(Former Name, Former Address, and Former Fiscal Year, if Changed Since Last Report)

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of ~~October~~July 26, ~~2018~~2019 was ~~96,911,130.~~

	September 30,			December 31,		June 30,		December 31,
	2018			2017		2019		2018
	(unaudited)					(unaudited)
ASSETS
Cash and cash equivalents	$	145		$	246	$	120	$	108
Restricted cash		67			51		67		72
Accounts receivable, net of allowance for doubtful accounts of $12 and $9		151			112
Accounts receivable, net of allowance for doubtful accounts of $17 and $14							156		153
Timeshare financing receivables, net		1,103			1,071		1,125		1,120
Inventory		582			509		536		527
Property and equipment, net		538			238		673		559
Investment in unconsolidated affiliates		33			41
Operating lease right-of-use assets, net							63		—
Investments in unconsolidated affiliates							43		38
Intangible assets, net		73			72		84		81
Other assets		121	��		44		122		95
TOTAL ASSETS (variable interest entities - $691 and $471)	$	2,813		$	2,384
TOTAL ASSETS (variable interest entities - $571 and $647)						$	2,989	$	2,753
LIABILITIES AND EQUITY
Liabilities:
Accounts payable, accrued expenses and other	$	337		$	339	$	312	$	324
Advanced deposits		100			104		108		101
Debt, net		530			482		937		604
Non-recourse debt, net		806			583		696		759
Operating lease liabilities							76		—
Deferred revenues		263			109		163		95
Deferred income tax liabilities		215			249		247		254
Total liabilities (variable interest entities - $688 and $455)		2,251			1,866
Total liabilities (variable interest entities - $562 and $640)							2,539		2,137
Commitments and contingencies - see Note 19
Equity:
Preferred stock, $0.01 par value; 300,000,000 authorized shares, none issued or outstanding as of September 30, 2018 and December 31, 2017		—			—
Common stock, $0.01 par value; 3,000,000,000 authorized shares, 96,906,759 issued and outstanding as of September 30, 2018 and 99,136,304 issued and outstanding as of December 31, 2017		1			1
Preferred stock, $0.01 par value; 300,000,000 authorized shares, none issued or outstanding as of June 30, 2019 and December 31, 2018							—		—
Common stock, $0.01 par value; 3,000,000,000 authorized shares, 85,910,022 issued and outstanding as of June 30, 2019 and 94,558,086 issued and outstanding as of December 31, 2018							1		1
Additional paid-in capital		174			162		169		174
Accumulated retained earnings		387			355		280		441
Total equity		562			518		450		616
TOTAL LIABILITIES AND EQUITY	$	2,813		$	2,384	$	2,989	$	2,753

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Revenues
Sales of VOIs, net	$	99		$	145		$	427		$	406		$	120		$	250		$	245		$	328
Sales, marketing, brand and other fees		152			127			423			401			145			146			286			271
Financing		40			38			117			109			43			39			84			77
Resort and club management		40			37			116			108			43			37			85			76
Rental and ancillary services		60			45			164			138			60			53			119			104
Cost reimbursements		36			34			110			102			43			38			85			74
Total revenues		427			426			1,357			1,264			454			563			904			930
Expenses
Cost of VOI sales		29			40			109			107			32			61			68			80
Sales and marketing		174			171			528			492			186			193			356			354
Financing		12			11			35			32			12			12			25			23
Resort and club management		11			12			33			32			12			11			23			22
Rental and ancillary services		37			30			95			88			37			30			72			58
General and administrative		31			23			84			75			29			30			54			53
Depreciation and amortization		9			7			25			21			13			8			23			16
License fee expense		25			22			73			65			26			25			49			48
Cost reimbursements		36			34			110			102			43			38			85			74
Total operating expenses		364			350			1,092			1,014			390			408			755			728
Gain on foreign currency transactions		—			1			—			1
Interest expense		(7	)		(7	)		(22	)		(21	)		(11	)		(8	)		(21	)		(15	)
Equity in earnings from unconsolidated affiliates		1			1			—			1
Other loss		(1	)		—			(1	)		—
Equity in earnings (losses) from unconsolidated affiliates														2			(2	)		3			(1	)
Other (loss) gain, net														(1	)		1			(2	)		—
Income before income taxes		56			71			242			231			54			146			129			186
Income tax expense		(15	)		(28	)		(64	)		(87	)		(15	)		(39	)		(35	)		(49	)
Net income	$	41		$	43		$	178		$	144		$	39		$	107		$	94		$	137
Earnings per share:
Basic	$	0.42		$	0.43		$	1.82		$	1.45		$	0.43		$	1.10		$	1.02		$	1.40
Diluted	$	0.42		$	0.43		$	1.81		$	1.44		$	0.43		$	1.10		$	1.01		$	1.39

Nine Months Ended September 30,

2018

2017

Operating Activities

Net income

$
178

$
144

Adjustments to reconcile net income to net cash (used in) provided by
operating activities:

Depreciation and amortization

25

21

Amortization of deferred financing costs and other

4

4

Provision for loan losses

50

45

Gain on foreign currency transactions

—

(1
)
Other loss

1

—

Share-based compensation

13

13

Deferred tax benefits

(21
)

(5
)
Equity in earnings from unconsolidated affiliates

—

(1
)
Distributions received from unconsolidated affiliates

2

—

Net changes in assets and liabilities:

Accounts receivable, net

(39
)

19

Timeshare financing receivables, net

(83
)

(75
)
Inventory

(15
)

38

Purchases of real estate for future conversion to inventory

(299
)

—

Other assets

(61
)

(11
)
Accounts payable, accrued expenses and other

(15
)

96

Advanced deposits

13

(1
)
Deferred revenues

42

13

Net cash (used in) provided by operating activities

(205
)

299

Investing Activities

Capital expenditures for property and equipment

(29
)

(25
)
Software capitalization costs

(12
)

(12
)
Return of investment from unconsolidated affiliates

11

—

Investment in unconsolidated affiliates

(5
)

(40
)
Net cash used in investing activities

(35
)

(77
)
Financing Activities

Issuance of debt

215

—

Issuance of non-recourse debt

663

350

Repurchase and retirement of common stock

(112
)

—

Repayment of debt

(168
)

(7
)
Repayment of non-recourse debt

(436
)

(428
)
Debt issuance costs

(6
)

(5
)
Proceeds from stock options exercises

—

1

Payment of withholding taxes on vesting of restricted stock units

(4
)

—

Capital contribution

3

—

Net cash provided by (used in) financing activities

155

(89
)
Net (decrease) increase in cash, cash equivalents and restricted cash

(85
)

133

Cash, cash equivalents and restricted cash, beginning of period

297

151

Cash, cash equivalents and restricted cash, end of period

$
212

$
284

Supplemental disclosure of non-cash operating activities:

Cumulative effect of adoption of new accounting standards

$
38

$
—

															Six Months Ended June 30,
						Additional			Accumulated						2019			2018
Operating Activities
Net income															$	94		$	137
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization																23			16
Amortization of deferred financing costs and other																5			3
Provision for financing receivables losses																38			30
Other loss, net																2			—
Share-based compensation																12			8
Deferred income tax benefit																(9	)		(6	)
Equity in (earnings) losses from unconsolidated affiliates																(3	)		1
Distributions received from unconsolidated affiliates																—			2
Net changes in assets and liabilities:
Accounts receivable, net																(3	)		(26	)
Timeshare financing receivables, net																(42	)		(48	)
Inventory																(11	)		11
Purchases and development of real estate for future conversion to inventory																(80	)		(176	)
Other assets																(26	)		(58	)
Accounts payable, accrued expenses and other																(3	)		(42	)
Advanced deposits																7			8
Deferred revenues																68			4
Other																—			2
Net cash provided by (used in) operating activities																72			(134	)
Investing Activities
Capital expenditures for property and equipment																(17	)		(20	)
Software capitalization costs																(11	)		(9	)
Return of investment from unconsolidated affiliates																—			11
Investments in unconsolidated affiliates																(2	)		(5	)
Net cash used in investing activities																(30	)		(23	)
Financing Activities
Issuance of debt																410			160
Issuance of non-recourse debt																15			100
Repayment of debt																(105	)		(5	)
Repayment of non-recourse debt																(79	)		(80	)
Debt issuance costs																(2	)		(2	)
Repurchase and retirement of common stock																(271	)		(112	)
Payment of withholding taxes on vesting of restricted stock units																(3	)		(1	)
Proceeds from employee stock plan purchases																2			—
Capital contribution																—			3
Other financing activity																(2	)		—
Net cash (used in) provided by financing activities																(35	)		63
Net increase (decrease) in cash, cash equivalents and restricted cash																7			(94	)
Cash, cash equivalents and restricted cash, beginning of period																180			297
Cash, cash equivalents and restricted cash, end of period															$	187		$	203
	Common Stock					Paid-in			Retained			Total
	Shares			Amount		Capital			Earnings			Equity
Balance as of December 31, 2017		99		$	1	$	162		$	355		$	518
Net income		—			—		—			178			178
Activity related to share-based compensation		—			—		9			—			9
Repurchase and retirement of common stock		(2	)		—		(3	)		(109	)		(112	)
Revenue recognition cumulative-effect adjustment		—			—		—			(38	)		(38	)
Capital contribution		—			—		3			—			3
Other		—			—		3			1			4
Balance as of September 30, 2018		97		$	1	$	174		$	387		$	562
Supplemental disclosure of non-cash operating activities:
Cumulative effect of adoption of new accounting standard															$	—		$	38
Supplemental disclosure of non-cash financing activities:
Issuance of other debt															$	23		$	—

						Additional			Accumulated
	Common Stock					Paid-in			Retained			Total
	Shares			Amount		Capital			Earnings			Equity
Balance as of December 31, 2018		94		$	1	$	174		$	441		$	616
Net income		—			—		—			55			55
Activity related to share-based compensation		—			—		1			—			1
Repurchase and retirement of common stock		(3	)		—		(5	)		(92	)		(97	)
Balance as of March 31, 2019		91			1		170			404			575
Net income		—			—		—			39			39
Activity related to share-based compensation		—			—		10			—			10
Repurchase and retirement of common stock		(5	)		—		(11	)		(163	)		(174	)
Balance as of June 30, 2019		86		$	1	$	169		$	280		$	450

						Additional			Accumulated
	Common Stock					Paid-in			Retained			Total
	Shares			Amount		Capital			Earnings			Equity
Balance as of December 31, 2017		99		$	1	$	162		$	355		$	518
Net income		—			—		—			30			30
Activity related to share-based compensation		—			—		(1	)		—			(1	)
Repurchase and retirement of common stock		(2	)		—		(3	)		(109	)		(112	)
Revenue recognition cumulative-effect adjustment		—			—		—			(38	)		(38	)
Capital contribution		—			—		3			—			3
Balance as of March 31, 2018		97			1		161			238			400
Net income		—			—		—			107			107
Activity related to share-based compensation		—			—		6			—			6
Other		—			—		3			1			4
Balance as of June 30, 2018		97		$	1	$	170		$	346		$	517

Hilton Grand Vacations Inc. (“Hilton Grand Vacations,” “we,” “us,” “our,” “HGV” or the “Company”) is a global timeshare company engaged in developing, marketing, selling and managing timeshare resorts primarily under the Hilton Grand Vacations brand. Our operations primarily consist of: selling vacation ownership intervals (“VOIs”) for us and third parties; ~~operating resorts;~~ financing and servicing loans provided to consumers for their timeshare purchases; operating resorts; and managing our points-based Hilton Grand Vacations Club exchange program (the “Club”). As of ~~September~~June 30, ~~2018,~~2019, we had 5157 properties, comprised of ~~8,367~~9,177 units, located in the United States (“U.S.”), Japan and Europe.

On January 3, 2017, the previously announced spin-off of Hilton Grand Vacations from Hilton Worldwide Holdings Inc. (“Hilton”) was completed. As a result of the spin-off, we became an independent public company, and our common stock is listed on the New York Stock Exchange under the symbol “HGV.” Following the spin-off, Hilton did not retain any ownership interest in our company. In connection with the completion of the spin-off in January 2017, we entered into agreements with Hilton Worldwide (“Hilton”) (who at the time was a related party) and other third parties, including licenses to use the Hilton Grand Vacations brand. The unaudited condensed consolidated financial statements reflect the effect of these agreements. For the three months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, we incurred ~~$38~~$36 million and ~~$39~~$38 million, respectively, and for each of the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, we incurred ~~$135~~$92 million and ~~$137~~$97 million, respectively, in costs relating to the agreements entered with Hilton. See Key Agreements Related to the Spin-Off section in Part I - Item 1. Business of our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 for further information.

The unaudited condensed consolidated financial statements presented herein include 100 percent of our assets, liabilities, revenues, expenses and cash flows as well as all entities in which we have a controlling financial interest. In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods. All material intercompany transactions and balances have been eliminated in consolidation.

The unaudited condensed consolidated financial statements reflect our financial position, results of operations and cash flows as prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). 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, ~~2017,~~2018, included in our Annual Report on Form 10-K filed with the SEC on ~~March 1, 2018.~~February 28, 2019.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and, accordingly, ultimate results could differ from those estimates. Interim results are not necessarily indicative of full year performance.

~~On January 1, 2018, we adopted Accounting Standards Update (“ASU”) No. 2014-09,~~ ~~Revenue from Contracts with Customers~~ (commonly referred to as Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”). We adopted ASC 606 using the modified retrospective method in which the cumulative effect of applying the new standard has been recognized at the date of initial application with an adjustment to our opening balance of retained earnings. This approach applies to all contracts as of January 1, 2018. The new standard, as amended, replaces all current U.S. GAAP guidance on this topic and eliminates all industry-specific guidance.

The reported results as of and for the three and nine months ended September 30, 2018 reflects the application of ASC 606 while the reported financial position as of December 31, 2017 and results for the three and nine months ended September 30, 2017 were prepared under the guidance of ASC 605, ~~Revenue Recognition~~ ~~(“ASC 605”) and ASC 978-605,~~ ~~Real Estate – Time-Sharing Activities, Revenue Recognition, which is also referred to herein as the “previous accounting guidance.”~~

~~In accordance with ASC 606, revenue~~We lease sales centers, office space and equipment under operating leases. We determine if an arrangement is ~~recognized upon the transfer of control of promised goods or services~~a lease at inception. Amounts related to ~~customers~~operating leases are included in ~~an amount that reflects the consideration we expect to receive~~Operating lease right-of-use (“ROU”) assets, net and Operating lease liabilities in ~~exchange~~our condensed consolidated balance sheets. Operating lease ROU assets are adjusted for those products or services. To achieve the core principle of the new guidance, we take the following steps: (i) identify the contract with the customer; (ii) determine whether the promised goods or serviceslease incentives received.

ROU assets and operating lease liabilities are separate performance obligations in the contract; (iii) determine the transaction price, including considering the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations in the contractrecognized based on the ~~standalone selling price or estimated standalone selling price~~present value of lease payments over the lease term as of the ~~good~~commencement date. Because most of our leases do not provide an explicit or ~~service; and (v) recognize revenue when (or as)~~implicit rate of return, we ~~satisfy each performance obligation.~~

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. For arrangements that contain multiple goods or services, we determine whether such goods or services are distinct performance obligations that should be accounted for separately in the arrangement. When allocating the transaction price in the arrangement, we may not have observable standalone sales for all the performance obligations in these contracts; therefore, we exercise significant judgement when determining the standalone selling price of certain performance obligations. In order to estimate the standalone selling prices, we primarily rely on the expected cost plus margin and adjusted market assessment approaches. We then recognize the revenue allocated to each performance obligation as the related performance obligation is satisfied as discussed below.

We award Club Bonus Points (“Bonus Points”) to our customers as an incentive for purchasing a VOI. These Bonus Points are valid for a maximum of two years and may be redeemed for reservations at Club resorts, hotel reservations within Hilton’s system, and VOI exchanges with other third-party vacation ownership exchanges. At the time of the VOI sale, we estimate the fair value of the incentives to be redeemed, including an adjustment for breakage, to determine the standalone selling price of the first day incentive (“FDI”). We defer a portion of the total transaction price for the combined VOI contract as a liability for the FDI and recognize the corresponding revenue at the point in time when the customer receives the benefits of the FDI, which is upon the customer’s redemption of the Bonus Points. At that time, we also determine whether we are principal or agent for the redeemed good or service and recognize revenue on a gross or net basis accordingly.

Additionally, we enter into contracts to sell prepaid vacation packages. Our obligation in such contracts is satisfied when customers stay at our property; therefore, we recognize revenue for these packages when they are redeemed. On a portfolio basis, we exercise judgement to estimate the amount of expected breakage related to unused prepaid vacation packages and recognize such breakage in proportion to the pattern of packages utilized by our portfolio of customers.

As part of our resort operations, we contract with homeowner’s associations (“HOAs”) to provide day-to-day-management services, including housekeeping services, operation of a reservation system, maintenance, and certain accounting and administrative services. We receive compensation for such management services, which is generally based on a percentage of costs to operate the resorts, on a monthly basis. These fees represent a form of variable consideration and are estimated and recognized over time as the HOAs receive and consume the benefitsamount of the ~~management services. Management fees received related~~impairment loss to ~~the portion of unsold VOIs at each resort which we own are recognized on a net basis given we retain these VOIs in our inventory.~~

We account for rental operations of unsold VOIs, including accommodations provided through the use of our vacation sampler programs, as incidental operations. Incremental carrying costs in excess of incremental revenues are recognized in the period incurred. In all periods presented, incremental carrying costs exceeded incremental revenues and all revenues and expenses are recognized in the period earned or incurred.

We capitalize all incremental costs incurred to obtain a contract when such costs would not have been incurred if the contract had not been obtained. We elect to expense costs incurred to obtain a contract when the amortization period would be one year or less. Commissions for VOI sales for resorts under construction are expensed when the associated VOI revenue is recognized which is upon completion of the resort. These commissions are classified as ~~Sales and marketing expense~~ ~~in our unaudited condensed consolidated statements of operations.~~

As of September 30, 2018, the ending asset balance for cost to obtain a contract was $24 million. For the three and nine months ended September 30, 2018, the related amortization or incurred expense was $1 million and $20 million, respectively, with no associated impairment losses.recognize.

On January 1, 2019, we adopted Accounting Standards ~~Board ("FASB"~~Update (ASU) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) ~~issued~~as amended, using the modified retrospective approach permitted under ASU ~~2016-15,~~ ~~Classification of Certain Cash Receipts and Cash Payments, which in part requires entities~~No. 2018-11, Targeted Improvements, collectively Accounting Standards Codification Topic 842 (“ASC 842”). Accordingly,previously reported financial information has not been restated to ~~assess whether distributions of cash from unconsolidated entities represent a return on~~reflect the ~~investment or a return~~application of the ~~investment~~new standard to ~~appropriately classify~~ the ~~distributions~~comparative periods presented. As permitted under the transition guidance in ~~the statement of cash flows. We~~ASC 842, we have made an accounting policy election to adopt the following package of practical expedients:

ROU assets represent our right to use an underlying asset for the ~~cumulative earnings approach.~~ ~~Under~~lease term and operating lease liabilities represent our obligation to make lease payments arising from the cumulative earnings approach, distributions up to the amount of cumulative equity in earnings recognized will be treated as returns on investment as operating cash flows and those in excess of that amount will be treated as returns of investment as investing cash flows. On January 1, 2018, we adopted ASU 2016-15 whichlease. ASC 842 had no impact toon our ~~historical~~condensed consolidated ~~financial statements.~~ statements of operations or on our condensed consolidated statements of cash flows. Upon adoption, we recognized ROU assets of $68 million and operating lease liabilities of $80 million for our real estate and equipment operating leases on the condensed consolidated balance sheets.

In ~~February~~June 2016, the FASB issued ASU No. ~~2016-02~~2016-13, (“ASU ~~2016-02”~~2016-13”), ~~Leases (Topic 842)~~Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which ~~supersedes existing guidance on accounting for leases in~~ ~~Leases (Topic 840).~~ ~~Under~~replaces the ~~new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases~~incurred loss impairment methodology with a ~~term of 12 months or less.~~methodology that reflects expected credit losses. Subsequent to ASU ~~2016-02,~~2016-13, the FASB has issued ~~ASU No. 2018-01 (“ASU 2018-01”)~~ ~~Leases (Topic 842): Land Easement Practical Expedient for Transition~~ ~~which clarifies~~several related ASUs amending the ~~application of lease easements~~original ASU. The updates are intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and ~~eases adoption efforts for some land easements.~~other commitments to extend credit held by a reporting entity at each reporting date. The ~~provisions of ASU 2016-02 as clarified are~~update is effective for ~~reporting~~annual periods beginning after December 15, 2018; early adoption is permitted. The provisions of this ASU are to be applied using a modified retrospective approach. We expect to elect the initial application on January 1, 2019 and not to recast the comparative periods in transition but recognize a cumulative-effect adjustment to retained earnings as of January 1, 2019. We will choose to elect the package of practical expedients available to us upon adoption and are assessing lease software solutions. We continue to evaluate the effect that this ASU will have on our consolidated financial statements.

