What changed in this filing

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Item 1. Financial Statements

2023-08-03 compared with 2023-04-27 · 207 added, 169 removed, 615 unchanged (38% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

2023 December 31,

(in millions, except share and per share data)

June 30, 2023 December 31, 2022

Cash and cash equivalents $ 252 $ 223

11 unchanged sentences

$ 8,151 $ 8,004

LIABILITIES AND EQUITY

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable, accrued expenses and other $ 1,043 $ 1,007

7 unchanged sentences

Commitments and contingencies - see Note 17

Stockholders' Equity:

Preferred stock, $ 0.01 par value;

300,000,000 authorized shares, none

issued or outstanding as of March 31, 2023 and December 31, 2022

issued or outstanding as of June 30, 2023 and December 31, 2022

Common stock, $ 0.01 par value;

3,000,000,000 authorized shares,

112,515,473 shares issued and outstanding as of March 31, 2023 and

109,929,447 shares issued and outstanding as of June 30, 2023 and

113,628,706 shares issued and outstanding as of December 31, 2022

2 unchanged sentences

Accumulated other comprehensive income 24 39

Total equity 2,132 2,151

TOTAL LIABILITIES AND EQUITY $ 8,478 $ 8,004

Total stockholders' equity 2,105 2,151

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,151 $ 8,004

See notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in millions, except per share amounts)

Three Months Ended March 31,

(in millions, except per share data)

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Sales of VOIs, net $ 355 $ 361 $ 673 $ 630

14 unchanged sentences

License fee expense 34 32 64 57

Impairment expense — 3

Impairment expense (reversal) 3 ( 3 ) 3 —

Cost reimbursements 97 67 192 133

2 unchanged sentences

Equity in earnings from unconsolidated affiliates 2 4 5 7

Other gain, net 1 1

Other gain (loss), net 3 ( 2 ) 4 ( 1 )

Income before income taxes 115 114 205 185

8 unchanged sentences

(in millions)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Net income $ 80 $ 73 $ 153 $ 124

Derivative instrument adjustments, net of tax 5 10 ( 5 ) 32

Foreign currency translation adjustments ( 10 ) ( 6 ) ( 10 ) ( 6 )

Other comprehensive (loss) income, net of tax ( 5 ) 4 ( 15 ) 26

4 unchanged sentences

(in millions)

Three Months Ended March 31,

Six Months Ended June 30,

Operating Activities

5 unchanged sentences

Impairment expense 3 —

Other gain, net ( 1 ) —

Other (gain) loss, net ( 4 ) 2

Share-based compensation 26 26

Equity in earnings from unconsolidated affiliates ( 5 ) ( 7 )

Return on investments in unconsolidated affiliates 6 —

Net changes in assets and liabilities:

17 unchanged sentences

Repayment of non-recourse debt ( 397 ) ( 697 )

Payment of debt issuance costs — ( 7 )

Repurchase and retirement of common stock ( 206 ) ( 78 )

Payment of withholding taxes on vesting of restricted stock units ( 14 ) ( 8 )

Proceeds from employee stock plan purchases 4 2

Proceeds from stock option exercises 7 1

Other ( 2 ) ( 1 )

Net cash provided by (used in) financing activities 183 ( 133 )

Net cash used in financing activities ( 152 ) ( 518 )

Effect of changes in exchange rates on cash, cash equivalents & restricted cash ( 10 ) ( 6 )

Net increase in cash, cash equivalents and restricted cash 197 122

Net increase (decrease) in cash, cash equivalents and restricted cash 33 ( 29 )

Cash, cash equivalents and restricted cash, beginning of period 555 695

10 unchanged sentences

Comprehensive

Stockholders'

Shares Amount

4 unchanged sentences

Derivative instrument adjustments, net of tax — — — — ( 10 ) ( 10 )

Repurchase and retirement of common stock ( 2 ) — ( 26 ) ( 59 ) — ( 85 )

Repurchase and retirement of common stock, net of tax ( 2 ) — ( 26 ) ( 59 ) — ( 85 )

Balance as of March 31, 2023 112 $ 1 $ 1,559 $ 543 $ 29 $ 2,132

Net income — — — 80 — 80

Activity related to share-based compensation — — 16 — — 16

Employee stock plan issuance — — 4 — — 4

Foreign currency translation adjustments — — — — ( 10 ) ( 10 )

Derivative instrument adjustments, net of tax — — — — 5 5

Repurchase and retirement of common stock, net of tax ( 3 ) — ( 38 ) ( 84 ) — ( 122 )

Balance as of June 30, 2023

109 $ 1 $ 1,541 $ 539 $ 24 $ 2,105

3 unchanged sentences

Comprehensive

Stockholders'

Shares Amount

5 unchanged sentences

Balance as of March 31, 2022 120 $ 1 $ 1,634 $ 408 $ 22 $ 2,065

Net income — — — 73 — 73

Activity related to share-based compensation — — 16 — — 16

Employee stock plan issuance — — 2 — — 2

Foreign currency translation adjustments — — — — ( 6 ) ( 6 )

Derivative instrument adjustments, net of tax — — — — 10 10

Repurchase and retirement of common stock ( 2 ) — ( 26 ) ( 57 ) — ( 83 )

Balance as of June 30, 2022

118 $ 1 $ 1,626 $ 424 $ 26 $ 2,077

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Our club offerings, including HGV Max, are collectively referred to as “Clubs”.

As of March 31, 2023, we had over 150 properties located in the United States (“U.S.”), Europe, Mexico, the Caribbean, Canada and Japan.

As of June 30, 2023, we had over 150 properties located in the United States (“U.S.”), Europe, Mexico, the Caribbean, Canada and Japan.

A significant number of our properties and VOIs are concentrated in Florida, Europe, Hawaii, California, Arizona, Nevada and Virginia.

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The unaudited condensed consolidated financial statements presented herein include 100% of our assets, liabilities, revenues, expenses and cash flows as well as all entities in which we have a controlling financial interest.

The determination of a controlling financial interest is based upon the terms of the governing agreements of the respective entities, including the evaluation of rights held by other interests.

If the entity is considered to be a variable interest entity (“VIE”), we determine whether we are the primary beneficiary, and then consolidate those VIEs for which we have determined we are the primary beneficiary.

If the entity in which we hold an interest does not meet the definition of a VIE, we evaluate whether we have a controlling financial interest through our voting interests in the entity.

We consolidate entities when we own more than 50% of the voting shares of a company or otherwise have a controlling financial interest.

Our accompanying unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods.

