Interval Leisure Group, Inc. (Form: 10-Q, Received: 05/08/2014 06:02:13)

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As filed with the Securities and Exchange Commission on May 8, 2014

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


(Mark One)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2014
or
o		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

INTERVAL LEISURE GROUP, 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)

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 ý No o

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 ý No o

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


Large accelerated filer ý		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

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

As of May 5, 2014, 57,726,408 shares of the registrant's common stock were outstanding.

PART 1—FINANCIAL STATEMENTS

Item 1. Consolidated Financial Statements

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,

	2014			2013
Revenue	$	157,041		$	134,881
Cost of sales (exclusive of depreciation and amortization shown separately below)		63,850			46,376


Gross profit		93,191			88,505
Selling and marketing expense		14,570			13,735
General and administrative expense		31,437			26,305
Amortization expense of intangibles		2,966			2,012
Depreciation expense		3,793			3,664


Operating income		40,425			42,789
Other income (expense):
Interest income		44			151
Interest expense		(1,324	)		(1,653	)
Other expense, net		(136	)		(520	)


Total other expense, net		(1,416	)		(2,022	)


Earnings before income taxes and noncontrolling interests		39,009			40,767
Income tax provision		(14,315	)		(15,757	)


Net income		24,694			25,010
Net income attributable to noncontrolling interests		(979	)		(6	)


Net income attributable to common stockholders	$	23,715		$	25,004




Earnings per share attributable to common stockholders:
Basic	$	0.41		$	0.44
Diluted	$	0.41		$	0.44
Weighted average number of shares of common stock outstanding:
Basic		57,505			56,928
Diluted		58,078			57,435
Dividends declared per share of common stock	$	0.11		$	—

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

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Three Months Ended March 31,

	2014			2013
Net income	$	24,694		$	25,010
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		667			(1,773	)


Total comprehensive income, net of tax		25,361			23,237


Less: Net income attributable to noncontrolling interests, net of tax		(979	)		(6	)
Less: Other comprehensive income attributable to noncontrolling interest		(263	)		—


Total comprehensive income attributable to noncontrolling interests		(1,242	)		(6	)


Total comprehensive income attributable to common stockholders	$	24,119		$	23,231

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

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	March 31, 2014			December 31, 2013

	(Unaudited)
ASSETS
Cash and cash equivalents	$	64,883		$	48,462
Restricted cash and cash equivalents		9,365			7,421
Accounts receivable, net of allowance of $361 and $290, respectively		58,405			39,819
Deferred income taxes		16,977			17,714
Deferred membership costs		9,226			9,828
Prepaid income taxes		—			11,211
Prepaid expenses and other current assets		32,638			24,107


Total current assets		191,494			158,562
Property and equipment, net		58,865			59,556
Goodwill		541,014			540,839
Intangible assets, net		223,895			225,864
Deferred membership costs		11,535			10,741
Deferred income taxes		3,854			3,820
Other non-current assets		28,010			25,237


TOTAL ASSETS	$	1,058,667		$	1,024,619




LIABILITIES AND EQUITY
LIABILITIES:
Accounts payable, trade	$	16,376		$	13,793
Deferred revenue		109,630			92,503
Accrued compensation and benefits		19,739			23,214
Member deposits		9,646			8,977
Accrued expenses and other current liabilities		59,345			51,071


Total current liabilities		214,736			189,558
Long-term debt		248,000			253,000
Other long-term liabilities		6,044			14,156
Deferred revenue		102,287			100,494
Deferred income taxes		90,336			90,452


Total liabilities		661,403			647,660


Redeemable noncontrolling interest		444			426
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 59,423,361 and 59,124,834 shares, respectively		594			591
Treasury stock—1,697,360 shares at cost		(20,913	)		(20,913	)
Additional paid-in capital		192,557			191,106
Retained earnings		200,140			182,935
Accumulated other comprehensive loss		(9,490	)		(9,894	)


Total ILG stockholders' equity		362,888			343,825
Noncontrolling interest		33,932			32,708


Total equity		396,820			376,533


TOTAL LIABILITIES AND EQUITY	$	1,058,667		$	1,024,619

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

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EQUITY

(In thousands, except share data)

(Unaudited)

									Common Stock				Treasury Stock											Accumulated Other Comprehensive Loss

	Total Equity			Noncontrolling Interest		Total ILG Stockholders' Equity			Common Stock				Treasury Stock					Additional Paid-in Capital			Retained Earnings
	Total Equity			Noncontrolling Interest		Total ILG Stockholders' Equity			Amount		Shares		Amount			Shares		Additional Paid-in Capital			Retained Earnings
Balance as of December 31, 2013	$	376,533		$	32,708	$	343,825		$	591		59,124,834	$	(20,913	)		1,697,360	$	191,106		$	182,935		$	(9,894	)
Net income		24,676			961		23,715			—		—		—			—		—			23,715			—
Other comprehensive income, net of tax		667			263		404			—		—		—			—		—			—			404
Non-cash compensation expense		2,847			—		2,847			—		—		—			—		2,847			—			—
Issuance of common stock upon exercise of stock options		292			—		292			—		13,322		—			—		292			—			—
Issuance of common stock upon vesting of restricted stock units, net of withholding taxes		(3,919	)		—		(3,919	)		3		285,205		—			—		(3,922	)		—			—
Change in excess tax benefits from stock-based awards		1,877			—		1,877			—		—		—			—		1,877			—			—
Deferred stock compensation expense		197			—		197												197			—			—
Dividends declared on common stock		(6,350	)		—		(6,350	)		—		—		—			—		160			(6,510	)		—


Balance as of March 31, 2014	$	396,820		$	33,932	$	362,888		$	594		59,423,361	$	(20,913	)		1,697,360	$	192,557		$	200,140		$	(9,490	)

The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,

	2014			2013
	(In thousands)
Cash flows from operating activities:
Net income	$	24,694		$	25,010
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization expense of intangibles		2,966			2,012
Amortization of debt issuance costs		196			196
Depreciation expense		3,793			3,664
Non-cash compensation expense		2,847			2,557
Non-cash interest expense		4			68
Deferred income taxes		573			(985	)
Excess tax benefits from stock-based awards		(1,877	)		(2,474	)
Loss on disposal of property and equipment		10			156
Change in fair value of contingent consideration		—			425
Changes in operating assets and liabilities:
Accounts receivable		(16,207	)		(20,879	)
Prepaid expenses and other current assets		568			1,213
Prepaid income taxes and income taxes payable		13,043			16,510
Accounts payable and other current liabilities		(2,827	)		93
Payment of contingent consideration		(1,184	)		—
Deferred revenue		18,537			18,469
Other, net		(11,079	)		1,414


Net cash provided by operating activities		34,057			47,449


Cash flows from investing activities:
Capital expenditures		(3,101	)		(3,075	)
Proceeds from disposal of property and equipment		(7	)		5
Investment in financing receivables		(500	)		—
Payments received on financing receivables		—			9,876


Net cash provided by (used in) investing activities		(3,608	)		6,806


Cash flows from financing activities:
Payments on revolving credit facility		(5,000	)		(20,000	)
Dividend payments		(6,350	)		—
Payments of contingent consideration		(816	)		—
Withholding taxes on vesting of restricted stock units		(3,700	)		(2,680	)
Proceeds from the exercise of stock options		289			350
Excess tax benefits from stock-based awards		1,877			2,474


Net cash used in financing activities		(13,700	)		(19,856	)


Effect of exchange rate changes on cash and cash equivalents		(328	)		(3,034	)


Net increase in cash and cash equivalents		16,421			31,365
Cash and cash equivalents at beginning of period		48,462			101,162


Cash and cash equivalents at end of period	$	64,883		$	132,527




Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized	$	1,222		$	1,283
Income taxes, net of refunds	$	699		$	231

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

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

(Unaudited)

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION

Company Overview

Interval Leisure Group, Inc., or ILG, is a leading global provider of membership and leisure services to the vacation industry. ILG consists of two operating segments. Membership and Exchange offers leisure and travel-related products and services to owners of vacation interests and others primarily through various membership programs, as well as related services to resort developer clients. Management and Rental provides hotel, condominium resort, timeshare resort and homeowners' association management, and rental services to both vacation property owners and vacationers.

On November 4, 2013, VRI Europe Limited, a subsidiary of ILG, purchased the European shared ownership resort management business of CLC World Resorts and Hotels (CLC). As part of this transaction, ILG issued to CLC shares totaling 24.5% of VRI Europe Limited. Additionally, on December 12, 2013, we acquired all of the equity of Aqua Hospitality LLC and Aqua Hotels and Resorts, Inc., referred to as Aqua, a Hawaii-based hotel and resort management company representing 29 properties in Hawaii and Guam.

The Membership and Exchange operating segment consists of Interval International Inc.'s businesses, referred to as Interval, and the membership and exchange related line of business of Trading Places International, or TPI, and VRI. The Management and Rental operating segment consists of Aston Hotels & Resorts (referred to as Aston), Aqua, VRI Europe and the management and rental related line of business of VRI and TPI.

Basis of Presentation

The accompanying unaudited 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.

The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2013 Annual Report on Form 10-K.

Seasonality

Revenue at ILG is influenced by the seasonal nature of travel. The Membership and Exchange businesses 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. The Management and Rental businesses recognize rental revenue based on occupancy, with the first and third quarters generally generating higher revenue and the second and fourth quarters generally generating lower revenue. The timeshare and homeowners' association management part of this business does not experience significant seasonality.

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES

Our significant accounting policies were described in Note 2 to our audited consolidated financial statements included in our 2013 Annual Report on Form 10-K. There have been no significant changes in our significant accounting policies for the three months ended March 31, 2014.

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.

Significant estimates underlying the accompanying consolidated financial statements include: the recovery of long-lived assets as well as goodwill and other intangible assets; purchase price allocations of business combinations; the determination of deferred income taxes including related valuation allowances; the determination of deferred revenue and membership costs; and the determination of stock-based compensation. In the opinion of ILG's management, the assumptions underlying the historical 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 restricted stock units ("RSUs") 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 do not include approximately 0.8 million stock options each for the three months ended March 31, 2014 and 2013 as the effect of their inclusion would have been antidilutive to earnings per share.

In connection with the spin-off, stock options to purchase ILG common stock were granted to non-ILG employees for which there is no future compensation expense to be recognized by ILG. As of March 31, 2014 and 2013, 0.8 million and 0.9 million, respectively, of stock options remained outstanding.

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 March 31,

	2014		2013
Basic weighted average shares of common stock outstanding		57,505		56,928
Net effect of common stock equivalents assumed to be vested related to RSUs		564		496
Net effect of common stock equivalents assumed to be exercised related to stock options held by non-employees		9		11


Diluted weighted average shares of common stock outstanding		58,078		57,435

Recent Accounting Pronouncements

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 2013 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.

In April 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360)" ("ASU 2014-08"). The amendments in ASU 2014-08 change the requirements for reporting and disclosing discontinued operations. Among other items, this new guidance defines a discontinued operation as a disposal of a component or group of components that is disposed of or is classified as held for sale and "represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results." The standard states that a strategic shift could include a disposal of (i) a major geographical area of operations, (ii) a major line of business, (iii) a major equity method investment, or (iv) other major parts of an entity. The ASU is effective for fiscal years beginning after December 15, 2014 (and interim periods within those fiscal years), with early adoption permitted. We do not currently anticipate the adoption of this guidance will have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures; however, we will continue to assess through the effective date the future impact, if any, of this new accounting update to our consolidated financial statements.

In January 2014, the FASB issued ASU No. 2014-04, "Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure" ("ASU 2014-04"). Current US GAAP requires a loan to be reclassified to Other Real Estate Owned ("OREO") upon a troubled debt restructuring that is "in substance a repossession or foreclosure," where the creditor receives "physical possession" of the debtor's assets regardless of whether formal foreclosure proceedings take place. The amendments in ASU 2014-04 clarify when an "in substance a repossession or foreclosure" and "physical possession"

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES (Continued)

has occurred as these terms are not defined in US GAAP, in addition to requiring certain supplementary interim and annual disclosures. The ASU is effective for fiscal years beginning after December 15, 2014 (and interim periods within those fiscal years) and shall be applied prospectively, with early adoption permitted. We do not currently anticipate the adoption of this guidance will have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures; however, we will continue to assess through the effective date the future impact, if any, of this new accounting update to our consolidated financial statements.

Adopted Accounting Pronouncements

In July 2013, the FASB issued ASU 2013-10, "Derivatives and Hedging (Topic 815): Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate, ("OIS")) as a Benchmark Interest Rate for Hedge Accounting Purposes (a consensus of the FASB Emerging Issues Task Force)" ("ASU 2013-10"). ASU 2013-10 ratified the Task Force's consensus to allow the Fed Funds effective swap rate to serve as a benchmark interest rate in the United States, which was previously defined in ASC 815 as either (1) a rate on direct obligations of the U.S. Department of the Treasury (UST) or (2) the LIBOR swap rate. ASU 2013-10 does not add to the disclosure requirements in ASC 815-10-50; however, in order to comply with the required disclosures related to fair value in ASC 820 a separate process for determining the fair value hierarchy of derivatives when the OIS rate is an input may be required. The ASU is required to be applied prospectively for qualifying new or re-designated hedging relationships entered into on or after July 17, 2013. The adoption of ASU 2013-10 did not have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures.

In March 2013, the FASB issued ASU 2013-05, "Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment ("CTA") upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (a consensus of the FASB Emerging Issues Task Force)" ("ASU 2013-05"). ASU 2013-05 applies to the release of the CTA into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity. The ASU does not change the requirement to release a pro rata portion of the CTA of the foreign entity into earnings for a partial sale of an equity method investment in a foreign entity. The ASU is effective for fiscal years beginning after December 15, 2013 (and interim periods within those fiscal years) and shall be applied prospectively. The adoption of ASU 2013-05 did not have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures.

In February 2013, the FASB issued ASU 2013-04, "Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date" ("ASU 2013-04"). ASU 2013-04 provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this ASU is fixed at the reporting date. The ASU requires an entity to measure those obligations as the sum of the amount the reporting entity

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES (Continued)

agreed to pay on the basis of its arrangements among its co-obligors as well as any additional amount the reporting entity expects to pay on behalf of its co-obligors. ASU 2013-04 also requires an entity to disclose the nature and amount of those obligations. The ASU is effective for fiscal years beginning after December 15, 2013 (and interim periods within those years), and shall be applied retrospectively. The adoption of ASU 2013-04 did not have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures.

NOTE 3—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 determined our Membership and Exchange and Management and Rental operating segments are individual reporting units which are also individual reportable segments of ILG pursuant to ASC 280, Segment Reporting ("ASC 280"). ILG tests goodwill and other indefinite-lived intangible assets for impairment annually as of October 1, or more frequently if events or changes in circumstances indicate that the assets might be impaired. Goodwill is tested for impairment based on either a qualitative assessment or a two-step impairment test, as more fully described in Note 2 of our 2013 Annual Report on Form 10-K. When performing the two-step impairment test, if the carrying amount of a reporting unit's goodwill exceeds its implied fair value, an impairment loss equal to the excess is recorded.

As of October 1, 2013, we reviewed the carrying value of goodwill and other intangible assets of each of our two reporting units. Goodwill assigned to the Membership and Exchange and Management and Rental reporting units as of that date was $483.5 million and $22.3 million, respectively. We elected to bypass the qualitative assessment for the 2013 annual test and performed the first step of the impairment test on both our reporting units. Following the impairment test, we concluded that each reporting unit's fair value exceeded its carrying value and, therefore, the second step of the impairment test was not necessary. As of March 31, 2014, we did not identify any triggering events which required an interim impairment test subsequent to our annual impairment test on October 1, 2013.

