============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------ Form 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------ AUGUST 13, 1998 (AUGUST 12, 1998) (Date of Report (date of earliest event reported)) CENDANT CORPORATION (Exact name of Registrant as specified in its charter) (973) 428-9700 (Registrant's telephone number, including area code) NONE (Former name, former address and former fiscal year, if applicable) ==============================================================================
DELAWARE 1-10308 06-0918165 (State or other jurisdiction (Commission File No.) (I.R.S. Employer of incorporation or organization) Identification Number) 6 SYLVAN WAY PARSIPPANY, NEW JERSEY 07054 (Address of principal executive office) (Zip Code) ITEM 5. OTHER Completion of Accounting Investigation. On August 13, 1998, Cendant Corporation (the "Company") announced that its investigation of accounting irregularities and errors in the CUC International Inc. ("CUC") businesses was complete. The Company reported its final calculation of the impact of accounting irregularities and errors on its 1997, 1996 and 1995 full year results. The Company will lower 1997 results by $0.28 per share or $392 million pretax. The net impact of this restatement plus $0.02 of discontinued operations will lower net income from continuing operations before one-time merger and other unusual charges to $0.70 per share versus the $1.00 per share previously reported. A substantial amount of the adjustment had the impact of reducing revenues. The Compay also announced a $457 million pre-tax adjustment to the charge associated with the CUC businesses taken on the date of CUC's merger with HFS Incorporated on December 17, 1997. This will increase 1997 net income by $279 million after-tax or $0.32 per share. The Company will lower 1996 results by $0.18 per share. Cendant has also determined that certain one-time merger charges taken by CUC in 1996 should be reversed and will eliminate $0.02 per share of these charges. 1995 results will be lowered by $0.14 per share. Earnings. On August 13, 1998, Cendant Corporation (the "Company") announced second quarter from continuing operations of $0.23 per share for 1998 versus $0.16 per share for 1997, an increase of 44%. 1998 results are before $0.02 unusual expenses associated with the resolution of accounting irregularities plus $0.03 of income from reversal of prior restructuring chages. 1997 results are before merger charges associated with the acquisition of PHH Corporation. RAC Motoring Services Acquisition. On August 12, 1998, the Company reported that the Board of RAC Holdings Limited, the company which indirectly owns RAC Motoring Services (RACMS), announced that its shareholders overwhelmingly approved the sale of RACMS to Cendant for approximately $735 million, in cash. Sale of Hebdo Mag and Plan to Sell Software Business. On August 12, 1998, the Company announced that it agreed to sell 100% of its Hebdo Mag International ("Hebdo") subsidiary to a company organized by Hebdo management for approximately 7 million shares of company common stock and $410 million in cash. The sale of Hebdo is conditioned upon, among other things, the receipt of certain governmental approvals and financing. The transaction is expected to be completed in the fourth quarter of 1998. The Company also announced that it has engaged Credit Suisse First Boston to analyze strategic alternatives in regard to the potential 100% initial pubic offering or a third party sale of its entire consumer software business unit. The information set forth in the press releases attached hereto as Exhibits 99.1, 99.2, 99.3 and 99.4 are incorporated herein by reference in their entirety. Segment Information. Reference is made to Exhibit 99.5 for certain financial information regarding the Company's business segments, which is incorporated herein by reference in its entirety. 2 ITEM 7. EXHIBITS 3
Exhibit No. Description - ------- ----------- 99.1 Press Release: Cendant Completes Accounting Investigation, dated August 13, 1998. 99.2 Press Release: Cendant Announces Second Quarter Earnings, dated August 13, 1998. 99.3 Press Release: Shareholders Approve Sale of RAC Motoring Services to Cendant, dated August 12, 1998. 99.4 Press Release: Cendant Corporation to Sell Hebdo Mag International to Hebdo Management for Approximately Seven Million Shares of Cendant Common Stock and $410 million in Cash, dated August 12, 1998. 99.5 Cendant Segment Information SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CENDANT CORPORATION BY: /s/ James E. Buckman --------------------------------------- James E. Buckman Senior Executive Vice President and General Counsel Date: August 13, 1998 4 CENDANT CORPORATION CURRENT REPORT ON FORM 8-K REPORT DATED AUGUST 13, 1998 (AUGUST 12, 1998) EXHIBIT INDEX 5
EXHIBIT NO. DESCRIPTION - ----------- ----------- 99.1 Press Release: Cendant Completes Accounting Investigation, dated August 13, 1998. 99.2 Press Release: Cendant Announces Second Quarter Earnings, dated August 13, 1998. 99.3 Press Release: Shareholders Approve Sale of RAC Motoring Services to Cendant, dated August 12, 1998. 99.4 Press Release: Cendant Corporation to Sell Hebdo Mag International to Hebdo Management for Approximately Seven Million Shares of Cendant Common Stock and $410 million in Cash, dated August 12, 1998. 99.5 Cendant Segment Information
EXHIBIT 99.1 CENDANT COMPLETES ACCOUNTING INVESTIGATION 1997, 1996, 1995 Net Income Before One-time Charges Revised by $0.28, $0.18 and $0.14 Per Share In Line with Previous Estimates PARSIPPANY, NJ, August 13, 1998 - Cendant Corporation (NYSE: CD) reported today that its investigation of accounting irregularities and errors in the CUC businesses was complete. The 1998 financial results announced today in a separate release incorporate all relevant information obtained in that investigation and reflect the correction of accounting policies changed as a result of its findings. These 1998 results will not be subject to further revision based on the results of the Company's investigation. Quarterly financial statements for 1998 and the comparable periods of 1997 will be filed with the SEC on Form 10-Q on Friday, August 14. Full restated, audited financial statements for Cendant's fiscal years 1997, 1996 and 1995 will be filed with the SEC on Form 10-K/A later this month. Furthermore, a full report on the Audit Committee's investigation of these accounting irregularities will be issued later this month. Michael P. Monaco, Vice Chairman and Chief Financial Officer reported "we have now concluded our investigation of the accounting issues at CUC. Millions of dollars and hundreds of thousands of hours of work have determined what was wrong and what must be put right. While we take no joy in reporting these results, our shareholders should take great comfort from the thoroughness of this investigation and the fact that we have unflinchingly accepted and reported its results, even when it uncovered much greater and more systematic fraud than we had any conception of when we launched this effort in April." Cendant reported its final calculation of the impact of accounting irregularities and errors on its 1997, 1996 and 1995 full year results. Cendant will lower 1997 results by $0.28 per share or $392 million pretax. The net impact of this restatement plus $0.02 of discontinued operations will lower net income from continuing operations before one-time merger and other unusual charges to $0.70 per share versus the $1.00 per share previously reported. A substantial amount of the adjustment had the impact of reducing revenues. Cendant also announced a $457 million pre-tax adjustment to the charge associated with the CUC businesses taken on the date of CUC's merger with HFS on December 17, 1997. This will increase 1997 net income by $279 million after-tax or $0.32 per share.