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generally accepted accounting principles (“U.S.

Our accompanying unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods.

Certain information and footnote disclosures normally included in financial statements presented in accordance with U.S.

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Although we believe the disclosures made are adequate to prevent information presented from being misleading, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2022, included in our Annual Report on Form 10-K filed with the SEC on March 1, 2023.

The determination of a controlling financial interest is based upon the terms of the governing agreements of the respective entities, including the evaluation of rights held by other interests.

If the entity in which we hold an interest does not meet the definition of a VIE, we evaluate whether we have a controlling financial interest through our voting interests in the entity.

We consolidate entities when we own more than 50% of the voting shares of a company or otherwise have a controlling financial interest.

Use of Estimates

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

On January 1, 2023, we adopted Accounting Standards Update 2022-02 (“ASU 2022-02”), Financial Instruments— Credit Losses (Topic 326):

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(i) Real estate sales and financing and (ii) Resort operations and club management .

Please refer to Note 16:

Business Segments below for more details related to our segments.

($ in millions) Three Months Ended March 31,

Business Segments for more information related to our segments.

($ in millions) Three Months Ended June 30, Six Months Ended June 30,

Real Estate Sales and Financing Segment 2023 2022 2023 2022

4 unchanged sentences

Real estate sales and financing segment revenues $ 604 $ 586 $ 1,154 $ 1,038

($ in millions) Three Months Ended March 31,

($ in millions) Three Months Ended June 30, Six Months Ended June 30,

Resort Operations and Club Management Segment 2023 2022 2023 2022

1 unchanged sentence

Resort management 80 73 160 147

162 155 309 279

Ancillary services 11 16 22 28

Resort operations and club management segment revenues $ 306 $ 295 $ 595 $ 556

(1) Excludes intersegment eliminations.

(1) Excludes intersegment transactions.

Business Segments for additional information.

3 unchanged sentences

The following table provides information on our accounts receivable from contracts with customers which are included in Accounts receivable, net on our condensed consolidated balance sheets:

($ in millions) March 31, 2023 December 31, 2022

($ in millions) June 30, 2023 December 31, 2022

Receivables $ 324 $ 322

Contract liabilities include payments received or due in advance of satisfying our performance obligations.

Such contract liabilities include advance deposits received on prepaid vacation packages for future stays at our resorts, deferred revenues related to sales of VOIs of projects under construction, Club activation fees and annual dues and the liability for Bonus Points awarded to our customers for purchase of VOIs at our properties or properties under our fee-for-service arrangements that may be redeemed in the future, deferred maintenance fees and other deferred revenue.

Such contract liabilities include advance deposits received on prepaid vacation packages for future stays at our resorts, deferred revenues related to sales of VOIs of projects under construction, Club activation fees and annual dues, the liability for bonus points awarded to our customers for purchase of VOIs at our properties or properties under our fee-for-service arrangements that may be redeemed in the future, deferred maintenance fees and other deferred revenue.

The following table presents the composition of our contract liabilities:

($ in millions) March 31, 2023 December 31, 2022

($ in millions) June 30, 2023 December 31, 2022

Contract liabilities:

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Other deferred revenue 31 42

(1) As of March 31, 2023, the balance includes $ 52 million of bonus point incentive liabilities included in Accounts payable, accrued expenses and other on our condensed consolidated balance sheets.

(1) The balance includes $ 56 million and $ 51 million of bonus point incentive liabilities included in Accounts payable, accrued expenses and other on our condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022, respectively.

This liability is for incentives from VOI sales and sales and marketing expenses in conjunction with our fee-for-service arrangements.

Revenue earned for the three months ended March 31, 2023, that was included in the contract liabilities balance at December 31, 2022 was approximately $ 56 million.

Revenue earned for the three and six months ended June 30, 2023, that was included in the contract liabilities balance at December 31, 2022, was approximately $ 43 million and $ 99 million, respectively.

Contract assets relate to incentive fees that can be earned for meeting certain targets on sales of VOIs at properties under our fee-for-service arrangements;

however, our right to consideration is conditional upon completing the requirements of the annual incentive fee period.

There were no contract assets as of March 31, 2023 and $ 9 million contract assets as of December 31, 2022.

Contract assets were $ 7 million as of June 30, 2023 and $ 9 million as of December 31, 2022.

Transaction Price Allocated to Remaining Performance Obligations

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Our contracts with remaining performance obligations primarily include (i) sales of VOIs under construction, (ii) Club activation fees paid at closing of a VOI purchase, (iii) customers’ advanced deposits on prepaid vacation packages and (iv) bonus points that may be redeemed in the future.

The following table presents the deferred revenue, cost of VOI sales and direct selling costs from sales of VOIs related to projects under construction as of March 31, 2023 and December 31, 2022.

($ in millions) March 31, 2023 December 31, 2022

The following table presents the deferred revenue, cost of VOI sales and direct selling costs from sales of VOIs related to projects under construction as of June 30, 2023 and December 31, 2022:

($ in millions) June 30, 2023 December 31, 2022

Sales of VOIs, net $ 6 $ 3

1 unchanged sentence

Sales and marketing expense 1 1

As of March 31, 2023, we have recognized all revenue, costs of VOI sales and direct selling costs previously in deferral as all projects under construction were completed in the first quarter of 2023.

The following table includes the remaining transaction price related to Advanced deposits, Club activation fees and Bonus Points incentive liability as of March 31, 2023:

During the six months ended June 30, 2023, we recognized $ 4 million of sales of VOIs, net, offset by deferrals of $ 6 million, related to sales of projects under construction, some of which were completed during the year.

We expect to recognize the revenue, costs of VOI sales and direct selling costs related to the projects under construction as of June 30, 2023 upon their completion in 2024.

The following table includes the remaining transaction price related to Advanced deposits, Club activation fees and Bonus points incentive liability as of June 30, 2023:

($ in millions) Remaining

2 unchanged sentences

Club activation fees 65 7 years Straight-line basis over average inventory holding period

Bonus Points incentive liability 103 18 - 30 months

Bonus point incentive liability 101 18 - 30 months

Upon redemption

2 unchanged sentences

The following table represents our accounts receivable, net of allowance for credit losses:

($ in millions) March 31, 2023 December 31, 2022

($ in millions) June 30, 2023 December 31, 2022

Fee-for-service commissions $ 69 $ 91

7 unchanged sentences

We use delinquency status and economic factors such as credit quality indicators to monitor our receivables within the scope of ASC 326 and use these as a basis for how we develop our expected loss estimates.

