Exhibit 99.1
[CENDANT LOGO]
CENDANT REPORTS BETTER THAN EXPECTED
FOURTH QUARTER 2000 RESULTS
4Q Adjusted EPS of $0.20 from Continuing Operations, Excluding Move.com,
Exceeds Projection by $0.02
Company Increases Projected 2001 Adjusted EPS from Continuing Operations,
Excluding Move.com, to $0.93
4Q Adjusted EPS from Continuing Operations, Excluding Move.com,
$0.20 in 2000 vs. $0.26 in 1999
NEW YORK, NY, FEBRUARY 7, 2001 - Cendant Corporation (NYSE: CD) today reported
fourth quarter 2000 results and updated its outlook for 2001.
"We are pleased that we have exceeded our projections for the fourth quarter of
2000 and have raised our projection for 2001 as well," said Cendant Chairman,
President and Chief Executive Officer, Henry R. Silverman. "Strong performance
in our mortgage and relocation business units, an improved interest rate
environment and cost containment contributed to the improvement of our fourth
quarter results over prior projections. We anticipate closing the Avis
transaction in March and the Fairfield transaction in April and integrating
those businesses to increase revenue and earnings growth in 2001."
The Company announced that it has increased its 2001 projection for adjusted
earnings per share from continuing operations, including the pending
acquisitions of Avis Group and Fairfield Communities and excluding move.com's
operating results and the impact of its sale to Homestore.com, to $0.93 for full
year 2001 and to $0.16 for first quarter 2001. The Company previously announced
that it projected earnings per share from continuing operations, excluding
Move.com, to be $0.91 for full year 2001 and $0.14 for first quarter 2001. The
Company noted that further improvements in operations, together with reduced
interest rates and financing costs, may result in further increases in projected
earnings for 2001.
1
FOURTH QUARTER DIVISION RESULTS
- -------------------------------
The underlying discussion of each division's operating results focuses on
revenues and Adjusted EBITDA. EBITDA is defined as earnings before non-operating
interest, income taxes, depreciation, amortization and minority interest.
Adjusted EBITDA excludes net gains and losses on disposition of businesses and
other items that are of a non-recurring or unusual nature. (See Table 4 for
Revenues and Adjusted EBITDA by Segment and Table 5 for Segment Revenue Driver
Analysis.) All dollar amounts are in millions.
TRAVEL DIVISION
- ---------------
Travel 2000 1999 % change
- --------------------------------------------------------------------------------
Revenues $289 $291 (1%)
- --------------------------------------------------------------------------------
EBITDA $124 $129 (4%)
- --------------------------------------------------------------------------------
EBITDA Margin 43% 44%
- ----------------------------------------------
While reported revenues and EBITDA decreased, recurring operating results from
our travel segment businesses were favorable quarter over quarter. Royalty fees
rose primarily as a result of a higher average daily rate and room growth in
lodging and increased car rental volume at Avis. Also, timeshare revenue
(exclusive of the impact of Staff Accounting Bulletin 101 (SAB 101), which
modified the timing of revenue recognition for subscriptions) increased due to
membership growth, increased exchange transaction volume and higher fees per
transaction. Fourth quarter 1999 revenues and EBITDA benefited from an $11
million bulk timeshare exchange transaction. Fourth quarter 2000 results were
negatively impacted by the timing and allocation of certain expenses and the
effect of SAB 101.
REAL ESTATE DIVISION
- --------------------
Real Estate Franchise 2000 1999 % change
- --------------------------------------------------------------------------------
Revenues $144 $154 (6%)
- --------------------------------------------------------------------------------
EBITDA $102 $114 (11%)
- --------------------------------------------------------------------------------
EBITDA Margin 71% 74%
- -----------------------------------------------------------------
Reported revenues and EBITDA decreased during the quarter; however, excluding
the gain in fourth quarter 1999 from the sale of a portion of our preferred
stock investment in our largest franchisee, NRT, and higher corporate overhead
allocations in 2000 due to a refinement of allocation methods, revenues and
EBITDA remained relatively constant quarter over quarter. Royalty fees increased
primarily because of an increase in the average price of homes sold. The volume
of homes sold in fourth quarter 2000 was relatively constant versus fourth
quarter 1999, which is also consistent with the performance of the industry.
We continued to add new franchise brokerages to our system in 2000. The gross
commissions added by our franchise sales was 10% higher in fourth quarter 2000
than in fourth quarter 1999. Revenue growth in this segment was moderated by a
reduction in international franchise fees because of certain international
development contracts executed in fourth quarter 1999 and significantly reduced
NRT acquisition activity until December 2000.
2
Relocation 2000 1999 % change
- --------------------------------------------------------------------------------
Revenues $116 $101 15%
- --------------------------------------------------------------------------------
EBITDA $37 $28 32%
- --------------------------------------------------------------------------------
EBITDA Margin 32% 28%
- -----------------------------------------------
Revenues and EBITDA increased primarily from higher services fees and increased
referral fees. These results reflect a continuing trend from asset-based to
service-based fees. Fourth quarter 2000 EBITDA margins improved principally
because of benefits from the Company's investment in technology. During the
fourth quarter, we signed 25 new accounts and expanded 39 existing business
relationships. Additionally, we expanded our international presence in 2000
through the acquisition of two relocation firms, Hamilton Watts International in
Australia and Bradford and Bingley Relocation Services in the U.K.
