Four weeks after the troubled but recovering Cendant Corp. made public the results of an internal investigation into accounting fraud, the firm has issued its revised earnings outlook for the current year and released its restated results for the previous three years, as expected.

Cendant (NYSE:CD) said in its updated filing with the U.S. Securities and Exchange Commission that it lost 27 cents a share in fiscal 1997, instead of a gain of six cents per share as first reported.

The loss was more than expected because of the three years of fraudulent accounting at the former CUC International Inc., which merged with HFS Inc. to form Cendant in December 1997. No allegations were directed at Cendant.

An investigation shortly after the marriage of HFS and CUC International discovered that about $500 million in revenue and pretax profits were falsified from 1995 to 1997.

As previously announced, results for 1997, 1996 and 1995 have been restated as a result of the discovery of accounting irregularities and errors at business units of the former CUC International. In addition, results for 1997, not for 1996 and 1995, have been restated to give effect to a change in membership revenue and expense recognition recently requested by the SEC. The impact of this change on periods prior to 1997 is separately recorded as a cumulative effect of a change in accounting principle on 1997 earnings.

According to the revised 1997 results, Parsippany, N.J.-based Cendant posted a loss of $217.2 million or 27 cents per share, compared to net income of $55.4 million, or 6 cents per share as originally reported. Restated 1997 results include a net loss of $283.1 million representing the cumulative effect on periods prior to 1997 of the SEC-required accounting policy.

Cendant said the accounting change will affect 1998 results differently from previous years' results. Before the revision, gross revenue from new business would have been matched against the expense to acquire the new memberships, which in turn would produce earnings growth in 1998. The revised accounting policy defers the recognition of revenue from the sale of memberships until the full refund offer period has expired.

Cendant said its 1998 net income will be reduced by seven cents to nine cents a share because of the changes. The company is expected to report financial results for the first and second quarters of 1998 as early as next month.

Cendant is involved in several businesses that cross-market to customers worldwide. Cendant resulted from the merger of membership-based discount services provider CUC and hospitality franchisor HFS. Its real estate, relocation and mortgage services complement its operations in home improvement referrals and mailings to people who have moved.

Cendant is involved in travel and hospitality -- through its franchising of Days Inn, Howard Johnson, Ramada, Avis -- vehicle fleet management, financial services, and entertainment and educational software. Cendant is the franchisor of three of the largest brokerage concerns in the United States -- Coldwell Banker, ERA and Century 21.

There are more than 12,000 brokerage offices worldwide representing 200,000 agents, all of which fall under one of the three Cendant banners. Of those, 600 are directly owned and operated by NRT Inc., a wholly separate company which Cendant and Apollo Management own. NRT, formerly National Realty Trust, was formed to buy the larger, regional independent brokerages. The other 11,400 offices are franchisees -- smaller, independent broker offices that paid for an ERA, Century 21 or Coldwell Banker franchise.

Published: October 1, 1998

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