this stock the name of the Corporation was changed to Beverly Hilton Development Corporation and a certificate of election to dissolve the Corporation was executed December 29, 1950 and filed with the Secretary of State on January 26, 1951. (See Notes 1 and 2).
6 convertible preference stock—Since the date of Consolidation the Corporation has purchased for the Treasury 168,853.97 shares
of its own convertible preference stock at a total cost of $6,402,342.87, the discount thereon being credited to capital surplus. Of the
total shares so purchased 32,378.97 shares have been permanently retired and cancelled.
The Corporation had options to purchase 54,564 shares of its own convertible preference stock for $40.00 per share at December
31, 1950 under a certain offer to stockholders which expired on August 15, 1949. At December 31, 1950 the Corporation had provided a reserve for dividends on convertible preference stock under option in the amount of $206,289.00 which would be required
to be paid were the Corporation not to exercise its option under the terms of the offer. As of January 31, 1951, 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 $68,763.00 as of January 31, 1951. 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, 1952 and 1953.
7 common stock—Common 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.
8 reserve for contingencies—The Board of Directors established as of June 1, 1946 a reserve for contingencies of $1,700,000.00 to
cover claims which may be asserted under various Federal statutes and regulations, including claims for Federal Income and Excess
Profits Taxes of the Consolidated Companies, such reserve so created being deemed by the Board of Directors to be reasonably
adequate to cover all such contingencies.
9 general—The suit instituted against Hilton Hotels Corporation and others by various stockholders of the Mayflower Hotel Corporation, involving, among other matters, the management fee charged by Hilton Hotels Corporation to Mayflower Hotel Corporation
since acquisition of the controlling stock in December 1946, was decided by the District Court of the District of Columbia in favor of
Hilton Hotels Corporation and the other defendants. The case is now on appeal before the Circuit Court of Appeals of the District
1 consolidated income—Consolidated Income includes the wholly owned subsidiaries State-Monroe Equipment Corporation; Beverly
Hilton Development Corporation and Hilton Hotels International, Inc., but not the partly owned Mayflower Hotel Corporation;
Hotel Waldorf-Astoria Corporation; Jefferson Hotel Company or Hotels of the Bermuda Development Company, Ltd. (Reference
is made to Consolidated Balance Sheet Note 1).
The Corporation's share for the year ended December 31, 1950 of net profits, less dividends received, of the non-consolidated
subsidiaries, which has not been reflected herein, amounted to $900,404.79, and for the year ended December 31, 1949, such share
amounted to $200,132.85.
2 general—Operations for the year ended December 31, 1949 have been restated from previously issued reports for comparative
purposes only. 25