<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
----------------
APRIL 20, 2000 (APRIL 18, 2000)
(Date of Report (date of earliest event reported))
CENDANT CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 1-10308 06-0918165
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation File No.) Identification Number)
or organization)
9 WEST 57TH STREET 10019
NEW YORK, NY (Zip Code)
(Address of principal
executive office)
(212) 413-1800
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if applicable)
================================================================================
<PAGE>
ITEM 5. OTHER EVENTS
Earnings Release. On April 18, 2000, we reported our 2000 first quarter
results which are discussed in more detail in the press release attached
hereto.
Attached hereto as Exhibit 99.1 is such press release relating to the
foregoing announcement which is incorporated herein by reference in its
entirety.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
EXHIBIT
NO. DESCRIPTION
- ----------- -----------------------------------------------------------------
99.1 Press Release: Cendant Reports Record First Quarter 2000 Results
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENDANT CORPORATION
BY: /s/ Jon F. Danski
-------------------------------------
Jon F. Danski
Executive Vice President, Finance and
Chief Accounting Officer
Date: April 20, 2000
3
<PAGE>
CENDANT CORPORATION
CURRENT REPORT ON FORM 8-K
REPORT DATED APRIL 20, 2000 (APRIL 18, 2000)
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ----------- -----------------------------------------------------------------
99.1 Press Release: Cendant Reports Record First Quarter 2000 Results
4
<PAGE>
[CENDANT LOGO]
CENDANT REPORTS RECORD FIRST QUARTER 2000 RESULTS
First Quarter Adjusted EPS from Continuing Operations,
Excluding Move.com Group, Increases 24% to $0.26 in 2000 vs. $0.21 in 1999
Comparable Basis EBITDA Rises 10%
First Quarter Reported EPS from Continuing Operations,
Including Unusual Items, is $0.17 in 2000 vs. $0.20 in 1999
First Quarter Reported EPS is $0.09 in 2000 vs. $0.43 in 1999
NEW YORK, NY, APRIL 18, 2000 -- Cendant Corporation (NYSE: CD) today reported
record first quarter 2000 results. Cendant Chairman, President and Chief
Executive Officer, Henry R. Silverman stated, "In the first quarter of 2000 we
continued to deliver consistent organic growth and we remain comfortable with
the current Wall Street estimates for the year. Additionally, I am pleased to
report that our convergence strategy to apply our off-line assets to the online
world is moving forward. For example, in January we launched move.com, our real
estate services portal and in March, our stockholders approved the creation of
a new class of common stock to track the performance of Move.com Group."
First quarter results and other recent activities include:
o Adjusted earnings per share, excluding Move.com Group, were up 24% to
$0.26 versus $0.21. (Adjusted basis is defined on page 2.)
o Comparable basis EBITDA increased 10% to $439 million. Comparable basis
revenues increased 6%. Comparable basis excludes the impact of unusual
items, disposed businesses and Move.com Group.
o As of March 31, 2000, the Company had approximately $1.5 billion of debt,
net of cash. The net debt to total capital ratio was 27% and annualized
return on equity was 30% (measured on adjusted net income).
o During the quarter the Company purchased approximately 10 million shares
of its common stock under a program initiated in October 1998. Since the
inception of the program, in the aggregate, the Company has reduced
shares outstanding by 20%. The Company has $600 million remaining under
the currently authorized $1 billion share repurchase program.
o The Company recorded restructuring and other unusual charges totaling $70
million after tax in the first quarter, of which 41% is non-cash, aimed
at increasing efficiencies and productivity and reducing cost structures
in the underlying businesses. The charge includes the cost of eliminating
approximately 950 positions and is expected to increase pre-tax income by
about $25 to $30 million annually, commencing in 2001.
<PAGE>
FIRST QUARTER DIVISION RESULTS
The underlying discussion of each division's operating results focuses on
Adjusted EBITDA. EBITDA is defined as earnings before non-operating interest,
income taxes, depreciation, amortization and minority interest. Adjusted
results exclude restructuring charges, gains and losses on disposition of
businesses and other items which are of a non-recurring or unusual nature and
are not measured in assessing segment performance or are not segment specific.
