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 period from June 30, 1995 (date of inception) through December 31, 1995
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. 1-11463
A. Full title of the plan and address of the plan, if different from
that of the issuer named below:
The Promus Hotel Corporation
Savings and Retirement Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Promus Hotel Corporation
755 Crossover Lane
Memphis, Tennessee 38117
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Trustees of The Promus Hotel Corporation
Savings and Retirement Plan:
We have audited the accompanying statement of net assets available for plan
benefits of THE PROMUS HOTEL CORPORATION SAVINGS AND RETIREMENT PLAN as of
December 31, 1995, and the related statement of changes in net assets
available for plan benefits, with fund information, for the period from
June 30, 1995 (date of inception) through December 31, 1995. 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 audit.
We conducted our audit 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 audit provides 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 Hotel Corporation Savings and Retirement Plan as of December 31,
1995, and the changes in its net assets available for plan benefits, with
fund information, for the period from June 30, 1995 (date of inception)
through December 31, 1995, in conformity with generally accepted accounting
principles.
Our audit was 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, 1995 (Exhibit I) and of reportable
transactions for the period from June 30, 1995 (date of inception) through
December 31, 1995 (Exhibit II) are presented for 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 fund information in the statement of net
assets available for plan benefits and the statement of changes in net
assets available for plan benefits is also presented for purposes of
additional analysis rather than to present the net assets available for plan
benefits and changes in net assets available for plan benefits of each fund.
The supplemental schedules and fund information 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 7, 1996.
2
<PAGE>
THE PROMUS HOTEL CORPORATION SAVINGS AND RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
AS OF DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE><CAPTION>
FUND INFORMATION
-------------------------------------------------
PARTICIPANT DIRECTED FUNDS
-------------------------------------------------
Promus Aggressive Diversified Long-term
Stock Fund Stock Fund Stock Fund Bond Fund
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Investments
Common Stock $15,765 $ -- $ -- $ --
Mutual Funds -- 3,371 -- 4,729
Common/collective trust funds -- -- 7,063 --
Corporate securities -- -- -- --
U. S. government and
agency securities -- -- -- --
Temporary investments -- -- -- --
Loans to participants -- -- -- --
Receivables
Interest and dividends -- -- -- --
Contributions 14 4 5 1
Other 33 (2) 2 (7)
Due (to) from other funds 2,550 249 233 (2,881)
Cash 37 9 14 2
------- ------ ------ ------
Total assets 18,399 3,631 7,317 1,844
------- ------ ------ ------
LIABILITIES
Bank overdrafts (36) (10) (16) (2)
Accrued expenses (11) (1) (3) --
Accounts payable -- (1) (2) --
Refunds payable (64) (16) (24) (3)
Other 92 19 (160) 3
------- ------ ------ -------
Total liabilities (19) (9) (205) (2)
------- ------ ------ -------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $18,380 $3,622 $7,112 $ 1,842
======= ====== ====== =======
</TABLE>
<PAGE>
<TABLE><CAPTION>
-----------------------------------------------------------
Non-
Participant
Directed
Funds
---------------------------- --------------------------
Income Treasury Executive ESOP Loan
Fund Fund Life Fund Fund Fund Total
------ -------- --------- ----- ------ ------
(Note 5)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments
Common Stock $ -- $ -- $ -- $1,433 $ -- $17,198
Mutual Funds -- 3,053 -- -- -- 11,153
Common/collective trust funds -- -- -- -- -- 7,063
Corporate securities 991 -- -- -- -- 991
U. S. government and
agency securities 5,355 -- -- -- -- 5,355
Temporary investments 1,028 -- -- -- -- 1,028
Loans to participants -- -- -- -- 1,734 1,734
Receivables
Interest and dividends 79 -- -- -- -- 79
Contributions 5 2 -- -- -- 31
Other 332 (5) 552 24 -- 929
Due (to) from other funds 18 (190) (10) 31 -- --
Cash 13 5 -- -- -- 80
------ ------ ---- ------ ------ -------
Total assets 7,821 2,865 542 1,488 1,734 45,641
------ ------ ---- ------ ------ -------
LIABILITIES
Bank overdrafts (14) (5) -- -- -- (83)
Accrued expenses (12) (1) -- -- -- (28)
Accounts payable (1) (1) -- (1) -- (6)
Refunds payable (22) (8) -- -- -- (137)
Other 30 12 -- -- -- (4)
------ ------ ---- ------ ------ -------
Total liabilities (19) (3) -- (1) -- (258)
------ ------ ---- ------ ------ -------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $7,802 $2,862 $542 $1,487 $1,734 $45,383
====== ====== ==== ====== ====== =======
</TABLE>
The accompanying Notes to Financial Statements are an integral
part of this statement.
