-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A8Dj5pHMzVIYupy0wdi+5RBtlbES68AO52PJM9NxYGK3mERqnD+AWyXWH2v3xrTW yi30BmJJhga+RQqPkwr/sQ== 0000950136-00-000116.txt : 20000204 0000950136-00-000116.hdr.sgml : 20000204 ACCESSION NUMBER: 0000950136-00-000116 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000203 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENDANT CORP CENTRAL INDEX KEY: 0000723612 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PERSONAL SERVICES [7200] IRS NUMBER: 060918165 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-10308 FILM NUMBER: 522842 BUSINESS ADDRESS: STREET 1: 9 W 57TH ST 57TH FL CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124131800 MAIL ADDRESS: STREET 1: 707 SUMMER ST CITY: STAMFORD STATE: CT ZIP: 06901 FORMER COMPANY: FORMER CONFORMED NAME: CUC INTERNATIONAL INC /DE/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: COMP U CARD INTERNATIONAL INC DATE OF NAME CHANGE: 19870914 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------ Form 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------ FEBRUARY 3, 2000 (FEBRUARY 2, 2000) (Date of Report (date of earliest event reported)) CENDANT CORPORATION (Exact name of Registrant as specified in its charter) DELAWARE 1-10308 06-0918165 (State or other jurisdiction (Commission File No.) (I.R.S. Employer of incorporation or Identification Number) organization) 9 WEST 57TH STREET NEW YORK, NY 10019 (Address of principal (Zip Code) executive) office) (212) 413-1800 (Registrant's telephone number, including area code) NOT APPLICABLE (Former name, former address and former fiscal year, if applicable) ITEM 5. OTHER EVENTS Earnings Release. On February 2, 2000, we reported our 1999 fourth quarter and full year results which are discussed in more detail in the press release attached hereto as Exhibit 99.1. Attached hereto as Exhibit 99.1 is the press release relating to the forgoing announcements which is incorporated herein by reference in its entirety. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS EXHIBIT NO. DESCRIPTION - ------- ----------- 99.1 Press Release: Cendant Reports 1999 Fourth Quarter Results SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CENDANT CORPORATION BY: /s/ Jon F. Danski ------------------ Jon F. Danski Executive Vice President, Finance and Chief Accounting Officer Date: February 3, 2000 CENDANT CORPORATION CURRENT REPORT ON FORM 8-K REPORT DATED FEBRUARY 3, 2000 (FEBRUARY 2, 2000) EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - ------- ----------- 99.1 Press Release: Cendant Reports 1999 Fourth Quarter Results EX-99.1 2 PRESS RELEASE [GRAPHIC OMITTED] CENDANT REPORTS 1999 FOURTH QUARTER RESULTS Comparable Basis EBITDA Rises 36% --------------------------------- 4Q Adjusted EPS from Continuing Operations, ------------------------------------------- Excluding Move.com, Increases 36% to $0.30 in 1999 vs. $0.22 in 1998 -------------------------------------------------------------------- 4Q Reported EPS from Continuing Operations, Including ----------------------------------------------------- Litigation Settlement Charges, $2.06 Loss in 1999 vs. $0.36 Loss in 1998 ------------------------------------------------------------------------ Full Year Adjusted EPS from Continuing Operations, -------------------------------------------------- Excluding Move.com, Increases 30% to $1.04 vs. $0.80 in 1998 ------------------------------------------------------------ NEW YORK, NY, FEBRUARY 2, 2000 - Cendant Corporation (NYSE: CD) today reported 1999 fourth quarter results. Cendant Chairman, President and Chief Executive Officer, Henry R. Silverman stated, "Our fourth quarter results confirm the ability of our core businesses to deliver consistent, organic growth. In 2000, we will build on this base with new growth initiatives including the execution of our convergence strategy to apply our off-line assets to the online world." FOURTH QUARTER 1999 RESULTS - --------------------------- Reported results Reported EPS from continuing operations was a loss of $2.06 in the fourth quarter of 1999 compared with a loss of $0.36 in the prior year period. Reported EPS includes a litigation settlement charge of $2.9 billion ($1.8 billion after tax, or $2.56 per share) in 1999 and litigation settlement and deal termination charges of $784 million ($510 million after tax, or $0.60 per share) in 1998. Adjusted results, excluding move.com Adjusted results from continuing operations include the operating results of disposed businesses through their disposition dates but exclude the net gains associated with their dispositions. The 1999 fourth quarter adjusted results as compared with the prior year period were as follows: o Adjusted EBITDA was $509 million, up 21% from $422 million o Adjusted income from continuing operations was $225 million, up 18% from $190 million o Adjusted earnings per share were up 36% to $0.30 versus $0.22. (Including move.com, EPS for the fourth quarter of 1999 was $0.29 versus $0.22 in 1998.) Comparable basis results On a comparable basis, which excludes the operating results of disposed businesses, the net gains associated with their dispositions and the results of move.com from each period, the operating results for the fourth quarter of 1999 versus the prior year period, were as follows: o Comparable revenues were $1.13 billion, up 7% from $1.06 billion o Comparable EBITDA was $460 million, up 36% from $337 million Comparable basis operating results and Adjusted operating results also exclude other unusual charges in 1999 and 1998 including litigation settlements, investigation-related costs and certain other non-recurring items. (See Table 1 for a reconciliation of reported results to adjusted results and comparable results. See Table 2 for fourth quarter results - as reported, as adjusted and as adjusted excluding the operating results of move.com). FISCAL YEAR 1999 RESULTS - ------------------------ Reported results Reported EPS from continuing operations was a loss of $0.28 for 1999 