-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AhSoBDwov62/j3o2bape+HfLptXDwqev6SXsEpXu8gjj0+l1NTu9+eYIFg3DkRK0 Q7EiqCpn+oRtP6oGZme0PA== 0000950112-96-002174.txt : 19960627 0000950112-96-002174.hdr.sgml : 19960627 ACCESSION NUMBER: 0000950112-96-002174 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960626 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROMUS HOTEL CORP CENTRAL INDEX KEY: 0000944647 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 621596939 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11463 FILM NUMBER: 96585993 BUSINESS ADDRESS: STREET 1: 6800 POPLAR AVENUE STREET 2: STE 200 CITY: MEMPHIS STATE: TN ZIP: 38138 MAIL ADDRESS: STREET 1: 6800 POPLAR AVENUE STREET 2: STE 200 CITY: MEMPHIS STATE: TN ZIP: 38138 11-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K (Mark One) [x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the period from June 30, 1995 (date of inception) through December 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission File No. 1-11463 A. Full title of the plan and address of the plan, if different from that of the issuer named below: The Promus Hotel Corporation Savings and Retirement Plan B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Promus Hotel Corporation 755 Crossover Lane Memphis, Tennessee 38117 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ---------------------------------------- To the Trustees of The Promus Hotel Corporation Savings and Retirement Plan: We have audited the accompanying statement of net assets available for plan benefits of THE PROMUS HOTEL CORPORATION SAVINGS AND RETIREMENT PLAN as of December 31, 1995, and the related statement of changes in net assets available for plan benefits, with fund information, for the period from June 30, 1995 (date of inception) through December 31, 1995. These financial statements and the schedules referred to below are the responsibility of the Plan Administrator. Our responsibility is to express an opinion on these financial statements and schedules based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of The Promus Hotel Corporation Savings and Retirement Plan as of December 31, 1995, and the changes in its net assets available for plan benefits, with fund information, for the period from June 30, 1995 (date of inception) through December 31, 1995, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of investments as of December 31, 1995 (Exhibit I) and of reportable transactions for the period from June 30, 1995 (date of inception) through December 31, 1995 (Exhibit II) are presented for purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The fund information in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits is also presented for purposes of additional analysis rather than to present the net assets available for plan benefits and changes in net assets available for plan benefits of each fund. The supplemental schedules and fund information have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Memphis, Tennessee, June 7, 1996. 2 THE PROMUS HOTEL CORPORATION SAVINGS AND RETIREMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION AS OF DECEMBER 31, 1995 (IN THOUSANDS)
FUND INFORMATION ------------------------------------------------- PARTICIPANT DIRECTED FUNDS ------------------------------------------------- Promus Aggressive Diversified Long-term Stock Fund Stock Fund Stock Fund Bond Fund ---------- ---------- ----------- --------- ASSETS Investments Common Stock $15,765 $ -- $ -- $ -- Mutual Funds -- 3,371 -- 4,729 Common/collective trust funds -- -- 7,063 -- Corporate securities -- -- -- -- U. S. government and agency securities -- -- -- -- Temporary investments -- -- -- -- Loans to participants -- -- -- -- Receivables Interest and dividends -- -- -- -- Contributions 14 4 5 1 Other 33 (2) 2 (7) Due (to) from other funds 2,550 249 233 (2,881) Cash 37 9 14 2 ------- ------ ------ ------ Total assets 18,399 3,631 7,317 1,844 ------- ------ ------ ------ LIABILITIES Bank overdrafts (36) (10) (16) (2) Accrued expenses (11) (1) (3) -- Accounts payable -- (1) (2) -- Refunds payable (64) (16) (24) (3) Other 92 19 (160) 3 ------- ------ ------ ------- Total liabilities (19) (9) (205) (2) ------- ------ ------ ------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $18,380 $3,622 $7,112 $ 1,842 ======= ====== ====== =======
