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Large accelerated
filer
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Accelerated
filer
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Non-accelerated filer
(Do not check if a smaller reporting company)
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Smaller reporting
company
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Emerging growth company
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Realogy Holdings Corp.
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þ
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¨
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¨
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¨
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Realogy Group LLC
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þ
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Page
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PART I
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FINANCIAL INFORMATION
|
|
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Item 1.
|
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 1.
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Item 2.
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Item 5.
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Item 6.
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||
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•
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risks related to general business, economic, employment and political conditions and the U.S. residential real estate markets, either regionally or nationally, including but not limited to:
|
|
◦
|
a lack of improvement or a decline in the number of homesales, stagnant or declining home prices and/or a deterioration in other economic factors that particularly impact the residential real estate market and the business segments in which we operate;
|
|
◦
|
increasing mortgage rates and/or constraints on the availability of mortgage financing;
|
|
◦
|
insufficient or excessive home inventory levels by market and price point;
|
|
◦
|
a decrease in consumer confidence;
|
|
◦
|
the impact of recessions, slow economic growth, disruptions in the U.S. government or banking system, disruptions in a major geoeconomic region, or equity or commodity markets and high levels of unemployment in the U.S. and abroad, which may impact all or a portion of the housing markets in which we and our franchisees operate;
|
|
◦
|
legislative, tax or regulatory changes (including changes in regulatory interpretations or enforcement practices) that would adversely impact the residential real estate market, including changes relating to the Real Estate Settlement Procedures Act ("RESPA"), potential reforms of Fannie Mae and Freddie Mac, immigration reform, and potential tax code reform (including reforms related to the deductibility of home mortgage interest or state, local and property taxes);
|
|
◦
|
a decrease in housing affordability due to higher mortgage rates and increases in average homesale prices;
|
|
◦
|
high levels of foreclosure activity;
|
|
◦
|
changing attitudes towards home ownership, particularly among potential first-time homebuyers who may delay, or decide not to, purchase a home, as well as the potential impact of decisions to rent versus purchase a home; and
|
|
◦
|
the inability or unwillingness of current homeowners to purchase their next home due to various factors, including limited or negative equity in their current home, difficult mortgage underwriting standards, attractive rates on existing mortgages and the lack of available inventory in their market;
|
|
•
|
increased competition whether through traditional competitors, other industry participants or competitors with alternative business models (such as flat fee, capped fee or desk fee models) including companies employing technologies intended to disrupt the traditional brokerage model, as well as eliminating brokers or agents from, or minimizing the role they play in, the homesale transaction, such as reducing brokerage commissions, and companies otherwise competing for a portion of gross commission income;
|
|
•
|
competition for more productive sales associates, sales associate teams, and manager talent will continue to impact the ability of our company owned brokerage business and our affiliated franchisees to attract and retain independent sales associates, either individually or as members of a team, and will result in continuing pressure on the commission split rates paid by our company owned brokerages and our affiliated franchisees;
|
|
•
|
our geographic and high-end market concentration, particularly with respect to our company owned brokerage operations;
|
|
•
|
our inability to enter into franchise agreements with new franchisees at current net effective royalty rates, or to realize royalty revenue growth from them;
|
|
•
|
our inability to renew existing franchise agreements at current net effective royalty rates or without increasing the amount and prevalence of non-standard incentives, or to maintain or enhance our value proposition to franchisees;
|
|
•
|
the lack of revenue growth or declining profitability of our franchisees and company owned brokerage operations, including the impact of lower average broker commission rates;
|
|
•
|
disputes or issues with entities that license us their tradenames for use in our business or events that negatively impact their brands that could impede our franchising of those brands;
|
|
•
|
actions by our franchisees that could harm our business or reputation, non-performance of our franchisees, controversies with our franchisees or actions against us by their independent sales associates or employees or third parties with which our franchisees have business relationships;
|
|
•
|
loss, attrition or changes among our senior executives, other key employees or our inability to recruit top talent;
|
|
•
|
our inability to achieve or maintain cost savings and other benefits from our restructuring activities;
|
|
•
|
our inability to realize the benefits from acquisitions due to the loss of key personnel or productive agents of the acquired companies, as well as the possibility that expected benefits and synergies of the transactions may not be achieved in a timely manner or at all;
|
|
•
|
our failure or alleged failure to comply with laws, regulations and regulatory interpretations and any changes in laws and regulations or stricter interpretations of regulatory requirements, including but not limited to (1) state or federal employment laws or regulations that would require reclassification of independent contractor sales associates to employee status, (2) RESPA or state consumer protection or similar laws and (3) privacy or data security laws and regulations;
|
|
•
|
any adverse resolution of litigation, governmental or regulatory proceedings or arbitration awards as well as any adverse impact of decisions to voluntarily modify business arrangements or enter into settlement agreements to avoid the risk of protracted and costly litigation or other proceedings;
|
|
•
|
our inability to obtain new technologies and systems, to replace or introduce new technologies and systems as quickly as our competitors and in a cost-effective manner or to achieve the benefits anticipated from new technologies or systems;
|
|
•
|
risks and growing costs related to cybersecurity threats to our data and customer, franchisee, employee and independent sales associate data, including but not limited to:
|
|
◦
|
the failure or significant disruption of our operations from various causes, including human error, computer malware, ransomware, insecure software, zero day threats, or other events related to our critical information technologies and systems;
|
|
◦
|
the increasing level and sophistication of cybersecurity attacks, including distributed denial of service attacks, data exfiltration, fraud or malicious acts on the part of trusted insiders, social engineering, or other unlawful tactics aimed at compromising the systems and data of our officers, employees and franchisee and company owned brokerage sales associates and their customers (including via systems not directly controlled by us); and
|
|
◦
|
the reputational or financial risks associated with a loss of data or material data breach (including unauthorized access to our proprietary business information or personal information of our customers, employees and independent sales associates), the transmission of computer malware, or the diversion of homesale transaction closing funds;
|
|
•
|
risks related to our international operations, including compliance with the Foreign Corrupt Practices Act and similar anti-corruption laws as well as risks relating to the master franchisor model that we deploy internationally;
|
|
•
|
risks associated with our substantial indebtedness and interest obligations and restrictions contained in our debt agreements, including risks relating to having to dedicate a significant portion of our cash flows from operations to service our debt;
|
|
•
|
risks relating to our ability to refinance or repay our indebtedness, incur additional indebtedness or return capital to stockholders;
|
|
•
|
changes in corporate relocation practices resulting in fewer employee relocations, reduced relocation benefits or the loss of one or more significant affinity clients;
|
|
•
|
an increase in the claims rate of our title underwriter and an increase in mortgage rates could adversely impact the revenue of our title and settlement services segment;
|
|
•
|
our inability to securitize certain assets of our relocation business, which would require us to find an alternative source of liquidity that may not be available, or if available, may not be on favorable terms;
|
|
•
|
risks that could materially adversely impact our equity investment in our mortgage origination joint venture, including increases in mortgage rates, the impact of joint venture operational or liquidity risks, the impact of a transition from our current joint venture to our new joint venture, regulatory changes, litigation, investigations and inquiries or any termination of the venture;
|
|
•
|
risks relating to the unfavorable impact on homesale activity due to severe weather events or natural disasters;
|
|
•
|
any remaining resolutions or outcomes with respect to contingent liabilities of our former parent, Cendant Corporation ("Cendant"), under the Separation and Distribution Agreement and the Tax Sharing Agreement (each as described in our Annual Report on Form 10-K for the year ended December 31, 2016, the "
2016
Form 10-K"), including any adverse impact on our future cash flows; and
|
|
•
|
new types of taxes or increases in state, local or federal taxes that could diminish profitability or liquidity.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
Revenues
|
|
|
|
|
|
|
|
||||||||
|
Gross commission income
|
$
|
1,250
|
|
|
$
|
1,211
|
|
|
$
|
3,505
|
|
|
$
|
3,288
|
|
|
Service revenue
|
261
|
|
|
273
|
|
|
710
|
|
|
715
|
|
||||
|
Franchise fees
|
111
|
|
|
107
|
|
|
296
|
|
|
280
|
|
||||
|
Other
|
52
|
|
|
53
|
|
|
159
|
|
|
157
|
|
||||
|
Net revenues
|
1,674
|
|
|
1,644
|
|
|
4,670
|
|
|
4,440
|
|
||||
|
Expenses
|
|
|
|
|
|
|
|
||||||||
|
Commission and other agent-related costs
|
887
|
|
|
834
|
|
|
2,462
|
|
|
2,256
|
|
||||
|
Operating
|
394
|
|
|
400
|
|
|
1,162
|
|
|
1,158
|
|
||||
|
Marketing
|
63
|
|
|
58
|
|
|
195
|
|
|
181
|
|
||||
|
General and administrative
|
82
|
|
|
78
|
|
|
269
|
|
|
234
|
|
||||
|
Former parent legacy cost (benefit), net
|
1
|
|
|
—
|
|
|
(10
|
)
|
|
1
|
|
||||
|
Restructuring costs
|
2
|
|
|
9
|
|
|
9
|
|
|
30
|
|
||||
|
Depreciation and amortization