The following tables present the balance of goodwill by reporting unit, including the changes in carrying amount of goodwill as of March 31, 2014 and December 31, 2013 (in thousands):

	Balance as of January 1, 2014		Additions		Deductions		Foreign Currency Translation		Goodwill Impairment		Balance as of March 31, 2014

Membership and Exchange	$	483,462	$	—	$	—	$	—	$	—	$	483,462
Management and Rental		57,377		—		—		175		—		57,552


Total	$	540,839	$	—	$	—	$	175	$	—	$	541,014

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 3—GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)

	Balance as of January 1, 2013		Additions		Deductions		Foreign Currency Translation		Goodwill Impairment		Balance as of December 31, 2013

Membership and Exchange	$	483,462	$	—	$	—	$	—	$	—	$	483,462
Management and Rental		22,312		34,533		—		532		—		57,377


Total	$	505,774	$	34,533	$	—	$	532	$	—	$	540,839

Other Intangible Assets

The balance of other intangible assets, net as of March 31, 2014 and December 31, 2013 is as follows (in thousands):

	March 31, 2014		December 31, 2013

Intangible assets with indefinite lives	$	137,546	$	136,713
Intangible assets with definite lives, net		86,349		89,151


Total intangible assets, net	$	223,895	$	225,864

The $0.8 million change in our indefinite-lived intangible assets during the three months ended March 31, 2014 reflects the 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 31, 2014 and December 31, 2013, intangible assets with indefinite lives relate to the following (in thousands):

	March 31, 2014		December 31, 2013

Resort management contracts	$	93,630	$	92,797
Trade names and trademarks		43,916		43,916


Total	$	137,546	$	136,713

At March 31, 2014, intangible assets with definite lives relate to the following (in thousands):

	Cost		Accumulated Amortization			Net

Purchase agreements	$	75,879	$	(75,086	)	$	793
Resort management contracts		108,348		(29,845	)		78,503
Other		21,841		(14,788	)		7,053


Total	$	206,068	$	(119,719	)	$	86,349

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 3—GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)

At December 31, 2013, intangible assets with definite lives relate to the following (in thousands):

	Cost		Accumulated Amortization			Net

Purchase agreements	$	75,879	$	(74,967	)	$	912
Resort management contracts		108,202		(27,518	)		80,684
Other		21,817		(14,262	)		7,555


Total	$	205,898	$	(116,747	)	$	89,151

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 $3.0 million and $2.0 million for the three months ended March 31, 2014 and 2013, respectively. Based on March 31, 2014 balances, amortization expense for the next five years and thereafter is estimated to be as follows (in thousands):

Twelve month period ending March 31,

2015	$	11,497
2016		11,041
2017		9,675
2018		8,488
2019		7,871
2020 and thereafter		37,777


	$	86,349

NOTE 4—PROPERTY AND EQUIPMENT

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

	March 31, 2014			December 31 2013

Computer equipment	$	20,352		$	20,084
Capitalized software		85,854			84,067
Land, buildings and leasehold improvements		28,927			28,905
Furniture and other equipment		15,367			14,830
Projects in progress		8,763			8,296


		159,263			156,182
Less: accumulated depreciation and amortization		(100,398	)		(96,626	)


Total property and equipment, net	$	58,865		$	59,556

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 5—LONG-TERM DEBT

Long-term debt is as follows (in thousands):

	March 31, 2014		December 31, 2013

Revolving credit facility (interest rate of 1.66% at March 31, 2014 and 1.67% at December 31, 2013)	$	248,000	$	253,000


Total long-term debt	$	248,000	$	253,000

Credit Facility

In June, 2012 we entered into an amended and restated credit agreement (the "Amended Credit Agreement") which, among other things (1) provides for a $500 million revolving credit facility, (2) extends the maturity of the credit facility to June 21, 2017, (3) provides for an interest rate on borrowings, commitment fees and letter of credit fees based on our consolidated leverage ratio, and (4) may be increased to up to $700 million, subject to certain conditions. As of March 31, 2014, there was $248 million outstanding on the revolving credit facility. Any principal amounts outstanding under the revolving credit facility are due at maturity. 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 2.25%, or the Base Rate as defined in the Amended Credit Agreement plus a predetermined margin that ranges from 0.25% to 1.25%, in each case based on our leverage ratio. As of March 31, 2014, the applicable margin was 1.50% per annum for LIBOR revolving loans and 0.50% per annum for Base Rate loans. The Amended Credit Agreement has a commitment fee on undrawn amounts that ranges from 0.25% to 0.375% per annum based on our leverage ratio and as of March 31, 2014 the commitment fee was 0.275%. Interest expense for the three months ended March 31, 2014 and 2013 was $1.3 million and $1.7 million, respectively.

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.

Restrictions and Covenants

The Amended Credit Agreement has 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 Amended Credit Agreement requires us to meet certain financial covenants regarding the maintenance of a maximum consolidated leverage ratio of consolidated debt, less credit given for a portion of foreign cash, over consolidated Earnings Before Interest, Taxes, Depreciation and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 5—LONG-TERM DEBT (Continued)

Amortization ("EBITDA"), as defined in the Amended Credit Agreement, of 3.50x through December 31, 2013 and 3.25x thereafter. Additionally, we are required to maintain a minimum consolidated interest coverage ratio of consolidated EBITDA over consolidated interest expense, as defined in the Amended Credit Agreement, of 3.0x. As of March 31, 2014, ILG was in compliance in all material respects with the requirements of all applicable financial and operating covenants, and our consolidated leverage ratio and consolidated interest coverage ratio under the Amended Credit Agreement were 1.27 and 32.56, respectively.

Debt Issuance Costs

In connection with entering into the Amended Credit Agreement in June 2012, we incurred $3.9 million of lender and third-party debt issuance costs and wrote-off the remaining unamortized balance of $0.6 million relating to the original revolving credit and term loan facilities. As of March 31, 2014 and December 31, 2013, total unamortized debt issuance costs on outstanding debt were $2.6 million, net of $1.4 million of accumulated amortization, and $2.7 million, net of $1.2 million of accumulated amortization, respectively, which were included in "Other non-current assets" in our consolidated balance sheets. Debt issuance costs are amortized to "Interest expense" on a straight-line basis for our for our revolving credit facility.

Subsequent Event

On April 8, 2014, we entered into the first amendment to the Amended Credit Agreement (the "Amendment") which increases the revolving credit facility from $500 million to $600 million, extends the maturity of the credit facility to April 8, 2019 and provides for certain other amendments to covenants. Under the Amendment, the maximum consolidated leverage ratio is 3.5x and the minimum consolidated interest coverage ratio is 3.0x. The terms related to interest rates and commitment fees remain unchanged.

ILG and certain of its subsidiaries continue to guarantee all obligations under the Amendment and borrowings continue to be secured as discussed above.

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 6—FAIR VALUE MEASUREMENTS

In accordance with ASC Topic 820, "Fair Value Measurement," ("ASC 820") the fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability's fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

Level 1—Observable inputs that reflect quoted prices in active markets

Level 2—Inputs other than quoted prices in active markets that are either directly or indirectly observable

Level 3—Unobservable inputs in which little or no market data exists, therefore requiring the company to develop its own assumptions

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 months ended March 31, 2014. Our financial instruments include guarantees, letters of credit and surety bonds.

	March 31, 2014						December 31, 2013

	Carrying Amount			Fair Value			Carrying Amount			Fair Value
	(In thousands)
Cash and cash equivalents	$	64,883		$	64,883		$	48,462		$	48,462
Restricted cash and cash equivalents		9,365			9,365			7,421			7,421
Total debt		(248,000	)		(248,000	)		(253,000	)		(253,000	)
Guarantees, surety bonds and letters of credit		N/A			(26,666	)		N/A			(28,525	)

The carrying amounts of cash and cash equivalents and restricted cash and cash equivalents reflected in the accompanying 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 carrying value of the outstanding balance under our $500 million revolving credit facility approximates fair value as of March 31, 2014 and December 31, 2013 through inputs inherent to the debt such as variable interest rates and credit risk (Level 2).

The guarantees, surety bonds, and letters of credit represent liabilities that are carried on our balance sheet only when a future related contingent event becomes probable and reasonably estimable. These commitments are in place to facilitate our commercial operations. The related fair value of these

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 6—FAIR VALUE MEASUREMENTS (Continued)

liabilities is estimated at the minimum expected cash flows contractually required to satisfy the related liabilities in the future upon occurrence of the applicable contingent events (Level 2).

Fair Value of Contingent Consideration

In connection with the VRI Europe transaction, we have an obligation to transfer additional consideration in the form of cash, which results in incremental noncontrolling interest value in VRI Europe, based on final results of the acquired business for the twelve months ended December 31, 2013. As of March 31, 2014, preliminary results for 2013 form the basis of the estimated amount accrued on our consolidated balance sheet; accordingly, this estimated amount is based on Level 3 inputs (such as results for the business) representing the fair value of this liability for each respective balance sheet date. This estimated liability is subject to adjustment until such time as agreed upon by both parties. Subsequent to March 31, 2014, the parties reached final agreement and adjusted downward the amount of contingent consideration by approximately $1.2 million, which will be recognized in earnings in the quarter ended June 30, 2014 when the change to the contingent consideration arrangement occurred.

The contingent consideration amount accrued within current liabilities as of March 31, 2014 and December 31, 2013 is $7.7 million and $7.6 million, respectively. The change from December 31, 2013 to March 31, 2014 solely relates to the translation effect on the foreign currency amount.

Additionally, in connection with our fourth quarter 2013 acquisitions, certain amounts related to the purchase consideration paid at closing were deposited into escrow to be held subject to specified future events which could occur over a period ranging from the respective acquisition dates up to 36 months thereafter, as applicable. Pursuant to ASC 805, we consider these escrowed funds to be contingent consideration whereby their release from escrow is subject to future performance. Consequently, at March 31, 2014 and December 31, 2013, we have recorded liabilities totaling $11.3 million and $11.0 million, respectively, with corresponding assets representing the prepayment into escrow. The change from December 31, 2013 to March 31, 2014 solely relates to the translation effect on the foreign currency amount. These liabilities, which were measured using Level 3 inputs (such as provisions of their respective purchase agreements), are stated at their agreed upon contractual amounts because it is likely these amounts would be released to the sellers. As the associated specified events occur and respective amounts are released from escrow, we will release the corresponding amount from our consolidated balance sheet at that time.

NOTE 7—EQUITY

ILG has 300 million authorized shares of common stock, par value of $0.01 per share. At March 31, 2014, there were 59.4 million shares of ILG common stock issued, of which 57.7 million are outstanding with 1.7 million shares held as treasury stock. At December 31, 2013, there were 59.1 million shares of ILG common stock issued, of which 57.4 million were outstanding with 1.7 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 31, 2014 and December 31, 2013. The Board of Directors

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 7—EQUITY (Continued)

has the authority to issue the preferred stock in one or more series and to establish the rights, preferences and dividends.

Dividend Declared

In February 2014, our Board of Directors declared a quarterly dividend payment of $0.11 per share to shareholders of record on March 13, 2014. In March 2014, a cash dividend of $6.3 million was paid.

In May 2014, our Board of Directors declared a $0.11 per share dividend payable June 18, 2014 to shareholders of record on June 4, 2014.

Stockholder Rights Plan

In June 2009, ILG's Board of Directors approved the creation of a Series A Junior Participating Preferred Stock, adopted a stockholders rights plan and declared a dividend of one right for each outstanding share of common stock held by our stockholders of record as of the close of business on June 22, 2009. The rights attach to any additional shares of common stock issued after June 22, 2009. These rights, which trade with the shares of our common stock, currently are not exercisable. Under the rights plan, these rights will be exercisable if a person or group acquires or commences a tender or exchange offer for 15% or more of our common stock. The rights plan provides certain exceptions for acquisitions by Liberty Interactive Corporation (formerly known as Liberty Media Corporation) in accordance with an agreement entered into with ILG in connection with its spin-off from IAC/InterActiveCorp (IAC). If the rights become exercisable, each right will permit its holder, other than the "acquiring person," to purchase from us shares of common stock at a 50% discount to the then prevailing market price. As a result, the rights will cause substantial dilution to a person or group that becomes an "acquiring person" on terms not approved by our Board of Directors.

Share Repurchase Program

Effective August 3, 2011, ILG's Board of Directors authorized a share repurchase program for up to $25.0 million, excluding commissions, of our outstanding common stock. Acquired shares of our common stock are held as treasury shares carried at cost on our consolidated financial statements. 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 and other factors. This program may be modified, suspended or terminated by us at any time without notice.

There were no repurchases of common stock during the year ended December 31, 2013 and the three months ended March 31, 2014. As of March 31, 2014, the remaining availability for future repurchases of our common stock was $4.1 million.

Accumulated Other Comprehensive Loss

Pursuant to final guidance issued by the FASB in February of 2013, entities are required to disclose additional information about reclassification adjustments within accumulated other

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 7—EQUITY (Continued)

comprehensive income/loss, referred to as AOCL for ILG, including (1) changes in AOCL balances by component and (2) significant items reclassified out of AOCL in the period. For the three months ended March 31, 2014, 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 consolidated statements of comprehensive income.

Noncontrolling Interest and Redeemable Noncontrolling Interest

Noncontrolling Interest

In connection with the VRI Europe transaction on November 4, 2013, CLC was issued a noncontrolling interest in VRI Europe valued at 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 31, 2014 and December 31, 2013, this noncontrolling interest amounts to $33.9 million and $32.7 million, respectively, and is presented on our consolidated balance sheets as a component of equity. The change from December 31, 2013 to March 31, 2014 relates to the recognition of the noncontrolling interest holder's proportional share of VRI Europe's earnings, as well as the translation effect on the foreign currency amount.

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 minimum returns and a preemptive right by ILG. As of March 31, 2014, 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 has made available to CLC a convertible secured loan facility of $15.1 million that matures five years subsequent to the funding date 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. The funding of this loan is subject to certain conditions precedent that have not been met as of March 31, 2014; consequently, no disbursements have been made in connection with this loan arrangement.

Redeemable Noncontrolling Interest

The redeemable noncontrolling interest presented on our consolidated balance sheet as temporary equity represents a noncontrolling ownership in the parent company of our Aston and Aqua businesses. In connection with the acquisition of Aston by ILG in May 2007, a member of senior management of this business purchased an ownership interest at the same per share price as ILG, a portion of which accrues preferred dividends at a rate of 10% per annum, and was granted an additional interest vesting over four and a half years. ILG is party to a fair value put and call arrangement with respect to this individual's holdings whereby this member of management could require ILG to purchase their interest or ILG could acquire such interest at fair value. The fair value of these shares upon exercise of the put

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 7—EQUITY (Continued)

or call is equal to their fair market value, determined by negotiation or arbitration, reduced by the accreted value of the preferred interest that was taken by ILG upon the purchase of Aston. The initial value of the preferred interest was equal to the acquisition price of Aston. An additional put right by the holder and call right by ILG would require, upon exercise, the purchase of these non-voting common shares by ILG immediately prior to a registered public offering by Aston, at the public offering price.

This put arrangement is exercisable by the counter-party outside the control of ILG and is accounted for in accordance with the ASC Topic 480, "Distinguishing Liabilities from Equity" ("ASC 480"). Pursuant to this guidance, we are required to adjust the carrying value of this noncontrolling interest, once redeemable, to its maximum redemption amount at each balance sheet date with a corresponding adjustment to retained earnings. Furthermore, if the noncontrolling interest is not currently redeemable yet probable of becoming redeemable, we are required to either (1) accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the security will become redeemable, if later) to the earliest redemption date of the instrument using an appropriate methodology, usually the interest method, or (2) recognize changes in the redemption value (for example, fair value) immediately as they occur and adjust the carrying value of the security to equal the redemption value at the end of each reporting period. In applicable periods, we elect to use the second approach.

This put and call arrangement became redeemable in the first quarter of 2014 upon filing our 2013 Annual Report on Form 10-K, and is exercisable for a period of 60 days and annually thereafter. Upon exercise of the put or call, the consideration payable can be denominated in ILG shares, cash or a combination thereof at ILG's option.

As of March 31, 2014, the estimated redemption value of this redeemable interest is lower than the current carrying value on our consolidated balance sheet. Consequently, pursuant to the applicable accounting guidance, no adjustment to the balance of this redeemable noncontrolling interest was recorded for the three months ended March 31, 2014.

The balance of redeemable noncontrolling interest as of March 31, 2014 and 2013 was $0.4 million. Changes during the periods then ended are as follows (in thousands):

	March 31,

	2014		2013
Balance, beginning of period	$	426	$	426
Net income attributable to redeemable noncontrolling interests		18		6


Balance, end of period	$	444	$	432

NOTE 8—BENEFIT PLANS

Under a retirement savings plan 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 under the ILG plan of fifty cents for

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 8—BENEFIT PLANS (Continued)

each dollar a participant contributed into the plan with a maximum contribution of 3% of a participant's eligible earnings, subject to Internal Revenue Service ("IRS") restrictions. Matching contributions for the ILG plan were approximately $0.6 million and $0.4 million for the three months ended March 31, 2014 and 2013, respectively. Matching contributions were invested in the same manner as each participant's voluntary contributions in the investment options provided under the plan.

During the three months ended March 31, 2014 and 2013, we also had or participated in various benefit plans, principally defined contribution plans, for non-U.S. employees. Our contributions for these plans were approximately $0.1 million in each of the three months ended March 31, 2014 and 2013.

