates deemed reasonable for the type of debt, prevailing market conditions and the length of maturity for the debt. Borrowings under our senior notes (issued April 2015) and revolving credit facility are carried at historical cost and adjusted for principal payments. The fair value of our senior notes was estimated at December 31, 2016 using an input of quoted prices from an inactive market due to the infrequency at which trades occur on our senior notes (Level 2). The carrying value of the outstanding balance under our revolving credit facility, exclusive of debt issuance costs, approximates fair value as of December 31, 2016 and 2015 through inputs inherent to the debt such as variable interest rates and credit risk (Level 2). |
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2016 | |
EQUITY | |
EQUITY | NOTE 16—EQUITY ILG has 300 million authorized shares of common stock, par value of $0.01 per share. At December 31, 2016, there were 133.5 million shares of ILG common stock issued, of which 124.7 million are outstanding with 8.9 million shares held as treasury stock. At December 31, 2015, there were 59.9 million shares of ILG common stock issued, of which 57.5 million were outstanding with 2.4 million shares held as treasury stock. ILG has 25 million authorized shares of preferred stock, par value of $0.01 per share, none of which are issued or outstanding as of December 31, 2016 and 2015. The Board of Directors has the authority to issue the preferred stock in one or more series and to establish the rights, preferences and dividends. In connection with the acquisition of Vistana in May 2016, we issued 72.4 million shares of ILG common stock, valued at $1 billion as of the acquisition date, to the holders who received Vistana common stock in the spin-off from its former parent. This amount is presented on our consolidated statement of equity as well as in the supplemental cash flow disclosure in Note 22. Any difference therein is due to rounding. Dividend Declared In February, May, August and November of 2016, our Board of Directors declared a quarterly dividend payment of $0.12 per share paid in March, June, September and December of 2016, respectively, amounting to $7 million, $16 million, $15 million and $15 million, respectively. In February 2017, our Board of Directors declared a $0.15 per share dividend payable March 28, 2017 to shareholders of record on March 14, 2017. Stockholder Rights Plan In June 2009, ILG’s Board of Directors approved the creation of a Series A Junior Participating Preferred Stock, adopted a stockholders rights plan and declared a dividend of one right for each outstanding share of common stock held by our stockholders of record as of the close of business on June 22, 2009. The rights attach to any additional shares of common stock issued after June 22, 2009. These rights, which trade with the shares of our common stock, currently are not exercisable. Under the rights plan, these rights will be exercisable if a person or group acquires or commences a tender or exchange offer for 15% or more of our common stock. The rights plan provides certain exceptions for acquisitions by Liberty Interactive Corporation (formerly known as Liberty Media Corporation) in accordance with an agreement entered into with ILG in connection with its spin‑off from IAC/InterActiveCorp (IAC). If the rights become exercisable, each right will permit its holder, other than the “acquiring person,” to purchase from us shares of common stock at a 50% discount to the then prevailing market price. As a result, the rights will cause substantial dilution to a person or group that becomes an “acquiring person” on terms not approved by our Board of Directors. Share Repurchase Program In May 2016, our Board of Directors increased the then remaining share repurchase authorization to a total of $100 million. In November 2016, the Board authorized repurchases of up to $50 million of ILG common stock. During the year ended December 31, 2016, we repurchased 6.5 million shares of common stock for $101 million, including commissions. The remaining availability for future repurchases of our common stock was $49 million, as of December 31, 2016. There were no repurchases of common stock during the year ended December 31, 2015. Acquired shares of our common stock are held as treasury shares carried at cost on our consolidated financial statements. Common stock repurchases may be conducted in the open market or in privately negotiated transactions. The amount and timing of all repurchase transactions are contingent upon market conditions, applicable legal requirements, restrictions under our Tax Matters Agreement with Starwood, and other factors. This program may be modified, suspended or terminated by us at any time without notice. Accumulated Other Comprehensive Loss Entities are required to disclose additional information about reclassification adjustments within accumulated other comprehensive income/loss, referred to as AOCL including (1) changes in AOCL balances by component and (2) significant items reclassified out of AOCL in the period. For the years ended December 31, 2016, 2015 and 2014 there were no significant items reclassified out of AOCL, and the change in AOCL pertains to current period foreign currency translation adjustments, as disclosed in our accompanying consolidated statements of comprehensive income. Noncontrolling Interests Noncontrolling Interest—VRI Europe In connection with the VRI Europe transaction on November 4, 2013, CLC was issued a noncontrolling interest in VRI Europe representing 24.5% of the business, which was determined based on the purchase price paid by ILG for its 75.5% ownership interest as of the acquisition date. As of December 31, 2016 and 2015, this noncontrolling interest amounts to $26 million and $31 million, respectively, and is presented on our consolidated balance sheets as a component of equity. The change from December 31, 2015 to December 31, 2016 relates to the recognition of the noncontrolling interest holder’s proportional share of VRI Europe’s earnings, as well as the translation effect on the foreign currency based amount. The parties have agreed not to transfer their interests in VRI Europe or CLC’s related development business for a period of five years from the acquisition. In addition, they have agreed to certain rights of first refusal, and customary drag along and tag along rights, including a right by CLC to drag along ILG’s VRI Europe shares in connection with a sale of the entire CLC resort business subject to achieving minimum returns and a preemptive right by ILG. As of December 31, 2016, there have been no changes in ILG’s ownership interest in VRI Europe. Additionally, in connection with this arrangement, ILG and CLC entered into a loan agreement whereby ILG made available to CLC a convertible secured loan facility of $15 million that matures in October of 2019 with interest payable monthly. The outstanding loan is to be repaid in full at maturity either in cash or by means of a share option exercisable by ILG, at its sole discretion, which would allow for settlement of the loan in CLC’s shares of VRI Europe for contractually determined equivalent value. ILG has the right to exercise this share option at any time prior to maturity of the loan; however, the equivalent value for these shares would be measured at a 20% premium to its acquisition date value. We have determined the value of this embedded derivative is not material to warrant bifurcating from the host instrument (loan) at this time. Noncontrolling Interest—Hyatt Vacation Ownership In connection with the HVO acquisition on October 1, 2014, ILG assumed a noncontrolling interest in a joint venture entity, which we fully consolidate, formed for the purpose of developing and selling VOIs. The fair value of the noncontrolling interest at acquisition was determined based on the noncontrolling party’s ownership interest applied against the fair value allocated to the respective joint venture entity. During the fourth quarter of 2016, we acquired this noncontrolling interest for $1 million and have accounted for this event as an equity transaction. |
BENEFIT PLANS
BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2016 | |
BENEFIT PLANS | |
BENEFIT PLANS | NOTE 17—BENEFIT PLANS Under retirement savings plans sponsored by ILG, qualified under Section 401(k) of the Internal Revenue Code, participating employees may contribute up to 50.0% of their pre‑tax earnings, but not more than statutory limits. ILG provides a discretionary match of fifty cents for each dollar a participant contributes into a plan with a maximum contribution of 3% of a participant’s eligible earnings, with employees participating in the safe harbor plan, also receiving a 100% match for the first 1% of the participant’s eligible earnings, subject to Internal Revenue Service (“IRS”) restrictions. Net matching contributions for the ILG plans were $5 million, $2 million and $2 million for the years ended December 31, 2016, 2015 and 2014, respectively. Matching contributions were invested in the same manner as each participant’s voluntary contributions in the investment options provided under the plans. Effective August 20, 2008, a deferred compensation plan (the “Director Plan”) was established to provide non‑employee directors of ILG an option to defer director fees on a tax‑deferred basis. Participants in the Director Plan are allowed to defer a portion or all of their compensation and are 100% vested in their respective deferrals and earnings. With respect to director fees earned for services performed after the date of such election, participants may choose from receiving cash or stock at the end of the deferral period. ILG has reserved 100,000 shares of common stock for issuance pursuant to this plan, of which 60,986 share units were outstanding at December 31, 2016. ILG does not provide matching or discretionary contributions to participants in the Director Plan. Any deferred compensation elected to be received in stock is included in diluted earnings per share. Effective October 1, 2014, a non-qualified deferred compensation plan (the “DCP”) was established to allow eligible employees of ILG an option to defer compensation on a tax-deferred basis. The initial establishment of the DCP was intended to receive a transfer of deferred compensation liabilities in connection with the acquisition of HVO and, the DCP was amended in 2016 in connection with the receipt of a transfer of deferred compensation plan liabilities and assets in connection with the acquisition of Vistana. Participants in the DCP currently include only certain HVO and Vistana employees that participated in similar plans prior to the acquisitions by ILG of HVO and Vistana, respectively. These participants make an election prior to the first of each year to defer an amount of compensation payable for services to be rendered beginning in the next calendar year, and also select when such deferred amounts will be distributed in the future. Participants are fully vested in all amounts held in their individual accounts. Participants have only an unsecured claim against ILG for the future payment of the deferred amounts, although payment is indirectly secured through a fully funded Rabbi trust. The Rabbi trust is subject to creditor claims in the event of insolvency, but the assets held in the Rabbi trust are not available for general corporate purposes. Amounts in the Rabbi trust are invested in mutual funds, as selected by participants, which are designated as trading securities and carried at fair value. Subsequent to the acquisitions of HVO and Vistana, there were net transfers of $11 million and $2 million, respectively, into the Rabbi trust, related to participants that became ILG employees in connection with the respective acquisitions. As of December 31, 2016 and 2015, the fair value of the investments in the Rabbi trust was $14 million and $11 million, respectively, which is recorded in other non-current assets with the corresponding deferred compensation liability recorded in other long-term liabilities in the consolidated balance sheet. We recorded unrealized gains of $1 million and an unrealized loss of $0.1 million, for the years ended December 31, 2016 and 2015, respectively to general and administrative expense related to the investment gains, and a charge to compensation expense also within general and administrative expense related to the increase in deferred compensation liabilities to reflect the DCP liability. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2016 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 18—STOCK‑BASED COMPENSATION On May 21, 2013, ILG adopted the Interval Leisure Group, Inc. 2013 Stock and Incentive Plan and stopped granting awards under the ILG 2008 Stock and Annual Incentive Plan (“2008 Incentive Plan”). Both plans provide for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock‑based awards. RSUs are awards in the form of phantom shares or units, denominated in a hypothetical equivalent number of shares of ILG common stock and with the value of each award equal to the fair value of ILG common stock at the date of grant. Each RSU is subject to service‑based vesting, where a specific period of continued employment must pass before an award vests. We grant awards subject to graded vesting (i.e., portions of the award vest at different times during the vesting period) or to cliff vesting (i.e., all awards vest at the end of the vesting period). In addition, certain RSUs are subject to attaining specific performance criteria. ILG recognizes non‑cash compensation expense for all RSUs held by ILG’s employees. For RSUs to be settled in stock, the accounting charge is measured at the grant date as the fair value of ILG common stock and expensed as non‑cash compensation over the vesting term using the straight‑line basis for service awards and the accelerated basis for performance‑based awards with graded vesting. Certain cliff vesting awards contain performance criteria which are tied to anticipated future results of operations in determining the fair value of the award, while other cliff vesting awards with performance criteria are tied to the achievement of certain market conditions. This value is recognized as expense over the service period, net of estimated forfeitures, using the straight‑line recognition method. The expense associated with RSU awards to be settled in cash is initially measured at fair value at the grant date and expensed ratably over the vesting term, recording a liability subject to mark‑to‑market adjustments for changes in the price of the respective common stock, as compensation expense. Shares underlying RSUs are not issued or outstanding until vested. In relation to our quarterly dividend, unvested RSUs are credited with dividend equivalents, in the form of additional RSUs, when dividends are paid on our shares of common stock. Such additional RSUs are forfeitable and will have the same vesting dates and will vest under the same terms as the RSUs in respect of which such additional RSUs are credited. Given such dividend equivalents are forfeitable, we do not consider them to be participating securities and, consequently, they are not subject to the two‑class method of determining earnings per share. Under the ILG 2013 Stock and Incentive Compensation Plan, the maximum aggregate number of shares of common stock reserved for issuance as of adoption is 4.1 million shares, less one share for every share granted under any prior plan after December 31, 2012. In August 2016, the 2013 Stock and Incentive Compensation Plan was amended to increase the plan balance by 4 million shares. As of December 31, 2016, 4 million shares were available for future issuance under the 2013 Stock and Incentive Compensation Plan. During 2016, 2015 and 2014, the Compensation Committee granted 1,592,000, 521,000 and 692,000 RSUs, respectively, vesting over one to four years, to certain officers, board of directors and employees of ILG and its subsidiaries. Of these RSUs granted in 2016, 2015 and 2014, approximately 533,000, 105,000 and 367,609, respectively, cliff vest in three years and approximately 299,000, 54,000 and 202,000, respectively, are subject to performance criteria that could result between 0% and 200% of these awards being earned either based on defined adjusted EBITDA, revenue, or relative total shareholder return targets over the respective performance period, as specified in the award document. Of the annuals subject to annual vesting, 103,000 RSUs are subject to performance criteria that could result between 0% and 200% of these awards being earned based on defined adjusted EBITDA targets over the respective performance period, as specified in the award document. Additionally, on May 11, 2016, in connection with the acquisition of Vistana, all of the unvested equity grants held by Vistana’s employees under Starwood plans were converted to grants under the ILG 2013 Stock and Incentive Plan based on a conversion factor using relative stock prices at closing. A total of 713,000 shares of restricted stock and 11,000 RSUs were issued in this conversion with a fair value of $10 million, of which $2 million and $8 million were attributed to pre-acquisition and post-acquisition services, respectively. The converted awards generally have the same terms and conditions as the original Starwood awards and vest through the first quarter of 2019. For the 2016, 2015 and 2014 RSUs subject to relative total shareholder return performance criteria, the number of RSUs that may ultimately be awarded depends on whether the market condition is achieved. We used a Monte Carlo simulation analysis to estimate a per unit grant date fair value of $13.13 for 2016, $40.71 for 2015 and $36.90 for 2014, for these performance based RSUs. This analysis estimates the total shareholder return ranking of ILG as of the grant date relative to two peer groups approved by the Compensation Committee, over the remaining performance period. The expected volatility of ILG’s common stock at the date of grant was estimated based on a historical average volatility rate for the approximate three-year performance period. The dividend yield assumption was based on historical and anticipated dividend payouts. The risk‑free interest rate assumption was based on observed interest rates consistent with the approximate three – year performance measurement period. Non‑cash compensation expense related to RSUs and restricted stock for the years ended December 31, 2016, 2015, and 2014 was $18 million, $13 million and $11 million, respectively. At December 31, 2016, there was approximately $27 million of unrecognized compensation cost, net of estimated forfeitures, related to RSUs and restricted stock, which is currently expected to be recognized over a weighted average period of approximately 2 years. The amount of stock‑based compensation expense recognized in the consolidated statements of income is reduced by estimated forfeitures, as the amount recorded is based on awards ultimately expected to vest. The forfeiture rate is estimated at the grant date based on historical experience and revised, if necessary, in subsequent periods for any changes to the estimated forfeiture rate from that previously estimated. For any vesting tranche of an award, the cumulative amount of compensation cost recognized is at least equal to the portion of the grant‑date value of the award tranche that is actually vested at that date. Non‑cash stock‑based compensation expense related to equity awards is included in the following line items in the accompanying consolidated statements of income for the years ended December 31, 2016, 2015 and 2014 (in millions): Year Ended December 31, 2016 2015 2014 Cost of sales $ $ $ Selling and marketing expense General and administrative expense Non-cash compensation expense Income tax benefit Non-cash compensation expense after income taxes $ $ $ The following table summarizes RSU activity during the years ended December 31, 2016, 2015 and 2014: Weighted-Average Grant Date Shares Fair Value (In millions) Non-vested RSUs at December 31, 2013 $ Granted Vested — Forfeited — Non-vested RSUs at December 31, 2014 $ Granted Vested Forfeited — Non-vested RSUs at December 31, 2015 $ Granted Vested Forfeited — Non-vested RSUs at December 31, 2016 $ |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES | |
INCOME TAXES | NOTE 19—INCOME TAXES U.S. and foreign earnings from continuing operations before income taxes and noncontrolling interest are as follows (in millions): Year Ended December 31, 2016 2015 2014 U.S. $ $ $ Foreign Total $ $ $ The components of the provision for income taxes attributable to continuing operations are as follows (in millions): Year Ended December 31, 2016 2015 2014 Current income tax provision Federal $ $ $ State Foreign Current income tax provision Deferred income tax provision (benefit) Federal State Foreign Deferred income tax provision (benefit) Income tax provision $ $ $ ILG records a deferred tax asset, or future tax benefit, based on the amount of non‑cash compensation expense recognized in the financial statements for stock‑based awards. For income tax purposes, ILG receives a tax deduction equal to the stock price on the vesting date of the stock‑based awards. Upon vesting of these awards, the deferred tax assets are reversed, and the difference between the deferred tax asset and the realized income tax benefit creates an excess tax benefit or deficiency that increases or decreases the additional paid‑in‑capital pool (“APIC pool”). If the amount of future tax deficiencies is greater than the available APIC pool, ILG will record the deficiencies in excess of the APIC pool as income tax expense in its consolidated statements of income. ILG did not early adopt ASU 2016-09. During 2016, ILG recorded to APIC a net deficiency of approximately $2 million associated with stock-based awards, while in 2015 and 2014 net excess tax benefits associated with stock‑based awards of approximately $2 million, for each year, was recorded to APIC. The tax effects of cumulative temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2016 and 2015 are presented below (in millions). The valuation allowance is related to items for which it is more likely than not that the tax benefit will not be realized. December 31, 2016 2015 Deferred tax assets: Deferred revenue $ $ Inventory — Provision for accrued expenses Non-cash compensation Net operating loss, capital loss and tax credit carryforwards Other Total deferred tax assets Less valuation allowance — Net deferred tax assets Deferred tax liabilities: Intangible and other assets Deferred membership costs Property and equipment Investments in unconsolidated entities Sales of vacation ownership interests Other Total deferred tax liabilities Net deferred tax liability $ $ At December 31, 2016 and 2015, ILG had foreign NOLs of approximately $46 million ($14 million tax effected) and $3 million ($1 million tax effected), respectively, available to offset future income, virtually all of which will expire in various years beginning in 2022 and extending through 2026. At December 31, 2016, ILG had state NOLs of approximately $50 million ($2 million tax effected), which will expire in various years beginning in 2018 and extending through 2036. At December 31, 2016, ILG had capital loss carryforwards of approximately $55 million ($21 million tax effected), which will expire in 2019 and 2020. At December 31, 2016, ILG had state tax credit carryforwards of approximately $2 million, all of which are indefinite. It is more likely than not that substantially all of these state tax credits will be realized. At December 31, 2016, ILG had Mexico and other various tax credit carryforwards of approximately $6 million, which will expire in various years beginning in 2018 and extending through 2026. It is more likely than not that substantially all of these tax credits will be realized. The significant increase in NOLs, capital loss and tax credit carryforwards discussed above is attributable to the acquisition of Vistana. A valuation allowance for deferred tax assets is provided when it is more likely than not that certain deferred tax assets will not be realized. Realization is dependent upon the generation of future taxable income or the reversal of deferred tax liabilities during the periods in which those temporary differences become deductible. We consider the history of taxable income in recent years, the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies to make this assessment. During 2016, ILG’s valuation allowance significantly increased as a result of Vistana. At December 31, 2016, ILG had a valuation allowance of approximately $36 million related to the majority of foreign NOLs, other foreign assets and all of the state NOLs and capital loss carryforwards for which, more likely than not, the tax benefit will not be realized. A reconciliation of total income tax provision to the amounts computed by applying the statutory federal income tax rate to earnings before income taxes and noncontrolling interest is shown as follows (in millions, except percentages): Year Ended December 31, 2016 2015 2014 Amount % Amount % Amount % Income tax provision at the federal statutory rate of 35% $ $ $ State income taxes, net of effect of federal tax benefit Foreign income taxed at a different statutory tax rate U.S. tax consequences of foreign operations — — — Gain on acquisition — — — — Other, net — — — — Income tax provision $ $ $ In accordance with ASC 740, no federal and state income taxes have been provided on permanently reinvested earnings of certain foreign subsidiaries aggregating approximately $135 million at December 31, 2016. If, in the future, these earnings are repatriated to the U.S., or if ILG determines such earnings will be repatriated to the U.S. in the foreseeable future, additional tax provisions would be required. Due to complexities in the tax laws and the assumptions that would have to be made, it is not practicable to estimate the amounts of income taxes that would have to be provided. ASC 740 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of December 31, 2016, 2015 and 2014, ILG did not have any material unrecognized tax benefits. All amounts rounded to less than a million, but which if recognized, would favorably affect the effective tax rate. ILG recognizes interest and, if applicable, penalties related to unrecognized tax benefits in income tax expense. There were no material accruals for interest during 2016, 2015 and 2014. In connection with the acquisition of Vistana, Starwood and ILG entered into a Tax Matters Agreement, discussed further below. Under the Tax Matters Agreement, Starwood indemnifies ILG for all consolidated tax liabilities and related interest and penalties for the pre-close period. Accordingly, any unrecognized tax benefits and related interest for Vistana related to the pre-close period that are the obligation of its former parent have not been recorded. ILG believes that its unrecognized tax benefits will not materially change within twelve months of the current reporting date. An estimate of other changes in unrecognized tax benefits cannot be made, but is not expected to be significant. ILG files income tax returns in the U.S. federal jurisdiction and various state, local, and foreign jurisdictions. As of December 31, 2016, no open tax years are currently under examination by the IRS. The U.S. federal statute of limitations for years prior to and including 2012 has closed. ILG was notified by the State of Florida that the consolidated state tax return for all open tax years will be examined. In Florida our tax years ended December 31, 2013 through December 31, 2015 are open. No other tax years are currently under examination in any material state and local jurisdictions. Vistana, by virtue of previously filed consolidated tax returns with Starwood, is under audit by the IRS for several pre-close periods. Vistana is also under audit in Mexico for the tax year ended December 31, 2012. Under the Tax Matters Agreement, Starwood indemnifies ILG for all income tax liabilities and related interest and penalties for the pre-close period. On September 15, 2016, the U.K. Finance Act 2016 was enacted, which among other changes, further reduced the U.K. corporate income tax rate to 17% effective April 1, 2020. The impact of this further rate reduction was recorded during the year and was not significant. This reduced our U.K. net deferred tax liability and decreased income tax expense, favorably impacting our effective tax rate. Going forward, the lower corporate tax rate will continue to decrease income tax expense and favorably impact our effective tax rate. In connection with the Vistana transaction, Starwood and ILG entered into a Tax Matters Agreement that generally governs the parties' respective rights, responsibilities, and obligations with respect to taxes, including both taxes arising in the ordinary course of business as well as taxes, if any, incurred as a result of any failure of the Vistana reorganization, spin-off, Merger and certain related transactions consummated in connection with Starwood's internal restructuring to qualify for their intended U.S. federal income tax treatment. In addition to allocating responsibility for these taxes between the parties, the Tax Matters Agreement sets forth the respective obligations of the parties with respect to the filing of tax returns, the administration of tax contests and assistance and cooperation on tax matters. The Tax Matters Agreement also generally prohibits ILG, Vistana and any subsidiary of Vistana from taking certain actions that could cause the failure of the Vistana reorganization, spin-off, Merger and certain related transactions consummated in connection with Starwood's internal restructuring from qualifying for their intended tax treatment. Additional details can be found in the Tax Matters Agreement which was included as an exhibit to Form 8-K filed on May 12, 2016. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 20—SEGMENT INFORMATION Pursuant to FASB guidance as codified in ASC 280, an operating segment is a component of a public entity (1) that engages in business activities that may earn revenues and incur expenses; (2) for which operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segments and assess its performance; and (3) for which discrete financial information is available. We also considered how the businesses are organized as to segment management, and the focus of the businesses with regards to the types of products or services offered. ILG is comprised of two operating and reportable segments: Vacation Ownership and Exchange and Rental. Our Vacation Ownership segment engages in the management, sales, marketing, financing, rental and ancillary services, and development of VOIs as well as related services to owners and associations. Our Exchange and Rental segment offers access to vacation accommodations and other travel‑related transactions and services to leisure travelers, by providing vacation exchange services and vacation rental, working with resort developers and managing vacation properties. ILG provides certain corporate functions that benefit the organization as a whole. Such corporate functions include corporate services relating to oversight, corporate development, finance and accounting, legal, treasury, tax, internal audit, human resources, and certain IT functions. Costs relating to such corporate functions that are not directly cross‑charged to individual businesses are being allocated to our two operating and reportable segments based on a pre‑determined measure of profitability relative to total ILG. All such allocations relate only to general and administrative expenses. The consolidated statements of income are not impacted by this cross‑segment allocation. Information on reportable segments and reconciliation to consolidated operating income is as follows (in millions): Year Ended December 31, 2016 2015 2014 Vacation Ownership: Resort operations revenue $ $ $ Management fee revenue Sales of vacation ownership products, net Consumer financing revenue Cost reimbursement revenue Total revenue Cost of service and membership related Cost of sales of vacation ownership products Cost of rental and ancillary services Cost of consumer financing — — Cost reimbursements Total cost of sales Royalty fee expense Selling and marketing expense General and administrative expense Amortization expense of intangibles Depreciation expense Segment operating income $ $ $ Year Ended December 31, 2016 2015 2014 Exchange and Rental: Transaction revenue $ $ $ Membership fee revenue Ancillary member revenue Total member revenue Club rental revenue Other revenue Rental management revenue Cost reimbursement revenue Total Exchange and Rental revenue Cost of service and membership related sales Cost of sales of rental and ancillary services Cost reimbursements Total cost of sales Royalty fee expense — Selling and marketing expense General and administrative expense Amortization expense of intangibles Depreciation expense Segment operating income $ $ $ Year Ended December 31, 2016 2015 2014 Consolidated: Revenue $ $ $ Cost of sales Operating expenses Operating income $ $ $ Selected financial information by reporting segment is presented below (in millions). December 31, 2016 2015 Total Assets: Vacation Ownership $ $ Exchange and Rental Total $ $ Year Ended December 31, 2016 2015 2014 Capital expenditures Vacation Ownership $ $ $ Exchange and Rental Total $ $ $ Geographic Information We conduct operations through offices in the U.S. and 14 other countries. For the year ended December 31, 2016 and 2015 revenue is sourced from over 100 countries worldwide. Other than the United States and Europe, revenue sourced from any individual country or geographic region did not exceed 10% of consolidated revenue for the years ended December 31, 2016 and 2015. Geographic information on revenue, based on sourcing, and long‑lived assets, based on physical location, is presented in the table below (in millions). Year Ended December 31, 2016 2015 2014 Revenue: United States $ $ $ Europe All other countries (1) Total $ $ $ (1) Includes countries within the following continents: Africa, Asia, Australia, North America and South America. December 31, 2016 2015 Long-lived assets (excluding goodwill and intangible assets): United States $ $ Mexico — Europe Total $ $ |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 21—COMMITMENTS AND CONTINGENCIES In the ordinary course of business, ILG is a party to various legal proceedings. ILG establishes reserves for specific legal matters when it determines that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. ILG does not establish reserves for identified legal matters when ILG believes that the likelihood of an unfavorable outcome is not probable. Although management currently believes that an unfavorable resolution of claims against ILG, including claims where an unfavorable outcome is reasonably possible, will not have a material impact on the liquidity, results of operations, or financial condition of ILG, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future. ILG also evaluates other contingent matters, including tax contingencies, to assess the probability and estimated extent of potential loss. See Note 19 for a discussion of income tax contingencies. Lease Commitments ILG leases office space, computers and equipment used in connection with its operations under various operating leases, many of which contain escalation clauses. We account for leases under ASC Topic 840, “Leases” (“ASC 840”). Future minimum payments under operating lease agreements are as follows (in millions): Years Ending December 31, 2017 $ 2018 2019 2020 2021 Thereafter through 2021 Total $ Expense charged to operations under these agreements was $11 million, $12 million and $13 million for the years ended December 31, 2016, 2015 and 2014, respectively. Lease expense is recognized on a straight‑line basis over the term of the lease, including any option periods, as appropriate. The same lease term is used for lease classification, the amortization period of related leasehold improvements, and the estimation of future lease commitments. Other items, such as certain purchase commitments and guarantees are not recognized as liabilities in our consolidated financial statements but are required to be disclosed in the footnotes to the financial statements. These funding commitments could potentially require our performance in the event of demands by third parties or contingent events. The following table summarizes these items, on an undiscounted basis, at December 31, 2016 and the future periods in which such obligations are expected to be settled in cash. In addition, the table reflects the timing of principal and interest payments on outstanding borrowings. Years Ending December 31, Total 2017 2018 2019 2020 2021 Thereafter (Dollars in millions) Debt principal $ $ — $ — $ — $ — $ $ Debt interest (projected) Guarantees, surety bonds, and letters of credit — Purchase obligations and other commitments — Total commitments $ $ $ $ $ $ $ At December 31, 2016, guarantees, surety bonds and letters of credit totaled $107 million, with the highest annual amount of $82 million occurring in year one. The total includes a guarantee by us of up to $37 million of the construction loan for the Maui project. The total also includes maximum exposure under guarantees of $40 million which primarily relates to our Exchange and Rental segment’s rental management agreements, including those with guaranteed dollar amounts, and accommodation leases supporting the segment’s management activities that are entered into on behalf of the property owners for which either party generally may terminate such leases upon 60 to 90 days prior written notice to the other party. In addition, certain of our rental management agreements provide that owners receive specified percentages of the rental revenue generated under its management. In these cases, the operating expenses for the rental operations are paid from the revenue generated by the rentals, the owners are then paid their contractual percentages or guaranteed amounts, and our vacation rental business either retain the balance (if any) as its fee or makes up the deficit. Although such deficits are reasonably possible in a few of these agreements, as of December 31, 2016, future amounts are not expected to be significant either individually or in the aggregate. Additionally, as of December 31, 2016, our letters of credit totaled $11 million and were principally related to our Vacation Ownership sales and financing activities. More specifically, these letter of credits provide alternate assurance on amounts held in escrow which enable our developer entities to access purchaser deposits prior to closings, as well as provide a guarantee of maintenance fees owed by our developer entities during subsidy periods at a particular vacation ownership resort, among other items. The purchase obligations primarily relate to future guaranteed purchases of rental inventory, operational support services, marketing related benefits and membership fulfillment benefits. Certain of our vacation rental businesses also enter into agreements, as principal, for services purchased on behalf of property owners for which it is subsequently reimbursed. As such, we are the primary obligor and may be liable for unreimbursed costs. As of December 31, 2016, amounts pending reimbursements are not significant. Litigation On December 5, 2016, individuals and entities who own or owned 107 fractional interests of a total of 372 interests created in the Fifth and Fifty-Fifth Residence Club located within The St. Regis, New York filed suit against us, certain of our subsidiaries, Marriott International Inc. and certain of its subsidiaries including Starwood Hotels and Resorts Worldwide LLC. The case is filed as a mass action in federal court in the Southern District of New York, not as a class action. The plaintiffs principally challenge the sale of less than all interests offered in the fractional offering plan, the amendment of the plan to include additional units, the failure to amend the plan to provide for certain alleged changes, and the rental of unsold fractional interests by the plan’s sponsor, claiming that alleged acts by us and the other defendants breached or undermined the relevant agreements and harmed the value of plaintiffs’ fractional interests. The relief sought includes, among other things, compensatory damages, rescission, disgorgement, attorneys’ fees, and pre- and post-judgment interest. In response to our request to file a motion to dismiss, the plaintiffs have agreed to amend their complaint on or before March 6, 2017. We will determine at that time whether to request permission to file a motion to dismiss the amended complaint. We dispute the material allegations in the complaint and intend to defend against the action vigorously. Given the early stages of the action and the inherent uncertainties of litigation, we cannot estimate a range of the potential liability, if any, at this time. On February 28, 2017, the owners association for the Fifth and Fifty-Fifth Residence Club located within The St. Regis, New York filed a separate suit against us and certain of our subsidiaries in federal court in the Southern District of New York. The complaint, which has not been served on any party, asserts claims against the sponsor of the residence club, St. Regis Residence Club, New York, Inc., the club manager, St. Regis New York Management, Inc., and certain affiliated entities for alleged breach of fiduciary duties principally related to sale and rental practices and alleged breach of the original purchase agreements with certain owners. The relief sought consists of unspecified actual damages, punitive damages, and disgorgement of payments under the management and purchase agreements, as well as related agreements. We dispute the material allegations in the complaint and intend to defend against the action vigorously. Given the early stages of the action and the inherent uncertainties of litigation, we cannot estimate a range of the potential liability, if any, at this time. |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
SUPPLEMENTAL CASH FLOW INFORMATION | |
SUPPLEMENTAL CASH FLOW INFORMATION | NOTE 22—SUPPLEMENTAL CASH FLOW INFORMATION Year Ended December 31, 2016 2015 2014 (In millions) Cash paid during the period for: Interest, net of amounts capitalized $ $ $ Income taxes, net of refunds $ $ $ Non-cash financing activity: Issuance of stock in connection with Vistana acquisition $ $ — $ — |
SUPPLEMENTAL GUARANTOR INFORMAT
SUPPLEMENTAL GUARANTOR INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
SUPPLEMENTAL GUARANTOR INFORMATION | |
SUPPLEMENTAL GUARANTOR INFORMATION | NOTE 23— SUPPLEMENTAL GUARANTOR INFORMATION The senior notes are guaranteed by ILG and certain other subsidiaries for which 100% of the voting securities are owned directly or indirectly by ILG (collectively, the “Guarantor Subsidiaries”). These guarantees are full and unconditional and joint and several. The guarantees of the Guarantor Subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions. The indenture governing the senior notes contains covenants that, among other things, limit the ability of Interval Acquisition Corp. (the “Issuer”) and the Guarantor Subsidiaries to pay dividends to us or make distributions, loans or advances to us. The following tables present consolidating financial information as of December 31, 2016 and 2015 and for the year ended December 31, 2016 and 2015 for ILG on a stand‑alone basis, the Issuer on a stand‑alone basis, the combined Guarantor Subsidiaries of ILG (collectively, the “Guarantor Subsidiaries”), the combined non-guarantor subsidiaries of ILG (collectively, the “Non-Guarantor Subsidiaries”) and ILG on a consolidated basis (in millions). Balance Sheet as of December 31, 2016 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Current assets $ $ $ $ $ - $ Property and equipment, net - - Goodwill and intangible assets, net - - Investments in subsidiaries - - Other assets - - - Total assets $ $ $ $ $ $ Current liabilities $ $ $ $ $ - $ Other long-term liabilities - - - Long term debt - - Intercompany liabilities (receivables) / equity - - Redeemable noncontrolling interest - - - - ILG stockholders' equity Noncontrolling interests - - - - Total liabilities and equity $ $ $ $ $ $ Balance Sheet as of December 31, 2015 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Current assets $ $ - $ $ $ - $ Property and equipment, net - - - Goodwill and intangible assets, net - - Investments in subsidiaries - - Other assets - - - Total assets $ $ $ $ $ $ Current liabilities $ $ $ $ $ - $ Other long-term liabilities - - - Long term debt - - Intercompany liabilities (receivables) / equity - - Redeemable noncontrolling interest - - - - ILG stockholders' equity Noncontrolling interests - - - Total liabilities and equity $ $ $ $ $ $ Statement of Income for the Year Ended December 31, 2016 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ - $ - $ $ $ - $ Operating expenses - - Interest (expense) income, net - - Other income (expense), net (1) Income tax (provision) benefit - Equity in earnings from unconsolidated entities - - - - Net income Net loss (income) attributable to noncontrolling interests - - - Net income attributable to common stockholders $ $ $ $ $ $ Statement of Income for the Year Ended December 31, 2015 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ - $ - $ $ $ - $ Operating expenses - Interest (expense) income, net - - - Other income (expe nse ), net (1) Income tax (provision) benefit - Equity in earnings from unconsolidated entities - - - - Net income Net loss (income) attributable to noncontrolling interests - - - Net income attributable to common stockholders $ $ $ $ $ $ Statement of Income for the Year Ended December 31, 2014 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ - $ - $ $ $ - $ Operating expenses - Interest (expense), net - - - - Other income, net (1) Income tax (provision) benefit - Equity in earnings from unconsolidated entities - - - - Net income Net loss (income) attributable to noncontrolling interests - - - - Net income attributable to common stockholders $ $ $ $ $ $ (1) Includes equity in net income of wholly-owned subsidiaries. Statement of Cash Flows for the Year Ended December 31, 2016 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries ILG Consolidated Cash flows provided by (used in) operating activities $ $ $ $ $ Cash flows used in investing activities - Cash flows provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents - - - Cash and cash equivalents at beginning of period - - Cash and cash equivalents at end of period $ - $ - $ $ $ Statement of Cash Flows for the Year Ended December 31, 2015 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries ILG Consolidated Cash flows provided by (used in) operating activities $ $ $ $ $ Cash flows used in investing activities - - Cash flows provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents - - - Cash and cash equivalents at beginning of period - - Cash and cash equivalents at end of period $ - $ - $ $ $ Statement of Cash Flows for the Year Ended December 31, 2014 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries ILG Consolidated Cash flows provided by (used in) operating activities $ $ $ $ $ Cash flows used in investing activities - - Cash flows provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents - - - Cash and cash equivalents at beginning of period - - Cash and cash equivalents at end of period $ - $ - $ $ $ |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2016 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 24—RELATED PARTY TRANSACTIONS Agreements with Liberty In connection with the transactions contemplated by the Merger Agreement and Separation Agreement, ILG and Liberty Interactive Corp. agreed to amend and restate that certain Spinco Agreement, dated May 13, 2008, by and among Liberty, certain affiliates of Liberty and IAC/InterActive Corp., as subsequently assigned to ILG on August 20, 2008. This amended agreement provides that Liberty is entitled to appoint two directors to the Board. So long as Liberty continues to beneficially own at least 10% of ILG’s common stock, Liberty has the right to nominate a proportionate number of directors to ILG’s board of directors. The amended agreement restricts Liberty and its affiliates from acquiring in excess of 35% of ILG’s outstanding shares of common stock without ILG’s consent. The amended agreement with Liberty, and the respective rights and obligations thereunder, will terminate if Liberty’s beneficial ownership falls below 10% of ILG’s outstanding equity, unless Liberty’s ownership was reduced below 10% not in conjunction with Liberty transferring its shares. In that event, Liberty’s rights will terminate three years from the date of the amended agreement. Also in connection with the Vistana acquisition, ILG and Liberty amended and restated that certain registration rights agreement, dated as of August 20, 2008, by and among ILG, Liberty and an affiliate of Liberty. The Amended Registration Rights Agreement provides Liberty with four demand registration rights and sets the aggregate offering price threshold for any demand registration statement at $50 million. Pursuant to the Amended Registration Rights Agreement, ILG must prepare a demand registration statement requested by Liberty no earlier than upon termination of the Merger Agreement or sixty days following the consummation of the transactions contemplated by the Merger Agreement. CLC World Resorts and Hotels Effective November 4, 2013, CLC became a related party of ILG when VRI Europe Limited, a subsidiary of ILG, purchased CLC’s European shared ownership resort management business and, in connection with this purchase, issued to CLC a noncontrolling interest in VRI Europe. As part of this arrangement, VRI Europe and CLC entered into a shared services arrangement whereby each party provides certain services to one another at an agreed upon cost. VRI Europe’s corresponding income and expense resulting from this shared services arrangement is recorded on a straight‑line basis throughout the year. Additionally, we have an ongoing business relationship with CLC as part of their Interval Network affiliation. During the year ended December 31, 2016, VRI Europe recorded $1 million and $3 million of income and expense, respectively, in shared services with CLC, which is included within our Vacation Ownership segment. Additionally, we recorded less than $1 million of Exchange and Rental revenue in 2016 related to membership enrollments and sales of marketing materials. As of December 31, 2016, we had a trade payable of less than $1 million due to CLC, and a receivable of $1 million due from CLC. During the year ended December 31, 2015, VRI Europe recorded $1 million and $3 million of income and expense, respectively, in shared services with CLC, which is included within our Vacation Ownership segment. Additionally, we recorded $1 million of Exchange and Rental revenue in 2015 related to membership enrollments and sales of marketing materials. As of December 31, 2015, we had a trade payable of less $0.1 million due to CLC, and a receivable of $0.5 million due from CLC. As of December 31, 2016 and 2015, we had a loan of $15 million due from CLC which is presented within other non-current assets in our consolidated balance sheets. The loan is secured and matures five years subsequent to the funding date with a fixed interest rate payable monthly. The outstanding loan is to be repaid in full at maturity either in cash or by means of a share option exercisable by ILG, at its sole discretion, which would allow for settlement of the loan in CLC’s shares of VRI Europe for contractually determined equivalent value. The funding of this loan was in October 2014. We recorded interest income of less than $1 million and $1 million in the consolidated statement of income for the years ended December 31, 2016 and 2015. Starwood Hotels and Resorts In connection with the acquisitions of Vistana in May 2016, ILG entered into several agreements with Starwood including the license agreement, tax matters agreement, management agreements for certain transferred hotels, transition services agreement, and other commercial agreements. One of our directors was an executive of Starwood during the period from the closing of the Vistana acquisition until he left Starwood following its sale. Maui Timeshare Venture In connection with the acquisition of HVO in October of 2014, we acquired a noncontrolling ownership interest in Maui Timeshare Venture, LLC, a joint venture to develop and operate a vacation ownership resort in the state of Hawaii. During the year ended December 31, 2016, we recorded revenue of $17 million from this joint venture related primarily to resort management and vacation ownership sales and marketing services performed on behalf of the joint venture pursuant to contractual arrangements at market rates. As of December 31, 2016, we had a trade payable of $ 2 million due to the joint venture and a negligible amount owed from the joint venture. |
QUARTERLY RESULTS (UNAUDITED)
QUARTERLY RESULTS (UNAUDITED) | 12 Months Ended |
Dec. 31, 2016 | |
QUARTERLY RESULTS (UNAUDITED) | |
QUARTERLY RESULTS (UNAUDITED) | NOTE 25—QUARTERLY RESULTS (UNAUDITED) Revenue at ILG is influenced by the seasonal nature of travel. The timeshare management part of this business does not experience significant seasonality. The vacation rental business recognizes rental revenue based on occupancy, with the first and third quarters generally generating higher revenue and the second and fourth quarters generally generating lower revenue. The vacation exchange business generally recognizes exchange and Getaway revenue based on confirmation of the vacation, with the first quarter generally experiencing higher revenue and the fourth quarter generally experiencing lower revenue. Quarter Ended (1) March 31, June 30, September 30, December 31, (In millions, except for share data) 2016 Revenue $ $ $ $ Operating income Net income attributable to common stockholders Earnings per share attributable to common stockholders: Basic Diluted 2015 Revenue $ $ $ $ Operating income Net income attributable to common stockholders Earnings per share attributable to common stockholders(1): Basic Diluted (1) For the years ended December 31, 2016 and 2015, individual amounts for the quarters may not add to the annual amount because of rounding and, in the case of per share amounts, differences in the average common shares outstanding during each period. Additionally, the second quarter of 2016 included a pre-tax $197 million gain on bargain purchase , while the third and fourth quarters of 2016 included downward adjustments to that gain of $9 million and $25 million, respectively. See Note 3 for related discussion. |
Schedule II VALUATION AND QUALI
Schedule II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2016 | |
Schedule II VALUATION AND QUALIFYING ACCOUNTS | |
Schedule II VALUATION AND QUALIFYING ACCOUNTS | Schedule II INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS Charges Charges Balance at (Credits) (Credits) Balance at Beginning to to Other End of Description of Period Earnings Accounts Deductions(1) Period (In millions) 2016 Allowance for doubtful accounts on trade receivables $ — $ — $ — $ — $ — Allowance for loan losses on mortgages receivable $ $ $ — $ — $ Deferred tax valuation allowance(2) $ — $ $ — $ — $ 2015 Allowance for doubtful accounts on trade receivables $ — $ — $ — $ — $ — Allowance for loan losses on mortgages receivable $ — $ $ — $ — $ Deferred tax valuation allowance $ — $ — $ — $ — $ — 2014 Allowance for doubtful accounts on trade receivables $ — $ — $ — $ — $ — Allowance for loan losses on mortgages receivable $ — $ — $ — $ — $ — Deferred tax valuation allowance $ — $ — $ — $ — $ — (1) Write‑off of uncollectible accounts receivable. (2) Primarily related to the Vistana acquisition. |
SIGNIFICANT ACCOUNTING POLICI34
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of ILG, our wholly‑owned subsidiaries, and companies in which we have a controlling interest, including variable interest entities (“VIEs”) where we are the primary beneficiary in accordance with consolidation guidance. All significant intercompany balances and transactions have been eliminated in the consolidated financial statements. References in these financial statements to net income attributable to common stockholders and ILG stockholders’ equity do not include noncontrolling interests, which represent the outside ownership of our consolidated non‑wholly owned entities and are reported separately. |
