SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 11-K
(Mark One)
[T] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________ to __________
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Commission File No. 1-10308
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Cendant Membership Services, Inc.
Savings Incentive Plan
(Full title of the Plan)
Cendant Corporation
(Name of issuer of the securities held pursuant to the Plan)
6 Sylvan Way
Parsippany, New Jersey 07054
(Address of principal executive office)
<PAGE>
CENDANT MEMBERSHIP SERVICES, INC.
SAVINGS INCENTIVE PLAN
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORTS 1 - 2
FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 1997 AND 1996
Statements of Net Assets Available for Benefits
as of December 31, 1997 and 1996 3
Statements of Changes in Net Assets Available for
Benefits, for the Years Ended December 31, 1997 and 1996 4
Notes to Financial Statements 5 - 17
SUPPLEMENTAL SCHEDULES:
Item 27a - Schedule of Assets Held for Investment Purposes
as of December 31, 1997 18 - 20
Item 27d - Schedule of Reportable Transactions
for the Year Ended December 31, 1997 21
Signature 22
EXHIBITS:
Independent Auditors' Consents 23 - 24
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Administrative Committee of the
Cendant Membership Services, Inc. Savings Incentive Plan
We have audited the accompanying statement of net assets available for benefits
of the Cendant Membership Services, Inc. Savings Incentive Plan (the "Plan")
(formerly the Savings Incentive Plan of CUC International, Inc.) as of December
31, 1997, and the related statement of changes in net assets available for
benefits for the year then ended. 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such 1997 financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31,
1997, and the changes in net assets available for benefits for the year then
ended, in conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of (1) assets
held for investment purposes as of December 31, 1997 and (2) reportable
transactions for the year ended December 31, 1997 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. The Plan summary information by fund as
of December 31, 1997, and for the year then ended, is presented for the purpose
of additional analysis of the basic financial statements rather than to present
information regarding the net assets available for benefits and changes in net
assets available for benefits of the individual funds. The supplemental
schedules and information by fund are the responsibility of the Plan's
Administrative Committee. Such supplemental schedules and information by fund
have been subjected to the auditing procedures applied in our audit of the basic
1997 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
Parsippany, New Jersey
July 2, 1998
<PAGE>
Report of Independent Auditors
To the Administrative Committee of the
Cendant Membership Services, Inc Savings Incentive Plan
We have audited the accompanying statement of net assets available for benefits
of the Cendant Membership Services, Inc. Savings Incentive Plan ("the Plan")
(formerly the Savings Incentive Plan of CUC International Inc.) as of December
31, 1996, and the related statement of changes in net assets available for
benefits for the year then ended. 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 audit.
We conducted our audit 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 audit provides 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 at
December 31, 1996, and the changes in its net assets available for benefits for
the year then ended, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Stamford, Connecticut
June 27, 1997
<PAGE>
CENDANT MEMBERSHIP SERVICES, INC.
SAVINGS INCENTIVE PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
ASSETS:
Investments:
Common stocks $ 95,805,851 $ 68,099,544
Preferred stock - 71,167
Shares of registered investment companies:
Neuberger & Berman Limited Maturity Bond Fund 11,496,221 10,717,650
Neuberger & Berman International Equity Fund 4,102,802 43,929
Neuberger & Berman Genesis Fund 7,617,528 56,051
First Union Evergreen Money Market Fund 12,598,636 10,294,216
MetLife Stock Market Index Guarantee Fund 1,353,750 -
Short-term investment funds 958,856 2,598,794
Loans to participants 3,617,348 2,843,187
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Total investments 137,550,992 94,724,538
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Contributions receivable:
Participants 329,760 300,782
Employer 134,619 135,881
Interest and dividends receivable 36,926 27,701
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Total receivables 501,305 464,364
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ASSETS AVAILABLE FOR BENEFITS $ 138,052,297 $ 95,188,902
============= =============
</TABLE>
See notes to financial statements.
<PAGE>
CENDANT MEMBERSHIP SERVICES, INC.
SAVINGS INCENTIVE PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Contributions:
Participants $ 9,761,052 $ 7,865,141
Employer 4,000,585 3,630,585
Rollovers 8,440,233 7,135,007
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Total contributions 22,201,870 18,630,733
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Investment income:
Realized and unrealized gains (losses) 28,796,409 2,028,721
Interest and dividends 1,963,443 1,575,490
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Total investment income 30,759,852 3,604,211
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Loan repayments 416,021 -
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Total additions 53,377,743 22,234,944
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DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants (10,514,348) (9,906,492)
-------------- --------------
Total deductions (10,514,348) (9,906,492)
-------------- --------------
NET INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 42,863,395 12,328,452
NET ASSETS AVAILABLE FOR BENEFITS
BEGINNING OF YEAR 95,188,902 82,860,450
------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $ 138,052,297 $ 95,188,902
============= =============
</TABLE>
See notes to financial statements.
<PAGE>
CENDANT MEMBERSHIP SERVICES, INC.
SAVINGS INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of the Cendant Membership Services, Inc. Savings
Incentive Plan (the "Plan") (formerly the Savings Incentive Plan of CUC
International, Inc.) provides only general information. Participants
should refer to the Summary Plan Description or the Plan documents, which
are available from Cendant Membership Services, Inc. (the "Company" or the
"Plan Sponsor"), for a more complete description of the Plan's provisions.
The Plan is a defined contribution plan which provides retirement,
disability and death benefits to eligible employees of the Company and its
subsidiaries. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
Effective January 1, 1997, the Company amended the Plan to provide for
monthly rather than quarterly entry dates, and to change the eligibility
service requirement to six months of employment from one year of service.
The Company also amended the Plan's definition of "compensation" to
include elective deferrals under the Plan and any elective contributions
under a cafeteria plan pursuant to Section 125 of the Internal Revenue
Code. In addition, the Company eliminated the Plan language limiting
elective deferrals by highly compensated employees (as defined) to 6% of
defined compensation, and amended the Plan to permit 401(k) participants
to change their deferral elections under the Plan on a monthly rather than
quarterly basis.
The Company also amended the Plan to permit in-service withdrawals from a
participant's pre-tax account and the vested portion of the Company
matching account upon the participant's attainment of age 59-1/2. The
Company removed from the Plan the requirement that installment
distributions from the Plan may not be made over a period longer than 20
years. Plan was amended to exclude certain employees from participation
in the Plan and clarified that certain workers are excluded from
participation, regardless of whether they are common law employees. A
provision in the Plan was made that a Plan loan shall become due within
sixty days of a participant's death, disability, retirement or other
termination of employment, rather than immediately thereafter.