Adjustments for Reversal of Merger & Unusual Charges ------------------------------------------ Adjustments for Total Previously Reversals New Total Irregularities and Errors Reported One- of CUC One-Time Total Time Charges Charges Charges ----- ---------------- --------- --------- 1997 ($0.28) ($0.94) $0.32 ($0.62) 1996 (0.18) (0.14) 0.02 (0.12) 1995 (0.14) (0.08) -- (0.08) Cendant will lower 1996 results by $0.18 per share. Cendant has also determined that certain one-time merger charges taken by CUC in 1996 should be reversed and will eliminate $0.02 per share of these charges. 1995 results will be lowered by $0.14 per share. Certain matters discussed in the news release are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to a number of known and unknown risks and uncertainties including, but not limited to, the outcome of the Audit Committee's investigation relating to the previously announced accounting irregularities; the outcome of the pending class action litigation relating to the previously announced accounting irregularities; uncertainty as to the Company's future profitability; the Company's ability to develop and implement operational and financial systems to manage rapidly growing operations; competition in the Company's existing and potential future lines of business; the Company's ability to integrate and operate successfully acquired businesses and the risks associated with such businesses; the Company's ability to obtain financing on acceptable terms to finance the Company's growth strategy and for the Company to operate within the limitations imposed by financing arrangements; uncertainty as to the future profitability of acquired businesses; and other factors. Other factors and assumptions not identified above were also involved in the derivation of these forward-looking statements, and the failure of such other assumptions to be realized as well as other factors may also cause actual results to differ materially from those projected. The Company assumes no obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements. Cendant (NYSE:CD) is the world's premier provider of consumer and business services. The Company operates in three principal segments: Travel Services, Real Estate Services and Alliance Marketing. In Travel Services, Cendant is the leading franchisor of hotels and rental car agencies worldwide; the largest provider of vacation exchange services; a leading fleet management company, the UK's largest private car park operator, and a leading motorist assistance group in the UK. In Real Estate Services, Cendant is the world's largest franchisor of residential real estate brokerage offices, a major provider of mortgage services to consumers and a global leader in corporate employee relocation. In Alliance Marketing, Cendant provides access to insurance, travel, shopping, auto, and other services, primarily through direct marketing to customers of its affinity partners. Headquartered in Parsippany, NJ, the company has more than 40,000 employees and operates in over 100 countries. Media Contact: Investor Contact: Cendant Corporation Cendant Corporation Elliot Bloom David M. Johnson 973-496-8414 or 973-496-7909 Denise L. Gillen 973-496-7303 Kekst and Company Jim Fingeroth Roanne Kulakoff 212-521-4800
EXHIBIT 99.2 CENDANT POSTS RECORD 2Q EARNINGS OF $0.23 VS $0.16 PER SHARE, UP 44% Second Quarter Revenues up 28% ------------------------------ 6 Month Results: $0.47 vs $0.28, up 68% --------------------------------------- 6 Month Revenues up 24% PARSIPPANY, NJ, August 13, 1998 - Cendant Corporation (NYSE: CD) announced record second quarter earnings from continuing operations of $0.23 per share for 1998 versus $0.16 per share for 1997, an increase of 44%. 1998 results are before $0.02 of unusual expenses associated with resolution of accounting irregularities plus $0.03 of income from reversal of prior restructuring charges. 1997 results are before merger charges associated with the acquisition of PHH. "Our second quarter results demonstrate the depth and quality of our management team and the strength of Cendant's core business franchises," said Henry R. Silverman, Chairman, President and CEO. "The past four months have challenged our operating management to rise to new levels of leadership and productivity in a period when our most senior executives have devoted the vast majority of their time to stanching and closing the wound in our company created by the accounting revelations at CUC. I am fiercely proud of their achievements and the depth of talent in our management ranks confirmed by these results. Our 28% revenue growth in continuing operations underlines the momentum of our franchise. Even after adjusting for acquisitions, our managers delivered mid-teens top-line growth - a terrific achievement." "All of our segments performed well in the quarter, led by unparalleled performance in our real estate segment. Each of the business units we inherited from HFS performed on or ahead of plan. The carefully laid out strategy built over eight years at HFS is yielding its greatest rewards this year. These businesses yielded 50% plus growth in both EBITDA and net income in the second quarter, continuing the strong performance of the first quarter. We see no signs that any of these businesses will fail to meet our high expectations for the rest of the year," reported Mr. Silverman. "We are now able to evaluate and manage performance at the CUC business units," Mr. Silverman continued. "With consumer software and Hebdo Mag discontinued, our CUC operations are largely centered in Alliance Marketing. Two of the three