<PAGE>
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): AUGUST 5, 1997
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-18525 52-1616016
--------------- ------------------ -------------------
(STATE OR OTHER (COMMISSION FILE (IRS EMPLOYER
JURISDICTION OF NUMBER) IDENTIFICATION NO.)
INCORPORATION)
533 SOUTH FREMONT AVENUE - LOS ANGELES, CALIFORNIA 90071
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (213) 613-3123
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N/A
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE>
ITEM 5. OTHER EVENTS.
On August 5, 1997, CB Commercial Real Estate Services Group, Inc. issued a
press release announcing its results of operations for the quarter and the six
months ended June 30, 1997 and discussing certain other matters. The press
release is filed as an exhibit hereto.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
The following is furnished as an exhibit to this report:
99 Press release dated August 5, 1997 issued by CB Commercial Real
Estate Services Group, Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
CB COMMERCIAL REAL ESTATE SERVICES
GROUP, INC.
Date: August 11, 1997 By: /s/ John C. Haeckel
-------------------------------
John C. Haeckel
Senior Executive Vice President
<PAGE>
FOR IMMEDIATE RELEASE EXHIBIT 99
AUGUST 5, 1997
CB COMMERCIAL REPORTS CONTINUED FINANCIAL
GAINS DURING SECOND QUARTER
KOLL MERGER "ON TRACK"
Los Angeles, CA (August 5, 1997) -- CB Commercial Real Estate Services Group,
Inc. (NASDAQ:CBCG), today reported that a strong national economy, strengthening
real estate markets and growing business activity helped the Company produce
gains of 21% in revenues, 37% in EBITDA and 69% in earnings per share for the
second quarter ended June 30, 1997.
The Company also said that previously announced and expected nonrecurring
charges associated with the Koll Real Estate Services merger are estimated to
reduce EBITDA and earnings for the third quarter by a slightly higher range of
up to $18 million to $20 million. The Company expects the merger to be accretive
on an annual basis thereafter.
QUARTERLY REVENUES, EARNINGS & EBITDA
For the quarter ended June 30, 1997, revenues increased 21% to $158.0 million,
compared with $131.0 million in the same period of 1996. EBITDA increased 37%
to $15.2 million, compared with $11.1 million in 1996. Quarterly net income was
$4.9 million, or $0.27 per share on a fully diluted basis, compared with $2.2
million, or $0.16 per share, in the second quarter last year.
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CB Commercial
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For the six months ended June 30, 1997, revenues increased 20% to $292.0
million, compared with $243.7 million in the same period of 1996. EBITDA
increased 31% to $25.3 million, compared with $19.3 million in 1996. For the
six months, net income increased 339% to $7.1 million, or $0.37 per share on a
fully diluted basis, compared with $1.6 million, or $0.12 per share, for the
same period last year.
KEY FACTORS
CB Commercial Chairman and Chief Executive Officer James J. Didion said,
"Continued revenue increases were supported by gains in most of our businesses.
The largest contributor was an increase in the number of sales and lease
transactions bolstered by an increase in average transaction size.
"Higher EBITDA and earnings resulted from leveraging our existing infrastructure
to handle greater deal flow without adding proportionate costs," Didion said.
"We expect to maintain strong operating margins, although these spreads will be
temporarily masked in third quarter results by one-time charges associated with
the Koll merger."
KOLL ACQUISITION, WHITTIER JOINT VENTURE
In May, CB Commercial and Koll Real Estate Services announced a merger agreement
expected to produce greater marketplace strength and combined company savings of
more than $12 million annually. The transaction was approved by the boards of
directors of both companies and still is subject to approval by shareholders of
Koll Real Estate Services and CB Commercial. Pending shareholder approval, the
companies seek to complete the merger by the end of August 1997.
The Company also announced it expects to complete a refinancing of existing debt
as well as Koll debt to be assumed in connection with the merger. The Company
has received a commitment from Bank of America for a $300 million, 5-year
revolving credit facility initially priced at LIBOR plus 100 basis points.
