-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SSq2yedoH8RHa81YcmwuOMsD3v7eAbF6u8cKNLFfC2TimcOz0alk6D5Qiu2MLk8c 7SjQPXudvu/GdiCDzyoQhA== 0000898430-99-004220.txt : 19991115 0000898430-99-004220.hdr.sgml : 19991115 ACCESSION NUMBER: 0000898430-99-004220 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991103 ITEM INFORMATION: FILED AS OF DATE: 19991112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CB RICHARD ELLIS SERVICES INC CENTRAL INDEX KEY: 0000852203 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 521616016 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-12231 FILM NUMBER: 99750423 BUSINESS ADDRESS: STREET 1: 533 S FREMONT AVE CITY: LOS ANGELES STATE: CA ZIP: 90071-1798 BUSINESS PHONE: 2136133123 MAIL ADDRESS: STREET 1: 533 S FREMONT AVE CITY: LOS ANGELES STATE: CA ZIP: 90071-1798 FORMER COMPANY: FORMER CONFORMED NAME: CB COMMERCIAL HOLDINGS INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CB ACQUISITION CORP DATE OF NAME CHANGE: 19890731 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): November 3, 1999 CB RICHARD ELLIS SERVICES, INC. -------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 001-12231 52-1616016 - ------------------ ---------------- ------------------- (State or other (Commission File (IRS Employer jurisdiction of Number) Identification No.) incorporation) 200 North Sepulveda Boulevard, El Segundo, California 90245 --------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (310) 563-8600 --------------- - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (c) The following is furnished as an exhibit to this report: 99 Press release dated November 3, 1999 issued by CB Richard Ellis Services, Inc. This report may contain forward-looking statements as well as historical information. Forward-looking statements, which are included in accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in the report. Such forward-looking statements speak only as of the date of this report. The Company expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any changes in company expectations or results or any change in events. -2- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CB RICHARD ELLIS SERVICES, INC. Date: November 12, 1999 By: /s/ Walter V. Stafford ---------------------------------------- Walter V. Stafford Senior Executive Vice President, Secretary and General Counsel -3- EXHIBIT INDEX Exhibit Number Description of Exhibit - ------- ---------------------- 99 Press release dated November 3, 1999 issued by CB Richard Ellis Services, Inc. -4- EX-99 2 PRESS RELEASE DATED 11/03/1999 CB [LOGO] Richard Ellis P R E S S R E L E A S E - -------------------------- CB Richard Ellis, Inc. Los Angeles Downtown Office 333 South Beaudry Avenue Los Angeles, CA 90017-5139 T 213 613 3123 F 213 613 3535 www.cbrichardellis.com EXHIBIT 99 FOR IMMEDIATE RELEASE -- November 3, 1999 For further information: Media: Investors: Joseph Fitzpatrick Jeff Misakian CB Richard Ellis CB Richard Ellis 213 613 3033 213 613 3351 CB Richard Ellis Reports Third Quarter Results El Segundo, Calif. (November 3, 1999) - CB Richard Ellis (NYSE:CBG) today reported a 12 percent increase in revenue for the third quarter ended September 30, 1999 and a 16 percent increase in revenue for the nine months ended September 30, 1999, compared to the same periods last year. Earnings before interest, taxes, depreciation and amortization (EBITDA) in the September 1999 quarter declined 16 percent to $30.0 million, compared to $35.9 million in the same period last year. EBITDA for the nine months ended September 30, 1999 decreased 10 percent to $71.7 million, compared to $79.2 million in the same period last year. The increase in revenue in the September 1999 quarter primarily reflects stronger sales and leasing revenues and contributions from operations acquired last year. For the nine months ended September 30, 1999, the increase primarily reflects the contribution from offshore operations acquired last year. The decline in EBITDA was principally due to higher expenses associated with the company's North American and global operations relative to the pace of revenue growth and expenses related to the company's recently announced restructuring. In addition, the emphasis on a bonus rather than commission-based compensation structure by the company's offshore operations resulted in higher expenses relative to revenues in the first three quarters of 1999 versus the same periods last year. Ray Wirta, chief executive officer, commented, "We are pleased that revenues continued to run ahead of last year. Offshore operations, in particular, continued to post strong results. We also are encouraged to see sales and leasing activity in North