EXHIBIT 99.1
CENDANT REPORTS RECORD RESULTS FOR FIRST QUARTER 2002;
RAISES FULL YEAR 2002 PROJECTION
1Q 2002 Adjusted EPS of $0.34 Exceeded Projection by $0.04
1Q 2002 Adjusted EBITDA Increased 54% to $697 Million vs. 1Q 2001
Adjusted EPS Increased 62% to $0.34 in 1Q 2002 vs. $0.21 in 1Q 2001
Reported EPS $0.34 in 1Q 2002 vs. $0.30 in 1Q 2001
Revenue Increased 84% to $2.7 Billion vs. $1.5 Billion in 1Q 2001
Company Increases Projected Full Year 2002 Adjusted EPS by $0.07
to $1.36, a 30% Increase Over 2001
NEW YORK, NY, APRIL 17, 2002 - Cendant Corporation (NYSE: CD) today reported
record first quarter 2002 results. Adjusted earnings per share was $0.34 and
reported earnings per share was $0.34 (adjusted EPS excludes non-recurring or
unusual items). The Company raised its projection for adjusted earnings per
share for 2002 by $0.07 to $1.36, a 30% increase over the results for 2001. The
increased forecast reflects the strength of the Company's businesses and the
anticipated results of the previously announced acquisitions of Trendwest
Resorts, NRT Incorporated, and Arvida Realty Services.
Cendant's Chairman, President and CEO, Henry R. Silverman, stated: "Simply put,
we had an outstanding quarter. All of our operating segments reported
year-over-year EBITDA growth of at least 10%, and performed ahead of our
expectations. In addition, our operating leverage, which increased due to our
cost reductions after September 11th, produced the expected outcome--a
substantial portion of every incremental dollar of revenue dropped to the bottom
line. Our organic growth exceeded our long term targets.
"I am particularly pleased that we now expect to attain our previously announced
stretch goal of adjusted earnings per share of $1.35 to $1.40 for 2002."
RECENT DEVELOPMENTS
The Company has announced several activities during 2002:
o The Company completed the acquisition of Equivest Finance, Inc. for
approximately $100 million in cash and the assumption of approximately
$65 million of corporate debt, and signed a definitive agreement to
acquire all of the outstanding common stock of Trendwest Resorts
through a tax-free exchange of approximately $890 million of Cendant
common stock and the assumption of $70 million of net corporate debt.
Equivest and Trendwest market, sell and finance vacation ownership
interests.
o The Company announced today that it acquired NRT Incorporated, the
largest residential real estate brokerage firm in the United States,
for approximately $230 million in
1
Cendant common stock, plus the assumption of $300 million of net debt,
and NRT subsequently acquired Arvida Realty Services, the largest
residential real estate brokerage firm in Florida, for approximately
$160 million in cash.
o Rating agencies Fitch, Moody's and Standard & Poor's recently affirmed
the Company's senior unsecured credit ratings of BBB Plus, Baa1 and
BBB, respectively, and removed Cendant from credit watch.
FIRST QUARTER 2002 SEGMENT RESULTS
The following discussion of operating results addresses segment revenue and
Adjusted EBITDA, which is defined as earnings before non-program-related
interest, income taxes, non-program-related depreciation and amortization and
minority interest, adjusted to exclude certain items that are of a non-recurring
or unusual nature and are not measured in assessing segment performance. Such
discussion is the most informative representation of how management evaluates
performance and allocates resources. During the first quarter of 2002, the
segment results contained no adjustments of a non-recurring or unusual nature.
Revenue and Adjusted EBITDA are expressed in millions.
REAL ESTATE SERVICES
(Consisting of the Company's real estate brokerage brands, mortgage and
relocation services.)
2002 2001 % CHANGE
- --------------------------------------------------------------------------------
REVENUES $410 $339 21%
- --------------------------------------------------------------------------------
ADJUSTED EBITDA $182 $132 38%
- --------------------------------------------------------------------------------
The increase in operating results was driven primarily by increased franchise
fees from our Century 21, Coldwell Banker and ERA franchise brands and continued
growth in mortgage loan production during the first quarter of 2002.
HOSPITALITY
(Consisting of the Company's nine lodging brands, timeshare exchange and
interval sales, and vacation rental.)
2002 2001 % CHANGE
- --------------------------------------------------------------------------------
REVENUES $403 $240 68%
- --------------------------------------------------------------------------------
ADJUSTED EBITDA $112 $102 10%
- --------------------------------------------------------------------------------
Revenues and Adjusted EBITDA increased primarily due to the acquisitions of
Fairfield Resorts in April 2001 and Equivest in February 2002, and organic
growth in our timeshare exchange and vacation rental businesses.
