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Item 2. Management’s Discussion and Analysis

2021-07-29 compared with 2021-05-05 · 186 added, 140 removed, 224 unchanged (59% of the section changed)

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This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

These statements include, but are not limited to, statements related to our expectations regarding the impact of the COVID-19 pandemic, the performance of our business, our financial results, our liquidity and capital resources and other non-historical statements.

These statements include, but are not limited to, statements related to our expectations regarding the impact of and recovery from the COVID-19 pandemic, the performance of our business, our financial results, our liquidity and capital resources and other non-historical statements.

In some cases, you can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "projects," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words.

Such forward-looking statements are subject to various risks and uncertainties including, among others, risks inherent to the hospitality industry, macroeconomic factors beyond our control, risks related to the impact of the COVID-19 pandemic, competition for hotel guests and management and franchise contracts, risks related to doing business with third-party hotel owners, performance of our information technology systems, growth of reservation channels outside of our system, risks of doing business outside of the U.S.

Such forward-looking statements are subject to various risks and uncertainties including, among others, risks inherent to the hospitality industry, macroeconomic factors beyond our control, risks related to the impact of the COVID-19 pandemic, including as a result of new strains and variants of the virus, competition for hotel guests and management and franchise contracts, risks related to doing business with third-party hotel owners, performance of our information technology systems, growth of reservation channels outside of our system, risks of doing business outside of the U.S.

and our indebtedness.

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COVID-19 Pandemic

Since the beginning of 2020, the COVID-19 pandemic has significantly impacted the global economy and strained the hospitality industry due to travel restrictions and stay-at-home directives in place at various times, resulting in cancellations and significantly reduced travel around the world.

In response to the global crisis, we took actions to prioritize the safety and security of our guests, employees and owners and support our communities, as well as help our business withstand this uncertain time;

see further discussion in "—Liquidity and Capital Resources."

The reduction in travel resulted in the complete and partial suspensions of operations at certain of our hotels throughout 2020, although the majority of those properties had reopened by December 31, 2020.

During the three months ended March 31, 2021, reopenings outpaced suspensions;

however, the operations of approximately 275 hotels were suspended for some period of time during the period.

Our Asia Pacific region began experiencing the effects of the pandemic in January 2020, while the pronounced negative results and hotel suspensions in the Americas and Europe, Middle East and Africa ("EMEA") regions did not begin until mid-March 2020.

Additionally, since the beginning of the pandemic, the pervasiveness and severity of travel restrictions and stay-at-home directives have varied by country and state and have fluctuated with COVID-19 infection surges and contractions and COVID-19 vaccination distributions, which commenced in late 2020.

As such, the pandemic had a material adverse impact on our results for the three months ended March 31, 2021 and 2020 when compared to periods prior to the onset of the pandemic, and although both periods were significantly impacted by the pandemic, they are not considered comparable, and no two periods affected by the pandemic are expected to be comparable in the future.

In addition, although the distribution of effective COVID-19 vaccinations is a promising development, we are unable to predict how widely utilized the vaccines will be, whether they will be effective in preventing the spread of COVID-19 (including its variant strains) and when normal economic activity and business operations will resume.

Accordingly, given the ongoing nature of the COVID-19 pandemic, the ultimate impact that it will have on the Company’s business, financial performance and results of operations remains uncertain.

As of April 28, 2021, 97 percent of our global hotel properties were open, while the operations of approximately 175 hotels were suspended, and we expect all of our hotel properties to be open by the end of 2021.

Refer to "—Results of Operations" for further discussion on signs of recovery experienced during the period.

Hilton is one of the largest hospitality companies in the world, with 6,567 properties comprising 1,032,412 rooms in 119 countries and territories as of March 31, 2021.

The COVID-19 pandemic has significantly impacted the global economy and strained the hospitality industry since the beginning of 2020.

Our Asia Pacific region began experiencing the effects of the COVID-19 pandemic in January 2020, while the pronounced negative results and suspensions of hotel operations in the Americas and Europe, Middle East and Africa ("EMEA") regions did not begin until mid-March 2020.

Since the beginning of the pandemic, the pervasiveness and severity of travel restrictions and stay-at-home directives have varied by country and state and have fluctuated with COVID-19 infection surges and contractions, as well as the distribution of COVID-19 vaccinations, which commenced in late 2020, and the emergence of new strains and variants of the virus.

As such, the pandemic had a material adverse impact on our results for the three and six months ended June 30, 2021 and 2020 when compared to periods prior to the onset of the pandemic, and although all periods were significantly impacted by the pandemic, none of these periods are considered comparable, and no periods affected by the pandemic are expected to be comparable to future periods.

We are still unable to predict when normal economic activity and business operations will fully resume.

Accordingly, given the ongoing nature of the pandemic, the ultimate impact that it will have on the Company’s business, financial performance and results of operations remains uncertain.

However, during recent months, the broader distribution of COVID-19 vaccinations and the easing of travel and other restrictions have generated renewed travel and tourism activities in many markets around the globe.

Additionally, although the restrictions and reduction in travel resulted in the suspensions of operations at certain hotels throughout 2020 and the operations of approximately 300 hotels were suspended for some period of time during the six months ended June 30, 2021, reopenings have significantly outpaced suspensions during 2021 and only 95 hotels remained suspended as of July 21, 2021.

We expect nearly all of our hotel properties that were suspended for some period of time as a result of the pandemic to be open by the end of 2021.

Hilton is one of the largest hospitality companies in the world, with 6,676 properties comprising 1,050,331 rooms in 119 countries and territories as of June 30, 2021.

Our premier brand portfolio includes:

our luxury and lifestyle hotel brands, Waldorf Astoria Hotels & Resorts, LXR Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Tempo by Hilton and Motto by Hilton;

our full service hotel brands, Signia by Hilton, Hilton Hotels & Resorts, Curio Collection by Hilton, DoubleTree by Hilton, Tapestry Collection by Hilton and Embassy Suites by Hilton;

our full service hotel brands, Signia by Hilton, Hilton Hotels & Resorts, Curio Collection by Hilton,

DoubleTree by Hilton, Tapestry Collection by Hilton and Embassy Suites by Hilton;

our focused service hotel brands, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton;

and our timeshare brand, Hilton Grand Vacations.

