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, 1994
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, 1994 and 1993, and the related statements of
changes in net assets available for plan benefits for each of the three
years ended December 31, 1994. 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 and schedules 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 available for plan benefits of The
Promus Companies Incorporated Savings and Retirement Plan as of
December 31, 1994 and 1993, and the changes in its net assets available for
plan benefits for each of the three years ended December 31, 1994, 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, 1994 (Exhibit I) and of reportable
transactions for the year ended December 31, 1994 (Exhibit II) are
presented for the purposes 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.
The supplemental 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 LLP
Memphis, Tennessee,
June 1, 1995.
<PAGE>
<TABLE><CAPTION>
THE PROMUS COMPANIES INCORPORATED
SAVINGS AND RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1994
Diversified Long-term Income
Promus Aggressive Stock Bond Investment Treasury Executive
Stock Fund Stock Fund Fund Fund Fund Fund Life Fund
---------- ---------- ----------- --------- ---------- -------- ---------
(Note 4)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments (Notes 1 and 2)
Promus common stock $172,725,711 $ - $ - $ - $ - $ - $ -
Mutual funds - 1,881,506 29,932,696 1,323,359 - 13,898,472 -
Bonds - - - - 56,805,021 - -
Guaranteed investment
contracts - - - - 8,913,105 - 10,940,544
Temporary investments 1,306,439 35,086 224,963 12,383 381,819 103,194 76,453
Receivables
Due from participants
(Note 1) - - - - - - -
Due from Promus 123,953 2,695 20,210 770 35,993 8,854 45,100
Due (to) from other funds 2,506,902 371,973 (1,451,312) 477,612 (1,233,751) (713,436) 92,831
Contributions - - - - - - -
Other 1,294 35 222 13 378 103 -
Accrued interest and dividends - - - - 175,721 - -
Cash 81,839 - - - 118,664 - -
------------ ---------- ----------- ---------- ----------- ----------- -----------
Total assets 176,746,138 2,291,295 28,726,779 1,814,137 65,196,950 13,297,187 11,154,928
------------ ---------- ----------- ---------- ----------- ----------- -----------
LIABILITIES
Advances from Promus - - - - - - (3,056,000)
Bank overdrafts (966,627) (25,960) (166,449) (9,162) (282,506) (76,353) -
Accrued expenses (193,699) (4,769) (34,901) (1,725) (94,146) (15,499) -
Accounts payable (52,016) (11) (7,591) (4) (6,691) (1,547) -
Unposted contributions (213) (1,860) (3,544) (1,174) (1,181) (2,817) -
------------ ---------- ----------- ---------- ----------- ----------- -----------
Total liabilities (1,212,555) (32,600) (212,485) (12,065) (384,524) (96,216) (3,056,000)
------------ ---------- ----------- ---------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $175,533,583 $2,258,695 $28,514,294 $1,802,072 $64,812,426 $13,200,971 $ 8,098,928
============ ========== =========== ========== =========== =========== ===========
</TABLE>
ESOP Fund Loan Fund Total
--------- --------- ------------
ASSETS
Investments (Notes 1 and 2)
Promus common stock $14,396,395 $ - $187,122,106
Mutual funds - - 47,036,033
Bonds - - 56,805,021
Guaranteed investment
contracts - - 19,853,649
Temporary investments - - 2,140,337
Receivables
Due from participants
(Note 1) - 21,846,770 21,846,770
Due from Promus - - 237,575
Due (to) from other funds (50,819) - -
Contributions 537,441 - 537,441
Other 34,246 - 36,291
Accrued interest and dividends - - 175,721
Cash 55,708 - 256,211
----------- ----------- ------------
Total assets 14,972,971 21,846,770 336,047,155
----------- ----------- ------------
LIABILITIES
Advances from Promus - - (3,056,000)
Bank overdrafts - - (1,527,057)
Accrued expenses - - (344,739)
Accounts payable (20,046) - (87,906)
Unposted contributions - - (10,789)
----------- ----------- ------------
Total liabilities (20,046) - (5,026,491)
----------- ----------- ------------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $14,952,925 $21,846,770 $331,020,664
=========== =========== ============
The accompanying Notes to Financial Statements are an integral part of
this statement.