3
<PAGE>
<TABLE><CAPTION>
THE PROMUS HOTEL CORPORATION SAVINGS AND RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
FOR THE PERIOD FROM JUNE 30, 1995 (DATE OF INCEPTION)
THROUGH DECEMBER 31, 1995
(IN THOUSANDS)
FUND INFORMATION
--------------------------------------------------------------------------------
PARTICIPANT DIRECTED FUNDS
--------------------------------------------------------------------------------
Promus Aggressive Diversified Long-term Income Treasury Executive
Stock Fund Stock Fund Stock Fund Bond Fund Fund Fund Life Fund
---------- ---------- ----------- --------- ------ -------- ---------
(Note 5)
<S> <C> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME
Interest $ -- $ -- $ -- $ -- $ 395 $ -- $ --
Dividends -- 137 15 132 7 80 --
------- ------- ------ ------- ------ ------ ----
-- 137 15 132 402 80 --
------- ------- ------ ------- ------ ------ ----
REALIZED GAIN ON INVESTMENTS
Aggregate proceeds 16,970 -- 42 9 9,691 108 --
Aggregate average cost 16,904 -- 33 8 9,642 108 --
------- ------- ------ ------- ------ ------ ----
Net realized gain 66 -- 9 1 49 -- --
------- ------- ------ ------- ------ ------ ----
UNREALIZED APPRECIATION
(DEPRECIATION) OF
INVESTMENTS (981) 249 782 269 522 -- --
------- ------- ------ ------- ------ ------ ----
CONTRIBUTIONS
Participants 933 137 300 36 307 122 --
Promus 651 100 202 24 209 46 --
------- ------- ------ ------- ------ ------ ----
1,584 237 502 60 516 168 --
------- ------- ------ ------- ------ ------ ----
OTHER
Distributions to participants
and beneficiaries (442) 15 (84) (39) (495) (35) (10)
Transfers between funds 1,418 1,001 390 (2,734) (61) (95) 3
Administrative expenses (86) (13) (25) (4) (37) (10) --
------- ------- ------ ------- ------ ------ ----
890 1,003 281 (2,777) (593) (140) (7)
------- ------- ------ ------- ------ ------ ----
INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR
PLAN BENEFITS 1,559 1,626 1,589 (2,315) 896 108 (7)
TRANSFERS FROM PARENT'S PLAN 16,821 1,996 5,523 4,157 6,906 2,754 549
------- ------- ------ ------- ------ ------ ----
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, End of period $18,380 $ 3,622 $7,112 $ 1,842 $7,802 $2,862 $542
======= ======= ====== ======= ====== ====== ====
</TABLE>
<PAGE>
----------------
Non-
Participant
Directed
Funds
----------------
ESOP Loan
Fund Fund Total
------ ----- ------
NET INVESTMENT INCOME
Interest $ -- $ 60 $ 455
Dividends -- -- 371
----- ------ -------
-- 60 826
----- ------ -------
REALIZED GAIN ON INVESTMENTS
Aggregate proceeds 1,458 -- 28,278
Aggregate average cost 835 -- 27,530
----- ------ -------
Net realized gain 623 -- 748
----- ------ -------
UNREALIZED APPRECIATION
(DEPRECIATION) OF
INVESTMENTS 252 -- 1,093
----- ------ -------
CONTRIBUTIONS
Participants -- -- 1,835
Promus 1 -- 1,233
----- ------ -------
1 -- 3,068
----- ------ -------
OTHER
Distributions to participants
and beneficiaries (233) -- (1,323)
Transfers between funds -- 78 --
Administrative expenses -- -- (175)
----- ------ -------
(233) 78 (1,498)
----- ------ -------
INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR
PLAN BENEFITS 643 138 4,237
TRANSFERS FROM PARENT'S PLAN 844 1,596 41,146
----- ------ -------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, End of period $1,487 $1,734 $45,383
====== ====== =======
The accompanying Notes to Financial Statements are an integral
part of this statement.
