HILTON HOTELS CORPORATION
Financial Highlights (Unaudited)
(in millions, except per share amounts)
Three Months
Nine Months
Ended
Ended
September 30,
September 30,
---------------
---------------
2005 2006 % Change 2005
2006 % Change
------- ------- --------- ------- ------- ---------
Revenue
Owned hotels $ 489
$ 649 33 % $1,559 $1,838
18 %
Leased hotels
28 679
- 87 1,616
-
Management and
franchise fees 119
175 47
338 502 49
Timeshare and
other income
155 178 15
457 606 33
------- -------
------- -------
791 1,681 113
2,441 4,562 87
Other revenue
from managed
and franchised
properties
311 526 69
913 1,368 50
------- -------
------- -------
1,102 2,207 100
3,354 5,930 77
Expenses
Owned hotels
350 464 33
1,117 1,321 18
Leased hotels
24 578
- 77 1,380
-
Depreciation and
amortization
70 118 69
228 321 41
Impairment loss
and related
costs
- -
- 7
- -
Other operating
expenses
128 177 38
366 545 49
Corporate
expense
25 43
72 75 130
73
------- -------
------- -------
597 1,380 131
1,870 3,697 98
Other expenses
from managed
and franchised
properties
311 527 69
907 1,360 50
------- -------
------- -------
908 1,907 110
2,777 5,057 82
Operating income
from
unconsolidated
affiliates
9 15
67 35
43 23
------- -------
------- -------
Operating income 203
315 55
612 916 50
Interest and
dividend income
6 7
17 14
22 57
Interest expense (66)
(136) 106 (196)
(371) 89
Net interest from
unconsolidated
affiliates and
non-controlled
interests
(6) (12) 100
(19) (34) 79
Net (loss) gain on
foreign currency
transactions
- (10) -
- 10
-
Net gain on asset
dispositions and
other
4 13
- 76
36 (53)
Loss from non-
operating
affiliates
(4) (4) -
(13) (12) (8)
------- -------
------- -------
Income before
taxes and
minority and non-
controlled
interests
137 173 26
474 567 20
Provision for
income taxes
(47) (54) 15
(108) (198) 83
Minority and non-
controlled
interests, net
(1) (2) 100
(11) (4) (64)
------- -------
------- -------
Net income
$ 89 $ 117
31 % $ 355 $ 365
3 %
======= =======
======= =======
Net income per
share(1)
------------------
Basic
$ .23 $ .30 30 %
$ .93 $ .95
2 %
======= =======
======= =======
Diluted
$ .22 $ .29 32 %
$ .87 $ .89
2 %
======= =======
======= =======
Average shares -
basic
381 386
1 % 383 385
1 %
======= =======
======= =======
Average shares -
diluted
415 420
1 % 417 419
- %
======= =======
======= =======
(1) EPS for the nine-month periods differs from the sum
of quarterly
EPS amounts due to the required method of computing
EPS in the
respective periods.
HILTON HOTELS CORPORATION
Comparable Owned Statistics(1)
Three Months Ended
September 30,
2005 2006 Change
--------- --------- ---------
Worldwide - 57 Hotels
---------------------------------------
Hilton
--------------------------------------
Occupancy
79.9 % 80.3 % 0.4 pts
Average Rate
$169.56 $184.82 9.0 %
RevPAR
$135.46 $148.43 9.6 %
All Other
--------------------------------------
Occupancy
77.0 % 78.6 % 1.6 pts
Average Rate
$115.08 $127.53 10.8 %
RevPAR
$ 88.58 $100.22 13.1 %
Total
--------------------------------------
Occupancy
79.6 % 80.1 % 0.5 pts
Average Rate
$163.89 $178.74 9.1 %
RevPAR
$130.41 $143.22 9.8 %
North America - 25 Hotels
---------------------------------------
Hilton
--------------------------------------
Occupancy
85.3 % 83.6 % (1.7) pts
Average Rate
$184.50 $201.03 9.0 %
RevPAR
$157.33 $168.07 6.8 %
All Other
--------------------------------------
Occupancy
74.3 % 76.5 % 2.2 pts
Average Rate
$131.06 $145.40 10.9 %
RevPAR
$ 97.39 $111.24 14.2 %
Total
--------------------------------------
Occupancy
83.9 % 82.7 % (1.2) pts
Average Rate
