Pro Forma Financial Information
The following information reflects pro forma consolidated balance sheet
data of HFS Incorporated (the "Company") as of June 30, 1996 and consolidated
results of operations data of the Company for the six months ended June 30, 1996
and the year ended December 31, 1995.
The pro forma consolidated balance sheet data is presented as if the
acquisitions of (i)Resort Condominiums International, Inc. ("RCI") and (ii)Avis
Inc. ("Avis") and the issuance of the Company common stock as partial
consideration for both RCI and Avis had occurred on June 30, 1996.
The pro forma consolidated results of operations data for the six months
ended June 30, 1996 and the year ended December 31, 1995 is presented as if the
acquisitions of both RCI and Avis and the following transactions had occurred on
January 1, 1995: (i) the May 31, 1996 acquisition of the common stock of
Coldwell Banker Corporation ("Coldwell Banker") and the related contribution of
Coldwell Banker's owned real estate brokerage offices to an independent trust,
(ii) the receipt of proceeds from an offering of the Company's common stock to
the extent necessary to fund the acquisition of Coldwell Banker and the related
repayment of indebtedness and acquisition expenses, (iii) the acquisitions of:
the six non-owned Century 21 regions during the second quarter of 1996, the
Travelodge franchise system on January 23, 1996 and the Electronic Realty
Associates franchise system on February 12, 1996 (collectively the "Other 1996
Acquisitions") and (iv) the February 22, 1996 issuance of $240 million of 4-
3/4% convertible senior notes due 2003 to the extent such proceeds were used to
finance the Other 1996 Acquisitions. The pro forma consolidated results of
operations data for the year ended December 31, 1995 also reflects the August 1,
1995 acquisition of Century 21 Real Estate Corporation and the acquisition by
merger in May 1995 of Central Credit Inc. as if such acquisitions had occurred
on January 1, 1995.
The acquisitions have been or will be accounted for using the purchase
method of accounting. Accordingly, assets acquired and liabilities assumed have
been or will be recorded at their estimated fair values which are subject to
further refinement, including appraisals and other analyses, with appropriate
recognition given to the effect of current interest rates and income taxes.
Management does not expect that the final allocation of the purchase price for
the above transactions will differ materially from the preliminary allocations.
The Company has entered into certain immaterial transactions which are not
reflected in the pro forma consolidated results of operations data.
The pro forma financial information does not purport to present the
financial position or results of operations of the Company had the transactions
and events assumed therein occurred on the dates specified, nor are they
necessarily indicative of the results of operations that may be achieved in the
future. In addition to the cost savings reflected in the pro forma consolidated
results of operations data, the pro forma consolidated results of operations
data does not reflect certain additional cost savings and revenue enhancements
that management believes may be realized following the acquisitions. These
savings are expected to be realized primarily through the restructuring of
franchise and other services of the acquired companies as well as revenue
enhancements expected through leveraging of the Company's preferred vendor
programs. No assurances can be made as to the amount of cost savings or revenue
enhancements, if any, that actually will be realized. In addition, there can be
no assurance the Company will complete the acquisitions of Avis and RCI.
(In millions, except per share amounts)
Consolidated Results of Operations Data
For the Six Months Ended For the Year Ended
June 30, 1996 December 31, 1995
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Historical Pro Forma Historical Pro Forma
HFS (Unaudited) HFS(1) (Unaudited)
Revenue .................. $ 304.2 $ 598.4 $ 413.0 $ 1,143.3
Income before income taxes . 103.3 167.9 134.9 325.9
Net income .................... 61.6 98.6 79.3 191.4
Net income per share ...... $ 0.51 $ 0.70 $ 0.73 $ 1.41
(1)Restated to conform to current year presentation.
Consolidated Balance Sheet Data
As of June 30, 1996
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Historical Pro Forma
HFS (Unaudited)
Total Assets ............ $ 2,789.6 $ 4,026.5
Total Stockholders' Equity. 1,836.7 2,273.2