UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

Form 11-K

 

(Mark One)

 

ý

ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the fiscal year ended December 31, 2003

 

OR

 

o

TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the transition period from                      to                     

 


 

Commission File No. 1-10308

 


 

A.            Full title of the plan and address of the plan, if different from that of the issuer named below:

 

Avis Voluntary Investment Savings Plan
For Bargaining Hourly Employees

 

B.            Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 

Cendant Corporation

9 West 57th Street

New York, New York 10019

 

 



 

AVIS VOLUNTARY INVESTMENT SAVINGS PLAN FOR BARGAINING HOURLY EMPLOYEES

 

TABLE OF CONTENTS

 

 

Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

1

 

 

FINANCIAL STATEMENTS:

 

 

 

Statements of Net Assets Available for Benefits as of December 31, 2003 and 2002

2

 

 

Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2003

3

 

 

Notes to Financial Statements

4

 

 

SUPPLEMENTAL SCHEDULE:

 

 

 

Form 5500, Part IV, Schedule H, line 4i – Schedule of Assets (Held At End of Year) as of December 31, 2003

9

 

 

SIGNATURES

10

 

 

EXHIBIT 23.1 - CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

11

 

 

 

All other Schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.

 



 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Trustee and Participants of the
Avis Voluntary Investment Savings Plan For Bargaining Hourly Employees:

 

We have audited the accompanying statements of net assets available for benefits of the Avis Voluntary Investment Savings Plan for Bargaining Hourly Employees (the “Plan”) as of December 31, 2003 and 2002, and the related statement of changes in net assets available for benefits for the year ended December 31, 2003.  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 standards of the Public Company Accounting Oversight Board (United States).  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, 2003 and 2002, and the changes in net assets available for benefits for the year ended December 31, 2003, 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 end of year) as of December 31, 2003 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 2003 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 25, 2004

 

1



 

AVIS VOLUNTARY INVESTMENT SAVINGS PLAN FOR BARGAINING HOURLY EMPLOYEES

 

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

AS OF DECEMBER 31, 2003 AND 2002

 

 

 

2003

 

2002

 

ASSETS:

 

 

 

 

 

Investments:

 

 

 

 

 

Interest in Avis Rent A Car, Inc. Voluntary Savings Plan Combined Fund Master Trust

 

$

 

$

17,698,035

 

Cash and cash equivalents

 

148

 

 

Mutual funds

 

6,751,179

 

 

Common/collective trusts

 

6,471,414

 

 

Guaranteed investment contracts

 

6,367,006

 

 

Common stock fund

 

47,273

 

 

Loans to participants

 

1,215,383

 

1,145,353

 

Total investments

 

20,852,403

 

18,843,388

 

 

 

 

 

 

 

Receivables:

 

 

 

 

 

Participant contributions

 

14,739

 

64,287

 

Interest

 

150

 

 

Total receivables

 

14,889

 

64,287

 

 

 

 

 

 

 

NET ASSETS AVAILABLE FOR BENEFITS

 

$

20,867,292

 

$

18,907,675

 

 

The accompanying notes are an integral part of these financial statements.

 

2



 

AVIS VOLUNTARY INVESTMENT SAVINGS PLAN FOR BARGAINING HOURLY EMPLOYEES

 

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

FOR THE YEAR ENDED DECEMBER 31, 2003

 

ADDITIONS TO NET ASSETS:

 

 

 

Net investment income:

 

 

 

Interest

 

$

666,208

 

Net appreciation in fair value of investments

 

1,762,904

 

Net investment income

 

2,429,112

 

 

 

 

 

Contributions:

 

 

 

Participants

 

1,220,065

 

Rollovers

 

41,437

 

Total contributions

 

1,261,502

 

 

 

 

 

Total additions

 

3,690,614

 

 

 

 

 

DEDUCTIONS FROM NET ASSETS:

 

 

 

Benefits paid to participants

 

1,726,572

 

Administrative expenses

 

4,425

 

Total deductions

 

1,730,997

 

 

 

 

 

INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS

 

1,959,617

 

 

 

 

 

NET ASSETS AVAILABLE FOR BENEFITS:

 

 

 

BEGINNING OF YEAR

 

18,907,675

 

END OF YEAR

 

$

20,867,292

 

 

The accompanying notes are an integral part of these financial statements.

