| Debt
|
|
|
|
|
|
|
|
|
|
|
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Land | $ | 4,097 | $ | 4,098 | |||
Buildings and leasehold improvements | 5,609 | 5,511 | |||||
Furniture and equipment | 1,193 | 1,172 | |||||
Construction-in-progress | 81 | 67 | |||||
10,980 | 10,848 | ||||||
Accumulated depreciation and amortization | (1,944 | ) | (1,790 | ) | |||
$ | 9,036 | $ | 9,058 |
|
June 30, 2014 | |||||||||||||||
Securitized Timeshare | Unsecuritized Timeshare | Other | Total | ||||||||||||
(in millions) | |||||||||||||||
Financing receivables | $ | 491 | $ | 370 | $ | 40 | $ | 901 | |||||||
Less: allowance | (29 | ) | (50 | ) | (1 | ) | (80 | ) | |||||||
462 | 320 | 39 | 821 | ||||||||||||
Current portion of financing receivables | 69 | 58 | 2 | 129 | |||||||||||
Less: allowance | (4 | ) | (8 | ) | — | (12 | ) | ||||||||
65 | 50 | 2 | 117 | ||||||||||||
Total financing receivables | $ | 527 | $ | 370 | $ | 41 | $ | 938 |
December 31, 2013 | |||||||||||||||
Securitized Timeshare | Unsecuritized Timeshare | Other | Total | ||||||||||||
(in millions) | |||||||||||||||
Financing receivables | $ | 205 | $ | 654 | $ | 49 | $ | 908 | |||||||
Less: allowance | (11 | ) | (67 | ) | (1 | ) | (79 | ) | |||||||
194 | 587 | 48 | 829 | ||||||||||||
Current portion of financing receivables | 29 | 106 | — | 135 | |||||||||||
Less: allowance | (2 | ) | (12 | ) | — | (14 | ) | ||||||||
27 | 94 | — | 121 | ||||||||||||
Total financing receivables | $ | 221 | $ | 681 | $ | 48 | $ | 950 |
Six Months Ended June 30, | |||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Beginning balance | $ | 92 | $ | 93 | |||
Write-offs | (16 | ) | (11 | ) | |||
Provision for uncollectibles on sales | 15 | 13 | |||||
Ending balance | $ | 91 | $ | 95 |
Securitized Timeshare | Unsecuritized Timeshare | ||||||
Year | (in millions) | ||||||
2014 (remaining) | $ | 34 | $ | 35 | |||
2015 | 70 | 45 | |||||
2016 | 73 | 48 | |||||
2017 | 75 | 49 | |||||
2018 | 75 | 48 | |||||
Thereafter | 233 | 203 | |||||
560 | 428 | ||||||
Less: allowance | (33 | ) | (58 | ) | |||
$ | 527 | $ | 370 |
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Current | $ | 947 | $ | 948 | |||
30 - 89 days past due | 10 | 14 | |||||
90 - 119 days past due | 3 | 4 | |||||
120 days and greater past due | 28 | 28 | |||||
$ | 988 | $ | 994 |
|
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Equity investments | $ | 240 | $ | 245 | |||
Other investments | 17 | 15 | |||||
$ | 257 | $ | 260 |
|
|
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Senior secured term loan facility with a rate of 3.50%, due 2020 | $ | 5,550 | $ | 6,000 | |||
Senior notes with a rate of 5.625%, due 2021 | 1,500 | 1,500 | |||||
Commercial mortgage-backed securities loan with an average rate of 4.05%, due 2018(1) | 3,500 | 3,500 | |||||
Mortgage loan with a rate of 2.30%, due 2018 | 525 | 525 | |||||
Mortgage notes with an average rate of 6.15%, due 2016 | 132 | 133 | |||||
Other unsecured notes with a rate of 7.50%, due 2017 | 54 | 53 | |||||
Capital lease obligations with an average rate of 6.04%, due 2015 to 2097 | 82 | 73 | |||||
11,343 | 11,784 | ||||||
Less: current maturities of long-term debt | (3 | ) | (4 | ) | |||
Less: unamortized discount on senior secured term loan facility | (26 | ) | (29 | ) | |||
$ | 11,314 | $ | 11,751 |
(1) | The initial maturity date of the variable-rate component of this borrowing is November 1, 2015. We assumed all extensions, which are solely at our option, were exercised. |
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Capital lease obligations of consolidated VIEs with a rate of 6.34%, due 2018 to 2026 | $ | 259 | $ | 255 | |||
Non-recourse debt of consolidated VIEs with an average rate of 3.38%, due 2015 to 2018(1) | 40 | 41 | |||||
Timeshare Facility with a rate of 1.48%, due 2016 | 150 | 450 | |||||
Securitized Timeshare Debt with an average rate of 1.98%, due 2026 | 548 | 222 | |||||
997 | 968 | ||||||
Less: current maturities of non-recourse debt | (107 | ) | (48 | ) | |||
$ | 890 | $ | 920 |
(1) | Excludes the non-recourse debt of our VIEs that issued the Securitized Timeshare Debt, as this is presented separately. |
