Marriott Vacations Worldwide Reports Second Quarter 2015 Financial Results

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Marriott Vacations Worldwide Corporation

Jul 23, 2015, 08:00 ET

ORLANDO, Fla., July 23, 2015 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported second quarter 2015 financial results and provided updated guidance for the full year 2015.

Second quarter 2015 highlights:

Adjusted fully diluted earnings per share (EPS) increased to $0.91, up 4.6 percent from $0.87 in the second quarter of 2014.
Adjusted EBITDA totaled $57.7 million, an increase of $1.0 million, or 2 percent, year-over-year.
North America contract sales were $150.6 million, up 3.4 percent year-over-year.
North America tours increased 1.2 percent year-over-year.
North America volume per guest (VPG) increased 0.6 percent year-over-year to $3,404.
Company adjusted development margin was 21.0 percent and North America adjusted development margin was 23.0 percent.
The company completed the sale of its undeveloped land in Kauai, Hawaii, for gross cash proceeds of $20 million.
During the second quarter of 2015, the company repurchased $15 million of its common stock, bringing total 2015 repurchases through the end of the second quarter to $66.2 million.
Subsequent to the end of the second quarter, the company purchased 71 units in The Mayflower Hotel, Autograph Collection in Washington, D.C.

Second quarter 2015 net income was $34.0 million, or $1.05 diluted EPS, compared to net income of $35.3 million, or $1.00 diluted EPS, in the second quarter of 2014. Company development margin was 21.3 percent and North America development margin was 23.6 percent in the second quarter of 2015.

Non-GAAP financial measures such as adjusted EBITDA, adjusted net income, adjusted earnings per share and adjusted development margin are reconciled and adjustments are shown and described in further detail on pages A-1 through A-19 of the Financial Schedules that follow.

"We're pleased with our solid second quarter financial results, delivering nearly $58 million of Adjusted EBITDA," said Stephen P. Weisz, president and chief executive officer. "Our North America contract sales grew 3.4 percent on continued growth in tour volumes and slightly higher VPG and our company development margin remained in line with our full year expectations. With a strong first half of the year behind us, we are reaffirming Adjusted EBITDA guidance of $222 million to $232 million for full year 2015."

Second Quarter 2015 Results

Company Results

Total company contract sales were $165.9 million, $1.3 million higher than the second quarter of last year. The increase was driven by $5.0 million of higher contract sales in the company's North America segment and $0.7 million of higher contract sales in the company's Asia Pacific segment, partially offset by $4.3 million of lower contract sales in the company's Europe segment.

Adjusted development margin was $32.3 million, a $4.4 million decrease from the second quarter of 2014. Adjusted development margin percentage was 21.0 percent in the second quarter of 2015 compared to 24.2 percent in the second quarter of 2014. Development margin was $33.1 million, a $3.8 million decrease from the second quarter of 2014. Development margin percentage was 21.3 percent in the second quarter of 2015 compared to 24.2 percent in the second quarter of 2014.

Rental revenues totaled $72.6 million, a $10.8 million increase from the second quarter of 2014, reflecting a 4 percent increase in transient rate and a 6 percent increase in transient keys rented. Rental revenues, net of expenses, were $10.8 million, a $4.0 million increase from the second quarter of 2014.

Resort management and other services revenues totaled $74.1 million, a $0.8 million decrease from the second quarter of 2014. Resort management and other services revenues, net of expenses, were $28.6 million, a $2.1 million, or 8 percent, increase over the second quarter of 2014.

Financing revenues totaled $28.3 million, a $1.5 million decrease from the second quarter of 2014. Financing revenues, net of expenses and consumer financing interest expense, were $17.0 million, a $1.7 million decrease from the second quarter of 2014.

Adjusted EBITDA was $57.7 million in the second quarter of 2015, a $1.0 million, or 1.7 percent, increase from $56.7 million in the second quarter of 2014.

Segment Results

North America

VPG increased 0.6 percent to $3,404 in the second quarter of 2015 from $3,383 in the second quarter of 2014, driven by improved closing efficiency and higher pricing, offset partially by fewer points purchased per contract. North America contract sales were $150.6 million in the second quarter of 2015, an increase of $5.0 million, or 3.4 percent, over the prior year period.

Second quarter 2015 North America segment financial results were $104.6 million, an increase of $2.9 million from the second quarter of 2014. The increase was driven primarily by $8.2 million of higher gains mainly associated with the disposition of the company's property in Kauai, Hawaii, $4.2 million of higher rental revenues net of expenses, $2.1 million of higher resort management and other services revenues net of expenses and $0.8 million related to an impairment charge in the prior year period. These increases were offset partially by $7.5 million of lower litigation settlements due mainly to the settlement of a dispute with a former service provider in the prior year period, $2.0 million of lower development margin, $2.0 million from the reversal of a charge in the prior year period related to the company's interest in an equity method investment in a joint venture project and $1.5 million of lower financing revenues.

Adjusted development margin was $32.3 million, a $3.0 million decrease from the prior year quarter. Adjusted development margin percentage was 23.0 percent in the second quarter of 2015 compared to 26.3 percent in the second quarter of 2014. Development margin was $33.5 million, a $2.0 million decrease from the second quarter of 2014. Development margin percentage was 23.6 percent in the second quarter of 2015 compared to 26.3 percent in the prior year quarter.

Asia Pacific

Total contract sales in the segment were $8.0 million, an increase of $0.7 million in the second quarter of 2015. Segment financial results were a loss of $0.1 million, a $1.5 million decrease from the second quarter of 2014, reflecting $1.3 million of transaction costs associated with the company's future new resort and sales distribution in Australia.

Europe

Second quarter 2015 contract sales were $7.3 million, a decrease of $4.3 million from the second quarter of 2014. Segment financial results were $3.0 million, a $2.2 million decrease from the second quarter of 2014 due to lower development margin from lower contract sales.

Share Repurchase Program

In total for 2015, through the end of the second quarter, the company repurchased approximately $66.2 million of its common stock.

Balance Sheet and Liquidity

On June 19, 2015, cash and cash equivalents totaled $250.9 million. Since the beginning of the year, real estate inventory balances declined $69.1 million to $699.1 million, including $335.3 million of finished goods and $363.8 million of land and infrastructure. The company had $568.1 million in gross debt outstanding at the end of the second quarter of 2015, a decrease of $143.3 million from year-end 2014, consisting primarily of $564.7 million in gross non-recourse securitized notes. In addition, $40.0 million of gross mandatorily redeemable preferred stock of a subsidiary of the company was outstanding at the end of the second quarter of 2015.

As of June 19, 2015, the company had approximately $197 million in available capacity under its revolving credit facility after taking into account outstanding letters of credit, and approximately $207 million of gross vacation ownership notes receivable eligible for securitization into its warehouse credit facility.

Outlook

The company is providing the following updated guidance for the full year 2015:

	Current Guidance	Previous Guidance
Adjusted free cash flow	$175 million to $200 million	$145 million to $170 million

The company is reaffirming the following guidance for the full year 2015:

	Current Guidance
Adjusted EBITDA	$222 million to $232 million
Company contract sales growth (excluding residential)	5 percent to 8 percent
Adjusted company development margin	21 percent to 22 percent
Adjusted net income	$108 million to $114 million
Adjusted fully diluted earnings per share	$3.29 to $3.48

Pages A-1 through A-19 of the Financial Schedules reconcile the non-GAAP financial measures set forth above to the following full year 2015 expected GAAP results: net income of $114 million to $121 million; fully diluted EPS of $3.49 to $3.70; company development margin of 21.1 percent to 22.1 percent; and net cash provided by operating activities of $170 million to $185 million.

