SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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July 29, 1998 (July 27, 1998)
(Date of Report (date of earliest event reported))
Cendant Corporation
(Exact name of Registrant as specified in its charter)
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)
(973) 428-9700
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if applicable)
Item 5. Other
Management and Corporate Governance Changes. On July 28, 1998, Cendant
Corporation (the "Company") announced that Walter A. Forbes resigned as Chairman
of the Company and as a member of the Board of Directors. Henry R. Silverman,
Chief Executive Officer of the Company, was unanimously elected by the Board of
Directors to be Chairman and will continue to serve as Chief Executive Officer
and President. Nine members of the Board formerly associated with CUC
International Inc. ("CUC") , including Mr. Forbes, also resigned effective
immediately. One other Board member formerly associated with CUC will leave the
Board by year end, leaving the Company with 18 directors.
The Board also voted to eliminate the governance plan adopted as part of
the merger of CUC and HFS Incorporated, including the 80% super-majority
provisions of the Company's By-Laws which included provisions governing the
composition of the Board and limitations on the removal of the Chairman and the
Chief Executive Officer. In addition, the Board rescheduled the Company's annual
meeting of shareholders for October 1, 1998.
The severance agreement reached with Mr. Forbes gives him the benefits
required by his employment contract relating to a termination of Mr. Forbes'
employment with the Company for reasons other than for cause. These benefits
total $35 million in cash and include the grant of stock options. In addition,
the Company provided a limited release for Mr. Forbes. The payments to Mr.
Forbes will cause the Company to record an unusual expense of approximately
$0.03 per share in the third quarter.
The immediate departure of nine Directors formerly associated with CUC, and
the planned departure of one additional CUC Director, Frederick D. Green, will
result in the Company having a Board with 18 Directors. Mr. Green, Chairman of
the Audit Committee of the Board, has agreed to resign effective upon completion
of the final Audit Committee report relating to the accounting irregularities.
Extension of American Bankers Tender offer. On July 27, 1998, the Company
Corporation announced that it extended its cash tender offer to purchase
approximately 23.5 million common shares of American Bankers Insurance Group,
Inc. ("ABI") at a price of $67 per share. The offer, which commenced on January
28, 1998, and was scheduled to expire at 5:00 p.m., New York City time, on
Monday, August 3, 1998, has been extended through 5:00 p.m., New York City time,
Tuesday, September 1, 1998, unless further extended.
Audit Committee Investigation Update. On July 28, 1998, the Company
announced that the Audit Committee of its Board of Directors had received an
oral summary of the conclusions of Arthur Andersen LLP's forensic audit of the
accounting records of the former CUC. Arthur Andersen reported that its
investigation was virtually complete. Deloitte & Touche LLP also reported on the
status of its audit and indicated that it was substantially complete. Their
conclusions were consistent with the Company's July 14, 1998 $0.22 to $0.28 per
share estimate of the aggregate restatement of net income before one-time and
extraordinary items required to correct 1997 accounting irregularities and
accounting errors.
The information set forth in the press releases attached hereto as Exhibit 99.1,
99.2 and 99.3 and the agreements attached hereto as Exhibits 10.1 and 10.2 are
incorporated herein by reference in their entirety.
Item 7. Exhibits
Exhibit
No. Description
10.1 Memorandum, dated July 28, 1998, from Walter A. Forbes to
Audit Committee.
10.2 Agreement, dated July 28, 1998, between Cendant Corporation
and Walter A. Forbes.
99.1 Press Release: Cendant Extends $67 Per Share Tender Offer for
American Bankers Insurance Group to September 1, 1998, dated
July 27, 1998.
99.2 Press Release: Cendant Confirms Estimate of 1997 Accounting
Restatement, dated July 28, 1998.
99.3 Press Release: Walter Forbes Steps Down as Cendant Chairman.
dated July 28, 1998.
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: July 29, 1998
CENDANT CORPORATION
CURRENT REPORT ON FORM 8-K
Report Dated July 28, 1998 (July 27, 1998)
EXHIBIT INDEX
Exhibit No. Description
10.1 Memorandum, dated July 28, 1998, from Walter A. Forbes to
Audit Committee.
10.2 Agreement, dated July 28, 1998, between Cendant Corporation
and Walter A. Forbes.
99.1 Press Release: Cendant Extends $67 Per Share Tender Offer for
American Bankers Insurance Group to September 1, 1998, dated
July 27, 1998.
99.2 Press Release: Cendant Confirms Estimate of 1997 Accounting
Restatement, dated July 28, 1998.
99.3 Press Release: Walter Forbes Steps Down as Cendant Chairman.
dated July 28, 1998.