Year | (in millions) | ||
2014 (remaining) | $ | 61 | |
2015 | 109 | ||
2016 | 363 | ||
2017 | 139 | ||
2018(1) | 4,110 | ||
Thereafter | 7,558 | ||
$ | 12,340 |
(1) | The CMBS Loan has three one-year extensions, solely at our option, that effectively extend maturity to November 1, 2018. We assumed all extensions for purposes of calculating maturity dates. |
|
June 30, 2014 | December 31, 2013 | ||||||||||
Balance Sheet Classification | Fair Value | Balance Sheet Classification | Fair Value | ||||||||
(in millions) | (in millions) | ||||||||||
Cash Flow Hedges: | |||||||||||
Interest rate swaps | Other liabilities | $ | 5 | Other assets | $ | 10 | |||||
Non-designated Hedges: | |||||||||||
Interest rate caps | Other assets | — | Other assets | — |
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
Classification of Loss Recognized | 2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | |||||||||||||||||
Cash Flow Hedges: | |||||||||||||||||
Interest rate swaps(1) | Other comprehensive loss | $ | (9 | ) | $ | — | $ | (14 | ) | $ | — | ||||||
Non-designated Hedges: | |||||||||||||||||
Interest rate caps | Other gain (loss), net | — | — | — | — |
(1) | There were no amounts recognized in earnings related to hedge ineffectiveness or amounts excluded from hedge effectiveness testing during the three and six months ended June 30, 2014. |
|
June 30, 2014 | |||||||||||||||
Hierarchy Level | |||||||||||||||
Carrying Amount | Level 1 | Level 2 | Level 3 | ||||||||||||
(in millions) | |||||||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 291 | $ | — | $ | 291 | $ | — | |||||||
Restricted cash equivalents | 94 | — | 94 | — | |||||||||||
Timeshare financing receivables | 988 | — | — | 990 | |||||||||||
Liabilities: | |||||||||||||||
Long-term debt(1) | 11,235 | 59 | 1,598 | 9,862 | |||||||||||
Non-recourse debt(2) | 698 | — | — | 701 | |||||||||||
Interest rate swaps | 5 | — | 5 | — |
December 31, 2013 | |||||||||||||||
Hierarchy Level | |||||||||||||||
Carrying Amount | Level 1 | Level 2 | Level 3 | ||||||||||||
(in millions) | |||||||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 309 | $ | — | $ | 309 | $ | — | |||||||
Restricted cash equivalents | 107 | — | 107 | — | |||||||||||
Timeshare financing receivables | 994 | — | — | 996 | |||||||||||
Interest rate swaps | 10 | — | 10 | — | |||||||||||
Liabilities: | |||||||||||||||
Long-term debt(1) | 11,682 | 57 | 1,560 | 10,358 | |||||||||||
Non-recourse debt(2) | 672 | — | — | 670 |
(1) | Excludes capital lease obligations with a carrying value of $82 million and $73 million as of June 30, 2014 and December 31, 2013, respectively. |
(2) | Represents the Securitized Timeshare Debt and the Timeshare Facility. |
|
|
Three Months Ended June 30, | |||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||
Domestic Plan | U.K. Plan | International Plans | Domestic Plan | U.K. Plan | International Plans | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Service cost | $ | 2 | $ | — | $ | 1 | $ | 1 | $ | 1 | $ | — | |||||||||||
Interest cost | 4 | 4 | 1 | 5 | 4 | 1 | |||||||||||||||||
Expected return on plan assets | (5 | ) | (6 | ) | (1 | ) | (6 | ) | (6 | ) | (1 | ) | |||||||||||
Amortization of prior service cost | 1 | — | — | 1 | — | — | |||||||||||||||||
Amortization of net loss | 1 | — | — | 1 | 1 | 1 | |||||||||||||||||
Settlement losses | 1 | — | — | — | — | — | |||||||||||||||||
Net periodic pension cost (credit) | $ | 4 | $ | (2 | ) | $ | 1 | $ | 2 | $ | — | $ | 1 |
Six Months Ended June 30, | |||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||
Domestic Plan | U.K. Plan | International Plans | Domestic Plan | U.K. Plan | International Plans | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Service cost | $ | 4 | $ | — | $ | 2 | $ | 2 | $ | 2 | $ | 1 | |||||||||||
Interest cost | 8 | 9 | 2 | 9 | 8 | 2 | |||||||||||||||||
Expected return on plan assets | (9 | ) | (12 | ) | (2 | ) | (10 | ) | (11 | ) | (2 | ) | |||||||||||
Amortization of prior service cost (credit) | 2 | — | — | 2 | (1 | ) | — | ||||||||||||||||
