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Cendant
Reports Record Results for Fourth Quarter and Full Year 2002
4Q 2002 Adjusted EPS from Continuing Operations Increased 38% to
$0.29
4Q 2002 Reported EPS from Continuing Operations Was $0.24, Versus a
Loss of ($0.33) in 4Q 2001
4Q 2002 Revenue Increased 54% (5% Organically) and Adjusted EBITDA
Increased 22% (16% Organically)
Full Year 2002 Adjusted EPS from Continuing Operations Increased 31%
to $1.26
Full Year 2002 Reported EPS from Continuing Operations Was $1.04
Versus $0.36 in 2001
Company Reiterates its Projection of 2003 Reported EPS from
Continuing Operations of $1.46, representing a 40% Increase Over 2002
NEW YORK, Feb. 5 /PRNewswire-FirstCall/ -- Cendant Corporation (NYSE:CD)
today reported record fourth quarter 2002 Adjusted EPS from continuing
operations of $0.29, an increase of 38% year over year, in line with the
Company's projection. Reported EPS from continuing operations was $0.24,
up from a loss of ($0.33) last year. Reported EPS from continuing
operations in fourth quarter 2002 includes a $0.06 per share non-cash
charge to reserve for the Company's estimated liability for all remaining
CUC-related securities litigation. As previously disclosed, the Company
also recognized a $0.03 per share D&O insurance recovery benefit in
connection with the settlement of CUC-related shareholder derivative
actions. The Company also affirmed that it expects reported EPS from
continuing operations of $1.46 in 2003, an increase of 40% over 2002.
Cendant's Chairman, President and CEO, Henry R. Silverman, stated:
"The diversity and scale of our business model, which we use to
manage risk, proved successful again in the fourth quarter. Despite the
continued challenging environment for travel and corporate spending, the
majority of our businesses performed at or ahead of plan, enabling us to
achieve record results.
"During the fourth quarter, we continued to deploy our free cash
flow primarily to strengthen our balance sheet. Exclusive of the
approximately $600 million we temporarily drew on our revolving credit
facility to complete the Budget transaction, we retired approximately $240
million in long-term debt and repurchased $79 million in stock. We also
renewed and upsized our revolving credit facility and, in January, we
issued $2 billion in medium-term notes, which, along with our expected
2003 free cash flow of approximately $2 billion, should give us
significant financial flexibility to continue to repay debt and repurchase
stock. (Net cash provided by operating activities exclusive of management
and mortgage programs is projected to be at least $2 billion.)
"I am also pleased to report that, for the full year 2002, we
generated revenue growth of 64%, including 3% organic growth, and Adjusted
EBITDA growth of 32%, including 11% organic growth. During the fourth
quarter, our revenue growth was 54%, including 5% organic growth, and our
Adjusted EBITDA growth was 22%, including 16% organic growth." See
Table 10 for more information regarding our organic growth.
Reconciliation of Fourth Quarter Reported EPS to Adjusted EPS
Adjusted EPS excludes items that are of a non-recurring or unusual
nature, including securities litigation costs and acquisition and
integration related costs consisting primarily of the non-cash
amortization of the pendings and listings intangible asset from real
estate brokerage acquisitions. In 2001, Adjusted EPS also excludes certain
effects on our operations from the September 11 terrorist attacks and
Homestore.com related items. Because Adjusted EPS excludes non-recurring
and unusual items, management believes it is a useful measure of the
Company's operating performance in 2001 and 2002. Adjusted EPS is a non-GAAP
(generally accepted accounting principles) measure and should be viewed in
addition to, and not in lieu of, the Company's reported EPS. The following
table reconciles reported EPS from continuing operations to Adjusted EPS
from continuing operations, identifying the items reflected in reported
EPS that are considered to be of an unusual or non-recurring nature for
purposes of deriving Adjusted EPS. Fourth quarter 2002 will be the last
quarter that Cendant provides Adjusted EPS figures. Hereafter, the
Company's disclosures will focus on reported EPS. Fourth quarter 2001
amounts do not add due to a change in the weighted average shares used in
calculating EPS for reported and Adjusted results:
Fourth Fourth First Call
Quarter Quarter % Consensus
2002 2001(4) Change Estimate
Reported EPS from
Continuing Operations $0.24 ($0.33) $0.29
Shareholder litigation
and related costs(1) 0.05 0.04
Acquisition and
integration related costs(2) 0.01 0.07
Costs related to 9/11
terrorist attacks(3) (0.01) 0.13
Losses related to
equity in Homestore.com -- 0.31
Adjusted EPS from
Continuing Operations $0.29 $0.21 38% $0.29
(1) In 2002, this amount includes a non-cash charge of $0.06 per share to
reserve for the Company's estimated liability in all remaining
CUC-related securities litigation and ongoing costs related to the
CUC related securities litigation, partially offset by a credit of
$0.03 per share related to the D&O liability insurance recovery in
connection with settlement of the CUC related shareholder derivative
actions.
(2) In 2002, this charge is primarily the non-cash amortization of the
pendings and listings intangible asset from real estate brokerage
acquisitions.
(3) In 2002, this amount represents a non-cash credit related to changes
in the Company's restructuring costs incurred as a result of the
September 11, 2001 terrorist attacks, compared to original estimates.
(4) Please see the Company's fourth quarter 2001 earnings release dated
February 6, 2002 for a detailed description of the reconciling items
between reported and Adjusted EPS for fourth quarter 2001.
Fourth Quarter Accomplishments
The Company had several important accomplishments during
the fourth quarter of 2002:
* Retired approximately $240 million of long-term debt including
$143 million carrying amount of our zero coupon convertible debentures
due May 2021, $76 million of our 73/4% notes due December 2003, and
$24 million of our 11% senior subordinated notes due May 2009.
See Table 6 for more detailed information.
* Repurchased $79 million in common stock at an average price of
$11.42 per share.
* Renewed and upsized our revolving credit facility to $2.9 billion with
a three-year term.
* Completed the acquisition of certain assets of Budget Group, Inc. for a
total transaction cost of approximately $600 million.
* Announced that, beginning in 2003, the Company will discontinue
reporting Adjusted EPS and Adjusted EBITDA.
Fourth Quarter 2002 Segment Results
The following discussion of operating results addresses segment revenue
and Adjusted EBITDA, which is defined as earnings from continuing
operations before non-program related interest, income taxes, non-program
related depreciation and amortization, minority interest and, in 2001,
Homestore.com related items. Adjusted EBITDA also excludes certain items
that are of a non-recurring or unusual nature and are not measured in
assessing segment performance including, in 2001, certain effects on our
operations from the September 11 terrorist attacks. See Table 2 for a
detailed description of each item excluded from Adjusted EBITDA. We
believe this metric is the most informative presentation of how management
evaluated performance and allocated resources in 2001 and 2002. Fourth
quarter 2002 will be the last quarter that Cendant provides Adjusted
EBITDA figures. Hereafter, the Company's disclosures will focus on
reported EBITDA and that is how we will measure and allocate resources to
our segments prospectively. Revenue and Adjusted EBITDA are expressed in
millions.
