SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File No. 1-10410
A. Full title of the plan and address of the plan, if
different from that of the issuer named below:
The Promus Companies Incorporated
Savings and Retirement Plan
B. Name of issuer of the securities held pursuant to the
plan and the address of its principal executive office:
The Promus Companies Incorporated
1023 Cherry Road
Memphis, Tennessee 38117
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Trustees of The Promus Companies Incorporated
Savings and Retirement Plan:
We have audited the accompanying statements of net assets
available for plan benefits of THE PROMUS COMPANIES INCORPORATED
SAVINGS AND RETIREMENT PLAN as of December 31, 1993 and 1992, and
the related statements of changes in net assets available for
plan benefits for each of the three years in the period ended
December 31, 1993. These financial statements and the schedules
referred to below are the responsibility of the Plan
Administrator. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets of The
Promus Companies Incorporated Savings and Retirement Plan as of
December 31, 1993 and 1992, and the changes in its net assets
available for plan benefits for each of the three years in the
period ended December 31, 1993, in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental
schedules of investments as of December 31, 1993 (Exhibit I) and
of reportable transactions for the year ended December 31, 1993
(Exhibit II) are presented for the purpose of additional analysis
and are not a required part of the basic financial statements but
are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. Such
schedules have been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation
to the basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Memphis, Tennessee,
April 25, 1994.
<PAGE>
<TABLE> <CAPTION>
THE PROMUS COMPANIES INCORPORATED
SAVINGS AND RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1993
Income Diversified
Investment Investment Promus Treasury Executive
Fund Fund Stock Fund Fund Loan Fund ESOP Fund Life Fund Total
----------- ----------- ------------ ----------- ---------- ----------- ------------ ------------
(Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value
(Notes 1 and 2)
Guaranteed investment
contracts $24,591,922 $ - $ - $ - $ - $ - $11,014,122 $ 35,606,044
Bonds 37,642,524 - - - - - - 37,642,524
Mutual funds - 28,323,337 - - - - - 28,323,337
Promus common stock - - 255,810,210 - - 22,310,033 - 278,120,243
Short-term securities - - - 8,546,564 - - - 8,546,564
Temporary investments 335,282 169,352 1,166,643 39,344 - - - 1,710,621
Receivables
Due from participants
(Note 1) - - - - 20,184,547 - - 20,184,547
Due from Promus 52,049 26,290 181,109 6,108 - - 140,529 406,085
Due (to) from other funds (2,284,011) (1,097,124) 3,901,984 (551,351) - 40,859 (10,357) -
Contributions - - - - - 730,722 - 730,722
Other 3,432 1,733 11,941 403 - - - 17,509
Accrued interest and dividends 105,635 - - - - - - 105,635
Cash 100,743 3,678 27,132 854 - 69,147 - 201,554
----------- ----------- ------------ ---------- ----------- ----------- ----------- ------------
Total assets 60,547,576 27,427,266 261,099,019 8,041,922 20,184,547 23,150,761 11,144,294 411,595,385
----------- ----------- ------------ ---------- ----------- ----------- ----------- ------------
LIABILITIES
Advances from Promus - - - - - - (2,700,400) (2,700,400)
Bank overdrafts (152,630) (77,094) (531,090) (17,911) - - - (778,725)
Accrued expenses (21,805) (11,014) (75,875) (2,559) - - - (111,253)
Accounts payable (14,558) (7,352) (50,650) (1,707) - - - (74,267)
----------- ----------- ------------ ---------- ----------- ----------- ----------- ------------
Total liabilities (188,993) (95,460) (657,615) (22,177) - - (2,700,400) (3,664,645)
----------- ----------- ------------ ---------- ----------- ----------- ----------- ------------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $60,358,583 $27,331,806 $260,441,404 $8,019,745 $20,184,547 $23,150,761 $ 8,443,894 $407,930,740
=========== =========== ============ ========== =========== =========== =========== ============
The accompanying Notes to Financial Statements are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE> <CAPTION>
