Marriott Vacations Worldwide Reports Second Quarter 2014 Financial Results

  Marriott Vacations Worldwide Reports Second Quarter 2014 Financial Results  PR Newswire  ORLANDO, Fla., July 24, 2014  ORLANDO, Fla., July 24, 2014 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported second quarter 2014 financial results and provided updated guidance for the full year 2014.  Highlights for the second quarter of 2014 include:    oAdjusted EBITDA totaled $57 million, an increase of $9 million, or 20     percent, year-over-year.   oCompany adjusted development margin was 24.2 percent and North America     adjusted development margin was 26.3 percent, an increase of 710 and 680     basis points, respectively, year-over-year.   oNorth America volume per guest (VPG) increased 5.3 percent year-over-year     to $3,383.   oAdjusted fully diluted earnings per share (EPS) were $0.87 compared to     $0.73 in the second quarter of 2013.   oThe company disposed of a parcel of undeveloped land on Singer Island,     Florida for gross cash proceeds of $11 million.   oIn the second quarter of 2014, the company repurchased 936,060 shares of     its common stock under its share repurchase program for approximately $52     million. Through July 22, 2014, the company has repurchased a total of     nearly 2.5 million shares for a total of $134 million since the launch of     the program in the fourth quarter of 2013.  Second quarter 2014 net income totaled $36 million, or $1.00 per diluted share, compared to net income of $30 million, or $0.85 per diluted share, in the second quarter of 2013. Company development margin increased to 24.2 percent in the second quarter of 2014 from 23.1 percent in the second quarter of 2013; North America development margin for the second quarter increased to 26.3 percent from 20.8 percent last year.  Second quarter 2014 adjusted net income totaled $31 million, a $4 million increase compared to the second quarter of 2013. Second quarter adjusted net income excludes the pre-tax impact of the following:    oSecond quarter 2014: $8 million of income in the company's North America     segment associated with the settlement of a dispute with a former service     provider, the reversal of a $2 million reserve associated with the     company's interest in an equity method investment in a joint venture     project in its North America segment, $1 million of organizational and     separation related costs, $1 million related to a gain from the sale of a     golf course and adjacent undeveloped land and a $1 million non-cash     impairment charge.   oSecond quarter 2013: $9 million related to the impact of extended     rescission periods in the company's Europe segment, a $7 million increase     in an accrual for expected remaining costs associated with the company's     interest in an equity method investment in a joint venture project in its     North America segment offset by a $7 million gain for cash received in     payment of fully reserved receivables associated with that same project,     $2 million of organizational and separation related costs, and $2 million     of severance costs and an impairment charge in the company's Europe     segment. In addition, adjusted development margin for both periods is     adjusted for the impact of revenue reportability, as necessary.  Non-GAAP financial measures, such as adjusted EBITDA, adjusted net income, adjusted earnings per share 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-20. The company now reports consumer financing interest expense separately from all other interest expense. As a result, adjusted EBITDA as used in this release is equivalent to the non-GAAP financial measure adjusted EBITDA, as adjusted, presented prior to the third quarter of 2013.  "Our second quarter results were strong across the board, with continued growth in VPG, development margin and adjusted EBITDA, as well as improving trends in our tour production," said Stephen P. Weisz, president and chief executive officer. "Adjusted development margin in our key North America segment improved to 26.3 percent, and total company development margin improved to 24.2 percent. After two quarters of solid performance, we are increasing our full year 2014 guidance for adjusted free cash flow, as well as total company and North America adjusted development margin, and raising the lower end of our full year adjusted EBITDA guidance."  Second Quarter 2014 Results  Total company contract sales were $164 million, a $7 million increase from $157 million in the second quarter of 2013, driven by $4 million of higher contract sales in the company's North America segment and $4 million of higher contract sales in the company's Europe segment, offset by $1 million of lower contract sales in the company's Asia Pacific segment.  Adjusted development margin was $37 million, a $12 million increase from the second quarter of 2013. Adjusted development margin percentage increased 7.1 percentage points to 24.2 percent in the second quarter of 2014 from 17.1 percent in the second quarter of 2013. The adjustments are illustrated on schedule A-10. Development margin was $37 million, a $1 million decrease from the second quarter of 2013, as the prior year period benefited from the impact of extended rescission periods in the company's Europe segment. Development margin percentage increased 1.1 percentage points to 24.2 percent in the second quarter of 2014 from 23.1 percent in the second quarter of 2013.  Rental revenues totaled $62 million, a $3 million decrease from the second quarter of 2013. These results reflect a 2 percent increase in transient keys rented as well as a 3 percent increase in average transient rate, offset by $5 million of lower plus points revenue. Rental revenues, net of expenses, were $7 million, a $2 million decrease from the second quarter of 2013.  Resort management and other services revenues totaled $70 million, a $6 million increase from the second quarter of 2013. Resort management and other services revenues, net of expenses, were $24 million, a $6 million increase over the second quarter of 2013.  Adjusted EBITDA was $57 million in the second quarter of 2014, a $9 million increase from $48 million in the second quarter of 2013.  Segment Results  North America  VPG increased 5.3 percent to $3,383 in the second quarter of 2014 from $3,211 in the second quarter of 2013, driven mainly by higher pricing. North America vacation ownership contract sales were $146 million in the second quarter of 2014, an increase of $5 million over the prior year period.  Second quarter 2014 North America segment financial results were $101 million, an increase of $17 million, or 20 percent, year-over-year. The increase was primarily driven by $8 million of higher development margin, $8 million from the settlement of a dispute with a former service provider, $5 million of higher resort management and other services revenues net of expenses, the reversal of a $2 million charge related to the company's interest in an equity method investment in a joint venture project and $2 million of lower royalty fees. These increases were partially offset by $3 million of lower rental revenues net of expenses, $3 million of lower financing revenues, $1 million of lower other revenues net of expenses and $1 million of organizational and separation related charges.  Development margin was $36 million, an $8 million increase from the second quarter of 2013. Development margin percentage increased to 26.3 percent in the second quarter of 2014 as compared to 20.8 percent in the prior year quarter. Excluding the impact of revenue reportability, adjusted development margin was $36 million, an $11 million increase from the prior year quarter. Adjusted development margin percentage increased to 26.3 percent in the second quarter of 2014 from 19.5 percent in the second quarter of 2013. The impact of revenue reportability is illustrated on schedule A-12.  Asia Pacific  Asia Pacific contract sales declined $1 million to $7 million in the second quarter of 2014. Segment financial results were $2 million, flat to the second quarter of 2013.  Europe  Second quarter 2014 contract sales improved $4 million to $11 million. Segment financial results were $6 million, $5 million below the second quarter of 2013. Adjustingfor the $9 million impact related to extended rescission periods in the prior year comparable period, segment financial results increased $4 million.  Organizational and Separation Plan  During the second quarter of 2014, the company incurred $1 million of costs in connection with its continued organizational and separation related efforts. Remaining spending for these efforts of approximately $4 million to $6 million is expected to be incurred by the end of 2014.  These costs primarily relate to establishing the company's own information technology systems and services, independent accounts payable functions and the reorganization of existing human resources and information technology organizations to support the company's stand-alone public company needs. Once completed, these efforts are expected to generate approximately $15 million to $20 million of annualized savings, of which approximately $12 million has been realized cumulatively to date, including roughly $2 million reflected in the company's 2014 financial results.  Dispositions  As part of its strategy to dispose of excess land and inventory, the company completed the sale of a parcel of undeveloped land on Singer Island, Florida in May 2014, resulting in $11 million of gross cash proceeds and an estimated gain of less than $1 million.  Share Repurchase Program  During the second quarter of 2014, the company repurchased 936,060 shares of its common stock at an average price of $55.56 per share for a total of approximately $52 million. Through July 22, 2014, the company has repurchased a total of nearly 2.5 million shares of its common stock for a total of $134 million since the launch of the program on October 20, 2013.  Balance Sheet and Liquidity  On June 20, 2014, cash and cash equivalents totaled $170 million. Since the end of 2013, real estate inventory balances declined $44 million to $820 million, including $446 million of finished goods, $40 million of work-in-process and $334 million of land and infrastructure. The company had $570 million in debt outstanding at the end of the second quarter of 2014, a decrease of $108 million from year-end 2013, including $566 million in non-recourse securitized notes. In addition, $40 million of mandatorily redeemable preferred stock of a subsidiary of the company was outstanding at the end of the second quarter of 2014.  In June, the company completed a securitization of a pool of approximately $23.8 million of primarily highly-seasoned vacation ownership notes receivable that the company had previously classified as not being eligible for securitization, at a weighted average interest rate of 6.25 percent and an advance rate of 95 percent. This transaction generated approximately $22.5 million of net cash proceeds to the company after transaction costs and cash reserves, which are available for general corporate purposes.  As of June 20, 2014, the company had $197 million in available capacity under its revolving credit facility after taking into account outstanding letters of credit and had approximately $170 million of gross vacation ownership notes receivable eligible for securitization.  Outlook  For the full year 2014, the company is updating guidance as reflected in the chart below.                                       