EXHIBIT 99.2
CENDANT POSTS RECORD 2Q EARNINGS OF $0.23 VS $0.16 PER SHARE, UP 44%
Second Quarter Revenues up 28%
------------------------------
6 Month Results: $0.47 vs $0.28, up 68%
---------------------------------------
6 Month Revenues up 24%
PARSIPPANY, NJ, August 13, 1998 - Cendant Corporation (NYSE: CD) announced
record second quarter earnings from continuing operations of $0.23 per share
for 1998 versus $0.16 per share for 1997, an increase of 44%. 1998 results are
before $0.02 of unusual expenses associated with resolution of accounting
irregularities plus $0.03 of income from reversal of prior restructuring
charges. 1997 results are before merger charges associated with the acquisition
of PHH.
"Our second quarter results demonstrate the depth and quality of our management
team and the strength of Cendant's core business franchises," said Henry R.
Silverman, Chairman, President and CEO. "The past four months have challenged
our operating management to rise to new levels of leadership and productivity
in a period when our most senior executives have devoted the vast majority of
their time to stanching and closing the wound in our company created by the
accounting revelations at CUC. I am fiercely proud of their achievements and
the depth of talent in our management ranks confirmed by these results. Our 28%
revenue growth in continuing operations underlines the momentum of our
franchise. Even after adjusting for acquisitions, our managers delivered
mid-teens top-line growth - a terrific achievement."
"All of our segments performed well in the quarter, led by unparalleled
performance in our real estate segment. Each of the business units we inherited
from HFS performed on or ahead of plan. The carefully laid out strategy built
over eight years at HFS is yielding its greatest rewards this year. These
businesses yielded 50% plus growth in both EBITDA and net income in the second
quarter, continuing the strong performance of the first quarter. We see no
signs that any of these businesses will fail to meet our high expectations for
the rest of the year," reported Mr. Silverman.
"We are now able to evaluate and manage performance at the CUC business units,"
Mr. Silverman continued. "With consumer software and Hebdo Mag discontinued,
our CUC operations are largely centered in Alliance Marketing. Two of the three
major units in Alliance Marketing produced solid gains versus 1997 results. We
are particularly pleased with the strong EBITDA growth in our
Insurance/Wholesale businesses, which generated approximately $44 million in
EBITDA in the second quarter, an increase of 36%. This unit contributed the
majority of our 1998 Alliance Marketing earnings to date and should continue to
account for most of its profits in the future. Individual Membership also
generated sizable EBITDA gains from price increases and membership growth,
generating a four times increase in EBITDA in the second quarter."
"Our ability to report fundamental growth in Individual Membership encourages
us to believe that these units, under proper management and with appropriate
financial controls, can offer significant upside potential to our shareholders
in the future. The relatively flat comparison in the lifestyle portion of
Alliance Marketing masks significant variations in the performance of the many
small businesses in that sub-segment. We will rapidly move to address these
issues - businesses that do not meet Cendant standards of performance will be
restructured," Mr. Silverman concluded.
The Company also reported its investigation of accounting irregularities and
errors in the CUC businesses was complete and in line with previously announced
estimates. The financial results announced today incorporate all relevant
information obtained in that investigation and reflect the correction of
accounting policies changed as a result of its findings. A separate press
release will discuss the findings in more detail. Cendant also announced
yesterday that it has classified its Hebdo Mag and consumer software units as
discontinued operations. Therefore, all periods presented have been adjusted
appropriately.
For the first six months of 1998, Cendant reported income from continuing
operations of $0.47 per share versus $0.28 in 1997, an increase of 68%.
Revenues increased 24% to $2.5 billion. Results for the first quarter of 1998
have been restated to correct errors in revenue recognition at businesses of
the former CUC International ("CUC"). The net impact of implementing these
policies will lower 1998 first quarter results from continuing operations from
those previously reported by $0.04 per share. 1997 results are before merger
charges associated with the acquisition of PHH.
Certain matters discussed in the news release are forward-looking statements,
as defined in the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are subject to a number of known and unknown risks
and uncertainties including, but not limited to, the outcome of the Audit
Committee's investigation relating to the previously announced accounting
irregularities; the outcome of the pending class action litigation relating to
the previously announced accounting irregularities; 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 businesses
and the risks associated with such businesses; 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; uncertainty as to the future profitability of acquired
businesses; and other factors. 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 update these forward-looking
statements to reflect actual results, changes in assumptions or changes in
other factors affecting such forward-looking statements.
