Exhibit 99.1
REALOGY CORPORATION
![LOGO](https://capedge.com/proxy/8-K/0001193125-08-037565/g74965img001.jpg)
Historical Quarterly Supplemental Financial Information
For the Quarters Ended March 31, 2007,
June 30, 2007 & September 30, 2007
This document should be read in conjunction with Realogy Corporation’s Registration Statement on Form S-4. For details of our 2006 quarterly financial results, please see our Form 10 for the quarter ended March 31, 2006 and our Form 10-Qs for the quarters ended June 30, 2006, and September 30, 2006, which were filed with the Securities and Exchange Commission. Certain information in this document contains non-GAAP measures. Please direct questions with respect to the information contained in this document to Alicia Swift, Vice President, Planning, Realogy Corporation, 1 Campus Drive, Parsippany, New Jersey 07054 (973)-407-4669.
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Table of Contents
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Condensed Consolidated Statements of Operations for the Predecessor which includes the three months ended March 31, 2007 and the period from April 1, 2007 to April 9, 2007 and for the Successor which includes the period from April 10, 2007 to June 30, 2007 and the three months ended September 30, 2007 | | 3 |
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Condensed Consolidated Balance Sheets for the Predecessor as of March 31, 2007 and for the Successor as of June 30, 2007 and September 30, 2007 | | 4 |
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Condensed Consolidated Statements of Cash Flows for the Predecessor which includes the three months ended March 31, 2007 and the period from April 1, 2007 to April 9, 2007 and for the Successor which includes the period from April 10, 2007 to September 30, 2007 | | 5 |
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2007 Recap of Key Business/Revenue Drivers and Operating Statistics for the Predecessor as of March 31, 2007 and for the Successor as of June 30, 2007 and September 30, 2007 | | 6 |
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2007 Recap of Key Business/Revenue Drivers and Operating Statistics for the three months ended March 31, 2007 and the period from April 1, 2007 to April 9, 2007 and for the Successor which includes the period from April 10, 2007 to June 30, 2007 and the three months ended September 30, 2007 | | 7 |
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2006 Recap of Key Business/Revenue Drivers and Operating Statistics for each Quarter | | 8 |
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2008 Supplemental Cash Flow Guidance As Reported on Third Quarter Earnings Call held on November 16, 2007 | | 9 |
2
REALOGY CORPORATION AND THE PREDECESSOR
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions)
| | | | | | | | | | | | | | | | |
| | Predecessor | | | Predecessor | | | Successor | | | Successor | |
| | For The Three Months Ended March 31, 2007 | | | Period from April 1 Through April 9, 2007 | | | Period from April 10 Through June 30, 2007 | | | For The Three Months Ended September 30, 2007 | |
Revenues | | | | | | | | | | | | | | | | |
Gross commission income | | $ | 1,021 | | | $ | 83 | | | $ | 1,295 | | | $ | 1,238 | |
Service revenue | | | 196 | | | | 20 | | | | 201 | | | | 225 | |
Franchise fees | | | 97 | | | | 9 | | | | 115 | | | | 115 | |
Other | | | 59 | | | | 7 | | | | 46 | | | | 48 | |
| | | | | | | | | | | | | | | | |
Net revenues | | | 1,373 | | | | 119 | | | | 1,657 | | | | 1,626 | |
| | | | |
Expenses | | | | | | | | | | | | | | | | |
