SOURCE: Realogy Corporation

Realogy Corporation

March 04, 2011 06:00 ET

Realogy Reports Results for Full Year 2010

Real Estate Leader Posts Net Revenue of $4.1 Billion in 2010, Successfully Completed Debt Refinancing Transactions and Continues to Focus on Strategic Growth

PARSIPPANY, NJ--(Marketwire - March 4, 2011) - Realogy Corporation, a global leader in real estate and relocation services, today reported results for the full year ended December 31, 2010. Realogy's net revenue for the year was $4.1 billion, an increase of 4% compared to 2009. The growth is attributed to an increase in the average sales price of homes sold by our franchisees and owned real estate offices as well as the impact of the January 2010 acquisition of Primacy Relocation. Reported EBITDA for the year was $835 million. EBITDA before restructuring and other items for the year was $534 million, an increase of $107 million, or 25%, year-over-year. For the year, Realogy recorded a net loss attributable to the Company of $99 million.

"In spite of another difficult year in housing and the economy, management remained highly focused on our strategic growth initiatives," said Richard A. Smith, Realogy's chief executive officer. "The Realogy Franchise Group increased its domestic franchise sales by 56% in 2010 compared to 2009, adding new franchisees and sales associates with $332 million in franchisee gross commission income (GCI). NRT, our owned brokerage company, added $60 million of annualized GCI through the acquisition of nine companies encompassing 23 offices and more than 1,000 sales associates. Cartus strengthened its position as a global provider of relocation services through the acquisition of Primacy, as well as adding more than 140 new clients and expanding relationships with approximately 300 of its existing clients. Title Resource Group continued to develop both its lender channel and title underwriting business, further diversifying its revenue base."

Looking at Realogy's core business drivers, both RFG and NRT outperformed the national market in terms of average sales price. Due to our mix of business, the average home sale price increased at both RFG and NRT in 2010 by 4% and 11% year-over-year, respectively, compared to the 1% increase in average home price reported by the National Association of Realtors (NAR). The number of home sale sides decreased 6% year-over-year at the Realogy Franchise Group (RFG) and decreased 7% at NRT, the company-owned brokerage unit. These results were consistent with the 5% decrease in existing domestic home sale units reported by NAR. Cartus experienced a 29% increase in relocation initiations primarily due to increased volume from corporate clients principally from the Primacy Relocation acquisition. Title Resource Group had a 5% increase in the average price per closing unit, which was offset by an 11% decrease in refinance title and closing units and a 10% decrease in its purchase title and closing units.

Industry forecasts from NAR and Fannie Mae continue to anticipate a weak first half of 2011 compared to 2010 for existing home sales. This is mainly because the first half of 2010 had an atypical sales pattern due to the existence of the federal homebuyer tax credit that pulled forward sales from the third quarter of 2010. For the same reasons, industry forecasts project double-digit gains in the second half of 2011 in terms of year-over-year comparisons in home sales, which could offset the anticipated weak first half.

Balance Sheet Information and Covenant Compliance as of December 31, 2010

In February 2011, the Company successfully completed a series of refinancing transactions designed to improve Realogy's capital structure and debt maturity profile. The highlights of the transactions include:

--  We extended the maturities by at least three years on the majority of
    our secured and unsecured debt. Consequently, the due dates for most
    of our debt have been extended to 2016 or later.
--  After completing an amendment to our senior secured credit agreement,
    we raised $700 million in a senior secured bond offering. The senior
    secured bonds mature in 2019, and we used the proceeds from the
    offering to prepay a like amount of our term loans under the credit
    agreement.
--  The new senior secured bonds are not included in the calculation of
    senior secured net debt for compliance with our senior secured leverage
    ratio maintenance covenant under our senior secured credit facility.
    Accordingly, the prepayment of $700 million dollars of term loans
    enabled us to increase our operating cushion under the leverage ratio.
--  Lastly, we completed a debt exchange of $2.1 billion principal amount
    of unsecured notes for an equivalent amount of convertible notes that
    are convertible into equity of our parent company. As a result, these
    convertible notes represent a potential future reduction of a
    substantial portion of our outstanding debt if and when such
    convertible notes are converted.

