<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 8, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
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
(310) 278-4321
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
William C. Lebo, Jr. Esq.
Senior Vice President and General Counsel
Hilton Hotels Corporation
9336 Civic Center Drive
Beverly Hills, California 90210
(310) 278-4321
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
Brian G. Cartwright Gregg A. Noel
Latham & Watkins Skadden, Arps, Slate, Meagher & Flom
633 West Fifth Street, Suite 4000 300 S. Grand Ave., Suite 3400
Los Angeles, California 90071-2007 Los Angeles, California 90071
(213) 485-1234 (213) 687-5000
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------------
If the only securities being registered on this Form are being offered
pursuant to a dividend or interest reinvestment plans, check the following box.
/ /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
investment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the securities Act
registration statement number of the ealier effective registration statement for
the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SECURITY(2) OFFERING PRICE(2) FEE(1)(2)(3)
<S> <C> <C> <C> <C>
% Convertible Subordinated Notes due 2006..... $575,000,000 100% $575,000,000 $198,276(4)
Common Stock, $2.50 par value per share (5)....... * * * *
Series A Junior Participating Preferred Stock
Purchase Rights ("Rights") (5)(6)................ * * * *
</TABLE>
* Not applicable
(1) Includes $65,000,000 aggregate principal amount of the Registrant's
securities which were previously registered under its Registration Statement
on Form S-3 (Registration No. 33-35951) and remain unsold as of the date
hereof. As permitted by Rule 429 under the Securities Act, the registration
fee specified in the table has been computed on the basis of $575,000,000
principal amount of the Notes covered hereby, prior to including the
previously registered and unsold securities referred to above, since the
requisite registration fee with respect to such previously registered and
unsold securities was paid upon the filing of the Registration Statement on
Form S-3 (Registration No. 33-35951).
(2) Estimated solely for purposes of calculating the registration fee.
(3) Amount calculated pursuant to Section 6(b) under the Securities Act.
(4) Pursuant to Rule 429 under the Securities Act, the registration fee consists
of $175,862 paid herewith and $22,414 which has been previously paid with
respect to $65,000,000 of the aggregate offering price. See note 1.
(5) There are being registered hereunder such presently indeterminate number of
shares of Common Stock and the related Rights into which the Convertible
Subordinated Notes are convertible. Accordingly, pursuant to Rule 457(o)
under the Securities Act, which permits the registration fee to be
calculated on the basis of the maximum offering price of all securities
listed, the table does not specify by Common Stock or Rights as to the
amount to be registered, proposed maximum offering price per unit or
proposed maximum aggregate offering price.
(6) The Rights are initially carried and traded with the Common Stock. The value
attributable to the Rights, if any, is reflected in the value of the Common
Stock.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
THE PROSPECTUS CONTAINED IN THIS REGISTRATION STATEMENT ALSO RELATES TO A
REGISTRATION STATEMENT PREVIOUSLY FILED WITH THE COMMISSION.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS, DATED APRIL 8, 1996
PROSPECTUS
APRIL , 1996
$500,000,000
[LOGO]
% CONVERTIBLE SUBORDINATED NOTES DUE 2006
The Convertible Subordinated Notes to be issued by Hilton Hotels Corporation
(the "Company" or "Hilton") will be convertible at the option of the holder into
shares of Common Stock of the Company, at any time at or prior to maturity,
unless previously redeemed, at a conversion price of $ per share (equivalent
to a conversion rate of shares per $1,000 principal amount of Notes), subject
to adjustment in certain events. Interest on the Notes is payable semi-annually
on , and of each year, commencing on , 1996.
On April 4, 1996, the last reported sale price for the Company's Common Stock on
the New York Stock Exchange (where it trades under the symbol "HLT") was $97.00
per share.
The Notes will be redeemable at the option of the Company, in whole or in
part at any time on or after , 1999 and prior to , 2000 at % of
the principal amount thereof, plus accrued and unpaid interest to the date of
redemption if the last reported sale price of the common stock shall have
exceeded $ per share for 20 trading days within a period of 30 consecutive
trading days; thereafter, the Notes will be redeemable, at the option of the
Company, in whole or in part, at the redemption price set forth herein, plus
accrued and unpaid interest to the date of redemption. In addition, upon a
Change of Control Triggering Event (as defined herein), which shall include a
spin-off to stockholders of the Hotel Segment (as defined herein) or Gaming
Segment (as defined herein), the Company will be required to offer to purchase
the Notes at 100% of the principal amount thereof, plus accrued and unpaid
interest to the date of purchase.
The Notes are general unsecured obligations of the Company, subordinated in
right of payment to all existing and future Senior Indebtedness (as defined
herein) of the Company, and are structurally subordinated to all liabilities
(including trade payables) of the Company's Subsidiaries. The Indenture (as
defined herein) will not restrict the incurrence of Senior Indebtedness or other
indebtedness by the Company or its Subsidiaries. At December 31, 1995, as
adjusted to give effect to the issuance and sale of the Notes and the
application of the estimated net proceeds therefrom, the Company would have had
approximately $1.1 billion of Senior Indebtedness, and the Company's
Subsidiaries had approximately $ of trade payables and accrued
liabilities. See "Use of Proceeds," "Capitalization" and "Description of the
Notes."
Application will be made to have the Notes and the Common Stock approved for
listing on the New York Stock Exchange.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
NONE OF THE NEVADA GAMING COMMISSION, THE NEVADA STATE GAMING CONTROL BOARD, THE
NEW JERSEY CASINO CONTROL COMMISSION, NOR THE LOUISIANA GAMING ENFORCEMENT
DIVISION HAS PASSED UPON THE ACCURACY, OR ADEQUACY OF THIS PROSPECTUS OR THE
INVESTMENT MERITS OF THE SECURITIES OFFERED HEREBY. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
UNDERWRITING
DISCOUNTS
PRICE TO AND PROCEEDS TO
THE PUBLIC(1) COMMISSIONS(2) THE COMPANY(3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note................................................ % % %
Total (4)............................................... $ $ $
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) PLUS ACCRUED INTEREST, IF ANY, FROM THE DATE OF ISSUANCE.
(2) THE COMPANY HAS AGREED TO INDEMNIFY THE UNDERWRITER AGAINST, AND TO PROVIDE
CONTRIBUTION WITH RESPECT TO, CERTAIN LIABILITIES, INCLUDING LIABILITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SEE "UNDERWRITING."
(3) BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY, ESTIMATED AT
$ .
(4) THE COMPANY HAS GRANTED THE UNDERWRITER A 30-DAY OPTION TO PURCHASE UP TO AN
ADDITIONAL $75,000,000 AGGREGATE PRINCIPAL AMOUNT OF NOTES ON THE SAME TERMS
AND CONDITIONS AS SET FORTH ABOVE, TO COVER OVER-ALLOTMENTS, IF ANY. IF THE
OPTION IS EXERCISED IN FULL, THE TOTAL PRICE TO THE PUBLIC, UNDERWRITING
DISCOUNTS AND COMMISSIONS, AND PROCEEDS TO THE COMPANY WILL BE $ ,
$ AND $ , RESPECTIVELY. SEE "UNDERWRITING."
The Notes are being offered by Donaldson, Lufkin & Jenrette Securities
Corporation (the "Underwriter") subject to prior sale, when, as and if delivered
to and accepted by the Underwriter, and subject to certain other conditions. The
Underwriter reserves the right to withdraw, cancel or modify the Offering and to
reject orders in whole or in part. It is expected that delivery of the Notes
will be made in New York, New York on or about April , 1996 to qualified
institutional investors in book-entry form through the facilities of The
Depository Trust Company against payment therefor in immediately available
funds.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
<PAGE>
IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY, THE COMMON STOCK OF THE COMPANY, OR BOTH, AT LEVELS ABOVE THOSE WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON
THE NEW YORK STOCK EXCHANGE (AS TO THE COMMON STOCK) OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
--------------------------
The Notes will be available initially in book-entry form and the Company
expects that the Notes sold pursuant hereto will be issued in the form of a
Global Note (as defined), which will be deposited with, or on behalf of, The
Depository Trust Company (the "Depositary") and registered in its name or in the
name of Cede & Co., its nominee. Beneficial interests in the Global Note
representing the Notes will be shown on, and transfers thereof will be effected
through, records maintained by the Depositary and its participants. After the
initial issuance of the Global Note, Notes in certificated form will be issued
in exchange for the Global Note on the terms set forth in the Indenture (as
defined). See "Description of the Notes -- Book-Entry, Delivery and Form."
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (together with all amendments, the
"Registration Statement") on Form S-3 under the Securities Act with respect to
the Notes offered hereby. This Prospectus, filed as a part of that Registration
Statement, does not contain all the information set forth in the Registration
Statement, certain portions of which have been omitted as permitted by the rules
and regulations of the Commission. In addition, certain documents filed by the
Company with the Commission have been incorporated herein by reference. See
"Incorporation of Certain Documents by Reference." For further information
regarding the Company and the Notes offered hereby, reference is made to the
Registration Statement, including the exhibits and schedules thereto and the
documents incorporated herein by reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files periodic reports, proxy materials and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
materials and other information may be inspected and copies may be obtained at
the principal office of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices of the Commission:
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such materials can be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Common Stock is listed on the NYSE under the symbol "HLT." Reports,
proxy materials and other information concerning the Company can also be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005; and the Pacific Stock Exchange, Inc., 618 South Spring
Street, Los Angeles, California 90014, and 301 Pine Street, San Francisco,
California 94104.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company has filed with the Commission, pursuant to Section 13 of the
Exchange Act, (i) an Annual Report on Form 10-K for the year ended December 31,
1995, (ii) a description of the Common Stock included in a Registration
Statement on Form 8-A on May 19, 1986, and (iii) a description of the Rights
included in a Registration Statement on Form 8-A on July 22, 1988 which are each
hereby incorporated by reference in and made a part of this Prospectus.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act, after the date of this Prospectus and prior to the
termination of the offering of the securities offered by this Prospectus, shall
be deemed to be incorporated by reference in this Prospectus and be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained in this Prospectus, or in
any other subsequently filed document that also is or is deemed to be
incorporated by reference, modifies or replaces such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified,
to constitute a part of this Prospectus.
The Company undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, upon written or oral request of any
such person, a copy of any or all of the documents incorporated by reference
herein, other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates. Written or oral requests for such copies should be directed to:
Cheryl L. Marsh, Vice President and Corporate Secretary, Hilton Hotels
Corporation, 9336 Civic Center Drive, Beverly Hills, California 90210; (310)
278-4321.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL DATA APPEARING
ELSEWHERE IN THIS PROSPECTUS AND THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS
AND NOTES THERETO AND "MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION" IN THE COMPANY'S 1995 ANNUAL REPORT TO
STOCKHOLDERS (THE "ANNUAL REPORT") INCORPORATED BY REFERENCE IN THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995 (THE "FORM
10-K"). AS USED IN THIS PROSPECTUS, THE TERMS "COMPANY" OR "HILTON" REFER TO THE
COMPANY AND ITS SUBSIDIARIES, UNLESS OTHERWISE PROVIDED OR THE CONTEXT OTHERWISE
REQUIRES. EXCEPT AS OTHERWISE SPECIFIED, ALL INFORMATION IN THIS PROSPECTUS
ASSUMES NO EXERCISE OF THE UNDERWRITER'S OVER-ALLOTMENT OPTION.
THE COMPANY
The Company is a leading owner and operator of full-service hotels and
hotel-casinos in the United States. The Hilton name is one of the best
recognized and most respected lodging brands in the world. The Company owns,
leases and operates major lodging and gaming properties in gateway cities, urban
and suburban centers and resort areas under the Hilton name in the U.S. and
under the Conrad International name abroad. Hilton's strategy is to expand its
core businesses through acquisitions, domestic and international expansion,
leveraging its brand names and exploiting the synergies between its lodging and
gaming operations.
The Company announced in January 1996 it would not pursue a proposed
spin-off of its gaming operations, and will continue to develop the marketing,
operating and financial efficiencies between the two businesses. In February
1996, Stephen Bollenbach joined Hilton as president and chief executive officer.
Mr. Bollenbach, who previously served as a senior executive at such companies as
The Walt Disney Co., Marriott Corporation and Holiday Corporation, brings broad
financial and strategic experience to Hilton's management.
For the fiscal year ended December 31, 1995, the Company's consolidated
revenue increased 9% to $1.6 billion, and operating income rose 24% to $353.6
million from $284.6 million in 1994. Net income rose 42% to $172.8 million, or
$3.56 per share, compared to $121.7 million or $2.52 per share in 1994.
HOTELS. At February 1, 1996, the Company owned or leased and operated 18
hotels, and managed 41 properties partially or wholly owned by others. An
additional 164 hotels were operated by others under the Hilton, Hilton Garden
Inn and Hilton Suites brand names under franchise agreements granted by the
Company.
Most of Hilton's hotels are located in the United States, except for six
hotels operated by the Company's Conrad International Hotels Corporation
subsidiary. The Company's hotels include such well-known urban and resort
properties as the Waldorf=Astoria in New York, the Palmer House Hilton in
Chicago, the New Orleans Hilton Riverside & Towers and the Hilton Hawaiian
Village in Honolulu.
The domestic lodging business, particularly the full-service sector, is
benefiting from a favorable supply-demand relationship, as well as from an
improved economy and a resurgence in travel. Those factors, along with the
recent streamlining and upgrading of the Company's franchise operations and
other operational improvements, are reflected by substantial gains in the
Company's hotel operating statistics.
Consolidated hotel revenue increased 15% in 1995 to $708.8 million. Revenue
per available room ("REVPAR") for owned and managed hotels increased 10% in
1995, the second consecutive year of double-digit growth. Hotel operating
income, primarily income from hotel interests and management and franchise fee
income, increased 41% in 1995 to $207.7 million.
GAMING. The Company's gaming operations, which are largely concentrated in
Nevada, operate primarily under the Hilton and Flamingo brand names. The
Company's wholly owned Nevada casinos are the Las Vegas Hilton, the Flamingo
Hilton-Las Vegas, the Flamingo Hilton-Laughlin, the Reno Hilton and the Flamingo
Hilton-Reno. The Company has a strong presence in Las Vegas, the largest gaming
market in the world with more than 29 million visitors and gross gaming revenue
of more than $5.7 billion in 1995.
3
<PAGE>
Through its Conrad International brand, the Company manages international
hotel-casinos in Brisbane and the Gold Coast in Queensland, Australia and in
Istanbul, Turkey. The Company also operates a riverboat casino in New Orleans,
Louisiana, next to the New Orleans Hilton Riverside & Towers, and is a minority
partner in a company that manages a casino in Windsor, Ontario, Canada.
The Company's total gaming revenue increased 5% to $940.6 million in 1995
compared to $895.6 million in 1994. Casino revenue, a component of gaming
revenue, was $511.0 million in 1995, compared to $480.6 million in 1994. Gaming
operating income was $177.8 million in 1995, an increase of 7% over prior-year
results of $165.4 million.
GROWTH STRATEGY
HOTELS. The Company has developed a five-year strategic growth plan that
calls for increasing room count by a significant percentage by year-end 2000. In
1995, the Company added twice as many rooms as it did in any of the previous
five years.
Hilton's lodging growth strategy focuses on the development of its
redesigned, mid-market Hilton Garden Inn concept, international expansion, and
acquisition and conversion of existing hotels to franchised and managed
properties. The redesigned Hilton Garden Inn concept offers many full-service
amenities at moderate prices. The Company intends to create a strong presence in
the mid-market hotel segment by exploiting the Hilton name and offering a fresh,
attractive product in a segment that includes several mature brands. The concept
is designed for urban and suburban markets, particularly those that cannot
support a standard full-service hotel. Amenities such as limited food and
beverage service, meeting space, exercise facilities, and a residential
atmosphere are designed to differentiate Hilton Garden Inns from other mid-
market hotel competitors.
The Company also believes there are substantial opportunities for
international hotel expansion, and is particularly focused on city-center
business hotels and resort properties. The Company expects that most will be
operated under the Conrad International flag through long-term management
agreements. The Company currently has agreements to manage new Conrad
International hotels in Egypt, Singapore, Indonesia, Jordan and Thailand. Hilton
is developing a mid-market hotel product for select international markets, and
also is exploring a strategic alliance with the owner of the Hilton
International hotel chain, which owns the Hilton name outside the United States.
GAMING. The Company intends to expand and improve its worldwide gaming
operations through select acquisitions, new development, and the enhancement of
existing gaming properties. Hilton is pursuing gaming acquisition and
development opportunities that will complement its existing strengths as a
major-market gaming operator. The Company has been granted a Statement of
Compliance by New Jersey gaming regulators, although it does not currently
operate or have an agreement to operate a casino resort in Atlantic City, N.J.
The Company will continue to pursue gaming opportunities internationally
through its Conrad International brand. Hilton currently is developing
international hotel-casinos under the Conrad International flag in Uruguay and
Egypt, both scheduled to open in 1997.
Hilton is developing a dockside casino complex in Kansas City, Missouri,
which is scheduled to open in summer 1996. A 260-room Hilton hotel is slated to
open in mid-1997, which is designed to enhance the casino's attractiveness to
higher-spending overnight visitors.
