SOURCE: Realogy Corporation

Realogy Corporation

April 29, 2010 08:00 ET

Realogy Reports Results for First Quarter 2010

Real Estate Leader Posts 18% Higher Net Revenue of $819 Million; Home Sale Transaction and Price Drivers Show Gains Across Segments

PARSIPPANY, NJ--(Marketwire - April 29, 2010) - Realogy Corporation, a global leader in real estate and relocation services, today reported results for the first quarter ended March 31, 2010. Realogy's revenue for the first quarter of $819 million increased 18% compared to 2009. In the latest quarter, Realogy recorded a net loss attributable to the Company of $197 million. EBITDA for the period was $11 million, an improvement of $73 million year-over-year due to revenue gains, cost reductions and productivity gains.

In the first quarter, Realogy's core business drivers showed improvement. The number of home sale transactions increased 8% year-over-year at the Realogy Franchise Group (RFG) and 11% at NRT, the company-owned brokerage unit. The growth is principally attributable to the move-up and higher priced markets and a comparatively weak first quarter of 2009. Average home sale price increased in the first quarter by 3% at RFG and 17% at NRT year-over-year. In addition, at Cartus we saw a 20% increase in relocation initiations aided by the addition of business from Primacy Relocation, which we acquired in January, and a 6% increase in purchase closing units at Title Resource Group.

"We saw gains in the average home sale price across our franchise and company-owned offices, and it is increasingly apparent that prices are stabilizing in many markets," said Realogy president and CEO Richard A. Smith. "The shift in the mix of business we started to see late last year continued into the first quarter of 2010, signaling a much healthier outlook for housing."

The changing composition of home sale price points particularly impacted NRT where average home price was approximately $418,000 in the first quarter of 2010 compared to $356,000 for the same period in 2009. In the first quarter of 2010, home sales at price points over $750,000 represented 43% of NRT's sales volume versus 35% during the first quarter of 2009. In addition, REO transactions at NRT dropped from 19% in the first quarter of 2009 to 11% of transaction sides in the first quarter of 2010. "We believe that NRT's average home sale price will continue to outperform the industry due to our geographic concentration and focus on high-end markets," said Smith.

"While the homebuyer tax credit appears to have had less of an impact on home sales in the first quarter compared to the fourth quarter of 2009, we have seen increased momentum in terms of home sale contracts opened during the months of March and April, and expect to see the results of that stimulus in the second quarter," added Smith. "The third and fourth quarters for housing remain somewhat uncertain as they will be driven by traditional macro factors such as job growth, consumer confidence, and from a micro-economic perspective, the dynamics of local markets."

Covenant Compliance

As of March 31, 2010, the Company's senior secured leverage ratio was 4.51 to 1, which is below the 5.0 to 1 maximum ratio required to be in compliance with our Credit Agreement. The senior secured leverage ratio is determined by taking Realogy's senior secured net debt of $2.92 billion at March 31, 2010 and dividing it by the Company's Adjusted EBITDA of $648 million for the 12 months ended March 31, 2010. (Please see Table 6 for a reconciliation of net loss attributable to Realogy to EBITDA and Adjusted EBITDA and Table 8 for the definition of non-GAAP financial measures.)

"The improvement in our senior secured leverage ratio from last year is primarily the result of increases in our transaction volume and the continued long-term realization of our cost-reduction initiatives," said Anthony E. Hull, Realogy's chief financial officer and treasurer. "These organic gains in our business are reflected in the higher trailing 12 month EBITDA compared to year-end 2009."

Balance Sheet Information as of March 31, 2010

As of March 31, 2010, Realogy had no balance on its revolving credit facility. The Company also had $175 million of readily available cash, which is included in cash and cash equivalents of $207 million.

A complete balance sheet is included as Table 2 of this press release.

Investor Webcast

Realogy will hold a Webcast to review its first quarter 2010 results at 10:00 a.m. (EDT) today. The call will be hosted by Richard A. Smith, president and CEO, and Anthony E. Hull, executive vice president, CFO and treasurer. The conference call will be made available live via Webcast on the Investor Information section of the www.Realogy.com Web site. A replay of the Webcast will be available at www.realogy.com from April 30 through May 14.

