<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): FEBRUARY 10, 1998
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
- --------------------------------------------------------------------------------
(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
--------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (213) 613-3123
--------------
- --------------------------------------------------------------------------------
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE>
ITEM 5. OTHER EVENTS.
On February 10, 1998, CB Commercial Real Estate Services Group, Inc. issued
a press release announcing its results of operations for the quarter and year
ended December 31, 1997. 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 February 10, 1998 issued by CB Commercial Real
Estate Services Group, Inc.
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<PAGE>
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 COMMERCIAL REAL ESTATE SERVICES
GROUP, INC.
Date: February 10, 1998 By: /s/ Ronald J. Platisha
------------------------------------------
Ronald J. Platisha
Executive Vice President
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<PAGE>
EXHIBIT 99
NEWS
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
533 South Fremont Avenue
Los Angeles, CA 90071
(213) 613-3123
TRADED: NYSE:CBG
AT THE COMPANY AT THE FINANCIAL RELATIONS BOARD
Cary Brazeman Karen Taylor Stephanie Mishra
Corporate Communications General Information Investor/Analyst Contact
(213) 613-3227 (310) 442-0599 (415) 986-1591
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
FEBRUARY 10, 1998
CB COMMERCIAL REPORTS RECORD FOURTH QUARTER AND YEAR-END RESULTS,
POSITIVE IMPACT OF PREFERRED SHARE PURCHASE
. QUARTERLY ADJUSTED EPS INCREASES 38.7% TO $.86
. FULL YEAR ADJUSTED EPS INCREASES 84.8% TO $1.83
. 35.6% REVENUE AND 70.1% EBITDA GAINS FOR THE QUARTER
. 25.2% REVENUE AND 45.3% EBITDA GAINS FOR 1997
LOS ANGELES, CA, FEBRUARY 10, 1998-- CB Commercial (NYSE:CBG), the world's
leading commercial real estate services provider, today reported fourth quarter
consolidated revenue gains of 35.6%, along with 70.1% growth in earnings before
interest, income taxes, depreciation and amortization ("EBITDA"). For the
quarter, earnings per share (computed on a diluted basis) increased 38.7% to
$.86 per share before the effect of a tax adjustment in the 1996 quarter.
CONSOLIDATED RESULTS
For the quarter ended December 31, 1997, consolidated revenues increased 35.6%
to $260.7 million from $192.2 million a year ago. These gains include
approximately four months of Koll Real Estate Services ("Koll") revenues.
EBITDA increased 70.1% to $43.9 million compared with $25.8 million in 1996.
The company reported net income applicable to common shareholders of $18.2
million, or $.86 per share, versus net income applicable to common shareholders
of $8.7 million, or $.62 per share, up 38.7% in the comparable year-ago quarter,
adjusted to exclude the effect of a reduction in tax valuation allowances (which
artificially increased net income and earnings per share) in 1996.
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For the year ended December 31, 1997, consolidated revenues increased 25.2% to
$730.2 million versus $583.1 million a year ago. These gains also reflect four
months of Koll revenues. EBITDA before one-time charges advanced 45.3% to $90.1
million, versus $62.0 million for the full 1996 year. Net income applicable to
common shareholders was $20.4 million, or $1.28 per share, compared to $13.6
million, or $.99 per share, in the prior year period. Earnings per common share
(computed on a diluted basis), adjusted to exclude one-time charges of $16.0
million, improved 84.8% to $1.83 per share for the 1997 year.
Both the quarter and year-end adjusted results for 1996 exclude tax valuation
allowance adjustments. Additionally, the company noted that total one-time
charges of $16.0 million for 1997 included severance, facilities consolidation,
accelerated amortization and other costs occasioned by the Koll merger and
concurrent refinancing.