Mortgage 2000 1999 % change
- --------------------------------------------------------------------------------
Revenues $117 $83 41%
- --------------------------------------------------------------------------------
EBITDA $63 $29 117%
- --------------------------------------------------------------------------------
EBITDA Margin 54% 35%
- -----------------------------------------------
The increase in operating results reflects significant growth in both loan
production volume and our servicing portfolio. Revenues from mortgage loans
closed increased $25 million during the quarter resulting from strong mortgage
origination growth and favorable production margins. Total mortgage closings
were $5.8 billion, up 32% compared with fourth quarter 1999. Mortgage closings
of $5.1 billion for home-purchase mortgages were up 28% and refinance mortgages
were up 72%. Loan servicing revenues increased primarily due to a $19 billion,
or 38%, increase in the average servicing portfolio. Cendant Mortgage ranked as
the fourth largest retail mortgage lender by the National Mortgage News for
third quarter 2000, the latest period for which data are available. During
fourth quarter 2000 we entered into an expanded agreement with Merrill Lynch,
under which Merrill Lynch will outsource its mortgage origination and servicing
operations to us beginning in January 2001. Merrill Lynch closed approximately
$5 billion in retail purchase mortgages for the year ended December 31, 2000.
Assuming Merrill Lynch's loan volume was part of our operating results for the
full year 2000, we believe we would have ranked as the second largest retail
mortgage lender.
DIRECT MARKETING DIVISION
- -------------------------
Insurance/Wholesale 2000 1999 % change
- --------------------------------------------------------------------------------
Revenues $140 $149 (6%)
- --------------------------------------------------------------------------------
Adjusted EBITDA $39 $44 (11%)
- --------------------------------------------------------------------------------
Adjusted EBITDA Margin 28% 30%
- -------------------------------------------------------
Revenues and Adjusted EBITDA decreased principally due to modestly reduced
direct mail offerings in prior periods, primarily related to consumer privacy
concerns, and reduced billings and collections of insurance premiums. The
decline was partially offset by cost savings realized from the consolidation of
U.S. operations in 2000. The Company projects that improved market conditions,
increased mail volume in fourth quarter 2000, and the benefits of the
consolidation of U.S. operations will improve operating results later in 2001.
3
DIVERSIFIED SERVICES DIVISION
- -----------------------------
Diversified Services 2000 1999 % change
- --------------------------------------------------------------------------------
Revenues $145 $310 (53%)
- --------------------------------------------------------------------------------
Adjusted EBITDA $34 $110 (69%)
- --------------------------------------------------------------------------------
Adjusted EBITDA Margin 23% 35%
- -----------------------------------------------------------------
Revenues and Adjusted EBITDA decreased primarily as a result of the 1999
dispositions of several business operations. The absence of these divested
businesses from fourth quarter 2000 operations resulted in a reduction in
revenues of $142 million and a reduction in Adjusted EBITDA of $53 million. The
decline in Adjusted EBITDA also reflects lower investment income, as expected
and previously disclosed. Partially offsetting these declines was an increase in
revenue and EBITDA at our National Car Parks subsidiary.
MOVE.COM GROUP
- --------------
Move.com Group 2000 1999
- -----------------------------------------------------------------------
Revenues $18 $6
- --------------------------------------------------------------
EBITDA ($20) ($8)
- --------------------------------------------------------------
Move.com Group revenues tripled because of higher sponsorship revenues made
possible by the first quarter 2000 launch of our Internet real estate services
portal, move.com. Results reflect increased investment in marketing and
development of the move.com portal. In October 2000, we announced a definitive
agreement with Homestore.com, Inc. to sell move.com, certain other businesses
within Move.com Group and Welcome Wagon International, Inc. (a wholly-owned
subsidiary included within the Diversified Services segment) to Homestore.com,
Inc. in exchange for approximately 26 million shares of Homestore common stock.
Subject to regulatory approval, the Company expects to complete this transaction
during first quarter 2001.
DISCONTINUED OPERATIONS
- -----------------------
Individual Membership 2000 1999 % change
- --------------------------------------------------------------------------------
Revenues $203 $192 6%
- --------------------------------------------------------------------------------
Adjusted EBITDA $40 $55 (27%)
- --------------------------------------------------------------------------------
Adjusted EBITDA Margin 20% 29%
- -----------------------------------------------------------------
Individual Membership was classified as a discontinued operation reflecting our
October 2000 announcement to spin off this business to CD common stock
shareholders. Fewer annual memberships expiring in fourth quarter 2000 than in
fourth quarter 1999 (revenues are generally recorded upon expiration of the
membership term) accounted for a $17 million reduction in revenues and Adjusted
EBITDA. In addition, consistent with our previously announced intention to
invigorate the growth of our Individual Membership business, we incurred an
incremental $8 million of marketing solicitation spending compared with fourth
quarter 1999. Also, during fourth quarter 2000, we reintegrated NetMarket Group,
the online portion of the business, into this segment, which increased revenues
by $12 million but decreased Adjusted EBITDA by $7 million. Revenues and
Adjusted EBITDA in fourth quarter 2000 were positively impacted by a favorable
mix of products and programs with marketing partners.