About Realogy Corporation

Realogy Corporation, a global provider of real estate and relocation services, has a diversified business model that includes real estate franchising, brokerage, relocation and title services. Realogy's world-renowned brands and business units include Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®, Coldwell Banker Commercial®, The Corcoran Group®, ERA®, Sotheby's International Realty®, NRT LLC, Cartus and Title Resource Group. Collectively, Realogy's franchise systems have approximately 14,900 offices and 264,000 sales associates doing business in 93 countries and territories around the world. Headquartered in Parsippany, N.J., Realogy (www.realogy.com) is owned by affiliates of Apollo Management, L.P., a leading private equity and capital markets investor. To receive future Realogy news releases, you can sign up for an e-mail subscription or secure a link for your RSS reader at www.realogy.com/media.

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 Realogy Corporation 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" and "plans" 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.

Various factors that could cause actual future results and other future events to differ materially from those estimated by management include, but are not limited to: our substantial amount of outstanding debt; our ability to comply with the affirmative and negative covenants contained in our debt agreements; adverse developments or the absence of improvement in the residential real estate markets including but not limited to the lack of sustained improvement in the number of home sales and/or further declines in home prices, low levels of consumer confidence, the impact of the ongoing or future recessions and related high levels of unemployment in the U.S. and abroad, continuing high levels of foreclosures, our geographic and high-end market concentration in particular to our company-owned brokerage operations and reduced availability of mortgage financing or financing availability at rates not sufficiently attractive to homebuyers; the final resolution or outcomes with respect to Cendant's contingent liabilities, including contingent tax liabilities; adverse developments or the absence of sustained improvement in general business, economic and political conditions, including but not limited to changes in short-term or long-term interest rates, or any outbreak or escalation of hostilities on a national, regional or international basis; our failure to enter into or renew franchise agreements, maintain our brands or the inability of franchisees to survive the current real estate cycle; our inability to realize benefits from future acquisitions; our inability to sustain improvements in our operating efficiency; and our inability to access capital and/or securitization markets.

Consideration should be given to the areas of risk described above, as well as those risks set forth under the headings "Forward-Looking Statements" and "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2009 and in our other periodic reports filed from time to time, in connection with considering any forward-looking statements that may be made by us and our businesses generally. Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so 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 in the Tables attached to this release.

Table 1

                           REALOGY CORPORATION
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                              (In millions)


                                                        Three Months Ended
                                                             March 31,
                                                        ------------------
                                                          2010      2009
                                                        --------  --------
Revenues
        Gross commission income                         $    588  $    472
        Service revenue                                      136       134
        Franchise fees                                        55        50
        Other                                                 40        41
                                                        --------  --------

Net revenues                                                 819       697
                                                        --------  --------

Expenses
        Commission and other agent-related costs             377       292
        Operating                                            300       328
        Marketing                                             46        41
        General and administrative                            78        63
        Former parent legacy costs (benefit), net              5         4
        Restructuring costs                                    6        34
        Depreciation and amortization                         50        51
        Interest expense/(income), net                       152       144
        Other (income)/expense, net                           (3)        1
                                                        --------  --------

Total expenses                                             1,011       958
                                                        --------  --------

Loss before income taxes, equity in earnings and
 noncontrolling interest                                    (192)     (261)
Income tax expense                                             6         2
Equity in earnings of unconsolidated entities                 (1)       (4)
                                                        --------  --------
Net loss                                                    (197)     (259)
        Less: income attributable to noncontrolling
         interests                                             -         -
                                                        --------  --------
Net loss attributable to Realogy                        $   (197) $   (259)
                                                        ========  ========

Table 2

                           REALOGY CORPORATION
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                              (In millions)


