As filed with the Securities and Exchange Commission as of ~~May~~August 43, 2018

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10‑Q

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2018
For the quarterly period ended June 30, 2018
Or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File No. 1‑34062

ILG, Inc.

(Exact name of registrant as specified in its charter)



Delaware (State or other jurisdiction of incorporation or organization)	26‑2590997 (I.R.S. Employer Identification No.)
6262 Sunset Drive, Miami, FL (Address of Registrant’s principal executive offices)	33143 (Zip Code)

(305) 666‑1861

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company or an emerging growth company. See definition of “accelerated filer,” “large accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act. (Check one):



Large accelerated filer ☒	Accelerated filer ☐	Non‑accelerated filer ☐ (Do not check if a smaller reporting company)

Smaller reporting company ☐	Emerging growth company ☐

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. Yes ☐ No ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒

As of ~~May~~August 1, 2018, 124,~~320~~415,~~709~~714 shares of the registrant’s common stock were outstanding.

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TABLE OF CONTENTS

		Page
PART I
Item 1.	Financial Statements	3
	Condensed Consolidated Statements of Income	3
	Condensed Consolidated Statements of Comprehensive Income	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statement of Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4850
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	7482
Item 4.	Controls and Procedures	7584
PART II
Item 1.	Legal Proceedings	7684
Item 1A.	Risk Factors	7684
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7686
Item 3-5.	Not applicable	7686
Item 6.	Exhibits	7786
Signatures		7888

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PART I—FINANCIAL STATEMENTS

Item 1. Consolidated Financial Statements

ILG, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except share and per share data)

(Unaudited)

	Three Months Ended				Six Months Ended
	March 31,
	June 30,				June 30,
	2018		2017		2018		2017
Revenues:
Service and membership related	$	~~152~~148	$	~~127~~119	$	300	$	247
Sales of vacation ownership products, net		~~123~~121		~~105~~118		244		223
Rental and ancillary services		~~118~~104		~~107~~97		222		204
Consumer financing		2423		2122		47		43
Cost reimbursements		65		8485		131		168
Total revenues		~~482~~461		~~444~~441		944		885
Operating costs and expenses:
Cost of service and membership related sales		6467		3533		132		68
Cost of vacation ownership product sales		3922		2528		61		54
Cost of sales of rental and ancillary services		7270		7778		142		155
Cost of consumer financing		87		67		15		14
Cost reimbursements		65		8485		131		168
Royalty fee expense		11		1011		22		21
Selling and marketing expense		7881		7076		159		145
General and administrative expense		5965		5458		124		112
Amortization expense of intangibles		5		5		10		10
Depreciation expense		1516		15		31		30
Total operating costs and expenses		~~416~~409		~~381~~396		827		777
Operating income		6652		6345		117		108
Other income (expense):
Interest expense		(7)		(5)
Interest income		1		—		1		—
Other income, net		5		10
Interest expense		(7)		(7)		(15)		(12)
Equity in earnings from unconsolidated entities		1		2
Gain on bargain purchase		—		2		—		2
Total other income (expense), net		(1)		7
Other income (expense), net		(5)		(2)		—		8
Earnings before income taxes and noncontrolling interests		65		70
Equity in earnings from unconsolidated entities		—		1		1		3
Income tax provision		(20)		(25)
Total other income (expense), net		(11)		(6)		(13)		1
Net income		45		45
Earnings before income taxes and noncontrolling interests		41		39		104		109
Net income attributable to noncontrolling interests		(2)		(1)
Income tax provision		(13)		(13)		(33)		(38)
Net income attributable to common stockholders	$	43	$	44
Net income		28		26		71		71
Earnings per share attributable to common stockholders:
Net income attributable to noncontrolling interests		(1)		—		(2)		(1)
Basic	$	0.35	$	0.35
Net income attributable to common stockholders	$	27	$	26	$	69	$	70
Diluted	$	0.34	$	0.35
Earnings per share attributable to common stockholders:
Weighted average number of shares of common stock outstanding (in thousands):
Basic	$	0.21	$	0.21	$	0.56	$	0.56
Basic		123,826		123,998
Diluted	$	0.21	$	0.20	$	0.55	$	0.55
Diluted		125,751		125,582
Weighted average number of shares of common stock outstanding (in 000's):
Dividends declared per share of common stock	$	0.175	$	0.15
Basic		124,241		124,384		124,033		124,191
Diluted		125,874		126,141		125,813		125,862
Dividends declared per share of common stock	$	0.175	$	0.15	$	0.35	$	0.30

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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ILG, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

	Three Months Ended				Six Months Ended
	March 31,
	June 30,				June 30,
	2018		2017		2018		2017
Net income	$	4528	$	4526	$	71	$	71
Other comprehensive income, net of tax:
Foreign currency translation adjustments, net of tax		8(12)		69		(4)		15
Total comprehensive income, net of tax		5316		5135		67		86
Less: Net income attributable to noncontrolling interests		(21)		~~(1)~~—		(2)		(1)
Less: Other comprehensive income attributable to noncontrolling interests		~~(1)~~2		—(1)		1		(2)
Total comprehensive income attributable to noncontrolling interests		~~(3)~~1		(1)		(1)		(3)
Comprehensive income attributable to common stockholders	$	5017	$	5034	$	66	$	83

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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ILG, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)

	(Unaudited)
	March 31,		December 31,
	June 30,		December 31,
	2018		2017
ASSETS
Cash and cash equivalents	$	~~158~~143	$	122
Restricted cash and cash equivalents (including $18 and $19 in variable interest entities, "VIEs," respectively)		252		227
Restricted cash and cash equivalents (including $17 and $19 in variable interest entities, "VIEs," respectively)		215		227
Accounts receivable, net of allowance for doubtful accounts of $13 for both periods		~~125~~115		121
Vacation ownership mortgages receivable, net of allowance of $5 and $4, respectively (including a net $59 and $61 in VIEs, respectively)		82		79
Vacation ownership mortgages receivable, net of allowance of $5 and $4, respectively (including a net $56 and $61 in VIEs, respectively)		77		79
Vacation ownership inventory		~~497~~486		496
Prepaid income taxes		3936		58
Prepaid expenses		~~105~~91		64
Other current assets (including $3 and $4 of interest receivables in VIEs, respectively)		3330		33
Total current assets		1,~~291~~193		1,200
Restricted cash and cash equivalents (including $1 in variable interest entities, "VIEs" for both periods)		4		3
Vacation ownership mortgages receivable, net of allowance of $58 and $51, respectively (including a net $459 and $498 in VIEs, respectively)		651		658
Vacation ownership mortgages receivable, net of allowance of $69 and $51, respectively (including a net $423 and $498 in VIEs, respectively)		657		658
Vacation ownership inventory		6072		60
Investments in unconsolidated entities		54		55
Property and equipment, net		~~621~~606		616
Goodwill		~~565~~564		564
Intangible assets, net		~~438~~428		440
Other non-current assets		8683		91
TOTAL ASSETS	$	3,~~770~~661	$	3,687
LIABILITIES AND EQUITY
LIABILITIES:
Accounts payable, trade	$	5246	$	46
Current portion of securitized debt from VIEs		~~135~~128		146
Deferred revenue		~~224~~177		162
Accrued compensation and benefits		6864		72
Accrued expenses and other current liabilities (including a net $1 of interest payables in VIEs for both periods)		~~249~~256		215
Total current liabilities		~~728~~671		641
Long-term debt		~~563~~548		562
Securitized debt from VIEs		~~395~~361		429
Income taxes payable, non-current		2		11
Other long-term liabilities		~~119~~118		118
Deferred revenue		8482		76
Deferred income taxes		~~140~~142		133
Total liabilities		21,~~031~~924		1,970
Redeemable noncontrolling interest		1		1
Commitments and contingencies
EQUITY:
Preferred stock—authorized 25,000,000 shares, of which 100,000 shares are designated Series A Junior Participating Preferred Stock; $0.01 par value; none issued and outstanding		—		—
Common stock—authorized 300,000,000 shares; $0.01 par value; issued 134,308,206 and 134,053,132 shares, respectively		1		1
Common stock—authorized 300,000,000 shares; $0.01 par value; issued 134,403,465 and 134,053,132 shares, respectively		1		1
Treasury stock— 9,987,627 shares at cost each period		(164)		(164)
Additional paid-in capital		1,~~277~~281		1,278
Retained earnings		~~610~~615		597
Accumulated other comprehensive loss		(2636)		(33)
Total ILG stockholders’ equity		1,~~698~~697		1,679
Noncontrolling interests		4039		37
Total equity		1,~~738~~736		1,716
TOTAL LIABILITIES AND EQUITY	$	3,~~770~~661	$	3,687

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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ILG, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In millions, except share data)

(Unaudited)

																	Accumulated
					Total ILG								Additional				Other
	Total		Noncontrolling		Stockholders’		Common Stock			Treasury Stock			Paid-in		Retained		Comprehensive
	Equity		Interests		Equity		Amount		Shares	Amount		Shares	Capital		Earnings		Loss
Balance as of December 31, 2017	$	1,716	$	37	$	1,679	$	1	134,053,132	$	(164)	9,987,627	$	1,278	$	597	$	(33)
Net income		4571		2		4369		—	—		—	—		—		4369		—
Cumulative adjustment related to change in accounting principle		(7)		—		(7)		—	—		—	—		—		(7)		—
Other comprehensive income, net of tax		8(4)		(1)		7(3)		—	—		—	—		—		—		7(3)
Non-cash compensation expense		611		—		611		—	—		—	—		611		—		—
Issuance of restricted stock for converted shares in connection with the Vistana acquisition		—		—		—		—	(~~160~~163,~~532~~976)		—	—		—		—		—
Issuance of common stock upon vesting of RSUs, net of withholding taxes		(89)		—		(89)		—	~~415~~513,~~318~~574		—	—		(89)		—		—
Dividends declared on common stock		(2243)		—		(2243)		—	~~288~~735		—	—		1		(2344)		—
Balance as of March 31, 2018	$	1,738	$	40	$	1,698	$	1	134,308,206	$	(164)	9,987,627	$	1,277	$	610	$	(26)
Other		1		1		—		—	—		—	—		—		—		—
Balance as of June 30, 2018	$	1,736	$	39	$	1,697	$	1	134,403,465	$	(164)	9,987,627	$	1,281	$	615	$	(36)

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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ILG, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	Three Months Ended March 31,
	Six Months Ended June 30,
	2018		2017
Cash flows from operating activities:
Net income	$	4571	$	4571
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash and restricted cash provided by operating activities:
Amortization expense of intangibles		510		510
Amortization of debt issuance costs		12		12
Depreciation expense		1531		1530
Allowance for losses on originated loans		9		7
Bad debt expense		4		1
Allowance for impairment on acquired loans		2		2
Allowance for losses on originated loans		23		15
Accretion of mortgages receivable		1		2
Allowance for impairment on acquired loans		3		5
Non-cash compensation expense		6		6
Accretion of mortgages receivable		2		3
Deferred income taxes		7		12
Non-cash compensation expense		11		12
Equity in earnings from unconsolidated entities		(1)		(2)
Deferred income taxes		10		13
Equity in earnings from unconsolidated entities		(1)		(3)
Distributions from investments in unconsolidated entities		2		—
Gain on bargain purchase of Vistana acquisition		—		(2)
Changes in operating assets and liabilities:
Accounts receivable		(4441)		~~(25)~~4
Vacation ownership mortgages receivable (originations)		(82171)		(76163)
Vacation ownership mortgages receivable (collections)		71139		69140
Vacation ownership inventory (additions)		(2139)		(59120)
Vacation ownership inventory (disposals)		3453		2249
Vacation ownership inventory related insurance proceeds		19		—
Vacation ownership operating related insurance proceeds		19		—
Vacation ownership consolidated HOAs related insurance proceeds		23		—
Prepaid expenses and other current assets		(3926)		(3320)
Prepaid income taxes and income taxes payable		811		109
Accounts payable and other current liabilities		2327		16(1)
Deferred income		6821		4936
Other, net		—		(89)
Net cash and restricted cash provided by operating activities		~~152~~184		5882
Cash flows from investing activities:
Capital expenditures		(1622)		(2248)
Net cash used in investing activities		(16)		(22)
Purchases of trading investments		4		—
Net cash used in investing activities		(18)		(48)
Cash flows from financing activities:
Borrowings on revolving credit facility, net		—		20
Borrowings (payments) on revolving credit facility, net		(15)		71
Payments on securitized debt		(4586)		(3266)
Purchases of treasury stock		—		(3)
Dividend payments to stockholders		(2243)		(1937)
Withholding taxes on vesting of restricted stock units and restricted stock		(89)		(45)
Net cash and restricted cash used in financing activities		(75153)		(3840)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		1(3)		~~(1)~~3
Net increase (decrease) in cash, cash equivalents and restricted cash		6210		(3)
Cash, cash equivalents and restricted cash at beginning of period		352		244
Cash, cash equivalents and restricted cash at end of period	$	~~414~~362	$	241
Supplemental disclosures of cash flow information:
Interest paid, net of amounts capitalized	$	521	$	217
Income taxes paid, net of refunds	$	512	$	316

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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ILG, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH~~JUNE 3130, 2018

(Unaudited)

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION

Organization

ILG, Inc. is a leading provider of professionally delivered vacation experiences and the exclusive global licensee for the Hyatt®, Sheraton® and Westin® brands in vacation ownership. We operate in the following two segments: Vacation Ownership (VO) and Exchange and Rental.

Our VO segment engages in sales, marketing, financing and development of vacation ownership interests (VOIs); the management of vacation ownership resorts; and related services to owners and associations. The VO operating segment consists of the VOI sales and financing business of Vistana Signature Experiences (Vistana) and Hyatt Vacation Ownership (HVO) as well as the management related lines of business of Vistana, HVO, Vacation Resorts International (VRI), Trading Places International (TPI), VRI Europe and certain homeowners’ associations (HOAs) under our control.

Our Exchange and Rental segment offers access to vacation accommodations and other travel-related transactions and services to members of our programs and other leisure travelers, by providing vacation exchange services and vacation rentals, working with resort developers, HOAs and operating vacation rental properties. The Exchange and Rental operating segment consists of Interval International (referred to as Interval), the Vistana Signature Network, the Hyatt Residence Club, the TPI exchange business, and Aqua-Aston Holdings, Inc. (Aqua-Aston).

ILG was incorporated as a Delaware corporation in May 2008 under the name Interval Leisure Group, Inc. and commenced trading on The NASDAQ Stock Market in August 2008 under the symbol "IILG" and now trades under “ILG.”

On May 11, 2016, we acquired the vacation ownership business of Starwood Hotels & Resorts Worldwide, LLC (Starwood), now known as Vistana. In connection with the acquisition, Vistana entered into an exclusive, 80 - year global license agreement with Starwood for the use of the Sheraton and Westin brands in vacation ownership. The global license agreement may also be extended for two 30 – year terms, subject to meeting certain sales performance tests. Also, Vistana has the non-exclusive license for the existing St. Regis® and The Luxury Collection® vacation ownership properties and an affiliation with the Starwood Preferred Guest program.

~~Basis~~On April 30, 2018, we entered into an Agreement and Plan of ~~Presentation~~Merger (“Merger Agreement”), with Marriott Vacations Worldwide Corporation (“Marriott Vacations”), Ignite Holdco, Inc. and Ignite Holdco Subsidiary, Inc. (two of our wholly owned subsidiaries), and Volt Merger Sub, Inc. and Volt Merger Sub, LLC (two wholly owned subsidiaries of Marriott Vacations), pursuant to which Marriott Vacations will acquire ILG in a series of transactions (the “Combination Transactions”) and ILG stockholders will receive $14.75 in cash (without interest) and 0.165 shares of common stock of Marriott Vacations for each share of ILG common stock held by such stockholder. This will result in ILG stockholders owning approximately 43% of Marriott Vacations following the merger transactions. See Note 23 for further discussion.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the rules and regulations of the Securities and Exchange Commission. Accordingly, these financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of ILG’s management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Interim results are not indicative of the results that may be expected for a full year.

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Basis of Presentation

Individual amounts presented by quarter in our interim financial statements may not add to the year-to-date amount due to rounding and, in the case of per share amounts, differences in the average common shares outstanding during each period.

Additionally, the prior period condensed consolidated financial statements presented in this report have been restated as part of our adoption of ASC 606. See Note 3 for additional information.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of ILG, our wholly‑owned subsidiaries, and companies in which we have a controlling interest, including variable interest entities (“VIEs”) where we are the primary beneficiary in accordance with consolidation guidance. All significant intercompany balances and transactions have been eliminated in these condensed consolidated financial statements. References in these financial statements to net income attributable to common stockholders and ILG stockholders’ equity do not include noncontrolling interests, which represent the outside ownership of our consolidated non‑wholly owned entities and are reported separately.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2017 Annual Report on Form 10‑K.

Seasonality

Revenue at ILG is influenced by the seasonal nature of travel. Within our VO segment, our sales and financing business experiences a modest impact from seasonality, with higher sales volumes during the traditional vacation periods. Our vacation ownership management businesses by and large do not experience significant seasonality, with the exception of our resort operations revenue which tends to be higher in the first quarter.

Within our Exchange and Rental segment, we recognize exchange and Getaway revenue based on confirmation of the vacation, with the first quarter generally experiencing higher revenue and the fourth quarter generally experiencing lower revenue. Remaining rental revenue is recognized based on occupancy. For the vacation rental business, the first and third quarters generally generate higher revenue as a result of increased leisure travel to our Hawaii‑based managed properties during these periods, and the second and fourth quarters generally generate lower revenue.

