<PAGE>
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                       SECURITIES AND EXCHANGE COMMISSION
 
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
                                   FORM 10-K
 
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934
 
For the fiscal year ended December 31, 1996
 
                                       OR
 
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
 
For the transition period from ....................... to ......................
 
Commission File Number 1-3427
 
                           HILTON HOTELS CORPORATION
 
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
<TABLE>
<S>                               <C>
            DELAWARE                         36-2058176
  (STATE OR OTHER JURISDICTION            (I.R.S. EMPLOYER
      OF INCORPORATION OR              IDENTIFICATION NUMBER)
         ORGANIZATION)
 
    9336 CIVIC CENTER DRIVE                    90210
   BEVERLY HILLS, CALIFORNIA                 (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
            OFFICES)
</TABLE>
 
      Registrant's telephone number, including area code:  (310) 278-4321
 
          Securities registered pursuant to Section 12(b) of the Act:
 
<TABLE>
<CAPTION>
                                                  Name of each exchange
          Title of each class                      on which registered
----------------------------------------  --------------------------------------
<S>                                       <C>
Common Stock, par value $2.50 per share             New York, Pacific
Preferred Redeemable Increased Dividend             New York, Pacific
  Equity Securities-SM-, 8% PRIDES-SM-,
  Convertible Preferred Stock, par value
  $1.00 per share
</TABLE>
 
          Securities registered pursuant to Section 12(g) of the Act:
 
                                      None
 
    Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes /X/    No / /
 
    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
 
    Based upon the February 28, 1997 New York Stock Exchange closing price of
$25.125 per share, the aggregate market value of Registrant's outstanding Common
Stock held by non-affiliates of the Registrant was approximately $4.7 billion.
On that date, there were 249,238,660 shares of Common Stock outstanding.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
    Certain portions of Registrant's annual report to stockholders for the
fiscal year ended December 31, 1996 are incorporated by reference under Parts I
and II. Certain portions of Registrant's definitive proxy statement, to be filed
with the Securities and Exchange Commission pursuant to Regulation 14A not later
than 120 days after the close of the Registrant's fiscal year, are incorporated
by reference under Part III.
 
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<PAGE>
                                     PART I
 
ITEM 1.  BUSINESS
 
                              GENERAL INFORMATION
 
CURRENT OPERATIONS
 
    Hilton Hotels Corporation and its majority and wholly owned subsidiaries are
collectively referred to as "Hilton" or the "Company," unless the context
indicates otherwise. The Company is primarily engaged in the ownership and
management of hotels and hotel-casinos. As of February 1, 1997, all of these
properties were located in the United States, with the exception of seven hotels
and four hotel-casinos operated by the Company's wholly owned subsidiary, Conrad
International Hotels Corporation and its subsidiaries ("Conrad International").
 
    On February 1, 1997, Hilton owned or leased and operated 29 hotels and
managed 42 hotels partially or wholly owned by others. In addition, 174 hotels
were operated under the Hilton, Hilton Garden Inn and Hilton Suites names by
others pursuant to franchises granted by a subsidiary of Hilton.
 
    Twelve of the hotels have substantial gaming operations, six of which are
wholly or majority owned by the Company and are located in Nevada, two of which
are wholly owned by the Company and are located in Atlantic City, New Jersey,
and the other four of which are partially owned by the Company and are located
in Australia, Turkey and Uruguay. The Company also wholly or partially owns and
manages four riverboat casinos in the United States and owns a 50% interest in a
company which operates one casino in Canada. The Company's gaming operations
accounted for approximately 58%, 50% and 33% of its total operating income in
1994, 1995 and 1996, respectively. The Company's domestic gaming operations are
conducted under the Hilton, Flamingo and Bally brand names. For additional
information, see the Five Year Summary on page 53 in the Company's Annual Report
to Stockholders for the fiscal year ended December 31, 1996 (the "Stockholders
Report"), which report is included as Exhibit 13 hereto and, to the extent
specific references are made thereto, incorporated herein by such references.
 
    The Company, along with other entities in which the Company has an
investment, is also engaged in various other activities incidental or related to
the operation of hotels and hotel-casinos. See "Additional Information."
 
    Hilton was organized in the State of Delaware on May 29, 1946. Its principal
executive offices are located at 9336 Civic Center Drive, Beverly Hills,
California 90210, and its telephone number is (310) 278-4321.
 
RECENT DEVELOPMENTS
 
    In December 1996, the Company consummated its acquisition of Bally
Entertainment Corporation ("Bally") through the merger of Bally with and into
the Company, with the Company surviving the merger (the "Bally Merger"). As a
result of the Bally Merger, the Company currently operates the following
additional properties, with the Company's percentage ownership indicated
parenthetically: (i) the 1,265-room Bally's Park Place Casino Resort in Atlantic
City, New Jersey (100%); (ii) the 509-room Atlantic City Hilton in Atlantic
City, New Jersey (formerly named The Grand) (100%); (iii) the 2,814-room Bally's
Las Vegas in Las Vegas, Nevada (84%); (iv) the Bally's Saloon  Gambling Hall
 Hotel dockside casino and 238-room hotel in Robinsonville, Mississippi (near
Memphis, Tennessee) (58%); and (v) the Bally's Casino  Lakeshore Resort
riverboat casino in New Orleans, Louisiana (50%). Additionally, Arthur M.
Goldberg, the former Chairman and Chief Executive Officer of Bally, has joined
the Company's Board of Directors and serves as Executive Vice President and
President--Gaming Operations. See "Acquisitions" in the Notes to the Company's
Consolidated Financial Statements on page 39 in the Stockholders Report and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on page 25 through 32 in the Stockholders Report.
 
    Also in December 1996, subsequent to the Bally Merger, the Company
consummated cash tender offers to purchase the outstanding debt securities of
certain former Bally subsidiaries and the related consent solicitations
(collectively, the "Bally Offers"). In total, the Company received tenders and
consents of approximately $1.1 billion, or 98% of the total aggregate principal
amount of the securities subject to
<PAGE>
the Bally Offers. The Company funded the Bally Offers primarily with commercial
paper. See "Extraordinary Item" in the Notes to the Company's Consolidated
Financial Statements on page 39 in the Stockholders Report.
 
    During the 1996 fourth quarter, the Company acquired from The Prudential
Insurance Company of America ("Prudential") approximately 50% of the ownership
interests in joint ventures which own the Capital Hilton, Chicago Hilton &
Towers, New York Hilton & Towers, Rye Town Hilton, San Francisco Hilton & Towers
and Washington Hilton & Towers. As a result of these acquisitions, the Company's
ownership interest exceeds 99% in each of these properties, except the Chicago
Hilton & Towers, in which the Company's ownership interest is approximately 83%.
The Company continues to manage each of these hotels. In 1997 and 1998, the
Company will have an option to purchase Prudential's remaining interest in such
properties, other than Prudential's .5% interest in the New York Hilton &
Towers, and in certain cases Prudential has the right to require the Company to
purchase such interests. In connection with the Company's acquisition of
Prudential's ownership interest in such joint ventures, the Company and
Prudential eliminated area restrictions which limited the Company's ability to
operate additional hotels in the New York City and Washington, D.C. markets. See
"Acquisitions" in the Notes to the Company's Consolidated Financial Statements
on page 39 in the Stockholders Report, "Hotel Operations--Territorial
Restrictions" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" on pages 25 through 32 in the Stockholders Report.
 
    In January 1997, the Company finalized agreements with Ladbroke Group PLC
("Ladbroke"), whose wholly owned subsidiary, Hilton International Co. ("HI"),
owns the rights to the Hilton name outside the United States. The agreements
provide for the reunification of the Hilton brand worldwide through a strategic
alliance between the companies, including cooperation on sales and marketing,
loyalty programs and other operational matters. The Company and HI have
integrated their reservation systems and, in February 1997, launched the Hilton
HHonors-Registered Trademark- Worldwide loyalty program. In addition, the
alliance permits the Company and Ladbroke to acquire up to 20% of each other's
outstanding capital stock and provides for mutual participation in certain
future hotel development focusing primarily upon management contracts and
franchises. Stephen F. Bollenbach, the Company's President and Chief Executive
Officer, has become a non-executive director of Ladbroke and Peter M. George,
Chief Executive of Ladbroke, has joined the Board of Directors of Hilton as a
non-executive director. Implementation of certain features of the alliance is
subject to the receipt of certain regulatory approvals. See "Hotel
Operations--Territorial Restrictions."
 
    In December 1996, the Company and Patriot American Hospitality, Inc.
("Patriot") entered into a letter of intent for Patriot to acquire and develop a
range of Hilton properties in key U.S. markets. The alliance calls for Patriot
to acquire four existing wholly owned Hilton Suites hotels for approximately
$105 million, develop new suites, acquire and convert full-service hotels and
suites to the Hilton brand and develop approximately 15 new Hilton Garden Inns.
 
    In January 1997, the Company commenced an offer to acquire ITT Corporation
("ITT") in a combination cash and stock transaction. The Company offered a price
of $55 for each ITT share, for a consideration of approximately $6.5 billion.
The total transaction, including assumption of ITT's outstanding debt, would be
valued at approximately $10.5 billion. The Company's offer consists of a cash
tender offer of $55 per share for a majority of the outstanding ITT shares (the
"Tender Offer"), to be followed by a merger whereby ITT shareholders would
receive shares of the Company's Common Stock with a value of $55 in exchange for
each remaining ITT share, subject to appropriate collar provisions. The Company
plans to fund the ITT Tender Offer from a combination of its available cash,
working capital, existing credit facilities, borrowings under credit facilities
that the Company will seek to obtain from commercial banks and/or issuance of
public debt. Hilton has reached a preliminary understanding with HFS
Incorporated ("HFS") under which HFS would license, on a long-term worldwide
basis, the Sheraton trademark, franchise systems and management agreements. The
acquisition is subject to regulatory approvals and other conditions, and
therefore there can be no assurance that the Company will be successful in
acquiring ITT, or if successful, what effect such acquisition will have on the
Company's financial condition or results
 
                                       2
<PAGE>
of operations. On February 12, 1997, the board of directors of ITT recommended
that ITT shareholders reject Hilton's offer as inadequate and not in the best
interests of ITT shareholders. In response, Hilton expressed its continuing
commitment to the transaction, including pursuing the transaction by taking the
matter directly to ITT shareholders.
 
    As of February 1, 1997, the Company owned 41% of the 11 3/4 First Mortgage
Notes due 2002 of Claridge Hotel and Casino Corporation ("Claridge"). Claridge
owns and operates the Claridge Casino Hotel in Atlantic City, New Jersey,
located adjacent to Bally's Park Place. The Company is discussing with Claridge
the possible acquisition by the Company of the Claridge Casino Hotel or all of
the outstanding stock in Claridge. There is no assurance that such acquisition
will occur. Any such acquisition by the Company would be subject to certain
regulatory approvals.
 
    Since January 1, 1996, the Company has taken advantage of additional
opportunities to expand its business, which included the opening of a dockside
casino in Kansas City, Missouri, the opening of the 508-room Conrad
International Centennial Singapore, the opening of the casino in the 300-room
Conrad International Punta del Este Resort and Casino, the acquisition of the
entire ownership interest in the Anchorage Hilton, the acquisition of the
remaining 50% interest in the Hilton Grand Vacations Company joint venture, the
acquisition of an additional ownership interest of approximately 17% in Windsor
Casino Limited, the sale of the Company's 30% ownership interest in the Conrad
International Hong Kong and the sale of the Company's 10% ownership interest in
the Miami Airport Hilton & Towers.
 
    For a more detailed description of the Company's recent developments, see
"Hotel Operations," "Gaming Operations" and "Additional Information--Vacation
Ownership." For a description of the Company's planned expansion activities, see
"Hotel Operations--Expansion Program" and "Gaming Operations--Expansion
Program."
 
INDUSTRY SEGMENTS
 
    Hilton's revenue and income are derived primarily from two sources: (i)
hotel operations, which include the operation of Hilton's owned or leased,
partially owned and managed hotels and franchise fees; and (ii) gaming
operations, which include the operation of Hilton's owned, partially owned and
managed hotel-casinos and riverboat casinos. For financial data relating to the
Company's hotel and gaming operations for the three years ended December 31,
1996, see "Segments of Business" in the Notes to the Company's Consolidated
Financial Statements on pages 48 and 49 in the Stockholders Report.
 
    The Company re-entered the international arena in November 1985, with the
opening of a hotel-casino in Queensland, Australia and, thereafter, the opening
of additional managed (and in some cases, partially owned) hotel properties in
Ireland, England, Hong Kong, Turkey, Belgium, Australia, Spain, Egypt, Singapore
and Uruguay. To date, the amounts of revenues, operating profits and
identifiable assets attributable to geographic areas other than the United
States have not been material.
 
                                HOTEL OPERATIONS
 
OWNED HOTELS
 
    On February 1, 1997, the following hotels were owned in fee and operated by
Hilton:
 
<TABLE>
<CAPTION>
                                                                     YEAR
                                                      NUMBER OF    ACQUIRED
NAME AND LOCATION                                   ROOMS/SUITES   BY HILTON
--------------------------------------------------  -------------  ---------
<S>                                                 <C>            <C>
 
Atlanta Airport Hilton & Towers                              503     1960
  Atlanta, Georgia(1)
Atlantic City Hilton                                         509     1996
  Atlantic City, New Jersey(2)
Bally's Park Place Casino Resort                           1,265     1996
  Atlantic City, New Jersey(2)
</TABLE>
 
                                       3
<PAGE>
<TABLE>
<CAPTION>
                                                                     YEAR
                                                      NUMBER OF    ACQUIRED
NAME AND LOCATION                                   ROOMS/SUITES   BY HILTON
--------------------------------------------------  -------------  ---------
<S>                                                 <C>            <C>
Palmer House Hilton                                        1,639     1988
  Chicago, Illinois(3)
Flamingo Hilton-Las Vegas                                  3,642     1971
  Las Vegas, Nevada
Las Vegas Hilton                                           3,174     1971
  Las Vegas, Nevada
Flamingo Hilton-Laughlin                                   2,000     1990
  Laughlin, Nevada
New Orleans Airport Hilton                                   317     1959
  New Orleans, Louisiana(1)
New York Hilton & Towers                                   2,041     1996
  New York, New York(4)
Waldorf=Astoria                                            1,380     1977
  New York, New York(5)
Portland Hilton                                              455     1963
  Portland, Oregon
Flamingo Hilton-Reno                                         604     1981
  Reno, Nevada(6)
Reno Hilton                                                2,001     1992
  Reno, Nevada
Rye Town Hilton                                              438     1996
  Rye Brook, New York(4)
San Francisco Hilton & Towers                              1,895     1996
  San Francisco, California(4)
Capital Hilton                                               543     1996
  Washington, D.C.(4)
Washington Hilton & Towers                                 1,123     1996
  Washington, D.C.(4)
Hilton Garden Inn                                            195     1993
  Southfield, Michigan(7)
Hilton Suites                                                224     1991
  Auburn Hills, Michigan(8)
Hilton Suites                                                203     1989
  Brentwood, Tennessee(8)
Hilton Suites                                                230     1989
  Orange, California(8)
Hilton Suites                                                226     1990
  Phoenix, Arizona(8)
</TABLE>
 
---------
 
(1) The Atlanta Airport Hilton & Towers and the New Orleans Airport Hilton were
    closed and demolished in 1986 and, thereafter, rebuilt and reopened in 1989.
 
(2) The Company acquired the referenced properties as a result of the Bally
    Merger, which was consummated on December 18, 1996. See "General
    Information--Recent Developments."
 
(3) The Company owned the Palmer House Hilton from May 1946 to December 1962
    and, thereafter, operated the Palmer House Hilton under a lease until
    acquiring the property in February 1988.
 
                                       4
<PAGE>
(4) The Company has an ownership interest in excess of 99% in the joint ventures
    which own each of the referenced properties. The Company had a 50% ownership
    interest in these properties prior to the 1996 acquisition of substantially
    all of Prudential's interest in such properties. See "General
    Information--Recent Developments."
 