As of March 31, 2021, we had 115 million members in our award-winning guest loyalty program, Hilton Honors.

As of June 30, 2021, we had more than 118 million members in our award-winning guest loyalty program, Hilton Honors.

Segments and Regions

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(i) management and franchise and (ii) ownership.

The management and franchise segment provides services, including hotel management and licensing of our brands and IP.

The management and franchise segment provides services, including hotel management and the licensing of our brands and IP.

This segment generates its revenue from:

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The Americas region includes North America, South America and Central America, including all Caribbean nations.

Although the U.S., which represented 71 percent of our system-wide hotel rooms as of March 31, 2021, is included in the Americas region, it is often analyzed separately and apart from the Americas region and, as such, it is presented separately within the analysis herein.

The EMEA region includes Europe, which represents the western-most peninsula of Eurasia stretching from Iceland in the west to Russia in the east, and the Middle East and Africa ("MEA"), which represents the Middle East region and all African nations, including the Indian Ocean island nations.

Although the U.S., which represented 71 percent of our system-wide hotel rooms as of June 30, 2021, is included in the Americas region, it is often analyzed separately and apart from the Americas region and, as such, it is presented separately within the analysis herein.

The EMEA region includes Europe, which represents the western-most peninsula of Eurasia stretching from Iceland in the west to Russia in the east, and the Middle East and Africa ("MEA"), which represents the Middle East and all African nations, including the Indian Ocean island nations.

Europe and MEA are often analyzed separately and, as such, are presented separately within the analysis herein.

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While these objectives have not changed as a result of the COVID-19 pandemic, the current economic environment has posed certain challenges to the execution of our strategy, which have included and may continue to include delays in openings and new development.

During the three months ended March 31, 2021, we added over 100 hotels, consisting of 16,500 rooms, to our system, contributing to over 13,100 net additional hotel rooms.

As of March 31, 2021, we had over 2,570 hotels in our development pipeline that we expect to add to our system in the future, representing nearly 399,000 rooms under construction or approved for development throughout 114 countries and territories, including 31 countries and territories where we do not currently have any existing hotels.

During the six months ended June 30, 2021, we added over 220 hotels, consisting of over 36,300 rooms, to our system, contributing to nearly 30,900 net additional hotel rooms.

As of June 30, 2021, we had nearly 2,590 hotels in our development pipeline that we expect to add to our system in the future, representing 401,000 rooms under construction or approved for development throughout 115 countries and territories, including 30 countries and territories where we do not currently have any existing hotels.

Nearly all of the rooms in the development pipeline are within our management and franchise segment.

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We do not consider any individual development project to be material to us.

In June 2016, the United Kingdom ("U.K.") held a referendum in which voters approved an exit from the European Union ("E.U.") (commonly referred to as "Brexit").

In June 2016, the U.K.

held a referendum in which voters approved an exit from the European Union ("E.U.") (commonly referred to as "Brexit").

In December 2020, the U.K.

reached a new bilateral trade and cooperation deal governing their future relationship (the "EU-UK Trade and Cooperation Agreement"), which has now been approved by all parties and will be fully implemented from May 1, 2021.

While our results as of and for the three months ended March 31, 2021 were not materially affected by Brexit specifically, the final outcomes are not yet certain.

reached a new bilateral trade and cooperation deal governing their future relationship (the "EU-UK Trade and Cooperation Agreement"), which was fully implemented from May 1, 2021.

While our results as of and for the three and six months ended June 30, 2021 were not materially affected by Brexit specifically, the final outcomes are not yet certain.

In addition, while the EU-UK Trade and Cooperation Agreement provides clarity in respect of the intended future relationship between the U.K.

and some detailed matters of trade and cooperation, it remains unclear what general long-term economic, financial, trade and legal implications the U.K.

and some detailed matters of trade and cooperation, it

remains unclear what general long-term economic, financial, trade and legal implications the U.K.

withdrawal from the E.U.

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and (iii) have not sustained substantial property damage, business interruption, undergone large-scale capital projects or for which comparable results were not available.

Of the 6,511 hotels in our system as of March 31, 2021, 5,642 hotels were classified as comparable hotels.

Our 869 non-comparable hotels included 48 hotels, or less than one percent of the total hotels in our system, that were removed from the comparable group during the last twelve months because they sustained substantial property damage, business interruption, underwent large-scale capital projects or comparable results were otherwise not available.

When considering business interruption in the context of our definition of comparable hotels, any hotel that had completely or partially suspended operations on a temporary basis at any point as a result of the COVID-19 pandemic was considered to be part of the definition of comparable hotels.

Despite these temporary suspensions of hotel operations, we believe that including these hotels within our hotel operating statistics of occupancy, average daily rate ("ADR") and revenue per available room ("RevPAR") reflects the underlying results of our business for the three months ended March 31, 2021 and 2020.

Of the 6,619 hotels in our system as of June 30, 2021, 5,617 hotels were classified as comparable hotels.

Our 1,002 non-comparable hotels included 43 hotels, or less than one percent of the total hotels in our system, that were removed from the comparable group during the last twelve months because they have sustained substantial property damage, business interruption, underwent large-scale capital projects or comparable results were otherwise not available.

When considering business interruption in the context of our definition of comparable hotels, no hotel that had completely or partially suspended operations on a temporary basis at any time as a result of the COVID-19 pandemic was excluded from the definition of comparable hotels on that basis alone.

Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel or group of hotels for a given period.

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References to RevPAR, ADR and occupancy are presented on a comparable basis, and references to RevPAR and ADR are presented on a currency neutral basis, unless otherwise noted.

As such, comparisons of these hotel operating statistics for the three months ended March 31, 2021 and 2020 use the exchange rates for the three months ended March 31, 2021.

As such, comparisons of these hotel operating statistics for the three and six months ended June 30, 2021 and 2020 use the exchange rates for the three and six months ended June 30, 2021, respectively.

