================================================================================ 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 ------------ NOVEMBER 15, 2002 (NOVEMBER 12, 2002) (DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)) CENDANT CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 1-10308 06-0918165 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation or organization File No.) Identification Number) 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) NONE (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF APPLICABLE) ================================================================================ Item 5. Other Events EXCEPT AS EXPRESSLY INDICATED OR UNLESS THE CONTEXT OTHERWISE REQUIRES, "CENDANT", "WE", "OUR", OR "US" MEANS CENDANT CORPORATION, A DELAWARE CORPORATION, AND ITS SUBSIDIARIES. On November 12, 2002, we announced that we were hosting a Travel Distribution and Real Estate Teach-In for the investment community in New York City, on November 13, 2002 to provide a detailed review of the business units within these two divisions as well as our financial outlook for future periods. The Teach-In can be accessed (audio and video) on our website at http://www.cendant.com. A copy of the press release, and text of certain of the slides referenced therein, are attached hereto as Exhibits 99.1 and 99.2, respectively, and incorporated herein by reference in their entirety. Statements about future results made in the materials attached to this Form 8-K as exhibits constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and the current economic environment. Forward-looking statements and projections are inherently subject to significant economic, competitive and other uncertainties and contingencies including but not limited to, the potential negative impact of war or terrorism, many of which are beyond the control of management. We caution that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements and projections are specified in our Form 10-Q for the quarterly period ended September 30, 2002. Item 7. Exhibits See Exhibit Index. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CENDANT CORPORATION BY: /s/ Eric J. Bock ------------------------------------ Eric J. Bock Executive Vice President -- Law and Corporate Secretary Date: November 15, 2002 CENDANT CORPORATION CURRENT REPORT ON FORM 8-K REPORT DATED NOVEMBER 13, 2002 (NOVEMBER 12, 2002) EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - ----------- ----------- 99.1 Press Release issued by Cendant Corporation on November 12, 2002, announcing its hosting of a travel distribution and real estate teach-in for the investment community. 99.2 Slides from the presentation made by Kevin M. Sheehan, Chief Financial Officer of Cendant Corporation, on November 13, 2002.
Exhibit 99.1 CENDANT INVESTOR TEACH-IN TO FOCUS ON THE COMPANY'S TRAVEL DISTRIBUTION AND REAL ESTATE DIVISIONS NEW YORK, Nov. 12 -- Cendant Corporation (NYSE: CD) today announced that it is hosting a Travel Distribution and Real Estate Teach-In for the investment community in New York City on November 13. The Teach-In will provide a detailed review of the business units within these two divisions as well as the financial outlook for the Corporation for future periods. The Teach-In can be accessed (audio and video) via a live Web cast at http://www.cendant.com beginning at 9:00 a.m. on November 13, and will also be archived within the Investor Center of the Company's Web site immediately following the investor meeting. For those interested investors without web access, a copy of the slides may be obtained by contacting Investor Relations at the contact number below. Cendant Corporation is primarily a provider of travel and residential real estate services. With approximately 70,000 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 www.cendant.com or by calling 877-4INFO-CD (877-446-3623).