(5) The Company operated the Waldorf=Astoria under a lease from February 1950
    until acquiring the property in April 1977.
 
(6) An extension of the casino operation is contained in a structure located on
    an adjacent block with a skywalk connecting it to the main building. This
    structure is held under four long-term leases or subleases, expiring on
    various dates from January 1, 2001 to August 31, 2034, including renewal
    options, all of which may not necessarily be exercised.
 
(7) The Company managed the Hilton Garden Inn from July 1991 until acquiring the
    property in July 1993.
 
(8) The Company has entered into a letter of intent to sell its interest in each
    of the referenced properties to Patriot. Subject to the execution of
    definitive agreements, the sales are anticipated to occur in mid-1997, with
    the Company continuing to manage each of the properties. See "General
    Information--Recent Developments."
 
    As of February 1, 1997, none of the hotels referenced in the table above had
any outstanding mortgage indebtedness, except for (i) the Atlanta Airport Hilton
& Towers in the amount of $50,000,000; and (ii) the New Orleans Airport Hilton
in the amount of $32,000,000.
 
LEASED HOTELS
 
    Hilton leases the land upon which seven hotels are located. Upon the
expiration of such leases, the buildings and other leasehold improvements
presently owned by Hilton revert to the landlords. See "Leases" in the Notes to
the Company's Consolidated Financial Statements on page 50 in the Stockholders
Report. Hilton, in all cases, owns all furniture and equipment, is responsible
for repairs, maintenance, operating expenses and lease rentals, and retains
complete managerial discretion over operations. Generally, Hilton pays a
percentage rental based on the gross revenue of the facility, but in some
instances the rental is a fixed amount.
 
                                       5
<PAGE>
    On February 1, 1997, the following hotels were leased and operated by
Hilton:
 
<TABLE>
<CAPTION>
                                             NUMBER OF
                                               ROOMS
                                           (YEAR ACQUIRED
          NAME AND LOCATION                  BY HILTON)      EXPIRATION DATE
-------------------------------------  ------------------------------------------------------------------------
<S>                                    <C>                   <C>
O'Hare Hilton                                   858          2018
  Chicago, Illinois(1)                         (1991)
 
Oakland Airport Hilton                          363          2033
  Oakland, California                          (1970)
 
Pittsburgh Hilton & Towers                      712          2004, with renewal options aggregating 30 years
  Pittsburgh, Pennsylvania                     (1959)
 
San Diego Hilton Beach & Tennis                 357          2019
  Resort                                       (1965)
  San Diego, California
 
San Francisco Airport Hilton                    527          1998
  San Francisco, California                    (1959)
 
Seattle Airport Hilton                          178          2004, with renewal options aggregating 30 years
  Seattle, Washington                          (1961)
 
Tarrytown Hilton                                236          2003, with renewal options aggregating 40 years
  Tarrytown, New York(2)                       (1993)
</TABLE>
 
---------
 
(1) The Company managed the O'Hare Hilton from 1974 until October 1991, when the
    Company purchased the then remaining leasehold of the hotel. The O'Hare
    Hilton was closed for renovation in October 1991 and reopened in July 1992.
 
(2) The Company managed and was a joint venture partner with respect to the
    Tarrytown Hilton from 1975 until August 1993, when it acquired the remaining
    equity interest in the joint venture leasing the land underlying the hotel.
 
    During the three years ended December 31, 1996, Hilton paid aggregate
rentals, including rentals attributable to the properties listed in the above
table, of $13,300,000, $15,300,000 and $18,000,000, respectively. For
information relating to minimum rental commitments in the future, see "Leases"
in the Notes to the Company's Consolidated Financial Statements on page 50 in
the Stockholders Report.
 
MANAGED HOTELS
 
    On February 1, 1997, Hilton operated 31 domestic hotels and 11 international
hotels under management agreements. Under its standard management arrangement,
Hilton operates a hotel for the benefit of its owner, which either owns or
leases the hotel and the associated personal property. Hilton's management fee
is generally based on a percentage of each hotel's gross revenue plus, in the
majority of properties, an incentive fee based on operating performance. The
expiration dates of Hilton's management agreements range from 1998 to 2021 and
generally contain renewal options ranging from five to 20 years, subject to
certain termination rights.
 
    Under the management agreements, all operating and other expenses are paid
by the owner, and Hilton is generally reimbursed for its out-of-pocket expenses.
In turn, Hilton's managerial discretion is subject to approval by the owner in
certain major areas, including adoption of capital budgets. In some cases, the
owner of a managed hotel is a joint venture in which Hilton has an equity
interest. In addition, the Company has a right of first refusal to purchase an
interest in certain managed hotels. For information relating to Hilton's
investment in entities that own managed properties, see "Investments" in the
Notes to the Company's Consolidated Financial Statements on pages 40 and 41 in
the Stockholders Report.
 
                                       6
<PAGE>
    The Company has also agreed to provide loans or additional investments to
the owners of certain managed hotels under specified circumstances. See
"Commitments and Contingent Liabilities" in the Notes to the Company's
Consolidated Financial Statements on page 50 in the Stockholders Report.
 
    On February 1, 1997, the following hotels were operated by Hilton under
management agreements:
 
<TABLE>
<CAPTION>
NAME AND LOCATION                      NUMBER OF ROOMS/SUITES
-------------------------------------  ----------------------
<S>                                    <C>
DOMESTIC
Anaheim Hilton & Towers                           1,576
  Anaheim, California
 
Anchorage Hilton                                    591
  Anchorage, Alaska(1)
 
Atlanta Hilton & Towers                           1,224
  Atlanta, Georgia
 
Beverly Hilton                                      581
  Beverly Hills, California
 
Chicago Hilton & Towers                           1,543
  Chicago, Illinois(2)
 
Tamarron Hilton Resort                              294
  Durango, Colorado(3)
 
Brunswick Hilton & Towers                           405
  East Brunswick, New Jersey(3)
 
Hilton Hawaiian Village                           2,545
  Honolulu, Hawaii(4)
 
Bally's Las Vegas                                 2,814
  Las Vegas, Nevada(5)
 
Long Beach Hilton                                   393
  Long Beach, California
 
Los Angeles Airport Hilton & Towers               1,234
  Los Angeles, California
 
McLean Hilton                                       458
  McLean, Virginia(6)
 
Fontainebleau Hilton Resort & Towers              1,206
  Miami, Florida
 
Miami Airport Hilton & Towers                       500
  Miami, Florida
 
Minneapolis Hilton & Towers                         814
  Minneapolis, Minnesota
 
Newark Airport Hilton                               374
  Newark, New Jersey
 
New Orleans Hilton Riverside & Towers             1,600
  New Orleans, Louisiana(7)
 
Millenium Hilton                                    561
  New York, New York
 
Turtle Bay Hilton Golf & Tennis                     485
  Resort
  Oahu, Hawaii
</TABLE>
 
                                       7
<PAGE>
<TABLE>
<CAPTION>
NAME AND LOCATION                      NUMBER OF ROOMS/SUITES
-------------------------------------  ----------------------
Hilton at Walt Disney World                         814
  Orlando, Florida(3)
<S>                                    <C>
 
Pasadena Hilton                                     291
  Pasadena, California
 
The Pointe Hilton Resort on South                   636
  Mountain
  Phoenix, Arizona
 
The Pointe Hilton Resort at Squaw                   563
  Peak
  Phoenix, Arizona
 
The Pointe Hilton Resort at Tapatio                 585
  Cliffs
  Phoenix, Arizona
 
Hilton Palacio del Rio                              481
  San Antonio, Texas
 
San Antonio Airport Hilton                          387
  San Antonio, Texas(3)
 
Hilton at Short Hills                               300
  Short Hills, New Jersey
 
Innisbrook Hilton Resort                            873
  Tarpon Springs, Florida(3)
 
Hilton Waikoloa Village                           1,238
  Waikoloa, Hawaii(6)
 
Hilton Suites                                       212
  Oakbrook Terrace, Illinois(3)(4)
 
Hilton Garden Inn                                   152
  Valencia, California(6)
 
INTERNATIONAL
 
Conrad International Barcelona                      412
  Barcelona, Spain(3)
 
Conrad International Treasury Casino,               136
  Brisbane
  Brisbane, Queensland, Australia(6)
 
Conrad International Brussels                       269
  Brussels, Belgium
 
Conrad International Dublin                         191
  Dublin, Ireland(3)(6)
 
Conrad International Hong Kong                      510
  Hong Kong(6)(8)
 
Conrad International Hurghada Resort                260
  Hurghada, Egypt
 
Conrad International Istanbul                       620
  Istanbul, Turkey(3)(6)
 
Conrad International London                         159
  London, England
</TABLE>
 
                                       8
<PAGE>
<TABLE>
<CAPTION>
NAME AND LOCATION                      NUMBER OF ROOMS/SUITES
-------------------------------------  ----------------------
Conrad International Punta del Este                 300
  Resort and Casino
  Punta del Este, Uruguay(3)(6)(9)
<S>                                    <C>
 
Conrad Jupiters, Gold Coast                         609
  Gold Coast,
  Queensland, Australia(6)
 
Conrad International Centennial                     508
  Singapore
  Singapore
</TABLE>
 
---------
 
(1) In February 1997, the Company acquired 100% of the ownership interest in the
    Anchorage Hilton.
 
(2) Hilton has an ownership interest of approximately 83% in the joint venture
    which owns the Chicago Hilton & Towers. Hilton had a 33.3% ownership
    interest in this property prior to the 1996 acquisition of Prudential's
    ownership interest of approximately 50% of the property. See "General
    Information-- Recent Developments."
 
(3) Hilton has made loans which are currently outstanding to the owners of each
    of the referenced properties.
 
(4) Hilton has equity interests of 50% in joint ventures which own each of the
    referenced properties. See "Investments" in the Notes to the Company's
    Consolidated Financial Statements on pages 40 and 41 in the Stockholders
    Report.
 
(5) Hilton owns approximately 84% of Bally's Grand, Inc., which owns and
    operates Bally's Las Vegas.
 
(6) Hilton has equity interests of less than 50% in entities which own each of
    the referenced properties. See "Investments" in the Notes to the Company's
    Consolidated Financial Statements on pages 40 and 41 in the Stockholders
    Report.
 
(7) Hilton has a 67.4% equity interest in the joint venture which owns the New
    Orleans Hilton Riverside & Towers. See "Investments" in the Notes to the
    Company's Consolidated Financial Statements on pages 40 and 41 in the
    Stockholders Report.
 
(8) In February 1997, the Company sold its ownership interest in the Conrad
    International Hong Kong. The Company continues to manage this hotel.
 
(9) The Company commenced casino operations in the Conrad International Punta
    del Este Resort and Casino in January 1997. The hotel is scheduled to open
    in late 1997.
 
FRANCHISE HOTELS
 
    Pursuant to franchises granted by the Company through a subsidiary,
franchise hotels are operated under the Hilton, Hilton Garden Inn or Hilton
Suites names. The franchise hotels operated under the Hilton name are generally
smaller than the full-service hotels operated by the Company, average
approximately 250 rooms in size and target the mid-market segment. Franchise
hotels bearing the Hilton Garden Inn name are approximately 90 to 250 rooms in
size and utilize a modular design constructed around a courtyard containing an
indoor or outdoor swimming pool. The Hilton Suites properties operated pursuant
to franchise agreements utilize an all-suites design with approximately 200 to
250 suites. In general, Hilton approves the plan for, and the location of,
franchise hotels and assists in their design.
 
    On February 1, 1997, there were 174 franchise hotels, of which 169 were
operated under the Hilton name, three were operated under the Hilton Garden Inn
name and two were operated under the Hilton Suites name. In general, franchisees
pay Hilton an initial fee based on the number of rooms in a franchise hotel and
a continuing fee based on a percentage of the facility's room revenue. Although
Hilton does not directly participate in the management or operation of franchise
hotels, it conducts periodic inspections to ensure that Hilton's standards are
maintained and renders advice with respect to hotel operations.
 
    The Company has continued its ongoing program of monitoring and improving
its franchise operations. The Company added 11 franchises to its system in 1996,
while one franchise arrangement was
 
                                       9
<PAGE>
terminated. In addition, the Company has entered into commitment agreements for
an additional 26 franchise hotels scheduled to commence operation during the
remainder of 1997 and 1998.
 
EXPANSION PROGRAM
 
    In January 1996, Hilton announced plans for a major expansion of Hilton
Garden Inn properties over the next five years, with the addition of up to 100
new Hilton Garden Inns. The additional Hilton Garden Inns are anticipated to be
primarily newly constructed facilities which will be operated as franchise
hotels. In December 1996, Hilton and Patriot entered into a letter of intent for
Patriot to develop approximately 15 new Hilton Garden Inns. See "General
Information--Recent Developments."
 
    Hilton also intends to expand its domestic operations through the
acquisition of ownership interests in existing hotels, conversion of existing
hotels into management and franchise properties and through development and
management of vacation ownership resorts. The Company will invest in new
domestic hotel projects or conversion properties where the return on investment
meets the Company's criteria.
 
    The Company has entered into management contracts to operate the following
new international hotels, the anticipated opening dates of which are indicated
parenthetically: the 350-room Conrad International Sharm El Sheikh Resort in
Egypt (summer 1997); the 700-room Conrad International Jakarta in Indonesia
(1999); and the 400-room Conrad International Bangkok in Thailand (1999). Future
development of international hotels by the Company will be subject to agreements
entered into between the Company and Ladbroke in January 1997. Pursuant to such
agreements, Ladbroke has been granted rights to future international development
using the Conrad brand name and the Company and Ladbroke will have the
opportunity to participate in certain of each other's future hotel development
focusing primarily upon management contracts and franchises. See "General
Information--Recent Developments" and "Territorial Restrictions."
 
    The operation of hotels internationally is affected by the political and
economic conditions of the countries and regions in which they are located, in
addition to factors affecting the hotel industry generally. Certain countries
have also restricted, from time to time, the repatriation of funds. The Company
considers the foregoing factors, among others, when evaluating a management
and/or investment opportunity abroad, but the Company can give no assurances
that changes in law or governmental policy will not adversely affect
international operations in the future.
 
TERRITORIAL RESTRICTIONS
 
    Hilton has entered into various agreements which restrict its right to
operate hotels in various areas. The most significant of such restrictions
related to agreements between the Company and Prudential which limited the
Company's right to operate additional hotels in the New York City, Washington,
D.C. and Chicago markets. In connection with the Company's acquisition of
substantially all of Prudential's ownership interests in the New York Hilton &
Towers, Rye Town Hilton, Capital Hilton and Washington Hilton & Towers, the
Company and Prudential terminated the area restrictions with respect to the New
York City and Washington, D.C. markets. See "General Information--Recent
Developments." The area restriction relating to the Chicago market expired in
1996.
 
    Pursuant to an agreement entered into at the time of Hilton's distribution
on December 1, 1964 to its stockholders of all the issued and outstanding
capital stock of HI, as subsequently amended, Hilton was prohibited from
operating facilities outside the United States identified as "Hilton" hotels and
HI was prohibited from operating facilities within the continental United States
identified as "Hilton" hotels. The Company's international hotel and
hotel-casino operations are conducted under the Conrad International name. See
"Hotel Operations" and "Gaming Operations--International Hotel-Casinos."
 
    In January 1997, the Company and Ladbroke, the parent company of HI, entered
into agreements to form a strategic alliance to reunite the Hilton name.
Pursuant to these agreements, the Conrad name has
 
                                       10
<PAGE>
been licensed to HI for future development outside the United States for a
period of 20 years. HI has also licensed the Company to develop full-service
franchise properties under the Hilton name in Canada, Mexico and the Island of
St. John, U.S. Virgin Islands. Subject to the foregoing restrictions as to the
use of the "Hilton" name, Hilton and HI can compete in all, and do compete in
certain, markets. The Compass computerized reservation system utilized by Hilton
and HI provides information as to their respective hotels, if any, in each
market. See "General Information--Recent Developments," "Additional
Information--Computer Systems" and "Additional Information--Reservation System."
 
