<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): MAY 1, 1998
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 001-12231 52-1616016
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
</TABLE>
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
N/A
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 5. OTHER EVENTS.
On May 1, 1998, CB Commercial Real Estate Services Group, Inc. issued a
press release announcing that during the week of May 4, 1998 it plans to file
with the Securities and Exchange Commission a prospectus supplement to its
omnibus shelf registration statement in conjunction with a proposed offering
of $200 million aggregate principal amount of Senior Subordinated Notes. The
press release is filed as an exhibit hereto.
On May 5, 1998, CB Commercial Real Estate Services Group, Inc. issued a
press release announcing its results of operations for the quarter ended March
31, 1998. The press release is filed as an exhibit hereto.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) CB Commercial Real Estate Services Group, Inc. Unaudited Pro Forma
Financial Statements for the year ended December 31, 1997.
(c) The following is furnished as exhibits to this report:
99.1 Press release dated May 1, 1998 issued by CB Commercial Real Estate
Services Group, Inc.
99.2 Press release dated May 5, 1998 issued by CB Commercial Real Estate
Services Group, Inc.
2
<PAGE>
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The accompanying pro forma financial statements give effect to the
following: (a) inclusion of the operations of Koll Real Estate Services, Inc.
("Koll"), for unaudited pro forma statement of operations purposes, for the
first eight months of the year to reflect the acquisition of Koll by CB
Commercial Real Estate Services Group, Inc. (the "Company") as if the
acquisition had occurred on January 1, 1997, and (b) the purchase of the
Company's outstanding preferred stock which occurred in the first quarter of
1998, as if it had occurred on December 31, 1997 for unaudited pro forma
balance sheet purposes and as if it had occurred on January 1, 1997 for
unaudited pro forma statement of operations purposes. The historical financial
information of the Company was derived from the audited financial statements
for the year ended December 31, 1997 included in the Company's 1997 Annual
Report on Form 10-K. The historical financial information for Koll was derived
from Koll's unaudited, internally prepared financial statements for the eight-
month period ended August 31, 1997.
The pro forma adjustments are based upon currently available information and
upon certain assumptions that management believes are reasonable. There can be
no assurance that the actual effects will not differ significantly from the
pro forma adjustments reflected in the pro forma financial statements. The pro
forma financial statements are not necessarily indicative of future statement
of financial position, results of operations or results that might have been
achieved if the transactions had been consummated as of the dates indicated
above.
3
<PAGE>
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
UNAUDITED PROFORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN 000'S, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CB
COMMERCIAL KOLL EIGHT
HISTORICAL MONTHS
YEAR ENDED ENDED CB
DECEMBER AUGUST 31, PRO FORMA PRO FORMA COMMERCIAL
31, 1997 1997 ADJUSTMENTS SUBTOTAL ADJUSTMENTS PRO FORMA
---------- ---------- ----------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues................ $ 730,224 $ 87,687 $817,911 $ 817,911
Commissions, fees and
other incentives....... 365,705 17,656 383,361 383,361
Operating,
administrative and
other.................. 274,447 67,290 341,737 341,737
Merger related and other
non-recurring
charges................. 12,924 19,771 32,695 32,695
Depreciation and
amortization........... 18,060 8,023 (4,500)(a) 26,253 26,253
1,464 (b)
2,910 (c)
208 (d)
88 (e)
---------- -------- ------ -------- ------- ----------
Operating income (loss). 59,088 (25,053) 170 33,865 -- 33,865
Interest income......... 2,598 96 2,694 2,694
Interest expense........ 15,780 2,335 18,115 6,192 (g) 24,307
Minority interest....... 651 651 651
---------- -------- ------ -------- ------- ----------
Income (loss) before
equity income (loss)
and provision (benefit)
for income taxes....... 45,906 (27,943) 170 17,793 (6,192) 11,601
Equity income (loss).... -- (63) (63) (63)
---------- -------- ------ -------- ------- ----------
Income (loss) before
provision for income
taxes.................. 45,906 (28,006) 170 17,730 (6,192) 11,538
Provision (benefit) for
income taxes........... 20,558 (8,443) (428)(f) 11,687 (2,477)(h) 9,210
---------- -------- ------ -------- ------- ----------
Income (loss) from
continuing operations.. $ 25,348 $(19,563) $ (258) $ 6,043 $(3,715) $ 2,328
========== ======== ====== ======== ======= ==========
Income applicable to
common shareholders.... $ 21,348 $ 2,328(j)
========== ==========
Per share data:
Basic earnings per
share................. $ 1.40 $ 0.12(j)
========== ==========
Weighted average
shares................ 15,237,914 18,634,811(i)
========== ==========
Diluted earnings per
share................. $ 1.33 $ 0.12(j)
========== ==========
Weighted average
shares................ 15,996,929 19,556,070(i)
========== ==========
</TABLE>
- -------
Notes:
(a) Represents reversal of Koll's historical amortization expense.