TRAVEL DISTRIBUTION
(Consisting of electronic global distribution services for the travel industry
and travel agency services.)
2002 2001 % CHANGE
- --------------------------------------------------------------------------------
REVENUES $444 $25 N/M
- --------------------------------------------------------------------------------
ADJUSTED EBITDA $146 $ 2 N/M
- --------------------------------------------------------------------------------
N/M = not meaningful
The October 2001 acquisitions of Galileo International, Inc. and Cheap Tickets
Inc. drove the substantial revenue and Adjusted EBITDA increases in the first
quarter of 2002. While the terrorist incidents of September 11 caused a
significant decrease in the demand for travel-related
2
services and, accordingly, reduced the booking volumes of Galileo and our travel
agency businesses during the third and fourth quarters of 2001, travel bookings
improved during the first quarter of 2002.
VEHICLE SERVICES
(Consisting of car rental, vehicle management services and car park services.)
2002 2001 % CHANGE
- --------------------------------------------------------------------------------
REVENUES $1,030 $454 127%
- --------------------------------------------------------------------------------
ADJUSTED EBITDA $104 $93 12%
- --------------------------------------------------------------------------------
Revenues and Adjusted EBITDA increased substantially due to the acquisition of
Avis Group Holdings as of March 1, 2001 and improved results at our National Car
Parks subsidiary. Our Avis car rental business, which was significantly impacted
by reduced travel volumes after September 11, reported stronger-than-expected
results throughout the first quarter of 2002.
FINANCIAL SERVICES
(Consisting of individual membership products, insurance-related services,
financial services enhancement products and tax preparation services.)
2002 2001 % CHANGE
- --------------------------------------------------------------------------------
REVENUES $419 $390 7%
- --------------------------------------------------------------------------------
ADJUSTED EBITDA $164 $131 25%
- --------------------------------------------------------------------------------
Revenues and Adjusted EBITDA increased in the first quarter primarily due to
increased tax preparation volume.
BALANCE SHEET AND OTHER ITEMS
o As of March 31, 2002, we had approximately $1.1 billion of cash and cash
equivalents and $6.1 billion of debt and preferred minority interest. In
addition, the Company has $863 million of mandatorily convertible Upper
DECS securities outstanding.
o As of March 31, 2002, the net debt to total capital ratio was 37%. The
ratio of adjusted EBITDA to net interest expense (non-program related) was
10.5 to 1 for first quarter 2002.
o As of March 31, 2002, the Company had undrawn lines of credit of $2.6
billion (not including undrawn lines of credit of $1.6 billion related to
our PHH subsidiary).
o In the first quarter of 2002, we paid $250 million to a settlement trust,
reducing the liability associated with the principal common stock class
action litigation settlement at March 31, 2002 to $1.2 billion. We
anticipate funding the balance of this obligation by July 16, 2002.
o Weighted average common shares outstanding, including dilutive securities,
were 1.02 billion for the first quarter of 2002 compared with 830 million
for first quarter 2001. The increase was primarily from the issuance of 61
million shares in connection with the retirement of $1.7 billion of Feline
PRIDES in February 2001, the sale of 46 million shares in February 2001
and the issuance of 117 million shares in connection with the acquisition
of Galileo International in October 2001.
RECONCILIATION OF FIRST QUARTER ADJUSTED EPS TO REPORTED EPS
Adjusted EPS excludes items that are of a non-recurring or unusual nature and
Move.com-related items. Adjusted EPS is a non-GAAP (generally accepted
accounting principles) measure, but the Company believes that it is useful to
assist investors in gaining an understanding of the trends and results of
operations for the Company's core businesses. Adjusted EPS should be viewed in
3
addition to the Company's reported results and not in lieu of reported results.
Reported earnings per share was $0.34 in the first quarter of 2002 compared with
reported earnings per share before the cumulative effect of an accounting change
of $0.30 in the first quarter of 2001.
The only item reflected in first quarter 2002 reported results that is
considered to be of an unusual or non-recurring nature for purposes of deriving
adjusted EPS is an after tax charge of $6 million for costs related to
securities litigation. In the first quarter of 2001, unusual or non-recurring
items included: net income of $210 million, or $0.26 per share, associated with
Move.com related items, primarily a gain on the sale of Move.com to
Homestore.com; and net after-tax charges of $134 million or $0.17 per share,
primarily to fund travel and real estate technology initiatives, acquisition and
integration-related costs, and for costs associated with securities litigation
(see Table 3).