4
<PAGE>
THE PROMUS HOTEL CORPORATION SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1 - SUMMARY DESCRIPTION OF THE PLAN
The following description of The Promus Hotel Corporation 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.
Plan Inception
On June 30, 1995, The Promus Companies Incorporated (Parent) completed the
transfer of the operations, assets and liabilities of its hotel business
composed of three hotel brands targeted at specific market segments (Embassy
Suites, Hampton Inn and Homewood Suites) to a new publicly traded entity, Promus
Hotel Corporation (Promus or the Company). As approved by Parent's Board of
Directors and stockholders on May 26, 1995, this entity was spun-off (the
Spin-off) from the Parent and its stock was distributed to Parent's stockholders
on a one-for-two basis effective June 30, 1995 (the Distribution). Concurrent
with the Distribution, Parent changed its name to Harrah's Entertainment, Inc.
The Plan was established effective June 30, 1995, to include eligible employees
of Promus. During 1995, the assets of Promus employees held in the Parent's plan
were transferred, at fair market value, to this plan.
The Plan
The Plan was established for Promus 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. 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 increments as
follows:
I. Promus Stock Fund - invested in Promus Hotel Corporation common stock
which provides a return based on the change in market value of Promus
Hotel Corporation's 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 which provide a return based on the performance of stocks included
within the fund, including dividends thereon;
III. Diversified Stock Fund - invested mainly in stocks through the State
Street collective trust fund which provide a return based on the
performance of stocks included within the trust funds, including dividends
thereon;
5
<PAGE>
NOTE 1 - SUMMARY DESCRIPTION OF THE PLAN (Continued)
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 which provides a return based on
specific interest rates of securities included in the portfolio, plus
changes in market interest rates which either increase or decrease the
market value of the security;
V. Income Fund - invested in intermediate term bonds managed by Western
Asset Management and "guaranteed investment contracts" issued by major
insurance companies, the United States Government and its agencies, major
corporations and other financial institutions; which provides a return
based on specific interest rates of securities included in the portfolio,
plus changes in market interest rates which either increase or decrease
the market value of the security; or
VI. Treasury Fund - invested in a Dreyfus money market mutual fund that
invests solely in United States Treasury Department backed short-term
securities issued by the United States Government which provides a return
based on specific interest rates of the securities owned by the fund.
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 5 - Executive Life Investment
for further details.
VIII. ESOP Fund - accounts for special contributions made 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 "How To Borrow Money" in the Summary Plan Description for
further details.
Plan Administration
General administration of the Plan shall be carried out by the Company or its
delegates, who act as the administrator within the meaning of Title I of ERISA.
The Company has the authority to delegate to one or more persons the duties and
responsibilities of the Plan Administrator.
6
<PAGE>
NOTE 1 - SUMMARY DESCRIPTION OF THE PLAN (Continued)
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:
Years of Vested
Credited Service Percentage
---------------- ----------
One 10
Two 20
Three 30
Four 40
Five 60
Six 80
Seven 100
An employee's active participation in the Plan ceases upon separation of service
at which time his or her vested account balance can then either be withdrawn or
remain in the Plan according to the Plan Document.
Plan Expenses
In connection with the Spin-off, the Trustees entered into a services contract
with Parent that provided for certain recordkeeping and administrative services
to be provided for a fee to the Plan through December 31, 1995. During the last
six months of 1995, the Plan paid Parent approximately $124,000 for services
provided. Such costs are reflected as administrative expenses in the
accompanying statement of changes in net assets available for plan benefits.
Participants' Contributions and Withdrawals
During 1995, 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 or her 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.
7
<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, 1995 was
approximately $1.0 million. Forfeitures are reallocated to active participants
based upon their total basic contributions for the year. The Plan Administrator
allocated approximately $0.2 million of forfeited funds during 1995.
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 participants based upon the participants'
prior month-end equity balances. 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. During 1995 this rate ranged from 7.5% to 9.5%.
Principal and interest paid by a participant are credited to the participant's
account.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
NOTE 2 - VALUATION OF INVESTMENTS
Investments in securities and mutual funds are stated at market values on the
last business day of the plan year.