PREFERRED STOCK PURCHASE
As previously announced, the company recently purchased all 4.0 million of its
existing convertible preferred shares which could have been converted into
approximately 2.56 million of common shares. The preferred shares carried a
dividend requirement of $.25 per share per quarter. Giving effect for the
purchase, the company's earnings per share for the year, on a pro forma basis,
would have been about $1.93, assuming an approximate $2.8 million after-tax
carrying cost of funding the purchase. The total cost to purchase the preferred
shares was $77.0 million, including $5.0 million of accrued dividends. The
shares were originally issued in conjunction with the company's acquisition by
management in 1989. The sale of the preferred stock, which the Preferred
Shareholders intended to effect through a private placement in the event the
company had not acquired the shares, will trigger an annual limitation on the
use of CB Commercial's net operating loss carryforward. The limitation only
impacts the annual use of the loss and not the aggregate loss carryforward
available, and affects only actual taxes paid with no material impact on
reported earnings per share.
Chairman and Chief Executive Officer, Jim Didion, commented, "We were presented
early last month with an opportunity to buy back the preferred shares at an
attractive price. We decided to purchase the shares because it was beneficial
to both the company and existing shareholders in that we simplified our capital
structure and we no longer incur the costs associated with the dividend. Our
financial flexibility enabled us to move quickly, eliminating a possible
overhang in the market created by the prospective sale of the preferred to
various investors while retaining the capacity to complete both the pending
acquisition of REI Ltd. and fund our needs going forward."
REI LTD. ACQUISITION UPDATE
Also as previously announced, CB Commercial has agreed to acquire REI Ltd. The
purchase price will consist of cash and CBC stock valued in total at
approximately (Pounds)57.25 million. Up to 50% of the purchase may be in cash
at the option of REI shareholders. Although the price is subject to reduction
if adjusted EBITDA is less than approximately (Pounds)7.3 million or if net debt
exceeds (Pounds)6.5 million, CB Commercial expects REI to meet or better these
levels of
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performance, resulting in no price adjustment. Since the acquisition will be a
taxable transaction, CBC will be able to amortize the bulk of the purchase price
for tax purposes over 15 years.
Didion said, "The combination with REI will make us the only global real estate
services operation with a commonly owned network, integrated management, and
seamless service capabilities across all business lines and geographic locations
to meet multinational client demand. We believe the potential for new business
is enormous. In our view, a number of our clients, particularly multinational
companies, are outsourcing an increasing share of their non-core business
activities - their real estate operations as well as their strategic planning,
facilities management and transaction management - and we are positioned to
capitalize on those growth opportunities."
MARKET FACTORS
A robust national economy and strengthening real estate markets helped drive the
company toward its record financial performance for 1997. As an example, in the
office space sector, the national vacancy rate dropped below 10% for the first
time since 1981. (At year-end, the national rate was 9.9%.) Demand for office
space fueled the declining rate, as 73.4 million square feet was absorbed during
the year -- the most in a single year since 1989, according to CB
Commercial/Torto Wheaton Research, the company's Boston-based real estate
econometric analysis and forecasting firm. Positive job creation and generally
favorable economic activity gave rise to the demand and, because new supply has
been limited, average rents increased in 1997 as well. Notably, the
metropolitan New York area exhibited record-high levels of absorption in 1997,
pushing vacancy rates to the relatively low levels of the mid-1980s and rents
rapidly toward the $40-per-square-foot mark. Both midtown and downtown
Manhattan benefited from this trend.
SEGMENT RESULTS
In the third quarter, CB Commercial restructured into three operating units:
Brokerage Services, Corporate and Institutional Management Services, and
Financial Services. Beginning with the fourth quarter, the company further
segmented the corporate and institutional management services unit into
Corporate Services and Institutional Management Services to reflect the current
operating structure. Each business segment realized strong revenue growth and
steady gains in EBITDA for both the quarter and the year, indicative of the
continuing success of their specific growth strategies and the many benefits
each derives from CB Commercial's vertical integration.
Didion said, "Clearly we are realizing solid returns on our investments in each
of our business segments. We continue to experience strong deal flow and cash
flow from our brokerage business which has generated very substantial revenue
and profit growth. Our brokerage operation serves as our core business and
provides a strong financial base, along with key market intelligence, needed to
support the growth of our other business groups -- the financial services,
corporate services and institutional management services businesses."
