Exhibit 99.1
PRO FORMA FINANCIAL INFORMATION
The following Unaudited Pro Forma Condensed Combined Statements of Operations
for the three months ended March 31, 2001 and for the year ended December 31,
2000 give effect to the March 1, 2001 acquisition of Avis Group Holdings, Inc.
("Avis") (the "Acquisition"), which has been accounted for under the purchase
method of accounting. The Unaudited Pro Forma Condensed Combined Statements of
Operations are based on the historical consolidated financial statements of
Cendant Corporation ("Cendant") and Avis under the assumptions and adjustments
set forth in the accompanying explanatory notes. The Unaudited Pro Forma
Condensed Combined Statements of Operations assume the Acquisition occurred on
January 1, 2000.
Since Avis and Cendant were consolidated as of March 1, 2001, the results of
operations of Avis between January 1, 2001 and February 28, 2001 were combined
with Cendant's results of operations to report the pro forma results of
operations for the three month period ended March 31, 2001. All intercompany
transactions have been eliminated on a pro forma basis. Historically, Avis paid
Cendant for services Cendant provided related to call centers and information
technology and for the use of Cendant trademarks.
The following Unaudited Pro Forma Condensed Combined Statement of Operations for
the year ended December 31, 2000 also gives effect to various significant
finance-related activities which occurred during the first quarter of fiscal
2001 ("Financing Activities"). The Financing Activities include an issuance of
debt securities (net of debt retirements) and equity securities, the conversion
of the PRIDES to equity and an issuance of zero-coupon convertible notes. The
Unaudited Pro Forma Condensed Combined Statement of Operations for the year
ended December 31, 2000 assumes the Financing Activities occurred on January 1,
2000.
In August 2000, Avis contributed its European vehicle management and leasing
business (PHH Europe) to a newly formed joint venture in exchange for cash,
settlement of intercompany debt and a 20% interest in the venture (the "PHH
Europe Transaction"). The accompanying Avis Supplemental Unaudited Pro Forma
Condensed Combined Statement of Operations for the year ended December 31, 2000
has been adjusted to reflect the PHH Europe Transaction.
The pro forma adjustments reflect the disbursement of $33 in cash for each share
of Avis common stock outstanding to Avis stockholders. Cendant made payments
totaling approximately $994 million, including payments to Avis stockholders
($937 million), and direct expenses related to the transaction ($40 million)
inclusive of the net cash obligation related to Avis stock options settled prior
to consummation. The purchase price also includes the fair value of Cendant
options exchanged with certain fully vested Avis option holders who elected not
to exercise their options as part of the Acquisition. The Pro Forma Condensed
Combined Statements of Operations for the three months ended March 31, 2001 and
for the year ended December 31, 2000 reflect the purchase price being funded by
$600 million in debt with the remaining amount provided by cash.
In addition, Cendant assumed approximately $7.7 billion of Avis' debt ($6.8
billion of which relates to vehicle financing).
Management believes that the assumptions used provide a reasonable basis on
which to present the Unaudited Pro Forma Condensed Combined Statements of
Operations. We have completed other acquisitions and dispositions which are not
significant and, accordingly, have not been included in the accompanying
Unaudited Pro Forma Condensed Combined Statements of Operations. The Unaudited
Pro Forma Condensed Combined Statements of Operations may not be indicative of
the results that would have occurred if the Acquisition had been in effect on
the dates indicated or which may be obtained in the future.
The Unaudited Pro Forma Condensed Combined Statements of Operations should be
read in conjunction with the historical consolidated financial statements and
accompanying notes thereto for Cendant and Avis, which have been incorporated by
reference herein.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
(in millions, except per share amounts)
Other Pro
Historical Adjusted Purchase Forma Pro Forma
Cendant Avis Adjustments Adjustments Combined
----------- ---------- ------------- ----------- -----------
Revenues
Membership and service fees, net $ 4,512 155 $ (173)a $ -- $ 4,494
Vehicle-related -- 3,783 -- -- 3,783
Other 147 151 (39)b -- 259
----------- ---------- ------------- ----------- -----------
Net revenues 4,659 4,089 (212) -- 8,536
Expenses
Operating 1,426 966 (173)a -- 2,219
Vehicle depreciation, lease charges and interest, net -- 1,671 -- -- 1,671
Selling, general and administrative 1,508 637 -- -- 2,145
Non-vehicle depreciation and amortization 352 74 16 c -- 442
Other charges (credits) -
Restructuring and other unusual charges 109 -- -- -- 109
Litigation settlement and related costs (21) -- -- -- (21)
Investigation-related costs 23 -- -- -- 23
Non-vehicle interest, net 148 482 6 d 54 g, i 690
----------- ---------- ------------- ----------- -----------
Total expenses 3,545 3,830 (151) 54 7,278
----------- ---------- ------------- ----------- -----------
Net losses on dispositions of businesses (8) -- (35)e -- (43)
----------- ---------- ------------- ----------- -----------
Income (loss) before income taxes and minority interest 1,106 259 (96) (54) 1,215
Provision (benefit) for income taxes 362 117 (30)f (20)f 429
Minority interest, net of tax 84 7 -- (66)h 25
Income (loss) before extraordinary loss and cumulative
----------- ---------- ------------- ----------- -----------
effect of accounting change $ 660 135 $ (66) $ 32 $ 761
----------- ---------- ------------- ----------- -----------
Cendant common stock income per share
Income before extraordinary loss and cumulative
effect of accounting change -
Basic $ 0.92 $ 0.92
Diluted $ 0.89 $ 0.90
Weighted average shares outstanding-
Basic 724 107 j 831
Diluted 762 107 j 869
Move.com common stock loss per share
Loss before extraordinary loss and cumulative
effect of accounting change -
Basic $ (1.76) $ (1.76)
Diluted $ (1.76) $ (1.76)
Weighted average shares outstanding-
Basic 3 3
Diluted 3 3
See accompanying Notes to Unaudited Pro Forma Condensed Combined
Statement of Operations.