compared with income of $0.18 in 1998. Reported EPS includes a litigation settlement charge of $2.9 billion ($1.8 billion after tax, or $2.43 per share) in 1999 and litigation settlement and deal termination charges of $784 million ($510 million after tax, or $0.58 per share) in 1998. Adjusted results, excluding move.com Adjusted results from continuing operations include the operating results of disposed businesses through their disposition dates but exclude the net gains associated with their dispositions. The full year adjusted 1999 results as compared with the prior year were as follows: o Adjusted EBITDA was $1.94 billion, up 22% from $1.59 billion o Adjusted income from continuing operations was $827 million, up 17% from $706 million o Adjusted earnings per share were up 30% to $1.04 versus $0.80. (Including move.com, EPS for 1999 was $1.02 versus $0.80 in 1998.) Comparable basis results On a comparable basis, which excludes the operating results of disposed businesses, the net gains associated with their dispositions and the results of move.com from each period, the comparable operating results for 1999 versus 1998, were as follows: o Comparable revenues were $4.51 billion, up 10% from $4.11 billion o Comparable EBITDA was $1.80 billion, up 29% from $1.39 billion Comparable basis operating results and Adjusted operating results also exclude other unusual charges in 1999 and 1998, including litigation settlements, investigation-related costs and certain other non-recurring items. (See Table 1 for a reconciliation of reported results to adjusted and comparable results. See Table 3 for full year results - as reported, as adjusted and as adjusted excluding the operating results of move.com). SHARE REPURCHASES AND DEBT RETIREMENT - ------------------------------------- In October 1998, the Company initiated a share repurchase program. As of February 2, 2000 the Company has repurchased 157 million shares of its common stock under the program. In addition, the Company received more than 7 million of its shares back in connection with the December 1998 disposition of its Hebdo Mag subsidiary. In the aggregate, the Company has reduced shares outstanding by 19%. During 1999 the Company retired $500 million in long-term debt. As of December 31, 1999, the Company had approximately $2.8 billion of debt and $1.2 billion in cash and cash equivalents on hand. At December 31, 1999, the net debt to total capital ratio was 31% and return on equity was 23%. Subsequent to year end the Company also redeemed its 71/2% $400 million senior notes. FOURTH QUARTER DIVISION RESULTS - ------------------------------- Total Company performance in the fourth quarter of 1999 was consistent with the Company's stated growth targets. The underlying discussion of each division's operating results focuses on Adjusted EBITDA, which is defined as earnings before non-operating interest, income taxes, depreciation, amortization and minority interest, adjusted to exclude net gains on disposition of businesses and other items which are of a non-recurring or unusual nature, and are not measured in assessing segment performance or are not segment specific. (See Table 5 for Revenues and Adjusted EBITDA by Segment and Table 6 for Segment Revenue Drivers). Travel Division Travel revenues increased 16% to $275 million. Franchise fees rose 7% as a result of room growth in Lodging and increases in car rental days and rate at Avis. Timeshare subscription and exchange revenues also increased 6%, primarily as a result of increased volume. Other contributors to the year-over-year revenue increase were a bulk timeshare exchange transaction and a $9 million increase in marketing and reservation fund revenues in Lodging offset by a corresponding increase in the funds' expenses. EBITDA for the Travel division increased 16% to $133 million and the EBITDA margin was 48%. Real Estate Division Real Estate Franchise revenues increased 36% to $154 million due to a 18% increase in royalty fees primarily as a result of a 10% increase in the average price of homes sold and a $10 million gain on sale of a small portion of the Company's preferred stock investment in NRT Incorporated. Contributions by franchisees to the Marketing and Advertising Fund increased revenues by $8 million and increased expenses by a like amount with no corresponding impact on EBITDA. EBITDA increased 36% to $114 million. Excluding the Marketing and Advertising contributions and offsetting expenses, the EBITDA margin increased to 78% in the fourth quarter of 1999 versus 74% in the prior year period. Relocation revenues decreased 2% to $101 million. Ancillary service fees increased, partially offsetting reduced home sale revenue and reflecting a continuing trend from asset-based to service-based fees. Adjusted EBITDA rose 4% to $28 million. The Adjusted EBITDA margin increased to 28% in 1999 from 26% in 1998 primarily due to expense reductions. Mortgage revenues decreased 19% to $83 million. Although origination volume for home purchases remained at the same level, refinancing origination volume declined $3.2 billion, or 87%, compared with record level volumes in the prior year period associated with unprecedented refinancing activity at that time. Servicing fee revenues rose 46% year over year as the average portfolio grew $8 billion (20%). EBITDA decreased 52% to $29 million and the EBITDA margin decreased from 59% in 1998 to 35% in 1999, as the decline in revenues amplified the impact of technology, infrastructure and teleservices costs incurred to support capacity built to handle anticipated market share in future periods. Move.com, the Company's new real estate services Internet portal, recorded revenues of $6 million as compared with $2 million in the prior year period. EBITDA decreased $8 million to a loss of $8 million in 1999. These results reflect increased investment in marketing and development of the portal which was launched on January 27, 2000. Direct Marketing Division Individual Membership revenues decreased 