Cendant Corporation (CD)

Dagim Wondafrash

Mcintire Investment Institute

November 06, 2001

Company Overview

� Created through merger of HFS Incorporated into CUC International in December 1997.

� Franchises hotel businesses, franchises and operates car rental businesses, facilitates vacation timeshare car rental businesses, facilitates vacation timeshare exchanges and provides fleet management services.

� Three Main Divisions

- Travel

- Real Estate

- Diversified Business

Company Overview

� Licenses the owners and operators of independent business and right to use their brand name.

Provide services to increase revenue and � Provide services to increase revenue and profitability of franchises.

� Receive annual licensing fees plus percentage of gross revenue of subsidiary franchises.

Cendant’s Numbers

� Share price: $13.87(11/06/01)

� PE: 13.4

Market cap: 13.4 billion� Market cap: 13.4 billion

� Price/Sales: 1.57

� Price/Cash flow: 4.30

� Revenue: 6.37 billion in Revenue for 2001

Cendant’s Edge…

� Global expansion.

� Diversified portfolio of businesses that do not reduce share do not reduce share holder value.

� Quality with out sacrificing volume.

Lodging Franchises

� World’s largest hotel franchiser.

� Over 6,400 hotels and 540,000 rooms on 540,000 rooms on five continents.

� Exposure to different economic market groups.

Car Rental

� Owns Avis world wide vehicle rental franchise system.

� Over 1,650 locations in the United States

Real Estate Services

� Franchises a leading real estate brokerage system.

� Affiliates responsible for more than one out every four homes sold or purchased in the every four homes sold or purchased in the U.S.

� Runs one of the largest retail originators, leading relocation services company.

Real Estate Franchises � Century 21

- Over 6,300 independently franchised broker offices.

- Presence in over 28 countries.- Presence in over 28 countries.

� Coldwell Banker/ Coldwell Banker Commercial

- More than 3,000 independently owned and operated commercial offices.

- Offices in Cannada and 12 other countries.

� ERA- More Than 2,500 offices operating in 50 states

and 24 countries.

Relocation Services

Cendant Mobility is the provider of mobility services in every market served, market served, including: Corporate and Government Relocation, International Assignment Services.

Diversified Services Division

� Insurance/ Wholesale.

� Tax preparations Franchises.Franchises.

� Parking Operations.

� Electronic reservations and information management.

Financial Highlights

� As of 9/30/01 revenues rose 83% to $6.37 billion.

� Net income rose 42% to to $730 million.

� Already at 6.37 billion in revenue after 3 quarters.

…� Acquired Galileo International, Inc. (NYSE: GLC) for approximately $2.8 approximately $2.8 billion in common stock and cash.

Management

� CEO:Henry R. Silverman

� EDUCATIONEDUCATIONEDUCATIONEDUCATIONB.A., Art History, Williams College, 1961; Law Degree, B.A., Art History, Williams College, 1961; Law Degree, University of Pennsylvania, 1964.

� CAREERCAREERCAREERCAREERMade name as investment banker doing deals in the '80s at Reliance Group Holdings and later at Blackstone Group. Built franchising giant HFS Inc., took it public in 1992, and engineered merger with CUC International in 1997, forming Cendant.

Risk

� Slow down in consumer spending can decrease business volume in Cendant’s travel and lodging franchises.

Accounting irregularities in the past.� Accounting irregularities in the past.

� Upside Risk…if MII does not Buy CD at current price level.

Reward

� Cendant’s mortgage and real estate franchises should benefit from the record low mortgage rates.

Heavy institutional buying at $19-21 price � Heavy institutional buying at $19-21 price level.

� Increased online presence through the acquisition of Galileo International.