THE PROMUS COMPANIES INCORPORATED
SAVINGS AND RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1992
Income Diversified
Investment Investment Promus Treasury Executive
Fund Fund Stock Fund Fund Loan Fund ESOP Fund Life Fund Total
----------- ----------- ------------ ----------- ---------- ----------- ----------- -----------
(Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value
(Notes 1 and 2)
Guaranteed investment
contracts $43,179,429 $ - $ - $ - $ - $ - $12,878,272 $ 56,057,701
Bonds 40,630,755 - - - - - - 40,630,755
Mutual funds - 24,665,849 - - - - - 24,665,849
Promus common stock - - 79,211,275 - - 8,979,795 - 88,191,070
Short-term securities - - - 9,101,771 - - - 9,101,771
Temporary investments 2,204,276 390,629 754,005 99,928 - - - 3,448,838
Receivables
Due from participants
(Note 1) - - - - 15,915,623 - - 15,915,623
Due from Promus 193,824 65,169 138,170 16,614 - - - 413,777
Due (to) from other funds 208,157 (38,010) 244,576 (458,178) - 26,080 17,375 -
Accrued interest and dividends 119,074 - - - - - - 119,074
Cash 224,168 3,660 1,023,517 937 - 1,453 - 1,253,735
Prepaid 6,796 2,586 4,992 662 - - - 15,036
----------- ----------- ----------- ---------- ----------- ---------- ----------- -----------
Total assets 86,766,479 25,089,883 81,376,535 8,761,734 15,915,623 9,007,328 12,895,647 239,813,229
----------- ----------- ----------- ---------- ----------- ---------- ----------- -----------
LIABILITIES
Advances from Promus - - - - - - (2,391,900) (2,391,900)
Bank overdrafts (672,063) (255,741) (493,639) (65,421) - - - (1,486,864)
Accounts payable (73,785) (28,077) (54,196) (7,183) - - - (163,241)
Accrued expenses (60,750) (23,117) (44,621) (5,914) - - - (134,402)
Unposted contributions (54,000) (20,549) (39,664) (5,256) - - - (119,469)
----------- ---------- ----------- ---------- ----------- ---------- ----------- ------------
Total liabilities (860,598) (327,484) (632,120) (83,774) - - (2,391,900) (4,295,876)
----------- ---------- ----------- ---------- ----------- ---------- ----------- ------------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $85,905,881 $24,762,399 $80,744,415 $8,677,960 $15,915,623 $9,007,328 $10,503,747 $235,517,353
=========== =========== =========== ========== =========== ========== =========== ============
The accompanying Notes to Financial Statements are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE> <CAPTION>
THE PROMUS COMPANIES INCORPORATED
SAVINGS AND RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1993
Income Diversified
Investment Investment Promus Treasury Executive
Fund Fund Stock Fund Fund Loan Fund ESOP Fund Life Fund Total
----------- ----------- ----------- ----------- ---------- ---------- ----------- ------------
(Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME
Interest $ 5,417,520 $ 11,007 $ 57,729 $ 2,834 $ 1,426,920 $ - $ - $ 6,916,010
Dividends - 1,316,933 - 252,130 - - - 1,569,063
------------ ----------- ----------- ----------- ----------- ---------- ----------- ------------
5,417,520 1,327,940 57,729 254,964 1,426,920 - - 8,485,073
REALIZED GAIN ON
INVESTMENTS
Aggregate proceeds 13,463,687 7,069,666 766,992 - - 1,358,871 - 22,659,216
Aggregate cost (at
average cost) 13,412,626 5,676,111 237,349 - - 430,639 - 19,756,725
------------ ----------- ------------ ----------- ----------- ---------- ----------- ------------
Net realized gain 51,061 1,393,555 529,643 - - 928,232 - 2,902,491
------------ ----------- ------------ ----------- ----------- ----------- ----------- ------------
UNREALIZED APPRECIATION
(DEPRECIATION) OF
INVESTMENTS (372,908) 1,162.165 141,189,725 - - 12,983,985 - 154,962,967
------------ ----------- ------------ ----------- ----------- ----------- ----------- ------------
CONTRIBUTIONS
Participants 5,018,471 2,218,795 10,272,010 550,236 - - - 18,059,512
Promus 3,648,463 1,498,809 6,771,138 376,139 - 1,496,842 - 13,791,391
------------ ----------- ------------ ----------- ----------- ----------- ----------- ------------
8,666,934 3,717,604 17,043,148 926,375 - 1,496,842 - 31,850,903
OTHER
Distributions to
participants and
beneficiaries (9,271,491) (1,429,370) (12,017,273) (447,890) - (1,250,746) (641,197) (25,057,967)
