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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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GALILEO INTERNATIONAL
SAVINGS AND INVESTMENT 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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GALILEO INTERNATIONAL
SAVINGS AND INVESTMENT PLAN
TABLE OF CONTENTS
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PAGE
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INDEPENDENT AUDITORS' REPORTS 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of December 31, 2001
and 2000 3
Statement of Changes in Net Assets Available for Benefits for the Year
Ended December 31, 2001 4
Notes to Financial Statements 5
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
Consent of KPMG LLP 13
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
Galileo International Savings and Investment Plan
We have audited the accompanying statement of net assets available for benefits
of Galileo International Savings and Investment Plan (the "Plan") as of December
31, 2001, and the related statement of changes in net assets available for
benefits for the year 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 audit.
We conducted our audit 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 audit provides 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 the changes in net assets available for benefits for the year then
ended in conformity with accounting principles generally accepted in the United
States of America.
Our audit was 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, 2001 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
INDEPENDENT AUDITORS' REPORT
The Plan's Trustees
Galileo International Savings and Investment Plan:
We have audited the accompanying statement of net assets available for benefits
of Galileo International Savings and Investment Plan (the Plan) as of
December 31, 2000. This financial statement is the responsibility of the
Plan's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit 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 statement is free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statement. 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
audit provides a reasonable basis for our opinion.
In our opinion, such financial statement referred to above, presents fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2000 in conformity with accounting principles generally accepted in
the United States of America.
/s/ KPMG LLP
Chicago, Illinois
June 6, 2001
2
GALILEO INTERNATIONAL
SAVINGS AND INVESTMENT 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 $ 63,735,996 $ 48,534,594
Investments, at fair value 118,711,894 145,175,203
Cendant Corporation common stock 6,490,220 -
Galileo International, Inc. common stock - 3,360,933
Participant notes receivable 3,889,782 4,237,165
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NET ASSETS AVAILABLE FOR BENEFITS $192,827,892 $201,307,895
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The accompanying notes are an integral part of these financial statements.
3
GALILEO INTERNATIONAL
SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2001
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ADDITIONS TO NET ASSETS:
Investment income:
Interest $ 3,930,689
Dividends 30,231
Interest on participant loans 365,411
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Total investment income 4,326,331
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Contributions:
Participants 10,584,429
Employer 3,481,318
Rollover 437,217
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Total contributions 14,502,964
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Total additions 18,829,295
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DEDUCTIONS FROM NET ASSETS:
Net realized and unrealized depreciation in fair value
of investments 15,608,246
Benefits paid to participants 11,661,617
Administrative expenses and other 39,435
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Total deductions 27,309,298
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DECREASE IN NET ASSETS AVAILABLE FOR BENEFITS (8,480,003)
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR 201,307,895
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NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $192,827,892
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The accompanying notes are an integral part of these financial statements.
4
GALILEO INTERNATIONAL
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF THE PLAN
The following brief description of the Galileo International Savings and
Investment Plan (the "Plan") is provided for general information purposes
only. Participants should refer to the Plan documents for more complete
information.
The Plan is a defined contribution plan subject to the provisions of ERISA
covering substantially all U.S. employees of Galileo International, Inc. (the
"Company" and "Sponsor"), a wholly owned subsidiary of Cendant Corporation as
of October 1, 2001. The Plan was established effective January 1, 1987 to
enable eligible employees to defer receipt of a portion of their earnings as
contributions under section 401(k) of the Internal Revenue Code (the "IRC")
for the primary purpose of providing benefits at the time of retirement,
disability, or death. CIGNA Bank & Trust Company is the trustee of the Plan
under a contractual agreement with the Company. Connecticut General Life
Insurance Company ("CIGNA") maintains all records of the Plan and assumes
responsibility for proper allocation of income among all participants'
accounts in the Plan. The Company administers the Plan through its ERISA
Plans Administration Committee (the "Plan Administrator").
