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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 11-K
Annual Report Pursuant to Section 15(d)
of the Securities Exchange Act of 1934
for the Fiscal Year Ended December 31, 2000
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EMPLOYEE STOCK PURCHASE PLAN
INTERSTATE HOTELS CORPORATION
Foster Plaza Ten
680 Andersen Drive
Pittsburgh, Pennsylvania 15220
(412) 937-0600
0-26805
(Commission File No.)
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[PRICEWATERHOUSECOOPERS LOGO]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Plan Administrator of the
Interstate Hotels Corporation
Employee Stock Purchase Plan:
In our opinion, the accompanying statements of financial condition and the
related statements of income and changes in plan equity present fairly, in all
material respects, the financial position of the Interstate Hotels Corporation
Employee Stock Purchase Plan at December 31, 2000 and 1999, and the results of
its operations for the year ended December 31, 2000 and for the period October
1, 1999 (inception) to December 31, 1999 in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As discussed in Note 6, Interstate Hotels Corporation terminated the Interstate
Hotels Corporation Employee Stock Purchase Plan in February 2001.
/s/ PRICEWATERHOUSECOOPERS LLP
March 29, 2001
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INTERSTATE HOTELS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF FINANCIAL CONDITION
December 31, 1999 and 2000
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1999 2000
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Assets:
Employee contributions receivable $205,271 $214,982
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Total assets $205,271 $214,982
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Plan equity $205,271 $214,982
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The accompanying notes are an integral part of the financial statements.
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INTERSTATE HOTELS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY
for the period from October 1, 1999 (inception) to December 31, 1999 and
for the year ended December 31, 2000
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1999 2000
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Additions:
Employee contributions $205,271 $ 627,205
Deductions:
Purchase of shares issued to participants -- (617,494)
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Total income and increase in plan equity $205,271 $ 9,711
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Plan equity at beginning of period -- 205,271
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Plan equity at end of period $205,271 $ 214,982
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The accompanying notes are an integral part of the financial statements.
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INTERSTATE HOTELS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
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1. Description of Plan:
The Interstate Hotels Corporation Employee Stock Purchase Plan and the
Interstate Hotels Canadian Employee Share Purchase Plan (collectively,
the "Plan") were formed on October 1, 1999 for the purpose of providing
eligible employees of Interstate Hotels Corporation (the "Company") and
its subsidiaries with opportunities to purchase stock of the Company
through offerings made under the Plan up to a maximum of 25,000 shares,
per employee. An eligible employee is one who is employed to work for
more than 20 hours per week or more than five months per calendar year,
and has completed at least 12 consecutive months of employment.
Eligible employees may contribute in whole percentages between 1% and
8% of their compensation, as defined by the Plan. Shares are purchased
at 85% of the lesser of the fair market value on the first day of the
stock purchase offering period or the last day of the same period. The
fair market value of the stock available for purchase by an eligible
employee may not exceed $25,000 per calendar year. The initial stock
purchase offering period began on October 30, 1999 and ended on June
30, 2000. Thereafter, the offering periods will represent two six-month
periods in a calendar year. The maximum number of shares that may be
issued under the Plan is 400,000.
The administrator, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
purchases and allocates the shares to the participants. The Plan does
not maintain cash or share investments on behalf of the participants.
Shares are held by the administrator in accounts on behalf of each
individual participant. Each participant may request deliverance of the
shares, and earnings thereon, directly from the administrator at any
time. As of December 31, 1999 and 2000 there were 522 and 371
participants in the Plan, respectively.
These financial statements have been prepared for the period from
October 1, 1999 (inception) to December 31, 1999 and for the year
ended December 31, 2000.
2. Summary of Significant Accounting Policies:
1) The transactions of the Plan, including participant contributions,
are accounted for on the accrual basis of accounting. The Company
does not make contributions to the Plan.
2) Administrative expenses incurred by the Plan are paid by the
Company.
3. Use of Estimates:
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires the plan
administrator to make estimates and assumptions that affect certain
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements. Estimates may also affect the changes in Plan equity during
the reporting period. Actual results may differ from those estimates.
4. Purchase of Shares Issued to Participants:
Details related to the purchase of shares issued by the Plan from
October 1, 1999 (inception) to December 31, 1999 and for the year
ended December 31, 2000 are as follows:
Number of
Shares Total Cost
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Issued during the period ended December 31, 1999 -- $ --
Issued during the year ended December 31, 2000 247,303 617,494
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Total shares issued from inception
through December 31, 2000 247,303 $617,494
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NOTES TO FINANCIAL STATEMENTS, continued
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5. Federal Income Taxes:
The Plan does not pay federal income taxes and qualifies as a
non-compensatory plan under Section 423 of the Internal Revenue Code.
If a participant disposes of any stock within one year from the date of
purchase or within two years of the date of the offering (the "Holding
Period"), the participant is required to pay ordinary income tax on the
difference between the sale price and the purchase price. Additionally,
the Company recognizes a tax deduction for the income that has been
taxed at the individual level.
If a participant disposes of the stock after the Holding Period, the
participant is required to pay ordinary income tax on the 15% discount
received at the time of purchase and capital gains tax on the remaining
difference between the sale price and the purchase price. In this
situation, there is no effect on the Company's income tax liability.
6. Subsequent Event:
On January 11, 2001, the Compensation Committee of the Company's Board
of Directors authorized the Company to terminate the Plan due to the
depletion of the number of shares authorized for issuance under the
Plan and accordingly, the Company terminated the Plan. The final
allocation of 152,696 shares to the participants, valued at $214,982,
occurred on February 12, 2001 for the purchase period ended December
31, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Compensation Committee has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized on March 30, 2001.
INTERSTATE HOTELS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
By: /s/ SHERWOOD M. WEISER
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Sherwood M. Weiser
Chairman,
Compensation Committee
of the Board of Directors
of Interstate Hotels Corporation
(Plan Administrator)
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