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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________ to __________
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COMMISSION FILE NO. 1-11402
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CENDANT CORPORATION
EMPLOYEE SAVINGS PLAN
(FULL TITLE OF THE PLAN)
CENDANT CORPORATION
(NAME OF ISSUER OF THE SECURITIES HELD PURSUANT TO THE PLAN)
9 WEST 57TH STREET
NEW YORK, NEW YORK 10019
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
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CENDANT CORPORATION
EMPLOYEE SAVINGS PLAN
TABLE OF CONTENTS
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PAGE
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INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of
December 31, 2001 and 2000 2
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2001 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULE:
Schedule H, line 4i - Schedule of Assets Held At End of Year 9
SIGNATURES 10
EXHIBIT INDEX: 11
Consent of Deloitte & Touche LLP 12
Schedules required under the Employee Retirement Income Security Act of 1974
("ERISA"), other than the schedule listed above, are omitted because of the
absence of the conditions under which they are required.
INDEPENDENT AUDITORS' REPORT
To the Trustees and Participants of
Cendant Corporation Employee Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of Cendant Corporation Employee Savings Plan (the "Plan") as of December 31,
2001 and 2000, and the related statement of changes in net assets available for
benefits for the year ended December 31, 2001. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2001 and 2000, and the changes in net assets available for benefits for the year
ended December 31, 2001 in conformity with accounting principles generally
accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
at the end of the year 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 schedule is the responsibility of the Plan's management. Such
schedule has been subjected to the auditing procedures applied in our audit of
the basic 2001 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
New York, New York
June 14, 2002
1
CENDANT CORPORATION
EMPLOYEE SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2001 AND 2000
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2001 2000
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ASSETS:
Investments, at contract value $ 87,868,153 $ 71,606,613
Investments, at fair value 357,342,305 296,289,662
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Total investments 445,210,458 367,896,275
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Receivables:
Participant contributions - 914,351
Employer contributions - 596,480
Interest and dividends 92,503 76,127
Transfer receivable 42,079,063 -
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Total receivables 42,171,566 1,586,958
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NET ASSETS AVAILABLE FOR BENEFITS $487,382,024 $369,483,233
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The accompanying notes are an integral part of these financial statements.
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CENDANT CORPORATION
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET CHANGES IN ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2001
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ADDITIONS TO NET ASSETS:
Interest and dividends $ 9,592,591
Contributions:
Employer 33,363,765
Participants 37,152,740
Rollovers 3,071,306
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Total contributions 73,587,811
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Total additions 83,180,402
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DEDUCTIONS FROM NET ASSETS:
Benefits paid to participants 36,380,930
Net depreciation in fair value of investments 9,075,835
Administrative expenses 49,986
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Total deductions 45,506,751
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NET INCREASE IN NET ASSETS AVAILABLE
FOR BENEFITS 37,673,651
TRANSFER IN OF NET ASSETS FROM MERGED PLANS 80,225,140
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR 369,483,233
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NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $487,382,024
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The accompanying notes are an integral part of these financial statements.
3
CENDANT CORPORATION
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF THE PLAN
The following description of the Cendant Corporation Employee Savings Plan
(the "Plan") provides only general information. Participants should refer to
the Summary Plan Description or the Plan document, which are available from
Cendant Corporation (the "Company" or the "Plan Sponsor"), for a more
complete description of the Plan's provisions.
The Plan is a defined contribution plan established for certain eligible
employees of the Company that provides Internal Revenue Code (the "IRC")
Section 401(k) employee salary deferral benefits and additional employer
contributions for the Company's employees. The Plan is subject to the
provisions of ERISA. Merrill Lynch Trust Company is the Plan's trustee (the
"Trustee"). The Plan was amended during 2001 and 2000 to allow for existing
plans of companies acquired by the Company to be combined into the Plan.
During 2001, approximately $80.2 million in Plan assets associated with the
One2One Dynamics, Inc. Employee Savings Plan, the RCI Retirement Savings
Plan, the Cheap Tickets, Inc. 401(k) Retirement Savings Plan, the Highwire,
Inc. 401(k) Savings Plan and Trust, the Fairfield Resorts, Inc.
