February 23, 2017

Marriott Vacations Worldwide Reports Fourth Quarter and Full Year 2016 Financial Results and 2017 Outlook

ORLANDO, Fla., Feb. 23, 2017 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported fourth quarter and full year 2016 financial results and provided its outlook for the full year 2017.

Fourth quarter 2016 highlights:

  • Net income was $49.8 million, or $1.80 fully diluted earnings per share (EPS), compared to net income of $33.1 million, or $1.06 fully diluted EPS, in the fourth quarter of 2015, an increase of 50.3 percent and 69.8 percent, respectively.
  • Adjusted net income was $50.8 million, compared to adjusted net income of $34.7 million in the fourth quarter of 2015, an increase of 46.4 percent. Adjusted fully diluted EPS was $1.83, compared to adjusted fully diluted EPS of $1.11 in the fourth quarter of 2015, an increase of 64.9 percent.
  • Adjusted EBITDA totaled $95.0 million, an increase of $21.5 million, or 29.3 percent, year-over-year, with growth coming from all lines of business.
    • The company estimates that Hurricane Matthew negatively impacted Adjusted EBITDA by approximately $3.6 million in the fourth quarter. Adjusting for that impact, Adjusted EBITDA would have totaled nearly $99 million in the fourth quarter, an increase of 34.1 percent.
  • Total company vacation ownership contract sales, excluding residential sales, were $234.3 million, an increase of $30.1 million, or 14.7 percent, compared to the prior year period. Contract sales in our key North America and Asia Pacific segments increased over the prior year by $32.6 million, or 16.9 percent.
    • The company estimates that Hurricane Matthew negatively impacted contract sales by $8.1 million in the fourth quarter. Adjusting for that impact, contract sales would have grown by nearly 19 percent over 2015.
  • North America VPG totaled $3,563, a 12.7 percent increase from the fourth quarter of 2015; tours increased 3.4 percent year-over-year.
    • The company estimates that Hurricane Matthew negatively impacted tour growth by approximately 3.9 percentage points. Adjusting for that impact, tours would have increased 7.3 percent over 2015.
  • Company development margin percentage was 24.3 percent compared to 22.1 percent in the fourth quarter of 2015. Company adjusted development margin percentage was 22.3 percent compared to 20.1 percent in the fourth quarter of 2015.

Full Year 2016 highlights:

  • Net income was $137.3 million, or $4.83 fully diluted EPS, compared to net income of $122.8 million, or $3.82 fully diluted EPS, in 2015, an increase of 11.8 percent and 26.4 percent, respectively.
  • Adjusted net income was $134.3 million, compared to adjusted net income of $118.9 million in 2015, an increase of 13.0 percent. Adjusted fully diluted EPS was $4.73 compared to adjusted fully diluted EPS of $3.70 in 2015, an increase of 27.8 percent.
  • Adjusted EBITDA totaled $261.4 million, an increase of $11.3 million, or 4.5 percent, year-over-year.
    • Adjusting for the impact of Hurricane Matthew, Adjusted EBITDA would have totaled $265.0 million for the full year.
  • Total company vacation ownership contract sales, excluding residential sales, were $723.6 million, an increase of $23.8 million, or 3.4 percent, compared to the prior year period. Contract sales in our key North America and Asia Pacific segments were $27.0 million, an increase of 4.0 percent, compared to the prior year period.
    • Adjusting for the impact of Hurricane Matthew, total company contract sales would have increased by an additional $8.1 million, for a total of approximately 4.5 percent, for the full year.
  • North America VPG totaled $3,462, a 2.2 percent increase from 2015; tours increased 2.3 percent year-over-year.
  • The company generated net cash provided by operating activities of $140.2 million and adjusted free cash flow of $158.9 million, delivering at the high end of the company's previous guidance range, despite the impact from Hurricane Matthew.
  • The company returned a total of $212.0 million to its shareholders through repurchases of its common stock and quarterly dividends.

Non-GAAP financial measures, such as adjusted net income, adjusted EBITDA, adjusted fully diluted earnings per share, adjusted development margin and adjusted free cash flow are reconciled and adjustments are shown and described in further detail on pages A-1 through A-12 of the Financial Schedules that follow.

"I am extraordinarily pleased with how we finished 2016. In the fourth quarter, contract sales grew nearly 15 percent, driving $95 million of Adjusted EBITDA, our strongest quarter as a public company," said Stephen P. Weisz, president and chief executive officer. "We continue to execute our growth strategy as our same store marketing initiatives continue to build a strong tour pipeline, and we opened our sixth new sales center for 2016 at our Miami Beach location in the last week of December. Subsequent to the end of the year, we opened our additional New York sales location, adding to our momentum and giving us confidence that we will achieve 2017 contract sales growth of 9 to 15 percent, net income of $139 million to $148 million, and Adjusted EBITDA of $276 million to $291 million for the full year."

2017 Outlook:
The company is providing guidance for the full year 2017 on the non-GAAP financial measures provided below. Pages A-1 through A-12 of the Financial Schedules reconcile the non-GAAP financial measures set forth below to the following full year 2017 expected GAAP results: 

Net income

$139 million to $148 million

Fully diluted EPS

$4.97 to $5.29

Net cash provided by operating activities

$110 million to $125 million



Adjusted net income

$139 million to $148 million

Adjusted fully diluted EPS

$4.97 to $5.29

Adjusted EBITDA

$276 million to $291 million

Adjusted free cash flow

$160 million to $180 million

Contract sales growth

9 percent to 15 percent

 

Fourth Quarter 2016 Results

Company Results

Fourth quarter 2016 company net income was $49.8 million, a $16.7 million increase from the fourth quarter of 2015. These results were driven by $9.8 million of higher development margin, $6.4 million of higher resort management and other services revenues net of expenses, $1.8 million of lower acquisition related transaction costs, $1.7 million of higher financing revenues net of expenses and consumer financing interest expense, $1.4 million of lower interest expense, $0.9 million of higher rental revenues net of expenses, and $2.7 million of lower general and administrative costs stemming from lower bonus payouts and cost containment initiatives.