4
FOURTH QUARTER EPS ITEMS
- ------------------------
Cendant Corporation currently has two classes of common stock: CD common stock
and Move.com common stock. CD common stock is intended to track the performance
of Cendant Group and Move.com common stock is intended to track the performance
of Move.com Group. Beginning with second quarter 2000, Cendant reported EPS on
the two-class method. Reported EPS for CD common stock includes Cendant Group
operations and a majority retained interest in Move.com Group. Reported EPS for
Move.com common stock includes Move.com Group operations excluding Cendant
Group's retained interest in Move.com Group.
Reported earnings (loss) per share from continuing operations for Cendant Group
was $0.17 in fourth quarter 2000 and ($2.22) in fourth quarter 1999. Fourth
quarter 1999 was favorably impacted by the operations of Entertainment
Publications (EPub), which was sold at the end of November 1999. Due to the
seasonality of its operations, EPub operations contributed $0.04 per share after
tax in fourth quarter 1999. The following items are also reflected in reported
results:
o A charge of $2.59 per share after tax in 1999 in connection with the
settlement of the common stock class action litigation
o A net gain of $0.10 per share after tax in 1999 related to the dispositions
of certain non-strategic businesses
o Interest expense of $0.04 per share after tax in 2000 in connection with the
settlement of the common stock class action litigation
o A charge of $0.01 per share after tax in 2000 for investigation-related
costs and other unusual items
o Cendant Group's retained interest in the losses of Move.com Group of ($0.02)
per share after tax in 2000 and ($0.01) per share after tax in 1999
FULL YEAR 2000 RESULTS
- ----------------------
Reported earnings (loss) per share from continuing operations for Cendant Group
was $0.78 in 2000 compared with ($0.44) in 1999. Adjusted EBITDA from continuing
operations, excluding move.com, was $1.6 billion in 2000 and $1.8 billion in
1999. Adjusted income from continuing operations, excluding move.com, was $686
million in 2000 and $761 million in 1999. Adjusted earnings per share from
continuing operations, excluding move.com, was $0.91 in 2000 compared with $0.96
in 1999.
BALANCE SHEET AND CASH FLOW ITEMS
- ---------------------------------
o As of December 31, 2000, we had approximately $967 million of cash and cash
equivalents and $2.3 billion of debt. We have $2.5 billion in credit
facilities for the litigation settlement and other corporate needs. The net
debt to total capital ratio was 24%.
o Return on common equity, measured on adjusted net income, was 25% in 2000.
o In third quarter 2000, in accordance with the settlement agreement, we began
to accrue interest expense on our $2.85 billion litigation settlement
obligation. The Company expects the comparisons of interest expense from the
litigation settlement to improve by fourth quarter 2001 as we anniversary
and also discharge the liability. In fourth quarter 2000 we paid $350
million to a settlement trust and the Company projects that it will pay
approximately $1.0 billion in 2001, bringing the outstanding principal
obligation to no more than $1.5 billion by year end 2001.
5
2001 OUTLOOK
- ------------
In addition to the first quarter 2001 projection stated above, the Company
reiterated that it projects adjusted earnings per share from continuing
operations, excluding Move.com, to be $0.25 in second quarter 2001. Earnings per
share in the second, third and fourth quarters of 2001 are projected to be
higher than the corresponding quarters of 2000. Results for the second, third
and fourth quarters are dependent upon the timing and completion of the pending
acquisitions of Avis Group and Fairfield Communities.
While Cendant's second quarter 2001 results will be affected by the timing and
financing of the Avis and Fairfield acquisitions, the Company announced the
following financial projections from continuing operations, excluding the
results of move.com and including the results of Avis and Fairfield, for second
quarter 2001:
o Adjusted EBITDA is projected to be between $550 million and $560 million
compared with $360 million in 2000. The increase in projected Adjusted
EBITDA in the second quarter is principally because of the expected
acquisitions of Avis and Fairfield. In addition, Adjusted EBITDA is
projected to benefit by a significant percentage increase in the Mortgage
Services segment.
o Depreciation and amortization is projected to be between $115 million and
$120 million in 2001 compared with $81 million in 2000.
o Net interest expense is projected to be between $70 million and $75 million
in 2001 compared with $21 million in 2000, with the increase principally due
to the Company's litigation settlement obligation.
o The tax rate is projected to be approximately 35.2% for the full year 2001
compared with 34.0% for the full year 2000. The higher 2001 tax rate is
principally a result of the acquisition of Avis.
o Minority interest is projected to be approximately $5 million in 2001
compared with $22 million in 2000, primarily as a result of the retirement
of the Feline PRIDES and the issuance of common stock on February 16, 2001,
in connection therewith.
o Weighted average diluted shares outstanding are projected to be between 900
million and 925 million in 2001 compared with 762 million in 2000, primarily
as a result of the retirement of $1.7 billion Feline PRIDES and the issuance
of common stock in connection therewith, anticipated financing to fund our
acquisition program and shares which may be issued for the Fairfield
transaction.