Effective August 20, 2008, a deferred compensation plan (the "Director Plan") was established to provide non-employee directors of ILG an option to defer director fees on a tax-deferred basis. Participants in the Director Plan are allowed to defer a portion or all of their compensation and are 100% vested in their respective deferrals and earnings. With respect 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 has reserved 100,000 shares of common stock for issuance pursuant to this plan, of which 43,271 share units were outstanding at March 31, 2014. ILG does not provide matching or discretionary contributions to participants in the Director Plan. Any deferred compensation elected to be received in stock is included in diluted earnings per share.

NOTE 9—STOCK-BASED COMPENSATION

On May 21, 2013, ILG adopted the Interval Leisure Group, Inc. 2013 Stock and Incentive Plan and stopped granting awards under the ILG 2008 Stock and Annual Incentive Plan. Both plans provide 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. Each RSU 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.

ILG recognizes non-cash compensation expense for all RSUs held by ILG's employees. For RSUs to be settled in stock, the accounting charge is measured at the grant date as the fair value of ILG common stock and expensed as non-cash compensation over the vesting term using the straight-line basis for service awards and the accelerated basis for performance-based awards with graded vesting. Certain cliff vesting awards contain performance criteria which are tied to anticipated future results of operations in determining the fair value of the award, while other cliff vesting awards with performance criteria are tied to the achievement of certain market conditions. This value is recognized as expense over the service period, net of estimated forfeitures, using the straight-line recognition method. The expense associated with RSU awards to be settled in cash is initially measured at fair value at the grant

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 9—STOCK-BASED COMPENSATION (Continued)

date and expensed ratably over the vesting term, recording a liability subject to mark-to-market adjustments for changes in the price of the respective common stock, as compensation expense.

Shares underlying RSUs are not issued or outstanding until vested. In relation to our quarterly dividend, unvested RSUs are credited with dividend equivalents, in the form of additional RSUs, when dividends are paid on our shares of common stock. Such additional RSUs are forfeitable and will have the same vesting dates and will vest under the same terms as the RSUs in respect of which such additional RSUs are credited. Given such dividend equivalents are forfeitable, we do not consider them to be participating securities and, consequently, they are not subject to the two-class method of determining earnings per share.

Under the ILG 2013 Stock and Incentive Compensation Plan, the maximum aggregate number of shares of common stock reserved for issuance as of adoption is 4.1 million shares, less one share for every share granted under any prior plan after December 31, 2012. As of March 31, 2014, ILG has 3.0 million shares available for future issuance under the 2013 Stock and Incentive Compensation Plan.

During the first quarter of 2014 and 2013, the Compensation Committee granted approximately 390,000 and 657,000 RSUs, respectively, vesting over three to five years, to certain officers and employees of ILG and its subsidiaries. Of these RSUs granted in 2014 and 2013, approximately 116,000 and 300,000 cliff vest in three to five years and approximately 84,000 and 58,000 of these RSUs, respectively, are subject to performance criteria that could result between 0% and 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 2014 and 2013 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 $36.90 for 2014 and $29.61 for 2013 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.

Non-cash compensation expense related to RSUs for the three months ended March 31, 2014 and 2013 was $2.8 million and $2.6 million, respectively. At March 31, 2014, there was approximately $22.5 million of unrecognized compensation cost, net of estimated forfeitures, related to RSUs, which is currently expected to be recognized over a weighted average period of approximately 2.2 years.

The amount of stock-based compensation expense recognized in the consolidated statements of income is reduced by estimated forfeitures, as the amount recorded is based on awards ultimately expected to vest. The forfeiture rate is estimated at the grant date based on historical experience and revised, if necessary, in subsequent periods for any changes to the estimated forfeiture rate from that previously estimated. For any vesting tranche of an award, the cumulative amount of compensation cost

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 9—STOCK-BASED COMPENSATION (Continued)

recognized is at least 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 consolidated statements of income for the three months ended March 31, 2014 and 2013 (in thousands):

	Three Months Ended March 31,

	2014		2013
Cost of sales	$	210	$	194
Selling and marketing expense		363		322
General and administrative expense		2,274		2,041


Non-cash compensation expense	$	2,847	$	2,557

The following table summarizes RSU activity during the three months ended March 31, 2014:

	Shares			Weighted-Average Grant Date Fair Value

	(In thousands)
Non-vested RSUs at January 1, 2014		1,495		$	17.33
Granted		399			27.41
Vested		(430	)		16.02
Forfeited		(2	)		17.58


Non-vested RSUs at March 31, 2014		1,462		$	20.46

NOTE 10—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 or benefit related to significant, unusual, or extraordinary items that will be separately reported or reported net of their related tax effect are individually computed and recognized in the interim period in which those items occur. In addition, the effect of a change in enacted tax laws or rates, tax status, or judgment on the realizability of a beginning-of-the-year deferred tax asset in future years is recognized in the interim period in which the change occurs.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 10—INCOME TAXES (Continued)

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 operating income 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 recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision 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 tax expense for the current quarter.

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 months ended March 31, 2014, ILG recorded an income tax provision for continuing operations of $14.3 million, which represents an effective tax rate of 36.7%. This tax rate is higher than the federal statutory rate of 35% due principally to state and local income taxes partially offset by foreign income taxed at lower rates. During the three months ended March 31, 2014, the effective tax rate decreased due to the shift in the projections of the proportion of income earned and taxed between the various jurisdictions and the decrease in unrecognized tax benefits associated with the expiration of the statute of limitations related to foreign taxes, partially offset by the net increase in income taxes associated with the effect of changes in tax laws in certain states and other income tax items.

For the three months ended March 31, 2013, ILG recorded an income tax provision for continuing operations of $15.8 million, which represents an effective tax rate of 38.6%. This tax rate is higher than the federal statutory rate of 35% due principally to state and local income taxes partially offset by foreign income taxed at lower rates. During the three months ended March 31, 2013, the effective tax rate increased due to the shift in the projections of the proportion of income earned and taxed between the various jurisdictions, partially offset by a decrease in unrecognized tax benefits associated with the expiration of the statute of limitations related to foreign taxes.

As of March 31, 2014 and December 31, 2013, ILG had unrecognized tax benefits of $0.4 million and $0.5 million, respectively, which if recognized, would favorably affect the effective tax rate. During the three months ended March 31, 2014, the unrecognized tax benefits decreased by approximately $0.1 million as a result of the expiration of the statute of limitations related to foreign taxes.

ILG recognizes interest and, if applicable, penalties related to unrecognized tax benefits in income tax expense. There were no material accruals for interest for the three months ended March 31, 2014. During the three months ended March 31, 2014, interest and penalties decreased by approximately $0.1 million as a result of the expiration of the statute of limitations related to foreign taxes. As of March 31, 2014, ILG had accrued $0.3 million for interest and penalties.

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 10—INCOME TAXES (Continued)

ILG believes that it is reasonably possible that its unrecognized tax benefits could decrease by approximately $0.1 million within twelve months of the current reporting date due primarily to the expiration of the statute of limitations related to foreign taxes. An estimate of other changes in unrecognized tax benefits cannot be made, but is not expected to be significant.

ILG has routinely been under audit by federal, state, local and foreign taxing authorities. These audits include questioning the timing and the amount of deductions and the allocation of income among various tax jurisdictions. Income taxes payable include amounts considered sufficient to pay assessments that may result from examination of prior year returns; however, the amount paid upon resolution of issues raised may differ from the amount provided. Differences between the reserves for tax contingencies and the amounts owed by ILG are recorded in the period they become known. Under a tax sharing agreement, entered into in connection with the spin-off transaction, IAC indemnifies ILG for all consolidated tax liabilities and related interest and penalties for the pre-spin period.

The IRS has completed its review of IAC's consolidated tax returns for the years ended December 31, 2001 through 2009, which includes our operations from September 24, 2002, our date of acquisition by IAC, until the spin-off in August 2008. On August 28, 2013, the Joint Committee of Taxation completed its review and approved the audit settlement. The statute of limitations for the years 2001 through 2009 expires on July 1, 2014. Various IAC consolidated tax returns that include our operations, filed with state and local jurisdictions, are currently under examination, the most significant of which are California, New York and New York City for various tax years beginning with 2006. No other open tax years are currently under examination by the IRS or any material state and local jurisdictions.

During 2013, the U.K. Finance Act of 2013 was enacted which further reduced the U.K. corporate income tax rate to 21%, effective April 1, 2014 and 20%, effective April 1, 2015. The impact of the U.K. rate reduction to 21% and 20%, which reduced our U.K. net deferred tax asset and increased income tax expense, was reflected in the reporting period when the law was enacted. The change in the corporate tax rate initially negatively impacted income tax expense as the future benefit expected to be realized from our U.K. net deferred tax assets decreased; however, going forward, the lower corporate tax rate will decrease income tax expense and favorably impact our effective tax rate.

NOTE 11—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 consists of two operating segments which are also reportable segments. Membership and Exchange offers leisure and travel-related products and services to owners of vacation interests and others mostly through various membership programs, as well as related services to resort developer clients. Management and Rental provides hotel, condominium resort, timeshare resort and

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 11—SEGMENT INFORMATION (Continued)

homeowners' association management, and vacation rental services to both vacation property owners and vacationers.

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

	Three Months Ended March 31,

	2014		2013
Membership and Exchange
Revenue	$	95,345	$	102,095
Cost of sales		23,969		25,457


Gross profit		71,376		76,638
Selling and marketing expense		13,340		12,825
General and administrative expense		22,440		20,485
Amortization expense of intangibles		334		337
Depreciation expense		3,335		3,319


Segment operating income	$	31,927	$	39,672

	Three Months Ended March 31,

	2014		2013
Management and Rental
Management fee and rental revenue	$	36,611	$	17,445
Pass-through revenue		25,085		15,341


Total revenue		61,696		32,786
Cost of sales		39,881		20,919


Gross profit		21,815		11,867
Selling and marketing expense		1,230		910
General and administrative expense		8,997		5,820
Amortization expense of intangibles		2,632		1,675
Depreciation expense		458		345


Segment operating income	$	8,498	$	3,117

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 11—SEGMENT INFORMATION (Continued)

	Three Months Ended March 31,

	2014		2013
Consolidated
Revenue	$	157,041	$	134,881
Cost of sales		63,850		46,376


Gross profit		93,191		88,505
Direct segment operating expenses		52,766		45,716


Operating income	$	40,425	$	42,789

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

	March 31, 2014		December 31, 2013

Total Assets:
Membership and Exchange	$	755,489	$	732,161
Management and Rental		303,178		292,458


Total	$	1,058,667	$	1,024,619

Geographic Information

We conduct operations through offices in the U.S. and 16 other countries. For the three months ended March 31, 2014 and 2013 revenue is sourced from over 100 countries worldwide. Other than the United States and Europe, revenue sourced from any individual country or geographic region did not exceed 10% of consolidated revenue for three months ended March 31, 2014 and 2013.

Geographic information on revenue, based on sourcing, and long-lived assets, based on physical location, is presented in the table below (in thousands). Amounts in the proceeding table representing revenue sourced from the United States and Europe, versus all other countries, for the three months ended March 31, 2013 have been reclassified to conform to current period presentation.

	Three Months Ended March 31,

	2014		2013
Revenue:
United States	$	121,700	$	109,343
Europe		19,244		6,210
All other countries(1)		16,097		19,328


Total	$	157,041	$	134,881

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

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 11—SEGMENT INFORMATION (Continued)

	March 31, 2014		December 31, 2013

Long-lived assets (excluding goodwill and other intangible assets):
United States	$	52,555	$	53,056
Europe		5,672		5,812
All other countries		638		688


Total	$	58,865	$	59,556

NOTE 12—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 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 10 for a discussion of income tax contingencies.

Other items, such as certain purchase commitments and guarantees are not recognized as liabilities in our 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. At March 31, 2014, guarantees, surety bonds and letters of credit totaled $26.7 million, with the highest annual amount of $15.2 million occurring in year one. The total includes maximum exposure under guarantees of $23.1 million, which primarily relates to the Management and Rental segment's hotel and resort management agreements, including those with guaranteed dollar amounts, and accommodation leases supporting the segment's management activities, 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.

In addition, certain of the Management and Rental segment's hotel and resort management agreements provide that owners receive specified percentages of the revenue generated under 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, and we either retain the balance (if any) as our management fee or make up the deficit. Although such deficits are reasonably possible in a few of these agreements, as of March 31, 2014, future amounts are not expected to be significant, individually or in the aggregate. Certain of our Management and Rental businesses also enter into agreements, as principal, for services purchased on behalf of property owners for which they are subsequently reimbursed. As such, we are the primary obligor and may be liable for unreimbursed costs. As of March 31, 2014, amounts pending reimbursements are not significant.

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARCH 31, 2014

(Unaudited)

NOTE 12—COMMITMENTS AND CONTINGENCIES (Continued)

European Union Value Added Tax Matter

In 2009, the European Court of Justice issued a judgment related to Value Added Tax ("VAT") in Europe against an unrelated party. The judgment affects companies who transact within the European Union ("EU"), specifically providers of vacation interest exchange services, and altered the manner in which the Membership and Exchange segment accounts for VAT on its revenues as well as to which EU country VAT is owed.

As of March 31, 2014 and December 31, 2013, ILG had an accrual of $2.4 million and $2.9 million, respectively, representing the net exposure of any VAT reclaim refund receivable and accrued VAT liabilities related to this matter. The net change in the accrual primarily relates to a decrease in the change in estimate primarily to update the periods for which the accrued VAT liabilities are due, as well as the effect of foreign currency remeasurements. The change in estimate resulted in a favorable adjustment to our consolidated statement of income for the three months ended March 31, 2014.

Because of the uncertainty surrounding the ultimate outcome and settlement of these VAT liabilities, it is reasonably possible that future costs to settle these VAT liabilities may range from $2.4 million up to approximately $3.4 million based on quarter-end exchange rates. ILG believes that the $2.4 million accrual at March 31, 2014 is our best estimate of probable future obligations for the settlement of these VAT liabilities. The difference between the probable and reasonably possible amounts is primarily attributable to the assessment of certain potential penalties.

NOTE 13—SUBSEQUENT EVENT

In May 2014, we entered into an Equity Interest Purchase Agreement with Hyatt Corporation to acquire the Hyatt Residential Group business for approximately $190 million in cash at closing, subject to customary post-closing adjustments. Additionally, we will reimburse Hyatt for its capital contribution associated with its interest in a joint venture related to a 131-unit vacation ownership property in Maui (currently estimated to be $35 million based on an assumed early fourth quarter closing). In connection with this transaction we will enter into an exclusive master license agreement and become Hyatt's exclusive licensee in vacation ownership. The closing of this transaction is subject to obtaining specified consents, in addition to other customary closing conditions, and the Equity Interest Purchase Agreement may be terminated in certain circumstances, including, among others, if the transaction does not close by December 31, 2014.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward-Looking Information

This quarterly report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as "anticipates," "estimates," "expects," "intends," "plans" and "believes," and similar expressions or future or conditional verbs such as "will," "should," "would," "may" and "could" among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements relating to: our future financial performance, our business prospects and strategy, anticipated financial position, liquidity and capital needs and other similar matters. These forward-looking statements are based on management's current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.

Actual results could differ materially from those contained in the forward-looking statements included in this quarterly report for a variety of reasons, including, among others: adverse trends in economic conditions generally or in the vacation ownership, vacation rental and travel industries; adverse changes to, or interruptions in, relationships with third parties; lack of available financing for, or insolvency of developers; consolidation of developers; decreased demand from prospective purchasers of vacation interests; travel related health concerns; changes in our senior management; regulatory changes; our ability to compete effectively and successfully add new products and services; our ability to successfully manage and integrate acquisitions; impairment of assets; the restrictive covenants in our revolving credit facility; adverse events or trends in key vacation destinations; business interruptions in connection with our technology systems; ability of managed homeowners' associations to collect sufficient maintenance fees; third parties not repaying advances or extensions of credit; failure to consummate a previously announced transaction; and our ability to expand successfully in international markets and manage risks specific to international operations. Certain of these and other risks and uncertainties are discussed in our filings with the SEC, including in Item 1A "Risk Factors" of our 2013 Annual Report on Form 10-K and in Part II of this report. In light of these risks and uncertainties, the forward looking statements discussed in this report may not prove to be accurate. Accordingly, you should not place undue reliance on these forward looking statements, which only reflect the views of our management as of the date of this report. Except as required by applicable law, we do not undertake to update these forward-looking statements.