(b) Represents amortization expense for management agreements assuming a
useful life of 10 years.
(c) Represents amortization expense for the Koll goodwill resulting from the
transaction using a 30 year estimated useful life.
(d) Represents amortization expense for covenants not to compete.
(e) Represents amortization expense on Koll's investments to amortize the
difference between the purchase price allocated to these investments and
their underlying net book value.
(f) Represents the net tax effect of the Koll pro forma adjustments.
(g) Represents interest on the borrowings for the preferred stock buyback
using a 8.0% interest rate.
(h) Represents tax benefit on pro forma entry at 40%.
(i) Weighted average shares include incremental shares issued in connection
with the Koll transaction from the beginning of the year.
(j) Pro forma earnings per share ("EPS") gives effect to the purchase of all
of the Company's preferred stock. Accordingly no reduction has been made
to income available to common stockholders for the annual dividend on such
preferred stock. In addition, pro forma EPS does not reflect the one-time
reduction of EPS by approximately $1.70, in connection with such purchase,
which amount represents the excess of the purchase price over the carrying
value of the preferred stock.
4
<PAGE>
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
UNAUDITED PROFORMA BALANCE SHEET
AS OF DECEMBER 31, 1997
(DOLLARS IN 000'S)
<TABLE>
<CAPTION>
CB
COMMERCIAL
HISTORICAL
AS OF CB
DECEMBER 31, PRO FORMA COMMERCIAL
1997 ADJUSTMENTS PRO FORMA
------------ ----------- ----------
<S> <C> <C> <C>
ASSETS
Cash..................................... $ 47,181 $ 47,181
Receivables.............................. 77,734 77,734
A/R from affiliates...................... -- --
Deferred taxes........................... 2,890 2,890
Prepaid expenses......................... 9,819 9,819
Other.................................... 12,789 12,789
--------- -------- ---------
Total current assets................... 150,413 -- 150,413
Property, plant and equipment............ 50,309 50,309
Goodwill................................. 196,358 196,358
Investments and advances................. -- --
Other intangible assets.................. 43,026 43,026
Inventoried property..................... 7,355 7,355
Deferred taxes........................... 34,967 34,967
Other assets............................. 22,763 22,763
--------- -------- ---------
Total assets........................... $ 505,191 $ -- $ 505,191
========= ======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Compensation and employee benefits....... $ 56,389 $ 56,389
Accounts payable & accrued liabilities... 61,345 61,345
Reserve for bonus and profit sharing..... 33,538 33,538
Current maturities of long term debt..... 4,949 4,949
Current portion of capital lease
obligations............................. 1,655 1,655
Notes payable to bank.................... -- --
--------- -------- ---------
Total current liabilities.............. 157,876 -- 157,876
Senior term loans........................ 136,551 77,400 (a) 213,951
Inventoried property loan................ 7,470 7,470
Deferred income taxes.................... -- --
Other long term debt..................... 2,083 2,083
Other long term liabilities.............. 35,768 (5,000)(a) 30,768
--------- -------- ---------
Total liabilities...................... 339,748 72,400 412,148
Minority interest........................ 7,672 7,672
STOCKHOLDERS' EQUITY
Preferred stock.......................... 40 (40)(a) --
Common stock............................. 188 188
Additional paid-in capital............... 333,981 (72,360)(a) 261,621
Notes receivable from sale of stock...... (5,956) (5,956)
Retained earnings (deficit).............. (170,208) (170,208)
Foreign currency translation (loss) gain. (274) (274)
--------- -------- ---------
Total stockholders' equity............. 157,771 (72,400) 85,371
--------- -------- ---------
Total liabilities and stockholders'
equity................................ $ 505,191 $ -- $ 505,191
========= ======== =========
</TABLE>
- --------
Notes:
(a) Reflects the purchase of all of the Company's outstanding preferred stock.
