EXHIBIT 99.2
CENDANT CORPORATION TO RESTATE EARNINGS
Stamford, CT and Parsippany, NJ, April 15, 1998 - Cendant Corporation (NYSE:
CD) today reported that, in the course of transferring
responsibility for the Company's accounting functions from former CUC
International Inc. personnel to former HFS Incorporated accounting personnel and
preparing for the reporting of first quarter 1998 results, it has discovered
potential accounting irregularities in certain former CUC business units which
are part of Cendant's Alliance Marketing division (formerly the Membership
segment). Accordingly, Cendant said it expects to restate annual and quarterly
net income and earnings per share for 1997 and may restate certain other
previous periods related to the former CUC businesses.
Based on presently available information, the effect on 1997 results is expected
to be a reduction to net income prior to restructuring and unusual charges of
approximately $100 to $115 million and earnings per share by about 11 to 13
cents, respectively. In 1997, the Company had previously reported net income
prior to restructuring and unusual charges of $872 million and earnings per
share of $1.00.
Cendant said that the potential accounting irregularities are limited to certain
former CUC businesses, which accounted for less than one third in Cendant's net
income in 1997. it said all its current businesses continue to perform strongly
and that its anticipated percentage growth of earnings per share in 1998 over
restated 1997 appeared achievable. Cendant expects to meet or exceed the
currently forecasted Wall Street consensus estimate of 25 cents per share for
the quarter of 1998. However, since 1997 earnings per share will be reduced by
about 11 to 13 cents, the Company anticipates that 1998 full-year earnings
expectations will be reduced from current levels by approximately the same
amount.
Henry R. Silverman, President and CEO, said: "Cendant remains a strong and
highly liquid company. Our businesses are very healthy and growing, but we're
growing off a lower base than we had been previously led to believe by certain
members of the former CUC management."
The Company also stated it remains committed to completion of the previously
announced American Bankers, National Parking Corporation and Providian Insurance
transactions.
The Company said that upon discovering the potential accounting irregularities,
it, together with its counsel, Skadden, Arps, Slate Meagher & Flom LLP, assisted
by auditors, immediately began an intensive investigation. As a result of the
discovery and information developed to date, Cendant has taken a number of
actions:
o It has informed the appropriate regulatory authorities;
o The Audit Committee of the Board of Directors has engaged Willkie Farr &
Gallagher as special legal counsel, and Willkie Farr has engaged Arthur
Andersen LLP to perform an independent investigation;
o The Company has assigned all accounting, finance, financial reporting,
budget, systems and control functions to the former HFS finance staff; and
o The Company has asked counsel to explore litigation against certain
officers of the former CUC as well as other potential defendants.
In addition, the Company will take appropriate action, including immediate
terminations, with respect to those individuals whom the investigation
establishes have had any involvement in or knowledge of the potential accounting
irregularities. The Company expects that the investigation its Audit Committee
has commenced will establish the identity of such individuals.
Silverman said: "We're outraged by the actions of a small number of former CUC
employees who betrayed the trust that was placed in them by the Company and our
fellow shareholders. We are taking the appropriate steps to address those
actions. The Company will continue to pursue aggressively the independent and
internal investigations that are underway and will take whatever further actions
are necessary based on the results of that comprehensive inquiry."
The Company said it would not comment further on this matter until the ongoing
investigation has been completed and the results presented to its Audit
Committee and Board of Directors.
In accordance with SAS No. 1, the Company's previously issued financial
statements and auditors' reports should not be relied upon. Revised financial
statements and auditors' reports will be issued upon completion of the
investigation.
Cendant is the world's premier provider of consumer and business services.
Cendant operates in three principal segments: Alliance Marketing, Travel and
Real Estate Services. In Alliance Marketing, Cendant provides access to travel,
shopping, auto, dining and other services through more than 66.5 million
memberships worldwide. In Travel Services, Cendant is the leading franchisor of
hotels and rental car agencies worldwide, the premier provider of vacation
exchange services and the second largest fleet management company. 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. Headquartered in Stamford, CT
and Parsippany, NJ, Cendant has more than 34,000 employees, operates in over 100
countries and makes approximately 100 million customer contacts annually.
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; 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.