2014

Marriott Vacations Worldwide Reports First Quarter 2013 Financial Results

ORLANDO, Fla., April 25, 2013 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported first quarter 2013 financial results and updated certain earnings guidance for the full year 2013.

First Quarter 2013 highlights include:

  • Adjusted EBITDA (earnings before non-consumer financing interest expense, income taxes, depreciation and amortization), as adjusted for organizational and separation related costs in connection with the company's spin-off from Marriott International, Inc. (the "Spin-Off") and other activity, totaled $39 million, a $10 million increase from the first quarter of 2012, on an adjusted basis.
  • North America segment contract sales increased 7 percent to $143 million; volume per guest (VPG) increased 11 percent year-over-year to $3,266.
  • Adjusted development margin increased to 17.7 percent in the first quarter of 2013 from 12.1 percent in the first quarter of 2012; North America adjusted development margin increased to 18.8 percent in the first quarter of 2013 from 15.3 percent in the first quarter of 2012.
  • Adjusted fully diluted earnings per share (EPS) in the first quarter were $0.54 compared to $0.27 in the first quarter of 2012.

First quarter 2013 net income totaled $18 million, or $0.50 per diluted share, compared to net income of $9 million, or $0.24 per diluted share, in the first quarter of 2012. Development margin, as reported, increased to 15.8 percent in the first quarter of 2013 from 9.2 percent in the first quarter of 2012.

First quarter 2013 adjusted net income totaled $19 million, a $9 million increase from $10 million of adjusted net income in the first quarter of 2012. First quarter 2013 adjusted results exclude $1 million of pre-tax charges related to organizational and separation related efforts and $1 million for severance charges in the Europe segment, partially offset by a $1 million reversal of a previously established accrual for a legal settlement based upon an agreement to settle the matter. First quarter 2012 adjusted results exclude $2 million related to organizational and separation related efforts. In addition, adjusted development margin for both periods is adjusted, as appropriate, for the impact of revenue reportability.

Non-GAAP financial measures, such as Adjusted EBITDA as adjusted, adjusted net income and adjusted development margin are reconciled in the Press Release Schedules that follow. Adjustments are shown and described in further detail on schedules A-1 through A-10.

"We generated strong first quarter growth in adjusted EBITDA, as adjusted, which was up 34 percent, driven by continued VPG improvement and development margin expansion in our key North America segment," said Stephen P. Weisz, president and chief executive officer. "Our top-line results benefitted from higher pricing and improved closing efficiency during the quarter. In addition, lower product cost and leveraging our fixed marketing and sales expenses drove another quarter of strong development margin performance. As a result, we now expect to achieve full year 2013 adjusted company development margin of 17 to 18 percent." 

First Quarter 2013 Results

For the first quarter, which ended March 22, 2013, total revenues were $389 million, including $91 million in cost reimbursements. Total revenues increased $13 million from the first quarter of 2012 reflecting higher revenues from the sale of vacation ownership products, rental revenues, resort management and other services revenues and cost reimbursements. These increases were partially offset by lower financing revenues from lower interest income on a declining vacation ownership notes receivable portfolio.

Total company contract sales were $156 million, a 2 percent increase from $154 million in the first quarter of 2012, driven by a 7 percent increase in contract sales in the North America segment, partially offset by lower contract sales in the Europe and Asia Pacific segments.  

Development margin was $22 million, a $10 million increase from the first quarter of 2012. This increase was driven by higher total company contract sales, higher revenue reportability year-over-year, lower cost of vacation ownership products and lower marketing and sales expenses as a percentage of revenue.

Development margin increased 6.6 percentage points to 15.8 percent in the first quarter of 2013 from 9.2 percent in the prior year quarter. After adjusting for the impact of revenue reportability, primarily in the North America segment, and other charges, adjusted development margin increased 5.6 percentage points to 17.7 percent in the first quarter of 2013 from 12.1 percent in the first quarter of 2012. The impact of revenue reportability and other charges is illustrated on schedules A-6 and A-7.