$178.39 $194.34 8.9 %
RevPAR
$149.59 $160.69 7.4 %
International - 32 Hotels
---------------------------------------
Hilton
--------------------------------------
Occupancy
70.2 % 74.4 % 4.2 pts
Average Rate
$136.85 $152.21 11.2 %
RevPAR
$ 96.04 $113.27 17.9 %
All Other
--------------------------------------
Occupancy
87.0 % 86.5 % (0.5) pts
Average Rate
$ 63.62 $ 67.87 6.7 %
RevPAR
$ 55.33 $ 58.69 6.1 %
Total
--------------------------------------
Occupancy
71.3 % 75.2 % 3.9 pts
Average Rate
$130.94 $145.79 11.3 %
RevPAR
$ 93.35 $109.66 17.5 %
Nine Months Ended
September 30,
2005 2006 Change
--------- --------- ---------
Worldwide - 57 Hotels
----------------------------------------
Hilton
---------------------------------------
Occupancy
76.3 % 77.3 % 1.0 pts
Average Rate
$172.60 $184.89 7.1 %
RevPAR
$131.62 $142.98 8.6 %
All Other
---------------------------------------
Occupancy
75.4 % 76.6 % 1.2 pts
Average Rate
$113.71 $121.61 6.9 %
RevPAR
$ 85.74 $ 93.18 8.7 %
Total
---------------------------------------
Occupancy
76.2 % 77.3 % 1.1 pts
Average Rate
$166.30 $178.11 7.1 %
RevPAR
$126.66 $137.61 8.6 %
North America - 25 Hotels
----------------------------------------
Hilton
---------------------------------------
Occupancy
80.3 % 80.0 % (0.3) pts
Average Rate
$184.44 $200.29 8.6 %
RevPAR
$148.08 $160.21 8.2 %
All Other
---------------------------------------
Occupancy
74.4 % 76.0 % 1.6 pts
Average Rate
$126.39 $135.70 7.4 %
RevPAR
$ 94.01 $103.13 9.7 %
Total
---------------------------------------
Occupancy
79.5 % 79.5 % - pts
Average Rate
$177.43 $192.28 8.4 %
RevPAR
$141.10 $152.81 8.3 %
International - 32 Hotels
----------------------------------------
Hilton
---------------------------------------
Occupancy
68.9 % 72.6 % 3.7 pts
Average Rate
$147.45 $154.47 4.8 %
RevPAR
$101.61 $112.12 10.3 %
All Other
---------------------------------------
Occupancy
79.3 % 79.0 % (0.3) pts
Average Rate
$ 68.82 $ 70.46 2.4 %
RevPAR
$ 54.54 $ 55.66 2.1 %
Total
---------------------------------------
Occupancy
69.6 % 73.0 % 3.4 pts
Average Rate
$141.47 $148.46 4.9 %
RevPAR
$ 98.46 $108.39 10.1 %
(1) Statistics are presented pro forma as if the acquisition
of Hilton
International had occurred January 1, 2005. Includes
hotels owned as
of September 30, 2006, which were owned by HHC
or HI since January 1,
2005. Excludes the Company's owned hotels in New
Orleans.
HILTON HOTELS CORPORATION
Comparable Leased Statistics(1)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2005 2006 Change
2005 2006 Change
--------- --------- -------- --------- --------- --------
Worldwide -
199 Hotels
------------
Hilton
-----------
Occupancy 74.4 %
76.4 % 2.0 pts 71.5 % 74.0 %
2.5 pts
Average
Rate $142.55
$158.45 11.2 % $146.67 $153.78
4.8 %
RevPAR $106.06
$120.99 14.1 % $104.81 $113.79
8.6 %
Scandic
-----------
Occupancy 72.2 %
72.7 % 0.5 pts 64.4 % 65.5 %
1.1 pts
Average
Rate $ 95.93
$103.46 7.8 % $106.09 $107.37
1.2 %
RevPAR $ 69.24
$ 75.26 8.7 % $ 68.36 $ 70.30
2.8 %
All Other
-----------
Occupancy 81.2 %
84.7 % 3.5 pts 76.5 % 78.1 %
1.6 pts
Average
Rate $120.41
$133.89 11.2 % $116.34 $128.00
10.0 %
RevPAR $ 97.78
$113.34 15.9 % $ 89.05 $100.03
12.3 %
Total
-----------
Occupancy 73.7 %
75.1 % 1.4 pts 68.5 % 70.3 %
1.8 pts
Average
Rate $120.85
$133.01 10.1 % $127.97 $132.93
3.9 %
RevPAR $ 89.04
$ 99.83 12.1 % $ 87.65 $ 93.45
6.6 %
(1) Statistics are presented pro forma as if the acquisition
of Hilton
International had occurred January 1, 2005. Includes
hotels leased as
of September 30, 2006, which were leased by HHC
or HI since January
1, 2005.