Amortization of net loss | 1 | — | — | 2 | 2 | 1 | |||||||||||||||||
Settlement losses | 1 | — | — | — | — | 1 | |||||||||||||||||
Net periodic pension cost (credit) | $ | 7 | $ | (3 | ) | $ | 2 | $ | 5 | $ | — | $ | 3 |
|
Currency Translation Adjustment(1) | Pension Liability Adjustment | Cash Flow Hedge Adjustment | Total | ||||||||||||
(in millions) | |||||||||||||||
Balance as of December 31, 2013 | $ | (136 | ) | $ | (134 | ) | $ | 6 | $ | (264 | ) | ||||
Other comprehensive income (loss) before reclassifications | 87 | 2 | (9 | ) | 80 | ||||||||||
Amounts reclassified from accumulated other comprehensive loss | (4 | ) | 2 | — | (2 | ) | |||||||||
Net current period other comprehensive income (loss) | 83 | 4 | (9 | ) | 78 | ||||||||||
Balance as of June 30, 2014 | $ | (53 | ) | $ | (130 | ) | $ | (3 | ) | $ | (186 | ) |
Currency Translation Adjustment(1) | Pension Liability Adjustment | Total | |||||||||
(in millions) | |||||||||||
Balance as of December 31, 2012 | $ | (212 | ) | $ | (194 | ) | $ | (406 | ) | ||
Other comprehensive income (loss) before reclassifications | (197 | ) | 8 | (189 | ) | ||||||
Amounts reclassified from accumulated other comprehensive loss | — | 4 | 4 | ||||||||
Net current period other comprehensive income (loss) | (197 | ) | 12 | (185 | ) | ||||||
Balance as of June 30, 2013 | $ | (409 | ) | $ | (182 | ) | $ | (591 | ) |
(1) | Includes net investment hedges. |
Six Months Ended June 30, | |||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Currency translation adjustment: | |||||||
Sale and liquidation of foreign assets(1) | $ | 4 | $ | (1 | ) | ||
Gains on net investment hedges(2) | — | 1 | |||||
Tax benefit(3)(4) | — | — | |||||
Total currency translation adjustment reclassifications for the period, net of taxes | 4 | — | |||||
Pension liability adjustment: | |||||||
Amortization of prior service cost(5) | (2 | ) | (1 | ) | |||
Amortization of net loss(5) | (1 | ) | (5 | ) | |||
Tax benefit(3) | 1 | 2 | |||||
Total pension liability adjustment reclassifications for the period, net of taxes | (2 | ) | (4 | ) | |||
Total reclassifications for the period, net of tax | $ | 2 | $ | (4 | ) |
(1) | Reclassified out of accumulated other comprehensive loss to other gain (loss), net in our condensed consolidated statements of operations. Amounts in parentheses indicate a loss in our condensed consolidated statements of operations. |
(2) | Reclassified out of accumulated other comprehensive loss to gain (loss) on foreign currency transactions in our condensed consolidated statements of operations. |
(3) | Reclassified out of accumulated other comprehensive loss to income tax expense in our condensed consolidated statements of operations. |
(4) | The respective tax benefit was less than $1 million for the six months ended June 30, 2013. |
(5) | Reclassified out of accumulated other comprehensive loss to general, administrative and other in the condensed consolidated statements of operations. These amounts were included in the computation of net periodic pension cost. See Note 11: "Employee Benefit Plans" for additional information. Amounts in parentheses indicate a loss in our condensed consolidated statements of operations. |
|
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
(in millions) | |||||||||||||||
Revenues | |||||||||||||||
Ownership(1)(2) | $ | 1,126 | $ | 1,078 | $ | 2,078 | $ | 1,998 | |||||||
Management and franchise(3) | 371 | 326 | 702 | 608 | |||||||||||
Timeshare | 276 | 261 | 555 | 507 | |||||||||||
Segment revenues | 1,773 | 1,665 | 3,335 | 3,113 | |||||||||||
Other revenues from managed and franchised properties | 920 | 750 | 1,747 | 1,591 | |||||||||||
Other revenues(4) | 25 | 15 | 46 | 30 | |||||||||||
Intersegment fees elimination(1)(2)(3)(4) | (51 | ) | (50 | ) | (98 | ) | (91 | ) | |||||||
Total revenues | $ | 2,667 | $ | 2,380 | $ | 5,030 | $ | 4,643 | |||||||
Adjusted EBITDA | |||||||||||||||
Ownership(1)(2)(3)(4)(5) | $ | 291 | $ | 271 | $ | 470 | $ | 445 | |||||||
Management and franchise(3) | 371 | 326 | 702 | 608 | |||||||||||
Timeshare(1)(3) | 69 | 60 | 154 | 119 | |||||||||||
