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Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 30, 2011	Mar. 02, 2012	Jun. 17, 2011
Document Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY
Trading Symbol	VAC
Entity Registrant Name	MARRIOTT VACATIONS WORLDWIDE CORP
Entity Central Index Key	0001524358
Current Fiscal Year End Date	--12-30
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		34,175,821
Entity Public Float			$ 0

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Dec. 30, 2011	Dec. 31, 2010	Jan. 01, 2010
REVENUES
Sales of vacation ownership products, net	$ 634	$ 635	$ 743
Resort management and other services	238	227	213
Financing	169	188	119
Rental	212	187	175
Other	29	29	34
Cost reimbursements	331	318	312
TOTAL REVENUES	1,613	1,584	1,596
EXPENSES
Cost of vacation ownership products	245	247	314
Marketing and sales	342	344	413
Resort management and other services	198	196	170
Financing and other	41	44	48
Rental	220	194	199
General and administrative	81	82	88
Interest	47	56
Restructuring			44
Royalty fee	4
Impairment	324	15	623
Cost reimbursements	331	318	312
TOTAL EXPENSES	1,833	1,496	2,211
Gains and other income	2	21	2
Equity in losses		(8)	(12)
Impairment reversals (charges) on equity investment	4	11	(138)
(LOSS) INCOME BEFORE INCOME TAXES	(214)	112	(763)
Benefit (provision) for income taxes	36	(45)	231
NET (LOSS) INCOME	(178)	67	(532)
Add: Net losses attributable to noncontrolling interests, net of tax			11
NET (LOSS) INCOME ATTRIBUTABLE TO MARRIOTT VACATIONS WORLDWIDE	$ (178)	$ 67	$ (521)
PER SHARE INFORMATION ATTRIBUTABLE TO MARRIOTT VACATIONS WORLDWIDE SHAREHOLDERS
Basic (loss) earnings per share attributable to Marriott Vacations Worldwide Shareholders	$ (5.29)	$ 2.00	$ (15.48)
Shares used in computing basic (loss) income per share	33.7	33.7	33.7
Diluted (loss) earnings per share attributable to Marriott Vacations Worldwide Shareholders	$ (5.29)	$ 2.00	$ (15.48)
Shares used in computing diluted (loss) income per share	33.7	33.7	33.7

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Dec. 30, 2011	Dec. 31, 2010
ASSETS
Cash and cash equivalents	$ 110	$ 26
Restricted cash (including $42 and $45 from VIEs, respectively)	81	66
Accounts and contracts receivable	105	100
Notes receivable (including $910 and $1,029 from VIEs, respectively)	1,149	1,254
Inventory	959	1,412
Property and equipment	285	310
Deferred taxes		333
Other (including $6 and $7 from VIEs, respectively)	157	141
Total Assets	2,846	3,642
LIABILITIES AND EQUITY
Accounts payable	145	87
Advance deposits	46	48
Accrued liabilities	121	92
Deferred revenue	29	56
Payroll and benefits liability	55	72
Liability for Marriott Rewards loyalty program	225	220
Deferred compensation liability	47	64
Mandatorily redeemable preferred stock of consolidated subsidiary	40
Debt (including $847 and $1,017 from VIEs, respectively)	850	1,022
Other (including $2 and $4 from VIEs, respectively)	76	77
Deferred taxes	78
Total Liabilities	1,712	1,738
Contingencies and Commitments (Note 11)
Preferred stock, $.01 par value; authorized 2,000,000 shares, none issued or outstanding at December 30, 2011
Common stock, $.01 par value; authorized 100,000,000 shares, 33,845,700 shares issued and outstanding at December 30, 2011
Divisional equity		1,876
Additional paid-in capital	1,117
Accumulated other comprehensive income	19	28
Retained deficit for the period subsequent to November 20, 2011	(2)
Total Equity	1,134	1,904
Total Liabilities and Equity	$ 2,846	$ 3,642

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions	Dec. 30, 2011	Dec. 31, 2010
Restricted cash	$ 81	$ 66
Notes receivable	1,149	1,254
Other assets	157	141
Debt	850	1,022
Other liabilities	$ 76	$ 77
Preferred stock, par value	$ 0.01
Preferred stock, authorized shares	2,000,000
Preferred stock, issued
Preferred stock, outstanding
Common stock, par value	$ 0.01
Common stock, authorized shares	100,000,000
Common stock, shares issued	33,845,700
Common stock, shares outstanding	33,845,700
Variable Interest Entity
Restricted cash	$ 42	$ 45
Notes receivable	910	1,029
Other assets	6	7
Debt	847	1,017
Other liabilities	$ 2	$ 4

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	12 Months Ended
	Dec. 30, 2011	Dec. 31, 2010	Jan. 01, 2010
OPERATING ACTIVITIES
Net (loss) income	$ (178)	$ 67	$ (532)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	33	35	42
Amortization of debt issuance costs	4	4
Provision for loan losses	37	51	12
Increase in fair value of retained interests in securitizations			(23)
Share-based compensation	11	10	10
Gain on disposal of property and equipment, net	(2)	(21)	(2)
Deferred income taxes	(57)	74	(214)
Equity method loss		8	12
Impairment charges	324	15	623
Impairment (reversals) charges on equity investment	(4)	(11)	138
Non-cash restructuring charges			44
Net change in assets and liabilities:
Accounts and contracts receivable	(3)	2	42
Notes receivable	66	95	253
Inventory	113	64	9
Other assets	(24)	2	(26)
Accounts payable, advance deposits and accrued liabilities	48	(19)	(93)
Liability for Marriott Rewards loyalty program	5	(35)	(6)
Deferred revenue	(28)	(2)	(12)
Payroll and benefit liabilities	(25)	16	(34)
Deferred compensation liability	1	3	8
Other liabilities		14	(72)
Other, net		7	2
Net cash provided by operating activities	321	379	181
INVESTING ACTIVITIES
Capital expenditures for property and equipment (excluding inventory)	(15)	(24)	(28)
Note advances			(32)
Note collections	20		6
(Increase) decrease in restricted cash	(15)	17	6
Dispositions	19	46	1
Net cash provided by (used in) investing activities	9	39	(47)
FINANCING ACTIVITIES
Borrowings from securitization transactions	125	218
Repayment of debt related to securitizations	(295)	(323)
Borrowings on Revolving Corporate Credit Facility	1
Repayments on Revolving Corporate Credit Facility	(1)
Debt issuance costs	(10)	(3)
Repayment of third party debt	(2)	(52)	(28)
Net distribution to Marriott International	(64)	(264)	(100)
Net cash used in financing activities	(246)	(424)	(128)
INCREASE (DECREASE) IN CASH AND EQUIVALENTS	84	(6)	6
CASH AND CASH EQUIVALENTS, beginning of year	26	32	26
CASH AND CASH EQUIVALENTS, end of year	110	$ 26	$ 32
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES
Non-cash settlement of transactions with Marriott International through equity	478
Equity distribution payable to Marriott International	(23)
Preferred Stock
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES
Issuance stock	40
Common Stock
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES
Issuance stock	$ 1

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($)
$ in Millions

Total

Common Stock

Divisional Equity

Additional Paid-In Capital

Accumulated Other Comprehensive Income (Loss)

Retained Deficit

Non- Controlling Interest, Net of Tax

Balance at Jan. 02, 2009

$ 2,846

$ 2,814

$ 21

$ 11

Net (loss) income

(532)

(521)

(11)

Currency translation adjustments

(1)

Comprehensive income (loss)

(533)

(521)

(1)

$ (11)

Net transfers to Parent

(90)

Balance (Scenario, Previously Reported) at Jan. 01, 2010

2,223

2,203

Balance (Restatement Adjustment, Accounting Standards Update 2009-17)

^[1]

(141)

Balance at Jan. 01, 2010

2,082

2,062

Net (loss) income

Currency translation adjustments

Comprehensive income (loss)

Net transfers to Parent

(253)

Balance at Dec. 31, 2010

1,904

1,876

Net (loss) income

(178)

(176)

$ (2)

Currency translation adjustments

(9)

Comprehensive income (loss)

(187)

(176)

(9)

(2)

Issuance of common stock (in shares)

34,000,000

Issuance of common stock

$ 1

Reclassification of Parent Company investment to additional paid-in capital

^[2]

(1,113)

1,113

Net distribution to Marriott International

$ (587)

Balance (in shares) at Dec. 30, 2011

33,845,700

34,000,000

Balance at Dec. 30, 2011

$ 1,134

$ 1,117

$ 19

$ (2)

[1]	The abbreviation ASC means Accounting Standards Codification, and the abbreviation ASU means Accounting Standards Update.
[2]	Upon the effective date of the Spin-Off, Marriott Vacations Worldwide's Divisional Equity was reclassified and allocated between common stock and additional paid-in capital based on the number of shares of Marriott Vacations Worldwide common stock issued and outstanding.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 30, 2011

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our Business

Marriott Vacations Worldwide Corporation (“Marriott Vacations Worldwide,” “we” or “us,” which includes our consolidated subsidiaries except where the context of the reference is to a single corporate entity) is the exclusive worldwide developer, marketer, seller and manager of vacation ownership and related products under the Marriott Vacation Club and Grand Residences by Marriott brands. We are also the exclusive global developer, marketer and seller of vacation ownership and related products under the Ritz-Carlton Destination Club brand, and we have the non-exclusive right to develop, market and sell whole ownership residential products under the Ritz-Carlton Residences brand. The Ritz-Carlton Hotel Company, L.L.C. (“Ritz-Carlton”), a subsidiary of Marriott International, Inc. (“Marriott International”) generally provides on-site management for Ritz-Carlton branded properties.

Our business is grouped into four segments: North America, Luxury, Europe and Asia Pacific. We operate 64 properties (under 71 separate resort management contracts) in the United States and eight other countries and territories.

We generate most of our revenues from four primary sources: selling vacation ownership products, managing our resorts, financing consumer purchases, and renting vacation ownership inventory.

Our Spin-Off from Marriott International, Inc.

On October 25, 2011, the board of directors of Marriott International approved the spin-off of its vacation ownership division into an independent public company, Marriott Vacations Worldwide, through the distribution of 100 percent of the outstanding shares of Marriott Vacations Worldwide common stock to the shareholders of Marriott International (the “Spin-Off”). On November 21, 2011, the Spin-Off of Marriott Vacations Worldwide was completed pursuant to a Separation and Distribution Agreement (the “Separation and Distribution Agreement”) between Marriott Vacations Worldwide and Marriott International.

Prior to the Spin-Off, Marriott International completed an internal reorganization to contribute its non-U.S. and U.S. subsidiaries that conducted its vacation ownership business to Marriott Vacations Worldwide, a newly formed wholly owned subsidiary of Marriott International; the contributed subsidiaries included Marriott Ownership Resorts, Inc., which does business under the name Marriott Vacation Club International and is now our wholly owned subsidiary. The distribution of Marriott Vacations Worldwide common stock was made on November 21, 2011, with Marriott International shareholders receiving one share of Marriott Vacations Worldwide common stock for every ten shares of Marriott International common stock held as of the close of business Eastern time on the record date of November 10, 2011. Fractional shares of Marriott Vacations Worldwide common stock were not distributed; any fractional share of Marriott Vacations Worldwide common stock otherwise issuable to a Marriott International shareholder was sold in the open market on such shareholder’s behalf, with such shareholders receiving a cash payment in lieu of such fractional share.

In connection with the Spin-Off, we entered into the Separation and Distribution Agreement and several other agreements which govern the ongoing relationship between Marriott Vacations Worldwide and Marriott International. See Footnote No. 21 “Related Party Transactions,” for further information on the ongoing relationship with Marriott International.

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include 100 percent of the assets, liabilities, revenues, expenses and cash flows of Marriott Vacations Worldwide, all entities in which Marriott Vacations Worldwide has a controlling voting interest (“subsidiaries”), and those variable interest entities for which Marriott Vacations Worldwide is the primary beneficiary in accordance with the consolidation accounting guidance. Through the date of the Spin-Off, these financial statements present the historical consolidated results of operations, financial position and cash flows of the Marriott Vacations Worldwide business that now comprises our operations. Intercompany accounts and transactions between consolidated companies have been eliminated in consolidation.

Through the date of the Spin-Off, the consolidated financial statements presented herein, and discussed below, were prepared on a stand-alone basis and were derived from the consolidated financial statements and accounting records of Marriott International. These consolidated financial statements were prepared as if the reorganization described under “Our Spin-Off from Marriott International, Inc.” above had taken place as of the earliest period presented. The consolidated financial statements reflect our historical financial position, results of operations and cash flows as we have historically operated, in conformity with United States Generally Accepted Accounting Principles (“GAAP”). All significant intracompany transactions and accounts within these Consolidated Financial Statements have been eliminated.

Prior to the Spin-Off, Marriott Vacations Worldwide was a subsidiary of Marriott International. The financial information included herein may not necessarily reflect our financial position, results of operations and cash flows in the future or what our financial position, results of operations and cash flows would have been had we been an independent, publicly traded company during all of the periods presented.

Our fiscal year ends on the Friday nearest to December 31. The fiscal years in the following table have 52 weeks. Unless otherwise specified, each reference to a particular year in these financial statements means the fiscal year ended on the date shown in the following table, rather than the corresponding calendar year:


Fiscal Year		Fiscal Year-End Date
2011		December 30, 2011
2010		December 31, 2010
2009		January 1, 2010

We refer throughout to (i) our Consolidated Financial Statements as our “Financial Statements,” (ii) our Consolidated Statements of Operations as our “Statements of Operations,” (iii) our Consolidated Balance Sheets as our “Balance Sheets,” (iv) our Consolidated Statements of Cash Flows as our “Cash Flows” and (v) Accounting Standards Update (“ASU”) No. 2009-17, “Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities” (“ASU No. 2009-17”), which we adopted on the first day of the 2010 fiscal year, as the new “Consolidation Standard.”

In accordance with the guidance for noncontrolling interests in consolidated financial statements, references in these Financial Statements to net income (loss) and Divisional Equity do not include noncontrolling interests (previously known as minority interests), which we report separately.

All significant transactions between us and Marriott International have been included in these Financial Statements. The total net effect of the settlement of these intercompany transactions prior to the Spin-Off is reflected in the Cash Flows as a financing activity and in the Balance Sheets as Divisional Equity. In connection with the Spin-Off, we completed certain transactions with Marriott International related to our separation from Marriott International, which resulted in a net reduction to our equity of approximately $500 million. These transactions primarily consisted of the reversal of our deferred tax assets, which were retained by Marriott International following the Spin-Off, and establishment of deferred tax liabilities. Retained earnings represents the results of operations subsequent to November 20, 2011.

Through the date of the Spin-Off our Financial Statements include costs for services provided by Marriott International including, but not limited to, information technology support, systems maintenance, telecommunications, accounts payable, payroll and benefits, human resources, self-insurance and other shared services. Historically, these costs were charged to us based on specific identification or on a basis determined by Marriott International to reflect a reasonable allocation to us of the actual costs incurred to perform these services. Marriott International allocated indirect general and administrative costs to us for certain functions provided by Marriott International. The services provided to us included, but were not limited to, executive office, legal, tax, finance, government and public relations, internal audit, treasury, investor relations, human resources and other administrative support, which were allocated to us primarily on the basis of our proportion of Marriott International’s overall revenue. We consider the basis on which the expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefit received by us during the periods presented. The allocations may not, however, reflect the expense we would have incurred as an independent, publicly traded company for the periods presented. Actual costs that might have been incurred had we been a stand-alone company would depend on a number of factors, including the chosen organizational structure, what functions we might have performed ourselves or outsourced and strategic decisions we might have made in areas such as information technology and infrastructure. Following the Spin-Off, we perform these functions using our own resources or purchased services from either Marriott International or third parties. For an interim period some of these functions will continue to be provided by Marriott International under Transition Services Agreements (“TSAs”). In addition to the TSAs, we entered into a number of commercial agreements with Marriott International in connection with the Spin-Off, many of which have terms longer than one year. These agreements may not have existed prior to the Spin-Off, or may be on different terms than the terms of agreements that existed prior to Spin-Off. Refer to Footnote No. 21, “Related Party Transactions,” for further discussion related to agreements entered into effective as of the Spin-Off.

Marriott International uses a centralized approach to U.S. domestic cash management and financing of its operations. Prior to the Spin-Off, the majority of our domestic cash was transferred to Marriott International daily and Marriott International funded our operating and investing activities as needed. Accordingly, the cash and cash equivalents held by Marriott International at the corporate level were not allocated to us for any of the periods prior to the Spin-Off presented. Prior to the Spin-Off, cash and cash equivalents in our Balance Sheets primarily represented cash held locally by international entities included in our Financial Statements. We reflected transfers of cash to and from Marriott International’s domestic cash management system as a component of Divisional Equity on the Balance Sheets. We included debt incurred from our limited direct financing and historical notes receivable securitizations on our Balance Sheets, as this debt is specific to our business. Marriott International did not allocate a portion of its external senior debt interest cost to us since none of the external senior debt recorded by Marriott International was directly related to our business. We also did not include any interest expense for cash advances from Marriott International since historically Marriott International did not allocate any interest expense related to intercompany advances to any of the historical Marriott International divisions.

Marriott International maintains self-insurance programs at a corporate level. Marriott International allocated a portion of expenses associated with these programs to us as part of the historical costs for services Marriott International provided. In connection with the Spin-Off, Marriott International did not allocate any portion of the related reserves as these reserves represent obligations of Marriott International which are not transferable. See Footnote No. 21, “Related Party Transactions,” for further description of our transactions with Marriott International.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates include, but are not limited to, revenue recognition, inventory valuation, property and equipment valuation, loan loss reserves, valuation of investments in ventures, residual interests valuation, Marriott Rewards customer loyalty program liabilities, equity-based compensation, income taxes, loss contingencies and restructuring charge reserves. Actual amounts may differ from these estimated amounts.

Restatement of Prior Year Cash Flow Activity Classification

While preparing our Cash Flows for the year ended December 30, 2011, we discovered errors in the presentation of certain items within our prior periods. Consequently, we have restated the accompanying Cash Flows for the years ended December 31, 2010 and January 1, 2010, appearing herein, from amounts previously reported to correct the prior period misstatements for these classification errors. Based on our evaluation of relevant quantitative and qualitative factors, we determined the identified misstatements are immaterial to our individual prior period Financial Statements.

The tables below summarize the effect of the restatement of the previously reported Cash Flow activities for the years ended December 31, 2010 and January 1, 2010.


