Condensed Consolidating Guarantor Financial Information | Condensed Consolidating Guarantor Financial Information In October 2013, Hilton Worldwide Finance LLC and Hilton Worldwide Finance Corp. (the "HWF Issuers"), entities that are 100 percent owned by Hilton Worldwide Parent LLC ("HWP"), which is 100 percent owned by the Parent, issued the 2021 Senior Notes. In September 2016, Hilton Domestic Operating Company Inc. ("HOC"), an entity incorporated in July 2016 that is 100 percent owned by Hilton Worldwide Finance LLC and is a guarantor of the 2021 Senior Notes, assumed the 2024 Senior Notes that were issued in August 2016 by escrow issuers and are guaranteed by the HWF Issuers and HWP. The 2021 Senior Notes and the 2024 Senior Notes are referred to as the Senior Notes. The HWF Issuers and HOC are collectively referred to as the Subsidiary Issuers. In September 2016, certain employees, assets and liabilities of a guarantor subsidiary were transferred into HOC. This transfer was considered to be a transfer of assets rather than a transfer of a business. Accordingly, we have separately presented HOC as a subsidiary issuer in our condensed consolidating financial information prospectively from the date of transfer. The Senior Notes are guaranteed jointly and severally on a senior unsecured basis by the Parent and certain of the Parent's 100 percent owned domestic restricted subsidiaries that are themselves not issuers of the applicable series of Senior Notes (together, the "Guarantors"). The indentures that govern the Senior Notes provide that any subsidiary of the Company that provides a guarantee of the Senior Secured Credit Facility will guarantee the Senior Notes. None of our foreign subsidiaries or U.S. subsidiaries owned by foreign subsidiaries or conducting foreign operations or our non-wholly owned subsidiaries guarantee the Senior Notes (collectively, the "Non-Guarantors"). The guarantees are full and unconditional, subject to certain customary release provisions. The indentures that govern the Senior Notes provide that any Guarantor may be released from its guarantee so long as: (i) the subsidiary is sold or sells all of its assets; (ii) the subsidiary is released from its guaranty under the Senior Secured Credit Facility; (iii) the subsidiary is declared "unrestricted" for covenant purposes; (iv) the subsidiary is merged with or into the applicable Subsidiary Issuers or another Guarantor or the Guarantor liquidates after transferring all of its assets to the applicable Subsidiary Issuers or another Guarantor; or (v) the requirements for legal defeasance or covenant defeasance or to discharge the indenture have been satisfied, in each case in compliance with applicable provisions of the indentures. The following schedules present the condensed consolidating financial information as of December 31, 2016 and 2015, and for the years ended December 31, 2016, 2015 and 2014, for the Parent, HWF Issuers, HOC, Guarantors and Non-Guarantors. December 31, 2016 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total (in millions) ASSETS Current Assets: Cash and cash equivalents $ — $ — $ 3 $ 22 $ 1,037 $ — $ 1,062 Restricted cash and cash equivalents — — 87 9 25 — 121 Accounts receivable, net — — 7 484 264 — 755 Intercompany receivables — — — — 42 (42 ) — Prepaid expenses — — 6 21 65 (3 ) 89 Income taxes receivable — — — 30 — (17 ) 13 Other — — 1 5 33 — 39 Current assets of discontinued operations — — — — 1,502 (24 ) 1,478 Total current assets — — 104 571 2,968 (86 ) 3,557 Intangibles and Other Assets: Investments in subsidiaries 5,889 11,300 12,583 5,889 — (35,661 ) — Goodwill — — — 3,824 1,394 — 5,218 Brands — — — 4,404 444 — 4,848 Management and franchise contracts, net — — — 716 247 — 963 Other intangible assets, net — — 1 296 150 — 447 Property