The Star Trek attraction at the Las Vegas Hilton, which will complement a
22,000-square-foot casino expansion at the property, is scheduled to open in
spring 1997. Star Trek is a joint development with Paramount Parks Inc. and is
designed to attract and retain middle-market gaming customers to augment the
property's high-end gaming business. The Company also is enhancing the Flamingo
Hilton-Las Vegas, Flamingo Hilton-Laughlin, Flamingo Hilton-Reno and Reno Hilton
through various refurbishments of rooms, restaurants, casino floors and
equipment.
4
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities Offered........... $500,000,000 principal amount of % Convertible
Subordinated Notes due , 2006.
Interest Payment Dates....... and commencing , 1996.
Conversion Rights............ The Notes are convertible into shares of the Company's
common stock, par value $2.50 per share (the "Common
Stock"), at any time at or prior to maturity, unless
previously redeemed, at a conversion price of $ per share,
subject to adjustment under certain circumstances as
described herein (the "Conversion Price"). Accordingly, each
$1,000 principal amount of Notes is convertible into
shares of Common Stock, subject to adjustment, for an
aggregate of shares. See "Capitalization."
Mandatory Redemption......... None.
Optional Redemption.......... The Notes are redeemable, in whole or in part, at the option
of the Company at any time on or after , 1999 and
prior to , 2000, if the reported last sale price of
the Common Stock exceeds $ per share for 20 trading days
within a period of 30 consecutive trading days, at a
redemption price of % of the principal amount thereof,
plus accrued and unpaid interest, if any, to the date of
purchase; thereafter, the Notes are redeemable at the option
of the Company, in whole or in part, at the redemption
prices set forth herein, plus accrued and unpaid interest,
if any, to the date of redemption.
Change of Control Triggering Upon a Change of Control Triggering Event, including a
Event....................... spin-off to stockholders of the Hotel Segment or the Gaming
Segment, the Company will be required to offer to purchase
the Notes at 100% of the principal amount thereof, plus
accrued and unpaid interest to the date of purchase.
Subordination................ The Notes will be general unsecured obligations of the
Company, subordinated in right of payment to all existing
and future Senior Indebtedness of the Company and will be
structurally subordinated to all liabilities (including
trade payables) of the Company's Subsidiaries. At December
31, 1995, as adjusted to give effect to the issuance and
sale of the Notes and the application of the estimated net
proceeds therefrom, the Senior Indebtedness of the Company
would have aggregated approximately $1.1 billion, and the
Company's Subsidiaries had approximately $ of trade
payables and accrued liabilities. The Indenture will not
restrict the incurrence of Senior Indebtedness or other
indebtedness by the Company or any of its Subsidiaries.
Use of Proceeds.............. The net proceeds from the Offering will be used to repay
certain outstanding indebtedness of the Company and for
general corporate purposes, including the funding of various
development and construction projects. See "Use of
Proceeds."
Common Stock Traded.......... The Common Stock is traded on the New York Stock Exchange
under the symbol "HLT."
</TABLE>
For a discussion of the terms of the Notes, see "Description of the Notes."
For a description of the Common Stock, see "Description of Capital Stock."
5
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
The following table presents summary consolidated historical financial data
of the Company for the five fiscal years ended December 31, 1995. The historical
financial data provided herein as of and for the years ended December 31, 1994
and 1995 are derived from the Consolidated Financial Statements and Notes
thereto of the Company included in the Annual Report incorporated by reference
in the Form 10-K. The historical financial data as of and for the years ended
December 31, 1991 and 1992 are derived from the Company's audited financial
statements. The Summary Historical Financial Data are qualified in their
entirety by and should be read in conjunction with the Company's Consolidated
Financial Statements and Notes thereto and "Management's Discussion and Analysis
of Results of Operations and Financial Condition" included in the Annual Report
incorporated by reference in the Form 10-K.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DECEMBER 31,
-----------------------------------------------------
1991 1992 1993 1994 1995
--------- --------- --------- --------- ---------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenue........................................... $ 1,112.7 1,229.6 1,393.5 1,513.9 1,649.4
Total operating income.................................. 184.8 219.9 239.9 284.6 353.6
Net interest expense.................................... (62.4) (61.7) (73.2) (76.4) (74.8)
Minority interest, net.................................. -- -- -- (1.6) (4.9)
Net income (1).......................................... 84.3 103.9 106.1 121.7 172.8
Net income per share (1)................................ $ 1.76 2.17 2.21 2.52 3.56
Average common and equivalent shares.................... 47.8 47.9 48.0 48.3 48.5
OTHER DATA:
EBITDA (2).............................................. $ 289.6 329.2 358.8 417.9 495.5
Hotels revenue.......................................... 443.9 470.4 520.0 618.3 708.8
Gaming revenue.......................................... 668.8 759.2 873.5 895.6 940.6
Hotels operating income................................. 92.9 91.5 96.2 147.5 207.7
Gaming operating income................................. 115.0 153.4 170.5 165.4 177.8
Percentage of occupancy
Hotels................................................ 64 66 67 70 73
Gaming (Nevada)....................................... 85 87 89 91 88
Ratio of earnings to fixed charges (3).................. 2.6x 2.9x 2.7x 2.8x 3.2x
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, 1995
--------------------------
ACTUAL AS ADJUSTED(4)
--------- ---------------
(IN MILLIONS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and temporary
investments...................................................................... $ 408.7 682.7
Total assets...................................................................... 3,060.3 3,345.3
Long-term debt, including current maturities...................................... 1,286.5 1,571.5
Total stockholders' equity........................................................ 1,253.7 1,253.7
</TABLE>
- ------------------------------
(1) Fiscal 1993 results include additional net income of $3.4 million or $.07
per share resulting from the adoption of Statement of Financial Accounting
Standards ("SFAS") No. 106, "Postretirement Benefits Other Than Pensions"
and SFAS No. 109, "Accounting for Income Taxes."
(2) "EBITDA" consists of operating income plus consolidated depreciation and
amortization. The Company has presented EBITDA supplementally because the
Company believes it allows for a more complete analysis of its results of
operations. This information should not be considered as an alternative to
any measure of performance or liquidity as promulgated under generally
accepted accounting principles (such as net income or cash provided by or
used in operating, investing and financing activities) nor should it be
considered as an indicator of the Company's overall financial performance.
(3) For purposes of this ratio, earnings are calculated by adding fixed charges
(excluding capitalized interest) to income before income taxes and minority
interest, adjusting to exclude gain (loss) from property transactions and
undistributed earnings in less than 50%-owned-affiliates. Fixed charges
consist of interest on borrowings and that portion of rental expense which
represents interest, including Hilton's proportionate share of such items
with respect to 50%-owned-affiliates.
(4) Balance sheet data is as adjusted to reflect the issuance and sale of the
Notes and the application of the estimated net proceeds therefrom.
6
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes offered hereby,
after deducting underwriting discounts and commissions and estimated expenses of
this Offering, is estimated to be approximately $ million (approximately
$ million if the Underwriters' over-allotment option is exercised in
full). The Company intends to use the net proceeds from the Offering to repay
approximately $215 million in outstanding Senior Indebtedness of the Company
that currently bears interest at a weighted average rate of 8.9% and is due in
1996, and for general corporate purposes, including the funding of development
and construction costs of Hilton Garden Inn properties and additional
construction costs of the dockside casino in Kansas City, Missouri and the Star
Trek attraction at the Las Vegas Hilton. Pending ultimate application, the net
proceeds will be invested in short-term investment grade securities.
PRICE RANGE OF COMMON STOCK
The Common Stock is listed on the New York Stock Exchange, Inc. (the "NYSE")
under the symbol "HLT." The following table sets forth for the periods indicated
the high and low sales prices of the Common Stock as reported on the NYSE.
<TABLE>
<CAPTION>
COMMON STOCK PRICE
-------------------- DIVIDENDS
HIGH LOW PAID
--------- --------- -------------
<S> <C> <C> <C>
Year ended December 31, 1994
1st Quarter............................................................ $ 74.00 54.50 .30
2nd Quarter............................................................ 61.25 49.75 .30
3rd Quarter............................................................ 66.63 53.25 .30
4th Quarter............................................................ 72.00 56.00 .30
Year ended December 31, 1995
1st Quarter............................................................ $ 77.88 64.13 .30
2nd Quarter............................................................ 79.75 65.63 .30
3rd Quarter............................................................ 74.13 60.38 .30
4th Quarter............................................................ 68.75 60.63 .30
Year ended December 31, 1996
1st Quarter............................................................ $ 99.75 61.13 .30
2nd Quarter (through April 4, 1996).................................... 97.38 96.50
</TABLE>
DIVIDEND POLICY
On April 4, 1996, the reported last sale price of the Common Stock on the
NYSE was $97.00 per share. At April 4, 1996, there were approximately 4,000
holders of record of the Common Stock.
The Company has declared and paid cash dividends on its Common Stock as set
forth above. Any further determination to pay cash dividends will be at the
discretion of the Company's Board of Directors and will depend upon the earnings
of the Company, its financial condition, capital requirements and other factors
as the Company's Board of Directors may deem relevant.
7
<PAGE>
CAPITALIZATION
The following table sets forth (i) the cash, cash equivalents and temporary
investments and capitalization of the Company at December 31, 1995 and (ii) the
cash, cash equivalents and temporary investments and capitalization as adjusted
to reflect the issuance and sale of the Notes and the application of the
estimated net proceeds therefrom. The information below should be read in
conjunction with and is qualified by reference to the Company's Consolidated
Financial Statements and Notes thereto and "Management's Discussion and Analysis
and Results of Operations and Financial Condition" included in the Annual Report
incorporated by reference in the Form 10-K.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1995
----------------------
ACTUAL AS ADJUSTED
--------- -----------
(IN MILLIONS)
<S> <C> <C>
CASH, CASH EQUIVALENTS AND TEMPORARY INVESTMENTS:
Cash and equivalents................................................................... $ 338.0 612.0
Temporary investments.................................................................. 70.7 70.7
--------- -----------
Total cash, cash equivalents and temporary investments................................. $ 408.7 682.7
--------- -----------
--------- -----------
LONG-TERM DEBT, INCLUDING CURRENT MATURITIES:
Industrial development revenue bonds at adjustable rates, due 2015..................... $ 82.0 82.0
Senior notes, 7.02% to 9.80%, due 1996 to 2002......................................... 636.6 421.6
Mortgage notes, 6.68% to 8.34%, due 1996 to 2011....................................... 103.5 103.5
Commercial paper....................................................................... 406.1 406.1
Revolving loans, with an average rate of 5.91% at December 31, 1995 (1)................ 51.1 51.1
Other.................................................................................. 7.2 7.2
Notes offered hereby................................................................... -- 500.0
--------- -----------
Total long-term debt................................................................. $ 1,286.5 1,571.5
--------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock -- 10.0 million shares authorized at $1.00 par value, none
outstanding........................................................................... $ -- --
Common stock -- 90.0 million shares authorized at $2.50 par value, 48.3 million shares
outstanding (2)....................................................................... 127.6 127.6
Cumulative translation adjustment...................................................... (1.4) (1.4)
Unrealized loss on marketable securities............................................... (4.6) (4.6)
Retained earnings...................................................................... 1,274.6 1,274.6
Less treasury stock, at cost........................................................... (142.5) (142.5)
--------- -----------
Total stockholders' equity........................................................... 1,253.7 1,253.7
--------- -----------
Total capitalization................................................................. $ 2,540.2 $ 2,825.2
--------- -----------
--------- -----------
</TABLE>
- ------------------------------
(1) At December 31, 1995, Hilton had committed bank lines of credit aggregating
approximately $597.5 million. At such date approximately $51.1 million was
outstanding under such lines.
(2) Does not include approximately 1.8 million shares reserved for issuance upon
exercise of stock options pursuant to stock option plans. Stock options to
purchase approximately 1.7 million shares of Common Stock were outstanding
as of December 31, 1995.
8
<PAGE>
SELECTED FINANCIAL DATA
The selected consolidated financial data as of and for the years ended
December 31, 1993, 1994 and 1995 are derived from the consolidated financial
statements of the Company, which are included in the Annual Report incorporated
by reference in the Form 10-K. The selected consolidated financial data as of
and for the years ended December 31, 1991 and 1992 and historical balance sheet
data at December 31, 1993 are derived from the Company's audited financial
statements. The data presented below are qualified in their entirety by and
should be read in conjunction with the Company's Consolidated Financial
Statements and Notes thereto and "Management's Discussion and Analysis of
Results of Operations and Financial Condition" included in the Annual Report
incorporated by reference in the Form 10-K.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED DECEMBER 31,
-----------------------------------------------------
1991 1992 1993 1994 1995
--------- --------- --------- --------- ---------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue
Rooms................................................................. $ 345.0 386.7 440.2 509.6 587.2
Food and beverage..................................................... 204.4 216.2 236.8 247.2 265.7
Casino................................................................ 392.4 438.8 502.1 480.6 511.0
Management and franchise fees......................................... 76.2 79.0 85.1 94.5 100.5
Other................................................................. 64.4 82.5 93.8 124.2 125.4
Operating income from unconsolidated affiliates....................... 30.3 26.4 35.5 57.8 59.6
--------- --------- --------- --------- ---------
1,112.7 1,229.6 1,393.5 1,513.9 1,649.4
--------- --------- --------- --------- ---------
Expenses
Rooms................................................................. 119.9 131.9 152.5 171.8 186.4
Food and beverage..................................................... 168.4 180.3 202.4 216.4 229.4
Casino................................................................ 200.1 195.6 217.5 216.3 234.9
Other costs and expenses.............................................. 416.4 476.9 554.4 596.5 613.2
Corporate expense..................................................... 23.1 25.0 26.8 28.3 31.9
--------- --------- --------- --------- ---------
927.9 1,009.7 1,153.6 1,229.3 1,295.8
--------- --------- --------- --------- ---------
Operating income........................................................ 184.8 219.9 239.9 284.6 353.6
Interest and dividend income............................................ 11.3 16.4 21.8 21.5 35.2
Interest expense........................................................ (58.1) (66.9) (80.4) (85.7) (93.5)
Interest expense, net, from unconsolidated affiliates................... (15.6) (11.2) (14.6) (12.2) (16.5)
--------- --------- --------- --------- ---------
Income before property transactions and foreign currency losses......... 122.4 158.2 166.7 208.2 278.8
Property transactions, net.............................................. .5 .9 (4.5) 1.1 1.5
Foreign currency losses................................................. -- -- (1.3) (.7) --
--------- --------- --------- --------- ---------
Income before income taxes and minority interest........................ 122.9 159.1 160.9 208.6 280.3
Provision for income taxes.............................................. 38.6 55.2 58.2 85.3 102.6
Minority interest, net.................................................. -- -- -- 1.6 4.9
--------- --------- --------- --------- ---------
Income before cumulative effect of accounting changes................... 84.3 103.9 102.7 121.7 172.8
Cumulative effect of accounting changes, net(1)......................... -- -- 3.4 -- --
--------- --------- --------- --------- ---------
Net income.............................................................. $ 84.3 103.9 106.1 121.7 172.8
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Income per share
Before cumulative effect of accounting changes........................ $ 1.76 2.17 2.14 2.52 3.56
Cumulative effect of accounting changes(1)............................ -- -- .07 -- --
--------- --------- --------- --------- ---------
Net income per share.................................................... $ 1.76 2.17 2.21 2.52 3.56
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Average common and equivalent shares.................................... 47.8 47.9 48.0 48.3 48.5
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
OTHER DATA:
EBITDA(2)............................................................... $ 289.6 329.2 358.8 417.9 495.5
Hotels revenue.......................................................... 443.9 470.4 520.0 618.3 708.8
Gaming revenue.......................................................... 668.8 759.2 873.5 895.6 940.6
Hotels operating income................................................. 92.9 91.5 96.2 147.5 207.7
Gaming operating income................................................. 115.0 153.4 170.5 165.4 177.8
Percentage of occupancy
Hotels................................................................ 64 66 67 70 73
Gaming (Nevada)....................................................... 85 87 89 91 88
Ratio of earnings to fixed charges(3)................................... 2.6x 2.9x 2.7x 2.8x 3.2x
<CAPTION>
AT DECEMBER 31,
-----------------------------------------------------
1991 1992 1993 1994 1995
--------- --------- --------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and temporary investments........................ $ 349.9 510.9 478.5 393.2 408.7
Total assets............................................................ 2,186.8 2,659.4 2,674.8 2,925.9 3,060.3
Long-term debt, including current maturities............................ 791.2 1,132.5 1,142.4 1,288.6 1,286.5
Total stockholders' equity.............................................. 952.8 1,002.5 1,056.7 1,127.8 1,253.7
</TABLE>
FOOTNOTES ON FOLLOWING PAGE
9
<PAGE>
- ------------------------------
(1) Fiscal 1993 results include additional net income of $3.4 million or $.07
per share resulting from the adoption of SFAS No. 106, "Postretirement
Benefits Other Than Pensions" and SFAS No. 109, "Accounting for Income
Taxes."
(2) "EBITDA" consists of operating income plus consolidated depreciation and
amortization. The Company has presented EBITDA supplementally because the
Company believes it allows for a more complete analysis of its results of
operations. This information should not be considered as an alternative to
any measure of performance or liquidity as promulgated under generally
accepted accounting principles (such as net income or cash provided by or
used in operating, investing and financing activities) nor should it be
considered as an indicator of the Company's overall financial performance.
