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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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
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COMMISSION FILE NO. 1-11402
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CENDANT CORPORATION
EMPLOYEE SAVINGS PLAN
(Full title of the Plan)
CENDANT CORPORATION
(Name of issuer of the securities held pursuant to the Plan)
9 WEST 57TH STREET
NEW YORK, NEW YORK 10019
(Address of principal executive office)
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CENDANT CORPORATION
EMPLOYEE SAVINGS PLAN
TABLE OF CONTENTS
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PAGE
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INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998
Statements of Net Assets Available for Benefits
as of December 31, 1999 and 1998 2
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 1999 and 1998 3
Notes to Financial Statements 4-9
SUPPLEMENTAL SCHEDULES:
Item 27a -Schedule of Assets Held for Investment Purposes
as of December 31, 1999 10
Item 27d - Schedule of Reportable Transactions for the Year
Ended December 31, 1999 11
Schedules required under the Employee Retirement Income Security Act of 1974
("ERISA"), other than the schedules listed above, are omitted because of the
absence of the conditions under which they are required.
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INDEPENDENT AUDITORS' REPORT
To the Trustees and Participants of
Cendant Corporation Employee Savings Plan
We have audited the accompanying statements of net assets available for benefits
of Cendant Corporation Employee Savings Plan (the "Plan") as of December 31,
1999 and 1998, and the related statements of changes in net assets available for
benefits for the years 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 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 net assets available for benefits of the Plan as of December 31,
1999 and 1998, and the changes in net assets available for benefits for the
years then ended 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 of (1) assets
held for investment purposes as of December 31, 1999 and (2) reportable
transactions for the year ended December 31, 1999 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 supplemental 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
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Deloitte & Touche LLP
New York, New York
June 23, 2000
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CENDANT CORPORATION EMPLOYEE SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
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1999 1998
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ASSETS
Investments, at fair value $335,037,627 $237,215,840
Contributions receivable from:
Participants 168,879 132,332
Employer 63,256 45,365
Interest and dividends receivable 59,331 45,216
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Total receivables 291,466 222,913
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NET ASSETS AVAILABLE FOR BENEFITS $335,329,093 $237,438,753
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See notes to financial statements.
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CENDANT CORPORATION EMPLOYEE SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
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<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Contributions from:
Participants $ 25,740,022 $ 17,950,966
Employer 11,718,967 7,083,449
Rollovers 12,488,238 155,518,084
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Total contributions 49,947,227 180,552,499
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Investment income:
Net appreciation (depreciation) in fair value of investments 57,538,512 (13,637,397)
Interest and dividends 14,041,884 6,741,369
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Total investment income (loss) 71,580,396 (6,896,028)
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Total additions 121,527,623 173,656,471
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DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 23,619,147 13,303,410
Trustee fees 18,136 12,971
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Total deductions 23,637,283 13,316,381
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NET INCREASE IN NET ASSETS
AVAILABLE FOR BENEFITS 97,890,340 160,340,090
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NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR 237,438,753 77,098,663
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NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $335,329,093 $237,438,753
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</TABLE>
See notes to financial statements.
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CENDANT CORPORATION EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
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1. DESCRIPTION OF PLAN
The following description of the Cendant Corporation Employee Savings Plan
(the "Plan") provides only general information. Participants should refer
to the Summary Plan Description or the Plan documents, which are available
from Cendant Corporation, ("Cendant" or the "Company" or the "Plan
Sponsor") for a more complete description of the Plan's provisions.
The Plan, is a defined contribution plan established for certain eligible
employees of Cendant Corporation that provides Internal Revenue Code
Section 401(k) employee salary deferral benefits and additional employer
contributions for the Company's employees. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974
("ERISA"). Effective January 1, 1998, certain provisions of the Plan were
revised, including eligibility requirements, Company matching contributions
and the vesting of Plan benefits. The Plan was also amended various times
during 1999 and 1998 to allow for existing plans of companies acquired by
Cendant to be combined into the Plan (see "Rollovers").
The following is a summary of certain Plan provisions:
a. Eligibility - Each regular employee (as defined in the Plan) of the
Company is eligible to participate in the Plan on the entry date
following both attainment of age 18 and completion of six months of
service.
b. Employee contributions - Participants may elect to make pre-tax
contributions up to fifteen percent of pre-tax annual compensation up
to a maximum of $10,000 for 1999 and 1998. Participants may change
their investment allocations between funds on a daily basis.
