with $10,049,857, or $2.49 a share, for the preceding year. Operating earnings for 1960 amounted to 3.3 per cent of revenues and to 7.4 per cent of
equity capital invested.
The Corporation also realized net profit from sales of property, most of
which took place in prior years. Capital gains taken into earnings in 1960
were $2,247,028, or 60 cents a share, compared with $1,533,007, or 41 cents
a share, the year before.
Operating costs of the nine newest hotels and inns were high in relation
to volume generated. This was anticipated during their period of building
towards full potential. In addition, depreciation and amortization charges
in 1960 were $1,623,257 above 1959, principally due to the new properties.
Many labor and material costs were greater in relation to volume, a trend
which prevails throughout the hotel industry and which is common to
much of American industry.
Net interest expense, that is interest paid in excess of interest earned, was
$905,432 higher in 1960 than in the year before. This increase resulted
primarily from the $30 million in 6% subordinated sinking fund debentures issued in October, 1959.
Property sales in 1960 included the 473-room San Antonio hotel and
inn in Texas and the Waldorf-Astoria laundry in Jersey City. Profit of
approximately $1,400,000 on the San Antonio sale will be taken into earnings as realized over the next ten years while the total profit of $354,649 on
the laundry sale is included in 1960 consolidated earnings.
Unrealized profits from property sales totaled $12,078,790 at December
31, 1960. This equalled $2.43 a share based on the common shares outstanding at year-end, after provision for taxes at the current capital gains
rate. The major portion of these profits will be taken into earnings as
realized over the next six years.
quarterly dividends: During the year, four dividends on the
common stock, each of 371/i cents a share, were paid on March 1, June 1,
September 1 and December 1, for a total of $1.50 a share. Regular quarterly dividends also were paid totalling $5.00 a share on the 5% First
Preferred Stock, Series A (par value $100) and $1.37^ a share on the 5lA %
Cumulative Voting Preferred Stock, Series A (par value $25). Payments
to holders of all classes of capital stock during 1960 totaled $6,250,979,
compared with $5,191,253 the year before.
capital changes: The number of common shares outstanding at
December 31, 1960 decreased by 59,589 from a year earlier to 3,731,228.
This was accomplished by repurchasing shares of stock in the open market.
The established policy, in effect since early 1958, is to reacquire stock
issued for acquisition of properties which were subsequently sold.
Earned surplus at the 1960 year-end was $57,904,979 as compared with
$58,361,381 a year earlier. Net profit retained from 1960 consolidated earnings, after payment of all dividends, amounted to $3,541,031. The investment of Hilton Hotels International, Inc., of $1,854,575 in its Cuban subsidiary, which originally operated The Habana Hilton, has been written off
against earned surplus. In addition, the Board of Directors felt that it was