EBITDA and Adjusted EBITDA

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For Adjusted EBITDA, we also exclude items such as:

(i) FF&E replacement reserves for leased hotels to be consistent with the treatment of FF&E for owned hotels, where it is capitalized and depreciated over the life of the FF&E;

(i) FF&E replacement reserves for leased hotels to be consistent with the treatment of capital expenditures for property and equipment, where it is capitalized and depreciated over the life of the FF&E;

(ii) share-based compensation, as this could vary widely among companies due to the different plans in place and the usage of them;

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The hotel operating statistics by region for our system-wide comparable hotels were as follows:

Three Months Ended Change

March 31, 2021 2021 vs.

Three Months Ended Change Six Months Ended Change

June 30, 2021 2021 vs.

2020 June 30, 2021 2021 vs.

Occupancy 63.7 % 39.2 % pts.

55.7 % 14.7 % pts.

ADR $ 129.30 28.1 % $ 119.91 (6.6) %

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Occupancy 37.3 % 27.5 % pts.

33.8 % 3.1 % pts.

ADR $ 108.05 28.7 % $ 102.34 (13.3) %

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Occupancy 31.9 % 25.1 % pts.

25.7 % (3.8) % pts.

ADR $ 105.83 22.6 % $ 96.81 (20.1) %

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Occupancy 48.8 % 32.7 % pts.

45.7 % 8.5 % pts.

ADR $ 131.06 28.1 % $ 128.18 1.0 %

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Occupancy 56.1 % 27.2 % pts.

49.9 % 16.8 % pts.

ADR $ 98.71 25.4 % $ 98.26 (5.1) %

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Occupancy 58.5 % 36.1 % pts.

51.3 % 12.6 % pts.

ADR $ 124.75 28.0 % $ 116.51 (7.1) %

RevPAR $ 73.03 233.8 % $ 59.75 23.2 %

During the three months ended March 31, 2021, the COVID-19 pandemic continued to negatively impact our business and our hotel operating statistics.

As a result of the pandemic, certain hotels suspended operations at various times throughout 2020 and, although the majority of those hotels were reopened by 2021, new suspensions and re-suspensions continued during the three months ended March 31, 2021.

The operations of approximately 275 properties, which are primarily located in the U.S.

and Europe, were suspended for some period of time during the three months ended March 31, 2021, as compared to approximately 730 properties during the three months ended March 31, 2020.

While approximately 97 percent of our global hotel properties were open as of March 31, 2021, most properties, including those that reopened following suspensions of their operations, experienced significantly lower occupancy as compared to prior to the pandemic, as business and transient demand was lower due to factors related to the pandemic, such as travel restrictions and health and safety concerns.

During the three and six months ended June 30, 2021, the COVID-19 pandemic continued to negatively impact our business and our hotel operating statistics.

However, we experienced improvement in our results as compared to previous periods during the COVID-19 pandemic, particularly during the three months ended June 30, 2021, as a result of an upward trend in travel and tourism with the easing of COVID-19 restrictions.

The negative impact of the COVID-19 pandemic affected the Asia Pacific region in January 2020, before spanning to the U.S., Americas (excluding the U.S.), Europe and MEA regions in mid-March 2020.

Therefore, the results for the three months ended March 31, 2021 and 2020 for the U.S., Americas (excluding the U.S.), Europe and MEA regions are less comparable than the Asia Pacific region and reflect more pronounced declines in RevPAR between the two periods.

However, overall, signs of recovery are evident as our properties continue to reopen and, although we historically expect our revenues to be lowest in the first quarter given the seasonality of our industry, we had sequential monthly improvement in occupancy, ADR and RevPAR on a system-wide basis from December 2020 through March 2021, with a 23.2 percent improvement in system-wide RevPAR for the month of March 2021 as compared to the month of March 2020.

Therefore, the results for the six months ended June 30, 2021 and 2020 for the U.S., Americas (excluding the U.S.), Europe and MEA regions are less comparable than the Asia Pacific region and reflect less improvement, if any, in RevPAR between the two periods, as those regions were not affected for the entirety of the six months ended June 30, 2020.

Although all regions showed significant improvement compared to the three months ended June 30, 2020, Europe's recovery was outpaced by the other regions during the six months ended June 30, 2021 due to continued COVID-19 restrictions and travel barriers across the region.

The three months ended June 30, 2020 reflected the lowest occupancy and RevPAR of any period for all regions since the start of the pandemic.

Further, as a result of the pandemic, certain hotels suspended operations at various times throughout 2020, but the majority of those hotels were reopened by 2021.

Overall, we are recovering from the negative impact of the pandemic and while some hotels suspended operations during the six months ended June 30, 2021, reopenings significantly outpaced suspensions.

As such, the operations of only approximately 300 hotels, primarily located in the U.S.

and Europe, were suspended for some period of time during the six months ended June 30, 2021, as compared to approximately 1,205 hotels during the six months ended June 30, 2020.

Further, as of June 30, 2021, the number of hotels with suspended operations was the fewest as of any period end since the start of the pandemic, with more than 98 percent of our global hotel properties open.

And while most properties, including those that reopened following suspensions of their operations, experienced significantly lower occupancy during 2020 and 2021 as

compared to periods prior to the onset of the pandemic, we experienced sequential monthly improvement in occupancy, ADR and RevPAR on a system-wide basis during the six months ended June 30, 2021.

The table below provides a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

(in millions)

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EBITDA 274 (250) 284 (82)

Gain on foreign currency transactions (2) (9)

Loss (gain) on foreign currency transactions 1 13 (1) 4

Loss on debt extinguishment — — 69 —

FF&E replacement reserves 11 7 15 21

Share-based compensation expense (benefit) 39 (12)

Share-based compensation expense 53 24 92 12

Reorganization costs — 38 — 38

Impairment losses — 15 — 127

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Net other expenses from managed and franchised properties

55 166 119 237

Other adjustments (1)

Adjusted EBITDA $ 400 $ 51 $ 598 $ 414

(1) Includes severance and other items.

Three Months Ended Percent

March 31, Change

(1) Includes severance not related to the reorganization activities undertaken in response to the COVID-19 pandemic and other items.

The three and six months ended June 30, 2020 also include losses related to the disposal of an investment and the settlement of a debt guarantee for a franchised hotel.

Three Months Ended Percent Six Months Ended Percent

June 30, Change June 30, Change

2021 2020 2021 vs.

(in millions)

Franchise and licensing fees $ 242 $ 339 (28.6)

Base and other management fees $ 25 $ 60 (58.3)

2020 2021 2020 2021 vs.