Total company vacation ownership contract sales were $234.3 million, $30.1 million, or 14.7 percent, higher than the fourth quarter of 2015. These results were driven by $27.0 million of higher contract sales in the company's North America segment and $5.6 million of higher contract sales in the company's Asia Pacific segment, partially offset by $2.5 million of lower contract sales in the company's Europe segment as it continues to sell through the remaining developer inventory. The company estimates that Hurricane Matthew negatively impacted contract sales by approximately $8.1 million in the fourth quarter.  Adjusting for that impact, contract sales would have grown by nearly 19 percent over 2015.   

Development margin was $53.8 million, a $9.8 million increase from the fourth quarter of 2015. Development margin percentage was 24.3 percent compared to 22.1 percent in the prior year quarter. The increase in development margin reflected $8.1 million from lower product costs, $6.6 million from higher contract sales volumes net of expenses, and $0.5 million related to the timing of revenue reportability year-over-year, partially offset by $2.4 million from higher sales reserve activity mainly associated with a 5.4 percentage point increase in financing propensity, $2.0 million related mainly to higher usage of plus points for sales incentives, and $1.4 million of higher marketing and sales costs primarily from ramp-up costs associated with the company's new sales distributions. Adjusted development margin percentage, which excludes the impact of revenue reportability year-over-year, was 22.3 percent in the fourth quarter of 2016 compared to 20.1 percent in the fourth quarter of 2015. 

Rental revenues totaled $82.9 million, a $5.2 million decrease from the fourth quarter of 2015. Rental revenues net of expenses were $13.8 million, a $0.9 million, or 6.9 percent, increase from the fourth quarter of 2015.

Resort management and other services revenues totaled $93.0 million, a $2.4 million decrease from the fourth quarter of 2015. Resort management and other services revenues, net of expenses, totaled $42.3 million, a $6.4 million, or 18.0 percent, increase from the fourth quarter of 2015.

Financing revenues totaled $39.2 million, a $0.8 million increase from the fourth quarter of 2015. Financing revenues, net of expenses and consumer financing interest expense, were $24.3 million, a $1.7 million, or 7.7 percent, increase from the fourth quarter of 2015.

Net income was $49.8 million, compared to net income of $33.1 million in the fourth quarter of 2015, an increase of $16.7 million, or 50.3 percent. Adjusted EBITDA was $95.0 million in the fourth quarter of 2016, a $21.5 million, or 29.3 percent, increase from $73.5 million in the fourth quarter of 2015. The company estimates that Hurricane Matthew negatively impacted Adjusted EBITDA by approximately $3.6 million in the fourth quarter. Adjusting for that impact, Adjusted EBITDA would have totaled nearly $99 million in the fourth quarter.

Segment Results

North America

North America vacation ownership contract sales were $209.1 million in the fourth quarter of 2016, an increase of $27.0 million, or 14.9 percent, from the prior year period, reflecting higher sales from existing sales centers driven by the success of our new marketing programs, as well as the continued ramp-up of new sales centers. VPG increased $402, or 12.7 percent, to $3,563 in the fourth quarter of 2016 from the fourth quarter of 2015.  Total tours in the fourth quarter of 2016 increased 3.4 percent, driven by an 8.3 percent increase in first time buyer tours. Tours were negatively impacted by 3.9 percentage points due to Hurricane Matthew. Adjusting for this impact, tours would have improved almost 7.3 percent in the fourth quarter.

Fourth quarter 2016 North America segment financial results were $141.2 million, an increase of $18.8 million from the fourth quarter of 2015. The increase was driven primarily by $9.4 million of higher development margin, $7.1 million of higher resort management and other services revenues net of expenses, $1.0 million of higher financing revenues, $0.7 million of higher rental revenues net of expenses, and $0.4 million of lower acquisition related transaction costs.

Development margin was $53.6 million, a $9.4 million increase from the fourth quarter of 2015. Development margin percentage was 26.9 percent compared to 24.5 percent in the prior year quarter. The increase in development margin reflected $7.8 million from lower product costs, and $6.2 million from higher contract sales volumes net of expenses, partially offset by $2.2 million related mainly to higher usage of plus points for sales incentives, $2.1 million from higher sales reserve activity mainly associated with a 5.0 percentage point increase in financing propensity, and $0.7 million of higher marketing and sales costs primarily from ramp-up costs associated with the company's new sales distributions. Adjusted development margin percentage, which excludes the impact of revenue reportability, was 24.8 percent in the fourth quarter of 2016 compared to 22.1 percent in the fourth quarter of 2015.

Asia Pacific

Total vacation ownership contract sales in the segment were $16.1 million, an increase of $5.6 million, or 52.5 percent, from the fourth quarter of 2015, due primarily to the opening of a new sales location in Surfers Paradise, Australia in the second quarter of 2016. Segment financial results were $1.8 million, relatively flat to the fourth quarter of 2015.

Europe

Fourth quarter 2016 contract sales were $9.1 million, a decrease of $2.5 million from the fourth quarter of 2015. Segment financial results were $5.0 million, a $0.3 million increase from the fourth quarter of 2015, driven by $0.5 million of higher development margin.

Full Year 2016 Results

Full year 2016 net income totaled $137.3 million, or $4.83 diluted earnings per share, compared to net income of $122.8 million in 2015, or $3.82 diluted earnings per share. Total company contract sales, excluding residential sales, were $723.6 million, up $23.8 million, or 3.4 percent, from $699.9 million in 2015, driven by $13.9 million, or 2.2 percent, higher contract sales in the company's North America segment, and $13.1 million, or 38.3 percent, higher contract sales in the company's Asia Pacific segment. These increases were partially offset by $3.2 million of lower contract sales in the company's Europe segment. 

Full year total company development margin decreased to 20.3 percent in 2016 from 20.8 percent in 2015. Full year total company adjusted development margin decreased to 20.7 percent in 2016 from 20.9 percent in 2015.

Share Repurchase Program and Dividends

During 2016, the company returned $212.0 million to its shareholders, through the repurchase of more than 2.8 million shares for $177.8 million and $34.2 million in dividends paid.     

Fiscal Year Change

On December 8, 2016, the Board of Directors approved a change in the company's financial reporting year end to a calendar year end beginning with its 2017 fiscal year. The 2017 fiscal year began on December 31, 2016 (the day after the end of the 2016 fiscal year) and will end on December 31, 2017. Subsequent fiscal years will begin on January 1 and end on December 31. The company's financial quarters will be the three-month periods ending March 31, June 30, September 30, and December 31, except that the period ending March 31, 2017 will also include December 31, 2016. The company believes these changes will allow for the simplification of transaction and reporting processes to support future growth. Historical results will not be restated.