Current Guidance     Previous Guidance Adjusted free cash flow  $190 million to $205 $145 million to $160                                 million              million Adjusted fully diluted earnings per  $2.64 to $2.82       $2.42 to $2.68 share Adjusted EBITDA                      $190 million to $200 $185 million to $200                                      million              million Adjusted net income                  $93 million to $99   $87 million to $96                                      million              million Adjusted development margin:  Company                        21.0 percent to 22.0 20.0 percent to 21.0                                      percent              percent  North America                  23.0 percent to 24.0 22.0 percent to 23.0                                      percent              percent Contract sales growth (excluding residential):  Company                        1 percent to 3       5 percent to 8                                      percent              percent  North America                  flat to 2 percent    4 percent to 7                                                           percent    Schedules A-1 through A-20 reconcile the non-GAAP financial measures set forth above to the following full year 2014 expected GAAP results: reported net income of $95 million to $101 million; reported company development margin of 20.5 percent to 21.5 percent; reported North America development margin of 22.8 percent to 23.8 percent; and net cash provided by operating activities of $189 million to $201 million.  Second Quarter 2014 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 (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 13586548.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 approximately 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 future operating results, organizational and separation related efforts, 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 24, 2014 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 PRESS RELEASE SCHEDULES QUARTER 2, 2014 TABLE OF CONTENTS Consolidated Statements of Operations - 12 Weeks Ended June 20, 2014 and A-1 June 14, 2013 Consolidated Statements of Operations - 24 Weeks Ended June 20, 2014 and A-2 June 14, 2013 North America Segment Financial Results - 12 Weeks Ended June 20, 2014   A-3 and June 14, 2013 North America Segment Financial Results - 24 Weeks Ended June 20, 2014   A-4 and June 14, 2013 Asia Pacific Segment Financial Results - 12 Weeks Ended June 20, 2014    A-5 and June 14, 2013 Asia Pacific Segment Financial Results - 24 Weeks Ended June 20, 2014    A-6 and June 14, 2013 Europe Segment Financial Results - 12 Weeks Ended June 20, 2014 and June A-7 14, 2013 Europe Segment Financial Results - 24 Weeks Ended June 20, 2014 and June A-8 14, 2013 Corporate and Other Financial Results - 12 Weeks and 24 Weeks Ended June A-9 20, 2014 and June 14, 2013 Consolidated Contract Sales to Sale of Vacation Ownership Products and Adjusted Development Margin  (Adjusted Sale of Vacation Ownership Products Net of Expenses) - 12  A-10 Weeks Ended June 20, 2014 and June 14, 2013 Consolidated Contract Sales to Sale of Vacation Ownership Products and Adjusted Development Margin  (Adjusted Sale of Vacation Ownership Products Net of Expenses) - 24  A-11 Weeks Ended June 20, 2014 and June 14, 2013 North America Contract Sales to Sale of Vacation Ownership Products and Adjusted Development Margin  (Adjusted Sale of Vacation Ownership Products Net of Expenses) - 12  A-12 Weeks Ended June 20, 2014 and June 14, 2013 North America Contract Sales to Sale of Vacation Ownership Products and Adjusted Development Margin  (Adjusted Sale of Vacation Ownership Products Net of Expenses) - 24  A-13 Weeks Ended June 20, 2014 and June 14, 2013 EBITDA and Adjusted EBITDA - 12 Weeks and 24 Weeks Ended June 20, 2014   A-14 and June 14, 2013 Adjusted Net Income and Adjusted Earnings Per Share - Diluted, Adjusted  A-15 EBITDA and Adjusted Development Margin - 2014 Outlook 2014 Adjusted Free Cash Flow Outlook                                     A-16 2014 Normalized Adjusted Free Cash Flow Outlook                          A-17 Non-GAAP Financial Measures                                              A-18 Interim Consolidated Balance Sheets                                      A-21 Interim Consolidated Statements of Cash Flows                            A-22    A-1 MARRIOTT VACATIONS WORLDWIDE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS 12 Weeks Ended June 20, 2014 and June 14, 2013 (In millions, except per share amounts)                   As                 As           As                 Europe      As                   Reported           Adjusted     Reported                       Adjusted                   12 Weeks  Certain  12 Weeks     12 Weeks  Certain  Rescission  12 Weeks                   Ended              Ended        Ended                          Ended                   June 20,  Charges  June 20, **  June 14,  Charges  Adjustment  June 14, **                   2014               2014         2013                           2013 Revenues   Sale of         $               $         $               $       $      vacation              $                    $                  ownership                -                    -                products         152              152         169               (17)        152   Resort   management and  70        -        70           64        -        -           64   other services   Financing       29        -        29           32        -        -           32   Rental          62        -        62           65        -        -           65   Other           6         -        6            6         -        -           6   Cost            91        -        91           85        -        -           85   reimbursements      Total        410       -        410          421       -        (17)        404      revenues Expenses   Cost of   vacation        43        -        43           57        -        (6)         51   ownership   products   Marketing and   72        -        72           74        (1)      (2)         71   sales   Resort   management and  46        -        46           46        -        -           46   other services   Financing       6         -        6            6         -        -           6   Rental          55        -        55           56        -        -           56   Other           3         -        3            2         -        -           2   General and     23        -        23           22        -        -           22   administrative   Organizational   and separation  1         (1)      -            2         (2)      -           -   related   Litigation      (8)       8        -            -         -        -           -   settlement   Consumer   Financing       5         -        5            7         -        -           7   Interest   Royalty fee     14        -        14           15        -        -           15   Impairment      1         (1)      -            1         (1)      -           -   Cost            91        -        91           85        -        -           85   reimbursements      Total        352       6        358          373       (4)      (8)         361      expenses Gains and other   1         (1)      -            -         -        -           - income Interest Expense  3         -        3            4         -        -           4 Impairment reversals on      2         (2)      -            -         -        -           - equity investment   Income before   58        (9)      49           44        4        (9)         39   income taxes Provision for     (22)      4        (18)         (14)      (1)      3           (12) income taxes                   $               $         $               $       $    Net income              $                    $                                         (5)                     3                                36               31         30               (6)         27                   $               $         $                           $    Earnings per                                                             share - Basic                                                                              1.03               0.89         0.87                           0.76                   $               $         $                           $    Earnings per                                                             share - Diluted                                                                            1.00               0.87         0.85                           0.73 Basic Shares      34.3               34.3         35.4                           35.4 Diluted Shares    35.2               35.2         36.6                           36.6                   As                              As                   Reported                        Reported                   12 Weeks                        12 Weeks                   Ended                           Ended Contract Sales    June 20,                        June 14,                   2014                            2013                   $                            $      Vacation                                          ownership                                                         164                            156   Residential     -                               1   products      Total        $                            $         contract                                          sales                                                          164                            157    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 for additional information about our reasons for providing these alternative financial measures and limitations on their use. NOTE: We now report in Resort management and other services certain external exchange company results previously included in Other and have recast prior year presentation for consistency.    A-2 MARRIOTT VACATIONS WORLDWIDE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS 24 Weeks Ended June 20, 2014 and June 14, 2013 (In millions, except per share amounts)                   As                 As           As                 Europe      As                   Reported           Adjusted     Reported                       Adjusted                   24 Weeks  Certain  24 Weeks     24 Weeks  Certain  Rescission  24 Weeks                   Ended              Ended        Ended                          Ended                   June 20,  Charges  June 20, **  June 14,  Charges  Adjustment  June 14, **                   2014               2014         2013                           2013 Revenues   Sale of         $      $     $         $      $     $       $      vacation                                                      ownership             -                      -                    products         297               297         310              (18)         292   Resort   management and  130       -        130          123       -        -           123   other services   Financing       60        -        60           65        -        -           65   Rental          126       -        126          128       -        -           128   Other           8         -        8            9         -        -           9   Cost            191       -        191          176       -        -           176   reimbursements      Total        812       -        812          811       -        (18)        793      revenues Expenses   Cost of   vacation        90        -        90           101       -        (6)         95   ownership   products   Marketing and   143       -        143          148       (2)      (2)         144   sales   Resort   management and  88        -        88           89        -        -           89   other services   Financing       11        -        11           11        -        -           11   Rental          112       -        112          112       -        -           112   Other           5         -        5            5         -        -           5   General and     45        -        45           43        -        -           43   administrative   