Accounting Estimates | Accounting Estimates ILG’s management is required to make certain estimates and assumptions during the preparation of its consolidated financial statements in accordance with generally accepted accounting principles (“GAAP”). These estimates and assumptions impact the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net earnings during any period. Actual results could differ from those estimates. Significant estimates underlying the accompanying consolidated financial statements include: · the recovery of long‑lived assets as well as goodwill and other intangible assets; · purchase price allocations of business combinations; · loan loss reserves for vacation ownership mortgages receivable; · accounting for acquired vacation ownership mortgages receivable; · revenue recognition pertaining to sales of vacation ownership products pursuant to the percentage of completion method; · cost of vacation ownership product sales related estimates included in our relative sales value calculation, such as future projected sales revenue and expected project costs to complete; · the accounting for income taxes including deferred income taxes and related valuation allowances; · the determination of deferred revenue and membership costs; · and the determination of stock‑based compensation. In the opinion of ILG’s management, the assumptions underlying the historical consolidated financial statements of ILG and its subsidiaries are reasonable |
Seasonality | Seasonality Revenue at ILG is influenced by the seasonal nature of travel. Within our Vacation Ownership segment, our sales and financing business experiences a modest impact from seasonality, with higher sales volumes during the traditional vacation periods. Our vacation ownership management businesses by and large do not experience significant seasonality, with the exception of our resort operations revenue which tends to be higher in the first quarter. Within our Exchange and Rental segment, our vacation exchange businesses recognize exchange and Getaway revenue based on confirmation of the vacation, with the first quarter generally experiencing higher revenue and the fourth quarter generally experiencing lower revenue. Our vacation rental businesses recognize rental revenue based on occupancy, with the first and third quarters generally generating higher revenue as a result of increased leisure travel to our Hawaii‑based managed properties during these periods, and the second and fourth quarters generally generating lower revenue. |
Revenue recognition | Revenue Recognition Vacation Ownership Revenue from the Vacation Ownership segment is derived principally from sales of VOIs and related fees earned by Vistana and HVO, interest income earned for financing these sales, fees for vacation ownership resort and homeowners’ association management services, and rental and ancillary revenues, including from hotels owned by Vistana and HVO . Sales of VOIs ILG recognizes revenue from sales of VOIs in accordance with Financial Accounting Standard Board (FASB) Accounting Standards Codification (ASC) 970, Real Estate—General , and FASB ASC 978, Real Estate—Time‑Sharing Activities . The stated sales price of the VOI is divided into separate revenue components, which include the revenue earned on the sale of the VOI and the revenue earned on related sales incentives given to the customer as motivation to purchase the VOI. We at times offer several types of sales incentives, including SPG and Hyatt Gold Passport (World of Hyatt) points, free bonus week, and down payment credits to buyers. Consolidated VOI sales are recognized and included in revenues after a binding sales contract has been executed, a 10% minimum down payment has been received as a measure of substantiating the purchaser’s commitment, the rescission period has expired, and construction is substantially complete. Pursuant to accounting rules for real estate time‑sharing transactions, as part of determining when we have met the criteria necessary for revenue recognition we must also take into consideration the fair value of certain incentives provided to the purchaser when assessing the adequacy of the purchaser’s initial down-payment. The agreement for sale generally provides for a down payment and a note secured by a mortgage payable in monthly installments, including interest, over a typical term ranging from 5 - 15 years. All payments received prior to the recognition of the sale as revenue are recognized in deferred revenue in the accompanying consolidated balance sheets. Customer deposits relating to contracts cancelled after the applicable rescission period are forfeited and recorded in revenue at the time of forfeiture. If construction of the vacation ownership product is not complete, we determine the portion of revenues to recognize based upon the percentage of completion method, which includes judgments and estimates, including total project costs to complete. Revenue deferred under the percentage of completion calculations is included in deferred revenue on the consolidated balance sheet as of December 31, 2016, and associated direct selling costs are deferred as prepaid expenses within prepaid expenses and other current assets. The provision for loan losses is recorded as an adjustment to sales of VOIs in the accompanying consolidated income statements rather than as an adjustment to bad debt expense. ILG records an estimate of uncollectible amounts at the time of the interval sale. We capitalize direct costs attributable to the sale of VOIs until the sales are recognized. All such capitalized costs are included in prepaid expenses and other current assets in the consolidated balance sheets. If a contract is cancelled, we charge the unrecoverable direct selling costs to expense. Indirect sales and marketing costs are expensed as incurred. Management fee revenue Management fees in this segment consist of base management fees, service fees, and annual maintenance fees, as applicable. Annual maintenance fees are amounts paid by timeshare owners for maintaining and operating the respective properties, which includes management services, and are recognized on a straight‑line basis over the respective annual maintenance period. Our day-to-day management services include activities such as housekeeping services, operation of a reservation system, maintenance, and certain accounting and administrative services. We receive compensation for such management services, which is generally based on either a percentage of the budgeted cost to operate such resorts or a fixed fee arrangement. Resort operations revenue Our resort operations activities are largely comprised of transient rental income at our vacation ownership and owned-hotel properties. We record rental revenue when occupancy has occurred or, in the case of unused prepaid rentals, upon forfeiture. Other ancillary services revenue consists of goods and services that are sold or provided by us at restaurants, golf courses and other retail and service outlets located at developed resorts. We recognize ancillary services revenue when goods have been provided and/or services have been rendered. Exchange and Rental Membership fee revenue Revenue, net of sales incentives, from membership fees from our Exchange and Rental segment is deferred and recognized over the terms of the applicable memberships, typically ranging from one to five years, on a straight‑line basis. When multiple member benefits and services are provided over the term of the membership, revenue is recognized for each separable deliverable ratably over the membership period, as applicable. Generally, memberships are cancelable and refundable on a pro‑rata basis, with the exception of Interval Network’s Platinum tier which is non‑refundable. Direct costs of acquiring members (primarily commissions) and certain direct fulfillment costs related to deferred membership revenue are also deferred and amortized on a straight‑line basis over the terms of the applicable memberships or benefit period, whichever is shorter. The recognition of previously deferred revenue and expense is based on estimates derived from an aggregation of member‑level data. However, following the implementation of a proprietary IT platform in the fourth quarter of 2014, recognition of deferred membership revenue and expense on new Interval Network memberships sold is at the individual member‑level. Transaction revenue Revenue from exchanges, Getaway transactions and other fee-based services provided to members of our networks is recognized when confirmation of the transaction is provided and services have been rendered as the earnings process is complete. Reservation servicing revenue is recognized when the service is performed or on a straight‑line basis over the applicable service period. All taxable revenue transactions are presented on a net‑of‑tax basis. Club rental revenue Club rental revenue represents rentals generated by the Vistana Signature Network and Hyatt Residence Club mainly to monetize inventory at their vacation ownership resorts to provide exchanges for our members through hotel loyalty programs. Revenue related to club rentals is recognized when occupancy has occurred. Rental management revenue Revenue from our vacation rental management businesses is comprised of base management fees which are typically either (i) fixed amounts, (ii) amounts based on a percentage of adjusted gross lodging revenue, or (iii) various revenue sharing arrangements with condominium owners based on stated formulas. Base management fees are recognized when earned in accordance with the terms of the contract. Incentive management fees for certain hotels and condominium resorts are generally a percentage of operating profits or improvement in operating profits. We recognize incentive management fees as earned throughout the incentive period based on actual results which are trued‑up at the culmination of the incentive period. Service fee revenue is based on the services provided to owners including reservations, sales and marketing, property accounting and information technology services either internally or through third party providers. Service fee revenue is recognized when the service is provided. General Cost reimbursement revenue Represents the compensation and other employee-related costs directly associated with managing properties that are included in both revenue and cost of sales and that are passed on to the property owners or homeowner associations without mark-up. Cost reimbursement revenue of the Vacation Ownership segment also includes reimbursement of sales and marketing expenses, without mark-up, pursuant to contractual arrangements. Deferred revenue in a business combination When we acquire a business which records deferred revenue on their historical financial statements, we are required to re‑measure that deferred revenue as of the acquisition date pursuant to rules related to accounting for business combinations, as described further below. The post‑acquisition impact of that remeasurement results in recognizing revenue which solely comprises the cost of the associated legal performance obligation we assumed as part of the acquisition, plus a normal profit margin. This purchase accounting treatment typically results in lower amounts of revenue recognized in a reporting period following the acquisition than would have otherwise been recognized on a historical basis. Multiple‑element arrangements When we enter into multiple‑element arrangements, we are required to determine whether the deliverables in these arrangements should be treated as separate units of accounting for revenue recognition purposes and, if so, how the contract price should be allocated to each element. We analyze our contracts upon execution to determine the appropriate revenue recognition accounting treatment. Our determination of whether to recognize revenue for separate deliverables will depend on the terms and specifics of our products and arrangements as well as the nature of changes to our existing products and services, if any. The allocation of contract revenue to the various elements does not change the total revenue recognized from a transaction or arrangement, but may impact the timing of revenue recognition. Sales type taxes All taxable revenue transactions are presented on a net‑of‑tax basis. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less. |
Restricted Cash and Cash Equivalents | Restricted Cash and Cash Equivalents Restricted cash and cash equivalents at December 31, 2016 and 2015 primarily includes maintenance fees, escrow deposits received on sales of VOIs that are held in escrow until the applicable statutory rescission period has expired, the funds have been released from escrow and the deeding process has begun or title is otherwise transferred. We also may have the opportunity to release escrow funds by issuing a surety bond. Additionally, restricted cash and cash equivalents also include amounts held in trust and lock box accounts in connection with certain transactions related to management of vacation rental properties as well as cash held by our variable interest entities (“VIEs”) from our securitization transactions (refer to Note 13 – Securitized Vacation Ownership Debt). |
Accounts Receivable | Accounts Receivable Accounts receivable are stated at amounts due from customers, principally resort developers, members and managed properties, net of an allowance for doubtful accounts. Accounts receivable outstanding longer than the contractual payment terms are considered past due. We determine our allowance by considering a number of factors, including the length of time accounts receivable are past due, previous loss history, our judgment as to the specific customer’s current ability to pay its obligation and the condition of the general economy. More specifically, our policy for determining our allowance for doubtful accounts consists of both general and specific reserves. The general reserve methodology is distinct for each ILG business based on its historical collection experience and past practice. Predominantly, receivables greater than 120 days past due are applied a general reserve factor, while receivables 180 days or more past due are fully reserved. The determination of when to apply a specific reserve requires judgment and is directly related to the particular customer collection issue identified, such as known liquidity constraints, insolvency concerns or litigation. The allowance for doubtful accounts is included within general and administrative expense within our consolidated statements of income. We write off accounts receivable when they become uncollectible once we have exhausted all means of collection. |
Vacation Ownership Inventory and Cost of Sales | Vacation Ownership Inventory and Cost of Sales Our inventory consists of completed unsold vacation ownership interests, which has an operating cycle that generally exceeds twelve months, and vacation ownership projects under construction. On our consolidated balance sheet, completed unsold vacation ownership interests are presented as a current asset, while vacation ownership projects under construction are presented as a non-current asset given this inventory is in the development stage of its operating cycle. We carry our inventory presented within current assets at the lower of cost or fair value, less expected costs to sell, which can result in impairment charges and/or recoveries of previous impairments. We capitalize costs clearly associated with the acquisition, development and construction of a real estate project when it is probable that the project will move forward. We capitalize salary and related costs only to the extent they directly relate to the project. We capitalize interest expense, taxes and insurance costs when activities that are necessary to get the property ready for its intended use are underway. We cease capitalization of costs during prolonged gaps in development when substantially all activities are suspended or when projects are considered substantially complete. We account for our vacation ownership inventory and cost of vacation ownership products in accordance with the authoritative guidance for accounting for real estate time-sharing transactions contained in ASC Topic 978, Real Estate—Time Sharing Activities , which defines a specific application of the relative sales value method for reducing vacation ownership inventory and recording cost of sales. Also, pursuant to the guidance for accounting for real estate time-sharing transactions, we do not reduce inventory for the cost of vacation ownership products related to anticipated credit losses (accordingly, no adjustment is made when inventory is reacquired upon default of originated receivables). These standards provide for changes in estimates within the relative sales value calculations to be accounted for as real estate inventory true-ups, which we refer to as cost of sales true-ups, and are recorded in cost of vacation ownership product sales to retrospectively adjust the margin previously recorded subject to those estimates. These cost of sales true-ups could result in material adjustments to cost of vacation ownership product sales in a given period. |
Costs Incurred to Sell Vacation Ownership Products | Costs Incurred to Sell Vacation Ownership Products We capitalize and defer direct costs attributable to the sale of vacation ownership products until the sales are recognized, in accordance with the guidelines of ASC Topic 978, Real Estate—Time Sharing Activities . All such capitalized costs are included in prepaid expenses and other current assets in the accompanying consolidated balance sheets, and are subsequently reflected in sales and marketing expense when recognized. If a contract is cancelled, we charge the unrecoverable direct selling costs to expense. In accordance with ASC 978, indirect sales and marketing costs are expensed as incurred. |
Vacation Ownership Mortgages Receivable and Allowance for Loan Losses | Vacation Ownership Mortgages Receivable and Allowance for Loan Losses Vacation ownership mortgages receivable consist of loans to eligible customers who purchase VOIs and choose to finance their purchase. These mortgage receivables are collateralized by the underlying VOI, generally bear interest at a fixed rate, have a typical term ranging from 5-15 years and are generally made available to customers who make a down payment on the purchase price within established credit guidelines. Vacation ownership mortgages receivable are composed of mortgage loans related to our financing of vacation ownership interval sales. Included within our vacation ownership mortgages receivable are originated loans and loans acquired in connection with our acquisitions of Vistana and HVO. Acquired loans are segregated between those with deteriorated credit quality at acquisition and those deemed as performing. To make this determination, we consider such factors as credit collection history, past due status, non‑accrual status, credit risk ratings, interest rates and the underlying collateral securing the loans. The fair value of acquired loans deemed performing is determined by discounting cash flows, both principal and interest, for the loan pool at market interest rates while giving consideration to anticipated future defaults. The difference between fair value and principal balances due at acquisition date is accreted to interest income, within consolidated revenue, over the estimated life of the loan pool. The collection activity associated with our securitized vacation ownership notes receivable determines the amount of our monthly repayments against our securitized debt. Collection activity includes contractual payments due and prepayments. In addition, defaulted loans are generally removed from the securitized pool and are substituted or repurchased, while upgraded loans are repurchased, for debt repayment purposes. The securitized debt is non-recourse without a specific repayment schedule. As the amount of each principal payment is contingent on the cash flows from underlying vacation ownership mortgages receivable in a given period, we have not disclosed future contractual debt repayments. Additionally, our vacation ownership mortgages receivable securitization agreements allow us to receive the net excess cash flows (spread between the collections on the notes and payments for third party obligations as defined in the securitization agreements) from the VIEs provided we do not meet certain triggers related to default levels and collateralization of the securitized pool, as discussed in Note 13. Allowance for Loan Losses For originated loans, we record an estimate of uncollectability as a reduction of sales of VOIs in the accompanying consolidated statements of income at the time revenue is recognized on a VOI sale. We evaluate our originated loan portfolio collectively as they are largely homogeneous, smaller‑balance, vacation ownership mortgages receivable. We use a technique referred to as static pool analysis, which tracks uncollectibles over the entire life of those mortgages receivable, as the basis for determining our general reserve requirements on our vacation ownership mortgages receivable. The adequacy of the related allowance is determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio, including defaults, aging, and historical write‑offs of these receivables. The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio. We generally determine our originated vacation ownership mortgages receivable to be nonperforming if either interest or principal is more than 30 days past due. All non‑performing loans are placed on non‑accrual status and we do not resume interest accrual until the receivable becomes contractually current. We apply payments we receive for vacation ownership notes receivable on non‑performing status first to interest, then to principal, and any remainder to fees. Loans acquired in connection with a business combination are recorded at their estimated fair value on their purchase date with no carryover of the related allowance for loan losses. Performing acquired loans are subsequently evaluated for any required allowance at each reporting date. Refer to Note 5 for additional information on our acquired loans. |
Investments in Unconsolidated Entities | Investments in Unconsolidated Entities We consolidate entities under our control, including variable interest entities (VIEs) where we are deemed to be the primary beneficiary as a result of qualitative and/or quantitative characteristics. The primary beneficiary is the party who has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and who has an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be disproportionate to the entity. Investments in unconsolidated affiliates over which we exercise significant influence, but do not control, including joint ventures, are accounted for by the equity method. In addition, our limited partnership investments in which we hold more than a minimal investment are accounted for under the equity method of accounting. We assess investments in unconsolidated entities for impairment quarterly to determine whether there is an indication that a loss in value that is other‑than‑temporary has occurred. If so, we evaluate the carrying value compared to the estimated fair value of the investment. Fair value is based upon internally developed discounted cash flow models, third‑party appraisals, or if appropriate, current estimated net sales proceeds from pending offers. If the estimated fair value is less than carrying value, we use our judgment to determine if the decline in value is other‑than‑temporary. In making this determination, we consider factors including, but not limited to, the length of time and extent of the decline, loss of values as a percentage of the cost, financial condition and near‑term financial projections, our intent and ability to recover the lost value, and current economic conditions. Impairments that are deemed other‑than‑temporary are charged to equity in losses from unconsolidated entities in our accompanying consolidated statements of income. |
Property and Equipment | Property and Equipment Property and equipment, including capitalized improvements, are recorded at cost. Repairs and maintenance and any gains or losses on dispositions are included in results of operations. Gains or losses on the sale or retirement of assets are included in net income when the assets are retired or sold provided there is reasonable assurance of the collectability of the sales price, if applicable, and any future activities to be performed by us relating to the assets sold are insignificant. Depreciation is recorded on a straight‑line basis to allocate the cost of depreciable assets to operations over their estimated useful lives. The following table summarizes depreciable life by asset category. Asset Category Depreciation Period Computer equipment 3 to 5 Years Capitalized software (including internally-developed software) 3 to 7 Years Buildings and leasehold improvements 1 to 40 Years Furniture and other equipment 3 to 10 Years (1) The depreciation period for leasehold improvements is the lesser of the lease term or the economic useful life for leasehold improvements. In accordance with ASC Topic 350, “Intangibles‑Goodwill and Other” (“ASC 350”), we capitalize certain qualified costs incurred in connection with the development of internal use software. Capitalization of internal use software costs begins when the preliminary project stage is completed, management with the relevant authority authorizes and commits to the funding of the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. Depreciation of property and equipment is presented as a separate line item in the accompanying income statement. |
Fair Value Measurements | Fair Value Measurements In accordance with ASC Topic 820, “Fair Value Measurement,” (“ASC 820”) the fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. We categorize assets and liabilities recorded at fair value using a three‑tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: · Level 1—Observable inputs that reflect quoted prices in active markets · Level 2—Inputs other than quoted prices in active markets that are either directly or indirectly observable · Level 3—Unobservable inputs in which little or no market data exists, therefore requiring the company to develop its own assumptions Our non‑financial assets, such as goodwill, intangible assets, vacation ownership inventory and long‑lived assets, are adjusted to fair value only when an impairment charge is recognized. Such fair value measurements are based predominantly on Level 3 inputs. |