2002 QUARTERLY OUTLOOK
The Company projects adjusted EPS of $0.36 for the second quarter of 2002
compared with $0.30 in 2001; $0.39 for the third quarter of 2002 compared with
$0.32 in 2001; and $0.27 for the fourth quarter of 2002 compared with $0.23 in
2001. The acquisitions of Trendwest, NRT and Arvida will cause the seasonality
of Cendant's earnings to be weighted to the second and third quarters of the
year. The Company announced the following financial projections for the second
and third quarters of 2002: (in millions)
SECOND QUARTER 2002 THIRD QUARTER 2002
------------------ ------------------
Adjusted EBITDA $780 - $790 $885 - $900
Percentage increase vs. prior year 33%-35% 47%-49%
Depreciation and amortization $115 - $120 $120 - $125
Interest expense, net $85 - $95 $100 - $110
Minority interest $7 $7
Weighted average shares outstanding 1,050 - 1,070 1,130 - 1,150
In the table above, depreciation and interest expense exclude program-related
amounts. The Company's 2002 tax rate is expected to be between 33.0% and 33.5%.
The increase in weighted average shares outstanding is due to the Trendwest and
NRT acquisitions and the assumption that the Company's CODES securities will
become convertible in the third quarter. Adjusted EBITDA for the balance of 2002
will exclude acquisition and integration-related costs, including the non-cash
amortization of pendings and listings from real estate brokerage acquisitions,
and securities litigation costs.
INVESTOR CONFERENCE CALL
Cendant will host a conference call to discuss first quarter results on
Thursday, April 18, 2002, at 11:00 a.m. (EDT). Investors may access the call
live at WWW.CENDANT.COM or by dialing 913-981-5519. A web replay will be
available at WWW.CENDANT.COM following the call. A telephone replay will be
available from 2:00 p.m. (EDT) on April 18, 2002 until 8:00 p.m. (EDT) on [April
25, 2002] at 719-457-0820, access code: 488800.
Cendant Corporation is primarily a provider of travel and residential real
estate services. With approximately 70,000 employees, New York City-based
Cendant provides these services to businesses and consumers in over 100
countries.
4
More information about Cendant, its companies, brands and current SEC filings
may be obtained by visiting the Company's Web site at WWW.CENDANT.COM or by
calling 877-4-INFOCD (877-446-3623).
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. THE COMPANY 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-K FOR THE YEAR ENDED DECEMBER 31, 2001.
SUCH FORWARD-LOOKING STATEMENTS INCLUDE PROJECTIONS. SUCH PROJECTIONS WERE NOT
PREPARED IN ACCORDANCE WITH PUBLISHED GUIDELINES OF THE AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS OR THE SEC REGARDING PROJECTIONS AND FORECASTS, NOR
HAVE SUCH PROJECTIONS BEEN AUDITED, EXAMINED OR OTHERWISE REVIEWED BY
INDEPENDENT AUDITORS OF CENDANT OR ITS AFFILIATES. IN ADDITION, SUCH PROJECTIONS
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 MANAGEMENT OF CENDANT AND ITS AFFILIATES. ACCORDINGLY, ACTUAL RESULTS
MAY BE MATERIALLY HIGHER OR LOWER THAN THOSE PROJECTED. THE INCLUSION OF SUCH
PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS A REPRESENTATION BY CENDANT OR ITS
AFFILIATES THAT THE PROJECTIONS WILL PROVE TO BE CORRECT.