Organizational   and separation  2         (2)      -            3         (3)      -           -   related   Litigation      (8)       8        -            (1)       1        -           -   settlement   Consumer   Financing       12        -        12           15        -        -           15   Interest   Royalty fee     27        -        27           28        -        -           28   Impairment      1         (1)      -            1         (1)      -           -   Cost            191       -        191          176       -        -           176   reimbursements      Total        719       5        724          731       (5)      (8)         718      expenses Gains and other   2         (2)      -            1         -        -           1 income Interest Expense  5         -        5            7         -        -           7 Impairment reversals on      -         -        -            -         -        -           - equity investment      Income      before       90        (7)      83           74        5        (10)        69      income taxes Provision for     (35)      3        (32)         (25)      (1)      3           (23) income taxes                   $               $         $               $       $    Net income              $                    $                                          (4)                    4                                 55               51         49              (7)         46                   $               $         $                           $    Earnings per                                                             share - Basic                                                                              1.58              1.47        1.40                          1.32                   $               $         $                           $    Earnings per                                                             share - Diluted                                                                            1.54              1.43        1.35                          1.27 Basic Shares      34.6               34.6         35.3                           35.3 Diluted Shares    35.6               35.6         36.6                           36.6                   As                              As                   Reported                        Reported                   24 Weeks                        24 Weeks                   Ended                           Ended Contract Sales    June 20,                        June 14,                   2014                            2013                   $                            $      Vacation                                          ownership                                                          320                            312   Residential     6                               1   products      Total        $                            $         contract                                          sales                                                           326                            313    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 for additional information about our reasons for providing these alternative financial measures and limitations on their use. NOTE: We have restated 2013 first quarter Sale of vacation ownership products revenue, Income before income taxes, Net income, Earnings per share - Basic, and Earnings per share - Diluted to correct prior period misstatements. Earnings per share - Basic and Earnings per share - Diluted are calculated using whole dollars. We now report in Resort management and other services certain external exchange company results previously included in Other and have recast prior year presentation for consistency.    A-3 MARRIOTT VACATIONS WORLDWIDE CORPORATION NORTH AMERICA SEGMENT 12 Weeks Ended June 20, 2014 and June 14, 2013 ($ in millions)                   As                 As           As                 As                   Reported           Adjusted     Reported           Adjusted                   12 Weeks  Certain  12 Weeks     12 Weeks  Certain  12 Weeks                   Ended              Ended        Ended              Ended                   June 20,  Charges  June 20, **  June 14,  Charges  June 14, **                   2014               2014         2013               2013 Revenues   Sale of         $      $     $         $      $     $      vacation                                               ownership             -                      -             products         135               135         136               136   Resort   management and  60        -        60           55        -        55   other services   Financing       27        -        27           30        -        30   Rental          54        -        54           57        -        57   Other           6         -        6            6         -        6   Cost            81        -        81           75        -        75   reimbursements      Total        363       -        363          359       -        359      revenues Expenses   Cost of   vacation        37        -        37           46        -        46   ownership   products   Marketing and   62        -        62           62        -        62   sales   Resort   management and  39        -        39           39        -        39   other services   Rental          48        -        48           48        -        48   Other           3         -        3            2         -        2   Organizational   and separation  1         (1)      -            -         -        -   related   Litigation      (8)       8        -            -         -        -   settlement   Royalty fee     1         -        1            3         -        3   Impairment      1         (1)      -            -         -        -   Cost            81        -        81           75        -        75   reimbursements      Total        265       6        271          275       -        275      expenses Gains and other   1         (1)      -            -         -        - income Impairment reversals on      2         (2)      -            -         -        - equity investment      Segment      $               $         $      $     $         financial          $                                   results              (9)                 -                              101                92         84               84                   As                              As                   Reported                        Reported                   12 Weeks                        12 Weeks                   Ended                           Ended Contract Sales    June 20,                        June 14,                   2014                            2013                   $                            $      Vacation                                          ownership                                                          146                            141   Residential     -                               1   products      Total        $                            $         contract                                          sales                                                           146                            142    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 for additional information about our reasons for providing these alternative financial measures and limitations on their use. NOTE: We now report in Resort management and other services certain external exchange company results previously included in Other and have recast prior year presentation for consistency.    A-4 MARRIOTT VACATIONS WORLDWIDE CORPORATION NORTH AMERICA SEGMENT 24 Weeks Ended June 20, 2014 and June 14, 2013 ($ in millions)                   As                 As           As                 As                   Reported           Adjusted     Reported           Adjusted                   24 Weeks  Certain  24 Weeks     24 Weeks  Certain  24 Weeks                   Ended              Ended        Ended              Ended                   June 20,  Charges  June 20, **  June 14,  Charges  June 14, **                   2014               2014         2013               2013 Revenues   Sale of         $      $     $         $      $     $      vacation                                               ownership             -                      -             products         266               266         262               262   Resort   management and  114       -        114          108       -        108   other services   Financing       56        -        56           61        -        61   Rental          114       -        114          116       -        116   Other           8         -        8            9         -        9   Cost            171       -        171          156       -        156   reimbursements      Total        729       -        729          712       -        712      revenues Expenses   Cost of   vacation        79        -        79           86        -        86   ownership   products   Marketing and   124       -        124          126       -        126   sales   Resort   management and  75        -        75           76        -        76   other services   Rental          99        -        99           99        -        99   Other           5         -        5            5         -        5   Organizational   and separation  1         (1)      -            -         -        -   related   Litigation      (8)       8        -            (1)       1        -   settlement   Royalty fee     3         -        3            4         -        4   Impairment      1         (1)      -            -         -        -   Cost            171       -        171          156       -        156   reimbursements      Total        550       6        556          551       1        552      expenses Gains and other   2         (2)      -            1         -        1 income Impairment reversals on      -         -        -            -         -        - equity investment      Segment      $               $         $               $         financial          $                    $              results              (8)                   (1)                         181               173         162               161                   As                              As                   Reported                        Reported                   24 Weeks                        24 Weeks                   Ended                           Ended Contract Sales    June 20,                        June 14,                   2014                            2013                   $                            $      Vacation                                          ownership                                                          286                            284   Residential     6                               1   products      Total        $                            $         contract                                          sales                                                           292                            285    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 for additional information about our reasons for providing these alternative financial measures and limitations on their use. NOTE: We now report in Resort management and other services certain external exchange company results previously included in Other and have recast prior year presentation for consistency.    