Cendant (NYSE:CD) is the world's premier provider of consumer and business
services. The Company operates in three principal segments: Travel Services,
Real Estate Services and Alliance Marketing. In Travel Services, Cendant is the
leading franchisor of hotels and rental car agencies worldwide; the largest
provider of vacation exchange services; a leading fleet management company, the
UK's largest private car park operator, and a leading motorist assistance group
in the UK. In Real Estate Services, Cendant is the world's largest franchisor
of residential real estate brokerage offices, a major provider of mortgage
services to consumers and a global leader in corporate employee relocation. In
Alliance Marketing, Cendant provides access to insurance, travel, shopping,
auto, and other services, primarily through direct marketing to customers of
its affinity partners. Headquartered in Parsippany, NJ, the company has more
than 40,000 employees and operates in over 100 countries.
Media Contact: Investor Contact:
Cendant Corporation Cendant Corporation
Elliot Bloom David M. Johnson
973-496-8414 or 973-496-7909
Denise L. Gillen
973-496-7303
Kekst and Company
Jim Fingeroth
Roanne Kulakoff
212-521-4800
Tables Follow
Second Quarter Financial Results - As Reported
- ----------------------------------------------
(In millions, except per share amounts)
The following information includes: (a) a second quarter 1998 one-time
restructuring charge reversal of $29 million after tax, or $0.03 per share (b)
certain 1998 expenses arising from resolution of the company's accounting
issues ($20.4 million after tax, or $0.02 per share) and (c) a second quarter
1997 one-time charge related to the PHH merger with HFS of $300 million ($225
million after tax, or $0.25 per share)
Quarter Ended June 30,
----------------------
% change
1998 1997 vs 2Q97
---- ---- -------
Revenues $1,306.3 $1,024.0 28
Expenses 959.1 1,076.6 (11)
----- -------
Income before Income Taxes
And Minority Interest $347.2 $(52.6) --
Income (Loss) Continuing Operations $214.5 $(87.9) --
Loss Discontinued Operations (1) $(3.6) $(4.4) --
Income (Loss) $210.9 $(92.3) --
EBITDA - Continuing Operations (2) $445.6 $313.6 42
Earnings per share
Diluted
Continuing Operations $0.24 $(0.11) --
Discontinued Operations 0.00 0.00 --
---- ----
Net Income $0.24 $(0.11) --
Basic
Continuing Operations $0.24 $(0.11) --
Discontinued Operations 0.00 0.00 --
---- ----
Net Income $0.24 $(0.11) --
Weighted Average shares -
Diluted 900.9 804.2 12
(1) Discontinued operations are Hebdo Mag classified advertising unit plus the
Cendant Software consumer education and entertainment software unit.
(2) Earnings Before Interest, Taxes, Depreciation and Amortization
Second Quarter Financial Results - Adjusted
- -------------------------------------------
(In millions, except per share amounts)
The following information excludes: (a) a second quarter 1998 one-time
restructuring charge reversal of $29 million after tax, or $0.03 per share (b)
certain 1998 expenses arising from resolution of the company's accounting
issues ($20.4 million after tax, or $0.02 per share) and (c) a second quarter
1997 one-time charge related to the PHH merger with HFS of $300 million ($225
million after tax, or $0.25 per share),
Quarter Ended June 30,
----------------------
% change
1998 1997 vs 2Q97
---- ---- -------
Revenues $1,306.3 $1,024.0 28
Expenses 968.9 777.0 25
----- -----
Income before Income Taxes
And Minority Interest $337.4 $247.0 37
Income Continuing Operations $205.5 $136.8 50
Loss Discontinued Operations (1) $(3.6) $(4.4) --
Income $201.9 $132.4 52
EBITDA - Continuing Operations (2) $445.6 $313.6 42
Earnings per share
Diluted
Continuing Operations $0.23 $0.16 44
Discontinued Operations 0.00 0.00 --
---- ----
Net Income $0.23 $0.16 44
Basic
Continuing Operations $0.24 $0.17 41
Discontinued Operations 0.00 (0.01) --
---- -----
Net Income $0.24 $0.16 50
Weighted Average shares -
Diluted 900.9 879.3 2
(1) Discontinued operations are Hebdo Mag classified advertising unit plus the
Cendant Software consumer education and entertainment software unit.