*($ in millions)*	For the Year Ended December 31, 2010
*($ in millions)*	As Previously Reported			Adjustment			As Restated
OPERATING ACTIVITIES
Share-based compensation	$	—		$	10		$	10
All other, including working capital changes		45			(14	)		31
Net cash provided by operating activities	$	383		$	(4	)	$	379

INVESTING ACTIVITIES
Other	$	(1	)	$	1		$	—
Decrease in restricted cash		—			17			17
Net cash provided by investing activities	$	21		$	17		$	39

FINANCING ACTIVITIES
Debt issuance costs	$	—		$	(3	)	$	(3	)
Net distribution to Marriott International		(253	)		(11	)		(264	)
Net cash provided by investing activities	$	(410	)	$	(14	)	$	(424	)


*($ in millions)*	For the Year Ended January 1, 2010
*($ in millions)*	As Previously Reported			Adjustment			As Restated
OPERATING ACTIVITIES
Share-based compensation	$	—		$	10		$	10
All other, including working capital changes		7			(6	)		1
Net cash provided by operating activities	$	177		$	4		$	181

INVESTING ACTIVITIES
Note advances	$	—		$	(32	)	$	(32	)
Note collections		—			6			6
Decrease in restricted cash		—			6			6
Net cash provided by investing activities	$	(27	)	$	(20	)	$	(47	)

FINANCING ACTIVITIES
Note advances	$	(32	)	$	32		$	—
Note collections		6			(6	)		—
Net distribution to Marriott International		(90	)		(10	)		(100	)
Net cash provided by investing activities	$	(144	)	$	16		$	(128	)

We have also reclassified certain prior year amounts to conform to our 2011 presentation.

Adoption of New Accounting Standard Resulting in Consolidation of Special Purpose Entities

On January 2, 2010, the first day of our 2010 fiscal year, we adopted the new Consolidation Standard.

We use certain bankruptcy remote special purpose entities to securitize notes receivable originated with the sale of vacation ownership products, which prior to our adoption of the new Consolidation Standard were treated as off-balance sheet entities. We retain the servicing rights and varying subordinated interests (“residual interests”) in the securitized notes receivable. Pursuant to GAAP in effect prior to 2010, we did not consolidate these special purpose entities in our Financial Statements because the notes receivable securitization transactions were executed through qualified special purpose entities and qualified as sales of financial assets. As a result of adopting the new Consolidation Standard on the first day of 2010, we consolidated 13 existing qualifying special purpose entities associated with past notes receivable securitization transactions.

We recorded the cumulative effect of adopting this standard in 2010. This consisted primarily of re-establishing the notes receivable (net of reserves) that we had transferred to special purpose entities as a result of the notes receivable securitization transactions, eliminating residual interests that we initially recorded in connection with those transactions (and subsequently revalued on a periodic basis), the impact of recording debt obligations associated with third-party interests held in the special purpose entities, and related adjustments to inventory balances accounted for using the relative sales value method. Through application of the relative sales value method, we adjusted the projected revenues to include anticipated future revenue from the resale of inventory that we expect to reacquire when we foreclose on defaulted notes receivable, thus reducing the inventory balance.

Adopting the new Consolidation Standard had the following after-tax impact on our Balance Sheet at January 2, 2010:


($ in millions)	Implementation Impact
Assets
Restricted cash	$	49
Notes receivable		986
Inventory		100
Retained interests in notes receivable securitized		(267	)
Other		107

Total Assets	$	975

Liabilities
Accounts payable	$	5
Debt		(1,121	)

Total Liabilities		(1,116	)
Divisional Equity, net of tax		141

Total Liabilities and Divisional Equity	$	(975	)

Adopting the new Consolidation Standard also impacted our 2011 and 2010 Statements of Operations when compared to 2009 by increasing interest income (reflected in Financing revenues) from securitized notes receivable and increasing interest expense from consolidation of debt obligations, partially offset by the absence of accretion income on eliminated residual interests and gain on notes receivable that were ultimately securitized. We do not expect to recognize gains or losses from future securitizations of our notes receivable as a result of adopting this standard. The impact to our Cash Flows at January 2, 2010, as a result of adopting this standard was insignificant as the associated increases in assets and liabilities were primarily non-cash.

Revenue Recognition

Sales of Vacation Ownership Products

We market and sell real estate and in substance real estate in our four segments. Real estate and in substance real estate include deeded vacation ownership products, deeded beneficial interests, rights to use real estate, and other interests in trusts that solely hold real estate and deeded whole ownership units in residential buildings. Within the Luxury segment, we also market and sell residential stand-alone structures at certain properties on a limited basis.

Our sales of vacation ownership products may be made for cash or we may provide financing. We generally do not provide financing on sales of whole ownership products. Except for revenue from the sale of residential stand-alone structures, which we recognize upon transfer of title to a third party, we recognize revenue when all of the following exist or are true: the customer has executed a binding sales contract, the statutory rescission period has expired (after which time the purchasers are not entitled to a refund except for non-delivery by us), we have deemed the receivable collectible and the remainder of our obligations are substantially completed. In addition, before we recognize any revenues, the purchaser must have met the initial investment criteria and, as applicable, the continuing investment criteria. A purchaser has met the initial investment criteria when we receive a minimum downpayment. In accordance with the guidance for accounting for real estate time-sharing transactions, we must also take into consideration the fair value of certain incentives provided to the purchaser when assessing the adequacy of the purchaser’s initial investment. In those cases where we provide financing to the purchaser, the purchaser must be obligated to remit monthly payments under financing contracts that represent the purchaser’s continuing investment.

If construction of the purchased vacation ownership product is not complete, we apply the percentage-of-completion (“POC”) method of accounting provided that the preliminary construction stage is complete and that a minimum sales level has been met (to ensure that the property will not revert to a rental property). We deem the preliminary stage of development to be complete when the engineering and design work is complete, the construction contracts have been executed, the site has been cleared, prepared and excavated, and the building foundation is complete. We determine completion percentage by comparing the proportion of inventory costs incurred to total estimated costs. We base these estimated costs on our historical experience, market conditions and the related contractual terms. The remaining revenues and related costs of sales, including commissions and direct expenses, are deferred and recognized as the remaining costs are incurred.

Resort Management and Other Services Revenues

Resort management and other services revenues consist primarily of ancillary revenues and management fees. Ancillary revenues consist of goods and services that are sold or provided by us at restaurants, golf courses and other retail and service outlets located at developed resorts. We recognize ancillary revenue when goods have been provided and/or services have been rendered.

We provide day-to-day-management services, including housekeeping services, operation of a reservation system, maintenance and certain accounting and administrative services for property owners’ associations. We receive compensation for such management services which is generally based on either a percentage of total costs to operate such resorts or a fixed fee arrangement. We recognize revenues when earned in accordance with the terms of the contract and record them as a component of Resort management and other services revenues on our Statements of Operations. Management fee revenues were $63 million, $60 million and $56 million during 2011, 2010 and 2009, respectively.

Financing Revenues

We offer consumer financing as an option to qualifying customers purchasing vacation ownership products, which is typically collateralized by the underlying vacation ownership products. We recognize interest income on an accrual basis. The contractual terms of the financing agreements require that the contractual level of annual principal payments be sufficient to amortize the loan over a customary period for the vacation ownership product being financed, which is generally ten years. Generally, payments commence under the financing contracts 30 to 60 days after closing and upon receipt of a minimum downpayment of 10 percent. We record an estimate of uncollectible amounts at the time of the sale with a charge to the provision for loan losses, which we classify as a reduction of Sales of vacation ownership products on our Statements of Operations. Revisions to estimates of uncollectible amounts also impact the provision for loan losses and can increase or decrease revenue. We earn interest income from the financing arrangements on the principal balance outstanding over the life of the arrangement and record that interest income in Financing revenues on our Statements of Operations.

Rental Revenues

We record rental revenues when occupancy has occurred or, in the case of unused prepaid rentals, upon forfeiture.

Fee Revenues

Both Financing revenues and Resort management and other services revenues include additional fees for services we provide to our property owners’ associations, as well as certain annual and transaction based fees we charge to owners and other third parties for services. We recognize fee revenues when services have been rendered. Fee revenues included in Financing revenues were $7 million in 2011, $7 million in 2010 and $8 million in 2009, as reflected on our Statements of Operations. Fee revenues included in Resort management and other services revenues were $17 million in 2011, $10 million in 2010 and $5 million in 2009, as reflected on our Statements of Operations.

Cost Reimbursements

Cost reimbursements include direct and indirect costs that property owners’ associations and joint ventures reimbursed to us. In accordance with the accounting guidance for gross versus net presentation, we record these revenues on a gross basis. These costs primarily consist of payroll and payroll-related costs for management of the property owners’ associations and other services we provide where we are the employer. We recognize cost reimbursements when we incur the related reimbursable costs. Cost reimbursements are based upon actual expenses with no added margin.

Multiple-Element Transactions

From time to time, we enter into transactions involving multiple elements. We analyze contracts with multiple elements under the accounting guidance for revenue recognition in multiple-element arrangements. If we enter into transactions for the sale of multiple products or services, we evaluate whether the delivered elements have value to the customer on a stand-alone basis, and whether there is objective and reliable evidence of fair value for each undelivered element in the transaction. If these criteria are met, then we account for each deliverable in the transaction separately. We generally recognize revenue for undelivered elements on a straight-line basis over the contractual performance period for time-based elements or upon delivery to the customer. If we are unable to determine the fair value of one or more undelivered elements in the transaction, we recognize the revenue on a straight-line basis over the period in which the last deliverable is provided to the customer.

Multiple-element transactions require judgment to determine the selling price or fair value of the different elements. The judgments impact the amount of revenue and expenses recognized over the term of the contract, as well as the period in which they are recognized.

Inventory

Our inventory consists of completed vacation ownership products, vacation ownership products under construction and land held for future vacation ownership product development. We carry our inventory at the lower of (1) cost, including costs of improvements and amenities incurred subsequent to acquisition, capitalized interest and real estate taxes plus other costs incurred during construction, or (2) estimated fair value, less costs to sell, which can result in impairment charges and/or recoveries of previous impairments.

We account for vacation ownership inventory and cost of vacation ownership products in accordance with time-sharing accounting standards, which define a specific application of the relative sales value method for reducing vacation ownership inventory and recording cost of sales as described in our policy for revenue recognition for vacation ownership products. Also, pursuant to time-sharing accounting standards, we do not reduce inventory for cost of vacation ownership products related to anticipated credit losses (accordingly, no adjustment is made when inventory is reacquired upon default of the related receivable). These standards provide for changes in estimates within the relative sales value calculations to be accounted for as real estate inventory true-ups which are recorded in Cost of vacation ownership product expenses on the Statements of Operations to retrospectively adjust the margin previously recorded subject to those estimates. For 2011, 2010 and 2009, real estate true-ups relating to vacation ownership products increased carrying values of inventory by $2 million, $6 million and $11 million, respectively.

For residential real estate projects, we allocate costs to individual residences in the projects based on the relative estimated sales value of each residence in accordance with ASC 970, “Real Estate—General,” which defines the accounting for costs of real estate projects. Under this method, we reduce the allocated cost of a unit from inventory and recognize that cost as cost of sales when we recognize the related sale. Changes in estimates within the relative sales value calculations for residential products (similar to condominiums) are accounted for as prospective adjustments to cost of vacation ownership products.

Capitalization of Costs

We capitalize interest and certain salaries and related costs incurred in connection with the following: (1) development and construction of sales centers; (2) internally developed software; and (3) development and construction projects for our real estate inventory. We capitalize interest expense and costs clearly associated with the acquisition, development and construction of a real estate project when it is probable that we will acquire a property or an option to acquire a property. We capitalize salary and related costs only to the extent they directly relate to the project. We capitalize taxes and insurance costs when activities that are necessary to get the property ready for its intended use are underway. We cease capitalization of costs during prolonged gaps in development when substantially all activities are suspended or when projects are considered substantially complete (e.g., typically three months after a project phase receives a certificate of occupancy). Capitalized salaries and related costs totaled $11 million, $19 million and $28 million for 2011, 2010 and 2009, respectively.

Defined Contribution Plan

Marriott International administers and maintains a defined contribution plan for the benefit of all Marriott International employees meeting certain eligibility requirements who elect to participate in the plan. Contributions are determined based on a specified percentage of salary deferrals by participating employees. Our employees participated in Marriott International’s plan prior to the Spin-Off. Subsequent to the Spin-Off, our employees are no longer eligible to participate in Marriott International’s defined contribution plan, and we established a comparable defined contribution plan. We recognized compensation expense (net of cost reimbursements from property owners’ associations) for our participating employees totaling $6 million in 2011, $6 million in 2010 and $8 million in 2009. Of the $6 million compensation expense we recognized in 2011, $5 million was recognized prior to the Spin-Off and was associated with the Marriott International defined contribution plan and $1 million was recognized subsequent to the Spin-Off and was associated with our newly established defined contribution plan.

Property and Equipment

Property and equipment includes our sales centers, golf courses, information technology and other assets used in the normal course of business, as well as land parcels that are not part of our approved development plan. We record property and equipment at cost, including interest and real estate taxes incurred during active development. We capitalize the cost of improvements that extend the useful life of property and equipment when incurred. These capitalized costs may include structural costs, equipment, fixtures, floor and decorative items and signage. We expense all repair and maintenance costs as incurred. We compute depreciation using the straight-line method over the estimated useful lives of the assets (three to forty years), and we amortize leasehold improvements over the shorter of the asset life or lease term.

Marriott Rewards Customer Loyalty Program

We participate in the Marriott Rewards customer loyalty program and we offer Marriott Reward points, or “points,” as incentives to purchase vacation ownership products and/or through exchange and other activities. Marriott International maintains and administers this program and points cannot be redeemed for cash.

Our liability represents the net present value of future cash outlays that we are obligated to pay Marriott International based on actual point redemptions. We base the carrying value of this liability on a statistical model that projects the dollar value and timing of future point redemptions. The most significant estimates involve the future cost of each 1,000 redeemed points, the breakage for points that will never be redeemed, and the pace at which points are redeemed. We base our estimates for these items on our historical experience, current trends and other considerations. Actual results could differ from our projections so the actual discounted future cash outlays associated with our Marriott Rewards customer loyalty liability could differ from the amounts currently recorded.

In conjunction with the Spin-Off, we entered into a Marriott Rewards Affiliation Agreement with Marriott International and its subsidiary, Marriott Rewards, LLC. Under this agreement, we are able to continue to participate in the Marriott Rewards customer loyalty program, including the ability to issue and use Marriott Rewards Points in our business following the Spin-Off. Subsequent to the Spin-Off, our liability represents the amount that we are obligated to pay to Marriott International based on future redemptions. These future redemptions consist of actual redemptions incurred during years 2012 to 2015, with a final lump sum payment in 2016. The lump sum payment represents an estimate of the present value of anticipated future redemptions of any remaining Marriott Reward points issued in connection with our business prior to 2012. Effective beginning fiscal year 2012, we will generally pay Marriott International for Marriott Reward Points upon issuance.

The associated expense is classified in the Statements of Operations based on the source of the expense and related revenue stream. See Footnote No. 14, “Other Liabilities,” and Footnote No. 21, “Related Party Transactions,” for more information.

Guarantees

We record a liability for the fair value of a guarantee on the date we issue or modify the guarantee. The offsetting entry depends on the circumstances in which the guarantee was issued. Funding under the guarantee reduces the recorded liability. On a quarterly basis, we evaluate all material estimated liabilities based on the operating results and the terms of the guarantee. If we conclude that it is probable that we will be required to fund a greater amount than previously estimated, we will record a loss.

Cash and Cash Equivalents

We consider all highly liquid investments with an initial maturity of three months or less at the date of purchase to be cash equivalents.

Restricted Cash

Restricted cash primarily consists of cash held in a reserve account related to notes receivable securitizations; cash collected for maintenance fees to be remitted to property owners’ associations; and deposits received, primarily associated with vacation ownership products and residential sales that are held in escrow until the associated contract has closed or the period in which it can be rescinded has passed, depending on legal requirements.

Accounts and Contracts Receivable

Accounts and contracts receivable are presented net of allowances of $2 million and $1 million at year-end 2011 and 2010, respectively.

Loan Loss Reserves

Vacation Ownership Notes Receivable

We record an estimate of expected uncollectibility on all notes receivable from vacation ownership purchasers as a reduction of revenues from the sales of vacation ownership products at the time we recognize profit on a vacation ownership product sale. We fully reserve for all defaulted notes receivable in addition to recording a reserve on the estimated uncollectible portion of the remaining notes receivable. For those notes receivable not in default, we assess collectability based on pools of notes receivable because we hold large numbers of homogeneous vacation ownership notes receivable. We use the same criteria to estimate uncollectibility for non-securitized notes receivable and securitized notes receivable because they perform similarly. We estimate uncollectibility for each pool based on historical activity for similar vacation ownership notes receivable.

Although we consider loans to owners to be past due if we do not receive payment within 30 days of the due date, we suspend accrual of interest only on those that are over 90 days past due. We consider loans over 150 days past due to be in default. We apply payments we receive for notes receivable on non-accrual status first to interest, then to principal and any remainder to fees. We resume accruing interest when notes receivable are less than 90 days past due. We do not accept payments for notes receivable during the foreclosure process unless the amount is sufficient to pay all principal, interest, fees and penalties owed and fully reinstate the note. We write off uncollectible notes receivable against the reserve once we receive title of the vacation ownership products through the foreclosure or deed-in-lieu process or in Europe and Asia Pacific, when revocation is complete. At year-end 2011, we estimated an average remaining default rate of 7.71 percent for both non-securitized and securitized vacation ownership notes receivable. An increase of 0.5 percent in the estimated default rate would have resulted in an increase in our allowance for credit losses of $6 million.

For additional information on our notes receivable, including information on the related reserves, see Footnote No. 4, “Notes Receivable.”

Other Loans Receivable

On a regular basis, we individually assess other loans receivable for impairment. We use internally generated cash flow projections to determine if we expect the notes receivable will be repaid according to the terms of the loan agreements. If we conclude that it is probable that a loan will not be repaid in accordance with the loan agreement, we consider the loan impaired and begin recognizing interest income on a cash basis. To measure impairment, we calculate the present value of expected future cash flows discounted at the loan’s original effective interest rate or the estimated fair value of the collateral. If the present value or the estimated value of collateral is less than the carrying value of the note receivable, we establish a specific impairment reserve for the difference.

It is our policy to charge off notes receivable that we believe will likely not be collected based on financial or other business indicators, including our historical experience, in the quarter in which we deem the note receivable to be uncollectible.

Costs Incurred to Sell Vacation Ownership Products

We charge the majority of marketing and sales costs we incur to sell vacation ownership products to expense when incurred. Deferred marketing and selling expenses, which are direct marketing and selling costs related either to an unclosed contract or a contract for which 100 percent of revenue has not yet been recognized, were $3 million at year-end 2011 and $6 million at year-end 2010 and are included in the accompanying Balance Sheets in the Other caption within Assets.

Valuation of Property and Equipment

Property and equipment includes our sales centers, golf courses, information technology and other assets used in the normal course of business, as well as land parcels that are not part of an approved development plan and do not meet the criteria to be classified as held for sale. We test long-lived asset groups for recoverability when changes in circumstances indicate the carrying value may not be recoverable, for example, when there are material adverse changes in projected revenues or expenses, significant underperformance relative to historical or projected operating results, and significant negative industry or economic trends. We also perform a test for recoverability when management has committed to a plan to sell or otherwise dispose of an asset group and we expect the plan will be completed within a year. We evaluate recoverability of an asset group by comparing its carrying value to the future net undiscounted cash flows that we expect will be generated by the asset group. If the comparison indicates that the carrying value of an asset group is not recoverable, we recognize an impairment loss for the excess of carrying value over the estimated fair value. When we recognize an impairment loss for assets to be held and used, we depreciate the adjusted carrying amount of those assets over their remaining useful life. Refer to Footnote No. 10, “Property and Equipment,” for additional information.

