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, 1999
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
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 Group Holdings, 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
------------------------------------------------------------------------
Independent Auditors' Report
Financial Statements:
Statements of Assets Available for Plan Benefits
as of December 31, 1999 and 1998.
Statement of Changes in Assets Available for Plan Benefits
for the year ended December 31, 1999.
Notes to the Financial Statements for the year ended
December 31, 1999 and as of December 31, 1998.
Supplemental Schedules as of and for the year ended December 31, 1999:*
Schedule I - Item 27a - Schedule of Assets held for Investment
Purposes
Schedule II - Item 27d - Schedule of Reportable Transactions
* 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 assets available for benefits of
the Avis Voluntary Investment Savings Plan (the "Plan") as of December 31,
1999 and 1998, and the related statement of changes in assets available for
benefits for the year ended December 31, 1999. 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 auditing standards generally accepted
in the United States of America. 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 assets available for benefits of the Plan as of December 31, 1999
and 1998, and the changes in assets available for benefits for the year ended
December 31, 1999 in conformity with accounting principles generally accepted in
the United States of America.
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 1999 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.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
June 20, 2000
<PAGE>
AVIS VOLUNTARY INVESTMENT SAVINGS PLAN
STATEMENTS OF ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31,
1999 1998
------------- --------------
Investments $176,530,851 $161,788,021
Cash and cash equivalents 357,435 889,156
------------- --------------
Total assets available for plan benefits $176,888,286 $162,677,177
============= ==============
See notes to the financial statements.
<PAGE>
AVIS VOLUNTARY INVESTMENT SAVINGS PLAN
STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1999
Additions:
Net appreciation in fair value of investments $ 11,367,617
Interest 11,563,338
Dividends 798,640
Employer contributions 7,327,400
Employee contributions 7,153,660
Rollovers 1,150,911
---------------
Total Additions 39,361,566
Deductions from assets attributed to:
Transferred out of Plan 7,788,767
Benefits paid to participants 17,361,690
---------------
Net increase in assets available for plan benefits 14,211,109
Assets available for plan benefits:
Beginning of year 162,677,177
-------------------
End of year $ 176,888,286
===================
See notes to the financial statements.
<PAGE>
AVIS VOLUNTARY INVESTMENT SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1999 AND AS OF DECEMBER 31, 1998
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
Group Holdings, Inc. (formerly Avis Rent A Car, Inc.) (see Note 7). The Plan
administrator is the Administrative Committee of the Avis Voluntary Investment
Savings Plan. As of January 1, 1998, Bankers Trust Company was appointed as
the Plan's trustee (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 the
first twelve months of employment or the completion of at least 1,000 hours in
any Plan year that follows the employment date).
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.
Company Matching Contributions
The Company contributes to the Plan with respect to each participating employee
an amount equal to the sum of 50% of the first 6% of the participant's
compensation that is contributed to the Plan.
Retirement Guarantee Contributions
For all Plan participants, who are active employees, the Company contributes an
additional amount equal to 3% (2% prior to January 1, 1999) of the participant's
annual compensation.
Investments
Participants in the Plan have the option of investing their account balance and
the additional 3% (2% prior to January 1, 1999) 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.
<PAGE>
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 and the Retirement Guarantee Contributions made by the Company after
January 1, 2000. Participants are fully vested with respect to Company matching
contributions upon completion of 5 years of service. With respect to the
Retirement Guarantee Contributions made prior to January 1, 2000, participants
are fully vested up to a maximum of $400 in any plan year and 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.
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, 1999, the average yield on the aggregate guaranteed
income contracts was 6.84%. The crediting interest rate as of December 31, 1999
and 1998 on the guaranteed income contracts ranged from 6.05% to 7.76% and from
5.73% to 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.
<PAGE>
Payment of Benefits
Benefit payments to participants are recorded upon distribution. Benefit
payments for the year ended December 31, 1999 are net of transfers to the Avis
Voluntary Investment Savings Plan for Bargaining Hourly Employee of
approximately $127,000.
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, 1999
and 1998, the Plan's interest in the assets of the Combined Fund was
approximately 89.5% and 90%, respectively.
The following table presents the cost and fair/contract value of investments
held by the Combined Fund at December 31, 1999 (after allocation of the
individual portfolios to the respective investments):
<TABLE>
<CAPTION>
Cost Fair/Contract Value
---------------- -------------------
<S> <C> <C>
Guaranteed Income Contracts $ 58,787,307 $ 58,787,307
BT Pyramid Government Securities Cash Fund 2,725,375 2,725,375
SEI Stable Asset Fund #354 14,581,959 14,581,959
Fidelity Equity Income Fund 17,527,094 19,459,697
Fidelity Magellan Fund 35,339,421 47,669,342
Bond Fund of America 2,871,136 2,729,957
Putnam Growth & Income Fund 11,832,281 10,880,272
Putnam New Opportunities Fund 11,102,927 17,437,837
American EuroPacific Growth Fund 6,522,597 9,069,552
Heartland Value Fund 3,886,425 4,143,865
Avis Stock Fund 1,603,865 1,899,473
Loans to participants 7,993,709 7,993,709
---------------- -------------------
Total Combined Fund amounts $ 174,774,096 $ 197,378,345
================ ===================
</TABLE>
<PAGE>
The following table presents the cost and fair/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>
Investment income for the Combined Fund for the year ended December 31, 1999 is
as follows:
Investment income:
Net appreciation in fair value of investments $ 12,396,087
Interest and dividend income 13,671,094
---------------
Total $ 26,067,181
===============
Note 4 - 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.