5
<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.
/s/ Debra Morris
Date: May 5, 1998 By: _________________________________
Debra Morris
Chief Accounting Officer
6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
99.1 Press release dated May 1, 1998 issued by CB Commercial Real Estate
Services Group, Inc.
99.2 Press release dated May 5, 1998 issued by CB Commercial Real Estate
</TABLE> Services Group, Inc.
7
<PAGE>
EXHIBIT 99.1
NEWS
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
533 South Fremont Avenue
Los Angeles, CA 90071
(213) 613-3123
TRADED: NYSE:CBG
<TABLE>
<S> <C> <C>
AT THE FINANCIAL RELATIONS
AT THE COMPANY BOARD
Cary Brazeman Karen Taylor Stephanie Mishra
Corporate Communications General Information Investor/Analyst Contact
(213) 613-3227 (310) 442-0599 (415) 986-1591
</TABLE>
FOR IMMEDIATE RELEASE
MAY 1, 1998
CB COMMERCIAL ANNOUNCES PROPOSED PUBLIC OFFERING
Los Angeles, CA, May 1, 1998--CB Commercial Real Estate Services Group, Inc.
(NYSE:CBG) today announced that next week it plans to file with the Securities
and Exchange Commission a prospectus supplement to the company's omnibus shelf
registration statement in conjunction with a proposed offering of $200 million
aggregate principal amount of Senior Subordinated Notes due 2008.
The underwriters for the offering are Merrill Lynch & Co., BancAmerica
Robertson Stephens and Nationsbanc Montgomery Securities. The company intends
to consummate this new financing in May 1998.
CB Commercial, headquartered in Los Angeles with over 8,000 employees
worldwide, serves real estate owners, investors and occupiers through over 200
principal offices in 29 countries. Services include property sales and
leasing, investment property acquisitions and dispositions, property
management, corporate advisory services and facilities management, development
advisory, mortgage banking, investment management, capital markets,
appraisal/valuation and market research.
When available, copies of the prospectus and prospectus supplement may be
obtained from either Merrill Lynch & Co., 250 Vesey Street, New York, NY
10281, (212) 449-1000, BancAmerica Robertson Stephens, 231 South LaSalle
Street, 18th Floor, Chicago, IL 60697, (312) 828-7406, or Nationsbanc
Montgomery Securities, 600 Montgomery Street, San Francisco, CA 94111, (415)
627-2000.
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 or 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.
For more information on CB Richard Ellis (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.
# # #
<PAGE>
EXHIBIT 99.2
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
533 South Fremont Avenue
Los Angeles, CA 90071
TRADED: NYSE:CBG
<TABLE>
<S> <C> <C>
AT THE FINANCIAL
AT THE COMPANY RELATIONS BOARD
Cary Brazeman Karen Taylor Stephanie Mishra
Corporate Communications General Information Investor/Analyst Contact
(213) 613-3227 (310) 442-0599 (415) 986-1591
</TABLE>
- -------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
MAY 5, 1998
CB COMMERCIAL REPORTS FIRST QUARTER RESULTS
30.6% REVENUE AND 23.9% EBITDA GAINS
LOS ANGELES, CA, MAY 5, 1998--CB Commercial Real Estate Services Group, Inc.