CONFERENCE CALL
- ---------------
Cendant will host a conference call to discuss fourth quarter results on
Thursday, February 8, 2001 at 11:00 a.m. Eastern Time. Investors may access this
call live at www.Cendant.com or dial in to 913-981-5507. A web replay will be
available beginning at 2:00 p.m. Eastern Time on February 8, 2001 at
www.Cendant.com. A telephone replay will be available from 2:00 p.m. Eastern
Time on February 8, 2001 until 8:00 p.m. on February 12 at 719-457-0820, access
code: 241875.
6
REGULATION FD
- -------------
In connection with the adoption of SEC rules on corporate disclosure, the
Company intends to update and publish forward-looking statements regarding its
projected financial performance on a periodic basis.
Statements about future results made in this release 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. Actual results may 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 8-K filed on the date hereof.
Such forward-looking statements include projections. Such projections were not
prepared in accordance with published guidelines of the American Institute of
Certified Public Accountants or the SEC regarding projections and forecasts, nor
have such projections been audited, examined or otherwise reviewed by
independent auditors of Cendant or its affiliates. In addition, such projections
are based upon many estimates and are inherently subject to significant economic
and competitive uncertainties and contingencies, many of which are beyond the
control of management of Cendant and its affiliates. Certain of such
uncertainties and contingencies are specified in Cendant's Form 8-K filed on the
date hereof. Accordingly, actual results may be materially higher or lower than
those projected. The inclusion of such projections herein should not be regarded
as a representation by Cendant or its affiliates that the projections will prove
to be correct.
Cendant Corporation is a diversified global provider of business and consumer
services primarily within the real estate and travel sectors. The Company's core
competencies include building franchise systems and providing outsourcing
services. Cendant is among the world's leading franchisers of real estate
brokerage offices, hotels, rental car agencies, and tax preparation services.
Cendant is also a provider of outsourcing solutions to its business partners
including mortgage origination, employee relocation, customer loyalty programs
and vacation exchange services. Other business units include NCP, the UK's
largest private car park operator, and WizCom, an information technology
services provider. With headquarters in New York City, the Company has
approximately 28,000 employees and operates in over 100 countries.
More information about Cendant, its companies, brands and current SEC filings
may be obtained by calling 877-4INFO-CD (877-446-3623) or by visiting the
Company's Web site at www.Cendant.com.
Media Contact: Investor Contacts:
Elliot Bloom Denise Gillen Sam Levenson
212-413-1832 212-413-1833 212-413-1834
****Tables Follow****
7
TABLE 1
CENDANT CORPORATION AND SUBSIDIARIES
FINANCIAL RESULTS OF CONTINUING OPERATIONS
(IN MILLIONS)
THREE MONTHS ENDED DECEMBER 31, 2000
------------------------------------
AS AS DISPOSED MOVE.COM COMPARABLE
REPORTED ADJUSTMENTS ADJUSTED BUSINESSES (B) GROUP (C) BASIS (D)
-------- ----------- -------- -------------- --------- ---------
Revenues $ 968 $ - $ 968 $ 7 $ 18 $ 943
EBITDA (A) 370 9 (E) 379 2 (20) 397
THREE MONTHS ENDED DECEMBER 31, 1999
------------------------------------
AS AS DISPOSED MOVE.COM COMPARABLE
REPORTED ADJUSTMENTS ADJUSTED BUSINESSES (B) GROUP (C) BASIS (D)
-------- ----------- -------- -------------- --------- ---------
Revenues $ 1,094 $ - $ 1,094 $ 151 $ 6 $ 937
EBITDA (A) (2,286) 2,732 (F) 446 55 (8) 399
YEAR ENDED DECEMBER 31, 2000
----------------------------
AS AS DISPOSED MOVE.COM COMPARABLE
REPORTED ADJUSTMENTS ADJUSTED BUSINESSES (B) GROUP (C) BASIS (D)
-------- ----------- -------- -------------- --------- ---------
Revenues $ 3,930 $ - $ 3,930 $ 30 $ 59 $ 3,841
EBITDA (A) 1,444 99 (G) 1,543 4 (94) 1,633
YEAR ENDED DECEMBER 31, 1999
----------------------------
AS AS DISPOSED MOVE.COM COMPARABLE
REPORTED ADJUSTMENTS ADJUSTED BUSINESSES (B) GROUP (C) BASIS (D)
-------- ----------- -------- -------------- --------- ---------
Revenues $ 4,521 $ - $ 4,521 $ 739 $ 18 $ 3,764
EBITDA (A) (197) 1,980 (H) 1,783 177 (22) 1,628
(A) Defined as earnings before non-operating interest, income taxes,
depreciation, amortization and minority interest.