PROPERTY TRANSACTIONS
 
    Hilton continuously evaluates its property portfolio and intends to dispose
of its interests in hotels or properties that, in its opinion, no longer yield
an adequate return on investment or conform to Hilton's long range plans. In so
doing, the Company expects to maintain a balanced mix of sources of revenue and
a favorable return on stockholders' equity.
 
                               GAMING OPERATIONS
 
NEVADA HOTEL-CASINOS
 
    The Company owns and operates five hotel-casinos in the State of Nevada: the
3,174-room Las Vegas Hilton, the 3,642-room Flamingo Hilton-Las Vegas, the
2,000-room Flamingo Hilton-Laughlin, the 2,001-room Reno Hilton and the 604-room
Flamingo Hilton-Reno. The Company also owns an 84% equity interest in Bally's
Grand, Inc., which owns and operates the 2,814-room Bally's Las Vegas.
 
    The Company's Nevada gaming operations reach diverse markets by offering
gaming alternatives for premium players, convention visitors, mid-market
gamblers and budget-conscious customers. The Las Vegas Hilton is located
adjacent to the Las Vegas Convention Center and focuses on upscale individual
leisure guests and convention groups. Bally's Las Vegas is located at the famous
"Four Corners" on the Strip in Las Vegas and caters to convention groups and the
mid-to upper mid-market, including the group tour and travel segment. Bally's
Las Vegas is also serviced by a public monorail which connects to the MGM Grand
Hotel and Casino. The Flamingo Hilton-Las Vegas and the Flamingo Hilton-Reno
focus primarily on the mid-market, in particular the group tour and travel
segment. The Flamingo Hilton-Laughlin targets the budget and mid-market
segments. The Reno Hilton focuses primarily on the mid-market, in particular
convention groups. Each of these hotel-casinos has gaming, convention, dining,
shopping, entertainment and, with the exception of the Flamingo Hilton-Reno,
indoor and outdoor recreational facilities. A variety of popular entertainment
is featured in theaters and lounges at each hotel. The Company also operates a
vacation ownership resort adjacent to the Flamingo Hilton-Las Vegas. See
"Additional Information--Vacation Ownership."
 
    The Company continues to refurbish and expand existing facilities in Nevada
to maintain their presence as premier properties in the market. In 1996, the Las
Vegas Hilton completed two new suites for premium players, opened a new casino
cage and retail stores, renovated guest rooms and a restaurant and upgraded its
heating and cooling system. The Flamingo Hilton-Las Vegas added 19,000 square
feet of casino space, renovated the registration area and guest room corridors
and remodeled a restaurant. Bally's Las Vegas renovated the baccarat area of the
casino, restaurant areas and guest suites. The Flamingo Hilton-Laughlin
renovated guest bathrooms and continued its slot machine replacement program.
The Reno Hilton renovated restaurants and meeting rooms, and upgraded slot
machines and the life safety system. At the Flamingo Hilton-Reno, the Company
opened a new Benihana restaurant, renovated guest rooms and dining areas and
upgraded slot machines.
 
                                       11
<PAGE>
    The approximate square footage of the Company's casinos in Nevada is as
follows: Las Vegas Hilton--78,000 square feet (inclusive of 29,000 square feet
attributable to the race and sports book); Flamingo Hilton-Las Vegas--93,000
square feet (inclusive of 20,000 square feet attributable to O'Sheas Irish theme
casino adjacent to the hotel); Bally's Las Vegas--62,000 square feet (inclusive
of 7,000 square feet attributable to the race and sports book); Flamingo
Hilton-Laughlin--58,000 square feet (inclusive of 3,000 square feet attributable
to the race and sports book); Reno Hilton--118,000 square feet (inclusive of
12,000 square feet attributable to the race and sports book); and Flamingo
Hilton-Reno--46,000 square feet (inclusive of 2,500 square feet attributable to
the race and sports book).
 
    Each of the hotel-casinos is open 24 hours a day, seven days a week, for
gaming activities. Games operated in these casinos include "21," craps,
roulette, big "6," baccarat, poker, keno and slot and other coin machines. The
Las Vegas Hilton's race and sports book is tied in by satellite or modem to the
casinos at the Flamingo Hilton-Las Vegas, the Flamingo Hilton-Laughlin, the Reno
Hilton and the Flamingo Hilton-Reno. Bally's Las Vegas also operates a race and
sports book.
 
    It is impracticable for Hilton's hotel-casinos to record the total amount
bet in the casinos, although the amount of chips issued for cash and credit is
determined regularly. The amount of gaming activity varies significantly from
time to time primarily due to general economic conditions, popularity of
entertainment in the hotels, and occupancy rates in the hotels and in the Las
Vegas, Laughlin and Reno markets. The amount of revenue from gaming operations
varies depending upon the amount of gaming activity as well as variations in the
odds for different games and the factor of chance. Casino activities are
conducted by experienced personnel who are supervised at all times.
 
    As is the case of any business extensively involved in the handling of cash,
gaming operations at the Company's hotel-casinos are subject to risk of
substantial loss as a result of dishonesty. However, the Company believes that
it has reduced such risk, by means of procedures for supervision of employees
and other controls, to the fullest extent practicable without impediment to play
and within the limits of reasonable costs. Substantially all table games and
slot machines can be monitored by remote control television and substantially
all slot machines at all six Nevada properties are monitored by computers.
 
    The Las Vegas Hilton and, to a lesser extent, the Flamingo Hilton-Las Vegas,
Bally's Las Vegas, the Flamingo Hilton-Laughlin, the Flamingo Hilton-Reno and
the Reno Hilton invite VIP customers to their casinos and may pay for or
reimburse the cost of their air transportation and provide them with
complimentary rooms, food and beverage. In addition, the Las Vegas Hilton and
the Reno Hilton have instituted special flight programs, pursuant to which free
air transportation on Company owned or chartered aircraft and complimentary
rooms, food and beverage are provided to groups or selected persons. These
persons either have established casino credit limits or cash on deposit in the
casinos and have previously evidenced a willingness to put substantial amounts
at risk at the casinos. The special flight programs are sometimes referred to as
junkets. The Las Vegas Hilton and the Reno Hilton hosted 18 and 4 special flight
programs in 1996, compared to 11 and 13 such programs in 1995, respectively.
 
    Revenues from the Company's casinos are accounted for in accordance with
applicable laws and rules and regulations. As is customary in the Nevada gaming
industry, activities are conducted on a credit as well as a cash basis, in
accordance with procedures established and supervised by management.
Fluctuations in collecting casino receivables could have a material effect on
results of operations of these properties. An allowance is provided for
estimated uncollectible casino receivables. Casino receivables aggregated
$69,100,000, subject to a $16,000,000 (approximately 23%) reserve, at December
31, 1994; $87,300,000, subject to a $13,500,000 (approximately 15%) reserve, at
December 31, 1995; and $75,800,000, subject to a $14,900,000 (approximately 20%)
reserve, at December 31, 1996.
 
                                       12
<PAGE>
ATLANTIC CITY HOTEL-CASINOS
 
    The Company owns and operates two hotel-casinos in Atlantic City, New
Jersey: the 1,265-room Bally's Park Place Casino Resort ("Bally's Park Place")
and the 509-room Atlantic City Hilton (formerly named The Grand).
 
    Bally's Park Place, currently the largest four-star hotel in New Jersey, is
located on an eight-acre site with ocean frontage at the intersection of Park
Place and the Boardwalk. With its strategic location on the Boardwalk and over
2,300 parking spaces, Bally's Park Place is strongly positioned to attract
significant walk-in and drive-in business. The Atlantic City Hilton is located
on approximately three acres at the intersection of Boston and Pacific Avenues
at the southern end of the Boardwalk in proximity to one of the major highways
leading into Atlantic City. This location gives the Atlantic City Hilton a
significant advantage in attracting destination oriented customers arriving by
automobile or bus.
 
    Both of the Company's Atlantic City properties have gaming, dining,
shopping, entertainment, convention and meeting facilities, recreational
facilities and parking. A variety of popular entertainment, sports events and
production shows are featured at the Atlantic City Hilton.
 
    Bally's Park Place contains approximately 80,000 square feet of casino area
(inclusive of 8,500 square feet attributable to the race book). The Atlantic
City Hilton contains approximately 60,000 square feet of casino area (inclusive
of 1,500 square feet attributable to the race book). Both Atlantic City casinos
are open 24 hours a day, seven days a week, for gaming activities, and feature
table games and slot machines similar to those offered at the Company's Nevada
hotel-casinos. Atlantic City casinos do not contain sports books. Revenue and
earnings for Bally's Park Place and the Atlantic City Hilton peak during the
summer, with less favorable operating results in the winter.
 
    Bally's Park Place is a leader in Atlantic City's mid-market slot segment,
and also focuses on premium table game and slot players from New York,
Philadelphia and other northeastern metropolitan areas. The Atlantic City Hilton
primarily focuses on personalized service for upscale and mid-market casino
customers from the same geographic area.
 
RIVERBOAT CASINOS
 
    The Company manages and owns equity interests in four riverboat casinos
located in the states of Louisiana, Missouri and Mississippi. These riverboat
casinos feature table games and slot machines similar to those offered at the
Company's hotel-casinos in Nevada and New Jersey.
 
    Since February 1994, the Company has operated a riverboat casino located
adjacent to the New Orleans Hilton Riverside & Towers. The riverboat accomodates
1,500 passengers and has a 20,000 square foot casino. This vessel is wholly
owned by the Company and leased to a joint venture, of which the Company owns a
50% interest. In October 1996, the Company was granted approval by the Louisiana
Gaming Control Board to relocate this vessel from New Orleans to Shreveport,
Louisiana, where the vessel will operate as a dockside casino on the Red River.
The relocation is anticipated to occur in fall 1997.
 
    The Company has an ownership interest of approximately 50% in the entity
that owns Bally's Casino Lakeshore Resort, a 2,500 passenger riverboat casino
facility which features a 30,000 square foot casino. This riverboat operates
from Lake Pontchartrain in Orleans Parish, which is approximately eight miles
from the French Quarter of New Orleans.
 
    In October 1996, the Company commenced operation of the Flamingo
Casino-Kansas City, a dockside casino complex in Kansas City, Missouri. The
wholly owned complex features a 30,000 square foot casino, concessions and
entertainment facilities. An agreement between the Company and the Port
Authority of Kansas City provides for the Company, subject to certain
conditions, to sell 10% of its ownership interest in the complex to
locally-based minority interests.
 
                                       13
<PAGE>
    The Company has a 58% ownership interest in the entity that owns Bally's
Saloon  Gambling Hall Hotel, a dockside casino and hotel complex in
Robinsonville, Mississippi, near Memphis, Tennessee. This complex is managed by
the Company and features a 40,000 square foot casino and a 30,000 square foot
land based facility, which includes a 238-room hotel, entertainment facilities,
a restaurant and health club facilities.
 
INTERNATIONAL HOTEL-CASINOS
 
    The Company, through Conrad International, manages four international
hotel-casinos which feature table games and slot machines similar to those
offered at the Company's hotel-casinos in Nevada and New Jersey.
 
    In January 1997, the Company commenced casino operations of the Conrad
International Punta del Este Resort and Casino in Uruguay, which features a
38,000 square foot casino. Conrad International manages and has an equity
interest of approximately 43% in this hotel-casino. The 300-room hotel is
expected to open in late 1997, and will feature convention facilities,
restaurants and related amenities.
 
    The Company has a 19.9% ownership interest in the 609-room Conrad Jupiters,
Gold Coast, which opened in 1985. This hotel-casino is located on the Gold Coast
in Queensland, Australia, and features a 70,000 square foot casino.
 
    The Company also has a 19.9% ownership interest in the 136-room Conrad
International Treasury Casino, Brisbane in Brisbane, Queensland, Australia,
which opened in April 1995. This hotel-casino features a 65,000 square foot
casino and has the exclusive right to conduct casino gaming in Brisbane until
2005.
 
    The Company has a 25% ownership interest in the 620-room Conrad
International Istanbul, which opened in 1992. This hotel-casino includes a
12,000 square foot casino.
 
CASINO WINDSOR
 
    The Company and another shareholder of Windsor Casino Limited ("WCL")
operate the Casino Windsor, an interim 50,000 square foot casino in Windsor,
Ontario, Canada. The Company, through Conrad International, owns a 50% interest
in WCL, which operates this project for the Ontario provincial government. In
January 1997, WCL redeemed the shareholder interest of its third original
shareholder. The Company anticipates that the interim casino will be replaced by
a permanent facility in early 1998, which will include a hotel of approximately
400 rooms, a 75,000 square foot casino and entertainment and meeting facilities.
 
    Since December 1995, the Company has chartered a riverboat to the Ontario
provincial government to serve as a complementary facility for Casino Windsor.
This vessel provides an additional 25,000 square feet of casino space for the
property.
 
EXPANSION PROGRAM
 
    The Company continues to expand its domestic gaming operations through the
development of the 2,900-room Paris Casino-Resort, a new casino resort adjacent
to Bally's Las Vegas which is expected to feature an 85,000 square foot casino
and a 50-story replica of the Eiffel Tower. The Paris Casino-Resort is scheduled
to be completed in mid-1999.
 
    The Company and Paramount Parks Inc. ("Paramount") are building a 65,000
square foot attraction to be called "Star Trek: The Experience at the Las Vegas
Hilton." This attraction is scheduled to open in summer 1997 and will feature a
motion-based simulation ride, interactive video and virtual reality stations,
dining and souvenir shops. The building housing the Star Trek attraction will be
owned by the Company and leased to Paramount. The attraction will also be
managed by Paramount. In conjunction with the Star
 
                                       14
<PAGE>
Trek attraction, the Company is constructing SpaceQuest Casino, a themed 22,000
square foot casino addition at the Las Vegas Hilton, which is also scheduled to
open in summer 1997.
 
    In 1997, the Company's Nevada hotel-casinos are scheduled to complete
additional expansion and renovation programs. The Las Vegas Hilton plans to
renovate elevators and 1,500 guest rooms, install a new marquee sign, open new
retail stores and a parking garage and upgrade its slot machines and life safety
system. The Flamingo Hilton-Las Vegas plans to renovate restaurant areas,
enlarge its casino bar and add a pool bar. Bally's Las Vegas plans to renovate
its life safety and building management systems. The Flamingo Hilton-Laughlin
plans to renovate guest rooms, install a riverside dock to accommodate a new
boat operation and continue its slot machine replacement program. The Reno
Hilton plans to renovate its bowling center, guest room suites and a restaurant
and enhance its heating and air conditioning system. At the Flamingo
Hilton-Reno, the Company plans to continue to renovate the casino and guest
rooms and upgrade slot machines.
 
    The Company's Atlantic City, New Jersey hotel-casinos are also planning to
complete major expansion projects in 1997. Bally's Park Place is constructing a
new western-themed casino and entertainment complex on approximately four acres
adjacent to the hotel-casino. This complex is expected to include approximately
70,000 square feet of casino space (including space attributable to the race
book) and is scheduled to be completed in mid-1997. The Atlantic City Hilton is
building a new 300-room hotel tower adjacent to the hotel-casino, which will
include restaurants, meeting rooms and other related amenities. This hotel
addition is scheduled for completion in mid-1997.
 
    Conrad International has entered into an agreement to develop and operate a
633-room hotel-casino in Cairo, Egypt. This property will feature a 17,000
square foot European-style casino. Conrad International will manage and have a
10% equity interest in the hotel-casino, which is scheduled to open in 1999.
 
                             ADDITIONAL INFORMATION
 
VACATION OWNERSHIP
 
    In May 1996, the Company acquired the remaining 50% interest in the Hilton
Grand Vacations Company joint venture ("HGVC"), which currently operates 17
vacation ownership resorts in Florida and one in Nevada. In 1995, HGVC commenced
operation of a 200-unit vacation ownership resort adjacent to the Flamingo
Hilton-Las Vegas and the first phase of a 420-unit vacation ownership resort
adjacent to Sea World in Orlando, Florida. Construction of 116 units of the
Orlando resort has been completed. In 1997, HGVC anticipates development of a
52-unit vacation ownership resort in Miami Beach, Florida, through the
renovation of two historic art deco buildings. HGVC is actively seeking new
management, development and acquisition opportunities in other destination
resort locations.
 