Transfers between funds (29,676,055) (3,497,702) 33,131,262 (1,365,973) 2,842,004 (14,880) (1,418,656) -
Administrative expenses (362,359) (104,785) (237,245) (25,691) - - - (730,080)
------------ ----------- ------------ ----------- ---------- ------------ ----------- ------------
NET INCREASE (DECREASE)
IN PLAN EQUITY (25,547,298) 2,569,407 179,696,989 (658,215) 4,268,924 14,143,433 (2,059,853) 172,413,387
PLAN EQUITY, beginning
of period 85,905,881 24,762,399 80,744,415 8,677,960 15,915,623 9,007,328 10,503,747 235,517,353
------------ ----------- ------------ ----------- ----------- ----------- ----------- ------------
PLAN EQUITY, end of period $ 60,358,583 $27,331,806 $260,441,404 $ 8,019,745 $20,184,547 $23,150,761 $ 8,443,894 $407,930,740
============ =========== ============ =========== =========== =========== =========== ============
The accompanying Notes to Financial Statements are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE><CAPTION>
THE PROMUS COMPANIES INCORPORATED
SAVINGS AND RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1992
Income Diversified
Investment Investment Promus Treasury Executive
Fund Fund Stock Fund Fund Loan Fund ESOP Fund Life Fund Total
----------- ----------- ----------- ----------- ---------- ---------- ----------- ------------
(Note 4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME
Interest $ 6,753,939 $ 33,880 $ 62,606 $ 4,570 $ 1,281,871 $ - $ - $ 8,136,866
Dividends - 1,057,141 - 191,286 - - - 1,248,427
----------- ---------- ----------- ---------- ----------- ---------- ----------- ------------
6,753,939 1,091,021 62,606 195,856 1,281,871 - - 9,385,293
----------- ---------- ----------- ---------- ----------- ---------- ----------- ------------
REALIZED GAIN (LOSS) ON
INVESTMENTS
Aggregate proceeds 7,900,016 3,800,686 4,637,439 - - 1,002,695 - 17,340,836
Aggregate cost (at
average cost) 7,966,622 3,230,229 3,391,241 - - 1,386,096 - 15,974,188
----------- ---------- ----------- ---------- ----------- ---------- ----------- ------------
Net realized gain
(loss) (66,606) 570,457 1,246,198 - - (383,401) - 1,366,648
----------- ---------- ----------- ---------- ----------- ---------- ----------- ------------
UNREALIZED APPRECIATION
(DEPRECIATION) OF
INVESTMENTS (62,769) 170,422 45,653,992 - - 5,875,133 - 51,636,778
----------- ---------- ----------- ---------- ----------- --------- ----------- ------------
CONTRIBUTIONS
Participants 7,624,265 3,050,390 4,398,142 467,414 - - - 15,540,211
Promus 5,539,659 1,855,348 3,029,986 318,768 - 351,784 - 11,095,545
----------- ---------- ----------- ---------- ----------- --------- ----------- ------------
13,163,924 4,905,738 7,428,128 786,182 - 351,784 - 26,635,756
OTHER
Distributions to
participants and
beneficiaries (13,376,264) (2,755,982) (5,939,585) (633,300) - (695,190) (1,260,347) (24,660,668)
Transfers between funds (9,127,815) (670,269) 790,005 8,353,150 569,582 (4,646) 89,993 -
Administrative expenses (635,920) (158,902) (189,435) (23,928) - - - (1,008,185)
----------- ---------- ----------- ---------- ----------- --------- ----------- ------------
NET INCREASE (DECREASE)
IN PLAN EQUITY (3,351,511) 3,152,485 49,051,909 8,677,960 1,851,453 5,143,680 (1,170,354) 63,355,622
PLAN EQUITY, beginning
of period 89,257,392 21,609,914 31,692,506 - 14,064,170 3,863,648 11,674,101 172,161,731
----------- ----------- ----------- ---------- ----------- ---------- ----------- ------------
PLAN EQUITY, end of period $85,905,881 $24,762,399 $80,744,415 $8,677,960 $15,915,623 $9,007,328 $10,503,747 $235,517,353
=========== =========== =========== ========== =========== ========== =========== ============
The accompanying Notes to Financial Statements are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE><CAPTION>
THE PROMUS COMPANIES INCORPORATED
SAVINGS AND RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1991
Income Diversified
Investment Investment Promus Executive
Fund Fund Stock Fund Loan Fund ESOP Fund Life Fund Total
------------ ----------- ----------- ----------- ---------- ----------- ------------
(Note 4)
<S> <C> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME
Interest $ 7,066,376 $ - $ - $ 1,176,455 $ - $ - $ 8,242,831
Dividends - 1,278,745 - - - - 1,278,745
------------ ----------- ----------- ----------- ---------- ----------- ------------