Effective December 17, 1997 and coincident with the Cendant Merger (See
Note 6), the Company further amended the Plan by changing the definition
of "employer" and "Company" to reflect the change in Plan sponsorship.
Effective November 1, 1996, Fleet Financial Group ("Fleet") was replaced
by The Metropolitan Life Insurance Company ("MetLife") as the recordkeeper
of the Plan. Additionally, effective November 1, 1996, Fleet was replaced
by Neuberger & Berman Trust Company ("Neuberger & Berman") as the trustee
for the Cendant Corporation Company Stock Fund; and Chase Manhattan Bank
("Chase") as the trustee for the Equity Separate Fund and all other funds
of the Plan (with MetLife serving as Chase's agent for the other funds).
The following is a summary of certain plan provisions:
a. Eligibility - The Plan covers substantially all employees of the
Company who work in excess of 20 hours per week and its subsidiaries
who have been employed for at least six months and are age twenty-one
or older.
b. Contributions - Each year, participants may contribute up to 15%
of pretax annual compensation, as defined in the Plan. The Company
matches each participant's bi-weekly contribution dollar for dollar
of the first $27.69, $0.60 for each dollar of the next $36.93, and
$0.40 for each dollar of the next $27.69 up to a maximum of 6% of
pretax annual compensation, as defined in the Plan, for a total
maximum match of $60.92 per bi-weekly pay period. Participants may
also contribute amounts representing transfers from other qualified
plans, which are not subject to the Company match.
c. Rollovers - All employees, upon commencement of employment, are
provided the option of making a rollover contribution to the Plan in
accordance with Internal Revenue Service regulations.
d. Vesting - Participants are immediately vested in their contributions
plus actual earnings thereon. Vesting in the Company matching portion
of their accounts (plus actual earnings thereon) is based on years of
credited service. A participant is 100% vested after five years of
credited service.
e. Termination - Although it has not expressed any intent to do so, the
Company has the right under the Plan to discontinue its contributions
at any time and to terminate the Plan subject to the provisions of
ERISA. In the event of Plan termination, participants will become
fully vested and will receive lump-sum distributions in an amount
equal to the value of their accounts.
f. Loan Provision - Participants may borrow from their fund accounts up
to the lesser of $50,000 or 50% of their account balance. Loan terms
range from 1-5 years and are secured by the balance in the
participant's account. The loans bear interest at a rate commensurate
with local prevailing rates as determined quarterly by the plan
administrator and the trustee. Interest rates on outstanding loans
currently range from 7.16% to 11%. Principal and interest is paid
ratably through monthly payroll deductions.
g. Participant Accounts - Each participant's account is credited with
the participant's contributions and allocations of the Company's
contributions and Plan earnings. Allocations are based on participant
earnings or account balances as defined. Forfeited balances of
terminated participants' nonvested accounts are used to, at the
discretion of the committee, either pay administrative expenses of
the Plan or reduce future Company contributions. During the year
ended December 31, 1997, approximately $220,000 of net forfeited
balances were offset against Company contributions.
h. Benefits Payable - Upon termination of employment, a participant may
receive a lump-sum amount equal to the vested value of his or her
account. Distributions to terminated employees are recorded in the
financial statements when paid. Amounts payable to participants who
have terminated participation in the Plan were approximately $238,000
at December 31, 1997.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The accounting records of the Plan are maintained
on the accrual basis. All administrative expenses incurred in connection
with the operation of the plan are generally paid by the Company.
Valuation of Investments - The Plan's investments are stated at fair
value. Securities traded on a national securities exchange are valued at
the last reported sales price on the last business day of the plan year.
Investments traded on the over-the-counter market for which no sale was
reported on that date are valued at the average of the last reported bid
and ask prices. The shares of registered investment companies are valued
at the quoted market price which represent the net asset value of shares
held by the Plan at year-end. Loans to participants are valued at cost,
which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis.
Dividends are recorded on the ex-dividend date.
The change in the difference between the fair value and the cost of
investments which are held at each statement date is reflected as net
unrealized gains (losses) in the statement of changes in net assets
available for benefits. The net realized gains (losses) on investments is
the difference between the proceeds received, after fees and expenses, and
the average cost of the investments sold.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect reported amounts and related
disclosures. Actual results could differ from those estimates.
3. INVESTMENTS
The Plan's investments which exceeded 5% of net assets available for
benefits as of December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Neuberger & Berman Limited Maturity Bond Fund
1997 - 1,203,793 shares $ 11,496,221
1996 - 1,124,622 shares $ 10,717,650
First Union Evergreen Money Market Fund
1997 - 12,598,636 shares 12,598,636
1996 - 10,294,216 shares 10,294,216
Cendant Corporation Common Stock
1997 - 1,446,320 shares 49,717,250
1996 - 1,448,017 shares 34,398,404
Neuberger & Berman Genesis Fund
1997 - 342,823 shares 7,617,528 -
</TABLE>
Investment Options - Upon enrollment in the Plan (and until October 31,
1996), a participant could direct employer and employee contributions in
5% increments in any of the following investment options that were
available under the Plan (through Fleet).
a. Fixed Fund - Funds were invested in United States Treasury
obligations, certificates of deposit, commercial paper, and money
market funds, all having a maturity of three years or less from the
date of investment, and insurance company contracts which provide a
fixed rate of interest for a specified period of time.
b. Bond Fund - Funds were invested in long-term fixed-income
securities, including government and corporate bonds or in mutual
funds which specialize in such fixed-income securities.
c. Equity Separate Fund - Funds were invested in a variety of common
and preferred stocks with emphasis on a balanced portfolio of
primarily common stocks or in mutual funds which specialize in such
equity investments.
d. CUC Stock Fund - Funds were invested in common stock of CUC
International, Inc. ("CUC"), (the Plan Sponsor's parent company
prior to the merger of HFS Incorporated ("HFS") with CUC), which was
traded on the New York Stock Exchange.
Effective November 1, 1996, a participant may direct employer and employee
contributions in 1% increments in any of the following investment options
available under the Plan (through Neuberger & Berman and Chase).