DESIGN AND FURNISHING SERVICES
 
    Hilton, through its wholly owned subsidiary, Hilton Equipment Corporation,
and through its hotels division, provides design and furnishing services and
purchases and distributes furniture, furnishings, equipment and supplies to
hotels and hotel-casinos owned, leased or managed by Hilton and to hotels
franchised by Hilton or owned and operated by others. The revenues of this
operation depend primarily on the number of new hotels operated or franchised by
Hilton and on refurbishing and remodeling of existing Hilton hotels. In October
1996, Hilton entered into an agreement with Electronic Data Systems Corporation
("EDS") pursuant to which EDS will provide certain purchasing and distribution
services on behalf of Hilton Equipment Corporation under a fee arrangement.
 
COMPUTER SYSTEMS
 
    Compass Computer Services, Inc. ("Compass"), 50% of which is owned by Hilton
and the balance by Budget Rent-A-Car, Inc. ("Budget"), operates a computerized
reservation system for, among other things, hotel reservations. This system also
provides Hilton with certain statistical data and registration packets.
 
                                       15
<PAGE>
Compass is being managed by Litton Computer Services. The Company has entered
into an agreement with Budget to acquire Budget's 50% ownership interest in
Compass. This acquisition is expected to be completed in spring 1997.
 
RESERVATION SYSTEM
 
    The Compass computerized reservation system is presently utilized by Hilton
Service Corporation, the operator of a worldwide reservation system for hotels
owned, operated or franchised by Hilton, HI, their affiliates and others. Hilton
Service Corporation is owned 51% by Hilton and 49% by HI. Pursuant to agreements
entered into in January 1997 between the Company and Ladbroke, the parent
corporation of HI, the companies have agreed to merge Hilton Service Corporation
into a new entity to be formed to operate an updated computerized reservation
system. The Company and HI will each own 50% of such new entity. The new
computerized reservation system, which will replace the existing system, is
expected to commence operation in 1998. See "General Information--Recent
Developments."
 
MARKETING
 
    The Company's hotel and gaming segments offer multiple product lines to a
broad range of customers in many geographic markets. The Company's diversified
hotel portfolio includes large urban hotels, airport hotels, suburban/suite
hotels and resorts. The gaming segment, with its major presence in Las Vegas and
Atlantic City, attracts premium players, convention visitors, mid-market
gamblers and budget-conscious customers.
 
    Hotel occupancy at Hilton's metropolitan and airport properties is primarily
derived from the convention and meeting market and the business traveler market
(businesspersons traveling as individuals or in small groups). Hotel occupancy
at the Company's resort properties is primarily derived from the tour and
leisure market (tourists traveling either as individuals or in groups) and the
convention and meeting market. Hotel occupancy at the Company's hotel-casinos is
primarily derived from the convention and meeting market, the tour and leisure
market and junket and VIP programs. As indicated under "Business Risks" below,
these sources of business are sensitive to general economic and other
conditions. In addition, the Company participates in certain joint marketing
programs with business partners in the airline, car rental and cruise line
industries. The Company believes that its recent alliance with Ladbroke (which
currently owns the rights to the Hilton name outside the U.S.) will improve the
performance of the Company's operations as its properties benefit from the
worldwide integration of the Hilton brand, reservation systems, marketing
programs and sales organization. See "General Information--Recent Developments."
 
STATISTICAL DATA
 
    For information regarding the Company's properties, number of available
rooms, occupancy ratios and management and franchise fees, see the Five Year
Summary on page 53 in the Stockholders Report.
 
BUSINESS RISKS
 
    In 1996, the Company was able to increase average room rates for its hotels
and hotel-casinos by seven percent over 1995. The Company's future operating
results could be adversely impacted by industry overcapacity and weak demand,
which could restrict the Company's ability to raise room rates to keep pace with
the rate of inflation. The Company's business could also be adversely affected
by increases in transportation and fuel costs or sustained recessionary periods.
The operating results for the Company's hotel-casinos can be volatile depending
upon the table game play of premium players, particularly at the Las Vegas
Hilton.
 
    Hilton's occupancy ratios are affected by general economic conditions, as
well as by competition, work stoppages and other factors affecting particular
properties. Occupancy ratios at the Company's hotels could also be adversely
impacted by a decrease in travel resulting from fluctuations in the worldwide
economy and by excess industry capacity.
 
                                       16
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COMPETITION
 
    The Company seeks to maintain the diversity and balance of its lodging and
gaming operations while expanding both businesses. The Company intends to
improve and expand its core businesses by capitalizing on the synergies between
its hotel and gaming operations, leveraging its strong brand names, maximizing
operating efficiencies, expanding and enhancing properties and acquiring or
developing properties as appropriate.
 
    Hilton believes it is one of the largest operators of hotels located within
the United States. Competition from other hotels, motels and inns, including
facilities owned by local interests and facilities owned by national and
international chains, is vigorous in all areas in which Hilton operates its
facilities. Hilton hotels also compete generally with facilities offering
similar services and located in cities and other locations where Hilton hotels
are not present. The Company's precise competitive position in most areas in
which its hotels are located cannot be determined from the information and data
available to Hilton.
 
    To the extent that hotel capacity is expanded by others in a city where a
Hilton hotel is located, competition will increase. In this regard, recent
capacity additions have increased competition in all segments of the Las Vegas
market. Certain of the Company's competitors have announced, or are developing,
new casino projects in Las Vegas which, if completed, will add significant
casino space and hotel rooms to the market. Such new capacity additions to the
Las Vegas market could adversely impact the Company's gaming income. The
business of Hilton's Nevada hotel-casinos might also be adversely affected if
gaming operations of the type conducted in Nevada were to be permitted under the
laws of other states, particularly California. Similarly, legalization of gaming
operations in any jurisdiction located near Atlantic City, New Jersey, or the
establishment of new large scale gaming operations on nearby Native American
tribal lands, could adversely affect the Company's Atlantic City hotel-casinos.
The expansion of riverboat gaming or casino gaming on Native American tribal
lands could also impact the Company's gaming operations.
 
ENVIRONMENTAL MATTERS
 
    The Company, like others in its industry, is subject to various federal,
state, local and, in some cases, foreign laws, ordinances and regulations that
(i) govern activities or operations that may have adverse environmental effects,
such as discharges to air and water, as well as handling and disposal practices
for solid and hazardous or toxic wastes, or (ii) may impose liability for the
costs of cleaning up, and certain damages resulting from, sites of past spills,
disposals or other releases of hazardous or toxic substances or wastes
(together, "Environmental Laws").
 
    The Company endeavors to maintain compliance with Environmental Laws, but,
from time to time, the Company's operations may have resulted or may result in
noncompliance or liability for cleanup pursuant to Environmental Laws. In that
regard, the Company has been notified of contamination resulting from past
disposals of wastes at two sites to which hazardous or non-hazardous wastes may
have been sent from Company facilities in the past. Based on information
reviewed by and available to the Company, including uncertainty whether a
Company facility in fact shipped any wastes to one such site, the number of
potentially responsible parties at such sites and, where available, the volume
and type of waste sent to each such site, the Company believes that any
liability arising from such disposals under Environmental Laws would not have a
material adverse effect on its results of operations or financial condition.
 
    Bally received notice from the current landowner of a prior Bally facility
in Chicago, Illinois that the landowner may seek to recover past and future
costs of investigating and remediating alleged soil and groundwater
contamination at the facility. The Company does not believe that Bally's prior
operations at the site have contributed to the alleged contamination; as a
result, if the current landowner pursues its claim, the Company expects to
vigorously defend against the claim. The Company cannot at this time estimate
the potential costs of investigation or cleanup, if any, however, based on
currently available
 
                                       17
<PAGE>
information, the Company believes that any such costs would be shared by several
parties and, in any event, the cost estimates provided to date indicate that any
such liability would not have a material adverse effect on the Company.
 
REGULATION AND LICENSING
 
    Each of the Company's casinos is subject to extensive regulation under laws,
rules and supervisory procedures, primarily in the jurisdiction where located or
docked. Some jurisdictions, however, empower their regulators to investigate
participation by licensees in gaming outside their jurisdiction and require
access to and periodic reports respecting such gaming activities. Violations of
laws in one jurisdiction could result in disciplinary action in other
jurisdictions.
 
    Under provisions of Nevada, New Jersey, Louisiana, Mississippi, Missouri and
other gaming laws, and the Company's Restated Certificate of Incorporation, as
amended, certain securities of the Company are subject to restrictions on
ownership which may be imposed by specified governmental authorities. Such
restrictions may require the holder to dispose of the securities or, if the
holder refuses to make such disposition, the Company may be obligated to
repurchase the securities.
 
    NEVADA GAMING LAWS.  The ownership and operation of casino gaming facilities
in the State of Nevada, such as those at the Las Vegas Hilton, the Flamingo
Hilton-Las Vegas, Bally's Las Vegas, the Flamingo Hilton-Laughlin, the Reno
Hilton and the Flamingo Hilton-Reno, are subject to the Nevada Gaming Control
Act and the regulations promulgated thereunder (the "Nevada Act") and various
local regulations. The Company's Nevada gaming operations are subject to the
licensing and regulatory control of the Nevada Gaming Commission (the "Nevada
Commission"), the Nevada State Gaming Control Board (the "Nevada Board") and,
depending on the facility's location, the Clark County Liquor and Gaming
Licensing Board (the "CCB") and the City of Reno. The Nevada Commission, the
Nevada Board, the CCB and the City of Reno are collectively referred to as the
"Nevada Gaming Authorities."
 
    The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy that are concerned
with, among other things: (i) the prevention of unsavory or unsuitable persons
from having a direct or indirect involvement with gaming at any time or in any
capacity; (ii) the establishment and maintenance of responsible accounting
practices and procedures; (iii) the maintenance of effective controls over the
financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and
revenues, providing reliable record keeping and requiring the filing of periodic
reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and
fraudulent practices; and (v) providing a source of state and local revenues
through taxation and licensing fees. Change in such laws, regulations and
procedures could have an adverse effect on the Company's gaming operations.
 
    Each subsidiary of the Company that operates a casino in Nevada
(individually, a "Corporate Licensee" and collectively, the "Corporate
Licensees") is required to be licensed by the Nevada Gaming Authorities. The
gaming license requires the periodic payment of fees and taxes and is not
transferable. The Company is required to be registered by the Nevada Commission
as a publicly traded corporation ("Registered Corporation") and as such, it is
required periodically to submit detailed financial and operating reports to the
Nevada Commission and furnish any other information that the Nevada Commission
may require. No person may become a stockholder of, or receive any percentage of
profits from, a Corporate Licensee without first obtaining licenses and
approvals from the Nevada Gaming Authorities. The Company and the Corporate
Licensees have obtained from the Nevada Gaming Authorities the various
registrations, approvals, permits and licenses required in order to engage in
gaming activities in Nevada.
 
    The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, the Company or any of
its Corporate Licensees in order to determine whether such individual is
suitable or should be licensed as a business associate of a gaming licensee.
Officers,
 
                                       18
<PAGE>
directors and certain key employees of a Corporate Licensee must file
applications with the Nevada Gaming Authorities and may be required to be
licensed or found suitable by the Nevada Gaming Authorities. Officers, directors
and key employees of the Company who are actively and directly involved in
gaming activities of any Corporate Licensee may be required to be licensed or
found suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities
may deny an application for licensing for any cause which they deem reasonable.
A finding of suitability is comparable to licensing, and both require submission
of detailed personal and financial information followed by a thorough
investigation. An applicant for licensing or an applicant for a finding of
suitability must pay for all the costs of the investigation. Changes in licensed
positions must be reported to the Nevada Gaming Authorities and, in addition to
their authority to deny an application for a finding of suitability or
licensing, the Nevada Gaming Authorities have the jurisdiction to disapprove a
change in a corporate position.
 
    If the Nevada Gaming Authorities were to find an officer, director or key
employee unsuitable for licensing or unsuitable to continue having a
relationship with the Company or any Corporate Licensee, the Company and the
Corporate Licensee would have to sever all relationships with such person. In
addition, the Nevada Commission may require the Company or a Corporate Licensee
to terminate the employment of any person who refuses to file appropriate
applications. Determinations of suitability or questions pertaining to licensing
are not subject to judicial review in Nevada.
 
    The Company and all Corporate Licensees are required to submit detailed
financial and operating reports to the Nevada Commission. Substantially all
material loans, leases, sales of securities and similar financing transactions
of a Corporate Licensee must be reported to, or approved by, the Nevada
Commission.
 
    If it were determined that the Nevada Act was violated by a Corporate
Licensee, the gaming licenses it holds could be limited, conditioned, suspended
or revoked, subject to compliance with certain statutory and regulatory
procedures. In addition, the Corporate Licensee, the Company and the persons
involved could be subject to substantial fines for each separate violation of
the Nevada Act at the discretion of the Nevada Commission. Further, a supervisor
could be appointed by the Nevada Commission to operate a Corporate Licensee's
gaming property and, under certain circumstances, earnings generated during the
supervisor's appointment (except for the reasonable rental value of the gaming
property) could be forfeited to the State of Nevada. Limitation, conditioning or
suspension of any gaming license of a Corporate Licensee or the appointment of a
supervisor could (and revocation of any gaming license would) have a material
adverse effect on the Company's gaming operations.
 
    Any beneficial holder of the Company's Common Stock, Preferred Redeemable
Increased Dividend Equity Securities-SM-, 8% PRIDES-SM-, Convertible Preferred
Stock ("PRIDES") or any other voting security of the Company ("Company Voting
Securities"), regardless of the number of shares owned, may be required to file
an application, be investigated, and have such person's suitability as a
beneficial holder of Company Voting Securities determined if the Nevada
Commission has reason to believe that such ownership would otherwise be
inconsistent with the declared policies of the State of Nevada. The applicant
must pay all costs of the investigation incurred by the Nevada Gaming
Authorities in conducting any such investigation.
 
    The Nevada Act requires any person who acquires a beneficial ownership of
more than 5% of Company Voting Securities to report the acquisition to the
Nevada Commission. The Nevada Act requires that beneficial owners of more than
10% of Company Voting Securities apply to the Nevada Commission for a finding of
suitability within thirty days after the Chairman of the Nevada Board mails the
written notice requiring such filing. Under certain circumstances, an
"institutional investor," as defined in the Nevada Act, which acquires
beneficial ownership of more than 10%, but not more than 15%, of Company Voting
Securities may apply to the Nevada Commission for a waiver of such finding of
suitability if such institutional investor holds Company Voting Securities for
investment purposes only. An institutional investor shall not be deemed to hold
Company Voting Securities for investment purposes unless Company
 
                                       19
<PAGE>
Voting Securities were acquired and are held in the ordinary course of business
as an institutional investor and not for the purpose of causing, directly or
indirectly, the election of a majority of the members of the Board of Directors
of the Company, any change in the Company's corporate charter, bylaws,
management, policies or operations of the Company, or any of its gaming
affiliates, or any other action which the Nevada Commission finds to be
inconsistent with holding Company Voting Securities for investment purposes
only. Activities which are not deemed to be inconsistent with holding voting
securities for investment purposes only include: (i) voting on all matters voted
on by stockholders; (ii) making financial and other inquiries of management of
the type normally made by securities analysts for informational purposes and not
to cause a change in its management, polices or operations; and (iii) such other
activities as the Nevada Commission may determine to be consistent with such
investment intent. If the beneficial holder of voting securities who must be
found suitable is a corporation, partnership, limited partnership, limited
liability company or trust, it must submit detailed business and financial
information including a list of beneficial owners. The applicant is required to
pay all costs of investigation. Barron Hilton, the Company's largest
stockholder, has been found suitable as a controlling stockholder of the
Company.
 