and equipment, net — — 12 62 267 — 341 Deferred income tax assets 10 2 167 — 82 (179 ) 82 Other — 12 30 213 153 — 408 Non-current assets of discontinued operations — — — 12 10,345 (10 ) 10,347 Total intangibles and other assets 5,899 11,314 12,793 15,416 13,082 (35,850 ) 22,654 TOTAL ASSETS $ 5,899 $ 11,314 $ 12,897 $ 15,987 $ 16,050 $ (35,936 ) $ 26,211 LIABILITIES AND EQUITY Current Liabilities: Accounts payable, accrued expenses and other $ — $ 26 $ 293 $ 1,091 $ 414 $ (3 ) $ 1,821 Intercompany payables — — 42 — — (42 ) — Current maturities of long-term debt — 26 — — 7 — 33 Income taxes payable — — — — 73 (17 ) 56 Current liabilities of discontinued operations — — — 77 721 (24 ) 774 Total current liabilities — 52 335 1,168 1,215 (86 ) 2,684 Long-term debt — 5,361 981 — 241 — 6,583 Deferred revenues — — — 42 — — 42 Deferred income tax liabilities — — — 1,919 38 (179 ) 1,778 Liability for guest loyalty program — — — 889 — — 889 Other — 12 277 490 713 — 1,492 Non-current liabilities of discontinued operations — — 4 — 6,900 (10 ) 6,894 Total liabilities — 5,425 1,597 4,508 9,107 (275 ) 20,362 Equity: Total Hilton stockholders' equity 5,899 5,889 11,300 11,479 6,993 (35,661 ) 5,899 Noncontrolling interests — — — — (50 ) — (50 ) Total equity 5,899 5,889 11,300 11,479 6,943 (35,661 ) 5,849 TOTAL LIABILITIES AND EQUITY $ 5,899 $ 11,314 $ 12,897 $ 15,987 $ 16,050 $ (35,936 ) $ 26,211 December 31, 2015 Parent HWF Issuers Guarantors Non-Guarantors Eliminations Total (in millions) ASSETS Current Assets: Cash and cash equivalents $ — $ — $ 18 $ 495 $ — $ 513 Restricted cash and cash equivalents — — 91 29 — 120 Accounts receivable, net — — 406 258 — 664 Prepaid expenses — — 36 79 (3 ) 112 Income taxes receivable — — 120 — (23 ) 97 Other — — 3 32 — 35 Current assets of discontinued operations — — — 1,070 (26 ) 1,044 Total current assets — — 674 1,963 (52 ) 2,585 Intangibles and Other Assets: Investments in subsidiaries 6,166 11,854 6,457 — (24,477 ) — Goodwill — — 3,824 1,456 — 5,280 Brands — — 4,405 514 — 4,919 Management and franchise contracts, net — — 818 271 — 1,089 Other intangible assets, net — — 334 189 — 523 Property and equipment, net — — 73 338 — 411 Deferred income tax assets 24 3 — 59 (27 ) 59 Other — 9 200 123 — 332 Non-current assets of discontinued operations — — 28 10,396 — 10,424 Total intangibles and other assets 6,190 11,866 16,139 13,346 (24,504 ) 23,037 TOTAL ASSETS $ 6,190 $ 11,866 $ 16,813 $ 15,309 $ (24,556 ) $ 25,622 LIABILITIES AND EQUITY Current Liabilities: Accounts payable, accrued expenses and other $ — $ 39 $ 1,168 $ 415 $ (3 ) $ 1,619 Current maturities of long-term debt — — — 7 — 7 Income taxes payable — — — 50 (23 ) 27 Current liabilities of discontinued operations — — 71 767 (26 ) 812 Total current liabilities — 39 1,239 1,239 (52 ) 2,465 Long-term debt — 5,647 — 240 — 5,887 Deferred revenues — — 251 — — 251 Deferred income tax liabilities — — 1,813 89 (27 ) 1,875 Liability for guest loyalty program — — 784 — — 784 Other 205 14 808 238 — 1,265 Non-current liabilities of discontinued operations — — 64 7,080 — 7,144 Total liabilities 205 5,700 4,959 8,886 (79 ) 19,671 Equity: Total Hilton stockholders' equity 5,985 6,166 11,854 6,457 (24,477 ) 5,985 Noncontrolling interests — — — (34 ) — (34 ) Total equity 5,985 6,166 11,854 6,423 (24,477 ) 5,951 TOTAL LIABILITIES AND EQUITY $ 6,190 $ 11,866 $ 16,813 $ 15,309 $ (24,556 ) $ 25,622 Year Ended December 31, 2016 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total (in millions) Revenues Franchise fees $ — $ — $ 21 $ 1,031 $ 112 $ (10 ) $ 1,154 Base and other management fees — — — 126 116 — 242 Incentive management fees — — — 16 126 — 142 Owned and leased hotels — — — — 1,452 — 1,452 Other revenues — — 10 61 11 — 82 — — 31 1,234 1,817 (10 ) 3,072 Other revenues from managed