CENDANT REPORTS 1999 SECOND QUARTER RESULTS

Press Release: Cendant Corporation

July 22, 1999
NEW YORK-- Cendant Corporation (NYSE: CD) today reported 1999 second quarter results. Cendant Chairman, President and Chief Executive Officer, Henry R. Silverman stated, "Our core businesses continue to perform in line with our business plan, with Individual Membership, in particular, making a significant contribution to EBITDA growth in the second quarter. We remain confident that we will deliver earnings per share in line with Wall Street expectations of between $1.00 to $1.07 for the year, up 22% to 30% from $0.82 in 1998, despite timing issues associated with our ongoing asset divestiture and share repurchase programs.''

Operating results for the quarter ended June 30, 1999, as compared with the prior year second quarter were as follows:

-- Revenues were $1.38 billion, up 8% from $1.27 billion
-- Adjusted EBITDA from continuing operations was $472 million, up 20% from $394 million
-- Adjusted net income from continuing operations was $195 million, up 16% from $169 million
-- Adjusted income from continuing operations per share was up 26% to $0.24 vs. $0.19
-- Net income was $862 million compared with $153 million
-- Net income per share was $1.05 compared with $0.18

Net income and net income per share in 1999 include an after tax gain of $709 million, or $0.86 per share, on the dispositions of the Company's Fleet business segment and certain other non-strategic businesses of the Company, including Match.com, National Leisure Group and National Library of Poetry. Adjusted EBITDA from continuing operations excludes the pretax gain of $766 million associated with the divestitures and net unusual pretax charges of $30 million in 1999 and $5 million in 1998. Unusual charges in both years include investigation-related costs and certain other non-recurring items. (See Tables 1 and 2 for consolidated operating results from continuing operations -- as adjusted and as reported.)

Share Repurchase Program and Asset Sales

The Company has reduced shares outstanding by approximately 141 million shares through open market transactions, its recently announced self tender offer and the 7.1 million shares returned to the Company in connection with the sale of Hebdo Mag International. The Company expects to continue to use excess financial resources, including cash flow from operations and proceeds from asset sales, to repurchase shares and retire debt. The Company's stated objective is to maintain a target debt to total capital ratio of 40% or less.

During the second half of 1999 the Company expects to sell several non- strategic businesses it previously identified to generate proceeds estimated at over $1 billion. The Company expects to use the proceeds and anticipated operating cash flows to reduce its term loan by about $350 to $400 million and reduce its shares outstanding by about 40 to 50 million shares (assuming current share prices) by year end. Accordingly, the Company anticipates that approximately 735 million shares will be outstanding on a diluted basis at December 31, 1999, a reduction of about 21% from the commencement of the stock buyback program in November 1998.

Second Quarter Division Results

Total Company performance in the second quarter of 1999 was consistent with the Company's stated growth targets for the full year. The underlying discussion of operating results by division for the second quarter of 1999 as compared to the second quarter of 1998 focuses on Adjusted EBITDA, which is the profit measure that the Company uses to evaluate performance. (See Table 4 for Revenues and Adjusted EBITDA by segment and Table 5 for underlying segment revenue drivers.)

Travel Division

Travel segment revenues increased 10% to $290 million as a result of a 9% increase in franchise fees from lodging properties and car rental locations, primarily from increases in available rooms, revenue per available room and car rental days. Increased timeshare subscription and exchange revenues contributed to overall timeshare revenue growth of 13%. Adjusted EBITDA for the Travel segment increased 8% to $147 million. Adjusted EBITDA excludes a non-recurring charge of $23 million, or $0.02 per share after tax, to fund a contribution to the trust responsible for completing the previously announced transition of the Company's lodging franchisees to a Company- sponsored property management system. The Adjusted EBITDA margin of 51% for 1999 was unchanged from 1998.

Cendant disposed of its Fleet operations as of June 30, 1999. Fleet revenues increased 10% to $106 million, primarily as a result of higher service fee revenues. The number of service cards and leased vehicles increased by approximately 18% and 4%, respectively. EBITDA decreased 6% to $41 million primarily because of higher borrowing costs.

Real Estate Division

Real Estate Franchise revenues increased 21% to $159 million and EBITDA increased 11% to $114 million. Royalty fees increased 12% primarily as a result of a 5% increase in home sale transactions and a 6% increase in the average price of homes sold. In addition, revenues increased as a result of increases in marketing fund revenues, which were offset directly by marketing fund expenses on behalf of franchisees, with the effect of lowering margins but having no impact on profitability. Preferred Alliance revenues declined $10 million due to certain access fees received in 1998, which were offset by a $10 million payment received from NRT Incorporated in 1999.

Relocation revenues decreased 3% to $107 million. Lower volumes on certain relocation services in 1999 were partially offset by higher ancillary service fees from certain renegotiated contracts and increased outsourcing services provided by the Company. In 1999 the Company entered into a strategic partnership with a third-party insurance company, which contributed $7 million of additional revenues. These increases were partially offset by the sale of certain niche-market asset management operations in the third quarter of 1998, which reduced revenues by $4 million. EBITDA increased 30% to $34 million. Operating expenses decreased 13% principally from cost savings in regional operations and reduced government home sale expenses.

Mortgage revenues increased 13% to $107 million due to substantial growth in mortgage origination volume, which increased $1.2 billion, or 19%, to $7.8 billion. Mortgage closings increased and included a shift to more profitable sales and processing channels, which was responsible for production revenue growth of $5 million. The servicing portfolio grew 29% to $43.8 billion and servicing revenue increased $9 million, or 60%, with average servicing fees increasing slightly. EBITDA increased 11% to $50 million reflecting higher revenues partially offset by higher operating expenses related to increases in hiring, technology and capacity to support continued growth.

Direct Marketing Division

Individual Membership revenues increased 16% to $244 million due to an increase in the number of club members and an increase in the average price of a membership. EBITDA increased $58 million from a loss of $41 million last year to a profit of $17 million this year, primarily as a result of increased revenues and reduced marketing spending, as the Company further refined the targeted audiences for its direct marketing efforts and further optimized the use of various marketing media. The Company's online membership business contributed $15 million to revenues but reduced EBITDA by $10 million in the second quarter of 1999.

Insurance/Wholesale revenues increased 5% to $143 million, primarily because of customer growth, which resulted from increases in affiliations with financial institutions. The increase in revenues was attributable principally to international expansion. International revenues increased 26% due primarily to a 42% increase in customers. EBITDA increased 41% to $50 million. The segment also benefited from a decrease in customer acquisition costs related to insurance products. The EBITDA margin increased from 26% in 1998 to 35% in 1999.

Other Consumer and Business Services

Revenues decreased 3% to $223 million, primarily as a result of a decrease in income from financial investments and the divestiture of several businesses. The revenue decreases were partially offset by increased revenues from National Parking Corporation, the largest private car park operator in the UK, which was acquired in April 1998. Adjusted EBITDA decreased to $20 million.

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-looking statements are specified in the Company's Form 10-K/A for the year ended December 31, 1998, including the resolution of the pending class action litigation and the Company's ability to implement its plan to divest non-strategic assets.

Cendant Corporation is a global provider of consumer and business services. The Company's core competencies include building franchise systems, providing outsourcing solutions and direct marketing. As a franchisor, Cendant is among the world's leading franchisors of hotels, rental car agencies, tax preparation services and real estate brokerage offices. The real estate division also includes Welcome Wagon/GETKO and the Company's soon- to-be-created residential real estate services portal on the Internet. As a provider of outsourcing solutions, Cendant is the world's largest vacation exchange service, a major provider of mortgage services to consumers and the global leader in employee relocation. In direct marketing, Cendant provides access to insurance, travel, shopping, auto, and other services primarily to customers of its affinity partners. Other business units include NCP, the UK's largest private car park operator, and Wizcom, an information technology services provider. Headquartered in New York, NY, the Company has more than 30,000 employees and operates in over 100 countries.

More information about Cendant, its companies, brands and current SEC filings may be obtained by visiting the Company's Web site at http://www.Cendant.com or by calling 877-4INFO-CD (877-446-3623).