|
50
|
|
|
53
|
|
|
149
|
|
|
149
|
|
||||
|
Interest expense, net
|
41
|
|
|
37
|
|
|
127
|
|
|
169
|
|
||||
|
Loss on the early extinguishment of debt
|
1
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
|
Other income, net
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
|
Total expenses
|
1,521
|
|
|
1,468
|
|
|
4,368
|
|
|
4,177
|
|
||||
|
Income before income taxes, equity in earnings and noncontrolling interests
|
153
|
|
|
176
|
|
|
302
|
|
|
263
|
|
||||
|
Income tax expense
|
67
|
|
|
74
|
|
|
131
|
|
|
114
|
|
||||
|
Equity in earnings of unconsolidated entities
|
(10
|
)
|
|
(5
|
)
|
|
(7
|
)
|
|
(10
|
)
|
||||
|
Net income
|
96
|
|
|
107
|
|
|
178
|
|
|
159
|
|
||||
|
Less: Net income attributable to noncontrolling interests
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(3
|
)
|
||||
|
Net income attributable to Realogy Holdings and Realogy Group
|
$
|
95
|
|
|
$
|
106
|
|
|
$
|
176
|
|
|
$
|
156
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Earnings per share attributable to Realogy Holdings:
|
|
|
|
|
|
|
|
||||||||
|
Basic earnings per share
|
$
|
0.70
|
|
|
$
|
0.74
|
|
|
$
|
1.28
|
|
|
$
|
1.07
|
|
|
Diluted earnings per share
|
$
|
0.69
|
|
|
$
|
0.73
|
|
|
$
|
1.26
|
|
|
$
|
1.06
|
|
|
Weighted average common and common equivalent shares of Realogy Holdings outstanding:
|
|||||||||||||||
|
Basic
|
136.1
|
|
|
144.0
|
|
|
137.8
|
|
|
145.4
|
|
||||
|
Diluted
|
138.1
|
|
|
145.1
|
|
|
139.4
|
|
|
146.6
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Cash dividends declared per share (beginning in August 2016)
|
$
|
0.09
|
|
|
$
|
0.09
|
|
|
$
|
0.27
|
|
|
$
|
0.09
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30,
|
|
September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
Net income
|
$
|
96
|
|
|
$
|
107
|
|
|
$
|
178
|
|
|
$
|
159
|
|
|
Currency translation adjustment
|
1
|
|
|
—
|
|
|
3
|
|
|
(3
|
)
|
||||
|
Defined benefit pension plan - amortization of actuarial loss to periodic pension cost
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
|
Other comprehensive income (loss), before tax
|
2
|
|
|
—
|
|
|
4
|
|
|
(2
|
)
|
||||
|
Income tax expense related to items of other comprehensive income
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
|
Other comprehensive income (loss), net of tax
|
1
|
|
|
(1
|
)
|
|
3
|
|
|
(3
|
)
|
||||
|
Comprehensive income
|
97
|
|
|
106
|
|
|
181
|
|
|
156
|
|
||||
|
Less: comprehensive income attributable to noncontrolling interests
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(3
|
)
|
||||
|
Comprehensive income attributable to Realogy Holdings and Realogy Group
|
$
|
96
|
|
|
$
|
105
|
|
|
$
|
179
|
|
|
$
|
153
|
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
|
|
||||||
|
ASSETS
|
|
|
|
||||
|
Current assets:
|
|
|
|
||||
|
Cash and cash equivalents
|
$
|
348
|
|
|
$
|
274
|
|
|
Trade receivables (net of allowance for doubtful accounts of $10 and $13)
|
166
|
|
|
152
|
|
||
|
Relocation receivables
|
275
|
|
|
244
|
|
||
|
Other current assets
|
153
|
|
|
148
|
|
||
|
Total current assets
|
942
|
|
|
818
|
|
||
|
Property and equipment, net
|
272
|
|
|
267
|
|
||
|
Goodwill
|
3,704
|
|
|
3,690
|
|
||
|
Trademarks
|
748
|
|
|
748
|
|
||
|
Franchise agreements, net
|
1,311
|
|
|
1,361
|
|
||
|
Other intangibles, net
|
291
|
|
|
313
|
|
||
|
Other non-current assets
|
253
|
|
|
224
|
|
||
|
Total assets
|
$
|
7,521
|
|
|
$
|
7,421
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
|
Current liabilities:
|
|
|
|
||||
|
Accounts payable
|
$
|
152
|
|
|
$
|
140
|
|
|
Securitization obligations
|
234
|
|
|
205
|
|
||
|
Due to former parent
|
18
|
|
|
28
|
|
||
|
Current portion of long-term debt
|
242
|
|
|
242
|
|
||
|
Accrued expenses and other current liabilities
|
442
|
|
|
435
|
|
||
|
Total current liabilities
|
1,088
|
|
|
1,050
|
|
||
|
Long-term debt
|
3,234
|
|
|
3,265
|
|
||
|
Deferred income taxes
|
518
|
|
|
389
|
|
||
|
Other non-current liabilities
|
216
|
|
|
248
|
|
||
|
Total liabilities
|
5,056
|
|
|
4,952
|
|
||
|
Commitments and contingencies (Note 9)
|
|
|
|
||||
|
Equity:
|
|
|
|
||||
|
Realogy Holdings preferred stock: $.01 par value; 50,000,000 shares authorized, none issued and outstanding at September 30, 2017 and December 31, 2016
|
—
|
|
|
—
|
|
||
|
Realogy Holdings common stock: $.01 par value; 400,000,000 shares authorized, 135,180,292 shares issued and outstanding at September 30, 2017 and 140,227,692 shares issued and outstanding at December 31, 2016
|
1
|
|
|
1
|
|
||
|
Additional paid-in capital
|
5,383
|
|
|
5,565
|
|
||
|
Accumulated deficit
|
(2,886
|
)
|
|
(3,062
|
)
|
||
|
Accumulated other comprehensive loss
|
(37
|
)
|
|
(40
|
)
|
||
|
Total stockholders' equity
|
2,461
|
|
|
2,464
|
|
||
|
Noncontrolling interests
|
4
|
|
|
5
|
|
||
|
Total equity
|
2,465
|
|
|
2,469
|
|
||
|
Total liabilities and equity
|
$
|
7,521
|
|
|
$
|
7,421
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2017
|
|
2016
|
||||
|
Operating Activities
|
|
|
|
||||
|
Net income
|
$
|
178
|
|
|
$
|
159
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
|
Depreciation and amortization
|
149
|
|
|
149
|
|
||
|
Deferred income taxes
|
129
|
|
|
98
|
|
||
|
Amortization of deferred financing costs and discount
|
12
|
|
|
12
|
|
||
|
Noncash portion of loss on early extinguishment of debt
|
4
|
|
|
—
|
|
||
|
Equity in earnings of unconsolidated entities
|
(7
|
)
|
|
(10
|
)
|
||
|
Stock-based compensation
|
38
|
|
|
39
|
|
||
|
Mark-to-market adjustments on derivatives
|
6
|
|
|
39
|
|
||
|
Other adjustments to net income
|
(2
|
)
|
|
(4
|
)
|
||
|
Net change in assets and liabilities, excluding the impact of acquisitions and dispositions:
|
|
|
|
||||
|
Trade receivables
|
(13
|
)
|
|
(29
|
)
|
||
|
Relocation receivables
|
(30
|
)
|
|
(14
|
)
|
||
|
Other assets
|
(33
|
)
|
|
(20
|
)
|
||
|
Accounts payable, accrued expenses and other liabilities
|
10
|
|
|
(5
|
)
|
||
|
Due to former parent
|
(10
|
)
|
|
1
|
|
||
|
Dividends received from unconsolidated entities
|
24
|
|
|
5
|
|
||
|
Other, net
|
(11
|
)
|
|
(9
|
)
|
||
|
Net cash provided by operating activities
|
444
|
|
|
411
|
|
||
|
Investing Activities
|
|
|
|
||||
|
Property and equipment additions
|
(69
|
)
|
|
(61
|
)
|
||
|
Payments for acquisitions, net of cash acquired
|
(13
|
)
|
|
(95
|
)
|
||
|
Investment in unconsolidated entities
|
(34
|
)
|
|
—
|
|
||
|
Change in restricted cash
|
3
|
|
|
(2
|
)
|
||
|
Other, net
|
17
|
|
|
(5
|
)
|
||
|
Net cash used in investing activities
|
(96
|
)
|
|
(163
|
)
|
||
|
Financing Activities
|
|
|
|
||||
|
Net change in revolving credit facility
|
(10
|
)
|
|
(45
|
)
|
||
|
Proceeds from issuance of Term Loan A-1
|
—
|
|
|
355
|
|
||
|
Repayment of amended Term Loan B facility
|
—
|
|
|
(758
|
)
|
||
|
Amortization payments on term loan facilities
|
(31
|
)
|
|
(31
|
)
|
||
|
Proceeds from issuance of Senior Notes
|
—
|
|
|
750
|
|
||
|
Redemption of Senior Notes
|
—
|
|
|
(500
|
)
|
||
|
Net change in securitization obligations
|
29
|
|
|
9
|
|
||
|
Debt issuance costs
|
(6
|
)
|
|
(15
|
)
|
||
|
Repurchase of common stock
|
(180
|
)
|
|
(134
|
)
|
||
|
Dividends paid on common stock
|
(37
|
)
|
|
(13
|
)
|
||
|
Proceeds from exercise of stock options
|
7
|
|
|
1
|
|
||
|
Taxes paid related to net share settlement for stock-based compensation
|
(11
|
)
|
|
(6
|
)
|
||
|
Payments of contingent consideration related to acquisitions
|
(18
|
)
|
|
(23
|
)
|
||
|
Other, net
|
(19
|
)
|
|
(28
|
)
|
||
|
Net cash used in financing activities
|
(276
|
)
|
|
(438
|
)
|
||
|
Effect of changes in exchange rates on cash and cash equivalents
|
2
|
|
|
(1
|
)
|
||
|
Net increase (decrease) in cash and cash equivalents
|
74
|
|
|
(191
|
)
|
||
|
Cash and cash equivalents, beginning of period
|
274
|
|
|
415
|
|
||
|
Cash and cash equivalents, end of period
|
$
|
348
|
|
|
$
|
224
|
|
|
Supplemental Disclosure of Cash Flow Information
|
|
|
|
||||
|
Interest payments (including securitization interest of $5 for both periods presented)
|
$
|
111
|
|
|
$
|
117
|
|
|
Income tax payments, net
|
10
|
|
|
13
|
|
||
|
1.
|
BASIS OF PRESENTATION
|
|
Level Input:
|
|
Input Definitions:
|
|
|
|
|
|
Level I
|
|
Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the
measurement date.
|
|
|
|
|
|
Level II
|
|
Inputs other than quoted prices included in Level I that are observable for the asset or liability through
corroboration with market data at the measurement date.
|
|
|
|
|
|
Level III
|
|
Unobservable inputs that reflect management’s best estimate of what market participants would use in
pricing the asset or liability at the measurement date.
|
|
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||
|
Interest rate swaps (included in other current and non-current liabilities)
|
$
|
—
|
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
24
|
|
|
Deferred compensation plan assets (included in other non-current assets)
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
|
Contingent consideration for acquisitions (included in accrued expenses and other current liabilities and non-current liabilities)
|
—
|
|
|
—
|
|
|
33
|
|
|
33
|
|
||||
|
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||
|
Interest rate swaps (included in other non-current liabilities)
|
$
|
—
|
|
|
$
|
33
|
|
|
$
|
—
|
|
|
$
|
33
|
|
|
Deferred compensation plan assets (included in other non-current assets)
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
|
Contingent consideration for acquisitions (included in accrued expenses and other current liabilities and non-current liabilities)
|
—
|
|
|
—
|
|
|
50
|
|
|
50
|
|
||||
|
|
|
Level III
|
||
|
Fair value of contingent consideration at December 31, 2016
|
|
$
|
50
|
|
|
Additions: contingent consideration related to acquisitions completed during the period
|
|
3
|
|
|
|
Reductions: payments of contingent consideration (reflected in the financing section of the Consolidated Statement of Cash Flows)
|
|
(18
|
)
|
|
|
Changes in fair value (reflected in the Consolidated Statement of Operations)
|
|
(2
|
)
|
|
|
Fair value of contingent consideration at September 30, 2017
|
|
$
|
33
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Debt
|
Principal Amount
|
|
Estimated
Fair Value (a) |
|
Principal Amount
|
|
Estimated
Fair Value (a) |
||||||||
|
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
||||||||
|
Revolving Credit Facility
|
$
|
190
|
|
|
$
|
190
|
|
|
$
|
200
|
|
|
$
|
200
|
|
|
Term Loan B
|
1,086
|
|
|
1,092
|
|
|
1,094
|
|
|
1,100
|
|
||||
|
Term Loan A Facility:
|
|
|
|
|
|
|
|
||||||||
|
Term Loan A
|
397
|
|
|
398
|
|
|
413
|
|
|
414
|
|
||||
|
Term Loan A-1
|
344
|
|
|
345
|
|
|
351
|
|
|
351
|
|
||||
|
4.50% Senior Notes
|
450
|
|
|
462
|
|
|
450
|
|
|
461
|
|
||||
|
5.25% Senior Notes
|
550
|
|
|
573
|
|
|
550
|
|
|
562
|
|
||||
|
4.875% Senior Notes
|
500
|
|
|
514
|
|
|
500
|
|
|
483
|
|
||||
|
Securitization obligations
|
234
|
|
|
234
|
|
|
205
|
|
|
205
|
|
||||
|
(a)
|
The fair value of the Company's indebtedness is categorized as Level II.
|
|
Liability Derivatives
|
|
Fair Value
|
||||||||
|
Not Designated as Hedging Instruments
|
|
Balance Sheet Location
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
Interest rate swap contracts
|
|
Other current and non-current liabilities
|
|
$
|
24
|
|
|
$
|
33
|
|
|
Derivative Instruments Not Designated as Hedging Instruments
|
|
Location of (Gain) or Loss Recognized for Derivative Instruments
|
|
(Gain) or Loss Recognized on Derivatives
|
||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||||
|
Interest rate swap contracts
|
|
Interest expense
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
|
$
|
4
|
|
|
$
|
40
|
|
|
Foreign exchange contracts
|
|
Operating expense
|
|
1
|
|
|
(1
|
)
|
|
2
|
|
|
(1
|
)
|
||||
|
2.
|
ACQUISITIONS
|
|
3.