Rental revenues totaled $63 million, a 13 percent increase from the first quarter of 2012, reflecting a 19 percent increase in transient keys rented on 9 percent more keys available to rent due to our expectation of more owners electing to bank their points for usage the following year. Rental revenue net of expenses was $7 million, $1 million less than the first quarter of 2012, primarily reflecting the timing of rental expenses associated with owners banking their usage year-over-year.

Resort management and other services revenues totaled $56 million, a 2 percent increase over the first quarter of 2012, and resort management and other services revenues, net of expenses improved $4 million, a 35 percent increase over the first quarter of 2012. Results reflected higher annual fees in connection with the company's Marriott Vacation Club Destinations program, higher management fees, and improvements in ancillary operations.

Adjusted EBITDA, as adjusted for organizational and separation related costs and other charges, was $39 million in the first quarter of 2013, an increase of $10 million from Adjusted EBITDA, as adjusted, of $29 million in the first quarter of 2012.

Segment Results

Effective December 29, 2012, the company combined the reporting of the financial results of its former Luxury segment with the North America segment based upon its scaling back of separate development activity and the aggregation of future marketing and sales of both upscale tier and luxury tier inventory. Existing service standards and on-site management remain unaffected by our reporting changes. Prior year amounts have been recast for consistency with current year's presentation.

North America

Total North America contract sales increased $9 million, or 7 percent, to $143 million in the first quarter of 2013. VPG increased 11 percent to $3,266 in the first quarter of 2013 from $2,942 in the first quarter of 2012, driven by higher pricing and improved closing efficiency.

First quarter 2013 North America segment financial results increased $8 million to $78 million from $70 million in segment financial results in the first quarter of 2012. The increase was driven by $9 million of higher development margin and $4 million of higher resort management and other services revenues, net of expenses. These increases were partially offset by $3 million of lower financing revenues from a declining notes receivable portfolio and $2 million of lower rental revenues net of expenses. Revenues from the sale of vacation ownership products increased $12 million to $126 million in the first quarter, driven mainly by the $9 million increase in contract sales and $3 million of higher year-over-year revenue reportability. Development margin was $22 million, a $9 million increase from the first quarter of 2012.  This increase was driven by higher contract sales, higher revenue reportability year-over-year and lower cost of vacation ownership products. Results for the first quarter of 2013 included $5 million of favorable product cost true-up activity as compared to $2 million in the first quarter of 2012. 

Development margin increased to 17.3 percent in the first quarter of 2013 as compared to 11.7 percent in the prior year quarter. Excluding the impact of revenue reportability, adjusted development margin increased to 18.8 percent in the first quarter of 2013 from 15.3 percent in the first quarter of 2012. The impact of revenue reportability is illustrated on schedule A-7.

Asia Pacific

Asia Pacific contract sales declined $4 million to $9 million in the first quarter of 2013. Total revenues declined $3 million to $15 million. Segment financial results, however, increased $2 million to $3 million in the first quarter of 2013 from the first quarter of 2012 reflecting improved margin as a result of the shutdown of two under-performing off-site sales centers in the fourth quarter of 2012.

Europe

As the Europe segment continues to sell through its remaining inventory, first quarter 2013 contract sales declined $3 million to $4 million. Europe segment financial results were break-even, in line with the first quarter of 2012. After adjusting for severance charges, adjusted segment financial results for Europe were $1 million in the first quarter of 2013, a $1 million increase from 2012, reflecting lower expenses year-over-year.

Organizational and Separation Plan

During the first quarter of 2013, $2 million of costs were incurred in connection with the company's continued organizational and separation related efforts, of which approximately $1 million were capitalized during the quarter. Total future spending for these efforts is expected to be approximately $20 million to $25 million, with costs being incurred through 2014.

These costs primarily relate to establishing the company's own information technology systems and services, independent accounts payable functions and reorganization of existing human resources and information technology organizations to support the company's standalone public company needs. Once completed, these efforts are expected to generate approximately $15 million to $20 million of annualized savings, of which approximately $1 million are reflected in the company's first quarter 2013 financial results.

