APPLICATION EXERCISE

P&L AND BALANCE SHEET ANALYSIS HILTON WORLDWIDE

BALANCE SHEET:

• What is the accounting equation? Prove the equation by using the amounts presented on Hiltons 2019 Balance Sheet.

• Is the Balance Sheet presenting figures at a point of time or for a period of time? (Hint: Answer can be found in the column header of the Balance Sheet).

• What are the units of the numbers being presented. (Hint: Answer can be found in the header of the Balance Sheet).

• Cash and Cash Equivalents is being reported as $538 and $403 for 2019 and 2018 respectively. What is the actual amounts for both periods?

• What is the most liquid asset on the Balance Sheet?

• How much did current assets increase from 2018 to 2019? Please provide answer in actual dollars.

• Did current liabilities increase or decrease from 2018 to 2019?

• How much did long term debt increase from 2018 to 2019? What is a possible reason why this may have occurred?

CONSSOLIDATED STATEMENT OF OPERATIONS:

• Is the Consolidated Statement of Operations presenting figures at a point of time or for a period of time? (Hint: Answer can be found in the column header of the Consolidated Statement of Operations).

• What is the trend for Hiltons Total Revenue?

• What is the ratio of total expense to total revenue for 2017, 2018 and 2019?

• How much did operating income increase from 2018 to 2019? Please provide both the $ as well as the % increase.