(See Table 4 for Revenues and Adjusted EBITDA by Segment and Table 5 for
Segment Revenue Driver Analysis.)
THREE MONTHS ENDED MARCH 31,
(Dollars in millions)
<TABLE>
<CAPTION>
ADJUSTED EBITDA
REVENUES ADJUSTED EBITDA MARGIN
---------------------------- ------------------------------ ------------------
% %
2000 1999 CHANGE 2000 1999 CHANGE 2000 1999
------ ------ ---------- -------- ------ ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Travel $272 $272 -- $ 126 $145 (13%) 46% 53%
Real Estate Franchise 121 97 25% 84 71 18% 69% 73%
Relocation 91 91 -- 18 18 -- 20% 20%
Mortgage 77 93 (17%) 12 44 (73%) 16% 47%
Move.com Group 11 3 267% (26) -- * * *
Individual Membership 204 241 (15%) 52 12 333% 25% 5%
Insurance/ Wholesale 145 140 4% 48 38 26% 33% 27%
Diversified Services 207 278 (26%) 98 65 51% 47% 23%
</TABLE>
- ----------
* Not meaningful.
TRAVEL DIVISION
Travel revenues remained flat while Adjusted EBITDA decreased 13% in first
quarter 2000 compared to first quarter 1999. Franchise fees rose as a result of
room growth in Lodging. Timeshare subscription and exchange revenues also
increased, primarily as a result of increased memberships, partially offset by
a reduction in subscription revenues resulting from the adoption of SAB 101
(see page 5). Additionally, first quarter 1999 included a gain from the sale of
a portion of the Company's equity investment in Avis Group Holdings, Inc. of $7
million. Contributing to the Adjusted EBITDA reduction in first quarter 2000
was an additional $4 million of corporate overhead allocations and $3 million
related to the timing of cost allocations to the franchisee funds as a result
of the refinement of allocation methods. Another contributing factor was the
recognition of $3 million of additional obligations relating to a prior
acquisition. Excluding the previously mentioned non-recurring items, revenues
increased 3% and Adjusted EBITDA was flat in first quarter 2000 over first
quarter 1999.
REAL ESTATE DIVISION
A 17% increase in royalty fees in real estate franchise was the primary driver
for a 25% increase in revenues and an 18% increase in Adjusted EBITDA. The
increase in royalty fees is primarily a result of unit growth and an 11%
increase in the average price of homes sold by franchisees. Beginning in second
quarter 1999, the national advertising funds for Coldwell Banker and ERA were
consolidated into the segment's financial results. Contributions by franchisees
to the Marketing and Advertising Fund increased revenues by $7 million and
increased expenses by a like amount with no corresponding impact on Adjusted
EBITDA. Including advertising fund contributions and offsetting expenses in
both periods, the Adjusted EBITDA margin increased to 69% in the first quarter
of 2000 versus 68% in the prior year period.
Relocation revenues, Adjusted EBITDA and Adjusted EBITDA margin were unchanged.
Increased ancillary services, referral fees and international services were
offset by reduced corporate and government home sale revenue reflecting a
continuing trend from asset-based to service-based fees.
Mortgage revenues decreased 17% due to a reduction in origination revenues.
While origination volume for home purchases was essentially unchanged,
refinancing origination volume declined $2.8 billion, or
2
<PAGE>
89%, compared with record level volumes in the prior year period associated
with unprecedented refinancing activity at that time. Servicing fee revenues
rose 8% year over year as the average portfolio grew $7 billion, or 14%, to $52
billion. Adjusted EBITDA decreased 73%. Adjusted EBITDA margin decreased from
47% in 1999 to 16% in 2000, as the decline in revenues amplified the impact of
fixed expenses and technology, infrastructure and teleservices costs incurred
to support future growth. Mortgage closings from our Log In -- Move In Internet
business amounted to $160 million in first quarter of 2000 up from $28 million
in 1999. While as anticipated Adjusted EBITDA in the mortgage segment for the
first quarter was below the prior year period, the Company continues to expect
that market conditions will improve in the back half of the year and produce
more positive comparisons as the year progresses. The Company currently expects
full year 2000 Adjusted EBITDA in its mortgage segment to be slightly lower
than 1999.
