SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
(Mark one):
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996.)
For the fiscal year ended December 31, 1998
OR
[ ] TRANSMITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REUQUIRED)
For the transition period from to
Commission file number
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below
Avis Voluntary Investment Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office
Avis Rent A Car Inc., 900 Old Country Road, Garden City, NY 11530
<PAGE>
Avis Voluntary Investment Savings Plan
Table of Contents of the Financial Statements and Supplemental Schedules
Page
----
Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits
as of December 31, 1998 and 1997. 2
Statement of Changes in Net Assets Available for Plan Benefits
for the year ended December 31, 1998. 3
Notes to the Financial Statements for the year ended
December 31, 1998 and as of December 31, 1997. 4-11
Supplemental Schedules as of and for the year ended December 31, 1998:*
Schedule I - Item 27a - Schedule of Assets held for Investment
Purposes 12
Schedule II - Item 27d - Schedule of Reportable Transactions 13
* Other schedules required by Section 2520.103 - 2520.104 of the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974 ("ERISA") have been
omitted because they are not applicable.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Participants and Administrator of
The Avis Voluntary Investment Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the Avis Voluntary Investment Savings Plan (the "Plan") as of December 31,
1998 and 1997, and the related statements of changes in net assets available for
benefits for the year ended December 31, 1998. 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 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, such financial statements 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 conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
Table of Contents are presented for the purpose 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. These schedules are the responsibility of the Plan's management. Such
schedules have been subjected to the auditing procedures applied in our audit of
the basic 1998 financial statements and, in our opinion, are fairly stated in
all material respects when considered in relation to the basic financial
statements taken as a whole.
June 22, 1999
<PAGE>
AVIS VOLUNTARY INVESTMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS
AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
----------------- -----------------
<S> <C> <C>
Fixed Income Fund:
Investments at contract value:
Guaranteed Income Contracts $ 55,277,168 $ 54,280,764
Investments at fair value:
BT Pyramid Government Securities Cash Fund 3,492,739
SEI Stable Asset Fund #354 10,390,349 15,901,978
NationsBank Treasury Reserves Capital Class 6,548,285
--------------- ----------------
Total Fixed Income Fund 69,160,256 76,731,027
Investments at fair value:
Fidelity Equity Income Fund 22,057,477 17,945,052
Fidelity Magellan Fund 31,401,689 20,977,997
Bond Fund of America 2,655,384 1,875,585
Putnam Growth & Income Fund 9,675,208 7,800,128
Putnam New Opportunities Fund 7,059,554 3,714,706
American Europacific Growth Fund 3,523,241 3,333,459
Heartland Value Fund 3,919,300 5,784,949
Avis Stock Fund 860,280
Portfolio A 73,792 55,666
Portfolio B 290,655 291,827
Portfolio C 1,222,919 1,095,005
Portfolio D 1,016,332 776,314
Portfolio E 1,734,510 1,365,992
Investments at estimated fair value:
Loans to participants 7,137,424 6,468,624
--------------- -------------------
Total investments 161,788,021 148,216,331
Cash and Cash Equivalents 889,156 521,836
--------------- -------------------
Total net assets available for plan benefits $ 162,677,177 $ 148,738,167
=============== ===================
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
Avis Voluntary Investment Savings Plan
Statement of Changes in Net Assets Available for Plan Benefits
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Fixed Fidelity Fidelity Bond Fund
Income Equity Income Magellan of
Fund Fund Fund America
----------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Net appreciation (depreciation) in fair
value of investments $ 1,029,890 $ 5,947,039 $ (74,437)
Interest $ 4,280,356
Dividends 1,216,027 1,412,822 191,752
----------------- ------------- -------------- --------------
4,280,356 2,245,917 7,359,861 117,315
----------------- ------------- -------------- --------------
Contributions:
Employer 1,894,715 518,590 559,613 70,669
Employee 1,657,419 1,143,153 1,179,880 163,453
Rollover 306,523 51,190 44,007 2,732
----------------- ------------- -------------- --------------
3,858,657 1,712,933 1,783,500 236,854
----------------- ------------- -------------- --------------
Total Additions 8,139,013 3,958,850 9,143,361 354,169
Deductions from assets attributed to:
Benefits Paid to Participants (7,204,334) (1,552,803) (2,337,701) (282,491)
----------------- ------------- -------------- --------------
Net increase (decrease) prior to
interfund transfers 934,679 2,406,047 6,805,660 71,678
Interfund transfers (8,505,450) 1,706,378 3,618,032 708,121
----------------- ------------- -------------- --------------
Net (decrease) increase in net assets
available for Plan benefits (7,570,771) 4,112,425 10,423,692 779,799
Net assets available for Plan benefits:
Beginning of year 76,731,027 17,945,052 20,977,997 1,875,585
================= ============= ============== ==============
End of year $ 69,160,256 $ 22,057,477 $31,401,689 $ 2,655,384
================= ============= ============== ==============
Growth New American Heartland
& Income Opportunities Europacific Value
Fund Fund Growth Fund Fund
----------------- ------------- ------------ ----------------
<S> <C> <C> <C> <C>
Net appreciation (depreciation) in fair
value of investments $ 283,892 $ 860,865 $ 260,988 $ (806,283)
Interest
Dividends 859,012 223,793 211,380 106,678
----------------- ------------- ------------ --------------
1,142,904 1,084,658 472,368 (699,605)
----------------- ------------- ------------ --------------
Contributions:
Employer 253,792 188,304 94,313 152,889
Employee 571,930 414,574 223,042 350,260
Rollover 23,414 30,705 1,677 2,362
----------------- ------------- ------------ --------------
849,136 633,583 319,032 505,511
----------------- ------------- ------------ --------------
Total Additions 1,992,040 1,718,241 791,400 (194,094)
Deductions from assets attributed to:
Benefits Paid to Participants (924,792) (446,033) (283,003) (439,028)
----------------- ------------- ------------ --------------
Net increase (decrease) prior to
interfund transfers 1,067,248 1,272,208 508,397 (633,122)
Interfund transfers 807,832 2,072,640 (318,615) (1,232,527)
----------------- ------------- ------------ --------------
Net (decrease) increase in net assets
available for Plan benefits 1,875,080 3,344,848 189,782 (1,865,649)
Net assets available for Plan benefits:
Beginning of year 7,800,128 3,714,706 3,333,459 5,784,949
================= ============= ============ ==============
End of year $ 9,675,208 $ 7,059,554 $ 3,523,241 $ 3,919,300
================= ============= ============ ==============
<PAGE>
Avis
Stock
Fund Portfolio A Portfolio B Portfolio C
---------------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
Net appreciation (depreciation) in fair
value of investments $ 315,790 $ (359) $ (243) $ 31,078
Interest 4,623 13,553 20,637
Dividends 5,411 21,265 81,818
---------------- ------------- ----------- --------------
315,790 9,675 34,575 133,533
---------------- ------------- ------------ --------------
Contributions:
Employer 8,819 8,511 22,052 73,352
Employee 19,033 14,411 38,949 149,685
Rollover 1,760 57 889 57
---------------- ------------- ------------ --------------
29,612 22,979 61,890 223,094
---------------- ------------- ------------ --------------
Total Additions 345,402 32,654 96,465 356,627
Deductions from assets attributed to:
Benefits Paid to Participants (22,422) (56,230) (24,457) (499,000)
---------------- ------------- ------------ --------------
Net increase (decrease) prior to
interfund transfers 322,980 (23,576) 72,008 (142,373)
Interfund transfers 537,300 41,702 (73,180) 270,287
---------------- ------------- ------------ --------------
Net (decrease) increase in net assets
available for Plan benefits 860,280 18,126 (1,172) 127,914
Net assets available for Plan benefits:
Beginning of year 55,666 291,827 1,095,005
================ ============= ============ ==============
End of year $ 860,280 $ 73,792 $ 290,655 $ 1,222,919
================ ============= ============ ==============
Loans Cash and
to Cash
Portfolio D Portfolio E Participants Equivalents Total
---------------- ------------- ------------ -------------- ----------
<S> <C> <C> <C> <C> <C>
Net appreciation (depreciation) in fair
value of investments $ 40,751 $ 25,695 $ 7,914,666
Interest 7,038 6,099 4,332,306
Dividends 60,435 101,080 4,491,473
---------------- ------------- ------------ -------------- -----------
108,224 132,874 0 0 16,738,445
---------------- ------------- ------------ -------------- -----------
Contributions:
Employer 57,504 89,511 3,992,634
Employee 112,171 178,932 6,216,892
Rollover 681 2,868 468,922
---------------- ------------- ------------ -------------- -----------
170,356 271,311 0 0 10,678,448
---------------- ------------- ------------ -------------- -----------
Total Additions 278,580 404,185 0 0 27,416,893
Deductions from assets attributed to:
Benefits Paid to Participants (152,458) (115,554) 668,800 193,623 (13,477,883)
---------------- ------------- ------------ -------------- -----------
Net increase (decrease) prior to
interfund transfers 126,122 288,631 668,800 193,623 13,939,010
Interfund transfers 113,896 79,887 173,697
---------------- ------------- ------------ -------------- -----------
Net (decrease) increase in net assets
available for Plan benefits 240,018 368,518 668,800 367,320 13,939,010
Net assets available for Plan benefits:
Beginning of year 776,314 1,365,992 6,468,624 521,836 148,738,167
================ ============= ============ ============== ===========
End of year $ 1,016,332 $ 1,734,510 $ 7,137,424 $ 889,156 $162,677,177
================ ============= ============ ============== ===========
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
AVIS VOLUNTARY INVESTMENT SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1998
AND AS OF DECEMBER 31, 1997
Note 1 - Description of the Plan
- ---------------------------------------------------------------
The following description of the Avis Voluntary Investment Savings Plan (the
"Plan") provides only general information. Participants should refer to the Plan
agreement for a more complete description of the Plan's provisions.