----------------------------------------------------------- Non- Participant Directed Funds ---------------------------- -------------------------- Income Treasury Executive ESOP Loan Fund Fund Life Fund Fund Fund Total ------ -------- --------- ----- ------ ------ (Note 5) ASSETS Investments Common Stock $ -- $ -- $ -- $1,433 $ -- $17,198 Mutual Funds -- 3,053 -- -- -- 11,153 Common/collective trust funds -- -- -- -- -- 7,063 Corporate securities 991 -- -- -- -- 991 U. S. government and agency securities 5,355 -- -- -- -- 5,355 Temporary investments 1,028 -- -- -- -- 1,028 Loans to participants -- -- -- -- 1,734 1,734 Receivables Interest and dividends 79 -- -- -- -- 79 Contributions 5 2 -- -- -- 31 Other 332 (5) 552 24 -- 929 Due (to) from other funds 18 (190) (10) 31 -- -- Cash 13 5 -- -- -- 80 ------ ------ ---- ------ ------ ------- Total assets 7,821 2,865 542 1,488 1,734 45,641 ------ ------ ---- ------ ------ ------- LIABILITIES Bank overdrafts (14) (5) -- -- -- (83) Accrued expenses (12) (1) -- -- -- (28) Accounts payable (1) (1) -- (1) -- (6) Refunds payable (22) (8) -- -- -- (137) Other 30 12 -- -- -- (4) ------ ------ ---- ------ ------ ------- Total liabilities (19) (3) -- (1) -- (258) ------ ------ ---- ------ ------ ------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $7,802 $2,862 $542 $1,487 $1,734 $45,383 ====== ====== ==== ====== ====== =======
The accompanying Notes to Financial Statements are an integral part of this statement. 3
THE PROMUS HOTEL CORPORATION SAVINGS AND RETIREMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION FOR THE PERIOD FROM JUNE 30, 1995 (DATE OF INCEPTION) THROUGH DECEMBER 31, 1995 (IN THOUSANDS) FUND INFORMATION -------------------------------------------------------------------------------- PARTICIPANT DIRECTED FUNDS -------------------------------------------------------------------------------- Promus Aggressive Diversified Long-term Income Treasury Executive Stock Fund Stock Fund Stock Fund Bond Fund Fund Fund Life Fund ---------- ---------- ----------- --------- ------ -------- --------- (Note 5) NET INVESTMENT INCOME Interest $ -- $ -- $ -- $ -- $ 395 $ -- $ -- Dividends -- 137 15 132 7 80 -- ------- ------- ------ ------- ------ ------ ---- -- 137 15 132 402 80 -- ------- ------- ------ ------- ------ ------ ---- REALIZED GAIN ON INVESTMENTS Aggregate proceeds 16,970 -- 42 9 9,691 108 -- Aggregate average cost 16,904 -- 33 8 9,642 108 -- ------- ------- ------ ------- ------ ------ ---- Net realized gain 66 -- 9 1 49 -- -- ------- ------- ------ ------- ------ ------ ---- UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS (981) 249 782 269 522 -- -- ------- ------- ------ ------- ------ ------ ---- CONTRIBUTIONS Participants 933 137 300 36 307 122 -- Promus 651 100 202 24 209 46 -- ------- ------- ------ ------- ------ ------ ---- 1,584 237 502 60 516 168 -- ------- ------- ------ ------- ------ ------ ---- OTHER Distributions to participants and beneficiaries (442) 15 (84) (39) (495) (35) (10) Transfers between funds 1,418 1,001 390 (2,734) (61) (95) 3 Administrative expenses (86) (13) (25) (4) (37) (10) -- ------- ------- ------ ------- ------ ------ ---- 890 1,003 281 (2,777) (593) (140) (7) ------- ------- ------ ------- ------ ------ ---- INCREASE (DECREASE) IN NET ASSETS AVAILABLE FOR PLAN BENEFITS 1,559 1,626 1,589 (2,315) 896 108 (7) TRANSFERS FROM PARENT'S PLAN 16,821 1,996 5,523 4,157 6,906 2,754 549 ------- ------- ------ ------- ------ ------ ---- NET ASSETS AVAILABLE FOR PLAN BENEFITS, End of period $18,380 $ 3,622 $7,112 $ 1,842 $7,802 $2,862 $542 ======= ======= ====== ======= ====== ====== ====
