Condensed Consolidating Guarantor Financial Information | Condensed Consolidating Guarantor Financial Information Hilton Worldwide Finance LLC and Hilton Worldwide Finance Corp. (together, the "HWF Issuers"), which are 100 percent owned by Hilton Worldwide Parent LLC ("HWP"), which is 100 percent owned by the Parent, issued the 2025 Senior Notes and the 2027 Senior Notes. Hilton Domestic Operating Company Inc. ("HOC"), which is 100 percent owned by Hilton Worldwide Finance LLC, assumed the 2024 Senior Notes, issued the 2026 Senior Notes and, in June 2019, issued the 2030 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 the Parent, HWP and substantially all of the Parent's direct and indirect wholly 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 our senior secured credit facilities will guarantee the Senior Notes. Additionally, the HWF Issuers are guarantors of the 2024 Senior Notes, the 2026 Senior Notes and the 2030 Senior Notes, and HOC is a guarantor of the 2025 Senior Notes and the 2027 Senior Notes. As of December 31, 2019, none of our foreign subsidiaries or U.S. subsidiaries owned by foreign subsidiaries or conducting foreign operations or our non-wholly owned subsidiaries guaranteed 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 our senior secured credit facilities; (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. Subsequent to December 31, 2019, we intend to merge the HWF Issuers with and into HOC, with HOC as the surviving entity. The following tables present the condensed consolidating financial information as of December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017, for the Parent, HWF Issuers, HOC, Guarantors and Non-Guarantors. The condensed consolidating financial information presents the financial information for all periods based on the composition of the Guarantors as of December 31, 2019. December 31, 2019 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total (in millions) ASSETS Current Assets: Cash and cash equivalents $ — $ — $ 1 $ 10 $ 527 $ — $ 538 Restricted cash and cash equivalents — — 36 21 35 — 92 Accounts receivable, net — — 26 897 338 — 1,261 Intercompany receivables — — — — 40 (40) — Prepaid expenses — — 43 40 52 (5) 130 Other — 1 1 39 54 (23) 72 Total current assets — 1 107 1,007 1,046 (68) 2,093 Intangibles and Other Assets: Investments in subsidiaries (468) 3,846 7,645 (468) — (10,555) — Goodwill — — — 3,824 1,335 — 5,159 Brands — — — 4,405 472 — 4,877 Management and franchise contracts, net — — 1 448 331 — 780 Other intangible assets, net — — — 306 115 — 421 Operating lease right-of-use assets — — 31 8 828 — 867 Property and equipment, net — — 62 68 250 — 380 Deferred income tax assets 3 7 96 — 129 (135) 100 Other — 11 38 49 182 — 280 Total intangibles and other assets (465) 3,864 7,873 8,640 3,642 (10,690) 12,864 TOTAL ASSETS $ (465) $ 3,865 $ 7,980 $ 9,647 $ 4,688 $ (10,758) $ 14,957 LIABILITIES AND EQUITY (DEFICIT) Current Liabilities: Accounts payable, accrued expenses and other $ 17 $ 21 $ 277 $ 695 $ 715 $ (22) $ 1,703 Current maturities of long-term debt — — 19 — 18 — 37 Current portion of deferred revenues — — 107 218 13 (6) 332 Intercompany payables — — 40 — — (40) — Current portion of liability for guest loyalty program — — — 799 — — 799 Total current liabilities 17 21 443 1,712 746 (68) 2,871 Long-term debt — 4,274 3,472 — 210 — 7,956 Operating lease liabilities — — 37 5 995 — 1,037 Deferred revenues — — — 755 72 — 827 Deferred income tax liabilities — — — 930 — (135) 795 Liability for guest loyalty program — — — 1,060 — — 1,060 Other — 38 182 82 581 — 883 Total liabilities 17 4,333 4,134 4,544 2,604 (203) 15,429 Equity (Deficit): Total Hilton stockholders' equity (deficit) (482) (468) 3,846 5,103 2,074 (10,555) (482) Noncontrolling interests — — — — 10 — 10 Total equity (deficit) (482) (468) 3,846 5,103 2,084 (10,555) (472) TOTAL LIABILITIES AND EQUITY (DEFICIT) $ (465) $ 3,865 $ 7,980 $ 9,647 $ 4,688 $ (10,758) $ 14,957 December 31, 2018 