Balance Sheet and Liquidity

On March 22, 2013, cash and cash equivalents totaled $119 million. Since the end of 2012, real estate inventory balances declined $8 million to $866 million, including $454 million of finished goods, $145 million of work-in-process and $267 million of land and infrastructure. The company had $726 million in debt outstanding at the end of the first quarter of 2013, an increase of $8 million from year-end 2012, including $682 million in non-recourse securitized notes, of which $110 million has been drawn down under our warehouse credit facility, and $40 million of mandatorily redeemable preferred stock of a subsidiary. As of March 22, 2013, the company had $194 million in available capacity under its revolving credit facility after taking into account outstanding letters of credit and had $89 million of vacation ownership notes receivable eligible for securitization.

Outlook

As a result of positive trends experienced to date in 2013, the company is updating its guidance for full year 2013 for Adjusted EBITDA, as adjusted, Adjusted net income, Adjusted company development margin and Adjusted fully diluted earnings per share as follows: 


Current Guidance

Previous Guidance

Adjusted EBITDA, as adjusted

$155 million to $165 million

$150 million to $165 million

Adjusted Net Income

$69 million to $75 million

$66 million to $74 million

Adjusted company development margin

17.0 percent to 18.0 percent

16.5 percent to 17.5 percent

Adjusted fully diluted earnings per share

$1.87 to $2.03

$1.77 to $2.00

The company is also reaffirming the following guidance for full year 2013 as previously provided on February 21, 2013:

  • Gross contract sales growth of 0 percent to 5 percent
  • North America contract sales growth of 5 percent to 10 percent

Schedules A-1 through A-13 reconcile non-GAAP financial measures to net income of $60 million to $66 million and development margin of 16.5 percent to 17.5 percent, in each case on an as reported basis.

First Quarter 2013 Earnings Conference Call

The company will hold a conference call at 10:00 a.m. EDT today to discuss these results. Participants may access the call by dialing (866) 225-8754 or (480) 629-9818 for international callers. A live webcast of the call will also be available in the Investor Relations section of the company's website at www.marriottvacationsworldwide.com

An audio replay of the conference call will be available for seven days and can be accessed at (800) 406-7325 or (303) 590-3030 for international callers. The replay passcode is 4610022. The webcast will also be available on the company's website.

About Marriott Vacations Worldwide Corporation

Marriott Vacations Worldwide Corporation is a leading global pure-play vacation ownership company. In late 2011, Marriott Vacations Worldwide was established as an independent, public company focusing primarily on vacation ownership experiences. Since entering the industry in 1984 as part of Marriott International, Inc., the company earned its position as a leader and innovator in vacation ownership products. The company preserves high standards of excellence in serving its customers, investors and associates while maintaining a long-term relationship with Marriott International. Marriott Vacations Worldwide offers a diverse portfolio of quality products, programs and management expertise with more than 60 resorts and more than 420,000 Owners and Members. Its brands include: Marriott Vacation Club, The Ritz-Carlton Destination Club and Grand Residences by Marriott. For more information, please visit www.marriottvacationsworldwide.com.

Note on forward-looking statements: This press release and accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including statements about earnings trends, organizational and separation related efforts, estimates, and assumptions, and similar statements concerning anticipated future events and expectations that are not historical facts. We caution you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including volatility in the economy and the credit markets, supply and demand changes for vacation ownership and residential products, competitive conditions; the availability of capital to finance growth, and other matters referred to under the heading "Risk Factors" contained in our most recent Annual Report on Form 10-K filed with the U.S Securities and Exchange Commission (the "SEC") and in subsequent SEC filings, any of which could cause actual results to differ materially from those expressed in or implied in this presentation. These statements are made as of April 25, 2013 and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Press Release Schedules Follow

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

PRESS RELEASE SCHEDULES

QUARTER 1, 2013

TABLE OF CONTENTS




Consolidated Statements of Operations - 12 Weeks Ended March 22, 2013 and March 23, 2012                                                  

 A-1



North America Segment Financial Results - 12 Weeks Ended March 22, 2013 and March 23, 2012                                                   

 A-2



Asia Pacific Segment Financial Results - 12 Weeks Ended March 22, 2013 and March 23, 2012                                                            