Second Quarter 2015 Earnings Conference Call

The company will hold a conference call at 10:00 a.m. EST today to discuss these results and the updated guidance for full year 2015. Participants may access the call by dialing (877) 407-8289 or (201) 689-8341 for international callers. A live webcast of the call will also be available in the Investor Relations section of the company's website at www.marriottvacationsworldwide.com.

An audio replay of the conference call will be available for seven days and can be accessed at (877) 660-6853 or (201) 612-7415 for international callers. The conference ID for the recording is 13613029. The webcast will also be available on the company's website.

About Marriott Vacations Worldwide Corporation

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

Note on forward-looking statements: This press release and accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including statements about future operating results, estimates, and assumptions, and similar statements concerning anticipated future events and expectations that are not historical facts. The company cautions you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including volatility in the economy and the credit markets, supply and demand changes for vacation ownership and residential products, competitive conditions, the availability of capital to finance growth, and other matters referred to under the heading "Risk Factors" contained in the company's most recent Annual Report on Form 10-K filed with the U.S Securities and Exchange Commission (the "SEC") and in subsequent SEC filings, any of which could cause actual results to differ materially from those expressed in or implied in this press release. These statements are made as of July 23, 2015 and the company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Financial Schedules Follow

MARRIOTT VACATIONS WORLDWIDE CORPORATION

FINANCIAL SCHEDULES

QUARTER 2, 2015

TABLE OF CONTENTS

Consolidated Statements of Income - 12 Weeks Ended June 19, 2015 and June 20, 2014

A-1

Consolidated Statements of Income - 24 Weeks Ended June 19, 2015 and June 20, 2014

A-2

North America Segment Financial Results - 12 Weeks Ended June 19, 2015 and June 20, 2014

A-3

North America Segment Financial Results - 24 Weeks Ended June 19, 2015 and June 20, 2014

A-4

Asia Pacific Segment Financial Results - 12 Weeks Ended June 19, 2015 and June 20, 2014

A-5

Asia Pacific Segment Financial Results - 24 Weeks Ended June 19, 2015 and June 20, 2014

A-6

Europe Segment Financial Results - 12 Weeks Ended June 19, 2015 and June 20, 2014

A-7

Europe Segment Financial Results - 24 Weeks Ended June 19, 2015 and June 20, 2014

A-8

Corporate and Other Financial Results - 12 Weeks and 24 Weeks Ended June 19, 2015 and June 20, 2014

A-9

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 June 19, 2015 and June 20, 2014

A-10

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

(Adjusted Sale of Vacation Ownership Products Net of Expenses) - 24 Weeks Ended June 19, 2015 and June 20, 2014

A-11

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 June 19, 2015 and June 20, 2014

A-12

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

(Adjusted Sale of Vacation Ownership Products Net of Expenses) - 24 Weeks Ended June 19, 2015 and June 20, 2014

A-13

EBITDA and Adjusted EBITDA - 12 Weeks and 24 Weeks Ended June 19, 2015 and June 20, 2014

A-14

2015 Outlook - Adjusted Net Income and Adjusted Earnings Per Share - Diluted, Adjusted EBITDA and Adjusted Development Margin

A-15

2015 Outlook - Adjusted Free Cash Flow and Normalized Adjusted Free Cash Flow

A-16

Non-GAAP Financial Measures

A-17

Consolidated Balance Sheets

A-20

Consolidated Statements of Cash Flows

A-21

A-1
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
12 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands, except per share amounts)

				As Reported		As Adjusted		As Reported		As Adjusted
				12 Weeks Ended	Certain	12 Weeks Ended		12 Weeks Ended	Certain	12 Weeks Ended
				June 19, 2015	Items	June 19, 2015	**	June 20, 2014	Items	June 20, 2014	**
Revenues
	Sale of vacation ownership products			$ 155,370	$ -	$ 155,370		$ 152,562	$ -	$ 152,562
	Resort management and other services			74,063	-	74,063		74,821	-	74,821
	Financing			28,294	-	28,294		29,817	-	29,817
	Rental			72,642	-	72,642		61,827	-	61,827
	Cost reimbursements			92,458	-	92,458		90,875	-	90,875
			Total revenues	422,827	-	422,827		409,902	-	409,902
Expenses
	Cost of vacation ownership products			45,119	-	45,119		43,414	-	43,414
	Marketing and sales			77,137	-	77,137		72,227	(287)	71,940
	Resort management and other services			45,480	-	45,480		48,308	-	48,308
	Financing			6,085	-	6,085		5,438	-	5,438
	Rental			61,835	-	61,835		54,991	-	54,991
	General and administrative			22,892	-	22,892		23,153	-	23,153
	Organizational and separation related			101	(101)	-		1,089	(1,089)	-
	Litigation settlement			26	(26)	-		(7,575)	7,575	-
	Consumer financing interest			5,248	-	5,248		5,737	-	5,737
	Royalty fee			13,431	-	13,431		13,653	-	13,653
	Impairment			-	-	-		834	(834)	-
	Cost reimbursements			92,458	-	92,458		90,875	-	90,875
			Total expenses	369,812	(127)	369,685		352,144	5,365	357,509
Gains and other income				8,625	(8,625)	-		409	(409)	-
Interest Expense				(3,009)	-	(3,009)		(2,601)	-	(2,601)
Equity in earnings				85	-	85		81	-	81
Impairment reversals on equity investment				-	-	-		2,000	(2,000)	-
Other				(1,272)	1,272	-		-	-	-
			Income before income taxes	57,444	(7,226)	50,218		57,647	(7,774)	49,873
Provision for income taxes				(23,403)	2,804	(20,599)		(22,344)	3,158	(19,186)
Net income				$ 34,041	$ (4,422)	$ 29,619		$ 35,303	$ (4,616)	$ 30,687

Earnings per share - Basic				$ 1.07		$ 0.93		$ 1.03		$ 0.89

Earnings per share - Diluted				$ 1.05		$ 0.91		$ 1.00		$ 0.87

Basic Shares				31,858		31,858		34,292		34,292
Diluted Shares				32,517		32,517		35,239		35,239

				As Reported				As Reported
				12 Weeks Ended				12 Weeks Ended
Contract Sales				June 19, 2015				June 20, 2014

		Vacation ownership		$ 165,938				$ 164,589
		Residential products		-				-
			Total contract sales	$ 165,938				$ 164,589

** Denotes non-GAAP financial measures. Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on their use.

NOTE: Earnings per share - Basic and Earnings per share - Diluted are calculated using whole dollars. Beginning with the fourth quarter of 2014, we have combined results from Other into Resort management and other services and have recast prior year presentation for consistency.