The following is a summary of certain Plan provisions:
a. ELIGIBILITY - All employees are eligible to join the Plan at the time of
hire.
b. PARTICIPANT CONTRIBUTIONS - Participants may contribute 1% to 15% (in
whole percentages) of their compensation to the Plan through voluntary
payroll deductions, subject to a maximum pre-tax contribution of $10,500
for 2001 and 2000. The total annual additions made to a participant's
account may not exceed the lesser of $35,000 or 25% of a participant's
compensation. Contributions from participants are recognized by the Plan
when withheld by the Company through payroll deductions.
c. EMPLOYER CONTRIBUTIONS - For each $1.00 that participants contribute to
their 401(k) account, up to 6% of their eligible compensation, the Company
will contribute $.50 to the Plan on the behalf of the participant as a
matching contribution.
d. ROLLOVERS - All participants are provided the option of making a rollover
contribution into the Plan in accordance with Internal Revenue Service
("IRS") regulations.
e. VESTING SCHEDULE - A participant is always fully vested in their
contributions, as well as any employer match, interest, dividends, and net
realized and unrealized appreciation (depreciation) in fair value of
investments, less administrative expenses accrued.
f. LOAN PROVISIONS - A loan provision is available for all actively employed
participants of the Plan. The feature allows a participant to borrow up to
50% of the participant's total account balance, minus the highest
outstanding loan balance during the last 12 months. Both the participant
and Company contributions are available for loans. Loan amounts are
available in amounts greater than $1,000 and less than $50,000.
5
g. BENEFITS PAID TO PARTICIPANTS - Participants are entitled to withdraw all
or any portion of their vested account in accordance with the terms of the
Plan and applicable law. Participants have the ability to 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. Amounts payable to participants who have
terminated participation in the Plan were approximately $260,000 and zero
at December 31, 2001 and 2000. Upon normal retirement, death, or
disability, the value of a participant's separate account can be made
payable to the participant or their beneficiaries. However, upon
termination a participant whose vested interest exceeds $5,000 may elect
to leave the account balance in the Plan until notice is given by the
participant to receive the distribution or until the normal retirement
date and subject to applicable law. Amounts left in the Plan after
termination of employment will continue to be adjusted for any earnings,
gains, losses, and expenses.
h. ADMINISTRATIVE EXPENSES - The Company paid substantially all of the Plan's
administrative expenses other than administrative expenses of the
investment funds, which are deducted from a participant's account. Fees
paid by participants for Cendant Corporation and Galileo International,
Inc. common stock transaction commissions and participant fees for
distributions, loans and withdrawals amounted to approximately $36,000 for
the year ended December 31, 2001.
i. PLAN TERMINATION - While the Company has not expressed any intent to
terminate the Plan, it is free to do so at any time. If the Plan is
terminated, the plan administrator may decide to liquidate the Trust, in
which case distributions (in a form to be determined by the plan
administrator) shall be made to participants of their balances remaining
after payment of expenses. If the Trust is not liquidated, all amounts
credited to a participant's account at the time of termination shall be
retained in the Trust until the participant's termination of employment
and will then be distributed as provided by the Plan.
j. ALLOCATIONS - Interest, dividends, net realized and unrealized
appreciation (depreciation) in fair value of investments, and
administrative expenses are allocated daily to participants based on their
respective account balances at the beginning of each day plus the current
day's contributions to the total of such amounts for all participants.
Participants share only in the interest, dividends, and net realized and
unrealized appreciation (depreciation) in fair value of investments, less
administrative expenses of the investment funds in which their account is
invested.
A separate account is maintained for each participant aggregating the
participant's contributions, including amounts representing compensation
deferred and interest, dividends, and net realized and unrealized
appreciation (depreciation) in fair value of investments, less
administrative expenses from investment of such contributions.
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.