(NYSE:CBG), the world's leading real estate services provider, today announced
first quarter consolidated revenue gains of 30.6% and 23.9% growth in earnings
before interest, income taxes, depreciation and amortization ("EBITDA"). For
the quarter, adjusted diluted earnings per share increased 11.1% to $0.10 per
share.
Jim Didion, Chairman and Chief Executive Officer, commented, "Our strong
quarterly performance is a reflection of continued strong internal growth
combined with the full financial impact of the Koll acquisition in the first
quarter compared to last year." Didion continued, "The fundamentals of our
business--the strong and increasingly global economy, continued outsourcing of
corporate real estate service needs and the ongoing consolidation among real
estate services providers--create reason for continued optimism."
Didion added, "We are very excited about our combination with REI, which has
made us the only global real estate services operation with a commonly owned
network, integrated management and consistent service capabilities across all
business lines and geographic locations. More than ever before, we are now
able to uniquely and creatively serve multinational client needs. Our
potential growth from new business as a result of this competitive positioning
and becoming the preferred service provider to these types of clients is
immense. From our perspective, we continue to see an increasing number of
clients, especially multinational companies, outsourcing more and more of
their non-core business activities, including their real estate operations,
strategic planning, and facilities management and transaction management
requirements. We are well poised to capitalize on those growth opportunities
and believe we will see the favorable results in our performance going
forward."
Consolidated Results
For the quarter ended March 31, 1998, consolidated revenues increased 30.6%
to $175.1 million from $134.1 million in the 1997 first quarter. The 1998
results include the full contribution from Koll Real Estate Services ("Koll").
EBITDA increased 23.9% to $12.5 million compared with $10.1 million in 1997.
The company reported net income applicable to common shareholders (before the
adjustment for the effects of the deemed dividend associated with accounting
for the repurchase of its preferred stock) of $2.0 million, or $0.10 per
share, versus net income applicable to common shareholders of $1.3 million, or
$0.09 per share in the comparable year ago quarter. The net loss applicable to
common shareholders after the impact of the accounting treatment of the
preferred stock repurchase was $(30.3) million, or $(1.60) per share in the
first quarter, compared to net income of $1.3 million, or $0.09 per share
during the 1997 first quarter.
<PAGE>
CB Commercial News Release
May 5, 1998
Page 2
The company noted that the deemed dividend of $32.3 million represented the
portion of the price of the January 1998 repurchase of all 4.0 million of its
existing convertible preferred shares in excess of carrying value. Those
shares were originally issued in conjunction with the company's acquisition by
management in 1989. Additionally, the company reported the final purchase
price for the equity of REI was approximately $103.0 million based on the
company's stock price and the exchange rate at closing. Additional one-time
charges of up to $5 million associated with the REI acquisition and
integration, and a possible write-down in the carrying value of two owned
buildings to fair market value are anticipated to impact next quarter's
results, according to Didion.
Market Factors
The U.S. economy remains strong and real estate markets across the country
have continued to perform well. In the office space sector, the national
vacancy rate dropped to 9.5% from 11.6% for the first quarter. Demand for
office space fueled the declining rate, with about 15 million square feet
absorbed during the quarter, according to Torto Wheaton Research, the
company's Boston-based real estate econometric analysis and forecasting firm.
The outlook for 1998 continues to be favorable, with strong economic activity
giving rise to space demand coupled with limited new supply.
Segment Results
Each business segment continued to realize strong revenue growth during the
quarter, and steady gains in EBITDA, with the exception of Corporate Services
due to its continuing infrastructure investments. The strong revenue growth
reflects the ongoing success of their respective growth strategies and the
numerous benefits each realizes from CB Commercial's vertical integration
strategy.
