- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 ---------------

                                    FORM 10-Q
             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended September 30, 2000
                           COMMISSION FILE NO. 1-10308

                                 ---------------

                               CENDANT CORPORATION
             (Exact name of Registrant as specified in its charter)

                      DELAWARE                         06-0918165
            (State or other jurisdiction            (I.R.S. Employer
         of incorporation or organization)       Identification Number)

                 9 WEST 57TH STREET                       10019
                    NEW YORK, NY                       (Zip Code)
      (Address of principal executive office)

                                 (212) 413-1800
              (Registrant's telephone number, including area code)

                                 ---------------

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed in Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements, for the past 90 days: Yes [X] No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares outstanding of each of the Registrant's classes of common
stock as of October 31, 2000 was 728,958,489 shares of CD common stock and
3,742,586 shares of Move.com common stock.

- --------------------------------------------------------------------------------



                      CENDANT CORPORATION AND SUBSIDIARIES

                                      INDEX

                                                                        PAGE NO.
                                                                        --------

PART I    Financial Information

Item 1.   Financial Statements

          Consolidated Condensed Statements of Income for the three
          and nine months ended September 30, 2000 and 1999                  1

          Consolidated Condensed Balance Sheets as of September 30,
          2000 and December 31, 1999                                         2

          Consolidated Condensed Statements of Cash Flows for the
          nine months ended September 30, 2000 and 1999                      3

          Notes to Consolidated Condensed Financial Statements               4

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                         19

Item 3.   Quantitative and Qualitative Disclosures About Market Risks       35

PART II   Other Information

Item 1.   Legal Proceedings                                                 36

Item 6.   Exhibits and Reports on Form 8-K                                  36

Certain statements in this Quarterly Report on Form 10-Q constitute "forward
looking statements" within the meaning of the Private Litigation Reform Act of
1995. Such forward looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance,
or achievements of the Company to be materially different from any future
results, performance, or achievements expressed or implied by such forward
looking statements. These forward looking statements were based on various
factors and were derived utilizing numerous important assumptions and other
important factors that could cause actual results to differ materially from
those 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, include, but are not limited to: the
resolution or outcome of the unresolved pending litigation relating to the
previously announced accounting irregularities and other related litigation;
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 and merged businesses and the risks associated with such businesses,
including the acquisition of Avis Group Holdings, Inc. and Fairfield
Communities, Inc.; uncertainty relating to the timing and impact of the proposed
dispositions of certain businesses within the Move.com Group and Welcome Wagon
International, Inc. and the spin-off of the Company's Individual Membership
segment and loyalty business; 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 and the effect
of changes in current interest rates, particularly in our Mortgage and Real
Estate Franchise segments. 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 publicly correct or update these forward
looking statements to reflect actual results, changes in assumptions or changes
in other factors affecting such forward looking statements or if the Company
later becomes aware that they are not likely to be achieved.

                                       (i)


PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                      CENDANT CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                      (IN MILLIONS, EXCEPT PER SHARE DATA)



                                                                         THREE MONTHS ENDED         NINE MONTHS ENDED
                                                                            SEPTEMBER 30,             SEPTEMBER 30,
                                                                       ----------------------    ----------------------
                                                                         2000         1999         2000          1999
                                                                       ---------    ---------    ---------    ---------
                                                                                                  
REVENUES
   Service fees, net                                                   $   1,009    $   1,116    $   2,852    $   3,280
   Fleet leasing (net of depreciation and interest costs of $0, $0,
     $0 and $670)                                                              -            -            -           30
   Other                                                                      35           38          110          117
                                                                       ---------    ---------    ---------    ---------
Net revenues                                                               1,044        1,154        2,962        3,427
                                                                       ---------    ---------    ---------    ---------

EXPENSES
   Operating                                                                 324          383          994        1,189
   Marketing and reservation                                                 151          156          451          471
   General and administrative                                                125          140          353          429
   Depreciation and amortization                                              82           82          244          259
   Other charges (credits):
     Restructuring and other unusual charges                                   3            5           89           27
     Litigation settlement and related costs                                  20            -          (21)           -
     Investigation-related costs                                               7            5           15           13
     Termination of proposed acquisition                                       -            -            -            7
   Interest, net                                                              38           51           85          153
                                                                       ---------    ---------    ---------    ---------
Total expenses                                                               750          822        2,210        2,548
                                                                       ---------    ---------    ---------    ---------

Net gain (loss) on dispositions of businesses                                  3           83           (7)         799
                                                                       ---------    ---------    ---------    ---------

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST                             297          415          745        1,678
Provision for income taxes                                                    86          166          234          386
Minority interest, net of tax                                                 23           16           61           46
                                                                       ---------    ---------    ---------    ---------
INCOME FROM CONTINUING OPERATIONS                                            188          233          450        1,246
Discontinued operations:
   Income (loss) from discontinued operations, net of tax                     26          (24)          65            6
   Gain (loss) on sale of discontinued operations, net of tax                  -           (7)           -          174
                                                                       ---------    ---------    ---------    ---------
INCOME BEFORE EXTRAORDINARY LOSS AND CUMULATIVE EFFECT OF
   ACCOUNTING CHANGE                                                         214          202          515        1,426
Extraordinary loss, net of tax                                                 -            -           (2)           -
                                                                       ---------    ---------    ---------    ---------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE                         214          202          513        1,426
Cumulative effect of accounting change, net of tax                             -            -          (56)           -
                                                                       ---------    ---------    ---------    ---------
NET INCOME                                                             $     214    $     202    $     457    $   1,426
                                                                       =========    =========    =========    =========

CD COMMON STOCK INCOME PER SHARE
   BASIC
     Income from continuing operations                                 $    0.26    $    0.32    $    0.63    $    1.63
     Net income                                                             0.30         0.28         0.64         1.86

   DILUTED
     Income from continuing operations                                 $    0.25    $    0.30    $    0.61    $    1.53
     Net income                                                             0.29         0.26         0.62         1.75

MOVE.COM COMMON STOCK LOSS PER SHARE
   BASIC
     Loss from continuing operations                                   $  (0.55)                 $  (1.22)
     Net loss                                                             (0.55)                    (1.22)

   DILUTED
     Loss from continuing operations                                   $  (0.55)                 $  (1.22)
     Net loss                                                             (0.55)                    (1.22)


            See Notes to Consolidated Condensed Financial Statements.

                                        1


                      CENDANT CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                        (IN MILLIONS, EXCEPT SHARE DATA)



                                                                                SEPTEMBER 30,    DECEMBER 31,
                                                                                    2000              1999
                                                                                -------------    -------------
                                                                                           
ASSETS
Current assets
   Cash and cash equivalents                                                    $       1,215    $       1,168
   Receivables, net                                                                       751              991
   Deferred income taxes                                                                1,293            1,305
   Other current assets                                                                   646              771
                                                                                -------------    -------------
Total current assets                                                                    3,905            4,235

Property and equipment, net                                                             1,242            1,279
Goodwill, net                                                                           3,000            3,106
Franchise agreements, net                                                               1,408            1,410
Other intangibles, net                                                                    642              655
Other assets                                                                            1,371            1,120
                                                                                -------------    -------------
Total assets exclusive of assets under management and mortgage programs                11,568           11,805
                                                                                -------------    -------------

Assets under management and mortgage programs
   Mortgage loans held for sale                                                         1,249            1,112
   Mortgage servicing rights                                                            1,575            1,084
   Relocation receivables                                                                 194              530
                                                                                -------------    -------------
                                                                                        3,018            2,726
                                                                                -------------    -------------

TOTAL ASSETS                                                                    $      14,586    $      14,531
                                                                                =============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
   Accounts payable and other current liabilities                               $       1,076    $       1,152
   Stockholder litigation settlement and related costs                                  2,886            2,892
   Deferred income                                                                        293              228
   Current portion of debt                                                                  -              400
   Net liabilities of discontinued operations                                             163              241
                                                                                -------------    -------------
Total current liabilities                                                               4,418            4,913

Long-term debt                                                                          2,074            2,445
Deferred income                                                                           417              413
Other noncurrent liabilities                                                              467              452
                                                                                -------------    -------------
Total liabilities exclusive of liabilities under management and
   mortgage programs                                                                    7,376            8,223
                                                                                -------------    -------------

Liabilities under management and mortgage programs
   Debt                                                                                 2,143            2,314
   Deferred income taxes                                                                  321              310
                                                                                -------------    -------------
                                                                                        2,464            2,624
                                                                                -------------    -------------
Mandatorily redeemable preferred securities issued by subsidiary holding solely
   senior debentures issued by the Company                                              1,681            1,478
                                                                                -------------    -------------

Mandatorily redeemable preferred interest in a subsidiary                                 375                -
                                                                                -------------    -------------

Commitments and contingencies (Note 11)

Stockholders' equity
   Preferred stock, $.01 par value - authorized 10 million shares;
     none issued and outstanding                                                            -                -
   CD common stock, $.01 par value - authorized 2 billion shares;
     issued 907,707,500 and 870,399,635 shares                                              9                9
   Move.com common stock, $.01 par value - authorized 500 million shares and none;
     issued and outstanding 3,742,586 shares and none; notional issued shares with
     respect to Cendant Group's retained interest 22,500,000 and none                       -                -
   Additional paid-in capital                                                           4,571            4,102
   Retained earnings                                                                    1,883            1,425
   Accumulated other comprehensive loss                                                  (204)             (42)
   CD treasury stock, at cost, 179,003,833 and 163,818,148 shares                      (3,569)          (3,288)
                                                                                -------------    -------------
Total stockholders' equity                                                              2,690            2,206
                                                                                -------------    -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                      $      14,586    $      14,531
                                                                                =============    =============


            See Notes to Consolidated Condensed Financial Statements.

                                        2


                      CENDANT CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                  (IN MILLIONS)



                                                                                       NINE MONTHS ENDED
                                                                                         SEPTEMBER 30,
                                                                                ------------------------------
                                                                                    2000              1999
                                                                                -------------    -------------
                                                                                           
OPERATING ACTIVITIES
Net income                                                                      $         457    $       1,426
Adjustments to reconcile net income to net cash provided by operating activities:
   Income from discontinued operations, net of tax                                        (65)              (6)
   Gain on sale of discontinued operations, net of tax                                      -             (174)
   Extraordinary loss                                                                       4                -
   Cumulative effect of accounting change                                                  89                -
   Restructuring and other unusual charges                                                 89               27
   Payments of restructuring, merger-related and other unusual charges                    (44)             (46)
   Litigation settlement and related costs                                                (21)               -
   Net (gain) loss on dispositions of businesses                                            7             (799)
   Depreciation and amortization                                                          244              259
   Other, net                                                                            (182)              51
                                                                                -------------    -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES FROM CONTINUING OPERATIONS
   EXCLUSIVE OF MANAGEMENT AND MORTGAGE PROGRAMS                                          578              738
                                                                                -------------    -------------

Management and mortgage programs:
   Depreciation and amortization                                                          113              668
   Origination of mortgage loans                                                      (17,980)         (20,841)
   Proceeds on sale and payments from mortgage loans held for sale                     17,839           21,471
                                                                                -------------    -------------
                                                                                          (28)           1,298
                                                                                -------------    -------------

NET CASH PROVIDED BY OPERATING ACTIVITIES FROM CONTINUING OPERATIONS                      550            2,036
                                                                                -------------    -------------

INVESTING ACTIVITIES
Property and equipment additions                                                         (147)            (201)
Net assets acquired (net of cash acquired) and acquisition-related payments               (43)            (146)
Net proceeds from dispositions of businesses                                                4            2,772
Other, net                                                                                (60)              84
                                                                                -------------    -------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES FROM CONTINUING OPERATIONS
   EXCLUSIVE OF MANAGEMENT AND MORTGAGE PROGRAMS                                         (246)           2,509
                                                                                -------------    -------------

Management and mortgage programs:
   Equity advances on homes under management                                           (2,243)          (6,026)
   Repayment on advances on homes under management                                      2,752            6,033
   Additions to mortgage servicing rights                                                (664)            (560)
   Proceeds from sales of mortgage servicing rights                                        93               84
   Investment in leases and leased vehicles, net                                            -             (774)
                                                                                -------------    -------------
                                                                                          (62)          (1,243)
                                                                                -------------    -------------

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES FROM CONTINUING OPERATIONS           (308)           1,266
                                                                                -------------    -------------

FINANCING ACTIVITIES
Proceeds from borrowings                                                                    6            1,717
Principal payments on borrowings                                                         (776)          (1,713)
Issuances of CD common stock                                                              506               76
Issuances of Move.com common stock                                                         45                -
Repurchases of CD common stock                                                           (306)          (2,635)
Proceeds from mandatorily redeemable preferred securities issued by subsidiary
   holding solely senior debentures issued by the Company                                  91                -
Proceeds from mandatorily redeemable preferred interest in a subsidiary                   375                -
Other, net                                                                                 (1)               -
                                                                                -------------    -------------
NET CASH USED IN FINANCING ACTIVITIES FROM CONTINUING OPERATIONS
   EXCLUSIVE OF MANAGEMENT AND MORTGAGE PROGRAMS                                          (60)          (2,555)
                                                                                -------------    -------------

Management and mortgage programs:
   Principal payments on borrowings                                                    (4,283)          (6,484)
   Proceeds from debt issuance or borrowings                                            3,237            4,157
   Net change in short-term borrowings                                                    875           (1,772)
   Proceeds received for debt repayment in connection with disposal
      of Fleet segment                                                                      -            3,017
                                                                                -------------    -------------
                                                                                         (171)          (1,082)
                                                                                -------------    -------------

NET CASH USED IN FINANCING ACTIVITIES FROM CONTINUING OPERATIONS                         (231)          (3,637)
                                                                                -------------    -------------

Effect of changes in exchange rates on cash and cash equivalents                           25               32
                                                                                -------------    -------------
Net cash provided by (used in) discontinued operations                                     11              (80)
                                                                                -------------    -------------
Net increase (decrease) in cash and cash equivalents                                       47             (383)
Cash and cash equivalents, beginning of period                                          1,168            1,002
                                                                                -------------    -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                        $       1,215    $         619
                                                                                =============    =============


            See Notes to Consolidated Condensed Financial Statements.

                                        3




                      CENDANT CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNLESS OTHERWISE NOTED, ALL AMOUNTS ARE IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

1.  BASIS OF PRESENTATION

    The accompanying unaudited Consolidated Condensed Financial Statements
    include the accounts and transactions of Cendant Corporation and its
    wholly-owned subsidiaries (collectively, the "Company").

    In management's opinion, the Consolidated Condensed Financial Statements
    contain all normal recurring adjustments necessary for a fair presentation
    of interim results reported. The results of operations reported for interim
    periods are not necessarily indicative of the results of operations for the
    entire year or any subsequent interim periods. In addition, management is
    required to make estimates and assumptions that affect the amounts reported
    and related disclosures. Estimates, by their nature, are based on judgment
    and available information. Accordingly, actual results could differ from
    those estimates. The Consolidated Condensed Financial Statements should be
    read in conjunction with the Company's Annual Report on Form 10-K for the
    year ended December 31, 1999.

    On October 25, 2000, the Company's Board of Directors committed to a plan to
    complete a tax-free spin-off of the Company's Individual Membership segment
    (consisting of Cendant Membership Services, Inc., a wholly-owned subsidiary)
    and loyalty business (consisting of Cendant Incentives, formerly National
    Card Control Inc., a wholly-owned subsidiary within the Insurance/Wholesale
    segment) through a special dividend to CD common stockholders. In connection
    with the planned spin-off, the account balances and activities of the
    Company's Individual Membership segment were segregated and reported as
    discontinued operations for all periods presented (see Note 5 - Discontinued
    Operations).

    On March 21, 2000, the Company's stockholders approved a proposal
    authorizing a new series of common stock to track the performance of the
    Move.com Group, a group of businesses which provide a broad range of quality
    relocation, real estate, and home-related products and services through its
    flagship portal site, move.com, and through the move.com network. The
    Company's existing common stock was reclassified as CD common stock, which
    reflects the performance of the Company's other businesses and also a
    retained interest in the Move.com Group (collectively referred to as the
    "Cendant Group"). In addition, the Company's charter was amended and
    restated to increase the number of authorized shares of common stock from
    2.0 billion to 2.5 billion, comprised of 2.0 billion shares of CD common
    stock and 500 million shares of Move.com common stock. Although the issuance
    of Move.com common stock is intended to track the performance of the
    Move.com Group, holders are subject to all of the risks associated with an
    investment in the Company and all of its businesses, assets and liabilities.
    The Company has issued shares of Move.com common stock in several private
    financings. See Note 12 - Stockholders' Equity for a description of those
    transactions. On October 27, 2000, the Company entered into a definitive
    agreement to sell certain businesses within its Move.com Group segment, as
    well as certain other businesses (see Note 14 - Subsequent Events).