America in the recent quarter begin to improve, although there can be no assurance that this improvement will continue. Because the pace of sales and leasing activity in North America trailed expectations for most of the year, revenue growth has not been sufficient to offset the increased costs from building our North American and global platform. This resulted in lower earnings performance than we had expected to see at this time of the year. While we expect to see -more- N A V I G A T I N G A N E W W O R L D CB Richard Ellis Press Release November 3, 1999 Page 2 of 4 leasing activity remain strong for the rest of the year, final sales revenue for the year will depend, in large part, on interest rate movements and the effect of Y2K concerns on year-end closings. "We believe the challenges we face in revenue growth this year are temporary. Real estate fundamentals remain sound, continuing to benefit from a U.S. economy with stable growth and low inflation and an encouraging real estate supply/demand balance. Because of these temporary challenges, we are focused on controlling costs for the remainder of the year and into 2000. Our previously announced, and now fully implemented, restructuring of North American field operations will result in annual cost savings of $14 million in 2000 and beyond. These cost savings will have little impact on 1999 because of the associated severance costs. We will continue to focus on opportunities to streamline operations further in the coming months. In particular, we have targeted an additional $10 million in annual run-rate cost savings from our North American and global back-office operations, which currently run at a $55 million rate. These additional cost savings are expected to be in place by the first quarter of 2000." The company reported net income for the September 1999 quarter of $4.6 million, or $0.22 per diluted share, compared with $10.1 million, or $0.48 per diluted share in the September 1998 quarter. Net income for the nine months ended September 30, 1999 was $6.3 million, or $0.30 per diluted share, compared with a net loss applicable to common shareholders of $21.3 million, or $1.07 per diluted share in the same period last year. The results for the 1998 nine-month period include after-tax merger-related and other non-recurring charges of $8.7 million and a deemed dividend of $32.3 million on the repurchase of the company's preferred stock. Excluding these factors, the company reported adjusted net income in the 1998 nine-month period of $19.7 million, or $0.96 per diluted share. The decline in net income reflects the lower EBITDA, higher interest expense and goodwill amortization associated with last year's acquisitions and a higher effective income tax rate. Wirta commented, "The slower than expected pace of sales and leasing transactions in North America in the first half of the year has made it difficult to forecast revenue and earnings growth. Given the challenges we face in sales activity in the fourth quarter, EBITDA for the 1999 full year could come in 15 percent or more below current expectations. Because of the leverage created by the debt incurred and goodwill recorded in past acquisitions, this reduced level of EBITDA would translate into a reduction in earnings per share of approximately 25 percent from current expectations for 1999." Segment Results As previously announced, the company changed its segment reporting due to a reorganization undertaken to streamline operations and simplify reporting. Prior periods have been restated to conform to the new segment presentation. Transaction Management Transaction Management, which includes commercial property sales and leasing transactions and brokerage consulting fees, contributed 73 percent of the company's consolidated revenue in the September 1999 quarter. Investment property sales, which had previously been included in the Financial Services segment, are now included in Transaction Management. CB Richard Ellis Press Release November 3, 1999 Page 3 of 4 Transaction Management revenue increased 14 percent and 12 percent, respectively, in the September 1999 quarter and year-to-date, compared to a year ago. EBITDA for Transaction Management increased 12 percent in the September 1999 quarter, but decreased 5 percent in the nine months ended September 30, 1999 compared to the same periods last year. The EBITDA margin for Transaction Management of 13.3 percent in the September 1999 quarter was essentially flat compared to the same period last year. For the nine months ended September 30, 1999, the EBITDA margin for Transaction Management declined to 10.2 percent, compared to 12.0 percent in the same period last year. The revenue and