<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): JULY 1, 1998
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)
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 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) REI Limited financial statements for the year ended December 31, 1997
(audited) and for the quarter ended March 31, 1998 (unaudited).
-2-
<PAGE>
REI Limited
Financial statements for the year ended 31 December 1997
together with unaudited statements for the period ended 31 March 1998
Registered No: 1833422
<PAGE>
Independent accountants' report
TO THE BOARD OF DIRECTORS AND SHARE OWNERS OF REI LIMITED:
We have audited the accompanying consolidated balance sheet of REI Limited and
subsidiaries as of 31 December 1997 and the related consolidated profits and
cash flows for the year ended 31 December 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United Kingdom and the United States. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of REI Limited and subsidiaries as
of 31 December 1997 and the results of their operations and their cash flows for
the year ended 31 December 1997, in conformity with generally accepted
accounting principles in the United Kingdom.
ARTHUR ANDERSEN
CHARTERED ACCOUNTANTS
1 Surrey Street
London
WC2R 2PS
29 June 1998
<PAGE>
Consolidated profit and loss account
<TABLE>
<CAPTION>
UNAUDITED YEAR
3 MONTHS ENDED 31
ENDED 31 DECEMBER
MARCH 1998 1997
NOTES
(POUNDS)'000 (POUNDS)'000
<S> <C> <C> <C>
TURNOVER 2 9,734 70,372
Operating expenses (14,521) (66,576)
Other operating income 6 177 1,224
__________ __________
OPERATING (LOSS)/PROFIT 6 (4,610) 5,020
Income from interests in associated undertakings 257 253
Investment income 7 114 221
Interest payable and similar charges 8 (228) (1,124)
__________ __________
(LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 3, 4 (4,467) 4,370
Taxation 9 (79) (2,856)
__________ __________
(LOSS)/PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION (4,546) 1,514
Minority interests 48 (1,246)
__________ __________
(LOSS)/PROFIT FOR THE FINANCIAL PERIOD (4,498) 268
Dividends - -
__________ __________
RETAINED (LOSS)/PROFIT FOR THE PERIOD 18, 19 (4,498) 268
__________ __________
</TABLE>
There is no difference between the (loss)/profit on ordinary activities before
taxation and the retained (loss)/profit for the period stated above, and their
historical cost equivalents.
Turnover, other operating income and operating expenses relate wholly to
continuing operations.
Statement of total recognised gains and losses
<TABLE>
<CAPTION>
UNAUDITED YEAR
3 MONTHS ENDED 31
ENDED 31 DECEMBER
MARCH 1998 1997
NOTES
(POUNDS)'000 (POUNDS)'000
<S> <C> <C> <C>
Retained (loss)/profit for the period (4,498) 268
Transfers in respect of employee share scheme 1,000 -
Exchange differences taken to reserves 19 370 (437)
__________ __________
TOTAL GAINS AND LOSSES RECOGNISED DURING THE PERIOD (3,128) (169)
__________ __________
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Consolidated balance sheet
<TABLE>
<CAPTION>
UNAUDITED
31 MARCH 31 DECEMBER
NOTES 1998 1997
(Pounds)'000 (Pounds)'000
<S> <C> <C> <C>
FIXED ASSETS
Tangible assets 10 4,236 4,278
Investments 11 1,385 1,161
____________ ____________
5,621 5,439
____________ ____________
Current assets
Debtors: amounts falling due after one year 12 279 306
Debtors: amounts falling due within one year 12 16,644 23,050
Cash at bank and in hand 13 7,799 10,580
____________ ____________
24,722 33,936
____________ ____________
CREDITORS: amounts falling due within one year 14 (23,652) (28,324)
____________ ____________
NET CURRENT ASSETS 1,070 5,612
____________ ____________
TOTAL ASSETS LESS CURRENT LIABILITIES 6,691 11,051
____________ ____________
Creditors: amounts falling due after more than one year 15 (7,835) (7,829)
____________ ____________
NET (LIABILITIES)/ASSETS (1,144) 3,222
____________ ____________
Called up equity share capital 17 78 56
Share premium account 18 6,678 5,054
Profit and loss account 18 8,804 11,932
____________ ____________
15,560 17,042
Goodwill write-off reserve 18 (17,457) (15,732)
____________ ____________
EQUITY SHAREHOLDER'S FUNDS 19 (1,897) 1,310
Minority interests 753 1,912
____________ ____________
(1,144) 3,222
____________ ____________
</TABLE>
The financial statements on pages 3 to 24 were approved by the Board of
Directors on 29 June 1998 and were signed on its behalf by:
B.D. White
Director
The accompanying notes are an integral part of this consolidated balance sheet.
<PAGE>
Consolidated cashflow
<TABLE>
<CAPTION>
UNAUDITED YEAR
3 MONTHS ENDED 31
ENDED 31 DECEMBER
MARCH 1998 1997
NOTES
(POUNDS)'000 (POUNDS)'000
<S> <C> <C> <C>
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES 25 (2,475) 7,389
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 98 205
Interest paid (189) (940)
Dividends received from associated undertakings 31 172
Dividends received from other investments - 16
Interest element of finance lease payments (26) (184)
Dividends paid to minority interests (37) (774)
__________ __________
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
(123) (1,505)
__________ __________
TAXATION
UK ACT recovered - 102
Overseas tax paid (180) (2,547)
__________ __________
TAX PAID (180) (2,445)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (390) (1,732)
Sale of tangible fixed assets 28 235
Purchase of fixed asset investments - (419)
__________ __________
NET CASH OUTFLOW FOR CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (362) (1,916)
__________ __________
MANAGEMENT OF LIQUID RESOURCES
Cash placed on short-term deposit (598) (41)
__________ __________
NET CASH OUTFLOW FROM MANAGEMENT OF LIQUID RESOURCES (598) (41)
__________ __________
NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING (3,738) 1,482
__________ __________
FINANCING
Capital element of finance lease payments (28) (112)
Issue of share capital 1,646 56
Inception of finance leases 110 -
New secured bank loans (662) 2,066
__________ __________
NET CASH INFLOW FROM FINANCING 1,066 2,010
__________ __________
(DECREASE)/INCREASE IN CASH DURING THE PERIOD 25 (2,672) 3,492
__________ __________
</TABLE>
The accompanying notes are an integral part of this consolidated cashflow
statement.
