================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------ Form 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------ JULY 30, 2001 (JULY 30, 2001) (DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) CENDANT CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 1-10308 06-0918165 (STATE OR OTHER JURISDICTION (COMMISSION FILE NO.) (I.R.S. EMPLOYER OF INCORPORATION OR IDENTIFICATION NUMBER) ORGANIZATION) 9 WEST 57TH STREET NEW YORK, NY 10019 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE) (212) 413-1800 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) ================================================================================ ITEM 5. OTHER EVENTS This Current Report on Form 8-K of the Company is being filed to make available its Consolidated Condensed Statements of Cash Flows (see Exhibit 99.1) for the six months ended June 30, 2001 and 2000 and its Consolidated Schedule of Free Cash Flows (see Exhibit 99.2) for the twelve months ended June 30, 2001 and 2000. Free cash flow is another measure used by management to evaluate liquidity and financial condition. Free cash flow represents cash available for the repayment of debt and other corporate purposes such as stock repurchases, acquisitions and investments for the latest twelve-month period. The Company has provided the Consolidated Schedule of Free Cash Flows for the twelve months ended June 30, 2001 and 2000 as that reflects the measure in which management evaluates the performance of its free cash flows. Such measure of performance may not be comparable to similarly titled measures used by other companies and is not a measurement recognized under generally accepted accounting principles. Therefore, free cash flow should not be construed as a substitute for income or cash flow from operations in measuring operating results or liquidity. The Consolidated Schedule of Free Cash Flows for the twelve months ended June 30, 2001 and 2000 should be read in conjunction with the Company's Consolidated Condensed Statements of Cash Flows attached hereto as well as the Company's Consolidated Statements of Income included within the Company's earnings release of second quarter results filed with the Securities and Exchange Commission on Form 8-K on July 19, 2001 and the Company's Annual Report on Form 10-K/A filed on July 3, 2001. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (c) Exhibits See Exhibit Index. 1 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CENDANT CORPORATION BY: /s/ Tobia Ippolito ---------------------- Tobia Ippolito Executive Vice President, Finance and Chief Accounting Officer Date: July 30, 2001 2 CENDANT CORPORATION CURRENT REPORT ON FORM 8-K EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - -------- ----------- 99.1 Consolidated Condensed Statements of Cash Flows for the six months ended June 30, 2001 and 2000 99.2 Consolidated Schedule of Free Cash Flows for the twelve months ended June 30, 2001 and 2000 3
EXHIBIT 99.1 CENDANT CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (IN MILLIONS) SIX MONTHS ENDED JUNE 30, -------------------- 2001 2000 ------- ------- OPERATING ACTIVITIES Net cash provided by operating activities exclusive of management and mortgage programs $ 438 $ 385 Net cash provided by (used in) operating activities of management and mortgage programs 753 (214) ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES 1,191 171 ------- ------- INVESTING ACTIVITIES Property and equipment additions (151) (115) Net assets acquired (net of cash acquired) and acquisition-related payments (1,727) (16) Funding of stockholder litigation settlement trust (500) -- Other, net (22) (75) ------- ------- Net cash used in investing activities exclusive of management and mortgage programs (2,400) (206) ------- ------- MANAGEMENT AND MORTGAGE PROGRAMS: Investment in vehicles, net (4,681) -- Payments received on investment in vehicles 3,612 -- Origination of contract receivables (155) -- Principal collection of contract receivables 162 -- Equity advances on homes under management (3,027) (3,763) Repayment on advances on homes under management 3,017 4,186 Additions to mortgage servicing rights (433) (384) Proceeds from sales of mortgage servicing rights 125 65 ------- ------- (1,380) 104 ------- ------- NET CASH USED IN INVESTING ACTIVITIES (3,780) (102) ------- ------- FINANCING ACTIVITIES Proceeds from borrowings 2,697 -- Principal payments on borrowings (845) (776) Issuances of common stock 750 536 Repurchases of common stock (28) (300) Proceeds from mandatorily redeemable preferred securities issued by subsidiary holding solely senior debentures issued by the Company -- 91 Proceeds from mandatorily redeemable preferred interest in a subsidiary -- 375 Other, net (60) (3) ------- ------- Net cash provided by (used in) financing activities exclusive of management and mortgage programs 2,514 (77) ------- ------- MANAGEMENT AND MORTGAGE PROGRAMS: Proceeds from borrowings 8,138 2,009 Principal payments on borrowings (7,165) (2,719) Net change in short-term borrowings 62 765 ------- ------- 1,035 55 ------- ------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 3,549 (22) ------- ------- Effect of changes in exchange rates on cash and cash equivalents 9 23 ------- ------- Net increase in cash and cash equivalents 969 70 Cash and cash equivalents, beginning of period 944 1,164 ------- ------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,913 $ 1,234 ======= =======
