<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 September 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)
DELAWARE 36-2058176
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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 October 31, 1994 --- Common Stock, $2.50 par value ---
48,067,705 shares.
<PAGE> 2
PART 1 FINANCIAL INFORMATION
Company or group of companies for which report is filed:
HILTON HOTELS CORPORATION AND SUBSIDARIES
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED
STATEMENTS
OF INCOME
(IN MILLIONS,
EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Revenue Rooms $134.0 114.0 371.9 326.1
Food and beverage 59.2 55.8 177.7 173.4
Casino 123.6 129.3 356.6 375.8
Management and franchise fees 22.8 19.1 69.3 59.6
Other 32.7 22.3 91.0 64.9
Operating income
from unconsolidated affiliates 8.6 6.2 34.4 23.7
-------------------------------------------------------------------------------------------------
380.9 346.7 1,100.9 1,023.5
- ------------------------------------------------------------------------------------------------------------------------
Expenses Rooms 45.2 39.0 127.4 112.7
Food and beverage 54.7 49.2 158.8 148.8
Casino 55.2 53.4 160.4 160.8
Other costs and expenses 153.8 132.8 442.6 400.7
Corporate expense 9.6 6.2 19.6 19.6
-------------------------------------------------------------------------------------------------
318.5 280.6 908.8 842.6
- ------------------------------------------------------------------------------------------------------------------------
Operating income 62.4 66.1 192.1 180.9
Interest and dividend income 5.6 4.1 15.5 15.3
Interest expense (20.6) (20.5) (57.9) (60.7)
Interest expense, net, from
unconsolidated affiliates (1.9) (4.0) (10.1) (10.9)
Property transactions .7 (4.5) .7 (4.5)
Foreign currency gains (losses) .2 (1.2) (.2) (1.2)
- ------------------------------------------------------------------------------------------------------------------------
Income before
income taxes and
minority interest 46.4 40.0 140.1 118.9
Provision for income taxes 19.0 19.5 56.1 48.5
Minority interest, net (.4) -- (.4) --
- ------------------------------------------------------------------------------------------------------------------------
Income before
cumulative effect of
accounting changes 27.0 20.5 83.6 70.4
Cumulative effect of accounting
changes, net -- -- -- 3.4
- ------------------------------------------------------------------------------------------------------------------------
Net income $ 27.0 20.5 83.6 73.8
========================================================================================================================
Net income per share:
Before cumulative effect of accounting changes $ .56 .43 1.73 1.47
Cumulative effect of accounting changes, net -- -- -- .07
- ------------------------------------------------------------------------------------------------------------------------
Net income per share $ .56 .43 1.73 1.54
========================================================================================================================
Average number of
shares 48.4 48.0 48.3 48.0
========================================================================================================================
</TABLE>
2
<PAGE> 3
CONSOLIDATED
BALANCE
SHEETS
(IN MILLIONS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1994 1993
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
Assets Current assets
Cash and equivalents $ 179.4 380.4
Temporary investments 190.3 98.1
Other current assets 232.2 248.5
------------------------------------------------------------------------------------------------
Total current assets 601.9 727.0
Investments 513.4 482.1
Property and equipment, net 1,631.1 1,417.5
Other assets 52.8 48.2
------------------------------------------------------------------------------------------------
Total assets $2,799.2 2,674.8
=======================================================================================================================
Liabilities and Current liabilities
stockholders' equity Accounts payable and accrued expenses $ 249.7 228.5
Short-term borrowing -- 10.8
Current maturities of long-term debt 41.5 29.8
Income taxes payable 14.1 8.8
------------------------------------------------------------------------------------------------
Total current liabilities 305.3 277.9
Long-term debt 1,195.3 1,112.6
Deferred income taxes and other liabilities 198.8 227.6
Stockholders' equity 1,099.8 1,056.7
------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $2,799.2 2,674.8
=======================================================================================================================
</TABLE>
3
<PAGE> 4
CONSOLIDATED
STATEMENTS OF
CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1994 1993
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Operating activities Net income $ 83.6 73.8
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 97.3 87.3
Change in working capital components:
