<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from .................... to ......................
Commission file number 1-3427
HILTON HOTELS CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 36-2058176
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
9336 CIVIC CENTER DRIVE, BEVERLY HILLS, CALIFORNIA 90210
(Address of principal executive offices) (Zip code)
(310) 278-4321
(Registrant's telephone number, including area code)
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 twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
-----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of July 29, 1994 --- Common Stock, $2.50 par value ---
47,992,021 shares.
<PAGE> 2
Part I FINANCIAL INFORMATION
Company or group of companies for which report is filed:
HILTON HOTELS CORPORATION AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
HILTON HOTELS CONSOLIDATED
CORPORATION STATEMENTS
AND OF INCOME
SUBSIDIARIES (IN MILLIONS,
EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C> <C>
- - -----------------------------------------------------------------------------------------------------------------------
Revenue Rooms $126.6 112.2 237.9 212.1
Food and beverage 62.9 62.2 118.5 117.6
Casino 118.4 116.1 233.0 246.5
Management and franchise fees 24.4 20.4 46.5 40.5
Other 31.4 22.6 58.3 42.6
Operating income
from unconsolidated affiliates 17.5 11.7 25.8 17.5
------------------------------------------------------------------------------------------------
381.2 345.2 720.0 676.8
- - -----------------------------------------------------------------------------------------------------------------------
Expenses Rooms 43.2 38.2 82.2 73.7
Food and beverage 54.1 51.3 104.1 99.6
Casino 54.6 52.8 105.2 107.4
Other costs and expenses 148.9 135.8 288.8 267.9
Corporate expense 6.4 6.9 10.0 13.4
------------------------------------------------------------------------------------------------
307.2 285.0 590.3 562.0
- - -----------------------------------------------------------------------------------------------------------------------
Operating income 74.0 60.2 129.7 114.8
Interest and dividend income 4.8 5.5 9.9 11.2
Interest expense (18.8) (19.8) (37.3) (40.2)
Interest expense, net, from
unconsolidated affiliates (4.0) (3.4) (8.2) (6.9)
Foreign currency losses -- -- (.4) --
- - -----------------------------------------------------------------------------------------------------------------------
Income before
income taxes 56.0 42.5 93.7 78.9
Provision for income taxes 22.1 15.7 37.1 29.0
- - -----------------------------------------------------------------------------------------------------------------------
Income before
cumulative effect of
accounting changes 33.9 26.8 56.6 49.9
Cumulative effect of accounting
changes, net -- -- -- 3.4
- - -----------------------------------------------------------------------------------------------------------------------
Net income $ 33.9 26.8 56.6 53.3
=======================================================================================================================
Net income per share:
Before cumulative effect of accounting changes $ .70 .56 1.17 1.04
Cumulative effect of accounting changes, net -- -- -- .07
- - -----------------------------------------------------------------------------------------------------------------------
Net income per share $ .70 .56 1.17 1.11
=======================================================================================================================
Average number of shares 48.3 48.0 48.3 48.0
=======================================================================================================================
</TABLE>
2
<PAGE> 3
HILTON HOTELS CONSOLIDATED
CORPORATION BALANCE
AND SHEETS
SUBSIDIARIES (IN MILLIONS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
<S> <C> <C> <C>
- - ----------------------------------------------------------------------------------------------------------------------
Assets Current assets
Cash and equivalents $ 341.8 380.4
Temporary investments 91.2 98.1
Other current assets 213.2 248.5
-----------------------------------------------------------------------------------------------
Total current assets 646.2 727.0
Investments 559.6 482.1
Property and equipment, net 1,578.8 1,417.5
Other assets 65.4 48.2
-----------------------------------------------------------------------------------------------
Total assets $2,850.0 2,674.8
======================================================================================================================
Liabilities and Current liabilities
stockholders' equity Accounts payable and accrued expenses $ 273.3 228.5
Short-term borrowings -- 10.8
Current maturities of long-term debt 26.5 29.8
Income taxes payable 19.6 8.8
-----------------------------------------------------------------------------------------------
Total current liabilities 319.4 277.9
Long-term debt 1,238.9 1,112.6
Deferred income taxes
and other liabilities 202.7 227.6
Stockholders' equity 1,089.0 1,056.7
-----------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $2,850.0 2,674.8
======================================================================================================================
</TABLE>
3
<PAGE> 4
HILTON HOTELS CONSOLIDATED
CORPORATION STATEMENTS OF
AND CASH FLOWS
SUBSIDIARIES (IN MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1994 1993