major units in Alliance Marketing produced solid gains versus 1997 results. We are particularly pleased with the strong EBITDA growth in our Insurance/Wholesale businesses, which generated approximately $44 million in EBITDA in the second quarter, an increase of 36%. This unit contributed the majority of our 1998 Alliance Marketing earnings to date and should continue to account for most of its profits in the future. Individual Membership also generated sizable EBITDA gains from price increases and membership growth, generating a four times increase in EBITDA in the second quarter." "Our ability to report fundamental growth in Individual Membership encourages us to believe that these units, under proper management and with appropriate financial controls, can offer significant upside potential to our shareholders in the future. The relatively flat comparison in the lifestyle portion of Alliance Marketing masks significant variations in the performance of the many small businesses in that sub-segment. We will rapidly move to address these issues - businesses that do not meet Cendant standards of performance will be restructured," Mr. Silverman concluded. The Company also reported its investigation of accounting irregularities and errors in the CUC businesses was complete and in line with previously announced estimates. The financial results announced today incorporate all relevant information obtained in that investigation and reflect the correction of accounting policies changed as a result of its findings. A separate press release will discuss the findings in more detail. Cendant also announced yesterday that it has classified its Hebdo Mag and consumer software units as discontinued operations. Therefore, all periods presented have been adjusted appropriately. For the first six months of 1998, Cendant reported income from continuing operations of $0.47 per share versus $0.28 in 1997, an increase of 68%. Revenues increased 24% to $2.5 billion. Results for the first quarter of 1998 have been restated to correct errors in revenue recognition at businesses of the former CUC International ("CUC"). The net impact of implementing these policies will lower 1998 first quarter results from continuing operations from those previously reported by $0.04 per share. 1997 results are before merger charges associated with the acquisition of PHH. Certain matters discussed in the news release are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to a number of known and unknown risks and uncertainties including, but not limited to, the outcome of the Audit Committee's investigation relating to the previously announced accounting irregularities; the outcome of the pending class action litigation relating to the previously announced accounting irregularities; uncertainty as to the Company's future profitability; the Company's ability to develop and implement operational and financial systems to manage rapidly growing operations; competition in the Company's existing and potential future lines of business; the Company's ability to integrate and operate successfully acquired businesses and the risks associated with such businesses; the Company's ability to obtain financing on acceptable terms to finance the Company's growth strategy and for the Company to operate within the limitations imposed by financing arrangements; uncertainty as to the future profitability of acquired businesses; and other factors. Other factors and assumptions not identified above were also involved in the derivation of these forward-looking statements, and the failure of such other assumptions to be realized as well as other factors may also cause actual results to differ materially from those projected. The Company assumes no obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements. Cendant (NYSE:CD) is the world's premier provider of consumer and business services. The Company operates in three principal segments: Travel Services, Real Estate Services and Alliance Marketing. In Travel Services, Cendant is the leading franchisor of hotels and rental car agencies worldwide; the largest provider of vacation exchange services; a leading fleet management company, the UK's largest private car park operator, and a leading motorist assistance group in the UK. In Real Estate Services, Cendant is the world's largest franchisor of residential real estate brokerage offices, a major provider of mortgage services to consumers and a global leader in corporate employee relocation. In Alliance Marketing, Cendant provides access to insurance, travel, shopping, auto, and other services, primarily through direct marketing to customers of its affinity partners. Headquartered in Parsippany, NJ, the company has more than 40,000 employees and operates in over 100 countries. Media Contact: Investor Contact: Cendant Corporation Cendant Corporation Elliot Bloom David M. Johnson 973-496-8414 or 973-496-7909 Denise L. Gillen 973-496-7303 Kekst and Company Jim Fingeroth Roanne Kulakoff 212-521-4800 Tables Follow Second Quarter Financial Results - As Reported - ---------------------------------------------- (In millions, except per share amounts) The following information includes: (a) a second quarter 1998 one-time restructuring charge reversal of $29 million after tax, or $0.03 per share (b) certain 1998 expenses arising from resolution of the company's accounting issues ($20.4 million after tax, or $0.02 per share) and (c) a second quarter 1997 one-time charge related to the PHH merger with HFS of $300 million ($225 million after tax, or $0.25 per share) (1) Discontinued operations are Hebdo Mag classified advertising unit plus the Cendant Software consumer education and entertainment software unit. (2) Earnings Before Interest, Taxes, Depreciation and Amortization