|
INTANGIBLE ASSETS
|
|
|
Real Estate
Franchise
Services
|
|
Company
Owned
Brokerage
Services
|
|
Relocation
Services
|
|
Title and
Settlement
Services
|
|
Total
Company
|
||||||||||
|
Gross goodwill as of December 31, 2016
|
$
|
3,315
|
|
|
$
|
1,051
|
|
|
$
|
641
|
|
|
$
|
469
|
|
|
$
|
5,476
|
|
|
Accumulated impairment losses
|
(1,023
|
)
|
|
(158
|
)
|
|
(281
|
)
|
|
(324
|
)
|
|
(1,786
|
)
|
|||||
|
Balance at December 31, 2016
|
2,292
|
|
|
893
|
|
|
360
|
|
|
145
|
|
|
3,690
|
|
|||||
|
Goodwill acquired
|
—
|
|
|
6
|
|
|
—
|
|
|
8
|
|
|
14
|
|
|||||
|
Balance at September 30, 2017
|
$
|
2,292
|
|
|
$
|
899
|
|
|
$
|
360
|
|
|
$
|
153
|
|
|
$
|
3,704
|
|
|
|
As of September 30, 2017
|
|
As of December 31, 2016
|
||||||||||||||||||||
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
|
Amortizable—Franchise agreements (a)
|
$
|
2,019
|
|
|
$
|
708
|
|
|
$
|
1,311
|
|
|
$
|
2,019
|
|
|
$
|
658
|
|
|
$
|
1,361
|
|
|
Indefinite life—Trademarks (b)
|
$
|
748
|
|
|
|
|
$
|
748
|
|
|
$
|
748
|
|
|
|
|
$
|
748
|
|
||||
|
Other Intangibles
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Amortizable—License agreements (c)
|
$
|
45
|
|
|
$
|
10
|
|
|
$
|
35
|
|
|
$
|
45
|
|
|
$
|
9
|
|
|
$
|
36
|
|
|
Amortizable—Customer relationships (d)
|
550
|
|
|
330
|
|
|
220
|
|
|
550
|
|
|
312
|
|
|
238
|
|
||||||
|
Indefinite life—Title plant shares (e)
|
18
|
|
|
|
|
18
|
|
|
18
|
|
|
|
|
18
|
|
||||||||
|
Amortizable—Pendings and listings (f)
|
2
|
|
|
1
|
|
|
1
|
|
|
6
|
|
|
5
|
|
|
1
|
|
||||||
|
Amortizable—Other (g)
|
33
|
|
|
16
|
|
|
17
|
|
|
33
|
|
|
13
|
|
|
20
|
|
||||||
|
Total Other Intangibles
|
$
|
648
|
|
|
$
|
357
|
|
|
$
|
291
|
|
|
$
|
652
|
|
|
$
|
339
|
|
|
$
|
313
|
|
|
(b)
|
Primarily relates to the Century 21
®
, Coldwell Banker
®
, ERA
®
, Corcoran
®
, Coldwell Banker Commercial
®
and Cartus tradenames, which are expected to generate future cash flows for an indefinite period of time.
|
|
(c)
|
Relates to the Sotheby’s International Realty
®
and Better Homes and Gardens
®
Real Estate agreements which are being amortized over
50
years (the contractual term of the license agreements).
|
|
(d)
|
Relates to the customer relationships at the Relocation Services segment, the Title and Settlement Services segment, the Real Estate Franchise Services segment and our Company Owned Real Estate Brokerage Services segment. These relationships are being amortized over a period of
2
to
20
years.
|
|
(e)
|
Ownership in a title plant is required to transact title insurance in certain states. The Company expects to generate future cash flows for an indefinite period of time.
|
|
(f)
|
Generally amortized over a period of
5 months
.
|
|
(g)
|
Consists of covenants not to compete which are amortized over their contract lives and other intangibles which are generally amortized over periods ranging from
5
to
10
years.
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
Franchise agreements
|
$
|
16
|
|
|
$
|
16
|
|
|
$
|
50
|
|
|
$
|
50
|
|
|
License agreements
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
|
Customer relationships
|
5
|
|
|
7
|
|
|
18
|
|
|
20
|
|
||||
|
Pendings and listings
|
2
|
|
|
7
|
|
|
3
|
|
|
9
|
|
||||
|
Other
|
1
|
|
|
1
|
|
|
4
|
|
|
4
|
|
||||
|
Total
|
$
|
25
|
|
|
$
|
31
|
|
|
$
|
76
|
|
|
$
|
84
|
|
|
4.
|
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
Accrued payroll and related employee costs
|
$
|
123
|
|
|
$
|
138
|
|
|
Accrued volume incentives
|
38
|
|
|
40
|
|
||
|
Accrued commissions
|
41
|
|
|
31
|
|
||
|
Restructuring accruals
|
7
|
|
|
14
|
|
||
|
Deferred income
|
60
|
|
|
69
|
|
||
|
Accrued interest
|
31
|
|
|
13
|
|
||
|
Contingent consideration for acquisitions
|
23
|
|
|
24
|
|
||
|
Other
|
119
|
|
|
106
|
|
||
|
Total accrued expenses and other current liabilities
|
$
|
442
|
|
|
$
|
435
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
Senior Secured Credit Facility:
|
|
|
|
||||
|
Revolving Credit Facility
|
$
|
190
|
|
|
$
|
200
|
|
|
Term Loan B
|
1,065
|
|
|
1,069
|
|
||
|
Term Loan A Facility:
|
|
|
|
||||
|
Term Loan A
|
395
|
|
|
411
|
|
||
|
Term Loan A-1
|
341
|
|
|
347
|
|
||
|
4.50% Senior Notes
|
443
|
|
|
439
|
|
||
|
5.25% Senior Notes
|
546
|
|
|
545
|
|
||
|
4.875% Senior Notes
|
496
|
|
|
496
|
|
||
|
Total Short-Term & Long-Term Debt
|
$
|
3,476
|
|
|
$
|
3,507
|
|
|
Securitization obligations:
|
|
|
|
||||
|
Apple Ridge Funding LLC
|
$
|
223
|
|
|
$
|
192
|
|
|
Cartus Financing Limited
|
11
|
|
|
13
|
|
||
|
Total securitization obligations
|
$
|
234
|
|
|
$
|
205
|
|
|
|
Interest
Rate |
|
Expiration
Date |
|
Principal Amount
|
|
Unamortized Discount and Debt Issuance Costs
|
|
Net Amount
|
||||||
|
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
|
|
||||||
|
Revolving Credit Facility (1)
|
(2)
|
|
October 2020
|
|
$
|
190
|
|
|
$ *
|
|
|
$
|
190
|
|
|
|
Term Loan B
|
(3)
|
|
July 2022
|
|
1,086
|
|
|
21
|
|
|
1,065
|
|
|||
|
Term Loan A Facility:
|
|
|
|
|
|
|
|
|
|
||||||
|
Term Loan A
|
(4)
|
|
October 2020
|
|
397
|
|
|
2
|
|
|
395
|
|
|||
|
Term Loan A-1
|
(5)
|
|
July 2021
|
|
344
|
|
|
3
|
|
|
341
|
|
|||
|
Senior Notes
|
4.50%
|
|
April 2019
|
|
450
|
|
|
7
|
|
|
443
|
|
|||
|
Senior Notes
|
5.25%
|
|
December 2021
|
|
550
|
|
|
4
|
|
|
546
|
|
|||
|
Senior Notes
|
4.875%
|
|
June 2023
|
|
500
|
|
|
4
|
|
|
496
|
|
|||
|
Securitization obligations: (6)
|
|
|
|
|
|
|
|
|
|
||||||
|
Apple Ridge Funding LLC (7)
|
|
|
June 2018
|
|
223
|
|
|
*
|
|
|
223
|
|
|||
|
Cartus Financing Limited (8)
|
|
|
August 2018
|
|
11
|
|
|
*
|
|
|
11
|
|
|||
|
Total (9)
|
$
|
3,751
|
|
|
$
|
41
|
|
|
$
|
3,710
|
|
||||
|
*
|
The debt issuance costs related to our Revolving Credit Facility and securitization obligations are classified as a deferred financing asset within other assets.
|
|
(1)
|
As of
September 30, 2017
, the Company had
$1,050 million
of borrowing capacity under its Revolving Credit Facility, leaving
$860 million
of available capacity. The revolving credit facility expires in October 2020, but is classified on the balance sheet as current due to the revolving nature of the facility. On
November 1, 2017
, the Company had
$70 million
in outstanding borrowings under the Revolving Credit Facility, leaving
$980 million
of available capacity.
|
|
(2)
|
Interest rates with respect to revolving loans under the Senior Secured Credit Facility at
September 30, 2017
are based on, at the Company's option, (a) adjusted
LIBOR
plus an additional margin or (b)
ABR
plus an additional margin, in each case subject to adjustment based on the then current senior secured leverage ratio. Based on the previous quarter senior secured leverage ratio, the
LIBOR
margin was
2.00%
and the
ABR
margin was
1.00%
for the three months ended
September 30, 2017
.
|
|
(3)
|
The Term Loan B provides for quarterly amortization payments totaling
1%
per annum of the original principal amount. The interest rate with respect to term loans under the Term Loan B is based on, at the Company’s option, (a) adjusted
LIBOR
plus
2.25%
(with a
LIBOR
floor of
0.75%
) or (b) JPMorgan Chase Bank, N.A.’s prime rate ("
ABR
") plus
1.25%
(with an
ABR
floor of
1.75%
).
|
|
(4)
|
The Term Loan A provides for quarterly amortization payments, which commenced March 31, 2016, totaling per annum
5%
,
5%
,
7.5%
,
10.0%
and
12.5%
of the original principal amount of the Term Loan A in 2016, 2017, 2018, 2019 and 2020, respectively. The interest rates with respect to term loans under the Term Loan A are based on, at the Company's option, (a) adjusted
LIBOR
plus an additional margin or (b)
ABR
plus an additional margin, in each case subject to adjustment based on the then current senior secured leverage ratio. Based on the previous quarter senior secured leverage ratio, the
LIBOR
margin was
2.00%
and the
ABR
margin was
1.00%
for the three months ended
September 30, 2017
.
|
|
(5)
|
The Term Loan A-1 provides for quarterly amortization payments, which commenced on September 30, 2016, totaling per annum
2.5%
,
2.5%
,
5%
,
7.5%
and
10.0%
of the original principal amount of the Term Loan A-1, with the last amortization payment made on June 30, 2021. The interest rates with respect to term loans under the Term Loan A-1 are based on, at the Company's option, (a) adjusted
LIBOR
plus an additional margin or (b)
ABR
plus an additional margin, in each case subject to adjustment based on the then current senior secured leverage ratio. Based on the previous quarter senior secured leverage ratio, the
LIBOR
margin was
2.00%
and the
ABR
margin was
1.00%
for the three months ended
September 30, 2017
.
|
|
(6)
|
Available capacity is subject to maintaining sufficient relocation related assets to collateralize these securitization obligations.
|
|
(7)
|
In June 2017, Realogy Group extended the existing Apple Ridge Funding LLC securitization program utilized by Cartus until June 2018. As of
September 30, 2017
, the Company had
$325 million
of borrowing capacity under the Apple Ridge Funding LLC securitization program leaving
$102 million
of available capacity.
|
|
(8)
|
Consists of a
£10 million
revolving loan facility and a
£5 million
working capital facility. As of
September 30, 2017
, the Company had
$20 million
of borrowing capacity under the Cartus Financing Limited securitization program leaving
$9 million
of available capacity. In September 2017, Realogy Group extended the existing Cartus Financing Limited securitization program to August 2018.
|
|
(9)
|
Not included in this table is the Company's Unsecured Letter of Credit Facility which had a capacity of
$74 million
with
$71 million
utilized at a weighted average rate of
3.24%
at
September 30, 2017
.