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES

Our significant accounting policies were described in Note 2 accompanying our audited consolidated financial statements included in our 2017 Annual Report on Form 10-K. There have been no significant changes in our significant accounting policies for the ~~three~~six months ended ~~March~~June 3130, 2018 other than changes related to the adoption of ASU 2014‑09, “Revenue from Contracts with Customers (Topic 606) (“ASU 2014‑09”). See Note 3 for further details and related disclosures.

Accounting Estimates

ILG’s management is required to make certain estimates and assumptions during the preparation of its consolidated financial statements in accordance with GAAP. These estimates and assumptions impact the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net earnings during any period. Actual results could differ from those estimates.

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Accounting Estimates

Significant estimates underlying the accompanying condensed consolidated financial statements include:

the recovery of long‑lived assets as well as goodwill and other intangible assets;

purchase price allocations of business combinations;

allowance for loan losses for vacation ownership mortgages receivable;

accounting for acquired vacation ownership mortgages receivable;

cost of vacation ownership product sales related estimates included in our relative sales value calculation, such as future projected sales revenue and expected project costs to complete;

the accounting for income taxes including deferred income taxes and related valuation allowances;

the determination of deferred membership revenue and deferred membership costs; and

the determination of stock‑based compensation.

In the opinion of ILG’s management, the assumptions underlying the condensed consolidated financial statements of ILG and its subsidiaries are reasonable.

Earnings per Share

Basic earnings per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Treasury stock is excluded from the weighted average number of shares of common stock outstanding. Diluted earnings per share attributable to common stockholders is computed based on the weighted average number of shares of common stock and dilutive securities outstanding during the period. Dilutive securities are common stock equivalents that are freely exercisable into common stock at less than market prices or otherwise dilute earnings if converted. The net effect of common stock equivalents is based on the incremental common stock that would be issued upon the assumed exercise of common stock options and the vesting of RSUs and restricted stock using the treasury stock method. Common stock equivalents are not included in diluted earnings per share when their inclusion is antidilutive. The computations of diluted earnings per share available to common stockholders exclude 0.61 million RSUs and restricted shares for each of the three months ended June 30, 2018 and 2017 and 0.83 million and 0.4 million RSUs and restricted shares for the ~~three~~six months ended ~~March~~June 3130, 2018 and 2017, respectively, as the effect of their inclusion would have been antidilutive to earnings per share.

The computation of weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share is as follows (in thousands):

	Three Months Ended		Six Months Ended
	March 31,
	June 30,		June 30,
	2018	2017	2018	2017
Basic weighted average shares of common stock outstanding	~~123~~124,~~826~~241	~~123~~124,~~998~~384	124,033	124,191
Net effect of common stock equivalents assumed to be vested related to RSUs and restricted stock	1,~~925~~633	1,~~584~~757	1,780	1,671
Diluted weighted average shares of common stock outstanding	125,~~751~~874	~~125~~126,~~582~~141	125,813	125,862

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Earnings per share for the three and six months ended ~~March~~June 3130, 2018 and 2017 are as follows (in thousands, except per share data):

		Three Months Ended				Six Months Ended
		March 31,
		June 30,				Six Months Ended June 30,
		2018		2017		2018		2017
Net income attributable to common stockholders	$	4226,~~909~~574	$	4325,~~993~~840	$	69,483	$	69,832
Weighted average number of shares of common stock outstanding:
Basic		~~123~~124,~~826~~241		~~123~~124,~~998~~384		124,033		124,191
Diluted		125,~~751~~874		~~125~~126,~~582~~141		125,813		125,862
Earnings per share attributable to common stockholders:
Basic	$	0.3521	$	0.3521	$	0.56	$	0.56
Diluted	$	0.3421	$	0.3520	$	0.55	$	0.55

Recent Accounting Pronouncements: General

With the exception of those discussed below, there are no recent accounting pronouncements or changes in accounting pronouncements since the recent accounting pronouncements described in our 2017 Annual Report on Form 10-K that are of significance, or potential significance, to ILG based on our current operations. The following summary of recent accounting pronouncements is not intended to be an exhaustive description of the respective pronouncement, and may include certain accounting standards also disclosed in our 2017 Annual Report on Form 10-K which have not yet been adopted.

In ~~February~~July ~~2016~~2018, the FASB issued ASU ~~2016‑02~~2018-09, “~~Leases~~Codification ~~(Topic 842)~~Improvements” (“ASU ~~2016‑02~~2018-09”). ~~ASU~~The ~~2016‑02~~amendments ~~amends~~in ~~the~~this ~~existing~~update ~~accounting~~affect ~~standards~~a ~~for~~wide ~~lease~~variety ~~accounting,~~of ~~including~~topics ~~requiring~~in ~~lessees~~the tocodification. ~~recognize~~To ~~most~~list ~~leases~~a onfew, ~~their~~there ~~balance~~are ~~sheets~~amendments ~~and~~to ~~making~~“Compensation ~~targeted~~– ~~changes~~Stock toCompensation ~~lessor~~– ~~accounting.~~Income ~~The~~Taxes ~~new~~(Subtopic ~~guidance~~718-740)”, ~~will~~“Business beCombinations ~~effective~~– ~~for~~Income ~~public~~Taxes ~~entities~~(Subtopic ~~for~~805-740)”, ~~annual~~“Fair ~~periods~~Value ~~beginning~~Measurement ~~after~~– ~~December 15,~~Overall ~~2018~~(Subtopic ~~and~~820-10)”, ~~interim periods therein~~etc. The ~~new~~transition ~~leases~~and ~~standard~~effective ~~requires~~date aguidance ~~modified~~is ~~retrospective~~based ~~transition~~on ~~approach~~the ~~for~~facts ~~all~~and ~~leases~~circumstances ~~existing~~of ~~at,~~each oramendment. ~~entered~~Some ~~into~~of ~~after,~~ the ~~date~~amendments ofin ~~initial~~this ~~application,~~ASU ~~with~~do annot ~~option~~require totransition ~~use~~guidance ~~certain~~and ~~transition~~will ~~relief.~~be Weeffective ~~are~~upon ~~currently~~issuance ~~evaluating~~of ~~the~~this ~~methods~~update. ~~and~~However, ~~impact~~many of ~~adopting~~the ~~this~~amendments ~~new~~in ~~standard~~this onASU ~~our~~do ~~consolidated~~have ~~financial~~transition ~~statements;~~guidance ~~however,~~with weeffective dodates ~~expect~~for ~~our~~annual ~~balance~~periods ~~sheet~~beginning ~~presentation~~after toDecember be15, ~~impacted~~2018. ~~upon~~We ~~adoption~~are ~~due~~currently toevaluating the ~~recognition~~methods ofand ~~right-~~impact of~~-use~~ ~~assets~~adopting ~~and~~this ~~lease~~new ~~liabilities~~standard ~~for~~on ~~operating~~our ~~leases~~consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718)” (“ASU 2018-07”) to align the measurement and classification guidance for share-based payments to nonemployees with the guidance for share-based payments to employees, with certain exceptions. Under the guidance, the measurement of equity-classified nonemployee awards will be fixed at the grant date, which may lower their cost and reduce volatility in the income statement. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We do not anticipate the adoption of this guidance will have a material impact on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016 02, “Leases (Topic 842)” (“ASU 2016 02”). ASU 2016 02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The new guidance will be effective for public entities for annual periods beginning after December 15, 2018 and interim periods therein. Originally, entities were required to adopt ASU 2016-02 using a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application. However, in July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements” (“ASU 2018-11”), which now allows entities the option of recognizing the cumulative effect of applying the new standard as an adjustment to the opening balance of retained earnings in the year of adoption while continuing to present all periods under previous lease accounting guidance. In July 2018, the FASB also issued ASU 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”), which clarifies how to apply certain aspects of ASU 2016-02. We expect to adopt ASU 2016-02, ASU 2018-10 and ASU 2018-11 commencing in fiscal year 2019 and are currently in the process of evaluating and analyzing our leases pursuant to this guidance. While we have

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not yet finalized a quantified impact of adopting this new standard, we do expect our balance sheet presentation to be impacted due to the recognition of right-of-use assets and lease liabilities for operating leases.

Adopted Accounting Pronouncements: General

In March 2018, the FASB issued ASU 2018-05, “Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118”. The guidance amends SEC paragraphs in Accounting Standards Codification (ASC or Codification) 740, Income Taxes, to reflect SEC Staff Accounting Bulletin (SAB) 118, which provides guidance for companies that are not able to complete their accounting for the income tax effects of the Tax Cuts and Jobs Act (the “Tax Reform Act”) in the period of enactment. For further discussion please see Note 19. This ASU was effective immediately and the adoption of this guidance did not have a material impact on our consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting” to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under this new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The guidance is effective prospectively for annual periods beginning on or after December 15, 2017. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In February 2017, the FASB issued ASU 2017-05, “Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets”. The FASB issued this ASU to clarify the scope of subtopic 610-20, which was issued in May 2014 as part of Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The effective date and transition requirements of these amendments are the same as the effective date and transition requirements of ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)". We plan to adopt this standard, as well as other clarifications and technical guidance issued by the FASB related to this new revenue standard, on January 1, 2018. The adoption of this guidance did not have a material impact on our consolidated financial statements.

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issued in May 2014 as part of Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The effective date and transition requirements of these amendments are the same as the effective date and transition requirements of ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)". We plan to adopt this standard, as well as other clarifications and technical guidance issued by the FASB related to this new revenue standard, on January 1, 2018. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805),” to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses by clarifying the definition of a business. The definition of a business affects many areas of accounting including acquisition, disposals, goodwill and consolidation. This amendment covers Phase 1 of a three phase project. The update is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments in this update should be applied prospectively on or after the effective date. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230).” This ASU requires that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The update is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The adoption of this guidance did not have a material impact on our consolidated financial statements. The effect of the adoption of ASU 2016-18 on our consolidated statements of cash flows was to include restricted cash balances in the beginning and end of period balances of cash and cash equivalents and restricted cash. The change in restricted cash was previously disclosed in operating activities and financing activities in the consolidated statements of cash flows.

In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (“ASU 2016-16”) as part of the Board’s initiative to reduce complexity in accounting standards. This ASU eliminates an exception in ASC 740, which prohibits the immediate recognition of income tax consequences of intra-entity asset transfers other than inventory. Under ASU 2016-16, entities will be required to recognize the immediate current and deferred income tax effects of intra-entity asset transfers, which often involve a subsidiary of a company transferring intellectual property to another subsidiary. For public entities, the new guidance is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. This ASU’s amendments should be applied on a modified retrospective basis, recognizing the effects in retained earnings as of the beginning of the year of adoption. In accordance with this ASU, during the current period we recorded a cumulative adjustment of approximately $7 million to opening retained earnings. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230).” This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under existing guidance. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The amendments should be applied using a retrospective transition method to each period presented. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In January 2016, the FASB issued ASU 2016‑01, “Financial Instruments—Overall (Subtopic 825‑10),” which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Although the ASU retains many current requirements, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. The amendments in this update are effective for fiscal years beginning after December 31, 2017,

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~~including~~recognize the immediate current and deferred income tax effects of intra-entity asset transfers, which often involve a subsidiary of a company transferring intellectual property to another subsidiary. For public entities, the new guidance is effective for annual periods beginning after December 15, 2017, and interim periods within those ~~fiscal~~annual ~~years~~periods. This ASU’s amendments should be applied on a modified retrospective basis, recognizing the effects in retained earnings as of the beginning of the year of adoption. In accordance with this ASU, during the first quarter of 2018 we recorded a cumulative adjustment of approximately $7 million to opening retained earnings. The adoption of this guidance did not have a material impact on our consolidated financial statements.

Adopted Accounting Pronouncements: Revenue Recognition

In May 2014, the FASB issued ASU 2014‑09 (otherwise known as ASC 606). The FASB and the International Accounting Standards Board (“IASB”) initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS that would: (i) remove inconsistencies and weaknesses in revenue requirements; (ii) provide a more robust framework for addressing revenue issues; (iii) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; (iv) provide more useful information to users of financial statements through improved disclosure requirements; and (v) simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. To meet those objectives, the FASB amended the FASB Accounting Standards Codification (“Codification”) and created a new Topic 606, Revenue from Contracts with Customers. The core principle of the guidance in ASU 2014‑09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in this ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry specific guidance throughout the Industry Topics of the Codification. Additionally, ASU 2014‑09 supersedes some cost guidance included in Subtopic 605‑35, Revenue Recognition—Construction‑Type and Production‑Type Contracts. The ASU is effective for fiscal years beginning after December 15, 2017 (and interim periods within that period).

In periods subsequent to the initial issuance of this ASU, the FASB has issued additional ASU’s clarifying items within Topic 606, as follows:

In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date," which defers by one year the effective date of ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" to annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.

In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”). The amendments in ASU 2016-08 serve to clarify the implementation guidance on principal vs. agent considerations.

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In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”). The purpose of ASU 2016-10 is to clarify two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance (while retaining the related principles for those areas).

In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2016-12”). The purpose of ASU 2016-12 is to address certain issues identified to improve Topic 606 by enhancing guidance on assessing collectability, presentation of sales taxes and other similar taxes collected from customers, noncash consideration and completed contracts and contract modifications at transition.

In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,” which amends certain aspects of the Board’s new revenue standard, ASU 2014-09. This ASU addresses thirteen specific issues pertaining to Topic 606, Revenue from Contracts with Customers.

We have adopted this standard, as well as other clarifications and technical guidance issued by the FASB related to this new revenue standard, as of January 1, 2018, using the retrospective adoption method. See Note 3 for further details.

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NOTE 3—REVENUE RECOGNITION

The core principle of the guidance in ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. We recognize all revenue related to contracts with customers in accordance with ASC 606. We elected to apply ASC 606, and all related ASUs, using the retrospective adoption method. Under this method, we revised our consolidated financial statements for the years ended December 31, 2017, 2016 and ~~2017~~2015, and applicable interim periods within those years, as if ASC 606 had been effective for those periods. The major areas of impact in applying ASC 606 include the following:

earlier recognition of certain VOI sales where the transaction price was deemed collectable yet we were deferring recognition due to specific buyers’ commitment requirements under legacy GAAP (also known as buyers’ commitment deferral or BCD);

gross versus net presentation changes, which did not impact profitability, such as incentives provided to customers on VOI sales (e.g., SPG points), management fees and cost reimbursements attributable to unsold VOI inventory, and administrative fees for VOI sales in certain cases;

classification of certain trial vacation package sales which also did not impact profitability;

capitalization of certain incremental costs to obtain a contract related to trial vacation package sales;

the instances in which we can apply the percentage of completion revenue recognition method when construction of a vacation ownership project is not complete; and

classification of certain payments to developers in our exchange business who are functioning as agents in the member acquisition process.

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The tables below ~~summarizes~~summarize the adjustments that were made to our condensed consolidated statement of income for the three and six months ended ~~March~~June 3130, 2017 and our condensed consolidated balance sheet as of December 31, 2017, on a line item basis (USD in millions, except per share data):

	(As reported)					(Restated)
	Three Months Ended March 31, 2017	Reclassification Adjustments (1)	BCD	Percentage of Completion Related	Other (2)	Three Months Ended March 31, 2017
	Three Months Ended June 30, 2017	Reclassification Adjustments (1)	BCD	Percentage of Completion Related	Other (2)	Three Months Ended June 30, 2017
Service and membership related	126	1	—	—	—	127
Sales of vacation ownership products, net	123	(2)	1	(4)	—	118
Sales of vacation ownership products, net	110	(1)	1	(5)	—	105
Cost reimbursements	89	(4)	—	—	—	85
Rental and ancillary services	107	—	—	—	—	107
Total revenues	450	(6)	1	(4)	—	441
Cost reimbursements	88	(4)	—	—	—	84
Cost of service and membership related sales	32	1	—	—	—	33
Total revenues	452	(4)	1	(5)	—	444
Cost of vacation ownership products sales	29	—	—	(1)	—	28
Cost of service and membership related sales	32	3	—	—	—	35
Cost reimbursements	89	(4)	—	—	—	85
Cost of vacation ownership products sales	27	—	—	(2)	—	25
Selling and marketing expense	80	(3)	—	—	(1)	76
Cost of sales of rental and ancillary services	78	(1)	—	—	—	77
Total operating costs and expenses	404	(6)	—	(1)	(1)	396
Cost reimbursements	88	(4)	—	—	—	84
Equity in earnings from unconsolidated entities	2	—	(1)	—	—	1
Selling and marketing expense	73	(2)	—	—	(1)	70
Earnings before income taxes and noncontrolling interest	41	—	—	(3)	1	39
Total operating costs and expenses	388	(4)	—	(2)	(1)	381
Income tax benefit (provision)	(14)	—	—	1	—	(13)
Equity in earnings from unconsolidated entities	1	—	1	—	—	2
Net income attributable to common stockholders	27	—	—	(2)	1	26
Earnings before income taxes and noncontrolling interest	70	—	2	(3)	1	70
Income tax benefit (provision)	(25)	—	(1)	1	—	(25)
Net income attributable to common stockholders	44	—	1	(2)	1	44
Earnings per share attributable to common stockholders:
Basic	0.3622					0.3521
Diluted	0.3522					0.3520

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	(As reported)					(Restated)
	Six Months Ended June 30, 2017	Reclassification Adjustments (1)	BCD	Percentage of Completion Related	Other (2)	Six Months Ended June 30, 2017

Service and membership related	246	1	—	—	—	247
Sales of vacation ownership products, net	233	(3)	2	(9)	—	223
Cost reimbursements	176	(8)	—	—	—	168
Total revenues	902	(10)	2	(9)	—	885

Cost of service and membership related sales	64	4	—	—	—	68
Cost of vacation ownership products sales	56	—	—	(2)	—	54
Cost of sales of rental and ancillary services	156	(1)	—	—	—	155
Cost reimbursements	176	(8)	—	—	—	168
Selling and marketing expense	152	(5)	—	—	(2)	145
Total operating costs and expenses	791	(10)	—	(2)	(2)	777

Equity in earnings from unconsolidated entities	3	—	—	—	—	3

Earnings before income taxes and noncontrolling interest	112	—	2	(7)	2	109

Income tax benefit (provision)	(39)	—	(1)	2	—	(38)

Net income attributable to common stockholders	72	—	1	(5)	2	70

Earnings per share attributable to common stockholders:
Basic	0.58					0.56
Diluted	0.57					0.55

(1)

Includes impact of item numbers 2, 3 and 6 described further above.

