<PAGE>
FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1998
------------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (NO FEE REQUIRED)
For the transition period from _____________ to _______________
Commission File Number 1-11915
--------
A. Full title of the plan and address of the plan, if different from that of
the issuer named below:
SUNBURST HOSPITALITY CORP. RETIREMENT SAVINGS & INVESTMENT PLAN
- -------------------------------------------------------------------------------
(formerly Choice Hotels International, Inc. Retirement Savings & Investment Plan
B. Name of the issuer of the securities held pursuant to the plan and the
address of its principle executive office:
Sunburst Hospitality Corporation
10770 Columbia Pike, Silver Spring, Maryland 2090
<PAGE>
Report of Independent Public Accountants
To Sunburst Hospitality Corporation:
We have audited the accompanying statement of net assets available for benefits
of the Sunburst Hospitality Corporation Retirement, Savings and Investment Plan
(the "Plan" - see Note 1) as of December 31, 1998 and 1997, and the related
statement of changes in net assets available for benefits with fund information
for the year ended December 31, 1998. These financial statements and the
schedules referred to below are the responsibility of the Plan's management.
Our responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1998 and 1997, and the changes in net assets available for benefits
for the year ended December 31, 1998, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and of reportable transactions are presented for
purposes of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The fund information in
the statement of changes in net assets available for benefits is presented for
purposes of additional analysis rather than to present the changes in its net
assets available for benefits of each fund. These supplemental schedules and
fund information have been subjected to the auditing procedures applied in our
audit of the basic financial statements and, in our opinion, are fairly stated,
in all material respects, in relation to the basic financial statements taken as
a whole.
ARTHUR ANDERSEN LLP
Washington, D.C.
June 2, 1999
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Statement of Net Assets Available for Benefits
As of December 31, 1998 and 1997 1
Statement of Changes in Net Assets Available for Benefits, With Fund Information
For the Year Ended December 31, 1998 2
Notes to Financial Statements
As of December 31, 1998 4
Item 27(a) - Schedule of Assets Held for Investment Purposes
As of December 31, 1998 8
Item 27(d) - Schedule of Reportable (5%) Transactions 9
Item 27(b) - Schedule of Loans or Fixed Income Obligations
As of December 31, 1998 *
Item 27(c) - Schedule of Leases in Default or Classified as Uncollectible
As of December 31, 1998 *
Item 27(e) - Schedule of Nonexempt Transactions
For the Year Ended December 31, 1998 *
</TABLE>
* Schedules omitted because there were no such transactions, obligations, or
leases in default.
<PAGE>
Sunburst Hospitality Corporation
Retirement, Savings and Investment Plan
Statement of Net Assets Available for Benefits
As of December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
--------------- --------------
<S> <C> <C>
Assets:
Participant directed investments held by
Merrill Lynch Trust Company-
Mutual Funds:
Janus Fund $ - $ 8,528,097
Vanguard Wellington Balanced Fund - 7,736,995
T. Rowe Price International Fund - 3,319,698
Vanguard U.S. Treasury Money Market Fund - 2,317,911
T. Rowe Price Stable Value Fund - 1,254,665
Alliance Premier Growth Fund 1,635,308 -
Merrill Lynch Capital Fund 1,359,917 -
Hotchkis & Wiley International Equity Fund 562,150 -
Merrill Lynch S&P 500 Index Fund 36,578 -
Pimco Small Cap Value Fund 19,698 -
Pimco Total Return Fund 8,520 -
Common/Collective Trust:
Merrill Lynch Retirement Preservation Trust 1,445,929 -
Common Stock:
Choice Hotels Common Stock Fund 22,890 1,853,235
Sunburst Hospitality Common Stock Fund 126,654 379,337
Manor Care Common Stock Fund 73,382 664,051
--------------- -------------
Total investments 5,291,026 26,053,989
--------------- -------------
Participant loans 212,963 770,405
Receivable from Manor Care Plan (see Note 6) - 53,108
Contributions receivable:
Employer, paid subsequent to year-end 201,162 1,006,310
Employee, paid subsequent to year-end 29,213 81,981
--------------- -------------
Net assets available for benefits $ 5,734,364 $ 27,965,793
=============== =============
</TABLE>
The accompanying notes are an integral part of these statements.
-1-
<PAGE>
Sunburst Hospitality Corporation
Retirement, Savings and Investment Plan
Statement of Changes in Net Assets Available for Benefits, With Fund Information
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Participant Directed
---------------------------------------------------------------------
Vanguard Vanguard U.S.