Commission and other agent-related costs | | | 673 | | | | 54 | | | | 863 | | | | 821 | |
Operating | | | 444 | | | | 46 | | | | 409 | | | | 460 | |
Marketing | | | 74 | | | | 10 | | | | 60 | | | | 65 | |
General and administrative | | | 69 | | | | 51 | | | | 67 | | | | 62 | |
Former parent legacy costs (benefit), net | | | (20 | ) | | | 1 | | | | — | | | | 2 | |
Separation costs | | | 2 | | | | — | | | | 1 | | | | 1 | |
Restructuring costs | | | — | | | | 1 | | | | 3 | | | | 3 | |
Merger costs | | | 9 | | | | 71 | | | | 16 | | | | 6 | |
Depreciation and amortization | | | 34 | | | | 4 | | | | 328 | | | | 119 | |
Interest expense | | | 35 | | | | 8 | | | | 153 | | | | 173 | |
Interest income | | | (6 | ) | | | (1 | ) | | | (2 | ) | | | (4 | ) |
| | | | | | | | | | | | | | | | |
Total expenses | | | 1,314 | | | | 245 | | | | 1,898 | | | | 1,708 | |
| | | | | | | | | | | | | | | | |
Income (loss) before income taxes and minority interest | | | 59 | | | | (126 | ) | | | (241 | ) | | | (82 | ) |
Provision for income taxes | | | 27 | | | | (49 | ) | | | (93 | ) | | | (28 | ) |
Minority interest, net of tax | | | — | | | | — | | | | 1 | | | | 1 | |
| | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 32 | | | $ | (77 | ) | | $ | (149 | ) | | $ | (55 | ) |
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REALOGY CORPORATION AND THE PREDECESSOR
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
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| | Predecessor | | | Successor | | | Successor | |
| | March 31, 2007 | | | June 30, 2007 | | | September 30, 2007 | |
ASSETS | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 496 | | | $ | 196 | | | $ | 276 | |
Trade receivables (net of allowance for doubtful accounts) | | | 149 | | | | 158 | | | | 149 | |
Relocation receivables, net | | | 907 | | | | 948 | | | | 1,020 | |
Relocation properties held for sale, net | | | 166 | | | | 154 | | | | 189 | |
Deferred income taxes | | | 97 | | | | 93 | | | | 110 | |
Due from former parent | | | 42 | | | | 34 | | | | 31 | |
Other current assets | | | 204 | | | | 202 | | | | 192 | |
| | | | | | | | | | | | |
Total current assets | | | 2,061 | | | | 1,785 | | | | 1,967 | |
| | | |
Property and equipment, net | | | 337 | | | | 366 | | | | 377 | |
Deferred income taxes | | | 234 | | | | — | | | | — | |
Goodwill | | | 3,331 | | | | 3,722 | | | | 3,747 | |
Trademarks | | | 17 | | | | 1,345 | | | | 1,345 | |
Franchise agreements, net | | | 325 | | | | 3,978 | | | | 3,959 | |
Other intangibles, net | | | 75 | | | | 623 | | | | 549 | |
Due from former parent | | | — | | | | | | | | — | |
Other non-current assets | | | 218 | | | | 351 | | | | 402 | |
| | | | | | | | | | | | |
Total assets | | $ | 6,598 | | | $ | 12,170 | | | $ | 12,346 | |
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LIABILITIES AND STOCKHOLDER’S EQUITY | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | |
Accounts payable | | $ | 149 | | | $ | 161 | | | $ | 131 | |
Securitization obligations | | | 915 | | | | 876 | | | | 968 | |
Due to former parent | | | 557 | | | | 532 | | | | 576 | |
Current portion of long-term debt | | | — | | | | 20 | | | | 31 | |
Accrued expenses and other current liabilities | | | 482 | | | | 679 | | | | 759 | |
| | | | | | | | | | | | |
Total current liabilities | | | 2,103 | | | | 2,268 | | | | 2,465 | |
| | | |
Long-term debt | | | 1,800 | | | | 6,212 | | | | 6,225 | |
Deferred income taxes | | | — | | | | 1,697 | | | | 1,731 | |
Other non-current liabilities | | | 146 | | | | 136 | | | | 127 | |
| | | | | | | | | | | | |
Total liabilities | | | 4,049 | | | | 10,313 | | | | 10,548 | |