<PAGE>
Notes to the financial statements
1 PRINCIPAL ACCOUNTING POLICIES
The financial statements have been prepared in accordance with applicable
accounting standards in the United Kingdom. A summary of the principal group
accounting policies, which have been applied consistently throughout the year,
is set out below.
These financial statements have been prepared for inclusion in the public
filings of CB Richard Ellis Services, Inc. The results for the period to 31
March 1998 are unaudited. As permitted by the SEC, company only information in
respect of REI Limited is not included within these financial statements, and
footnote disclosures relating to the period ended 31 March 1998 are limited and
unaudited.
a) Basis of accounting
The financial statements have been prepared under the historical cost
convention, modified to include the revaluation of certain fixed asset
investments.
b) Basis of consolidation
The group financial statements consolidate the financial statements of REI
Limited and its subsidiary undertakings. Where necessary the financial
statements of the subsidiary undertakings are adjusted to conform with the
group's accounting policies. The results of subsidiary undertakings are
included from the date of acquisition.
c) Associated undertakings
The group's share of profits less losses of associated undertakings is included
in the consolidated profit and loss account and the group's share of their net
assets is included in the consolidated balance sheet.
d) Goodwill
Goodwill represents the difference between the value of a business or company
acquired, as represented by the fair value of the consideration paid, and the
fair value of the separable tangible net assets acquired. Goodwill arising on
consolidation is written off to reserves.
e) Turnover
Turnover represents fees to clients excluding sales taxes. Turnover is
recognised when the provision of services is completed or, where relevant, at
the point when a contract for the underlying property transaction, on which fees
are earned, becomes irrevocable.
f) Deferred taxation
Deferred taxation is provided under the liability method on all timing
differences only to the extent that they are expected to reverse in the future
without being replaced.
g) Pension costs
The group does not operate their own pension schemes but contribute to the
personal pension plans of certain employees at rates based upon current salary.
These annual contributions are charged against profits in the year in which they
arise.
<PAGE>
Notes the financial statements (continued)
1 PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
h) Tangible fixed assets and depreciation
Tangible fixed assets are stated at cost, net of depreciation, government grants
and provision for permanent diminution in value.
Depreciation is provided so as to write off the cost or valuation, less
estimated residual values, of all tangible fixed assets, over their expected
useful lives, principally using a reducing balance basis at the following annual
rates:
<TABLE>
<S> <C> <C>
Leasehold improvements - over the term of the lease
Fixtures and fittings - 10% - 20%
Computer and office equipment - 10% - 33 1/3%
Motor vehicles - 15% - 33 1/3%
</TABLE>
i) Leased assets
Assets acquired by means of finance leases, which confer rights and obligations
similar to those attached to owned assets, are capitalised as tangible assets as
if they had been purchased outright. Obligations under finance leases are
recorded as finance debt and the related finance charges are charged to the
profit and loss account and recorded as interest payable.
All other leases are treated as operating leases. Their annual rentals are
charged to the profit and loss account on a straight-line basis over the term of
the lease regardless of the timing of rentals under the lease.
j) Valuation of investments
Investments are valued at cost less provision for permanent diminution in value.
k) Foreign currency
The trading results of overseas subsidiaries are translated using the average
rates of exchange ruling during the financial year. The balance sheets of
overseas subsidiaries are translated into sterling at the rates of exchange
ruling at the balance sheet date.
Exchange differences which arise from the translation of the opening net assets
of foreign subsidiary undertakings are taken to reserves. All other exchange
differences are taken to the profit and loss account.
Foreign currency transactions are translated at the rates ruling when they
occur. Foreign currency monetary assets and liabilities are translated at the
rates ruling at the balance sheet date. Any differences are taken to the profit
and loss account.
<PAGE>
1 PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
l) Changes in presentation of financial information
Financial Reporting Standard 1 "Cash flow statements" was revised in 1996 to
change the format for reporting cash flows. The revised standard came into
effect for accounting periods ending on or after 23 March 1997. Accordingly,
the group's cash flow statement has been presented under the new format.
2 TURNOVER
All the group's turnover is derived from property consultancy
services.
The analysis of group turnover by geographical area is set out below:
<TABLE>
<CAPTION>
Year ended 31
December
1997
(Pounds)'000
<S> <C>
Europe 26,840
Far East 23,558
Australia 12,188
Americas 7,685
Africa 101
__________
70,372
__________
</TABLE>
Geographical segmentation of turnover to third parties by destination is not
materially different to amount by origin.
3 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION BY CLASS OF BUSINESS
All the group's profit on ordinary activities before taxation is derived from
property consultancy services.
<PAGE>
4 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
<TABLE>
<CAPTION>
Year ended 31
December
1997
(Pounds)'000
<S> <C>
Profit on ordinary activities before taxation is stated after charging:
Depreciation:
Tangible owned fixed assets 1,452
Tangible fixed assets held under finance leases 354
Auditors' remuneration 408
Auditors' remuneration for non-audit work 214
Operating leases:
Hire of plant and machinery 36
Hire of other assets 198
Loss on disposal of fixed assets 84
__________
Auditors remuneration represents amounts paid to Coopers and Lybrand, the groups statutory auditors in 1997.
