The Timeshare Beat Home | Today's Headlines | Back to Previous Page
|
The Timeshare Beat Home | Today's Headlines | Back to Previous Page |
|
|
|
Press Release: Cendant Corporation
October 25, 2005
NEW YORK, Oct. 24 /PRNewswire-FirstCall/ -- Cendant Corporation (NYSE: CD) yesterday reported results for third
quarter 2005. Revenue totaled $5.0 billion, an increase of 12% over third quarter 2004, reflecting growth in the
Company's core real estate and travel services businesses. EPS from Continuing Operations was $0.44 and Net Income
was $514 million, versus $593 million in third quarter 2004. Disruptions in the global travel environment, primarily
as a consequence of the hurricanes in the Gulf Coast, are estimated to have negatively impacted EPS by approximately
$0.03.
Third 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)
2005 2004 % change
Revenue $2,068 $1,856 11%
EBITDA $409 $ 379 8%
Revenue and EBITDA increased due to growth in all of our real estate services businesses. Revenue growth at real
estate franchise and NRT was driven principally by home price increases and tuck-in acquisitions at NRT. Home prices
increased 15% at real estate franchise and 16% at NRT. Revenue generated by Cendant Mobility increased 9%, driven
by higher fixed fee revenues and an overall increase in transaction fees, and revenue generated by Cendant Settlement
Services Group increased 9%, due to growth in title and closing volumes.
Hospitality Services
(Consisting of the Company's franchised lodging brands, timeshare exchange and vacation rental businesses)
2005 2004 % change
Revenue $404 $365 11%
EBITDA $144 $131 10%
Revenue and EBITDA increased due to growth in all of our hospitality services businesses. Revenue from our lodging
business grew 12%, including a 7% increase in revenue per available room on an organic basis, the addition of Ramada
International and continuing growth in our TripRewards loyalty program. Revenue from RCI, our timeshare exchange
business, increased 3%, driven by a 5% increase in subscribers. Revenue from our vacation rental business increased
21%, due primarily to the acquisition of Canvas Holidays Limited in October 2004 as well as organic growth in our
remaining vacation rental businesses of 9%.
Timeshare Resorts
(Consisting of the Company's timeshare sales and development businesses)
2005 2004 % change
Revenue $484 $424 14%
EBITDA $ 80 $80 --
Revenue increased due to 10% growth in tour volume and a 6% increase in revenue per guest. Tour flow and revenue
per guest were enhanced by our expansion in premium destinations including Hawaii, Las Vegas and Orlando and the
opening of new sales offices. In addition, revenue and EBITDA were positively impacted by increased consumer financing
income. EBITDA remained unchanged, year-over-year, due to $14 million of expenses resulting from the hurricanes
in the Gulf Coast, which primarily include a provision for timeshare contract receivable losses and estimated costs
to repair timeshare properties, some of which we expect will ultimately be recovered through insurance claims.
Vehicle Rental
(Consisting of the Company's car and truck rental businesses)
2005 2004 % change
Revenue $1,433 $1,243 15%
EBITDA $ 183 $ 179 2%
Revenue increased due to growth in our domestic and international car rental operations as well as our truck
rental business. Car rental revenue grew 17% worldwide due to a 17% increase in rental day volume. EBITDA was negatively
impacted by $10 million of expenses reflecting the effects of the hurricanes in the Gulf Coast, which primarily
include the impairment of rental car assets, most of which we expect will ultimately be recovered through insurance
claims. EBITDA was also negatively impacted by higher vehicle depreciation and other volume-related costs resulting
from 14% growth in our rental fleet to support increased demand, the absence of significant incentives from car
manufacturers available in third quarter 2004 and increased fleet costs for model year 2006 vehicles. We initiated
price increases in the second and third quarters of 2005 in order to attempt to partially offset the increased
fleet costs as model year 2006 vehicles cycle into our inventory. To date, these price increases generally appear
to be succeeding and we anticipate positive year-over-year pricing comparisons beginning in fourth quarter 2005,
which should partially offset increased fleet costs.
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 $646 $437 48%
EBITDA $160 $123 30%
Revenue and EBITDA increased primarily due to growth in our online travel agency and other consumer travel businesses.
The acquisitions of Orbitz, Gullivers and ebookers contributed $215 million of revenue and $46 million of EBITDA,
despite costs incurred to integrate these businesses. The revenue and EBITDA contribution from acquisitions was
partially offset by $14 million and $3 million, respectively, due to the transfer of our membership travel business
to the discontinued Marketing Services division effective January 1, 2005. The integration of Orbitz is substantially
complete and the integrations of ebookers and Gullivers remain on track for completion during 2006. Apart from
these transactions, gross bookings at our online travel agencies increased 15% and these businesses also achieved
higher margins. Revenue from GDS and Supplier Services grew 1%, driven primarily by a 5% increase in global GDS
segments and increased hosting services and other revenue, which was partially offset by a decline in domestic
air yield and subscriber fees.
Recent Achievements and Strategic Initiatives
During the third 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 $937 million and
Free Cash Flow of $665 million. Year-to-date, the Company generated
Net Cash Provided by Operating Activities of approximately $2.5 billion
and Free Cash Flow of approximately $1.6 billion. For the full year
2005, the Company's projection remains unchanged at more than
$3 billion of Net Cash Provided by Operating Activities and $1.8 to
$2.0 billion of Free Cash Flow.
