SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
Form 11-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the period January 1, 1998 through May 1, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________ to __________
------------
Commission File No. 1-7797
------------
PHH CORPORATION
Employee Investment Plan
(Full title of the Plan)
PHH 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>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS FOR THE PERIOD FROM JANUARY 1, 1998
THROUGH MAY 1, 1998 AND THE YEAR ENDED DECEMBER 31, 1997:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-9
SUPPLEMENTAL SCHEDULE FOR THE PERIOD FROM JANUARY 1, 1998
THROUGH MAY 1, 1998:
Item 27d - Schedule of Reportable Transactions 11
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
PHH Corporation Employee Investment Plan
Parsippany, New Jersey
We have audited the accompanying statements of net assets available for benefits
of PHH Corporation Employee Investment Plan (the Plan) as of May 1, 1998 and
December 31, 1997, and the related statements of changes in net assets available
for benefits for the period from January 1, 1998 through May 1, 1998, and the
year ended December 31, 1997. 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, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of May 1, 1998
and December 31, 1997, and the changes in net assets available for benefits for
the period from January 1, 1998 through May 1, 1998, and the year ended December
31, 1997, in conformity with generally accepted accounting principles.
As described in Note 1 to the financial statements, on May 1, 1998, the assets
and benefit obligations of the Plan were merged into the Cendant Corporation
Employees Savings Plan, the surviving plan.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of reportable
transactions for the period from January 1, 1998 through May 1, 1998 is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements, but is 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. This supplemental schedule
is the responsibility of the Plan's management. Such supplemental schedule has
been subjected to the auditing procedures applied in our audit of the basic 1998
financial statements and, in our opinion, is fairly stated in all material
respects when considered in relation to the basic financial statements taken as
a whole.
/s/ Deloitte & Touche LLP
Washington, D.C.
September 25, 1998
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
MAY 1, 1998 AND DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS May 1, 1998 December 31, 1997
----------- -----------------
<S> <C> <C>
INVESTMENTS:
Cendant Corporation common stock ......... $ -- $100,839,906
Fidelity U.S. Equity Index Portfolio
-- 22,986,867
Fidelity Magellan Fund
-- 26,038,455
Fidelity Retirement Money Market Portfolio
-- 14,446,587
Fidelity Asset Manager
-- 3,968,087
Fidelity Europe Fund
-- 5,710,881
Fidelity U.S. Bond Index Portfolio
-- 1,345,672
Loans to Participants
-- 3,691,913
---------- ------------
NET ASSETS AVAILABLE FOR BENEFITS .............. $ -- $179,028,368
========== ============
</TABLE>
See notes to financial statements
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 1, 1998 AND
YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
January 1, 1998 Year Ended
through December 31,
(DEDUCTIONS)/ADDITIONS TO NET ASSETS May 1, 1998 1997
----------------- ----------------
<S> <C> <C>
ATTRIBUTED TO:
Contributions:
Participants $ 2,672,159 $ 7,954,721
Employer 1,562,868 6,897,990
----------------- ---------------
Total contributions 4,235,027 14,852,711
----------------- ---------------
Investment (loss)/income:
Realized and unrealized (losses)/gains (16,692,227) 48,816,989
Interest and dividends 721,140 4,351,887
----------------- ---------------
Total investment (loss)/income (15,971,087) 53,168,876
----------------- ---------------
Total (deductions)/additions (11,736,060) 68,021,587
----------------- ---------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants and beneficiaries 15,090,360 20,889,265
Trustee fees 6,884 93,372
----------------- ---------------
Total deductions 15,097,244 20,982,637
----------------- ---------------
TRANSFER TO CENDANT CORPORATION
EMPLOYEE SAVINGS PLAN (Note 1) (152,195,064) -
----------------- ---------------
NET (DECREASE)/INCREASE IN NET ASSETS
AVAILABLE FOR BENEFITS (179,028,368) 47,038,950
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF PERIOD 179,028,368 131,989,418
----------------- ---------------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF PERIOD $ - $179,028,368
================= ===============
</TABLE>
See notes to financial statements.