MEDIA CONTACT: INVESTOR CONTACTS:
Elliot Bloom Sam Levenson
212-413-1832 212-413-1834
# # #
Tables Follow
5
<Page>
TABLE 1
CENDANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In millions, except per share data)
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
------------------
2002 2001
------- -------
REVENUES
Service fees and membership-related, net $ 1,715 $ 1,076
Vehicle-related 961 398
Other 37 12
------- -------
Net revenues 2,713 1,486
------- -------
EXPENSES
Operating 945 427
Vehicle depreciation, lease charges and interest, net 502 180
Marketing and reservation 290 249
General and administrative 279 187
Non-program related depreciation and amortization 107 101
Other charges:
Litigation settlement and related costs, net 11 11
Restructuring and other unusual charges -- 185
Acquisition and integration related costs -- 8
Non-program related interest, net 66 60
------- -------
Total expenses 2,200 1,408
------- -------
Net gain on dispositions of businesses -- 435
------- -------
INCOME BEFORE INCOME TAXES, MINORITY INTEREST AND
EQUITY IN HOMESTORE.COM 513 513
Provision for income taxes 169 205
Minority interest, net of tax 2 13
Losses related to equity in Homestore.com, net of tax -- 18
------- -------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 342 277
Cumulative effect of accounting change, net of tax -- (38)
------- -------
NET INCOME $ 342 $ 239
======= =======
CD COMMON STOCK INCOME PER SHARE
BASIC
Income before cumulative effect of accounting change $ 0.35 $ 0.32
Net income 0.35 0.28
DILUTED
Income before cumulative effect of accounting change $ 0.34 $ 0.30
Net income 0.34 0.26
WEIGHTED AVERAGE SHARES
Basic 979 790
Diluted 1,018 830
</Table>
<Page>
<Table>
<Caption>
TABLE 2
CENDANT CORPORATION AND SUBSIDIARIES
REVENUES AND ADJUSTED EBITDA BY SEGMENT
(Dollars in millions)
THREE MONTHS ENDED MARCH 31,
----------------------------
REVENUES ADJUSTED EBITDA (A)
------------------------- ------------------------------
%
2002 2001 CHANGE 2002 2001 % CHANGE
------ ---------------- ------ ------ --------
Real Estate Services $ 410 $ 339 21% $ 182 $ 132 (D) 38%
Hospitality 403 240 68% 112 102 10%
Travel Distribution 444 25 * 146 2 *
Vehicle Services 1,030 454 127% 104 93 (E) 12%
Financial Services 419 390 7% 164 131 25%
------ ------ ------ ------
Total Reportable Segments 2,706 1,448 708 460
Corporate and Other (B) 7 38 * (11) (C) (17)(F) *
------ ------ ------ ------
TOTAL COMPANY 2,713 1,486 83% 697 443 57%
Move.com Group -- 10 * -- (9) *
------ ------ ------ ------
Total Company Excluding Move.com Group $2,713 $1,476 84% $ 697 $ 452 54%
====== ====== ====== ======
- ---------
* Not meaningful.
(A) Defined as earnings before non-program related interest, income taxes, non-program related
depreciation and amortization, minority interest and equity in Homestore.com, adjusted to
exclude certain items which are of a non-recurring or unusual nature and not measured in
assessing segment performance or are not segment specific.
(B) Principally reflects unallocated corporate overhead and 2001 includes Move.com Group operating
results.
(C) Excludes $11 million of litigation settlement and related costs.
(D) Excludes a charge of $95 million related to the funding of an irrevocable contribution to an
independent technology trust responsible for providing technology initiatives for the benefit
of certain of the Company's current and future real estate franchisees.
(E) Excludes a charge of $4 million related to the acquisition and integration of Avis Group
Holdings, Inc. ("Avis").
(F) Excludes (i) a net gain of $435 million primarily related to the sale of the Company's real
estate Internet portal, move.com, and (ii) a credit of $14 million to reflect an adjustment to
the settlement charge recorded in the fourth quarter of 1998 for the PRIDES class action
litigation. Such amounts were partially offset by charges of (i) $85 million incurred in
connection with the creation of Trip Network, Inc. (formerly Travel Portal, Inc.), (ii) $25
million of litigation settlement and related costs, (iii) $7 million related to a contribution
to the Cendant Charitable Foundation and (iv) $4 million related to the acquisition and
integration of Avis.