Exhibit 99.1 [CENDANT LOGO] Kevin M. Sheehan Chief Financial Officer THE BUSINESS MODEL - -------------------------------------------------------------------------------- ORGANIC GROWTH TARGETS: o Revenue mid-single digits - 3 - 4% unit growth - 2 - 3% price o Earnings low double digits - Operating leverage - Use of free cash flow 2 OUTLOOK FOR 2003 - -------------------------------------------------------------------------------- MACRO-ECONOMIC ASSUMPTIONS: o Gradual recovery in corporate spending beginning in second half o Stable interest rate environment o Continued healthy real estate market o No war or additional terrorist incidents of the scope and scale of September 11 3 BUSINESSES BY DIVISION - -------------------------------------------------------------------------------- Percentages are prior to unallocated corporate charges. EBITDA data is projected and adjusted (1) Pending close of transaction 4
------- CENDANT ------- - -------------------------- -------------------------- -------------------------- -------------------------- ----------------------- REAL ESTATE TRAVEL VEHICLE FINANCIAL SERVICES HOSPITALITY DISTRIBUTION SERVICES SERVICES - -------------------------- -------------------------- -------------------------- -------------------------- ----------------------- - -------------------------- -------------------------- -------------------------- -------------------------- ----------------------- REAL ESTATE FRANCHISE LODGING GLOBAL DISTRIBUTION CAR RENTAL TAX PREPARATION CENTURY 21 Days Inn SYSTEM Avis Rent a Car Jackson Hewitt Tax Coldwell Banker Ramada Galileo Budget (1) Service ERA Howard Johnson Wizcom -------------------------- ----------------------- Coldwell Banker Commercial Travelodge Trust International - -------------------------- Villager -------------------------- Knights Inn -------------------------- ----------------------- Wingate Inn FLEET MANAGEMENT / INSURANCE AND - -------------------------- Amerihost -------------------------- FUEL CARD WHOLESALE BROKERAGE Super 8 TRAVEL AGENCY PHH Arval NRT -------------------------- CheapTickets Wright Express Progeny - -------------------------- Highwire -------------------------- Cims Lodging.com ----------------------- -------------------------- Cendant Travel - -------------------------- VACATION TIMESHARE Trip Network, Inc. MORTGAGE affiliation ----------------------- RCI -------------------------- MEMBERSHIP Cendant Mortgage Fairfield Resorts Coldwell Banker Equivest CMS CENTURY 21 Trendwest Trilegiant affiliation ERA -------------------------- ----------------------- - -------------------------- -------------------------- - -------------------------- VACATION RENTAL GROUP CENDANT SETTLEMENT SERVICES Holiday Cottages - -------------------------- Novasol Cuendet Welcome Holidays - -------------------------- International Leisure Life RELOCATION -------------------------- Cendant Mobility - -------------------------- 36% of 23% of 18% of 14% of 11% of 2003 2003 2003 2003 2003 EBITDA EBITDA EBITDA EBITDA EBITDA PRELIMINARY OUTLOOK FOR 2003 - -------------------------------------------------------------------------------- PROJECTED REVENUE (in millions) 2002 2003 ---------------- ---------------- Real Estate $ 4,550 - 4,600 $ 6,300 - 6,500 Hospitality 2,200 - 2,250 2,600 - 2,800 Travel Distribution 1,700 - 1,750 1,850 - 1,950 Vehicle Services (a) 4,125 - 4,225 5,800 - 6,100 Financial Services 1,300 - 1,350 1,100 - 1,200 Corp. & Other 0 - 20 0 - 0 Total $13,875 - 14,195 $17,650 - 18,550 % Increase 29% === (a) Estimate for 2002 excludes the results of National Car Parks, which has been reclassified as a discontinued operation, and is dependent on the timing of the Budget acquisition 5 PRELIMINARY OUTLOOK FOR 2003 - -------------------------------------------------------------------------------- PROJECTED ORGANIC GROWTH - REVENUE* (IN MILLIONS) Organic Acquired 2002 Growth Growth(c) 2003 ------- ------- --------- ------- Real Estate $ 4,575 $ 725 $ 1,100 $ 6,400 Hospitality 2,225 275 200 2,700 Travel Distribution 1,725 150 25 1,900 Vehicle Services (a) 4,175 175 1,600 5,950 Financial Services 1,325 (175) -- 1,150 ------- ------- ------- ------- Total (b) $14,025 $ 1,150 $ 2,925 $18,100 ======= ======= ======= ======= % Increase 8% === * Assumes mid-range of estimates (a) Estimate for 2002 excludes the results of National Car Parks, which has been reclassified as a discontinued operation, and is dependent on the timing of the Budget acquisition (b) Reportable segments only - excludes corporate and other (c) Acquired growth is from Budget acquisition and full-year impact of acquisitions completed in 2002 6 PRELIMINARY OUTLOOK FOR 2003 - -------------------------------------------------------------------------------- PROJECTED ADJUSTED EBITDA (a) (IN MILLIONS) 2002 2003 -------------- -------------- Real Estate $825 - 840 $1,175 - 1,250 Hospitality 660 - 670 750 - 825 Travel Distribution 530 - 540 600 - 625 Vehicle Services (b) 390 - 400 450 - 525 Financial Services 445 - 455 350 - 375 Corp. & Other (105 - 95) (75 - 50) -------------- -------------- Total $2,745 - 2,810 $3,250 - 3,550 ============== ============== % Increase 22% === (a) Adjusted EBITDA is defined as earnings from continuing operations before non-program related interest, income taxes, non-program related depreciation and amortization, and minority interest, adjusted to exclude certain items that are non-recurring or unusual. (b) Estimate for 2002 excludes the results of National Car Parks, which has been reclassified as a discontinued operation 7 PRELIMINARY OUTLOOK FOR 2003 - -------------------------------------------------------------------------------- PROJECTED ORGANIC GROWTH - ADJUSTED EBITDA (IN MILLIONS) Organic Acquired 2002 Growth Growth(c) 2003 ------ ------ --------- ------ Real Estate $ 833 $ 375 $ 5 $1,213 Hospitality 665 75 40 780 Travel Distribution 535 68 10 613 Vehicle Services (a) 395 33 70 498 Financial Services 450 (87) -- 363 Total (b) $2,878 $ 464 $ 125 $3,467 ====== ====== ====== ====== % Increase 16% ==== (a) Estimate for 2002 excludes the results of National Car Parks, which has been reclassified as a discontinued operation, and is dependent on the timing of the Budget acquisition. Acquired growth for 2003 is based on mid-range of $50 to $90, our current estimate for the Budget acquisition (b) Reportable segments only - excludes corporate and other (c) Acquired growth is from Budget acquisition and full-year impact of acquisitions completed in 2002 8 PRELIMINARY OUTLOOK FOR 2003 - -------------------------------------------------------------------------------- INCOME STATEMENT ($ IN MILLIONS, EXCEPT EPS) 2002(1) 2003 --------------- --------------- Adjusted EBITDA $2,745 - $2,810 $3,350 - $3,450 Depreciation 370 - 375 470 - 480 Amortization 95 - 100 95 - 100 Interest 265 - 270 300 - 340 Tax rate 34.4% 32.5 - 33.0% Minority interest 23 25 Diluted shares 1,045 1,050 - 1,060 Adjusted EPS (2) $1.26 $1.55 - $1.60 Reported EPS $1.05 $1.49 - $1.56 (1) Estimates for 2002 exclude the results of National Car Parks, which has been reclassified as a discontinued operation (2) Adjusted EPS excludes items that are of a non-recurring or unusual nature, as set forth in Slide #12, and is a non-GAAP measure 9 PRELIMINARY OUTLOOK FOR 2003 - -------------------------------------------------------------------------------- ADJUSTED EPS 2002* 2003 ----- ------------ Prior Year Actual/Projection $0.96 $1.26 Organic growth 0.15 0.28 - 0.31 End of goodwill amortization 0.14 - Impact of acquisitions 0.13 0.04 - 0.06 Lower interest rates 0.01 - Effect of 9/11 0.03 MSR revaluation (0.17) - Expensing of equity grants - (0.03) ----- ------------ Current Projection $1.26 $1.55 - 1.60 ===== ============ * Adjusted EPS for 2002 excludes the results of National Car Parks, which has been reclassified as a discontinued operation. Adjusted EPS is a non-GAAP (generally accepted accounting principles) measure. Please see page 12 for a reconciliation from Reported EPS to Adjusted EPS. Numbers do not add due to rounding. 