<PAGE>
<TABLE><CAPTION>
THE PROMUS COMPANIES INCORPORATED
SAVINGS AND RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1993
Diversified Income
Promus Stock Investment Treasury Executive
Stock Fund Fund Fund Fund Life Fund
------------ ----------- ----------- ---------- -----------
(Note 4)
<S> <C> <C> <C> <C> <C>
ASSETS
Investments (Notes 1 and 2)
Guaranteed investment
contracts $ - $ - $24,591,922 $ - $11,014,122
Bonds - - 37,642,524 - -
Mutual funds - 28,323,337 - 8,546,564 -
Promus common stock 255,810,210 - - - -
Temporary investments 1,166,643 169,352 335,282 39,344 -
Receivables
Due from participants
(Note 1) - - - - -
Due from Promus 181,109 26,290 52,049 6,108 140,529
Due (to) from other funds 3,901,984 (1,097,124) (2,284,011) (551,351) (10,357)
Contributions - - - - -
Other 11,941 1,733 3,432 403 -
Accrued interest and dividends - - 105,635 - -
Cash 27,132 3,678 100,743 854 -
------------ ----------- ----------- ---------- -----------
Total assets 261,099,019 27,427,266 60,547,576 8,041,922 11,144,294
------------ ----------- ----------- ---------- -----------
LIABILITIES
Advances from Promus - - - - (2,700,400)
Bank overdrafts (531,090) (77,094) (152,630) (17,911) -
Accrued expenses (75,875) (11,014) (21,805) (2,559) -
Accounts payable (50,650) (7,352) (14,558) (1,707) -
------------ ----------- ----------- ---------- -----------
Total liabilities (657,615) (95,460) (188,993) (22,177) (2,700,400)
------------ ----------- ----------- ---------- -----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $260,441,404 $27,331,806 $60,358,583 $8,019,745 $ 8,443,894
============ =========== =========== ========== ===========
</TABLE>
ESOP Fund Loan Fund Total
---------- ----------- -----------
ASSETS
Investments (Notes 1 and 2)
Guaranteed investment
contracts $ - $ - $35,606,044
Bonds - - 37,642,524
Mutual funds - - 36,869,901
Promus common stock 22,310,033 - 278,120,243
Temporary investments - - 1,710,621
Receivables
Due from participants
(Note 1) - 20,184,547 20,184,547
Due from Promus - - 406,085
Due (to) from other funds 40,859 - -
Contributions 730,722 - 730,722
Other - - 17,509
Accrued interest and dividends - - 105,635
Cash 69,147 - 201,554
----------- ----------- -----------
Total assets 23,150,761 20,184,547 411,595,385
----------- ----------- -----------
LIABILITIES
Advances from Promus - - (2,700,400)
Bank overdrafts - - (778,725)
Accrued expenses - - (111,253)
Accounts payable - - (74,267)
----------- ----------- -----------
Total liabilities - - (3,664,645)
----------- ----------- -----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $23,150,761 $20,184,547 $407,930,740
=========== =========== ============
The accompanying Notes to Financial Statements are an integral part of
this statement.
