Exhibit 99.1
P R E S S R E L E A S E CB Richard Ellis, Inc.
- ------------------------ 200 N. Sepulveda Blvd.
Suite 300 El Segundo, CA 90245
T 310 563 8600
F 310 563 8670
www.cbre.com
FOR IMMEDIATE RELEASE -- 9 May 2001
For further information: Gallen Neilly & Associates
CB Richard Ellis Tim Gallen
James Leonetti 925/930-9848
310/563-8611 (media)
(investors)
CB Richard Ellis Reports Operating Results for First-Quarter 2001
EL SEGUNDO, Calif. - CB Richard Ellis (NYSE:CBG) today reported an increase in
revenue over the prior year and positive operating results from its North
America operations. These results were mitigated by a softening of revenue in
Asia and in Europe.
Revenue for the first quarter was $272.5 million, a 4% improvement over revenue
generated during the first quarter of last year. This increase in revenue was
the result of higher lease revenue, improved property and facility management
fees, strong results by the valuation unit, and solid revenue growth of the
mortgage banking unit.
These revenue improvements were primarily achieved in the North America
Division, partially mitigated by softening of revenue in Asia and Europe.
EBITDA for the quarter was $14.0 million, as compared to a robust $19.8 million
reported during the same period last year. Due to the seasonal nature of its
operations, the company typically reports small losses or break-even results
during its first calendar quarter. The company recorded a net loss for the first
quarter of $2.8 million, which represents a net loss of $0.13 per share.
Comparatively, during the first quarter of 2000, the company reported break-even
net income.
Operating results during the first quarter of 2001 and 2000 were impacted by the
occurrence of non-recurring sales of business operations. The company recognized
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N A V I G A T I N G A N E W W O R L D
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CB Richard Ellis First Quarter Earnings
May 9, 2001
gains from one-time sales, net of related expenses, of $5.4 million during the
first quarter of 2001 as compared to $4.7 million during the first quarter of
2000.
Additionally, the company disposed of other business operations during 2000,
which had generated approximately $1.8 million in revenues during the first
quarter of 2000, with no such revenue during 2001.
Chief Executive Officer Ray Wirta commented: "We are pleased with the revenue
growth of our business, particularly in North America. Despite economic softness
in several of our key markets in North America and internationally, each of our
business segments continued to generate revenue growth. A softening economy in
the United States has been evidenced by slower job growth, resulting in a
predictable negative impact on real estate activity by corporate clients.
"Our Transaction Management group produced quarter-over-quarter revenue growth
of 1%, led by the Corporate Services business unit, which posted a 23%
improvement in revenues. We believe that this affirms our strategy to focus
resources to help our corporate clients manage their real estate operations more
effectively."
Wirta noted: "Led by our mortgage banking group, the Financial Services
businesses continued to provide profitable growth, generating 22% growth in
revenue and 25% growth in EBITDA from recurring operations. Excluding non-
recurring items and adjusted for the effect of business disposals, Management
Services generated 6% growth in revenue from recurring operations.
"The growth in revenues was driven by our North America operations, which
posted a 7% increase in revenue during the first quarter of 2001 as compared to
the prior year. Asia operations were adversely affected by a reduction in the
level of U.S. corporate expansion and by the recent dispute between China and
the U.S.
"Additionally, our European operations did not perform at the same level as the
prior year. We are closely monitoring the situation in both Asia and Europe, and
have already taken steps to reduce our operating expenses.
"Although our North American results were positive, certain local regional
economies in the U.S. are experiencing an economic slowdown. This is
particularly evident in the Western United States, which we equate the economic
softness to the pronounced decline in the technology and telecommunication
sectors.
"We continue to believe in the fundamentals for our business for the long term;
however, if the softness in the U.S. economy continues, it will impact our
revenue growth for the balance of the year.
"Our business model allows for the flexibility to reduce expenses in response
to declining revenues. We have contingency plans in place to reduce our costs
should revenue begin to decline and have a history of successfully implementing
such programs."