Historically (including for the 2016 fiscal year), the company's fiscal year was a 52 or 53 week fiscal year that ended on the Friday nearest to December 31, and quarterly results were for twelve-week periods for the first, second, and third quarters and for a sixteen-week period (or in some cases a seventeen-week period) for the fourth quarter.

Balance Sheet and Liquidity

On December 30, 2016, cash and cash equivalents totaled $147.1 million. Since the beginning of the year, real estate inventory balances increased $44.2 million to $708.2 million, including $338.0 million of finished goods, $39.5 million of work-in-progress and $330.7 million of land and infrastructure. The company had $746.4 million in gross debt outstanding at the end of 2016, an increase of $58.3 million from year-end 2015, consisting primarily of $738.4 million in gross non-recourse securitized notes.

As of December 30, 2016, the company had approximately $197 million in available capacity under its revolving credit facility after taking into account outstanding letters of credit and approximately $103 million of gross vacation ownership notes receivable eligible for securitization in its warehouse credit facility.

Fourth Quarter 2016 Earnings Conference Call

The company will hold a conference call at 10:00 a.m. EST today to discuss these results and the guidance for full year 2017. Participants may access the call by dialing (877) 407-8289 or (201) 689-8341 for international callers. A live webcast of the call will also be available in the Investor Relations section of the company's website at www.marriottvacationsworldwide.com.

An audio replay of the conference call will be available for seven days and can be accessed at (877) 660-6853 or (201) 612-7415 for international callers. The conference ID for the recording is 13654437. The webcast will also be available on the company's website.

About Marriott Vacations Worldwide Corporation
Marriott Vacations Worldwide Corporation is a leading global pure-play vacation ownership company, offering a diverse portfolio of quality products, programs and management expertise with over 60 resorts. Its brands include Marriott Vacation Club, The Ritz-Carlton Destination Club and Grand Residences by Marriott. Since entering the industry in 1984 as part of Marriott International, Inc., the company earned its position as a leader and innovator in vacation ownership products. The company preserves high standards of excellence in serving its customers, investors and associates while maintaining a long-term relationship with Marriott International. For more information, please visit www.marriottvacationsworldwide.com.

Note on forward-looking statements: This press release and accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including statements about future operating results, estimates, and assumptions, and similar statements concerning anticipated future events and expectations that are not historical facts. The company cautions you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including volatility in the economy and the credit markets, supply and demand changes for vacation ownership and residential products, competitive conditions, the availability of capital to finance growth, and other matters referred to under the heading "Risk Factors" contained in the company's most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the "SEC") and in subsequent SEC filings, any of which could cause actual results to differ materially from those expressed in or implied in this press release. These statements are made as of February 23, 2017 and the company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Financial Schedules Follow

MARRIOTT VACATIONS WORLDWIDE CORPORATION

FINANCIAL SCHEDULES

QUARTER 4, 2016

TABLE OF CONTENTS





Consolidated Statements of Income - 16 Weeks and 52 Weeks Ended December 30, 2016 and January 1, 2016

 A-1



Adjusted Net Income, Adjusted Earnings Per Share - Diluted, EBITDA and Adjusted EBITDA - 16 Weeks and 52 Weeks Ended December 30, 2016 and January 1, 2016

 A-2



North America Segment Financial Results - 16 Weeks and 52 Weeks Ended December 30, 2016 and January 1, 2016

 A-3



Asia Pacific Segment Financial Results - 16 Weeks and 52 Weeks Ended December 30, 2016 and January 1, 2016

 A-4



Europe Segment Financial Results - 16 Weeks and 52 Weeks Ended December 30, 2016 and January 1, 2016

 A-5



Corporate and Other Financial Results - 16 Weeks and 52 Weeks Ended December 30, 2016 and January 1, 2016

 A-6



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


    (Adjusted Sale of Vacation Ownership Products Net of Expenses) - 16 Weeks and 52 Weeks Ended December 30, 2016 and January 1, 2016

 A-7



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


    (Adjusted Sale of Vacation Ownership Products Net of Expenses) - 16 Weeks and 52 Weeks Ended December 30, 2016 and January 1, 2016

 A-8



2016 Adjusted Free Cash Flow

 A-9



2017 Outlook - Adjusted Net Income, Adjusted Earnings Per Share - Diluted, Adjusted EBITDA and Adjusted Free Cash Flow

 A-10



Non-GAAP Financial Measures

 A-11



Consolidated Balance Sheets

 A-13



Consolidated Statements of Cash Flows

 A-14

 

A-1

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

16 Weeks and 52 Weeks Ended December 30, 2016 and January 1, 2016

(In thousands, except per share amounts)























16 Weeks Ended



52 Weeks Ended








December 30, 2016


January 1, 2016



December 30, 2016


January 1, 2016

Revenues










Sale of vacation ownership products

$                        221,672


$                 199,251



$                        637,503


$                 675,329


Resort management and other services

92,955


95,374



303,570


295,547


Financing

39,182


38,393



126,126


124,033


Rental

82,938


88,117



312,071


312,997


Cost reimbursements

127,992


119,938



431,965


405,875






Total revenues

564,739


541,073



1,811,235


1,813,781

Expenses










Cost of vacation ownership products

50,944


53,442



155,093


204,299


Marketing and sales

116,947


101,839



353,295


330,599


Resort management and other services

50,616


59,479



174,311


180,072


Financing

7,032


7,716



21,380


24,194


Rental

69,094


75,169



260,752


259,729


General and administrative

31,962


34,651



104,833


106,104


Organizational and separation related

-


442



-


1,174


Litigation settlement

-


4



(303)


(232)


Consumer financing interest

7,845


8,100



23,685


24,658


Royalty fee

18,946


18,551



60,953


58,982


Impairment

-


324



-


324


Cost reimbursements

127,992


119,938



431,965


405,875






Total expenses

481,378


479,655



1,585,964


1,595,778

Gains and other income

72


65



11,201


9,557

Interest expense

(2,581)


(3,988)



(8,912)


(12,810)

Other

(104)


(1,948)



(4,632)


(8,253)






Income before income taxes

80,748


55,547



222,928


206,497

Provision for income taxes

(30,924)