---------------- Non- Participant Directed Funds ---------------- ESOP Loan Fund Fund Total ------ ----- ------ NET INVESTMENT INCOME Interest $ -- $ 60 $ 455 Dividends -- -- 371 ----- ------ ------- -- 60 826 ----- ------ ------- REALIZED GAIN ON INVESTMENTS Aggregate proceeds 1,458 -- 28,278 Aggregate average cost 835 -- 27,530 ----- ------ ------- Net realized gain 623 -- 748 ----- ------ ------- UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS 252 -- 1,093 ----- ------ ------- CONTRIBUTIONS Participants -- -- 1,835 Promus 1 -- 1,233 ----- ------ ------- 1 -- 3,068 ----- ------ ------- OTHER Distributions to participants and beneficiaries (233) -- (1,323) Transfers between funds -- 78 -- Administrative expenses -- -- (175) ----- ------ ------- (233) 78 (1,498) ----- ------ ------- INCREASE (DECREASE) IN NET ASSETS AVAILABLE FOR PLAN BENEFITS 643 138 4,237 TRANSFERS FROM PARENT'S PLAN 844 1,596 41,146 ----- ------ ------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, End of period $1,487 $1,734 $45,383 ====== ====== ======= The accompanying Notes to Financial Statements are an integral part of this statement. 4 THE PROMUS HOTEL CORPORATION SAVINGS AND RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 NOTE 1 - SUMMARY DESCRIPTION OF THE PLAN The following description of The Promus Hotel Corporation Savings and Retirement Plan (the Plan) is provided for general information purposes only. Reference should be made to the Plan Document for a more complete description of the Plan's provisions. Plan Inception On June 30, 1995, The Promus Companies Incorporated (Parent) completed the transfer of the operations, assets and liabilities of its hotel business composed of three hotel brands targeted at specific market segments (Embassy Suites, Hampton Inn and Homewood Suites) to a new publicly traded entity, Promus Hotel Corporation (Promus or the Company). As approved by Parent's Board of Directors and stockholders on May 26, 1995, this entity was spun-off (the Spin-off) from the Parent and its stock was distributed to Parent's stockholders on a one-for-two basis effective June 30, 1995 (the Distribution). Concurrent with the Distribution, Parent changed its name to Harrah's Entertainment, Inc. The Plan was established effective June 30, 1995, to include eligible employees of Promus. During 1995, the assets of Promus employees held in the Parent's plan were transferred, at fair market value, to this plan. The Plan The Plan was established for Promus employees to accumulate capital for their retirement. Participants can contribute either pre-tax payroll dollars (i.e., temporary deferral of federal and/or state income taxes) or after-tax dollars to the Plan, as provided for under Sections 401(k) and 401(m) of the Internal Revenue Code. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Plan Investment Funds By election of a participant, his or her account balances (contributions, Promus matching funds and accumulated earnings) can be invested in one or in a combination of up to six separate funds of the Plan in 10 percent increments as follows: I. Promus Stock Fund - invested in Promus Hotel Corporation common stock which provides a return based on the change in market value of Promus Hotel Corporation's common stock, including any dividends declared thereon; II. Aggressive Stock Fund - invested in the Delaware Trend Institutional Fund comprised primarily of a mix of common stocks of emerging and other growth-oriented companies, including securities convertible to common stocks which provide a return based on the performance of stocks included within the fund, including dividends thereon; III. Diversified Stock Fund - invested mainly in stocks through the State Street collective trust fund which provide a return based on the performance of stocks included within the trust funds, including dividends thereon; 5 NOTE 1 - SUMMARY DESCRIPTION OF THE PLAN (Continued) IV. Long-term Bond Fund - invested in the Vanguard Long-term Corporate Portfolio, a mutual fund with investments in a diversified mix of long-term investment grade bonds