A-2
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
24 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands, except per share amounts)

				As Reported		As Adjusted		As Reported		As Adjusted
				24 Weeks Ended	Certain	24 Weeks Ended		24 Weeks Ended	Certain	24 Weeks Ended
				June 19, 2015	Items	June 19, 2015	**	June 20, 2014	Items	June 20, 2014	**
Revenues
	Sale of vacation ownership products			$ 339,276	$(28,420)	$ 310,856		$ 297,412	$ -	$ 297,412
	Resort management and other services			138,480	-	138,480		138,367	-	138,367
	Financing			57,346	-	57,346		60,457	-	60,457
	Rental			148,841	-	148,841		125,352	-	125,352
	Cost reimbursements			193,764	-	193,764		190,261	-	190,261
			Total revenues	877,707	(28,420)	849,287		811,849	-	811,849
Expenses
	Cost of vacation ownership products			110,081	(21,583)	88,498		90,285	-	90,285
	Marketing and sales			157,132	(922)	156,210		143,447	(287)	143,160
	Resort management and other services			87,889	-	87,889		93,204	200	93,404
	Financing			10,990	-	10,990		10,542	-	10,542
	Rental			121,993	-	121,993		111,781	-	111,781
	General and administrative			45,669	-	45,669		44,981	-	44,981
	Organizational and separation related			293	(293)	-		1,940	(1,940)	-
	Litigation settlement			(236)	236	-		(7,575)	7,575	-
	Consumer financing interest			11,269	-	11,269		12,362	-	12,362
	Royalty fee			26,431	-	26,431		27,081	-	27,081
	Impairment			-	-	-		834	(834)	-
	Cost reimbursements			193,764	-	193,764		190,261	-	190,261
			Total expenses	765,275	(22,562)	742,713		719,143	4,714	723,857
Gains and other income				9,512	(9,512)	-		1,642	(1,642)	-
Interest Expense				(5,983)	-	(5,983)		(4,748)	-	(4,748)
Equity in earnings				98	-	98		118	-	118
Other				(1,272)	1,272	-		-	-	-
			Income before income taxes	114,787	(14,098)	100,689		89,718	(6,356)	83,362
Provision for income taxes				(46,692)	3,779	(42,913)		(35,107)	2,537	(32,570)
Net income				$ 68,095	$(10,319)	$ 57,776		$ 54,611	$ (3,819)	$ 50,792

Earnings per share - Basic				$ 2.12		$ 1.80		$ 1.58		$ 1.47

Earnings per share - Diluted				$ 2.08		$ 1.76		$ 1.54		$ 1.43

Basic Shares				32,078		32,078		34,583		34,583
Diluted Shares				32,760		32,760		35,557		35,557

				As Reported				As Reported
				24 Weeks Ended				24 Weeks Ended
Contract Sales				June 19, 2015				June 20, 2014

		Vacation ownership		$ 335,888				$ 319,837
		Residential products		28,420				6,326
			Total contract sales	$ 364,308				$ 326,163

A-3
MARRIOTT VACATIONS WORLDWIDE CORPORATION
NORTH AMERICA SEGMENT
12 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands)


				As Reported		As Adjusted		As Reported		As Adjusted
				12 Weeks Ended	Certain	12 Weeks Ended		12 Weeks Ended	Certain	12 Weeks Ended
				June 19, 2015	Items	June 19, 2015	**	June 20, 2014	Items	June 20, 2014	**
Revenues
	Sale of vacation ownership products			$ 142,148	$ -	$ 142,148		$ 134,590	$ -	$ 134,590
	Resort management and other services			66,194	-	66,194		65,480	-	65,480
	Financing			26,354	-	26,354		27,807	-	27,807
	Rental			65,756	-	65,756		54,404	-	54,404
	Cost reimbursements			84,037	-	84,037		80,642	-	80,642
			Total revenues	384,489	-	384,489		362,923	-	362,923
Expenses
	Cost of vacation ownership products			40,834	-	40,834		37,433	-	37,433
	Marketing and sales			67,837	-	67,837		61,722	-	61,722
	Resort management and other services			39,101	-	39,101		40,527	-	40,527
	Rental			55,128	-	55,128		47,985	-	47,985
	Organizational and separation related			115	(115)	-		388	(388)	-
	Litigation settlement			(108)	108	-		(7,575)	7,575	-
	Royalty fee			1,686	-	1,686		1,820	-	1,820
	Impairment			-	-	-		834	(834)	-
	Cost reimbursements			84,037	-	84,037		80,642	-	80,642
			Total expenses	288,630	(7)	288,623		263,776	6,353	270,129
Gains and other income				8,658	(8,658)	-		448	(448)	-
Equity in earnings				86	-	86		81	-	81
Impairment reversals on equity investment				-	-	-		2,000	(2,000)	-
			Segment financial results	$ 104,603	$ (8,651)	$ 95,952		$ 101,676	$ (8,801)	$ 92,875

				As Reported				As Reported
				12 Weeks Ended				12 Weeks Ended
Contract Sales				June 19, 2015				June 20, 2014

		Vacation ownership		$ 150,605				$ 145,597
		Residential products		-				-
			Total contract sales	$ 150,605				$ 145,597

NOTE: Beginning with the fourth quarter of 2014 we have combined results from Other into Resort management and other services and have recast prior year presentation for consistency.

A-4
MARRIOTT VACATIONS WORLDWIDE CORPORATION
NORTH AMERICA SEGMENT
24 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands)


				As Reported		As Adjusted		As Reported		As Adjusted
				24 Weeks Ended	Certain	24 Weeks Ended		24 Weeks Ended	Certain	24 Weeks Ended
				June 19, 2015	Items	June 19, 2015	**	June 20, 2014	Items	June 20, 2014	**
Revenues
	Sale of vacation ownership products			$ 283,876	$ -	$ 283,876		$ 265,932	$ -	$ 265,932
	Resort management and other services			124,769	-	124,769		122,640	-	122,640
	Financing			53,410	-	53,410		56,368	-	56,368
	Rental			137,471	-	137,471		113,727	-	113,727
	Cost reimbursements			176,891	-	176,891		170,585	-	170,585
			Total revenues	776,417	-	776,417		729,252	-	729,252
Expenses
	Cost of vacation ownership products			81,335	-	81,335		78,938	-	78,938
	Marketing and sales			136,854	-	136,854		124,409	-	124,409
	Resort management and other services			76,069	-	76,069		79,616	-	79,616
	Rental			109,739	-	109,739		99,022	-	99,022
	Organizational and separation related			254	(254)	-		405	(405)	-
	Litigation settlement			(370)	370	-		(7,575)	7,575	-
	Royalty fee			2,946	-	2,946		3,497	-	3,497
	Impairment			-	-	-		834	(834)	-
	Cost reimbursements			176,891	-	176,891		170,585	-	170,585
			Total expenses	583,718	116	583,834		549,731	6,336	556,067
Gains and other income				9,538	(9,538)	-		1,690	(1,690)	-
Equity in earnings				102	-	102		120	-	120
			Segment financial results	$ 202,339	$ (9,654)	$ 192,685		$ 181,331	$ (8,026)	$ 173,305

				As Reported				As Reported
				24 Weeks Ended				24 Weeks Ended
Contract Sales				June 19, 2015				June 20, 2014

		Vacation ownership		$ 306,598				$ 285,774
		Residential products		-				6,326
			Total contract sales	$ 306,598				$ 292,100

NOTE: Beginning with the fourth quarter of 2014 we have combined results from Other into Resort management and other services and have recast prior year presentation for consistency.