Quarter Ended June 30, ---------------------- % change 1998 1997 vs 2Q97 ---- ---- ------- Revenues $1,306.3 $1,024.0 28 Expenses 959.1 1,076.6 (11) ----- ------- Income before Income Taxes And Minority Interest $347.2 $(52.6) -- Income (Loss) Continuing Operations $214.5 $(87.9) -- Loss Discontinued Operations (1) $(3.6) $(4.4) -- Income (Loss) $210.9 $(92.3) -- EBITDA - Continuing Operations (2) $445.6 $313.6 42 Earnings per share Diluted Continuing Operations $0.24 $(0.11) -- Discontinued Operations 0.00 0.00 -- ---- ---- Net Income $0.24 $(0.11) -- Basic Continuing Operations $0.24 $(0.11) -- Discontinued Operations 0.00 0.00 -- ---- ---- Net Income $0.24 $(0.11) -- Weighted Average shares - Diluted 900.9 804.2 12 Second Quarter Financial Results - Adjusted - ------------------------------------------- (In millions, except per share amounts) The following information excludes: (a) a second quarter 1998 one-time restructuring charge reversal of $29 million after tax, or $0.03 per share (b) certain 1998 expenses arising from resolution of the company's accounting issues ($20.4 million after tax, or $0.02 per share) and (c) a second quarter 1997 one-time charge related to the PHH merger with HFS of $300 million ($225 million after tax, or $0.25 per share), (1) Discontinued operations are Hebdo Mag classified advertising unit plus the Cendant Software consumer education and entertainment software unit. (2) Earnings Before Interest, Taxes, Depreciation and Amortization
Quarter Ended June 30, ---------------------- % change 1998 1997 vs 2Q97 ---- ---- ------- Revenues $1,306.3 $1,024.0 28 Expenses 968.9 777.0 25 ----- ----- Income before Income Taxes And Minority Interest $337.4 $247.0 37 Income Continuing Operations $205.5 $136.8 50 Loss Discontinued Operations (1) $(3.6) $(4.4) -- Income $201.9 $132.4 52 EBITDA - Continuing Operations (2) $445.6 $313.6 42 Earnings per share Diluted Continuing Operations $0.23 $0.16 44 Discontinued Operations 0.00 0.00 -- ---- ---- Net Income $0.23 $0.16 44 Basic Continuing Operations $0.24 $0.17 41 Discontinued Operations 0.00 (0.01) -- ---- ----- Net Income $0.24 $0.16 50 Weighted Average shares - Diluted 900.9 879.3 2 First Half Financial Results - As Reported - ------------------------------------------- (In millions, except per share amounts) The following information includes: (a) a second quarter 1998 one-time restructuring charge reversal of $29 million after tax, or $0.03 per share (b) certain 1998 expenses arising from resolution of the company's accounting issues ($20.4 million after tax, or $0.02 per share) and (c) a second quarter 1997 one-time charge related to the PHH merger with HFS of $300 million ($225 million after tax, or $0.25 per share) (1) Discontinued operations are Hebdo Mag classified advertising unit plus the Cendant Software consumer education and entertainment software unit. (2) Earnings Before Interest, Taxes, Depreciation and Amortization
Six Months Ended June 30, ------------------------- % change 1998 1997 vs 1H97 ---- ---- ------- Revenues $2,461.2 $1,981.8 24 Expenses 1,782.7 1,847.2 (3) ------- ------- Income before Income Taxes And Minority Interest $678.5 $134.6 -- Income Continuing Operations $430.0 $12.5 -- Income Discontinued Operations (1) $(16.2) $(1.5) -- Income $413.8 $11.0 -- EBITDA - Continuing Operations (2) $875.9 $563.2 56 Earnings (Loss) per share Diluted Continuing Operations $0.48 $0.02 -- Discontinued Operations (0.02) (0.01) -- ------ ----- Net Income $0.46 $0.01 -- Basic Continuing Operations $0.51 $0.02 -- Discontinued Operations (0.02) (0.01) -- ----- ----- Net Income $0.49 $0.01 -- Weighted Average shares - Diluted 907.8 803.2 13 First Half Financial Results - Adjusted - ------------------------------------------- (In millions, except per share amounts) The following information excludes: (a) a second quarter 1998 one-time restructuring charge reversal of $29 million after tax, or $0.03 per share (b) certain 1998 expenses arising from the investigation of the company's accounting issues ($20.4 million after tax, or $0.02 per share) and (c) a second quarter 1997 one-time charge related to the PHH merger with HFS of $300 million ($225 million after tax, or $0.25 per share) (1) Discontinued operations are Hebdo Mag classified advertising unit plus the Cendant Software consumer education and entertainment software unit. (2) Earnings Before Interest, Taxes, Depreciation and Amortization
Six Months Ended June 30, ------------------------- % change 1998 1997 vs 1H97 ---- ---- ------- Revenues $2,461.2 $1,981.8 24 Expenses 1,777.4 1,547.8 15 ------- ------- Income before Income Taxes And Minority Interest $683.8 $434.0 58 Income Continuing Operations $421.0 $237.3 77 Income (Loss) Discontinued Operations (1) $(16.2) $(1.5) -- Net Income $404.8 $235.8 72 EBITDA - Continuing Operations (2) $875.9 $563.2 56 Earnings (Loss) per share Diluted Continuing Operations $0.47 $0.28 68 Discontinued Operations (0.02) 0.00 -- ---- ---- Net Income $0.45 $0.28 61 Basic Continuing Operations $0.50 $0.30 67 Discontinued Operations (0.02) 0.00 -- ----- ---- Net Income $0.48 $0.30 60 Weighted Average shares - Diluted 907.8 878.4 3 SECOND QUARTER RESULTS BY SEGMENT* (Dollars in millions) *Excludes results of one-time merger and unusual charges in 1997 plus other unusual expenses associated with resolution of accounting issues in 1998. Discontinued operations are Hebdo Mag classified advertising unit plus the Cendant Software consumer education and entertainment software unit. Earnings Before Interest, Taxes, Depreciation and Amortization 14
