(in millions)

Unaudited Pro Forma Combined Statement of Operations Data:

Total revenues

Total operating expenses

Loss before income taxes

Net loss

Basic loss per share

Diluted loss per share

(in millions)

Unaudited Pro Forma Combined Balance Sheet Data:

Cash and cash equivalents

Timeshare financing receivables, net

Goodwill

Total assets

Debt, net

Non-recourse debt, net

HGV’s audited consolidated financial statements and related notes as of and for the year ended December 31, 2020, and unaudited condensed consolidated financial statements and related notes as of and for the six months ended June 30, 2021, which are set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 1, 2021, and the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, as filed with the SEC on July 29, 2021, respectively; and

Diamond’s audited consolidated financial statements and related notes as of and for the year ended December 31, 2020, and unaudited condensed consolidated financial statements and related notes as of and for the six months ended June 30, 2021, which are included as Exhibits 99.2 and 99.1, respectively, to this Current Report on Form 8-K/A.

ASSETS

Cash and cash equivalents

Restricted cash

Accounts receivable, net of allowance for doubtful accounts

Timeshare financing receivables, net

Inventory

Property and equipment, net

Operating lease right-of-use assets, net

Investments in unconsolidated affiliates

Intangible assets, net

Goodwill

Land and infrastructure held for sale

Other assets

TOTAL ASSETS

LIABILITIES AND EQUITY

Accounts payable, accrued expenses and other

Advanced deposits

Debt, net

Non-recourse debt, net

Operating lease liabilities

Deferred revenues

Deferred income tax liabilities

Total liabilities

Equity:

Preferred Stock

Common stock

Additional paid-in capital

Accumulated retained earnings (loss)

Total equity

TOTAL LIABILITIES AND EQUITY

Revenues

Sales of VOIs, net

Sales, marketing, brand and other fees

Financing

Resort and club management

Rental and ancillary services

Cost reimbursements

Total revenues

Expenses

Cost of VOI sales

Sales and marketing

Financing

Resort and club management

Rental and ancillary services

General and administrative

Depreciation and amortization

License fee expense

Impairment expense

Cost reimbursements

Total operating expenses

Interest expense

Equity in earnings from unconsolidated affiliates

Other loss, net

(Loss) income before income taxes

Income tax benefit (expense)

Net (loss) income

Earnings (loss) per share

Basic

Diluted

Revenues

Sales of VOIs, net

Sales, marketing, brand and other fees

Financing

Resort and club management

Rental and ancillary services

Cost reimbursements

Total revenues

Expenses

Cost of VOI sales

Sales and marketing

Financing

Resort and club management

Rental and ancillary services

General and administrative

Depreciation and amortization

License fee expense

Impairment expense

Cost reimbursements

Total operating expenses

Interest expense

Equity in earnings from unconsolidated affiliates

Other gain, net

(Loss) income before income taxes

Income tax benefit (expense)

Net (loss) income

Loss per share

Basic

Diluted

Description of the Merger and Basis of Pro Forma Presentation

Consideration Transferred

HGV Shares Issued ⁽¹⁾

Stock Price per Share ⁽²⁾

Stock Purchase Price

Repayment of Diamond Debt ⁽³⁾

Total Consideration Transferred

HGV shares issued is based on a fixed base purchase price quantity of shares, reduced by certain closing leakage and excluded liabilities as defined in the Merger Agreement.

Stock price is the closing price of HGV stock on July 30, 2021.

This reflects the balance of Diamond’s debt to be repaid as of June 30, 2021, as well as $34 million of accrued interest. Refer to Note 5 below for more information about debt repayment.

Preliminary Fair Values of Assets Acquired and Liabilities Assumed

Assets acquired

Cash and cash equivalents

Restricted cash

Accounts receivable, net of allowance for doubtful accounts

Timeshare financing receivables

Inventory

Property and equipment

Operating lease right-of-use assets

Intangible assets

Other assets

Total assets acquired

Liabilities assumed

Accounts payable, accrued expenses and other

Debt

Non-recourse debt

Operating lease liabilities

Deferred revenues

Deferred income tax liabilities

Total liabilities assumed

Net assets acquired

Total consideration transferred

Goodwill ⁽²⁾

The allocation of assets and liabilities was performed in accordance with ASC 805, Business Combinations, utilizing the definition of fair value as defined in ASC 820, Fair Value Measurement.

Excludes tax effects; refer to Note 6(h).