and franchised properties — — 32 3,777 501 — 4,310 Total revenues — — 63 5,011 2,318 (10 ) 7,382 Expenses Owned and leased hotels — — — — 1,295 — 1,295 Depreciation and amortization — — 1 272 91 — 364 Impairment loss — — — — 15 — 15 General and administrative — — 90 204 109 — 403 Other expenses — — 1 31 29 (10 ) 51 — — 92 507 1,539 (10 ) 2,128 Other expenses from managed and franchised properties — — 32 3,777 501 — 4,310 Total expenses — — 124 4,284 2,040 (10 ) 6,438 Gain on sales of assets, net — — — — 8 — 8 Operating income (loss) — — (61 ) 727 286 — 952 Interest expense — (261 ) (30 ) (51 ) (52 ) (394 ) Gain (loss) on foreign currency transactions — — 11 (150 ) 123 — (16 ) Other non-operating income, net — 1 1 8 4 — 14 Income (loss) from continuing operations before income taxes and equity in losses from subsidiaries — (260 ) (79 ) 534 361 — 556 Income tax benefit (expense) 193 100 32 (319 ) (570 ) — (564 ) Income (loss) from continuing operations before equity in losses from subsidiaries 193 (160 ) (47 ) 215 (209 ) — (8 ) Equity in losses from subsidiaries (211 ) (51 ) (4 ) (211 ) — 477 — Income (loss) from continuing operations, net of taxes (18 ) (211 ) (51 ) 4 (209 ) 477 (8 ) Income from discontinued operations, net of taxes 366 366 366 428 374 (1,528 ) 372 Net income 348 155 315 432 165 (1,051 ) 364 Net income attributable to noncontrolling interests — — — — (16 ) — (16 ) Net income attributable to Hilton stockholders $ 348 $ 155 $ 315 $ 432 $ 149 $ (1,051 ) $ 348 Comprehensive income $ 131 $ 153 $ 320 $ 361 $ 15 $ (834 ) $ 146 Comprehensive income attributable to noncontrolling interests — — — — (15 ) — (15 ) Comprehensive income attributable to Hilton stockholders $ 131 $ 153 $ 320 $ 361 $ — $ (834 ) $ 131 Year Ended December 31, 2015 Parent HWF Issuers Guarantors Non-Guarantors Eliminations Total (in millions) Revenues Franchise fees $ — $ — $ 998 $ 101 $ (12 ) $ 1,087 Base and other management fees — — 125 105 — 230 Incentive management fees — — 18 120 — 138 Owned and leased hotels — — — 1,596 — 1,596 Other revenues — — 61 10 — 71 — — 1,202 1,932 (12 ) 3,122 Other revenues from managed and franchised properties — — 3,510 501 — 4,011 Total revenues — — 4,712 2,433 (12 ) 7,133 Expenses Owned and leased hotels — — — 1,414 — 1,414 Depreciation and amortization — — 288 97 — 385 Impairment loss — — — 9 — 9 General and administrative — — 424 113 — 537 Other expenses — — 37 15 (12 ) 40 — — 749 1,648 (12 ) 2,385 Other expenses from managed and franchised properties — — 3,510 501 — 4,011 Total expenses — — 4,259 2,149 (12 ) 6,396 Gain on sales of assets, net — — — 163 — 163 Operating income — — 453 447 — 900 Interest expense — (281 ) (50 ) (46 ) — (377 ) Gain (loss) on foreign currency transactions — — 77 (118 ) — (41 ) Other non-operating income, net — — 14 37 — 51 Income (loss) from continuing operations before income taxes and equity in earnings from subsidiaries — (281 ) 494 320 — 533 Income tax benefit (expense) (7 ) 108 189 58 — 348 Income (loss) from continuing operations before equity in earnings from subsidiaries (7 ) (173 ) 683 378 — 881 Equity in earnings from subsidiaries 883 1,056 373 — (2,312 ) — Income from continuing operations, net of taxes 876 883 1,056 378 (2,312 ) 881 Income from discontinued operations, net of taxes 528 528 528 460 (1,509 ) 535 Net income 1,404 1,411 1,584 838 (3,821 ) 1,416 Net income attributable to noncontrolling interests — — — (12 ) — (12 ) Net income attributable to Hilton stockholders $ 1,404 $ 1,411 $ 1,584 $ 826 $ (3,821 ) $ 1,404 Comprehensive income $ 1,248 $ 1,404 $ 1,546 $ 727 $ (3,665 ) $ 1,260 Comprehensive income attributable to noncontrolling interests — — — (12 ) — (12 ) Comprehensive income attributable to Hilton stockholders $ 1,248 $ 1,404 $ 1,546 $ 715 $ (3,665 ) $ 1,248 Year Ended