of the Corporation's real estate holdings in Houston other
than the land on which The Shamrock Hilton is located. The
preferred shares acquired in the exchange have now been retired and only 3,500 shares of this issue remain outstanding.
The action reduced annual preferred dividend requirements
by $247,000 which has the effect of increasing earnings available to the common stock by six cents per share annually.
The year-end earned surplus was $65,229,134 as compared
with $57,904,979 at December 13, 1960. After payment of all
dividends net profit retained from 1961 consolidated earnings
amounted to $7,324,155.
Book value per share of common stock was $27.66 at December 31 compared with $24.37 a year earlier. Book value
reflects the cost basis to the Corporation of its assets at the
time of acquisition less accumulated depreciation. With the
general increase in real estate values during the life of the
Corporation since 1946, market values are substantially
higher than book values.
Institutional investors continued to hold large amounts of
Hilton common stock at year-end. Approximately 600,000
or nearly 16 per cent of the outstanding shares were in the
portfolios of investment trusts, banks, pension funds and other
institutional investors. Institutions also held a substantial
portion of Hilton debentures and preferred stock issues.
5 OO i
financial condition: The Corporation's working capital at
December 31, 1961 amounted to $20,321,641, or $5.36 per
share of common stock. Current assets were 1.68 times current liabilities. A year earlier, working capital was $25,010,132
for a current ratio of 1.84 to 1. Current assets at the end of
1961 included $27,975,218 in cash compared with $27,056,626
in cash at the preceding year-end.
In March 1961, Hilton Hotels received $24,500,000, mostly
in the form of corporate securities, through the sale and leaseback of The Beverly Hilton, and the sale of notes and bonds
from the Corporation's investment portfolio to a group of
private investors. The Beverly Hilton was leased back for an
initial term of 35 years from March 31, 1961 with renewal options for an additional 64 years. The Corporation has options
to repurchase the hotel at the sale price in either 1966 or 1967.
Subsequently, the corporate securities received in the transaction were liquidated. The proceeds were utilized to eliminate all but a nominal amount of bank indebtedness through
repayment of the balance of a $21,000,000 loan from a group
of 17 leading banks. Of this loan, $19,000,000 was incurred at
the time of the purchase of The Hilton Hawaiian Village.
In December 1961, Hilton Hotels and Fritz B. Burns & Son
of Los Angeles formed the Hilton-Burns Hotels Company,
Inc. Hilton transferred ownership of The Hilton Hawaiian
Village, valued at $21,000,000, to Hilton-Burns Hotels Com-