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<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1993
A. Full Title of the Plan:
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
B. Name of Issuer of the Securities Held Pursuant to the Plan and the Address
of Its Principal Executive Office:
PHH CORPORATION
11333 McCormick Road
Hunt Valley, Maryland 21031
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
INDEX
Page No.
--------
Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits -
December 31, 1993 and 1992 2
Statements of Changes in Net Assets Available for Plan Benefits -
Years Ended December 31, 1993 and 1992 3
Notes to Financial Statements 4
Schedules - Item 27a - Schedule of Assets Held for Investment
Purposes 12
Item 27d - Schedule of Reportable Transactions 13
Signatures 14
Consent of Independent Auditors 15
********************************
The other schedules required by Item 27 of Department of Labor Form 5500,
Annual Return/Report of Employee Benefit Plan, are inapplicable and are
therefore omitted.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Employee Benefits Committee
PHH Corporation:
We have audited the accompanying statements of net assets available for plan
benefits of the PHH Corporation Employee Investment Plan as of December 31,
1993 and 1992 and the related statements of changes in net assets available
for plan 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits as of
December 31, 1993 and 1992 and the changes in net assets available for plan
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our 1993 audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions 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 Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental
schedules have been subjected to the auditing procedures applied in the audit
of the 1993 basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the 1993 basic financial statements
taken as a whole.
[/signature/ KPMG Peat Marwick]
Baltimore, Maryland
June 3, 1994
-1-
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE
FOR PLAN BENEFITS
December 31, (Note 3)
-----------------------
1993 1992
----------- -----------
Investments, at fair value $65,020,966 $55,969,984
Participant loans receivable 2,689,808 2,592,644
----------- -----------
Net assets available for plan benefits (Note 6) $67,710,774 $58,562,628
----------- -----------
----------- -----------
See accompanying notes to financial statements.
-2-
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Years Ended
December 31, (Note 4)
-----------------------
1993 1992
----------- -----------
Dividend income $2,727,223 $2,489,000
Interest income 192,557 133,405
----------- -----------
Total dividend and interest income 2,919,780 2,622,405
----------- -----------
Contributions:
Employee 5,924,079 5,299,804
Employer 3,815,942 2,699,381
----------- -----------
Total contributions 9,740,021 7,999,185
----------- -----------
Withdrawals and distributions to (5,123,198) (4,330,598)
participants
Plan expenses incurred (69,946) (92,749)
Net appreciation in fair value of 1,681,489 6,435,505
investments ----------- -----------
Increase in net assets available for 9,148,146 12,633,748
benefits
Net assets available for benefits:
Beginning of year 58,562,628 45,928,880
----------- -----------
End of year $67,710,774 $58,562,628
----------- -----------
----------- -----------
See accompanying notes to financial statements.
-3-
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1993 and 1992
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS
The accompanying financial statements of the PHH Corporation Employee
Investment Plan ("Plan") have been prepared on the accrual basis of accounting
and present the net assets available for plan benefits and the changes in net
assets available for plan benefits.
Purchases and sales of securities are recorded on a trade-date basis.
Investments are carried at fair value as determined by quoted market prices.
In accordance with requirements of the Tax Reform Act of 1986, the Plan is
subjected to a non-discrimination test based on the calculation of the Average
Deferred Percentages (ADP test) for highly compensated versus non-highly
compensated employee groups. The results of this test, as of December 31,
1993, indicate that the difference in the employee group average deferred
percentage is within permissible limits.
(2) DESCRIPTION OF THE PLAN
The Plan is a defined contribution plan. It is subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA).
Each employee of the Company may participate in the Plan after six months of
service if he is scheduled to work at least 1,000 hours in a 12 consecutive
month period commencing on his date of employment, or in any Plan year
commencing after his date of employment. There is no age requirement for
eligibility to participate in the Plan. Each participant may contribute to the
Plan each year between 1% and 10% of eligible earnings subject to certain
limits contained in the Internal Revenue Code of 1986, as amended. The
Company's matching contribution is dollar-for-dollar up to 3% of the
participant's eligible deferred earnings and up to an additional 3% of
eligible deferred earnings based upon the profitability of the Company from
continuing operations for the relevant fiscal year. The profitability-based
rate of the matchable portion is determined by a schedule established by the
Board of Directors for each fiscal year. For Plan year 1992, additional
Company matching contribution totalling approximately $671,000 was paid to
participants based upon Company profitability for fiscal year ended April 30,
1993. For Plan year 1993, additional Company matching contribution totalling
approximately $1,058,000 may be made to participants based upon company
profitability for fiscal year ended April 30, 1994. A portion of the
$1,058,000 relating to fiscal year ended April 30, 1994 was determined after
December 31, 1993 and had not yet been recorded or accrued at that date.
During Plan year 1992, each participant could direct the custodian to invest
in twenty-five percent (25%) increments in any of the following investment
programs: (a) the common stock of PHH Corporation comprising the PHH Common
Stock Fund; (b) an Equity-Income Fund (Fidelity U.S. Equity Index Portfolio)
consisting of income-producing equity securities; (c) a Growth Fund (Fidelity
Magellan Fund)
-4-
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) DESCRIPTION OF THE PLAN (Continued)
consisting of equity securities of corporations which are growth companies;
or(d) a Money Market Fund (Fidelity Retirement Money Market Portfolio)
consisting of various short-term money market instruments. Effective during
Plan year 1993, each participant may direct the custodian to invest in any
increment in any of the above described investment programs as well as the
following investment programs: (a) an Asset Allocation Fund (Fidelity Asset
Manager) consisting of domestic and foreign equity securities, bonds and
short-term instruments; (b) an International Growth Fund (Fidelity Europe
Fund) consisting of securities of Western European issuers; or (c) a
Bond-Income Fund (Fidelity U.S. Bond Index Portfolio) consisting of securities
contained in the Aggregate Bond Index.
All Company contributions matching the first 3% of the participant's eligible
deferred earnings are invested in the PHH Common Stock Fund and all Company
contributions matching up to an additional 3% based upon Company profitability
are initially invested in the Money Market Fund with no transfer restrictions.
Participants have a full and immediate vested interest in amounts contributed
by them and earnings thereon. Participants have a vested interest in the
Company's matching contribution previously made and to be made in the future,
determined by the participants' years of vested service. Generally, after
three years of such service, participants have a 100% vested interest in all
Company contributions made and to be made in the future. Forfeitures of
unvested Company matching contributions are used, as permitted under Plan
provisions, to pay Plan expenses.
Accounts which may be maintained for each participant in the Plan are (a)
"Prior Plan Employee Account" meaning the account relating to his
contributions made at any time prior to May 1, 1985; (b) "Prior Plan Company
Match Account" meaning the account relating to Employer matching contributions
attributable to his contributions made at any time prior to May 1, 1985; (c)
"Current Plan Employee Account" meaning the account relating to his
contributions made at any time on and after May 1, 1985, under Section 401(k)
of the Code; (d) "Current Plan Company Match Account" meaning the account
relating to Employer matching contributions attributable to his contributions
made at any time on and after May 1, 1985, under Section 401(k) of the Code
and (e) "Rollover Account" meaning the account relating to a Participant's
qualifying contributions under the rollover provisions of the Plan. Each of
these accounts shall have allocated to it the portion of the participant
contributions and related Employer matching contributions in accordance with
the Plan together with appreciation, depreciation, and earnings then
attributable to the participant contributions and related Employer matching
contributions as well as distributions to participants in accordance with the
Plan.
-5-
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) DESCRIPTION OF THE PLAN (Continued)
Participants may obtain a loan of up to 50% of their vested account balance
not to exceed $50,000. The interest rate charged on loans outstanding is the
prime rate as published in the Wall Street Journal plus 1% fixed for the
entire term of the loan. Loan terms may range up to five years unless the
purpose of the loan is to buy or build a primary residence in which case the
loan term may be extended to ten years. Repayment of the loan principal and
interest occurs through equal payroll deductions. Participants incur no
taxable income as a result of taking a loan unless the loan is not repaid.
Expenses of administering the Plan incurred external to the Company (i.e. the
cost of printing literature and forms, the disbursement of benefits, the
compensation of administrators, consultants, counsel, etc.), at the direction
of the Company, may be paid from the Trust Property. Internal Company support
costs (i.e. the cost of staff time, etc.) are paid by the Company.
Although it has not expressed any intent to do so, the Company reserves the
right at any time to alter, amend, suspend, discontinue or terminate the Plan;
provided, however, that no such alteration, amendment, suspension,
discontinuance or termination shall have the effect of permitting any of the
Trust Property to be used for or diverted to purposes other than those of the
Plan. If the Plan is discontinued or terminated, all Trust Property under the
Plan will become immediately vested in the participants and none will inure to
the Company.
-6-
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) ALLOCATION OF NET ASSETS AVAILABLE FOR PLAN BENEFITS TO INVESTMENT
PROGRAMS
The following is the allocation of net assets available for plan benefits to
investment programs at December 31, 1993 and 1992:
<TABLE>
<CAPTION>
December 31, 1993
--------------------------------------------------------------------------------------------------
PHH Corp U.S. Fidelity U.S.
Common Equity Magellan Money Asset Europe Bond Participant
Stock Fund Index Fund Market Manager Fund Index Loans Total
----------- ---------- ----------- ---------- ---------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments, at fair value $34,554,040 $7,098,394 $13,312,062 $8,160,036 $1,015,581 $612,751 $268,102 $ - $65,020,966
Participant loans receivable - - - - - - - 2,689,808 2,689,808
----------- ---------- ----------- ---------- ---------- -------- -------- ---------- -----------
Net assets available
for plan benefits $34,554,040 $7,098,394 $13,312,062 $8,160,036 $1,015,581 $612,751 $268,102 $2,689,808 $67,710,774
----------- ---------- ----------- ---------- ---------- -------- -------- ---------- -----------
----------- ---------- ----------- ---------- ---------- -------- -------- ---------- -----------
</TABLE>
-7-
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) ALLOCATION OF NET ASSETS AVAILABLE FOR PLAN BENEFITS TO INVESTMENT
PROGRAMS (Continued)
<TABLE>
<CAPTION>
December 31, 1992
-------------------------------------------------------------------
PHH Corp U.S. Fidelity
Common Equity Magellan Money Participant
Stock Fund Index Fund Market Loans Total
----------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investments, at fair value $33,080,027 $6,093,423 $8,171,089 $8,625,445 $ - $55,969,984
Participant loans receivable - - - - 2,592,644 2,592,644
----------- ---------- ---------- ---------- ---------- -----------
Net assets available
for plan benefits $33,080,027 $6,093,423 $8,171,089 $8,625,445 $2,592,644 $58,562,628
----------- ---------- ---------- ---------- ---------- -----------
----------- ---------- ---------- ---------- ---------- -----------
</TABLE>
-8-
<PAGE>
PHH CORPORATION EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
(4) ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS TO
INVESTMENT PROGRAMS
The following is the allocation of changes in net assets available for plan
benefits to investment programs for the years ended December 31, 1993 and
1992:
<TABLE>
<CAPTION>
Year Ended December 31, 1993
--------------------------------------------------------------------------------------------------
PHH Corp U.S. Fidelity U.S.
Common Equity Magellan Money Asset Europe Bond Participant
Stock Fund Index Fund Market Manager Fund Index Loans Total
----------- ---------- ----------- ---------- ---------- -------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividend income $ 974,527 $ 273,450 $ 1,168,826 $ 251,300 $ 46,258 $ 2,636 $ 10,226 $ - $ 2,727,223
Interest income - - - - - - - 192,557 192,557
----------- ---------- ----------- ---------- ---------- -------- -------- ---------- -----------
Total dividend and 974,527 273,450 1,168,826 251,300 46,258 2,636 10,226 192,557 2,919,780
interest income ----------- ---------- ----------- ---------- ---------- -------- -------- ---------- -----------
Contributions:
Employee 1,223,476 1,114,744 2,095,633 1,292,776 103,420 52,128 41,902 - 5,924,079
Employer 2,837,060 - - 978,882 - - - - 3,815,942
----------- ---------- ----------- ---------- ---------- -------- -------- ---------- -----------
Total contributions 4,060,536 1,114,744 2,095,633 2,271,658 103,420 52,128 41,902 - 9,740,021
----------- ---------- ----------- ---------- ---------- -------- -------- ---------- -----------
Interfund transfers (1,481,283) (272,553) 1,512,511 (1,552,613) 906,631 514,929 222,225 150,153 -
Withdrawals and (2,237,725) (457,796) (724,297)(1,371,888) (78,971) (5,007) (1,968) (245,546) (5,123,198)
distributions to
participants
Plan expenses incurred (1,102) (2,636) (1,920) (63,866) (385) (12) (25) - (69,946)
Net appreciation/ 159,060 349,762 1,090,220 - 38,628 48,077 (4,258) - 1,681,489
(depreciation) in fair
value of investments
Increase (decrease) in 1,474,013 1,004,971 5,140,973 (465,409) 1,015,581 612,751 268,102 97,164 9,148,146
net assets available
for benefits
Net assets available for
benefits:
Beginning of year 33,080,027 6,093,423 8,171,089 8,625,445 - - - 2,592,644 58,562,628
End of year $34,554,040 $7,098,394 $13,312,062 $8,160,036 $1,015,581 $612,751 $268,102 $2,689,808 $67,710,774
</TABLE>
-9-
<PAGE>
PHH CORPORATION EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
(4) ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS TO
INVESTMENT PROGRAMS (Continued)
<TABLE>
<CAPTION>
Year Ended December 31, 1992
-------------------------------------------------------------------
PHH Corp
Common U.S. Fidelity Participan
Stock Equity Magellan Money t
Fund Index Fund Market Loans Total
----------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Dividend income $ 936,050 $ 148,972 $1,097,122 $ 306,856 $ - $ 2,489,000
Interest income - - - - 133,405 133,405
----------- ---------- ---------- ---------- ---------- -----------
Total dividend and interest
income 936,050 148,972 1,097,122 306,856 133,405 2,622,405
----------- ---------- ---------- ---------- ---------- -----------
Contributions:
Employee 1,054,101 1,022,631 1,702,767 1,520,305 - 5,299,804
Employer 2,698,205 79 238 859 - 2,699,381
----------- ---------- ---------- ---------- ---------- -----------
Total contributions 3,752,306 1,022,710 1,703,005 1,521,164 - 7,999,185
----------- ---------- ---------- ---------- ---------- -----------
Interfund transfers (1,230,080) (283,969) (192,835) (648,026) 2,354,910 -
Withdrawals and distributions to
participants (2,187,712) (487,318) (666,565) (989,003) - (4,330,598)
Plan expenses incurred (565) (1,475) (837) (89,872) - (92,749)
Net appreciation (depreciation) in
fair value of investments
6,769,250 249,946 (583,691) - - 6,435,505
----------- ---------- ---------- ---------- ---------- -----------
Increase in net assets available
for benefits 8,039,249 648,866 1,356,199 101,119 2,488,315 12,633,748
Net assets available for benefits:
Beginning of year 25,040,778 5,444,557 6,814,890 8,524,326 104,329 45,928,880
----------- ---------- ---------- ---------- ---------- -----------
End of year $33,080,027 $6,093,423 $8,171,089 $8,625,445 $2,592,644 $58,562,628
----------- ---------- ---------- ---------- ---------- -----------
----------- ---------- ---------- ---------- ---------- -----------
</TABLE>
-10-
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
(5) FEDERAL INCOME TAX EXEMPTION
The Internal Revenue Service issued its latest determination letter on January
30, 1989 which stated that the Plan and its underlying trust qualify under the
applicable provisions of the Internal Revenue Code and therefore are exempt
from federal income taxes. The Plan and its underlying trust have been amended
since the date covered by the letter. In the opinion of the Plan
Administrator, the Plan and its underlying trust have operated within the
terms of the Plan and remain qualified under the applicable provisions of the
Internal Revenue Code.
(6) FORM 5500 RECONCILIATION
Amounts due to participating employees of $ 158,773 and $125,902, in 1993 and
1992 are reflected as liabilities and benefit payment expenses in the Plan's
Form 5500 but are presented as a component of net assets available for plan
benefits in the financial statements.
-11-
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
Par Value
or
Number Current
Name of Issuer and Title of Issue of Shares Cost Value
- --------------------------------------- --------- ----------- -----------
DECEMBER 31, 1993
PHH Corporation common stock 832,627 $26,961,989 $34,554,040
Equity-Income Fund - Fidelity
U.S. Equity Index Portfolio 411,025 6,082,613 7,098,394
Growth Fund - Fidelity
Magellan Fund 187,891 12,378,766 13,312,062
Money Market Fund - Fidelity Retirement
Money Market Portfolio 8,160,036 8,160,036 8,160,036
Asset Allocation Fund - Fidelity
Asset Manager 65,947 979,229 1,015,581
International Growth Fund - Fidelity
Europe Fund 32,048 567,718 612,751
Bond-Income Fund - Fidelity
U.S. Bond Index Portfolio 24,373 272,212 268,102
----------- -----------
$55,402,563 $65,020,966
----------- -----------
Total investments ----------- -----------
-12-
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
Year Ended December 31, 1993
<TABLE>
<CAPTION>
Purchases Sales
--------------------------- --------------------------------------------------
Current Current
Value at Value at
Total Purchase transaction Total Selling Cost of transaction Net
Description of Asset # Price date # Price Asset date Gain(Loss)
- ---------------------- ----- ---------- ---------- ----- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PHH Corporation common
stock 142 $5,502,054 $5,502,054 108 $4,180,953 $3,145,793 $4,180,953 1,035,160
Fidelity U.S. Equity
Index Portfolio 198 2,244,932 2,244,932 152 1,595,455 1,395,256 1,595,455 200,199
Fidelity Magellan Fund 214 5,887,555 5,887,555 114 1,858,155 1,710,041 1,858,155 148,114
Fidelity Retirement
Money Market
Portfolio 212 4,221,989 4,221,989 202 4,695,203 4,695,203 4,695,203 -
Fidelity Asset Manager 120 1,170,520 1,170,520 16 193,371 191,094 193,371 2,277
Fidelity Europe Fund 94 642,767 642,767 17 78,089 75,045 78,089 3,044
Fidelity U.S. Bond
Index Portfolio 65 298,003 298,003 11 25,632 25,780 25,632 (148)
-13-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Employee Benefits Committee has duly caused this annual report to be signed on
its behalf by the undersigned here duly authorized.
PHH CORPORATION EMPLOYEE INVESTMENT PLAN
Date: June 17, l994 By /signature/Roy A. Meierhenry
--------------------------------------
Roy A. Meierhenry
Senior Vice President and Chief
Financial Officer of PHH Corporation
Chairman - Employee Benefits Committee
-14-
<PAGE>
Consent of Independent Auditors
The Stockholders and
Board of Directors
PHH Corporation:
We consent to the incorporation by reference in the Registration Statement
(No. 33-53282) on Form S-8 of PHH Corporation of our report dated June 3,
1994, relating to the statements of net assets available for plan benefits of
PHH Corporation Employee Investment Plan as of December 31, 1993 and 1992, and
the related statements of changes in net assets available for plan benefits
for the years then ended and the related schedules for the year ended December
31, 1993, which report appears elsewhere in this Form 11-K dated June 17,
1994.
KPMG PEAT MARWICK
Baltimore, Maryland
June 17, 1994
-15-
</TABLE>
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