    Certain reclassifications have been made to prior period amounts to conform
    to the current period presentation.

2.  CHANGE IN ACCOUNTING POLICY

    On January 1, 2000, the Company revised certain revenue recognition policies
    regarding the recognition of non-refundable one-time fees and the
    recognition of pro rata refundable subscription revenue as a result of the
    adoption of Staff Accounting Bulletin ("SAB") No. 101 "Revenue Recognition
    in Financial Statements." The Company previously recognized non-refundable
    one-time fees at the time of contract execution and cash receipt. This
    policy was changed to the recognition of non-refundable one-time fees on a
    straight line basis over the life of the underlying contract. The Company
    previously recognized pro rata refundable subscription revenue equal to
    procurement costs upon initiation of a subscription. Additionally, the
    amount in excess of procurement costs was recognized over the subscription
    period. This policy was

                                       4


    changed to the recognition of pro rata refundable subscription revenue on a
    straight line basis over the subscription period. Procurement costs will
    continue to be expensed as incurred. The adoption of SAB No. 101 also
    resulted in a non-cash charge of approximately $89 million ($56 million,
    after tax) on January 1, 2000 to account for the cumulative effect of the
    accounting change. The percentage of annual revenues earned from
    non-refundable one-time fees and from pro rata refundable subscription
    revenue is not material to the Company's consolidated net revenues or to its
    consolidated income from continuing operations.

3.  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

    In June 2000, the Financial Accounting Standards Board ("FASB") issued
    Statement of Financial Accounting Standards ("SFAS") No. 138, "Accounting
    for Certain Derivative Instruments and Certain Hedging Activities," which
    amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging
    Activities." SFAS No. 133 was previously amended by SFAS No. 137,
    "Accounting For Derivative Instruments and Hedging Activities - Deferral of
    the Effective Date of FASB Statement No. 133," which deferred the effective
    date of SFAS No. 133 to fiscal years commencing after June 15, 2000. The
    Company has appointed a team to implement these standards on an
    enterprise-wide basis. The Company has identified certain contracts, which
    contain embedded derivatives, and additional freestanding derivatives as
    defined by SFAS No. 133. Completion of the Company's implementation plan and
    determination of the impact of adopting these standards is expected by the
    end of the fourth quarter of 2000. Since the impact is dependent upon market
    fluctuations and the notional value of such contracts at the time of
    adoption, the impact of adopting these standards is not fully determinable.
    However, the Company currently does not anticipate material changes to any
    of its existing hedging strategies as a result of such adoption. The Company
    will adopt SFAS No. 138 concurrently with SFAS No. 133 on January 1, 2001,
    as required.

    In October 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and
    Servicing of Financial Assets and Extinguishments of Liabilities - a
    Replacement of FASB Statement No. 125." SFAS No. 140 revises criteria for
    accounting for securitizations, other financial-asset transfers, and
    collateral and introduces new disclosures, but otherwise carries forward
    most of the provisions of SFAS No. 125 "Accounting for Transfers and
    Servicing of Financial Assets and Extinguishments of Liabilities" without
    amendment. The Company will adopt SFAS No. 140 on December 31, 2000, as
    required.

4.  EARNINGS PER SHARE

    Earnings per share ("EPS") is calculated using both the basic and diluted
    methods. Basic EPS reflects the weighted average number of shares
    outstanding during the period exclusive of non-vested shares. Diluted EPS
    further reflects all potentially dilutive securities only if the impact is
    dilutive. Potentially dilutive securities include the assumed exercise of
    stock options and warrants, non-vested shares, convertible debt and other
    common stock equivalents (collectively, "common stock equivalents").
    Furthermore, EPS for periods after March 31, 2000, the date of the original
    issuance of Move.com common stock, has been calculated using the two-class
    method. The two-class method is an earnings allocation formula that
    determines EPS for each class of common stock according to the related
    earnings participation rights.

    CD COMMON STOCK
    Basic EPS is calculated by dividing earnings attributable to CD common stock
    (including Cendant Group's retained interest in Move.com Group) by the
    weighted average number of shares of CD common stock outstanding during the
    period, exclusive of non-vested shares. Diluted EPS further reflects the
    effects of dilutive common stock equivalents. At September 30, 2000, stock
    options of 109 million (with a weighted average exercise price of $22.41 per
    option) and stock warrants of 31 million (with a weighted average exercise
    price of $22.91 per warrant) were antidilutive. At September 30, 1999, stock
    options of 59 million (with a weighted average exercise price of $25.50 per
    option) and stock warrants of 2 million (with a weighted average exercise
    price of $21.31 per warrant) were antidilutive. Therefore, such options and
    warrants were excluded from the computation of diluted EPS. In addition, the
    Company's FELINE PRIDES ("PRIDES"), which provide for the distribution of CD
    common stock shares in February 2001, were antidilutive at September 30,
    2000 and 1999 and therefore also excluded from the computation of diluted
    EPS.

                                       5


    MOVE.COM COMMON STOCK
    Basic EPS is calculated by dividing (a) the product of the earnings
    applicable to Move.com Group multiplied by the outstanding Move.com
    "fraction" by (b) the weighted average number of shares outstanding during
    the period. The Move.com "fraction" is a fraction, the numerator of which is
    the number of shares of Move.com common stock outstanding and the
    denominator of which is the number of shares that, if issued, would
    represent 100% of the equity (and would include the 22,500,000 notional
    shares of Move.com common stock representing Cendant Group's retained
    interest in Move.com Group) in the earnings or losses of Move.com Group.
    Diluted EPS further reflects the effects of dilutive common stock
    equivalents. At September 30, 2000, stock options of 6 million (with a
    weighted average exercise price of $18.48 per option) and stock warrants of
    2 million (with a weighted average exercise price of $96.12 per warrant)
    were antidilutive due to losses incurred by Move.com Group and therefore
    excluded from the computation of diluted EPS.

    Income (loss) per common share from continuing operations was computed as
    follows:



                                                                  THREE MONTHS ENDED            NINE MONTHS ENDED
                                                                     SEPTEMBER 30,                SEPTEMBER 30,
                                                               ------------------------     ------------------------
                                                                   2000         1999           2000         1999
                                                               -----------  -----------     -----------  -----------
                                                                                             
    CD COMMON STOCK
    Income from continuing operations:
    Cendant Group                                              $       202  $       238     $       498  $     1,255
    Cendant Group's retained interest in Move.com Group                (12)          (5)            (43)          (9)
                                                               -----------  -----------     -----------  -----------
    Income from continuing operations for basic EPS                    190          233             455        1,246
    Convertible debt interest, net of tax                                3            3               8            9
                                                               -----------  -----------     -----------  -----------
    Income from continuing operations for diluted EPS          $       193  $       236     $       463  $     1,255
                                                               ===========  ===========     ===========  ===========

    Weighted average shares outstanding:
    Basic                                                              725          726             722          765
    Dilutive securities
      Stock options, warrants and non-vested shares                     16           36              23           36
      Convertible debt                                                  18           18              18           18
                                                               -----------  -----------     -----------  -----------
    Diluted                                                            759          780             763          819
                                                               ===========  ===========     ===========  ===========




                                                                  THREE MONTHS ENDED            NINE MONTHS ENDED
                                                                     SEPTEMBER 30,                SEPTEMBER 30,
                                                                         2000                         2000
                                                                    ---------------             --------------
                                                                                          
    MOVE.COM COMMON STOCK
    Loss from continuing operations:
    Move.com Group                                                  $           (14)            $          (47)
    Less:  Cendant Group's retained interest in Move.com Group                  (12)                       (43)
                                                                    ---------------             --------------
    Loss from continuing operations for basic and diluted EPS       $            (2)            $           (4)
                                                                    ===============             ==============

    Weighted average shares outstanding:
    Basic and Diluted (1)                                                         4                          4
                                                                    ===============             ==============


    -----------------
    (1)  Weighted average shares outstanding for the nine month period was
         calculated from the date of issuance of Move.com common stock (March
         31, 2000) through September 30, 2000.

    Income (loss) per common share from discontinued operations is summarized as
    follows:



                                                                   THREE MONTHS ENDED            NINE MONTHS ENDED
                                                                      SEPTEMBER 30,                SEPTEMBER 30,
                                                                -----------------------      ------------------------
                                                                    2000         1999           2000         1999
                                                                -----------  ----------      -----------  -----------
                                                                                              
     CD COMMON STOCK
     Income (loss) from discontinued operations:
       Basic                                                    $      0.04  $    (0.03)     $      0.09  $      0.01
       Diluted                                                         0.04       (0.03)            0.08         0.01
     Gain (loss) on sale of discontinued operations:
       Basic                                                    $         -  $    (0.01)     $         -  $      0.22
       Diluted                                                            -       (0.01)               -         0.21


                                        6


    Basic and diluted loss per CD common share from the cumulative effect of an
    accounting change for the nine months ended September 30, 2000 was $0.08 and
    $0.07, respectively.

5.  DISCONTINUED OPERATIONS

    On October 25, 2000, the Company's Board of Directors committed to a plan to
    complete a tax-free spin-off of the Company's Individual Membership segment
    and loyalty business through a special dividend to CD common stockholders.
    The final transaction is expected to close by mid-2001.

    Summarized financial data of discontinued operations are as follows:

    STATEMENTS OF INCOME:



                                                                  THREE MONTHS ENDED            NINE MONTHS ENDED
                                                                     SEPTEMBER 30,                SEPTEMBER 30,
                                                               ------------------------     ------------------------
                                                                   2000         1999           2000         1999
                                                               -----------  -----------     -----------  -----------
                                                                                             
    Net revenues                                               $       185  $       261     $       540  $       703
                                                               -----------  -----------     -----------  -----------

    Income (loss) before income taxes                          $        42  $       (46)    $       107  $         3
    Provision for (benefit from) income taxes                           16          (22)             42           (3)
                                                               -----------  ------------    -----------  -----------
    Income (loss) from discontinued operations                 $        26  $       (24)    $        65  $         6
                                                               ===========  ===========     ===========  ===========


    BALANCE SHEETS:



                                                                 SEPTEMBER 30,                  DECEMBER 31,
                                                                      2000                          1999
                                                               -------------------          ------------------
                                                                                      
    Current assets                                             $               345          $              357
    Goodwill                                                                   161                         164
    Other assets                                                                98                          96
    Total liabilities                                                         (767)                       (858)
                                                               -------------------          ------------------
    Net liabilities of discontinued operations                 $              (163)         $             (241)
                                                               ===================          ==================


    For the three and nine months ended September 30, 1999, the Company also
    recorded a gain (loss) on the sale of discontinued operations of ($7)
    million and $174 million, respectively, relating to certain other business
    units of the Company which were previously reported as discontinued
    operations.

6.  COMPREHENSIVE INCOME

    The components of comprehensive income are summarized as follows:



                                                                  THREE MONTHS ENDED            NINE MONTHS ENDED
                                                                     SEPTEMBER 30,                SEPTEMBER 30,
                                                               ------------------------     ------------------------
                                                                   2000         1999           2000         1999
                                                               -----------  -----------     -----------  -----------
                                                                                             
    Net income                                                 $       214  $       202     $       457  $     1,426
    Other comprehensive income (loss):
       Currency translation adjustment                                 (31)          92            (119)          39
       Unrealized loss on marketable securities, net of tax              -          (12)            (43)          (5)
                                                               -----------  -----------     -----------  -----------
    Total comprehensive income                                 $       183  $       282     $       295  $     1,460
                                                               ===========  ===========     ===========  ===========


    The after tax components of accumulated other comprehensive loss for the
    nine months ended September 30, 2000 are as follows:



                                                           UNREALIZED         ACCUMULATED
                                          CURRENCY       GAIN/(LOSS) ON          OTHER
                                         TRANSLATION       MARKETABLE        COMPREHENSIVE
                                         ADJUSTMENT        SECURITIES            LOSS
                                      ----------------   ---------------   ----------------
                                                                  
     Balance, January 1, 2000         $            (58)  $            16   $            (42)
     Current period change                        (119)              (43)              (162)
                                      ----------------   ---------------   ----------------
     Balance, September 30, 2000      $           (177)  $           (27)  $           (204)
                                      ================   ===============   ================


                                       7


7.  OTHER CHARGES (CREDITS)

    RESTRUCTURING AND OTHER UNUSUAL CHARGES
    First Quarter 2000 Charge. During the first quarter of 2000, the Company's
    management, with the appropriate level of authority, formally committed to
    various strategic initiatives. As a result of such initiatives, the Company
    incurred restructuring and other unusual charges ("Unusual Charges") of $106
    million during the first quarter of 2000, of which $86 million is included
    in restructuring and other unusual charges and $20 million is included in
    income (loss) from discontinued operations in the Consolidated Condensed
    Statements of Income. The restructuring initiatives were aimed at improving
    the overall level of organizational efficiency, consolidating and
    rationalizing existing processes, reducing cost structures in the Company's
    underlying businesses and other related efforts. These initiatives primarily
    affected the Company's Travel and Insurance/Wholesale segments and its
    discontinued Individual Membership segment. The initiatives are expected to
    be substantially completed over the next six months. Liabilities associated
    with Unusual Charges are classified as a component of accounts payable and
    other current liabilities. The initial recognition of the Unusual Charges
    and the corresponding utilization from inception is summarized by category
    of expenditure as follows:



                                                                                          BALANCE AT
                                       UNUSUAL            CASH             OTHER         SEPTEMBER 30,
                                       CHARGES          PAYMENTS        REDUCTIONS           2000
                                    -------------    -------------     -------------    -------------
                                                                            
     Personnel related              $          25    $          17     $           -    $           8
     Asset impairments and
       contract terminations                   26                1                25                -
     Facility related                           9                1                 1                7
     Other unusual charges                     46               29                14                3
                                    -------------    -------------     -------------    -------------
     Total Unusual Charges                    106               48                40               18
     Reclassification for
       discontinued operations                (20)              (8)              (10)              (2)
                                    -------------    -------------     -------------    -------------
     Total Unusual Charges related
       to continuing operations     $          86    $          40     $          30    $          16
                                    =============    =============     =============    =============


    Personnel related costs include severance resulting from the consolidation
    and relocation of business operations and certain corporate functions as
    well as other related costs. The Company formally communicated to 971
    employees, representing a wide range of employee groups, as to their
    separation from the Company. As of September 30, 2000, approximately 770
    employees were terminated. In connection with a change in the Company's
    strategic focus to an online business model, the Company recognized $23
    million of asset impairments associated with the planned exit of a timeshare
    software development business and $3 million of other asset write-offs and
    various contract termination costs. Facility related costs consist of
    facility closures and lease obligations resulting from the consolidation and
    relocation of business operations. Other unusual charges include a $21
    million charge to fund an irrevocable contribution to an independent
    technology trust responsible for the installation of a Company sponsored
    property management system, which will provide for integrated Web
    capabilities enabling lodging franchisees to maximize Internet
    opportunities. Additionally, the Company incurred other unusual charges of
    $11 million associated with executive terminations, $7 million principally
    related to the abandonment of certain computer system applications, $3
    million related to stock option contract modifications and $4 million of
    other related costs. Liabilities remaining at September 30, 2000 consisted
    of personnel related costs, charges associated with facility closures and
    related lease obligations and other unusual charges.

    Third Quarter 2000 Charge. During the third quarter of 2000, the Company
    incurred charges of $3 million in connection with the postponement of the
    initial public offering of Move.com common stock.

    1997 Charge. During the nine months ended September 30, 2000, cash outlays
    of $1 million were applied against the 1997 merger-related and other unusual
    charges reserve for severance payments. As a result, the 1997 merger-related
    and other unusual charges reserve of $71 million at September 30, 2000
    primarily relates to future severance payments, executive termination
    benefits and lease termination payments, which will be settled upon the
    resolution of related contingencies and in accordance with applicable lease
    installment plans.