 A-3



Europe Segment Financial Results - 12 Weeks Ended March 22, 2013 and March 23, 2012                                                            

 A-4



Corporate and Other Financial Results - 12 Weeks Ended March 22, 2013 and March 23, 2012                                             

 A-5



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


    (Adjusted Sale of Vacation Ownership Products Net of Expenses) - 12 Weeks Ended March 22, 2013 and March 23, 2012

 A-6



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


    (Adjusted Sale of Vacation Ownership Products Net of Expenses) - 12 Weeks Ended March 22, 2013 and March 23, 2012

 A-7


EBITDA and Adjusted EBITDA - 12 Weeks Ended March 22, 2013 and March 23, 2012                              

 A-8



Adjusted Net Income and Adjusted Earnings Per Share - Diluted, Adjusted EBITDA and Adjusted Development Margin - 2013 Outlook

 A-9



2013 Adjusted Free Cash Flow Outlook                                                                                               

 A-10



2013 Normalized Adjusted Free Cash Flow Outlook

 A-11



Non-GAAP Financial Measures                                                                                                   

 A-12



Interim Consolidated Balance Sheets                                                                                                   

 A-14



Interim Consolidated Statements of Cash Flows                                                                                                   

 A-15





A-1

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

12 Weeks Ended March 22, 2013 and March 23, 2012

(In millions, except per share amounts)




























As Reported




As Adjusted



As Reported




As Adjusted









12 Weeks Ended


Other


12 Weeks Ended



12 Weeks Ended


Other


12 Weeks Ended









March 22, 2013


Charges


March 22, 2013

**


March 23, 2012


Charges


March 23, 2012

**

Revenues














Sale of vacation ownership products

$                              140


$                       -


$                              140



$                              134


$                       -


$                              134



Resort management and other services

56


-


56



54


-


54



Financing

33


-


33



36


-


36



Rental

63


-


63



56


-


56



Other

6


-


6



6


-


6



Cost reimbursements

91


-


91



90


-


90




Total revenues

389


-


389



376


-


376


Expenses














Cost of vacation ownership products

44


-


44



48


-


48



Marketing and sales

74


(1)


73



74


-


74



Resort management and other services

42


-


42



44


-


44



Financing

5


-


5



6


-


6



Rental

56


-


56



48


-


48



Other

4


-


4



2


-


2



General and administrative

21


-


21



19


-


19



Organizational and separation related

1


(1)


-



2


(2)


-



Litigation settlement

(1)


1


-



-


-


-



Interest

11


-


11



13


-


13



Royalty fee

13


-


13



13


-


13



Cost reimbursements

91


-


91



90


-


90




Total expenses

361


(1)


360



359


(2)


357


Gains and other income

1


-


1



-


-


-




Income before income taxes

29


1


30



17


2


19


Provision for income taxes

(11)


-


(11)



(8)


(1)


(9)


Net income

$                                18


$                      1


$                                19



$                                  9


$                      1


$                                10






















Earnings per share - Basic

$                             0.52




$                             0.56



$                             0.25




$                             0.28






















Earnings per share - Diluted

$                             0.50




$                             0.54



$                             0.24




$                             0.27






















Basic Shares

35.2




35.2



34.0




34.0


Diluted Shares

36.6




36.6



35.7




35.7





























As Reported







As Reported













12 Weeks Ended







12 Weeks Ended













March 22, 2013







March 23, 2012


























Contract Sales

$                              156







$                              154


























**  Denotes non-GAAP financial measures.  Please see schedules A-12 and A-13 for additional information about our reasons for providing these alternative financial measures and limitations on their use.





















NOTE:   We have restated 2012 Cost reimbursements to correct a prior period misstatement.


