EXHIBIT 99.1
CENDANT TO OUTSOURCE AND LICENSE ITS MEMBERSHIP BUSINESS
FORMER MANAGEMENT OF CENDANT MEMBERSHIP SERVICES AND CENDANT INCENTIVES
ACQUIRES LICENSE FOR FUTURE MEMBERSHIP AND LOYALTY PROGRAMS
CENDANT TO RETAIN ECONOMIC BENEFITS FROM EXISTING MEMBERS AND WILL RECEIVE
A ROYALTY FOR FUTURE MEMBERS
2002 EPS FORECAST INCREASED TO $1.35 - $1.40
NEW YORK, NEW YORK, JULY 2, 2001--Cendant Corporation (NYSE: CD) today announced
that it has entered into agreements with Trilegiant Corporation, a newly formed
corporation to be headquartered in Norwalk, CT, to outsource and license the
Company's individual membership and loyalty business. Effective today, the
former management of Cendant Membership Services, Inc. ("CMS") and Cendant
Incentives, Inc. own 100% of the common stock of Trilegiant. Cendant has
invested $20 million for convertible preferred stock of Trilegiant which could
convert into 20% of the company's equity. As an incentive for Trilegiant to
market memberships and generate royalties, Cendant has agreed to fund the new
company approximately $100 million in cash for marketing purposes which Cendant
will expense as those marketing dollars are spent. Employees of CMS and Cendant
Incentives will become employees of Trilegiant.
Previously, Cendant had planned to spin these units off to its shareholders,
which will no longer occur.
Cendant will retain the economic benefits from existing members including all
renewals, and Trilegiant will provide fulfillment services to these members for
a servicing fee. Under the terms of the outsourcing agreement, Trilegiant will
license the assets that are necessary for the operation of the individual
membership and loyalty businesses, and beginning in the third quarter of 2002
Cendant will receive a license fee of five percent of Trilegiant's revenues,
increasing to approximately 16% over ten years. The outsourcing agreement has a
40-year term. Trilegiant will also pursue similar outsourcing opportunities from
third parties.
Accordingly, Cendant will again report the historical operating results of CMS
in continuing operations, and will re-file its annual report on Form 10-K/A for
the year ended December 31, 2000 and its quarterly report on Form 10-Q/A for the
quarter ended March 31, 2001 to reflect the inclusion of CMS for 2000 and the
first quarter of 2001. The Company said the inclusion of CMS in continuing
operations will increase earnings per share for the first quarter of 2001 by
$0.02 and that it expects the transaction to be neutral to slightly positive to
results for the remainder of 2001. The transaction is expected to increase 2002
earnings per share by approximately $0.06 to $0.08. As a result, considering the
Financial Accounting Standards Board's (FASB) changes in accounting for goodwill
amortization and assuming that the
previously announced Galileo transaction is completed, the Company would expect
EPS for 2002 to be in the range of $1.35 to $1.40. The Galileo transaction and
change in goodwill amortization are expected to provide $0.10 to $0.14 and $0.10
to $0.12, respectively, to 2002 earnings per share. Cendant's prior forecast for
2002, which excluded these items, was $1.06.
Cendant Chairman, President and CEO, Henry R. Silverman, stated: "This
transaction is superior to that of a spin off because it provides greater
shareholder value as well as greater opportunities for former CMS and Cendant
Incentives employees, marketing partners and about 24 million club members. All
of these key constituents should be pleased to interact with a business that
remains affiliated with Cendant."
President and CEO of Trilegiant, Scott W. Bernstein, said, "We are excited about
our future as an independent company, and can now focus on our growth
objectives. Trilegiant is well capitalized and in a much better position to
increase our investments in marketing, technology and systems, and to pursue
strategic acquisitions and relationships within the direct marketing industry.
Additionally, we will continue the implementation of the aggressive member
growth strategy we commenced in the fourth quarter of 2000."
Goldman, Sachs & Co. served as an advisor on the transaction.
Cendant will host a conference call to discuss the outsourcing of its membership
businesses on Tuesday, July 3, 2001 at 10:00 a.m. (EDT). Individuals dialing
into the conference call at (913) 981-4900 are encouraged to do so beginning at
9:45 a.m. as the call will begin promptly at 10:00 a.m. The conference call will
also be available through a live Webcast at www.cendant.com. To access the call
online, go to the Investor Center portion of www.cendant.com prior to the call
to install the necessary audio software. A replay of the call will be available
from July 3, 2001 at 1:00 p.m. (EDT) until July 6, 2001 at 6:00 p.m. (EDT). The
replay phone number and access code are (719) 457-0820 and 704109, respectively.
ABOUT CENDANT
Cendant is a diversified global provider of business and consumer services
primarily within the real estate and travel sectors. The Company's
fee-for-service businesses include hotel, real estate and tax preparation
franchising; rental cars, fleet leasing and fuel cards; mortgage origination and
employee relocation; customer loyalty programs; vacation exchange and rental
services and vacation interval sales. Other business units include the UK's
largest private car park operator and electronic reservations processing for the
travel industry. With headquarters in New York City, the Company has
approximately 57,000 employees and operates in over 100 countries.
STATEMENTS ABOUT FUTURE RESULTS MADE IN THIS RELEASE CONSTITUTE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. THESE STATEMENTS ARE BASED ON CURRENT EXPECTATIONS AND THE CURRENT
ECONOMIC ENVIRONMENT. CENDANT CAUTIONS THAT THESE STATEMENTS
ARE NOT GUARANTEES OF FUTURE PERFORMANCE. ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THOSE EXPRESSED OR IMPLIED IN THE FORWARD-LOOKING STATEMENTS. IMPORTANT
ASSUMPTIONS AND OTHER IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS ARE SPECIFIED IN
CENDANT'S FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2001 AND GALILEO
INTERNATIONAL INC.'S FORM 10-K FOR ITS YEAR ENDED DECEMBER 31, 2000. IN
ADDITION, SUCH FORWARD LOOKING STATEMENTS ARE BASED UPON MANY ESTIMATES AND ARE
INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES AND
CONTINGENCIES, MANY OF WHICH ARE BEYOND THE CONTROL OF THE MANAGEMENT OF CENDANT
AND ITS AFFILIATES. ACCORDINGLY, ACTUAL RESULTS MAY BE MATERIALLY HIGHER OR
LOWER THAN THOSE PROJECTED. THE INCLUSION OF SUCH STATEMENTS HEREIN SHOULD NOT
BE REGARDED AS A REPRESENTATION BY CENDANT OR ITS AFFILIATES THAT THE STATEMENTS
WILL PROVE TO BE CORRECT.
CENDANT MEDIA CONTACT: CENDANT INVESTOR CONTACTS:
Elliot Bloom Sam Levenson
212-413-1832 212-413-1834
Denise Gillen
212-413-1833