                                        8


    LITIGATION SETTLEMENT AND RELATED COSTS
    On March 14, 2000, pursuant to a court order approving the previously
    disclosed PRIDES settlement, the Company issued approximately 25 million
    Rights with a calculated value of $11.71 per Right. Right holders may sell
    or exercise the Rights by delivering the Company three Rights together with
    two PRIDES in exchange for two new PRIDES (the "New PRIDES") for a period
    beginning upon distribution of the Rights and concluding upon expiration of
    the Rights (February 2001). The terms of the New PRIDES are the same as the
    original PRIDES, except that the conversion rate was revised and fixed so
    that, at the time of the issuance of the Rights, the New PRIDES had a value
    equal to $17.57 more than the original PRIDES.

    In connection with the issuance of the Rights, the Company recorded a
    non-cash credit of $41 million to litigation settlement and related costs
    during the first quarter of 2000, with a corresponding decrease to
    additional paid-in capital. The credit represented an adjustment related to
    the number of Rights to be issued, which was decreased by approximately 3
    million, as such Rights were unclaimed and uncontested.

    On May 3, 2000, pursuant to the PRIDES settlement, the Company issued
    approximately 4 million additional PRIDES (the "Additional PRIDES"), with a
    face value of $50 per Additional PRIDES, and received approximately $91
    million in cash proceeds related to the issuance of such securities. Only
    Additional Income PRIDES (having identical terms to the originally issued
    Income PRIDES) were issued, of which 3,619,374 were immediately converted
    into 3,619,374 New Income PRIDES and 380,626 remained Additional Income
    PRIDES. No Additional Growth PRIDES were issued in the offering. Upon the
    issuance of the Additional Income PRIDES, the Company recorded a reduction
    to stockholders' equity of $108 million equal to the value of the total
    future contract adjustment payments to be made.

    During the third quarter of 2000, the Company also incurred charges of $20
    million in connection with litigation asserting claims associated with
    accounting irregularities in the former business units of CUC International
    Inc. ("CUC") and outside of the principal common stockholder class action
    lawsuit.

8.  DEBT REDEMPTION

    In January 2000, the Company redeemed its outstanding 7 1/2% senior notes at
    a redemption price of 100.695% of par plus accrued interest. In connection
    with the redemption, the Company recorded an extraordinary loss of $4
    million ($2 million, after tax). The loss consisted of the call premium and
    the write-off of deferred issuance costs.

9.  SECURITIZATIONS

    During the second and third quarters of 2000, the Company entered into three
    separate financing agreements with Apple Ridge Funding LLC ("Apple Ridge"),
    a bankruptcy remote, special purpose entity. Under the terms of these
    agreements, certain relocation receivables will be transferred for cash, on
    a revolving basis, to Apple Ridge until March 31, 2007. The Company retains
    a subordinated residual interest and the related servicing rights and
    obligations in the relocation receivables. At September 30, 2000, the
    Company was servicing $703 million of receivables under these agreements.

10. MANDATORILY REDEEMABLE PREFERRED INTEREST IN A SUBSIDIARY

    In March 2000, a Company-formed limited liability corporation ("LLC") issued
    a mandatorily redeemable preferred interest ("Senior Preferred Interest") in
    exchange for $375 million in cash. The Senior Preferred Interest is
    classified as a mandatorily redeemable preferred interest in a subsidiary in
    the Consolidated Condensed Balance Sheet. The Senior Preferred Interest is
    mandatorily redeemable 15 years from the date of issuance and may be
    redeemed by the Company after 5 years, or earlier in certain circumstances.
    Distributions on the Senior Preferred Interest are based on the three-month
    LIBOR plus an applicable margin (1.77%) and are reflected as minority
    interest in the Consolidated Condensed Statements of Income. Simultaneous
    with the issuance of the Senior Preferred Interest, the Company transferred
    certain assets to the LLC. After the sale of the Senior Preferred Interest,
    the Company owned 100% of both the common interest and the junior preferred
    interest in the LLC. In the event of default, holders of the Senior
    Preferred Interest have certain liquidation preferences.

                                       9


11. COMMITMENTS AND CONTINGENCIES

    CLASS ACTION LITIGATION AND GOVERNMENT INVESTIGATIONS
    Since the April 15, 1998 announcement of the discovery of accounting
    irregularities in the former business units of CUC, approximately 70
    lawsuits claiming to be class actions, two lawsuits claiming to be brought
    derivatively on the Company's behalf and several individual lawsuits and
    arbitration proceedings have commenced in various courts and other forums
    against the Company and other defendants by or on behalf of persons claiming
    to have purchased or otherwise acquired securities or options issued by CUC
    or the Company between May 1995 and August 1998.

    The Securities and Exchange Commission ("SEC") and the United States
    Attorney for the District of New Jersey are also conducting investigations
    relating to the matters referenced above. As a result of the findings from
    the Company's internal investigations, the Company made all adjustments
    considered necessary by the Company, which are reflected in its previously
    filed restated financial statements for the years ended December 31, 1997,
    1996 and 1995 and for the six months ended June 30, 1998. On June 14, 2000,
    pursuant to an offer of settlement made by the Company, the SEC issued an
    Order Instituting Public Administrative Proceedings Pursuant to Section 21C
    of the Securities and Exchange Act of 1934, Making Findings and Imposing a
    Cease and Desist Order. In such Order, the SEC found that the Company had
    violated certain financial reporting provisions of the Securities and
    Exchange Act of 1934 and ordered the Company to cease and desist from
    committing any future violations of such provisions. No financial penalties
    were imposed against the Company.

    On December 7, 1999, the Company announced that it reached a preliminary
    agreement to settle the principal securities class action pending against
    the Company in the U.S. District Court in Newark, New Jersey (the
    "Settlement Agreement") brought on behalf of purchasers of all Cendant and
    CUC publicly traded securities, other than PRIDES, between May 1995 and
    August 1998. Under the Settlement Agreement, the Company would pay the class
    members approximately $2.85 billion in cash. The definitive settlement
    document was approved by the U.S. District Court by order dated August 14,
    2000. Certain parties in the class action have appealed the District Court's
    orders approving the plan of allocation of the settlement fund and awarding
    of attorneys' fees and expenses to counsel for the lead plaintiffs. No
    appeals challenging the fairness of the $2.85 billion settlement amount were
    filed. The U.S. Court of Appeals for the Third Circuit has not issued a
    briefing schedule for the appeals. Accordingly, the Company will not be
    required to fund the settlement amount of $2.85 billion for some time.
    However, the Settlement Agreement required the Company to post collateral
    in the form of credit facilities and/or surety bonds by November 13, 2000.
    See "Liquidity and Capital Resources" for management's discussion regarding
    collateral arrangements under the Settlement Agreement.

    The settlement does not encompass all litigation asserting claims associated
    with the accounting irregularities. The Company does not believe that it is
    feasible to predict or determine the final outcome or resolution of these
    unresolved proceedings. An adverse outcome from such unresolved proceedings
    could be material with respect to earnings in any given reporting period.
    However, the Company does not believe that the impact of such unresolved
    proceedings should result in a material liability to the Company in relation
    to its consolidated financial position or liquidity.

    FLEET DISPOSITION
    The Company's Fleet segment disposition in June 1999 was structured as a
    tax-free reorganization and, accordingly, no tax provision was recorded on a
    majority of the gain. However, pursuant to a recent interpretive ruling, the
    Internal Revenue Service ("IRS") has taken the position that similarly
    structured transactions do not qualify as tax-free reorganizations under the
    Internal Revenue Code Section 368(a)(1)(A). If the transaction is not
    considered a tax-free reorganization, the resultant incremental liability
    could range between $10 million and $170 million depending upon certain
    factors including utilization of tax attributes and contractual
    indemnification provisions. Notwithstanding the IRS interpretive ruling, the
    Company believes that, based upon analysis of current tax law, its position
    would prevail, if challenged.

    OTHER PENDING LITIGATION
    The Company is involved in pending litigation in the usual course of
    business. In the opinion of management, such other litigation will not have
    a material adverse effect on the Company's consolidated financial position,
    results of operations or cash flows.

                                       10




12. STOCKHOLDERS' EQUITY

    CD COMMON STOCK TRANSACTIONS
    Repurchases. During the nine months ended September 30, 2000, the Company
    repurchased $306 million (approximately 18 million shares) of CD common
    stock under its common stock repurchase program.

    Strategic Alliance. In February 2000, pursuant to a previously announced
    strategic alliance, Liberty Media Corporation ("Liberty Media") invested
    $400 million in cash to purchase 18 million shares of CD common stock and a
    two-year warrant to purchase approximately 29 million shares of CD common
    stock at an exercise price of $23.00 per share. In addition, in March 2000,
    Liberty Media's Chairman, John C. Malone, Ph.D., purchased one million
    shares of CD common stock for approximately $17 million in cash.

    MOVE.COM COMMON STOCK TRANSACTIONS
    NRT Incorporated Investment. On April 14, 2000, NRT Incorporated ("NRT")
    purchased 319,591 shares of Move.com common stock for $31.29 per share or
    approximately $10 million in cash. The Company owns $179 million of NRT
    convertible preferred stock, of which $21 million will be convertible, at
    the Company's option upon occurrence of certain events, into no more than
    50% of NRT's common stock.

    Chatham Street Holdings, LLC Investment. In connection with the
    recapitalization of NRT in September 1999, the Company entered into an
    agreement with Chatham Street Holdings, LLC ("Chatham") as consideration for
    certain amendments made with respect to the NRT franchise agreements, which
    amendments provided for additional payments of certain royalties to the
    Company. Pursuant to this agreement, Chatham was granted the right, until
    September 2001, to purchase 1,561,000 shares of Move.com common stock. On
    March 31, 2000, Chatham exercised this contractual right and purchased
    1,561,000 shares of Move.com common stock for $16.02 per share or
    approximately $25 million in cash. In connection with such exercise, for
    every two shares of Move.com common stock purchased, Chatham received a
    warrant to purchase one share of Move.com common stock at a price equal to
    $64.08 per share and a warrant to purchase one share of Move.com common
    stock at a price equal to $128.16 per share. Also during March 2000, the
    Company invested $25 million in convertible preferred stock of WMC Finance
    Co. ("WMC"), an online provider of sub-prime mortgages and an affiliate of
    Chatham (which is convertible into 2,541,946 shares or approximately 12% of
    WMC's common stock at September 30, 2000), and was granted an option to
    purchase approximately 5 million shares of WMC common stock.

    Liberty Digital, Inc. Investment. On March 31, 2000, Liberty Digital, Inc.
    ("Liberty Digital") purchased 1,598,030 shares of Move.com common stock for
    $31.29 per share in exchange for consideration consisting of $10 million in
    cash and 813,215 shares of Liberty Digital Class A common stock valued at
    approximately $40 million. In the event Move.com common stock is not
    publicly traded by June 30, 2001, the Company will be required to exchange
    such shares for CD common stock.

13. SEGMENT INFORMATION

    Management evaluates each segment's performance based upon a modified
    earnings before interest, income taxes, depreciation and amortization and
    minority interest calculation. For this purpose, Adjusted EBITDA is defined
    as earnings before non-operating interest, income taxes, depreciation and
    amortization and minority interest, adjusted to exclude certain items, which
    are of a non-recurring or unusual nature and are not measured in assessing
    segment performance or are not segment specific.

    Prior to the third quarter of 2000, the historical operating results of
    Cendant Travel, a subsidiary which facilitates travel arrangements for the
    Company's travel-related and membership businesses, were included

                                       11


    within the Individual Membership segment. Beginning the third quarter of
    2000, the operations of Cendant Travel began being managed as a component of
    the Travel segment. Accordingly, the operating results of Cendant Travel are
    reflected in the Travel segment for all periods presented.

    In connection with the Individual Membership segment being reported as
    discontinued operations, general corporate overhead previously allocated to
    the Individual Membership segment has been reclassified to the Diversified
    Services segment for all periods presented.

    SEGMENT INFORMATION



                                                      THREE MONTHS ENDED SEPTEMBER 30,
                                   ------------------------------------------------------------------------
                                           2000 (1)                     1999
                                   ------------------------  ------------------------    1999 PRO FORMA
                                                 ADJUSTED                   ADJUSTED        ADJUSTED
                                    REVENUES      EBITDA      REVENUES       EBITDA          EBITDA (2)
                                   -----------  -----------  -----------  -----------  --------------------
                                                                        
    Travel                         $       344  $       165  $       335  $       164  $                161
    Real Estate Franchise                  162          119          161          124                   120
    Relocation                             127           49          117           42                    43
    Mortgage                               132           74          114           59                    60
    Insurance/Wholesale                    145           48          143           48                    50
    Move.com Group                          15          (20)           5           (8)                   (8)
    Diversified Services                   121            9          279           46                    49
    Inter-segment Eliminations              (2)           -            -            -                     -
                                   -----------  -----------  -----------  -----------  --------------------
    Total                          $     1,044  $       444  $     1,154  $       475  $                475
                                   ===========  ===========  ===========  ===========  ====================




                                                        NINE MONTHS ENDED SEPTEMBER 30,
                                   ------------------------------------------------------------------------
                                           2000 (1)                    1999
                                   ------------------------  ------------------------    1999 PRO FORMA
                                                 ADJUSTED                   ADJUSTED        ADJUSTED
                                    REVENUES      EBITDA      REVENUES       EBITDA           EBITDA (2)
                                   -----------  -----------  -----------  -----------  --------------------
                                                                        
    Travel                         $       954  $       440  $       948  $       463  $                454
    Real Estate Franchise                  448          328          417          310                   303
    Relocation                             332          105          315           94                    96
    Mortgage                               306          117          314          153                   154
    Insurance/Wholesale                    435          138          426          137                   141
    Move.com Group                          41          (74)          11          (14)                  (14)
    Diversified Services                   448          110          789          114                   123
    Fleet                                    -            -          207           81                    81
    Inter-segment Eliminations              (2)           -            -            -                     -
                                   -----------  -----------  -----------  -----------  --------------------
    Total                          $     2,962  $     1,164  $     3,427  $     1,338  $              1,338
                                   ===========  ===========  ===========  ===========  ====================


    -----------------
    (1)  As of January 1, 2000, the Company refined its corporate overhead
         allocation method. As a result, expenses determined to be primarily
         associated with a specific business segment are recorded by that
         business segment versus allocating those expenses among the segments
         based on a percentage of revenue. The Company determined the refinement
         in corporate allocation method to be appropriate subsequent to the
         completion of the Company's divestiture plan and based on the
         composition of the business units comprising the Company in 2000.

    (2)  Pro forma 1999 Adjusted EBITDA is presented as if the refined method of
         allocating corporate overhead in 2000 was applicable to 1999.

    Provided below is a reconciliation of Adjusted EBITDA to income before
    income taxes and minority interest.



                                                           THREE MONTHS ENDED            NINE MONTHS ENDED
                                                              SEPTEMBER 30,                SEPTEMBER 30,
                                                        ------------------------     ------------------------
                                                            2000         1999           2000         1999
                                                        -----------  -----------     -----------  -----------
                                                                                      
     Adjusted EBITDA                                    $       444  $       475     $     1,164  $     1,338
       Depreciation and amortization                            (82)         (82)           (244)        (259)
       Other (charges) credits:
         Restructuring and other unusual charges                 (3)          (5)            (89)         (27)
         Litigation settlement and related costs                (20)           -              21            -
         Investigation-related costs                             (7)          (5)            (15)         (13)
         Termination of proposed acquisition                      -            -               -           (7)
       Interest, net                                            (38)         (51)            (85)        (153)
       Net gain (loss) on disposition of businesses               3           83              (7)         799
                                                        -----------  -----------     -----------  -----------
     Income before income taxes and minority interest   $       297  $       415     $       745  $     1,678
                                                        ===========  ===========     ===========  ===========


                                       12

14. SUBSEQUENT EVENTS

    DISPOSITION
    On October 27, 2000, the Company announced that it had entered into a
    definitive agreement with Homestore.com, Inc. ("Homestore") to sell its
    Internet real estate portal, move.com, certain other businesses within its
    Move.com Group segment and Welcome Wagon International, Inc. ("Welcome
    Wagon") (a wholly-owned subsidiary included within the Diversified Services
    segment) in exchange for approximately 26 million shares of Homestore
    common stock valued at approximately $761 million. The Company intends on
    allocating a portion of the Homestore common stock shares received to
    existing Move.com common stockholders and option holders. After such
    allocation, the Company expects to retain approximately 19 or 20 million
    shares of Homestore common stock. Consummation of the transaction is
    subject to certain customary closing conditions, including Hart Scott
    Rodino anti-trust approval. Although no assurances can be given, the
    Company expects to complete the transaction during the first quarter of
    2001.

