Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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) November 1, 2005 (October 28, 2005)
Cendant Corporation
| Delaware | 1-10308 | 06-0918165 | ||
| (State or other jurisdiction | (Commission File No.) | (I.R.S. Employer | ||
| of incorporation) | Identification Number) | |||
| 9 West 57th Street | ||||
| New York, NY | 10019 | |||
| (Address of principal | (Zip Code) | |||
| executive office) |
Registrant’s telephone number, including area code (212) 413-1800
None
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 Exchange 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))
Table of Contents
Item 2.02 Results of Operations and Financial Condition.
Settlement of the PRIDES Action
On October 28, 2005, Cendant Corporation (the “Company”) reached a settlement in principle with respect to a consolidated class action filed on behalf of the purchasers of the Company’s PRIDES securities between April 16 and August 28, 1998 related to the accounting irregularities at its former CUC International, Inc. (“CUC”) business units that were discovered in 1998.
To settle this matter, the Company has agreed to pay $32.5 million in cash plus 3.5% of any net recovery from litigation the Company is pursuing against Ernst & Young, LLP, auditors for the former CUC, arising from the accounting irregularities. As a result, we recorded an additional $12.5 million pretax expense in our Consolidated Condensed Income Statement for the three and nine months ended September 30, 2005.
Interest will accrue on the cash portion of the settlement from the earlier of either approval by the United States District Court in New Jersey or February 1, 2006 at the federal funds rate applicable at that time. The settlement is subject to execution of a definitive settlement agreement and court approval, which the Company presently expects to occur in early 2006.
Settlement of a Vehicle Rental Dispute
On October 28, 2005, the Company reached a settlement in principle with respect to an
ongoing dispute with licensees of the Company’s Avis brand arising out of the Company’s
acquisition of the Budget business in 2002. The licensees have accepted and the Company
has agreed to pay $10 million, in the aggregate, in cash. In addition, the Company has
agreed to grant the licensees certain rights with respect to the Avis and Budget brands,
upon terms and conditions to be set forth in a definitive agreement to be negotiated.
Accordingly, we recorded a pretax expense of $10 million in our Consolidated Condensed
Income Statement for the three and nine months ended September 30, 2005.
Impact on the Company’s Third Quarter 2005 Results
In accordance with generally accepted accounting principles, the Company is required to reflect the impact of the settlements described above in its financial statements for third quarter 2005. Accordingly, the Company expects to report in its Quarterly Report on Form 10-Q for third quarter 2005 that earnings per share from continuing operations was $0.43. Attached as Exhibit 99.1, and incorporated by reference herein, are revised tables to the Company’s third quarter earnings release dated October 24, 2005 and included in the Company’s Current Report on Form 8-K of the same date.
Item 7.01 Regulation FD Disclosure.
On October 28, 2005, we announced that we entered into an agreement with a broker-dealer that specifies the parameters under which up to $500 million of open-market repurchases of our common stock may be made on our behalf. We also stated that we are exploring the possible acceleration of the effectiveness of the previously announced separation of the company into four independent, publicly traded, pure-play companies.
Attached hereto as Exhibit 99.2 and incorporated herein by reference is a copy of the press release issued on October 28, 2005.
Table of Contents
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
| 99.1 | Revised
Tables to the Company’s Third Quarter 2005 Earnings Release. |
|||
| 99.2 | Press Release: Cendant Corporation Establishes Share Repurchase Plan
For Up to $500 Million of its Common Stock. |
Table of Contents
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/ Eric J. Bock | |||
| Eric J. Bock | ||||
| Executive Vice President, Law and Corporate Secretary | ||||
Date: November 1, 2005
Table of Contents
CENDANT CORPORATION
CURRENT REPORT ON FORM 8-K
Report Dated November 1, 2005 (October 28, 2005)
EXHIBIT INDEX
| 99.1 | Revised
Tables to the Company’s Third Quarter 2005 Earnings Release. |
|||
| 99.2 | Press Release: Cendant Corporation Establishes Share Repurchase Plan
For Up to $500 Million of its Common Stock. |
Exhibit 99.1
Table 1
(page 1 of 2)
Cendant Corporation and Subsidiaries
SUMMARY DATA SHEET
(Dollars in millions, except per share data)
| Third Quarter | ||||||||||||
| 2005 | 2004 | % Change | ||||||||||
Income Statement Items |
||||||||||||
Net Revenues |
$ | 5,046 | $ | 4,505 | 12 | % | ||||||
Pretax Income (A) |
698 | 736 | (5 | %) | ||||||||
Income from Continuing Operations |
453 | 497 | (9 | %) | ||||||||
EPS from Continuing Operations (diluted) |
0.43 | 0.47 | (9 | %) | ||||||||
Cash Flow Items |
||||||||||||
Net Cash Provided by Operating Activities |
$ | 937 | $ | 1,919 | ||||||||
Free Cash Flow (B) |
665 | 540 | ||||||||||
Payments Made for Current Period Acquisitions, Net of Cash Acquired |
(166 | ) | (53 | ) | ||||||||
Net Debt Repayments |
(63 | ) | (214 | ) | ||||||||
Issuance of Common Stock in Connection with the Upper DECS |
— | 863 | ||||||||||
Net Repurchases of Common Stock |
(521 | ) | (103 | ) | ||||||||
Payment of Dividends |
(117 | ) | (93 | ) | ||||||||
| As of | As of | |||||||||||
| September 30, 2005 | December 31, 2004 | |||||||||||
Balance Sheet Items |
||||||||||||
Total Corporate Debt |
$ | 4,814 | $ | 4,330 | ||||||||
Cash and Cash Equivalents |
356 | 467 | ||||||||||
Total Stockholders’ Equity |
11,215 | 12,695 | ||||||||||
Segment Results |
||||||||||||
| Third Quarter | ||||||||||||
| 2005 | 2004 | % Change | ||||||||||
Net Revenues |
||||||||||||
Real Estate Services |
$ | 2,068 | $ | 1,856 | 11 | % | ||||||
Hospitality Services |
404 | 365 | 11 | % | ||||||||
Timeshare Resorts |
484 | 424 | 14 | % | ||||||||
Vehicle Rental |
1,433 | 1,243 | 15 | % | ||||||||
Total Travel Content |
2,321 | 2,032 | 14 | % | ||||||||
Travel Distribution Services |
646 | 437 | 48 | % | ||||||||
Total Travel |
2,967 | 2,469 | 20 | % | ||||||||
Total Core Operating Segments |
5,035 | 4,325 | 16 | % | ||||||||
Mortgage Services |
— | 175 | * | |||||||||
Corporate and Other |
11 | 5 | * | |||||||||
Total Company |
$ | 5,046 | $ | 4,505 | 12 | % | ||||||
EBITDA (C) |
||||||||||||
Real Estate Services |
$ | 409 | $ | 379 | 8 | % | ||||||
Hospitality Services |
144 | 131 | 10 | % | ||||||||
Timeshare Resorts |
80 | 80 | — | |||||||||
Vehicle Rental |
173 | 179 | (3 | %) | ||||||||
Total Travel Content |
397 | 390 | 2 | % | ||||||||
Travel Distribution Services |
160 | 123 | 30 | % | ||||||||
Total Travel |
557 | 513 | 9 | % | ||||||||
Total Core Operating Segments |
966 | 892 | 8 | % | ||||||||
Mortgage Services |
— | 29 | * | |||||||||
Corporate and Other |
(62 | ) | (30 | ) | * | |||||||
Total Company |
$ | 904 | $ | 891 | 1 | % | ||||||
Reconciliation of EBITDA to Pretax Income |
||||||||||||
Total Company EBITDA |
$ | 904 | $ | 891 | ||||||||
Less: Non-program related depreciation and amortization |
134 | 118 | ||||||||||
Non-program related interest expense, net |
66 | 32 | ||||||||||
Amortization of pendings and listings |
6 | 5 | ||||||||||
Pretax Income (A) |
$ | 698 | $ | 736 | (5 | %) | ||||||
| * | Not meaningful. |
|
| (A) | Referred to as “Income before income taxes and minority interest” on the Consolidated
Condensed Statements of Income presented on Table 2. See Table 2 for a reconciliation of
Pretax Income to Net Income. |
|
| (B) | See Table 9 for a description of Free Cash Flow and Table 8 for the underlying calculations. |
|
| (C) | See Table 9 for a description of EBITDA. |
Table 1
(page 2 of 2)
Cendant Corporation and Subsidiaries
SUMMARY DATA SHEET
(Dollars in millions, except per share data)
| Nine Months Ended September 30, | ||||||||||||
| 2005 | 2004 | % Change | ||||||||||
Income Statement Items |
||||||||||||
Net Revenues |
$ | 13,658 | $ | 12,449 | 10 | % | ||||||
Pretax Income (A) |
1,465 | 1,664 | (12 | %) | ||||||||
Income from Continuing Operations |
908 | 1,116 | (19 | %) | ||||||||
EPS from Continuing Operations (diluted) |
0.85 | 1.05 | (19 | %) | ||||||||
Cash Flow Items |
||||||||||||
Net Cash Provided by Operating Activities |
$ | 2,541 | $ | 2,771 | ||||||||
Free Cash Flow (B) |
1,581 | 1,355 | ||||||||||
Payments Made for Current Period Acquisitions, Net of Cash Acquired |
(1,670 | ) | (328 | ) | ||||||||
Net Debt Borrowings (Repayments) |
470 | (1,311 | ) | |||||||||
Issuance of Common Stock in Connection with the Upper DECS |
— | 863 | ||||||||||
Net Repurchases of Common Stock |
(790 | ) | (669 | ) | ||||||||
Payment of Dividends |
(309 | ) | (237 | ) | ||||||||
| As of | As of | |||||||||||
| September 30, 2005 | December 31, 2004 | |||||||||||
Balance Sheet Items |
||||||||||||
Total Corporate Debt |
$ | 4,814 | $ | 4,330 | ||||||||
Cash and Cash Equivalents |
356 | 467 | ||||||||||
Total Stockholders’ Equity |
11,215 | 12,695 | ||||||||||
Segment Results |
||||||||||||
| Nine Months Ended September 30, | ||||||||||||
| 2005 | 2004 | % Change | ||||||||||
Net
Revenues |
||||||||||||
Real Estate Services |
$ | 5,520 | $ | 4,980 | 11 | % | ||||||
Hospitality Services |
1,166 | 1,017 | 15 | % | ||||||||
Timeshare Resorts |
1,288 | 1,155 | 12 | % | ||||||||
Vehicle Rental |
3,745 | 3,363 | 11 | % | ||||||||
Total Travel Content |
6,199 | 5,535 | 12 | % | ||||||||
Travel Distribution Services |
1,858 | 1,337 | 39 | % | ||||||||
Total Travel |
8,057 | 6,872 | 17 | % | ||||||||
Total Core Operating Segments |
13,577 | 11,852 | 15 | % | ||||||||
Mortgage Services |
46 | 545 | * | |||||||||
Corporate and Other |
35 | 52 | * | |||||||||
Total Company |
$ | 13,658 | $ | 12,449 | 10 | % | ||||||
EBITDA (C) |
||||||||||||
Real Estate Services |
$ | 963 | $ | 894 | 8 | % | ||||||
Hospitality Services |
369 | 378 | (2 | %) | ||||||||
Timeshare Resorts |
192 | 180 | 7 | % | ||||||||
Vehicle Rental |
367 | 387 | (5 | %) | ||||||||
Total Travel Content |
928 | 945 | (2 | %) | ||||||||
Travel Distribution Services |
432 | 364 | 19 | % | ||||||||
Total Travel |
1,360 | 1,309 | 4 | % | ||||||||
Total Core Operating Segments |
2,323 | 2,203 | 5 | % | ||||||||
Mortgage Services (D) |
(181 | ) | 88 | * | ||||||||
Corporate and Other |
(137 | ) | (75 | ) | * | |||||||
Total Company |
$ | 2,005 | $ | 2,216 | (10 | %) | ||||||
Reconciliation of EBITDA to Pretax Income |
||||||||||||
Total Company EBITDA |
$ | 2,005 | $ | 2,216 | ||||||||
Less: Non-program related depreciation and amortization |
411 | 341 | ||||||||||
Non-program related interest expense, net |
117 | 180 | ||||||||||
Early extinguishment of debt |
— | 18 | ||||||||||
Amortization of pendings and listings |
12 | 13 | ||||||||||
Pretax Income (A) |
$ | 1,465 | $ | 1,664 | (12 | %) | ||||||
| * | Not meaningful. |
|
| (A) | Referred to as “Income before income taxes and minority interest” on the Consolidated Condensed
Statements of Income presented on Table 2. See Table 2 for a reconciliation of Pretax Income to
Net Income. |
|
| (B) | See Table 9 for a description of Free Cash Flow and Table 8 for the underlying calculations. |
|
| (C) | See Table 9 for a description of EBITDA. |
|
| (D) | The 2005 amount includes a $180 million non-cash valuation charge associated with the PHH spin-off. |
Table 2
Cendant Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In millions, except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Revenues |
||||||||||||||||
Service fees and membership, net |
$ | 3,606 | $ | 3,255 | $ | 9,864 | $ | 9,018 | ||||||||
Vehicle-related |
1,433 | 1,243 | 3,745 | 3,363 | ||||||||||||
Other |
7 | 7 | 49 | 68 | ||||||||||||
Net revenues |
5,046 | 4,505 | 13,658 | 12,449 | ||||||||||||
Expenses |
||||||||||||||||
Operating |
2,867 | 2,604 | 7,854 | 7,233 | ||||||||||||
Vehicle depreciation, lease charges and interest, net |
428 | 342 | 1,126 | 935 | ||||||||||||
Marketing and reservation |
446 | 383 | 1,325 | 1,119 | ||||||||||||
General and administrative |
392 | 294 | 1,087 | 950 | ||||||||||||
Non-program related depreciation and amortization |
134 | 118 | 411 | 341 | ||||||||||||
Non-program related interest, net: |
||||||||||||||||
Interest expense, net |
66 | 32 | 117 | 180 | ||||||||||||
Early extinguishment of debt |
— | — | — | 18 | ||||||||||||
Acquisition and integration related costs: |
||||||||||||||||
Amortization of pendings and listings |
6 | 5 | 12 | 13 | ||||||||||||
Other |
8 | (9 | ) | 29 | (4 | ) | ||||||||||
Restructuring and transaction-related charges |
1 | — | 52 | — | ||||||||||||
Valuation charge associated with PHH spin-off |
— | — | 180 | — | ||||||||||||
Total expenses |
4,348 | 3,769 | 12,193 | 10,785 | ||||||||||||
Income before income taxes and minority interest |
698 | 736 | 1,465 | 1,664 | ||||||||||||
Provision for income taxes |
244 | 238 | 554 | 541 | ||||||||||||
Minority interest, net of tax |
1 | 1 | 3 | 7 | ||||||||||||
Income from continuing operations |
453 | 497 | 908 | 1,116 | ||||||||||||
Income from discontinued operations, net of tax (*) |
43 | 96 | 28 | 411 | ||||||||||||
Gain (loss) on disposal of discontinued operations, net of tax: |
||||||||||||||||
PHH valuation and transaction-related charges |
— | — | (312 | ) | — | |||||||||||
Gain on disposal |
3 | — | 181 | 198 | ||||||||||||
Net income |
$ | 499 | $ | 593 | $ | 805 | $ | 1,725 | ||||||||
Earnings per share |
||||||||||||||||
Basic |
||||||||||||||||
Income from continuing operations |
$ | 0.44 | $ | 0.48 | $ | 0.87 | $ | 1.09 | ||||||||
Income from discontinued operations |
0.04 | 0.09 | 0.03 | 0.40 | ||||||||||||
Gain (loss) on disposal of discontinued operations |
— | — | (0.13 | ) | 0.20 | |||||||||||
Net income |
$ | 0.48 | $ | 0.57 | $ | 0.77 | $ | 1.69 | ||||||||
Diluted |
||||||||||||||||
Income from continuing operations |
$ | 0.43 | $ | 0.47 | $ | 0.85 | $ | 1.05 | ||||||||
Income from discontinued operations |
0.04 | 0.09 | 0.02 | 0.39 | ||||||||||||
Gain (loss) on disposal of discontinued operations |
— | — | (0.12 | ) | 0.19 | |||||||||||
Net income |
$ | 0.47 | $ | 0.56 | $ | 0.75 | $ | 1.63 | ||||||||
Weighted average shares outstanding |
||||||||||||||||
Basic |
1,037 | 1,036 | 1,047 | 1,024 | ||||||||||||
Diluted |
1,057 | 1,064 | 1,069 | 1,059 | ||||||||||||
| (*) | Includes the results of operations of (i) the Company’s Marketing
Services division, which was sold on October 17, 2005, (ii) the
Company’s former fuel card business, Wright Express Corporation,
through date of disposition (February 2005), (iii) the Company’s former
fleet leasing and appraisal businesses through date of spin-off
(January 2005) and (iv) in 2004, the Company’s former tax preparation
business, Jackson Hewitt Tax Service Inc., through date of disposition
(June 2004). |
Table 3
(page 1 of 2)
Cendant Corporation and Subsidiaries
ORGANIC GROWTH BY SEGMENT
(In millions)
| REVENUES | ||||||||||||
| Third Quarter | ||||||||||||
| 2005 | 2004 | %* | ||||||||||
Real Estate Services (A) |
$ | 2,005 | $ | 1,851 | 8 | % | ||||||
Hospitality Services (B) |
389 | 365 | 7 | % | ||||||||
Timeshare Resorts (C) |
482 | 424 | 14 | % | ||||||||
Vehicle Rental |
1,433 | 1,243 | 15 | % | ||||||||
Total Travel Content |
2,304 | 2,032 | 13 | % | ||||||||
Travel Distribution Services (D) |
431 | 423 | 2 | % | ||||||||
Total Travel |
2,735 | 2,455 | 11 | % | ||||||||
Total Core Operating Segments |
$ | 4,740 | $ | 4,306 | 10 | % | ||||||
| EBITDA | ||||||||||||
| Third Quarter | ||||||||||||
| 2005 | 2004 | %* | ||||||||||
Real Estate Services (A) |
$ | 401 | $ | 375 | 7 | % | ||||||
Hospitality Services (B) |
139 | 131 | 6 | % | ||||||||
Timeshare Resorts (C) |
79 | 80 | — | |||||||||
Vehicle Rental |
173 | 179 | (3 | %) | ||||||||
Total Travel Content |
391 | 390 | — | |||||||||
Travel Distribution Services (D) |
114 | 120 | (5 | %) | ||||||||
Total Travel |
505 | 510 | (1 | %) | ||||||||
Total Core Operating Segments |
$ | 906 | $ | 885 | 2 | % | ||||||
Reconciliation of Organic EBITDA to Pretax Income |
||||||||||||
Pretax Income (E) |
$ | 698 | $ | 736 | ||||||||
Add: Non-program related depreciation and amortization |
134 | 118 | ||||||||||
Non-program related interest expense, net |
66 | 32 | ||||||||||
Amortization of pendings and listings |
6 | 5 | ||||||||||
Total Company EBITDA |
904 | 891 | ||||||||||
Less: Mortgage Services |
— | 29 | ||||||||||
Corporate and Other |
(62 | ) | (30 | ) | ||||||||
EBITDA for Total Core Operating Segments |
966 | 892 | ||||||||||
Adjustments to arrive at Organic EBITDA for Total Core Operating Segments |
(60 | ) | (7 | ) | ||||||||
Organic EBITDA for Total Core Operating Segments (per above) |
$ | 906 | $ | 885 | ||||||||
| * | Amounts may not calculate due to rounding in millions. |
|
| (A) | Includes a reduction to revenue and EBITDA growth of $58 million and $4
million, respectively, primarily related to the acquisitions of
significant real estate brokerage businesses during or subsequent to
third quarter 2004. |
|
| (B) | Includes a reduction to revenue and EBITDA growth of $15 million and $5
million, respectively, primarily related to the acquisitions of Canvas
Holidays Limited in October 2004 and Ramada International, Inc. in
December 2004. |
|
| (C) | Includes a reduction to revenue and EBITDA growth of $2 million and $1
million, respectively, related to the acquisition of a timeshare resort
property in August 2005. |
|
| (D) | Includes a reduction to revenue and EBITDA growth of $201 million and
$43 million, respectively, primarily related to the acquisitions of
Orbitz, Inc. in November 2004, ebookers plc in February 2005 and
Gullivers Travel Associates in April 2005, partially offset by the
transfer of the Company’s membership travel business to the
discontinued Marketing Services division. |
|
| (E) | See Table 2 for a reconciliation of Pretax Income to Net Income. |
Table 3
(page 2 of 2)
Cendant Corporation and Subsidiaries
ORGANIC GROWTH BY SEGMENT
(In millions)
| REVENUES | ||||||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||
| 2005 | 2004 | %* | ||||||||||||||||||||||
Real Estate Services (B) |
$ | 5,335 | $ | 4,959 | 8 | % | ||||||||||||||||||
Hospitality Services (C) |
1,085 | 1,017 | 7 | % | ||||||||||||||||||||
Timeshare Resorts (D) |
1,286 | 1,149 | 12 | % | ||||||||||||||||||||
Vehicle Rental |
3,745 | 3,363 | 11 | % | ||||||||||||||||||||
Total Travel Content |
6,116 | 5,529 | 11 | % | ||||||||||||||||||||
Travel Distribution Services (E) |
1,327 | 1,292 | 3 | % | ||||||||||||||||||||
Total Travel |
7,443 | 6,821 | 9 | % | ||||||||||||||||||||
Total Core Operating Segments |
$ | 12,778 | $ | 11,780 | 8 | % | ||||||||||||||||||
| EBITDA | EBITDA Excluding Restructuring Charges | |||||||||||||||||||||||
| Nine Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
| 2005 | 2004 | %* | 2005 (A) | 2004 | %* | |||||||||||||||||||
Real Estate Services (B) |
$ | 938 | $ | 874 | 7% | $ | 944 | $ | 874 | 8% | ||||||||||||||
Hospitality Services (C) |
366 | 378 | (3% | ) | 371 | 378 | (2% | ) | ||||||||||||||||
Timeshare Resorts (D) |
192 | 175 | 10% | 193 | 175 | 10% | ||||||||||||||||||
Vehicle Rental |
367 | 387 | (5% | ) | 375 | 387 | (3% | ) | ||||||||||||||||
Total Travel Content |
925 | 940 | (2% | ) | 939 | 940 | — | |||||||||||||||||
Travel Distribution Services (E) |
351 | 358 | (2% | ) | 362 | 358 | 1% | |||||||||||||||||
Total Travel |
1,276 | 1,298 | (2% | ) | 1,301 | 1,298 | — | |||||||||||||||||
Total Core Operating Segments |
$ | 2,214 | $ | 2,172 | 2% | $ | 2,245 | $ | 2,172 | 3% | ||||||||||||||
Reconciliation of Organic EBITDA to Pretax Income |
||||||||||||||||||||||||
Pretax Income (F) |
$ | 1,465 | $ | 1,664 | $ | 1,465 | $ | 1,664 | ||||||||||||||||
Add: Non-program related depreciation and amortization |
411 | 341 | 411 | 341 | ||||||||||||||||||||
Non-program related interest expense, net |
117 | 180 | 117 | 180 | ||||||||||||||||||||
Early extinguishment of debt |
— | 18 | — | 18 | ||||||||||||||||||||
Amortization of pendings and listings |
12 | 13 | 12 | 13 | ||||||||||||||||||||
Total Company EBITDA |
2,005 | 2,216 | 2,005 | 2,216 | ||||||||||||||||||||
Less: Mortgage Services |
(181 | ) | 88 | (181 | ) | 88 | ||||||||||||||||||
Corporate and Other |
(137 | ) | (75 | ) | (137 | ) | (75 | ) | ||||||||||||||||
EBITDA for Total Core Operating Segments |
2,323 | 2,203 | 2,323 | 2,203 | ||||||||||||||||||||
Adjustments to arrive at Organic EBITDA for Total Core Operating Segments |
(109 | ) | (31 | ) | (78 | ) | (31 | ) | ||||||||||||||||
Organic EBITDA for Total Core Operating Segments (per above) |
$ | 2,214 | $ | 2,172 | $ | 2,245 | $ | 2,172 | ||||||||||||||||
| * | Amounts may not calculate due to rounding in millions. |
|
| (A) | Excludes restructuring charges of $6 million, $5 million, $1 million,
$8 million and $11 million within the Real Estate Services, Hospitality
Services, Timeshare Resorts, Vehicle Rental and Travel Distribution
Services segments, respectively. |
|
| (B) | Includes a reduction to revenue and EBITDA growth of $163 million and
$5 million, respectively, primarily related to the acquisition of
Sotheby’s International Realty in February 2004, the acquisitions of
significant real estate brokerage businesses during or subsequent to
second quarter 2004 and a refinement during first quarter 2005 to how
we estimate transactions that closed during the quarter when those
transactions have not yet been reported to us by our franchisees,
partially offset by the sale of certain non-core assets by our
settlement services business in June 2004. |
|
| (C) | Includes a reduction to revenue and EBITDA growth of $81 million and $3
million, respectively, primarily related to the acquisitions of Landal
GreenParks in May 2004, Canvas Holidays Limited in October 2004 and
Ramada International, Inc. in December 2004. |
|
| (D) | Includes an increase to revenue and EBITDA growth of $4 million and $5
million, respectively, related to the sale of Equivest Capital in March
2004, partially offset by the acquisition of a timeshare resort
property in August 2005. |
|
| (E) | Includes a reduction to revenue and EBITDA growth of $486 million and
$75 million, respectively, primarily related to the acquisitions of
Orbitz, Inc. in November 2004, ebookers plc in February 2005, Gullivers
Travel Associates in April 2005 and Flairview Travel in April 2004,
partially offset by the transfer of the Company’s membership travel
business to the discontinued Marketing Services division. |
|
| (F) | See Table 2 for a reconciliation of Pretax Income to Net Income. |
Table 4
(page 1 of 2)
Cendant Corporation and Affiliates
SEGMENT REVENUE DRIVER ANALYSIS (*)
(Revenue dollars in thousands)
| Third Quarter | ||||||||||||
| 2005 | 2004 | % Change | ||||||||||
REAL ESTATE SERVICES SEGMENT |
||||||||||||
Real Estate Franchise |
||||||||||||
Closed Sides |
516,534 | 516,747 | — | |||||||||
Average Price |
$ | 233,211 | $ | 201,952 | 15 | % | ||||||
Royalty Revenue (A) |
$ | 147,268 | $ | 131,062 | 12 | % | ||||||
Total Revenue (A) |
$ | 168,900 | $ | 148,776 | 14 | % | ||||||
Real Estate Brokerage |
||||||||||||
Closed Sides |
135,463 | 137,805 | (2 | %) | ||||||||
Average Price |
$ | 476,636 | $ | 412,058 | 16 | % | ||||||
Net Revenue from Real Estate Transactions |
$ | 1,649,607 | $ | 1,481,887 | 11 | % | ||||||
Total Revenue |
$ | 1,666,738 | $ | 1,494,002 | 12 | % | ||||||
Relocation |
||||||||||||
Transaction Volume |
25,149 | 24,863 | 1 | % | ||||||||
Total Revenue |
$ | 139,202 | $ | 127,951 | 9 | % | ||||||
Settlement Services |
||||||||||||
Purchase Title and Closing Units |
43,613 | 40,618 | 7 | % | ||||||||
Refinance Title and Closing Units |
14,222 | 11,590 | 23 | % | ||||||||
Total Revenue |
$ | 93,440 | $ | 85,406 | 9 | % | ||||||
HOSPITALITY SERVICES SEGMENT |
||||||||||||
Lodging |
||||||||||||
RevPAR (B) |
$ | 36.86 | $ | 34.04 | 8 | % | ||||||
Weighted Average Rooms Available (B) |
511,531 | 507,330 | 1 | % | ||||||||
Royalty, Marketing and Reservation Revenue (C) |
$ | 119,829 | $ | 112,765 | 6 | % | ||||||
Total Revenue (C) |
$ | 148,215 | $ | 132,349 | 12 | % | ||||||
RCI |
||||||||||||
Average Number of Subscribers |
3,232,901 | 3,073,811 | 5 | % | ||||||||
Subscriber Related Revenue |
$ | 144,723 | $ | 140,958 | 3 | % | ||||||
Total Revenue |
$ | 151,737 | $ | 147,224 | 3 | % | ||||||
Vacation Rental Group |
||||||||||||
Cottage Weeks Sold |
242,899 | 223,850 | 9 | % | ||||||||
Total Revenue |
$ | 104,106 | $ | 85,871 | 21 | % | ||||||
| (*) | Certain of the 2004 amounts presented herein have been revised to reflect the new segment reporting structure and a new presentation of drivers. All
comparable quarterly amounts for 2003 and 2004 are available on the Cendant website, which may be accessed at www.cendant.com. |
|
| (A) | Excludes $110 million and $100 million of intercompany royalties paid primarily by our NRT real estate brokerage business during the three months ended
September 30, 2005 and 2004, respectively. |
|
| (B) | We acquired the Ramada International Hotels and Resorts trademark on December 10, 2004. The 2004 drivers do not include RevPAR and Weighted Average Rooms
Available of Ramada International. On a comparable basis (excluding Ramada International from the 2005 amounts), RevPAR would have increased 7% and Weighted
Average Rooms Available would have decreased 4%. |
|
| (C) | The 2005 amounts include the revenues of businesses acquired during or subsequent to third quarter 2004 and are therefore not comparable to the 2004 amounts. |
Table 4
(page 2 of 2)
Cendant Corporation and Affiliates
SEGMENT REVENUE DRIVER ANALYSIS (*)
(Revenue dollars in thousands)
| Third Quarter | ||||||||||||
| 2005 | 2004 | % Change | ||||||||||
TIMESHARE RESORTS SEGMENT |
||||||||||||
Tours |
271,591 | 245,820 | 10 | % | ||||||||
Total Revenue |
$ | 483,748 | $ | 423,831 | 14 | % | ||||||
VEHICLE RENTAL SEGMENT |
||||||||||||
Car |
||||||||||||
Rental Days (000’s) |
28,720 | 24,583 | 17 | % | ||||||||
Time and Mileage Revenue per Day |
$ | 38.29 | $ | 38.41 | — | |||||||
Total Car Revenue |
$ | 1,265,600 | $ | 1,081,957 | 17 | % | ||||||
Truck |
||||||||||||
Total Truck Revenue |
$ | 167,118 | $ | 160,952 | 4 | % | ||||||
TRAVEL DISTRIBUTION SERVICES SEGMENT |
||||||||||||
Transaction Volume, by Region (000’s) (A) |
||||||||||||
United States |
27,894 | 26,541 | 5 | % | ||||||||
International |
43,722 | 41,924 | 4 | % | ||||||||
Transaction Volume, by Channel (000’s) |
||||||||||||
Traditional Agency |
61,542 | 60,500 | 2 | % | ||||||||
Online (A) |
10,074 | 7,965 | 26 | % | ||||||||
Online Gross Bookings ($000’s) (B) |
$ | 1,922,369 | $ | 1,656,119 | 16 | % | ||||||
Offline Gross Bookings ($000’s) (B) |
$ | 455,935 | $ | 221,600 | 106 | % | ||||||
GDS and Supplier Services Revenue (C) |
$ | 382,563 | $ | 378,306 | 1 | % | ||||||
Owned Travel Agency Revenue (D) |
$ | 263,192 | $ | 58,704 | 348 | % | ||||||
| (*) | Certain of the 2004 amounts presented herein have been revised to reflect the new segment reporting structure and a new presentation of drivers. All
comparable quarterly amounts for 2003 and 2004 are available on the Cendant website, which may be accessed at www.cendant.com. |
|
| (A) | Includes supplier link and merchant hotel transactions not booked through the Galileo GDS system. |
|
| (B) | We acquired Gullivers Travel Associates on April 1, 2005, ebookers plc on February 28, 2005 and Orbitz, Inc. on November 12, 2004. Revenue generated by
these businesses prior to acquisition is not reflected in the revenue data presented herein and, therefore, the revenue data are not comparable.
However, the online gross bookings and offline gross bookings data for third quarter 2004 have been adjusted to include aggregate bookings of
approximately $1.3 billion and $135 million, respectively, by ebookers and Orbitz so as to present comparable driver data. The online gross bookings
and offline gross bookings data for Gullivers have been reflected in the third quarter 2005 driver data (approximately $70 million and $300 million,
respectively), but not in the third quarter 2004 driver data due to the absence of available driver data prior to our acquisition of Gullivers on April
1, 2005. |
|
| (C) | We refer to this as our “Order Taker” business. Includes Galileo revenue of $375 million and $370 million for third quarter 2005 and 2004, respectively. |
|
| (D) | We refer to this as our “Order Maker” business, which is primarily comprised of Gullivers, ebookers, Orbitz, Flairview, Cheaptickets and Lodging.com. |
Table 5
Cendant Corporation and Subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEETS
(In billions)
| As of | As of | |||||||
| September 30, 2005 | December 31, 2004 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 0.4 | $ | 0.5 | ||||
Assets of discontinued operations |
1.1 | 6.6 | ||||||
Other current assets |
3.1 | 2.6 | ||||||
Total current assets |
4.6 | 9.7 | ||||||
Property and equipment, net |
1.7 | 1.7 | ||||||
Goodwill |
12.3 | 11.1 | ||||||
Other non-current assets |
4.3 | 5.4 | ||||||
Total assets exclusive of assets under programs |
22.9 | 27.9 | ||||||
Assets under management programs |
12.5 | 14.7 | ||||||
Total assets |
$ | 35.4 | $ | 42.6 | ||||
Liabilities and stockholders’ equity |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt |
$ | 2.2 | $ | 0.7 | ||||
Liabilities of discontinued operations |
0.6 | 5.3 | ||||||
Other current liabilities |
4.6 | 4.4 | ||||||
Total current liabilities |
7.4 | 10.4 | ||||||
Long-term debt |
2.6 | 3.6 | ||||||
Other non-current liabilities |
1.6 | 1.5 | ||||||
Total liabilities exclusive of liabilities under programs |
11.6 | 15.5 | ||||||
Liabilities under management programs (*) |
12.6 | 14.4 | ||||||
Total stockholders’ equity |
11.2 | 12.7 | ||||||
Total liabilities and stockholders’ equity |
$ | 35.4 | $ | 42.6 | ||||
| (*) | Liabilities under management programs includes deferred income tax
liabilities of $1.9 billion and $2.2 billion as of September 30, 2005
and December 31, 2004, respectively. |
Table 6
Cendant Corporation and Subsidiaries
SCHEDULE OF CORPORATE DEBT (*)
(In millions)
| September 30, | June 30, | March 31, | December 31, | |||||||||||||||||
| Maturity Date | 2005 | 2005 | 2005 | 2004 | ||||||||||||||||
Net Debt |
||||||||||||||||||||
| August 2006 | 6 7/8% notes |
$ | 850 | $ | 850 | $ | 850 | $ | 850 | |||||||||||
| August 2006 | 4.89% notes |
100 | 100 | 100 | 100 | |||||||||||||||
| January 2008 | 6 1/4% notes |
798 | 798 | 798 | 797 | |||||||||||||||
| March 2010 | 6 1/4% notes |
349 | 349 | 349 | 349 | |||||||||||||||
| January 2013 | 7 3/8% notes |
1,191 | 1,191 | 1,191 | 1,191 | |||||||||||||||
| March 2015 | 7 1/8% notes |
250 | 250 | 250 | 250 | |||||||||||||||
| November 2009 | Revolver borrowings (A) |
381 | 284 | 1,310 | 650 | |||||||||||||||
Commercial paper borrowings (A) |
800 | 975 | — | — | ||||||||||||||||
Net hedging gains (losses) (B) |
(25 | ) | 29 | (29 | ) | 17 | ||||||||||||||
Other |
120 | 96 | 89 | 126 | ||||||||||||||||
Total Debt |
4,814 | 4,922 | 4,908 | 4,330 | ||||||||||||||||
Less: Cash and cash equivalents |
356 | 623 | 1,341 | 467 | ||||||||||||||||
Net Debt |
$ | 4,458 | $ | 4,299 | $ | 3,567 | $ | 3,863 | ||||||||||||
Net Capitalization |
||||||||||||||||||||
Total Stockholders’ Equity |
$ | 11,215 | $ | 11,234 | $ | 11,195 | $ | 12,695 | ||||||||||||
Total Debt (per above) |
4,814 | 4,922 | 4,908 | 4,330 | ||||||||||||||||
Total Capitalization |
16,029 | 16,156 | 16,103 | 17,025 | ||||||||||||||||
Less: Cash and cash equivalents |
356 | 623 | 1,341 | 467 | ||||||||||||||||
Net Capitalization |
$ | 15,673 | $ | 15,533 | $ | 14,762 | $ | 16,558 | ||||||||||||
Net Debt to Net Capitalization Ratio (C) |
28.4% | 27.7% | 24.2% | 23.3% | ||||||||||||||||
Total Debt to Total Capitalization Ratio |
30.0% | 30.5% | 30.5% | 25.4% | ||||||||||||||||
| (*) | Amounts presented herein exclude assets and liabilities under management programs. |
|
| (A) | On October 17, 2005, we received approximately $1.7 billion of cash from the
sale of our Marketing Services division. Approximately $1.2 billion of such cash
has already been or will be used during October 2005 to repay the outstanding
revolver and commercial paper borrowings. The Net Debt to Net Capitalization and
Total Debt to Total Capitalization ratios after giving effect to the sale of the
Marketing Services division and the utilization of $1.2 billion of those proceeds
will be 19.3% and 23.6%, respectively. |
|
| (B) | As of September 30, 2005, this balance represents $139 million of mark-to-market
adjustments on current interest rate hedges, partially offset by $114 million of
net gains resulting from the termination of interest rate hedges, which will be
amortized by the Company to reduce future interest expense. |
|
| (C) | See Table 9 for a description of this ratio. |
Table 7
Cendant Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Operating Activities |
||||||||||||||||
Net cash provided by operating activities exclusive of management programs |
$ | 722 | $ | 773 | $ | 1,884 | $ | 1,785 | ||||||||
Net cash provided by operating activities of management programs |
215 | 1,146 | 657 | 986 | ||||||||||||
Net Cash Provided by Operating Activities |
937 | 1,919 | 2,541 | 2,771 | ||||||||||||
Investing Activities |
||||||||||||||||
Property and equipment additions |
(110 | ) | (100 | ) | (303 | ) | (280 | ) | ||||||||
Net assets acquired, net of cash acquired, and acquisition-related payments |
(205 | ) | (65 | ) | (1,794 | ) | (402 | ) | ||||||||
Proceeds received on asset sales |
30 | 5 | 43 | 29 | ||||||||||||
Proceeds from disposition of businesses, net of transaction-related payments |
4 | (5 | ) | 969 | 821 | |||||||||||
Other, net |
73 | (2 | ) | 101 | 118 | |||||||||||
Net cash provided by (used in) investing activities exclusive of management programs |
(208 | ) | (167 | ) | (984 | ) | 286 | |||||||||
Management programs: |
||||||||||||||||
Net change in program cash |
(4 | ) | (137 | ) | (65 | ) | 8 | |||||||||
Net change in investment in vehicles |
252 | 1,202 | (2,320 | ) | (1,401 | ) | ||||||||||
Net change in relocation receivables |
(39 | ) | (47 | ) | (157 | ) | (62 | ) | ||||||||
Net
change in mortgage servicing rights, related derivatives and
mortgage-backed securities |
— | 121 | 21 | (269 | ) | |||||||||||
Other, net |
(1 | ) | 9 | (21 | ) | 54 | ||||||||||
| 208 | 1,148 | (2,542 | ) | (1,670 | ) | |||||||||||
Net Cash Provided by (Used in) Investing Activities |
— | 981 | (3,526 | ) | (1,384 | ) | ||||||||||
Financing Activities |
||||||||||||||||
Proceeds from borrowings |
159 | 6 | 165 | 25 | ||||||||||||
Principal payments on borrowings |
(67 | ) | (220 | ) | (156 | ) | (1,336 | ) | ||||||||
Net change in short-term borrowings |
(155 | ) | — | 461 | — | |||||||||||
Issuances of common stock |
37 | 951 | 228 | 1,347 | ||||||||||||
Repurchases of common stock |
(558 | ) | (191 | ) | (1,018 | ) | (1,153 | ) | ||||||||
Payments of dividends |
(117 | ) | (93 | ) | (309 | ) | (237 | ) | ||||||||
Cash reduction due to spin-off of PHH |
— | — | (259 | ) | — | |||||||||||
Other, net |
4 | (1 | ) | 8 | (23 | ) | ||||||||||
Net cash provided by (used in) financing activities exclusive of management programs |
(697 | ) | 452 | (880 | ) | (1,377 | ) | |||||||||
Management programs: |
||||||||||||||||
Proceeds from borrowings |
2,644 | 2,330 | 9,627 | 9,201 | ||||||||||||
Principal payments on borrowings |
(3,019 | ) | (3,893 | ) | (7,926 | ) | (8,798 | ) | ||||||||
Net change in short-term borrowings |
(86 | ) | (864 | ) | 98 | 50 | ||||||||||
Other, net |
(10 | ) | (2 | ) | (22 | ) | (19 | ) | ||||||||
| (471 | ) | (2,429 | ) | 1,777 | 434 | |||||||||||
Net Cash Provided by (Used in) Financing Activities |
(1,168 | ) | (1,977 | ) | 897 | (943 | ) | |||||||||
Effect of changes in exchange rates on cash and cash equivalents |
(15 | ) | (34 | ) | (44 | ) | 4 | |||||||||
Cash provided by (used in) discontinued operations |
(21 | ) | 215 | 21 | 361 | |||||||||||
Net increase (decrease) in cash and cash equivalents |
(267 | ) | 1,104 | (111 | ) | 809 | ||||||||||
Cash and cash equivalents, beginning of period |
623 | 451 | 467 | 746 | ||||||||||||
Cash and cash equivalents, end of period |
$ | 356 | $ | 1,555 | $ | 356 | $ | 1,555 | ||||||||
Table 8
Cendant Corporation and Subsidiaries
CONSOLIDATED SCHEDULES OF FREE CASH FLOWS (*)
(In millions)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Pretax income |
$ | 698 | $ | 736 | $ | 1,465 | $ | 1,664 | ||||||||
Addback of non-cash depreciation and amortization: |
||||||||||||||||
Non-program related |
134 | 118 | 411 | 341 | ||||||||||||
Pendings and listings |
6 | 5 | 12 | 13 | ||||||||||||
Addback of non-cash valuation charge associated with PHH spin-off |
— | — | 180 | — | ||||||||||||
Tax payments, net of refunds |
(44 | ) | (28 | ) | (148 | ) | (116 | ) | ||||||||
Working capital and other |
29 | (56 | ) | 72 | (17 | ) | ||||||||||
Capital expenditures |
(110 | ) | (100 | ) | (303 | ) | (280 | ) | ||||||||
Management programs (A) |
(48 | ) | (135 | ) | (108 | ) | (250 | ) | ||||||||
Free Cash Flow |
665 | 540 | 1,581 | 1,355 | ||||||||||||
Current period acquisitions, net of cash acquired |
(166 | ) | (53 | ) | (1,670 | ) | (328 | ) | ||||||||
Payments related to prior period acquisitions |
(39 | ) | (12 | ) | (124 | ) | (74 | ) | ||||||||
Proceeds from disposition of businesses, net |
4 | (5 | ) | 969 | 821 | |||||||||||
Issuance of common stock in connection with the Upper DECS |
— | 863 | — | 863 | ||||||||||||
Net repurchases of common stock |
(521 | ) | (103 | ) | (790 | ) | (669 | ) | ||||||||
Payment of dividends |
(117 | ) | (93 | ) | (309 | ) | (237 | ) | ||||||||
Investments and other (B) |
(30 | ) | 181 | 21 | 389 | |||||||||||
Cash reduction due to spin-off of PHH |
— | — | (259 | ) | — | |||||||||||
Net debt borrowings (repayments) |
(63 | ) | (214 | ) | 470 | (1,311 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents (per Table 7) |
$ | (267 | ) | $ | 1,104 | $ | (111 | ) | $ | 809 | ||||||
| (*) | See Table 9 for a description of Free Cash Flow. |
|
| (A) | Cash flows related to management programs may fluctuate significantly from period to period due to the timing of the underlying transactions. For the three months ended September 30, 2005
and 2004, the net cash flows from the activities of management programs are reflected on Table 7 as follows: (i) net cash provided by operating activities of $215 million and $1,146 million,
respectively, (ii) net cash provided by investing activities of $208 million and $1,148 million, respectively, and (iii) net cash used in financing activities of $471 million and $2,429
million, respectively. For the nine months ended September 30, 2005 and 2004, the net cash flows from the activities of management programs are reflected on Table 7 as follows: (i) net cash
provided by operating activities of $657 million and $986 million, respectively, (ii) net cash used in investing activities of $2,542 million and $1,670 million, respectively, and (iii) net
cash provided by financing activities of $1,777 million and $434 million, respectively. |
|
| (B) | Represents net cash provided by discontinued operations, the effects of exchange rates on cash and cash equivalents, other investing and financing activities and the change in restricted cash. |
RECONCILIATION OF FREE CASH FLOW TO NET CASH PROVIDED BY OPERATING ACTIVITIES
(In millions)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Free Cash Flow (per above) |
$ | 665 | $ | 540 | $ | 1,581 | $ | 1,355 | ||||||||
Cash (inflows) outflows included in Free Cash Flow but
not reflected in Net Cash Provided by Operating
Activities: |
||||||||||||||||
Investing activities of management programs |
(208 | ) | (1,148 | ) | 2,542 | 1,670 | ||||||||||
Financing activities of management programs |
471 | 2,429 | (1,777 | ) | (434 | ) | ||||||||||
Capital expenditures |
110 | 100 | 303 | 280 | ||||||||||||
Proceeds received on asset sales |
(30 | ) | (5 | ) | (43 | ) | (29 | ) | ||||||||
Change in restricted cash |
(71 | ) | 3 | (65 | ) | (71 | ) | |||||||||
Net Cash Provided by Operating Activities (per Table 7) |
$ | 937 | $ | 1,919 | $ | 2,541 | $ | 2,771 | ||||||||
| Full Year 2005 | ||||
| Projected | ||||
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 and financing activities of management programs |
700 — 800 | |||
Capital expenditures |
450 — 500 | |||
Net Cash Provided by Operating Activities |
$ | 2,950 — $3,300 | ||
Table 9
Cendant Corporation and Subsidiaries
Definitions of Non-GAAP Measures
The accompanying press release includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, we have provided below the reasons we present these non-GAAP financial measures and a description of what they represent.
EBITDA
|
Represents income from continuing operations before non-program related depreciation and amortization, non-program related interest, amortization of pendings and listings, income taxes and minority interest. We believe that EBITDA is useful as a supplemental measure in evaluating the aggregate performance of our operating businesses. EBITDA is the measure that is used by our management, including our chief operating decision maker, to perform such evaluation, and it is a factor in measuring performance in our incentive compensation plans. It is also a component of our financial covenant calculations under our credit facilities, subject to certain adjustments. EBITDA should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with generally accepted accounting principles and our presentation of EBITDA may not be comparable to similarly titled measures used by other companies. | |
| For third quarter and year-to-date 2005 and 2004 amounts, a reconciliation of EBITDA to pretax income is included in Table 1 and a reconciliation of pretax income to net income is included in Table 2, both of which accompany this press release. For fourth quarter 2005 (projected) and 2004 amounts, a reconciliation of EBITDA to income from continuing operations is set forth below: |
| 2005P | 2004 | |||||||
EBITDA for core operating segments (a) |
$ | 625-655 | $ | 575 | ||||
Mortgage Services |
— | 9 | ||||||
Corporate and Other (b) |
(70-55 | ) | 8 | |||||
Total Company EBITDA |
555-600 | 592 | ||||||
Less: Non-program related depreciation and amortization |
135-130 | 141 | ||||||
Less: Non-program related interest expense, net |
60-55 | 66 | ||||||
Less: Amortization of pendings and listings |
20-10 | 3 | ||||||
Pretax income |
340-405 | 382 | ||||||
Less: Provision for income taxes and minority interest |
110-135 | 134 | ||||||
Income from continuing operations |
$ | 230-270 | $ | 248 | ||||
| (a) | 2005P amount includes $16 million of estimated restructuring costs
incurred in connection with the combination of our timeshare exchange business,
RCI, with our European vacation rental businesses. |
|
| (b) | 2004 amount includes a previously disclosed credit of $60 million relating
to previously established liabilities for severance and other termination
benefits. |
Net Debt to Net
Capitalization
Ratio
|
Represents (i) net corporate debt (which reflects total corporate debt adjusted to assume the application of available cash to reduce outstanding indebtedness) divided by (ii) net capitalization (which reflects total capitalization also adjusted for the application of available cash). We believe that this ratio is useful in measuring the Company’s leverage and indicating the strength of its financial condition. We also believe that adjusting corporate debt to assume the application of available cash to reduce outstanding indebtedness eliminates the effect of timing differences relating to the use of debt proceeds. A reconciliation of the “Net Debt to Net Capitalization Ratio” to the appropriate measure recognized under generally accepted accounting principles (Total Debt to Total Capitalization Ratio) is presented in Table 6, which accompanies this press release. | |
Free Cash Flow
|
Represents Net Cash Provided by Operating Activities adjusted to include the cash inflows and outflows relating to (i) capital expenditures, (ii) the investing and financing activities of our management programs, and (iii) asset sales. We believe that Free Cash Flow is useful to management and the Company’s 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, and our presentation of Free Cash Flow may not be comparable to similarly titled measures used by other companies. A reconciliation of Free Cash Flow to the appropriate measure recognized under generally accepted accounting principles (Net Cash Provided by Operating Activities) is presented in Table 8, which accompanies this press release. | |
Organic Growth
|
Represents the results of our reportable operating segments excluding the impact of acquisitions and dispositions. We believe that Organic Growth is useful to management and the Company’s investors in evaluating the operating performance of its reportable segments on a comparable basis. We also present Organic EBITDA growth excluding charges associated with the 2005 restructuring activities undertaken following the PHH spin-off and initial public offering of Wright Express. Our management believes this metric is useful in measuring the normalized performance of the Company’s reportable operating segments. The reconciliations of Organic revenue and EBITDA growth to the comparable measures recognized under generally accepted accounting principles are presented in Table 3, which accompanies this press release. | |
2005 EPS from Continuing Operations before Transaction Related Charges |
Represents EPS from Continuing Operations adjusted to exclude the non-cash impairment charge of $0.17 per share and restructuring and transaction-related costs of $0.03 per share. We believe that by providing the calculation of EPS from Continuing Operations both including and excluding these charges, we are enhancing an investor’s ability to analyze our financial results on a comparable basis, thereby providing greater transparency. We also believe that excluding the impairment charge is useful to investors because it is a non-cash charge directly resulting from the spin-off of PHH and will not recur in subsequent periods. EPS from Continuing Operations before Transaction Related Charges should not be considered in isolation or as a substitute for EPS from Continuing Operations prepared in accordance with generally accepted accounting principles. A reconciliation of EPS from Continuing Operations before Transaction Related Charges to the most comparable measure (EPS from Continuing Operations) recognized under generally accepted accounting principles is presented within the body of the accompanying press release. |
Exhibit 99.2
Cendant Corporation Establishes Share Repurchase Plan For Up to
$500 Million of its Common Stock
Company Will Also Explore Alternatives to Complete Part of the Separation
Into Four Independent Entities Earlier than Previously Anticipated
NEW YORK, October 28, 2005 — Cendant Corporation (NYSE: CD) today announced that it has entered into an agreement with a broker-dealer that specifies the parameters under which up to $500 million of open-market repurchases may be made on the Company’s behalf. This purchase plan is designed to comply with Rule 10b5-1 (the “10b5-1 Plan”) under the Securities Exchange Act of 1934, as amended. Repurchases under the 10b5-1 Plan will occur pursuant to the Company’s previously announced and approved share repurchase program.
The Company also stated that it was exploring the possible acceleration of the effectiveness of the previously announced separation of the Company into four independent, publicly traded, pure-play companies. This acceleration may allow the first two spin-offs, Real Estate and Hospitality, to occur in mid-second quarter. There can be no assurances, however, that the plan of separation will be completed on an accelerated time frame.
About Cendant Corporation
Cendant Corporation is primarily a provider of travel and residential real estate services. With
approximately 85,000 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.
Forward-Looking Statements
Certain statements in this press release constitute “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking statements. Statements
preceded by, followed by or that otherwise include the words “believes”, “expects”, “anticipates”,
“intends”, “projects”, “estimates”, “plans”, “may increase”, “may fluctuate” and similar
expressions or future or conditional verbs such as “will”, “should”, “would”, “may” and “could” are
generally forward-looking in nature and not historical facts. Any statements that refer to
expectations or other characterizations of future events, circumstances or results are
forward-looking statements. The Company cannot provide any assurances that the separation or any of
the proposed transactions related thereto will be completed, nor can it give assurances as to the
terms on which such transactions will be consummated. The transaction is subject to certain
conditions precedent, including final approval by the Board of Directors of Cendant.
Various risks that could cause future results to differ from those expressed by the forward-looking statements included in this press release include, but are not limited to: risks inherent in the contemplated separation and related transactions and borrowings and costs related to the proposed transactions; distraction of the Company and its management as a result of the proposed transactions; changes in business, political and economic conditions in the U.S. and in other countries in which Cendant and its companies currently do business; changes in governmental regulations and policies and actions of regulatory bodies; changes in operating performance; and access to capital markets and changes in credit ratings, including those that may result from the proposed transaction. Other unknown or unpredictable factors also could have material adverse effects on Cendant’s and its companies’ performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release. 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 10-Q for the quarter ended June 30, 2005, including under headings such as “Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Except for the Company’s ongoing obligations to disclose material information under the federal securities laws, the Company undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless required by law.
Media Contacts:
Elliot Bloom
SVP, Corporate Communications
(212) 413-1832
Investor Contacts:
Sam Levenson
SVP, Corporate and Investor Relations
(212) 413-1834
Henry A. Diamond
Group VP, Investor Relations
(212) 413-1920