                                                 March 31,    December 31,
                                                   2010           2009
                                               ------------   ------------
ASSETS
Current assets:
        Cash and cash equivalents              $        207   $        255
        Trade receivables (net of allowance
         for doubtful accounts of $74 and $66)          118            102
        Relocation receivables                          315            334
        Relocation properties held for sale              55              -
        Deferred income taxes                            82             85
        Other current assets                             97             98
                                               ------------   ------------
                Total current assets                    874            874

Property and equipment, net                             201            211
Goodwill                                              2,592          2,577
Trademarks                                              732            732
Franchise agreements, net                             2,959          2,976
Other intangibles, net                                  510            453
Other non-current assets                                215            218
                                               ------------   ------------

Total assets                                   $      8,083   $      8,041
                                               ============   ============

LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
        Accounts payable                       $        147   $         96
        Securitization obligations                      239            305
        Due to former parent                            510            505
        Revolving credit facilities and
         current portion of long-term debt               71             32
        Accrued expenses and other current
         liabilities                                    698            502
                                               ------------   ------------
                Total current liabilities             1,665          1,440

Long-term debt                                        6,667          6,674
Deferred income taxes                                   763            760
Other non-current liabilities                           165            148
                                               ------------   ------------

Total liabilities                                     9,260          9,022
                                               ------------   ------------

Commitments and contingencies

Equity (deficit):
        Common stock                                      -              -
        Additional paid-in capital                    2,022          2,020
        Accumulated deficit                          (3,168)        (2,971)
        Accumulated other comprehensive loss            (32)           (32)
                                               ------------   ------------
                Total Realogy stockholder's
                 deficit                             (1,178)          (983)
                                               ------------   ------------
        Noncontrolling interests                          1              2
                                               ------------   ------------
Total equity (deficit)                               (1,177)          (981)
                                               ------------   ------------

Total liabilities and equity (deficit)         $      8,083   $      8,041
                                               ============   ============

Table 3

                           REALOGY CORPORATION
                             2010 KEY DRIVERS


                                           Three Months Ended March 31,
                                        ---------------------------------
                                          2010        2009      % Change
                                        ---------   ---------   ---------
Real Estate Franchise Services (a)
Closed homesale sides                     193,340     178,233           8%
Average homesale price                  $ 188,478   $ 182,865           3%
Average homesale broker commission rate      2.55%       2.57%    (2) bps
Net effective royalty rate                   5.04%       5.15%   (11) bps
Royalty per side                        $     252   $     253          - %

Company Owned Real Estate Brokerage
 Services
Closed homesale sides                      52,532      47,499          11%
Average homesale price                  $ 417,782   $ 355,838          17%
Average homesale broker commission rate      2.48%       2.55%    (7) bps
Gross commission income per side        $  11,161   $   9,909          13%

Relocation Services
Initiations (b)                            33,175      27,677          20%
Referrals (c)                              12,109      10,719          13%

Title and Settlement Services
Purchase title and closing units           19,947      18,810           6%
Refinance title and closing units          11,935      19,933         (40%)
Average price per closing unit          $   1,353   $   1,211          12%

(a)  Includes all franchisees except for our Company Owned Real Estate
     Brokerage Services segment.
(b)  Includes 5,177 of initiations related to the Primacy acquisition in
     2010.
(c)  Includes 716 of referrals related to the Primacy acquisition in 2010.

Table 4

                           REALOGY CORPORATION
                             2009 KEY DRIVERS

                                   Quarter Ended                Year Ended
                     ------------------------------------------  ---------
                       March      June     September  December   December
                     31, 2009   30, 2009   30, 2009   31, 2009   31, 2009
                     ---------  ---------  ---------  ---------  ---------


Real Estate Franchise
 Services (a)
Closed homesale sides  178,233    259,476    281,973    263,834    983,516
Average homesale
 price               $ 182,865  $ 188,489  $ 194,881  $ 192,604  $ 190,406
Average homesale
 broker commission
 rate                     2.57%      2.57%      2.53%      2.54%      2.55%
Net effective royalty
 rate                     5.15%      5.10%      5.11%      5.04%      5.10%
Royalty per side     $     253  $     256  $     260  $     255  $     257