    ACQUISITIONS

    Avis Group Holdings, Inc. On November 13, 2000, the Company announced that
    they entered into a definitive agreement to acquire all of the outstanding
    shares of Avis Group Holdings, Inc. ("Avis") that are not currently owned by
    the Company at a price of $33.00 per share in cash. Approximately 26 million
    outstanding shares of Avis common stock, and options to purchase
    approximately 7.9 million additional shares, are not currently owned by the
    Company. Accordingly, the transaction is valued at approximately
    $935 million, net of option proceeds.

    The acquisition will be made by PHH Corporation ("PHH"), a wholly-owned
    subsidiary of the Company. PHH will distribute the consumer car rental
    business, Avis Rent a Car, to a Company subsidiary not within PHH's
    ownership structure. After the acquisition and the distribution of the
    consumer car rental business, PHH will own and operate the Vehicle
    Management and Leasing business as well as the Wright Express fuel card
    business. The merger is conditioned upon, among other things, approval of a
    majority of the votes cast by Avis stockholders who are unaffiliated with
    the Company and also customary regulatory approvals. Although no assurances
    can be given, the Company expects the transaction to close in the first
    quarter of 2001.

    Fairfield Communities, Inc. On November 2, 2000, the Company announced that
    it had entered into a definitive agreement with Fairfield Communities, Inc.
    ("Fairfield") to acquire all of its outstanding common stock at $15 per
    share, or approximately $635 million in aggregate. The final acquisition
    price may increase to a maximum of $16 per share depending upon a formula
    based on the average trading price of CD common stock over a twenty trading
    day period prior to the date on which Fairfield stockholders meet to approve
    the transaction. At least 50% of the consideration will be in cash and the
    balance will either be in cash or CD common stock, at the Company's
    election. Consummation of the transaction is subject to customary regulatory
    approvals. Although no assurances can be given, the Company expects to
    complete the acquisition in early 2001.

15. CONSOLIDATING CONDENSED FINANCIAL INFORMATION

    In connection with the issuance of Move.com common stock, the Company began
    disclosing separately, for financial reporting purposes, financial
    information for the Cendant Group and the Move.com Group. Cendant Group
    provides various services to and receives various services from the Move.com
    Group. Inter-group revenues and expenses have been broken out seperately and
    self-eliminate in consolidation.

    ALLOCATION POLICIES
    Treasury Activities. Through March 31, 2000 (the date of original issuance
    of Move.com common stock), Cendant Group had provided all necessary funding
    for the operations and investments of the Move.com Group since inception and
    such funding had been accounted for as capital contributions from the
    Cendant Group. Accordingly, no interest charges from the Cendant Group were
    reflected in the accompanying Consolidating Condensed Statements of Income.
    Surplus cash, transferred from the Move.com Group to the Cendant Group from
    time to time, had been accounted for as a return of capital. Subsequent to
    March 31, 2000, all cash transfers from one group to or for the account of
    the other group are accounted for as inter-group revolving credit advances
    and may bear interest at a rate similar to the Company's prevailing
    revolving line of credit rate determined by the Company's Board of
    Directors, in its sole discretion.

    Revenues. Revenue allocations are supported by signed agreements between the
    Cendant Group and the Move.com Group and are intended to approximate the
    fair value of services provided.

    Expenses. Cendant Group allocates the cost of its corporate overhead
    services to the Move.com Group generally based on utilization. Where
    determinations based on utilization are impracticable, the Cendant Group
    uses percentages of revenues or other methods and criteria that management
    believes to be equitable and to provide a reasonable estimate of costs
    attributable to the Move.com Group. The allocations of corporate overhead to
    the Move.com Group are consistent with the allocations made to subsidiaries
    within the Cendant Group. Corporate overhead includes charges for legal,
    accounting (tax and financial),
                                      13


    information and telecommunications services, marketing, intellectual
    property, public relations, corporate offices and travel.

    Expenses, other than corporate overhead allocations, are allocated based
    upon utilization and usage volume.

    Income Taxes. Move.com Group is included in the consolidated federal income
    tax return of Cendant Group. In addition, Move.com Group files unitary and
    combined state income tax returns with Cendant Group in jurisdictions where
    required. As such, income tax expense is allocated to Move.com Group in
    accordance with Cendant Group's tax allocation policy.

    ALLOCATIONS
    The allocations from the Cendant Group to the Move.com Group are comprised
    as follows: (a) revenues for selling advertising space and links on the
    Cendant Group real estate franchise systems Web sites, (b) revenues for Web
    site management associated with the Cendant Group's real estate franchise
    systems, (c) revenues associated with the Web site development of Welcome
    Wagon, (d) expenses for overhead charges, (e) expenses associated with an
    Internet engineering services agreement and (f) expenses associated with the
    Web site development Welcome Wagon. Additionally, portions of the benefit
    for income taxes and balance sheet accounts of Move.com Group are based on
    allocations from the Cendant Group.

    The consolidating condensed financial information, which includes certain
    allocations between the Cendant Group and the Move.com Group, is presented
    as follows:


                                       14


    CONSOLIDATING CONDENSED STATEMENTS OF INCOME



                                       THREE MONTHS ENDED SEPTEMBER 30, 2000      THREE MONTHS ENDED SEPTEMBER 30, 1999
                                       -------------------------------------      -------------------------------------
                                         CENDANT      MOVE.COM       CENDANT      CENDANT      MOVE.COM        CENDANT
                                          GROUP         GROUP     CONSOLIDATED      GROUP        GROUP      CONSOLIDATED
                                       -----------  -----------  ------------    -----------  -----------  ------------
                                                                                         
     REVENUES
       External revenues               $     1,035  $         9  $      1,044    $     1,149  $         5  $      1,154
       Inter-group agreements                   (6)           6             -              -            -             -
                                       -----------  -----------  ------------    -----------  -----------  ------------
     Net revenues                            1,029           15         1,044          1,149            5         1,154
                                       -----------  -----------  ------------    -----------  -----------  ------------

     EXPENSES
       Operating:
         External expenses                     313           11           324            375            8           383
         Inter-group allocated expenses         (6)           6             -             (1)           1             -
       Marketing and reservation               142            9           151            156            -           156
       General and administrative:
         External expenses                     118            7           125            136            4           140
         Inter-group allocated expenses         (1)           1             -              -            -            -
       Depreciation and amortization            80            2            82             81            1            82
       Other charges, net                       27            3            30             10            -            10
       Interest, net                            38            -            38             51            -            51
                                       -----------  -----------  ------------    -----------  -----------  ------------
     Total expenses                            711           39           750            808           14           822
                                       -----------  -----------  ------------    -----------  -----------  ------------

     Net gain on dispositions of
       businesses                                3            -             3             83            -            83
                                       -----------  -----------  ------------    -----------  -----------  ------------

     INCOME (LOSS) BEFORE INCOME TAXES
       AND MINORITY INTEREST                   321          (24)          297            424           (9)          415
     Provision (benefit) for income taxes       96          (10)           86            170           (4)          166
     Minority interest, net of tax              23            -            23             16            -            16
                                       -----------  -----------  ------------    -----------  -----------  ------------
     INCOME (LOSS) FROM CONTINUING
       OPERATIONS                              202          (14)          188            238           (5)          233
     Discontinued operations:
       Income (loss) from
         discontinued operations                26            -            26            (24)           -           (24)
       Loss on sale of discontinued
         operations, net of tax                  -            -             -             (7)           -            (7)
                                       -----------  -----------  ------------    -----------  -----------  ------------
     NET INCOME (LOSS)                 $       228  $       (14) $        214    $       207  $        (5) $        202
                                       ===========  ===========  ============    ===========  ===========  ============




                                       15



    CONSOLIDATING CONDENSED STATEMENTS OF INCOME (CONTINUED)



                                        NINE MONTHS ENDED SEPTEMBER 30, 2000      NINE MONTHS ENDED SEPTEMBER 30, 1999
                                        ------------------------------------      ------------------------------------
                                         CENDANT      MOVE.COM       CENDANT       CENDANT     MOVE.COM        CENDANT
                                          GROUP         GROUP    CONSOLIDATED       GROUP        GROUP     CONSOLIDATED
                                       -----------  -----------  ------------    -----------  -----------  ------------
                                                                                         
     REVENUES
       External revenues               $     2,937  $        25  $      2,962    $     3,416  $        11  $      3,427
       Inter-group agreements                  (16)          16             -              -            -             -
                                       -----------  -----------  ------------    -----------  -----------  ------------
     Net revenues                            2,921           41         2,962          3,416           11         3,427
                                       -----------  -----------  ------------    -----------  -----------  ------------

     EXPENSES
       Operating:
         External expenses                     964           30           994          1,176           13         1,189
         Inter-group allocated expenses        (15)          15             -             (1)           1             -
       Marketing and reservation               402           49           451            471            -           471
       General and administrative:
         External expenses                     334           19           353            418           11           429
         Inter-group allocated expenses         (2)           2                            -            -             -
       Depreciation and amortization           240            4           244            257            2           259
       Other charges, net                       79            4            83             47            -            47
       Interest, net                            86           (1)           85            153            -           153
                                       -----------  -----------  ------------    -----------  -----------  ------------
     Total expenses                          2,088          122         2,210          2,521           27         2,548
                                       -----------  -----------  ------------    -----------  -----------  ------------

     Net gain (loss) on dispositions of
       businesses                               (7)           -            (7)           799            -           799
                                       -----------  -----------  ------------    -----------  -----------  ------------

     INCOME (LOSS) BEFORE INCOME TAXES
       AND MINORITY INTEREST                   826          (81)          745          1,694          (16)        1,678
     Provision (benefit) for income taxes      267          (33)          234            393           (7)          386
     Minority interest, net of tax              61            -            61             46            -            46
                                       -----------  -----------  ------------    -----------  -----------  ------------
     INCOME (LOSS) FROM CONTINUING
       OPERATIONS                              498          (48)          450          1,255           (9)        1,246
     Discontinued operations:
       Income from discontinued
         operations                             65            -            65              6            -             6
       Gain on sale of discontinued
         operations, net of tax                  -            -             -            174            -           174
                                       -----------  -----------  ------------    -----------  -----------  ------------
     INCOME (LOSS) BEFORE EXTRAORDINARY
       LOSS AND CUMULATIVE EFFECT OF
       ACCOUNTING CHANGE                       563          (48)          515          1,435           (9)        1,426
     Extraordinary loss, net of tax            (2)            -           (2)              -            -             -
                                       ----------   -----------  -----------     -----------  -----------  ------------
     INCOME (LOSS) BEFORE CUMULATIVE
       EFFECT OF ACCOUNTING CHANGE             561          (48)          513          1,435           (9)        1,426
     Cumulative effect of accounting
       change, net of tax                     (56)            -           (56)             -            -             -
                                       ----------   -----------  ------------    -----------  -----------  ------------
     NET INCOME (LOSS)                 $       505  $       (48) $        457    $     1,435  $        (9) $      1,426
                                       ===========  ===========  ============    ===========  ===========  ============



                                       16


    CONSOLIDATING CONDENSED BALANCE SHEETS



                                                      SEPTEMBER 30, 2000                         DECEMBER 31, 1999
                                            --------------------------------------    --------------------------------------
                                              CENDANT    MOVE.COM        CENDANT       CENDANT     MOVE.COM       CENDANT
                                              GROUP        GROUP      CONSOLIDATED      GROUP        GROUP      CONSOLIDATED
                                            -----------  -----------  ------------    -----------  -----------  ------------
                                                                                              
       ASSETS
         Cash and cash equivalents          $     1,211  $         4  $      1,215    $     1,167  $         1  $      1,168
         Receivables, net                           743            8           751            983            8           991
         Deferred income taxes                    1,287            6         1,293          1,305            -         1,305
         Other current assets                       635           11           646            768            3           771
         Property and equipment, net              1,227           15         1,242          1,276            3         1,279
         Goodwill, net                            2,991            9         3,000          3,101            5         3,106
         Other noncurrent assets                  3,407           14         3,421          3,183            2         3,185
         Assets under management
           and mortgage programs                  3,018            -         3,018          2,726            -         2,726
                                            -----------  -----------  ------------    -----------  -----------  ------------
       TOTAL ASSETS                         $    14,519  $        67  $     14,586    $    14,509  $        22  $     14,531
                                            ===========  ===========  ============    ===========  ===========  ============


       LIABILITIES AND STOCKHOLDERS' EQUITY
         Current liabilities                $     4,397  $        21  $      4,418    $     4,892  $        21  $      4,913
         Noncurrent liabilities                   2,955            3         2,958          3,310            -         3,310
         Liabilities under management
           and mortgage programs                  2,464            -         2,464          2,624            -         2,624
         Mandatorily redeemable preferred
           securities issued by subsidiary
           holding solely senior debentures
           issued by the Company                  1,681            -         1,681          1,478            -         1,478
         Mandatorily redeemable
           preferred interest in a subsidiary       375            -           375              -            -             -
         Stockholders' equity
           Common stock                               9            -             9              9            -             9
           Additional paid-in capital             4,454          117         4,571          4,083           19         4,102
           Retained earnings
              (accumulated deficit)               1,949          (66)        1,883          1,443          (18)        1,425
           Accumulated other
              comprehensive loss                   (196)          (8)         (204)           (42)           -           (42)
           CD treasury stock, at cost            (3,569)           -        (3,569)        (3,288)           -        (3,288)
                                            -----------  -----------  ------------    -----------  -----------  ------------
       TOTAL LIABILITIES AND
         STOCKHOLDERS' EQUITY               $    14,519  $        67  $     14,586    $    14,509  $        22  $     14,531
                                            ===========  ===========  ============    ===========  ===========  ============


                                       17



    CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS



                                           NINE MONTHS ENDED SEPTEMBER 30, 2000     NINE MONTHS ENDED SEPTEMBER 30, 1999
                                           ------------------------------------     ------------------------------------
                                          CENDANT    MOVE.COM   CENDANT             CENDANT    MOVE.COM       CENDANT
                                           GROUP        GROUP    CONSOLIDATED        GROUP       GROUP      CONSOLIDATED
                                         ----------  ----------  -------------     ----------  ----------   ------------
                                                                                          
       OPERATING ACTIVITIES
       Net income (loss)                 $      505  $      (48) $         457     $    1,435  $       (9)  $      1,426
       Adjustments to reconcile net
         income (loss) to net cash
         provided by (used in) operating
         activities:
         Income from discontinued
           operations, net of tax               (65)          -            (65)            (6)          -             (6)
         Gain on sale of discontinued
           operations, net of tax                 -           -              -           (174)          -           (174)
         Extraordinary loss                       4           -              4              -           -              -
         Cumulative effect of
           accounting change                     89           -             89              -           -              -
         Restructuring and other
           unusual charges                       85           4             89             27           -             27
         Payments of restructuring,
           merger-related and other
           unusual charges                      (40)         (4)           (44)           (46)          -            (46)
         Litigation settlement and related
           costs                                (21)          -            (21)             -           -              -
         Net (gain) loss on dispositions
           of businesses                          7           -              7           (799)          -           (799)
         Depreciation and amortization          240           4            244            257           2            259
         Other, net                            (167)        (15)          (182)            47           4             51
         Management and mortgage
           programs                             (28)          -            (28)         1,298           -          1,298
                                         ----------  ----------  -------------     ----------  ----------   ------------
       NET CASH PROVIDED BY (USED IN)
         OPERATING ACTIVITIES                   609         (59)           550          2,039          (3)         2,036
                                         ----------  ----------  -------------     ----------  ----------   ------------

       INVESTING ACTIVITIES
       Property and equipment additions        (134)        (13)          (147)          (200)         (1)          (201)
       Net assets acquired (net of
         cash acquired) and acquisition-
         related payments                       (43)          -            (43)          (146)          -           (146)
       Net proceeds from dispositions of
         businesses                               4           -              4          2,772           -          2,772
       Other, net                               (62)          2            (60)            84           -             84
       Management and mortgage
         programs                               (62)          -            (62)        (1,243)          -         (1,243)
                                         ----------  ----------  -------------     ----------  ----------   ------------
       NET CASH PROVIDED BY (USED IN)
         INVESTING ACTIVITIES                  (297)        (11)          (308)         1,267          (1)         1,266
                                         ----------  ----------  -------------     ----------  ----------   ------------

       FINANCING ACTIVITIES
       Proceeds from borrowings                   6           -              6          1,717           -          1,717
       Principal payments on borrowings        (776)          -           (776)        (1,713)          -         (1,713)
       Issuances of CD common stock             506           -            506             76           -             76
       Issuances of Move.com
         common stock                             -          45             45              -           -              -
       Repurchases of CD common stock          (306)          -           (306)        (2,635)          -         (2,635)
       Proceeds from mandatorily redeemable
         preferred securities issued by
         subsidiary holding solely senior
         debentures issued by the Company        91           -             91              -           -              -
       Proceeds from mandatorily
         redeemable preferred interest in
         a subsidiary                           375           -            375              -           -              -
       Other, net                                (1)          -             (1)             -           -              -
       Management and mortgage
         programs                              (171)          -           (171)        (1,082)          -         (1,082)
       Inter-group funding, net                 (28)         28              -             (4)          4              -
                                         ----------  ----------  -------------     ----------  ----------   ------------
       NET CASH PROVIDED BY (USED IN)
         FINANCING ACTIVITIES                  (304)         73           (231)        (3,641)          4         (3,637)
                                         ----------  ----------  -------------     ----------  ----------   ------------

       Effect of changes in exchange rates
         on cash and cash equivalents            25           -             25             32           -             32
                                         ----------  ----------  -------------     ----------  ----------   ------------
       Net cash provided by (used in)
         discontinued operations                 11           -             11            (80)          -            (80)
                                         ----------  ----------  -------------     ----------  ----------   ------------
       Net increase (decrease) in cash and
         cash equivalents                        44           3             47           (383)          -           (383)
       Cash and cash equivalents,
         beginning of period                  1,167           1          1,168          1,002           -          1,002
                                         ----------  ----------  -------------     ----------  ----------   ------------
       CASH AND CASH EQUIVALENTS,
         END OF PERIOD                   $    1,211  $        4  $       1,215     $      619  $        -   $        619
                                         ==========  ==========  =============     ==========  ==========   ============


                                       18


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

    The following discussion should be read in conjunction with the information
    contained in our Consolidated Condensed Financial Statements and
    accompanying Notes thereto included elsewhere herein. Unless otherwise
    noted, all dollar amounts are in millions.