NOTE 3 - INVESTMENTS
The fair market value of individual investments that represent 5% or more of the
Plan's total net assets as of December 31, 1995 is as follows (in thousands):
Promus Hotel Corporation Common Stock $17,198
State Street Bank Flagship Fund 7,063
Vanguard Long-Term Corporate Portfolio 4,729
Delaware Trend Institutional Fund 3,371
Dreyfus Treasury Fund 3,053
8
<PAGE>
NOTE 4 - EXCESS CONTRIBUTIONS
Plan participants received a refund of a portion of their contributions and
attributable earnings totaling approximately $6,500 in 1995. 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.
In March 1996, certain highly compensated Plan participants received a refund of
a portion of their 1995 contributions and attributable earnings totaling
approximately $133,000. These refunds were paid in accordance with Internal
Revenue Code Section 401(k) and 401(m) which require that certain
nondiscriminatory tests related to the overall composition of participants'
contributions be met.
NOTE 5 - EXECUTIVE LIFE INVESTMENT
On May 1, 1991, Parent's 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 Parent's
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 Parent due to the
conservatorship imposed on Executive Life by the State of California Insurance
Commissioner. Parent had agreed to pay to its' Plan any deficiency between the
$12.9 million and amounts finally paid under the contract. Parent also agreed
to make interest free loans to its' Plan, which are to be repaid out of any
amounts received under the contract, so that persons who leave or who have
already left employment may withdraw the vested portion of the Executive Life
guaranteed investment contract, as well as other vested funds.
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 Parent's Plan which reduced the principal of the
Executive Life contract. Of this payment, $414,829 was paid to Parent to reduce
previous advances. 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, Parent's 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.
Effective with the Spin-off, Promus provided guarantees, similar to Parent, to
the Plan participants of Promus with Executive Life Fund investment balances.
Obligations for terminated employees prior to the Spin-off were retained by
Parent. Promus remains liable to the Plan for any deficiency between the book
value and amounts ultimately received. At December 31, 1995, the guaranteed
investment contract was held by the Parent's Plan. The Plan has a receivable
from the Parent's Plan for its portion of the contract. Promus expects the
contract to be split into two separate contracts in 1996. The restructured
contract matures on September 3, 1998, and is presently earning interest at
approximately five percent.
9
<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% vested in their accounts.
NOTE 7 - TAX STATUS
The Plan is intended to satisfy the tax qualification requirements under Section
401(a) of the Internal Revenue Code (IRC); therefore, the trust funds of the
Plan are intended to be exempt from federal income taxes under Section 501(a).
Although a request for determination has not been filed for the Plan, the Plan
has not changed significantly from Parent's Plan. A favorable determination
letter regarding Parent's Plan status, dated November 19, 1992, was received
from the Internal Revenue Service.
NOTE 8 - RECONCILIATION TO FORM 5500
As of December 31, 1995, the Plan had approximately $106,000 of pending
distributions to participants who elected to withdraw from the operation and
earnings of the Plan. This amount is recorded as a liability in the Plan's Form
5500; however, this amount is not recorded as a liability in the accompanying
statement of net assets available for plan benefits in accordance with generally
accepted accounting principles.
The following table reconciles net assets available for benefits per the
financial statements to the Form 5500 as filed by the Company for the year ended
December 31, 1995.
Benefits Net Assets Available
Payable to Benefits for Plan Benefits
Participants Paid December 31, 1995
------------ ------- --------------------
Per financial statements $ - $ 1,323 $45,383
Accrued benefit payments 106 106 (106)
------ ------- -------
Per Form 5500 $ 106 $ 1,429 $45,277
====== ======= =======
NOTE 9 - SUBSEQUENT EVENTS
Effective with the 1996 Plan year, the following changes will be made to the
Plan:
- - Employees hired after December 31, 1995, will not be eligible to enroll in
the Plan until they reach age 21.
- - The Plan will be split into two plans in order to meet certain IRC
requirements. Plan B will include all eligible Suitekeepers and Room
Attendants from all hotel brands. Plan A will include all other eligible
employees of Promus and its subsidiaries. Both plans will have the same
investment options, vesting, provisions and services; the only difference
will be eligibility requirements.
10
<PAGE>
- - Shares held in the participants' ESOP accounts will be transferred into a
newly created ESOP plan, The Promus Hotel Corporation Employee Stock
Ownership Plan. Beneficiary elections and vesting will carry over from the
Plan. During February 1996, the Trustees of the Plan elected to terminate the
ESOP plan upon receipt of a favorable determination from the IRS.