"These transactions have resulted in improved financial flexibility for our Company in the future," said Anthony Hull, Realogy's chief financial officer. "We believe our success in completing these transactions at a modest increase in our interest expense reflects both investor confidence in Realogy's future and the strength of our business model."

The Company ended 2010 with $166 million of readily available cash and no outstanding balance on its revolving credit facility under its senior secured credit agreement. There was $60 million outstanding as of March 1, 2011 due to normal seasonal activity. The Company expects these borrowings to be substantially repaid prior to the end of the first quarter.

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

As of December 31, 2010, the Company's senior secured leverage ratio (SSLR) was 4.59 to 1, which is below the 5.0 to 1 maximum ratio required to be in compliance with its senior secured credit agreement. The SSLR is determined by dividing Realogy's senior secured net debt of $2.9 billion at December 31, 2010 by the Company's Adjusted EBITDA of $633 million for the 12 months ended December 31, 2010. After giving effect to the refinancing transactions completed in February 2011, the SSLR would have been 3.51 to 1 as of December 31, 2010. (Please see Table 8 for the definition of non-GAAP financial measures, Adjusted EBITDA and EBITDA before restructuring and other items and Tables 6 and 7 for a reconciliation of these non-GAAP measures to their most comparable GAAP financial measure, net loss attributable to Realogy).

Investor Webcast

Realogy will hold a Webcast to review its full year 2010 results at 10:00 a.m. (EST) March 4th. 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 March 4 through March 18.

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 14,700 offices and 264,000 sales associates doing business in 100 countries and territories around the world. Headquartered in Parsippany, N.J., Realogy is owned by affiliates of Apollo Management, L.P., a subsidiary of Apollo Global Management, LLC, a leading global alternative asset manager.

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; 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; government regulation as well as legislative, tax or regulatory changes that would adversely impact the residential real estate market, including but not limited to potential reform of the financing of the U.S. housing and mortgage markets; 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 the 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, 2010 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 December 31,
                                              ----------------------------
                                                2010      2009      2008
                                              --------  --------  --------
Revenues
  Gross commission income                     $  2,965  $  2,886  $  3,483
  Service revenue                                  700       621       737
  Franchise fees                                   263       273       323
  Other                                            162       152       182
                                              --------  --------  --------
Net revenues                                     4,090     3,932     4,725
                                              --------  --------  --------

Expenses
  Commission and other agent-related costs       1,932     1,850     2,275
  Operating                                      1,241     1,263     1,607
  Marketing                                        179       161       207
  General and administrative                       238       250       236
  Former parent legacy costs (benefit), net       (323)      (34)      (20)
  Restructuring costs                               21        70        58
  Merger costs                                       1         1         2
  Impairment of intangible assets, goodwill
   and investments in unconsolidated entities        -         -     1,789
  Depreciation and amortization                    197       194       219
  Interest expense/(income), net                   604       583       624
  Gain on extinguishment of debt                     -       (75)        -
  Other (income)/expense, net                       (6)        3        (9)
                                              --------  --------  --------
Total expenses                                   4,084     4,266     6,988
                                              --------  --------  --------
Income (loss) before income taxes, equity
 in earnings and noncontrolling interests            6      (334)   (2,263)
Income tax expense (benefit)                       133       (50)     (380)
Equity in (earnings) losses of
 unconsolidated entities                           (30)      (24)       28
                                              --------  --------  --------
Net loss                                           (97)     (260)   (1,911)
  Less: Net income attributable to
   noncontrolling interests                         (2)       (2)       (1)
                                              --------  --------  --------
Net loss attributable to Realogy              $    (99) $   (262) $ (1,912)
                                              ========  ========  ========

Table 2

                          REALOGY CORPORATION
                      CONSOLIDATED BALANCE SHEETS
                             (In millions)

                                                          December 31,
                                                       ------------------
                                                         2010      2009
                                                       --------  --------
ASSETS
Current assets:
  Cash and cash equivalents                            $    192  $    255
  Trade receivables (net of allowance for
   doubtful accounts of $67 and $66)                        114       102
  Relocation receivables                                    386       334
  Relocation properties held for sale                        21         -
  Deferred income taxes                                      76        85
  Other current assets                                      109        98
                                                       --------  --------
    Total current assets                                    898       874

