<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): February 4, 1999
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
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(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 February 4, 1999, the Registrant announced its earnings for the
fourth quarter and year ended December 31, 1998. A copy of the Registrant's
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
February 4, 1999.
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
Dated: February 4, 1999 By: /s/ THOMAS E. GALLAGHER
-------------------------------------------
Name: Thomas E. Gallagher
Title: Executive Vice President,
General Counsel and Secretary
3
<PAGE>
[LETTERHEAD]
Contact: Marc Grossman
Senior VP - Corporate Affairs
(310) 205-4030
HILTON REPORTS 4Q98, FY98 RESULTS
---------------------------------
Beverly Hills, Calif., February 4, 1999 -- Hilton Hotels Corporation
(NYSE:HLT) today reported results for the fourth quarter and year ended
December 31, 1998. The results for both the quarter and year reflect Hilton's
spin-off of its casino gaming operations, a tax-free distribution to
shareholders that was completed December 31, 1998.
Hilton reported income from continuing operations for the fourth quarter
of $44 million, or $.17 per diluted share, compared to $41 million, or $.15
per diluted share, for the same period in 1997. The company's proportionate
share of costs associated with the gaming spin-off reduced fourth quarter
earnings by $.04 per diluted share. In the 1997 quarter, costs associated
primarily with the ITT acquisition effort reduced earnings also by $.04 per
diluted share.
For the year, Hilton reported income from continuing operations of $188
million, or $.71 per diluted share, versus 1997's $183 million, or $.68 per
diluted share. The aforementioned costs impacted both 1998 and 1997 EPS by
$.04 per diluted share.
<PAGE>
4th Quarter/Year-End Earnings
2-2-2-2
The company reported total fourth quarter 1998 earnings before interest,
taxes, depreciation, amortization and non-cash items (EBITDA) of $151 million,
a 36 percent increase over the 1997 period. Fourth quarter 1998 EBITDA
included costs of $13 million associated with the gaming spin-off, while
EBITDA for the same period in 1997 included $16 million of costs associated
primarily with the ITT effort. On a recurring basis, total EBITDA for the
fourth quarter 1998 rose 29 percent to $164 million from $127 million in 1997.
Fiscal year 1998 total EBITDA rose 20 percent to $596 million from $497
million in 1997. On a recurring basis, giving effect to the costs noted
above, total EBITDA for the year was $609 million, up 19 percent from $513
million.
Driving the EBITDA gains for both the fourth quarter and year were
exceptional performances from several of Hilton's major market
full-service hotels, along with the EBITDA contribution from hotel
acquisitions made during the year.
Fourth quarter and fiscal 1998 interest expense reflect higher debt
levels due to acquisition activity during the year, and a higher average
cost of debt resulting from the company issuing long-term fixed notes to
replace floating rate debt in 1997.
-more-
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4th Quarter/Year-End Earnings
3-3-3-3
Hotel Operations
----------------
Hilton's U.S. owned and equity hotels generated $152 million of EBITDA
in the fourth quarter, with comparable EBITDA increasing 9 percent over the
prior year. Double-digit EBITDA gains were posted by the Waldorf=Astoria,
Palmer House and the Portland, New Orleans, New York, Pittsburgh, O'Hare, San
Francisco, San Diego and Rye Town Hiltons. Excluding the Hilton Hawaiian
Village in Honolulu and the Hilton Waikoloa village on the Big Island of
Hawaii, which continue to feel the effects of the Asian economic crisis,
comparable EBITDA at this group of properties improved 14 percent.
Occupancy at these hotels was down 1 point for the quarter to 72.2
percent, while average daily rate (ADR) increased 7.4 percent to $176.00,
resulting in a revenue per available room (RevPAR) gain of 6.0 percent.
EBITDA margins in the quarter rose 1 point to 34 percent. Excluding the
impact of the Hilton Hawaiian Village and Waikoloa, RevPAR rose 8.7 percent.
For the year, Hilton's domestic owned hotels contributed $544 million of
EBITDA, with comparable EBITDA increasing 11 percent over the last year. The
increase improved to 17 percent when excluding the two Hawaii properties.
Occupancy in 1998 declined 2.5 points to 75.0 percent, with ADR increasing
8.3 percent to $166.47; a 4.8 percent improvement in RevPAR. EBITDA margins
for the year were up 2 points to 34 percent. Without Hawaii, RevPAR for the
year at this group of properties increased 7.1 percent.
-more-
<PAGE>
4th Quarter/Year-End Earnings
4-4-4-4
Hilton's Top Ten hotels contributed $119 million of EBITDA in the fourth
quarter with comparable EBITDA increasing 11 percent over the prior year.