7,066,376 1,278,745 - 1,176,455 - - 9,521,576
------------ ----------- ----------- ----------- ---------- ----------- ------------
REALIZED GAIN (LOSS) ON
INVESTMENTS
Aggregate proceeds - 48,774 4,059,476 - 403,392 - 4,511,642
Aggregate cost (at
average cost) - 42,273 5,668,124 - 703,951 - 6,414,348
------------ ----------- ----------- ----------- ---------- ----------- ------------
Net realized gain
(loss) - 6,501 (1,608,648) - (300,559) - (1,902,706)
------------ ----------- ----------- ----------- ---------- ----------- ------------
UNREALIZED APPRECIATION
OF INVESTMENTS - 3,653,661 12,556,652 - 1,552,887 - 17,763,200
------------ ----------- ----------- ----------- ---------- ----------- ------------
CONTRIBUTIONS
Participants 8,626,597 1,708,468 3,438,886 - - - 13,773,951
Promus 6,409,894 1,288,631 2,580,696 - 504,557 - 10,783,778
------------ ----------- ----------- ----------- ---------- ----------- ------------
15,036,491 2,997,099 6,019,582 - 504,557 - 24,557,729
OTHER
Distributions to
participants and
beneficiaries (14,035,845) (1,594,613) (3,430,859) - (532,509) (1,196,628) (20,790,454)
Transfers between funds (10,797,049) 2,663,807 (4,373,403) (364,365) 281 12,870,729 -
Administrative expenses (715,355) (108,984) (206,742) - - - (1,031,081)
------------ ----------- ----------- ----------- ---------- ----------- ------------
NET INCREASE (DECREASE)
IN PLAN EQUITY (3,445,382) 8,896,216 8,956,582 812,090 1,224,657 11,674,101 28,118,264
PLAN EQUITY, beginning
of period 92,702,774 12,713,698 22,735,924 13,252,080 2,638,991 - 144,043,467
------------ ----------- ----------- ----------- ---------- ----------- ------------
PLAN EQUITY, end of period $ 89,257,392 $21,609,914 $31,692,506 $14,064,170 $3,863,648 $11,674,101 $172,161,731
============ =========== =========== =========== ========== =========== ============
The accompanying Notes to Financial Statements are an integral part of this statement.
</TABLE>
<PAGE>
THE PROMUS COMPANIES INCORPORATED
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1993
NOTE 1 - SUMMARY DESCRIPTION OF THE PLAN
The following description of The Promus Companies Incorporated
Savings and Retirement Plan ("the Plan") is provided for general
information purposes only. Participants should refer to the Plan
Document for a more complete description of the Plan's
provisions.
The Plan
The Plan was established by The Promus Companies Incorporated
effective February 6, 1990, to include eligible employees of The
Promus Companies Incorporated and its affiliates ("Promus") for
the primary purpose of allowing these employees to accumulate
capital for their retirement. Participants can contribute either
pre-tax payroll dollars (i.e., temporary deferral of federal
and/or state income taxes) or after-tax dollars to the Plan, as
provided for under Sections 401(k) and 401(m) of the Internal
Revenue Code. Promus matches the first six percent of eligible
participant contributions to the Plan, defined as basic
contributions. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA).
Plan Investment Funds
By election of a participant, his or her account balances
(contributions, Promus matching funds and accumulated earnings)
can be invested in one or in a combination of two, three or four
separate funds of the Plan in 10 percent units as follows:
I. Income Investment Fund - invested in "guaranteed
investment contracts" issued by major insurance
companies and other financial institutions and Marinvest
Intermediate Bond Fund. This fund was formerly named
Guaranteed Investment Fund;
II. Diversified Stock Investment Fund - invested mainly in
stocks through mutual funds which provide a return based
on the performance of the stocks included within the
mutual funds, including dividends thereon;
III. Promus Stock Fund - invested in Promus common stock
which provides a return based on the change in market
value of Promus' common stock, including any dividends
declared thereon; or
IV. Treasury Fund - invested in a money market fund that
invests solely in United States Treasury Department
backed short-term securities issued by the United States
Government. This fund was instituted by an amendment to
the Plan and became available April 1, 1992.