Property and equipment, net                                 186       211
Goodwill                                                  2,611     2,577
Trademarks                                                  732       732
Franchise agreements, net                                 2,909     2,976
Other intangibles, net                                      478       453
Other non-current assets                                    215       218
                                                       --------  --------

Total assets                                           $  8,029  $  8,041
                                                       ========  ========

LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
  Accounts payable                                     $    203  $     96
  Securitization obligations                                331       305
  Due to former parent                                      104       505
  Revolving credit facility and current portion
   of long-term debt                                        194        32
  Accrued expenses and other current liabilities            525       502
                                                       --------  --------
    Total current liabilities                             1,357     1,440

Long-term debt                                            6,698     6,674
Deferred income taxes                                       883       760
Other non-current liabilities                               163       148
                                                       --------  --------

Total liabilities                                         9,101     9,022
                                                       --------  --------

Commitments and contingencies

Equity (deficit):
  Common stock                                                -         -
  Additional paid-in capital                              2,026     2,020
  Accumulated deficit                                    (3,070)   (2,971)
  Accumulated other comprehensive loss                      (30)      (32)
                                                       --------  --------
    Total Realogy stockholder's deficit                  (1,074)     (983)
                                                       --------  --------
  Noncontrolling interests                                    2         2
                                                       --------  --------
Total equity (deficit)                                   (1,072)     (981)
                                                       --------  --------
Total liabilities and equity (deficit)                 $  8,029  $  8,041
                                                       ========  ========

Table 3

                          REALOGY CORPORATION
                           2010 KEY DRIVERS

                                    Quarter Ended                Year Ended
                     ------------------------------------------  ---------
                       March      June     September  December    December
                         31,       30,        30,        31,        31,
                        2010      2010       2010       2010       2010
                     ---------  ---------  ---------  ---------  ---------

Real Estate Franchise
 Services (a)
Closed homesale sides  193,340    288,479    229,241    211,281    922,341
Average homesale
 price               $ 188,478  $ 197,637  $ 202,272  $ 202,906  $ 198,076
Average homesale
 broker commission
 rate                     2.55%      2.54%      2.53%      2.53%      2.54%
Net effective
 royalty rate             5.04%      5.04%      4.95%      4.97%      5.00%
Royalty per side     $     252  $     261  $     267  $     267  $     262

Company Owned Real
 Estate Brokerage
 Services
Closed homesale sides   52,532     83,583     61,092     58,080    255,287
Average homesale
 price               $ 417,782  $ 424,442  $ 457,782  $ 444,000  $ 435,500
Average homesale
 broker commission
 rate                     2.48%      2.49%      2.47%      2.48%      2.48%
Gross commission
 income per side     $  11,161  $  11,247  $  12,209   $ 11,736  $  11,571

Relocation Services
Initiations (b)         32,429     46,189     36,743     32,943    148,304
Referrals (c)           12,109     21,770     19,625     16,101     69,605

Title and Settlement
 Services
Purchase title and
 closing units          19,947     30,133     22,963     21,247     94,290
Refinance title and
 closing units          11,935     10,378     17,546     22,366     62,225
Average price per
 closing unit        $   1,353  $   1,472  $   1,381  $   1,336  $   1,386

(a) Includes all franchisees except for our Company Owned Real Estate
    Brokerage Services segment.
(b) Includes initiations of 5,177, 7,612, 6,516 and 6,782 for the three
    months ended March 31, June 30, September 30, and December 31, 2010,
    respectively, related to the Primacy acquisition in 2010.
(c) Includes referrals of 716, 1,527, 1,513 and 1,241 for the three
    months ended March 31, June 30, September 30, and December 31, 2010,
    respectively, related to the Primacy acquisition in 2010.