(B) Reflects the operating results of businesses included in continuing
operations which were disposed.
(C) The Move.com Group represents a group of businesses which provide a
broad range of quality relocation, real estate and home-related
products and services through its flagship portal site, move.com, and
through the move.com network.
(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 charges of $8 million ($5 million, after tax or $.01 per
diluted share) for investigation-related costs and $1 million ($1
million, after tax) for losses related to the dispositions of
businesses.
(F) Includes charges of (i) $2,894 million ($1,839 million, after tax or
$2.59 per diluted share) associated with the agreement to settle the
principal common stockholder class action lawsuit and (ii) $8 million
($5 million, after tax or $0.01 per diluted share) for
investigation-related costs. Such charges were partially offset by (i)
a net gain of $168 million ($73 million, after tax or $0.10 per diluted
share) related to the dispositions of businesses and (ii) a credit of
$2 million ($1 millio tax) associated with changes to the estimate of
previously recorded merger-related costs and other unusual charges.
(G) Includes charges of (i) $86 million ($56 million, after tax or $.07 per
diluted share) in connection with restructuring and other initiatives,
(ii) $43 million ($27 million, after tax or $.04 per diluted share) for
losses related to the dispositions of businesses, (iii) $23 million
($15 million, after tax or $.02 per diluted share) for
investigation-related costs, (iv) $20 million ($12 million, after tax
or $.02 per diluted share) in connection with litigation asserting
claims associated with accounting irregularities in the former business
units of CUC and outside of the principal common stockholder class
action lawsuit and (v) $3 million ($2 million, after tax) in connection
with the postponement of the initial public offering of Move.com common
stock. Such charges were partially offset by (i) a non-cash credit of
$41 million ($26 million, after tax or $.03 per diluted share) in
connection with a change to the original estimate of the number of
Rights to be issued in connection with the PRIDES settlement resulting
from unclaimed and uncontested Rights and (ii) a gain of $35 million
($35 million, after tax or $.05 per diluted share), which represents
the recognition of a portion of the Company's previously recorded
deferred gain from the sale of its fleet businesses due to the
disposition of VMS Europe by Avis Group Holdings, Inc. in August 2000.
(H) Includes charges of (i) $2,894 million ($1,839 million, after tax or
$2.45 per diluted share) associated with the preliminary agreement to
settle the principal common stockholder class action lawsuit, (ii) $23
million ($15 million, after or $0.02 per diluted share) in connection
with the transition of the Company's lodging franchisees to a Company
sponsored property managment system, (iii) $21 million ($13 million,
after tax or $0.02 per diluted share) for investigation-related costs,
(iv) $7 million ($4 million, after tax or $0.01 per diluted share)
related to the termination of a proposed acquisition and (v) $2 million
($1 million, after tax) principally related to the consolidation of
European call centers in Cork, Ireland. Such charges were partially
offset by a net gain of $967 million ($793 million, after tax or $1.05
per diluted share) related to the dispositions of businesses.
8
TABLE 2
CENDANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In millions, except per share data)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
---------------------- -------------------------
2000 1999 2000 1999
-------- -------- -------- --------
Revenues
Service fees, net $ 932 $ 1,022 $ 3,783 $ 4,302
Fleet leasing, net - - - 30
Other 36 72 147 189
------ ------- ------ -------
Net revenues 968 1,094 3,930 4,521
------ ------- ------ -------
EXPENSES
Operating 320 415 1,314 1,605
Marketing and reservation 139 125 589 596
General and administrative 130 108 484 537
Depreciation and amortization 86 88 330 347
Other charges (credits):
Restructuring and other unusual charges - (2) 89 25
Litigation settlement and related costs - 2,894 (21) 2,894
Investigation-related costs 8 8 23 21
Termination of proposed acquisition - - - 7
Interest, net 60 43 145 196
------ ------- ------ -------
Total expenses 743 3,679 2,953 6,228
------ ------- ------ -------
Net gain (loss) on dispositions of businesses (1) 168 (8) 967
------ ------- ------ -------
INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST 224 (2,417) 969 (740)
Provision (benefit) for income taxes 75 (853) 309 (468)
Minority interest, net of tax 23 15 84 61
------ ------- ------ -------
INCOME (LOSS) FROM CONTINUING OPERATIONS 126 (1,579) 576 (333)
Discontinued operations:
Income from discontinued operations, net of tax 3 98 68 104
Gain on the sale of discontinued operations, net of tax 16 - 16 174
------ ------- ------ -------
INCOME (LOSS) BEFORE EXTRAORDINARY LOSS AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 145 (1,481) 660 (55)
Extraordinary loss, net of tax - - (2) -
------ ------- ------ -------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 145 (1,481) 658 (55)