We have various allowances for our accounts receivable to account for fee-for-service commissions, expected losses related to sales of VOIs, trade accounts receivable, marketing packages, club dues and activation fees.

We have allowances for our accounts receivable to account for fee-for-service commissions, trade accounts receivable, marketing packages, club dues and activation fees.

TIMESHARE FINANCING RECEIVABLES

5 unchanged sentences

Originated Acquired

($ in millions) March 31,

($ in millions) June 30,

2023 December 31,

2022 March 31,

2022 June 30,

2023 December 31,

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(1) Includes amounts used as collateral to secure a non-recourse revolving timeshare receivable credit facility (“Timeshare Facility”) as well as amounts held as future collateral for securitization activities.

(2) Non-credit premium of $ 97 million was recognized at the Acquisition Date, of which $ 37 million and $ 41 million remains unamortized as of March 31, 2023 and December 31, 2022, respectively.

As of March 31, 2023 and December 31, 2022, we had timeshare financing receivables with a carrying value of $ 180 million and $ 105 million, respectively, securing the Timeshare Facility.

We record an estimate of variable consideration for estimated defaults as a reduction of revenue from VOI sales at the time revenue is recognized on a VOI sale.

(2) Non-credit premium of $ 97 million was recognized at the Acquisition Date, of which $ 34 million and $ 41 million remains unamortized as of June 30, 2023 and December 31, 2022, respectively.

As of June 30, 2023 and December 31, 2022, we had timeshare financing receivables with a carrying value of $ 262 million and $ 105 million, respectively, securing the Timeshare Facility.

We record an estimate of variable consideration for defaults as a reduction of revenue from VOI sales at the time revenue is recognized.

We record the difference between the timeshare financing receivable and the variable consideration included in the transaction price for the sale of the related VOI as an allowance for financing receivables and record the receivable net of the allowance.

During the three months ended March 31, 2023 and 2022, we recorded an adjustment to our estimate of variable consideration of $ 30 million and $ 31 million, respectively.

During both the six months ended June 30, 2023 and 2022, we recorded an adjustment to our estimate of variable consideration of $ 71 million.

We recognize interest income on our timeshare financing receivables as earned.

As of both March 31, 2023 and December 31, 2022, we had interest receivable outstanding of $ 13 million on our originated timeshare financing receivables.

As of both March 31, 2023 and December 31, 2022, we had interest receivable outstanding of $ 4 million on our acquired timeshare financing receivables.

Interest receivable is included in Other Assets within our condensed

consolidated balance sheets.

As of both June 30, 2023 and December 31, 2022, we had interest receivable outstanding of $ 13 million on our originated timeshare financing receivables.

As of June 30, 2023 and December 31, 2022, we had interest receivable outstanding of $ 3 million and $ 4 million, respectively, on our acquired timeshare financing receivables.

Interest receivable is included in Other Assets within

our condensed consolidated balance sheets.

The interest rate charged on the notes correlates to the risk profile of the customer at the time of purchase and the percentage of the purchase that is financed, among other factors.

As of March 31, 2023, our originated timeshare financing receivables had interest rates ranging from 1.5 % to 25.8 %, a weighted-average interest rate of 14.5 %, a weighted-average remaining term of 8.2 years and maturities through 2038.

As of June 30, 2023, our originated timeshare financing receivables had interest rates ranging from 1.5 % to 25.8 %, a weighted-average interest rate of 14.7 %, a weighted-average remaining term of 8.2 years and maturities through 2038.

Our acquired timeshare financing receivables had interest rates ranging from 2.0 % to 25.0 %, a weighted-average interest rate of 15.7 %, a weighted-average remaining term of 7.2 years and maturities through 2033.

We apply payments we receive for loans, including those in non-accrual status, to amounts due in the following order:

servicing fees;

and late charges.

Once a loan is 91 days past due, we cease accruing interest and reverse the accrued interest recognized up to that point.

We resume interest accrual for loans for which we had previously ceased accruing interest once the loan is less than 91 days past due.

We fully reserve for a timeshare financing receivable in the month following the date that the loan is 121 days past due and, subsequently, we write off the uncollectible note against the reserve once the foreclosure process is complete.

Acquired Timeshare Financing Receivables with Credit Deterioration

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Subsequent changes to the allowance for financing receivable losses are recorded as additions to or reversals to the provision.

Our gross acquired timeshare financing receivables as of March 31, 2023 mature as follows:

Our gross acquired timeshare financing receivables as of June 30, 2023 mature as follows:

Acquired Timeshare Financing Receivables

($ in millions) Securitized Unsecuritized Total

2023 (remaining nine months) $ 28 $ 38 $ 66

2023 (remaining six months) $ 20 $ 27 $ 47

2024 29 39 68

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Originated Timeshare Financing Receivables

Our originated timeshare financing receivables as of March 31, 2023 mature as follows:

Our originated timeshare financing receivables as of June 30, 2023 mature as follows:

Originated Timeshare Financing Receivables

($ in millions) Securitized Unsecuritized Total

2023 (remaining nine months) $ 70 $ 62 $ 132

2023 (remaining six months) $ 44 $ 50 $ 94

2024 89 82 171

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Inventory recoveries — 8

Balance as of March 31, 2023 $ 418 $ 325

Balance as of June 30, 2023 $ 447 $ 313

($ in millions) Originated

3 unchanged sentences

Inventory recoveries — 17

Balance as of March 31, 2022 $ 302 $ 461

Balance as of June 30, 2022 $ 348 $ 405

(1) Includes incremental provision for financing receivables losses, net of activity related to the repurchase of defaulted and upgraded securitized timeshare financing receivables.

12 unchanged sentences

Legacy-HGV Timeshare Financing Receivables

($ in millions) March 31, 2023 December 31, 2022

($ in millions) June 30, 2023 December 31, 2022

700+ $ 800 $ 763

2 unchanged sentences

(1) Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

The following table details our gross Legacy-HGV timeshare financing receivables by the origination year and average FICO score as of March 31, 2023:

The following table details our gross Legacy-HGV timeshare financing receivables by the origination year and average FICO score as of June 30, 2023:

($ in millions) 2023 2022 2021 2020 2019 Prior Total

6 unchanged sentences

(1) Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

We apply payments we receive for loans, including those in non-accrual status, to amounts due in the following order:

servicing fees;

and late charges.

Once a loan is 91 days past due, we cease accruing interest and reverse the accrued interest recognized up to that point.