(22,398)



(85,580)


(83,698)

Net income

$                          49,824


$                   33,149



$                        137,348


$                 122,799
















Earnings per share - Basic

$                              1.83


$                       1.08



$                              4.93


$                       3.90
















Earnings per share - Diluted

$                              1.80


$                       1.06



$                              4.83


$                       3.82
















Basic Shares


27,152


30,623



27,882


31,487

Diluted Shares

27,742


31,297



28,422


32,168























16 Weeks Ended



52 Weeks Ended








December 30, 2016


January 1, 2016



December 30, 2016


January 1, 2016

Contract Sales











Vacation ownership

$                        234,317


$                 204,239



$                        723,634


$                 699,884



Residential products

-


-



-


28,420





Total contract sales

$                        234,317


$                 204,239



$                        723,634


$                 728,304


NOTE:  Earnings per share - Basic and Earnings per share - Diluted are calculated using whole dollars. In the fourth quarter of 2016, we reclassified certain revenues and expenses to correct immaterial presentation errors within the following line items: Resort management and other services revenues, Resort management and other services expenses and General and administrative expenses. We have recast prior year presentation for consistency.

 

A-2

MARRIOTT VACATIONS WORLDWIDE CORPORATION

16 Weeks and 52 Weeks Ended December 30, 2016 and January 1, 2016

(In thousands, except per share amounts)
















ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE - DILUTED























16 Weeks Ended



52 Weeks Ended








December 30, 2016


January 1, 2016



December 30, 2016


January 1, 2016































Net income

$                      49,824


$                33,149



$                    137,348


$              122,799

Less certain items:











Transaction costs

168


1,987



4,881


8,440



Hurricane Matthew related expenses

1,442


-



1,442


-



Refurbishment costs

-


-



-


1,767



Operating results from the sold portion of the Surfers Paradise, Australia property

-


(1,595)



(275)


(1,595)



Litigation settlement

-


4



(303)


(232)



Gains and other income

(72)


(65)



(11,201)


(9,557)



Impairments

-


324



-


324



Asia Pacific bulk sale

-


-



-


(5,915)



Organizational and separation related

-


442



-


1,174





Certain items before depreciation and provision for income taxes 1

1,538


1,097



(5,456)


(5,594)



Depreciation on the sold portion of the Surfers Paradise, Australia property

-


1,341



469


1,341



Provision for income taxes on certain items

(606)


(922)



1,962


366




Adjusted net income **

$                     50,756


$               34,665



$                   134,323


$             118,912
















Earnings per share - Diluted

$                          1.80


$                    1.06



$                          4.83


$                    3.82
















Adjusted earnings per share - Diluted **

$                          1.83


$                    1.11



$                          4.73


$                    3.70
















Diluted Shares

27,742


31,297



28,422


32,168































EBITDA AND ADJUSTED EBITDA























16 Weeks Ended



52 Weeks Ended








December 30, 2016


January 1, 2016



December 30, 2016


January 1, 2016
















Net income

$                      49,824


$                33,149



$                    137,348


$              122,799

Interest expense 2

2,581


3,988



8,912


12,810

Tax provision

30,924


22,398



85,580


83,698

Depreciation and amortization

6,188


8,367



21,044


22,217



EBITDA **

89,517


67,902



252,884


241,524
















Non-cash share-based compensation 3

3,954


4,509



13,949


14,142

Certain items before depreciation and provision for income taxes 1

1,538


1,097



(5,456)


(5,594)



Adjusted EBITDA **

$                      95,009


$                73,508



$                    261,377


$              250,072


**  Denotes non-GAAP financial measures.  Please see pages A-11 and A-12 for additional information about our reasons for providing these alternative financial measures and limitations on their use.


1  Please see pages A-11 and A-12 for additional information regarding these items. The certain items adjustments for the Adjusted EBITDA reconciliations exclude depreciation and the provision for income taxes on certain items included in the Adjusted Net Income reconciliations.

2   Interest expense excludes consumer financing interest expense.

3   Beginning with the first quarter of 2016, non-cash share-based compensation expense is excluded from our Adjusted EBITDA, and prior period presentation has been recast for consistency.  Please see pages A-11 and A-12 for additional information.

 

A-3

MARRIOTT VACATIONS WORLDWIDE CORPORATION

NORTH AMERICA SEGMENT

16 Weeks and 52 Weeks Ended December 30, 2016 and January 1, 2016

(In thousands)























16 Weeks Ended



52 Weeks Ended








December 30, 2016


January 1, 2016



December 30, 2016


January 1, 2016

Revenues












Sale of vacation ownership products

$                        198,964


$                 179,990



$                        572,305


$                 586,774


Resort management and other services

83,776


79,870



268,766


258,761


Financing

36,947


35,929



118,646


115,738


Rental

74,484


74,742



276,008


277,348


Cost reimbursements

116,402


109,015



394,592


369,467






Total revenues

510,573


479,546



1,630,317


1,608,088

Expenses












Cost of vacation ownership products

44,203


47,129



134,079


164,200


Marketing and sales

101,211


88,754



304,099


288,260


Resort management and other services

43,714


46,898



145,036


149,257


Rental

60,601


61,562



225,281


225,043


Organizational and separation related

-


219



-


532


Litigation settlement

-


-



(303)


(370)


Royalty fee

3,114


2,797



9,867


7,971


Impairment

-


324



-


324


Cost reimbursements

116,402


109,015



394,592


369,467






Total expenses

369,245


356,698



1,212,651


1,204,684

(Losses) gains and other (expense) income

(37)


66



12,260


9,600

Other





(123)


(578)



(4,191)


(422)






Segment financial results

$                        141,168


$                 122,336



$                        425,735


$                 412,582
















Segment financial results

$                        141,168


$                 122,336



$                        425,735


$                 412,582

Less certain items:










Transaction costs

189


622



4,449


622


Litigation settlement

-


-



(303)


(370)


Losses (gains) and other expense (income)

37


(66)



(12,260)


(9,600)


Impairment


-


324



-


324


Organizational and separation related

-


219



-


532




Certain items

226


1,099



(8,114)


(8,492)






Adjusted segment financial results **

$                        141,394


$                 123,435



$                        417,621


$                 404,090






































16 Weeks Ended



52 Weeks Ended








December 30, 2016


January 1, 2016



December 30, 2016


January 1, 2016

Contract Sales











Vacation ownership

$                        209,063


$                 182,018



$                        645,277


$                 631,403





Total contract sales

$                        209,063


$                 182,018



$                        645,277


$                 631,403


**  Denotes non-GAAP financial measures.  Please see pages A-11 and A-12 for additional information about our reasons for providing these alternative financial measures and limitations on their use.