|
|
Year
|
|
Amount
|
||
|
Remaining 2017 (a)
|
|
$
|
200
|
|
|
2018
|
|
57
|
|
|
|
2019
|
|
527
|
|
|
|
2020
|
|
357
|
|
|
|
2021
|
|
837
|
|
|
|
(a)
|
The current portion of long-term debt consists of remaining 2017 amortization payments totaling
$5 million
,
$2 million
and
$3 million
for the Term Loan A, Term Loan A-1 and Term Loan B facilities, respectively, as well as
$190 million
of revolver borrowings under the revolving credit facility which expires in October 2020, but are classified on the balance sheet as current due to the revolving nature of the facility.
|
|
(a)
|
a Term Loan B issued in the original aggregate principal amount of
$1,100 million
with a maturity date of July 2022. The Term Loan B has quarterly amortization payments totaling
1%
per annum of the initial aggregate principal amount. The interest rate with respect to term loans under the Term Loan B is based on, at Realogy Group's option, adjusted
LIBOR
plus
2.25%
(with a
LIBOR
floor of
0.75%
) or
ABR
plus
1.25%
(with an
ABR
floor of
1.75%
); and
|
|
(b)
|
a
$1,050 million
Revolving Credit Facility with a maturity date of October 23, 2020, which includes (i) a
$125 million
letter of credit subfacility and (ii) a swingline loan subfacility. The interest rate with respect to revolving loans under the Revolving Credit Facility is based on, at Realogy Group's option, adjusted
LIBOR
or
ABR
plus an additional margin subject to the following adjustments based on the Company’s then current senior secured leverage ratio:
|
|
Senior Secured Leverage Ratio
|
|
Applicable LIBOR Margin
|
|
Applicable ABR Margin
|
|
Greater than 3.50 to 1.00
|
|
2.50%
|
|
1.50%
|
|
Less than or equal to 3.50 to 1.00 but greater than or equal to 2.50 to 1.00
|
|
2.25%
|
|
1.25%
|
|
Less than 2.50 to 1.00
|
|
2.00%
|
|
1.00%
|
|
Senior Secured Leverage Ratio
|
|
Applicable LIBOR Margin
|
|
Applicable ABR Margin
|
|
Greater than 3.50 to 1.00
|
|
2.50%
|
|
1.50%
|
|
Less than or equal to 3.50 to 1.00 but greater than or equal to 2.50 to 1.00
|
|
2.25%
|
|
1.25%
|
|
Less than 2.50 to 1.00
|
|
2.00%
|
|
1.00%
|
|
Senior Secured Leverage Ratio
|
|
Applicable LIBOR Margin
|
|
Applicable ABR Margin
|
|
Greater than 3.50 to 1.00
|
|
2.50%
|
|
1.50%
|
|
Less than or equal to 3.50 to 1.00 but greater than or equal to 2.50 to 1.00
|
|
2.25%
|
|
1.25%
|
|
Less than 2.50 to 1.00 but greater than or equal to 2.00 to 1.00
|
|
2.00%
|
|
1.00%
|
|
Less than 2.00 to 1.00
|
|
1.75%
|
|
0.75%
|
|
Capacity (in millions)
|
Expiration Date
|
|
$8
|
September 2018
|
|
$66
|
December 2019
|
|
6.
|
RESTRUCTURING COSTS
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
Personnel-related costs (1)
|
$
|
1
|
|
|
$
|
6
|
|
|
$
|
7
|
|
|
$
|
17
|
|
|
Facility-related costs (2)
|
—
|
|
|
2
|
|
|
1
|
|
|
7
|
|
||||
|
Accelerated depreciation on asset disposals
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
|
Other restructuring costs (3)
|
1
|
|
|
—
|
|
|
1
|
|
|
5
|
|
||||
|
Total restructuring charges
|
$
|
2
|
|
|
$
|
9
|
|
|
$
|
9
|
|
|
$
|
30
|
|
|
(1)
|
Personnel-related costs consist of severance costs provided to employees who have been terminated and duplicate payroll costs during transition.
|
|
(2)
|
Facility-related costs consist of costs associated with planned facility closures such as contract termination costs, lease payments that will continue to be incurred under the contract for its remaining term without economic benefit to the Company and other facility and employee relocation related costs.
|
|
(3)
|
Other restructuring costs consist of costs related to professional fees, consulting fees and other costs associated with restructuring activities which are primarily included in the Corporate and Other business segment.
|
|
|
Personnel-related costs
|
|
Facility-related costs
|
|
Accelerated depreciation on asset disposal
|
|
Other restructuring costs
|
|
Total
|
||||||||||
|
Balance at December 31, 2016
|
$
|
9
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16
|
|
|
Restructuring charges
|
7
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
9
|
|
|||||
|
Costs paid or otherwise settled
|
(12
|
)
|
|
(5
|
)
|
|
—
|
|
|
(1
|
)
|
|
(18
|
)
|
|||||
|
Balance at September 30, 2017
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
|
Total amount expected to be incurred
|
|
Amount incurred to date
|
|
Total amount remaining to be incurred
|
||||||
|
Personnel-related costs
|
$
|
32
|
|
|
$
|
32
|
|
|
$
|
—
|
|
|
Facility-related costs
|
16
|
|
|
14
|
|
|
2
|
|
|||
|
Accelerated depreciation related to asset disposals
|
2
|
|
|
1
|
|
|
1
|
|
|||
|
Other restructuring costs
|
12
|
|
|
11
|
|
|
1
|
|
|||
|
Total
|
$
|
62
|
|
|
$
|
58
|
|
|
$
|
4
|
|
|
|
Total amount expected to be incurred
|
|
Amount incurred to date
|
|
Total amount remaining to be incurred
|
||||||
|
Real Estate Franchise Services
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
Company Owned Real Estate Brokerage Services
|
37
|
|
|
35
|
|
|
2
|
|
|||
|
Relocation Services
|
5
|
|
|
5
|
|
|
—
|
|
|||
|
Title and Settlement Services
|
1
|
|
|
1
|
|
|
—
|
|
|||
|
Corporate and Other
|
14
|
|
|
12
|
|
|
2
|
|
|||
|
Total
|
$
|
62
|
|
|
$
|
58
|
|
|
$
|
4
|
|
|
7.
|
STOCK-BASED COMPENSATION
|
|
|
2017 RTSR PSU
|
||
|
Weighted average grant date fair value
|
$
|
27.98
|
|
|
Weighted average expected volatility
|
29.0
|
%
|
|
|
Weighted average volatility of XHB
|
18.4
|
%
|
|
|
Weighted average correlation coefficient
|
0.53
|
|
|
|
Weighted average risk-free interest rate
|
1.5
|
%
|
|
|
Weighted average dividend yield
|
—
|
|
|
|
|
Restricted
Stock Units |
|
Weighted Average Grant Date Fair Value
|
|||
|
Unvested at January 1, 2017
|
1.4
|
|
|
$
|
37.53
|
|
|
Granted
|
1.1
|
|
|
28.22
|
|
|
|
Vested (a)
|
(0.6
|
)
|
|
39.56
|
|
|
|
Forfeited
|
(0.1
|
)
|
|
30.82
|
|
|
|
Unvested at September 30, 2017
|
1.8
|
|
|
$
|
31.34
|
|
|
(a)
|
The total fair value of RSUs which vested during the
nine months ended
September 30, 2017
was
$26 million
.
|
|
|
Performance Share Units (a)
|
|
Weighted Average Grant Date Fair Value
|
|||
|
Unvested at January 1, 2017
|
1.0
|
|
|
$
|
36.66
|
|
|
Granted
|
0.7
|
|
|
27.70
|
|
|
|
Vested
|
—
|
|
|
—
|
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
|
Unvested at September 30, 2017
|
1.7
|
|
|
$
|
32.71
|
|
|
(a)
|
The PSU amounts in the table are shown at the target amount of the award.
|
|
|
2017 Options
|
||
|
Weighted average grant date fair value
|
$
|
8.00
|
|
|
Weighted average expected volatility
|
30.7
|
%
|
|
|
Weighted average expected term (years)
|
6.25
|
|
|
|
Weighted average risk-free interest rate
|
2.1
|
%
|
|
|
Weighted average dividend yield
|
1.3
|
%
|
|
|
|
Options
|
|
Weighted Average
Exercise Price
|
|||
|
Outstanding at January 1, 2017
|
3.3
|
|
|
$
|
31.69
|
|
|
Granted
|
0.4
|
|
|
27.56
|
|
|
|
Exercised (a) (b)
|
(0.3
|
)
|
|
23.77
|
|
|
|
Forfeited/Expired
|
—
|
|
|
—
|
|
|
|
Outstanding at September 30, 2017 (c)
|
3.4
|
|
|
$
|
31.52
|
|
|
(a)
|
The intrinsic value of options exercised during the
nine months ended
September 30, 2017
was
$2 million
.
|
|
(b)
|
Cash received from options exercised during the
nine months ended
September 30, 2017
was
$7 million
.
|
|
(c)
|
Options outstanding at
September 30, 2017
have an intrinsic value of
$6 million
and have a weighted average remaining contractual life of
5.8 years
.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
(in millions, except per share data)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
Net income attributable to Realogy Holdings shareholders
|
$
|
95
|
|
|
$
|
106
|
|
|
$
|
176
|
|
|
$
|
156
|
|
|
Basic weighted average shares
|
136.1
|
|
|
144.0
|
|
|
137.8
|
|
|
145.4
|
|
||||
|
Stock options, restricted stock units and performance share units (a)
|
2.0
|
|
|
1.1
|
|
|
1.6
|
|
|
1.2
|
|
||||
|
Weighted average diluted shares
|
138.1
|
|
|
145.1
|
|
|
139.4
|
|
|
146.6
|
|
||||
|
Earnings Per Share:
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
$
|
0.70
|
|
|
$
|
0.74
|
|
|
$
|
1.28
|
|
|
$
|
1.07
|
|
|
Diluted
|
$
|
0.69
|
|
|
$
|
0.73
|
|
|
$
|
1.26
|
|
|
$
|
1.06
|
|
|
(a)
|
The
three and nine months ended
September 30, 2017
respectively exclude
4.9 million
and
5.3 million
shares of common stock issuable for incentive equity awards, which includes performance share units based on the achievement of target amounts, that are anti-dilutive to the diluted earnings per share computation. The
three and nine months ended
September 30, 2016
respectively exclude
5.2 million
and
5.1 million
shares of common stock issuable for incentive equity awards, which includes performance share units based on the achievement of target amounts, that are anti-dilutive to the diluted earnings per share computation.
|
|
9.
|
COMMITMENTS AND CONTINGENCIES
|
|
•
|
that the Company is vicariously liable for the acts of franchisees under theories of actual or apparent agency;
|
|
•
|
by current or former franchisees that franchise agreements were breached including improper terminations;
|
|
•
|
concerning claims for alleged RESPA or state real estate law violations including but not limited to claims challenging the validity of sales associates indemnification, and administrative fees;
|
|
•
|
that residential real estate sales associates engaged by NRT—under certain state or federal laws—are potentially employees instead of independent contractors, and they or regulators therefore may bring claims against NRT for breach of contract, wage and hour classification claims, wrongful discharge, unemployment and workers' compensation and could seek benefits, back wages, overtime, indemnification, penalties related to classification practices and expense reimbursement available to employees;
|
|
•
|
concerning claims generally against the company owned brokerage operations for negligence, misrepresentation or breach of fiduciary duty in connection with the performance of real estate brokerage or other professional services as well as other brokerage claims associated with listing information and property history;
|
|
•
|
concerning claims generally against the title company contending that, as the escrow company, the company knew or should have known that a transaction was fraudulent or concerning other title defects or settlement errors; and
|
|
•
|
concerning information security and cyber crime.
|
|
10.