<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, 1994
Diversified Long-term Income
Promus Aggressive Stock Bond Investment Treasury Executive
Stock Fund Stock Fund Fund Fund Fund Fund Life Fund
------------ ---------- ----------- ---------- ---------- ----------- -----------
(Note 4)
<S> <C> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME
Interest $ 74,748 $ 145 $ 8,842 $ 102 $ 4,274,148 $ 4,484 $ 2,875
Dividends - - 603,276 11,584 - 456,209 -
------------ ---------- ----------- ---------- ----------- ----------- ----------
74,748 145 612,118 11,686 4,274,148 460,693 2,875
------------ ---------- ----------- ---------- ----------- ----------- ----------
REALIZED GAIN (LOSS) ON
INVESTMENTS
Aggregate proceeds 17,486,151 - 3,124,163 - 2,879,687 - -
Aggregate cost (at
average cost) 5,599,712 - 2,717,751 - 2,971,295 - -
------------ ---------- ----------- ---------- ----------- ----------- ----------
Net realized
gain (loss) 11,886,439 - 406,412 - (91,608) - -
------------ ---------- ----------- ---------- ----------- ----------- ----------
UNREALIZED APPRECIATION
(DEPRECIATION) OF
INVESTMENTS (92,596,671) (28,813) (2,382,635) 9,075 (2,262,385) - -
------------ ---------- ----------- ---------- ----------- ----------- ----------
CONTRIBUTIONS
Participants 13,313,390 73,357 2,166,085 24,815 3,617,185 751,342 -
Promus 9,058,805 47,402 1,415,552 17,370 2,575,445 621,675 -
------------ ---------- ----------- ---------- ----------- ----------- ----------
22,372,195 120,759 3,581,637 42,185 6,192,630 1,373,017 -
OTHER
Distributions to
participants and
beneficiaries (13,819,311) (91) (2,121,419) (549) (5,767,763) (1,145,732) (286,300)
Transfers between funds (12,149,250) 2,173,104 1,222,398 1,741,979 2,482,193 4,539,095 (61,541)
Administrative expenses (675,971) (6,409) (136,023) (2,304) (373,372) (45,847) -
------------ ---------- ----------- ---------- ----------- ----------- ----------
NET INCREASE (DECREASE)
IN PLAN EQUITY (84,907,821) 2,258,695 1,182,488 1,802,072 4,453,843 5,181,226 (344,966)
PLAN EQUITY, beginning
of period 260,441,404 - 27,331,806 - 60,358,583 8,019,745 8,443,894
------------ ---------- ----------- ---------- ----------- ----------- ----------
PLAN EQUITY, end
of period $175,533,583 $2,258,695 $28,514,294 $1,802,072 $64,812,426 $13,200,971 $8,098,928
============ ========== =========== ========== =========== =========== ==========
</TABLE>
ESOP Fund Loan Fund Total
----------- ----------- -----------
NET INVESTMENT INCOME
Interest $ - $ 1,616,847 $ 5,982,191
Dividends - - 1,071,069
----------- ----------- ------------
- 1,616,847 7,053,260
----------- ----------- ------------
REALIZED GAIN (LOSS) ON
INVESTMENTS
Aggregate proceeds 1,276,173 - 24,766,174
Aggregate cost (at
average cost) 693,131 - 11,981,889
----------- ----------- ------------
Net realized
gain (loss) 583,042 - 12,784,285
----------- ----------- ------------
UNREALIZED APPRECIATION
(DEPRECIATION) OF
INVESTMENTS (8,085,372) - (105,346,801)
----------- ----------- ------------
CONTRIBUTIONS
Participants - - 19,946,174
Promus 540,119 - 14,276,368
----------- ----------- ------------
540,119 - 34,222,542
OTHER
Distributions to
participants and
beneficiaries (1,242,271) - (24,383,436)
Transfers between funds 6,646 45,376 -
Administrative expenses - - (1,239,926)
----------- ----------- ------------
NET INCREASE (DECREASE)
IN PLAN EQUITY (8,197,836) 1,662,223 (76,910,076)
PLAN EQUITY, beginning
of period 23,150,761 20,184,547 407,930,740
----------- ----------- ------------
PLAN EQUITY, end
of period $14,952,925 $21,846,770 $331,020,664
=========== =========== ============
The accompanying Notes to Financial Statements are an integral part of
this statement.