Accounting for Business Combinations | Accounting for Business Combinations In accordance with ASC Topic 805, “Business Combinations,” when accounting for business combinations we are required to recognize the assets acquired, liabilities assumed, contractual contingencies, noncontrolling interests and contingent consideration at their fair value as of the acquisition date. These items are recorded on our consolidated balance sheets as of the respective acquisition dates based upon their estimated fair values at such dates. The results of operations of acquired businesses are included in the consolidated statements of income since their respective acquisition dates. The purchase price allocation process requires management to make significant estimates and assumptions with respect to intangible assets, estimated contingent consideration payments and/or pre‑acquisition contingencies, all of which ultimately affect the fair value of goodwill established as of the acquisition date. Goodwill acquired in business combinations is assigned to the reporting unit(s) expected to benefit from the combination as of the acquisition date and is then subsequently tested for impairment at least annually. If the fair value of the net assets acquired exceeds the purchase price consideration, we record a gain on bargain purchase. However, in such a case, before the measurement period closes we perform a reassessment to reconfirm whether we have correctly identified all of the assets acquired and all of the liabilities assumed as of the acquisition date. As part of our accounting for business combinations we are required to determine the useful lives of identifiable intangible assets recognized separately from goodwill. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the acquired business. An intangible asset with a finite useful life shall be amortized; an intangible asset with an indefinite useful life shall not be amortized. We base the estimate of the useful life of an intangible asset on an analysis of all pertinent factors, in particular, all of the following factors with no one factor being more presumptive than the other: · The expected use of the asset. · The expected useful life of another asset or a group of assets to which the useful life of the intangible asset may relate. · Any legal, regulatory, or contractual provisions that may limit the useful life. · Our own historical experience in renewing or extending similar arrangements, consistent with our intended use of the asset, regardless of whether those arrangements have explicit renewal or extension provisions. · The effects of obsolescence, demand, competition, and other economic factors. · The level of maintenance expenditures required to obtain the expected future cash flows from the asset. If no legal, regulatory, contractual, competitive, economic, or other factors limit the useful life of an intangible asset to the reporting entity, the useful life of the asset shall be considered to be indefinite. The term indefinite does not mean the same as infinite or indeterminate. The useful life of an intangible asset is indefinite if that life extends beyond the foreseeable horizon—that is, there is no foreseeable limit on the period of time over which it is expected to contribute to the cash flows of the acquired business. Although we believe the assumptions and estimates we have made have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired entity and are inherently uncertain. Examples of critical estimates in accounting for acquisitions include but are not limited to: · future expected cash flows from sales of products and services and related contracts and agreements; · discount and long‑term growth rates; and · the estimated fair value of the acquisition‑related contingent consideration, which is performed using a probability‑weighted income approach based upon the forecasted achievement of post‑acquisition pre‑determined targets; Unanticipated events and circumstances may occur which could affect the accuracy or validity of our assumptions, estimates or actual results. Additionally, any change in the fair value of the acquisition‑related contingent consideration subsequent to the acquisition date, including changes resulting from events that occur after the acquisition date, such as changes in our estimated fair value of the targets that are expected to be achieved, will be recognized in earnings in the period of the change in estimated fair value. Additionally, when acquiring a company who has recorded deferred revenue in its historical, pre‑acquisition financial statements, we are required as part of purchase accounting to re‑measure the deferred revenue as of the acquisition date. Deferred revenue is re‑measured to represent solely the cost that relates to the associated legal performance obligation which we assumed as part of the acquisition, plus a normal profit margin representing the level of effort or risk assumed. Legal performance obligations that simply relate to the passage of time would not result in recognized deferred revenue as there is little to no associated cost. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill and other intangible assets are significant components of our consolidated balance sheets. Our policies regarding the valuation of intangible assets affect the amount of future amortization and possible impairment charges we may incur. Assumptions and estimates about future values and remaining useful lives of our intangible and other long‑lived assets are complex and subjective. They can be affected by a variety of factors, including external factors such as consumer spending habits and general economic trends, and internal factors such as changes in our business strategy and our internal forecasts. Goodwill acquired in business combinations is assigned to the reporting unit(s) expected to benefit from the combination as of the acquisition date. In accordance with ASC 350, we review the carrying value of goodwill and other intangible assets of each of our reporting units on an annual basis as of October 1, or more frequently upon the occurrence of certain events or substantive changes in circumstances, based on either a qualitative assessment or a two‑step impairment test. Our reporting units within each of our Vacation Ownership and Exchange and Rental operating segments are as follows: OPERATING SEGMENTS Vacation Ownership Exchange and Rental VO management reporting unit Exchange reporting unit VO sales and financing reporting unit Rental reporting unit During the year, we monitor the actual performance of our reporting units relative to the fair value assumptions used in our annual impairment test, including potential events and changes in circumstance affecting our key estimates and assumptions. Qualitative Assessment The qualitative assessment may be elected in any given year pursuant to ASC 350. Under this guidance, entities testing goodwill for impairment have the option of performing a qualitative assessment before calculating the fair value of a reporting unit. If entities determine, on the basis of qualitative factors, that it is more‑likely‑than‑not (i.e., a likelihood of more than 50 percent) that the fair value of the reporting unit is below the carrying amount, the two‑step impairment test would be required. The guidance also provides the option to skip the qualitative assessment in any given year and proceed directly with the two‑step impairment test at our discretion. Our qualitative assessment is performed for the purpose of assessing whether events or circumstances have occurred in the intervening period between the date of our last two‑step impairment test (the “Baseline Valuation”) and the date of our current annual impairment test which could adversely affect the comparison of our reporting units’ fair value with its carrying amount. Examples of events and circumstances that might indicate that a reporting unit’s fair value is less than its carrying amount include macro‑economic conditions such as deterioration in the entity’s operating environment, industry or overall market conditions; reporting unit specific events such as increasing costs, declining financial performance, or loss of key personnel or contracts; or other events such as pending litigation, access to capital in the credit markets or a sustained decrease in ILG’s stock price on either an absolute basis or relative to peers. If it is determined, as a result of the qualitative assessment, that it is more‑likely‑than‑not that the fair value of a reporting unit is less than its carrying amount, we are then required to perform a two‑step impairment test on goodwill. Two‑step Impairment Test The first step of the impairment test compares the fair value of each reporting unit with its carrying amount, including goodwill. The fair value of each reporting unit is calculated using the average of an income approach and a market comparison approach which utilizes similar companies as the basis for the valuation. If the carrying amount exceeds fair value, then the second step of the impairment test is performed to measure the amount of any impairment loss. The impairment loss is determined by comparing the implied fair value of goodwill to the carrying value of goodwill. The implied fair value of goodwill represents the excess of the fair value of the reporting unit over amounts assigned to its net assets. The determination of fair value utilizes an evaluation of historical and forecasted operating results and other estimates. Fair value measurements are generally determined through the use of valuation techniques that may include a discounted cash flow approach, which reflects our own assumptions of what market participants would use in pricing the asset or liability. Indefinite‑Lived Intangible Assets Our intangible assets with indefinite lives relate principally to trade names, trademarks and certain resort management contracts. Pursuant to ASC 350, if an intangible asset is determined to have an indefinite useful life, it shall not be amortized until its useful life is determined to no longer be indefinite. Accordingly, we evaluate the remaining useful life of an intangible asset that is not being amortized each reporting period to determine whether events or circumstances continue to support an indefinite useful life. As of December 31, 2016, there have been no changes to the indefinite life determination pertaining to these intangible assets. In addition, an intangible asset that is not subject to amortization shall be tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test consists of a comparison of the fair value of an intangible asset with its carrying amount. If the carrying amount of an indefinite‑lived intangible asset exceeds its estimated fair value, an impairment loss equal to the excess is recorded. However, entities testing an indefinite‑lived intangible asset for impairment have the option of performing a qualitative assessment before calculating the fair value of the asset. If entities determine, on the basis of qualitative factors, that the likelihood of the indefinite‑lived intangible asset being impaired is below a “more‑likely‑than‑not” threshold (i.e., a likelihood of more than 50 percent), the entity would not need to calculate the fair value of the asset. |
Long-Lived Assets and Intangible Assets with Definite Lives | Long‑Lived Assets and Intangible Assets with Definite Lives We review the carrying value of all long‑lived assets - primarily property and equipment, vacation ownership inventory under construction and not in active sales, and definite‑lived intangible assets - for impairment whenever events or changes in circumstances indicate that the carrying value of a long‑lived asset (asset group) may be impaired. In accordance with guidance included within ASC Topic 360, “Property Plant and Equipment,” (“ASC 360”), recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset (asset group) to future undiscounted cash flows expected to be generated by the asset (asset group). An asset group is the lowest level of assets and liabilities for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. When estimating future cash flows, we consider: · only the future cash flows that were directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset group; · our own assumptions about our use of the asset group and all available evidence when estimating future cash flows; · potential events and changes in circumstance affecting our key estimates and assumptions; and · the existing service potential of the asset (asset group) at the date tested. If an asset (asset group) is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset (asset group) exceeds its fair value. When determining the fair value of the asset (asset group), we consider the highest and best use of the assets from a market‑participant perspective. The fair value measurement is generally determined through the use of independent third party appraisals or an expected present value technique, both of which may include a discounted cash flow approach, which reflects our own assumptions of what market participants would utilize to price the asset (asset group). Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Assets to be abandoned, or from which no further benefit is expected, are written down to zero at the time that the determination is made and the assets are removed entirely from service. |
Advertising | Advertising Advertising and promotional expenditures primarily include printing and postage costs of directories and magazines, promotions, tradeshows, agency fees, and related commissions. Direct‑response advertising consists primarily of printing, postage, and freight costs related to our member resort directories. Advertising costs are expensed in the period incurred, except for magazine related costs that are expensed at time of mailing when the advertising takes place, and direct‑response advertising, which are amortized ratably over the applicable period following the mailing of the directories. Advertising expense was $20 million, $16 million and $16 million for the years ended December 31, 2016, 2015 and 2014, respectively, of which $3 million, $3 million and $2 million, respectively, pertained to expenses related to our direct‑response advertising. As of December 31, 2016 and 2015, we had $5 million and $4 million, respectively, of capitalized advertising costs recorded in prepaid expenses on our consolidated balance sheets. |
Income Taxes | Income Taxes ILG accounts for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and attributable to tax loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences or tax loss or tax credit carryforwards are expected to be recovered or settled. A valuation allowance is provided on deferred tax assets if it is determined that it is more likely than not that the deferred tax asset will not be realized. Realization is dependent upon the generation of future taxable income or the reversal of deferred tax liabilities during the periods in which those temporary differences become deductible. We consider the history of taxable income in recent years, the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies to make this assessment. ILG records interest on potential income tax contingencies as a component of income tax expense and records interest net of any applicable related income tax benefit. Pursuant to ASC Topic 740 “Income Taxes” (“ASC 740”), ILG recognizes liabilities for uncertain tax positions based on the two‑step process prescribed by the interpretation. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settling the uncertain tax position. |
Foreign Currency Translation and Transaction Gains and Losses | Foreign Currency Translation and Transaction Gains and Losses The financial position and operating results of substantially all foreign operations are consolidated using the local currency as the functional currency. Local currency assets and liabilities are translated at the rates of exchange as of the balance sheet date, and local currency revenue and expenses are translated at average rates of exchange during the period. Resulting translation gains or losses are included as a component of accumulated other comprehensive income (loss), a separate component of ILG stockholders’ equity. Accumulated other comprehensive income (loss) is solely related to foreign currency translation. Only the accumulated other comprehensive income (loss) exchange rate adjustment related to Venezuela is tax effected as required by the FASB guidance codified in ASC 740 since the earnings in Venezuela are not indefinitely reinvested in that jurisdiction. Transaction gains and losses arising from transactions and/or assets and liabilities denominated in a currency other than the functional currency of the entity involved are included in the consolidated statements of income. Operating foreign currency exchange attributable to foreign currency remeasurements of operating assets and liabilities denominated in a currency other than their functional currency, primarily related to Euro denominated value added tax liabilities, resulted in net gains of $0.1 million, $0.2 million and $0.4 million for the years ended December 31, 2016 2015 and 2014, respectively, which is included in general and administrative expenses. Non‑operating foreign currency exchange which primarily relates to U.S. dollar denominated intercompany loan positions resulted in a net loss of $7 million for the year ended December 31, 2016 and net gains of $4 million and $2 million for the years ended December 31, 2015 and 2014, respectively, and are included in other income (expense) in the accompanying consolidated statements of income. |
Stock-Based Compensation | Stock‑Based Compensation Stock‑based compensation is accounted for under ASC Topic 718, “Compensation—Stock Compensation” (“ASC 718”). Non‑cash compensation expense for stock‑based awards is measured at fair value on date of grant and recognized over the service period for awards expected to vest. The fair value of restricted stock and restricted stock units (“RSUs”) is determined based on the number of shares granted and the quoted price of our common stock on that date, except for RSUs subject to relative total shareholder return performance criteria, which the fair value is based on a Monte Carlo simulation analysis as further discussed in Note 18. We grant awards subject to graded vesting (i.e., portions of the award vest at different times during the vesting period) or to cliff vesting (i.e., all awards vest at the end of the vesting period). Certain RSUs, in addition, are subject to attaining specific performance criteria. For RSUs to be settled in stock, the accounting charge is measured at the grant date fair value and expensed as non‑cash compensation over the vesting term using the straight‑line basis for service‑only awards and the accelerated basis for performance‑based awards with graded vesting. For certain cliff vesting awards with performance criteria, we also use anticipated future results in determining the fair value of the award. Such value is recognized as expense over the service period, net of estimated forfeitures, using the straight‑line recognition method. The amount of stock‑based compensation expense recognized in the consolidated statements of income is reduced by estimated forfeitures, as the amount recorded is based on awards ultimately expected to vest. The expense associated with RSU awards to be settled in cash is initially measured at fair value at the grant date and expensed ratably over the vesting term, recording a liability subject to mark‑to‑market adjustments for changes in the price of the respective common stock as compensation expense. Stock‑based compensation is recorded within the same line item in our consolidated statements of income as the employee‑related compensation of the award recipient, as disclosed in tabular format in Note 18. Management must make certain estimates and assumptions regarding stock awards that will ultimately vest, and to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised. We consider many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience. The forfeiture rate is estimated at the grant date based on historical experience and revised, if necessary, in subsequent periods for any changes to the estimated forfeiture rate from that previously estimated. For any vesting tranche of an award, the cumulative amount of compensation cost recognized is at least equal to the portion of the grant‑date value of the award tranche that is actually vested at that date. Tax benefits resulting from tax deductions in excess of the stock‑based compensation expense recognized in the consolidated statements of income are reported as a component of financing cash flows. Gross excess tax benefits from stock‑based compensation reported as a component of financing cash flows had a negligible balance for the year ended December 31, 2016 and was $2 million in each of the years ending December 31, 2015 and 2014. |
Earnings per Share | Earnings per Share Basic earnings per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Treasury stock is excluded from the weighted average number of shares of common stock outstanding. Diluted earnings per share attributable to common stockholders is computed based on the weighted average number of shares of common stock and dilutive securities outstanding during the period. Dilutive securities are common stock equivalents that are freely exercisable into common stock at less than market prices or otherwise dilute earnings if converted. The net effect of common stock equivalents is based on the incremental common stock that would be issued upon the assumed exercise of common stock options and the vesting of RSUs and restricted stock using the treasury stock method. Common stock equivalents are not included in diluted earnings per share when their inclusion is antidilutive. The computations of diluted earnings per share available to common stockholders do not include approximately 0.3 million RSUs and restricted shares for the year ended December 31, 2016, 0.2 million stock options and 0.3 million RSUs for the year ended December 31, 2015, and 0.8 million stock options and 0.2 million RSUs for the year ended December 31, 2014, as the effect of their inclusion would have been antidilutive to earnings per share. The computation of weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share is as follows (in thousands): Year Ended December 31, 2016 2015 2014 Basic weighted average shares of common stock outstanding Net effect of common stock equivalents assumed to be vested related to RSUs and restricted stock Net effect of common stock equivalents assumed to be exercised related to stock options held by non-employees — Diluted weighted average shares of common stock outstanding |
Certain Risks and Concentrations | Earnings per share for the years ended December 31, 2016, 2015 and 2014 are as follows (in thousands, except per share data): Year Ended December 31, 2016 2015 2014 Net income attributable to common stockholders $ $ $ Weighted average number of shares of common stock outstanding: Basic Diluted Earnings per share attributable to common stockholders: Basic $ $ $ Diluted $ $ $ Certain Risks and Concentrations Geographic Risk In regards to our Exchange and Rental segment, a substantial percentage of the vacation ownership resorts in the Interval Network are located in Florida, Hawaii, Las Vegas, Mexico and Southern California, while the majority of the revenue from our vacation rental management businesses is derived from vacation properties located in Hawaii. In regards to our Vacation Ownership segment, a substantial percentage of our VOIs available for sale are located in Hawaii, Florida and Mexico, and the largest concentration of revenue derived the management of vacation ownership properties resides in Spain with regard to our VRI Europe business. From an ILG perspective, approximately $529 million, $232 million and $211 million of 2016, 2015 and 2014 revenue, respectively, (excluding cost reimbursement revenue) was generated from travel to properties located in all of these locations, together with vacation ownership management services and sales and financing activities related to these locations. Business Risk ILG also depends on relationships with developers and vacation property owners, as well as third party service providers for processing certain fulfillment services. We do not consider our overall business to be dependent on any one of these resort developers, provided, that the loss of a few large developers (particularly those from which Interval receives membership renewal fees directly) could materially impact our business. The loss of several of our largest management agreements could materially impact our businesses. ILG’s business also is subject to certain risks and concentrations including exposure to risks associated with online commerce security and credit card fraud. Credit Risk ILG is exposed to credit risk in relation to its portfolio of mortgage receivables associated with its vacation ownership business, as further discussed in Note 5. We offer financing to purchasers of VOIs at our Hyatt, Westin and Sheraton‑branded vacation ownership resorts and, as a result, ILG bears the risk of default on these loans. Should a purchaser default, ILG has the ability to foreclose and attempt to resell the associated VOI at its own cost to resell. Other financial instruments that potentially subject ILG to concentration of credit risk consist primarily of cash and cash equivalents and restricted cash, which are maintained with high quality financial institutions. Financial instruments also contain secured loans that are recorded at the time of origination for the principal amount financed and are carried at amortized cost, net of any allowance for credit losses, as further discussed in Note 13. Interest Rate Risk ILG is exposed to interest rate risk through borrowings under our amended credit agreement which bears interest at variable rates. The interest rate on the amended credit agreement is based on (at our election) either LIBOR plus a predetermined margin that ranges from 1.25% to 2.5%, or the Base Rate as defined in the amended credit agreement plus a predetermined margin that ranges from 0.25% to 1.5%, in each case based on ILG’s total leverage ratio. |
Recent and Adopted Accounting Pronouncements | Recent Accounting Pronouncements: General With the exception of those discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the year ended December 31, 2016 that are of significance, or potential significance, to ILG based on our current operations. The following summary of recent accounting pronouncements is not intended to be an exhaustive description of the respective pronouncement. In January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other (Topic 350),” to simplify the subsequent measurement of goodwill by eliminating the second step from the goodwill impairment test. An entity will no longer determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Instead, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The update is effective for annual periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently assessing the future impact of this accounting standard update on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-03, “Accounting Changes and Error Corrections (Topic 250) and Investments—Equity Method and Joint Ventures (Topic 323).” ASU 2017-03 states that a registrant should evaluate ASUs that have not yet been adopted to determine the appropriate financial statement disclosures about the potential material effects of those ASUs on the financial statements when adopted. We are currently assessing the future impact of this accounting standard update on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805),” to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses by clarifying the definition of a business. The definition of a business affects many areas of accounting including acquisition, disposals, goodwill and consolidation. This amendment covers Phase 1 of a three phase project. The update is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments in this update should be applied prospectively on or after the effective date. We are currently assessing the future impact of this accounting standard update on our consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230).” This ASU requires that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The update is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. We are currently assessing the future impact of this accounting standard update on our consolidated financial statements. In October 2016, the FASB issued ASU 2016-17, “Consolidation (Topic 810),” to amend the existing guidance issued with ASU 2015-02. This ASU is being issued to amend the consolidation guidance on how a reporting entity, that is the single decision maker of a VIE, should treat indirect interests in the entity held through related parties that are under common control with the reporting entity, when determining whether it is the primary beneficiary of that VIE. The update is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Entities that already have adopted the amendments in ASU 2015-02 are required to apply the amendments in this ASU, retrospectively beginning with the fiscal year in which the amendments in ASU 2015-02 initially were applied. We do not anticipate the adoption of this guidance will have a material impact on our consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (“ASU 2016-16”) as part of the Board’s initiative to reduce complexity in accounting standards. This ASU eliminates an exception in ASC 740, which prohibits the immediate recognition of income tax consequences of intra-entity asset transfers other than inventory. Under ASU 2016-16, entities will be required to recognize the immediate current and deferred income tax effects of intra-entity asset transfers, which often involve a subsidiary of a company transferring intellectual property to another subsidiary. For public entities, the new guidance will be effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. This ASU’s amendments should be applied on a modified retrospective basis, recognizing the effects in retained earnings as of the beginning of the year of adoption. We are currently assessing the future impact of this accounting standard update on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230).” This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under existing guidance. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The amendments should be applied using a retrospective transition method to each period presented. We do not anticipate the adoption of this guidance will have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326).” This ASU amends the Board’s guidance on the impairment of financial instruments. The ASU adds to GAAP an impairment model (known as the current expected credit losses model) that is based on an expected losses model rather than an incurred losses model. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. The ASU is also intended to reduce the complexity of GAAP by decreasing the number of impairment models that entities use to account for debt instruments. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We do not anticipate the adoption of this guidance will have a material impact on our consolidated financial statements as we currently apply an expected losses model against our outstanding vacation ownership mortgages receivable. In March 2016, the FASB issued ASU 2016-09, “Compensation – Stock Compensation (Topic 718)” (“ASU 2016-03”), to simplify the current accounting for Stock Compensation. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The new guidance will be effective for public entities for annual periods beginning after December 15, 2016 and interim periods therein. Early adoption of ASU 2016‑09 as of its issuance is permitted. Under the new guidance, companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital. Instead, all excess tax benefits and tax deficiencies should be recognized as income tax expense or benefit in the income statement, which may result in volatility in our effective tax rate. During 2016, ILG recorded to APIC a net deficiency of approximately $2 million associated with stock-based awards, while in 2015 and 2014 net excess tax benefits associated with stock-based awards of approximately $2 million each year was recorded to APIC. In accordance with this ASU, comparable amounts for future periods related to the difference between the fair value of stock-based awards on the grant date and the fair value on the vest date will be recorded as a discrete benefit or expense to the current income tax provision in the period in which the award vests. We do not anticipate the adoption of this guidance will have a material impact on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, “Investments – Equity Method and Joint Ventures (Topic 323)” (“ASU 2016-07”). The amendments in this ASU require, among other items, that an equity method investor add the cost of acquiring an additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting, as well as eliminates certain other existing requirements. ASU 2016-07 is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that would result in adoption of the equity method and earlier application is permitted. We do not anticipate the adoption of this guidance will have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016‑02, “Leases (Topic 842)” (“ASU 2016‑02”). ASU 2016‑02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The new guidance will be effective for public entities for annual periods beginning after December 15, 2018 and interim periods therein. Early adoption of ASU 2016‑02 as of its issuance is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. We are currently evaluating the methods and impact of adopting this new standard on our consolidated financial statements. In January 2016, the FASB issued ASU 2016‑01, “Financial Instruments—Overall (Subtopic 825‑10),” which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Although the ASU retains many current requirements, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. The amendments in this update are effective for fiscal years beginning after December 31, 2017, including interim periods within those fiscal years. We are currently assessing the future impact of this new accounting standard update on our consolidated financial statements. Recent Accounting Pronouncements: Revenue Recognition In May 2014, the FASB issued ASU 2014‑09, “Revenue from Contracts with Customers (Topic 606) (“ASU 2014‑09”). The FASB and the International Accounting Standards Board (“IASB”) initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS that would: (i) remove inconsistencies and weaknesses in revenue requirements; (ii) provide a more robust framework for addressing revenue issues; (iii) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; (iv) provide more useful information to users of financial statements through improved disclosure requirements; and (v) simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. To meet those objectives, the FASB amended the FASB Accounting Standards Codification (“Codification”) and created a new Topic 606, Revenue from Contracts with Customers. The core principle of the guidance in ASU 2014‑09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in this ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry specific guidance throughout the Industry Topics of the Codification. Additionally, ASU 2014‑09 supersedes some cost guidance included in Subtopic 605‑35, Revenue Recognition—Construction‑Type and Production‑Type Contracts. The ASU is effective for fiscal years beginning after December 15, 2017 (and interim periods within that period). In periods subsequent to the initial issuance of this ASU, the FASB has issued additional ASU’s clarifying items within Topic 606, as follows: · In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date," which defers by one year the effective date of ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. · In March 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”). The purpose of ASU 2016-10 is to clarify two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance (while retaining the related principles for those areas). · In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”). The amendments in ASU 2016-08 serve to clarify the implementation guidance on principal vs. agent considerations. · In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2016-12”). The purpose of ASU 2016-12 is to address certain issues identified to improve Topic 606 by enhancing guidance on assessing collectability, presentation of sales taxes and other similar taxes collected from customers, noncash consideration and completed contracts and contract modifications at transition. · In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,” which amends certain aspects of the Board’s new revenue standard, ASU 2014-09. This ASU addresses thirteen specific issues pertaining to Topic 606 , Revenue from Contracts with Customers. We are currently in the process of completing our evaluation of ASU 2014-09, including identifying the potential differences in the timing and/or method of revenue recognition for our contracts and, ultimately, the expected impact on our business processes, systems and controls. As part of this evaluation, we are reviewing customer contracts and applying the five-step model of the new standard to each contact type identified that’s associated to our material revenue streams and will compare the results to our current accounting practices. We plan to adopt this standard, as well as other clarifications and technical guidance issued by the FASB related to this new revenue standard, on January 1, 2018. However, given the complexities of this new standard, we are unable to determine, at this time, whether adoption of this standard will have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures. We expect to complete our evaluation of the effect of adopting this standard from a qualitative perspective during the first half of 2017. Additionally, we continue to evaluate whether to apply the retrospective or modified retrospective adoption method. Adopted Accounting Pronouncements In December 2016, the FASB issued ASU 2016-19, “Technical Corrections and Improvements.” This ASU addresses six amendments clarifying guidance or correcting references in the Accounting Standards Codification that could potentially result in changes in current practice because of either misapplication or misunderstanding of current guidance. The topics and subtopics affected include: Subtopic 350-40, Intangibles—Goodwill and Other— Internal-Use Software; Subtopic 360-20, Property, Plant, and Equipment—Real Estate Sales; Topic 820, Fair Value Measurement; Subtopic 405-40, Liabilities—Obligations Resulting from Joint and Several Liability Arrangements; Subtopic 860-20, Transfers and Servicing—Sales of Financial Assets, and Subtopic 860-50, Transfers and Servicing—Servicing Assets and Liabilities. Most of the amendments in this update do not require transition guidance and are effective upon issuance of the update. The adoption of this guidance did not have a material impact on our consolidated financial statements. In September 2015, the FASB issued ASU 2015-16, “Business Combinations (Topic 805).” The purpose of the ASU is to simplify the accounting for measurement-period adjustments related to business combinations. ASU 2015-16 requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period, in the reporting period in which the adjustment amounts are determined. The amendments in this update are effective for fiscal years beginning after December 31, 2015, including interim periods within the fiscal year and should be applied prospectively. The adoption of this guidance did not have a material impact on our consolidated financial statements other than the impact of adjustments in the third and fourth quarter of 2016 to the gain on bargain purchase associated with the Vistana acquisition in the second quarter of 2016. This impact is summarized as follows: As Reported Recasted for Subsequent Quarter Gain on Bargain Purchase Adjustment Three Months Ended Six Months Ended Three Months Ended Six Months Ended (In thousands, except per share data) June 30, 2016 June 30, 2016 June 30, 2016 June 30, 2016 Net income attributable to common stockholders $ $ EPS - Basic $ $ EPS - Diluted $ $ In April 2015, the FASB issued ASU 2015-05, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement” (“ASU 2015-05”). The FASB amended its guidance on internal use software to clarify how customers in cloud computing arrangements should determine whether the arrangement includes a software license. The guidance also eliminates the existing requirement for customers to account for software licenses they acquire by analogizing to the guidance on leases. Instead, entities will account for these arrangements as licenses of intangible assets. The ASU was effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. The adoption of this guidance on a prospective basis did not have a material impact on our consolidated financial statements. In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis” (“ASU 2015-02”). The amendments in this topic are intended to improve and simplify targeted areas of the consolidation guidance. ASU 2015-02 modifies the method for determining whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities. Further, it eliminates the presumption that a general partner should consolidate a limited partnership and impacts the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. The ASU was effective for fiscal years beginning after December 15, 2015 (and interim periods within those fiscal years). The adoption of this guidance did not have a material impact on our consolidated financial statements. In January 2015, the FASB issued ASU 2015‑01, “Income Statement—Extraordinary and Unusual Items (Subtopic 225‑20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items” (“ASU 2015‑01”). ASU 2015‑01 eliminates from generally accepted accounting principles (GAAP) the concept of extraordinary items as part of the FASB’s initiative to reduce complexity in accounting standards (the Simplification Initiative). The presentation and existing disclosure guidance for items that are unusual in nature or occur infrequently are retained and expanded to include items that are both unusual in nature and occur infrequently. This ASU was effective for fiscal years beginning after December 15, 2015 (and interim periods within those fiscal years). A reporting entity may apply the amendments in the ASU prospectively and also may apply the amendments retrospectively to all prior periods presented in the financial statements. The adoption of this guidance did not have a material impact on our consolidated financial statements. In August 2014, the FASB issued ASU 2014‑15, “Presentation of Financial Statements—Going Concern (Subtopic 205‑40): Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern (“ASU 2014‑15”).” ASU 2014‑15 requires management to perform interim and annual assessments on whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year of the date the financial statements are issued and to provide related disclosures, if required. The ASU is effective for fiscal years ending after December 15, 2016 (and interim periods within those fiscal years). The standard allows for either a full retrospective or modified retrospective transition method. The adoption of this guidance did not have a material impact on our consolidated financial statements. In June 2014, the FASB issued ASU 2014‑12, “Compensation—Stock Compensation (Topic 718): Accounting for Share‑Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period” (“ASU 2014‑12”). ASU 2014‑12 clarifies that entities should treat performance targets that can be met after the requisite service period of a share‑based payment award as performance conditions that affect vesting. No new disclosures are required under ASU 2014‑12. The ASU was effective for fiscal years beginning after December 15, 2015 (and interim periods within that period). In addition, all entities will have the option of applying the guidance either prospectively or retrospectively. The adoption of this guidance, on a prospective basis, did not have a material impact on our consolidated financial statements. |
SIGNIFICANT ACCOUNTING POLICI35
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Summary of depreciable life by asset category | Depreciation is recorded on a straight‑line basis to allocate the cost of depreciable assets to operations over their estimated useful lives. The following table summarizes depreciable life by asset category. Asset Category Depreciation Period Computer equipment 3 to 5 Years Capitalized software (including internally-developed software) 3 to 7 Years Buildings and leasehold improvements 1 to 40 Years Furniture and other equipment 3 to 10 Years (1) The depreciation period for leasehold improvements is the lesser of the lease term or the economic useful life for leasehold improvements. |
Schedule of computation of weighted average common and common equivalent shares | The computation of weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share is as follows (in thousands): Year Ended December 31, 2016 2015 2014 Basic weighted average shares of common stock outstanding Net effect of common stock equivalents assumed to be vested related to RSUs and restricted stock Net effect of common stock equivalents assumed to be exercised related to stock options held by non-employees — Diluted weighted average shares of common stock outstanding |
Schedule of earnings per share | Year Ended December 31, 2016 2015 2014 Net income attributable to common stockholders $ $ $ Weighted average number of shares of common stock outstanding: Basic Diluted Earnings per share attributable to common stockholders: Basic $ $ $ Diluted $ $ $ |
Schedule of Adopted Accounting Pronouncement | As Reported Recasted for Subsequent Quarter Gain on Bargain Purchase Adjustment Three Months Ended Six Months Ended Three Months Ended Six Months Ended (In thousands, except per share data) June 30, 2016 June 30, 2016 June 30, 2016 June 30, 2016 Net income attributable to common stockholders $ $ EPS - Basic $ $ EPS - Diluted $ $ |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
BUSINESS COMBINATION | |
Schedule of allocation of total acquisition cost to the assets acquired and liabilities assumed, based on their estimated fair values | The following table presents the preliminary allocation of total purchase price consideration to the assets acquired and liabilities assumed, based on their estimated fair values as of their respective acquisition dates (in millions): Preliminary PPA Adjustments to PPA (3) Revised Preliminary PPA (4) Cash $ $ - $ Vacation ownership inventory Vacation ownership mortgages receivable Other current assets Intangibles Property plant and equipment Other non-current assets Deferred revenue Securitized debt - Other current liabilities (2) Other non-current liabilities Gain on bargain purchase (1) Net assets acquired $ $ $ (1) Gain on bargain purchase represents the excess of the fair value of the net tangible and intangible assets acquired over the purchase price. This gain of $163 million is presented within Other income (expense), net, in our consolidated statement of income for the year ended December 31, 2016, and includes a negative adjustment of $34 million in the 2016 period subsequent to the respective quarter of the acquisition. The existence of a gain on bargain purchase pertaining to this transaction is principally related to the decrease in our stock price leading up to the acquisition date. (2) Includes a $24 million accrual pertaining to a dividend declared by a subsidiary of Vistana to Starwood prior to our acquisition date which was settled subsequent to the acquisition closing. (3) Represents adjustments to the preliminary purchase price allocation first presented in our June 30, 2016 Form 10-Q resulting from our ongoing activities, including our reassessment of assets acquired and liabilities assumed, with respect to finalizing our purchase price allocation for this acquisition. The larger adjustments primarily pertained to refinements of certain estimates related to the valuation of our mortgages receivable and vacation ownership inventory based on additional information, adjustments to tax related accounts as new information became available, and certain other reclasses between line items. (4) Measurement period is considered closed as of December 31, 2016 for all balance sheet items except those that are tax related, as discussed further below. |
Schedule of purchase price allocated to the fair value of goodwill and identifiable intangible assets | The purchase price allocated to the fair value of identifiable intangible assets associated with the Vistana acquisition is as follows (in millions): Fair Value Useful Life (years) Resort management contracts $ Customer relationships Other < 1 Total $ |
Schedule of unaudited pro forma financial information | Year Ended December 31, (In millions, except per share data) 2016 2015 Revenue $ $ Net income attributable to common stockholders $ $ Earnings per share: Basic $ $ Diluted $ $ |
RESTRICTED CASH (Tables)
RESTRICTED CASH (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
RESTRICTED CASH | |
Schedule of restricted cash | Restricted cash consists of the following (in millions): December 31, December 31, 2016 2015 Escrow deposits on vacation ownership products $ $ Securitization VIEs — Other Total restricted cash $ $ |
VACATION OWNERSHIP MORTGAGES 38
VACATION OWNERSHIP MORTGAGES RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
VACATION OWNERSHIP MORTGAGES RECEIVABLE | |
Schedule of mortgages receivable | Vacation ownership mortgages receivable carrying amounts as of December 31, 2016 and 2015 were as follows (in millions): December 31, December 31, 2016 2015 Securitized Unsecuritized (2) Total Securitized Unsecuritized (2) Total Acquired vacation ownership mortgages receivable (1) $ $ $ $ — $ $ Originated vacation ownership mortgages receivable (1) — Less allowance for loan losses on originated loans — Net vacation ownership mortgages receivable $ $ $ $ — $ $ (1) At various interest rates with varying payment terms through 2030 for acquired receivables and for originated receivables (2) As of December 31, 2016, $9 million of unsecuritized vacation ownership receivables were not eligible for securitization. Additionally, as part of the September 2016 securitization described in Note 13, approximately $19 million of currently unsecuritized receivables may be added in the future to the September 2016 securitized pool and thereby releasing the same amount from restricted cash. |
Schedule of changes in accretable yield | Year Ended Accretable Yield December 31, 2016 Balance, beginning of period $ Vistana acquired accretable yield Accretion Reclassification from nonaccretable difference Balance, end of period $ Nonaccretable difference, end of period balance $ |
Schedule to mature mortgages receivables | Vacation ownership mortgages receivable as of December 31, 2016 are scheduled to mature as follows (in millions): Vacation Ownership Mortgages Receivable Acquired Originated Twelve month period ending December 31, Securitized Loans Unsecuritized Loans Securitized Loans Unsecuritized Loans Total 2017 $ $ $ $ $ 2018 2019 2020 2021 2021 and thereafter Total Plus: net premium on acquired loans (1) — — Less: allowance for losses — — Net vacation ownership mortgages receivable $ $ $ $ $ Weighted average stated interest rate as of December 31, 2016 13.4% 13.5% Range of stated interest rates as of December 31, 2016 9.9% to 15.9% 10.9% to 15.9% (1) The difference between the contractual principal amount of acquired loans of $466 million and the net carrying amount of $546 million as of December 31, 2016 is related to the application of ASC 310-30. |
Schedule of vacation ownership notes receivable by brand and by FICO score | Balances of our vacation ownership mortgages receivable by brand and by FICO score (at time of loan origination) were as follows (in millions): As of December 31, 2016 700+ 600-699 <600 No Score (1) Total Westin $ $ $ $ $ Sheraton Hyatt Other - Vacation ownership mortgages receivable, gross $ $ $ $ $ (1) Mortgages receivable with no FICO score primarily relate to non-U.S. resident borrowers. |
Schedule of past-due and nonaccrual status of mortgages receivable | Our aged analysis of delinquent vacation ownership mortgages receivable and the gross balance of vacation ownership mortgages receivable greater than 120 days past‑due as of December 31, 2016 and December 31, 2015 for our originated loans is as follows (in millions): Delinquent Defaulted (1) Receivables Current 30-59 Days 60-89 Days 90-119 Days ≥120 Total Delinquent & Defaulted Originated Loans December 31, 2016 $ $ $ $ $ $ $ December 31, 2015 $ $ $ — $ — $ — $ — $ — Mortgages receivable equal to or greater than 120 days are considered defaulted and have been fully reserved in our allowance of loan losses for originated loans . |
VACATION OWNERSHIP INVENTORY (T
VACATION OWNERSHIP INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
VACATION OWNERSHIP INVENTORY | |
Schedule of ownership inventory | As of and December 31, 2016 and 2015, vacation ownership inventory is comprised of the following (in millions): December 31, December 31, 2016 2015 Completed unsold vacation ownership interests (current asset) $ $ Vacation ownership products construction in process (non-current asset) — Other — Total vacation ownership inventory $ $ |
INVESTMENTS IN UNCONSOLIDATED40
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INVESTMENTS IN UNCONSOLIDATED ENTITIES | |
Schedule of carrying value of our investments in unconsolidated entities | The carrying value of our investments in unconsolidated entities as of December 31, 2016 and 2015 were as follows (in millions): December 31, December 31, 2016 2015 Maui Timeshare Venture, LLC $ $ Harborside at Atlantis joint venture — Other Total $ $ |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
PROPERTY AND EQUIPMENT | |
Schedule of Property and equipment, net | Property and equipment, net is as follows (in millions): December 31, 2016 2015 Computer equipment $ $ Capitalized software (including internally developed software) Land, buildings and leasehold improvements Land held for development — Furniture, fixtures and other equipment Construction projects in progress — Other projects in progress Less: accumulated depreciation and amortization Total property and equipment, net $ $ |
GOODWILL AND OTHER INTANGIBLE42
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Schedule of balance of goodwill by reporting unit | The following tables present the balance of goodwill by reporting unit, including the changes in carrying amount of goodwill, for the years ended December 31, 2016 and 2015 (in millions): Foreign Balance as of Currency Goodwill Balance as of January 1, 2016 Additions Deductions Translation Impairment December 31, 2016 VO management $ $ — $ — $ $ — $ VO sales and financing — — — — Exchange — — — — Rental — — — — Total $ $ — $ — $ $ — $ Foreign Balance as of Currency Goodwill Balance as of January 1, 2015 Additions Deductions Translation Impairment December 31, 2015 VO management $ $ — $ — $ $ — $ VO sales and financing — — — — Exchange — — — — Rental — — — — Total $ $ — $ — $ $ — $ |
Schedule of balance of intangible assets, net | The balance of other intangible assets, net for the years ended December 31, 2016 and 2015 is as follows (in millions): December 31, December 31, 2016 2015 Intangible assets with indefinite lives $ $ Intangible assets with definite lives, net Total intangible assets, net $ $ |
Schedule of intangible assets with indefinite lives | At December 31, 2016 and 2015, intangible assets with indefinite lives relate to the following (in millions): December 31, December 31, 2016 2015 Resort management contracts $ $ Trade names and trademarks Total $ $ |
Schedule of intangible assets with definite lives | At December 31, 2016, intangible assets with definite lives relate to the following (in millions): Cost Accumulated Amortization Net Weighted Average Remaining Customer relationships $ $ $ Purchase agreements — — Resort management contracts Technology — — Other $ $ $ At December 31, 2015, intangible assets with definite lives relate to the following (in millions): Weighted Average Remaining Accumulated Amortization Cost Amortization Net Life (Years) Customer relationships $ $ $ Purchase agreements — - Resort management contracts Technology — - Other Total $ $ $ |
Schedule of amortization expense of intangible assets with definite lives | Based on the December 31, 2016 balances, amortization expense for the next five years and thereafter is estimated to be as follows (in millions): Year Ended December 31, 2017 $ 2018 2019 2020 2021 2021 and thereafter $ |
CONSOLIDATED VARIABLE INTERES43
CONSOLIDATED VARIABLE INTEREST ENTITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
CONSOLIDATED VARIABLE INTEREST ENTITIES | |
Schedule of vacation ownership notes receivable securitization | The following table shows assets which are collateral for the related obligations of the variable interest entities, included in our consolidated balance sheets (in millions): Vacation Ownership Notes Receivable Securitization (1) December 31, 2016 Assets Restricted cash $ Interest receivable Vacation ownership mortgages receivable, net Total $ Liabilities Interest payable $ Securitized debt Total $ (1) The creditors of these entities do not have general recourse to us. |
ACCRUED LIABILITIES AND OTHER44
ACCRUED LIABILITIES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
ACCRUED LIABILITIES AND OTHER CURRENT LIABILITIES | |
Schedule of general components of accrued liabilities | The following table summarizes the general components of accrued expenses and other current liabilities (in millions): December 31, December 31, 2016 2015 General accrued expenses $ $ Accrued other taxes Customer deposits Accrued membership related Accrued construction costs — Accrued expenses and other current liabilities $ $ |
DEFERRED REVENUE (Tables)
DEFERRED REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
DEFERRED REVENUE | |
Schedule of general components of deferred revenue | The following table summarized the general components of deferred revenue (in millions): December 31, December 31, 2016 2015 Deferred membership-related revenue $ $ Other Total $ $ |
SECURITIZED VACATION OWNERSHI46
SECURITIZED VACATION OWNERSHIP DEBT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SECURITIZED VACATION OWNERSHIP DEBT | |
Schedule of securitized vacation ownership debt | Securitized vacation ownership debt consisted of the following (in millions): December 31, 2016 2011 securitization, interest rates ranging from 3.67% to 4.82%, maturing 2025 $ 2012 securitization, interest rates ranging from 2.00% to 2.76%, maturing 2023 2016 securitization, interest rates ranging from 2.54% to 2.74%, maturing 2024 Unamortized debt issuance costs (2016 securitization) Total securitized vacation ownership debt, net of debt issuance costs $ |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
LONG-TERM DEBT | |
Schedule of Long-term debt | Long‑term debt is as follows (in millions): December 31, December 31, 2016 2015 Revolving credit facility (interest rate of 2.27% at December 31, 2016 and 2.68% at December 31, 2015) $ $ 5.625% senior notes Unamortized debt issuance costs (revolving credit facility) Unamortized debt issuance costs (senior notes) Total long-term debt, net of debt issuance costs $ $ |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
FAIR VALUE MEASUREMENTS | |
Schedule of estimated fair value of financial instruments | December 31, 2016 December 31, 2015 Carrying Fair Carrying Fair Amount Value Amount Value (In millions) Cash and cash equivalents $ $ $ $ Restricted cash and cash equivalents Financing receivables Vacation ownership mortgages receivable Investments in marketable securities Securitized debt — — Revolving credit facility (1) Senior notes (1) (1) The carrying value of our revolving credit facility and senior notes include $4 million and $6 million of debt issuance costs, respectively, which are presented as a direct reduction of the corresponding liability. |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