HILTON WORLDWIDE HOLDINGS INC. CONSOLIDATED BALANCE SHEETS (in millions, except share data) December 31. 2019 2018 538 5 92 1.261 130 4031 81 1.150 160 189 1.983 2,093 5,160 4.869 872 415 ASSETS Current Assets: Cash and cash equivalents Restricted cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts of S44 and SA2 Prepaid expenses P. Other Total current assets (variable interest entities - $100 and $90) Intangibles and Other Assets: Goodwill Brands Management and franchise contracts, net Other intangible assets, net Operating lease right-of-use assets Property and equipment, net Deferred income tax assets Other Total intangibles and other assets (variable interest entities - $179 and $178) TOTAL ASSETS LIABILITIES AND EQUITY (DEFICIT) Current Liabilities: Accounts payable, accrued expenses and other Current maturities of long-term debt Current portion of deferred revenues Current portion of liability for guest loyalty program Total current liabilities (variable interest entities - S64 and $56) Long-term debt Operating lease liabilities Deferred revenues Deferred income tax liabilities Liability for guest loyalty program Other Total liabilities (variable interest entities-S260 and $263) Commitments and contingencies - see Note 19 5.159 4.877 780 421 867 380 100 280 12,864 14.957 367 90 * 239 12,012 13.995 1,549 350 700 2,615 7.266 1,703 $ 37 332 799 2,871 7-956 1,037 827 795 1,060 883 15,429 826 898 969 863 13.4372 7:14.957 13.995 1,549 350 700 TOTAL ASSETS LIABILITIES AND EQUITY (DEFICIT) Current Liabilities: Accounts payable, accrued expenses and other Current maturities of long-term debt Current portion of deferred revenues Current portion of liability for guest loyalty program Total current liabilities (variable interest entities - $64 and $56) Long-term debt Operating lease liabilities I Deferred revenues Deferred income tax liabilities Liability for guest loyalty program Other Total liabilities (variable interest entities - $260 and $263) Commitments and contingencies - see Note 19 Equity (Deficit): Preferred stock, $0.01 par value; 3,000,000,000 authoried shares, none issued or outstanding as of December 31, 2019 and 2018 Common stock, 30.01 par value: 10,000,000,000 authorized shares, 333,159,770 issued and 278,985, 125 outstanding as of December 31, 2019 and 332, 105,163 issued and 294,815,890 outstanding as of December 31, 2018 Treasury stock, at cost; 54,174,645 shares as of December 31, 2019 and 37,289,273 shares as of December 31, 2018 Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Total Hilton stockholders' equity (deficit) Noncontrolling Interests Total equity (deficit) TOTAL LIABILITS AND EQUITY (DEFICIT) 1,703 $ 37 332 799. 2,871 7.956 1,037 827 795 1,060 883 15,429 2,615 7266 826 898 969 863 13.437. (4,169) XI 10,489 (5,965) (840) (482). 10 (472) ETU.957 S (2,625) 10,372 (6,417) (782) 551 71 558 13.995 See notes to consolidated financial statements. 67 7:14.957 13.995 1,549 350 700 TOTAL ASSETS LIABILITIES AND EQUITY (DEFICIT) Current Liabilities: Accounts payable, accrued expenses and other Current maturities of long-term debt Current portion of deferred revenues Current portion of liability for guest loyalty program Total current liabilities (variable interest entities - $64 and $56) Long-term debt Operating lease liabilities I Deferred revenues Deferred income tax liabilities Liability for guest loyalty program Other Total liabilities (variable interest entities - $260 and $263) Commitments and contingencies - see Note 19 Equity (Deficit): Preferred stock, $0.01 par value; 3,000,000,000 authoried shares, none issued or outstanding as of December 31, 2019 and 2018 Common stock, 30.01 par value: 10,000,000,000 authorized shares, 333,159,770 issued and 278,985, 125 outstanding as of December 31, 2019 and 332, 105,163 issued and 294,815,890 outstanding as of December 31, 2018 Treasury stock, at cost; 54,174,645 shares as of December 31, 2019 and 37,289,273 shares as of December 31, 2018 Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Total Hilton stockholders' equity (deficit) Noncontrolling Interests Total equity (deficit) TOTAL LIABILITS AND EQUITY (DEFICIT) 1,703 $ 37 332 799. 2,871 7.956 1,037 827 795 1,060 883 15,429 2,615 7266 826 898 969 863 13.437. (4,169) XI 10,489 (5,965) (840) (482). 10 (472) ETU.957 S (2,625) 10,372 (6,417) (782) 551 71 558 13.995 See notes to consolidated financial statements. 