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CB Richard Ellis First Quarter Earnings
May 9, 2001
Quarterly Segment Performance
The company reports its operations under three core business segments:
. Transaction Management. Transaction Management generated $180.0 million
of revenue in the first quarter, up 1% over the same period last year.
The transaction management revenues improved in North America by 5% over
the comparable period of last year. This was partially offset by softness
in revenues in Europe and Asia. The Corporate Services business unit
generated $29.9 million of revenue, an improvement of 23% over the $24.4
million of revenue during the same period of last year. The Investment
Properties unit posted revenue of $38.0 million during the first quarter
of 2001, which represents quarter-over-quarter growth of 11%. Transaction
Management EBITDA for the first quarter was $2.0 million, a $7.6 million
decrease from last year. Higher compensation costs relating to the
expansion and retention of the sales force in North America, combined
with the planned expansion of international operations, resulted in
expenses being at a higher level than the prior year.
. Financial Services. Financial Services generated $55.9 million of revenue
during the first quarter, up 35% over the first quarter of last year.
Revenue improved in the three major business lines that compose this
segment: valuation, mortgage and investment management. EBITDA rose to
$10.1 million during the first quarter, an improvement of $6.3 million,
compared to the same period last year. Additionally, contributing to the
first-quarter 2001 results was a one-time gain, net of related expenses,
of $5.6 million resulting from the sale of a managed fund in the
investment management business. Financial Services was a more significant
part of the company's operating performance in the first quarter of 2001,
reflecting the company's strategy to concentrate on higher-margin
business lines and improved market conditions for the mortgage and
valuation business lines. Excluding non-recurring items, revenue from
Financial Services represented approximately 19% of total revenues during
the first quarter of 2001, as compared to 16% during the first quarter of
2000.
. Management Services. Management Services' revenue for the first quarter
totaled $36.6 million as compared to $34.5 million of recurring revenue
for the first quarter of 2000. Although the company reported revenue of
$41.1 million from this segment during the first quarter of 2000, such
revenue included $6.5 million of non-recurring items. During the first
quarter of 2000, the company recorded a one-time gain of $4.7 million
from the sale of a Telecommunication business. Additionally, during the
fourth quarter of 2000, the company sold its Strategic HR business. The
Strategic HR business generated approximately $1.8 million of revenue
during the first quarter of 2000. Management Services' EBITDA for the
quarter ended March 31, 2001, totaled $1.9 million, an improvement of 15%
over recurring EBITDA for the prior year. The company reported EBITDA of
$6.4 million during the first quarter of 2000; however, this includes the
$4.8 million of non-recurring EBITDA related to the sale of the
Telecommunication and Strategic HR businesses.
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CB Richard Ellis First Quarter Earnings
May 9, 2001
Update of Sale of the Company
On Feb. 24, 2001, the company announced that it had entered into a merger
agreement providing for the acquisition of the company by CBRE Holding Inc. for
$16 per share in cash. On April 12, the company filed a preliminary proxy
statement with the Securities and Exchange Commission. The company expects to
mail a definitive proxy statement to its stockholders in late May and to hold a
meeting of shareholders in July to vote on the proposed merger.
Completion of the merger is subject to a number of conditions including the
following:
. Expiration or early termination of the Hart Scott Rodino waiting period;
. Obtaining funding for the merger in accordance with the executed
commitment letters with Credit Suisse First Boston and DLJ Investment
Funding;
. Obtaining the approval of a majority of the outstanding shares of the
company and two-thirds of the shares held by shareholders not affiliated
with the buying group;
. Obtaining consents from holders of more than 50% of the $175 million face
amount of 8 7/8% senior subordinated notes of the company to certain
amendments to the indenture governing those notes;
. Effectiveness of a registration statement of CBRE Holding Inc. pursuant
to which it intends to offer its common stock to employees of the
company; and
. Other customary conditions for a transaction of this nature.
CB Richard Ellis is the world's leading real estate services company. With
headquarters in Los Angeles and approximately 9,700 employees worldwide, the
company serves real estate owners, investors and occupiers through nearly 250
offices in 44 countries. Services include property sales and leasing, property
management, corporate services, facilities management, commercial mortgage
services, investment management, appraisal/valuation, research and consulting.