We resume interest accrual for loans for which we had previously ceased accruing interest once the loan is less than 91 days past due.

As of March 31, 2023 and December 31, 2022, we had ceased accruing interest on timeshare financing receivables with an aggregate principal balance of $ 77 million and $ 76 million, respectively.

As of June 30, 2023 and December 31, 2022, we had ceased accruing interest on timeshare financing receivables with an aggregate principal balance of $ 84 million and $ 76 million, respectively.

The following tables detail an aged analysis of our gross timeshare receivables balance:

Legacy-HGV Timeshare Financing Receivables

March 31, 2023

June 30, 2023

($ in millions) Securitized Unsecuritized Total

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There are no significant concentrations of credit risk with any individual counterparty or groups of counterparties.

We use a technique referred to as static pool analysis as the basis for estimating expected defaults and determining our allowance for financing receivables losses on our timeshare financing receivables.

We use a technique referred to as static pool analysis as the basis for estimating expected

defaults and determining our allowance for financing receivables losses on our timeshare financing receivables.

The adequacy of the related allowance is determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including assumed default rates, aging and historical write-offs of these receivables.

2 unchanged sentences

Legacy-Diamond Acquired Timeshare Financing Receivables

($ in millions) March 31, 2023 December 31, 2022

($ in millions) June 30, 2023 December 31, 2022

700+ $ 322 $ 373

3 unchanged sentences

Legacy-Diamond Originated Timeshare Financing Receivables

($ in millions) March 31, 2023 December 31, 2022

($ in millions) June 30, 2023 December 31, 2022

700+ $ 349 $ 321

2 unchanged sentences

(1) Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

The following tables detail our gross Legacy-Diamond acquired and originated timeshare financing receivables by the origination year and average FICO score as of March 31, 2023:

The following tables detail our gross Legacy-Diamond acquired and originated timeshare financing receivables by the origination year and average FICO score as of June 30, 2023:

Legacy-Diamond Acquired Timeshare Financing Receivables

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(1) Timeshare financing receivables without a FICO score are primarily related to foreign borrowers.

For our Legacy-Diamond timeshare financing receivables, we apply payments we receive for loans, including those in non-accrual status, to amounts due in the following order:

servicing fees;

and late charges.

Once a loan is 91 days past due, we cease accruing interest and reverse the accrued interest recognized up to that point.

We resume interest accrual for loans for which we had previously ceased accruing interest once the loan is less than 91 days past due.

As of March 31, 2023 and December 31, 2022, we had ceased accruing interest on Legacy-Diamond timeshare financing receivables with an aggregate principal balance of $ 397 million and $ 377 million, respectively.

As of June 30, 2023 and December 31, 2022, we had ceased accruing interest on Legacy-Diamond timeshare financing receivables with an aggregate principal balance of $ 416 million and $ 377 million, respectively.

The following tables detail an aged analysis of our gross timeshare receivables balance:

Legacy-Diamond Timeshare Financing Receivables

March 31, 2023

June 30, 2023

($ in millions) Securitized Unsecuritized Total

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Inventory was comprised of the following:

($ in millions) March 31, 2023 December 31, 2022

($ in millions) June 30, 2023 December 31, 2022

Completed unsold VOIs $ 1,273 $ 1,096

2 unchanged sentences

Total $ 1,280 $ 1,159

The table below presents costs of sales true-ups relating to VOI products and the related impacts to the carrying value of inventory.

Three Months Ended March 31,

During the six months ended June 30, 2023, we acquired a property in New York for $ 136 million from a third-party developer for inventory.

Under the purchase agreement, there are no further inventory commitments related to this property.

The table below presents costs of sales true-ups relating to VOI products and the related impacts to the carrying value of inventory and cost of VOI sales.

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2023 2022 2023 2022

Cost of sales true-up (1)

(1) For the three months ended March 31, 2023 and 2022, respectively, the costs of sales true-up decreased costs of VOI sales and increased inventory.

$ 13 $ 2 $ 29 $ 9

(1) For the three and six months ended June 30, 2023 and 2022, respectively, the costs of sales true-up decreased costs of VOI sales and increased inventory.

The table below presents expenses incurred, recorded in Cost of VOI sales, related to granting credit to customers for their existing ownership when upgrading into fee-for service projects.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2023 2022 2023 2022

Cost of VOI sales related to fee-for-service upgrades $ 3 $ 2 $ 6 $ 4

During the three months ended March 31, 2023, we acquired a property in New York for $ 136 million from a third-party developer for inventory.

Under the purchase agreement, there are no further inventory commitments related to this property.

CONSOLIDATED VARIABLE INTEREST ENTITIES

As of March 31, 2023, we consolidated 9 VIEs.

As of June 30, 2023, we consolidated 9 VIEs.

The activities of these entities are limited primarily to purchasing qualifying non-recourse timeshare financing receivables from us and issuing debt securities and/or borrowing under a debt facility to facilitate such purchases.

2 unchanged sentences

We are also the servicer of these timeshare financing receivables and we often replace or repurchase timeshare financing receivables that are in default at their outstanding principal amounts.

Additionally, we have the obligation to absorb their losses and the right to receive benefits that could be significant to them.

Additionally, we have the right to receive benefits that could be significant to them.

Only the assets of our VIEs are available to settle the obligations of the respective entities.

Our condensed consolidated balance sheets included the assets and liabilities of these entities, which primarily consisted of the following:

($ in millions) March 31, 2023 December 31, 2022

($ in millions) June 30, 2023 December 31, 2022

Restricted cash $ 48 $ 48

2 unchanged sentences

INVESTMENTS IN UNCONSOLIDATED AFFILIATES

As of March 31, 2023, we have 25 % and 50 % ownership interests in BRE Ace LLC and 1776 Holding LLC, respectively, which are VIEs.

As of June 30, 2023, we have 25 % and 50 % ownership interests in BRE Ace LLC and 1776 Holding LLC, respectively, which are VIEs.

We do not consolidate BRE Ace LLC and 1776 Holding LLC because we are not the primary beneficiary.

For both VIEs, our investment interests are included in the condensed balance sheets as Investments in unconsolidated affiliates , and equity earned is included in the condensed statements of operations as Equity in earnings from unconsolidated affiliates .

Our two unconsolidated affiliates have aggregated debt balances of $ 380 million and $ 393 million as of March 31, 2023 and December 31, 2022, respectively.

For both VIEs, our investment interests are included in the condensed consolidated balance sheets as Investments in unconsolidated affiliates , and equity earned is included in the condensed consolidated statements of operations as Equity in earnings from unconsolidated affiliates .