67 Year Ended December 31, 2018 2017 2019 Revenues Franchise and licensing fees Base and other management focs Incentive management fees Owned and leased hotels Other revenues $ 1,681 S 1,530 S Les 33254321 230 235 1,422 1,484 101 98 3,766 3,668 5,686 5.238 9452 8.9063 1,321 324 222 1,432 105 3,404 4,727 8.131 Other revenues from managed and franchised properties Total revenues Expenses Owned and leased hotels Depreciation and amortization General and administrative Other expenses 1.254 346 441 72 2,113 5.763 7.876 1,332 325 443 51 2,151 5323 7,474 1,269 336 439 56 2.100 4,899 6,999 Other expenses from managed and franchised properties Total expenses Gain on sale of assets, net 81 Operating income 1.657 1,432 1.132 (414) Interest expense Gain (loss) on foreign currency transactions Loss on debt extinguishment Other non-operating income, net (371) (11) (351) 3 (60) 29 28 Income before income taxes 1,078 753 Income tax benefit (expense). 358) (309) 336 Net income Net income attributable to noncontrolling interests Net Income attributable to Hilton stockholders 886 (5) 881 769 (5) 7645 1,089 (5) 1.084 Earnings per share: Basic 3.07 2,5 s 13.34 HILTON WORLDWIDE HOLDINGS INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in million Year Ended December 31, 2019 2018 2017 886 169. 1089 Nef income Other comprehensive income (loss), net of tax benefit (expense) Currency transfatiny adjustment, neil of tax of S(8), 56 and $32 Pension liability adjustment, net of tax of S3, $3 and S(8) Cash flow hedge adjustment, net of tax of $15, $(8) and S(7) Total other comprehensive income (loss) 163 22 (9) (Toy (9) 22 (57) (58) 197 828 712 1.286 Comprehensive income Comprehensive income attributable to concontrolling interests Comprehensive income attributable to Hilton stockholders 823 707S 1281 See notes to consolidated financial statements. Didw Highlight Erase Year Ended December 31. 2018 2019 2017 886 S 769 $ 1,089 17 336 325 29 346 (81) 2 60 154 16 2 (20) (90) 127 16 4 (14) (103) 121 15 1 (729) (105) (161) (39) 13 148 (204) (11) (24) (17) Operating Activities: Net income Adjustments to reconcile net income to net cash provided by operating activities Amortization of contract acquisition costs Depreciation and amortization Gain on sale of assets, net Loss (gain) on foreign currency transacti ctions Loss on debt extinguishment Share-based compensation Amortization of deferred financing costs and other Distributions from unconsolidated affiliates Deferred income taxes Contract acquisition costs Changes in operating assets and liabilities: Accounts receivable, net Prepaid expenses Other current assets Accounts payable, accrued expenses and other Change in operating lease right-of-use assets Change in operating lease liabilities Change in defared revenues Change in liability for guest loyalty program Change in other liabilities Other Nd cash provided by operating activities Investing Activities: Capital expenditures for property and equipment Payments received on other financing receivables Proceeds from asset disposition Capitalized software costs Other Net cash used in investing activities Financing Activities: Borrowings Repayment of debt Debt issuance costs and redemption premium Dividends paid Cash transferred in spin-offs Repurchases of common stock Share-based compensation tax withholdings and other Other Net cash used in financing activities 334 (80) (17) 191 (14) 2. 1384 (18) 207 (53) (95) 1.255 849 (58) (2) so (81) 3 120 (124) (41) (123) (87 (75) 20 (147) (131) 2,200 (1,547) (29) (172) 1,676 (1,005) (21) (181) 1,824 (1860) (69) (195) (501) (891) (31) (1) (1.724) (1,538) (27) (1,721) (44) (1.113) (1.300) 1384 1.255 849 02) 50 (58) (81) 3 120 (124) (41) (123) (131) (147) Other Net cash provided by operating activities Investing Activities: Capital expenditures for property and equipment Payments received on other financing receivables Proceeds from asset disposition Capitalized software costs Other Net cash used in investing activities Financing Activities: Borrowings Repayment of debt Debt issuance costs and redemption premium Dividends paid Cash transferred in spin-offs Repurchases of common stock Share-based compensation tax withholdings and other Other Na cash used in financing activities 2.200 (1,547) (29) (172) 1,676 (1,005) (21) (181) 1,824 (1,860) (69) (195) (501) (891) (31) (0) (1.724) (1,538) (27) (1,721) (1.113) (1 300) Effect of exchange rate changes on cash, restricted cash and cash equivalents Na increase (decrease) in cash, restricted cash and cash equivalents Cash, restricted cash and cash equivalents, beginning of period Cash, restricted cash and cash equivalents, end of period (2) 146 484 630S (10) (186) 670 (1,014) 1.684 670 See notes to consolidated financial statements. For supplemental disclosures, see Note 21: "Supplemental Disclosures of Cash Flow Information 70 rotocoarch n Hi HILTON WORLDWIDE HOLDINGS INC. CONSOLIDATED BALANCE SHEETS (in millions, except share data) December 31. 