 

3



 

AVIS VOLUNTARY INVESTMENT SAVINGS PLAN FOR BARGAINING HOURLY EMPLOYEES

 

NOTES TO FINANCIAL STATEMENTS

 

1.              DESCRIPTION OF THE PLAN

 

The following description of the Avis Voluntary Investment Savings Plan for Bargaining Hourly Employees (the “Plan”) provides only general information.  Participants should refer to the Plan document for a more complete description of the Plan’s provisions.

 

The Plan is a defined contribution plan sponsored by Avis Rent A Car System, Inc. (the “Company” or “Plan Sponsor”).  The Company is a wholly-owned subsidiary of Cendant Corporation (“Cendant”).  The Plan was adopted by the Company on October 1, 1997, (“Date of Inception”) for the benefit of all hourly paid employees of the Company who are members of the collective bargaining units covered by collective bargaining agreements between these units and the Company.  The Cendant Employee Benefits Committee is the Plan administrator (“Plan Administrator”).  The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).  Merrill Lynch Trust Company is the Plan’s trustee (the “Trustee”).

 

As of January 1, 2003, the Plan began reporting investment assets separately.  Prior to January 1, 2003, all investment assets were held in a trust account and consisted of an undivided interest in an investment account of the Avis Rent A Car, Inc. Voluntary Savings Plan Combined Fund (the “Master Trust”), a master trust established by the Company and administered by the Trustee.

 

The following is a summary of certain Plan provisions:

 

Eligibility – Employees who have attained the age of 21 and completed one year of service (a year of service means the completion of at least one thousand hours of service during twelve consecutive months) are eligible to participate in the Plan.

 

Participant Contributions – Participants may elect to defer on a pre-tax basis from 1% to 16% of specified compensation under a “qualified cash or deferred arrangement” under Section 401(k) of the Internal Revenue Code (the “IRC”), subject to certain limitations in 1% increments.  In addition, employees participating in the Plan may make additional contributions from 1% to 10% of specified compensation on a current, after-tax basis, subject to certain limitations imposed by law. Effective January 1, 2003, certain eligible participants (age 50 and over) can contribute additional amounts as a catch up contributions ($2,000 for 2003).

 

Participants who have received all of their benefits under another tax-qualified plan within one taxable year may roll their distributions received into the Plan.

 

Rollovers – All employees, upon commencement of employment, are provided the option of making a rollover contribution into the Plan in accordance with the Internal Revenue Service (the “IRS”) regulations.

 

Fund Reallocations – Participants can reallocate investments among the various funds or change future contributions on a daily basis.  The fund reallocation must be in 1% increments.  Only one reallocation is allowed each day.


VestingParticipants are fully vested at all times with respect to their contributions to the Plan.

 

4



 

Participant Accounts – A separate account is maintained for each participant. Each participant’s account is credited with the participant’s contributions and an allocation of Plan earnings including interest, dividends and net realized and unrealized appreciation in fair value of investments and charged with an allocation of net realized and unrealized depreciation in fair value of investments and certain administrative expenses.  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 account.

 

Payment of Benefits to Participants – Distribution of the participant’s account may be made in a lump sum payment upon retirement, death or disability, or upon termination of employment. 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.

 
Loan Provisions - - Participants may borrow from their fund accounts up to the lesser of $50,000 or 50% of their account balance provided the account balance is at least $2,000.  The loans are secured by the balance in the participant’s account balance and bear interest at rates commensurate with local prevailing rates as determined quarterly by the Plan administrator.  Principal and interest are paid ratably through payroll deductions.

 

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

 

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.

 

Cash and Cash Equivalents – The Plan considers highly liquid investments with an original maturity of three months or less to be cash equivalents.

 

Valuation of Investments and Income Recognition – The Plan’s investments in Cendant common stock, mutual funds, loans to participants and cash and cash equivalents 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.  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.  A portion of the Plan’s investments in common/collective trusts consists of funds that invest primarily in guaranteed investment contracts with high quality insurance companies.  The Plan’s investment in these funds is valued at amounts contributed, plus the Plan’s pro-rata share of interest income earned by the funds, less administrative expenses and withdrawals.  The value recorded in the Plan’s financial statements for such funds was $6,371,192 at December 31, 2003. The Plan’s investment in guaranteed investment contracts are recorded at contract value, which equals principal plus accrued interest (See Note 4 – Investment Contracts).

 

Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date and interest is recorded when earned.  The accompanying Statement of Changes in net Assets Available for Benefits presents net appreciation in fair value of investments, which includes unrealized gains and losses on investments held at December 31, 2003 and realized gains and losses on investments sold during the year then ended.

