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 fiscal year ended December 31, 1996
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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HFS Incorporated
Employee Savings Plan
(Full title of the Plan)
HFS Incorporated
(Name of issuer of the securities held pursuant to the Plan)
6 Sylvan Way
Parsippany, New Jersey 07054
(Address of principal executive office)
<PAGE>
HFS Incorporated
Employee Savings Plan
Financial Statements for the Years Ended
December 31, 1996 and 1995
INDEX
Description
Independent Auditors' Report ...................................
Statements of Net Assets Available for Benefits
As of December 31, 1996 and 1995 ......................
Statements of Changes in Net Assets Available for
Benefits for the Years Ended December 31, 1996 and 1995
Notes to Financial Statements ..................................
Item 27a -Schedule of Assets Held for Investment Purposes
as of December 31, 1996 ...............................
Item 27d - Schedule of Reportable Transactions .................
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.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
HFS Incorporated
Employee Savings Plan
Parsippany, NJ 07054
We have audited the accompanying statements of net assets available for benefits
of HFS Incorporated Employee Savings Plan (the "Plan") as of December 31, 1996
and 1995, 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 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 at December 31, 1996
and 1995, and the changes in net assets available for benefits for the years
then ended in conformity with generally accepted accounting principles.
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, 1996 and (2) transactions in
excess of five percent of the current value of plan assets for the year ended
December 31, 1996 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
schedules have been subjected to the auditing procedures applied in our audit of
the basic 1996 financial statements and, in our opinion, are fairly stated in
all material respects when considered in relation to the basic financial
statements taken as a whole.
/s/Deloitte & Touche LLP
Parsippany, NJ
June 28, 1997
<PAGE>
HFS Incorporated
Employee Savings Plan
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1996 and 1995
1996 1995
----------- -----------
ASSETS
Investments ..................... $30,289,693 $23,225,164
Interest and dividends receivable 14,637 56,007
Contributions receivable from:
Participants ................ 462,145 179,477
Employer .................... 95,035 170,364
----------- -----------
Total assets ................ 30,861,510 23,631,012
Liabilities ..................... -- 16,111
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS ..... $30,861,510 $23,614,901
=========== ===========
-See notes to financial statements-
<PAGE>
HFS Incorporated
Employee Savings Plan
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1996 and 1995
1996 1995
----------- -----------
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Contributions:
Participants ......................... $ 3,606,740 $ 2,394,265
Employer ............................. 706,177 576,726
Rollovers ............................ 4,255,021 12,998,034
----------- -----------
Total contributions .............. 8,567,938 15,969,025
----------- -----------
Investment income:
Realized and unrealized gains 1,429,130 1,359,261
Interest and dividends ............... 1,529,256 870,091
----------- -----------
Total investment income .......... 2,958,386 2,229,352
----------- -----------
Total additions .................. 11,526,324 18,198,377
----------- -----------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants ........ 4,268,290 695,083
Trustee fees ......................... 11,425 18,294
----------- -----------
Total deductions ................. 4,279,715 713,377
----------- -----------
NET INCREASE IN NET ASSETS
AVAILABLE FOR BENEFITS ............... 7,246,609 17,485,000
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR .................... 23,614,901 6,129,901
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR .......................... $30,861,510 $23,614,901
=========== ===========
-See notes to financial statements-
<PAGE>
HFS Incorporated
Employee Savings Plan
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF PLAN
The following description of the HFS Incorporated Employee Savings Plan
(the "Plan") provides only general information. Participants should refer
to the Plan agreement for a more complete description of the Plan's
provisions.
The Plan, established July 2, 1990 and amended and restated as of January
1, 1996, (See Note 5 - Plan Amendments) is a defined contribution plan
established for all eligible employees of HFS Incorporated (the "Company")
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").
The Company made contributions to the Plan equal to a percent of the
pre-tax contributions made by the employee with respect to the first six
percent of the employee's compensation as set forth in the schedule below:
Years of Service as of the Employer Matching
Last Day of the Plan Year Percentage of Investment
--------------------------- ------------------------
All eligible employees with
less than 6 years of service 25%
At least 6 but less than 11
years of service 35%
11 or more years of service 50%
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 21 and completion of six months
service.
b. Contributions - An employee may elect to make pre-tax contributions up
to fifteen percent of annual compensation to a maximum of $9,500 and
$9,240 for 1996 and 1995, respectively.