</Table>
<Page>
<Table>
<Caption>
TABLE 3
CENDANT CORPORATION AND SUBSIDIARIES
RECONCILIATION OF REPORTED EPS TO ADJUSTED EPS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
MARCH 31,
-------------------------------------------
2002
-------------------------------------------
INCOME BEFORE
CUMUMLATIVE EFFECT OF
ACCOUNTING CHANGE DILUTED EPS
--------------------- -----------------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE:
Total Company $ 342 $ 0.34
Less: Move.com Group (A) -- --
--------------------- -----------------
Income before cumulative effect of accounting change, including
Cendant's retained interest in Move.com Group 342 0.34
Convertible debt interest, net of tax 1 --
--------------------- -----------------
Total - As Reported 343 0.34
Adjustments (after-tax):
Litigation settlement and related costs (C) 6 --
Restructuring and other unusual charges (D) -- --
Acquisition and integration related costs (E) -- --
Loss on dispositions of businesses (F) -- --
Losses related to equity in Homestore.com -- --
Less: Retained interest in Move.com Group (B) -- --
--------------------- -----------------
Total - As Adjusted $ 349 $ 0.34
===================== =================
<Caption>
THREE MONTHS ENDED
MARCH 31,
----------------------------------------
2001
----------------------------------------
INCOME BEFORE
CUMUMLATIVE EFFECT OF
ACCOUNTING CHANGE DILUTED EPS
--------------------- -----------------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE:
Total Company $ 277 $ 0.33
Less: Move.com Group (A) 27 0.03
--------------------- -----------------
Income before cumulative effect of accounting change, including
Cendant's retained interest in Move.com Group 250 0.30
Convertible debt interest, net of tax 3 --
--------------------- -----------------
Total - As Reported 253 0.30
Adjustments (after-tax):
Litigation settlement and related costs (C) 6 0.01
Restructuring and other unusual charges (D) 122 0.15
Acquisition and integration related costs (E) 5 0.01
Loss on dispositions of businesses (F) 1 --
Losses related to equity in Homestore.com 18 0.02
Less: Retained interest in Move.com Group (B) 228 0.28
--------------------- -----------------
Total - As Adjusted $ 177 $ 0.21
===================== =================
- ------
(A) Represents the portion of Move.com Group's operating results (including the gain on sale of Move.com
Group) not retained by Cendant.
(B) Represents the portion of Move.com Group's operating results (including the gain on sale of Move.com
Group) retained by Cendant.
(C) Represents 2002 and 2001 pre-tax charges of $11 million each.
(D) Represents 2001 pre-tax charges of $185 million primarily related to (i) the funding of an irrevocable
contribution to an independent technology trust ($95 million), (ii) the creation of Trip Network, Inc.
($85 million) and (iii) a non-cash contribution to the Cendant Charitable Foundation ($7 million).
(E) Represents 2001 pre-tax charges of $8 million related to the acquisition and integration of Avis Group
Holdings, Inc.
(F) Represents 2001 pre-tax losses of $1 million.
</Table>
<Page>
<Table>
<Caption>
TABLE 4
CENDANT CORPORATION AND SUBSIDIARIES
SEGMENT REVENUE DRIVER ANALYSIS
(REVENUE DOLLARS IN THOUSANDS)
THREE MONTHS ENDED MARCH 31,
-------------------------------------------
%
2002 2001 CHANGE
----------- ----------- ------------
REAL ESTATE SERVICES SEGMENT
REAL ESTATE FRANCHISE
Closed Sides - Domestic (000's) 395,316 359,561 10%
Average Price $ 186,434 $ 171,865 8%
Royalty and Marketing Revenue $ 124,110 $ 103,370 20%
Total Revenue $ 157,402 $ 117,849 34%
RELOCATION
Service Based Revenue (Referrals, Outsourcing, etc.) $ 59,361 $ 61,174 (3%)
Asset Based Revenue (Corporate and Government Home Sale
Closings and Financial Income) $ 37,750 $ 41,916 (10%)
Total Revenue $ 97,111 $ 103,090 (6%)
MORTGAGE
Production Loans Sold (millions) $ 8,549 $ 5,916 45%
Production Revenue $ 190,719 $ 87,153 119%
Average Servicing Loan Portfolio (millions) $ 99,132 $ 80,986 22%
Net Servicing Revenue (A) $ (35,025) $ 31,403 n/a
Total Revenue $ 155,863 $ 118,823 31%
HOSPITALITY SEGMENT
LODGING
RevPar ($) $ 21.44 $ 24.17 (11%)
Weighted Average Rooms Available 519,409 508,685 2%
Royalty, Marketing and Reservation Revenue $ 75,079 $ 84,484 (11%)
Total Revenue $ 89,136 $ 104,134 (14%)
RCI
Average Subscriptions 2,744,404 2,482,152 11%
Number of Timeshare Exchanges 568,873 506,590 12%
Total Revenue $ 144,742 $ 127,005 14%
FAIRFIELD RESORTS
Average Revenue per Transaction $ 12,310 $ 11,802 4%
Total Revenue $ 126,602 (B) n/a
TRAVEL DISTRIBUTION SEGMENT
GALILEO
Domestic Booking Volume (millions)
Air 24 31 (23%)
Non-air 4 5 (20%)
International Booking Volume (millions)