GENERAL

The following Management Discussion and Analysis provides a narrative of the results of operations and financial condition of ILG for the three months ended March 31, 2014. This section should be read in conjunction with the consolidated financial statements and accompanying notes included in this report as well as our 2013 Annual Report on Form 10-K, which have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). This discussion includes the following sections:

•: Management Overview
•: Results of Operations
•: Financial Position, Liquidity and Capital Resources
•: Critical Accounting Policies and Estimates
•: ILG's Principles of Financial Reporting
•: Reconciliations of Non-GAAP Measures

MANAGEMENT OVERVIEW

General Description of our Business

ILG is a leading global provider of membership and leisure services to the vacation industry. We operate in two segments: Membership and Exchange and Management and Rental. Membership and Exchange, offers leisure and travel-related products and services to owners of vacation interests and others primarily through various membership programs, as well as related services to resort developer clients. Management and Rental provides hotel, condominium resort, timeshare resort and homeowners' association management, and rental services to both vacation property owners and vacationers.

Membership and Exchange Services

Interval, the principal business comprising our Membership and Exchange segment, has been a leader in the membership and exchange services industry since its founding in 1976. As of March 31, 2014, Interval's primary operation is the Interval Network, a quality global vacation ownership membership exchange network with:

•: a large and diversified base of participating resorts consisting of approximately 2,900 resorts located in over 80 countries, including both leading independent resort developers and branded hospitality companies; and
•: approximately 1.8 million vacation ownership interest owners enrolled as members of the Interval Network.

Interval typically enters into multi-year contracts with developers of vacation ownership resorts, pursuant to which the resort developers agree to enroll all purchasers of vacation interests at the applicable resort as members of an Interval exchange program. In return, Interval provides enrolled purchasers with the ability to exchange the use and occupancy of their vacation interest at the home resort (generally for a period of one week) for the right to occupy accommodations at a different resort participating in an Interval exchange network. Through Interval's Getaways, members may rent resort accommodations for a fee without relinquishing the use of their vacation interest. In addition, Interval offers sales, marketing and operational support, consulting and back-office services, including reservation servicing, to certain resort developers participating in the Interval Network, upon their request and for additional consideration.

The Membership and Exchange segment earns most of its revenue from (i) fees paid for membership in the Interval Network and (ii) Interval Network transactional and service fees paid primarily for exchanges, Getaways, reservation servicing, and related transactions collectively referred to as "transaction revenue."

Management and Rental Services

We also provide management and rental services to hotels, condominium resorts, timeshare resorts, vacation clubs and homeowners' associations through Aston, Aqua, VRI Europe, Vacation Resorts International (VRI), and Trading Places International (TPI). Such vacation properties and hotels are not owned by us. Aston and Aqua are based in Hawaii and concentrate largely on hotel and condominium resort management primarily in Hawaii, as well as vacation property rental and related services (including common area and owner association management services for condominium projects). VRI Europe manages vacation ownership resorts in Spain, the United Kingdom, France and Portugal. TPI and VRI provide property management, vacation rental and homeowners' association management services to timeshare resorts in the United States, Canada and Mexico.

As of March 31, 2014, the businesses that comprise our Management and Rental segment provided various management and rental services to travelers and owners at approximately 250 vacation properties, resorts and club locations.

Revenue from the Management and Rental segment is derived principally from fees for hotel, condominium resort, timeshare resort, vacation clubs and homeowners' association management and rental services. Management fees consist of a base management fee, incentive management fee, service fees, and annual maintenance fees, as applicable. Incentive management fees are generally a percentage of operating profits or improvement in operating profits. 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. Annual maintenance fees are amounts paid by timeshare owners for maintaining and operating the respective properties, including management services.

At Aston and Aqua, the majority of hotel and condominium resort management agreements provide that owners receive either specified percentages of the revenue generated under our management or, in limited instances, guaranteed dollar amounts. In these cases, the operating expenses for the rental operation are paid from the revenue generated by the rentals, the owners are then paid their contractual percentages or amounts, and the Management and Rental segment either retains the balance (if any) as its management fee or makes up the deficit. In other instances, fees for rental services generally consist of commissions earned on rentals.

International Revenue

International revenue increased 19% in the three months ended March 31, 2014 compared to the same period in 2013. As a percentage of our total revenue, international revenue increased to 23% in the three months ended March 31, 2014 from 19.0% in 2013. The increase in international revenue as a percentage of total revenue in 2014 is attributable to revenue from our VRI Europe joint venture established in November 2013.

Other Factors Affecting Results

Membership and Exchange

The consolidation of resort developers driven by bankruptcies and the lack of receivables financing previously resulted in a decrease in the flow of new members from point of sale to our exchange networks. Access to financing has returned to the industry following the recession and slow recovery. While very few new projects have been constructed in the last several years, developers and homeowners' associations have been taking back vacation ownership interests which are again available to be sold. This allows developers to continue to generate sales revenues without significant capital expenditure for development and causes homeowners' associations at resorts that are no longer linked to a developer to look for efficient distribution channels to resell the inventory to preserve the maintenance fee paying owner base. Additionally, a high proportion of sales by developers are to their existing owners, which does not result in new members to the Interval Network.

Our 2014 results to-date continue to be negatively affected by a shift in the percentage mix of our membership base from traditional, direct renewal members to corporate members, a tightening in the availability of exchange and Getaway inventory and, to a lesser extent, severe weather throughout much of the United States which limited demand to certain destinations with availability. In addition, we secured multi-year renewals with four large developer clients that account for approximately two-thirds of the Interval Network corporate members; however, the terms associated with these renewals have resulted in reduced profitability. Our corporate developer accounts enroll and renew their entire active owner base which positively impacts our retention rate; however, these members tend to have a lower propensity to transact with us. Membership mix as of March 31, 2014 is comprised of 59% traditional

versus 41% corporate members, compared to 61% and 39%, respectively, as of March 31, 2013. Consequently, where possible, we structure our corporate membership arrangements to include reservation servicing and/or other revenue streams to mitigate the anticipated lower transaction propensity.

Management and Rental

Our Management and Rental segment results are susceptible to variations in economic conditions, particularly in Hawaii, one of its largest markets. According to the Hawaii Tourism Authority, visitor arrivals by air in Hawaii decreased 2.3% for the three months ended March 31, 2014 compared to the same period in the prior year. Aston's occupancy in Hawaii for the first quarter of 2014 was consistent when compared to the prior year, while revenue per available room was higher by 4.4% driven by higher average daily rates. For comparative purposes, Aqua has been excluded from this analysis.

As of the latest forecast (February 2014), the Hawaii Department of Business, Economic Development and Tourism forecasts increases of 2.0% in visitors by air to Hawaii and 3.4% in visitor expenditures in 2014 over 2013.

Business Acquisitions

During the fourth quarter of 2013 we purchased the European shared ownership resort management business of CLC and all of the equity of Aqua, a Hawaii-based hotel and resort management company. These acquisitions were not individually significant; however, the year-over-year comparability for the three months ended March 31, 2014 was affected as further discussed in our Results of Operations section.

Outlook

The vacation ownership industry remains in a period of transition that resulted in the bankruptcy, restructuring and consolidation of developers as well as continued modifications to their business models. We expect additional consolidation and reorganizations within the industry leading to increased competition in our membership and exchange business and reduced availability of exchange and Getaway inventory. Also, we anticipate reduced profitability related to the four large corporate renewals discussed above to unfavorably impact year-over-year comparability for the remainder of 2014.

For the Management and Rental segment, we expect year-over-year growth in RevPAR to weaken as the tourism recovery of its largest market, Hawaii, moderates. Additionally, airlift into the island chain remains a positive factor bolstering the Hawaiian tourism economy; however, increases in the cost of a Hawaiian vacation may continue to negatively impact visitor arrivals and temper growth.

Business Acquisitions

The completion of the VRI Europe and Aqua transactions during the fourth quarter of 2013 will affect the year-over-year comparability of our results of operations for the year ended December 31, 2014 and respective interim periods. The VRI Europe transaction will continue to affect international revenue as a percentage of total revenue.

RESULTS OF OPERATIONS

Revenue

For the three months ended March 31, 2014 compared to the three months ended March 31, 2013

	Three Months Ended March 31,

	2014		% Change			2013
	(Dollars in thousands)
Membership and Exchange
Transaction revenue	$	56,111		(8.2	)%	$	61,148
Membership fee revenue		31,818		(4.6	)%		33,364
Ancillary member revenue		1,623		(15.6	)%		1,924


Total member revenue		89,552		(7.1	)%		96,436
Other revenue		5,793		2.4	%		5,659


Total Membership and Exchange revenue		95,345		(6.6	)%		102,095


Management and Rental
Management fee and rental revenue		36,611		109.9	%		17,445
Pass-through revenue		25,085		63.5	%		15,341


Total Management and Rental revenue		61,696		88.2	%		32,786


Total revenue	$	157,041		16.4	%	$	134,881

Revenue for the three months ended March 31, 2014 increased $22.2 million, or 16.4%, from the comparable period in 2013. Management and Rental segment revenue increased $28.9 million, or 88.2%, in the quarter compared to 2013, while Membership and Exchange segment revenue decreased $6.8 million, or 6.6%, year-over-year.

Membership and Exchange

Membership and Exchange revenue decreased $6.8 million, or 6.6%, in the first quarter of 2014 compared to 2013. This decrease primarily resulted from lower transaction revenue and membership fee revenue of $5.0 million and $1.5 million, respectively. The decrease in transaction revenue is mainly related to a drop in revenue from exchanges and Getaways of $5.4 million, partly offset by a rise of $0.4 million in other transaction related fees. Lower transaction revenue from exchanges and Getaways was caused by a decline in transaction volume of 12.7%, partly offset by an increase of 5.2% in average fee per transaction. Lower transaction volume is related to the continued shift in percentage mix of the membership base from traditional to corporate, which reduced transaction propensity, coupled with a tightening in the availability of exchange and Getaway inventory.

Total active members in the Interval Network at March 31, 2014 decreased 0.5% to approximately 1.82 million members as compared to approximately 1.83 million members at March 31, 2013. The decrease of $1.5 million in membership fee revenue in the quarter largely reflects the impact of a decline in active Interval Network members, as developer sales to new owners continues at a pace slower than needed to grow the membership base. In addition, we secured multi-year renewals with four large developer clients that account for approximately two-thirds of the Interval Network corporate members; however, the membership fees associated with these renewals are less favorable when compared to prior arrangements. This impact has been partly mitigated by continued improvement in the member base penetration of our Platinum and Club Interval Gold products. Overall Interval Network average revenue per member was $49.30 in the quarter, lower by 6.6% from $52.79 in the prior year period.

Management and Rental

The increase of $19.2 million, or 109.9%, in management fee and rental revenue includes $19.5 million of incremental revenue from our VRI Europe and Aqua acquisitions Aston and Aqua combined revenue per available room ("RevPAR") was $141.45, a decrease of 15.0% over the prior year. Excluding Aqua, Aston RevPAR in the quarter increased slightly to $167.89 compared to $166.39 in the prior year. The increase in RevPAR, when excluding Aqua, can be attributed to a 1.2% improvement in average daily rate compared to 2013.

Pass-through revenue represents reimbursed compensation and other employee-related costs directly associated with managing properties that are included in both revenue and expenses and that are passed on to the property owners or homeowners association without mark-up. The increase in pass-through revenue of $9.7 million, or 63.5%, in the quarter is predominately related to our acquisition of Aqua.

Cost of Sales

For the three months ended March 31, 2014 compared to the three months ended March 31, 2013

	Three Months Ended March 31,

	2014			% Change			2013
	(Dollars in thousands)
Membership and Exchange	$	23,969			(5.8	)%	$	25,457
Management and Rental
Management fee and rental expenses		14,796			165.3	%		5,578
Pass-through expenses		25,085			63.5	%		15,341


Total Management and Rental cost of sales		39,881			90.6	%		20,919


Total cost of sales	$	63,850			37.7	%	$	46,376




As a percentage of total revenue		40.7	%		18.3	%		34.4	%
As a percentage of total revenue excluding pass-through revenue		48.4	%		24.7	%		38.8	%
Gross margin		59.3	%		(9.6	)%		65.6	%
Gross margin without pass-through revenue/expenses		70.6	%		(4.6	)%		74.0	%

Cost of sales consists primarily of compensation and other employee-related costs (including stock-based compensation) for personnel engaged in servicing members of the Membership and Exchange segment and providing services to property owners and/or guests of the Management and Rental segment's managed vacation properties, as well as cost of rental inventory used primarily for Getaways included within the Membership and Exchange segment.

Cost of sales in the first quarter of 2014 increased $17.5 million from 2013, consisting of an increase of $19.0 million from our Management and Rental segment, partly offset by a decrease of $1.5 million from our Membership and Exchange segment. Overall gross margin declined by 628 basis points to 59.3% this quarter compared to 2013, primarily due to the incremental gross profit contribution from our lower-margin Management and Rental segment relative to total ILG gross profit.

Gross margin for the Membership and Exchange segment in the first quarter of 2014 was largely consistent when compared to the prior year. Cost of sales for this segment decreased $1.5 million, or 5.8%, from 2013. The year-over-year decrease in cost of sales is a result of lower purchased inventory expense of $0.8 million, together with a decrease in call center costs and related member servicing activities. The decline in purchased inventory expense was principally due to lower purchased inventory volumes, partly offset by an increase in the average cost per unit of this purchased inventory.

The increase of $19.0 million in cost of sales from the Management and Rental segment was primarily attributable to $9.5 million of incremental expenses resulting from the inclusion of our 2013 acquisitions which closed in the fourth quarter of last year, together with an increase of $9.7 million in segment pass-through revenue principally related to Aqua. Gross margin for this segment decreased by 84 basis points to 35.4% in the quarter compared to 2013. Excluding the effect of pass-through revenue, gross margin for this segment decreased by 844 basis points to 59.6% in the current quarter when compared to the prior year quarter largely resulting from the incremental gross profit contribution from VRI Europe relative to total segment gross profit.

Selling and Marketing Expense

For the three months ended March 31, 2014 compared to the three months ended March 31, 2013

	Three Months Ended March 31,

	2014			% Change			2013
	(Dollars in thousands)
Selling and marketing expense	$	14,570			6.1	%	$	13,735
As a percentage of total revenue		9.3	%		(8.9	)%		10.2	%
As a percentage of total revenue excluding pass-through revenue		11.0	%		(3.9	)%		11.5	%

Selling and marketing expense consists primarily of advertising and promotional expenditures and compensation and other employee-related costs (including stock-based compensation) for personnel engaged in sales and sales support functions. Advertising and promotional expenditures primarily include printing costs of directories and magazines, promotions, tradeshows, agency fees, marketing fees and related commissions.

Selling and marketing expense in the first quarter of 2014 increased $0.8 million, or 6.1%, compared to 2013. Higher sales and marketing spend is attributable to increased marketing fees related to developer contract renewals during the quarter, partly offset by lower sales commissions as compared to the prior year. As a percentage of total revenue and total revenue excluding pass-through revenue, sales and marketing expense decreased 91 and 45 basis points, respectively, on a year-over-year basis.

General and Administrative Expense

For the three months ended March 31, 2014 compared to the three months ended March 31, 2013

	Three Months Ended March 31,

	2014			% Change			2013
	(Dollars in thousands)
General and administrative expense	$	31,437			19.5	%	$	26,305
As a percentage of total revenue		20.0	%		2.6	%		19.5	%
As a percentage of total revenue excluding pass-through revenue		23.8	%		8.3	%		22.0	%

General and administrative expense consists primarily of compensation and other employee-related costs (including stock-based compensation) for personnel engaged in finance, legal, tax, human resources, information technology and executive management functions, as well as facilities costs, fees for professional services and other company-wide benefits.

General and administrative expense in the first quarter of 2014 increased $5.1 million from 2013, primarily due to incremental expenses of $2.2 million from the inclusion of our acquired businesses in our results of operations, higher professional fees of $1.6 million (excluding such incremental expenses

from acquired businesses), an increase of $1.5 million in overall compensation and other employee related costs (excluding incremental expenses from acquired business) and certain other miscellaneous cost increases. These increases were partly offset by a favorable year-over-year change of $0.4 million related to the estimated fair value of contingent consideration for an acquisition.

The $1.6 million increase in professional fees primarily related to accounting and legal services provided largely in connection with potential acquisition activities, together with additional costs related to certain IT initiatives.

The $1.5 million increase in overall compensation and other employee-related costs was primarily due to a $0.8 million increase in health and welfare insurance expense resulting from higher self-insured claim activity during the quarter when compared to the prior year, together with an increase of $0.2 million in non-cash compensation expense, and higher salary and other employee-related costs.