- - Effective January 2, 1996, American Express Institutional Services (American
Express) will begin administering the Plan. American Express will provide
recordkeeping, accounting, daily trading and investment management services.
In connection with this change, fund options will remain the same; however,
the underlying investments changed.
- - Interest rates for loans after December 31, 1995, will be at prime, as
stated in the Wall Street Journal. Loans may be pre-paid without any
limitations.
- - No restrictions in the number of times participants can make investment
election changes for prior and current contributions.
- - Participants can make investment elections in increments of 1% instead of
10%.
- - Forfeitures of terminated participants not fully vested will be immediately
distributed to plan participants instead of waiting 5 years, except as
otherwise provided by law.
11
<PAGE>
EXHIBIT I
THE PROMUS HOTEL CORPORATION SAVINGS AND RETIREMENT PLAN
SCHEDULE OF INVESTMENTS
AS OF DECEMBER 31, 1995
(IN THOUSANDS)
Contract/
Cost Fair Value
------- ----------
COLLECTIVE TRUST FUNDS
State Street Bank Flagship Fund $ 6,426 $ 7,063
MUTUAL FUNDS
Delaware Trend Institutional Fund 3,239 3,371
Vanguard Long-term Corporate Portfolio 4,354 4,729
Dreyfus Treasury Fund 3,053 3,053
------- -------
10,646 11,153
------- -------
TEMPORARY INVESTMENTS
Fidelity Institutional Cash U.S.
Government Portfolio 1,028 1,028
CORPORATE SECURITIES
Ford Motor Credit Corporation Notes, 7.75%,
due 11/15/02 150 154
Heller Financial Corporation Notes, 9.375%,
dated 3/31/91, due 3/15/98 107 108
Lehman Brothers Holdings, 7.375%, dated 5/18/95,
due 5/15/07 219 227
USL Capital Corporation MTN, 7.76%,
dated 3/29/95, due 3/29/02 114 118
TCI Communications, Inc., Variable rate,
dated 9/13/95, due 9/15/10 100 101
Time Warner, Inc., 7.975%, dated 8/15/95,
due 8/15/04 181 184
YPF Sociedad Anonima, 7.50%, dated 10/26/95,
due 10/26/02 98 99
------- -------
969 991
------- -------
UNITED STATES GOVERNMENT AND AGENCY SECURITIES
United States Treasury Bonds, 12%,
dated 8/15/83, due 8/15/13 152 168
United States Treasury Bonds, 11.625%,
dated 10/30/84, due 11/15/04 191 199
United States Treasury Notes, 7.125%,
dated 9/30/94, due 9/30/99 489 495
United States Treasury Notes, 7.75%,
dated 1/31/95, due 1/31/00 502 531
United States Treasury Notes, 5.625%,
dated 10/31/95, due 10/31/97 100 101
United States Treasury Notes, 5.75%,
dated 10/31/95, due 10/31/00 100 101
United States Treasury Notes, 5.875%,
dated 11/15/95, due 11/15/05 463 473
United States Treasury Notes, 5.625%,
dated 11/30/95, due 11/30/00 500 505
12
<PAGE>
THE PROMUS HOTEL CORPORATION SAVINGS AND RETIREMENT PLAN
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF DECEMBER 31, 1995
(IN THOUSANDS)
Contract/
Cost Fair Value
----- ----------
Champion Home Equity Loan, Variable rate,
dated 5/1/95, due 5/25/50 $ 97 $ 98
Contimortgage Home Equity Loan, 8.60%, dated
2/23/95, due 2/15/10 110 113
FHLMC Multiclass Mortgage, Floating rate,
dated 9/15/91, due 9/15/96 80 77
FHLMC Multiclass Mortgage, 0%, dated 7/1/92,
due 7/15/22 39 40
FNMA Strip, 9.5%, dated 3/1/87, due 2/25/17 12 13
FNMA Pool # 303323, 9.0%, dated 4/1/95,
due 4/1/25 97 99
First Boston Mortgage Securities Corp., 9.488%,
dated 3/1/87, due 5/16/18 53 48
First Boston Mortgage Securities Corp., 0%,
dated 3/1/87, due 5/16/18 154 150
GNMA II Pool #008643, Adjustable rate,
dated 6/1/95, due 6/20/25 90 91
Lehman Brothers Mortgage, Adjustable rate,
dated 9/1/90, due 10/25/20 228 228
