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, 2025 Senior Notes and 2027 Senior Notes, assumed the 2024 Senior Notes that were issued in August 2016 by escrow issuers. In March 2017, the HWF Issuers, which are guarantors of the 2024 Senior Notes, issued the 2025 Senior Notes and 2027 Senior Notes, and used the net proceeds and available cash to repay in full the 2021 Senior Notes. The 2024 Senior Notes, 2025 Senior Notes and 2027 Senior Notes are collectively referred to as the Senior Notes. The HWF Issuers and HOC are collectively referred to as the Subsidiary Issuers. The Senior Notes are guaranteed jointly and severally on a senior unsecured basis by HWP, 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. As of September 30, 2017 , 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"). 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 the transfer. Due to the timing of the transfer, our condensed consolidating statements of operations will include the results of operations of HOC beginning October 1, 2016 and our condensed consolidating statement of cash flows reflects the issuance of the 2024 Senior Notes during the nine months ended September 30, 2016. In connection with the spin-offs, certain entities that were previously guarantors of the 2021 Senior Notes and 2024 Senior Notes were released and no longer guaranteed these senior notes. The condensed consolidating financial information presents the financial information based on the composition of the Guarantors and Non-Guarantors as of September 30, 2017 . 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 September 30, 2017 and December 31, 2016 , and for the three and nine months ended September 30, 2017 and 2016 , for the Parent, HWF Issuers, HOC, Guarantors and Non-Guarantors. September 30, 2017 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total (in millions) ASSETS Current Assets: Cash and cash equivalents $ — $ — $ 1 $ 21 $ 648 $ — $ 670 Restricted cash and cash equivalents — — 87 10 29 — 126 Accounts receivable, net — — 15 629 284 — 928 Intercompany receivables — — — — 39 (39 ) — Prepaid expenses — — 6 54 71 (1 ) 130 Income taxes receivable — — — 15 — (10 ) 5 Other — — 1 15 30 — 46 Total current assets — — 110 744 1,101 (50 ) 1,905 Intangibles and Other Assets: Investments in subsidiaries 1,438 6,852 7,983 1,438 — (17,711 ) — Goodwill — — — 3,824 1,359 — 5,183 Brands — — — 4,405 482 — 4,887 Management and franchise contracts, net — — — 663 261 — 924 Other intangible assets, net — — — 276 152 — 428 Property and equipment, net — — 17 64 265 — 346 Deferred income tax assets 9 3 166 — 90 (186 ) 82 Other — 10 31 232 195 — 468 Total intangibles and other assets 1,447 6,865 8,197 10,902 2,804 (17,897 ) 12,318 TOTAL ASSETS $ 1,447 $ 6,865 $ 8,307 $ 11,646 $ 3,905 $ (17,947 ) $ 14,223 LIABILITIES AND EQUITY Current Liabilities: Accounts payable, accrued expenses and other $ — $ 41 $ 174 $ 1,224 $ 473 $ (1 ) $ 1,911 Intercompany payables — — 39 — — (39 ) — Current maturities of long-term debt — 32 — — 17 — 49 Income taxes payable — — — — 83 (10 ) 73 Total current liabilities — 73 213 1,224 573 (50 ) 2,033 Long-term debt — 5,341 983 — 240 — 6,564 Deferred revenues — — — 95 — — 95 Deferred income tax liabilities — — — 1,836 — (186 ) 1,650 Liability for guest loyalty program — — — 879 — — 879 Other — 13 259 564 718 — 1,554 Total liabilities — 5,427 1,455 4,598 1,531 (236 ) 12,775 Equity: Total Hilton stockholders' equity 1,447 1,438 6,852 7,048 2,373 (17,711 ) 1,447 Noncontrolling interests — — — — 1 — 1 Total equity 1,447 1,438 6,852 7,048 2,374 (17,711 ) 1,448 TOTAL LIABILITIES AND EQUITY $ 1,447 $ 6,865 $ 8,307 $ 11,646 $ 3,905 $ (17,947 ) $ 