During the three and six months ended June 30, 2023, we received a cash distribution of approximately $ 6 million from our investment in BRE Ace LLC.

Our two unconsolidated affiliates have aggregated debt balances of $ 410 million and $ 393 million as of June 30, 2023 and December 31, 2022, respectively.

The debt is secured by their assets and is without recourse to us.

Our maximum exposure to loss as a result of our investment interests in the two unconsolidated affiliates is primarily limited to (i) the carrying amount of the investments, which totaled $ 75 million and $ 72 million as of March 31, 2023 and December 31, 2022, respectively, and (ii) receivables for commission and other fees earned under fee-for-service arrangements.

Our maximum exposure to loss as a result of our investment interests in the two unconsolidated affiliates is primarily limited to (i) the carrying amount of the investments, which totaled $ 72 million as of June 30, 2023 and December 31, 2022, respectively, and (ii) receivables for commission and other fees earned under fee-for-service arrangements.

Related Party Transactions for additional information.

1 unchanged sentence

Intangible assets and related accumulated amortization were as follows:

March 31, 2023

June 30, 2023

($ in millions) Gross Carrying Amount Accumulated Amortization

13 unchanged sentences

Total $ 1,660 $ ( 383 ) $ 1,277

Amortization expense on intangible assets was $ 40 million and $ 48 million for the three months ended March 31, 2023 and 2022, respectively .

Debt & Non-recourse Debt

Amortization expense on intangible assets was $ 38 million and $ 49 million for the three months ended June 30, 2023 and 2022, respectively, and $ 78 million and $ 97 million for the six months ended June 30, 2023 and 2022, respectively.

DEBT AND NON-RECOURSE DEBT

The following table details our outstanding debt balance and its associated interest rates:

($ in millions) March 31, 2023 December 31, 2022

($ in millions) June 30, 2023 December 31, 2022

Senior secured credit facility

9 unchanged sentences

Total debt, net $ 2,942 $ 2,651

(1) As of March 31, 2023 and December 31, 2022, weighted-average interest rates were 6.396 % and 6.143 %, respectively.

(2) Amount includes unamortized deferred financing costs related to our term loan and senior notes of $ 25 million and $ 19 million, respectively, as of March 31, 2023 and $ 26 million and $ 19 million, respectively, as of December 31, 2022.

This amount also includes unamortized original issuance discounts of $ 6 million and $ 7 million as of March 31, 2023 and December 31, 2022, respectively.

(3) Amount does not include unamortized deferred financing costs of $ 4 million as of March 31, 2023 and December 31, 2022, respectively, related to our revolving facility which are included in Other assets in our condensed consolidated balance sheets.

Senior secured credit facilities

As of March 31, 2023, we had $ 1 million of letters of credit outstanding under the revolving credit facility and $ 1 million outstanding backed by cash collateral.

We were in compliance with all applicable maintenance and financial covenants and ratios as of March 31, 2023.

As of March 31, 2023, we have $ 671 million remaining borrowing capacity under the revolver facility.

(1) As of June 30, 2023 and December 31, 2022, weighted-average interest rates were 6.598 % and 6.143 %, respectively.

(2) Amount includes unamortized deferred financing costs related to our term loan and senior notes of $ 24 million and $ 18 million, respectively, as of June 30, 2023 and $ 26 million and $ 19 million, respectively, as of December 31, 2022.

This amount also includes unamortized original issuance discounts of $ 6 million and $ 7 million as of June 30, 2023 and December 31, 2022, respectively.

(3) Amount does not include unamortized deferred financing costs of $ 4 million as of June 30, 2023 and December 31, 2022, respectively, related to our revolving facility which are included in Other assets in our condensed consolidated balance sheets.

Senior secured credit facility

As of June 30, 2023, we had $ 1 million of letters of credit outstanding under the revolving credit facility and $ 1 million outstanding backed by cash collateral.

We were in compliance with all applicable maintenance and financial covenants and ratios as of June 30, 2023.

As of June 30, 2023, we have $ 671 million remaining borrowing capacity under the revolver facility.

On May 31, 2023, we amended our Credit Facility Agreement to transition from London Interbank Offered Rate (“LIBOR”) reference rates to Secured Overnight Financing Rate (“SOFR”) reference rates.

We applied the optional expedients in ASC 848, Reference Rate Reform (“ASC 848”), accounting for the modification as a continuation of the

existing contract.

Therefore, the transition did not require remeasurement at the modification date or a reassessment of previous accounting determinations, and the change in reference rates will be applied prospectively from the amendment date.

We primarily use interest rate swaps as part of our interest rate risk management strategy for our variable-rate debt.

These interest rate swaps are associated with the remaining available LIBOR based senior secured credit facility.

Therefore, as of March 31, 2023, these interest rate swaps convert the LIBOR based variable rate on our Term Loan to average fixed rates of 1.32 % per annum with maturities between 2023 and 2028, for the balance on this borrowing up to the notional values of our interest rate swaps.

As of March 31, 2023, the notional values of the interest rate swaps under our Term Loan was $ 705 million.

These interest rate swaps are associated with the remaining available SOFR based senior secured credit facility.

During the second quarter of 2023, we amended certain interest rate swap contracts to transition from one-month LIBOR to one-month SOFR as the floating interest rate.

The notional amount of the amended contracts was $ 550 million.

The remaining $ 184 million interest rate swaps were not amended as of June 30, 2023.

We did not de-designate the interest rate swaps with a floating interest rate to one-month LIBOR as we are permitted to maintain the designation as part of the transitional relief in accordance with ASC 848.

Transaction costs incurred for the swap amendments were de minimis.

As of June 30, 2023, these interest rate swaps convert the SOFR based variable rate on our Term Loan to average fixed rates of 1.29 % per annum with maturities between 2023 and 2028, for the balance on this borrowing up to the notional values of our interest rate swaps.

As of June 30, 2023, the total notional values of the interest rate swaps under our Term Loan was $ 703 million.

Our interest rate swaps have been designated and qualify as cash flow hedges of interest rate risk and recorded at their estimated fair value as an asset in Other assets in our condensed consolidated balance sheets.

As of March 31, 2023 and December 31, 2022, the estimated fair value of our cash flow hedges are $ 51 million and $ 63 million, respectively.

As of June 30, 2023 and December 31, 2022, the estimated fair value of our cash flow hedges was $ 57 million and $ 63 million, respectively.

We characterize payments we make in connection with these derivative instruments as interest expense and a reclassification of accumulated other comprehensive income for presentation purposes.

