April 27, 1998 Dear Cendant Shareholder: We are writing to report to you the actions we have taken since the discovery of potential accounting irregularities in certain former CUC businesses and to state clearly that Cendant remains strong and vibrant. All of us in management are united in tackling this problem aggressively. We do not believe that the potential accounting problems exist anywhere other than where they were first discovered. Here's what we have done to date: - - The Audit Committee of the Board of Directors engaged Willkie Farr & Gallagher as special legal counsel who, in turn, engaged Arthur Andersen LLP to perform a thorough, independent investigation; - - We informed the appropriate regulatory authorities, advised the SEC and initiated a meeting with its staff; - - We assigned all accounting, finance, financial reporting, treasury, budget, systems and control functions to the former HFS finance staff; - - We installed a new management team to lead the Alliance Marketing Division consisting of: - Co-Chair and Co-Chief Executive John Fullmer, who was most recently Chief Marketing Officer at CUC; - Co-Chair and Co-Chief Executive Tony Menchaca, formerly President of the Comp-U-Card Division; - President and Chief Operating Officer John Chidsey, who was Executive Vice President for Business Development at HFS. - - We created a new position of Chief Financial Officer of Alliance Marketing, to which Michael Wargotz has been named; - - We terminated the employment of CUC's former Chief Financial Officer; - - We have obtained the support of our bank group, which has given us the necessary waivers to maintain the availability to us of $5 billion in existing, committed bank facilities. We are outraged that the apparent misdeeds of a small number of individuals within a limited part of our company has adversely affected the value of your investment - and ours - in Cendant. We are working together diligently to clear this matter up as soon as possible. We fully support the Audit Committee's investigation and continue to believe that the strategic rationale and industrial logic of the HFS/CUC merger that created Cendant is as compelling as ever. Cendant is strong, highly liquid, and extremely profitable. The vast majority of Cendant's operating businesses and earnings are unaffected and the prospects for the Company's future growth and success are excellent. We have affirmed our commitment to completing all pending acquisitions: American Bankers, National Parking Corporation and Providian Insurance. In this connection, we are pleased to note that today we completed the National Parking Corporation acquisition following shareholder and European Community approvals for that transaction. We are exceedingly proud of the continued dedication and professionalism we see exhibited every day by Cendant associates, who remain single-mindedly focused on the day-to-day success of the company and, ultimately, restoring - and then increasing - the value of your and their investment in the Company. We will announce first quarter earnings on May 5th. We expect to meet or exceed current Wall Street consensus estimates. We have also announced that we will be holding investor meetings in May in which senior members of the Alliance Marketing operating management will discuss that Division's business model and outlook for continued growth and operational success. We will periodically update you as developments warrant and, when the Audit Committee's investigation is concluded, we will report to you all we can about what happened and share with you our specific measures to assure that we are never confronted with this problem again. Everyone involved in that effort understands the extreme urgency of the assignment and is working as quickly and diligently as possible. In the meantime, we appreciate and share your concern and are more determined that ever to win back your confidence and reward you for your investment in Cendant. Sincerely, Walter A. Forbes Henry R. Silverman Chairman President and Chief Executive officer