(2) Earnings Before Interest, Taxes, Depreciation and Amortization
First Half Financial Results - As Reported
- -------------------------------------------
(In millions, except per share amounts)
The following information includes: (a) a second quarter 1998 one-time
restructuring charge reversal of $29 million after tax, or $0.03 per share (b)
certain 1998 expenses arising from resolution of the company's accounting
issues ($20.4 million after tax, or $0.02 per share) and (c) a second quarter
1997 one-time charge related to the PHH merger with HFS of $300 million ($225
million after tax, or $0.25 per share)
Six Months Ended June 30,
-------------------------
% change
1998 1997 vs 1H97
---- ---- -------
Revenues $2,461.2 $1,981.8 24
Expenses 1,782.7 1,847.2 (3)
------- -------
Income before Income Taxes
And Minority Interest $678.5 $134.6 --
Income Continuing Operations $430.0 $12.5 --
Income Discontinued Operations (1) $(16.2) $(1.5) --
Income $413.8 $11.0 --
EBITDA - Continuing Operations (2) $875.9 $563.2 56
Earnings (Loss) per share
Diluted
Continuing Operations $0.48 $0.02 --
Discontinued Operations (0.02) (0.01) --
------ -----
Net Income $0.46 $0.01 --
Basic
Continuing Operations $0.51 $0.02 --
Discontinued Operations (0.02) (0.01) --
----- -----
Net Income $0.49 $0.01 --
Weighted Average shares -
Diluted 907.8 803.2 13
(1) Discontinued operations are Hebdo Mag classified advertising unit plus the
Cendant Software consumer education and entertainment software unit.
(2) Earnings Before Interest, Taxes, Depreciation and Amortization
First Half Financial Results - Adjusted
- -------------------------------------------
(In millions, except per share amounts)
The following information excludes: (a) a second quarter 1998 one-time
restructuring charge reversal of $29 million after tax, or $0.03 per share (b)
certain 1998 expenses arising from the investigation of the company's
accounting issues ($20.4 million after tax, or $0.02 per share) and (c) a
second quarter 1997 one-time charge related to the PHH merger with HFS of $300
million ($225 million after tax, or $0.25 per share)
Six Months Ended June 30,
-------------------------
% change
1998 1997 vs 1H97
---- ---- -------
Revenues $2,461.2 $1,981.8 24
Expenses 1,777.4 1,547.8 15
------- -------
Income before Income Taxes
And Minority Interest $683.8 $434.0 58
Income Continuing Operations $421.0 $237.3 77
Income (Loss) Discontinued Operations (1) $(16.2) $(1.5) --
Net Income $404.8 $235.8 72
EBITDA - Continuing Operations (2) $875.9 $563.2 56
Earnings (Loss) per share
Diluted
Continuing Operations $0.47 $0.28 68
Discontinued Operations (0.02) 0.00 --
---- ----
Net Income $0.45 $0.28 61
Basic
Continuing Operations $0.50 $0.30 67
Discontinued Operations (0.02) 0.00 --
----- ----
Net Income $0.48 $0.30 60
Weighted Average shares -
Diluted 907.8 878.4 3
(1) Discontinued operations are Hebdo Mag classified advertising unit plus the
Cendant Software consumer education and entertainment software unit.
