EXHIBIT 99.1
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The following Unaudited Pro Forma Condensed Combined Statement of Operations for
the six months ended June 30, 2001 gives effect to the Company's March 1, 2001
acquisition (the "Acquisition") of Avis Group Holdings, Inc. ("Avis"), which has
been accounted for under the purchase method of accounting.
The Unaudited Pro Forma Condensed Combined Statement of Operations assumes the
Acquisition occurred on January 1, 2001. The unaudited pro forma financial
information is based on the historical consolidated financial statements of the
Company and Avis under the assumptions and adjustments set forth in the
accompanying explanatory notes.
Since Avis was consolidated with the Company as of March 1, 2001, the results of
operations of Avis between January 1, 2001 and February 28, 2001 were combined
with the Company's results of operations to report the combined pro forma
results of operations for the six month period ended June 30, 2001. All
intercompany transactions were eliminated on a pro forma basis.
In connection with the Acquisition, the Company retained ownership of Avis'
Vehicle Management and Leasing business and its Wright Express business. The
Company's parent, Cendant Corporation ("Cendant") retained ownership in Avis'
other business, Avis Rent A Car ("ARAC"), through a dividend of this business
from the Company to Cendant.
As a result of the Acquisition, the Company and Cendant made payments totaling
approximately $994 million, including payments of $937 million to Avis
stockholders, direct expenses of $40 million related to the transaction and the
net cash obligation of $17 million related to Avis stock options settled prior
to consummation. The purchase price also included the fair value of CD common
stock options exchanged with certain fully-vested Avis stock options. The
Unaudited Pro Forma Condensed Combined Statement of Operations reflects interest
expense on $600 million of the purchase price financed through loans from
Cendant. The remaining amount was financed from existing cash and other
intercompany loans which were immediately repaid at March 31, 2001.
The unaudited pro forma financial information excludes any benefits that might
result from the Acquisition due to synergies that may be derived or from the
elimination of duplicate efforts.
The Company's management believes that the assumptions used provide a reasonable
basis on which to present the unaudited pro forma financial information. The
Company has completed other acquisitions and dispositions which are not
significant and, accordingly, have not been included in the accompanying
unaudited pro forma financial information. The unaudited pro forma financial
information may not be indicative of the results of operations that would have
occurred if the Acquisition had been in effect on the dates indicated or which
might be obtained in the future.
The unaudited pro forma financial information should be read in conjunction with
the historical consolidated financial statements and accompanying notes for the
Company, Cendant and Avis.
<Page>
PHH CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(IN MILLIONS)
<Table>
<Caption>
PRO FORMA ADJUSTMENTS
HISTORICAL --------------------------
HISTORICAL AVIS DIVIDEND COMBINED
PHH JAN 1-FEB 28, 2001 OF ARAC (A) ACQUISITION PRO FORMA
---------- ------------------ ----------- ----------- ---------
REVENUES
Service fees, net $ 525 $ 27 $ -- $ -- $ 552
Vehicle rental -- 366 (366) -- --
Fleet leasing 520 228 -- -- 748
Other 87 20 (20) (3) (b) 84
---------- ------------------ ----------- ----------- ---------
Net revenues 1,132 641 (386) (3) 1,384
EXPENSES
Operating 361 174 (174) -- 361
Vehicle depreciation, lease charges and
interest, net 422 350 (152) -- 620
Selling, general and administrative 69 115 (83) 6 (c) 107
Non-vehicle depreciation and amortization 35 23 (8) (1) (d) 49
Other charges 8 12 (11) -- 9
---------- ------------------ ----------- ----------- ---------
Total expenses 895 674 (428) 5 1,146
INCOME (LOSS) BEFORE INCOME TAXES 237 (33) 42 (8) 238
Provision (benefit) for income taxes 95 (10) 16 (3) (e) 98
---------- ------------------ ----------- ----------- ---------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE $ 142 $ (23) $ 26 $ (5) $ 140
========== ================== =========== =========== =========
</Table>
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED STATEMENT OF OPERATIONS.
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PHH CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(DOLLARS IN MILLIONS)
(a) The dividend of ARAC to Cendant was assumed to occur on January 1, 2001
for purposes of preparing the Unaudited Pro Forma Condensed Combined
Statement of Operations. As such, ARAC's results of operations have been
excluded from this pro forma financial information.
(b) Represents the elimination of the Company's earnings attributable to its
investment in Avis.
(c) Represents interest expense on debt issued by Cendant to finance the
acquisition of Avis ($7), net of the reversal of Avis' amortization of
debt-related costs ($1).
(d) Represents amortization of goodwill generated on the excess of fair value
over the net assets acquired on a straight-line basis over 40 years, net
of the reversal of Avis' amortization of pre-acquisition goodwill and
other identifiable intangibles resulting from the allocation of purchase
price on a straight-line basis over 20 years.
(e) Represents the income tax effect of the purchase adjustments and other pro
forma adjustments at an estimated statutory rate of 37.5% (not including
adjustments for non-deductible goodwill).
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