A-5 MARRIOTT VACATIONS WORLDWIDE CORPORATION ASIA PACIFIC SEGMENT 12 Weeks Ended June 20, 2014 and June 14, 2013 ($ in millions)                  As                 As           As                 As                  Reported           Adjusted     Reported           Adjusted                  12 Weeks  Certain  12 Weeks     12 Weeks  Certain  12 Weeks                  Ended              Ended        Ended              Ended                  June 20,  Charges  June 20, **  June 14,  Charges  June 14, **                  2014               2014         2013               2013 Revenues   Sale of        $      $     $         $      $     $      vacation                                              ownership            -                      -             products          8               8         8               8   Resort   management and 1         -        1            1         -        1   other services   Financing      1         -        1            1         -        1   Rental         2         -        2            2         -        2   Cost           -         -        -            2         -        2   reimbursements      Total       12        -        12           14        -        14      revenues Expenses   Cost of   vacation       2         -        2            1         -        1   ownership   products   Marketing and  4         -        4            5         -        5   sales   Resort   management and -         -        -            -         -        -   other services   Rental         3         -        3            3         -        3   Royalty fee    1         -        1            1         -        1   Cost           -         -        -            2         -        2   reimbursements      Total       10        -        10           12        -        12      expenses      Segment     $      $     $         $      $     $         financial                                             results           -                      -                               2               2         2               2                  As                              As                  Reported                        Reported                  12 Weeks                        12 Weeks                  Ended                           Ended                  June 20,                        June 14,                  2014                            2013                  $                            $    Contract Sales                                                                                                        7                            8    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 for additional information about our reasons for providing these alternative financial measures and limitations on their use. NOTE: Asia Pacific segment revenues and expenses for the twelve weeks ended June 14, 2013 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.    A-6 MARRIOTT VACATIONS WORLDWIDE CORPORATION ASIA PACIFIC SEGMENT 24 Weeks Ended June 20, 2014 and June 14, 2013 ($ in millions)                  As                 As           As                 As                  Reported           Adjusted     Reported           Adjusted                  24 Weeks  Certain  24 Weeks     24 Weeks  Certain  24 Weeks                  Ended              Ended        Ended              Ended                  June 20,  Charges  June 20, **  June 14,  Charges  June 14, **                  2014               2014         2013               2013 Revenues   Sale of        $      $     $         $      $     $      vacation                                              ownership            -                      -             products         14               14         16               16   Resort   management and 2         -        2            2         -        2   other services   Financing      2         -        2            2         -        2   Rental         4         -        4            4         -        4   Cost           2         -        2            4         -        4   reimbursements      Total       24        -        24           28        -        28      revenues Expenses   Cost of   vacation       3         -        3            3         -        3   ownership   products   Marketing and  8         -        8            9         -        9   sales   Resort   management and 1         -        1            1         -        1   other services   Rental         6         -        6            5         -        5   Royalty fee    1         -        1            1         -        1   Cost           2         -        2            4         -        4   reimbursements      Total       21        -        21           23        -        23      expenses      Segment     $      $     $         $      $     $         financial                                             results           -                      -                               3               3         5               5                  As                              As                  Reported                        Reported                  24 Weeks                        24 Weeks                  Ended                           Ended                  June 20,                        June 14,                  2014                            2013                  $                            $    Contract Sales                                                                                                       14                            17    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 for additional information about our reasons for providing these alternative financial measures and limitations on their use. NOTE: Asia Pacific segment revenues and expenses for the twenty four weeks ended June 20, 2014 (related to the twelve weeks ended March 28, 2014) and June 14, 2013 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.    A-7 MARRIOTT VACATIONS WORLDWIDE CORPORATION EUROPE SEGMENT 12 Weeks Ended June 20, 2014 and June 14, 2013 ($ in millions)                  As                 As           As                 Europe      As                  Reported           Adjusted     Reported                       Adjusted                  12 Weeks  Certain  12 Weeks     12 Weeks  Certain  Rescission  12 Weeks                  Ended              Ended        Ended                          Ended                  June 20,  Charges  June 20, **  June 14,  Charges  Adjustment  June 14, **                  2014               2014         2013                           2013 Revenues   Sale of        $      $     $         $      $     $       $      vacation                                                       ownership            -                      -       (17)             products          9               9        25                            8   Resort   management and 9         -        9            8         -        -           8   other services   Financing      1         -        1            1         -        -           1   Rental         6         -        6            6         -        -           6   Cost           10        -        10           8         -        -           8   reimbursements      Total       35        -        35           48        -        (17)        31      revenues Expenses   Cost of   vacation       2         -        2            9         -        (6)         3   ownership   products   Marketing and  6         -        6            7         (1)      (2)         4   sales   Resort   management and 7         -        7            7         -        -           7   other services   Rental         4         -        4            5         -        -           5   Impairment     -         -        -            1         (1)      -           -   Cost           10        -        10           8         -        -           8   reimbursements      Total       29        -        29           37        (2)      (8)         27      expenses      Segment     $      $     $         $               $       $         financial                              $                      results           -                         2  (9)                                6               6        11                            4                  As                              As                  Reported                        Reported                  12 Weeks                        12 Weeks                  Ended                           Ended                  June 20,                        June 14,                  2014                            2013                  $                            $    Contract Sales                                                                                                       11                             7    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 for additional information about our reasons for providing these alternative financial measures and limitations on their use. NOTE: Europe segment revenues and expenses for the twelve weeks ended June 14, 2013 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.    A-8 MARRIOTT VACATIONS WORLDWIDE CORPORATION EUROPE SEGMENT 24 Weeks Ended June 20, 2014 and June 14, 2013 ($ in millions)                  As                 As           As                 Europe      As                  Reported           Adjusted     Reported                       Adjusted                  24 Weeks  Certain  24 Weeks     24 Weeks  Certain  Rescission  24 Weeks                  Ended              Ended        Ended                          Ended                  June 20,  Charges  June 20, **  June 14,  Charges  Adjustment  June 14, **                  2014               2014         2013                           2013 Revenues   Sale of        $      $     $         $      $     $       $      vacation                                                       ownership            -                      -       (18)             products         17               17         32                           14   Resort   management and 14        -        14           13        -        -           13   other services   Financing      2         -        2            2         -        -           2   Rental         8         -        8            8         -        -           8   Cost           18        -        18           16        -        -           16   reimbursements      Total       59        -        59           71        -        (18)        53      revenues Expenses   Cost of   vacation       4         -        4            9         -        (6)         3   ownership   products   Marketing and  11        -        11           13        (2)      (2)         9   sales   Resort   management and 12        -        12           12        -        -           12   other services   Rental         7         -        7            8         -        -           8   Impairment     -         -        -            1         (1)      -           -   Cost           18        -        18           16        -        -           16   reimbursements      Total       52        -        52           59        (3)      (8)         48      expenses      Segment     $      $     $         $               $       $         financial                              $                       results           -                         3  (10)                               7               7        12                            5                  As                              As                  Reported                        Reported                  24 Weeks                        24 Weeks                  Ended                           Ended                  June 20,                        June 14,                  2014                            2013                  $                            $    Contract Sales                                                                                                       20                            11    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 for additional information about our reasons for providing these alternative financial measures and limitations on their use. NOTE: Europe segment revenues and expenses for the twenty four weeks ended June 20, 2014 (related to the twelve weeks ended March 28, 2014) and June 14, 2013 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. In addition, Europe segment first quarter Sale of vacation ownership products revenue and Segment financial results have been restated to correct prior period misstatements.    