For information on impairment losses that we recorded associated with long-lived assets, see Footnote No. 19, “Impairment Charges.”

Investments

We consolidate entities that we control. We account for investments in joint ventures using the equity method of accounting when we exercise significant influence over the venture. If we do not exercise significant influence, we account for the investment using the cost method of accounting. We account for investments in limited partnerships and limited liability companies using the equity method of accounting when we own more than a minimal investment. Our ownership interest in these equity method investments generally varies from 34 percent to 50 percent.

Valuation of Investments in Ventures

We evaluate an investment in a venture for impairment when circumstances indicate that the carrying value may not be recoverable due to loan defaults, significant under-performance relative to historical or projected performance, significant negative industry or economic trends, or otherwise.

We impair investments we have accounted for using the equity and cost methods of accounting when we determine that the venture has had an “other than temporary” decline in its estimated fair value as compared to its carrying value. Additionally, a change in business plans or strategies of a venture could cause us to evaluate the recoverability for the individual long-lived assets in the venture and possibly the venture itself.

We calculate the estimated fair value of an investment in a venture using the income approach. We use internally developed discounted cash flow models that include the following assumptions, among others: projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends; expected future investments; and estimated discount rates. We base these assumptions on our historical data and experience, third-party appraisals, industry projections, micro and macro general economic condition projections, and our expectations.

For information regarding impairment losses that we recorded associated with investments in ventures, see Footnote No. 20, “Significant Investments.”

Fair Value Measurements

We have various financial instruments we must measure at fair value on a recurring basis, including certain marketable securities and derivatives. See Footnote No. 5, “Fair Value Measurements,” for further information. We also apply the provisions of fair value measurement to various non-recurring measurements for our financial and non-financial assets and liabilities.

The applicable accounting standards define fair value as the price that would be received upon selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). We measure fair value of our assets and liabilities using inputs from the following three levels of the fair value hierarchy:

Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.

Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 includes unobservable inputs that reflect our assumptions about what factors market participants would use in pricing the asset or liability. We develop these inputs based on the best information available, including our own data.

Residual Interests

We periodically securitize notes receivable that we originate from the sale of vacation ownership products. We continue to service those notes receivable after securitization, transfer all proceeds collected to special purpose entities and retain servicing assets and other interests in the notes receivable. Before we adopted the new Consolidation Standard, we accounted for these residual interests as trading securities under the then-applicable standards for accounting for certain investments in debt and equity securities. At the dates of the notes receivable securitizations and at the end of each reporting period, we estimated the fair value of our residual interests using a Level 3 discounted cash flow model.

We historically measured our servicing assets using the fair value method. Under the fair value method, we carried servicing assets on the Balance Sheets at fair value and reported the changes in fair value, primarily due to changes in valuation inputs and assumptions and the collection or realization of expected cash flows, in the Financing revenues caption on our Statements of Operations in the period in which the change occurred.

As a result of our 2010 adoption of the new Consolidation Standard, we eliminated residual interests from our Balance Sheet. See the “Adoption of New Accounting Standard Resulting in Consolidation of Special Purpose Entities” caption of this footnote, Footnote No. 3, “Asset Securitizations,” and Footnote No. 5, “Fair Value Measurements,” for additional information.

Derivative Instruments

Prior to the Spin-Off, we used derivative instruments, entered into on our behalf by Marriott International, to reduce market risk due to changes in interest rates and currency exchange rates. Marriott International managed our exposure to these risks by monitoring available financing alternatives, as well as through development and application of credit granting policies. Marriott International also used derivative instruments, including cash flow hedges, net investment in non-U.S. operations hedges, fair value hedges, and other derivative instruments, as part of Marriott International’s overall strategy to manage our exposure to market risks. As a matter of policy, Marriott International only entered into transactions that Marriott International believed would be highly effective at offsetting the underlying risk and did not use derivatives for trading or speculative purposes.

At the time of the Spin-Off, only interest rate derivatives entered into as a condition of the Warehouse Credit Facility (as defined below) were outstanding. Subsequent to the Spin-Off and through December 30, 2011, we have not entered into any derivative instruments or hedges.

The designation of a derivative instrument as a hedge and its ability to meet the hedge accounting criteria determines how the change in fair value of the derivative instrument is recorded in our Financial Statements. A derivative qualifies for hedge accounting if, at inception, we expect the derivative to be highly effective in offsetting the underlying hedged cash flows or fair value and we fulfill the hedge documentation standards at the time we enter into the derivative contract. We designate a hedge as a cash flow hedge, fair value hedge, or a net investment in non-U.S. operations hedge based on the exposure we are hedging. The asset or liability value of the derivative will change in tandem with its fair value. For the effective portion of qualifying hedges, we record changes in fair value in other comprehensive income (“OCI”). We release the derivative’s gain or loss from OCI to match the timing of the underlying hedged items’ effect on earnings.

For the purposes of our Financial Statements, prior to the Spin-Off we were allocated hedges related to our business that Marriott International transacted. Then, we marked-to-market the gains and losses on the allocated hedges, recorded the effective portion in OCI, and included the ineffective portion in Financing revenues within our Statements of Operations. For cash flow hedges specific to our business, we have recorded changes in fair value in OCI. We release the derivative’s gain or loss from OCI to match the timing of the underlying hedge items’ effect on earnings.

Non-U.S. Operations

The U.S. dollar is the functional currency of our consolidated entities operating in the United States. The functional currency for our consolidated entities operating outside of the United States is generally the currency of the economic environment in which the entity primarily generates and expends cash. For consolidated entities whose functional currency is not the U.S. dollar, we translate their financial statements into U.S. dollars. We translate assets and liabilities at the exchange rate in effect as of the financial statement date and translate Statement of Operations accounts using the weighted average exchange rate for the period. We include translation adjustments from currency exchange and the effect of exchange rate changes on intercompany transactions of a long-term investment nature as a separate component of equity. We report gains and losses from currency exchange rate changes related to intercompany receivables and payables that are not of a long-term investment nature, as well as gains and losses from non-U.S. currency transactions, currently in operating costs and expenses.

Legal Contingencies

We are subject to various legal proceedings and claims in the normal course of business, the outcomes of which are subject to significant uncertainty. We record an accrual for legal contingencies when we determine that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In making such determinations we evaluate, among other things, the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, our ability to make a reasonable estimate of the loss. We review these accruals each reporting period and make revisions based on changes in facts and circumstances.

Share-Based Compensation Costs

Prior to the Spin-Off, certain of our employees participated in the Marriott International, Inc. Stock and Cash Incentive Plan (“Marriott International Stock Plan”). Marriott International compensated employees by issuing stock options, stock appreciation rights (“SARs”) and restricted stock units (“RSUs”) to them under the Marriott International Stock Plan. In conjunction with the Spin-Off, we established the Marriott Vacations Worldwide Corporation Stock and Cash Incentive Plan (“Marriott Vacations Worldwide Stock Plan”) in order to continue compensating our employees and directors by issuing stock options, SARs and RSUs to them under this plan. For the period from November 21, 2011 through December 30, 2011, our Statement of Operations includes expenses related to our employees’ participation in both the Marriott Vacations Worldwide Stock Plan and the Marriott International Stock Plan. For the period from January 1, 2011 through November 20, 2011 and the fiscal years ended 2010 and 2009, our Statements of Operations include expenses related to our employees’ participation in the Marriott International Stock Plan.

We follow the provisions of ASC 718, “Compensation—Stock Compensation” (“ASC 718”), which requires that a company measure the expense of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Generally, share-based awards granted to our employees vest ratably over a four-year period, and we recognize the expense associated with these awards in our Statements of Operations on a straight-line basis over the period during which an employee is required to provide service in exchange for the award. We measure the amount of compensation expense for share-based awards based on the fair value of the awards as of the date that the share-based awards are granted and adjust that expense to the estimated number of awards that we expect will vest. We generally determine the fair value of stock options and SARs using the Black-Scholes option valuation model which incorporates assumptions about expected volatility, risk free interest rate, dividend yield and expected term. The fair value of RSUs represents the number of awards granted multiplied by the average of the high and low market price of our common stock on the date the awards are granted. For awards granted after 2005, we recognize compensation cost for share-based awards ratably over the vesting period. See Footnote No. 16, “Share-Based Compensation,” for more information.

Advertising Costs

We expensed advertising costs as incurred of $3 million, $3 million and $4 million in 2011, 2010 and 2009, respectively. These costs are included in the Marketing and sales expense caption on our Statements of Operations.

Income Taxes

Prior to the Spin-Off from Marriott International, we did not file separate tax returns as we were included in the consolidated tax filings of other Marriott International entities within the respective entity’s tax jurisdiction. We have calculated the income tax provision included in these Financial Statements based on a separate return methodology, as if the entities were separate taxpayers in the respective jurisdictions. As a result, our deferred tax balances and effective tax rate as a stand-alone entity will likely differ significantly from those recognized historically. We will file our own consolidated U.S. federal and state income tax returns for the period subsequent to the Spin-Off, November 21, 2011 through December 30, 2011, and any required filings for non-U.S. jurisdictions based on the applicable tax year in each jurisdiction.

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

Changes in existing tax laws and rates, their related interpretations, and the uncertainty generated by the current economic environment may affect the amounts of deferred tax liabilities or the valuations of deferred tax assets over time. Our accounting for deferred tax consequences represents management’s best estimate of future events that can be appropriately reflected in the accounting estimates.

We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. In the event we determine that we would be able to realize our deferred income tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which impacts the provision for income taxes.

For tax positions we have taken, or expect to take, in a tax return we apply a more likely than not threshold, under which we must conclude a tax position is more likely than not to be sustained, assuming that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information, in order to continue to recognize the benefit. In determining our provision for income taxes, we use judgment, reflecting our estimates and assumptions, in applying the more likely than not threshold.

Prior to Spin-Off, we did not maintain taxes payable to or from Marriott International and the annual current tax balances will be settled in accordance with the Tax Sharing and Indemnification Agreement that we entered into on November 17, 2011 with Marriott International. These deemed settlements are reflected as changes in Shareholder’s Equity.

For information about income taxes and deferred tax assets and liabilities, see Footnote No. 2, “Income Taxes.”

Income (Loss) Per Common Share

Basic income (loss) per common share is calculated by dividing the earnings available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted income (loss) per common share is calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period. The dilutive effect of outstanding equity-based compensation awards is reflected in diluted income (loss) per common share by application of the treasury stock methods. For 2011, basic weighted average shares outstanding were computed using the number of shares of common stock outstanding immediately following the Spin-Off, as if such shares were outstanding for the entire period prior to the Spin-Off, plus the weighted average of such shares outstanding following the Spin-Off date through year-end 2011. For 2010 and 2009, basic and diluted weighted average shares outstanding were computed using the number of shares of common stock outstanding immediately following the Spin-Off, as if such shares were outstanding for the entire period.

New Accounting Standards

New Transfers of Financial Assets and Consolidation Standards

On the first day of 2010, we adopted ASU No. 2009-16, which amended Topic 860, “Transfers and Servicing,” by: (1) eliminating the concept of a qualifying special-purpose entity (“QSPE”); (2) clarifying and amending the criteria for a transfer to be accounted for as a sale; (3) amending and clarifying the unit of account eligible for sale accounting; and (4) requiring that a transferor initially measure at fair value and recognize all assets obtained (for example beneficial interests) and liabilities incurred as a result of a transfer of an entire financial asset or group of financial assets accounted for as a sale. In addition, this topic required us to evaluate entities for consolidation that had been treated as QSPEs under previous accounting guidance. The topic also mandated that we supplement our disclosures about, among other things, our continuing involvement with transfers of financial assets we previously accounted for as sales, the inherent risks in our retained financial assets, and the nature and financial effect of restrictions on the assets that we continue to report in our Balance Sheets.

As previously discussed herein, we also adopted the new Consolidation Standard, ASU No. 2009-17, on the first day of 2010.

Accounting Standards Update No. 2010-06 “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements” (“ASU No. 2010-06”) – Provisions Effective in the 2011 First Quarter

Certain provisions of ASU No. 2010-06 became effective during our first quarter 2011. Those provisions, which amended Subtopic 820-10, “Fair Value Measurements and Disclosures—Overall,” require us to present as separate line items all purchases, sales, issuances, and settlements of financial instruments valued using unobservable inputs (Level 3) in the reconciliation of fair value measurements, in contrast to the prior aggregate presentation as a single line item. The adoption did not have a material impact on our Financial Statements or disclosures.

Future Adoption of Accounting Standards

Accounting Standards Update No. 2011-04 – “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU No. 2011-04”)

ASU No. 2011-04 generally provides a uniform framework for fair value measurements and related disclosures between GAAP and International Financial Reporting Standards (“IFRS”). Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. ASU No. 2011-04 will be effective for interim and annual periods beginning on or after December 15, 2011, which for us will be our first quarter of 2012. We do not believe the adoption of this update will have a material impact on our Financial Statements.

Accounting Standards Update No. 2011-05 – “Comprehensive Income (Topic 220): Presentation of Comprehensive Income” (“ASU No. 2011-05”) and Accounting Standards Update No. 2011-12 – “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05” (“ASU No. 2011-12”)

ASU No. 2011-05 amends existing guidance by allowing only two options for presenting the components of net income and other comprehensive income: (1) in a single continuous financial statement, statement of comprehensive income, or (2) in two separate but consecutive financial statements, consisting of an income statement followed by a separate statement of other comprehensive income. ASU No. 2011-12 defers until further notice ASU No. 2011-05’s requirement that items that are reclassified from other comprehensive income to net income be presented on the face of the financial statements. ASU No. 2011-05 requires retrospective application, and both ASU No. 2011-05 and ASU No. 2011-12 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 (which for us will be our first quarter of 2012), with early adoption permitted. We believe the adoption of these updates will change the order in which certain financial statements are presented and will provide additional detail on those financial statements when applicable, but will not have any substantive impact on our Financial Statements.

INCOME TAXES

12 Months Ended

Dec. 30, 2011

INCOME TAXES

2. INCOME TAXES

Prior to the Spin-Off, our operating results were included in Marriott International’s combined U.S. federal and state income tax returns, as well as included in many of Marriott International’s tax filings for non-U.S. jurisdictions. Subsequent to the Spin-Off, Marriott Vacations Worldwide will file its own U.S. consolidated federal and state tax returns, as well as separate tax filings for non-U.S. jurisdictions. We have determined our provision for income taxes and our contribution to Marriott International’s tax losses and tax credits on a separate return basis and included each in these Financial Statements. Our separate return basis tax loss and tax credit carry backs may not reflect the tax positions taken or to be taken by Marriott International for tax losses occurring prior to the Spin-Off. In many cases tax losses and tax credits generated by us have been available for use by Marriott International and will largely continue to be available to Marriott International after the Spin-Off.

On November 21, 2011, we entered into a Tax Sharing and Indemnification Agreement with Marriott International (the “Tax Sharing and Indemnification Agreement”), which governs the methodology for allocating responsibility for federal, state, local and foreign income and other taxes related to taxable periods prior to and subsequent to the Spin-Off between Marriott International and Marriott Vacations Worldwide. Under this agreement, if any part of the Spin-Off fails to qualify for the tax treatment stated in the ruling Marriott International received from the U.S. Internal Revenue Service, taxes imposed will be allocated between Marriott International and Marriott Vacations Worldwide and each will indemnify and hold harmless the other from and against the taxes so allocated.

In addition, under the Tax Sharing and Indemnification Agreement, Marriott International is allocated the responsibility and payment of taxes for taxable income prior to Spin-Off and we are allocated the responsibility and payment of taxes for taxable income subsequent to Spin-Off.

The (loss)/income before provision of income taxes by geographic region is as follows:


*($ in millions)*	2011			2010		2009
United States	$	(129	)	$	88	$	(560	)
Non-U.S. jurisdictions.		(85	)		24		(203	)

	$	(214	)	$	112	$	(763	)

Our current tax provision does not reflect the benefits (costs) attributable to us for the exercise or vesting of employee share-based awards of less than $1 million in 2011, $3 million in 2010, and ($1) million in 2009.

Our benefit from (provision for) income taxes consists of:


*($ in millions)*	2011			2010			2009
Current - U.S. Federal	$	(10	)	$	39		$	17
- U.S. State		(1	)		1			1
- Non-U.S.		(10	)		(9	)		(3	)

		(21	)		31			15

Deferred - U.S. Federal		55			(68	)		169
- U.S. State		6			(7	)		33
- Non-U.S.		(4	)		(1	)		14

		57			(76	)		216

	$	36		$	(45	)	$	231

The deferred tax assets and related valuation allowances in these Financial Statements have been determined on a separate return basis. The assessment of the valuation allowances requires considerable judgment on the part of management, with respect to benefits that could be realized from future taxable income, as well as other positive and negative factors. We recorded valuation allowances against the deferred tax assets of certain foreign operations in the Netherlands, Mexico, Spain, and the U.S. Virgin Islands. We established these valuation allowances for deferred tax assets due to restructuring and impairment charges incurred (see Footnote No. 18, “Restructuring Costs and Other Charges,” and Footnote No. 19, “Impairment Charges”). The change in the valuation allowances established were $13 million in 2011 and $3 million in 2010.

We have made no provision for U.S. income taxes or additional non-U.S. taxes on the cumulative unremitted earnings of non-U.S. subsidiaries ($156 million as of year-end 2011) because we consider these earnings to be permanently invested. These earnings could become subject to additional taxes if remitted as dividends, loaned to us or a U.S. affiliate or if we sold our interests in the affiliates. We cannot practically estimate the amount of additional taxes that might be payable on the unremitted earnings.

We conduct business in countries that grant “holidays” from income taxes for five to thirty year periods. These holidays expire through 2034. Without these tax “holidays,” we would have incurred the following aggregate income taxes: $4 million in 2011, $5 million in 2010 and $1 million in 2009.

Our total unrecognized tax benefits were $2 million at year-end 2011, $1 million at year-end 2010 and $0 million at year-end 2009. Our unrecognized tax benefit reflects an increase of $1 million in 2011, an increase of $1 million in 2010, and no change in 2009 representing non-U.S. audit activity.

As a large taxpayer, Marriott International is continuously under audit by the IRS and other taxing authorities. Marriott Vacations Worldwide has joined in the Marriott International U.S. Federal tax consolidated filing for tax years 2009, 2010 and a portion of 2011 up to the date of the Spin-Off. The IRS has examined Marriott International’s federal income tax returns, and it has settled all issues for the tax years through 2009. Marriott International participated in the IRS Compliance Assurance Program (CAP) for the 2011 and 2010 tax years. Although we do not anticipate that a significant impact to our unrecognized tax benefit balance will occur during the next fiscal year as a result of these audits, it remains possible that the amount of our liability for unrecognized tax benefits could change over that time period. Pursuant to the Tax Sharing and Indemnification Agreement, Marriott International is liable and shall pay the relevant tax authority for all taxes related to the taxable income prior to the Spin-Off. Our tax year 2011, subsequent to the Spin-Off, is subject to examination by the tax authorities.