NOTE: In the fourth quarter of 2016, we reclassified certain revenues and expenses to correct immaterial presentation errors within the following line items: Segment Resort management and other services revenues, Segment Resort management and other services expenses and Corporate General and administrative expenses. We have recast prior year presentation for consistency.

 

A-4

MARRIOTT VACATIONS WORLDWIDE CORPORATION

ASIA PACIFIC SEGMENT

16 Weeks and 52 Weeks Ended December 30, 2016 and January 1, 2016

(In thousands)























16 Weeks Ended



52 Weeks Ended








December 30, 2016


January 1, 2016



December 30, 2016


January 1, 2016

Revenues












Sale of vacation ownership products

$                          14,019


$                     9,436



$                          40,664


$                   59,592


Resort management and other services

1,679


7,840



10,514


11,664


Financing

1,281


1,289



4,187


4,346


Rental

3,698


8,546



16,471


14,970


Cost reimbursements

1,211


953



3,461


3,060






Total revenues

21,888


28,064



75,297


93,632

Expenses












Cost of vacation ownership products

2,588


1,646



7,606


26,877


Marketing and sales

9,982


6,354



30,054


20,365


Resort management and other services

1,509


6,814



10,055


10,368


Rental

4,579


9,836



20,463


19,255


Royalty fee

360


238



924


684


Cost reimbursements

1,211


953



3,461


3,060






Total expenses

20,229


25,841



72,563


80,609

Gains (losses) and other income (expense)

130


-



(878)


(29)

Other





19


(292)



(230)


(5,731)






Segment financial results

$                            1,808


$                     1,931



$                            1,626


$                     7,263
















Segment financial results

$                            1,808


$                     1,931



$                            1,626


$                     7,263

Less certain items:










Transaction costs

(21)


287



221


5,718


Operating results from the sold portion of the Surfers Paradise, Australia property

-


(254)



194


(254)


(Gains) losses and other (income) expense

(130)


-



878


29


Asia Pacific bulk sale

-


-



-


(5,915)




Certain items

(151)


33



1,293


(422)






Adjusted segment financial results **

$                            1,657


$                     1,964



$                            2,919


$                     6,841





















































16 Weeks Ended



52 Weeks Ended








December 30, 2016


January 1, 2016



December 30, 2016


January 1, 2016

Contract Sales











Vacation ownership

$                          16,134


$                   10,577



$                          47,183


$                   34,105



Residential products

-


-



-


28,420





Total contract sales

$                          16,134


$                   10,577



$                          47,183


$                   62,525


**  Denotes non-GAAP financial measures.  Please see pages A-11 and A-12 for additional information about our reasons for providing these alternative financial measures and limitations on their use.

NOTE: In the fourth quarter of 2016, we reclassified certain revenues and expenses to correct immaterial presentation errors within the following line items: Segment Resort management and other services revenues and Segment Resort management and other services expenses. We have recast prior year presentation for consistency.

 

A-5

MARRIOTT VACATIONS WORLDWIDE CORPORATION

EUROPE SEGMENT

16 Weeks and 52 Weeks Ended December 30, 2016 and January 1, 2016

(In thousands)























16 Weeks Ended



52 Weeks Ended








December 30, 2016


January 1, 2016



December 30, 2016


January 1, 2016

Revenues












Sale of vacation ownership products

$                            8,689


$                     9,825



$                          24,534


$                   28,963


Resort management and other services

7,500


7,664



24,290


25,122


Financing

954


1,175



3,293


3,949


Rental

4,756


4,829



19,592


20,679


Cost reimbursements

10,379


9,970



33,912


33,348






Total revenues

32,278


33,463



105,621


112,061

Expenses












Cost of vacation ownership products

1,731


2,354



5,889


6,509


Marketing and sales

5,754


6,731



19,142


21,974


Resort management and other services

5,393


5,767



19,220


20,447


Rental

3,914


3,771



15,008


15,431


Royalty fee

119


174



383


464


Cost reimbursements

10,379


9,970



33,912


33,348






Total expenses

27,290


28,767



93,554


98,173

Losses and other expense

-


(1)



-


(14)






Segment financial results

$                            4,988


$                     4,695



$                          12,067


$                   13,874
















Segment financial results

$                            4,988


$                     4,695



$                          12,067


$                   13,874

Less certain items:










Losses and other expense

-


1



-


14




Certain items

-


1



-


14






Adjusted segment financial results **

$                            4,988


$                     4,696



$                          12,067


$                   13,888






































16 Weeks Ended



52 Weeks Ended








December 30, 2016


January 1, 2016



December 30, 2016


January 1, 2016

Contract Sales











Vacation ownership

$                            9,120


$                   11,644



$                          31,174


$                   34,376



Residential products

-


-



-


-





Total contract sales

$                            9,120


$                   11,644



$                          31,174


$                   34,376


**  Denotes non-GAAP financial measures.  Please see pages A-11 and A-12 for additional information about our reasons for providing these alternative financial measures and limitations on their use.

NOTE: In the fourth quarter of 2016, we reclassified certain revenues and expenses to correct immaterial presentation errors within the following line items: Segment Resort management and other services revenues and Segment Resort management and other services expenses. We have recast prior year presentation for consistency.