(3) For purposes of this ratio, earnings are calculated by adding fixed charges
(excluding capitalized interest) to income before income taxes and minority
interest, adjusting to exclude gain (loss) from property transactions and
undistributed earnings in less than 50%-owned affiliates. Fixed charges
consist of interest on borrowings and that portion of rental expense which
represents interest, including Hilton's proportionate share of such items
with respect to 50%-owned affiliates.
10
<PAGE>
BUSINESS
THE COMPANY
The Company is a leading owner and operator of full-service hotels and
hotel-casinos in the United States. The Hilton name is one of the best
recognized and most respected lodging brands in the world. The Company owns,
leases and operates major lodging and gaming properties in gateway cities, urban
and suburban centers and resort areas under the Hilton name in the U.S. and
under the Conrad International name abroad. Hilton's strategy is to expand its
core businesses through acquisitions, domestic and international expansion,
leveraging its brand names and exploiting the synergies between its lodging and
gaming operations.
The Company announced in January 1996 it would not pursue a proposed
spin-off of its gaming operations, and will continue to develop the marketing,
operating and financial efficiencies between its two business segments. In
February 1996, Stephen Bollenbach joined Hilton as president and chief executive
officer. Mr. Bollenbach, who previously served as a senior executive at such
companies as The Walt Disney Co., Marriott Corporation and Holiday Corporation,
brings broad financial and strategic experience to Hilton's management.
For the fiscal year ended December 31, 1995, the Company's consolidated
revenue increased 9% to $1.6 billion, and operating income rose 24% to $353.6
million from $284.6 million in 1994. Net income rose 42% to $172.8 million, or
$3.56 per share, compared to $121.7 million or $2.52 per share in 1994.
A summary of the Company's hotels and gaming properties is set forth below:
<TABLE>
<CAPTION>
AT FEBRUARY 1, 1996
------------------------------------------
PROPERTY TYPE NUMBER OF PROPERTIES NUMBER OF ROOMS
- ------------------------------------------------------------------------- ----------------------- -----------------
<S> <C> <C>
HOTELS
Owned/Partially Owned Hotels:
Domestic Full-Service.................................................. 24 21,957
Hilton Suites.......................................................... 5 1,095
Hilton Garden Inns..................................................... 2 347
Conrad International................................................... 2 704
--- ------
Total.................................................................. 33 24,103
--- ------
Managed Hotels:
Domestic Full-Service.................................................. 22 14,668
Conrad International................................................... 4 1,100
--- ------
Total.................................................................. 26 15,768
--- ------
Franchise Hotels......................................................... 164 42,155
--- ------
GAMING
Owned/Partially Owned Hotel-Casinos:
Domestic............................................................... 5 11,421
Conrad International................................................... 3 1,361
New Orleans Riverboat.................................................. 1 --
--- ------
Total.................................................................. 9 12,782
--- ------
Managed Casino:
Casino Windsor......................................................... 1 --
--- ------
TOTAL PROPERTIES......................................................... 233 94,908
--- ------
--- ------
</TABLE>
Since the beginning of 1995, the Company has taken advantage of various
opportunities to expand its business, the most significant of which included the
opening of new vacation ownership resorts in Las Vegas, Nevada and Orlando,
Florida; the completion of the third of three new 12,600- to 15,400-square-foot
Sky
11
<PAGE>
Villa luxury suites at the Las Vegas Hilton; the opening of the 136-room Conrad
International Treasury hotel-casino in Brisbane, Australia; chartering a
riverboat to serve as a complementary facility for Casino Windsor in Windsor,
Ontario, Canada; the management of a 294-room hotel in Durango, Colorado, a
260-room hotel in Hurghada, Egypt and a 412-room hotel in Barcelona, Spain; and
the announcement of a major expansion of Hilton Garden Inn properties.
The Company routinely reviews opportunities to make acquisitions in the
hotel and gaming businesses and other travel-related businesses. The Company
believes that currently there are available a number of acquisition
opportunities that would be complementary to its current business. The Company
currently has no commitments or understandings to acquire any specific business
or other material assets and there is no assurance that it will be successful in
pursuing any such acquisition opportunities.
Hilton was organized in the State of Delaware on May 29, 1946. Its principal
executive offices are located at 9336 Civic Center Drive, Beverly Hills,
California 90210 and its telephone number is (310) 278-4321.
GROWTH STRATEGY -- HOTELS
The Company has developed a five-year strategic growth plan that calls for
increasing room count by a significant percentage by year-end 2000. In 1995, the
Company added twice as many rooms as it did in any of the previous five years.
Growth in the Hotel Segment will occur primarily through significant domestic
expansion of the Company's new Hilton Garden Inn product, conversion of existing
domestic properties and international expansion.
EXPANSION OF HILTON GARDEN INN PROPERTIES. In January 1996, Hilton
announced plans for a major expansion of its redesigned Hilton Garden Inn
concept. The hotels have been redesigned to include 150 to 200 rooms, and offer
amenities such as a quality restaurant, meeting space, exercise room and pool to
differentiate them from other mid-market hotel competitors. Guest rooms will
feature refrigerators, coffee makers, microwave ovens, irons, ironing boards and
well-appointed work desks. The concept is designed to offer many full-service
amenities at moderate prices that are lower than those at standard full-service
hotels.
Hilton plans to add as many as 100 new Hilton Garden Inns over the next five
years to create a strong presence in the mid-market segment. Approximately 80%
of the additional Hilton Garden Inns are expected to be newly constructed
facilities, with the remainder to be conversions of existing properties. The
properties constructed during the first phase of the Hilton Garden Inn expansion
are expected to be financed by Hilton, either solely or with partners.
EXPANSION OF MANAGEMENT AND FRANCHISE PROPERTIES. Hilton also intends to
expand its domestic operations through acquisitions and conversions of existing
hotels into management and franchise properties. The Company believes
full-service hotels can be acquired at prices that are attractive, and
substantially below replacement value. Very few standard full-service hotels are
being built domestically, which the Company believes will help drive demand in
the future. The Company also believes it can improve the performance of acquired
and franchise hotels, as the converted properties can benefit from the strength
of its brand names, reservation system, marketing programs and worldwide sales
organization.
EXPANSION OF INTERNATIONAL HOTEL OPERATIONS. The Company believes there are
substantial opportunities for international hotel expansion, and is particularly
focused on city-center business hotels and resort properties. The Company
expects that most of those properties will be operated under the Conrad
International brand through long-term management agreements. The Company has
entered into management contracts to operate the following new hotels, the
anticipated opening dates of which are indicated parenthetically: the 350-room
Conrad International Sharm El Sheikh in Egypt (fall 1996); the 510-room Conrad
International Singapore (fall 1996); the 700-room Conrad International Jakarta
in Indonesia (1998); the 400-room Conrad International Amman in Jordan (1998);
and the 400-room Conrad International Bangkok in Thailand (1999). Negotiations
relating to the management of other international hotels are in varying stages
and, in certain instances, letters of intent for management contracts have been
executed. However, no assurances can be given that management contracts for such
other hotels will be executed or
12
<PAGE>
that such other hotels will be constructed and, thereafter, operated by the
Company. Hilton is developing a mid-market hotel product for select
international locations, and also is exploring a strategic alliance with the
owner of the Hilton International hotel chain, which owns the Hilton name
outside of the United States.
GROWTH STRATEGY -- GAMING
The Company is continuing to expand and improve its worldwide gaming
operations through acquisitions, the development of new facilities and the
enhancement of existing gaming properties.
EXPANSION IN EXISTING GAMING MARKETS. The Company is pursuing gaming
acquisitions and development opportunities that will complement its existing
strengths as a major-market casino operator. The New Jersey Casino Control
Commission has granted the Company's request for a Statement of Compliance,
finding that the Company satisfies all non-facility related criteria for a
casino license in Atlantic City, New Jersey. The Company does not own or manage,
and has not entered into any agreement to own or manage, a hotel-casino in
Atlantic City.
EXPANSION OF INTERNATIONAL HOTEL-CASINO OPERATIONS. The Company believes
the opportunity exists to expand its gaming operations abroad. Hilton is
monitoring gaming operations in Asia, Canada, Latin America, the Middle East and
South Africa with the intention of expanding its Conrad International
properties.
The government of Uruguay has selected Conrad International and its partners
to develop a new 300-room hotel-casino in Punta del Este, Uruguay. This project,
which will be the first privately operated casino in Uruguay in 30 years, will
include a 38,000-square-foot casino. Conrad International will manage and have
an equity interest of approximately 43% in the hotel-casino. The casino is
scheduled to open in early 1997 and the hotel is expected to commence operations
in late 1997.
Conrad International has entered into an agreement to develop and operate a
700-room hotel-casino in Cairo, Egypt. Plans for this property feature a
17,000-square-foot European-style casino. Conrad International will manage and
have a 10% equity interest in the hotel-casino, which is scheduled to open in
late 1997.
DEVELOPMENT OF DOCKSIDE CASINO IN KANSAS CITY, MISSOURI. The Company also
is developing a dockside casino in Kansas City, Missouri. The Company will
manage and own a 90% interest in this project, which will include a
30,000-square-foot casino on a continually docked 130,000-square-foot barge,
concessions and entertainment facilities. Subject to the receipt of all required
gaming licenses and permits, this project is scheduled to open in mid-1996. The
Company also plans to build a 260-room Hilton hotel next to the dockside casino,
which is scheduled to open in mid-1997.
ENHANCEMENT OF EXISTING HOTEL-CASINOS. In 1996, the Las Vegas Hilton plans
to rebuild its marquee sign and renovate 700 of its guest rooms. The Flamingo
Hilton-Las Vegas plans to complete a new main entrance to the property and
renovate the registration area. The Flamingo Hilton-Laughlin plans to renovate
1,000 of its guest rooms, refinish the exterior facade and continue its slot
machine replacement program. At the Reno Hilton, renovation of restaurants,
meeting rooms and guest rooms is planned. The Flamingo Hilton-Reno plans to
renovate guest rooms and open a Benihana restaurant.
CONSTRUCTION OF STAR TREK ATTRACTION AT THE LAS VEGAS HILTON. In January
1995, the Company and Paramount Parks Inc. ("Paramount") announced plans to
build a 65,000-square-foot attraction to be called "Star Trek: The Experience at
the Las Vegas Hilton." This attraction is scheduled to open in spring 1997, and
will feature a motion-based simulation ride, interactive video and virtual
reality stations, dining and souvenir shops. The building housing the Star Trek
attractions will be owned by the Company and leased to Paramount. The attraction
also will be managed by Paramount. In conjunction with the Star Trek attraction,
the Company plans to construct a themed 22,000-square-foot casino addition at
the Las Vegas Hilton, which also is scheduled to open in spring 1997. The
project is designed to attract and retain middle-market gaming customers to
augment the property's high-end gaming business.
13
<PAGE>
HOTELS
OWNED, PARTIALLY OWNED AND LEASED
At February 1, 1996, Hilton owned, partially owned or leased and operated 24
full-service hotels with 21,957 rooms (excluding its five hotel-casinos) located
throughout the United States. Thirteen of these hotels with 8,036 rooms are
wholly owned or leased, including the Waldorf=Astoria in New York City, the
Palmer House Hilton and the O'Hare Hilton in Chicago, while 11 hotels with
13,921 rooms are partially owned, including the 50%-owned Hilton Hawaiian
Village, New York Hilton & Towers and San Francisco Hilton & Towers and the
67.4%-owned New Orleans Hilton Riverside & Towers. Hilton also earns management
fee income from its partially owned hotels generally under long-term management
contracts.
Hilton leases the land upon which eight hotels are located. Upon the
expiration of such leases, the buildings and other leasehold improvements
presently owned by Hilton revert to the landlords. Hilton, in all cases, owns
all furniture and equipment, is responsible for repairs, maintenance, operating
expenses and lease rentals, and retains complete managerial discretion over
operations. Generally, Hilton pays a percentage rental based on the gross
revenue of the facility, but in some instances the rental is a fixed amount.
Complementing its standard full-service hotels, Hilton also has ownership
interests in five Hilton Suites with a total of 1,095 rooms and two Hilton
Garden Inns with 347 rooms, at February 1, 1996.
MANAGED
At February 1, 1996, Hilton managed 22 domestic hotels with no ownership
interest. Under its standard management arrangement, Hilton operates a hotel for
the benefit of its owner, which either owns or leases the hotel and the
associated personal property. Hilton's management fee is generally based on a
percentage of each hotel's gross revenue plus, in the majority of properties, an
incentive fee based on operating performance.
Under the management agreements, all operating and other expenses are paid
by the owner, and Hilton is generally reimbursed for its out-of-pocket expenses.
In turn, Hilton's managerial discretion is subject to approval by the owner in
certain major areas, including adoption of capital budgets. The Company has a
right of first refusal to purchase an interest in certain managed hotels.
The Company has also agreed to provide loans or additional investments to
the owners of certain managed hotels under specified circumstances.
FRANCHISE
Pursuant to franchises granted by the Company, franchise hotels are operated
under the Hilton, Hilton Garden Inn or Hilton Suites names. The franchise hotels
operated under the Hilton name are generally smaller than the full-service
hotels owned, leased or managed by Hilton and average approximately 250 rooms in
size. Franchise hotels bearing the Hilton Garden Inn name are approximately 90
to 250 rooms in size and utilize a modular design constructed around a courtyard
containing an indoor or outdoor swimming pool. In general, Hilton approves the
plan for, and the location of, franchise hotels and assists in their design.
On February 1, 1996, there were 164 franchise hotels operated by others, of
which 160 were operated under the Hilton name, three were operated under the
Hilton Garden Inn name and one was operated under the Hilton Suites name. In
general, franchisees pay Hilton an initial fee based on the number of rooms in a
franchise hotel and a continuing fee based on a percentage of the facility's
room revenue. Although Hilton does not directly participate in the management or
operation of franchise hotels, it conducts periodic inspections to ensure that
Hilton's standards are maintained and renders advice with respect to hotel
operations.
The Company has continued its ongoing program of monitoring and improving
its franchise operations. The Company added six franchises to its system in
1995, while five franchise arrangements were terminated, several due to
noncompliance with the Company's standards.
14
<PAGE>
INTERNATIONAL
The Company's international hotel operations are conducted through Conrad
International. At February 1, 1996, Conrad International operated six hotels
with a total of 1,804 rooms (excluding hotel-casinos) under long-term management
contracts. Two of these hotels are partially owned: the 14.7%-owned Conrad
International Dublin in Ireland and the 30%-owned Conrad International Hong
Kong. Hilton is pursuing opportunities to operate hotels throughout the world
with particular emphasis in city-center business hotels and resort hotels. It is
anticipated that these acquisitions will generally be operated pursuant to
long-term management contracts.
GAMING
NEVADA HOTEL-CASINOS
The Company's gaming operations, which are largely concentrated in Nevada,
operate primarily under the Hilton and Flamingo brand names. The Company's
wholly owned Nevada casinos are the Las Vegas Hilton, the Flamingo Hilton-Las
Vegas, the Flamingo Hilton-Laughlin, the Reno Hilton and the Flamingo
Hilton-Reno. The Company has a strong presence in Las Vegas, the largest gaming
market in the world with more than 29 million visitors and gross gaming revenue
of more than $5.7 billion in 1995.
The Las Vegas Hilton is located adjacent to the Las Vegas Convention Center
and focuses on upscale individual leisure guests and convention groups. The
Flamingo Hilton-Las Vegas, the Reno Hilton and the Flamingo Hilton-Reno focus
primarily on the mid-market, in particular the group tour and travel segment.
The Flamingo Hilton-Laughlin targets the budget and mid-market segments. Each of
the Company's hotel-casinos has gaming, convention, dining, shopping,
entertainment and, with the exception of the Flamingo Hilton-Reno, indoor and
outdoor recreational facilities. A variety of popular entertainment is featured
in theaters and lounges at each hotel. The Company also operates a vacation
ownership resort adjacent to the Flamingo Hilton-Las Vegas. See "-- Other
Operations -- Vacation Ownership."
The Company continues to refurbish and expand existing facilities in Nevada
to maintain their presence as premier properties in the market. In 1995, the Las
Vegas Hilton completed construction of the third of three new 12,600- to
15,400-square-foot Sky Villa luxury suites for premium players. The Las Vegas
Hilton also completed new VIP baccarat facilities and opened a new
6,800-square-foot luxury European Suite. The Flamingo Hilton-Las Vegas completed
an extensive expansion and renovation project, including a new 600-room tower, a
10,000-square-foot casino expansion, a new 21,000-square-foot ballroom,
remodeling of the race and sports book, new entertainment, recreation, retail
and dining facilities, exterior enhancements and guest room renovations. The
Flamingo Hilton-Laughlin upgraded its guest room bathrooms and continued its
slot machine replacement program. The Reno Hilton completed a renovation of its
casino and the registration, entertainment and retail areas of the property, and
opened a new Johnny Rockets restaurant. The Flamingo Hilton-Reno renovated its
casino and remodeled the Top of the Flamingo Hilton restaurant.
