What changed in this filing

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Item 1. Financial Statements

2023-11-06 compared with 2023-08-03 · 211 added, 155 removed, 667 unchanged (35% of the section changed)

3 unchanged sentences

(in millions, except share and per share data)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Cash and cash equivalents $ 227 $ 223

24 unchanged sentences

300,000,000 authorized shares, none

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

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

Common stock, $ 0.01 par value;

3,000,000,000 authorized shares,

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

108,628,081 shares issued and outstanding as of September 30, 2023 and

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

8 unchanged sentences

(in millions, except per share data)

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

15 unchanged sentences

License fee expense 37 33 101 90

Impairment expense (reversal) 3 ( 3 ) 3 —

Impairment expense — — 3 —

Cost reimbursements 97 82 289 215

2 unchanged sentences

Equity in earnings from unconsolidated affiliates 2 2 7 9

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

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

Income before income taxes 136 204 341 389

8 unchanged sentences

(in millions)

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

2 unchanged sentences

Foreign currency translation adjustments ( 4 ) ( 11 ) ( 14 ) ( 17 )

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

Other comprehensive income (loss), net of tax — 6 ( 15 ) 32

Comprehensive income $ 92 $ 156 $ 230 $ 306

3 unchanged sentences

(in millions)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating Activities

7 unchanged sentences

Share-based compensation 38 40

Deferred income tax benefit — ( 1 )

Equity in earnings from unconsolidated affiliates ( 7 ) ( 9 )

26 unchanged sentences

Net cash used in financing activities ( 270 ) ( 644 )

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

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

Effect of changes in exchange rates on cash, cash equivalents and restricted cash

( 15 ) ( 19 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 20 ) 49

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

17 unchanged sentences

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

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

Repurchase and retirement of common stock

( 2 ) — ( 26 ) ( 59 ) — ( 85 )

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

4 unchanged sentences

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

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

Repurchase and retirement of common stock

( 3 ) — ( 38 ) ( 84 ) — ( 122 )

Balance as of June 30, 2023 109 $ 1 $ 1,541 $ 539 $ 24 $ 2,105

Net income — — — 92 — 92

Activity related to share-based compensation — — 14 — — 14

Foreign currency translation adjustments — — — — ( 4 ) ( 4 )

Derivative instrument adjustments, net of tax — — — — 4 4

Repurchase and retirement of common stock

( 1 ) — ( 20 ) ( 43 ) — ( 63 )

Balance as of September 30, 2023

108 $ 1 $ 1,535 $ 588 $ 24 $ 2,148

See notes to unaudited condensed consolidated financial statements.

HILTON GRAND VACATIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(in millions)

Common Stock Additional

5 unchanged sentences

Balance as of December 31, 2021 120 $ 1 $ 1,630 $ 357 $ — $ 1,988

120 $ 1 $ 1,630 $ 357 $ — $ 1,988

Net income — — — 51 — 51

9 unchanged sentences

Balance as of June 30, 2022 118 $ 1 $ 1,626 $ 424 $ 26 $ 2,077

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

Net income — — — 150 — 150

Activity related to share-based compensation — — 13 — — 13

Foreign currency translation adjustments — — — — ( 11 ) ( 11 )

Derivative instrument adjustments, net of tax — — — — 17 17

Repurchase and retirement of common stock ( 2 ) — ( 32 ) ( 57 ) — ( 89 )

Balance as of September 30, 2022 116 $ 1 $ 1,607 $ 517 $ 32 $ 2,157

See notes to unaudited condensed consolidated financial statements.

12 unchanged sentences

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

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

As of September 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.

9 unchanged sentences

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.

7 unchanged sentences

Recently Adopted Accounting Pronouncements

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

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

Troubled Debt Restructurings and Vintage Disclosures.

7 unchanged sentences

The following tables show our disaggregated revenues by product and segment from contracts with customers.

We operate our business in the following two segments:

We operate our business in the following two reportable segments:

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

Business Segments for more information related to our segments.

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

($ in millions) Three Months Ended September 30, Nine Months Ended

September 30,

Real Estate Sales and Financing Segment 2023 2022 2023 2022

4 unchanged sentences

Real estate sales and financing segment revenues $ 612 $ 745 $ 1,766 $ 1,783

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

($ in millions) Three Months Ended September 30, Nine Months Ended

September 30,

Resort Operations and Club Management Segment 2023 2022 2023 2022

6 unchanged sentences

Business Segments for additional information.