Real Estate Services
(Consisting of the Company's real estate franchise brands, brokerage
operations, mortgage services and relocation services.)
2002 2001 % change
Revenues $1,506 $532 183%
Adjusted EBITDA $279 $289 (3%)
Revenues and Adjusted EBITDA were positively impacted by real estate
brokerage acquisitions (primarily NRT in April 2002) and by growth in our
real estate franchise business due to increases in transaction volume and
price. Strong growth in mortgage production revenue was offset by
increased mortgage servicing amortization due to continued high
refinancing activity. Although mortgage revenues were below the record
levels achieved in fourth quarter 2001, the mortgage business was
significantly profitable during fourth quarter 2002. Revenues and Adjusted
EBITDA were also negatively impacted by a modest decline in relocation
volumes, owing to a continued weak corporate spending environment.
Hospitality
(Consisting of the Company's nine franchised lodging brands, timeshare
exchange and interval sales, and vacation rental.)
2002 2001 % change
Revenues $541 $369 47%
Adjusted EBITDA $135 $103 31%
Revenues and Adjusted EBITDA increased primarily due to the
acquisitions of Trendwest and Equivest in 2002. In addition, operating
results were favorably impacted by organic growth in RCI timeshare
exchange revenues, Fairfield timeshare unit sales and higher revenues per
available room at our franchised lodging operations.
Travel Distribution
(Consisting of electronic global distribution services for the travel
industry and travel agency services.)
2002 2001 % change
Revenues $381 $362 5%
Adjusted EBITDA $119 $102 17%
Revenues and Adjusted EBITDA increased primarily due to growth in
Galileo booking volumes and the acquisition of Galileo distribution
partners in Italy and Ireland. Adjusted EBITDA also benefited from the
success of cost reduction efforts in connection with the integration of
Galileo and Cheap Tickets.
Vehicle Services
(Consisting of car rental, vehicle management services and fuel card
services.)
2002 2001 % change
Revenues $1,127 $879 28%
Adjusted EBITDA $72 $14 414%
Revenues and Adjusted EBITDA increased primarily due to strong results
at the Avis car rental business, reflecting continued increases in both
pricing and market share. Operating results also were modestly benefited
by the acquisition of certain assets of Budget Group, Inc. in November
2002.
Financial Services
(Consisting of individual membership products, insurance-related
services, financial services enhancement products and tax preparation
services.)
2002 2001 % change
Revenues $273 $342 (20%)
Adjusted EBITDA $75 $51 47%
Revenue declined while Adjusted EBITDA increased primarily due to the
2001 outsourcing of portions of the individual membership business to
Trilegiant. As expected, the retained base of membership customers
existing prior to the Trilegiant transaction continued to decline,
resulting in lower revenues and lower corresponding operating costs to
Cendant, and, therefore, higher margins. In addition, marketing expenses
were lower quarter over quarter due to incremental solicitation efforts by
Trilegiant during fourth quarter 2001, which were funded and expensed by
the Company in connection with the transaction.
Other Items
* Free cash flow for the twelve months ended December 31, 2002 was
approximately $1.62 billion. See Table 8 for a reconciliation of free
cash flow to net cash provided by operating activities.
* As of December 31, 2002, the Company had approximately $125 million of
cash and cash equivalents, $5.6 billion of debt (including $600 million
drawn on its revolving credit facility) and $375 million of preferred
minority interest. In addition, the Company had $863 million of
mandatorily convertible Upper DECS securities outstanding.
* As of December 31, 2002, the Company's net debt to total capital ratio
was 36%. The Company's ratio of Adjusted EBITDA to net non-program
related interest expense was 10 to 1 for the fourth quarter 2002.
* As of December 31, 2002, the Company had unused credit facilities of
$1.3 billion. In addition, the Company had unused credit facilities of
$1.5 billion related to its PHH subsidiary.
* Weighted average common shares outstanding, including dilutive
securities, used to calculate Adjusted EPS from continuing operations,
were 1.04 billion for the fourth quarter 2002 compared with
1.02 billion for the fourth quarter 2001. The increase was primarily
from the issuance of common shares in connection with the acquisitions
of Trendwest and NRT in 2002.
Full Year 2002 Results
Adjusted EPS from continuing operations was $1.26 in 2002 versus $0.96
in 2001, an increase of 31%. Reported EPS from continuing operations was
$1.04 in 2002 versus $0.36 in 2001, an increase of 189%. Revenue was $14.1
billion in 2002 versus $8.6 billion in 2001, an increase of 64%. Adjusted
EBITDA was $2.8 billion in 2002 versus $2.1 billion in 2001, an increase
of 32%.
Subsequent Events
Since December 2002, the Company has:
* Issued a total of $2 billion in five-year and ten-year maturity bonds.
* Utilized proceeds from the $2 billion bond issue to retire $1.7 billion
of debt, including $600 million drawn on its revolving credit facility
primarily to complete the Budget acquisition, $334 million carrying
amount of our zero coupon convertible debentures due May 2021,
$737 million of our 7-3/4% notes due December 2003, and $33 million of
our 11% senior subordinated notes due May 2009.
* Repurchased $33 million in common stock at an average price of $11.39
per share.
* Acquired the common interests of FFD Development Company, LLC (FFD)
from an independent trust for approximately $27 million in cash plus
approximately $58 million in acquired debt. FFD is the primary
developer of timeshare inventory for Fairfield Resorts.
2003 Outlook
As previously announced, the Company will no longer report Adjusted
EBITDA or Adjusted EPS beginning with the results of the first quarter of
2003. The company projects the following range of reported EPS from
continuing operations for 2003:
First Second Third Fourth Full
Quarter Quarter Quarter Quarter Year
2003 $0.29 - 0.30 $0.42 - 0.44 $0.45 - 0.47 $0.27 - 0.29 $1.46
2002 $0.31 $0.25 $0.24 $0.24 $1.04
% Change (6% - 3%) 68% - 76% 88% - 96% 12% - 21% 40%
2002 (Pro Forma)(1) $0.31 $0.23 $0.24 $0.24 $1.01
% Change (6% - 3%) 83% - 91% 88% - 96% 12% - 21% 45%
* The comparability of the Company's earnings from 2002 to 2003
reflects the acquisitions of NRT and Budget's car and truck rental
operations, the mortgage servicing rights asset write-down in third
quarter 2002, the securities litigation charge recorded in fourth
quarter 2002, and the debt extinguishment costs being incurred in
first quarter 2003, which will be offset by reduced interest expense
during the remainder of 2003. Additionally, reported EPS in any
quarter may be impacted positively or negatively by non-recurring
events not subject to forecasting.