Participants may change their investment allocation between funds on a
daily basis.
a. Equity Separate Fund - Funds are invested in a variety of common and
preferred stocks with emphasis on a balanced portfolio of primarily
common stocks or in mutual funds which specialize in such equity
investments.
b. Cendant Corporation Company Stock Fund (formerly CUC Stock Fund) -
Funds are invested in the common stock of the Plan Sponsor's parent
company, which is traded on the New York Stock Exchange.
c. Neuberger & Berman Limited Maturity Bond Fund - Funds are invested
in a diversified portfolio of short to intermediate term U.S.
government and agency securities as well as primarily investment
grade debt securities issued by financial institutions, corporations
and others.
d. Neuberger & Berman International Equity Fund - Funds are invested in
a diversified portfolio of equity securities of medium to large
capitalized companies doing business outside the United States and
traded on foreign exchanges.
e. Neuberger & Berman Genesis Fund - Funds are invested principally in
common stocks of companies with a market capitalization of $750
million or less.
f. First Union Evergreen Money Market Fund - Funds are invested in
high-quality money market instruments.
Additionally, effective June 1, 1997, a participant may direct the
employer and employee contributions in 1% increments in the MetLife Stock
Market Index Guarantee Fund which is a commingled separate account that
offers the return of the Standard & Poor's 500 Composite Stock Price
Index, minus an annual management fee.
4. DIFFERENCES BETWEEN FINANCIAL STATEMENTS AND FORM 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500 for the year ended December 31,
1996:
1996
------------
Net assets available for benefits per financial statements $ 95,188,902
Amounts allocated to withdrawn participants -
------------
Net assets available for benefits per Form 5500 95,188,902
============
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the year ended December 31,
1996:
1996
-------------
Benefits paid to participants per financial statements $ 9,906,492
Less amounts allocated on Form 5500 to withdrawn
participants at December 31, 1995 (3,142,436)
-------------
Benefits paid to participants per Form 5500 $ 6,763,946
=============
5. INTERNAL REVENUE SERVICE STATUS
The Plan is intended to be qualified under section 401 (a) of the Internal
Revenue Code of 1986 (the "Code") and is intended to be exempt from
taxation under section 501 (a) of the Code. The Plan received a favorable
IRS determination letter dated September 7, 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 for income taxes has been included in the Plan's
financial statements.
6. BUSINESS COMBINATIONS AND PLAN MERGERS
1997
Cendant - In December 1997, Cendant Corporation was created through the
merger (the "Cendant Merger") of CUC International Inc. ("CUC") and HFS
Incorporated ("HFS") with CUC surviving and being renamed Cendant
Corporation ("Cendant" or the "Parent Company"). Cendant is a leading
global provider of consumer and business services including
technology-driven membership-based consumer services, travel services and
real estate services. The Company currently maintains each of the existing
employee savings plans of the merged companies.
Hebdo Mag - In October 1997, Cendant issued 14.2 million shares of its
common stock for all of the outstanding common stock of Hebdo Mag
International Inc. ("Hebdo Mag"). Employees of Hebdo Mag are eligible to
participate in the Plan effective July 1, 1998.
NUMA - In February 1997, Cendant issued 3.0 million shares of its common
stock for substantially all of the assets and specific liabilities of NUMA
Corporation ("NUMA"). NUMA maintained a profit sharing plan (consisting of
approximately $1.0 million in assets as of December 31, 1997), which was
terminated on December 31, 1997. Employees have the option of rolling over
their profit sharing plan assets into the Plan and became eligible for
participation in the Plan on January 1, 1998.
Davidson, Sierra and Ideon - In July 1996, Cendant issued 45.1 million
shares of its common stock for all of the outstanding capital stock of
Davidson & Associates, Inc. ("Davidson"). Also in July 1996, Cendant
issued 38.4 million shares of its common stock for all of the outstanding
capital stock of Sierra On-Line, Inc. ("Sierra"). In August 1996, Cendant
issued 16.6 million shares of its common stock for all of the outstanding
capital stock of Ideon Group, Inc. ("Ideon").
Davidson, Sierra and Ideon sponsored several retirement plans, which were
merged into the Plan. In connection with such plan mergers, plan assets of
approximately $4.1 million and $9.1 million were transferred into the Plan
during 1997 and 1998, respectively. The Company expects to transfer the
remaining assets from such plan mergers (having an asset value of
approximately $7.4 million at December 31, 1997) into the Plan during
1998.
North American Outdoor Group - Cendant merged the existing 401(k) plan of
its subsidiary, North American Outdoor Group (acquired in 1995), into the
Plan during the fourth quarter of 1996. In connection with such plan
merger, approximately $3.5 million of assets were transferred into the
Plan during 1997.
Other - Cendant acquired certain other entities during 1997 that maintain
401(k) plans (consisting of approximately $4.0 million of assets as of
December 31, 1997), which Cendant expects to merge into the Plan during
1998.
1996
Getting to Know You, Inc. - On March 31, 1996, the Employee Stock
Ownership and Savings Plan (the "ESOP") of Getting to Know You, Inc. (a
wholly-owned subsidiary of the Company) terminated and the related
participants were given the option to roll over their balances into the
Plan. During the year ended December 31, 1996, $7.1 million from the
ESOP was transferred to the Plan.
The aforementioned asset transfers into the Plan during 1997 and 1996 are
included in contributions rollovers in the statements of changes in net
assets available for benefits for the years ended December 31, 1997 and
1996.
7. RECENT EVENTS
Cendant Restatement, Investigation and Litigation - On April 15, 1998,
Cendant announced that it had discovered accounting irregularities in
certain former CUC business units, which are part of Cendant's Alliance
Marketing segment (formerly the Membership segment) and the Audit
Committee of the Cendant's Board of Directors has initiated an
investigation into such matters. Accordingly, Cendant will restate annual
and quarterly net income and earnings per share for 1997 and may restate
certain other previous periods related to the former CUC businesses. The
investigation is expected to be completed during the summer of 1998.
Since the aforementioned Parent Company announcement, and prior to the
date hereof, class action lawsuits, certain legal actions and other legal
complaints have been filed against Cendant, its predecessor, CUC, and
certain current and former officers and directors of Cendant and CUC.
These complaints assert, among other things, claims under the federal
securities laws, and allege various breaches of fiduciary duty,
mismanagement and negligence. While it is not feasible to predict or
determine the final outcome of these proceedings, Cendant does not expect
these proceedings to have any material adverse impact on the Plan.