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Commitments and contingencies | | | | | | | | | | | | |
| | | |
Stockholder’s equity: | | | | | | | | | | | | |
Common stock | | | 2 | | | | — | | | | — | |
Additional paid-in capital | | | 2,431 | | | | 2,000 | | | | 2,004 | |
(Accumulated deficit) retained earnings | | | 152 | | | | (149 | ) | | | (204 | ) |
Accumulated other comprehensive income (loss) | | | (18 | ) | | | 6 | | | | (2 | ) |
Treasury stock, at cost | | | (18 | ) | | | — | | | | — | |
| | | | | | | | | | | | |
Total stockholder’s equity | | | 2,549 | | | | 1,857 | | | | 1,798 | |
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Total liabilities and stockholder’s equity | | $ | 6,598 | | | $ | 12,170 | | | $ | 12,346 | |
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4
REALOGY CORPORATION AND THE PREDECESSOR
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
| | | | | | | | | | | | | | | | | | | | |
| | Three Months | | | Six Months | | | Nine Months | |
| | Predecessor | | | Predecessor | | | Successor | | | Predecessor | | | Successor | |
| | Predecessor March 31, 2007 | | | From January 1 Through April 9, 2007 | | | From April 10 Through June 30, 2007 | | | From January 1 Through April 9, 2007 | | | From April 10 Through September 30, 2007 | |
Operating Activities | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 32 | | | $ | (44 | ) | | $ | (149 | ) | | $ | (44 | ) | | $ | (204 | ) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | 34 | | | | 37 | | | | 328 | | | | 37 | | | | 448 | |
Deferred income taxes | | | 28 | | | | (20 | ) | | | (95 | ) | | | (20 | ) | | | (131 | ) |
Merger costs related to employee equity awards | | | — | | | | 56 | | | | — | | | | 56 | | | | — | |
Amortization and write-off of deferred financing costs | | | — | | | | 4 | | | | — | | | | 4 | | | | 22 | |
Gain on early extinguishment of debt | | | — | | | | — | | | | — | | | | — | | | | (2 | ) |
Net change in assets and liabilities, excluding the impact of acquisitions and dispositions: | | | | | | | | | | | | | | | | | | | | |
Trade receivables | | | (21 | ) | | | (26 | ) | | | (1 | ) | | | (26 | ) | | | 8 | |
Relocation receivables and advances | | | 59 | | | | 106 | | | | (85 | ) | | | 106 | | | | (129 | ) |
Relocation properties held for sale | | | 35 | | | | 38 | | | | 3 | | | | 38 | | | | (39 | ) |
Accounts payable, accrued expenses and other current liabilities | | | (46 | ) | | | 5 | | | | 190 | | | | 5 | | | | 224 | |
Due (to) from former parent | | | 9 | | | | 15 | | | | 13 | | | | 15 | | | | 16 | |
Other, net | | | (60 | ) | | | (64 | ) | | | 24 | | | | (64 | ) | | | (6 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net cash provided by operating activities | | | 70 | | | | 107 | | | | 228 | | | | 107 | | | | 207 | |
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Investing Activities | | | | | | | | | | | | | | | | | | | | |
Property and equipment additions | | | (29 | ) | | | (31 | ) | | | (22 | ) | | | (31 | ) | | | (41 | ) |
Acquisition of Realogy | | | — | | | | — | | | | (6,761 | ) | | | — | | | | (6,761 | ) |
Net assets acquired (net of cash acquired) and acquisition-related payments | | | (22 | ) | | | (22 | ) | | | (20 | ) | | | (22 | ) | | | (22 | ) |
Investment in unconsolidated entities | | | — | | | | — | | | | — | | | | — | | | | (1 | ) |
Sale leaseback proceeds related to corporate aircraft | | | — | | | | — | | | | — | | | | — | | | | 21 | |
Proceeds from sale of preferred stock and warrants | | | 22 | | | | 22 | | | | — | | | | 22 | | | | — | |
Change in restricted cash | | | (1 | ) | | | (9 | ) | | | 2 | | | | (9 | ) | | | 5 | |