<PAGE>
NOTE 1 - SUMMARY DESCRIPTION OF THE PLAN (Continued)
The Plan also includes three other special purpose funds, as
follows:
V. Loan Fund - created to separately track loans to
participants as provided for under the Plan. See Loans
in the Summary Description of the Plan for further
details.
VI. ESOP Fund - created to account for special contributions
by Promus of its common stock or cash equivalents to
eligible employees. The ESOP Fund was established
within the Plan to serve as a means to monitor the
accounts and records of the participants. Participants
are not allowed to make contributions to their ESOP
account and distributions can be made after a
participant stops working for Promus.
VII. Executive Life Fund - established during 1991 to
segregate the assets and participants' equity accounts
related to the investment in Executive Life Insurance
Company's guaranteed investment contract. See Note 4 -
Executive Life Investment for further details.
On February 18, 1994, the Trustees of the Plan elected to add two
additional investment funds. An aggressive equity fund and a
bond fund will serve as additional investment options for Plan
participants.
Plan Administration
The general administration of the Plan is the responsibility of
the Trustees of the Plan, who are appointed by the Promus Board
of Directors, and who act as the Plan Administrator. The
Trustees perform the duties and exercise the authority set forth
in the Plan and Trustee Agreements. The Trustees have delegated
certain of their authority to individuals for purposes of day-to-
day administration.
Employee Eligibility, Vesting and Termination
Employees of Promus become eligible to join the Plan on the first
entry date (January 1 or July 1) following completion of 12
months during which the employee is credited with at least 1,000
hours of service. Participants vest in Promus matching
contributions over seven calendar years of credited service as
follows:
Vested
Years of Credited Service Percentage
------------------------- ----------
One 10
Two 20
Three 30
Four 40
Five 60
Six 80
Seven 100
<PAGE>
NOTE 1 - SUMMARY DESCRIPTION OF THE PLAN (Continued)
An employee's active participation in the Plan ceases upon
separation of service at which time his or her vested account
balance can then be withdrawn or remain in the Plan according to
the Plan Document.
Plan Expenses
As sponsor of the Plan, Promus, through its wholly-owned
subsidiary Embassy Suites, Inc. ("Embassy"), initially pays many
of the costs associated with the operation of the Plan. These
costs include salaries for employees who perform administrative
services for the Plan, rent, various service charges and other
direct costs of operation. The Plan reimbursed Embassy for these
costs in the amounts of approximately $0.7 million, $1.0 million
and $1.0 million for 1993, 1992 and 1991, respectively. Such
costs are reflected as administrative expenses in the
accompanying statements of changes in net assets available for
plan benefits.
Participants' Contributions and Withdrawals
During 1993, participants could elect to make basic contributions
ranging from two to six percent of their eligible earnings, as
defined. If a non-highly compensated participant is making basic
pre-tax contributions of six percent of his earnings to the Plan,
the participant could elect to make supplemental contributions of
up to an additional 10% of which 8% can be pre-tax dollars.
Highly compensated employees could contribute an additional 10%
of after-tax dollars. Promus will match the first six percent of
all participants' contributions.
Participants' contributions, vested matching Promus contributions
and related income may be withdrawn by giving 30 days written
notice subject to Plan and Internal Revenue Service rules. In-
service withdrawals of pre-tax contributions are subject to
hardship rules if the withdrawal occurs before age 59 1/2.
Withdrawal of basic after-tax and matching contributions will not
prohibit participants from making further contributions; however,
if these contributions or any other funds are withdrawn, Promus
will not match subsequent contributions for six months.
Supplemental after-tax contributions and any earnings thereon may
be withdrawn without this penalty. If a participant ceases to
make contributions to the Plan, the participant's equity may
remain constant, except for allocation of earnings and losses on
the Plan's investments.
In January 1994, the Plan made payments of approximately $5.5
million to both active and terminated participants for
withdrawals, a portion of which had been requested prior to
December 31, 1993.