The aforementioned announcement resulted in a decline in the per share
price of the Parent Company common stock. At December 31, 1997, the
Cendant Corporation Company Stock Fund, valued at $49.7 million, was
comprised of 1,446,320 shares of Parent Company common stock which had a
closing price of $34.375. At July 2, 1998, the closing price of the Parent
Company common stock was $21.5625 per share. At $21.5625 per share, the
Cendant Corporation Company Stock Fund at December 31, 1997 would have
been valued at $31.2 million.
Cendant 1998 Acquisitions
a. Jackson Hewitt Inc. - On January 7, 1998, Cendant completed the
acquisition of Jackson Hewitt Inc. ("Jackson Hewitt"), for
approximately $480.0 million in cash. Jackson Hewitt operates the
second largest tax preparation service franchise system in the United
States with locations in 41 states. Jackson Hewitt franchises a
system of approximately 2,050 offices that specialize in computerized
preparation of federal and state individual income tax returns.
b. The Harpur Group Ltd. - On January 20, 1998, Cendant completed the
acquisition of The Harpur Group Ltd. ("Harpur"), a leading fuel card
and vehicle management company in the United Kingdom ("UK"), from
privately held H-G Holdings, Inc. for approximately $186.0 million in
cash plus future contingent payments of up to $20.0 million over the
next two years.
c. National Parking Corporation - On April 27, 1998, Cendant completed
the acquisition of National Parking Corporation ("NPC") for $1.3
billion in cash. NPC is the largest private (nonmunicipal) single car
park operator in the UK with approximately 500 locations. NPC has
also developed a broad-based roadside assistance group under the name
of Green Flag. Green Flag offers a wide-range of emergency support
and rescue services to approximately 3.5 million members.
d. Other - Cendant acquired certain other entities during the first
quarter of 1998 for an aggregate purchase price of $378.9 million.
Pending Cendant Acquisitions
Providian Auto and Home Insurance Company - On December 9, 1997, Cendant
executed a definitive agreement to acquire Providian Auto and Home
Insurance Company ("Providian") for approximately $219.0 million in cash.
Closing is subject to receipt of required regulatory approval which will
require restated financial statements of the Parent Company and other
customary conditions. Providian sells automobile insurance to consumers
through direct response marketing in 45 states and the District of
Columbia.
RAC Motoring Services - On May 1, 1998, Cendant signed a letter of intent
and entered into exclusive negotiations with Royal Automobile Club Limited
("RACL") to acquire their RAC Motoring Services subsidiary for
approximately $750.0 million in cash. Closing is subject to the execution
of a definitive agreement and approval by 75% of RACL's voting members and
is anticipated in the summer of 1998. RAC Motoring Services is the
second-largest roadside assistance company in the UK and also owns the
UK's largest driving school company.
American Bankers Insurance Group, Inc. - On March 23, 1998, Cendant
entered into a definitive agreement to acquire American Bankers Insurance
Group, Inc. ("American Bankers") for $67 per share in cash and stock, for
aggregate consideration of $3.1 billion. Cendant intends to purchase 23.5
million shares of American Bankers at $67 per share through its pending
cash tender offer, to be followed by a merger in which Cendant will
deliver its shares with a value of $67 for each remaining share of
American Bankers common stock outstanding. The Company has received
anti-trust clearance to acquire American Bankers. The tender offer is
subject to the receipt of tenders representing at least 51% of the common
stock of American Bankers as well as customary closing conditions. The
transaction is expected to be completed following the restatement of the
Parent Company's financial statements, receipt of and approval by American
Bankers' shareholders and receipt of required regulatory approvals, which
require restated financial statements. American Bankers provides
affordable, specialty insurance products and services through financial
institutions, retailers and other entities offering consumer financing.
In connection with the Company's acquisitions and pending acquisitions
noted above, the Company may elect to merge the employee savings plans of
such acquired companies into the Plan.
Plan Withdrawal
At March 20, 1998 approximately $7.5 million of assets was withdrawn from
the Company's Plan and transferred to Interval Holdings, Inc. Retirement
Savings Plan in connection with the sale in December 1997 of all of the
outstanding shares of Interval International Inc. ("Interval") by Cendant
and the subsequent departure of participants employed by Interval.
8. PARTY-IN-INTEREST
A portion of the plan investments are shares in a fund managed by MetLife,
the MetLife Stock Market Index Guarantee Fund. MetLife is the custodian of
these investments as defined by the Plan and, therefore, these
transactions qualify as party-in-interest transactions.
9. PLAN SUMMARY BY FUND
The following tables represent the statements of net assets available for
benefits as of December 31, 1997 and 1996, and the changes in net assets
available for benefits, summarized by fund, for the years ended December 31,
1997 and 1996.
<PAGE>
CENDANT MEMBERSHIP SERVICES, INC.
SAVINGS INCENTIVE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Fund Information
-----------------------------------------------------------
Neuberger Neuberger
Cendant & Berman & Berman
Equity Corporation Limited International
Separate Company Maturity Equity
Fund Stock Fund Bond Fund Fund Subtotal
----------- ------------ ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Common stocks $46,088,601 $49,717,250 $ - $ - $ 95,805,851
Preferred stocks - - - - -
Shares of registered investment companies: - - - - -
Neuberger & Berman Ltd. Maturity Bond Fund - - 11,496,221 - 11,496,221
Neuberger & Berman International
Equity Fund - - - 4,102,802 4,102,802
Neuberger & Berman Genesis Fund - - - - -
First Union Evergreen Money Market Fund - - - - -
MetLife Stock Market Index Guarantee Fund - - - - -
Short-term investment funds 321,927 636,929 - - 958,856
Loans to participants - - - - -
------------ ----------- ------------ ---------- -----------
Total investments 46,410,528 50,354,179 11,496,221 4,102,802 112,363,730
------------ ----------- ------------ ---------- -----------
Contributions receivable:
Participants 102,825 95,480 30,826 22,215 251,346
Employer 40,826 39,985 14,988 7,315 103,114
Interest and dividends receivable 36,926 - - - 36,926
------------ ----------- ------------ ---------- -----------
Total receivables 180,577 135,465 45,814 29,530 391,386
------------ ----------- ------------ ---------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $ 46,591,105 $50,489,644 $ 11,542,035 $4,132,332 $112,755,116
============ =========== ============ ========== ============
</TABLE>
See notes to financial statements.
<PAGE>
CENDANT MEMBERSHIP SERVICES, INC.
