SOURCE: Realogy Corporation

Realogy Corporation

February 16, 2010 08:06 ET

Realogy Reports Results for Full Year 2009

Real Estate Leader Posts Net Revenue of $3.9 Billion, Net Loss of $262 Million and EBITDA of $465 Million

PARSIPPANY, NJ--(Marketwire - February 16, 2010) - Realogy Corporation, a global leader in real estate and relocation services, today reported results for the year ended December 31, 2009. Realogy had 2009 net revenue of $3.9 billion, a net loss attributable to the Company of $262 million, and earnings before interest, taxes, depreciation and amortization (EBITDA) of $465 million. As of December 31, 2009, Realogy had $219 million of readily available cash and no outstanding balance on its revolving credit facility.

Realogy's revenue for the fourth quarter of 2009 increased 11% compared to 2008. EBITDA for the period was $89 million, or $104 million before restructuring and other items. This was an increase of $70 million year over year, and primarily a result of executed cost efficiencies.

On a full-year basis, Realogy's revenue decreased by $793 million in 2009 compared to 2008 principally due to lower average sale prices of homes brokered by our franchisees and our company-owned operations. Despite the 17% revenue decline, 2009 EBITDA of $427 million before restructuring and other items increased $16 million compared to 2008. Realogy's reported EBITDA of $465 million for the full year was positively affected by a $75 million gain on debt extinguishment and $49 million from the prepayment of a receivable from Wright Express, partially offset by $86 million of restructuring and other legacy charges. (Please see Table 6 for a reconciliation of net income (loss) attributable to Realogy to EBITDA before restructuring and other items and Table 7 for the definition of non-GAAP financial measures.)

"The macroeconomic challenges of the past two years have been unprecedented, and our business model has proven its resiliency throughout," said Realogy President and CEO Richard A. Smith. "EBITDA before restructuring and other items has remained essentially flat during 2008 and 2009 despite substantial revenue declines we have experienced since 2007. The resulting increased efficiency of our operations has positioned us to outperform when the recovery occurs. While we continue to monitor costs, Realogy is sharply focused on growth in each of our businesses, both organically and via strategic acquisitions. This growth strategy is evidenced by our recent announcement regarding Cartus' acquisition of Primacy, a prominent provider of relocation services."

In the fourth quarter, Realogy's core business drivers showed significant improvement, particularly home sale unit transactions, which increased 18% year-over-year at the Realogy Franchise Group (RFG) and 20% at NRT, the Company's owned brokerage unit. These improvements were due to a combination of relatively weak fourth quarter 2008 activity and an influx of transaction volume in 2009, spurred by the original November 30 expiration of government tax credits for first-time buyers. The average home sale price declined in the fourth quarter by 5% at RFG and 3% at NRT. The fourth quarter 2009 average home sale price stabilized compared to more significant declines reported in the first three quarters due to fewer REO sales and increased home sales in the high end markets we serve.

On a full-year basis, RFG and NRT transaction sides decreased 1 percent and remained flat, respectively. RFG's average home sale price decreased 11 percent during the full year 2009 while NRT's average home sale price declined 18 percent. Average home sale price declines in 2009, particularly at NRT, were driven early in the year by a shift in mix of transactions away from higher priced homes and a greater level of distressed home sales.

Covenant Compliance

As of December 31, 2009, the Company's senior secured leverage ratio was 4.66 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 $2.89 billion at December 31, 2009 and dividing it by the Company's Adjusted EBITDA of $619 million for the 12 months ended December 31, 2009. (Please see Table 6 for a reconciliation of net loss attributable to Realogy to Adjusted EBITDA and Table 7 for the definition of non-GAAP financial measures.)

Balance Sheet Information as of December 31, 2009

As of December 31, 2009, Realogy had no balance on its revolving credit facility. The Company also had $219 million of readily available cash, which is included in cash and cash equivalents of $255 million.

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

Investor Webcast

Realogy will hold a Webcast to review its full year 2009 results at 10:00 a.m. (EST) 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 Realogy.com Web site. A replay of the Webcast will be available at www.realogy.com from February 17 through March 3.