(2)

Includes impact of item number 4 described above, and other items of lesser significance.

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	(As reported)			(Restated)
	December 31, 2017	BCD	Other (3)	December 31, 2017
Vacation ownership mortgages receivable, net (current)	78	1	—	79
Vacation ownership inventory	499	(3)	—	496
Prepaid expenses	62	(2)	4	64
Other current assets	32	-—	1	33
Total current assets	1,199	(4)	5	1,200
Vacation ownership mortgages receivable, net (noncurrent)	644	14	—	658
Investment in unconsolidated entities	54	1	—	55
TOTAL ASSETS	3,671	11	5	3,687
Deferred revenue	162	—	—	162
Accrued expenses and other current liabilities	217	(2)	—	215
Total current liabilities	643	(2)	—	641
Deferred income taxes	128	4	1	133
TOTAL LIABILITIES	1,967	2	1	1,970
Retained earnings	584	9	4	597
Total shareholders’ equity	1,666	9	4	1,679
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	3,671	11	5	3,687

(3)

Includes impact on condensed consolidated balance sheet for all items described above, except BCD.

Performance obligations and accounting policies

Vacation Ownership

Revenue from the VO segment is derived principally from sales of VOIs and related fees earned by Vistana and HVO, interest income earned for financing these sales, maintenance fees, fees for vacation ownership resort and homeowners’ association management services, and rental and ancillary revenues, including from hotels owned by Vistana and HVO.

Sales of VOIs

We enter into contracts for the purchase of VOIs which include (i) the sale of the VOI, (ii) membership in the Vistana Signature Network or Hyatt Residence Club, and (iii) potential incentives for purchasing the VOI. See the Membership fee revenue section below for the revenue recognition treatment of the club membership fees.

Consolidated VOI sales are recognized and included in revenues once control of the VOI has transferred and the purchaser secures the benefits of ownership, which occurs after a binding sales contract has been executed, collectability is reasonably assured, the rescission period has expired, and construction is complete. The agreement for sale generally provides for a down payment and a note secured by a mortgage payable in monthly installments, including interest, over a typical term ranging from 5 -15 years. Customer deposits relating to contracts cancelled after the applicable rescission period are forfeited and recorded in revenue at the time of forfeiture.

The provision for loan losses is recorded as an adjustment to sales of VOIs in the consolidated income statements rather than as an adjustment to bad debt expense, as the default on the VOI is deemed to be a right of return. We record an estimate of loan losses at the time of the VOI sale and recognize revenue net of amounts deemed uncollectible.

We at times offer several types of sales incentives, including SPG and World of Hyatt points, a bonus week, and down payment credits to buyers. Revenue from sales incentives is recognized when the incentive is provided to the owner of the VOI. If the owner finances the VOI, the incentive may not be provided until six payments have been made. For our primary incentives, SPG and World of Hyatt points, we act as an agent and therefore, recognize revenue for these incentives on a net basis.

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We routinely sell trial vacation packages where we provide our customers with a stay at a resort and offer a discount on a future VOI sale. The future discount is accounted for as a material right, which is recognized when the purchaser buys a VOI or the discount expires, both of which occur at the time of stay. Our customers have the option to pay upfront for these packages or finance these packages through us. In the case of unused trial vacation packages, we recognize revenue upon forfeiture as we do not expect a significant amount of breakage to occur.

Management fee and other revenue

Management fees and other revenue in this segment consist of annual maintenance fees, service fees and base management fees, as applicable. Annual maintenance fees are amounts paid by VOI owners for maintaining and operating the respective properties, which includes management services, and are recognized on a straight‑line basis over the respective annual maintenance period. Our day-to-day management services include activities such as housekeeping services, operation of a reservation system, maintenance, and certain accounting and administrative services. We receive compensation for such management services, which is generally based on either a percentage of the budgeted cost to operate such resorts or a fixed fee arrangement, on a monthly basis as the services are performed. We generally recognize management fee revenue on a gross basis except for management fees associated with VOIs which remain in our inventory.

Resort operations revenue

Our resort operations performance obligations are largely comprised of transient rental income at our vacation ownership and owned-hotel properties. We may receive payment for these services upfront or at the time of the stay. We record rental revenue when occupancy has occurred or, in the case of unused prepaid rental deposits, upon forfeiture. Other ancillary services revenue consists of goods and services that are sold or provided by us at restaurants, golf courses and other retail and service outlets located at developed resorts. We receive payment and recognize ancillary services revenue when goods have been provided and/or services have been rendered.

Exchange and Rental

Membership fee revenue

Revenue from membership fees from our Exchange and Rental segment is deferred and recognized over the terms of the applicable memberships, typically ranging from one to five years, on a straight‑line basis. When multiple member benefits and services are provided over the term of the membership, revenue is recognized for each separable deliverable ratably over the membership period, as applicable. Membership fees are paid up front at the beginning of the applicable membership period. Generally, memberships are cancelable and refundable on a pro‑rata basis, with the exception of Interval Network’s Platinum tier which is non‑refundable.

Transaction revenue

Revenue from exchanges, Getaway transactions and other fee-based services provided to members of our networks is recognized when confirmation of the transaction is provided and services have been rendered, as the earnings process is complete. Reservation servicing fees are generally received on a monthly basis and revenue is recognized when the service is performed or on a straight‑line basis over the applicable service period.

Club rental revenue

Club rental revenue represents rentals generated by the Vistana Signature Network and Hyatt Residence Club mainly to monetize inventory at their vacation ownership resorts to provide exchanges for our members through hotel loyalty programs. We recognize revenue for such rentals when occupancy has occurred.

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Rental management revenue

Revenue from our vacation rental management businesses is comprised of base management fees which are typically either (i) fixed amounts, (ii) amounts based on a percentage of adjusted gross lodging revenue, or (iii) various revenue sharing arrangements with condominium owners based on stated formulas. We generally receive payment from the rental management services on a monthly basis as the services are performed. Base management fees are recognized when earned in accordance with the terms of the contract (i.e., over time as we perform the management services). Incentive management fees for certain hotels and condominium resorts are generally a percentage of either operating profits or improvement in operating profits. We recognize incentive management fees as earned throughout the incentive period based on actual results which are trued‑up at the culmination of the incentive period. Determining the amount of the transaction price related to the incentive management fees may require us to estimate the variable consideration related to the incentive fees based on generated budgets and forecasts until such time as the actual amounts are known (typically at end of calendar year). Such variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal of the related revenue will not occur. Service fee revenue is based on the services provided to owners including reservations, sales and marketing, property accounting and information technology services, either internally or through third party providers. Service fee revenue is recognized when the service is provided. We are considered an agent for these services, and will therefore recognize revenue from the service fees on a net basis per the terms of the respective agreement.

General

Cost reimbursement revenue

Represents the compensation and other employee-related costs directly associated with managing properties that are included in both revenue and cost of sales and that are passed on to the property owners or homeowner associations without mark-up. Cost reimbursement revenue of the Vacation Ownership segment also includes reimbursement of sales and marketing expenses, without mark-up, pursuant to contractual arrangements. Such cost reimbursements are recognized gross when the related services are performed.

Deferred revenue in a business combination

When we acquire a business which records deferred revenue on its historical financial statements, we are required to re‑measure that deferred revenue as of the acquisition date pursuant to rules related to accounting for business combinations, as described further below. The post‑acquisition impact of that remeasurement results in recognizing revenue which solely comprises the cost of the associated legal performance obligation we assumed as part of the acquisition, plus a normal profit margin. This purchase accounting treatment typically results in lower amounts of revenue recognized in a reporting period following the acquisition than would have otherwise been recognized on a historical basis.

Contracts with multiple performance obligations

When we enter into an arrangement which contains multiple promises, we are required to determine whether the promises in these arrangements should be treated as separate performance obligations for revenue recognition purposes and, if so, how the transaction price should be allocated to each performance obligation. We analyze our contracts upon execution to determine the appropriate revenue recognition accounting treatment. Our determination of whether to recognize revenue for separate performance obligation will depend on the terms and specifics of our products and arrangements as well as the nature of changes to our existing products and services, if any. The transaction price is allocated to such distinct performance obligations in accordance with their standalone selling price. As we have observable standalone sales of each of our performance obligations, we utilize the observable standalone selling price for purposes of allocation and we do not exercise significant judgement in determining these standalone selling prices. The allocation of the total transaction price to the various performance obligations does not change the total revenue recognized from a transaction or arrangement, but may impact the timing of revenue recognition.

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Sales type taxes

All taxable revenue transactions are presented on a net‑of‑tax basis.

Costs to Obtain or Fulfill a Contract

We capitalize the incremental costs of obtaining a contract when those costs would not have been incurred if the contract had not been obtained, in accordance with ASC Subtopic 340-40, Other Assets and Deferred Costs – Revenue from Contracts with Customers (“ASC 340-40”). Direct costs of acquiring members (primarily commissions) are deferred and amortized on a straight‑line basis over the terms of the applicable membership period. We also capitalize commissions related to the sale of prepaid vacation packages. These commissions are expensed when the purchaser stays at the property. If a contract is cancelled, we charge the unrecoverable direct selling costs to expense at cancellation.

The ending asset balance related to costs to obtain a contract as of ~~March~~June 3130, 2018 and December 31, 2017 were $2321 million and $19 million, respectively, and total amortization was $26 million for the ~~three~~six months ended ~~March~~June 3130, 2018. There were no associated impairment losses.

We apply a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less.

We capitalize certain costs incurred to fulfill our contracts with customers, which primarily consists of membership fulfillment and member resort directory costs for active members. Membership fulfillment costs are amortized over the applicable membership term, and costs associated with directories are amortized over the period of benefit.

The ending asset balance for fulfillment costs as of ~~March~~June 3130, 2018 and December 31, 2017 were $74 million and $95 million, respectively, and total amortization was $1 million for the ~~three~~six months ended ~~March~~June 3130, 2018. There were no associated impairment losses.

1920

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Disaggregation of revenue

The following table presents our condensed consolidated income statement revenues disaggregated by type and reportable segments for the ~~quarters~~three and six months ended ~~March~~June 3130, 2018 and 2017 (in millions).

		For the Three Months Ended March 31, 2018												For the Three Months Ended March 31, 2017
		For the Three Months Ended June 30, 2018												For the Three Months Ended June 30, 2017
		Service and membership related		Sales of vacation ownership products		Rental and ancillary services		Consumer financing		Cost reimbursements		Total		Service and membership related		Sales of vacation ownership products		Rental and ancillary services		Consumer financing		Cost reimbursements		Total
Vacation Ownership
Resort operations revenue	$	—	$	—	$	6358	$	—	$	—	$	6358	$	—	$	—	$	5853	$	—	$	—	$	5853
Management fee revenue		5761		—		—		—		—		5761		3033		—		—		—		—		3033
Sales of vacation ownership products, net		—		~~123~~121		—		—		—		~~123~~121		—		~~105~~118		—		—		—		~~105~~118
Consumer financing revenue		—		—		—		2423		—		2423		—		—		—		2122		—		2122
Cost reimbursement revenue		—		—		—		—		4445		4445		—		—		—		—		5859		5859
Total Vacation Ownership revenue		5761		~~123~~121		6358		2423		4445		~~311~~308		3033		~~105~~118		5853		2122		5859		~~272~~285
Exchange and Rental
Transaction revenue		4034		—		1916		—		—		5950		4234		—		1715		—		—		5949
Membership fee revenue		3635		—		—		—		—		3635		36		—		—		—		—		36
Ancillary member revenue		2		—		—		—		—		2		2		—		—		—		—		2
Total member revenue		7871		—		1916		—		—		9787		8072		—		1715		—		—		9787
Club rental revenue		—		—		3429		—		—		3429		—		—		3027		—		—		3027
Other revenue		45		—		1		—		—		56		4		—		1		—		—		5
Rental management revenue		1311		—		1—		—		—		1411		1310		—		1		—		—		1411
Cost reimbursement revenue		—		—		—		—		2120		2120		—		—		—		—		26		26
Total Exchange and Rental revenue		9587		—		5546		—		2120		~~171~~153		9786		—		4944		—		26		~~172~~156
Total ILG revenue	$	~~152~~148	$	~~123~~121	$	~~118~~104	$	2423	$	65	$	~~482~~461	$	~~127~~119	$	~~105~~118	$	~~107~~97	$	2122	$	8485	$	~~444~~441


		For the Six Months Ended June 30, 2018												For the Six Months Ended June 30, 2017
		Service and membership related		Sales of vacation ownership products		Rental and ancillary services		Consumer financing		Cost reimbursements		Total		Service and membership related		Sales of vacation ownership products		Rental and ancillary services		Consumer financing		Cost reimbursements		Total
Vacation Ownership
Resort operations revenue	$	—	$	—	$	124	$	—	$	—	$	124	$	—	$	—	$	110	$	—	$	—	$	110
Management fee revenue		116		—		—		—		—		116		64		—		—		—		—		64
Sales of vacation ownership products, net		—		244		—		—		—		244		—		223		—		—		—		223
Consumer financing revenue		—		—		—		47		—		47		—		—		—		43		—		43
Cost reimbursement revenue		—		—		—		—		90		90		—		—		—		—		117		117
Total Vacation Ownership revenue		116		244		124		47		90		621		64		223		110		43		117		557
Exchange and Rental
Transaction revenue		76		—		33		—		—		109		75		—		33		—		—		108
Membership fee revenue		71		—		—		—		—		71		71		—		—		—		—		71
Ancillary member revenue		4		—		—		—		—		4		5		—		—		—		—		5
Total member revenue		151		—		33		—		—		184		151		—		33		—		—		184
Club rental revenue		—		—		62		—		—		62		—		—		57		—		—		57
Other revenue		10		—		2		—		—		12		9		—		1		—		—		10
Rental management revenue		23		—		1		—		—		24		23		—		3		—		—		26
Cost reimbursement revenue		—		—		—		—		41		41		—		—		—		—		51		51
Total Exchange and Rental revenue		184		—		98		—		41		323		183		—		94		—		51		328
Total ILG revenue	$	300	$	244	$	222	$	47	$	131	$	944	$	247	$	223	$	204	$	43	$	168	$	885

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Contract balances

The following table provides information about receivables, contracts assets, and contract liabilities from our contracts with customers (in millions):

	March 31,		December 31,
	June 30,		December 31,
	2018		2017
Accounts receivable, net of allowance for doubtful accounts	$	~~125~~115	$	121
Vacation ownership mortgages receivable, net of allowance	$	~~733~~734	$	737
Contract liabilities(1)	$	~~292~~259	$	232

(1) Of this amount, $4475 million of revenue recognized in the ~~three~~six months ended ~~March~~June 3130, 2018 were included in the contract liabilities balance as of December 31, 2017.

Receivables as of ~~March~~June 3130, 2018 and December 31, 2017 include amounts related to our contractual right to consideration for completed performance obligations, and are realized when the associated cash is received. Amounts related to our contract assets, aside from those in table above, as of ~~March~~June 3130, 2018 and December 31, 2017, are negligible. There were no associated impairment losses. Contract liabilities include payments received in advance of performance under the contract and are realized with the associated revenue recognized under the contract.

Transaction price allocated to remaining performance obligations

As of ~~March~~June 3130, 2018, we have approximately $~~114~~103 million of revenue expected to be recognized from remaining performance obligations that are unsatisfied (or partially unsatisfied). This revenue is primarily related to membership fees and fixed management fees which are recognized ratably as the performance obligation is satisfied. We expect to recognize this revenue over the next one to eight years.

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We have elected the following optional exemptions related to the remaining transaction price disclosure:

Not to include variable consideration that is allocated entirely to a wholly unsatisfied performance obligation, or to a wholly unsatisfied promise to transfer a distinct good or service, that forms part of a single performance obligation, for which the criteria in ASC 606-10-32-40 have been met.

This optional exemption applies to our management services which are satisfied over time and are substantially the same in any given period. Management fees are variable as these fees are based on a percentage of the budgeted cost to operate resorts. These fees are resolved on a monthly basis as revenue is recognized.

Not to disclose the amount of the transaction price allocated to the remaining performance obligations and an explanation of when the entity expects to recognize that amount as revenue for the reporting periods prior to the period of adoption.

NOTE 4—RESTRICTED CASH

Restricted cash consists of the following (in millions):

	March 31,		December 31,
	June 30,		December 31,
	2018		2017
Escrow deposits on vacation ownership products	$	4946	$	70
HOAs		~~163~~138		137
Securitization VIEs		1918		20
Other		2517		3
Total restricted cash	$	~~256~~219	$	230

Restricted cash associated with escrow deposits on vacation ownership products represents amounts that are held in escrow until statutory requirements for release are satisfied, at which time that cash is no longer restricted. Restricted cash of securitization VIEs represents cash held in accounts related to vacation ownership mortgages receivable securitizations, which is generally used to pay down securitized vacation ownership debt in the period following the quarter in which the cash is received.