HILTON HOTELS CORPORATION
Comparable Systemwide Statistics(1)
Regional Summary
Three Months Ended
September 30,
2005 2006 Change
--------- --------- ---------
North America (US & Canada)
---------------------------------------
Occupancy
76.0 % 76.0 % - pts
Average Rate
$111.59 $120.35 7.9 %
RevPAR
$84.76 $91.43 7.9 %
United Kingdom & Ireland
---------------------------------------
Occupancy
76.8 % 80.7 % 3.9 pts
Average Rate
$153.46 $174.21 13.5 %
RevPAR
$117.93 $140.59 19.2 %
Continental Europe
---------------------------------------
Occupancy
71.6 % 72.5 % 0.9 pts
Average Rate
$142.94 $159.51 11.6 %
RevPAR
$102.29 $115.67 13.1 %
Africa
---------------------------------------
Occupancy
67.1 % 73.9 % 6.8 pts
Average Rate
$119.07 $128.28 7.7 %
RevPAR
$79.92 $94.85 18.7 %
Middle East
---------------------------------------
Occupancy
80.2 % 75.7 % (4.5) pts
Average Rate
$95.26 $108.08 13.5 %
RevPAR
$76.43 $81.78 7.0 %
Asia Pacific
---------------------------------------
Occupancy
79.9 % 78.1 % (1.8) pts
Average Rate
$122.49 $129.58 5.8 %
RevPAR
$97.92 $101.25 3.4 %
Latin America & Caribbean
---------------------------------------
Occupancy
67.9 % 71.5 % 3.6 pts
Average Rate
$108.59 $120.03 10.5 %
RevPAR
$73.77 $85.79 16.3 %
Nordic
---------------------------------------
Occupancy
72.5 % 73.2 % 0.7 pts
Average Rate
$99.57 $107.46 7.9 %
RevPAR
$72.21 $78.69 9.0 %
Total
---------------------------------------
Occupancy
75.6 % 75.8 % 0.2 pts
Average Rate
$113.89 $123.64 8.6 %
RevPAR
$86.07 $93.69 8.9 %
Nine Months Ended
September 30,
2005 2006 Change
--------- --------- ---------
North America (US & Canada)
----------------------------------------
Occupancy
73.3 % 74.3 % 1.0 pts
Average Rate
$110.76 $119.69 8.1 %
RevPAR
$81.13 $88.94 9.6 %
United Kingdom & Ireland
----------------------------------------
Occupancy
74.2 % 77.8 % 3.6 pts
Average Rate
$159.34 $165.74 4.0 %
RevPAR
$118.24 $128.88 9.0 %
Continental Europe
----------------------------------------
Occupancy
67.6 % 69.2 % 1.6 pts
Average Rate
$151.31 $159.52 5.4 %
RevPAR
$102.33 $110.36 7.8 %
Africa
----------------------------------------
Occupancy
66.3 % 71.3 % 5.0 pts
Average Rate
$119.36 $127.77 7.0 %
RevPAR
$79.09 $91.06 15.1 %
Middle East
----------------------------------------
Occupancy
76.6 % 72.8 % (3.8) pts
Average Rate
$96.76 $106.19 9.7 %
RevPAR
$74.16 $77.34 4.3 %
Asia Pacific
----------------------------------------
Occupancy
77.0 % 76.7 % (0.3) pts
Average Rate
$124.50 $129.05 3.7 %
RevPAR
$95.80 $99.02 3.4 %
Latin America & Caribbean
----------------------------------------
Occupancy
69.7 % 72.3 % 2.6 pts
Average Rate
$116.39 $127.21 9.3 %
RevPAR
$81.09 $91.99 13.4 %
Nordic
----------------------------------------
Occupancy
64.7 % 65.9 % 1.2 pts
Average Rate
$109.71 $111.10 1.3 %
RevPAR
$70.96 $73.17 3.1 %
Total
----------------------------------------
Occupancy
72.6 % 73.7 % 1.1 pts
Average Rate
$114.60 $123.07 7.4 %
RevPAR
$83.23 $90.71 9.0 %
(1) Statistics are presented pro forma as if the acquisition
of Hilton
International had occurred January 1, 2005. Includes
hotels in the
system as of September 30, 2006, which were in
the system of HHC or
HI since January 1, 2005. Excludes the Company's
owned hotels in New
Orleans. Excludes data for HI franchise hotels.