A-9 MARRIOTT VACATIONS WORLDWIDE CORPORATION CORPORATE AND OTHER 12 Weeks and 24 Weeks Ended June 20, 2014 and June 14, 2013 ($ in millions)                   As                 As           As                 As                   Reported           Adjusted     Reported           Adjusted                   12 Weeks  Certain  12 Weeks     12 Weeks  Certain  12 Weeks                   Ended              Ended        Ended              Ended                   June 20,  Charges  June 20, **  June 14,  Charges  June 14, **                   2014               2014         2013               2013 Expenses   Cost of         $      $     $         $      $     $      vacation                                               ownership             -                      -             products           2               2         1               1   Financing       6         -        6            6         -        6   General and     23        -        23           22        -        22   administrative   Organizational   and separation  -         -        -            2         (2)      -   related   Royalty fee     12        -        12           11        -        11                   $               $         $               $         Total              $                    $              expenses             -                    (2)                          48               48         49               47                   As                 As           As                 As                   Reported           Adjusted     Reported           Adjusted                   24 Weeks  Certain  24 Weeks     24 Weeks  Certain  24 Weeks                   Ended              Ended        Ended              Ended                   June 20,  Charges  June 20, **  June 14,  Charges  June 14, **                   2014               2014         2013               2013 Expenses   Cost of         $      $     $         $      $     $      vacation                                               ownership             -                      -             products           4               4         3               3   Financing       11        -        11           11        -        11   General and     45        -        45           43        -        43   administrative   Organizational   and separation  1         (1)      -            3         (3)      -   related   Consumer   Financing       12        -        12           15        -        15   Interest   Royalty fee     23        -        23           23        -        23                   $               $         $               $         Total              $                    $              expenses            (1)                   (3)                          96               95         98               95    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 for additional information about our reasons for providing these alternative financial measures and limitations on their use. NOTE: Corporate and Other consists of results not specifically attributable to an individual segment, including expenses in support of 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, Inc. in connection with the spin-off, as well as consumer financing interest expense. Beginning with the fourth quarter of 2013 we no longer report Interest expense in Corporate and Other and have recast prior year information for consistency.    A-10 MARRIOTT VACATIONS WORLDWIDE CORPORATION CONSOLIDATED CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS ($ in millions)                                                                                             12 Weeks Ended                                              June 20, 2014     June 14, 2013 Contract sales                               $          $                                                         164          157 Revenue recognition adjustments:                 Reportability^1              -                 8                 Europe rescission            -                 17                 adjustment^2                 Sales Reserve^3              (8)               (9)                 Other^4                      (4)               (4) Sale of vacation ownership products          $          $                                                         152          169    ^1 Adjustment for lack of required downpayment or contract sales in rescission period. ^2 Adjustment to eliminate the impact of extended rescission periods in our Europe segment. Please see schedule A-19 for additional information. ^3 Represents allowance for bad debts for our financed vacation ownership product sales, which we also refer to as sales reserve. ^4 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                 Recognition    As           As                 Europe      Recognition    As                Reported                          Adjusted     Reported                                      Adjusted                12 Weeks  Certain  Reportability  12 Weeks     12 Weeks  Certain  Rescission  Reportability  12 Weeks                Ended                             Ended        Ended                                         Ended                June 20,  Charges  Adjustment     June 20, **  June 14,  Charges  Adjustment  Adjustment     June 14, **                2014                              2014         2013                                          2013 Sale of        $      $                    $         $      $     $                      $    vacation                   $                                      $            ownership            -            -                   -       (17)           (8)        products        152                              152         169                                          144 Less:  Cost of  vacation      43        -        -              43           57        -        (6)         (3)            48  ownership  products  Marketing     72        -        -              72           74        (1)      (2)         -              71  and sales                $      $                    $         $               $                      $    Development                $                       $             $            margin               -            -                      1  (9)            (5)                         37                              37         38                                          25  Development  margin        24.2%                             24.2%        23.1%                                         17.1%  percentage^1    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 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-11 MARRIOTT VACATIONS WORLDWIDE CORPORATION CONSOLIDATED CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS ($ in millions)                                      24 Weeks Ended                                      June 20,       June 14,                                      2014           2013 Contract sales                       $ 326          $ 313 Revenue recognition adjustments:   Reportability^1                    (4)            5   Europe rescission adjustment^2     -              18   Sales Reserve^3                    (16)           (18)   Other^4                            (9)            (8) Sale of vacation ownership products  $ 297          $ 310  ^1 Adjustment for lack of required downpayment or contract sales in rescission period. ^2 Adjustment to eliminate the impact of extended rescission periods in our Europe segment. Please see schedule A-19 for additional information. ^3 Represents allowance for bad debts for our financed vacation ownership product sales, which we also refer to as sales reserve. ^4 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                 Recognition    As           As                 Europe      Recognition    As                 Reported                          Adjusted     Reported                                      Adjusted                 24 Weeks  Certain  Reportability  24 Weeks     24 Weeks  Certain  Rescission  Reportability  24 Weeks                 Ended                             Ended        Ended                                         Ended                 June 20,  Charges  Adjustment     June 20, **  June 14,  Charges  Adjustment  Adjustment     June 14, **                 2014                              2014         2013                                          2013 Sale of         $      $                    $         $      $     $                      $    vacation                    $                                      $            ownership             -            4                   -       (18)           (5)        products         297                              301         310                                          287 Less:   Cost of   vacation      90        -        1              91           101       -        (6)         (2)            93   ownership   products   Marketing     143       -        -              143          148       (2)      (2)         -              144   and sales                 $      $                    $         $               $                      $    Development                 $                       $              $            margin                -            3                      2  (10)           (3)                          64                              67         61                                          50   Development   margin        21.4%                             22.0%        19.8%                                         17.4%   percentage^1    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 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 restated 2013 first quarter Sale of vacation ownership products, Development margin and Development margin percentage to correct prior period misstatements.    A-12 MARRIOTT VACATIONS WORLDWIDE CORPORATION NORTH AMERICA CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS ($ in millions)                                      12 Weeks Ended                                      June 20, 2014   June 14,                                                      2013 Contract sales                       $ 146           $ 142 Revenue recognition adjustments:         Reportability^1              -               5         Sales Reserve ^2             (7)             (7)         Other ^3                     (4)             (4) Sale of vacation ownership products  $ 135           $ 136    ^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 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                 Recognition    As           As                 Recognition    As                 Reported                          Adjusted     Reported                          Adjusted                 12 Weeks  Certain  Reportability  12 Weeks     12 Weeks  Certain  Reportability  12 Weeks                 Ended                             Ended        Ended                             Ended                 June 20,  Charges  Adjustment     June 20, **  June 14,  Charges  Adjustment     June 14, **                 2014                              2014         2013                              2013 Sale of         $                              $         $                              $    vacation              $     $                       $     $            ownership                                               (5)               products               -      -                             -                                         135                              135         136                              131 Less:  Cost of  vacation       37        -        -              37           46        -        (2)            44  ownership  products  Marketing and  62        -        -              62           62        -        -              62  sales                 $                              $         $                              $    Development           $     $                       $     $            margin                                                  (3)                                      -      -                           -                                           36                             36          28                               25  Development  margin         26.3%                             26.3%        20.8%                             19.5%  percentage^1    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 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-13 MARRIOTT VACATIONS WORLDWIDE CORPORATION NORTH AMERICA CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS ($ in millions)                                      24 Weeks Ended                                      June 20, 2014   June 14,                                                      2013 Contract sales                       $ 292           $ 285 Revenue recognition adjustments:     Reportability^1                  (4)             -     Sales Reserve ^2                 (13)            (15)     Other ^3                         (9)             (8) Sale of vacation ownership products  $ 266           $ 262    ^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 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                 Recognition    As           As                 Recognition    As                 Reported                          Adjusted     Reported                          Adjusted                 24 Weeks  Certain  Reportability  24 Weeks     24 Weeks  Certain  Reportability  24 Weeks                 Ended                             Ended        Ended                             Ended                 June 20,  Charges  Adjustment     June 20, **  June 14,  Charges  Adjustment     June 14, **                 2014                              2014         2013                              2013 Sale of         $      $                    $         $                              $    vacation                   $                       $     $            ownership                    4                                 -               products               -                                       -                                         266                              270         262                              262 Less:   Cost of   vacation      79        -        1              80           86        -        -              86   ownership   products   Marketing and 124       -        -              124          126       -        -              126   sales                 $      $                    $         $                              $    Development                $                       $     $            margin                       3                                 -                                     -                                     -                                          63                               66          50                               50   Development   margin        23.5%                             24.1%        19.1%                             19.1%   percentage^1    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 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-14 MARRIOTT VACATIONS WORLDWIDE CORPORATION EBITDA AND ADJUSTED EBITDA 12 Weeks and 24 Weeks Ended June 20, 2014 and June 14, 2013 ($ in millions)                                             As                 As          As                 Europe      As                                             Reported           Adjusted    Reported                       Adjusted                                             12 Weeks  Certain  12 Weeks    12 Weeks  Certain  Rescission  12 Weeks                                             Ended              Ended       Ended                          Ended                                             June 20,  Charges  June 20, ** June 14,  Charges  Adjustment  June 14, **                                             2014               2014        2013                           2013                                             $               $        $                           $                                                      $                   $     $           Net income                                                                                                                             (5)                     3        (6)                                                       36             31           30                           27 Interest expense                            3         -        3           4         -        -           4 Tax                                         22        (4)      18          14        1        (3)         12 provision Depreciation and amortization               5         -        5           5         -        -           5                                             $               $        $                           $                                                      $                   $     $                 EBITDA **                                                                                                                        (9)                     4        (9)                                                       66             57           53                           48                                             As                 As          As                 Europe      As                                             Reported           Adjusted    Reported                       Adjusted                                             24 Weeks  Certain  24 Weeks    24 Weeks  Certain  Rescission  24 Weeks                                             Ended              Ended       Ended                          Ended                                             June 20,  Charges  June 20, ** June 14,  Charges  Adjustment  June 14, **                                             2014               2014        2013                           2013                                             $               $        $                           $                                                      $                   $     $           Net income                                                                                                                             (4)                     4        (7)                                                       55             51           49                           46 Interest expense                            5         -        5           7         -        -           7 Tax provision                               35        (3)      32          25        1        (3)         23 Depreciation and amortization               9         -        9           11        -        -           11                                             $               $        $                           $                                                      $                   $     $                 EBITDA **                                                                                                                        (7)                     5       (10)                                                       104              97           92                           87    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 for additional information about our reasons for providing these alternative financial measures and limitations on their use. NOTE: We now report consumer financing interest expense separately from all other interest expense. As a result, adjusted EBITDA as presented in these schedules is equivalent to the non-GAAP financial measure adjusted EBITDA, as adjusted presented prior to the third quarter of 2013. In addition, we have restated 2013 first quarter Net income to correct prior period misstatements.    A-15  MARRIOTT VACATIONS WORLDWIDE CORPORATION  2014 ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE - DILUTED OUTLOOK  (In millions, except per share amounts)                                               Fiscal Year  Fiscal Year                                               2014 (low)   2014 (high)  Net income                                   $ 95         $ 101    Adjustments to reconcile Net income to    Adjusted net income      Organizational and separation related    (1)          (1)      and other charges^1      Gain on disposition ^2                   (2)          (2)      Provision for income taxes on            1            1      adjustments to net income             Adjusted net income**             $ 93         $ 99    Earnings per share - Diluted ^3            $ 2.72       $ 2.90    Adjusted earnings per share - Diluted**^,  $ 2.64       $ 2.82    3    Diluted shares^3                           35.1         35.1    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 for additional information about our reasons for providing these alternative financial measures and limitations on their use. ^1 Organizational and separation related and other charges adjustment includes $5 million for organizational and separation related efforts, $1 million for an impairment charge in our North America segment, and $1 million for restructuring / severance costs in our Europe segment, offset by $8 million associated with the settlement of a dispute with a former service provider in our North America segment. ^2 Gain on disposition adjustment includes the gain on the sale of a golf course and adjacent undeveloped land in our North America segment. ^3 Earnings per share - Diluted, Adjusted earnings per share - Diluted, and Diluted shares outlook includes the impact of share repurchase activity only through July 22, 2014.    MARRIOTT VACATIONS WORLDWIDE CORPORATION 2014 ADJUSTED EBITDA OUTLOOK (In millions)                                Fiscal Year 2014  Fiscal Year 2014 (high)                                (low) Adjusted net income **         $ 93              $ 99 Interest expense^1             12                12 Tax provision                  66                70 Depreciation and amortization  19                19     Adjusted EBITDA**          $ 190             $ 200    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 for additional information about our reasons for providing these alternative financial measures and limitations on their use. ^1 Interest expense excludes consumer financing interest expense.    MARRIOTT VACATIONS WORLDWIDE CORPORATION 2014 ADJUSTED DEVELOPMENT MARGIN OUTLOOK                                 Total MVW              North America                                 Fiscal     Fiscal      Fiscal     Fiscal                                 Year 2014  Year 2014   Year 2014  Year 2014                                 (low)      (high)      (low)      (high) Development margin^1            20.5%      21.5%       22.8%      23.8%  Adjustments to reconcile  Development margin to Adjusted  development margin     Other charges^2             0.1%       0.1%        0.0%       0.0%     Revenue recognition         0.4%       0.4%        0.2%       0.2%     reportability          Adjusted development   21.0%      22.0%       23.0%      24.0%          margin**^, 1    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 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 $1 million for restructuring / severance costs in our Europe segment recorded under the "Marketing and sales" caption.    