</TABLE>
5 DIRECTORS AND EMPLOYEES
Directors' remuneration:
The remuneration paid to the directors of REI Limited by the group was:
<TABLE>
<CAPTION>
Year ended 31
December
1997
(Pounds)'000
<S> <C>
Aggregate emoluments 1,480
Company pension contributions to money purchase schemes 100
Sums paid to third parties for directors' services 80
__________
1,660
__________
</TABLE>
Retirement benefits are accruing to three directors under privately held money
purchase pension schemes and to one director under a privately held defined
benefit scheme.
No director exercised share options in the year. No director was entitled to
receive benefits under any long-term incentive schemes.
<PAGE>
5 DIRECTORS AND EMPLOYEES (CONTINUED)
Three people who served as directors during the year (B.D. White, J.A.D. Croft
and D.A. Sizer) had an interest as shareholders in Richard Ellis Group Limited
with whom the following significant transactions were made during the year.
<TABLE>
<CAPTION>
Year ended 31
December
1997
(Pounds)'000
<S> <C>
Charged in respect of accommodation 215
__________
</TABLE>
<TABLE>
<CAPTION>
Highest paid director Year ended 31
December
1997
(Pounds)'000
<S> <C>
Aggregate emoluments and benefits 231
Company pension contributions to money purchase scheme 28
__________
259
__________
</TABLE>
EMPLOYEES:
The average monthly number of persons (including executive directors) employed
by the group during the year was 1,174.
<TABLE>
<CAPTION>
Year ended 31
December
1997
(Pounds)'000
Staff costs:
<S> <C>
Wages and salaries 33,987
Social security costs 3,552
Other pension costs 569
__________
38,108
__________
</TABLE>
<PAGE>
6 OPERATING PROFIT
<TABLE>
<CAPTION>
Year ended 31
December
1997
(Pounds)'000
Other operating income comprises:
<S> <C>
Exchange gains 345
Recovery of bad debts 35
Recognition of profit on client expenditure 8
Licence fee income 597
Other 239
__________
1,224
__________
</TABLE>
7 INVESTMENT INCOME
<TABLE>
<CAPTION>
Year ended 31
December
1997
(Pounds)'000
<S> <C>
Income from other participating interests 16
Interest receivable 205
__________
221
__________
</TABLE>
8 INTEREST PAYABLE AND SIMILAR CHARGES
<TABLE>
<CAPTION>
Year ended 31
December
1997
(Pounds)'000
On bank loans and overdrafts:
<S> <C>
Repayable within 5 years, not by instalments 940
On finance leases and hire purchase contracts 184
__________
1,124
__________
</TABLE>
<PAGE>
9 TAXATION
The tax charge is based on profit for the year and comprises:
<TABLE>
<CAPTION>
Year ended 31
December
1997
(Pounds)'000
<S> <C>
United Kingdom corporation tax at 31%/33%:
Current 259
Double tax relief (259)
__________
-
Transfer to deferred tax (see note 16) 557
Overseas taxation 2,278
Withholding tax 48
Irrecoverable Advance Corporation Tax -
Overprovision in respect of prior years (59)
__________
2,824
__________
Associated undertakings 32
__________
2,856
__________
</TABLE>
Unutilised corporation tax trading losses carried forward for REI Limited are
estimated to be (Pounds)1,317,043. These taxation losses are subject to
agreement with the Inland Revenue. The taxation losses have not been recognised
as an asset in the financial statements of the group.
Overseas taxation excludes the amount of taxation payable on the minority's
share of the profits of the partnership Richard Ellis VOF.
<PAGE>
10 TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
Short Fixtures Computer
leasehold and and office Motor
improvements fittings equipment vehicles Total
(Pounds)'000 (Pounds)'000 (Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C> <C> <C>
COST
At 1 January 1997 743 3,579 4,663 2,728 11,713
Exchange differences (26) (441) (518) (378) (1,363)
Additions - 562 741 429 1,732
Disposals (165) (148) (434) (590) (1,337)
__________ __________ __________ __________ __________
At 31 December 1997 552 3,552 4,452 2,189 10,745
__________ __________ __________ __________ __________
DEPRECIATION
At 1 January 1997 605 1,734 2,759 1,485 6,583
Exchange differences (22) (270) (377) (235) (904)
Charge for year - 619 797 390 1,806
Disposals (133) (116) (295) (474) (1,018)
__________ __________ __________ __________ __________
At 31 December 1997 450 1,967 2,884 1,166 6,467
__________ __________ __________ __________ __________
NET BOOK VALUE
At 31 December 1997 102 1,585 1,568 1,023 4,278
__________ __________ __________ __________ __________
</TABLE>
The net book value of tangible fixed assets includes an amount of
(Pounds)479,036 in respect of assets held under finance leases and hire purchase
contracts.
<PAGE>
11 FIXED ASSET INVESTMENTS
<TABLE>
<CAPTION>
Associated Other
undertakings investments Total
(Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C>
COST OR VALUATION
At 1 January 1997 680 301 981
Exchange differences (132) (17) (149)
Additions 44 375 419
Written off in the year - (60) (60)
Goodwill (77) - (77)
Share of retained profit (less dividends received) 47 - 47
Transfers (56) 56 -
__________ __________ __________
At 31 December 1997 506 655 1,161
__________ __________ __________
</TABLE>
ASSOCIATED UNDERTAKINGS
<TABLE>
<CAPTION>
Country of
incorporation Proportion of ordinary
Name of undertaking or registration share capital held in
<S> <C> <C>
1997
%
Richard Ellis (Queensland) Trust Australia 25
Richard Ellis Limited New Zealand 25
Richard Ellis Africa Pty Limited South Africa 26
Richard Ellis (KZN) Pty Limited South Africa 21
Richard Ellis Africa Zimbabwe 33
</TABLE>
The principal activity of all of the above undertakings is the provision of
property consulting services.