Commented Didion, "Our brokerage business continues to generate strong deal
flow and cash flow. The brokerage operation, which serves as our core
business, provides a strong market position and competitive strength to our
other business groups." Didion said, "We continue to make considerable
advances towards our longer-term objectives and are very pleased with our
performance in each business area."
Relative Gains
For the quarter ended March 31, 1998, CB Commercial produced revenue
increases of 12.9% in Brokerage Services, which grew to $93.0 million; 111.9%
in Corporate Services, which increased to $12.5 million; 106.8% in Management
Services, which advanced to $22.5 million; and 35.1% in Financial Services,
which reached $47.2 million.
Brokerage Services (53.1% of revenues; grew 12.9%)
The company's core business, Brokerage Services (commercial property sales
and leasing), contributed 53.1% to consolidated revenues for the quarter. The
company reported 12.9% higher brokerage revenues compared to the first quarter
of last year as lower vacancy rates in much of the U.S. continued to push
rents and sales prices higher. EBITDA advanced 8.3% for the quarter. EBITDA
margins narrowed slightly to 7.5% in the quarter from 7.8% in the comparable
year ago quarter.
Said Brett White, President of Brokerage Services, "The first quarter was
strong for Brokerage Services as we continued to prosper from a healthy
commercial real estate market. Our presence in every major national market
positions us to receive a tremendous amount of the third party service
provider business. We continue to see our market share and market preeminence
solidify in virtually every major market around the country."
<PAGE>
CB Commercial News Release
May 5, 1998
Page 3
Corporate Services (7.1% of revenues; grew 111.9%)
This segment 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.
Revenues increased 111.9% to account for 7.1% of total revenues. A top three
player in the facilities management part of this segment, CB Commercial now
manages approximately 80 million square feet and serves over 125 major
multinational and national corporate clients. EBITDA for the quarter declined
by $(0.8) million to a loss due to the investment made in infrastructure to
support new business expected to come on-line in part as a result of the REI
acquisition.
Gary Beban, President of Corporate Services, said, "Our continued
investments position us to capitalize on the increasing opportunities in this
area. As the only service provider able to offer a consistent global
capability to corporate clients worldwide, we are already seeing a number of
opportunities to take this business worldwide--the CB Richard Ellis
combination has sustainable competitive advantages in serving the outsourcing
needs of major global corporations."
Management Services (12.8% of revenues; grew 106.8%)
Providing a comprehensive range of property management services, the company
manages more than 200 million square feet for hundreds of clients. Revenue
increased 106.8% to $22.5 million, versus $10.9 million in the previous first
quarter, to constitute 12.8% of total revenues. EBITDA for the quarter
advanced 158.3% to $2.0 million.
According to Jana Turner, President of Management Services, "Results for
this segment are beginning to reflect the benefits of our integration of our
CB and Koll operations, with margins picking up as we start to realize some of
the benefits of consolidation."
Financial Services (27.0% of revenues; grew 35.1%)
A market leader in the delivery of financial services and products to Wall
Street, institutional, corporate and offshore investors, the company's
Financial Services group realized strong growth during the quarter across
nearly all service areas. Services include investment property acquisitions
and 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 27.0% to consolidated quarterly revenues and increased 35.1%
during the current quarter compared to the 1997 first quarter. EBITDA
increased 52.8% for the quarter versus last year's first quarter.
Ray Wirta, President of Financial Services, stated, "Overall, our
performance in Financial Services was strong, reflecting the real estate
markets nationally and our expanding market presence."
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
<PAGE>
CB Commercial News Release
May 5, 1998
Page 4
or revise any forward-looking statements found herein to reflect any changes
in company expectations or results or any change in events.
CB Commercial Real Estate Services Group, Inc. (NYSE:CBG), doing business as
CB Richard Ellis, is the world's leading real estate services company.