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Restricted cash of securitization VIEs represents cash held in accounts related to vacation ownership mortgages receivable securitizations, which is generally used to pay down securitized vacation ownership debt in the period following the quarter in which the cash is received.

HOAs restricted cash predominantly pertains to maintenance fees collected from their respective owners which are designated for resort operations and HOA specific uses, such as reserves, and not freely available for immediate or general business use at ILG’s discretion.

NOTE 5—VACATION OWNERSHIP MORTGAGES RECEIVABLE

Vacation ownership mortgages receivable is comprised of various mortgage loans related to our financing of vacation ownership interval sales. As part of our acquisitions of HVO and Vistana, we acquired existing portfolios of vacation ownership mortgages receivable. These loans are accounted for using the expected cash flows method of recognizing discount accretion based on the acquired loans’ expected cash flows pursuant to ASC 310-30, “Loans acquired with deteriorated credit quality.” At acquisition, we recorded these acquired loans at fair value, including a credit discount or premium, as applicable, which is accreted as an adjustment to yield over the loans’ estimated life. Originated loans as of ~~March~~June 3130, 2018 and December 31, 2017 represent vacation ownership mortgages receivable originated by ILG, or more specifically our Vacation Ownership segment, subsequent to the acquisitions of HVO and Vistana on October 1, 2014 and May 11, 2016, respectively.

21Vacation ownership mortgages receivable carrying amounts as of June 30, 2018 and December 31, 2017 were as follows (in millions):

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	June 30,						December 31,
	2018						2017
	Securitized		Unsecuritized(2)		Total		Securitized		Unsecuritized(2)		Total
Acquired vacation ownership mortgages receivable(1)	$	283	$	35	$	318	$	345	$	38	$	383
Originated vacation ownership mortgages receivable(1)		231		266		497		251		163		414
Less: allowance for impairment on acquired loans		(6)		(1)		(7)		(4)		(1)		(5)
Less: allowance for losses on originated loans		(29)		(45)		(74)		(33)		(22)		(55)
Net vacation ownership mortgages receivable	$	479	$	255	$	734	$	559	$	178	$	737

originated by ILG, or more specifically our Vacation Ownership segment, subsequent to the acquisitions of HVO and Vistana on October 1, 2014 and May 11, 2016, respectively.

Vacation ownership mortgages receivable carrying amounts as of March 31, 2018 and December 31, 2017 were as follows (in millions):

	March 31,						December 31,
	2018						2017
	Securitized		Unsecuritized(2)		Total		Securitized		Unsecuritized(2)		Total
Acquired vacation ownership mortgages receivable(1)	$	313	$	37	$	350	$	345	$	38	$	383
Originated vacation ownership mortgages receivable(1)		239		213		452		251		163		414
Less: allowance for impairment on acquired loans		(5)		(1)		(6)		(4)		(1)		(5)
Less: allowance for losses on originated loans		(29)		(34)		(63)		(33)		(22)		(55)
Net vacation ownership mortgages receivable	$	518	$	215	$	733	$	559	$	178	$	737

(1)

At various interest rates with varying payment terms through 2032 for acquired receivables and for originated receivables.

(2) As of ~~March~~June 3130, 2018, $1113 million of unsecuritized vacation ownership receivables were not eligible for securitization.

The fair value of our acquired loans as of the respective acquisition dates was determined by use of a discounted cash flow approach which calculates a present value of expected future cash flows based on scheduled principal and interest payments over the term of the respective loans, while considering anticipated defaults and early repayments determined based on historical experience. Consequently, the fair value of these acquired loans recorded on our condensed consolidated balance sheet as of the acquisition date included an estimate for future loan losses which becomes the historical cost basis for that existing portfolio going forward. As of ~~March~~June 3130, 2018 and December 31, 2017, the contractual outstanding balance of the acquired loans, which represents contractually-owed future principal amounts, was $~~260~~227 million and $296 million, respectively.

The table below (in millions) presents a rollforward from December 31, 2017 of the accretable yield (interest income) expected to be earned related to our acquired loans, as well as the amount of non-accretable difference at the end of the period. Nonaccretable difference represents estimated contractually required payments in excess of estimated ~~cash flows expected to be collected. The accretable yield represents the excess of estimated cash flows expected to be collected over the carrying amount of the acquired loans.~~

	Three Months Ended
Accretable Yield	March 31, 2018
Balance, beginning of period	$	99
Accretion		(11)
Reclassification from nonaccretable difference		(2)
Balance, end of period	$	86
Nonaccretable difference, end of period balance	$	30

The accretable yield is recognized into interest income (within consolidated revenue) over the estimated life of the acquired loans using the level yield method. The accretable yield may change in future periods due to changes in the anticipated remaining life of the acquired loans, which may alter the amount of future interest income expected to be

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cash flows expected to be collected,. ~~and~~The ~~changes~~accretable inyield ~~expected~~represents ~~future~~the ~~principal~~excess ~~and~~of ~~interest~~estimated cash ~~collections~~flows ~~which~~expected ~~impact~~to be collected over the ~~nonaccretable~~carrying ~~difference~~amount of the acquired loans.

Vacation ownership mortgages receivable as of March 31, 2018 are scheduled to mature as follows (in millions):


	Six Months Ended
Accretable Yield	June 30, 2018
Balance, beginning of period	$	99
Accretion		(21)
Reclassification from nonaccretable difference		(2)
Balance, end of period	$	76
Nonaccretable difference, end of period balance	$	29

	Vacation Ownership Mortgages Receivable
	Acquired				Originated
Twelve month period ending March 31,	Securitized Loans		Unsecuritized Loans		Securitized Loans		Unsecuritized Loans		Total
2019	$	35	$	4	$	15	$	17	$	71
2020		34		3		17		13		67
2021		33		4		19		14		70
2022		31		3		22		16		72
2023		28		3		24		18		73
2024 and thereafter		73		9		142		135		359
Total		234		26		239		213		712
Plus: net premium on acquired loans(1)		79		11		—		—		90
Less: allowance for impairment on acquired loans		(5)		(1)		—		—		(6)
Less: allowance for losses on originated loans		—		—		(29)		(34)		(63)
Net vacation ownership mortgages receivable	$	308	$	36	$	210	$	179	$	733
Weighted average stated interest rate as of March 31, 2018		13.3%				13.5%
Range of stated interest rates as of March 31, 2018		8.00% to 15.90%				9.90% to 15.90%

~~(1)~~ Vacation ~~The~~ownership ~~difference~~mortgages ~~between~~receivable ~~the contractual principal amount of acquired loans of $260 million and the net carrying amount of $344 million~~ as of ~~March~~June 3130, 2018 isare ~~related~~scheduled to ~~the~~mature ~~application~~as offollows ~~ASC~~(in ~~310-30.~~millions):


	Vacation Ownership Mortgages Receivable
	Acquired				Originated
Twelve month period ending June 30,	Securitized Loans		Unsecuritized Loans		Securitized Loans		Unsecuritized Loans		Total
2019	$	31	$	4	$	16	$	19	$	70
2020		31		3		17		16		67
2021		30		3		19		18		70
2022		28		3		22		20		73
2023		25		2		24		22		73
2024 and thereafter		59		8		133		171		371
Total		204		23		231		266		724
Plus: net premium on acquired loans(1)		79		12		—		—		91
Less: allowance for impairment on acquired loans		(6)		(1)		—		—		(7)
Less: allowance for losses on originated loans		—		—		(29)		(45)		(74)
Net vacation ownership mortgages receivable	$	277	$	34	$	202	$	221	$	734
Weighted average stated interest rate as of June 30, 2018		13.3%				13.5%
Range of stated interest rates as of June 30, 2018		8.00% to 15.90%				9.90% to 15.90%

(1)

The difference between the contractual principal amount of acquired loans of $227 million and the net carrying amount of $311 million as of June 30, 2018 is related to the application of ASC 310-30.

Collectability

We assess our vacation ownership mortgages receivable portfolio of loans for collectability on an aggregate basis. Estimates of uncollectability pertaining to our originated loans are recorded as provisions in the vacation ownership mortgages receivable allowance for loan losses. For originated loans, we record an estimate of uncollectability as a reduction of sales of vacation ownership products in the accompanying condensed consolidated statements of income at the time revenue is recognized on a vacation ownership product sale. We evaluate our originated loan portfolio collectively as it is comprised of homogeneous, smaller-balance, vacation ownership mortgages receivable. We use a technique referred to as static pool analysis, which tracks uncollectibles over the entire life of those mortgages receivable, as the basis for determining our general reserve requirements on our vacation ownership mortgages receivable. The adequacy of the related allowance is determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio, including defaults, aging, and historical write-offs of these receivables. The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio. As of March 31, 2018, an allowance for loan losses of $63 million for uncollectability was recorded against our vacation ownership mortgages receivable for estimated losses related solely to our originated loans. Our allowance for loan losses as of December 31, 2017 was $55 million; the change in 2018 principally pertains to additional loan loss provision recorded against sales of VO products on our condensed consolidated income statement during the period and adjusted through our periodic static pool analysis. This analysis tracks uncollectibles over the entire life of those mortgages receivable, and forms the basis for determining our general reserve requirements on our originated VO mortgages receivable.

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factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio, including defaults, ~~used~~aging, inand historical write-offs of these receivables. The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the ~~remeasurements~~mortgage portfolio. As of June 30, 2018, an allowance for loan losses of $74 million for uncollectability was recorded against our ~~acquired~~vacation ownership mortgages receivable for estimated losses related solely to our originated loans. Our allowance for loan losses as of December 31, 2017 was $55 million; the change in 2018 principally pertains to beadditional ~~adequate~~loan ~~and~~loss ~~based~~provision recorded against sales of VO products on ~~the~~our ~~economic~~condensed ~~environment~~consolidated income statement during the period and adjusted through our ~~assessment~~periodic ofstatic pool analysis. This analysis tracks uncollectibles over the ~~future~~entire ~~collectability~~life of those mortgages receivable, and forms the ~~outstanding~~basis ~~loans~~for determining our general reserve requirements on our originated VO mortgages receivable.

Our acquired loans are remeasured at period end based on expected future cash flows which uses an estimated measure of anticipated defaults. We consider the allowance for loan losses on our originated loans and estimates of defaults used in the remeasurements of our acquired loans to be adequate and based on the economic environment and our assessment of the future collectability of the outstanding loans.

We use the origination of the notes by brand (Hyatt, Sheraton, Westin and other) and the FICO scores of the buyers as the primary credit quality indicators to calculate the allowance for loan losses for our originated vacation ownership mortgages receivable, as we believe there is a relationship between the default behavior of borrowers and the brand associated with the vacation ownership property they have acquired, supplemented by the FICO scores of the buyers. In addition to quantitatively calculating the allowance based on our static pool analysis, we supplement the process by evaluating certain qualitative data, including the aging of the respective receivables, current default trends by brand and origination year and various macroeconomic indicators.

At ~~March~~June 3130, 2018, the weighted average FICO score within our consolidated loan pools was ~~712~~711 based upon the outstanding loan balance at time of origination. The average estimated rate for all future defaults for our consolidated outstanding pool of loans as of ~~March~~June 3130, 2018 was 11.48%.

Balances of our vacation ownership mortgages receivable by brand and by FICO score (at time of loan origination) were as follows (in millions):

		As of March 31, 2018
		As of June 30, 2018
	700+		600-699		<600		No Score(1)		Total
Westin	$	~~205~~209	$	9799	$	57	$	3230	$	~~339~~345
Sheraton		~~175~~178		~~153~~152		1721		69		~~414~~420
Hyatt		2324		14		2		1		4041
Other		5		1		-—		3		9
Vacation ownership mortgages receivable, gross	$	~~408~~416	$	~~265~~266	$	2430	$	~~105~~103	$	~~802~~815

(1)

Mortgages receivable with no FICO score primarily relate to non-U.S. resident borrowers.

On an ongoing basis, we monitor credit quality of our vacation ownership mortgages receivable portfolio based on payment activity as follows:

Current—The consumer’s note is in good standing as payments and reporting are current per the terms contractually stipulated in the agreement.

Delinquent—We consider a vacation ownership mortgage receivable to be delinquent based on the contractual terms of each individual financing agreement.

· Non‑performing—Our vacation ownership mortgages receivable are generally considered non‑performing if interest or principal is more than 30 days past due. All non‑performing loans are placed on non‑accrual status and we do not resume interest accrual until the receivable becomes contractually current. We apply ~~payments we receive for vacation ownership notes receivable on non‑performing status first to interest, then to principal, and any remainder to fees.~~

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~~balance~~payments ofwe VOreceive ~~mortgages~~for ~~receivable~~vacation ~~greater~~ownership ~~than~~notes ~~120 days~~receivable ~~past~~on non‑~~due,~~performing asstatus offirst ~~March~~to 31interest, ~~2018~~then ~~and~~to ~~December 31~~principal, ~~2017,~~and ~~for~~any ~~our~~remainder ~~originated~~to ~~loans are as follows (in millions):~~ fees.

					Delinquent							Defaulted(1)
	Receivables		Current		30-59 Days		60-89 Days		90-119 Days		≥120			Total Delinquent & Defaulted
Originated Loans
March 31, 2018	$	452	$	431	$	6	$	3	$	3	$	9	$	21
December 31, 2017	$	414	$	394	$	6	$	5	$	3	$	6	$	20

In the event of a default, we generally have the right to recover the mortgaged VOIs and consider loans to be in default upon reaching 120 days outstanding. Our aged analysis of delinquent VO mortgages receivable and the gross balance of VO mortgages receivable greater than 120 days past‑due, as of June 30, 2018 and December 31, 2017, for our originated loans are as follows (in millions):


					Delinquent							Defaulted(1)
	Receivables		Current		30-59 Days		60-89 Days		90-119 Days		≥120			Total Delinquent & Defaulted
Originated Loans
June 30, 2018	$	497	$	474	$	6	$	4	$	3	$	10	$	23
December 31, 2017	$	414	$	394	$	6	$	5	$	3	$	6	$	20

(1)

Mortgages receivable equal to or greater than 120 days are considered defaulted and have been fully reserved in our allowance of loan losses for originated loans.

NOTE 6—VACATION OWNERSHIP INVENTORY

Our inventory consists of completed unsold vacation ownership interests, with an operating cycle that generally exceeds twelve months, and vacation ownership projects under construction. On our condensed consolidated balance sheet, completed unsold vacation ownership interests are presented as a current asset, while vacation ownership projects under construction are presented as a non-current asset given this inventory is in the development stage of its operating cycle.

As of ~~March~~June 3130, 2018 and December 31, 2017, vacation ownership inventory is comprised of the following (in millions):

	March 31,		December 31,
	June 30,		December 31,
	2018		2017
Completed unsold vacation ownership interests (current asset)	$	~~493~~483	$	492
Vacation ownership projects construction in process (non-current asset)		6072		60
Other		43		4
Total vacation ownership inventory	$	~~557~~558	$	556

Inventory as of ~~March~~June 3130, 2018 remained relatively consistent with our balance as of December 31, 2017. ~~This~~The ~~quarter’s~~year-to-date inventory activity reflects our ongoing development activities primarily pertaining to our Sheraton Kauai Resort and The Westin Resort and Spa, Cancun, the rebuilding work at The Westin St. John Resort Villas, and an additional phase at the Hyatt Residence Club Bonita Springs, Coconut Plantation; among other resorts to a lesser extent.

NOTE 7—INVESTMENTS IN UNCONSOLIDATED ENTITIES

Our investments in unconsolidated entities, recorded under the equity method of accounting in accordance with guidance in ASC 323, “Investments—Equity Method and Joint Ventures,” primarily consists of an ownership interest in Maui Timeshare Venture, LLC, a joint venture to develop and operate a Hyatt-branded vacation ownership resort in Hawaii, and Vistana’s Harborside at Atlantis joint venture which performs sales, marketing and management services for a vacation ownership resort in the Bahamas. Our equity income from investments in unconsolidated entities, recorded in equity in earnings from unconsolidated entities in the accompanying condensed consolidated statement of income, was $1a ~~million~~negligible amount and $21 million for the three months ended ~~March~~June 3130, 2018 and 2017, and $1 million and $3 million for the six month period ending June 30, 2018 and 2017, respectively.

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Our ownership percentages of the Maui Timeshare Venture and Harborside investments are 33% and 50%, respectively, and ownership percentage of the other investments is 25%. The carrying value of our investments in unconsolidated entities as of ~~March~~June 3130, 2018 and December 31, 2017 were as follows (in millions):

	March 31,		December 31,
	June 30,		December 31,
	2018		2017
Maui Timeshare Venture, LLC	$	42	$	42
Harborside at Atlantis		1112		11
Other		1—		2
Total investments in unconsolidated entities	$	54	$	55

NOTE 8—PROPERTY AND EQUIPMENT

Property and equipment, net is as follows (in millions):

	March 31,		December 31,
	June 30,		December 31,
	2018		2017
Computer equipment	$	4447	$	43
Capitalized software (including internally developed software)		~~182~~189		177
Land, buildings and leasehold improvements		~~443~~444		431
Land held for development		56		56
Furniture, fixtures and other equipment		7678		72
Construction projects in progress		2120		20
Other projects in progress		3726		40
Total property and equipment		~~859~~860		839
Less: accumulated depreciation and amortization		(~~238~~254)		(223)
Total property and equipment, net	$	~~621~~606	$	616

The increase in total property and equipment as of ~~March~~June 3130, 2018 from December 31, 2017 is in large part attributable to our development activities. These pertain to the development of assets primarily used to support marketing and sales activities and resort operations at the Sheraton Kauai Resort and The Westin Resort and Spa, Cancun~~, in addition to ongoing rebuilding of The Westin St~~. ~~John Resort Villas.~~ The increase to total property and equipment was ~~partly~~more than offset by transfers to inventory (non-current) related to the conversion of the Sheraton Kauai Resort and depreciation and amortization in normal course.