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 14,500 offices and 262,000 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, 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
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                              (In millions)

                                                 Year Ended    Year Ended
                                                December 31,  December 31,
                                                    2009          2008
                                                -----------   -----------
Revenues
  Gross commission income                       $     2,886   $     3,483
  Service revenue                                       621           737
  Franchise fees                                        273           323
  Other                                                 152           182
                                                -----------   -----------
Net revenues                                          3,932         4,725
                                                -----------   -----------

Expenses
  Commission and other agent-related costs            1,850         2,275
  Operating                                           1,263         1,607
  Marketing                                             161           207
  General and administrative                            250           236
  Former parent legacy costs (benefit), net             (34)          (20)
    Restructuring costs                                  70            58
  Merger costs                                            1             2
  Impairment of intangible assets, goodwill
   and investments in unconsolidated entities             -         1,789
  Depreciation and amortization                         194           219
  Interest expense/(income), net                        583           624
  Gain on extinguishment of debt                        (75)            -
  Other (income)/expense, net                             3            (9)
                                                -----------   -----------
Total expenses                                        4,266         6,988
                                                -----------   -----------

Loss before income taxes, equity in earnings
 and noncontrolling interests                          (334)       (2,263)
Income tax benefit                                      (50)         (380)
Equity in (earnings) losses of unconsolidated
 entities                                               (24)           28
                                                -----------   -----------
Net loss                                               (260)       (1,911)
  Less: Net income attributable to
   noncontrolling interests                              (2)           (1)
                                                -----------   -----------

Net loss attributable to Realogy                $      (262)  $    (1,912)
                                                ===========   ===========




Table 2
                           REALOGY CORPORATION
                       CONSOLIDATED BALANCE SHEETS
                              (In millions)

                                                December 31,  December 31,
                                                    2009          2008
                                                -----------   -----------
ASSETS
Current assets:
  Cash and cash equivalents                     $       255   $       437
  Trade receivables (net of allowance for
   doubtful accounts of $66 and $46)                    102           140
  Relocation receivables                                334           765
  Relocation properties held for sale                     -            22
  Deferred income taxes                                  85            92
  Due from former parent                                  3             3
  Other current assets                                   95           112
                                                -----------   -----------
    Total current assets                                874         1,571

Property and equipment, net                             211           276
Goodwill                                              2,577         2,572
Trademarks                                              732           732
Franchise agreements, net                             2,976         3,043
Other intangibles, net                                  453           480
Other non-current assets                                218           238
                                                -----------   -----------
Total assets                                    $     8,041   $     8,912
                                                ===========   ===========

LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
  Accounts payable                              $        96   $       133
  Securitization obligations                            305           703
  Due to former parent                                  505           554
  Revolving credit facility and current portion
   of long-term debt                                     32           547
  Accrued expenses and other current liabilities        502           513
                                                -----------   -----------
    Total current liabilities                         1,440         2,450

Long-term debt                                        6,674         6,213
Deferred income taxes                                   760           826
Other non-current liabilities                           148           163
                                                -----------   -----------
Total liabilities                                     9,022         9,652
                                                -----------   -----------

Commitments and Contingencies

Equity (deficit):
  Common stock                                            -             -
  Additional paid-in capital                          2,020         2,013
  Accumulated deficit                                (2,971)       (2,709)
  Accumulated other comprehensive loss                  (32)          (46)
                                                -----------   -----------
    Total Realogy stockholder's deficit                (983)         (742)
                                                -----------   -----------
  Noncontrolling interests                                2             2
                                                -----------   -----------
Total equity (deficit)                                 (981)         (740)
                                                -----------   -----------
Total liabilities and equity (deficit)          $     8,041   $     8,912
                                                ===========   ===========



Table 3
                           REALOGY CORPORATION
                               KEY DRIVERS

                       Year Ended December 31,    Year Ended December 31,
                      -------------------------  -------------------------
                                           %                          %
                         2009     2008   Change     2008     2007   Change
                      -------- --------  ------  -------- --------- ------
Real Estate Franchise
 Services (a)
Closed homesale sides  983,516  995,622     (1%)  995,622 1,221,206   (18%)
Average homesale
 price                $190,406 $214,271    (11%) $214,271 $ 230,346    (7%)
Average homesale
 broker commission
 rate                     2.55%    2.52%  3 bps      2.52%     2.49% 3 bps
Net effective royalty
 rate                     5.10%    5.12% (2 bps)     5.12%     5.03% 9 bps
Royalty per side      $    257 $    287    (10%) $    287 $     298    (4%)

Company Owned Real
 Estate Brokerage
 Services
Closed homesale sides  273,817  275,090     --%   275,090   325,719   (16%)
Average homesale
 price                $390,688 $479,301    (18%) $479,301 $ 534,056   (10%)
Average homesale
 broker commission
 rate                     2.51%    2.48%  3 bps      2.48%     2.47% 1 bps
Gross commission
 income per side      $ 10,519 $ 12,612    (17%) $ 12,612 $  13,806    (9%)