Table 4

                          REALOGY CORPORATION
                           2009 KEY DRIVERS

                                    Quarter Ended                Year Ended
                     ------------------------------------------  ---------
                       March      June     September  December    December
                         31,       30,        30,        31,        31,
                        2009      2009       2009       2009       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     28,326     25,607    114,684
Referrals               10,719     17,349     20,320     16,607     64,995

Title and Settlement
 Services
Purchase title and
 closing units          18,811     28,148     30,653     27,077    104,689
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    For the    For the    For the
                       Three      Three      Three      Three     For the
                      Months     Months     Months     Months      Year
                       Ended      Ended      Ended      Ended      Ended
                       March      June     September   December   December
                        31,        30,        30,        31,        31,
                       2010       2010       2010       2010       2010
                     ---------  ---------  ---------  ---------  ---------
Revenue (a)
  Real Estate
   Franchise
   Services          $     122  $     173  $     138  $     127  $     560
  Company Owned Real
   Estate Brokerage
   Services                601        956        762        697      3,016
  Relocation
   Services                 76        106        122        101        405
  Title and
   Settlement
   Services                 65         86         84         90        325
  Corporate and
   Other                   (45)       (68)       (54)       (49)      (216)
                     ---------  ---------  ---------  ---------  ---------
  Total Company      $     819  $   1,253  $   1,052  $     966  $   4,090
                     =========  =========  =========  =========  =========

EBITDA (b)
  Real Estate
   Franchise
   Services          $      65  $     123  $      90  $      74  $     352
  Company Owned Real
   Estate Brokerage
   Services                (34)        84         31         (1)        80
  Relocation
   Services                  4         27         51         27        109
  Title and
   Settlement
   Services                 (5)        11          8         11         25
  Corporate and
   Other                   (19)       299         (3)        (8)       269
                     ---------  ---------  ---------  ---------  ---------
  Total Company      $      11  $     544  $     177  $     103  $     835
                     ---------  ---------  ---------  ---------  ---------

  Depreciation and
   amortization             50         49         49         49        197
  Interest
   expense, net            152        155        151        146        604
  Income tax expense
   (benefit)                 6        118         10         (1)       133
                     ---------  ---------  ---------  ---------  ---------
  Net income (loss)
   attributable to
   Realogy           $    (197) $     222  $     (33) $     (91) $     (99)
                     =========  =========  =========  =========  =========

(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, $68 million, $54 million and
    $49 million for the three months ended March 31, June 30, September 30,
    and December 31 2010, respectively. Such amounts are eliminated through
    the Corporate and Other line. Revenues for the Relocation Services
    segment include $7 million, $10 million, $12 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, June 30, September 30, and December 31 2010, 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 $216 million for the year ended December 31, 2010.  Revenues for the
    Relocation Services segment include intercompany referral and
    relocation fees paid by the Company Owned Real Estate Brokerage
    Services segment of $37 million for the year ended December 31, 2010.
    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, $4 million of restructuring costs offset by a net benefit of
    $314 million of former parent legacy items primarily as a result of tax
    and other liability adjustments for the three months ended June 30,
    2010, $2 million of restructuring costs offset by a net benefit of
    $6 million of former parent legacy items for the three months ended
    September 30, 2010 and $9 million of restructuring and $1 million of
    merger costs, offset by a net benefit of $8 million of former parent
    legacy items for the three months ended December 31, 2010. EBITDA for
    the year ended December 31, 2010 includes $21 million of restructuring
    costs and $1 million of merger costs, offset by a net benefit of
    $323 million of former parent legacy items primarily as a result of tax
    and other liability adjustments broken down by business units as
    follows:

                      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      June     September   December   December
                        31,        30,        30,        31,        31,
                       2010       2010       2010       2010       2010
                     ---------  ---------  ---------  ---------  ---------
  Real Estate
   Franchise
   Services          $       -  $       -  $       -  $       -          -
  Company Owned Real
   Estate Brokerage
   Services                  3          2          2          5         12
  Relocation
   Services                  2          1          -          -          3
  Title and
   Settlement
   Services                  1          -          -          2          3
  Corporate and
   Other                     5       (313)        (6)        (5)      (319)
                     ---------  ---------  ---------  ---------  ---------
  Total Company      $      11  $    (310) $      (4) $       2  $    (301)
                     =========  =========  =========  =========  =========