Cumulative effect of accounting change, net of tax - - (56) -
------ ------- ------ -------
NET INCOME (LOSS) $ 145 $ (1,481) $ 602 $ (55)
====== ======= ====== =======
CD COMMON STOCK INCOME (LOSS) PER SHARE
BASIC
Income (loss) from continuing operations $ 0.17 $ (2.22) $ 0.80 $ (0.44)
Net income (loss) 0.20 (2.08) 0.84 (0.07)
DILUTED
Income (loss) from continuing operations $ 0.17 $ (2.22) $ 0.78 $ (0.44)
Net income (loss) 0.20 (2.08) 0.81 (0.07)
WEIGHTED AVERAGE SHARES
Basic 731 711 724 751
Diluted 757 711 762 751
MOVE.COM COMMON STOCK LOSS PER SHARE
BASIC AND DILUTED
Net loss $ (0.54) $ (1.76)
WEIGHTED AVERAGE SHARES
Basic and Diluted 3 3
9
TABLE 3
CENDANT CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INCOME (LOSS) PER SHARE DATA - CALCULATION OF EARNINGS BY CLASS OF
COMMON STOCK
(IN MILLIONS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, 2000 DECEMBER 31, 2000
-------------------------- --------------------------
AS REPORTED AS ADJUSTED AS REPORTED AS ADJUSTED
----------- ----------- ----------- -----------
CD COMMON STOCK INCOME PER SHARE
Income (loss) from continuing operations:
Cendant Group $ 140 $ 145 $ 638 $ 686
Cendant Group's retained interest in Move.com Group (A) (12) (12) (56) (54)
------- ------- ------- -------
Income from continuing operations - Basic 128 133 582 632
Convertible debt interest, net of tax 3 3 11 11
------- ------- ------- -------
Income from continuing operations - Diluted $ 131 $ 136 $ 593 $ 643
======= ======= ======= =======
Net income (loss):
Cendant Group (D) $ 159 $ 145 $ 664 $ 686
Cendant Group's retained interest in Move.com Group (A) (12) (12) (56) (54)
------- ------- ------- -------
Net income - Basic 147 133 608 632
Convertible debt interest, net of tax 3 3 11 11
------- ------- ------- -------
Net income - Diluted $ 150 $ 136 $ 619 $ 643
======= ======= ======= =======
Weighted average shares outstanding:
Basic 731 731 724 724
Diluted 757 757 762 762
Income per share:
Basic
Income from continuing operations $ 0.17 $ 0.18 $ 0.80 $ 0.87
Net income 0.20 0.18 0.84 0.87
Diluted
Income from continuing operations $ 0.17 $ 0.18 $ 0.78 $ 0.84
Net income 0.20 0.18 0.81 0.84
MOVE.COM COMMON STOCK LOSS PER SHARE
Net loss:
Move.com Group $ (14) $ (14) $ (62) $ (60)
Less: Cendant Group's retained interest in Move.com Group (A) (12) (12) (56) (54)
------- ------- ------- -------
Net loss - Basic and Diluted $ (2) $ (2) $ (6) $ (6)
======= ======= ======= =======
Weighted average shares outstanding:
Basic and Diluted 3 3 3 (B) 3 (B)
Loss per share:
Basic and Diluted (C) $ (0.54) $ (0.54) $ (1.76) $ (1.69)
- --------------
(A) As Adjusted excludes an after tax charge of $2 million for the year
ended December 31, 2000 primarily in connection with the postponement
of the initial public offering of Move.com common stock.
(B) Weighted average shares outstanding for the year ended December 31,
2000 was calculated from the date of issuance of Move.com common stock
(March 31, 2000) through December 31, 2000.
(C) In thousands, the As Reported net loss attributable to Move.com common
stock for the three months and year ended December 31, 2000 was $1,670
and $6,033, respectively, and the As Adjusted net loss attributable to
Move.com common stock for the three months and year ended December 31,
2000 was $1,663 and $5,782, respectively. The weighted average shares
outstanding for the three months and year ended December 31, 2000 were
3,098 and 3,425, respectively.
(D) As Adjusted also excludes the results of the Company's discontinued
operations, extraordinary loss and cumulative effect of accounting
change.
10
TABLE 4
CENDANT CORPORATION AND SUBSIDIARIES
Revenues and Adjusted EBITDA by Segment
(In millions)
THREE MONTHS ENDED DECEMBER 31,
-----------------------------------------------------------------------------------
REVENUES ADJUSTED EBITDA (A)
---------------------------------- -------------------------------------------
2000 1999 % CHANGE 2000 1999 % CHANGE
-------- -------- -------- -------- ------ ---------
Travel (C) $ 289 $ 291 (1%) $ 124 $ 129 (4%)
Real Estate Franchise 144 154 (6%) 102 114 (11%)
Relocation 116 101 15% 37 28 32%
Mortgage 117 83 41% 63 29 117%
Insurance/Wholesale 140 149 (6%) 39 44 (F) (11%)
Move.com Group 18 6 * (20) (8) *
Diversified Services (D) 145 310 (53%) 34 (E) 110 (G) (69%)
Inter-segment Eliminations (1) - * - - -
----- ------- ----- -----
Total $ 968 $ 1,094 $ 379 $ 446
===== ======= ===== =====
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------
REVENUES ADJUSTED EBITDA (A)
---------------------------------- -------------------------------------------
2000 1999 % CHANGE 2000(B) 1999 % CHANGE
-------- -------- -------- -------- ------ ---------
Travel (C) $ 1,243 $ 1,239 - $ 564 (H) $ 593 (K) (5%)
Real Estate Franchise 593 571 4% 430 424 1%
Relocation 448 415 8% 142 122 16%
Mortgage 423 397 7% 180 182 (1%)
Insurance/Wholesale 574 575 - 177 180 (F) (2%)
Move.com Group 59 18 * (94) (I) (22) *
Diversified Services (D) 593 1,099 (46%) 144 (J) 223 (L) (35%)
Fleet - 207 * - 81 *
Inter-segment Eliminations (3) - * - - -
------- ------- ------- -------
Total $ 3,930 $ 4,521 $ 1,543 $ 1,783
======= ======= ======= =======
- -------------
* Not meaningful.
