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

Feb 23, 2017

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.

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

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

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

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

(In thousands)






















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.

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

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

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

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

(In thousands)






















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, 2016.  In 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

SOURCE Marriott Vacations Worldwide

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