(2) Earnings Before Interest, Taxes, Depreciation and Amortization
SECOND QUARTER RESULTS BY SEGMENT*
(Dollars in millions)
REVENUE EBITDA (2) EBITDA MARGIN
------------------------ ---------------------- --------------
1998 1997 % 1998 1997 % 1998 1997
---- ---- - ---- ---- - ---- ----
TRAVEL
Lodging $117.2 $108.1 8 $63.7 $51.4 24 54 48
Timeshare 94.0 85.3 10 33.3 27.4 21 35 32
Car Rental 48.2 38.6 25 32.1 25.2 27 67 65
Fleet 80.8 65.7 23 37.2 28.2 32 46 43
Other (ETS, NPC) 135.0 22.0 515 30.3 7.9 285 22 36
----- ----- ------ ------
TOTAL $475.2 $319.7 49 $196.5 $140.1 40 41 44
REAL ESTATE
Franchise $131.5 $83.7 57 $102.7 $57.3 79 78 68
Relocation 110.2 103.4 7 26.5 27.2 -3 24 26
Mortgage 94.0 42.5 121 44.6 19.9 124 48 47
Other 19.2 17.2 11 2.7 2.5 8 14 15
----- ----- ------ ------
TOTAL $354.9 $246.8 44 $176.5 $106.9 65 50 43
ALLIANCE
MARKETING
Individual $206.2 $167.3 23 $21.1 $5.4 291 10 3
Wholesale/Insurance 138.7 129.4 7 43.5 31.9 36 31 25
Lifestyle 66.7 59.2 13 -8.4 -11.7 28 -13 -20
----- ----- ------ ------
TOTAL $411.6 $355.9 16 $56.2 $25.6 120 14 7
OTHER $64.6 $101.6 -36 $16.4 $41.0 -60 25 40
TOTAL
CONTINUING OPERATIONS $1,306.3 $1,024.0 28 $445.6 $313.6 42 34 31
DISCONTINUED
OPERATIONS (1)
Software $130.5 $50.8 157 $0.7 -$4.5 -- 1 -9
Hebdo Mag 74.4 48.9 52 23.8 11.7 103 32 24
----- ----- ------ ------
TOTAL $204.9 $99.7 105 $24.5 $7.2 238 12 7
TOTAL $1,511.2 $1,123.7 34 $470.1 $320.8 47 31 29
*Excludes results of one-time merger and unusual charges in 1997 plus other
unusual expenses associated with resolution of accounting issues in 1998.
Discontinued operations are Hebdo Mag classified advertising unit plus the
Cendant Software consumer education and entertainment software unit.
Earnings Before Interest, Taxes, Depreciation and Amortization
14
FIRST HALF RESULTS BY SEGMENT*
(Dollars in millions)
REVENUE EBITDA (2) EBITDA MARGIN
------------------------ ---------------------- --------------
1998 1997 % 1998 1997 % 1998 1997
---- ---- - ---- ---- - ---- ----
TRAVEL
Lodging $211.9 $198.0 7 $114.5 $94.5 21 54 48
Timeshare 200.4 179.0 12 75.3 55.7 35 38 31
Car Rental 93.2 73.1 27 62.9 45.6 38 67 62
Fleet 163.6 146.6 12 79.1 64.0 24 48 44
Other (ETS, NPC) 153.9 39.4 291 32.9 12.2 170 21 31
----- ----- ------ ------
TOTAL $822.9 $636.1 29 $364.6 $272.0 34 44 43
REAL ESTATE
Franchise $215.8 $139.1 55 $161.1 $86.2 87 75 62
Relocation 209.9 188.7 11 53.7 43.1 25 26 23
Mortgage 172.0 76.1 126 81.9 34.1 140 48 45
Other 36.3 34.0 7 3.8 4.4 -14 11 13
----- ----- ------ ------
TOTAL $634.0 $437.9 45 $300.5 $167.8 79 47 38
ALLIANCE
MARKETING
Individual $393.7 $335.6 17 $43.0 $12.9 233 11 4
Wholesale/Insurance 274.5 246.0 12 85.2 57.8 47 31 23
Lifestyle 133.9 132.4 1 -22.8 -9.5 -- -17 -7
----- ----- ------ ------
TOTAL $802.1 $714.0 12 $105.3 $61.2 72 13 9
OTHER $202.2 $193.9 4 $105.4 $62.2 69 52 32
TOTAL
CONTINUING OPERATIONS $2,461.2 $1,981.8 24 $875.9 $563.2 56 36 28
DISCONTINUED
OPERATIONS (1)
Software $226.3 $115.1 97 -$19.3 $1.4 -- -9 1
Hebdo Mag 137.2 94.5 45 39.5 23.9 65 29 25
----- ----- ------ ------
TOTAL $363.5 $209.6 73 $20.2 $25.3 -20 6 12
TOTAL $2,824.8 $2,191.4 29 $896.0 $588.5 52 32 27
*Excludes results of one-time merger and unusual charges in 1997 plus other
unusual expenses associated with resolution of accounting issues in 1998.
Discontinued operations are Hebdo Mag classified advertising unit plus the
Cendant Software consumer education and entertainment software unit.
Earnings Before Interest, Taxes, Depreciation and Amortization
# # #