SAVINGS INCENTIVE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997 (Continued)
<TABLE>
<CAPTION>
Fund Information
-------------------------------------------------------------------------------
First Union MetLife
Neuberger Evergreen Stock Market
& Berman Money Index
Genesis Market Guarantee Loan
Subtotal Fund Fund Fund Fund Total
----------- ---------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Common stocks $95,805,851 $ - $ - $ - $ - $ 95,805,851
Preferred stocks - - - - - -
Shares of registered investment companies:
Neuberger & Berman Ltd. Maturity Bond Fund 11,496,221 - - - - 11,496,221
Neuberger & Berman International Equity Fund 4,102,802 - - - - 4,102,802
Neuberger & Berman Genesis Fund - 7,617,528 - - - 7,617,528
First Union Evergreen Money Market Fund - - 12,598,636 - - 12,598,636
MetLife Stock Market Index Guarantee Fund - - - 1,353,750 - 1,353,750
Short-term investment funds 958,856 - - - - 958,856
Loans to participants - - - - 3,617,348 3,617,348
------------ ---------- ----------- ---------- ---------- ------------
Total investments 112,363,730 7,617,528 12,598,636 1,353,750 3,617,348 137,550,992
------------ ---------- ----------- ---------- ---------- ------------
Contributions receivable:
Participants 251,346 40,966 25,354 12,094 - 329,760
Employer 103,114 13,596 13,647 4,262 - 134,619
Interest and dividends receivable 36,926 - - - - 36,926
------------ ---------- ----------- ---------- ---------- ------------
Total receivables 391,386 54,562 39,001 16,356 - 501,305
------------ ---------- ----------- ---------- ---------- ------------
NET ASSETS AVAILABLE FOR BENEFITS $112,755,116 $7,672,090 $12,637,637 $1,370,106 $3,617,348 $138,052,297
============ ========== =========== ========== ========== ============
</TABLE>
See notes to financial statements.
<PAGE>
CENDANT MEMBERSHIP SERVICES, INC.
SAVINGS INCENTIVE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Fund Information
-----------------------------------------------------------------------------
Equity CUC Limited
Fixed Bond Separate Stock Maturity
Fund Fund Fund Fund Bond Fund Subtotal
------- ------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment at fair value (Note 3):
Common stocks $ - $ - $33,709,140 $34,390,404 $ - $68,099,544
Preferred stocks - - 71,167 - - 71,167
Shares of registered investment
companies:
Neuberger & Berman Ltd. Maturity
Bond Fund - - - - 10,717,650 10,717,650
Neuberger & Berman International
Equity Fund - - - - - -
Neuberger & Berman Genesis Fund - - - - - -
First Union Evergreen Money Market
Fund - - - - -
Short-term investment funds 32,636 28,357 1,145,991 1,352,444 - 2,559,428
Loans to participants - - - - - -
------- ------- ----------- ----------- ---------- ------------
Total investments 32,636 28,357 34,926,298 35,742,848 10,717,650 81,447,789
------- ------- ----------- ----------- ---------- ------------
Contributions receivable:
Participants - - 120,763 94,533 39,176 254,472
Employer - - 49,783 43,615 19,284 112,682
Interest and dividends receivable - - 27,701 - - 27,701
------- ------- ----------- ----------- ---------- ------------
Total receivables - - 198,247 138,148 58,460 394,855
------- ------- ----------- ----------- ---------- ------------
NET ASSETS AVAILABLE FOR BENEFITS $32,636 $28,357 $35,124,545 $35,880,996 $10,776,110 $ 81,842,644
======= ======= =========== =========== =========== ============
</TABLE>
See notes to financial statements.
<PAGE>
CENDANT MEMBERSHIP SERVICES, INC.
SAVINGS INCENTIVE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996 (Continued)
<TABLE>
<CAPTION>
Fund Information
-----------------------------------------------------------------------------------
International Money
Equity Genesis Market Loan
Subtotal Fund Fund Fund Fund Subtotal
----------- ------------ ------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment at fair value (Note 3):
Common stocks $68,099,544 $ - $ - $ - $ - $68,099,544
Preferred stocks 71,167 - - - - 71,167
Shares of registered investment companies:
Neuberger & Berman Ltd. Maturity
Bond Fund 10,717,650 - - - - 10,717,650
Neuberger & Berman International
Equity Fund - 43,929 - - - 43,929
Neuberger & Berman Genesis Fund - - 56,051 - - 56,051
First Union Evergreen Money Market Fund - - - 10,294,216 - 10,294,216
Short-term investment funds 2,559,428 - - - 39,366 2,598,794
Loans to participants - - - - 2,843,187 2,843,187
----------- ------------ ------- ----------- ---------- -----------
Total investments 81,447,789 43,929 56,051 10,294,216 2,882,553 94,724,538
----------- ------------ ------- ----------- ---------- -----------
Contributions receivable:
Participants 254,472 3,666 7,482 35,162 - 300,782
Employer 112,682 1,407 2,709 19,083 - 135,881
Interest and dividends receivable 27,701 - - - - 27,701
----------- ------------ ------- ----------- ---------- -----------
Total receivables 394,855 5,073 10,191 54,245 - 464,364
----------- ------------ ------- ----------- ---------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $81,842,644 $ 49,002 $66,242 $10,348,461 $2,882,553 $95,188,902
=========== ============ ======= =========== ========== ===========
See notes to financial statements.
</TABLE>
<PAGE>
CENDANT MEMBERSHIP SERVICES, INC.