The following table reflects the activity in Accumulated other comprehensive income related to our derivative instruments during the three months ended March 31, 2023.

The following table reflects the activity, net of tax, in Accumulated other comprehensive income related to our derivative instruments during the six months ended June 30, 2023.

Net unrealized gain on derivative instruments

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Reclassification to net income ( 9 )

Balance as of March 31, 2023

Balance as of June 30, 2023

Senior Notes due 2029 and 2031

The Senior Unsecured Notes are guaranteed on a senior unsecured basis by certain of our subsidiaries.

We are in compliance with all applicable financial covenants as of March 31, 2023.

We are in compliance with all applicable financial covenants as of June 30, 2023.

Non-recourse Debt

The following table details our outstanding non-recourse debt balance and associated interest rates:

($ in millions) March 31,

($ in millions) June 30,

2023 December 31, 2022

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unamortized deferred financing costs (2)

( 10 ) ( 11 )

Total non-recourse debt, net $ 882 $ 1,102

(1) As of March 31, 2023 and December 31, 2022, weighted-average interest rates were 4.026 % and 3.539 %, respectively.

(2) Amount relates to securitized debt only and does not include unamortized deferred financing costs of $ 4 million as of March 31, 2023 and December 31, 2022, respectively, relating to our Timeshare Facility included in Other Assets in our condensed consolidated balance sheets.

(3) In connection with the amended and restated Timeshare Facility executed in May 2022, the revolving commitment period of the Timeshare Facility terminates in May 2024, however the repayment maturity date extends 12 months beyond the commitment termination date to May 2025.

(1) As of June 30, 2023 and December 31, 2022, weighted-average interest rates were 3.799 % and 3.539 %, respectively.

(2) Amount relates to securitized debt only and does not include unamortized deferred financing costs of $ 3 million and $ 4 million as of June 30, 2023 and December 31, 2022, respectively, relating to our Timeshare Facility included in Other Assets in our condensed consolidated balance sheets.

(3) The revolving commitment period of the Timeshare Facility terminates in May 2024, however the repayment maturity date extends 12 months beyond the commitment termination date to May 2025.

The Timeshare Facility is a non-recourse obligation payable solely from the pool of timeshare financing receivables pledged as collateral and related assets.

As of March 31, 2023, our Timeshare Facility has a remaining borrowing capacity of $ 575 million.

As of June 30, 2023, our Timeshare Facility has a remaining borrowing capacity of $ 710 million.

We are required to deposit payments received from customers on the timeshare financing receivables securing the Timeshare Facility and Securitized Debt into depository accounts maintained by third parties.

On a monthly basis, the depository accounts are utilized to make required principal, interest and other payments due under the respective loan agreements.

The balances in the depository accounts were $ 50 million as of March 31, 2023 and December 31, 2022, respectively, and were included in Restricted cash in our condensed consolidated balance sheets.

The balances in the depository accounts were $ 48 million and $ 50 million as of June 30, 2023 and December 31, 2022, respectively, and were included in Restricted cash in our condensed consolidated balance sheets.

Debt Maturities

The contractual maturities of our debt and non-recourse debt as of March 31, 2023 were as follows:

The contractual maturities of our debt and non-recourse debt as of June 30, 2023 were as follows:

($ in millions) Debt Non-recourse Debt Total

2023 (remaining nine months) $ 13 $ 196 $ 209

2023 (remaining six months) $ 9 $ 128 $ 137

2024 17 215 232

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The carrying amounts and estimated fair values of our financial assets and liabilities were as follows:

March 31, 2023

June 30, 2023

Hierarchy Level

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Non-recourse debt, net (2)

1,095 898 173

December 31, 2022

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(1) Carrying amount net of allowance for financing receivables losses.

(2) Carrying amount net of unamortized deferred financing costs and discount.

(2) Carrying amount net of unamortized deferred financing costs and discounts.

Our estimates of the fair values were determined using available market information and appropriate valuation methods.

Considerable judgment is necessary to interpret market data and develop the estimated fair values.

The table above excludes cash and cash equivalents, restricted cash, accounts receivable, accounts payable, advance deposits and accrued liabilities, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.

The table above excludes interest rate swaps discussed below and cash and cash equivalents, restricted cash, accounts receivable and advance deposits, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.

The estimated fair values of our originated and acquired timeshare financing receivables were determined using a discounted cash flow model.

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• Non-recourse debt – based on projected future cash flows discounted at risk-adjusted rates.

The effective tax rate for the three months ended March 31, 2023 and 2022 was approximately 19 % and 28 %, respectively.

The effective tax rate decrease year over year is due to the change in earnings mix of our worldwide income and discrete items in the quarter, primarily unrecognized tax benefits.

The effective tax rate for the three months ended June 30, 2023 and 2022 was approximately 30 % and 36 %, respectively.

The effective tax rate for the six months ended June 30, 2023 and 2022 was approximately 25 % and 33 %, respectively.

The effective tax rate decrease year over year is due to the change in earnings mix of our worldwide income and discrete items, primarily unrecognized tax benefits.

The difference between our effective tax rate as compared to the U.S.

statutory federal tax rate of 21% is primarily due to the benefit of discrete items including share-based compensation and unrecognized tax benefits in the quarter, which offset the impact of state and foreign income taxes.

statutory federal tax rate of 21% is primarily due to the impact of state and foreign income taxes, offset by the benefit of discrete items including share-based compensation and unrecognized tax benefits.

SHARE-BASED COMPENSATION

We issue restricted stock units (“Service RSUs”), nonqualified stock options (“Options”), and time and performance-vesting restricted stock units (“Performance RSUs”) to certain employees and directors.

We recognized share-

based compensation expense of $ 10 million and $ 11 million for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, unrecognized compensation costs for unvested awards were approximately $ 70 million, which is expected to be recognized over a weighted average period of 1.8 years.

As of March 31, 2023, there were 1,818,645 shares of common stock available for future issuance under this plan.

During the three months ended March 31, 2023, we issued 491,426 Service RSUs with a grant date fair value of $ 49.14 , which generally vest in equal annual installments over three years from the date of grant.

During the three months ended March 31, 2023 , we granted 301,215 Options with an exercise price of $ 49.14 , which generally vest over three years from the date of the grant.

On May 3, 2023, the 2023 Omnibus Incentive Plan (“2023 Plan”) was approved by our shareholders to replace the 2017 Omnibus Incentive Plan and the 2017 Plan for Non-Employee Directors (the “2017 Plans”).