 

A-6

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CORPORATE AND OTHER

16 Weeks and 52 Weeks Ended December 30, 2016 and January 1, 2016

(In thousands)























16 Weeks Ended



52 Weeks Ended








December 30, 2016


January 1, 2016



December 30, 2016


January 1, 2016

Expenses












Cost of vacation ownership products

$                            2,422


$                     2,313



$                            7,519


$                     6,713


Financing

7,032


7,716



21,380


24,194


General and administrative

31,962


34,651



104,833


106,104


Organizational and separation related

-


223



-


642


Litigation settlement

-


4



-


138


Consumer financing interest

7,845


8,100



23,685


24,658


Royalty fee

15,353


15,342



49,779


49,863






Total expenses

64,614


68,349



207,196


212,312

Losses and other expense

(21)


-



(181)


-

Interest expense

(2,581)


(3,988)



(8,912)


(12,810)

Other





-


(1,078)



(211)


(2,100)






Financial results

$                        (67,216)


$                  (73,415)



$                      (216,500)


$                (227,222)
















Financial results

$                        (67,216)


$                  (73,415)



$                      (216,500)


$                (227,222)

Less certain items:










Transaction costs

-


1,078



211


2,100


Hurricane Matthew related expenses

1,442


-



1,442


-


Refurbishment costs

-


-



-


1,767


Litigation settlement

-


4



-


138


Losses and other expense

21


-



181


-


Organizational and separation related

-


223



-


642




Certain items

1,463


1,305



1,834


4,647






Adjusted financial results **

$                        (65,753)


$                  (72,110)



$                      (214,666)


$                (222,575)


**  Denotes non-GAAP financial measures.  Please see pages A-11 and A-12 for additional information about our reasons for providing these alternative financial measures and limitations on their use.

NOTE: In the fourth quarter of 2016, we reclassified certain revenues and expenses to correct immaterial presentation errors within the following line items: Segment Resort management and other services revenues, Segment Resort management and other services expenses and Corporate General and administrative expenses. We have recast prior year presentation for consistency.

 

A-7

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS

(In thousands)























16 Weeks Ended



52 Weeks Ended








December 30, 2016


January 1, 2016



December 30, 2016


January 1, 2016
















Contract sales














Vacation ownership




$                   234,317


$             204,239



$                   723,634


$             699,884


Residential products




-


-



-


28,420



Total contract sales




234,317


204,239



723,634


728,304
















Revenue recognition adjustments:













Reportability1




9,482


9,472



(7,547)


(1,652)


Sales reserve 2




(14,827)


(9,853)



(48,274)


(32,999)


Other 3





(7,300)


(4,607)



(30,310)


(18,324)

Sale of vacation ownership products



$                   221,672


$             199,251



$                   637,503


$             675,329


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

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

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

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

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

(In thousands)

























16 Weeks Ended



52 Weeks Ended









December 30, 2016


January 1, 2016



December 30, 2016


January 1, 2016

Sale of vacation ownership products




$                    221,672


$              199,251



$                    637,503


$              675,329

Less:
















Cost of vacation ownership products



50,944


53,442



155,093


204,299


Marketing and sales




116,947


101,839



353,295


330,599

















Development margin





53,781


43,970



129,115


140,431


Certain items 1





-


-



-


(5,915)


Revenue recognition reportability adjustment


(6,429)


(5,898)



4,614


1,057

Adjusted development margin**




$                     47,352


$               38,072



$                   133,729


$             135,573


















Development margin percentage2




24.3%


22.1%



20.3%


20.8%


Adjusted development margin percentage



22.3%


20.1%



20.7%


20.9%


**  Denotes non-GAAP financial measures.  Please see pages A-11 and A-12 for additional information about our reasons for providing these alternative financial measures and limitations on their use.


1   Certain items adjustment in the 52 weeks ended January 1, 2016, represents $5.9 million of development margin from the disposition of units in Macau as whole ownership residential units rather than through our Marriott Vacation Club, Asia Pacific points program.

2   Development margin percentage represents Development margin divided by Sale of vacation ownership products.

 

A-8

MARRIOTT VACATIONS WORLDWIDE CORPORATION

NORTH AMERICA CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS

(In thousands)























16 Weeks Ended



52 Weeks Ended








December 30, 2016


January 1, 2016



December 30, 2016


January 1, 2016
















Contract sales














Vacation ownership




$                   209,063


$             182,018



$                   645,277


$             631,403



Total contract sales




209,063


182,018



645,277


631,403
















Revenue recognition adjustments:













Reportability1




9,529


10,510



(3,453)


(841)


Sales reserve 2




(12,338)


(8,191)



(39,298)


(26,077)


Other 3





(7,290)


(4,347)



(30,221)


(17,711)

Sale of vacation ownership products



$                   198,964


$             179,990



$                   572,305


$             586,774


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

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

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

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

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

(In thousands)

























16 Weeks Ended



52 Weeks Ended









December 30, 2016


January 1, 2016



December 30, 2016


January 1, 2016

Sale of vacation ownership products




$                    198,964


$              179,990



$                    572,305


$              586,774

Less:
















Cost of vacation ownership products



44,203


47,129



134,079


164,200


Marketing and sales




101,211


88,754



304,099


288,260

















Development margin





53,550


44,107



134,127


134,314


Revenue recognition reportability adjustment


(6,476)


(6,689)



1,887


360

Adjusted development margin**




$                     47,074


$               37,418



$                   136,014


$             134,674


















Development margin percentage1




26.9%


24.5%



23.4%


22.9%


Adjusted development margin percentage



24.8%


22.1%



23.6%


22.9%


**  Denotes non-GAAP financial measures.  Please see pages A-11 and A-12 for additional information about our reasons for providing these alternative financial measures and limitations on their use.


1   Development margin percentage represents Development margin divided by Sale of vacation ownership products.

 

A - 9

MARRIOTT VACATIONS WORLDWIDE CORPORATION

2016 CASH FLOW AND ADJUSTED FREE CASH FLOW

(In thousands)








Cash Flow


2016

Cash provided by (used in);




Operating activities


$ 140,172


Investing activities


39,021


Financing activities


(204,952)


Effect of change in exchange rates on cash and cash equivalents


(4,200)



Decrease in cash and cash equivalents


$ (29,959)















Adjusted Free Cash Flow



Net cash provided by operating activities

$ 140,172


Capital expenditures for property and equipment (excluding inventory):





New sales centers 1


(18,077)



Other


(16,693)


Decrease in restricted cash


4,838


Borrowings from securitization transactions


376,622


Repayment of debt related to securitizations

(322,864)




Free cash flow**


163,998

Adjustment:





Net change in borrowings available from the securitization of eligible vacation ownership notes receivable through the warehouse credit facility 2

(5,107)




Adjusted free cash flow**


$ 158,891


**  Denotes non-GAAP financial measures.  Please see pages A-11 and 12 for additional information about our reasons for providing these alternative financial measures and limitations on their use.