c. Rollovers - All employees, upon commencement of employment, are
provided the option of making a rollover contribution to the Plan in
accordance with Internal Revenue Service regulations. On August, 1,
1995, a majority owned company subsidiary, C21 Holding Corp., acquired
Century 21 Real Estate Corporation ("Century 21"). In December 1995 the
then existing Century 21 plan was combined into the Plan. On May 31,
1996, the Company completed its acquisition of Coldwell Banker
Corporation ("Coldwell Banker"). In November 1996, a portion of the
existing Coldwell Banker plan was also combined into the Plan. As a
result of the aforementioned acquisitions and plan mergers, $3.5
million and $12.9 million was transferred to the Plan in 1996 and 1995,
<PAGE>
respectively, and is included in Contributions - Rollovers in the
Statement of Changes in Net Assets Available for Benefits for the years
ended December 31, 1996 and 1995.
d. Vesting - Employee contributions are 100% vested at all times.
Effective January 1,1996, all participants were 100% vested in employer
contributions. Employer contributions for the year ended December
31, 1995 were vested in accordance with the following schedule:
Years of Qualifying
Service Percentage
------------------- ----------
Less than 1 0%
1 but less than 2 33%
2 but less than 3 66%
3 or more 100%
e. Termination - Although it 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 shall become fully vested.
f. Loan Provision - Employees may borrow up to the lesser of $50,000 or
fifty percent of their vested balance, provided the vested balance is
at least one thousand dollars. Interest is charged at a commercial rate
and is secured by the vested 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.
g. Forfeitures - If an employee is terminated, all non-vested Company
contributions are used to reduce future company contributions.
Forfeitures for the year ended December 31, 1995 were $24,479.
h. Benefits Payable - Amounts payable to participants who have terminated
participation in the Plan were approximately $1.1 million and $1.9
million at December 31, 1996 and 1995, respectively. The payable amount
at December 31, 1995 includes distributions to be made in connection
with the Century 21 acquisition.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - The accompanying financial statements are prepared
on an accrual basis of accounting. Effective with the change in Trustee
(see "Change in Trustee" below), as of February 1, 1996, all administrative
costs of the Plan were paid by the Company. Prior to such date trustee fees
were paid by the Plan.
Change in Trustee - As of February 1, 1996, the trustee and record
keeping and administrative responsibilities previously performed by the
Charles Schwab Trust Company ("Charles Schwab") and the Segal Company,
respectively, were undertaken by Merrill Lynch Trust Company of New
Jersey (the "Trustee"). In connection with the change in trustee, net
assets of approximately $20.9 million were transferred from Charles Schwab
to the Trustee.
Valuation of Investments - 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.
<PAGE>
The value of the remaining investments are based upon quoted market values
as determined by the Plan's trustee.
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 and related
disclosures. Actual results could differ from those estimates.
Share Information - In November 1995, the Company's Board of Directors
authorized a two-for-one stock split effected in the form of a 100% stock
dividend which was effected in February 1996. All share and stok price
information related to the Company's common stock presented herein has
been retroactively adjusted to reflect the stock split.
3. INVESTMENTS
The market or contract values of investments, including cash and cash
equivalents within the funds, are as follows:
At December 31,
-------------------------
1996 1995
----------- -----------
Market or Market or
Contract Contract
Value Value
----------- -----------
HFS Stable Value Fund
- RPT ...................... $ 6,768,959 $ --
- CIGNA .................... 1,030,123 1,362,408
- Hartford ................. 373,977 7,683,495
AIM Charter Fund .............. 3,044,717 2,356,472
AIM Weingarten Fund ........... 2,108,625 1,850,727
AIM Constellation Fund ........ 4,620,263 3,900,928
SteinRoe Intermediate Bond Fund -- 1,047,079
Templeton Foreign Fund ........ 1,425,092 1,190,467
Company Common Stock Fund ..... 5,694,266 2,858,628
MFS Emerging Growth Fund ...... 554,626 --
Merrill Lynch Growth Fund ..... 888,246 --
Merrill Lynch Capital Fund .... 285,003 --
Mmerrill Lynch Inter
Term Bond Fund ............... 989,373 --
Putnam New Opportunity Fund ... 1,238,781 --
Employee Loans Receivable ..... 1,123,779 974,960
Cash fund ..................... 143,863 --
----------- -----------
$30,289,693 $23,225,164
=========== ===========
a. HFS Stable Value Fund - Certain contributions in this fund are invested
invested under contracts with major insurance companies providing a
high level of security for principal and a fixed rate of return. As of
February 1, 1996, contributions made to this fund were invested in the
Merrill Lynch Retirement Preservation Trust which invests in high
quality fixed interest instruments. The account is designed to provide
the investor with a defined rate of return and low risk of principal.