|
SEGMENT INFORMATION
|
|
|
Revenues (a) (b)
|
||||||||||||||
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
Real Estate Franchise Services
|
$
|
224
|
|
|
$
|
215
|
|
|
$
|
631
|
|
|
$
|
593
|
|
|
Company Owned Real Estate Brokerage Services
|
1,267
|
|
|
1,231
|
|
|
3,556
|
|
|
3,340
|
|
||||
|
Relocation Services
|
111
|
|
|
116
|
|
|
290
|
|
|
308
|
|
||||
|
Title and Settlement Services
|
154
|
|
|
164
|
|
|
431
|
|
|
424
|
|
||||
|
Corporate and Other (c)
|
(82
|
)
|
|
(82
|
)
|
|
(238
|
)
|
|
(225
|
)
|
||||
|
Total Company
|
$
|
1,674
|
|
|
$
|
1,644
|
|
|
$
|
4,670
|
|
|
$
|
4,440
|
|
|
(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
$82 million
and
$238 million
for the
three and nine months ended
September 30, 2017
, respectively, and
$82 million
and
$225 million
for the
three and nine months ended
September 30, 2016
, respectively. Such amounts are eliminated through the Corporate and Other line.
|
|
(b)
|
Revenues for the Relocation Services segment include intercompany referral commissions paid by the Company Owned Real Estate Brokerage Services segment of
$11 million
and
$31 million
for the
three and nine months ended
September 30, 2017
, respectively, and
$12 million
and
$33 million
for the
three and nine months ended
September 30, 2016
, respectively. Such amounts are recorded as contra-revenues by the Company Owned Real Estate Brokerage Services segment. There are no other material intersegment transactions.
|
|
(c)
|
Includes the elimination of transactions between segments.
|
|
|
EBITDA
|
||||||||||||||
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2017 (a)
|
|
2016 (b)
|
|
2017 (c)
|
|
2016 (d)
|
||||||||
|
Real Estate Franchise Services
|
$
|
159
|
|
|
$
|
153
|
|
|
$
|
427
|
|
|
$
|
394
|
|
|
Company Owned Real Estate Brokerage Services
|
62
|
|
|
74
|
|
|
113
|
|
|
131
|
|
||||
|
Relocation Services
|
37
|
|
|
40
|
|
|
65
|
|
|
74
|
|
||||
|
Title and Settlement Services
|
21
|
|
|
23
|
|
|
49
|
|
|
49
|
|
||||
|
Corporate and Other (e)
|
(25
|
)
|
|
(20
|
)
|
|
(70
|
)
|
|
(60
|
)
|
||||
|
Total Company
|
$
|
254
|
|
|
$
|
270
|
|
|
$
|
584
|
|
|
$
|
588
|
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
|
Depreciation and amortization (f)
|
$
|
51
|
|
|
$
|
53
|
|
|
$
|
150
|
|
|
$
|
149
|
|
|
Interest expense, net
|
41
|
|
|
37
|
|
|
127
|
|
|
169
|
|
||||
|
Income tax expense
|
67
|
|
|
74
|
|
|
131
|
|
|
114
|
|
||||
|
Net income attributable to Realogy Holdings and Realogy Group
|
$
|
95
|
|
|
$
|
106
|
|
|
$
|
176
|
|
|
$
|
156
|
|
|
(a)
|
The
three months ended
September 30, 2017
includes a net
cost
of
$1 million
of former parent legacy items and
$1 million
related to the loss on the early extinguishment of debt in Corporate and Other, and restructuring charges of
$2 million
in the Company Owned Real Estate Brokerage Services segment.
|
|
(b)
|
The
three months ended
September 30, 2016
includes
$9 million
of restructuring charges as follows:
$1 million
in the Real Estate Franchise Services segment,
$6 million
in the Company Owned Real Estate Brokerage Services segment,
$1 million
in the Relocation Services segment and
$1 million
in the Title and Settlement Services segment.
|
|
(c)
|
The
nine months ended
September 30, 2017
includes an
$8 million
expense related to the settlement of the Strader legal matter and
$5 million
related to the losses on the early extinguishment of debt, partially offset by a net
benefit
of
$10 million
of former parent legacy items in Corporate and Other, and
$9 million
of restructuring charges as follows:
$8 million
in the Company Owned Real Estate Brokerage Services segment and
$1 million
in the Real Estate Franchise Services segment.
|
|
(d)
|
The
nine months ended
September 30, 2016
includes
$30 million
of restructuring charges as follows:
$4 million
in the Real Estate Franchise Services segment,
$15 million
in the Company Owned Real Estate Brokerage Services segment,
$4 million
in the Relocation Services segment,
$1 million
in the Title and Settlement Services segment and
$6 million
in Corporate and Other, and a net
cost
of
$1 million
of former parent legacy items included in Corporate and Other.
|
|
(e)
|
Includes the elimination of transactions between segments.
|
|
(f)
|
Depreciation and amortization for both the
three and nine months ended
September 30, 2017
includes
$1 million
of amortization expense related to Guaranteed Rate Affinity's purchase accounting included in the "Equity in earnings of unconsolidated entities" line on the Condensed Consolidated Statement of Operations.
|
|
11.
|
SUBSEQUENT EVENTS
|
|
•
|
Real Estate Franchise Services
(known as Realogy Franchise Group or RFG)—franchises the Century 21
®
, Coldwell Banker
®
, Coldwell Banker Commercial
®
, ERA
®
, Sotheby's International Realty
®
and Better Homes and Gardens
®
Real Estate brand names. As of
September 30, 2017
, our franchise systems had approximately
14,450
franchised and company owned offices and approximately
286,500
independent sales associates operating under our franchise and proprietary brands in the U.S. and
113
other countries and territories around the world, which included more than
780
of our company owned and operated brokerage offices with more than
50,000
independent sales associates.
|
|
•
|
Company Owned Real Estate Brokerage Services
(known as NRT)—operates a full-service real estate brokerage business with more than
780
owned and operated brokerage offices with more than
50,000
independent sales associates principally under the Coldwell Banker
®
, Corcoran
®
, Sotheby’s International Realty
®
, ZipRealty
®
and Citi Habitats
SM
brand names in more than
50
of the
100
largest metropolitan areas in the U.S. This segment also includes the Company's share of earnings for our PHH Home Loans venture, which is in the process of winding down as we transition to our new mortgage origination joint venture with Guaranteed Rate Affinity.
|
|
•
|
Relocation Services
(known as Cartus
®
)—primarily offers clients employee relocation services such as homesale assistance, providing home equity advances to transferees (generally guaranteed by the individual's employer), home finding and other destination services, expense processing, relocation policy counseling and consulting services, arranging household goods moving services, coordinating visa and immigration support, intercultural and language training and group move management services. In addition, we provide home buying and selling assistance to members of affinity clients.
|
|
•
|
Title and Settlement Services
(known as Title Resource Group or TRG)—provides full-service title and settlement services to real estate companies, affinity groups, corporations and financial institutions with many of these services provided in connection with the Company's real estate brokerage and relocation services business. This segment also includes the Company's share of earnings, including start-up costs, for our Guaranteed Rate Affinity venture.
|
|
|
|
|
2017 vs. 2016
|
|
||||||||||||||
|
Number of Existing Homesales
|
Full Year
2016 vs. 2015 |
|
First
Quarter |
|
Second
Quarter |
|
Third
Quarter |
|
Fourth
Quarter Forecast |
|
Full Year
Forecast 2017 vs. 2016 |
|
||||||
|
Industry
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
NAR
|
4
|
%
|
(a)
|
5
|
%
|
(a)
|
2
|
%
|
(a)
|
(2
|
%)
|
(a)
|
(4
|
%)
|
(b)
|
—
|
%
|
(b)
|
|
Fannie Mae (c)
|
4
|
%
|
|
5
|
%
|
|
2
|
%
|
|
(2
|
%)
|
|
(5
|
%)
|
|
—
|
%
|
|
|
Realogy
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
RFG and NRT Combined
|
2
|
%
|
|
3
|
%
|
|
1
|
%
|
|
(1
|
%)
|
|
|
|
|
|
||
|
RFG
|
3
|
%
|
|
3
|
%
|
|
1
|
%
|
|
(1
|
%)
|
|
|
|
|
|
||
|
NRT
|
—
|
%
|
|
4
|
%
|
|
3
|
%
|
|
—
|
%
|
|
|
|
|
|
||
|
(a)
|
Historical existing homesale data is as of the most recent NAR press release, which is subject to sampling error.
|
|
(b)
|
Forecasted existing homesale data, on a seasonally adjusted basis, is as of the most recent NAR forecast.
|
|
(c)
|
Forecasted existing homesale data, on a seasonally adjusted basis, is as of the most recent Fannie Mae press release.
|
|
|
|
|
2017 vs. 2016
|
|
||||||||||||||
|
Price of Existing Homes
|
Full Year
2016 vs. 2015 |
|
First
Quarter |
|
Second
Quarter |
|
Third
Quarter |
|
Fourth
Quarter Forecast |
|
Full Year
Forecast 2017 vs. 2016 |
|
||||||
|
Industry
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
NAR
|
4
|
%
|
(a)
|
5
|
%
|
(a)
|
5
|
%
|
(a)
|
4
|
%
|
(a)
|
5
|
%
|
(b)
|
6
|
%
|
(b)
|
|
Fannie Mae (c)
|
5
|
%
|
|
7
|
%
|
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
|
|
Realogy
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
RFG and NRT Combined
|
2
|
%
|
|
5
|
%
|
|
7
|
%
|
|
6
|
%
|
|
|
|
|
|
||
|
RFG
|
3
|
%
|
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
|
|
|
|
|
||
|
NRT
|
—
|
%
|
|
3
|
%
|
|
9
|
%
|
|
4
|
%
|
|
|
|
|
|
||
|
(a)
|
Historical homesale price data is for existing homesale average price and is as of the most recent NAR press release.
|
|
(b)
|
Forecasted homesale price data is for median price and is as of the most recent NAR forecast.
|
|
(c)
|
Existing homesale price data is for median price and is as of the most recent Fannie Mae press release.
|
|
•
|
higher mortgage rates due to increases in long-term interest rates as well as reduced availability of mortgage financing;
|
|
•
|
continued insufficient inventory levels and lack of building of new housing leading to lower unit sales;
|
|
•
|
changing attitudes towards home ownership, particularly among potential first-time homebuyers who may delay, or decide not to, purchase homes;
|
|
•
|
potential homebuyers with a low credit rating or inability to afford down payments;
|
|
•
|
the impact of limited or negative equity of current homeowners, as well as the lack of available inventory may limit their proclivity to purchase an alternative home;
|
|
•
|
reduced affordability of homes;
|
|
•
|
economic stagnation or contraction in the U.S. economy;
|
|
•
|
a decline in home ownership levels in the U.S.;
|
|
•
|
geopolitical and economic instability; and
|
|
•
|
legislative or regulatory reform, including but not limited to reform that adversely impacts the financing of the U.S. housing market or amends the Internal Revenue Code in a manner that negatively impacts home ownership such as reform that reduces the amount that certain taxpayers would be allowed to deduct for home mortgage interest or state, local and property taxes.