24% to $205 million. On a comparable basis, adjusting for the divestiture of North American Outdoor Group and the formation of NetMarket Group, Inc. as an independent company to which the online membership businesses were contributed, revenues declined 9%. This is partially due to the large number of new members who joined in the third quarter of 1997 for which revenues were recognized in the fourth quarter of 1998. The decrease in revenues was partially offset by an increase in the average price of a membership. Adjusted EBITDA increased from $10 million to $49 million due to reduced solicitation spending as the Company further refined the targeted audiences for its direct marketing efforts and achieved greater efficiencies in membership acquisition and retention, as well as the absence of losses generated by the online membership businesses. Insurance/Wholesale revenues rose 8% to $149 million, primarily as a result of international expansion. International revenues increased primarily due to a 30% increase in customers. EBITDA increased 42% to $44 million due to improved profitability in international markets and a marketing expense decrease. The Adjusted EBITDA margin increased from 22% in 1998 to 30% in 1999. Diversified Services Division Revenues in the Other Services segment decreased 13% to $310 million. The decrease is primarily as a result of the 1999 dispositions of certain business operations, including Global Refund Group, Entertainment Publications, Inc., Green Flag Group and several other non-strategic businesses. Adjusted EBITDA more than doubled year over year to $112 million as a result of a benefit from incremental financial income and reductions in corporate expenses. Statements about future results made in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and the current economic environment. The Company cautions that these statements are not guarantees of future performance. They involve a number of risks and uncertainties that are difficult to predict including the outcome of litigation. Actual results could differ materially from those expressed or implied in the forward-looking statements. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements are specified in the Company's Form 10-K/A for the year ended December 31, 1998, including completion of the settlement of the class action litigation. Cendant Corporation is a global provider of real estate, travel and direct marketing related consumer and business services. The Company's core competencies include building franchise systems, providing outsourcing solutions and direct marketing. As a franchisor, Cendant is among the world's leading franchisors of real estate brokerage offices, hotels, rental car agencies, and tax preparation services. The Company's real estate-related operations also includes Move.com, Cendant's residential real estate services portal on the Internet. As a provider of outsourcing solutions, Cendant is a major provider of mortgage services to consumers, the global leader in employee relocation, and the world's largest vacation exchange service. In direct marketing, Cendant provides access to insurance, travel, shopping, auto, and other services primarily to customers of its affinity partners. Other business units include NCP, the UK's largest private car park operator, and Wizcom, an information technology services provider. Headquartered in New York, NY, the Company has approximately 30,000 employees and operates in over 100 countries. More information about Cendant, its companies, brands and current SEC filings may be obtained by visiting the Company's Web site at or by calling 877-4INFO-CD (877-446-3623). Media Contact: Investor Contact: Elliot Bloom Denise L. Gillen 212-413-1832 212-413-1833 Samuel J. Levenson 212-413-1834 ***** Tables Follow
TABLE 1 CENDANT CORPORATION AND SUBSIDIARIES FINANCIAL RESULTS OF CONTINUING OPERATIONS (IN MILLIONS) THREE MONTHS ENDED DECEMBER 31, 1999 AS AS DISPOSED MOVE.COM COMPARABLE REPORTED ADJUSTMENTS ADJUSTED BUSINESSES (B) GROUP (C) BASIS (D) -------- ----------- -------- -------------- --------- --------- Revenues $ 1,283 $ - $ 1,283 $ 143 $ 6 $ 1,134 EBITDA (A) (2,089) 2,590 (E,F) 501 49 (8) 460 THREE MONTHS ENDED DECEMBER 31, 1998 AS AS DISPOSED MOVE.COM COMPARABLE REPORTED ADJUSTMENTS ADJUSTED BUSINESSES (B) GROUP (C) BASIS (D) -------- ----------- -------- -------------- --------- --------- Revenues $ 1,419 $ - $ 1,419 $ 355 $ 2 $ 1,062 EBITDA (A) (332) 754 (H,I) 422 85 - 337 YEAR ENDED DECEMBER 31, 1999 AS AS DISPOSED MOVE.COM COMPARABLE REPORTED ADJUSTMENTS ADJUSTED BUSINESSES (B) GROUP (C) BASIS (D) -------- ----------- -------- -------------- --------- --------- Revenues $ 5,402 $ - $ 5,402 $ 876 $ 18 $ 4,508 EBITDA (A) 22 1,897 (E,G) 1,919 142 (22) 1,799 YEAR ENDED DECEMBER 31, 1998 AS AS DISPOSED MOVE.COM COMPARABLE REPORTED ADJUSTMENTS ADJUSTED BUSINESSES (B) GROUP (C) BASIS (D) -------- ----------- -------- -------------- --------- --------- Revenues $ 5,284 $ - $ 5,284 $ 1,164 $ 10 $ 4,110 EBITDA (A) 752 838 (H,J) 1,590 200 1 1,389
- -------- (A) Defined as earnings before non-operating interest, income taxes, depreciation, amortization and minority interest. (B) Reflects the operating results of businesses which were disposed and the operating results of Netmarket Group, Inc. ("NGI"), an independent company that was created to pursue the development and expansion of interactive businesses formerly within the Company's Direct Marketing Division. (C) The Move.com Group represents a group of businesses which provide a broad range of home-related services through an Internet services portal formed by the combination of on-line strategies for the Real Estate Division of the Company. The Move.com Group assets include Rent Net, Inc., acquired in 1996, Utility Connections, Inc., acquired in May 1999, and Metro Rent, acquired in the fourth quarter of 1999. (D) Comparable Basis reflects the As Adjusted results of operations less the results of operations of the Disposed Businesses and the Move.com