OTHER INVESTMENTS
Other investments include (Pounds)505,885 in respect of 168,984 ordinary 1p
shares in REI Limited held at cost by the company's Employee Share Option Plan
("ESOP") trust for the purpose of satisfying obligations under share option
plans for the benefit of the group's employees. The purchase of shares is funded
by loans guaranteed by REI Limited. The related financing is included in
borrowings.
ESOP costs charged to the profit and loss account in the year amounted to
(Pounds)5,633. This related to interest payable on the borrowings held by the
group.
<PAGE>
11. FIXED ASSET INVESTMENTS (CONTINUED)
INTEREST IN GROUP UNDERTAKINGS
The directors consider that to give full particulars of all subsidiary
undertakings would lead to a statement of excessive length. The following
information relates to those subsidiary undertakings whose results or financial
position, in the opinion of the directors, significantly affected the figures of
the group:
<TABLE>
<CAPTION>
Country of
incorporation Proportion of ordinary
Name or registration share capital held
in 1997
%
<S> <C> <C>
Relam Amsterdam Holdings BV The Netherlands 100
REI Investments Limited England 100
REI Registrars Limited* England 100
Richard Ellis SA Belgium 100
Richard Ellis SA France 66.7
Richard Ellis SA Spain 100
Richard Ellis VOF (see note 22) The Netherlands 63.99
Richard Ellis SpA Italy 100
Richard Ellis GmbH Germany 100
Richard Ellis SA Switzerland 100
Richard Ellis GmbH Austria 100
Richard Ellis Limited Portugal 100
Richard Ellis Inc USA 100
Richard Ellis (Canada) Inc Canada 100
Richard Ellis S/C Limited Brazil 81.36
Richard Ellis Limited Hong Kong 100
Richard Ellis (Private) Limited Singapore 100
Richard Ellis KK Japan 100
Richard Ellis (Thailand) Co Limited Thailand 70
Richard Ellis (South Australia) Pty Limited Australia 100
Richard Ellis (Western Australia) Trust Australia 100
Richard Ellis New South Wales Partnership Australia 90
</TABLE>
Shares of the undertaking marked with an asterisk (*) are held directly by the
parent company. Otherwise shares are held by subsidiary undertakings.
All the above undertakings operate principally in their country of incorporation
or registration. The principal activity of all of the above undertakings is the
provision of property consulting services, with the exceptions of
<PAGE>
Relam Amsterdam Holdings BV, REI Investments Limited and REI Registrars Limited
which act as holding companies.
12 DEBTORS
<TABLE>
<CAPTION>
31 December
1997
(Pounds)'000
<S> <C>
Amounts falling due after one year:
Other debtors 306
__________
Amounts falling due within one year:
Trade debtors 18,449
Other debtors 3,124
Prepayments and accrued income 1,413
Amounts due from associated undertakings 64
__________
23,050
__________
</TABLE>
13 CASH AT BANK AND IN HAND
The balance includes (Pounds)93,921 of monies held on behalf of clients. The
corresponding liabilities are included within creditors falling due within one
year.
14 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
31 December
1997
(Pounds)'000
<S> <C>
Bank loans and overdrafts 6,119
Obligations under finance leases (see note 15) 260
Trade creditors 3,699
Amounts due to associated undertakings 57
Corporation tax 1,872
Other taxation and social security payable 3,254
Other creditors 5,251
Accruals and deferred income 7,812
__________
28,324
__________
</TABLE>
<PAGE>
15 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
<TABLE>
<CAPTION>
31 December
1997
(Pounds)'000
<S> <C>
Bank loans and overdrafts 4,427
Obligations under finance leases (see below) 282
Deferred taxation 70
Deferred purchase consideration 2,521
Other 529
__________
7,829
__________
BANK LOANS AND OVERDRAFTS
Repayable as follows:
In one year or less 6,119
Between one and two years 3,997
Between two and five years 344
In five years or more 86
__________
10,546
__________
</TABLE>
Loans repayable after five years are repayable by instalment.
FINANCE LEASES
The future minimum lease payments to which the group is committed under finance
lease and hire purchase contracts are as follows:
<TABLE>
<CAPTION>
31 December
1997
(Pounds)'000
<S> <C>
In one year or less 260
Between one and two years 199
Between two and five years 83
__________
542
__________
</TABLE>
<PAGE>
15 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR (CONTINUED)
DEFERRED PURCHASE CONSIDERATION
On 1 January 1993, the group acquired the remaining 36% of the equity of Richard
Ellis Limited (a Hong Kong company). The consideration comprised an initial
payment of HK$72,000 ((Pounds)6,138) representing the nominal value of the
shares acquired, and deferred consideration contingent upon the performance of
the Hong Kong business in subsequent years. Owing to uncertainties, including
those in the Hong Kong property market, the directors consider that it is not,
at the present time, practicable to determine the ultimate consideration
payable. An amount of HK$12.72m (approximately (Pounds)1m), representing an
estimate based on the future profitability of the Hong Kong business, has been
accounted for to date as the deferred consideration payable, which has been
included in creditors: amounts falling due after more than one year. Further
adjustments to the goodwill account may therefore be required in future years to
amend the estimated consideration to the actual amounts paid. The fair value of
the net assets acquired was (Pounds)317,911.