General
The Plan is a defined contribution pension plan sponsored by Avis Rent A Car
System, Inc. (the "Company"). The Company is a wholly-owned subsidiary of Avis
Rent A Car, Inc. (see Note 8). The Plan administrator is the Administrative
Committee of the Avis Voluntary Investment Savings Plan. Prior to January 1,
1998, the Plan trustee was NationsBank of Georgia, N.A. On January 1, 1998, the
Plan trustee was changed to the Bankers Trust Company. NationsBank of Georgia,
N.A and Bankers Trust Company are collectively referred to as the "Trustee". The
Plan is subject to the provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA").
Eligibility
Each employee may elect to become a contributing participant after having
met all of the following requirements: (i) the status of a non-union
employee, (ii) the attainment of age 21 and (iii) the completion of one year
of service (a year of service means the completion of at least 1,000 hours of
service during a twelve consecutive month period).
Contributions
Participants may elect to defer on a pre-tax basis from 1% to 16% of specified
compensation under a "qualified cash or deferred arrangement" under Section
401(k) of the Internal Revenue Code, subject to certain limitations, in 1%
increments. In addition, employees participating in the Plan may make additional
contributions (that are not matched by employer contributions) from 1% to 10% of
specified compensation on a current, after-tax basis, subject to certain
limitations imposed by law.
The Company contributes to the Plan with respect to each participating employee
an amount equal to the sum of 50% of the first 4% of the participant's
compensation that is contributed to the Plan. Effective January 1, 1999, the
employer matching contribution will increase to 50% of the first 6% of the
participant's compensation that is contributed to the Plan. For those
participants not eligible to participate in the Company's defined benefit
pension plans, the Company contributes an additional amount equal to 2% of the
participant's annual compensation, increasing to 3% effective January 1, 1999.
Investments
Participants in the Plan have the option of investing their account balance and
the additional 2% contribution by the Company (where applicable) in a Fixed
Income Fund (includes guaranteed income contracts and investments backed by the
U.S. Government, as well as other high-quality fixed income securities),
Fidelity Equity Income Fund, Fidelity Magellan Fund, Bond Fund of America,
Putnam Growth & Income Fund, Putnam New Opportunities Fund, American Europacific
Growth Fund, Heartland Value Fund, the Avis Stock Fund or five individual
portfolios of various combinations of investments in the foregoing investments.
Fund Reallocations
Participants can reallocate investments among the various funds or change future
contributions on a daily basis. The fund reallocation must be in 1% increments
and includes both employee and employer contributions. Only one reallocation is
allowed each day.
Vesting
Participants are fully vested at all times with respect to their contributions
to the Plan. Participants are fully vested with respect to Company contributions
upon completion of 5 years of service. With respect to the additional 2%
contributed by the Company (where applicable), participants are fully vested up
to a maximum of $400 in any plan year. Participants are fully vested in the
remainder of the Company's contribution upon completion of five years of
service.
Participant Accounts
Each participant's account is credited with the participant's contribution,
allocation of the Company's contribution and the Plan earnings. 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 account.
Distributions to Participants
Distribution of the participant's account may be made in a lump sum payment upon
retirement, death or disability, or upon termination of employment, subject to
the vesting requirements of the Plan.
Loans are permitted under the Plan, with certain limitations.
<PAGE>
Plan Termination
Although the Company has not expressed any intention to terminate the Plan, it
has the right to do so at any time, subject to the provisions of ERISA. In such
event, assets will be distributed in accordance with the Plan agreement and the
regulations set forth under ERISA.
Note 2 - Summary of Significant Accounting Policies
- ---------------------------------------------------
Method of Accounting
The Plan's financial statements are prepared on the accrual basis of accounting.
Investment Valuation
Investments in guaranteed income contracts are stated at contract value
representing amounts contributed plus interest at contract value, less funds
withdrawn, because such contracts are fully benefit responsive, as defined in
the AICPA Statement of Position 94-4, "Reporting of Investment Contracts Held by
Health and Welfare Benefit Plans and Defined Contribution Pension Plans." For
the year ended December 31, 1998, the average yield on the aggregate guaranteed
income contracts was 7.42%. The crediting interest rate as of December 31, 1998
and 1997 on the guaranteed income contracts ranged from 5.73% to 7.80% and to
5.73% and 7.80%, respectively.