A-2



MARRIOTT VACATIONS WORLDWIDE CORPORATION



NORTH AMERICA SEGMENT



12 Weeks Ended March 22, 2013 and March 23, 2012



($ in millions)






















































As Reported




As Adjusted



As Reported




As Adjusted











12 Weeks Ended


Other


12 Weeks Ended



12 Weeks Ended


Other


12 Weeks Ended











March 22, 2013


Charges


March 22, 2013

**


March 23, 2012


Charges


March 23, 2012

**



Revenues



















Sale of vacation ownership products

$                              126


$                       -


$                              126



$                              114


$                       -


$                              114





Resort management and other services

50


-


50



49


-


49





Financing

31


-


31



34


-


34





Rental

59


-


59



52


-


52





Other

6


-


6



6


-


6





Cost reimbursements

81


-


81



82


-


82






Total revenues

353


-


353



337


-


337




Expenses

















Cost of vacation ownership products

40


-


40



41


-


41





Marketing and sales

64


-


64



60


-


60





Resort management and other services

36


-


36



39


-


39





Rental

51


-


51



42


-


42





Other

4


-


4



2


-


2





Litigation settlement

(1)


1


-



-


-


-





Royalty fee

1


-


1



1


-


1





Cost reimbursements

81


-


81



82


-


82






Total expenses

276


1


277



267


-


267




Gains and other income

1


-


1



-


-


-






Segment financial results

$                                78


$                     (1)


$                                77



$                                70


$                       -


$                                70

































As Reported







As Reported















12 Weeks Ended







12 Weeks Ended















March 22, 2013







March 23, 2012






























Contract Sales


$                              143







$                              134






























**  Denotes non-GAAP financial measures.  Please see schedules A-12 and A-13 for additional information about our reasons for providing these alternative financial measures and limitations on their use.























NOTE: We have combined the financial results of the former Luxury segment with the North America segment beginning with the first quarter of 2013 and have recast prior year presentation for consistency.  As a result of a realignment of our management structure, beginning with the first quarter of 2013 we no longer allocate certain general and administrative expenses to our reportable segments.  Prior year reportable segment information has been adjusted to reflect this change.  We have restated 2012 Cost reimbursements to correct a prior period misstatement.  


A-3

MARRIOTT VACATIONS WORLDWIDE CORPORATION

ASIA PACIFIC SEGMENT

12 Weeks Ended March 22, 2013 and March 23, 2012

($ in millions)
















































As Reported




As Adjusted



As Reported




As Adjusted









12 Weeks Ended


Other


12 Weeks Ended



12 Weeks Ended


Other


12 Weeks Ended









March 22, 2013


Charges


March 22, 2013

**


March 23, 2012


Charges


March 23, 2012

**

Revenues















Sale of vacation ownership products

$                                  8


$                       -


$                                  8



$                                12


$                       -


$                                12



Resort management and other services

1


-


1



1


-


1



Financing

1


-


1



1


-


1



Rental

2


-


2



2


-


2



Cost reimbursements

3


-


3



2


-


2





Total revenues

15


-


15



18


-


18


Expenses















Cost of vacation ownership products

2


-


2



3


-


3



Marketing and sales

4


-


4



8


-


8



Resort management and other services

1


-


1



1


-


1



Rental

2


-


2



3


-


3



Cost reimbursements

3


-


3



2


-


2





Total expenses

12


-


12



17


-


17





Segment

financial results

$                                  3


$                       -


$                                  3



$                                  1


$                       -


$                                  1

















































As Reported







As Reported













12 Weeks Ended







12 Weeks Ended













March 22, 2013







March 23, 2012


























Contract Sales

$                              9







$                                13


























**  Denotes non-GAAP financial measures.  Please see schedules A-12 and A-13 for additional information about our reasons for providing these alternative financial measures and limitations on their use.





















NOTE:  As a result of a realignment of our management structure, beginning with the first quarter of 2013 we no longer allocate certain general and administrative expenses to our reportable segments. Prior year reportable segment information has been adjusted to reflect this change. We have restated 2012 Cost reimbursements to correct a prior period misstatement.                