Group. (E) Includes a charge of $2,868 million associated with the preliminary agreement to settle the shareholder securities class action suit. (F) Includes credits of (i) $284 million for the net gain on the disposition of businesses and (ii) $2 million associated with changes to the estimate of previously recorded merger-related costs and other unusual charges. Such credits are partially offset by $8 million of investigation-related costs. (G) Includes a credit of $1,109 million for the net gain on the disposition of businesses. Such credit was partially offset by net charges of (i) $87 million comprised principally of an $85 million non-recurring charge incurred in conjunction with the creation of NGI, (ii) $23 million in connection with the transition of the Company's lodging franchisees to a Company-sponsored property management system, (iii) $7 million in connection with the termination of the proposed acquisition of RAC Motoring Services and (iv) $21 million of investigation-related costs. (H) Includes charges of (i) $433 million for the costs of terminating the proposed acquisitions of American Bankers Insurance Group, Inc. and Providian Auto and Home Insurance Company and (ii) $351 million associated with the agreement to settle the PRIDES securities class action suit. (I) Includes credits of $43 million associated with changes to the estimate of previously recorded merger-related costs and other unusual charges. Such credits are partially offset by charges of $13 million for investigation-related costs, including incremental financing costs, and executive terminations. (J) Includes charges of $121 million for investigation-related costs, including incremental financing costs, and executive terminations. Such charges are partially offset by a net credit of $67 million associated with changes to the estimate of previously recorded merger-related costs and other unusual charges.
TABLE 2 CENDANT CORPORATION AND SUBSIDIARIES FINANCIAL RESULTS OF CONTINUING OPERATIONS (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS ENDED DECEMBER 31, 1999 MOVE.COM CENDANT GROUP (A) GROUP (B) CENDANT -------------------------- -------- ------------------------ AS AS AS AS AS REPORTED ADJUSTED REPORTED REPORTED ADJUSTED -------- -------- -------- -------- -------- Revenues $ 1,277 $ 1,277 $ 6 $ 1,283 $ 1,283 Expenses 3,779 905 16 3,795 921(D) Net gain on disposition of businesses 284 - - 284 -(E) -------- -------- ------ -------- -------- Income (loss) from continuing operations before income taxes and minority interest (2,218) 372 (10) (2,228) 362 EBITDA (C) (2,081) 509 (8) (2,089) 501 Income (loss) from continuing operations (1,460) 225 (5) (1,465) 220 Net income (loss) (1,460) 225 (5) (1,465) 220 Income (loss) per share: Basic Income (loss) from continuing operations $ (2.06) $ 0.31 Net income (loss) (2.06) 0.31 Diluted Income (loss) from continuing operations (2.06) 0.29 Net income (loss) (2.06) 0.29 Weighted average shares Basic 711 711 Diluted 711 762 THREE MONTHS ENDED DECEMBER 31, 1998 MOVE.COM CENDANT GROUP (A) GROUP (B) CENDANT -------------------------- -------- ------------------------ AS AS AS AS AS REPORTED ADJUSTED REPORTED REPORTED ADJUSTED -------- -------- -------- -------- -------- Revenues $ 1,417 $ 1,417 $ 2 $ 1,419 $ 1,419 Expenses 1,871 1,117 2 1,873 1,119 (F) -------- -------- -------- -------- -------- Income (loss) from continuing operations before income taxes and minority interest (454) 300 - (454) 300 EBITDA (C) (332) 422 - (332) 422 Income (loss) from continuing operations (302) 190 - (302) 190 Net income (loss) 103 595 - 103 595 Income (loss) per share: Basic Income (loss) from continuing operations $ (0.36) $ 0.22 Net income (loss) 0.12 0.70 Diluted Income (loss) from continuing operations (0.36) 0.22 Net income (loss) 0.12 0.67 Weighted average shares Basic 850 850 Diluted 850 891 - -------- (A) The Cendant Group represents all of the businesses operated by Cendant other than the businesses which comprise the Move.com Group. (B) The Move.com Group represents a group of businesses which provide a broad range of home-related services through an Internet services portal formed by the combination of on-line strategies for the Real Estate Division of the Company. (C) Defined as earnings before non-operating interest, income taxes, depreciation, amortization and minority interest. (D) Excludes charges of $2,868 million ($1,823 million, after tax or $2.56 per diluted share) associated with the preliminary agreement to settle the shareholder securities class action suit and $8 million ($5 million, after tax or $0.01 per diluted share) of investigation-related costs. Such charges were partially offset by a credit of $2 million ($2 million, after tax) associated with changes to the estimate of previously recorded merger-related costs and other unusual charges. All per share amounts are calculated based on the As Reported diluted weighted average shares. (E) Excludes a credit of $284 million ($142 million, after tax or $0.20 per diluted share) associated with the net gain on the disposition of businesses. All per share amounts are calculated based on the As Reported diluted weighted average shares. (F) Excludes charges of (i) $433 million ($282 million, after tax or $0.33 per diluted share) for the costs of terminating the proposed acquisitions of American Bankers Insurance Group, Inc. and Providian Auto and Home Insurance Company, (ii) $351 million ($228 million, after tax or $0.27 per diluted share) associated with the agreement to settle the PRIDES securities class action suit and (iii) $13 million ($10 million, after tax or $0.01 per diluted share) for investigation-related costs and executive terminations. Such charges are partially offset by credits of $43 million ($28 million, after tax or $0.03 per diluted share) associated with changes to the estimate of previously recorded merger-related costs and other unusual charges. All per share amounts are calculated based on the As Reported diluted weighted average shares.