HILTON HOTELS CORPORATION
Comparable Systemwide Statistics(1)
Brand Summary
Three Months Ended
September 30,
2005 2006 Change
--------- --------- ---------
Hilton
---------------------------------------
Occupancy
75.3 % 75.7 % 0.4 pts
Average Rate
$135.00 $147.50 9.3 %
RevPAR
$101.69 $111.70 9.8 %
Hilton Garden Inn
---------------------------------------
Occupancy
74.3 % 74.5 % 0.2 pts
Average Rate
$104.81 $112.32 7.2 %
RevPAR
$ 77.90 $ 83.65 7.4 %
Doubletree
---------------------------------------
Occupancy
73.6 % 74.3 % 0.7 pts
Average Rate
$111.07 $120.56 8.5 %
RevPAR
$ 81.75 $ 89.53 9.5 %
Embassy Suites
---------------------------------------
Occupancy
76.7 % 77.0 % 0.3 pts
Average Rate
$130.09 $140.30 7.8 %
RevPAR
$ 99.75 $108.02 8.3 %
Homewood Suites by Hilton
---------------------------------------
Occupancy
78.6 % 78.1 % (0.5) pts
Average Rate
$101.35 $108.51 7.1 %
RevPAR
$ 79.69 $ 84.73 6.3 %
Hampton
---------------------------------------
Occupancy
76.4 % 76.3 % (0.1) pts
Average Rate
$ 89.57 $ 96.46 7.7 %
RevPAR
$ 68.46 $ 73.63 7.6 %
Scandic
---------------------------------------
Occupancy
72.3 % 73.0 % 0.7 pts
Average Rate
$ 95.49 $103.06 7.9 %
RevPAR
$ 69.07 $ 75.26 9.0 %
Conrad
---------------------------------------
Occupancy
74.4 % 71.4 % (3.0) pts
Average Rate
$140.88 $166.56 18.2 %
RevPAR
$104.85 $118.95 13.4 %
Other
---------------------------------------
Occupancy
83.1 % 85.3 % 2.2 pts
Average Rate
$134.19 $149.50 11.4 %
RevPAR
$111.57 $127.57 14.3 %
Total
---------------------------------------
Occupancy
75.6 % 75.8 % 0.2 pts
Average Rate
$113.89 $123.64 8.6 %
RevPAR
$ 86.07 $ 93.69 8.9 %
Nine Months Ended
September 30,
2005 2006 Change
---------- --------- ---------
Hilton
---------------------------------------
Occupancy
72.6 % 73.7 % 1.1 pts
Average Rate
$137.25 $147.14 7.2 %
RevPAR
$ 99.67 $108.48 8.8 %
Hilton Garden Inn
---------------------------------------
Occupancy
71.4 % 73.1 % 1.7 pts
Average Rate
$103.92 $111.52 7.3 %
RevPAR
$ 74.17 $ 81.47 9.8 %
Doubletree
---------------------------------------
Occupancy
72.0 % 73.3 % 1.3 pts
Average Rate
$110.99 $120.47 8.5 %
RevPAR
$ 79.86 $ 88.35 10.6 %
Embassy Suites
---------------------------------------
Occupancy
75.3 % 76.4 % 1.1 pts
Average Rate
$129.78 $140.14 8.0 %
RevPAR
$ 97.73 $107.03 9.5 %
Homewood Suites by Hilton
---------------------------------------
Occupancy
76.5 % 77.3 % 0.8 pts
Average Rate
$101.22 $108.29 7.0 %
RevPAR
$ 77.43 $ 83.71 8.1 %
Hampton
---------------------------------------
Occupancy
73.1 % 74.0 % 0.9 pts
Average Rate
$ 87.62 $ 94.57 7.9 %
RevPAR
$ 64.07 $ 70.01 9.3 %
Scandic
---------------------------------------
Occupancy
64.5 % 65.7 % 1.2 pts
Average Rate
$105.63 $106.94 1.2 %
RevPAR
$ 68.16 $ 70.23 3.0 %
Conrad
---------------------------------------
Occupancy
71.2 % 69.5 % (1.7) pts
Average Rate
$143.74 $162.46 13.0 %
RevPAR
$102.41 $112.99 10.3 %
Other
---------------------------------------
Occupancy
75.6 % 80.1 % 4.5 pts
Average Rate
$130.82 $140.87 7.7 %
RevPAR
$ 98.89 $112.88 14.1 %
Total
---------------------------------------
Occupancy
72.6 % 73.7 % 1.1 pts
Average Rate
$114.60 $123.07 7.4 %
RevPAR
$ 83.23 $ 90.71 9.0 %
(1) Statistics are presented pro forma as if the acquisition
of Hilton
International had occurred January 1, 2005. Includes
hotels in the
system as of September 30, 2006, which were in
the system of HHC or
HI since January 1, 2005. Excludes the Company's
owned hotels in New
Orleans. Excludes data for HI franchise hotels.