SAVINGS INCENTIVE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Fund Information
-------------------------------------------------------------------------------------------------
Neuberger Neuberger
Cendant & Berman & Berman
Equity Corporation Limited International
Fixed Bond Separate Company Maturity Equity
Fund Fund Fund Stock Fund Bond Fund Fund Subotal
---------- ----------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
Contributions:
Participants ..................$ - $ - $ 3,273,174 $ 2,754,794 $ 1,041,686 $ 596,920 $ 7,666,574
Employer - - 1,353,977 1,220,738 509,524 212,375 3,296,614
Rollovers - - 1,661,608 661,625 470,730 1,006,192 3,800,155
---------- ----------- ----------- ----------- ----------- ---------- -----------
Total contributions - - 6,288,759 4,637,157 2,021,940 1,815,487 14,763,343
---------- ----------- ----------- ----------- ----------- ---------- -----------
Investment income:
Realized and unrealized gains
(losses) .................. - - 12,984,495 14,663,603 (271,057) 31,783 27,408,824
Interest and dividends - - 324,644 47,952 814,297 39,346 1,226,239
Total investment income - - 13,309,139 14,711,555 543,240 71,129 28,635,063
Loan repayments - - 484,469 574,393 220,470 40,021 1,319,353
------------ ----------- ----------- ----------- ---------- ---------- -----------
Total additions - - 20,082,367 19,923,105 2,785,650 1,926,637 44,717,759
------------ ----------- ----------- ----------- ---------- ---------- -----------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefits paid to participants - - (3,709,685) (3,154,214) (1,018,162) (43,051) (7,925,112)
Loan disbursements - - (810,446) (984,594) (231,587) (63,023) (2,089,650)
------------ ----------- ----------- ----------- ---------- ---------- -----------
Total deductions - - (4,520,131) (4,138,808) (1,249,749) (106,074) (10,014,762)
------------ ----------- ----------- ----------- ---------- ---------- -----------
INTERFUND TRANSFERS ....... (32,636) (28,357) (4,095,676) (1,175,649) (769,976) 2,262,767 (3,839,527)
------------ ----------- ----------- ----------- ---------- ---------- -----------
NET INCREASE IN NET ASSETS
AVAILABLE FOR BENEFITS (32,636) (28,357) 11,466,560 14,608,648 765,925 4,083,330 34,702,997
NET ASSETS AVAILABLE FOR
BENEFITS BEGINNING OF YEAR 32,636 28,357 35,124,545 35,880,996 10,776,110 49,002 81,891,646
------------ ----------- ----------- ----------- ---------- ---------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS END OF YEAR ..... $ - $ - $46,591,105 $50,489,644 $11,542,035 $4,132,332 $112,755,116
============ =========== =========== =========== =========== ========== ============
</TABLE>
See notes to financial statements.
<PAGE>
CENDANT MEMBERSHIP SERVICES, INC.
SAVINGS INCENTIVE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
YEAR ENDED DECEMBER 31, 1997 (Continued)
<TABLE>
<CAPTION>
Fund Information
---------------------------------------------------------------------------------------
First Union MetLife
Neuberger Evergreen Stock Market
& Berman Money Index
Genesis Market Guarantee Loan
Subotal Fund Fund Fund Fund Total
------------ ----------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
Contributions:
Participants ......................... $ 7,666,574 $ 970,382 $ 990,439 $ 133,657 $ - $9,761,052
Employer ............................. 3,296,614 353,807 303,375 46,789 - 4,000,585
Rollovers ............................ 3,800,155 2,026,307 2,456,286 157,485 - 8,440,233
------------ ----------- ----------- ----------- ---------- ------------
Total contributions ........... 14,763,343 3,350,496 3,750,100 337,931 - 22,201,870
------------ ----------- ----------- ----------- ---------- ------------
Investment income:
Realized and unrealized gains (losses) 27,408,824 1,303,634 83,951 - 28,796,409
Interest and dividends ............... 1,226,239 50,924 686,269 11 - 1,963,443
------------ ----------- ----------- ----------- ---------- -----------
Total investment income ....... 28,635,063 1,354,558 686,269 83,962 - 30,759,852
------------ ----------- ----------- ----------- ---------- ------------
Loan repayments ........................ 1,319,353 62,591 224,858 6,936 (1,197,717) 416,021
------------ ----------- ----------- ----------- ---------- ------------
Total additions ............... 44,717,759 4,767,645 4,661,227 428,829 (1,197,717) 53,377,743
------------ ----------- ----------- ----------- ---------- ------------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefits paid to participants .......... (7,925,112) (117,825) (1,868,091) (18,392) (584,928) (10,514,348)
Loan disbursements (2,089,650) (123,814) (297,512) (6,464) 2,517,440 --
------------ ----------- ----------- ----------- ---------- ------------
Total deductions .............. (10,014,762) (241,639) (2,165,603) (24,856) 1,932,512 (10,514,348)
------------ ----------- ----------- ----------- ---------- ------------
INTERFUND TRANSFERS ...................... (3,839,527) 3,079,842 (206,448) 966,133 - -
------------ ---------- ----------- ----------- ---------- ------------
NET INCREASE IN NET ASSETS
AVAILABLE FOR BENEFITS ................. 30,863,470 7,605,848 2,289,176 1,370,106 734,795 42,863,395
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR ...................... 81,891,646 66,242 10,348,461 - 2,882,553 95,188,902
------------ ----------- ----------- ----------- ---------- ------------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR ............................ $112,755,116 $ 7,672,090 $12,637,637 $1,370,106 $3,617,348 $138,052,297
============ =========== =========== ========== ========== ============
</TABLE>
See notes to financial statements.
<PAGE>
CENDANT MEMBERSHIP SERVICES, INC.
SAVINGS INCENTIVE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Fund Information
---------------------------------------------------------------------------------------
Equity CUC Limited
Fixed Bond Separate Stock Maturity
Fund Fund Fund Fund Bond Fund Subotal
----------- ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
Contributions:
Participants ..............$ 870,595 $ 924,339 $ 3,276,321 $ 2,371,948 $ 200,017 $ 7,643,220
Employer 401,327 425,669 1,491,479 1,096,025 99,947 3,514,447
Rollovers 1,076,689 1,170,684 3,080,238 1,771,672 3,563 7,102,846
----------- ----------- ----------- ----------- ------------ -----------
Total contributions 2,348,611 2,520,692 7,848,038 5,239,645 303,527 18,260,513
----------- ----------- ----------- ----------- ------------ -----------
Investment income:
Realized and unrealized
gains (losses) ......... (85,600) (358,126) 1,972,977 511,371 (35,488) 2,005,134
Interest and dividends 532,577 628,580 251,481 120,883 1,421 1,534,942
----------- ----------- ----------- ----------- ------------ -----------
Total investment
income........... 446,977 270,454 2,224,458 632,254 (34,067) 3,540,076
----------- ----------- ----------- ----------- ------------ -----------
Loan repayments 107,120 88,565 210,359 194,446 -- 600,490
----------- ----------- ----------- ----------- ------------ -----------
Total additions ...... 2,902,708 2,879,711 10,282,855 6,066,345 269,460 22,401,079
----------- ----------- ----------- ----------- ------------ -----------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefits paid to
participants ............ (2,017,315) (1,178,240 (3,009,098) (3,701,839) -- (9,906,492)
Loan disbursements (292,206) (346,856) (650,250) (664,048) -- (1,953,360)
----------- ----------- ----------- ----------- ------------ ------------
Total deductions ...... (2,309,521) (1,525,096) (3,659,348) (4,365,887) -- (11,859,852)
------------ ----------- ------------ ----------- ------------ ------------
INTERFUND TRANSFERS (11,295,767) (11,675,483) 628,886 1,950,448 10,506,650 (9,885,266)
----------- ----------- ----------- ----------- ------------ -----------
NET CHANGE DURING THE YEAR (10,702,580) (10,320,868) 7,252,393 3,650,906 10,776,110 655,961
NET ASSETS AVAILABLE FOR
BENEFITS BEGINNING OF YEAR 10,735,216 10,349,225 27,872,152 32,230,090 -- 81,186,683
----------- ----------- ----------- ----------- ------------ -----------
NET ASSETS AVAILABLE FOR
BENEFITS END OF YEAR ..... $ 32,636 $ 28,357 $35,124,545 $35,880,996 $ 10,776,110 $81,842,644
=========== =========== =========== =========== ============ ===========
See notes to financial statements.