STOCK-BASED COMPENSATION | |
Schedule of allocation of recognized compensation cost | Non‑cash stock‑based compensation expense related to equity awards is included in the following line items in the accompanying consolidated statements of income for the years ended December 31, 2016, 2015 and 2014 (in millions): Year Ended December 31, 2016 2015 2014 Cost of sales $ $ $ Selling and marketing expense General and administrative expense Non-cash compensation expense Income tax benefit Non-cash compensation expense after income taxes $ $ $ |
Schedule of RSU award activity | The following table summarizes RSU activity during the years ended December 31, 2016, 2015 and 2014: Weighted-Average Grant Date Shares Fair Value (In millions) Non-vested RSUs at December 31, 2013 $ Granted Vested — Forfeited — Non-vested RSUs at December 31, 2014 $ Granted Vested Forfeited — Non-vested RSUs at December 31, 2015 $ Granted Vested Forfeited — Non-vested RSUs at December 31, 2016 $ |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES | |
Schedule of U.S. and foreign earnings from continuing operations before income taxes and noncontrolling interest | U.S. and foreign earnings from continuing operations before income taxes and noncontrolling interest are as follows (in millions): Year Ended December 31, 2016 2015 2014 U.S. $ $ $ Foreign Total $ $ $ |
Schedule of components of the provision for income taxes attributable to continuing operations | The components of the provision for income taxes attributable to continuing operations are as follows (in millions): Year Ended December 31, 2016 2015 2014 Current income tax provision Federal $ $ $ State Foreign Current income tax provision Deferred income tax provision (benefit) Federal State Foreign Deferred income tax provision (benefit) Income tax provision $ $ $ |
Schedule of the tax effects of cumulative temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities | The tax effects of cumulative temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2016 and 2015 are presented below (in millions). The valuation allowance is related to items for which it is more likely than not that the tax benefit will not be realized. December 31, 2016 2015 Deferred tax assets: Deferred revenue $ $ Inventory — Provision for accrued expenses Non-cash compensation Net operating loss, capital loss and tax credit carryforwards Other Total deferred tax assets Less valuation allowance — Net deferred tax assets Deferred tax liabilities: Intangible and other assets Deferred membership costs Property and equipment Investments in unconsolidated entities Sales of vacation ownership interests Other Total deferred tax liabilities Net deferred tax liability $ $ |
Schedule of reconciliation of total income tax provision to the amounts computed by applying the statutory federal income tax rate to earnings before income taxes and noncontrolling interest | A reconciliation of total income tax provision to the amounts computed by applying the statutory federal income tax rate to earnings before income taxes and noncontrolling interest is shown as follows (in millions, except percentages): Year Ended December 31, 2016 2015 2014 Amount % Amount % Amount % Income tax provision at the federal statutory rate of 35% $ $ $ State income taxes, net of effect of federal tax benefit Foreign income taxed at a different statutory tax rate U.S. tax consequences of foreign operations — — — Gain on acquisition — — — — Other, net — — — — Income tax provision $ $ $ |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SEGMENT INFORMATION | |
Schedule of information on reportable segments and reconciliation to consolidated operating income | Information on reportable segments and reconciliation to consolidated operating income is as follows (in millions): Year Ended December 31, 2016 2015 2014 Vacation Ownership: Resort operations revenue $ $ $ Management fee revenue Sales of vacation ownership products, net Consumer financing revenue Cost reimbursement revenue Total revenue Cost of service and membership related Cost of sales of vacation ownership products Cost of rental and ancillary services Cost of consumer financing — — Cost reimbursements Total cost of sales Royalty fee expense Selling and marketing expense General and administrative expense Amortization expense of intangibles Depreciation expense Segment operating income $ $ $ Year Ended December 31, 2016 2015 2014 Exchange and Rental: Transaction revenue $ $ $ Membership fee revenue Ancillary member revenue Total member revenue Club rental revenue Other revenue Rental management revenue Cost reimbursement revenue Total Exchange and Rental revenue Cost of service and membership related sales Cost of sales of rental and ancillary services Cost reimbursements Total cost of sales Royalty fee expense — Selling and marketing expense General and administrative expense Amortization expense of intangibles Depreciation expense Segment operating income $ $ $ Year Ended December 31, 2016 2015 2014 Consolidated: Revenue $ $ $ Cost of sales Operating expenses Operating income $ $ $ |
Schedule of financial information by reportable segment | Selected financial information by reporting segment is presented below (in millions). December 31, 2016 2015 Total Assets: Vacation Ownership $ $ Exchange and Rental Total $ $ |
Schedule of capital expenditures by reporting segment | Year Ended December 31, 2016 2015 2014 Capital expenditures Vacation Ownership $ $ $ Exchange and Rental Total $ $ $ |
Schedule of geographic information on revenue, based on sourcing, and long-lived assets, based on physical location | Geographic information on revenue, based on sourcing, and long‑lived assets, based on physical location, is presented in the table below (in millions). Year Ended December 31, 2016 2015 2014 Revenue: United States $ $ $ Europe All other countries (1) Total $ $ $ (1) Includes countries within the following continents: Africa, Asia, Australia, North America and South America. December 31, 2016 2015 Long-lived assets (excluding goodwill and intangible assets): United States $ $ Mexico — Europe Total $ $ |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of future minimum payments under operating lease agreements | Future minimum payments under operating lease agreements are as follows (in millions): Years Ending December 31, 2017 $ 2018 2019 2020 2021 Thereafter through 2021 Total $ |
Summary of future periods in which certain purchase commitments and guarantees are expected to be settled in cash and timing of principal and interest payments on outstanding borrowings | The following table summarizes these items, on an undiscounted basis, at December 31, 2016 and the future periods in which such obligations are expected to be settled in cash. In addition, the table reflects the timing of principal and interest payments on outstanding borrowings. Years Ending December 31, Total 2017 2018 2019 2020 2021 Thereafter (Dollars in millions) Debt principal $ $ — $ — $ — $ — $ $ Debt interest (projected) Guarantees, surety bonds, and letters of credit — Purchase obligations and other commitments — Total commitments $ $ $ $ $ $ $ |
SUPPLEMENTAL CASH FLOW INFORM53
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SUPPLEMENTAL CASH FLOW INFORMATION | |
Schedule of supplemental cash flow information | Year Ended December 31, 2016 2015 2014 (In millions) Cash paid during the period for: Interest, net of amounts capitalized $ $ $ Income taxes, net of refunds $ $ $ Non-cash financing activity: Issuance of stock in connection with Vistana acquisition $ $ — $ — |
SUPPLEMENTAL GUARANTOR INFORM54
SUPPLEMENTAL GUARANTOR INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SUPPLEMENTAL GUARANTOR INFORMATION | |
Schedule of condensed consolidating balance sheet | Balance Sheet as of December 31, 2016 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Current assets $ $ $ $ $ - $ Property and equipment, net - - Goodwill and intangible assets, net - - Investments in subsidiaries - - Other assets - - - Total assets $ $ $ $ $ $ Current liabilities $ $ $ $ $ - $ Other long-term liabilities - - - Long term debt - - Intercompany liabilities (receivables) / equity - - Redeemable noncontrolling interest - - - - ILG stockholders' equity Noncontrolling interests - - - - Total liabilities and equity $ $ $ $ $ $ Balance Sheet as of December 31, 2015 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Current assets $ $ - $ $ $ - $ Property and equipment, net - - - Goodwill and intangible assets, net - - Investments in subsidiaries - - Other assets - - - Total assets $ $ $ $ $ $ Current liabilities $ $ $ $ $ - $ Other long-term liabilities - - - Long term debt - - Intercompany liabilities (receivables) / equity - - Redeemable noncontrolling interest - - - - ILG stockholders' equity Noncontrolling interests - - - Total liabilities and equity $ $ $ $ $ $ |
Schedule of condensed consolidating statement of income | Statement of Income for the Year Ended December 31, 2016 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ - $ - $ $ $ - $ Operating expenses - - Interest (expense) income, net - - Other income (expense), net (1) Income tax (provision) benefit - Equity in earnings from unconsolidated entities - - - - Net income Net loss (income) attributable to noncontrolling interests - - - Net income attributable to common stockholders $ $ $ $ $ $ Statement of Income for the Year Ended December 31, 2015 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ - $ - $ $ $ - $ Operating expenses - Interest (expense) income, net - - - Other income (expe nse ), net (1) Income tax (provision) benefit - Equity in earnings from unconsolidated entities - - - - Net income Net loss (income) attributable to noncontrolling interests - - - Net income attributable to common stockholders $ $ $ $ $ $ Statement of Income for the Year Ended December 31, 2014 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ - $ - $ $ $ - $ Operating expenses - Interest (expense), net - - - - Other income, net (1) Income tax (provision) benefit - Equity in earnings from unconsolidated entities - - - - Net income Net loss (income) attributable to noncontrolling interests - - - - Net income attributable to common stockholders $ $ $ $ $ $ (1) Includes equity in net income of wholly-owned subsidiaries. |
Schedule of condensed consolidating statement of cash flows | Statement of Cash Flows for the Year Ended December 31, 2016 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries ILG Consolidated Cash flows provided by (used in) operating activities $ $ $ $ $ Cash flows used in investing activities - Cash flows provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents - - - Cash and cash equivalents at beginning of period - - Cash and cash equivalents at end of period $ - $ - $ $ $ Statement of Cash Flows for the Year Ended December 31, 2015 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries ILG Consolidated Cash flows provided by (used in) operating activities $ $ $ $ $ Cash flows used in investing activities - - Cash flows provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents - - - Cash and cash equivalents at beginning of period - - Cash and cash equivalents at end of period $ - $ - $ $ $ Statement of Cash Flows for the Year Ended December 31, 2014 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries ILG Consolidated Cash flows provided by (used in) operating activities $ $ $ $ $ Cash flows used in investing activities - - Cash flows provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents - - - Cash and cash equivalents at beginning of period - - Cash and cash equivalents at end of period $ - $ - $ $ $ |
QUARTERLY RESULTS (UNAUDITED) (
QUARTERLY RESULTS (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
QUARTERLY RESULTS (UNAUDITED) | |
Schedule of quarterly results | Quarter Ended (1) March 31, June 30, September 30, December 31, (In millions, except for share data) 2016 Revenue $ $ $ $ Operating income Net income attributable to common stockholders Earnings per share attributable to common stockholders: Basic Diluted 2015 Revenue $ $ $ $ Operating income Net income attributable to common stockholders Earnings per share attributable to common stockholders(1): Basic Diluted For the years ended December 31, 2016 and 2015, individual amounts for the quarters may not add to the annual amount because of rounding and, in the case of per share amounts, differences in the average common shares outstanding during each period. Additionally, the second quarter of 2016 included a pre-tax $197 million gain on bargain purchase , while the third and fourth quarters of 2016 included downward adjustments to that gain of $9 million and $25 million, respectively. See Note 3 for related discussion. |
ORGANIZATION AND BASIS OF PRE56
ORGANIZATION AND BASIS OF PRESENTATION (Details) $ / shares in Units, shares in Millions, $ in Millions | May 11, 2016USD ($)item$ / sharesshares | Dec. 31, 2016USD ($)item |
Organization | ||
Number of operating segments | item | 2 | |
Common stock value | $ 1,029 | |
Vistana | ||
Organization | ||
Percentage of voting equity interests | 100.00% | |
Common stock issued (in shares) | shares | 72.4 | |
Common stock value | $ 1,000 | |
Share price | $ / shares | $ 14.24 | |
Aggregate purchase price in cash | $ 128 | |
Global license agreement term | 80 years | |
Number of extended term Of Global License Agreement | item | 2 | |
Term of Global License Agreement | 30 years |
SIGNIFICANT ACCOUNTING POLICI57
SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Revenue Recognition | |
Minimum down payment received on VOI sales (as a percent) | 10.00% |
Minimum | |
Revenue Recognition | |
Period of mortgage payable to ILG in monthly installments, including interest | 5 years |
Maximum | |
Revenue Recognition | |
Period of mortgage payable to ILG in monthly installments, including interest | 15 years |
Exchange and Rental | Minimum | |
Revenue Recognition | |
Terms of the applicable memberships | 1 year |
Exchange and Rental | Maximum | |
Revenue Recognition | |
Terms of the applicable memberships | 5 years |
SIGNIFICANT ACCOUNTING POLICI58
SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Accounts Receivable | |
Threshold period past due for general reserve factor | 120 days |
Threshold period past due write off | 180 days |
Minimum | |
Accounts Receivable | |
Period of Mortgage Receivable Including Interest | 5 years |
Maximum | |
Accounts Receivable | |
Period of Mortgage Receivable Including Interest | 15 years |
SIGNIFICANT ACCOUNTING POLICI59
SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Computer Equipment | Minimum | |
Property and Equipment | |
Depreciation Period | 3 years |
Computer Equipment | Maximum | |
Property and Equipment | |
Depreciation Period | 5 years |
Capitalized Software | Minimum | |
Property and Equipment | |
Depreciation Period | 3 years |
Capitalized Software | Maximum | |
Property and Equipment | |
Depreciation Period | 7 years |
Buildings and leasehold improvements | Minimum | |
Property and Equipment | |
Depreciation Period | 1 year |
Buildings and leasehold improvements | Maximum | |
Property and Equipment | |
Depreciation Period | 40 years |
Furniture and Other Equipment | Minimum | |
Property and Equipment | |
Depreciation Period | 3 years |
Furniture and Other Equipment | Maximum | |
Property and Equipment | |
Depreciation Period | 10 years |
SIGNIFICANT ACCOUNTING POLICI60
SIGNIFICANT ACCOUNTING POLICIES - Advertising (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Advertising | |||
Advertising expense | $ 20 | $ 16 | $ 16 |
Direct-response advertising expense | 3 | 3 | $ 2 |
Capitalized advertising costs | $ 5 | $ 4 |
SIGNIFICANT ACCOUNTING POLICI61
SIGNIFICANT ACCOUNTING POLICIES - Foreign Currency Translation and Translation Gains and Losses (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
General and Administrative Expense | |||
Foreign Currency Translation and Transaction Gains and Losses | |||
Net gain (loss) from foreign exchange | $ 0.1 | $ 0.2 | $ 0.4 |
Other income (expense) | |||
Foreign Currency Translation and Transaction Gains and Losses | |||
Net gain (loss) from foreign exchange | $ (7) | $ 4 | $ 2 |
SIGNIFICANT ACCOUNTING POLICI62
SIGNIFICANT ACCOUNTING POLICIES - Stock-Based Compensation (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Stock-Based Compensation | ||
Gross excess tax benefits from stock-based compensation | $ 2 | $ 2 |
SIGNIFICANT ACCOUNTING POLICI63
SIGNIFICANT ACCOUNTING POLICIES - Earnings per Share Narrative (Details) - shares shares in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Stock Options | |||
Securities not included in the computations of diluted earnings per share | |||
Securities excluded from computation of diluted earnings per share (in shares) | 0.2 | 0.3 | 0.8 |
Restricted Stock Units (RSUs) | |||
Securities not included in the computations of diluted earnings per share | |||
Securities excluded from computation of diluted earnings per share (in shares) | 0.3 | 0.2 |
SIGNIFICANT ACCOUNTING POLICI64
SIGNIFICANT ACCOUNTING POLICIES - Earnings per Share Table (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share | |||||||||||
Basic weighted average shares of common stock outstanding | 100,868 | 57,400 | 57,343 | ||||||||
Diluted weighted average shares of common stock outstanding | 101,732 | 57,989 | 57,953 | ||||||||
Net income attributable to common stockholders | $ 265 | $ 73 | $ 79 | ||||||||
Weighted average number of shares of common stock outstanding (in 000's): | |||||||||||
Basic (in shares) | 100,868 | 57,400 | 57,343 | ||||||||
Diluted (in shares) | 101,732 | 57,989 | 57,953 | ||||||||
Earnings per share attributable to common stockholders: | |||||||||||
Basic (in dollars per share) | $ 0.22 | $ 0.26 | $ 1.89 | $ 0.38 | $ 0.21 | $ 0.33 | $ 0.29 | $ 0.44 | $ 2.62 | $ 1.28 | $ 1.38 |
Diluted (in dollars per share) | $ 0.22 | $ 0.25 | $ 1.87 | $ 0.38 | $ 0.21 | $ 0.33 | $ 0.29 | $ 0.44 | $ 2.60 | $ 1.26 | $ 1.36 |
Restricted Stock Units (RSUs) | |||||||||||
Weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share | |||||||||||
Net effect of common stock equivalents (in shares) | 864 | 588 | 606 | ||||||||
Stock Options | |||||||||||
Weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share | |||||||||||
Net effect of common stock equivalents (in shares) | 1 | 4 |
SIGNIFICANT ACCOUNTING POLICI65
SIGNIFICANT ACCOUNTING POLICIES - Certain Risks and Concentrations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Recent Accounting Pronouncements | |||
Change in excess tax benefits from stock-based awards | $ 2 | $ 2 | $ 2 |
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | |||
Interest Rate Risk | |||
Reference rate | LIBOR | ||
Applicable margin (as a percent) | 1.50% | ||
Revolving Credit Facility | Base Rate | |||
Interest Rate Risk | |||
Reference rate | Base Rate | ||
Applicable margin (as a percent) | 0.50% | ||
Minimum | Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | |||
Interest Rate Risk | |||
Applicable margin (as a percent) | 1.25% | ||
Minimum | Revolving Credit Facility | Base Rate | |||
Interest Rate Risk | |||
Applicable margin (as a percent) | 0.25% | ||
Maximum | Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | |||
Interest Rate Risk | |||
Applicable margin (as a percent) | 2.50% | ||
Maximum | Revolving Credit Facility | Base Rate | |||
Interest Rate Risk | |||
Applicable margin (as a percent) | 1.50% | ||
Sales Revenue | Geographic Concentration Risk | |||
Certain Risks and Concentrations | |||
Revenue generated from travel to properties as well as hotel, resort and homeowners association management services performed | $ 529 | $ 232 | $ 211 |
SIGNIFICANT ACCOUNTING POLICI66
SIGNIFICANT ACCOUNTING POLICIES - Adopted Accounting Pronouncement (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings per share | ||||||||||||
Net income attributable to common stockholders | $ 265,000 | $ 73,000 | $ 79,000 | |||||||||
Earnings per share attributable to common stockholders: | ||||||||||||
Basic (in dollars per share) | $ 0.22 | $ 0.26 | $ 1.89 | $ 0.38 | $ 0.21 | $ 0.33 | $ 0.29 | $ 0.44 | $ 2.62 | $ 1.28 | $ 1.38 | |
Diluted (in dollars per share) | $ 0.22 | $ 0.25 | $ 1.87 | $ 0.38 | $ 0.21 | $ 0.33 | $ 0.29 | $ 0.44 | $ 2.60 | $ 1.26 | $ 1.36 | |
As Reported | Vistana | ||||||||||||
Earnings per share | ||||||||||||
Net income attributable to common stockholders | $ 183,375 | $ 205,554 | ||||||||||
Earnings per share attributable to common stockholders: | ||||||||||||
Basic (in dollars per share) | $ 1.89 | $ 2.66 | ||||||||||
Diluted (in dollars per share) | $ 1.87 | $ 2.64 | ||||||||||
Correction Adjustment | Vistana | ||||||||||||
Earnings per share | ||||||||||||
Net income attributable to common stockholders | $ 155,615 | $ 177,794 | ||||||||||
Earnings per share attributable to common stockholders: | ||||||||||||
Basic (in dollars per share) | $ 1.60 | $ 2.30 | ||||||||||
Diluted (in dollars per share) | $ 1.59 | $ 2.28 |
BUSINESS COMBINATION (Details)
BUSINESS COMBINATION (Details) - USD ($) $ / shares in Units, $ in Millions | May 11, 2016 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Allocation of total acquisition cost to the assets acquired and liabilities assumed | ||||||||
Dividend payments to noncontrolling interest | $ 2 | $ 3 | ||||||
Adjustments to PPA | ||||||||
Gain on bargain purchase | $ 25 | $ 9 | $ (197) | |||||
Pro forma financial information (unaudited) | ||||||||
Federal statutory rate (as a percent) | 35.00% | 35.00% | 35.00% | |||||
Vistana | ||||||||
Allocation of total acquisition cost to the assets acquired and liabilities assumed | ||||||||
Cash | $ 45 | 45 | $ 45 | $ 45 | ||||
Vacation ownership inventory | 221 | 228 | 228 | 228 | ||||
Vacation ownership mortgages receivable | 712 | 693 | 693 | 693 | ||||
Other current assets | 143 | 144 | 144 | 144 | ||||
Intangible assets | 241 | 238 | 238 | 238 | ||||
Property plant and equipment | 465 | 455 | 455 | 455 | ||||
Other non-current assets | 24 | 15 | 15 | 15 | ||||
Deferred revenue | (60) | (64) | (64) | (64) | ||||
Securitized debt | (154) | (154) | (154) | (154) | ||||
Other current liabilities | (187) | (176) | (176) | (176) | ||||
Other noncurrent liabilities | (98) | (100) | (100) | (100) | ||||
Gain on bargain purchase | (197) | (163) | (163) | (163) | ||||
Net assets acquired | 1,155 | 1,161 | 1,161 | 1,161 | ||||
Dividend payments to noncontrolling interest | $ 24 | |||||||
Adjustments to PPA | ||||||||
Vacation ownership inventory | 7 | |||||||
Vacation ownership mortgages receivable | (19) | |||||||
Other current assets | 1 | |||||||
Intangibles | (3) | |||||||
Property plant and equipment | (10) | |||||||
Other non-current assets | (9) | |||||||
Deferred revenue | (4) | |||||||
Other current liabilities | 11 | |||||||
Other non-current liabilities | (2) | |||||||
Gain on bargain purchase | 34 | |||||||
Net assets acquired | 6 | |||||||
Revenue | 654 | |||||||
Net income | 45 | |||||||
Acquisition related costs | $ 18 | |||||||
Proforma adjustment on deferred revenue | $ 14 | |||||||
Pro forma financial information (unaudited) | ||||||||
Federal statutory rate (as a percent) | 35.00% | 37.20% | ||||||
Revenue | $ 1,733 | $ 1,593 | ||||||
Net income attributable to common stockholders | $ 126 | $ 311 | ||||||
Earnings per share: | ||||||||
Basic | $ 0.99 | $ 2.39 | ||||||
Diluted | $ 0.98 | $ 2.38 | ||||||
Vistana | Resort Management Contracts | ||||||||
Allocation of total acquisition cost to the assets acquired and liabilities assumed | ||||||||
Intangible assets | $ 118 | 118 | $ 118 | |||||
Adjustments to PPA | ||||||||
Useful life | 26 years | |||||||
Vistana | Customer relationships | ||||||||
Allocation of total acquisition cost to the assets acquired and liabilities assumed | ||||||||
Intangible assets | $ 119 | 119 | 119 | |||||
Adjustments to PPA | ||||||||
Useful life | 25 years | |||||||
Vistana | Other | ||||||||
Allocation of total acquisition cost to the assets acquired and liabilities assumed | ||||||||
Intangible assets | $ 1 | $ 1 | $ 1 | |||||
Vistana | Other | Maximum | ||||||||
Adjustments to PPA | ||||||||
Useful life | 1 year |
RESTRICTED CASH (Details)
RESTRICTED CASH (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Restricted cash | ||
Escrow deposits on vacation ownership products | $ 67 | $ 2 |
Securitization VIEs | 34 | |
Other | 17 | 15 |
Total restricted cash | 118 | $ 17 |
Cash collateral | $ 19 |
VACATION OWNERSHIP MORTGAGES 69
VACATION OWNERSHIP MORTGAGES RECEIVABLE - Carrying amounts and Accretable yield (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Vacation ownership mortgages receivable | ||
Vacation ownership mortgages receivable | $ 741 | |
Less: allowance for loan losses on originated loans | (22) | |
Net vacation ownership mortgages receivable | 719 | $ 32 |
Cash collateral | 19 | |
Accretable yield expected to be collected over the carrying amount | ||
Balance, beginning of period | 12 | |
Vistana acquired accretable yield | 205 | |
Accretion | (49) | |
Reclassification between nonaccretable difference | (12) | |
Balance, end of period | 156 | |
Nonaccretable difference, end of period balance | 35 | |
Acquired vacation | ||
Vacation ownership mortgages receivable | ||
Vacation ownership mortgages receivable | 546 | 23 |
Expected remaining principal payment | 466 | 26 |
Originated vacation | ||
Vacation ownership mortgages receivable | ||
Vacation ownership mortgages receivable | 195 | 11 |
Less: allowance for loan losses on originated loans | (22) | (2) |
Securitized | ||
Vacation ownership mortgages receivable | ||
Net vacation ownership mortgages receivable | 429 | |
Securitized | Acquired vacation | ||
Vacation ownership mortgages receivable | ||
Vacation ownership mortgages receivable | 419 | |
Net vacation ownership mortgages receivable | 419 | |
Securitized | Originated vacation | ||
Vacation ownership mortgages receivable | ||
Vacation ownership mortgages receivable | 11 | |
Less: allowance for loan losses on originated loans | (1) | |
Net vacation ownership mortgages receivable | 10 | |
Unsecuritized | ||
Vacation ownership mortgages receivable | ||
Net vacation ownership mortgages receivable | 290 | 32 |
Unsecuritized vacation ownership receivables not eligible for securitization | 9 | |
Cash collateral | 19 | |
Unsecuritized | Acquired vacation | ||
Vacation ownership mortgages receivable | ||
Vacation ownership mortgages receivable | 127 | 23 |
Net vacation ownership mortgages receivable | 127 | |
Unsecuritized | Originated vacation | ||
Vacation ownership mortgages receivable | ||
Vacation ownership mortgages receivable | 184 | 11 |
Less: allowance for loan losses on originated loans | (21) | $ (2) |
Net vacation ownership mortgages receivable | $ 163 |
VACATION OWNERSHIP MORTGAGES 70
VACATION OWNERSHIP MORTGAGES RECEIVABLE - Schedule of maturities (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Schedule of maturities for vacation ownership mortgages receivable | ||
2,017 | $ 78 | |
2,018 | 69 | |
2,019 | 68 | |
2,020 | 69 | |
2,021 | 69 | |
2022 and thereafter | 308 | |
Total | 741 | |
Plus: net premium on acquired loans | 80 | |
Less: allowance for losses | (22) | |
Net vacation ownership mortgages receivable | 719 | $ 32 |
Acquired vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Total | 546 | 23 |
Expected remaining principal payment | 466 | 26 |
Net carrying amount | 546 | |
Originated vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Total | 195 | 11 |
Less: allowance for losses | (22) | (2) |
Receivables Acquired with Deteriorated Credit Quality | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Total | 661 | |
Securitized | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Net vacation ownership mortgages receivable | 429 | |
Securitized | Acquired vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
2,017 | 49 | |
2,018 | 44 | |
2,019 | 43 | |
2,020 | 42 | |
2,021 | 40 | |
2022 and thereafter | 127 | |
Total | 419 | |
Plus: net premium on acquired loans | 74 | |
Net vacation ownership mortgages receivable | $ 419 | |
Weighted-average interest rate on vacation ownership mortgage receivables | 13.40% | |
Interest rate on vacation ownership mortgage receivables, minimum | 9.90% | |
Securitized | Originated vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
2,017 | $ 1 | |
2,018 | 1 | |
2,019 | 1 | |
2,020 | 1 | |
2,021 | 1 | |
2022 and thereafter | 6 | |
Total | 11 | |
Less: allowance for losses | (1) | |
Net vacation ownership mortgages receivable | $ 10 | |