A-4


MARRIOTT VACATIONS WORLDWIDE CORPORATION


EUROPE SEGMENT


12 Weeks Ended March 22, 2013 and March 23, 2012


($ in millions)



















































As Reported




As Adjusted



As Reported




As Adjusted










12 Weeks Ended


Other


12 Weeks Ended



12 Weeks Ended


Other


12 Weeks Ended










March 22, 2013


Charges


March 22, 2013

**


March 23, 2012


Charges


March 23, 2012

**


Revenues















Sale of vacation ownership products

$                                  6


$                       -


$                                  6



$                                  8


$                       -


$                                  8




Resort management and other services

5


-


5



4


-


4




Financing

1


-


1



1


-


1




Rental

2


-


2



2


-


2




Cost reimbursements

7


-


7



6


-


6






Total revenues

21


-


21



21


-


21



Expenses















Cost of vacation ownership products1

-


-


-



2


-


2




Marketing and sales

6


(1)


5



6


-


6




Resort management and other services

5


-


5



4


-


4




Rental

3


-


3



3


-


3




Cost reimbursements

7


-


7



6


-


6






Total expenses

21


(1)


20



21


-


21






Segment financial results

$                                   -


$                      1


$                                  1



$                                   -


$                       -


$                                   -




















































As Reported







As Reported














12 Weeks Ended







12 Weeks Ended














March 22, 2013







March 23, 2012




























Contract Sales


$                                  4







$                                  7




























1Cost of vacation ownership products is less than $1 million in the 12 weeks ended March 22, 2013 as a result of a favorable product cost true-up and a favorable resolution of a tax (non-income) matter.

























**  Denotes non-GAAP financial measures.  Please see schedules A-12 and A-13 for additional information about our reasons for providing these alternative financial measures and limitations on their use.

























NOTE:  As a result of a realignment of our management structure, beginning with the first quarter of 2013 we no longer allocate certain general and administrative expenses to our reportable segments. Prior year reportable segment information has been adjusted to reflect this change. We have restated 2012 Cost reimbursements to correct a prior period misstatement.


A-5


MARRIOTT VACATIONS WORLDWIDE CORPORATION


CORPORATE AND OTHER 


12 Weeks Ended March 22, 2013 and March 23, 2012


($ in millions)



















































As Reported




As Adjusted



As Reported




As Adjusted










12 Weeks Ended


Other


12 Weeks Ended



12 Weeks Ended


Other


12 Weeks Ended










March 22, 2013


Charges


March 22, 2013

**


March 23, 2012


Charges


March 23, 2012

**


Expenses















Cost of vacation ownership products

$                                  2


$              -


$                                  2



$                                  2


$              -


$                                  2




Financing

5


-


5



6


-


6




General and administrative

21


-


21



19


-


19




Organizational and separation related


1


(1)


-



2


(2)


-




Interest

11


-


11



13


-


13




Royalty fee

12


-


12



12


-


12






Total expenses

52


(1)


51



54


(2)


52






Financial results

$                               (52)


$             1


$                               (51)



$                               (54)


$             2


$                               (52)

















**  Denotes non-GAAP financial measures.  Please see schedules A-12 and A-13 for additional information about our reasons for providing these alternative financial measures and limitations on their use.























NOTE:  Corporate and Other captures information not specifically identifiable to any individual segment including expenses in support of our financing operations, non-capitalizable development expenses supporting overall company development, company-wide general and administrative costs, interest expense and the fixed royalty fee payable under the license agreements with Marriott International, Inc.  As a result of a realignment of our management structure, beginning  with the first quarter of 2013 we no longer allocate certain general and administrative expenses to our reportable segments.  Prior year reportable segment information has been adjusted to reflect this change.


A-6

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS

($ in millions)










12 Weeks Ended











March 22, 2013



March 23, 2012
















Contract sales

$                             156



$                             154
















Revenue recognition adjustments:







Reportability1

(3)



(9)



Sales Reserve2

(9)



(9)



Other3

(4)



(2)


Sale of vacation ownership products


$                             140



$                             134









1 Adjustment for lack of required downpayment, contract sales in rescission period, or percentage completion accounting.

2 Represents additional reserve for current year financed vacation ownership product sales, which we also refer to as sales reserve.

3 Adjustment represents sales incentives for plus points that will ultimately be recognized upon usage or expiration as rental revenues rather than revenues from the Sale of vacation ownership products.