which provides a return based on specific interest rates of securities included in the portfolio, plus changes in market interest rates which either increase or decrease the market value of the security; V. Income Fund - invested in intermediate term bonds managed by Western Asset Management and "guaranteed investment contracts" issued by major insurance companies, the United States Government and its agencies, major corporations and other financial institutions; which provides a return based on specific interest rates of securities included in the portfolio, plus changes in market interest rates which either increase or decrease the market value of the security; or VI. Treasury Fund - invested in a Dreyfus money market mutual fund that invests solely in United States Treasury Department backed short-term securities issued by the United States Government which provides a return based on specific interest rates of the securities owned by the fund. The Plan also includes three other special purpose funds, as follows: VII. Executive Life Fund - segregates the assets and participants' equity accounts related to the investment in Executive Life Insurance Company's guaranteed investment contract. See Note 5 - Executive Life Investment for further details. VIII. ESOP Fund - accounts for special contributions made by Promus of its common stock or cash equivalents to eligible employees. The ESOP Fund was established within the Plan to serve as a means to monitor the accounts and records of the participants. Participants are not allowed to make contributions to their ESOP account and distributions can be made only after a participant terminates employment. IX. Loan Fund - separately tracks loans to participants as provided for under the Plan. See "How To Borrow Money" in the Summary Plan Description for further details. Plan Administration General administration of the Plan shall be carried out by the Company or its delegates, who act as the administrator within the meaning of Title I of ERISA. The Company has the authority to delegate to one or more persons the duties and responsibilities of the Plan Administrator. 6 NOTE 1 - SUMMARY DESCRIPTION OF THE PLAN (Continued) Employee Eligibility, Vesting and Termination Employees of Promus become eligible to join the Plan on the first entry date (January 1 or July 1) following completion of 12 months during which the employee is credited with at least 1,000 hours of service. Participants vest in Promus matching contributions over seven calendar years of credited service as follows: Years of Vested Credited Service Percentage ---------------- ---------- One 10 Two 20 Three 30 Four 40 Five 60 Six 80 Seven 100 An employee's active participation in the Plan ceases upon separation of service at which time his or her vested account balance can then either be withdrawn or remain in the Plan according to the Plan Document. Plan Expenses In connection with the Spin-off, the Trustees entered into a services contract with Parent that provided for certain recordkeeping and administrative services to be provided for a fee to the Plan through December 31, 1995. During the last six months of 1995, the Plan paid Parent approximately $124,000 for services provided. Such costs are reflected as administrative expenses in the accompanying statement of changes in net assets available for plan benefits. Participants' Contributions and Withdrawals During 1995, participants could elect to make basic contributions ranging from two to six percent of their eligible earnings, as defined. If a non-highly compensated participant is making basic pre-tax contributions of six percent of his or her earnings to the Plan, the participant could elect to make supplemental contributions of up to an additional 10% of which 8% can be pre-tax dollars. Highly compensated employees could contribute an additional 10% of after-tax dollars. Promus will match the first six percent of all participants' contributions. Participants' contributions, vested matching Promus contributions and