Our unrecognized tax benefit balances included tax positions of $2 million at year-end 2011, $1 million at year-end 2010, and $0 million at year-end 2009 that, if recognized, would impact our effective tax rate. We believe it is reasonably possible that our unrecognized tax benefits will decrease or be recognized in the next twelve months by up to $1 million due to the expiration of statutes of limitations, audit or appeal resolution in various tax jurisdictions.

The following table reconciles our unrecognized tax benefit balance for each year from the beginning of 2009 to the end of 2011:


*($ in millions)*	Amount
Unrecognized tax benefit at beginning of 2009	$	—
Change attributable to tax positions taken during a prior period		—
Change attributable to tax positions taken during the current period		—
Decrease attributable to settlements with taxing authorities		—
Decrease attributable to lapse of statute of limitations		—

Unrecognized tax benefit at end of 2009		—
Change attributable to tax positions taken during a prior period		1
Change attributable to tax positions taken during the current period		—
Decrease attributable to settlements with taxing authorities		—
Decrease attributable to lapse of statute of limitations		—

Unrecognized tax benefit at end of 2010		1
Change attributable to tax positions taken during a prior period		1
Change attributable to withdrawal of tax positions previously taken or expected to be taken		—
Change attributable to tax positions taken during the current period		—
Decrease attributable to settlements with taxing authorities		—
Decrease attributable to lapse of statute of limitations		—

Unrecognized tax benefit at end of 2011	$	2

In accordance with our accounting policies, we recognize accrued interest and penalties related to our unrecognized tax benefits as a component of tax expense. Related interest expense and accrued interest expense each totaled less than $1 million in each of 2011, 2010 and 2009.

Deferred Income Taxes

Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as from net operating loss and tax credit carry-forwards. We state those balances at the enacted tax rates we expect will be in effect when we actually pay or recover taxes. Deferred income tax assets represent amounts available to reduce income taxes we will pay on taxable income in future years. We evaluate our ability to realize these future tax deductions and credits by assessing whether we expect to have sufficient future taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies to utilize these future deductions and credits. We establish a valuation allowance when we no longer consider it more likely than not that a deferred tax asset will be realized.

Total deferred tax assets and liabilities as of year-end 2011 and year-end 2010 were as follows:


*($ in millions)*	At Year-End 2011			At Year-End 2010
Deferred tax assets	$	106		$	353
Deferred tax liabilities		(184	)		(20	)

Net deferred tax (liability) asset	$	(78	)	$	333

The tax effect of each type of temporary difference and carry-forward that gives rise to a significant portion of our deferred tax assets and liabilities as of year-end 2011 and year-end 2010 were as follows:


*($ in millions)*	At Year-End 2011			At Year-End 2010
Employee benefits	$	—		$	37
Inventory		(58	)		92
Reserves		(43	)		91
Deferred income		6			6
Property and equipment		(21	)		16
Vacation Ownership financing		4			—
Marriott Rewards loyalty program		—			61
Joint venture interests		—			13
Long lived intangible assets		35			—
Net operating loss carry-forwards		27			51
Other, net		25			6

Deferred tax (liability) asset		(25	)		373
Less: valuation allowance		(53	)		(40	)

Net deferred tax (liability) asset	$	(78	)	$	333

At year-end 2011, we had approximately $156 million of foreign net operating losses (excluding valuation allowances) some of which begin expiring in 2012. However, a significant portion of these tax net operating losses have an indefinite carry forward period. We have no net operating losses for federal or state tax purposes.

Reconciliation of U.S. Federal Statutory Income Tax Rate to Actual Income Tax Rate

The following table reconciles the U.S. statutory tax rate to our effective income tax rate for continuing operations:


	2011			2010			2009
U.S. statutory tax rate (benefit)/expense		(35.00	)%		35.00	%		(35.00	)%
U.S. state income taxes, net of U.S. federal tax benefit		(2.34	)		3.07			(2.88	)
Nondeductible expenses		0.17			0.05			0.01
Non-U.S. income		14.44			1.61			4.78
Non controlling interest		—			—			0.51
Change in valuation allowance		5.94			0.33			2.39

Effective rate (benefit)/expense		(16.79	)%		40.06	%		(30.19	)%

Cash taxes are included within changes in Shareholders’ Equity.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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+ Details

ASSET SECURITIZATIONS

12 Months Ended

Dec. 30, 2011

ASSET SECURITIZATIONS

3. ASSET SECURITIZATIONS

We periodically securitize, without recourse, through bankruptcy remote special purpose entities, notes receivable originated in connection with the sale of vacation ownership products. Generally, in order for a vacation ownership note receivable to be eligible for securitization, the note receivable must be associated with a North America or Luxury segment project, the loan must not be delinquent, the purchaser must have made a down-payment of at least 10 percent of the purchase price and made at least one payment on the loan, and the borrower must have a FICO score of greater than 600. We continue to service these notes receivable and transfer all proceeds collected to special purpose entities. We retain servicing agreements and other interests in the notes receivable. The executed securitization transactions typically include minimal cash reserves established at the time of a notes receivable securitization as well as default and delinquency triggers, which we monitor on a monthly basis. We may also voluntarily repurchase defaulted (over 150 days past due) notes receivable. As a result of our adoption of the new Consolidation Standard, we no longer account for notes receivable securitizations as sales, and therefore, we did not recognize gains or losses on our 2011 or 2010 notes receivable securitizations, nor do we expect to recognize gains or losses on future notes receivable securitizations. See Footnote No. 1, “Summary of Significant Accounting Policies,” for additional information on the impact of our adoption in the first quarter of 2010 of the new Consolidation Standard on our notes receivable securitizations, including the elimination of residual interests.

The following table shows cash flows between us and bondholders during 2009. In 2010, we consolidated the entities that facilitate our notes receivable securitizations. See Footnote No. 17, “Variable Interest Entities,” for further discussion of the impact of our involvement with these entities on our financial position, financial performance and cash flows for 2011.


*($ in millions)*	2009
Net proceeds from vacation ownership notes receivable securitizations	$	349
Voluntary repurchases of defaulted notes receivable (over 150 days overdue)		(81	)
Servicing fees received		6
Cash flows received from our retained interests in notes receivable		75

Securitization collections, net of repurchases	$	349

The following table provides additional information pertaining to our historical notes receivable securitization transactions:


*($ in millions)*	2011		2010		2009
Securitized notes receivable⁽¹⁾⁽²⁾	$	—	$	229	$	664
Notes securitized under Warehouse Credit Facility	$	154	$	—	$	—
Trust bonds payable issued⁽²⁾	$	—	$	218	$	522
Non-recourse debt issued under Warehouse Credit Facility	$	125	$	—	$	—
Gain from securitization included in Financing revenues in our Statement of Operations	$	—	$	—	$	37

(1)	Originated in connection with sale of vacation ownership products.

(2)

Securitized notes receivable and bonds payable issued in 2009 resulted from two securitizations that occurred in the first and fourth quarters of 2009, the latter of which included the simultaneous repayment of the bonds issued in the first quarter of $218 and ultimately resecuritized the underlying collateral that was securitized in the first quarter.

- Definition

The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 140
-Paragraph 17
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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Reference 11: http://www.xbrl.org/2003/role/presentationRef
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+ Details

NOTES RECEIVABLE

12 Months Ended

Dec. 30, 2011

NOTES RECEIVABLE

4. NOTES RECEIVABLE

As discussed in Footnote No. 1, “Summary of Significant Accounting Policies,” on the first day of the 2010 fiscal year, we consolidated certain entities associated with past notes receivable securitization transactions. Prior to 2010, we were not required to consolidate the special purpose entities utilized to securitize the notes receivable.

The following table shows the composition of our vacation ownership notes receivable balances, net of reserves:


*($ in millions)*	At Year-End 2011		At Year-End 2010
Vacation ownership notes receivable - securitized	$	910	$	1,029
Vacation ownership notes receivable - non-securitized		239		225

Total vacation ownership notes receivable	$	1,149	$	1,254

The following tables show future principal payments, net of reserves, as well as interest rates for our securitized and non-securitized vacation ownership notes receivable:


*($ in millions)*	Non-Securitized Vacation Ownership Notes Receivable		Securitized Vacation Ownership Notes Receivable		Total
2012	$	64	$	116	$	180
2013		33		122		155
2014		26		125		151
2015		22		121		143
2016		21		112		133
Thereafter		73		314		387

Balance at year-end 2011	$	239	$	910	$	1,149

Weighted average stated interest rate at year-end 2011		11.5%		13.0%		12.6%
Range of stated interest rates at year-end 2011		0.0% to 19.5%		6.1% to 19.5%		0.0% to 19.5%

We reflect interest income associated with vacation ownership notes receivable of $161 million, $179 million and $46 million for 2011, 2010 and 2009, respectively, in our Statements of Operations in the Financing revenues caption. Of the $161 million of interest income we recognized from these loans in 2011, $131 million was associated with securitized notes receivable and $30 million was associated with non-securitized notes receivable. Of the $179 million of interest income we recognized from these vacation ownership notes receivable in 2010, $139 million was associated with securitized notes receivable and $40 million was associated with non-securitized notes receivable. The interest income recognized in 2009 related solely to non-securitized notes receivable.

The following table summarizes the activity related to our vacation ownership notes receivable reserve for 2011, 2010 and 2009:


*($ in millions)*	Non-Securitized Vacation Ownership Notes Receivable			Securitized Vacation Ownership Notes Receivable			Total
Balance at year-end 2008	$	35		$	—		$	35
Additions for current year vacation ownership product sales		30			—			30
Reductions for securitizations		(25	)		—			(25	)
Write-offs		(13	)		—			(13	)

Balance at year-end 2009		27			—			27
One-time impact of the new Consolidation Standard⁽¹⁾		84			134			218
Additions for current year vacation ownership product sales		32			—			32
Securitizations, net of clean-up call⁽²⁾		(18	)		18			—
Write-offs		(79	)		—			(79	)
Defaulted notes receivable repurchase activity⁽³⁾		68			(68	)		—
Other⁽⁴⁾		15			5			20

Balance at year-end 2010		129			89			218
Additions for current year vacation ownership product sales		30			—			30
Securitizations, net of clean-up call⁽²⁾		(12	)		12			—
Write-offs		(85	)		—			(85	)
Defaulted notes receivable repurchase activity⁽³⁾		52			(52	)		—
Other⁽⁴⁾		(10	)		18			8

Balance at year-end 2011	$	104		$	67		$	171

(1)	The non-securitized notes receivable reserve relates to the implementation of the new Consolidation Standard, which required us to establish reserves for certain previously securitized and subsequently repurchased notes held at January 2, 2010.

(2)	Clean-up call refers to our voluntary repurchase of previously securitized non-defaulted notes receivable to retire previous notes receivable securitizations.

(3)	Decrease in securitized reserve and increase in non-securitized reserve was attributable to the transfer of the reserve when we repurchased the notes receivable.

(4)	Consists of static pool and default rate assumption changes.

The following table shows our recorded investment in non-accrual notes receivable, which are notes receivable that are 90 days or more past due. As noted in Footnote No. 1, “Summary of Significant Accounting Policies,” we recognize interest income on a cash basis for these notes receivable.


*($ in millions)*	Non-Securitized Vacation Ownership Notes Receivable		Securitized Vacation Ownership Notes Receivable		Total
Investment in notes receivable on non-accrual status at year-end 2011	$	90	$	11	$	101
Investment in notes receivable on non-accrual status at year-end 2010	$	113	$	15	$	128

The following table shows the aging of the recorded investment in principal, before reserves, in vacation ownership notes receivable at year-end 2011:


*($ in millions)*	Non-Securitized Vacation Ownership Notes Receivable		Securitized Vacation Ownership Notes Receivable		Total
31–90 days past due	$	11	$	24	$	35
91–150 days past due		8		11		19
Greater than 150 days past due		82		—		82

Total past due		101		35		136
Current		242		942		1,184

Total vacation ownership notes receivable	$	343	$	977	$	1,320

- Definition

The entire disclosure for claims held for amounts due a company. Examples include trade accounts receivables, notes receivables, loans receivables.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 3, 4
-Article 5

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 7
-Article 9

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 01-6
-Paragraph 13
-Subparagraph d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Article 4
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-Paragraph k

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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+ Details

FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 30, 2011

FAIR VALUE MEASUREMENTS

5. FAIR VALUE MEASUREMENTS

The guidance for fair value measurement defines fair value as the price that would be received upon selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The guidance outlines a valuation framework, creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures, and details the disclosures that are required for items measured at fair value.

We have various financial instruments we must measure at fair value on a recurring basis, including certain derivatives and residual interests related to our notes receivable securitizations. We also apply the provisions of fair value measurement to various non-recurring measurements for our financial and non-financial assets. See Footnote No. 18, “Restructuring Costs and Other Charges,” and Footnote No. 19, “Impairment Charges,” for further information.

The following table summarizes the changes in fair value of our Level 3 assets and liabilities that we measure at fair value on a recurring basis:


*($ in millions)*	Fair Value Measurements of Assets and Liabilities Using Level 3 Inputs
	Servicing Assets and Other Residual Interests			Derivative Instruments
Balance at beginning of 2009	$	222		$	(15	)
Included in earnings (or changes in net assets)		18			—
Transfers in or out of Level 3		—			—
Purchases, sales, issuances, and settlements		(26	)		14

Total (losses) gains (realized or unrealized)		(8	)		14

Ending balance at 2009		214			(1	)
Included in earnings (or changes in net assets)		—			—
Included in other comprehensive income		—			—
Transfers in or out of Level 3		—			—
Purchases, sales, issuances, and settlements		—			—
Elimination in connection with implementation of the new Consolidation Standard		(214	)		—

Total losses (realized or unrealized)		(214	)		—

Ending balance at 2010		—			(1	)
Included in earnings (or changes in net assets)		—			—
Transfers in or out of Level 3		—			—
Purchases, sales, issuances, and settlements		—			1

Total gains (realized or unrealized)		—			1

Ending balance at 2011	$	—		$	—

Servicing Assets and Other Residual Interests

As discussed in more detail in Footnote No. 3, “Asset Securitizations,” we periodically securitize notes receivable we originate in connection with vacation ownership product sales. We continue to service the notes receivable after the securitization, and we retain servicing assets and other interests in the notes receivable. Before 2010, we accounted for these assets and interests as residual interests. At the date of each notes receivable securitization and at the end of each reporting period, we estimated the fair value of our residual interests using a discounted cash flow model.

The most significant estimate we used in the measurement process for retained interests was the discount rate, followed by the default rate and the loan prepayment rate. We estimated these rates based on management’s expectations of future prepayment rates and default rates, reflecting our historical experience, industry trends, current market interest rates, expected future interest rates and other considerations. We based the discount rates we used in determining the fair values of our residual interests on the volatility characteristics (i.e., defaults and prepayments) of the residual interests and our estimate of discount rates used by other market participants.

As noted in the “Residual Interests” caption of Footnote No. 1, “Summary of Significant Accounting Policies,” prior to 2010, we treated the residual interests, including servicing assets, as trading securities under the provisions of accounting for certain investments in debt and equity securities. During 2009, we recorded trading gains of $18 million within the Financing revenues on our Statements of Operations.

During 2009, we used the following key assumptions to measure, at the date of each notes receivable securitization, the fair value of the residual interests, including servicing assets:


	2009
Average discount rates		12.53	%
Average expected annual prepayments, including defaults		19.46	%
Expected weighted average life of prepayable notes receivable, excluding prepayments and defaults		72 months
Expected weighted average life of prepayable notes receivable, including prepayments and defaults		38 months

We based our key assumptions on our historical experience with notes receivable and servicing assets.

We used the following key assumptions in measuring the fair value of the residual interests, including servicing assets, in our 13 outstanding notes receivable securitizations at year-end 2009: an average discount rate of 16.06 percent; an average expected annual prepayment rate, including defaults, of 15.58 percent; an expected weighted average life of prepayable notes receivable, excluding prepayments and defaults, of 57 months; and an expected weighted average life of prepayable notes receivable, including prepayments and defaults, of 37 months.

For our notes receivable securitizations in the first quarter and fourth quarter of 2009, on the date of transfer we recorded notes receivable for which we retained full risks and rewards of cash flows after the transfer at a fair value of $81 million and $58 million, respectively. We used a discounted cash flow model, including estimates of Level 3 inputs, to determine the fair value of notes receivable we effectively owned after the transfer. We based the discount rate we used in determining the fair value on the methodology described earlier in this footnote. Other assumptions, such as default and prepayment rates, are consistent with those used in determining the fair value of our residual interests. For additional information, see Footnote No. 3, “Asset Securitizations.”

Derivative Instruments

We use financial instruments to reduce our overall exposure to changes in interest rates. Prior to the Spin-Off all hedge transactions were executed by Marriott International. Historically, Marriott International managed our foreign exchange exposure on a combined basis with the exposures of all other Marriott International businesses. We are required to carry our derivative assets and liabilities at fair value. We had two derivative instruments in an asset position of less than $1 million at year-end 2011 in the Other caption within the Assets section of our Balance Sheets and a liability position of $1 million at year-end 2010 in the Other caption within the Liabilities section of our Balance Sheets, which were both valued using Level 3 inputs. We value our Level 3 input derivatives using valuations that we calibrate to the initial trade prices, with subsequent valuations based on unobservable inputs to the valuation model, including interest rates and volatility characteristics.

FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 30, 2011

FINANCIAL INSTRUMENTS

6. FINANCIAL INSTRUMENTS

The following table shows the carrying values and the estimated fair values of financial assets and liabilities that qualify as financial instruments, determined in accordance with current guidance for disclosures on the fair value of financial instruments. Considerable judgment is required in interpreting market data to develop estimates of fair value. The use of different market assumptions and/or estimation methodologies could have a material effect on the estimated fair value amounts. The table excludes Cash and cash equivalents, Restricted cash, Accounts and contracts receivable and Accounts payable, which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.


*($ in millions)*	At Year-End 2011						At Year-End 2010
	Carrying Amount			Fair Value⁽¹⁾			Carrying Amount			Fair Value⁽¹⁾
Vacation ownership notes receivable – securitized	$	910		$	1,061		$	1,029		$	1,219
Vacation ownership notes receivable – non-securitized		239			245			225			231

Total financial assets	$	1,149		$	1,306		$	1,254		$	1,450

Non-recourse debt associated with securitized notes receivable	$	(729	)	$	(750	)	$	(1,017	)	$	(1,047	)
Warehouse credit facility		(118	)		(116	)		—			—
Other debt		(3	)		(3	)		(5	)		(5	)
Mandatorily redeemable preferred stock of consolidated subsidiary		(40	)		(40	)		—			—
Liability for Marriott Rewards loyalty program⁽²⁾		(225	)		(206	)		—			—
Other liabilities		(29	)		(32	)		(30	)		(26	)

Total financial liabilities	$	(1,144	)	$	(1,147	)	$	(1,052	)	$	(1,078	)

(1)	Fair value of financial instruments has been determined using Level 3 inputs.