Contract Balances

Receivables from Contracts with Customers, Contract Liabilities, and Contract Assets

Our accounts receivable that relate to our contracts with customers includes amounts associated with our contractual right to consideration for completed performance obligations and are settled when the related cash is received.

Accounts receivable are recorded when the right to consideration becomes unconditional and is only contingent on the passage of time.

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) June 30, 2023 December 31, 2022

Receivables $ 324 $ 322

Our timeshare financing receivables consist of loans related to our financing of VOI sales that are secured by the underlying timeshare properties.

Timeshare financing receivables for additional information.

The following table provides information on our contracts with customers which are included in Accounts receivable, net and Timeshare financing receivables, net , respectively, on our condensed consolidated balance sheets:

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

Receivables from contracts with customers:

Accounts receivable, net $ 308 $ 322

Timeshare financing receivables, net 1,821 1,767

Total $ 2,129 $ 2,089

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

1 unchanged sentence

The following table presents the composition of our contract liabilities:

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

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

Contract liabilities:

1 unchanged sentence

Deferred sales of VOIs of projects under construction 18 3

Club dues and Club activation fees 142 76

Club activation fees and annual dues

Bonus point incentive liability (1)

1 unchanged sentence

Other deferred revenue 36 42

(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.

(1) The balance includes $ 61 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 September 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 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.

Revenue earned for the three and nine months ended September 30, 2023, that was included in the contract liabilities balance at December 31, 2022, was approximately $ 44 million and $ 143 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.

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

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

Transaction Price Allocated to Remaining Performance Obligations

1 unchanged sentence

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 June 30, 2023 and December 31, 2022:

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

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

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

Sales of VOIs, net $ 18 $ 3

1 unchanged sentence

Sales and marketing expense 3 1

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:

During the nine months ended September 30, 2023, we recognized $ 4 million of sales of VOIs, net, offset by deferrals of $ 18 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 September 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 September 30, 2023:

($ in millions) Remaining

7 unchanged sentences

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

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

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

Fee-for-service commissions $ 70 $ 91

15 unchanged sentences

Originated Acquired

($ in millions) June 30,

($ in millions) September 30,

2023 December 31,

2022 June 30,

2022 September 30,

2023 December 31,

7 unchanged sentences

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

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

In August 2023, we completed a securitization of approximately $ 293 million of gross timeshare financing receivables and issued approximately $ 187 million of 5.72 % notes, $ 79 million of 6.11 % notes, and $ 27 million of 6.94 % notes due January 2038.

The securitization transaction did not qualify as a sale and, accordingly, no gain or loss was recognized.

The transaction is considered a secured borrowing, and the notes from the transaction are presented as non-recourse debt.

The proceeds were used to pay down in part some of the existing debt and for other general corporate purposes.

Consolidated Variable Interest Entities and Note 10:

Debt and Non-recourse Debt for additional information.

As of December 31, 2022, we had timeshare financing receivables of $ 105 million securing the Timeshare Facility.

As of September 30, 2023, we did not have any timeshare financing receivables securing the Timeshare Facility.

We record an estimate of variable consideration for defaults as a reduction of revenue from financed 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 nine months ended September 30, 2023 and 2022, we recorded an adjustment to our estimate of variable consideration of $ 117 million and $ 101 million, respectively.

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

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.

As of September 30, 2023 and December 31, 2022, we had interest receivable outstanding of $ 15 million and $ 13 million, respectively, on our originated timeshare financing receivables.

As of September 30, 2023 and December 31, 2022, we had interest receivable outstanding of $ 2 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 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.

As of September 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 8.3 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 years and maturities through 2033.

3 unchanged sentences

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

During the nine months ended September 30, 2023 and 2022, we reversed $ 55 million and $ 52 million, respectively, of accrued interest income.

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

8 unchanged sentences

We consider historical Legacy-Diamond timeshare financing receivables performance and the current economic environment in the re-measurement of the allowance for financing receivable losses for our acquired timeshare financing receivables.

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 June 30, 2023 mature as follows:

Subsequent changes to the allowance for financing receivable losses are recorded as adjustments to the provision.

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

Acquired Timeshare Financing Receivables

($ in millions) Securitized Unsecuritized Total

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

2023 (remaining three months) $ 14 $ 15 $ 29

2024 30 31 61

5 unchanged sentences

Originated Timeshare Financing Receivables

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

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

Originated Timeshare Financing Receivables

($ in millions) Securitized Unsecuritized Total

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

2023 (remaining three months) $ 26 $ 32 $ 58

2024 99 78 177

11 unchanged sentences

Inventory recoveries — 21

Balance as of June 30, 2023 $ 447 $ 313

Balance as of September 30, 2023 $ 473 $ 258

($ in millions) Originated

3 unchanged sentences

Inventory recoveries — 14

Balance as of June 30, 2022 $ 348 $ 405

Balance as of September 30, 2022 $ 374 $ 388

(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) June 30, 2023 December 31, 2022

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

700+ $ 835 $ 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 June 30, 2023:

The following table details our gross Legacy-HGV timeshare financing receivables by the origination year and average FICO score as of September 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.

