UNITED
STATES
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
____________
Date of
Report (Date of earliest event reported) April
7, 2005 (April 6, 2005)
Cendant
Corporation
(Exact
name of Registrant as specified in its charter)
|
Delaware
(State
or other jurisdiction
of
incorporation) |
1-10308
(Commission
File No.) |
06-0918165
(I.R.S.
Employer
Identification
Number) |
|
9
West 57th
Street
New
York, NY
(Address
of principal
executive
office) |
10019
(Zip
Code)
|
Registrant's
telephone number, including area code (212)
413-1800
None
|
(Former
name or former address if changed since last
report) |
|
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Securities Act (17
CFR 240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
|
|
Item 2.02 |
Results
of Operations and Financial
Condition. |
On April
6, 2004, we issued re-formatted projections for our reportable operating
segments consistent with our new financial reporting structure announced on
March 14, 2005. The press release related to this announcement is attached
hereto as Exhibit
99.1 and
incorporated by reference herein.
The
information furnished under Item 2.02 of this Current Report on Form 8-K,
including Exhibit 99.1, shall be deemed to be “filed” for purposes of the
Securities Exchange Act of 1934, as amended, and incorporated by reference in
any of our filings under the Securities Act of 1933, as amended, as may be
specified in such filing.
|
Item
9.01 |
Financial
Statements and Exhibits. |
| (c) |
Exhibits |
|
99.1 |
Press
release dated April 6, 2005. | ||||
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
|
CENDANT
CORPORATION
| |
|
By: |
/s/
Virginia M. Wilson |
|
Virginia
M. Wilson
Executive
Vice President and Chief Accounting Officer |
Date:
April 7, 2005
CENDANT
CORPORATION
CURRENT
REPORT ON FORM 8-K
Report
Dated April 7, 2005 (April 6, 2005)
EXHIBIT
INDEX
|
Exhibit
No. |
Description
| |
|
99.1 |
Press
release dated April 6, 2005. |
Exhibit
99.1
CENDANT
ISSUES RE-FORMATTED PROJECTIONS
CONSISTENT
WITH ITS NEW SEGMENT REPORTING
STRUCTURE
New
York, April 6, 2005 -
Cendant Corporation (NYSE:
CD) today
issued re-formatted projections for its reportable operating segments consistent
with its new financial reporting structure announced on March 14, 2005. Under
this new reporting structure, effective with the first quarter 2005, the Company
will have five reportable operating segments within its three divisions of Real
Estate, Travel Content and Travel Distribution. The Real Estate Services and
Travel Distribution Services segments will each continue to be individual
reportable operating segments. The Travel Content division will be divided into
three reportable operating segments: Hospitality Services, Timeshare Resorts and
Vehicle Rental. The businesses included in each of these five reportable
operating segments are set forth below:
Real
Estate
| · |
Real
Estate Services - Includes the Company’s real estate franchise brands,
brokerage operations, relocation services, settlement services and,
subsequent to January 31, 2005, the mortgage origination venture with PHH
Corporation. |
Travel
Content
| · |
Hospitality
Services - Includes the Company’s franchised lodging brands, timeshare
exchange business and vacation rental
businesses. |
| · |
Timeshare
Resorts - Includes the Company’s timeshare sales and development
businesses. |
| · |
Vehicle
Rental - Includes the Company’s car and truck rental
businesses. |
Travel
Distribution
| · |
Travel
Distribution Services - Includes electronic global distribution services
for the travel industry, corporate and consumer online travel services and
travel agency services. |
In
addition, because the Company’s former mortgage unit will not be reported as a
discontinued operation, the Company will continue to report the results of this
unit prior to its spin-off on January 31, 2005 as a separate reportable
operating segment, Mortgage Operations.
Separately,
the Company reported that, pursuant to the recently enacted American Jobs
Creation Act, it plans to repatriate approximately $555 million of foreign
earnings and profits, which it will use for domestic investment purposes. The
net impact of increased taxes on these repatriated earnings and profits, offset
by other foreign tax planning activities, is expected to reduce full year 2005
EPS from Continuing Operations by approximately $0.01 per share. The Company
expects that it will fund the cash repatriation through borrowings under its
revolving credit agreement and international cash balances.
In
addition, the Company has updated its quarterly EPS projections to reflect
stronger than expected first quarter results, changes in its income tax expense,
and changes in the seasonality of its businesses as a result of asset
dispositions and recent acquisitions. The revised projections are set forth
below:
|
First
Quarter |
|
|
Second
Quarter |
|
|
Third
Quarter |
|
|
Fourth
Quarter |
|
|
Full
Year |
||||
2005
EPS from Continuing Operations before Transaction Related
Charges |
$ |
0.24
- $0.25 |
$ |
0.34
- $0.36 |
$ |
0.47
- $0.50 |
$ |
0.29
- $0.32 |
$ |
1.34
- $1.42 |
||||||
|
2005
Transaction Related Charges |
($0.20 |
) |
- |
- |
($0.20 |
) | ||||||||||
|
2005
EPS from Continuing Operations |
$ |
0.04
- $0.05 |
$ |
0.34
- $0.36 |
$ |
0.47
- $0.50 |
$ |
0.29
- $0.32 |
$ |
1.14
- $1.22 |
||||||
2006
EPS from Continuing Operations |
$ |
1.62
- $1.72 |
Previously
disclosed transaction related charges included in the table above reflect a
non-cash impairment charge in connection with the spin-off of PHH, which is
approximately $0.17 per share, and an estimated $0.03 per share charge related
to restructuring activities undertaken following the PHH spin-off and the
initial public offering of Wright Express.
The
Company’s restructuring charge primarily includes severance costs related to the
recently announced management reorganization and severance and other expenses
related to various office and call center consolidations across the Company. The
restructuring charges are expected to be recorded as follows:
(in
millions)
|
Corporate |
$23 |
|||
|
Travel
Distribution |
14 |
|||
|
Vehicle
Rental |
8 |
|||
|
Real
Estate Services |
5 |
|||
|
Hospitality
Services |
4 |
|||
|
Timeshare
Resorts |
1 |
|||
Total |
$55 |
These
charges are reflected in the Company’s EBITDA projections set forth below.
The
Company also continues to expect to generate over $3 billion of Net Cash
Provided by Operating Activities and almost $2 billion of Free Cash Flow in
2005. However, as a result of the recent divestitures and accompanying shift in
business mix more toward travel, the seasonality of the Company’s free cash flow
is expected to shift, with the substantial majority of free cash flow being
generated in the second through fourth quarters. The following is a
reconciliation of 2005 projected Free Cash Flow to projected Net Cash Provided
by Operating Activities:
(in
millions)
Free
Cash Flow |
$ |
1,800
- 2,000 |
||
Cash
outflows included in Free Cash Flow but not reflected
in
Net Cash Provided by Operating Activities |
||||
Investing
activities of management and mortgage programs |
800
- 1,000 |
|||
|
Capital
expenditures |
450
- 500 |
|||
|
Net
Cash Provided by Operating Activities |
$ |
3,050
- 3,500 |
The
Company announced the following detailed financial projections for full year
2005 with respect to its new reportable operating segment structure:
| (in
millions)
|
Full Year 2004
Actual |
Full
Year 2005
Projected (a) |
||||||||
|
Revenue |
||||||||||
|
Real
Estate Services |
$ |
6,552 |
$ |
6,925
- 7,125 |
||||||
|
Hospitality
Services |
1,340 |
1,500
- 1,575 |
||||||||
|
Timeshare
Resorts |
1,544 |
1,650
- 1,725 |
||||||||
|
Vehicle
Rental |
4,424 |
4,750
- 5,000 |
||||||||
|
Total
Travel Content |
|
7,308 |
|
7,900
- 8,300 |
||||||
|
Travel
Distribution Services |
1,788 |
2,700
- 2,800 |
||||||||
|
Total
Travel |
|
9,096 |
|
10,600
- 11,100 |
||||||
|
Total
Core Operating Segments |
15,648 |
17,625
- 18,125 |
||||||||
|
Mortgage
Operations (b) |
700 |
46 |
||||||||
|
Corporate
and Other |
56 |
4 -
54 |
||||||||
|
Total
Company |
$ |
16,404 |
$ |
17,675
- 18,225 |
||||||
|
EBITDA
(c) |
||||||||||
|
Real
Estate Services |
$ |
1,131 |
$ |
1,125
- 1,175 |
||||||
|
Hospitality
Services |
460 |
485
- 510 |
||||||||
|
Timeshare
Resorts |
254 |
265
- 290 |
||||||||
|
Vehicle
Rental |
467 |
475
- 525 |
||||||||
|
Total
Travel Content |
|
1,181 |
|
1,225
- 1,325 |
||||||
|
Travel
Distribution Services |
466 |
640
- 690 |
||||||||
|
Total
Travel |
|
1,647 |
|
1,865
- 2,015 |
||||||
|
Total
Core Operating Segments |
2,778 |
3,055
- 3,130 |
||||||||
|
Mortgage
Operations (b)
(d) |
97 |
(180 |
) | |||||||
|
Corporate
and Other |
(66 |
) |
(140-110) |
|||||||
|
Depreciation
and amortization (e) |
(483 |
) |
(580
- 550 |
) | ||||||
|
Amortization
of pendings/listings |
(16 |
) |
(25
- 15 |
) | ||||||
|
Interest
expense, net (e)
(f) |
(263 |
) |
(190
- 170 |
) | ||||||
|
Pretax
income (c)
(d) |
$ |
2,047 |
$ |
1,940
- 2,105 |
||||||
|
Provision
for income taxes |
(674 |
) |
(720
- 780 |
) | ||||||
|
Minority
interest |
(8 |
) |
(5
- 10 |
) | ||
|
Income
from continuing operations (c)
(d) |
$ |
1,365 |
$ |
1,215
- 1,315 |
||
Diluted
weighted average shares outstanding (g) |
1,064 |
1,080
- 1,065 |
| (a) |
Projections
do not total because we do not expect the actual results of all segments
to be at the lowest or highest end of any projected range
simultaneously. |
| (b) |
Reflects
the results of the Company’s mortgage unit for the full year in 2004 but
only for the month of January in 2005, due to the spin-off of PHH
Corporation on January 31, 2005. |
| (c) |
Includes
approximately $55 million of pretax charges related to restructuring
activities undertaken following the PHH spin-off and Wright Express
IPO. |
| (d) |
2005
includes the previously disclosed non-cash impairment charge recorded in
connection with the spin-off of PHH of approximately $180
million. |
| (e) |
Depreciation
and amortization excludes amounts related to our assets under management
and mortgage programs, and interest expense excludes amounts related to
our debt under management and mortgage programs, both of which are already
reflected in EBITDA. |
| (f) |
2005
interest expense includes the reversal of $73 million of accrued interest
in the first quarter related to the CUC related litigation
settlement. |
| (g) |
Diluted
weighted average shares outstanding is expected to increase modestly in
2005 due primarily to the full-year impact of the settlement of the Upper
DECS securities in August 2004, which resulted in the issuance of
approximately 38 million shares of Cendant common stock. Our diluted
shares outstanding at March 31, 2005 are expected to be modestly lower
than at December 31, 2004 and continue to decrease throughout the year due
to share repurchases. Diluted shares outstanding may be influenced by
factors outside of the Company’s control, including Cendant’s stock
price. |
Cendant
Corporation is primarily a provider of travel and residential real estate
services. With approximately 80,000 employees,
New York City-based Cendant provides these services to businesses and consumers
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.
Statements
about future results made in this release, including the projections and the
statements attached hereto 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. Actual results may 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 Cendant’s Form 10-K for
the year ended December 31, 2004.
Such
forward-looking statements include projections. Such projections were not
prepared in accordance with published guidelines of the American Institute of
Certified Public Accountants or the SEC regarding projections and forecasts, nor
have such projections been audited, examined or otherwise reviewed by
independent auditors of Cendant or its affiliates. In addition, such projections
are based upon many estimates and are inherently subject to significant
economic, competitive and other uncertainties and contingencies, including but
not limited to the impact of war or terrorism, which are beyond the control of
management of Cendant and its affiliates. Accordingly, actual results may be
materially higher or lower than those projected. The inclusion of such
projections herein should not be regarded as a representation by Cendant or its
affiliates that the projections will prove to be correct.
In
this press release we refer to Free Cash Flow, which is considered a "non-GAAP
financial measure" under SEC regulations. Free Cash Flow is useful to the
Company's management and investors in measuring the cash generated by the
Company that is available to be used to repurchase stock, repay debt
obligations, pay dividends and invest in future growth through new business
development activities or acquisitions. Free Cash Flow should not be construed
as a substitute in measuring operating results or liquidity. Such metric may not
be comparable to similarly titled measures used by other companies and is not a
measurement recognized under generally accepted accounting principles. A
reconciliation of Free Cash Flow to the appropriate measure recognized under
generally accepted accounting principles (Net Cash Provided by Operating
Activities) is presented above.
|
Media
Contacts: |
Investor
Contacts: |
|
Elliot
Bloom
212-413-1832 |
Sam
Levenson
212-413-1834 |
|
Kelli
Segal
212-413-1871 |
Henry
A. Diamond
212-413-1920 |