Wellington T. Rowe Price Treasury T. Rowe Price
Janus Balanced International Money Stable Value
Fund Fund Fund Market Fund Fund
----------- ----------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Additions:
Contributions-
Employer $ - $ - $ - $ - $ -
Employee 118,855 86,669 50,253 59,674 22,295
----------- ---------- ----------- ----------- -----------
Total 118,855 86,669 50,253 59,674 22,295
Interest and dividends, including interest
on participant loan transactions 4,411 24,002 58 23,229 16,631
Net (depreciation) appreciation in market value 325,202 112,756 82,009 - -
Rollover contributions - - - - -
----------- ---------- ----------- ----------- -----------
Total additions 448,468 223,427 132,320 82,903 38,926
----------- ---------- ----------- ----------- -----------
Transfers between investment options, including
principal portions of participant loan transactions (1,438,131) (1,364,785) 576,185 743,591 506,374
----------- ---------- ----------- ----------- -----------
Deductions:
Benefit payments (664,744) (641,547) (48,583) (80,036) (5,248)
Transfers to Choice Plan (6,873,690) (5,954,090) (2,827,247) (1,577,187) (781,969)
----------- ---------- ----------- ----------- -----------
Net (decrease) (8,528,097) (7,736,995) (3,319,698) (2,317,911) (1,254,665)
Net assets available for benefits, beginning of year 8,528,097 7,736,995 3,319,698 2,317,911 1,254,665
----------- ---------- ----------- ----------- -----------
Net assets available for benefits, end of year $ - $ - $ - $ - $ -
=========== ========== =========== =========== ===========
<CAPTION>
Participant Directed
--------------------------------------------------------
Alliance Hotchkis
Premier Merrill & Wiley Merrill Lynch
Growth Lynch International S&P 500
Fund Capital Fund Equity Fund Index Fund
----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Additions:
Contributions-
Employer $ - $ - $ - $ -
Employee 88,897 52,105 33,215 19,247
---------- ---------- ---------- ----------
Total 88,897 52,105 33,215 19,247
Interest and dividends, including interest
on participant loan transactions 33,988 33,633 14,338 1,490
Net (depreciation) appreciation in market value 171,346 (12,505) (30,129) 1,751
Rollover contributions 5,004 144 - 3,823
---------- ---------- ---------- ----------
Total additions 299,235 73,377 17,424 26,311
---------- ---------- ---------- ----------
Transfers between investment options, including
principal portions of participant loan transactions 1,379,224 1,303,690 557,577 10,267
---------- ---------- ---------- ----------
Deductions:
Benefit payments (43,151) (17,150) (12,851) -
Transfers to Choice Plan - - - -
---------- ---------- ---------- ----------
Net (decrease) 1,635,308 1,359,917 562,150 36,578
Net assets available for benefits, beginning of year - - - -
---------- ---------- ---------- ----------
Net assets available for benefits, end of year $1,635,308 $1,359,917 $ 562,150 $ 36,578
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this statement
-2-
<PAGE>
Sunburst Hospitality Corporation
Retirement, Savings and Investment Plan
Statement of Changes in Net Assets Available for Benefits, With Fund Information
For the Year Ended December 31, 1998
(Continued)
<TABLE>
<CAPTION>
Participant Directed
------------------------------------------------------
Merrill Lynch
Pimco Pimco Retirement
Small Cap Total Return Preservation
Value Fund Fund Trust
---------------- --------------- ----------------
<S> <C> <C> <C>
Additions:
Contributions-
Employer $ - $ - $ -
Employee 13,636 4,681 55,902
-------- ------ ----------
Total 13,636 4,681 55,902
Interest and dividends, including interest on participant loan transactions 832 422 33,488
Net (depreciation) appreciation in market value 590 (257) -
Rollover contributions - 1,187 -
-------- ------ ----------
Total additions 15,058 6,033 89,390
-------- ------ ----------
Transfers between investment options, including principal portions of
participant loan transactions
4,640 2,487 1,371,585
-------- ------ ----------
Deductions:
Benefit payments - - (15,046)
Transfers to Choice Plan - - -
-------- ------ ----------
Net (decrease) 19,698 8,520 1,445,929
Net assets available for benefits, beginning of year - - -
-------- ------ ----------
Net assets available for benefits, end of year $ 19,698 $8,520 $1,445,929
