Cendant Reports Record Operating Results

PRNewswire-FirstCall NEW YORK Oct. 20 :

Cendant Corporation today reported third quarter 2003 EPS from Continuing
Operations of $0.47, versus $0.24 in third quarter 2002, an increase of
96%. This result exceeded the Company`s prior projection of $0.44 - $0.45.

As a result of the better than expected third quarter results, the Company
raised its EPS from Continuing Operations projection for full year 2003 to
$1.40 - $1.41 from its prior projection of $1.37 - $1.39, an increase of
approximately 40% versus the prior year. The Company also forecasts 2003
Net Cash Provided by Operating Activities exceeding $5 billion and Free
Cash Flow approaching $2.5 billion. These projections reflect prolonged
strength in the residential real estate market and modestly improving
travel activity, balanced by lower mortgage refinancing volumes and the
challenges of the current economic environment.

Cendant`s Chairman, Chief Executive Officer and President, Henry R.
Silverman, stated: “During the third quarter, residential real estate
sales and mortgage volumes continued to show robust year over year growth,
and leisure travel trends continued to firm, enabling us to exceed our
projections for the quarter. Despite a challenging environment, our
diversified portfolio on the whole generated organic growth.

“In 2004, we expect that continued strong results from our real estate
franchise and brokerage businesses, improving travel trends, and the
successful completion of the integration of the principal car and truck
rental operations of Budget Group, Inc. will more than offset the likely
decline in mortgage refinancing from which Cendant has benefited in 2003.
We continue to expect that the Company will generate in excess of $2
billion of Free Cash Flow per year for the foreseeable future. We intend
to deploy our cash primarily to reduce corporate debt and repurchase
common stock and, as previously announced, in first quarter 2004, we
intend to begin paying a quarterly cash dividend on our common shares.”

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Third Quarter Achievements
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The Company made considerable progress towards its cash flow generation,
debt reduction and share repurchase goals during the quarter:

* Generated Net Cash Provided by Operating Activities of approximately
$1.06 billion and Free Cash Flow of approximately $1.0 billion due to
favorable operating results and, in part, to the timing of cash inflows
and a tax refund advance of $175 million, which will be partially offset
in fourth quarter 2003 by tax payments. See Table 7 for a description of
Free Cash Flow and a reconciliation to Net Cash Provided by Operating
Activities. * Reduced corporate debt net of cash on the balance sheet by
$878 million, including the prepayment of our $375 million mandatorily
redeemable debt securities at par. Corporate debt excludes Debt under
Management and Mortgage Programs. See Table 5 for more detailed
information. * Utilized $249 million of cash for the repurchase of common
stock. In addition: * The Company`s Board of Directors authorized an
additional $500 million, plus proceeds from stock option exercises, for
the repurchase of common stock. * The Company completed its analysis with
respect to Trilegiant Corporation and Bishop`s Gate Residential Mortgage
Trust pursuant to FASB Interpretation No. 46, and consolidated those
entities effective July 1, 2003. As previously disclosed, the
consolidation of Trilegiant resulted in a non-cash charge of $293 million,
to reflect the cumulative effect of accounting change in third quarter
2003, which had no impact on cash flow or income from continuing
operations or the related per share amounts. Third Quarter 2003 Results of
Reportable Operating Segments
The following discussion of operating results focuses on revenue and
EBITDA for each of our reportable operating segments. EBITDA is defined as
earnings from continuing operations before non-program related
depreciation and amortization, non-program related interest, amortization
of pendings and listings, income taxes and minority interest. EBITDA is
the measure that we use to evaluate performance in each of our reportable
operating segments in accordance with generally accepted accounting
principles. Revenue and EBITDA are expressed in millions. See Table 8 for
details on the organic growth of our reportable operating segments for
third quarter 2003.

Real Estate Services:
Revenue and EBITDA increased due to strong organic growth in substantially
all of our real estate businesses. In particular, we generated growth in
our mortgage business as a result of an increase of 107% in mortgage loan
production revenue and the absence of the $275 million mortgage servicing
rights asset write-down recorded in third quarter 2002. Real estate
franchise royalty and marketing fund revenues increased 18%, primarily due
to a 10% increase in home sale transactions and a 12% increase in average
price, and revenue generated by our NRT real estate brokerage business
increased 18% organically, primarily due to increases in home sale
transactions and average price. Acquisitions by NRT subsequent to second
quarter 2002 and increased volumes of settlement services also contributed
to the quarter-over-quarter increase in revenue and EBITDA.
Hospitality:  Revenue and EBITDA were positively impacted by 10% growth in timeshare
sales revenue and 7% growth in RCI timeshare subscription and exchange
revenue. As previously announced, the principal securitization structure
for our timeshare receivables was amended in third quarter 2003, which
resulted in our consolidation of that structure and, in turn, increased
the transparency of our operating results. Subsequent to consolidation, we
no longer recognize gains upon the securitization of timeshare
receivables, which had a negative impact on EBITDA for third quarter 2003.
EBITDA also declined due to higher product costs on developed timeshare
inventory and an increased investment in timeshare marketing, which should
generate incremental revenues and EBITDA in future periods. EBITDA was
reduced by approximately $30 million due to these three factors; however,
in fourth quarter 2003, we expect Hospitality operating results to exceed
the prior year period`s levels.


Travel Distribution:Revenue and EBITDA were negatively impacted by decreased international
travel volumes, including a 3% reduction in Galileo air travel booking
fees. In addition, Trip Network, Inc., which operates the on-line travel
business of Cheap Tickets and was acquired in March 2003, contributed
incremental revenue but negatively affected EBITDA. The global travel
industry continued to be subjected to negative economic pressures and
geopolitical concerns; however, successful cost reduction efforts have
mitigated the EBITDA impact from reduced travel demand.
Vehicle Services:Revenue and EBITDA increased due to the acquisition of the principal car
and truck rental operations of Budget Group, Inc. in fourth quarter 2002
and due to organic growth in Wright Express` fuel card management
business. Lower domestic car rental volume at Avis was partially offset by
a 2% increase in car rental pricing. The integration of Budget, which
represents a significant growth opportunity in 2004, is proceeding
according to plan.

Financial Services:  Revenue increased primarily due to the consolidation of Trilegiant on July
1, 2003 pursuant to FASB Interpretation No. 46; however, there was minimal
impact on EBITDA. Revenue and EBITDA were reduced, as expected, by the
continued attrition of the base of members that we retained at the time of
the 2001 outsourcing of our membership business to Trilegiant. The effect
on EBITDA was partially mitigated by a net reduction in expenses from
servicing fewer members. In addition, revenue and EBITDA were positively
impacted by growth in our insurance-wholesale businesses and negatively
impacted by the timing of revenue at Jackson Hewitt, our tax preparation
business, and by restructuring costs at Cims, our international membership
business, during third quarter 2003, which will benefit operating results
in future periods. Although the year-over-year EBITDA comparisons for
Financial Services have been negative throughout much of 2003, we expect
the EBITDA of this division in 2004 to exceed 2003 levels.

Other Items * As of September 30, 2003, the Company had approximately $1.0
billion of cash and cash equivalents and approximately $6.3 billion of
corporate debt outstanding, including $863 million of mandatorily
convertible Upper DECS securities. * As of September 30, 2003, the
Company`s $2.9 billion credit facility was supporting $1.2 billion in
letters of credit used primarily as credit enhancement for our debt under
management and mortgage programs. The Company had $1.7 billion of
availability for use as of September 30, 2003. * As of September 30, 2003,
the Company`s net debt to total capitalization ratio was 34.6%, versus
41.9% as of December 31, 2002 (see calculation on Table 5). The Company`s
interest coverage ratio was 13 to 1 for third quarter 2003 (see
calculation on Table 1). * Weighted average common shares outstanding,
including dilutive securities, used to calculate EPS was 1.039 billion for
third quarter 2003, versus 1.058 billion for third quarter 2002.
Full Details at Cendant Website
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