Trade name

Management contracts

Club member relationships

Vacation ownership relationships

Intangible Assets

Reclassification Adjustments

Assets

Cash and cash equivalents

Cash in escrow and restricted cash

Restricted cash

Vacation Interests notes receivable, net

Due from related parties, net

Other receivables, net

Income tax receivable, net

Accounts receivable, net of allowance for doubtful accounts

Timeshare financing receivables, net

Unsold Vacation Interests

Inventory

Property and equipment, net

Prepaid expenses and other assets

Operating lease right-of-use assets, net

Other intangible assets, net

Intangible assets, net

Goodwill

Assets held for sale

Deferred tax asset

Other assets

Total assets

Liabilities and Equity

Accounts payable

Due to related parties, net

Accrued liabilities

Income taxes payable

Accounts payable, accrued expenses, and other

Corporate indebtedness, net

Debt, net

Securitization notes and Funding Facilities, net

Non-recourse debt, net

Operating lease liabilities

Deferred income taxes, net

Deferred revenues

Deferred income tax liabilities

Total liabilities

Equity

Preferred stock

Common stock

Additional paid-in capital

Accumulated other comprehensive income

Accumulated loss

Accumulated retained earnings

Total equity

Total liabilities and equity

Revenues

Vacation Interests sales, net of provision

Sales of VOIs, net

Sales, marketing, brand and other fees

Financing

Consumer financing interest

Resort and club management

Management and member services

Rental and ancillary services

Other

Cost reimbursements

Total revenues

Expenses

Vacation interests cost of sales

Cost of VOI sales

Advertising, sales and marketing

Vacation Interests carrying cost, net

Management and member services

Sales and marketing

Financing

Loan portfolio

Resort and club management

Rental and ancillary services

General and administrative

Depreciation and amortization

Goodwill impairment

Other impairments and write-offs

Impairment expense

Consumer financing interest

Gain on disposal of assets, net

Cost reimbursements

Total operating expenses

Interest income

Corporate indebtedness interest expense

Interest expense

Other (gain) loss, net

Loss on extinguishment of debt

Loss before income taxes

Income tax benefit

Benefit for income taxes

Net loss

Management and member services revenue was reclassified into the following financial statement line items: (i) Resort and club management revenue, (ii) Rental and ancillary revenue, and (iii) Cost reimbursement revenue.

Other revenue was reclassified into the following financial statement line items: (i) Sale of VOIs, (ii) Sales, marketing, and brand revenue, (iii) Financing revenue, (iv) Resort and club management revenue, and (v) Rental and ancillary revenue.

Vacation interests carrying cost was reclassified into the following financial statement line items: (i) Sales, marketing, brand and other fees, (ii) Rental and ancillary revenue, (iii) Sales and marketing expense, and (iv) Rental and ancillary expense.

Management and member services expense was reclassified into the following financial statement line items: (i) Resort and club management expenses, (ii) Rental and ancillary expense, and (iii) Cost reimbursement expense.

Revenues

Vacation Interests sales, net of provision

Sales of VOIs, net

Sales, marketing, brand and other fees

Financing

Consumer financing interest

Resort and club management

Management and member services

Rental and ancillary services

Other

Cost reimbursements

Total revenues

Expenses

Vacation interests cost of sales

Cost of VOI sales

Advertising, sales and marketing

Vacation Interests carrying cost, net

Management and member services

Sales and marketing

Financing

Loan portfolio

Resort and club management

Rental and ancillary services

General and administrative

Depreciation and amortization

Goodwill impairment

Other impairments and write-offs

Impairment expense

Consumer financing interest

Gain on disposal of assets, net

Cost reimbursements

Total operating expenses

Interest income

Corporate indebtedness interest expense

Interest expense

Other (gain) loss, net

Loss on extinguishment of debt

Loss before income taxes

Income tax benefit

Benefit for income taxes

Net loss

Management and member services revenue was reclassified into the following financial statement line items: (i) Resort and club management revenue, (ii) Rental and ancillary revenue, and (iii) Cost reimbursement revenue.

Other revenue was reclassified into the following financial statement line items: (i) Sale of VOIs, (ii) Sales, marketing, and brand revenue, (iii) Financing revenue, (iv) Resort and club management revenue, and (v) Rental and ancillary revenue.

Vacation interests carrying cost was reclassified into the following financial statement line items: (i) Sales, marketing, brand and other fees, (ii) Rental and ancillary revenue, (iii) Sales and marketing expense, and (iv) Rental and ancillary expense.

Management and member services expense was reclassified into the following financial statement line items: (i) Resort and club management expenses, (ii) Rental and ancillary expense, and (iii) Cost reimbursement expense.

Financing

Transaction Accounting Adjustments

Reflect the consideration transferred to acquire Diamond; refer to Note 2.

Remove the historical equity balances of Diamond.

Reflect preliminary fair value adjustments to acquired assets and liabilities and recognize goodwill; refer to Note 3 for preliminary fair values.