Air 51 55 (7%)
Non-air 1 1 --
Worldwide Booking Volume (millions)
Air 75 86 (13%)
Non-air 5 6 (17%)
Total Galileo Revenue $ 407,259 (B) n/a
VEHICLE SERVICES SEGMENT
CAR RENTAL
Rental Days (000's) 13,537 14,559 (7%)
Time and Mileage Revenue per Day $ 39.47 $ 39.57 --
Average Length of Rental Days 3.81 3.71 3%
Total Revenue $ 571,385 (B) n/a
VEHICLE MANAGEMENT AND FUEL CARD SERVICES
Average Fleet (Leased) 316,041 310,787 2%
Average Number of Cards (000's) 3,819 3,517 9%
Total Revenue $ 361,557 (B) n/a
FINANCIAL SERVICES SEGMENT
Insurance/Wholesale-related Revenue $ 140,342 $ 143,313 (2%)
Other Revenue $ 278,631 $ 246,493 13%
Total Revenue $ 418,973 $ 389,806 7%
TRILEGIANT
Gross New Member Joins 3,104,930 2,396,729 30%
Blended Cancellation Rate (C) 11.7% 12.4% 6%
- -------
(A) Includes gross recurring service fees of $99 million and $81 million for 2002 and 2001, respectively. Net
servicing revenues also include the non-cash amortization of mortgage servicing rights ($130 million and $53
million, respectively), which was accelerated due to a higher volume of refinancing activity, and interest
expense ($12 million and $6 million, respectively), which also increased due to a higher volume of
refinancing activity as the Company's mortgage business is required to pay the investor interest on loans
refinanced, which is calculated from the loan payoff date through the end of the month.
(B) The operations of these businesses were acquired in, or subsequent to, the first quarter of 2001.
Accordingly, first quarter 2001 revenues are not comparable to the current period amounts.
(C) Represents the blended cancellation rate across the entire active member base, which includes new and renewal
members.
</Table>
<Page>
<Table>
<Caption>
TABLE 5
CENDANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN BILLIONS)
MARCH 31, 2002 DECEMBER 31, 2001
------------------ ---------------------
ASSETS
Current assets:
Cash and cash equivalents $ 1.1 $ 2.0
Stockholder litigation settlement trust -- 1.4
Other current assets 3.2 3.1
------------------ ---------------------
Total current assets 4.3 6.5
Property and equipment, net 1.9 2.0
Goodwill, net 8.1 8.0
Other non-current assets 5.4 5.0
------------------ ---------------------
Total assets exclusive of assets under programs 19.7 21.5
Assets under management and mortgage programs 11.7 12.0
------------------ ---------------------
TOTAL ASSETS $ 31.4 $ 33.5
================== =====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ -- $ 0.4
Stockholder litigation settlement 1.2 2.9
Other current liabilities 4.0 4.4
------------------ ---------------------
Total current liabilities 5.2 7.7
Long-term debt, excluding Upper DECS 5.7 5.7
Upper DECS 0.9 0.9
Other noncurrent liabilities 0.9 0.8
------------------ ---------------------
Total liabilities exclusive of liabilities under programs 12.7 15.1
Liabilities under management and mortgage programs 10.7 10.9
Mandatorily redeemable preferred interest in a subsidiary 0.4 0.4
Total stockholders' equity 7.6 7.1
------------------ ---------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 31.4 $ 33.5
================== =====================
</Table>
<Page>
<Table>
<Caption>
TABLE 6
CENDANT CORPORATION AND SUBSIDIARIES
SCHEDULE OF TOTAL CORPORATE DEBT OUTSTANDING (A)
(IN MILLIONS)
MATURITY
DATE MARCH 31, 2002 DECEMBER 31, 2001
- --------------------- ---------------- -------------------
December 2003 7 3/4% notes $ 1,150 $ 1,150
August 2006 6 7/8% notes 850 850
May 2009 11% senior subordinated notes 577 584
November 2011 (B) 3 7/8% convertible senior debentures 1,200 1,200
February 2021 (C) Zero coupon senior convertible contingent notes 925 920
May 2021 (D) Zero coupon convertible debentures 1,000 1,000
3% convertible subordinated notes - 390
Other 18 38
---------------- -------------------
Total debt, excluding Upper DECS 5,720 6,132
Less: current portion 10 401
---------------- -------------------
Long-term debt, excluding Upper DECS 5,710 5,731
May 2004 (E) Upper DECS 863 863
---------------- -------------------
$ 6,573 $ 6,594
================ ===================
- -------
(A) Amounts presented herein exclude liabilities under management and mortgage programs.
(B) Each $1,000 principal amount is convertible into 41.58 shares of CD common stock during 2002 if the average price
of CD common stock exceeds $28.86 during the stipulated measurement periods. The average price of CD common stock
at which the debentures are convertible decreases annually by a stipulated percentage. Redeemable by the Company
after November 27, 2004. Holders may require the Company to repurchase the notes on November 27, 2004 and 2008.
