offer made in connection with the merger agreement. A cash settlement
was made in August, 1960 in the amount of $1,769,945 plus $169,572 in
interest. This was in lieu of the 28,547 shares of Hilton 5lA % preferred
and 22,838 shares of Hilton common which would have been issuable
under the merger agreement.
In the final session of Congress in 1960, a law was passed providing for
special federal tax treatment of real estate investment trusts. Hilton Hotels,
like other companies with large real estate holdings, is carefully studying
the implications and provisions of this law to determine if in any way the
Corporation could qualify, and if there would be any benefit in doing so.
Any further developments will be discussed in subsequent reports.
financial condition: During 1960, sums expended on new properties (as distinguished from modernization projects) totaled $11,270,874.
The Corporation's working capital position at year-end was strong,
amounting to $25,010,132, or $6.70 per share of common stock. Current
assets were 1.8 times current liabilities. Comparable figures a year earlier,
which reflected the $30 million debenture issue in late 1959, were $32,925,130
of working capital and a current ratio of 1.9 to 1.
Included in the December 31, 1960 current assets of $54,728,054 are
cash of $27,056,626 and $2,498,924 in highly liquid short term securities
which are the equivalent of cash. These securities earn interest, but can
readily be converted into cash when needed.
In January 1961 the Corporation borrowed $21,000,000 at 51/a per cent
interest of which $19,000,000 was used for the purchase of The Hawaiian
Village and $2,000,000 was used to reduce other bank indebtedness. The
funds were drawn under a $25,000,000 standby credit agreement with a
group of 17 leading banks. The Corporation has until September 15, 1961
to borrow the remaining $4,000,000 under the agreement.
Long-term indebtedness was decreased during the year by $8,291,216
through payments on mortgages and other notes. This is detailed in the
table entitled "Analysis of Consolidated Long-Term Debt." The year-end
total was equal to 46.2 per cent of the book value of fixed assets, investments at cost and working capital.
The following is a condensed consolidated statement of source and
application of funds for the year ended December 31, 1960:
SOURCE OF FUNDS:
Net profit $ 9,792,010
Less: Net profit from property sales 2,247,028
Net profit from operations 7,544,982
Depreciation and amortization 10,740,575
Collections on notes receivable 3,596,922
Maturing short-term investments 10,000,000
New financing 2,000,000
Decrease in cash 6,488,784
Decrease in other net assets 195,116
FUNDS APPLIED TO:
Reduction of long-term debt $ 8,291,216
Capital expenditures 22,093,715
Purchase of treasury stock 1,990,952
Payment to Savoy-Plaza dissenters 1,939,517