</TABLE>
<PAGE>
CENDANT MEMBERSHIP SERVICES, INC.
SAVINGS INCENTIVE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
YEAR ENDED DECEMBER 31, 1996 (Continued)
<TABLE>
<CAPTION>
Fund Information
---------------------------------------------------------------------------------
International Money
Equity Genesis Market Loan
Subotal Fund Fund Fund Fund Total
---------- -------- -------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
Contributions:
Participants ......................... $7,643,220 $ 14,947 $ 33,093 $ 173,881 $ -- $ 7,865,141
Employer 3,514,447 6,612 13,218 96,308 -- 3,630,585
Rollovers 7,102,846 7,743 15,540 8,878 -- 7,135,007
---------- -------- -------- ----------- --------- -----------
Total contributions ........... 18,260,513 29,302 61,851 279,067 -- 18,630,733
---------- -------- -------- ----------- --------- -----------
Investment income:
Realized and unrealized gains (losses) 2,005,134 19,637 3,950 -- -- 2,028,721
Interest and dividends 1,534,942 63 441 40,044 -- 1,575,490
---------- -------- -------- ----------- --------- -----------
Total investment income ....... 3,540,076 19,700 4,391 40,044 -- 3,604,211
---------- -------- -------- ----------- --------- -----------
Loan repayments ........................ 600,490 - - - (600,490) -
---------- -------- -------- ----------- --------- -----------
Total aditions................. 22,401,079 49,002 66,242 319,111 (600,490) 22,234,944
---------- -------- -------- ----------- --------- -----------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefits paid to participants .......... (9,906,492) -- -- -- -- (9,906,492)
Loan disbursements ..................... (1,953,360) -- -- -- 1,953,360 --
---------- -------- -------- ----------- --------- -----------
Total deductions .............. (11,859,852) -- -- -- 1,953,360 (9,906,492)
---------- -------- -------- ----------- --------- -----------
INTERFUND TRANSFERS ...................... (9,885,266) -- -- 10,029,350 (144,084) --
---------- -------- -------- ----------- --------- -----------
NET CHANGE DURING THE YEAR ............... 655,961 49,002 66,242 10,348,461 1,208,786 12,328,452
---------- -------- -------- ----------- --------- -----------
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR ...................... 81,186,683 -- -- -- 1,673,767 82,860,450
---------- -------- -------- ----------- --------- -----------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR ............................ $81,842,644 $ 49,002 $ 66,242 $10,348,461 $2,882,553 $95,188,902
=========== ======== ======== =========== ========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
SIGNATURE
The Plan. Pursuant to the requirement 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.
Cendant Membership Services, Inc.
Savings and Incentive Plan
Date: July 13, 1998 By: /s/ Scott E. Forbes
---------------------------------
Scott E. Forbes
Plan Committee Member
Cendant Membership Services, Inc.
Savings Incentive Plan
<PAGE>
SUPPLEMENTAL SCHEDULES
<PAGE>
CENDANT MEMBERSHIP SERVICES, INC.
SAVINGS INCENTIVE PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Contract or
Number of Current
Description Units/Shares Cost Value
- ----------------------------------------------------- ------------ ----------- ------------
<S> <C> <C> <C>
Investments:
AHL Services Inc. .................................... 27,800 $ 372,800 $ 684,575
BankBoston Corp. .................................... 9,500 698,966 892,411
Capital One Financial Corp. ......................... 20,000 436,962 1,083,760
Cendant Corporation ................................. 1,446,320 35,982,057 49,717,250
Chancellor Media Corp. .............................. 13,000 373,834 970,125
Cheesecake Factory Inc. ............................. 30,000 591,964 915,000
Circus Circus Enterprises Inc. ...................... 25,000 756,050 512,500
Citicorp............................................. 8,000 359,127 1,011,504
Citrix Systems Inc. ................................. 18,000 903,034 1,368,000
CKE Restaurants Inc. ................................ 48,000 438,984 2,022,000
Claires Stores, Inc. ................................. 46,500 778,385 903,867
Columbia/HCA Healthcare Corp. ........................ 24,000 786,173 711,000
Comcast U.K. Cable Partners Ltd. ..................... 62,500 727,452 589,875
Cooper Cameron Corp. ................................. 14,000 514,026 854,000
Corporate Express Inc. .............................. 48,000 548,292 618,000
ECI Telecommunications Ltd. ......................... 9,500 178,082 242,250
EMC Corp. ........................................... 30,000 725,413 823,140
Enron Oil & Gas Co. ................................. 21,000 444,200 444,948
Exel Ltd. ........................................... 10,000 387,875 633,750
Fidelity National Financial, Inc. .................. 48,000 823,145 1,643,400
Finova Group Inc. ...................................... 15,000 228,618 745,320
General Nutrition Companies Inc. ....................... 47,000 611,909 1,598,000
Gtech Holdings Corp. .................................. 22,000 531,489 702,636
Harrah's Entertainment Inc. ............................ 43,000 612,975 811,625
Healthplan Services Corp. .............................. 35,000 755,143 735,000
IDDYMAC Mortgage Holdings Inc. ......................... 20,000 454,188 468,760
Intel Corp. ........................................... 6,000 142,606 421,500
KLA Tencor Corp. ....................................... 17,000 673,718 656,625
Knightsbridge Tankers Ltd. ............................... 7,500 213,562 212,348
Luxottica Group SPA Sponsored ADR....................... 10,000 455,306 625,000
</TABLE>
<PAGE>
CENDANT MEMBERSHIP SERVICES, INC.