In July, CB Commercial and Whittier Partners, a premier Boston-based commercial
real estate firm, announced signing a letter of intent to form a 50/50 joint
venture to provide service in New England. The new joint venture, to be called
CB Commercial/Whittier Partners, will be New England's largest commercial real
estate services company, encompassing the existing local operations of Whittier
Partners, CB Commercial and Koll Real Estate Services.
THE COMBINED CB COMMERCIAL/KOLL ENTITY
CB Commercial had 1996 revenues of $583.1 million and has more than 4,000
employees. Koll Real Estate Services had 1996 revenues of $115 million and has
over 2,400 employees. The combined firm will be America's leading brokerage
services provider, having participated in
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CB Commercial
Page 3
over 26,000 sale and lease assignments in 1996 for a range of corporate,
institutional and other clients around the world, and will be a leader in
commercial property and facilities management, with a portfolio of approximately
300 million square feet; commercial mortgage lending, with 1996 originations of
$3.5 billion; capital markets and institutional advisory services, with a
portfolio of almost $6 billion under management; and corporate real estate
services.
The merger does not include several other entities bearing the Koll
name, including Koll Construction, Koll Real Estate Group (the development and
investment company) or Koll International (resorts and recreational
developments).
FORWARD-LOOKING STATEMENTS
This release 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 this release. Such forward-looking statements
speak only as of the date of this release. 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.
***
CB Commercial is America's leading and largest commercial real estate services
company. With more than 4,000 U.S. employees and through global strategic
alliances, the Company serves real estate users, owners and investors in over
200 cities in 33 countries. Services include brokerage, investment properties,
corporate and financial services, property management, mortgage banking,
investment management, institutional advisory services, appraisal and property
tax services, and real estate market research. Founded in 1906, CB Commercial
(NASDAQ:CBCG) is headquartered in Los Angeles. Revenues for 1996 were $583
million.
For more information on CB Commercial (via facsimile and at no cost), simply
call 1-800-PRO-INFO and dial client code "CBCG." If you are calling from
outside the United States, please dial 908-544-2850.
[FINANCIAL TABLES TO FOLLOW]
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<TABLE>
<CAPTION>
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
FOR THE THREE MONTHS ENDED JUNE 30, 1997 WITH COMPARATIVE FIGURES FOR THE SIMILAR PERIODS IN 1996
QUARTER ENDED JUNE 30,
-----------------------------------------------------------------------------
1997 1996 DIFFERENCE % CHANGE
------------- -------------- --------------- ------------
<S> <C> <C> <C> <C>
CONSOLIDATED
- ------------
Revenue $ 157,958 $ 130,954 $27,004 20.6%
Costs and expenses:
Commissions, fees and
other incentives 82,521 66,262 16,259 24.5%
Operating, administrative
and other 60,206 53,594 6,612 12.3%
Depreciation and
amortization 3,053 3,038 15 0.5%
----------- ----------- ------- -----
Operating income 12,178 8,060 4,118 51.1%
Interest income 587 354 233 65.8%
Interest expense 4,104 5,759 (1,655) -28.7%
----------- ----------- ------- -----
Income before provision for
income taxes 8,661 2,655 6,006 226.2%
Provision for taxes based on
income 3,795 438 3,357 766.4%
----------- ----------- ------- -----
Net income $ 4,866 $ 2,217 $ 2,649 119.5%
=========== =========== ======= =====
Net income applicable to
common shareholders $ 3,866 $ 2,217 $ 1,649 74.4%
=========== =========== ======= =====
Primary earnings per share
Net income per common and
common equivalent share
