[CENDANT LETTERHEAD]
NEWS RELEASE
CENDANT CORPORATION REPORTS THIRD QUARTER RESULTS
ADJUSTED EPS $0.24 VS. $0.20
REPORTED EPS $0.14 VS. $0.23
Parsippany, NJ, November 4, 1998 -- Cendant Corporation (NYSE:CD) today
reported third quarter results. Revenues from continuing operations were $1.46
billion, a 23% increase over $1.19 billion in 1997. Adjusted earnings from
continuing operations were $0.24 per share, up 20% from $0.20 per share in the
third quarter of 1997.
Adjusted third quarter 1998 results reflect the impact of $0.06 per share for
the cost of the Company's investigation of previously disclosed accounting
irregularities at the former CUC International including the severance payment
to the Company's former chairman and $0.04 per share with respect to the
non-cash write-off of the Company's equity investment in NetGrocer and the
goodwill associated with the National Library of Poetry. Adjusted 1997 results
reflect $0.03 per share from the reduction in the Company's ownership of
Avis-Rent-A-Car from 100% in 1997 to 20% in 1998 and certain one-time gains.
"Once again, the Travel and Real Estate businesses performed extremely well,"
said Henry R. Silverman, chairman, president and chief executive officer. "As
recently announced, we have restructured the management and reporting
relationships of the former CUC businesses and anticipate significant
improvement in future periods. Together with continued superior performance
from our Travel and Real Estate segments, we are confident that the Cendant
growth story remains intact, and anticipate increases in operating earnings per
share in the fourth quarter of 1998 and in fiscal 1999."
Third quarter EBITDA benefited from a 39% improvement in the Travel segment, to
$209.2 million in 1998 from $150.5 million in 1997, and a 51% increase in the
Real Estate segment to $197.0 million in 1998 from $130.8 million in 1997,
reflecting increases in all lines of business within these segments. Alliance
Marketing reported EBITDA of $29.7 million in 1998 compared with $73.9 million
in 1997, a 60% decrease primarily due to the non-cash write-down of intangible
assets in the National Library of Poetry business and higher marketing
expenses, including a higher level of investment in the Company's Interactive
Membership Services unit, which were incurred in the current period without a
corresponding revenue benefit under the new accounting policy. EBITDA in the
Company's Other segment was a loss of $28.7 million in 1998, excluding
investigation costs, compared with income of $57.9 million in 1997, driven
primarily by the reduction of the Company's interest in Avis-Rent-A-Car and the
write-off of NetGrocer. Net income in the Other segment was affected by a $26.6
million after tax increase in interest expense and minority interest, due to
the Company's 1998 acquisitions of Harpur Group, Jackson Hewitt and National
Parking Corp., and additional investments in NRT Incorporated.
Statements about future results made in this release may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform act of 1995. These statements are based on current
expectations and the current economic environment. The Company cautions that
these statements are not guarantees of future performance. They involve a
number of risks and uncertainties that are difficult to predict. Actual results
could differ materially from those expressed or implied in the forward-looking
statements. Important assumptions and other important factors that could cause
actual results to differ materially from those in the forward-look statements
are specified in the Company's Annual Report on Form 10-K/A for the year ended
December 31, 1997.
Cendant 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 Contacts:
Elliot Bloom Denise L. Gillen
973-496-8414 973-496-7303
Samuel J. Levenson
973-496-5023
Third Quarter Financial Results -- As Reported Table 1 of 5
(Dollars in millions, except per share amounts)
1998 1997 % CHANGE
--------- --------- ---------
Revenues 1,457.8 1,186.5 23
Expenses (1) 1,247.0 845.8 47
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Income before income taxes and minority interest 210.8 340.7 (38)
Income from continuing operations 123.1 203.0 (40)
Loss from discontinued operations (2) (12.1) (.4) --
------- -------
Net income 111.0 202.6 (46)
EBITDA -- continuing operations (3) 330.7 413.1 (20)
Earnings per share -- diluted
Continuing operations .14 .23 (39)
Discontinued operations (.01) -- --
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Net income .13 .23 (43)
Earnings per share -- basic
Continuing operations .14 .25 (44)
Discontinued operations (.01) -- --
------- -------
Net income .13 .25 (48)
Weighted average shares -- diluted 877.3 889.0
- ----------
(1) 1998 includes $76.4 million of costs associated with the investigation of
previously disclosed irregularities at the former CUC International
including the severance payment to the Company's former chairman and
$50.0 million with respect to the non-cash write-off of the Company's
equity investment in NetGrocer and the goodwill associated with the
National Library of Poetry.