    RESULTS OF CONSOLIDATED OPERATIONS

    REVENUES

    Revenues for the three months ended September 30, 2000 decreased $110
    million (10%) compared with the corresponding period in 1999 primarily due
    to the effects of non-strategic businesses disposed throughout 1999.
    Excluding the operating results of such dispositions, revenues increased $32
    million (3%), which primarily reflected increased loan production in our
    mortgage business and an increase in service based fees from our relocation
    business, partially offset by a decline in revenues related to financial
    investment income.

    Revenues for the nine months ended September 30, 2000 decreased $465 million
    (14%) compared with the corresponding period in 1999 due to the effects of
    non-strategic businesses disposed throughout 1999. Excluding the operating
    results of such dispositions, revenues increased $103 million (4%), which
    primarily reflected growth attributable to (i) an increase in real estate
    royalty fees, (ii) an increase in service based fees from our relocation
    business, (iii) an increase in sponsorship revenues due to our continued
    investment in the marketing of the move.com network and (iv) an increase in
    tax return volume and average fee per tax return; partially offset by a
    decline related to a decrease in mortgage volume.

    OTHER CHARGES (CREDITS)

    RESTRUCTURING AND OTHER UNUSUAL CHARGES

    First Quarter 2000 Charge. During the first quarter of 2000, management,
    with the appropriate level of authority, formally committed to various
    strategic initiatives. As a result of such initiatives, we incurred
    restructuring and other unusual charges ("Unusual Charges") of $106 million
    during the first quarter of 2000, of which $86 million is included in
    restructuring and other unusual charges and $20 million is included in
    income (loss) from discontinued operations in the Consolidated Condensed
    Statements of Income. The restructuring initiatives were aimed at improving
    the overall level of organizational efficiency, consolidating and
    rationalizing existing processes, reducing cost structures in our underlying
    businesses and other related efforts. These initiatives primarily affected
    our Travel and Insurance/Wholesale segments and our discontinued Individual
    Membership segment. The initiatives are expected to be substantially
    completed over the next six months. The initial recognition of the Unusual
    Charges and the corresponding utilization from inception is summarized by
    category of expenditure as follows:



                                                                                          BALANCE AT
                                                     UNUSUAL  CASH         OTHER        SEPTEMBER 30,
                                       CHARGES         PAYMENTS         REDUCTIONS           2000
                                    -------------    -------------     -------------    -------------
                                                                            
     Personnel related              $          25    $          17     $           -    $           8
     Asset impairments and
       contract terminations                   26                1                25                -
     Facility related                           9                1                 1                7
     Other unusual charges                     46               29                14                3
                                    -------------    -------------     -------------    -------------
     Total Unusual Charges                    106               48                40               18
     Reclassification for
       discontinued operations                (20)              (8)              (10)              (2)
                                    -------------    -------------     -------------    -------------
     Total Unusual Charges related
       to continuing operations     $          86    $          40     $          30    $          16
                                    =============    =============     =============    =============


    Personnel related costs include severance resulting from the consolidation
    and relocation of business operations and certain corporate functions as
    well as other related costs. We formally communicated to 971 employees,
    representing a wide range of employee groups, as to their separation from
    us. As of September 30, 2000, approximately 770 employees were terminated.
    In connection with a change in our strategic focus to an online business
    model, we recognized $23 million of asset impairments associated

                                       19


    with the planned exit of a timeshare software development business and $3
    million of other asset write-offs and various contract termination costs.
    Facility related costs consist of facility closures and lease obligations
    resulting from the consolidation and relocation of business operations.
    Other unusual charges include a $21 million charge to fund an irrevocable
    contribution to an independent technology trust responsible for the
    installation of a property management system sponsored by us, which will
    provide for integrated Web capabilities enabling lodging franchisees to
    maximize Internet opportunities. Additionally, we incurred other unusual
    charges of $11 million associated with executive terminations, $7 million
    principally related to the abandonment of certain computer system
    applications, $3 million related to stock option contract modifications and
    $4 million of other related costs. The total Unusual Charges will require
    cash expenditures of approximately $62 million, expected to be spent
    primarily in 2000, and are anticipated to increase pre-tax income by
    approximately $25 million to $30 million annually, commencing in 2001. All
    cash requirements are expected to be funded from operations. Liabilities
    remaining at September 30, 2000 consisted of personnel related costs,
    charges associated with facility closures and related lease obligations and
    other unusual charges.

    Third Quarter 2000 Charge. During the third quarter of 2000, we incurred
    charges of $3 million in connection with the postponement of the initial
    public offering of Move.com common stock.

    1997 Charge. During the nine months ended September 30, 2000, cash outlays
    of $1 million were applied against the 1997 merger-related and other unusual
    charges reserve for severance payments. As a result, the 1997 merger-related
    and other unusual charges reserve of $71 million at September 30, 2000
    primarily relates to future severance payments, executive termination
    benefits and lease termination payments, which will be settled upon the
    resolution of related contingencies and in accordance with applicable lease
    installment plans.

    LITIGATION SETTLEMENT AND RELATED COSTS
    In connection with the issuance of Rights on March 14, 2000 under the FELINE
    PRIDES ("PRIDES") settlement, we recorded a non-cash credit of $41 million
    during the first quarter of 2000. The credit represented an adjustment
    related to the number of Rights to be issued, which was decreased by
    approximately 3 million, as such Rights were unclaimed and uncontested. For
    a detailed discussion regarding the issuance of Rights pursuant to the
    PRIDES settlement, see Note 7 to our Consolidated Condensed Financial
    Statements.

    During the third quarter of 2000, we also incurred charges of $20 million in
    connection with litigation asserting claims associated with accounting
    irregularities in the former business units of CUC International Inc.
    ("CUC") and outside of the principal common stockholder class action
    lawsuit.

    INTEREST, NET AND MINORITY INTEREST, NET OF TAX

    Interest, net for the three and nine months ended September 30, 2000
    decreased $13 million (25%) and $68 million (44%), respectively, primarily
    as a result of a decrease in the average debt balance outstanding, partially
    offset by $20 million of interest expense incurred on the common stockholder
    litigation settlement. Minority interest, net of tax for the three and nine
    months ended September 30, 2000 increased $7 million (44%) and $15 million
    (33%), respectively, primarily due to the May 2000 issuance of Additional
    PRIDES and the March 2000 issuance of a mandatorily redeemable preferred
    interest in a subsidiary. For a detailed discussion regarding the Additional
    PRIDES and the mandatorily redeemable preferred interest, see Notes 7 and
    10, respectively, to our Consolidated Condensed Financial Statements.

    PROVISION FOR INCOME TAXES

    Our effective tax rate for the three months ended September 30, 2000
    decreased to 29.0% from 40.0% in 1999. Such change is attributable to
    higher income taxes provided on net gains on certain businesses which were
    disposed of in the third quarter of 1999 and also the recognition in 2000 of
    a portion of the deferred gain on the disposition of our former Fleet
    segment that was treated as a tax-free reorganization. Our effective tax
    rate for the nine months ended September 30, 2000 increased to 31.4% from
    23.0% in 1999. Such change is attributable to the June 1999 disposition of
    our former Fleet segment.

                                       20


    INCOME FROM CONTINUING OPERATIONS

    Income from continuing operations for the three months ended September 30,
    2000 decreased $45 million (19%) compared with the corresponding period in
    1999 primarily as a result of:

         o    the 1999 net gain on dispositions of businesses ($32 million),
         o    the impact of operating results from disposed businesses ($15
              million)
         o    an increase in other charges ($12 million) and
         o    an increase in minority interest ($7 million);

    partially offset by:

         o    the 2000 net gain on dispositions of businesses ($15 million) and
         o    a reduction in interest expense ($8 million).

    Income from continuing operations for the nine months ended September 30,
    2000 decreased $796 million (64%) compared with the corresponding period in
    1999 primarily as a result of:

         o    the 1999 net gain on dispositions of businesses ($720 million),
         o    the impact of operating results from disposed businesses ($51
              million),
         o    an increase in other charges ($24 million) and
         o    an increase in minority interest ($15 million);

    partially offset by:

         o    a reduction in interest expense ($43 million) and
         o    the 2000 net gain on dispositions of businesses ($9 million).

    DISCONTINUED OPERATIONS

    On October 25, 2000, our Board of Directors committed to a plan to complete
    a tax-free spin-off of our Individual Membership segment (consisting of
    Cendant Membership Services, Inc., a wholly-owned subsidiary) and loyalty
    business (consisting of Cendant Incentives, formerly National Card Control
    Inc., a wholly-owned subsidiary included within our Insurance/Wholesale
    segment) through a special dividend to CD common stockholders. In connection
    with the planned spin-off, the account balances and activities of our
    Individual Membership segment were segregated and reported as discontinued
    operations for all periods presented. The final transaction is expected to
    close by mid-2001.

    CUMULATIVE EFFECT OF ACCOUNTING CHANGE

    On January 1, 2000, we revised certain revenue recognition policies
    regarding the recognition of non-refundable one-time fees and the
    recognition of pro rata refundable subscription revenue as a result of the
    adoption of Staff Accounting Bulletin ("SAB") No. 101 "Revenue Recognition
    in Financial Statements." We previously recognized non-refundable one-time
    fees at the time of contract execution and cash receipt. This policy was
    changed to the recognition of non-refundable one-time fees on a straight
    line basis over the life of the underlying contract. We previously
    recognized pro rata refundable subscription revenue equal to procurement
    costs upon initiation of a subscription. Additionally, the amount in excess
    of procurement costs was recognized over the subscription period. This
    policy was changed to the recognition of pro rata refundable subscription
    revenue on a straight line basis over the subscription period. Procurement
    costs will continue to be expensed as incurred. The adoption of SAB No. 101
    also resulted in a non-cash charge of approximately $89 million ($56
    million, after tax) on January 1, 2000 to account for the cumulative effect
    of the accounting change.

                                       21


    RESULTS OF REPORTABLE OPERATING SEGMENTS

    The underlying discussions of each segment's operating results focuses on
    Adjusted EBITDA, which is defined as earnings before non-operating interest,
    income taxes, depreciation and amortization and minority interest, adjusted
    to exclude certain items, which are of a non-recurring or unusual nature and
    are not measured in assessing segment performance or are not segment
    specific. Our management believes such discussions are the most informative
    representation of how management evaluates performance. However, our
    presentation of Adjusted EBITDA may not be comparable with similar measures
    used by other companies.

    Prior to the third quarter of 2000, the historical operating results of
    Cendant Travel, our subsidiary which facilitates travel arrangements for our
    travel-related and membership businesses, were included within the
    Individual Membership segment. Beginning in the third quarter of 2000, the
    operations of Cendant Travel began being managed as a component of our
    Travel segment. Accordingly, the operating results of Cendant Travel are
    reflected in the Travel segment for all periods presented.

    In connection with the Individual Membership segment being reported as
    discontinued operations, general corporate overhead previously allocated to
    the Individual Membership segment has been reclassified to the Diversified
    Services segment for all periods presented.

    THREE MONTHS ENDED SEPTEMBER 30, 2000 VS. THREE MONTHS ENDED SEPTEMBER 30,
    1999



                                                                                                    ADJUSTED EBITDA
                                REVENUES                            ADJUSTED EBITDA                     MARGIN
                  -----------------------------------     -----------------------------------    -------------------
                                                 %                                      %
                    2000          1999        CHANGE        2000         1999        CHANGE        2000       1999
                  ---------    ---------    ---------     --------     ---------    ---------    ---------  --------
                                                                                         
     Travel       $     344    $     335           3%     $    165 (1) $     164           1%          48%       49%
     Real Estate
      Franchise         162          161           1%          119           124         (4)%          73%       77%
     Relocation         127          117           9%           49            42          17%          39%       36%
     Mortgage           132          114          16%           74            59          25%          56%       52%
     Insurance/
      Wholesale         145          143           1%           48            48            -          33%       34%
     Move.com
      Group              15            5            *          (20)(2)        (8)           *           *         *
     Diversified
      Services          121          279        (57)%            9 (3)        46(4)       (80%)         7%       16%
     Inter-segment
      Eliminations       (2)           -                         -             -
                  ---------    ---------                  --------     ---------
     Total        $   1,044    $   1,154                  $    444     $     475
                  =========    =========                  ========     =========


    --------------
    *    Not meaningful.
    (1)  Excludes $8 million of losses related to the dispositions of
         businesses.
    (2)  Excludes charges of $3 million in connection with the postponement of
         the initial public offering of Move.com common stock.
    (3)  Excludes (i) a loss of $24 million related to the dispositions of
         businesses, (ii) $20 million in connection with litigation asserting
         claims associated with accounting irregularities in the former business
         units of CUC International, Inc. and outside of the principal common
         stockholder class action lawsuit and (iii) $7 million for
         investigation-related costs; partially offset by a gain of $35 million,
         which represents the 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 Group Holdings, Inc. in August 2000.
    (4)  Excludes a net gain of $83 million related to the dispositions of
         businesses, partially offset by $5 million of investigation-related
         costs and a $5 million charge principally related to the consolidation
         of European call centers in Cork, Ireland.

    TRAVEL
    Revenues increased $9 million (3%) while Adjusted EBITDA increased $1
    million (1%) in third quarter 2000 compared with third quarter 1999.
    Royalties from our franchise business increased $5 million (5%) principally
    due to a 3% increase in available rooms and a 3% increase in the average
    daily room rate within our lodging business and a 3% increase in the volume
    of car rental transactions at Avis Group Holdings, Inc. ("Avis"). Our common
    equity interest in Avis, which is approximately 18% and accounted for under
    the equity method, resulted in equity in earnings of $8 million and $7
    million for the three months ended September 30, 2000 and 1999,
    respectively. Timeshare subscription and exchange fees grew $8 million (9%)
    primarily due to a 3% growth in memberships, a 3% increase in exchange
    volume, and an 8% increase in the

                                       22


    average fee per exchange. The favorable operations of our Travel segment
    were partially offset by a collective $11 million reduction in the
    recognition of preferred alliance access fees and timeshare subscription
    revenues in third quarter 2000 compared to third quarter 1999, due primarily
    to the January 1, 2000 implementation of SAB 101. Adjusted EBITDA in third
    quarter 2000 also reflects a net reduction from the timing of cost
    allocations to the lodging brands' national advertising funds and additional
    corporate overhead allocations. The increase in corporate overhead
    allocations resulted from a refinement of allocation methods in 2000 due to
    our significant divestitures in 1999. Excluding the impact of non-recurring
    items, comprised of SAB 101 and the net increase in allocations, revenues
    and Adjusted EBITDA increased $20 million (6%) and $16 million (10%),
    respectively, in third quarter 2000 compared with third quarter 1999.