~~In June 2018, the FASB issued ASU No. 2018-07 (“ASU 2018-07”), Compensation – Stock Compensation (Topic 718).~~ Under the new guidance, the existing employee guidance will apply to nonemployee share-based transactions, with the exception of specific guidance related to attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. T~~he provisions of this ASU are effective for reporting periods beginning after December 15, 2018; early adoption is permitted.~~ We are currently evaluating the effect ~~that~~of this ASU ~~will~~but we do not expect it to have a material impact on our unaudited condensed consolidated financial statements.

~~In August 2018, the FASB issued ASU 2018-13 (“ASU 2018-13”),~~ ~~Fair Value Measurement (Topic 8420): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.”~~ ASU 2018-13 modifies the requirements associated with the hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. The provisions of this ASU are effective for reporting periods after December 15, 2019; early adoption is permitted. We are currently evaluating the effect that this ASU will have on our consolidated financial statements.

~~In August 2018, the FASB issued ASU 2018-15 (“ASU 2018-15”),~~ ~~Customer’s Accounting Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract~~, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Accounting Standards Codification 350-40 to determine which implementation costs to defer and recognize as an asset. ASU 2018-15 generally aligns the guidance on recognizing implementation costs incurred in a cloud computing arrangement that is a service contract with that for implementation costs incurred to develop or obtain internal-use software, including hosting arrangements that include an internal-use software license. The provisions of this ASU are effective for reporting periods after December 15, 2019; early adoption is permitted. We are currently evaluating the effect that this ASU will have on our consolidated financial statements.

The cumulative effect of applying the new guidance to all contracts with customers as of January 1, 2018 was recorded as an adjustment to retained earnings as of the adoption date. The following unaudited cumulative adjustments were made to the condensed consolidated balance sheet as of January 1, 2018:

~~The table below shows the adjustments that were made to the condensed consolidated balance sheet as of January 1, 2018:~~

December 31, 2017

Adjustments

January 1, 2018

($ in millions)

ASSETS

Cash and cash equivalents

$
246

$
—

$
246

Restricted cash

51

—

51

Accounts receivable, net of allowance for doubtful  accounts

112

—

112

Timeshare financing receivables, net

1,071

—

1,071

Inventory

509

30

539

Property and equipment, net

238

—

238

Investment in unconsolidated affiliate

41

—

41

Intangible assets, net

72

—

72

Other assets

44

16

60

TOTAL ASSETS

$
2,384

$
46

$
2,430

LIABILITIES AND EQUITY

Liabilities:

Accounts payable, accrued expenses and other

$
339

$
2

$
341

Advanced deposits

104

(17
)

87

Debt, net

482

—

482

Non-recourse debt, net

583

—

583

Deferred revenues

109

112

221

Deferred income tax liabilities

249

(13
)

236

Total liabilities

1,866

84

1,950

Commitments and contingencies

Equity:

Preferred stock, $0.01 par value; 300,000,000 authorized
   shares, none issued or outstanding as of December 31,
   2017

—

—

—

Common stock, $0.01 par value; 3,000,000,000 authorized
   shares, 99,136,304 issued and outstanding as of
   December 31, 2017

1

—

1

Additional paid-in capital

162

—

162

Accumulated retained earnings

355

(38
)

317

Total equity

518

(38
)

480

TOTAL LIABILITIES AND EQUITY

$
2,384

$
46

$
2,430

The following tables show our disaggregated revenues by segment from contracts with customers. We operate our business in the following two segments: (i) Real estate sales and financing and (ii) Resort operations and club management. Please refer to Note 18: Business Segments below for more details related to our segments.

	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018		Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)					2019		2018		2019		2018
Real Estate and Financing Segment
Sales of VOIs, net	$	99	$	427	$	120	$	250	$	245	$	328
Sales, marketing, brand and other fees		152		423		145		146		286		271
Interest income		35		103		36		34		72		68
Other financing revenue		5		14		7		5		12		9
Real estate and financing segment revenues	$	291	$	967	$	308	$	435	$	615	$	676

	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018		Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)					2019		2018		2019		2018
Resort Operations and Club Management Segment
Club management	$	25	$	71	$	26	$	23	$	52	$	46
Resort management		15		45		17		14		33		30
Rental ⁽¹⁾		53		144		53		46		105		91
Ancillary services		7		20		7		7		14		13
Resort operations and club management segment revenues	$	100	$	280	$	103	$	90	$	204	$	180

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

The following table presents ~~changes in~~the composition of our contract liabilities for the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019.


($ in millions)	January 1, 2018		Additions		Subtractions			September 30, 2018		June 30, 2019		December 31, 2018
Contract liabilities:
Advanced deposits	$	87	$	128	$	(115	)	$	100	$	108	$	101
Deferred revenue⁽¹⁾		197		256		(215	)		238
Deferred revenues⁽¹⁾											145		72
Club Bonus Point incentive liability⁽²⁾		52		39		(31	)		60		61		56

Revenue earned during the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 that was included in the contract liabilities balance at ~~January 1,~~December 31, 2018 was approximately ~~$58~~$39 million and ~~$202~~$78 million, respectively.

~~Accounts receivable for the nine months ended September 30, 2018 include~~Our accounts receivables that relate to our contracts with customers includes amounts associated with our contractual right to consideration for completed performance obligations related primarily to our fee-for-service arrangements and homeowners’ associations (“HOA”) management agreements and are ~~realized~~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. ~~For the nine months ended September 30, 2018, there were no associated impairment losses.~~ Refer to Note 5: Timeshare Financing Receivables for information on balances and changes in balances during the period related to our ~~Timeshare~~timeshare financing receivables.

Contract ~~asset relates~~assets relate to incentive fees that can be earned for meeting certain target 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 liabilities include payments received or due in advance of satisfying our performance ~~obligations, offset by revenues recognized.~~obligations. Such contract liabilities include advance deposits received on prepaid vacation packages for future stays at our resorts, deferred revenues and the liability for Club 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.

Transaction price allocated to remaining performance obligations represents contract revenue that has not yet been recognized. 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) Club Bonus Points that may be redeemed in the future.

~~The following table includes~~ As of June 30, 2019, we deferred $34 million of revenue and $5 million of direct selling costs ~~expected to be recognized in the future related to~~from sales of VOIs under construction asthat will be acquired under a just-in-time arrangement once construction is complete. We expect to recognize the revenue and direct selling costs during the second quarter of ~~September 30, 2018:~~2020. Upon acquisition, we expect to recognize $11 million in costs of VOI sales related to these sales. As of December 31, 2018, we had no remaining performance obligations on sales of VOIs under construction.

The following table includes the remaining transaction price related to Advanced deposits, Club activation fees and Club Bonus Points as of ~~September~~June 30, ~~2018:~~2019:

~~ASC 606 provides certain practical expedients that facilitate the disclosure around performance obligations. We have elected the following practical expedients options:~~

Our performance obligations under the management service arrangements and fee-for-service arrangements are satisfied over time and the related fees represent variable consideration that meets the first practical expedient option. Fees for management services are variable consideration as these fees are based off of costs to operate the resorts in a given annual period, which is resolved on a monthly basis over the contract term.

The following tables compare the reported condensed consolidated balance sheet and statement of operations as of and for the three and nine months ended September 30, 2018, as well as the cash flows for the nine months ended September 30, 2018, to the previous accounting guidance:

September 30, 2018

As Reported

Effects of ASC 606

Previous
Accounting
Guidance

(in millions)

ASSETS

Cash and cash equivalents

$
145

$
—

$
145

Restricted cash

67

—

67

Accounts receivable, net of allowance for doubtful accounts

151

(5
)

146

Timeshare financing receivables, net

1,103

—

1,103

Inventory

582

(47
)

535

Property and equipment, net

538

—

538

Investment in unconsolidated affiliates

33

—

33

Intangible assets, net

73

—

73

Other assets

121

(20
)

101

TOTAL ASSETS

$
2,813

$
(72
)

$
2,741

LIABILITIES AND EQUITY

Liabilities:

Accounts payable, accrued expenses and other

$
337

$
(29
)

$
308

Advanced deposits

100

17

117

Debt, net

530

—

530

Non-recourse debt, net

806

—

806

Deferred revenues

263

(142
)

121

Deferred income tax liabilities

215

30

245

Total liabilities

2,251

(124
)

2,127

Commitments and contingencies

Equity:

Preferred stock, $0.01 par value; 300,000,000 authorized
   shares, none issued or outstanding as of September 30, 2018

—

—

—

Common stock, $0.01 par value; 3,000,000,000 authorized
   shares, 96,906,759 issued and outstanding as of
   September 30, 2018

1

—

1

Additional paid-in capital

174

—

174

Accumulated retained earnings

387

52

439

Total equity

562

52

614

TOTAL LIABILITIES AND EQUITY

$
2,813

$
(72
)

$
2,741

Total reported assets and liabilities were $72 million and $124 million, respectively, greater than the balance if the previous accounting guidance were in effect as of September 30, 2018. This was primarily due to the deferral of all direct costs and revenue recognition for Sales of VOIs until construction is complete. In addition, total reported liabilities were partially offset by releasing the advanced deposits liability to recognize expected breakage revenue on prepaid vacation packages proportionally as our customers redeem their packages.

Three Months Ended September 30, 2018

($ in millions)

As Reported

Effects of ASC 606

Previous
Accounting
Guidance

Revenues

Sales of VOIs, net

$
99

$
58

$
157

Sales, marketing, brand and other fees

152

(2
)

150

Financing

40

—

40

Resort and club management

40

—

40

Rental and ancillary services

60

—

60

Cost reimbursements

36

—

36

Total revenues

427

56

483

Expenses

Cost of VOI sales

29

18

47

Sales and marketing

174

11

185

Financing

12

—

12

Resort and club management

11

—

11

Rental and ancillary services

37

—

37

General and administrative

31

—

31

Depreciation and amortization

9

—

9

License fee expense

25

—

25

Cost reimbursements

36

—

36

Total operating expenses

364

29

393

Interest expense

(7
)

—

(7
)
Equity in earnings from unconsolidated affiliates

1

—

1

Other loss

(1
)

—

(1
)
Income before income taxes

56

27

83

Income tax expense

(15
)

(6
)

(21
)
Net income

$
41

$
21

$
62

Earnings per share:

Basic

$
0.42

$
0.21

$
0.63

Diluted

$
0.42

$
0.21

$
0.63

Nine Months Ended September 30, 2018

($ in millions)

As Reported

Effects of ASC 606

Previous
Accounting
Guidance

Revenues

Sales of VOIs, net

$
427

$
30

$
457

Sales, marketing, brand and other fees

423

4

427

Financing

117

—

117

Resort and club management

116

—

116

Rental and ancillary services

164

—

164

Cost reimbursements

110

—

110

Total revenues

1,357

34

1,391

Expenses

Cost of VOI sales

109

16

125

Sales and marketing

528

14

542

Financing

35

—

35

Resort and club management

33

—

33

Rental and ancillary services

95

—

95

General and administrative

84

—

84

Depreciation and amortization

25

—

25

License fee expense

73

—

73

Cost reimbursements

110

—

110

Total operating expenses

1,092

30

1,122

Interest expense

(22
)

—

(22
)
Other loss

(1
)

—

(1
)
Income before income taxes

242

4

246

Income tax expense

(64
)

(1
)

(65
)
Net income

$
178

$
3

$
181

Earnings per share:

Basic

$
1.82

$
0.03

$
1.85

Diluted

$
1.81

$
0.03

$
1.84

The following summarizes the significant changes to our condensed consolidated statement of operations for the three and nine months ended September 30, 2018 as a result of the adoption of ASC 606 on January 1, 2018 compared to if we had continued to recognize revenues under the previous accounting guidance:

The adoption of ASC 606 had no impact on our total cash flows provided by operating activities or used by investing and financing activities. ASC 606 resulted in offsetting shifts in cash flows throughout net income and various changes in working capital balances.

	September 30,		December 31,		June 30,		December 31,
($ in millions)	2018		2017		2019		2018
Escrow deposits on VOI sales	$	40	$	29	$	41	$	45
Reserves related to non-recourse debt⁽¹⁾		27		22		26		27
	$	67	$	51	$	67	$	72

	September 30, 2018									June 30, 2019
($ in millions)	Securitized and Pledged			Unsecuritized⁽¹⁾			Total			Securitized and Pledged			Unsecuritized⁽¹⁾			Total
Timeshare financing receivables	$	705		$	567		$	1,272		$	579		$	720		$	1,299
Less: allowance for loan loss		(47	)		(122	)		(169	)
Less: allowance for financing receivables losses											(35	)		(139	)		(174	)
	$	658		$	445		$	1,103		$	544		$	581		$	1,125

	December 31, 2017									December 31, 2018
($ in millions)	Securitized and Pledged			Unsecuritized⁽¹⁾			Total			Securitized and Pledged			Unsecuritized⁽¹⁾			Total
Timeshare financing receivables	$	471		$	741		$	1,212		$	660		$	632		$	1,292
Less: allowance for loan loss		(27	)		(114	)		(141	)
Less: allowance for financing receivables losses											(43	)		(129	)		(172	)
	$	444		$	627		$	1,071		$	617		$	503		$	1,120

As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we had ~~$198~~$279 million and ~~$143~~$190 million, respectively, of gross timeshare financing receivables securing the outstanding debt balance of our Timeshare Facility. ~~We recognize interest income on our timeshare financing receivables as earned.~~ 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.

The interest rate charged on the notes correlates to the risk profile of the borrower at the time of purchase and the percentage of the purchase that is financed, among other factors. As of September 30, 2018, our timeshare financing receivables had interest rates ranging from 5.3 percent to 20.5 percent, a weighted average interest rate of 12.2 percent, a weighted average remaining term of 7.8 years and maturities through 2030.

In September 2018, we completed a securitization of $350 million of gross timeshare financing receivables and issued approximately $268 million of 3.54 percent notes, $54 million of 3.70 percent notes and $28 million of 4.0 percent notes, which have a stated maturity date of February 25, 2032. The securitization transaction did not qualify as a sale and, accordingly, no gain or loss was recognized. The transaction is considered a secured borrowing; therefore, the proceeds from the transaction are presented as non-recourse debt (collectively, the “Securitized Debt”). The proceeds were primarily used to pay down a portion of our Timeshare Facility and general corporate operating expenses.

Our timeshare financing receivables as of ~~September~~June 30, ~~2018~~2019 mature as follows:

($ in millions)	Securitized and Pledged			Unsecuritized			Total			Securitized and Pledged			Unsecuritized			Total
Year
2018 (remaining)	$	22		$	26		$	48
2019		90			46			136
2019 (remaining)										$	40		$	39		$	79
2020		90			50			140			81			58			139
2021		89			54			143			80			64			144
2022		86			58			144			77			70			147
2023											75			75			150
Thereafter		328			333			661			226			414			640
		705			567			1,272			579			720			1,299
Less: allowance for loan loss		(47	)		(122	)		(169	)
Less: allowance for financing receivables losses											(35	)		(139	)		(174	)
	$	658		$	445		$	1,103		$	544		$	581		$	1,125

We evaluate this portfolio collectively for purposes of estimating variable consideration, since we hold a large group of homogeneous timeshare financing receivables which are individually immaterial. We monitor the credit quality of our receivables on an ongoing basis. 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 determining our allowance for ~~loan loss~~financing receivables losses on our timeshare financing receivables. For static pool analysis, we use certain key dimensions to stratify our portfolio, including FICO scores, equity percentage at the time of sale and certain other factors. 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. The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio.

We recognize interest income on our timeshare financing receivables as earned. 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, 2019, our timeshare financing receivables had interest rates ranging from 5.25 percent to 20.50 percent, a weighted-average interest rate of 12.36 percent, a weighted-average remaining term of 7.7 years and maturities through 2031.

Our gross timeshare financing receivables balances by FICO score were as follows:

	September 30,		December 31,		June 30,		December 31,
($ in millions)	2018		2017		2019		2018
FICO score
700+	$	826	$	770	$	853	$	843
600-699		236		225		234		237
<600		28		28		27		27
No score⁽¹⁾		182		189		185		185
	$	1,272	$	1,212	$	1,299	$	1,292

We apply payments we receive for ~~loans,~~timeshare financing receivables, including those in non-accrual status, to amounts due in the following order: servicing fees; interest; principal; and late charges. Once a ~~loan~~receivable 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~~receivables for which we had previously

ceased accruing interest once the ~~loan~~receivable is less than 91 days past due. We fully reserve for a timeshare financing receivable in the month following the date that the ~~loan~~receivable is 121 days past due and, subsequently, we write off the uncollectible ~~note~~balance against the reserve once the foreclosure process is complete and we receive the deed for the foreclosed unit.

As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we had ceased accruing interest on timeshare financing receivables with an aggregate principal balance of ~~$69~~$70 million and ~~$49~~$69 million, respectively. The following tables detail an aged analysis of our gross timeshare financing receivables balance:

	September 30, 2018						June 30, 2019
($ in millions)	Securitized and Pledged		Unsecuritized		Total		Securitized and Pledged		Unsecuritized		Total
Current	$	697	$	489	$	1,186	$	566	$	644	$	1,210
31 - 90 days past due		4		13		17		8		11		19
91 - 120 days past due		2		4		6		2		4		6
121 days and greater past due		2		61		63		3		61		64
	$	705	$	567	$	1,272	$	579	$	720	$	1,299

	December 31, 2017						December 31, 2018
($ in millions)	Securitized and Pledged		Unsecuritized		Total		Securitized and Pledged		Unsecuritized		Total
Current	$	462	$	685	$	1,147	$	648	$	556	$	1,204
31 - 90 days past due		6		10		16		8		11		19
91 - 120 days past due		1		4		5		3		3		6
121 days and greater past due		2		42		44		1		62		63
	$	471	$	741	$	1,212	$	660	$	632	$	1,292

The changes in our allowance for ~~loan loss~~financing receivables losses were as follows:

	September 30,		December 31,		June 30,		December 31,
($ in millions)	2018		2017		2019		2018
Completed unsold VOIs	$	233	$	191	$	249	$	243
Construction in process		76		60		11		9
Land, infrastructure and other		273		258		276		275
	$	582	$	509	$	536	$	527

We benefited from $5 million in costs of sales true-ups relating to VOI products for the six months ended June 30, 2019, which resulted in a $5 million increase to the carrying value of inventory as of June 30, 2019. We benefited from $10 million in costs of sales true-ups relating to VOI products for the ~~nine months~~year ended ~~September 30,~~December 31, 2018, which resulted in a $10 million increase to the carrying value of inventory as of ~~September 30, 2018. We benefited from $4 million in costs of sales true-ups relating to VOI products for the year ended~~ December 31, ~~2017, which resulted in a $4 million increase to the carrying value of inventory as of December 31, 2017.~~2018. Shown below are 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 September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2018		2017		2018		2017		2019		2018		2019		2018
Cost of VOI sales related to fee-for-service upgrades	$	8	$	8	$	23	$	28	$	7	$	9	$	16	$	15

	September 30,			December 31,			June 30,			December 31,
($ in millions)	2018			2017			2019			2018
Land		268			53		$	335		$	268
Building and leasehold improvements		286			182			300			295
Furniture and equipment		56			48			68			54
Construction in progress		8			20			66			25
		618			303			769			642
Accumulated depreciation		(80	)		(65	)		(96	)		(83	)
	$	538		$	238		$	673		$	559

In June 2018, we acquired an operating hotel in New York City, New York for $176 million for future conversion to timeshare inventory. In September 2018, we acquired land in Honolulu, Hawaii for $123 million which will be used to construct a timeshare resort. Both transactions were accounted for as an asset acquisition with purchase price being allocated to land, building and leasehold improvements and furniture and equipment.