(2) Discontinued operations include Hebdo Mag classified advertising unit and
the Cendant Software unit.
(3) Earnings before interest, taxes, depreciation and amortization.
Third Quarter Financial Results -- As Reported Table 2 of 5
(Dollars in millions, except per share amounts)
The following 1998 results were adjusted for a third quarter pre-tax charge of
$76.4 million, or $0.06 per share after tax, associated with the investigation
of previously disclosed accounting irregularities and related charges at the
former CUC International and a third quarter non-cash pre-tax charge of $50.0
million, or $0.04 per share after tax, associated with the write-off of the
Company's investment in NetGrocer and the goodwill associated with the National
Library of Poetry. The following 1997 results were adjusted to exclude $0.03
per share reflecting the reduction in the Company's ownership of
Avis-Rent-A-Car from 100% in 1997 to 20% in 1998, and certain one-time gains.
1998 1997 % CHANGE
--------- --------- ---------
Revenues 1,457.8 1,111.1 31
Expenses 1,120.6 822.6 36
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Income before income taxes and minority interest 337.2 288.5 17
Income from continuing operations 203.9 171.9 19
Loss from discontinued operations (1) (12.1) (.4) --
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Net income 191.8 171.5 12
EBITDA -- continuing operations (2) 457.1 359.8 27
Earnings per share -- diluted
Continuing operations .24 .20 20
Discontinued operations (.01) -- --
------- -------
Net income .23 .20 15
Earnings per share -- basic
Continuing operations .24 .21 14
Discontinued operations (.01) -- --
------- -------
Net income .23 .21 10
Weighted average shares -- diluted 877.3 889.0
- ----------
(1) Discontinued operations include Hebdo Mag classified advertising unit and
the Cendant Software unit.
(2) Earnings before interest, taxes, depreciation and amortization.
Nine Months Ended September 30 Financial Results -- As ReportedTable 3 of 5
(Dollars in millions, except per share amounts)
1998 1997 % CHANGE
----------- ----------- -----------
Revenues 3,865.1 3,139.8 23
Expenses (1) 3,095.8 2,654.1 17
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Income before income taxes and minority interest 769.3 485.7 58
Income from continuing operations before
cumulative effect of accounting change 461.9 247.3 87
Cumulative effect of accounting change -- (283.1) --
Loss from discontinued operations (2) (25.0) (12.2) (104)
------- ------- ----
Net income 436.9 (48.0) --
EBITDA -- continuing operations (3) 1,083.4 697.4 55
Earnings per share -- diluted
Continuing operations .53 .29 83
Discontinued operations (.03) (.01) (2)
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Income before cumulative effect of accounting change .50 .28 79
Cumulative effect of accounting change -- (.32) --
------- -------
Net income .50 (.04) --
Earnings per share -- basic
Continuing operations .55 .31 77
Discontinued operations (.03) (.02) (50)
------- -------
Income before cumulative effect of accounting change .52 .29 79
Cumulative effect of accounting change -- (.35) --
------- -------
Net income .52 (.06) --
Weighted average shares -- diluated 895.0 877.1
- ----------
(1) 1998 includes $108.6 million of costs associated with the investigation
of previously disclosed irregularities at the former CUC International
including the severance payment to the Company's former chairman and
$50.0 million with respect to the non-cash write-off of the Company's
equity investment in NetGrocer and the goodwill associated with the
National Library of Poetry. The nine months ended September 30, 1998 also
includes a net credit of $24.4 million to merger related costs and other
unusual charges primarily as a result of changes to the original estimate
of costs to be incurred.
(2) Discontinued operations includes Hebdo Mag classified advertising unit
and the Cendant Software unit.
(3) Earnings before interest, taxes, depreciation and amortization.