REVENUE EBITDA (2) EBITDA MARGIN ------------------------ ---------------------- -------------- 1998 1997 % 1998 1997 % 1998 1997 ---- ---- - ---- ---- - ---- ---- TRAVEL Lodging $117.2 $108.1 8 $63.7 $51.4 24 54 48 Timeshare 94.0 85.3 10 33.3 27.4 21 35 32 Car Rental 48.2 38.6 25 32.1 25.2 27 67 65 Fleet 80.8 65.7 23 37.2 28.2 32 46 43 Other (ETS, NPC) 135.0 22.0 515 30.3 7.9 285 22 36 ----- ----- ------ ------ TOTAL $475.2 $319.7 49 $196.5 $140.1 40 41 44 REAL ESTATE Franchise $131.5 $83.7 57 $102.7 $57.3 79 78 68 Relocation 110.2 103.4 7 26.5 27.2 -3 24 26 Mortgage 94.0 42.5 121 44.6 19.9 124 48 47 Other 19.2 17.2 11 2.7 2.5 8 14 15 ----- ----- ------ ------ TOTAL $354.9 $246.8 44 $176.5 $106.9 65 50 43 ALLIANCE MARKETING Individual $206.2 $167.3 23 $21.1 $5.4 291 10 3 Wholesale/Insurance 138.7 129.4 7 43.5 31.9 36 31 25 Lifestyle 66.7 59.2 13 -8.4 -11.7 28 -13 -20 ----- ----- ------ ------ TOTAL $411.6 $355.9 16 $56.2 $25.6 120 14 7 OTHER $64.6 $101.6 -36 $16.4 $41.0 -60 25 40 TOTAL CONTINUING OPERATIONS $1,306.3 $1,024.0 28 $445.6 $313.6 42 34 31 DISCONTINUED OPERATIONS (1) Software $130.5 $50.8 157 $0.7 -$4.5 -- 1 -9 Hebdo Mag 74.4 48.9 52 23.8 11.7 103 32 24 ----- ----- ------ ------ TOTAL $204.9 $99.7 105 $24.5 $7.2 238 12 7 TOTAL $1,511.2 $1,123.7 34 $470.1 $320.8 47 31 29 FIRST HALF RESULTS BY SEGMENT* (Dollars in millions) *Excludes results of one-time merger and unusual charges in 1997 plus other unusual expenses associated with resolution of accounting issues in 1998. Discontinued operations are Hebdo Mag classified advertising unit plus the Cendant Software consumer education and entertainment software unit. Earnings Before Interest, Taxes, Depreciation and Amortization # # #
REVENUE EBITDA (2) EBITDA MARGIN ------------------------ ---------------------- -------------- 1998 1997 % 1998 1997 % 1998 1997 ---- ---- - ---- ---- - ---- ---- TRAVEL Lodging $211.9 $198.0 7 $114.5 $94.5 21 54 48 Timeshare 200.4 179.0 12 75.3 55.7 35 38 31 Car Rental 93.2 73.1 27 62.9 45.6 38 67 62 Fleet 163.6 146.6 12 79.1 64.0 24 48 44 Other (ETS, NPC) 153.9 39.4 291 32.9 12.2 170 21 31 ----- ----- ------ ------ TOTAL $822.9 $636.1 29 $364.6 $272.0 34 44 43 REAL ESTATE Franchise $215.8 $139.1 55 $161.1 $86.2 87 75 62 Relocation 209.9 188.7 11 53.7 43.1 25 26 23 Mortgage 172.0 76.1 126 81.9 34.1 140 48 45 Other 36.3 34.0 7 3.8 4.4 -14 11 13 ----- ----- ------ ------ TOTAL $634.0 $437.9 45 $300.5 $167.8 79 47 38 ALLIANCE MARKETING Individual $393.7 $335.6 17 $43.0 $12.9 233 11 4 Wholesale/Insurance 274.5 246.0 12 85.2 57.8 47 31 23 Lifestyle 133.9 132.4 1 -22.8 -9.5 -- -17 -7 ----- ----- ------ ------ TOTAL $802.1 $714.0 12 $105.3 $61.2 72 13 9 OTHER $202.2 $193.9 4 $105.4 $62.2 69 52 32 TOTAL CONTINUING OPERATIONS $2,461.2 $1,981.8 24 $875.9 $563.2 56 36 28 DISCONTINUED OPERATIONS (1) Software $226.3 $115.1 97 -$19.3 $1.4 -- -9 1 Hebdo Mag 137.2 94.5 45 39.5 23.9 65 29 25 ----- ----- ------ ------ TOTAL $363.5 $209.6 73 $20.2 $25.3 -20 6 12 TOTAL $2,824.8 $2,191.4 29 $896.0 $588.5 52 32 27
EXHIBIT 99.3 SHAREHOLDERS APPROVE THE SALE OF RAC MOTORING SERVICES TO CENDANT FOR LI.450 MILLION, OR APPROXIMATELY $735 MILLION, IN CASH PARSIPPANY, NEW JERSEY, August 12, 1998 - Cendant Corporation (NYSE:CD) reported today that the Board of RAC Holdings Limited, the company which indirectly owns RAC Motoring Services (RACMS), announced that its shareholders overwhelmingly approved the sale of RACMS to Cendant for a total of Li.450 million, or approximately $735 million, in cash. As previously announced, Cendant said it expects the acquisition of RAMCS would be immediately accretive to its earnings per share, and that it would utilize its committed bank facilities to pay for the acquisition. "Today's vote is an important step towards implementing the sale of RACMS to Cendant," said Brian McGivern, chairman of RAC Holdings Limited. "Subject to regulatory approval by the Office of Fair Trading (OFT), we look forward to completing the sale as soon as possible." Cendant Vice Chairman, Stephen P. Holmes stated: "We are pleased that shareholders overwhelmingly approved the transaction. We look forward to continuing the RAC's long standing history of providing service excellence to consumers." Cendant (NYSE:CD) is the world's premier provider of consumer and business services. Cendant operates in three principal segments: Travel Services, Real Estate Services and Alliance Marketing. In Travel Services, Cendant is the leading franchisor of hotels and rental car agencies worldwide; the largest provider of vacation exchange services; a leading fleet management company; the UK's largest private car park operator; and a leading motorist assistance group in the UK. In Real Estate Services, Cendant is the world's largest franchisor of residential real estate brokerage offices; a major provider of mortgage services to consumers; and a global leader in corporate employee relocation. In Alliance Marketing, Cendant provides access to insurance, travel, shopping, auto, and other services, primarily through direct marketing to customers of its affinity partners. Headquartered in Parsippany, NJ, the company has more than 40,000 employees, operates in over 100 countries. Media Contact: Investor Contact: Elliot Bloom Denise L. Gillen Vice President Vice President Corporate Communications Investor Relations Cendant Corporation Cendant Corporation 973-496-8414 or 973-496-7303 Jim Fingeroth Kekst and Company 212-521-4800