As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we consolidated four ~~and three, respectively,~~ variable interest entities (“VIEs”) that issued ~~Securitized Debt,~~non-recourse debt backed by pledged assets consisting primarily of a pool of timeshare financing receivables which is without recourse to us. We are the primary beneficiaries of these VIEs as we have the power to direct the activities that most significantly affect their economic performance. We are also the servicer of these timeshare financing receivables and we are required to 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. 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:

	September 30,		December 31,		June 30,		December 31,
($ in millions)	2018		2017		2019		2018
Restricted cash	$	23	$	18	$	20	$	23
Timeshare financing receivables, net		658		445		544		617
Non-recourse debt⁽¹⁾		686		454		561		639

During the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, we did not provide any financial or other support to any VIEs that we were not previously contractually required to provide, nor do we intend to provide such support in the future.

~~In March 2018,~~As of June 30, 2019, we ~~entered into an agreement with SCG 1776, LLC, an affiliate of Strand Capital Group,~~have 25 percent and 50 percent ownership interests in BRE Ace LLC and ~~formed~~ 1776 ~~Holding,~~Holdings LLC, ~~a VIE. Because~~respectively, that are deemed as VIEs. We do not consolidate BRE Ace LLC and 1776 Holdings LLC because we are not the primary beneficiary, we do not consolidate 1776 Holding, LLC. Pursuant to the agreement, we contributed $5 million in cash for a 50 percent interest in 1776 Holding, LLC, which will construct an approximately 99-unit timeshare resort in Charleston, South Carolina.beneficiary. Our investment interests in ~~1776 Holdings, LLC is~~and equity earned from both VIEs are included in the ~~condensed~~ consolidated balance sheets as ~~Investment~~Investments in unconsolidated affiliates. and in the consolidated statements of operations as Equity in earnings (losses) from unconsolidated affiliates, respectively.

During the nine months ended September 30, 2018, we received cash distributions of $13 million from our investment in BRE Ace LLC, also a non-consolidated VIE, of which $10 million was considered a return of investment.

We held investments in our two unconsolidated affiliates with aggregated debt balances of ~~$483~~$478 million and ~~$488~~$490 million as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, 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 totals ~~$33~~$43 million and ~~$41~~$38 million as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively and (ii) receivables for commission and other fees earned under a fee-for-service arrangement. See Note 17: Related Party Transactions for additional information.

	September 30,		December 31,		June 30,		December 31,
($ in millions)	2018		2017		2019		2018
Inventory deposits	$	43	$	—	$	44	$	46
Deferred selling, marketing, general and administrative expenses		22		3
Prepaid expenses		28		18		34		18
Other		28		23		44		31
	$	121	$	44	$	122	$	95

In February 2018, we entered into a commitment to acquire $41 million of real estate for future conversion to timeshare inventory. In July 2018, we executed a sale and purchase agreement to acquire a portion of an operating hotel for future conversion to timeshare inventory for $50 million of which we made an initial deposit of $2 million. Both transactions were recorded as inventory deposits.

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

	September 30,			December 31,			June 30,			December 31,
($ in millions)	2018			2017			2019			2018
Debt⁽¹⁾
Senior secured credit facilities:
Term loan with an average rate of 4.511%, due 2021	$	182		$	190
Revolver with an average rate of 4.511%, due 2021		55			—
Term loan with an average rate of 3.898%, due 2023							$	192		$	197
Revolver with an average rate of 3.898%, due 2023								425			115
Senior notes with a rate of 6.125%, due 2024		300			300			300			300
Other debt								27			—
		537			490			944			612
Less: unamortized deferred financing costs and discount⁽²⁾⁽³⁾		(7	)		(8	)		(7	)		(8	)
	$	530		$	482		$	937		$	604

During the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, we borrowed ~~$215~~$410 million and repaid ~~$160~~$105 million (including recurring payments) under the ~~revolving~~senior secured credit ~~facility~~facilities with an interest rate based on one month LIBOR plus ~~2.25~~1.5 percent.

As of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we had $1 million of outstanding letter of credit under the revolving credit facility. We were in compliance with all applicable financial covenants as of ~~September~~June 30, ~~2018.~~2019.

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

	September 30,			December 31,			June 30,			December 31,
($ in millions)	2018			2017			2019			2018
Non-recourse debt⁽¹⁾
Timeshare Facility with an average rate of 3.302%, due 2021	$	120		$	129
Timeshare Facility with an average rate of 3.337%, due 2021							$	135		$	120
Securitized Debt with a rate of 2.280%, due 2026		38			54			25			33
Securitized Debt with an average rate of 1.810%, due 2026		82			112			59			74
Securitized Debt with an average rate of 2.711%, due 2028		224			293			176			206
Securitized Debt with an average rate of 3.602%, due 2032		350			—			307			333
		814			588			702			766
Less: unamortized deferred financing costs⁽²⁾		(8	)		(5	)		(6	)		(7	)
	$	806		$	583		$	696		$	759

In September 2018, we completed a securitization of $350 million of gross timeshare financing receivables and issued approximately $268 million of 3.54 percent notes, $54 million of 3.70 percent notes and $28 million of 4.0 percent notes due February 2032. In connection with the securitization, we incurred $4 million in debt issuance costs recorded in other assets. The Securitized Debt is backed by pledged assets, consisting primarily of a pool of timeshare financing receivables secured by first mortgages or deeds of trust on timeshare interest. 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 from the securitization were primarily used to pay down a portion of our Timeshare Facility and general corporate operating expenses.

The Timeshare Facility is a non-recourse obligation with a borrowing capacity of $450 million and is payable solely from the pool of timeshare financing receivables pledged as collateral and related assets. In ~~March 2018,~~April 2019, we ~~extended~~amended the Timeshare Facility, excluding the end of the commitment ~~termination date~~period, from March 2020 to ~~March 2020. The maturity date was extended 12 months from~~April 2021. All other terms and borrowing capacity remained the commitment date to March 2021. As a result of this extension, we incurred $2 million in debt issuance costs recorded in other assets. During the nine months ended September 30, 2018, we borrowed $313 million and repaid $322 million under the Timeshare Facility. same.

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 ~~$27~~$26 million and ~~$22~~$27 million as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, and were included in Restricted cash in our condensed consolidated balance sheets.

The contractual maturities of our debt and non-recourse debt as of ~~September~~June 30, ~~2018~~2019 were as follows:

($ in millions)	Debt		Non-recourse Debt		Total		Debt		Non-recourse Debt		Total
Year
2018 (remaining)	$	2	$	44	$	46
2019		10		189		199
2019 (remaining)							$	6	$	110	$	116
2020		10		166		176		12		167		179
2021		215		208		423		11		88		99
2022		—		64		64		10		200		210
2023								582		76		658
Thereafter		300		143		443		323		61		384
	$	537	$	814	$	1,351	$	944	$	702	$	1,646

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

	September 30, 2018						June 30, 2019
			Hierarchy Level						Hierarchy Level
($ in millions)	Carrying Amount		Level 1		Level 3		Carrying Amount		Level 1		Level 3
Assets:
Timeshare financing receivables, net⁽¹⁾	$	1,103	$	—	$	1,339	$	1,125	$	—	$	1,387
Liabilities:
Debt, net⁽²⁾		530		309		244		937		320		649
Non-recourse debt, net⁽²⁾		806		—		796		696		—		707

	December 31, 2017						December 31, 2018
			Hierarchy Level						Hierarchy Level
($ in millions)	Carrying Amount		Level 1		Level 3		Carrying Amount		Level 1		Level 3
Assets:
Timeshare financing receivables, net⁽¹⁾	$	1,071	$	—	$	1,292	$	1,120	$	—	$	1,339
Liabilities:
Debt, net⁽²⁾		482		329		194		604		302		309
Non-recourse debt, net⁽²⁾		583		—		577		759		—		753

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 estimated fair values of our timeshare financing receivables were determined using a discounted cash flow model. Our model incorporates default rates, coupon rates, credit quality and ~~loan~~borrowing terms respective to the portfolio based on current market assumptions for similar types of arrangements.

The estimated fair values of our Level 1 debt was based on prices in active debt markets. The estimated fair value of our Level 3 debt and non-recourse debt were as follows:

We do not have any assets or liabilities measured at fair value on a recurring basis as of ~~September~~June 30, ~~2018.~~2019.

We lease sales centers, office space and equipment under operating leases. Our leases expire at various dates from 2019 through 2030, with varying renewal and termination options. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

Rent expense for lease payments is recognized on a straight-line basis over the lease term. Rental expense for all operating leases was $4 million and $10 million for the three and six months ended June 30, 2019 respectively. This amount includes immaterial short-term leases and variable lease costs. Rent expense for all operating leases for the year ended December 31, 2018 was as follows:

Supplemental information related to operating leases for the six months ending June 30, 2019:

Future minimum lease payments under noncancelable operating leases, due in each of the next five years and thereafter as of June 30, 2019, are as follows:

Future minimum lease payments under noncancelable operating leases, due in each of the next five years and thereafter as of December 31, 2018, are as follows:

At the end of each quarter, we estimate the effective tax rate expected to be applied for the full year. The effective ~~income~~ tax rate is determined by the level and composition of pre-tax income or loss, which is subject to federal, foreign and state and local income taxes. The effective ~~income~~ tax rate for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 was approximately 27 percent and 3826 percent, respectively, which ~~decreased~~increased primarily due to a ~~decrease~~reduction in the ~~federal corporate income~~ tax ~~rate as a result of the Tax Cut and Jobs Act (the “Act”) that was passed on December 22, 2017.~~

We are applying the guidance in SEC Staff Accounting Bulletin 118 (“SAB 118”) when accounting for the enactment-date effects of the Act. As of September 30, 2018, there has been no adjustment to the provisional amounts of the Act’s effects on the one-time repatriation tax as we continue to expect to report approximately $1 million or less (net of applicable foreign tax credit) as the one-time deemed repatriation transition tax on unrepatriated foreign earnings upon our filing of the 2017 federal income tax return. Upon the enactment of the Act on December 22, 2017, we have re-measured certain deferred tax assets and liabilities using the new corporate tax rate of 21 percent, rather than the previous corporate tax rate of 35 percent, resulting in a $132 million decrease in our income tax expense for the year ended December 31, 2017. As of September 30, 2018, the re-measurement of our deferred tax balances continues to remain provisional without additional change as we continue to monitor additional guidance from the U.S. Department of the Treasury.

Furthermore, we have not yet elected an accounting policy to account for the tax upon Global Intangible Low-Taxed Income (“GILTI”) in either of the following ways: 1) as a period charge in the future period the tax arises or 2) as part of deferred taxesbenefit related to share-based compensation awards exercised or vested during the ~~investment or subsidiary, given the complexities of the GILTI taxation. As of September~~six months ended June 30, ~~2018, we have an insignificant amount of GILTI tax net of applicable foreign tax credit.~~2019.

We issue ~~time-vesting~~service-based restricted stock units (“Service RSUs”), ~~time~~service and ~~performance-vesting~~performance-based restricted stock units (“~~PSUs”~~Performance RSUs”) and nonqualified stock options (“~~options”~~Options”) to certain employees and directors. We recognized share-based compensation expense of $7 million and $5 million during the three months ended ~~September~~June 30, 2019 and 2018, respectively, and ~~2017~~$12 million and ~~$13~~$8 million ~~during~~for the ~~nine~~six months ended ~~September~~June 30, 2019 and 2018, ~~and 2017.~~respectively. As of ~~September~~June 30, ~~2018,~~2019, unrecognized compensation costs for unvested awards were approximately ~~$20~~$34 million, which is expected to be recognized over a weighted average period of ~~2.0~~1.9 years. As of ~~September~~June 30, ~~2018,~~2019, there were ~~7,324,752~~6,386,657 shares of common stock available for future issuance.

During the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, we issued ~~290,786~~500,925 Service RSUs with a ~~weighted average~~weighted-average grant date fair value of ~~$45.90,~~$33.07, which generally vest in equal annual installments over three years from the date of grant.

During the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019, we issued ~~312,141 options~~544,209 Options with a ~~weighted average~~weighted-average exercise price of ~~$46.48,~~$33.32, which vest over three years from the date of the grant.

The ~~weighted average~~weighted-average grant date fair value of these options was ~~$14.78,~~$12.29, which was determined using the Black-Scholes-Merton option-pricing model with the following assumptions:

As of ~~September~~June 30, ~~2018,~~2019, we had ~~373,282 options~~648,617 Options outstanding that were exercisable.

During the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, we issued ~~92,578 PSUs~~133,660 Performance RSUs with a ~~weighted average~~weighted-average grant date fair value of ~~$42.94.~~$33.32. The ~~PSUs~~Performance RSUs are settled at the end of a three-year performance period, with 70 percent of the ~~PSUs~~Performance RSUs subject to achievement based on the Company’s adjusted earnings before interest expense, taxes and depreciation and ~~amortization. This metric is~~amortization further adjusted byfor net impacts and recognitions of revenues and expenses related to sales of VOIs of projects under construction. The remaining 30 percent of the ~~PSUs~~Performance RSUs are subject to the achievement of certain ~~VOI~~contract sales targets. We determined that the performance conditions for these awards are probable of achievement and, as of ~~September~~June 30, ~~2018,~~2019, we recognized compensation expense based on the number of ~~PSUs~~Performance RSUs we expect to vest.

The following table presents the calculation of our basic and diluted earnings per share (“EPS”). The ~~weighted~~weighted- average shares outstanding used to compute basic EPS and diluted EPS for the three months ended ~~September~~June 30, ~~2018~~2019 is ~~96,840,685~~89,849,803 and ~~97,432,015,~~90,271,976, respectively, and for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 is ~~97,407,644~~91,959,041 and ~~98,142,238,~~92,421,752, respectively. The ~~weighted average~~weighted-average shares outstanding used to compute basic EPS and diluted EPS for the three months ended ~~September~~June 30, ~~2017~~2018 was ~~98,981,557~~96,774,130 and ~~99,730,483,~~97,463,820, respectively, and ~~for the nine~~six months ended ~~September~~June 30, ~~2017~~2018 was ~~98,916,894~~97,692,558 and ~~99,530,534,~~98,474,971, respectively.

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
($ and shares outstanding in millions, except per share amounts)	2018		2017		2018		2017		2019		2018		2019		2018
Basic EPS:
Numerator:
Net Income⁽¹⁾	$	41	$	43	$	178	$	144	$	39	$	107	$	94	$	137
Denominator:
Weighted average shares outstanding		97		99		97		99		90		97		92		98
Basic EPS	$	0.42	$	0.43	$	1.82	$	1.45	$	0.43	$	1.10	$	1.02	$	1.40
Diluted EPS:
Numerator:
Net Income⁽¹⁾	$	41	$	43	$	178	$	144	$	39	$	107	$	94	$	137
Denominator:
Weighted average shares outstanding		97		100		98		100		90		97		92		98
Diluted EPS	$	0.42	$	0.43	$	1.81	$	1.44	$	0.43	$	1.10	$	1.01	$	1.39

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 ~~nine~~six months ended ~~September~~June 30, 2019, we excluded1,433,833 and 1,168,159, respectively, and for the three and six months ended June 30, 2018, we excluded ~~533,721~~533,609 and ~~359,127~~341,246 share-based compensation awards, respectively, because their effect would have been anti-dilutive under the treasury stock method.

On March 13, 2018, we and HNA Tourism Group Co., Ltd. (“HNA”) and HNA HLT Holdco I LLC (the “Selling Stockholder”), an affiliate of HNA, entered into a Master Amendment and Option Agreement (the “Master Amendment and Option Agreement”) to make certain amendments to the Stockholders Agreement, dated October 24, 2016, between us and HNA (the “Stockholders Agreement”) and the Registration Rights Agreement, dated October 24, 2016, between us and HNA (the “Registration Rights Agreement”), among other things, (i) to permit the sale of up to all 24,750,000 shares of our common stock owned by the Selling Stockholder prior to the expiration of the two-year restricted period originally contained in the Stockholders Agreement, (ii) grant us a right to repurchase up to 4,340,000 shares of our common stock held by the Selling Stockholder, (iii) provide that HNA has customary “demand” registration rights effective March 13, 2018, (iv) require HNA to pay all expenses incurred under the Registration Rights Agreement for registrations or offerings occurring prior to a certain date and (v) eliminate HNA’s right to designate a certain number of directors to our board of directors. We exercised the repurchase option from the Selling Stockholder with respect to 2,500,000 shares at a price of approximately $44.75 per share.

~~On March 14, 2018, HGV and HNA entered into an underwriting agreement with~~ several underwriters, pursuant to which the underwriters agreed to purchase from the Selling Stockholder 22,250,000 shares of common stock, $0.01 par value per share, of the Company at a price of approximately $44.75 per share. ~~The sale was completed on March 19, 2018; consequently, HNA ceased to be a related party. We did not receive any proceeds from the sale.~~

~~On March 19, 2018, the repurchase was completed and the shares were retired.~~

In September 2017, Blackstone completed the sale of substantially all of our common stock that it owned and ceased to be a related party. For the three and nine months ended September 30, 2017, we earned $42 million and $135 million, respectively, in commission and other fees related to a fee-for-service arrangement with Blackstone affiliates to sell VOIs on their behalf.

In July 2017, we acquired a 25 percent 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.” During the three and six months ended ~~September~~June 30, ~~2018,~~2019, we recorded $1$2 million in and $3 million, respectively, of Equity in earnings from unconsolidated affiliates ~~included~~ in our condensed consolidated statements of ~~operation. There was no~~ operations. During the three and six months ended June 30, 2018, we recorded $2 million and $1 million, respectively, of Equity in ~~earnings~~losses from unconsolidated affiliates ~~for the nine months ended September 30, 2018.~~ in our condensed consolidated statements of operations. Additionally, we earn commissions and other fees related to a fee-for-service agreement with the investee to sell VOIs at Elara, by Hilton Grand Vacations. These amounts are summarized in the following table and are included in our condensed consolidated statements of operations as of the date they became a related party.

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2018		2017		2018		2017		2019		2018		2019		2018
Commission and other fees	$	32	$	43	$	96	$	43	$	32	$	32	$	68	$	64

~~Also~~We also have $27 million of outstanding receivables related to the fee-for-service agreement as of ~~September~~June 30, ~~2018, we have outstanding receivables of $27 million.~~2019.

OnIn March ~~23,~~ 2018, we entered into an agreement with SCG 1776, LLC to form 1776 Holding, LLC. In conjunction with this agreement, we contributed $5 million in cash for a 50 percent ownership interest in 1776 Holding, LLC. ~~For~~In May 2019, the agreement was amended to assign the interest of SCG 1776, LLC in 1776 Holding, LLC to 1776 Investment Group, LLC. In May 2019, we also contributed an additional $2 million in cash to 1776 Holding, LLC. During each of the three and ~~nine~~six months ended ~~September~~June 30, 2019 and 2018, we recorded less than $1 million, ~~loss~~ respectively, of Equity in earnings (losses) from unconsolidated affiliates included in ~~the~~our condensed consolidated statements of ~~operations as~~ ~~Equity in losses from unconsolidated affiliates.~~ operations. See Note 9: ~~Investment~~Investments in Unconsolidated Affiliates for additional information.

On March 13, 2018, HNA entered into an underwriting agreement with several underwriters to sell 22,250,000 shares of our common stock. In connection with the underwriting offer, we elected to purchase 2,500,000 shares at a price of approximately $44.75 per share. The transactions were completed on March 19, 2018 and HNA ceased to be a related party.

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”). We define Adjusted EBITDA as EBITDA which has been further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with: (i) asset dispositions; (ii) foreign currency transactions; (iii) debt restructurings/retirements; (iv) non-cash impairment losses; (v) reorganization costs, including severance and relocation costs; (vi) share-based and other compensation expenses; (vii) costs related to the spin-off; and (viii) other items.