Segment Results -- As Reported Table 4 of 5
(Dollars in Millions)
THIRD QUARTER ENDED SEPTEMBER 30, 1998
EBITDA
REVENUES EBITDA (2) MARGIN
---------------------------------- -------------------------------- -----------------
% %
1998 1997 CHANGE 1998 1997 CHANGE 1998 1997
---------- ---------- -------- ----------- ------- -------- --------- -----
Travel 564.4 354.9 59 209.2 150.5 39 37 42
Real Estate 360.0 281.2 28 196.9 130.8 51 55 47
Alliance Marketing 499.1 437.6 14 29.7 73.9 (60) 6 17
Other 34.3 112.8 (70) (105.1) 57.9 -- -- 51
----- ----- ------ -----
Continuing
Operations (1) 1,457.8 1,186.5 23 330.7 413.1 (20) 23 35
------ -----
Discontinued
Operations (3) 184.6 142.0 30 (2.8) 11.4 125 (2) 8
------- ------- ------ -----
Total 1,642.4 1,328.5 24 327.9 424.5 (23) 20 32
NINE MONTHS ENDED SEPTEMBER 30, 1998
EBITDA
REVENUES EBITDA (2) MARGIN
-------------------------------- ---------------------------------- -------------------
% %
1998 1997 CHANGE 1998 1997 CHANGE 1998 1997
--------- --------- -------- ---------- ---------- -------- -------- --------
Travel 1,415.4 1,015.0 40 595.3 384.3 55 42 38
Real Estate 993.9 726.7 37 490.3 237.6 106 49 33
Alliance Marketing 1,248.3 1,123.9 11 18.3 136.6 (87) 2 12
Other 207.5 274.2 (24) (20.5) (61.1) (67) (10) (22)
------- ------- ----- -----
Continuing
Operations (1) 3,865.1 3,139.8 23 1,083.4 697.4 55 28 22
Discontinued
Operations (3) 548.1 407.2 35 22.3 18.7 20 4 5
------- ------- ------- -----
Total 4,413.2 3,547.0 24 1,105.7 716.1 54 25 20
- ----------
(1) 1998 includes $76.4 million and $108.6 million of costs associated with
the investigation of previously disclosed irregularities at the former
CUC International including the severance payment to the Company's former
chairman for the three months and nine months, respectively. The three
months and nine months ended September 30, 1998 also includes $50.0
million with respect to the non-cash write-off of the Company's equity
investment in NetGrocer and the goodwill associated with the National
Library of Poetry. The nine months ended September 30, 1998 also includes
a net credit of $24.4 million to merger related costs and other unusual
charges primarily as a result of changes to the original estimate of
costs to be incurred.
(2) Earnings before interest, taxes, depreciation and amortization.
(3) Discontinued operations includes Hebdo Mag classified advertising unit
and the Cendant Software unit.
Segment Results -- As Reported Table 5 of 5
(Dollars in Millions)
3Q ENDED SEPTEMBER 30 NINE MONTHS ENDED SEPTEMBER 30
---------------------------------- ---------------------------------
% %
1998 1997 CHANGE 1998 1997 CHANGE
---------- ---------- -------- ---------- ---------- -------
TRAVEL
Lodging 137.5 124.5 10 349.3 322.4 8
Timeshare 106.7 86.9 23 307.1 265.9 16
Car Rental 47.0 41.4 14 140.2 114.5 23
Fleet 94.8 73.9 28 287.5 244.6 18
Other 178.4 28.2 532 331.3 67.6 390
----- ----- ----- -----
Total Travel 564.4 354.9 59 1,415.4 1,015.0 40
REAL ESTATE
Franchise 126.7 98.3 29 342.5 237.4 44
Relocation 130.8 112.0 17 340.7 308.2 11
Mortgage 79.9 51.6 55 251.8 127.8 97
Other 22.6 19.3 17 58.9 53.3 10
----- ----- ------- -------
Total Real Estate 360.0 281.2 28 993.9 726.7 37
ALLIANCE MARKETING
Individual 201.6 171.0 18 548.5 493.7 11
Insurance Wholesale 135.5 118.5 14 406.3 349.1 16
Lifestyle 162.0 148.1 9 293.5 281.1 4
----- ----- ------- -------
Total Alliance Marketing 499.1 437.6 14 1,248.3 1,123.9 11
OTHER 34.3 112.8 (70) 207.5 274.2 (24)
TOTAL CONTINUING 1,457.8 1,186.5 23 3,865.1 3,139.8 23
DISCONTINUED OPERATIONS
Hebdo Mag 65.2 51.3 27 202.4 145.8 39
Software 119.4 90.7 32 345.7 261.4 32
------- ------- ------- -------
Total 184.6 142.0 30 548.1 407.2 35
TOTAL COMPANY 1,642.4 1,328.5 24 4,413.2 3,547.0 24
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