Cendant Sees Profit in Line With Forecasts
Cendant Corp. reported “preliminary” first-quarter earnings in line with forecasts Tuesday, but the company said the accounting problems it disclosed last month may cut its profit for the period.
The marketing and franchising company said it earned $230 million, or 26 cents a diluted share, in the period. In a statement released later, the company stressed that the earnings were “compiled in accordance with what Cendant believes are appropriate accounting practices.”
Cendant also postponed its annual meeting, set for May 19, until fall.
Parsippany, N.J.-based Cendant didn’t give comparable figures for 1997 because of the audit, which it says won’t be finished until summer. Chief Executive Henry Silverman had said earlier the investigation could be completed this month.
The company’s stock, once a darling of Wall Street, fell 46% to $19.06 on April 16 after the firm revealed “irregularities” in bookkeeping at its discount shopping club unit. Cendant battled back, erasing more than a third of the decline by Monday. Its shares fell 94 cents to close Tuesday at $24.56 on the New York Stock Exchange.
The latest results were a penny more than the 25 cents that analysts on average expected in an IBES International Inc. poll. Cendant, the owner of brands such as Avis car rentals and Howard Johnson hotels, reported revenue of $1.44 billion.
Cendant had first-quarter net income of $166 million, or 19 cents a diluted share, a year ago, according to an annual report. The numbers are pro forma because Cendant was formed in December by merging CUC International Inc., based in Stamford, Conn., and HFS Inc. of Parsippany, N.J.
More than 80% of net income in the latest quarter came from businesses Cendant said weren’t affected by “potential accounting irregularities.” First-quarter net income for those businesses more than doubled to $189.1 million from $91.1 million. Revenue in the units rose 35% to $699.6 million.
At a Glance
Other earnings, excluding one-time gains and charges unless noted, include:
* PacifiCorp’s first-quarter profit rose 7.2% to $104 million, or 35 cents a diluted share, from a year earlier, missing analyst expectations of 38 cents. The power company’s revenue nearly doubled to $2.08 billion, mostly from arranging sales of electricity and natural gas between utilities and industrial users. But its costs more than doubled.
* W.R. Grace & Co. said first-quarter profit rose 6% to $11.8 million, or 15 cents a diluted share, from a year ago, beating analyst estimates by a penny. The chemicals and packaging company said lower costs and higher sales of specialty chemicals helped offset the strong dollar’s effect on revenue. Revenue fell 6% to $341 million. The latest results exclude one-time charges of $37.8 million associated with the company’s restructuring.
* Dow Corning Corp.’s first-quarter profit rose 3% to $54.9 million, or $21.96 a basic share, from a year ago, on a 3% rise in sales to $649.1 million. Dow Corning, a joint venture equally owned by Dow Chemical Co. and Corning Inc., is operating under Chapter 11 bankruptcy protection because of lawsuits alleging health problems from the company’s silicone breast-implant products.
* Donna Karan International Inc.’s first-quarter earnings more than doubled to $2.1 million, or 10 cents a diluted share, from $806,000, or 4 cents, far exceeding estimates of 5 cents. The clothing designers’ revenue rose 14% to $181.2 million.
* CNA Financial Corp. said first-quarter earnings fell 14% to $117 million, or $1.87 a share, from a year earlier, exceeding analyst forecasts of $1.70.