The 2023 Plan authorizes the issuance of restricted stock units (“Service RSUs”), nonqualified stock options (“Options”), time and performance-vesting restricted stock units (“Performance RSUs”), and stock appreciation rights (“SARs”) to certain employees and directors.

Pursuant to the 2023 Plan, 5,240,000 shares of our common stock are reserved for issuance.

The 2017 Plans remain in place until all of the awards previously granted thereunder have been paid, forfeited or expired.

Shares underlying awards that are canceled or forfeited under the 2017 Plans without the issuance of any shares are added to the 2023 Plan share pool.

However, the shares which remained available for issuance under the 2017 Plans are no longer available for issuance, and all future awards will be granted pursuant to the 2023 Plan.

As of June 30, 2023, there were 5,266,105 shares of common stock available for future issuance under the 2023 plan.

We recognized share-based compensation expense of $ 15 million for the three months ended June 30, 2023 and 2022, respectively, and $ 25 million and $ 26 million for the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, unrecognized compensation costs for unvested awards was approximately $ 53 million, which is expected to be recognized over a weighted average period of 1.8 years.

During the six months ended June 30, 2023, we issued 517,478 Service RSUs with a grant date fair value of $ 48.81 , which generally vest in equal annual installments over three years from the date of grant.

During the six months ended June 30, 2023 , we granted 301,215 Options with an exercise price of $ 49.14 , which generally vest over three years from the date of the grant.

The weighted-average grant date fair value of these Options was $ 24.78 , which was determined using the Black-Scholes-Merton option-pricing model with the assumptions included in the table below.

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(1) At the date of grant we had no plans to pay dividends during the expected term of these options.

As of March 31, 2023, we had 1,824,886 Options outstanding that were exercisable.

As of June 30, 2023, we had 1,726,413 Options outstanding that were exercisable.

Performance RSUs

During the three months ended March 31, 2023, we issued 119,887 Performance RSUs with a grant date fair value of $ 49.14 .

During the six months ended June 30, 2023, we issued 119,887 Performance RSUs with a grant date fair value of $ 49.14 .

The Performance RSUs are settled at the end of a 3-year performance period, with 50 % of the Performance RSUs subject to achievement based on the Company’s adjusted earnings before interest expense, taxes and depreciation and amortization further adjusted for net deferral and recognition of revenues and related direct expenses related to sales of VOIs of projects under construction.

The remaining 50 % of the Performance RSUs are subject to the achievement of certain contract sales targets.

Compensation expense will be recorded through the end of the performance period if it is deemed probable that the performance goals will be met.

If the performance goals are not met, no compensation cost will be recognized and any previously recognized compensation cost will be reversed.

We determined that the performance conditions for our Performance RSUs are probable of achievement and, for the three and six months ended June 30, 2023, we recognized compensation expense based on the number of Performance RSUs we expect to vest.

Employee Stock Purchase Plan

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The ESPP allows eligible employees to purchase shares of our common stock at a price per share not less than 95 % of the fair market value per share of common stock on the purchase date, up to a maximum threshold established by the plan administrator for the offering period.

During the three months ended March 31, 2022, we recognized less than $ 1 million of compensation expense related to this plan.

During the three and six months ended June 30, 2022, we recognized less than $ 1 million of compensation expense related to this plan, respectively.

During fourth quarter of 2022, the Board of Directors amended the ESPP plan to allow eligible employees to purchase shares of our common stock at a price per share not less than 85 % of the fair market value per share of common stock on the first day of the Purchase Period or the last day of the Purchase Period, whichever is lower, up to a maximum threshold established by the plan administrator for the offering period.

The amendment became effective in 2023.

During the three months ended March 31, 2023, we recognized less than $ 1 million of compensation expense related to this plan.

During the three and six months ended June 30, 2023, we recognized less than $ 1 million of compensation expense related to this plan.

EARNINGS PER SHARE

The following tables present the calculation of our basic and diluted earnings per share (“EPS”) and the corresponding weighted average shares outstanding referenced in these calculations for the three months ended March 31, 2023 and 2022, respectively.

Three Months Ended March 31,

The following tables present the calculation of our basic and diluted earnings per share (“EPS”) and the corresponding weighted average shares outstanding referenced in these calculations for the three and six months ended June 30, 2023 and 2022, respectively.

Three Months Ended June 30, Six Months Ended June 30,

($ and shares outstanding in millions, except per share amounts) 2023 2022 2023 2022

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The dilutive effect of outstanding share-based compensation awards is reflected in diluted earnings per common share by application of the treasury stock method using average market prices during the period.

For the three months ended March 31, 2023, and 2022, we excluded 699,357 and 338,109 , res pe ctively, of share-based compensation awards, because their effect would have been anti-dilutive under the treasury stock method.

For the three and six months ended June 30, 2023, we excluded 1,111,202 and 880,806 , res pe ctively, and 839,347 and 485,808 for the three and six months ended June 30, 2022, respectively, of share-based compensation awards, because their effect would have been anti-dilutive under the treasury stock method.

Share Repurchases

On May 4, 2022, our Board of Directors approved a share repurchase program authorizing the Company to repurchase up to an aggregate of $ 500 million of its outstanding shares of common stock over a two-year period.

The following table summarizes stock repurchase activity under the share repurchase program as of March 31, 2023:

On May 3, 2023, our Board of Directors approved a new share repurchase program authorizing the Company to repurchase up to an aggregate of $ 500 million of its outstanding shares of common stock over a two-year period (the "2023 Repurchase Plan") which is in addition to the 2022 Repurchase Plan.

The following table summarizes stock repurchase activity under the share repurchase program as of June 30, 2023:

(in millions) Shares Cost

1 unchanged sentence

Repurchases 5 206

As of March 31, 2023

From April 1, 2023 through April 21, 2023, we repurchased 1.3 million shares for $ 60 million.

As of April 21, 2023, we had $ 83 million of remaining availability under the share repurchase program.

As of June 30, 2023

As of June 30, 2023, we had $ 522 million of remaining availability under the share repurchase programs, of which $ 22 million was under the 2022 Repurchase Plan and $ 500 million was under the 2023 Repurchase Plan.

RELATED PARTY TRANSACTIONS

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These amounts are summarized in the following table and are included in Sales, marketing, brand, and other fees on our condensed consolidated statements of operations as of the date they became related parties.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2023 2022 2023 2022

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Commissions and other fees 56 47 108 81

We also had $ 27 million and $ 23 million of outstanding receivables related to the fee-for-service agreements included in Accounts receivable, net on our condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively.