Corporate and other(2)(4) | (80 | ) | (67 | ) | (131 | ) | (135 | ) | |||||||
Adjusted EBITDA | $ | 651 | $ | 590 | $ | 1,195 | $ | 1,037 |
(1) | Includes charges to timeshare operations for rental fees and fees for other amenities, which were eliminated in our condensed consolidated financial statements. These charges totaled $8 million and $7 million for the three months ended June 30, 2014 and 2013, respectively, and $14 million and $12 million for the six months ended June 30, 2014 and 2013, respectively. While the net effect is zero, our measures of segment revenues and Adjusted EBITDA include these fees as a benefit to the ownership segment and a cost to timeshare Adjusted EBITDA. |
(2) | Includes other intercompany charges of $1 million for the three months ended June 30, 2014 and 2013 and $2 million for the six months ended June 30, 2014 and 2013. |
(3) | Includes management, royalty and intellectual property fees of $29 million and $26 million for the three months ended June 30, 2014 and 2013, respectively, and $56 million and $47 million for the six months ended June 30, 2014 and 2013, respectively. These fees are charged to consolidated owned and leased properties and were eliminated in our condensed consolidated financial statements. Also includes a licensing fee of $11 million and $13 million for the three months ended June 30, 2014 and 2013, respectively, and $22 million and $25 million for the six months ended June 30, 2014 and 2013, respectively, which is charged to our timeshare segment by our management and franchise segment and was eliminated in our condensed consolidated financial statements. While the net effect is zero, our measures of segment revenues and Adjusted EBITDA include these fees as a benefit to the management and franchise segment and a cost to ownership Adjusted EBITDA and timeshare Adjusted EBITDA. |
(4) | Includes charges to consolidated owned and leased properties for services provided by our wholly owned laundry business of $2 million and $3 million for the three months ended June 30, 2014 and 2013, respectively, and $4 million and $5 million for the six months ended June 30, 2014 and 2013, respectively. These charges were eliminated in our condensed consolidated financial statements. |
(5) | Includes unconsolidated affiliate Adjusted EBITDA. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
(in millions) | |||||||||||||||
Adjusted EBITDA | $ | 651 | $ | 590 | $ | 1,195 | $ | 1,037 | |||||||
Net income attributable to noncontrolling interests | (3 | ) | (2 | ) | (4 | ) | (6 | ) | |||||||
Gain (loss) on foreign currency transactions | 32 | (39 | ) | 46 | (82 | ) | |||||||||
FF&E replacement reserve | (12 | ) | (10 | ) | (23 | ) | (17 | ) | |||||||
Share-based compensation expense | (6 | ) | (1 | ) | (19 | ) | (3 | ) | |||||||
Other gain (loss), net | 11 | (1 | ) | 14 | 6 | ||||||||||
Other adjustment items | (17 | ) | (9 | ) | (30 | ) | (20 | ) | |||||||
EBITDA | 656 | 528 | 1,179 | 915 | |||||||||||
Interest expense | (158 | ) | (131 | ) | (311 | ) | (274 | ) | |||||||
Interest expense included in equity in earnings from unconsolidated affiliates | (3 | ) | (2 | ) | (6 | ) | (6 | ) | |||||||
Income tax expense | (121 | ) | (84 | ) | (204 | ) | (122 | ) | |||||||
Depreciation and amortization | (158 | ) | (149 | ) | (311 | ) | (309 | ) | |||||||
Depreciation and amortization included in equity in earnings from unconsolidated affiliates | (7 | ) | (7 | ) | (15 | ) | (15 | ) | |||||||
Net income attributable to Hilton stockholders | $ | 209 | $ | 155 | $ | 332 | $ | 189 |
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Assets: | |||||||
Ownership | $ | 11,851 | $ | 11,936 | |||
Management and franchise | 10,726 | 11,016 | |||||
Timeshare | 1,836 | 1,871 | |||||
Corporate and other | 2,084 | 1,739 | |||||
$ | 26,497 | $ | 26,562 |
Six Months Ended | |||||||
June 30, | |||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Capital expenditures for property and equipment: | |||||||
Ownership | $ | 106 | $ | 116 | |||
Timeshare | 1 | 2 | |||||
Corporate and other | 3 | 3 | |||||
$ | 110 | $ | 121 |
|
|
|
|