-- Utilized $558 million of cash for the repurchase of common stock
($521 million net of proceeds from option exercises). Year-to-date,
the Company utilized $1.0 billion of cash for the repurchase of common
stock ($790 million net of proceeds from option exercises). Fully
diluted shares decreased by approximately 15 million from the second
quarter 2005 amount.
-- Utilized $117 million of cash to pay its quarterly dividend of $0.11
per share. Year-to-date, the Company utilized $309 million of cash to
pay quarterly dividends.
In addition, the Company has:
-- Completed the sale of its Marketing Services division for approximately
$1.8 billion in total consideration, of which approximately
$1.7 billion was in cash, net of estimated closing adjustments, and the
balance was in preferred stock and warrants. The transaction is
expected to result in a pretax gain in excess of $1.0 billion.
-- Acquired the Wyndham hotel brand and franchise system, relating to more
than 100 upscale, full-service lodging properties in major U.S.,
Mexican and Caribbean markets, for approximately $100 million in cash.
The acquisition includes franchise agreements for 82 hotels and
management contracts for 27 hotels, as well as the worldwide rights to
the Wyndham brand for hotel and timeshare development.
Other Items
-- Corporate and Other -- As previously disclosed, third quarter 2004
EBITDA includes a $12 million credit related to the termination of a
lease, which did not recur in 2005.
-- Depreciation and Amortization -- Third quarter 2005 results include
$18 million of incremental depreciation and amortization related to the
Orbitz, Gullivers and ebookers acquisitions.
-- Interest Expense -- As previously disclosed, third quarter 2004
interest expense includes interest income of $26 million related to a
federal tax refund, which did not recur in third quarter 2005.
-- 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.
Outlook
Based upon current trends in the Company's consumer-oriented travel businesses, EBITDA from core operating segments
(excluding restructuring charges) is expected to increase approximately 14%, year-over-year, in fourth quarter
2005, as compared with our previous projected growth of approximately 25%.
President and Chief Financial Officer Ronald L. Nelson commented, "Several of our leisure travel units began
to show signs of slowing growth during the third quarter. Although some of what we experienced can be directly
attributed to the impact of terrorism, devastating hurricanes and higher gasoline prices, we also began to feel
the impact of, among other things, the slowdown in the rate of growth currently affecting all online travel businesses,
as well as the ongoing channel shift to supplier sites, demand weakness in certain key markets in the global distribution
business, and continued economic weakness in Europe.
"In addition, we combined our timeshare exchange business, RCI, and our Vacation Rental Group to create the
new Vacation Network Group. This combination is expected to save the Company approximately $9 million annually,
as well as broaden the marketing capability of our European travel business, but will result in severance and facility
closing costs of approximately $0.01 per share in fourth quarter 2005."
As a result of this restructuring and the slower growth noted above, the Company reduced its projection for fourth
quarter 2005 EPS by $0.03 - $0.04, to a range of $0.23 - $0.26. This projection does not include any potential
charges associated with the contemplated separation of the Company into four separately traded public companies
announced this morning.
Mr. Nelson continued, "The effect of these items on 2006 is not yet clear. However, based upon the current
trends noted above, together with increased fleet costs and higher interest cost in the rental car business, we
preliminarily project revenue to grow by approximately 10% and EBITDA from core operating segments to grow by 11%
- 13% in 2006 versus 2005, down from our previous estimate of 11% revenue growth and 19% EBITDA growth."
The Company will not be providing specific EPS guidance for Cendant for 2006, as it is no longer relevant due to
the contemplated separation of the Company into four separately traded public companies announced this morning.
The Company expects to provide guidance for each of the proposed new companies at its 2006 Investor Day, currently
planned for February 2, 2006. The Company updated its EPS projections for the remainder of 2005 as follows:
Fourth Full
Quarter Year
2005 EPS from Continuing Operations
before Transaction Related Charges(a) $0.23 - $0.26 $1.28 - $1.31
2005 Transaction Related Charges(b) -- ($0.20)
2005 EPS from Continuing
Operations(a)(b) $0.23 - $0.26 $1.08 - $1.11
(a) Includes a $0.01 per share charge in connection with combining the
management and operations of our vacation rental business in Europe
with our timeshare exchange business to create the newly formed
Vacation Network Group. Excludes any potential charges associated
with the contemplated separation of the Company into four separately
traded public companies announced this morning.
(b) Includes a non-cash impairment charge of $0.17 per share in connection
with the spin-off of PHH and a $0.03 per share charge related to
restructuring activities and other transaction related costs, both of
which were recorded in first quarter 2005.
