Cendant Reports Results For Fourth Quarter and Full Year 2005
4Q 2005 Revenue Increased 7% to $4.3 Billion versus $4.0 Billion in 4Q 2004
4Q 2005 EPS from Continuing Operations was a Loss of $0.04
4Q 2005 EPS from Continuing Operations as Adjusted for Specified Items was $0.23, In Line with Most Recent Projection
4Q 2005 Net Cash Provided by Operating Activities was $773 Million and Free Cash Flow was $445 Million
Full Year 2005 Revenue Increased 9% to $18.2 Billion versus $16.7 Billion In 2004
Full Year 2005 EPS from Continuing Operations was $0.82
Full Year 2005 EPS from Continuing Operations as Adjusted for Specified Items was $1.28
Full Year 2005 Net Cash Provided by Operating Activities was $3.3 Billion and Free Cash Flow was $2.0 Billion
Company Updates 2006 Projections
NEW YORK, Feb. 13 -- Cendant Corporation today reported results for fourth quarter and full year 2005.
For fourth quarter 2005, revenue totaled $4.3 billion, an increase of 7% over fourth quarter 2004, reflecting growth in the Company's core real estate and travel services businesses. EPS from Continuing Operations was a loss of $0.04 (a profit of $0.23 as adjusted for specified items, which was in line with the Company's most recent projection). The loss from operations in the fourth quarter reflects the impact of the previously disclosed impairment charge related to lower than previously forecasted results in the Company's Travel Distribution Services businesses. (For a more detailed explanation see Other Items.) Net Income increased to $537 million, versus $357 million in fourth quarter 2004.
For full year 2005, revenue totaled $18.2 billion, an increase of 9% over 2004. Reported EPS from Continuing Operations was $0.82 ($1.28 as adjusted for specified items). Net Income was $1.3 billion.
Cendant's President and Chief Financial Officer, Ronald L. Nelson, stated: "During 2005, we continued to strengthen our businesses' leading positions in the residential real estate, hospitality, travel distribution and vehicle rental markets that they serve. Each of our business segments individually generated organic revenue growth for the full year and, in total, our core reportable segments generated organic revenue growth of 5% for the fourth quarter and 8% for the full year. In addition, during 2005 we generated over $2 billion in free cash flow, and we returned over $2.5 billion in value to our shareholders, including over 70% of our free cash flow and the spin-off of PHH Corporation."
With respect to Cendant's plan to separate the Company into four independent, publicly traded, pure play companies, Mr. Nelson further commented: "We are now in the execution phase and remain on track to complete the spin-offs of Real Estate Services and Hospitality in the second and third quarters of 2006, respectively, and the separation of Travel Distribution from Vehicle Services in October 2006."
Reconciliation to Previous EPS Guidance
The following table presents a reconciliation of actual EPS from Continuing Operations to the Company's estimated outlook as of December 13, 2005:
Q4 2005 Full Year 2005
Reported EPS from Continuing Operations ($0.04) $0.82
Adjusted for:
First quarter 2005 restructuring and
transaction-related charges - 0.03
Separation costs 0.01 0.01
Impairment of intangible assets 0.25 0.24
Valuation charge associated with PHH spin-off - 0.17
Arbitration interest expense 0.01 0.01
Estimated EPS as of December 13, 2005 $0.23 $1.28
Fourth Quarter 2005 Results of Core Operating Segments
The following discussion of operating results focuses on revenue and EBITDA for each of our core operating segments. Revenue and EBITDA are expressed in millions.
Real Estate Services
(Consisting of the Company's real estate franchise brands, brokerage operations, relocation services and settlement services businesses)
2005 2004 % change Revenue $1,620 $1,572 3% EBITDA $ 221 $ 238 (7%)
Revenue increased due to growth in our real estate franchise and NRT real estate brokerage businesses, principally driven by increases in home prices and by tuck-in acquisitions at NRT. Home prices increased 12% at real estate franchise and 10% at NRT. These increases were partially offset by a 5% decline in closed sides at both real estate franchise and NRT, reflecting the expected moderation of the residential real estate market, particularly in certain markets where NRT is concentrated such as the East and West coasts. EBITDA declined due primarily to higher fixed costs at NRT in the seasonally slow fourth quarter.
Hospitality Services
(Consisting of the Company's franchised lodging brands, hotel management, timeshare exchange and vacation rental businesses)
2005 2004 % change Revenue $ 361 $ 324 11% EBITDA $ 80 $ 83 (4%)
Revenue increased primarily due to growth in our lodging and RCI timeshare exchange businesses. The largest contributor to revenue growth was the inclusion of approximately $30 million of revenue associated with the acquisition of Wyndham International, of which approximately $25 million had no impact on EBITDA because it related to reimbursable expenses. Lodging revenue was also positively impacted by an 11% improvement in RevPAR, excluding Wyndham and Ramada International. Revenue from RCI increased 8% primarily as a result of increased rental activity and RCI points transaction volume. Partially offsetting these revenue increases was a decline at our European Vacation Rental business, which experienced slow booking patterns in the soft European travel marketplace. EBITDA was negatively impacted primarily by a previously announced $16 million charge incurred to combine the operations of RCI and the Vacation Rental Group to form the Vacation Network Group.
Timeshare Resorts
(Consisting of the Company's timeshare sales and development businesses)
2005 2004 % change
Revenue $ 447 $ 389 15%
EBITDA $ 96 $ 73 32%
Revenue and EBITDA increased primarily due to 6% growth in tour volume and a 14% increase in revenue per guest. The increase in tour flow resulted from the reorganization of the sales and marketing organizations and the benefit of diversified tour mix. Sales efficiency improvement resulted from improved yield management of product inventory, mix of tour types and pricing, particularly at some of our premium destinations (Hawaii, Las Vegas, Orlando and Myrtle Beach). In addition, revenue and EBITDA were positively impacted by increased consumer financing income primarily due to growth in the portfolio.
Vehicle Rental
(Consisting of the Company's car and truck rental businesses)
2005 2004 % change
Revenue $1,308 $1,131 16%
EBITDA $ 72 $ 80 (10%)
Revenue increased due to growth in our domestic and international car rental operations. Car rental revenue grew 18% worldwide due to a 17% increase in rental day volume. EBITDA comparisons were negatively impacted, however, by increased fleet costs for newer vehicles and 17% growth in our car rental fleet to support increased demand. We have initiated domestic price increases to mitigate the impact of higher fleet costs and have achieved modest year-over-year increases in pricing thus far in 2006.