CB Richard Ellis had 2000 revenues of $1.3 billion. For more information about
CB Richard Ellis, visit the company's Web site at www.cbre.com.
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This release contains forward-looking statements concerning expectations for
future revenues, cost reductions and earnings performance. These statements
reflect the company's current plans and expectations and are based on
information currently available to it. They rely on a number of assumptions and
estimates, which could prove to be inaccurate, and which are subject to risks
and uncertainties that could cause the company's actual results to vary
materially from the results anticipated. CB Richard Ellis undertakes no
obligation to update publicly or revise any forward-looking statements. These
statements are qualified by reference to the company's 2000 Report on Form 10-K
and its quarterly reports on Form 10-Q.
CB Richard Ellis filed a preliminary proxy statement regarding the Merger on
April 12, 2001, and will file a definitive proxy statement regarding the Merger
when it is
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CB Richard Ellis First Quarter Earnings
May 9, 2001
available. Information regarding the identity of persons who, under rules of the
Securities and Exchange Commission, may be considered participants in the
solicitation of proxies from stockholders of CB Richard Ellis, and those
persons' holdings of securities of CB Richard Ellis, are included in the
preliminary proxy statement. Stockholders of CB Richard Ellis are urged to read
the definitive proxy statement regarding the Merger when it is available,
because it will contain important information. Copies of the proxy statements
and related Rule 13e-3 Transaction Statement on Schedule 13E-3 may be obtained
for free at the Securities and Exchange Commission Web site at www.sec.gov.
These documents may also be obtained for free from CB Richard Ellis. Requests
for copies should be directed to CB Richard Ellis Services Inc., 505 Montgomery
St., Sixth Floor, San Francisco, Calif. 94111, Attention: Walter Stafford,
Secretary.
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CB Richard Ellis First Quarter Earnings
May 9, 2001
CB RICHARD ELLIS SERVICES INC.
OPERATING RESULTS
For the Three Months Ended March 31, 2001, and 2000
(Dollars in thousands, except share and per share data)
(Unaudited)
Three Months Ended
March 31,
Consolidated 2001 2000
Revenue:
Leases $ 103,166 $ 99,753
Sales 73,843 74,281
Property and facilities management fees 27,872 25,285
Consulting and referral fees 16,367 16,314
Appraisal fees 18,836 16,284
Loan origination and servicing fees 14,812 9,263
Investment management fees 8,549 7,337
Other 9,053 12,402
Total revenue 272,498 260,919
Costs and expenses:
Commissions, fees and other incentives 124,398 113,963
Operating, administrative and other 134,079 127,148
Depreciation and amortization 11,696 10,569
Operating income 2,325 9,239
Interest income 800 489
Interest expense 9,055 9,685
(Loss) income before (benefit)
provision for income tax (5,930) 43
(Benefit) provision for income tax (3,084) 23
Net (loss) income $ (2,846) $ 20
Basic (loss) earnings per share $ (0.13) $ --
Weighted average shares outstanding for
basic (loss) earnings per share 21,309,550 20,819,268
Diluted (loss) earnings per share $ (0.13) $ --
Weighted average shares outstanding for
diluted (loss) earnings per share 21,309,550 20,851,184
EBITDA $ 14,021 $ 19,808
EBITDA margin 5.1% 7.6%
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CB Richard Ellis First Quarter Earnings
May 9, 2001
CB RICHARD ELLIS SERVICES INC.