The space utilized by the Company's casinos in Nevada, in terms of
approximate square footage, is as follows: Las Vegas Hilton -- 78,000 square
feet (inclusive of 29,000 square feet attributable to the race and sports book);
Flamingo Hilton-Las Vegas -- 74,000 square feet (inclusive of 20,000 square feet
attributable to O'Sheas Irish theme casino adjacent to the hotel); Flamingo
Hilton-Laughlin -- 58,000 square feet (inclusive of 3,000 square feet
attributable to the race and sports book); Reno Hilton -- 118,000 square feet
(inclusive of 12,000 square feet attributable to the race and sports book); and
Flamingo Hilton-Reno -- 46,000 square feet (inclusive of 2,500 square feet
attributable to the race and sports book).
Each of the hotel-casinos is open 24 hours a day, seven days a week, for
gaming activities. Games operated in these casinos include "21," craps,
roulette, big 6, baccarat, poker, keno and slot and other coin machines. The Las
Vegas Hilton's race and sports book is tied in by satellite or modem to the
casinos at the Flamingo Hilton-Las Vegas, the Flamingo Hilton-Laughlin, the Reno
Hilton and the Flamingo Hilton-Reno.
15
<PAGE>
INTERNATIONAL HOTEL-CASINOS
The Company, through Conrad International, manages three international
hotel-casinos which feature table games and slot machines similar to those
offered at the Company's hotel-casinos in Nevada.
In April 1995, the Company commenced operation of the 136-room Conrad
International Treasury in Brisbane, Australia. This hotel-casino features a
65,000-square-foot casino and has the exclusive right to conduct casino gaming
in Brisbane until 2005. The Company has a 19.9% ownership interest in this
property.
The Company also has a 19.9% ownership interest in the 605-room Hotel Conrad
& Jupiters Casino, which opened in 1985. This hotel-casino is located on the
Gold Coast in Queensland, Australia, and features a 70,000-square-foot casino.
This property had the exclusive right to conduct casino gaming on Queensland's
Gold Coast through 1995.
The Company has a 25% ownership interest in the 620-room Conrad
International Istanbul, which opened in 1992. This hotel-casino includes a
12,000-square-foot casino.
CASINO WINDSOR
The Company and the other two shareholders of Windsor Casino Limited ("WCL")
operate the Casino Windsor, an interim 50,000-square-foot casino in Windsor,
Ontario, Canada. The Company, through Conrad International, owns a 33.3%
interest in WCL, which operates this project for the Ontario provincial
government. The Company anticipates that the interim casino will be replaced by
a permanent facility in early 1998, which will include a hotel of approximately
400 rooms, a 75,000-square-foot casino, entertainment and meeting facilities.
Since December 1995, the Company has chartered a riverboat to the Ontario
provincial government to serve as a complementary facility for Casino Windsor.
This vessel provides an additional 25,000 square feet of casino space for the
property.
NEW ORLEANS RIVERBOAT CASINO
Since February 1994, the Company has operated a riverboat casino located
adjacent to the New Orleans Hilton Riverside & Towers. The Company currently
operates a 1,500-passenger vessel which has a 20,000-square-foot casino
featuring table games and slot machines similar to those offered at the
Company's hotel-casinos in Nevada. This vessel is wholly owned by the Company
and leased to a joint venture, of which the Company owns a 50% interest.
OTHER OPERATIONS
VACATION OWNERSHIP
The Company owns a 50% interest in the Hilton Grand Vacations Company joint
venture ("HGVC"), which currently operates 12 vacation ownership resorts in
Florida and one in Nevada. In January 1995, HGVC commenced operation of a
200-unit vacation ownership resort adjacent to the Flamingo Hilton-Las Vegas. In
August 1995, HGVC also commenced operation of the first phase of a 360-unit
vacation ownership resort adjacent to Sea World in Orlando, Florida.
Development, construction and certain operating costs of HGVC's projects in Las
Vegas and Orlando have been substantially funded by the Company in the form of
revolving loan facilities. HGVC is seeking new development and acquisition
opportunities in other resort locations.
DESIGN AND FURNISHING SERVICES
Hilton, through its wholly owned subsidiary, Hilton Equipment Corporation,
and through its hotels division, provides design and furnishing services and
distributes furniture, furnishings, equipment and supplies to hotels and
hotel-casinos. The revenue of this operation depend primarily on the number of
new hotels operated or franchised by Hilton and on refurbishing and remodeling
of existing Hilton hotels.
16
<PAGE>
COMPUTER SYSTEMS
Compass Computer Services, Inc. ("Compass"), 50% of which is owned by Hilton
and the balance by Budget Rent-A-Car, Inc., operates a computerized worldwide
reservation system for, among other things, hotel reservations. This system also
provides Hilton with certain statistical data and registration packets. Compass
is managed by Litton Computer Services.
RESERVATION SYSTEM
The Compass computerized reservation system is presently utilized by Hilton
Service Corporation, the operator of a worldwide system of reservation offices
for hotels operated by Hilton, Hilton International Co., their affiliates and
others. Hilton Service Corporation is owned 51% by Hilton and 49% by Hilton
International Co.
17
<PAGE>
OWNED, LEASED AND MANAGED HOTELS
The following charts set forth the Company's owned, leased and managed
hotels.
OWNED HOTELS
At February 1, 1996, the following hotels were owned in fee and operated by
Hilton:
<TABLE>
<CAPTION>
NUMBER OF MORTGAGE
ROOMS/SUITES YEAR INDEBTEDNESS
(YEAR OF ACQUIRED AS OF FEBRUARY 1,
NAME AND LOCATION COMPLETION) BY HILTON 1996
- -------------------------------------------------- ------------- --------- -----------------
<S> <C> <C> <C>
Atlanta Airport Hilton & Towers 503 1960 $50,000,000
Atlanta, Georgia(1) (1989)
Palmer House Hilton 1,639 1988 --
Chicago, Illinois(2) (1925; 1945)
Flamingo Hilton-Las Vegas 3,642
Las Vegas, Nevada (various 1971 --
dates
through 1995)
Las Vegas Hilton 3,174
Las Vegas, Nevada (various 1971 --
dates
through 1995)
Flamingo Hilton-Laughlin 2,000 1990 --
Laughlin, Nevada (1990)
New Orleans Airport Hilton 317 1959 $32,000,000
New Orleans, Louisiana(1) (1989)
Waldorf=Astoria 1,380 1977 --
New York, New York(3) (1931)
Portland Hilton 455 1963 --
Portland, Oregon (1963)
Flamingo Hilton-Reno 604 1981 --
Reno, Nevada(4) (1978)
Reno Hilton 2,001 1992 --
Reno, Nevada (1978)
Hilton Garden Inn 195 1993 --
Southfield, Michigan(5) (1988)
Hilton Suites 224 1991 --
Auburn Hills, Michigan (1991)
Hilton Suites 203 1989 --
Brentwood, Tennessee (1989)
Hilton Suites 230 1989 --
Orange, California (1989)
Hilton Suites 226 1990 --
Phoenix, Arizona (1990)
</TABLE>
- ------------------------------
(1) The Atlanta Airport Hilton & Towers and the New Orleans Airport Hilton were
closed and demolished in 1986 and, thereafter, rebuilt and reopened in 1989.
(2) The Company owned the Palmer House Hilton from May 1946 to December 1962
and, thereafter, operated the Palmer House Hilton under a lease until
acquiring the property in February 1988.
(3) The Company operated the Waldorf=Astoria under a lease from February 1950
until acquiring the property in April 1977.
18
<PAGE>
(4) An extension of the casino operation is contained in a structure located on
an adjacent block with a skywalk connecting it to the main building. This
structure is held under four long-term leases or subleases, expiring on
various dates from January 1, 2001 to August 31, 2034, including renewal
options, all of which may not necessarily be exercised.
(5) The Company managed the Hilton Garden Inn from July 1991 until acquiring the
property in July 1993.
LEASED HOTELS
At February 1, 1996, the following hotels were leased and operated by
Hilton:
<TABLE>
<CAPTION>
NUMBER OF
ROOMS (YEAR OF
INITIAL COMPLETION;
YEAR ACQUIRED
NAME AND LOCATION BY HILTON) EXPIRATION DATE
- -------------------------------------------------- ------------------------------------------------------------------------
<S> <C> <C>
Logan Airport Hilton 516 2014, with renewal options aggregating 25 years
Boston, Massachusetts(1) (1959; 1988) under specified circumstances
O'Hare Hilton 858 2018
Chicago, Illinois(2) (1973; 1991)
Oakland Airport Hilton 363 2033
Oakland, California (1970; 1970)
Pittsburgh Hilton & Towers 712 2004, with renewal options aggregating 30 years
Pittsburgh, Pennsylvania (1959; 1959)
San Diego Hilton Beach & Tennis Resort 357 2019
San Diego, California (1962; 1965)
San Francisco Airport Hilton 527 1998
San Francisco, California (1959; 1959)
Seattle Airport Hilton 173 2004, with renewal options aggregating 30 years
Seattle, Washington (1961; 1961)
Tarrytown Hilton 236 2003, with renewal options aggregating 40 years
Tarrytown, New York(3) (1961; 1993)
</TABLE>
- ------------------------------
(1) The Company managed and was a joint venture partner with respect to the
Logan Airport Hilton from 1975 until July 1988, when it acquired the
remaining equity interest in the joint venture leasing the land underlying
the hotel.
(2) The Company managed the O'Hare Hilton from 1974 until October 1991, when the
Company purchased the then remaining leasehold of the hotel. The O'Hare
Hilton was closed for renovation in October 1991 and reopened in July 1992.
(3) The Company managed and was a joint venture partner with respect to the
Tarrytown Hilton from 1975 until August 1993, when it acquired the remaining
equity interest in the joint venture leasing the land underlying the hotel.
MANAGED HOTELS
At February 1, 1996, the following hotels were operated by Hilton under
management agreements:
<TABLE>
<CAPTION>
NUMBER OF ROOMS/SUITES
NAME AND LOCATION (YEAR OF COMPLETION) EXPIRATION DATE
- -------------------------------------------------- ------------------------------------------------------------------------
<S> <C> <C>
DOMESTIC
Anaheim Hilton & Towers 1,576 2014, with renewal options aggregating 30 years,
Anaheim, California(1) (1984) subject to certain termination rights
Anchorage Hilton 591 2006, with renewal options aggregating 20 years
Anchorage, Alaska (various dates
through 1986)
Atlanta Hilton & Towers 1,224 2006, with a renewal option for 10 years
Atlanta, Georgia (1976)
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF ROOMS/SUITES
NAME AND LOCATION (YEAR OF COMPLETION) EXPIRATION DATE
- -------------------------------------------------- ------------------------------------------------------------------------
<S> <C> <C>
Beverly Hilton 581 2007, with renewal options aggregating 20 years,
Beverly Hills, California (1955; 1967) subject to certain termination rights
Chicago Hilton & Towers 1,543 2005, with renewal options aggregating 20 years
Chicago, Illinois(2) (various dates
through 1986)
Tamarron Hilton Resort 294 2015, subject to certain termination rights
Durango, Colorado (1975)
Brunswick Hilton & Towers 405 2013, subject to certain termination rights
East Brunswick, New Jersey(1) (1989)
Hilton Hawaiian Village 2,542 1997, with renewal options aggregating 20 years
Honolulu, Hawaii(3) (various dates
through 1988)
Long Beach Hilton 393 2012, with renewal options aggregating 20 years,
Long Beach, California (1992) subject to certain termination rights
Los Angeles Airport Hilton & Towers 1,234 1999, with renewal options aggregating 10 years,
Los Angeles, California (1983) subject to certain termination rights
McLean Hilton 458 2007, with renewal options aggregating 20 years
McLean, Virginia(2) (1987)
Fontainebleau Hilton Resort & Towers 1,206 1998, with a renewal option for 10 years, subject
Miami, Florida (1954) to certain termination rights
Miami Airport Hilton & Towers 500 2004, with renewal options aggregating 20 years
Miami, Florida(2) (1983)
Minneapolis Hilton & Towers 814 2012, with renewal options aggregating 20 years,
Minneapolis, Minnesota (1992) subject to certain termination rights
Newark Airport Hilton 374 2003
Newark, New Jersey (1988)
New Orleans Hilton Riverside & Towers 1,600 2007, with a renewal option for 10 years
New Orleans, Louisiana(4) (1977; 1983)
Millenium Hilton 561 2004, with a renewal option for 10 years, subject
New York, New York (1992) to certain termination rights
New York Hilton & Towers 2,041 (5)
New York, New York(3) (1963)
Turtle Bay Hilton Golf & Tennis Resort 485 2004, with a renewal option for 10 years
Oahu, Hawaii (1972)
Hilton at Walt Disney World 814 2003, with renewal options aggregating 20 years,
Orlando, Florida(1) (1983) subject to certain termination rights
Pasadena Hilton 291 2004, with a renewal option for 10 years, subject
Pasadena, California (1970) to certain termination rights
The Pointe Hilton Resort on 636 2012, with renewal options aggregating 20 years,
South Mountain (1986) subject to certain termination rights
Phoenix, Arizona
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF ROOMS/SUITES
NAME AND LOCATION (YEAR OF COMPLETION) EXPIRATION DATE
- -------------------------------------------------- ------------------------------------------------------------------------
<S> <C> <C>
The Pointe Hilton Resort at Squaw Peak 563 2012, with renewal options aggregating 20 years,
Phoenix, Arizona (1977) subject to certain termination rights
The Pointe Hilton Resort at 585 2012, with renewal options aggregating 20 years,
Tapatio Cliffs (1982) subject to certain termination rights
Phoenix, Arizona
Rye Town Hilton 438 (5)
Rye Brook, New York(3) (1973; 1978)
Hilton Palacio del Rio 481 1998, with a renewal option for 10 years
San Antonio, Texas (1968)
San Antonio Airport Hilton 387 2001, subject to certain termination rights
San Antonio, Texas(1) (1982)
San Francisco Hilton & Towers 1,895 2005, with a renewal option for 10 years
San Francisco, California(3) (various dates
through 1988)
Hilton at Short Hills 300 2000, with a renewal option for 5 years, subject
Short Hills, New Jersey (1988) to certain termination rights
Innisbrook Hilton Resort 873 2013, subject to certain termination rights
Tarpon Springs, Florida(1) (1972)
Hilton Waikoloa Village 1,238 2013, subject to certain termination rights
Waikoloa, Hawaii(2) (1988)
Capital Hilton 543 2005, with a renewal option for 10 years
Washington, D.C.(3) (1943; 1985)
Washington Hilton & Towers 1,123 (5)
Washington, D.C.(3) (1965)
Hilton Suites 212 2009, with renewal options aggregating 20 years
Oakbrook Terrace, Illinois(1)(3) (1989)
Hilton Garden Inn 152 2012, subject to certain termination rights
Valencia, California(2) (1991)
INTERNATIONAL
Conrad International Barcelona 412 2007, with a renewal option for 5 years
Barcelona, Spain(1) (1992)
Conrad International Treasury 136 2010
Brisbane, Australia(2) (1995)
Conrad International Brussels 269 2013, with renewal options aggregating 20 years
Brussels, Belgium (1993)
Conrad International Dublin 191 2010, with renewal options aggregating 20 years
Dublin, Ireland(1)(2) (1989)
Conrad International Hong Kong 513 2021
Hong Kong(2) (1990)
Conrad International Hurghada 260 2015, with renewal options aggregating 20 years,
Hurghada, Egypt (1994) subject to certain termination rights
Conrad International Istanbul 620 2011, with a renewal option for 20 years
Istanbul, Turkey(1)(2) (1992)
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF ROOMS/SUITES
NAME AND LOCATION (YEAR OF COMPLETION) EXPIRATION DATE
- -------------------------------------------------- ------------------------------------------------------------------------
<S> <C> <C>
Conrad International London 159 2016, with renewal options aggregating 20 years
London, England (1990)
Hotel Conrad & Jupiters Casino 605 2010
Gold Coast, (1986)
Queensland, Australia(2)
</TABLE>
- ------------------------------
(1) Hilton has made loans to the owners of each of the referenced properties.
(2) Hilton has equity interests of less than 50% in joint ventures which own
each of the referenced properties. See "Investments" in the Notes to the
Company's Consolidated Financial Statements on pages 48 and 49 in the Annual
Report.
(3) Hilton has equity interests of 50% in joint ventures which own each of the
referenced properties. See note 2 above.
(4) Hilton has a 67.4% equity interest in the joint venture which owns the New
Orleans Hilton Riverside & Towers. See note 2 above.
(5) The management agreements with respect to each of the referenced properties
expired on December 31, 1995, but Hilton continues to manage each of the
properties for the fees specified in the expired agreements.
ENVIRONMENTAL MATTERS
The Company, like others in its industry, is subject to various federal,
state, local and, in some cases, foreign laws, ordinances and regulations that
(i) govern activities or operations that may have adverse environmental effects,
such as discharges to air and water, as well as handling and disposal practices
for solid and hazardous or toxic wastes, or (ii) may impose liability for the
costs of cleaning up, and certain damages resulting from, sites of past spills,
disposals or other releases of hazardous or toxic substances or wastes
(together, "Environmental Laws").
The Company endeavors to maintain compliance with Environmental Laws, but,
from time to time, the Company's operations may have resulted or may result in
noncompliance or liability for cleanup pursuant to Environmental Laws. In that
regard, the Company has been notified of contamination resulting from past
disposals of wastes at two sites to which hazardous or non-hazardous wastes may
have been sent from Company facilities in the past. Based on information
reviewed by and available to the Company, including uncertainty whether a
Company facility in fact shipped any wastes to one such site, the number of
potentially responsible parties at such sites and, where available, the volume
and type of waste sent to each such site, the Company believes that any
liability arising from such disposals under Environmental Laws would not have a
material adverse effect on its results of operation or financial condition.