Weighted-average interest rate on vacation ownership mortgage receivables | 13.50% | |
Securitized | Receivables Acquired with Deteriorated Credit Quality | Acquired vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Total | $ 345 | |
Securitized | Receivables Acquired with Deteriorated Credit Quality | Originated vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Total | 11 | |
Unsecuritized | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Net vacation ownership mortgages receivable | 290 | 32 |
Unsecuritized | Acquired vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
2,017 | 14 | |
2,018 | 13 | |
2,019 | 12 | |
2,020 | 12 | |
2,021 | 13 | |
2022 and thereafter | 57 | |
Total | 127 | 23 |
Plus: net premium on acquired loans | 6 | |
Net vacation ownership mortgages receivable | $ 127 | |
Weighted-average interest rate on vacation ownership mortgage receivables | 13.40% | |
Interest rate on vacation ownership mortgage receivables, maximum | 15.90% | |
Unsecuritized | Originated vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
2,017 | $ 14 | |
2,018 | 11 | |
2,019 | 12 | |
2,020 | 14 | |
2,021 | 15 | |
2022 and thereafter | 118 | |
Total | 184 | 11 |
Less: allowance for losses | (21) | $ (2) |
Net vacation ownership mortgages receivable | $ 163 | |
Weighted-average interest rate on vacation ownership mortgage receivables | 13.50% | |
Interest rate on vacation ownership mortgage receivables, minimum | 10.90% | |
Interest rate on vacation ownership mortgage receivables, maximum | 15.90% | |
Unsecuritized | Receivables Acquired with Deteriorated Credit Quality | Acquired vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Total | $ 121 | |
Unsecuritized | Receivables Acquired with Deteriorated Credit Quality | Originated vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
Total | $ 184 |
VACATION OWNERSHIP MORTGAGES 71
VACATION OWNERSHIP MORTGAGES RECEIVABLE - Collectabiltity (Details) $ in Millions | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) |
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Allowance for loan losses | $ 22 | |
Weighted average FICO score within originated loan pool | item | 712 | |
Vacation ownership mortgages receivable, gross | $ 741 | |
Average estimated rate of default for all outstanding loans | 10.20% | |
Receivables | $ 87 | $ 6 |
Greater than 700 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 376 | |
600 to 699 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 250 | |
Less than 600 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 19 | |
No Score | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 96 | |
Westin | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 305 | |
Westin | Greater than 700 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 184 | |
Westin | 600 to 699 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 89 | |
Westin | Less than 600 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 4 | |
Westin | No Score | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 28 | |
Sheraton | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 388 | |
Sheraton | Greater than 700 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 166 | |
Sheraton | 600 to 699 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 146 | |
Sheraton | Less than 600 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 13 | |
Sheraton | No Score | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 63 | |
Hyatt | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 37 | |
Hyatt | Greater than 700 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 20 | |
Hyatt | 600 to 699 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 14 | |
Hyatt | Less than 600 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 2 | |
Hyatt | No Score | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 1 | |
Other | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 11 | |
Other | Greater than 700 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 6 | |
Other | 600 to 699 | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 1 | |
Other | No Score | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 4 | |
Acquired vacation | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Vacation ownership mortgages receivable, gross | 546 | 23 |
Originated vacation | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Allowance for loan losses | 22 | 2 |
Vacation ownership mortgages receivable, gross | 195 | 11 |
Receivables | 195 | 11 |
Receivables Past Due | 5 | |
Originated vacation | Current | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Receivables current | 190 | $ 11 |
Originated vacation | 30-59 Days | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Receivables Past Due | 2 | |
Originated vacation | 60-89 Days | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Receivables Past Due | 1 | |
Originated vacation | 90-119 Days | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Receivables Past Due | 1 | |
Originated vacation | Defaulted | ||
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Receivables Past Due | $ 1 |
VACATION OWNERSHIP INVENTORY (D
VACATION OWNERSHIP INVENTORY (Details) - USD ($) $ in Millions | Dec. 31, 2016 | May 11, 2016 | Dec. 31, 2015 |
VACATION OWNERSHIP INVENTORY | |||
Completed unsold vacation ownership interests (Current asset) | $ 197 | $ 46 | |
Vacation ownership products construction in process (non-current asset) | 189 | ||
Other | 1 | ||
Total vacation ownership inventory | $ 386 | $ 47 | |
Vistana | |||
VACATION OWNERSHIP INVENTORY | |||
Completed unsold vacation ownership interests (Current asset) | $ 228 |
INVESTMENTS IN UNCONSOLIDATED73
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Carrying value of our investments in unconsolidated entities | |||
Equity income from investments in unconsolidated entities | $ 5 | $ 5 | $ 5 |
Carrying value of investments in unconsolidated entities | $ 59 | 38 | |
Maui Timeshare Venture, LLC | |||
Carrying value of our investments in unconsolidated entities | |||
Ownership percentages of investments in unconsolidated entities | 33.00% | ||
Carrying value of investments in unconsolidated entities | $ 42 | 37 | |
Harborside Investments | |||
Carrying value of our investments in unconsolidated entities | |||
Ownership percentages of investments in unconsolidated entities | 50.00% | ||
Carrying value of investments in unconsolidated entities | $ 12 | ||
Other | |||
Carrying value of our investments in unconsolidated entities | |||
Carrying value of investments in unconsolidated entities | $ 5 | $ 1 | |
Other | Minimum | |||
Carrying value of our investments in unconsolidated entities | |||
Ownership percentages of investments in unconsolidated entities | 25.00% | ||
Other | Maximum | |||
Carrying value of our investments in unconsolidated entities | |||
Ownership percentages of investments in unconsolidated entities | 50.00% |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
PROPERTY AND EQUIPMENT | |||
Less: accumulated depreciation and amortization | $ (168) | $ (127) | |
Total property and equipment, net | 580 | 91 | |
Depreciation expense | 43 | 18 | $ 16 |
Computer Equipment | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 26 | 23 | |
Capitalized Software | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 126 | 108 | |
Total property and equipment, net | 47 | 38 | |
Depreciation expense | 14 | 12 | $ 10 |
Land, Buildings and Leasehold Improvements | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 368 | 51 | |
Land held for development | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 56 | ||
Furniture and Other Equipment | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 89 | 17 | |
Construction in Progress [Member] | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 55 | ||
Other projects in progress | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 28 | $ 19 | |
ILG | |||
PROPERTY AND EQUIPMENT | |||
Total property and equipment, net | $ 1 |
GOODWILL AND OTHER INTANGIBLE75
GOODWILL AND OTHER INTANGIBLE ASSETS - Changes in carrying amount of goodwill (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | |
Goodwill | ||
Number of reporting segments | item | 2 | |
Changes in carrying amount of goodwill | ||
Balance at the beginning of the period | $ 561 | $ 562 |
Foreign Currency Translation | (3) | (1) |
Goodwill Impairment | 0 | |
Balance at the end of the period | 558 | 561 |
Exchange reporting unit | ||
Changes in carrying amount of goodwill | ||
Balance at the beginning of the period | 496 | 496 |
Balance at the end of the period | 496 | 496 |
Rental reporting unit | ||
Changes in carrying amount of goodwill | ||
Balance at the beginning of the period | 20 | 20 |
Balance at the end of the period | 20 | 20 |
VO management reporting unit | ||
Changes in carrying amount of goodwill | ||
Balance at the beginning of the period | 38 | 39 |
Foreign Currency Translation | (3) | (1) |
Balance at the end of the period | 35 | 38 |
VO sales and financing reporting unit | ||
Changes in carrying amount of goodwill | ||
Balance at the beginning of the period | 7 | 7 |
Balance at the end of the period | $ 7 | $ 7 |
GOODWILL AND OTHER INTANGIBLE76
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill Impairment Test (Details) $ in Millions | Oct. 01, 2016USD ($)item | Oct. 01, 2015item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Jan. 01, 2015USD ($) | Dec. 31, 2014USD ($) |
Goodwill | ||||||
Number of reporting units | item | 4 | 4 | ||||
Goodwill Impairment Tests | ||||||
Goodwill | $ 558 | $ 561 | $ 562 | |||
Accumulated goodwill impairment losses | $ 34.3 | |||||
Goodwill Impairment | 0 | |||||
VO sales and financing reporting unit | ||||||
Goodwill Impairment Tests | ||||||
Goodwill | $ 7 | 7 | 7 | 7 | ||
VO management reporting unit | ||||||
Goodwill Impairment Tests | ||||||
Goodwill | 36 | 35 | 38 | 39 | ||
Exchange reporting unit | ||||||
Goodwill Impairment Tests | ||||||
Goodwill | 496 | 496 | 496 | 496 | ||
Rental reporting unit | ||||||
Goodwill Impairment Tests | ||||||
Goodwill | $ 20 | $ 20 | $ 20 | $ 20 |
GOODWILL AND OTHER INTANGIBLE77
GOODWILL AND OTHER INTANGIBLE ASSETS - Intangibles assets, net (Details) - USD ($) $ in Millions | Oct. 01, 2016 | Dec. 31, 2016 | Dec. 31, 2015 |
Other intangible assets | |||
Required annual impairment of intangible assets | $ 0 | ||
Intangibles assets, net | |||
Intangible assets with indefinite lives | $ 114 | $ 127 | |
Intangible assets with definite lives, net | 339 | 123 | |
Total intangible assets, net | 453 | 250 | |
Change in indefinite-lived intangible assets | (13) | ||
Resort Management Contracts | |||
Intangibles assets, net | |||
Intangible assets with indefinite lives | 70 | 83 | |
Trade Names and Trademarks | |||
Intangibles assets, net | |||
Intangible assets with indefinite lives | $ 44 | $ 44 |
GOODWILL AND OTHER INTANGIBLE78
GOODWILL AND OTHER INTANGIBLE ASSETS - Itangible assets with definite lives (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Other intangible assets | |||
Cost | $ 656 | $ 420 | |
Accumulated Amortization | (317) | (297) | |
Net | $ 339 | $ 123 | |
Weighted Average Remaining Amortization Life | 8 years | 15 years | |
Amortization expense for intangible assets | $ 19 | $ 14 | $ 12 |
Customer relationships | |||
Other intangible assets | |||
Cost | 287 | 168 | |
Accumulated Amortization | (137) | (132) | |
Net | $ 150 | $ 36 | |
Weighted Average Remaining Amortization Life | 8 years | 21 years | |
Purchase Agreements | |||
Other intangible assets | |||
Cost | $ 76 | $ 76 | |
Accumulated Amortization | (76) | (76) | |
Resort Management Contracts | |||
Other intangible assets | |||
Cost | 245 | 129 | |
Accumulated Amortization | (58) | (46) | |
Net | $ 187 | $ 83 | |
Weighted Average Remaining Amortization Life | 7 years | 14 years | |
Technology | |||
Other intangible assets | |||
Cost | $ 25 | $ 25 | |
Accumulated Amortization | (25) | (25) | |
Other | |||
Other intangible assets | |||
Cost | 23 | 22 | |
Accumulated Amortization | (21) | (18) | |
Net | $ 2 | $ 4 | |
Weighted Average Remaining Amortization Life | 1 year | 3 years |
GOODWILL AND OTHER INTANGIBLE79
GOODWILL AND OTHER INTANGIBLE ASSETS - Amortization expense for the next five years (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Amortization of intangible assets | ||
2,017 | $ 21 | |
2,018 | 19 | |
2,019 | 19 | |
2,020 | 19 | |
2,021 | 17 | |
2021 and thereafter | 244 | |
Net | $ 339 | $ 123 |
CONSOLIDATED VARIABLE INTERES80
CONSOLIDATED VARIABLE INTEREST ENTITIES (Details) $ in Millions | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2016USD ($) | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | |
Assets | |||
Restricted cash and cash equivalents | $ 114 | $ 114 | $ 17 |
Vistana's outstanding securitization transactions | |||
Consolidated variable interest entities | |||
Number of outstanding securitization transactions | item | 3 | ||
Excess cash flows | 20 | ||
Assets | |||
Restricted cash and cash equivalents | 34 | $ 34 | |
Interest receivable | 3 | 3 | |
Vacation ownership notes receivable, net | 429 | 429 | |
Total | 466 | 466 | |
Liabilities | |||
Interest payable | 1 | 1 | |
Securitized debt | 430 | 430 | |
Total | $ 431 | $ 431 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||
General accrued expenses | $ 62 | $ 18 |
Accrued other taxes | 13 | 5 |
Customer deposits | 71 | 13 |
Accrued membership related | 18 | 20 |
Accrued construction costs | 16 | |
Accrued expenses and other current liabilities | $ 180 | $ 56 |
DEFERRED REVENUE (Details)
DEFERRED REVENUE (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Deferred membership-related revenue | $ 157 | $ 169 |
Other | 9 | 4 |
Total | $ 166 | $ 173 |
Minimum | ||
Membership period | 1 year | |
Maximum | ||
Membership period | 5 years |
SECURITIZED VACATION OWNERSHI83
SECURITIZED VACATION OWNERSHIP DEBT (Details) - USD ($) $ in Millions | Sep. 20, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Securitized vacation ownership debt | ||||
Unamortized debt issuance costs | $ (10) | $ (9) | ||
Escrow Deposit | 67 | 2 | ||
Interest expense | $ 23 | $ 21 | $ 7 | |
Revolving Credit Facility | ||||
Securitized vacation ownership debt | ||||
Stated interest rate (as a percent) | 2.27% | 2.68% | ||
Unamortized debt issuance costs | $ (4) | $ (3) | ||
Vistana's outstanding securitization transactions | ||||
Securitized vacation ownership debt | ||||
Unamortized debt issuance costs | (5) | |||
Total securitized vacation ownership debt | 430 | |||
Securitization of asset backed notes | $ 375 | |||
Overall weighted average coupon rate (in percentage) | 2.56% | |||
Advance rate | 96.50% | |||
Escrow Deposit | $ 19 | |||
Interest expense | 5 | |||
Vistana's outstanding securitization transactions | Revolving Credit Facility | ||||
Securitized vacation ownership debt | ||||
Maximum borrowing capacity | 600 | |||
Vistana's outstanding securitization transactions | 2010 securitization, interest rates ranging from 3.65% to 4.75%, maturing 2021 | ||||
Securitized vacation ownership debt | ||||
Repayment of outstanding balance | 33 | |||
Vistana's outstanding securitization transactions | 2011 securitization, interest rates ranging from 3.67% to 4.82%, maturing 2025 | ||||
Securitized vacation ownership debt | ||||
Securitized vacation ownership debt | 44 | |||
Vistana's outstanding securitization transactions | 2012 securitization, interest rates ranging from 2.00% to 2.76%, maturing 2023 | ||||
Securitized vacation ownership debt | ||||
Securitized vacation ownership debt | 46 | |||
Vistana's outstanding securitization transactions | 2016 securitization, interest rates ranging from 2.54% to 2.74%, maturing 2024 | ||||
Securitized vacation ownership debt | ||||
Securitized vacation ownership debt | 345 | |||
Unamortized debt issuance costs | $ (5) | |||
Vistana's outstanding securitization transactions | Class A notes | ||||
Securitized vacation ownership debt | ||||
Securitization of asset backed notes | 346 | |||
Vistana's outstanding securitization transactions | Class B notes | ||||
Securitized vacation ownership debt | ||||
Securitization of asset backed notes | 29 | |||
Vistana's outstanding securitization transactions | Minimum | 2011 securitization, interest rates ranging from 3.67% to 4.82%, maturing 2025 | ||||
Securitized vacation ownership debt | ||||
Stated interest rate (as a percent) | 3.67% | |||
Vistana's outstanding securitization transactions | Minimum | 2012 securitization, interest rates ranging from 2.00% to 2.76%, maturing 2023 | ||||
Securitized vacation ownership debt | ||||
Stated interest rate (as a percent) | 2.00% | |||
Vistana's outstanding securitization transactions | Minimum | 2016 securitization, interest rates ranging from 2.54% to 2.74%, maturing 2024 | ||||
Securitized vacation ownership debt | ||||
Stated interest rate (as a percent) | 2.54% | |||
Vistana's outstanding securitization transactions | Maximum | ||||
Securitized vacation ownership debt | ||||
Additional loans | $ 19 | |||
Vistana's outstanding securitization transactions | Maximum | 2011 securitization, interest rates ranging from 3.67% to 4.82%, maturing 2025 | ||||
Securitized vacation ownership debt | ||||
Stated interest rate (as a percent) | 4.82% | |||
Vistana's outstanding securitization transactions | Maximum | 2012 securitization, interest rates ranging from 2.00% to 2.76%, maturing 2023 | ||||
Securitized vacation ownership debt | ||||
Stated interest rate (as a percent) | 2.76% | |||
Vistana's outstanding securitization transactions | Maximum | 2016 securitization, interest rates ranging from 2.54% to 2.74%, maturing 2024 | ||||
Securitized vacation ownership debt | ||||
Stated interest rate (as a percent) | 2.74% |
LONG-TERM DEBT - Long term debt
LONG-TERM DEBT - Long term debt table (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | Apr. 10, 2015 |
LONG-TERM DEBT | |||
Unamortized debt issuance costs | $ (10) | $ (9) | |
Total long-term debt, net of unamortized debt issuance costs | 580 | 416 | |
5.625% Senior Notes | |||
LONG-TERM DEBT | |||
5.625% senior notes | 350 | 350 | $ 350 |
Unamortized debt issuance costs | $ (6) | $ (6) | |
Stated interest rate (as a percent) | 5.625% | 5.625% | 5.625% |
Revolving Credit Facility | |||
LONG-TERM DEBT | |||
Revolving credit facility | $ 240 | $ 75 | |
Unamortized debt issuance costs | $ (4) | $ (3) | |
Stated interest rate (as a percent) | 2.27% | 2.68% |
LONG-TERM DEBT - Narrative (Det
LONG-TERM DEBT - Narrative (Details) $ in Millions | Apr. 10, 2015USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | May 05, 2015 |
Senior Secured Credit Facility and Covenants | |||||
Unamortized debt issuance costs | $ 10 | $ 9 | |||
Accumulated amortization on debt issuance costs | 5 | 4 | |||
Interest expense | $ 23 | 21 | $ 7 | ||
Minimum fixed charge coverage ratio | 2 | ||||
5.625% Senior Notes | |||||
Senior Secured Credit Facility and Covenants | |||||
Unamortized debt issuance costs | $ 6 | 6 | |||
5.625% senior notes | $ 350 | $ 350 | $ 350 | ||
Proceeds from issuance of senior notes | $ 343 | ||||
Stated interest rate (as a percent) | 5.625% | 5.625% | 5.625% | ||
Redemption price ( as a percent) | 104.219% | ||||
Issuer and subsidiary guarantors | 5.625% Senior Notes | |||||
Senior Secured Credit Facility and Covenants | |||||
Ownership interest ( as a percent) | 100.00% | ||||
Revolving Credit Facility | |||||
Senior Secured Credit Facility and Covenants | |||||
Amount outstanding | $ 240 | $ 75 | |||
Available to be drawn | $ 349 | ||||
Commitment fee (as a percent) | 0.275% | ||||
Percentage of voting equity securities of the Borrower and its U.S. subsidiaries by which credit facility is secured | 100.00% | ||||
Percentage of equity in the first-tier foreign subsidiaries of the Borrower by which credit facility is secured | 65.00% | ||||
Unamortized debt issuance costs | $ 4 | $ 3 | |||
Stated interest rate (as a percent) | 2.27% | 2.68% | |||
Revolving Credit Facility | Actual | |||||
Senior Secured Credit Facility and Covenants | |||||
Consolidated leverage ratio of debt over EBITDA | 0.72 | ||||
Consolidated interest coverage ratio | 15.77 | ||||
Revolving Credit Facility | Minimum | |||||
Senior Secured Credit Facility and Covenants | |||||
Commitment fee (as a percent) | 0.25% | ||||
Revolving Credit Facility | Minimum | Financial Covenant | |||||
Senior Secured Credit Facility and Covenants | |||||
Consolidated interest coverage ratio | 3 | ||||
Revolving Credit Facility | Maximum | |||||
Senior Secured Credit Facility and Covenants | |||||
Commitment fee (as a percent) | 0.40% | ||||
Revolving Credit Facility | Maximum | Financial Covenant | |||||
Senior Secured Credit Facility and Covenants | |||||
Consolidated leverage ratio of debt over EBITDA | 3.25 | ||||
Revolving Credit Facility | Base Rate | |||||
Senior Secured Credit Facility and Covenants | |||||
Reference rate | Base Rate | ||||
Applicable margin (as a percent) | 0.50% | ||||
Revolving Credit Facility | Base Rate | Minimum | |||||
Senior Secured Credit Facility and Covenants | |||||
Applicable margin (as a percent) | 0.25% | ||||
Revolving Credit Facility | Base Rate | Maximum | |||||
Senior Secured Credit Facility and Covenants | |||||
Applicable margin (as a percent) | 1.50% | ||||
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | |||||
Senior Secured Credit Facility and Covenants | |||||
Reference rate | LIBOR | ||||
Applicable margin (as a percent) | 1.50% | ||||
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Minimum | |||||
Senior Secured Credit Facility and Covenants | |||||
Applicable margin (as a percent) | 1.25% | ||||
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Maximum | |||||
Senior Secured Credit Facility and Covenants | |||||
Applicable margin (as a percent) | 2.50% | ||||
Third Amendment To Credit Agreement | |||||
Senior Secured Credit Facility and Covenants | |||||
Commitment fee (as a percent) | 0.40% | ||||
Third Amendment To Credit Agreement | Actual | |||||
Senior Secured Credit Facility and Covenants | |||||
Consolidated leverage ratio of debt over EBITDA | 3.5 | ||||
Third Amendment To Credit Agreement | Maximum | Financial Covenant | |||||
Senior Secured Credit Facility and Covenants | |||||
Consolidated leverage ratio of debt over EBITDA | 3.25 | ||||
Third Amendment To Credit Agreement | Maximum | Pro Forma | |||||
Senior Secured Credit Facility and Covenants | |||||
Consolidated leverage ratio of debt over EBITDA | 4.50 | ||||
Third Amendment To Credit Agreement | Base Rate | |||||
Senior Secured Credit Facility and Covenants | |||||
Reference rate | Base Rate | ||||
Applicable margin (as a percent) | 1.50% | ||||
Third Amendment To Credit Agreement | London Interbank Offered Rate (LIBOR) | |||||
Senior Secured Credit Facility and Covenants | |||||
Reference rate | LIBOR | ||||
Applicable margin (as a percent) | 2.50% | ||||
Fourth Amendment To Credit Agreement Member | 5.625% Senior Notes | |||||
Senior Secured Credit Facility and Covenants | |||||
Stated interest rate (as a percent) | 5.625% |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Apr. 10, 2015 | |
Fair Value of Financial Instruments | |||
Restricted cash and cash equivalents | $ 114,000 | $ 17,000 | |
Debt issuance costs | 10,000 | 9,000 | |
5.625% Senior Notes | |||
Fair Value of Financial Instruments | |||
Senior notes | (350,000) | (350,000) | $ (350,000) |
Debt issuance costs | 6,000 | 6,000 | |
Revolving Credit Facility | |||
Fair Value of Financial Instruments | |||
Revolving credit facility | (240,000) | (75,000) | |
Debt issuance costs | 4,000 | 3,000 | |
HVO | |||
Fair Value of Financial Instruments | |||
Investments in marketable securities | 14,000 | ||
Unrealized trading gain | 1,000 | ||
Carrying Amount | |||
Fair Value of Financial Instruments | |||
Cash and cash equivalents | 126 | 93 | |
Restricted cash and cash equivalents | 118 | 17 | |
Financing receivables | 19,000 | 16,000 | |
Vacation ownership mortgages receivable | 719,000 | 32,000 | |
Investments in marketable securities | 14,000 | 11,000 | |
Securitized debt | 430,000 | ||
Revolving credit facility | (236,000) | (72,000) | |
Senior notes | (344,000) | (344,000) | |
Carrying Amount | 5.625% Senior Notes | |||
Fair Value of Financial Instruments | |||
Debt issuance costs | 6,000 | ||
Carrying Amount | Revolving Credit Facility | |||
Fair Value of Financial Instruments | |||
Debt issuance costs | 4,000 | ||
Fair Value | |||
Fair Value of Financial Instruments | |||
Cash and cash equivalents | 126 | 93 | |
Restricted cash and cash equivalents | 118 | 17 | |
Financing receivables | 19,000 | 16,000 | |
Vacation ownership mortgages receivable | 737,000 | 34,000 | |
Investments in marketable securities | 14,000 | 11,000 | |
Securitized debt | 425,000 | ||
Revolving credit facility | (240,000) | (75,000) | |
Senior notes | $ (361,000) | $ (348,000) |
EQUITY (Details)
EQUITY (Details) $ / shares in Units, $ in Millions | May 11, 2016USD ($)shares | Nov. 04, 2013USD ($) | Feb. 28, 2017$ / shares | Dec. 31, 2016USD ($)$ / sharesshares | Nov. 30, 2016USD ($)$ / shares | Sep. 30, 2016USD ($) | Aug. 31, 2016$ / shares | Jun. 30, 2016USD ($) | May 31, 2016USD ($)$ / shares | Mar. 31, 2016USD ($)$ / shares | Feb. 29, 2016$ / shares | Jun. 30, 2009shares | Dec. 31, 2016USD ($)item$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / shares |
Equity | |||||||||||||||
Authorized shares of common stock | shares | 300,000,000 | 300,000,000 | 300,000,000 | ||||||||||||
Par value of common stock (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |||||||||||
Shares of common stock issued | shares | 133,545,864 | 133,545,864 | 59,853,933 | ||||||||||||
Shares of common stock outstanding | shares | 124,700,000 | 124,700,000 | 57,500,000 | ||||||||||||
Shares held as treasury stock | shares | 8,878,489 | 8,878,489 | 2,363,324 | ||||||||||||
Authorized shares of preferred stock | shares | 25,000,000 | 25,000,000 | 25,000,000 | ||||||||||||
Par value of preferred stock (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||||||||||||
Preferred stock, issued shares | shares | 0 | 0 | 0 | ||||||||||||
Preferred stock, outstanding shares | shares | 0 | 0 | 0 | ||||||||||||
Minimum number of series to issue preferred stock | item | 1 | ||||||||||||||
Common stock value | $ 1,029 | ||||||||||||||
Dividends declared per common share (in dollars per share) | $ / shares | $ 0.12 | $ 0.12 | $ 0.12 | $ 0.12 | $ 0.48 | $ 0.48 | $ 0.44 | ||||||||
Cash dividend paid | $ 15 | $ 15 | $ 16 | $ 7 | |||||||||||
Stockholder Rights Plan | |||||||||||||||
Rights per common stock share declared as dividend | shares | 1 | ||||||||||||||
Minimum percentage of common stock to be acquired before rights become exercisable | 15.00% | ||||||||||||||
Percentage of discount on prevailing market price of common stock | 50.00% | ||||||||||||||
Equity and Share Repurchase Program | |||||||||||||||
Common stock repurchased | $ 101 | $ 14 | |||||||||||||
Cost of shares of common stock repurchased | 101 | ||||||||||||||
Stockholders' Equity Attributable to Noncontrolling Interest | 26 | $ 26 | $ 33 | ||||||||||||
May 2016 Repurchase Program | |||||||||||||||
Equity and Share Repurchase Program | |||||||||||||||
Amount authorized under share repurchase program | $ 100 | ||||||||||||||
November 2016 Repurchase Program | |||||||||||||||
Equity and Share Repurchase Program | |||||||||||||||
Amount authorized under share repurchase program | $ 50 | ||||||||||||||
Share Repurchase Program | |||||||||||||||
Equity and Share Repurchase Program | |||||||||||||||
Number of shares of common stock repurchased | shares | 6,500,000 | 0 | |||||||||||||
Common stock repurchased | $ 101 | ||||||||||||||
Remaining availability for future repurchases of common stock | 49 | 49 | |||||||||||||
CLC | |||||||||||||||
Equity and Share Repurchase Program | |||||||||||||||
Premium upon exercise of share options to settle loan (as a percent) | 20.00% | ||||||||||||||
CLC | Convertible Secured Loan Facility | |||||||||||||||
Equity and Share Repurchase Program | |||||||||||||||
Convertible secured loan available, subject to certain conditions being met | $ 15 | ||||||||||||||
CLC | VRI Europe Limited | |||||||||||||||
Equity and Share Repurchase Program | |||||||||||||||
Equity of VRIE issued as consideration for acquisition (as a percent) | 24.50% | ||||||||||||||
Ownership interest ( as a percent) | 75.50% | ||||||||||||||
Stockholders' Equity Attributable to Noncontrolling Interest | 26 | 26 | $ 31 | ||||||||||||
Period from acquisition during which parties have agreed not to transfer their interests | 5 years | ||||||||||||||
HVO | |||||||||||||||
Equity and Share Repurchase Program | |||||||||||||||
Stockholders' Equity Attributable to Noncontrolling Interest | $ 1 | $ 1 | |||||||||||||
Vistana | |||||||||||||||
Equity | |||||||||||||||
Common stock issued (in shares) | shares | 72,400,000 | ||||||||||||||
Common stock value | $ 1,000 | ||||||||||||||