On 25 January 1996, Richard Ellis SA (a French company) merged with Achard et
Associes. The transaction was completed by issuing Richard Ellis SA shares to
the shareholders of Achard et Associes. The issue of the shares diluted REI
Investments Limited investment in Richard Ellis SA to 66.7%. At the same time
the group entered into an agreement to repurchase the 33.3% interest in Richard
Ellis SA between 2001 and 2003 at a price based inter-alia on profits generated
by the company in the period up to the date of repurchase. The directors
consider that it is not at the present time practicable to determine the
ultimate consideration payable for the purchase of the Achard et Associes
business. An amount of FF15m (approximately (Pounds)1.5m) representing an
estimate based on the future profitability of the French business has been
accounted for as the deferred consideration payable and is included in
creditors: amounts falling due after more than one year. Further adjustments to
the goodwill account may therefore be required in future years to amend the
estimated consideration to the actual amounts paid.
<PAGE>
16 DEFERRED TAXATION
Deferred taxation provided and not provided in the financial statements are as
follows:
<TABLE>
<CAPTION>
31 December 1997
Amounts provided Amount unprovided
((Pounds)'000) ((Pounds)'000)
<S> <C> <C>
Tax effect of timing differences relating to accelerated
capital allowances - -
Other timing differences 70 -
__________ __________
</TABLE>
The movements on the provision for deferred taxation are as follows:
<TABLE>
<CAPTION>
(Pounds)'000
<S> <C>
Provision at 1 January 1997 104
Transfer from profit and loss account (see note 9) 557
Assets included in other debtors in prior year (591)
__________
Provision at 31 December 1997 70
__________
</TABLE>
Deferred tax has not been provided in respect of the accumulated reserves of
overseas subsidiary undertakings as it is not currently intended to remit
earnings which would give rise to significant United Kingdom tax liabilities
after taking into account any related double tax relief.
17 CALLED UP EQUITY SHARE CAPITAL
<TABLE>
<CAPTION>
31 December
1997
(Pounds)'000
<S> <C>
Authorised
10 million ordinary shares of 1p each split into:
7.5 million `A' ordinary shares 75
2.5 million `B' ordinary shares 25
__________
100
__________
Allotted, called up and fully paid
`A' ordinary shares (5,649,489) 56
__________
</TABLE>
<PAGE>
17 CALLED UP EQUITY SHARE CAPITAL (CONTINUED)
The company has established share options schemes under which certain eligible
employees are granted options to subscribe for ordinary shares. At 31 December
1997 the following options were outstanding:
. 62,000 at 215p, exercisable from 18 October 1991 to 17 October 1998.
. 268,500 at 231p, exercisable from 1 May 1996 to 30 April 1998.
In May 1997 shareholders approved the adoption of an employee share incentive
plan under which up to 1.5 million ordinary 1p shares with restricted vesting
rights would be allotted to employees at par value to motivate and encourage
them to hold shares in the company. Awards under the scheme were to be
determined by reference to certain office performance criteria including
financial results for 1997. Since the year end 1,405,029 shares made available
to the scheme have been awarded.
18 RESERVES
<TABLE>
<CAPTION>
Share Goodwill Profit
premium write-off and loss
account reserve account
(Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C>
At 1 January 1997 4,998 (15,384) 12,226
On allotment during the year 56 - -
Goodwill arising during the year - (473) -
Exchange differences - - (437)
Retained profit - - 268
Transfer between reserves - 125 (125)
__________ __________ __________
At 31 December 1997 5,054 (15,732) 11,932
__________ __________ __________
</TABLE>
<PAGE>
19 RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
Year ended 31
December
1997
(Pounds)'000
<S> <C>
Profit for the financial year 268
Dividends -
__________
268
Exchange differences (437)
Premium on new share capital issued 56
Share capital issued -
Goodwill on acquisitions during the year (473)
__________
Net addition to shareholders' funds (586)
Opening shareholders' funds 1,896
__________
Closing shareholders' funds 1,310
__________
</TABLE>
20 FINANCIAL COMMITMENTS
At 31 December 1997 the group had annual commitments under non-cancellable
operating leases as follows:
<TABLE>
<CAPTION>
31 December
1997
(Pounds)'000
<S> <C>
Expiring within one year 1,854
Expiring between two and five years 1,307
Expiring in over five years 267
__________
3,428
__________
</TABLE>
21 CAPITAL COMMITMENTS
<TABLE>
<CAPTION>
31 December
1997
(Pounds)'000
<S> <C>
Capital commitments contracted for but not provided for in the financial statements 42
__________
Capital expenditure authorised by the directors, but not yet contracted for 19
__________
</TABLE>
<PAGE>
22 POST BALANCE SHEET EVENTS
In December 1997, it was announced that the Board had reached agreement with CB
Commercial Real Estate Services Group Inc. ("CB") on the terms of the merger
whereby CB would acquire the entire share capital of REI Limited. Since the
year end shareholders holding more than 95% of the fully diluted share capital
of REI Limited gave irrevocable undertakings to sell their shares to CB and the
transaction was completed during April 1998. In May 1998, CB changed its name
to CB Richard Ellis Services, Inc.
Pursuant to an agreement dated 1 January 1993, between REI Limited and Holding
Selman Beheer BV, the partnership of Richard Ellis VOF terminated on 31 December
1997. With effect from 1 January 1998, Amell Holdings BV acquired the entire
issued share capital of Selman BV, previously the 36.01% partner in Richard
Ellis VOF. Under the terms of the agreement consideration payable was
calculated based on the following:
i) The net asset value of Selman BV; and
ii) A goodwill amount, calculated as 25% of pre tax profits of Richard Ellis
VOF for five years. This amounts to NLG 4.68m (approximately (Pounds)1.4m)
These amounts together with interest of NLG 328,000 (approximately
(Pounds)98,000) thereon became due and payable 1 January 1998.