(1) 2002 pro forma results reflect reported EPS from continuing
operations giving effect to the change in accounting policy effective
in 2003 under generally accepted accounting principles whereby losses
on the early extinguishment of debt are required to be reclassified
to continuing operations, consistent with our presentation of 2003
projected reported EPS.
The Company also announced the following detailed financial projections
for full year 2003 (in millions):
Full Year 2002 Full Year 2003
Actual Projected
Revenue
Real Estate Services $4,687 $6,300 - 6,500
Hospitality 2,180 2,600 - 2,700
Travel Distribution 1,695 1,800 - 1,900
Vehicle Services 4,175 5,800 - 6,000
Financial Services 1,325 1,150 - 1,200
Corporate and Other 26 25 - 50
Total Revenue $14,088 $17,675 - 18,350
Reported EBITDA
Real Estate Services $832 $1,150 - 1,225
Hospitality 625 725 - 775
Travel Distribution 526 550 - 600
Vehicle Services 408 450 - 500
Financial Services 450 350 - 375
Corporate and Other (198) (75 - 50)
Total Reported EBITDA $2,643 $3,200 - 3,375
Depreciation and amortization(1) (466) (565 - 580)
Amortization of pendings/listings (256) (25 - 30)
Operating Income $1,921 $2,610 - 2,765
Interest expense, net (262) (330 - 360)
Interest expense, net (pro forma)(2) (304) (330 - 360)
Minority interest (22) (20 - 25)
Diluted weighted average shares
outstanding(3) 1,043 1,050 - 1,060
* Projections do not reflect any potential impact from war, additional
terrorist attacks or substantial changes to current economic
conditions.
* The effective tax rate is expected to be approximately 33% in 2003.
(1) Depreciation and amortization and interest expense exclude
program-related amounts, which are already reflected in reported
EBITDA.
(2) 2002 pro forma interest expense gives effect to the change in
accounting policy effective in 2003 under generally accepted
accounting principles whereby losses on the early extinguishment of
debt are required to be reclassified to interest expense, consistent
with our presentation of 2003 interest expense.
(3) Diluted weighted average shares outstanding are expected to increase
marginally in 2003 due to the full-year impact of the Trendwest and
NRT acquisitions, which were completed in 2002 for stock, partially
offset by anticipated stock repurchases.
Investor Conference Call
Cendant will host a conference call to discuss the fourth quarter
results on Thursday, February 6, 2003, at 11:00 a.m. (EST). Investors may
access the call live at http://www.cendant.com/
or by dialing (913) 981-4900. A web replay will be available at http://www.cendant.com/
following the call. A telephone replay will be available from 2:00 p.m.
(EST) on February 6, 2003 until 8:00 p.m. (EST) on February 13, 2003 at
(719) 457-0820, access code: 605198.
Cendant Corporation is primarily a provider of travel and residential
real estate services. With approximately 85,000 employees, New York
City-based Cendant provides these services to businesses and consumers 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 http://www.cendant.com/
or by calling 877-4-INFOCD (877-446-3623).
Statements about future results made in this release, including the
projections, and the statements attached hereto 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 Cendant's Form 10-Q/A for the
quarterly period ended September 30, 2002.
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, competitive and other
uncertainties and contingencies, including but not limited to the
potential impact of war or terrorism, many of which are beyond the control
of management of Cendant and its affiliates. 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.
Table 1
Cendant Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In millions, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2001 2002 2001
Revenues
Service fees and
membership-related, net $2,762 $1,648 $10,062 $5,426
Vehicle-related 1,075 827 3,979 3,134
Other 12 19 47 53
Net revenues 3,849 2,494 14,088 8,613
Expenses
Operating 2,021 837 6,721 2,658
Vehicle depreciation, lease
charges and interest, net 561 511 2,094 1,789
Marketing and reservation 333 328 1,392 1,114
General and administrative 270 275 1,120 965
Non-program related depreciation
and amortization 129 148 466 477
Other charges (credits):
Acquisition and integration
related costs (A) 22 104 285 112
Litigation and related costs, net 77 58 103 86
Restructuring and other unusual
charges (14) 116 (14) 379
Mortgage servicing rights
impairment -- 94 -- 94
Non-program related
interest, net 69 73 262 252
Total expenses 3,468 2,544 12,429 7,926
Gains on dispositions of businesses -- 5 -- 443
Losses on dispositions of businesses -- (23) -- (26)
Impairment of investments -- (441) -- (441)
Income (loss) before income taxes,
minority interest and equity in
Homestore.com 381 (509) 1,659 663
Provision (benefit) for income taxes 128 (206) 556 220
Minority interest, net of tax 6 2 22 24
Losses related to equity in
Homestore.com, net of tax -- 21 -- 77
Income (loss) from continuing
operations 247 (326) 1,081 342
Income from discontinued operations,
net of tax -- 19 51 81
Loss on disposal of discontinued
operations, net of tax (B) -- -- (256) --
Income (loss) before extraordinary
losses and cumulative effect
of accounting changes 247 (307) 876 423
Extraordinary losses, net of tax -- -- (30) --
Income (loss) before cumulative
effect of accounting changes 247 (307) 846 423
Cumulative effect of accounting
changes, net of tax -- -- -- (38)
Net income (loss) 247 (307) 846 385
CD common stock income (loss) per share
Basic
Income (loss) from
continuing operations $0.24 ($0.33) $1.06 $0.37
Net income (loss) 0.24 (0.31) 0.83 0.42
Diluted
Income (loss) from
continuing operations $0.24 ($0.33) $1.04 $0.36
Net income (loss) 0.24 (0.31) 0.81 0.41
Weighted average shares
Basic 1,034 978 1,019 869
Diluted 1,045 978 1,043 917
(A) Includes non-cash amortization of pendings and listings of
$17 million during the three months ended December 31, 2002
principally related to the acquisitions of real estate brokerages and
$256 million during the twelve months ended December 31, 2002
principally related to the acquisition of NRT Incorporated.
(B) Includes $245 million of non-cash currency translation adjustment,
which was previously reflected within stockholders' equity.