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total (in millions) ASSETS Current Assets: Cash and cash equivalents $ — $ — $ 3 $ 17 $ 383 $ — $ 403 Restricted cash and cash equivalents — — 34 15 32 — 81 Accounts receivable, net — — 10 735 405 — 1,150 Intercompany receivables — — — — 40 (40) — Prepaid expenses — — 52 37 80 (9) 160 Other — 1 1 36 154 (3) 189 Total current assets — 1 100 840 1,094 (52) 1,983 Intangibles and Other Assets: Investments in subsidiaries 557 5,131 7,930 557 — (14,175) — Goodwill — — — 3,824 1,336 — 5,160 Brands — — — 4,404 465 — 4,869 Management and franchise contracts, net — — — 556 316 — 872 Other intangible assets, net — — — 287 128 — 415 Property and equipment, net — — 27 65 275 — 367 Deferred income tax assets 4 — 94 — 90 (98) 90 Other — 23 33 22 161 — 239 Total intangibles and other assets 561 5,154 8,084 9,715 2,771 (14,273) 12,012 TOTAL ASSETS $ 561 $ 5,155 $ 8,184 $ 10,555 $ 3,865 $ (14,325) $ 13,995 LIABILITIES AND EQUITY Current Liabilities: Accounts payable, accrued expenses and other $ 10 $ 19 $ 229 $ 529 $ 765 $ (3) $ 1,549 Current maturities of long-term debt — — — — 16 — 16 Current portion of deferred revenues — — 106 239 14 (9) 350 Intercompany payables — — 40 — — (40) — Current portion of liability for guest loyalty program — — — 700 — — 700 Total current liabilities 10 19 375 1,468 795 (52) 2,615 Long-term debt — 4,573 2,467 — 226 — 7,266 Deferred revenues — — — 762 64 — 826 Deferred income tax liabilities — 6 — 962 28 (98) 898 Liability for guest loyalty program — — — 969 — — 969 Other — — 211 93 559 — 863 Total liabilities 10 4,598 3,053 4,254 1,672 (150) 13,437 Equity: Total Hilton stockholders' equity 551 557 5,131 6,301 2,186 (14,175) 551 Noncontrolling interests — — — — 7 — 7 Total equity 551 557 5,131 6,301 2,193 (14,175) 558 TOTAL LIABILITIES AND EQUITY $ 561 $ 5,155 $ 8,184 $ 10,555 $ 3,865 $ (14,325) $ 13,995 Year Ended December 31, 2019 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total (in millions) Revenues Franchise and licensing fees $ — $ — $ 275 $ 1,268 $ 156 $ (18) $ 1,681 Base and other management fees — — 1 207 124 — 332 Incentive management fees — — — 77 153 — 230 Owned and leased hotels — — — — 1,422 — 1,422 Other revenues — — 3 82 16 — 101 — — 279 1,634 1,871 (18) 3,766 Other revenues from managed and franchised properties — — 320 4,768 598 — 5,686 Total revenues — — 599 6,402 2,469 (18) 9,452 Expenses Owned and leased hotels — — — — 1,254 — 1,254 Depreciation and amortization — — 7 255 84 — 346 General and administrative — — 339 — 132 (30) 441 Other expenses — — 8 11 41 12 72 — — 354 266 1,511 (18) 2,113 Other expenses from managed and franchised properties — — 324 4,835 604 — 5,763 Total expenses — — 678 5,101 2,115 (18) 7,876 Gain on sale of assets, net — — — — 81 — 81 Operating income (loss) — — (79) 1,301 435 — 1,657 Interest expense — (192) (166) (1) (55) — (414) Gain (loss) on foreign currency transactions — — 3 (24) 19 — (2) Other non-operating income (loss), net — (11) 7 (6) 13 — 3 Income (loss) before income taxes and equity in earnings from subsidiaries — (203) (235) 1,270 412 — 1,244 Income tax benefit (expense) — 49 51 (313) (145) — (358) Income (loss) before equity in earnings from subsidiaries — (154) (184) 957 267 — 886 Equity in earnings from subsidiaries 881 1,035 1,219 881 — (4,016) — Net income 881 881 1,035 1,838 267 (4,016) 886 Net income attributable to noncontrolling interests — — — — (5) — (5) Net income attributable to Hilton stockholders $ 881 $ 881 $ 1,035 $ 1,838 $ 262 $ (4,016) $ 881 Comprehensive income $ 823 $ 838 $ 1,042 $ 1,838 $ 245 $ (3,958) $ 828 Comprehensive income attributable to noncontrolling interests — — — — (5) — (5) Comprehensive income attributable to Hilton stockholders $ 823 $ 838 $ 1,042 $ 1,838 $ 240 $ (3,958) $ 823 Year Ended December 31, 2018 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total (in millions) Revenues Franchise and licensing fees $ — $ — $ 227 $ 1,182 $ 139 $ (18) $ 1,530 Base