HILTON HOTELS CORPORATION
Supplementary Statistical Information(1)
September
-----------------------------------------
2005
2006
Number of
Number of
Properties Rooms Properties Rooms
----------- -------- ----------- --------
Hilton
---------------------------
Owned
79 38,207
49 28,071
Leased
80 23,509
80 23,798
Joint Venture
16 6,844
14 6,156
Managed
123 44,834
150 54,925
Franchised
188 52,465
204 59,097
----------- -------- ----------- --------
486 165,859 497
172,047
Hilton Garden Inn
---------------------------
Owned
1 162
1 162
Joint Venture
1 128
1 128
Managed
7 895
7 886
Franchised
236 32,429
275 37,878
----------- -------- ----------- --------
245 33,614
284 39,054
Doubletree
---------------------------
Owned
3 1,349
3 1,349
Leased
5 1,746
5 1,750
Joint Venture
14 4,306
12 3,761
Managed
31 8,240
26 7,291
Franchised
102 24,936
127 31,002
----------- -------- ----------- --------
155 40,577
173 45,153
Embassy Suites
---------------------------
Owned
3 663
3 664
Joint Venture
25 6,586
24 6,251
Managed
56 14,767
55 14,630
Franchised
97 22,118
98 22,246
----------- -------- ----------- --------
181 44,134
180 43,791
Homewood Suites by Hilton
---------------------------
Owned
1 140
1 140
Managed
41 4,706
41 4,706
Franchised
120 13,108
142 15,410
----------- -------- ----------- --------
162 17,954
184 20,256
Hampton
---------------------------
Owned
1 133
1 133
Managed
34 4,453
34 4,448
Franchised
1,290 128,640 1,345 132,753
----------- -------- ----------- --------
1,325 133,226 1,380 137,334
Scandic
---------------------------
Owned
1 325
1 325
Leased
123 21,951
120 21,377
Managed
3 429
3 429
Franchised
5 508
5 669
----------- -------- ----------- --------
132 23,213
129 22,800
Conrad
---------------------------
Joint Venture
3 1,395
3 1,399
Managed
11 3,348
13 3,935
----------- -------- ----------- --------
14 4,743
16 5,334
Other
---------------------------
Owned
2 630
1 324
Leased
2 666
1 129
Managed
9 2,118
11 4,277
Franchised
5 2,215
5 2,265
----------- -------- ----------- --------
18 5,629
18 6,995
Timeshare
39 4,250
34 3,740
---------------------------
Total
---------------------------
Owned
91 41,609
60 31,168
Leased
210 47,872
206 47,054
Joint Venture
59 19,259
54 17,695
Managed
315 83,790
340 95,527
Franchised
2,043 276,419 2,201 301,320
Timeshare
39 4,250
34 3,740
----------- -------- ----------- --------
TOTAL PROPERTIES
2,757 473,199 2,895 496,504
=========== ==================== ========
Change to
----------------------------------------
September 2005 December 2005
Number of Number
of
Properties Rooms Properties Rooms
----------- -------- ----------- -------
Hilton
-----------------------------
Owned
(30) (10,136) (8) (4,298)
Leased
- 289
1 338
Joint Venture
(2) (688)
(2) (688)
Managed
27 10,091
13 7,216
Franchised
16 6,632
11 4,313
----------- -------- ----------- -------
11 6,188
15 6,881
Hilton Garden Inn
-----------------------------
Owned
- -
- -
Joint Venture
- -
- -
Managed
- (9)
- -
Franchised
39 5,449
25 3,531
----------- -------- ----------- -------
39 5,440
25 3,531
Doubletree
-----------------------------
Owned
- -
- -
Leased
- 4
- 4
Joint Venture
(2) (545)
(2) (545)
Managed
(5) (949)
(4) (769)
Franchised
25 6,066
19 4,295
----------- -------- ----------- -------
18 4,576
13 2,985
Embassy Suites
-----------------------------
Owned
- 1
- 1
Joint Venture
(1) (335)
(1) (335)
Managed
(1) (137)
(1) (202)
Franchised
1 128
- (102)
----------- -------- ----------- -------
(1) (343)
(2) (638)
Homewood Suites by Hilton
-----------------------------
Owned
- -
- -
Managed
- -
- -
Franchised
22 2,302
20 2,123
----------- -------- ----------- -------
22 2,302
20 2,123
Hampton
-----------------------------
Owned
- -
- -
Managed
- (5)
- (5)
Franchised
55 4,113
44 3,218
----------- -------- ----------- -------
55 4,108
44 3,213
Scandic
-----------------------------
Owned
- -
- -
Leased
(3) (574)
(1) (28)
Managed
- -
- -
Franchised
- 161
- (46)
----------- -------- ----------- -------
(3) (413)
(1) (74)
Conrad
-----------------------------
Joint Venture
- 4
- 4
Managed
2 587
1 275
----------- -------- ----------- -------
2 591
1 279
Other
-----------------------------
Owned
(1) (306)
(1) (306)
Leased
(1) (537)
(1) (537)
Managed
2 2,159
5 2,966
Franchised
- 50
(1) (169)
----------- -------- ----------- -------
- 1,366
2 1,954
Timeshare
(5) (510)
(6) (532)
-----------------------------
Total
-----------------------------
Owned
(31) (10,441) (9) (4,603)
Leased
(4) (818)
(1) (223)
Joint Venture
(5) (1,564) (5) (1,564)
Managed
25 11,737
14 9,481
Franchised
158 24,901
118 17,163
Timeshare
(5) (510)
(6) (532)
----------- -------- ----------- -------
TOTAL PROPERTIES
138 23,305
111 19,722
=========== ======== =========== =======
(1) Statistics are presented pro forma as if the acquisition
of Hilton
International had occurred January 1, 2005.