|
|
•
|
they use survey data and estimates in their historical reports and forecasting models, which are subject to sampling error, whereas we use data based on actual reported results;
|
|
•
|
there are geographical differences and concentrations in the markets in which we operate versus the national market. For example, many of our company owned brokerage offices are geographically located where average homesale prices are generally higher than the national average and therefore NAR survey data will not correlate with NRT's results;
|
|
•
|
comparability is also impaired due to NAR’s utilization of seasonally adjusted annualized rates whereas we report actual period-over-period changes and their use of median price for their forecasts compared to our average price;
|
|
•
|
NAR historical data is subject to periodic review and revision and these revisions have been, and could be material in the future; and
|
|
•
|
NAR and Fannie Mae generally update their forecasts on a monthly basis and a subsequent forecast may change materially from a forecast that was previously issued.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
% Change
|
|
2017
|
|
2016
|
|
% Change
|
||||||||||
|
RFG (a)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Closed homesale sides
|
318,961
|
|
|
323,176
|
|
|
(1
|
%)
|
|
866,956
|
|
|
861,254
|
|
|
1
|
%
|
||||
|
Average homesale price
|
$
|
292,000
|
|
|
$
|
275,325
|
|
|
6
|
%
|
|
$
|
287,558
|
|
|
$
|
270,669
|
|
|
6
|
%
|
|
Average homesale broker commission rate
|
2.49
|
%
|
|
2.50
|
%
|
|
(1
|
) bps
|
|
2.50
|
%
|
|
2.51
|
%
|
|
(1
|
) bps
|
||||
|
Net effective royalty rate
|
4.42
|
%
|
|
4.50
|
%
|
|
(8
|
) bps
|
|
4.42
|
%
|
|
4.50
|
%
|
|
(8
|
) bps
|
||||
|
Royalty per side
|
$
|
334
|
|
|
$
|
322
|
|
|
4
|
%
|
|
$
|
331
|
|
|
$
|
318
|
|
|
4
|
%
|
|
NRT
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Closed homesale sides
|
95,236
|
|
|
95,605
|
|
|
—
|
%
|
|
262,849
|
|
|
258,163
|
|
|
2
|
%
|
||||
|
Average homesale price
|
$
|
506,418
|
|
|
$
|
486,343
|
|
|
4
|
%
|
|
$
|
515,617
|
|
|
$
|
487,781
|
|
|
6
|
%
|
|
Average homesale broker commission rate
|
2.45
|
%
|
|
2.46
|
%
|
|
(1
|
) bps
|
|
2.45
|
%
|
|
2.47
|
%
|
|
(2
|
) bps
|
||||
|
Gross commission income per side
|
$
|
13,142
|
|
|
$
|
12,681
|
|
|
4
|
%
|
|
$
|
13,358
|
|
|
$
|
12,750
|
|
|
5
|
%
|
|
Cartus
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Initiations
|
39,608
|
|
|
40,556
|
|
|
(2
|
%)
|
|
126,921
|
|
|
129,290
|
|
|
(2
|
%)
|
||||
|
Referrals
|
23,905
|
|
|
25,495
|
|
|
(6
|
%)
|
|
64,392
|
|
|
68,526
|
|
|
(6
|
%)
|
||||
|
TRG
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Purchase title and closing units (b)
|
43,764
|
|
|
42,932
|
|
|
2
|
%
|
|
122,069
|
|
|
116,082
|
|
|
5
|
%
|
||||
|
Refinance title and closing units (c)
|
6,513
|
|
|
15,170
|
|
|
(57
|
%)
|
|
21,370
|
|
|
36,100
|
|
|
(41
|
%)
|
||||
|
Average fee per closing unit
|
$
|
2,115
|
|
|
$
|
1,824
|
|
|
16
|
%
|
|
$
|
2,092
|
|
|
$
|
1,865
|
|
|
12
|
%
|
|
(a)
|
Includes all franchisees except for NRT.
|
|
(b)
|
The amounts presented for the
three and nine months ended
September 30, 2017
include
3,325
and
8,351
purchase units, respectively, as a result of the acquisitions completed prior to the
third quarter
of 2017.
|
|
(c)
|
The amounts presented for the
three and nine months ended
September 30, 2017
include
725
and
1,858
refinance units, respectively, as a result of the acquisitions completed prior to the
third quarter
of 2017.
|
|
|
Three Months Ended September 30,
|
||||||||||
|
|
2017
|
|
2016
|
|
Change
|
||||||
|
Net revenues
|
$
|
1,674
|
|
|
$
|
1,644
|
|
|
$
|
30
|
|
|
Total expenses (1)
|
1,521
|
|
|
1,468
|
|
|
53
|
|
|||
|
Income before income taxes, equity in earnings and noncontrolling interests
|
153
|
|
|
176
|
|
|
(23
|
)
|
|||
|
Income tax expense
|
67
|
|
|
74
|
|
|
(7
|
)
|
|||
|
Equity in earnings of unconsolidated entities
|
(10
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|||
|
Net income
|
96
|
|
|
107
|
|
|
(11
|
)
|
|||
|
Less: Net income attributable to noncontrolling interests
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|||
|
Net income attributable to Realogy Holdings and Realogy Group
|
$
|
95
|
|
|
$
|
106
|
|
|
$
|
(11
|
)
|
|
(1)
|
Total expenses
for the three months ended
September 30, 2017
includes
$2 million
of restructuring charges,
$1 million
related to loss on the early extinguishment of debt and a net
cost
of
$1 million
of former parent legacy items. Total expenses
for the three months ended
September 30, 2016
includes
$9 million
of restructuring charges partially offset by
$5 million
of
gains
related to mark-to-market adjustments for our interest rate swaps.
|
|
•
|
a
$53 million
increase
in commission and other sales associate-related costs due to an increase in homesale transaction volume at NRT and higher sales commissions paid to its independent sales associates;
|
|
•
|
a
$5 million
increase
in marketing expenses; and
|
|
•
|
a
$4 million
net
increase
in interest expense to
$41 million
in the
third quarter
of
2017
from
$37 million
in the
third quarter
of
2016
due to the absence of mark-to-market adjustments for our interest rate swaps that resulted in
gains
of
$5 million
during the third quarter of
2016
less a
$1 million
decrease as a result of a reduction in total outstanding indebtedness and a lower weighted average interest rate.
|
|
•
|
a
$7 million
decrease
in restructuring costs related to the Company's business optimization plan; and
|
|
•
|
a
$2 million
decrease
in operating and general and administrative expenses primarily driven by:
|
|
◦
|
a
$10 million
increase
in other expenses including professional fees and occupancy costs; and
|
|
◦
|
a
$1 million
increase
in employee-related costs primarily related to acquisitions;
|
|
◦
|
a
$10 million
decrease
in variable operating costs at TRG primarily due to lower refinance and underwriter volume.
|
|
•
|
an
$8 million
increase
in equity earnings at NRT as a result of
$14 million
of earnings from the sale of the first two phases of PHH Home Loans' assets to Guaranteed Rate Affinity, partially offset by
$2 million
of exit costs. In addition, there was a
$4 million
decrease
in earnings due to lower operating results as a result of lower origination volume, compressed industry margins and lower results due to the level of organizational change associated with the transition to the operations of Guaranteed Rate Affinity.
|
|
•
|
a
$3 million
decrease
in equity earnings at TRG primarily related to costs associated with the start up of operations of Guaranteed Rate Affinity, including
$1 million
of amortization of intangible assets recorded in purchase accounting.
|
|
|
Revenues (a)
|
|
%
Change
|
|
EBITDA (b)
|
|
%
Change
|
|
EBITDA Margin
|
|
Change
|
|||||||||||||||||||
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||||||
|
RFG
|
$
|
224
|
|
|
$
|
215
|
|
|
4
|
%
|
|
$
|
159
|
|
|
$
|
153
|
|
|
4
|
%
|
|
71
|
%
|
|
71
|
%
|
|
—
|
|
|
NRT
|
1,267
|
|
|
1,231
|
|
|
3
|
|
|
62
|
|
|
74
|
|
|
(16
|
)
|
|
5
|
|
|
6
|
|
|
(1
|
)
|
||||
|
Cartus
|
111
|
|
|
116
|
|
|
(4
|
)
|
|
37
|
|
|
40
|
|
|
(8
|
)
|
|
33
|
|
|
34
|
|
|
(1
|
)
|
||||
|
TRG
|
154
|
|
|
164
|
|
|
(6
|
)
|
|
21
|
|
|
23
|
|
|
(9
|
)
|
|
14
|
|
|
14
|
|
|
—
|
|
||||
|
Corporate and Other
|
(82
|
)
|
|
(82
|
)
|
|
*
|
|
|
(25
|
)
|
|
(20
|
)
|
|
*
|
|
|
|
|
|
|
|
|||||||
|
Total Company
|
$
|
1,674
|
|
|
$
|
1,644
|
|
|
2
|
%
|
|
$
|
254
|
|
|
$
|
270
|
|
|
(6
|
%)
|
|
15
|
%
|
|
16
|
%
|
|
(1
|
)
|
|
Less: Depreciation and amortization (c)
|
|
51
|
|
|
53
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Interest expense, net
|
|
41
|
|
|
37
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Income tax expense
|
|
67
|
|
|
74
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Net income attributable to Realogy Holdings and Realogy Group
|
|
$
|
95
|
|
|
$
|
106
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
*
|
not meaningful
|
|
(a)
|
Includes the elimination of transactions between segments, which consists of intercompany royalties and marketing fees paid by NRT of
$82 million
during both the
three months ended
September 30, 2017
and
September 30, 2016
.
|
|
(b)
|
EBITDA
for the three months ended
September 30, 2017
includes
$1 million
related to loss on the early extinguishment of debt and a net
cost
of
$1 million
of former parent legacy items in Corporate and Other and
$2 million
of restructuring charges in NRT.
|
|
(c)
|
Depreciation and amortization
for the three months ended
September 30, 2017
includes
$1 million
of amortization expense related to Guaranteed Rate Affinity's purchase accounting included in the "Equity in earnings of unconsolidated entities" line on the Condensed Consolidated Statement of Operations.
|
|
*
|
not meaningful
|
|
|
Revenues (a)
|
|
%
Change
|
|
EBITDA Before Restructuring (b)
|
|
%
Change
|
|
Margin
|
|
Change
|
|||||||||||||||||||
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||||||
|
RFG and NRT Combined
|
$
|
1,409
|
|
|
$
|
1,364
|
|
|
3
|
%
|
|
$
|
223
|
|
|
$
|
234
|
|
|
(5
|
%)
|
|
16
|
%
|
|
17
|
%
|
|
(1
|
)
|
|
(a)
|
Excludes transactions between segments, which consists of intercompany royalties and marketing fees paid by NRT to RFG of
$82 million
during both the
three months ended
September 30, 2017
and
2016
.
|
|
(b)
|
EBITDA for the combined RFG and NRT segments excludes
$2 million
and
$7 million
of restructuring charges for the
three months ended
September 30, 2017
and
2016
, respectively.
|
|
•
|
a
$53 million
increase
in commission expenses paid to independent sales associates from
$834 million
in the
third quarter
of
2016
to
$887 million
in the
third quarter
of
2017
. The
$53 million
increase
is comprised of a
$41 million
increase
in commission expense due to our existing brokerage operations and was driven by the impact of initiatives focused on growing and retaining our productive independent sales associate base and higher homesale transaction volume, as well as a
$12 million
increase
in commission expense related to acquisitions. The
$53 million
increase in commission expense was significantly impacted by the mix of business as approximately
70%
of the increase was due to higher homesale transaction volume in the west region where we pay a greater proportion of commissions to independent sales associates;
|
|
•
|
a
$7 million
increase
in other costs including occupancy costs;
|
|
•
|
a
$2 million
increase
in marketing expenses including the effect of acquisitions; and
|
|
•
|
a
$2 million
increase
in royalties paid to RFG from
$79 million
in the
third quarter
of
2016
to
$81 million
in the
third quarter
of
2017
.
|
|
•
|
the
$36 million
increase
in revenues discussed above;
|
|
•
|
an
$8 million
increase in earnings for our equity method investment in PHH Home Loans for the third quarter of 2017 compared to the third quarter
2016
as a result of
$14 million
of earnings from the sale of the first two phases of PHH Home Loans' assets to Guaranteed Rate Affinity partially offset by
$2 million
of exit costs. In addition, there was a
$4 million
decrease in earnings due to lower operating results as a result of lower origination volume, compressed industry margins and lower results due to the level of organizational change associated with the transition of the operations to Guaranteed Rate Affinity;
|
|
•
|
a
$4 million
decrease
in restructuring costs related to the Company's business optimization plan from
$6 million
in the
third quarter
of
2016
to
$2 million
in the
third quarter
of
2017
; and
|
|
•
|
a
$3 million
decrease
in employee-related costs due to a
$5 million
decrease
primarily related to expense reduction initiatives offset by a
$2 million
increase
in costs attributable to acquisitions.
