================================================================================ 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 23, 2001 (OCTOBER 23, 2001) (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 ORGANIZATION) IDENTIFICATION NUMBER) 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) ITEM 5. OTHER EVENTS This Current Report on Form 8-K of the Company is being filed to make available its Consolidated Schedule of Free Cash Flows (see Exhibit 99.1) for the twelve months ended September 30, 2001 and 2000 and its Consolidated Condensed Statements of Cash Flows (see Exhibit 99.2) for the nine months ended September 30, 2001 and 2000. Free cash flow is another measure used by management to evaluate liquidity and financial condition. Free cash flow represents cash available for the repayment of debt and other corporate purposes such as stock repurchases, acquisitions and investments for the latest twelve-month period. The Company has provided the Consolidated Schedule of Free Cash Flows for the twelve months ended September 30, 2001 and 2000 as that reflects the measure in which management evaluates the performance of its free cash flows. Such measure of performance may not be comparable to similarly titled measures used by other companies and is not a measurement recognized under generally accepted accounting principles. Therefore, free cash flow should not be construed as a substitute for income or cash flow from operations in measuring operating results or liquidity. The Consolidated Schedule of Free Cash Flows for the twelve months ended September 30, 2001 and 2000 should be read in conjunction with the Company's Consolidated Condensed Statements of Cash Flows attached hereto as well as the Company's Consolidated Statements of Income included within the Company's earnings release of third quarter results filed with the Securities and Exchange Commission on Form 8-K on October 18, 2001 and the Company's Annual Report on Form 10-K/A filed on July 3, 2001. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (c) Exhibits See Exhibit Index. 1 SIGNATURES 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 thereunto duly authorized. CENDANT CORPORATION BY: /s/ Tobia Ippolito --------------------------- Tobia Ippolito Executive Vice President, Finance and Chief Accounting Officer Date: October 23, 2001 2 CENDANT CORPORATION CURRENT REPORT ON FORM 8-K EXHIBIT INDEX 3
EXHIBIT NO. DESCRIPTION ------- ----------- 99.1 Consolidated Schedule of Free Cash Flows for the twelve months ended September 30, 2001 and 2000 99.2 Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2001 and 2000
EXHIBIT 99.1 CENDANT CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF FREE CASH FLOWS (IN MILLIONS)
TWELVE MONTHS ENDED SEPTEMBER 30, ------------------------------ 2001 2000 ------------- ------------- Adjusted EBITDA (*) $ 2,052 (A) 1,806 (B) Less: Move.com Group 29 83 ------------- ------------- Adjusted EBITDA, excluding Move.com Group 2,081 1,889 Interest expense, net (C) (226) (130) Minority interest, excluding tax benefit (D) (75) (109) Tax payments (56) (49) ------------- ------------- CASH FLOW NET OF TAXES PAID 1,724 1,601 Tax refunds 10 126 Restructuring and other unusual payments (30) (175) Working capital and other 172 (238) ------------- ------------- OPERATING CASH FLOW 1,876 1,314 Adjusted capital expenditures (E) (320) (216) -------------- ------------- FREE CASH FLOW 1,556 1,098 NON-OPERATING ACTIVITIES: Investments (F) (579) (173) Acquisitions, net of cash acquired (1,975) (102) Funding of stockholder litigation settlement trust (1,100) - Net proceeds from sale of subsidiaries - 741 Other (G) (219) (186) ------------- ------------- (3,873) 280 ------------- ------------- FINANCING ACTIVITIES: Net proceeds from (repayments on) borrowings (H) 3,332 (894) Net issuances of equity securities and other 679 159 ------------- ------------- 4,011 (735) ------------- ------------- NET CHANGE IN CASH BEFORE MANAGEMENT AND MORTGAGE PROGRAMS 1,694 643 MANAGEMENT AND MORTGAGE PROGRAMS: Net investment in vehicles (1,297) - Net mortgage origination and sales 1,709 675 Net mortgage servicing rights (584) (667) Net contract receivables 11 - Net relocation advances (149) 582 Net financing for assets of management and mortgage programs 607 (647) ------------- ------------- 297 (57) ------------- ------------- NET INCREASE IN CASH AND CASH EQUIVALENTS $ 1,991 $ 586 ============= ============= ----------------------- (*) Adjusted EBITDA is defined as earnings before non-operating interest, income taxes, non-vehicle depreciation and amortization, minority interest and equity in Homestore.com, adjusted to exclude certain items which are of a non-recurring or unusual nature and not measured in assessing segment performance or are not segment specific. (A) Excludes (i) a net gain related to the dispositions of businesses ($434 million) and (ii) a credit to reflect an adjustment to the PRIDES class action litigation settlement charge recorded in the fourth quarter of 1998 primarily for Rights that expired unexercised ($14 million). Such amounts were partially offset by (i) a charge to fund an irrevocable contribution to an independent technology trust responsible for providing technology initiatives for the benefit of current and future franchisees at Century 21, Coldwell Banker and ERA ($95 million), (ii) a charge in connection with the creation of Travel Portal, Inc., a company that was created to pursue the development of an online travel business for the benefit of certain current and future franchisees ($85 million), (iii) charges associated with the September 11th terrorist attacks principally related to costs incurred to reduce Avis' fleet size and certain other effects on Avis' car rental operations ($60 million); information systems costs associated with terminated projects ($8 million); and marketing fund expenses that will not be recovered by franchisees as a result of decreased occupancy levels ($6 million), (iv) litigation settlement and related costs ($50 million), (v) charges related to the acquisition and integration of Avis Group ($8 million) and (vi) a non-cash contribution to the Cendant Charitable Foundation ($7 million). (B) Excludes (i) a charge associated with the settlement of the principal common stockholder class action lawsuit ($2,894 million), (ii) charges in connection with restructuring and other initiatives ($109 million) and (iii) litigation settlement and related costs ($43 million). Such amounts were partially offset by (i) a net gain related to the dispositions of businesses ($242 million), (ii) a non-cash credit in connection with a change to the original estimate of the number of Rights to be issued in connection with the PRIDES settlement resulting from unclaimed and uncontested Rights ($41 million) and (iii) a gain representing the recognition of a portion of the Company's previously recorded deferred gain from the sale of its fleet business due to the disposition of VMS Europe by Avis Group Holdings, Inc. in August 2000 ($35 million). (C) Excludes non-cash interest recorded on zero-coupon senior convertible notes. (D) Represents the before tax amounts of minority interest. (E) Represents total capital expenditures exclusive of Move.com Group capital expenditures ($4 million and $16 million in 2001 and 2000, respectively). (F) Represents investment activity of the Company, including cash payments in 2001 associated with (i) the funding of marketing expenses incurred by Trilegiant Corporation, a newly formed company that provides fulfillment services to members of the Company's individual membership business ($104 million), (ii) a contribution to the independent technology trust responsible for providing technology initiatives for the benefit of current and future franchisees at Century 21, Coldwell Banker and ERA ($95 million), (iii) a contribution to NRT Incorporated, an unconsolidated affiliated company that acquires residential real estate brokerage firms ($149 million) and (iv) the creation of Travel Portal, Inc., a company that was created to pursue the development of an online travel business for the benefit of certain current and future franchisees ($45 million). (G) Includes net cash used in Move.com Group operations and the effects of changes in exchange rates. (H) Represents debt borrowings, net of debt repayments and financing costs (including the issuance of a mandatorily redeemable preferred interest in a subsidiary in the twelve months ending September 30, 2000).
EXHIBIT 99.2 CENDANT CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (IN MILLIONS)
NINE MONTHS ENDED SEPTEMBER 30, ------------------------------ 2001 2000 ------------- ------------- OPERATING ACTIVITIES Net cash provided by operating activities exclusive of management and mortgage programs $ 880 $ 609 Net cash provided by (used in) operating activities of management and mortgage programs 1,295 (28) ------------- ------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 2,175 581 ------------- ------------- INVESTING ACTIVITIES Property and equipment additions (242) (168) Net assets acquired (net of cash acquired) and acquisition-related payments (1,907) (43) Funding of stockholder litigation settlement trust (750) - Other, net (137) (56) ------------- -------------- Net cash used in investing activities exclusive of management and mortgage programs (3,036) (267) ------------- ------------- MANAGEMENT AND MORTGAGE PROGRAMS: Investment in vehicles (10,519) - Payments received on investment in vehicles 9,222 - Origination of timeshare receivables (66) - Principal collection of timeshare receivables 77 - Equity advances on homes under management (4,949) (6,025) Repayment on advances on homes under management 4,937 6,534 Additions to mortgage servicing rights (505) (664) Proceeds from sales of mortgage servicing rights 45 93 ------------- ------------- (1,758) (62) ------------- ------------- NET CASH USED IN INVESTING ACTIVITIES (4,794) (329) ------------- ------------- FINANCING ACTIVITIES Proceeds from borrowings 4,407 6 Principal payments on borrowings (854) (776) Issuances of common stock 773 551 Repurchases of common stock (74) (306) Proceeds from mandatorily redeemable preferred securities issued by subsidiary holding solely senior debentures issued by the Company - 91 Proceeds from mandatorily redeemable preferred interest in a subsidiary - 375 Other, net (92) (1) ------------- ------------- Net cash provided by (used in) financing activities exclusive of management and mortgage programs 4,160 (60) ------------- ------------- MANAGEMENT AND MORTGAGE PROGRAMS: Proceeds from borrowings 11,447 3,236 Principal payments on borrowings (10,824) (4,282) Net change in short-term borrowings 87 875 ------------- ------------- 710 (171) ------------- ------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 4,870 (231) ------------- ------------- Effect of changes in exchange rates on cash and cash equivalents 6 25 ------------- ------------- Net increase in cash and cash equivalents 2,257 46 Cash and cash equivalents, beginning of period 944 1,164 ------------- ------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,201 $ 1,210 ============= =============