Diamond Acquisition (Tables)

6 Months Ended

Jun. 30, 2022

Business Combination and Asset Acquisition [Abstract]

Schedule of Fair Value of Consideration Transferred

The following table presents the fair value of each class of consideration transferred in relation to the Diamond Acquisition at the Acquisition Date:

($ in millions, except stock price amounts)
HGV common stock shares issued for outstanding Diamond shares	33.93
HGV common stock price as of Acquisition Date(1)	40.71
Stock purchase price	$	1,381
Repayment of Legacy-Diamond debt	$	2,029
Total consideration transferred	$	3,410

(1) Represents the average of the opening and closing price of HGV stock on August 2, 2021.

Schedule of Preliminary Fair Values of Assets Acquired and Liabilities Assumed

Any potential adjustments made could be material in relation to the values presented in the table below. As of June 30, 2022, the primary areas of the purchase price allocation that are not yet finalized include the following: (1) finalizing the review and valuation of acquired undeveloped land, property and equipment (including key assumptions, inputs and estimates) and assigning the remaining useful lives to the depreciable assets; (2) finalizing the review of accounts receivable, including the evaluation of which receivables are purchased credit deteriorated assets; (3)

finalizing the review and valuation of other acquired assets and assumed liabilities; and (4) finalizing our estimate of the impact of purchase accounting on deferred income tax liabilities.

($ in millions)	Preliminary Amounts Recognized as of the Acquisition Date
Assets acquired
Cash and cash equivalents	$	310
Restricted cash	127
Accounts receivable, net of allowance for doubtful accounts	97
Timeshare financing receivables, net	825
Inventory	497
Property and equipment, net	298
Operating lease right-of-use assets, net	32
Intangible assets, net	1,429
Other assets	250
Total assets acquired	$	3,865
Liabilities assumed
Accounts payable, accrued expenses and other	$	485
Non-recourse debt, net	660
Operating lease liabilities	34
Advanced deposits	4
Deferred revenues	140
Deferred income tax liabilities	489
Total liabilities assumed	$	1,812
Net assets acquired	$	2,053
Total consideration transferred	$	3,410
Goodwill(1)	$	1,357

(1)Goodwill is calculated as total consideration transferred less net assets acquired and it primarily represents the value that we expect to obtain from synergies and growth opportunities from our combined Company post-acquisition. The majority of goodwill is not expected to be deductible for tax purposes.

Schedule of Financing Receivables

Acquired timeshare financing receivables with credit deterioration as of the Acquisition Date were as follows:

($ in millions)	As of August 2, 2021
Purchase price	$	825
Allowance for credit losses	512
Premium attributable to other factors	(97)
Par value	$	1,240

Schedule of Goodwill

We have allocated the acquired goodwill to our segments, Real Estate Sales and Financing and Resort Operations and Club Management, as indicated in the table below. Our allocations may change throughout the measurement period as we continue to finalize the fair value of assets acquired and liabilities assumed in the Diamond Acquisition.

	Real Estate Sales and Financing Segment		Resort Operations and Club Management Segment		Total Consolidated
Goodwill	$	1,001	$	356	$	1,357

Schedule of Preliminary Estimates Of The Fair Value of Intangible Assets and Estimated Remaining Useful Lives

The following table presents our preliminary estimates of the fair values of the acquired Diamond’s identified intangible assets and their related estimated remaining useful lives:

	Estimated Fair Value ($ in millions)		Estimated Useful Life (in years)
Trade name	$	18	1.5
Management contracts	1,251		35.4
Club member relationships	139		14.4
Computer software	21		1.5
Total intangible assets	$	1,429

Schedule of Acquisition Pro Forma Information

The following unaudited pro forma information presents the combined results of operations of HGV and Diamond as if we had completed the Diamond Acquisition on January 1, 2021, the first day of our prior fiscal year, but using our preliminary fair values of assets and liabilities as of the Acquisition Date. These unaudited pro forma results do not reflect any synergies from operating efficiencies. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the Diamond Acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations.

($ in millions, except per share data)	Six Months Ended June 30, 2021
Revenue	$	1,155
Net loss	(87)