A-5
MARRIOTT VACATIONS WORLDWIDE CORPORATION
ASIA PACIFIC SEGMENT
12 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands)


				As Reported		As Adjusted		As Reported		As Adjusted
				12 Weeks Ended	Certain	12 Weeks Ended		12 Weeks Ended	Certain	12 Weeks Ended
				June 19, 2015	Items	June 19, 2015	**	June 20, 2014	Items	June 20, 2014	**
Revenues
	Sale of vacation ownership products			$ 7,575	$ -	$ 7,575		$ 7,954	$ -	$ 7,954
	Resort management and other services			964	-	964		926	-	926
	Financing			1,043	-	1,043		1,047	-	1,047
	Rental			1,503	-	1,503		1,581	-	1,581
	Cost reimbursements			632	-	632		722	-	722
			Total revenues	11,717	-	11,717		12,230	-	12,230
Expenses
	Cost of vacation ownership products			1,803	-	1,803		2,047	-	2,047
	Marketing and sales			4,432	-	4,432		4,243	-	4,243
	Resort management and other services			655	-	655		642	-	642
	Rental			2,794	-	2,794		2,936	-	2,936
	Royalty fee			150	-	150		147	-	147
	Cost reimbursements			632	-	632		722	-	722
			Total expenses	10,466	-	10,466		10,737	-	10,737
Gains and other income				(33)	33	-		-	-	-
Equity in losses				(1)	-	(1)		-	-	-
Other				(1,272)	1,272	-		-	-	-
			Segment financial results	$ (55)	$ 1,305	$ 1,250		$ 1,493	$ -	$ 1,493


				As Reported				As Reported
				12 Weeks Ended				12 Weeks Ended
Contract Sales				June 19, 2015				June 20, 2014

		Vacation ownership		$ 7,992				$ 7,337
		Residential products		-				-
			Total contract sales	$ 7,992				$ 7,337

NOTE: Beginning with the fourth quarter of 2014 we have combined results from Other into Resort management and other services and have recast prior year presentation for consistency.

A-6
MARRIOTT VACATIONS WORLDWIDE CORPORATION
ASIA PACIFIC SEGMENT
24 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands)


				As Reported		As Adjusted		As Reported		As Adjusted
				24 Weeks Ended	Certain	24 Weeks Ended		24 Weeks Ended	Certain	24 Weeks Ended
				June 19, 2015	Items	June 19, 2015	**	June 20, 2014	Items	June 20, 2014	**
Revenues
	Sale of vacation ownership products			$ 43,853	$(28,420)	$ 15,433		$ 14,222	$ -	$ 14,222
	Resort management and other services			1,827	-	1,827		1,832	-	1,832
	Financing			2,049	-	2,049		2,104	-	2,104
	Rental			3,855	-	3,855		3,556	-	3,556
	Cost reimbursements			1,498	-	1,498		1,663	-	1,663
			Total revenues	53,082	(28,420)	24,662		23,377	-	23,377
Expenses
	Cost of vacation ownership products			23,799	(21,583)	2,216		3,500	-	3,500
	Marketing and sales			9,989	(922)	9,067		8,021	-	8,021
	Resort management and other services			1,505	-	1,505		1,342	-	1,342
	Rental			5,290	-	5,290		5,532	-	5,532
	Royalty fee			307	-	307		324	-	324
	Cost reimbursements			1,498	-	1,498		1,663	-	1,663
			Total expenses	42,388	(22,505)	19,883		20,382	-	20,382
Gains and other income				(30)	30	-		(8)	8	-
Equity in losses				(4)	-	(4)		(2)	-	(2)
Other				(1,272)	1,272	-		-	-	-
			Segment financial results	$ 9,388	$ (4,613)	$ 4,775		$ 2,985	$ 8	$ 2,993


				As Reported				As Reported
				24 Weeks Ended				24 Weeks Ended
Contract Sales				June 19, 2015				June 20, 2014

		Vacation ownership		16,651				13,960
		Residential products		28,420				-
			Total contract sales	$ 45,071				$ 13,960

NOTE: Asia Pacific segment revenues and expenses for the twelve weeks ended March 28, 2014 have been restated to reclassify a portion of Cost reimbursements from the Asia Pacific segment to the Europe segment to correct certain immaterial prior period errors. Beginning with the fourth quarter of 2014 we have combined results from Other into Resort management and other services and have recast prior year presentation for consistency.

A-7
MARRIOTT VACATIONS WORLDWIDE CORPORATION
EUROPE SEGMENT
12 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands)


			As Reported		As Adjusted		As Reported		As Adjusted
			12 Weeks Ended	Certain	12 Weeks Ended		12 Weeks Ended	Certain	12 Weeks Ended
			June 19, 2015	Items	June 19, 2015	**	June 20, 2014	Items	June 20, 2014	**
Revenues
	Sale of vacation ownership products		$ 5,647	$ -	$ 5,647		$ 10,018	$ -	$ 10,018
	Resort management and other services		6,905	-	6,905		8,415	-	8,415
	Financing		897	-	897		963	-	963
	Rental		5,383	-	5,383		5,842	-	5,842
	Cost reimbursements		7,789	-	7,789		9,511	-	9,511
		Total revenues	26,621	-	26,621		34,749	-	34,749
Expenses
	Cost of vacation ownership products		1,233	-	1,233		2,389	-	2,389
	Marketing and sales		4,868	-	4,868		6,262	(287)	5,975
	Resort management and other services		5,724	-	5,724		7,139	-	7,139
	Rental		3,913	-	3,913		4,070	-	4,070
	Royalty fee		88	-	88		180	-	180
	Cost reimbursements		7,789	-	7,789		9,511	-	9,511
		Total expenses	23,615	-	23,615		29,551	(287)	29,264
Gains and other income			-	-	-		(39)	39	-
		Segment financial results	$ 3,006	$ -	$ 3,006		$ 5,159	$ 326	$ 5,485


			As Reported				As Reported
			12 Weeks Ended				12 Weeks Ended
			June 19, 2015				June 20, 2014

Contract Sales			$ 7,341				$ 11,655

NOTE: Beginning with the fourth quarter of 2014 we have combined results from Other into Resort management and other services and have recast prior year presentation for consistency.

A-8
MARRIOTT VACATIONS WORLDWIDE CORPORATION
EUROPE SEGMENT
24 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands)


			As Reported		As Adjusted		As Reported		As Adjusted
			24 Weeks Ended	Certain	24 Weeks Ended		24 Weeks Ended	Certain	24 Weeks Ended
			June 19, 2015	Items	June 19, 2015	**	June 20, 2014	Items	June 20, 2014	**
Revenues
	Sale of vacation ownership products		$ 11,547	$ -	$ 11,547		$ 17,258	$ -	$ 17,258
	Resort management and other services		11,884	-	11,884		13,895	-	13,895
	Financing		1,887	-	1,887		1,985	-	1,985
	Rental		7,515	-	7,515		8,069	-	8,069
	Cost reimbursements		15,375	-	15,375		18,013	-	18,013
		Total revenues	48,208	-	48,208		59,220	-	59,220
Expenses
	Cost of vacation ownership products		2,085	-	2,085		3,835	-	3,835
	Marketing and sales		10,289	-	10,289		11,017	(287)	10,730
	Resort management and other services		10,315	-	10,315		12,246	200	12,446
	Rental		6,964	-	6,964		7,227	-	7,227
	Royalty fee		164	-	164		282	-	282
	Cost reimbursements		15,375	-	15,375		18,013	-	18,013
		Total expenses	45,192	-	45,192		52,620	(87)	52,533
Gains and other income			4	(4)	-		(39)	39	-
		Segment financial results	$ 3,020	$ (4)	$ 3,016		$ 6,561	$ 126	$ 6,687


			As Reported				As Reported
			24 Weeks Ended				24 Weeks Ended
			June 19, 2015				June 20, 2014

Contract Sales			$ 12,639				$ 20,103

NOTE: Europe segment revenues and expenses for the twelve weeks ended March 28, 2014 have been restated to reclassify a portion of Cost reimbursements from the Asia Pacific segment to the Europe segment to correct certain immaterial prior period errors. Beginning with the fourth quarter of 2014 we have combined results from Other into Resort management and other services and have recast prior year presentation for consistency.