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 1, 1998 AND
THE YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
1. BUSINESS COMBINATIONS AND PLAN MERGER
On April 30, 1997, PHH Corporation (the "Company") was merged with and
into HFS Incorporated ("HFS") (the "HFS Merger") and on December 17, 1997,
HFS was merged with and into CUC International Inc. ("CUC") to form
Cendant Corporation ("Cendant"). The Company is a wholly owned subsidiary
of Cendant.
On May 1, 1998, the PHH Corporation Employee Investment Plan (the "Plan")
comprised of $152.2 million in Plan assets, was merged into the Cendant
Corporation Employee Savings Plan (the "Cendant Plan"), formerly the HFS
Incorporated Employee Savings Plan (the "Plan Merger"). Coincident with
the Plan Merger, Plan participants became participants in the Cendant
Plan. Accordingly, the transfer of each of the participants' Plan assets
that existed at the transfer date under the Plan, were invested in
comparable investment categories in proportionate amounts within the
Cendant Plan. Effective as of the date of the Plan Merger, investment
options for participants under the Plan were terminated and all future
contributions were invested in options available under the Cendant Plan.
After the Plan Merger, Plan participants maintained the same vesting
schedule for their Plan benefits as was in effect under the Plan. Plan
participants can refer to the Cendant Plan document for a more complete
description of that Plan.
Although it has not expressed any intention to do so, Cendant reserves the
right to modify, suspend, amend or terminate the Cendant Plan in whole or
in part at any time subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA). If the Cendant Plan is terminated,
the amounts credited to the employer contribution accounts of all
participants shall become fully vested.
2. DESCRIPTION OF THE PLAN
The following description of the Plan provides only general information
relative to the Plan as it existed prior to the Plan Merger. Participants
can refer to the Plan Agreement for a more complete description of the
Plan's provisions that were in effect for the financial statement periods
presented.
The Plan is a defined contribution plan. It is subject to the provisions
of ERISA. The following is a summary of certain Plan provisions that were
in effect prior to Plan Merger.
A. Eligibility - Each employee of the Company is eligible to participate
in the Plan after six months of service if at least 1,000 hours were
worked in a consecutive 12-month period commencing on the date of
employment, or in any Plan year commencing after the date of
employment. There is no age requirement for eligibility to
participate in the Plan.
B. Employee Contributions - Each participant may contribute to the Plan
each year between 0% and 10% of eligible earnings subject to certain
limits contained in the Internal Revenue Code of 1986, as amended.
C. Employer Contributions - Prior to May 1, 1997, the Company's matching
contribution was dollar-for-dollar up to 3% of the participant's
eligible deferred earnings and up to an additional 3% of eligible
earnings based upon the profitability of the Company from continuing
operations for the relevant fiscal year. The profitability-based
rate of the matchable portion was determined each year by the Board
of Directors. All Company contributions matching the first 3% of the
participant's eligible deferred earnings were invested in PHH
Corporation common stock with no transfers permitted until age 50.
All Company contributions matching up to an additional 3% based upon
Company profitability were initially invested in the Fidelity
Retirement Money Market Portfolio with no transfer restrictions.
During Plan year 1997, additional Company matching contributions
totaling approximately $2,541,100 were paid to participants based on
Company profitability.
Effective May 1, 1997, in connection with the HFS Merger, the
provisions of the Plan were amended to provide for a Company match of
100% of employee contributions up to 3% of the participant's eligible
deferred earnings and 50% of additional contributions up to 6% of the
participant's eligible deferred earnings and all such Company match
contributions to the Plan were to be initially invested in the
Fidelity Retirement Money Market Portfolio with no transfer
restrictions.
<PAGE>
D. Vesting - 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 contributions 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.
E. Rollovers - All employees, upon commencement of employment, are
provided the option of making a rollover contribution to the Plan in
accordance with the Internal Revenue Service regulations.
F. Loan Provision - 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 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.