Investments in mutual funds are carried at fair value. The fair value of the
Plan's interest in the Avis Rent A Car, Inc. Voluntary Savings Plan Combined
Fund (the "Combined Fund") is based on the Plan's interest at the beginning of
the year plus actual contributions and allocated investment income less actual
distributions (see Note 3). Investment transactions are accounted for on the
date the investments are purchased or sold (trade date). Dividend income is
recorded on the ex-dividend date.
Payment of Benefits
Benefit payments to participants are recorded upon distribution.
Administrative Expenses
Investment advisory, trustee and other fees and expenses relating to the
administration of the Plan are paid by the Company and are not included in the
Plan's financial statements.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires Plan management to make estimates and assumptions
that affect the amount of assets available for plan benefits at the date of the
financial statements and the reported amounts of changes in assets available for
plan benefits during the period. In the opinion of the Plan's management,
actual results are not expected to vary materially from the estimates and
assumptions used in preparing these financial statements.
Note 3 - Interest in the Avis Rent A Car, Inc. Voluntary Savings Plan
(the "Combined Fund")
- ---------------------------------------------------------------------
The Plan has an agreement with the Trustee, whereby substantially all of the
assets of the Plan are held in the Combined Fund on behalf of the Avis Voluntary
Investment Savings Plan and the Avis Voluntary Investment Savings Plan for
Bargaining Hourly Employees. The assets are maintained in a commingled account
by the Trustee and are not separately identified as to ownership. The Plan's
beneficial interest in the combined investments of the Combined Fund is
determined on the basis of the initial asset contribution to the Combined Fund,
adjusted for subsequent contributions, distributions, allocated income, and
realized and unrealized gains and losses. Allocations of investment income and
net appreciation (depreciation) in the fair value of investments (both realized
and unrealized) are determined on the basis of proportionate share in the
Combined Fund assets stated at contract and market value. At December 31, 1998,
the Plan's interest in the net assets of the Combined Fund was approximately
90%.
The following table presents the cost and fair value/contract value of
investments held by the Combined Fund at December 31, 1998 (after allocation of
the individual portfolios to the respective investments):
<TABLE>
<CAPTION>
Cost Fair/Contract Value
<S> <C> <C>
Guaranteed Income Contracts $ 63,882,895 $ 63,882,895
BT Pyramid Government Securities Cash Fund 4,040,432 4,040,432
SEI Stable Asset Fund #354 12,007,952 12,007,952
Fidelity Equity Income Fund 20,950,695 23,217,196
Fidelity Magellan Fund 25,643,145 32,978,098
Bond Fund of America 3,605,817 3,734,287
Putnam Growth & Income Fund 10,650,270 11,954,744
Putnam New Opportunities Fund 7,452,139 8,789,255
American Europacific Growth Fund 4,562,035 5,076,668
Heartland Value Fund 5,426,140 4,853,744
Avis Stock Fund 654,616 903,732
Loans to participants 9,152,515 9,152,515
--------------- --------------
Total Combined Fund amounts $ 168,028,651 $ 180,591,518
=============== ==============
</TABLE>
<PAGE>
The following table presents the cost and fair value/contract value of
investments held by the Combined Fund at December 31, 1997 (after allocation of
the individual portfolios to the respective investments):
<TABLE>
<CAPTION>
Cost Fair/Contract Value
<S> <C> <C>
Guaranteed Income Contracts $ 63,057,745 $ 63,057,745
NationsBank Treasury Reserve Capital Class 7,607,116 7,607,116
SEI Stable Asset Fund #354 18,473,264 18,473,264
Fidelity Equity Income Fund 14,857,305 18,572,252
Fidelity Magellan Fund 17,812,720 21,583,216
Bond Fund of America 2,680,485 2,698,529
Putnam Growth & Income Fund 9,689,036 9,381,328
Putnam New Opportunities Fund 4,424,925 4,802,105
American Europacific Growth Fund 4,856,617 4,536,283
Heartland Value Fund 7,303,213 6,750,923
Loans to participants 7,851,889 7,851,889
--------------- --------------
Total Combined Fund amounts $ 158,614,315 $ 165,314,650
=============== ==============
</TABLE>
Investment income for the Combined Fund for the year ended December 31, 1998 is
as follows:
Investment Income:
Net appreciation in fair value of investments $ 8,371,717
Interest and dividend income 10,166,032
---------------
Total $ 18,537,749
===============
Note 4 - Investment in the Fixed Income Fund
- -------------------------------------------------------------
At December 31, 1998 and 1997, the Plan's investment in the Fixed Income Fund
was $69,160,256 and $76,731,027, respectively. The allocation between the
guaranteed income contracts, BT Pyramid Government Securities Cash Fund and the
SEI Stable Asset Fund #354 is based on the Plan's proportionate share of the
Fixed Income Fund investment in the Combined Fund at December 31, 1998 and 1997,
respectively. The Plan's interest in the Fixed Income Fund of the Combined Fund
at December 31, 1998 and 1997 was approximately 87% and 86%, respectively.