Move.com Group recorded revenues of $11 million as compared with $3 million in
the prior year period. Adjusted EBITDA decreased $26 million to a loss of $26
million in 2000. These results reflect increased investment in marketing and
development of the new real estate services Internet portal, which was launched
in January. The Company expects Move.com Group will continue to report losses
in the foreseeable future resulting from continuing investment in the growth of
the business.
DIRECT MARKETING DIVISION
Individual Membership revenues decreased 15%. On a comparable basis, excluding
divested businesses, revenues increased 7%. This is due to an increase in the
average price of a membership and the favorable mix of products and marketing
partners. Adjusted EBITDA increased from $12 million to $52 million due to
reduced solicitation spending as the Company further refined the targeted
audiences for its direct marketing efforts and achieved greater efficiencies in
reaching potential new members, as well as the absence of losses generated by
disposed businesses.
Insurance/Wholesale revenues rose 4% primarily as a result of international
expansion. Adjusted EBITDA increased 26% due to improved profitability in
international markets and a marketing expense decrease. The Adjusted EBITDA
margin increased to 33% in 2000 from 27% in 1999.
DIVERSIFIED SERVICES DIVISION
Revenues decreased 26% primarily as a result of the 1999 dispositions of
certain businesses, including Global Refund Group, Entertainment Publications,
Inc., and Green Flag Group. Adjusted EBITDA increased 51%. Excluding the impact
of disposed businesses on first quarter 1999 operating results, revenues and
Adjusted EBITDA increased 18% and 43%, respectively, in first quarter 2000.
These increases resulted from a 33% increase in tax return volume and a 9%
increase in the average fee per return received by Jackson Hewitt franchisees,
$10 million of incremental income recognized from financial investments and a
32% increase in the operating results of the Company's National Car Parks
subsidiary.
CENDANT INTERNET GROUP
During the first quarter the Company formed Cendant Internet Group ("CIG"). CIG
was actively involved in supporting move.com including raising $85 million from
investors led by Liberty Digital. Additionally, CIG has led a company-wide
e-strategy effort. As part of this endeavor, each unit of Cendant was reviewed
so that its Internet business strategies and opportunities could be
inventoried. Certain of these new business ideas are going through detailed
business planning and a strategy for how these initiatives will be implemented
as well as how the other Web business opportunities across the Company are
pursued in the near and intermediate term is being developed. CIG will identify
business and content partners for each initiative, as well as vendors. Lastly,
CIG pursued a strategic investment initiative, which has resulted in
investments in several Internet companies with which Cendant is developing or
implementing business relationships.
LIBERTY MEDIA
During the quarter, the previously announced transactions with Liberty Media
Corporation and its chairman, Dr. John C. Malone, closed, and Dr. Malone joined
the Company's Board of Directors.
3
<PAGE>
Additionally, Liberty Digital, Inc. purchased approximately 1.6 million shares,
or 6%, of move.com in a private placement. Liberty Digital and Cendant agreed
to use good faith efforts to enter into mutually acceptable agreements relating
to the development of real estate-related programming for Liberty Digital's
interactive television initiatives based on Move.com Group's Web content. Other
previously disclosed initiatives with Liberty Media continue in the planning
and feasibility stage.