Travel Distribution Services
(Consisting of electronic global distribution services for the travel industry, corporate and consumer online travel services, and travel agency services)
2005 2004 % change Revenue $ 570 $ 451 26% EBITDA $ (332) $ 101 N/M
Revenue increased primarily due to growth in our online travel agency and other consumer travel businesses. The acquisitions of Orbitz and Gullivers contributed to revenue and EBITDA, while the acquisition of ebookers contributed to revenue but reduced EBITDA by $10 million. On an organic basis, our online travel businesses grew gross bookings by 16% and achieved higher EBITDA margins. Revenue from GDS and Supplier Services declined 2%, as a 6% increase in global GDS segment volume was offset by decreased subscriber fee income. Despite increased revenue, EBITDA declined primarily due to a previously announced non-cash impairment charge of $425 million, pretax, ($256 million or $0.25 per share, after tax) principally associated with the Company's online consumer travel businesses, largely ebookers, as well as severance costs of $12 million. In addition, EBITDA comparisons were negatively impacted by $10 million relating to previously disclosed benefit plan changes that reduced expenses in fourth quarter 2004.
Recent Achievements and Strategic Initiatives
During the fourth quarter, the Company made considerable progress toward its cash flow generation, share repurchase and dividend payment goals:
-- Generated Net Cash Provided by Operating Activities of $773 million
and Free Cash Flow of $445 million. For full year 2005, the Company
generated Net Cash Provided by Operating Activities of approximately
$3.3 billion and Free Cash Flow of approximately $2.0 billion.
-- Utilized $331 million of cash for the repurchase of common stock
($270 million net of proceeds from option exercises). For full
year 2005, the Company utilized $1.3 billion of cash for the
repurchase of 68 million shares of its common stock ($1.1 billion net
of proceeds from issuing 24 million shares in connection with option
exercises).
-- Utilized $114 million of cash to pay its quarterly dividend of
$0.11 per share. For full year 2005, the Company utilized
$423 million of cash to pay quarterly dividends. As previously
announced, Cendant's Board of Directors has approved the payment of
the Company's first quarter 2006 dividend of $0.11 per share, after
which further cash dividends will be suspended for the remainder of
2006 due to the planned separation of Cendant into four independent,
publicly traded companies.
Other Items
-- Discontinued Operations - Includes income from the Company's former
Marketing Services Division and, in prior periods, results of
operations of the Company's former Jackson Hewitt, Wright Express,
fleet and appraisal units, which have been disposed. The Company
recorded gains on the sale of Marketing Services and Wright Express
totaling $765 million in 2005 and a gain on the sale of Jackson
Hewitt of $198 million in 2004.
-- Arbitration Interest Expense - On February 2, 2006, we were informed
of a final award in a matter related to claims by the purchaser of a
business sold by Avis Group Holdings prior to Cendant's acquisition
in 2001 of that company. The amount awarded had been fully reserved
for in connection with the acquisition; however, our fourth quarter
pretax results were reduced by $19 million (or $0.01 per share, after
tax) to reflect interest expense that we will now be required to pay
on the award amount.
-- Impairment of Intangible Asset - The Company's initial estimate of
the impairment charge discussed in its December 13, 2005 press
release was based upon having completed only the first step of a
multi-step valuation analysis required under GAAP. The Company has
now completed the required, detailed analysis and determined that the
excess value of certain Travel Distribution assets is insufficient to
overcome the shortfall in other assets, principally ebookers. As a
result, the impairment of intangible asset charge recorded in our
Travel Distribution Services segment in fourth quarter 2005 was
$425 million pretax ($256 million or $0.25 per share, after tax),
which was larger than previously projected.
Outlook
Based on current trends, the 2006 revenue and EBITDA outlook for the Company's Hospitality and Timeshare segments remains substantially unchanged from the most recent projection announced on December 13, 2005. As a result of initiatives being undertaken by new management of Cendant's Travel Distribution division to preserve and enhance the market position of its international operations, the Company currently expects the 2006 results of that division to be around the low end of the previously projected EBITDA range of $575 - $625 million (before separation costs). The outlook for the Company's other segments is as follows.
Real Estate Services - As a result of recent moderation in the residential real estate market, particularly in some of the markets where NRT is more heavily concentrated, the Company expects EBITDA comparisons (before separation costs) to be negative in first quarter 2006 versus first quarter 2005. The impact on Cendant's prior first quarter 2006 EPS projection is approximately $0.03 - $0.05. The Company is taking actions to reduce costs at NRT, including consolidating offices, which should benefit results beginning in the second half of 2006. In addition, our open contracts have trended up in recent weeks, which normally indicates that home sales should improve in the next few quarters. During January 2006, average homesale prices increased in the high single digit range, year-over-year, in our franchise and brokerage businesses, continuing the national trend of uninterrupted annual price increases that, according to government statistics, has existed since at least 1950. As a result, the Company currently estimates that Real Estate Services' revenue will increase and EBITDA (before separation costs) will be about unchanged for full year 2006 versus 2005.
Vehicle Rental - The Company has modestly reduced its first quarter 2006 outlook primarily based on the expectation that corporate price increases will not take effect until later in the year when contracts come up for renewal. The impact on Cendant's prior first quarter 2006 EPS projection is approximately $0.01 - $0.02.
As a result of the reduced first quarter outlook for Real Estate Services and Vehicle Services, the Company now projects first quarter 2006 revenue growth from core operations of approximately 6% - 8%, an EBITDA decline from core operations (before separation costs) of 14% - 16%, and EPS from Continuing Operations of $0.11 - $0.16 (before separation costs).
For full year 2006, if Cendant had remained together, the Company's current expectation would be for high single digit revenue growth and low single digit EBITDA growth from core operations, excluding separation costs and the fourth quarter 2005 impairment charge at Travel Distribution Services. The Company plans to outline its full year 2006 projections for the four new companies at its Annual Investor Day scheduled for March 21, 2006.
Investor Conference Call
Cendant will host a conference call to discuss the fourth quarter results on Tuesday, February 14, 2006, at 11:00 a.m. (ET). Investors may access the call live at http://www.cendant.com/ or by dialing (719) 457-2621. 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. (ET) on February 14, 2006 until 8:00 p.m. (ET) on February 21, 2006 at (719) 457-0820, access code: 3428907.
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/.