<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
Diversified Income
Promus Stock Investment Treasury Executive
Stock Fund Fund Fund Fund Life Fund
------------ ----------- ----------- ---------- -----------
(Note 4)
<S> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME
Interest $ 57,729 $ 11,007 $ 5,417,520 $ 2,834 $ -
Dividends - 1,316,933 - 252,130 -
------------ ----------- ----------- ---------- -----------
57,729 1,327,940 5,417,520 254,964 -
------------ ----------- ----------- ---------- -----------
REALIZED GAIN ON
INVESTMENTS
Aggregate proceeds 766,992 7,069,666 13,463,687 - -
Aggregate cost (at
average cost) 237,349 5,676,111 13,412,626 - -
------------ ----------- ----------- ---------- -----------
Net realized gain 529,643 1,393,555 51,061 - -
------------ ----------- ----------- ---------- -----------
UNREALIZED APPRECIATION
(DEPRECIATION) OF
INVESTMENTS 141,189,725 1,162,165 (372,908) - -
------------ ----------- ----------- ---------- -----------
CONTRIBUTIONS
Participants 10,272,010 2,218,795 5,018,471 550,236 -
Promus 6,771,138 1,498,809 3,648,463 376,139 -
------------ ----------- ----------- ---------- -----------
17,043,148 3,717,604 8,666,934 926,375 -
OTHER
Distributions to
participants and
beneficiaries (12,017,273) (1,429,370) (9,271,491) (447,890) (641,197)
Transfers between funds 33,131,262 (3,497,702) (29,676,055) (1,365,973) (1,418,656)
Administrative expenses (237,245) (104,785) (362,359) (25,691) -
------------ ----------- ----------- ---------- -----------
NET INCREASE (DECREASE)
IN PLAN EQUITY 179,696,989 2,569,407 (25,547,298) (658,215) (2,059,853)
PLAN EQUITY, beginning
of period 80,744,415 24,762,399 85,905,881 8,677,960 10,503,747
------------ ----------- ----------- ---------- -----------
PLAN EQUITY, end of period $260,441,404 $27,331,806 $60,358,583 $8,019,745 $ 8,443,894
============ =========== =========== ========== ===========
</TABLE>
ESOP Fund Loan Fund Total
---------- ----------- ------------
NET INVESTMENT INCOME
Interest $ - $ 1,426,920 $ 6,916,010
Dividends - - 1,569,063
----------- ----------- ------------
- 1,426,920 8,485,073
----------- ----------- ------------
REALIZED GAIN ON
INVESTMENTS
Aggregate proceeds 1,358,871 - 22,659,216
Aggregate cost (at
average cost) 430,639 - 19,756,725
----------- ----------- ------------
Net realized gain 928,232 - 2,902,491
----------- ----------- ------------
UNREALIZED APPRECIATION
(DEPRECIATION) OF
INVESTMENTS 12,983,985 - 154,962,967
----------- ----------- ------------
CONTRIBUTIONS
Participants - - 18,059,512
Promus 1,496,842 - 13,791,391
----------- ----------- ------------
1,496,842 - 31,850,903
OTHER
Distributions to
participants and
beneficiaries (1,250,746) - (25,057,967)
Transfers between funds (14,880) 2,842,004 -
Administrative expenses - - (730,080)
----------- ----------- ------------
NET INCREASE (DECREASE)
IN PLAN EQUITY 14,143,433 4,268,924 172,413,387
PLAN EQUITY, beginning
of period 9,007,328 15,915,623 235,517,353
----------- ----------- ------------
PLAN EQUITY, end of period $23,150,761 $20,184,547 $407,930,740
=========== =========== ============
The accompanying Notes to Financial Statements are an integral part of
this statement.
<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
Diversified Income
Promus Stock Investment Treasury Executive
Stock Fund Fund Fund Fund Life Fund
------------ ----------- ----------- ---------- -----------
(Note 4)
<S> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME
Interest $ 62,606 $ 33,880 $ 6,753,939 $ 4,570 $ -
Dividends - 1,057,141 - 191,286 -
------------ ----------- ----------- ---------- -----------
62,606 1,091,021 6,753,939 195,856 -
------------ ----------- ----------- ---------- -----------
REALIZED GAIN (LOSS) ON
INVESTMENTS
Aggregate proceeds 4,637,439 3,800,686 7,900,016 - -
Aggregate cost (at
average cost) 3,391,241 3,230,229 7,966,622 - -
------------ ----------- ----------- ---------- -----------
Net realized gain
(loss) 1,246,198 570,457 (66,606) - -
------------ ----------- ----------- ---------- -----------
UNREALIZED APPRECIATION
(DEPRECIATION) OF
INVESTMENTS 45,653,992 170,422 (62,769) - -
------------ ----------- ----------- ---------- -----------
CONTRIBUTIONS
Participants 4,398,142 3,050,390 7,624,265 467,414 -
Promus 3,029,986 1,855,348 5,539,659 318,768 -
------------ ----------- ----------- ---------- -----------
7,428,128 4,905,738 13,163,924 786,182 -
OTHER
Distributions to
participants and
beneficiaries (5,939,585) (2,755,982) (13,376,264) (633,300) (1,260,347)
Transfers between funds 790,005 (670,269) (9,127,815) 8,353,150 89,993