10 PRELIMINARY OUTLOOK FOR 2003 - -------------------------------------------------------------------------------- ADJUSTED EARNINGS PER SHARE o 23% to 27% increase over 2002 ($1.55 to $1.60) o Seasonality of EPS shifting slightly with acquisitions of real estate brokers and Budget % of 2001 EPS % of 2002 EPS* % of 2003 EPS ------------- -------------- ------------- Q1 20% 22% 21 - 23% Q2 28% 27% 26 - 28% Q3 30% 31% 29 - 31% Q4 22% 20% 20 - 22% *Excludes 3Q02 impact of MSR revaluation 11 RECONCILIATION OF REPORTED TO ADJUSTED EPS - -------------------------------------------------------------------------------- 2002(1) 2003 Reported EPS $1.05 $1.49 - 1.56 year over year increase 42% - 49% CUC litigation settlement costs(2) 0.02 0.00 Acquisition & integration costs(3) 0.19 0.04 - 0.06 ----- ------------ Adjusted EPS $1.26 $1.55 - 1.60 ===== ============ year over year increase 31% 23 - 27% (1) Estimates for 2002 exclude the results of National Car Parks, which has been reclassified as a discontinued operation. Reported EPS is before extraordinary items. (2) In 2003, litigation settlement costs reflect $0.02 - 0.03 in legal costs offset by a $0.02 - 0.03 recovery from D&O insurance. (3) Amounts will depend on timing and other issues related to the Budget acquisition. 12 VISIBILITY AND PREDICTABILITY OF EARNINGS - -------------------------------------------------------------------------------- o Visibility comes from: - Reservation/booking systems (e.g. lodging, Galileo, rental car) - Home purchase contracts - Mortgage applications - Move authorizations - Memberships o Predictability comes from: - Long-term contracts with franchisees - Long-term relationships with outsourcing clients - Hedged nature of portfolio - Defensible, industry-leading positions o Enables proactive management of future business pipeline - Can react quickly to size our businesses for expected volumes - Adjustable cost structure means "right sizing" can still produce significant cash flow 13 SENSITIVITY ANALYSIS - -------------------------------------------------------------------------------- EBITDA IMPACT OF APPROXIMATE 5% CHANGE 2003 IN DRIVER PER SHARE DRIVER EXPECTATION (IN MILLIONS) EFFECT - -------------------------------------------------------------------------------- REAL ESTATE Gross Home Sales (Franchised) 1.6 million 18 $0.01 Gross Home Sales (CD Owned) 500,000 53 $0.03 Mortgage Origination Volume $63 billion 52 $0.03 HOSPITALITY Lodging RevPAR $28 $9 $0.01 RCI Timeshare Exchanges 2.0 million 11 $0.01 Timeshare Sales Tour Flow 1.1 million 21 $0.01 VEHICLE SERVICES Car Rental Days 95 million 63 $0.04 Car Rental Pricing $40 161 $0.10 TRAVEL DISTRIBUTION Galileo Segment Volume 317 million 46 $0.03 14 OUTLOOK FOR 2003 SENSITIVITIES - -------------------------------------------------------------------------------- EBITDA IMPACT OF APPROXIMATE 5% CHANGE 2003 IN DRIVER PER SHARE DRIVER EXPECTATION (IN MILLIONS) EFFECT - -------------------------------------------------------------------------------- Lodging RevPAR $28 $9 $0.01 479,000 $28 5% 4% 97% domestic X 365 days X RevPAR X charge X royalty X EBITDA rooms rate margin = $9 MILLION EBITDA 15 OUTLOOK FOR 2003 SENSITIVITIES - -------------------------------------------------------------------------------- EBITDA IMPACT OF APPROXIMATE 5% CHANGE 2003 IN DRIVER PER SHARE DRIVER EXPECTATION (IN MILLIONS) EFFECT - -------------------------------------------------------------------------------- Car Rental Days 95mm $63 $0.04 95 million $40 rate 5% 33% car rental X per day X charge X EBITDA days margin = $63 MILLION EBITDA 16 LONG TERM CASH FLOW PROJECTION (AMOUNTS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) - -------------------------------------------------------------------------------- (1) Company will be a cash tax payer in 2005 (2) Free Cash Flow is a non-GAAP measure 2004 ASSUMPTIONS: - 10% EBITDA growth - 5% Capital Expenditures growth - 10% growth in investment in working capital 17