EXHIBIT 99.4 CENDANT CORPORATION TO SELL HEBDO MAG INTERNATIONAL TO HEBDO MANAGEMENT FOR APPROXIMATELY SEVEN MILLION SHARES OF CENDANT COMMON STOCK AND $410 MILLION IN CASH PARSIPPANY, NEW JERSEY, August 12, 1998 - Cendant Corporation (NYSE:CD) today announced it has agreed to sell 100% of its Hebdo Mag International subsidiary to a company organized by Hebdo management for approximately seven million shares of Cendant common stock and $410million in cash. Hebdo Mag International is a worldwide pubisher, including via the internet, and distributor of classified advertising information with operations in 14 countries. The transaction is expected to be completed in the fourth quarter of 1998. The sale of Hebdo Mag is part of a program by Cendant management to undertake various strategic alternatives to enhance shareholder value by focusing on Cendant's business model. The Company also announced that it has engaged Credit Suisse First Boston to analyze strategic alternatives in regard to the potential 100% IPO or third party sale of its entire consumer software business unit which includes Knowledge Adventure, Blizzard Entertainment, Davidson & Associates and Sierra On-Line. Henry R. Silverman, Cendant Chairman, President and CEO stated: "We have no comparative advantages as owners or managers of Hebdo or our software businesses. Accordingly, we have determined these units do not fit within our future business model. The sale of Hebdo will be neutral to 1998 earnings per share and will add one cent to 1999 earnings per share. In addition, this transaction will generate an after tax book gain of more than $250 million." "I am confident the Hebdo transaction and the anticipated future sale of Cendant's consumer software businesses will further sharpen our Company's focus on providing service excellence to our key constituents including corporate clients, franchisees and business partners. Cendant remains a premier provider of business and consumer services throughout the world. We will cotninue to leverage our strengths in our travel, real estate and direct marketing businesses." Cendant will immediately classify Hebdo Mag and the consumer software businesses as discontinued operations, and will report financial results for these units on this basis when the Company restates its financial results. The sale of Hebdo Mag is conditioned upon, among other things, the receipt of certain governmental approvals and financing. Hebdo Mag management stated: "We welcome the challenge to continue the growth of Hebdo Mag International which, in just 12 years, has become the world's leading classified advertising information company, reaching 300 million consumers worldwide." Cendant (NYSE:CD) is the world's premier provider of consumer and business services. Cendant operates in three principal segments: Travel Services, Real Estate Services and Alliance Marketing. In Travel Services, Cendant is the leading franchisor of hotels and rental car agencies worldwide; the largest provider of vacation exchange services; a leading fleet management company; the UK's largest private car park operator; and a leading motorist assistance group in the UK. In Real Estate Services, Cendant is the world's largest franchisor of residential real estate brokerage offices; a major provider of mortgage services to consumers; and a global leader in corporate employee relocation. In Alliance Marketing, Cendant provides access to insurance, travel, shopping, auto, and other services, primarily through direct marketing to customers of its affinity partners. Headquartered in Parsippany, NJ, the company has more than 40,000 employees, operates in over 100 countries. Media Contact: Investor Contact: Elliot Bloom Denise L. Gillen Vice President Vice President Corporate Communications Investor Relations Cendant Corporation Cendant Corporation 973-496-8414 or 973-496-7303 Jim Fingeroth Roanne Kulakoff Kekst and Company 212-521-4800
EXHIBIT 99.5 Unaudited Segment Financial Data of Cendant Corporation The related financial data of Cendant Corporation ("Company") presented below has been derived from unaudited consolidated financial statements which, in the opinion of management, includes all adjustments necessary for a fair presentation of such financial results for each of the interim periods presented. The following results are not necessarily indicative of results which may be expected for any other interim period or for the year as a whole. The information shown below is qualified in its entirety by, and should be used in conjunction with the related consolidated financial statements of the Company including the related footnotes thereto, to be filed by the Company on August 14, 1998 in a Form 10-Q for the quarter ending June 30, 1998 and the amended Form 10-K/A for the year ended December 31, 1997 and amended Form 10-Q/A for the quarter ending March 31, 1998 which are expected to be filed by the end of August 1998.