Forward Looking Statements
Certain statements in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", "may increase", "may fluctuate" and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements. The Company cannot provide any assurances that the contemplated separation or any of the proposed transactions related thereto will be completed, nor can it give assurances as to the terms on which such transactions will be consummated. The contemplated separation is subject to certain conditions precedent, including final approval by the Board of Directors of Cendant.
Various risks that could cause future results to differ from those expressed by the forward-looking statements included in this press release include, but are not limited to: risks inherent in the contemplated separation and related transactions and borrowings and costs related to the proposed transactions; distraction of the Company and its management as a result of the proposed transactions; changes in business, political and economic conditions in the United States and in other countries in which Cendant and its companies currently do business; changes in governmental regulations and policies and actions of regulatory bodies; changes in operating performance; and access to capital markets and changes in credit ratings, including those that may result from the proposed transactions. Other unknown or unpredictable factors also could have material adverse effects on Cendant's and its companies' performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release. 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 10-Q for the quarter ended September 30, 2005, including under headings such as "Forward-Looking Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations". Except for the Company's ongoing obligations to disclose material information under the federal securities laws, the Company undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless required by law.
This release includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, important information regarding such measures is contained on Table 9 to this release.
Table 1
(part 1 of 2)
Cendant Corporation and Subsidiaries
SUMMARY DATA SHEET
(Dollars in millions, except per share data)
Fourth Quarter
2005 2004 % Change
Income Statement Items
Net Revenues $4,316 $4,026 7%
Pretax Income (Loss) (A) (119) 382 *
Income (Loss) from Continuing Operations (39) 248 *
EPS from Continuing Operations (diluted) (0.04) 0.23 *
Cash Flow Items
Net Cash Provided by Operating Activities $ 773 $ 842
Free Cash Flow (B) 445 258
Payments Made for Current Period
Acquisitions, Net of Cash Acquired (277) (1,264)
Net Debt Repayments (869) (134)
Net Repurchases of Common Stock (270) (87)
Payment of Dividends (114) (96)
As of As of
December 31, December 31,
2005 2004
Balance Sheet Items
Total Corporate Debt $ 3,936 $ 4,330
Cash and Cash Equivalents 835 467
Total Stockholders' Equity 11,291 12,695
Segment Results
Fourth Quarter
2005 2004 % Change
Net Revenues
Real Estate Services $1,620 $1,572 3%
Hospitality Services 361 324 11%
Timeshare Resorts 447 389 15%
Vehicle Rental (C) 1,308 1,131 16%
Total Travel Content 2,116 1,844 15%
Travel Distribution Services 570 451 26%
Total Travel 2,686 2,295 17%
Total Core Operating Segments 4,306 3,867 11%
Mortgage Services - 156 *
Corporate and Other 10 3 *
Total Company $4,316 $4,026 7%
EBITDA (D)
Real Estate Services $ 221 $ 238 (7%)
Hospitality Services 80 83 (4%)
Timeshare Resorts 96 73 32%
Vehicle Rental 72 80 (10%)
Total Travel Content 248 236 5%
Travel Distribution Services (E) (332) 101 *
Total Travel (84) 337 *
Total Core Operating Segments 137 575 *
Mortgage Services - 9 *
Corporate and Other (38) 8 *
Total Company $ 99 $ 592 *
Reconciliation of EBITDA to Pretax Income
Total Company EBITDA $ 99 $ 592
Less Non-program related
depreciation and amortization 136 141
Non-program related interest expense, net 71 66
Amortization of pendings and listings 11 3
Pretax Income (Loss) (A) $ (119) $ 382 *
* Not meaningful.
(A) Referred to as "Income (loss) before income taxes and minority
interest" on the Consolidated Condensed Statements of Income presented
on Table 2. See Table 2 for a reconciliation of Pretax Income (Loss)
to Net Income.
(B) See Table 9 for a description of Free Cash Flow and Table 8 for the
underlying calculations.
(C) For comparability purposes, 2004 revenue has been grossed-up by
$70 million to reflect a change in accounting presentation adopted
during fourth quarter 2005 to be consistent with industry competitors.
This change had no impact on EBITDA.
(D) See Table 9 for a description of EBITDA.
(E) The 2005 amount includes a $425 million non-cash impairment charge
principally associated with our online consumer travel businesses.
Table 1
(part 2 of 2)
Cendant Corporation and Subsidiaries
SUMMARY DATA SHEET
(Dollars in millions, except per share data)
Full Year
2005 2004 % Change
Income Statement Items
Net Revenues $18,236 $16,689 9%
Pretax Income (A) 1,346 2,047 *
Income from Continuing Operations 869 1,365 *
EPS from Continuing Operations (diluted) 0.82 1.28 *
Cash Flow Items
Net Cash Provided by Operating Activities $ 3,314 $ 3,613
Free Cash Flow (B) 2,026 1,613
Payments Made for Current Period
Acquisitions, Net of Cash Acquired (1,947) (1,592)
Net Debt Repayments (399) (1,445)
Issuance of Common Stock in
Connection with the Upper DECS - 863
Net Repurchases of Common Stock (1,060) (756)
Payment of Dividends (423) (333)
As of As of
December 31, December 31,
2005 2004
Balance Sheet Items
Total Corporate Debt $ 3,936 $ 4,330
Cash and Cash Equivalents 835 467
Total Stockholders' Equity 11,291 12,695
Segment Results
Full Year
2005 2004 % Change
Net Revenues
Real Estate Services $ 7,141 $ 6,552 9%
Hospitality Services 1,527 1,340 14%
Timeshare Resorts 1,735 1,544 12%
Vehicle Rental (C) 5,316 4,708 13%
Total Travel Content 8,578 7,592 13%
Travel Distribution Services 2,429 1,788 36%
Total Travel 11,007 9,380 17%
Total Core Operating Segments 18,148 15,932 14%
Mortgage Services 46 700 *
Corporate and Other 42 57 *
Total Company $18,236 $16,689 9%
EBITDA (D)
Real Estate Services $ 1,184 $ 1,131 5%
Hospitality Services 449 460 (2%)
Timeshare Resorts 289 254 14%
Vehicle Rental 439 467 (6%)
Total Travel Content 1,177 1,181 -
Travel Distribution Services (E) 100 466 *
Total Travel 1,277 1,647 *
Total Core Operating Segments 2,461 2,778 *
Mortgage Services (F) (181) 97 *
Corporate and Other (175) (66) *
Total Company $ 2,105 $ 2,809 *
Reconciliation of EBITDA to Pretax Income
Total Company EBITDA $ 2,105 $ 2,809
Less: Non-program related
depreciation and amortization 547 483
Non-program related interest expense, net 189 245
Early extinguishment of debt - 18
Amortization of pendings and listings 23 16
Pretax Income (A) $ 1,346 $ 2,047 *
* Not meaningful.