 

The Plan’s investment in the Master Trust is presented at fair value, which has been determined based on the value of the underlying investments of the Master Trust.  Securities traded on a national securities exchange

 

5



 

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. Additionally, the Master Trust maintains investments in guaranteed investment contracts, which are valued at contract value.

 

Use of Estimates - - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Plan Administrator to make estimates and assumptions that affect the amounts reported and related disclosures.  Actual results could differ from those estimates.

 

Risk and Uncertainties – The Plan invests in various securities, including mutual funds, common/collective trusts and common stocks.  Investment securities, in general, are exposed to various risks, such as interest rate and credit risks 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 financial statements.

 

Benefit Payments – Benefits to participants are recorded when paid.

 

Reclassifications – Certain reclassifications have been made to prior year amounts to conform to the current presentation.

 

3.              INVESTMENTS

 

The following table presents investments that represent five percent or more of the Plan’s net assets available for benefits as of December 31:

 

 

 

2003

 

 

 

 

 

*

Merrill Lynch Retirement Preservation Trust

 

$

6,371,192

 

 

John Hancock Life Insurance Company

 

1,351,035

 

 

New York Life Insurance Company

 

1,450,646

 

 

Peoples Benefit Life Insurance Company

 

2,245,843

 

 

Principal Life Insurance Company

 

1,319,482

 

 

PIMCO CCM Capital Appreciation Fund

 

1,362,275

 

*

Loans to participants

 

1,215,383

 

 

During 2003, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in fair value, as follows:

 

 

 

2003

 

 

 

 

 

Cendant Corporation Common Stock Fund

 

$

55,252

 

Common /collective trusts

 

251,466

 

Mutual funds

 

1,456,186

 

 

 

$

1,762,904

 

 


(*) Permitted party-in-interest

 

6



 

4.              INVESTMENT CONTRACTS

 

Guaranteed investment contracts provide a guaranteed return on principal invested over a specified time period. All investment contracts are fully benefit responsive and are recorded at contract value, which equals principal plus accrued interest. The total contract value at December 31, 2003 was $6,367,006, which approximated fair value. The crediting interest rates at December 31, 2003 for various investment contracts ranged from 6.19% to 7.71% and the average yield of these investments for the 2003 plan year was 6.97%.

 

5.              INVESTMENT IN MASTER TRUST

 

Prior to January 1, 2003, all assets of the Plan were held in the Master Trust on behalf of the Avis Voluntary Investment Savings Plan and the Avis Voluntary Investment Savings Plan for Bargaining Hourly Employees.  Use of the Master Trust permitted the commingling of trust assets with the assets of the Plan for investment and administrative purposes.  The net investment income and losses of the investment assets was allocated by the Trustee to each participating plan based on the relationship of the interest of each plan to the total of the interests of the participating plans.

 

The following table summarizes the fair market values of investments held by the Master Trust at December 31:

 

 

 

2002

 

 

 

 

 

Non interest-bearing cash

 

$

176,931

 

Interest-bearing cash

 

794,305

 

Common stocks

 

200,173

 

Mutual funds

 

25,098,044

 

Common/collective trusts

 

14,037

 

Guaranteed income contracts (*)

 

54,264,347

 

Accrued income receivable

 

14,293

 

Total

 

$

80,562,130

 

 

 

 

 

Plan’s investment in the Master Trust

 

$

17,698,035

 

 

 

 

 

Plan’s investment in the Master Trust as a percentage of total

 

21.97

%

 


(*)              The crediting interest rates at December 31, 2002 for various investment contracts ranged from 6.19% to 9.83%.

 

6.              FEDERAL INCOME TAX STATUS

 

The IRS determined and informed the Company by letter dated October 25, 2002, that the Plan and related trust are designed in accordance with applicable sections of the IRC.  The Plan has been amended since receiving this determination letter.  However, the Plan Administrator and the Plan’s tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC and the Plan and related trust continue to be tax-exempt.

 

7.              PARTY-IN-INTEREST TRANSACTIONS

 

A portion of the Plan’s investments are shares in funds managed by Merrill Lynch Trust Company, the trustee of the Plan.  Therefore, these transactions qualify as exempt party-in-interest transactions.

 

7



 

At December 31, 2003, the Plan held 2,123 shares of Cendant common stock with a cost basis of $26,598. At December 31, 2002, the Master Trust held 19,100 shares of Cendant common stock with a cost basis of $269,038. There was no dividend income recorded during the year ended December 31, 2003.

 

8.              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.