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2000
(Dollars in millions, except per share)
(a) Elimination of amounts paid by Avis to Cendant for services related to
call centers and information technology and for the use of trademarks.
(b) Elimination of Cendant's earnings attributable to its investment in Avis.
(c) Amortization of goodwill generated on the excess of fair value over the
net assets acquired on a straight-line basis over 40 years, net of
reversal of Avis' amortization of pre-acquisition goodwill and
amortization of other identifiable intangibles resulting from the
allocation of purchase price on a straight-line basis over 20 years.
(d) Interest expense on the acquisition financing ($44), net of amortization
of fair value adjustment on acquired debt and reversal of Avis'
amortization of debt related costs ($38).
(e) Reversal of a $35 gain recorded by Cendant, which represents the
recognition of a portion of its previously recorded deferred gain from the
sale of its fleet business due to the disposition of PHH Europe by Avis in
August 2000.
(f) Represents the income tax effect of the purchase adjustments and other pro
forma adjustments at an estimated statutory rate of 37.5% (not including
adjustments for non-deductible goodwill), except item (e), where the tax
effect was approximately 2% (the rate at which taxes were provided on the
related gain).
(g) Represents a net increase in interest expense relating to the issuance of
zero-coupon convertible notes, medium term notes, borrowings under a $650
million term loan agreement and the repayment of an existing term loan,
net of interest expense allocated to the Acquisition (See (d) above).
(h) Represents reduction in preferred stock dividends resulting from
conversion of PRIDES to equity.
(i) No adjustment has been made to reduce interest expense for interest income
on the incremental cash raised through the Financing Activities of $1,587.
Assuming the incremental cash was invested at 5%, Cendant's current rate
for cash investments, interest expense would have been reduced by $79.
Additionally, income before extraordinary loss and cumulative effect of
accounting change and income per share before extraordinary loss and
cumulative effect of accounting change would have improved by $49 and
$0.06, respectively.
(j) Represents the issuance of CD common stock of 61 million shares and 46
million shares relating to PRIDES conversion and equity issuance,
respectively.
*******
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2001
(in millions, except per share amounts)
Historical
Historical Avis Purchase Pro Forma
Cendant Jan 1- Feb 28, 2001 Adjustments Combined
------------ ------------------- -------------- ------------
Revenues
Membership and service fees, net $ 1,076 $ 27 $ (34) a $ 1,069
Vehicle-related 398 594 -- 992
Other 12 20 -- b 32
------------ ------------------- -------------- ------------
Net revenues 1,486 641 (34) 2,093
Expenses
Operating 451 174 (34) a 591
Vehicle depreciation, lease charges and interest, net 181 284 -- 465
Selling, general and administrative 411 115 -- 526
Non-vehicle depreciation and amortization 101 23 2 d 126
Other charges-
Restructuring and other unusual charges 185 -- -- 185
Litigation settlement and related costs 11 -- -- 11
Merger-related costs 8 -- -- 8
Non-vehicle interest, net 60 78 1 c 139
------------ ------------------- -------------- ------------
Total expenses 1,408 674 (31) 2,051
Net gain on dispositions of businesses 435 -- -- 435
------------ ------------------- -------------- ------------
Income (loss) before income taxes, minority interest
and equity in Homestore.com 513 (33) (3) 477
Provision (benefit) for income taxes 205 (10) (2) e 193
Minority interest, net of tax 13 -- -- 13
Losses related to equity in Homestore.com, net of tax 18 -- -- 18
------------ ------------------- -------------- ------------
Income (loss) before extraordinary loss and cumulative
effect of accounting change $ 277 $ (23) $ (1) $ 253
Cendant common stock income per share
Income before extraordinary loss and cumulative
effect of accounting change -
Basic $ 0.32 $ 0.29
Diluted $ 0.30 $ 0.28
Weighted average shares outstanding-
Basic 790 790
Diluted 830 830
Move.com common stock income per share
Income before extraordinary loss and cumulative
effect of accounting change
Basic $ 10.41 $ 10.41
Diluted $ 10.13 $ 10.13
Weighted average shares outstanding-
Basic 2 2
Diluted 3 3
See accompanying Notes to Unaudited Pro Forma Condensed Combined
Statement of Operations.
