<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 22, 1998
Hilton Hotels Corporation
------------------------------
(Exact Name of Registrant as
Specified in Charter)
Delaware 1-3427 36-2058176
---------------- ------------ --------------
(State or Other (Commission (IRS Employer
Jurisdiction of File Identification
Incorporation) Number) No.)
9336 Civic Center Drive
Beverly Hills, California 90210
--------------------------------
(Address of Principal
Executive Offices)
(310) 278-4321
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(Registrant's telephone
number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS
On July 22, 1998, the Registrant announced its earnings for its second fiscal
quarter and the six months ended June 30, 1998. A copy of the press release
is attached hereto as Exhibit 99 and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
7(c) Exhibits
--------
99 Press Release of Hilton Hotels Corporation, dated July 22,
1998.
2
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
HILTON HOTELS CORPORATION
By: /s/ THOMAS E. GALLAGHER
-------------------------------------------
Name: Thomas E. Gallagher
Dated: July 22, 1998 Title: Executive Vice President and
General Counsel
3
<PAGE>
[LETTERHEAD]
Contact: Marc Grossman
Senior VP - Corporate Affairs
310-205-4030
HILTON REPORTS SECOND QUARTER, SIX-MONTH RESULTS;
-------------------------------------------------
2Q98 DILUTED EARNINGS PER SHARE INCREASE 15%, EBITDA UP 17%
-----------------------------------------------------------
Beverly Hills, Calif., July 22, 1998 -- Hilton Hotels Corporation
(NYSE:HLT) today reported results for the second quarter and six months ended
June 30, 1998.
Net income for the quarter totaled $106 million, or $.39 per diluted
share, compared to $93 million, or $.34 per diluted share, last year -- an
increase of 15 percent in diluted per share earnings.
Second quarter earnings before interest, taxes, depreciation,
amortization and non-cash items (EBITDA) totaled $324 million, up 17 percent
from last year's $278 million. The EBITDA increase was attributable to
double-digit gains at many of Hilton's owned and partially owned hotels,
continued strong results at "The Wild Wild West" casino in Atlantic City and
significantly improved results at the Las Vegas Hilton.
LODGING
-------
EBITDA for Hilton's lodging division was $184 million, an increase of 14
percent from $162 million a year ago. Double-digit EBITDA gains were
reported at many of Hilton's owned and partially owned hotels, with
properties in Chicago, New York and San Francisco showing particularly strong
results. EBITDA also benefited from new hotel acquisitions made by the
company in the first and second quarters.
- more -
<PAGE>
2nd Quarter Earnings
2-2-2-2
In the second quarter, the company's "Top Ten" hotels contributed $121
million of EBITDA, which, on a comparable basis, represented a 13 percent
increase over the prior year. The percentage increase excludes the EBITDA
benefit from the required full consolidation of the Hilton Hawaiian Village
results beginning June 1, 1998 due to the previously announced restructuring.
Average daily rate (ADR) increased 10 percent at these ten hotels to $181.97
in the second quarter, with occupancy showing a 4.4-point decline to 79.9
percent, resulting in a revenue per available room (RevPAR) increase of 5
percent. EBITDA margin at these properties increased two percentage points to
40 percent, owing to the operating leverage associated with the ADR
increases, along with an ongoing emphasis on maximizing operating
efficiencies. Impacting results at the "Top Ten" properties was the
anticipated softness at the Hilton Hawaiian Village in Honolulu as a result
of adverse economic conditions in Asia, as well as a flat quarter at the New
Orleans Hilton Riverside which was negatively impacted by the absence of
Hilton's riverboat casino which ceased operations October 1, 1997. Excluding
the impact of Hawaii from the "Top Ten," EBITDA was up 17 percent, with
RevPAR increasing 8 percent.
"We continue to be encouraged by the favorable supply-demand environment
surrounding these big hotel properties and expect this environment to
continue for the next several years," said Stephen F. Bollenbach, president
and chief executive officer of Hilton Hotels Corporation. "Reports of new
supply in the lodging business miss the important point that this supply is
not being built in the markets that are important to us, and is not the kind
of full-service product that will be competitive with our major hotels.
"In the six cities where we generate over 60 percent of our lodging cash
flow -- New York, Chicago, San Francisco, Washington, D.C., New Orleans and
Honolulu -- there are few competitive properties that will open in the next
five years, which bodes well for this important group of hotels going
forward," he said.
- more -
<PAGE>
2nd Quarter Earnings
3-3-3-3
ADR for Hilton's other comparable U.S. owned and partially owned hotels
improved 10 percent to $140.80. Occupancy, however, for this group of
properties declined 5 points to 75 percent, resulting in a RevPAR increase of
3 percent.
During the quarter, Hilton announced an agreement with The Prudential
Insurance Company of America to restructure their joint venture ownership of
the 2,545-room Hilton Hawaiian Village. Under the agreement, Hilton plans to
increase its investment in the venture by as much as $400 million and assume
controlling interest.