Relocation Services
Initiations            116,491  136,089    (14%)  136,089   132,343     3%
Referrals               64,995   71,743     (9%)   71,743    78,828    (9%)

Title and Settlement
 Services
Purchase title and
 closing units         104,689  110,462     (5%)  110,462   138,824   (20%)
Refinance title and
 closing units          69,522   35,893     94%    35,893    37,204    (4%)
Average price per
 closing unit         $  1,320 $  1,500    (12%) $  1,500 $   1,471     2%


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



Table 4a
                                REALOGY CORPORATION
                           SELECTED 2009 FINANCIAL DATA
                                  (In millions)


                      For The    For The    For The    For The
                       Three      Three      Three      Three     For The
                       Months     Months     Months     Months     Year
                       Ended      Ended      Ended      Ended      Ended
                     March 31,  June 30,   September  December   December
                       2009       2009     30, 2009   31, 2009   31, 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)
                     ---------  ---------  ---------  ---------  ---------

                     $     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 (c)            (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                $     (62) $     185  $     253  $      89  $     465
                     ---------  ---------  ---------  ---------  ---------
  Depreciation and
   Amortization             51         48         48         47        194
  Interest, Net            144        147        139        153        583
  Income Tax 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
                Three       Three        Three      Three
                Months      Months       Months     Months       For The
                Ended       Ended        Ended      Ended      Year Ended
              March 31,    June 30,     Sept 30,  December 31, December 31,
                 2009        2009        2009        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         $       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 4b
                                REALOGY CORPORATION
                           SELECTED 2008 FINANCIAL DATA
                                  (In millions)


                      For The    For The    For The    For The
                       Three      Three      Three      Three     For The
                       Months     Months     Months     Months     Year
                       Ended      Ended      Ended      Ended      Ended
                     March 31,  June 30,   September  December   December
                       2008       2008     30, 2008   31, 2008   31, 2008
                     ---------  ---------  ---------  ---------  ---------
Revenue (a)
  Real Estate
   Franchise
   Services          $     152  $     185  $     172  $     133  $     642
  Company Owned
   Real Estate
   Brokerage
   Services                767      1,061      1,026        707      3,561
  Relocation
   Services                108        124        129         90        451
  Title and
   Settlement
   Services                 81         94         84         63        322
  Corporate and
   Other                   (57)       (75)       (70)       (49)      (251)
                     ---------  ---------  ---------  ---------  ---------

                     $   1,051  $   1,389  $   1,341  $     944  $   4,725
                     =========  =========  =========  =========  =========
EBITDA (b)
  Real Estate
   Franchise
   Services          $      80  $     109  $      98  $    (884) $    (597)
  Company Owned
   Real Estate
   Brokerage
   Services (c)            (60)        26         (9)      (226)      (269)
  Relocation
   Services                  -         23         39       (319)      (257)
  Title and
   Settlement
   Services                 (2)         5          9       (315)      (303)
  Corporate and
   Other                   (14)        (2)        (8)         1        (23)
                     ---------  ---------  ---------  ---------  ---------

Total                $       4  $     161  $     129  $  (1,743) $  (1,449)
                     ---------  ---------  ---------  ---------  ---------
  Depreciation and
   Amortization             56         55         54         54        219
  Interest, Net            164        152        152        156        624
  Income Tax Benefit       (84)       (19)       (27)      (250)      (380)
                     ---------  ---------  ---------  ---------  ---------
  Net Loss
   attributable to
   Realogy           $    (132) $     (27) $     (50) $  (1,703) $  (1,912)
                     =========  =========  =========  =========  =========


(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 $57 million, $75 million,
     $70 million and $49 million for the three months ended March 31, 2008,
     June 30, 2008, September 30, 2008 and December 31, 2008, respectively.
     Such amounts are eliminated through the Corporate and Other line.
     Revenues for the Relocation Services segment include $7 million, $12
     million, $14 million and $9 million of intercompany referral and
     relocation fees paid by the Company Owned Real Estate Brokerage
     Services segment during the three months ended March 31, 2008,
     June 30, 2008, September 30, 2008 and December 31, 2008 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 $251 million for the year ended December 31, 2008.
     Revenues for the Relocation Services segment include intercompany
     referral and relocation fees paid by the Company Owned Real Estate
     Brokerage Services segment of $42 million for the year ended December
     31, 2008. There are no other material inter-segment transactions.