Table 2
Cendant Corporation and Subsidiaries
REVENUES AND ADJUSTED EBITDA BY SEGMENT (A)
(Dollars in millions)
Three Months Ended December 31,
Revenues Adjusted EBITDA
% %
2002 2001 Change 2002(C) 2001(I) Change
Real Estate Services $1,506 $532 183% $279(D) $289(J) (3%)
Hospitality 541 369 47% 135 103(K) 31%
Travel Distribution 381 362 5% 119 102(L) 17%
Vehicle Services 1,127 879 28% 72 14 414%
Financial Services 273 342 (20%) 75 51 (47%)
Total Reportable Segments 3,828 2,484 680 559
Corporate and Other (B) 21 10 * (16)(E) (16)(M) *
Continuing Operations $3,849 $2,494 54% $664 $543 22%
Twelve Months Ended December 31,
Revenues Adjusted EBITDA
% %
2002 2001 Change 2002(C) 2001(N) Change
Real Estate Services $4,687(F) 1,859 152% $853(G) 939(O) (9%)
Hospitality 2,180 1,522 43% 625 513(K) 22%
Travel Distribution 1,695 437 288% 524 108(L) 385%
Vehicle Services 4,175 3,322 26% 408 290(P) 41%
Financial Services 1,325 1,402 (5%) 449 310 45%
Total Reportable Segments 14,062 8,542 2,859 2,160
Corporate and Other (B) 26 71 * (98)(H) (73)(Q) *
Continuing Operations 14,088 8,613 64% 2,761 2,087 32%
Less: Move.com Group -- 10 * -- (9) *
Continuing Operations
Excluding Move.com Group $14,088 $8,603 64% $2,761 $2,096 32%
* Not meaningful.
(A) In connection with the sale of the Company's car parking facility
business, National Car Parks ("NCP"), on May 22, 2002, the account
balances and activities of NCP have been segregated from the Company's
Vehicle Services segment and reported as a discontinued operation for
all periods presented.
(B) Principally reflects unallocated corporate overhead and, in the twelve
months ended December 31, 2001, includes Move.com Group operating
results.
(C) Excludes non-cash credits of $14 million related to changes in the
original estimates of costs to be incurred in connection with the
Company's restructuring initiatives undertaken during 2001 as a result
of the September 11, 2001 terrorist attacks ($6 million, $1 million
and $7 million of credits were recorded within Real Estate Services,
Vehicle Services and Corporate and Other, respectively).
(D) Excludes a charge of $8 million principally related to the acquisition
and integration of NRT Incorporated and other real estate brokerage
businesses.
(E) Excludes a charge of $119 million for litigation and related costs,
partially offset by a credit of $42 million related to the recovery
from the Company's directors' and officers' liability insurance in
connection with the principal securities litigation settled in 1999.
(F) Includes a write-down of $275 million (pre-tax) related to the
impairment of the Company's mortgage servicing rights asset.
(G) Excludes a charge of $26 million principally related to the
acquisition and integration of NRT and other real estate brokerage
businesses and includes a write-down of $275 million (pre-tax) related
to the impairment of the Company's mortgage servicing rights asset.
(H) Excludes $145 million of litigation and related costs and $4 million
of acquisition and integration related costs. Such charges were
partially offset by a credit of $42 million related to the recovery
from the Company's directors' and officers' liability insurance in
connection with the principal securities litigation settled in 1999.
(I) Excludes a charge of $116 million primarily in connection with
restructuring and other initiatives undertaken as a result of the
September 11, 2001 terrorist attacks ($31 million, $48 million,
$6 million, $9 million and $25 million of charges were recorded within
Real Estate Services, Hospitality, Travel Distribution, Financial
Services and Corporate and Other, respectively, and $3 million of net
credits were recorded within Vehicle Services).
(J) Excludes a charge of $94 million related to the impairment of the
Company's mortgage servicing rights asset.
(K) Excludes a charge of $11 million related to the impairment of
investments due in part to the September 11, 2001 terrorist attacks.
(L) Excludes charges of $23 million related to the acquisition and
integration of Galileo International, Inc. and Cheap Tickets, Inc.
(M) Excludes charges of (i) $427 million primarily related to the
impairment of the Company's investment in Homestore.com, Inc., (ii)
$80 million related to the outsourcing of the Company's information
technology operations to IBM in connection with the acquisition of
Galileo, (iii) $58 million for litigation and related costs and
(iv) $23 million related to the dispositions of non-strategic
businesses in 1999. Such charges were partially offset by a gain of
$5 million on the dispositions of non-strategic businesses.
(N) Excludes charges of $192 million primarily in connection with
restructuring and other initiatives undertaken as a result of the
September 11, 2001 terrorist attacks ($31 million, $51 million,
$58 million, $7 million, $10 million and $35 million of charges were
recorded within Real Estate Services, Hospitality, Vehicle Services,
Travel Distribution, Financial Services and Corporate and Other,
respectively).
(O) Excludes charges of $95 million related to the funding of an
irrevocable contribution to the Real Estate Technology Trust and
$94 million related to the impairment of the Company's mortgage
servicing rights asset.
(P) Excludes charges of $5 million related to the acquisition and
integration of Avis Group Holdings, Inc. and $2 million related to the
impairment of investments due to the September 11, 2001 terrorist
attacks.
(Q) Excludes charges of (i) $427 million primarily related to the
impairment of the Company's investment in Homestore, (ii) $100 million
for litigation and related costs, (iii) $85 million related to the
funding of Trip Network, Inc., (iv) $80 million related to the
outsourcing of the Company's information technology operations to IBM
in connection with the acquisition of Galileo, (v) $26 million related
to losses on the dispositions of non-strategic businesses in 1999,
(vi) $7 million related to a non-cash contribution to the Cendant
Charitable Foundation and (vii) $4 million related to the acquisition
and integration of Avis. Such charges were partially offset by (i) a
gain of $436 million related to the sale of the Company's real estate
Internet portal, move.com, (ii) a gain of $7 million related to the
dispositions of non-strategic businesses and (iii) a credit of
$14 million to reflect an adjustment to the settlement charge recorded
in the fourth quarter of 1998 for the PRIDES class action litigation.
Table 3
Cendant Corporation and Subsidiaries
EPS BY QUARTER
ADJUSTED
Year Ended December 31, 2002
1st 2nd 3rd 4th Full
Qtr Qtr Qtr Qtr Year
Continuing Operations $0.32 $0.38 $0.28 $0.29 $1.26
Discontinued Operations 0.03 0.02 - - 0.05
Total * $0.34 $0.40 $0.28 $0.29 $1.31
Year Ended December 31, 2001
1st 2nd 3rd 4th Full
Qtr Qtr Qtr Qtr Year
Continuing Operations $0.19 $0.27 $0.29 $0.21 $0.96
Discontinued Operations 0.02 0.02 0.02 0.02 0.09
Total * $0.21 $0.30 $0.32 $0.23 $1.05
REPORTED
Year Ended December 31, 2002
1st 2nd 3rd 4th Full
Qtr Qtr Qtr Qtr Year
Continuing Operations $0.31 $0.25 $0.24 $0.24 $1.04
Discontinued Operations 0.03 0.02 - - 0.05
Total * $0.34 $0.27 $0.24 $0.24 $1.09
Year Ended December 31, 2001
1st 2nd 3rd 4th Full
Qtr Qtr Qtr Qtr Year
Continuing Operations $0.28 $0.25 $0.21 $(0.33) $0.36
Discontinued Operations 0.02 0.02 0.02 0.02 0.09
Total * $0.30 $0.27 $0.23 $(0.31) $0.45
PROJECTED REPORTED
Year Ended December 31, 2001
1st 2nd 3rd 4th Full
Qtr Qtr Qtr Qtr Year
Continuing
Operations $0.29-$0.30 $0.42-$0.44 $0.45-$0.47 $0.27-$0.29 $1.46
* May not add due to rounding. Not comparable to net income per share
as such amounts do not include the losses on disposal of discontinued
operations, extraordinary losses or cumulative effect of accounting
changes.