The following presents the cost and fair value/contract value held by the
Combined Fund at December 31, 1998:
Cost Fair/Contract Value
Guaranteed Income Contracts (contract value) $63,882,895 $63,882,895
BT Pyramid Government Securities Cash Fund 4,040,432 4,040,432
SEI Stable Asset Fund #354 (fair value) 12,007,952 12,007,952
---------- ----------
Total Fixed Income Fund Amounts $79,931,279 $79,931,279
=========== ===========
The following presents the cost and fair value/contract value held by the
Combined Fund at December 31, 1997:
Cost Fair/Contract Value
Guaranteed Income Contracts (contract value) $63,057,745 $63,057,745
NationsBank Treasury Reserve Capital Class
(fair value) 7,607,116 7,607,116
SEI Stable Asset Fund #354 (fair value) 18,473,264 18,473,264
---------- ----------
Total Fixed Income Fund Amounts $89,138,125 $89,138,125
=========== ===========
<PAGE>
Note 5 - Investments
- --------------------
This information, as of December 31, 1998 and 1997, and for the periods then
ended, was obtained from the Combined Funds (see Note 3).
The following is a summary of reclasses made in the preparation of the statement
of assets available for Plan Benefits as of December 31, 1998:
<TABLE>
<CAPTION>
Fidelity Putnam Putnam American
Fixed Equity Fidelity Bond Fund Growth & New Europacific
Income Income Magellan of Income Opportunities Growth
Fund Fund Fund America Fund Fund Fund
----------- ----------- ---------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Guaranteed Income Contracts $ 54,673,039
BT Pyramid Government
Securities Cash Fund 3,454,291
SEI Stable Asset Fund #354 10,276,792
Fidelity Equity Income Fund $22,057,477
Fidelity Magellan Fund $31,401,689
Bond Fund of America $2,655,384
Putnam Growth & Income Fund $ 9,675,208
Putnam New Opportunities Fund $ 7,059,554
American Europacific Growth Fund $ 3,523,241
Heartland Value Fund
Avis Stock Fund
Portfolio A 72,992 43,431 22,751 7,610
Portfolio B 190,394 117,658 75,915 27,819 50,414
Portfolio C 296,419 291,906 317,247 177,578 317,080
Portfolio D 107,207 106,635 292,810 195,334 289,624
Portfolio E 89,122 88,010 474,312 416,555 468,478
Loans to Participants
Cash and Cash Equivalents
------------ ----------- ----------- ----------- ----------- ------------- -------------
Total $ 69,160,256 $22,057,477 $31,401,689 $3,303,024 $10,858,243 $ 7,876,840 $ 4,656,447
============ =========== =========== =========== =========== ============= =============
Amount per
Statement of
Heartland Avis Cash and Loans Net Assets
Growth Val Cash to Available for
Fund Fund Equivalents Participants Total Reclasses Plan Benefits
------------ ----------- ----------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Guaranteed Income Contracts $ 54,673,039 $ 604,129 $ 55,277,168
BT Pyramid Government
Securities Cash Fund 3,454,291 38,448 3,492,739
SEI Stable Asset Fund #354 10,276,792 113,557 10,390,349
Fidelity Equity Income Fund 22,057,477 22,057,477
Fidelity Magellan Fund 31,401,689 31,401,689
Bond Fund of America 2,655,384 2,655,384
Putnam Growth & Income Fund 9,675,208 9,675,208
Putnam New Opportunities Fund 7,059,554 7,059,554
American Europacific Growth Fund 3,523,241 3,523,241
Heartland Value Fund $ 3,919,300 3,919,300 3,919,300
Avis Stock Fund $ 860,280 860,280 860,280
Portfolio A 146,784 (72,992) 73,792
Portfolio B 18,849 481,049 (190,394) 290,655
Portfolio C 119,108 1,519,338 (296,419) 1,222,919
Portfolio D 131,929 1,123,539 (107,207) 1,016,332
Portfolio E 287,155 1,823,632 (89,122) 1,734,510
Loans to Participants $ 7,137,424 7,137,424 7,137,424
Cash and Cash Equivalents $ 889,156 889,156 889,156
------------ ----------- ----------- ------------ ------------ ------------- -------------
Total $ 4,476,341 $ 860,280 $ 889,156 $ 7,137,424 $162,677,177 $ 0 $ 162,677,177