6
b. VALUATION OF INVESTMENTS AND INCOME RECOGNITION - The Plan's investments
are stated at fair value. The value of the portion of the mutual fund
owned by a pooled separate account is determined by multiplying the Net
Asset Value (NAV) by the number of shares owned. The value of the Plan's
portion of a pooled separate account is the Net Unit Value (NUV)
multiplied by the number of units the Plan owns. The Plan's NUV differs
from NAV as dividends and capital gains are automatically reinvested and
CIGNA may deduct a small charge for administering the account. The
Guaranteed Long-Term Account is a fully benefit-responsive investment
contract that is valued at contract value, which represents the principal
balance of the investment contract plus accrued interest at the stated
contract rate, less payments made and contract charges by the insurance
company, and approximates fair value. The annual net rate of return for
the Guaranteed Long-Term Account was 7.00% and 6.75% for 2001 and 2000,
respectively. Purchases and sales of securities are recorded on a
trade-date basis. Realized gains and losses on investments are determined
based on the average cost of investments sold. Interest income is recorded
as earned. Dividend income is recorded on the ex-dividend date.
c. USE OF ESTIMATES - The preparation of financial statements in conformity
with accounting standards generally accepted in the United States of
America require the plan administrator to make estimates and assumptions
that affect the amounts reported and related disclosures. Actual results
could differ from those estimates.
d. 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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Guaranteed Long-Term Account $ 63,735,996 $ 48,534,594
S&P 500 Index 25,967,411 32,086,676
Fidelity Advisor Equity Growth Account 22,735,538 31,010,991
Janus Worldwide Account 11,443,943 18,907,113
Small Cap Value/Berger Account 10,925,063 -
Balanced/Wellington Management Account 10,330,968 11,009,126
During 2001, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciation
(depreciation) in fair value, is as follows:
Investments, at fair value $(18,285,943)
Cendant Corporation common stock 2,013,023
Galileo International, Inc. common stock 664,674
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$(15,608,246)
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7
4. TAX STATUS
The IRS previously determined and informed the Company by letter dated May
26, 1998 that the Plan and related trust are designed in accordance with
applicable sections of the IRC. Although the Plan has been amended since
receiving that determination letter, 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. Further, during
2001, the Company restated the Plan document and filed for a new
determination letter with the IRS. By letter dated June 13, 2002, the IRS
determined and informed the Company that the restated Plan and related trust
are currently in accordance with the applicable sections of the IRC subject
to the adoption of certain proposed amendments.
5. PARTY-IN-INTEREST TRANSACTIONS
A portion of the Plan's investments are units of pooled separate accounts
managed by CIGNA. CIGNA is the custodian of these investments as defined by
the Plan, and, therefore, these transactions qualify as exempt
party-in-interest transactions.
******
8
GALILEO INTERNATIONAL
SAVINGS AND INVESTMENT PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS HELD AT END OF YEAR
DECEMBER 31, 2001
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NUMBER OF
SHARES, UNITS
DESCRIPTION OR PAR VALUE CURRENT VALUE
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Fixed rate funds:
Guaranteed Long-Term Account* 1,559,691 $ 63,735,996
Pooled separate accounts:
S&P 500 Index* 413,850 25,967,411
Fidelity Advisor Equity Growth Account 275,204 22,735,538
Janus Worldwide Account 199,487 11,443,943
Small CapValue/Berger Account* 599,585 10,925,063
Balanced/Wellington Management Account* 1,093,667 10,330,968
Large Cap Blend/Invesco - NAM Account* 819,546 7,083,952
Small Cap Growth/TimesSquare Capital
Management Account 420,870 6,828,591
Cendant Company Common Stock* 329,838 6,490,220
Dreyfus Founders Balanced Account 521,317 6,194,226
Large Cap Growth/Morgan Stanley Account 446,020 4,974,715
AIM Constellation Account 125,141 4,346,614
NeubergerBerman Partners Fund Trust Class Account 176,194 3,970,350
Lazard International Equity Account 163,737 2,372,804
Templeton Foreign Account 103,657 1,406,394
Cash Transaction Account - 131,325
Participant notes receivable** 400 3,889,782
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Total $192,827,892
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*Represents exempt party-in-interest transaction (Refer to Note 5).
**Maturity dates range from January 2002 to June 2011. Interest rates range
from 5.50% to 10.00%.
******
9
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.
Galileo International Savings and
Investment 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
10
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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23.1 Consent of Deloitte & Touche LLP
23.2 Consent of KPMG LLP
11