sales effort. Moderate increases were shown for administrative and general, heat, light and power, and
maintenance and repairs expenses. Lease rentals and
interest were up over 1962 while property taxes and
corporate expenses and sundry capital charges were
down. Depreciation and amortization amounted to
$13,464,229, or $772,744 higher than in 1962.
Consolidated profits for the year, including capital
gains from the sale of properties, amounted to
$4,770,356, equal to $1.35 a share in 1963, compared
with $17,664,529, or $4.54 a share in 1962. During
1963, property sales accounted for a gain of $890,021
or 25 cents a share. The only significant sale during
the year was that of an undivided one-half interest in
The San Francisco Hilton Hotel, now in the final stages
of construction. A large portion of the capital gains
represented profits realized in 1963 on the sale of
properties in prior years. In 1962, capital gains
amounted to $11,932,372, or $3.11 a share. These
unusually large gains primarily reflected the sale during 1962 of The Savoy Hilton and the land under
The Palmer House.
In September 1963 Hilton Inns, Inc., a wholly-
owned subsidiary, entered into a contract, subject to
certain conditions, involving the sale of the buildings,
furniture and equipment, and leasehold comprising
The Hilton Inn, Aurora, Illinois, at a price which is
approximately $2,510,000 less than its cost basis. Accordingly, a reserve was established for revaluation of
the carrying value of this property in the amount of
the anticipated loss. Pending the consummation of the
sale, Hilton will continue to operate the inn. With
the exception of the expropriation of the subsidiary
company in Havana, Cuba, this is the first transaction, if consummated, in which the Corporation or
any of its wholly-owned subsidiaries will realize a
substantial loss upon the disposition of a hotel.
Dividend payments were made in March and June
at the rate of 37!/2 cents per share for a total of 75 cents
a share of common stock during the year. Payments
during 1962 totalled $1.50 per common share. All of
the preferred stock was retired during 1962.
Working capital of the Corporation and consolidated
subsidiaries at December 31, 1963 amounted to
$20,779,109 or $5.86 a share of common stock. Accounts receivable were up substantially over a year
earlier, primarily because of the consolidation of
Hilton Credit Corporation and additional operating
units. Current liabilities were significantly higher because of the inclusion of $4,050,000 in bank loans of
Hilton Credit which were paid in February 1964, a
bank overdraft of The London Hilton subsidiary and
an increase in the amount of long-term indebtedness
due within one year.
The ratio of current assets to current liabilities was
1.48 to 1 at December 31, 1963, compared with 1.84
to 1 the previous year end.
Working capital was increased on October 15, 1963
through the sale of an undivided one-half interest in
The San Francisco Hilton Hotel. Hilton received
$7,620,823 which represented one half of its investment plus interest from this sale thereby reducing the
Corporation's equity in the project to $4,500,000. Concurrently the co-owners arranged a $17,000,000 interim construction loan and an additional unsecured
loan of $1,500,000. A $17,000,000 first mortgage commitment has been obtained for the permanent financing of the hotel. The estimated total cost of the hotel
project is $29,000,000. Hilton Hotels has an agreement
to operate the hotel for a term of 25 years on a management fee basis.
On March 1, 1963, the Corporation sublet the
Albuquerque Hilton to another operator. The property comprising the El Paso Hilton Hotel was leased
on October 1, 1963 to another operator and the lessee
was granted an option to buy the property.
Fixed assets consisting of land, buildings, leaseholds,
leasehold improvements, furnishings and equipment,
at year end had a book value of $195,811,668. Of this
amount $119,881,289 was invested in twelve hotels
owned in fee and $58,748,527 was represented in
thirty-one leased properties. The remaining
$17,181,852 of fixed assets included land acquired for
development and the Corporation's undivided one
half interest in The San Francisco Hilton Hotel.
Long-term indebtedness amounted to $151,486,378
at December 31, 1963, compared with $138,390,496 a
year earlier. The consolidation of Hilton Credit Corporation brought bank loans of $6,075,000 and subordinated notes of $3,050,000 of the subsidiary onto
the consolidated balance sheet although Hilton Hotels
Corporation is not liable therefor. The $4,110,000 balance of The Portland Hilton mortgage commitment
and $4,480,213, representing the Corporation's 50 per
cent share of interim financing on The San Francisco
Hilton were drawn down.