The Company updated its financial projections for full year 2005 as
follows:
(in millions) Full Year 2004 Full Year 2005
Actual Projected (a)
Revenue
Real Estate Services $6,552 $7,200 - 7,300
Hospitality Services 1,340 1,500 - 1,550
Timeshare Resorts 1,544 1,675 - 1,725
Vehicle Rental 4,424 4,900 - 5,000
Total Travel Content $7,308 $8,075 - 8,275
Travel Distribution Services 1,788 2,400 - 2,500
Total Travel $9,096 $10,475 - 10,775
Total Core Operating Segments $15,648 $17,800 - 17,950
Mortgage Services (b) 700 46
Corporate and Other 56 4 - 54
Total Company $16,404 $17,850 - 18,050
EBITDA (c)
Real Estate Services $1,131 $1,200 - 1,225
Hospitality Services 460 455 - 475
Timeshare Resorts 254 260 - 280
Vehicle Rental 467 440 - 465
Total Travel Content $1,181 $1,155 - 1,220
Travel Distribution Services 466 570 - 595
Total Travel $1,647 $1,725 - 1,815
Total Core Operating Segments $2,778 $2,955 - 2,975
Mortgage Services (b) (d) 97 (181)
Corporate and Other (66) (195 - 180)
Depreciation and amortization (e) (483) (545 - 540)
Amortization of pendings/listings (16) (30 - 25)
Interest expense, net (e) (f) (263) (185 - 175)
Pretax income (c) (d) $2,047 $1,819 - 1,874
Provision for income taxes (674) (670 - 690)
Minority interest (8) (4)
Income from continuing operations (c) (d) $1,365 $1,145 - 1,180
Diluted weighted average shares outstanding 1,064 1,065 - 1,060
(a) Projections do not total because we do not expect the actual results
of all segments to be at the lowest or highest end of any projected
range simultaneously.
(b) Reflects the results of the Company's former mortgage unit for the
full year in 2004 but only for the month of January in 2005, due to
the spin-off of PHH Corporation on January 31, 2005.
(c) 2005 includes approximately $53 million of pretax charges related to
restructuring activities and other transaction related costs,
approximately $52 million of which was recorded in the nine months
ended September 30, 2005.
(d) 2005 includes the previously disclosed non-cash impairment charge
recorded in connection with the spin-off of PHH of $180 million ($0.17
per share).
(e) Depreciation and amortization excludes amounts related to our assets
under management programs, and interest expense excludes amounts
related to our debt under management programs, both of which are
already reflected in EBITDA.
(f) 2005 interest expense includes the reversal of $73 million of accrued
interest in the first quarter related to a litigation settlement.
Investor Conference Call
Cendant will host a conference call to discuss the third quarter results on Tuesday, October 25, 2005, at 11:00
a.m. (ET). Investors may access the call live at http://www.cendant.com or by dialing (913) 981-5542. 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 October 25, 2005 until midnight (ET) on November 1, 2005 at (719) 457-0820, access code: 1047115.
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 June 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. This press release also
includes management's estimate of EBITDA growth from core operating segments for the year ended December 31, 2006.
Management believes the most directly comparable GAAP measure would be "Net income." Due to the difficulty
in forecasting and quantifying the amounts that would be required to be included in this comparable GAAP measure,
the Company is not providing an estimate of 2006 Net Income at this time.
Table 1
(page 1 of 2)
Cendant Corporation and Subsidiaries
SUMMARY DATA SHEET
(Dollars in millions, except per share data)
Third Quarter
2005 2004 % Change
Income Statement Items
Net Revenues $5,046 $4,505 12%
Pretax Income (A) 720 736 (2%)
Income from Continuing Operations 468 497 (6%)
EPS from Continuing Operations (diluted) 0.44 0.47 (6%)
Cash Flow Items
Net Cash Provided by Operating
Activities $937 $1,919
Free Cash Flow (B) 665 540
Payments Made for Current Period
Acquisitions, Net of Cash Acquired (166) (53)
Net Debt Repayments (63) (214)
Issuance of Common Stock in
Connection with the Upper DECS -- 863
Net Repurchases of Common Stock (521) (103)
Payment of Dividends (117) (93)
As of As of
September 30, December 31,
2005 2004
Balance Sheet Items
Total Corporate Debt $4,814 $4,330
Cash and Cash Equivalents 356 467
Total Stockholders' Equity 11,230 12,695
Segment Results
Third Quarter
2005 2004 % Change
Net Revenues
Real Estate Services $2,068 $1,856 11%
Hospitality Services 404 365 11%
Timeshare Resorts 484 424 14%
Vehicle Rental 1,433 1,243 15%
Total Travel Content 2,321 2,032 14%
Travel Distribution Services 646 437 48%
Total Travel 2,967 2,469 20%
Total Core Operating Segments 5,035 4,325 16%
Mortgage Services -- 175 *
Corporate and Other 11 5 *
Total Company $5,046 $4,505 12%
EBITDA ©
Real Estate Services $409 $379 8%
Hospitality Services 144 131 10%
Timeshare Resorts 80 80 --
Vehicle Rental 183 179 2%
Total Travel Content 407 390 4%
Travel Distribution Services 160 123 30%
Total Travel 567 513 11%
Total Core Operating Segments 976 892 9%
Mortgage Services -- 29 *
Corporate and Other (50) (30) *
Total Company $926 $891 4%
Reconciliation of EBITDA to Pretax Income
Total Company EBITDA $926 $891
Less: Non-program related depreciation
and amortization 134 118
Non-program related interest
expense, net 66 32
Amortization of pendings and listings 6 5
Pretax Income (A) $720 $736 (2%)
* 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.
© See Table 9 for a description of EBITDA.