Excluding the Hilton Hawaiian Village, EBITDA at the Top Ten improved 17
percent. The timing of certain religious holidays, which fell in the third
quarter 1998, and a vibrant growth quarter in virtually all of the Top Ten
markets contributed to this strong performance. Occupancy at these hotels was
flat for the quarter at 75.6 percent, while average daily rate increased 8.0
percent to $196.44, resulting in a revenue per available room gain of 7.6
percent. Excluding Hawaii, RevPAR rose 10.5 percent. EBITDA margins at the
Top Ten increased to 37 percent for the quarter.
For the year, Top Ten properties contributed $414 million of EBITDA,
with comparable EBITDA increasing 13 percent over last year. The increase
improved to 20 percent when excluding Hawaii. Occupancy in 1998 declined 2.3
points to 77.0 percent, with ADR increasing 8.4 percent to $179.96; a 5.4
percent gain in RevPAR. Without Hawaii, RevPAR for the year at the Top Ten
increased 8.1 percent. Top Ten EBITDA margins were up two points to 36
percent for the year.
Acquisition Activity
--------------------
Fourth quarter acquisition activity was highlighted by Hilton's purchase
of the 394-room Sheraton Grande Torrey Pines, which the company has renamed
the Hilton La Jolla Torrey Pines. Situated adjacent to the world-famous
Torrey Pines golf courses along the Pacific Coast, and close to the beaches,
tourist attractions, universities and research facilities of La Jolla and San
Diego, the hotel was acquired for $82.5 million, approximately 7.5 times
estimated 1999 EBITDA.
-more-
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4th Quarter/Year-End Earnings
5-5-5-5
Acquisition of the Torrey Pines property capped off an aggressive year
of purchasing hotel assets at attractive prices and at discounts to
replacement cost, in line with one of the company's growth strategies. During
the year, Hilton invested $950 million in acquiring eight hotels -- The
Pointe Hilton Resort at Tapatio Cliffs in Phoenix; Hilton Charlotte; Hilton
DFW Lakes Executive Conference Center at the Dallas-Ft. Worth Airport; Hilton
East Brunswick in New Jersey; and additional 48 percent of the Hilton
Hawaiian Village; Hilton Short Hills in New Jersey; Hilton McLean Tysons
Corner in the Washington, D.C. metropolitan area, and the Torrey Pines hotel.
Franchising Activity
--------------------
The Hilton Garden Inn franchising program continues on track to reach
the goal of having 200 of these mid-priced properties open or under
construction in 2000. During the fourth quarter 1998, Hilton Garden Inn
hotels were either opened or began construction in Wisconsin, Washington, New
Mexico, Ohio, California and Mexico. In 1998, the company added nine Garden
Inn properties, and expects to open approximately 65 more during 1999.
Hilton added a number of full-service franchise properties to the system
in 1998, including hotels in Louisville, Kentucky; Hartford, Connecticut;
Jackson, Mississippi; Monterey, California; Clearwater Beach, Florida; and
Tulsa, Oklahoma, as well as properties in Mexico (Guadalajara and Mexico City
International Airport) and Canada (Montreal and Windsor).
-more-
<PAGE>
4th Quarter/Year-End Earnings
6-6-6-6
Vacation Ownership
------------------
Construction continued on schedule for Hilton's newest vacation
ownership project, a 232-suite facility adjacent to The Las Vegas Hilton
expected to open in late 1999. The company plans to establish a more
significant presence in the growing timeshare business, and in keeping with
this strategy, reached an agreement to market Hilton vacation ownership
properties at Park Place Entertainment hotel-casinos.
"Our excellent EBITDA and RevPAR results in the quarter and for the year
reflect the continuing strong nature of our business and the favorable
environment for owning quality hotel assets," said Stephen F. Bollenbach,
president and chief executive officer of Hilton Hotels Corporation.
"We see a landscape in 1999 that will favor companies like ours, with a
major ownership presence in key U.S. cities and the desire and balance sheet
necessary to acquire hotel assets with both strategic and economic value," he
said. "Our $1.75 billion revolving credit line provides us the capability to
continue making good buys for the benefit of our shareholders, as we did in
1998."
Bollenbach continued: "The strength of most of our important markets, a
favorable acquisition environment, the power of the Hilton brand and the
dedication and talents of our team members have us looking to 1999 with
enthusiasm and optimism."