Other current assets (19.7) 2.5
Accounts payable and accrued expenses 8.0 (7.4)
Income taxes payable 5.3 (3.3)
Decrease in deferred income taxes (13.3) (26.2)
Change in other liabilities (14.7) 14.3
Unconsolidated affiliates' distributions
in excess of earnings .1 11.5
(Gain) loss from property transactions (.7) 4.5
Other 10.7 (.8)
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 156.6 156.2
- --------------------------------------------------------------------------------------------------------------------
Investing activities Capital expenditures (188.2) (112.1)
Additional investments (108.3) (71.9)
Decrease in long-term marketable securities 42.6 90.8
Change in temporary investments (98.8) 23.8
Payments on notes and other investments 56.9 .5
- --------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (295.8) (68.9)
- --------------------------------------------------------------------------------------------------------------------
Financing activities Long-term borrowings 116.4 1.0
Decrease in short-term borrowings (10.8) (65.0)
Reduction of long-term debt (131.7) (26.3)
Issuance of common stock 7.5 4.8
Cash dividends (43.2) (43.0)
- --------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (61.8) (128.5)
- --------------------------------------------------------------------------------------------------------------------
Decrease in cash and equivalents (201.0) (41.2)
Cash and equivalents at beginning of year 380.4 348.5
- --------------------------------------------------------------------------------------------------------------------
Cash and equivalents at end of period $ 179.4 307.3
====================================================================================================================
</TABLE>
4
<PAGE> 5
SUMMARY
OF
OPERATIONS
(IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Revenue Hotels $152.1 123.1 438.9 368.5
Gaming 228.8 223.6 662.0 655.0
-------------------------------------------------------------------------------------------------
Total $380.9 346.7 1,100.9 1,023.5
========================================================================================================================
Operating income Hotels $ 29.9 24.1 94.3 66.6
Gaming 42.1 48.2 117.4 133.9
Corporate expense (9.6) (6.2) (19.6) (19.6)
-------------------------------------------------------------------------------------------------
Total 62.4 66.1 192.1 180.9
Net interest expense (16.9) (20.4) (52.5) (56.3)
Property transactions .7 (4.5) .7 (4.5)
Foreign currency gains (losses) .2 (1.2) (.2) (1.2)
Provision for income taxes (19.0) (19.5) (56.1) (48.5)
Minority interest, net (.4) -- (.4) --
- ------------------------------------------------------------------------------------------------------------------------
Income before
cumulative effect of
accounting changes 27.0 20.5 83.6 70.4
Cumulative effect of accounting
changes, net -- -- -- 3.4
- ------------------------------------------------------------------------------------------------------------------------
Net income $ 27.0 20.5 83.6 73.8
========================================================================================================================
Percentage of
occupancy Hotels 72 68 70 68
Gaming 90 90 88 87
========================================================================================================================
</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 Nine months ended
September 30, September 30,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Common and equivalent shares
- ----------------------------
Shares outstanding
beginning of period 47,982,696 47,796,544 47,846,854 47,677,922
Net common shares issued/
issuable upon exercise
of certain stock
options 430,486 250,881 445,949 297,259
---------- ---------- ---------- ----------
Common and equivalent
shares 48,413,182 48,047,425 48,292,803 47,975,181
========== ========== ========== ==========
Net income (in millions)
- ----------
Income before cumulative
effect of accounting
changes $27.0 20.5 $83.6 70.4
Cumulative effect of
accounting changes, net - - - 3.4
----- ---- ----- -----
Net income $27.0 20.5 $83.6 73.8
===== ==== ===== =====
Net income per share
- --------------------
Income before cumulative
effect of accounting
changes $.56 .43 $1.73 1.47
Cumulative effect of
accounting changes, net - - - .07
Net income per share ---- --- ----- -----
$.56 .43 $1.73 1.54
==== === ===== =====
Dividends declared per share $.30 .30 $ .90 .90
==== === ===== =====
</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 nine months ended September 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>
Nine months ended
September 30,
1994 1993
---- ----
(in millions)
<S> <C> <C>
Cash paid during the period
for the following:
Interest, net of amounts capitalized $58.3 60.4
Income taxes 63.8 61.3
</TABLE>
Due to changes in market conditions, the Company has reclassified $140 million
of certain cash equivalent securities to temporary investments.