Savings/Profit Sharing Plan, the Axiom Financial, Inc. 401(k) Retirement Plan
and the RMR Financial 401(k) Profit Sharing Plan and Trust (collectively
the "Merged Plans") were merged into the Plan. As of December 31, 2001,
assets of $42.1 million have not been transferred from trusts of the
Merged Plans to the primary Plan trust and are reported as a transfer
receivable on the Statement of Net Assets Available for Benefits.
The following is a summary of certain Plan provisions:
a. ELIGIBILITY - Each regular employee of the Company (as defined in the Plan
document) is eligible to participate in the Plan on the entry date
following both attainment of age 18 and completion of six months of
service.
b. PARTICIPANT CONTRIBUTIONS - Participants may elect to make pre-tax
contributions up to 15% of pre-tax annual compensation up to the statutory
maximum of $10,500 for 2001 and 2000. Participants may change their
investment allocations between funds on a daily basis. Participants should
refer to each fund's prospectus for a more complete description of the
risks associated with each fund.
c. DISCRETIONARY EMPLOYER CONTRIBUTIONS - The Company makes contributions to
the Plan equal to 100% of each eligible participants' salary deferral up
to 6% of such participants' eligible compensation.
d. ROLLOVERS - All employees, upon commencement of employment, are provided
the option of making a rollover contribution into the Plan in accordance
with Internal Revenue Service (the "IRS") regulations.
4
e. VESTING SCHEDULE - At any time, participants are 100% vested in their
pre-tax contributions. Employer contributions credited to accounts of
participants who commenced employment on or subsequent to January 1, 1998
vest as shown in the following schedule:
YEARS OF VESTED
SERVICE INTEREST
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Less than 1 0%
1 34%
2 67%
3 100%
Employer contributions credited to accounts of participants who commenced
employment prior to January 1, 1998 are 100% vested in such contributions.
f. LOAN PROVISION - Participants may borrow from their fund accounts up to
the lesser of $50,000 or 50% of their vested balance provided the vested
balance is at least $1,000. Loan terms range from 1-5 years or up to 15
years for the purchase of a primary residence and are secured by the
participant's vested account balance. Loan repayments must be made through
payroll deductions over a term not to exceed 5 years unless the proceeds
of the loan are used to purchase the principal residence of the
participant, in which case the term is not to exceed 15 years. The loans
bear interest at a rate commensurate with the prime rate plus one percent.
Principal and interest is paid ratably through periodic payroll
deductions.
g. PARTICIPANT ACCOUNTS - Each participant's account is credited with the
participant's contributions and allocations of the Company's contributions
and Plan earnings. Allocations are based on participant account balances,
as defined in the Plan document. The benefit to which a participant is
entitled is the benefit that can be provided from the participant's vested
account.
h. BENEFITS PAID TO PARTICIPANTS - Participants are entitled to withdraw all
or any portion of their vested balance. Participants may make full or
partial withdrawals of funds in any of their accounts upon attaining age
59 1/2 or for hardship in certain circumstances, as defined in the Plan
document, before that age. Distributions to terminated employees are
recorded in each fund's financial statements when paid. Amounts payable to
participants who have terminated participation in the Plan were
approximately $681,000 and $1.2 million at December 31, 2001 and 2000.
i. FORFEITED ACCOUNTS - Forfeited balances of participants' non-vested
accounts shall first be used to pay plan expenses, if any, and then to
decrease employer contributions. During the year ended December 31, 2001,
forfeited account balances were approximately $523,000. In 2001, employer
contributions were reduced by approximately $465,000 from the forfeited
nonvested accounts.
j. ADMINISTRATIVE EXPENSES - All administrative expenses of the Plan, other
than costs incurred to maintain participant loan accounts, were paid by
the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. BASIS OF ACCOUNTING - The accompanying financial statements have been
prepared in conformity with accounting principles generally accepted in
the United States of America on the accrual basis of accounting.
b. CASH AND CASH EQUIVALENTS - The Company considers highly liquid
investments with an original maturity of three months or less to be cash
equivalents.
5
c. VALUATION OF INVESTMENTS AND INCOME RECOGNITION - The Plan's investments
are stated at fair value. Securities traded on a national securities
exchange are valued at the last reported sales price on the last business
day of the Plan year. The shares of registered investment companies are
valued at the quoted market price, which represents the net asset value of
shares held by the Plan at year-end. Loans to participants are valued at
cost, which approximates fair value. Purchases and sales of securities are
recorded on a trade-date basis. Dividends are recorded on the ex-dividend
date.