Selman BV is a company in which GJ Selman (who served as a director of REI
Limited during the year) has an interest.
23 MINORITY INTERESTS
<TABLE>
<CAPTION>
31 December
1997
(Pounds)'000
<S> <C>
At 1 January 1997 1,303
Profit on ordinary activities after taxation 1,252
Dividends paid and proposed (774)
Adjustment to goodwill 303
Exchange differences on translation of subsidiary undertakings' net assets (172)
__________
At 31 December 1997 1,912
__________
</TABLE>
24 RELATED PARTIES
Other than the disclosures included in respect of charges for accommodation (see
note 5) and transactions to acquire Richard Ellis Limited (Hong Kong) and Selman
Beheer BV (see notes 15 and 22 respectively) there were no material related
party transactions and balances that require disclosure.
<PAGE>
25 NOTES TO THE CASHFLOW STATEMENT
RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES
<TABLE>
<CAPTION>
Year Ended 31
December
1997
(Pounds)'000
<S> <C>
Operating profit 5,020
Depreciation on tangible fixed assets 1,806
Increase in debtors (3,510)
Decrease in creditors 3,811
Loss on disposal of fixed assets 84
Foreign exchange differences 178
__________
Net cash inflows from operating activities 7,389
__________
</TABLE>
RECONCILIATION OF NET CASHFLOW TO MOVEMENT IN NET DEBT
<TABLE>
<CAPTION>
Year Ended 31
December
1997
(Pounds)'000
<S> <C>
Increase in cash in the year 3,492
Cash outflow from increase in liquid resources 41
Cash inflow from increase in debt and lease financing (1,954)
Translation differences 31
__________
Movement in net funds in the year 1,610
Net debt at 1 January 1997 (2,118)
__________
Net debt at 31 December 1997 (508)
__________
</TABLE>
<PAGE>
25 NOTES TO THE CASHFLOW STATEMENT (CONTINUED)
ANALYSIS OF NET DEBT
<TABLE>
<CAPTION>
31 December 31 December
1996 Cash flow Non-cash 1997
(Pounds)'000 (Pounds)'000 (Pounds)'000 (Pounds)'000
<S> <C> <C> <C> <C>
Net cash:
Cash at bank and in hand 7,201 3,942 (563) 10,580
Less: deposits treated as liquid resources (3,118) (41) 249 (2,910)
__________ __________ __________ __________
4,083 3,901 (314) 7,670
Bank overdrafts (4,313) (409) 14 (4,708)
__________ __________ __________ __________
(230) 3,492 (300) 2,962
Liquid resources:
Deposits included in cash 3,118 41 (249) 2,910
__________ __________ __________ __________
3,118 41 (249) 2,910
Debt:
Finance leases (776) 112 122 (542)
Debts falling due after one year (4,230) (2,066) 458 (5,838)
__________ __________ __________ __________
(5,006) (1,954) 580 (6,380)
__________ __________ __________ __________
NET DEBT (2,118) 1,579 31 (508)
__________ __________ __________ __________
</TABLE>
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFO
(CONTINUED).
(b) CB Richard Ellis Services. Inc. Unaudited Pro Forma Financial
Statements for the year ended December 31, 1997 and for the quarter
ended March 31, 1998.
<PAGE>
CB RICHARD ELLIS SERVICES, INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The accompanying pro forma financial statements give effect to the following:
(a) for the unaudited pro forma statement of operations for the year ended
December 31, 1997, inclusion of the operations of REI Limited ("REI") for the
full year ended December 31, 1997 and Koll Real Estate Services, Inc. ("Koll"),
for the period from January 1, 1997 through August 28, 1997 (b) inclusion of the
operations of REI for unaudited pro forma statement of operations for the
quarter ended March 31, 1998 and (c) inclusion of REI's balance sheet as of
March 31, 1998 in the unaudited pro forma combined balance sheet. The
acquisition of REI by CB Richard Ellis Services, Inc. ("CB REI") is reflected as
if it had occurred on January 1, 1997, and March 31, 1998 for purposes of the
unaudited pro forma statements of operations and unaudited pro forma balance
sheet, respectively. The Koll acquisition has been reflected in the unaudited
pro forma statement of operations for the year ended December 31, 1997 as if it
had occurred on January 1, 1997.
The historical financial information of CB REI was derived from (i) the audited
financial statements for the year ended December 31, 1997 included in the
Company's 1997 Form 10-K; and (ii) the unaudited financial statements for the
quarter ended March 31, 1998 included in the Company's Form 10-Q for the first
quarter 1998. The historical financial information for REI was derived from (i)
the audited financial statements for the year ended December 31, 1997 and; (ii)
the unaudited internally prepared financial statements for the three-month
period ended March 31, 1998, both included herein. 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. The
acquisitions have been accounted for by the Company as purchases. The
adjustments included in the pro forma financial statements represent the effects
of the Company's preliminary determination and allocation of the purchase price
to the fair value of the assets and liabilities acquired, based upon currently
available information. There can be no assurance that the 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 either future results of operations or results that might have
been achieved if the transactions had been consummated as of the dates
indicated.