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Land | $ | 4,097 | $ | 4,098 | |||
Buildings and leasehold improvements | 5,609 | 5,511 | |||||
Furniture and equipment | 1,193 | 1,172 | |||||
Construction-in-progress | 81 | 67 | |||||
10,980 | 10,848 | ||||||
Accumulated depreciation and amortization | (1,944 | ) | (1,790 | ) | |||
$ | 9,036 | $ | 9,058 |
|
June 30, 2014 | |||||||||||||||
Securitized Timeshare | Unsecuritized Timeshare | Other | Total | ||||||||||||
(in millions) | |||||||||||||||
Financing receivables | $ | 491 | $ | 370 | $ | 40 | $ | 901 | |||||||
Less: allowance | (29 | ) | (50 | ) | (1 | ) | (80 | ) | |||||||
462 | 320 | 39 | 821 | ||||||||||||
Current portion of financing receivables | 69 | 58 | 2 | 129 | |||||||||||
Less: allowance | (4 | ) | (8 | ) | — | (12 | ) | ||||||||
65 | 50 | 2 | 117 | ||||||||||||
Total financing receivables | $ | 527 | $ | 370 | $ | 41 | $ | 938 |
December 31, 2013 | |||||||||||||||
Securitized Timeshare | Unsecuritized Timeshare | Other | Total | ||||||||||||
(in millions) | |||||||||||||||
Financing receivables | $ | 205 | $ | 654 | $ | 49 | $ | 908 | |||||||
Less: allowance | (11 | ) | (67 | ) | (1 | ) | (79 | ) | |||||||
194 | 587 | 48 | 829 | ||||||||||||
Current portion of financing receivables | 29 | 106 | — | 135 | |||||||||||
Less: allowance | (2 | ) | (12 | ) | — | (14 | ) | ||||||||
27 | 94 | — | 121 | ||||||||||||
Total financing receivables | $ | 221 | $ | 681 | $ | 48 | $ | 950 |
Six Months Ended June 30, | |||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Beginning balance | $ | 92 | $ | 93 | |||
Write-offs | (16 | ) | (11 | ) | |||
Provision for uncollectibles on sales | 15 | 13 | |||||
Ending balance | $ | 91 | $ | 95 |
Securitized Timeshare | Unsecuritized Timeshare | ||||||
Year | (in millions) | ||||||
2014 (remaining) | $ | 34 | $ | 35 | |||
2015 | 70 | 45 | |||||
2016 | 73 | 48 | |||||
2017 | 75 | 49 | |||||
2018 | 75 | 48 | |||||
Thereafter | 233 | 203 | |||||
560 | 428 | ||||||
Less: allowance | (33 | ) | (58 | ) | |||
$ | 527 | $ | 370 |
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Current | $ | 947 | $ | 948 | |||
30 - 89 days past due | 10 | 14 | |||||
90 - 119 days past due | 3 | 4 | |||||
120 days and greater past due | 28 | 28 | |||||
$ | 988 | $ | 994 |
|
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Equity investments | $ | 240 | $ | 245 | |||
Other investments | 17 | 15 | |||||
$ | 257 | $ | 260 |
|
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Senior secured term loan facility with a rate of 3.50%, due 2020 | $ | 5,550 | $ | 6,000 | |||
Senior notes with a rate of 5.625%, due 2021 | 1,500 | 1,500 | |||||
Commercial mortgage-backed securities loan with an average rate of 4.05%, due 2018(1) | 3,500 | 3,500 | |||||
Mortgage loan with a rate of 2.30%, due 2018 | 525 | 525 | |||||
Mortgage notes with an average rate of 6.15%, due 2016 | 132 | 133 | |||||
Other unsecured notes with a rate of 7.50%, due 2017 | 54 | 53 | |||||
Capital lease obligations with an average rate of 6.04%, due 2015 to 2097 | 82 | 73 | |||||
11,343 | 11,784 | ||||||
Less: current maturities of long-term debt | (3 | ) | (4 | ) | |||
Less: unamortized discount on senior secured term loan facility | (26 | ) | (29 | ) | |||
$ | 11,314 | $ | 11,751 |
(1) | The initial maturity date of the variable-rate component of this borrowing is November 1, 2015. We assumed all extensions, which are solely at our option, were exercised. |
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Capital lease obligations of consolidated VIEs with a rate of 6.34%, due 2018 to 2026 | $ | 259 | $ | 255 | |||
Non-recourse debt of consolidated VIEs with an average rate of 3.38%, due 2015 to 2018(1) | 40 | 41 | |||||
Timeshare Facility with a rate of 1.48%, due 2016 | 150 | 450 | |||||
Securitized Timeshare Debt with an average rate of 1.98%, due 2026 | 548 | 222 | |||||
997 | 968 | ||||||
Less: current maturities of non-recourse debt | (107 | ) | (48 | ) | |||
$ | 890 | $ | 920 |
(1) | Excludes the non-recourse debt of our VIEs that issued the Securitized Timeshare Debt, as this is presented separately. |