Didion added, "We are pleased with our performance in each business area and the
progress towards our longer-term goals."
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RELATIVE GAINS
For the quarter ended December 31, 1997, CB Commercial produced revenue
increases of 25.7% in Brokerage Services, which grew to $141.6 million, 85.3% in
Corporate Services, which increased to $15.1 million, 93.5% in Institutional
Management Services, which advanced to $29.4 million, and 32.7% in Financial
Services, which reached $74.6 million.
BROKERAGE SERVICES (54.3% OF REVENUES; GREW 25.7%)
The company's core business, Brokerage Services (commercial property sales and
leasing), contributed 54.3% to consolidated revenues for the quarter. The
company reported 25.7% higher brokerage revenues compared to the fourth quarter
of last year and 22.4% higher revenues for the year as reduced vacancy rates in
much of the U.S. continued to drive rents and sales prices upwards. EBITDA
advanced 93.2% for the quarter and 66.9% for the whole year. EBITDA margins
improved from 10.9% to 16.8% in the quarter and from 9.0% to 12.3% for the year.
While the business of the Brokerage Services group is made up of thousands of
sales and leasing transactions, a significant portion of these transactions
involve the same clients year after year.
"Our demonstrated ability to build long term contractual relationships with our
key clients continues to drive our revenue growth," according to Brett White,
President of Brokerage Services.
White continued, "We experienced higher fees and commissions as a result of
higher property values and rental rates, and broadened our revenue base by
continuing to increase our market share in property markets nationwide. In
particular, our focus this past year was on solidifying our market presence
along the eastern seaboard and becoming the firm of choice in those markets, two
goals we achieved. In so doing, our revenue stream is now more evenly
distributed across the country and the quality of our deal flow has improved.
Additionally, the infrastructure we already have in place, in terms of trained,
seasoned sales people and our information systems, is more than sufficient for
us to accommodate the growing market base and improving real estate environment.
Similarly, when revenue increases beyond a certain threshold, we begin to
realize the benefits of economies of scale in our brokerage operations, which
results in a much higher level of profitability, as evidenced in our results
this past year."
CORPORATE SERVICES (5.8% OF REVENUES; GREW 85.3%)
This division provides transaction management, advisory services, and facilities
management on a regional, national and international basis, and constitutes a
"one-stop" shop for major corporate and institutional clients. Compared to a
year-ago, revenues from this unit increased 85.3% to account for 5.8% of total
revenues. As one of the top three players in this segment, CB Commercial
manages approximately 91 million square feet and serves over 125 major
multinational and national corporate clients. EBITDA for the quarter advanced
748.0% to $1.9 million, while segment EBITDA for the year was up 330.1% to $2.5
million. EBITDA margins improved from 2.7% to 12.4% for the quarter and from
2.3% to 6.6% for the year.
Gary Beban, President of Corporate Services, said, "We are delighted by our
performance in this segment which is starting to hit its stride. We have been
investing heavily here to build the critical
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mass necessary to enable us to capitalize on the tremendous opportunities in
this area. Looking forward, our merger with REI Ltd. expands our capability even
further, and positions CB Commercial as the only service provider able to offer
a seamless global capability to corporate clients around the world."
INSTITUTIONAL MANAGEMENT SERVICES (11.3% OF REVENUES; GREW 93.5%)
Providing a comprehensive range of property management services, this division
has 211 million square feet under management for hundreds of clients. Revenue
increased 93.5% to $29.4 million, versus $15.2 million in the prior year, to
constitute 11.3% of total revenues. EBITDA for the quarter advanced 13.5% to
$3.4 million, while segment EBITDA for the year was up 12.6% to $6.6 million.
Didion said, "While we continue to be pleased with the way our operations have
come together here, the full benefits of our integration with Koll are not yet
completely evident. We will see meaningful market share increases, the benefits
of scale, and further expense synergies as we move forward."