and other management fees — — 1 205 115 — 321 Incentive management fees — — — 78 157 — 235 Owned and leased hotels — — — — 1,484 — 1,484 Other revenues — — 6 78 14 — 98 — — 234 1,543 1,909 (18) 3,668 Other revenues from managed and franchised properties — — 245 4,376 617 — 5,238 Total revenues — — 479 5,919 2,526 (18) 8,906 Expenses Owned and leased hotels — — — — 1,332 — 1,332 Depreciation and amortization — — 6 237 82 — 325 General and administrative — — 323 — 130 (10) 443 Other expenses — — 7 21 31 (8) 51 — — 336 258 1,575 (18) 2,151 Other expenses from managed and franchised properties — — 236 4,466 621 — 5,323 Total expenses — — 572 4,724 2,196 (18) 7,474 Operating income (loss) — — (93) 1,195 330 — 1,432 Interest expense — (227) (106) — (38) — (371) Gain (loss) on foreign currency transactions — — 4 (99) 84 — (11) Other non-operating income (loss), net — (9) 3 16 18 — 28 Income (loss) before income taxes and equity in earnings from subsidiaries — (236) (192) 1,112 394 — 1,078 Income tax benefit (expense) — 57 39 (263) (142) — (309) Income (loss) before equity in earnings from subsidiaries — (179) (153) 849 252 — 769 Equity in earnings from subsidiaries 764 943 1,096 764 — (3,567) — Net income 764 764 943 1,613 252 (3,567) 769 Net income attributable to noncontrolling interests — — — — (5) — (5) Net income attributable to Hilton stockholders $ 764 $ 764 $ 943 $ 1,613 $ 247 $ (3,567) $ 764 Comprehensive income $ 707 $ 784 $ 932 $ 1,612 $ 187 $ (3,510) $ 712 Comprehensive income attributable to noncontrolling interests — — — — (5) — (5) Comprehensive income attributable to Hilton stockholders $ 707 $ 784 $ 932 $ 1,612 $ 182 $ (3,510) $ 707 Year Ended December 31, 2017 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total (in millions) Revenues Franchise and licensing fees $ — $ — $ 143 $ 1,077 $ 118 $ (17) $ 1,321 Base and other management fees — — 1 195 128 — 324 Incentive management fees — — — 76 146 — 222 Owned and leased hotels — — — — 1,432 — 1,432 Other revenues — — 31 70 11 (7) 105 — — 175 1,418 1,835 (24) 3,404 Other revenues from managed and franchised properties — — 159 3,986 582 — 4,727 Total revenues — — 334 5,404 2,417 (24) 8,131 Expenses Owned and leased hotels — — — — 1,269 — 1,269 Depreciation and amortization — — 5 242 89 — 336 General and administrative — — 327 — 118 (6) 439 Other expenses — — 17 29 27 (17) 56 — — 349 271 1,503 (23) 2,100 Other expenses from managed and franchised properties — — 147 4,147 605 — 4,899 Total expenses — — 496 4,418 2,108 (23) 6,999 Gain (loss) on sale of assets, net — — — (1) 1 — — Operating income (loss) — — (162) 985 310 (1) 1,132 Interest expense — (244) (61) — (47) 1 (351) Gain (loss) on foreign currency transactions — — 10 124 (131) — 3 Loss on debt extinguishment — (60) — — — — (60) Other non-operating income (loss), net — (3) 4 7 21 — 29 Income (loss) before income taxes and equity in earnings from subsidiaries — (307) (209) 1,116 153 — 753 Income tax benefit (expense) (3) 122 26 89 102 — 336 Income (loss) before equity in earnings from subsidiaries (3) (185) (183) 1,205 255 — 1,089 Equity in earnings from subsidiaries 1,087 1,272 1,455 1,087 — (4,901) — Net income 1,084 1,087 1,272 2,292 255 (4,901) 1,089 Net income attributable to noncontrolling interests — — — — (5) — (5) Net income attributable to Hilton stockholders $ 1,084 $ 1,087 $ 1,272 $ 2,292 $ 250 $ (4,901) $ 1,084 Comprehensive income $ 1,281 $ 1,101 $ 1,288 $ 2,295 $ 419 $ (5,098) $ 1,286 Comprehensive income attributable to noncontrolling interests — — — — (5) — (5) Comprehensive income attributable to Hilton stockholders $ 1,281 $ 1,101 $ 1,288 $ 2,295 $ 414 $ (5,098) $ 1,281 Year Ended December 31, 2019 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total (in millions) Operating Activities: Net cash provided by (used in) operating activities $ — $ (153) $ (30) $ 1,494 $ 213 $ (140) $ 1,384 Investing Activities: Capital expenditures for property and equipment — — (14) (7) (60) — (81) Payments