Year | (in millions) | ||
2014 (remaining) | $ | 61 | |
2015 | 109 | ||
2016 | 363 | ||
2017 | 139 | ||
2018(1) | 4,110 | ||
Thereafter | 7,558 | ||
$ | 12,340 |
(1) | The CMBS Loan has three one-year extensions, solely at our option, that effectively extend maturity to November 1, 2018. We assumed all extensions for purposes of calculating maturity dates. |
|
June 30, 2014 | December 31, 2013 | ||||||||||
Balance Sheet Classification | Fair Value | Balance Sheet Classification | Fair Value | ||||||||
(in millions) | (in millions) | ||||||||||
Cash Flow Hedges: | |||||||||||
Interest rate swaps | Other liabilities | $ | 5 | Other assets | $ | 10 | |||||
Non-designated Hedges: | |||||||||||
Interest rate caps | Other assets | — | Other assets | — |
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
Classification of Loss Recognized | 2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | |||||||||||||||||
Cash Flow Hedges: | |||||||||||||||||
Interest rate swaps(1) | Other comprehensive loss | $ | (9 | ) | $ | — | $ | (14 | ) | $ | — | ||||||
Non-designated Hedges: | |||||||||||||||||
Interest rate caps | Other gain (loss), net | — | — | — | — |
(1) | There were no amounts recognized in earnings related to hedge ineffectiveness or amounts excluded from hedge effectiveness testing during the three and six months ended June 30, 2014. |
|
June 30, 2014 | |||||||||||||||
Hierarchy Level | |||||||||||||||
Carrying Amount | Level 1 | Level 2 | Level 3 | ||||||||||||
(in millions) | |||||||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 291 | $ | — | $ | 291 | $ | — | |||||||
Restricted cash equivalents | 94 | — | 94 | — | |||||||||||
Timeshare financing receivables | 988 | — | — | 990 | |||||||||||
Liabilities: | |||||||||||||||
Long-term debt(1) | 11,235 | 59 | 1,598 | 9,862 | |||||||||||
Non-recourse debt(2) | 698 | — | — | 701 | |||||||||||
Interest rate swaps | 5 | — | 5 | — |
December 31, 2013 | |||||||||||||||
Hierarchy Level | |||||||||||||||
Carrying Amount | Level 1 | Level 2 | Level 3 | ||||||||||||
(in millions) | |||||||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | 309 | $ | — | $ | 309 | $ | — | |||||||
Restricted cash equivalents | 107 | — | 107 | — | |||||||||||
Timeshare financing receivables | 994 | — | — | 996 | |||||||||||
Interest rate swaps | 10 | — | 10 | — | |||||||||||
Liabilities: | |||||||||||||||
Long-term debt(1) | 11,682 | 57 | 1,560 | 10,358 | |||||||||||
Non-recourse debt(2) | 672 | — | — | 670 |
(1) | Excludes capital lease obligations with a carrying value of $82 million and $73 million as of June 30, 2014 and December 31, 2013, respectively. |
(2) | Represents the Securitized Timeshare Debt and the Timeshare Facility. |
|
Six Months Ended June 30, | |||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||
Domestic Plan | U.K. Plan | International Plans | Domestic Plan | U.K. Plan | International Plans | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Service cost | $ | 4 | $ | — | $ | 2 | $ | 2 | $ | 2 | $ | 1 | |||||||||||
Interest cost | 8 | 9 | 2 | 9 | 8 | 2 | |||||||||||||||||
Expected return on plan assets | (9 | ) | (12 | ) | (2 | ) | (10 | ) | (11 | ) | (2 | ) | |||||||||||
Amortization of prior service cost (credit) | 2 | — | — | 2 | (1 | ) | — | ||||||||||||||||
Amortization of net loss | 1 | — | — | 2 | 2 | 1 | |||||||||||||||||
Settlement losses | 1 | — | — | — | — | 1 | |||||||||||||||||
Net periodic pension cost (credit) | $ | 7 | $ | (3 | ) | $ | 2 | $ | 5 | $ | — | $ | 3 |
Three Months Ended June 30, | |||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||
Domestic Plan | U.K. Plan | International Plans | Domestic Plan | U.K. Plan | International Plans | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Service cost | $ | 2 | $ | — | $ | 1 | $ | 1 | $ | 1 | $ | — | |||||||||||
Interest cost | 4 | 4 | 1 | 5 | 4 | 1 | |||||||||||||||||
Expected return on plan assets | (5 | ) | (6 | ) | (1 | ) | (6 | ) | (6 | ) | (1 | ) | |||||||||||
Amortization of prior service cost | 1 | — | — | 1 | — | — | |||||||||||||||||
Amortization of net loss | 1 | — | — | 1 | 1 | 1 | |||||||||||||||||