(C) Each $1,000 principal amount is convertible into 33.4 shares of CD common stock during Q3 and Q4 of 2002 if the
average price of CD common stock exceeds $20.80 and $20.93, respectively, during the stipulated measurement
periods. The average price of CD common stock at which the notes are convertible increases on a quarterly basis by
a stipulated percentage. Redeemable by the Company after February 13, 2004. Holders may require the Company to
repurchase the notes on February 13, 2004, 2009 and 2014. Issued at a discount resulting in a yield-to-maturity of
2.5%.
(D) Each $1,000 principal amount is convertible into 39.08 shares of CD common stock if the average price of CD common
stock exceeds $28.15 during the stipulated measurement periods. Redeemable by the Company after May 4, 2004.
Holders may require the Company to repurchase the notes on May 4, 2002, 2004, 2006, 2008, 2011 and 2016. This debt
is classified as long-term based upon the Company's intent and ability to refinance such amount with existing lines
of credit if holders require the Company to repurchase the notes on May 4, 2002.
(E) The forward purchase contracts require the holder to purchase a minimum of 1.7593 shares (if the average price of
CD common stock is greater than $28.42 during a stipulated period) and a maximum of 2.3223 shares (if the average
price of CD common stock is less than $21.53 during a stipulated period) of CD common stock in August 2004. The
minimum and maximum number of shares to be issued under the forward purchase contracts are 30.3 million and 40.1
million shares, respectively.
</Table>
<Page>
<Table>
<Caption>
TABLE 7
CENDANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULES OF FREE CASH FLOWS
(In millions)
TWELVE MONTHS ENDED
MARCH 31,
----------------------------------
2002 2001 % CHANGE
------- ------- --------
Adjusted EBITDA, excluding Move.com Group (*) $ 2,458 (A) $ 1,833 (B) 34%
Interest expense, net (C) (231) (142)
Minority interest, excluding tax benefit (D) (23) (128)
Tax payments (111) (53)
------- -------
CASH FLOW 2,093 1,510 39%
Tax refunds 17 114
Restructuring and other unusual payments (166) (48)
Working capital and other 24 (16)
Capital expenditures (336) (248)
------- -------
FREE CASH FLOW 1,632 1,312 24%
NON-OPERATING ACTIVITIES:
Investments (E) (274) (379)
Acquisitions, net of cash acquired (1,998) (1,101)
Funding of stockholder litigation settlement (1,060) (600)
Other (F) 25 (410)
------- -------
(3,307) (2,490)
------- -------
FINANCING ACTIVITIES:
Net proceeds from (repayments on) borrowings (G) 1,493 1,504
Net issuances of equity securities and other (17) 287
------- -------
1,476 1,791
------- -------
NET CHANGE IN CASH BEFORE MANAGEMENT AND MORTGAGE PROGRAMS (199) 613
MANAGEMENT AND MORTGAGE PROGRAMS:
Net investment in vehicles (80) (12)
Net mortgage originations and sales 45 296
Net mortgage servicing rights (606) (456)
Net contract receivables 24 --
Net relocation receivables 79 349
Net financing for assets under management and mortgage programs (217) 354
------- -------
Net change in cash from management and mortgage programs (755) 531
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ (954) $ 1,144
======= =======
- ---------
(*) Represents Adjusted EBITDA excluding Move.com Group operating losses. Adjusted EBITDA is defined as
earnings before non-program related interest, income taxes, non-program related depreciation and
amortization, minority interest and equity in Homestore.com, adjusted to exclude certain items which are
of a non-recurring or unusual nature and not measured in assessing segment performance or are not segment
specific.
(A) Excludes (i) a $441 million non-cash charge primarily related to the impairment of the Company's
investment in Homestore.com, Inc., (ii) a $193 million charge ($51 million of which was non-cash)
primarily in connection with restructuring and other initiatives undertaken as a result of the September
11th terrorist attacks, (iii) a $104 million charge ($33 million of which is non-cash) primarily related
to the acquisition and integration of Galileo International, Inc. and Cheap Tickets, Inc. (iv) a $94
million non-cash charge related to the impairment of the Company's mortgage servicing rights portfolio,
(v) $86 million ($48 million of which is non-cash) of litigation settlement and related costs and (iv)
$19 million of other non-cash charges. The cash payments are included in "Restructuring and other unusual
payments" and "Investments" (see Note (E) below).