Note 3: Investments
Summarized operating results of the Company's unconsolidated affiliates are as
follows:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1994 1993 1994 1993
---- ---- ---- ----
(in millions)
<S> <C> <C> <C> <C>
Revenue $323.5 226.5 $939.8 714.4
Expenses 294.9 215.7 845.5 658.3
Net Income 20.7 10.8 73.4 55.1
</TABLE>
7
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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
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 $156.6 million for the nine
months ended September 30, 1994 compared to $156.2 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 from $449.1 million at December 31, 1993 to $296.6
million at September 30, 1994. This decrease was the result of using working
capital to fund new construction and investments. Capital expenditures during
the period totaled $188.2 million, while new investments aggregated $108.3
million.
The Company has various major construction projects underway. Improvements at
the Company's gaming properties include a 600-room tower addition at the
Flamingo Hilton-Las Vegas, three new luxury "Sky Villas" at the Las Vegas
Hilton and major casino and public space improvements at the Reno Hilton. The
50%-owned Hilton Grand Vacations Company is constructing a 200-unit vacation
ownership project adjacent to the Flamingo Hilton-Las Vegas. The existing
"Queen of New Orleans" river casino will be replaced by the larger "Flamingo
Casino New Orleans" in the fourth quarter. In Missouri, Hilton has reached
agreement with the City and Port Authority of Kansas City, Missouri, on a
revised plan that calls for a single floating 25,000 square foot casino on the
Missouri River near downtown Kansas City. In addition, major renovation
programs are continuing at the San Diego Hilton Beach & Tennis Resort and at the
Portland Hilton.
The Company anticipates that capital expenditures and investments will total
approximately $375 million in 1994. The Company intends to fund these
expenditures through internal cash flows, available debt capacity or new
borrowings.
In June 1994 the Company increased its ownership in the New Orleans Hilton
Riverside to 67.4%. Accordingly, the New Orleans Hilton Riverside's operating
results (from June 16, 1994) and balance sheet are included in the consolidated
financial statements of the Company.
LONG-TERM DEBT
Long-term debt at September 30, 1994 totaled $1.2 billion compared to $1.1
billion at December 31, 1993. Included in the 1994 total is $108.8 million of
long-term debt of the New Orleans Hilton Riverside.
The Board has authorized borrowings of up to $1 billion in the form of either
senior notes or a combination of senior notes, subordinated notes and private
debt securities, with the subordinated notes and private debt securities each
limited to $300 million. In this regard, the Company has filed shelf
registration statements with the Securities and Exchange Commission that
presently permit the public sale of up to $65 million.
9
<PAGE> 10
The Company is currently issuing debt under its $200 million Series B Medium
Term Note program. Through September 30, 1994, $90 million in notes with
maturities from three to seven years had been issued at an average coupon rate
of 7.36%. An additional $80 million in notes have been issued in October 1994.
Available financing under board authorizations at September 30, 1994 totaled
$246.0 million. This amount has been subsequently reduced by the $80 million
in medium term notes issued in October.
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 September 30, 1994, the Company had $241.7 million
in commercial paper outstanding and $48.7 million in borrowings under its
various revolving bank credit facilities. Available commercial paper and
revolving bank debt financing at September 30, 1994 was $309.6 million.
RESULTS OF OPERATIONS
COMPARISON OF FISCAL QUARTERS ENDED SEPTEMBER 30, 1994 AND 1993
Total revenue in the third quarter increased 10 percent to $380.9 million.
Total operating income decreased six percent, declining from $66.1 million in
the 1993 quarter to $62.4 million.
HOTELS
Hotel revenue for the third quarter was $152.1 million, a 24 percent
increase over last year. Adjusting for the increase in revenue due to the
consolidation of the New Orleans Hilton Riverside, hotel revenue increased
nine percent over 1993. Hotel operating income increased 24 percent to
$29.9 million from $24.1 million in the 1993 third quarter. Operating income
improved at the majority of the Company's owned and partially owned
properties, reflecting increases in both occupancies and average daily rates
from a year ago.
Results at the Company's three major Chicago properties increased $3.9 million
from the prior year quarter due to occupancy increases at all three properties.
Higher occupied room nights for national conventions and individual business
travelers contributed to these increases. Reported earnings from the New
Orleans Hilton Riverside rose $3.2 million, reflecting consolidation of the
hotel's operating results and major increases in occupancy and revenues. The
income contribution from the New York Hilton was down $1.3 million as occupancy
levels at that property dropped six percentage points from the 1993 quarter.