|
|
|
Nine Months Ended September 30,
|
||||||||||
|
|
2017
|
|
2016
|
|
Change
|
||||||
|
Net revenues
|
$
|
4,670
|
|
|
$
|
4,440
|
|
|
$
|
230
|
|
|
Total expenses (1)
|
4,368
|
|
|
4,177
|
|
|
191
|
|
|||
|
Income before income taxes, equity in earnings and noncontrolling interests
|
302
|
|
|
263
|
|
|
39
|
|
|||
|
Income tax expense
|
131
|
|
|
114
|
|
|
17
|
|
|||
|
Equity in earnings of unconsolidated entities
|
(7
|
)
|
|
(10
|
)
|
|
3
|
|
|||
|
Net income
|
178
|
|
|
159
|
|
|
19
|
|
|||
|
Less: Net income attributable to noncontrolling interests
|
(2
|
)
|
|
(3
|
)
|
|
1
|
|
|||
|
Net income attributable to Realogy Holdings and Realogy Group
|
$
|
176
|
|
|
$
|
156
|
|
|
$
|
20
|
|
|
(1)
|
Total expenses
for the nine months ended
September 30, 2017
includes
$9 million
of restructuring charges, an
$8 million
expense related to the settlement of the Strader legal matter,
$5 million
related to losses on the early extinguishment of debt and
$4 million
of
losses
related to mark-to-market adjustments for our interest rate swaps, partially offset by a net
benefit
of
$10 million
of former parent legacy items. Total expenses
for the nine months ended
September 30, 2016
includes
$40 million
of
losses
related to mark-to-market adjustments for our interest rate swaps,
$30 million
of restructuring charges and a net
cost
of
$1 million
of former parent legacy items.
|
|
•
|
a
$206 million
increase
in commission and other sales associate-related costs due to an increase in homesale transaction volume at NRT and higher sales commissions paid to its independent sales associates;
|
|
•
|
a
$39 million
increase
in operating and general and administrative expenses primarily driven by:
|
|
◦
|
$24 million
of additional employee-related costs associated with acquisitions;
|
|
◦
|
a
$24 million
increase
in other expenses including professional fees and occupancy costs; and
|
|
◦
|
an
$8 million
expense related to the settlement of the Strader legal matter in the second quarter of 2017;
|
|
◦
|
a
$7 million
decrease
in variable operating costs at TRG primarily due to lower refinance and underwriter volume;
|
|
•
|
a
$14 million
increase
in marketing expenses; and
|
|
•
|
$5 million
related to the losses on the early extinguishment of debt primarily as a result of the refinancing transaction completed during the first quarter of 2017.
|
|
•
|
a
$42 million
net
decrease
in interest expense to
$127 million
for the nine months ended
September 30, 2017
from
$169 million
for the nine months ended
September 30, 2016
. Mark-to-market adjustments for our interest rate swaps resulted in
losses
of
$4 million
for the nine months ended
September 30, 2017
compared to
losses
of
$40 million
in the same period of 2016. Before the mark-to-market adjustments for our interest rate swaps, interest expense
decrease
d
$6 million
to
$123 million
for the nine months ended
September 30, 2017
from
$129 million
for the nine months ended
September 30, 2016
as a result of a reduction in total outstanding indebtedness and a lower weighted average interest rate;
|
|
•
|
a
$21 million
decrease
in restructuring costs related to the Company's business optimization plan (see Note 6, "Restructuring Costs", in the Condensed Consolidated Financial Statements for additional information); and
|
|
•
|
an
$11 million
increase in the net benefit of former parent legacy items primarily as a result of the settlement of a Cendant legacy tax matter.
|
|
•
|
a
$4 million
decrease
in equity earnings at TRG primarily related to costs associated with the start up of operations of Guaranteed Rate Affinity, including
$1 million
of amortization of intangible assets recorded in purchase accounting.
|
|
•
|
a
$1 million
increase
in equity earnings at NRT as a result of
$14 million
of earnings from the first two phases of the sale of PHH Home Loans' assets to Guaranteed Rate Affinity, partially offset by
$5 million
of exit costs. In addition, there was a
$8 million
decrease
in earnings due to lower operating results as a result of lower origination volume, compressed industry margins and lower results due to the level of organizational change associated with the transition of the operations to Guaranteed Rate Affinity.
|
|
|
Revenues (a)
|
|
%
Change
|
|
EBITDA (b)
|
|
%
Change
|
|
EBITDA Margin
|
|
Change
|
|||||||||||||||||||
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||||||
|
RFG
|
$
|
631
|
|
|
$
|
593
|
|
|
6
|
%
|
|
$
|
427
|
|
|
$
|
394
|
|
|
8
|
%
|
|
68
|
%
|
|
66
|
%
|
|
2
|
|
|
NRT
|
3,556
|
|
|
3,340
|
|
|
6
|
|
|
113
|
|
|
131
|
|
|
(14
|
)
|
|
3
|
|
|
4
|
|
|
(1
|
)
|
||||
|
Cartus
|
290
|
|
|
308
|
|
|
(6
|
)
|
|
65
|
|
|
74
|
|
|
(12
|
)
|
|
22
|
|
|
24
|
|
|
(2
|
)
|
||||
|
TRG
|
431
|
|
|
424
|
|
|
2
|
|
|
49
|
|
|
49
|
|
|
—
|
|
|
11
|
|
|
12
|
|
|
(1
|
)
|
||||
|
Corporate and Other
|
(238
|
)
|
|
(225
|
)
|
|
*
|
|
|
(70
|
)
|
|
(60
|
)
|
|
*
|
|
|
|
|
|
|
|
|||||||
|
Total Company
|
$
|
4,670
|
|
|
$
|
4,440
|
|
|
5
|
%
|
|
$
|
584
|
|
|
$
|
588
|
|
|
(1
|
)%
|
|
13
|
%
|
|
13
|
%
|
|
—
|
|
|
Less: Depreciation and amortization (c)
|
|
150
|
|
|
149
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Interest expense, net
|
|
127
|
|
|
169
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Income tax expense
|
|
131
|
|
|
114
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Net income attributable to Realogy Holdings and Realogy Group
|
|
$
|
176
|
|
|
$
|
156
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
*
|
not meaningful
|
|
(a)
|
Includes the elimination of transactions between segments, which consists of intercompany royalties and marketing fees paid by NRT of
$238 million
and
$225 million
during the
nine months ended
September 30, 2017
and
September 30, 2016
, respectively.
|
|
(b)
|
EBITDA
for the nine months ended
September 30, 2017
includes an
$8 million
expense related to the settlement of the Strader legal matter and
$5 million
related to losses on the early extinguishment of debt, partially offset by a net
benefit
of
$10 million
of former parent legacy items in Corporate and Other, and
$9 million
of restructuring charges discussed further below.
|
|
(c)
|
Depreciation and amortization
for the nine months ended
September 30, 2017
includes
$1 million
of amortization expense related to Guaranteed Rate Affinity's purchase accounting included in the "Equity in earnings of unconsolidated entities" line on the Condensed Consolidated Statement of Operations.
|
|
*
|
not meaningful
|
|
|
Revenues (a)
|
|
%
Change
|
|
EBITDA Before Restructuring (b)
|
|
%
Change
|
|
Margin
|
|
Change
|
|||||||||||||||||||
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
||||||||||||||||
|
RFG and NRT Combined
|
$
|
3,949
|
|
|
$
|
3,708
|
|
|
6
|
%
|
|
$
|
549
|
|
|
$
|
544
|
|
|
1
|
%
|
|
14
|
%
|
|
15
|
%
|
|
(1
|
)
|
|
(a)
|
Excludes transactions between segments, which consists of intercompany royalties and marketing fees paid by NRT to RFG of
$238 million
and
$225 million
during the
nine months ended
September 30, 2017
and
2016
, respectively.
|
|
(b)
|
EBITDA for the combined RFG and NRT segments excludes
$9 million
and
$19 million
of restructuring charges
for the nine months ended
September 30, 2017
and
2016
,
respectively.
|
|
•
|
a
$206 million
increase
in commission expenses paid to independent sales associates from
$2,256 million
for the nine months ended
September 30, 2016
to
$2,462 million
for the nine months ended
September 30, 2017
. The
increase
in commission expense is due to an
increase
of
$166 million
by our existing brokerage operations due to the impact of initiatives focused on growing and retaining our productive independent sales associate base and higher homesale transaction volume, as well as a
$40 million
increase
related to acquisitions. The
$206 million
increase in commission expense was impacted by the mix of business as approximately 46% of the increase was due to higher homesale transaction volume in the west region where we pay a greater proportion of commissions to independent sales associates;
|
|
•
|
a
$14 million
increase
in other costs including occupancy costs of which
$6 million
related to acquisitions;
|
|
•
|
a
$12 million
increase
in royalties paid to RFG from
$217 million
for the nine months ended
September 30, 2016
to
$229 million
for the nine months ended
September 30, 2017
;
|
|
•
|
a
$6 million
increase
in employee-related costs due to a
$12 million
increase
attributable to acquisitions offset by a
$6 million
decrease
due to expense reduction initiatives; and
|
|
•
|
a
$6 million
increase
in marketing expenses of which
$3 million
related to acquisitions.
|
|
•
|
a
$216 million
increase
in revenues discussed above;
|
|
•
|
a
$7 million
decrease
in restructuring costs incurred during the nine months ended
September 30, 2017
compared to the same period in
2016
; and
|
|
•
|
a
$1 million
increase in earnings for our equity method investment in PHH Home Loans
for the nine months ended
September 30, 2017
compared to the same period in
2016
as a result of
$14 million
of earnings from the first two phases of the sale of PHH Home Loans' assets to Guaranteed Rate Affinity partially offset by
$5 million
of exit costs. In addition, there was a
$8 million
decrease in earnings due to lower operating results as a result of lower origination volume, compressed industry margins and lower results due to the level of organizational change associated with the transition of the operations to Guaranteed Rate Affinity.
|
|
|
September 30, 2017
|
|
December 31, 2016
|
|
Change
|
||||||
|
Total assets
|
$
|
7,521
|
|
|
$
|
7,421
|
|
|
$
|
100
|
|
|
Total liabilities
|
5,056
|
|
|
4,952
|
|
|
104
|
|
|||
|
Total equity
|
2,465
|
|
|
2,469
|
|
|
(4
|
)
|
|||
|
|
Nine Months Ended September 30,
|
||||||||||
|
|
2017
|
|
2016
|
|
Change
|
||||||
|
Cash provided by (used in):
|
|
|
|
|
|
||||||
|
Operating activities
|
$
|
444
|
|
|
$
|
411
|
|
|
$
|
33
|
|
|
Investing activities
|
(96
|
)
|
|
(163
|
)
|
|
67
|
|
|||
|
Financing activities
|
(276
|
)
|
|
(438
|
)
|
|
162
|
|
|||
|
Effects of change in exchange rates on cash and cash equivalents
|
2
|
|
|
(1
|
)
|
|
3
|
|
|||
|
Net change in cash and cash equivalents
|
$
|
74
|
|
|
$
|
(191
|
)
|
|
$
|
265
|
|
|
•
|
$180 million
for the repurchase of our common stock;
|
|
•
|
$37 million
of dividend payments;
|
|
•
|
$31 million
of quarterly amortization payments on the term loan facilities;
|
|
•
|
$19 million
of other financing payments primarily related to capital leases and interest rate swaps;
|
|
•
|
$18 million
for payments of contingent consideration;
|
|
•
|
$11 million
of tax payments related to net share settlement for stock-based compensation;
|
|
•
|
$10 million
repayment of borrowings under the Revolving Credit Facility; and
|
|
•
|
$6 million
of debt issuance costs;
|
|
•
|
a
$29 million
net decrease in securitization borrowings; and
|
|
•
|
the repayment of $758 million to reduce the Term Loan B facility;
|
|
•
|
the repayment of $500 million to retire the 3.375% Senior Notes at maturity;
|
|
•
|
the net repayment of $45 million of borrowings under the Revolving Credit Facility;
|
|
•
|
$134 million for the purchase of our common stock;
|
|
•
|
$31 million of amortization payments on the term loan facilities;
|
|
•
|
$23 million for payments of contingent consideration; and
|
|
•
|
$28 million of other financing payments partially related to capital leases and interest rate swaps;
|
|
•
|
$15 million of debt issuance costs;
|
|
•
|
$13 million of dividend payments; and
|
|
•
|
$6 million of tax payments related to net share settlement for stock-based compensation;
|
|
•
|
$750 million of proceeds from the issuance of $250 million of 5.25% Senior Notes and $500 million of 4.875% Senior Notes;
|
|
•
|
$355 million of proceeds from issuance of the Term Loan A-1 facility; and
|
|
•
|
a $9 million net increase in securitization borrowings.
