UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 5, 2003
INTERSTATE HOTELS & RESORTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-14331 52-2101815
(State of Incorporation) (Commission File No.) (IRS Employer
Identification No.)
4501 N. Fairfax Drive 22203
Arlington, VA (Zip Code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: 703-387-3100
1010 Wisconsin Avenue, N.W.
Washington, D.C. 20007
(202) 965-4455
(Former name or former address, if changed since last report)
Item 5. Other Events
On August 5, 2003, Interstate Hotels & Resorts filed a Registration Statement on
Form S-3. This Registration Statement incorporates by reference our Annual
Report on Form 10-K, filed on March 27, 2003, as amended on March 31, 2003 and
April 2, 2003. Included in our Form 10-K are references to earnings before
interest, taxes, depreciation and amortization, or "EBITDA", which is a
non-GAAP financial measure. In accordance with Regulation G, as adopted by the
Securities and Exchange Commission, we are required to provide a reconciliation
from net income (loss) to EBITDA for the periods presented. See the table below
for the reconciliation.
We use EBITDA as a performance measure of our financial condition and results of
operations because it provides a basis to evaluate our ability to incur and
service debt, fund capital expenditures and expand our business. In addition,
since depreciation and amortization are non-cash items and a significant portion
of our assets, including our management agreements, are intangible assets which
are amortized over their projected life, EBITDA represents a basis for
evaluating our current operating performance. We also use EBITDA as one measure
in determining the value of other acquisitions and dispositions. This financial
measure, however, should be considered in addition to, not as a substitute for
or as being superior to, operating losses, cash flows, or other measures of
financial performance prepared in accordance with U.S. generally accepted
accounting principles ("GAAP").
The table below reconciles net income (loss) to EBITDA for the three years ended
December 31, 2002, by reportable operating segment. Prior to our merger on July
31, 2002, we operated in two reportable segments: (1) operations of luxury and
upscale hotels and (2) operations of mid-scale, upper economy and budget hotels.
Following the merger, we operate in the segments shown in the table below. For
periods prior to the merger, we have combined our two previously reportable
operating segments into the hotel management operating segment.
Hotel Corporate Financial
Management Housing Other Statements
================ ============== ============== ================
Year ended December 31, 2002:
Net Loss $ (945) $ (1,155) $ (34,071) $ (36,171)
Add back:
Depreciation and amortization 13,382 676 - 14,058
Interest expense 5,642 (47) - 5,595
Equity in loss of affiliates 2,409 - - 2,409
Conversion incentive payment -
convertible notes - - 7,307 7,307
Minority Interest expense (197) - - (197)
Tax expense (1,133) - - (1,133)
---------------- -------------- -------------- ----------------
EBITDA $ 19,158 $ (526) $ (26,764) $ (8,132)
================ ============== ============== ================
Hotel Corporate Financial
Management Housing Other Statements
================ ============== ============== ================
Year ended December 31, 2001: $ (4,324) $ - $ (3,026) $ (7,350)
Net Loss
Add back:
Depreciation and amortization 10,394 - - 10,394
Interest expense 1,635 - - 1,635
Equity in loss of affiliates 5,169 - - 5,169
Minority Interest expense 194 - - 194
Tax expense (3,295) - - (3,295)
---------------- -------------- -------------- ----------------
EBITDA $ 9,773 $ - $ (3,026) $ 6,747
================ ============== ============== ================
Year ended December 31, 2000:
Net Loss $ 5,743 $ - $ (14,646) $ (8,903)
Add back:
Depreciation and amortization 16,091 - - 16,091
Interest expense (1,801) - - (1,801)
Equity in loss of affiliates 522 - - 522
Minority Interest expense (10,719) - - (10,719)
Tax expense (5,935) - - (5,935)
---------------- -------------- -------------- ----------------
EBITDA $ 3,901 $ - $ (14,646) $ (10,745)
================ ============== ============== ================
The "Other" column in the table above represents operating segment activity for
the non-reportable segments, including merger costs, restructuring costs,
tender offer costs, asset impairments and write-offs, and joint venture
start-up costs.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 5, 2003 By: /s/ Christopher L. Bennett
--------------------------------
Name: Christopher L. Bennett
Title: Senior Vice President and
General Counsel