###
<PAGE>
HILTON HOTELS CORPORATION
FINANCIAL HIGHLIGHTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS TWELVE MONTHS
ENDED ENDED
DECEMBER 31 DECEMBER 31
---------------- --------------------
% %
1998 1997 CHANGE 1998 1997 CHANGE
---- ---- ---- ------ ------ ----
<S> <C> <C> <C> <C> <C> <C>
REVENUE $496 $386 28 % $1,769 $1,475 20 %
---- ---- ---- ------ ------ ----
---- ---- ---- ------ ------ ----
EBITDA(1)
Operations $177 $141 26 % $ 660 $ 561 18 %
Corporate expense, net (26) (30) (13) (64) (64) --
---- ---- ---- ------ ------ ----
Total $151 $111 36 % $ 596 $ 497 20 %
---- ---- ---- ------ ------ ----
---- ---- ---- ------ ------ ----
OPERATING INCOME
Operations $139 $113 23 % $ 531 $ 460 15 %
Corporate expense, net (27) (30) (10) (67) (65) 3
---- ---- ---- ------ ------ ----
Total operating income 112 83 35 464 395 17
Interest and dividend income 3 5 (40) 13 17 (24)
Interest expense (39) (21) 86 (137) (90) 52
Net interest from equity investments -- (1) -- (4) (8) (50)
---- ---- ---- ------ ------ ----
Net interest expense (36) (17) 112 (128) (81) 58
INCOME BEFORE TAXES AND MINORITY
INTEREST 76 66 15 336 314 7
Provision for taxes (30) (24) 25 (136) (124) 10
Minority interest, net (2) (1) -- (12) (7) 71
---- ---- ---- ------ ------ ----
INCOME FROM CONTINUING OPERATIONS 44 41 7 188 183 3
Income (loss) from discontinued gaming
operations (9) (46) (80) 109 67 63
---- ---- ---- ------ ------ ----
Net income (loss) $ 35 $ (5) -- % $ 297 $ 250 19 %
---- ---- ---- ------ ------ ----
---- ---- ---- ------ ------ ----
NET INCOME PER SHARE--BASIC
Income from continuing operations $.17 $.15 13 % $ .71 $ .68 4 %
Income (loss) from discontinued gaming
operations (.03) (.18) -- .44 .27 63
---- ---- ---- ------ ------ ----
Net income per share $.14 $(.03) -- % $ 1.15 $ .95 21 %
---- ---- ---- ------ ------ ----
---- ---- ---- ------ ------ ----
NET INCOME PER SHARE--DILUTED
Income from continuing operations $.17 $.15 13 % $ .71 $ .68 4 %
Income (loss) from discontinued gaming
operations (.03) (.18) -- .41 .26 58
---- ---- ---- ------ ------ ----
Net income per share $.14 $(.03) -- % $ 1.12 $ .94 19 %
---- ---- ---- ------ ------ ----
---- ---- ---- ------ ------ ----
</TABLE>
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(1) EBITDA is earnings before interest, taxes, depreciation, amortization and
non-cash items.
<PAGE>
HILTON HOTELS CORPORATION
SUPPLEMENTARY STATISTICAL INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
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%/PT %/PT
1998 1997 CHANGE 1998 1997 CHANGE
-------- ------- ------ --------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
U.S. OWNED AND EQUITY(1)
Occupancy 72.2% 73.2% (1.0)pts 75.0% 77.5% (2.5)pts
Average Rate $176.00 $163.81 7.4% $166.47 $153.68 8.3%
Revpar $127.15 $119.96 6.0% $124.86 $119.09 4.8%
Number of hotels -- -- 35 30
Number of rooms -- -- 24,946 22,983
U.S. MANAGED(1)
Occupancy 67.1% 67.1% -- pts 70.2% 72.2% (2.0)pts
Average Rate $140.54 $132.20 6.3% $138.26 $129.28 6.9%
Revpar $94.25 $88.73 6.2% $97.11 $93.38 4.0%
Number of hotels -- -- 17 20
Number of rooms -- -- 12,220 13,311
INTERNATIONAL-MANAGED(1)(2)
Occupancy 68.3% 64.5% 3.8 pts 65.6% 68.4% (2.8)pts
Average Rate $128.33 $147.35 (12.9)% $144.02 $152.64 (5.6)%
Revpar $87.65 $95.00 (7.7)% $94.49 $104.36 (9.5)%
Number of hotels -- -- 9 9
Number of rooms -- -- 3,286 3,283
FRANCHISED
Occupancy 62.4% 64.5% (2.1)pts 68.2% 70.0% (1.8)pts
Average Rate $96.22 $90.35 6.5% $97.30 $90.91 7.0%
Revpar $60.04 $58.31 3.0% $66.36 $63.67 4.2%
Number of hotels -- -- 188 180
Number of rooms -- -- 46,562 45,092
TOTAL HOTELS
Number of hotels -- -- 249 239
Number of rooms -- -- 87,014 84,669
</TABLE>
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(1) Operating statistics are based on a comparable hotel mix.
(2) Includes two hotels where the company has a minority interest.