EBITDA improvement in the current quarter over last year is primarily due to higher sales and lease revenues, which reflect an improvement in transaction activity. The decline in EBITDA performance in the September 1999 nine-month period reflects the continued impact of the slower pace of sales and leasing activity in the first half of the year. Wirta commented, "In spite of a challenging year for sales and leasing activity, our Transaction Management segment posted solid results in the current quarter. CB Richard Ellis continued to lead the market with several major deals that demonstrated the synergies that are being brought to bear by our global services platform." Financial Services Financial Services provides valuation, mortgage lending and advisory services to property owners, including Wall Street firms and institutional, corporate and offshore investors. Financial Services contributed 14 percent to the company's consolidated revenue in the September 1999 quarter. Financial Services revenue increased 2 percent and 24 percent in the September 1999 quarter and year-to-date, respectively, compared to the same periods last year. Financial Services EBITDA declined 108 percent and 11 percent in the September 1999 quarter and year-to-date, respectively, compared to the same periods last year. The revenue improvement in the nine-month period was primarily due to increased consulting and appraisal fees, partially offset by lower mortgage banking fees. The decline in EBITDA in the September 1999 quarter was primarily due to lower than expected revenues in the company's Appraisal and Mortgage Banking business lines as a result of the sluggish commercial mortgage backed securities market and an unusually high level of activity in the third quarter of 1998. Management Services Management Services provides property and facilities management services to investors and major corporate clients. Management Services contributed 13 percent of the company's consolidated revenue in the September 1999 quarter. CB Richard Ellis Press Release November 3, 1999 Page 4 of 4 Revenue for Management Services increased 14 percent and 33 percent in the September 1999 quarter and year-to-date, respectively, compared to the same periods last year. EBITDA for Management Services decreased 92 percent and 39 percent in the September 1999 quarter and year-to-date, respectively, compared to the same periods last year. The higher revenues reflect increased business from the company's integrated service approach and increased servicing of larger portfolios. The decline in EBITDA reflects the company's continued investment in building its global corporate outsourcing capabilities. The company secured several property and facilities management contracts in the recent quarter, increasing total square feet under management by 14 percent to 433 million square feet at the end of the September 1999 quarter from 380 million square feet a year ago. Wirta noted that the company is also responding to a number of significant requests for proposals from both real estate investors and Corporate America. CB Richard Ellis (NYSE:CBG) is the world's leading real estate services company. Headquartered in Los Angeles with 10,000 employees worldwide, the company serves real estate owners, investors and occupiers through nearly 250 principal offices in 35 countries. Services include property sales and leasing, property management, corporate services and facilities management, mortgage banking, investment management, capital markets, appraisal/valuation, research and consulting. CB Richard Ellis had 1998 revenues of over $1 billion. For more information about CB Richard Ellis, visit the company's website at www.cbrichardellis.com. - ---------------------- This release contains forward-looking statements concerning expectations for future revenues, cost reductions and earnings performance. These statements reflect the company's current plans and expectations and are based on information currently available to it. They rely on a number of assumptions and estimates, which could prove to be inaccurate, and which are subject to risks and uncertainties that could cause the company's actual results to vary materially from the results anticipated. CB Richard Ellis undertakes no obligation to update publicly or revise any forward-looking statements. These statements are qualified by reference to the company's 1998 Annual Report and 10-K and its quarterly reports on 10-Q. ### CB RICHARD ELLIS SERVICES, INC OPERATING RESULTS For the Three and Nine Months Ended September 30, 1999 and 1998 (Dollars in thousands, except share and per share data) (Unaudited)