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.

As of September 30, 2023 and December 31, 2022, we had ceased accruing interest on timeshare financing receivables with an aggregate principal balance of $ 88 million and $ 76 million, respectively.

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

Legacy-HGV Timeshare Financing Receivables

June 30, 2023

September 30, 2023

($ in millions) Securitized Unsecuritized Total

22 unchanged sentences

Legacy-Diamond Acquired Timeshare Financing Receivables

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

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

700+ $ 278 $ 373

3 unchanged sentences

Legacy-Diamond Originated Timeshare Financing Receivables

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

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

700+ $ 377 $ 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 June 30, 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 September 30, 2023:

Legacy-Diamond Acquired Timeshare Financing Receivables

16 unchanged sentences

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

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.

As of September 30, 2023 and December 31, 2022, we had ceased accruing interest on Legacy-Diamond timeshare financing receivables with an aggregate principal balance of $ 369 million and $ 377 million, respectively.

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

Legacy-Diamond Timeshare Financing Receivables

June 30, 2023

September 30, 2023

($ in millions) Securitized Unsecuritized Total

13 unchanged sentences

Inventory was comprised of the following:

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

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

Completed unsold VOIs $ 1,262 $ 1,096

2 unchanged sentences

Total $ 1,308 $ 1,159

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.

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

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,

For the nine months ended September 30, 2023, we recorded non-cash operating activity transfers of $ 39 million related to the registrations for timeshare units under construction from Property and equipment, net to Inventory .

As VOI inventory is constructed it is recorded into Property and equipment, net until such units are registered and made available for sale.

Once registered and available for sale, the units are then transferred into completed unsold VOIs inventory.

The table below presents cost 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 September 30, Nine Months Ended September 30,

($ in millions) 2023 2022 2023 2022

1 unchanged sentence

$ 22 $ 8 $ 51 $ 17

(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 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

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

CONSOLIDATED VARIABLE INTEREST ENTITIES

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

As of September 30, 2023, we consolidated 10 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.

5 unchanged sentences

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

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

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

Restricted cash $ 90 $ 48

2 unchanged sentences

INVESTMENTS IN UNCONSOLIDATED AFFILIATES

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

As of September 30, 2023 and December 31, 2022, we had ownership interests in BRE Ace LLC and 1776 Holding LLC, 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 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.

During the nine months ended September 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 $ 389 million and $ 393 million as of September 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 $ 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.

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 $ 74 million as of September 30, 2023 and $ 72 million as of 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:

June 30, 2023

September 30, 2023

($ in millions) Gross Carrying Amount Accumulated Amortization

13 unchanged sentences

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

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.

Amortization expense on intangible assets was $ 40 million and $ 50 million for the three months ended September 30, 2023 and 2022, respectively, and $ 118 million and $ 147 million for the nine months ended September 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) June 30, 2023 December 31, 2022

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

Senior secured credit facility

9 unchanged sentences

Total debt, net $ 2,730 $ 2,651

(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.

(1) As of September 30, 2023 and December 31, 2022, weighted-average interest rates were 6.666 % and 6.143 %, respectively.

(2) Amount includes unamortized deferred financing costs related to our term loan and senior notes of $ 23 million and $ 17 million, respectively, as of September 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 September 30, 2023 and December 31, 2022, respectively.

(3) Amount does not include unamortized deferred financing costs of $ 3 million and $ 4 million as of September 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.

As of September 30, 2023, we had $ 16 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 September 30, 2023.

As of September 30, 2023, we have $ 866 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.

2 unchanged sentences

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.

On October 6, 2023, we amended our Term loan under the Senior secured credit facility.

Under the amendment, the new interest rate is SOFR plus a spread adjustment of 0.11 % plus 2.75 %, down from SOFR plus a spread adjustment of 0.11 % plus 3.00 %.

Additionally, the interest rate floor for the Term loan was lowered from 0.50 % to 0.00 %.

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

2 unchanged sentences

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.

The remaining $ 184 million of interest rate swaps were not amended as of September 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.

