Cendant Corporation and its PHH Corporation subsidiary announced today that Cendant intends to distribute the fleet and mortgage operations of PHH to Cendant shareholders. The transaction will be structured as a tax-free distribution of the common stock of PHH Corporation. The spin-off is expected to be consummated in the first quarter of 2005. Cendant's relocation and Wright Express fuel card businesses will remain a part of Cendant. The spin-off reflects Cendant's strategy to focus on the travel and residential real estate sectors. Cendant's fleet and mortgage operations represent approximately 85 percent of the carrying value of the assets of PHH Corporation as of June 30, 2004. PHH is currently a wholly-owned subsidiary of Cendant, and files quarterly and annual reports with the Securities and Exchange Commission. Cendant's fleet management business, operating as PHH Arval, is the nation's second-largest provider of outsourced commercial fleet management services. Cendant's mortgage business, operating as Cendant Mortgage, is the sixth largest retail originator of residential mortgage loans in the United States. The two businesses had combined revenues in excess of $2 billion for the twelve months ended June 30, 2004. Cendant anticipates it will enter into a joint venture with Cendant Mortgage, designed to preserve the mutually beneficial cross-selling opportunities that exist between the mortgage business and Cendant's residential real estate, relocation and settlement services businesses. Terence W. Edwards, who is currently CEO of Cendant Mortgage and is expected to become CEO of PHH Corporation upon the spin-off, stated: "We believe that the mortgage and vehicle management operations are well positioned to benefit from corporate customers' continuing desire to identify vendors, such as PHH, that can perform non-core services more efficiently. In addition, the 'pure-play' nature of PHH as a publicly-traded, financial services company should enhance investors' appreciation of these businesses, compared to their being relatively small components of Cendant." George J. Kilroy will remain as President and CEO of Fleet Operations. Commenting on the transaction, Kilroy said, "We're excited aboutbecoming an independent public company once more, in partnership with themortgage company. PHH Arval is committed to Baltimore County, where weemploy about 1,000 people. Our transition to an independent status will besmooth and completely transparent to our clients. We will continue to serveour customers and employees with the same commitment and service focus we'vehad since we were founded almost 60 years ago."Ronald L. Nelson, Cendant's Chief Financial Officer, stated: "The spin-off provides substantial opportunities and benefits to Cendant shareholders that weren't easily attainable by a sale of these businesses. It reinforces our commitment to divest the company of non-core businesses and continue to strengthen our leadership position within the travel and real estate sectors, where we have sustainable competitive advantages. It also simplifies Cendant's capital structure, preserves the cross-selling benefits between Cendant Mortgage and our retained real estate operations, reduces our earnings volatility, and eliminates the tax burden inherent in a sale. We believe the increased transparency and reduced complexity resulting from the spin-off of PHH should enhance overall shareholder value."