Table 4
(page 1 of 2)
Cendant Corporation and Affiliates
SEGMENT REVENUE DRIVER ANALYSIS
(Revenue dollars in thousands)
Three Months Ended December 31,
%
2002 2001 Change
REAL ESTATE SERVICES SEGMENT
Real Estate Franchise
Closed Sides - Domestic 507,704 452,593 12%
Average Price $197,084 $172,397 14%
Royalty and Marketing Revenue $162,670 $137,631 18%
Total Revenue (A) $169,363 $152,856 11%
Real Estate Brokerage
Revenue from Real Estate
Transactions (B) $874,952 (C)
Other Revenue $20,426 (C)
Total Revenue $895,378 (C)
Relocation
Service Based Revenue
(Referrals, Outsourcing, etc.) $61,426 $63,037 (3%)
Asset Based Revenue (Home Sale
Closings and Financial Income) $35,936 $40,435 (11%)
Total Revenue $97,362 $103,472 (6%)
Mortgage
Production Loans Closed to be
Securitized (millions) (D) $13,158 $10,695 23%
Other Production Loans Closed
(millions) (D) $6,044 $3,156 92%
Production Loans Sold (millions) (D) $12,225 $10,040 22%
Average Servicing Loan Portfolio
(millions) $112,250 $95,157 18%
Production Revenue $303,523 $222,993 36%
Gross Recurring Servicing Revenue $108,134 $94,436 15%
Amortization and Impairment of
Mortgage Servicing Rights $(263,887) $(155,426)(E) 70%
Hedging Activity for Mortgage
Servicing Rights $98,942 $14,610 *
Other Servicing Revenue (F) $(394) $(5,572) *
Total Revenue $246,318 $264,641 (G) *
Settlement Services
Title and Appraisal Units 127,875 123,514 4%
Total Revenue (H) $98,979 $10,751 *
HOSPITALITY SEGMENT
Lodging
RevPar $22.01 $21.79 (I) 1%
Weighted Average Rooms Available 508,414 516,476 (2%)
Royalty, Marketing and
Reservation Revenue $76,722 $71,569 (I) 7%
Total Revenue $100,669 $88,235 (I) 14%
RCI (J)
Average Subscriptions 2,915,764 2,852,316 2%
Average Subscription Fee $55.77 $56.08 (1%)
Subscription Revenue $40,650 $39,993 2%
Timeshare Exchanges 372,153 355,944 5%
Average Exchange Fee $150.58 $140.22 7%
Exchange Fee Revenue $56,038 $49,909 12%
Total Revenue $130,733 $125,239 4%
Fairfield Resorts
Tours 119,504 109,487 9%
Total Revenue (K) $167,503 $153,203 9%
Trendwest Resorts
Tours 84,731 86,412 (2%)
Total Revenue $112,929 (C)
* Not meaningful.
(A) In 2001, includes a $9 million preferred dividend from NRT.
(B) Net of royalties paid to Real Estate Franchise.
(C) The operations of these businesses were acquired in, or subsequent
to, the fourth quarter of 2001. Accordingly, fourth quarter 2001
revenues are not comparable to the current period amounts.
(D) Loan closings increased at a faster rate than loan sales due to an
increase in the mix of loans produced on a private label basis
(referred to as Other Production Loans Closed above) which are
originated for the Company's private label partners or other
investors for which the Company is paid a fee.
(E) Includes $94 million of mortgage servicing rights impairment during
fourth quarter 2001, which was not recorded within revenues and is
not included in Adjusted EBITDA.
(F) Includes net interest expense of $18 million and $16 million for 2002
and 2001, respectively.
(G) In 2001, excludes $94 million of mortgage servicing rights
impairment.
(H) In 2001, includes only the revenue of the existing settlement
services operations prior to the Company's acquisition of NRT.
(I) The Company initially under-estimated the decline in third quarter
royalty revenue resulting from the September 11, 2001 terrorist
attacks. The amounts presented herein exclude the royalty true-up
that relates to actual third quarter results, but was recorded by the
Company in fourth quarter 2001. Including such adjustment, the
RevPar, Royalty, Marketing and Reservation Revenues and Total Revenues
(as reported) for 2001 are $20.50, $66,630 and $83,296, respectively.
(J) Includes weeks and points members.
(K) In 2002, includes $20 million of revenues from Equivest.
Table 4
(page 2 of 2)
Cendant Corporation and Affiliates
SEGMENT REVENUE DRIVER ANALYSIS
(Revenue dollars in thousands)
Three Months Ended December 31,
%
2002 2001 Change
TRAVEL DISTRIBUTION SEGMENT
Galileo
Domestic Booking Volume (000's)
Air 19,574 17,612 11%
Car/Hotel 4,199 3,849 9%
International Booking Volume
(000's)
Air 37,816 36,726 3%
Car/Hotel 1,243 1,221 2%
Worldwide Booking Volume (000's)
Air 57,390 54,338 6%
Car/Hotel 5,442 5,070 7%
Total Galileo Revenue $353,223 $336,697 5%
VEHICLE SERVICES SEGMENT
Car Rental (Avis only)
Rental Days (000's) 13,670 12,799 7%
Time and Mileage Revenue per Day $40.04 $37.04 8%
Average Length of Rental
(stated in Days) 3.60 3.75 (4%)
Total Revenue $592,772 $510,969 16%
Vehicle Management and Fuel Card Services
Average Fleet (Leased) 316,966 317,423 --
Average Number of Cards (000's) 3,904 3,836 2%
Service Based Revenue $52,408 $43,200 21%
Asset Based Revenue (A) $321,390 $325,156 (1%)
Total Revenue $373,798 $368,356 1%
FINANCIAL SERVICES SEGMENT
Insurance/Wholesale-related
Revenue $143,580 $142,622 1%
Individual Membership Royalty
Revenue (B) $4,326 $-- 100%
Other Individual Membership
Revenue (C) $119,298 $195,224 (39%)
Total Revenue $273,290 $341,216 (20%)
(A) Reflects a decline in revenue due to lower interest expense on vehicle
funding, which is substantially passed through to clients and
therefore results in lower revenues but has a minimal EBITDA impact.