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities Net income $ 56.6 53.3
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 63.6 58.4
Change in working capital
components:
Other current assets (3.2) 4.2
Accounts payable
and accrued expenses 18.9 (5.7)
Income taxes payable 10.8 (1.8)
Decrease in deferred income taxes (18.0) (23.7)
Change in other liabilities (6.8) 14.0
Unconsolidated affiliates'
distributions (less than)
in excess of earnings (6.3) 8.6
Other (.5) (1.5)
- - --------------------------------------------------------------------------------------------------------------------
Net cash provided by operating
activities 115.1 105.8
- - --------------------------------------------------------------------------------------------------------------------
Investing activities Capital expenditures (111.5) (60.7)
Additional investments (115.9) (32.0)
Decrease in long-term
marketable securities 37.5 66.9
Change in temporary investments 6.9 (10.5)
Payments on notes
and other investments 51.1 .1
- - --------------------------------------------------------------------------------------------------------------------
Net cash used in investing
activities (131.9) (36.2)
- - --------------------------------------------------------------------------------------------------------------------
Financing activities Long-term borrowings 59.3 --
Decrease in short-term borrowings (10.8) (65.0)
Reduction of long-term debt (46.0) (23.8)
Issuance of common stock 4.5 4.5
Cash dividends (28.8) (28.7)
- - --------------------------------------------------------------------------------------------------------------------
Net cash used in financing
activities (21.8) (113.0)
- - --------------------------------------------------------------------------------------------------------------------
Decrease in cash and equivalents (38.6) (43.4)
Cash and equivalents at beginning of year 380.4 348.5
- - --------------------------------------------------------------------------------------------------------------------
Cash and equivalents at end of period $341.8 305.1
====================================================================================================================
</TABLE>
4
<PAGE> 5
HILTON HOTELS SUMMARY
CORPORATION OF
AND OPERATIONS
SUBSIDIARIES (IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1994 1993 1994 1993
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue Hotels $160.0 133.1 286.8 245.4
Gaming 221.2 212.1 433.2 431.4
------------------------------------------------------------------------------------------------
Total $381.2 345.2 720.0 676.8
=======================================================================================================================
Operating income Hotels $ 43.7 29.7 64.4 42.5
Gaming 36.7 37.4 75.3 85.7
Corporate expense (6.4) (6.9) (10.0) (13.4)
------------------------------------------------------------------------------------------------
Total 74.0 60.2 129.7 114.8
Net interest expense (18.0) (17.7) (35.6) (35.9)
Foreign currency losses -- -- (.4) --
Provision for income taxes (22.1) (15.7) (37.1) (29.0)
- - -----------------------------------------------------------------------------------------------------------------------
Income before
cumulative effect of
accounting changes 33.9 26.8 56.6 49.9
Cumulative effect of accounting
changes, net -- -- -- 3.4
- - -----------------------------------------------------------------------------------------------------------------------
Net income $ 33.9 26.8 56.6 53.3
=======================================================================================================================
Percentage of
occupancy Hotels 72 70 69 68
Gaming 90 87 88 84
=======================================================================================================================
</TABLE>
5
<PAGE> 6
NET INCOME PER SHARE
The calculations of common and equivalent shares, net income and net income per
share are as follows:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1994 1993 1994 1993
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Common and equivalent shares
- - ----------------------------
Shares outstanding
beginning of period 47,976,144 47,740,742 47,846,854 47,677,922
Net common shares issued/
issuable upon exercise
of certain stock
options 340,570 307,112 453,680 320,448
---------- ----------- ---------- ----------
Common and equivalent
shares 48,316,714 48,047,854 48,300,534 47,998,370
========== ========== ========== ==========
Net income (in millions)
- - ----------
Income before cumulative
effect of accounting
changes $33.9 26.8 $56.6 49.9
Cumulative effect of
accounting changes, net - - 3.4
----- ---- ----- ----
Net income $33.9 26.8 $56.6 53.3
===== ==== ===== ====
Net income per share
- - --------------------
Income before cumulative
effect of accounting
changes $.70 .56 $1.17 1.04
Cumulative effect of
accounting changes, net - - - .07
---- --- ----- ----
Net income per share $.70 .56 $1.17 1.11
==== === ===== ====
Dividends declared per share $.30 .30 $ .60 .60
==== === ===== ====
</TABLE>
6
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: General
The consolidated financial statements presented herein have been prepared by
the Company in accordance with the accounting policies described in its 1993
Annual Report to Stockholders and should be read in conjunction with the Notes
to Consolidated Financial Statements which appear in that report.