Table 1
(page 2 of 2)
Cendant Corporation and Subsidiaries
SUMMARY DATA SHEET
(Dollars in millions, except per share data)
Nine Months Ended
September 30,
2005 2004 % Change
Income Statement Items
Net Revenues $13,658 $12,449 10%
Pretax Income (A) 1,487 1,664 (11%)
Income from Continuing Operations 922 1,116 (17%)
EPS from Continuing Operations (diluted) 0.86 1.05 (18%)
Cash Flow Items
Net Cash Provided by Operating
Activities $2,541 $2,771
Free Cash Flow (B) 1,581 1,355
Payments Made for Current Period
Acquisitions, Net of Cash Acquired (1,670) (328)
Net Debt Borrowings (Repayments) 470 (1,311)
Issuance of Common Stock in
Connection with the Upper DECS -- 863
Net Repurchases of Common Stock (790) (669)
Payment of Dividends (309) (237)
As of As of
September 30, December 31,
2005 2004
Balance Sheet Items
Total Corporate Debt $4,814 $4,330
Cash and Cash Equivalents 356 467
Total Stockholders' Equity 11,230 12,695
Segment Results
Nine Months Ended
September 30,
2005 2004 % Change
Net Revenues
Real Estate Services $5,520 $4,980 11%
Hospitality Services 1,166 1,017 15%
Timeshare Resorts 1,288 1,155 12%
Vehicle Rental 3,745 3,363 11%
Total Travel Content 6,199 5,535 12%
Travel Distribution Services 1,858 1,337 39%
Total Travel 8,057 6,872 17%
Total Core Operating Segments 13,577 11,852 15%
Mortgage Services 46 545 *
Corporate and Other 35 52 *
Total Company $13,658 $12,449 10%
EBITDA ©
Real Estate Services $963 $894 8%
Hospitality Services 369 378 (2%)
Timeshare Resorts 192 180 7%
Vehicle Rental 377 387 (3%)
Total Travel Content 938 945 (1%)
Travel Distribution Services 432 364 19%
Total Travel 1,370 1,309 5%
Total Core Operating Segments 2,333 2,203 6%
Mortgage Services (D) (181) 88 *
Corporate and Other (124) (75) *
Total Company $2,028 $2,216 (8%)
Reconciliation of EBITDA to Pretax Income
Total Company EBITDA $2,028 $2,216
Less: Non-program related depreciation
and amortization 411 341
Non-program related interest
expense, net 118 180
Early extinguishment of debt -- 18
Amortization of pendings and listings 12 13
Pretax Income (A) $1,487 $1,664 (11%)
* 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.
© See Table 9 for a description of EBITDA.
(D) 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 Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Revenues
Service fees and membership, net $3,606 $3,255 $9,864 $9,018
Vehicle-related 1,433 1,243 3,745 3,363
Other 7 7 49 68
Net revenues 5,046 4,505 13,658 12,449
Expenses
Operating 2,868 2,604 7,853 7,233
Vehicle depreciation, lease charges
and interest, net 428 342 1,126 935
Marketing and reservation 446 383 1,325 1,119
General and administrative 369 294 1,065 950
Non-program related depreciation
and amortization 134 118 411 341
Non-program related interest, net:
Interest expense, net 66 32 118 180
Early extinguishment of debt -- -- -- 18
Acquisition and integration related
costs:
Amortization of pendings and
listings 6 5 12 13
Other 8 (9) 29 (4)
Restructuring and transaction-
related charges 1 -- 52 --
Valuation charge associated with
PHH spin-off -- -- 180 --
Total expenses 4,326 3,769 12,171 10,785
Income before income taxes and
minority interest 720 736 1,487 1,664
Provision for income taxes 251 238 562 541
Minority interest, net of tax 1 1 3 7
Income from continuing operations 468 497 922 1,116
Income from discontinued operations,
net of tax (*) 43 96 28 411
Gain (loss) on disposal of
discontinued operations, net of tax:
PHH valuation and transaction-
related charges -- -- (312) --
Gain on disposal 3 -- 181 198
Net income $514 $593 $819 $1,725
Earnings per share
Basic
Income from continuing operations $0.45 $0.48 $0.88 $1.09
Income from discontinued
operations 0.05 0.09 0.03 0.40
Gain (loss) on disposal of
discontinued operations -- -- (0.13) 0.20
Net income $0.50 $0.57 $0.78 $1.69
Diluted
Income from continuing operations $0.44 $0.47 $0.86 $1.05
Income from discontinued
operations 0.05 0.09 0.03 0.39
Gain (loss) on disposal of
discontinued operations -- -- (0.12) 0.19
Net income $0.49 $0.56 $0.77 $1.63
Weighted average shares outstanding
Basic 1,037 1,036 1,047 1,024
Diluted 1,057 1,064 1,069 1,059
(*) Includes the results of operations of (i) the Company's Marketing
Services division, which was sold on October 17, 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).
Table 3
(page 1 of 2)
Cendant Corporation and Subsidiaries
ORGANIC GROWTH BY SEGMENT
(In millions)
REVENUES
Third Quarter
2005 2004 %*
Real Estate Services (A) $2,005 $1,851 8%
Hospitality Services (B) 389 365 7%
Timeshare Resorts © 482 424 14%
Vehicle Rental 1,433 1,243 15%
Total Travel Content 2,304 2,032 13%
Travel Distribution Services (D) 431 423 2%
Total Travel 2,735 2,455 11%
Total Core Operating Segments $4,740 $4,306 10%
EBITDA
Third Quarter
2005 2004 %*
Real Estate Services (A) $401 $375 7%
Hospitality Services (B) 139 131 6%
Timeshare Resorts © 79 80 --
Vehicle Rental 183 179 2%
Total Travel Content 401 390 3%
Travel Distribution Services (D) 114 120 (5%)
Total Travel 515 510 1%
Total Core Operating Segments $916 $885 4%
Reconciliation of Organic EBITDA to
Pretax Income
Pretax Income (E) $720 $736
Add: Non-program related depreciation
and amortization 134 118
Non-program related interest
expense, net 66 32
Amortization of pendings and
listings 6 5
Total Company EBITDA 926 891
Less: Mortgage Services -- 29
Corporate and Other (50) (30)
EBITDA for Total Core Operating Segments 976 892
Adjustments to arrive at Organic
EBITDA for Total Core Operating Segments (60) (7)
Organic EBITDA for Total Core
Operating Segments (per above) $916 $885
* Amounts may not calculate due to rounding in millions.