G. Benefits Payable - Distributions to terminated participants are
reported in the financial statements when paid. Amounts payable to
participants who have terminated participation in the Plan were
approximately $8.5 million at December 31, 1997. This amount is
reflected as a liability on the Plan's Form 5500 in accordance with
Department of Labor regulation. Effective May 1, 1998, the Cendant
Plan assumed the benefits payable liabilities of the Plan.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS
Basis of Presentation - The accompanying financial statements of the Plan
have been prepared on the accrual basis of accounting and present the net
assets available for benefits and the changes in net assets available for
benefits. Expenses of administering the Plan incurred by the Company
(i.e., the cost of printing literature and forms, the disbursement of
benefits, the compensation of administrators, consultants, counsel, etc.),
may be paid from forfeited Plan assets at the discretion of the Company.
Internal Company support costs (i.e., the cost of staff time, etc.) are
paid by the Company.
Valuation of Investments - Purchases and sales of securities are recorded
on a trade-date basis. Investments are carried at fair value as determined
by quoted market prices. Participant loans are valued at cost, which
approximates fair value.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and judgments that affect the reported amounts and related
disclosures at the date of the financial statements. Actual results could
differ from those estimates.
<PAGE>
4. INVESTMENTS
The Plan's investments which exceeded 5% of net assets available for
benefits as of December 31, 1997, are as follows:
Description of Investment 1997
------------
Cendant Corporation common stock $100,839,906
Fidelity U.S. Equity Index Portfolio 22,986,867
Fidelity Magellan Fund 26,038,455
Fidelity Retirement Money Market Portfolio 14,446,587
Prior to the Plan Merger, each participant had the following investment
options: (a) the common stock of Cendant Corporation, (b) an Equity-Income
Fund (Fidelity U.S. Equity Index Portfolio), consisting of
income-producing equity securities; (c) a Growth Fund (Fidelity Magellan
Fund), consisting of equity securities of corporations that 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; and (g) a Bond-Income Fund (Fidelity U.S. Bond
Index Portfolio) consisting of securities contained in the Aggregate Bond
Index. The above investment objective descriptions are from each option's
respective prospectus.
5. INTERNAL REVENUE SERVICE STATUS
The Internal Revenue Service issued its latest determination letter on
January 23, 1995 which stated that the Plan and its underlying trust
qualify by design under the applicable provisions of the Internal Revenue
Code and therefore are exempt from federal income taxes. The Plan and its
underlying trust had been restated and amended since the date covered by
this letter. In the opinion of Plan management, the Plan and its
underlying trust has operated within the terms of the Plan and remained
qualified under the applicable provisions of the Internal Revenue Code
through date of Plan Merger.
6. RELATED PARTY TRANSACTIONS
During fiscal years 1998 and 1997, a significant portion of the Plan
investments were shares in various mutual funds managed by Fidelity
Investments ("Fidelity"). Fidelity was the custodian of these investments
as defined by the Plan and, therefore, these transactions qualified as
party-in interest. Fees paid by the Plan for plan record keeping services
amounted to $6,884 and $93,372 for the period from January 1, 1998 through
May 1, 1998 and the year ended December 31, 1997, respectively.
7. CONTINGENCIES
On April 15, 1998, Cendant announced that in the course of transferring
responsibilities for its accounting functions from the former CUC
personnel to HFS accounting personnel and preparing for the reporting of
first quarter 1998 financial results, it had discovered accounting
irregularities in certain former CUC business units. Cendant, together
with its legal counsel and assisted by external auditors, conducted an
investigation of these accounting irregularities. In addition, the Audit
Committee of Cendant's Board of Directors initiated an investigation into
such matters. As a result of the findings of these investigations and a
concurrent internal financial review process by Cendant which revealed
both accounting errors and irregularities, Cendant restated its previously
reported financial statements for the years ended December 31, 1997, 1996
and 1995, and the 1998 quarterly periods ended March 31 and June 30.
Numerous purported classification lawsuits, two purported derivative
lawsuits and an individual lawsuit have been filed against Cendant, and
among others, its predecessor, HFS, and certain current and former
officers and directors of Cendant and HFS, asserting various claims under
the federal securities laws and certain state statutory and common laws.
While it is not feasible to predict or determine the final outcome of
these legal proceedings, Cendant does not expect these legal proceedings
to have any material adverse impact on the Cendant Plan.