TABLE 3 CENDANT CORPORATION AND SUBSIDIARIES FINANCIAL RESULTS OF CONTINUING OPERATIONS (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) YEAR ENDED DECEMBER 31, 1999 MOVE.COM CENDANT GROUP (A) GROUP (B) CENDANT -------------------------- -------- ------------------------ AS AS AS AS AS REPORTED ADJUSTED REPORTED REPORTED ADJUSTED -------- -------- -------- -------- -------- Revenues $ 5,384 $ 5,384 $ 18 $ 5,402 $ 5,402 Expenses 7,017 4,011 42 7,059 4,053(D) Net gain on disposition of businesses 1,109 - - 1,109 -(E) -------- -------- -------- -------- -------- Income (loss) from continuing operations before income taxes and minority interest (524) 1,373 (24) (548) 1,349 EBITDA (C) 44 1,941 (22) 22 1,919 Income (loss) from continuing operations (199) 827 (14) (213) 813 Net income (loss) (25) 1,001 (14) (39) 987 Income (loss) per share: Basic Income (loss) from continuing operations $ (0.28) $ 1.08 Net income (loss) (0.05) 1.31 Diluted Income (loss) from continuing operations (0.28) 1.02 Net income (loss) (0.05) 1.24 Weighted average shares Basic 751 751 Diluted 751 805 YEAR ENDED DECEMBER 31, 1998 MOVE.COM CENDANT GROUP (A) GROUP (B) CENDANT -------------------------- -------- ------------------------ AS AS AS AS AS REPORTED ADJUSTED REPORTED REPORTED ADJUSTED -------- -------- -------- -------- -------- Revenues $ 5,274 $ 5,274 $ 10 $ 5,284 $ 5,284 Expenses 4,958 4,120 11 4,969 4,131 (F) -------- -------- -------- -------- -------- Income (loss) from continuing operations before income taxes and minority interest 316 1,154 (1) 315 1,153 EBITDA (C) 751 1,589 1 752 1,590 Income (loss) from continuing operations 161 706 (1) 160 705 Net income (loss) 541 1,086 (1) 540 1,085 Income (loss) per share: Basic Income (loss) from continuing operations $ 0.19 $ 0.83 Net income (loss) 0.64 1.28 Diluted Income (loss) from continuing operations 0.18 0.80 Net income (loss) 0.61 1.22 Weighted average shares Basic 848 848 Diluted 880 899 - -------- (A) The Cendant Group represents all of the businesses operated by Cendant other than the businesses which comprise the Move.com Group. (B) The Move.com Group represents a group of businesses which provide a broad range of home-related services through an Internet services portal formed by the combination of on-line strategies for the Real Estate Division of the Company. (C) Defined as earnings before non-operating interest, income taxes, depreciation, amortization and minority interest. (D) Excludes charges of (i) $2,868 million ($1,823 million, after tax or $2.43 per diluted share) associated with the preliminary agreement to settle the shareholder securities class action suit, (ii) $87 million ($49 million, after tax or $0.07 per diluted share) comprised principally of an $85 million ($48 million, after tax or $0.06 per diluted share) in connection with the termination of the proposed acquisition of RAC Motoring Services, (iii) $7 million ($4 million, after tax or $0.01 per diluted share) in connection with the termination of the proposed acquisition of RAC Motoring Services, (iv) $21 million ($13 million, after tax or $0.02 per diluted share) of investigation-related costs and (v) $23 million ($15 million, after tax or $0.02 per diluted share) in connection with the transition of the Company's lodging franchisees to a Company-sponsored property management system. All per share amounts are calculated based on the As Reported diluted weighted average shares. (E) Excludes a $1,109 million ($879 million, after tax or $1.17 per diluted share) for the net gain on the disposition of businesses. All per share amounts are calculated based on the As Reported diluted weighted average shares. (F) Excludes charges of (i) $433 million ($282 million, after tax or $0.32 diluted share) for the costs of terminating the proposed acquisitions of American Bankers Insurance Group, Inc. and Providian Auto and Home Insurance Company, (ii) $351 million ($228 million, after tax or $0.26 per diluted share) associated with the agreement to settle the PRIDES securities class action suit and (iii) $121 million ($79 million, after tax or $0.09 per diluted share) for investigation related costs and executive terminations. Such charges are partially offset by a net credit of $67 million ($44 million, after tax or $0.05 per diluted share) associated with changes to the estimate of previously recorded merger-related costs and other unusual charges. All per share amounts are calculated based on the As Reported diluted weighted average shares.
