MARRIOTT VACATIONS WORLDWIDE Corp
For the period ended Sep 30, 2025. Filed Nov 6, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 6, 2025
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17. Modernization
| 17. | MODERNIZATION |
In November 2024, we announced the creation of a Strategic Business Operations (“SBO”) office focused on accelerating our growth and driving operating efficiencies in all areas of our business while increasing organizational agility. We are working to: modernize and optimize our processes and systems, including through advanced technology and automation; increase sales efficiency and inventory optimization; and capture significant savings from initiatives related to procurement and corporate overhead.
The following table shows the composition of our Modernization expense, by segment, for the three and nine months ended September 30, 2025.
| Three Months Ended September 30, 2025 | Nine Months Ended September 30, 2025 | |||||||
|---|---|---|---|---|---|---|---|---|
| ($ in millions) | VacationOwnership | Exchange &Third-PartyManagement | Corporate& Other | Total | VacationOwnership | Exchange &Third-PartyManagement | Corporate& Other | Total |
| Advisory services | $— | $— | $32 | $32 | $— | $— | $70 | $70 |
| Transition costs(1) | — | — | 11 | 11 | — | — | 11 | 11 |
| Technology and other | 1 | 1 | 7 | 9 | 2 | 1 | 9 | 12 |
| Severance | — | — | 1 | 1 | — | — | 4 | 4 |
| $1 | $1 | $51 | $53 | $2 | $1 | $94 | $97 | |
(1)Includes implementation costs associated with corporate overhead outsourcing efforts.
The following table presents the activity for this accrual on our Balance Sheet related to our Modernization efforts.
| ($ in millions) | SBO Initiatives |
|---|---|
| Balance at December 31, 2024 | $1 |
| Modernization charges | 97 |
| Cash payments | (61) |
| Balance at September 30, 2025 | $37 |
During the third quarter of 2025, we entered into outsourced service arrangements and completed the transition of a portion of certain corporate overhead functions to outsourced service providers. The arrangements are for terms offive tosix years, and are cancellable for convenience subject to a termination penalty. Our aggregate expected obligation under these arrangements is $151 million, of which $10 million, $42 million, $27 million, $26 million, $26 million, and $20 million is expected to be paid in the remainder of 2025, 2026, 2027, 2028, 2029, and thereafter, respectively. As of September 30, 2025, the total penalties for early termination are $9 million.
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