As a percentage of total revenue and total revenue excluding pass-through revenue, general and administrative expense during the first quarter of 2013 increased 52 and 182 basis points, respectively, over the prior year.

Amortization Expense of Intangibles

For the three months ended March 31, 2014 compared to the three months ended March 31, 2013

	Three Months Ended March 31,

	2014			% Change			2013
	(Dollars in thousands)
Amortization expense of intangibles	$	2,966			47.4	%	$	2,012
As a percentage of total revenue		1.9	%		26.6	%		1.5	%
As a percentage of total revenue excluding pass-through revenue		2.2	%		33.5	%		1.7	%

Amortization expense of intangibles for the three months ended March 31, 2014 increased $1.0 million over the comparable 2013 period due to incremental amortization expense pertaining to intangible assets of our recently acquired businesses.

Depreciation Expense

For the three months ended March 31, 2014 compared to the three months ended March 31, 2013

	Three Months Ended March 31,

	2014			% Change			2013
	(Dollars in thousands)
Depreciation expense	$	3,793			3.5	%	$	3,664
As a percentage of total revenue		2.4	%		(11.1	)%		2.7	%
As a percentage of total revenue excluding pass-through revenue		2.9	%		(6.2	)%		3.1	%

Depreciation expense for the three months ended March 31, 2014 increased $0.1 million over the comparable 2013 period largely due to additional depreciable assets being placed in service subsequent to March 31, 2013. These depreciable assets pertain primarily to software and related IT hardware.

Operating Income

For the three months ended March 31, 2014 compared to the three months ended March 31, 2013

	Three Months Ended March 31,

	2014			% Change			2013
	(Dollars in thousands)
Membership and Exchange	$	31,927			(19.5	)%	$	39,672
Management and Rental		8,498			172.6	%		3,117


Total operating income	$	40,425			(5.5	)%	$	42,789




As a percentage of total revenue		25.7	%		(18.9	)%		31.7	%
As a percentage of total revenue excluding pass-through revenue		30.6	%		(14.4	)%		35.8	%

Operating income in the first quarter of 2014 decreased $2.4 million from 2013, consisting of a $7.7 million decrease from our Membership and Exchange segment, offset in part by a $5.4 million increase from our Management and Rental segment.

Operating income for our Membership and Exchange segment decreased $7.7 million to $31.9 million in the quarter compared to the prior year. The decrease in operating income was driven primarily by $5.3 million of gross profit contraction in the period, coupled with higher general and administrative expense mainly resulting from a rise in health and welfare insurance costs and professional fees.

The increase in operating income of $5.4 million in our Management and Rental segment is primarily due to the incremental contributions from our recently acquired businesses, partly offset by higher professional fees largely related to potential acquisition activities.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization

Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) is a non-GAAP measure and is defined in "ILG's Principles of Financial Reporting." Prior period amounts have been recast to conform to the current period definition of Adjusted EBITDA.

For the three months ended March 31, 2014 compared to the three months ended March 31, 2013

	Three Months Ended March 31,

	2014			% Change			2013
	(Dollars in thousands)
Membership and Exchange	$	38,530			(15.9	)%	$	45,820
Management and Rental		11,760			97.6	%		5,951


Total adjusted EBITDA	$	50,290			(2.9	)%	$	51,771




As a percentage of total revenue		32.0	%		(16.6	)%		38.4	%
As a percentage of total revenue excluding pass-through revenue		38.1	%		(12.0	)%		43.3	%

Adjusted EBITDA in the first quarter of 2014 decreased by $1.5 million, or 2.9%, from 2013, consisting of a $7.3 million decrease from our Membership and Exchange segment, offset in part by a $5.8 million increase from our Management and Rental segment.

Adjusted EBITDA of $38.5 million from our Membership and Exchange segment declined by $7.3 million, or 15.9%, compared to the prior year. The drop in adjusted EBITDA is mainly correlated with a deterioration in transaction and membership fee revenue in the quarter, as well as reduced

profitability resulting from securing multi-year renewals from four of our largest corporate developer clients, partially offset by the positive contributions from our Platinum and Club Interval Gold products. Transaction revenue was adversely affected in the period by the continued shift in percentage mix of the membership base from traditional to corporate, which reduced transaction propensity, coupled with a tightening in the availability of exchange and Getaway inventory. Additionally, adjusted EBITDA in the period was unfavorably impacted by an increase in health and welfare insurance costs attributable to higher self-insured claim activity when compared to last year.

Adjusted EBITDA from our Management and Rental segment rose by $5.8 million, or 97.6%, to $11.8 million in the quarter from $6.0 million in 2013. The growth in adjusted EBITDA in this segment is driven by the incremental contribution from our recently acquired businesses, partly offset by higher employee-related costs and professional fees.

Other Income (Expense), net

For the three months ended March 31, 2014 compared to the three months ended March 31, 2013

	Three Months Ended March 31,

	2014			% Change			2013
	(Dollars in thousands)
Interest income	$	44			(70.9	)%	$	151
Interest expense	$	(1,324	)		(19.9	)%	$	(1,653	)
Other expense, net	$	(136	)		(73.8	)%	$	(520	)

Interest income decreased $0.1 million in the first quarter of 2014 compared to 2013 due to certain loans receivable being outstanding and accruing interest for a portion of the first quarter of 2013 prior to settlement during that quarter.

Interest expense in the first three months of 2014 relates to interest and amortization of debt costs on our amended and restated revolving credit facility. Lower interest expense in the quarter is primarily due to a lower average balance outstanding during the three month period when compared against the respective period in 2013.

Other expense, net primarily relates to net gains and losses on foreign currency exchange related to cash held in certain countries in currencies other than their local currency. Non-operating foreign exchange net gain was $0.2 million in the first quarter of 2014 compared to a net loss of $0.2 million in 2013. The favorable fluctuations during the current quarter were principally driven by U.S. dollar positions held at March 31, 2014 affected by the stronger dollar compared to the Colombian peso and Egyptian pound. The unfavorable fluctuations during the prior year quarter were principally driven by U.S. dollar positions held at March 31, 2013 affected by the weaker dollar compared to the Mexican peso, partly offset by a stronger dollar compared to the Colombian peso and Egyptian pound.

Income Tax Provision

For the three months ended March 31, 2014 compared to the three months ended March 31, 2013

For the three months ended March 31, 2014 and 2013, ILG recorded income tax provisions for continuing operations of $14.3 million and $15.8 million, respectively, which represent effective tax rates of 36.7% and 38.6%, respectively. These tax rates are higher than the federal statutory rate of 35% due principally to state and local income taxes partially offset by foreign income taxed at lower rates. The effective tax rate in the first quarter of 2014 is lower than the prior year period primarily due to the shift in the projections of the proportion of income earned and taxed between the various jurisdictions.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2014, we had $64.9 million of cash and cash equivalents, including $48.3 million of U.S. dollar equivalent or denominated cash deposits held by foreign subsidiaries which are subject to changes in foreign exchange rates. Of this amount, $32.8 million is held in foreign jurisdictions, principally the U.K. Earnings of foreign subsidiaries, except Venezuela, are permanently reinvested. Additional tax provisions would be required should such earnings be repatriated to the U.S. Cash generated by operations is used as our primary source of liquidity. Additionally, we are also exposed to risks associated with the repatriation of cash from certain of our foreign operations to the United States where currency restrictions exist, such as Venezuela and Argentina, which limit our ability to immediately access cash through repatriations. These currency restrictions had no impact on our overall liquidity during the three months ended March 31, 2014 and, as of March 31, 2014, the respective cash balances were immaterial to our overall cash on hand.

We believe that our cash on hand along with our anticipated operating future cash flows and availability under our $600 million revolving credit facility, which may be increased to up to $700 million subject to certain conditions, are sufficient to fund our operating needs, quarterly cash dividend, capital expenditures, development and expansion of our operations, debt service, investments and other commitments and contingencies for at least the next twelve months. However, our operating cash flow may be impacted by macroeconomic and other factors outside of our control.

Cash Flows Discussion

Operating Activities

Net cash provided by operating activities decreased to $34.1 million in the three months ended March 31, 2014 from $47.4 million in the same period of 2013. The decrease of $13.4 million from 2013 was principally due to payments made in connection with long-term agreements.

Investing Activities

Net cash used in investing activities of $3.6 million in the three months ended March 31, 2014 pertain to capital expenditures of $3.1 million primarily related to IT initiatives and to an investment in loan receivable of $0.5 million. Net cash provided by investing activities of $6.8 million in the three months ended March 31, 2013 mostly due to the early repayment of an existing loan receivable totaling $9.9 million, partly offset by capital expenditures of $3.1 million primarily related to IT initiatives.

Financing Activities

Net cash used in financing activities of $13.7 million in the three months ended March 31, 2014 related to cash dividend payments of $6.4 million, principal payments of $5.0 million on our revolving credit facility, withholding taxes on the vesting of restricted stock units of $3.7 million, and $0.8 million of the total $2.0 million contingent consideration payment related to an acquisition. These uses of cash were partially offset by excess tax benefits from stock-based awards and the proceeds from the exercise of stock options. Net cash used in financing activities of $19.9 million in the three months ended March 31, 2013 primarily related to principal payments of $20.0 million on our revolving credit facility, and withholding taxes on the vesting of restricted stock units. These uses of cash were partially offset by excess tax benefits from stock-based awards and the proceeds from the exercise of stock options.

Our amended and restated credit agreement provides for a $500 million revolving credit facility and matures June 21, 2017. As of March 31, 2014, borrowings outstanding under the revolving credit facility amounted to $248 million.

Any principal amounts outstanding under the revolving credit facility are due at maturity. 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 2.25%, or the Base Rate as defined in the amended credit agreement plus a predetermined margin that ranges from 0.25% to 1.25%, in each case based on our leverage ratio. As of March 31, 2014, the applicable margin was 1.50% per annum for LIBOR revolving loans and 0.50% per annum for Base Rate loans. The revolving credit facility has a commitment fee on undrawn amounts that ranges from 0.25% to 0.375% per annum based on our leverage ratio and as of March 31, 2014, the commitment fee was 0.275%.

The revolving credit facility has various financial and operating covenants that place significant restrictions on us, including our ability to incur additional indebtedness, to 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 revolving credit facility requires us to meet certain financial covenants regarding the maintenance of a maximum consolidated leverage ratio of consolidated debt, less credit given for a portion of foreign cash, over consolidated Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), as defined in the amended credit agreement of 3.25x. Additionally, we were required to maintain a minimum consolidated interest coverage ratio of consolidated EBITDA over consolidated interest expense, as defined in the Amended Credit Agreement, of 3.0x. As of March 31, 2014, ILG was in compliance in all material respects with the requirements of all applicable financial and operating covenants and our consolidated leverage ratio and consolidated interest coverage ratio under the amended credit agreement were 1.27 and 32.56, respectively.

On April 8, 2014, we entered into the first amendment to our amended and restated credit agreement which increases the revolving credit facility from $500 million to $600 million, extends the maturity of the credit facility to April 8, 2019 and provides for certain other amendments to covenants. Under this first amendment, the maximum consolidated leverage ratio is 3.5x and the minimum consolidated interest coverage ratio is 3.0x.

Free Cash Flow

Free cash flow is a non-GAAP measure and is defined in "ILG's Principles of Financial Reporting." For the three months ended March 31, 2014 and 2013, free cash flow was $31.0 million and $44.4 million, respectively. The change is mainly a result of the variance in net cash provided by operating activities as discussed above.

Dividends

In February 2014, our Board of Directors declared a $0.11 per share dividend payable March 27, 2014 to shareholders of record on March 13, 2014. In May 2014, our Board of Directors declared a $0.11 per share dividend payable June 18, 2014 to shareholders of record on June 4, 2014. Based on the number of shares of common stock outstanding as of March 31, 2014, at a dividend of $0.11 per share, the anticipated cash outflow would be $6.3 million in the second quarter of 2014. We currently expect to declare and pay quarterly dividends of similar amounts.

Contractual Obligations and Commercial Commitments

We have funding commitments that could potentially require our performance in the event of demands by third parties or contingent events. At March 31, 2014, guarantees, surety bonds and letters of credit totaled $26.7 million. The total includes maximum exposure under guarantees of $23.1 million, which primarily relates to the Management and Rental segment's hotel and resort management agreements, including those with guaranteed dollar amounts, and accommodation leases supporting the

segment's management activities, 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.

Contractual obligations and commercial commitments at March 31, 2014 are as follows:

	Payments Due by Period

Contractual Obligations	Total		Up to 1 year		1 - 3 years		3 - 5 years		More than 5 years
	(Dollars in thousands)
Debt principal(a)	$	248,000	$	—	$	248,000	$	—	$	—
Debt interest(a)		12,066		4,877		7,189		—		—
Purchase obligations(b)		81,843		17,420		22,764		27,403		14,256
Operating leases		65,622		14,005		22,050		15,315		14,252
Unused commitment on loans receivable and other advances(c)		15,147		15,147		—		—		—


Total contractual obligations	$	422,678	$	51,449	$	300,003	$	42,718	$	28,508

(a): Debt principal and projected debt interest represent principal and interest to be paid on our revolving credit facility based on the balance outstanding as of March 31, 2014. 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 31, 2014. Interest on the revolving credit facility is calculated using the prevailing rates as of March 31, 2014. On April 8, 2014, our revolving credit facility was amended to increase the borrowing capacity from $500 million to $600 million and to extend the maturity of the credit facility to April 8, 2019.
(b): The purchase obligations primarily relate to future guaranteed purchases of rental inventory, operational support services, marketing related benefits and membership fulfillment benefits.
(c): Relates to a loan agreement entered into in connection with the VRI Europe transaction whereby ILG has made available to CLC a convertible secured loan facility of $15.1 million.

	Amount of Commitment Expiration Per Period

Other Commercial Commitments(c)	Total Amounts Committed		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years
	(In thousands)
Guarantees, surety bonds and letters of credit	$	26,666	$	15,231	$	8,499	$	2,546	$	390

(c): Commercial commitments include minimum revenue guarantees related to hotel and resort management agreements, accommodation leases entered into on behalf of the property owners, and funding commitments that could potentially require performance in the event of demands by third parties or contingent events, such as under a letter of credit extended or under guarantees.

Off-Balance Sheet Arrangements

Except as disclosed above in our Contractual Obligations and Commercial Commitments (excluding "Debt principal"), as of March 31, 2014, we did not have any significant off-balance sheet arrangements, as defined in Item 303(a) (4) (ii) of SEC Regulation S-K.

Recent Accounting Pronouncements

Refer to Note 2 accompanying our consolidated financial statements for a description of recent accounting pronouncements.

Seasonality

Refer to Note 1 accompanying our consolidated financial statements for a discussion on the impact of seasonality.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates which are based on historical experience and on various other judgments and assumptions that we believe are reasonable under the circumstances. Actual outcomes could differ from those estimates. We have discussed those estimates that we believe are critical and required the use of significant judgment and use of estimates that could have a significant impact on our financial statements in our 2013 Annual Report on Form 10-K. There have been no material changes to our critical accounting policies in the interim period.

ILG'S PRINCIPLES OF FINANCIAL REPORTING

Definition of ILG's Non-GAAP Measures

Earnings before interest, taxes, depreciation and amortization (EBITDA) is defined as net income attributable to common stockholders excluding, if applicable: (1) interest income and interest expense, (2) income taxes, (3) depreciation expense, and (4) amortization expense of intangibles.

Adjusted EBITDA is defined as EBITDA excluding, if applicable: (1) non-cash compensation expense, (2) goodwill and asset impairments, (3) acquisition related and restructuring costs, (4) other non-operating income and expense and (5) the impact of correcting prior period items.

Free cash flow is defined as cash provided by operating activities less capital expenditures.

Our presentation of above-mentioned non-GAAP measures may not be comparable to similarly-titled measures used by other companies. We believe these measures are useful to investors because they represent the consolidated operating results from our segments, excluding the effects of any non-cash expenses. We also believe these non-GAAP financial measures improve the transparency of our disclosures, provide a meaningful presentation of our results from our business operations, excluding the impact of certain items not related to our core business operations and improve the period-to-period comparability of results from business operations. These non-GAAP measures have certain limitations in that they do not take into account the impact of certain expenses to our statement of operations; including non-cash compensation for adjusted EBITDA. We endeavor to compensate for the limitations of the non-GAAP measures presented by also providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-GAAP measure.

We report these non-GAAP measures as supplemental measures to results reported pursuant to GAAP. These measures are among the primary metrics by which we evaluate the performance of our businesses, on which our internal budgets are based and by which management is compensated. We believe that investors should have access to the same set of metrics that we use in analyzing our results. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. We provide and encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures which are discussed below.