We do not include equity in earnings (losses) from unconsolidated ~~affiliate~~affiliates in our measures of segment revenues.The following table presents revenues for our reportable segments reconciled to consolidated amounts:

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2018			2017			2018			2017			2019			2018			2019			2018
Revenues:
Real estate sales and financing	$	291		$	310		$	967		$	916		$	308		$	435		$	615		$	676
Resort operations and club management⁽¹⁾⁽²⁾		108			90			304			270			114			98			224			196
Total segment revenues		399			400			1,271			1,186			422			533			839			872
Cost reimbursements		36			34			110			102			43			38			85			74
Intersegment eliminations⁽¹⁾⁽²⁾		(8	)		(8	)		(24	)		(24	)		(11	)		(8	)		(20	)		(16	)
Total revenues	$	427		$	426		$	1,357		$	1,264		$	454		$	563		$	904		$	930

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2018			2017			2018			2017			2019			2018			2019			2018
Adjusted EBITDA:
Real estate sales and financing⁽¹⁾	$	67		$	81		$	274		$	263		$	69		$	163		$	149		$	207
Resort operations and club management⁽¹⁾		62			50			179			153			66			58			131			117
Segment Adjusted EBITDA		129			131			453			416			135			221			280			324
General and administrative		(31	)		(23	)		(84	)		(75	)		(29	)		(30	)		(54	)		(53	)
Depreciation and amortization		(9	)		(7	)		(25	)		(21	)		(13	)		(8	)		(23	)		(16	)
License fee expense		(25	)		(22	)		(73	)		(65	)		(26	)		(25	)		(49	)		(48	)
Gain on foreign currency transactions		—			1			—			1
Other (loss) gain, net														(1	)		1			(2	)		—
Interest expense		(7	)		(7	)		(22	)		(21	)		(11	)		(8	)		(21	)		(15	)
Income tax expense		(15	)		(28	)		(64	)		(87	)		(15	)		(39	)		(35	)		(49	)
Equity in earnings from unconsolidated affiliates		1			1			—			1
Other loss		(1	)		—			(1	)		—
Equity in earnings (losses) from unconsolidated affiliates														2			(2	)		3			(1	)
Other adjustment items		(1	)		(3	)		(6	)		(5	)		(3	)		(3	)		(5	)		(5	)
Net income	$	41		$	43		$	178		$	144		$	39		$	107		$	94		$	137

We have entered into certain arrangements with developers ~~whereby we have committed~~to commit to purchase vacation ownership units at a future date to be marketed and sold under our Hilton Grand Vacations brand. As of ~~September~~June 30, ~~2018,~~2019, we were committed to purchase approximately ~~$501~~$511 million of inventory and land over a period of ~~seven~~12 years. The ~~ultimate~~actual amount and timing of the acquisitions is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances. During the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, we purchased ~~$18~~$28 million and $9$4 million, respectively, of VOI inventory as required under our commitments. As of ~~September~~June 30, ~~2018,~~2019, our remaining obligation pursuant to these arrangements ~~was~~were expected to be incurred as follows:

($ in millions)	Purchase Obligations		Purchase Obligations
Year
2018 (remaining)	$	—
2019		127
2019 (remaining)			$	38
2020		160		220
2021		79		87
2022		52		57
2023				54
Thereafter		83		55
Total	$	501	$	511

We are involved in litigation arising from the normal course of business, some of which includes claims for substantial sums. Management has ~~also identified certain other~~evaluated these legal matters ~~where~~and we believe that possible losses derived from an unfavorable outcome that is reasonably possible ~~and/~~or ~~for which possible losses are~~remote is not reasonably estimable. While the ~~ultimate~~actual results of claims and litigation cannot be predicted with certainty, we expect that the ~~ultimate~~ resolution of all pending or threatened claims and litigation as of ~~September~~June 30, ~~2018,~~2019, will not ~~have a material effect on~~materially affect our unaudited condensed consolidated financial statements.

The following schedules present the unaudited condensed consolidating financial information as of ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017~~2018 and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 for the Parent, Subsidiary Issuers, Guarantors and Non-Guarantors.

	September 30, 2018													June 30, 2019
($ in millions)	Parent		Issuers		Guarantors		Non- Guarantors		Eliminations			Total		Parent		Issuers		Guarantors		Non- Guarantors		Eliminations			Total
ASSETS
Cash and cash equivalents	$	—	$	—	$	134	$	11	$	—		$	145	$	7	$	—	$	93	$	20	$	—		$	120
Restricted cash		—		—		41		26		—			67		—		—		41		26		—			67
Accounts receivable, net		—		—		154		9		(12	)		151		—		—		156		20		(20	)		156
Timeshare financing receivables, net		—		—		267		836		—			1,103		—		—		332		793		—			1,125
Inventory		—		—		558		24		—			582		—		—		496		40		—			536
Property and equipment, net		—		—		533		5		—			538		—		—		666		7		—			673
Investment in unconsolidated affiliates		—		—		33		—		—			33
Operating lease right-of-use assets, net																			63		—		—			63
Investments in unconsolidated affiliates															—		—		43		—		—			43
Intangible assets, net		—		—		73		—		—			73		—		—		84		—		—			84
Other assets		—		1		70		50		—			121		—		6		67		49		—			122
Investments in subsidiaries		562		1,091		143		—		(1,796	)		—		443		1,347		243		—		(2,033	)		—
TOTAL ASSETS	$	562	$	1,092	$	2,006	$	961	$	(1,808	)	$	2,813	$	450	$	1,353	$	2,284	$	955	$	(2,053	)	$	2,989
LIABILITIES AND EQUITY
Accounts payable, accrued expenses and other	$	—	$	—	$	337	$	12	$	(12	)	$	337	$	—	$	—	$	317	$	15	$	(20	)	$	312
Advanced deposits		—		—		100		—		—			100		—		—		108		—		—			108
Debt, net		—		530		—		—		—			530		—		910		27		—		—			937
Non-recourse debt, net		—		—		—		806		—			806		—		—		—		696		—			696
Operating lease liabilities															—		—		76		—		—			76
Deferred revenues		—		—		263		—		—			263		—		—		163		—		—			163
Deferred income tax liabilities		—		—		215		—		—			215		—		—		246		1		—			247
Total equity		562		562		1,091		143		(1,796	)		562		450		443		1,347		243		(2,033	)		450
TOTAL LIABILITIES AND EQUITY	$	562	$	1,092	$	2,006	$	961	$	(1,808	)	$	2,813	$	450	$	1,353	$	2,284	$	955	$	(2,053	)	$	2,989

December 31, 2017

($ in millions)

Parent

Issuers

Guarantors

Non-
Guarantors

Eliminations

Total

ASSETS

Cash and cash equivalents

$
—

$
—

$
230

$
16

$
—

$
246

Restricted cash

—

—

29

22

—

51

Accounts receivable, net

—

—

113

5

(6
)

112

Timeshare financing receivables, net

—

—

457

614

—

1,071

Inventory

—

—

509

—

—

509

Property and equipment, net

—

—

232

6

—

238

Investment in unconsolidated affiliate

—

—

41

—

—

41

Intangible assets, net

—

—

72

—

—

72

Other assets

—

2

36

7

(1
)

44

Investments in subsidiaries

518

999

81

—

(1,598
)

—

TOTAL ASSETS

$
518

$
1,001

$
1,800

$
670

$
(1,605
)

$
2,384

LIABILITIES AND EQUITY

Accounts payable, accrued
expenses and other

$
—

$
1

$
338

$
7

$
(7
)

$
339

Advanced deposits

—

—

104

—

—

104

Debt, net

—

482

—

—

—

482

Non-recourse debt, net

—

—

—

583

—

583

Deferred revenues

—

—

109

—

—

109

Deferred income tax liabilities

—

—

250

(1
)

—

249

Total equity

518

518

999

81

(1,598
)

518

TOTAL LIABILITIES AND EQUITY

$
518

$
1,001

$
1,800

$
670

$
(1,605
)

$
2,384

For the Three Months Ended September 30, 2018

($ in millions)

Parent

Issuers

Guarantors

Non-
Guarantors

Eliminations

Total

Revenues

Sales of VOI’s, net

$
—

$
—

$
97

$
2

$
—

$
99

Sales, marketing, license and other fees

—

—

151

1

—

152

Financing

—

—

17

26

(3
)

40

Resort and club management

—

—

40

—

—

40

Rental and ancillary service

—

—

59

1

—

60

Cost reimbursements

—

—

35

1

—

36

Total revenues

—

—

399

31

(3
)

427

Expenses

Cost of VOI sales

—

—

29

—

—

29

Sales and marketing

—

—

172

2

—

174

Financing

—

—

4

11

(3
)

12

Resort and club management

—

—

11

—

—

11

Rental and ancillary service

—

—

36

1

—

37

General and administrative

—

—

30

1

—

31

Depreciation and amortization

—

—

9

—

—

9

License fee expense

—

—

25

—

—

25

Cost reimbursements

—

—

35

1

—

36

Total operating expenses

—

—

351

16

(3
)

364

Interest expense

—

(7
)

—

—

—

(7
)
Equity in earnings from unconsolidated
affiliates

—

—

1

—

—

1

Other loss

—

—

(1
)

—

—

(1
)
Income (loss) before income taxes

—

(7
)

48

15

—

56

Income tax expense

—

—

(15
)

—

—

(15
)
Income (loss) before equity in earnings
(loss) from subsidiaries

—

(7
)

33

15

—

41

Equity in earnings from subsidiaries

41

48

15

—

(104
)

—

Net income

$
41

$
41

$
48

$
15

$
(104
)

$
41

For the Three Months Ended September 30, 2017

($ in millions)

Parent

Issuers

Guarantors

Non-
Guarantors

Eliminations

Total

Revenues

Sales of VOI’s, net

$
—

$
—

$
137

$
8

$
—

$
145

Sales, marketing, license and other fees

—

—

133

—

(6
)

127

Financing

—

—

19

21

(2
)

38

Resort and club management

—

—

37

—

—

37

Rental and ancillary service

—

—

44

1

—

45

Cost reimbursements

—

—

34

—

—

34

Total revenues

—

—

404

30

(8
)

426

Expenses

Cost of VOI sales

—

—

40

—

—

40

Sales and marketing

—

—

172

5

(6
)

171

Financing

—

—

4

9

(2
)

11

Resort and club management

—

—

12

—

—

12

Rental and ancillary service

—

—

30

—

—

30

General and administrative

—

—

23

—

—

23

Depreciation and amortization

—

—

7

—

—

7

License fee expense

—

—

22

—

—

22

Cost reimbursements

—

—

34

—

—

34

Total operating expenses

—

—

344

14

(8
)

350

Gain on foreign currency transaction

—

—

1

—

—

1

Interest expense

—

(7
)

—

—

—

(7
)
Equity in earnings from unconsolidated affiliates

—

—

1

—

—

1

Income (loss) before income taxes

—

(7
)

62

16

—

71

Income tax expense

—

—

(27
)

(1
)

—

(28
)
Income (loss) before equity in earnings
(loss) from subsidiaries

—

(7
)

35

15

—

43

Equity in earnings from subsidiaries

43

50

15

—

(108
)

—

Net income

$
43

$
43

$
50

$
15

$
(108
)

$
43

	December 31, 2018
($ in millions)	Parent		Issuers		Guarantors		Non- Guarantors		Eliminations			Total
ASSETS
Cash and cash equivalents	$	4	$	—	$	89	$	15	$	—		$	108
Restricted cash		—		—		45		27		—			72
Accounts receivable, net		—		—		157		17		(21	)		153
Timeshare financing receivables, net		—		—		209		911		—			1,120
Inventory		—		—		502		25		—			527
Property and equipment, net		—		—		553		6		—			559
Investments in unconsolidated affiliate		—		—		38		—		—			38
Intangible assets, net		—		—		81		—		—			81
Other assets		—		6		41		48		—			95
Investments in subsidiaries		612		1,210		277		—		(2,099	)		—
TOTAL ASSETS	$	616	$	1,216	$	1,992	$	1,049	$	(2,120	)	$	2,753
LIABILITIES AND EQUITY
Accounts payable, accrued expenses and other	$	—	$	—	$	332	$	13	$	(21	)	$	324
Advanced deposits		—		—		101		—		—			101
Debt, net		—		604		—		—		—			604
Non-recourse debt, net		—		—		—		759		—			759
Deferred revenues		—		—		95		—		—			95
Deferred income tax liabilities		—		—		254		—		—			254
Total equity		616		612		1,210		277		(2,099	)		616
TOTAL LIABILITIES AND EQUITY	$	616	$	1,216	$	1,992	$	1,049	$	(2,120	)	$	2,753

	For the Nine Months Ended September 30, 2018																For the Three Months Ended June 30, 2019
($ in millions)	Parent		Issuers			Guarantors			Non- Guarantors		Eliminations			Total			Parent			Issuers			Guarantors			Non- Guarantors			Eliminations			Total
Revenues
Sales of VOI’s, net	$	—	$	—		$	422		$	5	$	—		$	427
Sales of VOIs, net																	$	—		$	—		$	103		$	17		$	—		$	120
Sales, marketing, license and other fees		—		—			424			3		(4	)		423			—			—			154			3			(12	)		145
Financing		—		—			54			68		(5	)		117			—			—			20			25			(2	)		43
Resort and club management		—		—			116			—		—			116			—			—			43			—			—			43
Rental and ancillary service		—		—			162			2		—			164
Rental and ancillary services																		—			—			60			—			—			60
Cost reimbursements		—		—			107			3		—			110			—			—			42			1			—			43
Total revenues		—		—			1,285			81		(9	)		1,357			—			—			422			46			(14	)		454
Expenses
Cost of VOI sales		—		—			109			—		—			109			—			—			28			4			—			32
Sales and marketing		—		—			526			6		(4	)		528			—			—			187			11			(12	)		186
Financing		—		—			14			26		(5	)		35			—			—			4			10			(2	)		12
Resort and club management		—		—			33			—		—			33			—			—			12			—			—			12
Rental and ancillary service		—		—			93			2		—			95
Rental and ancillary services																		—			—			36			1			—			37
General and administrative		—		—			83			1		—			84			—			—			29			—			—			29
Depreciation and amortization		—		—			25			—		—			25			—			—			13			—			—			13
License fee expense		—		—			73			—		—			73			—			—			25			1			—			26
Cost reimbursements		—		—			107			3		—			110			—			—			42			1			—			43
Total operating expenses		—		—			1,063			38		(9	)		1,092			—			—			376			28			(14	)		390
Interest expense		—		(22	)		—			—		—			(22	)		—			(11	)		—			—			—			(11	)
Other loss		—		—			(1	)		—		—			(1	)
Income (loss) before income taxes		—		(22	)		221			43		—			242
Dividends from subsidiary																		150			150			—			—			(300	)		—
Equity in earnings from unconsolidated affiliates																		—			—			2			—			—			2
Other loss, net																		—			—			(1	)		—			—			(1	)
Income before income taxes																		150			139			47			18			(300	)		54
Income tax expense		—		—			(64	)		—		—			(64	)		—			—			(14	)		(1	)		—			(15	)
Income (loss) before equity in earnings (loss) from subsidiaries		—		(22	)		157			43		—			178
Equity in earnings from subsidiaries		178		200			43			—		(421	)		—
Income before equity in earnings from subsidiaries																		150			139			33			17			(300	)		39
Equity in (losses) earnings from subsidiaries																		(111	)		50			17			—			44			—
Net income	$	178	$	178		$	200		$	43	$	(421	)	$	178		$	39		$	189		$	50		$	17		$	(256	)	$	39

	For the Nine Months Ended September 30, 2017																	For the Three Months Ended June 30, 2018
($ in millions)	Parent		Issuers			Guarantors			Non- Guarantors			Eliminations			Total			Parent		Issuers			Guarantors			Non- Guarantors		Eliminations			Total
Revenues
Sales of VOI’s, net	$	—	$	—		$	380		$	26		$	—		$	406
Sales of VOIs, net																		$	—	$	—		$	248		$	2	$	—		$	250
Sales, marketing, license and other fees		—		—			407			2			(8	)		401			—		—			147			1		(2	)		146
Financing		—		—			50			64			(5	)		109			—		—			17			23		(1	)		39
Resort and club management		—		—			106			2			—			108			—		—			37			—		—			37
Rental and ancillary service		—		—			136			2			—			138
Rental and ancillary services																			—		—			53			—		—			53
Cost reimbursements		—		—			99			3			—			102			—		—			37			1		—			38
Total revenues		—		—			1,178			99			(13	)		1,264			—		—			539			27		(3	)		563
Expenses
Cost of VOI sales		—		—			105			2			—			107			—		—			61			—		—			61
Sales and marketing		—		—			487			13			(8	)		492			—		—			193			2		(2	)		193
Financing		—		—			13			24			(5	)		32			—		—			5			8		(1	)		12
Resort and club management		—		—			30			2			—			32			—		—			11			—		—			11
Rental and ancillary service		—		—			87			1			—			88
Rental and ancillary services																			—		—			30			—		—			30
General and administrative		—		—			72			3			—			75			—		—			30			—		—			30
Depreciation and amortization		—		—			21			—			—			21			—		—			8			—		—			8
License fee expense		—		—			65			—			—			65			—		—			25			—		—			25
Cost reimbursements		—		—			99			3			—			102			—		—			37			1		—			38
Total operating expenses		—		—			979			48			(13	)		1,014			—		—			400			11		(3	)		408
Gain on foreign currency transactions		—		—			1			—			—			1
Interest expense		—		(21	)		—			—			—			(21	)		—		(8	)		—			—		—			(8	)
Equity in earnings from unconsolidated affiliates		—		—			1			—			—			1
Equity in losses from unconsolidated affiliates																			—		—			(2	)		—		—			(2	)
Other gain, net																			—		—			1			—		—			1
Income (loss) before income taxes		—		(21	)		201			51			—			231			—		(8	)		138			16		—			146
Income tax expense		—		—			(86	)		(1	)		—			(87	)		—		—			(39	)		—		—			(39	)
Income (loss) before equity in earnings (loss) from subsidiaries		—		(21	)		115			50			—			144			—		(8	)		99			16		—			107
Equity in earnings from subsidiaries		144		165			50			—			(359	)		—			107		115			16			—		(238	)		—
Net income	$	144	$	144		$	165		$	50		$	(359	)	$	144		$	107	$	107		$	115		$	16	$	(238	)	$	107

For the Nine Months Ended September 30, 2018

($ in millions)

Parent

Issuers

Guarantors

Non-
Guarantors

Eliminations

Total

Operating Activities

Net cash (used in) provided by operating
   activities

$
—

$
(20
)

$
10

$
(241
)

$
46

$
(205
)
Investing Activities

Capital expenditures for property and
   equipment

—

—

(25
)

(4
)

—

(29
)
Software capitalization costs

—

—

(12
)

—

—

(12
)
Return of investment from unconsolidated
   affiliates

—

—

11

—

—

11

Investment in unconsolidated affiliate

—

—

(5
)

—

—

(5
)
Net cash used in investing activities

—

—

(31
)

(4
)

—

(35
)
Financing Activities

Issuance of debt

—

215

—

—

—

215

Issuance of non-recourse debt

—

—

—

663

—

663

Repurchase and retirement of common stock

—

(112
)

—

—

—

(112
)
Repayment of debt

—

(168
)

—

—

—

(168
)
Repayment of non-recourse debt

—

—

—

(436
)

—

(436
)
Debt issuance costs

—

—

—

(6
)

—

(6
)
Payment of withholding taxes on vesting of
   restricted stock units

—

(4
)

—

—

—

(4
)
Capital contribution

—

3

—

—

—

3

Intercompany transfers

—

86

(63
)

23

(46
)

—

Net cash provided by (used in) financing
   activities

—

20

(63
)

244

(46
)

155

Net decrease in cash, cash
   equivalents and restricted cash

—

—

(84
)

(1
)

—

(85
)
Cash, cash equivalents and restricted cash,
   beginning of period

—

—

259

38

—

297

Cash, cash equivalents and restricted cash,
   end of period

$
—

$
—

$
175

$
37

$
—

$
212

	For the Six Months Ended June 30, 2019
($ in millions)	Parent			Issuers			Guarantors			Non- Guarantors			Eliminations			Total
Revenues
Sales of VOIs, net	$	—		$	—		$	210		$	35		$	—		$	245
Sales, marketing, license and other fees		—			—			305			4			(23	)		286
Financing		—			—			38			50			(4	)		84
Resort and club management		—			—			85			—			—			85
Rental and ancillary services		—			—			118			1			—			119
Cost reimbursements		—			—			83			2			—			85
Total revenues		—			—			839			92			(27	)		904
Expenses
Cost of VOI sales		—			—			61			7			—			68
Sales and marketing		—			—			357			22			(23	)		356
Financing		—			—			8			21			(4	)		25
Resort and club management		—			—			23			—			—			23
Rental and ancillary services		—			—			70			2			—			72
General and administrative		—			—			54			—			—			54
Depreciation and amortization		—			—			23			—			—			23
License fee expense		—			—			47			2			—			49
Cost reimbursements		—			—			83			2			—			85
Total operating expenses		—			—			726			56			(27	)		755
Interest expense		—			(21	)		—			—			—			(21	)
Dividends from subsidiary		275			275			—			—			(550	)		—
Equity in earnings from unconsolidated affiliates		—			—			3			—			—			3
Other loss, net		—			—			(2	)		—			—			(2	)
Income before income taxes		275			254			114			36			(550	)		129
Income tax expense		—			—			(34	)		(1	)		—			(35	)
Income before equity in earnings from subsidiaries		275			254			80			35			(550	)		94
Equity in (losses) earnings from subsidiaries		(181	)		115			35			—			31			—
Net income	$	94		$	369		$	115		$	35		$	(519	)	$	94