(2)	The liability for Marriott Rewards loyalty program did not qualify as a financial instrument prior to the Spin-Off, because prior to the Spin-Off the terms of repayment obligation were pursuant to an intercompany arrangement with Marriott International.

See the “Fair Value Measurements” caption of Footnote No. 1, “Summary of Significant Accounting Policies” for additional information.

Vacation Ownership Notes Receivable

We estimate the fair value of our securitized notes receivable using a discounted cash flow model. We believe this is comparable to the model that an independent third party would use in the current market. Our model uses default rates, prepayment rates, coupon rates and loan terms for our securitized notes receivable portfolio as key drivers of risk and relative value, that when applied in combination with pricing parameters, determines the fair value of the underlying notes receivable.

We bifurcate our non-securitized notes receivable into two pools as follows:


*($ in millions)*	At Year-End 2011				At Year-End 2010
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Vacation ownership notes receivable – eligible for securitization	$	41	$	47	$	47	$	53
Vacation ownership notes receivable – not eligible for securitization		198		198		178		178

Total vacation ownership notes receivable – non-securitized	$	239	$	245	$	225	$	231

We estimate the fair value of a portion of our non-securitized notes receivable that we believe will ultimately be securitized in the same manner as securitized notes receivable. We value the remaining non-securitized notes receivable at their carrying value, rather than using our pricing model. We believe that the carrying value of these particular notes receivable approximates fair value because the stated interest rates of these loans are consistent with current market rates and the reserve for these notes receivable appropriately accounts for risks in default rates, prepayment rates and loan terms.

Non-Recourse Debt Associated with Securitized Notes Receivable

We internally generate cash flow estimates by modeling all bond tranches for our active notes receivable securitization transactions, with consideration for the collateral specific to each tranche. The key drivers in our analysis include default rates, prepayment rates, bond interest rates and other structural factors, which we use to estimate the projected cash flows. In order to estimate market credit spreads by rating, we obtain indicative credit spreads from investment banks that actively issue and facilitate the market for timeshare securities and determine an average credit spread by rating level of the different tranches. We then apply those estimated market spreads to swap rates in order to estimate an underlying discount rate for calculating the fair value of the active bonds payable.

Warehouse Credit Facility

We internally generate cash flow estimates by modeling all funding activity for our Warehouse Credit Facility with consideration given to the collateral pledged to date. The key drivers in our analysis include default rates, prepayment rates, bond interest rates and structural factors, which we use to estimate the projected cash flows. The discount rate used to calculate the fair value of these cash flows is composed of the market swap rate for the specific average life of the cash flows plus a credit spread. Because the Warehouse Credit Facility debt is not traded in the market, we use a credit spread which is the average of indicative credit spreads obtained from investment banks on our securitized debt for the particular rating that the Warehouse Credit Facility is structured to achieve.

Mandatorily Redeemable Preferred Stock of Consolidated Subsidiary

We estimate the fair value of the mandatorily redeemable preferred stock of our consolidated subsidiary using a discounted cash flow model. We believe this is comparable to the model that an independent third party would use in the current market. Our model includes an assessment of our subsidiary’s credit risk and the instrument’s contractual dividend rate.

Liability for Marriott Rewards Loyalty Program

We determine the carrying value of the future redemption obligation of our liability for the Marriott Rewards loyalty program based on statistical formulas that project the timing of future point redemption based on historical levels, including estimates of the points that will eventually be redeemed and the “breakage” for points that will never be redeemed, as discussed in Footnote No. 14, “Other Liabilities.” We estimate the fair value of the future redemption obligation by adjusting the contractual discount rate to an estimate of that of a market participant with similar nonperformance risk.

Other Liabilities

We estimate the fair value of our other liabilities that are financial instruments using expected future payments discounted at risk-adjusted rates. These liabilities represent guarantee costs and reserves and deposit liabilities. The carrying values of our guarantee costs and reserves approximate their fair values. We estimate the fair value of our deposit liabilities primarily by discounting future payments at a risk-adjusted rate.

ACQUISITIONS AND DISPOSITIONS

12 Months Ended

Dec. 30, 2011

ACQUISITIONS AND DISPOSITIONS

7. ACQUISITIONS AND DISPOSITIONS

2011 Acquisitions and Dispositions

In 2011, we completed a bulk sale of land and developed inventory, classified as inventory within our Luxury segment. Net cash proceeds from the sale totaled $17 million and we recorded a net gain of $2 million. We accounted for the sale under the full accrual method in accordance with the guidance on accounting for sales of real estate. We made no significant acquisitions in 2011.

2010 Acquisitions and Dispositions

In 2010, we acquired vacation ownership units for sale in our Luxury segment for cash consideration of $111 million, which included a deposit of $11 million paid in 2009.

In 2010, we sold one operating hotel, classified within property and equipment within our Asia Pacific segment, that we acquired for conversion to vacation ownership products. Net cash proceeds from the sale totaled $38 million and we recorded a net gain of $21 million in Gains and other income on our Statements of Operations. We accounted for the sale under the full accrual method in accordance with the guidance on accounting for sales of real estate.

2009 Acquisitions and Dispositions

We made no significant acquisitions or dispositions in 2009.

EARNINGS PER SHARE

12 Months Ended

Dec. 30, 2011

EARNINGS PER SHARE

8. EARNINGS PER SHARE

Basic income (loss) per common share is calculated by dividing net income (loss) attributable to Marriott Vacations Worldwide common shareholders by the weighted average number of shares of common stock issued and outstanding during the reporting period. Diluted income (loss) per common share is calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period. The dilutive effect of outstanding equity-based compensation awards is reflected in diluted income (loss) per common share by application of the treasury stock method.

On November 21, 2011, we ceased to be a subsidiary of Marriott International and became an independent publicly traded company. On the distribution date of November 21, 2011, Marriott International distributed 33.7 million shares of $.01 par value Marriott Vacations Worldwide common stock to Marriott International’s shareholders of record as of the close of business Eastern time on the record date of November 10, 2011. This share amount is being utilized for the calculation of basic income (loss) per common share for periods presented prior to 2011 because all 100 shares of our common stock outstanding prior to November 21, 2011 were held by Marriott International. For periods prior to 2011, the same number of shares is being used for diluted income (loss) per common share as for basic income (loss) per common share as no dilutive securities were outstanding for any prior period.

For 2011, in determining the weighted average number of common shares outstanding for basic income (loss) per common share, we assumed 33.7 million shares were outstanding for the period from January 1, 2011 through November 20, 2011. Diluted income (loss) per common share subsequent to the distribution date of November 21, 2011 reflects the potential dilution of outstanding equity-based compensation awards by application of the treasury stock method.

INVENTORY

12 Months Ended

Dec. 30, 2011

INVENTORY

9. INVENTORY

The following table shows the composition of our inventory balances:


*($ in millions)*	At Year-End 2011		At Year-End 2010
Finished goods	$	448	$	652
Work-in-progress		215		203
Land and infrastructure		290		551

Real estate inventory		953		1,406
Operating supplies and retail inventory		6		6

	$	959	$	1,412

Interest capitalized as a cost of inventory totaled $7 million, $3 million and $19 million in 2011, 2010 and 2009, respectively.

We value vacation ownership and residential products at the lower of cost or fair market value less costs to sell, in accordance with applicable accounting guidance, and we record operating supplies at the lower of cost (using the first-in, first-out method) or market value.

Weak economic conditions in the United States, Europe and much of the rest of the world, instability in the financial markets following the 2008 worldwide financial crisis and weak consumer confidence all contributed to a difficult business environment and resulted in weaker demand for our products, in particular our residential products, but also to a lesser extent our vacation ownership products. Accordingly, we have recorded inventory impairments and related reversals since that time. See Footnote No. 19, “Impairment Charges,” for additional information.

In preparing to operate as an independent public company following the Spin-Off management assessed our intended use of excess undeveloped land and built Luxury inventory and the current market conditions for those assets. During the third quarter of 2011, management approved a plan to accelerate cash flow through the monetization of certain excess undeveloped land and to offer incentives to accelerate sales of excess built Luxury fractional and residential inventory. As the fair values of the undeveloped land and the excess built Luxury fractional and residential inventory were less than their respective carrying values, we recorded a pre-tax inventory impairment charge of $251 million to adjust the carrying value of the inventory to its fair value. Additionally we reclassified $52 million of this undeveloped land previously in our development plans from inventory to property and equipment. See Footnote No. 19, “Impairment Charges,” for additional information.

PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 30, 2011

PROPERTY AND EQUIPMENT

10. PROPERTY AND EQUIPMENT

The following table details the composition of our property and equipment balances:


*($ in millions)*	At Year-End 2011			At Year-End 2010
Land	$	152		$	148
Buildings and leasehold improvements		227			219
Furniture and equipment		271			261
Construction in progress		9			18

		659			646
Accumulated depreciation		(374	)		(336	)

	$	285		$	310

As noted in Footnote No. 9, “Inventory,” management approved a plan, during the third quarter of 2011, to accelerate cash flow through the monetization of certain excess undeveloped land and to offer incentives to accelerate sales of excess built Luxury fractional and residential inventory. As the nominal cash flows from the planned land sales and their estimated fair values were less than their carrying values, we recorded a pre-tax impairment charge of $73 million to adjust the carrying value of the property and equipment to its fair value. Additionally we reclassified $52 million of this undeveloped land previously in our development plans from inventory to property and equipment in the third quarter of 2011. See Footnote No. 19, “Impairment Charges,” for additional information.

Interest capitalized as a cost of property and equipment totaled less than $1 million in each of 2011, 2010 and 2009. Depreciation expense totaled $33 million in 2011, $35 million in 2010 and $42 million in 2009.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

+ References + Details

CONTINGENCIES AND COMMITMENTS

12 Months Ended

Dec. 30, 2011

CONTINGENCIES AND COMMITMENTS

11. CONTINGENCIES AND COMMITMENTS

See Footnote No. 20, “Significant Investments,” for commitments and contingencies relating to one equity method investment.

Guarantees

We issue guarantees to certain lenders in connection with the provision of third-party financing for our sales of vacation ownership products for the Luxury and Asia Pacific segments. The terms of guarantees to lenders generally require us to fund if the purchaser fails to pay under the term of its note payable. Prior to the Spin-Off, Marriott International guaranteed our performance under these arrangements. Subsequent to the Spin-Off, Marriott International continues to hold a standby letter of credit related to the Asia Pacific segment guarantee. If Marriott International is required to fund any draws by lenders under this letter of credit it would seek recourse from Marriott Vacations Worldwide. Marriott International no longer guarantees our performance with respect to third-party financing for sales of products in the Luxury segment. We are entitled to recover any funding to third-party lenders related to these guarantees through reacquisition and resale of the vacation ownership product. Our commitments under these guarantees expire as notes mature or are repaid. The terms of the underlying notes extend to 2022.

The following table shows the maximum potential amount of future fundings for financing guarantees where we are the primary obligor and the carrying amount of the liability for expected future fundings.


*($ in millions)*	Maximum Potential		Liability for Expected
Segment	Amount of Future Fundings at Year-End 2011		Future Fundings at Year-End 2011
Asia Pacific	$	22	$	—
Luxury		3		1

Total guarantees where we are the primary obligor	$	25	$	1

We included our liability for expected future fundings of the financing guarantees in our Balance Sheets in the Other caption within Liabilities.

In addition to the guarantees we describe in the preceding paragraphs, in conjunction with financing obtained for specific projects or properties owned by joint ventures in which we are a party, we may provide industry standard indemnifications to the lender for loss, liability or damage occurring as a result of the actions of the other joint venture owners or our own actions.

Commitments and Letters of Credit

In addition to the guarantees we note in the preceding paragraphs, as of year-end 2011, we had the following commitments outstanding:

•

A commitment for $18 million (HK$141 million) to purchase vacation ownership units upon completion of construction for sale in our Asia Pacific segment. We have already made deposits of $11 million in conjunction with this commitment. We expect to pay the remaining $7 million upon acquisition of the units in the second quarter of 2012.

•

$3 million (€2 million) of other purchase commitments that we expect to fund over the next three years, as follows: $1 million in each of 2012, 2013 and 2014.

•

We have various contracts for the use of information technology hardware and software that we use in the normal course of business. Our commitments under these contracts were $5 million, which we expect will be paid in 2012.

•

Commitments to subsidize vacation ownership associations were $10 million which we expect will be paid in 2012.

Surety bonds issued as of year-end 2011 totaled $101 million, the majority of which were requested by federal, state or local governments related to our operations.

Other

We estimate the cash outflow associated with completing the phases of our existing portfolio of vacation ownership projects currently under development will be approximately $150 million, of which $7 million is included within liabilities on our Balance Sheet. This estimate is based on our current development plans, which remain subject to change, and we expect the phases currently under development will be completed by 2016.

Leases

We have various land, real estate and equipment operating leases. The land leases primarily consist of two long-term golf course land leases with terms of 20 and 50 years. The other operating leases are primarily for office and retail space as well as equipment supporting our operations and have lease terms of between 3 and 10 years. We have summarized our future obligations under operating leases at year-end 2011 below:


*($ in millions)*	Golf		Other
Fiscal Year	Land Leases		Operating Leases		Total
2012	$	1	$	13	$	14
2013		1		11		12
2014		1		3		4
2015		1		2		3
2016		1		1		2
Thereafter		35		3		38

Total minimum lease payments	$	40	$	33	$	73

Certain of these leases provide for minimum rentals and additional rentals based on our operations of the leased property. The total minimum lease payments above exclude approximately $13 million in future lease payments which have been accrued on the Balance Sheets as part of historical restructuring charges. The future lease payments accrued as restructuring charges are expected to be paid as follows: $6 million in 2012, $5 million in 2013 and $2 million in 2014.

The following table details the composition of rent expense associated with operating leases, net of sublease income, for the last three years:


*($ in millions)*	2011		2010		2009
Minimum rentals	$	10	$	11	$	24
Additional rentals		5		6		6

	$	15	$	17	$	30

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 9, 10, 11, 12
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
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-Publisher FASB
-Name Accounting Standards Codification
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-Publisher FASB
-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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+ Details

DEBT

12 Months Ended

Dec. 30, 2011

DEBT

12. DEBT

On the first day of fiscal 2010 we consolidated certain previously unconsolidated entities associated with past notes receivable securitization transactions (and later in 2010 we consolidated the special purpose entity associated with our 2010 notes receivable securitization), resulting in consolidation of the related debt obligations.

The following table provides detail on our debt balances:


*($ in millions)*	At Year-End 2011		At Year-End 2010
Non-recourse debt associated with securitized notes receivable, interest rates ranging from 3.64% to 7.20% (weighted average interest rate of 5.11%)	$	729	$	1,017
Warehouse credit facility (effective interest rate of 2.09%)		118		—
Revolving corporate credit facility		—		—
Other		3		5

	$	850	$	1,022

See Footnote No. 17, “Variable Interest Entities,” for a discussion of the collateral for the non-recourse debt associated with the securitized notes receivable and the Warehouse Credit Facility. All of our other debt was, and to the extent currently outstanding is, recourse to us but unsecured. Although no amounts were outstanding at the end of 2011 under our Revolving Corporate Credit Facility, any amounts that are borrowed under that facility are secured by a perfected first priority security interest in substantially all of our assets and the assets of the guarantors of that facility, in each case including inventory, subject to certain exceptions.

The following table shows scheduled future principal payments for our debt:


*($ in millions)* Debt Principal Payments Year	Non-Recourse Debt		Warehouse Credit Facility		Other Debt		Total
2012	$	108	$	15	$	—	$	123
2013		116		103		—		219
2014		120		—		—		120
2015		113		—		—		113
2016		99		—		—		99
Thereafter		173		—		3		176

Balance at year-end 2011	$	729	$	118	$	3	$	850

As the contractual terms of the underlying securitized notes receivable determine the maturities of the non-recourse debt associated with them, actual maturities may occur earlier than shown above due to prepayments by the notes receivable obligors.

We paid cash for interest, net of amounts capitalized, of $45 million in 2011, $54 million in 2010, and less than $1 million in 2009.

Non-Recourse Debt Associated with Securitized Notes Receivable

Each of our securitized notes receivable pools is subject to various triggers relating to the performance of the underlying notes receivable. If a pool of securitized notes receivable fails to perform within the pool’s established parameters (default or delinquency thresholds vary by transaction), transaction provisions effectively redirect the monthly excess spread we would otherwise receive from that pool (related to the interests we retained) to accelerate the principal payments to investors based on the subordination of the different tranches until the performance trigger is cured. In 2011, three of our securitized notes receivable pools reached performance triggers in different months throughout the year as a result of increased defaults. As of year-end 2011, performance had improved sufficiently in two of the three notes receivable pools that were not meeting performance thresholds during some portion of 2011 to cure the performance triggers. For 2011 and 2010, approximately $3 million and $6 million, respectively, of cash flows were redirected as a result of reaching the performance triggers during those years. At year-end 2011, we had 11 securitized notes receivable pools outstanding.

Warehouse Credit Facility

On September 28, 2011, we closed a $300 million warehouse credit facility (the “Warehouse Credit Facility”) that allows for the securitization of vacation ownership notes receivable on a non-recourse basis, pursuant to the terms of the facility. The revolving period of the facility is 364 days. The notes receivable that we securitize under the facility are similar in nature to the notes receivable we have securitized in the past. Borrowings under the facility bear interest at a rate of a combination of 1 month LIBOR and bank conduit commercial paper rates plus 1.25 percent and are limited at any point to the advance rate on the aggregate amount of eligible notes receivable at such time. The advance rate of receivables securitized using the facility varies based on the characteristics of the obligor on each securitized note receivable.

On October 5, 2011, we made the first draw on the Warehouse Credit Facility. The carrying amount of notes receivable securitized was $154 million. The advance rate was 81 percent, which resulted in gross proceeds of $125 million. Net proceeds were $122 million due to the funding of a reserve account in the amount of $1 million, cash transaction costs of $2 million and costs of less than $1 million associated with entering into a derivative transaction to cap the interest rate. The securitized notes receivable included $16 million of notes receivable that we repurchased in the fourth quarter of 2011 from two consolidated special purpose entities that we initially used to securitize the notes receivable in 2003. Proceeds from the draw on the Warehouse Credit Facility were transferred to Marriott International in settlement of certain intercompany account balances.