Hotel management and franchise fees for the quarter increased $1.8 million to
$19.9 million. Fee revenue is primarily based on operating revenue at managed
properties and room revenue at franchised hotels.
10
<PAGE> 11
Third quarter results include $1.2 million of operating income resulting from
the initial recognition of sales of vacation intervals by the 50%-owned Hilton
Grand Vacations Company at their project adjacent to the Flamingo Hilton-Las
Vegas.
Occupancy for hotels owned or managed was 72 percent in 1994 versus 68 percent
in 1993. Average room rates increased eight percent over the prior year.
GAMING
Total gaming revenue increased two percent to $228.8 million versus $223.6
million in the 1993 quarter. Casino revenue, a component of gaming revenue,
was $123.6 million in 1994 compared to $129.3 million last year. Gaming
operating income decreased from $48.2 million to $42.1 million, a 13 percent
decline. Excluding the results of the Queen of New Orleans river casino, which
opened in 1994, revenue increased one percent and operating income decreased 17
percent from the prior year quarter on a comparable basis.
Operating income declined at four of the Company's five Nevada properties.
Operating income was down $4.7 million at the Flamingo Hilton-Las Vegas,
reflecting the continuing impact of construction activities and loss of
available room capacity at that property. The Las Vegas Hilton was down $3.9
million as higher costs exceeded an increase in revenues generated by the
"Starlight Express" production show. General marketwide softness contributed
to a seven percentage point drop in occupancy and a $1.8 million decline in
operating income at the Flamingo Hilton-Laughlin. Combined results for the
Company's two Reno properties were comparable to the 1993 quarter.
The decline in Nevada results was partially offset by the $1.9 million
income contribution from the Queen of New Orleans and a $.8 million increase in
the Company's proportionate share of income at the Hotel Conrad & Jupiters
Casino in Australia.
Occupancy for the Nevada hotel-casinos was 94 percent, the same as 1993.
Average room rates were down one percent, largely as the result of a
significant drop in the average rate at the Flamingo Hilton-Laughlin.
FINANCING ACTIVITIES
The $.1 million increase in interest expense was the net of a $1.4 million
increase in capitalized interest and a $1.5 million increase in consolidated
interest expense. Net interest expense from unconsolidated affiliates
decreased $2.1 million. Consolidated interest expense for the 1994 quarter
includes $2.1 million in interest on debt at the New Orleans Hilton;
previously, this expense had been included in net interest expense from
unconsolidated affiliates.
The foreign currency losses incurred in the 1993 quarter are primarily due to
exchange adjustments arising from the remeasurement of the Company's Turkish
operations into U.S. dollars.
PROPERTY TRANSACTIONS
The 1994 quarter reflects a gain on the sale of land to Hilton Grand Vacations
Company for their project at the Flamingo Hilton-Las Vegas; gains on this
transaction are being recognized on an installment sale basis. The $4.5
million loss in the 1993 quarter resulted from the write-off of the remaining
book value of facilities at the Flamingo Hilton-Las Vegas which were demolished
to permit further expansion at that property.
11
<PAGE> 12
INCOME TAXES
The effective income tax rate for the 1994 period was 40.9 percent compared to
48.8 percent for 1993. The effective tax rate for the 1993 quarter was
impacted by a $4.4 million increase in the provision for income taxes resulting
from the increase in the Federal income tax rate for corporations from 34
percent to 35 percent retroactive to January 1, 1993.
NET INCOME
Net income for the 1994 third quarter was $27.0 million ($.56 per share), a 32
percent increase over the $20.5 million ($.43 per share) recorded a year ago.
The average number of common and equivalent shares outstanding was 48.4 million
and 48.0 million in 1994 and 1993, respectively.
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
Total revenue for the nine month period was $1.1 billion, an increase of eight
percent over 1993. Total operating income increased six percent to $192.1
million in 1994 versus $180.9 million for the prior year.
HOTELS
Hotel revenue in the 1994 period increased 19 percent to $438.9 million, while
hotel operating income increased 42 percent to $94.3 million. Adjusting for
increased results from the New Orleans Hilton Riverside, revenue and operating
income increased 13 percent and 33 percent, respectively, over the prior year.