FINANCIAL SERVICES (28.6% OF REVENUES; GREW 32.7%)
A market leader in the delivery of financial services and products to Wall
Street, institutional, corporate and offshore investors, CB Commercial's
Financial Services group realized record growth during 1997 across nearly all
service areas. Services include investment property sales, mortgage banking
through L.J. Melody & Company, valuation/appraisal, asset management through
Westmark Realty Advisors and real estate market research. Key products include
hard-asset funds, loan funds, and mutual funds. Revenue from the Financial
Services segment contributed 28.6% to consolidated quarterly revenues and
increased 32.7% during the current quarter and 20.9% over the prior year
periods. EBITDA increased 44.3% for the quarter and 18.6% for the year,
denoting the continued strength in investment property sales and valuation and
appraisal activity, as well as an improved mortgage banking environment
counterbalanced by relatively flat activity in investment management.
Ray Wirta, President of Financial Services, stated, "Our strong performance
continues to be favorably impacted by a renewed interest by investors in real
estate as a primary asset class along with a strong general economy which is
helping increase asset values. We see both these trends enduring through 1998
and greatly benefiting us further." Wirta continued, "In mortgage banking,
though we continue to experience competitive pressures from the great influx of
capital and intense competition in originations, we originated a record number
of loans during 1997, valued in excess of $3.5 billion and making us the number
one loan originator in the country. Going forward, a key emphasis for us in
mortgage banking is to substantially grow our presence in those markets where we
are less well established, principally the northeast and southeast regions,
through acquisitions and selective hirings. As we reported in January, we
recently acquired mortgage banking companies in the Pacific Northwest and
Central Atlantic regions." Added, Wirta, "In investment property sales, the
estimated $9.4 billion in total properties sold for the year places us in the
leading market position, as similarly is the case in our ranking in the
appraisal area, where our high level of activity resulted in completion of more
than 3,700 assignments during the year. In investment management,
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our growth was about even with last year, reflective of and consistent with the
overall contraction occurring within that industry. Nonetheless, we experienced
steady growth in our mutual fund offerings, especially the REIT mutual fund we
started in the fall of 1996, which has grown to approximately $650.0 million in
assets and is attracting about $50.0 million in new capital each month."
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.
Founded in 1906, CB Commercial (NYSE:CBG) is the world's leading commercial
real estate services company. Headquartered in Los Angeles, the company serves
real estate users, owners and investors in over 200 cities in 35 countries.
Services include commercial property sales and leasing, property management,
corporate services and facilities management, mortgage banking, realty advisory
and investment management, capital markets, appraisal services, financial
consulting, market research and human resources. CB Commercial has 6,700
employees.
***
For more information on CB Commercial (via facsimile and at no cost), simply
call 1-800-PRO-INFO and dial client code "CBG." If you are calling from
outside the United States, please dial 908-544-2850.