NOTE 9—GOODWILL AND OTHER INTANGIBLE ASSETS

Pursuant to FASB guidance as codified within ASC 350, “Intangibles—Goodwill and Other,” goodwill acquired in business combinations is assigned to the reporting unit(s) expected to benefit from the combination as of the acquisition date.

ILG is comprised of two operating and reportable segments: Vacation Ownership and Exchange and Rental, each of which contain two reporting units as follows:


OPERATING SEGMENTS
Vacation Ownership		Exchange and Rental
VO management reporting unit		Exchange reporting unit
VO sales and financing reporting unit		Rental reporting unit

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The following tables present the balance of goodwill by reporting unit, including the changes in carrying amount of goodwill, as of ~~March~~June 3130, 2018 and December 31, 2017 (in millions):

							Foreign
	Balance as of						Currency		Goodwill		Balance as of
	January 1, 2018		Additions		Deductions		Translation		Impairment		~~March~~June 3130, 2018
VO management	$	37	$	—	$	—	$	1—	$	—	$	3837
VO sales and financing		11		—		—		—		—		11
Exchange		496		—		—		—		—		496
Rental		20		—		—		—		—		20
Total goodwill	$	564	$	—	$	—	$	1—	$	—	$	~~565~~564


							Foreign
	Balance as of						Currency		Goodwill		Balance as of
	January 1, 2017		Additions		Deductions		Translation		Impairment		December 31, 2017
VO management	$	35	$	—	$	—	$	2	$	—	$	37
VO sales and financing		7		4		—		—		—		11
Exchange		496		—		—		—		—		496
Rental		20		—		—		—		—		20
Total goodwill	$	558	$	4	$	—	$	2	$	—	$	564

The ~~$1 million~~negligible increase in our goodwill balance as of ~~March~~June 3130, 2018 from December 31, 2017 is related to foreign currency translation of goodwill carried on the books of an ILG entity whose functional currency is not the US dollar.

Other Intangible Assets

The balance of other intangible assets, net as of ~~March~~June 3130, 2018 and December 31, 2017 is as follows (in millions):

	March 31,		December 31,
	June 30,		December 31,
	2018		2017
Intangible assets with indefinite lives	$	~~123~~118	$	120
Intangible assets with definite lives, net		~~315~~310		320
Total intangible assets, net	$	~~438~~428	$	440

The $32 million ~~increase~~decrease in our indefinite‑lived intangible assets during the ~~three~~six months ended ~~March~~June 3130, 2018 pertains to associated foreign currency translation of intangible assets carried on the books of an ILG entity whose functional currency is not the US dollar.

At ~~March~~June 3130, 2018 and December 31, 2017, intangible assets with indefinite lives relate to the following (in millions):

		March 31,		December 31,
		June 30,		December 31,
		2018		2017
Resort management contracts	$	7974	$	76
Trade names and trademarks		44		44
Total intangible assets with indefinite lives	$	~~123~~118	$	120

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At ~~March~~June 3130, 2018, intangible assets with definite lives relate to the following (in millions):

	Cost		Accumulated Amortization		Net
Customer relationships	$	287	$	(~~145~~146)	$	~~142~~141
Purchase agreements		76		(76)		—
Resort management contracts		246		(7477)		~~172~~169
Technology		25		(25)		—
Other		23		(2223)		1—
Total intangible assets with definite lives	$	657	$	(~~342~~347)	$	~~315~~310

At December 31, 2017, intangible assets with definite lives relate to the following (in millions):



	Cost		Accumulated Amortization		Net
Customer relationships	$	287	$	(143)	$	144
Purchase agreements		76		(76)		—
Resort management contracts		246		(71)		175
Technology		25		(25)		—
Other		23		(22)		1
Total intangible assets with definite lives	$	657	$	(337)	$	320

In accordance with our policy on the recoverability of long‑lived assets, we review the carrying value of all long‑lived assets, primarily property and equipment and definite‑lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of a long‑lived asset (asset group) may be impaired. For the ~~three~~six months ended ~~March~~June 3130, 2018 and the year ended December 31, 2017, we did not identify any events or changes in circumstances indicating that the carrying value of a long-lived asset (or asset group) may be impaired; accordingly, a recoverability test was not warranted.

Amortization of intangible assets with definite lives is primarily computed on a straight‑line basis. Total amortization expense for intangible assets with definite lives was $5 million for the three months ended ~~March~~June 3130, 2018 and 2017, respectively, and $10 million for the six months ended June 30, 2018 and 2017, respectively. Based on the ~~March~~June 3130, 2018 balances, amortization expense for the next five years and thereafter is estimated to be as follows (in millions):

Twelve month period ending March 31,
Twelve month period ending June 30,
2019	$	20
2020		19
2021		19
2022		1615
2023		14
2024 and thereafter		~~227~~223
	$	~~315~~310

NOTE 10—CONSOLIDATED VARIABLE INTEREST ENTITIES

We have variable interests in the entities associated with Vistana’s three outstanding securitization transactions. As these securitizations consist of similar, homogenous loans, they have been aggregated for disclosure purposes. We applied the variable interest model and determined we are the primary beneficiary of these VIEs and, accordingly, these VIEs are consolidated in our results. In making that determination, we evaluated the activities that significantly impact the economics of the VIEs, including the management of the securitized vacation ownership mortgages receivable and ~~any related non-performing loans. We are the servicer of the securitized vacation ownership mortgages receivable. We~~

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any related non-performing loans. We are the servicer of the securitized vacation ownership mortgages receivable. We also have the option, subject to certain limitations, to repurchase or replace vacation ownership mortgages receivable that are in default at their outstanding principal amounts. Historically, Vistana has been able to resell the vacation ownership products underlying the vacation ownership mortgages repurchased or replaced under these provisions without incurring significant losses. We also hold the risk of potential loss (or gain), as we are the last to be paid out by proceeds of the VIEs under the terms of the agreements. As such, we hold both the power to direct the activities of the VIEs and obligation to absorb the losses (or benefits) from the VIEs.

The securitization agreements are without recourse to us, except for breaches of representations and warranties with material adverse effect to the holders. We have the right to substitute loans for, or repurchase, defaulted loans at our option, subject to certain limitations. Based on industry practice and our past practices, we currently expect that we will exercise this option.

The following table shows assets which are collateral for the related obligations of the variable interest entities, included in our condensed consolidated balance sheets (in millions):

	Vacation Ownership Notes Receivable Securitization (1)
	March 31,		December 31,
	June 30,		December 31,
	2018		2017
Assets
Restricted cash	$	1918	$	20
Interest receivable		3		4
Vacation ownership mortgages receivable, net		~~518~~479		559
Total	$	~~540~~500	$	583
Liabilities
Interest payable	$	1	$	1
Securitized debt		~~530~~489		575
Total	$	~~531~~490	$	576

(1)

The creditors of these entities do not have general recourse to us.

Upon transfer of vacation ownership mortgages receivable, net to the VIEs, the receivables and certain cash flows derived from them become restricted for use in meeting obligations to the VIE creditors. The VIEs utilize trusts which have ownership of cash balances that also have restrictions, the amounts of which are reported in our restricted cash. Our interests in trust assets are subordinate to the interests of third-party investors and, as such, may not be realized by us if needed to absorb deficiencies in cash flows that are allocated to the investors in the trusts' debt. Unless we exceed certain triggers related to default levels and collateralization of the securitized pool, we are contractually entitled to receive the excess cash flows (spread between the collections on the mortgages and payment of third party obligations and debt service on the trusts’ debt defined in the securitization agreements) from the VIEs. Such activity totaled $1530 million ~~from~~for ~~December~~the ~~31,~~six ~~2017~~months ~~through~~ended ~~March~~June 3130, 2018.

The net cash flows generated by the VO mortgages receivable in the VIEs are used to repay our securitized debt from VIEs and, excluding any restricted cash balances, are reflected in the operating activities section of our condensed consolidated statements of cash flows. Proceeds and repayments pertaining to our securitized debt from VIEs is reflected in the financing activities section of our combined statements of cash flows. Refer to Note 13 for additional discussion on our securitized debt from VIEs.

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NOTE 11—ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

The following table summarizes the general components of accrued expenses and other current liabilities (in millions):

	March 31,		December 31,
	June 30,		December 31,
	2018		2017
General accrued expenses	$	~~100~~97	$	82
Accrued other taxes		2120		19
Customer deposits		8589		76
Accrued membership-related costs		1920		17
Accrued construction costs		1824		15
Member deposits		6		6
Total accrued expenses and other current liabilities	$	~~249~~256	$	215

NOTE 12—DEFERRED REVENUE

The following table summarized the general components of deferred revenue (in millions):

	March 31,		December 31,
	June 30,		December 31,
	2018		2017
Deferred membership-related revenue	$	~~201~~177	$	152
HOAs		9469		76
Other		13		10
Total deferred revenue	$	~~308~~259	$	238

Deferred membership-related revenue primarily relates to membership fees from our Exchange and Rental segment, which are deferred and recognized over the terms of the applicable memberships, typically ranging from one to five years, on a straight-line basis. HOAs deferred revenue predominantly pertains to maintenance fees collected from their respective owners which are earned over the applicable maintenance period.

Other deferred revenue pertains primarily to annual maintenance fees collected in our European VO management business which are not yet earned.

NOTE 13—SECURITIZED VACATION OWNERSHIP DEBT

As discussed in Note 10, the VIEs associated with the securitization of our VOI mortgages receivable are consolidated in our financial statements. Securitized vacation ownership debt consisted of the following (in millions):

	March 31,		December 31,
	June 30,		December 31,
	2018		2017
2012 securitization, interest rates ranging from 2.00% to 2.76%, maturing 2023	$	3027	$	33
2016 securitization, interest rates ranging from 2.54% to 2.74%, maturing 2026		~~224~~203		244
2017 securitization, interest rates ranging from 2.33% to 2.93%, maturing 2029		~~282~~265		305
Unamortized debt issuance costs (2016 & 2017 securitization)		(6)		(7)
Total securitized vacation ownership debt, net of debt issuance costs	$	~~530~~489	$	575

On September 22, 2017, we completed a term securitization transaction involving the issuance of $325 million of asset-backed notes. An indirect wholly-owned subsidiary of Vistana issued $240 million of Class A notes, $59 million of Class B notes and $26 million of Class C notes. The notes are backed by vacation ownership loans and have coupons of 2.33%, 2.63% and 2.93%, respectively, for an overall weighted average coupon of 2.43%. The advance rate for this transaction was approximately 97%.

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During the three and six months ended ~~March~~June 3130, 2018 ~~and 2017~~, interest expense associated with securitized vacation ownership debt totaled $43 million and $37 million, respectively, and totaled $2 million and $5 million during the three and six months ended June 30, 2017, respectively, and is reflected within consumer financing expenses in our condensed consolidated statements of income. The securitized debt is non-recourse with no contractual minimum repayment amounts throughout its term. The amount of each principal payment is contingent on the cash flows from the underlying vacation ownership notes in a given period. Refer to Note 5 for the stated maturities of our securitized vacation ownership notes receivable, which provide an indication of the potential repayment pattern before the impact of any prepayments or defaults.

As of the ~~March~~June 3130, 2018 and December 31, 2017, total unamortized debt issuance costs pertaining to the 2016 and 2017 securitizations were $6 million and $7 million, respectively, which is presented as a reduction of securitized debt from VIEs in the accompanying condensed consolidated balance sheets. Unamortized debt issuance costs pertaining to our securitized debt are amortized to interest expense using the effective interest method through the estimated life of the respective debt instruments.

NOTE 14—LONG-TERM DEBT

Long‑term debt is as follows (in millions):

	March 31,		December 31,
	June 30,		December 31,
	2018		2017
Revolving credit facility (interest rate of 3.46% at March 31, 2018 and of 3.10% at December 31, 2017)	$	220	$	220
Revolving credit facility (interest rate of 3.78% at June 30, 2018 and of 3.10% at December 31, 2017)	$	205	$	220
5.625% senior notes		350		350
Unamortized debt issuance costs (revolving credit facility)		(2)		(3)
Unamortized debt issuance costs (senior notes)		(5)		(5)
Total long-term debt, net of debt issuance costs	$	~~563~~548	$	562

Credit Facility

As of ~~March~~June 3130, 2018, there was $~~220~~205 million outstanding with $~~366~~382 million available to be drawn under our revolving credit facility, net of any letters of credit. Any principal amounts outstanding under the revolving credit facility are due at maturity in May 2021. The interest rate on the amended credit agreement is based on (at our election) either LIBOR plus a predetermined margin that ranges from 1.25% to 2.5%, or the Base Rate as defined in the amended credit agreement plus a predetermined margin that ranges from 0.25% to 1.5%, in each case based on our consolidated total leverage ratio. At ~~March~~June 3130, 2018, the applicable margin was 1.75% per annum for LIBOR revolving loans and 0.75% per annum for Base Rate loans. The amended credit agreement has a commitment fee on undrawn amounts that ranges from 0.25% to 0.40% per annum based on our leverage ratio and the commitment fee was 0.275% at quarter end.

Pursuant to the amended credit agreement, all obligations under the revolving credit facility are unconditionally guaranteed by ILG and certain of its subsidiaries. Borrowings are further secured by (1) 100% of the voting equity securities of ILG’s U.S. subsidiaries and 65% of the equity in our first‑tier foreign subsidiaries and (2) substantially all of our domestic tangible and intangible property.

Senior Notes

As of ~~March~~June 3130, 2018, total unamortized debt issuance costs relating to our $350 million of 5.625% senior notes due in 2023 were $5 million, which are presented as a direct deduction from the principal amount. Interest on the senior notes is paid semi-annually in arrears on April 15 and October 15 of each year. The senior notes are unsecured and fully and unconditionally guaranteed on a joint and several basis by our domestic subsidiaries that are required to guarantee the amended credit facility. Additionally, the voting stock of the issuer and the subsidiary guarantors is 100% owned by ILG. The senior notes are redeemable from April 15, 2018 at a redemption price starting at 104.219% which declines over time.

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Restrictions and Covenants

The senior notes and amended credit agreement have various financial and operating covenants that place significant restrictions on us, including our ability to incur additional indebtedness, incur additional liens, issue redeemable stock and preferred stock, pay dividends or distributions or redeem or repurchase capital stock, prepay, redeem or repurchase debt, make loans and investments, enter into agreements that restrict distributions from our subsidiaries, sell assets and capital stock of our subsidiaries, enter into certain transactions with affiliates and consolidate or merge with or into or sell substantially all of our assets to another person.

The indenture governing the senior notes restricts our ability to issue additional debt in the event we are not in compliance with the minimum fixed charge coverage ratio of 2.0 to 1.0 and limits restricted payments and investments unless we are in compliance with the minimum fixed charge coverage ratio and the amount is within a bucket that grows with our consolidated net income. We met the minimum fixed charge coverage ratio as of ~~March~~June 3130, 2018. In addition, the amended credit agreement requires us to meet certain financial covenants regarding the maintenance of a maximum consolidated secured leverage ratio of consolidated secured debt, over consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), as defined. We are also required to maintain a minimum consolidated interest coverage ratio of consolidated EBITDA over consolidated interest expense. As of ~~March~~June 3130, 2018, the maximum consolidated secured leverage ratio was 3.25x and the minimum consolidated interest coverage ratio was 3.0x. ILG was in compliance in all material respects with the requirements of all applicable financial and operating covenants, and our consolidated secured leverage ratio and consolidated interest coverage ratio under the amended credit agreement were 0.6863 and 13.3609, respectively.

Interest Expense and Debt Issuance Costs

Interest expense for each of the three months ended ~~March~~June 3130, 2018 and 2017 was $7 million, and for the six months ended June 30, 2018 and 2017 was $515 million and $12 million, respectively. Interest expense is net of a capitalized interest which was negligible ~~amount~~for ofthe ~~capitalized~~three ~~interest~~months ended June 30, 2018 and $21 million offor ~~capitalized~~the six months ended June 30, 2018, primarily relating to our vacation ownership projects under development and internally-developed software. Capitalized interest was $1 million and $3 million for the three months ended ~~March~~and ~~31,~~six ~~2018~~months ~~and~~ended June 30, 2017, respectively.

As of ~~March~~June 3130, 2018, total unamortized debt issuance costs were $7 million, net of $8 million of accumulated amortization, incurred in connection with the issuance and various amendments to our amended credit agreement, the issuance of our senior notes in April 2015 and the exchange for registered notes in June 2016. As of December 31, 2017, total unamortized debt issuance costs were $8 million, net of $7 million of accumulated amortization. Unamortized debt issuance costs are presented as a reduction of long-term debt in the accompanying condensed consolidated balance sheets, pursuant to ASU 2015-03. These costs are amortized to interest expense through the maturity date of our respective debt instruments using the effective interest method for those costs related to our senior notes, and on a straight-line basis for costs related to our amended credit agreement.

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NOTE 15—FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

The estimated fair value of financial instruments below has been determined using available market information and appropriate valuation methodologies, as applicable. There have been no changes in the methods and significant assumptions used to estimate the fair value of financial instruments during the ~~three~~six months ended ~~March~~June 3130, 2018. Our financial instruments are detailed in the following table.