(B) Reflects Cendant's royalty received on revenues generated by members
who joined the clubs and programs subsequent to July 2001. The
revenue generated by these new members is recognized by Trilegiant and
is not included in the above table. Cendant receives a royalty of
5% (growing to approximately 16% over 10 years), with minimal
associated expenses, on the revenues recognized by Trilegiant in
connection with the new members.
(C) Reflects a decline due to the outsourcing of the Company's
individual membership business in July 2001 to Trilegiant. While the
Company continues to collect membership fees from its existing members
as of July 2001, it does not collect the membership fees from new
members who joined the clubs and programs subsequent to July 2001.
Trilegiant recognizes the revenues generated by these new members
(see (B) above). Accordingly, the Company expects revenues for this
segment to continue to trend down in future quarters.
Table 5
Cendant Corporation and Subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEETS
(In billions)
December 31, 2002 December 31, 2001
Assets
Current assets:
Cash and cash equivalents $0.1 $1.9
Stockholder litigation settlement trust -- 1.4
Assets of discontinued operations -- 1.3
Other current assets 3.3 3.1
Total current assets 3.4 7.7
Property and equipment, net 1.8 1.4
Goodwill, net 10.6 7.2
Other non-current assets 5.1 5.3
Total assets exclusive of assets under programs 20.9 21.6
Assets under management and mortgage programs 15.0 11.9
Total assets $35.9 $33.5
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt $-- $0.4
Stockholder litigation settlement -- 2.9
Liabilities of discontinued operations -- 0.2
Other current liabilities 5.0 4.3
Total current liabilities 5.0 7.8
Long-term debt, excluding Upper DECS 5.6 5.7
Upper DECS 0.9 0.9
Other non-current liabilities 0.9 0.7
Total liabilities exclusive of
liabilities under programs 12.4 15.1
Liabilities under management and
mortgage programs 13.8 10.9
Mandatorily redeemable preferred
interest in a subsidiary 0.4 0.4
Total stockholders' equity 9.3 7.1
Total liabilities and stockholders' equity $35.9 $33.5
Table 6
Cendant Corporation and Subsidiaries
SCHEDULE OF CORPORATE DEBT AND NET STOCKHOLDER LITIGATION SETTLEMENT
OBLIGATION (A)
(In millions)
Earliest
Mandatory
Redemption
Maturity December Sept- June March December
Date Date 31, 30, 30, 31, 31,
2002 2002 2002 2002 2001
Corporate Debt:
December December
2003 2003 7-3/4% notes $966 $1,042 $1,071 $1,150 $1,150
August August
2006 2006 6-7/8% notes 850 850 850 850 850
May May 11% senior
2009 2009 subordinated notes 530 554 571 577 584
November November
2004 2011 3-7/8% convertible
senior debentures
(B) 1,200 1,200 1,200 1,200 1,200
February February
2004 2021 Zero coupon senior
convertible
contingent notes
(C) 420 417 678 925 920
May May Zero coupon
2003 2021 convertible
debentures (D) 857 1,000 1,000 1,000 1,000
December
2005 Revolver borrowings 600 -- -- -- --
February 3% convertible
2002 subordinated notes -- -- -- -- 390
Net hedging gains
(losses) (E) 89 95 44 (6) 11
Other 89 51 52 24 27
Total corporate
debt, excluding
Upper DECS 5,601 5,209 5,466 5,720 6,132
Net Stockholder
Litigation
Settlement
Obligation:
Stockholder
litigation
settlement
obligation -- -- -- 2,850 2,850
Less: Payments made
to the stockholder
litigation
settlement trust -- -- -- 1,660 1,410
Net stockholder
litigation
settlement
obligation -- -- -- 1,190 1,440
Total Corporate Debt
and Net Stockholder
Litigation
Settlement
Obligation $5,601 $5,209 $5,466 $6,910 $7,572
Net Debt to Total
Capitalization Ratio
(F) 36% 35% 35% 37% 37%
(A) Amounts presented herein exclude liabilities under management and
mortgage programs and the Company's mandatorily convertible Upper
DECS securities.
(B) Each $1,000 principal amount is convertible into 41.58 shares of CD
common stock during 2003 if the average price of CD common stock
exceeds $28.59 during the stipulated measurement periods. The
average price of CD common stock at which the debentures are
convertible decreases annually by a stipulated percentage.
Redeemable by the Company after November 27, 2004. Holders may
require the Company to repurchase the notes on November 27, 2004 and
2008.
(C) Each $1,000 principal amount is convertible into 33.4 shares of CD
common stock during Q1, Q2, Q3 and Q4 of 2003 if the average price
of CD common stock exceeds $21.06, $21.19, $21.32 and $21.45,
respectively, during the stipulated measurement period. The average
price of CD common stock at which the notes are convertible
increases on a quarterly basis by a stipulated percentage.
Redeemable by the Company after February 13, 2004. Holders may
require the Company to repurchase the notes on February 13, 2004,
2009 and 2014. Issued at a discount resulting in a
yield-to-maturity of 2.5%.
(D) Each $1,000 principal amount is convertible into 39.08 shares of CD
common stock if the average price of CD common stock exceeds $28.15
during the stipulated measurement periods. Redeemable by the
Company after May 4, 2004. Holders may require the Company to
repurchase the notes on May 4, 2003, 2004, 2006, 2008, 2011 and
2016. Amended to provide for cash interest payments of 3% per annum
beginning May 5, 2002 and continuing through May 4, 2003 payable on
a semi-annual basis.
(E) Represents derivative gains (losses) resulting from fair value
hedges, $52 million of which have been realized as of December 31,
2002 and will be amortized by the Company to offset future interest
expense.
(F) Reflects the Company's net debt (net of cash and cash equivalents
and excluding the Upper DECS, debt related to management and
mortgage programs and net stockholder litigation settlement
obligation) to total capitalization ratio (including net debt and
the Upper DECS).