December 31, 2014 Parent HWF Issuers Guarantors Non-Guarantors Eliminations Total (in millions) Revenues Franchise fees $ — $ — $ 826 $ 85 $ (6 ) $ 905 Base and other management fees — — 129 102 (4 ) 227 Incentive management fees — — 17 116 — 133 Owned and leased hotels — — — 1,776 — 1,776 Other revenues — — 71 9 — 80 — — 1,043 2,088 (10 ) 3,121 Other revenues from managed and franchised properties — — 3,120 447 — 3,567 Total revenues — — 4,163 2,535 (10 ) 6,688 Expenses Owned and leased hotels — — — 1,586 — 1,586 Depreciation and amortization — — 263 100 — 363 General and administrative — — 303 108 — 411 Other expenses — — 49 19 (10 ) 58 — — 615 1,813 (10 ) 2,418 Other expenses from managed and franchised properties — — 3,120 447 — 3,567 Total expenses — — 3,735 2,260 (10 ) 5,985 Operating income — — 428 275 — 703 Interest expense — (334 ) (54 ) (28 ) — (416 ) Gain (loss) on foreign currency transactions — — 443 (417 ) — 26 Other non-operating income, net — — 9 11 — 20 Income (loss) from continuing operations before income taxes and equity in earnings (losses) from subsidiaries — (334 ) 826 (159 ) — 333 Income tax benefit (expense) (5 ) 128 (306 ) 29 — (154 ) Income (loss) from continuing operations before equity in earnings (losses) from subsidiaries (5 ) (206 ) 520 (130 ) — 179 Equity in earnings (losses) from subsidiaries 179 385 (135 ) — (429 ) — Income (loss) from continuing operations, net of taxes 174 179 385 (130 ) (429 ) 179 Income from discontinued operations, net of taxes 499 499 499 450 (1,444 ) 503 Net income 673 678 884 320 (1,873 ) 682 Net income attributable to noncontrolling interests — — — (9 ) — (9 ) Net income attributable to Hilton stockholders $ 673 $ 678 $ 884 $ 311 $ (1,873 ) $ 673 Comprehensive income $ 315 $ 669 $ 813 $ 47 $ (1,515 ) $ 329 Comprehensive income attributable to noncontrolling interests — — — (14 ) — (14 ) Comprehensive income attributable to Hilton stockholders $ 315 $ 669 $ 813 $ 33 $ (1,515 ) $ 315 Year Ended December 31, 2016 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total (in millions) Operating Activities: Net cash provided by (used in) operating activities $ — $ (37 ) $ — $ 912 $ 1,095 $ (605 ) $ 1,365 Investing Activities: Capital expenditures for property and equipment — — — (9 ) (308 ) — (317 ) Issuance of intercompany receivables — — — (192 ) (42 ) 234 — Payments received on intercompany receivables — — — 192 — (192 ) — Proceeds from asset dispositions — — — — 11 — 11 Contract acquisition costs — — — (46 ) (9 ) — (55 ) Capitalized software costs — — — (73 ) (8 ) — (81 ) Other — (6 ) — (35 ) 5 — (36 ) Net cash used in investing activities — (6 ) — (163 ) (351 ) 42 (478 ) Financing Activities: Borrowings — — 1,000 — 3,715 — 4,715 Repayment of debt — (266 ) — — (4,093 ) — (4,359 ) Debt issuance costs — (17 ) (20 ) — (39 ) — (76 ) Intercompany borrowings — — — 42 192 (234 ) — Repayment of intercompany borrowings — — — — (192 ) 192 — Intercompany transfers 277 326 (890 ) (854 ) 1,141 — — Dividends paid (277 ) — — — — — (277 ) Intercompany dividends — — — — (605 ) 605 — Distributions to noncontrolling interests — — — — (32 ) — (32 ) Tax withholdings on share-based compensation — — — (15 ) — — (15 ) Net cash provided by (used in) financing activities — 43 90 (827 ) 87 563 (44 ) Effect of exchange rate changes on cash, restricted cash and cash equivalents — — — — (15 ) — (15 ) Net increase (decrease) in cash, restricted cash and cash equivalents — — 90 (78 ) 816 — 828 Cash, restricted cash and cash equivalents from continuing operations, beginning of period — — — 109 524 — 633 Cash, restricted cash and cash equivalents from discontinued operations, beginning of period — — — — 223 — 223 Cash, restricted cash and cash equivalents, beginning of period — — — 109 747 — 856 Cash, restricted cash and