Revolving Corporate Credit Facility

On October 20, 2011, we entered into a four-year revolving credit facility (the “Revolving Corporate Credit Facility”) with a borrowing capacity of $200 million, including a letter of credit sub-facility of $120 million, that provides support for our business, including ongoing liquidity and letters of credit, with a syndicate of banks led by JP Morgan Chase Bank. On November 21, 2011, we closed the Revolving Corporate Credit Facility by satisfying all conditions precedent to borrowing. Borrowings under the Revolving Corporate Credit Facility generally bear interest at a floating rate at the Eurodollar rate plus an applicable margin that varies from 2.75 percent to 4 percent depending on our credit rating. The facility’s credit agreement contains affirmative and negative covenants and representations and warranties customary for financings of this type. In addition, the Revolving Corporate Credit Facility contains financial covenants, including covenants requiring us to maintain (a) minimum consolidated tangible net worth of not less than the sum of (i) 80 percent of our consolidated tangible net worth as set forth on an opening balance sheet plus (ii) 80 percent of any increase in consolidated tangible net worth attributable to the issuance of equity after the date of such opening balance sheet; (b) a maximum ratio of consolidated total debt to consolidated adjusted EBITDA (as defined in the Revolving Corporate Credit Facility) of 6 to 1 through the end of the first quarter of 2013, at which time the maximum ratio decreases to 5.25 to 1 through the end of the 2014 fiscal year and to 4.75 to 1 thereafter; and (c) a minimum consolidated adjusted EBITDA, as defined in the Revolving Corporate Credit Facility, to interest expense ratio of not less than 3 to 1. The facility is guaranteed by Marriott Vacations Worldwide and by each of our direct and indirect, existing and future, domestic subsidiaries (excluding certain special purpose subsidiaries), and is secured by a perfected first priority security interest in substantially all of our assets and the assets of the guarantors, subject to certain exceptions.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References + Details

MANDATORILY REDEEMABLE PREFERRED STOCK OF CONSOLIDATED SUBSIDIARY

12 Months Ended

Dec. 30, 2011

MANDATORILY REDEEMABLE PREFERRED STOCK OF CONSOLIDATED SUBSIDIARY

13. MANDATORILY REDEEMABLE PREFERRED STOCK OF CONSOLIDATED SUBSIDIARY

In October 2011, our subsidiary, MVW US Holdings, Inc. (“MVW US Holdings”) issued $40 million of its mandatorily redeemable Series A (non-voting) preferred stock to Marriott International as part of Marriott International’s internal reorganization prior to the Spin-Off. Subsequently Marriott International sold all of this preferred stock to third-party investors. For the first five years after issuance, the Series A preferred stock will pay an annual cash dividend equal to the five-year U.S. Treasury Rate as of October 19, 2011, plus a spread of 10.958 percent, for a total annual cash dividend rate of 12 percent. On the fifth anniversary of issuance, the annual cash dividend rate will be reset to the five-year U.S. Treasury Rate in effect on such date plus the same 10.958 percent spread. The Series A preferred stock is mandatorily redeemable by MVW US Holdings upon the tenth anniversary of the date of issuance but can be redeemed at our option after five years. The Series A preferred stock has an aggregate liquidation preference of $40 million plus any accrued and unpaid dividends and an additional premium if liquidation occurs during the first five years after the issuance of the preferred stock. At December 30, 2011, 1,000 shares of Series A preferred stock were authorized, of which 40 shares were issued and outstanding. The dividends are recorded as a component of Interest expense as the Series A preferred stock is treated as a liability for accounting purposes.

OTHER LIABILITIES

12 Months Ended

Dec. 30, 2011

OTHER LIABILITIES

14. OTHER LIABILITIES

Liability for Marriott Rewards Customer Loyalty Program

We participate in the Marriott Rewards customer loyalty program. Program members earn Marriott Rewards Points based on their purchases of vacation ownership products and/or through exchange and other activities related to our vacation ownership products, as well as through hotel stays and other activities that are not related to our business. Points are tracked on members’ behalf and can be redeemed for stays at most of Marriott International’s lodging properties, airline tickets, airline frequent flyer program miles, rental cars and a variety of other awards; however, points cannot be redeemed for cash. As members earn points through our business, we record an accrual for amounts that we expect will, in the aggregate, equal the costs of point redemptions and our portion of program operating costs over time.

Historically, we have determined the carrying value of the future redemption obligation based on statistical formulas that project timing of future point redemption based on historical levels, including estimates of the points that will eventually be redeemed and the “breakage” for points that will never be redeemed. These judgment factors determine the required liability for outstanding points. The liability is relieved upon redemption of points by program members. Our Marriott Rewards customer loyalty program’s liability totaled $225 million at December 30, 2011, and $220 million at December 31, 2010.

We completed a stress test on the carrying value of our Marriott Rewards customer loyalty liability to measure the change in obligation associated with independent changes in key estimates as described in Footnote No. 1, “Summary of Significant Accounting Policies.” We applied this methodology to unfavorable changes that would be statistically significant and we concluded that each change to a variable shown in the table below would have the following impact on the valuation of our customer loyalty liability at year-end 2011:


*($ in millions)*
5 percent change in the cost per point	$	10
10 percent change in the cost per point	$	21
100 basis point change in the breakage rate	$	9
200 basis point change in the breakage rate	$	19

Although we did not specifically perform stress tests on the redemption curve because it is difficult to isolate a single quantitative measure against which to perform such a test, changes in the redemption curve could also have an impact on the valuation of our Marriott Rewards customer loyalty program liability.

Deferred Compensation Liability

Prior to the Spin-Off, certain of our senior management had the opportunity to supplement their retirement and other

tax-deferred savings under the Marriott International, Inc. Executive Deferred Compensation Plan (“Marriott International EDC”), which Marriott International maintains and administers. Under the Marriott International EDC, participating employees may defer payment and income taxation of a portion of their salary and bonus. The plan also gives participants the opportunity for long-term capital appreciation by crediting their accounts with notional earnings (at a fixed annual rate of return of 5.5 percent for both 2011 and 2010). Additional discretionary contributions to the participant’s EDC accounts may be made based on subjective factors such as individual performance, key contributions and retention needs. Additional discretionary contributions of less than $1 million were made for our employees in 2011. No additional discretionary contributions were made for our employees in 2010 or 2009. Subsequent to the Spin-Off we do not offer a similar executive deferred compensation plan, however we remain liable to reimburse Marriott International for distributions for participants that were employees of Marriott Vacations Worldwide at the time of Spin-Off including earnings thereon.

SHAREHOLDERS' EQUITY

12 Months Ended

Dec. 30, 2011

SHAREHOLDERS' EQUITY

15. SHAREHOLDERS’ EQUITY

Marriott Vacations Worldwide has 100,000,000 authorized shares of common stock, par value of $.01 per share and 2,000,000 authorized shares of preferred stock, par value of $.01 per share. At December 30, 2011, 33,845,700 shares of Marriott Vacations Worldwide common stock were outstanding and zero shares of Marriott Vacations Worldwide preferred stock were outstanding.

As discussed in Footnote No. 1, “Summary of Significant Accounting Policies,” in accordance with the Separation and Distribution Agreement between Marriott International and Marriott Vacations Worldwide, Marriott International shareholders of record as of close of business Eastern time on November 10, 2011, the record date for the distribution, received one share of Marriott Vacations Worldwide common stock for every ten shares of Marriott International common stock held (the “Distribution Ratio”), which resulted in the complete legal and structural separation of Marriott Vacations Worldwide from Marriott International. Fractional shares of Marriott Vacations Worldwide common stock were not distributed; any fractional share of Marriott Vacations Worldwide common stock otherwise issuable to a Marriott International shareholder was sold in the open market on such shareholder’s behalf, with such shareholders receiving a cash payment in lieu of such fractional share.

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References

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-Publisher AICPA
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-Number 12
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Research Bulletin (ARB)
-Number 43
-Chapter 1
-Section B
-Paragraph 7, 11A
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+ Details

SHARE-BASED COMPENSATION

12 Months Ended

Dec. 30, 2011

SHARE-BASED COMPENSATION

16. SHARE-BASED COMPENSATION

Marriott Vacations Worldwide Share-Based Compensation Plans

We maintain the Marriott Vacations Worldwide Stock Plan for the benefit of our officers, directors and employees. Under the Marriott Vacations Worldwide Stock Plan, we award to certain of our employees: (1) stock options to purchase Marriott Vacations Worldwide common stock (“Stock Option Program”); (2) SARs for Marriott Vacations Worldwide common stock (“SAR Program”); and (3) RSUs of Marriott Vacations Worldwide common stock. In addition, pursuant to the Separation and Distribution Agreement, we agreed to issue awards under the Marriott Vacations Worldwide Stock Plan to certain current and former directors, officers, and employees of Marriott International who held awards under the Marriott International Stock Plan relating to Marriott International common stock at November 10, 2011, the record date for the Spin-Off. A total of 6 million shares are authorized for issuance under the Marriott Vacations Worldwide Stock Plan. As of December 30, 2011, approximately 2 million shares were available for grants under the Marriott Vacations Worldwide Stock Plan subsequent to the issuance of shares effective with the Spin-Off.

Effective as of the completion of the Spin-Off, all holders of Marriott International RSUs on the November 10, 2011 record date for the Spin-Off received Marriott Vacations Worldwide RSUs in an amount consistent with the Distribution Ratio, with terms and conditions substantially similar to the terms and conditions applicable to the Marriott International RSUs. Also, effective as of the completion of the Spin-Off, the holders of Marriott International stock options and SARs on the record date received Marriott Vacations Worldwide stock options and SARs, in an amount consistent with the Distribution Ratio, with terms and conditions substantially similar to the terms and conditions applicable to the Marriott International stock options and SARs. The adjusted exercise price of each converted award was determined as follows in order to preserve the aggregate intrinsic value of the stock options and SARs held by such persons:

The exercise prices of Marriott International awards were adjusted based on the proportion of the Marriott International ex-distribution closing stock price to the sum of the total of the Marriott International ex-distribution and Marriott Vacations Worldwide “when issued” closing stock prices on the distribution date.

The per share exercise price of each such Marriott Vacations Worldwide Stock Plan converted award is equal to the proportion of the Marriott Vacations Worldwide “when issued” closing stock price on the distribution date to the sum of the total of the Marriott International ex-distribution and Marriott Vacations Worldwide “when issued” closing stock prices on the distribution date.

All of these adjustments were designed to equalize the fair value of each award before and after the Spin-Off.

Deferred compensation costs as of the date of Spin-Off reflected the unamortized balance of the original grant date fair value of the equity awards held by Marriott Vacations Worldwide employees (regardless of whether those awards are linked to Marriott International stock or Marriott Vacations Worldwide stock).

Accordingly, in connection with the Spin-Off, we issued RSUs, SARs, and stock options to current and former directors, officers, and employees of Marriott International and Marriott Vacations Worldwide as described above.

For all share-based awards, we measure compensation expense related to share-based payment transactions with our employees at fair value on the grant date and recognize this expense in the Statement of Operations over the vesting period during which the employees provide service in exchange for the award. Subsequent to the Spin-Off, we recognize share-based compensation expense related to our employees and Marriott International recognizes compensation expense related to Marriott International employees, regardless of whether the underlying awards represent Marriott International or Marriott Vacations Worldwide awards.

We recorded share-based compensation expense related to award grants to our employees of $11 million in 2011, $10 million in 2010 and $10 million in 2009. Deferred compensation costs related to unvested awards held by our employees totaled $19 million at year-end 2011 and $12 million at year-end 2010. As of year-end 2011, we expect that deferred compensation expense for our employees will be recognized over a weighted average period of two years.

For Marriott International Stock Plan awards granted after 2005, we recognized share-based compensation expense over the period from the grant date to the date on which the award is no longer contingent on the employee providing additional service (the “substantive vesting period”). We continued to follow the stated vesting period for the unvested portion of Marriott International Stock Plan awards granted to our employees before 2006 and the adoption of the current guidance for share-based compensation and follow the substantive vesting period for Marriott International Stock Plan and Marriott Vacations Worldwide Stock Plan awards granted to our employees after 2005.

In accordance with the guidance for share-based compensation, we presented the tax benefits and costs resulting from the exercise or vesting of Marriott International Stock Plan share-based awards related to our employees as financing cash flows. The exercise of share-based awards for our employees resulted in tax benefits of less than $1 million in 2011 and $3 million in 2010 and tax costs of $1 million in 2009.

Marriott International received $2 million in 2011, $12 million in 2010 and $3 million in 2009 in cash from our employees for the exercise of stock options granted under the Marriott International Stock Plan. Approximately $1 million of Marriott Vacations Worldwide stock options were exercised prior to December 30, 2011; however cash proceeds had not yet been paid to us by our stock plan service provider as of December 30, 2011.

RSUs

RSUs issued to our employees under the Marriott International Stock Plan and the Marriott Vacations Worldwide Stock Plan generally vest over four years in annual installments commencing one year after the date of grant. We recognize compensation expense for the RSUs over the service period equal to the fair market value of the stock units on the date of issuance. At year-end 2011 and 2010, we had approximately $16 million and $11 million, respectively, in deferred compensation costs related to RSUs for our employees granted under the Marriott International Stock Plan and Marriott Vacations Worldwide Stock Plan. The weighted average remaining term for RSU grants outstanding at year-end 2011 for our employees was two years.

The following table provides additional information on outstanding RSUs issued to our employees for the last three fiscal years:


	2011		2010		2009
Share-based compensation expense (in millions)	$	10	$	9	$	9
Weighted average grant-date fair value prior to Spin-Off (per share)		40		27		23
Weighted average grant-date fair value subsequent to Spin-Off (per share)		19		—		—
Aggregate intrinsic value of converted and distributed (in millions)		2		8		5

The following table shows the 2011 changes in Marriott Vacations Worldwide RSUs issued to Marriott International and Marriott Vacations Worldwide employees:


	2011
	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at year-end 2010		—		$	—
Granted during 2011⁽¹⁾		1,147,363			17
Distributed during 2011		(121	)		11
Forfeited during 2011		(2,732	)		18

Outstanding at year-end 2011		1,144,510			17

(1)	Includes 289,637 RSUs granted to our employees and directors under the Marriott Vacations Worldwide Stock Plan, subsequent to the Spin-Off.

Stock Options and SARs

We may grant employee non-qualified stock options to officers and key employees of our business at exercise prices or strike prices equal to the market price of our common stock on the date of grant. Non-qualified stock options generally expire ten years after the date of grant. Most stock options are exercisable in cumulative installments of one quarter at the end of each of the first four years following the date of grant.

The following table shows the 2011 changes in outstanding Marriott Vacations Worldwide stock options for Marriott International and Marriott Vacations Worldwide employees:


	Shares			Weighted Average Exercise Price
Outstanding at year-end 2010		—		$	—
Granted during 2011		1,735,033			11
Exercised during 2011		(140,772	)		11
Forfeited during 2011		(6,820	)		18

Outstanding at year-end 2011		1,587,441		$	10

Stock options awarded under the Marriott International Stock Plan were granted at exercise prices or strike prices equal to the market price of Marriott International common stock on the date of grant.

We recognized no stock option compensation expense for our employees in each of 2011, 2010 and 2009. There was no deferred compensation expense related to stock options held by our employees at both year-end 2011 and 2010.

The following table shows the Marriott Vacations Worldwide stock options issued to Marriott International and Marriott Vacations Worldwide employees that were outstanding and exercisable at year-end 2011:


	Outstanding						Exercisable
Range of Exercise Prices	Number of Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Life (in years)		Number of Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Life (in years)
$ 8 to $12		1,183,793	$	9		2		1,183,793	$	9		2
$13 to $17		277,720		13		2		268,594		13		2
$18 to $22		120,728		19		3		119,054		19		3
$23 to $28		5,200		26		5		3,283		28		2

$ 8 to $28		1,587,441	$	10		2		1,574,724	$	10		2

No Marriott Vacations Worldwide stock options, other than those granted as part of the Spin-Off, were granted to Marriott International or to our employees in 2011, 2010 or 2009.

The following table shows the intrinsic value of outstanding Marriott International stock options and exercisable stock options held by our employees at year-end 2011 and 2010:


*($ in millions)*	2011		2010
Outstanding stock options	$	5	$	24
Exercisable stock options	$	5	$	24

The intrinsic value of both the outstanding Marriott Vacations Worldwide stock options and the exercisable stock options held by our employees at year-end 2011 was less than $1 million.

The approximate total intrinsic value of stock options for Marriott International stock exercised by our employees was $2 million in 2011, $10 million in 2010 and $2 million in 2009. The approximate total intrinsic value of stock options for Marriott Vacations Worldwide stock exercised by our employees was less than $1 million in 2011.

SARs awarded under the Marriott International Stock Plan were granted at exercise prices or strike prices equal to the market price of Marriott International common stock on the date of grant. SARs awarded under the Marriott Vacations Worldwide Stock Plan are granted at exercise prices or strike prices equal to the market price of Marriott Vacations Worldwide common stock on the date of grant. SARs generally expire ten years after the date of grant and both vest and may be exercised in cumulative installments of one quarter at the end of each of the first four years following the date of grant. Upon exercise of SARs, our employees receive the number of shares of Marriott International common stock or Marriott Vacations Worldwide common stock, as applicable, equal to the number of SARs being exercised, multiplied by the quotient of (a) the final value minus the base value, divided by (b) the final value.

We recognized compensation expense associated with SARs held by our employees of less than $1 million in 2011, and $1 million in each of 2010 and 2009. At year-end 2011 and year-end 2010, we had $3 million and less than $1 million, respectively, in deferred compensation costs related to SARs held by our employees. Upon the exercise of SARs held by our employees, Marriott International or Marriott Vacations Worldwide will issue shares from treasury shares or authorized shares, as applicable.

The following table shows the 2011 changes in outstanding Marriott Vacations Worldwide SARs issued to both Marriott International and Marriott Vacations Worldwide employees:


	Number of Shares			Weighted Average Exercise Price
Outstanding at year-end 2010		—		$	—
Granted during 2011⁽¹⁾		803,118			18
Exercised during 2011		(2,470	)		16
Forfeited during 2011		(2,559	)		20

Outstanding at year-end 2011		798,089		$	18

(1)	Includes 263,746 SARs granted to our employees under the Marriott Vacations Worldwide Stock Plan, subsequent to the Spin-Off.

We use the Black-Scholes model to estimate the fair value of the stock options or SARs granted. For stock options or SARs granted under the Marriott Vacations Worldwide Stock Plan subsequent to the Spin-Off, the expected stock price volatility was calculated based on the historical volatility from the stock prices of a group of identified peer companies. The average expected life was calculated based on the simplified method. The risk-free interest rate was calculated based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. The expected annual dividend per share was $0 based on our expected dividend rate.

The following table outlines the assumptions used to estimate the fair value of grants following the Spin-Off for the fiscal year ended 2011:


	2011
Expected volatility		47.40	%
Dividend yield		0.00	%
Risk-free rate		1.38	%
Expected term (in years)		6.25

Marriott International used a binomial method to estimate the fair value of the stock options or SARs granted, under which Marriott International calculated the weighted average expected stock option or SAR as the product of a lattice-based binomial valuation model that uses suboptimal exercise factors. Marriott International used historical data to estimate exercise behaviors for separate groups of retirement eligible and non-retirement eligible employees of our business.

The following table shows the assumptions used to estimate the fair value of stock options and SARs our employees were awarded under the Marriott International Stock Plan, prior to the Spin-Off, for 2011, 2010 and 2009:


	2011			2010			2009
Expected volatility		32	%		32	%		32	%
Dividend yield		0.73	%		0.71	%		0.95	%
Risk-free interest rate		3.4	%		3.3	%		2.2	%
Expected term (in years)		8			7			7

In making these assumptions, Marriott International based risk-free interest rates on the corresponding U.S. Treasury spot rates for the expected duration at the date of grant, which Marriott International converted to a continuously compounded rate. Marriott International based the expected volatility on the weighted-average historical volatility of the Marriott International Common Stock, with periods with atypical stock movement given a lower weight to reflect stabilized long-term mean volatility.