A - 16 MARRIOTT VACATIONS WORLDWIDE CORPORATION 2014 ADJUSTED FREE CASH FLOW OUTLOOK (In millions)                                                                                       Fiscal  Fiscal                                                                                       Year    Year                                                                                       2014    2014                                                                                       (low)   (high)                                                                                       $     $                                                                                                  Adjusted net income **                                                                                                                                                                                                                                                            93    99     Adjustments to reconcile Adjusted net income to net cash     provided by operating activities:             Adjustments for non-cash items^1                                          68      69             Deferred income taxes / income taxes payable                              10      12             Net changes in assets and liabilities:                    Notes receivable originations                                      (273)   (270)                    Notes receivable collections                                       285     287                    Inventory                                                          34      36                    Liability for Marriott Rewards customer loyalty program            (32)    (31)                    Organizational and separation related and other charges            1       1                    Other working capital changes                                      3       (2)  Net cash provided by operating activities                                            189     201     Capital expenditures for property and equipment (excluding inventory)             Organizational and separation related capital expenditures                (3)     (3)             Other                                                                     (23)    (23)     Increase in restricted cash                                                       -       -     Borrowings from securitization                                                    245     250     transactions^     Repayment of debt related to securitizations                                      (220)   (222)                    Free cash flow**                                                   188     203  Add:     Organizational and separation related and other charges                           2       2                                                                                       $     $                                                                                                                    Adjusted free cash flow**                                                                                                                                                                                                                                      190    205    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 for additional information about our reasons for providing these alternative financial measures and limitations on their use. ^1Includes depreciation, amortization of debt issuance costs, provision for loan losses, impairment activity, and share-based compensation. NOTE: We now include borrowings from securitization transactions and repayment of debt related to securitizations in our free cash flow. As a result, free cash flow as presented in this schedule is equivalent to the non-GAAP financial measure adjusted free cash flow presented prior to the fourth quarter of 2013, and adjusted free cash flow presented in this schedule is equivalent to the non-GAAP financial measure adjusted free cash flow, as adjusted presented prior to the fourth quarter of 2013.    A-17 MARRIOTT VACATIONS WORLDWIDE CORPORATION 2014 NORMALIZED ADJUSTED FREE CASH FLOW OUTLOOK (In millions)                           Current Guidance                           Low    High   Mid-Point  Adjustments    Normalized                           $    $    $      $         $      Adjusted net income **   93    99       96        -                                                                          96     Adjustments to     reconcile Adjusted     net income to net     cash     provided by     operating     activities:        Adjustments for    68     69     69         -              69        non-cash items^1        Deferred income        taxes / income     10     12     11         (1)         ^2 10        taxes payable        Net changes in        assets and        liabilities:         Notes receivable  (273)  (270)  (272)      -              (272)         originations         Notes receivable  285    287    286        -              286         collections         Inventory         34     36     35         (35)        ^3 -         Liability for         Marriott Rewards  (32)   (31)   (32)       32          ^4 -         customer loyalty         program         Organizational         and separation    1      1      1          (1)         ^5 -         related and         other charges         Other working     3      (2)    1          (11)        ^6 (10)         capital changes  Net cash provided by     189    201    195        (16)           179  operating activities     Capital     expenditures for     property and     equipment     (excluding     inventory)        Organizational        and separation     (3)    (3)    (3)        3           ^5 -        related capital        expenditures        Other              (23)   (23)   (23)       5           ^7 (18)     Increase in           -      -      -          -              -     restricted cash     Borrowings from     securitization        245    250    248        (35)        ^8 213     transactions     Repayment of debt     related to            (220)  (222)  (221)      -              (221)     securitizations         Free cash flow**  188    203    196        (43)           153  Add:     Organizational and     separation related    2      2      2          (2)            -     and other charges         Adjusted free     $     $     $      $         $             cash flow**       190   205     198                  153                                                    (45)    ** Denotes non-GAAP financial measures. Please see schedules A-18 through A-20 for additional information about our reasons for providing these alternative financial measures and limitations on their use. NOTE: We now include borrowings from securitization transactions and repayment of debt related to securitizations in our free cash flow. As a result, free cash flow as presented in this schedule is equivalent to the non-GAAP financial measure adjusted free cash flow presented prior to the fourth quarter of 2013, and adjusted free cash flow presented in this schedule is equivalent to the non-GAAP financial measure adjusted free cash flow, as adjusted presented prior to the fourth quarter of 2013. ^1 Includes depreciation, amortization of debt issuance costs, provision for loan losses, impairment activity, and share-based compensation. ^2 Represents cash taxes slightly lower than tax provision. ^3 Represents adjustment to align real estate inventory spending with real estate inventory costs (i.e., product costs). ^4 Represents payment for Marriott Rewards Points issued prior to the Spin-off. Liability to be fully paid in 2016. ^5 Represents costs associated with organizational and separation related efforts (efforts projected to be completed in 2014), impairment activity, and restructuring / severance costs in our Europe segment, offset by the settlement of a dispute with a former service provider. ^6 Represents normalized other working capital changes. ^7 Represents normalized capital expenditures for property and equipment. ^8 Represents normalized borrowings from securitization transactions.    A-18 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 press release 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 charges incurred in the 12 weeks and 24 weeks ended June 20, 2014 and June 14, 2013, exclude the gain on the disposition of a golf course and adjacent undeveloped land in the 12 weeks and 24 weeks ended June 20, 2014, and exclude adjustments related to the extension of rescission periods in our Europe segment ("Europe Rescission Adjustments") in the 12 weeks and 24 weeks ended June 14, 2013, because these non-GAAP financial measures allow for period-over-period comparisons of our on-going core operations before the impact of certain charges, gains and Europe Rescission Adjustments. These non-GAAP financial measures also facilitate our comparison of results from our on-going core operations before certain charges, gains and Europe Rescission Adjustments with results from other vacation ownership companies.  Certain Charges - 12 weeks and 24 weeks ended June 20, 2014. In our Statement of Operations for the 12 weeks ended June 20, 2014, we recorded $8 million of net pre-tax income, which included $8 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 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 million of organizational and separation related costs recorded under the "Organizational and separation related" caption and a $1 million impairment charge associated with a project in our North America segment recorded under the "Impairment" caption. In our Statement of Operations for the 24 weeks ended June 20, 2014, we recorded $5 million of net pre-tax income, which included $8 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, partially offset by $2 million of organizational and separation related costs recorded under the "Organizational and separation related" caption and a $1 million impairment charge associated with a project in our North America segment recorded under the "Impairment" caption.  Certain Charges - 12 weeks and 24 weeks ended June 14, 2013. In our Statement of Operations for the 12 weeks ended June 14, 2013, we recorded $4 million of net pre-tax charges, which included a $7 million increase in our accrual 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, $2 million of organizational and separation related costs recorded under the "Organizational and separation related" caption, $1 million of severance costs in our Europe segment recorded under the "Marketing and sales" caption, and a $1 million pre-tax non-cash impairment charge related to a leased golf course at a project in our Europe segment recorded under the "Impairment" caption, partially offset by a $7 million gain for cash received in payment of fully reserved receivables in connection with an equity method investment in a joint venture project in our North America segment recorded under the "Impairment reversals on equity investment" caption. In our Statement of Operations for the 24 weeks ended June 14, 2013, we recorded $5 million of net pre-tax charges, which included a $7 million increase in our accrual 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, $3 million of organizational and separation related costs recorded under the "Organizational and separation related" caption, $2 million of severance costs in our Europe segment recorded under the "Marketing and sales" caption, and a $1 million pre-tax non-cash impairment charge related to a leased golf course at a project in our Europe segment recorded under the "Impairment" caption, partially offset by a $7 million gain for cash received in payment of fully reserved receivables in connection with an equity method investment in a joint venture project in our North America segment recorded under the "Impairment reversals on equity investment" caption, and a $1 million reversal of a previously recorded litigation settlement related to a project in our North America segment, based upon an agreement to settle the matter for an amount less than our accrual, recorded under the "Litigation settlement" caption.    