2001 2002 2003 2004 ------- ------- ------- ------- Adjusted EBITDA $ 2,087 $ 2,780 $ 3,400 $ 3,740 Interest, including minority interest (268) (285) (360) (300) Tax payments, net of refunds (1) (36) (100) (75) (100) ------- ------- ------- ------- CASH FLOW 1,783 2,395 2,965 3,340 ------- ------- ------- ------- Capital Expenditures (329) (360) (425) (445) Restructuring and Other (132) (72) (75) (50) Working Capital 108 (335) (200) (220) Management and Mortgage Programs (85) 23 (300) (330) ------- ------- ------- ------- FREE CASH FLOW (2) $ 1,345 $ 1,651 $ 1,965 $ 2,295 ======= ======= ======= ======= FCF/Share (2) $ 1.47 $ 1.58 $ 1.86 $ 2.02 ======= ======= ======= ======= MANAGEMENT AND MORTGAGE PROGRAMS (AMOUNTS IN MILLIONS) - -------------------------------------------------------------------------------- 2003 ---- Net Investment in Vehicles ($20) Net Mortgage Originations and Sales (20) Net Mortgage Servicing Rights (120) Net Timeshare Investment (140) Net Relocation Receivables - ----- Net Use of Cash by Management and Mortgage Programs ($300) ===== 18 VEHICLE SERVICES CASH FLOW - -------------------------------------------------------------------------------- CENDANT CASH FLOW STATEMENT 9 MONTHS ($ IN MILLIONS) ENDED 9/30/02 Net cash provided by operating activities exclusive of management and mortgage programs ($ 1,556) MANAGEMENT AND MORTGAGE PROGRAMS -------------------------------------------------------- Vehicle depreciation 1,310 -------------------------------------------------------- Other 677 -------- NET CASH PROVIDED BY OPERATING ACTIVITIES $ 431 Net cash provided by (used in) investing activities exclusive of management and mortgage programs 1,308 MANAGEMENT AND MORTGAGE PROGRAMS -------------------------------------------------------- Investment in Vehicles (12,574) Payment received on investment in vehicles 10,720 -------------------------------------------------------- Other (513) -------- NET CASH USED IN INVESTING ACTIVITIES ($ 1,059) ======== 19 VEHICLE SERVICES CASH FLOW - -------------------------------------------------------------------------------- CENDANT CASH FLOW STATEMENT 9 MONTHS ($ IN MILLIONS) ENDED 9/30/02 Net cash provided by operating activities exclusive of management and mortgage programs ($ 1,556) MANAGEMENT AND MORTGAGE PROGRAMS ---------------------------------------------------------- Vehicle Depreciation 1,310 ---------------------------------------------------------- Other 677 -------- NET CASH PROVIDED BY OPERATING ACTIVITIES $ 431 Net cash provided by (used in) investing activities exclusive of management and mortgage programs 1,308 MANAGEMENT AND MORTGAGE PROGRAMS ---------------------------------------------------------- Investment in Vehicles (12,574) Payment Received on investment in vehicles 10,720 ---------------------------------------------------------- Other (513) -------- NET CASH USED IN INVESTING ACTIVITIES ($ 1,059) ---------------------------------------------------------- Vehicle depreciation 1,310 Investment in vehicles (12,574) Payment received 10,720 -------- Net Investment in Vehicles (before financing) (544) Asset-backed financing (88% of investment) 479 -------- NET INVESTMENT IN VEHICLES (AFTER FINANCING) ($ 65) ---------------------------------------------------------- 20 VEHICLE SERVICES CASH FLOW - -------------------------------------------------------------------------------- CENDANT CASH FLOW STATEMENT 9 MONTHS ($ IN MILLIONS) ENDED 9/30/02 - ------------------------------------------------------------------------------- Net cash provided by operating activities exclusive of management and mortgage programs ($ 1,556) MANAGEMENT AND MORTGAGE PROGRAMS ---------------------------------------------------------------------- Vehicle Depreciation 1,310 ---------------------------------------------------------------------- Other 677 Net cash provided by operating activities $ 431 Net cash provided by (used in) investing activities exclusive of management and mortgage programs 1,308 MANAGEMENT AND MORTGAGE PROGRAMS ---------------------------------------------------------------------- Investment in Vehicles (12,574) Payment Received on investment in vehicles 10,720 ---------------------------------------------------------------------- Other (513) NET CASH USED IN INVESTING ACTIVITIES ($ 1,059) - ----------------------------------------------------------------------------- --------------------------------------------------------------------- Vehicle depreciation 1,310 Investment in vehicles (12,574) Payment received 10,720 Net Investment in Vehicles (before financing) (544) Asset-backed financing (88% of investment) 479 NET INVESTMENT IN VEHICLES (AFTER FINANCING) ($ 