received on other financing receivables — — — 3 — — 3 Proceeds from asset disposition — — — — 120 — 120 Capitalized software costs — — — (124) — — (124) Other — — — (30) (11) — (41) Net cash provided by (used in) investing activities — — (14) (158) 49 — (123) Financing Activities: Borrowings — 1,200 1,000 — — — 2,200 Repayment of debt — (1,505) (25) — (17) — (1,547) Debt issuance costs — (13) (16) — — — (29) Intercompany transfers 1,710 471 (888) (1,337) 44 — — Dividends paid (172) — — — — — (172) Repurchases of common stock (1,538) — — — — — (1,538) Intercompany dividends — — — — (140) 140 — Share-based compensation tax withholdings and other — — (27) — — — (27) Net cash provided by (used in) financing activities — 153 44 (1,337) (113) 140 (1,113) Effect of exchange rate changes on cash, restricted cash and cash equivalents — — — — (2) — (2) Net increase (decrease) in cash, restricted cash and cash equivalents — — — (1) 147 — 146 Cash, restricted cash and cash equivalents, beginning of period — — 37 32 415 — 484 Cash, restricted cash and cash equivalents, end of period $ — $ — $ 37 $ 31 $ 562 $ — $ 630 Year Ended December 31, 2018 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total (in millions) Operating Activities: Net cash provided by (used in) operating activities $ — $ (185) $ (8) $ 1,128 $ 320 $ — $ 1,255 Investing Activities: Capital expenditures for property and equipment — — (9) (7) (56) — (72) Payments received on other financing receivables — — — 49 1 — 50 Capitalized software costs — — — (87) — — (87) Other — — — (6) (16) — (22) Net cash used in investing activities — — (9) (51) (71) — (131) Financing Activities: Borrowings — 175 1,500 — 1 — 1,676 Repayment of debt — (985) — — (20) — (1,005) Debt issuance costs — — (21) — — — (21) Intercompany transfers 1,902 995 (1,444) (1,070) (383) — — Dividends paid (181) — — — — — (181) Repurchases of common stock (1,721) — — — — — (1,721) Share-based compensation tax withholdings and other — — (44) — — — (44) Other — — — (3) (1) — (4) Net cash provided by (used in) financing activities — 185 (9) (1,073) (403) — (1,300) Effect of exchange rate changes on cash, restricted cash and cash equivalents — — — — (10) — (10) Net increase (decrease) in cash, restricted cash and cash equivalents — — (26) 4 (164) — (186) Cash, restricted cash and cash equivalents, beginning of period — — 63 28 579 — 670 Cash, restricted cash and cash equivalents, end of period $ — $ — $ 37 $ 32 $ 415 $ — $ 484 Year Ended December 31, 2017 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total (in millions) Operating Activities: Net cash provided by (used in) operating activities $ — $ (113) $ (103) $ 950 $ 285 $ (170) $ 849 Investing Activities: Capital expenditures for property and equipment — — (12) (12) (34) — (58) Payments received on other financing receivables — — — 7 — — 7 Capitalized software costs — — — (75) — — (75) Other — (13) — (8) 3 (3) (21) Net cash used in investing activities — (13) (12) (88) (31) (3) (147) Financing Activities: Borrowings — 1,822 — — 2 — 1,824 Repayment of debt — (1,852) — — (8) — (1,860) Debt issuance costs and redemption premium — (69) — — — — (69) Repayment of intercompany borrowings — — (3) — — 3 — Intercompany transfers 1,086 225 122 (865) (568) — — Dividends paid (195) — — — — — (195) Repurchases of common stock (891) — — — — — (891) Intercompany dividends — — — — (170) 170 — Cash transferred in spin-offs — — — — (501) — (501) Share-based compensation tax withholdings and other — — (31) — — — (31) Other — — — — (1) — (1) Net cash provided by (used in) financing activities — 126 88 (865) (1,246) 173 (1,724) Effect of exchange rate changes on cash, restricted cash and cash equivalents — — — — 8 — 8 Net decrease in cash, restricted cash and cash equivalents — — (27) (3) (984) — (1,014) Cash, restricted cash and cash equivalents, beginning of period — — 90 31 1,563 — 1,684 Cash, restricted cash and cash equivalents, end of period $ — $ — $ 63 $ 28 $ 579 $ — $ 670 |