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CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
OPERATING RESULTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997
WITH COMPARATIVE FIGURES FOR THE SIMILAR PERIODS IN 1996
<TABLE>
<CAPTION>
QUARTER ENDED DECEMBER 31,
----------------------------------------------------------
1997 1996 DIFFERENCE %
CHANGE
------------ ------------ ---------- --------
<S> <C> <C> <C> <C>
CONSOLIDATED
- ------------
REVENUE $ 260,682 $ 192,205 $ 68,477 35.6%
COSTS AND EXPENSES:
COMMISSIONS, FEES AND OTHER INCENTIVES 127,752 96,801 30,951 32.0%
OPERATING, ADMINISTRATIVE AND OTHER 89,042 69,603 19,439 27.9%
DEPRECIATION AND AMORTIZATION 5,788 3,825 1,963 51.3%
------------ ------------ ---------- -------
OPERATING INCOME 38,100 21,976 16,124 73.4%
INTEREST INCOME 639 468 171 36.5%
INTEREST EXPENSE 3,773 6,240 (2,467) -39.5%
------------ ------------ ---------- -------
INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAX
AND EXTRAORDINARY ITEMS 34,966 16,204 18,762 115.8%
PROVISION FOR INCOME TAX 15,772 6,550 9,222 140.8%
REDUCTION OF VALUATION ALLOWANCES - (15,500) 15,500 N/A
------------ ------------ ---------- -------
NET PROVISION (BENEFIT) FOR INCOME TAX 15,772 (8,950) 24,722 N/A
------------ ------------ ---------- -------
NET INCOME BEFORE EXTRAORDINARY ITEMS 19,194 25,154 (5,960) -23.7%
EXTRAORDINARY ITEMS - - - -
------------ ------------ ---------- -------
NET INCOME $ 19,194 $ 25,154 $ (5,960) -23.7%
============ ============ ========== =======
NET INCOME APPLICABLE TO COMMON SHAREHOLDERS $ 18,194 $ 24,154 $ (5,960) -24.7%
============ ============ ========== =======
BASIC EARNINGS PER SHARE $ 0.97 $ 1.75 $ (0.78) -44.6%
============ ============ ========== =======
NUMBER OF SHARES USED IN COMPUTING BASIC
EARNINGS PER SHARE 18,762,328 $ 13,781,803 4,980,525 36.1%
============ ============ ========== =======
DILUTED EARNINGS PER SHARE $ 0.86 $ 1.68 $ (0.82) -48.8%
============ ============ ========== =======
NUMBER OF SHARES USED IN COMPUTING
DILUTED EARNINGS PER SHARE 22,320,451 15,008,295 $7,312,156 48.7%
============ ============ ========== =======
EBITDA $ 43,888 $ 25,801 $ 18,087 70.1%
============ ============ ========== =======
</TABLE>
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CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
OPERATING RESULTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
WITH COMPARATIVE FIGURES FOR THE SIMILAR PERIODS IN 1996
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1997 1996 DIFFERENCE %
CHANGE
-------------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
CONSOLIDATED
- ------------
REVENUE $ 730,224 $ 583,068 $ 147,156 25.2%
COSTS AND EXPENSES:
COMMISSIONS, FEES AND OTHER INCENTIVES 365,705 292,266 73,439 25.1%
OPERATING, ADMINISTRATIVE AND OTHER 274,447 228,799 45,648 20.0%
MERGER RELATED AND OTHER NON-RECURRING CHARGES 12,924 - 12,924 N/A
DEPRECIATION AND AMORTIZATION 18,060 13,574 4,486 33.0%
------------ ------------ ----------- -------
OPERATING INCOME 59,088 48,429 10,659 22.0%
INTEREST INCOME 2,598 1,503 1,095 72.9%
INTEREST EXPENSE 15,780 24,123 (8,343) -34.6%
INCOME BEFORE PROVISION
(BENEFIT) FOR INCOME TAX
AND EXTRAORDINARY ITEMS 45,906 25,809 20,097 77.9%
PROVISION FOR INCOME TAX 20,558 11,160 9,398 84.2%
REDUCTION OF VALUATION ALLOWANCES - (55,900) 55,900 N/A
------------ ------------ ----------- -------
NET PROVISION (BENEFIT) FOR INCOME TAX 20,558 (44,740) 65,298 N/A
------------ ------------ ----------- -------
NET INCOME BEFORE EXTRAORDINARY ITEMS 25,348 70,549 (45,201) -64.1%
EXTRAORDINARY ITEMS 951 - 951 N/A
------------ ------------ ----------- -------
NET INCOME $ 24,397 $ 70,549 $ (46,152) -65.4%