|
|
|
Interest
Rate |
|
Expiration
Date |
|
Principal Amount
|
|
Unamortized Discount and Debt Issuance Costs
|
|
Net Amount
|
||||||
|
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
|
|
||||||
|
Revolving Credit Facility (1)
|
(2)
|
|
October 2020
|
|
$
|
190
|
|
|
$ *
|
|
|
$
|
190
|
|
|
|
Term Loan B
|
(3)
|
|
July 2022
|
|
1,086
|
|
|
21
|
|
|
1,065
|
|
|||
|
Term Loan A Facility:
|
|
|
|
|
|
|
|
|
|
||||||
|
Term Loan A
|
(4)
|
|
October 2020
|
|
397
|
|
|
2
|
|
|
395
|
|
|||
|
Term Loan A-1
|
(5)
|
|
July 2021
|
|
344
|
|
|
3
|
|
|
341
|
|
|||
|
Senior Notes
|
4.50%
|
|
April 2019
|
|
450
|
|
|
7
|
|
|
443
|
|
|||
|
Senior Notes
|
5.25%
|
|
December 2021
|
|
550
|
|
|
4
|
|
|
546
|
|
|||
|
Senior Notes
|
4.875%
|
|
June 2023
|
|
500
|
|
|
4
|
|
|
496
|
|
|||
|
Securitization obligations: (6)
|
|
|
|
|
|
|
|
|
|
||||||
|
Apple Ridge Funding LLC (7)
|
|
|
June 2018
|
|
223
|
|
|
*
|
|
|
223
|
|
|||
|
Cartus Financing Limited (8)
|
|
|
August 2018
|
|
11
|
|
|
*
|
|
|
11
|
|
|||
|
Total (9)
|
$
|
3,751
|
|
|
$
|
41
|
|
|
$
|
3,710
|
|
||||
|
*
|
The debt issuance costs related to our Revolving Credit Facility and securitization obligations are classified as a deferred financing asset within other assets.
|
|
(1)
|
As of
September 30, 2017
, the Company had
$1,050 million
of borrowing capacity under its Revolving Credit Facility leaving
$860 million
of available capacity. The revolving credit facility expires in October 2020, but is classified on the balance sheet as current due to the revolving nature of the facility. On
November 1, 2017
, the Company had
$70 million
in outstanding borrowings under the Revolving Credit Facility, leaving
$980 million
of available capacity.
|
|
(2)
|
Interest rates with respect to revolving loans under the Senior Secured Credit Facility at
September 30, 2017
are based on, at the Company's option, (a) adjusted
LIBOR
plus an additional margin or (b)
ABR
plus an additional margin, in each case subject to adjustment based on the then current senior secured leverage ratio. Based on the previous quarter senior secured leverage ratio, the
LIBOR
margin was
2.00%
and the
ABR
margin was
1.00%
for the three months ended
September 30, 2017
.
|
|
(3)
|
The Term Loan B provides for quarterly amortization payments totaling
1%
per annum of the original principal amount. The interest rate with respect to term loans under the Term Loan B is based on, at the Company’s option, (a) adjusted
LIBOR
plus
2.25%
(with a
LIBOR
floor of
0.75%
) or (b) JPMorgan Chase Bank, N.A.’s prime rate ("
ABR
") plus
1.25%
(with an
ABR
floor of
1.75%
).
|
|
(4)
|
The Term Loan A provides for quarterly amortization payments, which commenced March 31, 2016, totaling per annum
5%
,
5%
,
7.5%
,
10.0%
and
12.5%
of the original principal amount of the Term Loan A in 2016, 2017, 2018, 2019 and 2020, respectively. The
|
|
(5)
|
The Term Loan A-1 provides for quarterly amortization payments, which commenced on September 30, 2016, totaling per annum
2.5%
,
2.5%
,
5%
,
7.5%
and
10.0%
of the original principal amount of the Term Loan A-1, with the last amortization payment made on June 30, 2021. The interest rates with respect to term loans under the Term Loan A-1 are based on, at the Company's option, (a) adjusted
LIBOR
plus an additional margin or (b)
ABR
plus an additional margin, in each case subject to adjustment based on the then current senior secured leverage ratio. Based on the previous quarter senior secured leverage ratio, the
LIBOR
margin was
2.00%
and the
ABR
margin was
1.00%
for the three months ended
September 30, 2017
.
|
|
(6)
|
Available capacity is subject to maintaining sufficient relocation related assets to collateralize these securitization obligations.
|
|
(7)
|
In June 2017, Realogy Group extended the existing Apple Ridge Funding LLC securitization program utilized by Cartus until June 2018. As of
September 30, 2017
, the Company had
$325 million
of borrowing capacity under the Apple Ridge Funding LLC securitization program leaving
$102 million
of available capacity.
|
|
(8)
|
Consists of a
£10 million
revolving loan facility and a
£5 million
working capital facility. As of
September 30, 2017
, the Company had
$20 million
of borrowing capacity under the Cartus Financing Limited securitization program leaving
$9 million
of available capacity. In September 2017, Realogy Group extended the existing Cartus Financing Limited securitization program to August 2018.
|
|
(9)
|
Not included in this table, is the Company's Unsecured Letter of Credit Facility which had a capacity of
$74 million
with
$71 million
utilized at a weighted average rate of
3.24%
at
September 30, 2017
.
|
|
•
|
incur or guarantee additional debt or issue disqualified stock or preferred stock;
|
|
•
|
pay dividends or make distributions to Realogy Group’s stockholders, including Realogy Holdings;
|
|
•
|
repurchase or redeem capital stock;
|
|
•
|
make loans, investments or acquisitions;
|
|
•
|
incur restrictions on the ability of certain of Realogy Group's subsidiaries to pay dividends or to make other payments to Realogy Group;
|
|
•
|
enter into transactions with affiliates;
|
|
•
|
create liens;
|
|
•
|
merge or consolidate with other companies or transfer all or substantially all of Realogy Group's and its material subsidiaries' assets;
|
|
•
|
transfer or sell assets, including capital stock of subsidiaries; and
|
|
•
|
prepay, redeem or repurchase subordinated indebtedness.
|
|
•
|
these measures do not reflect changes in, or cash required 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 may calculate these measures differently so they may not be comparable.
|
|
|
Three Months Ended
|
||||||
|
|
September 30, 2017
|
|
September 30, 2016
|
||||
|
Net income attributable to Realogy
|
$
|
95
|
|
|
$
|
106
|
|
|
Income tax expense
|
67
|
|
|
74
|
|
||
|
Income before income taxes
|
162
|
|
|
180
|
|
||
|
Interest expense, net
|
41
|
|
|
37
|
|
||
|
Depreciation and amortization (a)
|
51
|
|
|
53
|
|
||
|
EBITDA
|
254
|
|
|
270
|
|
||
|
EBITDA adjustments:
|
|
|
|
||||
|
Restructuring costs
|
2
|
|
|
9
|
|
||
|
Former parent legacy cost, net
|
1
|
|
|
—
|
|
||
|
Loss on the early extinguishment of debt
|
1
|
|
|
—
|
|
||
|
Operating EBITDA
|
$
|
258
|
|
|
$
|
279
|
|
|
(a)
|
Depreciation and amortization
for the three months ended
September 30, 2017
includes
$1 million
of amortization expense related to Guaranteed Rate Affinity's purchase accounting included in the "Equity in earnings of unconsolidated entities" line on the Condensed Consolidated Statement of Operations.
|
|
(a)
|
Realogy Holdings Corp. ("Realogy Holdings") maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its filings under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Realogy Holdings' management, including the Chief Executive Officer and the Chief Financial Officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
|
|
(b)
|
As of the end of the period covered by this quarterly report on Form 10-Q, Realogy Holdings has carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that Realogy Holdings' disclosure controls and procedures are effective at the "reasonable assurance" level.
|
|
(c)
|
There has not been any change in Realogy Holdings' internal control over financial reporting during the period covered by this quarterly report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
|
|
(a)
|
Realogy Group LLC ("Realogy Group") maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its filings under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the periods specified in the rules and
|
|
(b)
|
As of the end of the period covered by this quarterly report on Form 10-Q, Realogy Group has carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that Realogy Group's disclosure controls and procedures are effective at the "reasonable assurance" level.
|
|
(c)
|
There has not been any change in Realogy Group's internal control over financial reporting during the period covered by this quarterly report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
|
|
(c)
|
The following table sets forth information relating to repurchase of shares of our common stock during the quarter ended
September 30, 2017
:
|
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of a Publicly Announced Programs
(1)
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs
(1)
|
||||
|
July 1 - 31, 2017
|
|
452,691
|
|
|
$33.14
|
|
452,691
|
|
|
$
|
241,402,984
|
|
|
August 1 - 31, 2017
|
|
516,900
|
|
|
$34.33
|
|
516,900
|
|
|
$
|
223,657,807
|
|
|
September 1 - 30, 2017
(2)
|
|
759,600
|
|
|
$33.91
|
|
759,600
|
|
|
$
|
197,899,771
|
|
|
(1)
|
In February 2016, the Company's Board of Directors authorized a share repurchase program of up to
$275 million
of the
|
|
(2)
|
Includes
77,900
of shares purchased for which the trade date occurred in late September 2017 while settlement occurred in October 2017.
|
|
•
|
add the positions of Chairman of the Board and Lead Independent Director to Article III (Board of Directors) of the Bylaws and make related ancillary changes; and
|
|
•
|
align statutory officer positions in Article IV (Officers) with Company practice, including the elimination of the statutory officer roles of Treasurer and Chief Accounting Officer, and make related ancillary changes.
|
|
3.1*
|
|
10.1
|
|
10.2
|
|
10.3
|
|
10.4
|
|
10.5 *
|
|
15.1*
|
|
31.1*
|
|
31.2*
|
|
31.3*
|
|
31.4*
|
|
32.1*
|
|
32.2*
|
|
101.INS ^
|
XBRL Instance Document.
|
|
101.SCH ^
|
XBRL Taxonomy Extension Schema Document.
|
|
101.CAL^
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF ^
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
101.LAB ^
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
101.PRE ^
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
*
|
Filed herewith.
|
|
^
|
Furnished electronically with this report.
|
|
ATTEST:
|
|
REALOGY HOLDINGS CORP.
|
|
/s/ Seth Truwit
|
|
|
|
|
By:
|
/s/ Marilyn J. Wasser
|
|
|
|
Name: Marilyn J. Wasser
|
|
|
|
Title: Executive Vice President, General Counsel and Corporate Secretary
|
|
|
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Realogy Holdings Corp.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Realogy Holdings Corp.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Realogy Group LLC;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Realogy Group LLC;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|