Mid-State Trust II, 9.625%, dated 4/1/88,
due 4/1/03 151 151
Old Stone Credit Corporation Home Equity Trust,
6.3%, dated 8/25/92, due 9/25/07 16 17
Resolution Trust Corporation, Floating rate,
dated 8/1/91, due 8/25/21 59 61
Resolution Trust Corporation, Adjustable rate,
dated 8/1/91, due 2/25/21 96 99
Resolution Trust Corporation, Adjustable rate,
dated 9/1/91, due 5/25/19 46 46
Resolution Trust Corporation, 7.75%, dated 9/1/91,
due 12/25/18 89 90
Resolution Trust Corporation, Adjustable rate,
dated 10/1/91, due 10/25/21 79 79
Resolution Trust Corporation, Floating rate,
dated 10/1/91, due 7/25/20 307 315
Resolution Trust Corporation, Floating rate,
dated 12/1/91, due 6/25/21 226 248
Resolution Trust Corporation, Adjustable rate,
dated 2/1/92, due 11/25/21 110 111
Resolution Trust Corporation, Floating rate,
dated 5/1/92, due 9/25/21 133 136
Standard Credit Card Trust, 6.55%, dated 10/13/95,
due 10/7/07 100 103
The Money Store, Home Equity Trust, 8.00%, dated
3/1/95, due 9/15/05 74 74
13
<PAGE>
THE PROMUS HOTEL CORPORATION SAVINGS AND RETIREMENT PLAN
SCHEDULE OF INVESTMENTS (CONTINUED)
AS OF DECEMBER 31, 1995
(IN THOUSANDS)
Contract/
Cost Fair Value
------- ----------
The Money Store, Home Equity Trust, Floating rate,
dated 3/30/95, due 6/15/25 $ 91 $ 91
United States Veterans Affairs, 7.25%, dated 9/1/95,
due 10/25/10 204 204
------- -------
5,238 5,355
------- -------
*PROMUS HOTEL CORPORATION COMMON STOCK
Stock Fund 16,903 15,765
ESOP Fund 1,350 1,433
LOAN FUND
Loans to participants, 7.5% to 9.5% N/A 1,734
------- -------
18,253 18,932
------- -------
Total investments $42,560 $44,522
======= =======
*Represents a party-in-interest transaction.
14
<PAGE>
EXHIBIT II
THE PROMUS HOTEL CORPORATION SAVINGS AND RETIREMENT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE PERIOD FROM JUNE 30, 1995 (DATE OF INCEPTION) THROUGH DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE><CAPTION>
Current
Value of
Cost of Assets on
Purchase Selling Assets Transaction
Description Price Price Sold Date Gain
- ------------------------------------- -------- ------- ------- ----------- ------
<S> <C> <C> <C> <C> <C>
*Promus Hotel Corporation Common Stock
Purchases $15,595 $ - $ - $ - $ -
Sales - 3,650 3,567 3,650 83
*Harrah's Entertainment, Inc. Common Stock
Purchases - - - - -
Sales - 14,777 14,171 14,777 606
Fidelity Institutional Cash
Purchases 3,207 - - - -
Sales - 2,179 2,179 2,179 -
State Street Bank Flagship Fund
Purchases 2,919 - - - -
Sales - 42 33 42 9
United States Treasury Note
5.625%, 10/31/95
Purchases 2,598 - - - -
Sales - 2,503 2,498 2,503 5
</TABLE>
*Represents a party-in-interest transaction.
15
<PAGE>
Signature
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
THE PROMUS HOTEL CORPORATION
SAVINGS AND RETIREMENT PLAN
DATED: JUNE 26, 1996 By /s/ JEFFERY M. JARVIS
-------------------------------
(Jeffery M. Jarvis,
Vice President and Controller of
Promus Hotel Corporation)
16
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated June 7, 1996, included in this Form 11-K for the period from June
30, 1995 (date of inception) through December 31, 1995 into Promus' previously
filed Registration Statement File No. 33-59997. It should be noted that we
have not audited any financial statements of the Plan subsequent to December 31,
1995 or performed any audit procedures subsequent to the date of our report.
/s/ ARTHUR ANDERSEN LLP
-----------------------
Arthur Andersen LLP
Memphis, Tennessee,
June 26, 1996.
17
