AND CONTINGENT LIABILITIES
The Company is committed to approximately $500,000 in connection with the construction of a new hotel.
The Company has subscribed for and agreed to purchase from
its wholly-owned subsidiary Hilton Hotels International, Inc., at
par, $2,000,000 aggregate principal amount of 5% subordinated
debentures, and 400,000 shares of $5.00 par value common stock
to be issued from time to time at the option of the subsidiary. The
commitment is irrevocable for a period of four years from November 27, 1956, but shall expire prior thereto if and when such
securities in these amounts have been purchased by the Company.
At December 31, 1959, Hilton Hotels Corporation, in connection
with the subscription commitment, had purchased 320,000 shares
of common stock and $200,000 face amount of debentures.
During 1957 the Company, in connection with a lease and the
construction of the Pittsburgh Hilton Hotel, entered into an
Indenture of Mortgage and Deed of Trust pertaining to a
$12,000,000 issue of Leasehold Mortgage 4-41/2% Sinking Fund
Bonds due June 1, 1987. At December 31, 1959 $10,000,000 of
the available funds had been drawn down by the Company.
During 1959 the Company entered into a Credit Agreement
with a banking institution providing for a loan of $25,000,000 to
be advanced to the Company on or before September 15, 1961
with interest at the rate of 514% per annum. At December 31,
1959 the Company had not drawn any of the funds available
under this agreement. The agreement provides for a commitment
fee of Vi of 1% on the undrawn balance.
A subsidiary, Metropolitan Hotel Corporation, entered into an
agreement providing for a first mortgage construction loan in the
amount of $5,000,000 of which $1,666,667 is to be guaranteed by
the Company. At December 31, 1959 the subsidiary had not
drawn any of the funds available under this agreement. Under
the terms of an agreement with this subsidiary, the Company has
agreed to purchase from time to time, as the subsidiary shall request, but not later than December 31, 1961, 99,000 additional
shares of $1.00 par value common stock at an aggregate price of
$499,000 and a 4% twenty-five year subordinated note of the
subsidiary, in the principal amount of $1,500,000 at a price equal
to said principal amount. The Company is guarantor to the
extent of $1,000,000 under a $3,000,000 long-term obligation of
The Company has agreed to purchase all of the authorized
capital stock of Hilton Inns, Inc. in the amount of $5,000,000. At
December 31, 1959 the Company had purchased 120,000 shares
of such stock at a cost of $1,200,000.
The Company was contingently liable to the extent of approximately $4,700,000 as it did not receive releases from mortgagees
under certain mortgages assumed by buyers of properties, who,
however, agreed to hold the Company harmless against any
As of July 15, 1959 the Company entered into an agreement
with an individual to enable said individual to obtain sufficient
financing to build an Inn to be leased by Hilton Inns, Inc. Under
the agreement the Company might be required, by notice delivered between July 15 and July 25, 1960, to purchase the land
and buildings to be constructed thereon at a purchase price of
The Company entered into an agreement dated September 12,
1958 with respect to the Hilton Inn at New Orleans, Louisiana,
guaranteeing payment to the lessor, by Hilton Inns, Inc., of
sufficient annual rental (not to exceed $192,000 per annum) to
discharge debt service on the lessor's first mortgage, and guaranteeing payment by Hilton Inns, Inc. of real estate taxes and
insurance premiums on the Inn.
Hilton Inns, Inc. has an option, subject to certain conditions
precedent, to purchase a tract of land, consisting of 10.61 acres,
located in Dade County, Florida, for a purchase price of $848,800.
The option expires on May 1, 1960 but may be extended by
The Company and its subsidiaries operate or will operate certain
properties under leases ranging from three months to thirty-nine
years five and one-half months from December 31, 1959, with
options to renew for various periods in some instances. The total
minimum annual fixed or basic rentals payable (exclusive of real
estate taxes, insurance and other occupancy charges) under such
leases for each of the next five years ending December 31, follows:
1960, $10,597,992; 1961, $10,147,992; 1962, $9,641,040; 1963,
$9,299,233; and, 1964, $9,302,983.
Rentals and other lease obligations of Hilton of Canada, Ltd.,
a wholly-owned subsidiary of Hilton Hotels International, Inc.,
operating the Queen Elizabeth Hotel in Montreal, are guaranteed by both "International" and by the Company. The Caribe
Hilton lease was assigned to Caribe Hilton Hotel Corporation of
Delaware, but, under the terms of the assignment, neither "International" nor the Company were relieved of their obligations
under the lease agreement. "International" is also contingently
liable for lease performance under all other leases entered into
by or assigned to its foreign subsidiaries.
The wholly-owned subsidiary, Hilton Hotels International,
Inc. has entered into leases and contracts, subject to certain conditions, for the operation of hotels under construction or to be
constructed in nine cities outside the continental United States.
In general, "International" or its subsidiaries is required to
furnish initial inventories and to maintain sufficient working
capital, except in the case of one lease, which specifies that not
less than $250,000 shall be furnished for these purposes, to be
maintained for the first five years of the lease. In connection with
hotels to be constructed in the Netherlands, "International"subscribed to 1,000,000 guilders ($265,000) in the share capital of
the landlord companies. The terms of the leases commence either
on actual occupancy or within ten days of receipt of architect's
certificate of occupancy. The leases basically provide for a rental
based on a percentage of gross operating profit with certain
specific rental obligations.
9—LIMITATIONS AND RESTRICTIONS
Under the most restrictive covenants of certain indentures relating to long-term debt of the Company and an affiliate as of
December 31, 1959, the Company and certain subsidiaries on a
consolidated basis was (a) required to maintain working capital
of not less than $6,000,000 and a ratio of current assets to current
liabilities of not less than 120%; and (b) prohibited from declaring cash dividends on its capital stock, purchasing, redeeming or
otherwise retiring any shares of its capital stock unless the sum of
$2,500,000 and 80% of the consolidated net income from January
1, 1957 to date of declaration shall be greater than the aggregate
of all such dividends and payments. The maximum amount of
earned surplus so restricted was $55,214,047 at December 31,1959.
Under the most restrictive covenants of certain long-term
obligations of the wholly-owned subsidiary, Hilton Hotels International, Inc., the subsidiary is obligated to (a) maintain consolidated working capital of not less than $1,250,000, one-half
thereof to be represented by assets located in the United States,
its territories and possessions, or in countries whose currencies are
readily,and favorably convertible into dollars; and, (b) prohibited
from declaring dividends, other than in its own stock, and from
reacquiring its own stock for consideration.