- ---------- (*) Adjusted EBITDA is defined as earnings before non-operating interest, income taxes, non-vehicle depreciation and amortization, minority interest and equity in Homestore.com, adjusted to exclude certain items which are of a non-recurring or unusual nature and not measured in assessing segment performance or are not segment specific. (A) Excludes (i) a net gain related to the dispositions of businesses ($402 million), (ii) a gain representing the recognition of a portion of the Company's previously recorded deferred gain from the sale of its fleet businesses due to the disposition of VMS Europe by Avis Group Holdings, Inc. ("Avis Group") in August 2000 ($35 million) and (iii) a credit to reflect an adjustment to the PRIDES class action litigation settlement charge recorded in the fourth quarter of 1998 primarily for Rights that expired unexercised ($14 million). Such amounts were partially offset by (i) a charge to fund an irrevocable contribution to an independent technology trust responsible for providing technology initiatives for the benefit of current and future franchisees at Century 21, Coldwell Banker and ERA ($95 million), (ii) a charge in connection with the creation of Travel Portal, Inc., a company that was created to pursue the development of an online travel business for the benefit of certain current and future franchisees ($85 million), (iii) litigation settlement and related costs ($48 million), (iv) a charge in connection with litigation asserting claims associated with accounting irregularities in the former business units of CUC International, Inc. and outside of the principal common stockholder class action lawsuit ($20 million), (v) charges related to the acquisition and integration of Avis Group ($8 million), (vi) a non-cash contribution to the Cendant Charitable Foundation ($7 million) and (vii) charges incurred in connection with the postponement of the initial public offering of Move.com common stock ($3 million). (B) Excludes (i) a charge associated with the settlement of the principal common stockholder class action lawsuit ($2,894 million), (ii) a charge in connection with restructuring and other initiatives ($106 million), (iii) a charge in connection with the creation of NGI ($85 million), (iv) litigation settlement and related costs ($21 million) and (v) costs primarily resulting from the consolidation of European call centers in Cork, Ireland ($5 million). Such amounts were partially offset by (i) a net gain related to the dispositions of businesses ($349 million), (ii) a non-cash credit in connection with a change to the original estimate of the number of Rights to be issued in connection with the PRIDES settlement resulting from unclaimed and uncontested Rights ($41 million) and (iii) a credit associated with changes to the estimate of previously recorded merger-related costs and other unusual charges ($2 million). (C) Excludes non-cash interest recorded on zero-coupon senior convertible notes. (D) Represents the before tax amounts of minority interest. (E) Represents total capital expenditures exclusive of Move.com Group capital expenditures ($7 million and $13 million in 2001 and 2000, respectively). (F) Represents investment activity of the Company, including cash payments in 2001 associated with the independent technology trust responsible for providing technology initiatives for the benefit of current and future franchisees at Century 21, Coldwell Banker and ERA ($95 million) and the creation of Travel Portal, Inc. ($45 million). (G) Includes net cash used in Move.com Group operations and the effects of changes in exchange rates. (H) Represents debt borrowings, net of debt repayments and financing costs (including the issuance of a mandatorily redeemable preferred interest in a subsidiary in the twelve months ending June 30, 2000).
EXHIBIT 99.2 CENDANT CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF FREE CASH FLOWS (IN MILLIONS) TWELVE MONTHS ENDED JUNE 30, ----------------------- 2001 2000 ------- ------- Adjusted EBITDA(*) $ 1,939(A) 1,843(B) Less: Move.com Group (48) (71) ------- ------- Adjusted EBITDA, excluding Move.com Group 1,987 1,914 Interest expense, net (C) (214) (143) Minority interest, excluding tax benefit (D) (102) (102) Tax payments (51) (43) ------- ------- CASH FLOW NET OF TAXES PAID 1,620 1,626 Tax refunds 10 127 Restructuring and other unusual payments (35) (161) Working capital and other (61) (242) ------- ------- OPERATING CASH FLOW 1,534 1,350 Adjusted capital expenditures (E) (275) (249) ------- ------- FREE CASH FLOW 1,259 1,101 NON OPERATING ACTIVITIES: Investments (F) (422) (54) Acquisitions, net of cash acquired (1,824) (77) Funding of stockholder litigation settlement trust (850) -- Net proceeds from sale of subsidiaries -- 898 Other (G) (116) (238) ------- ------- (3,212) 529 ------- ------- FINANCING ACTIVITIES: Net proceeds from (repayments on) borrowings (H) 1,670 (891) Net issuances (repurchases) of equity securities and other 711 (1,119) ------- ------- 2,381 (2,010) ------- ------- NET CHANGE IN CASH BEFORE MANAGEMENT AND MORTGAGE PROGRAMS 428 (380) MANAGEMENT AND MORTGAGE PROGRAMS: Net investment in vehicles (1,069) -- Net mortgage origination and sales 1,352 892 Net mortgage servicing rights (684) (643) Net contract receivables 7 -- Net relocation advances (61) 472 Net financing for assets of management and mortgage programs 706 (2,170) ------- ------- 251 (1,449) ------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 679 $(1,829) ======= =======