Federal Income Tax Returns of Hilton Hotels Corporation since date of consolidation to December 31, 1948 and the Returns
of State-Monroe Equipment Corporation, (a wholly-owned subsidiary) for the years 1947 and 1948 were under examination at the
date of our certificate.
. first mortgage bonds and notes—The Equitable Life Assurance Society of the United States has authorized a First Mortgage Loan
on The Stevens in the total amount of 57,000,000.00, the first advance of 52,000,000.00 being closed on December 30, 1949. The
loan agreement carries a provision for a standby fee of one-half of one per cent due quarterly beginning March 1, 1950 on the un-
advanced portion of the total authorized loan.
. reserve for contingencies—The Board of Directors established as of June 1, 1946 a reserve for contingencies of 51,700,000.00 to
cover claims which may be asserted under various Federal statutes and regulations, including claims for Federal Income and Excess
Profits taxes of the consolidating companies, such reserve so created being deemed by the Board of Directors to be reasonably adequate
to cover all such contingencies.
. convertible preference stock—Since the date of consolidation the Corporation has purchased for the Treasury 150,665-97/100
shares of its own convertible preference stock at a total cost of 55,674,822.87, the discount thereon being credited to capital surplus.
Of the total shares so purchased 24,626-97/100 shares have been permanently retired and cancelled.
The Corporation had options to purchase 72,752 shares of its own convertible preference stock for 540.00 per share at December
31, 1949 under a certain offer to stockholders which expired on August 15, 1949. At December 31, 1949 the Corporation had provided
a reserve for dividends on convertible preference stock under option in the amount of 5129,548.00 which wouid be required to be
paid were the Corporation not to exercise its option under the terms of the offer. As of January 31, 1950, the Corporation exercised
its option and purchased 18,188 shares of this stock in accordance with the terms of the offer and accordingly the dividend reserve
was reduced by 532,387.00 as of January 31, 1950. Under the terms of the offer, the Corporation may purchase the remaining shares
under option in equal annual amounts of 18,188 shares each on or before January 31, 1951, 1952 and 1953.
i stock—Common stock shares have been reserved for the conversion of convertible preference shares at the option of the
holders thereof at the rate of two shares of common stock for each share of convertible preference stock.
ited by various minority stockholders of Mayflower Hotel Corporation naming amongst others as defendants
the Hilton Hotels Corporation involving together with other things challenge of management fees and charges of the latter to Mayflower Hotel Corporation since acquisition of the controlling stock in December 1946, is now pending in the District Court in the
District of Columbia.
poration is named as party defendant in several law suits '
ny material actual or contingent liability to the Corporati
1. consolidated income—Consolidated Income includes the wholly-owned subsidiaries State-Monroe Equipment Corporation and
Hilton Hotels International, Inc., but not the partly-owned Mayflower Hotel Corporation or Hotels of the Bermuda Development
Company, Ltd. (Reference is made to Balance Sheet Note 1).
Other Income includes management fees and charges earned by Hilton Hotels Corporation as per contracts with the non-
consolidated partly-owned subsidiary and other Hilton operated hotels.
The Corporation's share for the year ended December 31, 1949 of net profits, less dividends received, of the unconsolidated
subsidiary, which has not been reflected herein, amounted to 5200,132.85, and for the year ended December 31, 1948, such share
amounted to 5202,872.58.
2. general—Operations for the year ended December 31, 1948 have been restated from previously issued reports for comparative