    Any person who fails or refuses to apply for a finding of suitability or a
license within 30 days after being ordered to do so by the Nevada Commission or
by the Chairman of the Nevada Board may be found unsuitable. The same
restrictions apply to a record owner if the record owner, after request, fails
to identify the beneficial owner. Any stockholder found unsuitable and who
holds, directly or indirectly, any beneficial ownership of Company Voting
Securities beyond such period of time as may be prescribed by the Nevada
Commission may be guilty of a criminal offense. The Company is subject to
disciplinary action if, after it receives notice that a person is unsuitable to
be a stockholder or to have any other relationship with the Company or a
Corporate Licensee, the Company (i) pays that person any dividend or interest
upon any Company Voting Securities; (ii) allows that person to exercise,
directly or indirectly, any voting right conferred through securities held by
that person; (iii) pays remuneration in any form to that person for services
rendered or otherwise; or (iv) fails to pursue all lawful efforts to require
such unsuitable person to relinquish the voting securities for cash at fair
market value. Additionally, the CCB has the authority to approve all persons
owning or controlling the stock of any corporation controlling a gaming
licensee.
 
    The Nevada Commission may, in its discretion, require the holder of any debt
security of a Registered Corporation to file applications, be investigated and
be found suitable to own such debt security of a Registered Corporation. If the
Nevada Commission determines that a person is unsuitable to own such security,
then pursuant to the Nevada Act, the Registered Corporation can be sanctioned,
including the loss of its approvals, if without the prior approval of the Nevada
Commission, it (i) pays to the unsuitable person any dividend, interest or any
distribution whatsoever; (ii) recognizes any voting right by such unsuitable
person in connection with such securities; (iii) pays the unsuitable person
remuneration in any form; or (iv) makes any payment to the unsuitable person by
way of principal, redemption, conversion, exchange, liquidation or similar
transaction.
 
    The Company is required to maintain a current stock ledger in Nevada which
may be examined by the Nevada Gaming Authorities at any time. If any securities
are held in trust by an agent or by a nominee, the record holder may be required
to disclose the identity of the beneficial owner to the Nevada Gaming
Authorities. A failure to make such disclosure may be grounds for finding the
record holder unsuitable. The Company is also required to render maximum
assistance in determining the identity of the beneficial owner of any Company
Voting Securities. The Nevada Commission has the power to require the Company's
stock certificates to bear a legend indicating that the securities are subject
to the Nevada Act. However, to date, the Nevada Commission has not imposed such
a requirement on the Company.
 
    The Company may not make a public offering of its securities without the
prior approval of the Nevada Commission if the securities or the proceeds
therefrom are intended to be used to construct, acquire or finance gaming
facilities in Nevada, or to retire or extend obligations incurred for such
purposes. The Nevada Commission granted the Company prior approval to make
public offerings for a
 
                                       20
<PAGE>
period of one year, expiring on September 20, 1997, subject to certain
conditions (the "Shelf Approval"). The Shelf Approval, however, may be rescinded
for good cause without prior notice upon the issuance of an interlocutory stop
order by the Chairman of the Nevada Board. Furthermore, any approval, if
granted, does not constitute a finding, recommendation or approval of the Nevada
Gaming Authorities as to the accuracy or adequacy of the prospectus or the
investment merits of the securities offered thereby. Any representation to the
contrary is unlawful.
 
    Changes in control of the Company through merger, consolidation, stock or
asset acquisitions, management or consulting agreements, or any act or conduct
by a person whereby such person obtains control, may not occur without the prior
approval of the Nevada Commission. Entities seeking to acquire control of a
Registered Corporation must satisfy the Nevada Board and Nevada Commission in a
variety of stringent standards prior to assuming control of such Registered
Corporation. The Nevada Commission may also require controlling stockholders,
officers, directors and other persons having a material relationship or
involvement with the entity proposing to acquire control, to be investigated and
licensed as part of the approval process relating to the transaction.
 
    The Nevada legislature has declared that some corporate acquisitions opposed
by management, repurchases of voting securities and corporate defense tactics
affecting Nevada gaming licenses, and Registered Corporations that are
affiliated with those operations, may be injurious to stable and productive
corporate gaming. The Nevada Commission has established a regulatory scheme to
ameliorate the potentially adverse effects of these business practices upon
Nevada's gaming industry and to further Nevada's policy to: (i) assure the
financial stability of corporate gaming operators and their affiliates; (ii)
preserve the beneficial aspects of conducting business in the corporate form;
and (iii) promote a neutral environment for the orderly governance of corporate
affairs. Approvals are, in certain circumstances, required from the Nevada
Commission before the Company can make exceptional repurchases of voting
securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The Nevada Act also
requires prior approval of a plan of recapitalization proposed by the Company's
Board of Directors in response to a tender offer made directly to its
stockholders for the purpose of acquiring control of the Company.
 
    License fees and taxes, computed in various ways depending on the type of
gaming or activity involved, are payable to the State of Nevada and to the
counties and cities in which the Corporate Licensees' respective operations are
conducted. Depending upon the particular fee or tax involved, these fees and
taxes are payable either monthly, quarterly or annually and are based upon
either: (i) a percentage of the gross revenues received; (ii) the number of
gaming devices operated; or (iii) the number of table games operated. A casino
entertainment tax is also paid by casino operations where entertainment is
furnished in connection with the selling of food or refreshments. Nevada
Corporate Licensees that hold a license as an operator of a slot route, or a
manufacturer's or distributor's license also pay certain fees and taxes to the
State of Nevada.
 
    Any person who is licensed, required to be licensed, registered, required to
be registered, or is under common control with such persons (collectively,
"Licensees"), and who proposes to become involved in a gaming venture outside of
Nevada, is required to deposit with the Nevada Board, and thereafter maintain, a
revolving fund in the amount of $10,000 to pay the expenses of investigation of
the Nevada Board of the Licensee's participation in such foreign gaming. The
revolving fund is subject to increase or decrease in the discretion of the
Nevada Commission. Thereafter, Licensees are required to comply with certain
reporting requirements imposed by the Nevada Act. A Licensee is also subject to
disciplinary action by the Nevada Commission if it knowingly violates any laws
of the foreign jurisdiction pertaining to the foreign gaming operation, fails to
conduct the foreign gaming operation in accordance with the standards of honesty
and integrity required of Nevada gaming operations, engages in activities that
are harmful to the State of Nevada or its ability to collect gaming taxes and
fees, or employs a person in the foreign operation who has been denied a license
or finding of suitability in Nevada on the ground of personal unsuitability.
 
                                       21
<PAGE>
    The sale of alcoholic beverages at establishments operated by a Corporate
Licensee is subject to licensing, control and regulation by applicable local
regulatory agencies. All licenses are revocable and are not transferable. The
agencies involved have full power to limit, condition, suspend or revoke any
such license, and any such disciplinary action could (and revocation would) have
a material adverse effect upon the operations of the Corporate Licensee.
 
    NEW JERSEY GAMING LAWS.  The ownership and operation of casino gaming
facilities in Atlantic City are subject to the New Jersey Casino Control Act
(the "New Jersey Act"), regulations of the New Jersey Casino Control Commission
(the "New Jersey Commission") and other applicable laws. No casino may operate
unless the required permits or licenses and approvals are obtained from the New
Jersey Commission. The New Jersey Commission is authorized under the New Jersey
Act to adopt regulations covering a broad spectrum of gaming and gaming related
activities and to prescribe the methods and forms of applications from all
classes of licensees. These laws and regulations concern primarily: (i) the
financial stability, integrity, responsibility, good character, honesty and
business ability of casino service suppliers and casino operators, their
directors, officers and employees, their security holders and others financially
interested in casino operations; (ii) the nature of casino hotel facilities; and
(iii) the operating methods and financial and accounting practices used in
connection with the casino operations.
 
    Taxes are imposed by the State of New Jersey on gaming operations at the
rate of 8% of gross gaming revenues. In addition, the New Jersey Act provides
for an investment alternative tax of 2.5% of gross gaming revenues. This
investment alternative tax may be offset by investment tax credits equal to
1.25% of gross gaming revenues, which are obtained by purchasing bonds issued
by, or investing in housing or other development projects approved by, the
Casino Reinvestment Development Authority ("CRDA").
 
    The New Jersey Commission has broad discretion with regard to the issuance,
renewal and revocation or suspension of casino licenses. A casino license is not
transferable, is issued for a term of up to one year for the first two renewals
and thereafter for a term of up to four years (subject to discretionary
reopening of the licensing hearing by the New Jersey Commission at any time),
and must be renewed by filing an application which must be acted on by the New
Jersey Commission prior to the expiration of the license in force. At any time,
upon a finding of disqualification or noncompliance, the New Jersey Commission
may revoke or suspend a license or impose fines or other penalties.
 
    The New Jersey Act imposes certain restrictions on the ownership and
transfer of securities issued by a corporation that holds a casino license or is
deemed a holding company, intermediary company, subsidiary or entity qualifier
(each, an "affiliate") of a casino licensee. "Security" is defined by the New
Jersey Act to include instruments that evidence either a beneficial ownership in
an entity (such as common stock or preferred stock) or a creditor interest in an
entity (such as a bond, note or mortgage). Pursuant to the New Jersey Act, the
corporate charter of a publicly traded affiliate of a casino licensee must
require that a holder of the company's securities dispose of such securities if
the holder's continued interest would result in the company or any other
affiliate being no longer qualified to continue as a casino licensee under the
New Jersey Act. The corporate charter of a casino licensee or any privately held
affiliate of the licensee must: (i) establish the right of prior approval by the
New Jersey Commission with regard to a transfer of any security in the company
and (ii) create the absolute right of the company to repurchase at the market
price or purchase price, whichever is less, any security in the company in the
event the New Jersey Commission disapproves a transfer of such security under
the New Jersey Act. The corporate charter of the Company has been approved by
the New Jersey Commission pending the approval of an amendment thereto by the
Company's stockholders at the next regular stockholder's meeting to expand the
types of securities of the Company that are subject to repurchase by the Company
under certain circumstances to comport with the definition of "security" under
the New Jersey Act. The corporate charter of the Company's subsidiaries that
operate Bally's Park Place and the Atlantic City Hilton and the charters of
their privately held affiliates conform to the New Jersey Act's requirements
described above for privately held companies.
 
                                       22
<PAGE>
    If the New Jersey Commission finds that an individual owner or holder of
securities of a corporate licensee or an affiliate of such corporate licensee is
not qualified under the New Jersey Act, the New Jersey Commission may propose
remedial action. The New Jersey Commission may require divestiture of the
securities held by any disqualified holder who is required to be qualified under
the New Jersey Act (e.g., officers, directors, security holders and key casino
and other employees). In the event that disqualified persons fail to divest
themselves of such securities, the New Jersey Commission may revoke or suspend
the license. However, if an affiliate of a casino licensee is a publicly traded
company and the New Jersey Commission makes a finding of disqualification with
respect to any holder of any security thereof who is required to be qualified,
and the New Jersey Commission also finds that: (i) such company has complied
with aforesaid charter provisions; (ii) such company has made a good faith
effort, including the prosecution of all legal remedies, to comply with any
order of the New Jersey Commission requiring the divestiture of the security
interest held by the disqualified holder; and (iii) such disqualified holder
does not have the ability to control the corporate licensee or the affiliate, or
to elect one or more members of the board of directors of such affiliate, the
New Jersey Commission will not take action against the casino licensee or its
affiliate with respect to the continued ownership of the security interest by
the disqualified holder.
 
    For purposes of the New Jersey Act, a security holder is presumed to have
the ability to control a publicly traded corporation, or to elect one or more
members of its board of directors, and thus require qualification, if such
holder owns or beneficially holds 5% or more of any class of the equity
securities of such corporation, unless such presumption of control or ability to
elect is rebutted by clear and convincing evidence. An "institutional investor,"
as that term is defined under the New Jersey Act, is entitled to a waiver of
qualification if it holds less than 10% of any class of the equity securities of
a publicly traded holding or intermediary company of a casino licensee and: (i)
the holdings were purchased for investment purposes only; (ii) there is no cause
to believe the institutional investor may be found unqualified; and (iii) upon
request by the New Jersey Commission, the institutional investor files a
certified statement to the effect that it has no intention of influencing or
affecting the affairs of the issuer, the casino licensee or its other
affiliates. The New Jersey Commission may grant a waiver of qualification to an
institutional investor holding 10% or more of such securities upon a showing of
good cause and if the conditions specified above are met.
 
    With respect to debt securities, the New Jersey Commission generally
requires a person holding 15% or more of a debt issue of a publicly traded
affiliate of a casino licensee to qualify as a "financial source" where the use
of the proceeds from the debt issue is related in any way to the financing of
the casino licensee. There can be no assurance that the New Jersey Commission
will continue to apply the 15% threshold, and the New Jersey Commission could at
any time establish a lower threshold for qualification. An exception to the
qualification requirement is made for institutional investors, in which case the
institutional holder is entitled to a waiver of qualification if the holder's
position in the aggregate is less than 20% of the total outstanding debt of the
affiliate and less than 50% of any outstanding publicly traded issue of such
debt, and if the conditions specified in the above paragraph are met. As with
equity securities, a waiver of qualification may be granted to institutional
investors holding larger positions upon a showing of good cause and if all
conditions specified in the above paragraph are met.
 
    Generally, the New Jersey Commission would require each institutional holder
seeking a waiver of qualification to execute a certificate to the effect that:
(i) the holder has reviewed the definition of institutional investor under the
New Jersey Act and believes that it meets the definition of institutional
investor; (ii) the holder purchased the securities for investment purposes only
and holds them in the ordinary course of business; (iii) the holder has no
involvement in the business activities of, and no intention of influencing or
affecting the affairs of, the issuer, the casino licensee or any affiliate; and
(iv) if the holder subsequently determines to influence or affect the affairs of
the issuer, the casino licensee or any affiliate, it shall provide not less than
30 days' notice of such intent and shall file with the New Jersey Commission an
application for qualification before taking any such action.
 
                                       23
<PAGE>
    Commencing on the date the New Jersey Commission serves notice on a
corporate licensee or an affiliate of such corporate licensee that a security
holder of such corporation has been found disqualified, it will be unlawful for
the security holder to: (i) receive any dividends or interest upon any such
securities; (ii) exercise, directly or through any trustee or nominee, any right
conferred by such securities; or (iii) receive any remuneration in any form from
the corporate licensee for services rendered or otherwise.
 
    Persons who are required to qualify under the New Jersey Act by reason of
holding debt or equity securities and are not otherwise previously qualified,
are required to place the securities into an Interim Casino Authorization
("ICA") trust pending qualification. Unless and until the New Jersey Commission
has reason to believe that the investor may not qualify, the investor will
retain the ability to direct the trustee how to vote, or whether to dispose of,
the securities. If at any time the New Jersey Commission finds reasonable cause
to believe that the investor may be found unqualified, it can order the trust to
become "operative," in which case the investor will lose voting power, if any,
over the securities but will retain the right to petition the New Jersey
Commission to order the trustee to dispose of the securities.
 
    Once an ICA trust is created and funded, and regardless of whether it
becomes operative, the investor has no right to receive a return on the
investment until the investor becomes qualified. Should an investor ultimately
be found unqualified, the trustee would dispose of the trust property, and the
proceeds would be distributed to the unqualified applicant only in an amount not
exceeding the actual cost of the trust property. Any excess proceeds would be
paid to the State of New Jersey. If the securities were sold by the trustee
pending qualification, the investor would receive only actual cost, with
disposition of the remainder of the proceeds, if any, to await the investor's
qualification hearing.
 
    In the event it is determined that a licensee has violated the New Jersey
Act or its regulations, then under certain circumstances, the licensee could be
subject to fines or have its license suspended or revoked. In addition, if a
person who is required to qualify under the New Jersey Act fails to qualify, or
if a security holder who is required to qualify fails to qualify and does not
dispose of the related securities in the licensee or in any affiliate of the
licensee, as may be required by the New Jersey Act, then, under certain
circumstances, the licensee could have its license suspended or revoked.
 