(in millions) (in millions)

Franchise and licensing fees $ 369 $ 132 NM (1)

$ 611 $ 471 29.7

Base and other management fees $ 42 $ 8 NM (1)

$ 67 $ 68 (1.5)

Incentive management fees

Total management fees $ 38 $ 83 (54.2)

21 (5) NM (1)

Total management fees $ 63 $ 3 NM (1)

$ 101 $ 86 17.4

(1) Fluctuation in terms of percentage change is not meaningful.

The COVID-19 pandemic began to significantly impact our franchise and licensing fees and management fees in March 2020.

As a result of the pandemic, during the three months ended March 31, 2021 and 2020, the operations of certain of our franchised and managed hotels were suspended for some period of time.

As of March 31, 2021, all but approximately 200 of these hotels were open.

In addition to the suspensions of hotel operations, the related reduction in global travel and tourism led to decreases in our hotel operating statistics during the three months ended March 31, 2021, compared to the same period in the prior year, and, ultimately, decreases in our franchise fees and management fees.

For the three months ended March 31, 2021, RevPAR decreased 33.3 percent at our comparable franchised properties and 50.2 percent at our comparable managed properties, as a result of decreases in occupancy of 8.9 percentage points and 16.5 percentage points, respectively, and reduced ADR of 20.8 percent and 25.8 percent, respectively.

The decreases in RevPAR during the period were primarily attributable to decreases in January 2021 and February 2021 when compared to the same period in the prior year, as March 2021 showed RevPAR improvement at both comparable franchised properties and managed properties of 25.7 percent and 17.6 percent, respectively, when compared to the same period in the prior year.

Including new development and ownership type transfers, from January 1, 2020 to March 31, 2021, we added 460 managed and franchised properties on a net basis, providing an additional 61,700 rooms to our management and franchise segment.

While we have historically experienced increases to franchise fees and management fees as new hotels are a part of our system for full periods, the impact of the COVID-19 pandemic outweighed the positive impact of these property additions on our franchise fees and management fees from non-comparable hotels.

Additionally, licensing and other fees decreased $19 million during the three months ended March 31, 2021, primarily due to decreases in licensing fees from HGV and our strategic partnerships, which were the result of reductions in timeshare revenues and lower co-branded credit cardholder spend, respectively, both resulting from the COVID-19 pandemic.

Incentive fees decreased during the period as they are based on hotels' operating profits, which have declined from the prior year as a result of decreased demand due to the COVID-19 pandemic.

Three Months Ended Percent

March 31, Change

The increases in fees that were recognized in 2021, as compared to fees recognized during the same periods in 2020, were driven by an upward trend in travel and tourism in 2021 resulting from increased confidence and desire to travel by our customers, as COVID-19 vaccinations were distributed more broadly and COVID-19 restrictions began to ease.

Additionally, there were decreases in the number of hotels that had suspended operations as a result of the pandemic during the respective periods, with approximately 1,170 managed and franchised hotels with suspended operations for some period of time during the six months ended June 30, 2020, while only approximately 285 managed and franchised hotels had suspended operations for some period of time during the six months ended June 30, 2021.

As of June 30, 2021, all but approximately 100 of these hotels had reopened.

For the three months ended June 30, 2021, RevPAR increased 218.1 percent at our comparable franchised properties and 308.3 percent at our comparable managed properties, as a result of increases in occupancy of 38.3 percentage points and 29.5 percentage points, respectively, and increased ADR of 24.2 percent and 46.2 percent, respectively.

For the six months ended June 30, 2021, RevPAR increased 29.6 percent at our comparable franchised properties and 6.5 percent at our comparable

managed properties as a result of increased occupancy of 14.8 percentage points and 6.5 percentage points, respectively, partially offset by decreased ADR of 5.0 percent and 10.9 percent, respectively.

Including new development and ownership type transfers, from January 1, 2020 to June 30, 2021, we added nearly 570 managed and franchised properties on a net basis, providing an additional 79,700 rooms to our management and franchise segment.

As new hotels were part of our system for full periods and as they recovered from the negative impact of the COVID-19 pandemic, such hotels increased our franchise and management fees during the periods, and we expect this trend to continue in future periods.

Additionally, licensing and other fees increased $48 million and $28 million during the three and six months ended June 30, 2021, respectively, primarily due to increases in licensing fees from HGV and our strategic partnerships, which were the result of increases in timeshare revenues and higher co-branded credit cardholder spend, respectively, both resulting from the rise in travel and tourism during the periods.

Incentive fees increased during the periods as they are based on hotels' operating profits, which have improved from the prior year as a result of increased demand at our properties.

Incentive fees during the three months ended June 30, 2020 were negative due to the reversal in that period of certain incentive fees that were recognized during the three months ended March 31, 2020, as a result of revisions of the estimates of the expected operating profit for certain managed hotels during that reporting period.

Three Months Ended Percent Six Months Ended Percent

June 30, Change June 30, Change

2021 2020 2021 vs.

(in millions)

2020 2021 2020 2021 vs.

(in millions) (in millions)

Owned and leased hotels

$ 121 $ 31 NM (1)

$ 177 $ 241 (26.6)

Owned and leased hotel revenues decreased primarily due to the COVID-19 pandemic and the related reduction in global travel and tourism.

As a result of the COVID-19 pandemic, the operations of approximately 15 of our owned and leased hotels, all of which are located in Europe, were suspended for some period of time during the three months ended March 31, 2021, and five remained suspended as of March 31, 2021.

Although the operations of some of our owned and leased hotels were suspended for some period of time during the three months ended March 31, 2020, the suspensions began in late March, when our owned and leased hotels began to be significantly impacted by the pandemic.

The decrease in owned and leased hotel revenues was primarily attributable to the $114 million decrease in revenues from our comparable owned and leased hotels, due to reduced RevPAR of 79.6 percent, resulting from decreases in occupancy and ADR of 37.1 percentage points and 27.1 percent, respectively.

Three Months Ended Percent

March 31, Change

(1) Fluctuation in terms of percentage change is not meaningful.