<PAGE>
b. AIM Charter Fund - This balanced mutual fund seeks growth of capital
and current income by investing primarily in dividend-paying common
stocks. A significant portion of assets may also be held in cash or
other income-producing securities, including U.S. government securities
or debt securities.
c. AIM Weingarten Fund - This growth mutual fund seeks capital growth by
investing primarily in common stocks of leading U.S. companies that are
enjoying strong earnings momentum or a dramatic upsurge in earnings.
d. AIM Constellation Fund - This mutual fund seeks capital appreciation by
investing primarily in common stocks with emphasis on medium-sized and
smaller emerging growth companies.
e. SteinRoe Intermediate Bond Fund - This mutual fund seeks growth through
investments in high-quality investment grade corporate debt securities.
This fund was replaced in 1996 with the Merrill Lynch Inter Term Bond
Fund.
f. Templeton Foreign Fund - This mutual fund seeks long-term capital
growth through investing in stocks and debt obligations of companies
and governments outside the United States.
g. Company Common Stock Fund - Participants may elect to invest up to 50%
of their account balance in the Company's common stock which is an
equity security publicly traded on the New York Stock Exchange under
the symbol "HFS".
h. MFS Emerging Growth Fund - This mutual fund invests primarily in common
stocks of companies that are early in their life cycles and have the
potential to become major enterprises. The Fund may also invest in more
established companies whose earning growth is expected to accelerate
due to new management, new products or changes in consumer demand.
i. Merrill Lynch Growth Fund - This mutual fund invests in securities that
are selling at discounts from price-to-book value ratios and have
dividend yields greater than the stock market average or historic
yields. Large capitalization issues will be emphasized, but the Fund
has flexibility to invest in small capitalization companies with
similar value.The Fund may invest up to 20% of total assets in foreign
securities.
j. Merrill Lynch Capital Fund, Inc.- This mutual fund allows management to
shift emphasis based on its evaluation of changes in economic and
market trends. The Fund's portfolio may be invested substantially in
equity securities (stocks), corporate bonds or money market securities.
Over longer periods, a major portion of the Fund's portfolio will
consist of equity securities of larger market capitalization companies.
The Fund May invest up to 25% of its total assets in foreign
securities.
k. Merrill Lynch Inter Term Bond Fund - This mutual fund invests in
corporate debt securities, primarily through high-quality investment
grade securities.
<PAGE>
l. Putnam New Opportunity Fund - This mutual fund seeks above-average
capital appreciation from rapidly-growing sectors of the economy.
Fund management searches for companies with strong and expanded
Earnings, committed management, freedom from excessive government
regulation, and substantial insider equity holdings.
4. INTERNAL REVENUE SERVICE STATUS
The Plan obtained its latest determination letter dated May 21, 1996, in
which the Internal Revenue Service stated that the Plan was in compliance
with the applicable requirements of the Internal Revenue Code. Therefore,
no provision for income taxes has been included in the Plan's financial
statements. The Company has not yet filed Form 5500 for the 1995 plan year;
however, the Company's management has confirmed its intention to do so by
July 31, 1997. As a result, the IRS may charge late penalties which would
be paid directly by the Company.
5. RECENT EVENTS
Pending Merger
Pending Merger with CUC International, Inc. ("CUC") - On May 27, 1997, the
Company announced a definitive agreement to merge with CUC in a tax-free
exchange of shares. Pursuant to the terms of the merger agreement, 2.4031
shares of CUC common stock will be exchanged for each share of HFS
Incorporated common stock. CUC will issue approximately 434 million shares
valued at $11 billion.
CUC is a leading member services and direct marketing organization. The
transaction requires the approval of the shareholders of both companies,
and will be accounted for as a pooling of interests.
Company Acquisitions
A. Travelodge(R) - On January 23, 1996, the Company purchased the assets
comprising the Travelodge hotel franchise system ("Travelodge") in North
America, including the Travelodge and Thriftlodge(R) service marks and the
franchise agreements from Forte Hotels, Inc. ("FHI") for $39.3 million.
B. ERA(R) - On February 12, 1996, the Company purchased the assets
comprising the Electronic Realty Associates(R) ("ERA") residential real
estate brokerage franchise system for approximately $39.4 million in cash
plus expenses.