65) --------------------------------------------------------------------- -------------------------------------------------------------- VEHICLE SERVICES ADJUSTED EBITDA 336 Net Investment in Vehicles (after financing) (65) VEHICLE SERVICES FREE CASH FLOW (EX. CAPEX AND WC) $ 271 -------------------------------------------------------------- 21 PLANNED USE OF FREE CASH FLOW IN 2003 - -------------------------------------------------------------------------------- o $2 billion in free cash flow available to retire debt, invest in acquisitions and repurchase stock o Approximately 50% will be used to retire debt o Remainder will be used to repurchase stock and for accretive, tuck-in acquisitions, including remaining payments related to the Budget acquisition 22 BUDGET ACQUISITION FACT SHEET - -------------------------------------------------------------------------------- o Third largest general use car rental brand in U.S. o Domestic car rental operations generated revenue of $1.4 billion in 2001 o Average domestic car rental fleet of approximately 115,000 (Avis is 192,000) o Over 1,000 domestic car locations - Approximately 600 corporate owned locations - Approximately 440 franchise locations 23 BUDGET ACQUISITION FACT SHEET - -------------------------------------------------------------------------------- o High customer satisfaction (price/value) o Strong brand recognition 24 BUDGET ACQUISITION STRATEGIC RATIONALE - -------------------------------------------------------------------------------- o Ownership of corporate brand (Avis) and leisure brand (Budget) allows for fleet sharing, better yield management and increased utilization o Significant operational synergies through integration of Avis and Budget facilities, back-office and corporate functions and fleet financing o Strengthens our position in travel where we have a comparative advantage - Leisure traveler more aligned with Cendant travel brands in lodging, timeshare and travel distribution. 25 BUDGET ACQUISITION STRATEGIC RATIONALE - -------------------------------------------------------------------------------- o Expected yearly cost savings of at least $115 million beginning in 2004 o Expected to be modestly accretive in 2003 and significantly accretive beginning in 2004 26 BUDGET ACQUISITION TRANSACTION OVERVIEW ($ IN MILLIONS) - -------------------------------------------------------------------------------- AMOUNT TIMING -------- ---------- Asset purchase price $110 At closing Transaction and securitization costs 40 At closing Incremental rental truck fleet equity 200 At closing Headcount reduction, facilities closure, integration expenditures and working Over first capital 150-250 12 months -------- TOTAL CASH USE $500-600 ======== 27 DEBT ($ MILLIONS) - -------------------------------------------------------------------------------- 28
Earliest Redemp. Maturity Dec 31 Mar 31 Jun 30 Sep 30 Date Date 2001 2002 2002 2002 --------- -------- ------- ------- ------- ------- 7.75% Senior Notes 12/03 12/03 $ 1,150 $ 1,150 $ 1,071 $ 1,042 6.875% Senior Notes 8/06 8/06 850 850 850 850 11% Senior Subordinated Notes 5/09 5/09 584 577 571 554 3.875% Convertible Debentures 11/04 11/11 1,200 1,200 1,200 1,200 CODES Convertibles (2.5%) 2/04 2/21 920 925 678 417 CARZ Convertibles (3.0%) 5/03 5/21 1,000 1,000 1,000 1,000 3% Convertible Notes 2/02 390 -- -- -- Net Hedging Gains (Losses) 11 (6) 44 95 Other 27 24 52 51 Litigation Settlement 1,440 1,190 -- -- ------- ------- ------- ------- Debt (including litigation settlement) $ 7,572 $ 6,910 $ 5,466 $ 5,209 ======= ======= ======= ======= 2003 OUTLOOK SUMMARY - -------------------------------------------------------------------------------- o Substantial year over year growth - Revenue up 24 - 34% - EBITDA up 19 - 26% - Adjusted EPS up 23 - 27% - Reported EPS up 42 - 49% o Visibility and predictability of earnings o Stable and recurring cash flow generation - Debt retirement - Share repurchase - Small tuck-in acquisitions o Strong and improving balance sheet - Liquidity and capital to grow business o Defensible, industry-leading positions 29 2003 GOALS - -------------------------------------------------------------------------------- o Prove Our Business Model o Prove Our Cash Flow o Prove Our Organic Growth 30