TABLE 4 CENDANT CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (IN MILLIONS, EXCEPT PER SHARE DATA) THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ---------------------- ---------------------- 1999 1998 1999 1998 Revenues Membership and service fees, net $ 1,212 $ 1,346 $ 5,183 $ 5,081 Fleet leasing (net of depreciation and interest costs of $0, $325, $670 and $1,279) -- 31 30 89 Other 71 42 189 114 ------- ------- ------- ------- Net revenues 1,283 1,419 5,402 $ 5,284 ------- ------- ------- ------- EXPENSES Operating 440 513 1,795 1,870 Marketing and reservation 196 305 1,017 1,158 General and administrative 146 179 671 666 Depreciation and amortization 94 81 371 323 Other charges: Litigation settlement 2,868 351 2,868 351 Merger-related costs and other unusual charges (credits) (2) (43) 110 (67) Termination of proposed acquisition -- 433 7 433 Investigation-related financing costs -- 8 -- 35 Other investigation-related costs 8 3 21 33 Executive terminations -- 2 -- 53 Interest, net 45 41 199 114 ------- ------- ------- ------- Total expenses 3,795 1,873 7,059 4,969 ------- ------- ------- ------- Net gain on disposition of businesses 284 -- 1,109 -- ------- ------- ------- ------- INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST (2,228) (454) (548) 315 Provision (benefit) for income taxes (778) (168) (396) 104 Minority interest, net of tax 15 16 61 51 ------- ------- ------- ------- INCOME (LOSS) FROM CONTINUING OPERATIONS (1,465) (302) (213) 160 Discontinued Operations: Loss from operations of discontinued businesses, net of tax -- -- -- (25) Gain on sale of discontinued businesses, net of tax -- 405 174 405 ------- ------- ------- ------- NET INCOME (LOSS) $(1,465) $ 103 $ (39) $ 540 ======= ======= ======= ======= INCOME (LOSS) PER SHARE BASIC Income (loss) from continuing operations $ (2.06) $ (0.36) $ (0.28) $ 0.19 Loss from operations of discontinued businesses -- -- -- (0.03) Gain on sale of discontinued businesses, net of tax -- 0.48 0.23 0.48 ------- ------- ------- ------- NET INCOME (LOSS) $ (2.06) $ 0.12 $ (0.05) $ 0.64 ======= ======= ======= ======= DILUTED Income (loss) from continuing operations $ (2.06) $ (0.36) $ (0.28) $ 0.18 Loss from operations of discontinued businesses -- -- -- (0.03) Gain on sale of discontinued businesses, net of tax -- 0.48 0.23 0.46 ------- ------- ------- ------- NET INCOME (LOSS) $ (2.06) $ 0.12 $ (0.05) $ 0.61 ======= ======= ======= ======= WEIGHTED AVERAGE SHARES Basic 711 850 751 848 Diluted 711 850 751 880
TABLE 5 CENDANT CORPORATION AND SUBSIDIARIES CONTINUING OPERATIONS REVENUES AND ADJUSTED EBITDA BY SEGMENT (DOLLARS IN MILLIONS) THREE MONTHS ENDED DECEMBER 31 ------------------------------ REVENUES ADJUSTED EBITDA (A) -------------------------------------------------------------------------- 1999 1998 % CHANGE 1999 (B) 1998 (H) % CHANGE -------------------------------------------------------------------------- Travel $ 275 $ 237 16% $ 133 $ 115 16% Real Estate Franchise 154 113 36% 114 84 36% Relocation 101 103 (2)% 28 27 4% Mortgage 83 102 (19)% 29 60 (52)% Individual Membership 205 269 (24)% 49 10 * Insurance/Wholesale 149 138 8% 44 31 42% Move.com 6 2 * (8) -- * Other Services 310 355 (13)% 112 (C) 53 (I,J) * Fleet -- 100 * -- 42 * ------ ------ ------ ------ Total $1,283 $1,419 (10)% $ 501 $ 422 19% ====== ====== ====== ======
YEAR ENDED DECEMBER 31, -----------------------
REVENUES ADJUSTED EBITDA (A) ----------------------------------------------------------------------------- 1999 1998 % CHANGE 1999 (D) 1998 (K) % CHANGE ----------------------------------------------------------------------------- Travel $1,148 $1,063 8% $ 586 (E) $ 542 8% Real Estate Franchise 571 456 25% 424 349 21% Relocation 415 444 (7)% 122 125 (2)% Mortgage 397 353 12% 182 188 (3)% Individual Membership 972 920 6% 127 (F) (59) * Insurance/Wholesale 575 544 6% 180 138 30% Move.com 18 10 80% (22) 1 * Other Services 1,099 1,107 (1)% 239 (G) 132 (I,L) 81% Fleet 207 387 * 81 174 * ------ ------ ------ ------ Total $5,402 $5,284 2% $1,919 $1,590 21% ====== ====== ====== ====== - --------------- * Not meaningful (A) Defined as earnings before non-operating interest, income taxes, depreciation, amortization and minority interest, adjusted to exclude the net gain on the disposition of businesses and certain other non-recurring items which are classified as unusual. (B) Excludes a $284 million credit for the net gain on the disposition of businesses. Such credit was comprised of $116 million and $179 million of gains within the Individual Membership and Other Services business segments, respectively, and an $11 million loss incurred within the Insurance/Wholesale segment. (C) Excludes charges of $2,868 million associated with the preliminary agreement to settle the shareholder securities class action suit and $8 million of