HILTON HOTELS CORPORATION
Supplemental Financial Information (Unaudited)
Reconciliation of Adjusted
EBITDA to EBITDA and Net Income
Historical Data
($ in millions)
Three Months Ended Nine Months Ended
September 30, September
30,
--------------------- -----------------------
2005 2006 % Change 2005 2006
% Change
----- ----- --------- ----- ------- ---------
Adjusted EBITDA
$279 $440 58 % $867 $1,257
45 %
Proportionate share of
depreciation and
amortization of
unconsolidated
affiliates
(8) (8) -
(22) (23) 5
Impairment loss and
related costs
- - -
(7) -
-
Operating interest and
dividend income
(1) (2) 100
(6) (5) (17)
Operating income of
non-controlled
interests
3 3 -
8 8
-
Net (loss) gain on
foreign currency
transactions
- (10) -
- 10
-
Net gain on asset
dispositions and
other
4 13 -
76 36 (53)
Loss from non-
operating affiliates (4)
(4) - (13)
(12) (8)
Minority and non-
controlled interests,
net
(1) (2) 100 (11)
(4) (64)
----- -----
----- -------
EBITDA
272 430 58
892 1,267 42
Depreciation and
amortization
(70) (118) 69 (228)
(321) 41
Interest expense, net (66) (141)
114 (201) (383) 91
Provision for income
taxes
(47) (54) 15 (108)
(198) 83
----- -----
----- -------
Net income
$89 $117 31 % $355
$365 3 %
===== =====
===== =======
Reconciliation of Adjusted
EBITDA to EBITDA and Net Income
Future Performance - Full Year 2006 Outlook(1)
($ in millions, except per share amounts)
Estimated
Full Year 2006
-----------------------
Adjusted EBITDA
$
1,740
Proportionate share of depreciation and
amortization of unconsolidated affiliates
(30)
Operating interest and dividend income
(7)
Operating income of non-controlled interests
11
Net gain on foreign currency transactions
10
Net gain on asset dispositions and other
59
Loss from non-operating affiliates
(16)
Minority and non-controlled interests, net
(6)
-----------------------
EBITDA
1,761
Depreciation and amortization
(435)
Interest expense, net
(517)
Provision for income taxes
(289)
-----------------------
Net income
$
520
=======================
Diluted EPS
$
1.27
=======================
Recurring Diluted EPS
$
1.15
=======================
(1) Includes the impact of Hilton International from the
acquisition
date of February 23, 2006.
HILTON HOTELS CORPORATION
Supplemental Financial Information (Unaudited)
Pro Forma Revenue and Expenses
($ in millions)
Owned Hotels
----------------------------------- ------------------------
--------
Three Months
Nine Months
Ended % or
Ended % or
September 30, basis September 30,
basis
point
point
2005 2006 Change 2005
2006 Change
--------------- -------- --------------- --------
Revenue
------------------
Reported
$489 $649
$1,559 $1,838
Less sold hotels
and non-
comparable
(101) (73)
(420) (223)
Less HI
comparable, as
reported
- (165)
- (404)
------- ------- -------
-------
Pro Forma
Comparable Owned
- North America
388 411 6%
1,139 1,211 6%
Plus HI
International,
net(1)
143 165 15%
453 492 9%
------- ------- -------
-------
Pro Forma
Comparable Owned
- Worldwide
$531 $576 8%
$1,592 $1,703 7%
======= ======= =======
=======
Expenses
------------------
Reported
$350 $464
$1,117 $1,321
Less sold hotels
and non-
comparable
(74) (53)
(302) (163)
Less HI
comparable, as
reported
- (119)
- (287)
------- ------- -------
-------
Pro Forma
Comparable Owned
- North America
276 292 6%
815 871 7%
Plus HI
International,
net(1)
107 119 11%
335 354 6%
------- ------- -------
-------
Pro Forma
Comparable Owned
- Worldwide
$383 $411 7%
$1,150 $1,225 7%
======= ======= =======
=======
Margins
------------------
Pro Forma
Comparable Owned
- North America
28.9% 29.0% 10 bps 28.4%
28.1% (30) bps
Pro Forma
Comparable Owned
- International
25.2% 27.9% 270 bps 26.0% 28.0%
200 bps
Pro Forma
Comparable Owned
- Worldwide
27.9% 28.6% 70 bps 27.8%
28.1% 30 bps
Leased Hotels
----------------------------------- ------------------------
--------
Three Months
Nine Months
Ended % or
Ended % or
September 30, basis September 30,
basis
point
point
2005 2006 Change 2005
2006 Change
--------------- -------- --------------- --------
Revenue
------------------
Reported
$28 $679
$87 $1,616
Less sold hotels
and non-
comparable
- (33)
(9) (69)
Less HI
comparable, as
reported
- (616)
- (1,462)
Plus HI, net(1)
560 616 10%
1,699 1,764 4%
------- ------- -------
-------
Pro Forma
Comparable
Leased -
Worldwide
$588 $646 10% $1,777
$1,849 4%
======= ======= =======
=======
Expenses
------------------
Reported
$24 $578
$77 $1,380
Less sold hotels
and non-
comparable
- (30)
(8) (62)
Less HI
comparable, as
reported
- (524)
- (1,248)
Plus HI, net(1)
481 524 9%
1,487 1,528 3%
------- ------- -------
-------
Pro Forma
Comparable
Leased -
Worldwide
$505 $548 9%
$1,556 $1,598 3%
======= ======= =======
=======
Margins
------------------
Pro Forma
Comparable
Leased -
Worldwide
14.1% 15.2% 110 bps 12.4% 13.6%
120 bps
Management and
Franchise Fees
----------------------------------- ------------------------
--------
Three Months
Nine Months
Ended
Ended
September 30, % September
30, %
2005 2006 Change 2005
2006 Change
--------------- -------- --------------- --------
Reported
$119 $175
$338 $502
Less HI reported
- (29)
- (67)
Plus HI
21 29 38%
66 81 23%
------- ------- -------
-------
Pro Forma -
Worldwide
$140 $175 25%
$404 $516 28%
======= ======= =======
=======
(1) Pro forma for the entities acquired with Hilton International
as
if they had been acquired on January 1, 2005. Excludes
non-comparable
hotels.