Company Owned Real
 Estate Brokerage
 Services
Closed homesale sides   47,499     72,362     81,025     72,931    273,817
Average homesale
 price               $ 355,838  $ 378,870  $ 407,398  $ 406,549  $ 390,688
Average homesale
 broker commission
 rate                     2.55%      2.52%      2.49%      2.51%      2.51%
Gross commission
 income per side     $   9,909  $  10,292  $  10,816  $  10,814  $  10,519

Relocation Services
Initiations             27,677     33,074     28,871     26,870    116,491
Referrals               10,719     17,349     20,320     16,607     64,995

Title and Settlement
 Services
Purchase title and
 closing units          18,810     28,148     30,653     27,077    104,688

Refinance title and
 closing units          19,933     22,693     14,493     12,808     69,927
Average price per
 closing unit        $   1,211  $   1,258  $   1,405  $   1,396  $   1,317

(a)  Includes all franchisees except for our Company Owned Real Estate
     Brokerage Services segment.

Table 5a

                           REALOGY CORPORATION
                       SELECTED 2010 FINANCIAL DATA
                              (In millions)

                                 For the Three
                                  Months ended
                                 March 31, 2010
                                 --------------
Revenue (a)
  Real Estate Franchise Services $          122
  Company Owned Real Estate
   Brokerage Services                       601
  Relocation Services                        76
  Title and Settlement Services              65
  Corporate and Other                       (45)
                                 --------------
  Total Company                  $          819
                                 ==============
EBITDA (b)
  Real Estate Franchise Services $           65
  Company Owned Real Estate
   Brokerage Services                       (34)
  Relocation Services                         4
  Title and Settlement Services              (5)
  Corporate and Other                       (19)
                                 --------------
  Total Company                  $           11
  Depreciation and amortization              50
  Interest expense, net                     152
  Income tax expense (benefit)                6
                                 --------------
  Net loss attributable to
   Realogy                       $         (197)
                                 ==============

(a)  Transactions between segments are eliminated in consolidation.
     Revenues for the Real Estate Franchise Services segment include
     intercompany royalties and marketing fees paid by the Company Owned
     Real Estate Brokerage Services segment of $45 million for the three
     months ended March 31, 2010. Such amounts are eliminated through the
     Corporate and Other line. Revenues for the Relocation Services segment
     include $7 million of intercompany referral and relocation fees paid
     by the Company Owned Real Estate Brokerage Services segment during the
     three months ended March 31, 2010. Such amounts are recorded as
     contra-revenues by the Company Owned Real Estate Brokerage Services
     segment.  There are no other material inter-segment transactions.
(b)  Includes $6 million and $5 million of restructuring costs and former
     parent legacy items, respectively, for the three months ended March
     31, 2010 broken down by business units as follows:

                                 For the Three
                                  Months ended
                                 March 31, 2010
                                 --------------
Real Estate Franchise Services   $            -
Company Owned Real Estate
        Brokerage Services                    3
Relocation Services                           2
Title and Settlement Services                 1
Corporate and Other                           5
                                 --------------
Total Company                    $           11
                                 ==============

EBITDA by segment before restructuring and other items detailed above for
the three months ended March 31, 2010  was:  RFG $65 million, NRT ($31)
million, Cartus $6 million, TRG ($4) million and Corporate ($14) million.

Table 5b

                           REALOGY CORPORATION
                      SELECTED 2009 FINANCIAL DATA
                              (In millions)