Other, net | | | — | | | | — | | | | 1 | | | | — | | | | 1 | |
| | | | | | | | | | | | | | | | | | | | |
Net cash used in investing activities | | | (30 | ) | | | (40 | ) | | | (6,800 | ) | | | (40 | ) | | | (6,798 | ) |
| | | | | |
Financing Activities | | | | | | | | | | | | | | | | | | | | |
Proceeds from new term loan credit facility and issuance of notes | | | — | | | | — | | | | 5,032 | | | | — | | | | 6,219 | |
Repayment of predecessor term loan facility | | | — | | | | — | | | | (600 | ) | | | — | | | | (600 | ) |
Payments made for new term loan credit facility | | | — | | | | — | | | | — | | | | — | | | | (8 | ) |
Repurchase of 2006 Senior Notes, net of discount | | | — | | | | — | | | | — | | | | — | | | | (1,155 | ) |
Repayment of prior securitization obligations | | | — | | | | — | | | | (914 | ) | | | — | | | | (914 | ) |
Proceeds from new securitization obligations | | | — | | | | — | | | | 903 | | | | — | | | | 903 | |
Net change in securitization obligations | | | 21 | | | | 21 | | | | (30 | ) | | | 21 | | | | 59 | |
Debt issuance costs | | | — | | | | — | | | | (144 | ) | | | — | | | | (157 | ) |
Proceeds from issuances of common stock for equity awards | | | 37 | | | | 36 | | | | — | | | | 36 | | | | — | |
Proceeds from Cendant’s sale of Travelport | | | — | | | | 5 | | | | — | | | | 5 | | | | — | |
Investment by affiliates of Apollo and co-investors | | | — | | | | — | | | | 1,999 | | | | — | | | | 1,999 | |
Other, net | | | (1 | ) | | | — | | | | (6 | ) | | | — | | | | (8 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net cash provided by financing activities | | | 57 | | | | 62 | | | | 6,240 | | | | 62 | | | | 6,338 | |
| | | | | |
Effect of changes in exchange rates on cash and cash equivalents | | | — | | | | — | | | | — | | | | — | | | | 1 | |
| | | | | | | | | | | | | | | | | | | | |
Net (decrease) increase in cash and cash equivalents | | | 97 | | | | 129 | | | | (332 | ) | | | 129 | | | | (252 | ) |
Cash and cash equivalents, beginning of period | | | 399 | | | | 399 | | | | 528 | | | | 399 | | | | 528 | |
| | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents, end of period | | $ | 496 | | | $ | 528 | | | $ | 196 | | | $ | 528 | | | $ | 276 | |
| | | | | | | | | | | | | | | | | | | | |
Supplemental Disclosure of Cash Flow Information | | | | | | | | | | | | | | | | | | | | |
Interest payments (including securitization interest expense) | | $ | 28 | | | $ | 33 | | | $ | 67 | | | $ | 33 | | | $ | 167 | |
Income tax payments (refunds), net | | $ | (26 | ) | | $ | (26 | ) | | $ | 5 | | | $ | (26 | ) | | $ | 7 | |
5
2007 Recap of Key Business/Revenue Drivers and Operating Statistics
( In Millions)
| | | | | | | | | | | | |
| | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | |
Real Estate Franchise Services(a) | | | | | | | | | | | | |
Closed homesale sides | | | 279,236 | | | | 355,331 | | | | 331,824 | |
Average homesale price | | $ | 230,225 | | | $ | 233,610 | | | $ | 232,759 | |
Average homesale broker commission rate | | | 2.49 | % | | | 2.49 | % | | | 2.49 | % |
Net effective royalty rate | | | 5.03 | % | | | 5.01 | % | | | 5.06 | % |
Royalty per side | | $ | 298 | | | $ | 300 | | | $ | 303 | |
| | | |
Company Owned Real Estate Brokerage Services | | | | | | | | | | | | |
Closed homesale sides | | | 73,871 | | | | 98,574 | | | | 88,759 | |
Average homesale price | | $ | 533,634 | | | $ | 540,555 | | | $ | 540,379 | |
Average homesale broker commission rate | | | 2.47 | % | | | 2.48 | % | | | 2.46 | % |
Gross commission income per side | | $ | 13,768 | | | $ | 13,925 | | | $ | 13,894 | |
| | | |