======== ====== ==========
<CAPTION>
Participant Directed
-------------------------------------------------
Choice Sunburst
Hotels Hotels Manor Care
Common Hospitality Common
Stock Fund Common Stock Fund Stock Fund
---------- ----------------- ----------
<S> <C> <C> <C>
Additions:
Contributions-
Employer $ - $ 210,498 $ -
Employee 283 41,504 -
----------- ---------- ---------
Total 283 252,002 -
Interest and dividends, including interest on participant loan transactions 20 546 1,964
Net (depreciation) appreciation in market value (20,537) (353,619) (29,283)
Rollover contributions - - -
----------- ---------- ---------
Total additions (20,234) (101,071) (27,319)
----------- ---------- ---------
Transfers between investment options, including principal portions of
participant loan transactions (117) (2,934) (1,154)
----------- ---------- ---------
Deductions:
Benefit payments (285) (17,981) (28,541)
Transfers to Choice Plan (1,809,709) (130,697) (533,655)
----------- ---------- ---------
Net (decrease) (1,830,345) (252,683) (590,669)
Net assets available for benefits, beginning of year 1,853,235 379,337 664,051
----------- ---------- ---------
Net assets available for benefits, end of year $ 22,890 $ 126,654 $ 73,382
=========== ========== =========
<CAPTION>
Non-
Participant
Participant Directed 1998
Loans Other Total
----------- ----------- --------
<S> <C> <C> <C>
Additions:
Contributions-
Employer $ - $ (9,336) $ 201,162
Employee - (85,119) 562,097
--------- --------- ------------
Total - (94,455) 763,259
Interest and dividends, including interest on participant loan transactions - - 189,052
Net (depreciation) appreciation in market value - - 247,324
Rollover contributions - - 10,158
--------- --------- ------------
Total additions - (94,455) 1,209,793
--------- --------- ------------
Transfers between investment options, including principal portions of
participant loan transactions
Deductions:
Benefit payments 20,305 (16,501) -
--------- --------- ------------
Transfers to Choice Plan - - (1,575,163)
Net (decrease) (577,747) (800,068) (21,866,059)
--------- --------- ------------
Net assets available for benefits, beginning of year (557,442) (911,024) (22,231,429)
Net assets available for benefits, end of year 770,405 1,141,399 27,965,793
--------- --------- ------------
$ 212,963 $ 230,375 $ 5,734,364
========= ========== ============
</TABLE>
The accompanying notes are an integral part of this statement.
-3-
<PAGE>
Sunburst Hospitality Corporation
Retirement, Savings and Investment Plan
Notes to Financial Statements
As of December 31, 1998
1. Nature of the Organization and Description of the Plan:
Prior to January 1, 1998, the Sunburst Hospitality Corporation Retirement,
Savings and Investment Plan (the "Plan") was a defined contribution, salary
deferral plan that was available to the employees of both Sunburst Hospitality
Corporation ("Sunburst") and Choice Hotels International, Inc. ("Choice").
Sunburst is a leading national hotel company that owns and operates
approximately 75 hotels. Choice is the second largest franchiser of hotels in
the world. Choice franchises approximately 3,500 hotels operated under the
following brand names: Quality Inn, Comfort Inn, Clarion, Sleep Inn, Rodeway
Inn, EconoLodge, and Mainstay Suites.
Choice Hotels International, Inc. was formerly a subsidiary of Manor Care, Inc.
("Manor Care"). On November 1, 1996, Manor Care separated its lodging business
from its health care business by distributing to its shareholders all of the
outstanding common stock of Choice Hotels International, Inc. (the "Manor Care
Distribution"). On October 15, 1997, Choice Hotels International, Inc. separated
its franchising and European hotel business from its owned hotel business by
distributing to its shareholders the common stock of Choice Hotels Franchising
(the "Choice Distribution"). Subsequent to the Choice Distribution, Choice
Hotels International, Inc. changed its name to Sunburst Hospitality Corporation
and Choice Hotels Franchising changed its name to Choice Hotels International,
Inc. In connection with the Choice Distribution, the name of the original Choice
Hotels International, Inc. Retirement, Savings and Investment Plan was changed
to the Sunburst Hospitality Corporation Retirement, Savings and Investment Plan.
