RECORD EARNINGS!!!!!
Tuesday March 11 9:48 AM EDT
CUC International Inc. Reports Record Year-End and
Fourth Quarter Results
STAMFORD, Conn.--(BUSINESS WIRE)--March 11, 1997
--CUC International's fiscal 1997 year-end results reflect
non-recurring charges totalling $179.9 million, or $0.29 per share,
related to acquisition costs--
CUC International Inc today announced its financial results for the fourth quarter and fiscal year-ended January 31, 1997.
CUC International Inc. reported record fiscal 1997 year-end revenues of $2.3 billion versus$1.9 billion for the prior year, representing an increase of 21.1%. On a per share basis, CUC reported earnings of $0.41, which reflect non-recurring charges totalling $0.29 per share for transaction and restructuring costs and certain Ideon litigation matters related principally to the completion of the Sierra On-Line, Inc., Davidson & Associates, Inc., and Ideon Group, Inc., acquisitions. These acquisitions were accounted for as poolings-of-interests and, accordingly, all financial information has been restated to reflect Sierra On-Line, Inc., Davidson & Associates, Inc., and Ideon Group, Inc's., results of operations. Without giving effect to the non-recurring charges, CUC's operating results for fiscal 1997 would have been $0.70 per share versus $0.53 per share, which excludes a one-time charge relating to Ideon, for the same
period a year ago. Net income for fiscal 1997, before the on-recurring charges, increased 36.6% to $282.8 million, as compared to $207.1 million, before the one-time charge related to Ideon, for the same period a year ago. The weighted average number of shares outstanding
was 405.1 million for the year-ended January 31, 1997 versus 392.2 million for the year-ago period.
For the fourth quarter ended January 31, 1997, CUC International reported revenues of $674.2 million, as compared to $546.0 million for the same quarter a year ago. Earnings per share for the fourth quarter were $0.23, before a one-time charge of $0.01 per share related
primarily to the investment banking fees for the acquisitions of Plextel Telecommunications, Inc. and Knowledge Adventure, both of which were completed during the fourth quarter. For the fourth quarter a year ago, earnings per share were $0.16, before a one-time benefit of $0.01 per share relating to Ideon Group, Inc. The weighted average number of shares outstanding was 414.7 million for the fourth quarter, as compared to 396.3 million for the same quarter last year.
Walter A. Forbes, chairman and chief executive officer of CUC International, stated, "Fiscal 1997 was characterized by strong, double-digit growth in our core membership-services business, which was a key component in our realizing growth of 21.1% in revenue and 32.1% in earnings per share, before one-time charges. During this past year, we successfully broadened our membership base both in the United States as well as throughout Europe. In addition, we set the groundwork necessary to expand our membership services throughout
Asia with both the renegotiation of our Japanese licensing agreement and the establishment of an office in Singapore.
Alongside of the solid expansion in our membership base, we also completed three important and strategic acquisitions during fiscal 1997, starting with the acquisitions of Davidson & Associates, and Sierra On-Line. Our software division has experienced robust growth and gain in market share during this past year and has also provided us with the interactive development talent needed to fuel our Internet growth strategy. In June, we plan to launch an ambitious, all-encompassing consumer site on the World Wide Web, through which we plan to offer all of our major membership services."
Mr. Forbes continued, "Yet, while we believe that the interactive marketplace will enable us to offer an even better service to CUC's members, we are not taking our sights off of our core, telephone-based business. During this past year, we demonstrated our continued commitment to our traditional membership business through the acquisition of Ideon Group, a leading provider of credit card enhancement services to 13 million members across the United States.
Ideon is a great example of our ability to make fold-in, core business acquisitions that complement existing CUC services."
Mr. Forbes also stated that CUC intends to utilize the proceeds of its recent $550 million convertible debt offering to finance potential acquisitions and strategic alliances that will complement the company's growth strategy.
CUC International is a leading technology-driven, membership-based consumer services company that currently provides approximately 66.3 million consumers worldwide with access to home shopping, travel, insurance, automobile, dining, home improvement, lifestyle clubs,
checking account enhancement, and discount coupon programs. CUC is also the parent company of Interval International, a leading time-share exchange company that is based in Miami, Florida and has operations in more than 60 countries. In addition, CUC provides
educational and entertainment interactive media products through its CUC Software division.