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2001
(Dollars in millions)
(a) Elimination of amounts paid by Avis to Cendant for services related to
call centers and information technology and for the use of trademarks.
(b) Elimination of Cendant's earnings attributable to its investment in Avis,
for which the combined effect is zero.
(c) Interest expense on the acquisition financing ($7), net of amortization of
fair value adjustment on acquired debt ($4) and reversal of Avis'
amortization of debt related costs ($2).
(d) Amortization of goodwill generated on the excess of fair value over the
net assets acquired on a straight-line basis over 40 years, net of
reversal of Avis' amortization of pre-acquisition goodwill and
amortization of other identifiable intangibles resulting from the
allocation of purchase price on a straight-line basis over 20 years.
(e) Represents the income tax effect of the purchase adjustments and other pro
forma adjustments at an estimated statutory rate of 38.5% (not including
adjustments for non-deductible goodwill).
*******
AVIS SUPPLEMENTAL PRO FORMA FINANCIAL INFORMATION
The accompanying Unaudited Pro Forma Condensed Combined Statement of Operations
for the year ended December 31, 2000 was prepared to reflect the historical
consolidated financial statements of Avis, excluding the PHH Europe Transaction,
as set forth in the accompanying Supplemental Unaudited Pro Forma Condensed
Combined Statement of Operations for the year ended December 31, 2000. Avis will
receive an annual license fee in connection with the PHH Europe Transaction from
the joint venture for the license of the PHH fleet management technology, PHH
interactive. Avis utilized the proceeds of the PHH Europe Transaction to reduce
Avis' indebtedness and pay transaction costs.
SUPPLEMENTAL UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
(in millions)
Historical Sale of Pro Forma Adjusted
Avis PHH Europe (a) Adjustments Avis
------------ --------------- -------------- ------------
Revenues
Service fees, net $ 241 $ (86) $ -- $ 155
Vehicle rental 2,467 -- -- 2,467
Vehicle leasing and other fees 1,389 (73) -- 1,316
Other 146 -- 5 b 151
------------ --------------- -------------- ------------
Net revenues 4,243 (159) 5 4,089
Expenses
Operating 966 -- -- 966
Vehicle depreciation and lease charges 1,695 (24) -- 1,671
Selling, general and administrative 693 (56) -- 637
Interest, net 577 (37) (58) c 482
Depreciation and amortization 89 (12) (3) d 74
------------ --------------- -------------- ------------
Total expenses 4,020 (129) (61) 3,830
Income (loss) before income taxes and minority interest 223 (30) 66 259
Provision (benefit) for income taxes 95 (3) 25 e 117
Minority interest 7 -- -- 7
------------ --------------- -------------- ------------
Income (loss) before extraordinary loss and cumulative
effect of accounting change $ 121 $ (27) $ 41 $ 135
------------ --------------- -------------- ------------
See accompanying Notes to Supplemental Unaudited Pro Forma Condensed Combined
Statement of Operations.
SUPPLEMENTAL NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2000
(Dollars in millions)
The following is a summary of estimated adjustments to the Avis Pro Forma
Financial Statements:
(a) Represents the adjustment to pro forma the results of operations of PHH
Europe for the year ended December 31, 2000. This adjustment assumes that
the PHH Europe Transaction occurred on January 1, 2000.
(b) Fleet management technology fee income and the equity in the earnings of
the joint venture, formed pursuant to the PHH Europe Transaction for the
year ended December 31, 2000, net of amortization of the excess of cost
over the assets acquired.
(c) Interest reduction as a result of the retirement of acquisition debt and
revolving credit facilities related to the application of proceeds of
$1,053 from the PHH Europe Transaction.
(d) Decrease in amortization expense relating to goodwill generated from the
PHH Europe Transaction, net of reversal of PHH Europe goodwill.
(e) Represents the income tax effect of the pro forma adjustments at an
estimated statutory rate of 39% (not including adjustments for
non-deductible goodwill).