Headquartered in Los Angeles with over 8,000 employees worldwide, the company
serves real estate owners, investors and occupiers through over 200 principal
offices in 29 countries. Services include property sales and leasing,
investment property acquisitions and dispositions, property management,
corporate advisory services and facilities management, development advisory,
mortgage banking, investment management, capital markets, appraisal/valuation
and market research. CB Commercial had 1997 revenues in excess of $730
million; REI reported 1997 revenues of approximately $119 million.
* * *
For more information on CB Richard Ellis (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.
<PAGE>
CB Commercial News Release
May 5, 1998
Page 5
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
OPERATING RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 WITH COMPARATIVE FIGURES FOR THE
SIMILAR PERIOD IN 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31,
------------------------------------------------
1998 1997 DIFFERENCE % CHANGE
----------- ----------- ---------- --------
<S> <C> <C> <C> <C>
CONSOLIDATED
Revenue...................... $ 175,144 $ 134,064 $ 41,080 30.6 %
Costs and expenses:
Commissions, fees and other
incentives................ 83,714 67,607 16,107 23.8 %
Operating, administrative
and other................. 78,958 56,390 22,568 40.0 %
Depreciation and
amortization.............. 5,322 3,121 2,201 70.5 %
----------- ----------- ---------- -------
Operating income............. 7,150 6,946 204 2.9 %
Interest income.............. 727 632 95 15.0 %
Interest expense............. 4,321 3,745 576 15.4 %
----------- ----------- ---------- -------
Income before provision for
income tax.................. 3,556 3,833 (277) (7.2)%
Provision for income tax..... 1,591 1,560 31 2.0 %
----------- ----------- ---------- -------
Net income................... $ 1,965 $ 2,273 $ (308) (13.6)%
Dividend on preferred stock.. $ 32,273 (1) $ 1,000 $ 31,273 n/a
----------- ----------- ---------- -------
Net income (loss) applicable
to common
stockholders................ $ (30,308) $ 1,273 $ (31,581) (2480.8)%
=========== =========== ========== =======
Basic earnings (loss) per
share....................... $ (1.60) $ 0.10 $ (1.70) (1700.0)%
=========== =========== ========== =======
Number of shares used in
computing basic
earnings (loss) per share... 18,892,735 13,306,135 5,586,600 42.0 %
=========== =========== ========== =======
Diluted earnings (loss) per
share....................... $ (1.60) $ 0.09 $ (1.69) (1877.8)%
=========== =========== ========== =======
Number of shares used in
computing
diluted earnings (loss) per
share....................... 18,892,735 13,909,536 4,983,199 35.8 %
=========== =========== ========== =======
Adjusted diluted earnings per
share (2)................... $ 0.10 $ 0.09 $ 0.01 11.1 %
=========== =========== ========== =======
Number of shares used in
computing adjusted
earnings per share (2)...... 19,814,487 13,909,536 5,904,951 42.5 %
=========== =========== ========== =======
EBITDA....................... $ 12,472 $ 10,067 $ 2,405 23.9 %
=========== =========== ========== =======
</TABLE>
- --------
(1) Deemed dividend associated with the repurchase of preferred stock.
(2) Excludes the effect of deemed dividend associated with the repurchase of
preferred stock.