OTHER ITEMS
The following items are also reflected in the first quarter results:
First quarter 2000
o A credit of $41 million ($26 million or $0.03 per share after tax) to
reflect an adjustment to the amount of the settlement charge recorded in the
fourth quarter of 1998 for the PRIDES class action litigation due to
disallowed claims.
o Restructuring and other unusual charges totaling $106 million ($70 million
or $0.09 per share after tax). The charges consist of $39 million related to
personnel, $9 million related to facilities, $30 million related primarily
to the abandonment of certain capitalized software development activities,
$21 million related to a contribution to an independent technology trust to
facilitate Internet initiatives for the benefit of lodging franchisees and
$7 million of other. Approximately $60 million is classified as
restructuring which is aimed at increasing efficiencies and productivity and
reducing cost structures in the underlying businesses.
o An extraordinary loss of $4 million ($2 million after tax) for the early
extinguishment of debt associated with the Company's $400 million 7.5%
senior notes, which were redeemed in January 2000.
o As previously disclosed, effective January 1, 2000, the Company implemented
the Securities and Exchange Commission's Staff Accounting Bulletin No. 101
("SAB 101"), which modified the timing of revenue recognition. Accordingly,
in first quarter 2000, the Company recorded a non-cash charge to account for
the cumulative effect of an accounting change of $89 million ($56 million or
$0.07 per share after tax). SAB 101 impacted the timing of revenue
recognition related to preferred alliance access fee revenues and
subscriptions within the Company's timeshare exchange business.
o Charges totaling $13 million ($8 million or $0.01 per share after tax) for
losses related to the disposition of businesses.
First quarter 1999
o A $193 million after tax gain on the sale of Cendant Software Corporation, a
discontinued operation.
Reported net income, including unusual and other items, was $69 million ($0.09
per share) in the first quarter of 2000 compared with $362 million ($0.43 per
share) in 1999. (See Table 3 for Consolidated Condensed Statements of Income).
Statements about future results made in this release may 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. They involve a
number of risks and uncertainties that are difficult to predict including the
outcome of litigation. Actual results could 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 10-K for the year ended December 31, 1999, including completion
of the settlement of the class action litigation.
Cendant Corporation is a global provider of real estate, travel and direct
marketing related consumer and business services. The Company's core
competencies include building franchise systems, providing outsourcing
solutions and direct marketing. As a franchiser, Cendant is among the world's
leading franchisers of real estate brokerage offices, hotels, rental car
agencies, and tax preparation services. The Company's real estate-related
operations also include Move.com Group, Cendant's relocation, real estate and
home-related services portal on the Internet. As a provider of outsourcing
solutions, Cendant is a
4
<PAGE>
major provider of mortgage services to consumers, the global leader in employee
relocation, and the world's largest vacation exchange service. In direct
marketing, Cendant provides access to insurance, travel, shopping, auto, and
other services primarily to customers of its affinity partners. In addition,
Cendant Internet Group is aggressively pursuing a convergence strategy for the
Company's off-line and online businesses. Other business units include NCP, the
UK's largest private car park operator, and Wizcom, an information technology
services provider. Headquartered in New York, NY, 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 visiting the Company's Web site at www.Cendant.com or by
calling 877-4INFO-CD (877-446-3623).
Media Contact: Investor Contacts:
Elliot Bloom Denise Gillen
212-413-1832 212-413-1833
Sam Levenson
212-413-1834
*****
Tables Follow
5
<PAGE>
TABLE 1
CENDANT CORPORATION AND SUBSIDIARIES
FINANCIAL RESULTS OF OPERATIONS
(IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 2000
---------------------------------
AS AS DISPOSED MOVE.COM COMPARABLE
REPORTED ADJUSTMENTS ADJUSTED BUSINESSES (B) GROUP (C) BASIS (D)
---------- ------------- ---------- ---------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues $1,128 $ - $1,128 $ 1 $ 11 $1,116
EBITDA (A) 331 81 (E) 412 (1) (26) 439
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
---------------------------------
AS AS DISPOSED MOVE.COM COMPARABLE
REPORTED ADJUSTMENTS ADJUSTED BUSINESSES (B) GROUP (C) BASIS (D)
---------- ------------- ---------- ---------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues $1,317 $- $1,317 $260 $3 $1,054
EBITDA (A) 425 8 (F) 433 32 - 401
</TABLE>
- ---------
(A) Defined as earnings before non-operating interest, income taxes,
depreciation, amortization and minority interest.