<PAGE>
C. Century 21(R) Non-owned Regions - During the second quarter of 1996, the
Company purchased from four independent master licensees, the six U.S. non-
owned CENTURY 21 regions ("CENTURY 21 NORS") consisting of more than
1,000 franchised real estate offices. The aggregate purchase price was
approximately $147.4 million consisting of $96.4 million in cash, $5
million in notes and $46 million (approximately 0.9 million shares) in
Company common stock.
D. Coldwell Banker(R) - On May 31, 1996, the Company acquired all of the
outstanding capital stock of Coldwell Banker for $640 million in cash and
the related repayment of approximately $105 million of Coldwell Banker
indebtedness.
E. Avis, Inc. - On October 17, 1996, the Company completed the acquisition
of all of the outstanding capital stock of Avis, Inc. ("Avis"), including
payments under certain employee stock ownership plans of Avis and the
redemption of certain series of preferred stock of Avis for an aggregate
$806.5 million. the purchase price was comprised of approximately $367.2
million in cash, $100.9 million in indebtedness and $338.4 million
(approximately 4.6 million shares) in Company common stock. Avis, together
with its subsidiaries, licensees and affiliates, operates the Avis rental
car business, which the Company believes is the second largest car rental
system in the world.
F. Resort Condomiums International, Inc. - On November 12, 1996, the
Company completed the acquisition of all the outstanding capital stock of
Resort Condominiums International, Inc. and its affiliates ("RCI") for
approximately $487 million. The purchase price was comprised of $412
million in cash and $75 million (approximately 1.0 million shares) of
Company common stock and provides for contingent payments of up to $200
million over the next five years which are based on certain future
performance measurements. RCI, based in Indianapolis, Indiana, is the
world's largest provider of timeshare exchange programs, providing
services for approximately 2.2 million timeshare owners and approximately
3,100 resorts around the world. RCI is also engaged in publishing
related to the timeshare industry and provides other travel-related
services,integrated software and resort management and consulting services.
G. PHH Corporation ("PHH") - On April 30, 1997, the Company issued
approximately $1.7 billion of Company common stock in exchange for all of
the outstanding common stock of PHH. PHH is the world's largest provider
of corporate relocation services and also provides mortgage services and
vehicle management services. The merger was accounted for as a pooling of
interests.
In connection with the Company's acquisitions noted above, the Company
may elect to merge the employee savings plans of such acquired companies
into the Plan.
Plan Amendments
Effective January 1, 1996, the Company amended and restated the Plan.
Amendments effected as of such date included an adjustment to the vesting
schedule to provide for immediate vesting of employer contributions. The
Plan was also amended to allow for the eligibility of employees of acquired
companies subject to certain limitations. Subsequent to January 1, 1996,
two amendments to the plan were adopted related to combining the existing
plans of ERA, CENTURY 21 NORS and portions of the Coldwell Banker plan into
the Plan. The Company expects the combination of such plans to be
completed during 1997.
6. NEW ACCOUNTING PRONOUNCEMENT
The American Institute of Certified Public Accountants issued Statement of
Position No. 94-4 entitled "Reporting of Investment Contracts Held by
Health and Welfare Benefit Plans and defined-Contribution Pension Plans",
which requires certain investment contracts to be reported at fair value or
contract value. The Plan has adopted such statement on January 1, 1996.
<PAGE>
The HFS Stable Value Fund primarily invests in investment contracts
providing a guaranteed return on principal invested over a specified time
period. The crediting interest rates at December 31, 1996 for various
investment contracts ranged from 4.84% to 7.66%. The average yields of the
HFS Stable Value Fund, established on February 1, 1996 in connection
with the transfer of assets to the Trustee (See Note 2 - Change in Trustee)
for the year were 6.14%. All investment contracts in the HFS Stable Value
Fund are fully benefit-responsive and are recorded at contract value
which equals principal plus accrued interest. The HFS Stable Value Fund
balance at December 31, 1996 of $8,173,059 approximated the fair value.
7. PLAN SUMMARY BY FUND
The following tables represent the changes in net assets available for
benefits, summarized by fund, for the years ended December 31, 1996 and
1995 and the statements of net assets available for benefits as of December
31, 1996 and 1995.