	March 31, 2018				December 31, 2017
	June 30, 2018				December 31, 2017
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(In millions)
Cash and cash equivalents	$	~~158~~143	$	~~158~~143	$	122	$	122
Restricted cash and cash equivalents		~~256~~219		~~256~~219		230		230
Financing receivables		37		37		36		36
Vacation ownership mortgages receivable		~~733~~734		~~781~~786		737		770
Investments in marketable securities		138		138		13		13
Securitized debt		~~530~~489		~~524~~482		575		563
Revolving credit facility(1)		~~(218)~~203		~~(220)~~205		(217)		(220)
Senior notes(1)		(345)		~~(359)~~353		(345)		(364)

(1) The carrying value of our revolving credit facility and senior notes as of ~~March~~June 3130, 2018 include $2 million and $5 million of unamortized debt issuance costs, respectively, and $3 million and $5 million as of December 31, 2017, which are presented as a direct reduction of the corresponding liability.

The carrying amounts of cash and cash equivalents and restricted cash and cash equivalents reflected in the accompanying condensed consolidated balance sheets approximate fair value as they are redeemable at par upon notice or maintained with various high‑quality financial institutions and have original maturities of three months or less. Under the fair value hierarchy established in ASC 820, cash and cash equivalents and restricted cash and cash equivalents are stated at fair value based on quoted prices in active markets for identical assets (Level 1).

The financing receivables as of ~~March~~June 3130, 2018 are presented in our condensed consolidated balance sheet within other non‑current assets and principally pertain to financing receivables issued to individual purchasers by our consolidated Great Destinations joint-venture as part of their VOI reselling activities, as well as a convertible secured loan to CLC that matures October 2019 with interest payable monthly. The outstanding CLC loan is to be repaid in full at maturity either in cash or by means of a share option exercisable by ILG, at its sole discretion. The carrying value of these financing receivables approximate fair value through inputs inherent to the originating value of these loans, such as interest rates and ongoing credit risk accounted for through non‑recurring adjustments for estimated credit losses as necessary (Level 2). The stated interest rates on these financing receivables are comparable to their respective market rates. In our condensed consolidated income statement, interest on the CLC loan is recognized within our “Interest income” line item, while interest from our Great Destinations financing receivables is recognized as revenue within our “Consumer financing” line item.

We estimate the fair value of vacation ownership mortgages receivable using a discounted cash flow model. We believe this is comparable to the model that an independent third party would use in the current market. Our model incorporates default rates, prepayment rates, coupon rates and loan terms respective to the portfolio based on current market assumptions for similar types of arrangements. Based upon the availability of market data, we have classified inputs used in the valuation of our vacation ownership mortgages receivable as Level 3. The primary sensitivity in these assumptions relates to forecasted defaults and projected prepayments which could cause the estimated fair value to vary. These loans are secured by the underlying VOI.

Investments in marketable securities consist of marketable securities (mutual funds) related to deferred compensation plans which are funded in a Rabbi trust as of ~~March~~June 3130, 2018 and December 31, 2017 and classified as other

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~~other~~ noncurrent assets in the accompanying condensed consolidated balance sheets. Participants in the deferred compensation plan unilaterally determine how their compensation deferrals are invested within the confines of the Rabbi trust which holds the marketable securities. Consequently, management has designated these marketable securities as trading investments, as allowed by applicable accounting guidance, even though there is no intent by ILG to actively buy or sell securities with the objective of generating profits on short‑term differences in market prices. These marketable securities are recorded at a fair value of $138 million atand ~~each~~$13 ofmillion ~~March~~at 31June 30, 2018 and December 31, 2017, respectively, based on quoted market prices in active markets for identical assets (Level 1). We recognized a negligible amount of unrealized trading loss for the three and six months ended ~~March~~June 3130, 2018. These unrealized trading losses have an accompanying offsetting adjustment to employee compensation expense and are each included within general and administrative expenses in the accompanying condensed consolidated statement of income. See Note 17 for further discussion in regard to this deferred compensation plan.

Our non-public, securitized debt fair value is determined based upon discounted cash flows for the debt using Level 3 inputs such as rates deemed reasonable for the type of debt, prevailing market conditions and the length of maturity for the debt.

Borrowings under our senior notes (issued April 2015) and revolving credit facility are carried at historical cost and adjusted for principal payments. The fair value of our senior notes was estimated at ~~March~~June 3130, 2018 and December 31, 2017 using an input of quoted prices from an inactive market due to the infrequency at which trades occur on our senior notes (Level 2). The carrying value of the outstanding balance under our revolving credit facility, exclusive of debt issuance costs, approximates fair value as of ~~March~~June 3130, 2018 and December 31, 2017 through inputs inherent to the debt such as variable interest rates and credit risk (Level 2).

NOTE 16—EQUITY

ILG has 300 million authorized shares of common stock, par value of $0.01 per share. At ~~March~~June 3130, 2018, there were 134.34 million shares of ILG common stock issued, of which 124.34 million are outstanding with 10.0 million shares held as treasury stock. At December 31, 2017, there were 134.1 million shares of ILG common stock issued, of which 124.1 million were outstanding with 10.0 million shares held as treasury stock.

ILG has 25 million authorized shares of preferred stock, par value of $0.01 per share, none of which are issued or outstanding as of ~~March~~June 3130, 2018 and December 31, 2017. The Board of Directors has the authority to issue the preferred stock in one or more series and to establish the rights, preferences and dividends.

In connection with the acquisition of Vistana in May 2016, we issued 72.4 million shares of ILG common stock, valued at $1 billion as of the acquisition date, to the holders who received Vistana common stock in the spin-off from its former parent.

Dividend Declared

In February 2018, our Board of Directors declared a quarterly dividend payment of $0.175 per share paid in March 2018 of $22 million. In May 2018, our Board of Directors declared a quarterly dividend payment of $0.175 per share paid in June 2018 of $22 million.

In May 2018, our Board of Directors declared a $0.175 per share dividend payable June 12, 2018 to shareholders of record on June 1, 2018.

Our ability to continue to pay dividends in the future may be restricted by covenants in our credit agreement or if we do not have sufficient surplus under Delaware law. Additionally, our Board of Directors may determine not to declare dividends if they deem this action to be in ILG’s best interests.

Share Repurchase Program

During the year ended December 31, 2017, we repurchased 1.1 million shares for $28 million, including commissions, with $21 million available for future repurchases as of December 31, 2017. There were no repurchases of common stock during the six months ended June 30, 2018. Acquired shares of our common stock are held as treasury shares carried at cost on our condensed consolidated balance sheets.

34 Common stock repurchases may be conducted in the open market or in privately negotiated transactions. The amount and timing of all repurchase transactions are contingent upon market conditions, applicable legal requirements,

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~~common~~restrictions ~~stock~~under ~~during~~our ~~the~~Tax ~~three~~Matters ~~months~~Agreement ~~ended~~with ~~March 31~~Starwood, ~~2018.~~and ~~Acquired~~other ~~shares~~factors. ofThis ~~our~~program ~~common~~may ~~stock~~be ~~are~~modified, ~~held~~suspended asor ~~treasury~~terminated ~~shares~~by ~~carried~~us at ~~cost~~any ontime ~~our~~without ~~condensed consolidated balance sheets~~notice.

Common stock repurchases may be conducted in the open market or in privately negotiated transactions. The amount and timing of all repurchase transactions are contingent upon market conditions, applicable legal requirements, restrictions under our Tax Matters Agreement with Starwood, and other factors. This program may be modified, suspended or terminated by us at any time without notice.

Accumulated Other Comprehensive Loss

Entities are required to disclose additional information about reclassification adjustments within accumulated other comprehensive income/loss, referred to as AOCL including (1) changes in AOCL balances by component and (2) significant items reclassified out of AOCL in the period. For the three and six months ended ~~March~~June 3130, 2018, there were no significant items reclassified out of AOCL, and the change in AOCL pertains to current period foreign currency translation adjustments, as disclosed in our accompanying condensed consolidated statements of comprehensive income.

Noncontrolling Interests

Noncontrolling Interest—VRI Europe

In connection with the VRI Europe transaction on November 4, 2013, CLC was issued a noncontrolling interest in VRI Europe representing 24.5% of the business, which was determined based on the purchase price paid by ILG for its 75.5% ownership interest as of the acquisition date. As of ~~March~~June 3130, 2018 and December 31, 2017, this noncontrolling interest amounts to $2930 million atand ~~the~~$29 ~~end~~million, ofrespectively, ~~each respective period~~ and is presented on our condensed consolidated balance sheets as a component of equity.

The parties have agreed not to transfer their interests in VRI Europe or CLC’s related development business for a period of five years from the acquisition. In addition, they have agreed to certain rights of first refusal, and customary drag along and tag along rights, including a right by CLC to drag along ILG’s VRI Europe shares in connection with a sale of the entire CLC resort business subject to achieving minimum returns and a preemptive right by ILG. As of ~~March~~June 3130, 2018, there have been no changes in ILG’s ownership interest in VRI Europe.

Additionally, in connection with this arrangement, ILG and CLC entered into a loan agreement whereby ILG made available to CLC a convertible secured loan facility of $15 million that matures in October of 2019 with interest payable monthly. The outstanding loan is to be repaid in full at maturity either in cash or by means of a share option exercisable by ILG, at its sole discretion, which would allow for settlement of the loan in CLC’s shares of VRI Europe for contractually determined equivalent value. ILG has the right to exercise this share option at any time prior to maturity of the loan; however, the equivalent value for these shares would be measured at a 20% premium to its acquisition date value. We have determined the value of this embedded derivative is not material to warrant bifurcating from the host instrument (loan) at this time.

Noncontrolling Interest – HOAs

A component of ILG’s noncontrolling interest balance pertains to our consolidated HOAs and represents the portion related to individual or third-party VOI owners. As of ~~March~~June 3130, 2018 and December 31, 2017, this noncontrolling interest amounted to $1112 million and $8 million, respectively, and is presented on our condensed consolidated balance sheets as a component of equity.

NOTE 17—BENEFIT PLANS

Under retirement savings plans sponsored by ILG, qualified under Section 401(k) of the Internal Revenue Code, participating employees may contribute up to 50.0% of their pre‑tax earnings, but not more than statutory limits. ILG provides a discretionary match of fifty cents for each dollar a participant contributes into a plan with a maximum contribution of 3% of a participant’s eligible earnings, with employees participating in the safe harbor plan, also receiving a 100% match for the first 1% of the participant’s eligible earnings, subject to Internal Revenue Service (“IRS”) restrictions. Net matching contributions for the ILG plans were $2 million and $1 million for the three months ended June 30, 2018 and 2017, respectively, and $5 million and $3 million for the six months ended June 30, 2018 and 2017, respectively. Matching contributions were invested in the same manner as each participant’s voluntary contributions in the investment options provided under the plans.

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~~receiving~~ Effective August 20, 2008, a ~~100%~~deferred ~~match~~compensation ~~for~~plan (the ~~first~~“Director 1%Plan”) was established to provide non‑employee directors of ILG an option to defer director fees on a tax‑deferred basis. Participants in the ~~participant’s~~Director ~~eligible~~Plan ~~earnings,~~are ~~subject~~allowed to ~~Internal~~defer ~~Revenue~~a ~~Service~~portion ~~(“IRS”)~~or ~~restrictions~~all of their compensation and are 100% vested in their respective deferrals and earnings. ~~Net~~With ~~matching~~respect ~~contributions~~to director fees earned for services performed after the date of such election, participants may choose from receiving cash or stock at the end of the deferral period. ILG ~~plans~~has ~~was~~reserved $3100,000 ~~million~~shares of common stock for ~~the~~issuance ~~three~~pursuant ~~months~~to ~~ended~~this ~~March~~plan, 31of which 73,429 ~~2018~~share ~~and~~units ~~2017~~were outstanding at June 30, 2018. ~~Matching~~ILG does not provide matching or discretionary contributions ~~were~~to ~~invested~~participants in the ~~same~~Director ~~manner~~Plan. asAny ~~each~~deferred ~~participant’s~~compensation ~~voluntary~~elected ~~contributions~~to be received in ~~the~~stock ~~investment~~is ~~options~~included ~~provided~~in ~~under~~diluted ~~the~~earnings ~~plans~~per share.

Effective ~~August 20~~October 1, ~~2008~~2014, a non-qualified deferred compensation plan (the “~~Director Plan~~DCP”) was established to ~~provide~~allow ~~non‑employee~~eligible ~~directors~~employees of ILG an option to defer ~~director~~compensation ~~fees~~ on a tax‑-deferred basis. Participants in the ~~Director~~DCP ~~Plan~~currently ~~are~~include ~~allowed~~only tocertain ~~defer~~HVO aand ~~portion~~Vistana oremployees ~~all~~that ofparticipated ~~their~~in ~~compensation~~similar ~~and~~plans prior to the respective acquisitions. Participants are ~~100%~~fully vested in ~~their~~all ~~respective~~amounts ~~deferrals~~held ~~and~~in ~~earnings.~~their ~~With~~individual ~~respect~~accounts. toParticipants ~~director~~have ~~fees~~only ~~earned~~an ~~for~~unsecured ~~services~~claim ~~performed~~against ~~after~~ILG for the ~~date~~future payment of ~~such~~the ~~election~~deferred amounts, ~~participants~~although ~~may~~payment ~~choose~~is ~~from~~indirectly ~~receiving~~secured ~~cash~~through ora ~~stock~~fully atfunded Rabbi trust. The Rabbi trust is subject to creditor claims in the ~~end~~event of ~~the~~insolvency, ~~deferral~~but ~~period.~~the ~~ILG~~assets ~~has~~held ~~reserved~~in ~~100,000~~the ~~shares~~Rabbi oftrust ~~common~~are ~~stock~~not available for ~~issuance~~general ~~pursuant~~corporate topurposes. ~~this~~Amounts ~~plan~~in the Rabbi trust are invested in mutual funds, ofas ~~which~~selected 71by participants,~~667~~ ~~share~~which ~~units~~are ~~were~~designated ~~outstanding~~as trading securities and carried at ~~March~~fair 31value. As of June 30, 2018., ~~ILG~~the ~~does~~fair ~~not~~value ~~provide~~of ~~matching~~the orinvestments ~~discretionary~~in ~~contributions~~the toRabbi ~~participants~~trust was $8 million, which is recorded in ~~the~~other ~~Director~~non-current ~~Plan.~~assets ~~Any~~with the corresponding deferred compensation ~~elected~~liability torecorded bein ~~received~~other long-term liabilities in ~~stock~~the iscondensed ~~included~~consolidated balance sheets. Unrealized gains or losses are offset by a corresponding adjustment to compensation expense, all within general and administrative expense in ~~diluted~~our ~~earnings~~condensed ~~per~~consolidated ~~share~~income statements.

Effective October 1, 2014, a non-qualified deferred compensation plan (the “DCP”) was established to allow eligible employees of ILG an option to defer compensation on a tax-deferred basis. Participants in the DCP currently include only certain HVO and Vistana employees that participated in similar plans prior to the respective acquisitions. Participants are fully vested in all amounts held in their individual accounts. Participants have only an unsecured claim against ILG for the future payment of the deferred amounts, although payment is indirectly secured through a fully funded Rabbi trust. The Rabbi trust is subject to creditor claims in the event of insolvency, but the assets held in the Rabbi trust are not available for general corporate purposes. Amounts in the Rabbi trust are invested in mutual funds, as selected by participants, which are designated as trading securities and carried at fair value. As of March 31, 2018, the fair value of the investments in the Rabbi trust was $13 million, which is recorded in other non-current assets with the corresponding deferred compensation liability recorded in other long-term liabilities in the condensed consolidated balance sheets. Unrealized gains or losses are offset by a corresponding adjustment to compensation expense, all within general and administrative expense in our condensed consolidated income statements.

NOTE 18—STOCK‑BASED COMPENSATION

On May 21, 2013, ILG adopted the Interval Leisure Group, Inc. 2013 Stock and Incentive Plan which provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock‑based awards. RSUs are awards in the form of phantom shares or units, denominated in a hypothetical equivalent number of shares of ILG common stock and with the value of each award equal to the fair value of ILG common stock at the date of grant, except for RSUs subject to relative total shareholder return performance criteria, for which the fair value is based on a Monte Carlo simulation analysis. Each RSU and share of restricted stock is subject to service‑based vesting, where a specific period of continued employment must pass before an award vests. We grant awards subject to graded vesting (i.e., portions of the award vest at different times during the vesting period) or to cliff vesting (i.e., all awards vest at the end of the vesting period). In addition, certain RSUs are subject to attaining specific performance criteria. As of ~~March~~June 3130, 2018, 2.8 million shares were available for future issuance under the 2013 Stock and Incentive Compensation Plan.

During the first ~~quarter~~six months of 2018 and 2017, the Compensation Committee granted, ~~569~~620,000 and ~~870~~925,000 RSUs, respectively, generally vesting over three years, to certain officers, board of directors and employees of ILG and its subsidiaries. Of these RSUs granted in 2018 and 2017, approximately ~~160~~169,000 and 229,000, respectively, cliff vest in three years and approximately 147,000 and 213,000, respectively, are subject to performance criteria that could result between 0% and up to 200% of these awards being earned either based on defined adjusted EBITDA, or relative total shareholder return targets over the respective performance period, as specified in the award document.

