Revenue from Contracts with Customers (Tables)

3 Months Ended

Mar. 31, 2018

Schedule of Disaggregated Revenues by Segment from Contracts with Customers

The following tables show our disaggregated revenues by segment from contracts with customers. We operate our business in the following two segments: (i) Real estate sales and financing and (ii) Resort operations and club management. Please refer to Note 17: Business Segments below for more details related to our segments.

	Three Months Ended March 31, 2018
($ in millions)
Real Estate and Financing Segment
Sales of VOIs, net	$	78
Sales, marketing, brand and other fees		125
Interest income		34
Other financing revenue		4
Real estate and financing segment revenues	$	241

	Three Months Ended March 31, 2018
($ in millions)
Resort Operation and Club Management Segment
Club management	$	23
Resort management		16
Rental (1)		53
Ancillary services		6
Resort operation and club management segment revenues	$	98

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⁽¹⁾ Includes intersegment eliminations.

Schedule of Accounts Receivables from Contracts with Customers and Changes in Contract Liabilities

The following table provides information on our accounts receivable from contracts with customers:

($ in millions)	January 1, 2018		March 31, 2018
Receivables, which are included in Accounts receivable, net(1)	$	97	$	103

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⁽¹⁾ Does not include financing receivables from sales of VOI.  See Note 5: Timeshare Financing Receivables for additional information.

The following table presents changes in our contract liabilities for the three months ended March 31, 2018.

($ in millions)	January 1, 2018		Additions		Subtractions			March 31, 2018
Contract liabilities:
Advanced deposits	$	87	$	42	$	(37	)	$	92
Deferred revenue(1)		197	126			(20	)		303
Club Bonus Point incentive liability(2)		52	12			(12	)		52

⁽¹⁾ The deferred revenues balance is primarily comprised of (i) sales of VOI under construction, (ii) Club activation fees that are paid at the closing of a VOI purchase, which grants access to our points-based Club and (iii) annual dues for Club membership renewals.

⁽²⁾ Amounts related to the Club Bonus Point incentive liability are included in Accounts payable, accrued expenses and other on our unaudited condensed consolidated balance sheets. This liability is comprised of revenue for incentives from VOI sales and sales and marketing expenses in conjunction with our fee-for-service arrangements.

Topic 606

Schedule of Impact of Topic 606 on Financial Statements

The table below shows the adjustments that were made to the condensed consolidated balance sheet as of January 1, 2018:

	December 31, 2017		Adjustments			January 1, 2018
($ in millions)
ASSETS
Cash and cash equivalents	$	246	$	—		$	246
Restricted cash		51		—			51
Accounts receivable, net of allowance for doubtful    accounts		112		—			112
Timeshare financing receivables, net		1,071		—			1,071
Inventory		509		30			539
Property and equipment, net		238		—			238
Investment in unconsolidated affiliate		41		—			41
Intangible assets, net		72		—			72
Other assets		44		16			60
TOTAL ASSETS	$	2,384	$	46		$	2,430
LIABILITIES AND EQUITY
Liabilities:
Accounts payable, accrued expenses and other	$	339	$	2		$	341
Advanced deposits		104		(17	)		87
Debt, net		482		—			482
Non-recourse debt, net		583		—			583
Deferred revenues		109		112			221
Deferred income tax liabilities		249		(13	)		236
Total liabilities		1,866		84			1,950
Commitments and contingencies
Equity:
Preferred stock, $0.01 par value; 300,000,000 authorized    shares, none issued or outstanding as of December 31,    2017		—		—			—
Common stock, $0.01 par value; 3,000,000,000 authorized    shares, 99,136,304 issued and outstanding as of    December 31, 2017		1		—			1
Additional paid-in capital		162		—			162
Accumulated retained earnings		355		(38	)		317
Total equity		518		(38	)		480
TOTAL LIABILITIES AND EQUITY	$	2,384	$	46		$	2,430

The following table compares the reported condensed consolidated balance sheet, statement of operations, and cash flows, as of and for the three months ended March 31, 2018, to the previous accounting guidance:

	March 31, 2018
	As Reported		Effects of ASC 606			Previous Accounting Guidance
(in millions)
ASSETS
Cash and cash equivalents	$	85	$	—		$	85
Restricted cash		69		—			69
Accounts receivable, net of allowance for doubtful accounts		117		—			117
Timeshare financing receivables, net		1,074		—			1,074
Inventory		564		(48	)		516
Property and equipment, net		235		—			235
Investment in unconsolidated affiliates		37		—			37
Intangible assets, net		73		—			73
Other assets		111		(23	)		88
TOTAL ASSETS	$	2,365	$	(71	)	$	2,294
LIABILITIES AND EQUITY
Liabilities:
Accounts payable, accrued expenses and other	$	296	$	7		$	303
Advanced deposits		92		17			109
Debt, net		479		—			479
Non-recourse debt, net		544		—			544
Deferred revenues		326		(170	)		156
Deferred income tax liabilities		228		13			241
Total liabilities		1,965		(133	)		1,832
Commitments and contingencies
Equity:
Preferred stock, $0.01 par value; 300,000,000 authorized shares, none    issued or outstanding as of March 31, 2018		—		—			—
Common stock, $0.01 par value; 3,000,000,000 authorized shares,    96,821,553 issued and outstanding as of March 31, 2018	1			—		1
Additional paid-in capital	161			—		161
Accumulated retained earnings	238			62			300
Total equity	400			62		462
TOTAL LIABILITIES AND EQUITY	$	2,365	$	(71	)	$	2,294

	Three Months Ended March 31, 2018
($ in millions)	As Reported			Effects of ASC 606			Previous Accounting Guidance
Revenues
Sales of VOIs, net	$	78		$	59		$	137
Sales, marketing, brand and other fees		125			4			129
Financing		38			—			38
Resort and club management		39			—			39
Rental and ancillary services		51			—			51
Cost reimbursements		36			—			36
Total revenues		367			63			430
Expenses
Cost of VOI sales		19			18			37
Sales and marketing		161			12			173
Financing		11			—			11
Resort and club management		11			—			11
Rental and ancillary services		28			—			28
General and administrative		23			—			23
Depreciation and amortization		8			—			8
License fee expense		23			—			23
Cost reimbursements		36			—			36
Total operating expenses		320			30			350
Interest expense		(7	)		—			(7	)
Equity in earnings from unconsolidated affiliates		1			—			1
Other loss, net		(1	)		—			(1	)
Income before income taxes		40			33			73
Income tax expense		(10	)		(9	)		(19	)
Net income	$	30		$	24		$	54
Earnings per share:
Basic	$	0.31		$	0.24		$	0.55
Diluted	$	0.30		$	0.24		$	0.54

The adoption of ASC 606 had no impact on our total cash flows provided by operating activities or used by investing and financing activities. ASC 606 resulted in offsetting shifts in cash flows throughout net income and various changes in working capital balances.

	Three Months Ended March 31, 2018
	As Reported			Previous Accounting Guidance
($ in millions)
Net income	$	30		$	54
Adjustments to reconcile net income to net cash provided by operating activities		17			17
Changes in operating assets and liabilities
Accounts receivable, net		(5	)		(5	)
Timeshare financing receivables, net		(15	)		(15	)
Inventory		(19	)		(1	)
Other assets		(51	)		(44	)
Accounts payable, accrued expenses and other		(42	)		(32	)
Advanced deposits		5			5
Deferred revenues		105			46
Net cash provided by operating activities	$	25		$	25