<PAGE>
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
UNAUDITED PROFORMA BALANCE SHEET
AS OF MARCH 31, 1998
(DOLLARS IN 000'S)
<TABLE>
CB
Commercial REI
Historical Historical
As of As of CB
March March Pro forma Commercial
31, 1998 31, 1998 (a) Subtotal adjustments pro forma
---------- ------------ -------- ----------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
- ------
Cash $ 19,550 $13,063 $ 32,613 (2,989) $ 29,624
Receivables 65,824 28,346 94,170 94,170
A/R from affiliates - - -
Deferred taxes 3,189 - 3,189 3,189
Prepaid expenses 9,407 - 9,407 9,407
Other 11,826 - 11,826 11,826
-------- ------- --------- -------- --------
Total current assets 109,796 41,409 151,205 (2,989) 148,216
Property, plant and equipment 52,501 7,095 59,596 59,596
Goodwill 199,445 29,240 228,685 $ 76,917 (b) 308,602
3,000 (c)
Investments and advances - 2,320 2,320 2,320
Other intangible assets 44,280 - 44,280 44,280
Inventoried property 7,355 - 7,355 7,355
Deferred taxes 37,159 - 37,159 37,159
Other assets 27,203 - 27,203 27,203
-------- ------- --------- -------- --------
Total assets $477,739 $80,064 $557,803 $ 76,928 $634,731
======== ======= ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Compensation and employee benefits $ 35,182 $ - $ 35,182 $ 35,182
Accounts payable & accrued liabilities 44,939 39,617 84,556 $ 3,000 (c) 87,556
Reserve for bonus and profit sharing 7,110 - 7,110 7,110
Current maturities of long term debt 4,043 4,043 4,043
Current portion of capital lease obligations 1,422 1,422 1,422
Notes payable to bank - - - -
-------- ------- --------- -------- --------
Total current liabilities 92,696 39,617 132,313 3,000 135,313
Senior term loans 244,551 244,551 49,717 (b) 294,268
Inventoried property loan 7,470 - 7,470 7,470
Deferred income taxes - - - -
Other long term debt 2,400 - 2,400 2,400
Other long term liabilities 30,068 13,123 43,191 43,191
-------- ------- --------- -------- --------
Total liabilities 377,185 52,740 429,925 52,717 482,642
Minority interest 4,655 1,261 5,916 5,916
Stockholders' equity
- --------------------
Preferred stock - - -
Common stock 190 - 190 13 (b) 203
Additional paid-in capital 269,527 25,443 294,970 (25,443) (b) 319,788
50,261 (b)
Notes receivable from sale of stock (5,268) - (5,268) (5,268)
Retained earnings (deficit) (168,517) - (168,517) (168,517)
Foreign currency translation (loss) gain (33) 620 587 (620) (b) (33)
-------- ------- --------- -------- --------
Total stockholders' equity 95,899 26,063 121,962 24,211 146,173
-------- ------- --------- -------- --------
Total liabilities and
stockholders' equity $477,739 $80,064 $ 557,803 $ 76,928 $634,731
======== ======= ========= ======== ========
</TABLE>
NOTES:
(a) All UK currency balances have been converted to the US dollar at an assumed
average conversion rate of $1.676 (calculated based on 5 days before and 5
days after closing date which is April 17, 1998) to the pound.
(b) Represents the purchase of the REI stock for total consideration of
$102,980,194 (1,330,000 shares at $37.8, plus $47.0 million cash), plus
$5.7million in notes; elimination of REI's historical equity and recording
of goodwill.)
(c) Represents estimated costs associated with the transaction.
<PAGE>
CB COMMERCIAL REAL ESTATE SERVICES GROUP, INC.
UNAUDITED PROFORMA STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1998
(DOLLARS IN 000'S, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CB REI
Commercial Historical
Historical For the
Quarter ended Quarter ended CB
March March Pro forma Commercial
31, 1998 31, 1998 (a) adjustments pro forma
------------- ------------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues $ 175,144 $16,314 $ 191,458
Other operating income - 297 297
Commissions, fees
and other incentives 83,714 12,915 96,629
Operating, administrative and
other 78,958 10,413 89,371
Depreciation and
amortization 5,322 1,009 910 (c) 7,241
------------ ----------- --------- -----------
Operating income (loss) 7,150 (7,726) (910) (1,486)
Interest income 727 191 918
Interest expense 4,321 382 870 (d) 5,573
Minority interest income - 80 80
------------ ----------- --------- -----------
Income (loss) before equity income
(loss) and provision (benefit)
for income taxes 3,556 (7,837) (1,780) (6,061)
Equity income (loss) - 430 430
------------ ----------- --------- -----------
Income (loss) before provision
for income taxes 3,556 (7,407) (1,780) (5,631)
Provision (benefit)
for income taxes 1,591 132 (b) (712) (e) 1,011
------------ ----------- --------- -----------
Income (loss) from
continuing operations $ 1,965 $(7,539) $(1,068) $ (6,642)
============ =========== ========= ===========
Per share data:
--------------
Basic earnings (loss)
per share $ 0.10 (f) $ (0.33) (f)
========== ==========
Weighted average
shares 18,892,735 20,222,745 (g)
========== ==========
Diluted earnings
(loss) per share $ 0.10 (f) $ (0.33) (f)
========== ==========
Weighted average
shares 18,892,735 20,222,745 (G)
========== ==========
</TABLE>
NOTES:
(a) All UK currency balances have been converted to the US dollar at an
assumed average conversion rate of $1.675 (calculated based on 5 days
before and 5 days after closing date which is April 17, 1998) to the
pound.
(b) REI's historical effective tax rate was 87%. The high effective rate is
caused by REI's corporate expenses incurred in the U.K. which were not
deductible in jurisdictions where the company operates. CB intends to
lower the effective tax rate through the use of tax planning strategies,
however, the ultimate success of such strategies cannot be known at this
time. Accordingly, no adjustment has been reflected in the pro forma
financial statements to include any tax savings.
(c) Represents amortization expense on goodwill resulting from the REI
transaction using a 30 year life
(d) Represents interest on the borrowings for the transaction using a 7%
interest rate
(e) Reflects the tax benefit at an estimated 40% on all goodwill amortization
related to the acquisitions. The Company may not be able to receive the
full tax benefit on 100% of the goodwill
(f) Pro forma EPS gives effect to the purchase of all of CB's preferred stock.