For the 2018 and 2017 RSUs subject to relative total shareholder return performance criteria, the number of RSUs that may ultimately be awarded depends on whether the market condition is achieved. We used a Monte Carlo simulation analysis to estimate a per unit grant date fair value of $50.37 for 2018 and $28.23 for 2017, for these performance based RSUs. This analysis estimates the total shareholder return ranking of ILG as of the grant date relative to two peer groups approved by the Compensation Committee, over the remaining performance period. The expected volatility of ILG’s common stock at the date of grant was estimated based on a historical average volatility rate for the approximate three-year performance period. The dividend yield assumption was based on historical and anticipated dividend payouts. The risk‑free interest rate assumption was based on observed interest rates consistent with the approximate three-year performance measurement period.

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~~volatility~~ Non‑cash ofcompensation ~~ILG’s~~expense ~~common~~related to RSUs and restricted stock atfor the ~~date~~three ofmonths ~~grant~~ended ~~was~~June ~~estimated~~30, ~~based~~2018 onand a2017 ~~historical~~was ~~average~~$5 ~~volatility~~million ~~rate~~and $7 million, respectively, and for the ~~approximate~~six ~~three-year~~months ~~performance~~ended ~~period.~~June ~~The~~30, ~~dividend~~2018 ~~yield~~and ~~assumption~~2017 was ~~based~~$11 onmillion ~~historical~~ and ~~anticipated~~$12 ~~dividend~~million, ~~payouts~~respectively. ~~The~~At ~~risk‑free~~June ~~interest~~30, ~~rate~~2018, ~~assumption~~there was ~~based~~approximately on$32 ~~observed~~million ~~interest~~of ~~rates~~unrecognized ~~consistent~~compensation ~~with~~cost ~~the~~related ~~approximate~~to ~~three-year~~RSUs ~~performance~~and ~~measurement~~restricted stock, which is currently expected to be recognized over a weighted average period of approximately 2.07 years.

Non‑cash compensation expense related to RSUs and restricted stock for the three months ended March 31, 2018 and 2017 was $6 million for each period. At March 31, 2018, there was approximately $37 million of unrecognized compensation cost related to RSUs and restricted stock, which is currently expected to be recognized over a weighted average period of approximately 2.25 years.

Stock-based compensation is not reduced for estimated forfeitures. We account for forfeitures when they occur. For any vesting tranche of an award, the cumulative amount of compensation cost recognized is equal to the portion of the grant‑date value of the award tranche that is actually vested at that date.

Non‑cash stock‑based compensation expense related to equity awards is included in the following line items in the accompanying condensed consolidated statements of income for the three and six months ended ~~March~~June 3130, 2018 and 2017 (in millions):

	Three Months Ended				Six Months Ended
	March 31,
	June 30,				June 30,
	2018		2017		2018		2017
Cost of sales	$	—1	$	1—	$	1	$	1
Selling and marketing expense		1—		1—		1		1
General and administrative expense		54		47		9		10
Non-cash compensation expense	$	65	$	67	$	11	$	12

The following table summarizes RSU activity during the ~~three~~six months ended ~~March~~June 3130, 2018:

		Weighted-Average
		Grant Date
	Shares	Fair Value
	(In millions)
Non-vested RSUs at January 1, 2018	3	$	17.53
Granted	1		33.4224
Vested	(1)		19.6154
Forfeited	—		1618.4030
Non-vested RSUs at March 31, 2018	3	$	20.60
Non-vested RSUs at June 30, 2018	3	$	20.93

NOTE 19—INCOME TAXES

ILG calculates its interim income tax provision in accordance with ASC 740, “Income Taxes.” At the end of each interim period, ILG makes its best estimate of the annual expected effective tax rate and applies that rate to its ordinary year‑to‑date earnings or loss. The income tax provision or benefit related to significant, unusual, or extraordinary items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which those items occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or the liabilities for uncertain tax positions is recognized in the interim period in which the change occurs.

The computation of the annual expected effective tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences, and the likelihood of the realization of deferred tax assets generated in the current year. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, more experience is acquired, additional information is obtained or ILG’s tax environment changes. To the extent that the estimated annual effective tax rate changes during a quarter, the effect of the change on prior quarters is included in income tax expense in the quarter in which the change occurs.

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information is obtained or ILG’s tax environment changes. To the extent that the estimated annual effective tax rate changes during a quarter, the effect of the change on prior quarters is included in income tax expense in the quarter in which the change occurs.

A valuation allowance for deferred tax assets is provided when it is more likely than not that certain deferred tax assets will not be realized. Realization is dependent upon the generation of future taxable income or the reversal of deferred tax liabilities during the periods in which those temporary differences become deductible. We consider the history of taxable income in recent years, the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies to make this assessment.

For the three and six months ended ~~March~~June 3130, 2018 ~~and 2017~~, ILG recorded income tax provisions for continuing operations of $2013 million and $2533 million, respectively, which represent effective tax rates of 3132.1% and 3531.95% for the respective periods. On December 22, 2017, the President of the United States signed into law the Tax Reform Act, which among other things, lowered the statutory corporate tax rate from 35% to 21% effective in 2018. The tax rate for the three and six months ended ~~March~~June 3130, 2018 is higher than the federal statutory rate of 21% due principally to state, local, and foreign income taxes, ~~net discrete items related to non-cash compensation,~~ and other tax items. The other tax items increasing the rate include the projected impact of certain provisions enacted in the Tax Reform Act effective in 2018 such as the global intangible low-taxed income provisions. The tax rate for the three months ended March 31, 2017 is higher than the federal statutory rate of 35% due principally to state and local income taxes and other tax items partially offset by foreign income taxed at lower rates.

AsFor ofthe ~~March~~three ~~31,~~and ~~2018,~~six ~~there~~months ~~were~~ended noJune ~~material~~30, ~~changes~~2017, to ILG’s ~~unrecognized~~recorded income tax ~~benefits~~provisions ~~and~~for ~~related~~continuing ~~interest.~~operations Inof ~~connection~~$13 ~~with~~million ~~the~~and ~~acquisition~~$38 ofmillion, ~~Vistana~~respectively, ~~Starwood~~which ~~and~~represent ~~ILG~~effective ~~entered~~tax ~~into~~rates aof ~~Tax~~32.8% ~~Matters~~and ~~Agreement~~34.7% ~~Under~~for the ~~Tax~~respective ~~Matters~~periods. ~~Agreement,~~These ~~Starwood~~tax ~~indemnifies~~rates ~~ILG~~are ~~for~~lower ~~all~~than ~~consolidated~~the ~~tax~~federal ~~liabilities~~statutory ~~and~~rate ~~related~~of ~~interest~~35% ~~and~~due ~~penalties~~principally ~~for~~to the ~~pre-close~~discrete ~~period.~~impact ~~Accordingly,~~of ~~any~~excess ~~unrecognized~~ tax benefits ~~for~~associated ~~Vistana~~with ~~related to the pre~~stock-~~close~~based ~~period~~awards ~~that~~recorded ~~are~~in the ~~obligation~~income ofstatement ~~its~~and ~~former~~the ~~parent~~impact ~~have~~of ~~not~~foreign ~~been~~income ~~recorded.~~taxed ~~ILG~~at ~~recognizes~~lower ~~interest and~~rates, ifpartially ~~applicable,~~offset ~~penalties~~by ~~related~~state toand ~~unrecognized~~local ~~tax~~income ~~benefits~~taxes inand ~~income~~other tax ~~expense~~items.

~~ILG files income tax returns in the U.S. federal jurisdiction and various state, local, and foreign jurisdictions.~~ As of ~~March~~June 3130, 2018, nothere ~~open~~were ~~tax~~no ~~years~~material ~~are~~changes ~~currently~~to ~~under~~ILG’s ~~examination~~unrecognized bytax ~~the~~benefits ~~IRS.~~and ~~The~~related Uinterest.S. ~~federal~~In ~~statute~~connection ofwith ~~limitations~~the ~~for~~acquisition ~~years~~of ~~prior~~Vistana, toStarwood and ~~including~~ILG ~~2013~~entered ~~has~~into ~~closed.~~a NoTax ~~open~~Matters ~~tax~~Agreement. ~~years~~Under ~~are~~the ~~currently~~Tax ~~under~~Matters ~~examination in any material state and local jurisdictions. Vistana~~Agreement, byStarwood ~~virtue~~indemnifies ofILG ~~previously~~for ~~filed~~all consolidated tax ~~returns~~liabilities ~~with~~and ~~Starwood,~~related isinterest ~~under~~and ~~audit~~penalties byfor the ~~IRS for several~~ pre-close ~~periods~~period. ~~Vistana~~Accordingly, isany ~~also~~unrecognized ~~under~~tax ~~audit~~benefits infor ~~Mexico~~Vistana ~~for~~related to the ~~tax~~pre-close ~~years~~period ~~2012,~~that ~~2013~~are ~~and~~the ~~2015.~~obligation ~~Under~~of ~~the~~its ~~Tax~~former ~~Matters~~parent ~~Agreement,~~have ~~Starwood~~not ~~indemnifies~~been recorded. ILG ~~for~~recognizes ~~all~~interest ~~income~~and, ~~tax~~if ~~liabilities~~applicable, ~~and~~penalties related ~~interest~~to ~~and~~unrecognized ~~penalties~~tax ~~for~~benefits ~~the~~in ~~pre-close~~income ~~period~~tax expense.

~~The~~ILG ~~Tax~~files ~~Reform~~income ~~Act~~tax ~~significantly~~returns ~~changed~~in the U.S. ~~tax~~federal ~~law~~jurisdiction ~~by,~~and ~~among~~various ~~other things~~state, ~~lowering the statutory corporate tax rate~~local, asand ~~discussed~~foreign ~~above,~~jurisdictions. ~~eliminating~~As ~~certain deductions, requiring a one-time transition tax on certain unrepatriated earnings~~ of ~~foreign~~June ~~subsidiaries~~30, ~~introducing new tax regimes~~2018, ~~and~~no ~~changing~~open ~~how~~tax ~~foreign~~years ~~earnings~~ are ~~subject~~currently tounder ~~U.S.~~examination ~~tax.~~by ~~The~~the ~~SEC staff issued Staff Accounting Bulletin No~~IRS. ~~118~~The ~~(“SAB 118”), which was codified in ASU 2018-05 during the current period, to address the application of~~ U.S. ~~GAAP~~federal instatute ~~situations~~of ~~when~~limitations afor ~~registrant~~years ~~does~~prior ~~not~~to ~~have~~and ~~the necessary information available, prepared, or analyzed (~~including ~~computations)~~2013 inhas ~~reasonable~~closed. ~~detail~~No toopen ~~complete the accounting for certain income~~ tax ~~effects~~years ofare ~~the~~currently ~~Tax~~under ~~Reform~~examination ~~Act.~~in ~~SAB~~any ~~118~~material ~~allows~~state ~~registrants~~and tolocal ~~record provisional amounts during a one year “measurement period” similar to that used when accounting for business combinations~~jurisdictions. ~~During 2017~~Vistana, weby ~~reasonably~~virtue ~~estimated the effects~~ of ~~the~~previously ~~Tax~~filed ~~Reform~~consolidated ~~Act and recorded a provisional~~ tax ~~benefit~~returns ~~for~~with ~~the impact of the Tax Reform Act of approximately $51 million in our financial statements as of December 31~~Starwood, ~~2017. This amount~~ is ~~primarily~~under ~~comprised~~audit ofby the ~~remeasurement~~IRS offor ~~federal~~several ~~net~~pre-close ~~deferred~~periods. ~~tax~~Vistana ~~liabilities~~is ~~resulting~~also ~~from~~under ~~the~~audit ~~permanent~~in ~~reduction~~Mexico infor the ~~U.S. statutory corporate~~ tax ~~rate~~year ~~from~~2017 ~~35%~~and tofor ~~21%, partially offset by~~ the ~~mandatory one~~pre-~~time~~close ~~tax~~periods on2012, ~~the~~2013, ~~accumulated~~and ~~earnings of our foreign subsidiaries~~2015. WeUnder ~~have not completed our determination of~~ the ~~accounting~~Tax ~~implications~~Matters ofAgreement, ~~the~~Starwood ~~Tax~~indemnifies ~~Reform~~ILG ~~Act~~for onall ~~our~~income tax ~~accruals~~liabilities and ~~have~~related ~~not~~interest ~~made~~and ~~any~~penalties ~~material~~for ~~changes during~~ the ~~three~~pre-close ~~months ended March 31, 2018 to the provisional amounts recorded~~period.

38The Tax Reform Act significantly changed U.S. tax law by, among other things, lowering the statutory corporate tax rate, as discussed above, eliminating certain deductions, requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries, introducing new tax regimes, and changing how foreign earnings are subject to U.S. tax. The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which was codified in ASU 2018-05 during the first quarter of 2018, to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. SAB 118 allows registrants to record provisional amounts during a one year “measurement period” similar to that used when accounting for business combinations. During 2017, we reasonably estimated the effects of the Tax Reform Act and recorded a provisional tax benefit for the impact of the Tax Reform Act of approximately $53 million in our financial statements as of December 31, 2017. This amount is primarily comprised of the remeasurement of federal net deferred tax liabilities resulting from the permanent reduction in the U.S. statutory corporate tax rate from 35% to 21%, partially offset by the mandatory one-time tax on the accumulated earnings of our foreign subsidiaries. We have not completed our determination of the accounting implications of the Tax Reform Act on our tax accruals as we continue to gather and review information necessary to complete the analysis as part of our 2017 tax return. We have not made any material changes during the six months ended June 30, 2018 to the provisional amounts recorded.

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The ultimate impact of the Tax Reform Act may differ, possibly materially, from these provisional amounts due to among other things, additional analysis, changes in interpretations and assumptions ILG has made, additional regulatory guidance that may be issued, and actions ILG may take as a result of the Tax Reform Act. Any such revisions will be treated in accordance with the measurement period guidance outlined in SAB 118. As such, we expect to complete our analysis no later than December 22, 2018.

NOTE 20—SEGMENT INFORMATION

Pursuant to FASB guidance as codified in ASC 280, an operating segment is a component of a public entity (1) that engages in business activities that may earn revenues and incur expenses; (2) for which operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segments and assess its performance; and (3) for which discrete financial information is available. We also considered how the businesses are organized as to segment management, and the focus of the businesses with regards to the types of products or services offered. ILG is comprised of two operating and reportable segments: Vacation Ownership and Exchange and Rental.

Our Vacation Ownership segment engages in the management, sales, marketing, financing, rental and ancillary services, and development of VOIs as well as related services to owners and associations. Our Exchange and Rental segment offers access to vacation accommodations and other travel‑related transactions and services to members of our programs and other leisure travelers, by providing vacation exchange services and vacation rental, working with resort developers, HOAs and operating vacation rental properties.

ILG provides certain corporate functions that benefit the organization as a whole. Such corporate functions include corporate services relating to oversight, corporate development, finance and accounting, legal, treasury, tax, internal audit, human resources, and certain IT functions. Costs relating to such corporate functions that are not directly cross‑charged to individual businesses are being allocated to our two operating and reportable segments based on a pre‑determined measure of profitability relative to total ILG. All such allocations relate only to general and administrative expenses. The condensed consolidated statements of income are not impacted by this cross‑segment allocation.

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Information on reportable segments and reconciliation to consolidated operating income is as follows (in millions):

	Three Months Ended				Six Months Ended
	March 31,
	June 30,				June 30,
	2018		2017		2018		2017
Vacation Ownership:
Resort operations revenue	$	6358	$	5853	$	124	$	110
Management fee and other revenue		5761		3033		116		64
Sales of vacation ownership products, net		~~123~~121		~~105~~118		244		223
Consumer financing revenue		2423		2122		47		43
Cost reimbursement revenue		4445		5859		90		117
Total revenue		~~311~~308		~~272~~285		621		557
Cost of service and membership related		4549		1314		94		26
Cost of sales of vacation ownership products		3922		2528		61		54
Cost of sales of rental and ancillary services		4345		5157		89		107
Cost of consumer financing		87		67		15		14
Cost reimbursements		4445		5859		90		117
Total cost of sales		~~179~~168		~~153~~165		349		318
Royalty fee expense		11		10		21		20
Selling and marketing expense		6668		5763		134		119
General and administrative expense		2631		2427		57		53
Amortization expense of intangibles		2		2		4		4
Depreciation expense		1011		10		21		20
Segment operating income	$	17	$	168	$	35	$	23

	Three Months Ended				Six Months Ended
	March 31,
	June 30,				June 30,
	2018		2017		2018		2017
Exchange and Rental:
Transaction revenue	$	5950	$	5949	$	109	$	108
Membership fee revenue		3635		36		71		71
Ancillary member revenue		2		2		4		5
Total member revenue		9787		9787		184		184
Club rental revenue		3429		3027		62		57
Other revenue		56		5		12		10
Rental management revenue		1411		1411		24		26
Cost reimbursement revenue		2120		26		41		51
Total revenue		~~171~~153		~~172~~156		323		328
Cost of service and membership related		1918		2219		38		42
Cost of sales of rental and ancillary services		2925		2621		53		48
Cost reimbursements		2120		26		41		51
Total cost of sales		6963		7466		132		141
Selling and marketing expense		12		13
Royalty fee expense		—		1		1		1
General and administrative expense		33		30
Selling and marketing expense		13		13		25		26
Amortization expense of intangibles		3		3
General and administrative expense		34		31		67		59
Depreciation expense		5		5
Amortization expense of intangibles		3		3		6		6
Segment operating income	$	49	$	47
Depreciation expense		5		5		10		10
Segment operating income	$	35	$	37	$	82	$	85

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	Three Months Ended				Six Months Ended
	March 31,
	June 30,				June 30,
	2018		2017		2018		2017
Consolidated:
Revenue	$	~~482~~461	$	~~444~~441	$	944	$	885
Cost of sales		~~248~~231		~~227~~231		481		459
Operating expenses		~~168~~178		~~154~~165		346		318
Operating income	$	6652	$	6345	$	117	$	108

Selected financial information by reporting segment is presented below (in millions).