(A) Referred to as "Income before income taxes and minority interest" on
the Consolidated Condensed Statements of Income presented on Table 2.
See Table 2 for a reconciliation of Pretax Income to Net Income.
(B) See Table 9 for a description of Free Cash Flow and Table 8 for the
underlying calculations.
(C) For comparability purposes, 2004 revenue has been grossed-up by
$285 million to reflect a change in accounting presentation adopted
during fourth quarter 2005 to be consistent with industry competitors.
This change had no impact on EBITDA.
(D) See Table 9 for a description of EBITDA.
(E) The 2005 amount includes a $425 million non-cash impairment charge
principally associated with our online consumer travel businesses.
(F) The 2005 amount includes a $180 million non-cash valuation charge
associated with the PHH spin-off.
Table 2
Cendant Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In millions, except per share data)
Three Months Twelve Months
Ended Ended
December 31, December 31,
2005 2004(*) 2005 2004(*)
Revenues
Service fees and membership, net $ 3,002 $ 2,888 $12,865 $11,907
Vehicle-related 1,308 1,131 5,316 4,708
Other 6 7 55 74
Net revenues 4,316 4,026 18,236 16,689
Expenses
Operating 2,569 2,444 10,684 9,888
Vehicle depreciation, lease
charges and interest, net 422 295 1,547 1,232
Marketing and reservation 386 357 1,712 1,477
General and administrative 398 330 1,485 1,279
Non-program related depreciation
and amortization 136 141 547 483
Non-program related interest, net:
Interest expense, net 71 66 189 245
Early extinguishment of debt - - - 18
Acquisition and integration
related costs:
Amortization of pendings
and listings 11 3 23 16
Other 3 8 32 4
Restructuring and transaction-
related charges (credits) (2) - 50 -
Separation costs 16 - 16 -
Impairment of intangible assets 425 - 425 -
Valuation charge associated
with PHH spin-off - - 180 -
Total expenses 4,435 3,644 16,890 14,642
Income (loss) before income
taxes and minority interest (119) 382 1,346 2,047
Provision (benefit) for income taxes (80) 132 474 674
Minority interest, net of tax - 2 3 8
Income (loss) from continuing operations (39) 248 869 1,365
Income from discontinued
operations, net of tax (B) 1 109 27 519
Gain (loss) on disposal of
discontinued operations, net of tax:
PHH valuation and transaction-
related charges - - (312) -
Gain on disposal 583 - 765 198
Income before cumulative
change in accounting 545 357 1,349 2,082
Cumulative effect of accounting
change, net of tax (C) 8 - 8 -
Net income $ 537 $ 357 $ 1,341 $ 2,082
Earnings per share
Basic
Income (loss) from
continuing operations $ (0.04) $ 0.24 $ 0.84 $ 1.32
Income from
discontinued operations - 0.10 0.03 0.51
Gain on disposal of
discontinued operations 0.58 - 0.43 0.19
Cumulative effect of
accounting change, net of tax (0.01) - (0.01) -
Net income $ 0.53 $ 0.34 $ 1.29 $ 2.02
Diluted
Income (loss) from
continuing operations $ (0.04) $ 0.23 $ 0.82 $ 1.28
Income from
discontinued operations - 0.10 0.02 0.49
Gain on disposal of
discontinued operations 0.58 - 0.43 0.19
Cumulative effect of
accounting change, net of tax (0.01) - (0.01) -
Net income $ 0.53 $ 0.33 $ 1.26 $ 1.96
Weighted average shares outstanding
Basic 1,019 1,052 1,040 1,031
Diluted 1,019 1,079 1,060 1,064
(*) For comparability purposes, fourth quarter 2004 vehicle-related
revenues and operating expenses and full year 2004 vehicle-related
revenues and operating expenses have been grossed-up by $70 million
and $285 million, respectively, to reflect a change in accounting
presentation adopted during fourth quarter 2005 to be consistent with
industry competitors.
(B) Includes the results of operations of (i) the Company's Marketing
Services division, through date of disposition (October 2005), (ii)
the Company's former fuel card business, Wright Express Corporation,
through date of disposition (February 2005), (iii) the Company's
former fleet leasing and appraisal businesses through date of spin-
off (January 2005) and (iv) in 2004, the Company's former tax
preparation business, Jackson Hewitt Tax Service Inc., through date
of disposition (June 2004).
(C) Represents a non-cash charge to reflect the cumulative effect of
adopting FASB Interpretation No. 47, "Accounting for Conditional
Asset Retirement Obligations" in fourth quarter 2005, as required.
Table 3
(part 1 of 2)
Cendant Corporation and Subsidiaries
ORGANIC GROWTH BY SEGMENT
(In millions)
REVENUES
Fourth Quarter
2005 2004 %*
Real Estate Services (A) $ 1,543 $ 1,568 (2%)
Hospitality Services (B) 328 323 2%
Timeshare Resorts 447 389 15%
Vehicle Rental (C) 1,299 1,131 15%
Total Travel Content 2,074 1,843 13%
Travel Distribution Services (D) 445 441 1%
Total Travel 2,519 2,284 10%
Total Core Operating Segments $ 4,062 $3,852 5%
EBITDA
Fourth Quarter
2005 2004 %*
Real Estate Services (A) $ 211 $ 232 (9%)
Hospitality Services (B) 77 82 (6%)
Timeshare Resorts 96 73 30%
Vehicle Rental (C) 75 80 (7%)
Total Travel Content 248 235 5%
Travel Distribution Services (D) 93 101 (8%)
Total Travel 341 336 1%
Total Core Operating Segments $ 552 $ 568 (3%)
Reconciliation of Organic EBITDA
to Pretax Income
Pretax Income (Loss) (E) $ (119) $ 382
Add Non-program related
depreciation and amortization 136 141
Non-program related
interest expense, net 71 66
Amortization of pendings and listings 11 3
Total Company EBITDA 99 592
Less: Mortgage Services - 9
Corporate and Other (38) 8
EBITDA for Total Core Operating Segments 137 575
Adjustments to arrive at Organic
EBITDA for Total Core Operating
Segments 415 (7)
Organic EBITDA for Total Core
Operating Segments (per above) $ 552 $ 568
* Amounts may not calculate due to rounding in millions.