                       For the    For the    For the    For the    For the
                        Three      Three      Three      Three       Year
                       Months     Months     Months      Months     Ended
                        ended      ended      ended      ended     December
                      March 31,   June 30,  September   December      31,
                        2009       2009      30, 2009   31, 2009     2009
                       -------    -------    -------    -------    -------
Revenue (a)
 Real Estate Franchise
  Services             $   105    $   143    $   151    $   139    $   538
 Company Owned Real
  Estate Brokerage
  Services                 491        764        896        808      2,959
 Relocation Services        71         80         92         77        320
 Title and Settlement
  Services                  68         88         91         81        328
 Corporate and Other       (38)       (57)       (61)       (57)      (213)
                       -------    -------    -------    -------    -------
 Total Company         $   697    $ 1,018    $ 1,169    $ 1,048    $ 3,932
                       =======    =======    =======    =======    =======
EBITDA (b)
 Real Estate Franchise
  Services             $    44    $    85    $   107    $    87    $   323
 Company Owned Real
  Estate Brokerage
  Services                 (84)        24         48         18          6
 Relocation Services         -         72         34         16        122
 Title and Settlement
  Services                  (5)        12         10          3         20
 Corporate and Other       (17)        (8)        54        (35)        (6)
                       -------    -------    -------    -------    -------
 Total Company         $   (62)   $   185    $   253    $    89    $   465
                       -------    -------    -------    -------    -------

 Depreciation and
 amortization              51         48         48         47        194
 Interest expense, net     144        147        139        153        583
 Income tax expense
  (benefit)                  2          5          8        (65)       (50)
                       -------    -------    -------    -------    -------
 Net loss attributable
  to Realogy           $  (259)   $   (15)   $    58    $   (46)   $  (262)
                       =======    =======    =======    =======    =======

(a)  Transactions between segments are eliminated in consolidation.
     Revenues for the Real Estate Franchise Services segment include
     intercompany royalties and marketing fees paid by the Company Owned
     Real Estate Brokerage Services segment of $38 million, $57 million,
     $61 million and $57 million for the three months ended March 31, 2009,
     June 30, 2009, September 30, 2009 and December 31, 2009, respectively.
     Such amounts are eliminated through the Corporate and Other line.
     Revenues for the Relocation Services segment include $6 million, $9
     million, $11 million and $8 million of intercompany referral and
     relocation fees paid by the Company Owned Real Estate Brokerage
     Services segment during the three months ended March 31, 2009, June
     30, 2009, September 30, 2009 and December 31, 2009, respectively.
     Such amounts are recorded as contra-revenues by the Company Owned Real
     Estate Brokerage Services segment.  Revenues for the Real Estate
     Franchise Services segment include intercompany royalties and
     marketing fees paid by the Company Owned Real Estate Brokerage
     Services segment of $213 million for the year ended December 31, 2009.
     Revenues for the Relocation Services segment include intercompany
     referral and relocation fees paid by the Company Owned Real Estate
     Brokerage Services segment of $34 million for the year ended December
     31, 2009.  There are no other material inter-segment transactions.
(b)  Includes $34 million and $4 million of restructuring costs and former
     parent legacy items, respectively, for the three months ended March
     31, 2009, $10 million of restructuring costs offset by a benefit of
     $46 million of former parent legacy items (comprised of a benefit of
     $55 million recorded at Cartus related to Wright Express Corporation
     partially offset by $9 million of expenses recorded at Corporate)
     for the three months ended June 30, 2009, $15 million and $5 million
     of restructuring costs and former legacy items along with a $75
     million gain on extinguishment of debt for the three months ended
     September 30, 2009 and $11 million, $3 million and $1 million of
     restructuring costs, former legacy items and merger cost, respectively
     for the three months ended December 31, 2009. EBITDA for the year
     ended December 31, 2009 includes $70 million of restructuring costs
     and $1 million of merger costs offset by a benefit of $34 million of
     former parent legacy items (comprised of a benefit of $55 million
     recorded at Cartus related to Wright Express Corporation partially
     offset by $21 million of expenses recorded at Corporate) and a gain on
     the extinguishment of debt of $75 million.