CUC INTERNATIONAL INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
January 31, January 31,
1997 1996
Assets
Current Assets
Cash and cash equivalents $553,144 $333,036
Marketable securities 69,139 97,164
Receivables 578,630 463,492
Prepaid membership materials 37,579 39,061
Prepaid expenses, deferred income
taxes and other 191,583 158,523
Total Current Assets 1,430,075 1,091,276
Membership solicitations in process 76,281 60,713
Deferred membership acquisition costs 401,564 404,655
Contract renewal rights and
intangible assets, net 366,038 332,806
Properties, net 145,620 113,353
Deferred income taxes and other 53,794 65,393
$2,473,372 $2,068,196
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and accrued
expenses and federal and state
income taxes payable $481,376 $332,005
Total Current Liabilities 481,376 332,005
Deferred membership income 702,359 682,823
Convertible debt 23,487 23,389
Zero coupon convertible notes 14,410
Other 11,060 13,046
Shareholders' Equity 1,255,090 1,002,523
$2,473,372 $2,068,196
CUC INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended January 31, 1997 1996
REVENUES
Membership and service fees $526,668 $435,812
Software 147,561 110,157
Total Revenues 674,229 545,969
EXPENSES
Operating 193,808 167,076
Marketing 246,800 200,129
General and administrative 85,937 78,132
Interest income, net (3,155) (1,615)
Total Expenses 523,390 443,722
INCOME BEFORE INCOME TAXES &
ONE-TIME ITEMS (a) 150,839 102,247
Merger costs 4,110
Item related to Ideon products
abandoned and restructuring (562)
INCOME BEFORE INCOME TAXES 146,729 102,809
Provision for income taxes -
operations 57,203 36,967
Benefit from income taxes -
merger costs 0
Provision for income taxes -
products abandoned and
restructuring 202
NET INCOME $89,526 $65,640
Net Income Per Common Share before
One-Time Items (a) $0.23 $0.16
Net Income Per Common Share $0.22 $0.17
Weighted Average Number of Common and
Dilutive Common Equivalent Shares
Outstanding 414,728 396,261
(a) Primarily represents investment banking fees directly related
to the acquisitions of Plextel Telecommunications and Knowledge
Adventure completed in the current period. The previous year
represents a change in estimate related to the abandonment
of certain Ideon development efforts, marketing and operational
costs incurred for such products, and the restructuring of its
SafeCard division and its corporate infrastructure.
CUC INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Year Ended January 31, 1997 1996
REVENUES
Membership and service fees $1,972,430 $1,643,242
Software 375,225 291,990
Total Revenues 2,347,655 1,935,232
EXPENSES
Operating 701,262 593,508
Marketing 887,852 737,440
General and administrative 311,904 281,628
Interest income, net (9,549) (9,685)
Total Expenses 1,891,469 1,602,891
INCOME BEFORE INCOME TAXES &
ONE-TIME CHARGES (a) 456,186 332,341
Merger costs 179,945
Costs related to Ideon products
abandoned and restructuring 97,029
INCOME BEFORE INCOME TAXES 276,241 235,312
Provision for income taxes -
operations 173,351 125,267
Benefit from income taxes -
merger costs (61,209)
Benefit from income taxes -
products abandoned and restructuring (34,930)
NET INCOME $164,099 $144,975
Net Income Per Common Share before
One-Time Charges (a) $0.70 $0.53
Net Income Per Common Share $0.41 $0.37
Weighted Average Number of Common and
Dilutive Common Equivalent Shares
Outstanding 405,073 392,244
(a) Represents costs incurred primarily in conjunction with the
acquisitions of Davidson, Sierra and Ideon. Such costs are comprised
of transaction costs, other professional fees and integration costs
as well as a provision relating to certain Ideon litigation matters.
The previous year represents costs related to the abandonment of
certain Ideon development efforts, marketing and operational costs
incurred for such products, and the restructuring of its SafeCard
division and its corporate infrastructure.
CUC INTERNATIONAL INC. AND SUBSIDIARIES
SUPPLEMENTAL CASH FLOW DATA
(In thousands)
Year Ended January 31, 1997 1996
Net income $164,099 $144,975
Amortization of membership
acquisition costs 641,272 556,548
Deferred membership income 19,298 76,285
Membership acquisition costs (638,182) (605,058)
Membership solicitations in process (15,568) (15,077)
Amortization of contract rights and
excess cost 26,199 24,349
Amortization of original issue discount
on convertible notes 2,077 1,646
Amortization of restricted stock 2,273
Loss on impairment of assets 7,569
Depreciation 32,459 25,387
Deferred income taxes (35,970) (32,068)
Effect of change in amortization
periods for Ideon membership
acquisition costs 65,500
Net loss during change in fiscal
year-ends (4,674) (49,944)
193,283 200,112
After-tax effect of one-time charges 118,736 62,099
Cash flow from operations before
one-time charges $312,019 $262,211
CONTACT: Laura P. Hamilton
Vice President, Investor Relations
(203) 965-5114 |