We also had $ 17 million and $ 23 million of outstanding receivables related to the fee-for-service agreements included in Accounts receivable, net on our condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022, respectively.

BUSINESS SEGMENTS

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• Resort operations and club management – We manage the Clubs and earn activation fees, annual dues and transaction fees from member exchanges for other vacation products.

We also earn fees for managing the timeshare properties.

We also earn fees for

managing the timeshare properties.

We generate rental revenue from unit rentals of unsold inventory and inventory made available due to ownership exchanges under our Club programs.

We also earn revenue from food and beverage, retail and spa outlets at our timeshare properties.

The performance of our operating segments is evaluated primarily based on adjusted earnings before interest expense (excluding non-recourse debt), taxes, depreciation and amortization (“EBITDA”).

The performance of our operating segments, which are also our reportable segments, is evaluated primarily based on adjusted earnings before interest expense (excluding non-recourse debt), taxes, depreciation and amortization (“EBITDA”).

We define Adjusted EBITDA as EBITDA, further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with:

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The following table presents revenues for our reportable segments reconciled to consolidated amounts:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2023 2022 2023 2022

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Resort operations and club management (1)

320 303 622 571

Total segment revenues 924 889 1,776 1,609

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Intersegment eliminations (1)

( 14 ) ( 8 ) ( 27 ) ( 15 )

Total revenues $ 1,007 $ 948 $ 1,941 $ 1,727

(1) Includes charges to the Real estate sales and financing segment from the Resort operations and club management segment for fulfillment of discounted marking package stays at resorts.

These charges totaled $ 13 million and $ 7 million for the three months ended March 31, 2023 and 2022, respectively.

These charges totaled $ 14 million and $ 8 million, respectively, for the three months ended June 30, 2023 and 2022, and $ 27 million and $ 15 million, respectively, for the six months ended June 30, 2023 and 2022.

The following table presents Adjusted EBITDA for our reportable segments reconciled to net income:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2023 2022 2023 2022

1 unchanged sentence

Real estate sales and financing (1)

$ 189 $ 218 $ 358 $ 371

Resort operations and club management (1)

123 119 232 220

Segment Adjusted EBITDA 312 337 590 591

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License fee expense ( 34 ) ( 32 ) ( 64 ) ( 57 )

Other gain, net 1 1

Other gain (loss), net 3 ( 2 ) 4 ( 1 )

Interest expense ( 44 ) ( 35 ) ( 88 ) ( 68 )

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Equity in earnings from unconsolidated affiliates 2 4 5 7

Impairment expense — ( 3 )

Impairment (expense) reversal ( 3 ) 3 ( 3 ) —

Other adjustment items (2)

( 8 ) ( 14 ) ( 16 ) ( 25 )

Net income $ 80 $ 73 $ 153 $ 124

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Refer to our table presenting revenues by reportable segment above for additional discussion.

(2) For the three months ended March 31, 2023 and 2022, this amount includes costs associated with stock-based compensation, restructuring, one-time charges and other non-cash items included within our reportable segments.

(2) For the three and six months ended June 30, 2023 and 2022, these amounts include costs associated with stock-based compensation, restructuring, one-time charges and other non-cash items included within our reportable segments.

COMMITMENTS AND CONTINGENCIES

We have entered into certain arrangements with developers whereby we have committed to purchase vacation ownership units or other real estate at a future date to be marketed and sold under our Hilton Grand Vacations brand.

As of March 31, 2023, we were committed to purchase approximately $ 57 million of inventory over a period of two years and $ 12 million of other commitments in the normal course of business.

As of June 30, 2023, we were committed to purchase approximately $ 57 million of inventory over a period of two years and $ 36 million of other commitments in the normal course of business.

We are also committed to an agreement to exchange parcels of land in Hawaii, subject to the successful completion of zoning, land use requirements and other applicable regulatory requirements.

The actual amount and timing of the acquisitions are subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances.

During the three months ended March 31, 2023, we fulfilled $ 136 million of purchases required under our inventory commitments.

As of March 31, 2023, our remaining obligations pursuant to these arrangements were expected to be incurred as follows:

During the six months ended June 30, 2023, we fulfilled $ 136 million of purchases required under our inventory commitments.

As of June 30, 2023, our remaining obligations pursuant to these arrangements were expected to be incurred as follows:

($ in millions) 2023 2024 2025 2026 2027 Thereafter Total

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We record a contingent litigation liability when it is determined that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

As of March 31, 2023, we accrued liabilities of approximately $ 118 million for all legal matters.

Approximately $ 98 million of these accrued liabilities relate to a judgment entered against Diamond in March 2022 in connection with a

case filed in 2015 that was not deemed probable and estimable as of the Acquisition Date.

This matter is subject to insurance coverage, and as a result, we recorded an insurance claim receivable of $ 81 million within Accounts receivable, net in our condensed consolidated balance sheet.

As of June 30, 2023, we accrued liabilities of approximately $ 119 million for all legal matters.

Approximately $ 99 million of these accrued liabilities relate to a judgment entered against Diamond in March 2022 in connection with a case filed in 2015 that was not deemed probable and estimable as of the Acquisition Date.

This matter is subject to insurance coverage, and as a result, we recorded an insurance claim receivable of $ 82 million within Accounts receivable, net in our condensed consolidated balance sheet as of June 30, 2023.

While we currently believe that the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material effect on the Company’s financial condition, cash flows, or materially adversely affect overall trends in our results of operations, legal proceedings are inherently uncertain and unfavorable rulings could, individually or in aggregate, have a material adverse effect on the Company’s business, financial condition or results of operations.

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The availability, terms and conditions and pricing of such bonding capacity are dependent on, among other things, continued financial strength and stability of the insurance company affiliates providing the bonding capacity, general availability of such capacity and our corporate credit rating.

We have commitments from surety providers in the amount of $ 344 million as of March 31, 2023, which primarily consist of escrow and subsidy related bonds.

We have commitments from surety providers in the amount of $ 356 million as of June 30, 2023, which primarily consist of escrow and subsidy related bonds.

SUBSEQUENT EVENTS

Management has evaluated all subsequent events through April 27, 2023, the date the condensed consolidated financial statements were available to be issued.

Management has evaluated all subsequent events through August 3, 2023, the date the condensed consolidated financial statements were available to be issued.

The results of management’s analysis indicated no significant subsequent events have occurred that required consideration or adjustments to our disclosures in the unaudited financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements