EX-99.1 2 y14127exv99w1.htm EX-99.1: REVISED TABLES TO THE COMPANY'S THIRD QUARTER EARNINGS RELEASE EX-99.1:
 

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.