The statements for the three and six months ended June 30, 1994 and
1993 are unaudited; however, in the opinion of management, all adjustments
(which include only normal recurring accruals) have been made which are
considered necessary to present fairly the operating results for the unaudited
periods.
Note 2: Supplemental Cash Flow Information
<TABLE>
<CAPTION>
Six months ended
June 30,
1994 1993
---- ----
(in millions)
<S> <C> <C>
Cash paid during the period
for the following:
Interest, net of amounts capitalized $36.1 $38.8
Income taxes 43.7 37.8
</TABLE>
Note 3: Investments
Summarized operating results of the Company's unconsolidated affiliates are as
follows:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1994 1993 1994 1993
---- ---- ---- ----
(in millions)
<S> <C> <C> <C> <C>
Revenue $306.8 $251.0 $590.5 $487.9
Expenses 261.7 216.2 524.3 442.6
Net Income 38.2 34.2 53.2 44.3
</TABLE>
On June 16, 1994 the Company purchased an additional 20.6% interest in the
partnership that owns the 1,602-room New Orleans Hilton Riverside for $18.7
million, thereby increasing its ownership in the partnership to 67.4%. Prior to
the acquisition date, the Company accounted for its investment in the
partnership under the equity method of accounting. As the Company currently
owns in excess of 50% of this partnership, the operating results from June 16,
1994 and the June 30, 1994 balance sheet of the New Orleans Hilton Riverside
are included in the consolidated financial statements of the Company presented
herein.
7
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The summarized information below represents the incremental effect of including
the balance sheet of the New Orleans Hilton Riverside in the consolidated
balance sheet of the Company at June 30, 1994:
<TABLE>
<CAPTION>
(in millions)
<S> <C>
Current assets $ 11.2
Fixed assets, net 92.6
Other long-term assets 13.9
------
Total assets $117.7
======
Current liabilities $ 9.8
Long-term debt 107.9
------
Total liabilities $117.7
======
</TABLE>
Note 4: Income taxes
In February 1992, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 109, Accounting for
Income Taxes, which superseded previously issued standards. The Company
adopted SFAS No. 109 effective January 1, 1993. As permissible under the new
standard, the Company reflected the impact as a cumulative adjustment in the
1993 first quarter and did not restate prior periods. The new standard had a
favorable impact on net income of $8.0 million and is reflected in the
Consolidated Statements of Income under the caption "Cumulative Effect of
Accounting Changes, Net."
Note 5: Employee Benefit Plans
In December 1990, the FASB issued SFAS No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions. The Company adopted SFAS No. 106
effective January 1, 1993. As permissible under the new standard, the Company
reflected the impact as a cumulative adjustment in the 1993 first quarter and
did not restate prior periods. The new standard resulted in a charge to net
income of $4.6 million, net of a $2.3 million deferred tax benefit, and is
reflected in the Consolidated Statements of Income under the caption
"Cumulative Effect of Accounting Changes, Net."
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
CASH FLOW AND WORKING CAPITAL
Net cash provided by operating activities totaled $115.1 million for the six
months ended June 30, 1994 compared to $105.8 million in the same period last
year. The 1993 period included a $12.1 million distribution from an
unconsolidated affiliate as part of a refinancing of the affiliate's long-term
debt.