22
<PAGE>
REGULATION AND LICENSING
Under provisions of Nevada, Louisiana and New Jersey and other gaming laws,
and the Company's certificate of incorporation, certain securities of the
Company are subject to restrictions on ownership which may be imposed by
specified governmental authorities. Such restrictions may require the holder to
dispose of the securities or, if the holder refuses to make such disposition,
the Company may be obligated to repurchase the securities.
NEVADA GAMING LAWS. The ownership and operation of casino gaming facilities
in the State of Nevada, such as those at the Las Vegas Hilton, the Flamingo
Hilton-Las Vegas, the Flamingo Hilton-Laughlin, the Reno Hilton and the Flamingo
Hilton-Reno, are subject to the Nevada Gaming Control Act and the regulations
promulgated thereunder (the "Nevada Act") and various local regulations. The
Company's gaming operations are subject to the licensing and regulatory control
of the Nevada Gaming Commission (the "Gaming Commission"), the Nevada State
Gaming Control Board (the "Control Board"), the Clark County Liquor and Gaming
Licensing Board (the "CCB") and the City of Reno. The Gaming Commission, the
Control Board, the CCB and the City of Reno are collectively referred to as the
"Nevada Gaming Authorities."
The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy that are concerned
with, among other things: (i) the prevention of unsavory or unsuitable persons
from having a direct or indirect involvement with gaming at any time or in any
capacity; (ii) the establishment and maintenance of responsible accounting
practices and procedures; (iii) the maintenance of effective controls over the
financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and
revenues, providing reliable record keeping and requiring the filing of periodic
reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and
fraudulent practices; and (v) to provide a source of state and local revenues
through taxation and licensing fees. Change in such laws, regulations and
procedures could have an adverse effect on the Company's gaming operations. The
Company is required to be registered by the Nevada Commission as a publicly
traded corporation ("Registered Corporation") and as such, it is required
periodically to submit detailed financial and operating reports to the Nevada
Commission and furnish any other information that the Nevada Commission may
require.
Any beneficial holder of the Common Stock, regardless of the number of
shares owned, may be required to file an application, be investigated, and have
such person's suitability as a beneficial holder of the Common Stock determined
if the Gaming Commission has reason to believe that such ownership would
otherwise be inconsistent with the declared policies of the State of Nevada. The
applicant must pay all costs of investigation incurred by the Nevada Gaming
Authorities in conducting any such investigation.
The Nevada Act requires any person who acquires more than 5% of the Common
Stock to report the acquisition to the Gaming Commission. The Nevada Act
requires that beneficial owners of more than 10% of the Common Stock apply to
the Gaming Commission for a finding of suitability within thirty days after the
Chairman of the Control Board mails the written notice requiring such filing.
Under certain circumstances, an "institutional investor," as defined in the
Nevada Act, which acquires more than 10%, but not more than 15%, of the Common
Stock may apply to the Gaming Commission for a waiver of such finding of
suitability if such institutional investor holds the Common Stock for investment
purposes only. An institutional investor shall not be deemed to hold the Common
Stock for investment purposes unless the Common Stock was acquired and is held
in the ordinary course of business as an institutional investor and not for the
purpose of causing, directly or indirectly, the election of a majority of the
members of the Board of Directors of the Company, any change in the Company's
corporate charter, bylaws, management, policies or operations of the Company, or
any of its gaming affiliates, or any other action which the Gaming Commission
finds to be inconsistent with holding the Common Stock for investment purposes
only. Activities which are not deemed to be inconsistent with holding voting
securities for investment purposes only include: (i) voting on all matters voted
on by stockholders; (ii) making financial and other inquiries of management of
the type normally made by securities analysts for informational purposes and not
to cause a change in its management, policies or operations; and (iii) such
other activities as the Gaming Commission may determine to be
23
<PAGE>
consistent with such investment intent. If the beneficial holder of voting
securities who must be found suitable is a corporation, partnership or trust, it
must submit detailed business and financial information including a list of
beneficial owners. The applicant is required to pay all costs of investigation.
Barron Hilton, the Company's largest stockholder, has been found suitable as a
controlling stockholder of the Company.
Any person who fails or refuses to apply for a finding of suitability or a
license within 30 days after being ordered to do so by the Gaming Commission or
by the Chairman of the Control Board may be found unsuitable. The same
restrictions apply to a record owner if the record owner, after request, fails
to identify the beneficial owner. Any stockholder found unsuitable and who
holds, directly or indirectly, any beneficial ownership of the Common Stock
beyond such period of time as may be prescribed by the Gaming Commission may be
guilty of a criminal offense. The Company is subject to disciplinary action if,
after it receives notice that a person is unsuitable to be a stockholder or to
have any other relationship with the Company or the licensees, the Company (i)
pays that person any dividend or interest upon voting securities of the Company;
(ii) allows that person to exercise, directly or indirectly, any voting right
conferred through securities held by that person; (iii) pays remuneration in any
form to that person for services rendered or otherwise; or (iv) fails to pursue
all lawful efforts to require such unsuitable person to relinquish the voting
securities for cash at fair market value. Additionally, the CCB has taken the
position that it has the authority to approve all persons owning or controlling
the stock of any corporation controlling a gaming license.
The Gaming Commission may, in its discretion, require the holder of any debt
security of a Registered Corporation, such as the Notes, to file applications,
be investigated and be found suitable to own such debt security of a Registered
Corporation. If the Gaming Commission determines that a person is unsuitable to
own such security, then pursuant to the Nevada Act, the Registered Corporation
can be sanctioned, including the loss of its approvals, if without the prior
approval of the Gaming Commission, it (i) pays to the unsuitable person any
dividend, interest or any distribution whatsoever; (ii) recognizes any voting
right by such unsuitable person in connection with such securities; (iii) pays
the unsuitable person remuneration in any form; or (iv) makes any payment to the
unsuitable person by way of principal, redemption, conversion, exchange,
liquidation or similar transaction.
The Company is required to maintain a current stock ledger in Nevada which
may be examined by the Nevada Gaming Authorities at any time. If any securities
are held in trust by an agent or by a nominee, the record holder may be required
to disclose the identity of the beneficial owner to the Nevada Gaming
Authorities. A failure to make such disclosure may be grounds for finding the
record holder unsuitable. The Company is also required to render maximum
assistance in determining the identity of the beneficial owner. The Gaming
Commission has the power to require the Company's stock certificates to bear a
legend indicating that the securities are subject to the Nevada Act. However, to
date, the Gaming Commission has not imposed such a requirement on the Company.
The Company may not make a public offering of its securities without the
prior approval of the Gaming Commission if the securities or the proceeds
therefrom are intended to be used to construct, acquire or finance gaming
facilities in Nevada, or to retire or extend obligations incurred for such
purposes. Such approval, if given, does not constitute a finding, recommendation
or approval by the Gaming Commission or the Control Board as to the accuracy or
adequacy of the prospectus or the investment merits of the securities. Any
representation to the contrary is unlawful. On September 28, 1995, the Gaming
Commission granted the Company prior approval to make public offerings for a
period of one year, subject to certain conditions (the "Shelf Approval").
However, the Shelf Approval may be rescinded for good cause without prior notice
upon the issuance of an interlocutory stop order by the Chairman of the Control
Board. This Offering is made pursuant to such Shelf Approval. The Shelf Approval
does not constitute a finding, recommendation or approval by the Gaming
Commission or the Control Board as to the accuracy or adequacy of the Prospectus
or the investment merits of the securities offered. Any representation to the
contrary is unlawful.
Changes in control of the Company through merger, consolidation, stock or
asset acquisitions, management or consulting agreements, or any act or conduct
by a person whereby such person obtains control, may not occur without the prior
approval of the Gaming Commission. Entities seeking to acquire control of a
24
<PAGE>
Registered Corporation must satisfy the Control Board and Gaming Commission in a
variety of stringent standards prior to assuming control of such Registered
Corporation. The Gaming Commission may also require controlling stockholders,
officers, directors and other persons having a material relationship or
involvement with the entity proposing to acquire control, to be investigated and
licensed as part of the approval process relating to the transaction.
The Nevada legislature has declared that some corporate acquisitions opposed
by management, repurchases of voting securities and corporate defense tactics
affecting Nevada gaming licenses, and Registered Corporations that are
affiliated with those operations, may be injurious to stable and productive
corporate gaming. The Gaming Commission has established a regulatory scheme to
ameliorate the potentially adverse effects of these business practices upon
Nevada's gaming industry and to further Nevada's policy to: (i) assure the
financial stability of corporate gaming operators and their affiliates; (ii)
preserve the beneficial aspects of conducting business in the corporate form;
and (iii) promote a neutral environment for the orderly governance of corporate
affairs. Approvals are, in certain circumstances, required from the Gaming
Commission before the Company can make exceptional repurchases of voting
securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The Nevada Act also
requires prior approval of a plan of recapitalization proposed by the Company's
Board of Directors in response to a tender offer made directly to its
stockholders for the purpose of acquiring control of the Company.
LOUISIANA GAMING LAWS. The ownership and operation of a riverboat gaming
vessel in the State of Louisiana is subject to the Louisiana Riverboat Economic
Development and Gaming Control Act (the "Act"). Gaming activities are regulated
by the Louisiana Riverboat Gaming Commission (the "Commission") and the
Louisiana Riverboat Gaming Enforcement Division (the "Division"), a department
within the Louisiana State Police. The Division is responsible for investigating
the background of all applicants seeking a riverboat gaming license, issuing the
license and enforcing the laws, rules and regulations relating to riverboat
gaming activities.
The applicant, its officers, directors, key personnel, partners and person
holding a 5% or greater interest in the holder of a gaming license are required
to be found suitable by the Division. This requires the filing of an extensive
application to the Division disclosing personal, financial, criminal, business
and other information. On October 13, 1993, the Division issued a riverboat
gaming license to the Queen of New Orleans, a joint venture of which the Company
owns a 50% interest. The Company's joint venture commenced riverboat gaming
operations in New Orleans, Louisiana on February 10, 1994.
The transfer of a Louisiana gaming license is prohibited under the Act. The
sale, assignment, transfer, pledge or disposition of securities which represent
5% or more of the total outstanding shares issued by a holder of a license is
subject to Division approval and the transferee must be found suitable. In
addition, all contracts and leases entered into by a licensee are subject to
approval and certain enterprises which transact business with the licensee must
be licensed.
The Commission must approve all security holders of the licenses and may
find any such security holder not qualified to own those securities. Louisiana
law may require that the charter or bylaws of the licensee provide that
securities are held subject to the condition that, if a holder is found to be
disqualified by the Commission, the holder must dispose of the securities of the
licensee. If a security holder of a licensee is found disqualified, it will be
unlawful for the security holder to (i) receive any dividend or interest with
regard to the securities; (ii) exercise, directly or indirectly, any rights
conferred by the securities; or (iii) receive any remuneration from the licensee
for services rendered or otherwise. The Commission may impose similar approval
requirements on holders of securities of any intermediary or holding company of
the licensee, but may waive those requirements with respect to holders of
publicly-traded securities of intermediary and holding companies if such holders
do not have the ability to control the publicly-traded corporation or elect one
or more directors thereof.
NEW JERSEY GAMING LAWS. The ownership and operations of hotel-casino
facilities in Atlantic City, New Jersey are subject to extensive state
regulation under the New Jersey Casino Control Act (the "Act"). No hotel-casino
facility may operate unless various licenses and approvals are obtained from New
Jersey
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<PAGE>
regulatory authorities, including the Casino Control Commission (the
"Commission"). The Commission is authorized under the Act to adopt regulations
covering a broad spectrum of gaming and gaming related activities and to
prescribe the methods and forms of applications for licenses.
In order to be granted a casino license under the Act, officers and
directors of a licensee and its employees who are employed in hotel or casino
operations in Atlantic City are required to be licensed or approved by the
Commission. In addition, all contracts and leases entered into by a licensee
would be subject to approval and certain enterprises which transact business
with the licensee would themselves have to be licensed. New Jersey law also
authorizes the Commission to approve security holders of a licensee in the
manner described above under the caption "Louisiana Gaming Laws."
For a more complete description of the various applicable gaming regulatory
requirements under the Nevada, Louisiana and New Jersey Gaming Laws, see
"Additional Information -- Regulation and Licensing" in the Form 10-K.
DESCRIPTION OF THE NOTES
GENERAL
Set forth below is a summary of certain provisions of the Notes. The Notes
will be issued pursuant to an indenture (the "Indenture") to be dated as of
, 1996, by and between the Company and The Bank of New York, as trustee
(the "Trustee"). The following summary of the Notes and the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by,
reference to all of the provisions of the Indenture, including the definition
thereof. Copies of the Indenture can be obtained from the Underwriter upon
request. Capitalized terms used herein without definition have the meanings
ascribed to them in the Indenture. As used in this section, the "Company" refers
to Hilton Hotels Corporation, exclusive of its subsidiaries. Wherever particular
provisions of the Indenture are referred to in this summary, such provisions are
incorporated by reference as a part of the statements made and such statements
are qualified in their entirety by such reference.
The Notes will be general unsecured, subordinated, general obligations of
the Company, limited in aggregate principal amount to $ ($ if the
Underwriter's over-allotment option is exercised in full). The Notes will be
subordinated in right of payment to all Senior Indebtedness of the Company, as
described under "Subordination" below. The Notes will be issued only in fully
registered form, without coupons, in denominations of $1,000 and integral
multiples thereof.
The Notes will mature on , 2006. The Notes will bear interest at
the rate per annum stated on the cover page of this Prospectus from the date of
issuance or from the most recent Interest Payment Date to which interest has
been paid or provided for, payable semi-annually on and of
each year, commencing , 1996, to the persons in whose names such Notes
are registered at the close of business on or immediately
preceding such Interest Payment Date. Principal of, premium, if any, and
interest on, the Notes will be payable, the Notes will be convertible and the
Notes may be presented for registration of transfer or exchange, at the office
or agency of the Company maintained for such purpose, which office or agency
shall be maintained in the Borough of Manhattan, The City of New York. Interest
will be calculated on the basis of a 360-day year consisting of twelve 30-day
months.
At the option of the Company, payment of interest may be made by check
mailed to the Holders of the Notes at the addresses set forth upon the registry
books of the Registrar. No service charge will be made for any registration of
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. Until otherwise designated by the Company, the Company's office or
agency will be the corporate trust office of the Trustee presently located at
101 Barclay Street, 21 West, New York, New York 10286.
CONVERSION RIGHTS
The Holder of any Notes will have the right, at the Holder's option, to
convert any portion of the principal amount thereof that is an integral multiple
of $1,000 into shares of Common Stock at any time prior
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<PAGE>
to the second Business Day prior to the Stated Maturity of the Notes (unless
earlier redeemed or repurchased) at the Conversion Price set forth on the cover
page of this Prospectus (subject to adjustment as described below). The right to
convert a Note called for redemption or delivered for repurchase will terminate
at the close of business on the Business Day prior to the Redemption Date or
Repurchase Date for such Note, unless the Company subsequently fails to pay the
applicable Redemption Price or Repurchase Price, as the case may be.
In the case of any Note that has been converted after any Record Date, but
on or before the next Interest Payment Date, interest the stated due date of
which is on such Interest Payment Date shall be payable on such Interest Payment
Date notwithstanding such conversion, and such interest shall be paid to the
Holder of such Note who is a Holder on such Record Date. Any Note so converted
must be accompanied by payment of an amount equal to the interest payable on
such Interest Payment Date on the principal amount of Notes being surrendered
for conversion (unless such Note shall have been called for redemption, in which
case no such payment shall be required). No fractional shares will be issued
upon conversion but, in lieu thereof, an appropriate amount will be paid in cash
by the Company based on the market price of Common Stock (as determined in
accordance with the Indenture) at the close of business on the day of
conversion.
The Conversion Price will be subject to adjustment upon the occurrence of
certain events, including: (a) any payment of a dividend (or other distribution)
payable in Common Stock on any class of Capital Stock of the Company, (b) any
issuance to all holders of Common Stock of rights, options or warrants entitling
them to subscribe for or purchase Common Stock at less than the then current
market price (as determined in accordance with the Indenture) of Common Stock;
provided, however, that if such options or warrants are only exercisable upon
the occurrence of certain triggering events, then the Conversion Price will not
be adjusted until such triggering events occur, (c) any subdivision, combination
or reclassification of Common Stock, (d) any distribution to all holders of
Common Stock of evidences of indebtedness, shares of Capital Stock other than
Common Stock, cash or other assets (including securities, but excluding those
dividends, rights, options, warrants and distributions referred to above and
excluding dividends and distributions paid exclusively in cash), (e) any
distribution consisting exclusively of cash (excluding any cash portion of
distributions referred to in (d) above, or cash distributed upon a merger or
consolidation to which the second succeeding paragraph applies) to all holders
of Common Stock in an aggregate amount that, combined together with (i) all
other such all-cash distributions made within the then preceding 12 months in
respect of which no adjustment has been made and (ii) any cash and the fair
market value of other consideration paid or payable in respect of any tender
offer by the Company or any of its Subsidiaries for Common Stock concluded
within the preceding 12 months in respect of which no adjustment has been made,
exceeds 15% of the Company's market capitalization (defined as being the product
of the then current market price of the Common Stock times the number of shares
of Common Stock then outstanding) on the record date of such distribution, and
(f) the completion of a tender offer made by the Company or any of its
Subsidiaries for Common Stock that involves an aggregate consideration that,
together with (i) any cash and other consideration payable in a tender offer by
the Company or any of its Subsidiaries for Common Stock expiring within the 12
months preceding the expiration of such tender offer in respect of which no
adjustment has been made and (ii) the aggregate amount of any such all-cash
distributions referred to in (e) above to all holders of Common Stock within the
12 months preceding the expiration of such tender offer in respect of which no
adjustments have been made, exceeds 15% of the Company's market capitalization
on the expiration of such tender offer. No adjustment of the Conversion Price
will be required to be made until the cumulative adjustments amount to 1.0% or
more of the Conversion Price as last adjusted. The Company reserves the right to
make such reductions in the Conversion Price in addition to those required in
the foregoing provisions as it considers to be advisable. In the event the
Company elects to make such a reduction in the conversion price, the Company
will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder if and to the extent that such
laws and regulations are applicable in connection with the reduction of the
price of the Notes.