OPERATING RESULTS BY BUSINESS SEGMENT
For the Three Months Ended March 31, 2001, and 2000
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31,
2001 2000
Transaction Management
Revenue:
Leases $ 97,215 $ 94,304
Sales 70,303 71,922
Other consulting and referral fees (a) 12,463 12,233
Total revenue 179,981 178,459
Costs and expenses:
Commissions, fees and other incentives 101,622 94,912
Operating, administrative and other 76,342 73,965
Depreciation and amortization 6,147 4,951
Operating (loss) income $ (4,130) $ 4,631
EBITDA $ 2,017 $ 9,582
EBITDA margin 1.1% 5.4%
EBITDA as a percent of consolidated EBITDA 14.4% 48.4%
Financial Services
Revenue:
Appraisal fees $ 18,368 $ 15,941
Loan origination and servicing fees 14,812 9,230
Investment management fees 7,969 6,717
Other (a) 14,770 9,509
Total revenue 55,919 41,397
Costs and expenses:
Commissions, fees and other incentives 15,743 12,207
Operating, administrative and other 30,081 25,405
Depreciation and amortization 3,246 2,980
Operating income $ 6,849 $ 805
EBITDA $ 10,095 $ 3,785
EBITDA margin 18.1% 9.1%
EBITDA as a percent of consolidated EBITDA 72.0% 19.1%
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CB Richard Ellis First Quarter Earnings
May 9, 2001
Management Services
Revenue:
Property management fees $ 20,337 $ 19,234
Facilities management fees 6,881 5,291
Other (a) 9,380 16,538
Total revenue 36,598 41,063
Costs and expenses:
Commissions, fees and other incentives 7,033 6,844
Operating, administrative and other 27,656 27,778
Depreciation and amortization 2,303 2,638
Operating (loss) income $ (394) $ 3,803
EBITDA $ 1,909 $ 6,441
EBITDA margin 5.2% 15.7%
EBITDA as a percent of consolidated EBITDA 13.6% 32.5%
(a) Revenue is allocated by material line of business specific to each segment.
"Other" includes types of revenue that have not been broken out separately
due to their immaterial balances and/or nonrecurring nature within each
segment. Certain revenue types disclosed on the consolidated statements of
operations may not be derived directly from amounts shown in this table.
CB RICHARD ELLIS SERVICES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
March 31, 2001 Dec. 31, 2000
(Unaudited)
ASSETS
Cash and cash equivalents $ 20,339 $ 20,854
Other current assets 173,432 202,191
Property and equipment, net 75,048 75,992
Goodwill and other intangible assets, net 459,468 470,407
Cash surrender value of insurance policies,
deferred compensation plan 61,267 53,203
Other assets 141,742 140,458
Total assets $ 931,296 $ 963,105
LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term debt $ 1,161 $ 1,378
Short-term borrowings 8,418 9,215
Other current liabilities 177,096 299,612
Long-term debt 409,653 303,571
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CB Richard Ellis First Quarter Earnings
May 9, 2001
Deferred compensation liability 79,980 80,503
Other liabilities 27,729 29,739
Total liabilities 704,037 724,018
Minority Interest 2,967 3,748
Stockholders' Equity
Contributed capital 338,132 336,694
Accumulated deficit (113,840) (101,355)
Total stockholders' equity 224,292 235,339
Total liabilities and stockholders' equity $ 931,296 $ 963,105
CB RICHARD ELLIS SERVICES INC.
Three Months Ended March 31, 2001, and 2000
(Dollars in millions except per share data)
Three Months Ended
March 31,
2001 2000
Revenue $ 272.5 $ 260.9
EBITDA $ 14.0 $ 19.8
Net loss $ (2.8) $ --
Cash flow used in operating activities $ (104.3) $ (67.5)
Net income after tax before
goodwill amortization $ 1.1 $ 3.9
Cash flow used in operating activities
per share (diluted) $ (4.89) $ (3.24)
Basic loss per share $ (0.13) $ --
EBITDA per share (diluted) $ 0.66 $ 0.95
Diluted loss per share $ (0.13) $ --
Diluted number of shares 21,309,550 20,851,184
Debt/Equity 1.87x 2.04x
EBITDA/Net interest expense 1.70x 2.15x
Effective tax rate 52.0% 54.0%
Operating expense as a % of revenue 49.2% 48.7%
EBITDA as a % of revenue 5.1% 7.6%
Net loss as a % of revenue -1.0% --
International revenue as a % of
consolidated revenue 22.6% 23.9%
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