On January 1, 1998, the Sunburst Hospitality Corporation Retirement, Savings and
Investment Plan was split and the Choice Hotels International, Inc. Retirement
Savings and Investment Plan was formed in order to maintain a separate plan for
eligible Choice employees. The assets of both plans were initially co-mingled as
a master trust with transactions separately recorded. Effective August 1, 1998,
the Plan changed its trustee from Chase Manhattan Bank to Merrill Lynch Trust
Company ("Merrill Lynch") and the assets of the master plan were split between
the Plan and the Choice Hotels International, Inc. Retirement, Savings and
Investment Plan.
The following description of the Plan provides general information only.
Participants should refer to the plan agreement for a more complete description
of the Plan's provisions.
General
The Plan, established on October 1, 1996, is a participant directed, defined
contribution, salary deferral plan subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
Eligibility and Contributions
All employees of Sunburst are eligible to participate in the Plan if they are:
. Are at least 21 years of age
. Have completed one year of service
. Have worked at least 1,000 hours in the previous year
Participants may elect to contribute up to 15 percent of their annual
compensation to the Plan, subject to IRS limitations.
Sunburst matches an employee's contributions, up to a total match of 6 percent
of employee salary.
<TABLE>
<CAPTION>
Length of Service Percentage Match
----------------------- ----------------------
<S> <C>
1 - 5 years 25%
6 - 9 years 75%
10 years or more 100%
</TABLE>
-4-
<PAGE>
Each participant's account is credited with the participant's contribution and
allocations of (a) Choice contributions and (b) Plan earnings, and charged with
an allocation of administrative expenses. Allocations are based on participant
earnings or account balances, as defined. The benefit to which a participant is
entitled is the benefit that can be provided from the participant's vested
account.
Forfeitures
Sunburst has the right to apply amounts forfeited by employees to reduce
employer contributions. In 1998, forfeitures of $2,581 were used to reduce the
employer contribution and allocated to the plan funds in conjunction with
Sunburst matching contributions.
Benefits and Vesting
Participants are immediately vested in all participant contributions and
earnings on such contributions. Participants vest in the Sunburst contributions
20 percent per year beginning at the end of their third year, resulting in full
vesting at the end of their seventh year.
On termination of service due to death, disability or retirement, a participant
may elect to receive either a lump sum amount equal to the value of the
participant's vested interest in his or her account, or annual installments over
a ten-year period. For termination of service due to other reasons, a
participant may receive the value of the vested interest in his or her account
as a lump-sum distribution only.
Participants who leave Sunburst with a balance of less than $5,000 are required
to roll the money over into another 401(k) or IRA account, or receive a direct
payment after withholding of applicable federal and state tax provisions. If
the participant's balance is greater than $5,000, the participant may retain
their investment in the Plan for as long as IRS regulations allow.
Investments
Participants may direct the investment of their contributions into their choice
of mutual funds, common collective trusts, or the common stock of Choice or
Sunburst. Participants who previously had investments in Manor Care common
stock through the Manor Care Plan have been allowed to retain the Manor Care
stock, but not to make additional investments. Effective August 1, 1998, the
Plan changed trustees from Chase Manhattan Bank to Merrill Lynch. Due to this
change in trustee, the investment options previously available to participants
were changed to the equivalent investment instruments provided by Merrill Lynch.
These balances in the old investments were transferred to the new investment as
follows:
<TABLE>
<CAPTION>
Old Investment Funds New Investment Funds
- ----------------------------------------- -------------------------------------------
<S> <C>
Vanguard U.S. Treasury Money Market Fund Merrill Lynch Retirement Preservation Trust
Vanguard Wellington Balanced Fund Merrill Lynch Capital Fund
T. Rowe Price Stable Value Fund Merrill Lynch Retirement Preservation Trust
T. Rowe Price International Fund Hotchkis & Wiley International Equity Fund
Janus Fund Alliance Premier Growth Fund
Choice Hotels Common Stock Fund Choice Hotels Common Stock Fund
Sunburst Hospitality Common Stock Fund Sunburst Hospitality Common Stock Fund
Manor Care Common Stock Fund Manor Care Common Stock Fund
In addition, Merrill Lynch has added the following investment options that were
not previously offered by Chase Manhattan Bank:
Pimco Total Return Fund
Pimco Small Cap Value Fund
Merrill Lynch S&P 500 Index Fund
</TABLE>
In order to effectively implement this transfer of investments held by
employees, the trustee and plan administrators implemented a transition period
from August 1, 1998 to October 20, 1998, where participants could not change
their investment election, or receive any loans and distributions. As a result,
the old investments held by employees as of August 1, 1998, were transferred to
the new funds, as disclosed above, in the same percentages previously elected.