 

******

 

8



 

Plan Number: 005

EIN: 11-1998661

 

AVIS VOLUNTARY INVESTMENT SAVINGS PLAN FOR BARGAINING HOURLY EMPLOYEES

 

FORM 5500, PART IV, SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS

(HELD AT END OF YEAR) AS OF DECEMBER 31, 2003

 

Identify of Issue, Borrower
Lessor or Similar Party

 

Description of Investment,
Including Maturity Date,
Rate of Interest, Collateral
Par or Maturity Value

 

Number of
Shares, Units
or Par Value

 

Cost
***

 

Current
Value

 

 

 

 

 

 

 

 

 

 

 

 

*

Cendant Corporation Common Stock Fund

 

Common stock fund

 

2,123

 

 

 

$

47,273

 

*

Merrill Lynch Equity Index Trust

 

Common/collective trust

 

1,247

 

 

 

100,222

 

*

Merrill Lynch Retirement Preservation Trust

 

Common/collective trust

 

6,371,192

 

 

 

6,371,192

 

 

John Hancock Life Insurance Company

 

Guaranteed investment contract

 

1,351,035

 

 

 

1,351,035

 

 

New York Life Insurance Company

 

Guaranteed investment contract

 

1,450,646

 

 

 

1,450,646

 

 

Peoples Benefit Life Insurance Company

 

Guaranteed investment contract

 

2,245,843

 

 

 

2,245,843

 

 

Principal Life Insurance Company

 

Guaranteed investment contract

 

1,319,482

 

 

 

1,319,482

 

 

Davis NY Venture Fund

 

Registered investment company

 

28,405

 

 

 

781,709

 

 

ING International Value Fund

 

Registered investment company

 

38,061

 

 

 

575,102

 

 

Lord Abbett Bond Debenture Fund

 

Registered investment company

 

8,723

 

 

 

71,271

 

 

MASS Investment Growth Stock Fund

 

Registered investment company

 

2,118

 

 

 

23,976

 

 

MFS Mid-Cap Growth Fund

 

Registered investment company

 

2,047

 

 

 

15,987

 

 

MFS New Discovery Fund

 

Registered investment company

 

53

 

 

 

813

 

 

MFS Value Fund

 

Registered investment company

 

45,601

 

 

 

927,518

 

 

Oppenheimer Capital Income Fund

 

Registered investment company

 

24,131

 

 

 

934,353

 

 

Oppenheimer Developing Markets Fund

 

Registered investment company

 

6,581

 

 

 

135,636

 

 

Oppenheimer International Growth Fund

 

Registered investment company

 

2,807

 

 

 

46,367

 

 

Oppenheimer Quest Balance Fund

 

Registered investment company

 

684

 

 

 

11,193

 

 

PIMCO CCM Capital Appreciation Fund

 

Registered investment company

 

85,840

 

 

 

1,362,275

 

 

PIMCO PEA Renaissance Fund

 

Registered investment company

 

7,782

 

 

 

179,298

 

 

PIMCO Total Return Fund

 

Registered investment company

 

74,160

 

 

 

794,258

 

 

State Street Aurora Fund

 

Registered investment company

 

19,654

 

 

 

758,833

 

 

The Oakmark Equity and Income Fund

 

Registered investment company

 

4,523

 

 

 

99,379

 

 

Victory Real Estate Investment Fund

 

Registered investment company

 

2,122

 

 

 

33,211

 

 

Various participants**

 

Participant loans

 

 

 

 

 

1,215,383

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

148

 

Total

 

 

 

 

 

 

 

$

20,852,403

 

 


* Represents a permitted party-in-interest.

** Maturity dates range from January 2004 to August 2016 at interest rates of 4.75% to 10.5%.

*** Cost information is not required for participant-directed investments and, therefore, is not included.

 

******

 

9



 

SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

Avis Voluntary Investment Savings Plan
For Bargaining Hourly Employees

 

 

 

 

 

 

 

BY:

/s/ Terence P. Conley

 

 

 

Terence P. Conley

 

 

Executive Vice President,
Human Resources and Corporate Services

 

 

Cendant Corporation

 

 

 

Date:  June 28, 2004

 

 

 

10


Exhibit 23.1

 

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

We consent to the incorporation by reference in Registration Statement No. 333-98933 of Cendant Corporation on Form S-8 of our report dated June 25, 2004, appearing in this Annual Report on Form 11-K of the Avis Voluntary Investment Savings Plan for Bargaining Hourly Employees for the year ended December 31, 2003.

 

 

/s/ Deloitte & Touche LLP

 

New York, New York

June 28, 2004

 

11