 



MARRIOTT VACATIONS WORLDWIDE CORPORATION



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

($ in millions)







































Revenue









Revenue













As Reported




Recognition


As Adjusted



As Reported




Recognition


As Adjusted











12 Weeks Ended


Other


Reportability


12 Weeks Ended



12 Weeks Ended


Other


Reportability


12 Weeks Ended











March 22, 2013


Charges


Adjustment


March 22, 2013

**


March 23, 2012


Charges


Adjustment


March 23, 2012

**


Sale of vacation ownership products

$                              140


$            -


3


$                              143



$                              134


$              -


$                9


$                              143



Less:




















Cost of vacation ownership products 

44


-


1


45



48


-


3


51




Marketing and sales

74


(1)


-


73



74


-


1


75





























Development margin

$                                22


$           1


$                2


$                                25



$                                12


$              -


$                5


$                                17


























































Development margin percentage1

15.8%






17.7%



9.2%






12.1%

























**  Denotes non-GAAP financial measures.  Please see schedules A-12 and A-13 for additional information about our reasons for providing these alternative financial measures and limitations on their use.



























1  Development margin percentage represents Development margin divided by Sale of vacation ownership products.  Development margin percentage is calculated using whole dollars.


A-7

MARRIOTT VACATIONS WORLDWIDE CORPORATION

NORTH AMERICA CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS

($ in millions)






12 Weeks Ended







March 22, 2013



March 23, 2012












Contract sales



$                             143



$                             134












Revenue recognition adjustments:








Reportability1


(5)



(10)



Sales Reserve 2


(8)



(8)



Other 3


(4)



(2)


Sale of vacation ownership products


$                             126



$                             114









1  Adjustment for lack of required downpayment, contract sales in rescission period, or percentage completion accounting.

 Represents additional reserve for current year financed vacation ownership product sales, which we also refer to as sales reserve.

3  Adjustment represents sales incentives for plus points that will ultimately be recognized upon usage or expiration as rental revenues rather than revenues from the Sale of vacation ownership products.


MARRIOTT VACATIONS WORLDWIDE CORPORATION

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

($ in millions)

































Revenue







Revenue













As Reported


Recognition


As Adjusted



As Reported


Recognition


As Adjusted











12 Weeks Ended


Reportability


12 Weeks Ended



12 Weeks Ended


Reportability


12 Weeks Ended











March 22, 2013


Adjustment


March 22, 2013

**


March 23, 2012


Adjustment


March 23, 2012

**


Sale of vacation ownership products

$                              126


$                5


$                              131



$                              114


$              10


$                              124



Less:
















Cost of vacation ownership products 

40


2


42



41


3


44




Marketing and sales

64


-


64



60


1


61

























Development margin

$                                22


$                3


$                                25



$                                13


$                6


$                                19


















































Development margin percentage1

17.3%




18.8%



11.7%




15.3%






















**  Denotes non-GAAP financial measures.  Please see schedules A-12 and A-13 for additional information about our reasons for providing these alternative financial measures and limitations on their use.


























1  Development margin percentage represents Development margin divided by Sale of vacation ownership products.  Development margin percentage is calculated using whole dollars.


























NOTE:  We have combined the financial results of the former Luxury segment with the North America segment beginning with the first  quarter of 2013 and have recast prior year presentation for consistency.





A-8

MARRIOTT VACATIONS WORLDWIDE CORPORATION

EBITDA AND ADJUSTED EBITDA

12 Weeks Ended March 22, 2013 and March 23, 2012 

($ in millions)





























As Reported




As Adjusted


As Reported




As Adjusted











12 Weeks Ended


Other


12 Weeks Ended


12 Weeks Ended


Other


12 Weeks Ended











March 22, 2013


Charges


March 22, 2013

**

March 23, 2012


Charges


March 23, 2012

**












































Net income                                  

$                                18


$                1


$                                19


$                                  9


$                1


$                                10




Interest expense                                  

11


-


11


13


-


13




Tax provision                                  

11


-


11


8


1


9




Depreciation and amortization

6


-


6


7


-


7





EBITDA **

46


1


47


37


2


39




Consumer financing interest expense

(8)


-


(8)


(10)


-


(10)





Adjusted EBITDA**

$                                38


$                1


$                                39


$                                27


$                2


$                                29



















**  Denotes non-GAAP financial measures.  Please see schedules A-12 and A-13 for additional information about our reasons for providing these alternative financial measures and limitations on their use.