The differences in the assumptions used by Marriott International and by us to estimate fair value are a result of the Spin-Off and Marriott Vacations Worldwide operating as an independent company.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
-Paragraph 53
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 50
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 40
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929

+ Details

VARIABLE INTEREST ENTITIES

12 Months Ended

Dec. 30, 2011

VARIABLE INTEREST ENTITIES

17. VARIABLE INTEREST ENTITIES

In accordance with the applicable accounting guidance for the consolidation of variable interest entities, we analyze our variable interests, including loans, guarantees and equity investments, to determine if an entity in which we have a variable interest is a variable interest entity. Our analysis includes both quantitative and qualitative reviews. We base our quantitative analysis on the forecasted cash flows of the entity, and our qualitative analysis on our review of the design of the entity, its organizational structure including decision-making ability, and relevant financial agreements. We also use our qualitative analyses to determine if we must consolidate a variable interest entity as its primary beneficiary.

Variable Interest Entities Related to Our Notes Receivable Securitizations

We periodically securitize, without recourse, through bankruptcy remote special purpose entities, notes receivable originated in connection with the sale of vacation ownership products. These notes receivable securitizations provide funding for us and transfer the economic risks and substantially all the benefits of the loans to third parties. In a notes receivable securitization, various classes of debt securities that the special purpose entities issue are generally collateralized by a single tranche of transferred assets, which consist of vacation ownership notes receivable. We service the notes receivable. With each notes receivable securitization, we may retain a portion of the securities, subordinated tranches, interest-only strips, subordinated interests in accrued interest and fees on the securitized notes receivable or, in some cases, overcollateralization and cash reserve accounts.

Under GAAP as it existed before 2010, these entities met the definition of QSPEs, and we were not required to evaluate them for consolidation. We evaluated these entities for consolidation when we implemented the new Consolidation Standard in the first quarter of 2010. We created these entities to serve as a mechanism for holding assets and related liabilities, and the entities have no equity investment at risk, making them variable interest entities. We continue to service the notes receivable, transfer all proceeds collected to these special purpose entities, and retain rights to receive benefits that are potentially significant to the entities. Accordingly, we concluded under the new Consolidation Standard that we are the entities’ primary beneficiary and, therefore, may consolidate them. Please see Footnote No. 1, “Summary of Significant Accounting Policies,” for additional information, including the impact of initial consolidation of these entities.

The following table shows consolidated assets, that are collateral for the obligations of these variable interest entities, and consolidated liabilities included in our Balance Sheet at December 30, 2011.


*($ in millions)*	Notes Receivable Securitizations		Warehouse Credit Facility		Total
Consolidated Assets:
Notes receivable, net of reserves	$	775	$	135	$	910
Interest receivable		5		1		6
Restricted cash		37		5		42

Total	$	817	$	141	$	958

Consolidated Liabilities:
Interest payable	$	2	$	—	$	2
Debt		729		118		847

Total	$	731	$	118	$	849

The noncontrolling interest balance was zero. The creditors of these entities do not have general recourse to us.

The following table shows the interest income and expense recognized as a result of our involvement with these variable interest entities during fiscal year 2011:


*($ in millions)*	Notes Receivable Securitizations		Warehouse Credit Facility		Total
Interest income	$	125	$	6	$	131
Interest expense to investors	$	43	$	1	$	44
Debt issuance cost amortization	$	3	$	1	$	4

The following table shows cash flows between us and the notes receivable securitization variable interest entities:


*($ in millions)*	2011			2010
Cash inflows:
Net proceeds from notes receivable securitization	$	—		$	215
Principal receipts		209			231
Interest receipts		126			142

Total		335			588

Cash outflows:
Principal to investors		(214	)		(230	)
Optional repurchases of defaulted notes		(52	)		(68	)
Optional retirement clean-up call		(21	)		(25	)
Interest to investors		(44	)		(53	)

Total		(331	)		(376	)

Net Cash Flows	$	4		$	212

The following table shows cash flows between us and the warehouse credit facility variable interest entity:


*($ in millions)*	2011			2010
Cash inflows:
Net proceeds from notes receivable securitization	$	122		$	—
Principal receipts		10			—
Interest receipts		5			—

Total		137			—

Cash outflows:
Principal to investors		(8	)		—
Optional repurchases of defaulted notes		—			—
Interest to investors		(1	)		—

Total		(9	)		—

Net Cash Flows	$	128		$	—

Under the terms of our notes receivable securitizations, we have the right at our option to repurchase defaulted mortgage notes at the outstanding principal balance. The transaction documents typically limit such repurchases to 10 to 20 percent of the transaction’s initial mortgage balance. We made voluntary repurchases of defaulted notes receivable of $52 million during 2011, $68 million during 2010 and $81 million during 2009. We also made voluntary repurchases of $24 million and $25 million of other non-defaulted notes receivable during 2011 and 2010, respectively, to retire previous notes receivable securitizations. Our maximum exposure to loss relating to the entities that own these notes receivable is the overcollateralization amount (the difference between the loan collateral balance and the balance on the outstanding notes receivable), plus cash reserves and any residual interest in future cash flows from collateral.

Other Variable Interest Entities

In 2010, we completed the acquisition of the noncontrolling interest in an entity that develops and markets vacation ownership and residential products. We had previously concluded that the entity was a variable interest entity because the voting rights of the entity’s owners were not proportionate to the economic interests of the entity’s owners and we had consolidated the entity because we were the primary beneficiary. Following our acquisition of the noncontrolling interest, we determined that this now wholly owned entity was no longer a variable interest entity.

In 2010, we caused the sale of substantially all of the assets and liabilities of an entity whose equity was subject to a call option that we held, resulting in an $18 million gain (plus $3 million recorded in wholly owned entities) and net cash flow of $38 million (of a total $42 million in various entities). We had previously concluded that the entity, which holds property and land acquired for vacation ownership development that we operated as a hotel, was a variable interest entity because the equity investment at risk was not sufficient to permit it to finance its activities without additional support from other parties. We concluded we were the primary beneficiary because we had ultimate power to direct the activities that most significantly impacted the entity’s economic performance. Our involvement with the entity did not have a material effect on our financial performance or cash flows before 2010. Subsequent to the sale we no longer hold a call option on the equity and thus have no variable interest in this entity.

See Footnote No. 20, “Significant Investments,” for information pertaining to an equity method investee that is a variable interest entity.

RESTRUCTURING COSTS AND OTHER CHARGES

12 Months Ended

Dec. 30, 2011

RESTRUCTURING COSTS AND OTHER CHARGES

18. RESTRUCTURING COSTS AND OTHER CHARGES

During the latter part of 2008, our business was negatively affected by the global downturn in market conditions and particularly the significant deterioration in the credit markets. These declines resulted in cancellation of development projects and reduced contract sales. In the fourth quarter of 2008, we put company-wide cost-saving measures in place in response to these declines. As part of the restructuring actions we began in 2008 and as a result of the continued deterioration in market conditions, we initiated further cost-saving measures in 2009 that resulted in restructuring costs of $44 million in 2009. We completed this restructuring in 2009 and have not incurred additional expenses in connection with these initiatives. We also recorded $29 million of other charges in 2009.

Severance

These various restructuring initiatives resulted in an overall reduction of 965 employees (the majority of whom were terminated by year-end 2008) across our business. We recorded a total workforce reduction charge of $14 million related primarily to severance and fringe benefits.

Facilities Exit Costs

As a result of workforce reductions, closure of sales centers and delays in filling vacant positions that were part of the restructuring, we ceased using certain leased facilities. We recorded a restructuring charge of approximately $5 million associated with these facilities, primarily related to non-cancelable lease costs in excess of estimated sublease income.

2009 Restructuring Costs

Total restructuring costs by segment for fiscal year 2009 are as follows:


*($ in millions)*	Severance		Facility Exit Related		Total
North America Segment	$	10	$	21	$	31
Luxury Segment		1		2		3
Europe Segment		2		1		3
Asia Pacific Segment		2		5		7

Total	$	15	$	29	$	44

2009 Other Charges

Total other charges by segment for fiscal year 2009 are as follows:


*($ in millions)*	Contract Cancellation Allowance		Residual Interest Valuation		Total
Luxury Segment	$	9	$	—	$	9
Corporate and other		—		20		20

Total	$	9	$	20	$	29

Contract Cancellation Allowances

Our Financial Statements reflect net contract cancellation allowances of $9 million in 2009, recorded based on our expectation that a portion of contract revenue and costs previously recorded for certain projects under the percentage-of-completion method will not be realized due to contract cancellations prior to closing. We had an equity method investment in one of these projects, and accordingly, we reflected $6 million of the $9 million in the Equity in (losses) earnings caption on our Statements of Operations. The remaining net $3 million of contract cancellation allowances consisted of a reduction in revenue, net of adjustments to product costs and other direct costs and was recorded in Sales of vacation ownership products, net and Cost of vacation ownership products on our Statements of Operations.

Residual Interests Valuation

The fair market value of our residual interests in securitized notes receivable declined in the first half of 2009 primarily due to an increase in the market rate of interest at which we discounted future cash flows to estimate the fair market value of the retained interests as well as a decrease in interest we receive because certain previously securitized notes receivable pools reached performance triggers. The increase in the market rate of interest reflected an increase in defaults caused by the continued deteriorating economic conditions. As a result of this change, we recorded an $11 million charge in the first quarter of 2009, which was partially offset by a $7 million favorable impact from changes in assumptions related to discount rate, defaults and prepayments in the second, third and fourth quarters of 2009. Eight previously securitized notes receivable pools reached performance triggers as a result of increased defaults (one pool in March 2009, six pools in April and May 2009, and one pool in December 2009). These performance triggers effectively redirected the excess spread we typically receive each month to accelerate returns to investors and resulted in $20 million in charges in the first half of 2009. In the 2009 second half, performance improved sufficiently in seven of the eight securitized notes receivable pools to cure the performance triggers, resulting in a $4 million benefit to residual interest. We recorded these charges in the Financing revenues caption on our Statements of Operations. The tables summarizing the changes to our Level 3 assets and liabilities which are measured at fair value on a recurring basis in Footnote No. 5, “Fair Value Measurements,” reflect the $20 million in total charges in 2009 on the “Included in earnings” line, which also reflects a partial offset due to other changes in the underlying assumptions that impact the fair value of the residual interests and the cure of the performance triggers in the 2009 second half.

Summary of Restructuring Costs and Liability

The following table provides additional information regarding our restructuring, including the balance of the liability at year-end 2011 and total costs incurred through the end of the restructuring in 2009:


*($ in millions)*	Severance			Facility Exit Related			Total
Restructuring Cost Liability at Year-End 2008	$	11		$	5		$	16
2009 Restructuring Charges		15			29			44
Cash Payments in 2009		(21	)		(7	)		(28	)
Non-Cash Adjustments in 2009		(1	)		(9	)		(10	)

Restructuring Cost Liability at Year-End 2009		4			18			22
Cash Payments in 2010		(3	)		(5	)		(8	)

Restructuring Cost Liability at Year-End 2010		1			13			14
Cash Payments in 2011		(1	)		(4	)		(5	)

Restructuring Cost Liability at Year-End 2011	$	—		$	9		$	9

Total Cumulative Restructuring Costs through 2009	$	29		$	34		$	63

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

+ References + Details

IMPAIRMENT CHARGES

12 Months Ended

Dec. 30, 2011

IMPAIRMENT CHARGES

19. IMPAIRMENT CHARGES

In accordance with ASC 978, “Real Estate—Time-sharing Activities,” and ASC 360, “Property, Plant, and Equipment,” we have recorded impairment adjustments to inventory, property and equipment and one joint venture investment and related party notes receivable to adjust the carrying value of underlying assets to our estimate of its fair value when required.


*($ in millions)*	2011		2010		2009
Impairment Charge
Inventory impairment	$	251	$	1	$	546
Property and equipment impairment		73		14		56
Other impairments		—		—		21

Total impairment charge	$	324	$	15	$	623

Refer to Footnote No. 20, “Significant Investments,” for discussion of the impairment charges that impacted equity investments.

2009 Impairment Charges

We incurred total impairment charges during 2009 as follows:


*($ in millions)*	North America Segment		Luxury Segment		Europe Segment		Asia Pacific Segment		Corporate and Other		Total
Impairment Charge
Inventory impairment	$	105	$	391	$	44	$	6	$	—	$	546
Property and equipment impairment		3		31		7		8		7		56
Other impairments		—		19		—		2		—		21

Total impairment charge	$	108	$	441	$	51	$	16	$	7	$	623

In response to the difficult business conditions experienced by the vacation ownership and residential product development businesses, we evaluated our entire portfolio in 2009. In order to adjust our business strategy to reflect current market conditions at that time, we approved plans to take the following actions: (1) for our residential products projects, reduce prices, convert certain proposed projects to other uses, sell certain undeveloped land, and not pursue further company-funded residential development projects; (2) reduce prices for existing Luxury segment vacation ownership units; (3) continue short-term promotions for our North America segment vacation ownership business and defer the introduction of new projects and development phases; and (4) for our Europe segment resorts, continue promotional pricing and marketing incentives and not pursue further development. We designed these plans, which primarily related to residential products and vacation ownership resorts, to stimulate sales, accelerate cash flow and reduce investment spending.

We estimated the fair value of the underlying assets using probability-weighted cash flow models that reflected our expectations of future performance discounted at risk-free interest rates commensurate with the remaining life of the related projects, using the guidance specified in ASC 820. We used Level 3 inputs for our discounted cash flow analyses. Our assumptions included: growth rate and sales pace projections, additional pricing discounts resulting from the business decisions we made, development cancellations resulting in shorter project life cycles, marketing and sales cost estimates, and in certain instances alternative uses to comply with ASC 820’s highest and best use provisions. In some instances, we took into account appraisals, which we deemed to be Level 3 inputs, for the fair value of the underlying assets.

Other impairments primarily related to our anticipated fundings in conjunction with certain purchase commitments, a portion of which we did not expect to recover because the projected fair value of the assets to be purchased under the commitments would be below the amount we expect to fund. We measured the projected fair value of the assets using probability-weighted cash flow models with Level 3 inputs, in accordance with ASC 820. Our assumptions included: growth rate and sales pace projections, additional pricing discounts as a result of the business decisions made, marketing and sales cost estimates, and in certain instances alternative uses to comply with ASC 820’s highest and best use provisions.

The impairment charges were non-cash, other than $21 million of charges accrued for funding of future purchase commitments.

Software Development Write-off

In 2009, we recorded a non-cash impairment charge of $7 million for the write-off of capitalized software. We concluded that continued development of this software was not cost effective given continued cost savings initiatives associated with the challenging business environment and we will instead pursue alternative lower cost solutions.

2010 Impairment Charges

We incurred total impairment charges during 2010 as follows:


*($ in millions)*	Luxury Segment		Asia Pacific Segment			Total
Impairment Charge
Inventory impairment	$	6	$	—		$	6
Property and equipment impairment		14		—			14
Other impairments (reversals)		—		(5	)		(5	)

Total impairment charge	$	20	$	(5	)	$	15

We estimated the fair value of the underlying assets using cash flow models that reflected our expectations of future performance discounted at varying rates to capture the inherent risk in each model.

In the fourth quarter of 2010, we decided to pursue the disposition of a golf course and related assets. In accordance with the guidance for the impairment of long-lived assets, we evaluated the property and related assets for recovery and in 2010 we recorded an impairment charge of $14 million to adjust the carrying value of the assets to our estimate of fair value. We estimated fair value using an income approach reflecting internally developed Level 3 discounted cash flows based on negotiations with a qualified prospective third-party purchaser of the asset. Further, we recorded $6 million of additional inventory impairment charges in our Luxury segment due to continued sluggish sales pace.

In the first quarter of 2010, we negotiated an amendment to a purchase commitment for vacation ownership units to be delivered to our Asia Pacific segment in 2011, resulting in a reversal of $5 million of a previously recorded impairment charge for anticipated funding in connection with the purchase commitment.

2011 Impairment Charges

We incurred total impairment charges during 2011 as follows:


*($ in millions)*	Luxury Segment		Europe Segment		Corporate and Other		Total
Impairment Charge
Inventory impairment	$	111	$	2	$	138	$	251
Property and equipment impairment		6		—		67		73

Total impairment charge	$	117	$	2	$	205	$	324

In preparation for the Spin-Off, management assessed the intended use of excess undeveloped land and built inventory and the current market conditions for those assets. During the third quarter of 2011, management approved a plan to accelerate cash flow through the monetization of certain excess undeveloped land in the United States, Mexico, and the Bahamas over the next three years and to accelerate sales of excess built Luxury fractional and residential inventory over the next 18 to 24 months. As a result, in accordance with the guidance for accounting for the impairment or disposal of long-lived assets, because the nominal cash flows from the planned land sales and the estimated fair values of the land and excess built Luxury inventory were less than their respective carrying values, we recorded a pre-tax non-cash impairment charge of $324 million ($234 million after-tax) under the “Impairment” caption.

We estimated the fair value of the land by using recent comparable sales data for the land parcels, which we determined were Level 3 inputs. We estimated the fair value of the excess built Luxury fractional and residential inventory using cash flow projections discounted at risk premiums commensurate with the market conditions of the related projects. We used Level 3 inputs for these discounted cash flow analyses and our assumptions included: growth rate and sales pace projections, additional sales incentives such as pricing discounts, and marketing and sales cost estimates.

Grouped by product type and/or geographic location, these impairment charges consisted of $117 million associated with nine Luxury fractional and mixed use properties, $2 million related to one project in our European vacation ownership business, and $205 million associated with Corporate and Other, including $199 million related to undeveloped land parcels associated with five vacation ownership properties and $6 million of software previously under development that will not be completed and used under our new strategy.

Additionally, we reclassified $52 million of these land parcels previously in our development plans from inventory to property and equipment.

We also reviewed the remainder of our inventory assets and determined that there were no other adjustments needed to our vacation ownership inventory, which is recorded at the lower of cost or fair value less cost to sell.

SIGNIFICANT INVESTMENTS

12 Months Ended

Dec. 30, 2011

SIGNIFICANT INVESTMENTS

20. SIGNIFICANT INVESTMENTS

Significant Investment in One Joint Venture

We use the equity method of accounting for our investments in other companies over which we exercise significant influence and we include the net earnings of these investments as Equity in (losses) earnings on our Statements of Operations. Our investments in other companies consist primarily of an investment in and a note receivable due from a variable interest entity that develops and markets vacation ownership and residential products in Hawaii pursuant to a joint venture arrangement. We concluded that the entity is a variable interest entity because the equity investment at risk is not sufficient to permit the entity to finance its activities without additional support from other venture parties. We determined that we are not the primary beneficiary, as power to direct the activities that most significantly impact economic performance of the entity is shared among the variable interest holders and, therefore, we do not consolidate the entity. In 2009, we fully impaired our equity investment in the entity and in certain notes receivable due from the entity. In 2010, the continued application of equity losses to our remaining outstanding notes receivable balance reduced its carrying value to zero. We may be required to fund up to an additional $13 million to this entity and do not expect to recover this amount, which we have accrued and included in other liabilities on our Balance Sheets. The funding liability meets the criteria of probable and reasonably estimable, in accordance with the guidance in ASC 450, “Contingencies,” at year-end 2011. We do not have any remaining exposure to loss related to this entity.