SAVINGS INCENTIVE PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997 (Continued)
<TABLE>
<CAPTION>
Contract or
Number of Current
Description Units/Shares Cost Value
- ----------------------------------------------------- ------------ ----------- ------------
<S> <C> <C> <C>
Investments:
MBNA Corp. .................................................. 25,350 $ 168,437 $ 692,385
Merrill Lynch & Co. Inc. .................................... 9,000 391,950 656,442
Micron Electronics Inc. .................................... 50,000 861,638 456,250
Mid Ocean Ltd. ............................................. 12,000 491,200 651,000
Morgan Stanley Dean Witter Discover & Co. .................. 18,000 233,746 1,064,250
Noble Affiliates Inc. ..................................... 12,000 490,346 423,000
NTL Inc. .................................................. 36,000 904,825 1,003,500
Oryx Energy Co. ............................................ 17,000 419,256 433,500
Phillip Morris Companies Inc. .............................. 22,500 606,678 1,018,125
Promus Hotel Corp. ......................................... 9,712 35,614 407,904
Redwood Trust Inc. ......................................... 26,000 739,225 529,750
Regis Corp. ................................................ 28,000 694,943 703,500
Republic Industries Inc. ................................... 47,000 1,279,403 1,095,711
Rouse Co. .................................................. 22,000 682,188 720,500
SAP Aktiengesellschaft Sponsored ADR....................... 12,000 563,700 1,307,892
Seagull Energy Corp. ....................................... 30,500 773,453 629,062
Showboat Inc. .............................................. 30,000 547,141 881,250
Sola International Inc. .................................... 30,000 835,989 975,000
Staples Inc. ............................................... 32,000 519,283 888,000
Texas Instruments Inc. ..................................... 10,000 213,234 450,000
Trigon Healthcare Inc. ..................................... 30,000 390,000 783,750
Union Pacific Resources Group Inc. .......................... 18,000 464,269 436,500
United Healthcare Corp. .................................... 15,000 650,948 745,320
Viking Office Products Inc. ................................ 35,000 484,481 763,455
Watson Pharmaceuticals Inc. ................................. 18,000 322,216 583,884
Wells Fargo & Co. ........................................... 4,000 418,122 1,357,752
Wesley Jessen Visioncare Inc. ............................... 29,500 745,260 1,150,500
WSMP Inc. ................................................... 21,500 452,400 623,500
Xeikon NV Sponsored ADR 54,000 804,821 756,000
----------- ----------
Total common stocks ......................................... 67,691,101 95,805,851
</TABLE>
<PAGE>
CENDANT MEMBERSHIP SERVICES, INC.
SAVINGS INCENTIVE PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997 (Continued)
<TABLE>
<CAPTION>
Contract or
Number of Current
Description Units/Shares Cost Value
- ----------------------------------------------------- ------------ ----------- ------------
<S> <C> <C> <C>
Shares of registered investment companies:
Neuberger & Berman Ltd. Maturity Bond Fund 1,203,793 $ 11,483,314 $ 11,496,221
Neuberger & Berman International Equity Fund 283,538 4,051,189 4,102,802
Neuberger & Berman Genesis Fund 342,823 6,310,496 7,617,528
First Union Evergreen Money Market Fund 12,598,636 12,598,636 12,598,636
MetLife Stock Market Index Guarantee Fund 4,007 1,269,799 1,353,750
Short-term investment funds:
Chase Cash Investment Fund 321,927 321,927 321,927
Neuberger & Berman Institutional
Daily Income Fund 636,929 636,929 636,929
------------ ------------
Total short-term investment funds 958,856 958,856
Loans to participants 3,617,348 3,617,348
------------ ------------
Total investments $107,980,739 $137,550,992
============ ============
</TABLE>
<PAGE>
CENDANT MEMBERSHIP SERVICES, INC.
SAVINGS INCENTIVE PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Purchases Sales
--------------------------- ---------------------------
Identity of Description Purchase Number of Selling Number of Net Gain
Party Involved of Asset Price Transactions Price Transactions or (Loss)
- ------------------------------- ---------------- ----------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
A single transaction in excess of 5% of the beginning value of plan assets
Neuberger & Berman Trust Company Cendant Corporation
Company Stock Fund
1,677,116 shares $17,388,536 - $ - - $ -
1,782,249 shares 18,478,553 - - - -
Neuberger & Berman LLC Neuberger & Berman Limited Maturity Bond Fund
1,068,172 shares 10,158,318 - - - -
Neuberger & Berman LLC Equity Separate Fund
2,952,821 shares 31,761,391 - - - -
A series of security transactions in excess of 5% of the beginning value of plan assets
Neuberger & Berman Trust Company Cendant Corporation
Company Stock Fund $46,645,094 427
7,590,559 7,512,009 677 (78,550)
Neuberger & Berman LLLC Neuberger & Berman Limited
Maturity Bond Fund 14,204,960 288 - - -
Neuberger & Berman LLC Neuberger & Berman Genesis
Fund 7,511,988 411 - - -
Neuberger & Berman LLC Equity Separate Fund 43,832,727 418
8,665,921 9,612,290 729 946,369
Chase Manhattan Bank Chase Cash Investment
Fund 17,900,950 102
18,290,461 18,290,461 139 -
First Union Bank First Union Evergreen
Money Market Fund 16,346,159 360 - - -
</TABLE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-80834 of Cendant Corporation on Form S-8 of our report dated July 2, 1998,
appearing in this Annual Report on Form 11-K of Cendant Membership Services,
Inc. Savings Incentive Plan (formerly Savings Incentive Plan of CUC
International Inc.), for the year ended December 31, 1997.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
July 10, 1998
EXHIBIT 23.2
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-80834) pertaining to the Cendant Membership Services, Inc.
Savings Incentive Plan (formerly CUC International Inc. Savings Incentive Plan)
of Cendant Corporation of our report dated June 27, 1997, with respect to the
financial statements of the Cendant Membership Services, Inc. Savings Incentive
Plan included in this Annual Report (Form 11-K) for the year ended December 31,
1997.
/s/ Ernst & Young, LLP
Stamford, Connecticut
July 10, 1998