Accordingly no reduction has been made to income available to commons
stockholders for the annual dividend on such preferred stock. In addition,
pro forma EPS does not reflect the one time reduction of EPS by $1.62 per
share that will be recorded associated with such purchase representing the
excess of the purchase price over the carrying value of the preferred
stock.
(g) Weighted average shares include incremental shares assumed to be issued in
connection with the transaction
<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 REI
Commercial Koll Eight Historical
Historical Months For the
Year ended ended year ended
December August 31, Pro forma December
31, 1997 1997 (a) adjustments Subtotal 31, 1997 (h)
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Revenues $ 730,224 $ 87,687 $ 817,911 $ 117,943
Other operating income 2,051
Commissions, fees and other incentives 365,705 17,656 383,361 63,869
Operating, administrative and other 274,447 87,061 361,508 44,686
Merger related and other non-recurring
charges 12,924 - 12,924 -
Depreciation and amortization 18,060 8,023 (4,500) (b) 26,253 3,027
1,464 (c)
2,910 (d)
208 (e)
88 (f)
------------- ------------- ------------ ------------- -------------
Operating income (loss) 59,088 (25,053) (170) 33,865 8,412
Interest income 2,598 96 2,694 370
Interest expense 15,780 2,335 18,115 1,883
Minority interest expense 651 651 2,088
------------- ------------- ------------- ------------- -------------
Income (loss) before equity income
(loss) and provision (benefit) for income
taxes 45,906 (27,943) (170) 17,793 4,811
Equity income (loss) - (63) (63) 424
------------- ------------- ------------- ------------- -------------
Income (loss) before provision for income 45,906 (28,006) (170) 17,730 5,235
taxes
Provision (benefit) for income taxes 20,558 (8,443) (367) (g) 11,748 4,787 (i)
------------- ------------- ------------- ------------- -------------
Income (loss) from continuing operations $ 25,348 $ (19,563) $ 197 $ 5,982 $ 448
============= ============= ============= ============= =============
-------------
Income (loss) applicable to common
shareholders $ 21,348
=============
Per share data:
- ----------------------
Basic earnings (loss) per share $ 1.40
Weighted average shares 15,237,914
=============
Diluted earnings (loss) per share $ 1.33
=============
Weighted average shares 15,996,929
=============
<CAPTION>
CB
Pro forma Commercial
adjustments pro forma
------------- -------------
<S> <C> <C>
Revenues 935,854
Other operating income 2,051
Commissions, fees and other incentives 447,230
Operating, administrative and other 406,194
Merger related and other non-recurring
charges 12,924
Depreciation and amortization 3,639 (j) 32,919
------------- ------------
Operating income (loss) (3,639) 38,638
Interest income 3,064
Interest expense 8,898 (k) 28,896
Minority interest expense (1,307) (l) 1,432
------------- ------------
Income (loss) before equity income
(loss) and provision (benefit) for income
taxes (11,230) 11,374
Equity income (loss) 361
------------- ------------
Income (loss) before provision for income (11,230) 11,735
taxes
Provision (benefit) for income taxes (4,557) (g) 11,978
------------- ------------
Income (loss) from continuing operations $ (6,673) $ (243)
============= ============
------------
Income (loss) applicable to common
shareholders $ (243) (m)
============
Per share data:
- ----------------------
Basic earnings (loss) per share $ (0.01) (m)
============
Weighted average shares $19,919,615 (n)
============
Diluted earnings (loss) per share $ (0.01) (m)
=============
Weighted average shares 20,840,874 (n)
=============
</TABLE>
NOTES:
- ---------
(a) Koll historical results for the first eight months of 1997 include
certain non-recurring charges of $19 million.
(b) Represents reversal of Koll's historical amortization expense
(c) Represents amortization expense for management agreements assuming a
useful life of 10 years.
(d) Represents amortization expense for the Koll goodwill resulting from
the transaction using a 30 year estimated useful life.
(e) Represents amortization expense for covenants not to compete
(f) 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.
(g) Reflects the tax benefit at an estimated 40% on all goodwill
amortization related to the acquisitions. The Company may not be able
to receive the full tax benefit on 100% of the goodwill
(h) All UK currency balances have been converted to the US dollar at an
assumed average conversion rate of $1.676 (calculated based on 5 days
before and 5 days after closing date which is April 17, 1998) to the
pound.
(i) REI's historical effective tax rate was 87%. The high effective rate
is caused by REI's corporate expenses incurred in the U.K. which were
not deductible in jurisdictions where the company operates. CB intends
to lower the effective tax rate through the use of tax planning
strategies, however, the ultimate success of such strategies cannot
be known at this time. Accordingly, no adjustment has been reflected
in the pro forma financial statements to include any tax savings.
(j) Represents amortization expense on goodwill resulting from the REI
transaction using a 30 year life
(k) Represents interest on the borrowings for the acquisition or REI and
the purchase of Company's preferred stock using an 7% interest rate
(l) To eliminate the minority interest expense attributable to the
Amsterdam operation.
(m) Pro forma EPS gives effect to the purchase of all of CB's preferred
stock. Accordingly no reduction has been made to income available to
commons stockholders for the annual dividend on such preferred stock.
In addition, pro forma EPS does not reflect the one time reduction of
EPS by $1.62 per share that will be recorded associated with such
purchase representing the excess of the purchase price over the
carrying value of the preferred stock.
(n) Weighted average shares include incremental shares assumed to be
issued in connection with the transaction and the effect of the Koll
shares from the beginning of the year.
<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 RICHARD ELLIS SERVICES, INC.
Date: June 30, 1998 By: /s/ Debra L. Morris
----------------------------------
Debra L. Morris
Global Chief Accounting Officer