A-9
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CORPORATE AND OTHER
12 Weeks and 24 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands)


			As Reported		As Adjusted		As Reported		As Adjusted
			12 Weeks Ended	Certain	12 Weeks Ended		12 Weeks Ended	Certain	12 Weeks Ended
			June 19, 2015	Items	June 19, 2015	**	June 20, 2014	Items	June 20, 2014	**
Expenses
	Cost of vacation ownership products		$ 1,249	$ -	$ 1,249		$ 1,545	$ -	$ 1,545
	Financing		6,085	-	6,085		5,438	-	5,438
	General and administrative		22,892	-	22,892		23,153	-	23,153
	Organizational and separation related		(14)	14	-		701	(701)	-
	Litigation settlement		134	(134)	-		-	-	-
	Consumer financing interest		5,248	-	5,248		5,737	-	5,737
	Royalty fee		11,507	-	11,507		11,506	-	11,506
		Total expenses	$ 47,101	$ (120)	$ 46,981		$ 48,080	$ (701)	$ 47,379



			As Reported		As Adjusted		As Reported		As Adjusted
			24 Weeks Ended	Certain	24 Weeks Ended		24 Weeks Ended	Certain	24 Weeks Ended
			June 19, 2015	Items	June 19, 2015	**	June 20, 2014	Items	June 20, 2014	**
Expenses
	Cost of vacation ownership products		$ 2,862	$ -	$ 2,862		$ 4,012	$ -	$ 4,012
	Financing		10,990	-	10,990		10,542	-	10,542
	General and administrative		45,669	-	45,669		44,981	-	44,981
	Organizational and separation related		39	(39)	-		1,535	(1,535)	-
	Litigation settlement		134	(134)	-		-	-	-
	Consumer financing interest		11,269	-	11,269		12,362	-	12,362
	Royalty fee		23,014	-	23,014		22,978	-	22,978
		Total expenses	$ 93,977	$ (173)	$ 93,804		$ 96,410	$ (1,535)	$ 94,875

NOTE: Corporate and Other consists of results not specifically attributable to an individual segment, including expenses incurred to support our financing operations, non-capitalizable development expenses supporting overall company development, company-wide general and administrative costs, and the fixed royalty fee payable under the license agreements that we entered into with Marriott International in connection with the spin-off, as well as consumer financing interest expense.

A-10
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS
(In thousands)

			12 Weeks Ended
			June 19, 2015	June 20, 2014

Contract sales
	Vacation ownership		$ 165,938	$ 164,589
	Residential products		-	-
		Total contract sales	165,938	164,589

Revenue recognition adjustments:
	Reportability¹		1,440	829
	Sales Reserve²		(7,179)	(8,047)
	Other³		(4,829)	(4,809)
Sale of vacation ownership products			$ 155,370	$ 152,562

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

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

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

MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED ADJUSTED DEVELOPMENT MARGIN (ADJUSTED SALE OF VACATION OWNERSHIP PRODUCTS NET OF EXPENSES)
(In thousands)

				Revenue					Revenue
		As Reported		Recognition	As Adjusted		As Reported		Recognition	As Adjusted
		12 Weeks Ended	Certain	Reportability	12 Weeks Ended		12 Weeks Ended	Certain	Reportability	12 Weeks Ended
		June 19, 2015	Items	Adjustment	June 19, 2015	**	June 20, 2014	Items	Adjustment	June 20, 2014	**
Sale of vacation ownership products		$ 155,370	$ -	$ (1,440)	$ 153,930		$ 152,562	$ -	$ (829)	$ 151,733
Less:
	Cost of vacation ownership products	45,119	-	(464)	44,655		43,414	-	(198)	43,216
	Marketing and sales	77,137	-	(157)	76,980		72,227	(287)	(121)	71,819

Development margin		$ 33,114	$ -	$ (819)	$ 32,295		$ 36,921	$ 287	$ (510)	$ 36,698


	Development margin percentage¹	21.3%			21.0%		24.2%			24.2%

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

A-11
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS
(In thousands)

			24 Weeks Ended
			June 19, 2015	June 20, 2014

Contract sales
	Vacation ownership		$ 335,888	$ 319,837
	Residential products		28,420	6,326
		Total contract sales	364,308	326,163

Revenue recognition adjustments:
	Reportability¹		(73)	(3,725)
	Sales Reserve²		(15,546)	(15,698)
	Other³		(9,413)	(9,328)
Sale of vacation ownership products			$ 339,276	$ 297,412

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

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

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

MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED ADJUSTED DEVELOPMENT MARGIN (ADJUSTED SALE OF VACATION OWNERSHIP PRODUCTS NET OF EXPENSES)
(In thousands)

				Revenue					Revenue
		As Reported		Recognition	As Adjusted		As Reported		Recognition	As Adjusted
		24 Weeks Ended	Certain	Reportability	24 Weeks Ended		24 Weeks Ended	Certain	Reportability	24 Weeks Ended
		June 19, 2015	Items	Adjustment	June 19, 2015	**	June 20, 2014	Items	Adjustment	June 20, 2014	**
Sale of vacation ownership products		$ 339,276	$ (28,420)	$ 73	$ 310,929		$ 297,412	$ -	$ 3,725	$ 301,137
Less:
	Cost of vacation ownership products	110,081	(21,583)	98	88,596		90,285	-	1,216	91,501
	Marketing and sales	157,132	(922)	(52)	156,158		143,447	(287)	253	143,413

Development margin		$ 72,063	$ (5,915)	$ 27	$ 66,175		$ 63,680	$ 287	$ 2,256	$ 66,223


	Development margin percentage¹	21.2%			21.3%		21.4%			22.0%

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

A-12
MARRIOTT VACATIONS WORLDWIDE CORPORATION
NORTH AMERICA CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS
(In thousands)

			12 Weeks Ended
			June 19, 2015	June 20, 2014

Contract sales
	Vacation ownership		$ 150,605	$ 145,597
	Residential products		-	-
		Total contract sales	150,605	145,597

Revenue recognition adjustments:
	Reportability¹		1,942	208
	Sales Reserve ²		(5,651)	(6,424)
	Other ³		(4,748)	(4,791)
Sale of vacation ownership products			$ 142,148	$ 134,590

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

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

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

MARRIOTT VACATIONS WORLDWIDE CORPORATION
NORTH AMERICA ADJUSTED DEVELOPMENT MARGIN (ADJUSTED SALE OF VACATION OWNERSHIP PRODUCTS NET OF EXPENSES)
(In thousands)

				Revenue					Revenue
		As Reported		Recognition	As Adjusted		As Reported		Recognition	As Adjusted
		12 Weeks Ended	Certain	Reportability	12 Weeks Ended		12 Weeks Ended	Certain	Reportability	12 Weeks Ended
		June 19, 2015	Items	Adjustment	June 19, 2015	**	June 20, 2014	Items	Adjustment	June 20, 2014	**
Sale of vacation ownership products		$ 142,148	$ -	$ (1,942)	$ 140,206		$ 134,590	$ -	$ (208)	$ 134,382
Less:
	Cost of vacation ownership products	40,834	-	(553)	40,281		37,433	-	(58)	37,375
	Marketing and sales	67,837	-	(182)	67,655		61,722	-	(20)	61,702