    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. EBITDA by segment before restructuring and other items
    detailed above for the three months ended June 30, 2010 was: RFG $123
    million, NRT $86 million, Cartus $28 million, TRG $11 million and
    Corporate ($14) million. EBITDA by segment before restructuring and
    other items detailed above for the three months ended September 30,
    2010 was: RFG $90 million, NRT $33 million, Cartus $51 million, TRG
    $8 million and Corporate ($9) million. EBITDA by segment before
    restructuring and other items detailed above for the three months ended
    December 31, 2010 was: RFG $74 million, NRT $4 million, Cartus $27
    million, TRG $13 million and Corporate ($13) million. EBITDA by segment
    before restructuring and other items detailed above for the
    corresponding year ended December 31, 2010 was as follows: RFG $352
    million, NRT $92 million, Cartus $112 million, TRG $28 million, and
    Corporate ($50) million.

Table 5b

                           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      June     September   December   December
                        31,        30,        30,        31,        31,
                       2009       2009       2009       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 income (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     For the
                      Months     Months     Months     Months      Year
                       Ended      Ended      Ended      Ended      Ended
                       March      June     September   December   December
                        31,        30,        30,        31,        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 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 year ended December 31, 2010 is set forth in the
following table:

                                                      For the Year Ended
                                                       December 31, 2010
                                                       -----------------
Net loss attributable to Realogy                       $             (99)
Income tax expense (benefit)                                         133
                                                       -----------------
Income before income taxes                                            34
Interest expense (income), net                                       604
Depreciation and amortization                                        197
                                                       -----------------
EBITDA                                                               835
Covenant calculation adjustments:
   Restructuring costs, merger costs and former parent
    legacy costs (benefit), net (a)                                 (301)
   Pro forma cost savings for 2010 restructuring
    initiatives (b)                                                   20
   Pro forma effect of business optimization
    initiatives (c)                                                   49
   Non-cash charges (d)                                               (4)
   Non-recurring fair value adjustments for purchase
    accounting (e)                                                     4
   Pro forma effect of acquisitions and new
    franchisees (f)                                                   13
   Apollo management fees (g)                                         15
   Incremental securitization interest costs (h)                       2
                                                       -----------------
Adjusted EBITDA                                        $             633
                                                       -----------------
Total senior secured net debt (i)                      $           2,905
Senior secured leverage ratio                                       4.59x

Pro forma total senior secured net debt (j)            $           2,219
Pro forma senior secured leverage ratio                             3.51x

(a) Consists of $21 million of restructuring costs and $1 million of merger
    costs offset by a benefit of $323 million of former parent legacy
    items.

(b) Represents actual costs incurred that are not expected to recur in
    subsequent periods due to restructuring activities initiated during
    2010. From this restructuring, we expect to reduce our operating costs
    by approximately $34 million on a twelve-month run-rate basis and
    estimate that $14 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, 2010 through the
    time they were put in place, had those actions been effected on
    January 1, 2010.

(c) Represents the twelve-month pro forma effect of business optimization
    initiatives that have been completed to reduce costs, including $12
    million related to our Relocation Services new business start-ups,
    integration costs and acquisition related non-cash adjustments, $6
    million related to vendor renegotiations, $23 million for employee
    retention accruals and $8 million of other initiatives. The employee
    retention accruals reflect the employee retention plans that have been
    implemented in lieu of our customary bonus plan, due to the ongoing and
    prolonged downturn in the housing market in order to ensure the
    retention of executive officers and other key personnel, principally
    within our corporate services unit and the corporate offices of our
    four business units.

(d) Represents the elimination of non-cash expenses, including $6 million
    of stock-based compensation expense, less $8 million for the change in
    the allowance for doubtful accounts and notes reserves from January 1,
    2010 through December 31, 2010 and $2 million of other non-cash items.

(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, 2010.

(f) Represents the estimated impact of acquisitions and new franchisees as
    if they had been acquired or signed on January 1, 2010. 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, 2010.

(g) Represents the elimination of annual management fees payable to Apollo
    for the twelve months ended December 31, 2010.

(h) Reflects the incremental borrowing costs incurred as a result of the
    securitization facilities refinancing for the twelve months ended
    December 31, 2010.

(i) Represents total borrowings under the senior secured credit facility,
    including the revolving credit facility, of $3,059 million plus $12
    million of capital lease obligations less $166 million of readily
    available cash as of December 31, 2010.