Settlement losses | 1 | — | — | — | — | — | |||||||||||||||||
Net periodic pension cost (credit) | $ | 4 | $ | (2 | ) | $ | 1 | $ | 2 | $ | — | $ | 1 |
|
Currency Translation Adjustment(1) | Pension Liability Adjustment | Cash Flow Hedge Adjustment | Total | ||||||||||||
(in millions) | |||||||||||||||
Balance as of December 31, 2013 | $ | (136 | ) | $ | (134 | ) | $ | 6 | $ | (264 | ) | ||||
Other comprehensive income (loss) before reclassifications | 87 | 2 | (9 | ) | 80 | ||||||||||
Amounts reclassified from accumulated other comprehensive loss | (4 | ) | 2 | — | (2 | ) | |||||||||
Net current period other comprehensive income (loss) | 83 | 4 | (9 | ) | 78 | ||||||||||
Balance as of June 30, 2014 | $ | (53 | ) | $ | (130 | ) | $ | (3 | ) | $ | (186 | ) |
Currency Translation Adjustment(1) | Pension Liability Adjustment | Total | |||||||||
(in millions) | |||||||||||
Balance as of December 31, 2012 | $ | (212 | ) | $ | (194 | ) | $ | (406 | ) | ||
Other comprehensive income (loss) before reclassifications | (197 | ) | 8 | (189 | ) | ||||||
Amounts reclassified from accumulated other comprehensive loss | — | 4 | 4 | ||||||||
Net current period other comprehensive income (loss) | (197 | ) | 12 | (185 | ) | ||||||
Balance as of June 30, 2013 | $ | (409 | ) | $ | (182 | ) | $ | (591 | ) |
(1) | Includes net investment hedges. |
Six Months Ended June 30, | |||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Currency translation adjustment: | |||||||
Sale and liquidation of foreign assets(1) | $ | 4 | $ | (1 | ) | ||
Gains on net investment hedges(2) | — | 1 | |||||
Tax benefit(3)(4) | — | — | |||||
Total currency translation adjustment reclassifications for the period, net of taxes | 4 | — | |||||
Pension liability adjustment: | |||||||
Amortization of prior service cost(5) | (2 | ) | (1 | ) | |||
Amortization of net loss(5) | (1 | ) | (5 | ) | |||
Tax benefit(3) | 1 | 2 | |||||
Total pension liability adjustment reclassifications for the period, net of taxes | (2 | ) | (4 | ) | |||
Total reclassifications for the period, net of tax | $ | 2 | $ | (4 | ) |
(1) | Reclassified out of accumulated other comprehensive loss to other gain (loss), net in our condensed consolidated statements of operations. Amounts in parentheses indicate a loss in our condensed consolidated statements of operations. |
(2) | Reclassified out of accumulated other comprehensive loss to gain (loss) on foreign currency transactions in our condensed consolidated statements of operations. |
(3) | Reclassified out of accumulated other comprehensive loss to income tax expense in our condensed consolidated statements of operations. |
(4) | The respective tax benefit was less than $1 million for the six months ended June 30, 2013. |
(5) | Reclassified out of accumulated other comprehensive loss to general, administrative and other in the condensed consolidated statements of operations. These amounts were included in the computation of net periodic pension cost. See Note 11: "Employee Benefit Plans" for additional information. Amounts in parentheses indicate a loss in our condensed consolidated statements of operations. |
|
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
(in millions) | |||||||||||||||
Revenues | |||||||||||||||
Ownership(1)(2) | $ | 1,126 | $ | 1,078 | $ | 2,078 | $ | 1,998 | |||||||
Management and franchise(3) | 371 | 326 | 702 | 608 | |||||||||||
Timeshare | 276 | 261 | 555 | 507 | |||||||||||
Segment revenues | 1,773 | 1,665 | 3,335 | 3,113 | |||||||||||
Other revenues from managed and franchised properties | 920 | 750 | 1,747 | 1,591 | |||||||||||
Other revenues(4) | 25 | 15 | 46 | 30 | |||||||||||
Intersegment fees elimination(1)(2)(3)(4) | (51 | ) | (50 | ) | (98 | ) | (91 | ) | |||||||
Total revenues | $ | 2,667 | $ | 2,380 | $ | 5,030 | $ | 4,643 | |||||||
Adjusted EBITDA | |||||||||||||||
Ownership(1)(2)(3)(4)(5) | $ | 291 | $ | 271 | $ | 470 | $ | 445 | |||||||
Management and franchise(3) | 371 | 326 | 702 | 608 | |||||||||||
Timeshare(1)(3) | 69 | 60 | 154 | 119 | |||||||||||
Corporate and other(2)(4) | (80 | ) | (67 | ) | (131 | ) | (135 | ) | |||||||