* * * * *
<PAGE>
CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
GIC/HFS
Stable Value Aim Aim Aim
Fund Charter Weingarten Constellation SteinRoe Subtotal
------------ ------------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net assets available for
benefits-beginning of year ..... $ 9,089,176 $ 2,353,460 $ 1,848,084 $ 3,895,624 $ 1,051,199 $ 18,237,543
------------ ------------ ------------ ------------ ------------ ------------
Additions:
Contributions:
Plan contributions:
Plan participants ............ 1,074,729 296,633 265,313 522,262 16,815 2,175,752
Employer ..................... 183,746 69,108 86,471 181,687 (33,642) 487,370
Rollovers .................... 698,704 346,836 150,706 353,398 (5,231) 1,544,413
Realized and unrealized
gains (losses) ................. -- 193,994 125,178 14,808 (15,742) 318,238
Dividend and interest income .... 465,064 194,224 235,602 347,663 4,442 1,246,995
----------- ------------ ------------ ------------ ------------ ------------
2,422,243 1,100,795 863,270 1,419,818 (33,358) 5,772,768
----------- ------------ ------------ ------------ ------------ ------------
Deductions:
Distributions:
Plan participants ............ 2,986,797 186,587 210,082 160,292 41,732 3,585,490
Trustee fees ................. 606 1,803 6,365 3,061 -- 11,835
----------- ------------ ------------ ------------ ------------ ------------
2,987,403 188,390 216,447 163,353 41,732 3,597,325
----------- ------------ ------------ ------------ ------------ ------------
Net Additions (Deductions) ....... (565,160) 912,405 646,823 1,256,465 (75,090) 2,175,443
NET TRANSFERS .................... (350,957) (221,148) (386,282) (531,826) (976,109) (2,466,322)
----------- ------------ ------------ ------------ ------------ ------------
Net assets available for
benefits-end of year ........... $ 8,173,059 $ 3,044,717 $ 2,108,625 $ 4,620,263 $ -- $ 17,946,664
============ ============ ============ ============ ============ ============
</TABLE>
<PAGE>
CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Company Accrued
Common Amounts
Subtotal Templeton Stock Loans Unallocated Subtotal
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net assets available for
benefits-beginning of year ..... $ 18,237,543 $ 1,196,564 $ 2,855,993 $ 974,960 $ 349,841 $ 23,614,901
------------ ------------ ------------ ------------ ------------ ------------
Additions:
Contributions:
Plan contributions:
Plan participants ............ 2,175,752 89,673 720,943 -- 282,668 3,269,036
Employer ..................... 487,370 61,358 163,826 -- (80,132) 632,422
Rollovers .................... 1,544,413 155,772 310,432 108,760 -- 2,119,377
Realized and unrealized
gains (losses) ................. 318,238 127,701 1,106,517 -- -- 1,552,456
Dividend and interest income .... 1,246,995 70,763 32,277 (260) 14,637 1,364,412
------------ ------------ ------------ ----------- ----------- -----------
5,772,768 505,267 2,333,995 108,500 217,173 8,937,703
------------ ------------ ------------ ----------- ----------- -----------
Deductions:
Distributions:
Plan participants ............ 3,585,490 152,833 448,118 117,536 -- 4,303,977
Trustee fees ................. 11,835 733 (1,432) 160 -- 11,296
------------ ------------ ------------ ----------- ----------- -----------
3,597,325 153,566 446,686 117,696 -- 4,315,273
------------ ------------ ------------ ----------- ----------- -----------
Net Additions (Deductions) ....... 2,175,443 351,701 1,887,309 (9,196) 217,173 4,622,430
NET TRANSFERS .................... (2,466,322) (123,173) 950,964 158,015 4,803 (1,475,713)
------------ ------------ ------------ ------------ ------------ ------------
Net assets available for
benefits-end of year ........... $ 17,946,664 $ 1,425,092 $ 5,694,266 $ 1,123,779 $ 571,817 $ 26,761,618
============ ============ ============ ============ ============ ============
</TABLE>
<PAGE>
CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MFS ML ML
Cash Emerging Growth ML Corp. Bond
Subtotal Fund Growth Fund Capital Fund Putnam Total
----------- -------- --------- -------- -------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets available for
benefits-beginning of year ..... $ 23,614,901 $ -- $ -- $ -- $ -- $ -- $ -- $ 23,614,901
------------ -------- -------- -------- ------- --------- ---------- ------------
Additions:
Contributions:
Plan contributions:
Plan participants ............ 3,269,036 (6,838) 41,657 48,286 32,669 111,599 110,331 3,606,740
Employer ..................... 632,422 -- 8,304 9,763 5,978 24,890 24,820 706,177
Rollovers .................... 2,119,377 54,243 344,760 691,809 199,729 125,762 719,341 4,255,021
Realized and unrealized
gains (losses) ................. 1,552,456 -- (18,935) (36,013) (6,562) (34,961) (26,855) 1,429,130
Dividend and interest income .... 1,364,412 20,670 8,078 63,501 5,444 55,280 11,871 1,529,256
------------ ------- -------- -------- -------- -------- ---------- ------------
8,937,703 68,075 383,864 777,346 237,258 282,570 839,508 11,526,324
------------ ------- -------- -------- -------- -------- ---------- ------------
Deductions:
Distributions:
Plan participants ............ 4,303,977 (125,937) 475 902 533 88,170 170 4,268,290
Trustee fees ................. 11,296 -- (37) (47) (20) 233 -- 11,425
------------ -------- -------- -------- -------- -------- --------- ------------
4,315,273 (125,937) 438 855 513 88,403 170 4,279,715
------------ -------- -------- -------- -------- -------- --------- ------------
Net Additions (Deductions) ....... 4,622,430 194,012 383,426 776,491 236,745 194,167 839,338 7,246,609
NET TRANSFERS .................... (1,475,713) (50,149) 171,200 111,755 48,258 795,206 399,443 --
------------ -------- -------- -------- -------- --------- ----------- ------------
Net assets available for
benefits-end of year ........... $ 26,761,618 $143,863 $554,626 $888,246 $285,003 $ 989,373 $ 1,238,781 $ 30,861,510
============ ======== ======== ======== ======== ========= =========== ============
</TABLE>
<PAGE>
CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Guaranteed
Income Aim Aim Aim
Fund Charter Weingarten Constellation SteinRoe Subtotal
------------ ------------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net assets available for
benefits-beginning of year $ 2,186,086 $ 762,198 $ 703,393 $ 1,293,779 $ 171,970 $ 5,117,426
------------ ------------ ------------ ------------ ------------ ------------
Additions:
Contributions:
Plan contributions:
Plan participants .... 608,838 236,702 237,817 536,859 126,323 1,746,539
Employer ............. 113,648 44,679 44,938 101,642 23,286 328,193
Rollovers ............ 6,252,667 1,208,303 712,863 1,721,205 719,067 10,614,105
Realized and unrealized
gains (losses) ........... -- 56,426 1,220 334,858 24,040 416,544
Dividend and interest
income ................... 205,410 214,151 236,235 124,610 19,143 799,549
------------ ------------ ------------ ------------ ------------ ------------
7,180,563 1,760,261 1,233,073 2,819,174 911,859 13,904,930
Deductions:
Distributions:
Plan participants ...... 231,212 121,428 75,791 175,372 17,849 621,652
Trustee fees ........... 341 3,976 3,491 6,988 1,171 15,967
------------ ------------ ------------ ------------ ------------ ------------
231,553 125,404 79,282 182,360 19,020 637,619
Net Additions (Deductions) . 6,949,010 1,634,857 1,153,791 2,636,814 892,839 13,267,311
NET TRANSFERS .............. (45,920) (43,595) (9,100) (34,969) (13,610) (147,194)
------------ ------------ ------------ ------------ ------------ ------------
Net assets available for
benefits-end of year ..... $ 9,089,176 $ 2,353,460 $ 1,848,084 $ 3,895,624 $ 1,051,199 $ 18,237,543
============ ============ ============ ============ ============ ============
</TABLE>
<PAGE>
CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Company Accrued
Common Amounts
Subtotal Templeton Stock Loans Unallocated Total
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net assets available for
benefits-beginning of year $ 5,117,426 $ 282,761 $ 301,720 $ 212,703 $ 215,291 $ 6,129,901
------------ ------------ ------------ ------------ ------------ ------------
Additions:
Contributions:
Plan contributions:
Plan participants ...... 1,746,539 386,905 212,014 -- 48,807 2,394,265
Employer ............... 328,193 68,669 39,406 -- 140,458 576,726
Rollovers .............. 10,614,105 504,605 1,335,382 543,942 -- 12,998,034
Realized and unrealized
gains (losses) ........... 416,544 9,718 932,999 -- -- 1,359,261
Dividend and interest
income ................... 799,549 34,497 2,137 33,895 13 870,091
------------ ------------ ------------ ------------ ------------ ------------
13,904,930 1,004,394 2,521,938 577,837 189,278 18,198,377
Deductions:
Distributions:
Plan participants ...... 621,652 28,024 45,407 -- -- 695,083
Trustee fees ........... 15,967 2,106 221 -- -- 18,294
------------ ------------ ------------ ------------ ------------ ------------
637,619 30,130 45,628 -- -- 713,377
Net Additions (Deductions) . 13,267,311 974,264 2,476,310 577,837 189,278 17,485,000
NET TRANSFERS .............. (147,194) (60,461) 77,963 184,420 (54,728) --
------------ ------------ ------------ ------------ ------------ ------------
Net assets available for
benefits-end of year ..... $ 18,237,543 $ 1,196,564 $ 2,855,993 $ 974,960 $ 349,841 $ 23,614,901
============ ============ ============ ============ ============ ============
</TABLE>
<PAGE>
NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
GIC/HFS
Stable Value Aim Aim Aim
Fund Charter Weingarten Constellation SteinRoe Subtotal
------------ ----------- ----------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments ............. $ 8,173,059 $ 3,044,717 $ 2,108,625 $ 4,620,263 $ -- $17,946,664
Interest receivable
Contributions receivable:
Plan participants ....... -- -- -- -- -- --
Employer ................ -- -- -- -- -- --
----------- ----------- ----------- ----------- ------------ -----------
Total Assets ............ $ 8,173,059 $ 3,044,717 $ 2,108,625 $ 4,620,263 $ -- $17,946,664
Liabilities:
Other liabilities ....... -- -- -- -- -- --
----------- ----------- ----------- ----------- ------------ -----------
Net assets available for
benefits .............. $ 8,173,059 $ 3,044,717 $ 2,108,625 $ 4,620,263 $ -- $17,946,664
=========== =========== =========== =========== ============ ===========
</TABLE>
<PAGE>
NET ASSETS AVAILABLE FOR BENEFITS (Continued)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Company Accrued
Common Amounts
Subtotal Templeton Stock Loans Unallocated Subtotal
----------- ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments ............. $17,946,664 $ 1,425,092 $ 5,694,266 $ 1,123,779 $ -- $26,761,618
Interest receivable ..... -- -- -- -- 14,637 14,637
Contributions receivable:
Plan participants ....... -- -- -- -- 462,145 462,145
Employer ................ -- -- -- -- 95,035 95,035
----------- ----------- ----------- ----------- ----------- -----------
Total Assets ............ $17,946,664 $ 1,425,092 $ 5,694,266 $ 1,123,779 $ 571,817 $26,761,618
Liabilities:
Other liabilities ....... -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net assets available for
benefits .............. $17,946,664 $ 1,425,092 $ 5,694,266 $ 1,123,779 $ 571,817 $26,761,618
=========== =========== =========== =========== =========== ===========
</TABLE>
<PAGE>
NET ASSETS AVAILABLE FOR BENEFITS (Continued)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MFS ML ML
Cash Emerging Growth ML Corp. Bond
Subtotal Fund Growth Fund Capital Fund Putnam Total
----------- ----------- --------- ---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments ............. $26,189,801 $ 143,863 $ 554,626 $ 888,246 $ 285,003 $ 989,373 $ 1,238,781 $30,289,693
Interest receivable ..... 14,637 -- -- -- -- -- -- 14,637
Contributions receivable:
Plan participants ....... 462,145 -- -- -- -- -- -- 462,145
Employer ................ 95,035 -- -- -- -- -- -- 95,035
----------- ----------- --------- --------- --------- ---------- ----------- -----------
Total Assets ............ $26,761,618 $ 143,863 $ 554,626 $ 888,246 $ 285,003 $ 989,373 $ 1,238,781 $30,861,510
Liabilities:
Other liabilities ....... -- -- -- -- -- -- -- --
----------- ----------- --------- --------- --------- ---------- ----------- -----------
Net assets available for
benefits-end of year .. $26,761,618 $ 143,863 $ 554,626 $ 888,246 $ 285,003 $ 989,373 $ 1,238,781 $30,861,510
=========== =========== ========= ========= ========= ========== =========== ===========
</TABLE>
<PAGE>
NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Guaranteed
Income Aim Aim Aim
Fund Charter Weingarten Constellation SteinRoe Subtotal
----------- ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments ............. $ 9,045,903 $ 2,356,472 $ 1,850,727 $ 3,900,928 $ 1,047,079 $18,201,109
Interest receivable ..... 43,273 -- -- -- 5,130 48,403
Contributions receivable:
Plan participants ....... -- -- -- -- -- --
Employer ................ -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total Assets ............ 9,089,176 2,356,472 1,850,727 3,900,928 1,052,209 18,249,512