The following supplemental unaudited financial information
presents
the estimated 2006 full year outlook for owned
hotels, leased hotels
and depreciation and amortization on a pro forma
basis assuming the
acquisition of Hilton International had occurred
on January 1, 2006,
and based on the anticipated mix of owned and leased
properties at
December 31, 2006. The pro forma information presented
excludes
hotels sold through September 30, 2006, as well
as the Hilton
Metropoles in London and Birmingham, the sale of
which is expected to
be completed by year end.
HILTON HOTELS CORPORATION
Supplemental Financial Information (Unaudited)
Future Performance
- Estimated 2006 Full Year Outlook
Pro Forma Revenue and Expenses(1)
Based on Anticipated Comparable Mix
as of December 31, 2006(2)
($ in millions)
Owned Hotels
---------------------------------------------------------------------
Revenue
---------------------------------------------------
Full Year Outlook
$ 2,525
Less sold hotels and non-comparable
(357)
Plus HI Pro Forma
70
-----------------
Pro Forma Comparable Owned - Worldwide
$ 2,238
=================
Expenses
---------------------------------------------------
Full Year Outlook
$ 1,780
Less sold hotels and non-comparable
(233)
Plus HI Pro Forma
57
-----------------
Pro Forma Comparable Owned - Worldwide
$ 1,604
=================
Margins
---------------------------------------------------
Pro Forma Comparable Owned - Worldwide
28.3%
Leased Hotels
---------------------------------------------------------------------
Revenue
---------------------------------------------------
Full Year Outlook
$ 2,300
Less sold hotels and non-comparable
(63)
Plus HI Pro Forma
308
-----------------
Pro Forma Comparable Leased - Worldwide
$ 2,545
=================
Expenses
---------------------------------------------------
Full Year Outlook
$ 1,960
Less sold hotels and non-comparable
(55)
Plus HI Pro Forma
285
-----------------
Pro Forma Comparable Leased - Worldwide
$ 2,190
=================
Margins
---------------------------------------------------
Pro Forma Comparable Leased - Worldwide
13.9%
Consolidated Depreciation and Amortization Expense
---------------------------------------------------------------------
Full Year Outlook
$ 435
Less sold hotels
(20)
Plus HI Pro Forma
27
-----------------
Adjusted Full Year Outlook
$ 442
=================
(1) Pro forma for the entities acquired with Hilton International
as
if they had been acquired on January 1, 2006.
(2) Excludes hotels sold during 2006, including the Hilton
Metropoles
in London and Birmingham, which are expected to
be sold by year-end
2006; also excludes the Hilton New Orleans Riverside.
Comparable set
of hotels includes those that were owned or leased
since January 1,
2006, pro forma as if the acquisition of HI had
occurred January 1,
2006.
NON-GAAP FINANCIAL MEASURES
----------------------------------------------------------------------
Regulation G, "Conditions for Use of Non-GAAP Financial
Measures,"
prescribes the conditions for use of non-GAAP financial
information
in public disclosures. We believe that our presentation
of EBITDA and
Adjusted EBITDA, which are non-GAAP financial measures,
are important
supplemental measures of operating performance
to investors. The
following discussion defines these terms and why
we believe they are
useful measures of our performance.