Adjusted EBITDA | $ | 651 | $ | 590 | $ | 1,195 | $ | 1,037 |
(1) | Includes charges to timeshare operations for rental fees and fees for other amenities, which were eliminated in our condensed consolidated financial statements. These charges totaled $8 million and $7 million for the three months ended June 30, 2014 and 2013, respectively, and $14 million and $12 million for the six months ended June 30, 2014 and 2013, respectively. While the net effect is zero, our measures of segment revenues and Adjusted EBITDA include these fees as a benefit to the ownership segment and a cost to timeshare Adjusted EBITDA. |
(2) | Includes other intercompany charges of $1 million for the three months ended June 30, 2014 and 2013 and $2 million for the six months ended June 30, 2014 and 2013. |
(3) | Includes management, royalty and intellectual property fees of $29 million and $26 million for the three months ended June 30, 2014 and 2013, respectively, and $56 million and $47 million for the six months ended June 30, 2014 and 2013, respectively. These fees are charged to consolidated owned and leased properties and were eliminated in our condensed consolidated financial statements. Also includes a licensing fee of $11 million and $13 million for the three months ended June 30, 2014 and 2013, respectively, and $22 million and $25 million for the six months ended June 30, 2014 and 2013, respectively, which is charged to our timeshare segment by our management and franchise segment and was eliminated in our condensed consolidated financial statements. While the net effect is zero, our measures of segment revenues and Adjusted EBITDA include these fees as a benefit to the management and franchise segment and a cost to ownership Adjusted EBITDA and timeshare Adjusted EBITDA. |
(4) | Includes charges to consolidated owned and leased properties for services provided by our wholly owned laundry business of $2 million and $3 million for the three months ended June 30, 2014 and 2013, respectively, and $4 million and $5 million for the six months ended June 30, 2014 and 2013, respectively. These charges were eliminated in our condensed consolidated financial statements. |
(5) | Includes unconsolidated affiliate Adjusted EBITDA. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
(in millions) | |||||||||||||||
Adjusted EBITDA | $ | 651 | $ | 590 | $ | 1,195 | $ | 1,037 | |||||||
Net income attributable to noncontrolling interests | (3 | ) | (2 | ) | (4 | ) | (6 | ) | |||||||
Gain (loss) on foreign currency transactions | 32 | (39 | ) | 46 | (82 | ) | |||||||||
FF&E replacement reserve | (12 | ) | (10 | ) | (23 | ) | (17 | ) | |||||||
Share-based compensation expense | (6 | ) | (1 | ) | (19 | ) | (3 | ) | |||||||
Other gain (loss), net | 11 | (1 | ) | 14 | 6 | ||||||||||
Other adjustment items | (17 | ) | (9 | ) | (30 | ) | (20 | ) | |||||||
EBITDA | 656 | 528 | 1,179 | 915 | |||||||||||
Interest expense | (158 | ) | (131 | ) | (311 | ) | (274 | ) | |||||||
Interest expense included in equity in earnings from unconsolidated affiliates | (3 | ) | (2 | ) | (6 | ) | (6 | ) | |||||||
Income tax expense | (121 | ) | (84 | ) | (204 | ) | (122 | ) | |||||||
Depreciation and amortization | (158 | ) | (149 | ) | (311 | ) | (309 | ) | |||||||
Depreciation and amortization included in equity in earnings from unconsolidated affiliates | (7 | ) | (7 | ) | (15 | ) | (15 | ) | |||||||
Net income attributable to Hilton stockholders | $ | 209 | $ | 155 | $ | 332 | $ | 189 |
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Assets: | |||||||
Ownership | $ | 11,851 | $ | 11,936 | |||
Management and franchise | 10,726 | 11,016 | |||||
Timeshare | 1,836 | 1,871 | |||||
Corporate and other | 2,084 | 1,739 | |||||
$ | 26,497 | $ | 26,562 |
Six Months Ended | |||||||
June 30, | |||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Capital expenditures for property and equipment: | |||||||
Ownership | $ | 106 | $ | 116 | |||
Timeshare | 1 | 2 | |||||
Corporate and other | 3 | 3 | |||||
$ | 110 | $ | 121 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|