(A) Includes a reduction to revenue and EBITDA growth of $73 million and
$4 million, respectively, primarily related to the acquisitions of
significant real estate brokerage businesses during or subsequent to
fourth quarter 2004.
(B) Includes a reduction to revenue and EBITDA growth of $32 million and
$2 million, respectively, primarily related to the acquisitions of
Wyndham Worldwide in October 2005 and Ramada International, Inc. in
December 2004.
(C) Includes a reduction to revenue growth of $9 million and an increase
in EBITDA growth of $3 million related to the acquisition of a Budget
franchisee in October 2005.
(D) Includes a reduction to revenue growth of $115 million and an
increase in EBITDA growth of $425 million. The reduction in revenue
growth primarily relates to the acquisitions of Orbitz, Inc. in
November 2004, ebookers plc in February 2005 and Gullivers Travel
Associates in April 2005, partially offset by the transfer of the
Company's membership travel business to the discontinued Marketing
Services division. The increase in EBITDA growth reflects an
adjustment for the $425 million non-cash impairment charge principally
associated with our online travel consumer businesses.
(E) See Table 2 for a reconciliation of Pretax Income (Loss) to Net
Income.
Table 3
(part 2 of 2)
Cendant Corporation and Subsidiaries
ORGANIC GROWTH BY SEGMENT
(In millions)
REVENUES
Full Year
2005 2004 %*
Real Estate Services (A) $ 6,889 $ 6,529 6%
Hospitality Services (B) 1,414 1,340 6%
Timeshare Resorts (C) 1,735 1,538 13%
Vehicle Rental (D) 5,307 4,708 13%
Total Travel Content 8,456 7,586 11%
Travel Distribution Services (E) 1,772 1,733 2%
Total Travel 10,228 9,319 10%
Total Core Operating Segments $17,117 $15,848 8%
EBITDA
Full Year
2005 2004 %*
Real Estate Services (A) $ 1,148 $ 1,109 4%
Hospitality Services (B) 443 460 (4%)
Timeshare Resorts (C) 289 249 16%
Vehicle Rental (D) 441 467 (5%)
Total Travel Content 1,173 1,176 -
Travel Distribution Services (E) 444 459 (3%)
Total Travel 1,617 1,635 (1%)
Total Core Operating Segments $ 2,765 $ 2,744 1%
Reconciliation of Organic EBITDA
to Pretax Income
Pretax Income (F) $ 1,346 $ 2,047
Add: Non-program related
depreciation and amortization 547 483
Non-program related interest
expense, net 189 245
Early extinguishment of debt - 18
Amortization of pendings and listings 23 16
Total Company EBITDA 2,105 2,809
Less: Mortgage Services (181) 97
Corporate and Other (175) (66)
EBITDA for Total Core Operating Segments 2,461 2,778
Adjustments to arrive at Organic
EBITDA for Total Core Operating Segments 304 (34)
Organic EBITDA for Total Core
Operating Segments (per above) $ 2,765 $ 2,744
* Amounts may not calculate due to rounding in millions.
(A) Includes a reduction to revenue and EBITDA growth of $229 million and
$14 million, respectively, primarily related to the acquisition of
Sotheby's International Realty in February 2004 and the acquisitions
of significant real estate brokerage businesses during or subsequent
to January 1, 2004.
(B) Includes a reduction to revenue and EBITDA growth of $113 million
and $6 million, respectively, primarily related to the acquisitions
of Landal GreenParks in May 2004, Canvas Holidays Limited in
October 2004, Ramada International, Inc. in December 2004 and Wyndham
Worldwide in October 2005.
(C) Includes an increase to revenue and EBITDA growth of $6 million and
$5 million, respectively, related to the sale of Equivest Capital in
March 2004.
(D) Includes a reduction to revenue growth of $9 million and an increase
in EBITDA growth of $2 million related to the acquisition of a Budget
franchisee in October 2005.
(E) Includes a reduction to revenue growth of $602 million and an
increase to EBITDA growth of $351 million. The reduction in revenue
growth primarily relates to the acquisitions of Orbitz, Inc. in
November 2004, ebookers plc in February 2005, Gullivers Travel
Associates in April 2005 and Flairview Travel in April 2004, partially
offset by the transfer of the Company's membership travel business to
the discontinued Marketing Services division. The increase in EBITDA
growth reflects an adjustment for the $425 million non-cash impairment
charge principally associated with our online travel consumer
businesses, partially offset by a reduction of $74 million resulting
primarily from the aforementioned transactions.
(F) See Table 2 for a reconciliation of Pretax Income to Net Income.
Table 4
(part 1 of 2)
Cendant Corporation and Affiliates
SEGMENT REVENUE DRIVER ANALYSIS (*)
(Revenue dollars in thousands)
Fourth Quarter
2005 2004 % Change
REAL ESTATE SERVICES SEGMENT
Real Estate Franchise
Closed Sides 420,621 443,430 (5%)
Average Price $232,060 $207,350 12%
Royalty Revenue (A) $118,934 $118,434 -
Total Revenue (A) $142,867 $137,186 4%
Real Estate Brokerage
Closed Sides 105,854 111,349 (5%)
Average Price $469,287 $426,142 10%
Net Revenue from Real Estate
Transactions $1,274,201 $1,232,582 3%
Total Revenue $1,287,893 $1,242,873 4%
Relocation
Transaction Volume 19,354 18,456 5%
Total Revenue $118,371 $120,493 (2%)
Settlement Services
Purchase Title and Closing Units 32,426 33,133 (2%)
Refinance Title and Closing Units 12,991 12,986 -
Total Revenue $71,136 $71,761 (1%)
HOSPITALITY SERVICES SEGMENT
Lodging
RevPAR (B) $29.72 $24.53 21%
Weighted Average Rooms Available (B) 535,058 502,954 6%
Royalty, Marketing and
Reservation Revenue (C) $99,804 $82,502 21%
Total Revenue (C) $143,947 $101,869 41%
RCI
Average Number of Subscribers 3,270,763 3,116,362 5%
Subscriber Related Revenue $146,626 $138,290 6%
Total Revenue $155,387 $143,495 8%
Vacation Rental Group
Cottage Weeks Sold 208,944 223,273 (6%)
Total Revenue $61,901 $77,453 (20%)
(*) Certain of the 2004 amounts presented herein have been revised to
conform to the presentation used in 2005, including the new segment
reporting structure. All comparable quarterly amounts for 2003 and
2004 are available on the Cendant website, which may be accessed at
http://www.cendant.com/.