Participants should refer to each fund's prospectus for a more complete
description of the risks associated with each fund.
c. Employer contributions - The Company makes contributions to the Plan
equal to one hundred percent (100%) of all eligible employees' salary
deferral up to three percent (3%) of the employee compensation. An
additional discretionary employer contribution may be made, no greater
than fifty percent (50%) of the employees' salary deferral
contributions over three percent (3%) of the employees' compensation,
up to a maximum of six percent (6%) of the employees' compensation.
d. Rollovers - All employees, upon commencement of employment, are
provided the option of making a rollover contribution into the Plan in
accordance with Internal Revenue Service ("IRS") regulations.
During 1999, in connection with companies previously acquired by
Cendant, the Company completed the transfer of assets from the existing
plans of such acquired companies, including Electronic Realty
Associates, Inc., Credential Services International, Inc., Jackson
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Hewitt Inc., Resort Computer Corporation, and Home Mortgage Network. In
addition, the accumulated plan benefits of the reservation center
employees of Avis, Inc. were transferred into the Plan. The resulting
plan transfers accounted for plan assets of approximately $12.5 million
being merged into the Plan in 1999 and are included in Contributions -
Rollovers in the Statements of Changes in Net Assets Available for
Benefits for the year ended December 31, 1999.
In 1998, in connection with companies previously acquired by Cendant,
approximately $155.5 million in plan assets associated with the
qualified plans of PHH Corporation, Burnett Home Loans, and Wizcom were
merged into the Plan and are included in Contributions - Rollovers in
the Statements of Changes in Net Assets Available for Benefits for the
year ended December 31, 1998.
e. Vesting Schedule - Employer contributions credited to accounts of
employees who commenced employment on or subsequent to January 1, 1998
shall vest according to the following schedule:
YEARS OF VESTED
SERVICE INTEREST
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Fewer than 1 0%
1 34%
2 67%
3 100%
Employer contributions credited to accounts of employees who commenced
employment prior to January 1, 1998 shall continue to be 100% vested in
such contributions.
f. Loan Provision - Participants may borrow from their fund accounts up to
the lesser of $50,000 or 50% of their vested balance, provided the
vested balance is at least one thousand dollars. Loan terms range from
1-5 years or up to 15 years for the purchase of a primary residence and
are secured by the participant's vested account balance. Loan
repayments must be made through payroll deductions over a term not to
exceed five years unless the proceeds of the loan are used to purchase
the principal residence of the employee, in which case the term is not
to exceed fifteen years. The loans bear interest at a rate commensurate
with the prime rate plus one percent. Principal and interest is paid
ratably through periodic payroll deductions.
g. Participant Accounts - Each participant's account is credited with the
participant's contributions and allocations of the Company's
contribution and 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 vested account.
h. Benefits Paid to Participants - Participants are entitled to withdraw
all or any portion of their after-tax contributions. Participants may
make full or partial withdrawals of funds in any of their accounts upon
attaining age 59 1/2 or for hardship for certain accounts, as defined
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in the Plan, before that age. Distributions to terminated employees are
recorded in each fund's financial statements when paid. Amounts payable
to participants who have terminated participation in the Plan were
approximately $0.6 million and $1.3 million at December 31, 1999 and
1998, respectively.
i. Forfeited Accounts - Forfeited balances of participants' nonvested
accounts are used to reduce future employer contributions. During the
years ended December 31, 1999 and 1998 forfeited account balances were
approximately $280,300 and $242,400, respectively. In 1999 and 1998,
employer contributions were reduced by $316,000 and $0, respectively,
from the forfeited nonvested accounts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Accounting - The accompanying financial statements are
prepared on an accrual basis of accounting. Certain reclassifications
have been made to prior year amounts to conform to current year
presentation. All administrative costs of the Plan, other than costs
incurred to maintain participant loan accounts, were paid by the
Company.
b. Valuation of Investments and Income Recognition - 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. The shares of registered investment
companies are valued at the quoted market price, which represents 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 Plan's group annuity contract is valued at contract value. Contract
value represents contributions made under the contract, plus interest,
less funds used to pay benefits to participants.
c. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect reported
amounts of assets, liabilities, and changes therein, and disclosure of
contingent assets and liabilities. Actual results could differ from
those estimates.
d. Recently Issued Accounting Pronouncements - In 1999, the Plan adopted
the American Institute of Certified Public Accountants' Statement of
Position ("SOP") 99-3, "Accounting and Reporting of Certain Defined
Contribution Benefit Plan Investments and Other Disclosure Matters".
SOP 99-3 simplifies the disclosures for certain investments and
eliminates the requirement to disclose by investment fund option in the
statement of net assets available for benefits and the changes in net
assets available for benefits for all years presented. Accordingly,
certain reclassifications have been made in the prior year's financial
statements to correspond to the current year's presentation.
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3. INVESTMENTS
The following investments represent five percent or more of the Plan's net
assets available for benefits as of December 31, 1999 and 1998.
1999 1998
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Cendant Corporation Common Stock Fund $ 76,155,397 $ 59,213,751
Aim Charter Fund 55,078,853 40,914,605
Stable Value Fund 49,917,705 40,344,312
Merrill Lynch Equity Index Trust 37,437,860 30,815,254
Putnam New Opportunities Fund 19,339,075 -
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$237,928,890 $171,287,922
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During 1999, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
(depreciated) in value as follows:
Mutual Funds $ 30,539,331
Collective Trusts 6,313,200
Cendant Stock 21,013,265
Corporate Bond Funds (327,284)
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$ 57,538,512
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4. TAX STATUS
The Plan is qualified under section 401(a) of the Internal Revenue Code of
1986 (the "Code") and is exempt from taxation under section 501(a) of the
Code. The Plan received a favorable IRS determination letter dated May 21,
1996. 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 dates. Therefore, no provision for income taxes has been included
in the Plan's financial statements.
5. CENDANT LITIGATION
Since the April 15, 1998 announcement by Cendant of the discovery of
accounting irregularities in the former business units of CUC International
Inc. ("CUC"), approximately 70 lawsuits claiming to be class actions, two
lawsuits claiming to be brought derivatively on Cendant's behalf and
several individual lawsuits and arbitration proceedings have commenced in
various courts and other forums against Cendant and other defendants by or
on behalf of persons claiming to have purchased or otherwise acquired
securities or options issued by CUC or Cendant between May 1995 and August
1998.
The Securities and Exchange Commission ("SEC") and the United States
Attorney for the District of New Jersey are also conducting investigations
relating to the matters referenced
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above. The SEC advised Cendant that its inquiry should not be construed as
an indication by the SEC or its staff that any violations of law have
occurred. As a result of the findings from Cendant's internal
investigations, Cendant made all adjustments considered necessary, which
are reflected in Cendant's previously filed restated financial statements
for the years ended December 31, 1997, 1996 and 1995 and for the six months
ended June 30, 1998. Although Cendant can provide no assurances that
additional adjustments will not be necessary as a result of the government
investigations, Cendant does not expect that additional adjustments will be
necessary.
On December 7, 1999, Cendant announced that they had reached a preliminary
agreement to settle the principal securities class action pending against
Cendant in the U.S. District Court in Newark, New Jersey brought on behalf
of purchasers of all Cendant and CUC publicly traded securities, other than
PRIDES, between May 1995 and August 1998. Under the agreement, Cendant
would pay the class members approximately $2.85 billion in cash. The
settlement remains subject to approval by the court. If the settlement is
not approved by the court, Cendant can make no assurances that the final
outcome or settlement of this litigation will not be for an amount greater
than that set forth in the preliminary agreement.
The proposed settlement does not encompass all litigation asserting claims
associated with Cendant's accounting irregularities. Cendant does not
believe that it is feasible to predict or determine the final outcome or
resolution of these unresolved proceedings. An adverse outcome from such
unresolved proceedings could be material with respect to Cendant's earnings
in any given reporting period. However, Cendant does not believe that the
impact of such unresolved proceedings should result in a material liability
to Cendant's consolidated financial position or liquidity. Furthermore,
Cendant does not expect the outcome of these proceedings to have any
material adverse impact on the Plan.
6. INVESTMENT CONTRACTS WITH INSURANCE COMPANIES
The Stable Value Fund primarily invested in investment contracts providing
a guaranteed return on principal invested over a specified time period.
Thereafter, contributions to such fund are invested in the Merrill Lynch
Retirement Preservation Trust. The crediting interest rates at December 31,
1999 for various investment contracts ranged from 5.3% to 6.2% and the
average yield of the Stable Value Fund for the 1999 and 1998 plan years was
6.2%. All investment contracts in the Stable Value Fund are fully
benefit-responsive and are recorded at contract value, which equals
principal plus accrued interest. The Stable Value Fund at December 31, 1999
and 1998 was $49,917,705 and $40,344,312, respectively, which approximated
the fair value.
7. PARTY-IN-INTEREST
A portion of the Plan's investments is shares in funds managed by Merrill
Lynch. Merrill Lynch is the custodian of these investments as defined by
the Plan and, therefore, these transactions qualify as party-in-interest
transactions.
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8. PLAN TERMINATION
Although the Company has not expressed any intention to do so, the Company
reserves the right to modify, suspend, amend or terminate the Plan in whole
or in part at any time subject to the provisions of ERISA. If the Plan is
terminated, the amounts credited to the employer contribution accounts of
all participants become fully vested.
9. SUBSEQUENT EVENTS
Plan Merger
Effective January 1, 2000, subject to sections 401(a), 411(d)(6) and 414(l)
of the Internal Revenue Code, the Cendant Membership Services, Inc. Savings
Incentive Plan (the "CMS Plan") was merged with and into the Plan. As of
the date of this report, the CMS Plan's assets have not been transferred to
the Plan. In anticipation of the merger and subject to the provisions of
ERISA, the Company discontinued all employee and employer contributions to
the CMS Plan as of January 1, 2000.
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SUPPLEMENTAL SCHEDULES
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CENDANT CORPORATION EMPLOYEE SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1999
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<TABLE>
<CAPTION>
Contract or
Number of Current
Description Units/Shares Cost Value
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<S> <C> <C> <C>
Cendant Corporation Common Stock Fund 2,867,081 $ 37,361,383 $ 76,155,397
Merrill Lynch Equity Index Trust 369,939 29,042,582 37,437,860
Cendant Stable Value Fund 49,917,705 49,917,859 49,917,705
Merrill Lynch Aggregate Bond Index Fund 39,158 388,696 385,707
Merrill Lynch International Index Fund 26,156 344,492 395,741
Oppenheimer Capital Income Fund 36,253 495,545 428,149
Alliance Premier Growth Fund 70,676 2,372,735 2,579,666
Alliance Quasar Fund 16,127 396,191 455,436
Kobrick Capital Fund 199,155 3,349,020 4,475,012
Kobrick Emerging Growth Fund 104,517 1,678,423 2,296,247
Kobrick Growth Fund 94,937 1,481,049 2,019,318
GAM International Fund 24,427 651,892 785,587
MFS Emerging Growth Fund 141,721 6,142,980 9,437,234
PIMCO Total Return Fund 142,280 1,445,162 1,408,571
Merrill Lynch Small Cap Index 16,554 165,591 195,010
AIM Charter Fund 2,980,457 42,324,203 55,078,853
Merrill Lynch EuroFund 33,909 541,036 506,596
Merrill Lynch Growth Fund 269,006 6,871,992 7,376,157
AIM Constellation Fund 269,080 7,489,430 10,900,425
Franklin Balance Sheet 18,030 557,992 549,369
Putnam New Opportunities Fund 212,611 12,170,781 19,339,075
Templeton Foreign Fund 812,042 8,171,340 9,111,110
Federated High Income Bond Fund 17,758 191,215 185,922
PIMCO Renaissance Fund 30,671 498,207 438,291
MASS Investment Growth 772,315 3,810,025 4,357,169
Merrill Lynch Capital Fund 315,198 11,082,837 10,108,405
Merrill Lynch Corp Bond Fund Inter-Term 420,481 4,827,693 4,600,068
Davis NY Venture Fund 49,701 1,364,988 1,429,409
AIM Weingarten Fund 479,776 11,710,265 14,446,054
Loan Fund * 8,017,050 8,017,050 8,017,050
Cash Fund 188,367 188,368
Other 32,666 32,666 32,666
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Total 68,797,437 $255,083,687 $335,037,627
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</TABLE>
* Maturity dates range from January 2000 to November 2014. Interest rates range
from 5.84 % to 10.50%
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CENDANT CORPORATION EMPLOYEE SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1999
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<TABLE>
<CAPTION>
Purchases Sales
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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 series of transactions in excess of 5% of
the beginning value of plan assets
Cendant Stable Value Fund Common/Collective Trust 24,787,496 1148 - - -
15,417,001 - 15,416,370 992 (631)
AIM Charter Fund Mutual Fund 12,230,005 938 - - -
</TABLE>
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SIGNATURES
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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.
CENDANT CORPORATION
EMPLOYEE SAVINGS PLAN
BY: /s/ David M. Johnson
--------------------
David M. Johnson
Plan Committee Member
Cendant Corporation Employee
Date: June 28, 2000 Savings Plan
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EXHIBIT INDEX
EXHIBIT PAGE NO.
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23.1 Consent of Deloitte & Touche LLP 14
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