Administrative expenses (189,435) (158,902) (635,920) (23,928) -
------------ ----------- ----------- ---------- -----------
NET INCREASE (DECREASE)
IN PLAN EQUITY 49,051,909 3,152,485 (3,351,511) 8,677,960 (1,170,354)
PLAN EQUITY, beginning
of period 31,692,506 21,609,914 89,257,392 - 11,674,101
------------ ----------- ----------- ---------- -----------
PLAN EQUITY, end of period $ 80,744,415 $24,762,399 $85,905,881 $8,677,960 $10,503,747
============ =========== =========== ========== ===========
</TABLE>
ESOP Fund Loan Fund Total
---------- ----------- ------------
NET INVESTMENT INCOME
Interest $ - $ 1,281,871 $ 8,136,866
Dividends - - 1,248,427
---------- ----------- ------------
- 1,281,871 9,385,293
---------- ----------- ------------
REALIZED GAIN (LOSS) ON
INVESTMENTS
Aggregate proceeds 1,002,695 - 17,340,836
Aggregate cost (at
average cost) 1,386,096 - 15,974,188
---------- ----------- ------------
Net realized gain
(loss) (383,401) - 1,366,648
---------- ----------- ------------
UNREALIZED APPRECIATION
(DEPRECIATION) OF
INVESTMENTS 5,875,133 - 51,636,778
---------- ----------- ------------
CONTRIBUTIONS
Participants - - 15,540,211
Promus 351,784 - 11,095,545
---------- ----------- ------------
351,784 - 26,635,756
OTHER
Distributions to
participants and
beneficiaries (695,190) - (24,660,668)
Transfers between funds (4,646) 569,582 -
Administrative expenses - - (1,008,185)
---------- ----------- ------------
NET INCREASE (DECREASE)
IN PLAN EQUITY 5,143,680 1,851,453 63,355,622
PLAN EQUITY, beginning
of period 3,863,648 14,064,170 172,161,731
---------- ----------- ------------
PLAN EQUITY, end of period $9,007,328 $15,915,623 $235,517,353
========== =========== ============
The accompanying Notes to Financial Statements are an integral part of
this statement.
<PAGE>
THE PROMUS COMPANIES INCORPORATED
SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
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. Reference should be made 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 up to six separate funds of the Plan in 10 percent
units as follows:
I. 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;
II. Aggressive Stock Fund - invested in the Delaware Trend
Institutional Fund comprised primarily of a mix of common stocks
of emerging and other growth-oriented companies, including
securities convertible to common stocks;
III. Diversified Stock 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;
IV. Long-term Bond Fund - invested in the Vanguard Long-term Corporate
Portfolio, a mutual fund with investments in a diversified mix of
long-term investment grade bonds;
<PAGE>
-2-
NOTE 1 - SUMMARY DESCRIPTION OF THE PLAN (Continued)
V. Income Investment Fund - invested in intermediate term bonds and
"guaranteed investment contracts" issued by major insurance
companies and other financial institutions; or
VI. Treasury Fund - invested in a money market mutual fund that
invests solely in United States Treasury Department backed short-
term securities issued by the United States Government.
The Plan also includes three other special purpose funds, as follows:
VII. Executive Life Fund - segregates 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.
VIII. ESOP Fund - accounts 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 only after a participant
terminates employment.
IX. Loan Fund - separately tracks loans to participants as provided
for under the Plan. See Loans in the Summary Description of the
Plan for further details.
Plan Administration
The general administration of the Plan is the responsibility of its
Trustees, 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>
-3-
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 $1.2 million, $0.7 million and
$1.0 million for 1994, 1993 and 1992, 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 1994, 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, gains and losses on the Plan's investments.
In January 1995, the Plan made payments of approximately $0.5 million to
participants for withdrawals which had been requested prior to December 31,
1994.
<PAGE>
-4-
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,
1994 was $3.0 million. Forfeitures are allocated to active participants
based upon their total basic contributions for the year. The Plan
Administrator reallocated approximately $0.7 million, $0.7 million and
$0.6 million of forfeited funds during 1994, 1993 and 1992, 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%. 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 1994.
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,
1994 and 1993.