(B) Reflects the operating results of businesses 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 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 (i) $106 million in connection with restructuring
initiatives focused principally on consolidating and rationalizing existing
processes, improving the overall level of organizational efficiency and
other restructuring-related efforts, (ii) $13 million for losses related to
the dispositions of businesses and (iii) $3 million for
investigation-related costs. Such charges were partially offset by 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.
(F) Includes charges of $7 million in connection with the termination of a
proposed acquisition and $2 million for investigation-related costs. Such
charges were partially offset by a $1 million credit for the net gain on
the sale of Essex Corporation, a Company subsidiary.
<PAGE>
TABLE 2
CENDANT CORPORATION AND SUBSIDIARIES
FINANCIAL RESULTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 2000
---------------------------------
CENDANT GROUP (A) MOVE.COM GROUP (B) CENDANT
----------------------- ----------------------- -------------------------
AS AS AS AS AS AS
REPORTED ADJUSTED REPORTED ADJUSTED REPORTED ADJUSTED
---------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $1,117 $1,117 $ 11 $ 11 $1,128 $1,128
Expenses 857 790 38 37 895 827(D)
Loss on dispositions of businesses (13) -- -- -- (13) --(E)
------ ------ ----- ----- ------ ------
Income (loss) before income taxes and minority
interest 247 327 (27) (26) 220 301
EBITDA (C) 358 438 (27) (26) 331 412
Income (loss) from continuing operations 143 196 (16) (15) 127 181
Net income (loss) 85 196 (16) (15) 69 181(F)
Income per share:
Basic
Income from continuing operations $ 0.18 $ 0.25
Net income 0.10 0.25
Diluted
Income from continuing operations 0.17 0.24
Net income 0.09 0.24
Weighted average shares
Basic 717 717
Diluted 769 769
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
---------------------------------
CENDANT GROUP MOVE.COM GROUP (B) CENDANT
----------------------- ------------------------ -------------------------
AS AS AS AS AS AS
REPORTED ADJUSTED REPORTED ADJUSTED REPORTED ADJUSTED
---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues $1,314 $1,314 $ 3 $ 3 $ 1,317 $ 1,317
Expenses 1,029 1,021 4 4 1,033 1,025(G)
------ ------ --- --- ------- --------
Income (loss) before income taxes and minority
interest 285 293 (1) (1) 284 292
EBITDA (C) 425 433 -- -- 425 433
Income from continuing operations 169 174 -- -- 169 174
Net income 362 174 -- -- 362 174(H)
Income per share:
Basic
Income from continuing operations $ 0.21 $ 0.22
Net income 0.45 0.22
Diluted
Income from continuing operations 0.20 0.21
Net income 0.43 0.21
Weighted average shares
Basic 800 800
Diluted 854 854
</TABLE>
- ---------
(A) The Cendant Group represents all of the businesses operated by Cendant
other than the businesses which comprise the Move.com Group.
(B) 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 the move.com
network.
(C) Defined as earnings before non-operating interest, income taxes,
depreciation, amortization and minority interest.
(D) Excludes charges of $106 million ($70 million, after tax or $.09 per
diluted share) in connection with restructuring initiatives focused
principally on consolidating and rationalizing existing processes,
improving the overall level of organizational efficiency, and other
restructuring-related efforts and $3 million ($2 million, after tax) for
investigation-related costs. Such charges were partially offset by 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.
(E) Excludes losses of $13 million ($8 million, after tax or $.01 per diluted
share) related to the dispositions of businesses.
(F) In addition to the items excluded in Notes (D) and (E), amount further
excludes an extraordinary loss of $4 million ($2 million, after tax)
resulting from the early extinguishment of debt and a non-cash charge of
$89 million ($56 million, after tax or $.07 per diluted share) to account
for the cumulative effect of an accounting change adopted on January 1,
2000 with respect to certain revenue recognition policies.
(G) Excludes charges of $7 million ($4 million, after tax or $.01 per diluted
share) in connection with the termination of a proposed acquisition and $2
million ($1 million, after tax) of investigation-related costs. Such
charges were partially offset by a $1 million credit for the net gain on
the sale of Essex Corporation, a Company subsidiary.