============ ============ =========== =======
NET INCOME APPLICABLE TO
COMMON SHAREHOLDERS $ 20,397 $ 69,549 $ (49,152) -70.7%
============ ============ =========== =======
BASIC EARNINGS PER SHARE $ 1.34 $ 5.05 $ (3.71) -73.5%
============ ============ =========== =======
NUMBER OF SHARES USED IN
COMPUTING BASIC EARNINGS PER SHARE $ 15,237,914 13,783,882 1,454,032 10.5%
============ ============ =========== =======
DILUTED EARNINGS PER SHARE $ 1.28 $ 4.99 $ (3.71) -74.3%
============ ============ =========== =======
NUMBER OF SHARES USED IN
COMPUTING DILUTED EARNINGS PER SHARE 15,996,929 14,126,636 1,870,293 13.2%
============ ============ =========== =======
EBITDA EXCLUDING MERGER
RELATED AND OTHER NONRECURRING CHARGES $ 90,072 $ 62,003 $ 28,069 45.3%
============ ============ =========== =======
</TABLE>
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CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
(UNAUDITED)
ASSETS
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 47,181 $ 49,328
OTHER CURRENT ASSETS 103,232 64,624
PROPERTY AND EQUIPMENT, NET 50,309 40,835
GOODWILL AND OTHER INTANGIBLE ASSETS, NET 239,384 75,883
OTHER ASSETS, NET 65,085 48,274
--------- ---------
TOTAL ASSETS $ 505,191 $ 278,944
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT MATURITIES OF LONG-TERM DEBT $ 4,949 $ 15,314
OTHER CURRENT LIABILITIES 152,927 90,691
LONG-TERM DEBT, LESS CURRENT MATURITIES 146,104 148,529
OTHER LONG-TERM LIABILITIES 35,768 25,830
--------- ---------
TOTAL LIABILITIES $ 339,748 $ 280,364
MINORITY INTEREST 7,672 95
STOCKHOLDERS' EQUITY
CONTRIBUTED CAPITAL $ 328,253 $ 193,090
ACCUMULATED DEFICIT (170,482) (194,605)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 157,771 (1,515)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 505,191 $ 278,944
========= =========
</TABLE>
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<TABLE>
<CAPTION>
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 WITH COMPARATIVE FIGURES FOR THE SIMILAR PERIODS IN 1996
QUARTER ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 DIFFERENCE % CHANGE
-------- -------- ---------- --------
<S> <C> <C> <C> <C>
BROKERAGE SERVICES
- ------------------
Revenue $141,627 $112,655 $28,972 25.7%
Costs and expenses:
Commissions, fees and other incentives 79,720 61,754 17,966 29.1%
Operating, administrative and other 38,122 38,593 (471) -1.2%
Depreciation and amortization 1,652 1,594 58 3.6%
-------- -------- ------- -------
Operating income $ 22,133 $ 10,714 $11,419 106.6%
======== ======== ======= =======
EBITDA $ 23,785 $ 12,308 $11,477 93.2%
======== ======== ======= =======
EBITDA Margin 16.8% 10.9%
======== ========
EBITDA as a percent of consolidated EBITDA 54.2% 47.7%
======== ========
CORPORATE SERVICES
- ------------------
Revenue $ 15,054 $ 8,126 $ 6,928 85.3%
Costs and expenses:
Commissions, fees and other incentives 6,383 4,566 1,817 39.8%
Operating, administrative and other 6,797 3,339 3,458 103.6%
Depreciation and amortization 593 46 547 1,189.1%
-------- -------- ------- -------
Operating income $ 1,281 $ 175 $ 1,106 632.0%
======== ======== ======= =======
EBITDA $ 1,874 $ 221 $ 1,653 748.0%
======== ======== ======= =======
EBITDA Margin 12.4% 2.7%
======== ========
EBITDA as a percent of consolidated EBITDA 4.3% 0.9%
======== ========
INSTITUTIONAL MANAGEMENT SERVICES
- ---------------------------------
Revenue $ 29,425 $ 15,206 $14,219 93.5%
Costs and expenses:
Commissions, fees and other incentives 8,403 6,423 1,980 30.8%
Operating, administrative and other 17,642 5,804 11,838 204.0%
Depreciation and amortization 1,054 213 841 394.8%
-------- -------- ------- -------