We loaned $12 million to the venture in 2009. We collected $6 million in 2009. Additionally we loaned $20 million, secured by a mortgage, to one of the participants in the venture in 2009 related to its acquisition of residential units from the venture. The $20 million loan was repaid in full during 2011.

In response to the difficult business conditions experienced by the vacation ownership and residential product development businesses, we evaluated our equity method investment in this variable interest entity in the third quarter of 2009. To adjust the business strategy to reflect current market conditions, on September 22, 2009, we, as the venture project’s marketing and sales agent, approved plans to reduce prices for the venture’s vacation ownership and residential products in order to stimulate sales, accelerate cash flow and reduce investment spending. As a result of this change in strategy, we impaired our equity method investment. We also reviewed the recoverability of loans made to the venture and our obligations related to the venture and recorded the following charges in Impairment Reversal (Charge) on Equity Investment:


*($ in millions)*	2011		2010		2009
Impairment Reversal (Charge) on Equity Investment
Joint venture impairment	$	—	$	—	$	(71	)
Loan impairment		—		—		(40	)
Funding liability		4		11		(27	)

Total impairment reversal (charge) on equity investment	$	4	$	11	$	(138	)

We estimated the fair value of our investment using probability-weighted cash flow models that reflected our expectations of future performance discounted at risk-free interest rates commensurate with the remaining life of the related projects, using the guidance specified in ASC 820. We used Level 3 inputs for our discounted cash flow analyses. Our assumptions included: growth rate and sales pace projections, additional pricing discounts resulting from the business decisions we made and marketing and sales cost estimates.

We fully reserved certain notes receivable in accordance with ASC 310, based on the present value of the notes receivable’s expected cash flows discounted at the notes receivable’s effective interest rates.

In the fourth quarter of 2010, we reversed $11 million of the $27 million funding liability we recorded in 2009 based on facts and circumstances surrounding the venture project, including progress on certain construction-related legal claims and potential funding of certain costs by one of the venture participants. In addition, the venture was unable to pay promissory notes that matured on December 31, 2010 and August 1, 2011. Subsequently, the lenders issued a notice of default to the venture. The venture continues to negotiate a consensual resolution. In the third quarter of 2011, we reversed an additional $4 million of the $27 million funding liability we recorded in 2009.

We provide marketing and sales, construction management, property management and accounting services to the venture. Fees for such services were $1 million in 2011, $2 million in 2010 and $5 million in 2009 and are included in Resort management and other services revenues of our Statements of Operations.

Other

We have other investments in (i) a venture that developed and sold vacation ownership products in Thailand and (ii) an ancillary operation in the United States. At each of year-end 2011 and 2010, our investments were $1 million and $1 million in total, respectively. We include the investments in Other within Assets on our Balance Sheets.

Impact of Investments

The consolidated results of operations and consolidated financial position of our equity method investees are summarized below:


*($ in millions)*	2011			2010			2009
Condensed Statements of Operations information:
Net revenue	$	19		$	11		$	(47	)
Cost of sales		(7	)		(7	)		29
Impairment		—			—			(210	)
Loss from operations		(44	)		(108	)		(28	)

Net loss	$	(32	)	$	(104	)	$	(256	)


	2011			2010
Condensed Balance Sheet information:

Current assets	$	159		$	163
Non-current assets		14			16

Total assets	$	173		$	179

Current liabilities	$	26		$	13
Non-current liabilities		352			338
Equity (deficit)		(205	)		(172	)

Total liabilities and equity	$	173		$	179

Equity in losses recognized on our Statements of Operations that were attributable to our significant investment is shown below:


*($ in millions)*	2011		2010			2009
Equity in losses of significant investment to Marriott Vacations Worldwide	$	—	$	(8	)	$	(12	)

The total cash contributions to our equity method investees were $0 in each of 2011, 2010 and 2009. The total cash distributions from our equity method investees were $0 in 2011, $0 in 2010 and $1 million in 2009.

RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 30, 2011

RELATED PARTY TRANSACTIONS

21. RELATED PARTY TRANSACTIONS

Effective upon the completion of the Spin-Off, Marriott Vacations Worldwide ceased to be a related party of Marriott International.

Through November 21, 2011 (the effective date of the Spin-Off), our expenses included allocations from Marriott International of costs associated with services provided by Marriott International to us including, but not limited to, information technology support, systems maintenance, telecommunications, accounts payable, payroll and benefits, human resources, self-insurance and other shared services. Historically, these costs were charged to us based on specific identification or on a basis determined by Marriott International to reflect a reasonable allocation to us of the actual costs incurred to perform these services. These allocated costs were $23 million, $30 million and $25 million for the period from January 1, 2011 through date of Spin-Off, 2010 and 2009, respectively.

Marriott International allocated indirect general and administrative costs to us for certain functions and services provided to us by Marriott International, including, but not limited to, executive office, legal, tax, finance, government and public relations, internal audit, treasury, investor relations, human resources and other administrative support primarily on the basis of our proportion of Marriott International’s overall revenue. Accordingly, we were allocated $12 million for the period from January 1, 2011 through date of Spin-Off, $15 million in 2010 and $13 million in 2009 of Marriott International’s indirect general and corporate overhead expenses and have included these expenses in General and administrative expenses on our Statements of Operations.

Marriott International ceased allocating expenses to us after the Spin-Off on November 21, 2011. We determined that our relative revenue was a reasonable reflection of Marriott International time dedicated to the oversight of our historical business. The allocations may not, however, reflect the expense we would have incurred as an independent, publicly traded company for the periods presented.

Relationship Between Marriott Vacations Worldwide and Marriott International After the Spin-Off

For purposes of governing certain of the ongoing relationships between Marriott Vacations Worldwide and Marriott International at and after the Spin-Off, and to provide for an orderly transition, Marriott Vacations Worldwide and Marriott International have entered into the following agreements:

•

Separation and Distribution Agreement. This agreement sets forth the principal actions taken in connection with the Spin-Off. It also sets forth other agreements that govern certain aspects of our continued relationship with Marriott International following the Spin-Off. In accordance with the Separation and Distribution Agreement, we agreed that we had sufficient working capital as of the date of the distribution of our common stock to meet our anticipated needs, and that we would pay Marriott International $23 million within 120 days after the date of the distribution of our common stock, primarily to reimburse Marriott International for certain costs incurred in connection with the Spin-Off related to our new credit facilities and to implement and modify our information resource systems. The Separation and Distribution Agreement provides for the settlement or extinguishment of certain liabilities and the termination of certain agreements and understandings between us and Marriott International as of the distribution date for the Spin-Off. We and Marriott International each agreed to broad releases of the other company and its wholly owned subsidiaries and affiliates from claims against them arising out of events or actions occurring, or any conditions existing at or prior to, the distribution date. Each company also agreed in the Separation and Distribution Agreement to indemnify each other against certain liabilities in connection with the Spin-Off and our respective businesses.

•

License Agreements. These agreements grant us the exclusive right, for their respective terms, to use certain Marriott and Ritz-Carlton marks and intellectual property in our vacation ownership business, the exclusive right to use the Grand Residences by Marriott marks and intellectual property in our residential real estate business and the non-exclusive right to use certain Ritz-Carlton marks and intellectual property in our residential real estate development business. The initial term of each of these agreements will expire on December 31, 2090. We may extend the initial term of each agreement by two additional terms of 30 years each if we meet specified sales thresholds and are not in breach of the agreement at the time of renewal. We pay royalty fees under the License Agreements equal to: (i) a fixed fee of $50 million per year, plus (ii) two percent of the gross sales price paid to us or our affiliates for initial developer sales of interests in vacation ownership units or units of accommodation in our residential real estate business, plus (iii) one percent of the gross sales price paid to us or our affiliates for resales of such interests, in each case that are identified with or use the licensed marks. The fixed fee will be increased every five years by 50 percent of an inflation index, compounded annually.

•

Noncompetition Agreement. This agreement generally prohibits Marriott International and its subsidiaries from engaging in the vacation ownership business and prohibits us and our subsidiaries from engaging in the hotel business until the earlier of November 21, 2021 or the termination of the Marriott License Agreement.

•

Marriott Rewards Affiliation Agreement. This agreement allows us to continue to participate in the Marriott Rewards customer loyalty program following the Spin-Off; this participation includes the ability to purchase and use Marriott Rewards Points in connection with our Marriott-branded vacation ownership business. The Marriott Rewards Affiliation Agreement is coterminous with the Marriott License Agreement. We include the estimated cost of future redemptions of points that Marriott International issues on our behalf (approximately $102 million in 2011, $75 million in 2010 and $91 million in 2009) in the Liability for Marriott Rewards loyalty program caption of our Balance Sheets.

•

Tax Sharing and Indemnification Agreement. This agreement describes the methodology for allocating between Marriott International and ourselves responsibility for federal, state, local and foreign income and other taxes relating to taxable periods before and after the Spin-Off. This agreement also provides that if any part of the Spin-Off fails to qualify for the tax treatment stated in the ruling Marriott International received from the U.S. Internal Revenue Service in connection with the Spin-Off, taxes imposed on Marriott International or that it incurs as a result of such failure will be allocated between Marriott International and us, and each company will indemnify and hold harmless the other from and against the taxes so allocated.

•

Employee Benefits and Other Employment Matters Allocation Agreement. This agreement sets forth our agreement with Marriott International on the allocation of employees and obligations and responsibilities for compensation, benefits and labor matters, including, among other things, the treatment of outstanding awards under the Marriott International, Inc. Stock and Cash Incentive Plan, deferred compensation obligations, retirement plans and medical and other welfare benefit plans.

•

Transition Services Agreements. We entered into an Omnibus Transition Services Agreement, a Payroll Services Agreement, a Human Resources and Internal Communications Transition Services Agreement and an Information Resources Transition Services Agreement with Marriott International. Under these transition services agreements, Marriott International or certain of its subsidiaries agree to provide us with certain services for a limited time to help ensure an orderly transition following the Spin-Off. These agreements generally have terms of up to 24 months. We may terminate any transition service upon prior notice to Marriott International, generally 120 days in advance of the service termination date. The charge for transition services is intended to allow Marriott International to recover its direct and indirect costs incurred in providing those services.

•

Other Agreements. We also entered into other agreements with Marriott International that govern our relationship following the Spin-Off. These agreements, which are of varying duration, include agreements under which we provide telemarketing services to Marriott International, various subleases and other arrangements regarding the use of space, and agreements for the provision of services such as medical, payroll and other services at our properties. We also entered into agreements for the provision of transition services in addition to those described above, including services we provide to Marriott International in connection with business operations located in our headquarters facility and services Marriott International will provide to us in connection with the relocation of employees. In addition, we entered into agreements with Marriott International and certain third parties that provide services to Marriott International pursuant to which those third parties agreed to continue to provide such services to us for specified periods following the Spin-Off.

Because the terms of these agreements were entered into in the context of a related party transaction, the terms may not be comparable to terms that would be obtained in a transaction between unaffiliated parties.

All significant intercompany transactions between us and Marriott International were included in our historical financial statements and are considered to be effectively settled at the time of the Spin-Off. The total net effect of the settlement of these intercompany transactions is reflected in the Statements of Cash Flows as a financing activity and in the Balance Sheets as “Divisional Equity” as of and for the period ending at the date of Spin-Off.

- Definition

The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Article 4
-Section 08
-Paragraph k

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Regulation S-X (SX)
-Number 210
-Article 3A
-Section 04
-Paragraph b

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 57
-Paragraph 1-4
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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+ Details

BUSINESS SEGMENTS

12 Months Ended

Dec. 30, 2011

BUSINESS SEGMENTS

22. BUSINESS SEGMENTS

We operate in four business segments:

•

In our North America segment, we develop, market, sell and manage vacation ownership products under the Marriott Vacation Club and Grand Residences by Marriott brands in the United States and the Caribbean. We also develop, market, sell and manage resort residential real estate located within our vacation ownership developments under the Grand Residences by Marriott brand.

•

In our Luxury segment, we develop, market, sell and manage luxury vacation ownership products under the Ritz-Carlton Destination Club brand. We also sell whole ownership luxury residential real estate under the Ritz-Carlton Residences brand.

•

In our Europe segment, we develop, market, sell and manage vacation ownership products in several locations in Europe.

•

In our Asia Pacific segment, we operate Marriott Vacation Club, Asia Pacific, a right-to-use points program we introduced in 2006 that we specifically designed to appeal to vacation preferences of the Asian market, as well as a weeks-based right-to-use product originally introduced in 2001.

We evaluate the performance of our segments based primarily on the results of the segment without allocating corporate expenses, income taxes or indirect general and administrative expenses. We do not allocate corporate interest expense or other financing expenses to our segments. Prior to 2010, we included notes receivable securitization gains/(losses) in our Financing revenues on our Statements of Operations. Due to our adoption of the new Consolidation Standard, we no longer account for notes receivable securitizations as sales but rather as secured borrowings and therefore, we did not recognize a gain or loss on the 2011 or 2010 notes receivable securitizations nor do we expect to recognize gains or losses on future notes receivable securitizations. We include interest income specific to segment activities within the appropriate segment. We allocate other gains and losses, equity in earnings or losses from our joint ventures, general and administrative expenses, and income or losses attributable to noncontrolling interests to each of our segments. Corporate and other represents that portion of our revenues, general, administrative and other expenses, equity in earnings or losses, and other gains or losses that are not allocable to our segments.

Revenues


*($ in millions)*	2011		2010		2009
North America	$	1,272	$	1,251	$	1,195
Luxury		114		103		127
Europe		135		134		122
Asia Pacific		92		96		93

Total segment revenues		1,613		1,584		1,537
Corporate and other		—		—		59

	$	1,613	$	1,584	$	1,596

Net (Loss) Income


*($ in millions)*	2011			2010			2009
North America	$	263		$	280		$	(2	)
Luxury		(130	)		(47	)		(630	)
Europe		12			15			(49	)
Asia Pacific		3			29			(26	)

Total segment financial results		148			277			(707	)
Corporate and other		(362	)		(165	)		(56	)
Benefit (provision) for income taxes		36			(45	)		231

	$	(178	)	$	67		$	(532	)

Net Losses Attributable to Noncontrolling Interests


*($ in millions)*	2011		2010		2009
Luxury	$	—	$	—	$	11

Equity in Losses of Equity Method Investees


*($ in millions)*	2011		2010			2009
Luxury	$	—	$	(8	)	$	(12	)

Depreciation


*($ in millions)*	2011		2010		2009
North America	$	10	$	14	$	15
Luxury		3		3		4
Europe		3		3		4
Asia Pacific		1		2		2

Total segment depreciation		17		22		25
Corporate and other		16		13		17

	$	33	$	35	$	42

Assets


*($ in millions)*	At Year-End 2011		At Year-End 2010
North America	$	2,169	$	2,471
Luxury		185		417
Europe		134		145
Asia Pacific		103		108

Total segment assets		2,591		3,141
Corporate and other		255		501

	$	2,846	$	3,642

Equity Method Investments


*($ in millions)*	At Year-End 2011		At Year-End 2010
North America	$	—	$	—
Asia Pacific		1		1

Total segment equity method investments		1		1
Corporate and other		—		—

	$	1	$	1

Capital Expenditures


*($ in millions)*	2011		2010		2009
North America	$	113	$	100	$	247
Luxury		5		120		54
Europe		5		7		18
Asia Pacific		3		2		9

Total segment capital expenditures		126		229		328
Corporate and other		9		9		9

	$	135	$	238	$	337

Our Financial Statements include the following items related to operations located outside the United States (which are predominately related to our Europe and Asia Pacific segments):

•

Revenues, excluding reimbursed costs, of $288 million in 2011, $274 million in 2010 and $263 million in 2009; and

•

Fixed assets of $96 million in 2011 and $124 million in 2010. For year-end 2011 and year-end 2010, fixed assets located outside the United States are included within the “Property and equipment” caption in our Balance Sheets.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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+ Details

QUARTERLY RESULTS (UNAUDITED)

12 Months Ended

Dec. 30, 2011

QUARTERLY RESULTS (UNAUDITED)

23. QUARTERLY RESULTS (UNAUDITED)


($ in millions, except per share data)	Fiscal Year 2011⁽¹⁾⁽²⁾⁽³⁾
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Fiscal Year
Revenues	$	371		$	380		$	378		$	484		$	1,613

Expenses	$	(338	)	$	(352	)	$	(684	)	$	(459	)	$	(1,833	)

Net income (loss)	$	19		$	16		$	(221	)	$	8		$	(178	)
Net income attributable to non-controlling interests, net of tax		—			—			—			—			—

Net income (loss) attributable to Marriott Vacations Worldwide	$	19		$	16		$	(221	)	$	8		$	(178	)

Basic earnings (loss) per share attributable to Marriott Vacations Worldwide shareholders	$	0.58		$	0.47		$	(6.57	)	$	0.24		$	(5.29	)

Diluted earnings (loss) per share attributable to Marriott Vacations Worldwide shareholders	$	0.58		$	0.47		$	(6.57	)	$	0.23	⁽⁴⁾	$	(5.29	)

	Fiscal Year 2010⁽¹⁾⁽²⁾⁽³⁾
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Fiscal Year
Revenues	$	371		$	374		$	360		$	479		$	1,584

Expenses	$	(347	)	$	(343	)	$	(328	)	$	(478	)	$	(1,496	)

Net income	$	11		$	19		$	19		$	18		$	67
Net income attributable to non-controlling interests, net of tax		—			—			—			—			—

Net income attributable to Marriott Vacations Worldwide	$	11		$	19		$	19		$	18		$	67

Basic earnings per share attributable to Marriott Vacations Worldwide shareholders	$	0.33		$	0.55		$	0.57		$	0.54		$	2.00

Diluted earnings per share attributable to Marriott Vacations Worldwide shareholders	$	0.33		$	0.55		$	0.57		$	0.54		$	2.00

(1)	The quarters consisted of 12 weeks, except for the fourth quarters of 2011 and 2010, which consisted of 16 weeks.

(2)	The sum of the earnings per share for the four quarters differs from annual earnings per share due to the required method of computing the weighted average shares in interim periods.

(3)	The weighted average number of shares outstanding for purposes of calculating both basic and diluted earnings (loss) per share for all periods presented except the fourth quarter of fiscal year 2011 is 33.7 million shares.

(4)

As discussed in Footnote No. 16, “Share-Based Compensation,” we issued equity awards that qualify as common stock equivalents in connection with and after the Spin-Off resulting in a weighted average number of shares outstanding of 34.2 million for purposes of calculating diluted earnings (loss) per share.

- Definition

The entire disclosure for the quarterly financial data in the annual financial statements. The disclosure may include a tabular presentation of financial information for each fiscal quarter for the current and previous year, including revenues, gross profit, income or loss before extraordinary items and earnings per share data. It also includes an indication if the information in the note is unaudited, comments on the aggregate effect of year-end adjustments, and an explanation of matters or transactions that affect comparability or are pertinent to an understanding of the information furnished.

+ References + Details