(H) In addition to the items excluded in Note (G), amount further excludes an
after tax gain of $193 million on the sale of discontinued operations.
<PAGE>
TABLE 3
CENDANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------
2000 1999
------------ ------------
<S> <C> <C>
REVENUES
Membership and service fees, net $1,065 $1,253
Fleet leasing (net of depreciation and interest costs of $0 and $326) -- 18
Other 63 46
------ ------
Net revenues 1,128 1,317
------ ------
EXPENSES
Operating 368 457
Marketing and reservation 215 262
General and administrative 133 165
Depreciation and amortization 85 93
Other charges (credits):
Restructuring costs and other unusual charges (credits) 106 (1)
Litigation settlement and related costs (credits) (41) --
Investigation-related costs 3 2
Termination of proposed acquisition -- 7
Interest, net 26 48
------ ------
Total expenses 895 1,033
------ ------
Loss on dispositions of businesses (13) --
------ ------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 220 284
Provision for income taxes 77 100
Minority interest, net of tax 16 15
------ ------
INCOME FROM CONTINUING OPERATIONS 127 169
Gain on sale of discontinued operations, net of tax -- 193
------ ------
INCOME BEFORE EXTRAORDINARY LOSS AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE 127 362
Extraordinary loss, net of tax (2) --
------ ------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 125 362
Cumulative effect of accounting change, net of tax (56) --
------ ------
NET INCOME $ 69 $ 362
====== ======
INCOME (LOSS) PER SHARE
BASIC
Income from continuing operations $ 0.18 $ 0.21
Gain on sale of discontinued operations -- 0.24
Extraordinary loss -- --
Cumulative effect of accounting change (0.08) --
------ ------
NET INCOME $ 0.10 $ 0.45
====== ======
DILUTED
Income from continuing operations $ 0.17 $ 0.20
Gain on sale of discontinued operations -- 0.23
Extraordinary loss -- --
Cumulative effect of accounting change (0.08) --
------ ------
NET INCOME $ 0.09 $ 0.43
====== ======
WEIGHTED AVERAGE SHARES
Basic 717 800
Diluted 769 854
</TABLE>
<PAGE>
TABLE 4
CENDANT CORPORATION AND SUBSIDIARIES
REVENUES AND ADJUSTED EBITDA BY SEGMENT
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
REVENUES ADJUSTED EBITDA (A)
---------------------------------- -------------------------------------------
2000 (B) 1999 % CHANGE 2000 (B,C) 1999 % CHANGE
---------- -------- ---------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Travel $ 272 $ 272 -- $126(D) $145 (13)%
Real Estate Franchise 121 97 25 % 84 71 18 %
Relocation 91 91 -- 18 18 --
Mortgage 77 93 (17)% 12 44 (73)%
Individual Membership 204 241 (15)% 52 12 333 %
Insurance/Wholesale 145 140 4 % 48 38 26 %
Move.com Group 11 3 267 % (26) -- *
Diversified Services 207 278 (26)% 98 (E) 65(F) 51 %
Fleet -- 102 * -- 40 *
------ ------ -------- -------
Total $1,128 $1,317 $412 $433
====== ====== ======== =======
</TABLE>
- ----------
* Not meaningful.
(A) Defined as earnings before non-operating interest, income taxes,
depreciation, amortization and minority interest, adjusted to exclude gains
and losses on the dispositions of businesses and certain charges or credits
which are of a non-recurring or unusual nature.
(B) As of January 1, 2000, the Company refined its corporate overhead
allocation method. See Table 6 for the pro forma impact of such refinement.
(C) Excludes a charge of $106 million in connection with restructuring
initiatives focused principally on consolidating and rationalizing existing
processes, improving the overall level of organizational efficiency and
other restructuring-related efforts ($60 million, $1 million, $1 million,
$23 million, $9 million, $1 million and $11 million of charges were
recorded within the Travel, Relocation, Mortgage, Individual Membership,
Insurance/Wholesale, Move.com and Diversified Services segments,
respectively).