Items That Are Excluded From ILG's Non-GAAP Measures (as applicable)

Amortization expense of intangibles is a non-cash expense relating primarily to acquisitions. At the time of an acquisition, the intangible assets of the acquired company, such as customer relationships, purchase agreements and resort management agreements are valued and amortized over their estimated lives. We believe that since intangibles represent costs incurred by the acquired company to build value prior to acquisition, they were part of transaction costs.

Depreciation expense is a non-cash expense relating to our property and equipment and is recorded on a straight-line basis to allocate the cost of depreciable assets to operations over their estimated service lives.

Non-cash compensation expense consists principally of expense associated with the grants of restricted stock units. These expenses are not paid in cash, and we will include the related shares in our future calculations of diluted shares of stock outstanding. Upon vesting of restricted stock units, the awards will be settled, at our discretion, on a net basis, with us remitting the required tax withholding amount from our current funds.

Goodwill and asset impairments are non-cash expenses relating to adjustments to goodwill and long-lived assets whereby the carrying value exceeds the fair value of the related assets, and are infrequent in nature.

Acquisition related and restructuring costs are transaction fees, costs incurred in connection with performing due diligence, subsequent adjustments to our initial estimate of contingent consideration obligations associated with business acquisitions, and other direct costs related to acquisition activities. Additionally, this item includes certain restructuring charges primarily related to workforce reductions and estimated costs of exiting contractual commitments.

Other non-operating income and expense consists principally of foreign currency translations of cash held in certain countries in currencies, principally U.S. dollars, other than their functional currency, in addition to any gains or losses on extinguishment of debt.

RECONCILIATIONS OF NON-GAAP MEASURES

The following tables reconcile EBITDA and adjusted EBITDA to operating income for our operating segments and to net income attributable to common stockholders in total for the three months ended March 31, 2014 and 2013 (in thousands). The noncontrolling interest relates to the Management and Rental segment.

	For the Three Months Ended March 31, 2014

	Membership and Exchange			Management and Rental			Consolidated
Adjusted EBITDA	$	38,530		$	11,760		$	50,290
Non-cash compensation expense		(2,569	)		(278	)		(2,847	)
Other non-operating income (expense), net		17			(153	)		(136	)
Acquisition related and restructuring costs		(365	)		(873	)		(1,238	)


EBITDA		35,613			10,456			46,069
Amortization expense of intangibles		(334	)		(2,632	)		(2,966	)
Depreciation expense		(3,335	)		(458	)		(3,793	)
Less: Net income attributable to noncontrolling interest		—			979			979
Less: Other non-operating income (expense), net		(17	)		153			136


Operating income	$	31,927		$	8,498			40,425




Interest income								44
Interest expense								(1,324	)
Other non-operating expense, net								(136	)
Income tax provision								(14,315	)


Net income								24,694
Net income attributable to noncontrolling interest								(979	)


Net income attributable to common stockholders							$	23,715

	For the Three Months Ended March 31, 2013

	Membership and Exchange			Management and Rental			Consolidated
Adjusted EBITDA	$	45,820		$	5,951		$	51,771
Non-cash compensation expense		(2,279	)		(278	)		(2,557	)
Other non-operating expense, net		(349	)		(171	)		(520	)
Acquisition related and restructuring costs		(213	)		(542	)		(755	)


EBITDA		42,979			4,960			47,939
Amortization expense of intangibles		(337	)		(1,675	)		(2,012	)
Depreciation expense		(3,319	)		(345	)		(3,664	)
Less: Net income attributable to noncontrolling interest		—			6			6
Less: Other non-operating expense, net		349			171			520


Operating income	$	39,672		$	3,117			42,789




Interest income								151
Interest expense								(1,653	)
Other non-operating expense, net								(520	)
Income tax provision								(15,757	)


Net income								25,010
Net income attributable to noncontrolling interest								(6	)


Net income attributable to common stockholders							$	25,004

The following table reconciles cash provided by operating activities to free cash flow for the three months ended March 31, 2014 and 2013 (in thousands).

	For the Three Months Ended March 31,

	2014			2013
Net cash provided by operating activities	$	34,057		$	47,449
Less: Capital expenditures		(3,101	)		(3,075	)


Free cash flow	$	30,956		$	44,374

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Exchange Risk

We conduct business in certain foreign markets, primarily in the United Kingdom and other European Union markets. Our foreign currency risk primarily relates to our investments in foreign subsidiaries that transact business in a functional currency other than the U.S. dollar. This exposure is mitigated as we have generally reinvested profits in our international operations. As currency exchange rates change, translation of the income statements of our international businesses into U.S. dollars affects year-over-year comparability of operating results.

In addition, we are exposed to foreign currency risk related to transactions and/or assets and liabilities denominated in a currency other than the functional currency. Historically, we have not hedged currency risks. However, our foreign currency exposure related to EU VAT liabilities denominated in euros is offset by euro denominated cash balances.

Furthermore, in an effort to mitigate economic risk, we hold U.S. dollars in certain subsidiaries that have a functional currency other than the U.S. dollar.

Operating foreign currency exchange for the three months ended March 31, 2014 and 2014 resulted in a net gain of $0.2 million and $0.1 million, respectively, attributable to foreign currency remeasurements of operating assets and liabilities denominated in a currency other than their functional currency.

Non-operating foreign exchange for the three months ended March 31, 2014 and 2013 resulted in a net gain of $0.2 million and a net loss of $0.2 million, respectively, attributable to cash held in certain countries in currencies other than their functional currency.

The favorable fluctuations during the quarter were principally driven by U.S. dollar positions held at March 31, 2014 affected by the stronger dollar compared to the Colombian peso and Egyptian pound. The unfavorable fluctuations during the quarter were principally driven by U.S. dollar positions held at March 31, 2013 affected by the weaker dollar compared to the Mexican peso, partly offset by a stronger dollar compared to the Colombian peso and Egyptian pound.

Our operations in international markets are exposed to potentially volatile movements in currency exchange rates. The economic impact of currency exchange rate movements on us is often linked to variability in real growth, inflation, interest rates, governmental actions and other factors. These changes, if material, could cause us to adjust our financing, operating and hedging strategies. A hypothetical 10% weakening/strengthening in foreign exchange rates to the U.S. dollar for the three months ended March 31, 2014 would result in an approximate change to revenue of $2.1 million. There have been no material quantitative changes in market risk exposures since December 31, 2013.

Interest Rate Risk

We are exposed to interest rate risk through borrowings under our June 21, 2012 amended credit agreement which bears interest at variable rates. 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 2.25%, or the Base Rate as defined in the amended credit agreement plus a predetermined margin that ranges from 0.25% to 1.25%, in each case based on ILG's leverage ratio. As of March 31, 2014, the applicable margin was 1.50% per annum for LIBOR revolving loans and 0.50% per annum for Base Rate loans. During the first quarter of 2014, we had at least $248 million outstanding under our revolving credit facility; a 100 basis point change in interest rates would result in an approximate change to interest expense of $0.4 million for the current quarter. While we currently do not hedge our interest rate exposure, this risk is somewhat mitigated by variable interest rates earned on our cash balances.

Item 4. Controls and Procedures

We monitor and evaluate on an ongoing basis our disclosure controls and internal control over financial reporting in order to improve our overall effectiveness. In the course of this evaluation, we modify and refine our internal processes as conditions warrant.

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), our management, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined by Rule 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective in providing reasonable assurance that information we are required to disclose in our filings with the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management,

including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(d) of the Exchange Act, we, under the supervision and with the participation of our management, including the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, also evaluated whether any changes occurred to our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, such control. Based on that evaluation, there have been no material changes to internal controls over financial reporting.

PART II
OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable

Item 1A. Risk Factors

See Part I, Item IA., "Risk Factors," of ILG's 2013 Annual Report on Form 10-K, for a detailed discussion of the risk factors affecting ILG. There have been no material changes from the risk factors described in the Annual Report except as follows:

Our previously announced transaction may not be consummated

We recently announced that we entered into an agreement to purchase the Hyatt Residential Group business. This agreement is subject to customary closing conditions and may be terminated in certain circumstances. The occurrence of any event, change, or circumstance that could give rise to the termination of the purchase agreement (including the failure to satisfy conditions to completion) could cause the transaction not to close. This could adversely affect our stock price and future results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a): Unregistered Sale of Securities . None
(b): Use of Proceeds . Not applicable
(c): Purchases of Equity Securities by the Issuer and Affiliated Purchasers : The following table sets forth information with respect to purchases of shares of our common stock made during the quarter ended March 31, 2014 by or on behalf of ILG or any "affiliated purchaser," as defined by Rule 10b-18(a)(3) of the Exchange Act. All purchases were made in accordance with Rule 10b-18 of the Exchange Act.

Period				Approximate Dollar Value of Shares that May Yet Be Purchase Under the Plans or Programs(1)

January 2014	—	—	1,697,360	$	4,120,479
February 2014	—	—	1,697,360	$	4,120,479
March 2014	—	—	1,697,360	$	4,120,479

(1): On August 4, 2011, we announced that our Board of Directors had authorized the repurchase of up to $25 million of our common stock. There is no time restriction on this authorization and repurchases may be made in the open-market or through privately negotiated transactions.

Items 3-5. Not applicable.

Item 6. Exhibits

		Description	Location

3.1		Amended and Restated Certificate of Incorporation of Interval Leisure Group, Inc.	Exhibit 3.1 to ILG's Current Report on Form 8-K, filed on August 25, 2008.

3.2		Certificate of Designations, Preferences and Rights to Series A Junior Participating Preferred Stock	Exhibit 3.2 to ILG's Quarterly Report on Form 10-Q, filed on August 11, 2009.

3.3		Third Amended and Restated By-Laws of Interval Leisure Group, Inc.	Exhibit 3.2 to ILG's Current Report on Form 8-K, filed on December 14, 2011.

10.1	†	Form of Terms and Conditions of Annual Restricted Stock Unit Awards (2013 Plan)*

10.2	†	Form of Terms and Conditions of EBITDA Performance Restricted Stock Unit Awards (2013 Plan)*

10.3	†	Form of Terms and Conditions of TSR Performance Restricted Stock Unit Awards (2013 Plan)*

31.1	†	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act

31.2	†	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act

31.3	†	Certification of the Chief Accounting Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act

32.1	††	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act

32.2	††	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act

		Description

32.3	††	Certification of the Chief Accounting Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Calculation Linkbase Document

101.LAB		XBRL Taxonomy Label Linkbase Document

101.PRE		XBRL Taxonomy Presentation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

†: Filed herewith.
††: Furnished herewith.
*: Reflects management contracts and management and director compensatory plans.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 7, 2014


		INTERVAL LEISURE GROUP, INC.
		By:		/s/ WILLIAM L. HARVEY William L. Harvey Chief Financial Officer
		By:		/s/ JOHN A. GALEA John A. Galea Chief Accounting Officer

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PART 1—FINANCIAL STATEMENTS

Item 1. Consolidated Financial Statements

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited)
INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) (Unaudited)
INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data)
INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EQUITY (In thousands, except share data) (Unaudited)
INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2014 (Unaudited)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

GENERAL
MANAGEMENT OVERVIEW
RESULTS OF OPERATIONS
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
ILG'S PRINCIPLES OF FINANCIAL REPORTING
RECONCILIATIONS OF NON-GAAP MEASURES

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Item 4. Controls and Procedures

PART II OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Items 3-5. Not applicable.

Item 6. Exhibits

SIGNATURES

Exhibit 10.1

Terms and Conditions for Annual Restricted Stock Unit

Awards Overview

These Terms and Conditions apply to the grant awarded to you by Interval Leisure Group, Inc. (“ILG” or the “Company”) pursuant to Section 12 of the Interval Leisure Group 2013 Stock and Incentive Compensation Plan (the “Plan”) of restricted stock units (the “Award”). You were notified of your Award by way of an award notice (the “Award Notice”).

ALL CAPITALIZED TERMS USED HEREIN, TO THE EXTENT NOT DEFINED, SHALL HAVE THE MEANINGS SET FORTH IN THE PLAN.

Continuous Service

In order for your Award to vest, you must be continuously employed by ILG or any of its Subsidiaries during the Restriction Period (as defined below). Nothing in your Award Notice, these Terms and Conditions, or the Plan shall confer upon you any right to continue in the employ or service of ILG or any of its Subsidiaries or interfere in any way with their rights to terminate your employment or service at any time.

Vesting

Subject to the Award Notice, these Terms and Conditions and the provisions of the Plan, the Restricted Stock Units (“RSUs”) in respect to your Award, shall vest and no longer be subject to any restriction (such period during which restrictions apply is the “Restriction Period”):

	Percentage of Total
Vesting Date	Award Vesting

On the first year anniversary of the Award Date	25	%

On the second year anniversary of the Award Date	25	%

On the third year anniversary of the Award Date	25	%

On the fourth year anniversary of the Award Date	25	%

Termination of Employment

Subject to the provisions of your employment agreement, if any, upon your Termination of Employment during the Restriction Period for any reason, other than your death, Disability or, as approved by the Committee, Retirement, any RSUs still subject to restriction shall vest or be forfeited and canceled in accordance with the terms of the Plan and this Award. For the avoidance of doubt, a transfer of employment among the

Company and its Subsidiaries or other Affiliates, without any break in service, is not a Termination of Employment.

If you have a Termination of Employment due to death, any unvested portion of the Award shall vest in full. If you have a Termination of Employment as a result of a Disability, the Award shall continue to vest for up to four years after the effective date of such Termination of Employment provided you continue to comply with any applicable confidentiality and non-competition obligations you have to the Company and its Affiliates. If you have a Termination of Employment due to Retirement on or after the first anniversary of the grant date, upon the approval of the Committee, the Award shall continue to vest for up to four years after the effective date of such Retirement provided you continue to comply with any applicable confidentiality and non-competition obligations you have to the Company and its Affiliates.

If your employment is terminated by ILG or any of its Subsidiaries for Cause, or if following any termination of employment between you and ILG or any of its Subsidiaries for any reason, ILG determines that during the two years prior to such termination there was an event or circumstance that would have been grounds for termination for Cause, your Award shall be forfeited and canceled in its entirety upon such termination, and ILG may cause you, immediately upon notice, either to return the shares issued upon the settlement of RSUs that vested during the two-year period after the events or circumstances giving rise to or constituting grounds for termination for Cause or to pay ILG an amount equal to the aggregate amount, if any, that you had previously realized in respect of any and all shares issued upon settlement of RSUs that vested during the two-year period after the events or circumstances giving rise to or constituting grounds for such termination for Cause ( i.e. , the value of the RSUs upon vesting), in each case, including any dividend equivalents or other distributions received in respect of any such RSUs. This remedy shall be without prejudice to, or waiver of, any other remedies ILG or its Subsidiaries may have in such event.

Settlement

Subject to your satisfaction of the tax obligations described immediately below under “Taxes and Withholding,” as soon as practicable after any RSUs in respect of your Award have vested and are no longer subject to the Restriction Period, such RSUs shall be settled. In no event shall settlement occur later than two and one half months after the end of the fiscal year in which the RSUs vest. For each RSU settled, ILG shall issue one share of Common Stock for each RSU vesting. Notwithstanding the foregoing, ILG shall be entitled to hold the shares issuable to you upon settlement of all RSUs that have vested until ILG or the agent selected by ILG to administer the Plan (the “Agent”) has received from you (i) a duly executed Form W-9 or W-8 and (ii) payment for any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such RSUs.

Taxes and Withholding

No later than the date as of which an amount in respect of any RSUs first becomes includible in your gross income for federal, state, local or foreign income or employment or other tax purposes, ILG or its Subsidiaries shall, unless prohibited by law, have the right to deduct any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount due to you, including deducting such amount from the delivery of shares issued upon settlement of the RSUs that gives rise to the withholding requirement. In the event shares are deducted to cover tax withholdings, the number of shares withheld shall generally have a Fair Market Value equal to the aggregate amount of ILG’s withholding obligation. In the event that any such deduction and/or withholding is prohibited by law, you shall, prior to or contemporaneously with the vesting of your RSUs, pay to ILG, or make arrangements satisfactory to ILG regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount.

Adjustment in the Event of Change in Stock; Change in Control

Adjustment in the Event of Change in Stock. In the event of (i) a stock dividend, stock split, reverse stock split, share combination, or recapitalization or similar event affecting the capital structure of ILG (each, a “Share Change”), or (ii) a merger, consolidation, acquisition of property or shares, separation, spin-off, reorganization, significant non-recurring cash dividend, stock rights offering, liquidation, Disaffiliation, or similar event affecting ILG or any of its Subsidiaries (each, a “Corporate Transaction”), the Compensation and Human Resources Committee (the “Committee”) or the Board shall make such substitutions or adjustments as it, in its good faith and sole discretion, deems appropriate and equitable to the number of RSUs and the number and kind of shares of Common Stock underlying the RSUs. The determination of the Committee regarding any such adjustment will be final and conclusive and need not be the same for all RSU award recipients.