-5-
<PAGE>
Additionally, Sunburst's contribution is made in Sunburst's common stock. This
Sunburst common stock and all other investments are reported at quoted market
values. Purchases and sales of securities are recorded on a trade-date basis.
Dividends are recorded when declared. All income earned is allocated daily.
Loans
Participant loans are made available to all participants who have a vested
account balance. The minimum loan amount is $750 and the maximum loan amount is
the lesser of $50,000 or 50 percent of a participant's vested account balance.
Additionally, interest rates are equal to 1 percent above the Prime Rate on the
date the loan is issued and there is a $35 loan-processing fee per loan.
Participants may not have more than one loan outstanding at any time. Loans
receivable are valued at cost which approximates fair value.
Use of Estimates
The preparation of these financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
2. Summary of Significant Accounting Policies:
Basis of Accounting
The financial statements are presented on the accrual basis of accounting in
accordance with generally accepted accounting principles.
Trustee Fees
Investment management fees are netted against investment earnings in each fund.
Trustee fees and all administrative expenses of the Plan are currently paid by
Sunburst. Sunburst currently has no intention to seek reimbursement from the
Plan for prior or future expenses paid by Sunburst.
3. Federal Income Tax Status:
The Plan has not yet received a determination letter from the Internal Revenue
Service. However, management believes that the Plan, as designed, is in
compliance with the applicable requirements of Section 401(a) of the Internal
Revenue Code. Management believes that the Plan is operating as intended and,
as such, continues to comply with these requirements.
4. Plan Termination:
Although it has not expressed any intent to do so, Sunburst has the right under
the Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA.
5. Related-Party Transactions:
Certain Plan investments are shares of mutual funds and common collective trusts
managed by Merrill Lynch. Merrill Lynch is the Trustee and, therefore, these
transactions qualify as party-in-interest.
6. Non-participant Directed Other:
Non-participant Directed Other balances included in the financial statements
represent receivables from Sunburst for contributions which have not yet been
remitted to the trustee. All amounts were received by the Plan subsequent to
year-end. Additionally, certain Plan investments had not yet been transferred
from the Manor Care Plan as of December 31, 1997. These balances are also
included as Non-participant Directed Other balances. All amounts were received
by the Plan in 1998.
7. Multi-Employer Status:
As discussed in Note 1, subsequent to the Choice Distribution, the original
Choice Hotels International Inc. Retirement, Savings and Investment Plan changed
its name to the Sunburst Hospitality Corporation Retirement, Savings, and
Investment Plan and this plan was available to the employees of both Choice and
Sunburst. However, on January 1, 1998, the Plan was split into the Sunburst
Hospitality Corporation Retirement, Savings and Investment
-6-
<PAGE>
Plan and he Choice Hotels International, Inc. Retirement, Savings and Investment
Plan. These plans are now available to the respective employees of Sunburst and
Choice.
8. Reconciliation of Financial Statements to Form 5500:
The following is a reconciliation of net assets available for Plan benefits per
the financial statements to the Form 5500 for the year ended December 31, 1998:
<TABLE>
<S> <C>
Net assets available for Plan benefits per financial statements $5,734,364
----------
Amounts allocated to withdrawing participants (14,378)
----------
Net assets available for Plan benefits per the Form 5500 $5,719,986
==========
</TABLE>
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the year ended December 31, 1998:
<TABLE>
<S> <C>
Benefits paid to participants per the financial statements $1,575,163
----------
Add- Amounts allocated to withdrawing participants at
December 31, 1998 14,378
----------
Less- Amounts allocated to withdrawing participants at
December 31, 1997 (428,158)
----------
Benefits paid to participants per the Form 5500 $1,161,383
==========
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit claims that have occurred but have not been paid as of December 31.