related income may be withdrawn by giving 30 days written notice subject to Plan and Internal Revenue Service rules. In-service withdrawals of pre-tax contributions are subject to hardship rules if the withdrawal occurs before age 59 1/2. Withdrawal of basic after-tax and matching contributions will not prohibit participants from making further contributions; however, if these contributions or any other funds are withdrawn, Promus will not match subsequent contributions for six months. Supplemental after-tax contributions and any earnings thereon may be withdrawn without this penalty. If a participant ceases to make contributions to the Plan, the participant's equity may remain constant, except for allocation of earnings, gains and losses on the Plan's investments. 7 NOTE 1 - SUMMARY DESCRIPTION OF THE PLAN (Continued) Allocation of Forfeitures and Net Plan Income As required by the Plan, forfeited amounts attributed to non-vested Promus matching contributions of terminated employees will not be reallocated to remaining participants for a period of five years. Employees who return to service within that period will be credited, subject to further vesting, at the date of rehire with the unallocated equity amount. The total amount of potential forfeitures of terminated non-vested participants at December 31, 1995 was approximately $1.0 million. Forfeitures are reallocated to active participants based upon their total basic contributions for the year. The Plan Administrator allocated approximately $0.2 million of forfeited funds during 1995. Net Plan income (i.e., unrealized appreciation/depreciation of investments, dividend and interest income, and realized gains or losses on the sale of investments) is allocated monthly to participants based upon the participants' prior month-end equity balances. For purposes of calculating the realized gains or losses on investments, the Plan uses a cumulative average cost per share. Loans Loans may be made to participants upon written application to the Plan Administrator. All loans, other than those used to acquire or construct the principal residence of the participant, shall be repaid within five years. The minimum amount that may be borrowed is $500. The balance of loans outstanding under the Plan to a participant may not exceed $50,000 (which maximum is subject to reduction if another loan is outstanding) or one-half of the vested balance of the participant's account, whichever is less. Loans bear interest at a rate set by the Plan Administrator. During 1995 this rate ranged from 7.5% to 9.5%. Principal and interest paid by a participant are credited to the participant's account. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 - VALUATION OF INVESTMENTS Investments in securities and mutual funds are stated at market values on the last business day of the plan year. NOTE 3 - INVESTMENTS The fair market value of individual investments that represent 5% or more of the Plan's total net assets as of December 31, 1995 is as follows (in thousands): Promus Hotel Corporation Common Stock $17,198 State Street Bank Flagship Fund 7,063 Vanguard Long-Term Corporate Portfolio 4,729 Delaware Trend Institutional Fund 3,371 Dreyfus Treasury Fund 3,053 8 NOTE 4 - EXCESS CONTRIBUTIONS Plan participants received a refund of a portion of their contributions and attributable earnings totaling approximately $6,500 in 1995. These refunds were paid in accordance with Internal Revenue Code Section 401(m) which requires that certain nondiscriminatory tests related to the overall composition of participants' contributions be met and Section 415 which requires annual contributions not to exceed 25% of the participant's compensation, as defined. In March 1996, certain highly compensated Plan participants received a refund of a portion of their 1995 contributions and attributable earnings totaling approximately $133,000. These refunds were paid in accordance with Internal Revenue Code Section 401(k) and 401(m) which require that certain nondiscriminatory