<PAGE>
CB Commercial News Release
May 5, 1998
Page 6
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1998 WITH COMPARATIVE FIGURES FOR THE
SIMILAR PERIOD IN 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31,
--------------------------------------
1998 1997 DIFFERENCE % CHANGE
------- ------- ---------- --------
<S> <C> <C> <C> <C>
BROKERAGE SERVICES
Revenue................................ $92,969 $82,339 $10,630 12.9 %
Costs and expenses:
Commissions, fees and other
incentives.......................... 51,933 45,713 6,220 13.6 %
Operating, administrative and other.. 34,061 30,188 3,873 12.8 %
Depreciation and amortization........ 1,502 1,493 9 0.6 %
------- ------- ------- -------
Operating income....................... $ 5,473 $ 4,945 $ 528 10.7 %
======= ======= ======= =======
EBITDA................................. $ 6,975 $ 6,438 $ 537 8.3 %
======= ======= ======= =======
EBITDA Margin.......................... 7.5 % 7.8%
======= =======
EBITDA as a percent of consolidated
EBITDA................................ 55.9 % 64.0%
======= =======
CORPORATE SERVICES
Revenue................................ $12,480 $ 5,890 $ 6,590 111.9 %
Costs and expenses:
Commissions, fees and other
incentives.......................... 4,925 3,275 1,650 50.4 %
Operating, administrative and other.. 8,267 2,517 5,750 228.4 %
Depreciation and amortization........ 506 67 439 655.2 %
------- ------- ------- -------
Operating income (loss)................ $(1,218) $ 31 $(1,249) (4029.0)%
======= ======= ======= =======
EBITDA................................. $ (712) $ 98 $ (810) (826.5)%
======= ======= ======= =======
EBITDA Margin.......................... (5.7)% 1.7%
======= =======
EBITDA as a percent of consolidated
EBITDA................................ (5.7)% 1.0%
======= =======
MANAGEMENT SERVICES
Revenue................................ $22,461 $10,862 $11,599 106.8 %
Costs and expenses:
Commissions, fees and other
incentives.......................... 6,402 4,612 1,790 38.8 %
Operating, administrative and other.. 14,070 5,480 8,590 156.8 %
Depreciation and amortization........ 1,201 153 1,048 685.0 %
------- ------- ------- -------
Operating income....................... $ 788 $ 617 $ 171 27.7 %
======= ======= ======= =======
EBITDA................................. $ 1,989 $ 770 $ 1,219 158.3 %
======= ======= ======= =======
EBITDA Margin.......................... 8.9 % 7.1%
======= =======
EBITDA as a percent of consolidated
EBITDA................................ 16.0 % 7.6%
======= =======
FINANCIAL SERVICES
Revenue................................ $47,234 $34,973 $12,261 35.1 %
Costs and expenses:
Commissions, fees and other
incentives.......................... 20,454 14,007 6,447 46.0 %
Operating, administrative and other.. 22,560 18,205 4,355 23.9 %
Depreciation and amortization........ 2,113 1,408 705 50.1 %
------- ------- ------- -------
Operating income....................... $ 2,107 $ 1,353 $ 754 55.7 %
======= ======= ======= =======
EBITDA................................. $ 4,220 $ 2,761 $ 1,459 52.8 %
======= ======= ======= =======
EBITDA Margin.......................... 8.9 % 7.9%
======= =======
EBITDA as a percent of consolidated
EBITDA................................ 33.8 % 27.4%
======= =======
</TABLE>
<PAGE>
CB Commercial News Release
May 5, 1998
Page 7
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997(1)
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents.............................. $ 19,550 $ 47,181
Other current assets................................... 90,246 100,518
Property and equipment, net............................ 52,501 50,309
Goodwill and other intangible assets, net.............. 243,725 239,384
Other assets, net...................................... 71,717 65,117
--------- ---------
Total assets......................................... $ 477,739 $ 502,509
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term debt................... $ 4,043 $ 4,679
Other current liabilities.............................. 88,653 150,346
Long-term debt, less current maturities................ 254,421 146,273
Other long-term liabilities............................ 30,068 35,768
--------- ---------
Total liabilities.................................... $ 377,185 $ 337,066
Minority Interest...................................... 4,655 7,672
Stockholders' Equity
Contributed capital.................................... $ 264,449 $ 328,253
Accumulated deficit.................................... (168,550) (170,482)
--------- ---------
Total stockholders' equity........................... 95,899 157,771
--------- ---------
Total liabilities and stockholders' equity........... $ 477,739 $ 502,509
========= =========
</TABLE>
- --------
(1) conformed to current presentation
# # #