(A) Includes a reduction to revenue and EBITDA growth of $58 million and
$4 million, respectively, primarily related to the acquisitions of
significant real estate brokerage businesses during or subsequent to
third quarter 2004.
(B) Includes a reduction to revenue and EBITDA growth of $15 million and
$5 million, respectively, primarily related to the acquisitions of
Canvas Holidays Limited in October 2004 and Ramada International, Inc.
in December 2004.
© Includes a reduction to revenue and EBITDA growth of $2 million and
$1 million, respectively, related to the acquisition of a timeshare
resort property in August 2005.
(D) Includes a reduction to revenue and EBITDA growth of $201 million and
$43 million, respectively, primarily related 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.
(E) See Table 2 for a reconciliation of Pretax Income to Net Income.
Table 3
(page 2 of 2)
Cendant Corporation and Subsidiaries
ORGANIC GROWTH BY SEGMENT
(In millions)
REVENUES
Nine Months Ended September 30,
2005 2004 %*
Real Estate Services (B) $5,335 $4,959 8%
Hospitality Services © 1,085 1,017 7%
Timeshare Resorts (D) 1,286 1,149 12%
Vehicle Rental 3,745 3,363 11%
Total Travel Content 6,116 5,529 11%
Travel Distribution Services (E) 1,327 1,292 3%
Total Travel 7,443 6,821 9%
Total Core Operating Segments $12,778 $11,780 8%
EBITDA Excluding
EBITDA Restructuring Charges
Nine Months Ended Nine Months Ended
September 30, September 30,
2005 2004 %* 2005(A) 2004 %*
Real Estate Services (B) $938 $874 7% $944 $874 8%
Hospitality Services © 366 378 (3%) 371 378 (2%)
Timeshare Resorts (D) 192 175 10% 193 175 10%
Vehicle Rental 377 387 (3%) 385 387 (1%)
Total Travel Content 935 940 (1%) 949 940 1%
Travel Distribution Services(E) 351 358 (2%) 362 358 1%
Total Travel 1,286 1,298 (1%) 1,311 1,298 1%
Total Core Operating
Segments $2,224 $2,172 2% $2,255 $2,172 4%
Reconciliation of Organic
EBITDA to Pretax Income
Pretax Income (F) $1,487 $1,664 $1,487 $1,664
Add: Non-program related
depreciation and
amortization 411 341 411 341
Non-program related
interest expense, net 118 180 118 180
Early extinguishment
of debt -- 18 -- 18
Amortization of pendings
and listings 12 13 12 13
Total Company EBITDA 2,028 2,216 2,028 2,216
Less: Mortgage Services (181) 88 (181) 88
Corporate and Other (124) (75) (124) (75)
EBITDA for Total Core
Operating Segments 2,333 2,203 2,333 2,203
Adjustments to arrive at
Organic EBITDA for Total Core
Operating Segments (109) (31) (78) (31)
Organic EBITDA for Total Core
Operating Segments (per
above) $2,224 $2,172 $2,255 $2,172
* Amounts may not calculate due to rounding in millions.
(A) Excludes restructuring charges of $6 million, $5 million, $1 million,
$8 million and $11 million within the Real Estate Services,
Hospitality Services, Timeshare Resorts, Vehicle Rental and Travel
Distribution Services segments, respectively.
(B) Includes a reduction to revenue and EBITDA growth of $163 million and
$5 million, respectively, primarily related to the acquisition of
Sotheby's International Realty in February 2004, the acquisitions of
significant real estate brokerage businesses during or subsequent to
second quarter 2004 and a refinement during first quarter 2005 to how
we estimate transactions that closed during the quarter when those
transactions have not yet been reported to us by our franchisees,
partially offset by the sale of certain non-core assets by our
settlement services business in June 2004.
© Includes a reduction to revenue and EBITDA growth of $81 million and
$3 million, respectively, primarily related to the acquisitions of
Landal GreenParks in May 2004, Canvas Holidays Limited in October 2004
and Ramada International, Inc. in December 2004.
(D) Includes an increase to revenue and EBITDA growth of $4 million and
$5 million, respectively, related to the sale of Equivest Capital in
March 2004, partially offset by the acquisition of a timeshare resort
property in August 2005.
(E) Includes a reduction to revenue and EBITDA growth of $486 million and
$75 million, respectively, primarily related 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.
(F) See Table 2 for a reconciliation of Pretax Income to Net Income.