2019 2018 538 5 92 1.261 130 4031 81 1.150 160 189 1.983 2,093 5,160 4.869 872 415 ASSETS Current Assets: Cash and cash equivalents Restricted cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts of S44 and SA2 Prepaid expenses P. Other Total current assets (variable interest entities - $100 and $90) Intangibles and Other Assets: Goodwill Brands Management and franchise contracts, net Other intangible assets, net Operating lease right-of-use assets Property and equipment, net Deferred income tax assets Other Total intangibles and other assets (variable interest entities - $179 and $178) TOTAL ASSETS LIABILITIES AND EQUITY (DEFICIT) Current Liabilities: Accounts payable, accrued expenses and other Current maturities of long-term debt Current portion of deferred revenues Current portion of liability for guest loyalty program Total current liabilities (variable interest entities - S64 and $56) Long-term debt Operating lease liabilities Deferred revenues Deferred income tax liabilities Liability for guest loyalty program Other Total liabilities (variable interest entities-S260 and $263) Commitments and contingencies - see Note 19 5.159 4.877 780 421 867 380 100 280 12,864 14.957 367 90 * 239 12,012 13.995 1,549 350 700 2,615 7.266 1,703 $ 37 332 799 2,871 7-956 1,037 827 795 1,060 883 15,429 826 898 969 863 13.4372 7:14.957 13.995 1,549 350 700 TOTAL ASSETS LIABILITIES AND EQUITY (DEFICIT) Current Liabilities: Accounts payable, accrued expenses and other Current maturities of long-term debt Current portion of deferred revenues Current portion of liability for guest loyalty program Total current liabilities (variable interest entities - $64 and $56) Long-term debt Operating lease liabilities I Deferred revenues Deferred income tax liabilities Liability for guest loyalty program Other Total liabilities (variable interest entities - $260 and $263) Commitments and contingencies - see Note 19 Equity (Deficit): Preferred stock, $0.01 par value; 3,000,000,000 authoried shares, none issued or outstanding as of December 31, 2019 and 2018 Common stock, 30.01 par value: 10,000,000,000 authorized shares, 333,159,770 issued and 278,985, 125 outstanding as of December 31, 2019 and 332, 105,163 issued and 294,815,890 outstanding as of December 31, 2018 Treasury stock, at cost; 54,174,645 shares as of December 31, 2019 and 37,289,273 shares as of December 31, 2018 Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Total Hilton stockholders' equity (deficit) Noncontrolling Interests Total equity (deficit) TOTAL LIABILITS AND EQUITY (DEFICIT) 1,703 $ 37 332 799. 2,871 7.956 1,037 827 795 1,060 883 15,429 2,615 7266 826 898 969 863 13.437. (4,169) XI 10,489 (5,965) (840) (482). 10 (472) ETU.957 S (2,625) 10,372 (6,417) (782) 551 71 558 13.995 See notes to consolidated financial statements. 67 7:14.957 13.995 1,549 350 700 TOTAL ASSETS LIABILITIES AND EQUITY (DEFICIT) Current Liabilities: Accounts payable, accrued expenses and other Current maturities of long-term debt Current portion of deferred revenues Current portion of liability for guest loyalty program Total current liabilities (variable interest entities - $64 and $56) Long-term debt Operating lease liabilities I Deferred revenues Deferred income tax liabilities Liability for guest loyalty program Other Total liabilities (variable interest entities - $260 and $263) Commitments and contingencies - see Note 19 Equity (Deficit): Preferred stock, $0.01 par value; 3,000,000,000 authoried shares, none issued or outstanding as of December 31, 2019 and 2018 Common stock, 30.01 par value: 10,000,000,000 authorized shares, 333,159,770 issued and 278,985, 125 outstanding as of December 31, 2019 and 332, 105,163 issued and 294,815,890 outstanding as of December 31, 2018 Treasury stock, at cost; 54,174,645 shares as of December 31, 2019 and 37,289,273 shares as of December 31, 2018 Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Total Hilton stockholders' equity (deficit) Noncontrolling Interests Total equity (deficit) TOTAL LIABILITS AND EQUITY (DEFICIT) 1,703 $ 37 332 799. 2,871 7.956 1,037 827 795 1,060 883 15,429 2,615 7266 826 898 969 863 13.437. (4,169) XI 10,489 (5,965) (840) (482). 10 (472) ETU.957 S (2,625) 10,372 (6,417) (782) 551 71 558 13.995 See notes to consolidated financial statements. 