Reflect repayment of Diamond debt as follows:

Repayment of principal⁽¹⁾⁽²⁾

Repayment of accrued interest⁽¹⁾⁽³⁾

Derecognition of unamortized debt issuance costs⁽²⁾

Offset to Cash and cash equivalents. Refer to adjustment (a).

Adjustment to Debt, net

Adjustment to Accounts payable, accrued expenses and other

Timeshare financing receivables are in scope of ASC 326, Financial Instruments – Credit Losses (“ASC 326” or “CECL”) which includes guidance on purchased financial assets with credit deterioration (“PCD”). CECL requires recognition of an allowance at the closing of the Merger for any purchased credit deteriorated (“PCD”) loans from the Diamond loan portfolio. CECL also requires an additional allowance for non-PCD loans from the Diamond portfolio which will be recognized through the income statement of HGV following the closing of the Merger. HGV is continuing to evaluate the loan detail of the acquired Diamond timeshare financing receivables as well as the change in credit environment and credit quality since origination of those assets; this evaluation impacts the determination of which acquired timeshare financing receivables have experienced credit deterioration and are considered PCD. The impact of this analysis on our pro forma financial statements could be material.

Reflect financing obtained by HGV, including the term loan facility, the notes, and a draw of the revolving credit facility, net of debt issuance costs, to fund the repayment of certain existing indebtedness of HGV and Diamond, as follows:

Notes, term facility and amended revolving facility

Repayment of HGV existing revolver, term loan, and senior notes

Debt issuance costs

Reflect transaction costs.

Record an increase to deferred tax liabilities based on the blended foreign, federal, and state statutory rate of approximately 24% multiplied by the fair value adjustments related to the assets acquired and liabilities assumed. Deferred taxes relating to goodwill for prior Diamond acquisitions and repaid debt have also been removed from the pro forma financial statements.

Record the reduction in income taxes currently payable to reflect the tax impact of pro forma adjustments made to non-recurring transaction costs.

Record the settlement of the interest rate swap related to the variable rate Diamond debt that is repaid.

Reflect incremental depreciation expense related to the fair value adjustment on property and equipment based on the remaining useful life.

Reflect incremental amortization of acquired intangible assets.

Decrease financing revenue related to the accretion of the discount related to net fair value adjustments on timeshare financing receivables, based on the weighted average remaining life, excluding the impact of prepayments.

Decrease financing expense related to the amortization of the premium related to net fair value adjustment on warehouse funding facilities based on the weighted average remaining life.

As discussed in (d), timeshare financing receivables are in scope of ASC 326, including the guidance on purchased financial assets with credit deterioration. HGV is continuing to evaluate the loan detail of the acquired Diamond timeshare financing receivables as well as the change in credit environment and credit quality since origination of those assets; this evaluation impacts the determination of which acquired timeshare financing receivables have experienced credit deterioration and are considered PCD. The impact of this analysis on our financial statements could be material.

Recognize a net reduction of interest expense related to the financing obtained by HGV for the transaction, as follows. The pro forma interest expense for the term facility and the amended revolving facility is based on the variable interest rates specified in the Commitment Letter (Exhibit 10.1 to Form 8-K dated March 11, 2020) and for the notes is based on the fixed interest rate received under the debt offering. The weighted average interest rate for pro forma purposes on the notes, term facility and amended revolving facility is 4.12%. A change in the interest rate by 1/8% (12.5 basis points) is not expected to be material. Finally, in connection with the bridge loan, an increase in interest expense was recognized on consummation of the transaction related to loan commitment and funding fees, as such amounts will still be incurred by HGV, despite the bridge loan facility being terminated.

Remove historical interest expense associated with Diamond debt repaid

Remove historical interest expense associated with HGV debt repaid

Interest expense on the notes, term facility and amended revolving facility, net

Loan commitment and funding fees on bridge loan

Reflect transaction costs.

Recognize employee compensation arrangements.

Adjust HGV shares outstanding as of the year ended December 31, 2020 and the six months ended June 30, 2021, for the transaction and calculate pro forma earnings per share as follows. Given that the combined entity is operating at a net loss, an adjustment for dilution was not required.

Pro forma net loss attributable to common shareholders

Basic weighted average HGV shares outstanding

Diamond shares converted to HGV shares

Pro forma basic weighted average shares outstanding

Pro forma basic loss per share

Decrease financing expense related to the amortization of the premium related to net fair value adjustment on securitizations based on the average remaining life.

Record the income tax effect of the pro forma adjustments, based on a blended foreign, federal, and state statutory rate of approximately 24%. The effective tax rate of the combined company could be significantly different than what is presented in these unaudited pro forma financial statements depending on post-acquisition activities, including legal entity restructuring, repatriation decisions, and the geographical mix of taxable income.

Adjust interest expense for settlement of Diamond interest rate swap related to the variable rate Diamond debt that is repaid.