In the event that the Company distributes rights or warrants (other than
those referred to in (b) in the preceding paragraph) PRO RATA to holders of
Common Stock, so long as any such rights or warrants have not
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<PAGE>
expired or been redeemed by the Company, the Holder of any Note surrendered for
conversion will be entitled to receive upon such conversion, in addition to the
shares of Common Stock issuable upon such conversion (the "Conversion Shares"),
a number of rights or warrants to be determined as follows: (i) if such
conversion occurs on or prior to the date for the distribution to the holders of
rights or warrants of separate certificates evidencing such rights or warrants
(the "Distribution Date"), the same number of rights or warrants to which a
holder of a number of shares of Common Stock equal to the number of Conversion
Shares is entitled at the time of such conversion in accordance with the terms
and provisions of and applicable to the rights or warrants, and (ii) if such
conversion occurs after such Distribution Date, the same number of rights or
warrants to which a holder of the number of shares of Common Stock into which
such Note was convertible immediately prior to such Distribution Date would have
been entitled on such Distribution Date in accordance with the terms and
provisions of and applicable to the rights or warrants. The conversion price of
the Notes will not be subject to adjustment on account of any declaration,
distribution or exercise of such rights or warrants.
In case of any reclassification, consolidation or merger of the Company with
or into another person or any merger of another person with or into the Company
(with certain exceptions), or in case of any sale, transfer or conveyance of all
or substantially all of the assets of the Company (computed on a consolidated
basis), each Note then outstanding will, without the consent of any Holder of
Notes, become convertible only into the kind and amount of securities, cash and
other property receivable upon such reclassification, consolidation, merger,
sale, transfer or conveyance by a holder of the number of shares of Common Stock
into which such Note was convertible immediately prior thereto, after giving
effect to any adjustment event, who failed to exercise any rights of election
and received per share the kind and amount received per share by a plurality of
non-electing shares.
SUBORDINATION
The Notes will be general, unsecured obligations of the Company,
subordinated in right of payment to all existing and future Senior Indebtedness
of the Company. At December 31, 1995, as adjusted to give effect to the issuance
and sale of the Notes and the application of the net proceeds therefrom, the
Company would have had approximately $1.1 billion of Senior Indebtedness
outstanding. The Notes are structurally subordinated in right of payment to all
liabilities (including trade payables) of the Company's Subsidiaries. The
Company's Subsidiaries had approximately $ of trade payables and accrued
liabilities outstanding at December 31, 1995. The Indenture will not restrict
the incurrence of Senior Indebtedness or other indebtedness by the Company or
its Subsidiaries.
The Indenture will provide that no payment may be made by the Company on
account of the principal of, premium, if any, and interest on the Notes, or to
acquire any of the Notes (including repurchases of Notes at the option of the
Holder) for cash or property (other than Junior Securities), or on account of
the redemption provisions of the Notes, (i) upon the maturity of any Senior
Indebtedness of the Company by lapse of time, acceleration (unless waived) or
otherwise, unless and until all principal of, premium, if any, and interest on
such Senior Indebtedness are first paid in full (or such payment is duly
provided for), or (ii) in the event of default in the payment of any principal
of, premium, if any, or interest on any Senior Indebtedness of the Company when
it becomes due and payable, whether at maturity or at a date fixed for
prepayment or by declaration or otherwise (a "Payment Default"), unless and
until such Payment Default has been cured or waived or otherwise has ceased to
exist.
Upon (i) the happening of an event of default (other than a Payment Default)
that permits the holders of Senior Indebtedness or their representative
immediately to accelerate its maturity and (ii) written notice of such event of
default given to the Company and the Trustee by the holders of an aggregate of
at least $50,000,000 principal amount outstanding of such Senior Indebtedness or
their representative (a "Payment Notice"), then, unless and until such event of
default has been cured or waived or otherwise has ceased to exist, no payment
(by setoff or otherwise) may be made by or on behalf of the Company on account
of the principal of, premium, if any, interest on the Notes, or to acquire or
repurchase any of the Notes for cash or property, or on account of the
redemption provisions of the Notes, in any such case other than payments
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<PAGE>
made with Junior Securities of the Company. Notwithstanding the foregoing,
unless (i) the Senior Indebtedness in respect of which such event of default
exists has been declared due and payable in its entirety within 179 days after
the Payment Notice is delivered as set forth above (the "Payment Blockage
Period"), and (ii) such declaration has not been rescinded or waived, at the end
of the Payment Blockage Period, the Company shall be required to pay all sums
not paid to the Holders of the Notes during the Payment Blockage Period due to
the foregoing prohibitions and to resume all other payments as and when due on
the Notes. Any number of Payment Notices may be given; PROVIDED, HOWEVER, that
(i) not more than one Payment Notice shall be given within a period of any 360
consecutive days, and (ii) no default that existed upon the date of such Payment
Notice or the commencement of such Payment Blockage Period (whether or not such
event of default is on the same issue of Senior Indebtedness) shall be made the
basis for the commencement of any other Payment Blockage Period.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company (other than Junior Securities) shall be
received by the Trustee or the Holders at a time when such payment or
distribution is prohibited by the foregoing provisions, such payment or
distribution shall be held in trust for the benefit of the holders of Senior
Indebtedness of the Company, and shall be paid or delivered by the Trustee or
such Holders, as the case may be, to the holders of the Senior Indebtedness of
the Company remaining unpaid or unprovided for or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Indebtedness of the Company
may have been issued, ratably according to the aggregate amounts remaining
unpaid on account of the Senior Indebtedness of the Company held or represented
by each, for application to the payment of all Senior Indebtedness of the
Company remaining unpaid, to the extent necessary to pay or to provide for the
payment of all such Senior Indebtedness in full after giving effect to any
concurrent payment or distribution to the holders of such Senior Indebtedness.
Upon any distribution of assets of the Company upon any dissolution, winding
up, total or partial liquidation or reorganization of the Company, whether
voluntary or involuntary, in bankruptcy, insolvency, receivership or a similar
proceeding or upon assignment for the benefit of creditors or any marshalling of
assets or liabilities, (i) the holders of all Senior Indebtedness of the Company
will first be entitled to receive payment in full (or have such payment duly
provided for) before the Holders are entitled to receive any payment on account
of the principal of, premium, if any, interest on, with respect to, the Notes
(other than Junior Securities) and (ii) any payment or distribution of assets of
the Company of any kind or character, whether in cash, property or securities
(other than Junior Securities) to which the Holders or the Trustee on behalf of
the Holders would be entitled (by setoff or otherwise), except for the
subordination provisions contained in the Indenture, will be paid by the
liquidating trustee or agent or other person making such a payment or
distribution directly to the holders of Senior Indebtedness of the Company or
their representative to the extent necessary to make payment in full of all such
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness.
No provision contained in the Indenture or the Notes will affect the
obligation of the Company, which is absolute and unconditional, to pay, when
due, principal of, premium, if any, interest on, with respect to, the Notes. The
subordination provisions of the Indenture and the Notes will not prevent the
occurrence of any Default or Event of Default under the Indenture or limit the
rights of the Trustee or any Holder, subject to the two preceding previous
paragraphs, to pursue any other rights or remedies with respect to the Notes.
The Company conducts certain of its operations through its Subsidiaries.
Accordingly, the Company's ability to meet its cash obligations is dependent
upon the ability of its Subsidiaries to make cash distributions to the Company.
The ability of its Subsidiaries to make distributions to the Company is and will
continue to be restricted by, among other limitations, applicable provisions of
the laws of national and state governments and contractual provisions. The
Indenture will not limit the ability of the Company's Subsidiaries to incur such
restrictions in the future. The right of the Company to participate in the
assets of any Subsidiary (and thus the ability of Holders of the Notes to
benefit indirectly from such assets) is generally subject to the prior claims of
creditors, including trade creditors, of that Subsidiary except to the extent
that the Company is recognized as a creditor of such Subsidiary, in which case
the Company's claims would still be subject to any
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<PAGE>
security interest of other creditors of such Subsidiary. The Notes, therefore,
will be structurally subordinated to creditors, including trade creditors, of
Subsidiaries of the Company with respect to the assets of the Subsidiaries
against which such creditors have a claim.
As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or an assignment for the benefit of the creditors of the Company or
any of its Subsidiaries or a marshalling of assets or liabilities of the Company
and its Subsidiaries, Holders of the Notes may receive ratably less than other
creditors.
REDEMPTION AT THE COMPANY'S OPTION
The Notes will not be subject to redemption prior to , 1999 and
will be redeemable on or after , 1999 and prior to , 2000 at
the option of the Company, in whole or in part, at % (expressed as
percentages of the principal amount) if the reported last sale price of the
Common Stock for 20 trading days within a period of 30 consecutive trading days
ending within five trading days prior to the notice of redemption shall have
exceeded $ per share (subject to adjustment upon the occurrence of certain
events). On or after , 2000, the Notes will be redeemable at the option
of the Company, in whole or in part, at the following redemption prices
(expressed as percentages of the principal amount) if redeemed during the
12-month period commencing of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- -------------------------------------------------------------- -----------
<S> <C>
2000.......................................................... %
2001.......................................................... %
2002.......................................................... %
2003 and thereafter........................................... 100.00%
</TABLE>
in each case (subject to the right of Holders of record on a Record Date to
receive interest due on an Interest Payment Date that is on or prior to such
Redemption Date) together with accrued and unpaid interest, if any, to the
Redemption Date.
In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a PRO RATA basis, by lot or in such other
manner it deems appropriate and fair. The Notes may be redeemed in part in
multiples of $1,000 only.
The Notes will not have the benefit of any sinking fund.
Notice of any redemption will be sent, by first-class mail, at least 30 days
and not more than 60 days prior to the date fixed for redemption, to the Holder
of each Note to be redeemed to such Holder's last address as then shown upon the
registry books of the Registrar. The notice of redemption must state the
Redemption Date, the Redemption Price and the amount of accrued interest to be
paid. Any notice that relates to a Note to be redeemed in part only must state
the portion of the principal amount to be redeemed and must state that on and
after the Redemption Date, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion thereof will be issued. On and
after the Redemption Date, interest will cease to accrue on the Notes or
portions thereof called for redemption, unless the Company defaults in its
obligations with respect thereto.
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL
The Indenture will provide that in the event that a Change of Control (as
defined) has occurred, each Holder of Notes will have the right, at such
Holder's option, pursuant to an irrevocable and unconditional offer by the
Company (the "Repurchase Offer"), to require the Company to repurchase all or
any part of such Holder's Notes (PROVIDED, that the principal amount of such
Notes must be $1,000 or an integral multiple thereof) on the date (the
"Repurchase Date") that is no later than 40 Business Days after the occurrence
of such Change of Control at a cash price (the "Repurchase Price") equal to 100%
of the principal amount thereof, together with accrued and unpaid interest to
the Repurchase Date. The Repurchase Offer shall be made within 15 Business Days
following a Change of Control and shall remain open for 20 Business Days
following its commencement (the "Repurchase Offer Period"). Upon expiration of
the Repurchase Offer Period, the Company shall purchase all Notes tendered in
response to the Repurchase
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Offer. If required by applicable law, the Repurchase Date and the Repurchase
Offer Period may be extended as so required; however, if so extended, it shall
nevertheless constitute an Event of Default if the Repurchase Date does not
occur within 60 Business Days of the Change of Control.
The Indenture will provide that a "Change of Control" occurs upon the
occurrence of a Rating Decline in connection with any of the following events;
(i) upon any merger or consolidation of the Company with or into any person or
any sale, transfer or other conveyance, whether direct or indirect, of all or
substantially all of the assets of the Company, on a consolidated basis, in one
transaction or a series of related transactions, if, immediately after giving
effect to such transaction, any "person" or "group" is or becomes the
"beneficial owner," directly or indirectly, of more than 50% of the total voting
power in the aggregate normally entitled to vote in the election of directors,
managers, or trustees, as applicable, of the transferee or surviving entity,
(ii) when any "person" or "group" is or becomes the "beneficial owner," directly
or indirectly, of more than 50% of the total voting power in the aggregate
normally entitled to vote in the election of directors of the Company, (iii)
when, during any period of 12 consecutive months after the Issue Date,
individuals who at the beginning of any such 12-month period constituted the
Board of Directors of the Company (together with any new directors whose
election by such Board or whose nomination for election by the stockholders of
the Company was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Company then in
office, (iv) a sale or disposition by the Company of all or substantially all of
the assets relating to the Hotel Segment or the Gaming Segment (as segment is
used in Regulation S-K and Regulation S-X under the Securities Act), or (v) the
PRO RATA distribution by the Company to its stockholders of the Hotel Segment or
the Gaming Segment.
For purposes of this definition, (i) the terms "person" and "group" shall
have the meaning used for purposes of Rules 13d-3 and 13d-5 of the Exchange Act
as in effect on the Issue Date, whether or not applicable; and (ii) the term
"beneficial owner" shall have the meaning used in Rules 13d-3 and 13d-5 under
the Exchange Act as in effect on the Issue Date, whether or not applicable,
except that a "person" shall be deemed to have "beneficial ownership" of all
shares that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time or upon the occurrence
of certain events.
On or before the Repurchase Date, the Company will (i) accept for payment
Notes or portions thereof properly tendered pursuant to the Repurchase Offer,
(ii) deposit with the Paying Agent cash sufficient to pay the Repurchase Price
(together with accrued and unpaid interest) of all Notes so tendered and (iii)
deliver to the Trustee Notes so accepted, together with an Officers' Certificate
listing the Notes or portions thereof being purchased by the Company. The Paying
Agent will promptly mail to the Holders of Notes so accepted payment in an
amount equal to the Repurchase Price (together with accrued and unpaid
interest), and the Trustee will promptly authenticate and mail or deliver to
such Holders a new Note or Notes equal in principal amount to any unpurchased
portion of the Notes surrendered. Any Notes not so accepted will be promptly
mailed or delivered by the Company to the Holder thereof. The Company will
publicly announce the results of the Repurchase Offer on or as soon as
practicable after the Repurchase Date.
The phrase "all or substantially all" of the assets of the Company is likely
to be interpreted by reference to applicable state law at the relevant time, and
will be dependent on the facts and circumstances existing at such time. As a
result, there may be a degree of uncertainty in ascertaining whether a sale or
transfer of "all or substantially all" of the assets of the Company, or the
Gaming Segment or the Hotel Segment has occurred.
The Change of Control purchase feature of the Notes may make more difficult
or discourage a takeover of the Company, and, thus, the removal of incumbent
management. The Change of Control purchase feature resulted from negotiations
between the Company and the Underwriter.
The provisions of the Indenture relating to a Change of Control may not
afford the Holders protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger, spin-off or similar transaction that may
adversely affect Holders, if such transaction does not constitute a Change of
Control, as
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<PAGE>
set forth above. In addition, the Company may not have sufficient financial
resources available to fulfill its obligation to repurchase the Notes upon a
Change of Control or to repurchase other debt securities of the Company or its
Subsidiaries providing similar rights to the Holders thereof.
To the extent applicable, the Company will comply with Section 14 of the
Exchange Act and the provisions of Regulation 14E and any other tender offer
rules under the Exchange Act and any other securities laws, rules and
regulations that may then be applicable to any offer by the Company to purchase
the Notes at the option of Holders upon a Change of Control.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indenture will provide that the Company may not, directly or indirectly,
consolidate with or merge with or into another person or sell, lease, convey or
transfer all or substantially all of its assets (computed on a consolidated
basis), whether in a single transaction or a series of related transactions, to
another person or group of affiliated persons, unless (i) either (a) in the case
of a merger or consolidation, the Company is the surviving entity or (b) the
resulting, surviving or transferee entity is a corporation organized under the
laws of the United States, any state thereof or the District of Columbia and
expressly assumes by supplemental indenture all of the obligations of the
Company in connection with the Notes and the Indenture; (ii) no Default or Event
of Default shall exist or shall occur immediately after giving effect on a PRO
FORMA basis to such transaction; and (iii) the resulting, surviving or
transferee entity holds all gaming licenses necessary to conduct the business of
such resulting, surviving or transferee entity.