Working capital declined $122.3 million during the six month period to
$326.8 million from $449.1 million at December 31, 1993. During the six month
period, the Company utilized its working capital to fund capital requirements
related to new construction and investments. Capital expenditures totaled
$129.3 million in the 1994 period, including a $17.8 million increase in
construction payables, while new investments totaled $115.9 million.
The Company anticipates that capital expenditures and investments will
total approximately $400 million in 1994. The Company intends to fund this
amount through internal cash flows, available debt capacity or new borrowings.
The Company had previously been awarded the right to develop two
riverboat casinos in Kansas City, Missouri. Due to changing regulatory
requirements, changes in Missouri gaming laws and certain site constraints and
concerns, the Port Authority of Kansas City and the Company modified their
original agreement to permit the Company to develop and operate one riverboat
casino in Kansas City. The revised agreement calls for a floating facility
with up to 25,000 square feet of casino space, with an option to expand up to
50,000 square feet. Development will also include a parking
facility and a 70,000 square-foot land-based building for food service,
concessions and entertainment. The estimated cost of this development,
excluding the aforementioned option, is approximately $70 million. Subject to
the waiver of certain contingencies, final approval by the City Council and
Port Authority and licensing approvals, it is anticipated that a temporary
floating casino could be in operation in spring 1995.
In May 1994 the Company contributed $42.6 million to one of its hotel
joint ventures to retire long-term debt. Additionally, on June 16, 1994, the
Company purchased, for $18.7 million, an additional 20.6% interest in the
partnership that owns the 1,602-room New Orleans Hilton Riverside ("New Orleans
Partnership"). In June 1993 the Company had increased its ownership in this
entity from 21.6% to 46.8%. Combined with the June 1994 purchase, the Company
now owns 67.4% of the New Orleans Partnership.
As the Company currently owns in excess of 50% of the New Orleans
Partnership, the operating results from June 16, 1994 and the June 30, 1994
balance sheet of this entity are included in the consolidated financial
statements of the Company.
LONG-TERM DEBT
Long-term debt at June 30, 1994 totaled $1.2 billion compared to $1.1 billion
at December 31, 1993. Included in the 1994 total is $107.9 million of
long-term debt of the New Orleans Partnership that is now included in the
consolidated balance sheet of the Company.
9
<PAGE> 10
Under registration statements currently on file with the
Securities and Exchange Commission, the Company had authority to offer up to
$999.2 million in either senior notes or a combination of senior and
subordinated notes, with the subordinated notes limited to $300 million.
The Company also had authorization to issue up to $300 million in
private debt securities. However, the maximum principal amount of public debt
securities and private debt securities, either exclusively in the form of
public senior debt securities or, alternatively, in the form of one or more
combinations of public senior debt securities, public subordinated debt
securities and private debt securities, is limited to $1.0 billion.
Available financing under the aforementioned public and private
authorizations at June 30, 1994 totaled $336.0 million.
The Company has authorization to borrow up to $600 million through
either the issuance of commercial paper, draw downs on revolving bank credit
facilities or a combination thereof. At June 30, 1994 the Company had $327.1
million in commercial paper outstanding and $81.4 million in borrowings under
its various revolving bank credit facilities. Available commercial paper and
revolving bank debt financing at June 30, 1994 was $191.5 million.
RESULTS OF OPERATIONS
COMPARISON OF FISCAL QUARTERS ENDED JUNE 30, 1994 AND 1993
Total revenue in the second quarter increased 10 percent to $381.2 million,
while total operating income increased 23 percent to $74.0 million from $60.2
million in the 1993 quarter.
HOTELS
Hotel revenue in the second quarter was $160.0 million, an increase of
20 percent over last year, while hotel operating income increased 47 percent to
$43.7 million. In addition to continued strong results at the Company's
airport and secondary market locations, significant improvements in operating
income were recorded in many of the Company's major market properties.