14,223 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 Three Months Ended September 30, 2017 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total (in millions) Revenues Franchise fees $ — $ — $ 35 $ 303 $ 39 $ (4 ) $ 373 Base and other management fees — — 1 48 38 — 87 Incentive management fees — — — 15 37 — 52 Owned and leased hotels — — — — 388 — 388 Other revenues — — — 19 3 (1 ) 21 — — 36 385 505 (5 ) 921 Other revenues from managed and franchised properties — — 30 1,253 150 — 1,433 Total revenues — — 66 1,638 655 (5 ) 2,354 Expenses Owned and leased hotels — — — — 345 — 345 Depreciation and amortization — — 1 58 24 — 83 General and administrative — — 80 — 25 (1 ) 104 Other expenses — — — 6 5 (4 ) 7 — — 81 64 399 (5 ) 539 Other expenses from managed and franchised properties — — 30 1,253 150 — 1,433 Total expenses — — 111 1,317 549 (5 ) 1,972 Operating income (loss) — — (45 ) 321 106 — 382 Interest expense — (60 ) (25 ) — (16 ) 1 (100 ) Gain (loss) on foreign currency transactions — — (1 ) 48 (45 ) — 2 Other non-operating income (loss), net — (1 ) 1 2 4 (1 ) 5 Income (loss) from continuing operations before income taxes and equity in earnings from subsidiaries — (61 ) (70 ) 371 49 — 289 Income tax benefit (expense) — 24 24 (141 ) (15 ) — (108 ) Income (loss) from continuing operations before equity in earnings from subsidiaries — (37 ) (46 ) 230 34 — 181 Equity in earnings from subsidiaries 179 216 262 179 — (836 ) — Net income 179 179 216 409 34 (836 ) 181 Net income attributable to noncontrolling interests — — — — (2 ) — (2 ) Net income attributable to Hilton stockholders $ 179 $ 179 $ 216 $ 409 $ 32 $ (836 ) $ 179 Comprehensive income $ 226 $ 182 $ 215 $ 409 $ 78 $ (883 ) $ 227 Comprehensive income attributable to noncontrolling interests — — — — (1 ) — (1 ) Comprehensive income attributable to Hilton stockholders $ 226 $ 182 $ 215 $ 409 $ 77 $ (883 ) $ 226 Three Months Ended September 30, 2016 Parent HWF Issuers Guarantors Non-Guarantors Eliminations Total (in millions) Revenues Franchise fees $ — $ — $ 284 $ 32 $ (2 ) $ 314 Base and other management fees — — 30 29 — 59 Incentive management fees — — 3 31 — 34 Owned and leased hotels — — — 372 — 372 Other revenues — — 17 1 — 18 — — 334 465 (2 ) 797 Other revenues from managed and franchised properties — — 941 129 — 1,070 Total revenues — — 1,275 594 (2 ) 1,867 Expenses Owned and leased hotels — — — 325 — 325 Depreciation and amortization — — 68 22 — 90 General and administrative — — 84 23 — 107 Other expenses — — 7 5 (2 ) 10 — — 159 375 (2 ) 532 Other expenses from managed and franchised properties — — 941 129 — 1,070 Total expenses — — 1,100 504 (2 ) 1,602 Operating income — — 175 90 — 265 Interest expense — (65 ) (20 ) (12 ) — (97 ) Gain (loss) on foreign currency transactions — — (22 ) 12 — (10 ) Other non-operating income (loss), net — (5 ) 4 1 — — Income (loss) from continuing operations before income taxes and equity in earnings from subsidiaries — (70 ) 137 91 — 158 Income tax benefit (expense) 1 27 (54 ) (43 ) — (69 ) Income (loss) from continuing operations before equity in earnings from subsidiaries 1 (43 ) 83 48 — 89 Equity in earnings from subsidiaries 86 129 118 — (333 ) — Income from continuing operations, net of taxes 87 86 201 48 (333 ) 89 Income from discontinued operations, net of taxes 100 100 100 104 (301 ) 103 Net income 187 186 301 152 (634 ) 192 Net income attributable to noncontrolling interests — — — (5 ) — (5 ) Net income attributable to Hilton stockholders $ 187 $ 186 $ 301 $ 147 $ (634 ) $ 187 Comprehensive income $ 187 $ 189 $ 286 $ 165 $ (634 ) $ 193 Comprehensive income attributable to noncontrolling interests — — — (6 ) — (6 ) Comprehensive income attributable to Hilton stockholders $ 187 $ 189 $ 286 $ 159 $ (634 ) $ 187 Nine Months Ended September 30, 2017 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total (in millions) Revenues Franchise fees $ — $ — $ 103 $ 854 $ 95 $ (13 ) $ 1,039 Base and other management fees — — 1 151 103 — 255 Incentive management fees — — — 58 102 — 160 Owned and leased hotels — — — — 1,065 — 1,065 Other revenues — — 22 48 9 (1 ) 78 — — 126 1,111 1,374 (14 ) 2,597 Other revenues from managed and franchised properties — — 116 3,702 446 — 4,264 Total revenues — — 242 4,813 1,820 (14 ) 6,861 Expenses Owned and leased hotels — — — — 947 — 947 Depreciation and amortization — — 4 183 72 — 259 General and administrative — — 251 — 76 (1 ) 326 Other expenses — — 15 22 17 (13 ) 41 — — 270 205 1,112 (14 ) 1,573 Other expenses from managed and franchised properties — — 116 3,702 446 — 4,264 Total expenses — — 386 3,907 1,558 (14 ) 5,837 Operating income (loss) — — (144 ) 906 262 — 1,024 Interest expense — (183 ) (79 ) — (43 ) 1 (304 ) Gain (loss) on foreign currency transactions — — 12 122 (131 ) — 3 Loss on debt extinguishment — (60 ) — — — — (60 ) Other non-operating income (loss), net — (4 ) 4 6 6 (1 ) 11 Income (loss) from continuing operations before income taxes and equity in earnings from subsidiaries — (247 ) (207 ) 1,034 94 — 674 Income tax benefit (expense) — 97 76 (396 ) (28 ) — (251 ) Income (loss) from continuing operations before equity in earnings from subsidiaries — (150 ) (131 ) 638 66 — 423 Equity in earnings from subsidiaries 419 569 700 419 — (2,107 ) — Net income 419 419 569 1,057 66 (2,107 ) 423 Net income attributable to noncontrolling interests — — — — (4 ) — (4 ) Net income attributable to Hilton stockholders $ 419 $ 419 $ 569 $ 1,057 $ 62 $ (2,107 ) $ 419 Comprehensive income $ 537 $ 415 $ 571 $ 1,058 $ 184 $ (2,225 ) $ 540 Comprehensive income attributable to noncontrolling interests — — — — (3 ) — (3 ) Comprehensive income attributable to Hilton stockholders $ 537 $ 415 $ 571 $ 1,058 $ 181 $ (2,225 ) $ 537 Nine Months Ended September 30, 2016 Parent HWF Issuers Guarantors Non-Guarantors Eliminations Total (in millions) Revenues Franchise fees $ — $ — $ 802 $ 83 $ (7 ) $ 878 Base and other management fees — — 95 84 — 179 Incentive management fees — — 14 89 — 103 Owned and leased hotels — — — 1,089 — 1,089 Other revenues — — 45 8 — 53 — — 956 1,353 (7 ) 2,302 Other revenues from managed and franchised properties — — 2,858 383 — 3,241 Total revenues — — 3,814 1,736 (7 ) 5,543 Expenses Owned and leased hotels — — — 981 — 981 Depreciation and amortization — — 204 69 — 273 Impairment loss — — — 15 — 15 General and administrative — — 207 80 — 287 Other expenses — — 24 22 (7 ) 39 — — 435 1,167 (7 ) 1,595 Other expenses from managed and franchised properties — — 2,858 383 — 3,241 Total expenses — — 3,293 1,550 (7 ) 4,836 Gain on sales of assets, net — — — 1 — 1 Operating income — — 521 187 — 708 Interest expense — (199 ) (51 ) (36 ) — (286 ) Gain (loss) on foreign currency transactions — — (86 ) 50 — (36 ) Other non-operating income (loss), net — (5 ) 10 — — 5 Income (loss) from continuing operations before income taxes and equity in earnings from subsidiaries — (204 ) 394 201 — 391 Income tax benefit (expense) 193 78 (196 ) (86 ) — (11 ) Income (loss) from continuing operations before equity in earnings from subsidiaries 193 (126 ) 198 115 — 380 Equity in earnings from subsidiaries 182 308 182 — (672 ) — Income from continuing operations, net of taxes 375 182 380 115 (672 ) 380 Income from discontinued operations, net of taxes 360 360 360 344 (1,058 ) 366 Net income 735 542 740 459 (1,730 ) 746 Net