	For the Six Months Ended June 30, 2018
($ in millions)	Parent		Issuers			Guarantors			Non- Guarantors		Eliminations			Total
Revenues
Sales of VOIs, net	$	—	$	—		$	325		$	3	$	—		$	328
Sales, marketing, license and other fees		—		—			273			2		(4	)		271
Financing		—		—			37			42		(2	)		77
Resort and club management		—		—			76			—		—			76
Rental and ancillary services		—		—			103			1		—			104
Cost reimbursements		—		—			72			2		—			74
Total revenues		—		—			886			50		(6	)		930
Expenses
Cost of VOI sales		—		—			80			—		—			80
Sales and marketing		—		—			354			4		(4	)		354
Financing		—		—			10			15		(2	)		23
Resort and club management		—		—			22			—		—			22
Rental and ancillary services		—		—			57			1		—			58
General and administrative		—		—			53			—		—			53
Depreciation and amortization		—		—			16			—		—			16
License fee expense		—		—			48			—		—			48
Cost reimbursements		—		—			72			2		—			74
Total operating expenses		—		—			712			22		(6	)		728
Interest expense		—		(15	)		—			—		—			(15	)
Equity in losses from unconsolidated affiliates		—		—			(1	)		—		—			(1	)
Income (loss) before income taxes		—		(15	)		173			28		—			186
Income tax expense		—		—			(49	)		—		—			(49	)
Income (loss) before equity in earnings (loss) from subsidiaries		—		(15	)		124			28		—			137
Equity in earnings from subsidiaries		137		152			28			—		(317	)		—
Net income	$	137	$	137		$	152		$	28	$	(317	)	$	137

	For the Nine Months Ended September 30, 2017																	For the Six Months Ended June 30, 2019
($ in millions)	Parent		Issuers			Guarantors			Non- Guarantors			Eliminations			Total			Parent			Issuers			Guarantors			Non- Guarantors			Eliminations			Total
Operating Activities
Net cash provided by operating activities	$	—	$	(16	)	$	135		$	190		$	(10	)	$	299
Net cash provided by (used in) operating activities																		$	—		$	254		$	(43	)	$	136		$	(275	)	$	72
Investing Activities
Capital expenditures for property and equipment		—		—			(23	)		(2	)		—			(25	)		—			—			(17	)		—			—			(17	)
Software capitalization costs		—		—			(12	)		—			—			(12	)		—			—			(11	)		—			—			(11	)
Investment in unconsolidated affiliates		—		—			(40	)		—			—			(40	)
Net cash used in investing activities		—		—			(75	)		(2	)		—			(77	)
Investments in unconsolidated affiliates																			—			—			(2	)		—			—			(2	)
Dividends from subsidiary																			275			275			—			—			(550	)		—
Net cash used in (provided by) investing activities																			275			275			(30	)		—			(550	)		(30	)
Financing Activities
Issuance of debt																			—			410			—			—			—			410
Issuance of non-recourse debt		—		—			—			350			—			350			—			—			—			15			—			15
Repayment of debt		—		(7	)		—			—			—			(7	)		—			(100	)		(5	)		—			—			(105	)
Repayment of non-recourse debt		—		—			—			(428	)		—			(428	)		—			—			—			(79	)		—			(79	)
Debt issuance costs		—		—			—			(5	)		—			(5	)		—			—			—			(2	)		—			(2	)
Proceeds from stock option exercises		—		—			1			—			—			1
Repurchase and retirement of common stock																			(271	)		—			—			—			—			(271	)
Payment of withholding taxes on vesting of restricted stock units																			—						(3	)		—			—			(3	)
Proceeds from employee stock plan purchases																			—			—			2			—			—			2
Other financing activity																			—			—			(2	)		—			—			(2	)
Intercompany transfers		—		23			60			(93	)		10			—			(1	)		(839	)		81			(66	)		825			—
Net cash (used in) provided by financing activities		—		16			61			(176	)		10			(89	)
Net cash used in (provided by) financing activities																			(272	)		(529	)		73			(132	)		825			(35	)
Net increase in cash, cash equivalents and restricted cash		—		—			121			12			—			133			3			—			—			4			—			7
Cash, cash equivalents and restricted cash, beginning of period		—		—			128			23			—			151			4			—			134			42			—			180
Cash, cash equivalents and restricted cash, end of period	$	—	$	—		$	249		$	35		$	—		$	284		$	7		$	—		$	134		$	46		$	—		$	187

	For the Six Months Ended June 30, 2018
($ in millions)	Parent		Issuers			Guarantors			Non- Guarantors			Eliminations			Total
Operating Activities
Net cash (used in) provided by operating activities	$	—	$	(14	)	$	42		$	(205	)	$	43		$	(134	)
Investing Activities
Capital expenditures for property and equipment		—		—			(18	)		(2	)		—			(20	)
Software capitalization costs		—		—			(9	)		—			—			(9	)
Return of investment from unconsolidated affiliates		—		—			11			—			—			11
Investment in unconsolidated affiliates		—		—			(5	)		—			—			(5	)
Net cash used in investing activities		—		—			(21	)		(2	)		—			(23	)
Financing Activities
Issuance of debt		—		160			—			—			—			160
Issuance of non-recourse debt		—		—			—			100			—			100
Repurchase and retirement of common stock		—		(112	)		—			—			—			(112	)
Repayment of non-recourse debt		—		—			—			(80	)		—			(80	)
Repayment of debt		—		(5	)		—			—			—			(5	)
Debt issuance costs		—		—			—			(2	)		—			(2	)
Payment of withholding taxes on vesting of restricted stock units		—		(1	)		—			—			—			(1	)
Capital contribution		—		3			—			—			—			3
Intercompany transfers		—		(31	)		(111	)		185			(43	)		—
Net cash provided by (used in) financing activities		—		14			(111	)		203			(43	)		63
Net decrease in cash, cash equivalents and restricted cash		—		—			(90	)		(4	)		—			(94	)
Cash, cash equivalents and restricted cash, beginning of period		—		—			259			38			—			297
Cash, cash equivalents and restricted cash, end of period	$	—	$	—		$	169		$	34		$	—		$	203

In ~~October 2018,~~July 2019, we executed the ~~construction on a property in Hawaii was completed and the deferred revenue and direct related costs of $154 million and $72 million, respectively, will be recognized in the fourth quarter.~~following transactions:

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as ~~amended (the “Exchange Act”). These forward-looking~~amended. Forward-looking statements convey management’s expectations as to our future, and are based on ~~our~~ management’s beliefs, expectations, ~~and~~ assumptions and such plans, estimates, projections and other information ~~currently~~ available to management at the time we make such statements. Forward-looking statements include all statements that are not historical facts and may be identified by terminology such as the words “outlook,” “believe,” “expect,” “potential,” “goal,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “projects,” predicts,” “intends,” “plans,” “estimates,” “anticipates” “future,” “guidance,” “target,” or the negative version of these words or other comparable words. The forward-looking statements contained in this Report include statements related to our ~~management,~~revenues, earnings, taxes, cash flow and related financial and operating measures, and expectations with respect to future operating, financial and business performance, and other anticipated future events and expectations that are ~~subject~~not historical facts.

We caution you that our forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to ~~risks~~be materially different from the future results, business performance or achievements expressed in or implied by such statements. The forward-looking statements in this Report are not guarantees of our future performance, and ~~uncertainties. Actual~~you should not place undue reliance on such statements. Factors that could cause our actual results ~~could~~to differ materially ~~because of factors such as:~~ from those contemplated by our forward-looking statements include: risks associated with the inherent business, financial and operating risks of the timeshare industry, including limited underwriting standards due to the real-time nature of industry sales practices, and the intense competition associated with the industry; our ability successfully market and sell VOIs; our development and other activities to source inventory for VOI sales; significant increases in defaults on HGV’s vacation ownership mortgage receivables; the ability of managed homeowner associations to collect sufficient maintenance fees; general volatility in the economy and/or the financial and credit markets; adverse economic or market conditions ~~that~~and trends in the tourism and hospitality industry, which may ~~affect~~impact the purchasing and vacationing decisions of ~~consumers~~consumers; our actions or ~~otherwise harm our business; intense competition in~~ the ~~timeshare industry, which~~occurrence of other events that could ~~lead to lower revenue~~cause a breach under or ~~operating margins; the~~ termination of ~~material fee-for-service agreements~~our license agreement with ~~third parties;~~Hilton that could affect or terminate our access to the ~~ability~~Hilton brands and programs, or actions of Hilton that affect the reputation of the ~~Company~~ licensed marks or Hilton’s programs; economic and operational uncertainties related to our expanding global operations, including our ability to manage ~~risks associated~~the outcome and timing of such operations and compliance with ~~our international activities, including complying with~~anti-corruption, data privacy and other applicable laws and regulations affecting our international operations; ~~exposure to increased economic and operational uncertainties from expanding global operations, including~~ the effects of foreign currency exchange; ~~potential liability under anti-corruption and other laws resulting from our global operations;~~ changes in tax rates and exposure to additional tax liabilities; the impact of future changes in legislation, regulations or accounting pronouncements; HGV’s acquisitions, joint ventures, and strategic alliances that that may not result in expected benefits, ~~and that may have an adverse effect on our business;~~including the termination of material fee-for-service agreements; our dependence on third-party development activities to secure just-in-time inventory; our use of social media platforms; cyber-attacks, ~~and~~ security vulnerabilities, ~~that~~and information technology system failures resulting in disclosure of personal data, company data loss, system outages or disruptions of our online services, which could lead to reduced revenue, increased costs, liability claims, orharm to user engagement, and harm to our reputation or competitive position; ~~disclosure~~the impact of personal data that could cause liability and harm to our reputation; abuse of our advertising or social platforms that may harm our reputation or user engagement; outages, data losses, and disruptions of our online services; claims against us that may result in adverse outcomes, ~~in legal disputes; risks associated with~~including regulatory proceedings or litigation; our credit facilities, indenture and other debt agreements and instruments, including variable interest rates, operating and financial restrictions, our ability to make scheduled payments, and our ability to ~~service~~refinance our ~~indebtedness;~~debt on acceptable terms; the continued service and availability of key executives and employees; and catastrophic events or ~~geopolitical~~geo-political conditions including war, terrorist activity, political strife or natural disasters that may disrupt our ~~business. Forward-looking statements include all statements that are not historical facts and can be identified by~~operations in key vacation destinations. Any one or more of the use of forward-looking terminology such as the words “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” foregoing factors could adversely impact our operations, revenue, operating margins, financial condition and/or ~~the negative version of these words or other comparable words.~~credit rating.

~~You should not put undue reliance on any~~For additional information regarding factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements in this ~~Quarterly~~ Report, ~~on Form 10-Q. The~~please see the risk factors discussed in ~~our filings with the Securities and Exchange Commission, including~~ “Part I—Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, “Part II – Item 1A. Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, “Part II-Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, and those described from time to time ~~in our future~~other periodic reports ~~could cause our results to differ materially from those expressed in forward-looking statements.~~that we file with the SEC. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business. WeExcept for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to publicly update or review any forward-looking statement, ~~or information to conform to actual results,~~ whether as a result of new information, future developments, changes in ~~the Company’s~~management’s expectations, or ~~otherwise, except as required by law.~~otherwise.

Except where the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Hilton Grand Vacations,” “HGV,” “the Company,” “we,” “us” and “our” refer to Hilton Grand Vacations Inc., together with its consolidated subsidiaries. Except where the context requires otherwise, references to our “properties” and “rooms” refer to the timeshare properties managed, franchised, owned or leased by us. Of these properties and rooms, a portion are directly owned or leased by us or joint ventures in which we have an interest and the remaining properties and rooms are owned by third-party owners.

“Developed” refers VOI inventory that is sourced from projects developed by HGV.

“Fee for service” refers to VOI inventory that we sell and manage on behalf of third-party developers.

“Just-in-time” refers to VOI inventory that is primarily sourced in transactions that are designed to closely correlate the timing of the acquisition by us with our sale of that inventory to purchasers.

This Quarterly Report on Form 10-Q includes discussion of terms that are not recognized terms under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), and financial measures that are not calculated in accordance with U.S. GAAP, including contract sales, sales revenue, real estate margin, ~~tour flow, volume per guest, transient rate,~~ earnings before interest expense (excluding interest expense relating to our non-recourse debt), taxes and depreciation and amortization (“EBITDA”), Adjusted EBITDA and segment Adjusted EBITDA.

This Quarterly Report on Form 10-Q includes discussion of key business operational metrics including tour flow, volume per guest and transient rate.

See ~~“Management’s Discussion and Analysis of Financial Condition and Results of Operations-Key~~“Key Business and Financial Metrics and Terms Used by Management” and “-Results of Operations” for a discussion of the meanings of these terms, the Company’s reasons for providing non-GAAP financial measures, and reconciliations of non-GAAP financial measures to measures calculated in accordance with U.S. GAAP.

We are a ~~rapidly~~ growing timeshare company that markets and sells VOIs, manages resorts in top leisure and urban destinations, and operates a points-based vacation club. ~~During the nine months ended September 30, 2018, among other new developments and asset acquisitions, we added two new resorts in New York and one resort in Odawara, Japan, representing 265 units.~~ As of ~~September~~June 30, ~~2018,~~2019, we have 5157 properties, representing ~~8,367~~9,177 units, which are located in iconic vacation destinations such as the Hawaiian Islands, New York City, Orlando and Las Vegas, and feature spacious, condominium-style accommodations with superior amenities and quality service. As of ~~September~~June 30, ~~2018,~~2019, we have approximately ~~304,000~~317,000 Hilton Grand Vacations Club (the “Club”) members. Club members have the flexibility to exchange their VOIs for stays at any Hilton Grand Vacations resort or any property in the Hilton system of 1417 industry-leading brands across more than ~~5,000~~5,700 properties, as well as numerous experiential vacation options, such as cruises and guided tours.

We operate our business across two segments: (1) real estate sales and financing; and (2) resort operations and club management.

Our primary product is the marketing and selling of fee-simple VOIs deeded in perpetuity, developed either by us or by third parties. This ownership interest is an interest in real estate generally equivalent to one week annually at the timeshare resort where the VOI was purchased. Traditionally, timeshare operators have funded 100 percent of the investment necessary to acquire land and construct timeshare properties. In 2010, we began sourcing VOIs through fee-for-service and just-in-time agreements with third-party developers and have successfully transformed from a capital-intensive business to one that is highly capital-efficient. The fee-for-service agreements enable us to generate fees from the sales and marketing of the VOIs and Club memberships and from the management of the timeshare properties without requiring us to

fund acquisition and construction costs. The just-in-time agreements enable us to source VOI inventory in a manner that allows us to correlate the timing of acquisition of the inventory ~~by us~~ with the sale to purchasers. Sales of owned, ~~inventory,~~ including ~~purchased~~ just-in-time inventory, generally result in greater Adjusted EBITDA contributions, while fee-for-service sales require less initial investment and allow us to accelerate our sales growth. Both sales of owned inventory and fee-for-service sales generate long-term, predictable fee streams, by adding to the Club membership base and properties under management, that generate strong returns on invested capital.

For the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, sales from fee-for-service, just-in-time and developed inventory sources were 55 percent, 2217 percent and 2328 percent, respectively, of contract sales. See “—“Key Business and Financial Metrics and Terms Used by Management——Real Estate Sales Metrics” for additional discussion of contract sales. Based on our trailing twelve months sales pace, we have access to approximately ~~six~~seven years of future inventory, with capital efficient arrangements representing approximately 6656 percent of that supply. We believe that the visibility into our long-term supply allows us to efficiently manage inventory to meet predicted sales, reduce capital investments, minimize our exposure to the cyclicality of the real estate market and mitigate the risks of entering into new markets.

We ~~originate loans~~provide financing for members purchasing our developed and acquired inventory ~~which~~and generate interest income. Our ~~loans~~timeshare financing receivables are collateralized by the underlying VOIs and are generally structured as 10-year, fully-amortizing ~~loans~~receivables that bear a fixed interest rate typically ranging from 9nine percent to 18 percent per annum.

The interest rate on our ~~loans~~timeshare financing receivables is determined by, among other factors, the amount of the down payment, the borrower’s credit profile and the ~~loan~~receivable term. The weighted average FICO score for new ~~loans~~timeshare financing receivables to U.S. and Canadian borrowers at the time of origination were as follows:

Prepayment is permitted without penalty. When a member defaults, we ultimately return their VOI to inventory for resale and that member no longer participates in our Club.

Some of our ~~loans~~timeshare financing receivables have been pledged as collateral in our securitization transactions, which have in the past and may in the future provide funding for our business activities. In these securitization transactions, special purpose entities are established to issue various classes of debt securities which are generally collateralized by a single pool of assets, consisting of timeshare financing receivables that we service and related cash deposits. For additional information see Note 5: Timeshare Financing Receivables in our unaudited condensed consolidated financial statements.

In addition, we earn fees from servicing our securitized ~~loan portfolio~~timeshare financing receivables and the ~~loans~~timeshare financing receivables provided by third-party developers of our fee-for-service projects to purchasers of their VOIs.

We enter into a management ~~agreement~~agreements with the ~~homeowners’ association (“HOA”)~~HOA of the VOI owners for timeshare resorts developed by us or a third party. Each of the HOAs is governed by a board of directors comprising owner and developer representatives that are charged with ensuring the resorts are well-maintained and financially stable. Our management services include day-to-day operations of the resorts, maintenance of the resorts, preparation of reports, budgets and projections and employee training and oversight. Our HOA management agreements provide for a cost-plus management fee, which means we generally earn a fee equal to 10 percent to 15 percent of the costs to operate the applicable resort. The fees we earn are highly predictable due to the relatively fixed nature of resort operating expenses and our management fees are unaffected by changes in rental rate or occupancy. We are reimbursed for the costs incurred to perform our services, principally related to personnel providing on-site services. The initial term of our management agreements typically ranges from three to five years and the agreements are subject to periodic renewal for one to three year periods. Many of these agreements renew automatically unless either party provides advance notice of termination before the expiration of the term.

We also manage and operate the points-based Hilton Grand Vacations Club and Hilton Club exchange programs, which provide exclusive exchange, leisure travel and reservation services to our Club members. When ~~an owner purchases~~owners purchase a VOI, ~~he or she is~~they are generally ~~automatically~~ enrolled in the Club and given an annual allotment of points that allow the member to exchange ~~his or her~~their annual usage rights in the VOI that they own for a number of vacation and travel options. In addition to an annual membership fee, Club members pay incremental fees depending on exchanges they choose within the Club system.

We rent unsold VOI inventory, third-party inventory and inventory made available due to ownership exchanges through our ~~Club~~club programs. We earn a fee from rentals of third-party inventory. Additionally, we provide ancillary offerings including food and beverage, retail and spa offerings at these timeshare properties.

For further information see Item 8. Financial Statements and Supplementary Data - Note 2: Basis of Presentation and Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

EBITDA, presented herein, is a financial measure that is not recognized under U.S. GAAP that reflects net income (loss), before interest expense ~~on debt~~ (excluding non-recourse debt), a provision for income taxes and depreciation and amortization.

Adjusted EBITDA, presented herein, is calculated as EBITDA, as previously defined, further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with: (i) asset dispositions; (ii) foreign currency transactions; (iii) debt restructurings/retirements; (iv) non-cash impairment losses; (v) reorganization costs, including severance and relocation costs; (vi) share-based and certain other compensation expenses; (vii) costs related to the spin-off; and (viii) other items.

EBITDA and Adjusted EBITDA are not recognized terms under U.S. GAAP and should not be considered as alternatives to net income (loss) or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, our definitions of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

We believe that EBITDA and Adjusted EBITDA provide useful information to investors about us and our financial condition and results of operations for the following reasons: (i) EBITDA and Adjusted EBITDA are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions; and (ii) EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry.

EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income (loss), cash flow or other methods of analyzing our results as reported under U.S. GAAP. Some of these limitations are:

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to us to reinvest in the growth of our business or as measures of cash that will be available to us to meet our obligations.