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

2  Represents the net change in borrowings available from the securitization of eligible vacation ownership notes receivable through the warehouse credit facility between the 2015 and 2016 year ends.   

 

A-10

MARRIOTT VACATIONS WORLDWIDE CORPORATION

(In millions, except per share amounts)

2017 ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE - DILUTED OUTLOOK














Fiscal Year
2017 (low)


Fiscal Year
2017 (high)

Net income



$           139


$            148


Adjustments to reconcile Net income to Adjusted net income


-


-



Adjusted net income**


$           139


$            148










Earnings per share - Diluted 1


$          4.97


$           5.29


Adjusted earnings per share - Diluted**, 1


$          4.97


$           5.29


Diluted shares1


28.0


28.0


1      Earnings per share - Diluted, Adjusted earnings per share - Diluted, and Diluted shares outlook includes the impact of share repurchase activity only through February 23, 2017.

_________________________________________________________________________________

2017 ADJUSTED EBITDA OUTLOOK














Fiscal Year
2017 (low)


Fiscal Year
2017 (high)

Net income


$           139


$            148

Interest expense1


7


7

Tax provision


90


96

Depreciation and amortization


23


23


EBITDA **



259


274

Non-cash share-based compensation


17


17


Adjusted EBITDA**


$           276


$            291


1   Interest expense excludes consumer financing interest expense.

_________________________________________________________________________________

2017 ADJUSTED FREE CASH FLOW OUTLOOK






Fiscal Year
2017 (low)


Fiscal Year
2017 (high)

Net cash provided by operating activities


$           110


$            125


Capital expenditures for property and equipment (excluding inventory):







New sales centers 1


(11)


(9)



Other



(27)


(25)


Increase in restricted cash


(12)


(11)


Borrowings from securitization transactions


330


340


Repayment of debt related to securitizations

(250)


(260)




Free cash flow**


140


160

Adjustments:







Net change in borrowings available from the securitization of eligible vacation ownership notes receivable through the warehouse credit facility 2


20


20









Adjusted free cash flow**


$           160


$            180


1  Represents the incremental investment in new sales centers.

2  Represents the net change in borrowings available from the securitization of eligible vacation ownership notes receivable through the warehouse credit facility between the 2016 and 2017 year ends.   

**  Denotes non-GAAP financial measures.  Please see pages A-11 and A-12 for additional information about our reasons for providing these alternative financial measures and limitations on their use.

 

A-11

MARRIOTT VACATIONS WORLDWIDE CORPORATION

NON-GAAP FINANCIAL MEASURES
















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
















Adjusted Net Income.   We evaluate non-GAAP financial measures, including Adjusted Net Income, Adjusted EBITDA, and Adjusted Development Margin, that exclude certain items in the 12 weeks and 52 weeks Ended December 30, 2016 and January 1, 2016 because these non-GAAP financial measures allow for period-over-period comparisons of our on-going core operations before the impact of these items.  These non-GAAP financial measures also facilitate our comparison of results from our on-going core operations before these items with results from other vacation ownership companies.
















        Certain items - 16 Weeks and 52 Weeks Ended December 30, 2016.  In our Statement of Income for the 16 weeks ended December 30, 2016, we recorded $1.5 million of net pre-tax items, which included $1.4 million of Hurricane Matthew related expenses, $0.2 million of transaction costs associated with acquisitions, and $0.1 million of gains and other income not associated with our on-going core operations. In our Statement of Income for the 52 weeks Ended December 30, 2016, we recorded $5.0 million of net pre-tax items, which included $11.2 million of gains and other income not associated with our on-going core operations, $4.9 million of transaction costs associated with acquisitions, $1.4 million of Hurricane Matthew related expenses, $0.2 million of losses (including $0.5 million of depreciation) from the operations of the property we acquired in Australia in 2015 that we sold in the second quarter of 2016, and a $0.3 million reversal of litigation settlement expense.
















        Certain items - 16 Weeks and 52 Weeks Ended January 1, 2016In our Statement of Income for the 16 weeks ended January 1, 2016, we recorded $2.4 million of net pre-tax items, which included $2.0 million of transaction costs associated with acquisitions,  $0.4 million of organizational and separation related costs, $0.3 million of income (net of $1.3 million of depreciation) from the operations of the property we acquired in Australia in 2015 that we sold in the second quarter of 2016, a $0.3 million impairment associated with a project in our North America segment, and $0.1 million of gains and other income not associated with our on-going core operations. In our Statement of Income for the 52 weeks Ended January 1, 2016, we recorded $4.3 million of net pre-tax items, which included $9.6 million of gains and other income not associated with our on-going core operations, $8.4 million of transaction costs associated with acquisitions, $5.9 million of development profit from the disposition of units in Macau as whole ownership residential units rather than through our Marriott Vacation Club, Asia Pacific points program, a $1.8 million adjustment for refurbishment costs at a project in our North America segment, $1.2 million of organizational and separation related costs, $0.3 million of income (net of $1.3 million of depreciation) from the operations of the property we acquired in Australia in 2015 that we sold in the second quarter of 2016, a $0.3 million impairment associated with a project in our North America segment, and a $0.2 million reversal of litigation settlement expense.
















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

 

A-12

MARRIOTT VACATIONS WORLDWIDE CORPORATION

NON-GAAP FINANCIAL MEASURES


Earnings Before Interest Expense, Taxes, Depreciation and Amortization ("EBITDA") and Adjusted EBITDA.  EBITDA is defined as earnings, or net income, before interest expense (excluding consumer financing interest expense), provision for income taxes, depreciation and amortization.  For purposes of our EBITDA and Adjusted EBITDA calculations, we do not adjust for consumer financing interest expense because the associated debt is secured by vacation ownership notes receivable that have been sold to bankruptcy remote special purpose entities and is generally non-recourse to us.  Further, we consider consumer financing interest expense to be an operating expense of our business.  We consider EBITDA and Adjusted EBITDA to be indicators of operating performance, which we use to measure our ability to service debt, fund capital expenditures and expand our business. We also use EBITDA and Adjusted EBITDA, as do analysts, lenders, investors and others, because these measures exclude certain items that can vary widely across different industries or among companies within the same industry.  For example, interest expense can be dependent on a company's capital structure, debt levels and credit ratings.  Accordingly, the impact of interest expense on earnings can vary significantly among companies.  The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate.  As a result, effective tax rates and provision for income taxes can vary considerably among companies.  EBITDA and Adjusted EBITDA also exclude depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets.  These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. Adjusted EBITDA reflects additional adjustments for certain items, as itemized in the discussion of Adjusted Net Income above, including, beginning with the first quarter of 2016, the exclusion of non-cash share-based compensation expense to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted. Prior period presentation has been recast for consistency. We evaluate Adjusted EBITDA as an indicator of operating performance because it allows for period-over-period comparisons of our on-going core operations before the impact of the excluded items.  Together, EBITDA and Adjusted EBITDA facilitate our comparison of results from our on-going core operations before the impact of these items with results from other vacation ownership companies.