(A) Defined as earnings before non-operating interest, income taxes,
depreciation, amortization and minority interest, adjusted to exclude
certain items which are of a non-recurring or unusual nature and not
measured in assessing segment performance or are not segment specific.
(B) Excludes a charge of $86 million in connection with restructuring and
other initiatives ($63 million, $1 million, $1 million, $9 million, $1
million and $11 million of charges were recorded within the Travel,
Relocation, Mortgage, Insurance/Wholesale, Move.com Group and
Diversified Services segments, respectively).
(C) During the third quarter of 2000, Cendant Travel, a Company subsidiary
which facilitates travel arrangements for travel-related and membership
businesses of the Company, began being managed as a component of the
Travel segment and consequently was reclassified to the Travel segment
from the discontinued Individual Membership segment. Accordingly, the
operating results of Cendant Travel are now reflected in the Travel
segment for all periods presented.
(D) In connection with the Individual Membership segment being reported as
a discontinued operation in the third quarter of 2000, general
corporate overhead previously allocated to the Individual Membership
segment was reclassified to the Diversified Services segment for all
periods presented.
(E) Excludes charges of $8 million for investigation-related costs and $1
million for losses related to the dispositions of businesses.
(F) Excludes $11 million of losses related to the dispositions of
businesses.
(G) Excludes charges of $2,894 million associated with the preliminary
agreement to settle the principal common stockholder class action
lawsuit and $8 million for investigation-related costs. Such charges
were partially offset by a net gain of $179 million related to the
dispositions of businesses and a $2 million credit associated with
changes to the estimate of previously recorded merger-related costs and
other unusual charges.
(H) Excludes $12 million of losses related to the dispositions of
businesses.
(I) Excludes a charge of $3 million in connection with the postponement of
the initial public offering of Move.com common stock.
(J) Excludes (i) a non-cash credit of $41 million in connection with a
change to the original estimate of the number of Rights to be issued in
connection with the PRIDES settlement resulting from unclaimed and
uncontested Rights and (ii) a gain of $35 million, which represents the
recognition of a portion of the Company's previously recorded deferred
gain from the sale of its fleet businesses due to the disposition of
VMS Europe by Avis Group Holdings, Inc. in August 2000; partially
offset by (i) $31 million of losses related to the dispositions of
businesses, (ii) $23 million of investigation-related costs and (iii)
$20 million in connection with litigation asserting claims associated
with accounting irregularities in the former business units of CUC and
outside of the principal common stockholder class action lawsuit.
(K) Excludes a charge of $23 million in connection with the transition of
the Company's lodging franchisees to a Company sponsored property
management system.
(L) Excludes charges of (i) $2,894 million associated with the preliminary
agreement to settle the principal common stockholder class action
lawsuit, (ii) $21 million for investigation related costs, (iii) $7
million related to the termination of a proposed acquisition and (iv)
$2 million of costs principally related to the consolidation of
European call centers in Cork, Ireland. Such charges were partially
offset by a net gain of $978 million related to the dispositions of
businesses.
11
TABLE 5
CENDANT CORPORATION AND SUBSIDIARIES
Segment Revenue Driver Analysis
(Revenue dollars and Mortgage segment volume in millions)
THREE MONTHS ENDED DECEMBER 31,
------------------------------------------
2000 1999 % CHANGE
-------- -------- ---------
Travel Segment
Domestic Rooms
Month End Actual Rooms 513,577 509,117 1%
Weighted Average Rooms Available 506,240 497,957 2%
Franchise Fee per Weighted Average Room $ 190.61 $ 196.17 (3%)
---------- ----------
Total Franchise Fees $ 96 $ 98 (2%)
Car Rental Days 14,880,704 13,906,831 7%
Franchise Fee per Rental Day $ 2.71 $ 2.78 (3%)
---------- ----------
$ 40 $ 39 3%
Sub-Total Franchise Fees $ 136 $ 137 (1%)
Number of Timeshare Exchanges (A) 355,537 345,498 3%
Annualized Number of Exchanges 1,422,148 1,381,992 3%
Average Subscriptions 2,377,862 2,304,815 3%
---------- ----------
Total Exchanges and Subscriptions 3,800,010 3,686,807 3%
Average Fee $ 22.41 $ 22.76 (2%)
---------- ----------
Total Exchange/Subscription Fees (B) $ 85 $ 84 1%
Other Revenue $ 68 $ 70 (3%)
---------- ----------
TOTAL TRAVEL REVENUE $ 289 $ 291 (1%)
========== ==========
REAL ESTATE FRANCHISE SEGMENT
Closed Sides - Domestic 465,072 468,621 (1%)
Average Price $ 172,061 $ 158,528 9%
Adjusted Royalty Rate 0.15% 0.16% (6%)
---------- ----------
Total Royalties 122 117 4%
Other 22 37 (41%)
---------- ----------
TOTAL REVENUE $ 144 $ 154 (6%)
========== ==========
MORTGAGE SEGMENT
Production Loan Closings $ 5,835 $ 4,419 32%
Average Servicing Loan Portfolio $ 69,052 $ 49,941 38%
- -----------
(A) Adjusted retrospectively to reflect additional categories of
confirmation modifications.