As a result of the COVID-19 pandemic, the operations of approximately 15 and 35 of our owned and leased hotels were suspended for some period of time during the six months ended June 30, 2021 and 2020, respectively, and, as of June 30, 2021, all of these hotels had reopened.

The increase in owned and leased hotel revenues during the three months ended June 30, 2021 was primarily attributable to a $73 million increase in revenues from our comparable owned and leased hotels that was due to an increase in RevPAR of 492.6 percent, resulting from increases in occupancy and ADR of 21.8 percentage points and 14.1 percent, respectively, as well as the decrease in the number of these hotels that had suspended operations during the periods.

Additionally, the increase included a $23 million increase in COVID-19 relief subsidies from international governments.

Although the three months ended June 30, 2021 reflected signs of recovery from the COVID-19 pandemic, we still experienced a decrease in revenues from owned and leased hotels during the six months ended June 30, 2021, as the majority of our owned and leased hotels did not suspend operations or otherwise sustain negative results because of the pandemic until March 2020.

Revenues from our comparable owned and leased hotels decreased $41 million during the six months ended June 30, 2021, due to reduced RevPAR of 40.8 percent, resulting from decreases in occupancy and ADR of 7.6 percentage points and 19.0 percent, respectively.

However, the decrease in revenues during the six months ended June 30, 2021 was partially offset by a $28 million increase in COVID-19 relief subsidies from international governments and an $11 million increase due to favorable foreign currency exchange rates.

Three Months Ended Percent Six Months Ended Percent

June 30, Change June 30, Change

2021 2020 2021 vs.

(in millions)

Other revenues $ 17 $ 23 (26.1)

Other revenues decreased primarily due to decreased revenues from our purchasing operations, which predominately related to lower volume purchasing based on reduced hotel demand as a result of the COVID-19 pandemic.

2020 2021 2020 2021 vs.

(in millions) (in millions)

Other revenues $ 21 $ 10 NM (1)

$ 38 $ 33 15.2

(1) Fluctuation in terms of percentage change is not meaningful.

For the three months ended June 30, 2021, other revenues increased primarily due to increased revenue from our purchasing operations related to improving hotel demand resulting from the rise in travel and tourism during the period.

Operating Expenses

Three Months Ended Percent

March 31, Change

Three Months Ended Percent Six Months Ended Percent

June 30, Change June 30, Change

2021 2020 2021 vs.

(in millions)

2020 2021 2020 2021 vs.

(in millions) (in millions)

Owned and leased hotels

$ 142 $ 95 49.5 $ 252 $ 334 (24.6)

Owned and leased hotel expen ses decreased primarily due to a decrease in occupancy and certain hotels having suspended operations for some period of time as a result of the COVID-19 pandemic, which led to reduced variable operating costs and food and beverage expenses.

Further, as a result of declining performance, variable rent, which is generally based on a percentage of hotel revenues or profits, decreased at most leased hotels that have a variable rent structure .

However, certain fixed costs of maintaining these hotels, such as fixed rent and certain minimum maintenance and utility costs, even with suspended operations or operating with very low occupancy, could not be reduced at the same rate as the hotel revenue decreases during the period.

Three Months Ended Percent

March 31, Change

The changes in our owned and leased hotel expenses primarily reflect the changes in occupancy during the three and six months ended June 30, 2021, as discussed in "—Revenues," which drove food and beverage expenses and certain of the variable operating costs of the hotels.

Additionally, there were changes in rent expense for our leased hotels, particularly variable rent expense, which is generally based on hotel performance, consistent with the changes in owned and leased hotel revenues.

F urther, although the operations of certain owned and leased hotels were suspended for some period of time during the six months ended June 30, 2021 and 2020, and most remaining open hotels were operating with low occupancy, particularly during the three months ended June 30, 2020, certain fixed costs of maintaining these hotels, such as fixed rent and certain minimum maintenance and utility costs, could not be reduced at the same rate that those hotels' revenues may have decreased.

The changes during the three and six months ended June 30, 2021 also included increases in owned and leased hotel expenses of $7 million and $20 million, respectively, as a result of unfavorable foreign currency exchange rates.

Three Months Ended Percent Six Months Ended Percent

June 30, Change June 30, Change

2021 2020 2021 vs.

(in millions)

2020 2021 2020 2021 vs.

(in millions) (in millions)

Depreciation and amortization expenses $ 46 $ 88 (47.7) $ 97 $ 179 (45.8)

General and administrative expenses 98 63 55.6 195 123 58.5

Reorganization costs — 38 (100.0) — 38 (100.0)

Impairment losses — 15 (100.0) — 127 (100.0)

Other expenses 9 13 (30.8) 19 27 (29.6)

The decrease in depreciation and amortization expenses was primarily due to a decrease in amortization expense, which was largely the result of certain management and franchise contract intangible assets recorded at the Merger becoming fully amortized during 2020.

The increase in general and administrative expenses was primarily due to increased share-based compensation expense as a result of a benefit recognized during the three months ended March 31, 2020 due to the reversal of previously recognized expense resulting from the determination that the performance conditions of certain then-outstanding performance shares were no longer probable of achievement, while compensation expense was recognized during the three months ended March 31, 2021 for all of the outstanding performance shares, which were probable of achievement.

The decreases in depreciation and amortization expenses were due to decreases in amortization expenses, primarily resulting from certain management and franchise contract intangible assets that were recorded at the Merger becoming fully amortized during 2020.

The increases in general and administrative expenses were primarily due to increased share-based compensation expense as a result of expenses recognized during the three and six months ended June 30, 2021 for all of the outstanding performance shares, which were probable of achievement as of June 30, 2021, while the expenses recognized during the three and six months ended June 30, 2020 were net of the reversal of expenses recognized in prior periods as a result of the determination that the performance conditions of the performance shares that were originally awarded in 2018 and 2019 were no longer probable of achievement.

"Share-Based Compensation" in our unaudited condensed consolidated financial statements for additional information.

This increase was partially offset by a decrease in corporate costs associated with the reorganization initiated by the Company in June 2020, in response to the COVID-19 pandemic.

During the three months ended March 31, 2020, we recognized impairment losses of $45 million, $21 million and $46 million for operating lease ROU assets, property and equipment and other intangible assets, respectively, related to our leased hotel properties.