    REAL ESTATE FRANCHISE
    Revenues increased $1 million (1%) while EBITDA decreased $5 million (4%) in
    third quarter 2000 compared with third quarter 1999. Royalties and initial
    franchise fees for the CENTURY 21 (Registered Trademark), COLDWELL BANKER
    (Registered Trademark) and ERA(Registered Trademark) franchise brands
    remained constant quarter over quarter. An 8% reduction in home sale volume
    was offset by a 9% increase in the average price of homes sold. While our
    results reflected soft industry-wide conditions early in the third quarter
    2000, we continued to add franchised brokerages to our brands' systems. The
    volume of annual commission revenue added by franchise sales in third
    quarter 2000 was 10% higher than in third quarter 1999. Conversely, growth
    has been moderated by modestly declining volume and significantly reduced
    acquisition activity at our largest franchisee, NRT Incorporated. The
    EBITDA reduction includes a $3 million increase in corporate overhead
    allocations due to a refinement of allocation methods used in 2000 compared
    to 1999 and also reflects $2 million of increased costs for enhanced
    franchisee training programs.

    RELOCATION
    Revenues and EBITDA increased $10 million (9%) and $7 million (17%),
    respectively, in third quarter 2000 compared with third quarter 1999 and the
    EBITDA margin grew from 36% to 39% for the comparable periods. Revenues and
    EDITDA reflect a continuing trend in our business operations from asset
    based to service based. Higher service based fees in third quarter 2000
    versus third quarter 1999 include increases in (i) outsourcing fees of $3
    million as a result of expanded services, (ii) international service fees of
    $3 million as a result of increased marketing and sales efforts, and (iii)
    referral fees of $4 million. Partially offsetting the increase in service
    fee revenues was a decline in corporate and government homesale closings and
    the related management fees, which contributed reductions in revenue and
    EBITDA of $3 million and $5 million, respectively, in third quarter 2000
    versus third quarter 1999. Revenues and EBITDA also reflect $4 million of
    improved net interest income in third quarter 2000 compared with third
    quarter 1999.

    MORTGAGE
    Revenues and EBITDA increased $18 million (16%) and $15 million, (25%),
    respectively, in third quarter 2000 compared with the third quarter 1999,
    principally as a result of increased revenues from loan production. Revenues
    from mortgage loans closed increased $18 million due to favorable production
    margins. Accordingly, the average production fee increased 28 basis points
    in third quarter 2000 compared with third quarter 1999. Total mortgage
    closings for third quarter 2000 amounted to $6.5 billion, which was equal to
    the comparable prior year quarter. Purchase mortgage closings, however
    increased by $278 million (5%) while refinancing volume decreased by $287
    million (41%). Retail purchase mortgages, which are loans where we interact
    directly with the consumer, increased $225 million to $4.9 billion. Retail
    mortgage lending has been our primary focus and accounted for more than 80%
    of loan volume in third quarter 2000. Moreover, we ranked as the fourth
    largest retail mortgage lender by the National Mortgage News(TM) for the
    second quarter of 2000, the latest period for which data are available.
    Mortgage closings from our Internet business, known as Log-In, Move-In,
    amounted to $183 million in third quarter 2000, compared with $73 million in
    third quarter 1999. Revenues generated by our servicing portfolio remained
    relatively level with last year despite a $17 billion (36%) increase in the
    average servicing portfolio, principally because of higher servicing
    amortization and interest expenses and lower revenues from mortgage
    insurance. The EBITDA margin increased from 52% in third quarter 1999 to 56%
    in third quarter 2000. The increase in EBITDA and EBITDA margin resulted
    principally from the increase in the average production fee on mortgage
    originations. As we had anticipated, market conditions improved in third
    quarter 2000 which produced more positive margin comparisons. The amount of
    loans in process at September 30, 2000 was 13% higher than at September 30,
    1999. Although no assurances can be made, we continue to expect
    period-over-period market conditions to improve in the fourth quarter of the
    year.

                                       23


    INSURANCE/WHOLESALE
    Revenues increased $2 million (1%) in third quarter 2000 compared with third
    quarter 1999 while EBITDA remained flat for the comparable periods. The
    increase in revenues was principally attributable to international
    expansion. There was a 17% increase in international memberships quarter
    over quarter.

    MOVE.COM GROUP
    Move.com Group is our Internet real estate services portal which was
    launched in January 2000. Revenues increased $10 million to $15 million in
    third quarter 2000, while Adjusted EBITDA decreased $12 million to a loss of
    $20 million for the same period. The increase in revenues principally
    reflects a significant increase in sponsorship revenues made possible by the
    portal's launch. The decline in Adjusted EBITDA reflects our increased
    investment in marketing and development of the move.com network.

    DIVERSIFIED SERVICES
    Revenues decreased $158 million while Adjusted EBITDA decreased $37 million
    in third quarter 2000 compared with third quarter 1999. Revenues and
    Adjusted EBITDA decreased primarily as a result of the 1999 dispositions of
    several business operations. The operating results of divested businesses,
    which were included through their respective disposition dates in 1999
    contributed revenues and Adjusted EBITDA of $139 million and $27 million in
    1999. Additionally, reductions in revenues and Adjusted EBITDA resulted from
    a quarter over quarter decline in financial investment income and costs
    incurred during third quarter 2000 to pursue Internet initiatives through
    our Cendant Internet Group subsidiary.

    NINE MONTHS ENDED SEPTEMBER 30, 2000 VS. NINE MONTHS ENDED SEPTEMBER 30,
    1999



                                                                                                  ADJUSTED EBITDA
                                REVENUES                            ADJUSTED EBITDA                     MARGIN
                  -----------------------------------     -----------------------------------    ------------------
                                                 %                                      %
                    2000          1999        CHANGE        2000         1999        CHANGE        2000       1999
                  ---------    ---------    ---------     --------     ---------    ---------    ---------  -------
                                                                                       
     Travel       $     954    $     948           1%     $    440 (1) $     463 (4)    (5)%         46%       49%
     Real Estate
      Franchise         448          417           7%          328           310         6%          73%       74%
     Relocation         332          315           5%          105            94        12%          32%       30%
     Mortgage           306          314          (3%)         117           153       (24)%         38%       49%
     Insurance/
      Wholesale         435          426           2%          138           137         1%          32%       32%
     Move.com
      Group              41           11            *          (74)(2)       (14)        *            *         *
     Diversified
      Services          448          789            *          110 (3)       114 (5)     *            *         *
     Fleet                -          207            *            -            81         *            *        39%
     Inter-segment
      Eliminations       (2)           -                         -             -
                  ---------    ---------                  --------     ---------
     Total        $   2,962    $   3,427                  $  1,164     $   1,338
                  =========    =========                  ========     =========


    --------------
    *    Not meaningful.
    (1)  Excludes $12 million of losses related to the dispositions of
         businesses.
    (2)  Excludes charges of $3 million in connection with the postponement of
         the initial public offering of Move.com common stock.
    (3)  Excludes (i) a non-cash credit of $41 million in connection with a
         change in the original estimate of the number of Rights to be issued in
         connection with the PRIDES settlement resulting from unclaimed and
         uncontested Rights and (ii) a gain of $35 million, which represents the
         recognition of a portion of our previously recorded deferred gain from
         the sale of our fleet businesses due to the disposition of VMS Europe
         and Avis Group Holdings, Inc. in August 2000; partially offset by (i)
         $30 million of losses related to the dispositions of businesses, (ii)
         $15 million of investigation-related costs and (iii) $20 million in
         connection with litigation asserting claims associated with accounting
         irregularities in the former business units of CUC and outside of the
         principal common stockholder class action lawsuit.
    (4)  Excludes a charge of $23 million in connection with the transition of
         the Company's lodging franchisees to a Company sponsored property
         management system.
    (5)  Excludes a net gain of $799 million related to the dispositions of
         businesses and an unusual credit of $1 million recorded in connection
         with the sale of a Company subsidiary, partially offset by (i) $13
         million of investigation-related costs, (ii) a $7 million charge
         related to the termination of a proposed acquisition and (iii) $5
         million principally related to the consolidation of European call
         centers in Cork, Ireland.

    TRAVEL
    Revenues increased $6 million (1%) while Adjusted EBITDA decreased $23
    million (5%) in nine months 2000 compared with nine months 1999. Royalties
    from our franchise business increased $9 million (3%), principally due to a
    4% increase in available rooms within our lodging business and a 3% increase
    in the volume of car rental transactions at Avis. Timeshare exchange
    revenues grew $8 million (5%) primarily due

                                       24


    to a 6% increase in the average exchange fee. Timeshare subscription
    revenues increased $3 million (3%) period over period, despite the impact of
    SAB 101, which resulted in a $6 million reduction in timeshare subscription
    revenues. In addition, preferred alliance access fees were $7 million lower
    in nine months 2000 compared with the prior year period primarily due to SAB
    101. Contributing to the Adjusted EBITDA reduction in nine months 2000 was
    an additional $13 million of corporate overhead allocations. The increase in
    overhead allocations resulted from a refinement of allocation methods in
    2000 due to our significant divestitures in 1999. Other contributing factors
    to the Adjusted EBITDA reduction was the recognition in nine months 2000 of
    $3 million of obligations relating to a prior acquisition and $6 million of
    initial franchise fees received during nine months 1999 in connection with
    the generation of a master license agreement and joint venture within our
    timeshare business. Additionally, $11 million of gains were recognized in
    nine months 1999 associated with the sale of a portion of our common equity
    interest in Avis and incremental dividend income of $10 million was
    recognized in nine months 2000 from our preferred stock investment in Avis.
    Our common equity interest in Avis, which is approximately 18% and accounted
    for under the equity method, resulted in equity in earnings of $14 million
    and $15 million for the nine months ended September 30, 2000 and 1999,
    respectively. Excluding the impact of non-recurring items, comprised of SAB
    101, the increase in corporate allocations and the 1999 gains on sale of
    Avis stock, revenues and Adjusted EBITDA increased $30 million (3%) and $14
    million (3%), respectively, in nine months 2000 compared with nine months
    1999.

    REAL ESTATE FRANCHISE
    Revenues and Adjusted EBITDA increased $31 million (7%) and $18 million
    (6%), respectively, in nine months 2000 compared with nine months 1999.
    Royalty fees for the CENTURY 21(Registered Trademark), COLDWELL BANKER
    (Registered Trademark) and ERA(Registered Trademark) franchise brands
    collectively increased $25 million (7%). In addition, initial franchise
    fees increased $4 million (48%) primarily from the sale of international
    franchise agreements. Industry statistics provided by the National
    Association of Realtors for the eight months ended August 31, 2000 (the
    latest period for which information is available) indicate that the number
    of homes sold has declined by 5% versus the prior year, while the average
    price of those homes sold has increased 4%. We have out-performed such
    industry statistics as our homesale transactions decreased only 4% while
    the average price of such homesale transactions increased by more than 11%.
    This was accomplished through a combination of homesales through existing
    franchised brokerages and new franchises added during the period. Corporate
    overhead allocations were $7 million higher in nine months 2000 due to a
    refinement of allocation methods used in 2000 compared to 1999. In
    addition, broker services related expenses increased $4 million in nine
    months 2000 principally due to increased costs for enhanced franchisee
    training programs. The Adjusted EBITDA Margin decreased only 1% despite the
    aforementioned increases in expenses. Increases in royalties and franchise
    fees are recognized with minimal corresponding increases in expenses due to
    our significant operating leverage within our franchise operations.
    Excluding the increase in corporate allocations, the Adjusted EBITDA margin
    increased 1 percentage point to 75% in nine months 2000 compared with 74%
    for the prior year period.

    RELOCATION
    Revenues and Adjusted EBITDA increased $17 million (5%) and $11 million
    (12%), respectively, in nine months 2000 compared with nine months 1999 and
    the Adjusted EBITDA margin increased from 30% to 32% for the comparable
    periods. Revenues and Adjusted EBITDA reflect a continuing trend in our
    business operations from asset based to service based. Higher service based
    fees for nine months 2000 versus nine months 1999 including increases in:
    (i) outsourcing fees of $9 million as a result of expanded services; (ii)
    international fees of $7 million as a result of increased marketing and
    sales efforts and; (iii) referral and other ancillary service fees of $10
    million. Partially offsetting the increase in service fee revenues was a
    decline in corporate and government homesale closings and the related
    management fees which contributed reductions in revenues and Adjusted EBITDA
    of $10 million and $16 million, respectively, in third quarter 2000 versus
    third quarter 1999. Also contributing to increases in revenues and Adjusted
    EBITDA was $8 million of improved net interest income in nine months 2000
    compared with nine months 1999. In addition, a $7 million gain was
    recognized in nine months 1999 on the sale of a minority interest in an
    insurance subsidiary. On a comparable basis, excluding the non-recurring
    gain, revenues and Adjusted EBITDA increased $24 million (8%) and $18
    million (21%), respectively, in nine months 2000 compared with nine months
    1999.

    MORTGAGE
    Revenues and Adjusted EBITDA decreased $8 million (3%) and $36 million
    (24%), respectively in nine months 2000 compared with nine months 1999. The
    impact on Revenues and Adjusted EBITDA from a $4.8

                                       25


    billion (23%) reduction in mortgage loan closings was offset by an increase
    in the average production fee. The average production fee increased 29 basis
    points (25%) in nine months 2000 compared to the prior year period due to a
    reduction in the direct cost per loan. Mortgage loan closings for nine
    months 2000 were $16.3 billion, consisting of $15.1 billion in purchase
    mortgages and $1.2 billion in refinancing mortgages. The decline in loans
    closed in nine months 2000 is substantially a result of a $4.6 billion
    reduction in mortgage refinancing volume due to the unprecedented
    industry-wide refinancing activity in 1999. Purchase mortgage closings in
    our retail lending business amounted to $12.6 billion in nine months 2000
    and 1999. Mortgage closings from our Internet business, known as Log-In,
    Move-In, amounted to $587 million in nine months 2000, compared with $165
    million in nine months 1999. Loan servicing revenues in 1999 included a $9
    million gain on the sale of servicing rights. Excluding such gain, recurring
    loan servicing revenue increased $11 million (18%) in nine months 2000
    compared to nine months 1999. The increase in loan servicing revenues was
    principally attributable to a corresponding increase in the average
    servicing portfolio which grew approximately $12.7 billion (28%) in nine
    months 2000 versus the prior year period. The Adjusted EBITDA margin
    decreased from 49% in nine months 1999 to 38% in nine months 2000. The
    decline in Adjusted EBITDA and Adjusted EBITDA margin resulted principally
    from increased expenses to market to the real estate Phone-In Move-In
    offices and salary and infrastructure expenses incurred in the first half of
    2000 which were not fully utilized. As we anticipated, market conditions
    improved in third quarter 2000, and we continue to expect improvement of our
    operating results in fourth quarter 2000 versus fourth quarter 1999.

    INSURANCE/WHOLESALE
    Revenues increased $9 million (2%) in nine months 2000 compared with nine
    months 1999. Adjusted EBITDA increased $1 million (1%) over the same period.
    The increase in revenues and Adjusted EBITDA was principally attributable to
    international expansion. International revenues and Adjusted EBITDA
    increased $8 million and $3 million, respectively, primarily due to a 20%
    increase in memberships. Also, the quarter over quarter impact of a decrease
    in marketing expense resulting from longer amortization periods for certain
    customer acquisition costs was substantially offset by costs incurred during
    nine months 2000 related to a consolidation of domestic operations in
    Nashville, Tennessee. The consolidation of such domestic operations is
    expected to generate significant expense savings in future periods. The
    Adjusted EBITDA margin remained constant at 32% for the comparable nine
    month periods.

    MOVE.COM GROUP
    Revenues increased $30 million to $41 million in nine months 2000, while
    Adjusted EBITDA decreased $60 million to a loss of $74 million for the same
    period. These results reflect a significant increase in sponsorship revenues
    made possible by the portal's launch and our increased investment in
    marketing and development of the portal.

    DIVERSIFIED SERVICES
    Revenues and Adjusted EBITDA decreased $341 million and $4 million,
    respectively in nine months 2000 compared with nine months 1999. Revenues
    decreased primarily as a result of the 1999 dispositions of several business
    operations. The operating results of divested businesses were included
    through their respective disposition dates in 1999. The absence of such
    divested businesses from nine months 2000 operations resulted in a reduction
    in revenues and Adjusted EBITDA of $360 million and $25 million,
    respectively. Excluding the impact of divested businesses on nine months
    1999 operating results, revenues and Adjusted EBITDA increased $16 million
    and $15 million, respectively, in nine months 2000. Revenues and Adjusted
    EBITDA increases were partially due to the favorable operating results from
    our Jackson Hewitt tax preparation franchise business. Jackson Hewitt, which
    experienced a 25% increase in year over year tax return volume, contributed
    an incremental $14 million and $18 million to revenues and Adjusted EBITDA,
    respectively in nine months 2000 compared with nine months 1999. During nine
    months 2000 we incurred expenses of $16 million to pursue Internet
    initiatives through our Cendant Internet Group. Such expenses were partially
    offset by $8 million of incremental income recognized from financial
    investments.

    FLEET
    On June 30, 1999, we completed the disposition of our Fleet segment for
    aggregate consideration of $1.8 billion. Revenues and EBITDA for the nine
    months ended September 30, 1999, were $207 million and $81 million,
    respectively.

                                       26


    RESULTS OF DISCONTINUED OPERATIONS

    THREE MONTHS ENDED SEPTEMBER 30, 2000 VS. THREE MONTHS ENDED SEPTEMBER 30,
    1999

    In the third quarter of 2000, revenues and Adjusted EBITDA for Individual
    Membership decreased $76 million (29%) and $5 million (10%), respectively,
    compared with the third quarter of 1999, while the Adjusted EBITDA margin
    increased from 18% to 23% quarter-over-quarter. The 1999 dispositions of
    certain business units and the formation of Netmarket Group, Inc. ("NGI") as
    an independent company in 1999 collectively contributed $61 million to the
    decrease in revenues with no impact to Adjusted EBITDA. On a comparable
    basis, excluding the operations of such divested businesses, revenues and
    Adjusted EBITDA decreased $15 million (8%) and $5 million (10%),
    respectively, while the Adjusted EBITDA margin decreased from 24% to 23%
    quarter-over-quarter. The net decline in both revenues and Adjusted EBITDA
    primarily reflects fewer annual memberships expiring in the third quarter of
    2000 than in the third quarter of 1999 (since revenues are recorded upon
    expiration of the membership term). Such decline was partially offset by a
    favorable mix of products and programs with marketing partners.

    NINE MONTHS ENDED SEPTEMBER 30, 2000 VS. NINE MONTHS ENDED SEPTEMBER 30,
    1999

    In the nine months ended September 30, 2000, revenues decreased $163 million
    (23%) compared with the nine months ended September 30, 1999, while Adjusted
    EBITDA increased $68 million (100%) over the same period. The Adjusted
    EBITDA margin improved to 25% in the nine months ended September 30, 2000
    from 10% in the corresponding period for 1999. The 1999 dispositions of
    certain business units and the formation of NGI as an independent company
    collectively contributed $171 million to the period-over-period decrease in
    revenues and $15 million to the period-over-period increase in Adjusted
    EBITDA. On a comparable basis, excluding the operating results of such
    divested businesses, revenues and Adjusted EBITDA increased $8 million (2%)
    and $53 million (64%), respectively. The Adjusted EBITDA margin increased
    substantially as fewer annual memberships expired in the nine months ended
    September 30, 2000 than in the corresponding period for 1999, reflecting our
    strategy in 2000 to focus principally on profitability within this business
    by carefully targeting our marketing efforts and reducing expenses incurred
    to reach potential new members. We reduced our solicitation spending by $26
    million in the nine months ended September 30, 2000 compared with the
    corresponding period for 1999. In addition, we experienced a favorable mix
    of products and programs with marketing partners, which further contributed
    to revenue and Adjusted EBITDA growth. Also, the sale of certain referral
    agreements with car dealers resulted in an additional $8 million of revenues
    and Adjusted EBITDA in 2000.

    LIQUIDITY AND CAPITAL RESOURCES

    Based upon cash flows provided by our operations and access to liquidity
    through various other sources, including public debt and equity markets and
    financial institutions, we have sufficient liquidity to fund our current
    business plans. Activities of our management and mortgage programs are
    autonomous and distinct from our other activities. Therefore, management
    believes it is more useful to review the debt financing and cash flows of
    management and mortgage programs separately from the debt financing and cash
    flows of our other activities.

    We continually explore and conduct discussions with regard to acquisitions
    and other strategic corporate transactions in our industries and in other
    franchise, franchisable or service businesses in addition to the
    transactions previously announced. As part of this regular on-going
    evaluation of acquisition opportunities, we currently are engaged in a
    number of separate, unrelated preliminary discussions concerning possible
    acquisitions. The purchase price for the possible acquisitions may be paid
    in cash, through the issuance of CD common stock (which would increase the
    number of shares of CD common stock) or other of our securities, borrowings,
    or a combination thereof. Prior to consummating any such possible
    acquisition, we will need to, among other things, initiate and complete
    satisfactorily our due diligence investigations; negotiate the financial and
    other terms (including price) and conditions of such acquisitions; obtain
    appropriate Board of Directors, regulatory and other necessary consents and
    approvals; and, if necessary, secure financing. No assurance can be given
    with respect to the timing, likelihood or business effect of any possible
    transaction. In the past, we have been involved in both relatively small
    acquisitions and acquisitions which have been significant.

                                       27


    ACQUISITIONS AND DISPOSITIONS

    ACQUISITIONS On November 13, 2000, we announced that we entered into a
    definitive agreement to acquire all of the outstanding shares of Avis Group
    Holdings, Inc. ("Avis") that are not currently owned by us at a price of
    $33.00 per share in cash. Approximately 26 million outstanding shares of
    Avis common stock, and options to purchase approximately 7.9 million
    additional shares, are not currently owned by us. Accordingly, the
    transaction is valued at approximately $935 million, net of option proceeds.
    We anticipate that more than 50% of the purchase price will be financed from
    new borrowings available to us and to PHH Corporation ("PHH"), our
    wholly-owned subsidiary, and expect that the remaining amount will be
    provided either from available cash or from the issuance of CD common
    stock. However, the actual funding for the acquisition will be finalized
    before the closing of the transaction.

    The acquisition will be made by PHH. PHH will distribute the consumer car
    rental business, Avis Rent a Car, to one of our subsidiaries not within
    PHH's ownership structure. After the acquisition and the distribution of the
    consumer car rental business, PHH will own and operate the Vehicle
    Management and Leasing business as well as the Wright Express fuel card
    business. The merger is conditioned upon, among other things, approval of a
    majority of the votes cast by Avis stockholders who are unaffiliated with us
    and also customary regulatory approvals. Although no assurances can be
    given, we expect the transaction to close in first quarter of 2001.

    On November 2, 2000, we announced that we had entered into a definitive
    agreement with Fairfield Communities, Inc. ("Fairfield") to acquire all of
    its outstanding common stock at $15 per share, or approximately $635 million
    in aggregate. The final acquisition price may increase to a maximum of $16
    per share depending upon a formula based on the average trading price of CD
    common stock over a twenty trading day period prior to the date on which
    Fairfield stockholders meet to approve the transaction. At least 50% of the
    consideration will be in cash and the balance will either be in cash or CD
    common stock, at our election. Consummation of the transaction is subject to
    customary regulatory approvals. Although no assurances can be given, we
    expect to complete the acquisition in early 2001.

    DISPOSITIONS
    On October 27, 2000, we announced that we had entered into a definitive
    agreement with Homestore.com, Inc. ("Homestore") to sell our Internet real
    estate portal, move.com, certain other businesses within our Move.com Group
    segment and Welcome Wagon International, Inc., (a subsidiary within our
    Diversified Services segment) in exchange for approximately 26 million
    shares of Homestore common stock valued at approximately $761 million. We
    intend on allocating a portion of the Homestore common stock shares received
    to existing Move.com common stockholders and option holders. After such
    allocation, we expect to retain approximately 19 or 20 million shares of
    Homestore common stock. Consummation of the transaction is subject to
    certain customary closing conditions, including Hart Scott Rodino anti-trust
    approval. Although no assurances can be given, we expect to complete the
    transaction during the first quarter of 2001.

    On October 25, 2000, our Board of Directors committed to a plan to complete
    a tax-free spin-off of our Individual Membership segment and loyalty
    business through a special dividend to CD common stockholders. The final
    transaction is expected to close by mid-2001.

    CLASS ACTION LITIGATION SETTLEMENT

    On December 7, 1999, we announced that we reached a preliminary agreement to
    settle the principal securities class action pending against us in the U.S.
    District Court in Newark, New Jersey (the "Settlement Agreement") brought on
    behalf of purchasers of all Cendant and CUC publicly traded securities,
    other than PRIDES, between May 1995 and August 1998. Under the Settlement
    Agreement, we would pay the class members approximately $2.85 billion in
    cash. The definitive settlement document was approved by the U.S. District
    Court by order dated August 14, 2000. Certain parties in the class action
    have appealed the District Court's orders approving the plan of allocation
    of the settlement fund and awarding of attorneys' fees and expenses to
    counsel for the lead plaintiffs. No appeals challenging the fairness of the
    $2.85 billion settlement amount were filed. The U.S. Court of Appeals for
    the Third Circuit has not issued a briefing schedule for the appeals.
    Accordingly, we will not be required to fund the settlement amount of $2.85
    billion for some time. However, the Settlement Agreement required us to post
    collateral in the form of credit facilities and/or surety bonds by November
    13, 2000. Accordingly, on November 13, 2000, we posted a surety bond in the
    amount of $790 million and letters of credit aggregating $1.71 billion. We
    also had the option of forming a trust established for the benefit of the
    plaintiffs in lieu of posting collateral. On November 13, 2000, we funded
    such trust with a cash deposit of approximately $350 million. Such deposit
    will serve to reduce the amount of collateral required to be posted under
    the Settlement Agreement. See Debt Financing - Exclusive of Management and
    Mortgage Programs for further detail regarding the collateral arrangements
    in connection with the Settlement Agreement.

    The settlement does not encompass all litigation asserting claims associated
    with the accounting irregularities. We do not believe that it is feasible to
    predict or determine the final outcome or resolution of these unresolved
    proceedings. An adverse outcome from such unresolved proceedings could be
    material with respect to earnings in any given reporting period. However, we
    do not believe that the impact of such unresolved

                                       28


    proceedings should result in a material liability to us in relation to our
    consolidated financial position or liquidity.

    DEBT FINANCING

    EXCLUSIVE OF MANAGEMENT AND MORTGAGE PROGRAMS
    At September 30, 2000, aggregate outstanding borrowings consisted of the
    following:

    7 3/4% senior notes (1)                                   $  1,149
    3% convertible subordinated notes  (1)                         548
    Term loan facility                                             375
    Other                                                            2
                                                              --------
                                                              $  2,074
                                                              ========
    ----------
    (1) Publicly issued fixed rate debt.

    During August 2000, we replaced our $1.0 billion, 364-day revolving credit
    facility with a $1.75 billion three-year competitive advance and revolving
    credit agreement maturing on August 29, 2003. Borrowings under this new
    agreement will bear interest at LIBOR plus a margin of approximately 60
    basis points. In addition, we are required to pay a per annum facility fee
    of approximately 15 basis points and a 0.125% utilization fee of daily
    commitments above a certain threshold. The agreement also contains the
    committed capacity to issue up to $1.75 billion in letters of credit, which
    can be used as part of the collateral arrangements under the Settlement
    Agreement. We utilized $1.71 billion of the facility for this purpose
    at the time collateral was required to be posted under the Settlement
    Agreement. The interest rates and facility fees are subject to change based
    upon credit ratings on our senior unsecured long-term debt by nationally
    recognized debt rating agencies. As of September 30, 2000, there were no
    outstanding borrowings related to the $1.75 billion three-year competitive
    advance and revolving credit agreement.

    During August 2000, we obtained $790 million in commitments for surety bonds
    as an additional source of collateral required to be posted under the
    Settlement Agreement.

    The $1.75 billion three-year competitive advance and revolving credit
    agreement and the $790 million in surety bonds require us to fund a
    settlement trust on behalf of the plantiffs in the stockholder securities
    class action litigation in four quarterly payments of $150 million, followed
    by eight quarterly payments of $200 million, commencing in the quarter ended
    March 31, 2001. The escrow deposits will serve to reduce the amount of
    collateral previously posted by us, as required by the Settlement Agreement.

    We also have $750 million of committed bank facilities, which are currently
    undrawn and available, with the exception of $25 million of letters of
    credit, and $2.2 billion of availability under existing shelf registration
    statements. Our credit facilities contain certain restrictive covenants,
    including restrictions on indebtedness of material subsidiaries, consent to
    mergers and limitations on liens, liquidations, and sale and leaseback
    transactions. Maintenance of certain financial ratios is also required.

    In January 2000, we used available cash to redeem our outstanding 7 1/2%
    senior notes at a redemption price of 100.695% of par, plus accrued
    interest.

    RELATED TO MANAGEMENT AND MORTGAGE PROGRAMS
    Our PHH subsidiary operates our mortgage and relocation services businesses
    as a separate public reporting entity and supports the origination of
    mortgages and advances under relocation contracts primarily by issuing
    commercial paper and medium-term notes and by maintaining secured
    obligations. PHH debt is not classified based on contractual maturities, but
    rather is included in liabilities under management and mortgage programs
    since the debt corresponds directly with the high quality related assets. At
    September 30, 2000, aggregate outstanding borrowings under management and
    mortgage programs consisted of the following:

                                       29


    Commercial paper                                         $    1,494
    Secured obligations  (1)                                        400
    Medium-term notes                                               124
    Other                                                           125
                                                             ----------
                                                             $    2,143
                                                             ==========

    -----------
    (1) Consists of a 364-day financing agreement to sell mortgage loans under
    an agreement to repurchase such mortgages. The agreement is collateralized
    by the underlying mortgage loans held in safekeeping by the custodian to the
    agreement. The total commitment under this agreement is $500 million. The
    agreement is renewable on an annual basis at the discretion of the lender in
    accordance with the securitization agreement.

    Debt is issued by PHH without recourse to the parent company. PHH expects to
    continue to maximize its access to global capital markets by maintaining the
    quality of its assets under management. This is achieved by establishing
    credit standards to minimize credit risk and the potential for losses.

    PHH minimizes its exposure to interest rate and liquidity risk by
    effectively matching floating and fixed interest rate and maturity
    characteristics of funding to related assets, varying short and long-term
    domestic and international funding sources and securing available credit
    under committed banking facilities. Depending upon asset growth and
    financial market conditions, PHH utilizes domestic commercial paper markets,
    public and private debt markets, as well as other cost-effective short-term
    instruments. As of November 3, 2000, PHH had approximately $3.0 billion
    available for issuing medium-term notes under its existing shelf
    registration statement. Proceeds from future offerings will continue to be
    used to finance assets PHH manages for its clients, for a portion of the
    acquisition of Avis and for general corporate purposes.

    Augmenting these sources, PHH will continue to manage outstanding debt with
    the potential sale or transfer of managed assets to third parties while
    retaining fee-related servicing responsibility. At November 3, 2000, PHH
    maintained the following agreements, whereby managed assets were sold or
    transferred to third parties.

    Mortgage. PHH maintains a revolving sales agreement, under which an
    unaffiliated bankruptcy remote buyer, Bishops Gate Residential Mortgage
    Trust (the "Buyer"), a special purpose entity, committed to purchase, at
    PHH's option, mortgage loans originated by PHH on a daily basis, up to the
    Buyer's asset limit of $2.1 billion. Under the terms of this sales
    agreement, PHH retains the servicing rights on the mortgage loans sold to
    the Buyer and arranges for the sale or securitization of the mortgage loans
    into the secondary market. The Buyer retains the right to select
    alternative sale or securitization arrangements. At September 30, 2000, PHH
    was servicing approximately $980 million of mortgage loans owned by the
    Buyer.

    Relocation. PHH maintains three separate financing agreements with Apple
    Ridge Funding LLC ("Apple Ridge"), a bankruptcy remote, special purpose
    entity. Under the terms of these agreements, certain relocation receivables
    will be transferred for cash, on a revolving basis, to Apple Ridge until
    March 31, 2007. PHH retains a subordinated residual interest and the related
    servicing rights and obligations in the relocation receivables. At September
    30, 2000, PHH was servicing approximately $703 million of receivables under
    these agreements.