Table 7
Cendant Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions)
Twelve Months Ended
December 31,
2002 2001
Operating Activities
Net cash provided by (used in)
operating activities exclusive of
management and mortgage programs $(890) (A) $1,398
Net cash provided by operating
activities of management and
mortgage programs 2,147 1,389
Net cash provided by operating
activities 1,257 2,787
Investing Activities
Property and equipment additions (399) (329)
Proceeds from (payments to) stockholder
litigation settlement trust 1,410 (1,060)
Net assets acquired (net of cash
acquired) and acquisition-related
payments (1,371) (2,757)
Net proceeds from dispositions
of businesses 1,151 109
Other, net (23) (169)
Net cash provided by (used in)
investing activities exclusive of
management and mortgage programs 768 (4,206)
Management and mortgage programs:
Investment in vehicles (17,168) (14,906)
Payments received on investment in
vehicles 15,141 13,324
Origination of timeshare
receivables (1,118) (497)
Principal collection of timeshare
receivables 1,046 538
Equity advances on homes under
management (5,968) (6,306)
Repayment on advances on homes
under management 6,028 6,340
Net additions to mortgage
servicing rights (377) (760)
Net additions to hedge of mortgage
servicing rights (285) (42)
Proceeds from sales of mortgage
servicing rights 16 58
(2,685) (2,251)
Net cash used in investing activities (1,917) (6,457)
Financing Activities
Proceeds from borrowings 637 5,608
Principal payments on borrowings (2,111) (2,213)
Issuances of common stock 112 877
Repurchases of common stock (288) (254)
Other, net (64) (153)
Net cash provided by (used in)
financing exclusive of management
and mortgage programs (1,714) 3,865
Management and mortgage programs:
Proceeds from borrowings 15,171 9,460
Principal payments on borrowings (14,614) (8,798)
Net change in short-term
borrowings (114) 116
443 778
Net cash provided by (used in)
financing activities (1,271) 4,643
Effect of changes in exchange rates
on cash and cash equivalents 41 (8)
Cash provided by discontinued
operations 74 121
Net increase (decrease) in cash and
cash equivalents (1,816) 1,086
Cash and cash equivalents, beginning
of period 1,942 856
Cash and cash equivalents, end of
period $126 $1,942
(A) Net cash provided by operating activities exclusive of management and
mortgage programs is $2.0 billion when excluding the application of
the prior payments to the stockholder litigation settlement trust of
$2.85 billion ($1.41 billion in 2001, the first quarter 2002 payment
of $250 million and the funding of the remaining settlement liability
balance, including interest, of $1.19 billion on May 24, 2002).
Table 8
Cendant Corporation and Subsidiaries
CONSOLIDATED SCHEDULES OF FREE CASH FLOWS (A)
(In millions)
Twelve Months Ended
December 31,
2002 2001
Adjusted EBITDA (B) $2,761 $2,087
Interest expense, including minority interest (C) (277) (269)
Tax payments, net of refunds (62) (36)
Cash Flow 2,422 1,782
Working capital (227) 108
Capital expenditures (399) (329)
Restructuring and other unusual payments (81) (132)
Free Cash Flow before Management and
Mortgage Programs (D) 1,715 1,429
Management and mortgage programs (E) (F) (95) (84)
Free Cash Flow 1,620 1,345
Acquisitions, net of cash acquired (1,371) (2,757)
Net (repurchases)/issuances of equity securities (176) 623
Net proceeds from dispositions of businesses 1,151 109
Funding of stockholder litigation settlement (1,440) (1,060)
Investments and other (G) (126) (569)
Net (repayments of)/proceeds from borrowings (1,474) 3,395
Net increase (decrease) in
cash and cash equivalents $(1,816) $1,086
(A) Free cash flow is a measure used by the Company's management to
evaluate liquidity and financial condition. Free cash flow represents
cash available for the repayment of debt and other corporate purposes
such as acquisitions and investments. The Company has provided the
Consolidated Schedules of Free Cash Flows as it reflects the measure
by which management evaluates the performance of its cash flows. Such
measure of performance may not be comparable to similarly titled
measures used by other companies and is not a measurement recognized
under generally accepted accounting principles. Therefore, free cash
flow should not be construed as a substitute for income or cash flow
from operations in measuring operating results or liquidity. A
reconciliation of free cash flow to the appropriate measure recognized
under generally accepted accounting principles is included within
footnote (D) herein.
(B) See Table 2 for items excluded from Adjusted EBITDA.
(C) Excludes non-cash accretion recorded on the Company's zero-coupon
senior convertible notes and includes the before tax amounts of
minority interest.
(D) The reconciliation of Free Cash Flow before Management and Mortgage
Programs to Net Cash Provided by (Used in) Operating Activities
Exclusive of Management and Mortgage Programs is as follows:
Twelve Months Ended
December 31,
2002 2001
Free Cash Flow before Management
and Mortgage Programs $1,715 $1,429
Reconciling items:
Capital expenditures 399 329
Funding of stockholder litigation
settlement liability (2,850) --
Restricted cash used in insurance operations (49) (75)
Unusual charges (30) (192)
Other, including interest on
litigation settlement liability (75) (93)
Net Cash Provided by (Used in)
Operating Activities Exclusive of
Management and Mortgage
Programs (see Table 7) $(890) $1,398
(E) Net Change in Cash from Management and
Mortgage Programs is as follows:
Twelve Months Ended
December 31,
2002 2001
Management and Mortgage Programs (E)
Net investment in vehicles $(245) $(171)
Net mortgage originations and sales (558) (320)
Net mortgage servicing rights 277 (446)
Net timeshare receivables (72) 41
Net relocation receivables 60 34
Net financing for assets under
management and mortgage programs 443 778
Net Change in Cash from Management
and Mortgage Programs $(95) $(84)
(F) Cash flows related to management and mortgage programs may fluctuate
significantly from period to period due to the timing of the
underlying management and mortgage program transactions (i.e., timing
of mortgage loan origination versus sale). For the twelve months
ended December 31, 2002, the net change in cash from management and
mortgage programs represents (i) $2,147 million of net cash provided
by operating activities, (ii) $2,685 million of net cash used in
investing activities and (iii) $443 million of net cash provided by
financing activities, as detailed on Table 7. For the twelve months
ended December 31, 2001, the net change in cash from management and
mortgage programs represents (i) $1,389 million of net cash provided
by operating activities, (ii) $2,251 million of net cash used in
investing activities and (iii) $778 million of net cash provided by
financing activities, as detailed on Table 7.
(G) The activity for the twelve months ended December 31, 2002 primarily
relates to cash payments associated with (i) interest on the
stockholder litigation settlement, (ii) the insurance operations of
subsidiaries and (iii) the repurchase of loans in foreclosure, net of
cash received on the sale of marketable securities. The activity for
the twelve months ended December 31, 2001 includes cash payments
associated with (i) the funding of marketing expenses incurred by
Trilegiant Corporation ($104 million), (ii) an investment in NRT
Incorporated ($94 million), (iii) the contribution to the
technology trust ($95 million), (iv) the creation of Trip Network,
Inc. ($45 million) and (v) other payments, primarily related to
preferred stock investments.
Table 9
Cendant Corporation and Subsidiaries
REVENUES AND ADJUSTED EBITDA BY SEGMENT (A)
(In millions)
Year Ended December 31, 2002
Revenues
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year
Real Estate Services $410 $1,440 $1,331 1,506 $4,687
Hospitality 403 565 671 541 2,180
Travel Distribution 444 438 432 381 1,695
Vehicle Services 933 1,030 1,085 1,127 4,175
Financial Services 419 311 322 273 1,325
Total Reportable
Segments 2,609 3,784 3,841 3,828 14,062
Corporate and Other 7 -- (2) 21 26
Continuing
Operations $2,616 $3,784 $3,839 $3,849 $14,088
Year Ended December 31, 2002
Adjusted EBITDA
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year
Real Estate Services $182 $323 $69 279 $853
Hospitality 112 173 205 135 625
Travel Distribution 146 130 129 119 524
Vehicle Services 70 123 143 72 408
Financial Services 164 88 122 75 449
Total Reportable
Segments 674 837 668 680 2,859
Corporate and Other (12) (38) (32) (16) (98)
Continuing Operations $662 $799 $636 $664 $2,761
(A) In connection with the sale of the Company's car parking facility
business, National Car Parks ("NCP"), on May 22, 2002, the account
balances and activities of NCP have been segregated from the
Company's Vehicle Services segment and reported as a discontinued
operation for all periods presented.