During the three and six months ended June 30, 2020, we recognized reorganization costs related to activities undertaken in response to the COVID-19 pandemic, primarily relating to reductions in our workforce and the associated costs.

During the three months ended June 30, 2020, we recognized impairment losses of $6 million for operating lease ROU assets, and, during the six months ended June 30, 2020, we recognized impairment losses of $51 million, $21 million and $46 million for operating lease ROU assets, property and equipment, net and other intangible assets, net, respectively, related to our leased hotel properties.

Additionally, during the three and six months ended June 30, 2020, we recognized impairment losses of $9 million related to management contract acquisition costs.

These impairment losses were due to a decline in results and expected future performance at the related hotels as a result of the COVID-19 pandemic.

Other expenses decreased primarily as a result of a decrease in expenses from our purchasing operations, resulting from reduced hotel demand, as well as a decrease in expenses related to a performance guarantee that was recognized during the three months ended March 31, 2020.

Other expenses decreased primarily as a result of expenses related to performance guarantees being recognized during the three and six months ended June 30, 2020.

Additionally, the decrease during the six months ended June 30, 2021 included decreased expenses from our purchasing operations.

Non-operating Income and Expenses

Three Months Ended Percent

March 31, Change

Three Months Ended Percent Six Months Ended Percent

June 30, Change June 30, Change

2021 2020 2021 vs.

(in millions)

2020 2021 2020 2021 vs.

(in millions) (in millions)

Interest expense $ (101) $ (106) (4.7) $ (204) $ (200) 2.0

Gain on foreign currency transactions

Gain (loss) on foreign currency transactions

(1) (13) (92.3) 1 (4) NM (1)

Loss on debt extinguishment — — NM (1)

Other non-operating income, net

(69) — NM (1)

Other non-operating income (loss), net

5 (23) NM (1)

10 (23) NM (1)

Income tax benefit

1 12 (91.7) 36 47 (23.4)

(1) Fluctuation in terms of percentage change is not meaningful.

The increase in interest expense was primarily due to the issuances of the 2025 Senior Notes and the 2028 Senior Notes in April 2020.

These increases were partially offset by a decrease resulting from the issuances of new senior unsecured notes and extinguishments of existing senior unsecured notes in December 2020 and February 2021, which reduced the weighted average interest rate on our outstanding senior unsecured notes, as well as a decrease in interest expense on our Term Loan due to a decline in its variable interest rate that was applicable for the period.

The changes in interest expense during the three and six months ended June 30, 2021 included the increase in interest expense due to the issuances of the 2025 Senior Notes and the 2028 Senior Notes in April 2020, as well as decreases resulting from the issuances of new senior unsecured notes and extinguishments of existing senior unsecured notes in December 2020 and February 2021, which reduced the weighted average interest rates on our outstanding senior unsecured notes.

Additionally, our variable interest expense decreased during the three and six months ended June 30, 2021 due to declines in the variable interest rate on our Term Loan, as well as significant principal repayments that were made on the Revolving Credit Facility during the periods, while no such payments were made during 2020 after our full draw down on the Revolving Credit Facility in March 2020.

"Debt" in our unaudited condensed consolidated financial statements for additional information on our indebtedness.

The gains on foreign currency transactions included changes in foreign currency exchange rates on certain intercompany financing arrangements, including short-term cross-currency intercompany loans.

The changes for both periods were the result of various currencies, but primarily the Australian dollar and the euro.

Loss on debt extinguishment for the three months ended March 31, 2021 related to the redemption of the 2026 Senior Notes and included a redemption premium of $55 million and the accelerated recognition of unamortized deferred financing costs of $14 million.

The gains and losses on foreign currency transactions included changes in foreign currency exchange rates on certain intercompany financing arrangements, including short-term cross-currency intercompany loans.

The changes were the result of various currencies, but primarily the Australian dollar.

Loss on debt extinguishment for the six months ended June 30, 2021 related to the redemption of the 2026 Senior Notes and included a redemption premium of $55 million and the accelerated recognition of unamortized deferred financing costs on the 2026 Senior Notes of $14 million.

"Debt" in our unaudited condensed consolidated financial statements for additional information.

The income tax benefit was flat during the three months ended March 31, 2021, as the increase in loss before income taxes was partially offset by a decrease in tax benefits recognized for losses in certain jurisdictions.

Further, during the three months ended March 31, 2020, we recognized a tax benefit for impairment losses that were recognized during the period.

Other non-operating loss, net for the three and six months ended June 30, 2020 primarily included losses related to the disposal of an investment and the settlement of a debt guarantee for a franchised hotel.

The decreases in income tax benefit during the three and six months ended June 30, 2021 were primarily attributable to changes in income before income taxes, partially offset by benefits recognized as a result of the tax rate change implemented as part of the U.K.

Finance Act and increases in tax benefits recognized for net operating losses generated in 2021 in certain foreign jurisdictions.

For additional information, see Note 7:

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Refer to Note 11:

"Business Segments" in our unaudited condensed consolidated financial statements for reconciliations of revenues for our reportable segments to consolidated amounts and of segment operating income to consolidated loss before income taxes.

We evaluate our business segment operating performance using segment operating income (loss), without allocating other revenues and expenses or general and administrative expenses.

Refer to "—Revenues" for further discussion of the decrease in revenues from our managed and franchised properties, which is correlated to our management and franchise segment revenues and segment operating income.

Refer to "—Revenues" and "—Operating Expenses" for further discussion of the decreases in revenues and operating expenses at our owned and leased hotels, which are correlated with our ownership segment revenues and segment operating loss.

We primarily evaluate our business segment operating performance using segment operating income (loss), without allocating other revenues and other expenses from managed and franchised properties, other revenues, other expenses or general and administrative expenses.

Refer to "—Revenues" for further discussion of the increases in revenues from our managed and franchised properties, which are correlated to our management and franchise segment revenues and segment operating income.

Refer to "—Revenues" and "—Operating Expenses" for further discussion of the changes in revenues and operating expenses at our owned and leased hotels, which are correlated with our ownership segment revenues and segment operating losses.

Liquidity and Capital Resources

As of March 31, 2021, we had total cash and cash equivalents of $2,447 million, including $45 million of restricted cash and cash equivalents.