Table 4
(page 1 of 2)
Cendant Corporation and Affiliates
SEGMENT REVENUE DRIVER ANALYSIS (*)
(Revenue dollars in thousands)
Third Quarter
2005 2004 % Change
REAL ESTATE SERVICES SEGMENT
Real Estate Franchise
Closed Sides 516,534 516,747 --
Average Price $233,211 $201,952 15%
Royalty Revenue (A) $147,268 $131,062 12%
Total Revenue (A) $168,900 $148,776 14%
Real Estate Brokerage
Closed Sides 135,463 137,805 (2%)
Average Price $476,636 $412,058 16%
Net Revenue from Real Estate
Transactions $1,649,607 $1,481,887 11%
Total Revenue $1,666,738 $1,494,002 12%
Relocation
Transaction Volume 25,149 24,863 1%
Total Revenue $139,202 $127,951 9%
Settlement Services
Purchase Title and Closing Units 43,613 40,618 7%
Refinance Title and Closing Units 14,222 11,590 23%
Total Revenue $93,440 $85,406 9%
HOSPITALITY SERVICES SEGMENT
Lodging
RevPAR (B) $36.86 $34.04 8%
Weighted Average Rooms Available (B) 511,531 507,330 1%
Royalty, Marketing and
Reservation Revenue © $119,829 $112,765 6%
Total Revenue © $148,215 $132,349 12%
RCI
Average Number of Subscribers 3,232,901 3,073,811 5%
Subscriber Related Revenue $144,723 $140,958 3%
Total Revenue $151,737 $147,224 3%
Vacation Rental Group
Cottage Weeks Sold 242,899 223,850 9%
Total Revenue $104,106 $85,871 21%
(*) Certain of the 2004 amounts presented herein have been revised to
reflect the new segment reporting structure and a new presentation of
drivers. All comparable quarterly amounts for 2003 and 2004 are
available on the Cendant website, which may be accessed at
www.cendant.com.
(A) Excludes $110 million and $100 million of intercompany royalties paid
primarily by our NRT real estate brokerage business during the three
months ended September 30, 2005 and 2004, respectively.
(B) We acquired the Ramada International Hotels and Resorts trademark on
December 10, 2004. The 2004 drivers do not include RevPAR and
Weighted Average Rooms Available of Ramada International. On a
comparable basis (excluding Ramada International from the 2005
amounts), RevPAR would have increased 7% and Weighted Average Rooms
Available would have decreased 4%.
© The 2005 amounts include the revenues of businesses acquired during
or subsequent to third quarter 2004 and are therefore not comparable
to the 2004 amounts.
Table 4
(page 2 of 2)
Cendant Corporation and Affiliates
SEGMENT REVENUE DRIVER ANALYSIS (*)
(Revenue dollars in thousands)
Third Quarter
2005 2004 % Change
TIMESHARE RESORTS SEGMENT
Tours 271,591 245,820 10%
Total Revenue $483,748 $423,831 14%
VEHICLE RENTAL SEGMENT
Car
Rental Days (000's) 28,720 24,583 17%
Time and Mileage Revenue per Day $38.29 $38.41 --
Total Car Revenue $1,265,600 $1,081,957 17%
Truck
Total Truck Revenue $167,118 $160,952 4%
TRAVEL DISTRIBUTION SERVICES SEGMENT
Transaction Volume, by Region
(000's) (A)
United States 27,894 26,541 5%
International 43,722 41,924 4%
Transaction Volume, by Channel
(000's)
Traditional Agency 61,542 60,500 2%
Online (A) 10,074 7,965 26%
Online Gross Bookings ($000's)(B) $1,922,369 $1,656,119 16%
Offline Gross Bookings ($000's)(B) $455,935 $221,600 106%
GDS and Supplier Services Revenue© $382,563 $378,306 1%
Owned Travel Agency Revenue (D) $263,192 $58,704 348%
(*) Certain of the 2004 amounts presented herein have been revised to
reflect the new segment reporting structure and a new presentation of
drivers. All comparable quarterly amounts for 2003 and 2004 are
available on the Cendant website, which may be accessed at
www.cendant.com.
(A) Includes supplier link and merchant hotel transactions not booked
through the Galileo GDS system.
(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 is not
reflected in the revenue data presented herein and, therefore, the
revenue data are not comparable. However, the online gross bookings
and offline gross bookings data for third quarter 2004 have been
adjusted to include aggregate bookings of approximately $1.3 billion
and $135 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
third quarter 2005 driver data (approximately $70 million and $300
million, respectively), but not in the third quarter 2004 driver data
due to the absence of available driver data prior to our acquisition
of Gullivers on April 1, 2005.
© We refer to this as our "Order Taker" business. Includes Galileo
revenue of $375 million and $370 million for third quarter 2005 and
2004, respectively.
(D) We refer to this as our "Order Maker" business, which is primarily
comprised of Gullivers, ebookers, Orbitz, Flairview, Cheaptickets and
Lodging.com.
Table 5
Cendant Corporation and Subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEETS
(In billions)
As of September As of December
30, 2005 31, 2004
Assets
Current assets:
Cash and cash equivalents $0.4 $0.5
Assets of discontinued operations 1.1 6.6
Other current assets 3.1 2.6
Total current assets 4.6 9.7
Property and equipment, net 1.7 1.7
Goodwill 12.3 11.1
Other non-current assets 4.3 5.4
Total assets exclusive of assets under programs 22.9 27.9
Assets under management programs 12.5 14.7
Total assets $35.4 $42.6
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt $2.2 $0.7
Liabilities of discontinued operations 0.6 5.3
Other current liabilities 4.6 4.4
Total current liabilities 7.4 10.4
Long-term debt 2.6 3.6
Other non-current liabilities 1.6 1.5
Total liabilities exclusive of
liabilities under programs 11.6 15.5
Liabilities under management programs(*) 12.6 14.4
Total stockholders' equity 11.2 12.7
Total liabilities and stockholders' equity $35.4 $42.6
(*) Liabilities under management programs includes deferred income tax
liabilities of $1.9 billion and $2.2 billion as of September 30, 2005
and December 31, 2004, respectively.