The aforementioned announcement resulted in a decline in the per-share
price of Cendant's common stock. At December 31, 1997, the Plan's
investment in Cendant's common stock was valued at $100.8 million,
comprised of approximately 2.9 million shares at a closing price of
$34.375 per share. At May 1, 1998, prior to Plan Merger, the common stock
value was $68.3 million, comprised of approximately 2.7 million shares at
a closing price of $25.063 per share. During the period from January 1,
1998 through May 1, 1998, the resulting decline in the Cendant's common
stock value, exclusive of realized losses on stock sales, was $25.4
million.
<PAGE>
8. PLAN SUMMARY BY FUND
The following tables represent the changes in net assets available for
benefits, summarized by fund, for the period from January 1, 1998 through
May 1, 1998 and the year ended December 31, 1997.
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS TO INVESTMENT PROGRAMS
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 1, 1998
<TABLE>
<CAPTION>
Fidelity Fidelity
Cendant U.S. Equity Fidelity Retirement
Corporation Index Magellan Money
Common Stock Portfolio Fund Portfolio Subtotal
------------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
NET ASSET AVAILABLE FOR BENEFITS,
BEGINNING OF PERIOD $ 100,839,906 $ 22,986,867 $ 26,038,455 $ 14,446,587 $ 164,311,815
------------- ------------ ------------ ------------ -------------
Contributions:
Employee 710,830 533,056 682,105 350,650 2,276,641
Employer 435,791 300,424 394,430 208,350 1,338,995
------------- ------------ ------------ ------------ -------------
Total contributions 1,146,621 833,480 1,076,535 559,000 3,615,636
------------- ------------ ------------ ------------ -------------
REALIZED AND UNREALIZED
GAINS/(LOSSES) (25,362,232) 3,188,284 3,888,992 - (18,284,956)
------------- ------------ ------------ ------------ -------------
DIVIDEND AND INTEREST INCOME - 313,713 - 245,472 559,185
------------- ------------ ------------ ------------ -------------
WITHDRAWALS AND DISTRIBUTIONS (6,555,362) (1,994,572) (2,774,796) (1,707,986) (13,032,716)
------------- ------------ ------------ ------------ -------------
PLAN EXPENSES - (1,117) (550) (3,982) (5,649)
------------- ------------ ------------ ------------ -------------
Transfers:
Interfund Transfers (1,798,856) 1,237,537 (1,365,094) 1,032,053 (894,360)
Transfer to Cendant Corporation
Employee Savings Plan (68,270,077) (26,564,192) (26,863,542) (14,571,144) (136,268,955)
------------- ------------ ------------ ------------ -------------
Net transfers (70,068,933) (25,326,655) (28,228,636) (13,539,091) (137,163,315)
------------- ------------ ------------ ------------ -------------
DECREASE IN NET ASSETS
AVAILABLE FOR BENEFITS (100,839,906) (22,986,867) (26,038,455) (14,446,587) (164,311,815)
------------- ------------ ------------ ------------ -------------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF PERIOD $ - $ - $ - $ - $ -
============= ============ ============ ============ =============
</TABLE>
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS TO INVESTMENT PROGRAMS
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 1, 1998 (Continued)
<TABLE>
<CAPTION>
Fidelity
Fidelity Fidelity U.S. Bond
Asset Europe Index Participant
Subtotal Manager Fund Portfolio Loans Total
------------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET AVAILABLE FOR BENEFITS,
BEGINNING OF PERIOD $ 164,311,815 $ 3,968,087 $ 5,710,881 $ 1,345,672 $ 3,691,913 $ 179,028,368
------------- ----------- ----------- ----------- ----------- -------------
Contributions:
Employee 2,276,641 152,923 180,227 62,368 - 2,672,159
Employer 1,338,995 82,871 102,819 38,183 - 1,562,868
------------- ----------- ----------- ----------- ----------- -------------
Total contributions 3,615,636 235,794 283,046 100,551 - 4,235,027
------------- ----------- ----------- ----------- ----------- -------------
REALIZED AND UNREALIZED