Relocation Services | | | | | | | | | | | | |
Initiations | | | 30,836 | | | | 43,121 | | | | 32,504 | |
Referrals | | | 17,800 | | | | 24,905 | | | | 20,879 | |
| | | |
Title and Settlement Services | | | | | | | | | | | | |
Purchase Title and Closing Units | | | 32,007 | | | | 40,384 | | | | 38,782 | |
Refinance Title and Closing Units | | | 9,681 | | | | 10,478 | | | | 8,396 | |
Average price per closing unit | | $ | 1,457 | | | $ | 1,500 | | | $ | 1,466 | |
(a) | These amounts include only those relating to third-party franchisees and do not include amounts relating to NRT. |
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2007 Recap of Key Business/Revenue Drivers and Operating Statistics (Cont’d)
| | | | | | | | | | | | | | | | |
| | Predecessor | | | Predecessor | | | Successor | | | Successor | |
| | For The Three Months Ended March 31, 2007 | | | Period from April 1 Through April 9, 2007 | | | Period from April 10 Through June 30, 2007 | | | For The Three Months Ended September 30, 2007 | |
Revenue: | | | | | | | | | | | | | | | | |
Real Estate Franchise Services | | $ | 197 | | | $ | 19 | | | $ | 222 | | | $ | 217 | |
Company Owned Real Estate Brokerage Services | | | 1,033 | | | | 83 | | | | 1,312 | | | | 1,254 | |
Relocation Services | | | 124 | | | | 13 | | | | 116 | | | | 145 | |
Title and Settlement Services | | | 88 | | | | 9 | | | | 100 | | | | 95 | |
Corporate and Other (c) | | | (69 | ) | | | (5 | ) | | | (93 | ) | | | (85 | ) |
| | | | |
EBITDA (a) (b) | | | | | | | | | | | | | | | | |
Real Estate Franchise Services | | $ | 122 | | | $ | — | | | $ | 151 | | | $ | 145 | |
Company Owned Real Estate Brokerage Services | | | (21 | ) | | | (27 | ) | | | 69 | | | | 41 | |
Relocation Services | | | 20 | | | | (8 | ) | | | 27 | | | | 33 | |
Title and Settlement Services | | | 3 | | | | (7 | ) | | | 14 | | | | 6 | |
Corporate and Other (c) | | | (2 | ) | | | (73 | ) | | | (23 | ) | | | (19 | ) |
(a) | EBITDA is defined as net income before depreciation and amortization, interest (income) expense, net (other than Relocation Services interest for securitization assets and securitization obligations), income taxes and minority interest, each of which is presented on our Condensed Consolidated Statements of Operations. |
(b) | EBITDA includes Former Parent Legacy Costs (Benefits), Separation Costs (Benefits), Restructuring Costs and Merger Costs as follows ($ In Millions): Restructuring Costs and Merger Costs as follows ($ In Millions): |
| | | | | | | | | | | | | | | | | |
| | For The Three Months Ended March 31, 2007 | | | Predecessor Period from April 1 Through April 9, 2007 | | | | Successor Period from April 10 Through June 30, 2007 | | | For The Three Months Ended September 30, 2007 | |
RFG | | $ | — | | | $ | 11 | | | | $ | 3 | | | $ | — | |
NRT | | | — | | | | 18 | | | | | 8 | | | | 4 | |
Cartus | | | 1 | | | | 11 | | | | | (3 | ) | | | (2 | ) |
TRG | | | — | | | | 6 | | | | | 1 | | | | 1 | |
Corporate | | | (8 | ) | | | 27 | | | | | 11 | | | | 9 | |
(c) | Includes unallocated corporate overhead and the elimination of transactions between segments, which consists of intercompany royalties and marketing fees paid by our Company Owned Real Estate Brokerage Services segment of $69 million during the three months ended March 31, 2007, $5 million during the Predecessor Period from April 1 to April 9, 2007, $93 million during the Successor Period from April 10 to June 30, 2007 and $85 million during the three months ended September 30, 2007 respectively. |
7
2006 Recap of Key Business/Revenue Drivers and Operating Statistics by Quarter
(In millions, except operating statistics)