<PAGE>
NOTE 1 - SUMMARY DESCRIPTION OF THE PLAN (Continued)
Allocation of Forfeitures and Net Plan Income
As required by the Plan, forfeited amounts attributed to non-
vested Promus matching contributions of terminated employees will
not be reallocated to remaining participants for a period of five
years. Employees who return to service within that period will
be credited, subject to further vesting, at the date of rehire
with the unallocated equity amount. The total amount of
potential forfeitures of terminated non-vested participants at
December 31, 1993 was $3.8 million. Forfeitures are allocated to
active participants based upon their total basic contributions
for the year. The Plan Administrator reallocated approximately
$0.7 million, $0.6 million and $0.7 million of forfeited funds
during 1993, 1992 and 1991, respectively.
Net Plan income (i.e. unrealized appreciation/depreciation of
investments, dividend and interest income, and realized gains or
losses on the sale of investments) is allocated monthly to active
participants based upon the individual's prior month-end equity
balance. For purposes of calculating the realized gains or
losses on investments, the Plan uses a cumulative average cost
per share.
Loans
Loans may be made to participants upon written application to the
Plan Administrator. All loans, other than those used to acquire
or construct the principal residence of the participant, shall be
repaid within five years. The minimum amount that may be
borrowed is $500. The balance of loans outstanding under the
Plan to a participant may not exceed $50,000 (which maximum is
subject to reduction if another loan is outstanding) or one-half
of the vested balance of the participant's account, whichever is
less. Loans bear interest at a rate set by the Plan
Administrator. This rate was changed on September 1, 1992 from
9.5% to 7.5%. The interest rate was 9.5% for 1991. Principal
and interest paid by a participant are credited to the
participant's account.
Reclassifications
Certain amounts for prior years have been reclassified to conform
with the presentation for 1993.
NOTE 2 - VALUATION OF INVESTMENTS
Guaranteed investment contracts are stated at contract values.
Investments in securities and mutual funds are stated at market
values on December 31, 1993.
Due to the volatility of the stock market, the per share value of
Promus common stock has decreased from $45.75 at December 31,
1993, to $34.125 at April 25, 1994. This decrease in per share
market value would result in a $190,809,255 and $16,641,090
balance in Promus common stock for the Promus Stock Fund and the
ESOP Fund, respectively, if such funds were valued at April 25,
1994.
<PAGE>
NOTE 3 - EXCESS CONTRIBUTIONS
Plan participants received a refund of a portion of their
contributions and attributable earnings totaling approximately
$68,000, $134,000 and $805,000 in 1993, 1992 and 1991,
respectively. These refunds were paid in accordance with
Internal Revenue Code Section 401(m) which requires that certain
nondiscriminatory tests related to the overall composition of
participants' contributions be met and Section 415 which requires
annual contributions not to exceed 25% of the participant's
compensation, as defined.
NOTE 4 - EXECUTIVE LIFE INVESTMENT
On May 1, 1991, the Plan was amended to provide that
approximately $12.9 million attributable to a guaranteed
investment contract issued by Executive Life Insurance Company
("Executive Life") and held in the Plan's Income Investment Fund
would be frozen until such time as the contract is finally paid
out. The $12.9 million represented the book value of this
contract as of March 31, 1991. The action was taken by Promus
due to the conservatorship imposed on Executive Life by the State
of California Insurance Commissioner. Promus has agreed to pay
to the Plan any deficiency between the $12.9 million and any
amounts finally paid under the contract. Promus has also agreed
to make interest free loans to the Plan, which are to be repaid
out of any amounts received under the contract, so that persons
who leave or who have already left Promus' employment may
withdraw the vested portion of the Executive Life guaranteed
investment contract, as well as other vested funds. Amounts
loaned to the Plan are reflected in the accompanying statements
of net assets available for plan benefits as Advances from
Promus.
On September 3, 1993, the California Department of Insurance
closed on a rehabilitation transaction with Aurora National Life
Insurance Company ("Aurora"), whereby substantially all Executive
Life assets and restructured liabilities were transferred to
Aurora. Additionally, on September 3, 1993, Aurora made a
payment of $1,864,150 to the Plan which reduced the principal of
the Executive Life contract. Of this payment, $414,829 was paid
to Promus to reduce the Advances from Promus balance. The
remaining amount was used to unfreeze part of the Executive Life
Fund for each participant on a pro-rata basis. On February 4,
1994, the Plan elected to participate in the rehabilitation plan
offered by Aurora. This option provides for recovery of at least
77.7% of the March 31, 1991 book value. As before, Promus will
pay the Plan for any deficiency between the book value and
amounts ultimately received. The restructured contract matures
on September 3, 1998 and is presently earning interest at
approximately 5 percent.