    If a casino license was not renewed, was suspended for more than 120 days or
was revoked, the New Jersey Commission could appoint a conservator. The
conservator would be charged with the duty of conserving and preserving the
assets so acquired and continuing the operation of the hotel and casino of a
suspended licensee or with operating and disposing of the hotel-casino
facilities of a former licensee. Such suspended licensee or former licensee,
however, would be entitled only to a fair return on its investment, to be
determined under New Jersey law, with any excess to go to the State of New
Jersey, if so directed by the New Jersey Commission. Suspension or revocation of
any licenses or the appointment of a conservator by the New Jersey Commission
would have a material adverse effect on the businesses of the Company's Atlantic
City hotel-casinos.
 
    In November 1996, the New Jersey Commission found the Company qualified as a
holding company for New Jersey casino licensees, Bally's Park Place and the
Atlantic City Hilton. Such licenses are scheduled for renewal in the year 2000.
 
    LOUISIANA GAMING LAWS.  The ownership and operation of a riverboat gaming
vessel in the State of Louisiana is subject to the Louisiana Riverboat Economic
Development and Gaming Control Act (the "Act"). Gaming activities are regulated
by the Louisiana Gaming Control Board (the "Board"). The Board is responsible
for investigating the background of all applicants seeking a riverboat gaming
license, issuing the license and enforcing the laws, rules and regulations
relating to riverboat gaming activities.
 
    The applicant, its officers, directors, key personnel, partners and persons
holding a 5% or greater interest in the holder of a gaming license are required
to be found suitable by the Board. This requires the filing of an extensive
application to the Board disclosing personal, financial, criminal, business and
other information. On October 13, 1993, the Board's predecessor issued a
riverboat gaming license to the Queen of New Orleans, a joint venture of which
the Company owns a 50% interest. The Queen of New Orleans
 
                                       24
<PAGE>
joint venture commenced riverboat gaming operations in New Orleans on February
10, 1994. On March 24, 1994, the Board's predecessor issued a riverboat gaming
license to Belle of Orleans, L.L.C., a limited liability company of which the
Company owns a 49.9% interest as a result of the Bally Merger. Belle of Orleans,
L.L.C. commenced riverboat gaming operations in New Orleans on July 9, 1995.
 
    The transfer of a Louisiana gaming license is prohibited under the Act. The
sale, assignment, transfer, pledge or disposition of securities which represent
5% or more of the total outstanding shares issued by a holder of a license is
subject to Board approval and the transferee must be found suitable. In
addition, all contracts and leases entered into by a licensee are subject to
approval and certain enterprises which transact business with the licensee must
be licensed.
 
    The Board must approve all security holders of the licensees and may find
any such security holder not qualified to own those securities. Louisiana law
may require that the charter or bylaws of the licensee provide that securities
are held subject to the condition that, if a holder is found to be disqualified
by the Board, the holder must dispose of the securities of the licensee. If a
security holder of a licensee is found disqualified, it will be unlawful for the
security holder to (i) receive any dividend or interest with regard to the
securities; (ii) exercise, directly or indirectly, any rights conferred by the
securities; or (iii) receive any remuneration from the licensee for services
rendered or otherwise. The Board may impose similar approval requirements on
holders of securities of any intermediary or holding company of the licensee,
but may waive those requirements with respect to holders of publicly traded
securities of intermediary and holding companies if such holders do not have the
ability to control the publicly traded corporation or elect one or more
directors thereof.
 
    On April 19, 1996, the Louisiana legislature approved legislation mandating
statewide local elections on a parish-by-parish basis to determine whether to
prohibit or continue to permit three individual types of gaming. On November 5,
1996, Louisiana voters determined whether each of the following types of gaming
would be prohibited or permitted in the following described Louisiana parishes:
(i) the operation of video draw poker devices in each parish; (ii) the conduct
of riverboat gaming in each parish that is contiguous to a statutorily
designated river or waterway; or (iii) the conduct of land-based casino gaming
operations in Orleans Parish. In Orleans Parish, where both of the Company's
riverboat casinos currently operate, a majority of the voters elected to
continue to permit the three types of gaming described above. The current
legislation does not provide for any moratorium on future local elections on
gaming. Further, the current legislation does not provide for any moratorium
that must expire before future local elections on gaming could be mandated or
allowed.
 
    On October 11, 1996, the Board granted the Company's petition to move the
Queen of New Orleans riverboat casino from New Orleans to the City of
Shreveport. Shreveport is located in Caddo Parish, where a majority of voters
have elected to continue to permit riverboat gaming. The Board's approval
permits the Company to move the riverboat casino to Shreveport at the earlier of
(i) October 1, 1997 or (ii) 30 days after the opening of the land-based casino
in New Orleans.
 
    MISSISSIPPI GAMING LAWS.  The ownership and operation of casino gaming
facilities in Mississippi are subject to extensive state and local regulation,
but primarily the licensing and regulatory control of the Mississippi Gaming
Commission and the Mississippi State Tax Commission. An owner and operator of
casino gaming facilities in Mississippi and its related holding companies must
register under the Mississippi Gaming Control Act (the "Mississippi Act") and
its gaming operations are subject to the licensing and regulatory control of the
Mississippi Gaming Commission and various local, city and county regulatory
agencies. Although not identical, the Mississippi Act is similar to the Nevada
Act. The adopted regulations of the Mississippi Gaming Commission are also
similar in many respects to the Nevada gaming regulations.
 
    Mississippi statutes and regulations give the Mississippi Gaming Commission
the discretion to require a suitability finding with respect to any person or
entity who acquired any security of an owner and operator of casino gaming
facilities in Mississippi, regardless of the percentage of ownership. The
current policy of the Mississippi Gaming Commission is to require any person or
entity acquiring 5% or more of
 
                                       25
<PAGE>
any voting securities of a public company with a licensed subsidiary or private
company licensee to be found suitable. If the owner of voting securities who is
required to be found suitable is a corporation, partnership or trust, it must
submit detailed business and financial information including a list of
beneficial owners. The applicant is required to pay all costs of investigation.
The sale of alcoholic beverages by the Company is subject to licensing, control
and regulation by the Alcoholic Beverage Control Division ("ABC") of the
Mississippi State Tax Commission. An ABC license is revocable and is not
transferable. The ABC of the Mississippi State Tax Commission has full power to
limit, condition, suspend or revoke any such license.
 
    MISSOURI GAMING LAWS.  Missouri has enacted the Missouri Gaming Law (the
"MGL") and established the Missouri Gaming Commission (the "MGC"), which is
responsible for licensing and regulating riverboat gaming in Missouri. The MGL
does not specifically limit the number of licenses that the MGC may grant, but
generally authorizes the MGC to limit the number of licenses granted. The MGL
grants specific powers and duties to the MGC to supervise riverboat gaming,
implement the MGL and take other action as may be reasonable or appropriate to
enforce the MGL. The MGC may approve permanently moored ("dockside") riverboat
casinos subject to specific criteria.
 
    The MGL extensively regulates owning and operating riverboat gaming
facilities in Missouri. Generally, a licensed company and its officers,
directors, employees, related subsidiaries and significant shareholders are
subject to such extensive regulation. The initial license and first subsequent
license renewal for an excursion gambling boat operator generally is for a
period of one year. The MGC, however, may reopen license hearings and may
terminate a license or impose additional regulations upon a licensee at any time
during the term of a license. In addition to the owner's license and operator's
license for the riverboat, individuals participating in gaming operations are
required to obtain an occupational license from the MGC. Applicants and
licensees are responsible for keeping the application and any requested
materials current, and this responsibility continues throughout any period of
licensure. In addition, Missouri has extensive licensing disclosure
requirements. In October 1996, the MGC granted a riverboat gaming license to the
Flamingo Hilton Riverboat Casino, L.P., a limited partnership wholly owned by
the Company.
 
    Pursuant to its rulemaking authority, the MGC has adopted certain
regulations which provide, among other things, that: (i) no gaming licensee or
occupational licensee may pledge, hypothecate or transfer in any way any
license, or any interest in a license, issued by the MGC; (ii) no ownership
interest in a gaming licensee or a holding company that is not a publicly held
entity may be pledged or hypothecated in any way; (iii) at least 60 days prior
to consummation, a party must notify the MGC of its intention to transfer or
issue an ownership interest in a gaming licensee or a holding company that is
not a publicly held entity (and during such period the MGC may disapprove the
transaction or require the transaction be delayed pending further
investigation); (iv) at least 15 days prior to consummation, a party must notify
the MGC of its intention to: (a) issue an ownership interest in a publicly held
gaming licensee or holding company if such issuance would involve, directly or
indirectly, 5% or greater of the ownership interest in the gaming licensee or
holding company, (b) incur any private debt equal to or exceeding $1,000,000 by
a gaming licensee or any holding company affiliated with a gaming licensee or
(c) issue any public debt and, before or after consummation, the MGC may reopen
the gaming licensee's licensing hearing to consider the effect of the
transaction on the licensee's suitability; (v) not later than 7 days after
consummation, the following transactions must be reported to the MGC: (a) the
transfer or issuance of an ownership interest in a publicly held gaming licensee
or holding company, if such transfer or issuance would result in an entity or
group of entities acting in concert owning, directly or indirectly, a total
amount of ownership interest equaling 5% or greater of the ownership interest in
the gaming licensee or holding company and (b) any pledge or hypothecation of 5%
or more of the ownership interest in a publicly held gaming licensee or holding
company; (vi) no withdrawals of capital, loans, advances or distribution of any
type of assets in excess of 5% of accumulated earnings of a licensee to anyone
with an ownership interest in the licensee may occur without prior MGC approval;
and (vii) the MGC may take appropriate action against a licensee or other person
who has been disciplined in another jurisdiction for gaming related activity.
 
                                       26
<PAGE>
    QUEENSLAND GAMING LAWS.  Queensland, Australia, like the jurisdictions
discussed above, has comprehensive laws and regulations governing the conduct of
casino gaming. All persons connected with the ownership and operation of a
casino, including the Company, its subsidiary that manages the Hotel Conrad
Jupiters, Gold Coast and the Conrad International Treasury Casino, Brisbane and
certain of their principal stockholders, directors and officers, must be found
suitable and licensed. A casino license once issued remains in force until
surrendered or cancelled. Queensland law defines the grounds for cancellation
and, in such event, an administrator may be appointed to assume control of the
hotel-casino complex. The Queensland authorities have conducted an investigation
of, and have found suitable, the Company and its subsidiary.
 
    ONTARIO GAMING LAWS.  Ontario, Canada also has laws and regulations
governing the conduct of casino gaming. Ontario law requires that the operator
of a casino must be found suitable and be registered. A registration once issued
remains in force until revoked. Ontario law defines the grounds for
registration, as well as revocation or suspension of such registration. The
Company and two other shareholders formed Windsor Casino Limited ("WCL") to
operate the Casino Windsor. The Ontario authorities have conducted an
investigation of, and have found suitable, the Company and the other two
shareholders of WCL in connection with the Ontario registration of WCL. In
January 1997, WCL redeemed the shareholder interest of one of its three original
shareholders.
 
    TURKEY GAMING LAWS.  Turkey has laws and regulations governing the
establishment and operation of casino gaming. The Turkish Ministry of Tourism
inspects all casino premises prior to the commencement of operations and
conducts random inspections of ongoing casino operations. Under Turkish gaming
laws, access to casinos is limited to persons carrying a foreign passport or to
Turkish citizens receiving a permit from the Ministry of Tourism. The casino
located in the Conrad International Istanbul has been authorized to conduct
casino operations by the Turkish Ministry of Tourism.
 
    URUGUAY GAMING LAWS.  Uruguay also has laws and regulations governing the
establishment and operation of casino gaming. The Internal Auditors Bureau of
Uruguay is responsible for establishing the terms under which casino operations
are conducted, including suitability requirements of persons associated with
gaming operations, authorized games, specifications for gaming equipment,
security, surveillance and compliance. The casino located in the Conrad
International Punta del Este Resort and Casino has been authorized to conduct
casino operations by the Internal Auditors Bureau of Uruguay.
 
    IRS REGULATIONS.  The Internal Revenue Service ("IRS") requires operators of
casinos located in the United States to file information returns for U.S.
citizens (including names and addresses of winners) for keno and slot machine
winnings in excess of stipulated amounts. The IRS also requires operators to
withhold taxes on certain keno, bingo and slot machine winnings of nonresident
aliens. Management is unable to predict the extent, if any, to which such
requirements, if extended, might impede or otherwise adversely affect operations
of, and/or income from, such other games.
 
    Regulations adopted by the IRS and the gaming regulatory authorities in
certain domestic jurisdictions in which the Company operates casinos, or in
which the Company has applied for licensing to operate a casino, require the
reporting of currency transactions in excess of $10,000 occurring within a
gaming day, including identification of the patron by name and social security
number. This reporting obligation commenced in May 1985 and may have resulted in
the loss of gaming revenues to jurisdictions outside the United States which are
exempt from the ambit of IRS regulations.
 
    OTHER LAWS AND REGULATIONS.  Each of the hotels and casinos operated by the
Company is subject to extensive state and local regulations and, on a periodic
basis, must obtain various licenses and permits, including those required to
sell alcoholic beverages. Management believes that the Company has obtained all
required licenses and permits and its businesses are conducted in substantial
compliance with applicable laws.
 
                                       27
<PAGE>
EMPLOYEES
 
    At February 1, 1997, Hilton employed approximately 65,000 persons, of whom
approximately 28,000 are covered by various collective bargaining agreements
providing, generally, for basic pay rates, working hours, other conditions of
employment and orderly settlement of labor disputes. Hilton believes that the
aggregate compensation benefits and working conditions afforded its employees
compare favorably with those received by employees in the hotel and gaming
industries generally. Although strikes of short duration have from time to time
occurred at certain of Hilton's facilities, Hilton believes its employee
relations are satisfactory.
 
ITEM 2.  PROPERTIES
 
    Hilton considers its hotels and casinos to be leading establishments with
respect to desirability of location, size, facilities, physical condition,
quality and variety of services offered in most of the areas in which they are
located. Obsolescence arising from age and condition of facilities is a factor
in the hotel and gaming industries. Accordingly, Hilton expends, and intends to
continue to expend, substantial funds to maintain its facilities in first-class
condition in order to remain competitive.
 
    Hotels and hotel-casinos owned and operated, leased and managed by Hilton
are briefly described under "Item 1" and, in particular, under the captions
"Hotel Operations" and "Gaming Operations." In addition, contemplated additions
to, and major refurbishing and remodeling of, existing properties and new hotels
and casinos presently under construction that will be operated by Hilton are
briefly described under the captions "Hotel Operations--Expansion Program" and
"Gaming Operations--Expansion Program" under "Item 1."
 
ITEM 3.  LEGAL PROCEEDINGS
 
    A purported class action against Bally, its directors and Hilton was
commenced in August 1996 under the caption PARNES V. BALLY ENTERTAINMENT
CORPORATION, ET AL. in the Court of Chancery of the State of Delaware, New
Castle County. The plaintiff alleges breaches of fiduciary duty in connection
with the Bally Merger, including allegedly illegal payments to Arthur M.
Goldberg purportedly denying Bally shareholders other than Mr. Goldberg an
opportunity to sell their shares to Hilton or any other bidder at the best
possible price. In the complaint, the plaintiff seeks, among other things: (i)
an order enjoining the Bally Merger; (ii) an award of damages in an unspecified
amount; (iii) an order requiring Mr. Goldberg to disgorge his profits; and (iv)
an award of attorneys' fees and expenses. Two other purported class actions
relating to the Bally Merger are pending against Bally and its directors, one
commenced in April 1996 under the caption KINDER V. BRUNET, ET AL. and the other
commenced in June 1996 under the caption LORD V. BRUNET, ET AL., in the Court of
Chancery of the State of Delaware, New Castle County. These actions are
virtually identical, and the plaintiffs also allege breaches of fiduciary duty
in connection with the Bally Merger. In the complaint, the plaintiffs seek,
among other things: (i) a declaration that defendants have breached their
fiduciary duties; (ii) an order requiring defendants to act in accordance with
their fiduciary duties in order to maximize the value obtained for Bally's
shareholders; (iii) an award of damages in an unspecified amount; and (iv) an
award of expenses, including attorneys' fees.
 