EBITDA and Adjusted EBITDA
----------------------------------------------------------------------
Earnings before interest, taxes, depreciation and amortization
(EBITDA) is a commonly used measure of performance
in our industry
which we believe, when considered with measures
calculated in
accordance with United States Generally Accepted
Accounting
Principles (GAAP), gives investors a more complete
understanding of
operating results before the impact of investing
and financing
transactions and income taxes and facilitates comparisons
between us
and our competitors. Management has historically
adjusted EBITDA when
evaluating operating performance because we believe
that the
inclusion or exclusion of certain recurring and
non-recurring items
described below is necessary to provide the most
accurate measure of
our core operating results and as a means to evaluate
period-to-
period results. We have chosen to provide this
information to
investors to enable them to perform more meaningful
comparisons of
past, present and future operating results and
as a means to evaluate
the results of core on-going operations. We do
not reflect such items
when calculating EBITDA, however, we adjust for
these items and refer
to this measure as Adjusted EBITDA. We have historically
reported
this measure to our investors and believe that
the continued
inclusion of Adjusted EBITDA provides consistency
in our financial
reporting. We use Adjusted EBITDA in this press
release because we
believe it is useful to investors in allowing greater
transparency
related to a significant measure used by management
in its financial
and operational decision-making. Adjusted EBITDA
is among the more
significant factors in management's internal evaluation
of total
company and individual property performance and
in the evaluation of
incentive compensation related to property management.
Management
also uses Adjusted EBITDA as a measure in determining
the value of
acquisitions and dispositions. Adjusted EBITDA
is also widely used by
management in the annual budget process. Externally,
we believe these
measures continue to be used by investors in their
assessment of our
operating performance and the valuation of our
company. Adjusted
EBITDA reflects EBITDA adjusted for the following
items:
Gains and Losses on Asset Dispositions and Non-Recurring
Items
----------------------------------------------------------------------
We exclude from Adjusted EBITDA the effect of gains
and losses on
asset dispositions and non-recurring items,
such as asset write-
downs and impairment losses. We believe
the inclusion of these
items is not consistent with reflecting
the on-going performance of
our assets. Management believes it is useful
to exclude gains and
losses on asset dispositions as these amounts
are not reflective of
our operating performance or the performance
of our assets and the
amount of such items can vary dramatically
from period to period.
The timing and selection of an asset for
disposition is subject to
a number of variables that are generally
unrelated to our on-going
operations.
Proportionate Share of Depreciation and Amortization
of
Unconsolidated Affiliates
----------------------------------------------------------------------
Our consolidated results include the equity earnings
from our
unconsolidated affiliates after the deduction
of our proportionate
share of depreciation and amortization expense
from unconsolidated
affiliates. We exclude our proportionate
share of depreciation and
amortization expense from unconsolidated
affiliates from Adjusted
EBITDA to provide a more accurate measure
of our proportionate
share of core operating results before investing
activities and to
provide consistency with the performance
measure we use for our
consolidated properties.
Operating Interest and Dividend Income
----------------------------------------------------------------------
Interest and dividend income from investments related
to operating
activities is included in our calculation
of Adjusted EBITDA. We
consider this income, primarily interest
on notes receivable issued
to properties we manage or franchise and
dividend income from
investments related to the development of
our core businesses, to
be a part of our core operating results.
Non-Controlled Interest
----------------------------------------------------------------------
We exclude from Adjusted EBITDA the operating income,
net interest
expense, tax provision and non-controlled
interest reported on our
income statement to the extent we have no
ownership interest. These
exclusions are shown in their respective
lines on the
Reconciliation of Adjusted EBITDA to EBITDA
and Net Income.
Minority Interest, Net
----------------------------------------------------------------------
We exclude the minority interest in the income
or loss of our
consolidated joint ventures because these
amounts effectively
include our minority partners' proportionate
share of depreciation,
amortization, interest and taxes, which
are excluded from EBITDA.
Limitations on the Use of Non-GAAP Measures
----------------------------------------------------------------------
The use of EBITDA and Adjusted EBITDA has certain limitations.
Our
presentation of EBITDA and Adjusted EBITDA may
be different from the
presentation used by other companies and therefore
comparability may
be limited. Depreciation expense for various long-term
assets,
interest expense, income taxes and other items
have been and will be
incurred and are not reflected in the presentation
of EBITDA or
Adjusted EBITDA. Each of these items should also
be considered in the
overall evaluation of our results. Additionally,
EBITDA and Adjusted
EBITDA do not consider capital expenditures and
other investing
activities and should not be considered as a measure
of our
liquidity. We compensate for these limitations
by providing the
relevant disclosure of our depreciation, interest
and income tax
expense, capital expenditures and other items both
in our
reconciliations to the GAAP financial measures
and in our
consolidated financial statements, all of which
should be considered
when evaluating our performance.
EBITDA and Adjusted EBITDA are used in addition to and
in conjunction
with results presented in accordance with GAAP.
EBITDA and Adjusted
EBITDA should not be considered as an alternative
to net income,
operating income, or any other operating performance
measure
prescribed by GAAP, nor should these measures be
relied upon to the
exclusion of GAAP financial measures. EBITDA and
Adjusted EBITDA
reflect additional ways of viewing our operations
that we believe,
when viewed with our GAAP results and the reconciliations
to the
corresponding GAAP financial measures, provide
a more complete
understanding of factors and trends affecting our
business than could
be obtained absent this disclosure. Management
strongly encourages
investors to review our financial information in
its entirety and not
to rely on a single financial measure. |