============ =========== =========== ============ ============ ============= =============
</TABLE>
<PAGE>
The following is a summary of reclasses made in the preparation
of the Statement of Assets Available for Plan Benefits as of
December 31, 1997:
<TABLE>
<CAPTION>
Fidelity Putnam Putnam American
Fixed Equity Fidelity Bond Fund Growth & New Europacific
Income Income Magellan of Income Opportunities Growth
Fund Fund Fund America Fund Fund Fund
------------ ----------- ---------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Guaranteed Income Contracts $ 53,799,612
NationsBank Treausry Reserves
Capital Class 6,490,289
SEI Stable Asset Fund #354 15,767,688
Fidelity Equity Income Fund $ 17,945,052
Fidelity Magellan Fund $20,977,997
Bond Fund of America $ 1,875,585
Putnam Growth & Income Fund $ 7,800,128
Putnam New Opportunities Fund $ 3,714,706
American Europacific Growth Fund $ 3,333,459
Portfolio A 55,123 33,238 16,875 5,553
Portfolio B 192,658 120,771 73,136 25,252 48,362
Portfolio C 270,083 270,999 273,814 142,404 271,329
Portfolio D 84,912 85,194 215,081 134,127 213,279
Portfolio E 70,662 70,889 357,801 297,138 354,805
Loans to Participants
Cash and Cash Equivalents
------------ ----------- ----------- ------------ ----------- ------------- -------------
Total $ 76,731,027 $17,945,052 $20,977,997 $ 2,456,676 $ 8,736,835 $ 4,313,627 $ 4,226,787
============ =========== =========== ============ =========== ============= =============
Amount per
Statement of
Heartland Cash and Loans Net Assets
Growth Cash to Available for
Fund Equivalents Participants Total Reclasses Plan Benefits
------------ ----------- ------------ ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Guaranteed Income Contracts $ 53,799,612 $ 481,152 $ 54,280,764
NatonsBank Treasury Reserves
Capital Class 6,490,289 57,996 6,548,285
SEI Stable Asset Fund #354 15,767,688 134,290 15,901,978
Fidelity Equity Income Fund 17,945,052 17,945,052
Fidelity Magellan Fund 20,977,997 20,977,997
Bond Fund of America 1,875,585 1,875,585
Putnam Growth & Income Fund 7,800,128 7,800,128
Putnam New Opportunities Fund 3,714,706 3,714,706
American Europacific Growth Fund 3,333,459 3,333,459
Heartland Value Fund $ 5,784,949 5,784,949 5,784,949
Portfolio A 110,789 (55,123) 55,666
Portfolio B 24,306 484,485 (192,658) 291,827
Portfolio C 136,459 1,365,088 (270,083) 1,095,005
Portfolio D 128,633 861,226 (84,912) 776,314
Portfolio E 285,359 1,436,654 (70,662) 1,365,992
Loans to Participants $ 6,468,624 6,468,624 6,468,624
Cash and Cash Equivalents $ 521,836 521,836 521,836
------------ ----------- ----------- ------------ ------------ ---------------
Total $ 6,359,706 $ 521,836 $ 6,468,624 $148,738,167 $ 0 $ 148,738,167
============ =========== =========== ============ ============ ===============
</TABLE>
<PAGE>
Note 6 - Tax Status of the Plan
- -------------------------------------------------------------
The Plan is intended to be qualified under ss.401(a) of the Internal Revenue
Code of 1986 (the "Code") and is intended to be exempt from taxation under
ss.501(a) of the Code. The Plan received a favorable IRS determination letter
dated June 29, 1995. The Plan has been amended since receiving the determination
letter. However, the Plan administrator believes that the Plan is currently
designed and being operated in compliance with the applicable requirements of
the Code and the related trust was tax-exempt as of the financial statement
date. Therefore, no provision of income taxes has been included in the Plan's
financial statements.
Note 7- Investments
- ------------------------------------------
The following table presents the current value of the Plan's investments, which
represent 5% or more of the Plan's net assets at December 31, 1998 and 1997,
respectively.