(A) Excludes $87 million and $84 million of intercompany royalties paid
primarily by our NRT real estate brokerage business during the fourth
quarter 2005 and 2004, respectively.
(B) We acquired the Wyndham hotel brand and franchise system on
October 12, 2005 and the Ramada International Hotels and Resorts
trademark on December 10, 2004. The 2004 drivers do not include
RevPAR and Weighted Average Rooms Available of Wyndham or Ramada
International for the periods prior to our acquisitions. On a
comparable basis (excluding Wyndham and Ramada International from the
comparable 2005 amounts), RevPAR would have increased 11% and
Weighted Average Rooms Available would have decreased 2%.
(C) The 2005 amounts include the revenues of businesses acquired during
or subsequent to fourth quarter 2004 and are therefore not presented
on a comparable basis.
Table 4
(part 2 of 2)
Cendant Corporation and Affiliates
SEGMENT REVENUE DRIVER ANALYSIS (*)
(Revenue dollars in thousands)
Fourth Quarter
2005 2004 % Change
TIMESHARE RESORTS SEGMENT
Tours 217,480 204,905 6%
Total Revenue $446,130 $388,959 15%
VEHICLE RENTAL SEGMENT
Car
Rental Days (000's) 24,460 20,899 17%
Time and Mileage Revenue per Day $38.80 $38.96 -
Total Car Revenue (A) $1,181,266 $1,004,800 18%
Truck
Total Truck Revenue (A) $126,903 $126,061 1%
TRAVEL DISTRIBUTION SERVICES SEGMENT (B)
Transaction Volume, by Region (000's)(C)
United States 25,508 24,093 6%
International 38,914 36,571 6%
Transaction Volume, by Channel (000's)
Traditional Agency 54,467 52,458 4%
Online (C) 9,955 8,206 21%
Online Gross Bookings ($000's)(D) $1,868,720 $1,588,093 18%
Offline Gross Bookings ($000's)(D) $385,700 $177,864 117%
GDS and Supplier Services Revenue(E) $353,633 $359,537 (2%)
Owned Travel Agency Revenue (F) $217,498 $92,126 136%
(*) Certain of the 2004 amounts presented herein have been revised to
conform to the presentation used in 2005, including the new segment
reporting structure. All comparable quarterly amounts for 2003 and
2004 are available on the Cendant website, which may be accessed at
http://www.cendant.com/.
(A) For comparability purposes, 2004 revenue has been grossed-up by $70
million to reflect a change in accounting presentation adopted during
fourth quarter 2005 to be consistent with industry competitors.
(B) We acquired Gullivers Travel Associates on April 1, 2005, ebookers
plc on February 28, 2005 and Orbitz, Inc. on November 12, 2004.
Revenue generated by these businesses prior to acquisition are not
reflected in the revenue data presented herein and, therefore, the
revenue data are not comparable. However, certain of the driver data
for fourth quarter 2004 have been adjusted to include driver data for
these newly acquired businesses so as to present comparable driver
data.
(C) Includes supplier link and merchant hotel transactions not booked
through the Galileo GDS system.
(D) The online gross bookings and offline gross bookings data for fourth
quarter 2004 have been adjusted to include aggregate bookings of
approximately $685 million and $85 million, respectively, by ebookers
and Orbitz so as to present comparable driver data. The online gross
bookings and offline gross bookings data for Gullivers have been
reflected in the fourth quarter 2005 driver data (approximately
$60 million and $260 million, respectively), but not in the fourth
quarter 2004 driver data due to the absence of available driver data
prior to our acquisition of Gullivers.
(E) Includes Galileo revenue of $346.2 million and $350.7 million for
fourth quarter 2005 and 2004, respectively.
(F) Primarily comprised of Orbitz, Cheaptickets, ebookers, Flairview and
Gullivers.
Table 5
Cendant Corporation and Subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEETS
(In billions)
As of As of
December 31, December 31,
2005 2004
Assets
Current assets:
Cash and cash equivalents $0.8 $0.5
Assets of discontinued operations - 6.6
Other current assets 2.6 2.6
Total current assets 3.4 9.7
Property and equipment, net 1.8 1.7
Goodwill 12.0 11.1
Other non-current assets 4.5 5.4
Total assets exclusive of assets under programs 21.7 27.9
Assets under management programs 12.4 14.7
Total assets $34.1 $42.6
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt $1.0 $0.7
Liabilities of discontinued operations - 5.3
Other current liabilities 4.7 4.2
Total current liabilities 5.7 10.2
Long-term debt 2.9 3.6
Other non-current liabilities 1.6 1.6
Total liabilities exclusive of
liabilities under programs 10.2 15.4
Liabilities under management programs(*) 12.6 14.5
Total stockholders' equity 11.3 12.7
Total liabilities and stockholders' equity $34.1 $42.6
(*) Liabilities under management programs includes deferred income tax
liabilities of $1.7 billion and $2.2 billion as of December 31, 2005
and December 31, 2004, respectively.
Table 6
Cendant Corporation and Subsidiaries
SCHEDULE OF CORPORATE DEBT (*)
(In millions)
December September June March December
Maturity Net 31, 30, 30, 31, 31,
Date Debt 2005 2005 2005 2005 2004
August 2006 6-7/8% notes $850 $850 $850 $850 $850
August 2006 4.89% notes 100 100 100 100 100
January 2008 6-1/4% notes 798 798 798 798 797
March 2010 6-1/4% notes 349 349 349 349 349
January 2013 7-3/8% notes 1,192 1,191 1,191 1,191 1,191
March 2015 7-1/8% notes 250 250 250 250 250
November 2009 Revolver
borrowings(A) 357 381 284 1,310 650
Commercial
paper
borrowings - 800 975 - -
Net hedging
gains
(losses)(B) (47) (25) 29 (29) 17
Other 87 120 96 89 126
Total Debt 3,936 4,814 4,922 4,908 4,330
Less: Cash and
cash equivalents 835 356 623 1,341 467
Net Debt $3,101 $4,458 $4,299 $3,567 $3,863
Net Capitalization
Total
Stockholders'
Equity $11,291 $11,215 $11,234 $11,195 $12,695
Total Debt
(per above) 3,936 4,814 4,922 4,908 4,330
Total
Capitalization 15,227 16,029 16,156 16,103 17,025
Less: Cash
and cash
equivalents 835 356 623 1,341 467
Net
Capitalization $14,392 $15,673 $15,533 $14,762 $16,558
Net Debt to Net
Capitalization
Ratio(C) 21.5% 28.4% 27.7% 24.2% 23.3%
Total Debt to Total
Capitalization Ratio 25.8% 30.0% 30.5% 30.5% 25.4%
(*) Amounts presented herein exclude assets and liabilities under
management programs.