    Two derivative actions purportedly brought on behalf of Bally's Grand, Inc.
("BGI") against its directors and Bally, one commenced in October 1995 and the
other in September 1996, have been consolidated under the caption IN RE: BALLY'S
GRAND DERIVATIVE LITIGATION in the Court of Chancery of the State of Delaware,
New Castle County. The consolidated complaint alleges breaches of fiduciary duty
and waste of corporate assets in connection with certain actions including the
sale by BGI to Bally of the capital stock of BGI's subsidiary that owns the land
and the development rights with respect to the Paris Casino-Resort in Las Vegas
(the "Paris Transaction"), alleged improper delegation of duties by BGI's board
of directors by virtue of a management agreement (the "Management Agreement")
between BGI and Bally's Grand Management Co., Inc., a wholly owned subsidiary of
Bally ("BGM"), BGM's designation pursuant
 
                                       28
<PAGE>
to the Management Agreement of recipients awarded BGI stock options, stock
repurchases by BGI and Bally, and a consulting agreement entered into by BGI
with Arveron Investments L.P. in connection with BGI's repurchases of
securities. The plaintiffs seek, among other things: (i) rescission of the Paris
Transaction; (ii) a declaration that the Management Agreement is unlawful; (iii)
an accounting of damages to BGI and profits to defendants as a result of the
transactions complained of; (iv) an accounting for purchases of BGI stock by BGI
and Bally; and (v) costs and expenses, including reasonable attorneys' fees. A
third derivative action purportedly brought on behalf of BGI against its
directors, Bally, BGM and Hilton was commenced in November 1996 under the
caption TOWER INVESTMENT GROUP, INC., ET AL. V. BALLY'S GRAND, INC., ET AL. in
the Court of Chancery of the State of Delaware, New Castle County. The complaint
alleges breach of fiduciary duty and waste of corporate assets by BGI's
directors and Bally in connection with the Paris Transaction, aiding and
abetting by Hilton of the breaches of fiduciary duty and waste by BGI's
directors and Bally, fraud, willful misconduct or gross negligence by Bally and
BGM in connection with the Management Agreement, breach of fiduciary duty by
BGI's directors in connection with stock purchases by Bally while in possession
of material inside information concerning BGI's earnings, breach of fiduciary
duty by Bally in connection with alleged threats to abuse its controlling
interest in BGI, and violation by BGI's directors and Bally of Section 203 of
the Delaware General Corporation Law in connection with the Paris Transaction.
The plaintiffs seek, among other things: (i) rescission of the Paris
Transaction; (ii) termination of the Management Agreement; (iii) appointment of
a custodian to manage BGI's affairs; (iv) compensatory damages; (v) an order
enjoining Bally and Hilton from conveying the Paris Casino-Resort; (vi)
disgorgement by Bally and Hilton of the profits of the Paris Casino-Resort;
(vii) disgorgement by Arthur M. Goldberg of all payments, warrants and interests
received in connection with the Bally Merger; and (viii) disgorgement by Bally
of profits earned from any transactions in shares of BGI's stock based upon
material inside information. This action has been consolidated with the original
consolidated action under the caption IN RE: BALLY'S GRAND, INC. SHAREHOLDERS
LITIGATION.
 
    Several purported derivative actions against Bally and certain of its former
directors, including Arthur M. Goldberg, originally filed in December 1990 and
January 1991, have been consolidated under the caption IN RE: BALLY
ENTERTAINMENT CORPORATION SHAREHOLDERS LITIGATION in the Court of Chancery of
the State of Delaware, New Castle County. The consolidated complaint alleges,
among other things: breach of fiduciary duty, corporate mismanagement and waste
of corporate assets in connection with certain actions including, among other
things, payment of compensation, certain acquisitions by Bally, the
dissemination of allegedly materially false and misleading information, the
restructuring of Bally's debt, and a subsidiary's allegedly discriminatory
practices. The plaintiffs seek, among other things: (i) injunctions against
payment of certain termination compensation benefits and implementation of the
restructuring plan; (ii) rescission of consummated transactions and a
declaration that the complained of transactions are null and void; (iii) an
accounting by individual defendants of damages to Bally and benefits received by
such defendants; (iv) the appointment of a representative to negotiate on behalf
of the former Bally stockholders in connection with any restructuring; and (v)
costs and disbursements, including a reasonable allowance for the fees and
expenses of plaintiff's attorneys, accountants and experts.
 
    In management's opinion, disposition of pending litigation against the
Company, including the lawsuits described above, is not expected to have a
material effect on the Company's financial position or results of operations.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    Not applicable.
 
                                       29
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
 
    The following table sets forth certain information with respect to the
executive officers of the Company:
 
<TABLE>
<CAPTION>
                                                POSITIONS AND OFFICES
NAME                                              WITH THE COMPANY                             AGE
-------------------------  ---------------------------------------------------------------  ---------
<S>                        <C>                                                              <C>
Barron Hilton              Chairman of the Board, and previously served as Chief Executive     69
                           Officer until February 1996, and President until February 1993
 
Stephen F. Bollenbach      President and Chief Executive Officer since February 1996           54
 
Eric M. Hilton             Vice Chairman of the Board since May 1993, Executive Vice           63
                           President--International Operations from May 1992 until May
                           1993, President, Conrad International Hotels Corporation until
                           May 1993, and Senior Vice President--Real Estate Development,
                           International until May 1992
 
Arthur M. Goldberg         Executive Vice President and President--Gaming Operations since     55
                           December 1996
 
Matthew J. Hart            Executive Vice President and Chief Financial Officer since May      44
                           1996
 
Dieter H. Huckestein       Executive Vice President and President--Hotel Operations since      53
                           May 1994, and Senior Vice President-- Hawaii/California/Arizona
                           Region until May 1994
</TABLE>
 
    Unless otherwise noted in the table, all positions and offices with the
Company indicated have been continuously held since January 1992. The executive
officers are responsible for all major policy making functions and all other
corporate and divisional officers are responsible to, and are under the
supervision of, the executive officers. None of the above named executive
officers are related, except that Messrs. Barron and Eric Hilton are brothers.
 
    All of the above named executive officers are directors of the Company,
except for Mr. Hart. Prior to joining Hilton, Mr. Hart served as Senior Vice
President and Treasurer of The Walt Disney Company since October 1995, Executive
Vice President and Chief Financial Officer of Host Marriott Corporation from
October 1992 until October 1995, and Senior Vice President and Treasurer of
Marriott Corporation until October 1992. Additional information for directors of
the Company will be included under "Election of Directors" in the Company's
definitive proxy statement to be used in connection with its annual meeting of
stockholders scheduled to be held on May 8, 1997 (the "Proxy Statement").
Reference is expressly made to the Proxy Statement for the specific information
incorporated herein by the aforesaid reference. See "Cover Page--Documents
Incorporated by Reference."
 
                                       30
<PAGE>
                                    PART II
 
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
    The Company's Common Stock and PRIDES are listed on the New York and Pacific
Stock Exchanges and are traded under the symbols "HLT" and "HLT PR,"
respectively. Information regarding sales prices, dividend payments and record
holders with respect to the Company's Common Stock and PRIDES is set forth under
"Supplementary Financial Information" in the Notes to the Company's Consolidated
Financial Statements on page 52 in the Stockholders Report, which information is
incorporated herein by reference.
 
    On July 14, 1988, Hilton adopted a Preferred Share Purchase Rights Plan
("Plan") and declared a dividend distribution of one Preferred Share Purchase
Right ("Rights") on each outstanding share of Hilton Common Stock. The Rights
are transferable only with the Common Stock until they become exercisable.
 
    Generally, the Rights become exercisable only if a person or group (other
than Hilton Interests, as hereinafter defined) acquires 20% or more of Hilton's
Common Stock or announces a tender offer, the consummation of which would result
in ownership by a person or group of 20% or more of the Common Stock. Each Right
entitles stockholders to buy one one-hundredth of a share of a new series of
junior participating preferred stock at an exercise price of $150.
 
    If the Company is acquired in a merger or other business combination
transaction, each Right entitles its holder to purchase, at the Right's then
current price, a number of the acquiring company's common shares having a then
current market value of twice the Right's exercise price. In addition, if a
person or group (other than Hilton Interests) acquires 30% or more of the
Company's outstanding Common Stock, otherwise than pursuant to a cash tender
offer for all shares in which such person or group increases its stake from
below 20% to 80% or more of the outstanding shares of Common Stock, each Right
entitles its holder (other than such person or members of such group) to
purchase, at the Right's then current exercise price, shares of the Company's
Common Stock having a market value of twice the Right's exercise price.
 
    Following the acquisition by a person or group of beneficial ownership of
30% or more of the Company's Common Stock and prior to an acquisition of 50% or
more of the Common Stock, Hilton's Board of Directors may exchange the Rights
(other than Rights owned by such person or group), in whole or in part, at an
exchange ratio of one share of Common Stock (or one one-hundredth of a share of
the new series of junior participating preferred stock) per Right.
 
    Prior to the acquisition by a person or group of beneficial ownership of 20%
or more of the Company's Common Stock, the Rights are redeemable for one cent
per Right at the option of the Company's Board of Directors.
 
    "Hilton Interests" refer to Barron Hilton and the Conrad N. Hilton Fund and
the shares of Common Stock beneficially owned by them.
 
    The full text of the Plan has been filed as Exhibit 4.7 hereto, and the
foregoing summary is qualified in its entirety by reference to Exhibit 4.7.
 
ITEM 6.  SELECTED FINANCIAL DATA
 
    See the Five Year Summary on page 53 in the Stockholders Report and
"Segments of Business" in the Notes to the Company's Consolidated Financial
Statements on pages 48 and 49 in the Stockholders Report.
 
    The ratio of earnings to fixed charges for the five years ended December 31,
1996 is as follows: 1996 - 3.3 to 1; 1995 - 3.2 to 1; 1994 - 2.8 to 1; 1993 -
2.7 to 1; and 1992 - 2.9 to 1. The computation of the aforesaid ratios is set
forth in Exhibit 12 hereto.
 
                                       31
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS
 
    See pages 25 through 32 in the Stockholders Report.
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
    The consolidated financial statements and supplemental information required
by this Item are contained in the Stockholders Report on the pages indicated,
which information is incorporated herein by reference.
 
<TABLE>
<CAPTION>
                                                                                            PAGE
                                                                                            -----
<S>                                                                                      <C>
Consolidated statements of income for
  the three years ended December 31, 1996..............................................          33
 
Consolidated balance sheets as of December 31, 1996 and 1995...........................          34
 
Consolidated statements of cash flow for
  the three years ended December 31, 1996..............................................          35
 
Consolidated statements of stockholders' equity for
  the three years ended December 31, 1996..............................................          36
 
Notes to consolidated financial statements.............................................          37
 
Report of independent public accountants...............................................          51
 
Segment data for the five years ended December 31, 1996
  contained in the Five Year Summary...................................................          53
</TABLE>
 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE
 
    None.
 
                                    PART III
 
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
    Certain of the information respecting executive officers required by this
Item is set forth under the caption "Executive Officers of the Company" in Part
I. Other information respecting certain executive officers, as well as the
required information for directors, will be contained in the Proxy Statement,
and reference is expressly made thereto for the specific information
incorporated herein by the aforesaid reference.
 
ITEM 11.  EXECUTIVE COMPENSATION
 
    The information required by this Item will be set forth under "Executive
Compensation" in the Proxy Statement, and except for information set forth in
the Proxy Statement under "Personnel and Compensation Committee Report on
Executive Compensation" and "Stockholder Return Performance Graph," reference is
expressly made thereto for the specific information incorporated herein by the
aforesaid reference.
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    The information required by this Item will be set forth under "Security
Ownership of Certain Beneficial Owners and Executive Officers" and "Election of
Directors" in the Proxy Statement, and reference is expressly made thereto for
the specific information incorporated herein by the aforesaid reference.
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
    The information required by this Item will be set forth under "Election of
Directors--Certain Relationships and Interests in Certain Transactions" in the
Proxy Statement, and reference is expressly made thereto for the specific
information incorporated herein by the aforesaid reference.
 
                                       32
<PAGE>
                                    PART IV
 
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 
(A) INDEX TO FINANCIAL STATEMENTS
 
    1.  Financial Statements:
 
            The index to consolidated financial statements and supplementary
            data is set forth under Item 8 on page 32 hereof.
 
    2.  Financial Statement Schedules:
 
<TABLE>
<CAPTION>
                                                                                            PAGE
                                                                                            -----
<S>                                                                                      <C>
Report of Independent Public Accountants...............................................          34
Schedule II--Valuation and Qualifying Accounts.........................................          35
Supplemental Note to Consolidated Financial Statements.................................          36
</TABLE>
 
    All other schedules are inapplicable or the required information is included
elsewhere herein.
 
(B) REPORTS ON FORM 8-K
 
    The Company filed a Current Report on Form 8-K, dated December 18, 1996,
under the caption "Item 2. Acquisition or Disposition of Assets." This filing
reported the consummation of the merger of Bally with and into the Company. This
filing also contained Bally's consolidated financial statements for the periods
ended December 31, 1995 and September 30, 1996, and the Company's pro forma
financial statements reflecting the Bally Merger. See "Item 1. General
Information--Recent Developments."
 
(C) EXHIBITS
 
    Reference is made to the Index to Exhibits immediately preceding the
exhibits hereto.
 
                                       33
<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                  SUPPLEMENTAL SCHEDULE AND SUPPLEMENTAL NOTE
 
To Hilton Hotels Corporation:
 
    We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of Hilton Hotels Corporation and
subsidiaries included in the Annual Report to Stockholders incorporated by
reference in this Form 10-K, and have issued our report thereon dated February
14, 1997. Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. The supplemental schedule II and the supplemental
note to consolidated financial statements as shown on pages 35 and 36 are the
responsibility of the Company's management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic consolidated financial statements. The supplemental schedule and
the supplemental note to the consolidated financial statements have been
subjected to the auditing procedures applied in the audit of the basic
consolidated financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
 
                                          ARTHUR ANDERSEN LLP
 
Los Angeles, California
February 14, 1997
 
                                       34
<PAGE>
                   HILTON HOTELS CORPORATION AND SUBSIDIARIES
 
                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
 
                                 (IN MILLIONS)
 
<TABLE>
<CAPTION>
                                                                                         CHARGED
                                                              BALANCE AT   CHARGED TO   (CREDITED)                        BALANCE AT
                                                              BEGINNING    COSTS AND     TO OTHER                           END OF
                                                              OF PERIOD     EXPENSES     ACCOUNTS    DEDUCTIONS   OTHER     PERIOD
                                                              ----------   ----------   ----------   ----------   -----   ----------
<S>                                                           <C>          <C>          <C>          <C>          <C>     <C>
YEAR ENDED DECEMBER 31, 1996
  Allowance for doubtful accounts
    Hotel and other.........................................    $  12            4          (2)            5         1(A)      10
    Casino..................................................       18           25        --              26        13(A)      30
  Reserve for loss on other investments                            20            6        --              20       --           6
 
YEAR ENDED DECEMBER 31, 1995
  Allowance for doubtful accounts
    Hotel and other.........................................    $  14            6          (1)            7       --          12
    Casino..................................................       18           20        --              20       --          18
  Reserve for loss on other investments.....................       21        --           --               1       --          20
 
YEAR ENDED DECEMBER 31, 1994
  Allowance for doubtful accounts
    Hotel and other.........................................    $  13            5        --               4       --          14
    Casino..................................................        9           14        --               5       --          18
  Reserve for loss on other investments.....................       13        --           --           --            8(B)      21
</TABLE>
 
---------
 
(A) Represents balances acquired during the period.
 
(B) Represents unrealized holding losses on certain equity securities.
 