Development margin		$ 33,477	$ -	$ (1,207)	$ 32,270		$ 35,435	$ -	$ (130)	$ 35,305


	Development margin percentage¹	23.6%			23.0%		26.3%			26.3%

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

A-13
MARRIOTT VACATIONS WORLDWIDE CORPORATION
NORTH AMERICA CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS
(In thousands)

			24 Weeks Ended
			June 19, 2015	June 20, 2014

Contract sales
	Vacation ownership		$ 306,598	$ 285,774
	Residential products		-	6,326
		Total contract sales	306,598	292,100

Revenue recognition adjustments:
	Reportability¹		(1,502)	(4,192)
	Sales Reserve ²		(11,985)	(12,751)
	Other ³		(9,235)	(9,225)
Sale of vacation ownership products			$ 283,876	$ 265,932

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

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

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

MARRIOTT VACATIONS WORLDWIDE CORPORATION
NORTH AMERICA ADJUSTED DEVELOPMENT MARGIN (ADJUSTED SALE OF VACATION OWNERSHIP PRODUCTS NET OF EXPENSES)
(In thousands)

				Revenue					Revenue
		As Reported		Recognition	As Adjusted		As Reported		Recognition	As Adjusted
		24 Weeks Ended	Certain	Reportability	24 Weeks Ended		24 Weeks Ended	Certain	Reportability	24 Weeks Ended
		June 19, 2015	Items	Adjustment	June 19, 2015	**	June 20, 2014	Items	Adjustment	June 20, 2014	**
Sale of vacation ownership products		$ 283,876	$ -	$ 1,502	$ 285,378		$ 265,932	$ -	$ 4,192	$ 270,124
Less:
	Cost of vacation ownership products	81,335	-	427	81,762		78,938	-	1,318	80,256
	Marketing and sales	136,854	-	142	136,996		124,409	-	394	124,803

Development margin		$ 65,687	$ -	$ 933	$ 66,620		$ 62,585	$ -	$ 2,480	$ 65,065


	Development margin percentage¹	23.1%			23.3%		23.5%			24.1%

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

A-14
MARRIOTT VACATIONS WORLDWIDE CORPORATION
EBITDA AND ADJUSTED EBITDA
12 Weeks and 24 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands)


		As Reported		As Adjusted		As Reported		As Adjusted
		12 Weeks Ended	Certain	12 Weeks Ended		12 Weeks Ended	Certain	12 Weeks Ended
		June 19, 2015	Items	June 19, 2015	**	June 20, 2014	Items	June 20, 2014	**


Net income		$ 34,041	$ (4,422)	$ 29,619		$ 35,303	$ (4,616)	$ 30,687
Interest expense ¹		3,009	-	3,009		2,601	-	2,601
Tax provision		23,403	(2,804)	20,599		22,344	(3,158)	19,186
Depreciation and amortization		4,493	-	4,493		4,264	-	4,264
	EBITDA **	$ 64,946	$ (7,226)	$ 57,720		$ 64,512	$ (7,774)	$ 56,738




		As Reported		As Adjusted		As Reported		As Adjusted
		24 Weeks Ended	Certain	24 Weeks Ended		24 Weeks Ended	Certain	24 Weeks Ended
		June 19, 2015	Items	June 19, 2015	**	June 20, 2014	Items	June 20, 2014	**


Net income		$ 68,095	$(10,319)	$ 57,776		$ 54,611	$ (3,819)	$ 50,792
Interest expense ¹		5,983	-	5,983		4,748	-	4,748
Tax provision		46,692	(3,779)	42,913		35,107	(2,537)	32,570
Depreciation and amortization		8,558	-	8,558		8,922	-	8,922
	EBITDA **	$ 129,328	$(14,098)	$ 115,230		$ 103,388	$ (6,356)	$ 97,032

¹ Interest expense excludes consumer financing interest expense.

A-15
MARRIOTT VACATIONS WORLDWIDE CORPORATION
2015 ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE - DILUTED OUTLOOK
(In millions, except per share amounts)

				Fiscal Year 2015 (low)	Fiscal Year 2015 (high)
Net income				$ 114	$ 121
	Adjustments to reconcile Net income to Adjusted net income
		Organizational and separation related and other charges¹		7	6
		Gain on dispositions ²		(10)	(10)
		Bulk sales ³		(6)	(6)
		Provision for income taxes on adjustments to net income		3	3
			Adjusted net income**	$ 108	$ 114

	Earnings per share - Diluted ⁴			$ 3.49	$ 3.70
	Adjusted earnings per share - Diluted**^{, 4}			$ 3.29	$ 3.48
	Diluted shares⁴			32.7	32.7

¹ Organizational and separation related and other charges adjustment includes $1.8 million for organizational and separation related efforts and $4 million to $5 million of non-capitalizable transaction costs in our Asia Pacific and North America segments.

² Gain on dispositions adjustment includes a $0.9 million gain associated with the sale of a golf course and adjacent undeveloped land and an $8.7 million gain on the sale of undeveloped land in our North America segment.

³ Bulk sales adjustment includes the net $5.9 million of pre-tax income associated with the sale of the 18 units in the Asia Pacific segment.

⁴Earnings per share - Diluted, Adjusted earnings per share - Diluted, and Diluted shares outlook includes the impact of share repurchase activity only through June 19, 2015.

MARRIOTT VACATIONS WORLDWIDE CORPORATION
2015 ADJUSTED EBITDA OUTLOOK
(In millions)

		Fiscal Year 2015 (low)	Fiscal Year 2015 (high)
Adjusted net income **		$ 108	$ 114
Interest expense¹		12	12
Tax provision		81	85
Depreciation and amortization		21	21
	Adjusted EBITDA**	$ 222	$ 232

¹ Interest expense excludes consumer financing interest expense.

MARRIOTT VACATIONS WORLDWIDE CORPORATION
2015 ADJUSTED DEVELOPMENT MARGIN OUTLOOK
				Total MVW
				Fiscal Year 2015 (low)	Fiscal Year 2015 (high)
Development margin¹				21.1%	22.1%
	Adjustments to reconcile Development margin to Adjusted development margin
		Revenue recognition reportability		(0.1%)	(0.1%)
			Adjusted development margin**^{, 1}	21.0%	22.0%

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

A-16
MARRIOTT VACATIONS WORLDWIDE CORPORATION
2015 ADJUSTED FREE CASH FLOW AND NORMALIZED ADJUSTED FREE CASH FLOW OUTLOOK
(In millions)