67 Year Ended December 31, 2018 2017 2019 Revenues Franchise and licensing fees Base and other management focs Incentive management fees Owned and leased hotels Other revenues $ 1,681 S 1,530 S Les 33254321 230 235 1,422 1,484 101 98 3,766 3,668 5,686 5.238 9452 8.9063 1,321 324 222 1,432 105 3,404 4,727 8.131 Other revenues from managed and franchised properties Total revenues Expenses Owned and leased hotels Depreciation and amortization General and administrative Other expenses 1.254 346 441 72 2,113 5.763 7.876 1,332 325 443 51 2,151 5323 7,474 1,269 336 439 56 2.100 4,899 6,999 Other expenses from managed and franchised properties Total expenses Gain on sale of assets, net 81 Operating income 1.657 1,432 1.132 (414) Interest expense Gain (loss) on foreign currency transactions Loss on debt extinguishment Other non-operating income, net (371) (11) (351) 3 (60) 29 28 Income before income taxes 1,078 753 Income tax benefit (expense). 358) (309) 336 Net income Net income attributable to noncontrolling interests Net Income attributable to Hilton stockholders 886 (5) 881 769 (5) 7645 1,089 (5) 1.084 Earnings per share: Basic 3.07 2,5 s 13.34 HILTON WORLDWIDE HOLDINGS INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in million Year Ended December 31, 2019 2018 2017 886 169. 1089 Nef income Other comprehensive income (loss), net of tax benefit (expense) Currency transfatiny adjustment, neil of tax of S(8), 56 and $32 Pension liability adjustment, net of tax of S3, $3 and S(8) Cash flow hedge adjustment, net of tax of $15, $(8) and S(7) Total other comprehensive income (loss) 163 22 (9) (Toy (9) 22 (57) (58) 197 828 712 1.286 Comprehensive income Comprehensive income attributable to concontrolling interests Comprehensive income attributable to Hilton stockholders 823 707S 1281 See notes to consolidated financial statements. Didw Highlight Erase Year Ended December 31. 2018 2019 2017 886 S 769 $ 1,089 17 336 325 29 346 (81) 2 60 154 16 2 (20) (90) 127 16 4 (14) (103) 121 15 1 (729) (105) (161) (39) 13 148 (204) (11) (24) (17) Operating Activities: Net income Adjustments to reconcile net income to net cash provided by operating activities Amortization of contract acquisition costs Depreciation and amortization Gain on sale of assets, net Loss (gain) on foreign currency transacti ctions Loss on debt extinguishment Share-based compensation Amortization of deferred financing costs and other Distributions from unconsolidated affiliates Deferred income taxes Contract acquisition costs Changes in operating assets and liabilities: Accounts receivable, net Prepaid expenses Other current assets Accounts payable, accrued expenses and other Change in operating lease right-of-use assets Change in operating lease liabilities Change in defared revenues Change in liability for guest loyalty program Change in other liabilities Other Nd cash provided by operating activities Investing Activities: Capital expenditures for property and equipment Payments received on other financing receivables Proceeds from asset disposition Capitalized software costs Other Net cash used in investing activities Financing Activities: Borrowings Repayment of debt Debt issuance costs and redemption premium Dividends paid Cash transferred in spin-offs Repurchases of common stock Share-based compensation tax withholdings and other Other Net cash used in financing activities 334 (80) (17) 191 (14) 2. 1384 (18) 207 (53) (95) 1.255 849 (58) (2) so (81) 3 120 (124) (41) (123) (87 (75) 20 (147) (131) 2,200 (1,547) (29) (172) 1,676 (1,005) (21) (181) 1,824 (1860) (69) (195) (501) (891) (31) (1) (1.724) (1,538) (27) (1,721) (44) (1.113) (1.300) 1384 1.255 849 02) 50 (58) (81) 3 120 (124) (41) (123) (131) (147) Other Net cash provided by operating activities Investing Activities: Capital expenditures for property and equipment Payments received on other financing receivables Proceeds from asset disposition Capitalized software costs Other Net cash used in investing activities Financing Activities: Borrowings Repayment of debt Debt issuance costs and redemption premium Dividends paid Cash transferred in spin-offs Repurchases of common stock Share-based compensation tax withholdings and other Other Na cash used in financing activities 2.200 (1,547) (29) (172) 1,676 (1,005) (21) (181) 1,824 (1,860) (69) (195) (501) (891) (31) (0) (1.724) (1,538) (27) (1,721) (1.113) (1 300) Effect of exchange rate changes on cash, restricted cash and cash equivalents Na increase (decrease) in cash, restricted cash and cash equivalents Cash, restricted cash and cash equivalents, beginning of period Cash, restricted cash and cash equivalents, end of period (2) 146 484 630S (10) (186) 670 (1,014) 1.684 670 See notes to consolidated financial statements. For supplemental disclosures, see Note 21: "Supplemental Disclosures of Cash Flow Information 70 rotocoarch n Hi