(A) Approximately $350 million of the outstanding borrowings at December
31, 2005 represent borrowings to repatriate foreign earnings under the
American Jobs Creation Act of 2004.
(B) As of December 31, 2005, this balance represents $153 million of mark-
to-market adjustments on current interest rate hedges, partially
offset by $106 million of net gains resulting from the termination of
interest rate hedges, which will be amortized by the Company to reduce
future interest expense.
(C) See Table 9 for a description of this ratio.
Table 7
Cendant Corporation and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In millions)
Three Months Twelve Months
Ended Ended
December 31, December 31,
2005 2004 2005 2004
Operating Activities
Net cash provided by operating
activities exclusive of management
programs $561 $449 $2,445 $2,234
Net cash provided by operating
activities of management programs 212 393 869 1,379
Net Cash Provided by
Operating Activities 773 842 3,314 3,613
Investing Activities
Property and equipment additions (237) (148) (540) (428)
Net assets acquired, net of
cash acquired, and
acquisition-related payments (300) (1,308) (2,094) (1,710)
Proceeds received on asset sales 11 7 54 36
Proceeds from disposition of
businesses, net of transaction-
related payments 1,667 11 2,636 832
Other, net (30) 93 71 211
Net cash provided by (used in)
investing activities exclusive of
management programs 1,111 (1,345) 127 (1,059)
Management programs:
Net change in program cash (7) (262) (72) (254)
Net change in investment in vehicles (76) (90) (2,396) (1,491)
Net change in relocation receivables 15 46 (142) (16)
Net change in mortgage servicing
rights, related derivatives and
mortgage-backed securities - (87) 21 (356)
Other, net - (5) (21) 49
(68) (398) (2,610) (2,068)
Net Cash provided by (used in)
Investing Activities 1,043 (1,743) (2,483) (3,127)
Financing Activities
Proceeds from borrowings 306 26 471 51
Principal payments on borrowings (75) (810) (231) (2,146)
Net change in short-term borrowings (1,100) 650 (639) 650
Issuances of common stock 61 83 289 1,430
Repurchases of common stock (331) (170) (1,349) (1,323)
Payments of dividends (114) (96) (423) (333)
Cash reduction due to spin-off of PHH - - (259) -
Other, net 1 (6) 9 (29)
Net cash used in financing activities
exclusive of management programs (1,252) (323) (2,132) (1,700)
Management programs:
Proceeds from borrowings 3,386 3,305 13,013 12,506
Principal payments on borrowings (3,376) (3,329) (11,302) (12,127)
Net change in short-term borrowings (47) (6) 51 44
Other, net (1) (1) (23) (20)
(38) (31) 1,739 403
Net Cash Used in Financing Activities (1,290) (354) (393) (1,297)
Effect of changes in exchange rates
on cash and cash equivalents (7) 9 (51) 13
Cash provided by (used in)
discontinued operations (40) 158 (19) 519
Net increase (decrease) in cash and
cash equivalents 479 (1,088) 368 (279)
Cash and cash equivalents,
beginning of period 356 1,555 467 746
Cash and cash equivalents,
end of period $835 $467 $835 $467
Table 8
Cendant Corporation and Subsidiaries
CONSOLIDATED SCHEDULES OF FREE CASH FLOWS (*)
(In millions)
Three Months Twelve Months
Ended Ended
December 31, December 31,
2005 2004 2005 2004
Pretax income (loss) $(119) $382 $1,346 $2,047
Addback of non-cash depreciation
and amortization:
Non-program related 136 141 547 483
Pendings and listings 11 3 23 16
Addback of non-cash impairment of
intangible assets 425 - 425 -
Addback of non-cash valuation charge
associated with PHH spin-off - - 180 -
Tax payments, net of refunds (102) (48) (250) (164)
Working capital and other 225 (36) 297 (55)
Capital expenditures (237) (148) (540) (428)
Management programs (A) 106 (36) (2) (286)
Free Cash Flow 445 258 2,026 1,613
Current period acquisitions, net of
cash acquired (277) (1,264) (1,947) (1,592)
Payments related to prior period
acquisitions (23) (44) (147) (118)
Proceeds from disposition of
businesses, net 1,667 11 2,636 832
Issuance of common stock in
connection with the Upper DECS - - - 863
Net repurchases of common stock (270) (87) (1,060) (756)
Payment of dividends (114) (96) (423) (333)
Investments and other (B) (80) 268 (59) 657
Cash reduction due to spin-off of PHH - - (259) -
Net debt repayments (869) (134) (399) (1,445)
Net increase (decrease) in cash and
cash equivalents (per Table 7) $479 $(1,088) $368 $(279)
(*) See Table 9 for a description of Free Cash Flow.
(A) Cash flows related to management programs may fluctuate significantly
from period to period due to the timing of the underlying
transactions. For the three months ended December 31, 2005 and 2004,
the net cash flows from the activities of management programs are
reflected on Table 7 as follows: (i) net cash provided by operating
activities of $212 million and $393 million, respectively, (ii) net
cash used in investing activities of $68 million and $398 million,
respectively, and (iii) net cash used in financing activities of
$38 million and $31 million, respectively. For the twelve months
ended December 31, 2005 and 2004, the net cash flows from the
activities of management programs are reflected on Table 7 as follows:
(i) net cash provided by operating activities of $869 million and
$1,379 million, respectively, (ii) net cash used in investing
activities of $2,610 million and $2,068 million, respectively, and
(iii) net cash provided by financing activities of $1,739 million and
$403 million, respectively.
(B) Represents net cash provided by discontinued operations, the effects
of exchange rates on cash and cash equivalents, other investing and
financing activities and the change in restricted cash.