(D) Excludes $4 million of losses related to the dispositions of businesses.
(E) Excludes charges of $9 million for losses related to the dispositions of
businesses and $3 million for investigation-related costs. Such charges
were partially offset by 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.
(F) Excludes charges of $7 million in connection with the termination of a
proposed acquisition and $2 million for investigation-related costs. Such
charges were partially offset by a $1 million credit for the net gain on
the sale of Essex Corporation, a Company subsidiary.
<PAGE>
TABLE 5
CENDANT CORPORATION AND SUBSIDIARIES
SEGMENT REVENUE DRIVER ANALYSIS
(REVENUE DOLLARS AND MORTGAGE SEGMENT VOLUME IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------------------
%
2000 1999 CHANGE
-------------- -------------- ---------
<S> <C> <C> <C>
TRAVEL SEGMENT
Domestic Rooms (A)
Month End Actual Rooms 510,388 492,427 4%
Weighted Average Rooms Available 501,160 482,439 4%
Franchise Fee per Weighted Average Room $ 178.59 $ 182.78 (2%)
----------- -----------
Total Franchise Fees 90 88 2%
Car Rental Days 13,857,201 13,872,196 --
Franchise Fee per Rental Day $ 2.89 $ 2.82 2%
----------- -----------
Total Franchise Fees 40 39 3%
Sub-Total Franchise Fees $ 130 $ 127 2%
Number of Timeshare Exchanges (B) 468,692 465,684 1%
Annualized Number of Exchanges 1,874,768 1,862,736 1%
Average Subscriptions 2,336,574 2,298,726 2%
----------- -----------
Total Exchanges and Subscriptions 4,211,342 4,161,462 1%
Average Fee $ 23.01 $ 23.00 --
----------- -----------
Total Exchange/Subscription Fees (C) 97 96 1%
Other Revenue $ 45 $ 49 (8%)
----------- -----------
TOTAL TRAVEL REVENUE $ 272 $ 272 --
=========== ===========
REAL ESTATE FRANCHISE SEGMENT
Closed Sides - Domestic 372,403 368,333 1%
Average Price $ 162,908 $ 146,517 11%
Adjusted Royalty Rate 0.16% 0.15% 7%
----------- -----------
Total Royalties 97 83 17%
Other 24 14 71%
----------- -----------
Total Revenue $ 121 $ 97 25%
=========== ===========
MORTGAGE SEGMENT
Production Loan Closings (D) $ 3,847 $ 6,779 (43%)
Average Servicing Loan Portfolio $ 51,955 $ 45,405 14%
</TABLE>
- ----------
(A) Adjusted retrospectively to reflect improved room count information not
previously available as a result of the "Power Up" technology initiative
within the lodging business unit.
(B) Adjusted retrospectively to reflect additional categories of confirmation
modifications.
(C) First Quarter 2000 includes $2 million reduction as a result of the
implementation SAB 101 and its impact on the timing of subscription revenue
recognition.
(D) The $2.9 billion decrease in production loan closings is comprised of a
$2.8 billion reduction in mortgage refinancing volume and a $0.1 billion
decrease in closings for home purchases.