Subsequent Event | |||||||||||||||
Equity | |||||||||||||||
Dividends declared per common share (in dollars per share) | $ / shares | $ 0.15 |
BENEFIT PLANS (Details)
BENEFIT PLANS (Details) - USD ($) $ in Millions | Oct. 01, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Retirement savings plan qualified under Section 401(k) of the Internal Revenue Code and other various benefit plans | ||||
Employee contribution as maximum percentage of pre-tax earnings | 50.00% | |||
Employer contribution against each dollar contributed by employee (as a percent) | 50.00% | |||
Net matching contributions | $ 5 | $ 2 | $ 2 | |
Deferred compensation plan | ||||
Vesting percentage under deferred compensation plan | 100.00% | |||
Shares of common stock reserved for issuance pursuant to deferred compensation plan | 100,000 | |||
Shares outstanding under the deferred compensation plan | 60,986 | |||
Fair value of investments in the Rabbi Trust | $ 14 | 11 | ||
Unrealized gain (losses) on investments | $ 1 | $ (0.1) | ||
Maximum | ||||
Retirement savings plan qualified under Section 401(k) of the Internal Revenue Code and other various benefit plans | ||||
Employer's maximum contribution of participant's eligible earnings (as a percent) | 3.00% | |||
HVO | ||||
Deferred compensation plan | ||||
Net transfer into deferred compensation plan | $ 11 | |||
Vistana | ||||
Retirement savings plan qualified under Section 401(k) of the Internal Revenue Code and other various benefit plans | ||||
Employer contribution against each dollar contributed by employee (as a percent) | 100.00% | |||
Employer's maximum contribution of participant's eligible earnings (as a percent) | 1.00% | |||
Deferred compensation plan | ||||
Net transfer into deferred compensation plan | $ 2 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) $ / shares in Units, $ in Millions | May 11, 2016USD ($)shares | May 21, 2013shares | Aug. 31, 2016shares | Dec. 31, 2016USD ($)item$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares |
STOCK-BASED COMPENSATION | ||||||
Per unit grant date fair value (in dollars per unit) | $ / shares | $ 13.53 | $ 25.64 | $ 23.99 | |||
Fair value | $ | $ 2 | |||||
Non-cash compensation expense | $ | 18 | $ 13 | $ 11 | |||
Unrecognized compensation expense | ||||||
Unrecognized compensation cost, net of estimated forfeitures | $ | $ 27 | |||||
Weighted average period for recognition of unrecognized compensation expense | 2 years | |||||
Restricted Stock Units (RSUs) | ||||||
STOCK-BASED COMPENSATION | ||||||
New awards granted (in shares) | 1,592,000 | 521,000 | 692,000 | |||
Restricted Stock Units (RSUs) | Minimum | ||||||
STOCK-BASED COMPENSATION | ||||||
Award vesting period | 1 year | 1 year | 1 year | |||
Restricted Stock Units (RSUs) | Maximum | ||||||
STOCK-BASED COMPENSATION | ||||||
Award vesting period | 4 years | 4 years | 4 years | |||
Restricted Stock Units (RSUs) | Cliff vesting | ||||||
STOCK-BASED COMPENSATION | ||||||
New awards granted (in shares) | 533,000 | 105,000 | 367,609 | |||
Award vesting period | 3 years | 3 years | 3 years | |||
Restricted Stock Units (RSUs) | Vesting Based on Performance | ||||||
STOCK-BASED COMPENSATION | ||||||
New awards granted (in shares) | 299,000 | 54,000 | 202,000 | |||
Award vested (in shares) | 103,000 | |||||
Per unit grant date fair value (in dollars per unit) | $ / shares | $ 13.13 | $ 40.71 | $ 36.90 | |||
Number of peer groups for estimating total shareholder return ranking | item | 2 | |||||
The estimated performance period to be considered for historical average volatility rate | 3 years | |||||
The performance measurement period to be considered for risk free interest rate assumption | 3 years | |||||
Restricted Stock Units (RSUs) | Vesting Based on Performance | Minimum | ||||||
STOCK-BASED COMPENSATION | ||||||
Percentage of target shares which can be earned by the participants (as a percent) | 0.00% | 0.00% | 0.00% | |||
Restricted Stock Units (RSUs) | Vesting Based on Performance | Maximum | ||||||
STOCK-BASED COMPENSATION | ||||||
Percentage of target shares which can be earned by the participants (as a percent) | 200.00% | 200.00% | 200.00% | |||
2013 Stock and Incentive Compensation Plan | ||||||
STOCK-BASED COMPENSATION | ||||||
Number of shares of common stock reserved for issuance | 4,100,000 | |||||
Reduction from common stock reserved for issuance for every share granted under prior plan | 1 | |||||
Number of additional shares of common stock reserved for issuance | 4,000,000 | |||||
Remaining shares available for future issuance | 4,000,000 | |||||
Non-cash compensation expense | $ | $ 18 | $ 13 | $ 11 | |||
2013 Stock and Incentive Compensation Plan | Vistana | Vistana Employees | ||||||
STOCK-BASED COMPENSATION | ||||||
Fair value | $ | $ 10 | |||||
Fair Value, pre-acquisition services | $ | 2 | |||||
Fair Value, post-acquisition services | $ | $ 8 | |||||
2013 Stock and Incentive Compensation Plan | Restricted Stock Units (RSUs) | Vistana | Vistana Employees | ||||||
STOCK-BASED COMPENSATION | ||||||
Shares issued in conversion | 11,000 | |||||
2013 Stock and Incentive Compensation Plan | Restricted stock | Vistana | Vistana Employees | ||||||
STOCK-BASED COMPENSATION | ||||||
Shares issued in conversion | 713,000 |
STOCK-BASED COMPENSATION - Non-
STOCK-BASED COMPENSATION - Non-cash stock-based compensation expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Non-cash stock-based compensation expense | |||
Non-cash compensation expense before income taxes | $ 18 | $ 13 | $ 11 |
Income tax benefit | (7) | (5) | (4) |
Non-cash compensation expense after income taxes | 11 | 8 | 7 |
Cost of Sales | |||
Non-cash stock-based compensation expense | |||
Non-cash compensation expense before income taxes | 2 | 1 | 1 |
Selling and Marketing Expense | |||
Non-cash stock-based compensation expense | |||
Non-cash compensation expense before income taxes | 2 | 1 | 1 |
General and Administrative Expense | |||
Non-cash stock-based compensation expense | |||
Non-cash compensation expense before income taxes | $ 14 | $ 11 | $ 9 |
STOCK-BASED COMPENSATION - RSU
STOCK-BASED COMPENSATION - RSU activity (Details) - $ / shares shares in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Shares | |||
Outstanding at the beginning of the period (in shares) | 2 | 2 | 1 |
Granted (in shares) | 2 | 1 | 1 |
Vested (in shares) | (1) | (1) | |
Outstanding at the end of the period (in shares) | 3 | 2 | 2 |
Weighted-Average Grant Date Fair Value | |||
Outstanding at the beginning of the period (in dollars per share) | $ 22.98 | $ 20.23 | $ 17.33 |
Granted (in dollars per share) | 13.53 | 25.64 | 23.99 |
Vested (in dollars per share) | 20.52 | 17.34 | 16.27 |
Forfeited (in dollars per share) | 16.36 | 21.98 | 24.01 |
Outstanding at the end of the period (in dollars per share) | $ 16.71 | $ 22.98 | $ 20.23 |
INCOME TAXES - Earnings, Provis
INCOME TAXES - Earnings, Provision and Deferred Tax (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings from continuing operations before income taxes and noncontrolling interest | |||
U.S. | $ 308 | $ 91 | $ 100 |
Foreign | 16 | 25 | 27 |
Earnings before income taxes and noncontrolling interests | 324 | 116 | 127 |
Current income tax provision | |||
Federal | 31 | 29 | 29 |
State | 7 | 5 | 5 |
Foreign | 11 | 4 | 4 |
Current income tax provision | 49 | 38 | 38 |
Deferred income tax provision (benefit) | |||
Federal | 19 | 1 | 3 |
State | 1 | 1 | 1 |
Foreign | (12) | 1 | 3 |
Deferred income tax provision | 8 | 3 | 7 |
Income tax provision | 57 | 41 | 45 |
Net excess tax benefits associated with stock-based awards | 2 | 2 | 2 |
Deferred tax assets: | |||
Deferred revenue | 36 | 30 | |
Inventory | 48 | ||
Provision for accrued expenses | 25 | 6 | |
Non-cash compensation | 10 | 8 | |
Net operating loss and tax credit carryforwards | 45 | 1 | |
Other | 9 | 2 | |
Total deferred tax assets | 173 | 47 | |
Less valuation allowance | (36) | ||
Net deferred tax assets | 137 | 47 | |
Deferred tax liabilities: | |||
Intangible and other assets | (192) | (103) | |
Deferred membership costs | (6) | (6) | |
Property and equipment | (8) | (10) | |
Investments in unconsolidated entities | (5) | (3) | |
Installment sales of vacation ownership interest | (63) | (2) | |
Other | (15) | (2) | |
Total deferred tax liabilities | (289) | (126) | |
Net deferred tax liability | (152) | (79) | |
ILG | |||
Deferred income tax provision (benefit) | |||
Income tax provision | $ (2) | $ (1) | $ (1) |
INCOME TAXES - NOLs (Details)
INCOME TAXES - NOLs (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Net operating loss carryforwards | ||
Capital loss carryforwards | $ 55 | |
Capital loss carryforwards tax effected | 21 | |
Mexico | ||
Net operating loss carryforwards | ||
Tax credit carryforwards | 6 | |
Foreign | ||
Net operating loss carryforwards | ||
NOLs | 46 | $ 3 |
NOLs tax effected | 14 | $ 1 |
Valuation allowance related to NOL carryforwards | 36 | |
state | ||
Net operating loss carryforwards | ||
NOLs | 50 | |
NOLs tax effected | 2 | |
Tax credit carryforwards | $ 2 |
INCOME TAXES - Reconciliations
INCOME TAXES - Reconciliations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of total income tax provision | |||
Income tax provision at the federal statutory rate of 35% | $ 113 | $ 41 | $ 44 |
State income taxes, net of effect of federal tax benefit | 5 | 4 | 4 |
Foreign income taxed at a different statutory tax rate | (3) | (4) | (3) |
U.S. tax consequences of foreign operations | (1) | ||
Gain on Acquisition | (57) | ||
Income tax provision | $ 57 | $ 41 | $ 45 |
Federal statutory rate (as a percent) | 35.00% | 35.00% | 35.00% |
Reconciliation of total income tax provision (as a percent) | |||
Income tax provision at the federal statutory rate of 35% (as a percent) | 35.00% | 35.00% | 35.00% |
State income taxes, net of effect of federal tax benefit (as a percent) | 1.40% | 3.50% | 3.20% |
Foreign income taxed at a different statutory tax rate (as a percent) | (0.90%) | (3.50%) | (2.40%) |
U.S. tax consequences of foreign operations (as a percent) | (0.20%) | 0.10% | |
Gain on acquisition (as a percent) | (17.60%) | ||
Other, net (as a percent) | 0.20% | (0.30%) | |
Income tax provision (as a percent) | 17.70% | 35.30% | 35.50% |
Additional information related to income taxes | |||
Federal and state income taxes provided on earnings of certain foreign subsidiaries | $ 0 | ||
Aggregate earnings of certain foreign subsidiaries | $ 135 |
INCOME TAXES - UK Finance Act (
INCOME TAXES - UK Finance Act (Details) | Sep. 15, 2016 |
U.K. Finance Act of 2016 | |
Income Taxes | |
U.K. corporate income tax rate (as a percent) | 17.00% |
SEGMENT INFORMATION - Reportabl
SEGMENT INFORMATION - Reportable segments (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
SEGMENT INFORMATION | |||||||||||
Number of operating segments which are also reportable segments | item | 2 | ||||||||||
Sales of vacation ownership products, net | $ 306 | $ 28 | $ 7 | ||||||||
Consumer financing revenue | 57 | 5 | 1 | ||||||||
Cost reimbursement revenue | 274 | 152 | 112 | ||||||||
Total revenues | $ 455 | $ 418 | $ 297 | $ 186 | $ 165 | $ 174 | $ 174 | $ 184 | 1,356 | 697 | 614 |
Cost of service and membership related sales | 118 | 100 | 111 | ||||||||
Cost of sales of vacation ownership products | 99 | 20 | 6 | ||||||||
Cost of rental and ancillary services | 185 | 41 | 34 | ||||||||
Cost of consumer financing | 13 | ||||||||||
Cost reimbursements | 274 | 152 | 112 | ||||||||
Total cost of sales | 689 | 313 | 263 | ||||||||
Royalty fee expense | 28 | 3 | 1 | ||||||||
Selling and marketing expense | 194 | 71 | 62 | ||||||||
General and administrative expense | 198 | 150 | 133 | ||||||||
Amortization expense of intangibles | 19 | 14 | 12 | ||||||||
Depreciation expense | 43 | 18 | 16 | ||||||||
Operating expenses | 482 | 256 | 224 | ||||||||
Operating income | 71 | $ 47 | $ 27 | $ 40 | 23 | $ 33 | $ 31 | $ 41 | 185 | 128 | 127 |
Total assets | |||||||||||
Total assets | 3,304 | 1,279 | 3,304 | 1,279 | |||||||
Capital expenditures | |||||||||||
Capital expenditures | 95 | 20 | 19 | ||||||||
Vacation Ownership | |||||||||||
SEGMENT INFORMATION | |||||||||||
Resort operations revenue | 136 | 17 | 4 | ||||||||
Management fee revenue | 111 | 88 | 89 | ||||||||
Sales of vacation ownership products, net | 306 | 28 | 7 | ||||||||
Consumer financing revenue | 57 | 5 | 1 | ||||||||
Cost reimbursement revenue | 179 | 58 | 29 | ||||||||
Total revenues | 789 | 196 | 130 | ||||||||
Cost of service and membership related sales | 48 | 34 | 36 | ||||||||
Cost of sales of vacation ownership products | 99 | 20 | 6 | ||||||||
Cost of rental and ancillary services | 116 | 7 | 8 | ||||||||
Cost of consumer financing | 13 | ||||||||||
Cost reimbursements | 179 | 58 | 29 | ||||||||
Total cost of sales | 455 | 119 | 79 | ||||||||
Royalty fee expense | 27 | 2 | 1 | ||||||||
Selling and marketing expense | 139 | 13 | 4 | ||||||||
General and administrative expense | 82 | 47 | 30 | ||||||||
Amortization expense of intangibles | 8 | 5 | 5 | ||||||||
Depreciation expense | 25 | 2 | 1 | ||||||||
Operating income | 53 | 8 | 10 | ||||||||
Total assets | |||||||||||
Total assets | 2,220 | 374 | 2,220 | 374 | |||||||
Capital expenditures | |||||||||||
Capital expenditures | 66 | 4 | 1 | ||||||||
Exchange and Rental | |||||||||||
SEGMENT INFORMATION | |||||||||||
Transaction Revenue | 198 | 193 | 193 | ||||||||
Membership fee revenue | 134 | 126 | 128 | ||||||||
Ancillary member revenue | 6 | 6 | 7 | ||||||||
Total member revenue | 338 | 325 | 328 | ||||||||
Club rental revenue | 63 | 9 | 2 | ||||||||
Other revenue | 23 | 23 | 23 | ||||||||
Rental management revenue | 48 | 50 | 48 | ||||||||
Cost reimbursement revenue | 95 | 94 | 83 | ||||||||
Total revenues | 567 | 501 | 484 | ||||||||
Cost of service and membership related sales | 70 | 66 | 75 | ||||||||
Cost of sales of vacation ownership products | 69 | 34 | 26 | ||||||||
Cost reimbursements | 95 | 94 | 83 | ||||||||
Total cost of sales | 234 | 194 | 184 | ||||||||
Royalty fee expense | 1 | 1 | |||||||||
Selling and marketing expense | 55 | 58 | 58 | ||||||||
General and administrative expense | 116 | 103 | 103 | ||||||||
Amortization expense of intangibles | 11 | 9 | 7 | ||||||||
Depreciation expense | 18 | 16 | 15 | ||||||||
Operating income | 132 | 120 | 117 | ||||||||
Total assets | |||||||||||
Total assets | $ 1,084 | $ 905 | 1,084 | 905 | |||||||
Capital expenditures | |||||||||||
Capital expenditures | $ 29 | $ 16 | $ 18 |
SEGMENT INFORMATION - Geographi
SEGMENT INFORMATION - Geographic Information (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016USD ($)item | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | |
Geographic Information | |||||||||||
Number of other countries in which entity operates | item | 14 | 14 | |||||||||
Revenue: | |||||||||||
Revenue | $ 455 | $ 418 | $ 297 | $ 186 | $ 165 | $ 174 | $ 174 | $ 184 | $ 1,356 | $ 697 | $ 614 |
Long-lived assets (excluding goodwill and intangible assets): | |||||||||||
Total long-lived assets | 580 | 91 | $ 580 | $ 91 | |||||||
Minimum | |||||||||||
Geographic Information | |||||||||||
Number of countries from which revenue is sourced | item | 100 | 100 | |||||||||
UNITED STATES | |||||||||||
Revenue: | |||||||||||
Revenue | $ 1,153 | $ 577 | 483 | ||||||||
Long-lived assets (excluding goodwill and intangible assets): | |||||||||||
Total long-lived assets | 469 | 87 | 469 | 87 | |||||||
Mexico | |||||||||||
Long-lived assets (excluding goodwill and intangible assets): | |||||||||||
Total long-lived assets | 107 | 107 | |||||||||
Europe | |||||||||||
Revenue: | |||||||||||
Revenue | 65 | 68 | 73 | ||||||||
Long-lived assets (excluding goodwill and intangible assets): | |||||||||||
Total long-lived assets | $ 4 | $ 4 | 4 | 4 | |||||||
All Other Countries | |||||||||||
Revenue: | |||||||||||
Revenue | $ 138 | $ 52 | $ 58 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Lease Commitments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Future minimum payments under operating lease agreements | |||
2,017 | $ 21 | ||
2,018 | 19 | ||
2,019 | 16 | ||
2,020 | 14 | ||
2,021 | 10 | ||
Thereafter through 2021 | 85 | ||
Total | 165 | ||
Expenses under operating lease agreements | |||
Expense charged to operations under operating lease agreements | 11 | $ 12 | $ 13 |
Contractual obligations payment schedule | |||
Total | 940 | ||
2,017 | 145 | ||
2,018 | 59 | ||
2,019 | 46 | ||
2,020 | 41 | ||
2,021 | 273 | ||
Thereafter | 376 | ||
Debt principal | |||
Contractual obligations payment schedule | |||
Total | 590 | ||
2,021 | 240 | ||
Thereafter | 350 | ||
Debt interest (projected) | |||
Contractual obligations payment schedule | |||
Total | 155 | ||
2,017 | 27 | ||
2,018 | 27 | ||
2,019 | 26 | ||
2,020 | 27 | ||
2,021 | 22 | ||
Thereafter | 26 | ||
Guarantees, surety bonds, and letters of credit | |||
Contractual obligations payment schedule | |||
Total | 107 | ||
2,017 | 82 | ||
2,018 | 10 | ||
2,019 | 9 | ||
2,020 | 4 | ||
2,021 | 2 | ||
Purchase obligations | |||
Contractual obligations payment schedule | |||
Total | 88 | ||
2,017 | 36 | ||
2,018 | 22 | ||
2,019 | 11 | ||
2,020 | 10 | ||
2,021 | $ 9 |
COMMITMENTS AND CONTINGENCIES99
COMMITMENTS AND CONTINGENCIES - Guarantees (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Commitments and guarantees | |
Amount of guarantees and commitments, year one | $ 145 |
Letter of credit outstanding amount | 11 |
Guarantees, surety bonds, and letters of credit | |
Commitments and guarantees | |
Guarantees and commitments amount | 107 |
Amount of guarantees and commitments, year one | 82 |
Guarantees construction loan | |
Commitments and guarantees | |
Guarantees and commitments amount | 37 |
Guarantees | |
Commitments and guarantees | |
Guarantees and commitments amount | $ 40 |
Guarantees | Minimum | |
Commitments and guarantees | |
Notice period for termination of lease | 60 days |
Guarantees | Maximum | |
Commitments and guarantees | |
Notice period for termination of lease | 90 days |
SUPPLEMENTAL CASH FLOW INFOR100
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash paid during the period for: | |||
Interest, net of amounts capitalized | $ 24 | $ 15 | $ 6 |
Income taxes, net of refunds | 93 | $ 28 | $ 48 |
Non-cash financing activity: | |||
Issuance of stock in connection with Vistana acquisition | $ 1,031 |
SUPPLEMENTAL GUARANTOR INFOR101
SUPPLEMENTAL GUARANTOR INFORMATION - Balance Sheet (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Balance Sheet | ||
Current assets | $ 746 | $ 258 |
Property and equipment, net | 580 | 91 |
Goodwill and intangible assets, net | 1,011 | 811 |
Other assets | 967 | 119 |
TOTAL ASSETS | 3,304 | 1,279 |
Current liabilities | 519 | 212 |
Other long term liabilities | 292 | 185 |
Long-term debt | 899 | 416 |
Redeemable noncontrolling interest | 1 | 1 |
ILG stockholders' equity | 1,567 | 432 |
Noncontrolling interests | 26 | 33 |
TOTAL LIABILITIES AND EQUITY | 3,304 | 1,279 |
Total Eliminations | ||
Balance Sheet | ||
Investments in subsidiaries | (2,298) | (1,996) |
TOTAL ASSETS | (2,298) | (1,996) |
ILG stockholders' equity | (2,298) | (1,996) |
TOTAL LIABILITIES AND EQUITY | (2,298) | (1,996) |
ILG | ||
Balance Sheet | ||
Current assets | 1 | 1 |
Property and equipment, net | 1 | |
Investments in subsidiaries | 619 | 539 |
TOTAL ASSETS | 621 | 540 |
Current liabilities | 1 | 1 |
Intercompany liabilities (receivables)/equity | (947) | 107 |
ILG stockholders' equity | 1,567 | 432 |
TOTAL LIABILITIES AND EQUITY | 621 | 540 |
Interval Acquisition Corp | ||
Balance Sheet | ||
Current assets | 2 | |
Goodwill and intangible assets, net | 267 | 268 |
Investments in subsidiaries | 1,289 | 1,321 |
TOTAL ASSETS | 1,558 | 1,589 |
Current liabilities | 5 | 5 |
Long-term debt | 581 | 416 |
Intercompany liabilities (receivables)/equity | 353 | 629 |
ILG stockholders' equity | 619 | 539 |
TOTAL LIABILITIES AND EQUITY | 1,558 | 1,589 |
Guarantor Subsidiaries | ||
Balance Sheet | ||
Current assets | 491 | 148 |
Property and equipment, net | 420 | 65 |
Goodwill and intangible assets, net | 647 | 427 |
Investments in subsidiaries | 390 | 136 |
Other assets | 462 | 103 |
TOTAL ASSETS | 2,410 | 879 |
Current liabilities | 344 | 175 |
Other long term liabilities | 266 | 163 |
Long-term debt | (12) | (8) |
Intercompany liabilities (receivables)/equity | 522 | (775) |
Redeemable noncontrolling interest | 1 | 1 |
ILG stockholders' equity | 1,289 | 1,321 |
Noncontrolling interests | 2 | |
TOTAL LIABILITIES AND EQUITY | 2,410 | 879 |
Non-Guarantor Subsidiaries | ||
Balance Sheet | ||
Current assets | 252 | 109 |
Property and equipment, net | 159 | 26 |
Goodwill and intangible assets, net | 97 | 116 |
Other assets | 505 | 16 |
TOTAL ASSETS | 1,013 | 267 |
Current liabilities | 169 | 31 |
Other long term liabilities | 26 | 22 |
Long-term debt | 330 | 8 |
Intercompany liabilities (receivables)/equity | 72 | 39 |
ILG stockholders' equity | 390 | 136 |
Noncontrolling interests | 26 | 31 |
TOTAL LIABILITIES AND EQUITY | $ 1,013 | $ 267 |
SUPPLEMENTAL GUARANTOR INFOR102
SUPPLEMENTAL GUARANTOR INFORMATION - Statement of Income (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Income | |||||||||||
Revenue | $ 455 | $ 418 | $ 297 | $ 186 | $ 165 | $ 174 | $ 174 | $ 184 | $ 1,356 | $ 697 | $ 614 |
Operating expenses | (1,171) | (569) | (487) | ||||||||
Interest (expense) income, net | (22) | (20) | (7) | ||||||||
Other income (expense), net | 156 | 3 | 2 | ||||||||
Income tax benefit (provision) | (57) | (41) | (45) | ||||||||
Equity in earnings from unconsolidated entities | 5 | 5 | 5 | ||||||||
Net income | 267 | 75 | 82 | ||||||||
Net income attributable to noncontrolling interests | (2) | (2) | (3) | ||||||||
Net income attributable to common stockholders | $ 28 | $ 32 | $ 183 | $ 22 | $ 12 | $ 19 | $ 17 | $ 25 | 265 | 73 | 79 |
Total Eliminations | |||||||||||
Statement of Income | |||||||||||
Other income (expense), net | (240) | (180) | (182) | ||||||||
Net income | (240) | (180) | (182) | ||||||||
Net income attributable to common stockholders | (240) | (180) | (182) | ||||||||
ILG | |||||||||||
Statement of Income | |||||||||||
Operating expenses | (5) | (4) | (3) | ||||||||
Other income (expense), net | 268 | 76 | 81 | ||||||||
Income tax benefit (provision) | 2 | 1 | 1 | ||||||||
Net income | 265 | 73 | 79 | ||||||||
Net income attributable to common stockholders | 265 | 73 | 79 | ||||||||
Interval Acquisition Corp | |||||||||||
Statement of Income | |||||||||||
Operating expenses | (1) | (1) | |||||||||
Interest (expense) income, net | (25) | (22) | (7) | ||||||||
Other income (expense), net | 120 | 89 | 85 | ||||||||
Income tax benefit (provision) | 10 | 9 | 3 | ||||||||
Net income | 105 | 75 | 80 | ||||||||
Net income attributable to common stockholders | 105 | 75 | 80 | ||||||||
Guarantor Subsidiaries | |||||||||||
Statement of Income | |||||||||||
Revenue | 1,148 | 592 | 509 | ||||||||
Operating expenses | (990) | (479) | (401) | ||||||||
Interest (expense) income, net | 6 | 2 | |||||||||
Other income (expense), net | 15 | 15 | 16 | ||||||||
Income tax benefit (provision) | (65) | (46) | (43) | ||||||||
Equity in earnings from unconsolidated entities | 5 | 5 | 5 | ||||||||
Net income | 119 | 89 | 86 | ||||||||
Net income attributable to noncontrolling interests | 1 | 1 | |||||||||
Net income attributable to common stockholders | 120 | 90 | 86 | ||||||||
Non-Guarantor Subsidiaries | |||||||||||
Statement of Income | |||||||||||
Revenue | 208 | 105 | 105 | ||||||||
Operating expenses | (176) | (85) | (82) | ||||||||
Interest (expense) income, net | (3) | ||||||||||
Other income (expense), net | (7) | 3 | 2 | ||||||||
Income tax benefit (provision) | (4) | (5) | (6) | ||||||||
Net income | 18 | 18 | 19 | ||||||||
Net income attributable to noncontrolling interests | (3) | (3) | (3) | ||||||||
Net income attributable to common stockholders | $ 15 | $ 15 | $ 16 |
SUPPLEMENTAL GUARANTOR INFOR103
SUPPLEMENTAL GUARANTOR INFORMATION - Statement of Cash Flows (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Cash Flows | |||
Cash flows provided by (used in) operating activities | $ (7) | $ 143 | $ 111 |
Cash flows provided by (used in) investing activities | (189) | (21) | (258) |
Cash flows provided by (used in) financing activities | 234 | (103) | 185 |
Effect of exchange rate changes on cash and cash equivalents | (5) | (7) | (5) |
Cash and cash equivalents at beginning of year | 93 | 81 | 48 |
Cash and cash equivalents at end of year | 126 | 93 | 81 |
ILG | |||
Statement of Cash Flows | |||
Cash flows provided by (used in) operating activities | (2) | (2) | (2) |
Cash flows provided by (used in) investing activities | 1,196 | ||
Cash flows provided by (used in) financing activities | (1,194) | 2 | 2 |
Interval Acquisition Corp | |||
Statement of Cash Flows | |||
Cash flows provided by (used in) operating activities | (14) | (5) | (6) |
Cash flows provided by (used in) financing activities | 14 | 5 | 6 |
Guarantor Subsidiaries | |||
Statement of Cash Flows | |||
Cash flows provided by (used in) operating activities | 315 | 116 | 105 |
Cash flows provided by (used in) investing activities | (1,345) | (20) | (217) |
Cash flows provided by (used in) financing activities | 1,054 | (99) | 119 |
Cash and cash equivalents at beginning of year | 14 | 17 | 10 |
Cash and cash equivalents at end of year | 38 | 14 | 17 |
Non-Guarantor Subsidiaries | |||
Statement of Cash Flows | |||
Cash flows provided by (used in) operating activities | (306) | 34 | 14 |
Cash flows provided by (used in) investing activities | (40) | (1) | (41) |
Cash flows provided by (used in) financing activities | 360 | (11) | 58 |
Effect of exchange rate changes on cash and cash equivalents | (5) | (7) | (5) |
Cash and cash equivalents at beginning of year | 79 | 64 | 38 |
Cash and cash equivalents at end of year | $ 88 | $ 79 | $ 64 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) $ in Millions | Oct. 27, 2015USD ($)directoritem | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
RELATED PARTY TRANSACTIONS | |||
Interest income | $ 1 | $ 1 | |
CLC | |||
RELATED PARTY TRANSACTIONS | |||
Revenue from related party | 1 | 1 | |
Trade payable to related party | 1 | 0.1 | |
Receivable from related party | 1 | 0.5 | |
Loan due | $ 15 | 15 | |
Loan maturity period subsequent to funding date | 5 years | ||
Interest income | $ 1 | 1 | |
CLC | VRI Europe Limited | |||
RELATED PARTY TRANSACTIONS | |||
Shared services income | 1 | 1 | |
Shared services expense | 3 | $ 3 | |
Maui Timeshare Venture and Host Hotels and Resorts | |||
RELATED PARTY TRANSACTIONS | |||
Revenue from related party | 17 | ||
Trade payable to related party | $ 2 | ||
Spinco Agreement | Liberty Interactive Corp. | |||
RELATED PARTY TRANSACTIONS | |||
Number of directors to be appoint for Board | director | 2 | ||
Minimum percentage of ILG's common stock to be held | 10.00% | ||
Maximum percentage of ILG's common stock to be held | 35.00% | ||
Period for termination of rights under agreement (in years) | 3 years | ||
Registration Rights Agreement | Liberty Interactive Corp. | |||
RELATED PARTY TRANSACTIONS | |||
Number of demand registration rights under agreement | item | 4 | ||
Aggregate offering price threshold for demand registration statement | $ 50 | ||
Number of days for preparation of demand registration statement from consummation of transactions under Merger Agreement | 60 days |
QUARTERLY RESULTS (UNAUDITED105
QUARTERLY RESULTS (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
QUARTERLY RESULTS (UNAUDITED) | |||||||||||
Revenue | $ 455 | $ 418 | $ 297 | $ 186 | $ 165 | $ 174 | $ 174 | $ 184 | $ 1,356 | $ 697 | $ 614 |
Operating income | 71 | 47 | 27 | 40 | 23 | 33 | 31 | 41 | 185 | 128 | 127 |
Net income attributable to common stockholders | $ 28 | $ 32 | $ 183 | $ 22 | $ 12 | $ 19 | $ 17 | $ 25 | $ 265 | $ 73 | $ 79 |
Earnings per share attributable to common stockholders: | |||||||||||
Basic (in dollars per share) | $ 0.22 | $ 0.26 | $ 1.89 | $ 0.38 | $ 0.21 | $ 0.33 | $ 0.29 | $ 0.44 | $ 2.62 | $ 1.28 | $ 1.38 |
Diluted (in dollars per share) | $ 0.22 | $ 0.25 | $ 1.87 | $ 0.38 | $ 0.21 | $ 0.33 | $ 0.29 | $ 0.44 | $ 2.60 | $ 1.26 | $ 1.36 |
Gain (loss) on bargain purchase | $ (25) | $ (9) | $ 197 | ||||||||
ILG | |||||||||||
QUARTERLY RESULTS (UNAUDITED) | |||||||||||
Net income attributable to common stockholders | $ 265 | $ 73 | $ 79 |
Schedule II VALUATION AND QU106
Schedule II VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Allowance for loan losses on mortgages receivables | ||
Movement in valuation and qualifying accounts | ||
Balance at Beginning of Period | $ 2 | |
Charges (Credits) to Earnings | 20 | $ 2 |
Balance at End of Period | 22 | $ 2 |
Deferred tax valuation allowance | ||
Movement in valuation and qualifying accounts | ||
Charges (Credits) to Earnings | 36 | |
Balance at End of Period | $ 36 |