SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
------------
October 21, 1999 (October 20, 1999)
(Date of Report (date of earliest event reported))
Cendant Corporation
(Exact name of Registrant as specified in its charter)
Delaware 1-10308 06-0918165
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation or Identification Number)
organization)
9 West 57th Street
New York, NY 10019
(Address of principal) (Zip Code)
executive) office)
(212) 413-1800
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if applicable)
Item 5. OTHER EVENTS
Earnings Release. On October 20, 1999 we reported our 1999
third quarter results which are discussed in more detail in
the press release attached hereto on Exhibit 99.1. We also
announced that our Board of Directors has authorized an
additional $1.0 billion in share repurchases. However, the
implementation of the additional share repurchases has been
deferred pending a determination of whether or not a
settlement of the principal class action litigation is
possible.
Attached hereto as Exhibit 99.1 is the press release relating
to the foregoing announcements which is incorporated herein by
reference in its entirety.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit
No. Description
- ------- --------------------------------------------------------------
99.1 Press Release: Cendant Corporation Reports 1999 Third Quarter
Results
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENDANT CORPORATION
By: /s/ Jon F. Danski
Jon F. Danski
Executive Vice President, Finance and
Chief Accounting Officer
Date: October 21, 1999
CENDANT CORPORATION
CURRENT REPORT ON FORM 8-K
Report Dated October 21, 1999 (October 20, 1999)
EXHIBIT INDEX
Exhibit
No. Description
- ------- --------------------------------------------------------------
99.1 Press Release: Cendant Corporation Reports 1999 Third Quarter
Results
Exhibit 99.1
FOR IMMEDIATE RELEASE
CENDANT REPORTS 1999 THIRD QUARTER RESULTS
Comparable-Basis Revenues up 12%
Adjusted EPS From Continuing Operations $0.31 in 1999 vs. $0.20 in 1998
Reported EPS From Continuing Operations $0.27 in 1999 vs. $0.14 in 1998
Cendant Board Authorizes $1.0 Billion Additional Share Repurchases,
Subject to Determination of Whether Shareholder Litigation Settlement
is Possible
New York, NY, October 20, 1999 - Cendant Corporation (NYSE: CD) today reported
1999 third quarter results. Cendant Chairman, President and Chief Executive
Officer, Henry R. Silverman stated, "We are pleased once again to report strong
growth in our core businesses in the third quarter. We have continued to deliver
results in line with our plan while aggressively pursuing our strategy to
dispose of non-strategic businesses. Our management team remains confident that
we can deliver full year EPS in line with Wall Street expectations in the range
of $1.00 to $1.05, up 25% to 31% from $0.80 in 1998. The Company's long-term EPS
growth expectations remain in the range of mid to high teens."
On a comparable basis, operating results for the quarter ended September 30,
1999, versus the prior year third quarter, excluding the results of pending and
completed business dispositions in each period and excluding the operating
results in each period of Netmarket Group, Inc., an independent company formed
to develop and expand the interactive businesses formerly within the Company's
Direct Marketing Division, were as follows:
o Revenues on a comparable basis were $1.22 billion, up 12% from $1.09 billion
o Adjusted EBITDA on a comparable basis was $503 million, up 44% from $350
million
Adjusted results from continuing operations, including the results of disposed
businesses and Netmarket Group, Inc., for the quarter ended September 30, 1999,
versus the prior year third quarter were as follows:
o Adjusted EBITDA was $527 million, up 29% from $407 million
o Adjusted income was $235 million, up 37% from $172 million
o Adjusted earnings per share was up 55% to $0.31 vs. $0.20
These adjusted results include the Company's Entertainment Publications unit
(EPub), which has been reclassified to continuing operations from discontinued
operations. As a result of the Company's agreement to retain a minority voting
interest and board representation in connection with the disposition of EPub,
the classification of this unit as a discontinued operation has been reversed.
Adjusted operating results exclude the net gain associated with the third
quarter 1999 dispositions of certain non-strategic businesses, expenses incurred
in 1999 in conjunction with the creation of Netmarket Group, Inc. and other
unusual charges in 1999 and 1998. Unusual charges in both years include
investigation-related costs and certain other non-recurring items. (See Tables 2
and 3 for third quarter and nine month consolidated results - as reported, as
adjusted and as adjusted excluding the operating results of CompleteHome.com).
Third Quarter Division Results
Total Company performance in the third 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 third quarter of 1999 compared with the
third quarter of 1998 focuses on Revenues and Adjusted EBITDA. Adjusted EBITDA
is the profit measure that the Company uses to evaluate performance. Adjusted
EBITDA is defined as earnings before interest, income taxes, depreciation and
amortization, adjusted to exclude the net gain on the disposition of certain
non-strategic businesses and certain other non-recurring items, which are
classified as unusual. (See Table 5 for Revenues and Adjusted EBITDA by segment
and Table 6 for segment revenue drivers.)
Travel Division
Travel revenues increased 5% to $312 million as a result of an increase in
franchise fees, timeshare subscription and exchange revenues and Preferred
Alliance revenues. Franchise fees benefited from system room growth and
increased car rental days, and timeshare revenues benefited from increased
membership and exchange volume. EBITDA for the Travel segment increased 14% to
$163 million and the EBITDA margin improved to 52% from 48% last year. The
improvement in EBITDA margin is attributable to continued expense management and
operating leverage.
Real Estate Division
Real Estate Franchise revenues increased 27% to $161 million. Royalty fees
increased 21% benefiting from strong third quarter 1999 existing U.S. home
sales, as well as from expansion of the Company's franchise systems. In
addition, revenues increased as a result of an increase in marketing fund
revenues, which was directly offset by marketing fund expenses on behalf of
franchisees, with the effect of lowering margins but having no impact on
profitability. EBITDA increased 22% to $124 million.
Relocation revenues decreased 11% to $117 million. EBITDA decreased 7% to $42
million. Lower volumes on certain relocation services in 1999 were partially
offset by higher ancillary service fees from certain renegotiated contracts. The
EBITDA margin increased to 36% in 1999 from 35% in 1998 primarily due to expense
reductions. The sale of certain niche-market asset management operations during
the third quarter of 1998 benefited third quarter 1998 revenues and EBITDA by
$11 million and $9 million, respectively.
Without this non-recurring item, revenues were down 3% and EBITDA was up 15%.
Mortgage revenues increased 42%, to $114 million, due to a $15 million increase
in mortgage origination revenues and a $19 million increase in servicing
revenues. Originations were $6.6 billion versus $6.9 billion last year, as
continued growth in the Company's origination of mortgages for home purchases
was offset by lower refinance volume and as the business mix shifted to more
profitable sales and processing channels. The average servicing portfolio grew
23% to $47.4 billion. EBITDA increased 31% to $59 million reflecting higher
revenues partially offset by higher operating expenses including technology and
infrastructure expenditures and teleservices costs to support the Company's
"Phone-in, Move-in" and "Log-in, Move-in" programs.
CompleteHome.com, the Company's new real estate services portal, is now reported
as a separate business segment. Results for CompleteHome.com in 1999 were
previously included in the Company's Individual Membership segment. The Company
announced during the third quarter of 1999 that it plans to issue a new class of
common stock in the second quarter of 2000 to track the performance of
CompleteHome.com. Revenues for CompleteHome.com were $5.2 million in the third
quarter of 1999 compared with $2.6 million last year. EBITDA was a loss of $7.7
million compared with income of $0.3 million last year. These results reflect
the Company's increased investment in marketing and development for the portal.
(See Tables 2 and 3 - as reported, as adjusted and as adjusted excluding the
operating results of CompleteHome.com.)
Direct Marketing Division
Individual Membership revenues increased 16% to $280 million due to an increase
in the number of club members and an increase in the average price of a
membership. Adjusted EBITDA increased $59 million to a profit of $48 million
from a loss of $11 million last 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 achieved greater
efficiencies in reaching potential new members. The Company previously announced
that beginning September 15, 1999, the results of Individual Membership's online
businesses are no longer consolidated into Cendant's operations as a result of
the formation of Netmarket Group, Inc. as an independent company that will own,
operate, develop and expand those businesses. In the third quarter of 1999, the
online membership business contributed $16 million in revenues but reduced
Adjusted EBITDA by $7 million.
Insurance/Wholesale revenues increased 6% to $144 million, primarily because of
international expansion. International revenues increased 20% primarily due to a
35% increase in customers. EBITDA increased 50% to $48 million, primarily from
improved profitability in international markets and a decrease in costs related
to insurance products. The EBITDA margin increased to 34% in 1999 from 24% in
1998.
Other Consumer and Business Services
Revenues decreased 20% to $279 million primarily as a result of the disposition
of certain operations and reduced Entertainment Publications revenues due to the
timing of field sales. The operating results of the Company's Entertainment
Publications unit have been reclassified to continuing operations within the
Company's Other Consumer and Business Services segment from discontinued
operations in connection with the Company's pending sale of an 84% ownership
interest in that unit. The revenue decrease was partially offset by income from
financial investments in 1999 versus a loss in 1998. Adjusted EBITDA increased
to $49 million from $10 million due to growth at the Company's National Car
Parks subsidiary in 1999 and a $50 million non-cash asset write-off in 1998,
partially offset by the revenue items discussed above.
Disposition of Non-Strategic Businesses
In the fourth quarter of 1998, the Company began a strategic program to dispose
of non-strategic businesses. This recently completed program will result in the
disposition of business units at an average multiple of 15 times 1998 EBITDA.
The disposition program will generate approximately $4.5 billion in gross
proceeds. To date, using the proceeds from dispositions, the Company has reduced
outstanding shares by about 152 million shares, or 18%, and has retired
approximately $700 million in debt. The Company also anticipates that it will
have approximately $1.5 billion of cash when all pending transactions close.
Completed and pending dispositions include Hebdo Mag, Cendant Software, Essex,
Capital Logistics, Match.com, National Leisure Group, National Library of
Poetry, the Fleet businesses, Kobrick-Cendant Funds, Spark Services, Central
Credit, Global Refund, Bookstacks, Numa, North American Outdoor Group,
Entertainment Publications (pending) and Green Flag (pending).
Share Repurchase Program/Status of Litigation
The Company further announced that its Board of Directors has authorized an
additional $1.0 billion in share repurchases. However, the implementation of the
additional share repurchase has been deferred pending a determination of whether
or not a settlement of the principal class action litigation is possible.
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 Company's real estate-related
operations also include Welcome Wagon/GETKO and CompleteHome.com, the Company's
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 www.Cendant.com or by
calling 877-4INFO-CD (877-446-3623).
Media Contact: Investor Contact:
Elliot Bloom Denise L. Gillen
212-413-1832 212-413-1833
Samuel J. Levenson
212-413-1834
*****
Tables Follow
Table 1
Cendant Corporation and Subsidiaries
Financial Results of Continuing Operations
(In millions)
Third Quarter Ended September 30, 1999
----------------------------------------------------------------------------------------
As As Disposed Comparable
Reported Adjustments Adjusted Businesses (2) Basis
-------- ----------- -------- -------------- -----------
Revenues $1,410.4 $ - $1,410.4 $ 192.4 $ 1,218.0
EBITDA (1) 507.5 19.2 (4) 526.7 24.1 502.6
Third Quarter Ended September 30, 1998
----------------------------------------------------------------------------------------
As As Disposed Comparable
Reported Adjustments Adjusted Businesses (2) Basis
-------- ----------- -------- -------------- -----------
Revenues $1,457.8 $ - $1,457.8 $ 365.4 $ 1,092.4
EBITDA (1) 330.7 (3) 76.4 (5) 407.1 57.0 350.1
Nine Months Ended September 30, 1999
----------------------------------------------------------------------------------------
As As Disposed Comparable
Reported Adjustments Adjusted Businesses (2) Basis
-------- ----------- -------- -------------- -----------
Revenues $4,118.7 $ - $4,118.7 $ 733.2 $ 3,385.5
EBITDA (1) 2,111.0 (693.4) (6) 1,417.6 92.5 1,325.1
Nine Months Ended September 30, 1998
----------------------------------------------------------------------------------------
As As Disposed Comparable
Reported Adjustments Adjusted Businesses (2) Basis
-------- ----------- -------- -------------- -----------
Revenues $3,865.1 $ - $3,865.1 $ 808.5 $ 3,056.6
EBITDA (1) 1,083.4 (3) 84.2 (7) 1,167.6 116.7 1,050.9
- --------
(1) Defined as earnings before interest, income taxes, depreciation and
amortization.
(2) Reflects the operating results of businesses which were disposed or whose
disposition is pending (pursuant to the Company's plan to dispose of
non-strategic businesses) and the operating results of Netmarket Group,
Inc., ("NGI") an independent company that was created to pursue the
development and expansion of interactive businesses formerly within the
Company's Direct Marketing Division.
(3) Includes a $50.0 million non-cash write off of certain equity investments
in interactive membership businesses and impaired goodwill associated with
the National Library of Poetry ("NLP"), a company subsidiary.
(4) Adjustment reflects the exclusion of the following: (i) $4.6 million of
investigation-related costs, (ii) unusual charges of $89.9 million
comprised principally of an $84.8 million non-recurring charge incurred in
conjunction with the creation of NGI and (iii) a $75.3 million net gain on
the disposition of certain non-strategic businesses of the Company.
(5) Represents $76.4 million of investigation-related items, including
incremental financing costs, and separation payments to the Company's
former chairman.
(6) Adjustment reflects the exclusion of the following: (i) unusual charges of
$89.9 million comprised principally of an of $84.8 million non-recurring
charge incurred in conjunction with the creation of NGI, (ii) $7.0 million
of costs incurred in connection with the termination of the proposed
acquisition of RAC Motoring Services, (iii) $12.8 million of
investigation-related costs, (iv) a $23.0 million non-recurring charge in
connection with the transition of the Company's lodging franchisees to a
Company-sponsored property management system, (v) a $1.3 million gain on
the sale of Essex Corporation, a Company subsidiary and (vi) an $824.8
million net gain on the dispositions of the Fleet businesses and certain
non-strategic businesses of the Company.
(7) Represents $108.6 million of investigation-related items, including
incremental financing costs, and separation payments to the Company's
former chairman. The aforementioned 1998 charges are partially offset by a
credit of $24.4 associated with changes in the estimate of costs previously
recorded in connection with merger-related costs and other unusual charges.
Table 2
Cendant Corporation and Subsidiaries
Financial Results of Continuing Operations
(In millions, except per share amounts)
Third Quarter Ended September 30, 1999
-------------------------------------------------------------------
As As Complete Excluding
Reported Adjusted Home.com CompleteHome.com (1)
-------- -------- -------- --------------------
Revenues $ 1,410.4 $ 1,410.4 $ 5.2 $ 1,405.2
Expenses 1,117.1 1,022.6 (3) 13.4 1,009.2
Net gain on disposition of business 75.3 - (4) -
--------- -------- ---------- ------------
Income (loss) before income taxes and
minority interest 368.6 387.8 (8.2) 396.0
EBITDA (2) 507.5 526.7 (7.7) 534.4
Income (loss) from continuing operations 208.6 235.3 (5.3) 240.6
Earnings per share
Basic $ 0.29 $ 0.32 $ 0.33
Diluted 0.27 0.31 0.31
Weighted average shares - diluted 780.3 780.3 780.3
Third Quarter Ended September 30, 1998
-------------------------------------------------------------------
As As Complete Excluding
Reported Adjusted Home.com CompleteHome.com (1)
-------- -------- -------- --------------------
Revenues $1,457.8 $ 1,457.8 $ 2.6 $ 1,455.2
Expenses 1,247.0 (5) 1,170.6 (6) 3.0 1,167.6
-------- --------- --------- ------------
Income (loss) before income taxes and
minority interest 210.8 287.2 (0.4) 287.6
EBITDA (2) 330.7 407.1 0.3 406.8
Income (loss) from continuing operations 123.1 171.5 (0.2) 171.7
Earnings per share
Basic $ 0.14 $ 0.20 $ 0.20
Diluted 0.14 0.20 0.20
Weighted average shares - diluted 877.4 877.4 877.4
- --------
(1) Represents the Company's As Adjusted operating results excluding the
operating results of CompleteHome.com.
(2) Defined as earnings before interest, income taxes, depreciation and
amortization.
(3) Excludes (i) $4.6 million, ($2.9 million, after tax) of investigation-
related costs, (ii) unusual charges of $89.9 million
($51.6 million, after tax or $0.07 per diluted share) comprised principally
of an $84.8 million non-recurring charge ($48.4 million, after tax or $0.06
per diluted share) incurred in conjunction with the creation of NGI, an
independent company that will develop and expand the interactive businesses
formerly within the Company's Direct Marketing Division.
(4) Excludes a $75.3 million net gain ($27.8 million, after tax or $0.04 per
diluted share) on the disposition of certain non-strategic businesses of
the Company, including Global Refund Group ("Global Refund"), Central
Credit, Inc. ("CCI"), Spark Services, Inc. ("Spark") and NUMA Corporation
("NUMA").
(5) Includes a $50.0 million ($32.2 million, after tax or $0.04 per diluted
share) non-cash write off of certain equity investments in interactive
membership businesses and impaired goodwill associated with the NLP, a
Company subsidiary.
(6) Excludes $76.4 million ($48.4 million, after tax or $0.06 per diluted
share) of investigation-related items, including incremental financing
costs, and separation payments to the Company's former chairman.
Table 3
Cendant Corporation and Subsidiaries
Financial Results of Continuing Operations
(In millions, except per share amounts)
Nine Months Ended September 30, 1999
-------------------------------------------------------------------
As As Complete Excluding
Reported Adjusted Home.com CompleteHome.com (1)
-------- -------- -------- --------------------
Revenues $ 4,118.7 $ 4,118.7 $ 11.3 $ 4,107.4
Expenses 3,263.3 3,131.9 (3) 26.5 3,105.4
Net gain on disposition of business 824.8 - (4) -
--------- -------- -------- -----------
Income (loss) before income taxes and
minority interest 1,680.2 986.8 (15.2) 1,002.0
EBITDA (2) 2,111.0 1,417.6 (13.6) 1,431.2
Income (loss) from continuing operations 1,251.9 593.1 (9.9) 603.0
Earnings per share
Basic $ 1.64 $ 0.78 $ 0.79
Diluted 1.54 0.73 0.75
Weighted average shares - diluted 819.0 819.0 819.0
Nine Months Ended September 30, 1998
-------------------------------------------------------------------
As As Complete Excluding
Reported Adjusted Home.com CompleteHome.com (1)
-------- -------- -------- --------------------
Revenues $ 3,865.1 $ 3,865.1 $ 7.2 $ 3,857.9
Expenses 3,095.9 (5) 3,011.7 (6) 7.8 3,003.9
-------- --------- --------- ------------
Income (loss) before income taxes and
minority interest 769.2 853.4 (0.6) 854.0
EBITDA (2) 1,083.4 1,167.6 0.9 1,166.7
Income (loss) from continuing operations 461.9 514.5 (0.4) 514.9
Earnings per share
Basic $ 0.55 $ 0.61 $ 0.61
Diluted 0.53 0.58 0.58
Weighted average shares - diluted 895.0 895.0 895.0
- --------
(1) Reflects the Company's As Adjusted operating results excluding the operating
results of CompleteHome.com.
(2) Defined as earnings before interest, income taxes, depreciation and
amortization
(3) Excludes (i) a non-recurring charge of $84.8 million ($48.4 million, after
tax or $0.06 per diluted share) incurred in conjunction with the creation
of NGI, an independent company that will develop and expand the
interactive businesses formerly within the Company's Direct Marketing
Division, (ii) $7.0 million ($4.4 million, after tax or $0.01 per diluted
share) of costs incurred in connection with the termination of the
proposed acquisition of RAC Motoring Services, (iii) $12.8 million ($8.0
million, after tax or $0.01 per diluted share) of investigation-related
costs and (iv) a $23.0 million non-recurring charge ($14.9 million, after
tax or $0.02 per diluted share) in connection with the transition of the
Company's lodging franchisees to a Company-sponsored property management
system and (v) a $1.3 million gain ($0.8 million, after tax) on the sale of
Essex Corporation, a Company subsidiary.
(4) Excludes an $824.8 million net gain ($736.9 million, after tax or $0.90 per
diluted share) on the dispositions of the Fleet business segment and
certain other non-strategic businesses of the Company, including Global
Refund, CCI, Spark, NUMA, Match.com, National Leisure Group and NLP.
(5) Includes a $50.0 million ($32.2 million, after tax or $0.04 per diluted
share) non-cash write off of certain equity investments in interactive
membership businesses and impaired goodwill associated with the NLP.
(6) Excludes $108.6 million ($68.8 million, after tax or $0.08 per diluted
share) of investigation-related items, including incremental financing
costs, and separation payments to the Company's former chairman. The
aforementioned 1998 charges are partially offset by a credit of $24.4
million ($16.2 million, after tax or $0.02 per diluted share) associated
with changes in the estimate of costs previously recorded in connection
with merger-related costs and other unusual charges.
Table 4
Cendant Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- ------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
Revenues
Membership and service fees, net $ 1,400.0 $ 1,433.6 $ 3,999.9 $ 3,735.3
Fleet leasing (net of depreciation and interest costs of
$0, $324.9, $669.7 and $954.6) - 18.5 29.9 57.5
Other 10.4 5.7 88.9 72.3
---------- --------- --------- ---------
Net revenues 1,410.4 1,457.8 4,118.7 3,865.1
---------- --------- --------- ---------
Expenses
Operating 443.6 565.9 1,355.4 1,356.9
Marketing and reservation 270.5 297.2 820.6 853.2
General and administrative 169.6 187.6 525.1 487.4
Depreciation and amortization 87.4 88.9 277.0 241.3
Other charges
Merger-related costs and other unusual charges (credits 89.9 - 111.6 (24.4)
Termination of proposed acquisition - - 7.0 -
Other investigation-related costs 4.6 11.5 12.8 31.0
Investigation-related financing costs - 14.5 - 27.2
Executive termination - 50.4 - 50.4
Interest, net 51.5 31.0 153.8 72.9
Total expenses 1,117.1 1,247.0 3,263.3 3,095.9
---------- --------- --------- ---------
Net gain on disposition of businesses 75.3 - 824.8 -
---------- --------- --------- ---------
Income from continuing operations before income taxes
and minority interest 368.6 210.8 1,680.2 769.2
Provision for income taxes 144.3 73.2 382.2 273.0
Minority interest, net of tax 15.7 14.5 46.1 34.3
---------- --------- --------- ---------
Income from continuing operations 208.6 123.1 1,251.9 461.9
Loss from discontinued operations, net of tax - (12.1) - (25.0)
Gain (loss) on sale of discontinued operations, net of tax (6.9) - 174.1 -
---------- --------- --------- ---------
Net income $ 201.7 $ 111.0 $ 1,426.0 $ 436.9
========== ========= ========= =========
Income (loss) per share
Basic
Income from continuing operations $ 0.29 $ 0.14 $ 1.64 $ 0.55
Loss from discontinued operations - (0.01) - (0.03)
Gain (loss) on sale of discontinued operations (0.01) - 0.22 -
---------- --------- --------- ---------
Net income $ 0.28 $ 0.13 $ 1.86 $ 0.52
========== ========= ========= =========
Diluted
Income from continuing operations $ 0.27 $ 0.14 $ 1.54 $ 0.53
Loss from discontinued operations - (0.01) - (0.03)
Gain (loss) on sale of discontinued operations (0.01) - 0.21 -
--------- --------- --------- ---------
Net income $ 0.26 $ 0.13 $ 1.75 $ 0.50
========= ========= ========= =========
Weighted average shares
Basic 725.8 850.8 764.8 844.8
Diluted 780.3 877.4 819.0 895.0
Table 5
Cendant Corporation and Subsidiaries
Continuing Operations
Revenues and Adjusted EBITDA by Segment
(Dollars in millions)
Quarterly Period Ended September 30,
Revenues Adjusted EBITDA (1)
------------------------------------------ -----------------------------------------
1999 1998 % Change 1999 1998 % Change
---------- ---------- -------------- ---------- ---------- --------------
Travel $ 311.6 $ 297.3 5% $ 162.7 $ 142.2 14%
Real Estate Franchise 161.4 126.7 27% 124.4 102.1 22%
Relocation 116.8 130.8 (11%) 42.2 45.6 (7%)
Mortgage 113.8 79.9 42% 59.3 45.4 31%
Individual Membership 279.6 241.0 16% 48.3 (2) (11.0) *
Insurance/Wholesale 143.5 135.5 6% 48.3 32.1 50%
CompleteHome.com 5.2 2.6 100% (7.7) 0.3 *
Other Services 278.5 349.2 (20%) 49.2 (3) 9.9 (4,5) *
Fleet - 94.8 * - 40.5 *
--------- ---------- --------- ---------
Total $ 1,410.4 $ 1,457.8 (3%) $ 526.7 $ 407.1 29%
========= ========== ========= =========
Nine Months Ended September 30,
Revenues Adjusted EBITDA (1)
------------------------------------------ -----------------------------------------
1999 1998 % Change 1999 1998 % Change
---------- ---------- -------------- ---------- ---------- --------------
Travel $ 873.2 $ 826.5 6% $ 453.9 (6) $ 427.0 6%
Real Estate Franchise 416.9 342.5 22% 309.7 264.4 17%
Relocation 314.5 340.7 (8%) 94.3 97.6 (3%)
Mortgage 313.6 251.9 24% 153.0 127.7 20%
Individual Membership 766.8 650.1 18% 77.3 (2) (68.4) *
Insurance/Wholesale 426.2 406.3 5% 136.6 106.7 28%
CompleteHome.com 11.3 7.2 57% (13.6) 0.9 *
Other Services 788.8 752.5 5% 125.6 (7) 79.9 (4,9) 57%
Fleet 207.4 287.4 * 80.8 131.8 *
--------- ---------- --------- ---------
Total $ 4,118.7 $ 3,865.1 7% $ 1,417.6 $ 1,167.6 21%
========= ========== ========= =========
- ---------------
* Not meaningful
(1) Defined as earnings before interest, income taxes, depreciation and
amortization, adjusted to exclude the net gain on the disposition of
certain non-strategic businesses and certain other non-recurring items
which are classified as unusual.
(2) Excludes an $84.8 million non-recurring charge incurred in conjunction
with the creation of NGI, an independent company that will develop and
expand the interactive businesses formerly within the Company's Direct
Marketing Division.
(3) Excludes $4.6 million of investigation-related costs.
(4) Includes a $50.0 million non-cash write off of certain equity investments
in interactive membership businesses and impaired goodwill associated
with NLP, a Company subsidiary.
(5) Excludes $76.4 million of investigation-related items, including
incremental financing costs, and separation payments to the Company's
former chairman.
(6) Excludes a $23.0 million non-recurring charge in connection with the
transition of the Company's lodging franchisees to a Company-sponsored
property management system.
(7) Excludes $12.8 million of investigation-related costs and $7.0 million of
costs incurred in connection with the termination of the proposed
acquisition of RAC Motoring Services, partially offset by a $1.3 million
gain on the sale of Essex.
(8) Excludes a net credit of $24.4 million associated with changes in the
estimate of liabilities previously recorded in connection with
merger-related costs and other unusual charges. The aforementioned net
credit was comprised of $5.4 million, $1.0 million, $24.1 million and
$1.3 million of credits within the Travel, Real Estate Franchise, Other
Services and Fleet segments, respectively, and $3.7 million of charges
incurred within each of the Relocation and Mortgage segments,
respectively.
(9) Excludes $108.6 million of investigation-related items, including
incremental financing costs, and separation payments to the Company's
former chairman.
Table 6
Cendant Corporation and Subsidiaries
Segment Revenue Driver Analysis
Three Months Ended September 30, 1999 and 1998
(Revenue dollars in millions)
1999 1998 % Change
---------- ----------- ----------
Travel Segment
Domestic Rooms
Month End Actual Rooms 516,502 493,911 5%
Weighted Average Rooms Available 499,355 477,120 5%
Franchise Fee per Weighted Average Room $ 249.65 $ 253.81 (2%)
----------- ----------
Total Franchise Fees $ 124.7 $ 121.1 3%
Car Rental Days 16,952,151 15,996,768 6%
Franchise Fee per Rental Day $ 2.74 $ 2.71 1%
----------- ----------
Total Franchise Fees $ 46.4 $ 43.4 7%
Sub-Total Franchise Fees $ 171.1 $ 164.5 4%
Number of Timeshare Exchanges 444,347 419,725 6%
Annualized Number of Exchanges 1,777,388 1,678,900 6%
Average Subscriptions 2,289,861 2,207,678 4%
----------- ----------
Total Exchanges and Subscriptions 4,067,249 3,886,578 5%
Average Fee $ 20.63 $ 20.82 (1%)
----------- ----------
Total Exchange/Subscription Fees $ 83.9 $ 80.9 (1) 4%
Other Revenue $ 56.6 $ 51.9 (1) 9%
----------- ----------
Total Travel Revenue $ 311.6 $ 297.3 5%
=========== ==========
Real Estate Franchise Segment
Closed Sides - Domestic 564,574 540,957 4%
Average Price $ 157,139 $ 146,360 7%
Adjusted Royalty Rate 0.16% 0.15%
----------- ----------
Total Royalties $ 141.3 $ 116.8 21%
Other 20.1 9.9 103%
----------- ----------
Total Revenue $ 161.4 $ 126.7 27%
=========== ==========
Mortgage Segment
Production Loan Closings $ 6,555 $ 6,937 (6%)
Average Servicing Loan Portfolio $ 47,376 $ 38,398 23%
(1) Timeshare Exchange and Subscription Fees for 1998 have been adjusted
downward by $3.2 million to reclassify a one-time transaction as
Other Revenue.
Table 7
Cendant Corporation and Subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEETS
(In billions)
September 30, December 31,
1999 1998
------------- ------------
Assets
Cash $ 0.6 $ 1.0
Other current assets 2.9 3.6
----------- ----------
Total current assets 3.5 4.6
Property and equipment, net 1.4 1.4
Goodwill, net 3.6 3.9
Other assets 3.1 2.8
----------- ----------
Total assets exclusive of assets under programs 11.6 12.7
Assets under management and mortgage programs 3.3 7.5
----------- ----------
Total assets $ 14.9 $ 20.2
=========== ==========
Liabilities and shareholders' equity
Total current liabilities $ 2.8 $ 2.9
Long-term debt 3.3 3.4
Other non-current liabilities 0.4 0.4
----------- ----------
Total liabilities exclusive of liabilities under programs 6.5 6.7
Liabilities under management and mortgage programs 3.0 7.2
Mandatorily redeemable preferred securities issued by subsidiary 1.5 1.5
Commitments and contingencies
Total shareholders' equity 3.9 4.8
----------- ----------
Total liabilities and shareholders' equity $ 14.9 $ 20.2
=========== ==========