<PAGE>
TABLE 6
CENDANT CORPORATION AND SUBSIDIARIES
1999 ADJUSTED EBITDA BY SEGMENT (A)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
AS REPORTED PRO FORMA (B)
--------------------------------------------------- --------------------------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year
--------- --------- --------- --------- ----------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Travel $145 $146 $163 $132 $ 586 $141 $144 $160 $129 $ 574
Real Estate Franchise 71 114 125 114 424 69 113 121 111 414
Relocation 18 34 42 28 122 18 35 43 29 125
Mortgage 44 50 59 29 182 44 50 60 29 183
Individual Membership 12 17 48 50 127 12 18 50 50 130
Insurance/Wholesale 38 50 48 44 180 39 51 50 45 185
Move.com Group -- (6) (8) (8) (22) -- (6) (8) (8) (22)
Diversified Services 65 12 50 112 239 70 12 51 116 249
Fleet 40 41 -- -- 81 40 41 -- -- 81
---- ---- ---- ---- ------ ---- ---- ---- ---- ------
Total $433 $458 $527 $501 $1,919 $433 $458 $527 $501 $1,919
==== ==== ==== ==== ====== ==== ==== ==== ==== ======
</TABLE>
- ---------
(A) As of January 1, 2000, the Company refined its corporate overhead
allocation method. As a result, expenses determined to be primarily
associated with a specific business segment are recorded by that business
segment versus allocating those expenses among the segments based on a
percentage of revenue. The Company determined the refinement in corporate
allocation methods to be appropriate prospective to the completion of the
Company's divestiture plan and based on the composition of the business
units comprising the Company in 2000.
(B) Pro Forma 1999 Adjusted EBITDA is presented as if the refined method of
allocating corporate overhead in 2000 was applicable to 1999.
<PAGE>
TABLE 7
CENDANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN BILLIONS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 0.9 $ 1.2
Other current assets 3.4 3.4
----- -----
Total current assets 4.3 4.6
Property and equipment, net 1.3 1.3
Goodwill, net 3.2 3.3
Other assets 3.3 3.2
----- -----
Total assets exclusive of assets under programs 12.1 12.4
Assets under management and mortgage programs 2.9 2.7
----- -----
TOTAL ASSETS $15.0 $15.1
===== =====
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Stockholder litigation settlement and related costs $ 2.9 $ 2.9
Other current liabilities 2.1 2.7
----- -----
Total current liabilities 5.0 5.6
Long-term debt 2.1 2.4
Other non-current liabilities 0.7 0.8
----- -----
Total liabilities exclusive of liabilities under programs 7.8 8.8
Liabilities under management and mortgage programs 2.7 2.6
Mandatorily redeemable preferred securities issued by subsidiaries 1.9 1.5
Commitments and contingencies -- --
Total stockholders' equity 2.6 2.2
----- -----
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $15.0 $15.1
===== =====
</TABLE>
<PAGE>
TABLE 8
CENDANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
2000 1999
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net cash provided by operating activities exclusive of management and
mortgage programs $ 118 $ 163
Net cash provided by (used in) operating activities of management and
mortgage programs (87) 773
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 31 936
------- -------
INVESTING ACTIVITIES
Property and equipment additions (49) (63)
Net assets acquired (net of cash acquired) and acquisition-related payments (30) (64)
Net proceeds from dispositions of businesses -- 800
Other, net (25) 42
------- -------
Net cash provided by (used in) investing activities exclusive of management
and mortgage programs (104) 715
------- -------
MANAGEMENT AND MORTGAGE PROGRAMS:
Investment in leases and leased vehicles, net -- (384)
Repayment on advances on homes under management, net of equity
advances 36 39
Additions to mortgage servicing rights, net of proceeds from sale (104) (126)
------- -------
(68) (471)
------- -------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (172) 244
------- -------
FINANCING ACTIVITIES
Principal payments on borrowings (780) (9)
Issuance of common stock 499 30
Repurchases of common stock (198) (1,142)
Proceeds from mandatorily redeemable preferred securities issued by
subsidiary 375 --
------- -------
Net cash used in financing activities exclusive of management and
mortgage programs (104) (1,121)
------- -------
MANAGEMENT AND MORTGAGE PROGRAMS:
Proceeds from debt issuance or borrowings 777 1,831
Principal payments on borrowings (1,421) (2,102)
Net change in short-term borrowings 672 (299)
------- -------
28 (570)
------- -------
NET CASH USED IN FINANCING ACTIVITIES (76) (1,691)
------- -------
Effect of changes in exchange rates on cash and cash equivalents 1 23
------- -------
Net decrease in cash and cash equivalents (216) (488)
Cash and cash equivalents, beginning of period 1,164 1,009
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 948 $ 521
======= =======
</TABLE>