<TABLE>
<CAPTION>
December 31,
----------------------------------------
1998 1997
------------- --------------
<S> <C> <C>
Investment in Guaranteed Income Contracts at contract value:
Guaranteed Income Contracts $ 55,277,168 $ 54,280,764
Investments at fair value:
SEI Stable Asset Fund #354 10,390,349 15,901,978
Fidelity Equity Income Fund 22,057,477 17,945,052
Fidelity Magellan Fund 31,401,689 20,977,997
Putnam Growth & Income Fund 9,675,208 7,800,128
Loans to participants 7,137,424 6,468,624
------------- --------------
Total investments exceeding 5% of the
Plan's assets $ 135,939,315 $ 123,374,543
============= =============
</TABLE>
During 1998, the Plan's investments (including realized gains and losses on
investments sold) had net appreciation/(depreciation) of $7,914,666 as follows:
1998
Fidelity Equity Income Fund $ 1,029,890
Fidelity Magellan Fund 5,947,039
Bond Fund of America (74,437)
Putnam Growth & Income Fund 283,892
Putnam New Opportunities Fund 860,865
American Europacific Growth Fund 260,988
Heartland Value Fund (806,283)
Avis Stock Fund 315,790
Portfolio A (359)
Portfolio B (243)
Portfolio C 31,078
Portfolio D 40,751
Portfolio E 25,695
-----------
$7,914,666
===========
<PAGE>
The investment options available to participants as of December 31, 1998 consist
of the following:
a) Fixed Income Fund - The fund invests in a diversified portfolio of
high-quality, fixed income investments offering price stability and
liquidity.
b) Fidelity Equity Income Fund - The fund normally invests at least 65% of its
assets in income-producing equity securities that have demonstrated a yield
higher than the composite yield on the stock in the S&P 500 index. It may
also invest in debt obligations.
c) Fidelity Magellan Fund - The fund invests primarily in the common stocks
and convertible securities of domestic corporations operating primarily in
the United States, domestic corporations that have significant activities
and interests outside the United States and foreign companies, with up to
20% of its assets invested in debt securities of all types and qualities.
d) Bond Fund of America - The fund invests primarily in a diversified
portfolio consisting primarily of marketable fixed-income debt securities,
government obligations and money market instruments.
e) Putnam Growth & Income Fund - The fund invests primarily in common stocks
issued by well-established companies with a steady history of profits and
attractive price/earnings ratios. It may invest up to 20% of assets in
foreign securities.
f) Putnam New Opportunities Fund - The fund invests primarily in common stock
of companies in sectors of the economy believed to possess above-average
long-term growth potential including personal communications, environmental
services, media/entertainment, medical technology/medical cost containment,
applied advanced technology, personal financial services, restaurants and
retail. Up to 20% of its assets may be invested in foreign issues.
g) American EuroPacific Growth Fund - The fund normally invests at least 65%
of its assets in equity securities of insurers domiciled in Europe or the
Pacific Basin.
h) Heartland Value Fund - The fund normally invests at least 65% of its assets
in equities of companies with market capitalizations of less than $300
million.
i) Avis Stock Fund - This fund invests in the sponsor's (Avis Rent A Car,
Inc.) common stock which is an equity security publicly traded on the New
York Stock Exchange under the symbol "AVI".
j) Portfolio A - This portfolio will generally invest 50% of its assets in
fixed income, 30% in bonds, 15% in stock of large domestic companies and 5%
in stock of foreign companies.
k) Portfolio B - This portfolio will generally invest 40% of its assets in
fixed income, 25% in bonds, 15% in stock of large domestic companies, 10%
in stock of foreign companies and 10% in stock of aggressive growth and
small domestic companies.
l) Portfolio C - This portfolio will generally invest 20% of its assets in
fixed income, 20% in bonds, 20% in stock of large domestic companies, 20%
in stock of foreign companies and 20% in stock of aggressive growth and
small domestic companies.
m) Portfolio D - This portfolio will generally invest 30% of its assets in
aggressive growth and small domestic companies, 25% in stock of large
domestic companies, 25% in stock of foreign companies, 10% in bonds and 10%
in fixed income.
n) Portfolio E - This portfolio will generally invest 40% of its assets in
stock of aggressive growth and small domestic companies, 25% in stock of
large domestic companies, 25% in stock of foreign companies, 5% in bonds
and 5% in fixed income.
<PAGE>
Note 8 - Significant Transactions
As of December 31, 1997, WizCom and Preferred Holdiays employees terminated
participation in the Plan, as these entities are no longer owned by the Company.
Participant balances totaling $24.4 million were transferred out of the Plan.
On January 1, 1998, the 401(k) Savings Plan for employees of the First Gray Line
Corporation (the "First Gray Line Plan") was merged with and into the Plan and,
on that date, the former participants of the First Gray Line became participants
of the Plan.
On July 23, 1998, the Company's parent company, Avis Rent A Car, Inc., filed an
S-8 with the Securities and Exchange Commission, to register 2,000,000 shares of
Avis Rent A Car, Inc. Class A Common Stock of the Plan. The effect of this
registration was to provide an additional investment fund option, the Avis Stock
Fund, which invests in shares of Avis Rent A Car, Inc.