Free Cash Flow and Adjusted Free Cash Flow.  We evaluate Free Cash Flow and Adjusted Free Cash Flow as liquidity measures that provide useful information to management and investors about the amount of cash provided by operating activities after capital expenditures for property and equipment, changes in restricted cash, and the borrowing and repayment activity related to our securitizations, which cash can be used for strategic opportunities, including acquisitions and strengthening the balance sheet. Adjusted Free Cash Flow, which reflects additional adjustments to Free Cash Flow for the impact of organizational and separation related, litigation, and other cash charges, allows for period-over-period comparisons of the cash generated by our business before the impact of these items.  Analysis of Free Cash Flow and Adjusted Free Cash Flow also facilitates management's comparison of our results with our competitors' results.

 

A-13

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)













December 30, 2016


January 1, 2016

ASSETS




Cash and cash equivalents

$                   147,102


$             177,061

Restricted cash (including $27,525 and $26,884 from VIEs, respectively)

66,000


71,451

Accounts and contracts receivable, net (including $4,865 and $4,893 from VIEs, respectively)

161,733


131,850

Vacation ownership notes receivable, net (including $717,543 and $669,179 from VIEs, respectively)

972,311


920,631

Inventory

712,536


669,243

Property and equipment

202,802


288,803

Other

128,935


140,679

      Total Assets

$                2,391,419


$          2,399,718






LIABILITIES AND EQUITY




Accounts payable

$                   124,439


$             139,120

Advance deposits

55,542


49,128

Accrued liabilities (including $584 and $669 from VIEs, respectively)

147,469


163,632

Deferred revenue

95,495


78,196

Payroll and benefits liability

95,516


104,331

Deferred compensation liability

62,874


51,031

Mandatorily redeemable preferred stock of consolidated subsidiary, net

-


38,989

Debt, net (including $738,362 and $684,604 from VIEs, respectively)

737,224


678,793

Other

15,873


11,155

Deferred taxes

149,168


109,076

      Total Liabilities

1,483,600


1,423,451






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

-


-

Common stock - $.01 par value; 100,000,000 shares authorized; 36,633,868 and 36,393,800 shares issued, respectively

366


364

Treasury stock - at cost; 9,643,562 and 6,844,256 shares, respectively

(606,631)


(429,990)

Additional paid-in capital

1,162,283


1,150,731

Accumulated other comprehensive income

5,460


11,381

Retained earnings

346,341


243,781

      Total Equity

907,819


976,267






      Total Liabilities and Equity

$                2,391,419


$          2,399,718


The abbreviation VIEs above means Variable Interest Entities.

 

A-14

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)








52 Weeks Ended



December 30, 2016


January 1, 2016

OPERATING ACTIVITIES




Net income

$137,348


$122,799

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





Depreciation

21,044


22,217


Amortization of debt issuance costs

6,509


5,586


Provision for loan losses

47,292


33,083


Share-based compensation

13,949


14,142


Employee stock purchase plan

1,317


560


Deferred income taxes

38,834


28,162


Gain on disposal of property and equipment, net

(11,201)


(9,557)


Non-cash litigation settlement

(303)


(262)


Impairment charges

-


324


Net change in assets and liabilities:





Accounts and contracts receivable

(30,055)


(24,189)


Notes receivable originations

(356,859)


(311,195)


Notes receivable collections

253,622


270,170


Inventory

4,301


72,158


Purchase of operating properties for future conversion to inventory

-


(61,554)


Other assets

11,092


(10,648)


Accounts payable, advance deposits and accrued liabilities

(19,905)


23,461


Deferred revenue

17,664


(5,289)


Payroll and benefit liabilities

(6,933)


11,380


Liability for Marriott Rewards customer loyalty program

(37)


(89,251)


Deferred compensation liability

11,843


9,354


Other liabilities

1,863


2,974


Other, net

(1,213)


4,609






                 Net cash provided by operating activities

140,172


109,034

INVESTING ACTIVITIES





Capital expenditures for property and equipment (excluding inventory)

(34,770)


(35,735)


Purchase of operating property to be sold

-


(47,658)


Decrease in restricted cash

4,838


37,681


Dispositions, net

68,953


20,644







           Net cash provided by (used in) investing activities

39,021


(25,068)

FINANCING ACTIVITIES





Borrowings from securitization transactions

376,622


255,000


Repayment of debt related to securitization transactions

(322,864)


(278,427)


Borrowings from Revolving Corporate Credit Facility

85,000


-


Repayment of Revolving Corporate Credit Facility

(85,000)


-


Proceeds from vacation ownership inventory arrangement

-


5,375


Debt issuance costs

(4,065)


(5,335)


Repurchase of common stock

(177,830)


(201,380)


Redemption of mandatorily redeemable preferred stock of consolidated subsidiary

(40,000)


-


Payment of dividends

(34,195)


(23,793)


Proceeds from stock option exercises

7


97


Excess tax benefits from share-based compensation

1,207


9,380


Payment of withholding taxes on vesting of restricted stock units

(4,021)


(10,894)


Other

187


230






                 Net cash used in financing activities

(204,952)


(249,747)







Effect of changes in exchange rates on cash and cash equivalents

(4,200)


(3,673)






DECREASE IN CASH AND CASH EQUIVALENTS

(29,959)


(169,454)






CASH AND CASH EQUIVALENTS, beginning of period

177,061


346,515






CASH AND CASH EQUIVALENTS, end of period

$147,102


$177,061

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/marriott-vacations-worldwide-reports-fourth-quarter-and-full-year-2016-financial-results-and-2017-outlook-300412106.html

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