				Current Guidance
				Low	High	Mid-Point	Adjustments		Normalized
Adjusted net income **				$ 108	$ 114	$ 111	$ -		$ 111
	Adjustments to reconcile Adjusted net income to net cash provided by operating activities:
		Adjustments for non-cash items¹		73	75	74	-		74
		Deferred income taxes / income taxes payable		18	20	19	-		19
		Net changes in assets and liabilities:
			Notes receivable originations	(293)	(299)	(296)	-		(296)
			Notes receivable collections	269	275	272	-		272
			Inventory	47	52	50	(60)	⁶	(10)
			Purchase of operating hotel for future conversion to inventory²	(47)	(47)	(47)	47	²	-
			Liability for Marriott Rewards customer loyalty program	(21)	(21)	(21)	21	⁷	-
			Organizational and separation related and other charges	(5)	(5)	(5)	5	⁸	-
			Other working capital changes	21	21	21	(6)	⁹	15
Net cash provided by operating activities				170	185	178	7		185
	Capital expenditures for property and equipment (excluding inventory):
		New sales centers ³		(20)	(18)	(19)	19	³	-
		Organizational and separation related capital expenditures		(4)	(4)	(4)	4	⁸	-
		Other		(24)	(23)	(24)	4	¹⁰	(20)
		Investment in operating portion of Surfers Paradise hotel that will be sold ⁴		(45)	(45)	(45)	45	⁴	-
	Decrease in restricted cash			1	5	3	-		3
	Borrowings from securitization transactions			251	258	255	(45)	¹¹	210
	Repayment of debt related to securitizations			(244)	(250)	(247)	-		(247)
			Free cash flow**	85	108	97	34		131
Adjustments:
	Organizational and separation related and other charges			9	9	9	(9)	⁷	-
	Proceeds from sale of operating portion of Surfers Paradise hotel⁴			45	45	45	(45)	⁴	-
	Net change in borrowings available from the securitization of eligible vacation ownership notes receivable through the warehouse credit facility ⁵			36	38	37	-		37
			Adjusted free cash flow**	$ 175	$ 200	$ 188	$ (20)		$ 168

¹ Includes depreciation, amortization of debt issuance costs, provision for loan losses, and share-based compensation.

² Represents adjustment for investment in an operating hotel prior to future conversion to inventory.

³ Represents incremental investment in new sales centers, mainly to support new sales distributions.

⁴ Represents the estimated investment in, as well as the estimated proceeds from the subsequent sale of, the operating portion of the Surfers Paradise hotel.

⁵ Represents the net change in borrowings available from the securitization of eligible vacation ownership notes receivable through the warehouse credit facility between the 2014 and 2015 year ends.

⁶ Represents adjustment to align real estate inventory spending with real estate inventory costs (i.e., product costs).

⁷ Represents payment for Marriott Rewards Points issued prior to the Spin-off. Liability to be fully paid in 2016.

⁸ Represents costs associated with organizational and separation related efforts.

⁹ Represents normalized other working capital changes.

¹⁰ Represents normalized capital expenditures for property and equipment.

¹¹ Represents normalized borrowings from securitization transactions.

A-17

MARRIOTT VACATIONS WORLDWIDE CORPORATION

NON-GAAP FINANCIAL MEASURES

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

Adjusted Net Income. We evaluate non-GAAP financial measures, including Adjusted Net Income, Adjusted EBITDA, and Adjusted Development Margin, that exclude certain items and net gains in the 12 weeks and 24 weeks ended June 19, 2015 and June 20, 2014 because these non-GAAP financial measures allow for period-over-period comparisons of our on-going core operations before the impact of certain items and gains. These non-GAAP financial measures also facilitate our comparison of results from our on-going core operations before certain items and gains with results from other vacation ownership companies.

Certain items - 12 weeks and 24 weeks ended June 19, 2015. In our Statement of Income for the 12 weeks ended June 19, 2015, we recorded $1.4 million of net pre-tax items, which included a $1.3 million adjustment for transaction costs associated with a commitment to purchase an operating hotel in our Asia Pacific segment recorded under the "Other transaction related" caption, $0.1 million of organizational and separation related costs recorded under the "Organizational and separation related" caption and less than $0.1 million of net litigation related matters recorded under the "Litigation settlement" caption. In our Statement of Income for the 24 weeks ended June 19, 2015, we recorded $4.6 million of net pre-tax items, which included a $28.4 million adjustment to exclude the bulk sale of 18 units in our Asia Pacific segment recorded under the "Sale of vacation ownership products" caption, with corresponding adjustments of $21.6 million and $0.9 million to the "Cost of vacation ownership products" and Marketing and sales" captions, respectively, a $1.3 million adjustment for transaction costs associated with a commitment to purchase an operating hotel in our Asia Pacific segment recorded under the "Other transaction related" caption, $0.3 million of organizational and separation related costs recorded under the "Organizational and separation related" caption and less than $0.1 million of net litigation related matters recorded under the "Litigation settlement" caption, partially offset by a $0.3 million reversal of an accrual associated with a 2014 golf course disposition recorded under the "Litigation settlement" caption because actual costs were lower than expected.

Certain items - 12 weeks and 24 weeks ended June 20, 2014. In our Statement of Income for the 12 weeks ended June 20, 2014, we recorded $7.4 million of net pre-tax income, which included $7.6 million of income associated with the settlement of a dispute with a former service provider in our North America segment recorded under the "Litigation settlement" caption and the reversal of a $2.0 million reserve for remaining costs we expect to incur in connection with our interest in an equity method investment in a joint venture project in our North America segment recorded under the "Impairment reversals on equity investment" caption, partially offset by $1.1 million of organizational and separation related costs recorded under the "Organizational and separation related" caption, a $0.8 million impairment charge associated with a project in our North America segment recorded under the "Impairment" caption and $0.3 million of severance charges in our Europe segment recorded under the "Marketing and sales" caption. In our Statement of Income for the 24 weeks ended June 20, 2014, we recorded $4.7 million of net pre-tax income, which included $7.6 million of income associated with the settlement of a dispute with a former service provider in our North America segment recorded under the "Litigation settlement" caption and a $0.2 million reversal of a severance accrual in our Europe segment recorded under the "Resort management and other services" caption because actual costs were lower than expected, partially offset by $1.9 million of organizational and separation related costs recorded under the "Organizational and separation related" caption, a $0.8 million impairment charge associated with a project in our North America segment recorded under the "Impairment" caption and $0.3 million of severance charges in our Europe segment recorded under the "Marketing and sales" caption.

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MARRIOTT VACATIONS WORLDWIDE CORPORATION

NON-GAAP FINANCIAL MEASURES

Net gains - 12 weeks and 24 weeks ended June 19, 2015. In our Statement of Income for the 12 weeks ended June 19, 2015, we recorded an $8.7 million gain associated with the sale of undeveloped land in our North America segment under the "Gains and other income" caption. In our Statement of Income for the 24 weeks ended June 19, 2015, we recorded $9.5 million of net gains associated with the sale of undeveloped land and the sale of a golf course and adjacent undeveloped land in our North America segment under the "Gains and other income" caption.

Net gains - 12 weeks and 24 weeks ended June 20, 2014. In our Statement of Income for the 12 weeks ended June 20, 2014, we recorded $0.4 million of net gains associated with the sale of a golf course and adjacent undeveloped land, the sale of an undeveloped parcel of land, and the disposition of a project, all of which occurred in our North America segment and were recorded under the "Gains and other income" caption. In our Statement of Income for the 24 weeks ended June 20, 2014, we recorded $1.6 million of net gains associated with the sale of a golf course and adjacent undeveloped land, the sale of an undeveloped parcel of land, and the disposition of a project, all of which occurred in our North America segment and were recorded under the "Gains and other income" caption.

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

Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"). EBITDA is defined as earnings, or net income, before interest expense (excluding consumer financing interest expense), provision for income taxes, depreciation and amortization. For purposes of our EBITDA calculation (which previously adjusted for consumer financing interest expense), we do not adjust for consumer financing interest expense because the associated debt is secured by vacation ownership notes receivable that have been sold to bankruptcy remote special purpose entities and is generally non-recourse to us. Further, we consider consumer financing interest expense to be an operating expense of our business.