| | | | | | | | | | | | | | | | | | | | |
| | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | FY 2006 | |
Real Estate Franchise Services (a) | | | | | | | | | | | | | | | | | | | | |
Closed homesale sides | | | 334,897 | | | | 439,914 | | | | 402,109 | | | | 338,622 | | | | 1,515,542 | |
Average homesale price | | $ | 227,024 | | | $ | 233,457 | | | $ | 231,997 | | | $ | 233,527 | | | $ | 231,664 | |
Average homesale broker commission rate | | | 2.47 | % | | | 2.47 | % | | | 2.46 | % | | | 2.47 | % | | | 2.47 | % |
Net effective royalty rate | | | 4.78 | % | | | 4.85 | % | | | 4.95 | % | | | 4.90 | % | | | 4.87 | % |
Royalty per side | | $ | 276 | | | $ | 286 | | | $ | 290 | | | $ | 293 | | | $ | 286 | |
| | | | | |
Revenue(b) | | $ | 194 | | | $ | 254 | | | $ | 233 | | | $ | 198 | | | $ | 879 | |
EBITDA(c) | | $ | 131 | | | $ | 189 | | | $ | 158 | | | $ | 135 | | | $ | 613 | |
Company Owned Real Estate Brokerage Services | | | | | | | | | | | | | | | | | | | | |
Closed homesale sides | | | 85,826 | | | | 117,799 | | | | 103,850 | | | | 82,747 | | | | 390,222 | |
Average homesale price | | $ | 490,947 | | | $ | 492,809 | | | $ | 489,751 | | | $ | 497,922 | | | $ | 492,669 | |
Average homesale broker commission rate | | | 2.47 | % | | | 2.47 | % | | | 2.48 | % | | | 2.48 | % | | | 2.48 | % |
Gross commission income per side | | $ | 12,654 | | | $ | 12,611 | | | $ | 12,678 | | | $ | 12,857 | | | $ | 12,691 | |
| | | | | |
Revenue | | $ | 1,102 | | | $ | 1,501 | | | $ | 1,337 | | | $ | 1,082 | | | $ | 5,022 | |
EBITDA(c) | | $ | (36 | ) | | $ | 63 | | | $ | 28 | | | $ | (30 | ) | | $ | 25 | |
Relocation Services | | | | | | | | | | | | | | | | | | | | |
Initiations | | | 28,991 | | | | 42,832 | | | | 31,785 | | | | 27,156 | | | | 130,764 | |
Referrals | | | 18,705 | | | | 26,771 | | | | 21,761 | | | | 17,656 | | | | 84,893 | |
| | | | | |
Revenue | | $ | 107 | | | $ | 130 | | | $ | 142 | | | $ | 130 | | | $ | 509 | |
EBITDA(c) | | $ | 15 | | | $ | 34 | | | $ | 33 | | | $ | 21 | | | $ | 103 | |
Title and Settlement Services | | | | | | | | | | | | | | | | | | | | |
Purchase Title and Closing Units | | | 35,781 | | | | 47,163 | | | | 42,442 | | | | 35,646 | | | | 161,031 | |
Refinance Title and Closing Units | | | 10,366 | | | | 10,639 | | | | 9,551 | | | | 10,439 | | | | 40,996 | |
Average price per closing unit | | $ | 1,382 | | | $ | 1,403 | | | $ | 1,430 | | | $ | 1,402 | | | $ | 1,405 | |
| | | | | |
Revenue | | $ | 91 | | | $ | 113 | | | $ | 109 | | | $ | 96 | | | $ | 409 | |
EBITDA(c) | | $ | 7 | | | $ | 15 | | | $ | 14 | | | $ | 9 | | | $ | 45 | |
Corporate and Other | | | | | | | | | | | | | | | | | | | | |
EBITDA(c) | | $ | — | | | $ | (5 | ) | | $ | (31 | ) | | $ | 25 | | | $ | (11 | ) |
(a) | These amounts include only those relating to third-party franchisees and do not include amounts relating to NRT. |
(b) | Includes intercompany royalties paid by NRT of $72 million in the first quarter of 2006, $96 million in the second quarter of 2006, $87 million in the third quarter of 2006 and $72 million in the fourth quarter of 2006. |
(c) | EBITDA includes Former Parent Legacy Costs (Benefits), Separation Costs, Separation Benefits, Restructuring Costs and Merger Costs as follows ($ In Millions): |
| | | | | | | | | | | | | |
| | 1st Qtr | | 2nd Qtr | | 3rd Qtr | | 4th Qtr | |
RFG | | $ | — | | $ | 1 | | $ | 11 | | $ | 1 | |
NRT | | | — | | | 10 | | | 25 | | | 17 | |
Cartus | | | 1 | | | 3 | | | 7 | | | 2 | |
TRG | | | — | | | — | | | 4 | | | — | |
Corporate | | | — | | | 4 | | | 27 | | | (35 | ) |