tests related to the overall composition of participants' contributions be met. NOTE 5 - EXECUTIVE LIFE INVESTMENT On May 1, 1991, Parent's Plan was amended to provide that approximately $12.9 million attributable to a guaranteed investment contract issued by Executive Life Insurance Company (Executive Life) and held in the Parent's Plan's Income Investment Fund would be frozen until such time as the contract is finally paid out. The $12.9 million represented the book value of this contract as of March 31, 1991. The action was taken by Parent due to the conservatorship imposed on Executive Life by the State of California Insurance Commissioner. Parent had agreed to pay to its' Plan any deficiency between the $12.9 million and amounts finally paid under the contract. Parent also agreed to make interest free loans to its' Plan, which are to be repaid out of any amounts received under the contract, so that persons who leave or who have already left employment may withdraw the vested portion of the Executive Life guaranteed investment contract, as well as other vested funds. On September 3, 1993, the California Department of Insurance closed on a rehabilitation transaction with Aurora National Life Insurance Company (Aurora), whereby substantially all Executive Life assets and restructured liabilities were transferred to Aurora. Additionally, on September 3, 1993, Aurora made a payment of $1,864,150 to the Parent's Plan which reduced the principal of the Executive Life contract. Of this payment, $414,829 was paid to Parent to reduce previous advances. The remaining amount was used to unfreeze part of the Executive Life Fund for each participant on a pro rata basis. On February 4, 1994, Parent's Plan elected to participate in an ongoing rehabilitation plan offered by Aurora. This plan provides for recovery of at least 77.7% of the March 31, 1991 book value. Effective with the Spin-off, Promus provided guarantees, similar to Parent, to the Plan participants of Promus with Executive Life Fund investment balances. Obligations for terminated employees prior to the Spin-off were retained by Parent. Promus remains liable to the Plan for any deficiency between the book value and amounts ultimately received. At December 31, 1995, the guaranteed investment contract was held by the Parent's Plan. The Plan has a receivable from the Parent's Plan for its portion of the contract. Promus expects the contract to be split into two separate contracts in 1996. The restructured contract matures on September 3, 1998, and is presently earning interest at approximately five percent. 9 NOTE 6 - PLAN TERMINATION Although it has not expressed any intent to do so, Promus has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts. NOTE 7 - TAX STATUS The Plan is intended to satisfy the tax qualification requirements under Section 401(a) of the Internal Revenue Code (IRC); therefore, the trust funds of the Plan are intended to be exempt from federal income taxes under Section 501(a). Although a request for determination has not been filed for the Plan, the Plan has not changed significantly from Parent's Plan. A favorable determination letter regarding Parent's Plan status, dated November 19, 1992, was received from the Internal Revenue Service. NOTE 8 - RECONCILIATION TO FORM 5500 As of December 31, 1995, the Plan had approximately $106,000 of pending distributions to participants who elected to withdraw from the operation and earnings of the Plan. This amount is recorded as a liability in the Plan's Form 5500; however, this amount is not recorded as a liability in the accompanying statement of net assets available for plan benefits in accordance with generally accepted accounting principles. The following table reconciles net assets available for benefits per the financial statements to the Form 5500 as filed by the Company for the year ended December 31, 1995. Benefits Net Assets Available Payable to Benefits for Plan Benefits Participants Paid December 31, 1995 ------------ ------- -------------------- Per