NOTES TO FINANCIAL STATEMENTS
CO COMPANIES INCLUDED IN CONSOLIDATION
The consolidated statements include the accounts of the Corporation and its
Subsidiaries, all of which were wholly-owned at December 31, 1953.
C2) FIXED ASSETS
The properties included under fixed assets at December 31, 1953 were the same
as in the preceding year except for the changes in acquisitions and sales mentioned in the annual report to stockholders. Such asset values were carried at
cost or were carried over from the predecessor companies together with related
depreciation reserves at predecessors' basis, plus additions at cost.
The investment in Hotel Waldorf-Astoria Corporation, which was merged
with the Parent at December 31, 1953, and whose net assets were then transferred to the new Hotel Waldorf-Astoria Corporation, a wholly-owned subsidiary, was acquired at $1,934,591.53 more than the book value of the equity
thus acquired. The difference has been treated as additional cost of leasehold
and amortized accordingly.
(3) CAPITAL. STOCK
Cumulative First Preferred 5% Series "A" shares carry preference as to
dividends and sinking fund requirements over all other classes of stock. The
4% Cumulative Convertible Preference shares carry preference as to dividends and sinking fund requirements over common shares. Dividends have
been paid and sinking fund requirements have been complied with at December 31, 1953.
C4) LONG TERM LEASES
Certain properties are operated by the Corporation and its Subsidiaries
under long-term leases ranging from two to twenty-five years from December 31, 1953, at which time the total minimum annual fixed or basic rentals
payable under such leases were approximately $3,500,000.00
C53 RESTRICTIONS ON SUBSIDIARY
Hilton Hotels International, Inc., is restricted under the terms of a certain
note payable, in the amount of $500,000.00, from lending money to the Parent
or any affiliate, except wholly-owned subsidiaries; purchasing, redeeming or
retiring any of its outstanding capital stock and payment of dividends, so long
as any installments of principal and interest on the note remain unpaid.
The wholly-owned subsidiary, Hilton Hotels International, Inc., has entered
into preliminary leases, subject to certain conditions, for the operation of
hotels under construction in Istanbul, Turkey and Havana, Cuba. Preliminary
lease agreements were entered into, subject to certain conditions, for the operation of proposed hotels in Cairo, Egypt; Acapulco, Mexico; and Mexico City,
Mexico. A preliminary agreement provides that Hilton Hotels International,
Inc., will purchase for 250,000 pounds sterling (approximately $700,000.00)
50% of the common shares of a new corporation which is to erect a hotel in
London, England. Hilton Hotels International, Inc., is to operate this hotel
under a management agreement.
Pursuant to agreements with Manufacturers Trust Company and Hotel New
Yorker Corporation, Hilton Hotels Corporation agreed to purchase from these
parties at their respective option, within the period from August 20, 1954 to
December 20, 1954, 9,060 shares of Hilton Hotels Corporation 5% Cumulative
First Preferred Stock, Series "A", and 7,311 shares of its common stock at a
minimum price of $830,500.00 subject to adjustments not as yet determinable.
Contract commitments in connection with the construction of The Beverly
Hilton approximated $8,000,000.00 at December 31, 1953.
There is not reflected in the consolidated statements any liability that may
result in the event of an unsuccessful defense of an action brought against
Hotel Waldorf-Astoria Corporation by a former employee. In the opinion of
counsel for the Company, good defenses exist to the action, which has not yet
been brought to trial.