Cendant Corporation and Subsidiaries
REVENUES AND ADJUSTED EBITDA BY SEGMENT (A)
(In millions)
Year Ended December 31, 2001
Revenues
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year
Real Estate Services $339 $474 $514 $532 $1,859
Hospitality 240 448 465 369 1,522
Travel Distribution 25 26 24 362 437
Vehicle Services 379 1,028 1,036 879 3,322
Financial Services 390 332 338 342 1,402
Total Reportable
Segments 1,373 2,308 2,377 2,484 8,542
Corporate and Other 38 11 12 10 71
Continuing Operations 1,411 2,319 2,389 $2,494 8,613
Move.com Group 10 -- -- -- 10
Continuing Operations
Excluding Move.com
Group $1,401 $2,319 $2,389 $2,494 $8,603
Year Ended December 31, 2001
Adjusted EBITDA
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year
Real Estate Services $132 $231 $287 $289 $939
Hospitality 102 156 152 103 513
Travel Distribution 2 3 1 102 108
Vehicle Services 69 112 95 14 290
Financial Services 131 70 58 51 310
Total Reportable Segments 436 572 593 559 2,160
Corporate and Other (18) (16) (23) (16) (73)
Continuing Operations 418 556 570 543 2,087
Move.com Group (9) -- -- -- (9)
Continuing Operations Excluding
Move.com Group $427 $556 $570 $543 $2,096
(A) In connection with the sale of the Company's car parking facility
business, National Car Parks ("NCP"), on May 22, 2002, the account
balances and activities of NCP have been segregated from the
Company's Vehicle Services segment and reported as a discontinued
operation for all periods presented.
Table 10
Cendant Corporation and Subsidiaries
ORGANIC SEGMENT GROWTH FOR THE THREE MONTHS ENDED DECEMBER 31, 2002
(In millions)
Revenues Adjusted EBITDA
2002 2001 % 2002 2001 %
Real Estate
Services $605(B) $523(G) 16%(G) $268(B) $280(G) (4%)(G)
Hospitality 388(C) 369 5% 116(C) 103 13%
Travel
Distribution 358(D) 362 (1%) 111(D) 102 9%
Vehicle
Services (A) 967(E) 879 10% 65(E) 14 364%
Financial
Services 273(F) 342 (20%) 80(F) 51 57%
Total Reportable
Segments $2,591 $2,475 5% $640 $550 16%
Note: Refer to Table 2 for total segment growth.
(A) In connection with the sale of the Company's car parking facility
business, National Car Parks ("NCP"), on May 22, 2002, the account
balances and activities of NCP have been segregated from the
Company's Vehicle Services segment and reported as a discontinued
operation for all periods presented.
(B) Includes revenue and Adjusted EBITDA of $78 million and $12 million,
respectively, related to NRT Incorporated (acquired in April 2002).
These amounts represent the revenue and Adjusted EBITDA recorded by
NRT during the period that were in excess of the amounts forecasted
in the original acquisition model and hence are viewed by the Company
as organic growth.
(C) Excludes aggregate revenues and Adjusted EBITDA of $153 million and
$19 million, respectively, related to Trendwest Resorts, Inc.
(acquired in April 2002), Equivest Finance, Inc. (acquired in
February 2002), Novasol A.S. (acquired in April 2002), Welcome
Holidays Limited (acquired in June 2002) and The International Life
Group (acquired in October 2002).
(D) Excludes aggregate revenues and Adjusted EBITDA of $23 million and $8
million, respectively, related to Sigma (a Galileo distribution
partner in Italy acquired in June 2002), Trust International
(acquired in July 2002), Lodging.com (acquired in August 2002), TIMAS
Ltd (a Galileo distribution partner in Ireland acquired in September
2002) and a venture with Marriot International, Inc. (formed in March
2002).
(E) Excludes revenues and Adjusted EBITDA of $160 million and $7 million,
respectively, related to Budget Group, Inc. (acquired in November
2002).
(F) Excludes Adjusted EBITDA losses of $5 million (the revenue impact was
de minimis) related to Tax Services of America, Inc. (acquired in
January 2002).
(G) Excludes NRT preferred dividends of $9 million and a charge of $94
million related to the impairment of Company's mortgage servicing
rights asset. Including the $94 million impairment charge, organic
growth for revenues and Adjusted EBITDA would be 41% and 44%,
respectively.
Table 11
Cendant Corporation and Subsidiaries
RECONCILIATION OF ADJUSTED EBITDA TO REPORTED EBITDA AND OPERATING INCOME
(Dollars in millions)
Three Months Ended December 31,
2002 2001
Adjusted EBITDA $664 $543
Less:
Acquisition and integration related costs (A) 5 104
Litigation and related costs, net 77 58
Restructuring and other unusual charges (14) 116
Mortgage servicing rights impairment -- 94
Plus: Gains on dispositions of businesses -- 5
Less: Losses on dispositions of businesses -- 23
Less: Impairment of investments -- 441
Reported EBITDA 596 (288)
Less: Non-program related
depreciation and amortization 129 148
Less: Amortization of pendings and listings 17 --
Operating Income $450 $(436)
Twelve Months Ended December 31,
2002 2001
Adjusted EBITDA $2,761 $2,087
Less:
Acquisition and integration related costs (A) 29 112
Litigation and related costs, net 103 86
Restructuring and other unusual charges (14) 379
Mortgage servicing rights impairment -- 94
Plus: Gains on dispositions of businesses -- 443
Less: Losses on dispositions of businesses -- 26
Less: Impairment of investments -- 441
Reported EBITDA 2,643 1,392
Less: Non-program related
depreciation and amortization 466 477
Less: Amortization of pendings and listings 256 --
Operating Income $1,921 $915
(A) Does not include the non-cash amortization of pendings and listings
of $17 million and $256 million during the three and twelve months
ended December 31, 2002 as such amounts represent amortization and
are therefore not included in Reported EBITDA.
Source: Cendant Corporation
CONTACT: Media - Elliot Bloom, +1-212-413-1832; Investors - Sam
Levenson,
+1-212-413-1834, or Henry A. Diamond, +1-212-413-1920, all of Cendant
Corporation
Web site: http://www.cendant.com/
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