outstanding $ 0.28 $ 0.16 0.12 75%
=========== =========== ======= =====
Weighted average common
and common
equivalent shares
outstanding 14,010,527 13,806,956 203,571 1.5%
=========== =========== ======= =====
Fully diluted earnings per
share
Net income per common
and common
equivalent share
outstanding $ 0.27 $ 0.16 $ 0.11 68.8%
=========== =========== ======= =====
Weighted average common
and common
equivalent shares
outstanding 14,106,436 13,806,956 299,480 2.2%
=========== =========== ======= =====
EBITDA $ 15,231 $ 11,098 $ 4,133 37.2%
=========== =========== ======= =====
PROPERTY & USER SERVICES
- ------------------------
Revenue:
Brokerage services $ 92,028 $ 79,868 $12,160 15.2%
Investment properties 34,626 24,639 9,987 40.5%
Corporate services 6,882 5,114 1,768 34.6%
Property management 4,976 4,920 56 1.1%
Real estate market
research 486 235 251 106.8%
----------- ----------- ------- -----
138,998 114,776 24,222 21.1%
Costs and expenses:
Commissions, fees
and other incentives 76,797 62,587 14,210 22.7%
Operating,
administrative and
other 50,340 44,362 5,978 13.5%
Depreciation and
amortization 1,975 2,336 (361) -15.5%
----------- ----------- ------- -----
Segment operating income $ 9,886 $ 5,491 $ 4,395 80.0%
============ =========== ======= =====
</TABLE>
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CB Commercial
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<TABLE>
<CAPTION>
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
FOR THE THREE MONTHS ENDED JUNE 30, 1997 WITH COMPARATIVE FIGURES FOR THE SIMILAR PERIODS IN 1996
QUARTER ENDED JUNE 30,
----------------------------------------------------------------------
1997 1996 DIFFERENCE % CHANGE
----------- ----------- ------------- -----------
INVESTOR SERVICES
- -----------------
<S> <C> <C> <C> <C>
MORTGAGE BANKING
Revenue $ 6,674 $ 3,730 $2,944 78.9%
Costs and expenses:
Commissions, fees and other incentives 3,416 1,504 1,912 127.1%
Operating, administrative and other 2,830 1,576 1,254 79.6%
Depreciation and amortization 350 66 284 430.3%
------- ------- ------ -----
Operating income (loss) $ 78 $ 584 $ (506) -86.6%
======= ======= ====== =====
INVESTMENT MANAGEMENT AND ADVISORY
Revenue $ 7,046 $ 7,845 (799) -10.2%
Costs and expenses:
Operating, administrative and other 5,609 5,669 (60) -1.1%
Depreciation and amortization 695 602 93 15.4%
------- ------- ------ -----
Operating income $ 742 $ 1,574 $ (832) -52.9%
======= ======= ====== =====
VALUATION & APPRAISAL SERVICES
Revenue $ 5,240 $ 4,603 $ 637 13.8%
Costs and expenses:
Commissions, fees and other incentives 2,308 2,171 137 6.3%
Operating, administrative and other 1,427 1,987 (560) -28.2%
Depreciation and amortization 33 34 (1) -2.9%
------- ------- ------ -----
Operating income $ 1,472 $ 411 $1,061 258.2%
======= ======= ====== =====
TOTAL INVESTOR SERVICES
- -----------------------
Revenue $18,960 $16,178 $2,782 17.2%
Costs and expenses:
Commissions, fees and other incentives 5,724 3,675 2049 55.8%
Operating, administrative and other 9,866 9,232 634 6.9%
Depreciation and amortization 1,078 702 376 53.6%
------- ------- ------ -----
Segment operating income $ 2,292 $ 2,569 $ (277) -10.8%
======= ======= ====== =====
</TABLE>
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CB Commercial
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CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1997 WITH COMPARATIVE FIGURES FOR THE SIMILAR
PERIODS IN 1996
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
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1997 1996 DIFFERENCE % CHANGE
-------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C>
CONSOLIDATED
- ------------
Revenue $ 292,022 $ 243,695 $ 48,327 19.8%
Costs and expenses:
Commissions, fees and other incentives 150,128 121,269 28,859 23.8%
Operating, administrative and other 116,596 103,154 13,442 13.0%
Depreciation and amortization 6,174 6,318 (144) -2.3%