RECONCILIATION OF FREE CASH FLOW TO NET CASH PROVIDED BY OPERATING ACTIVITIES
(In millions)
Three Months Twelve Months
Ended Ended
December 31, December 31,
2005 2004 2005 2004
Free Cash Flow (per above) $445 $258 $2,026 $1,613
Cash (inflows) outflows included
in Free Cash Flow but not
reflected in Net Cash Provided
by Operating Activities:
Investing activities of
management programs 68 398 2,610 2,068
Financing activities of
management programs 38 31 (1,739) (403)
Capital expenditures 237 148 540 428
Proceeds received on asset sales (11) (7) (54) (36)
Change in restricted cash (4) 14 (69) (57)
Net Cash Provided by
Operating Activities (per Table 7) $773 $842 $3,314 $3,613
Table 9
(part 1 of 2)
Cendant Corporation and Subsidiaries
Definitions of Non-GAAP Measures
The accompanying press release includes certain non-GAAP (generally accepted accounting principles) financial measures as defined under SEC rules. As required by SEC rules, we have provided below the reasons we present these non-GAAP financial measures and a description of what they represent.
EBITDA Represents income from continuing operations before
non-program related depreciation and amortization,
non-program related interest, amortization of
pendings and listings, income taxes and minority
interest. We believe that EBITDA is useful as a
supplemental measure in evaluating the aggregate
performance of our operating businesses. EBITDA is
the measure that is used by our management,
including our chief operating decision maker, to
perform such evaluation, and it is a factor in
measuring performance in our incentive compensation
plans. It is also a component of our financial
covenant calculations under our credit facilities,
subject to certain adjustments. EBITDA should not
be considered in isolation or as a substitute for
net income or other income statement data prepared
in accordance with GAAP and our presentation of
EBITDA may not be comparable to similarly titled
measures used by other companies.
Net Debt to Net Represents (i) net corporate debt (which reflects
Capitalization Ratio total corporate debt adjusted to assume the
application of available cash to reduce outstanding
indebtedness) divided by (ii) net capitalization
(which reflects total capitalization also adjusted
for the application of available cash). We believe
that this ratio is useful in measuring the Company's
leverage and indicating the strength of its
financial condition. We also believe that adjusting
corporate debt to assume the application of
available cash to reduce outstanding indebtedeness
eliminates the effect of timing differences relating
to the use of debt proceeds. A reconciliation of
the "Net Debt to Net Capitalization Ratio" to the
appropriate measure recognized under GAAP (Total
Debt to Total Capitalization Ratio) is presented in
Table 6, which accompanies this press release.
Free Cash Flow Represents Net Cash Provided by Operating Activities
adjusted to include the cash inflows and outflows
relating to (i) capital expenditures, (ii) the
investing and financing activities of our management
programs, and (iii) asset sales. We believe that
Free Cash Flow is useful to management and the
Company's investors in measuring the cash generated
by the Company that is available to be used to
repurchase stock, repay debt obligations, pay
dividends and invest in future growth through new
business development activities or acquisitions.
Free Cash Flow should not be construed as a
substitute in measuring operating results or
liquidity, and our presentation of Free Cash Flow
may not be comparable to similarly titled measures
used by other companies. A reconciliation of Free
Cash Flow to the appropriate measure recognized
under GAAP (Net Cash Provided by Operating
Activities) is presented in Table 8, which
accompanies this press release.
Organic Growth Represents the results of our reportable operating
segments excluding the impact of acquisitions and
dispositions. We believe that Organic Growth is
useful to management and the Company's investors in
evaluating the operating performance of its
reportable segments on a comparable basis. The
reconciliations of Organic revenue and EBITDA growth
to the comparable measures recognized under GAAP are
presented in Table 3, which accompanies this press
release.
Table 9
(part 2 of 2)
Cendant Corporation and Subsidiaries
Definitions of Non-GAAP Measures
2005 EPS from Represents our EPS from Continuing Operations
Continuing adjusted to give effect to items that were not
Operations as included in the latest guidance we issued on
Adjusted for December 13, 2005. We believe that by providing the
Specified Items calculation of EPS from Continuing Operations both
including and excluding these items, we are providing
greater transparency into the results of operations
of our core operating segments. EPS from Continuing
Operations As Adjusted for Specified Items should not
be considered in isolation or as a substitute for EPS
from Continuing Operations prepared in accordance
with generally accepted accounting principles. A
reconciliation of EPS from Continuing Operations As
Adjusted for Specified Items to the most comparable
measure (EPS from Continuing Operations) recognized
under generally accepted accounting principles is
presented within the body of the accompanying press
release.
First Quarter 2006 Represents our estimates of first quarter 2006 EBITDA
EBITDA before excluding costs that will be incurred in connection
Separation Costs with our plan to separate Cendant into four
independent publicly-traded companies. Management
believes the most directly comparable GAAP measure
for EBITDA before Separation Costs would be Net
Income. We exclude separation costs due to the
difficulty in forecasting and quantifying an
estimated amount for such costs as a result of the
uncertainity related to the timing and impact of the
planned separation. Therefore, we are not providing
an estimate for Net Income.
First Quarter 2006 Represents our estimate of first quarter 2006 EPS
EPS from Continuing from Continuing Operations excluding costs that will
Operations before be incurred in connection with our plan to separate
Separation Costs Cendant into four independent publicly-traded
companies. Management believes the most directly
comparable GAAP measure for EPS from Continuing
Operations before Separation Costs would be EPS from
Continuing Operations. We exclude separation costs
due to the difficulty in forecasting and quantifying
an estimated amount for such costs as a result of the
uncertainity related to the timing and impact of the
planned separation. Therefore, we are not providing
an estimate for EPS from Continuing Operations.
2006 EBITDA Growth Represents our estimate of 2006 EBITDA growth over
2005 (full year) excluding costs that will be
incurred in connection with our plan to separate
Cendant into four independent publicly-traded
companies, as well as the $425 million impairment
charge recorded during fourth quarter 2005 by our
Travel Distribution Services segment. We exclude
separation costs due to the difficulty in forecasting
and quantifying an estimated amount for such costs as
a result of the uncertainty related to the timing and
impact of the planned separation. We exclude the
$425 million impairment charge because we believe we
are enhancing an investor's ability to analyze our
financial results on a comparable basis, thereby
providing greater transparency into the results of
operations of our core operating segments.
Management believes the most directly comparable GAAP
measure for EBITDA would be Net Income. However, due
to the difficulty in forecasting and quantifying an
estimated amount for separation costs as a result of
the uncertainity related to the timing and impact of
the planned separation, we are not providing an
estimate for Net Income.