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of the Company in accordance with the foregoing, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made, shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under the Indenture with the
same effect as if such successor corporation had been named therein as the
Company, and the Company will be released from its obligations under the
Indenture and the Notes, except as to any obligations that arise from or as a
result of such transaction.
REPORTS
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the
Trustee and to each Holder, within 15 days after it is or would have been
required to file such with the SEC, annual and quarterly consolidated financial
statements substantially equivalent to financial statements that would have been
included in reports filed with the SEC if the Company was subject to the
requirements of Section 13 or 15(d) of the Exchange Act, including, with respect
to annual information only, a report thereon by the Company's certified
independent public accountants as such would be required in such reports to the
SEC and, in each case, together with a management's discussion and analysis of
results of operations and financial condition as such would be so required.
EVENTS OF DEFAULT AND REMEDIES
The Indenture will define an Event of Default as (i) the failure by the
Company to pay any installment of interest on the Notes as and when due and
payable and the continuance of any such failure for 30 days, (ii) the failure by
the Company to pay all or any part of the principal of, or premium, if any, on
the Notes when and as the same become due and payable at maturity, redemption,
by acceleration or otherwise, including, without limitation, pursuant to any
Repurchase Offer or otherwise, (iii) the failure of the Company to perform any
conversion of Notes required under the Indenture and the continuance of any such
failure for 30 days, (iv) the failure by the Company to observe or perform any
other covenant or agreement contained in the Notes or the Indenture and, subject
to certain exceptions, the continuance of such failure for a period of 60 days
after written notice is given to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in aggregate principal amount of
the Notes outstanding, (v) certain events of bankruptcy, insolvency or
reorganization in respect of the Company or any of its Significant Subsidiaries,
(vi) a default in the payment of principal, premium or interest when due that
extends beyond any stated period of grace applicable thereto or an acceleration
for any other reason of the maturity of any Indebtedness of the Company or any
of its Subsidiaries with an aggregate principal amount in excess of
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<PAGE>
$50.0 million, and (vii) final unsatisfied judgments not covered by insurance
aggregating in excess of $50.0 million, at any one time rendered against the
Company or any of its Subsidiaries and not stayed, bonded or discharged within
30 days. The Indenture will provide that if a Default occurs and is continuing,
the Trustee must, within 90 days after the occurrence of such default, give to
the Holders notice of such default.
The Indenture will provide that if an Event of Default occurs and is
continuing (other than an Event of Default specified in clause (v) above), then
in every such case, unless the principal of all of the Notes shall have already
become due and payable, either the Trustee or the Holders of 25% in aggregate
principal amount of the Notes then outstanding, by notice in writing to the
Company (and to the Trustee if given by Holders) (an "Acceleration Notice"), may
declare all principal and accrued interest thereon to be due and payable
immediately. If an Event of Default specified in clause (v) above occurs, all
principal and accrued interest thereon will be immediately due and payable on
all outstanding Notes without any declaration or other act on the part of the
Trustee or the Holders. The Holders of no less than a majority in aggregate
principal amount of Notes generally are authorized to rescind such acceleration
if all existing Events of Default, other than the nonpayment of the principal
of, premium, if any, and interest on, the Notes that have become due solely by
such acceleration, have been cured or waived.
Prior to the declaration of acceleration of the maturity of the Notes, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may waive on behalf of all the Holders any default, except a default
in the payment of principal of or interest on any Note not yet cured, or a
default with respect to any covenant or provision that cannot be modified or
amended without the consent of the Holder of each outstanding Note affected.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, the Trustee will be under no obligation to exercise any of its rights
or powers under the Indenture at the request, order or direction of any of the
Holders, unless such Holders have offered to the Trustee reasonable security or
indemnity. Subject to all provisions of the Indenture and applicable law, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee.
AMENDMENTS AND SUPPLEMENTS
The Indenture will contain provisions permitting the Company and the Trustee
to enter into a supplemental indenture for certain limited purposes without the
consent of the Holders. With the consent of the Holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding, the
Company and the Trustee are permitted to amend or supplement the Indenture or
any supplemental indenture or modify the rights of the Holders; PROVIDED,
FURTHER, that no such modification may, without the consent of each Holder
affected thereby: (i) change the Stated Maturity of any Note or reduce the
principal amount thereof or the rate (or extend the time for payment) of
interest thereon or any premium payable upon the redemption thereof, or change
the place of payment where, or the coin or currency in which, any Note or any
premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment or the conversion of any Note on or
after the due date thereof (including, in the case of redemption, on or after
the Redemption Date), or reduce the Repurchase Price, or alter the Repurchase
Offer or redemption provisions in a manner adverse to the Holders, (ii) reduce
the percentage in principal amount of the outstanding Notes, the consent of
whose Holders is required for any such amendment, supplemental indenture or
waiver provided for in the Indenture, (iii) adversely affect the right of such
Holder to convert Notes, or (iv) modify any of the waiver provisions, except to
increase any required percentage or to provide that certain other provisions of
the Indenture cannot be modified or waived without the consent of the Holder of
each outstanding Note affected thereby.
NO PERSONAL LIABILITY OF STOCKHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES
The Indenture will provide that no stockholder, employee, officer or
director, as such, past, present or future of the Company or any successor
corporation shall have any personal liability in respect of the obligations of
the Company under the Indenture or the Notes by reason of his, her or its status
as such stockholder, employee, officer or director.
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<PAGE>
TRANSFER AND EXCHANGE
A Holder may transfer or exchange the Notes in accordance with the
Indenture. The Company may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents, and to pay any taxes and fees
required by law or permitted by the Indenture. The Company is not required to
transfer or exchange any Notes selected for redemption. Also, the Company is not
required to transfer or exchange any Notes for a period of 15 days before a
selection of Notes to be redeemed.
The registered Holder of a Note may be treated as the owner of it for all
purposes.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth below, the Notes will initially be issued in the form of
one or more registered Notes in global form (the "Global Notes"). Each Global
Note will be deposited on the date of the closing of the sale of the Notes (the
"Closing Date") with, or on behalf of, The Depository Trust Company (the
"Depositary") and registered in the name of Cede & Co., as nominee of the
Depositary.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the NYSE, the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the SEC.
The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Notes, the Depositary will credit the
accounts of Participants designated by the Underwriter with an interest in the
Global Note and (ii) ownership of the Notes evidenced by the Global Note will be
shown on, and the transfer of ownership thereof will be effected only through,
records maintained by the Depositary (with respect to the interests of
Participants), the Participants and the Indirect Participants. The laws of some
states require that certain persons take physical delivery in definitive form of
securities that they own and that security interests in negotiable instruments
can only be perfected by delivery of certificates representing the instruments.
Consequently, the ability to transfer Notes evidenced by the Global Note will be
limited to such extent.
So long as the Depositary or its nominee is the registered owner of a Note,
the Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by the Global Note for all purposes
under the Indenture. Except as provided below, owners of beneficial interests in
a Global Note will not be entitled to have Notes represented by such Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of Certificated Notes, and will not be considered the owners or holders
thereof under the Indenture for any purpose, including with respect to the
giving of any directions, instructions or approvals to the Trustee thereunder.
As a result, the ability of a person having a beneficial interest in Notes
represented by a Global Note to pledge such interest to persons or entities that
do not participate in the Depositary's system, or to otherwise take actions with
respect to such interest, may be affected by the lack of a physical certificate
evidencing such interest.
Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of Notes by the Depositary, or for maintaining, supervising or reviewing any
records of the Depositary relating to such Notes.
34
<PAGE>
Payments with respect to the principal of, premium, if any, interest on, any
Note represented by a Global Note registered in the name of the Depositary or
its nominee on the applicable record date will be payable by the Trustee to or
at the direction of the Depositary or its nominee in its capacity as the
registered Holder of the Global Note representing such Notes under the
Indenture. Under the terms of the Indenture, the Company and the Trustee may
treat the persons in whose names the Notes, including the Global Notes, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither the Company nor
the Trustee has or will have any responsibility or liability for the payment of
such amounts to beneficial owners of Notes (including principal, premium, if any
or interest), or to immediately credit the accounts of the relevant Participants
with such payment, in amounts proportionate to their respective holdings in
principal amount of beneficial interests in the Global Note as shown on the
records of the Depositary. Payments by the Participants and the Indirect
Participants to the beneficial owners of Notes will be governed by standing
instructions and customary practice and will be the responsibility of the
Participants or the Indirect Participants.
CERTIFICATED NOTES
If (i) the Company notifies the Trustee in writing that the Depositary is no
longer willing or able to act as a depositary and the Company is unable to
locate a qualified successor within 90 days or (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Notes in
definitive form under the Indenture, then, upon surrender by the Depositary of
the Global Notes, Certificated Notes will be issued to each person that the
Depositary identifies as the beneficial owner of the Notes represented by Global
Notes. In addition, subject to certain conditions, any person having a
beneficial interest in a Global Note may, upon request to the Trustee, exchange
such beneficial interest for Notes in the form of Certificated Notes. Upon any
such issuance, the Trustee is required to register such Certificated Notes in
the name of such person or persons (or the nominee of any thereof), and cause
the same to be delivered thereto.
Neither the Company nor the Trustee shall be liable for any delay by the
Depositary or any Participant or Indirect Participant in identifying the
beneficial owners of the Notes, and the Company and the Trustee may conclusively
rely on, and shall be protected in relying on, instructions from the Depositary
for all purposes (including with respect to the registration and delivery, and
the respective principal amounts, of the Notes to be issued).
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Company
believes to be reliable. The Company will have no responsibility for the
performance by the Depositary or its Participants of their respective
obligations as described hereunder or under the rules and procedures governing
their respective operations.
SAME-DAY FUNDS SETTLEMENT AND PAYMENT
The Indenture will require that payments in respect of the Notes represented
by the Global Notes (including principal, premium, if any, and interest) be made
by wire transfer of immediately available funds to the accounts specified by the
Depositary. With respect to Notes represented by Certificated Notes, the Company
will make all payments of principal, premium, if any, and interest, by mailing a
check to each such Holder's registered address. The Notes will trade in the
Depositary's Same-Day Funds Settlement System until maturity, or until the Notes
are issued in certificated form, and secondary market trading activity in the
Notes will therefore be required by the Depositary to settle in immediately
available funds. No assurance can be given as to the effect, if any, of
settlement in immediately available funds on trading activity in the Notes.
CERTAIN DEFINITIONS
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"CAPITAL STOCK" means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
35
<PAGE>
"INDEBTEDNESS" of any person means, without duplication, (a) all liabilities
and obligations, contingent or otherwise, of any such person, (i) in respect of
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such person or only to a portion thereof), (ii) evidenced by bonds,
notes, debentures or similar instruments, (iii) representing the balance
deferred and unpaid of the purchase price of any property or services, except
such as would constitute trade payables to trade creditors in the ordinary
course of business that are not more than 90 days past their original due date,
(iv) evidenced by bankers' acceptances or similar instruments issued or accepted
by banks, (v) for the payment of money relating to a Capitalized Lease
Obligation, or (vi) evidenced by a letter of credit or a reimbursement
obligation of such person with respect to any letter of credit; (b) all net
obligations of such person under Interest Swap and Hedging Obligations; (c) all
liabilities of others of the kind described in the preceding clauses (a) or (b)
that such person has guaranteed or that is otherwise its legal liability and all
obligations to purchase, redeem or acquire any Capital Stock; and (d) any and
all deferrals, renewals, extensions, refinancings and refundings (whether direct
or indirect) of any liability of the kind described in any of the preceding
clauses (a), (b) or (c), or this clause (d), whether or not between or among the
same parties.
"ISSUE DATE" means the date of first issuance of the Notes under the
Indenture.
"JUNIOR SECURITIES" of any person means any Qualified Capital Stock and any
Indebtedness of such person that is subordinated in right of payment to the
Notes and has no scheduled installment of principal due, by redemption, sinking
fund payment or otherwise, on or prior to the Stated Maturity of the Notes.
"RATING DECLINE" means the occurrence on or within 90 days after the date of
the first public notice of (i) the occurrence of a Change of Control or (ii) the
intention by the Company to effect a Change of Control, (which 90-day period
shall be extended so long as the rating of Senior Indebtedness of the Company is
under publicly announced consideration for possible downgrade by any of (x)
Moody's Investors Service, Inc. ("Moody's"), (y) Standard & Poor's Corporation
("S&P") or (z) Duff & Phelps ("D&P")), of a decrease in the rating of Senior
Indebtedness of the Company by any of Moody's, S&P or D&P to a rating that is
below "Investment Grade." Investment Grade means a rating in the top four rating
categories by Moody's, S&P, D&P or any other nationally recognized securities
rating agency or agencies, as the case may be, selected by the Company.
"SENIOR INDEBTEDNESS OF THE COMPANY" means any Indebtedness of the Company,
whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed, guaranteed or in effect guaranteed by the Company, unless the
instrument creating or evidencing such Indebtedness provides that such
Indebtedness is not senior or superior in right of payment to the Notes or to
other Indebtedness which is PARI PASSU with, or subordinated to, the Notes;
PROVIDED that in no event shall Senior Indebtedness include (a) Indebtedness of
the Company owed or owing to any Subsidiary of the Company or any officer,
director or employee of the Company or any Subsidiary of the Company, (b)
Indebtedness to trade creditors or (c) any liability for taxes owed or owing by
the Company.
"STATED MATURITY" when used with respect to any Note means ,
2006.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary which is a "significant
subsidiary" of the Company within the meaning of Rule 1.02(v) of Regulation S-X
promulgated by the SEC as in effect as of the date of the Indenture.
"SUBSIDIARY," with respect to any person, means (i) a corporation a majority
of whose Capital Stock with voting power normally entitled to vote in the
election of directors is at the time, directly or indirectly, owned by such
person, by such person and one or more Subsidiaries of such person or by one or
more Subsidiaries of such person, (ii) a partnership in which such person or a
Subsidiary of such person is, at the time, a general partner and owns alone or
together with the Company a majority of the partnership interests, or (iii) any
other person (other than a corporation) in which such person, one or more
Subsidiaries of such person, or such person and one or more Subsidiaries of such
person, directly or indirectly, at the date of determination thereof, has at
least a majority ownership interest.
36
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL. As of December 31, 1995, the Company was authorized to issue 90.0
million shares of Common Stock, par value $2.50 per share, of which 51.0 million
shares were issued, and outstanding, including Treasury Shares of 2.7 million,
and 10.0 million shares of preferred stock, par value $1.00 per share (the
"Preferred Stock"), of which no shares have been issued.
COMMON STOCK
Each share of Common Stock entitles the holder to one vote on matters
submitted to a vote of the stockholders, and, subject to the prior preferences
of the Company's Preferred Stock, if issued, a PRO RATA share of assets
remaining available for distribution to stockholders upon a liquidation of the
Company. Dividends may be paid to the holders of the Common Stock when and if
declared by the Board of Directors of the Company out of funds legally available
therefor. The Company has paid cash dividends on its Common Stock. Any further
determination to pay cash dividends will be at the discretion of the Company's
Board of Directors and will depend upon the earnings of the Company, its
financial condition, capital requirements and other factors as the Company's
Board of Directors may deem relevant. The Common Stock is not convertible and
has no preemptive rights. There are no redemption provisions with respect to the
Common Stock. All of the outstanding shares of Common Stock are, and the shares
of Common Stock issuable upon conversion of the Notes will be, fully paid and
non-assessable.
PREFERRED STOCK
The Company's Certificate of Incorporation provides that Preferred Stock may
be issued from time-to-time in one or more series. The Company's Board of
Directors has authority to fix or alter the dividend rights, dividends rates,
conversion rights, voting rights and terms of redemption (including sinking fund
provisions), redemption prices, and liquidation preferences of any wholly
unissued series of Preferred Stock, as well as the number of shares constituting
any such unissued series and the designation thereof, and to increase or
decrease the number of shares of any outstanding series (but not below the
number of shares of such series then outstanding), without any further vote or
action by the Company's stockholders.
PREFERRED STOCK RIGHTS AGREEMENT
On July 14, 1988, Hilton adopted a Preferred Share Purchase Rights Plan
("Rights Plan") and declared a dividend distribution of one Preferred Share
Purchase Right ("Rights") on each outstanding share of Common Stock. The Rights
are transferable only with the Common Stock until they become exercisable.
Generally, the Rights become exercisable only if a person or group (other
than Hilton Interests, as hereinafter defined) acquires 20% or more of the
Common Stock or announces a tender offer, the consummation of which would result
in ownership by a person or group of 20% or more of the Common Stock. Each Right
entitles stockholders to buy one one-hundredth of a share of a new series of
junior participating preferred stock at an exercise price of $150.
If the Company is acquired in a merger or other business combination
transaction, each Right entitles its holder to purchase, at the Right's then
current price, a number of the acquiring company's common shares having a then
current market value of twice the Right's exercise price. In addition, if a
person or group (other than Hilton Interests) acquires 30% or more of the
Company's outstanding Common Stock, otherwise than pursuant to a cash tender
offer for all shares in which such person or group increases its stake from
below 20% to 80% or more of the outstanding shares of Common Stock, each Right
entitles its holder (other than such person or members of such group) to
purchase, at the Right's then current exercise price, shares of the Common Stock
having a market value of twice the Right's exercise price.
Following the acquisition by a person or group of beneficial ownership of
30% or more of the Common Stock and prior to an acquisition of 50% or more of
the Common Stock, Hilton's Board of Directors may exchange the Rights (other
than Rights owned by such person or group), in whole or in part, at an exchange
ratio of one share of Common Stock (or one one-hundredth of a share of the new
series of junior participating preferred stock) per Right.
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<PAGE>
Prior to the acquisition by a person or group of beneficial ownership of 20%
or more of the Common Stock, the Rights are redeemable for one cent per Right at
the option of the Company's Board of Directors.
"Hilton Interests" refer to Barron Hilton and the Conrad N. Hilton Fund and
the shares of Common Stock beneficially owned by them.
DELAWARE GENERAL CORPORATION LAW SECTION 203
As a corporation organized under the laws of the State of Delaware, the
Company is subject to Section 203 of the Delaware General Corporation Law, which
restricts certain business combinations between the Company and an "interested
stockholder" (in general, a stockholder owning 15% or more of the Company's
outstanding voting stock) or such stockholder's affiliates or associates for a
period of three years following the date on which the stockholder becomes an
"interested stockholder." The restrictions do not apply if (i) prior to an
interested stockholder becoming such, the Board of Directors approves either the
business combination or the transaction in which the stockholder becomes an
interested stockholder, (ii) upon consummation of the transaction in which such
stockholder becomes an interested stockholder, such interested stockholder owns
at least 85% of the voting stock of the Company outstanding at the time the
transaction commenced (excluding shares owned by certain employee stock
ownership plans and persons who are both directors and officers of the Company),
or (iii) on or subsequent to the date an interested stockholder becomes such,
the business combination is both approved by the Board of Directors and
authorized at an annual or special meeting of the Company's stockholders (and
not by written consent) by the affirmative vote of at least 66 2/3% of the
outstanding voting stock not owned by the interested stockholder.
CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
Under the Company's Certificate of Incorporation, upon consummation of the
Offering (and the ultimate conversion of the Notes into shares of Common
Stock) there will be shares of Common Stock authorized but unissued,
and 10,000,000 shares of Preferred Stock authorized but unissued, for future
issuance without additional stockholder approval. These additional shares may be
utilized for a variety of corporate purposes, including future offerings to
raise additional capital or to facilitate corporate acquisitions.
The issuance of Preferred Stock could have the effect of delaying or
preventing a change in control of the Company. The issuance of Preferred Stock
could decrease the amount of earnings and assets available for distribution to
the holders of Common Stock or could adversely affect the rights and powers,
including voting rights, of the holders of the Common Stock. In certain
circumstances, such issuance could have the effect of decreasing the market
price of the Common Stock.
One of the effects of the existence of unissued Common Stock or preferred
stock may be to enable the Company's Board of Directors to issue shares to
persons friendly to current management which could render more difficult or
discourage an attempt to obtain control of the Company by means of a merger,
tender offer, proxy contest or otherwise, and thereby protect the continuity of
management. Such additional shares also could be used to dilute the stock
ownership of persons seeking to obtain control of the Company.
The Company does not currently have any plans to issue additional shares of
Common Stock or Preferred Stock other than shares of Common Stock which may be
issued upon the exercise of options which have been granted or which may be
granted in the future to directors, officers and employees of the Company. In
connection with the Offering, shares of Series A Preferred Stock will
be reserved for issuance pursuant to the Rights Plan. See "-- Preferred Stock
Rights Agreement."
REGISTRAR AND TRANSFER AGENT
The registrar and transfer agent for the Common Stock is Chemical Mellon
Shareholder Services LLC.
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<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
between the Company and Donaldson, Lufkin & Jenrette Securities Corporation
dated , 1996 (the "Underwriting Agreement"), the Underwriter has agreed
to purchase from the Company and the Company has agreed to sell to the
Underwriter, an aggregate of $500.0 million principal amount of Notes. Pursuant
to the Underwriting Agreement, the Company has granted to the Underwriter an
option, exercisable for 30 days, to purchase an additional $75.0 million
aggregate principal amount of Notes, on the same terms and conditions as are set
forth on the cover page hereof. The Underwriter may exercise such option to
purchase additional Notes solely for the purpose of covering over-allotments, if
any, made in connection with the sale of the Notes offered hereby.
The Underwriting Agreement provides that the obligations of the Underwriter
thereunder are subject to certain conditions precedent including the delivery of
certain legal opinions by its counsel. The Company has agreed in the
Underwriting Agreement to indemnify the Underwriter and its controlling persons
against certain liabilities in connection with the offer and sale of the Notes,
including liabilities under the Securities Act, and to contribute to payments
that the Underwriter may be required to make in respect thereof.
The Underwriter has advised the Company that it proposes to offer the Notes
directly to the public initially at the public offering price set forth on the
cover page of this Prospectus and to certain dealers at such offering price less
a concession not to exceed % of the principal amount of the Notes. The
Underwriter may reallow discounts not in excess of % of the principal amount
of the Notes to certain other dealers. After the initial public offering of the
Notes, the offering price and other selling terms may be changed by the
Underwriter.
Application will be made to list the Notes and the Common Stock on the NYSE.
Nevertheless, the Notes are new issues of securities, have no established
trading market and may not be widely distributed. The Company has been advised
by the Underwriter that, following the completion of this Offering, the
Underwriter presently intends to make a market in the Notes as permitted by
applicable laws and regulations. The Underwriter, however, is under no
obligation to do so and may discontinue any market-making activities at any time
at its sole discretion. No assurance can be given as to the liquidity of any
trading market for the Notes.
The Underwriter has provided and is currently retained to provide certain
investment banking services to the Company for which it has received and is
entitled to receive usual and customary fees.
The Company, its directors and certain officers and stockholders, who
collectively are the beneficial owners of an aggregate of 12,334,800 shares of
Common Stock, have agreed with the Underwriter, subject to certain exceptions,
not to, directly or indirectly, offer, sell, contract to sell, grant any option
to purchase or otherwise dispose of, without the prior written consent of the
Underwriter, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for, or warrants, options or rights to purchase or
acquire, Common Stock or in any other manner transfer all or a portion of the
economic consequences associated with the ownership of any Common Stock, or
enter into any agreement to do any of the foregoing, for a period of 90 days
after the date of this Prospectus.
LEGAL MATTERS
Certain legal matters relating to the issuance and sale of the Notes and the
validity of the Common Stock issuable upon conversion of the Notes will be
passed upon for the Company by Latham & Watkins, Los Angeles, California.
Certain legal matters relating to the offering will be passed upon for the
Underwriter by Skadden, Arps, Slate, Meagher & Flom, Los Angeles, California.
EXPERTS
The consolidated financial statements and schedules included (incorporated
by reference) in this Prospectus and elsewhere in the Registration Statement
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
39
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NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED IN CONNECTION WITH ANY
OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR BY THE UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SECURITIES OFFERED
HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN
OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO
THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
Prospectus Summary............................. 3
Summary Historical Financial Data.............. 6
Use of Proceeds................................ 7
Price Range of Common Stock.................... 7
Dividend Policy................................ 7
Capitalization................................. 8
Selected Financial Data........................ 9
Business....................................... 11
Regulation and Licensing....................... 23
Description of the Notes....................... 26
Description of Capital Stock................... 37
Underwriting................................... 39
Legal Matters.................................. 39
Experts........................................ 39
</TABLE>
$500,000,000
[LOGO]
% CONVERTIBLE SUBORDINATED NOTES
DUE 2006
------------
PROSPECTUS
------------
DONALDSON, LUFKIN & JENRETTE
Securities Corporation
APRIL , 1996
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF INSURANCE AND DISTRIBUTION.
Set forth below is an estimate of the fees and expenses, other than
underwriting discounts and commissions, payable or reimbursable by the Company
in connection with the issuance and distribution of the Notes.
<TABLE>
<S> <C>
SEC registration fee.............................. $175,862(1)
Fees and expenses of the Trustee.................. *
Printing and engraving expenses................... *
Rating agency fees................................ *
Legal fees and expenses........................... *
Blue Sky fees and expenses........................ *
Accounting fees and expenses...................... *
Miscellaneous..................................... *
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*
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</TABLE>
- ------------------------
* To be filed by amendment.
(1) The aggregate registration fee for this offering is $198,276, $22,414 of
which has previously been paid in connection with a registration statement
on Form S-3 (33-35951). Accordingly, pursuant to Rule 429, the actual amount
to be paid to the SEC in connection with the issuance and distribution of
the Notes is set forth above.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, Article XI of Hilton's
Restated Certificate of Incorporation, as amended, and Paragraph 35 of Hilton's
By-Laws as amended, authorize and empower Hilton to indemnify its directors,
officers, employees and agents, and agreements with each of Hilton's directors
and executive officers provide for indemnification against liabilities incurred
in connection with, and related expenses resulting from, any claim, action or
suit brought against any such person as a result of such person's relationship
with Hilton, provided that such persons acted in accordance with a stated
standard of conduct in connection with the acts or events on which such claim,
action or suit is based. The finding of either civil or criminal liability on
the part of such persons in connection with such acts or events is not
necessarily determinative of the question of whether such persons have met the
required standard of conduct and are, accordingly, entitled to be indemnified.
Hilton has purchased for the benefit of its officers and directors and those
of certain subsidiaries insurance policies whereby the insurance companies
agree, among other things, that in the event any such officer or director
becomes legally obligated to make a payment (including legal fees and expenses)
in connection with an alleged wrongful act, such insurance companies will pay
Hilton up to $100,000,000. Wrongful act means any breach of duty, neglect,
error, misstatement, misleading statement or other act done by an officer or
director of Hilton or any subsidiary.
Reference is made to Section 6 of the form of Underwriting Agreement to be
filed as an exhibit hereto, for provisions regarding indenmnification of Hilton
and its officers, directors and controlling persons against certain liabilities.
II-1
<PAGE>
ITEM 16 EXHIBITS.
This Registration Statement includes the following exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- --------------------------------------------------
<C> <S>
*1.1 Form of Underwriting Agreement.
*4.1 Indenture dated as of April , 1996 between
Hilton and The Bank of New York, as Trustee.
*4.2 Form of Note.
*5.1 Opinion of Latham & Watkins as to the legality of
the securities being registered.
12 Computation of Ratios of Earnings to Fixed
Charges.
23.1 Consent of Latham & Watkins (included in Exhibit
5.1).
23.2 Consent of Arthur Andersen LLP.
24 Powers of Attorney of certain directors and
officers of the Company.
*25 Statement of Eligibility of Trustee on Form T-1.
</TABLE>
- ------------------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
(b) Hilton hereby undertakes that, for purposes of determining any liability
under the Securities Act of 1933, as amended (the "Securities Act"), each filing
of Hilton's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(h) Certain arrangements indemnifying the Company and officers, directors
and controlling persons of the Company are set forth in the Prospectus and in
Item 15 above. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
(i) Hilton hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by Hilton pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of this Registration Statement
as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements on Form S-3 and has duly caused this Registration Statement be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Beverly Hills, State of California on April 5, 1996.
HILTON HOTELS CORPORATION
(Registrant)
By: ROBERT M. LA FORGIA
-----------------------------------
Robert M. La Forgia
VICE PRESIDENT AND CORPORATE
COMPTROLLER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on behalf of the
Registrant and in the capacities indicated on April 5, 1996.
<TABLE>
<S> <C>
* *
- ------------------------------------------- -------------------------------------------
Raymond C. Avansino, Jr. Robert L. Johnson
Director Director
*
- ------------------------------------------- *
Stephen F. Bollenbach -------------------------------------------
President and Chief Executive Officer Donald R. Knab
(Chief Executive Officer) Director
*
* -------------------------------------------
- ------------------------------------------- Steve Krithis
A. Steven Crown Senior Vice President--Finance
Director (Chief Financial and Accounting Officer)
* *
- ------------------------------------------- -------------------------------------------
Gregory R. Dillon Benjamin V. Lambert
Director Director
* *
- ------------------------------------------- -------------------------------------------
Barron Hilton Donna F. Tuttle
Chairman of the Board Director
* *
- ------------------------------------------- -------------------------------------------
Eric M. Hilton Sam D. Young, Jr.
Director Director
* *By: ROBERT M. LA FORGIA
- ------------------------------------------- ------------------------------------------
Dieter H. Huckestein Robert M. La Forgia
Director Attorney-in-Fact
</TABLE>
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBITS NUMBERED
NUMBER DESCRIPTION PAGE
- -------- -------------------------------------------------- ------------
<C> <S> <C>
*1.1 Form of Underwriting Agreement.
*4.1 Indenture dated as of April , 1996 between
Hilton and The Bank of New York, as Trustee.
*4.2 Form of Note.
*5.1 Opinion of Latham & Watkins as to the legality of
the securities being registered.
12 Computation of Ratios of Earnings to Fixed
Charges.
23.1 Consent of Latham & Watkins (included in Exhibit
5.1).
23.2 Consent of Arthur Andersen LLP.
24 Powers of Attorney of certain directors and
officers of the Company.
*25 Statement of Eligibility of Trustee on Form T-1.
</TABLE>
- ------------------------
* To be filed by amendment.
<PAGE>
EXHIBIT 12
HILTON HOTELS CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Pre-tax income including 50%-owned companies..................... $ 121.3 156.8 156.2 183.6 261.5
Add: Interest expense from
Wholly owned................................................. 58.1 66.9 80.4 85.7 93.5
50%-owned.................................................... 10.8 7.3 9.5 9.5 20.8
Distributions from less than 50%-owned....................... 5.2 4.8 6.4 12.1 13.5
--------- --------- --------- --------- ---------
SUB-TOTAL (A)................................................ 195.4 235.8 252.5 290.9 389.3
Add: Rent expense (interest factor)
Wholly owned................................................. 1.7 1.8 2.1 2.2 2.6
50%-owned.................................................... 0.6 0.9 0.8 0.8 0.9
--------- --------- --------- --------- ---------
TOTAL (B).................................................... 197.7 238.5 255.4 293.9 392.8
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Interest expense
Wholly owned................................................. 58.1 66.9 80.4 85.7 93.5
50%-owned.................................................... 10.8 7.3 9.5 9.5 20.8
Capitalized interest......................................... 5.2 4.9 2.1 8.4 3.3
--------- --------- --------- --------- ---------
SUB-TOTAL (C)................................................ 74.1 79.1 92.0 103.6 117.6
Add: Rent expense (interest factor)
Wholly owned................................................. 1.7 1.8 2.1 2.2 2.6
50%-owned.................................................... 0.6 0.9 0.8 0.8 0.9
--------- --------- --------- --------- ---------
TOTAL (D).................................................... $ 76.4 81.8 94.9 106.6 121.1
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
RATIOS
Interest (A/C)............................................... 2.6 3.0 2.7 2.8 3.3
Fixed charges (B/D).......................................... 2.6 2.9 2.7 2.8 3.2
</TABLE>
<PAGE>
EXHIBIT 23.2
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-3 registration statement of our report dated Februrary
1, 1996 incorporated by reference in Hilton Hotels Corporation Form 10-K for the
year ended December 31, 1995 and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Los Angeles, California
April 5, 1996
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN OF THESE PRESENTS, that each of the directors and officers of
Hilton Hotels Corporation, a Delaware corporation, whose signature appears below
constitutes and appoints Stephen F. Bollenbach, Robert M. La Forgia and William
C. Lebo Jr. and each of them, his true and lawful attorney-in-fact and agents
with full power of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to sign a Registration
Statement under the Securities Act of 1933, as amended, and any or all
amendments or supplements thereto including any registration statement for the
same offering that is to be effective upon filing pursuant to Rule 462(b) under
the Securities Act and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto such attorneys-in-fact and agents and each of them full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, to all intents and purposes and as fully
as they might or could do in person, hereby ratifying and confirming all that
such attorneys-in-fact and agents, or their substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney as
of the 4th day of April, 1996.
<TABLE>
<S> <C>
/S/ RAYMOND C. AVANSINO, JR. /S/ ROBERT L. JOHNSON
- ------------------------------------------- -------------------------------------------
Raymond C. Avansino, Jr. Robert L. Johnson
Director Director
/S/ STEPHEN F. BOLLENBACH
- ------------------------------------------- /S/ DONALD R. KNAB
Stephen F. Bollenbach -------------------------------------------
President and Chief Executive Officer Donald R. Knab
(Chief Executive Officer) Director
/S/ STEVE KRITHIS
/S/ A. STEVEN CROWN -------------------------------------------
- ------------------------------------------- Steve Krithis
A. Steven Crown Senior Vice President--Finance
Director (Chief Financial and Accounting Officer)
/S/ GREGORY R. DILLON /S/ BENJAMIN V. LAMBERT
- ------------------------------------------- -------------------------------------------
Gregory R. Dillon Benjamin V. Lambert
Director Director
/S/ BARRON HILTON /S/ DONNA F. TUTTLE
- ------------------------------------------- -------------------------------------------
Barron Hilton Donna F. Tuttle
Chairman of the Board Director
/S/ ERIC M. HILTON /S/ SAM D. YOUNG, JR.
- ------------------------------------------- -------------------------------------------
Eric M. Hilton Sam D. Young, Jr.
Director Director
/S/ DIETER H. HUCKESTEIN
- -------------------------------------------
Dieter H. Huckestein
Director
</TABLE>