GAINS/(LOSSES) (18,284,956) 223,181 1,373,338 (3,790) - (16,692,227)
------------- ----------- ----------- ----------- ----------- -------------
DIVIDEND AND INTEREST INCOME 559,185 27,932 - 33,774 100,249 721,140
------------- ----------- ----------- ----------- ----------- -------------
WITHDRAWALS AND DISTRIBUTIONS (13,032,716) (692,670) (877,709) (262,851) (224,414) (15,090,360)
------------- ----------- ----------- ----------- ---------- -------------
PLAN EXPENSES (5,649) (564) (468) (203) - (6,884)
------------- ----------- ----------- ----------- ---------- -------------
Transfers:
Interfund Transfers (894,360) 46,191 454,213 288,839 105,117 -
Transfer to Cendant Corporation
Employee Savings Plan (136,268,955) (3,807,951) (6,943,301) (1,501,992) (3,672,865) (152,195,064)
------------- ----------- ----------- ----------- ----------- -------------
Net transfers (137,163,315) (3,761,760) (6,489,088) (1,213,153) (3,567,748) (152,195,064)
------------- ----------- ----------- ----------- ----------- -------------
DECREASE IN NET ASSETS
AVAILABLE FOR BENEFITS (164,311,815) (3,968,087) (5,710,881) (1,345,672) (3,691,913) (179,028,368)
------------- ----------- ----------- ----------- ----------- -------------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF PERIOD $ - $ - $ - $ - $ - $ -
============= =========== =========== =========== =========== =============
</TABLE>
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS TO INVESTMENT PROGRAMS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PHH HFS Cendant Fidelity
Corporation Incorporated Corporation U.S. Equity Fidelity
Common Common Common Index Magellan
Stock Stock Stock Portfolio Fund Subtotal
------------ ------------ ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR $ 73,604,551 $ - $ - $ 15,566,475 $ 20,966,923 $ 110,137,949
------------ ------------ ------------ ------------ ------------ -------------
Contributions:
Employee 590,229 1,412,603 93,989 1,597,371 2,175,809 5,870,001
Employer 1,027,799 618,343 51,615 472,893 650,490 2,821,140
------------ ------------ ------------ ------------ ------------ -------------
Total contributions 1,618,028 2,030,946 145,604 2,070,264 2,826,299 8,691,141
------------ ------------ ------------ ------------ ------------ -------------
REALIZED AND UNREALIZED
GAINS/(LOSSES) 7,080,744 26,079,305 6,308,922 4,923,896 3,615,398 48,008,265
------------ ------------ ------------ ------------ ------------ -------------
DIVIDEND AND INTEREST INCOME 325,020 17,500 - 495,212 1,648,680 2,486,412
------------ ------------ ------------ ------------ ------------ -------------
WITHDRAWALS AND DISTRIBUTIONS (2,211,111) (9,046,038) - (3,386,047) (2,824,050) (17,467,246)
------------ ------------ ------------ ------------ ------------ -------------
PLAN EXPENSES (348) (476) - (2,206) (1,362) (4,392)
------------ ------------ ------------ ------------ ------------ -------------
Transfers:
Interfund Transfers (1,346,575) (3,759,235) (6,931) 3,319,273 (193,433) (1,986,901)
Conversion of Company common stock (79,070,309) (15,322,002) 94,392,311 - - -
------------ ------------ ------------ ----------- ------------ -------------
Net transfers (80,416,884) (19,081,237) 94,385,380 3,319,273 (193,433) (1,986,901)
------------ ------------ ------------ ----------- ------------ -------------
INCREASE/(DECREASE) IN NET ASSETS
AVAILABLE FOR BENEFITS (73,604,551) - 100,839,906 7,420,392 5,071,532 39,727,279
------------ ------------ ------------ ----------- ------------ -------------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $ - $ - $100,839,906 $22,986,867 $ 26,038,455 $ 149,865,228
============ ============ ============ =========== ============ =============
</TABLE>
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS TO INVESTMENT PROGRAMS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Fidelity
Retirement Fidelity Fidelity U.S. Bond
Money Asset Europe Index Participant
Subtotal Portfolio Manager Fund Portfolio Loans Total