Combined results from the Waldorf-Astoria and the 50% owned New York
Hilton & Towers increased $3.1 million over the prior year. The Waldorf-Astoria
and New York Hilton recorded increases in occupancy of 14 percent and 5 percent,
respectively, and both properties reported higher average rates. Improvements
were primarily due to increased individual business traveler (IBT) room nights
at the Waldorf-Astoria and increased convention and IBT room nights at the
New York Hilton.
Operating results from the 50% owned Hilton Hawaiian Village improved
$1.7 million over the prior year. Occupancy at this property increased six
percentage points primarily due to higher volume in both the group tour and
convention markets.
10
<PAGE> 11
The Company's share of earnings from the New Orleans Hilton Riverside
rose $2.4 million over the prior year quarter. This increase was almost
entirely due to the Company's increased ownership of that property.
Operating income from the 30% owned Conrad Hong Kong increased $.5 million
over 1993.
Hotel management and franchise fees increased $3.1 million in the 1994
quarter to $21.9 million. Fee revenue is primarily based on operating revenue
at managed properties and room revenue at franchised hotels.
Occupancy for hotels owned or managed was 72 percent in 1994 and 69
percent in 1993. Average room rates increased eight percent over the prior
year.
GAMING
Total gaming revenue increased four percent in the second quarter to $221.2
million from $212.1 million in 1993. Casino revenue, a component of gaming
revenue, was $118.4 million in 1994 compared to $116.1 million last year.
Gaming operating income decreased two percent to $36.7 million from $37.4
million last year. Excluding the quarterly results of the Queen of New Orleans
river casino, which opened in February 1994, revenue increased three percent
and operating income decreased ten percent from the prior year quarter on a
comparable basis.
Operating income at the Flamingo Hilton-Las Vegas decreased $3.7
million from the prior year reflecting a reduction of approximately 490
available rooms per day due to construction activities at that property. While
occupancy rose 13 percentage points at the Las Vegas Hilton, results were down
slightly from the prior year due to lower operating margins. The Flamingo
Hilton properties in Reno and Laughlin posted modest improvements over the
prior year quarter. However, results from the Reno Hilton decreased $1.6
million due to lower operating margins.
Operating income from the 19.96% owned Conrad & Jupiters Casino in
Australia improved slightly, while results from the 25% owned Conrad Istanbul
remained flat with the prior year.
The 50,000 square-foot Casino Windsor, located in Windsor, Ontario,
Canada, opened in May 1994. This facility is being operated for the Provincial
Government of Ontario by a consortium of Hilton Hotels Corporation, Caesars
World, Inc. and Circus Circus Enterprises, Inc. The Company's one-third
interest in the net operator fees of this facility was not significant to the
quarterly results.
Occupancy for the Nevada hotel-casinos was 94 percent in the 1994
quarter versus 90 percent last year. The average room rate for Nevada
increased two percent.
INTEREST AND DIVIDEND INCOME/EXPENSE
Interest and dividend income was $4.8 million in the 1994 quarter compared to
$5.5 million in 1993. Consolidated interest expense decreased $1.0 million to
$18.8 million in the 1994 period, while net interest expense from
unconsolidated affiliates increased $.6 million.
11
<PAGE> 12
INCOME TAXES
The effective income tax rate for the 1994 period was 39.5 percent compared to
36.9 percent in 1993. The Company's effective income tax rate is determined
by the level and composition of pretax income subject to varying foreign,
state and local taxes.
The provision for income taxes in the 1994 quarter includes a Federal
provision at the statutory rate of 35 percent. The provision for income taxes
in the 1993 quarter included a Federal provision at the 34 percent statutory
rate then in effect.
NET INCOME
Second quarter net income increased 26 percent to $33.9 million, or $.70 per
share, from $26.8 million, or $.56 per share in 1993. The average number of
common and equivalent shares outstanding were 48.3 million and 48.0 million in
1994 and 1993, respectively.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1994 AND 1993
Total revenue for the six month period was $720.0 million, an increase of six
percent over last year. Total operating income increased 13 percent in 1994 to
$129.7 million from $114.8 million in 1993.
HOTELS
Hotel revenue in the 1994 period increased 17 percent to $286.8 million, while
hotel operating income increased 52 percent to $64.4 million.