                                       35
<PAGE>
                   HILTON HOTELS CORPORATION AND SUBSIDIARIES
 
             SUPPLEMENTAL NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
 
                         AT DECEMBER 31, 1996 AND 1995
                                 (IN MILLIONS)
 
<TABLE>
<CAPTION>
                                                                                                      1996       1995
                                                                                                    ---------  ---------
<S>                                                                                                 <C>        <C>
Accounts payable and accrued expenses at December 31, consisted of:
  Accounts and notes payable......................................................................  $     230  $     167
  Accrued salaries and wages......................................................................         87         59
  Remittances to owners...........................................................................         64        119
  Other accrued expenses..........................................................................        513        343
                                                                                                    ---------  ---------
                                                                                                    $     894  $     688
                                                                                                    ---------  ---------
                                                                                                    ---------  ---------
</TABLE>
 
                                       36
<PAGE>
                                   SIGNATURES
 
    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on March 12, 1997.
 
                                          HILTON HOTELS CORPORATION
                                                     (Registrant)
 
                                          By:           MATTHEW J. HART
 
                                             -----------------------------------
 
                                                       Matthew J. Hart
 
                                                Executive Vice President and
                                                   Chief Financial Officer
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on March 12, 1997.
 
<TABLE>
<S>                                           <C>
           STEPHEN F. BOLLENBACH                          DIETER H. HUCKESTEIN
-------------------------------------------   -------------------------------------------
           Stephen F. Bollenbach                          Dieter H. Huckestein
   President and Chief Executive Officer                        Director
 
              A. STEVEN CROWN                              ROBERT L. JOHNSON
-------------------------------------------   -------------------------------------------
              A. Steven Crown                              Robert L. Johnson
                  Director                                      Director
 
              PETER M. GEORGE                                DONALD R. KNAB
-------------------------------------------   -------------------------------------------
              Peter M. George                                Donald R. Knab
                  Director                                      Director
 
             ARTHUR M. GOLDBERG                           BENJAMIN V. LAMBERT
-------------------------------------------   -------------------------------------------
             Arthur M. Goldberg                           Benjamin V. Lambert
                  Director                                      Director
 
              MATTHEW J. HART                               DONNA F. TUTTLE
-------------------------------------------   -------------------------------------------
              Matthew J. Hart                               Donna F. Tuttle
        Executive Vice President and                            Director
          Chief Financial Officer
  (Chief Financial and Accounting Officer)
 
               BARRON HILTON                               SAM D. YOUNG, JR.
-------------------------------------------   -------------------------------------------
               Barron Hilton                               Sam D. Young, Jr.
           Chairman of the Board                                Director
 
               ERIC M. HILTON
-------------------------------------------
               Eric M. Hilton
                  Director
</TABLE>
 
                                       37
<PAGE>
 
<TABLE>
<CAPTION>
                                                     INDEX TO EXHIBITS
                                                                                                               SEQUENTIALLY
EXHIBIT                                                                                                          NUMBERED
 NUMBER                                               DESCRIPTION                                                  PAGE
--------   --------------------------------------------------------------------------------------------------  ------------
<C>        <S>                                                                                                 <C>
 
      2.1  Agreement and Plan of Merger, dated as of June 6, 1996, between Registrant and Bally Entertainment
           Corporation, as amended (incorporated herein by reference from Exhibit 2.1 to Registrant's
           Registration Statement on Form S-4 (File No. 333-10415))
 
      3.1  Restated Certificate of Incorporation of Registrant, as amended (incorporated herein by reference
           from Exhibit 4.1 to Registrant's Registration Statement on Form S-3 (File No. 333-18523))
 
      3.2  By-Laws of Registrant, as amended (incorporated herein by reference from Exhibit 4.2 to
           Registrant's Registration Statement on Form S-3 (File No. 333-18523))
 
      4.1  Indenture, dated as of July 1, 1988, between Registrant and Citibank, N.A., regarding Registrant's
           Subordinated Debt Securities (incorporated herein by reference from Exhibit 4.1 to Post-Effective
           Amendment No. 2 to Registrant's Registration Statement on Form S-3 (File No. 2-95746))
 
      4.2  Indenture, dated as of July 1, 1988, between Registrant and Morgan Guaranty Trust Company of New
           York, regarding Registrant's Senior Debt Securities (incorporated herein by reference from Exhibit
           4.1 to Post-Effective Amendment No. 1 to Registrant's Registration Statement on Form S-3 (File No.
           2-99967))
 
      4.3  First Supplemental Indenture, dated as of June 30, 1992, between Registrant and Morgan Guaranty
           Trust Company of New York, regarding Registrant's Senior Debt Securities, relating to Exhibit 4.2
           hereto (incorporated herein by reference from Exhibit 4.3 to Registrant's Annual Report on Form
           10-K for the year ended December 31, 1992)
 
      4.4  Indenture, dated as of May 14, 1996, between Registrant and The Bank of New York, regarding
           Registrant's 5% Convertible Subordinated Notes due 2006 (incorporated herein by reference from
           Exhibit 4.6 to Registrant's Registration Statement on Form S-4 (File No. 333-10415))
 
      4.5  Credit Agreement, dated as of October 18, 1996, among Registrant, the financial institutions
           signatory thereto, Morgan Guaranty Trust Company of New York, as documentation agent and The Bank
           of New York, as administrative agent..............................................................
 
      4.6  Reimbursement Agreements, dated as of November 15, 1990, among Registrant, Swiss Bank Corporation
           and the financial institutions signatory thereto (incorporated herein by reference from Exhibit
           4.7 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1990)
 
      4.7  Rights Agreement, dated as of July 14, 1988, between Registrant and The First National Bank of
           Chicago (incorporated herein by reference from Exhibit 1 to Registrant's Current Report on Form
           8-K, dated July 14, 1988)
 
      4.8  Agreement Amending Rights Agreement, dated as of July 13, 1990, among Registrant, The First
           National Bank of Chicago and Manufacturers Hanover Trust Company of California, relating to
           Exhibit 4.7 hereto (incorporated herein by reference from Exhibit 8 to Registrant's Form 8-A,
           dated May 2, 1996)
</TABLE>
 
                                       38
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<TABLE>
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                                                     INDEX TO EXHIBITS
                                                                                                               SEQUENTIALLY
EXHIBIT                                                                                                          NUMBERED
 NUMBER                                               DESCRIPTION                                                  PAGE
--------   --------------------------------------------------------------------------------------------------  ------------
<C>        <S>                                                                                                 <C>
      4.9  Form of Certificate of Designations, Preferences, Rights and Limitations of Registrant's Preferred
           Redeemable Increased Dividend Equity Securities, 8% PRIDES, Convertible Preferred Stock
           (incorporated herein by reference from Exhibit 4.10 to Registrant's Registration Statement on Form
           S-4 (File No. 333-10415))
 
     10.1  1984 Stock Option and Stock Appreciation Rights Plan of Registrant, together with the Stock Option
           Agreement relating thereto, both as amended (incorporated herein by reference from Exhibit 10.5 to
           Registrant's Annual Report on Form 10-K for the year ended December 31, 1989)*
 
     10.2  Amendment, dated October 18, 1990, to the 1984 Stock Option and Stock Appreciation Rights Plan of
           Registrant, relating to Exhibit 10.1 hereto (incorporated herein by reference from Exhibit 10.3 to
           Registrant's Annual Report on Form 10-K for the year ended December 31, 1990)*
 
     10.3  Amendment, dated November 14, 1996, to the 1984 Stock Option and Stock Appreciation Rights Plan of
           Registrant, relating to Exhibits 10.1 and 10.2 hereto*............................................
 
     10.4  1990 Stock Option and Stock Appreciation Rights Plan of Registrant, together with the Stock Option
           Agreement relating thereto, both as amended (incorporated herein by reference from Exhibit 10.4 to
           Registrant's Annual Report on Form 10-K for the year ended December 31, 1990)*
 
     10.5  Amendment, dated January 20, 1994, to the 1990 Stock Option and Stock Appreciation Rights Plan of
           Registrant, relating to Exhibit 10.4 hereto (incorporated herein by reference from Exhibit 10.5 to
           Registrant's Annual Report on Form 10-K for the year ended December 31, 1993)*
 
     10.6  Amendment, dated January 19, 1995, to the 1990 Stock Option and Stock Appreciation Rights Plan of
           Registrant, relating to Exhibits 10.4 and 10.5 hereto (incorporated herein by reference from
           Exhibit 10.5 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994)*
 
     10.7  Amendment, dated November 14, 1996, to the 1990 Stock Option and Stock Appreciation Rights Plan of
           Registrant, relating to Exhibits 10.4, 10.5 and 10.6
           hereto*...........................................................................................
 
     10.8  1996 Stock Incentive Plan of Registrant (incorporated herein by reference from Exhibit 10.6 to
           Registrant's Annual Report on Form 10-K for the year ended December 31, 1995)*
 
     10.9  Amendment, dated November 14, 1996, to the 1996 Stock Incentive Plan of Registrant, relating to
           Exhibit 10.8 hereto*..............................................................................
 
     10.10 1996 Chief Executive Stock Incentive Plan of Registrant (incorporated herein by reference from
           Exhibit 10.7 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995)*
 
     10.11 Incentive Compensation Plan of Registrant (incorporated herein by reference from Exhibit 10.4 to
           Registrant's Annual Report on Form 10-K for the year ended December 31, 1980)*
</TABLE>
 
                                       39
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<TABLE>
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                                                     INDEX TO EXHIBITS
                                                                                                               SEQUENTIALLY
EXHIBIT                                                                                                          NUMBERED
 NUMBER                                               DESCRIPTION                                                  PAGE
--------   --------------------------------------------------------------------------------------------------  ------------
<C>        <S>                                                                                                 <C>
     10.12 Amendment, dated as of January 1, 1994, to the Incentive Compensation Plan of Registrant, relating
           to Exhibit 10.11 hereto (incorporated herein by reference from Exhibit 10.7 to Registrant's Annual
           Report on Form 10-K for the year ended December 31, 1993)*
 
     10.13 Retirement Plan of Registrant, as amended and restated (incorporated herein by reference from
           Exhibit 10.8 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994)*
 
     10.14 First Amendment, dated as of November 15, 1995, to the Retirement Plan of Registrant, relating to
           Exhibit 10.13 hereto (incorporated herein by reference from Exhibit 10.11 to Registrant's Annual
           Report on Form 10-K for the year ended December 31, 1995)*
 
     10.15 Second Amendment, effective December 31, 1996, to the Retirement Plan of Registrant, relating to
           Exhibits 10.13 and 10.14 hereto*..................................................................
 
     10.16 Third Amendment, effective December 31, 1996, to the Retirement Plan of Registrant, relating to
           Exhibits 10.13, 10.14 and 10.15 hereto*...........................................................
 
     10.17 Supplemental Executive Retirement Plan of Registrant, as amended (incorporated herein by reference
           from Exhibit 10.6 to Registrant's Annual Report on Form 10-K for the year ended December 31,
           1991)*
 
     10.18 Amendment, effective April 1, 1994, to the Supplemental Executive Retirement Plan of Registrant,
           relating to Exhibit 10.17 hereto (incorporated herein by reference from Exhibit 10.10 to
           Registrant's Annual Report on Form 10-K for the year ended December 31, 1994)*
 
     10.19 Amendment, effective December 31, 1996, to the Supplemental Executive Retirement Plan of
           Registrant, relating to Exhibits 10.17 and 10.18 hereto*..........................................
 
     10.20 Directors' Retirement Benefit Plan of Registrant, as amended (incorporated herein by reference
           from Exhibit 10.7 to Registrant's Annual Report on Form 10-K for the year ended December 31,
           1991)*
 
     10.21 Retirement Benefit Replacement Plan of Registrant, as amended (incorporated herein by reference
           from Exhibit 10.9 to Registrant's Annual Report on Form 10-K for the year ended December 31,
           1992)*
 
     10.22 Amendment, dated as of January 1, 1994, to the Retirement Benefit Replacement Plan of Registrant,
           relating to Exhibit 10.21 hereto (incorporated herein by reference from Exhibit 10.12 to
           Registrant's Annual Report on Form 10-K for the year ended December 31, 1993)*
 
     10.23 Amendment, effective April 1, 1994, to the Retirement Benefit Replacement Plan of Registrant,
           relating to Exhibits 10.21 and 10.22 hereto (incorporated herein by reference from Exhibit 10.14
           to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994)*
 
     10.24 Amendment, effective December 31, 1996, to the Retirement Benefit Replacement Plan of Registrant,
           relating to Exhibits 10.21, 10.22 and 10.23 hereto*...............................................
 
     10.25 Thrift Savings Plan of Registrant, as amended and restated*.......................................
 
     10.26 Amendment, effective January 1, 1996, to the Thrift Savings Plan of Registrant, relating to
           Exhibit 10.25 hereto*.............................................................................
</TABLE>
 
                                       40
<PAGE>
<TABLE>
<CAPTION>
                                                     INDEX TO EXHIBITS
                                                                                                               SEQUENTIALLY
EXHIBIT                                                                                                          NUMBERED
 NUMBER                                               DESCRIPTION                                                  PAGE
--------   --------------------------------------------------------------------------------------------------  ------------
<C>        <S>                                                                                                 <C>
     10.27 Executive Deferred Compensation Plan of Registrant, as amended*...................................
 
     10.28 Amendment, effective January 1, 1997, to the Executive Deferred Compensation Plan of Registrant,
           relating Exhibit 10.27 hereto*....................................................................
 
     10.29 Employee Stock Purchase Plan of Registrant*.......................................................
 
     10.30 Form of Change of Control Agreement between Registrant and each of Barron Hilton, Eric M. Hilton,
           Matthew J. Hart and Dieter H. Huckestein (incorporated herein by reference from Exhibit 10.16 to
           Registrant's Annual Report on Form 10-K for the year ended December 31, 1994)*
 
     10.31 Change of Control Agreement, dated as of January 30, 1996, between Registrant and Stephen F.
           Bollenbach*.......................................................................................
 
     10.32 Employment Agreement, dated as of February 1, 1996, between Registrant and Stephen F. Bollenbach
           (incorporated herein by reference from Exhibit 10.21 to Registrant's Annual Report on Form 10-K
           for the year ended December 31, 1995)*
 
     10.33 Amended Consulting and Employment Agreement, dated as of November 12, 1996, between Registrant and
           Arthur M. Goldberg*...............................................................................
 
     10.34 First Amendment, dated as of December 14, 1996, to the Amended Consulting and Employment
           Agreement, relating to Exhibit 10.33 hereto*......................................................
 
     10.35 Deferred Compensation Agreement, dated as of January 16, 1997, between Registrant and Arthur M.
           Goldberg*.........................................................................................
 
     10.36 Letter Agreement, dated as of October 10, 1996, between Registrant and Raymond C. Avansino,
           Jr.*..............................................................................................
 
     10.37 Release and Separation Agreement, dated as of February 19, 1997, between Registrant and William C.
           Lebo, Jr.*........................................................................................
 
     11    Computation of Earnings Per Share.................................................................
 
     12    Computation of Ratios of Earnings to Fixed Charges................................................
 
     13    Registrant's Annual Report to Stockholders for the year ended December 31, 1996...................
 
     21    List of Registrant's Subsidiaries.................................................................
 
     23    Consent of Independent Public Accountants.........................................................
 
     99    Undertakings......................................................................................
</TABLE>
 
---------
 
*  Management contracts or compensatory plans or arrangements required to be
   filed as exhibits to this Form 10-K by Item 601(b)(10)(iii) of Regulation
   S-K, previously filed where indicated and incorporated herein by reference.
 
    Pursuant to Regulation Section 229.601, Item 601(b)(4)(iii) of Regulation
S-K, upon request of the Securities and Exchange Commission, the Registrant
hereby undertakes to furnish a copy of any unfiled instrument which defines the
rights of holders of long-term debt of the Registrant and its consolidated
subsidiaries (and for any of its unconsolidated subsidiaries for which financial
statements are required to be filed) wherein the total amount of securities
authorized thereunder does not exceed 10% of the total consolidated assets of
the Registrant.
 
                                       41