The Plan's group annuity contract is valued at contract value. Contract
value represents contributions made under the contract, plus interest,
less funds used to pay benefits to participants.
d. USE OF ESTIMATES - The preparation of financial statements in conformity
with accounting standards generally accepted in the United States of
America required management to make estimates and assumptions that
affected the amounts reported and related disclosures. Actual results
could differ from those estimates.
e. CREDIT RISK AND UNCERTAINTIES - The Plan invests in various securities
including U.S. Government securities, corporate debt instruments and
corporate stocks. Investment securities, in general, are exposed to
various risks, such as interest rate, credit and overall market
volatility. Due to the level of risk associated with certain investment
securities, it is reasonably possible that changes in the values of
investment securities will occur in the near term and that such changes
could materially affect the amounts reported in the Statements of Net
Assets Available for Plan Benefits.
f. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS - On January 1, 2001, the
Company adopted the provisions of SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133, as amended and
interpreted, establishes accounting and reporting standards for derivative
instruments and hedging activities. As required by SFAS No. 133, the
Company has recorded all such derivatives at fair value in the
Consolidated Balance Sheet. The adoption of SFAS No. 133 did not have an
impact on the Plan's financial statements.
3. INVESTMENTS
The following table presents investments that represent five percent or more
of the Plan's assets as of December 31:
2001 2000
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Stable Value Fund $ 85,686,264 $ 71,606,613
Cendant Corporation Common Stock Fund 72,947,599 37,263,966
Merrill Lynch Equity Index Trust 47,209,658 35,988,975
Aim Charter Fund 33,033,842 43,787,178
Neuberger Berman Separately Managed Portfolio - 33,158,954
During 2001, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
(depreciated) in fair value, as follows:
2001
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Cendant Corporation Common Stock Fund $ 38,485,865
Mutual Funds (41,932,980)
Common/Collective Trusts (5,628,720)
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$ (9,075,835)
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4. TAX STATUS
The Plan is qualified under section 401(a) of the IRC and is exempt from
taxation under section 501(a). The Plan received a favorable IRS
determination letter dated May 21, 1996. During 2001, the Company restated
the Plan document and filed for a new determination letter with the IRS. The
Plan administrator believes that the Plan is currently designed and being
operated in compliance with the applicable requirements of the IRC and the
related trust was tax exempt as of the financial statement dates. Therefore,
no provision for income taxes has been included in the Plan's financial
statements. During 2001, the Company restated the Plan document and filed for
a new determination letter with the IRS.
5. INVESTMENT CONTRACTS WITH INSURANCE COMPANIES
The Stable Value Fund primarily invested in investment contracts providing a
guaranteed return on principal invested over a specified time period.
Thereafter, contributions to such fund are invested in the Merrill Lynch
Retirement Preservation Trust. The crediting interest rates at December 31,
2001 for various investment contracts ranged from 5.20% to 5.45% and the
average yield of the Stable Value Fund for the 2001 and 2000 plan year was
6.25% and 6.40%, respectively. All investment contracts in the Stable Value
Fund are fully benefit responsive and are recorded at contract value, which
equals principal plus accrued interest. The contract value of the Stable
Value Fund and Merrill Lynch Retirement Preservation Trust at December 31,
2001 and 2000 was $87,868,153 and $71,606,613, respectively, which
approximated fair value.
6. PARTY-IN-INTEREST TRANSACTIONS
A portion of the Plan's investments are shares in funds managed by Merrill
Lynch. Merrill Lynch is the custodian of these investments as defined by the
Plan and, therefore, these transactions qualify as exempt party-in-interest
transactions.
7. PLAN TERMINATION
Although the Company has not expressed any intention to do so, the Company
reserves the right to modify, suspend, amend or terminate the Plan in whole
or in part at any time subject to the provisions of ERISA. If the Plan is
terminated, the amounts credited to the employer contribution accounts of all
participants become fully vested.