During the current six month period, most of the Company's owned and
partially owned hotels posted improvements over the 1993 period. Combined
results from airport properties increased 150 percent or $4.1 million over
last year. Operating results from the Company's key downtown properties
in New York City, New Orleans and Chicago increased $4.7 million, $3.7
million, and $.9 million, respectively. The improved results from the New
Orleans Hilton Riverside were due to higher occupancy and average room rate and
the Company's increased ownership in this property. Six month operating income
from the Hilton Hawaiian Village increased $2.3 million over the prior year.
Management and franchise fees for the six month period increased 13
percent or $4.7 million over the prior year.
Occupancy for hotels owned or managed was 69 percent in 1994 compared
to 68 percent in 1993. Average room rates increased six percent over the prior
year.
12
<PAGE> 13
GAMING
Revenue from the gaming segment was $433.2 million in 1994 compared to $431.4
million in 1993. Casino revenue decreased $13.5 million or five percent from
1993. Gaming operating income decreased $10.4 million or 12 percent from the
prior year. Excluding the results of the Queen of New Orleans river casino,
operating income declined 16 percent from 1993 on a comparable basis.
For the six month period, the Flamingo Hilton-Las Vegas and the Las
Vegas Hilton experienced declines in operating income of $6.7 million and $10.2
million, respectively, from 1993. Results at the Flamingo Hilton-Las Vegas
were adversely impacted by the aforementioned reduction in available room
nights. The decline at the Las Vegas Hilton was primarily due to unusually
high table game win percentages in the 1993 first quarter. Results at the Las
Vegas Hilton are typically more volatile than the Company's other casinos since
this property caters to the premium play segment of the market.
Occupancy for the Nevada hotel-casinos was 91 percent in the 1994
period versus 87 percent last year. The average room rate for Nevada increased
three percent.
INTEREST AND DIVIDEND INCOME/EXPENSE
Interest and dividend income decreased $1.3 million from the prior year
primarily due to lower investable balances. Consolidated interest expense
declined $2.9 million due to lower average debt levels and higher amounts of
capitalized interest on construction projects. Net interest from
unconsolidated affiliates increased $1.3 million.
INCOME TAXES
The effective income tax rate for the 1994 six month period was 39.6 percent
compared to 36.8 percent in 1993. The increase is primarily due to the
aforementioned change in the Federal statutory rate.
NET INCOME
Net income for the six month period increased 13 percent to $56.6 million, or
$1.17 per share, from $49.9 million, or $1.04 per share in 1993, before the
cumulative effect of accounting changes. The accounting changes were related
to the January 1, 1993 implementation of new accounting standards for income
taxes and postretirement benefits and resulted in additional net income of $3.4
million or $.07 per share in 1993. The average number of common and equivalent
shares outstanding were 48.3 million and 48.0 million in 1994 and 1993,
respectively.
NEW ACCOUNTING STANDARDS
In February 1992, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 109,
Accounting for Income Taxes, which superseded previously issued standards. The
Company adopted SFAS 109 effective January 1, 1993. As permissible under the
new standard, the Company reflected the impact as a cumulative adjustment in
the 1993 first quarter and did not restate prior periods. The new
13
<PAGE> 14
standard had a favorable impact on net income of $8.0 million.
In December 1990, the FASB issued SFAS No. 106, Employers' Accounting
for Postretirement Benefits Other Than Pensions. The Company adopted SFAS 106
effective January 1, 1993. As permissible under the new standard, the Company
reflected the impact as a cumulative adjustment in the 1993 first quarter and
did not restate prior periods. The new standard resulted in a charge to net
income of $4.6 million, net of a $2.3 million deferred tax benefit.
14
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the second quarter of fiscal 1994.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements 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.
HILTON HOTELS CORPORATION
(Registrant)
Date: August 5, 1994 /S/ STEVE KRITHIS
--------------------------
Steve Krithis
Vice President & Corporate
Comptroller
(Acting Chief Financial and
Accounting Officer)
Date: August 5, 1994 /S/ WILLIAM C. LEBO, JR.
--------------------------
William C. Lebo, Jr.
Senior Vice President and
General Counsel
16