------------ ----------- ---------- ---------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR $110,137,949 $11,546,298 $2,511,787 $3,466,056 $ 862,406 $3,464,922 $131,989,418
Contributions:
Employee 5,870,001 791,874 488,611 600,852 203,383 - 7,954,721
Employer 2,821,140 3,710,551 136,697 170,625 58,977 - 6,897,990
------------ ----------- ---------- ---------- ---------- ---------- -=----------
Total contributions 8,691,141 4,502,425 625,308 771,477 262,360 - 14,852,711
------------ ----------- ---------- ---------- ---------- ---------- ------------
REALIZED AND UNREALIZED
GAINS/(LOSSES) 48,008,265 - 293,739 490,309 24,676 - 48,816,989
------------ ----------- ---------- ---------- ---------- ---------- -----------
DIVIDEND AND INTEREST INCOME 2,486,412 695,440 334,129 471,843 68,336 295,727 4,351,887
------------ ----------- ---------- ---------- ---------- ---------- -----------
WITHDRAWALS AND DISTRIBUTIONS (17,467,246) (1,929,269) (360,658) (644,194) (90,492) (397,406) (20,889,265)
------------ ----------- ---------- ---------- ---------- ---------- -----------
PLAN EXPENSES (4,392) (83,701) (979) (3,855) (445) - (93,372)
------------ ----------- ---------- ---------- ---------- ---------- -----------
Transfers:
Interfund Transfers (1,986,901) (284,606) 564,761 1,159,245 218,831 328,670 -
Conversion of Company
common stock - - - - - - -
------------ ----------- ----------- ---------- ---------- ---------- -----------
Net transfers (1,986,901) (284,606) 564,761 1,159,245 218,831 328,670 -
------------ ----------- ----------- ---------- ---------- ---------- -----------
INCREASE/(DECREASE) IN NET ASSETS
AVAILABLE FOR BENEFITS 39,727,279 2,900,289 1,456,300 2,244,825 483,266 226,991 47,038,950
------------ ----------- ----------- ---------- ---------- ---------- -----------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $149,865,228 $14,446,587 $ 3,968,087 $5,710,881 $1,345,672 $3,691,913 $179,028,368
============ =========== =========== ========== ========== ========== ============
</TABLE>
<PAGE>
SUPPLEMENTAL SCHEDULE
<PAGE>
PHH CORPORATION EMPLOYEE
INVESTMENT PLAN
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
PERIOD FROM JANUARY 1, 1998 THROUGH MAY 1, 1998
<TABLE>
<CAPTION>
Purchases Sales
---------------------------- ----------------------------------------------------------
Current Value Redemption Current Value
Purchase at Transaction or Selling Cost of at Transaction Net
Description of asset Price Date Price Asset Date Gain
---------- -------------- ----------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
*Cendant Corporation Common Stock
2,574,867 2,574,867 78,052,541 35,077,585 78,052,541 42,974,956
*Fidelity Magellan Fund
1,958,093 1,958,093 31,885,540 23,239,555 31,885,540 8,645,985
*Fidelity Europe Fund
1,539,185 1,539,185 8,623,404 6,493,292 8,623,404 2,130,112
*Fidelity Retirement Money Market
Portfolio 3,708,334 3,708,334 18,154,921 18,154,921 18,154,921 -
*Fidelity U.S. Equity Index Fund 3,568,130 3,568,130 29,743,282 18,385,667 29,743,282 11,357,615
</TABLE>
*Party in interest
Notes:
(1) Reportable transactions are presented in accordance with Department of Labor
regulations relating to requirements for employee benefit plan annual
reports filed under the Employee Retirement Income Security Act of 1974.
<PAGE>
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan Committee has duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.
PHH Corporation Employee Investment Plan
Date: October 28, 1998 By: /s/ Scott E. Forbes
Scott E. Forbes
Plan Administrative Committee Member
PHH Corporation Employee Investment Plan
We consent to the incorporation by reference in Registration Statement No.
333-42549 of Cendant Corporation on Form S-8 of our report dated September 25,
1998 appearing in this Annual Report on Form 11-K of PHH Corporation Employee
Investment Plan, for the period from January 1, 1998 through May 1, 1998.
/s/ Deloitte & Touche LLP
Washington, DC
September 25, 1998