                       For the    For the    For the    For the    For the
                        Three      Three      Three      Three       Year
                       Months     Months     Months      Months     Ended
                        ended      ended      ended      ended     December
                      March 31,   June 30,  September   December      31,
                        2009       2009      30, 2009   31, 2009     2009
                       -------    -------    -------    -------    -------
Real Estate Franchise
 Services              $     1    $     1    $     1    $     -          3
Company Owned Real
 Estate Brokerage
 Services                   25          5         13          4         47
Relocation Services          5        (52)         -          2        (45)
Title and Settlement
 Services                    1          1          -          1          3
Corporate and Other          6          9        (69)         8        (46)
                       -------    -------    -------    -------    -------
Total Company          $    38    $   (36)   $   (55)   $    15    $   (38)
                       =======    =======    =======    =======    =======

EBITDA by segment before restructuring and other items detailed above for
the three months ended March 31, 2009 was:  RFG $45 million, NRT ($59)
million, Cartus $5 million, TRG ($4) million and Corporate ($11) million.
EBITDA by segment before restructuring and other items detailed above for
the corresponding three months ended June 30, 2009 was as follows:  RFG
$86 million, NRT $29 million, Cartus $20 million, TRG $13 million, and
Corporate $1 million.  EBITDA by segment before restructuring and other
items detailed above for the corresponding three months ended September 30,
2009 was as follows:  RFG $108 million, NRT $61 million, Cartus $34
million, TRG $10 million, and Corporate ($15) million. EBITDA by segment
before restructuring and other items detailed above for the corresponding
three months ended December 31, 2009 was as follows:  RFG $87 million, NRT
$22 million, Cartus $18 million, TRG $4 million, and Corporate ($27)
million. EBITDA by segment before restructuring and other items detailed
above for the corresponding year ended December 31, 2009 was as follows:
RFG $326 million, NRT $53 million, Cartus $77 million, TRG $23 million,
and Corporate ($52) million.

Table 6

                                REALOGY CORPORATION
                            EBITDA AND ADJUSTED EBITDA
                                   (In millions)

A reconciliation of net loss attributable to Realogy to EBITDA and Adjusted
EBITDA for the twelve months ended March 31, 2010 is set forth in the
following table:

                              Less     Equals       Plus      Equals
                           ---------  ---------  ---------  ---------
                             Three       Nine      Three      Twelve
                   Year      Months    Months     Months      Months
                  Ended      Ended      Ended      Ended       Ended
                 December    March    December     March       March
                    31,        31,       31,         31,        31,
                   2009       2009      2009        2010       2010
                 --------  ---------  ---------  ---------  ---------
Net loss
 attributable
 to Realogy      $   (262) $    (259) $      (3) $    (197) $    (200)(a)
Income tax
 expense
 (benefit)            (50)         2        (52)         6        (46)
                 --------  ---------  ---------  ---------  ---------
Loss before
 income taxes        (312)      (257)       (55)      (191)      (246)
Interest expense,
 net                  583        144        439        152        591
Depreciation and
 amortization         194         51        143         50        193
                 --------  ---------  ---------  ---------  ---------
EBITDA                465        (62)       527         11        538 (b)
Covenant
 calculation
 adjustments:
   Restructuring
    costs, merger
    costs and former
    parent legacy
    cost (benefit)
    items, net (c)                                                 10
   Pro forma
    cost-savings for
    2010
    restructuring
    initiatives (d)                                                 7
   Pro forma
    cost-savings
    for 2009
    restructuring
    initiatives (e)                                                14
   Pro forma effect
    of business
    optimization
    initiatives (f)                                                40
   Non-cash
    charges (g)                                                    21
   Non-recurring
    fair value
    adjustments for
    purchase
    accounting (h)                                                  5
   Pro forma effect
    of acquisitions
    and new
    franchisees (i)                                                12
   Apollo management
    fees (j)                                                       15
   Proceeds from WEX
    contingent
    asset (k)                                                      55
   Incremental
    securitization
    interest costs (l)                                              2
   Expenses incurred
    in debt
    modification
    activities (m)                                                  4
   Gain on
    extinguishment
    of debt                                                       (75)
                                                            ---------
Adjusted EBITDA                                             $     648
                                                            ---------
Total senior
 secured net
 debt (n)                                                   $   2,922
Senior secured
 leverage ratio                                                 4.51x

