E L S
years 1944 to 1952 inclusive. Additional New York State Franchise Tax resulting therefrom, for the same period would
approximate $44,000.00. No provision has been matle in the consolidated accounts for either of these contingent liabilities. Tax returns of Roosevelt Hotel, Inc. for the years 1945 to 1950, inclusive are presently under examination by the
Bureau of Internal Revenue.
(5) COMMON STOCK
Common shares have been reserved for the conversion of convertible preference shares at the option of the holders
thereof at the rate of two shares of common stock for each share of convertible preference stock.
(6) RESERVE FOR CONTINGENCIES
The Board of Directors established as of December 31, 1951 a reserve for contingencies of $500,000.00 to cover claims
which may be asserted under various Federal and State statutes and regulations, including claims for taxes on the
Corporation's income for prior years, such reserve so created being deemed by the Board of Directors to be reasonably
adequate to cover all such contingencies.
(7) DIVIDEND RESTRICTIONS
The Trust Agreement securing the outstanding debentures of Hotel Waldorf-Astoria Corporation provides among other
things that no dividends may be paid nor other distributions made in respect of the outstanding capital stock until all
accrued interest and sinking fund payments have been made.
(8) SINKING FUND PAYMENTS
Two subsidiaries are required, under the terms of indentures covering their long term indebtedness, to pay into a
sinking fund a portion of their earnings for the retirement of such indebtedness. No provision has been made in the
consolidated statements for such sinking fund payments which amounted in total to $571,568.05 at December 31, 1952
of which $422,468.05 is due on March 1, 1953 and $149,100.00 is due on or before April 1, 1953.
(9) LONG TERM LEASES
Certain properties are occupied by the Corporation and its subsidiaries under long term leases ranging from 3 years,
with option to renew for 21 years, to 26 years from December 31, 1952. At December 31, 1952, the total minimum
annual fixed or basic rentals payable under such leases was approximately $2,000,000.00.
The wholly-owned subsidiary, Hilton Hotels International, Inc. has entered into preliminary leases, subject to certain
conditions, for the operation of Hotels under construction each in Madrid, Spain and Istanbul, Turkey. A preliminary
lease agreement was entered into, subject to certain conditions, for the operation of a proposed hotel in Havana, Cuba.
In addition, negotiations were in progress for leasing of hotels in Athens, Greece; London, England; Rome, Italy;
Paris, France; Mexico City, Mexico and Toronto, Canada. According to the minutes of Director's meetings, the Company has limited its investment in working capital and expenses to $100,000.00 for any one hotel project.
The Supreme Court of New York County has ruled in favor of Hotel Waldorf-Astoria Corporation in the litigation to reduce real estate tax assessments for the tax years 1951-1952 and 1952-1953. However, since the decision is
being appealed by the City of New York, no provision has been made in the income accounts for the pending net proceeds to the Company of approximately $267,000.00 of which amount, $183,000.00 would be applicable to the Company at December 31, 1952.
There is not reflected in the consolidated statements any liability that may result in the event of an unsuccessful
defense of an action brought against Hotel Waldorf-Astoria Corporation by a former employee. In the opinion of counsel
for the Company, good defenses exist to the action, which has not yet been brought to trial.
To the Board of Directors and Stockholders of
Hilton Hotels Corporation
Chicago 5, Illinois
We have examined the consolidated balance sheet of Hilton Hotels
Corporation and its Subsidiaries at December 31, 1952 and the related
statements of consolidated income and surplus fcr the year then ended.
These consolidated statements have been prepared from financial
statements of the operating units of Hilton Hotels Corporation and its
Subsidiaries which were either audited by us or by other independent
accountants who have submitted to us their certificates concerning the
underlying statements which were examined by them.
Our examination was made in accordance with generally accepted
auditing standards, and accordingly included such tests of the account
ing records and such other auditing procedures as we considered
necessary in the circumstances.
In our opinion, based upon our examination and upon the opinions
expressed in the reports of other independent accountants pertaining
to the operating units and companies examined by them, the accompanying consolidated balance sheet and related statements of consolidated income and surplus, together with notes pertaining thereto,
present fairly the financial position of Hilton Hotels Corporation and
its Subsidiaries at December 31, 1952 and the results of operations for
the year then ended, in conformity with generally accepted accounting
principles applied on a consistent basis.
Chicago, Illinois, February 27, 1953
Harris, Kerr, Forster & Company