investigation related costs. Such charges were partially offset by a $2 million credit associated with changes to the estimate of previously recorded merger-related costs and other unusual charges. (D) Excludes a credit of $1,109 million for the net gain on the disposition of businesses. Such credit was comprised of $142 million and $978 million of gains within the Individual Membership and Other Services business segments, respectively, and an $11 million loss incurred within the Insurance/Wholesale business segment. (E) Excludes a $23 million non-recurring charge in connection with the transition of the Company's lodging franchisees to a Company-sponsored property management system. (F) Excludes an $85 million non-recurring charge incurred in conjunction with the creation of NGI. (G) Excludes charges of (i) $2,868 million associated with the preliminary agreement to settle the shareholder securities class action suit, (ii) $21 million of investigation-related costs and (iii) $7 million in connection with the termination of the proposed acquisition of RAC Motoring Services. (H) Excludes a credit of $43 million associated with changes to the estimate of previously recorded merger-related costs and other unusual charges. Such credit was comprised of $20 million and $23 million within the Relocation and Other Services business segments, respectively. (I) Excludes charges of (i) $433 million for the costs of terminating the proposed acquisitions of American Bankers Insurance Group, Inc. and Providian Auto and Home Insurance Company and (ii) $351 million associated with the agreement to settle the PRIDES securities class action suit. (J) Excludes charges of $13 million for investigation related costs, including incremental financing costs, and executive terminations. (K) Excludes a net credit of $67 million associated with changes to the estimate of previously recorded merger-related costs and other unusual charges. The aforementioned net credit was comprised of $6 million, $1 million, $16 million, $47 million and $1 of credits within the Travel, Real Estate Franchise, Relocation, Other Services and Fleet segments, respectively, and $4 million of charges incurred within the Mortgage segment. (L) Excludes charges of $121 million of investigation related costs, including incremental financing costs, and executive terminations.
TABLE 6 CENDANT CORPORATION AND SUBSIDIARIES SEGMENT REVENUE DRIVER ANALYSIS (REVENUE DOLLARS AND MORTGAGE SEGMENT VOLUME IN MILLIONS) THREE MONTHS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, ---------------------------------------- ----------------------------------------- % % 1999 1998 CHANGE 1999 1998 CHANGE ----------- ----------- ----------- ----------- ----------- ----------- TRAVEL SEGMENT - -------------- Domestic Rooms Month End Actual Rooms (1) 509,117 489,396 4% 509,117 489,396 4% Weighted Average Rooms Available (1) 497,957 476,091 5% 489,329 465,270 5% Franchise Fee per Weighted Average Room $ 196.17 $ 188.29 4% 865.98 $ 853.91 1% ----------- ----------- ----------- ----------- Total Franchise Fees 98 90 9% 424 397 7% Car Rental Days 13,906,831 13,714,430 1% 60,047,067 56,043,544 7% Franchise Fee per Rental Day $ 2.78 $ 2.76 1% $ 2.81 $ 2.78 1% ----------- ----------- ----------- ----------- Total Franchise Fees 39 38 3% 169 156 8% Sub-Total Franchise Fees $ 137 $ 128 7% $ 593 $ 553 7% Number of Timeshare Exchanges 406,526 384,282 6% 1,839,797 1,708,154 8% Annualized Number of Exchanges 1,626,104 1,537,128 6% 1,839,797 1,708,154 8% Average Subscriptions 2,304,815 2,226,123 4% 2,313,179 2,296,451 1% ----------- ----------- ----------- ----------- Total Exchanges and Subscriptions 3,930,919 3,763,251 4% 4,152,976 4,004,605 4% Average Fee $ 21.37 $ 21.12 1% $ 84.04 $ 82.58 2% ----------- ----------- ----------- ----------- Total Exchange/Subscription Fees 84 79 6% 349 331 5% Other Revenue $ 54 $ 30 80% $ 206 $ 179 15% ----------- ----------- ----------- ----------- TOTAL TRAVEL REVENUE $ 275 $ 237 16% $ 1,148 $ 1,063 8% =========== =========== =========== =========== REAL ESTATE FRANCHISE SEGMENT Closed Sides - Domestic 468,621 477,723 (2%) 1,926,305 1,840,592 5% Average Price 158,528 144,565 10% 153,891 142,996 8% Adjusted Royalty Rate 0.16% 0.14% 14% 0.16% 0.15% 7% ----------- ----------- ----------- ----------- Total Royalties 117 99 18% 463 396 17% Other 37 14 164% 108 60 80% ----------- ----------- ----------- ----------- Total Revenue $ 154 $ 113 36% $ 571 $ 456 25% =========== =========== =========== =========== MORTGAGE SEGMENT Production Loan Closings $ 4,419 $ 7,883 (44%) $ 25,569 $ 26,010 (2%) Average Servicing Loan Portfolio 49,941 $ 41,753 20% $ 46,618 $ 36,266 29%
(1) Adjusted retrospectively to reflect improved room count information now available as a result of the "Power Up" technology initiative within the lodging business unit.