Also during the period, the company continued its acquisition strategy
by purchasing the 395-room DFW Lakes Hilton Executive Conference Center in
Dallas, Texas and the 407-room Westin Hotel Charlotte (since renamed the
Hilton Charlotte) in North Carolina for a total of approximately $170
million. Including the planned Hawaiian Village restructuring, Hilton's hotel
acquisitions thus far in 1998 total approximately $725 million.
Hilton also in the second quarter announced new full-service franchised
properties in Monterey, California, Clearwater, Florida, Tulsa, Oklahoma and
Guadalajara, Mexico. The company's Hilton Garden Inn franchising program
continued on track toward its goal of having 200 properties open or under
construction by 2000. During the second quarter, Hilton Garden Inn
properties were either opened or began construction in North Carolina,
Minnesota, New York State, Florida, Illinois, Maryland and Georgia.
- more -
<PAGE>
2nd Quarter Earnings
4-4-4-4
Gaming
------
Gaming division EBITDA for the second quarter of $157 million
represented a 15 percent increase from 1997's $136 million. The increase was
driven by the continued success of "The Wild Wild West" casino at Bally's
Park Place in Atlantic City, a strong quarter at the Las Vegas Hilton and
double-digit EBITDA improvements at the Reno Hilton, Atlantic City Hilton,
Bally's Tunica, Bally's Belle of Orleans and Conrad International Punta del
Este.
The company's two Las Vegas Strip properties reported respectable
comparable quarterly results and performed generally in line with the
company's expectations despite heightened competition in the Las Vegas market.
The Flamingo Hilton-Las Vegas reported EBITDA of $30 million, consistent
with the prior year. Occupancy was flat at 93.3 percent, with ADR down 4
percent to $81.67.
Bally's Las Vegas showed an EBITDA decline of $1 million to $22 million
due primarily to lower win percentage. Occupancy declined 1.4 points to 91.3
percent, with ADR down 4 percent to $87.96.
Improved results at the Las Vegas Hilton -- which reported a 120 percent
increase in EBITDA to $22 million -- were driven by an increase in baccarat
drop along with a significant increase in non-baccarat domestic table game
drop, resulting in a dramatic improvement in table game win. Slot volume at
the property also showed a significant improvement. Occupancy rose 7.3
points to 89.0 percent, while ADR declined 5 percent to $101.80.
- more -
<PAGE>
2nd Quarter Earnings
5-5-5-5
In Atlantic City, Bally's Park Place reported EBITDA of $41 million, an
increase of 17 percent from last year's $35 million. A major improvement in
casino revenues was attributable to continued outstanding results generated
by "The Wild Wild West." During the quarter, Bally's Park Place continued to
lead the Atlantic City market in EBITDA margin. The Atlantic City Hilton,
benefiting from increased table game drop and win as well as increased
revenues as a result of the property's new 300-room tower, saw its EBITDA
improve to $8 million from $7 million a year ago.
Many of Hilton's gaming operations in other markets also demonstrated
markedly improved results during the quarter, particularly those in Reno,
Tunica, New Orleans, Kansas City and Punta del Este. Reported results in
Australia, however, declined due to the adverse economic conditions in Asia.
Six-Month Results
-----------------
For the six months ended June 30, 1998, Hilton reported net income of
$183 million, or $.68 per diluted share, a 13 percent increase in net income
per share from $161 million, or $.60 per diluted share a year ago. EBITDA
for the six months totaled $594 million, a 17 percent increase over last
year's $509 million.
Hilton's lodging division reported six-month EBITDA of $314 million, a
15 percent increase from $273 million in 1997, while the company's gaming
operations showed EBITDA of $310 million, compared with last year's $269
million -- a 15 percent increase.
Commenting on the company's recent announcement to separate its gaming
and lodging businesses with a simultaneous merger of the new gaming company
with the Mississippi operations of Grand Casinos, Inc. (NYSE:GND), Bollenbach
said:
- more -
<PAGE>
2nd Quarter Earnings
6-6-6-6
"Our second quarter and year-to-date results demonstrate the tremendous
potential for each of these businesses as stand-alone companies once the
split is completed at year end. Our full-service, major market hotel
properties will continue to reap the benefits of limited new competitive
product entering these markets, an expected improved environment for the
acquisition of these types of hotel assets, an aggressive franchising program
and an ongoing emphasis on maximizing operating margins.
"In the gaming business, our properties -- by virtue of their
pre-eminent locations and excellent management -- are showing outstanding
comparable results in competitive markets and are consistent market leaders,"
Bollenbach said. "These properties, along with Paris and others that will
join the system through acquisition, will form the basis of a gaming company
with leadership positions in the three biggest U.S. markets, a strong
international presence and an unmatched diversity of cash flow."
# # #
NOTE: This press release contains "forward-looking statements" within the
meaning of federal securities law, including statements concerning business
strategies and their intended results, and similar statements concerning
anticipated future events and expectations that are not historical facts.
The forward-looking statements in this press release are subject to numerous
risks and uncertainties, including the effects of economic conditions; supply
and demand changes for hotel rooms; competitive conditions in the lodging and
gaming industries, relationships with clients and property owners; the impact
of government regulations; and the availability of capital to finance growth,
which could cause actual results to differ materially from those expressed in
or implied by the statements herein.