Liabilities:
Other liabilities ....... -- 3,012 2,643 5,304 1,010 11,969
----------- ----------- ----------- ----------- ----------- -----------
Net assets available for
benefits .............. $ 9,089,176 $ 2,353,460 $ 1,848,084 $ 3,895,624 $ 1,051,199 $18,237,543
=========== =========== =========== =========== =========== ===========
</TABLE>
<PAGE>
NET ASSETS AVAILABLE FOR BENEFITS (Continued)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Company Accrued
Common Amounts
Subtotal Templeton Stock Loans Unallocated Total
----------- ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments ............. $18,201,109 $1 ,190,467 $ 2,858,628 $ 974,960 $ -- $23,225,164
Interest receivable ..... 48,403 7,604 -- -- -- 56,007
Contributions receivable:
Plan participants ....... -- -- -- -- 179,477 179,477
Employer ................ -- -- -- -- 170,364 170,364
----------- ----------- ----------- ----------- ---------- -----------
Total Assets ............ 18,249,512 1,198,071 2,858,628 974,960 349,841 23,631,012
Liabilities:
Other liabilities ....... 11,969 1,507 2,635 -- -- 16,111
----------- ----------- ----------- ----------- ----------- -----------
Net assets available for
benefits ............ $18,237,543 $ 1,196,564 $ 2,855,993 $ 974,960 $ 349,841 $23,614,901
=========== =========== =========== =========== =========== ===========
</TABLE>
<PAGE>
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Contract or
Interest Maturity Number of Current
Description Rates Dates Units/Shares Cost Value
- ---------------------------- -------------- -------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
HFS Stable Value 8,173,059 $ 8,173,059 $ 8,173,059
AIM Charter Fund 275,042 2,876,649 3,044,717
AIM Weingarten Fund 113,918 2,091,820 2,108,625
AIM Constellation Fund 182,908 4,267,126 4,620,263
Templeton Foreign Fund 137,557 1,331,634 1,425,092
Company Common Stock 95,302 3,917,214 5,694,266
Employee Loans Receivable
Prime + 1%; 1 month to
5 years 1,123,779 1,123,779 1,123,779
MFS Emerging Growth Fund
Class A 18,311 573,683 554,626
ML Growth Fund Class A 33,993 924,893 888,246
ML Capital Fund Class A 9,179 291,798 285,003
ML Corp. Inter Term Bond Fund 86,863 1,013,499 989,373
Putnam New Opportunity Fund 30,489 1,265,541 1,238,781
Cash Fund 143,863 143,863
-------------- ------------
$ 27,994,558 $ 30,289,693
============== ============
</TABLE>
<PAGE>
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Purchases Sales
Identify of Description Purchase Number of Selling Number of Net Gain
Party Involved of Assets Price Transactions Price Transactions Or (Loss)
- -------------- -------------- ------------- ------------ ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
HFS Stable Value Fund Investment $ 10,749,490 351
Contract 2,574,124 $ 2,574,124 266 $ -
AIM Charter Mutual Fund 3,323,306 174
444,497 467,363 229 22,867
AIM Weingarten Mutual Fund 2,497,679 175
399,596 423,513 216 23,917
AIM Constellation Mutual Fund 5,097,906 203
827,105 889,075 260 61,970
Templeton Foreign Mutual Fund 1,611,193 160
Fund 278,541 294,918 171 16,377
Company Common Common Stock 4,296,975 248
Stock 347,170 642,416 247 295,245
MFS Emerging Growth Mutual Fund 584,513 112
Fund Class A 10,830 10,952 45 122
ML Growth Fund Class A Mutual Fund 937,351 100
12,778 13,412 37 634
ML Capital Fund Class A Mutual Fund 300,668 87
8,870 9,103 31 233
ML Corp Inter Term Bond Mutual Fund 1,275,483 137
Fund 261,969 251,134 160 (10,835)
Putnam New Opportunity Mutual Fund 1,314,544 118
Fund 49,003 48,908 17 (95)
</TABLE>
<PAGE>
SIGNATURES
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.
HFS Incorporated
Employee Savings Plan
By: /s/ Scott E. Forbes
Scott E. Forbes
Senior Vice President, Finance
Date: June 30, 1997 HFS Incorporated
<PAGE>
EXHIBIT INDEX
Exhibit Page No.
- ------- --------
23.1 Consent of Deloitte & Touche LLP...................................
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
33-56354, 33-70632, 33-72752, 33-83956, 33-94756, 333-06733, 333-6939 and
333-25635 of HFS Incorporated on Form S-8 and Nos. 333-11031 and 333-17453 of
HFS Incorporated on Form S-3 of our report dated June 28, 1997, appearing in
this Annual Report on Form 11-K of HFS Incorporated Employee Savings Plan for
the year ended December 31, 1996.
/s/ Deloitte & Touche LLP
Parsippany, NJ
June 28, 1997