NOTE 5 - PLAN QUALIFICATION
The Plan is intended to satisfy the tax qualification
requirements under Section 401(a) of the Internal Revenue Code;
therefore, the trust funds of the Plan are intended to be exempt
from federal income taxes under Section 501(a). A favorable
determination letter regarding the Plan's status, dated
November 19, 1992, has been received from the Internal Revenue
Service.
<PAGE>
NOTE 6 - PLAN TERMINATION
Although it has not expressed any intent to do so, Promus has the
right under the Plan to discontinue its contributions at any time
and to terminate the Plan subject to the provisions of ERISA. In
the event of Plan termination, participants will become 100
percent vested in their accounts.
<PAGE>
EXHIBIT I
<TABLE><CAPTION>
THE PROMUS COMPANIES INCORPORATED
SAVINGS AND RETIREMENT PLAN
SCHEDULE OF INVESTMENTS
AS OF DECEMBER 31, 1993
<S> <C> <C>
Cost Fair Value
------------ ------------
GUARANTEED INVESTMENT CONTRACTS
Confederation Life Insurance Company $ 5,997,123 $ 5,997,123
Continental Assurance Company 3,366,104 3,366,104
Executive Life Insurance Company (Note) 11,014,122 11,014,122
Hartford Life Insurance Company 2,679,324 2,679,324
Life Insurance Company of Georgia 2,266,647 2,266,647
Pan American Life Insurance Company 4,297,160 4,297,160
Provident National Assurance Company 2,605,991 2,605,991
Principal Mutual Life Insurance Company 3,361,673 3,361,673
The Prudential 17,900 17,900
------------ ------------
35,606,044 35,606,044
------------ ------------
BONDS
Marinvest Intermediate Bond Fund 37,925,019 37,642,524
------------ ------------
MUTUAL FUNDS
State Street Bank Flagship Fund 10,500,346 13,535,268
CGM Mutual Fund 12,685,641 14,788,069
------------ ------------
23,185,987 28,323,337
------------ ------------
PROMUS COMMON STOCK
Stock Fund 70,301,072 255,810,210
ESOP Fund 7,331,803 22,310,033
------------ ------------
77,632,875 278,120,243
------------ ------------
SHORT-TERM SECURITIES
Dreyfus Treasury Fund 8,546,564 8,546,564
------------ ------------
TEMPORARY INVESTMENTS
Fidelity Money Market Trust 1,710,621 1,710,621
------------ ------------
Total investments $184,607,110 $389,949,333
============ ============
</TABLE>
-----------
Note - See Note 4 in the accompanying Notes to Financial Statements regarding
the valuation of Executive Life Insurance Company guaranteed
investment contract.
<PAGE>
EXHIBIT II
<TABLE><CAPTION>
THE PROMUS COMPANIES INCORPORATED
SAVINGS AND RETIREMENT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
Current
Value of
Cost of Assets on
Purchase Selling Assets Transaction Gain
Description Price Price Sold Date (Loss)
----------------------------------------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Fidelity Money Market Trust -
Purchases $80,587,180 $ - $ - $ - $ -
Sales - 82,325,397 82,325,397 82,325,397 -
Marinvest Intermediate Bond Fund -
Purchases 10,797,302 - - - -
Sales - 13,463,687 13,412,626 13,463,687 51,061
Promus Common Stock -
Purchases 36,423,189 - - - -
Sales - 2,125,863 667,988 2,125,863 1,457,875
</TABLE>
<PAGE>
Signature
---------
Pursuant to the requirements of the Securities Exchange
Act of 1934, the trustees have duly caused this annual
report to be signed on its behalf by the undersigned
hereunto duly authorized.
THE PROMUS COMPANIES INCORPORATED
SAVINGS AND RETIREMENT PLAN
June 2, 1994
Michael N. Regan
Authorized Trustee of the Plan and
Vice President and Controller of
The Promus Companies Incorporated
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to
the incorporation of our report dated April 25, 1994,
included in this Form 11-K for the year ended December
31, 1993 into Promus' previously filed Registration
Statement File No. 33-32865.
ARTHUR ANDERSEN & CO.
Memphis, Tennessee,
June 2, 1994.