EBITDA is defined as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations), income taxes and minority interest, each of which is presented on our Condensed Consolidated Statements of Operations.
8
2008 Supplemental Cash Flow Guidance As Reported on Third Quarter 2007 Earnings
Call Held on November 16, 2007
On the cash flow side of the equation, we expect that we would have the following cash requirements and inflows in 2008:
| • | | Capital expenditures for our businesses, including for items such as storefront refurbishment and technology initiatives, of $60 to $75 million, at a minimum. |
| • | | Development advance notes of about $15 to $20 million per year, net of their amortization above the EBITDA line. These funds are used to retain expiring franchisees and attract new franchisees. The returns on this investment are quite attractive. |
| • | | Investment in relocation assets that are not funded by our securitizations of about $20 to $25 million per year assuming growth in that part of Cartus’s business. |
| • | | Residual payments on closed office leases and the like of about $10 to $15 million a year. |
| • | | Funding of legacy activities that are expected to total about $20 to $30 million annually. |
| • | | On the inflow side, we expect to receive $30 million in tax refunds next year from our former parent and about $12.5 million in from our Wright Express (WEX) agreement. |
The 2008 supplemental cash flow guidance above is as of November 16, 2007 and will be updated on our next earnings conference call.
Forward-Looking Statements
This supplement contains certain statements that 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 Realogy to be materially different from 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.
Various factors that could cause actual results, performance or achievements to differ materially from those expressed in such forward-looking statements include but are not limited to: our substantial leverage; continuing adverse developments in the residential real estate markets; limitations on flexibility in operating our business due to restrictions contained in our debt agreements; adverse developments in general business, economic and political conditions, including changes in short-term or long-term interest rates or mortgage lending practices, and any outbreak or escalation of hostilities on a national, regional and international basis; our failure to complete future acquisitions or realize anticipated benefits from completed acquisitions; our failure to maintain or acquire franchisees and brands or the inability of franchisees to survive in the current real estate downturn and other risk factors discussed in the Registration Statement on Form S-4, as amended, declared effective by the Securities and Exchange Commission (the “SEC”) on January 9, 2008 and in the periodic reports filed from time to time by Realogy with the SEC.
In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this supplement may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of November 16, 2007. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements are specified in Realogy’s filings with the SEC, including Realogy’s Registration Statement of Form S-4, as amended, declared effective by the SEC on January 9, 2008, under the headings “Risk Factors,” “Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Except for Realogy’s ongoing obligations to disclose material information under the federal securities laws, Realogy undertakes no obligation to release any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless required by law.
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