(B) Excludes (i) a net gain of $406 million related to the dispositions of businesses, (ii) a gain of $35
million, which represents recognition of a portion of our previously recorded deferred gain from the sale
of our fleet businesses due to the disposition of VMS Europe by Avis in August 2000 and (iii) a non-cash
credit of $14 million to reflect an adjustment to the settlement charge recorded in the fourth quarter of
1998 for the PRIDES class action litigation. Such amounts were partially offset by charges of (i) $95
million related to the funding of an irrevocable contribution to an independent technology trust, (ii)
$85 million incurred in connection with the creation of Trip Network, Inc. (formerly Travel Portal,
Inc.), (iii) $65 million of litigation settlement and related costs, (iv) $8 million ($4 million of which
was non-cash) related to the acquisition and integration of Avis, (v) $7 million ($6 million of which was
non-cash) related to a contribution to the Cendant Charitable Foundation and (vii) $3 million in connection
with the initial public offering of Move.com common stock. The cash payments are included in "Restructuring
and other unusual payments" and "Investments" (see Note (E) below).
(C) Excludes non-cash accretion recorded on the Company's zero-coupon senior convertible notes.
(D) Represents the before tax amounts of minority interest.
(E) The activity for the twelve months ended March 31, 2002 includes cash payments associated with an
investment in NRT Incorporated ($94 million) and other payments, primarily related to the funding of a
marketing advance to Trilegiant Corporation. The activity for the twelve months ended March 31, 2001
includes cash payments associated with (i) the contribution to the technology trust described in Note (B)
above ($95 million), (ii) investments in marketable securities ($75 million), (ii) an investment in NRT
Incorporated ($50 million), (iii) the creation of Trip Network, Inc. ($45 million) and (iv) other
payments, primarily related to preferred stock investments.
(F) Includes net cash used in Move.com Group operations during first quarter 2001, the effects of changes in
exchange rates and other.
(G) Represents debt borrowings, net of debt repayments and financing costs.
</Table>
<Page>
<Table>
<Caption>
TABLE 8
CENDANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions)
THREE MONTHS ENDED
MARCH 31,
---------------------
2002 2001
--------- --------
Operating Activities
Net cash used in operating activities exclusive of management
and mortgage programs $ (1,398) $ (26)
Net cash provided by operating activities of management
and mortgage programs 839 131
--------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (559) 105
--------- --------
INVESTING ACTIVITIES
Property and equipment additions (55) (68)
Net assets acquired (net of cash acquired) and acquisition-related payments (239) (978)
Collections from (payments to) stockholder litigation settlement trust 1,410 (B) (250)
Other, net (1) (17)
--------- --------
Net cash provided by (used in) investing activities exclusive of management
and mortgage programs 1,115 (1,313)
--------- --------
MANAGEMENT AND MORTGAGE PROGRAMS:
Investment in vehicles (3,506) (832)
Payments received on investment in vehicles 3,154 681
Origination of timeshare receivables (172) --
Principal collection of timeshare receivables 155 --
Equity advances on homes under management (1,295) (1,268)
Repayment on advances on homes under management 1,354 1,261
Additions to mortgage servicing rights and related hedges (257) (48)
Proceeds from sales of mortgage servicing rights 11 13
--------- --------
(556) (193)
--------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 559 (1,506)
--------- --------
FINANCING ACTIVITIES
Proceeds from borrowings -- 1,600
Principal payments on borrowings (491) (316)
Issuances of common stock 63 657
Repurchases of common stock (57) (10)
Other, net (8) (34)
--------- --------
Net cash provided by (used in) financing exclusive of management
and mortgage programs (493) 1,897
--------- --------
MANAGEMENT AND MORTGAGE PROGRAMS:
Proceeds from borrowings 2,518 2,712
Principal payments on borrowings (3,052) (2,081)
Net change in short-term borrowings 195 26
--------- --------
(339) 657
--------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (832) 2,554
--------- --------
Effect of changes in exchange rates on cash and cash equivalents (1) (5)
--------- --------
Net increase (decrease) in cash and cash equivalents (833) 1,148
Cash and cash equivalents, beginning of period 1,971 944
--------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,138 $ 2,092
========= ========
- ---------
(A) Includes the application of the prior payments to the stockholder litigation settlement trust of $1.41
billion and the March 2002 payment of $250 million.
(B) Represents $1.41 billion of collections from the stockholder litigation settlement trust, which were used
to extinguish a portion of the stockholder litigation settlement liability.
</Table>