cash equivalents from continuing operations, end of period — — 90 31 1,062 — 1,183 Cash, restricted cash and cash equivalents from discontinued operations, end of period — — — — 501 — 501 Cash, restricted cash and cash equivalents, end of period $ — $ — $ 90 $ 31 $ 1,563 $ — $ 1,684 Year Ended December 31, 2015 Parent HWF Issuers Guarantors Non-Guarantors Eliminations Total (in millions) Operating Activities: Net cash provided by operating activities $ — $ 184 $ 975 $ 723 $ (436 ) $ 1,446 Investing Activities: Capital expenditures for property and equipment — — (11 ) (299 ) — (310 ) Acquisitions, net of cash acquired — — — (1,402 ) — (1,402 ) Proceeds from asset dispositions — — — 2,205 — 2,205 Contract acquisition costs — — (23 ) (14 ) — (37 ) Capitalized software costs — — (57 ) (5 ) — (62 ) Other — — 13 7 — 20 Net cash provided by (used in) investing activities — — (78 ) 492 — 414 Financing Activities: Borrowings — — — 48 — 48 Repayment of debt — (775 ) — (849 ) — (1,624 ) Intercompany transfers 138 591 (693 ) (36 ) — — Dividends paid (138 ) — — — — (138 ) Intercompany dividends — — (184 ) (252 ) 436 — Distributions to noncontrolling interests — — — (8 ) — (8 ) Tax withholdings on share-based compensation — — (31 ) — — (31 ) Net cash used in financing activities — (184 ) (908 ) (1,097 ) 436 (1,753 ) Effect of exchange rate changes on cash, restricted cash and cash equivalents — — — (19 ) — (19 ) Net increase (decrease) in cash, restricted cash and cash equivalents — — (11 ) 99 — 88 Cash, restricted cash and cash equivalents from continuing operations, beginning of period — — 119 509 — 628 Cash, restricted cash and cash equivalents from discontinued operations, beginning of period — — 1 139 — 140 Cash, restricted cash and cash equivalents, beginning of period — — 120 648 — 768 Cash, restricted cash and cash equivalents from continuing operations, end of period — — 109 524 — 633 Cash, restricted cash and cash equivalents from discontinued operations, end of period — — — 223 — 223 Cash, restricted cash and cash equivalents, end of period $ — $ — $ 109 $ 747 $ — $ 856 Year Ended December 31, 2014 Parent HWF Issuers Guarantors Non-Guarantors Eliminations Total (in millions) Operating Activities: Net cash provided by operating activities $ — $ — $ 1,085 $ 522 $ (300 ) $ 1,307 Investing Activities: Capital expenditures for property and equipment — — (5 ) (263 ) — (268 ) Proceeds from asset dispositions — — 4 40 — 44 Contract acquisition costs — — (19 ) (46 ) — (65 ) Capitalized software costs — — (64 ) (5 ) — (69 ) Other — — 11 37 — 48 Net cash used in investing activities — — (73 ) (237 ) — (310 ) Financing Activities: Borrowings — — — 350 — 350 Repayment of debt — (1,000 ) — (424 ) — (1,424 ) Debt issuance costs — (6 ) — (3 ) — (9 ) Capital contribution — — — 22 (9 ) 13 Intercompany transfers — 1,006 (1,094 ) 88 — — Intercompany dividends — — — (309 ) 309 — Distributions to noncontrolling interests — — — (5 ) — (5 ) Net cash used in financing activities — — (1,094 ) (281 ) 300 (1,075 ) Effect of exchange rate changes on cash, restricted cash and cash equivalents — — — (14 ) — (14 ) Net decrease in cash, restricted cash and cash equivalents — — (82 ) (10 ) — (92 ) Cash, restricted cash and cash equivalents from continuing operations, beginning of period — — 201 505 — 706 Cash, restricted cash and cash equivalents from discontinued operations, beginning of period — — 1 153 — 154 Cash, restricted cash and cash equivalents, beginning of period — — 202 658 — 860 Cash, restricted cash and cash equivalents from continuing operations, end of period — — 119 509 — 628 Cash, restricted cash and cash equivalents from discontinued operations, end of period — — 1 139 — 140 Cash, restricted cash and cash equivalents, end of period $ — $ — $ 120 $ 648 $ — $ 768 |