(a)  Net loss attributable to Realogy consists of: (i) a loss of $15
     million for the second quarter of 2009; (ii) income of $58 million
     for the third quarter of 2009; (iii) a loss of $46 million for the
     fourth quarter of 2009 and (iv) a loss of $197 million for the first
     quarter of 2010.
(b)  EBITDA consists of: (i) $185 million for the second quarter of 2009;
     (ii) $253 million for the third quarter of 2009; (iii) $89 million
     for the fourth quarter of 2009 and (iv) $11 million for the first 
     quarter of 2010.
(c)  Consists of $42 million of restructuring costs and $1 million of
     merger costs offset by a net benefit of $33 million for former parent
     legacy items.
(d)  Represents actual costs incurred that are not expected to recur in
     subsequent periods due to restructuring activities initiated during
     the first three months of 2010. From this restructuring, we expect to
     reduce our operating costs by approximately $8 million on a
     twelve-month run-rate basis and estimate that $1 million of such
     savings were realized from the time they were put in place. The
     adjustment shown represents the impact the savings would have had on
     the period from April 1, 2009 through the time they were put in place
     had those actions been effected on April 1, 2009.
(e)  Represents actual costs incurred that are not expected to recur in
     subsequent periods due to restructuring activities initiated during
     the year ended December 31, 2009. From this restructuring, we expect
     to reduce our operating costs by approximately $42 million on a
     twelve-month run-rate basis and estimate that $28 million of such
     savings were realized from the time they were put in place. The
     adjustment shown represents the impact the savings would have had on
     the period from April 1, 2009 through the time they were put in place
     had those actions been effected on April 1, 2009.
(f)  Represents the twelve-month pro forma effect of business optimization
     initiatives that have been completed to reduce costs of $15 million as
     well as $25 million for employee retention accruals.
(g)  Represents the elimination of non-cash expenses, including a $14
     million write-down of a cost method investment acquired in 2006, $2
     million for the change in the allowance for doubtful accounts and
     notes reserves from April 1, 2009 through March 31, 2010, $7 million
     of stock-based compensation expense, less $2 million related to the
     unrealized net gains on foreign currency transactions and foreign
     currency forward contracts.
(h)  Reflects the adjustment for the negative impact of fair value
     adjustments for purchase accounting at the operating business segments
     primarily related to deferred rent.
(i)  Represents the estimated impact of acquisitions and new franchisees as
     if they had been acquired or signed on April 1, 2009. We have made a
     number of assumptions in calculating such estimate and there can be no
     assurance that we would have generated the projected levels of EBITDA
     had we owned the acquired entities or entered into the franchise
     contracts as of April 1, 2009.
(j)  Represents the elimination of annual management fees payable to Apollo
     for the twelve months ended March 31, 2010.
(k)  Wright Express Corporation ("WEX") was divested by Cendant in February
     2005 through an initial public offering ("IPO"). As a result of such
     IPO, the tax basis of WEX's tangible and intangible assets increased
     to their fair market value which may reduce federal income tax that
     WEX might otherwise be obligated to pay in future periods. Under
     Article III of the Tax Receivable Agreement dated February 22, 2005
     among WEX, Cendant and Cartus (the "TRA"), WEX was required to pay
     Cendant 85% of any tax savings related to the increase in fair value
     utilized for a period of time that we expect will be beyond the
     maturity of the notes. Cendant is required to pay 62.5% of these
     tax-savings payments received from WEX to us.   The Company received
     $6 million of recurring tax receivable payments from WEX during the
     last twelve months. On June 26, 2009, we entered into a Tax Receivable
     Prepayment Agreement with WEX, pursuant to which WEX simultaneously
     paid us the sum of $51 million, less expenses of approximately $2
     million, as prepayment in full of its remaining contingent obligations
     to Realogy under Article III of the TRA.
(l)  Incremental borrowing costs incurred as a result of the securitization
     facilities refinancing for the twelve months ended March 31, 2010.
(m)  Represents the expenses incurred in connection with the Company's
     unsuccessful debt modification activities in the third quarter of
     2009.
(n)  Represents total borrowings under the senior secured credit facility
     which are secured by a first priority lien on our assets of $3,083
     million plus $14 million of capital lease obligations less $175
     million of readily available cash as of March 31, 2010.  Pursuant to
     the terms of the senior secured credit agreement, senior secured net
     debt does not include Second Lien Loans, other bank indebtedness not
     secured by a first lien on our assets, securitization obligations or
     Unsecured Notes.

