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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 period from January 1, 2001 to
February 12, 2001 (date of termination)
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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 Participants and 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 (loss) and changes in plan equity present fairly,
in all material respects, the financial position of the Interstate Hotels
Corporation Employee Stock Purchase Plan (the Plan) at February 12, 2001 (date
of termination) and December 31, 2000, and the statements of income (loss) and
changes in plan equity for the period from January 1, 2001 to February 12, 2001
(date of termination) and for the year ended December 31, 2000 in conformity
with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Plan'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 1, Interstate Hotels Corporation, the plan sponsor,
terminated the Interstate Hotels Corporation Employee Stock Purchase Plan on
February 12, 2001.
/s/ PRICEWATERHOUSECOOPERS LLP
600 Grant Street
Pittsburgh, Pennsylvania
March 29, 2002
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INTERSTATE HOTELS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF FINANCIAL CONDITION
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December 31, February 12,
2000 2001
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Assets:
Employee contributions receivable $214,982 $ --
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Total assets $214,982 $ --
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Plan equity $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 (LOSS) AND CHANGES IN PLAN EQUITY
for the year ended December 31, 2000 and for the period from
January 1, 2001 to February 12, 2001 (date of termination)
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2000 2001
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Additions:
Employee contributions $ 627,205 $ --
Deductions:
Purchase of shares issued to participants (617,494) (214,982)
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Total income (loss) and increase (decrease) $ 9,711 $(214,982)
in plan equity --------- ---------
Plan equity at beginning of period 205,271 214,982
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Plan equity at end of period $ 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. The final offering period represented a
six-month period that ended December 31, 2000. The maximum number of
shares that could be issued under the Plan was 400,000.
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 effective
February 12, 2001. 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.
The administrator, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
purchased and allocated the shares to the participants. The Plan did
not maintain cash or share investments on behalf of the participants.
Shares were held by the administrator in accounts on behalf of each
individual participant. Each participant was able to request
deliverance of the shares, and earnings thereon, directly from the
administrator at any time. As of December 31, 2000 there were 371
participants in the Plan.
These financial statements have been prepared for the year ended
December 31, 2000 and for the period from January 1, 2001 to
February 12, 2001 (date of termination).
2. Summary of Significant Accounting Policies:
1) The transactions of the Plan, including participant contributions,
were accounted for on the accrual basis of accounting. The Company
did not make contributions to the Plan.
2) Administrative expenses incurred by the Plan were 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 for the
year ended December 31, 2000 and for the period from January 1, 2001
to February 12, 2001 (date of termination) were as follows:
<Table>
<Caption>
Number of
Shares Total Cost
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Issued during the year ended December 31, 2000 247,303 $617,494
Issued during the period ended February 12, 2001 152,696 $214,982
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Total shares issued from inception
through February 12, 2001 399,999 $832,476
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</Table>
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NOTES TO FINANCIAL STATEMENTS, continued
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5. Federal Income Taxes:
The Plan did not pay federal income taxes and qualified 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.
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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 April 1, 2002.
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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