Table 6
Cendant Corporation and Subsidiaries
SCHEDULE OF CORPORATE DEBT (*)
(In millions)
September June March December
Maturity 30, 2005 30, 2005 31, 2005 31, 2004
Date
Net Debt
August
2006 6 7/8% notes $850 $850 $850 $850
August
2006 4.89% notes 100 100 100 100
January
2008 6 1/4% notes 798 798 798 797
March 2010 6 1/4% notes 349 349 349 349
January
2013 7 3/8% notes 1,191 1,191 1,191 1,191
March 2015 7 1/8% notes 250 250 250 250
November
2009 Revolver borrowings (A) 381 284 1,310 650
Commercial paper
borrowings (A) 800 975 -- --
Net hedging gains
(losses)(B) (25) 29 (29) 17
Other 120 96 89 126
Total Debt 4,814 4,922 4,908 4,330
Less: Cash and cash
equivalents 356 623 1,341 467
Net Debt $4,458 $4,299 $3,567 $3,863
Net Capitalization
Total Stockholders' Equity $11,230 $11,234 $11,195 $12,695
Total Debt (per above) 4,814 4,922 4,908 4,330
Total Capitalization 16,044 16,156 16,103 17,025
Less: Cash and cash
equivalents 356 623 1,341 467
Net Capitalization $15,688 $15,533 $14,762 $16,558
Net Debt to Net
Capitalization Ratio © 28.4% 27.7% 24.2% 23.3%
Total Debt to Total
Capitalization Ratio 30.0% 30.5% 30.5% 25.4%
(*) Amounts presented herein exclude assets and liabilities under
management programs.
(A) On October 17, 2005, we received approximately $1.7 billion of cash
from the sale of our Marketing Services division. Approximately
$1.2 billion of such cash has already been or will be used during
October 2005 to repay the outstanding revolver and commercial paper
borrowings. The Net Debt to Net Capitalization and Total Debt to
Total Capitalization ratios after giving effect to the sale of the
Marketing Services division and the utilization of $1.2 billion of
those proceeds will be 19.2% and 23.6%, respectively.
(B) As of September 30, 2005, this balance represents $139 million of
mark-to-market adjustments on current interest rate hedges, partially
offset by $114 million of net gains resulting from the termination of
interest rate hedges, which will be amortized by the Company to
reduce future interest expense.
© 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 Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Operating Activities
Net cash provided by operating
activities exclusive of management
programs $722 $773 $1,884 $1,785
Net cash provided by operating
activities of management programs 215 1,146 657 986
Net Cash Provided by Operating
Activities 937 1,919 2,541 2,771
Investing Activities
Property and equipment additions (110) (100) (303) (280)
Net assets acquired, net of cash
acquired, and acquisition-related
payments (205) (65) (1,794) (402)
Proceeds received on asset sales 30 5 43 29
Proceeds from disposition of
businesses, net of transaction-
related payments 4 (5) 969 821
Other, net 73 (2) 101 118
Net cash provided by (used in)
investing activities exclusive of
management programs (208) (167) (984) 286
Management programs:
Net change in program cash (4) (137) (65) 8
Net change in investment in vehicles 252 1,202 (2,320) (1,401)
Net change in relocation receivables (39) (47) (157) (62)
Net change in mortgage servicing
rights, related derivatives and
mortgage-backed securities -- 121 21 (269)
Other, net (1) 9 (21) 54
208 1,148 (2,542) (1,670)
Net Cash Provided by (Used in)
Investing Activities -- 981 (3,526) (1,384)
Financing Activities
Proceeds from borrowings 159 6 165 25
Principal payments on borrowings (67) (220) (156) (1,336)
Net change in short-term borrowings (155) -- 461 --
Issuances of common stock 37 951 228 1,347
Repurchases of common stock (558) (191) (1,018) (1,153)
Payments of dividends (117) (93) (309) (237)
Cash reduction due to spin-off of PHH -- -- (259) --
Other, net 4 (1) 8 (23)
Net cash provided by (used in)
financing activities exclusive of
management programs (697) 452 (880) (1,377)
Management programs:
Proceeds from borrowings 2,644 2,330 9,627 9,201
Principal payments on borrowings (3,019) (3,893) (7,926) (8,798)
Net change in short-term borrowings (86) (864) 98 50
Other, net (10) (2) (22) (19)
(471) (2,429) 1,777 434
Net Cash Provided by (Used in)
Financing Activities (1,168) (1,977) 897 (943)
Effect of changes in exchange rates
on cash and cash equivalents (15) (34) (44) 4
Cash provided by (used in)
discontinued operations (21) 215 21 361
Net increase (decrease) in cash and
cash equivalents (267) 1,104 (111) 809
Cash and cash equivalents, beginning
of period 623 451 467 746
Cash and cash equivalents, end of
period $356 $1,555 $356 $1,555
Table 8
Cendant Corporation and Subsidiaries
CONSOLIDATED SCHEDULES OF FREE CASH FLOWS (*)
(In millions)
Three Months Nine Months
Ended Ended
September 30, September 30,
2005 2004 2005 2004
Pretax income $720 $736 $1,487 $1,664
Addback of non-cash depreciation and
amortization:
Non-program related 134 118 411 341
Pendings and listings 6 5 12 13
Addback of non-cash valuation charge
associated with PHH spin-off -- -- 180 --
Tax payments, net of refunds (44) (28) (148) (116)
Working capital and other 7 (56) 50 (17)
Capital expenditures (110) (100) (303) (280)
Management programs (A) (48) (135) (108) (250)
Free Cash Flow 665 540 1,581 1,355
Current period acquisitions, net of
cash acquired (166) (53) (1,670) (328)
Payments related to prior period
acquisitions (39) (12) (124) (74)
Proceeds from disposition of
businesses, net 4 (5) 969 821
Issuance of common stock in
connection with the Upper DECS -- 863 -- 863