	March 31,		December 31,
	June 30,		December 31,
	2018		2017
Total Assets:
Vacation Ownership	$	2,~~660~~579	$	2,603
Exchange and Rental		1,~~110~~082		1,084
Total	$	3,~~770~~661	$	3,687

Geographic Information

We conduct operations through offices in the U.S. and 14 other countries. For the ~~three~~six months ended ~~March~~June 3130, 2018 and 2017, revenue is sourced from over 100 countries worldwide. Other than the United States, no revenue sourced from any individual country or geographic region exceeded 10% of consolidated revenue for the three and six months ended ~~March~~June 3130, 2018 and 2017.

Geographic information on revenue, based on sourcing, and long‑lived assets, based on physical location, is presented in the table below (in millions).

	Three Months Ended				Six Months Ended
	March 31,
	June 30,				June 30,
	2018		2017		2018		2017
Revenue:
United States	$	~~424~~409	$	374	$	834	$	748
All other countries(1)		5852		7067		110		137
Total	$	~~482~~461	$	~~444~~441	$	944	$	885

(1)

Includes countries within the following continents: Africa, Asia, Australia, Europe, North America and South America.

	March 31,		December 31,
	June 30,		December 31,
	2018		2017
Long-lived assets, net (excluding goodwill and intangible assets):
United States	$	~~483~~477	$	486
Mexico		~~134~~125		126
Europe		4		4
Total	$	~~621~~606	$	616

NOTE 21—COMMITMENTS AND CONTINGENCIES

In the ordinary course of business, ILG is a party to various legal proceedings. ILG establishes reserves for specific legal matters when it determines that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. ILG does not establish reserves for identified legal matters when ILG believes that the likelihood of an unfavorable outcome is not probable. Although management currently believes that an unfavorable resolution of claims against ILG, including claims where an unfavorable outcome is reasonably possible, will not have a material

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impact on the liquidity, results of operations, or financial condition of ILG, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future. ILG also evaluates other contingent matters, including tax contingencies, to assess the probability and estimated extent of potential loss. See Note 19 for a discussion of income tax contingencies.

Litigation

On December 5, 2016, individuals and entities who own or owned 107 fractional interests of a total of 372 interests created in the Fifth and Fifty-Fifth Residence Club located within The St. Regis, New York (the “Club”) filed suit against ILG, certain of our subsidiaries, Marriott International Inc. (“Marriott”) and certain of its subsidiaries including Starwood. The case is filed as a mass action in federal court in the Southern District of New York, not as a class action. In response to our request to file a motion to dismiss, the plaintiffs filed an amended complaint on March 6, 2017. Plaintiffs principally challenge the sale of less than all interests offered in the fractional offering plan, the amendment of the plan to include additional units, and the rental of unsold fractional interests by the plan’s sponsor, claiming that alleged acts by us and the other defendants breached the relevant agreements and harmed the value of plaintiffs’ fractional interests. The relief sought includes, among other things, compensatory damages, rescission, disgorgement, attorneys’ fees, and pre- and post-judgment interest. We filed a motion to dismiss the amended complaint on April 21, 2017. The court has not yet rendered any decision on the motion. Fact discovery is complete and ~~fact~~expert discovery is proceeding. We dispute the material allegations in the amended complaint and intend to defend against the action vigorously. Given the early stages of the action and the inherent uncertainties of litigation, we cannot estimate a range of the potential liability, if any, at this time.

On February 28, 2017, the owners’ association for the Club filed a separate suit against us and certain of our subsidiaries in federal court in the Southern District of New York. On March 13, 2017, before it had served the initial complaint, Plaintiff filed an amended complaint that added Marriott and Starwood as defendants and added additional claims. Plaintiff then filed a second amended complaint on July 14, 2017. The complaint, as amended, asserts claims against the sponsor of the Club, St. Regis Residence Club, New York, Inc., the Club manager, St. Regis New York Management, Inc., and certain affiliated entities, as well as against Marriott and Starwood, for alleged breach of fiduciary duties principally related to sale and rental practices, tortious interference with the management agreement, alleged unjust enrichment, seeks certain declaratory relief in connection with the Starpoints conversion program and the exchange program at the Club, and asserts claims based on alleged anticompetitive conduct by the defendants in connection with Plaintiff’s renewal of the Club management agreement. In addition to the declaratory relief sought, Plaintiff seeks unspecified actual damages, punitive damages, and disgorgement of payments under the management and purchase agreements, as well as related agreements. We filed a motion to dismiss the second amended complaint on September 8, 2017. The court has not yet rendered any decision on the motion. We dispute the material allegations in the second amended complaint and intend to defend against the action vigorously. Given the early stages of the action and the inherent uncertainties of litigation, we cannot estimate a range of the potential liability, if any, at this time.

42On July 6, 2018, a complaint challenging the proposed combination transactions involving ILG and Marriott Vacations (the “Combination Transactions”) was filed allegedly on behalf of stockholders of ILG in the District Court for the District of Delaware, captioned Scarantino v. ILG, Inc., et al., Case No. 1:18-cv-00999-UNA. The complaint names as defendants ILG, ILG’s directors, Ignite Holdco, Inc., Ignite Holdco Subsidiary, Inc., Marriott Vacations, Volt Merger Sub, Inc., and Volt Merger Sub LLC. The complaint alleges that (i) ILG and ILG’s directors issued a false and misleading registration statement in violation of Section 14(a) of the Securities Exchange Act of 1934, as amended and Rule 14a-9 promulgated thereunder; and (ii) ILG’s directors, Marriott Vacations, Volt Corporate Merger Sub and Volt LLC Merger Sub violated Rule 20(a) of the Securities Exchange Act of 1934, as amended by allegedly exercising control over ILG and ILG’s directors while they issued a false and misleading registration statement. The complaint seeks an injunction preventing the defendants from consummating the Combination Transactions and attorneys’ fees and costs, as well as other remedies. ILG and Marriott Vacations believe that this lawsuit is without merit, and intend to defend themselves vigorously.

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On July 13, 2018, a complaint challenging the Combination Transactions was filed allegedly on behalf of an alleged stockholder of ILG in the District Court for the Southern District of Florida, captioned Patricia Stephens v. ILG, Inc., et al., Case No. 1:18-cv-22844-CMA. The complaint names ILG and ILG’s directors as defendants. The complaint alleges that (i) ILG and ILG’s directors issued a false and misleading registration statement in violation of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder and (ii) ILG’s directors violated Section 20(a) of the Exchange Act by allegedly exercising control over ILG while issuing a false and misleading registration statement. The complaint seeks an injunction preventing the defendants from consummating the Combination Transactions and attorneys’ fees and costs, as well as other remedies. ILG and Marriott Vacations believe that this lawsuit is without merit, and intend to defend themselves vigorously. Similar lawsuits could be filed in the future.

On July 31, 2018, a class action complaint challenging the Combination Transactions was filed on behalf of an alleged stockholder of ILG in the District Court for the District of Delaware, captioned Dina A. Hohman v. ILG, Inc., et al., Case No. 1:18-cv-01126. The complaint names ILG and ILG’s directors as defendants. The complaint alleges that (i) ILG and ILG’s directors issued a false and misleading registration statement in violation of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder and (ii) ILG’s directors violated Section 20(a) of the Exchange Act by allegedly exercising control over ILG while issuing a false and misleading registration statement. The complaint seeks an injunction preventing the defendants from consummating the Combination Transactions and attorneys’ fees and costs, as well as other remedies. ILG believes that the claims asserted in this matter are without merit.

Purchase Obligations and Other Commitments

Other items, such as certain purchase commitments and guarantees are not recognized as liabilities in our condensed consolidated financial statements but are required to be disclosed in the footnotes to the financial statements. These funding commitments could potentially require our performance in the event of demands by third parties or contingent events. The following table summarizes these items, on an undiscounted basis, at ~~March~~June 3130, 2018 and the future periods in which such obligations are expected to be settled in cash. In addition, the table reflects the timing of principal and interest payments on outstanding borrowings.

	Payments Due by Period
			Up to						More than
Contractual Obligations	Total		1 year		1 ‑ 3 years		3 ‑ 5 years		5 years
	(Dollars in millions)
Debt principal(a)	$	~~570~~555	$	—	$	—205	$	~~220~~350	$	~~350~~—
Debt interest(a)		~~129~~122		29		5857		4136		1—
Purchase obligations and other commitments(b)		6856		3730		2522		64		—
Operating leases		~~144~~141		20		3231		19		7371
Total contractual obligations	$	~~911~~874	$	8679	$	~~115~~315	$	~~286~~409	$	~~424~~71

(a)Debt principal and projected debt interest represent principal and interest to be paid on our senior notes and revolving credit facility based on the balance outstanding as of ~~March~~June 3130, 2018, exclusive of debt issuance costs. In addition, also included are certain fees associated with our revolving credit facility based on the unused borrowing capacity and outstanding letters of credit balances, if any, as of ~~March~~June 3130, 2018. Interest on the revolving credit facility is calculated using the prevailing rates as of ~~March~~June 3130, 2018.

(b)Purchase obligations and other commitments primarily relate to future guaranteed purchases of rental inventory, operational support services, marketing related benefits, membership fulfillment benefits and other commitments.

At ~~March~~June 3130, 2018, guarantees, surety bonds and letters of credit totaled $101 million, with the highest annual amount of $5470 million occurring in year one. The total also includes maximum exposure under guarantees of $48 million which primarily relates to our Exchange and Rental segment’s rental management agreements, including those with guaranteed dollar amounts, and accommodation leases supporting the segment’s management activities that are entered into on behalf of the property owners for which either party generally may terminate such leases upon 60 to 90 days prior written notice to the other party.

In addition, certain of our rental management agreements provide that owners receive specified percentages or guaranteed amounts of the rental revenue generated under its management. In these cases, the operating expenses for the rental operations are paid from the revenue generated by the rentals, the owners are then paid their contractual percentages or guaranteed amounts, and our vacation rental business either retain the balance (if any) as its fee or makes up the deficit. Although such deficits are reasonably possible in a few of these agreements, as of March 31, 2018 future amounts are not expected to be material either individually or in the aggregate.44

Our operating and purchase obligations primarily relate to future guaranteed purchases of rental inventory, operational support services, marketing related benefits and membership fulfillment benefits. Certain of our vacation rental businesses also enter into agreements, as principal, for services purchased on behalf of property owners for which we are subsequently reimbursed. As such, we are the primary obligor and may be liable for unreimbursed costs. As of March 31, 2018, amounts pending reimbursements are not material.

Letters of Credit

Additionally, as of March 31, 2018, our letters of credit totaled $14 million and were principally related to our Vacation Ownership sales and financing activities. More specifically, these letters of credit provide alternate assurance on amounts required to be held in escrow which enable our developer entities to access purchaser deposits prior to

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~~closings~~ In addition, ascertain ~~well~~of asour rental management agreements provide athat ~~guarantee~~owners receive specified percentages or guaranteed amounts of ~~maintenance~~the ~~fees~~rental ~~owed~~revenue generated under its management. In these cases, the operating expenses for the rental operations are paid from the revenue generated by the rentals, the owners are then paid their contractual percentages or guaranteed amounts, and our ~~developer~~vacation ~~entities~~rental ~~during~~business ~~subsidy~~either ~~periods~~retain atthe balance (if any) as its fee or makes up the deficit. Although such deficits are reasonably possible in a ~~particular~~few ~~vacation~~of ~~ownership~~these ~~resort~~agreements, ~~among~~as ~~other~~of ~~items~~June 30, 2018 future amounts are not expected to be material either individually or in the aggregate.

~~Insurance~~Our ~~recoveries~~operating and purchase obligations primarily relate to future guaranteed purchases of rental inventory, operational support services, marketing related benefits and membership fulfillment benefits. Certain of our vacation rental businesses also enter into agreements, as principal, for services purchased on behalf of property owners for which we are subsequently reimbursed. As such, we are the primary obligor and may be liable for unreimbursed costs. As of June 30, 2018, amounts pending reimbursements are not material.

AsLetters ~~discussed in Notes 6 and 8, during September 2017 we sustained damages at our Westin St. John Resort Villas property as a result~~ of Hurricane Irma. The resort has remained closed while rebuilding activities are in process. The reopening of the resort is currently targeted for January 2019. As of March 31, 2018, we are carrying an $8 million insurance liability as a result of receiving approximately $45 million of insurance proceeds during the quarter. This liability is presented within accrued expenses and other current liabilities within on our condensed consolidated balance sheet. We do not anticipate remaining in a net liability position in future periods as this is not a final claim figure and does not include any claims pertaining to business interruption at this time.Credit

Additionally, as of June 30, 2018, our letters of credit totaled $13 million and were principally related to our Vacation Ownership sales and financing activities. More specifically, these letters of credit provide alternate assurance on amounts required to be held in escrow which enable our developer entities to access purchaser deposits prior to closings, as well as provide a guarantee of maintenance fees owed by our developer entities during subsidy periods at a particular vacation ownership resort, among other items.

Insurance Recoveries

During September 2017 we sustained damages at our Westin St. John Resort Villas property as a result of Hurricane Irma. The resort has remained closed while rebuilding activities are in process. The reopening of the resort is currently targeted for January 2019. As of June 30, 2018, our property insurance claim receivable related to this event and other 2017 storms amounts to $17 million and is presented within accounts receivable on our condensed consolidated balance sheet. This balance is subject to change.

NOTE 22— SUPPLEMENTAL GUARANTOR INFORMATION

The senior notes are guaranteed by ILG and certain other subsidiaries for which 100% of the voting securities are owned directly or indirectly by ILG (collectively, the “Guarantor Subsidiaries”). These guarantees are full and unconditional and joint and several. The guarantees of the Guarantor Subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions. The indenture governing the senior notes contains covenants that, among other things, limit the ability of Interval Acquisition Corp. (the “Issuer”) and the Guarantor Subsidiaries to pay dividends to us or make distributions, loans or advances to us.

The following tables present consolidating financial information as of ~~March~~June 3130, 2018 and December 31, 2017 and for the three and six months ended ~~March~~June 3130, 2018 and 2017 for ILG on a stand‑alone basis, the Issuer on a stand‑alone basis, the combined Guarantor Subsidiaries of ILG (collectively, the “Guarantor Subsidiaries”), the ~~combined non-guarantor subsidiaries of ILG (collectively, the “Non-Guarantor Subsidiaries”) and ILG on a consolidated basis (in millions).~~

Balance Sheet as of March 31, 2018	ILG		Interval Acquisition Corp.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Total Eliminations		ILG Consolidated
Current assets	$	3	$	7	$	829	$	452	$	—	$	1,291
Property and equipment, net		1		—		456		164		—		621
Goodwill and intangible assets, net		—		267		623		113		—		1,003
Investments in subsidiaries		870		1,583		1,038		—		(3,491)		—
Other assets		—		—		342		513		—		855
Total assets	$	874	$	1,857	$	3,288	$	1,242	$	(3,491)	$	3,770
Current liabilities	$	4	$	10	$	409	$	305	$	—	$	728
Other long-term liabilities		—		—		234		111		—		345
Long term debt and securitized debt from VIEs (noncurrent portion)		—		563		—		395		—		958
Intercompany liabilities (receivables) / equity		(828)		414		1,062		(648)		—		—
Redeemable noncontrolling interest		—				1				—		1
ILG stockholders' equity		1,698		870		1,583		1,038		(3,491)		1,698
Noncontrolling interests		—				(1)		41		—		40
Total liabilities and equity	$	874	$	1,857	$	3,288	$	1,242	$	(3,491)	$	3,770

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combined non-guarantor subsidiaries of ILG (collectively, the “Non-Guarantor Subsidiaries”) and ILG on a consolidated basis (in millions).


Balance Sheet as of June 30, 2018	ILG		Interval Acquisition Corp.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Total Eliminations		ILG Consolidated
Current assets	$	2	$	2	$	750	$	439	$	—	$	1,193
Property and equipment, net		1		—		455		150		—		606
Goodwill and intangible assets, net		—		266		619		107		—		992
Investments in subsidiaries		888		1,605		1,038		—		(3,531)		—
Other assets		—		—		394		476		—		870
Total assets	$	891	$	1,873	$	3,256	$	1,172	$	(3,531)	$	3,661

Current liabilities	$	3	$	5	$	384	$	279	$	—	$	671
Other long-term liabilities		—		—		232		112		—		344
Long term debt and securitized debt from VIEs (noncurrent portion)		—		548		—		361		—		909
Intercompany liabilities (receivables) / equity		(809)		432		1,036		(659)		—		—
Redeemable noncontrolling interest		—		—		1		—		—		1
ILG stockholders' equity		1,697		888		1,605		1,038		(3,531)		1,697
Noncontrolling interests		—		—		(2)		41		—		39
Total liabilities and equity	$	891	$	1,873	$	3,256	$	1,172	$	(3,531)	$	3,661


Balance Sheet as of December 31, 2017	ILG		Interval Acquisition Corp.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Total Eliminations		ILG Consolidated
Current assets	$	1	$	3	$	790	$	406	$	—	$	1,200
Property and equipment, net		1		—		464		151		—		616
Goodwill and intangible assets, net		—		266		628		110		—		1,004
Investments in subsidiaries		824		1,521		1,022		—		(3,367)		—

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