Three Months Ended September 30, Nine Months Ended September 30, -------------------------------- ------------------------------- Consolidated 1999 1998 1999 1998 - ------------ ----------- ----------- ----------- ----------- Revenue: Leases................................................. $ 111,430 $ 97,763 $ 295,957 $ 252,654 Sales.................................................. 106,695 93,770 268,704 253,463 Property and facilities management fees................ 26,689 23,838 80,516 58,814 Consulting and referral fees........................... 18,612 19,515 54,044 41,340 Appraisal fees......................................... 15,018 13,983 45,334 31,661 Loan origination and servicing fees.................... 10,247 11,750 26,682 27,625 Realty advisor fees.................................... 7,854 7,348 20,723 23,755 Other.................................................. 10,473 5,836 25,426 14,902 ----------- ----------- ----------- ----------- Total revenue.......................................... 307,018 273,803 817,386 704,214 Costs and expenses: Commissions, fees and other incentives................. 137,709 119,959 351,317 315,271 Operating, administrative and other.................... 139,262 117,909 394,404 309,700 Merger-related and other nonrecurring charges.......... - - - 16,585 Depreciation and amortization.......................... 10,001 9,337 29,963 22,086 ----------- ----------- ----------- ----------- Operating income.......................................... 20,046 26,598 41,702 40,572 Interest income........................................... 791 703 1,861 1,968 Interest expense.......................................... 10,294 9,628 29,670 21,359 ----------- ----------- ----------- ----------- Income before provision for income tax.................... 10,543 17,673 13,893 21,181 Provision for income tax.................................. 5,895 7,534 7,642 10,257 ----------- ----------- ----------- ----------- Net income................................................ $ 4,648 $ 10,139 $ 6,251 $ 10,924 Dividend on preferred stock............................... $ - $ - $ - $ 32,273 (2) ----------- ----------- ----------- ----------- Earnings (loss) applicable to common stockholders......... $ 4,648 $ 10,139 $ 6,251 $ (21,349) =========== =========== =========== =========== Basic earnings (loss) per share........................... $ 0.22 $ 0.49 $ 0.30 $ (1.07) =========== =========== =========== =========== Number of shares used in computing basic earnings (loss) per share.............................. 21,098,757 20,692,573 21,021,512 19,917,773 =========== =========== =========== =========== Diluted earnings (loss) per share......................... $ 0.22 $ 0.48 $ 0.30 $ (1.07) =========== =========== =========== =========== Number of shares used in computing diluted earnings (loss) per share...................... 21,162,334 21,101,324 21,103,139 19,917,773 =========== =========== =========== =========== Adjusted diluted earnings per share (1)................... $ 0.22 $ 0.48 $ 0.30 $ 0.96 =========== =========== =========== =========== Number of shares used in computing adjusted diluted earnings per share (1)................. 21,162,334 21,101,324 21,103,139 20,454,938 =========== =========== =========== =========== EBITDA excluding merger-related and other nonrecurring charges..................................... $ 30,047 $ 35,935 $ 71,665 $ 79,243 =========== =========== =========== =========== EBITDA Margin............................................. 9.8% 13.1% 8.8% 11.3% =========== =========== =========== ===========
(1) Excludes merger-related and other nonrecurring charges, net of tax effect and the effect of deemed dividend associated with the repurchase of preferred stock (2) Deemed dividend associated with the repurchase of preferred stock CB RICHARD ELLIS SERVICES, INC OPERATING RESULTS BY BUSINESS SEGMENT For the Three and Nine Months Ended September 30, 1999 and 1998 (Dollars in thousands) (Unaudited)
Three Months Ended September 30, Nine Months Ended September 30, -------------------------------- ------------------------------- 1999 1998 1999 1998 ---------- ---------- ---------- ---------- Transaction Management - ---------------------- Revenue: Leases. . . . . . . . . . . . . . . . . . . . . . .. $ 105,893 $ 93,433 $ 280,866 $ 240,584 Sales. . . . . . . . . . . . . . . . . . . . . . . . 103,890 91,107 261,510 246,780 Other consulting and referral fees . . . . . . . . . 15,461 12,967 40,192 33,315 --------- --------- --------- ---------- Total revenue. . . . . . . . . . . . . . . . . . . . 225,244 197,507 582,568 520,679 Costs and expenses: Commissions, fees and other incentives . . . . . . . 119,717 105,041 305,206 278,497 Operating, administrative and other. . . . . . . . . 