The majority of our restricted cash and cash equivalents are related to cash collateral on our self-insurance programs and cash held for FF&E reserves.

Although we cannot presently estimate the ultimate and total financial impact of the unprecedented COVID-19 pandemic, which is highly dependent on the severity and duration of the pandemic, we expect it will continue to have a significant adverse impact on our results of operations in the near term.

As such, due to these uncertainties, and the indeterminate length of time the pandemic will affect the hospitality industry, we took certain proactive measures in 2020 to implement strict cost management and to secure our liquidity position to be able to meet our obligations for the foreseeable future, including issuing senior notes, drawing down on our Revolving Credit Facility and consummating the Honors Points Pre-Sale.

As of June 30, 2021, we had total cash and cash equivalents of $1,127 million, including $83 million of restricted cash and cash equivalents.

The majority of our restricted cash and cash equivalents are related to cash collateral and cash held for FF&E reserves.

In response to the global crisis resulting from the COVID-19 pandemic, in addition to the actions we took to prioritize the safety and security of our guests, employees and owners and support our communities, we took certain proactive measures in 2020 to help our business withstand this uncertain time.

This included securing our liquidity position to be able to meet our obligations for the foreseeable future, including issuing senior notes, drawing down on the full capacity of our Revolving Credit Facility and consummating the Honors Points Pre-Sale.

Further, in February 2021, we issued the 2032 Senior Notes to continue to extend debt maturities and reduce our cost of debt by repaying the 2026 Senior Notes.

Based on our ability to manage our liquidity position during the COVID-19 pandemic, we repaid an aggregate of $500 million of the outstanding debt balance on our Revolving Credit Facility during the three months ended March 31, 2021.

Based on our continued recovery and expectations of the foreseeable demands on our available cash and our liquidity in future periods, we fully repaid the $1,690 million outstanding debt balance on the Revolving Credit Facility during the six months ended June 30, 2021, including $1,190 million in June 2021.

Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating and other expenditures, including costs associated with the management and franchising of hotels, corporate expenses, payroll and compensation costs, taxes and compliance costs, interest payments on our outstanding indebtedness, contract acquisition costs and capital expenditures for required renovations and maintenance at the hotels within our ownership segment.

While our accounts receivable balance as of March 31, 2021 is less than periods prior to the start of the pandemic, we are generally experiencing slower payment of certain fees due to us.

While our accounts receivable balance as of June 30, 2021 is less than periods prior to the start of the pandemic, we are generally experiencing slower payment of certain fees due to us.

As such, we have considered the implications of these delayed payment trends in developing our estimates of expected future credit losses.

However, during the current period, we experienced some improvement with respect to the timing of customer payments in comparison to previous periods impacted by the pandemic.

Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities, capital improvements to the hotels within our ownership segment, commitments to owners in our management and franchise segment and corporate capital and information technology expenditures.

We have currently suspended dividend payments and share repurchases, but expect that these activities will be reinstated in future periods and result in uses of liquidity.

Although the COVID-19 pandemic has caused us to temporarily change our cash management strategy, we have a long-term investment policy that is focused on the preservation of capital and maximizing the return on new and existing investments and returning available capital to stockholders through dividends and share repurchases, which we expect to reimplement in the future.

Within the framework of our investment policy, we currently intend to continue to finance our business activities

primarily with cash on our balance sheet as of March 31, 2021, cash generated from our operations and, as needed, the use of the available capacity of our Revolving Credit Facility.

After considering our approach to liquidity and accessing our available sources of cash, we believe that our cash position and sources of liquidity will be adequate to meet anticipated requirements for operating and other expenditures, including corporate expenses, payroll and related benefits, taxes and compliance costs and other commitments for the foreseeable future based on current conditions.

We formally suspended share repurchases in March 2020 given the economic environment and our efforts to preserve cash, and no share repurchases have been made since then.

However, the stock repurchase program remains authorized by the board of directors, with approximately $2.2 billion remaining available for share repurchases under the program, and we may resume share repurchases in the future at any time, depending on market conditions, our capital needs and other factors.

Additionally, we suspended dividend payments in 2020, but we expect that both share repurchases and dividend payments will be reinstated in future periods and result in uses of liquidity.

Within the framework of our investment policy, we currently intend to continue to finance our business activities primarily with cash on our balance sheet as of June 30, 2021, cash generated from our operations and, as needed, the use of the available capacity of our Revolving Credit Facility.

After considering our approach to liquidity and our available sources of cash, we believe that our cash position and sources of liquidity will meet anticipated requirements for operating and other expenditures, including corporate expenses, payroll and related benefits, taxes and compliance costs and other commitments for the foreseeable future based on current conditions.

The objectives of our cash management policy are to maintain the availability of liquidity while minimizing operational costs.

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The amounts involved may be material.

We formally suspended share repurchases in 2020 given the economic environment and our efforts to preserve cash, and no share repurchases have been made since March 2020.

The stock repurchase program remains authorized by the board of directors, and we may resume share repurchases in the future at any time, depending on market conditions, our capital needs and other factors.

As of March 31, 2021, approximately $2.2 billion remained available for share repurchases under the program.

Sources and Uses of Our Cash and Cash Equivalents

The following table summarizes our net cash flows:

Three Months Ended Percent

March 31, Change

Six Months Ended Percent

June 30, Change

2021 2020 2021 vs.

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Operating Activities

The change in cash flows from operating activities was primarily the result of decreases in cash inflows generated from our management and franchise properties and our owned and leased hotels, largely as a result of decreases in system-wide RevPAR due to the COVID-19 pandemic, as further discussed in "—Revenues," as well as an increase in contract acquisition costs of $32 million.

The decrease was only partially offset by decreases in cash paid for taxes and interest of $25 million and $22 million, respectively.

The change in cash flows from operating activities was primarily attributable to the $1.0 billion of cash received in connection with the Honors Points Pre-Sale during the six months ended June 30, 2020.

Excluding the impact of this transaction, cash flows provided by (used in) operating activities were flat during the six months ended June 30, 2021, as the increase in cash inflows generated from our properties, largely as a result of an increase in system-wide RevPAR related to recovery from the COVID-19 pandemic, and the decreases in cash paid for interest and income taxes, were offset by a $92 million increase in payments of contract acquisition costs that, despite the current challenging conditions, continue our strategic investment in growing our system by adding hotels to our management and franchise segment.