We consider EBITDA to be an indicator of operating performance, and we use it to measure our ability to service debt, fund capital expenditures and expand our business. We also use it, as do analysts, lenders, investors and others, because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company's capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. EBITDA also excludes depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.

Adjusted EBITDA. We also evaluate Adjusted EBITDA, which reflects additional adjustments for certain items and gains, as itemized in the discussion of Adjusted Net Income above. We evaluate Adjusted EBITDA as an indicator of operating performance because it allows for period-over-period comparisons of our on-going core operations before the impact of certain items and gains. Together, EBITDA and Adjusted EBITDA facilitate our comparison of results from our on-going core operations before the impact of certain items and gains with results from other vacation ownership companies.

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MARRIOTT VACATIONS WORLDWIDE CORPORATION

NON-GAAP FINANCIAL MEASURES

Free Cash Flow. We also evaluate Free Cash Flow as a liquidity measure that provides useful information to management and investors about the amount of cash provided by operating activities after capital expenditures for property and equipment, changes in restricted cash, and the borrowing and repayment activity related to our securitizations. We consider Free Cash Flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can be used for strategic opportunities, including acquisitions and strengthening the balance sheet. Analysis of Free Cash Flow also facilitates management's comparison of our results with our competitors' results.

Adjusted Free Cash Flow. We also evaluate Adjusted Free Cash Flow, which reflects additional adjustments for organizational and separation related, litigation, and other cash items, as referred to in the discussion of Adjusted Net Income above. We evaluate Adjusted Free Cash Flow as a liquidity measure that provides useful information to management and investors about the amount of cash provided by operating activities after capital expenditures for property and equipment, changes in restricted cash, and the borrowing and repayment activity related to our securitizations, excluding the impact of organizational and separation related, litigation, and other cash charges. We consider Adjusted Free Cash Flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can be used for strategic opportunities, including acquisitions and strengthening the balance sheet. Analysis of Adjusted Free Cash Flow also facilitates management's comparison of our results with our competitors' results.

Normalized Adjusted Free Cash Flow. We also evaluate Normalized Adjusted Free Cash Flow as a liquidity measure that provides useful information to management and investors about the amount of cash provided by operating activities after capital expenditures for property and equipment, changes in restricted cash, the borrowing and repayment activity related to our securitizations, and adjustments to remove the impact of cash flow items not expected to occur on a regular basis. Adjustments eliminate the impact of excess cash taxes, payments for Marriott Rewards Points issued prior to the Spin-off, payments for organizational and separation related efforts, litigation cash settlements and other working capital changes. We consider Normalized Adjusted Free Cash Flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can be used for strategic opportunities, including acquisitions and strengthening the balance sheet. Analysis of Normalized Adjusted Free Cash Flow also facilitates management's comparison of our results with our competitors' results.

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MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

	(unaudited)
	June 19, 2015	January 2, 2015
ASSETS
Cash and cash equivalents	$ 250,906	$ 346,515
Restricted cash (including $37,017 and $34,986 from VIEs, respectively)	65,559	109,907
Accounts and contracts receivable (including $3,429 and $4,992 from VIEs, respectively)	116,544	109,700
Vacation ownership notes receivable (including $547,158 and $750,680 from VIEs, respectively)	878,858	917,228
Inventory	704,707	772,784
Property and equipment	188,714	147,379
Other	117,924	127,066
Total Assets	$ 2,323,212	$ 2,530,579

LIABILITIES AND EQUITY
Accounts payable	$ 80,450	$ 114,079
Advance deposits	64,148	60,192
Accrued liabilities (including $1,576 and $1,088 from VIEs, respectively)	137,261	165,969
Deferred revenue	32,845	38,818
Payroll and benefits liability	74,582	93,073
Liability for Marriott Rewards customer loyalty program	79,939	89,285
Deferred compensation liability	46,534	41,677
Mandatorily redeemable preferred stock of consolidated subsidiary	38,895	38,816
Debt (including $564,657 and $708,031 from VIEs, respectively)	561,133	703,013
Other	50,053	27,071
Deferred taxes	96,748	78,883
Total Liabilities	1,262,588	1,450,876

Preferred stock - $.01 par value; 2,000,000 shares authorized; none issued or outstanding	-	-
Common stock - $.01 par value; 100,000,000 shares authorized; 36,346,990 and 36,089,513 shares issued, respectively	363	361
Treasury stock - at cost; 4,814,451 and 3,996,725 shares, respectively	(295,466)	(229,229)
Additional paid-in capital	1,135,143	1,137,785
Accumulated other comprehensive income	14,756	17,054
Retained earnings	205,828	153,732
Total Equity	1,060,624	1,079,703

Total Liabilities and Equity	$ 2,323,212	$ 2,530,579

The abbreviation VIEs above means Variable Interest Entities.

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MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
		24 weeks ended
		June 19, 2015	June 20, 2014
OPERATING ACTIVITIES
Net income		$68,095	$54,611
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation	8,558	8,922
	Amortization of debt issuance costs	2,506	2,566
	Provision for loan losses	15,662	15,603
	Share-based compensation	6,588	6,180
	Deferred income taxes	17,850	(5,299)
	Equity method income	(98)	(118)
	Gain on disposal of property and equipment, net	(9,512)	(1,642)
	Non-cash litigation settlement	(262)	-
	Impairment charges	-	834
	Impairment charges on equity investment	-	-
	Net change in assets and liabilities:
	Accounts and contracts receivable	(6,068)	(11,822)
	Notes receivable originations	(112,060)	(103,908)
	Notes receivable collections	132,397	137,460
	Inventory	68,629	36,805
	Purchase of operating hotel for future conversion to inventory	(46,614)	-
	Other assets	8,154	26,546
	Accounts payable, advance deposits and accrued liabilities	(66,223)	(55,865)
	Liability for Marriott Rewards customer loyalty program	(9,345)	(14,284)
	Deferred revenue	(5,955)	(310)
	Payroll and benefit liabilities	(18,382)	(14,832)
	Deferred compensation liability	4,858	1,882
	Other liabilities	18,013	15,397
	Other, net	1,874	(564)

Net cash provided by operating activities		78,665	98,162
INVESTING ACTIVITIES
	Capital expenditures for property and equipment (excluding inventory)	(15,718)	(3,003)
	Decrease in restricted cash	43,758	43,958
	Dispositions, net	20,346	33,169

Net cash provided by investing activities		48,386	74,124
FINANCING ACTIVITIES
	Borrowings from securitization transactions	-	22,638
	Repayment of debt related to securitization transactions	(143,374)	(130,954)
	Debt issuance costs	(30)	(140)
	Proceeds from vacation ownership inventory arrangement	5,375	-
	Repurchase of common stock	(66,237)	(89,448)
	Payment of dividends	(8,085)	-
	Proceeds from stock option exercises	92	968
	Payment of withholding taxes on vesting of restricted stock units	(9,353)	(5,091)
	Other	109	-

Net cash used in financing activities		(221,503)	(202,027)

	Effect of changes in exchange rates on cash and cash equivalents	(1,157)	3

DECREASE IN CASH AND CASH EQUIVALENTS		(95,609)	(29,738)

CASH AND CASH EQUIVALENTS, beginning of period		346,515	199,511

CASH AND CASH EQUIVALENTS, end of period		$250,906	$169,773