CENDANT CORPORATION COMPARATIVE REVENUE DRIVER ANALYSIS (Revenue & EBITDA $ in millions) 1st Quarter 2nd Quarter - -------------------------------------------------------------------------------------------------------------------------- 1997 1998 % 1997 1998 % - -------------------------------------------------------------------------------------------------------------------------- Lodging Royalties Worldwide $ 36.7 $ 38.9 6% $ 47.6 $ 50.3 6% Fund/Other 53.1 55.8 5% 60.5 66.9 11% - ----------------------------------------------------------------------------------------------------------------------- Total Revenue 89.8 94.7 5% 108.1 117.2 8% - ----------------------------------------------------------------------------------------------------------------------- EBITDA (1) $ 43.1 $ 50.8 18% $ 51.4 $ 63.7 24% Rooms Worldwide 480,599 488,206 2% 488,145 496,706 2% Royalty per Available Room $ 76.46 $ 79.70 4% $ 97.57 $ 101.27 4% - ----------------------------------------------------------------------------------------------------------------------- Total Royalty $ 36.7 $ 38.9 6% $ 47.6 $ 50.3 6% - ----------------------------------------------------------------------------------------------------------------------- Timeshare Member/Exchange Fees $ 80.7 $ 87.1 8% $ 73.8 $ 80.0 8% Other 13.1 19.2 47% 11.5 14.0 22% - ----------------------------------------------------------------------------------------------------------------------- Total Revenue 93.8 106.3 13% 85.3 94.0 10% - ----------------------------------------------------------------------------------------------------------------------- EBITDA (1) $ 28.3 $ 42.1 49% $ 27.4 $ 33.3 22% Number of Exchanges 475,086 492,436 4% 405,120 411,711 2% Annual Number of Exchanges 1,900,344 1,969,744 4% 1,620,480 1,646,844 2% Average Members 2,039,811 2,177,050 7% 2,049,972 2,186,424 7% - ----------------------------------------------------------------------------------------------------------------------- Total Units 3,940,155 4,146,794 5% 3,670,452 3,833,268 4% Average Fee $ 20.47 $ 21.01 3% $ 20.11 $ 20.87 4% - ----------------------------------------------------------------------------------------------------------------------- Total Member/Exchange Fees $ 80.7 $ 87.1 8% $ 73.8 $ 80.0 8% - ----------------------------------------------------------------------------------------------------------------------- Car Rental Royalties $ 19.9 $ 23.7 19% $ 24.3 $ 25.7 6% Other 14.6 21.4 47% 14.3 22.5 57% - ----------------------------------------------------------------------------------------------------------------------- Total Revenue 34.5 45.1 31% 38.6 48.2 25% - ----------------------------------------------------------------------------------------------------------------------- EBITDA (1) $ 20.4 $ 30.8 51% $ 25.2 $ 32.1 27% Rental days 12,821,008 12,464,857 -3% 13,340,886 13,867,489 4% Royalty per Rental day $ 1.55 $ 1.90 22% $ 1.82 $ 1.85 2% - ----------------------------------------------------------------------------------------------------------------------- Total Royalty $ 19.9 $ 23.7 19% $ 24.3 $ 25.7 6% - ----------------------------------------------------------------------------------------------------------------------- Fleet Management Total Revenue $ 80.8 $ 82.7 2% $ 65.7 $ 80.8 23% EBITDA (1) $ 35.8 $ 41.9 17% $ 28.2 $ 37.2 32% Number of Cars/Cards 1,524,585 2,166,659 42% 1,549,975 2,245,550 45% Revenue per Car/Card $ 52.99 $ 38.19 -28% $ 42.38 $ 35.97 -15% - ----------------------------------------------------------------------------------------------------------------------- Total Revenue $ 80.8 $ 82.7 2% $ 65.7 $ 80.8 23% - ----------------------------------------------------------------------------------------------------------------------- 3rd Quarter 4th Quarter Total - ------------------------------------------------------ 1997 1997 1997 - ------------------------------------------------------ $ 57.2 $ 40.0 $ 181.6 67.3 61.5 242.4 - ----------------------------------------------------- 124.5 101.5 424.0 - ----------------------------------------------------- $ 58.2 $ 53.4 $ 206.1 497,020 503,183 492,254 $ 115.09 $ 79.45 $ 368.83 - ----------------------------------------------------- $ 57.2 $ 40.0 $ 181.6 - ----------------------------------------------------- $ 77.1 $ 72.2 $ 303.8 9.8 8.1 42.5 - ------------------------------------------------------ 86.9 80.3 346.3 - ------------------------------------------------------ $ 31.3 $ 26.1 $ 113.1 406,936 360,825 1,647,967 1,627,744 1,443,300 1,647,967 2,074,412 2,089,700 2,155,795 - ------------------------------------------------------ 3,702,156 3,533,000 3,803,762 $ 20.83 $ 20.44 $ 79.86 - ------------------------------------------------------ $ 77.1 $ 72.2 $ 303.8 - ------------------------------------------------------ $ 27.4 $ 23.7 $ 95.3 14.0 12.0 54.9 - --------------------------------------------------- 41.4 35.7 150.2 - --------------------------------------------------- $ 28.0 $ 23.1 $ 96.7 15,021,195 12,506,732 53,689,821 $ 1.82 $ 1.89 $ 1.77 - --------------------------------------------------- $ 27.4 $ 23.7 $ 95.3 - --------------------------------------------------- $ 59.8 $ 65.5 $ 271.8 $ 21.6 $ 21.7 $ 107.3 1,577,602 1,590,470 1,560,657 $ 37.91 $ 41.18 $ 174.15 - --------------------------------------------------- $ 59.8 $ 65.5 $ 271.8 - --------------------------------------------------- CENDANT CORPORATION COMPARATIVE REVENUE DRIVER ANALYSIS (Revenue & EBITDA $ in millions) 1st Quarter 2nd Quarter - ----------------------------------------------------------------------------------------------------------------------------------- 1997 1998 % 1997 1998 % - ----------------------------------------------------------------------------------------------------------------------------------- Other Travel (NPC and Global Refund) Total Revenue $ 17.5 $ 18.9 8% $ 22.0 $ 135.0 514% EBITDA (1) $ 4.3 $ 2.6 -40% $ 7.9 $ 30.3 284% Total Travel (excluding Hebdo Mag) Revenue $ 316.4 $ 347.7 10% $ 319.7 $ 475.2 49% EBITDA (1) $ 131.9 $ 168.2 28% $ 140.1 $ 196.6 40% Hebdo Mag Revenue $ 45.6 $ 62.8 38% $ 48.9 $ 74.4 52% EBITDA (1) $ 12.2 $ 15.7 29% $ 11.7 $ 23.8 103% Total Travel (including Hebdo Mag) Revenue $ 362.0 $ 410.5 13% $ 368.6 $ 549.6 49% EBITDA (1) $ 144.1 $ 183.9 28% $ 151.8 $ 220.4 45% 3rd Quarter 4th Quarter Total - ----------------------------------------------- 1997 1997 1997 - ----------------------------------------------- $ 28.2 $ 25.2 $ 92.9 $ 7.6 $ 4.5 $ 24.3 $ 340.8 $ 308.2 $ 1,285.1 $ 146.7 $ 128.8 $ 547.5 $ 51.3 $ 62.7 $ 208.5 $ 12.3 $ 14.2 $ 50.4 $ 392.1 $ 370.9 $ 1,493.6 $ 159.0 $ 143.0 $ 597.9 CENDANT CORPORATION COMPARATIVE REVENUE DRIVER ANALYSIS (Revenue & EBITDA $ in millions) 1st Quarter 2nd Quarter - -------------------------------------------------------------------------------------------------------------------------- 1997 1998 % 1997 1998 % - -------------------------------------------------------------------------------------------------------------------------- Real Estate Franchise Royalties Worldwide $ 48.3 $ 71.1 47% $ 74.6 $ 108.7 46% Other 7.1 13.2 86% 9.1 22.8 151% - -------------------------------------------------------------------------------------------------------------------------- Total Revenue 55.4 84.3 52% 83.7 131.5 57% EBITDA (1) $ 28.9 $ 58.4 102% $ 57.3 $ 102.7 79% Closed sides Domestic 265,896 322,995 21% 402,386 498,893 24% Avg Price $ 118,362 $ 135,445 14% $ 122,285 $ 142,735 17% Adj Royalty Rate (roy x comm) 0.15% 0.16% 0.01 0.15% 0.15% 0.00 - -------------------------------------------------------------------------------------------------------------------------- Total Royalties $ 48.3 $ 71.1 47% $ 74.6 $ 108.7 46% - -------------------------------------------------------------------------------------------------------------------------- Relocation Services Total Revenue $ 85.2 $ 99.7 17% $ 103.4 $ 110.2 7% EBITDA (1) $ 15.9 $ 27.2 71% $ 27.2 $ 26.5 -3% Mortgage Services Production Fees $ 19.2 $ 53.7 180% $ 30.8 $ 80.4 161% Service Fees 14.4 24.3 68% 11.7 13.6 16% - -------------------------------------------------------------------------------------------------------------------------- Total Revenue 33.6 78.0 132% 42.5 94.0 121% EBITDA (1) $ 14.2 $ 37.3 163% $ 19.9 $ 44.6 124% Production Loan Closings (000's) $ 1,783 $ 4,615 159% $ 2,480 $ 6,576 165% Avg Fee - Basis Points 107.6 116.4 8% 124.1 122.2 -2% Avg Servicing Loan Portfolio $ 25,103 $ 30,908 23% $ 25,636 $ 34,004 33% Avg Fee - Basis Points 5.8 7.6 31% 4.6 4.0 -13% New Mover Total Revenue $ 16.8 $ 17.1 2% $ 17.2 $ 19.2 12% EBITDA (1) $ 1.9 $ 1.1 -42% $ 2.5 $ 2.7 8% Total Real Estate Revenue $ 191.1 $ 279.1 46% $ 246.8 $ 354.9 44% EBITDA (1) $ 60.9 $ 124.0 104% $ 106.9 $ 176.5 65% 3rd Quarter 4th Quarter Total - ------------------------------------------- 1997 1997 1997 - ------------------------------------------- $ 85.8 $ 85.2 $ 293.9 12.5 12.0 40.7 - ---------------------------------------- 98.3 97.2 334.6 $ 72.6 $ 68.1 $ 226.9 438,120 431,423 1,537,825 $ 131,285 $ 130,909 $ 126,590 0.15% 0.15% 0.15% - ---------------------------------------- $ 85.8 $ 85.2 $ 293.9 - ---------------------------------------- $ 112.0 $ 101.8 $ 402.4 $ 36.6 $ 23.8 $ 103.5 $ 35.0 $ 33.2 $ 118.2 16.6 18.3 61.0 - ---------------------------------------- 51.6 51.5 179.2 $ 20.8 $ 19.8 $ 74.7 $ 3,547 $ 3,907 $ 11,717 98.7 84.9 100.8 $ 27,074 $ 28,999 $ 26,703 6.1 6.3 22.9 $ 19.3 $ 18.3 $ 71.6 $ 3.4 $ 2.4 $ 10.2 $ 281.2 $ 268.8 $ 987.9 $ 133.4 $ 114.1 $ 415.3 CENDANT CORPORATION COMPARATIVE REVENUE DRIVER ANALYSIS (Revenue & EBITDA $ in millions) 1st Quarter 2nd Quarter - ------------------------------------------------------------------------------------------------------------------------ 1997 1998 % 1997 1998 % - ------------------------------------------------------------------------------------------------------------------------ Individual Revenue $ 168.3 $ 187.5 11% $ 167.3 $ 206.2 23% EBITDA (1) $ 7.6 $ 21.8 187% $ 5.4 $ 21.1 291% Insurance/Wholesale Revenue $ 116.5 $ 135.8 17% $ 129.4 $ 138.7 7% EBITDA (1) $ 25.9 $ 41.7 61% $ 31.9 $ 43.5 36% Lifestyle Revenue $ 73.2 $ 67.2 -8% $ 59.2 $ 66.7 13% EBITDA (1) $ 2.1 $ (14.4) -786% $ (11.7) $ (8.4) 28% Total Alliance Marketing Revenue $ 358.0 $ 390.5 9% $ 355.9 $ 411.6 16% EBITDA (1) $ 35.6 $ 49.1 38% $ 25.6 $ 56.2 120% 3rd Quarter 4th Quarter Total - ----------------------------------------- 1997 1997 1997 - ----------------------------------------- $ 168.9 $ 171.0 $ 675.5 $ (1.3) $ 31.8 $ 43.5 $ 124.8 $ 140.0 $ 510.7 $ 29.5 $ 28.3 $ 115.6 $ 149.2 $ 135.9 $ 417.5 $ 51.4 $ 21.3 $ 63.1 $ 442.9 $ 446.9 $ 1,603.7 $ 79.6 $ 81.4 $ 222.2 Note: Driver information for Individual and Insurance/Wholesale will be made available later in the third quarter. CENDANT CORPORATION COMPARATIVE REVENUE DRIVER ANALYSIS (Revenue & EBITDA $ in millions) 1st Quarter 2nd Quarter - ----------------------------------------------------------------------------------------------------------------------- 1997 1998 % 1997 1998 % - ----------------------------------------------------------------------------------------------------------------------- Other (excluding Software) Revenue $ 92.3 $ 137.6 49% $ 101.6 $ 64.6 -36% EBITDA $ 21.2 $ 89.0 320% $ 41.0 $ 16.4 -60% Software Revenue $ 64.3 $ 95.9 49% $ 50.8 $ 130.5 157% EBITDA $ 5.9 $ (20.1) -441% $ (4.5) $ 0.7 116% Total Other (including Software) Revenue $ 156.6 $ 233.5 49% $ 152.4 $ 195.1 28% EBITDA $ 27.1 $ 68.9 154% $ 36.5 $ 17.1 -53% 3rd Quarter 4th Quarter Total - --------------------------------------------------------- 1997 1997 1997 - --------------------------------------------------------- $ 126.8 $ 72.2 $ 392.9 $ 61.9 $ (8.0) $ 116.1 $ 62.5 $ 134.8 $ 312.4 $ 0.2 $ 49.9 $ 51.5 $ 189.3 $ 207.0 $ 705.3 $ 62.1 $ 41.9 $ 167.6 Note: Other Segment includes Jackson Hewitt, Wizcom, Essex, Wright Express and Corporate. (1) Earnings before interest, taxes, depreciation, merger and unusual charges and investigation costs.