reduction of the outstanding issue in times of prosperity with resulting lower interest charges at other times.
Interest charges on the new bonds amount to $560,000 annually,
while minimum sinking fund requirements during the first five years
are $320,000 per annum, a total of $880,000 annually, as against
requirements of $1,204,300 under indebtedness which has been retired. Last year store and lobby rentals at the Palmer House produced $1,014,923, or more than enough to service the interest and
principal requirements of the new bonds.
PRESENT CAPITAL STRUCTURE
Your corporation in 1947 purchased in the open market 39,611-19/100
shares of convertible preference stock, having an aggregate par value
of $1,980,559.50, at a cost of $1,557,036. This stock will be held in
the treasury for application against future sinking fund requirements.
It will be the policy of the corporation to continue to buy preference
stock at advantageous terms to the extent funds are available. As of
December 31, 1947, outstanding capitalization consisted of:
Funded and long-term indebtedness $22,758,750
Convertible preference stock
(4 per cent $50 par value) .... 197,401-35/100 shares
Common stock ($5 par value) .... 1,618,578 shares
Working capital position was strengthened during 1947. As of December 31st last, working capital amounted to $4,651,619 against
$2,367,675 at the beginning of the year. Current assets totalled
$9,405,880 at the end of 1947, of which $5,800,264 consisted of
cash and equivalent. Current liabilities amounted to $4,754,261.
The common stock was listed on the New York Stock Exchange in
June and on the Los Angeles Stock Exchange in August.
ACQUISITIONS AND SALES
Hilton Hotels Corporation in August, 1947, paid $265,832 for an
interest in Bermuda Development Company, Ltd. common stock.
Properties of that concern are the Castle Harbour Hotel, the Ber-
mudiana, the St. George and the Mid-Ocean Club. The Castle Harbour,
the most modern hotel in Bermuda, is being rehabilitated and will be
opened in 1949. The other two hotels are in operation and are enjoying good business. Your corporation will operate all three hotels and
will receive 20 per cent of their gross operating profit under the
The Hilton Long Beach Hotel was sold in September at a net profit of
$743,558 after provision for applicable taxes. During the war years
the hotel returned high profits, aided by the influx of war industry
workers and naval personnel into that section of California. However, peacetime conditions do not lend themselves to operation of
the property on the earnings level of recent years.
The Palmer House Garage and equipment were sold for a profit of
$261,731, aft^r provision for applicable taxes. Satisfactory arrangements were made for garage facilities for Palmer House guests. The
Palmer House laundry was sold for the approximate book value.
THE HILTON DOLLAR
Where» came from.
a. REPAIRS & MAINTENANCE
(EXCLUSIVE OF PAYROLL Jagi .... 2.7 <
b. REAl ESTA^IftjD PERSONAt
PROPERTY TAXES—AND SUNDRY
CAPITAL CHARGES-'S.i§|jj^|i|fl. 3.81
C. INTEREST ON BORROWED MONEY . . 1.9*
d. DEPRECIATION & AMORTIZATION ... 4.6*
e. FEDERAL INCOME TAXES . 'J&8iTiJL 6Ji€
f. CONVERT!^ PREFERENCE
STOCK DIVIDENDS . . v'i|£ .... 1.1 <
g. AVAILABLE FOR INVESTMENT,
EXPANSION & COMMON STOCK
DIVIDENDS $»»■; . . . JSSPSmK 9.5 £