To the Board of Directors of
HILTON HOTELS CORPORATION,
February 19, 1948
We have examined the consolidated balance sheet of Hilton Hotels Corporation as of December 31,1947
and its wholly owned subsidiary, State-Monroe Equipment Corporation, and the consolidated statements
of Income and Profit and Loss and Surplus for the year ended December 31, 1947, have reviewed the
system of internal control and the accounting procedures of the corporation and, without making a detailed audit of the transactions, have examined or tested accounting records of the corporation and other
supporting evidence, by methods and to the extent we deemed appropriate. Our examination was made
in accordance with generally accepted auditing standards applicable in the circumstances and it included
all procedures which we considered necessary.
Examination of the accounts of three of the operating units, Palmer House of Chicago (and the wholly
owned related subsidiary, State-Monroe Equipment Corporation) and Town House of Los Angeles, were
made and separately certified to by Messrs. Horwath & Horwath, and, the Dayton Biltmore Hotel, by
Messrs. Wall, Cassel and Groneweg.
The accounts of Palm Beach Biltmore Company in which Hilton Hotels Corporation acquired 50% of the
outstanding shares of both common and preferred as of June 1, 1946, Mayflower Hote Corporation in
which Hilton Hotels Corporation has acquired 68.75% of the outstanding shares of common stock as of
December 31, 1947 and, Neil House Company in which Hilton Hotels Corporation acquired 50% of the
outstanding shares of common stock as of December 23, 1946, have not been consolidated herein. The
proportion of undistributed profits or losses applicable to the corporation's holding in these companies
from date of acquisition to December 31, 1947 amounted to a net profit of $182,012.03 representing
the increase in the corporation's equity in these companies since acquisition to December 31, 1947.
The accounts of Palm Beach Biltmore Company, Mayflower Hotel Corporation, and Neil House Company
were examined and separately certified to by us.
In our opinion, based upon our examination and upon the opinions expressed in the reports of the
independent public accountants pertaining to the operating units and companies which were examined
by them, the accompanying consolidated balance sheet and related consolidated statements of income
and surplus, together with the notes pertaining thereto, present fairly the position of Hilton Hotels
Corporation and its wholly owned subsidiary, State-Monroe Equipment Corporation as of December 31,
1947 and the results of operations for the year ended December 31, 1947, in conformity with generally
accepted accounting principles.
HARRIS, KERR, FORSTER & COMPANY