(b)  Includes $9 million, and $7 million of restructuring and merger costs
     and former parent legacy items, respectively, for the three months
     ended March 31, 2008, $14 million of restructuring costs offset by a
     benefit of $7 million of former parent legacy items for the three
     months ended June 30, 2009, $14 million and $15 million of impairment
     charges and restructuring costs, respectively, along with an
     impairment charge for which Realogy recorded its portion of the charge
     in equity (earnings) losses of unconsolidated entities of $31 million
     for the three months ended September 30, 2009 and $1,775 million and
     $20 million of impairment and restructuring costs, respectively for
     the three months ended December 31, 2009 offset by a benefit of $18
     million of former parent legacy costs.  EBITDA for the year ended
     December 31, 2008 includes impairment charges of $1,789 million,
     $58 million of restructuring costs, the Company's portion of the
     charge in equity (earnings) losses of $31 million, and $2 million of
     merger costs offset by a benefit of $20 million of former parent
     legacy costs.


             For The     For The      For The       For The
              Three       Three        Three         Three
              Months      Months       Months        Months      For The
              Ended       Ended        Ended         Ended     Year Ended
            March 31,    June 30,   September 30, December 31, December 31,
               2008        2008         2008          2008         2008
            ----------  ----------  ------------  -----------  -----------
Real Estate
 Franchise
 Services   $        -  $        -  $          1  $       954  $       955
Company
 Owned Real
 Estate
 Brokerage
 Services            9          13            56          193          271
Relocation
 Services            -           -             2          337          339
Title and
 Settlement
 Services            -           1             1          309          311
Corporate
 and Other           7          (7)            -          (16)         (16)
            ----------  ----------  ------------  -----------  -----------
Total       $       16  $        7  $         60  $     1,777  $     1,860
            ==========  ==========  ============  ===========  ===========

EBITDA by segment before restructuring and other items detailed above for the three months ended March 31, 2008 was: RFG $80 million, NRT ($51) million, Cartus $0, TRG ($2) million and Corporate ($7) million. For the three months ended June 30, 2008 was: RFG $109 million, NRT $39 million, Cartus $23 million, TRG $6 million and Corporate ($9) million. For the three months ended September 30, 2008 was: RFG $99 million, NRT $47 million, Cartus $41 million, TRG $10 million and Corporate ($8) million. For the three months ended December 31, 2008 was: RFG $70 million, NRT ($33) million, Cartus $18 million, TRG ($6) million and Corporate ($15) million. EBITDA by segment before restructuring and other items detailed above for the corresponding year ended December 31, 2008 was as follows: RFG $358 million, NRT $2 million, Cartus $82 million, TRG $8 million and Corporate ($39) million.

Table 5
                           REALOGY CORPORATION
                       EBITDA AND ADJUSTED EBITDA

A reconciliation of net loss to EBITDA and Adjusted EBITDA for the
year ended December 31, 2009 is set forth in the following table:

                                                             For the Year
                                                                Ended
                                                             December 31,
                                                                 2009
                                                             ------------
Net loss attributable to Realogy                             $       (262)
Income tax expense (benefit)                                          (50)
                                                             ------------
Loss before income taxes                                             (312)
Interest expense (income), net                                        583
Depreciation and amortization                                         194
                                                             ------------
EBITDA                                                                465
Covenant calculation adjustments:
  Restructuring costs, merger costs and former parent
   legacy costs (benefit), net (a)                                     37
  Pro forma cost savings for 2009 restructuring initiatives (b)        33
  Pro forma effect of business optimization initiatives (c)            38
  Non-cash charges (d)                                                 34
  Non-recurring fair value adjustments for purchase
   accounting (e)                                                       5
  Pro forma effect of NRT acquisitions and RFG acquisitions and
   new franchisees (f)                                                  5
  Apollo management fees (g)                                           15
  Proceeds from WEX contingent asset (h)                               55
  Incremental securitization interest costs (i)                         3
  Expenses incurred in debt modification activities (j)                 4
  Gain on extinguishment of debt                                      (75)
                                                             ------------
Adjusted EBITDA                                              $        619
                                                             ------------
Total senior secured net debt (k)                            $      2,886
Senior secured leverage ratio                                        4.66x

(a) Consists of $70 million of restructuring costs and $1 million of merger costs offset by a benefit of $34 million of former parent legacy costs.