financial statements $ - $ 1,323 $45,383 Accrued benefit payments 106 106 (106) ------ ------- ------- Per Form 5500 $ 106 $ 1,429 $45,277 ====== ======= ======= NOTE 9 - SUBSEQUENT EVENTS Effective with the 1996 Plan year, the following changes will be made to the Plan: - - Employees hired after December 31, 1995, will not be eligible to enroll in the Plan until they reach age 21. - - The Plan will be split into two plans in order to meet certain IRC requirements. Plan B will include all eligible Suitekeepers and Room Attendants from all hotel brands. Plan A will include all other eligible employees of Promus and its subsidiaries. Both plans will have the same investment options, vesting, provisions and services; the only difference will be eligibility requirements. 10 - - Shares held in the participants' ESOP accounts will be transferred into a newly created ESOP plan, The Promus Hotel Corporation Employee Stock Ownership Plan. Beneficiary elections and vesting will carry over from the Plan. During February 1996, the Trustees of the Plan elected to terminate the ESOP plan upon receipt of a favorable determination from the IRS. - - Effective January 2, 1996, American Express Institutional Services (American Express) will begin administering the Plan. American Express will provide recordkeeping, accounting, daily trading and investment management services. In connection with this change, fund options will remain the same; however, the underlying investments changed. - - Interest rates for loans after December 31, 1995, will be at prime, as stated in the Wall Street Journal. Loans may be pre-paid without any limitations. - - No restrictions in the number of times participants can make investment election changes for prior and current contributions. - - Participants can make investment elections in increments of 1% instead of 10%. - - Forfeitures of terminated participants not fully vested will be immediately distributed to plan participants instead of waiting 5 years, except as otherwise provided by law. 11 EXHIBIT I THE PROMUS HOTEL CORPORATION SAVINGS AND RETIREMENT PLAN SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1995 (IN THOUSANDS) Contract/ Cost Fair Value ------- ---------- COLLECTIVE TRUST FUNDS State Street Bank Flagship Fund $ 6,426 $ 7,063 MUTUAL FUNDS Delaware Trend Institutional Fund 3,239 3,371 Vanguard Long-term Corporate Portfolio 4,354 4,729 Dreyfus Treasury Fund 3,053 3,053 ------- ------- 10,646 11,153 ------- ------- TEMPORARY INVESTMENTS Fidelity Institutional Cash U.S. Government Portfolio 1,028 1,028 CORPORATE SECURITIES Ford Motor Credit Corporation Notes, 7.75%, due 11/15/02 150 154 Heller Financial Corporation Notes, 9.375%, dated 3/31/91, due 3/15/98 107 108 Lehman Brothers Holdings, 7.375%, dated 5/18/95, due 5/15/07 219 227 USL Capital Corporation MTN, 7.76%, dated 3/29/95, due 3/29/02 114 118 TCI Communications, Inc., Variable rate, dated 9/13/95, due 9/15/10 100 101 Time Warner, Inc., 7.975%, dated 8/15/95, due 8/15/04 181 184 YPF Sociedad Anonima, 7.50%, dated 10/26/95, due 10/26/02 98 99 ------- ------- 969 991 ------- ------- UNITED STATES GOVERNMENT AND AGENCY SECURITIES United States Treasury Bonds, 12%, dated 8/15/83, due 8/15/13 152 168 United States Treasury Bonds, 11.625%, dated 10/30/84, due 11/15/04 191 199 United States Treasury Notes, 7.125%, dated 9/30/94, due 9/30/99 489 495 United States Treasury Notes, 7.75%, dated 1/31/95, due 1/31/00 502 531 United States Treasury Notes, 5.625%, dated 10/31/95, due 10/31/97 100 101 United States Treasury Notes, 5.75%, dated 10/31/95, due 10/31/00 100 101 United States Treasury Notes, 5.875%, dated 11/15/95, due 11/15/05 463 473 United States Treasury Notes, 5.625%, dated 11/30/95, due 11/30/00 500 505 12 THE PROMUS HOTEL CORPORATION SAVINGS AND RETIREMENT PLAN SCHEDULE OF INVESTMENTS (CONTINUED) AS OF DECEMBER 31, 1995 (IN THOUSANDS) Contract/ Cost Fair Value ----- ---------- Champion Home Equity Loan, Variable rate, dated 5/1/95, due 5/25/50 $ 97 $ 98 Contimortgage Home