(j) Reflects the prepayment of $700 million of outstanding extended term
    loans from proceeds from the senior secured bonds (which we also refer
    to as First and a Half Lien Notes) less $14 million of estimated
    expenses related to the issuance of the First and a Half Lien Notes.

Table 7

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

A reconciliation of net income (loss) attributable to Realogy to EBITDA
and EBITDA before restructuring and other items for the three and twelve
months ended December 31, 2010 and 2009 are set forth in the following
tables:

                                                        Three Months Ended
                                                           December 31,
                                                        ------------------
                                                          2010      2009
                                                        --------  --------
Net loss attributable to Realogy                        $    (91) $    (46)
Income tax benefit                                            (1)      (65)
                                                        --------  --------
Loss before income taxes                                     (92)     (111)
Interest expense, net                                        146       153
Depreciation and amortization                                 49        47
                                                        --------  --------

EBITDA                                                  $    103  $     89
                                                        --------  --------

Legacy costs (benefits), net                                  (8)        3
Restructuring and merger costs                                10        12
                                                        --------  --------
Total restructuring and other items                            2        15
                                                        --------  --------
EBITDA before restructuring and other items             $    105  $    104
                                                        ========  ========



                                                        Twelve Months Ended
                                                           December 31,
                                                        ------------------
                                                          2010      2009
                                                        --------  --------
Net loss attributable to Realogy                        $    (99) $   (262)
Income tax expense (benefit)                                 133       (50)
                                                        --------  --------
Income (loss) before income taxes                             34      (312)
Interest expense, net                                        604       583
Depreciation and amortization                                197       194
                                                        --------  --------

EBITDA                                                  $    835  $    465
                                                        --------  --------

Legacy costs (benefits), net                                (323)      (34)
Restructuring and merger costs                                22        71
Gain on extinguishment of debt                                 -       (75)
                                                        --------  --------
Total restructuring and other items                         (301)      (38)
                                                        --------  --------
EBITDA before restructuring and other items             $    534  $    427
                                                        ========  ========

Table 8

Definitions

EBITDA is defined by us as net income 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 defined by us as EBITDA adjusted for merger costs, restructuring costs, former parent legacy cost (benefit) items, net, and gain on extinguishment of debt as described in Table 7 above. Adjusted EBITDA is presented to demonstrate our compliance with the senior secured leverage ratio covenant in the senior secured credit facility. We present EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA because we believe EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA are useful as supplemental measures in evaluating the performance of our operating businesses and provides greater transparency into our results of operations. Our management, including our chief operating decision maker, use EBITDA and EBITDA before restructuring and other items as a factor in evaluating the performance of our business. 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. See table 6 for a presentation of net income (loss) as calculated under GAAP and a reconciliation to our EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA.

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 believe EBITDA before restructuring and other items also facilitates company-to-company operating performance comparisons by backing out those items in EBITDA as well as certain historical cost (benefit) items 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 analytical tools, and you should not consider EBITDA or EBITDA before restructuring and other items either in isolation or as substitutes for analyzing our results as reported under GAAP. The limitations include the following:

--  these measures do not reflect changes in, or cash requirement for, our
    working capital needs;
--  these measures do 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;
--  these measures do not reflect our income tax expense or the cash
    requirements to pay our taxes;
--  these measures do 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 require replacement in the
    future, and these measures do not reflect any cash requirements for
    such replacements; and
--  other companies in our industry may calculate these measures
    differently so they may not be comparable.

Adjusted EBITDA as used herein 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.

Like EBITDA and EBITDA before restructuring and other items, Adjusted EBITDA has limitations as an analytical tool, and you should not consider Adjusted EBITDA either in isolation or as a substitute for analyzing our results as reported under GAAP. 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, the pro forma effect of business optimization initiatives and the pro forma full year effect of acquisitions and new franchisees. These adjustments may not reflect the actual cost savings or pro forma effect recognized in future periods.

EBITDA, EBITDA before restructuring and other items and Adjusted EBITDA are not necessarily comparable to other similarly titled financial measures of other companies due to the potential inconsistencies in the method of calculation.

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