income attributable to noncontrolling interests — — — (11 ) — (11 ) Net income attributable to Hilton stockholders $ 735 $ 542 $ 740 $ 448 $ (1,730 ) $ 735 Comprehensive income $ 693 $ 539 $ 686 $ 473 $ (1,688 ) $ 703 Comprehensive income attributable to noncontrolling interests — — — (10 ) — (10 ) Comprehensive income attributable to Hilton stockholders $ 693 $ 539 $ 686 $ 463 $ (1,688 ) $ 693 Nine Months Ended September 30, 2017 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total (in millions) Operating Activities: Net cash provided by (used in) operating activities $ — $ (89 ) $ (83 ) $ 630 $ 188 $ — $ 646 Investing Activities: Capital expenditures for property and equipment — — (8 ) (7 ) (21 ) — (36 ) Contract acquisition costs — — — (27 ) (24 ) — (51 ) Capitalized software costs — — — (45 ) — — (45 ) Other — (13 ) — (2 ) 4 (3 ) (14 ) Net cash used in investing activities — (13 ) (8 ) (81 ) (41 ) (3 ) (146 ) Financing Activities: Borrowings — 1,823 — — — — 1,823 Repayment of debt — (1,842 ) — — (6 ) — (1,848 ) Debt issuance costs and redemption premium — (69 ) — — — — (69 ) Repayment of intercompany borrowings — — (3 ) — — 3 — Intercompany transfers 772 190 120 (549 ) (533 ) — Dividends paid (147 ) — — — — — (147 ) Cash transferred in spin-offs of Park and HGV — — — — (501 ) — (501 ) Repurchases of common stock (625 ) — — — — — (625 ) Distributions to noncontrolling interests — — — — (1 ) — (1 ) Tax withholdings on share-based compensation — — (28 ) — — — (28 ) Net cash provided by (used in) financing activities — 102 89 (549 ) (1,041 ) 3 (1,396 ) Effect of exchange rate changes on cash, restricted cash and cash equivalents — — — — 8 — 8 Net decrease in cash, restricted cash and cash equivalents — — (2 ) — (886 ) — (888 ) Cash, restricted cash and cash equivalents from continuing operations, beginning of period — — 90 31 1,062 — 1,183 Cash, restricted cash and cash equivalents from discontinued operations, beginning of period — — — — 501 — 501 Cash, restricted cash and cash equivalents, beginning of period — — 90 31 1,563 — 1,684 Cash, restricted cash and cash equivalents, end of period $ — $ — $ 88 $ 31 $ 677 $ — $ 796 Nine Months Ended September 30, 2016 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total (in millions) Operating Activities: Net cash provided by (used in) operating activities $ — $ (127 ) $ — $ 264 $ 920 $ (88 ) $ 969 Investing Activities: Capital expenditures for property and equipment — — — (3 ) (224 ) — (227 ) Proceeds from asset dispositions — — — — 1 — 1 Contract acquisition costs — — — (28 ) (7 ) — (35 ) Capitalized software costs — — — (50 ) (6 ) — (56 ) Other — — — (32 ) 3 — (29 ) Net cash used in investing activities — — — (113 ) (233 ) — (346 ) Financing Activities: Borrowings — — 1,000 — — — 1,000 Repayment of debt — (8 ) — — (1,086 ) — (1,094 ) Debt issuance costs — (12 ) (20 ) — (3 ) — (35 ) Intercompany transfers 207 147 (890 ) (222 ) 758 — — Dividends paid (207 ) — — — — — (207 ) Intercompany dividends — — — — (88 ) 88 — Distributions to noncontrolling interests — — — — (6 ) — (6 ) Tax withholdings on share-based compensation — — — (13 ) — — (13 ) Net cash provided by (used in) financing activities — 127 90 (235 ) (425 ) 88 (355 ) Effect of exchange rate changes on cash, restricted cash and cash equivalents — — — — 7 — 7 Net increase (decrease) in cash, restricted cash and cash equivalents — — 90 (84 ) 269 — 275 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 25 494 — 609 Cash, restricted cash and cash equivalents from discontinued operations, end of period — — — — 522 — 522 Cash, restricted cash and cash equivalents, end of period $ — $ — $ 90 $ 25 $ 1,016 $ — $ 1,131 |