A-9

MARRIOTT VACATIONS WORLDWIDE CORPORATION


2013 ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE - DILUTED OUTLOOK


($ in millions)


















Fiscal Year 2013 (low)


Fiscal Year 2013 (high)



Net income

$                       60


$                       66




Adjustments to reconcile Net income to Adjusted net income








Organizational and separation related, litigation, and other charges1

14


14





Provision for income taxes on adjustments to Net income                                                                  

(5)


(5)





Adjusted net income**

$                       69


$                       75











Earnings per share - Diluted

$                    1.62


$                    1.78




Adjusted earnings per share - Diluted**                                         

$                    1.87


$                    2.03




Diluted shares                                                       

37.1


37.1


**  Denotes non-GAAP financial measures.  Please see schedules A-12 and A-13 for additional information about our reasons for providing these alternative financial measures and limitations on their use.

1   Organizational and separation related, litigation, and other charges adjustment includes $13 million for organizational and separation related efforts and $2 million for severance costs in our Europe segment, partially offset by a $1 million reversal of a previously recorded legal settlement related to a project in our North America segment.



MARRIOTT VACATIONS WORLDWIDE CORPORATION


2013 ADJUSTED EBITDA OUTLOOK


($ in millions)


















Fiscal Year 2013 (low)


Fiscal Year 2013 (high)



Adjusted net income **


$                       69


$                       75



Interest expense


43


44



Tax provision                                                                    


52


56



Depreciation and amortization


22


22




EBITDA, as adjusted** 


$                     186


$                     197



Consumer financing interest expense                                                                    

(31)


(32)




Adjusted EBITDA, as adjusted**

$                     155


$                     165


** Denotes non-GAAP financial measures. Please see schedules A-12 and A-13 for additional information about our reasons for providing these alternative financial measures and limitations on their use.

 


MARRIOTT VACATIONS WORLDWIDE CORPORATION

2013 ADJUSTED DEVELOPMENT MARGIN OUTLOOK

 


Fiscal Year 2013

(low)


Fiscal Year 2013

 (high)


Development margin1

16.5%


17.5%



Adjustments to reconcile Development margin to Adjusted development margin







Other charges2

0.3%


0.3%




Revenue recognition reportability

0.2%


0.2%





Adjusted development margin**, 1


17.0%


18.0%


**  Denotes non-GAAP financial measures.  Please see schedules A-12 and A-13 for additional information about our reasons for providing these alternative financial measures and limitations on their use.

1   Development margin represents Development margin dollars divided by Sale of vacation ownership products revenues.  Development margin is calculated using whole dollars.

2    Other charges adjustment includes $2 million for severance costs in our Europe segment under the "Marketing and sales" caption.


A-10

MARRIOTT VACATIONS WORLDWIDE CORPORATION

2013 ADJUSTED FREE CASH FLOW OUTLOOK

($ in millions)






Fiscal Year 2013 (low)


Fiscal Year 2013 (high)

Adjusted net income **                                                                 

$                       69


$                       75

    Adjustments to reconcile Adjusted net income to net cash 




    provided by operating activities:                                                                    




        Adjustments for non-cash items1

80


85

        Deferred income taxes

(5)


(10)

        Net changes in assets and liabilities:




               Notes receivable originations

(265)


(275)

               Notes receivable collections

275


280

               Inventory

10


20

               Liability for Marriott Rewards customer loyalty program

(45)


(43)

               Organizational and separation related, litigation, and other charges

(35)


(33)

               Other working capital changes

(30)


(28)

Net cash provided by operating activities                                                                    

54


71

    Capital expenditures for property and equipment    




        Organizational and separation related capital expenditures

(10)


(7)

        Other

(24)


(22)

    Increase in restricted cash

(3)


(2)

              Free cash flow**                                          &