~~On January 1, 2018, we adopted Accounting Standards Update (“ASU”) No. 2014-09,~~ ~~Revenue from Contracts with Customers~~ (commonly referred to as Accounting Standards Codification (“ASC”) Topic 606 (“ASC 606”)). We adopted ASC 606 using the modified retrospective method in which the cumulative effect of applying the new standard has been recognized at the date of initial application~~with an adjustment to our opening balance of retained earnings. This approach applies to all contracts as of January 1, 2018. See Note 2: Basis of Presentation and Summary of Significant Accounting Policies~~ ~~in our unaudited condensed consolidated financial statements for additional information.~~

~~On March 19, 2018, the repurchase was completed and the shares were retired.~~

On March 23, 2018, we entered into an agreement with SCG 1776, LLC, a Delaware limited liability company, an affiliate of Strand Capital Group, LLC and formed 1776 Holding, LLC, a variable interest entity. Because we are not the primary beneficiary, we do not consolidate 1776 Holding, LLC. Pursuant to the agreement, we contributed $5 million in cash for a 50 percent interest in 1776 Holding, LLC, which will construct an approximately 99-unit timeshare resort in Charleston, South Carolina.

~~In February 2018, we entered into a commitment to acquire $41 million of real estate for future conversion to timeshare inventory and was recorded in~~ ~~Other assets~~ ~~in our unaudited condensed consolidated financial statements.~~

~~In June 2018, we acquired an operating hotel in New York City, New York for $176 million for future conversion to timeshare inventory.~~

~~In June 2018, we entered into a commitment to purchase inventory for $52 million in multiple phases through year 2021. In September 2018, the first phase closed for $13 million and was recorded in~~ ~~Inventory~~ ~~in our unaudited condensed consolidated financial statements.~~

~~In July 2018,~~ we executed a sale and purchase agreement to acquire a portion of an operating hotel for future conversion to timeshare inventory for $50 million of which we made an initial deposit of $2 million which was recorded as in ~~Other assets~~ ~~in our unaudited condensed consolidated financial statements.~~

~~In September 2018, we acquired land in Honolulu, Hawaii for $123 million which will be used to construct a timeshare resort.~~

~~See Note 7:~~ ~~Property and Equipment~~ ~~and Note 10:~~ ~~Other Assets~~ ~~in our unaudited condensed consolidated financial statements for additional information.~~

In March 2018, we extended the commitment termination dated on our Timeshare Facility to March 2020. The maturity date was extended 12 months from the commitment date to March 2021. As a result of the extension, we incurred ~~$2 million in debt issuance costs recorded in other assets. During the nine months ended September 30, 2018, we borrowed $313 million and repaid $322 million under the Timeshare Facility.~~

~~During the nine months ended September 30, 2018, we borrowed $215 million and repaid $160 million under our revolving credit facility.~~

~~See Note 12:~~ ~~Debt and Non-recourse debt~~ ~~in our unaudited condensed consolidated financial statements for additional information.~~

In May 2018, Kilauea volcano erupted on the southern end of the Big Island of Hawaii forcing two thousand residents to evacuate. Our three Waikoloa resorts are on the Big Island’s western coast, approximately 100 miles from Kilauea volcano. The eruption has not had a material impact on our operations.

In September 2018, Hurricane Florence made landfall in the Carolinas causing flooding along coastal areas. Although certain of our resorts in South Carolina were temporarily closed during the aftermath of Hurricane Florence, neither HGV’s operations or financial performance were significantly impacted by this storm.

~~We adopted ASC 606 as of January 1, 2018 using the modified retrospective method.~~ The reported results for the three and nine months ended September 30, 2018 reflects the application of ASC 606 while the reported results for the three and nine months ended September 30, 2017 were prepared under the guidance of ASC 605, ~~Revenue Recognition~~ ~~(“ASC 605”) and ASC 978-605,~~ ~~Real Estate – Time-Sharing Activities, Revenue Recognition, which is also referred to herein as the “previous accounting guidance.”~~

The following table shows the impact that ASC 606 would have had to our quarterly and annual 2017 operating results, EBITDA and Adjusted EBITDA if we had adopted ASC 606 utilizing the full retrospective method of adoption. See Note 2: ~~Basis of Presentation and Summary of Significant Accounting Policies~~ ~~and Note 3:~~ ~~Revenue from Contracts with Customers~~ ~~in our unaudited condensed consolidated financial statements for additional information.~~

2017 Results Adjusted for ASC 606 Adoption

(in millions, except per share data)

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Full Year

Total revenues

$
387

$
414

$
411

$
424

$
1,636

Total operating expenses

307

340

342

344

1,333

Net income

47

41

39

166

293

Earnings per share:

Basic

$
0.48

$
0.41

$
0.39

$
1.67

$
2.95

Diluted

$
0.48

$
0.41

$
0.39

$
1.66

$
2.94

Net income

$
47

$
41

$
39

$
166

$
293

Interest expense

7

7

7

6

27

Income tax expense (benefit)

26

26

25

(92
)

(15
)
Depreciation and amortization

7

7

7

6

27

Interest expense, depreciation and amortization
included in equity in earnings from
unconsolidated affiliates

—

—

2

1

3

EBITDA

87

81

80

87

335

Other (gain) loss, net

—

—

(1
)

1

—

Share-based compensation expense

3

5

5

2

15

Other adjustment items ⁽¹⁾

1

3

3

5

12

Adjusted EBITDA

$
91

$
89

$
87

$
95

$
362

~~During periods of construction, we defer revenues and certain related direct expenses from the sales of VOIs until construction is completed.~~ ~~The following tables provide supplemental information for project(s) under construction or completed for the periods presented under the previous accounting guidance:~~

~~In all quarters presented for 2017, we deferred revenue and related direct expenses from sales of VOIs for one project under construction.~~

Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2018~~2019 Compared with the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2018

We evaluate our business segment operating performance using segment Adjusted EBITDA, as described in Note 18: Business Segments in our unaudited condensed consolidated financial statements. We do not include equity in earnings (losses) from unconsolidated affiliates in our measures of segment revenues. For a discussion of our definition of EBITDA and Adjusted EBITDA, how management uses itthem to manage our business and material limitations on ~~its~~their usefulness, refer to “—Key Business and Financial Metrics and Terms Used by Management—EBITDA and Adjusted EBITDA.” The following tables set forth revenues and Adjusted EBITDA by segment:

	Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance					Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance
($ in millions)	2018			2017			$			%			2018			2017			$		%			2019			2018			$			%			2019			2018			$			%
Revenues:
Real estate sales and financing	$	291		$	310		$	(19	)		(6.1	)%	$	967		$	916		$	51		5.6	%	$	308		$	435		$	(127	)		(29.2	)%	$	615		$	676		$	(61	)		(9.0	)%
Resort operations and club management		108			90			18			20.0			304			270			34		12.6			114			98			16			16.3			224			196			28			14.3
Segment revenues		399			400			(1	)		(0.3	)		1,271			1,186			85		7.2			422			533			(111	)		(20.8	)		839			872			(33	)		(3.8	)
Cost reimbursements		36			34			2			5.9			110			102			8		7.8			43			38			5			13.2			85			74			11			14.9
Intersegment eliminations⁽¹⁾		(8	)		(8	)		—			—			(24	)		(24	)		—		—			(11	)		(8	)		(3	)		37.5			(20	)		(16	)		(4	)		25.0
Total revenues	$	427		$	426		$	1			0.2		$	1,357		$	1,264		$	93		7.4		$	454		$	563		$	(109	)		(19.4	)	$	904		$	930		$	(26	)		(2.8	)

The following table reconciles net income, our most comparable U.S. GAAP financial measure, to EBITDA and Adjusted EBITDA:

	Three Months Ended September 30,					Variance						Nine Months Ended September 30,					Variance						Three Months Ended June 30,					Variance						Six Months Ended June 30,				Variance
($ in millions)	2018		2017			$			%			2018		2017			$			%			2019		2018			$			%			2019		2018		$			%
Net Income	$	41	$	43		$	(2	)		(4.7	)%	$	178	$	144		$	34			23.6	%	$	39	$	107		$	(68	)		(63.6	)%	$	94	$	137	$	(43	)		(31.4	)%
Interest expense		7		7			—			—			22		21			1			4.8			11		8			3			37.5			21		15		6			40.0
Income tax expense		15		28			(13	)		(46.4	)		64		87			(23	)		(26.4	)		15		39			(24	)		(61.5	)		35		49		(14	)		(28.6	)
Depreciation and amortization		9		7			2			28.6			25		21			4			19.0			13		8			5			62.5			23		16		7			43.8
Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates		1		2			(1	)		(0.5	)		3		2			1			50
Interest expense, depreciation and amortization included in equity in earnings (losses) from unconsolidated affiliates																								1		1			—			—			2		2		—			—
EBITDA		73		87			(14	)		(16.1	)		292		275			17			6.2			79		163			(84	)		(51.5	)		175		219		(44	)		(20.1	)
Other loss		1		—			1		NM⁽¹⁾				1		—			1		NM⁽¹⁾
Gain on foreign currency transactions		—		(1	)		1			100.0			—		(1	)		1			100.0
Other loss (gain)																								1		(1	)		2		NM⁽¹⁾				2		—		2		NM⁽¹⁾
Share-based compensation expense		5		5			—			—			13		13			—			—			7		5			2			40.0			12		8		4			50.0
Other adjustment items⁽²⁾		1		3			(2	)		66.7			11		7			4			57.1			3		8			(5	)		(62.5	)		3		10		(7	)		(70.0	)
Adjusted EBITDA	$	80	$	94		$	(14	)		(14.9	)	$	317	$	294		$	23			7.8		$	90	$	175		$	(85	)		(48.6	)	$	192	$	237	$	(45	)		(19.0	)

The following table shows our segment Adjusted EBITDA to Adjusted ~~EBITDA.~~EBITDA:

	Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance						Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance
($ in millions)	2018			2017			$			%			2018			2017			$			%			2019			2018			$			%			2019			2018			$			%
Adjusted EBITDA:
Real estate sales and financing⁽²⁾	$	67		$	81		$	(14	)		(17.3	)%	$	274		$	263		$	11			4.2	%	$	69		$	163		$	(94	)		(57.7	)%	$	149		$	207		$	(58	)		(28.0	)%
Resort operations and club management⁽²⁾		62			50			12			24.0			179			153			26			17.0			66			58			8			13.8			131			117			14			12.0
Segment Adjusted EBITDA		129			131			(2	)		(1.5	)		453			416			37			8.9			135			221			(86	)		(38.9	)		280			324			(44	)		(13.6	)
Adjustments:
Adjusted EBITDA from unconsolidated affiliates		2			3			(1	)		(33.3	)		3			3			—			—			3			(1	)		4		NM⁽¹⁾				5			1			4		NM⁽¹⁾
License fee expense		(25	)		(22	)		(3	)		13.6			(73	)		(65	)		(8	)		12.3			(26	)		(25	)		(1	)		4.0			(49	)		(48	)		(1	)		2.1
General and administrative⁽³⁾		(26	)		(18	)		(8	)		44.4			(66	)		(60	)		(6	)		10.0			(22	)		(20	)		(2	)		10.0			(44	)		(40	)		(4	)		10.0
Adjusted EBITDA	$	80		$	94		$	(14	)		(14.9	)	$	317		$	294		$	23			7.8		$	90		$	175		$	(85	)		(48.6	)	$	192		$	237		$	(45	)		(19.0	)

Real estate sales and financing segment revenues decreased by ~~$19~~$127 million for the three months ended ~~September~~June 30, ~~2018,~~2019, compared to the same period in ~~2017,~~2018, primarily due to ~~(i)~~ a ~~$18~~$136 million decrease in sales revenue, ~~and (ii)~~partially offset by a $3$5 million ~~decrease~~increase in marketing revenue and other fees ~~partially offset by~~mainly associated with higher vacation package sales and a $4 million increase in financing revenue related to an increase in interest income from higher outstanding timeshare receivables balance and an increase in servicing fees. Sales revenue decreased for the three months ended June 30, 2019, compared to the same period in 2018, primarily due to a $34 million decrease in revenue recognition from sales of $2VOIs on one property under construction compared to a $91 million net increase in revenue recognition from the completion of a timeshare resort under construction during the same period in 2018. Real estate sales and financing ~~revenue. The~~segment Adjusted EBITDA decreased by $94 million for the three months ended June 30, 2019, compared to the same period in 2018, primarily due to the decreases in revenue associated with the segment discussed above.

Real estate sales and financing segment revenues decreased by $61 million for the six months ended June 30, 2019, compared to the same period in 2018, primarily due to a $76 million decrease in sales revenue, ~~of $18 million was primarily related to the deferral of revenue recognition on a project under construction,~~ partially offset by ~~a $28~~(i) an $8 million increase in marketing revenue and other fees mainly associated with higher vacation package sales, (ii) an increase in commission and brand fees due to higher fee-for-service sales ~~primarily related to~~at existing fee-for-service properties, and (iii) a ~~new resort in South Carolina. The decrease in marketing revenue was partially due to the recognition of certain sales incentives on a net versus gross basis as a result of ASC 606. The~~$7 million increase in financing revenue ~~was primarily due~~related to an increase in interest income from higher outstanding timeshare ~~financing~~ receivables ~~balances.~~balance and an increase in servicing fees. Sales revenue decreased for the six months ended June 30, 2019, compared to the same period in 2018, primarily due to a $34 million decrease in revenue recognition from sales of VOIs on one property under construction compared to a $25 million net increase in revenue recognition from the completion of a timeshare resort under construction during the same period in 2018. Real

estate sales and financing segment Adjusted EBITDA decreased by ~~$14~~$58 million for the ~~three~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to the same period in ~~2017,~~2018, primarily due to the ~~decrease~~decreases in revenue associated with the segment discussed ~~above as well as a $4 million increase in sales and marketing and financing expenses, partially offset by a $11 million decrease in cost of VOI sales.~~

Real estate sales and financing segment revenues increased by $51 million for the nine months ended September 30, 2018, compared to the same period in 2017, primarily due to (i) a $61 million increase in sales revenue and (ii) a $8 million increase in financing revenue, partially offset by a decrease of $18 million in marketing revenue and other fees. The increase in sales revenue of $61 million was primarily due to (i) an increase related to revenue recognized from the completion of a timeshare resort under construction partially offset by an increase in sales from a project under construction which are deferred until construction is completed and (ii) a $40 million increase in commission and brand fees due to higher fee-for-service sales primarily related to a new resort in South Carolina. The increase in financing revenue was primarily due to an increase in interest income from higher outstanding timeshare financing receivable balances. The decrease in marketing revenue was primarily due to (i) a $10 million one-time benefit recognized in the second quarter of 2017 related to a reduction of expected redemptions of expired discounted vacation packages and (ii) recognition of certain sales incentives on a net versus gross basis as a result of ASC 606. Real estate sales and financing segment Adjusted EBITDA increased by $11 million for the nine months ended September 30, 2018, compared to the same period in 2017, primarily due to the increase in revenues associated with the segment discussed above, partially offset by (i) a $39 million increase in sales and marketing and financing expense and (ii) a $2 million increase in cost of VOI sales. above.

Refer to “—Real Estate” and “—Financing” for further discussion on the revenues and expenses of the real estate sales and financing segment.

Resort operations and club management segment revenues increased by ~~$18~~$16 million for the three months ended ~~September~~June 30, ~~2018,~~2019, compared to the same period in ~~2017,~~2018, primarily due to (i) an increase of $3$6 million in resort and club management revenues due to an increase in Club members as well as higher resort management revenue from the launch of new properties subsequent to the second quarter of 2018 and (ii) an increase of $7 million in rental and ancillary services revenues. Rental and ancillary services revenue increased due to higher transient rental room revenue, primarily due to the June 2018 acquisition of an operating hotel and higher club inventory rentals at our developed and fee-for-service properties. Resort operations and club management segment Adjusted EBITDA increased by $8 million for the three months ended June 30, 2019, compared to the same period in 2018, primarily due to the increases in revenues associated with the segment, partially offset by an increase of $8 million in segment expenses primarily due to the June 2018 acquisition of an operating hotel.

Resort operations and club management segment revenues increased by $28 million for the six months ended June 30, 2019, compared to the same period in 2018, primarily due to (i) an increase of $9 million in resort and club management revenues primarily due to an increase in Club members and (ii) an increase of $15 million in rental and ancillary services ~~revenues as a result of~~revenues. Rental and ancillary services revenue increased primarily due to higher transient rental room revenue, ~~from transient guests~~ primarily due to the June 2018 acquisition of an operating hotel ~~in New York City, New York in June 2018 (see~~ ~~Recent Events~~ ~~for additional information)~~ and higher club inventory rentals at our developed and fee-for-service properties. Resort operations and club management segment Adjusted EBITDA increased by ~~$12~~$14 million for the ~~three~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to the same period in ~~2017,~~2018, primarily due to the increases in revenues associated with the segment, partially offset by an increase of $6$15 million in segment ~~expenses.~~

Resort operations and club management segment revenues increased by $34 million for the nine months ended September 30, 2018, compared to the same period in 2017, primarily due to (i) an increase of $8 million in resort and club management revenues primarily due to an increase in Club members and (ii) an increase of $26 million in rental and ancillary services revenues as a result of higher rental room revenue from transient guestsexpenses primarily due to the June 2018 acquisition of an operating ~~hotel in New York City, New York in June 2018 (see~~ ~~Recent Events~~ for additional information) and higher club inventory rentals at our developed and fee-for-service properties. Resort operations and club management segment Adjusted EBITDA increased by $26 million for the nine months ended September 30, 2018, compared to the same period in 2017, primarily due to the increases in revenues associated with the segment, partially offset by an increase of $8 million in segment expenses. hotel.

Refer to “— Resort and Club Management” and “—Rental and Ancillary Services” for further discussion on the revenues and expenses of the resort operations and club management segment.

	Three Months Ended September 30,					Variance						Nine Months Ended September 30,						Variance					Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance
($ in millions, except Tour flow and VPG)	2018		2017			$			%			2018			2017			$		%			2019			2018			$			%			2019			2018			$			%
Sales of VOIs, net	$	99	$	145		$	(46	)		(31.7	)%	$	427		$	406		$	21		5.2	%	$	120		$	250		$	(130	)		(52.0	)%	$	245		$	328		$	(83	)		(25.3	)%
Adjustments:
Fee-for-service sales⁽²⁾		211		169			42			24.9			574			508			66		13.0			185			193			(8	)		(4.1	)		375			363			12			3.3
Loan loss provision		20		19			1			5.3			50			45			5		11.1
Reportability and other⁽³⁾		34		(7	)		41		NM⁽¹⁾				(1	)		(23	)		22	NM⁽¹⁾
Provision for financing receivables losses																								24			18			6			33.3			38			30			8			26.7
Reportability and other:
Net deferral (recognition) of sales of VOIs under construction⁽³⁾																								34			(91	)		125		NM⁽¹⁾				34			(25	)		59		NM⁽¹⁾
Fee-for-service sales upgrades, net																								(10	)		(11	)		1			(9.1	)		(24	)		(19	)		(5	)		26.3
Other⁽⁴⁾																								10			(2	)		12		NM⁽¹⁾				17			9			8			88.9
Contract sales	$	364	$	326		$	38			11.7		$	1,050		$	936		$	114		12.2		$	363		$	357		$	6			1.7		$	685		$	686		$	(1	)		(0.1	)
Tour flow		94,816		87,346			7,470			8.6			266,785			246,865			19,920		8.1			101,712			94,269			7,443			7.9			184,356			171,969			12,387			7.2
VPG	$	3,648	$	3,555		$	93			2.6		$	3,732		$	3,590		$	142		4.0		$	3,393		$	3,597		$	(204	)		(5.7	)	$	3,520		$	3,778		$	(258	)		(6.8	)

Contract sales increased for the three ~~and nine~~ months ended ~~September~~June 30, ~~2018,~~2019, compared to the same ~~periods~~period in ~~2017,~~2018, primarily due to ~~an increase~~eight percent growth in tour flow, ~~which drives the increase~~partially offset by lower VPG from both a 50-basis point decline in ~~marketing expense. VPG increased due to a 0.2 percent~~close rate and ~~1.0 percent increase in~~ average transaction price reduction. Contract sales was relatively flat for the ~~three and nine~~six months ended ~~September~~June 30, 2019, compared to the same period in 2018, ~~respectively.~~primarily due to lower VPG from both an 80-basis point decline in close rate and average transaction price reduction, offset by a seven percent improvement in tour flow.

	Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance						Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance
($ in millions)	2018			2017			$			%			2018			2017			$			%			2019			2018			$			%			2019			2018			$			%
Sales of VOIs, net	$	99		$	145		$	(46	)		(31.7	)%	$	427		$	406		$	21			5.2	%	$	120		$	250		$	(130	)		(52.0	)%	$	245		$	328		$	(83	)		(25.3	)%
Sales, marketing, brand and other fees		152			127			25			19.7			423			401			22			5.5			145			146			(1	)		(0.7	)		286			271			15			5.5
Less:
Marketing revenue and other fees		31			34			(3	)		(8.8	)		91			109			(18	)		(16.5	)		38			33			5			15.2			68			60			8			13.3
Sales revenue		220			238			(18	)		(7.6	)		759			698			61			8.7			227			363			(136	)		(37.5	)		463			539			(76	)		(14.1	)
Less:
Cost of VOI sales		29			40			(11	)		(27.5	)		109			107			2			1.9			32			61			(29	)		(47.5	)		68			80			(12	)		(15.0	)
Sales and marketing expense, net⁽¹⁾		135			132			3			2.3			413			363			50			13.8			139			152			(13	)		(8.6	)		270			278			(8	)		(2.9	)
Real estate margin	$	56		$	66			(10	)		(15	)	$	237		$	228		$	9			3.9		$	56		$	150		$	(94	)		(62.7	)	$	125		$	181		$	(56	)		(30.9	)
Real estate margin percentage		25.5	%		27.7	%								31.2	%		32.7	%								24.7	%		41.3	%								27.0	%		33.6	%

Sales revenue decreased for the three months ended ~~September~~June 30, ~~2018,~~2019, compared to the same period in ~~2017,~~2018, primarily due to ~~the deferral~~(i) a $34 million decrease in revenue recognition from sales of VOIs on one property under construction compared to a $91 million net increase in revenue recognition from the ~~sales~~completion of a ~~project~~timeshare resort under construction ~~partially offset~~during the same period in 2018 and (ii) a decrease in VPG driven by a ~~$28~~decrease in the close rate and a reduction in the average transaction price, and (iii) a decrease of $5 million ~~increase~~ in commission and brand fees due to ~~higher~~lower fee-for-service ~~sales primarily related to a new resort in South Carolina.~~ ~~Cost of~~ VOI sales ~~decreased for the three months ended September 30, 2018, compared to the same period~~ driven by a shift in ~~2017, primarily due to the deferral of direct expenses from the~~inventory mix. The decrease in sales ~~of a project under construction.~~ ~~Sales and marketing expense, net~~ ~~increased for the three months ended September 30, 2018, compared to the same period in 2017, primarily due to higher sales and marketing expense which drove higher contract sales.~~

~~Sales~~ revenue increased for the nine months ended September 30, 2018, compared to the same period in 2017, primarily due to (i) a $112 million increase related to revenue recognized from the completion of a timeshare resort under

~~construction~~was partially offset by ~~an increase in sales from~~ a ~~project under construction which are deferred until construction is completed and (ii) a $40~~$5 million increase in ~~commission and brand fees due to higher fee-for-service sales primarily related to a new resort in South Carolina.~~ ~~Cost of VOI sales~~ ~~and~~ ~~Sales and marketing expense, net~~, increased for the nine months ended September 30, 2018, compared to the same period in 2017, primarily as a result of (i) higher expenses as a result of the completion of a resort which was previously deferred, partially offset by deferred expenses from sales of a project under construction, (ii) a $10 million reduction of marketing revenue ~~due to a one-time benefit recognized in the second quarter of 2017 related to a reduction of expected redemptions of expired discounted~~and other fees mainly associated with higher vacation ~~packages and (iii) higher sales and marketing expense which drove higher contract~~package sales.

The decrease in real estate margin and margin percentage for the three months ended ~~September~~June 30, 2019, compared to 2018, ~~as well as~~was primarily due the reduction in sales revenue, partially offset by deferred expenses from the sales of one property under construction.

Sales revenue decreased for the six months ended June 30, 2019, compared to the same period in 2018, primarily due to (i) a $34 million decrease in revenue recognition from sales of VOIs on one property under construction compared to a $25 million net increase in revenue recognition from the completion of a timeshare resort under construction during the same period in 2018. The decrease in sales revenue was partially offset by (i) an increase of $8 million in commission and brand fees due to higher fee-for-service sales at our existing fee-for-service properties and (ii) an $8 million increase in marketing revenue and other fees mainly associated with higher vacation package sales. The decrease in real estate margin and margin percentage for the ~~nine~~six months ended ~~September~~June 30, 2019, compared to the same period in 2018, was primarily due to the reduction in sales revenue, partially offset by deferred expenses from the sales of one property under construction.

	Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance
($ in millions)	2019			2018			$			%			2019			2018			$			%
Interest income	$	36		$	34		$	2			5.9	%	$	72		$	68		$	4			5.9	%
Other financing revenue		7			5			2			40.0			12			9			3			33.3
Financing revenue		43			39			4			10.3			84			77			7			9.1
Consumer financing interest expense		7			6			1			16.7			14			10			4			40.0
Other financing expense		5			6			(1	)		(16.7	)		11			13			(2	)		(15.4	)
Financing expense		12			12			—			—			25			23			2			8.7
Financing margin	$	31		$	27		$	4			14.8		$	59		$	54		$	5			9.3
Financing margin percentage		72.1	%		69.2	%								70.2	%		70.1	%

Financing revenue increased by $4 million and $7 million for the three and six months ended June 30, 2019, respectively, compared to the same periods in ~~2017, was primarily~~2018, is due to the aforementioned decreases in revenue associated with the deferral of revenues and direct expenses of a timeshare resort under construction for which certain indirect selling costs are not deferred. The increase in real estate margin for the nine months ended September 30, 2018, compared to the same period in 2017, is primarily due to an increase in revenue, partially offset by an increase in expense.

Three Months Ended September 30,

Variance

Nine Months Ended September 30,

Variance

($ in millions)

2018

2017

$

%

2018

2017

$

%

Interest income

$
35

$
33

$
2

6.1
%

$
103

$
97

$
6

6.2
%
Other financing revenue

5

5

—

—

14

12

2

16.7

Financing revenue

40

38

2

5.3

117

109

8

7.3

Consumer financing interest expense

6

6

—

—

16

16

—

—

Other financing expense

6

5

1

20.0

19

16

3

18.8

Financing expense

12

11

1

9.1

35

32

3

9.4

Financing margin

$
28

$
27

$
1

3.7

$
82

$
77

$
5

6.5

Financing margin percentage

70.0
%

71.1
%

70.1
%

70.6
%

~~Financing revenue increased for the three and nine months ended September 30, 2018, compared to the same periods in 2017, primarily due to an increase of $2 million and $6 million, respectively, in~~higher interest income resulting from a higher average outstanding timeshare financing receivables balance during those respective periods and loan servicing revenues. Financing margin and margin percentage increased for the three ~~and nine~~ months ended ~~September~~June 30, ~~2018.~~2019, compared to the same period in 2018, primarily due increases in financing revenue. Financing margin increased for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to the same periods in ~~2017,~~2018, due to an increase in interest income as well as loan servicing revenue. Financing margin percentage increased for the three months ended June 30, 2019, primarily due to the ~~aforementioned~~ increases in ~~revenue, partially offset by expense. Financing margin percentage remaining relatively flat for~~ the ~~three and nine months ended September 30, 2018.~~segment revenue.

	Three Months Ended September 30,						Variance						Nine Months Ended September 30,						Variance					Three Months Ended June 30,						Variance					Six Months Ended June 30,						Variance
($ in millions)	2018			2017			$			%			2018			2017			$		%			2019			2018			$		%			2019			2018			$		%
Club management revenue	$	25		$	22		$	3			13.6	%	$	71		$	63		$	8		12.7	%	$	26		$	23		$	3		13.0	%	$	52		$	46		$	6		13.0	%
Resort management revenue		15			15			—			—			45			45			—		—			17			14			3		21.4			33			30			3		10.0
Resort and club management revenues		40			37			3			8.1			116			108			8		7.4			43			37			6		16.2			85			76			9		11.8
Club management expense		6			7			(1	)		(14.3	)		19			18			1		5.6			7			7			—		—			14			13			1		7.7
Resort management expense		5			5			—			—			14			14			—		—			5			4			1		25.0			9			9			—		—
Resort and club management expenses		11			12			(1	)		(8.3	)		33			32			1		3.1			12			11			1		9.1			23			22			1		4.5
Resort and club management margin	$	29		$	25		$	4			16.0		$	83		$	76		$	7		9.2		$	31		$	26		$	5		19.2		$	62		$	54		$	8		14.8
Resort and club management margin percentage		72.5	%		67.6	%								71.6	%		70.4	%							72.1	%		70.3	%							72.9	%		71.1	%

Resort and club management revenues increased for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to the same periods in ~~2017,~~2018, primarily due to ~~a trailing twelve months~~(i) an increase of approximately ~~21,000 in~~18,000 Club members and higher rates pertaining to annual dues and transaction ~~fees.~~

fees and (ii) an increase in resort management revenue from the launch of new properties subsequent to second quarter of 2018. Resort and club management margin and margin percentage increased for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to the same periods in ~~2017,~~2018, primarily due to ~~the aforementioned~~ increases in segment revenues.

	Three Months Ended September 30,						Variance					Nine Months Ended September 30,						Variance					Three Months Ended June 30,						Variance					Six Months Ended June 30,						Variance
($ in millions)	2018			2017			$		%			2018			2017			$		%			2019			2018			$		%			2019			2018			$		%
Rental revenues	$	53		$	39		$	14		35.9	%	$	144		$	120		$	24		20.0	%	$	53		$	46		$	7		15.2	%	$	105		$	91		$	14		15.4	%
Ancillary services revenues		7			6			1		16.7			20			18			2		11.1			7			7			—		—			14			13			1		7.7
Rental and ancillary services revenues		60			45			15		33.3			164			138			26		18.8			60			53			7		13.2			119			104			15		14.4
Rental expenses		30			25			5		20.0			78			73			5		6.8			30			25			5		20.0			59			48			11		22.9
Ancillary services expense		7			5			2		40.0			17			15			2		13.3			7			5			2		40.0			13			10			3		30.0
Rental and ancillary services expenses		37			30			7		23.3			95			88			7		8.0			37			30			7		23.3			72			58			14		24.1
Rental and ancillary services margin	$	23		$	15		$	8		53.3		$	69		$	50		$	19		38.0		$	23		$	23		$	—		—		$	47		$	46		$	1		2.2
Rental and ancillary services margin percentage		38.3	%		33.3	%							42.1	%		36.2	%							38.3	%		43.4	%							39.5	%		44.2	%

Rental and ancillary services revenues and expenses each increased by $7 million for the three ~~and nine~~ months ended ~~September~~June 30, ~~2018,~~2019 and increased by $15 million and $14 million for the six months ended June 30, 2019, respectively, compared to the same periods in ~~2017,~~2018. The increase in revenues and expenses is primarily due to ~~an increase of $14 million and $24 million, respectively, in rental revenues as a result of higher rental room revenue from transient guests due to~~ the acquisition of an operating hotel in ~~New York City, New York in~~ June ~~2018 (see~~ ~~Recent Events~~ ~~for additional information) and~~2018. In addition, we had higher club inventory rentals at our developed and fee-for-service properties.

Rental and ancillary services margin ~~and margin~~ percentage ~~increased~~decreased for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to the same periods in ~~2017, primary~~2018 primarily due to ~~the aforementioned~~ increases in ~~revenues.~~segment revenues and expenses discussed above.

	Three Months Ended September 30,				Variance					Nine Months Ended September 30,				Variance					Three Months Ended June 30,				Variance						Six Months Ended June 30,				Variance
($ in millions)	2018		2017		$		%			2018		2017		$		%			2019		2018		$			%			2019		2018		$		%
General and administrative	$	31	$	23	$	8		34.8	%	$	84	$	75	$	9		12.0	%	$	29	$	30	$	(1	)		(3.3	)%	$	54	$	53	$	1		1.9	%
Depreciation and amortization		9		7		2		28.6			25		21		4		19.0			13		8		5			62.5			23		16		7		43.8
License fee expense		25		22		3		13.6			73		65		8		12.3			26		25		1			4.0			49		48		1		2.1

~~Other~~The change in other operating expenses ~~increased~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to the same periods in ~~2017,~~2018, primarily due to ~~(i) higher consulting and software license fees relating to the Oracle cloud based information system implemented during second quarter of 2018, (ii)~~ higher depreciation and amortization ~~due to~~expense as a result of additional software placed into service primarily related to the Oracle cloud-based information system implementation during the second half of 2018 as well as additional depreciation on building and ~~(iii) higher license fee expense as a result of increases in revenues subject to license fees.~~building leasehold improvements.

	Three Months Ended September 30,						Variance						Nine Months Ended September 30,					Variance						Three Months Ended June 30,						Variance						Six Months Ended June 30,					Variance
($ in millions)	2018			2017			$			%			2018		2017			$			%			2019			2018			$			%			2019			2018		$			%
Interest expense	$	7		$	7		$	—			—		$	22	$	21		$	1			4.8	%	$	11		$	8		$	3			37.5	%	$	21		$	15	$	6			40.0	%
Equity in earnings from unconsolidated affiliates		(1	)		(1	)		—			—			—		(1	)		1			(100.0	)
Gain on foreign currency transactions		—			(1	)		1			(100.0	)		—		(1	)		1			(100.0	)
Other loss		1			—			1		NM⁽¹⁾				1		—			1		NM⁽¹⁾
Equity in (earnings) losses from unconsolidated affiliates																									(2	)		2			(4	)	NM⁽¹⁾				(3	)		1		(4	)	NM⁽¹⁾
Other loss (gain), net																									1			(1	)		2		NM⁽¹⁾				2			—		2		NM⁽¹⁾
Income tax expense		15			28			(13	)		(46.4	)		64		87			(23	)		(26.4	)		15			39			(24	)		(61.5	)		35			49		(14	)		(28.6	)

The change in ~~earnings from unconsolidated affiliates relates primarily to our 25 percent interest in BRE Ace LLC. See Note 9:~~ ~~Investment in unconsolidated affiliate~~ ~~in our Annual Report on Form 10-K for the year ended December 31, 2017 in our audited consolidated financial statements for additional information.~~

~~Income tax expense decreased~~non-operating expenses for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to the same periods in ~~2017,~~2018, is primarily due to (i) an increase in interest expense due to higher average outstanding balance on our senior secured credit facilities and (ii) a decrease in ~~the corporate~~ income tax ~~rate as a result of the Tax Cut and Jobs Act that was enacted on December 22, 2017.~~expense primarily due to lower pre-tax income.

Our cash management objectives are to maintain the availability of ~~September 30, 2018, we had total cash~~liquidity, minimize operational costs, make debt payments and ~~cash equivalents of $212 million, including $67 million of restricted cash. The restricted cash balance relates to escrowed cash from our sales of our VOIs~~fund future acquisitions and ~~reserves related to our non-recourse debt. See Note 12:~~ ~~Debt and Non-Recourse Debt~~ ~~in our unaudited condensed consolidated financial statements for additional information.~~

development projects. Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating expenses and other expenditures, including payroll and related benefits, legal costs, operating costs associated with the operation of our resorts and sales centers, interest and scheduled principal payments on our outstanding indebtedness, inventory-related purchase commitments, and capital expenditures for renovations and maintenance at our offices and sales centers. Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities, inventory-related purchase commitments ~~(near and long-term)~~ and costs associated with potential acquisitions and development projects.

We finance our ~~business activities~~short- and long-term liquidity needs primarily ~~with existing~~by cash and cash equivalents, cash generated from our operations, draws on our senior secured credit facility and our non-recourse revolving timeshare credit facility (“Timeshare Facility”), and through periodic securitizations of our timeshare financing receivables.

We believe ~~that this cash~~these sources of capital will be adequate to meet ~~anticipated~~our short- and long-term liquidity requirements for operating expenses and other expenditures, including payroll and related benefits, legal costs, and to finance our long-term growth plan and capital expenditures for the foreseeable future. ~~The objectives~~

We believe that our capital allocation strategy provides adequate funding for our operations, is flexible enough to fund our development pipeline, securitizes the optimal level of receivables at metrics setting the benchmark for the industry, and provides the ability to be strategically opportunistic in the marketplace, while providing returns to our ~~cash management policy are~~shareholders. We have made commitments with developers to ~~maintain~~purchase vacation ownership units at a future date to be marketed and sold under our Hilton Grand Vacations brand. As of June 30, 2019, our inventory-related purchase commitment was $511 million over twelve years of which we expect to purchase $38 million for the ~~availability~~remaining of liquidity, minimize operational costs, make debt payments and fund future acquisitions and development projects. Further, we have an investment policy that is focused on the preservation of capital and maximizing the return on new and existing investments.2019.

The following table summarizes our net cash flows and key metrics related to our liquidity:

	Nine Months Ended September 30,						Variance						Six Months Ended June 30,						Variance
($ in millions)	2018			2017			$			%			2019			2018			$			%
Net cash (used in) provided by:
Net cash provided by (used in):
Operating activities	$	(205	)	$	299		$	(504	)	NM⁽¹⁾			$	72		$	(134	)	$	206		NM⁽¹⁾
Investing activities		(35	)		(77	)		42			(54.5	)%		(30	)		(23	)		(7	)		30.4	%
Financing activities		155			(89	)		244		NM⁽¹⁾				(35	)		63			(98	)	NM⁽¹⁾

Cash flow ~~(used in)~~ provided by operating activities is primarily generated from (1) sales and financing of VOIs and (2) net cash generated from managing our resorts, Club operations and providing related ancillary services. Cash flows used in operating activities primarily include spending for the ~~acquisition of inventory,~~purchase and development of ~~new phases of existing resorts~~real estate for future conversion to inventory and funding our working capital needs. Our cash flows from operations generally vary due to the following factors related to the sale of our ~~VOIs:~~VOIs; the degree to which our owners finance their purchase and our owners’ repayment of timeshare financing receivables; the timing of management and sales and marketing services provided; and cash outlays for VOI inventory acquisition and development. Additionally, cash flow from operations will also vary depending upon our

sales mix of VOIs; over time, we generally receive more cash from the sale of an owned VOI as compared to that from a fee-for-service sale.

~~Net~~The change in net cash flows provided by (used in) ~~provided by~~ operating activities ~~decreased by $504 million during~~for the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to the same period in ~~2017,~~2018 was primarily due to (i) ~~purchases~~a reduction in the purchase and development of real estate for future conversion to inventory ~~of $299 million,~~and (ii) ~~deposits of $43 million related to an inventory purchase commitments, (iii)~~ a federal tax payment of $63 million made in January of 2018 ~~that~~which was deferred from 2017 pursuant to a tax relief program for regions impacted by Hurricane Irma (iv) an increase in inventory spending and (v) a license fee payment pertaining to the amount accrued in the fourth quarter of 2017.

The following table exhibits our VOI inventory ~~spending for the nine months ended September 30, 2018 and 2017:~~spending:

	Nine Months Ended September 30,				Six Months Ended June 30,
($ in millions)	2018		2017		2019		2018
VOI spending - owned properties	$	77	$	31	$	54	$	49
VOI spending - fee-for-service upgrades(1)		35		41		24		13
Real estate for future conversion into inventory		299		—
Inventory deposits		43		—
Purchases and development of real estate for future conversion to inventory						80		176
Total VOI inventory spending	$	454	$	72	$	158	$	238

	Nine Months Ended September 30,						Variance						Six Months Ended June 30,						Variance
($ in millions)	2018			2017			$			%			2019			2018			$			%
Capital expenditures for property and equipment	$	(29	)	$	(25	)	$	(4	)		16.0	%	$	(17	)	$	(20	)	$	3			(15.0	)%
Software capitalization costs		(12	)		(12	)		—			—			(11	)		(9	)		(2	)		22.2
Return of investment from unconsolidated affiliates		11			—			11		NM⁽¹⁾				—			11			(11	)		(100.0	)
Investment in unconsolidated affiliates		(5	)		(40	)		35			(87.5	)
Investments in unconsolidated affiliates														(2	)		(5	)		3			(60.0	)
Net cash used in investing activities	$	(35	)	$	(77	)	$	42			(54.5	)	$	(30	)	$	(23	)	$	(7	)		30.4

The change in net cash used in investing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to the same period in ~~2017,~~2018, was primarily due to ~~(i) a reduction in investment in unconsolidated affiliates and (ii)~~ an $11 million ~~distribution received~~return of investment from our 25 percent interest in BRE Ace LLC ~~partially offset by higher capital expenditures for property and equipment.~~ as a result of a distribution received in 2018.