Investing Activities

Net cash used in investing activities primarily related to capitalized software costs that were related to various systems initiatives for the benefit of both our hotel owners and our overall corporate operations and, during the three months ended March 31, 2020, also capital expenditures for property and equipment.

These capital expenditures were incurred before we took steps in March 2020 to temporarily reduce such expenditures in response to the COVID-19 pandemic and were related to our corporate facilities and the renovation of hotels in our ownership segment .

Net cash used in investing activities primarily related to capitalized software costs that were related to various systems initiatives for the benefit of both our hotel owners and our overall corporate operations and to capital expenditures for property and equipment related to our corporate facilities and the renovation of certain hotels in our ownership segment.

Beginning in March 2020, we took steps to temporarily reduce such expenditures in response to the COVID-19 pandemic;

however, we expect such costs to increase in future periods, aligned to our recovery from the pandemic.

Financing Activities

The change in cash flows from financing activities was primarily attributable to our Revolving Credit Facility, which we fully drew down during the three months ended March 31, 2020 in response to the COVID-19 pandemic, resulting in net cash inflows of $1.5 billion, while we repaid $500 million of the outstanding debt balance during the three months ended March 31, 2021.

Additionally, cash outflows decreased $338 million as a result of decreases in share repurchases and dividend payments, as both programs remained suspended during the three months ended March 31, 2021.

The change in cash flows from financing activities was primarily attributable to our Revolving Credit Facility, which we fully drew down during the six months ended June 30, 2020 in response to the COVID-19 pandemic, resulting in net cash inflows of $1.5 billion, while we fully repaid the $1.69 billion outstanding debt balance during the six months ended June 30, 2021.

Additionally, during the six months ended June 30, 2020, we had an additional net $1.0 billion of senior notes borrowings as compared to the six months ended June 30, 2021.

Further, cash outflows decreased $338 million as a result of decreases in share repurchases and dividend payments, as both programs remained suspended during the six months ended June 30, 2021.

Debt and Borrowing Capacity

As of March 31, 2021, our total indebtedness, excluding unamortized deferred financing costs and discount, was approximately $10.1 billion.

For additional information on our total indebtedness, including our recent financing transactions, availability under our Revolving Credit Facility and guarantees on our debt, refer to Note 5:

As of June 30, 2021, our total indebtedness, excluding unamortized deferred financing costs and discount, was approximately $8.9 billion.

For additional information on our total indebtedness, including financing transactions executed during the six months ended June 30, 2021, availability under our Revolving Credit Facility and guarantees on our debt, refer to Note 5:

"Debt" in our unaudited condensed consolidated financial statements.

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Our ability to make scheduled principal payments and to pay interest on our debt depends on our future operating performance, which is subject to general conditions in or affecting the hospitality industry that may be beyond our control.

The COVID-19 pandemic negatively impacted our cash flows from operations during the period, and will continue to do so for an indeterminate period of time.

During 2020, we took precautions to secure our cash position, as discussed above, and we expect to be able to meet our current obligations.

Furthermore, we do not have any material indebtedness outstanding that matures prior to June 2024.

The COVID-19 pandemic negatively impacted our cash flows from operations as compared to periods prior to the onset of the pandemic, and will continue to do so for an indeterminate period of time.

During 2020, we took precautions to secure our cash position, as discussed above, and, with our business recovering during the current period, we were able to repay outstanding debt borrowings on our Revolving Credit facility and we expect to be able to meet our current obligations.

Furthermore, we do not have any material indebtedness outstanding that matures prior to May 2025.

Contractual Obligations

During the three months ended March 31, 2021, we issued the 2032 Senior Notes, redeemed the 2026 Senior Notes and repaid $500 million of the outstanding debt balance on our Revolving Credit Facility.

Otherwise, there were no other material changes to our contractual obligations from what we previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

During the six months ended June 30, 2021, we issued the 2032 Senior Notes, redeemed the 2026 Senior Notes and fully repaid the $1,690 million outstanding debt balance on our Revolving Credit Facility.

Otherwise, there were no material changes to our contractual obligations from what we previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Summarized Guarantor Financial Information

HOC is the issuer of the Senior Notes and is 100 percent owned directly by Hilton Worldwide Parent LLC ("HWP"), which, in turn, is 100 percent owned directly by the Parent.

The Senior Notes are guaranteed jointly and severally on a senior unsecured basis by the Parent, HWP and substantially all of the Parent's direct and indirect wholly owned domestic restricted subsidiaries, except for HOC, the issuer (together, the "Guarantors").

The indentures that govern the Senior Notes provide that any subsidiary of the Company that provides a guarantee of our senior secured credit facilities will guarantee the Senior Notes.

As of March 31, 2021, none of our foreign subsidiaries or domestic subsidiaries owned by foreign subsidiaries or our non-wholly owned subsidiaries guaranteed the Senior Notes.

As of June 30, 2021, none of our foreign subsidiaries or domestic subsidiaries owned by foreign subsidiaries or our non-wholly owned subsidiaries guaranteed the Senior Notes.

The guarantees are full and unconditional, subject to certain customary release provisions.

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The following tables present summarized financial information for HOC, along with the Parent and all other Guarantors, on a combined basis:

March 31, 2021

June 30, 2021

(in millions)

9 unchanged sentences

TOTAL LIABILITIES AND EQUITY (DEFICIT) 10,275

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

(in millions)

7 unchanged sentences

Interest expense (196)

Income tax benefit 23

Net loss (55)

Net loss attributable to Hilton stockholders (55)

Income tax expense (12)

Net income 36

Net income attributable to Hilton stockholders 36

Critical Accounting Policies and Estimates

The preparation of our unaudited condensed consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect reported amounts and related disclosures.

We have discussed the policies and estimates that we believe are critical and require the use of complex judgment in their application in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and, during the three months ended March 31, 2021, there were no material changes to those previously disclosed.

We have discussed the policies and estimates that we believe are critical and require the use of complex judgment in their application in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and, during the six months ended June 30, 2021, there were no material changes to those previously disclosed.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis