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, 1994
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
<TABLE>
<CAPTION>
Page No.
<S> <C>
Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits -
December 31, 1994 and 1993 2
Statements of Changes in Net Assets Available for Plan Benefits -
Years Ended December 31, 1994 and 1993 3
Notes to Financial Statements 4
Schedules - Item 27a - Schedule of Assets Held for Investment
Purposes 11
Item 27d - Schedule of Reportable Transactions 12
Signatures 13
Consent of Independent Auditors 14
</TABLE>
********************************
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, 1994 and 1993 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, 1994 and 1993 and the changes in net
assets available for plan benefits for the years then ended, in
conformity with generally accepted accounting principles.
Our 1994 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 1994 basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the 1994 basic
financial statements taken as a whole.
(KPMG Peat Marwick LLP signature appears here)
Baltimore, Maryland
June 16, 1995
-1-
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE
FOR PLAN BENEFITS
<TABLE>
<CAPTION>
December 31, (Note 3)
1994 1993
<S> <C> <C>
Investments, at fair value $64,373,722 $65,020,966
Participant loans receivable 2,894,981 2,689,808
Net assets available for plan benefits (Note 6) $67,268,703 $67,710,774
</TABLE>
See Accompanying Notes to Financial Statements
-2-
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE
FOR PLAN BENEFITS
<TABLE>
<CAPTION>
Years Ended
December 31, (Note 4)
1994 1993
<S> <C> <C>
Dividend income $2,269,846 $2,727,223
Interest income 181,845 192,557
Total dividend and interest income 2,451,691 2,919,780
Contributions:
Employee 6,108,508 5,924,079
Employer 3,980,879 3,815,942
Total contributions 10,089,387 9,740,021
Withdrawals and distributions to participants (6,081,824) (5,123,198)
Plan expenses incurred (75,470) (69,946)
Net appreciation (depreciation) in fair value of investments (6,825,855) 1,681,489
Increase (decrease) in net assets available for benefits (442,071) 9,148,146
Net assets available for benefits:
Beginning of year 67,710,774 58,562,628
End of year $67,268,703 $67,710,774
</TABLE>
See Accompanying Notes to Financial Statements
-3-
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1994 and 1993
(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, 1994, 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 1993,
additional Company matching contributions totalling approximately
$1,058,000 was paid to participants based upon Company
profitability for fiscal year ended April 30, 1994 and is reflected
in the financial statements for Plan year 1994. For Plan year
1994, additional Company matching contribution, if any, will be
determined based upon the profitability of the Company for the year
ending April 30, 1995. Accordingly, no amounts relating to the
profitability-based match have been reflected in the financial
statements for Plan year 1994.
Each participant could direct the custodian to invest in any
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 US Equity Index
Portfolio) consisting of income-producing equity securities; (c) a
Growth Fund (Fidelity Magellan Fund)consisting of equity securities
of corporations which are growth companies; (d) a Money Market Fund
(Fidelity Retirement Money Market Portfolio) consisting of various
short-term money market instruments; (e) an Asset Allocation Fund
(Fidelity Asset Manager) consisting of domestic and foreign equity
securities, bonds and short-term instruments; (f) an International
Growth Fund (Fidelity Europe Fund) consisting of securities of
Western European issues; or (g) a Bond-Income Fund (Fidelity U. S.
Bond Index Portfolio) consisting of securities contained in the
Aggregate Bond Index.
-4-
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) DESCRIPTION OF THE PLAN (Continued)
All Company contributions matching the first 3% of the
participant's eligible deferred earnings are invested in the PHH
Common Stock Fund with no transfers permitted until age 50. 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 Basic Match
Account" meaning the account relating to Employer matching
contributions attributable to the first 3% of his contributions
made at any time on and after May 1, 1985, under Section 401(k)
of the Code; (e) "Current Plan Company Profit Match Account"
meaning the account relating to Employer matching contributions
attributable to 3% - 6% of his contributions made at any time on
and after May 1, 1985, under Section 401(k) of the Code based on
attainment of certain earnings per share targets set annually by
the Company; and (f) "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. 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.
-5-
<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, 1994 and 1993:
<TABLE>
<CAPTION>
December 31, 1994
PHH
Corp
Common U.S. Fidelity U.S.
Stock Equity Magellan Money Asset Europe Bond Participant
Fund Index Fund Market Manager Fund Index Loans Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments, at fair
value $29,950,883 $7,061,559 $13,936,122 $10,081,717 $1,796,428 $1,261,177 $285,836 $- $64,373,722
Participant loans
receivable -- -- -- -- -- -- -- 2,894,981 2,894,981
Net assets available for
plan benefits $29,950,883 $7,061,559 $13,936,122 $10,081,717 $1,796,428 $1,261,177 $285,836 $2,894,981 $67,268,703
</TABLE>
-6-
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) ALLOCATION OF NET ASSETS AVAILABLE FOR PLAN BENEFITS TO INVESTMENT PROGRAMS
<TABLE>
<CAPTION>
December 31, 1993
PHH
Corp
Common U.S. Fidelity U.S.
Stock Equity Magellan Money Asset Europe Bond Participant
Fund Index Fund Market Manager Fund Fund 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)
(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, 1994 and 1993:
<TABLE>
<CAPTION>
December 31, 1994
PHH Corp
Common U.S. Fidelity U.S.
Stock Equity Magellan Money Asset Europe Bond Participant
Fund Index Fund Market Manager Fund Index Loans Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividend income $1,038,669 $220,073 $543,707 $360,626 $66,997 $19,265 $20,509 $ $2,269,846
Interest income -- -- -- -- -- -- -- 181,845 181,845
Total dividend and
interest income 1,038,669 220,073 543,707 360,626 66,997 19,265 20,509 181,845 2,451,691
Contributions:
Employee 1,141,112 969,404 2,237,921 1,092,999 358,928 226,167 81,977 -- 6,108,508
Employer 2,889,051 -- -- 1,091,828 -- -- -- -- 3,980,879
Total
contributions 4,030,163 969,404 2,237,921 2,184,827 358,928 226,167 81,977 -- 10,089,387
Interfund transfers (1,079,334) (371,571) (106,030) 356,017 636,222 410,658 (51,945) 205,983 --
Withdrawals and
distributions to
participants (2,906,690) (706,446) (1,241,098) (910,029) (100,355) (29,774) (4,777) (182,655) (6,081,824)
Plan expenses incurred (681) (2,338) (1,611) (69,760) (850) (147) (83) -- (75,470)
Net appreciation
(depreciation)
in fair value of
investments (5,685,284) (145,957) (808,829) -- (180,095) 22,257 (27,947) -- (6,825,855)
Increase (decrease) in
net assets available
for benefits (4,603,157) (36,835) 624,060 1,921,681 780,847 648,426 17,734 205,173 (442,071)
Net assets available for
benefits:
Beginning 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
End of year $29,950,883 $7,061,559 $13,936,122 $10,081,717 $1,796,428 $1,261,177 $285,836 $2,894,981 $67,268,703
</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
<TABLE>
<CAPTION>
Year Ended December 31, 1993
PHH
Common U.S. Fidelity U.S.
Stock Equity Magellan Money Asset Europe Bond Participant
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
interest income 974,527 273,450 1,168,826 251,300 46,258 2,636 10,226 192,557 2,919,780
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 51,128 41,902 -- 9,740,021
Interfund transfers (1,481,283) (272,553) 1,512,511 (1,522,613) 906,631 514,929 222,225 150,153 --
Withdrawals and
distributions to
participants (2,237,725) (457,796) (724,297)(1,371,888) (78,971) (5,007) (1,968) (245,546) (5,123,198)
Plan expenses incurred (1,102) (2,636) (1,920) (63,866) (385) (12) (25) -- (69,946)
Net appreciation
(depreciation)
in fair value of
investments 159,060 349,762 1,090,220 -- 38,628 48,077 (4,258) -- 1,681,489
Increase (decrease) in net
assets available for
benefits 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:
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)
(5) FEDERAL INCOME TAX EXEMPTION
The Internal Revenue Service issued its latest determination letter on
January 23, 1995 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.
(6) FORM 5500 RECONCILIATION
Amounts due to participating employees of $153,453 and $158,773, in
1994 and 1993 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.
-10-
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
<TABLE>
<CAPTION>
Par Value or
Name of Issuer and Title of Number of Current
Issue Shares Cost Value
December 31, 1994
<S> <C> <C> <C>
PHH Corporation common stock 861,896 $28,663,682 $29,950,883
Equity-Income Fund - Fidelity
U.S. Equity Index Portfolio 417,597 6,349,926 7,061,559
Growth Fund - Fidelity
Magellan Fund 208,625 13,875,245 13,936,122
Money Market Fund - Fidelity
Retirement
Money Market Portfolio 10,081,717 10,081,717 10,081,717
Asset Allocation Fund - Fidelity
Asset Manager 129,894 1,928,589 1,796,428
International Growth Fund -
Fidelity Europe Fund 63,059 1,197,979 1,261,177
Bond-Income Fund - Fidelity
U.S. Bond Index Portfolio 28,670 308,333 285,836
Total investments $62,405,471 $64,373,722
</TABLE>
-11-
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
Year Ended December 31, 1994
<TABLE>
<CAPTION>
Purchases Sales
Current Value Current Value
Total Purchase at transaction Total Selling Cost of at transaction Net
Description of Asset # Price date # Price Asset date Gain(Loss)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PHH Corporation 137 $5,638,156 $5,638,156 111 $4,561,711 $3,942,146 $4,561,711 $619,565
common stock
Fidelity U.S. Equity 173 1,502,304 1,502,304 131 1,393,100 1,234,909 1,393,100 158,191
Index Portfolio
Fidelity Magellan 186 4,373,328 4,373,328 130 2,944,434 2,880,843 2,944,434 63,591
Fund
Fidelity Retirement 196 4,154,580 4,154,580 187 2,241,743 2,241,743 2,241,743 --
Money Market
Portfolio
Fidelity Asset 151 1,333,180 1,333,180 65 372,194 383,776 372,194 (11,582)
Manager
Fidelity Europe Fund 137 745,991 745,991 39 119,779 115,685 119,779 4,094
Fidelity U.S. Bond 75 158,300 158,300 28 112,609 122,169 112,609 (9,560)
Index Portfolio
</TABLE>
-12-
<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 22, l995 By (Roy A. Meierhenry's signature)
Roy A. Meierhenry
Senior Vice President and Chief
Financial Officer of PHH Corporation
Chairman - Employee Benefits Committee
-13-
<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 16, 1995, relating to
the statements of net assets available for plan benefits of
PHH Corporation Employee Investment Plan as of December 31,
1994 and 1993, 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,
1994, which report appears elsewhere in this
Form 11-K dated June 22, 1995.
(KPMG Peat Marwick LLP's signature)
KPMG PEAT MARWICK LLP
Baltimore, Maryland
June 22, 1995
-14-