Change in Control. Subject to the provisions of your employment agreement, if any, in the event you cease to be employed by either ILG or any of its Subsidiaries within the one (1) year period following a Change in Control of ILG (and not any of its Subsidiaries) as a result of (i) a termination by ILG or any of its Subsidiaries without Cause, or (ii) a resignation by you for Good Reason (as defined in the Plan), then upon the occurrence of such Termination of Employment, 100% of your Award shall automatically vest .

The Disaffiliation of the Subsidiary of ILG by which you are employed or for which you are performing services at the time of such sale or other disposition by ILG shall be considered a Termination of Employment ( not a Change in Control) and shall be governed by the applicable provisions of the Plan and the provision set forth under the caption “Termination of Employment” above; provided, however, that the Committee or the Board may deem it appropriate to make an equitable adjustment to the number of

RSUs and the number and kind of shares of Common Stock underlying the RSUs underlying your Award.

Non-Transferability of the RSUs

Until such time as your RSUs are ultimately settled, they shall not be transferable by you by means of sale, assignment, exchange, encumbrance, pledge, hedge or otherwise.

No Rights as a Stockholder

Except as otherwise specifically provided in the Plan, unless and until your RSUs are settled, you shall not be entitled to any rights of a stockholder with respect to the RSUs (including the right to vote the underlying shares). Notwithstanding the foregoing, if ILG declares and pays dividends on the Common Stock during the Restriction Period for particular RSUs in respect of your Award, you will be credited with additional amounts for each RSU underlying such Award equal to the dividend that would have been paid with respect to such RSU as if it had been an actual share of Common Stock, which amount shall remain subject to restrictions (and as determined by the Committee may be reinvested in RSUs or may be held in kind as restricted property) and shall vest concurrently with the vesting of the RSUs upon which such dividend equivalent amounts were paid. Notwithstanding the foregoing, dividends and distributions other than regular quarterly cash dividends, if any, may result in an adjustment pursuant to the “Adjustment in the Event of Change in Stock; Change in Control” section above.

Other Restrictions

The RSUs shall be subject to the requirement that, if at any time the Committee shall determine that (i) the listing, registration or qualification of the shares of Common Stock subject or related thereto upon any securities exchange or under any state or federal law, or (ii) the consent or approval of any government regulatory body is necessary or desirable as a condition of, or in connection with, the delivery of shares, then in any such event, the award of RSUs shall not be effective unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.

Conflicts and Interpretation

In the event of any conflict between these Terms and Conditions and the Plan, the Plan shall control; provided, that an action or provision that is permissive under the terms of the Plan, and required under these Terms and Conditions, shall not be deemed a conflict and these Terms and Conditions shall control. In the event of any ambiguity in these Terms and Conditions, or any matters as to which these Terms and Conditions are silent, the Plan shall govern. In the event of any conflict between the Award Notice (or any other information posted on ILG’s extranet or given to you directly or indirectly through the Agent (including information posted on www.benefitaccess.com )) and ILG’s

books and records, or (ii) ambiguity in the Award Notice (or any other information posted on ILG’s extranet or given to you directly or indirectly through the Agent (including information posted on www.benefitaccess.com )), ILG’s books and records shall control.

Amendment

ILG may modify, amend or waive the terms of your RSUs, prospectively or retroactively, but no such modification, amendment or waiver shall materially impair your rights without your consent, except as required by applicable law, NASDAQ or stock exchange rules, tax rules or accounting rules.

Data Protection

The acceptance of your RSUs constitutes your authorization of the release from time to time to ILG or any of its Subsidiaries and to the Agent (together, the “Relevant Companies”) of any and all personal or professional data that is necessary or desirable for the administration of your RSUs and/or the Plan (the “Relevant Information”). Without limiting the above, this authorization permits your employing company to collect, process, register and transfer to the Relevant Companies all Relevant Information (including any professional and personal data that may be useful or necessary for the purposes of the administration of your RSUs and/or the Plan and/or to implement or structure any further grants of equity awards (if any)). The acceptance of your RSUs also constitutes your authorization of the transfer of the Relevant Information to any jurisdiction in which ILG, your employing company or the Agent considers appropriate. You shall have access to, and the right to change, the Relevant Information, which will only be used in accordance with applicable law.

Section 409A of the Code

Your Award is not intended to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and the rules and regulations issued there under (“Section 409A”). In no event shall ILG be required to pay you any “gross-up” or other payment with respect to any taxes or penalties imposed under Section 409A with respect to any amounts or benefits paid to you in respect of your Award.

Notification of Changes

Any changes to these Terms and Conditions shall either be posted on ILG’s intranet and www.benefitaccess.com or communicated (either directly by ILG or indirectly through any of its Subsidiaries or the Agent) to you electronically via e-mail (or otherwise in writing) promptly after such change becomes effective .

Exhibit 10.2

Terms and Conditions for Adjusted EBITDA Performance RSU Awards

Overview

These Terms and Conditions apply to Performance RSU Awards, which are grants of performance-based restricted stock units made pursuant to Section 12 of the Interval Leisure Group, Inc. 2013 Stock and Incentive Compensation Plan (the “Plan”). You were notified of your Performance RSU Award by way of an award notice (the “Award Notice”).

ALL CAPITALIZED TERMS USED HEREIN, TO THE EXTENT NOT DEFINED, SHALL HAVE THE MEANINGS SET FORTH IN THE PLAN.

Continuous Service

Subject to the exceptions discussed under “Termination of Employment” (below), in order for your Performance RSU Award to vest, you must be continuously employed by Interval Leisure Group, Inc. (“ILG”) or any of its Subsidiaries through the third anniversary of the relevant award date (the “Continuous Service Requirement”). Nothing in your Award Notice, these Terms and Conditions or the Plan shall confer upon you any right to continue in the employ or service of ILG or any of its Subsidiaries or interfere in any way with their rights to terminate your employment or service at any time.

Adjusted EBITDA Performance Hurdles

Assuming satisfaction of the Continuous Service Requirement, the actual number of RSUs covered by your Performance RSU Award that will vest is dependent upon the achievement by ILG of certain levels of Adjusted EBITDA in a specified year, with the actual number of RSUs vesting ranging from 0 to 200% of the Target RSU number specified in your Award Notice. Schedule A to these Terms and Conditions defines Adjusted EBITDA, as well as explains how the achievement by ILG of various levels of Adjusted EBITDA performance impacts the number of RSUs that you will ultimately receive (the “Performance Hurdles”).

Vesting

The vesting date for Performance RSU Awards (the “Performance RSU Award Vesting Date”) will be the later of (i) the third anniversary of the relevant award date (the “Third Anniversary”) and (ii) the date on which ILG’s Compensation and Human Resources Committee (the “Committee”) certifies the level of Adjusted EBITDA that ILG achieved for the relevant period specified in the relevant Award Notice (the “Measurement Period”), which certification shall occur as soon as reasonably practicable following the date on which ILG releases its earnings for the last year of the Measurement Period.

If the Continuous Service Requirement is satisfied prior to the Performance RSU Award Vesting Date, no subsequent termination of employment for any reason (other than by ILG or its Subsidiaries for Cause, as described below) shall affect the ultimate vesting of your Performance RSU Award.

Termination of Employment

Subject to the provisions of your employment agreement, if any, and the terms of these terms and conditions, any RSUs still subject to restriction shall vest or be forfeited and canceled in accordance with the terms of the Plan and this Award. For the avoidance of doubt, a transfer of employment among the Company and its Subsidiaries or other Affiliates, without any break in service, is not a termination of your employment.

If you have a termination of your employment due to death, any unvested portion of the Award shall vest in full at the Target RSU number. If you have a termination of your employment as a result of a Disability, the Award shall continue to vest for up to four years after the effective date of such termination of your employment provided you continue to comply with any applicable confidentiality and non-competition obligations you have to the Company and its Affiliates. If you have a termination of your employment due to Retirement on or after the first anniversary of the relevant award date but prior to the Third Anniversary, upon the approval of the Committee, the Award shall continue to vest for up to three years after the effective date of such Retirement provided you continue to comply with any applicable confidentiality and non-competition obligations you have to the Company and its Affiliates.

Subject to the provisions of your employment agreement, if any, upon the termination of your employment by ILG or any of its Subsidiaries after the first anniversary of the relevant award date but prior to the Third Anniversary (i) by ILG or any of its Subsidiaries without Cause, (ii) by you for Good Reason (as defined below) or (iii) as a result of the sale, other disposition or other Disaffiliation of the ILG business or division by which you are employed (collectively, a “Qualifying Termination”), you shall retain eligibility to receive, for each completed twelve-month period (measured successively) of continued employment following the relevant award date, one-third of your Performance RSU Award. The remaining RSUs covered by your Performance RSU Award shall be forfeited and canceled in their entirety on the date of your termination of employment. On the Performance RSU Award Vesting Date, such portion of the RSUs that remain outstanding shall vest in accordance with Schedule A.

By way of example, assume that you are granted a Performance RSU Award of 1,500 Target RSUs and are terminated without Cause by ILG fourteen (14) months after the relevant award date. At that time, your new Target RSU number shall be 500 (one-third of your original number) and you shall continue to be eligible to receive 1,000 RSUs if the Maximum Hurdle is achieved. The target number will be reflected on Smith Barney’s website, www.benefitaccess.com . If on the Adjusted EBITDA Certification Date (as defined below) the Committee determines that the target level of Adjusted EBITDA for the Measurement Period has been achieved, you would vest at that time in 500 RSUs.

the definition in such agreement shall apply to your Performance RSU Award. In order for any termination of employment to be for Good Reason, you must provide notice of the circumstances giving rise to a Good Reason termination to your supervisor and then, if such circumstances are not remedied within thirty (30) days of such notice, you must resign your employment within sixty (60) days of such notice.

Upon the termination of your employment by ILG or any of its Subsidiaries prior to the Third Anniversary for any reason other than a Qualifying Termination, your Performance RSU Award shall be forfeited and canceled in its entirety effective immediately upon such termination of employment.

If your employment is terminated by ILG or any of its Subsidiaries for Cause, or if following any termination of employment between you and ILG or any of its Subsidiaries for any reason ILG determines that during the two years prior to such termination there was an event or circumstance that would have been grounds for termination for Cause, all outstanding Performance RSU Awards held by you shall be forfeited and canceled in their entirety upon such termination, and ILG may cause you, immediately upon notice, either to return the shares issued upon the settlement of RSUs that vested during the two-year period after the events or circumstances giving rise to or constituting grounds for termination for Cause or to pay ILG an amount equal to the aggregate amount, if any, that you had previously realized in respect of any and all shares issued upon settlement of RSUs that vested during the two-year period after the events or circumstances giving rise to or constituting grounds for such termination for Cause ( i.e. , the value of the RSUs upon vesting), in each case, including any dividend equivalents or other distributions received in respect of any such RSUs. This remedy shall be without prejudice to, or waiver of, any other remedies ILG or its Subsidiaries may have in such event.

Determination of Adjusted EBITDA Performance

As soon as reasonably practicable following the date on which ILG releases its earnings for the Measurement Period, the Committee shall certify as to the level of Adjusted EBITDA that ILG achieved for the Measurement Period, and the resulting percentage of Target RSUs that will vest (the “Adjusted EBITDA Certification Date”).

Committee Discretion to Adjust Adjusted EBITDA Performance Hurdles

Decrease of Performance Hurdles. Through the Adjusted EBITDA Certification Date, the Committee shall retain discretion to decrease Performance Hurdles (or otherwise make adjustments that increase the likelihood of Performance Hurdles being achieved) at any time. Furthermore, the Committee shall, within 90 days of the discovery of all relevant material facts relating to a Material Reduction Event (as defined below) by the Committee, decrease Performance Hurdles (or otherwise make adjustments that increase the likelihood of Performance Hurdles being achieved), such that, in the Committee’s good faith and sole judgment, the likelihood of achievement of the various Performance Hurdles as adjusted is no less likely than prior to the Material Reduction Event.

A “Material Reduction Event” means a discrete event which is likely to materially decrease Adjusted EBITDA during the Measurement Period in a manner the Committee determines, in its good faith and sole judgment, is not properly reflective of growth in ILG’s

performance in the Measurement Period over ILG’s fiscal year that began three years prior to the commencement of the Measurement Period (e.g., if the Measurement Period begins in 2011, then the relevant growth period is 2011 over 2008). For purposes of a Material Reduction Event, materiality shall be judged by the Committee without regard to the likelihood of achievement of any particular Performance Hurdles.

For example, the spin-off of a significant ILG business to ILG shareholders would most likely constitute a Material Reduction Event, as the Performance Hurdles would assume a contribution from the spun-off business, whereas the sale of an ILG business might not constitute a Material Reduction Event, as Adjusted EBITDA in the Measurement Period would continue to benefit from the re-investment of the sale proceeds. Nonetheless, under certain circumstances the sale of a business might constitute a Material Reduction Event, such as when the sale occurs during or at the end of the Measurement Period, resulting in the exclusion from Adjusted EBITDA of prior earnings during the Measurement Period from the sold business, even though Adjusted EBITDA did not get the benefit of the earnings from the sale proceeds for the entire period. In any event, such transactions would not constitute Material Reduction Events unless the Committee determined, in its good faith and sole judgment, that they were material.

Increase of Performance Hurdles. Through the Adjusted EBITDA Certification Date, the Committee may, within 90 days of the discovery of all relevant material facts relating to a Material Accretion Event (as defined below) by the Committee, increase Performance Hurdles (or otherwise make adjustments that decrease the likelihood of Performance Hurdles being achieved). Any such adjustment shall be made such that, in the Committee’s good faith and sole judgment, the likelihood of achievement of the various Performance Hurdles is no less likely than prior to the Material Accretion Event.

A “Material Accretion Event” means a discrete event which is likely to materially increase Adjusted EBITDA during the Measurement Period in a manner the Committee determines, in its good faith and sole judgment, is not properly reflective of growth in ILG’s performance in the Measurement Period over ILG’s fiscal year that began three years prior to the commencement of the Measurement Period (e.g., if the Measurement Period begins in 2011, then the relevant growth period is 2011 over 2008). It is understood that the effects of acquisitions and share repurchases will be considered reflective of growth in ILG’s financial performance and therefore will not constitute a Material Accretion Event for purposes of this grant. For purposes of a Material Accretion Event, materiality shall be judged by the Committee without regard to the likelihood of achievement of any particular Performance Hurdles.

For example, if ILG reversed a significant reserve during the Measurement Period, and such reversal materially increased Adjusted EBITDA, then such reversal would likely constitute a Material Accretion Event, given that such reversal simply represents a shifting of net income from a prior period into the Measurement Period.

However, an accretive cash acquisition of a company would not constitute a Material Accretion Event, unless the Committee determined that the impact on Adjusted EBITDA during the Measurement Period was not representative of the value added to ILG by such acquisition.

Determinations of the Committee regarding any adjustment (downward or upward) to Performance Hurdles through the Adjusted EBITDA Certification Date will be final and conclusive . Discretion, both positive and negative, need not be applied uniformly by the Committee to all outstanding Performance RSU Awards, but no Performance RSU Awards can be treated less favorably than the majority of Performance RSU Awards subject to the same set of Performance Hurdles.

Settlement

Subject to your satisfaction of the tax obligations described immediately below under “Taxes and Withholding,” as soon as practicable after the Performance RSU Award Vesting Date your RSUs shall be settled. In no event shall settlement occur later than two and one half months after the end of the fiscal year in which the RSUs vest. For each RSU settled, ILG shall issue one share of Common Stock for each RSU vesting. Notwithstanding the foregoing, ILG shall be entitled to hold the shares issuable to you upon settlement of all RSUs that have vested until ILG or the agent selected by ILG to administer the Plan (the “Agent”) has received from you (i) a duly executed Form W-9 or W-8, as applicable or (ii) payment for any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such RSUs.

Taxes and Withholding

No later than the date as of which an amount in respect of any RSUs first becomes includible in your gross income for federal, state, local or foreign income or employment or other tax purposes, ILG or its Subsidiaries shall, unless prohibited by law, have the right to deduct any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount due to you, including deducting such amount from the delivery of shares issued upon settlement of the RSUs that gives rise to the withholding requirement. In the event shares are deducted to cover tax withholdings, the number of shares withheld shall generally have a Fair Market Value equal to the aggregate amount of ILG’s withholding obligation. In the event that any such deduction and/or withholding is prohibited by law, you shall, prior to or contemporaneously with the vesting or your RSUs, pay to ILG, or make arrangements satisfactory to ILG regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount.

