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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the plan year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
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
EMPLOYEE STOCK OWNERSHIP 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
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
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To the Trustees of The Promus Hotel Corporation
Employee Stock Ownership Plan:
We have audited the accompanying statement of net assets available for plan
benefits of THE PROMUS HOTEL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN as of
December 31, 1996, and the related statement of changes in net assets available
for plan benefits for the year ended December 31, 1996. 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 Employee Stock Ownership Plan as of December 31, 1996,
and the changes in its net assets available for plan benefits for the year ended
December 31, 1996, 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 assets held
for investment purposes as of December 31, 1996 (Exhibit I) and reportable
transactions for the year ended December 31, 1996 (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. 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 LLP
Memphis, Tennessee,
June 10, 1997.
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THE PROMUS HOTEL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Net assets available for plan benefits
<S> <C>
Investments at fair value:
Promus Hotel Corporation Pooled Stock Fund.................. $1,854,293
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----------
</TABLE>
The accompanying notes to financial statements are an integral
part of this statement.
3
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THE PROMUS HOTEL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Additions to net assets attributed to:
<S> <C>
Transfers from prior plan.................................................... $1,493,096
Net appreciation in fair value of investments................................ 475,338
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Total additions............................................................ 1,968,434
Deductions from net assets attributed to:
Benefits paid to participants................................................ (114,141)
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Net increase................................................................. 1,854,293
Net assets available for plan benefits:
Beginning of year............................................................ --
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End of year.................................................................. $1,854,293
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----------
</TABLE>
The accompanying notes to financial statements are an integral
part of this statement.
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THE PROMUS HOTEL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1--SUMMARY DESCRIPTION OF THE PLAN
The following description of The Promus Hotel Corporation Employee Stock
Ownership 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
Prior to January 1, 1996, Promus Hotel Corporation (Promus or the Company)
was the plan sponsor of The Promus Hotel Corporation Savings and Retirement Plan
(the Predecessor Plan). Effective December 31, 1995, the Plan was created by
splitting the Predecessor Plan into three plans: The Promus Hotel Corporation
Savings and Retirement Plan A, The Promus Hotel Corporation Savings and
Retirement Plan B (collectively referred to as the Savings Plans), and the Plan.
The participant accounts of the Predecessor Plan were transferred in early 1996
at fair value to these new plans.
THE PLAN
The Plan is intended to be an "employee stock ownership plan" and is
designed to comply with Section 4975 (e)(7) and the regulations thereunder of
the Internal Revenue Code (IRC), and is subject to the provisions of the
Employee Retirement Income Security Act of 1974. The Plan is designed to invest
in the qualifying common stock securities of the Company.
PAYMENT OF BENEFITS
No distributions from the Plan will be made to participants until retirement,
death (in which case, payment shall be made to beneficiaries or legal
representatives), or otherwise termination of employment with the Company, or
termination of the Plan.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
ADMINISTRATIVE EXPENSES
All administrative expenses of the Plan are paid by the Company.
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NOTE 3--INVESTMENT
The assets of the Plan represent an investment in the Promus Hotel
Corporation Pooled Stock Fund (the Pooled Stock Fund). The Pooled Stock
Fund invests in units of a pooled fund shared between the Plan and the Savings
Plans, which in turn owns the Company's common stock securities and certain
money market instruments. The Plan owns 140,679.245 units out of the total
1,943,809.923 units of the Pooled Stock Fund.
As of December 31, 1996, the investments in the Pooled Stock Fund are stated
at fair value based on the quoted market price of the underlying common stock
securities as of the last business day of the Plan year.
The fair value of individual investments that represents 5% or more of the
Plan's net assets available for plan benefits as of December 31, 1996 is as
follows:
Promus Hotel Corporation Pooled
Stock Fund............................................. $1,854,293
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NOTE 4--PLAN TERMINATION
On February 21, 1996, the Board of Directors of the Company elected to
terminate the Plan upon receipt of a favorable tax-exempt determination from
the Internal Revenue Service (IRS). The IRS issued a determination letter
dated April 17, 1997, stating that the Plan was designed in accordance with
the applicable requirements of the IRC. Based on the favorable letter
received, management anticipates that it will terminate the Plan during 1997,
at which time, based on the discretion of Plan participants, participant
balances will be either transferred to the Savings Plans or such balances
will be distributed directly to participants.
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EXHIBIT I
THE PROMUS HOTEL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN
LINE 27A-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
ADJUSTED CURRENT
IDENTITY OF ISSUER DESCRIPTION OF INVESTMENT COST VALUE
- ------------------------------------------ ------------------------------------------ ------------ ------------
<S> <C> <C> <C>
*Promus Hotel Corporation 140,679.245 units of the Pooled
Stock Fund $1,636,006 $1,854,293
</TABLE>
- ------------------------
* Represents a Party-In-Interest.
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EXHIBIT II
THE PROMUS HOTEL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN
LINE 27D-SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PURCHASES SALES
---------------------------- -----------------------------------------
NUMBER OF PURCHASE NUMBER OF SALES COST OF
IDENTITY OF ISSUER DESCRIPTION OF ASSETS TRANSACTIONS PRICE TRANSACTIONS PRICE ASSETS
- ------------------------ ------------------------ ----------------- --------- ----------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
*Promus Hotel Pooled Stock Fund
Corporation........... 3 $26,465 79 $113,669 $104,383
<CAPTION>
SALES
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IDENTITY OF ISSUER GAIN
- ------------------------ ---------
<S> <C>
*Promus Hotel
Corporation........... $9,286
</TABLE>
- ------------------------
* Represents a Party-In-Interest.
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Signature
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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 HOTEL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
DATED: JUNE 26, 1997 By: /s/ JEFFERY M. JARVIS
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(Jeffery M. Jarvis, Authorized
Trustee of the Plan, Vice
President and Controller of
Promus Hotel Corporation)
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION SUBMISSION MEDIA
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EX-23 Consent of Arthur Andersen Electronic
LLP, Independent Public
Accountants, dated
June 24, 1997.
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EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated June 10, 1997, included in this Form 11-K for the plan
year ended December 31, 1996, into Promus Hotel Corporation's 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, 1996 or performed any audit procedures subsequent to the date of our
report.
/s/ ARTHUR ANDERSEN LLP
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Arthur Andersen LLP
Memphis, Tennessee,
June 24, 1997.