Consolidated net profit of Hilton Hotels Corporation in
1956, after all charges and taxes, soared to $16,752,369,
a gain of 84% over the $9,104,760 net profit of 1955. The
1956 net profit is equal, after preferred dividend requirements to $4.48 a share on the 3,671,602 shares of common stock outstanding on December 31, 1956. A year
earlier, net profit after preferred dividends was equal to
$2.52 per share on the equivalent 3,440,478 common
shares then outstanding, adjusted for the two-for-one
stock split effected in September.
Operations in 1956 accounted for $9,587,214 of the
total consolidated net profit. This amount was equal,
after preferred dividends, to $2.53 per common share.
In 1955, net profit from operations was $8,002,259, or
$2.20 per common share. Profit from the sale of properties in 1956 amounted to $7,165,155, or $1.95 per common share. This amount compared with similar profits in
1955 of $1,102,501, which came to 32 cents per common
share of stock.
The substantial net profit derived from property sales
was occasioned by a number of extraordinary circumstances. Three hotels, the Jefferson in St.
Louis, the Mayflower in Washington, and
the Roosevelt in New York, were sold in
compliance with a consent decree entered
on February 6, 1956. This decree, which
in no way admits any violation on the part
of the Corporation, brought to an end an
anti-trust suit filed by the Justice Department against the Corporation and the
Statler Hotels Delaware Corporation.
The Jefferson Hotel was sold in Decem
ber of 1955, prior to the entry of the consent decree, at a
profit of $2,617,655 after capital gains tax. This sale was
followed by that of the Hotel Roosevelt on February 29,
1956, which resulted in a profit after taxes of $1,845,950.
The Mayflower Hotel in Washington, D.C. was sold on
March 31 at a profit after taxes of $5,862,867.
The sale of the Hotel New Yorker was completed on
October 16, 1956. Payment received by Hilton Hotels
Corporation consisted of $1,679,625 in cash, plus 12,815
shares of Hilton Hotels common stock valued at $320,375.
As part of the transaction, Hilton earlier had received
the equity in the Hotel Senator in Sacramento, California. The remainder of the purchase price consisted of a
second mortgage and other notes. The total profit after
taxes accruing from the New Yorker sale is $7,169,847,
which will be received in installments over a ten-year
period. The Hotel Senator was sold, as of October 31,
upon receipt of $1,800,000 in cash from the purchaser.
The balance of the purchase price was represented by a
second mortgage of $450,000, and a new first mortgage
of $1,500,000, both assumed by the purchaser.
Of the $23,327,920 pre-tax profit accruing to Hilton
Hotels Corporation from the sale of the Jefferson,
Roosevelt, Mayflower, and New Yorker hotels, a total of
$8,589,793 was taken into income in 1956. Additional
profit was also realized from property sales of prior years.
At December 31, 1956, there remained $19,092,518 in
unrealized profit from property sales, which will be
applied to income over the next 10 years. This profit
amounts to $3.90 per share, after provision for capital
gains tax at the current rate based on the 3,671,602
common shares outstanding at the year-end.