------------- ------------ ------------ ----------
Operating income 19,124 12,954 6,170 47.6%
Interest income 1,219 749 470 62.8%
Interest expense 7,849 11,687 (3,838) -32.8%
------------- ------------ ------------ ----------
Income before provision for income taxes 12,494 2,016 10,478 519.7%
Provision for taxes based on income 5,355 390 4,965 1,273.1%
------------- ------------ ------------ ----------
Net income $ 7,139 $ 1,626 $ 5,513 339.1%
============= ============ ============ ==========
Net income applicable to common shareholders $ 5,139 $ 1,626 $ 3,513 216.1%
============= ============ ============ ==========
Primary earnings per share
Net income per common and common
equivalent share outstanding $ 0.37 $ 0.12 $ 0.25 208.3%
============= ============ ============ ==========
Weighted average common and common
equivalent shares outstanding 13,952,451 13,695,429 257,022 1.9%
============= ============ ============ ==========
Fully diluted earnings per share
Net income per common and common
equivalent share outstanding 0.37 0.12 0.25 208.3%
============= ============ ============ ==========
Weighted average common and common
equivalent shares outstanding 14,063,543 13,695,429 368,114 2.7%
============= ============ ============ ==========
EBITDA $ 25,298 $ 19,272 $ 6,026 31.3%
============= ============ ============ ==========
PROPERTY & USER SERVICES
- ------------------------
Revenue:
Brokerage services $ 172,168 $ 144,988 $ 27,180 18.7%
Investment properties 61,324 47,301 14,023 29.6%
Corporate services 12,778 9,404 3,374 35.9%
Property management 9,648 9,665 (17) -0.2%
Real estate market research 829 680 149 21.9%
------------- ------------ ------------ ----------
256,747 212,038 44,709 21.1%
Costs and expenses:
Commissions, fees and other incentives 140,517 114,438 26,079 22.8%
Operating, administrative and other 96,731 84,431 12,300 14.6%
Depreciation and amortization 4,018 4,741 (723) -15.2%
------------- ------------ ------------ ----------
Segment operating income $ 15,481 $ 8,428 $ 7,053 83.7%
============= ============ ============ ==========
</TABLE>
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<TABLE>
<CAPTION>
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1997 WITH COMPARATIVE FIGURES FOR THE SIMILAR PERIODS IN 1996
SIX MONTHS ENDED JUNE 30,
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1997 1996 DIFFERENCE % CHANGE
----------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
INVESTOR SERVICES
- -----------------
MORTGAGE BANKING
Revenue $11,357 $ 7,245 $ 4,112 56.8%
Costs and expenses:
Commissions, fees and other incentives 5,184 2,839 2,345 82.6%
Operating, administrative and other 5,580 3,218 2,362 73.4%
Depreciation and amortization 699 132 567 429.5%
------- ------- ------- -----
Operating income (loss) $ (106) $ 1,056 $(1,162) n/a
======= ======= ======= =====
INVESTMENT MANAGEMENT AND ADVISORY
Revenue $14,378 $16,001 $(1,623) -10.1%
Costs and expenses:
Operating, administrative and other 10,871 11,632 (761) -6.5%
Depreciation and amortization 1,389 1,375 14 1.0%
------- ------- ------- -----
Operating income $ 2,118 $ 2,994 $ (876) -29.3%
======= ======= ======= =====
VALUATION & APPRAISAL SERVICES
Revenue $ 9,540 $ 8,411 $ 1,129 13.4%
Costs and expenses:
Commissions, fees and other incentives 4,427 3,992 435 10.9%
Operating, administrative and other 3,414 3,873 (459) -11.9%
Depreciation and amortization 68 70 (2) -2.9%
------- ------- ------- -----
Operating income $ 1,631 $ 476 $ 1,155 242.6%
======= ======= ======= =====
TOTAL INVESTOR SERVICES
- -----------------------
Revenue $35,275 $31,657 $ 3,618 11.4%
Costs and expenses:
Commissions, fees and other incentives 9,611 6,831 2,780 40.7%
Operating, administrative and other 19,865 18,723 1,142 6.1%
Depreciation and amortization 2,156 1,577 579 36.7%
------- ------- ------- -----
Segment operating income $ 3,643 $ 4,526 $ (883) -19.5%
======= ======= ======= =====
</TABLE>
7