Our capital expenditures include spending related to technology, buildings and leasehold improvements used to support sales and marketing locations, resort operations and corporate activities. We believe the renovations of our existing assets are necessary to stay competitive in the markets in which we operate.

The following table summarizes our net cash provided by ~~cash (used in)~~ financing activities:

	Nine Months Ended September 30,						Variance						Six Months Ended June 30,						Variance
($ in millions)	2018			2017			$			%			2019			2018			$			%
Issuance of debt	$	215		$	—		$	215		NM⁽¹⁾			$	410		$	160		$	250		NM⁽¹⁾
Issuance of non-recourse debt		663			350			313			89.4	%		15			100			(85	)		(85.0	)%
Repurchase and retirement of common stock		(112	)		—			(112	)	NM⁽¹⁾
Repayment of debt		(168	)		(7	)		(161	)	NM⁽¹⁾				(105	)		(5	)		(100	)	NM⁽¹⁾
Repayment of non-recourse debt		(436	)		(428	)		(8	)		1.9			(79	)		(80	)		1			(1.3	)
Debt issuance costs		(6	)		(5	)		(1	)		20.0			(2	)		(2	)		—			—
Proceeds from stock option exercises		—			1			(1	)		(100.0	)
Repurchase and retirement of common stock														(271	)		(112	)		(159	)	NM⁽¹⁾
Payment of withholding taxes on vesting of restricted stock units		(4	)		—			(4	)	NM⁽¹⁾				(3	)		(1	)		(2	)	NM⁽¹⁾
Proceeds from employee stock plan purchases														2			—			2		NM⁽¹⁾
Capital contribution		3			—			3		NM⁽¹⁾				—			3			(3	)		(100.0	)
Net cash provided by (used in) financing activities	$	155		$	(89	)	$	244		NM⁽¹⁾
Other financing activity														(2	)		—			(2	)	NM⁽¹⁾
Net cash (used in) provided by financing activities													$	(35	)	$	63		$	(98	)	NM⁽¹⁾

The change in net cash flows (used in) provided by ~~(used in)~~ financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019 was primarily due to additional borrowings and repayments of debt and non-recourse debt, partially offset by an additional repurchases and retirements of common stock compared to the same period in 2017, was primarily due to (i) borrowings of $215 million and $313 million, respectively, under our revolving credit facility and Timeshare Facility to facilitate the funding of development and asset acquisitions (see ~~Recent Events~~ for additional information) as well as working capital needs, (ii) the issuance of $350 million securitized debt at favorable interest rates, of which $322 million was used to repay a portion of our Timeshare Facility for collateral utilized in the securitization, (iii) the repurchase of 2,500,000 shares of our common stock from HNA (see ~~Recent Events~~ for additional information), (iv) repayments $114 million under our other securitized debts and (vi) repayments of $160 million and $8 million, respectively, under our revolving credit facility and senior secured term loan.2018.

The following table summarizes our significant contractual obligations as of ~~September~~June 30, ~~2018:~~2019:

	Payments Due by Period										Payments Due by Period
($ in millions)	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years		Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
Debt⁽¹⁾	$	683	$	39	$	76	$	247	$	321	$	1,173	$	56	$	110	$	661	$	346
Non-recourse debt⁽¹⁾		879		189		449		131		110		755		205		375		124		51
Purchase commitments		501		127		239		100		35		485		120		275		90		—
Total contractual obligations	$	2,063	$	355	$	764	$	478	$	466	$	2,413	$	381	$	760	$	875	$	397

~~As of September 30, 2018,~~See Note 13: Leases in our unaudited condensed consolidated financial statements for information on our contractual obligations relating to our operating leases ~~has not materially changed from what was reported in our Annual Report on Form 10-K for the year ended December 31, 2017.~~as of June 30, 2019.

Our off-balance sheet arrangements as of ~~September~~June 30, ~~2018~~2019 consisted of ~~$501~~$511 million of certain commitments with developers whereby we have committed to purchase vacation ownership units at a future date to be marketed and sold under the Hilton Grand Vacations brand. The ultimate amount and timing of the acquisitions is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances. See Note 19: Commitments and Contingencies in our unaudited condensed consolidated financial statements for a discussion of our off-balance sheet arrangements.

In ~~October 2018,~~July 2019, we executed the ~~construction on a property in Hawaii was completed, and the deferred revenue and direct related costs of $154 million and $72 million, respectively, will be recognized in the fourth quarter.~~following transactions:

The preparation of our unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect reported amounts and related disclosures. We have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application in our Annual Report on Form 10-K for the year ended December 31, ~~2017. We have updated our revenue recognition policies in conjunction with our adoption of ASC 606 as further described in Note 2:~~ ~~Basis of Presentation and Summary of Significant Accounting Policies~~ ~~in our unaudited condensed consolidated financial statements.~~2018.

We are exposed to market risk from changes in interest rates and currency exchange rates. We manage our exposure to these risks by monitoring available financing alternatives and through pricing policies that may take into account currency exchange rates. Our exposure to market risk has not materially changed from what we previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

We are exposed to interest rate risk on our variable-rate debt, comprised of the term loans, revolver and our ~~timeshare facility,~~Timeshare Facility, of which the ~~timeshare facility~~Timeshare Facility is without recourse to us. The interest rates are based on one-month LIBOR and we are most vulnerable to changes in this rate.

We intend to securitize timeshare financing receivables in the asset-backed financing market periodically. We expect to secure fixed-rate funding to match our fixed-rate timeshare financing receivables. However, if we have variable-rate debt in the future, we will monitor the interest rate risk and evaluate opportunities to mitigate such risk through the use of derivative instruments.

To the extent we utilize variable-rate indebtedness in the future, any increase in interest rates beyond amounts covered under any corresponding derivative financial instruments, particularly if sustained, could have an adverse effect on our net income, cash flows and financial position. Hedging transactions we may enter into may not adequately mitigate the adverse effects of interest rate increases or that counterparties in those transactions will honor their obligations.

The following table sets forth the contractual maturities, weighted-average interest rates and the total fair values as of ~~September~~June 30, ~~2018,~~2019, for our financial instruments that are materially affected by interest rate risk:

				Maturities by Period																			Maturities by Period
($ in millions)	Weighted Average Interest Rate⁽¹⁾			2018		2019		2020		2021		2022		There- after		Total⁽²⁾		Fair Value		Weighted Average Interest Rate⁽¹⁾			2019		2020		2021		2022		2023		There- after		Total⁽²⁾		Fair Value
Assets:
Fixed-rate securitized timeshare financing receivables		11.893	%	$	22	$	90	$	90	$	89	$	86	$	328	$	705	$	741		11.950	%	$	40	$	81	$	80	$	77	$	75	$	226	$	579	$	614
Fixed-rate unsecuritized timeshare financing receivables		12.682	%		26		46		50		54		58		333		567		598		12.685	%		39		58		64		70		75		414		720		773
Liabilities:⁽³⁾
Fixed-rate debt		3.964	%		44		189		166		88		64		443		994		985		4.226	%		111		169		89		65		76		384		894		918
Variable-rate debt⁽⁴⁾		4.105	%		2		10		10		335		—		—		357		364		3.797	%		5		10		10		145		582		—		752		758

Though the majority of our operations are conducted in United States dollar (“U.S. dollar”), we are exposed to earnings and cash flow volatility associated with changes in foreign currency exchange rates. Our principal exposure results from our timeshare financing receivables denominated in Japanese yen, the value of which could change materially in reference to our reporting currency, the U.S. dollar. A 10 percent increase in the foreign exchange rate of Japanese yen to U.S. dollar would increase our gross timeshare financing receivables by less than $1 million.

Our management, including our Chief Executive Officer and Chief ~~Accounting~~Financial Officer, ~~(person currently performing functions similar to those performed by a principal financial officer),~~ does not expect that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act) or our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of the controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error and mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of effectiveness of controls and procedures to future periods are subject to the risk that the controls and procedures may become inadequate because of changes in conditions, or that the degree of compliance with the controls and procedures may have deteriorated.

In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this quarterly report, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief ~~Accounting~~Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief ~~Accounting~~Financial Officer concluded that our disclosure controls and procedures, as of the end of the period covered by this quarterly report, were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including the Chief Executive Officer and Chief ~~Accounting~~Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting that occurred during the three months ended ~~September~~June 30, ~~2018,~~2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We are involved in litigation arising from the normal course of business, some of which includes claims for substantial sums. Management has ~~also identified certain other~~evaluated these legal matters ~~where~~and we believe an unfavorable outcome is either reasonably possible or remote and/or for which are not reasonably estimable. While the ultimate results of claims and litigation cannot be predicted with certainty, we expect that the ultimate resolution of all pending or threatened claims and litigation as of ~~September~~June 30, ~~2018~~2019 will not have a material effect on our unaudited condensed consolidated financial statements.

As of ~~September~~June 30, ~~2018,~~2019, there have been no material changes from the risk factors previously disclosed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2017 and in Item 1A of Part II of our Quarterly Report on Form 10-Q for the period ended June 30, 2018, in each case under the heading “Risk Factors.”~~2018. These risk factors may be important to understanding statements in this Form 10-Q and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q.

The risks described in our Annual Report on Form 10-K for the year ended December 31, ~~2017 and in our Quarterly Report on Form 10-Q for the period ended June 30,~~ 2018 contain forward-looking statements, and they may not be the only risks facing the Company. The business, financial condition and operating results of the Company can be affected by the risk factors described in the foregoing reports and by other factors currently unknown or that management presently believes not to be material. Any one or more of such factors could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and the trading price of our common stock. Because of these factors affecting the Company’s financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.

(c) Issuer Repurchases.In April 2019, our board of directors authorized an additional $200 million of shares repurchases under conditions substantially similar to the November 2018 authorization. During the three months ended June 30, 2019, we repurchased the following shares:

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 1^st day of ~~November 2018.~~August 2019.

Delaware	81-2545345
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

6355 MetroWest Boulevard, Suite 180,
Orlando, Florida	32835
(Address of Principal Executive Offices)	(Zip Code)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.01 par value per share		HGV		New York Stock Exchange

PART I - FINANCIAL INFORMATION

Item 1.		Financial Statements	2
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	3730
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	5444
Item 4.		Controls and Procedures	5545

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings		5646
Item 1A.	Risk Factors		5646
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		5646
Item 3.	Defaults Upon Senior Securities		5646
Item 4.	Mine Safety Disclosures		5646
Item 5.	Other Information		5646
Item 6.	Exhibits		5747
	Signatures		48

($ in millions)
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows from operating leases	$	8
Right-of-use assets obtained in exchange for new operating lease liabilities		1
Weighted-average remaining lease term of operating leases	6.6 years
Weighted-average discount rate of operating leases		5.33	%


Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
Emerging Growth Company	☐

	December 31, 2017		Adjustments			January 1, 2018
($ in millions)
ASSETS
Cash and cash equivalents	$	246	$	—		$	246
Restricted cash		51		—			51
Accounts receivable, net of allowance for doubtful accounts		112		—			112
Timeshare financing receivables, net		1,071		—			1,071
Inventory		509		30			539
Property and equipment, net		238		—			238
Investment in unconsolidated affiliate		41		—			41
Intangible assets, net		72		—			72
Other assets		44		16			60
TOTAL ASSETS	$	2,384	$	46		$	2,430
LIABILITIES AND EQUITY
Liabilities:
Accounts payable, accrued expenses and other	$	339	$	2		$	341
Advanced deposits		104		(17	)		87
Debt, net		482		—			482
Non-recourse debt, net		583		—			583
Deferred revenues		109		112			221
Deferred income tax liabilities		249		(13	)		236
Total liabilities		1,866		84			1,950
Commitments and contingencies
Equity:
Preferred stock, $0.01 par value; 300,000,000 authorized shares, none issued or outstanding as of December 31, 2017		—		—			—
Common stock, $0.01 par value; 3,000,000,000 authorized shares, 99,136,304 issued and outstanding as of December 31, 2017		1		—			1
Additional paid-in capital		162		—			162
Accumulated retained earnings		355		(38	)		317
Total equity		518		(38	)		480
TOTAL LIABILITIES AND EQUITY	$	2,384	$	46		$	2,430


	Remaining		Expected Recognition Period
($ in millions)	Performance Obligation			Q4 2018
Deferred revenues	$	154		$	154
Deferred expenses		72			72

($ in millions)	Remaining Transaction Price		Recognition Period	Recognition Method
Advanced deposits	$	100	18 months	Upon customer stays
Club activation fees		61	7 years	Straight-line basis over average inventory holding period
Club Bonus Points		60	24 months	Upon redemption

	September 30, 2018
	As Reported		Effects of ASC 606			Previous Accounting Guidance
(in millions)
ASSETS
Cash and cash equivalents	$	145	$	—		$	145
Restricted cash		67		—			67
Accounts receivable, net of allowance for doubtful accounts		151		(5	)		146
Timeshare financing receivables, net		1,103		—			1,103
Inventory		582		(47	)		535
Property and equipment, net		538		—			538
Investment in unconsolidated affiliates		33		—			33
Intangible assets, net		73		—			73
Other assets		121		(20	)		101
TOTAL ASSETS	$	2,813	$	(72	)	$	2,741
LIABILITIES AND EQUITY
Liabilities:
Accounts payable, accrued expenses and other	$	337	$	(29	)	$	308
Advanced deposits		100		17			117
Debt, net		530		—			530
Non-recourse debt, net		806		—			806
Deferred revenues		263		(142	)		121
Deferred income tax liabilities		215		30			245
Total liabilities		2,251		(124	)		2,127
Commitments and contingencies
Equity:
Preferred stock, $0.01 par value; 300,000,000 authorized shares, none issued or outstanding as of September 30, 2018		—		—			—
Common stock, $0.01 par value; 3,000,000,000 authorized shares, 96,906,759 issued and outstanding as of September 30, 2018		1		—			1
Additional paid-in capital		174		—			174
Accumulated retained earnings		387		52			439
Total equity		562		52			614
TOTAL LIABILITIES AND EQUITY	$	2,813	$	(72	)	$	2,741

	September 30, 2017
($ in millions)	Securitized and Pledged			Unsecuritized			Total
Balance as of December 31, 2016	$	9		$	111		$	120
Write-offs		—			(27	)		(27	)
Securitization		28			(28	)		—
Provision for loan loss⁽¹⁾		(8	)		53			45
Balance as of September 30, 2017	$	29		$	109		$	138

	June 30, 2018
($ in millions)	Securitized and Pledged			Unsecuritized			Total
Balance as of December 31, 2017	$	27		$	114		$	141
Write-offs		—			(14	)		(14	)
Provision for financing receivables losses⁽¹⁾		(7	)		37			30
Balance as of June 30, 2018	$	20		$	137		$	157

($ in millions)	Operating Leases ⁽¹⁾
Year
2019 (remaining)	$	8
2020		16
2021		15
2022		10
2023		10
Thereafter		32
Total future minimum lease payments	$	91
Less: interest		(15	)
Present value of lease liabilities	$	76

($ in millions)	Operating Leases
Year
2019	$	16
2020		15
2021		14
2022		10
2023		10
Thereafter		29
Total future minimum lease payments	$	94

Expected volatility⁽¹⁾	~~26.6~~33.1	%
Dividend yield⁽²⁾	—	%
Risk-free rate⁽³⁾	~~2.7~~2.6	%
Expected term (in years)⁽⁴⁾	6.0

	2017 Results Adjusted for ASC 606 Adoption
(in millions, except per share data)	First Quarter		Second Quarter		Third Quarter			Fourth Quarter			Full Year
Total revenues	$	387	$	414	$	411		$	424		$	1,636
Total operating expenses		307		340		342			344			1,333
Net income		47		41		39			166			293
Earnings per share:
Basic	$	0.48	$	0.41	$	0.39		$	1.67		$	2.95
Diluted	$	0.48	$	0.41	$	0.39		$	1.66		$	2.94

Net income	$	47	$	41	$	39		$	166		$	293
Interest expense		7		7		7			6			27
Income tax expense (benefit)		26		26		25			(92	)		(15	)
Depreciation and amortization		7		7		7			6			27
Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates		—		—	2				1			3
EBITDA		87		81		80			87			335
Other (gain) loss, net		—		—		(1	)		1			—
Share-based compensation expense		3		5		5			2			15
Other adjustment items ⁽¹⁾		1		3		3			5			12
Adjusted EBITDA	$	91	$	89	$	87		$	95		$	362

	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Appropriate Dollar Value of Shares that May Yet Be Purchased Under Plan
April 1 - April 30, 2019		925,199	$	32.55		925,199	$	201,475,009
May 1 - May 31, 2019		941,000		28.52		941,000		174,633,868
June 1 - June 30, 2019		4,001,216		29.37		4,001,216		57,121,193
Total		5,867,415	$	29.74		5,867,415	$	57,121,193

Exhibit No.		Description

~~10.1~~ 3.1		~~Form of~~ Amended and Restated ~~Performance and Service Based Restricted Stock Unit Agreement (for use for all named executive officers other than Mr. Mark Wang)~~Certificate of Incorporation (incorporated by reference to Exhibit ~~10.1~~3.1 to ~~Hilton Grand Vacation Inc.’s~~the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on ~~August 9, 2018)~~March 17, 2017). †

~~10.2~~ 3.2		~~Form of~~ Amended and Restated ~~Performance and Service Based Restricted Stock Unit Agreement (for Mr. Mark Wang)~~Bylaws (incorporated by reference to Exhibit ~~10.2~~3.2 to ~~Hilton Grand Vacation Inc.’s~~the Registrant’s Current Report on Form 8-K (File No. 001-37794) filed on ~~August 9, 2018)~~March 17, 2017). †

~~10.3~~ 3.3		~~Hilton Resorts Corporation 2017 Executive Deferred Compensation Plan (as amended and restated effective~~Second Supplemental Indenture, dated as of ~~September 1, 2018).~~ †May 29, 2019, by and among the subsidiary guarantors party thereto and Wilmington Trust, National Association, as trustee, to the Indenture, dated as of October 24, 2016, by and among Hilton Grand Vacations Borrower LLC, as the issuer, Hilton Grand Vacations Borrower Inc., as the co-issuer, the guarantors party thereto from time to time, and Wilmington Trust, National Association, as trustee. **

~~11.1~~ 10.1		~~Statement regarding computation~~Joinder Agreement, dated as of ~~earnings per share. See condensed consolidated statements~~April 9, 2019, by and among subsidiary guarantors party thereto and Bank of ~~operations on page 3~~America N.A., as administrative agent and collateral agent, related to the Credit Agreement, dated as of ~~this Form 10-Q~~December 28, 2016, as amended by Amendment No. 1 to the Credit Agreement, dated as of November 28, 2018, by and among Hilton Grand Vacations Borrower LLC, Hilton Grand Vacations Parent LLC, the other guarantors party thereto from time to time, the other lender parties thereto, and Bank of America, N.A., as successor administrative agent, collateral agent, L/C issuer and swing line lender.*

10.2		Omnibus Amendment No. 11 to Receivables Loan Agreement and Amendment No. 5 to Sale and Contribution Agreement, effective as of April 25, 2019, by and among Hilton Grand Vacations Trust I LLC, as borrower, the financial institutions signatory thereto as managing agents, the financial institutions signatory thereto as conduit lenders, the financial institutions signatory thereto as committed lenders, and Bank of America, N.A., as administrative agent and structuring agent. *

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.***

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.***

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.***

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.***

101.INS		XBRL Instance ~~Document.~~Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Label Linkbase Document.

101.PRE		XBRL Taxonomy Presentation Linkbase Document.


HILTON GRAND VACATIONS INC.

	By:	/s/ Mark D. Wang
	Name:	Mark D. Wang
	Title:	President and Chief Executive Officer


	By:	/s/ ~~Allen~~Daniel J. ~~Klingsick~~Mathewes
	Name:	~~Allen~~Daniel J. ~~Klingsick~~Mathewes
	Title:	~~Senior~~Executive Vice President and Chief ~~Accounting~~Financial Officer ~~(currently performing functions substantially similar to those performed by a Principal Financial Officer)~~