TABLE 7 CENDANT CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (IN BILLIONS) DECEMBER 31, DECEMBER 31, 1999 1998 ------------- ----------------- Assets - ------ Cash and cash equivalents $ 1.2 $ 1.0 Other current assets (1) 3.4 3.5 -------- -------- Total current assets 4.6 4.5 Property and equipment, net 1.3 1.4 Goodwill, net 3.3 3.9 Other assets 3.2 2.9 -------- -------- Total assets exclusive of assets under programs 12.4 12.7 Assets under management and mortgage programs 2.7 7.5 -------- -------- TOTAL ASSETS $ 15.1 $ 20.2 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Common stock litigation settlement $ 2.9 $ -- Other current liabilities 2.7 2.9 Long-term debt 2.4 3.4 Other non-current liabilities 0.8 0.4 -------- -------- Total liabilities exclusive of liabilities under programs 8.8 6.7 Liabilities under management and mortgage programs 2.6 7.2 Mandatorily redeemable preferred securities issued by subsidiary 1.5 1.5 Commitments and contingencies Total shareholders' equity 2.2 4.8 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 15.1 $ 20.2 ======== ========
(1) Includes $1.0 billion related to the deferred income tax effect on the Company's accrued class action litigation settlement.
TABLE 8 CENDANT CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (IN MILLIONS) YEAR ENDED DECEMBER 31, --------------------------- 1999 1998 ------- ------- OPERATING ACTIVITIES Net income (loss) $ (39) $ 540 Adjustments to reconcile net income (loss) to net cash provided by operating activities from continuing operations: Gain on sale of discontinued operations, net of tax (174) (405) Net gain on disposition of businesses (1,109) -- Litigation settlement 2,868 351 Depreciation and amortization 371 323 Net change in assets and liabilities from continuing operations (36) (35) Current and deferred income taxes (573) (209) Other, net (277) (237) ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES FROM CONTINUING OPERATIONS EXCLUSIVE OF MANAGEMENT AND MORTGAGE PROGRAMS 1,031 328 ------- ------- Management and mortgage programs: Depreciation and amortization 698 1,260 Proceeds on sale and payments from mortgage loans, net of originations 1,303 (780) ------- ------- 2,001 480 ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES FROM CONTINUING OPERATIONS 3,032 808 ------- ------- INVESTING ACTIVITIES Property and equipment additions (277) (355) Net assets acquired (net of cash acquired) and acquisition-related payments (205) (2,852) Net proceeds from sale of subsidiaries 3,509 314 Other, net 98 82 ------- ------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES FROM CONTINUING OPERATIONS EXCLUSIVE OF MANAGEMENT AND MORTGAGE PROGRAMS 3,125 (2,811) ------- ------- Management and mortgage programs: Net investment in leases and leased vehicles (774) (1,277) Repayment on advances on homes under management, net of equity advances 80 141 Additions to mortgage servicing rights, net of proceeds from sale (571) (405) ------- ------- (1,265) (1,541) ------- ------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES FROM CONTINUING OPERATIONS 1,860 (4,352) ------- ------- FINANCING ACTIVITIES Proceeds from borrowings 1,719 4,809 Principal payments of borrowings (2,213) (2,596) Issuance of common stock 127 171 Repurchases of common stock (2,863) (258) Proceeds from mandatorily redeemable preferred securities issued by subsidiary, net -- 1,447 ------- ------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES FROM CONTINUING OPERATIONS EXCLUSIVE OF MANAGEMENT AND MORTGAGE PROGRAMS (3,230) 3,573 ------- ------- Management and mortgage programs: Proceeds received for debt repayment in connection with disposal of fleet segment 3,017 -- Proceeds from debt issuance or borrowings 5,263 4,300 Principal payments on borrowings (7,838) (3,090) Net change in short-term borrowings (2,000) (93) ------- ------- (1,558) 1,117 ------- ------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES FROM CONTINUING OPERATIONS (4,788) 4,690 ------- ------- Effect of changes in exchange rates on cash and cash equivalents 51 (16) ------- ------- Net cash used in discontinued operations -- (188) ------- ------- Net increase in cash and cash equivalents 155 942 Cash and cash equivalents, beginning of period 1,009 67 ------- ------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,164 $ 1,009 ======= =======
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