    To provide additional financial flexibility, PHH's current policy is to
    ensure that minimum committed facilities aggregate 100 percent of the
    average amount of outstanding commercial paper. As of September 30, 2000,
    PHH maintained $1.625 billion of unsecured committed credit facilities,
    which were provided by domestic and foreign banks. The facilities consisted
    of a $750 million revolving credit facility maturing in February 2001, a
    $125 million revolving credit facility maturing in September 2001 and a
    $750 million revolving credit facility maturing in February 2005. The full
    amount of PHH's committed facilities at September 30, 2000 was undrawn and
    available to support the average outstanding commercial paper balance.

    We closely evaluate not only the credit of the banks, but also the terms of
    the various agreements to ensure on-going availability. We believe that our
    current policy provides adequate protection should volatility in the
    financial markets limit PHH's access to commercial paper or medium-term
    notes funding. PHH continuously seeks additional sources of liquidity to
    accommodate its asset growth and to provide further protection from
    volatility in the financial markets. In the event that the public debt
    market is unable to

                                       30


    meet PHH's funding needs, we believe that PHH has appropriate alternative
    sources to provide adequate liquidity, including current and potential
    future securitized obligations and its revolving credit facilities.

    MANDATORILY REDEEMABLE PREFERRED SECURITIES ISSUED BY SUBSIDIARY HOLDING
    SOLELY SENIOR DEBENTURES ISSUED BY THE COMPANY

    On May 3, 2000, pursuant to the PRIDES settlement, we issued approximately 4
    million additional PRIDES (the "Additional PRIDES"), with a face value of
    $50 per Additional PRIDES, and received approximately $91 million in cash
    proceeds related to the issuance of such securities. Only Additional Income
    PRIDES (having identical terms to the originally issued Income PRIDES) were
    issued, of which 3,619,374 were immediately converted into 3,619,374 New
    Income PRIDES and 380,626 remained Additional Income PRIDES. No Additional
    Growth PRIDES were issued in the offering.

    MANDATORILY REDEEMABLE PREFERRED INTEREST IN A SUBSIDIARY

    In March 2000, through a limited liability corporation ("LLC"), we issued a
    mandatorily redeemable preferred interest ("Senior Preferred Interest") in
    exchange for $375 million in cash. The Senior Preferred Interest is
    mandatorily redeemable 15 years from the date of issuance and may be
    redeemed after 5 years, or earlier in certain circumstances. Distributions
    on the Senior Preferred Interest are based on the three-month LIBOR plus an
    applicable margin (1.77%). Simultaneously with the issuance of the Senior
    Preferred Interest, we transferred certain assets to the LLC. After the sale
    of the Senior Preferred Interest, we owned 100% of both the common interest
    and the junior preferred interest in the LLC. In the event of default,
    holders of the Senior Preferred Interest have certain liquidation
    preferences. Proceeds were used to repay a portion of the outstanding
    borrowings under our term loan facility.

    STOCKHOLDERS' EQUITY

    CD COMMON STOCK TRANSACTIONS
    Repurchases. Since inception of our common stock repurchase program in
    October 1998 and through September 30, 2000, we repurchased a total of
    approximately $2.3 billion (121 million shares) of CD common stock. As of
    September 30, 2000, we had approximately $488 million remaining availability
    under our common stock repurchase program.

    Strategic Alliance. In February 2000, pursuant to a previously announced
    strategic alliance, Liberty Media Corporation ("Liberty Media") invested
    $400 million in cash to purchase 18 million shares of CD common stock and a
    two-year warrant to purchase approximately 29 million shares of CD common
    stock at an exercise price of $23.00 per share. In addition, in March 2000,
    Liberty Media's Chairman, John C. Malone, Ph.D., purchased one million
    shares of CD common stock for approximately $17 million in cash. The
    strategic alliance with Liberty Media is intended to develop Internet and
    related opportunities associated with our travel, mortgage, real estate and
    direct marketing businesses.

    MOVE.COM COMMON STOCK TRANSACTIONS
    Authorization of Tracking Stock. On March 21, 2000, our stockholders
    approved a proposal authorizing a new series of common stock to track the
    performance of the Move.com Group, a group of businesses which provide a
    broad range of quality relocation, real estate and home-related products and
    services through its flagship portal site, move.com, and through the
    move.com network. Our existing common stock was reclassified as CD common
    stock, which reflects the performance of our other businesses and also a
    retained interest in the Move.com Group (collectively referred to as the
    "Cendant Group"). In addition, our charter was amended and restated to
    increase the number of authorized shares of common stock from 2.0 billion to
    approximately 2.5 billion, comprised of 2.0 billion shares of CD common
    stock and 500 million shares of Move.com common stock. Although the issuance
    of Move.com common stock is intended to track the performance of the
    Move.com Group, holders are subject to all of the risks associated with an
    investment in all of our businesses, assets and liabilities. We issued
    shares of Move.com common stock in the following private financings:

                                       31


    NRT Incorporated Investment. On April 14, 2000, NRT Incorporated ("NRT")
    purchased 319,591 shares of Move.com common stock for $31.29 per share or
    approximately $10 million in cash. We own $179 million of NRT convertible
    preferred stock, of which $21 million will be convertible, at our option
    upon occurrence of certain events, into no more than 50% of NRT's common
    stock.

    Chatham Street Holdings, LLC Investment. On March 31, 2000, Chatham Street
    Holdings, LLC ("Chatham") exercised a contractual right to purchase
    1,561,000 shares of Move.com common stock for $16.02 per share or
    approximately $25 million in cash. In connection with such exercise, for
    every two shares of Move.com common stock purchased, Chatham received a
    warrant to purchase one share of Move.com common stock at a price equal to
    $64.08 per share and a warrant to purchase one share of Move.com common
    stock at a price equal to $128.16 per share. Also during March 2000, we
    invested $25 million in convertible preferred stock of WMC Finance Co.
    ("WMC"), an online provider of sub-prime mortgages and an affiliate of
    Chatham, and were granted an option to purchase approximately 5 million
    shares of WMC common stock.

    Liberty Digital, Inc. Investment. On March 31, 2000, Liberty Digital, Inc.
    ("Liberty Digital") purchased 1,598,030 shares of Move.com common stock for
    $31.29 per share in exchange for consideration consisting of $10 million in
    cash and 813,215 shares of Liberty Digital Class A common stock valued at
    approximately $40 million. We and Liberty Digital also agreed to use good
    faith efforts to negotiate and enter into mutually acceptable agreements
    relating to the development of real estate related programming for Liberty
    Digital's interactive home channel based on Move.com Group's Web content.

    CASH FLOWS

    EXCLUSIVE OF MANAGEMENT AND MORTGAGE PROGRAMS CASH FLOWS



                                                                 NINE MONTHS ENDED SEPTEMBER 30,
                                                      --------------------------------------------------
                                                           2000              1999             CHANGE
                                                      --------------    -------------    ---------------
                                                                                
    Cash provided by (used in) continuing operations:
       Operating activities                           $          578    $         738    $          (160)
       Investing activities                                     (246)           2,509             (2,755)
       Financing activities                                      (60)          (2,555)             2,495
    Effects of exchange rate changes on
       cash and cash equivalents                                  25               32                 (7)
    Net cash provided by (used in)
       discontinued operations                                    11              (80)                91
                                                      --------------    -------------    ---------------
    Net change in cash and cash equivalents           $          308    $         644    $          (336)
                                                      ==============    =============    ===============


    Cash flows from operating activities decreased primarily due to:

         o    the effects of non-strategic businesses disposed throughout 1999
              and
         o    a decrease in working capital.

    Cash flows from investing activities resulted in an outflow of $246 million
    in 2000 compared to an inflow of $2,509 million in 1999, primarily due to
    the absence in 2000 of $2.8 billion of net cash proceeds received from the
    disposition of businesses in 1999.

    Cash flows used in financing activities decreased primarily due to:

         o    an increase in the issuances of common stock,
         o    a decrease in the repurchases of CD common stock and
         o    proceeds from the issuance of a mandatorily redeemable preferred
              interest and the Additional PRIDES;

    partially offset by:

         o    a net outflow of funds from borrowing activities.


                                       32


    MANAGEMENT AND MORTGAGE PROGRAMS CASH FLOWS



                                                                 NINE MONTHS ENDED SEPTEMBER 30,
                                                       ---------------------------------------------------
                                                            2000              1999            CHANGE
                                                       --------------    -------------    ----------------
                                                                                 
     Cash provided by (used in):
        Operating activities                           $          (28)   $       1,298    $        (1,326)
        Investing activities                                      (62)          (1,243)             1,181
        Financing activities                                     (171)          (1,082)               911
                                                       --------------    -------------    ----------------
     Net change in cash and cash equivalents           $         (261)   $      (1,027)   $           766
                                                       ==============    =============    ================


    Cash flows from operating activities resulted in an outflow of $28 million
    in 2000 compared to an inflow of $1,298 million in 1999, primarily due to:

         o    a decrease in cash flows from the originations of mortgage loans,
              which reflects larger mortgage loan originations in proportion to
              mortgage loan sales and
         o    a decrease in depreciation and amortization due to the 1999
              disposition of our former Fleet segment.

    Cash flows used in investing activities decreased primarily due to:

         o    the absence in 2000 of a $774 million cash use in 1999 related to
              our former Fleet segment and
         o    a net inflow of funds generated from advances on homes under
              management.

    Cash flows used in financing activities decreased primarily due to:

         o    the absence in 2000 of $3.0 billion in proceeds received for debt
              repayment in connection with the disposal of our former Fleet
              segment and
         o    a reduction in net borrowing requirements for our investment in
              assets under management and mortgage programs.

    CAPITAL EXPENDITURES

    During the nine months ended September 30, 2000, we invested $147 million in
    property and equipment to support operational growth and to enhance
    marketing opportunities. In addition, technological improvements were made
    to improve operating efficiencies. We anticipate an aggregate capital
    expenditure investment of approximately $210 million.

    FLEET DISPOSITION

    On June 30, 1999, we completed the disposition of our Fleet segment for
    aggregate consideration of $1.8 billion. The consideration consisted of the
    assumption and subsequent repayment of $1.44 billion of intercompany debt
    and the issuance of $360 million of non-voting convertible preferred stock
    of Avis Fleet Leasing and Management Corporation. We account for this
    convertible preferred stock investment using the cost method. Conversion of
    the convertible preferred stock is at our option, subject to earnings and
    stock price thresholds within specified intervals of time. As of September
    30, 2000, the conversion conditions had not been satisfied. In connection
    with our current business plans, we announced on August 15, 2000, that we
    had submitted to the Board of Directors of Avis, a preliminary, non-binding
    proposal to acquire all of the outstanding shares of Avis that are not
    currently owned by us. See "Liquidity and Capital Resources - Acquisitions
    and Dispositions" for further detail regarding this proposed transaction.

    RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

    In June 2000, the Financial Accounting Standards Board ("FASB") issued
    Statement of Financial Accounting Standards ("SFAS") No. 138, "Accounting
    for Certain Derivative Instruments and Certain Hedging Activities," which
    amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging
    Activities." SFAS No. 133 was previously amended by SFAS No. 137 "Accounting
    For Derivative Instruments and Hedging Activities - Deferral of the
    Effective Date of FASB Statement No. 133," which deferred the effective date
    of SFAS No. 133 to fiscal years commencing after June 15, 2000. We have
    appointed a team to implement these standards on an enterprise-wide basis.
    We have identified certain

                                       33


    contracts, which contain embedded derivatives, and additional freestanding
    derivatives as defined by SFAS No. 133. Completion of our implementation
    plan and determination of the impact of adopting these standards is
    expected by the end of the fourth quarter of 2000. Since the impact is
    dependent upon market fluctuations and the notional value of such contracts
    at the time of adoption, the impact of adopting these standards is not
    fully determinable. However, we currently do not anticipate material
    changes to any of our existing hedging strategies as a result of such
    adoption. We will adopt SFAS No. 138 concurrently with SFAS No. 133 on
    January 1, 2001, as required.

    In October 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and
    Servicing of Financial Assets and Extinguishments of Liabilities - a
    Replacement of FASB Statement No. 125." SFAS No. 140 revises criteria for
    accounting for securitizations, other financial-asset transfers, and
    collateral and introduces new disclosures, but otherwise carries forward
    most of the provisions of SFAS No. 125 "Accounting for Transfers and
    Servicing of Financial Assets and Extinguishments of Liabilities" without
    amendment. We will adopt SFAS No. 140 on December 31, 2000, as required.




                                       34


    ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

    As previously discussed in our 1999 Annual Report filed on Form 10-K, we
    assess our market risk based on changes in interest and foreign currency
    exchange rates utilizing a sensitivity analysis. The sensitivity analysis
    measures the potential loss in earnings, fair values, and cash flows based
    on a hypothetical 10% change (increase and decrease) in our market risk
    sensitive positions. We used September 30, 2000 market rates to perform a
    sensitivity analysis separately for each of our market risk exposures. The
    estimates assume instantaneous, parallel shifts in interest rate yield
    curves and exchange rates. We have determined, through such analyses, that
    the impact of a 10% change in interest and foreign currency exchange rates
    and prices on our earnings, fair values and cash flows would not be
    material.



                                       35



PART II  -  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The discussions contained under the headings "Class Action Litigation and
Government Investigations" in Note 11 contained in PART I FINANCIAL INFORMATION,
Item 1. Financial Statements, are incorporated herein by reference in their
entirety.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(A) EXHIBITS

See Exhibit Index.

(B) REPORTS ON FORM 8-K

On August 29, 2000, we filed a current report on Form 8-K to report under Item 5
that the U.S. District Court in Newark, New Jersey approved as final the
previously announced class action litigation settlement with Cendant common
stockholders.

On August 15, 2000, we filed a current report on Form 8-K to report under Item 5
that a preliminary, non-binding proposal to acquire all of the outstanding
shares of Avis Group Holdings, Inc. that are not currently owned by us at a
price of $29.00 per share in cash.

On July 21, 2000, we filed a current report on Form 8-K to report under Item 5
our second quarter 2000 financial results.


                                       36


                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.

                                            CENDANT CORPORATION

                                            /s/ David M. Johnson
                                            -----------------------------
                                            David M. Johnson
                                            Senior Executive Vice President and
                                            Chief Financial Officer


                                            /s/ John T. McClain
                                            -----------------------------
                                            John T. McClain
                                            Senior Vice President, Finance and
Date:  November 14, 2000                    Corporate Controller


                                       37


                                  EXHIBIT INDEX

EXHIBIT NO.                         DESCRIPTION
- -----------                         -----------

    3.1       Amended and Restated Certificate of Incorporation of the Company
              (Incorporated by reference to Exhibit 3.1 to the Company's
              Quarterly Report on Form 10-Q/A for the quarterly period ended
              March 31, 2000 dated July 28, 2000)

    3.2       Amended and Restated By-Laws of the Company (Incorporated by
              reference to Exhibit 3.2 to the Company's Quarterly Report on Form
              10-Q/A for the quarterly period ended March 31, 2000 dated July
              28, 2000)

    10.1      Amendment, effective May 15, 2000, to the Amended and Restated
              Employment Agreement, dated as of June 30, 1996 and all subsequent
              amendments thereto, by and between Cendant Corporation, successor
              to HFS Incorporated, and Henry R. Silverman.

    10.2      Agreement and Plan of Merger, dated as of November 1, 2000, by
              and among Cendant Corporation, Grand Slam Acquisition Corp. and
              Fairfield Communities, Inc.

    10.3      Agreement and Plan of Reorganization by and among Homestore.com,
              Inc., Metal Acquisition Corp, Welcome Wagon Acquisition Corp.,
              Move.com, Inc., Welcome Wagon International Inc., Cendant
              Membership Services, Inc. and Cendant Corporation, dated as of
              October 26, 2000.

    10.4      Agreement and Plan of Merger by and among Cendant Corporation, PHH
              Corporation, Avis Acquisition Corp. and Avis Group Holdings, Inc.,
              dated as of November 11, 2000.

    10.5      Three Year Competitive Advance and Revolving Credit Agreement,
              dated as of August 29, 2000, among Cendant Corporation, the
              lenders referred to therein, and the Chase Manhattan Bank, as
              Administrative Agent.

    12        Computation of Ratio of Earnings to Fixed Charges

    27        Financial Data Schedule (electronic transmission only)