Net repurchases of common stock (521) (103) (790) (669)
Payment of dividends (117) (93) (309) (237)
Investments and other (B) (30) 181 21 389
Cash reduction due to spin-off of PHH -- -- (259) --
Net debt borrowings (repayments) (63) (214) 470 (1,311)
Net increase (decrease) in cash and
cash equivalents (per Table 7) $(267) $1,104 $(111) $809
(*) 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 September 30, 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 $215 million and $1,146 million, respectively, (ii) net
cash provided by investing activities of $208 million and $1,148
million, respectively, and (iii) net cash used in financing activities
of $471 million and $2,429 million, respectively. For the nine months
ended September 30, 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 $657 million and $986
million, respectively, (ii) net cash used in investing activities of
$2,542 million and $1,670 million, respectively, and (iii) net cash
provided by financing activities of $1,777 million and $434 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 Nine Months
Ended Ended
September 30, September 30,
2005 2004 2005 2004
Free Cash Flow (per above) $665 $540 $1,581 $1,355
Cash (inflows) outflows included
in Free Cash Flow but not
reflected in Net Cash Provided by
Operating Activities:
Investing activities of
management programs (208) (1,148) 2,542 1,670
Financing activities of
management programs 471 2,429 (1,777) (434)
Capital expenditures 110 100 303 280
Proceeds received on asset
sales (30) (5) (43) (29)
Change in restricted cash (71) 3 (65) (71)
Net Cash Provided by Operating
Activities (per Table 7) $937 $1,919 $2,541 $2,771
Full Year 2005
Projected
Free Cash Flow $1,800 - $2,000
Cash outflows included in
Free Cash Flow but not
reflected in Net Cash
Provided by Operating
Activities:
Investing and
financing activities
of management
programs 700 - 800
Capital expenditures 450 - 500
Net Cash Provided by
Operating Activities $2,950 - $3,300
Table 9
Cendant Corporation and Subsidiaries
Definitions of Non-GAAP Measures
The accompanying press release includes certain non-GAAP 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
generally accepted accounting principles and our
presentation of EBITDA may not be comparable to similarly
titled measures used by other companies.
For third quarter and year-to-date 2005 and 2004 amounts,
a reconciliation of EBITDA to pretax income is included
in Table 1 and a reconciliation of pretax income to net
income is included in Table 2, both of which accompany
this press release. For fourth quarter 2005 (projected)
and 2004 amounts, a reconciliation of EBITDA to income
from continuing operations is set forth below:
2005P 2004
EBITDA for core operating
segments (a) $625 - 655 $575
Mortgage Services -- 9
Corporate and Other (b) (70 - 55) 8
Total Company EBITDA 555 - 600 592
Less: Non-program
related depreciation
and amortization 135 - 130 141
Less: Non-program
related interest
expense, net 60 - 55 66
Less: Amortization of
pendings and listings 20 - 10 3
Pretax income 340 - 405 382
Less: Provision for income
taxes and minority
interest 110 - 135 134
Income from continuing
operations $230 - 270 $248
(a) 2005P amount includes $16 million of estimated
restructuring costs incurred in connection with the
combination of our timeshare exchange business, RCI, with
our European vacation rental businesses.
(b) 2004 amount includes a previously disclosed credit of
$60 million relating to previously established liabilities
for severance and other termination benefits.
Net Debt to Net
Capitalization
Ratio Represents (i) net corporate debt (which reflects 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 indebtedness
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 generally accepted accounting
principles (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 generally accepted
accounting principles (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. We also present Organic EBITDA growth
excluding charges associated with the 2005 restructuring
activities undertaken following the PHH spin-off and
initial public offering of Wright Express. Our
management believes this metric is useful in measuring
the normalized performance of the Company's reportable
operating segments. The reconciliations of Organic
revenue and EBITDA growth to the comparable measures
recognized under generally accepted accounting principles
are presented in Table 3, which accompanies this press
release.
2005 EPS from
Continuing
Operations before
Transaction
Related Charges Represents EPS from Continuing Operations adjusted to
exclude the non-cash impairment charge of $0.17 per share
and restructuring and transaction-related costs of $0.03
per share. We believe that by providing the calculation
of EPS from Continuing Operations both including and
excluding these charges, we are enhancing an investor's
ability to analyze our financial results on a comparable
basis, thereby providing greater transparency. We also
believe that excluding the impairment charge is useful to
investors because it is a non-cash charge directly
resulting from the spin-off of PHH and will not recur in
subsequent periods. EPS from Continuing Operations
before Transaction Related Charges 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 before
Transaction Related Charges 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.
Source: Cendant Corporation