Hotel segment results were driven by a combination of higher occupancy levels
and increases in average room rates.
Substantial increases in operating income were provided by the Company's major
properties in the Chicago, New York, New Orleans and Hawaiian markets. Results
at the Company's three major Chicago properties improved $5.4 million, while
the New York Hilton and Waldorf=Astoria increased their profit contributions a
total of $2.9 million. Income from the New Orleans Hilton Riverside increased
$7.0 million due to significant increases in both the occupancy level and
average rate as well as the increase in Hilton's ownership interest in the
property. Year-to-date operating income from the Hilton Hawaiian Village was
$2.9 million over the prior year. Management and franchise fees for the 1994
period were $6.6 million higher than the 1993 period.
Occupancy for owned or managed hotels was 70 percent in 1994 compared to 68
percent in 1993. Average room rates increased seven percent over the prior
year.
12
<PAGE> 13
GAMING
Revenue from the gaming segment was $662.0 million in 1994 compared to $655.0
million in 1993. Casino revenue decreased $19.2 million or five percent from
1993. Gaming operating income decreased $16.5 million or 12 percent from the
prior year. Excluding the results of the Queen of New Orleans river casino,
operating income was down 17 percent from 1993 on a comparable basis.
For the nine month period, the Flamingo Hilton-Las Vegas and the Las Vegas
Hilton experienced declines in operating income of $11.4 million and $14.1
million, respectively, from 1993. Results at the Flamingo Hilton-Las Vegas
were adversely impacted by the aforementioned construction activities and a
reduction in available room nights. While occupancy and total revenues at the
Las Vegas Hilton were up, higher expenses and a decrease in premium casino
play profitability resulted in decreased operating profits. Partially
offsetting these declines was the $5.6 million profit contribution from the
Queen of New Orleans, which began operations in February 1994.
Occupancy for the Nevada hotel-casinos was 92 percent in 1994 versus 90 percent
in 1993. The average room rate for these properties increased two percent
from 1993.
FINANCING ACTIVITIES
The $2.8 million decrease in interest expense was the net of a $.4 million
increase in interest expense offset by a $3.2 million increase in capitalized
interest. Interest expense includes interest on debt at the New Orleans Hilton
Riverside from June 16, 1994.
INCOME TAXES
The effective income tax rate for the 1994 nine month period was 40.0 percent
compared to 40.8 percent for the comparable 1993 period.
NET INCOME
Net income for the nine month period increased 19 percent to $83.6 million
($1.73 per share) from $70.4 million ($1.47 per share) 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 was 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 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.
13
<PAGE> 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule.
(b) Reports on Form 8-K
On August 9, 1994 the Company filed a report on Form 8-K under Item 5
Other Events to report that it had commenced a program offering from
time to time up to $200 million aggregate principal amount of its
Medium Term Notes, Series B.
14
<PAGE> 15
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: November 10, 1994 /s/ Steve Krithis
______________________________
Steve Krithis
Vice President & Corporate
Comptroller
(Acting Chief Financial Officer)
Date: November 10, 1994 /s/ William C. Lebo, Jr.
_______________________________
William C. Lebo, Jr.
Senior Vice President and
General Counsel
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE COMPANY'S CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED
BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 179,400
<SECURITIES> 190,300
<RECEIVABLES> 181,800
<ALLOWANCES> 28,200
<INVENTORY> 13,600
<CURRENT-ASSETS> 601,900
<PP&E> 2,370,400
<DEPRECIATION> 739,300
<TOTAL-ASSETS> 2,799,200
<CURRENT-LIABILITIES> 305,300
<BONDS> 1,195,300
<COMMON> 127,600
0
0
<OTHER-SE> 972,200
<TOTAL-LIABILITY-AND-EQUITY> 2,799,200
<SALES> 1,100,900
<TOTAL-REVENUES> 1,100,900
<CGS> 0
<TOTAL-COSTS> 878,300
<OTHER-EXPENSES> 19,600
<LOSS-PROVISION> 10,900
<INTEREST-EXPENSE> 52,500
<INCOME-PRETAX> 140,100
<INCOME-TAX> 56,100
<INCOME-CONTINUING> 83,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 83,600
<EPS-PRIMARY> 1.73
<EPS-DILUTED> 1.73
</TABLE>