Operating income $ 2,326 $ 2,766 $ (440) -15.9%
======== ======== ======= =======
EBITDA $ 3,380 $ 2,979 $ 401 13.5%
======== ======== ======= =======
EBITDA Margin 11.5% 19.6%
======== ========
EBITDA as a percent of consolidated EBITDA 7.7% 11.5%
======== ========
FINANCIAL SERVICES
- ------------------
Revenue $ 74,576 $ 56,218 $18,358 32.7%
Costs and expenses:
Commissions, fees and other incentives 33,246 24,058 9,188 38.2%
Operating, administrative and other 26,481 21,867 4,614 21.1%
Depreciation and amortization 2,489 1,972 517 26.2%
-------- -------- ------- -------
Operating income $ 12,360 $ 8,321 $ 4,039 48.5%
======== ======== ======= =======
EBITDA $ 14,849 $ 10,293 $ 4,556 44.3%
======== ======== ======= =======
EBITDA Margin 19.9% 18.3%
======== ========
EBITDA as a percent of consolidated EBITDA 33.8% 39.9%
======== ========
</TABLE>
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<TABLE>
<CAPTION>
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997 WITH COMPARATIVE FIGURES FOR THE SIMILAR PERIODS IN 1996
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1997 1996 DIFFERENCE % CHANGE
-------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
BROKERAGE SERVICES
- -------------------
Revenue $423,485 $345,906 $77,579 22.4%
Costs and expenses:
Commissions, fees and other incentives 237,697 191,830 45,867 23.9%
Operating, administrative and other 133,661 122,845 10,816 8.8%
Depreciation and amortization 8,200 7,092 1,108 15.6%
-------- -------- ------- ------
Operating income $ 43,927 $ 24,139 $19,788 82.0%
======== ======== ======= ======
EBITDA $ 52,127 $ 31,231 $20,896 66.9%
======== ======== ======= ======
EBITDA Margin 12.3% 9.0%
======== ========
EBITDA as a percent of consolidated EBITDA 57.9% 50.4%
======== ========
CORPORATE SERVICES
- ------------------
Revenue $ 37,608 $ 25,564 $12,044 47.1%
Costs and expenses:
Commissions, fees and other incentives 18,429 14,286 4,143 29.0%
Operating, administrative and other 16,693 10,700 5,993 56.0%
Depreciation and amortization 898 243 655 269.5%
-------- -------- ------- ------
Operating income $ 1,588 $ 335 $ 1,253 374.0%
======== ======== ======= ======
EBITDA $ 2,486 $ 578 $ 1,908 330.1%
======== ======== ======= ======
EBITDA Margin 6.6% 2.3%
======== ========
EBITDA as a percent of consolidated EBITDA 2.8% 0.9%
======== ========
INSTITUTIONAL MANAGEMENT SERVICES
- ---------------------------------
Revenue $ 67,442 $ 44,783 $22,659 50.6%
Costs and expenses:
Commissions, fees and other incentives 22,230 17,416 4,814 27.6%
Operating, administrative and other 38,625 21,518 17,107 79.5%
Depreciation and amortization 2,040 700 1,340 191.4%
-------- -------- ------- ------
Operating income $ 4,547 $ 5,149 $ (602) -11.7%
======== ======== ======= ======
EBITDA $ 6,587 $ 5,849 $ 738 12.6%
======== ======== ======= ======
EBITDA Margin 9.8% 13.1%
======== ========
EBITDA as a percent of consolidated EBITDA 7.3% 9.4%
======== ========
FINANCIAL SERVICES
- ------------------
Revenue $201,689 $166,815 $34,874 20.9%
Costs and expenses:
Commissions, fees and other incentives 87,349 68,734 18,615 27.1%
Operating, administrative and other 85,468 73,736 11,732 15.9%
Depreciation and amortization 6,922 5,539 1,383 25.0%
-------- -------- ------- ------
Operating income $ 21,950 $ 18,806 $ 3,144 16.7%
======== ======== ======= ======
EBITDA $ 28,872 $ 24,345 $ 4,527 18.6%
======== ======== ======= ======
EBITDA Margin 14.3% 14.6%
======== ========
EBITDA as a percent of consolidated EBITDA 32.0% 39.3%
======== ========
MERGER RELATED AND OTHER NONRECURRING COSTS $ 12,924 $ - $12,924 n/a
- ------------------------------------------- ======== ======== ======= ======
</TABLE>