75,509 65,558 218,165 179,604 Depreciation and amortization . . . . . . . . . . . 4,826 3,981 13,615 8,959 --------- --------- --------- ---------- Operating income . . . . . . . . . . . . . . . . . .. $ 25,192 $ 22,927 $ 45,582 $ 53,619 ========= ========= ========= ========== EBITDA . . . . . . . . . . . . . . . . . . . . . . . $ 30,018 $ 26,908 $ 59,197 $ 62,578 ========= ========= ========= ========== EBITDA Margin. . . . . . . . . . . . . . . . . . . 13.3% 13.6% 10.2% 12.0% ========= ========= ========= ========== EBITDA as a percent of consolidated EBITDA. . . . . 99.9% 74.9% 82.6% 79.0% ========= ========= ========= ========== Financial Services - ------------------ Revenue: Appraisal fees . . . . . . . . . . . . . . . . . . . $ 14,730 $ 14,389 $ 44,129 $ 31,911 Loan origination and servicing fees . . . . . . . . . 10,247 11,750 26,680 27,625 Realty advisor fees . . . . . . . . . . . . . . . . . 7,338 7,496 19,765 23,281 Other. . . . . . . . . . . . . . . . . . . . . . . . 10,632 8,654 32,125 16,351 --------- --------- --------- --------- Total revenue. . . . . . . . . . . . . . . . . . . . 42,947 42,289 122,699 99,168 Costs and expenses: Commissions, fees and other incentives . . . . . . . 14,858 12,437 36,966 28,140 Operating, administrative and other. . . . . . . . . 28,442 25,407 78,406 62,844 Depreciation and amortization . . . . . . . . . . . . 2,804 3,080 9,260 7,499 --------- --------- --------- --------- Operating loss . . . . . . . . . . . . . . . . . . . $ (3,157) $ 1,365 $ (1,933) $ 685 ========= ========= ========= ========= EBITDA . . . . . . . . . . . . . . . . . . . . . . . $ (353) $ 4,445 $ 7,327 $ 8,184 ========= ========= ========= ========= EBITDA Margin . . . . . . . . . . . . . . . . . . . -0.8% 10.5% 6.0% 8.3% ========= ========= ========= ========= EBITDA as a percent of consolidated EBITDA. . . . . -1.2% 12.4% 10.2% 10.3% ========= ========= ========= ========= Management Services - ------------------- Revenue: Property Management fees . . . . . . . . . . . . . $ 19,706 $ 20,054 $ 60,712 $ 46,085 Facilities management fees . . . . . . . . . . . . . 5,961 3,857 16,725 11,497 Leases. . . . . . . . . . . . . . . . . . . . . . . . 5,364 4,165 14,809 11,837 Sales. . . . . . . . . . . . . . . . . . . . . . . . 1,547 1,205 3,727 3,909 Other. . . . . . . . . . . . . . . . . . . . . . . . 6,249 4,726 16,146 11,039 --------- --------- --------- --------- Total revenue. . . . . . . . . . . . . . . . . . . . 38,827 34,007 112,119 84,367 Costs and expenses: Commissions, fees and other incentives . . . . . . . 3,134 2,481 9,145 8,634 Operating, administrative and other. . . . . . . . . 35,311 26,944 97,833 67,252 Depreciation and amortization . . . . . . . . . . . 2,371 2,276 7,088 5,628 --------- --------- --------- --------- Operating income (loss) . . . . . . . . . . . . . . $ (1,989) $ 2,306 $ (1,947) $ 2,853 ========= ========= ========= ========= EBITDA . . . . . . . . . . . . . . . . . . . . . . . $ 382 $ 4,582 $ 5,141 $ 8,481 ========= ========= ========= ========= EBITDA Margin . . . . . . . . . . . . . . . . . . . 1.0% 13.5% 4.6% 10.1% ========= ========= ========= ========= EBITDA as a percent of consolidated EBITDA. . . . . 1.3% 12.7% 7.2% 10.7% ========= ========= ========= ========= Merger-related and other nonrecurring charges $ - $ - $ - $ 16,585 - --------------------------------------------- ========= ========= ========= =========
(1) Revenue is broken down by material line of business specific to the segment. "Other" includes revenue shown separately in the other segments which is immaterial to the segment. CB RICHARD ELLIS SERVICES, INC CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
September 30, 1999 December 31, 1998 ------------------ ------------------ (Unaudited) ASSETS Cash and cash equivalents $ 25,122 $ 19,551 Other current assets 172,597 156,853 Property and equipment, net 62,808 58,366 Goodwill and other intangible assets, net 503,065 509,037 Other assets, net 107,567 113,085 --------- --------- Total assets $ 871,159 $ 856,892 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current maturites of long-term debt $ 3,846 $ 12,343 Other current liabilities 182,145 213,404 Long-term debt, less current maturities 413,227 373,691 Other long-term liabilities 71,467 60,737 --------- --------- Total liabilities 670,685 660,175 Minority Interest 4,150 5,875 Stockholders' Equity Contributed capital 336,479 335,470 Accumulated deficit (140,155) (144,628) --------- --------- Total stockholders' equity 196,324 190,842 --------- --------- Total liabilities and stockholders' equity $ 871,159 $ 856,892 ========= =========
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