Equity Loan, 8.60%, dated 2/23/95, due 2/15/10 110 113 FHLMC Multiclass Mortgage, Floating rate, dated 9/15/91, due 9/15/96 80 77 FHLMC Multiclass Mortgage, 0%, dated 7/1/92, due 7/15/22 39 40 FNMA Strip, 9.5%, dated 3/1/87, due 2/25/17 12 13 FNMA Pool # 303323, 9.0%, dated 4/1/95, due 4/1/25 97 99 First Boston Mortgage Securities Corp., 9.488%, dated 3/1/87, due 5/16/18 53 48 First Boston Mortgage Securities Corp., 0%, dated 3/1/87, due 5/16/18 154 150 GNMA II Pool #008643, Adjustable rate, dated 6/1/95, due 6/20/25 90 91 Lehman Brothers Mortgage, Adjustable rate, dated 9/1/90, due 10/25/20 228 228 Mid-State Trust II, 9.625%, dated 4/1/88, due 4/1/03 151 151 Old Stone Credit Corporation Home Equity Trust, 6.3%, dated 8/25/92, due 9/25/07 16 17 Resolution Trust Corporation, Floating rate, dated 8/1/91, due 8/25/21 59 61 Resolution Trust Corporation, Adjustable rate, dated 8/1/91, due 2/25/21 96 99 Resolution Trust Corporation, Adjustable rate, dated 9/1/91, due 5/25/19 46 46 Resolution Trust Corporation, 7.75%, dated 9/1/91, due 12/25/18 89 90 Resolution Trust Corporation, Adjustable rate, dated 10/1/91, due 10/25/21 79 79 Resolution Trust Corporation, Floating rate, dated 10/1/91, due 7/25/20 307 315 Resolution Trust Corporation, Floating rate, dated 12/1/91, due 6/25/21 226 248 Resolution Trust Corporation, Adjustable rate, dated 2/1/92, due 11/25/21 110 111 Resolution Trust Corporation, Floating rate, dated 5/1/92, due 9/25/21 133 136 Standard Credit Card Trust, 6.55%, dated 10/13/95, due 10/7/07 100 103 The Money Store, Home Equity Trust, 8.00%, dated 3/1/95, due 9/15/05 74 74 13 THE PROMUS HOTEL CORPORATION SAVINGS AND RETIREMENT PLAN SCHEDULE OF INVESTMENTS (CONTINUED) AS OF DECEMBER 31, 1995 (IN THOUSANDS) Contract/ Cost Fair Value ------- ---------- The Money Store, Home Equity Trust, Floating rate, dated 3/30/95, due 6/15/25 $ 91 $ 91 United States Veterans Affairs, 7.25%, dated 9/1/95, due 10/25/10 204 204 ------- ------- 5,238 5,355 ------- ------- *PROMUS HOTEL CORPORATION COMMON STOCK Stock Fund 16,903 15,765 ESOP Fund 1,350 1,433 LOAN FUND Loans to participants, 7.5% to 9.5% N/A 1,734 ------- ------- 18,253 18,932 ------- ------- Total investments $42,560 $44,522 ======= ======= *Represents a party-in-interest transaction. 14 EXHIBIT II THE PROMUS HOTEL CORPORATION SAVINGS AND RETIREMENT PLAN SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE PERIOD FROM JUNE 30, 1995 (DATE OF INCEPTION) THROUGH DECEMBER 31, 1995 (IN THOUSANDS)
Current Value of Cost of Assets on Purchase Selling Assets Transaction Description Price Price Sold Date Gain - ------------------------------------- -------- ------- ------- ----------- ------ *Promus Hotel Corporation Common Stock Purchases $15,595 $ - $ - $ - $ - Sales - 3,650 3,567 3,650 83 *Harrah's Entertainment, Inc. Common Stock Purchases - - - - - Sales - 14,777 14,171 14,777 606 Fidelity Institutional Cash Purchases 3,207 - - - - Sales - 2,179 2,179 2,179 - State Street Bank Flagship Fund Purchases 2,919 - - - - Sales - 42 33 42 9 United States Treasury Note 5.625%, 10/31/95 Purchases 2,598 - - - - Sales - 2,503 2,498 2,503 5
*Represents a party-in-interest transaction. 15 Signature --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. THE PROMUS HOTEL CORPORATION SAVINGS AND RETIREMENT PLAN DATED: JUNE 26, 1996 By /s/ JEFFERY M. JARVIS ------------------------------- (Jeffery M. Jarvis, Vice President and Controller of Promus Hotel Corporation) 16 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated June 7, 1996, included in this Form 11-K for the period from June 30, 1995 (date of inception) through December 31, 1995 into Promus' previously filed Registration Statement File No. 33-59997. It should be noted that we have not audited any financial statements of the Plan subsequent to December 31, 1995 or performed any audit procedures subsequent to the date of our report. /s/ ARTHUR ANDERSEN LLP ----------------------- Arthur Andersen LLP Memphis, Tennessee, June 26, 1996. 17 -----END PRIVACY-ENHANCED MESSAGE-----