-7-
<PAGE>
Sunburst Hospitality Corporation
Retirement, Savings and Investment Plan
Item 27(a) - Schedule of Assets Held for Investment Purposes
As of December 31, 1998
<TABLE>
<CAPTION>
Description of Current
Identity of Issue Investment Cost Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Premier Growth Fund Mutual Fund $1,468,712 $1,635,308
Merrill Lynch Capital Fund* Mutual Fund 1,370,542 1,359,917
Hotchkis & Wiley International Equity Fund Mutual Fund 589,835 562,150
Merrill Lynch S&P 500 Index Fund* Mutual Fund 34,830 36,578
Pimco Small Cap Value Fund Mutual Fund 19,108 19,698
Pimco Total Return Fund Mutual Fund 8,777 8,520
Merrill Lynch Retirement Preservation Trust* Common/Collective Trust 1,445,929 1,445,929
Sunburst Hospitality Common Stock Fund* Common Stock 282,664 126,654
Choice Hotels Common Stock Fund Common Stock 28,791 22,890
Manor Care Common Stock Fund Common Stock 88,088 73,382
---------- ----------
Total assets held for investment purposes $5,337,276 $5,291,026
========== ==========
</TABLE>
*Represents party-in-interest to the Plan
-8-
<PAGE>
Sunburst Hospitality Corporation
Retirement, Savings and Investment Plan
Item 27(d) - Schedule of Reportable (5%) Transactions
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Purchase Lease
Identity of Party Description of Asset Price Selling Price Rental
- --------------------------------------------- ----------------------- --------------- ------------- -------
<S> <C> <C> <C> <C>
Merrill Lynch Retirement Preservation Trust * Common/Collective Trust $ 1,479,126 $ - $ -
-
Alliance Premier Growth Fund Mutual Fund 1,582,995 - -
Merrill Lynch Capital Fund* Mutual Fund 1,456,313 - -
Hotchkis & Wiley International Equity Fund Mutual Fund 623,382 - -
T. Rowe Price International Fund Mutual Fund - (622,401) -
Janus Fund Mutual Fund - (2,106,182) -
T. Rowe Price Stable Value Fund Mutual Fund - (509,965) -
Vanguard U.S. Treasury Money Market Fund Mutual Fund - (868,932) -
Vanguard Wellington Balanced Fund Mutual Fund - (2,006,738) -
<CAPTION>
Expense
Incurred with Current Value of Asset on
Identity of Party Description of Asset Transactions Cost of Asset Transaction Date
- --------------------------------------------- ------------------------- ------------- ------------- -------------------------
<S> <C> <C> <C>
Merrill Lynch Retirement Preservation Trust * Common/Collective Trust - $ 1,479,126 $ 1,479,126
-
Alliance Premier Growth Fund Mutual Fund - 1,582,995 1,582,995
Merrill Lynch Capital Fund* Mutual Fund - 1,456,313 1,456,313
Hotchkis & Wiley International Equity Fund Mutual Fund - 623,382 623,382
T. Rowe Price International Fund Mutual Fund - (622,401) (622,401)
Janus Fund Mutual Fund - (2,106,182) (2,106,182)
T. Rowe Price Stable Value Fund Mutual Fund - (509,965) (509,965)
Vanguard U.S. Treasury Money Market Fund Mutual Fund - (868,932) (868,932)
Vanguard Wellington Balanced Fund Mutual Fund - (2,006,738) (2,006,738)
<CAPTION>
Net
Identity of Party Description of Asset Gain/(Loss)
- --------------------------------------------- ------------------------- -----------
<S> <C> <C>
Merrill Lynch Retirement Preservation Trust * Common/Collective Trust $ -
Alliance Premier Growth Fund Mutual Fund -
Merrill Lynch Capital Fund* Mutual Fund -
Hotchkis & Wiley International Equity Fund Mutual Fund -
T. Rowe Price International Fund Mutual Fund -
Janus Fund Mutual Fund -
T. Rowe Price Stable Value Fund Mutual Fund -
Vanguard U.S. Treasury Money Market Fund Mutual Fund -
Vanguard Wellington Balanced Fund Mutual Fund -
</TABLE>
*These transactions qualify as party-in-interest transactions as described in
Note 5.
-9-
<PAGE>
EXHIBITS.
23 - Consent of Independent Public Accountants.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
administrative committee (or other persons who administer the employee benefit
plan) has duly caused this annual report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: July 15, 1999 SUNBURST HOSPITALITY CORPORATION
RETIREMENT SAVINGS & INVESTMENT PLAN
By: /s/ Greg Miller
----------------------------------
Greg Miller, Senior Vice President,
----------------------------------
Sunburst Hospitality Corp.
----------------------------------
-10-
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report, included in this Form 11-K, into the Company's previously filed
Registration Statement Form S-8, File No. 333-17577.
ARTHUR ANDERSEN LLP
Washington, D.C.,
July 15, 1999
-11-