As of September 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 September 30, 2023, the aggregate notional values of the interest rate swaps under our Term Loan was $ 700 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 June 30, 2023 and December 31, 2022, the estimated fair value of our cash flow hedges was $ 57 million and $ 63 million, respectively.

As of September 30, 2023 and December 31, 2022, the estimated fair value of our cash flow hedges were $ 61 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, net of tax, in Accumulated other comprehensive income related to our derivative instruments during the six months ended June 30, 2023.

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

Net unrealized gain on derivative instruments

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Other comprehensive income before reclassifications, net 12

Reclassification to net income ( 9 )

Balance as of June 30, 2023

Reclassifications to net income

Balance as of September 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 June 30, 2023.

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

Non-recourse Debt

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

($ in millions) June 30,

($ in millions) September 30,

2023 December 31, 2022

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HGV Securitized Debt with a weighted average rate of 5.937 %, due 2038

HGV Securitized Debt with a weighted average rate of 3.658 %, due 2039

Diamond Resorts Owner Trust 2019 with a weighted average rate of 3.255 %, due 2032

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unamortized deferred financing costs (2)

( 13 ) ( 11 )

Total non-recourse debt, net $ 1,038 $ 1,102

(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.

(1) As of September 30, 2023 and December 31, 2022, weighted-average interest rates were 4.304 % 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 September 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 securitized debt is backed by pledged assets, consisting primarily of a pool of timeshare financing receivables secured by first mortgages, deeds of trust, membership interests or timeshare interests (other than a fee simple interest in real estate) and temporarily by approximately $ 49 million on deposit in a prefunding account.

The securitized debt is a non-recourse obligation and is payable solely from the pool of timeshare financing receivables pledged as collateral to the debt.

The proceeds were used to pay down in part some of the existing debt and for other general corporate purposes.

Additionally, in connection with the securitization, we incurred $ 5 million in debt issuance costs.

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

As of September 30, 2023, our Timeshare Facility has a remaining borrowing capacity of $ 750 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 $ 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.

The balances in the depository accounts were $ 90 million and $ 50 million as of September 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 June 30, 2023 were as follows:

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

($ in millions) Debt Non-recourse Debt Total

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

2023 (remaining three months) $ 4 $ 79 $ 83

2024 17 273 290

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

June 30, 2023

Hierarchy Level

September 30, 2023

($ in millions) Carrying

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Non-recourse debt, net (2)

1,038 1,006 —

December 31, 2022

Hierarchy Level

($ in millions) Carrying

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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 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 for the three months ended September 30, 2023 and 2022 was approximately 32 % and 26 %, respectively.

The effective tax rate for the nine months ended September 30, 2023 and 2022 was approximately 28 % and 30 %, respectively.

The effective tax rate increase quarter over quarter is due to the overall change in earnings and discrete items, primarily unrecognized tax benefits.

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 impact of state and foreign income taxes, offset by the benefit of discrete items including share-based compensation and unrecognized tax benefits.

statutory federal tax rate of 21% is primarily due to the impact of state and foreign income taxes and discrete items, primarily unrecognized tax benefits.

SHARE-BASED COMPENSATION

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.

The 2023 Plan authorizes the issuance of restricted stock units (“Service RSUs” or “RSUs”), nonqualified stock options (“Options”), time and performance-vesting restricted stock units (“Performance RSUs” or “PSUs”), 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.

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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.

As of September 30, 2023, there were 5,263,395 shares of common stock available for future issuance under the 2023 plan.

We recognized share-based compensation expense of $ 12 million and $ 14 million for the three months ended September 30, 2023 and 2022, respectively, and $ 37 million and $ 40 million for the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, unrecognized compensation costs for unvested awards was approximately $ 38 million, which is expected to be recognized over a weighted average period of 1.8 years.

During the nine months ended September 30, 2023, we issued 532,497 Service RSUs with a grant date fair value of $ 48.72 , which generally vest in equal annual installments over three years from the date of grant.

During the nine months ended September 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 June 30, 2023, we had 1,726,413 Options outstanding that were exercisable.

As of September 30, 2023, we had 1,711,614 Options outstanding that were exercisable.

Performance RSUs

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

During the nine months ended September 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.

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.

We determined that the performance conditions for our Performance RSUs are probable of achievement and, for the three and nine months ended September 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 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.

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

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

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

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 and six months ended June 30, 2023 and 2022, respectively.