A-19 MARRIOTT VACATIONS WORLDWIDE CORPORATION NON-GAAP FINANCIAL MEASURES  Gain on the disposition of a golf course and adjacent undeveloped land - 12 weeks and 24 weeks ended June 20, 2014. In our Statement of Operations for the 12 weeks ended June 20, 2014, we recorded a net $1 million gain associated with the sale of a golf course and adjacent undeveloped land in our North America segment under the "Gains and other income" caption. In our Statement of Operations for the 24 weeks ended June 20, 2014, we recorded a net $2 million gain associated with the sale of a golf course and adjacent undeveloped land in our North America segment under the "Gains and other income" caption.  Europe Rescission Adjustments - 12 weeks and 24 weeks ended June 14, 2013. In the second quarter of 2013, during the course of an internal review of certain sales documentation processes related to the sale of certain vacation ownership interests in properties associated with our Europe segment, we determined that the documentation we provided for certain sales of vacation ownership products was not strictly compliant. As a result, in accordance with applicable European regulation, the period of time during which purchasers of such interests may rescind their purchases was extended. We record revenues from the sale of vacation ownership products once the rescission period has ended. Originally, we recorded revenues from these sales of vacation ownership products based on the rescission periods in effect assuming compliant documentation had been provided to the purchasers, rather than the extended periods. As a result, we recognized revenue in incorrect periods between fiscal years 2010 and 2013 and misstated revenues in our previously filed consolidated financial statements. We provided compliant documentation to purchasers for whom the extended rescission period had not yet expired. As compliant documentation was subsequently provided as part of the corrective actions we took, the extended rescission period for most of the purchases at issue ended during the second quarter of 2013. To better reflect our on-going core operations and allow for period-over-period comparisons, we have excluded the impact associated with the extended rescission periods in our adjusted financial measures.    12 weeks ended June 14, 2013. In our Statement of Operations for   the 12 weeks ended June 14, 2013, we recorded after-tax Europe Rescission   Adjustments of $6 million, which included a $17 million pre-tax increase in   Sale of vacation ownership products revenues, pre-tax increases of $6   million and $2 million in Cost of vacation ownership products expense and   Marketing and sales expense, respectively, associated with the change in   revenues from the Sale of vacation ownership products, and a $3 million   increase in the Provision for income taxes associated with the change in   Income before income taxes.    24 weeks ended June 14, 2013. In our Statement of Operations for   the 24 weeks ended June 14, 2013, we recorded after-tax Europe Rescission   Adjustments of $7 million, which included an $18 million pre-tax increase in   Sale of vacation ownership products revenues, pre-tax increases of $6   million and $2 million in Cost of vacation ownership products expense and   Marketing and sales expense, respectively, associated with the change in   revenues from the Sale of vacation ownership products, and a $3 million   increase in the Provision for income taxes associated with the change in   Income before income taxes. 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 charges and Europe Rescission Adjustments 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, certain charges and Europe Rescission Adjustments to our Development Margin.    A-20 MARRIOTT VACATIONS WORLDWIDE CORPORATION NON-GAAP FINANCIAL MEASURES 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. Beginning with the third quarter of 2013, we report consumer financing interest expense separately from all other interest expense. As a result, adjusted EBITDA as presented in these schedules is equivalent to the non-GAAP financial measure adjusted EBITDA, as adjusted presented prior to the third quarter of 2013. 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 charges, gains and Europe Rescission Adjustments, 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 charges, gains and Europe Rescission Adjustments. Together, EBITDA and Adjusted EBITDA facilitate our comparison of results from our on-going core operations before the impact of certain charges, gains and Europe Rescission Adjustments with results from other vacation ownership companies. 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. We now include borrowings from securitization transactions and repayment of debt related to securitizations in our free cash flow. As a result, free cash flow as presented in this schedule is equivalent to the non-GAAP financial measure adjusted free cash flow presented prior to the fourth quarter of 2013, and adjusted free cash flow presented in this schedule is equivalent to the non-GAAP financial measure adjusted free cash flow, as adjusted presented prior to the fourth quarter of 2013. Adjusted Free Cash Flow. We also evaluate Adjusted Free Cash Flow, which reflects additional adjustments for organizational and separation related, litigation, and other cash charges, 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.    A-21 MARRIOTT VACATIONS WORLDWIDE CORPORATION INTERIM CONSOLIDATED BALANCE SHEETS (In millions, except per share amounts)                                              (Unaudited)          January 3,                                              June 20, 2014        2014 ASSETS Cash and cash equivalents                    $           $                                                   170                  200 Restricted cash (including $21 and $34 from  42                   86 VIEs, respectively) Accounts and contracts receivable (including 121                  109 $4 and $5 from VIEs, respectively) Vacation ownership notes receivable (including $621 and $719 from VIEs,          920                  970 respectively) Inventory                                    826                  870 Property and equipment                       215                  254 Other                                       116                  143  Total Assets                           $             $                                                  2,410               2,632 LIABILITIES AND EQUITY Accounts payable                             $           $                                                    75                 129 Advance deposits                             55                   48 Accrued liabilities (including $0 and $1     168                  185 from VIEs, respectively) Deferred revenue                             19                   19 Payroll and benefits liability               67                   82 Liability for Marriott Rewards customer      100                  114 loyalty program Deferred compensation liability              39                   37 Mandatorily redeemable preferred stock of    40                   40 consolidated subsidiary Debt (including $566 and $674 from VIEs,     570                  678 respectively) Other                                        45                   31 Deferred taxes                               58                   60  Total Liabilities                      1,236                1,423 Preferred stock - $.01 par value; 2,000,000 shares authorized; none issued or            -                    - outstanding Common stock - $.01 par value; 100,000,000 shares authorized; 35,878,433 and 35,637,765 -                    - sharesissued, respectively Treasury stock - at cost; 2,175,224and       (115)                (26) 505,023 shares, respectively Additional paid-in capital                   1,129                1,130 Accumulated other comprehensive income       23                   23 Retained earnings                            137                  82  Total Equity                           1,174                1,209  Total Liabilities and Equity           $             $                                                  2,410               2,632 The abbreviation VIEs above means Variable Interest Entities.     A-22 MARRIOTT VACATIONS WORLDWIDE CORPORATION INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited)                                                                                                       24 weeks ended                                                   June 20, 2014  June 14, 2013 OPERATING ACTIVITIES Net income                                      $55            $49 Adjustments to reconcile net income to net cash provided by operating activities:     Depreciation                                9              11     Amortization of debt issuance costs         3              3     Provision for loan losses                   15             18     Share-based compensation                    6              6     Gain on disposal of property and equipment,  (2)            (1)     net     Deferred income taxes                       (5)            (1)     Impairment charges                          1              1     Net change in assets and liabilities:     Accounts and contracts receivable             (12)           (1)     Notes receivable originations                 (104)          (100)     Notes receivable collections                  137            148     Inventory                                     37             22     Other assets                                  27             -     Accounts payable, advance deposits and        (56)           (83)     accrued liabilities     Liability for Marriott Rewards customer       (14)           (25)     loyalty program     Deferred revenue                              -              (10)     Payroll and benefit liabilities               (15)           (7)     Deferred compensation liability               2              (8)     Other liabilities                             15             12     Other, net                                  (1)            -  Net cash provided by operating   98             34 activities INVESTING ACTIVITIES     Capital expenditures for property and        (3)            (7)     equipment (excluding inventory)     Decrease in restricted cash                 44             4     Dispositions, net                           33             3  Net cash provided by investing   74             - activities FINANCING ACTIVITIES     Borrowings from securitization               23             111     transactions     Repayment of debt related to securitization  (131)          (142)     transactions     Borrowings on Revolving Corporate Credit     -              25     Facility     Repayment of Revolving Corporate Credit      -              (25)     Facility     Purchase of treasury stock                  (89)           2     Proceeds from stock option exercises        1              -     Payment of withholding taxes on vesting of   (6)            (4)     restricted stock units  Net cash used in financing       (202)          (33) activities     Effect of changes in exchange rates on cash  -              -     and cash equivalents (DECREASE) INCREASE IN CASH AND CASH             (30)           1 EQUIVALENTS CASH AND CASH EQUIVALENTS, beginning of period  200            103 CASH AND CASH EQUIVALENTS, end of period        $170           $104    Marriott Vacations Worldwide Corporation.  Logo- http://photos.prnewswire.com/prnh/20130702/CG40568LOGO  SOURCE Marriott Vacations Worldwide Corporation  Website: http://www.marriottvacationsworldwide.com Contact: Jeff Hansen, Investor Relations, Marriott Vacations Worldwide Corporation, 407.206.6149, Jeff.Hansen@mvwc.com, or Ed Kinney, Corporate Communications, Marriott Vacations Worldwide Corporation, 407.206.6278, Ed.Kinney@mvwc.com  
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