<PAGE>
-5-
NOTE 3 - EXCESS CONTRIBUTIONS
Plan participants received a refund of a portion of their contributions and
attributable earnings totaling approximately $63,000, $68,000 and $134,000
in 1994, 1993 and 1992, 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 an ongoing rehabilitation plan offered by Aurora.
This plan provides for recovery of at least 77.7% of the March 31, 1991
book value. Promus remains liable to 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>
-6-
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.
NOTE 7 - SUBSEQUENT EVENT
On January 30, 1995, Promus announced a plan to split the company into two
independent public corporations (the "Spin-off"). Promus, to be renamed
Harrah's Entertainment, Inc., will retain the casino entertainment
business. Promus' hotel operations will be transferred to a newly created
company, to be named Promus Hotel Corporation ("PHC"). The Spin-off will
be completed on June 30, 1995. The agreements governing the terms of the
Spin-off transaction require that the assets allocable to those
participants in the Plan who become employees of PHC be transferred to a
new savings and retirement plan (the "PHC Plan") to be established for the
benefit of the eligible employees of PHC and its affiliates. The PHC Plan
will contain the same provisions as the current Plan, including investment
options and vesting and eligibility requirements. Concurrent with the
completion of the Spin-off, the Plan will be renamed the Harrah's
Entertainment Savings and Retirement Plan. Participants' investments in
Promus common stock through the Promus Stock Fund and the ESOP Fund will be
converted into investments in the common stock of their employer, either
Harrah's Entertainment, Inc. or PHC, after the Spin-off.
<PAGE>
EXHIBIT I
THE PROMUS COMPANIES INCORPORATED
SAVINGS AND RETIREMENT PLAN
SCHEDULE OF INVESTMENTS
AS OF DECEMBER 31, 1994
Contract/
Cost Fair Value
------------ ------------
GUARANTEED INVESTMENT CONTRACTS
Executive Life Insurance Company (see Note) $ 10,940,544 $ 10,940,544
Hartford Life Insurance Company 1,148,954 1,148,954
Life Insurance Company of Georgia 1,937,292 1,937,292
Pan American Life Insurance Company 1,849,798 1,849,798
Provident National Assurance Company 1,111,705 1,111,705
Principal Mutual Life Insurance Company 2,865,356 2,865,356
------------ ------------
19,853,649 19,853,649
------------ ------------
BONDS
Marinvest Intermediate Bond Fund 59,349,902 56,805,021
------------ ------------
MUTUAL FUNDS
Delaware Trend Institutional Fund 1,910,319 1,881,506
State Street Bank Flagship Fund 12,294,018 15,254,865
CGM Mutual Fund 14,883,963 14,677,831
Vanguard Long-term Corporate Portfolio 1,314,284 1,323,359
Dreyfus Treasury Fund 13,898,472 13,898,472
------------ ------------
44,301,056 47,036,033
------------ ------------
PROMUS COMMON STOCK
Stock Fund 79,813,244 172,725,711
ESOP Fund 7,491,024 14,396,395
------------ ------------
87,304,268 187,122,106
------------ ------------
TEMPORARY INVESTMENTS
Fidelity Money Market Trust 2,140,337 2,140,337
------------ ------------
Total investments $212,949,212 $312,957,146
============ ============
- -----------
Note - See Note 4 in the accompanying Notes to Financial Statements regarding
the valuation of Executive Life Insurance Company guaranteed
investment contract.
<PAGE>
<TABLE><CAPTION>
EXHIBIT II
THE PROMUS COMPANIES INCORPORATED
SAVINGS AND RETIREMENT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
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 $65,755,217 $ - $ - $ - $ -
Sales - 65,325,500 65,325,500 65,325,500 -
Marinvest Intermediate Bond Fund
Purchases 24,396,178 - - - -
Sales - 2,879,687 2,971,295 2,879,687 (91,608)
Promus Common Stock
Purchases 15,964,237 - - - -
Sales - 18,762,324 6,292,843 18,762,324 12,469,481
</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 26, 1995
/s/ Michael N. Regan
----------------------------------
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 June 1, 1995, included in this Form 11-K for the year
ended December 31, 1994 into The Promus Companies Incorporated's previously
filed Registration Statement File No. 33-32865.
ARTHUR ANDERSEN LLP
Memphis, Tennessee,
June 26, 1995.