(b) Represents actual costs incurred that are not expected to recur in subsequent periods due to restructuring activities initiated during 2009. From this restructuring, we expect to reduce our operating costs by approximately $103 million on a twelve month run-rate basis and estimate that $70 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 January 1, 2009 through the time they were put in place, had those actions been effected on January 1, 2009.

(c) Represents the twelve-month pro forma effect of business optimization initiatives that have been completed to reduce costs, including $3 million for initiatives to improve the Company Owned Real Estate Brokerage profit margin, $2 million for initiatives to improve Relocation Services and Title and Settlement Services fees, $19 million due to the exclusion of the retention accrual and $14 million related to other initiatives.

(d) Represents the elimination of non-cash expenses, including a $14 million write-down of a cost method investment acquired in 2006, $12 million for the change in the allowance for doubtful accounts and the reserves for development advance notes and promissory notes from January 1, 2009 through December 31, 2009, $7 million of stock-based compensation expense, and $1 million related to the unrealized net losses on foreign currency transactions and foreign currency forward contracts.

(e) Reflects the adjustment for the negative impact of fair value adjustments for purchase accounting at the operating business segments primarily related to deferred rent for the twelve months ended December 31, 2009.

(f) Represents the estimated impact of acquisitions made by NRT and RFG acquisitions and new franchisees as if they had been acquired or signed on January 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 January 1, 2009.

(g) Represents the elimination of annual management fees payable to Apollo for the twelve months ended December 31, 2009.

(h) 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 Wright Express Corporation ("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.

(i) Incremental borrowing costs incurred as a result of the securitization facilities refinancing for the twelve months ended December 31, 2009.

(j) Represents the expenses incurred in connection with the Company's unsuccessful debt modification activities in the third quarter of 2009.

(k) Represents total borrowings under the senior secured credit facility, including the revolving credit facility, of $3,091 million plus $14 million of capital lease obligations less $219 million of readily available cash as of December 31, 2009.

Table 6

Reconciliation of net loss to EBITDA before restructuring and other items

A reconciliation of net loss to EBITDA and EBITDA adjusted for
restructuring and other items for the fourth quarter ended December 31,
2009 and 2008 is set forth in the following table:


                                                    Quarter      Quarter
                                                     Ended        Ended
                                                  December 31, December 31,
                                                      2009         2008
                                                  -----------  -----------
Net loss attributable to Realogy                  $       (46) $    (1,703)
Income tax benefit                                        (65)        (250)
                                                  -----------  -----------
Loss before income taxes                          $      (111) $    (1,953)
Interest expense (income), net                            153          156
Depreciation and amortization                              47           54
                                                  -----------  -----------
EBITDA                                            $        89  $    (1,743)

Legacy costs (benefit), net                                 3          (19)
Restructuring and merger costs                             12           21
Impairment of intangible assets, goodwill and
 investments in unconsolidated entities                     -        1,775
                                                  -----------  -----------
Total restructuring and other items                        15        1,777

                                                  -----------  -----------
EBITDA adjusted for restructuring and other items $       104  $        34
                                                  -----------  -----------


A reconciliation of net loss to EBITDA and EBITDA adjusted for
restructuring and other items for the years ended December 31, 2009 and
2008 is set forth in the following table:

                                                  Year Ended   Year Ended
                                                  December 31, December 31,
                                                      2009         2008
                                                  -----------  -----------
Net loss attributable to Realogy                  $      (262) $    (1,912)
Income tax benefit                                        (50)        (380)
                                                  -----------  -----------
Loss before income taxes                          $      (312) $    (2,292)
Interest expense (income), net                            583          624
Depreciation and amortization                             194          219
                                                  -----------  -----------
EBITDA                                            $       465  $    (1,449)

Legacy costs (benefit), net                               (34)         (20)
Restructuring and merger costs                             71           60
Gain on extinguisment of debt                             (75)           -
Impairment of intangible assets, goodwill and
 investments in unconsolidated entities                     -        1,789
PHH home loans impairment recorded in equity in
 (earnings) losses                                          -           31
                                                  -----------  -----------
Total restructuring and other items                       (38)       1,860

                                                  -----------  -----------
EBITDA adjusted for restructuring and other items $       427  $       411
                                                  ===========  ===========

Table 7

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 impairment, restructuring, legacy, and other items as described in Table 4 above. Adjusted EBITDA is calculated by adjusting EBITDA by the items described in Table 4 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 adjusted for 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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