(B) The three months ended December 31, 2000 includes a $5 million
reduction as a result of the implementation of SAB 101 and its impact
on the timing of subscription revenue recognition.
12
TABLE 6
CENDANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN BILLIONS)
DECEMBER 31, DECEMBER 31,
2000 1999
------------ ------------
ASSETS
Current assets
Cash and cash equivalents $ 1.0 $ 1.2
Other current assets* 2.0 3.0
------ ------
Total current assets 3.0 4.2
Property and equipment, net 1.3 1.3
Goodwill, net 3.0 3.1
Other assets 4.3 3.2
------ ------
Total assets exclusive of assets under programs 11.6 11.8
Assets under management and mortgage programs 2.9 2.7
------ ------
TOTAL ASSETS $ 14.5 $ 14.5
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Stockholder litigation settlement and related costs $ 1.1 $ 2.9
Other current liabilities 1.6 1.8
Net liabilities of discontinued operations 0.3 0.2
------ ------
Total current liabilities 3.0 4.9
Long-term debt 1.9 2.4
Stockholder litigation settlement and related costs** 1.8 -
Other non-current liabilities 0.5 0.9
------ ------
Total liabilities exclusive of liabilities under programs 7.2 8.2
Liabilities under management and mortgage programs 2.5 2.6
Mandatorily redeemable preferred securities issued by subsidiaries 2.1 1.5
Total stockholders' equity 2.7 2.2
------ ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14.5 $ 14.5
====== ======
- --------------
* At December 31, 2000, amount includes $350 million of restricted cash
held in trust in connection with the stockholder - - litigation
settlement.
** At December 31, 2000, amount reflects the portion of the stockholder
litigation settlement which the Company intends and has the ability to
finance on a long-term basis.
- -
13
TABLE 7
CENDANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
YEAR ENDED DECEMBER 31,
2000 1999
---- -----
OPERATING ACTIVITIES
Net cash provided by operating activities exclusive of management and mortgage programs $ 1,000 $ 1,171
Net cash provided by operating activities of management and mortgage programs 385 2,001
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES FROM CONTINUING OPERATIONS 1,385 3,172
------- -------
INVESTING ACTIVITIES
Property and equipment additions (217) (254)
Net assets acquired (net of cash acquired) and acquisition-related payments (136) (205)
Net proceeds from dispositions of businesses 4 3,365
Funding of litigation settlement trust (350) -
Other, net (151) 104
------- -------
Net cash provided by (used in) investing activities exclusive of management and mortgage programs (850) 3,010
------- -------
Management and mortgage programs:
Repayment on advances on homes under management, net of equity advances 372 80
Additions to mortgage servicing rights, net of proceeds from sales (694) (571)
Investment in leases and leased vehicles, net - (774)
------- -------
(322) (1,265)
------- -------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES FROM CONTINUING OPERATIONS (1,172) 1,745
------- -------
FINANCING ACTIVITIES
Proceeds from borrowings 5 1,719
Principal payments on borrowings (902) (2,213)
Issuances of common stock 603 127
Repurchases of common stock (381) (2,863)
Proceeds from mandatorily redeemable preferred securities issued by subsidiaries 466 -
------- -------
Net cash used in financing activities exclusive of management and mortgage programs (209) (3,230)
------- -------
Management and mortgage programs:
Proceeds received for debt repayment in connection with fleet segment disposition - 3,017
Proceeds from debt issuance or borrowings 4,208 5,263
Principal payments on borrowings (5,420) (7,838)
Net change in short-term borrowings 938 (2,000)
------- -------
(274) (1,558)
------- -------
NET CASH USED IN FINANCING ACTIVITIES FROM CONTINUING OPERATIONS (483) (4,788)
------- -------
Effect of changes in exchange rates on cash and cash equivalents 18 51
------- -------
Net cash provided by (used in) discontinued operations 51 (14)
------- -------
Net increase (decrease) in cash and cash equivalents (201) 166
------- -------
Cash and cash equivalents, beginning of period 1,168 1,002
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 967 $ 1,168
======= =======
14