Adjustment in Event of Change in Stock; Change in Control

In the event of (i) a stock dividend, stock split, reverse stock split, share combination, or recapitalization or similar event affecting the capital structure of ILG (each, a “Share Change”), or (ii) a merger, consolidation, acquisition of property or shares, separation, spin-off, reorganization, stock rights offering, liquidation, Disaffiliation, or similar event affecting ILG or any of its Subsidiaries (each, a “Corporate Transaction”), the Committee or the Board will make such substitutions or adjustments, if any, as it, in its good faith and sole discretion, deems appropriate and equitable to the number of RSUs and the number and kind of shares of Common Stock underlying the RSUs. The determination of the Committee regarding any such adjustment will be final and conclusive and need not be the same for all RSU award recipients (including, but not limited to, recipients of Performance RSU Awards).

Subject to the terms of your employment agreement, if any, with ILG, in the event you cease to be employed by either ILG or any of its Subsidiaries within the one year period following a Change in Control as a result of (i) a termination by ILG or any of its Subsidiaries without Cause, or (ii) a resignation by you for Good Reason, 100% of the Target RSUs set forth in your Award Notice shall automatically vest upon such termination of employment. Notwithstanding the foregoing, if at the time of the Change in Control the Committee believes, in its good faith and sole judgment, that it is substantially likely that in the absence of the Change in Control a greater portion of the RSUs would have vested than the Target RSUs, then at such time the Committee shall make a determination to vest additional shares accordingly upon any such future terminations of employment. Any such determination by the Committee shall be final and conclusive and shall be the same for all Performance RSU Awards. For the avoidance of doubt, the Change in Control provision shall only apply in the case of a Change in Control of ILG and in no event shall apply to a Subsidiary of ILG.

Non-Transferability of the RSUs

Until such time as your RSUs are ultimately settled, they shall not be transferable by you by means of sale, assignment, exchange, encumbrance, pledge, hedge or otherwise.

No Rights as a Stockholder

Except as otherwise specifically provided in the Plan, unless and until your RSUs are settled, you shall not be entitled to any rights of a stockholder with respect to the RSUs. Notwithstanding the foregoing, if ILG declares and pays dividends on the Common Stock prior to the Performance RSU Award Vesting Date for a particular Performance RSU Award, you will be credited with additional amounts for each RSU underlying such Performance RSU Award equal to the dividend that would have been paid with respect to such RSU as if it had been an actual share of Common Stock, which amount shall remain subject to restrictions (and as determined by the Committee may be reinvested in RSUs or may be held in kind as restricted property) and shall vest concurrently with the vesting of the RSUs upon which such dividend equivalent amounts were paid. Notwithstanding the foregoing, dividends and distributions other than regular quarterly cash dividends, if any, may result in an adjustment pursuant to the “Adjustment in the Event of Change in Stock; Change in Control” section above.

Other Restrictions

Conflicts and Interpretation

In the event of any conflict between these Terms and Conditions and the Plan, the Plan shall control. In the event of any ambiguity in these Terms and Conditions, or any matters as to which these Terms and Conditions are silent, the Plan shall govern. In the event of any conflict between the Award Notice (or any other information posted on ILG’s extranet or given to you directly or indirectly through the Agent (including information posted on www.benefitaccess.com )) and ILG’s books and records, or (ii) ambiguity in the Award Notice (or any other information posted on ILG’s intranet or given to you directly or indirectly through the Agent (including information posted on www.benefitaccess.com ), ILG’s books and records shall control.

Amendment

Data Protection

Section 409A of the Code

Performance RSU Awards are not intended to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and the rules and regulations issued thereunder (“Section 409A”). In no event shall ILG be required to pay you any “gross-up” or other payment with respect to any taxes or penalties imposed under Section 409A with respect to any amounts or benefits paid to you in respect of your Performance RSU Award.

Notification of Changes

becomes effective . You are therefore urged to periodically check these Terms and Conditions, especially any schedules, to determine whether any changes have been made.

Exhibit 10.3

Terms and Conditions for TSR-based Performance RSU Awards

Overview

These Terms and Conditions apply to TSR-based Performance RSU Awards, which are grants of performance-based restricted stock units made pursuant to Section 12 of the Interval Leisure Group, Inc. 2013 Stock and Incentive Compensation Plan (the “Plan”). You were notified of your TSR-based Performance RSU Award by way of an award notice (the “Award Notice”).

ALL CAPITALIZED TERMS USED HEREIN, TO THE EXTENT NOT DEFINED, SHALL HAVE THE MEANINGS SET FORTH IN THE PLAN.

Continuous Service

Subject to the exceptions discussed under “Termination of Employment” (below), in order for your TSR-based Performance RSU Award to vest, you must be continuously employed by Interval Leisure Group, Inc. (“ILG”) or any of its Subsidiaries through the third anniversary of the relevant award date (the “Continuous Service Requirement”). Nothing in your Award Notice, these Terms and Conditions or the Plan shall confer upon you any right to continue in the employ or service of ILG or any of its Subsidiaries or interfere in any way with their rights to terminate your employment or service at any time.

Total Shareholder Return Performance Hurdles

Assuming satisfaction of the Continuous Service Requirement, the actual number of RSUs covered by your TSR-based Performance RSU Award that will vest is dependent upon the total shareholder return (“TSR”) of ILG Common Stock relative to the total shareholder return of the two Peer Groups, described below, with the actual number of RSUs vesting ranging from 0 to 200% of the Target RSU number specified in your Award Notice. Schedule A to these Terms and Conditions defines TSR and the two Peer Groups as well as explains how the achievement of various levels of TSR of ILG Common Stock relative to the TSR of the Peer Groups impacts the number of RSUs that you will ultimately receive (the “Performance Hurdles”).

Vesting

The vesting date for TSR-based Performance RSU Awards (the “TSR-based Performance RSU Award Vesting Date”) will be the later of (i) the third anniversary of the relevant award date (the “Third Anniversary”) and (ii) the date on which ILG’s Compensation and Human Resources Committee (the “Committee”) certifies the percentile rank of ILG’s TSR relative to the two Peer Groups for the relevant period specified in the relevant Award Notice (the “Measurement Period”), which certification shall occur as soon as reasonably practicable following the last day of the Measurement Period at the next regularly scheduled meeting of the Committee.

If the Continuous Service Requirement is satisfied prior to the TSR-based Performance RSU Award Vesting Date, no subsequent termination of employment for any reason (other than by ILG or its Subsidiaries for Cause, as defined in the Plan) shall affect the ultimate vesting of your TSR-based Performance RSU Award.

Termination of Employment

Subject to the provisions of your employment agreement, if any, and these terms and conditions, upon your termination of your employment during the Restriction Period for any reason, any RSUs still subject to restriction shall vest or be forfeited and canceled in accordance with the terms of the Plan and this Award. For the avoidance of doubt, a transfer of employment among the Company and its Subsidiaries or other Affiliates, without any break in service, is not a termination of your employment.

Subject to the provisions of your employment agreement, if any, upon the termination of your employment by ILG or any of its Subsidiaries after the first anniversary of the relevant award date but prior to the Third Anniversary (i) by ILG or any of its Subsidiaries without Cause, (ii) by you for Good Reason (as defined below) or (iii) as a result of the sale, other disposition or other Disaffiliation of the ILG business or division by which you are employed (collectively, a “Qualifying Termination”), you shall retain eligibility to receive, for each completed twelve-month period (measured successively) of continued employment following the relevant award date, one-third of your TSR-based Performance RSU Award. The remaining RSUs covered by your TSR-based Performance RSU Award shall be forfeited and canceled in their entirety on the date of your termination of employment. On the TSR-based Performance RSU Award Vesting Date, such portion of the RSUs that remain outstanding shall vest in accordance with Schedule A.

By way of example, assume that you are granted a TSR-based Performance RSU Award of 1,500 Target RSUs and are terminated without Cause by ILG fourteen (14) months after the relevant award date. At that time, your new Target RSU number shall be 500 (one-third of your original number) and you shall continue to be eligible to receive 1,000 RSUs if the maximum performance is achieved. The target number will be reflected on Smith Barney’s website, www.benefitaccess.com . If on the TSR Certification Date (as defined below) the Committee determines that the target level of TSR for the Measurement Period has been achieved, you would vest at that time in 500 RSUs.

“Good Reason” shall mean, without your prior written consent: (A) a reduction in your rate of annual base salary or (B) a relocation of your principal place of business more than 35 miles from the city in which your principal place of business was located immediately prior to the relocation. Notwithstanding the foregoing, if you have a valid and effective employment agreement at the time of your termination that defines “Good Reason,” the definition in such agreement shall apply to your TSR-based Performance RSU Award. In order for any termination of employment to be for Good Reason, you must provide notice of the circumstances giving rise to a Good Reason termination to your supervisor and then, if such circumstances are not remedied within thirty (30) days of such notice, you must resign your employment within sixty (60) days of such notice.

Upon the termination of your employment by ILG or any of its Subsidiaries prior to the Third Anniversary for any reason other than a Qualifying Termination, your TSR-based Performance RSU Award shall be forfeited and canceled in its entirety effective immediately upon such termination of employment.

If your employment is terminated by ILG or any of its Subsidiaries for Cause at any time prior to the actual settlement of your RSUs, or if following any termination of employment between you and ILG or any of its Subsidiaries for any reason ILG determines that during the two years prior to such termination there was an event or circumstance that would have been grounds for termination for Cause, all outstanding TSR-based Performance RSU Awards held by you shall be forfeited and canceled in their entirety upon such termination, even if otherwise vested, and ILG may cause you, immediately upon notice, either to return the shares issued upon the settlement of RSUs that vested during the two-year period after the events or circumstances giving rise to or constituting grounds for termination for Cause or to pay ILG an amount equal to the aggregate amount, if any, that you had previously realized in respect of any and all shares issued upon settlement of RSUs that vested during the two-year period after the events or circumstances giving rise to or constituting grounds for such termination for Cause ( i.e. , the value of the RSUs upon vesting), in each case, including any dividend equivalents or other distributions received in respect of any such RSUs. This remedy shall be without prejudice to, or waiver of, any other remedies ILG or its Subsidiaries may have in such event.

Determination of TSR Performance

ILG’s Compensation and Human Resources Committee (the “Committee”) shall certify the percentile rank of ILG’s TSR relative to the two Peer Groups for the relevant period specified in the relevant Award Notice (the “Measurement Period”), which certification shall occur as soon as reasonably practicable following the last day of the Measurement Period at the next regularly scheduled meeting of the Committee. The Committee shall also then certify the resulting percentage of Target RSUs earned (the “TSR Certification Date”).

Settlement

Subject to your satisfaction of the tax obligations described immediately below under “Taxes and Withholding,” as soon as practicable after the TSR-based Performance RSU Award Vesting Date your RSUs shall be settled. In no event shall settlement occur later than

two and one half months after the end of the fiscal year in which the RSUs vest. For each RSU vested and settled, ILG shall issue one share of Common Stock. Notwithstanding the foregoing, ILG shall be entitled to hold the shares issuable to you upon settlement of all RSUs that have vested until ILG or the agent selected by ILG to administer the Plan (the “Agent”) has received from you (i) a duly executed Form W-9 or W-8, as applicable or (ii) payment for any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such RSUs.

Taxes and Withholding

No later than the date as of which an amount in respect of any RSUs first becomes includible in your gross income for federal, state, local or foreign income or employment or other tax purposes, ILG or its Subsidiaries shall, unless prohibited by law, have the right to deduct any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount due to you, including deducting such amount from the delivery of Shares issued upon settlement of the RSUs that gives rise to the withholding requirement. In the event Shares are deducted to cover tax withholdings, the number of Shares withheld shall not exceed the legally required minimum withholding based on the.Fair Market Value of such Shares. In the event that any such deduction and/or withholding is prohibited by law, you shall, prior to or contemporaneously with the vesting or your RSUs, pay to ILG, or make arrangements satisfactory to ILG regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount.

Adjustment in Event of Change in Stock; Change in Control

only apply in the case of a Change in Control of ILG and in no event shall apply to a Subsidiary of ILG.

Non-Transferability of the RSUs

Until such time as your RSUs are ultimately settled, they shall not be transferable by you by means of sale, assignment, exchange, encumbrance, pledge, hedge or otherwise.

No Rights as a Stockholder

Except as otherwise specifically provided in the Plan, unless and until your RSUs are settled, you shall not be entitled to any rights of a stockholder with respect to the RSUs. Notwithstanding the foregoing, if ILG declares and pays dividends on the Common Stock prior to the TSR-based Performance RSU Award Vesting Date for a particular Performance RSU Award, you will be credited with additional amounts for each RSU underlying such TSR-based Performance RSU Award equal to the dividend that would have been paid with respect to such RSU as if it had been an actual share of Common Stock, which amount shall remain subject to restrictions (and as determined by the Committee may be reinvested in RSUs or may be held in kind as restricted property) and shall vest concurrently with the vesting of the RSUs upon which such dividend equivalent amounts were paid. Notwithstanding the foregoing, dividends and distributions other than regular quarterly cash dividends, if any, may result in an adjustment pursuant to the “Adjustment in the Event of Change in Stock; Change in Control” section above.

Other Restrictions

Conflicts and Interpretation

Amendment

ILG may modify, amend or waive the terms of your RSUs, prospectively or retroactively, but no such modification, amendment or waiver shall materially impair your rights or reduce the amount of your Award without your consent, except as required by applicable law, NASDAQ or stock exchange rules, tax rules or accounting rules.

Data Protection

Section 409A of the Code

TSR-based Performance RSU Awards are not intended to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and the rules and regulations issued thereunder (“Section 409A”). In no event shall ILG be required to pay you any “gross-up” or other payment with respect to any taxes or penalties imposed under Section 409A with respect to any amounts or benefits paid to you in respect of your Performance RSU Award.

Notification of Changes

Any changes to these Terms and Conditions, including Schedule A (or any additional schedules) hereto, shall either be posted on ILG’s intranet and www.benefitaccess.com or communicated (either directly by ILG or indirectly through any of its Subsidiaries or the Agent) to you electronically via e-mail (or otherwise in writing) promptly after such change becomes effective . You are therefore urged to periodically check these Terms and Conditions, especially any schedules, to determine whether any changes have been made.

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Exhibit 31.1

Certification

I, Craig M. Nash, certify that:

1.

I have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2014 of Interval Leisure Group, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a): Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b): Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c): Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d): Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a): All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b): Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Dated: May 7, 2014		/s/ CRAIG M. NASH Craig M. Nash Chairman, President and Chief Executive Officer

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Exhibit 31.1

Certification

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Exhibit 31.2

Certification

I, William L. Harvey, certify that:

1.

I have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2014 of Interval Leisure Group, Inc.;

2.

3.

4.

a): Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b): Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c): Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d): Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

a): All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b): Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Dated: May 7, 2014		/s/ WILLIAM L. HARVEY William L. Harvey Chief Financial Officer

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Exhibit 31.2

Certification

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Exhibit 31.3

Certification

I, John A. Galea, certify that:

1.

I have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2014 of Interval Leisure Group, Inc.;

2.

3.

4.

a): Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b): Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c): Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d): Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

a): All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b): Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Dated: May 7, 2014		/s/ JOHN A. GALEA John A. Galea Chief Accounting Officer

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Exhibit 31.3

Certification

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Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Craig M. Nash, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge:

(1): the Quarterly Report on Form 10-Q for the period ended March 31, 2014 of Interval Leisure Group, Inc. (the "Report") which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2): the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Interval Leisure Group, Inc.


Dated: May 7, 2014		/s/ CRAIG M. NASH Craig M. Nash Chairman, President and Chief Executive Officer

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Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, William L. Harvey, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge:

(1): the Quarterly Report on Form 10-Q for the period ended March 31, 2014 of Interval Leisure Group, Inc. (the "Report") which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2): the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Interval Leisure Group, Inc.


Dated: May 7, 2014		/s/ WILLIAM L. HARVEY William L. Harvey Chief Financial Officer

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Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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Exhibit 32.3

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, John A. Galea, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge:

(1): the Quarterly Report on Form 10-Q for the period ended March 31, 2014 of Interval Leisure Group, Inc. (the "Report") which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2): the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Interval Leisure Group, Inc.


Dated: May 7, 2014		/s/ JOHN A. GALEA John A. Galea Chief Accounting Officer

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Exhibit 32.3

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002