<PAGE>
Note 5- 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:
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
Investment in Guaranteed Income Contracts
at contract value: $ 50,677,443 $ 55,277,168
Investments at fair value:
SEI Stable Asset Fund #354 12,570,339 10,390,349
Fidelity Equity Income Fund 18,321,906 22,057,477
Fidelity Magellan Fund 44,954,562 31,401,689
Putnam Growth & Income Fund 9,767,416 9,675,208
Putnam New Opportunities Fund 15,559,129
American EuroPacific Growth Fund 8,279,815
Loans to participants 7,137,424
-------------- --------------
Total investments exceeding 5% of the Plan's assets $160,130,610 $ 135,939,315
============== ==============
</TABLE>
During 1999, the Plan's investments (including realized gains and losses on
investments sold) had net appreciation/(depreciation) of $11,367,617 as follows:
Year Ended
December 31,1999
----------------
Fidelity Equity Income Fund $ (537,598)
Fidelity Magellan Fund 4,687,385
Bond Fund of America (121,938)
Putnam Growth & Income Fund (862,373)
Putnam New Opportunities Fund 4,857,051
American EuroPacific Growth Fund 2,431,013
Heartland Value Fund 749,831
Avis Stock Fund 164,246
-----------------
$ 11,367,617
=================
The investment options available to participants as of December 31, 1999 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 Group Holdings,
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.
Note 6 - Significant Transactions
---------------------------------
As of December 31, 1998, certain Cendant employees terminated participation in
the Plan. In January 1999, participant balances totaling approximately $7.8
million were transferred out of the Plan in connection with this termination.
Note 7 - Subsequent Event
-------------------------
Effective March 27, 2000, Avis Rent A Car, Inc. changed its name to Avis Group
Holdings, Inc.
<PAGE>
SCHEDULE I
AVIS VOLUNTARY INVESTMENT SAVINGS PLAN
ITEM 27a-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Principal
amount/units/ Market/
shares * Cost * contract value **
--------------- ----------------- -------------------
<S> <C> <C> <C>
Guaranteed Income Contracts 50,677,443 $ 50,677,443 $ 50,677,443
BT Pyramid Government Securities Cash Fund 2,349,402 2,349,402 2,349,402
SEI Stable Asset Fund #354 12,570,339 12,570,339 12,570,339
Fidelity Equity Income Fund 342,409 16,502,286 18,321,906
Fidelity Magellan Fund 329,945 33,326,956 44,954,565
Bond Fund of America 174,757 2,397,490 2,280,407
Putnam Growth & Income Fund 520,649 10,622,050 9,767,416
Putnam New Opportunities Fund 170,713 9,906,754 15,559,129
American EuroPacific Growth Fund 193,716 5,954,618 8,279,815
Heartland Value Fund 103,868 3,551,460 3,786,226
Avis Stock Fund 68,637 1,495,972 1,771,698
Loans to Participants 6,212,505 6,212,505 6,212,505
----------------- -------------------
$ 155,567,275 $ 176,530,851
================= ===================
</TABLE>
* The principal amount/units/shares and cost were 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, 1999
<TABLE>
<CAPTION>
Transactions in excess of five percent of fair value of plan assets at December 31, 1998
----------------------------------------------------------------------------------------------------------------------------
Aggregate Aggregate Aggregate
Number of Number of value of cost of value of Net (loss)
purchases sales purchases sales sales or gain
-------------- ----------- ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Combined Transactions
BT Pyramid Government Securities Cash 340 382 $60,363,311 $62,351,992 $62,351,992
Fund
Fidelity Magellan Fund 149 16,522,300
Guaranteed Income Contracts 28 3 10,536,309 9,677,693 9,677,693
Single Transactions
BT Pyramid Government Securities Cash 93,485 9,348,505
Fund
</TABLE>
The reportable transactions as disclosed above, are based on the movement in
the Combined Fund.
<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 Group Holdings, Inc.
Avis Voluntary Investment Savings Plan
By: /s/ Kevin M. Sheehan
--------------------------
Kevin M. Sheehan
President-Corporate Business Affairs
and Chief Financial Officer
Date:
June 23, 2000
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the previously filed
Registration Statement No. 333-59693 of Avis Group Holdings, Inc. (formerly
Avis Rent A Car, Inc.) on Form S-8 of our report dated June 20, 2000, appearing
in this Annual Report on Form 11-K of Avis Voluntary Investment Savings Plan
for the year ended December 31, 1999.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
New York, New York
June 28, 2000