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

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:

Three Months Ended September 30, Nine Months Ended September 30,

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

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$ 0.83 $ 1.24 $ 2.18 $ 2.23

Basic weighted average shares outstanding

109.5 119.6 111.0 121.3

RSUs (2) , PSUs (3) , Options (4) and ESPP

1.4 1.5 1.6 1.6

Diluted weighted average shares outstanding

110.9 121.1 112.6 122.9

(1) Earnings per share amounts are calculated using whole numbers.

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 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.

(2) There were no anti-dilutive RSUs for the three and nine months ended September 30, 2023 and 2022, respectively.

(3) There were no anti-dilutive PSUs for the three and nine months ended September 30, 2023 and 2022, respectively.

(4) Excludes 0.9 million and 0.7 million of Options that would have been anti-dilutive to EPS for the three and nine months ended September 30, 2023, respectively, under the treasury stock method;

and 0.8 million and 0.7 million of Options that would have been anti-dilutive to EPS for the three and nine months ended September 30, 2022, respectively, under the treasury stock method.

These Options could potentially dilute EPS in the future.

Share Repurchases

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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:

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

(in millions) Shares Cost

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Repurchases 6 269

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.

As of September 30, 2023

From October 1, 2023 through October 30, 2023, we repurchased approximately 690,000 shares for $ 26 million.

As of October 30, 2023, we had $ 432 million of remaining availability under the 2023 Repurchase Plan.

RELATED PARTY TRANSACTIONS

BRE Ace LLC and 1776 Holding, LLC

We hold a 25 % ownership interest in BRE Ace LLC, a VIE, which owns a timeshare resort property and related operations, commonly known as “Elara, by Hilton Grand Vacations.”

We hold a 50 % ownership interest in 1776 Holding, LLC, a VIE, which owns a timeshare resort property and related operations, known as “Liberty Place Charleston, by Hilton Club.”

We hold an ownership interest in BRE Ace LLC, a VIE, which owns a timeshare resort property and related operations, commonly known as “Elara, by Hilton Grand Vacations.”

We hold an ownership interest in 1776 Holding, LLC, a VIE, which owns a timeshare resort property and related operations, known as “Liberty Place Charleston, by Hilton Club.”

We record Equity in earnings from our unconsolidated affiliates in our condensed consolidated statements of operations.

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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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2023 2022 2023 2022

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Commissions and other fees 51 52 159 133

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.

We also had $ 14 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 September 30, 2023 and December 31, 2022, respectively.

BUSINESS SEGMENTS

We operate our business through the following two segments:

We operate our business through the following two reportable segments:

• Real estate sales and financing – We market and sell VOIs that we own.

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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, 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2023 2022 2023 2022

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Total revenues $ 1,018 $ 1,116 $ 2,959 $ 2,843

(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 $ 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.

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

These charges totaled $ 13 million and $ 10 million, respectively, for the three months ended September 30, 2023 and 2022, and $ 40 million and $ 25 million, respectively, for the nine months ended September 30, 2023 and 2022.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

($ in millions) 2023 2022 2023 2022

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License fee expense ( 37 ) ( 33 ) ( 101 ) ( 90 )

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

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

Interest expense ( 45 ) ( 37 ) ( 133 ) ( 105 )

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Equity in earnings from unconsolidated affiliates 2 2 7 9

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

Impairment expense

Other adjustment items (2)

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

(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.

(2) For the three and nine months ended September 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 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.

As of September 30, 2023, we were committed to purchase approximately $ 56 million of inventory over a period of two years and $ 16 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 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

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

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

($ in millions) 2023

(remaining) 2024 2025 2026 2027 Thereafter Total

Inventory purchase obligations (1)

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

As of September 30, 2023, we accrued liabilities of approximately $ 121 million for all legal matters.

Approximately $ 101 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.

This matter is subject to insurance coverage, and as a result, we recorded an insurance claim receivable of $ 83 million within Accounts receivable, net in our condensed consolidated balance sheet as of September 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 $ 356 million as of June 30, 2023, which primarily consist of escrow and subsidy related bonds.

We have commitments from surety providers in the amount of $ 548 million as of September 30, 2023, which primarily consist of escrow, construction and subsidy related bonds.

SUBSEQUENT EVENTS

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.

On November 5, 2023, we entered into a merger agreement with Bluegreen Vacations Holding Corporation (“Bluegreen”) to acquire Bluegreen.

Subject to the terms and conditions of the merger agreement, upon the consummation of the transaction, we will acquire all of the shares of Bluegreen for $ 75.00 per share in an all-cash transaction, representing total consideration of approximately $ 1.5 billion, inclusive of net debt.

Consummation of this transaction is subject to customary conditions and receipt of regulatory approvals.

The transaction is anticipated to close during the first half of 2024.

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