8. SUBSEQUENT EVENTS
Effective January 1, 2002:
o each participant is eligible to make salary deferral contributions to the
Plan following the later of (i) date of hire or (ii) the date on which the
age eighteen is attained,
o each participant who commenced employment prior to July 1, 2001 is
eligible to receive employer match contributions as of January 1, 2002 and
any participants who commenced employment on or after July 1, 2001 is
eligible to receive employer match contributions as of the next payroll
after they have completed one year of service,
o the Plan will be considered a "safe harbor" plan pursuant to Sections
401(k)(12) and 401(m)(11) of the IRC, whereby the Company shall make a
contribution equal to 100% of the participants pre-tax contribution not to
exceed 6% of the participants compensation,
o each participant shall be permitted to contribute not less than 1% and not
more than 16% as a salary deferral contribution,
7
o each participant shall be 100% vested in an employer contributions made to
the Plan on or after January 1, 2002, however any employer contributions
made to the Plan prior to January 1, 2002 shall continue to vest in
accordance with the provisions previously set forth.
******
8
CENDANT CORPORATION
EMPLOYEE SAVINGS PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS HELD AT END OF YEAR
DECEMBER 31, 2001
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NUMBER OF
SHARES, UNITS CURRENT
DESCRIPTION OR PAR VALUE VALUE
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Common stock funds:
Cendant Corporation Common Stock Fund 3,719,918 $ 72,947,599
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Total Common stock funds 72,947,599
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Common/collective trusts:
Merrill Lynch Equity Index Trust** 585,728 47,209,658
Merrill Lynch Retirement Preservation Trust** 2,181,888 2,181,888
Stable Value Fund** 85,686,264 85,686,264
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Total Common/collective trusts 135,077,810
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Mutual Funds:
AIM Charter Fund 2,882,534 33,033,842
AIM Equity Constellation Fund 455,693 10,070,807
AIM Weingarten Fund 661,599 8,924,971
Alliance Premier Growth Fund 209,894 4,265,038
Alliance Quasar Fund 155,131 3,152,267
CDC Investment Large Capital Growth Fund 210,886 2,918,660
CDC Investment Star Growth Fund 780,259 6,835,070
Davis NY Venture Fund 314,699 8,002,807
Federated High Income Bond Fund 82,455 631,602
Franklin Balance Sheet 217,867 8,719,029
GAM International Fund 320,702 4,845,806
MASS Investment Growth 710,037 9,152,373
Merrill Lynch Aggregate Bond Index Fund** 136,327 1,431,430
Merrill Lynch Balanced Capital Fund** 361,570 9,664,766
Merrill Lynch Corp Bond Fund Inter-Term** 503,234 5,681,517
Merrill Lynch EuroFund** 93,515 1,174,550
Merrill Lynch Fundamental Growth Fund** 277,145 5,019,103
Merrill Lynch International Index Fund** 92,860 800,450
Merrill Lynch Small Cap Index** 75,372 793,671
MFS Emerging Growth Fund 228,802 7,600,787
Neuberger Berman Genesis Trust 371,259 10,807,343
Neuberger Berman International Equity Fund 253,066 2,897,610
Neuberger Berman Separately Managed Portfolio 2,910,573 21,624,175
Oppenheimer Capital Income Fund 657,195 7,814,043
PIMCO Renaissance Fund 466,491 9,600,391
PIMCO Total Return Fund 1,426,984 14,926,257
Putnam New Opportunities Fund 354,207 14,515,421
Templeton Foreign Fund 1,010,606 9,348,102
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Total Mutual funds 224,251,888
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Other:
Loan Fund** 12,425,129
Cash 508,032
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Total Other 12,933,161
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Total $445,210,458
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*Represents exempt party-in-interest transaction (refer to Note 6).
**Maturity dates range from January 2002 to February 2026. Interest rates range
from 6.0 % to 10.5 %.
******
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Committee has duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
Cendant Corporation Employee Savings Plan
BY: /s/ TERENCE P. CONLEY
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Terence P. Conley
Executive Vice President,
Human Resources
Cendant Corporation
Cendant Corporation
BY: /s/ KEVIN M. SHEEHAN
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Kevin M. Sheehan
Senior Executive Vice President
and Chief Financial Officer
Cendant Corporation
Date: July 1, 2002
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
23.1 Consent of Deloitte & Touche LLP, Cendant Corporation Employee
Savings Plan.
11