Table 7

Reconciliation of net loss attributable to Realogy to EBITDA before restructuring and other items (In millions)

A reconciliation of net loss attributable to Realogy to EBITDA and EBITDA before restructuring and other items for the first quarter ended March 31, 2010 and 2009 is set forth in the following table:

                                                   Three Months Ended
                                                        March 31,
                                               --------------------------
                                                  2010            2009
                                               -----------    -----------
Net loss attributable to Realogy               $      (197)   $      (259)
Income tax expense                                       6              2
                                               -----------    -----------
Loss before income taxes                              (191)          (257)
Interest expense, net                                  152            144
Depreciation and amortization                           50             51
                                               -----------    -----------
EBITDA                                         $        11    $       (62)
                                               -----------    -----------
Legacy costs (benefits), net                             5              4
Restructuring and merger costs                           6             34
                                               -----------    -----------
Total restructuring and other items                     11             38
                                               -----------    -----------
EBITDA before restructuring and other items    $        22    $       (24)
                                               ===========    ===========

Table 8

Definitions

EBITDA is defined by the Company as net income (loss) before depreciation and amortization, interest (income) expense, net (other than relocation services interest for securitization assets and securitization obligations) and income taxes. EBITDA before restructuring and other items is calculated by adjusting EBITDA by restructuring, legacy, and other items as described in Table 5 above. Adjusted EBITDA is calculated by adjusting EBITDA by the items described in Table 6 above. Adjusted EBITDA corresponds to the definition of "EBITDA," calculated on a "pro forma basis," used in the senior secured credit facility to calculate the senior secured leverage ratio and substantially corresponds to the definition of "EBITDA" used in the indentures governing the Unsecured Notes to test the permissibility of certain types of transactions, including debt incurrence. We present EBITDA and EBITDA before restructuring and other items because we believe EBITDA and EBITDA before restructuring and other items are useful supplemental measures in evaluating the performance of our operating businesses and provide greater transparency into our results of operations. The EBITDA and EBITDA before restructuring and other items measures are used by our management, including our chief operating decision maker, to perform such evaluation, and Adjusted EBITDA is used in measuring compliance with debt covenants relating to certain of our borrowing arrangements. EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP.

We believe EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance. We further believe that EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an EBITDA measure when reporting their results.

EBITDA and EBITDA before restructuring and other items have limitations as an analytical tool, and you should not consider EBITDA either in isolation or as a substitute for analyzing our results as reported under GAAP. Some of these limitations are:

--  EBITDA does not reflect changes in, or cash requirement for, our
    working capital needs;
--  EBITDA does not reflect our interest expense (except for interest
    related to our securitization obligations), or the cash requirements
    necessary to service interest or principal payments, on our debt;
--  EBITDA does not reflect our income tax expense or the cash requirements
    to pay our taxes;
--  EBITDA does not reflect historical cash expenditures or future
    requirements for capital expenditures or contractual commitments;
--  although depreciation and amortization are non-cash charges, the assets
    being depreciated and amortized will often have to be replaced in the
    future, and these EBITDA measures do not reflect any cash requirements
    for such replacements; and
--  other companies in our industry may calculate these EBITDA measures
    differently so they may not be comparable.

In addition to the limitations described above with respect to EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA includes pro forma cost-savings and the pro forma full year effect of NRT acquisitions and RFG acquisitions/new franchisees. These adjustments may not reflect the actual cost-savings or pro forma effect recognized in future periods.

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