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Mayflower Hotel Corporation
During the past year your Corporation purchased 834 additional shares of common
capital stock of Mayflower Hotel Corporation,
Washington, D. C, and on December 31, 1949
owned 271,826 shares, or 69.75% of the total
stock outstanding.
A dividend of $81,547.80 was received from
the Mayflower Hotel Corporation, which
added 5c per share to the earnings on the
Common Stock of your Corporation. Progress
has been made in the disposition of the Federal
income tax deficiency asserted by the Bureau
of Internal Revenue involving excess profit
taxes for the years 1943 to 1945. The Bureau
has conceded that the transaction whereby the
Mayflower Hotel Corporation acquired the
assets of the Mayflower Hotel Company in
January 1935, pursuant to a plan of reorganization approved by the Federal Court was a
non-taxable transaction. Accordingly, Mayflower Hotel Corporation is entitled to the
same basis as the predecessor Corporation.
The question of the amount of the invested
capital basis, and the basis for and rates of
depreciation charged by the Mayflower Hotel
Corporation, are still under consideration by
the Bureau.
You were advised in the last Annual Report
of the ruling of the Circuit Court of Appeals
that the dismissal of the suit filed in the Federal
District Court of Washington, D. C., against
your corporation and certain of its officers,
directors, and others by minority stockholders
of the Mayflower seeking to set aside the stock
purchase and the management contract should
be reversed and the case tried on its merits by
the District Court. A petition for rehearing
was filed and denied. The case is now pending
in the District Court for trial on its merits.
Answers have been filed denying the material
allegations of the amended complaint and
March 27, 1950 has been set up as the date
for trial.
Hilton Hotels International, Inc.
Hilton Hotels International, Inc., a wholly-
owned subsidiary, has had no income since its
organization in April 1948. Its operating ex
penses during 1949 were $47,605.93, most of
which was spent in the investigation of the
many projects offered it, the management of
the properties in Bermuda, and in the work
necessary to the selection, shipping and placing
of the operating equipment and furniture in the
Caribe-Hilton Hotel in San Juan, Puerto Rico.
Further expenditures were necessary for the
pre-opening expense of the Caribe-Hilton,
which was built and is owned by the Puerto
Rico Industrial Development Company and
leased for 20 years to Hilton Hotels International, Inc. The hotel, containing 300 rooms,
was built at a cost of approximately $6,000,000
including furniture and fixtures. It is modern
in every respect, air-conditioned throughout.
The formal opening was on December 9th and
wide publicity was given the event. Results so
far indicate that this hotel will be a successful
operation. For the month of January 1950 its
average room occupancy was 85.3% and it
returned a net profit of $24,101.89. A very
satisfactory number of future bookings and
inquiries are being received.
By mutual agreement the contract which
Hilton Hotels International, Inc. had with the
Bermuda Development Company for the operation of the Bermuda Hotels was cancelled on
September 9th, our experience there having
proved unsatisfactory.
Operating Contracts
There has been no change in the contracts
under which your Corporation supervises the
management of The Mayflower Hotel in Washington, D. C.j the Roosevelt Hotel in New
York, and the Palacio Hilton in Chihuahua,
Mexico.
Dividend Payments
Regular quarterly dividends of 50c per share
were paid on all Convertible Preference Stock
not under option to your Corporation.
Dividends of 25c per share on all Common
Stock were paid March 1st, June 1st, September 1st, and December 1st.
Total dividend distribution of $1,614,762
represented 41% of the net profit for the year.
This compared to a distribution of $1,888,153
during 1948, or 48% of the net profit for that year.
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