<PAGE>
HILTON HOTELS CORPORATION
FINANCIAL HIGHLIGHTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
% %
1998 1997 CHANGE 1998 1997 CHANGE
---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
REVENUE
- - -------
Hotels $ 748 $ 722 4 % $1,447 $1,389 4 %
Gaming 665 638 4 1,362 1,274 7
------ ------ ------ ------ ------ ------
Total $1,413 $1,360 4 % $2,809 $2,663 5 %
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
EBITDA(1)
- - ------
Hotels $ 184 $ 162 14 % $ 314 $ 273 15 %
Gaming 157 136 15 310 269 15
Corporate expense (17) (20) (15) (30) (33) (9)
------ ------ ------ ------ ------ ------
Total $ 324 $ 278 17 % $ 594 $ 509 17 %
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
OPERATING INCOME
- - ----------------
Hotels $ 154 $ 140 10 % $ 256 $ 225 14 %
Gaming 101 85 19 198 170 16
Corporate expense (18) (22) (18) (31) (35) (11)
------ ------ ------ ------ ------ ------
Total operating income 237 203 17 423 360 18
Interest and dividend income 7 10 (30) 18 23 (22)
Interest expense (53) (45) 18 (103) (88) 17
Net interest from equity investments (3) (5) (40) (9) (9) --
------ ------ ------ ------ ------ ------
Net interest expense (49) (40) 23 (94) (74) 27
Income before taxes
and minority interest 188 163 15 329 286 15
Provision for taxes (80) (67) 19 (141) (118) 19
Minority interest, net (2) (3) (33) (5) (7) (29)
------ ------ ------ ------ ------ ------
Net Income $ 106 $ 93 14 % $ 183 $ 161 14 %
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
Net income per share
- - --------------------
Basic $ .41 $ .36 14 % $ .71 $ .62 15 %
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
Diluted $ .39 $ .34 15 % $ .68 $ .60 13 %
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
</TABLE>
(1) EBITDA is earnings before interest, taxes, depreciation, amortization and
non-cash items.
<PAGE>
HILTON HOTELS CORPORATION
Supplementary Statistical Information
<TABLE>
<CAPTION>
HOTELS
-------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
%/PT %/PT
1998 1997 CHANGE 1998 1997 CHANGE
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
TOP TEN HOTELS
Occupancy 79.9% 84.3% (4.4)pts 76.4% 79.1% (2.7)pts
Average Rate $181.97 $164.69 10% $177.78 $162.89 9%
Revpar $145.36 $138.79 5% $135.75 $128.85 5%
Number of hotels - - 10 10
Number of rooms - - 15,167 15,167
OTHER U.S. OWNED AND EQUITY(1)
Occupancy 74.8% 79.7% (4.9)pts 71.4% 74.6% (3.2)pts
Average Rate $140.80 $128.54 10% $140.90 $128.54 10%
Revpar $105.28 $102.40 3% $100.53 $ 95.91 5%
Number of hotels - - 22 20
Number of rooms - - 8,395 7,815
U.S. MANAGED(1)
Occupancy 71.5% 74.2% (2.7)pts 72.3% 74.0% (1.7)pts
Average Rate $137.81 $128.43 7% $144.89 $135.00 7%
Revpar $ 98.49 $ 95.30 3% $104.71 $ 99.85 5%
Number of hotels - - 19 22
Number of rooms - - 13,014 14,553
INTERNATIONAL MANAGED(1)
Occupancy 65.7% 76.3% (10.6)pts 61.4% 69.5% (8.1)pts
Average Rate $156.44 $158.95 (2)% $153.62 $156.47 (2)%
Revpar $102.84 $121.25 (15)% $ 94.27 $108.82 (13)%
Number of hotels - - 9 8
Number of rooms - - 3,286 2,922
FRANCHISED
Occupancy 72.4% 74.9% (2.5)pts 69.6% 71.3% (1.7)pts
Average Rate $ 98.30 $ 91.38 8% $ 98.47 $ 90.88 8%
Revpar $ 71.16 $ 68.40 4% $ 68.48 $ 64.84 6%
Number of hotels - - 185 178
Number of rooms - - 46,049 45,184
</TABLE>
(1) Operating statistics are based on a comparable hotel mix.
(2) Includes two hotels where the company has a minority interest.
<TABLE>
<CAPTION>
GAMING
-------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
%/PT %/PT
1998 1997 CHANGE 1998 1997 CHANGE
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Number of owned, partially owned
managed casinos and hotel casinos - - 15 16
Number of rooms - - 17,588 16,992
Casino square footage - - 1,042,000 963,000
NEVADA
Occupancy 90.6% 88.3% 2.3 pts 88.4% 88.4% - pts
Average Rate $76.14 $77.99 (2)% $77.50 $77.28 - %
Revpar $69.01 $68.88 - % $68.50 $68.32 - %
ATLANTIC CITY
Occupancy 93.6% 94.0% (1.0)pts 93.6% 92.0% 1.6pts
Average Rate $82.58 $92.83 (11)% $78.12 $85.90 (9)%
Revpar $76.82 $87.27 (12)% $73.09 $79.00 (7)%
</TABLE>