On September 21, 1998, the Plan Sponsor amended the Plan, effective January 1,
1999. The effect of the amendment was (1) to change the Company's contribution
to the Plan with respect to each participant, to an amount equal to the sum of
50% of the first 6% of the participants compensation that is contributed to the
Plan , and (2) to increase the Company's additional contribution from 2% of each
participant's compensation to 3% of each participant's compensation.
Note 9 - Subsequent Events
On March 19, 1999, the Company purchased the common stock and franchise rights
of Rent A Car Company, Incorporated, of Richmond, Virginia for $10.2 million.
Cost in excess of the fair value of net assets acquired at March 19, 1999, is
approximately $7.6 million. The Company financed this transaction through
internally generated funds.
From January 1, 1999 through March 10, 1999, the Company under its Common Stock
Repurchase Program, purchased 2,013,100 shares of common stock at an aggregate
cost of $48.0 million including 1.3 million shares, which were repurchased from
Cendant at a cost of $31.5 million. As of March 10, 1999, under the Company's
Stock Repurchase Program, the Company has cumulatively repurchased 4,685,800
common shares at an average cost of approximately $21 per share.
On May 13, 1999, Avis agreed to acquire Motorent, Inc. ("Motorent"). Motorent is
a 47-year Avis franchisee operating at the airports in Knoxville, Memphis,
Nashville and Chattanooga, Tennessee, and is the largest Avis System franchisee
in North America, (excluding the Company). The Motorent acquisition is scheduled
to close on or about June 30, 1999.
On May 24, 1999, the Company entered into an agreement with Cendant to purchase
the vehicle management and fuel card businesses of Cendant for approximately
$1.8 billion plus expenses of approximately $100 million and refinancing of
approximately $3.6 billion of indebtedness. The Company expects to finance the
acquisition through the issuance of $362 million of Preferred Stock, $550
million of Senior Subordinated Notes and the remainder through secured and
unsecured borrowings.
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan Committee has duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.
Avis Rent A Car, Inc.
Voluntary Investment Savings Plan
By: /s/ Kevin M. Sheehan
--------------------------------
Executive Vice Prresident and
Chief Financial Officer
Date
June 22, 1999
SCHEDULE I
AVIS VOLUNTARY INVESTMENT SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
Principal
amount/ Market/
units/shares* Cost contract value **
<S> <C> <C> <C>
Guaranteed Income Contracts 55,277,168 $55,277,168 $55,277,168
BT Pyramid Government Securities
Cash Fund 3,492,741 3,517,984 3,492,739
SEI Stable Asset Fund #354 10,390,349 10,390,349 10,390,349
Fidelity Equity Income Fund 397,074 19,904,187 22,057,477
Fidelity Magellan Fund 259,905 24,417,351 31,401,689
Bond Fund of America 242,691 3,234,360 3,303,024
Putnam Growth & Income Fund 529,928 9,673,406 10,858,243
Putnam New Opportunities Fund 134,808 6,678,519 7,876,840
American Europacific Growth Fund 163,960 4,184,412 4,656,447
Heartland Value Fund 152,808 5,004,230 4,476,341
Avis Stock Fund 35,566 623,143 860,280
Loans to participants 7,795,129 7,137,424 7,137,424
-------------- --------------
$ 150,042,533 $ 161,788,021
============== ==============
</TABLE>
* The principal amount/units/shares and cost was calculated on a pro-rata
basis, based on the Combined Fund.
** After allocation of the individual portfolios
to the respective investments.
<PAGE>
SCHEDULE II
AVIS VOLUNTARY INVESTMENT SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
Transactions in excess of five percent of fair value of plan assets at
December 31, 1997
<TABLE>
<CAPTION>
Aggregate Aggregate Aggregate Net
No. of No. of value of cost value (loss)
Description of asset purchase of sale purchase of sales of sale or gain
<S> <C> <C> <C> <C> <C> <C>
BT Pyramid Government
Securities Cash Fund 314 338 $82,369,624 $77,413,170 $77,413,170
SEI Stable Asset Fund #354 18 16 17,231,525 23,700,000 23,700,00
Fidelity Equity Income Fund 128 127 8,268,608 4,699,789 5,511,062 $ 811,273
Fidelity Magellan Fund 147 106 10,661,482 5,276,601 6,279,784 1,003,183
Guaranteed Income Contracts 51 118 9,807,665 8,803,998 8,803,998
</TABLE>
The reportable transactions as disclosed above, are based on the movement in
the Combined Fund.
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the previously filed
Registration Statement No. 333-59693 of Avis Rent A Car, Inc. on Form S-8 of our
report dated June 22, 1999, appearing in this Annual Report on Form 11-K of Avis
Voluntary Investment Savings Plan for the year ended December 31, 1998.
/s/ Deloitte & Touche LLP
New York, New York
June 28, 1999
